bank sinopac · the integrated service network of contents bank sinopac and its affiliates...

Bank SinoPac

No. 36, Sec. 3, Nanking East Road, Taipei 104, Taiwan (R.O.C.)Telephone: 886-2-2506-3333http://bank.sinopac.comTelex: 479901Swift Address: SINOTWTP

Executive Offices

Financial Silk Road of the 21st Century

Growing Wealth Enriching Life

ContentsThe Integrated Service Network ofBank SinoPac and its Affiliates

Introduction

Organization

Human Resources

Global Overview

Business Overview

Business plan of the year

Research and Development

Short-term and Long-term Business Development Plans

Office Locations

Financial Highlights

Letter to Shareholders

Corporate Profile

I.

II.

III.

Economic and Financial Review

I.

Operating Report

I.

II.

III.

IV.

Financial Reports

Domestic Major Economic Indicators

04

07

08

10

15

22

45

248

2

ContentsThe Integrated Service Network ofBank SinoPac and its Affiliates

Introduction

Organization

Human Resources

Global Overview

Business Overview

Business plan of the year

Research and Development

Short-term and Long-term Business Development Plans

Office Locations

Financial Highlights


Corporate Profile

I.

II.

III.


I.

Operating Report

I.

II.

III.

IV.

Financial Reports


04

07

08

10

15

22

45

248

3

Dep. / Branch Name Address Telephone No. Dep. / Branch Name Address Telephone No.

Headquarters

Banking Division

Trust Division

International Division

Offshore Banking Unit

Taipei Branch

Chungshan Branch

Lungchiang Branch

Tehui Branch

Sungchiang Branch

Chunglun Branch

Chang An Branch

Sungshan Branch

Hsisung Branch

Tunpei Branch

Yungchun Branch

Sanhsing Branch

Fulin Branch

Chunghsiao E. Road Branch

Tungmen Branch

Hsinyi Branch

Jenai Branch

Hoping Branch

Chunghsiao Branch

Hsinwei Branch

Tunnan Branch

Chengchung Branch

Nanmen Branch

Shihmao Branch

Tingchou Branch

Chinan Road Branch

Chungcheng Branch

Chiencheng Branch

Yenping Branch

Chungching North Road Branch

Hsimen Branch

Wanhua Branch

Shuangyuan Branch

Hsinglung Branch

Chingmei Branch

Neihu Branch

Tunghu Branch

Hsinhu Branch

Hsihu Branch

Shetzu Branch

Shihlin Branch

Shihtung Branch

(02)2506-3333

(02)2506-3333

(02)2506-3333

(02)2506-3333

(02)2506-3333

(02)2508-2288

(02)2571-7221

(02)2509-5570

(02)2585-4880

(02)2567-9911

(02)8161-8000

(02)2516-5777

(02)2761-1331

(02)2746-9888

(02)2712-7899

(02)2769-5323

(02)2723-2955

(02)2833-0505

(02)2771-7011

(02)2392-6611

(02)2705-8322

(02)2704-5711

(02)2735-4533

(02)2778-8811

(02)2704-9911

(02)2378-0707

(02)2381-7777

(02)2391-7565

(02)2345-1177

(02)2337-8728

(02)2396-3001

(02)2367-2888

(02)2555-3261

(02)2558-0091

(02)2598-2463

(02)2381-8255

(02)2302-3485

(02)2303-8222

(02)2933-9831

(02)2932-8540

(02)2797-1600

(02)2633-5555

(02)8792-6888

(02)8797-6633

(02)2812-9477

(02)2886-8877

(02)2872-7155

No. 36, Sec. 3, Nanking E. Rd., Chungshan District, Taipei City 104, Taiwan (R.O.C.)





No. 9-1, Sec. 2, Chienkuo N. Rd., Chungshan District, Taipei City 104, Taiwan (R.O.C.)

No. 79, Sec. 2, Chungshan N. Rd., Chungshan District, Taipei City 104, Taiwan (R.O.C.)

No. 409, Lungchiang Rd., Chungshan District, Taipei City 104, Taiwan (R.O.C.)

No. 16-5, Tehui St., Chungshan District, Taipei City 104, Taiwan (R.O.C.)

No. 192, Sungchiang Rd., Chungshan District, Taipei City 104, Taiwan (R.O.C.)

No. 306, Sec. 2, Bade Rd., Chungshan District, Taipei City 104, Taiwan (R.O.C.)

No. 39, 41, 43, 43-1, 43-2, Songjiang Rd., Chungshan District, Taipei City 104, Taiwan (R.O.C.)

No. 680, Sec. 4, Bade Rd., Sungshan District, Taipei City 105, Taiwan (R.O.C.)

No. 12, Tunghsing Rd., Sungshan District, Taipei City 105, Taiwan (R.O.C.)

No. 209, Tunhua N. Rd., Sungshan District, Taipei City 105, Taiwan (R.O.C.)

No. 352, Yungchi Rd., Hsinyi District, Taipei City 110, Taiwan (R.O.C.)

No. 296, Chuangching Rd., Hsinyi District, Taipei City 110, Taiwan (R.O.C.)

No. 620, Sec. 5, Chungshan N. Rd., Shihlin District, Taipei City 111, Taiwan (R.O.C.)

No. 48, Sec. 4, Chunghsiao E. Rd., Taan District, Taipei City 106, Taiwan (R.O.C.)

No.154-1 & 156 & 158, Sec. 2, Hsinyi Rd., Taan District, Taipei City 106, Taiwan (R.O.C.)

No. 252, Sec. 4, Hsinyi Rd., Taan District, Taipei City 106, Taiwan (R.O.C.)

No. 316-2, Sec. 4, Jenai Rd., Taan District, Taipei City 106, Taiwan (R.O.C.)

No. 260, Sec. 3, Hoping E. Rd., Taan District, Taipei City 106, Taiwan (R.O.C.)

No. 1, Lane 236, Sec. 1, Tunhua S. Rd., Taan District, Taipei City 106, Taiwan (R.O.C.)


No. 187, Sec. 2, Anho Rd., Taan District, Taipei City 106, Taiwan (R.O.C.)

No. 17, Poai Rd., Chungcheng District, Taipei City 100, Taiwan (R.O.C.)

No. 110, Sec. 1, Nanchang Rd., Chungcheng District, Taipei City 100, Taiwan (R.O.C.)

No. 380, Sec. 1, Chilung Rd., Hsinyi District, Taipei City 110, Taiwan (R.O.C.)

No. 217, Sanyuan St., Chungcheng District, Taipei City 100, Taiwan (R.O.C.)

No. 39, Sec. 2, Chinan Rd., Chungcheng District, Taipei City 100, Taiwan (R.O.C.)

No. 172, Sec. 2, Roosevelt Rd., Chungcheng District, Taipei City 106, Taiwan (R.O.C.)

No. 43, Changan W. Rd., Tatung District, Taipei City 103, Taiwan (R.O.C.)

No. 286, Minsheng W. Rd., Tatung District, Taipei City 103, Taiwan (R.O.C.)

No. 139, Sec. 3, Chungching N. Rd., Tatung District, Taipei City 103, Taiwan (R.O.C.)

No. 75, Chengtu Rd., Wanhua District, Taipei City 108, Taiwan (R.O.C.)

No. 280, Kangting Rd., Wanhua District, Taipei City 108, Taiwan (R.O.C.)

No. 58, Tungyuan St., Wanhua District, Taipei City 108, Taiwan (R.O.C.)

No. 49, Sec. 2, Hsinglung Rd., Wenshan District, Taipei City 116, Taiwan (R.O.C.)

No. 12, Chechien Rd., Wenshan District, Taipei City 116, Taiwan (R.O.C.)

No. 723, Sec. 1, Neihu Rd., Neihu District, Taipei City 114, Taiwan (R.O.C.)

No. 23, Tunghu Rd., Neihu District, Taipei City 114, Taiwan (R.O.C.)

No. 8, Juikuang Rd., Neihu District, Taipei City 114, Taiwan (R.O.C.)

No.412, Ruiguang Rd., Neihu Dist., Taipei City 114, Taiwan (R.O.C.)

No. 111, Sec. 6, Yenping N. Rd., Shihlin District, Taipei City 111, Taiwan (R.O.C.)

No. 85, Sec. 4, Chengte Rd., Shihlin District, Taipei City 111, Taiwan (R.O.C.)


Lanya Branch

Sungte Branch

Tienmu Branch

Peitou Branch

Nankang Branch

Sanchung Branch

South Sanchung Branch

Sanho Branch

Chengyi Branch

North Sanchung Branch

Chunghsing Branch

Chunghsin Branch

Chuwei Branch

Kinmen Branch

Panchiao Branch

Kuangfu Branch

East Panchiao Branch

Panchiao Chunghsiao Branch

Huachiang Branch

Hsichou Branch

Chiangtzutsui Branch

Panhsin Branch

Chisui Branch

Chungho Branch

Yungho Branch

Kangshan Branch

Hsintien Branch

Peihsin Branch

Hsinchuang Branch

Chungkang Branch

Hsisheng Branch

Suyuan Branch

Minan Branch

Hsintai Branch

Tucheng Branch

Haishan Branch

Hsuehfu Branch

Yingke Branch

Yingtao Branch

Hsichih Branch

Hsichih Changshu Branch

Shulin Branch

Huilung Branch

Luchou Branch

South Luchou Branch

Chungke Branch

Wuku Branch

(02)2833-7222

(02)8788-2688

(02)2872-1177

(02)2891-2127

(02)2788-5265

(02)2983-3008

(02)2982-0711

(02)2972-8787

(02)2981-1335

(02)2982-6239

(02)2976-2159

(02)2999-1418

(02)2808-7058

(082)32-3300

(02)2967-1112

(02)8227-5058

(02)8952-2200

(02)2955-3678

(02)2257-2199

(02)2687-6869

(02)8252-8999

(02)2968-1616

(02)2223-4077

(02)8668-9393

(02)2927-4000

(07)622-6688

(02)2917-2202

(02)2912-7799

(02)2201-6123

(02)2992-3123

(02)2202-7700

(02)2996-8840

(02)2205-8170

(02)2992-9898

(02)2260-8122

(02)2270-3800

(02)2266-2000

(02)2678-6000

(02)2678-6999

(02)2642-1561

(02)2694-9898

(02)2683-8668

(02)2688-9030

(02)2281-8966

(02)2289-6186

(04)2465-1688

(02)2291-7333

No. 183, Tehsing E. Rd., Shihlin District, Taipei City 111, Taiwan (R.O.C.)

No. 132, Sungte Rd., Hsinyi District, Taipei City 110, Taiwan (R.O.C.)

No. 249, Sec. 2, Chungcheng Rd., Shihlin District, Taipei City 111, Taiwan (R.O.C.)

No. 166-6, Kuangming Rd., Peitou District, Taipei City 112, Taiwan (R.O.C.)

1F., No.19-12, Sanchong Rd., Nankang District, Taipei City 115, Taiwan (R.O.C.)

No. 80, Sec. 2, Chunghsiao Rd., Sanchung District, New Taipei City 241, Taiwan (R.O.C.)

No. 400, Chungcheng N. Rd., Sanchung District, New Taipei City 241, Taiwan (R.O.C.)

No. 18, Sec. 2, Chunghsin Rd., Sanchung District, New Taipei City 241, Taiwan (R.O.C.)

No. 343, Chengyi N. Rd., Sanchung District, New Taipei City 241, Taiwan (R.O.C.)

No. 83, Sec. 4, Tzuchiang Rd., Sanchung District, New Taipei City 241, Taiwan (R.O.C.)

No. 44, Hsinhsing Rd., Sanchung District, New Taipei City 241, Taiwan (R.O.C.)

No. 527, Sec.5, Chunghsin Rd., Sanchung District, New Taipei City 241, Taiwan (R.O.C.)

No. 31-15, Mintsu Rd., Tanshui District, New Taipei City 251, Taiwan (R.O.C.)

No. 236, Minquan Rd., Jincheng Township, Kinmen County 893, Taiwan (R.O.C.)

No. 23, Fuchung Rd., Panchiao District, New Taipei City 220, Taiwan (R.O.C.)

No. 204, Lite St., Chungho District, New Taipei City 235, Taiwan (R.O.C.)

No. 147, Sec. 2, Chungshan Rd., Panchiao District, New Taipei City 220, Taiwan (R.O.C.)

No.198, Chongqing Rd., Panchiao Dist., New Taipei City 220, Taiwan (R.O.C.)

No. 82, Hsinhai Rd., Panchiao District, New Taipei City 220, Taiwan (R.O.C.)

No. 74, Sec. 2, Tuhsing Rd., Panchiao District, New Taipei City 220, Taiwan (R.O.C.)

No. 6-12, Sec. 2, Shuangshih Rd., Panchiao District, New Taipei City 22043, Taiwan (R.O.C.)

No. 186, Minchuan Rd., Panchiao District, New Taipei City 220, Taiwan (R.O.C.)

No. 533, Liencheng Rd., Chungho District, New Taipei City 235, Taiwan (R.O.C.)

No. 51, Chungcheng Rd., Yungho District, New Taipei City 234, Taiwan (R.O.C.)

No. 47, Sec. 2, Yungho Rd., Yungho District, New Taipei City 234, Taiwan (R.O.C.)

No. 1, Tate 1st Rd., Kangshan District, Kaohsiung City 820, Taiwan (R.O.C.)

No. 290, Chungcheng Rd., Hsintien District, New Taipei City 231, Taiwan (R.O.C.)

No. 260, Sec. 2, Peihsin Rd., Hsintien District, New Taipei City 231, Taiwan (R.O.C.)

No. 341, Chungcheng Rd., Hsinchuang District, New Taipei City 242, Taiwan (R.O.C.)

No. 399, Chungkang Rd., Hsinchuang District, New Taipei City 242, Taiwan (R.O.C.)

No. 61, Houkang 1st Rd., Hsinchuang District, New Taipei City 242, Taiwan (R.O.C.)

No. 540-1, Huacheng Rd., Hsinchuang District New Taipei City 242, Taiwan (R.O.C.)

No. 47, Minan E. Rd., Hsinchuang District, New Taipei City 242, Taiwan (R.O.C.)

No. 229, Hsintai Rd., Hsinchuang District, New Taipei City 242, Taiwan (R.O.C.)

No. 223-6, Sec. 2, Chungyang Rd., Tucheng District, New Taipei City 236, Taiwan (R.O.C.)

No. 200-12, Sec. 3, Chincheng Rd., Tucheng District, New Taipei City 236, Taiwan (R.O.C.)

No. 124, Sec. 1, Hsuehfu Rd., Tucheng District, New Taipei City 236, Taiwan (R.O.C.)

No. 212, Chienkuo Rd., Yingke District, New Taipei City 239, Taiwan (R.O.C.)

No. 60, Sec. 2, Yingtao Rd., Yingke District, New Taipei City 239, Taiwan (R.O.C.)

No.508~510, Sec. 2, Datong Rd., Xizhi Dist., New Taipei City 221, Taiwan (R.O.C.)

No. 89, Chunghsing Rd., Hsichih District, New Taipei City 221, Taiwan (R.O.C.)

No. 288, Sec. 1, Chungshan Rd., Shulin District, New Taipei City 238, Taiwan (R.O.C.)

No. 61, Sanchun St., Shulin District, New Taipei City 238, Taiwan (R.O.C.)

No. 30, Sanmin Rd., Luchou District, New Taipei City 247, Taiwan (R.O.C.)

No. 203, Changan St., Luchou District, New Taipei City 247, Taiwan (R.O.C.)

No.1182, Sec. 4, Taiwan Blvd. Hsitun District, Taichung City 407, Taiwan (R.O.C.)

No. 84, Kungshang Rd., Wuku District, New Taipei City 248, Taiwan (R.O.C.)

4

Dep. / Branch Name Address Telephone No. Dep. / Branch Name Address Telephone No.

Headquarters

Banking Division

Trust Division

International Division

Offshore Banking Unit

Taipei Branch

Chungshan Branch

Lungchiang Branch

Tehui Branch

Sungchiang Branch

Chunglun Branch

Chang An Branch

Sungshan Branch

Hsisung Branch

Tunpei Branch

Yungchun Branch

Sanhsing Branch

Fulin Branch

Chunghsiao E. Road Branch

Tungmen Branch

Hsinyi Branch

Jenai Branch

Hoping Branch

Chunghsiao Branch

Hsinwei Branch

Tunnan Branch

Chengchung Branch

Nanmen Branch

Shihmao Branch

Tingchou Branch

Chinan Road Branch

Chungcheng Branch

Chiencheng Branch

Yenping Branch

Chungching North Road Branch

Hsimen Branch

Wanhua Branch

Shuangyuan Branch

Hsinglung Branch

Chingmei Branch

Neihu Branch

Tunghu Branch

Hsinhu Branch

Hsihu Branch

Shetzu Branch

Shihlin Branch

Shihtung Branch

(02)2506-3333

(02)2506-3333

(02)2506-3333

(02)2506-3333

(02)2506-3333

(02)2508-2288

(02)2571-7221

(02)2509-5570

(02)2585-4880

(02)2567-9911

(02)8161-8000

(02)2516-5777

(02)2761-1331

(02)2746-9888

(02)2712-7899

(02)2769-5323

(02)2723-2955

(02)2833-0505

(02)2771-7011

(02)2392-6611

(02)2705-8322

(02)2704-5711

(02)2735-4533

(02)2778-8811

(02)2704-9911

(02)2378-0707

(02)2381-7777

(02)2391-7565

(02)2345-1177

(02)2337-8728

(02)2396-3001

(02)2367-2888

(02)2555-3261

(02)2558-0091

(02)2598-2463

(02)2381-8255

(02)2302-3485

(02)2303-8222

(02)2933-9831

(02)2932-8540

(02)2797-1600

(02)2633-5555

(02)8792-6888

(02)8797-6633

(02)2812-9477

(02)2886-8877

(02)2872-7155






No. 9-1, Sec. 2, Chienkuo N. Rd., Chungshan District, Taipei City 104, Taiwan (R.O.C.)

No. 79, Sec. 2, Chungshan N. Rd., Chungshan District, Taipei City 104, Taiwan (R.O.C.)

No. 409, Lungchiang Rd., Chungshan District, Taipei City 104, Taiwan (R.O.C.)

No. 16-5, Tehui St., Chungshan District, Taipei City 104, Taiwan (R.O.C.)

No. 192, Sungchiang Rd., Chungshan District, Taipei City 104, Taiwan (R.O.C.)

No. 306, Sec. 2, Bade Rd., Chungshan District, Taipei City 104, Taiwan (R.O.C.)

No. 39, 41, 43, 43-1, 43-2, Songjiang Rd., Chungshan District, Taipei City 104, Taiwan (R.O.C.)

No. 680, Sec. 4, Bade Rd., Sungshan District, Taipei City 105, Taiwan (R.O.C.)

No. 12, Tunghsing Rd., Sungshan District, Taipei City 105, Taiwan (R.O.C.)

No. 209, Tunhua N. Rd., Sungshan District, Taipei City 105, Taiwan (R.O.C.)

No. 352, Yungchi Rd., Hsinyi District, Taipei City 110, Taiwan (R.O.C.)

No. 296, Chuangching Rd., Hsinyi District, Taipei City 110, Taiwan (R.O.C.)


No. 48, Sec. 4, Chunghsiao E. Rd., Taan District, Taipei City 106, Taiwan (R.O.C.)

No.154-1 & 156 & 158, Sec. 2, Hsinyi Rd., Taan District, Taipei City 106, Taiwan (R.O.C.)


No. 316-2, Sec. 4, Jenai Rd., Taan District, Taipei City 106, Taiwan (R.O.C.)

No. 260, Sec. 3, Hoping E. Rd., Taan District, Taipei City 106, Taiwan (R.O.C.)

No. 1, Lane 236, Sec. 1, Tunhua S. Rd., Taan District, Taipei City 106, Taiwan (R.O.C.)


No. 187, Sec. 2, Anho Rd., Taan District, Taipei City 106, Taiwan (R.O.C.)

No. 17, Poai Rd., Chungcheng District, Taipei City 100, Taiwan (R.O.C.)

No. 110, Sec. 1, Nanchang Rd., Chungcheng District, Taipei City 100, Taiwan (R.O.C.)

No. 380, Sec. 1, Chilung Rd., Hsinyi District, Taipei City 110, Taiwan (R.O.C.)

No. 217, Sanyuan St., Chungcheng District, Taipei City 100, Taiwan (R.O.C.)

No. 39, Sec. 2, Chinan Rd., Chungcheng District, Taipei City 100, Taiwan (R.O.C.)

No. 172, Sec. 2, Roosevelt Rd., Chungcheng District, Taipei City 106, Taiwan (R.O.C.)

No. 43, Changan W. Rd., Tatung District, Taipei City 103, Taiwan (R.O.C.)

No. 286, Minsheng W. Rd., Tatung District, Taipei City 103, Taiwan (R.O.C.)

No. 139, Sec. 3, Chungching N. Rd., Tatung District, Taipei City 103, Taiwan (R.O.C.)

No. 75, Chengtu Rd., Wanhua District, Taipei City 108, Taiwan (R.O.C.)

No. 280, Kangting Rd., Wanhua District, Taipei City 108, Taiwan (R.O.C.)

No. 58, Tungyuan St., Wanhua District, Taipei City 108, Taiwan (R.O.C.)

No. 49, Sec. 2, Hsinglung Rd., Wenshan District, Taipei City 116, Taiwan (R.O.C.)

No. 12, Chechien Rd., Wenshan District, Taipei City 116, Taiwan (R.O.C.)

No. 723, Sec. 1, Neihu Rd., Neihu District, Taipei City 114, Taiwan (R.O.C.)

No. 23, Tunghu Rd., Neihu District, Taipei City 114, Taiwan (R.O.C.)

No. 8, Juikuang Rd., Neihu District, Taipei City 114, Taiwan (R.O.C.)

No.412, Ruiguang Rd., Neihu Dist., Taipei City 114, Taiwan (R.O.C.)

No. 111, Sec. 6, Yenping N. Rd., Shihlin District, Taipei City 111, Taiwan (R.O.C.)

No. 85, Sec. 4, Chengte Rd., Shihlin District, Taipei City 111, Taiwan (R.O.C.)


Lanya Branch

Sungte Branch

Tienmu Branch

Peitou Branch

Nankang Branch

Sanchung Branch

South Sanchung Branch

Sanho Branch

Chengyi Branch

North Sanchung Branch

Chunghsing Branch

Chunghsin Branch

Chuwei Branch

Kinmen Branch

Panchiao Branch

Kuangfu Branch

East Panchiao Branch

Panchiao Chunghsiao Branch

Huachiang Branch

Hsichou Branch

Chiangtzutsui Branch

Panhsin Branch

Chisui Branch

Chungho Branch

Yungho Branch

Kangshan Branch

Hsintien Branch

Peihsin Branch

Hsinchuang Branch

Chungkang Branch

Hsisheng Branch

Suyuan Branch

Minan Branch

Hsintai Branch

Tucheng Branch

Haishan Branch

Hsuehfu Branch

Yingke Branch

Yingtao Branch

Hsichih Branch

Hsichih Changshu Branch

Shulin Branch

Huilung Branch

Luchou Branch

South Luchou Branch

Chungke Branch

Wuku Branch

(02)2833-7222

(02)8788-2688

(02)2872-1177

(02)2891-2127

(02)2788-5265

(02)2983-3008

(02)2982-0711

(02)2972-8787

(02)2981-1335

(02)2982-6239

(02)2976-2159

(02)2999-1418

(02)2808-7058

(082)32-3300

(02)2967-1112

(02)8227-5058

(02)8952-2200

(02)2955-3678

(02)2257-2199

(02)2687-6869

(02)8252-8999

(02)2968-1616

(02)2223-4077

(02)8668-9393

(02)2927-4000

(07)622-6688

(02)2917-2202

(02)2912-7799

(02)2201-6123

(02)2992-3123

(02)2202-7700

(02)2996-8840

(02)2205-8170

(02)2992-9898

(02)2260-8122

(02)2270-3800

(02)2266-2000

(02)2678-6000

(02)2678-6999

(02)2642-1561

(02)2694-9898

(02)2683-8668

(02)2688-9030

(02)2281-8966

(02)2289-6186

(04)2465-1688

(02)2291-7333

No. 183, Tehsing E. Rd., Shihlin District, Taipei City 111, Taiwan (R.O.C.)

No. 132, Sungte Rd., Hsinyi District, Taipei City 110, Taiwan (R.O.C.)

No. 249, Sec. 2, Chungcheng Rd., Shihlin District, Taipei City 111, Taiwan (R.O.C.)

No. 166-6, Kuangming Rd., Peitou District, Taipei City 112, Taiwan (R.O.C.)

1F., No.19-12, Sanchong Rd., Nankang District, Taipei City 115, Taiwan (R.O.C.)

No. 80, Sec. 2, Chunghsiao Rd., Sanchung District, New Taipei City 241, Taiwan (R.O.C.)

No. 400, Chungcheng N. Rd., Sanchung District, New Taipei City 241, Taiwan (R.O.C.)

No. 18, Sec. 2, Chunghsin Rd., Sanchung District, New Taipei City 241, Taiwan (R.O.C.)

No. 343, Chengyi N. Rd., Sanchung District, New Taipei City 241, Taiwan (R.O.C.)

No. 83, Sec. 4, Tzuchiang Rd., Sanchung District, New Taipei City 241, Taiwan (R.O.C.)

No. 44, Hsinhsing Rd., Sanchung District, New Taipei City 241, Taiwan (R.O.C.)

No. 527, Sec.5, Chunghsin Rd., Sanchung District, New Taipei City 241, Taiwan (R.O.C.)

No. 31-15, Mintsu Rd., Tanshui District, New Taipei City 251, Taiwan (R.O.C.)

No. 236, Minquan Rd., Jincheng Township, Kinmen County 893, Taiwan (R.O.C.)

No. 23, Fuchung Rd., Panchiao District, New Taipei City 220, Taiwan (R.O.C.)

No. 204, Lite St., Chungho District, New Taipei City 235, Taiwan (R.O.C.)

No. 147, Sec. 2, Chungshan Rd., Panchiao District, New Taipei City 220, Taiwan (R.O.C.)

No.198, Chongqing Rd., Panchiao Dist., New Taipei City 220, Taiwan (R.O.C.)

No. 82, Hsinhai Rd., Panchiao District, New Taipei City 220, Taiwan (R.O.C.)

No. 74, Sec. 2, Tuhsing Rd., Panchiao District, New Taipei City 220, Taiwan (R.O.C.)

No. 6-12, Sec. 2, Shuangshih Rd., Panchiao District, New Taipei City 22043, Taiwan (R.O.C.)

No. 186, Minchuan Rd., Panchiao District, New Taipei City 220, Taiwan (R.O.C.)

No. 533, Liencheng Rd., Chungho District, New Taipei City 235, Taiwan (R.O.C.)

No. 51, Chungcheng Rd., Yungho District, New Taipei City 234, Taiwan (R.O.C.)

No. 47, Sec. 2, Yungho Rd., Yungho District, New Taipei City 234, Taiwan (R.O.C.)

No. 1, Tate 1st Rd., Kangshan District, Kaohsiung City 820, Taiwan (R.O.C.)

No. 290, Chungcheng Rd., Hsintien District, New Taipei City 231, Taiwan (R.O.C.)

No. 260, Sec. 2, Peihsin Rd., Hsintien District, New Taipei City 231, Taiwan (R.O.C.)

No. 341, Chungcheng Rd., Hsinchuang District, New Taipei City 242, Taiwan (R.O.C.)

No. 399, Chungkang Rd., Hsinchuang District, New Taipei City 242, Taiwan (R.O.C.)

No. 61, Houkang 1st Rd., Hsinchuang District, New Taipei City 242, Taiwan (R.O.C.)

No. 540-1, Huacheng Rd., Hsinchuang District New Taipei City 242, Taiwan (R.O.C.)

No. 47, Minan E. Rd., Hsinchuang District, New Taipei City 242, Taiwan (R.O.C.)

No. 229, Hsintai Rd., Hsinchuang District, New Taipei City 242, Taiwan (R.O.C.)

No. 223-6, Sec. 2, Chungyang Rd., Tucheng District, New Taipei City 236, Taiwan (R.O.C.)

No. 200-12, Sec. 3, Chincheng Rd., Tucheng District, New Taipei City 236, Taiwan (R.O.C.)

No. 124, Sec. 1, Hsuehfu Rd., Tucheng District, New Taipei City 236, Taiwan (R.O.C.)

No. 212, Chienkuo Rd., Yingke District, New Taipei City 239, Taiwan (R.O.C.)

No. 60, Sec. 2, Yingtao Rd., Yingke District, New Taipei City 239, Taiwan (R.O.C.)

No.508~510, Sec. 2, Datong Rd., Xizhi Dist., New Taipei City 221, Taiwan (R.O.C.)

No. 89, Chunghsing Rd., Hsichih District, New Taipei City 221, Taiwan (R.O.C.)

No. 288, Sec. 1, Chungshan Rd., Shulin District, New Taipei City 238, Taiwan (R.O.C.)

No. 61, Sanchun St., Shulin District, New Taipei City 238, Taiwan (R.O.C.)

No. 30, Sanmin Rd., Luchou District, New Taipei City 247, Taiwan (R.O.C.)

No. 203, Changan St., Luchou District, New Taipei City 247, Taiwan (R.O.C.)

No.1182, Sec. 4, Taiwan Blvd. Hsitun District, Taichung City 407, Taiwan (R.O.C.)

No. 84, Kungshang Rd., Wuku District, New Taipei City 248, Taiwan (R.O.C.)

5

9,922

8,348

1,029,885

770,309

1,266,443

78,251

1.42

14.53

1.0683

For the year

Pretax income (include cumulative effect

of accounting changes)

Net income

At year-end

Deposits and remittances

Discounts and loans

Total assets

Shareholders' equity

Per share

Earnings per share

Shareholders' equity per share

Dividends declared per share

- Cash dividend

- Stock dividend

Note: US dollar amounts are converted for convenience only at NT$29.953 per dollar, the prevailing rate on Dec. 31, 2013.

367.21

320.60

36,460.19

27,005.58

45,305.41

2,922.98

0.05

0.49

-

-

10,999

9,603

1,092,092

808,898

1,357,033

87,552

1.61

14.69

-

-

(In millions, except per share data) 2013NT$

2012NT$

2013US$ (Note)

Dep. / Branch Name Address Telephone No.

Taishan Bran

Shenkeng Branch

Tanshui Branch

Keelung Branch

Chunan Branch

Lotung Branch

Yilan Branch

Taoyuan Branch

North Taoyuan Branch

South Taoyuan Branch

Linkou Branch

Nankan Branch

Chungli Branch

Neili Branch

Tayuan Branch

Hsinchu Branch

Chuke Branch

Kuanghua Branch

Chupei Kuangming Branch

Hsinkung Branch

Taichung Branch

North Taichung Branch

South Taichung Branch

Hsitun Branch

Fengyuan Branch

Changhua Branch

Yuanlin Branch

Chiayi Branch

Tainan Branch

East Tainan Branch

North Tainan Branch

Yungkang Branch

Kaohsiung Branch

Sanmin Branch

North Kaohsiung Branch

South Kaohsiung Branch

Lingya Branch

Fengshan Branch

Pingtung Branch

Los Angeles Branch

Hong Kong Branch

Kowloon Branch

Macau Branch

Vietnam Representative Office

Nanjing Representative Office

(02)2903-0903

(02)2664-2626

(02)2622-1788

(02)2423-1161

(037)47-9898

(039)545-421

(039)324-511

(03)333-9000

(03)317-8889

(03)369-2727

(03)397-5888

(03)321-4126

(03)427-8988

(03)435-8888

(03)384-0688

(03)572-8866

(03)564-5555

(03)535-6688

(03)553-0000

(03)597-2277

(04)2220-5766

(04)2293-8101

(04)2323-2468

(04)2255-9988

(04)2520-8966

(04)726-3111

(04)837-8068

(05)235-7888

(06)223-2888

(06)200-5566

(06)282-3888

(06)202-8599

(07)224-3733

(07)392-8988

(07)557-5888

(07)535-1111

(07)725-6101

(07)710-8866

(08)732-3322

1-213-437-4800

852-2801-2801

852-3655-8688

853-2871-5175

84-8-3825-7612

86-25-8321-9688

No. 416, Sec. 2, Mingchih Rd., Taishan District g, New Taipei City 243, Taiwan (R.O.C.)

No. 156, Sec. 3, Peishen Rd., Shenkeng District, New Taipei City 222, Taiwan (R.O.C.)

No. 77, Sec. 1, Chungshan N. Rd., Tanshui District, New Taipei City 251, Taiwan (R.O.C.)

No. 2, Yi 1st Rd., Chungcheng District, Keelung City 202, Taiwan (R.O.C.)

No. 157, Kuangfu Rd., Chunan Town, Miaoli County 350, Taiwan (R.O.C.)

No. 205, Chungcheng Rd., Lotung Town, Yilan County 265, Taiwan (R.O.C.)

No. 33, Sec. 3, Chungshan Rd., Yilan City, Yilan County 260, Taiwan (R.O.C.)

1-2F., No.51-1/ 1-3F., No.51, Fuxing Rd., Taoyuan City, Taoyuan County 330, Taiwan (R.O.C.)

No. 656, Chunjih Rd., Taoyuan City, Taoyuan County 330, Taiwan (R.O.C.)

No. 839, Chungshan Rd., Taoyuan City, Taoyuan County 330, Taiwan (R.O.C.)

No. 53, Wenhua 1st Rd., Kueishan Hsiang, Taoyuan County 333, Taiwan (R.O.C.)

No. 310, Chungcheng Rd., Luchu Hsiang, Taoyuan County 338, Taiwan (R.O.C.)

No. 160, Tzuhui 3rd St., Chungli City, Taoyuan County 320, Taiwan (R.O.C.)

No. 321, Huanchung E. Rd., Chungli City, Taoyuan County 320, Taiwan (R.O.C.)

No. 1, Lane 100 ,Chungshan N. Rd. , Tayuan Hsiang , Taoyuan County 337, Taiwan (R.O.C.)

No. 295, Sec. 2, Kuangfu Rd., Hsinchu City 300, Taiwan (R.O.C.)


No. 528, Sec. 1, Jingguo Rd., East Dist., Hsinchu City 300, Taiwan (R.O.C.)

No. 87-6,Kuangming 6th Rd.,Chupei City, Hsinchu County 30268, Taiwan (R.O.C.)

No. 22, Chunghua Rd., Fengshan Village, Hukou Hsiang , Hsinchu County 30353, Taiwan (R.O.C.)

No. 101, Sec. 1, Tzuyu Rd., West District, Taichung City 403, Taiwan (R.O.C.)

No. 1027, Sec. 3, Wenhsin Rd., Peitun District, Taichung City 406, Taiwan (R.O.C.)

No. 66, Sec. 2, Kungyi Rd., Nantun District, Taichung City 408, Taiwan (R.O.C.)

No.10, Sec. 3, Huichung Rd., Nantun District, Taichung City 408, Taiwan (R.O.C.)

No. 245 , Chungcheng Rd., Fengyuan District, Taichung City 420, Taiwan (R.O.C.)

No. 317, Mintsu Rd., Changhua City, Changhua County 500, Taiwan (R.O.C.)

No. 51, Sec. 2 , Chungshan Rd., Yuanlin Town, Changhua County 510, Taiwan (R.O.C.)

No. 338, Hsingyeh W. Rd., Chiayi City 600, Taiwan (R.O.C.)

No. 114, Sec. 2, Chienkang Rd., South District, Tainan City 702, Taiwan (R.O.C.)

No. 163, Sec. 2, Changjung Rd., East District, Tainan City 701, Taiwan (R.O.C.)

No. 480, Sec. 4, Hsimen Rd., North District, Tainan City 704, Taiwan (R.O.C.)

No. 725, Chunghua Rd., Yungkang District, Tainan City 710, Taiwan (R.O.C.)

No. 143, Chungcheng 2nd Rd., Lingya District, Kaohsiung City 802, Taiwan (R.O.C.)

No. 78, Mintsu 1st Rd., Sanmin District, Kaohsiung City 807, Taiwan (R.O.C.)

No. 441, Yucheng Rd., Tsoying District, Kaohsiung City 813, Taiwan (R.O.C.)

No. 100, Chunghua 4th Rd., Lingya District, Kaohsiung City 802, Taiwan (R.O.C.)

No. 90, Chienkuo 1st Rd., Lingya District, Kaohsiung City 802, Taiwan (R.O.C.)

No. 366, Kuangyuan Rd., Fengshan District, Kaohsiung City 830, Taiwan (R.O.C.)

No. 14, Fuhsing N. Rd., Pingtung City, Pingtung County 900, Taiwan (R.O.C.)

Wells Fargo Center-South Tower 355 South Grand Avenue, Suite 4168, Los Angeles, California, USA.

26F, Central Touer, 28 Queen's Rd Central, Hong Kong

18F, One Peking, 1 Peking Rd., Tsim Sha Tsui, Kowloon, Hong Kong

9F, Avenida Doutor Mario Soares, Finance and IT Center of Macao, Macau

Saigon Riverside Office Building, 17F, 2A-4A Ton Duc Thang Street, District 1, Ho Chi Minh City, Vietnam

No.4108 , 41F , Nanjing SunnyWorld Center , 188 Lushan Road, Jianye District , Nanjing, P.R.C.

6

Taishan Bran

Shenkeng Branch

Tanshui Branch

Keelung Branch

Chunan Branch

Lotung Branch

Yilan Branch

Taoyuan Branch

North Taoyuan Branch

South Taoyuan Branch

Linkou Branch

Nankan Branch

Chungli Branch

Neili Branch

Tayuan Branch

Hsinchu Branch

Chuke Branch

Kuanghua Branch

Chupei Kuangming Branch

Hsinkung Branch

Taichung Branch

North Taichung Branch

South Taichung Branch

Hsitun Branch

Fengyuan Branch

Changhua Branch

Yuanlin Branch

Chiayi Branch

Tainan Branch

East Tainan Branch

North Tainan Branch

Yungkang Branch

Kaohsiung Branch

Sanmin Branch

North Kaohsiung Branch

South Kaohsiung Branch

Lingya Branch

Fengshan Branch

Pingtung Branch

Los Angeles Branch

Hong Kong Branch

Kowloon Branch

Macau Branch



(02)2903-0903

(02)2664-2626

(02)2622-1788

(02)2423-1161

(037)47-9898

(039)545-421

(039)324-511

(03)333-9000

(03)317-8889

(03)369-2727

(03)397-5888

(03)321-4126

(03)427-8988

(03)435-8888

(03)384-0688

(03)572-8866

(03)564-5555

(03)535-6688

(03)553-0000

(03)597-2277

(04)2220-5766

(04)2293-8101

(04)2323-2468

(04)2255-9988

(04)2520-8966

(04)726-3111

(04)837-8068

(05)235-7888

(06)223-2888

(06)200-5566

(06)282-3888

(06)202-8599

(07)224-3733

(07)392-8988

(07)557-5888

(07)535-1111

(07)725-6101

(07)710-8866

(08)732-3322

1-213-437-4800

852-2801-2801

852-3655-8688

853-2871-5175

84-8-3825-7612

86-25-8321-9688

No. 416, Sec. 2, Mingchih Rd., Taishan District g, New Taipei City 243, Taiwan (R.O.C.)

No. 156, Sec. 3, Peishen Rd., Shenkeng District, New Taipei City 222, Taiwan (R.O.C.)

No. 77, Sec. 1, Chungshan N. Rd., Tanshui District, New Taipei City 251, Taiwan (R.O.C.)

No. 2, Yi 1st Rd., Chungcheng District, Keelung City 202, Taiwan (R.O.C.)

No. 157, Kuangfu Rd., Chunan Town, Miaoli County 350, Taiwan (R.O.C.)

No. 205, Chungcheng Rd., Lotung Town, Yilan County 265, Taiwan (R.O.C.)

No. 33, Sec. 3, Chungshan Rd., Yilan City, Yilan County 260, Taiwan (R.O.C.)

1-2F., No.51-1/ 1-3F., No.51, Fuxing Rd., Taoyuan City, Taoyuan County 330, Taiwan (R.O.C.)

No. 656, Chunjih Rd., Taoyuan City, Taoyuan County 330, Taiwan (R.O.C.)

No. 839, Chungshan Rd., Taoyuan City, Taoyuan County 330, Taiwan (R.O.C.)

No. 53, Wenhua 1st Rd., Kueishan Hsiang, Taoyuan County 333, Taiwan (R.O.C.)

No. 310, Chungcheng Rd., Luchu Hsiang, Taoyuan County 338, Taiwan (R.O.C.)

No. 160, Tzuhui 3rd St., Chungli City, Taoyuan County 320, Taiwan (R.O.C.)

No. 321, Huanchung E. Rd., Chungli City, Taoyuan County 320, Taiwan (R.O.C.)

No. 1, Lane 100 ,Chungshan N. Rd. , Tayuan Hsiang , Taoyuan County 337, Taiwan (R.O.C.)



No. 528, Sec. 1, Jingguo Rd., East Dist., Hsinchu City 300, Taiwan (R.O.C.)

No. 87-6,Kuangming 6th Rd.,Chupei City, Hsinchu County 30268, Taiwan (R.O.C.)

No. 22, Chunghua Rd., Fengshan Village, Hukou Hsiang , Hsinchu County 30353, Taiwan (R.O.C.)

No. 101, Sec. 1, Tzuyu Rd., West District, Taichung City 403, Taiwan (R.O.C.)

No. 1027, Sec. 3, Wenhsin Rd., Peitun District, Taichung City 406, Taiwan (R.O.C.)

No. 66, Sec. 2, Kungyi Rd., Nantun District, Taichung City 408, Taiwan (R.O.C.)

No.10, Sec. 3, Huichung Rd., Nantun District, Taichung City 408, Taiwan (R.O.C.)

No. 245 , Chungcheng Rd., Fengyuan District, Taichung City 420, Taiwan (R.O.C.)

No. 317, Mintsu Rd., Changhua City, Changhua County 500, Taiwan (R.O.C.)

No. 51, Sec. 2 , Chungshan Rd., Yuanlin Town, Changhua County 510, Taiwan (R.O.C.)

No. 338, Hsingyeh W. Rd., Chiayi City 600, Taiwan (R.O.C.)

No. 114, Sec. 2, Chienkang Rd., South District, Tainan City 702, Taiwan (R.O.C.)

No. 163, Sec. 2, Changjung Rd., East District, Tainan City 701, Taiwan (R.O.C.)

No. 480, Sec. 4, Hsimen Rd., North District, Tainan City 704, Taiwan (R.O.C.)

No. 725, Chunghua Rd., Yungkang District, Tainan City 710, Taiwan (R.O.C.)

No. 143, Chungcheng 2nd Rd., Lingya District, Kaohsiung City 802, Taiwan (R.O.C.)

No. 78, Mintsu 1st Rd., Sanmin District, Kaohsiung City 807, Taiwan (R.O.C.)

No. 441, Yucheng Rd., Tsoying District, Kaohsiung City 813, Taiwan (R.O.C.)

No. 100, Chunghua 4th Rd., Lingya District, Kaohsiung City 802, Taiwan (R.O.C.)

No. 90, Chienkuo 1st Rd., Lingya District, Kaohsiung City 802, Taiwan (R.O.C.)

No. 366, Kuangyuan Rd., Fengshan District, Kaohsiung City 830, Taiwan (R.O.C.)

No. 14, Fuhsing N. Rd., Pingtung City, Pingtung County 900, Taiwan (R.O.C.)

Wells Fargo Center-South Tower 355 South Grand Avenue, Suite 4168, Los Angeles, California, USA.

26F, Central Touer, 28 Queen's Rd Central, Hong Kong

18F, One Peking, 1 Peking Rd., Tsim Sha Tsui, Kowloon, Hong Kong

9F, Avenida Doutor Mario Soares, Finance and IT Center of Macao, Macau

Saigon Riverside Office Building, 17F, 2A-4A Ton Duc Thang Street, District 1, Ho Chi Minh City, Vietnam

No.4108 , 41F , Nanjing SunnyWorld Center , 188 Lushan Road, Jianye District , Nanjing, P.R.C.

9,922

8,348

1,029,885

770,309

1,266,443

78,251

1.42

14.53

1.0683

For the year

Pretax income (include cumulative effect

of accounting changes)

Net income

At year-end


Discounts and loans

Total assets

Shareholders' equity

Per share

Earnings per share

Shareholders' equity per share

Dividends declared per share

- Cash dividend

- Stock dividend

Note: US dollar amounts are converted for convenience only at NT$29.953 per dollar, the prevailing rate on Dec. 31, 2013.

367.21

320.60

36,460.19

27,005.58

45,305.41

2,922.98

0.05

0.49

-

-

10,999

9,603

1,092,092

808,898

1,357,033

87,552

1.61

14.69

-

-

(In millions, except per share data) 2013NT$

2012NT$

2013US$ (Note)

Dep. / Branch Name Address Telephone No.

7

8

bank.sinopac.com

Concern over the Fed's QE tapering weighed heavily on the world economy and global markets in 2013. At the beginning of the year, the U.S. fiscal cliff was averted thanks to a compromise between the administrative and legislative branches. The U.S. economy thus warded off what might have been a devastating blow and headed for a more promising recovery. Despite subsequent budgetary bickering, U.S. equities rallied to new highs and pushed the DJIA beyond 16,000. Thanks to the Abe administration's "three-arrow" initiative, the Japanese economy gradually turned for the better as core inflation accelerated to a 1.3% increase and the yen slid to 105 versus the dollar. In the euro zone, the outright monetary transactions (OMT) initiative proved effective in restoring market confidence and easing the sovereign debt crisis. GDP returned to growth track from the second quarter, ending six consecutive quarters of contraction. With President Xi Jinping and Premier Li Keqiang at the helm, China shifted gears to "adjust the structure and stabilize economic growth." The economy thus grew at a slower pace of 7.7% in 2013. For its part, Taiwan saw exports losing steam as China was proactive to nurture its own supply chains and Korea sped up its forging of free trade agreements with trading partners. Meanwhile, stagnant wages and excessive mortgages kept a lid on private consumption. GDP grew a mere 2.11%.

In 2013, Bank SinoPac recorded consolidated net profit of NT$9.6 billion, up 15% from a year earlier. Pretax and after-tax earnings per share came in at NT$1.85 and NT$1.61 respectively, up by NT$0.17 and NT$0.19. The ROE for 2013 topped 11.58%. As of the end of 2013, the Bank had assets totaling NT$1,357 billion and posted a capital adequacy ratio of 12.45%; both tallies were calculated on a consolidated basis. With shareholders' equity in excess of NT$87.6 billion, it registered a NT$1,091.4 billion outstanding balance of deposits and NT$818.3 billion of loans.

At the end of 2013, the outstanding balance of corporate loans and credit business was NT$436.8 billion. Of the total, some 44.29% was extended in foreign currencies, reflecting a substantial increase in overseas lending. In addition, the volume of factoring was NT$108.7 billion, and the volume of foreign exchange was US$189.5 billion, both account for significant market share among the banking industry in Taiwan. At the end of 2013, the outstanding balance of SME loan was over NT$122.2 billion, an increase of 8% from the end of 2012. The market share ranked 4th among domestic private banks. Meanwhile, the Bank secured loan guarantees for a total of NT$95.4 billion from the "Small and Medium Enterprises Credit Guarantee Fund of Taiwan, SMEG". Credit Guarantee Fund, up to 20% over last year, ranked 2nd among domestic private banks. In 2013, the Financial Supervisory Commission accorded Bank SinoPac a special award for balancing regional development by contributing to the "Project for Strengthening Domestic Bank Lending to SMEs-the seventh phase". In turn, the Bank's Kinmen Branch was permitted to be upgraded to a full function branch in June. Attesting to its competence in putting together syndicated loans and providing customers with long-term financing, the Bank acted as lead arranger and facility agent of

syndicated loans to a number of local companies. Alongside its expansion of overseas business territory, Bank SinoPac has brought its fully integrated cross-border banking services network to many corners of the world where there are gathering Taiwanese-invested enterprises. While Taiwanese-invested enterprises have been building supply chains all over the world, the Bank also draws on the Factors Chain International (FCI) platform and Factoring by Insurance (FBI) products to bring down its risks and costs for delivering such services overseas. In the days ahead, it is ready to further consolidate resources, make inroads domestically and internationally, and build better-rounded platforms, thereby making an international bank capable of cross-border services.

A good number of negative developments impacted on Taiwan's property market in 2013. High on the list were concerns over QE tapering and capital flight from emerging markets. But realty prices continued upwards against an increase in transaction volumes thanks to the government's introducing public works projects (such as the Taoyuan Aerotropolis project) and interest rates holding steady. Moreover, the competent authority continued selective credit control over mortgage loans secured by the property either located in the specific regions or at high-prices. Under such circumstances, Bank SinoPac stood by its pursuit of sustainable growth as it placed emphasis on optimal resource allocation. Priority was given to seeking out premium clients; a risk-grading approach was adopted, alone with the comprehensive credit processing policies and post-lending management. Eventually, the Bank attracted a greater number of target clients as the result. On top of keeping up assets quality, it was able to appeal to the high net worth or ultra high net worth individuals whom the Bank would like to build up long-term relationship with. As of the end of 2013, Bank SinoPac posted an outstanding NT$362 billion of mortgage loans. For the sake of effectiveness, the Bank will continue adopting a systematic approach toward pre-lending evaluation and post-lending management to fine out premium mortgage clients so as to maintain the excellent assets quality of personal loans.

In terms of wealth management, Bank SinoPac posted an outstanding balance of NT$116 billion in funds placed under non-discretionary money trust and channeled toward domestic and overseas

securities at the end of 2013. At the same time, the Bank's trust department had NT$31.6 billion under trust (including realty trust, employee stock and savings trust and securities trust). As the custodian bank for securities investment and trust companies that deal in mutual fund businesses in Taiwan as well as other entities, Bank SinoPac had NT$157.6 billion under its custody at the end of 2013. In terms of bancassurance, the Bank took in premiums totaling NT$23.2 billion last year. In 2013, Bank SinoPac persisted with product and service innovation to better meet customer needs. In the highlight were the introduction of investment portfolio instruments; the launch of mobile banking for trading mutual funds; launch of trust services for advance receipts for electronic coupons and for escrow from real estate management companies; introduction of RMB investment products and the related platform; and strengthening of various trading systems and putting them to better use, thereby enhancing customer convenience. In the days ahead, the Bank will continue developing unsophisticated, transparent products that strike a balance between customer needs and risk tolerance. Equal emphasis will be placed on differentiation as the Bank aims for a trustworthy wealth management bank that has a complete range of quality products and services to offer.

On the financial markets front, the Bank provides clients with hedging services, financial exercises, and investment instruments and consultation as well as undertakes proprietary trading. Always an avid market participant in Taiwan and across Asia, Bank SinoPac has built a solid track record particularly in the forex and derivatives arenas. In fact, it ranks as a leading market maker in Taiwan for RMB trading and foreign exchange options for major currencies. In Taiwan's banking community, it is also a leading player in terms of derivatives trading. Moreover, the Bank's overseas platform for financial trading is positioned as a center for trading Asian currencies and their derivatives as well as a base for Taiwanese businesses to conduct offshore allocations of their capital. Taiwanese companies that operate across the Taiwan Strait are thus accorded better-rounded cash flow services. When it comes to soliciting institutional clients, priority is given to meeting their cash flow and hedging needs. Earnings on this front in 2013 far exceeded the Bank's own target as its bolstering the function of retail outlets, deepening customer relations and installing full function branches paid off as well.

Separately, Bank SinoPac is ready to further expand RMB services and set up a mainland Chinese subsidiary in Nanjing. It will pay special attention to developing RMB-related investment and hedging products so that customers can share in the rapidly growing RMB market in a timely fashion. Above all, local customers will be provided with a greater variety of financial markets products and services. In the days ahead, the Bank is set to develop even more customer-oriented product combinations in order to meet all kinds of customer needs for hedging and investment.

In addition to deepening relations with existing consumer banking customers in 2013, the Bank introduced Me Card in a bid to appeal to young women while continuing to consolidate its cardholder base. Cardholder spending and the Bank's fee income both rose accordingly: cardholder spending grew 3%

Chairman / CHIU Cheng Hsiung


9

bank.sinopac.com

from a year earlier and fee income, 4%. To enhance both investment returns and operating efficiency, the Bank was proactive to retire cards that had been left idle for protracted periods. As of the end of 2013, its outstanding balance of credit cards in circulation exceeded 2.13 million, down 5% from the year before and ranking 7th in the local market. As of the end of 2013, the outstanding balance of credit card accounts receivable came in at NT$16.7 billion. Earnings from this line of business held steady thanks to reasonably sound asset quality and default charges kept at a relative low. The Bank's acquiring services brought in NT$37 billion in 2013, a jump of 44% from the prior year. This could be attributed to the Bank's signing up more authorized shops and starting to serve as an acquiring bank for UnionPay. Separately, the unsecured loan business also enjoyed a relatively smooth year in 2013. Coupled with promotional campaigns designed to meet seasonal demand, the end-2013 outstanding balance of unsecured loans rose 26% from a year earlier to NT$15.2 billion. Meanwhile, the Bank's earnings capacity for this line of business also improved further thanks to well-rounded control of asset quality and progress in NPL collections.

Bank SinoPac has 129 domestic branches (including Banking Division) of which 90 are located at greater Taipei area while Kinmen Branch covers the business on the west side of the Taiwan Strait. As a part of its global deployment, 3 banking locations in Hong Kong, Kowloon, and Macau were established. The new subsidiary established in Nanjing on the mainland this year is the latest addition to the Bank's cross-strait financial platform. Together with a total of 17 outposts around the Pacific Rim, including those in California and Vietnam, they form a comprehensive, powerful service network. Outside Greater Taipei, Bank SinoPac has also been actively expanding its service network across major metropolitan areas in central and southern Taiwan.

Bank SinoPac has developed customer-oriented platform, "MMA Internet Banking" and "SinoPac Mobile Banking" to deliver the most friendly electronic financial services and products in regards of virtual channels. Breaking the barriers of time and space, SinoPac provides customer with integrated investment channels, convenient trading services and complete financial market information accessible anytime anywhere. In 2013, SinoPac launched "FUN CASHIER" - a service created to provide convenient e-commerce money collection and payment, a mobile version was launched later in the year and was one of the first in the local market to provide a mobile version. Furthermore, SinoPac is proactive in supporting government policies such as "Project Hope for SMEs, Central and Southern Regions, Medium-and Low-Income Families, and Youth". With the characteristic of low entry barriers, convenient and low cost, "FUN CASHIER" plays a role in assisting SMEs to implement online payment and step foot into e-commerce. E-commerce market is expected to be developing rapidly, SinoPac will continue to develop a variety of electronic financial services and products to satisfy the needs of niche markets.

In 2013, Standard & Poor's gave Bank SinoPac a BBB long-term rating and A-2 short-term rating, with a stable outlook. For its part, Taiwan Ratings assigned the Bank ratings of twA+ and twA-1 respectively, also with a stable outlook. Alongside a stable outlook, Fitch Taiwan assigned Bank SinoPac a BBB Long Term Issuer Default Rating, F2 Short Term Issuer Default Rating, A+(twn) National Long Term Rating, and F1+(twn) National Short Term Rating.

To attain "customer preference, shareholder satisfaction, social respect and employee pride," Bank SinoPac has been undertaking a five-year restructuring program. Working on commodities, channels and operations at the same time, it seeks to consolidate product offerings and streamline operational procedures. Timely support is extended to retail channels so that customer needs can be fully met. In the spirit of innovation and cooperation, the Bank is also keen to consolidate the resources of other SinoPac Holdings affiliates by strengthening their collaboration in updating offerings. Emphasis is placed on bolstering the electronic banking platform in order to persuade customers that Bank SinoPac is indeed the most flexible and accessible financial partner in Greater China. With regards to cross-straits development, overseas expansion and capture of arising opportunities from internationalization of RMB, Bank SinoPac has set its business goal on three main focus, "new market, new currencies, and new channels" and made great achievement.The strategy has paid off. Following its launch of RMB services, Bank SinoPac soon pushed its outstanding balance of RMB deposits to over 10 billion RMB, a leading tally in the Taiwan market. In collaboration with its strategic partner Industrial and Commercial Bank of China (ICBC), the Bank launched the "Cross-Strait RMB Remittances in Chinese" service that features direct convertibility between simplified and traditional Chinese. On top of a substantial decrease in remittance errors, the service also saves both time and cost. Crafted for cross-border corporate accounts, "CPA+" is a global cash management service that enables customers to keep track of their liquidity by logging in the internet banking of either Bank SinoPac or ICBC. No matter wherever they may be, customers can thus always make sure that their capital is being put to optimal use. In addition, Bank SinoPac is not only acting as the market leader in RMB products, but also the first Taiwanese financial institution to receive Approval for banking business issued by the China Banking Regulatory Commission to set up a subsidiary, Bank SinoPac (China), Ltd., in Mainland China. In 2013, Bank SinoPac was singled out by The Asian Banker for "Best Mobile Banking in Taiwan". When Taiwan's Ministry of Economic Affairs presented its E-Golden Awards, Bank SinoPac walked away with the golden award for "Innovation in Adding Value to Mobile Services". Likewise, the Bank received the golden award for the financial industry when Taiwan's Commercial Times conducted an across-the-board evaluation of the local services industry.

Always committed to its corporate social responsibility, Bank SinoPac was an avid participant in local cultural events in 2013. For the fifth consecutive year, it sponsored the Children's Art Festival organized by the Department of Cultural Affairs, Taipei City Government; a unique wealth management gaming zone was designed to educate as well as entertain children. It also sponsored 27°C - Loaf Rock, a movie adapted from the life story of Wu Pao-chun, the master baker and homegrown hero who won the title of Bakery Master at the prestigious Bakery World Cup in Paris in 2010. Through its sponsorship of the Southern Shout Music Festival in Anping, Tainan City, the Bank was keen to have more young people hear the voices of their homeland and thus do a bit more for it. Moreover, Bank SinoPac also sponsored the making of a documentary on local sculptor Lee Chen by Discovery Taiwan in a bid to present to the world more artworks by ethnic Chinese artists. To be sure, the Bank is happy to honor its corporate social responsibility while doing its share to inspire more recognition and appreciation of Taiwan's culture and beauty.

Looking ahead, the banking industry must brace for more challenges. Always giving priority to customers, Bank SinoPac will continue striving to expand businesses and upgrade services both in scope and depth. Meanwhile, it will stand by its customer-oriented business model as it persists with product and service innovation. Also committed to sustainable development, the Bank is set to accelerate its push into the Greater China financial community, securing a strategic position therein. By delivering a full spectrum of localized financial services and managing customers effectively, it is confident of emerging as the No. 1 brand name for financial services across ethnic Chinese markets.

President / Tina CHIANG

CHIU Cheng HsiungChairman

Tina CHIANGPresident

10

bank.sinopac.com

I. IntroductionBank SinoPac is a wholly-owned subsidiary of SinoPac Holdings, and was formed in a merger between the former Bank SinoPac under SinoPac Holdings and the International Bank of Taipei on November 13, 2006. Bank SinoPac provides the best financial services and innovative product line to customers through its intensive branch networks. With the pillars of New Currency, New Market, and New Channel, the Bank can realize its vision of building a company that embraces" content shareholder, proud employees, happy customer and public respect".

International Bank of Taipei's predecessor was Taipei Mutual Loans and Savings Co., which was set up on May 4, 1948. Transformed into Taipei Business Bank in 1978, it was upgraded to a commercial bank under the name of International Bank of Taipei on May 14, 1998. The subsequent decades of evolution saw International Bank of Taipei focus on serving small and medium-sized enterprises and securing a solid customer base while taking the initiative to reinvent itself when warranted. On December 26, 2005, International Bank of Taipei was merged into SinoPac Holdings via a share swap and thus officially became the latter's wholly owned subsidiary.

Since its inception on January 28, 1992, Bank SinoPac has been devoted to product innovation and integration. Starting 2000, the Bank took the initiative to launch such niche offerings as Money Management Account®, B-to-B Pay-Web, e-Factoring, and Factoring by Insurance (FBI). These and other services form an efficient platform that allows customers to allocate their funds and manage their assets without any restrictions in time or geography. On May 9, 2002, Bank SinoPac, together with its subsidiary SinoPac Securities, merged with National Securities, thus giving birth to SinoPac Holdings. On June 20 of the same year, Bank SinoPac was made a wholly owned subsidiary of SinoPac Holdings.

On July 20, 2006, SinoPac Holdings changed its Chinese name into Yuen Foong (永豐). To better integrate banking resources and optimize their economies of scale, Bank SinoPac and International Bank of Taipei were merged as of November 13 of the same year, with the former as the surviving entity. Reengineering initiated subsequently, across the Bank's channels, products and operations, led to the establishment of a new network of full function branches. Further, the Bank undertook an across-the-board initiative to flatten the organization and reduce expenditure that proved effective in bringing down its overall cost structure.

As part of the SinoPac Group's organizational restructuring and adjustment in investment portfolios, Bank SinoPac completed the dissolution and liquidation of SinoPac Financial Consulting Co. on March 13, 2009. This was followed by Bank SinoPac's merger with SinoPac Card Services, another wholly owned subsidiary of SinoPac Holdings, on June 1 of the same year. Also with Bank SinoPac as the surviving entity, the exercise did not only raise the bank's BIS ratio but also help consolidate resources and enhance overall operational efficiency without undermining shareholders' interests. In a similar vein, Bank SinoPac sold its stake in SinoPac Leasing to its parent SinoPac Holdings on December 3, 2009 in a bid to help the SinoPac Group put its assets to better use and enhance its overall operational efficiency.

In December 2013, Bank SinoPac won China Banking Regulatory Commission approval for starting a wholly owned subsidiary in Nanjing. It is expected to operate in the first quarter of 2014. On top of its Nanjing subsidiary, domestic and offshore branches, Bank SinoPac will serve customers

Corporate Profile

11

bank.sinopac.com

December 31, 2013General Corporate Data

January 28, 1992

June 29, 1998

May 9, 2002

NT$87,552 million

NT$59,616 million

5,961.6 million

5,441

Deloitte Touche Tohmatsu

BBB

A-2

Stable

BBB

F2

Stable

twA+

twA-1

Stable

Date of incorporation:

Date of listing on Taiwan Stock Exchange:

Re-listing date of SinoPac Holdings:

Total shareholders' equity:

Paid-in capital:

Number of shares issued:

Number of employees:

Auditor:

S&P Ratings (Sep. 18, 2013)

Long-term issuer credit rating:

Short-term issuer credit rating:

Rating outlook:

Fitch Ratings (Oct. 9, 2013)

Long-term issuer default rating:

Short-term issuer default rating:

Rating outlook:

Taiwan Ratings (Sep. 18, 2013)

Long-term issuer credit rating:

Short-term issuer credit rating:

Rating outlook:

by teaming up with Industrial and Commercial Bank of China (ICBC), that owns more than 10,000 locations and nearly 400 branches around the world. By drawing on these shared advantages and synergies, Bank SinoPac is poised to establish the most flexible, accessible brand name for financial services in Greater China.

To enhance capital adequacy, the Bank issued two tranches of subordinated financial debentures in 2013 to raise NT$3.5 billion that serves as mid-to long-term funds for business expansion. Separately, the Bank disposed of a number of credit assets for the sake of asset revitalization.

At the end of 2013, Bank SinoPac and its subsidiaries employed over 5,500 people. With an organizational structure comprising 17 divisions and four offices, its paid-in capital and total assets came in at over NT$59.6 billion and NT$1,357 billion respectively. Alongside 129 domestic branches (including Banking Division), there are such overseas outlets as the Hong Kong Branch, Kowloon Branch, Macau Branch, Los Angeles Branch, representative office in Vietnam, as well as a representative office in Nanjing. Further, Bank SinoPac's California-based subsidiary Far East National Bank operates 9 U.S. branches, a branch in Ho Chi Minh City, Vietnam, and a representative office in Beijing. In the meantime, Bank SinoPac has also invested in other subsidiaries including SinoPac Capital (Hong Kong), SinoPac Life Insurance Agent and SinoPac Property Insurance Agent. Their division of labor is complemented by well-rounded collaboration across the board that enables the Bank to provide customers with a full spectrum of services.

12

Corporate Profile

Credit CommitteeCredit CommitteeGeneral Shareholder

Meeting Supervisors

Secretariat

Audit Division

President Office

Supervisors

Secretariat

Audit Division

President Office

Board of DirectorsChairman

President

General Shareholder Meeting

Board of DirectorsChairman

President

Risk Management Committee

Financial Markets Division

Consumer Banking Division

Retail Banking Division

Wealth Management Division

Corporate Banking Division

Integrated Marketing

Division

Finance Managem

entD

ivision

Overseas B

usiness D

ivision

OBU


Electronic Banking

Division

Risk M

anagement

Division

Legal & Compliance Division

I.T. Division

Human ResourcesDivision

AdministrationDivision

Operations Division


Los Angeles Branch

Macau Branch

Hong Kong BranchKowloon Branch

Banking Division

128 Branches (Taiwan)

Financial InstitutionDept.

International Dept.

Asset Liability Committee

Credit & InvestmentCommittee

Honor reward / PenaltyEvaluation Committee

Wealth ManagementRisk Committee

Wealth ManagementRisk Committee

Chief Executive ofFinancial Products

Chief Executive ofChannel

Channels GroupOffice

Chief Executive ofOperation

Operations Group Office

Products Group Office

Management Committee

Risk Management Committee

Asset Liability Committee

Credit & InvestmentCommittee

Honor reward / PenaltyEvaluation Committee

Management Committee

II. Organization(I) Organization Chart

February 28, 2014

13

bank.sinopac.com

(II) Board of Directors and Supervisors

February 28, 2014

＊ All directors and Supervisors are legal representatives of SinoPac Holdings.

Managing Director of SinoPac Holdings

Director of Far East National Bank

Chairman of SinoPac Bancorp

etc.

Chairman of SinoPac Holdings

Chairman of Bank SinoPac (China)

Director of YFY Biotechnology Management Co., Ltd.

Director of China Color Printing Co., Ltd.

Director of Shin-Yi Enterprise Co., Ltd.

etc.

Director of Taroko textile Co., Ltd.

Supervisor of Youth Development Foundation

Director of SinoPac Life Insurance Agent Co., Ltd.

Director of SinoPac Property Insurance Agent Co., Ltd.

Supervisor of Financial Information Service Co., Ltd.

Director of Bank SinoPac (China)

Chairman of Ever Trust Investment Co., Ltd.

etc.

Director of SinoPac Holdings

Chairman of SinoPac Leasing Corp.

President & Director of SinoPac Capital Ltd. (H.K.)

Director of SinoPac Capital (B.V.I.) Ltd.

etc.

Chief Strategy Officer and Chief Financial Officer of SinoPac Holdings

Director of SinoPac Securities Corp.

Supervisor of HYDIS Technologies Co., Ltd.

Supervisor of E Ink Holdings Inc.

Supervisor of Bank SinoPac (China)

etc.

Managing / Independent Director of SinoPac Holdings

Independent Director of Bank SinoPac

Supervisor of SinoPac Holdings

Independent Director of Mirle Automation etc.

Supervisor of E Ink Holdings Inc.

etc.

Supervisor of Y F Chemical Corp.

Director of Riken Taiwan Industrial Co., Ltd.

Title

Chairman

Director

Director

Director

Director

Director

Director

Independent

Director

Independent

Director

Supervisor

Supervisor

Name

CHIU Cheng-Hsiung

HO Show-Chung

LIEN Sheng-Wen

Tina CHIANG

LEE Liang-Chi

YU Kuo-Chi

Michael CHANG

MAI Chao-Cheng

James J. Sheu

Eli C. WANG

HO Tsung-Ta

Elected Date

2013.06.01

2013.06.01

2013.06.01

2013.06.01

2013.06.01

2013.06.01

2013.06.01

2013.06.01

2013.06.01

2013.06.01

2013.06.01

Positions Held Concurrently

14

● Tina CHIANG

President of Bank SinoPac● Lupe CHUANG

Executive Vice President● CHANG, Tse-Min

Executive Vice President● Jenny HUANG

Executive Vice President, Chief Secretary● Matt CHUANG

Senior Executive Vice President, Chief Executive of Channel● CHEN Chia-Hsing

Executive Vice President, Chief Executive of Operation● David HAN

Executive Vice President, Chief Executive of Financial Products, Head of Financial Markets Division● Melody WANG

Executive Vice President, Head of Finance Management Division● Benjamin TIEN

Executive Vice President, Head of Overseas Business Division● Brian LIN

Executive Vice President, Regional General Manager● Philip J.WEI

Executive Vice President, General Manager of Banking Division● Kim LIU

Executive Vice President● HSIEH Chun

Executive Vice President, Head of Corporate Banking Division● Jocelyn KUO

Executive Vice President, Head of Retail Banking Division, Head of Consumer Banking Division● Sam WANG

Chief Auditor

(III) Executive Officers

February 28, 2014

III. Human Resources

Number of staff

Average age

Average seniority

Education

Ph.D. degree

Master's degree

University and college

Junior college & others

Total

5,441

37.13

9.98

0.13%

17.55%

75.88%

6.44%

100.00%

4,985

37.54

10.77

0.12%

17.17%

75.25%

7.46%

100.00%

5,415

37.22

10.08

0.13%

17.36%

75.64%

6.87%

100.00%

2013 20122014/2/28Items

February 28, 2014Employee Statistics

Corporate Profile

15

bank.sinopac.com

I. Global Overview

(I) Overview of Major Markets for SinoPac Products and Services

SinoPac Holdings serves mainly the following Pan-Pacific markets: Taiwan, the U.S., mainland China, Hong

Kong, Macau and Vietnam. A summary of their respective economic conditions is as follows:

A. Taiwan

Taiwan's export orders picked up substantially in 2013 on the back of European and U.S. economic

recovery. Nevertheless, Taiwan's export industry did not benefit that much as 53% of those orders

were accounted for by offshore production. Taiwan's exports sustained an additional blow as China was

proactive to foster its own manufacturers and take over Taiwan's overseas markets. Meanwhile, local

people's income stalled and mortgages remained quite a burden, thus keeping a lid on private consumption.

Full-year GDP growth is 2.11%, up from 1.48% posted for 2012.

As Europe and the U.S. stay on track for recovery, Taiwan's exports are expected to sustain a boost in

2014. But any growth may prove far from dramatic due to ever-growing competition with China and

Korea. Taiwan's chronically low salaries are a structural problem and no immediate solution appears to

be in sight. Coupled with the drag of still high mortgages, private consumption is unlikely to pick up

significantly either. GDP is expected to grow 2.82% in 2014.

In terms of inflation, 2012 made a relatively high comparative base as a string of typhoons caused food

prices to surge and CPC Corp., the state-run oil company, raised gasoline prices in tandem with a global oil

runup. As such, the consumer price index rose a mere 0.83% in 2013, down from 1.93% in 2012. This was

the case even though 2013 saw two rounds of electricity rate hikes and CPC pushing gasoline prices even

higher. The prospect that the economy is expected to recover moderately in 2014 is also likely to induce

consumer prices to move higher. A 1.33% year-on-year increase is projected for the CPI in 2014.

Given a still fragile economy and muted inflation in 2013, Taiwan's central bank saw no room for rate

hikes and thus kept the discount rate intact at 1.875% throughout the year. While the reasons cited above

appear to remain valid this year, it is expected that the Fed will not resume rate hikes until 2015 at the

soonest. As such, the local central bank is expected to put the discount rate on hold all the way to the end

of 2014.

B. Mainland China, Hong Kong, and Macau

In late April 2013, China's State Administration of Foreign Exchange and other regulatory agencies began

taking measures to rectify irregularities in external trade. This led to an apparent softening in trade tallies

for the second and third quarters. In terms of domestic demand, production and investment expansion

slowed as manufacturers were still bogged down by outdated capacities and government intervention kept

a lid on the property market. The manufacturing sector did not record a conspicuous upturn in investment


16

and production until the fourth quarter as infrastructure projects sped up, industry upgrade gained

momentum, and authorities phased in power decentralization. Alongside a pickup in domestic demand

driven by retail sales during holidays, exports managed to return to growth track as the U.S. and Europe

gradually recovered and demand from ASEAN countries remained stable. As such, China's GDP grew 7.7%

in 2013, a bit higher than the official target of 7.5%. Growth in Hong Kong and Macau also accelerated.

Their GDP expanded 2.9% and 11.9% respectively in 2013, compared with 1.5% and 9.1% recorded for

the whole of 2012.

As far as monetary policy was concerned, the People's Bank of China resorted mainly to open market

operations in 2013. What was most noteworthy during the year was the liquidity shortage that hit the

banking system in mid-June and toward the end of December. Liquidity became so tight that Shanghai's

interbank rate jumped on both occasions. The rate did not retreat to former levels until the central bank

restored market order by injecting funds. A number of factors had contributed to this cash crunch. Besides

displacement of interbank loans, it was not uncommon for liquidity to tighten toward the end of a given

quarter when banks prepared for evaluation of their loan-deposit ratios. Moreover, Premier Li Keqiang

called for optimizing the allocation of banking resources and diverting credit lending to the real economy.

For its part, the PBOC did not aggressively respond initially as it considered liquidity in the banking

system to be at a reasonable level.

During the third Plenary Session of the 18th CPC Central Committee, the Beijing leadership outlined the

reforms it has in mind. Fundamentally the government is set to uphold economic stability as it pursues

reforms across the board. For its part, the Central Economic Work Conference reiterated the need to

adjust industry and investment structures and to prevent and control the risks of local debts and shadow

banking. None of these boded well for 2014 growth. On the bright side was the pledge by authorities to

expand investments in strategic, emerging industries; hasten urbanization of rural townships; and extend

credit lending to sustain crop production. As such, China's GDP should be able to hold steady and grow

7.3% in 2014. Hong Kong and Macau should be able to keep growing this year as well, with the former

expanding 3.6% and the latter maintaining double-digit growth. As far as China's monetary policy is

concerned, there is justification for worrying about a possible pickup in inflation due to further hikes

in food prices. All in all, however, the PBOC is expected to remain unfazed and persist with its neutral

monetary policy with a tight bias. And open market operations will remain its primary policy tool.

C. U.S.

In 2013, GDP growth slowed to 1.9% from 2.8% of the year before. Economic expansion was kept in

check by a number of factors that started with the fiscal cliff that threatened to increase tax rates and

decrease government spending.

The housing market, where the subprime mortgage crisis originated, appears poised to stay on growth


17

bank.sinopac.com

track in 2014 as U.S. median house prices and home sales both recovered handsomely last year. The

jobs market is equally promising. Given an average monthly increase of 194,000 nonfarm workers last

year, the U.S. should be able to bring down unemployment below the 7% mark this year, adding fuel to

a positive cycle of economic recovery. As the U.S. Congress already approved budget proposals for both

2014 and 2015, government shutdown is no longer an immediate concern. With fiscal uncertainty thus

curtailed, U.S. GDP growth is expected to accelerate to 2.7% in 2014.

Improving jobs market prospects prompted the Fed to announce in December 2013 that it would reduce

monthly bond purchases by US$10 billion to US$75 billion from January 2014. To minimize the impact

on a still vulnerable economy, the U.S. central bank stressed that it would proceed with its tapering of

asset purchases in gradual fashion. While QE is slated to draw to a complete stop at the end of 2014, the

Fed is expected to leave its benchmark rate at near zero throughout the year.

D. Vietnam

Banks' bad loans and capital deficiencies kept a lid on domestic consumption and private investment.

Yet, the economy was able to keep up growth momentum on the back of robust exports generated by

foreign-invested manufacturers that make value-added items like electronics and ICT products. Vietnam's

GDP grew 5.42% in 2013, up from 5.25% the year before. Its trade structure also improved further as

the country enjoyed a trade surplus for a second consecutive year. Thanks to falls in food prices and

slower rises in material prices, the CPI rose 6.5% in 2013, down from 9.2% in 2012. Inflation appeared

to be coming under control.

In 2014, Vietnam is expected to further benefit from its strategy of fostering economic growth by

drawing on foreign-invested ventures set up to make and export value-added items like electronics and

handsets. Separately, Hanoi has begun tackling banks' bad loans and revamping the financial system;

the initiative should prove conducive to economic growth. It is thus expected that Vietnam's 2014 GDP

growth should come in at 5.5% or so. On the other hand, the country's central bank is expected to bring

down interest rates even further with a view to stimulating domestic investment. As the global recovery

is also likely to push consumer prices even higher, Vietnam's CPI growth is expected to accelerate to

7.2% this year.

(II) Future Market Supply and Demand

Banks' lending business, policy sales by insurance firms and the size of trades done by brokerages for

customers have something in common. They are all dictated by the health of the economy. In an economic

boom, demand for seeking loans is strong as capital expenditure tends to rise. With ample cash on hand

and job security assured, people are easily motivated to buy their first insurance policy or add to existing

ones. With the bull charging, investors must find it irresistible to join the party as well. In all these

rosy scenarios, it is not surprising for banks, insurers and brokerages to benefit and generate handsome

18

earnings. Conversely, in the event of economic contraction or even recession, financial institutions often

must brace for lackluster earnings or even major losses if they have to come to terms with bad loans and

misguided investments. As noted above, economic prospects determine if financial institutions can grow

earnings or must suffer losses. The past three decades have seen the Taiwan economy undergo a structural

overhaul. In 2013, exports accounted for 65% of its GDP, up from 30% in the early days. That is to say,

the economic health of its major trading partners now weighs heavily on its own economic health. Its top

three trading partners are mainland China (Hong Kong included), Europe and the U.S. To be sure, local

banks' lending business is predominantly linked to GDP growth or contraction. While Taiwan's official

projection is for GDP to grow 2.82% in 2014, domestic banks are thus expected to see their loans increase

3%-5% this year.

Year

(%)(%) Annual Growth Rate of Real GDP (L) Annual Growth Rate of Loans and Investment (R)

14

11

8

5

2

-1

-4

-7

-10

10

8

6

4

2

0

-2

-4

-62000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Source: TEJ; Compiled by SinoPac HoldingsAnnual Growth Rates of GDP, Loans and Investments

In September 2011, Taiwan's central bank decided to put its benchmark rate on hold amid a softening

global economy and subdued inflationary expectations. As of the end of 2013, it had maintained this stop

mode for ten consecutive rate-setting meetings. Despite its refraining from rate hikes, domestic banks

managed to adjust their lending structure and sustain a widening interest spread in 2013. The spread

widened from 1.42 percentage points in the first quarter to 1.43 percentage points in the fourth quarter.

As 2014 unfolds, the Fed already began cutting back on its QE program. The Fed, however, also made

it clear that an interest rate hike is not forthcoming even though U.S. unemployment drops below 6.5%.

It is widely believed that the Fed is unlikely to resume rate hikes until 2015. Thus, chances are low for

Taiwan's central bank to go its own way and switch to rate hike mode this year.


19

bank.sinopac.com

(III) Positive and Negative Factors for Future Development

A. Positive Factors

1. Taiwanese banks making headway in mainland China

Although the Cross-Strait Agreement on Trade in Services is being stalled at Taiwan's parliament,

mainland Chinese authorities have offered selective opening to Taiwanese banks. The mainland

branches of six of them—Chang Hwa Bank, Cathay United Bank, Taiwan Cooperative Bank, Hua Nan

Commercial Bank, First Commercial Bank, and Land Bank of Taiwan—celebrated their respective second

anniversaries last year. Besides being granted a full license for the first branch to deal in RMB services,

each of the six won China Banking Regulatory Commission approval at the end of October 2013 to set

up a second branch. When it comes to mainland subsidiaries, Bank SinoPac secured mainland China's

regulatory approval in July 2013 to start one in Nanjing, the first to be set up by any Taiwanese bank.

Slated to open in the first quarter of 2014, Bank SinoPac's Nanjing subsidiary will be a historically

charged symbol that ushers in a new era for cross-strait financial cooperation.

2. Taiwanese financial holding companies incentivized to set up leasing ventures in mainland China

Like other foreign-invested ventures regulated by mainland China's Ministry of Commerce, financial

leasing firms started by Taiwan's financial institutions are permitted to deal in RMB financing. This

explains why the mainland has seen a booming of financial leasing ventures established by Taiwan's

financial holding companies. By contrast, the mainland branches of Taiwanese banks are prohibited from

extending RMB loans in their first year. Only after the first year has run its course can they apply to

the China Banking Regulatory Commission for a permit to start extending RMB loans.

Deposit Rate (L) Loan Rate (L) Nominal Spread (R)

Year

(%)(%)

4

3

2

1

0

12

9

6

3

01991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013

Source: TEJ; Compiled by SinoPac HoldingsNominal Interest Spread

20

3. Mainland banks' issuing Formosa bonds conducive to Taiwan's emergence as a RMB offshore center

Taiwan's DBUs saw their RMB deposits exceed the 100 billion mark in October 2013. To help domestic

banks dispose of their growing pool of RMB deposits, the Financial Supervisory Commission announced

on November 27 of the same year that three kinds of mainland Chinese entities would be permitted to

issue Formosa bonds: 1) mainland Chinese banks and their overseas branches or subsidiaries; 2) mainland

subsidiaries of Taiwanese banks; 3) mainland subsidiaries of Taiwanese listed companies. The opening

saw China's big four banks issue 6.7 billion RMB of Formosa bonds with maturities of two to five years

and coupons of 3.15%-3.70%. Coupled with 3.9 billion RMB in issuances before mainland Chinese issuers

were permitted, Taiwan has ushered in a total of 10.6 billion RMB in Formosa bond issuances to date. If

deregulation is effected for mainland Chinese companies to become Formosa bond issuers as well, there

is good reason to believe that Taiwan's RMB deposits will expand even further from the current level of

over 180 billion RMB. In turn, Taiwan can expect to emerge as a RMB offshore center.

4. Taiwanese banks' domestic branches launching RMB services

After both sides of the Taiwan Strait agreed on currency settlement, Taiwanese banks are now permitted

to engage in RMB deposits and loans, RMB-denominated foreign securities (overseas bonds and ETFs),

structured commodities, derivatives, etc. Deregulation is still pending for RMB-denominated mutual

funds and insurance products. In this regard, priority should be given to the following: 1) allowing local

securities investment trust companies to launch RMB-denominated mutual funds; 2) giving the green

light to RMB-denominated structured products; 3) allowing local insurance companies to offer RMB

policies.

5. Taiwanese brokerages making inroads overseas

In 2014, the Financial Supervisory Commission is scheduled to begin taking applications for launching

offshore securities unit operations. Qualified securities houses with net worth of NT$4 billion or more

can seek OSU status to undertake brokerage, underwriting and proprietary trading operations. Wealth

management, however, will be a line of business reserved for brokerages with net worth of over NT$10

billion. For years Taiwan's securities houses have sustained an outflow of high-asset customers due to

taxation and investment restrictions. OSUs cannot only expect to entice those who have opened overseas

accounts to return home but also make inroads into overseas wealth management markets. Separately,

Taiwan's securities houses are now permitted to set up only representative offices in mainland China.

But this is going to change. In 2013, Taiwan's Securities and Futures Bureau and the China Securities

Regulatory Commission agreed to the following: 1) Taiwanese securities houses will be allowed to

establish a full-license brokerage in Shanghai, Shenzhen and Fujian, respectively, of which they can own

up to 51%. Moreover, they will be permitted to seek mainland partners outside the securities industry.

2) With their holdings capped at 49%, Taiwanese securities houses will also be allowed to establish full-


21

bank.sinopac.com

license brokerages in the Haixi, Wenzhou, Qianhai (Shenzhen), Pudong (Shanghai), Binhai (Tianjin) and

Liangjiang (Chongqing) special economic zones. As they can partner with more than one shareholder,

Taiwanese investors will be able to retain control of such joint ventures. In other words, local brokerages

can apply to start joint ventures and offer A-share services on the mainland after the Cross-Strait

Agreement on Trade in Services wins parliamentary approval in Taiwan, thereby ending a decade-long

wait.

B. Negative Factors

1. Banks still bothered by excess liquidity

Starting in 2002, Taiwan's banking industry found it increasingly difficult to put its capital to effective

use. Between 2002 and 2008, banks' deposit-loan ratio came in at 79-83%. It went down to a near

record low of 75% in 2009 before recovering to about 76% in 2013. Despite the launch of China

branches by local banks, excess liquidity is set to remain a headache for Taiwan's banking industry in

the foreseeable future.

2. Stricter loan loss provision regulations bad for earnings

In mid-2011, Taiwan's regulatory authority asked banks to phase in higher loan loss provisions. That

is, loan loss provisions were required to exceed a certain percentage of total loans in order to keep up

the credit quality of financial institutions. In July 2011, banks were told to set aside loan loss provisions

equivalent to at least 0.5% of the outstanding balance of their Category One credit assets. The minimum

was raised further to 1% in September of the same year. The corresponding requirement in mainland

China is 2.5% while international banks face a minimum percentage of 2%. The possibility of Taiwan

further tightening such regulations and matching international standards does not bode well for local

banks' earnings capacity.

22

bank.sinopac.com

I. Business Overview

(I) Business scope and overview

A. Retail Banking

The major business scope of Retail Banking covers the product management, R&D, marketing and sales

planning with regard to collateralized retail lending products, such as mortgage loans (for home purchases/

repairs, government initiatives or revolving mortgage), vehicle loans, second mortgages, securities-secured

loans, financing for solar energy equipment, and other collateralized loans. Bank SinoPac Retail Banking

provides customers with highly integrated retail finance solutions in accordance with market differentials

and client segment needs.

In 2013, a number of negative developments impacted on Taiwan's property market, notably concern

over QE tapering and capital flight from emerging markets. But realty prices continued tardy upwards

against an increase in transaction volumes thanks to the government's introducing public works projects

(such as the Taoyuan Aerotropolis project) and interest rates holding steady. Moreover, the competent

authority continued the selective credit control over mortgage loans secured by the property either located

in the specific regions or at high-prices. Under such circumstances, Bank SinoPac stood by its pursuit of

sustainable and stable growth as it always placed emphasis on the optimal resource allocation. Priority

was given to seeking out premium clients; a risk-grading approach especially for the target segments

and collaterals was adopted, alone with the comprehensive credit processing policies and post-lending

management. Eventually, the Bank attracted a greater number of target clients as the result. On top of

keeping up assets quality, it was able to appeal to the high net worth or ultra high net worth individuals

whom the Bank would like to build up long-term relationship with.

As of the end of 2013, Bank SinoPac posted an outstanding NT$362.0 billion of mortgage loans, NT$6.2

billion of vehicle loans, and NT$1.5 billion of personal collateralized loans other than above-mentioned.

B. Wealth Management

1. Business Scope:

A wide array of products and services that meet every customer need, including investment products,

trust and custody services, and bancassurance.

(1) Investment Products: Domestic and foreign mutual funds, overseas bonds, ETFs, offshore structured

products, etc.

(2) Trust and Custody: Acting as custodian bank for securities investment and trust companies that offer

mutual fund services in Taiwan and for foreign institutions investing in local securities; custody of

discretionary accounts; custody of employee pensions and severance pays; trust of employee bonuses

and benefits; realty trust; securities trust; trust of advance payments; acting as depositary bank for

TDRs.

Operating Report

23

bank.sinopac.com

(3) Bancassurance: Joining SinoPac Life Insurance Agent, SinoPac Property Insurance Agent and

insurance companies to provide endowment linked insurance, mortgage life insurance, protection

insurance and investment insurance as well as accident insurance, fire insurance, business insurance,

auto/motorbike insurance and health insurance.

2. Business Overview:

Investors became more confident in 2013 as mature economies turned for the better. Amid improving

risk appetite, balanced and equity funds found favor among investors again. As for fixed-income

products, high-yielding bond funds and dividend-paying investments remained the main stream. As the

authorities tend to strengthen the protection to the financial consumers, the regulatory development of

Taiwan's wealth management industry comes to be rigid.

Innovation was increasingly difficult as competitors all had similar products to offer. It was all the more

important to provide quality services, in turn deepening customer relations and enhancing their loyalty.

For its part, Bank SinoPac channeled NT$66.2 billion under non-discretionary money trust toward

domestic and overseas securities last year, pushing the outstanding balance to NT$116.0 billion.

Further, the Bank's trust department had NT$31.6 billion under trust (including realty trust, employee

stock and savings trust and securities trust) at the end of 2013. As the custodian bank for securities

investment and trust companies that deal in mutual fund businesses in Taiwan as well as other entities,

Bank SinoPac had NT$157.6 billion under its custody at the end of 2013. In terms of bancassurance,

the Bank took in premiums totaling NT$23.2 billion last year.

C. Consumer Banking

1. Business Scope:

(1) Issuing credit cards; providing revolving credit and installment plans; offering cash advances;

handling other related operations.

(2) Credit card acquiring business which included signing card acceptance merchants, agency merchant's

clearing accounts, merchants' card transactions processing and for related issues.

(3) Providing unsecured loans to individuals.


(1) Income Breakdown: Interest income took 62% and fee income, 38%.

(2) As of the end of 2013, the outstanding balance of credit card accounts receivable came in at

NT$16.7 billion while that of unsecured loans amounted to NT$15.2 billion.

(3) In 2013, the Bank introduced Me Card in a bid to appeal to young women while continuing to

consolidate its existing cardholder base. Cardholder spending and the Bank's fee income both rose

accordingly: cardholder spending grew 3% from a year earlier and fee income, 4%. To enhance

24

both investment returns and operating efficiency, the Bank was proactive to retire cards that had

been left idle for protracted periods. As of the end of 2013, its outstanding balance of credit cards

in circulation fell 5% from the year before and was ranked 7th in the local market. All in all, the

Bank was able to maintain asset quality for its credit card business and keep default charges at a

multiyear low, thereby generating reasonable earnings.

(4) The unsecured loan business enjoyed a relatively smooth year in 2013. Coupled with promotional

campaigns designed to meet seasonal demand, the end-2013 outstanding balance of unsecured loans

rose 26%. Meanwhile, the Bank's earnings capacity for this line of business also improved further

thanks to well-rounded control of asset quality and progress in NPL collections.

(5) The Bank's acquiring business brought in NT$37.0 billion in 2013, a jump of 44% from the prior

year. This could be attributed to the Bank's signing up more authorized shops and starting to serve

as an acquiring bank for UnionPay.

D. Corporate Banking

1. Business Scope:

(1) Acceptance of corporate deposits

(2) Short-term working capital, term loans, guarantee and acceptance services

(3) Domestic and International Factoring

(4) Trade finance services, including foreign exchange payments and receipts as well as guarantee for foreign

currency payments

(5) International banking services meant for offshore enterprises and individuals

2. Business Overview

At the end of 2013, the outstanding balance of corporate loans and credit business was NT$436.8

billion. Of the total, some 44.29% was extended in foreign currencies, reflecting a substantial increase

in overseas lending. In addition, the volume of factoring wasNT$108.7 billion, and the volume of

foreign exchange was US$189.5 billion, both account for significant market share among the banking

industry in Taiwan.

At the end of 2013, the outstanding balance of SME loans was NT$122.2 billion, an increase of 8%

from the end of 2012. The market share ranked 4th among domestic private banks. Meanwhile, the

Bank secured loan guarantees for a total of NT$95.4 billion from the "Small and Medium Enterprises

Credit Guarantee Fund of Taiwan, SMEG". Credit Guarantee Fund, up to 20% over last year, ranked 2nd

among domestic private banks.

In defiance of Taiwan's weaker syndicated lending market in 2013, Bank SinoPac pushed its market

share to 2.29% and market ranking to 11th. Attesting to its competence in putting together syndicated

loans and providing customers with long-term financing, it acted as lead arranger and facility agent of

syndicated loans to TIC Group, Tatung Co., Wistron Corp. and Jincheng Trans Logistics.

Operating Report

25

bank.sinopac.com

Alongside its expansion of overseas business territory, Bank SinoPac has brought its fully integrated

cross-border banking services network to many corners of the world where there are gathering

Taiwanese-invested enterprises. Drawing on the Factors Chain International (FCI) platform and

Factoring by Insurance (FBI) products, the Bank can now bring down its risks and costs for delivering

such services overseas. While Taiwanese-invested enterprises have been building supply chains all over

the world, the Bank offers specialized, complete trade finance services. When it comes to supply-chain

financing, Bank SinoPac not only enjoys leadership in the domestic banking industry but also expands

its business scope globally.

E. Financial Markets

1. Business Scope:

(1) Proprietary Trading: Foreign exchange, interest rates, equities, derivatives, etc.

(2) Promoting financial markets offerings: Providing customers with optimal hedging plans, financial

exercises, financial investment instruments, timely market information, and specialized consultation.


Always an avid market participant in Taiwan and across Asia, Bank SinoPac has built a solid track

record particularly on the forex and derivatives fronts. In fact, it ranks among Taiwan's handful of

market makers for foreign exchange options. Moreover, the Bank's overseas platform for financial

trading is positioned as a center for trading Asian currencies and their derivatives as well as a base for

Taiwanese businesses to conduct offshore allocations of their capital. Taiwanese companies that operate

across the Taiwan Strait are thus accorded better-rounded cash flow services.

When it comes to soliciting institutional clients, priority is given to meeting their cash flow and hedging

needs. Earnings on this front far exceeded the Bank's own target for the year as its bolstering the

function of retail outlets, deepening customer relations and installing full function branches paid off as

well.

Bank SinoPac is ready to further expand RMB services and set up a mainland Chinese subsidiary in

Nanjing. It will pay special attention to developing RMB-related investment and hedging products

so that customers can share in the rapidly growing RMB market in a timely fashion. Above all, local

customers will be provided with a greater variety of financial markets products and services.

F. Electronic Banking

1. Business Scope:

(1) Planning and operating the Bank's electronic banking platform; conducting R&D, introducing new

technologies and attaining innovation of the business.

(2) Promoting electronic channels and managing online customer relationship.

(3) Planning, promoting and implementing strategies designed for products related to payables and

receivables, and liquidity management.

26


In February 2013, Bank SinoPac's Internet banking launched a number of RMB services. In May, the

Bank was awarded "Best Mobile Banking in Taiwan" by The Asian Banker. In September, it launched

"FUN CASHIER"—a service created to provide convenient e-commerce money collection and payment.

When the Ministry of Economic Affairs of Taiwan presented the E-Golden Awards in November,

SinoPac's mobile banking stood out with the award of "Innovation in Adding Value to Mobile Services".

In addition, the Bank also launched "Global Cash Management Account" service in the same month.

As e-commerce gained momentum, the demand and importance of online cash flow services increased as

well. Besides promoting businesses through virtual channels, Bank SinoPac's Electronic Banking Division

also began making inroads into such new services as collections and payments for online transactions

as well as online account-opening and online deposit. It is also proactive to build a cloud platform for

financial services and incorporate mobile payment applications with a view to helping the Bank improve

user experiences and expand market share.

G. SinoPac Life Insurance Agent

1. Business Scope:

The principal business is the selection of insurance companies in good standing, introduction of secure

insurance products and wealth management products with long-term stability, and satisfying the long-

term saving and wealth management needs of customers targeted by the group through appropriate

group channels.


In addition to introducing general insurance products and packaged products, the firm also seeks to

jointly develop special products with banking and insurance features with insurers under the principle

of mutual benefits. For examples, mortgage insurance which combines the features of mortgage loans

and life insurance. In addition, the firm will also establish a platform for investment management and

make positive efforts to engage in joint ventures with insurance companies with good reputations in the

market to launch pension and investment management products for satisfying the needs of customers

in asset accumulation, asset protection, asset withdrawal, and asset transfer. Currently, SinoPac Life

Insurance Agent carries a product line of mortgage insurance, variable life, and variable annuity. At the

same time, the firm also manages traditional life, saving insurance, and medical care insurance to offer

customers of financial holdings a complete product platform and services.

H. SinoPac Property Insurance Agent

1. Business Scope:

(1) Residential fire insurance, earthquake basic insurance and residential comprehensive insurance.

(2) Accident insurance.

(3) Health insurance.

(4) Auto mobile insurance.

Operating Report

27

bank.sinopac.com

(5) Commercial insurance: including business fire insurance, electronic equipment insurance, public

accident liability insurance, Directors and officers liability insurance and Marine insurance.

2. Business Overview

Currently, the gravity of insurance business rested with "commercial insurance", "residential fire", and

"accident insurance", and the income from each of these three sources accounted for 1/3 of the revenue.

For the full protection of the customers of financial holding, corporate risk planning has been linked

to individual protection needs and full coverage has been mapped out for the enterprises and the

individuals to certain extent under any situation.

1.58%

19.74%

22.59%

43.91%

33.87%

1.58%

20.64%

56.09%

100.00%

Demand Deposits

Checking Deposits

Demand Deposits

Savings Deposits

Subtotal

Time Deposits

Time Deposits

Negotiable Certificates of Deposit

Savings Deposits

Subtotal

Total

Dec. 31, 2012Dec. 31, 2013

Amount %Items

16,697

200,029

235,927

452,653

321,261

28,495

226,342

576,098

1,028,751

1.62%

19.45%

22.93%

44.00%

31.23%

2.77%

22.00%

56.00%

100.00%

Amount %

17,226

215,506

246,551

479,283

369,691

17,212

225,226

612,129

1,091,412

In NT$ millionsDeposits (Consolidated)

0.07%

0.04%

0.30%

26.65%

26.77%

45.84%

0.33%

100.00%

Import and Export Negotiations

Overdrafts

Accounts Receivable Financing

Short-Term Loans

Mid-Term Loans

Long-Term Loans

NPLs Transferred from Loans

Total

Dec. 31, 2012Dec. 31, 2013

Amount %Items

884

462

1,804

178,834

218,885

375,821

2,124

778,814

0.11%

0.06%

0.23%

22.96%

28.11%

48.26%

0.27%

100.00%

Amount %

575

320

2,474

218,083

219,098

375,076

2,674

818,300

In NT$ millionsLoans (Consolidated)

28

20122013Items

24,994

10,120

14,874

5,521

4,133

9

1,411

(71)

501

26,378

1,950

13,429

10,999

1,396

9,603

23,663

9,401

14,262

4,652

2,719

31

325

(287)

196

21,898

(597)

12,573

9,922

1,574

8,348

Interest revenue

Interest expense

Net interest

Net revenues other than interest

Commission and fee revenues, net

Gains on financial assets and liabilities at fair value through profit or

loss

Realized gains from available-for-sale financial assets

Foreign exchange gains

Impairment losses on assets

Other non interest net revenues

Total net revenues

Allowance for (reversal of)doubtful accounts and guarantees

Operating expenses

Income before income tax

Income tax expense

Net income

In NT$ millionsSummary of Consolidated Income and Expenses

II. Business plan of the year

(I) Retail Banking

1. Readjust personal collateralized loan portfolio to ensure stable growth on the earnings while complying

with the policies of the Authority and the optimal resource allocation.

(1) Readjust assets position according to the Bank's allocation strategy of credit risk assets with a view

to enhancement on product earnings.

(2) Form dynamic counteractions in accord with the Authority's tightened control over realty and

mortgage loans to ensure the effective risk management.

2. Commit in soliciting the target segments as well as retain the premium loan quality.

(1) Encourage the channels to deliver the products to the target customers by way of the risk control

policy and pricing differentials.

(2) Be in line with branch customer management, and leverage the system to reinforce pre- and post-

lending assets risk management.

3. Provide customer-oriented integrated sales to cement the stickiness with customer.

(1) Coordinate internal resources, keep track of the needs of premium clients and provide differential

services.

(2) Conduct analysis of the database for marketing accompanies by the upraised added-value attributed

to strategic alliances to reinforce customer loyalty and increase fee income.

Operating Report

29

bank.sinopac.com

(II) Wealth Management1. Develop a business model that centers on customer needs; meet customer needs by keeping up product

and service innovation.

2. Provide differentiated products, information and services in accordance with different customer needs

and specializations of SinoPac consultants.

3. Strengthen cross-selling and raise the number of high-asset clients, thereby expanding businesses and

earnings.

4. Design products and services meant specifically for retirees; partner with foreign brokerages and

mutual fund companies to introduce a wider array of offerings, such as overseas bonds, income funds

and principal-guaranteed funds, to accommodate wealth management across different stages in life.

5. Enhance the primary systems or platforms to provide customers with more convenient services.

6. Strengthen the risk management and regulatory compliance of SinoPac products and services to secure

customer trust.

7. Work with channels to attain earnings targets together.

8. Drive product development with customer needs. Develop and deliver more diversified investment

products and business through cross-border interchanges, and build up a more comprehensive wealth

management platform through enhancement of systems.

9. Benefit from Hong Kong's proximity to mainland China and its active wealth management market, to

battle for arousing opportunities from mainland China, and to increase fee income.

(III) Consumer Banking1. Establish credit cards as the carrier for various financial payments; enhance operating efficiency and

funnel resources toward product innovation.

(1) Integrate the Bank's payment and debit operations onto the credit card platform, through which it

can provide across-the-board cash flow services.

(2) Keep up product innovation, particularly with regard to mobile payments, such as dual-currency

cards, mobile payment, mPOS, etc.

(3) Draw on customer segmentation analysis to design new features and benefits for cardholders,

thereby enhancing card use and customer loyalty.

(4) Speed up the growth of acquiring business, which in turn serve as the basis of cash flow services

aiming at authorized shops.

2. Grow the unsecured loan business and strive for an asset mix with maximal returns.

(1) Provide different customer segments with a wide range of interest-bearing products.

(2) Reinforce the unsecured loan salesforce to drive sales.

(3) Calibrate pricing and the amount of loans to uphold asset quality.

30

3. Strengthen operating efficiency and bolster risk control.

(1) Streamline processing procedures for credit cards and unsecured loan but introduce more

checkpoints; speed up responses to customer queries; keep up a solid capacity for surveillance.

(2) Strengthen post-lending management; undertake spot checks of branches on a regular basis.

(3) Upgrade the scoring card database and credit review system; strengthen risk management by

reviewing quota assignment and the setting of risk control points on a regular basis.

(IV) Corporate Banking1. Offer comprehensive corporate banking services via 129 domestic branches

With a far-reaching service network of 129 full function branches nationwide, Bank SinoPac

is well-positioned to provide customers with all sorts of financial services. In particular,

a great variety of corporate banking products go a long way toward deepening customer

relations. Moreover, the Bank is joined by other SinoPac Holdings affiliates in delivering other

consolidated, value-added services to corporate clients, to fulfill all their financial needs.

2. Build the most flexible, accessible brand name for financial services across Greater China

Bank SinoPac has entered into a good number of cooperative projects over the past three years,

such as "Same day settlement of USD across the Taiwan Strait" and "Same day settlement of

RMB across the Taiwan Strait" with Industrial and Commercial Bank of China (ICBC). Under

a stake purchase agreement signed in 2013, both expect to work together across the cross-

border financial services, remittances, trade settlement, financing, cash management, wealth

management, credit cards and capital markets. The ultimate objective is to provide Taiwanese

and Chinese companies around the world with comprehensive financial services efficiently and

quickly. In December 2013, Bank SinoPac won China Banking Regulatory Commission's approval

for starting a wholly owned subsidiary in Nanjing. It is expected to operate in the first quarter

of 2014. On top of its Nanjing subsidiary, domestic and offshore branches, Bank SinoPac will

serve customers by teaming up with ICBC that owns more than 10,000 locations and nearly 400

branches around the world. By drawing on these shared advantages and synergies, Bank SinoPac

is poised to establish the most flexible, accessible brand name for financial services in Greater

China.

3. Cater to specific needs of niche markets while serving global supply chains

Bank SinoPac takes the preemptive opportunities and grasps the initiative situation through

discerning the trend of industry development. In addition, the Bank tries to fully understand our

clients, including their demands and cash flows, and then provides tailor-made services and self-

liquidated loans. The advantages are getting more business opportunities and minimizing the credit

risk.

4. Acting as mandated lead arranger of the syndicated loan and satisfying customers with diversified

needs in financing

Keep an eye on potential financial projects, seeking financing and vie for opportunities to serve as

lead arranger of syndicated loans. Enhance market ranking by arranging or managing more such

Operating Report

31

bank.sinopac.com

loans. Strengthen the competence for arranging a greater diversity of such projects and deepen

customer relations by arranging syndicated loans. Team up with overseas locations, such as Hong

Kong and Macau branches in promoting syndicated loans among Taiwanese invested enterprises

operating overseas or in mainland China.

5. Strengthen SME services to increase the Bank SinoPac's SME loans balance and market share

Bank SinoPac had served in Taiwan for over six decades, and witnessed the country's different

phases of economic growth stages. Besides its own endeavors on this front, it is proactive to work

with SMEG. It also extends support to the government's various economic stimulus initiatives by

providing SMEs with all kinds of products and services they need.

In 2013, the Financial Supervisory Commission accorded Bank SinoPac a special award for

balancing regional development by contributing to the "Project for Strengthening Domestic Bank

Lending to SMEs-the seventh phase". In turn, the Bank's Kinmen Branch was permitted to be

upgraded to a full function branch in June. In support of the "Project for Strengthening Domestic

Bank Lending to SMEs-the eighth phase", Bank SinoPac pushed its outstanding balance of SME

loans to NT$122.2 billion as of the end of 2013.

6. Integrate onshore and offshore resources to build up Greater China business platform

Having Hong Kong Branch as overseas business hub, and integrating onshore and offshore

resources among domestic and overseas branches, Bank SinoPac incessantly raises and evolves

experience from Hong Kong and Marco, explores FIs and Chinese corporate business opportunities

from Greater China, and expedites corporate banking, financial markets and RMB business in this

area. Additionally, through strategic alliances with partners and establishment of Bank SinoPac

(China) Ltd (Nanjing subsidiary), Bank SinoPac can provide Chinese corporations with more

diversified cross-border cash management service, thereby enhance its product penetration and

increase earnings.

7. Coordinate with the Bank's overseas branches and OBU to arrange more international syndications

Through banking deregulation and the gap between onshore and offshore interest rate in

mainland China, and we integrated resources from onshore and offshore channels and strategic

partners. Bank SinoPac not only strives for participations in international syndications but also

evolves into lead arranger with support from middle and back office, thereby the Bank is able to

widen spread yield and boost capital utilization.

8. Cooperate with strategic partner to develop new products and expand service scope

Basing on the cooperation of "Cross-strait RMB Same Day Direct Remittance Service" with the

Bank's strategic partner, ICBC, as well as the latter's extensive service network in mainland China

and around the world, Bank SinoPac developed supply chain finance and launched "Global Cash

Management Account" to provide our customers with timely and convenient cash management and

financing services.

32

(V) Financial Markets1. Proprietary Trading:

Introduce pricing capabilities to the in-house trading system for new varieties of structured

products. Grow earnings by upgrading self-sufficiency in this regard. Consolidate and optimize

financial trading systems and platforms; refine management of investment portfolios under such

newly developed trading systems; provide traders with cross-sector hedging instruments and

enhance their market-making capacity; strengthen internal risk management. Draw on the Bank's

experience in foreign exchange operations to develop RMB services. Promote RMB services across

national borders to capitalize on the businesses being brought by the RMB going international.

2. Marketing Endeavors:

Develop a gamut of products; stay abreast of market developments and trading trends; adjust

the product mix to ensure earnings stability. Provide optimal financial planning and financial

derivatives, thereby meeting customer needs for RMB investment and hedging. Develop core-value

customers; deepen customer relations; keep up mark to market (MTM) surveillance; strengthen

review of quota for financial trading and usher in an automated know-your-customer (KYC)

mechanism. Enforce risk control and management to optimize the overall credit profile. Strengthen

training at retail outlets in order to provide customers with specialized services.

3. Base on Hong Kong platform, coordinating and assisting other overseas branches to develop

financial market business. Meanwhile, team up with corporate banking group to provide customers

with financial market products embedding hedge solutions, enhance relationships, and then result

in higher earnings and penetration.

4. Integrate resources of SinoPac Holdings' subsidiaries to provide Chinese corporations with

financing in capital market. Giving equal consideration of risk and return, the Bank gradually

builds up RMB-dominated investment portfolio, actively develops various business opportunities

derived, and then boost capital utilization.

(VI) Electronic Banking 1. Innovative and optimally financial platforms

Optimize and upgrade internet banking. Revamp Business Internet Banking for corporate clients,

and provide secure, convenient, timely and considerate mobile banking services.

2. Increase the revenue of virtual channels

Offer discounts for consolidated virtual channels to lead customers from physical channel to

virtual channels to enhance the Bank's operating efficiency and eChannel penetration.

3. Increase eChannel usage rate

To coordinate closely with the initiation of marketing events to expand electronic banking

accounts and integrate virtual and physical channels. Adopt a segmented approach toward online

customers to enhance customer satisfaction and stickiness.

Operating Report

33

bank.sinopac.com

4. Continue to grasp deep plowing e-commerce money collection and payment service

With the advantage of developing the system in house, the Bank was able to develop a friendly

and convenient platform. Furthermore increased market share by forming strategic alliances and

marketing promotions.

5. Develop cash management products and services

Optimize cash management products and increase their added value. Provide cash management

total solutions by adapting differentiated products to different customer segments. Promote the

deployment of automated facilities to expand the clientele for such services.

6. Develop cash management products and services

Optimize cash management products and increase their added value. Provide cash management

total solutions by adapting differentiated products to different customer segments. Promote the

deployment of automated facilities to expand the clientele for such services.

(VII) SinoPac Life Insurance Agent1. Diversified sales effect through marketing by all employees

Continue to educate the staff of the Bank in insurance sales and encourage them to refer

customers. Professional sales personnel will explain and introduce the products to the customers to

yield the result of diversified sales. Make use of the experience of the Bank in marketing insurance

products with proper adjustments in order to assist the securities company in expanding the

market of life insurance.

2. Yield the desired effect of segmented marketing through interaction with the customers

Assist the sales personnel to close sales under appropriate market segmentation with the support

of an auxiliary sales mechanism and understand the customers through marketing channels in

order to keep track of the factors of value adding.

3. Create a demand focus effect through adding value to the product platform

Guide the sales personnel in developing demand-oriented marketing concepts, and highlight the

selection of products, performance assessment, information in statements, and insurance benefits

and related value adding functions on different platforms. In addition, research and develop a

complete product line of insurance and demonstrate the functions of long-term saving, asset

preservation, and income guarantee among the variety of products of the Bank.

4. Make the best use of resources to bring the effect of local materials to bear

Select the appropriate model for the promotion of life insurance in harmony with the

characteristics of branches. Make the best use of human resources support dispatched from life

insurance companies in insurance consultation, training, and sales promotion. Integrate the upper

and lower stream operation of financial holdings to increase added value through the promotion of

insurance business.

34

(VIII) SinoPac Property Insurance Agent1. Continue to study on the customers and the market for offering better products

To further the promotion of the running items, the firm will duly observe the needs in the market

and applicable legal rules of the government for undertaking brokerage of the most attractive

products, and prepare special offer packages to provide stronger incentive for the customers in

taking insurance protection.

2. Make full effort in increasing product channels for more sources of profits

In addition to the development of channels on hand, the firm will seek suitable strategic partners

for the formation of strategic alliance and launch suitable products depending on the attributes of

the partners for thicker profits.

3. Launch competitive and differentiated marketing projects or products in supporting business

operation

To further the launch of new products, the firm also works in cooperation with other direct and

indirect subsidiaries of SinoPac Holdings for offering property insurance as dictated by their

business operation.

4. Fortify the function of education and training

SinoPac Property Insurance Agent will intensify its internal education and training to meet the

requirement and the attention of the competent authority on the banking and insurance industry,

and seek to ensure all employees of the SinoPac Holdings familiarize with the knowledge of

different insurances and help them to obtain relevant insurance licenses.

5. Reinforce the internal business process and the competence of the management staff

SinoPac Property Insurance Agent has completed related tasks and business management

standards as required by the competent authority in the banking and insurance industry. The firm

will reinforce the internal business process and related management staff and conduct routine

audit so that the highest customer satisfaction can be assured.

III. Research and Development

(I) R&D on Financial ProductsIn February 2013, banking authority approved the deregulation of RMB business and allowed domestic

banking units of local banks to provide various RMB services. Besides over the counter services, banks

could offer online services for RMB exchanges, term-deposits and remittances, which has helped the Bank

to gain significant RMB deposit market share.

(II) R&D Expenses and Results; Future R&D Plans1. R&D Expenses and Results

(1) To help customers with capital allocation and build a better-rounded product mix, the Bank

introduced "Convenient Capital", a quota-based unsecured loan offering, in March 2013. Another

unsecured loan product crafted specifically for authorized shops is slated to be rolled out in the first

quarter of 2014.

Operating Report

35

bank.sinopac.com

(2) To uphold its leading position in product innovation and payment services, Bank SinoPac launched

its "Mobile Payment" and "Mobile Cash Storage Card" in August 2013. The first of its kind in

Taiwan, the Mobile Cash Storage Card is designed specifically for those who may be reluctant to use

their mobile as a credit card.

(3) The Bank introduced "SinoPac Wallet" an app for handsets, in July 2013. It was further expanded

in August to double as a "Mobile Payment" and "Mobile Cash Storage Card". As such, Bank SinoPac

was the first local bank to incorporate credit card features into its proprietary app, making a "mobile

wallet" in its literal sense. Besides making payments, SinoPac Wallet is good for making use of

credit card discounts and location-based services (LBS). Moreover, it allows users to exchange bonus

points for coupons to be used at authorized shops, take part in prize-drawing events, make real-time

account queries and payments, and apply for a new credit card or credit loan.

(4) The Bank launched acquiring services for the self-service pumps of the Bank's co-brand card partner

National Petroleum. It also completed consolidating systems for acquiring operations, bonus points,

LMS and electronic invoices. This is expected to help the Bank better serve retailers and secure cash

flow businesses as authorized shops can foster customer loyalty at lower costs.

2. Future R&D Plans

(1) In 2013, Bank SinoPac persisted with product and service innovation to better meet customer needs.

In the highlight were the introduction of investment portfolio instruments; upgrade of the "efficient

investment" method; addition of an app feature for trading mutual funds; launch of trust services

for advance receipts for electronic coupons and for escrow from real estate management companies;

installation of a platform for trading RMB products; and consolidation of domestic and overseas

operations and products.

(2) Strengthen various trading systems and put them to better use, including the platform for trading

mutual funds, MMA trading platform, wealth management system, and custody system. Separately,

the Bank already completed installing a platform for trading overseas bonds and a system for

collecting advance payments for electronic coupons and escrow from real estate management

companies to be placed under trust.

(3) The Bank already completed preparations for launching an "mPOS" system of mobile card swipers.

Pending regulatory approval, it will mark a new milestone in the Bank's working toward a new era

of mobile payments.

(4) To employ FCI's (Factors Chain International) experiences and achievements in factoring and to

obtain a better understanding of clients worldwide via collaboration between FCI platforms; and to

explore and expand the industry supply chain and integration with cross-platform business.

(5) To continue to conduct Factoring by Insurance (FBI), to strengthen partnerships with international

insurers, to build a factoring platform, which will be used as the support for helping customers

explore new global business opportunities.

(6) To strengthen the internal grading model for corporate loans, taking into account risk evaluation,

pricing strategies and performance management. Set up a default database and undertake risk-biased

pricing, thereby enhancing returns and keeping up the asset quality.

36

(7) Bank SinoPac has team up to launch the "Cross Pacific Account+ (CPA+)" with its strategic partner

ICBC. CPA+ is a global cash management service that caters specifically to multinational companies.

Meticulous analysis is conducted to help clients keep track of their liquidity and financial

management efficiency, thus reducing idle funds and operate more efficiently. Bank SinoPac is

rewarded with higher customer loyalty and growth in the lending business.

(8) Bank SinoPac will take proactive actions to integrate the resources of the Holdings, Far East

National Bank and strategic partners to provide customers comprehensive services which cover

corporate banking, financial market, wealth management, and capital market. Furthermore, Bank

SinoPac will extend its service footprint to build up Chinese corporate business in Mainland China,

North America, and ASEAN. In addition, the Bank will provide customers comprehensive financial

services by expending across-continent business and offering Cross Pacific Border financial services

platform.

(9) Given the internationalization of RMB, Bank SinoPac will persistently introduce and develop

diversified investment products, broaden product lines and provide customers various wealth

management services to satisfy their needs through integration within the Holdings and cooperation

among the Bank, SinoPac Securities, and SinoPac Securities Investment Trust.

(10) Given the increase of business in RMB for cross-strait trade and funding demand for capacity

expansion in Mainland China and offshore, Bank SinoPac will proactively integrate resources with

the Holdings and intensify cooperation among the Bank, SinoPac Securities and strategic partners to

provide customer various funding channels, tract market fluctuations and then increase profit from

financial market gradually.

(11) With the advancement of Internet technologies, cross-border cash flows will no longer be limited to

traditional international channels. A new era of cross-border cash flows for financial institutions in

cross-strait will integrate the electronic payment platforms and innovative user interface that will

result in extensive online cross-border cash flow business.

(12) Deregulation of online payment and online account-opening/cash deposit services has elicited a

hearty response among both financial institutions and online businesses. All quarters are now

seeking to foster cash flows on the Web and further expand e-commerce.

IV. Short-term and Long-term Business Development Plans

(I) Retail Banking

A. Short-term Business Development Plans

1. Take root in each regional market and provide tailor-made products for that specific market.

2. Develop diversified products to meet the needs of potential target customers.

3. Deepen customer relations broaden the scope of offerings , and enhance fee income.

4. Forge more strategic alliances and provide customers with more preferential services, thereby

enhancing customer satisfaction.

Operating Report

37

bank.sinopac.com

B. Long-term Business Development Plans

1. Be in line with the Authority's policies; follow the principles of "staying prudent, diversifying risks,

keeping up asset returns, and upholding asset quality"; lead retail channels toward serving prime and

high net worth customers.

2. Provide customer-orientated, convenient, comprehensive financial services and added value, thereby

maintaining customer loyalty and building a long-term relationship.

3. Maintain below-average NPL ratio and keep bad debt losses to a minimum, thereby enhancing product

profit.

(II) Wealth Management


1. Adopt a business model geared toward meeting customer needs: Determine target customers based on

their behavioral patterns. Adapt to customer categories and needs by offering differentiated products,

information and services.

2. Persist with customer-oriented product and service innovation: Introduce tools for building investment

portfolios, and develop mobile banking to accommodate fund trading. Keep watching the deregulation

for OBU platform and introduce differentiated products to meet customer needs and provide clients with

a greater diversity of wealth management services.

3. Strengthen the sales mechanism: Coordinate with retail outlets to make sure that the Bank's investment

consultants can deliver better-rounded services to customers. Offer guidance to branches in undertaking

various marketing campaigns to attain earnings targets.

4. Update or retire the primary systems or platforms: Strengthen the mutual fund and ETF trading

platforms, MMA trading network, wealth management system, trust platform, securities trust and

borrowing/lending system, and custody system. Install a simplified Chinese platform for the custody

of bonuses and benefits for foreign or mainland Chinese employees and a cash flow checking system

for the trust of funds from property transactions.

5. Bolster risk management: Equip related systems with the capacity for automatic risk inspection.

Strengthen internal control of sales operations to uphold consumer protection.

6. Cooperate with onshore and offshore product teams to provide customers with tailor-made products. In

addition, integrate resources of SinoPac Holdings' subsidiaries and strategic partners to offer customers

with diversified wealth management services, such as securities, RMB bonds, and other instruments.

38

B. Long-term Business Development Planss

Make a trustworthy wealth management bank by meeting all customer needs and providing

customers with reliable services:

1. Provide quality products and consolidated, value-added services.

2. Build convenient retail channels and a high-performance trading system/platform for wealth management.

3. Put in place a well-rounded wealth management team capable of delivering suitable and professional

consultation services.

4. Strive for top-quality operating efficiency and build a reliable mechanism for risk control and

management.

5. Having Hong Kong as the Bank's wealth management hub with focus on investment, insurance, and

financial markets, and through the integration of onshore and offshore products and services, Bank

SinoPac persistently drives business momentum from private banking sector aiming at Chinese high net

worth clients.

(III) Consumer BankingA. Short-term Business Development Plans

1. Streamline procedures and adopt information security technologies to put in place more convenient,

flexible steps for applying for credit cards and automatic payment deduction services, thereby making

credit cards the basic carrier for customers' financial payments. Consolidate related operations to

increase efficiency and enhance customers' use of SinoPac services.

2. Develop a customer-centered business model. Identify customer needs and likes by means of segmented

analysis, thereby enhancing customer satisfaction and improving overall customer experiences.

3. Adopt risk pricing to attain a price-volume balance for credit card and unsecured loan businesses and

keep up asset quality.


1. Further expand business scope and build on the strength of retail channels to enhance customer value

and contribution, thereby growing earnings and upgrading operational efficiency.

2. Promote products and undertake other publicity events on conventional media and the Web, enhancing

Bank SinoPac's visibility as a leading brand name for consumer banking.

3. Provide differentiated products and services to highlight a flexible, convenient and trustworthy brand

name for consumer banking.

4. Adopt a precise, complete grading model to undertake risk segmentation; build on sound asset quality as

the basis for cross-selling in conjunction with other banks.

Operating Report

39

bank.sinopac.com

5. Apply card issuance and customer management experiences to the Bank's new outlets in mainland China,

paving the way for making inroads into the consumer banking market there in the future.

(IV) Corporate Banking


1. Maximize the strengths of the Bank's 129 full function branches throughout Taiwan to deepen relations

with existing customers and secure new ones; manage asset quality properly while striving for lending

expansion to ensure profitable growth.

2. Enlarge Bank SinoPac's deposit and loan operations both at domestic and abroad steadily to further

enhance its market share; accept deposits from new clients, in particular demand deposits from

corporate accounts, to lower funding costs; adopt a target-oriented approach toward asset and liability

management to minimize the structural funding risks.

3. Deepen relations with larger enterprises; vie for chances to serve as lead arranger of syndicated loans

so as to provide target clients with differentiated services and various offerings from other SinoPac

affiliates. Boost earnings with the help of "blue ocean" strategies, e.g. focusing on more sophisticated,

higher-yielding M&A and project financing.

4. Continue to expand the Bank's factoring platform that spans the broadly defined Greater China market.

Collaborate with world-renowned credit guarantee agencies and Factors Chain International (FCI)

to help corporate clients cope with business risks associated with domestic or overseas transactions

and provide them with financing. Promote trade-based factoring services to help small and medium

enterprises enhance export competitiveness and foster earnings growth. Draw on the electronic

banking platform to consolidate information on a global basis, thereby providing customers with more

convenient, efficient financial management services.

5. Adjust the credit policy in tandem with fundamental changes unique to the relevant industry; enforce

credit risk management faithfully and devise tailor-made measures for customers of distinctively

different characteristics. Upgrade the credit management systems; usher in a loan pricing model

that takes account of risk-weighted assets (RWA). Strengthen internal control throughout the credit

approval process and introduce quantifying tools for credit risk analysis to enhance credit approval

process efficiency. Update the overall information structure to enhance systemic stability and accuracy,

thereby improving asset quality.

6. Further extend the scope of client base to the interior of mainland China, and seek out target customers.

Undertake various projects, particularly by acting as lead arranger of international syndications and

offering supply chain services, to further expand the achievement of overseas business.

40

7. Bolster the capability of Onshore and Offshore Collaboration Platform. Integrate close cooperation

among branches and subsidiaries in Taiwan and abroad to provide group customers with financial

services across Greater China, thereby deepening and broadening customer relations; meanwhile

maximize the Platform value and synergy of cross-selling to boost earnings from overseas corporate

banking.

8. Consolidate operations in North America, Southeast Asia and mainland China, Bank SinoPac keeps

making inroads into mainland China and extends to ASEAN market that relies heavily on trade between

the mainland, Hong Kong and Taiwan, meanwhile, increases competitive strengthen, and cooperates

with strategic partners to provide more convenient and comprehensive financial services.

9. Provide continuous training and recruit talents with international standing to support upcoming

overseas expansion.


1. Integrate resources, expand both domestically and internationally, and continue to strengthen

operational efficiency to make Bank SinoPac the best financial institution in Asia and a leading brand

name for RMB services in Taiwan. The Bank also sees itself as a new "Silk Road" for the financial world

of the 21st century that serves all enterprises and individuals having business transaction in Greater

China.

2. Establish better-rounded overseas platforms and turn SinoPac into a cross-continental international

bank.

3. Build on internal resources to consolidate all businesses under a customer-centric organization structure.

Provide corporate customers with one-stop, tailor-made solutions, fulfill all their financial needs from

plant construction to daily operations.

4. Combine corporate banking business and risk management to develop advanced risk quantification

technology and install a credit database applicable to pricing, dynamic risk control and management,

policy-making and performance management.

5. Persistently stimulate cooperation between domestic and overseas channels and consolidate their

resources and competitive advantages with the upgrade of electronic system to provide Chinese

corporations around the world with more localized and globalized financial services.

(V) Financial Markets


1. Strengthen teamwork between the Financial Markets Division's sales team and other departments in

developing customer-oriented, differentiated portfolios and services. Help branches create synergies by

providing different segments of customers with tailor-made asset and liability investment and hedging

Operating Report

41

bank.sinopac.com

products. Increase the stability of earnings sources by deepening and broadening partnerships with

customers.

2. Capitalize on the rapidly growing RMB market by devising exchange and interest rate products for

investment and hedging and providing customers with a greater variety of offerings to choose from.

3. Continue construction of a well-rounded system for structured products; grow earnings by enhancing

self-sufficiency in this regard.

4. Provide consolidated information on investment holdings to help monitor trading risks and strengthen

internal risk management. Provide traders with cross-sector hedging instruments and enhance their

market-making capacity.

5. Diversify investments with a view to adjusting the earnings structure and enhancing income from

proprietary operations. Enhance operating performance by deepening cooperation between domestic and

overseas operations.

6. Benefit from Hong Kong's status as international finance center and offshore RMB clearing center

to develop flexible financial market products and understand the fluctuations in cash flows, thereby

maximizing the Bank's capital utilization and deepening customer relationships through fulfilling their

requirements for hedge.

7. Actively build up onshore and offshore RMB-dominated investment portfolio and increase yield;

consistently pay close attention to international primary and secondary bond markets to diversify

country risk.


1. Develop a wide variety of products and platforms that come with meticulously differentiated packaging

to fully satisfy customer needs for hedging and investment.

2. Optimize trading systems, develop systematic financial analysis models, and devise a better-rounded

straight through processing (STP) mechanism, thereby driving high value-added trades that make

a more significant contribution to earnings as well as enhancing the competitiveness of the Bank's

financial products.

3. Upgrade the Financial Markets Division's expertise and capacity for effectively getting hold of the latest

developments across regional markets to facilitate the Bank's continuous expansion on this front.

4. Develop a richer mix of financial products to help target clients hedge against risks; enter into strategic

alliances with quality banks in Hong Kong and China to take advantage of the fast-growing RMB

business.

42

5. Enhance the professional training for the marketing personnel on financial products. Take proactive

stance in setting up the offshore trading platform for RMB to increase revenue from exchange gain

and commission income. Integrate the resources of the Bank in joint business development and broaden

the bases of existing customers and new customers in financial transaction service for more business

opportunities.

(VI) Electronic Banking


1. Continue to build and optimize cash flow platform to deliver financial products and services from

physical to virtual channels.

2. Accommodate the growing popularity of mobile devices by upgrading the mobile banking platform.

Provide customers with a simple, convenient, timely and secure online banking experience.

3. Cooperate with microenterprises and provide them with innovative financial services to expand the

market share of e-commerce money collection and payment.

4. Retrace cash flows while building a platform for corporate information and services to reach out to

more small and medium-sized enterprises, thereby enhancing customer satisfaction through provision of

financing and wealth management products and services.

5. Work with Integrated Marketing Division to support Bank Marketing Strategy to develop multiple

marketing channel opportunities, and expand the number of online banking clients through the

coorperation of local branches.

6. Redesign the structure of cash management products to make a better-rounded product mix and

optimize the primary offerings.

7. Apply business intelligence analysis to understand customer behavior and provide products and services

most suitable to customers, thereby fostering customer loyalty and increasing customer assets under

management.

8. Strengthen global cash management account services to meet the diverse needs of multinational

companies, providing them with comprehensive services from remittances and cash management to

centralized collections and payments.

9. Apply business intelligence analysis to understand customer behavior and provide products and services

most suitable to customers, thereby fostering customer loyalty and increasing customer assets under

management.

Operating Report

43

bank.sinopac.com

10. Strengthen global cash management account services to meet the diverse needs of multinational

companies, providing them with comprehensive services from remittances and cash management to

centralized collections and payments.


1. Capitalize on business opportunities emerging from cross-border deregulation by introducing online

cash flow services and working with strategic partners.

2. Take advantage of the growing popularity of smart handheld devices by devising mobile services for

collections and payments as well as wealth management.

3. Assist microenterprises with their online marketing and provide them with financing and

comprehensive financial planning, thereby enabling them to create value and grasp opportunities in

today's new era of electronic banking.

4. Enhance the added value of cash management products; strengthen cash flow products that cater to

different segments of customers, thereby become their preferred cash management bank.

(VII) Life Insurance Agent


1. Improve the administrative efficiency of insurance policies and design an effective communication

system.

2. Materialize a standard operation model for insurance advisors, and establish a standard model for

cooperation with insurance companies.

3. Establish a business model of theme marketing. Integrate product design and business training and

develop business supporting activities for the effective launch of business.

4. Continue to assist the channels in transformation, and guide sales personnel to transform from product

selling mode to wealth management design marketing mode. Help the wealth managers in bringing

their clients' core assets and long-term saving to SinoPac and keep them at SinoPac.


1. A strategy of balanced development is adopted to avoid the influence of short-term market fluctuation.

In the past, SinoPac Life Insurance Agent brought in a stable stream of income from mortgage life

insurance policies and retirement wealth management products, and made use of traditional life policies,

saving insurance, medical insurance, and other investment-linked insurance policies to build up a

complete product platform and supply customers with a wide array of product choices and a complete

service platform.

44

2. Continue joint development of investment management with insurance companies to satisfy the needs of

customers in asset accumulation, protection, withdrawal, and transfer. In addition, SinoPac will continue

to introduce suitable products from insurance companies in good standing in the market of general

insurance, and hope to highlight the functions of insurance in long-term saving, asset protection, and

income guarantee among the wide array of products from the Bank.

3. Design and establish a model of workplace marketing aiming at the large middle class and wealth

management service at the workplace in order to bring in additional income from stable sources of

personal policies in the long run.

(VIII) Property Insurance Agent


Further to the brokerage service of general property insurance products, the firm will also provide specific

customized property insurance products to the customers of financial holding for satisfying their needs.

With the support of the densely developed marketing channels, the service team will be nurtured with the

idea of party marketing to satisfy the customers.


Explore the attributes of the customers of SinoPac Holdings, their needs, and the market trend in depth,

and work in conjunction with the partner property insurers to tailor the kinds of insurance protection they

need. Further, individualized insurance products or projects meeting market needs will also be exclusively

provided so that the customers can feel the prestige of customized products and the heartiness of the

Company in service. As such, the properties of the customers can be fully protected and the business of the

Company will grow further with the achievement of benefit on both sides.

Operating Report

www.banksinopac.com.tw

Financial Reportsbank.sinopac.com

46

bank.sinopac.com

I. Condensed Five-year Financial Statements

Consolidated Balance Sheets-IFRSs In NT$ millions

Cash and due from banks

Financial assets at fair value through profit or loss

Available-for-sale financial assets

Derivative financial assets for hedging

Securities purchased under agreement to resell

Receivables, net

Current tax assets

Discounts and loans, net

Held-to-maturity financial assets

Other financial assets, net

Property and equipment, net

Intangible assets, net

Deferred tax assets, net

Other assets

Total assets

Deposits from the central bank and banks

Financial liabilities at fair value through profit or loss

Derivative financial liabilities for hedging

Securities sold under agreements to repurchase

Payables

Current tax liabilities


Bonds Payable

Other financial liabilities

Provisions

Deferred tax liabilities

Other liabilities

Total liabilities

Share capital

Capital surplus

Retained earnings

Other equity

Total equity

151,533

36,640

68,915

2

2,139

121,224

1,293

799,936

202,251

4,696

10,981

1,978

2,455

3,274

1,407,317

92,136

14,555

1

496

20,967

1,022

1,120,808

45,088

15,632

2,792

923

3,036

1,317,456

59,616

10,413

19,758

74

89,861

95,363

25,969

59,756

-

-

118,269

1,290

808,898

214,418

16,030

11,003

1,982

2,570

1,485

1,357,033

87,589

11,832

6

452

17,233

856

1,092,092

45,087

7,944

2,880

898

2,612

1,269,481

Note2

59,616

10,413

17,650

Note2

(127)

87,552

Note2

106,804

27,631

55,788

16

236

61,880

1,240

770,309

219,844

4,459

11,099

2,047

2,813

2,277

1,266,443

70,454

8,672

23

1,201

22,252

383

1,029,885

43,002

6,588

2,860

1,002

1,870

1,188,192

1,188,192

53,862

10,413

13,844

8,090

132

78,251

78,251

Ex-dividends

Post-dividends

Ex-dividends

Post-dividends

Ex-dividends

Post-dividends

Note1：The financial statements for each year were audited by CPA, except for February 28, 2014.

Note2：The appropriation of the 2013 earings is subject to the approval of the board of directors which execute the rights and functions of the stockholders' meeting in 2014.

20132012ItemsThe annual financial

statement as of February 28, 2014

Financial Reports

47

bank.sinopac.com

Consolidated Statements Of Comprehensive Income-IFRSs In NT$ millions

Interest revenue

Less：Interest expense

Net interest


Total net revenues

Allowance for doubtful accounts and guarantees

Operating expenses

Income (loss) from continuing operations before income tax

Tax income (expense)

Income from continuing operations before income tax

Profit (loss)

Other comprehensive income, net of tax

Total comprehensive income

Profit (loss), attributable to owners of parent

Comprehensive income, attributable to owners of parent

EPS (in NT$ dollar) (Note2)

4,508

1,879

2,629

2,611

5,240

441

2,347

2,452

(344)

2,108

2,108

202

2,310

2,108

2,310

0.35

24,994

10,120

14,874

11,504

26,378

1,950

13,429

10,999

(1,396)

9,603

9,603

(302)

9,301

9,603

9,301

1.61



23,663

9,401

14,262

7,636

21,898

(597)

12,573

9,922

(1,574)

8,348

8,348

227

8,575

8,348

8,575

1.42


Note2：Earnings per share are retroactively adjusted with earnings recapitalization.

48

106,804

27,681

236

55,788

770,309

62,354

219,844

9,419

2,045

5,533

6,359

1,266,372

70,454

1,029,885

8,672

1,201

43,002

1,433

6,880

25,881

1,187,408

1,187,408

53,862

10,413

13,738

7,984

343

(212)

820

78,964

78,964

95,919

27,284

1,152

38,194

716,169

41,873

200,565

8,949

1,472

5,646

8,664

1,145,887

64,798

934,477

9,507

3,067

30,121

1,602

20,117

16,243

1,079,932

1,082,383

49,550

9,207

7,145

4,694

189

(221)

85

65,955

63,504

99,589

18,328

-

38,665

693,779

51,349

125,825

9,148

1,562

8,462

8,998

1,055,705

44,804

873,895

8,636

1,598

27,130

1,486

10,499

25,297

993,345

994,780

48,218

8,874

5,079

3,644

(9)

(66)

264

62,360

60,925


Financial assets at fair value through

profit or loss

Securities purchased under agreements to

resell

Available-for-sale financial assets, net


Accounts Interest and other receivables,

net

Held-to-maturity investments, net

Properties, net (Note2)

Intangible assets


Other assets

Total assets

Call loans and due to banks


Financial liabilities at fair value through

profit or loss

Securities sold under agreements to

repurchase

Bank debentures and bonds payable

Accrued pension cost


Other liabilities

Total liabilities

Capital stock

Capital surplus

Retained Earnings

Unrealized gains or losses on financial

instruments

Cumulative translation adjustments

Others

Total Stockholder's equity

Items 2009 2010 2011 2012

100,766

33,438

3,080

37,085

732,364

51,939

233,698

9,602

1,457

5,264

6,842

1,215,535

66,375

994,056

7,309

7,072

37,028

1,456

8,747

22,947

1,144,990

1,146,715

52,574

9,963

7,242

5,517

111

(215)

870

70,545

68,820

Ex-dividends

Post-dividends

Ex-dividends

Post-dividends

Note1：The financial statements for each year were audited by CPA.

Note2：The Bank revalued its land, which approved by the board of directors on October 21, 2011 and resulted in total revaluation increments of $867,127.

Consolidated Balance Sheets-R.O.C GAAP In NT$ millions

Ex-dividends

Post-dividends

Financial Reports

49

bank.sinopac.com

Net interest


Provision for bad debts

Operating expenses

Income from continuing operations

before income tax

Income from continuing operations, net

of tax

Net income

EPS (in NT$ dollar)(Note2)

11,559

6,948

6,176

11,028

1,303

2,085

2,085

(0)

0.42

13,517

5,971

4,966

11,035

3,487

3,501

3,501

-

0.65

13,757

5,409

3,423

11,999

3,744

2,464

2,464

-

0.44

14,449

7,712

(36)

12,428

9,769

8,220

8,220

-

1.40



Consolidated Statements of Income-R.O.C GAAP In NT$ millions

Items 2009 2010 2011 2012

attributable to owners of

parent

at t r ibutable to non-

controline interests

50



Available-for-sale financial assets

Derivative financial assets for hedging

Securities purchased under agreements to resell

Receivables, net

Current tax assets


Held-to-maturity financial assets

Equity investments - equity method, net


Property and equipment, net

Intangible assets, net

Deferred tax assets, net

Other assets

Total assets

Deposits from the central bank and banks


Derivative financial liabilities for hedging


Payables

Current tax liabilities


Bonds Payable


Provisions

Deferred tax liabilities

Other liabilities

Total liabilities

Share capital

Capital surplus

Retained earnings

Other equity

Total equity

Balance Sheets-IFRSs In NT$ millions

20132012

135,742

36,032

65,587

2

2,139

121,112

1,274

772,836

199,416

15,935

8,558

10,741

1,477

1,618

2,862

1,375,331

91,658

14,555

1

496

20,768

879

1,091,120

45,088

14,393

2,664

923

2,924

1,285,469

59,616

10,413

19,758

74

89,861

82,500

25,370

56,309

-

-

118,433

1,271

781,919

211,578

15,517

19,925

10,742

1,490

1,650

1,103

1,327,807

87,282

11,832

4

452

16,631

725

1,065,373

45,087

6,722

2,754

828

2,565

1,240,255

Note2

59,616

10,413

17,650

Note2

(127)

87,552

Note2

ItemsThe annual financial


104,250

27,011

51,062

16

236

61,702

1,169

750,309

217,319

5,418

8,312

10,895

1,565

1,789

1,624

1,242,677

69,989

8,671

23

1,201

21,377

272

1,008,786

43,002

5,685

2,738

826

1,856

1,164,426

1,164,426

53,862

10,413

13,844

8,090

132

78,251

78,251

Ex-dividends

Post-dividends

Ex-dividends

Post-dividends

Ex-dividends

Post-dividends


Note2：The appropriation of the 2013 earings is subject to the approval of the board of directors which execute the rights and functions of the stockholders' meeting in 2014.

Financial Reports

51

bank.sinopac.com

Statements Of Comprehensive Income-IFRSs In NT$ millions

Interest revenue

Less：Interest expense

Net interest


Total net revenues

Allowance for doubtful accounts and guarantees

Operating expenses

Income (loss) from continuing operations before income tax

Tax income (expense)

Income from continuing operations before income tax

Profit (loss)

Other comprehensive income, net of tax

Total comprehensive income

Profit (loss), attributable to owners of parent

Comprehensive income, attributable to owners of parent


4,262

1,852

2,410

2,571

4,981

442

2,136

2,403

(295)

2,108

2,108

202

2,310

2,108

2,310

0.35

23,789

9,994

13,795

11,298

25,093

2,092

12,310

10,691

(1,088)

9,603

9,603

(302)

9,301

9,603

9,301

1.61



22,403

9,243

13,160

7,960

21,120

395

11,308

9,417

(1,069)

8,348

8,348

227

8,575

8,348

8,575

1.42



52

104,250

27,060

236

51,062

750,310

62,175

217,319

5,424

9,214

1,565

9,370

4,802

1,242,787

69,989

1,008,786

8,671

1,201

43,002

1,433

5,978

24,763

1,163,823

1,163,823

53,862

10,413

13,738

7,984

343

(212)

820

78,964

78,964

86,007

26,368

1,152

33,083

690,441

41,711

199,083

6,478

8,719

970

7,906

4,976

1,106,894

64,588

900,716

9,507

3,067

30,121

1,602

15,982

15,356

1,040,939

1,043,390

49,550

9,207

7,145

4,694

189

(221)

85

65,955

63,504

90,321

16,815

-

31,436

652,502

50,885

123,833

8,699

8,890

995

6,065

6,107

996,548

42,370

826,352

8,636

1,598

27,130

1,486

2,965

23,651

934,188

935,623

48,218

8,874

5,079

3,644

(9)

(66)

264

62,360

60,925


Financial assets at fair value through

profit or loss

Securities purchased under agreements to

resell

Available-for-sale financial assets, net


Accounts Interest and other receivables,

net

Held-to-maturity investments, net

Equity investments - equity method

Properties, net(Note2)

Intangible assets


Other assets

Total assets

Call loans and due to banks


Financial liabilities at fair value through

profit or loss

Securities sold under agreements to

repurchase

Bank debentures and bonds payable

Accrued pension cost


Other liabilities

Total liabilities

Capital stock

Capital surplus

Retained Earnings

Unrealized gains or losses on financial

instruments

Cumulative translation adjustments

Others

Total Stockholder's equity

Items 2009 2010 2011 2012

91,462

32,791

3,080

32,601

712,006

51,656

229,880

4,570

9,377

952

8,919

4,834

1,182,128

66,167

963,100

7,310

7,072

37,028

1,456

7,847

21,603

1,111,583

1,113,308

52,574

9,963

7,242

5,517

111

(215)

870

70,545

68,820

Ex-dividends

Post-dividends

Ex-dividends

Post-dividends


Note2：The Bank revalued its land, which approved by the board of directors on October 21, 2011 and resulted in total revaluation increments of $867,127.

Balance Sheets-R.O.C GAAP In NT$ millions

Ex-dividends

Post-dividends

Items 2009 2010 2011 2012

Net interest


Provision for bad debts

Operating expenses

Pretax income

Net income


9,846

4,992

3,178

9,372

2,288

2,085

0.42

12,133

4,438

2,572

9,636

4,363

3,501

0.65

12,584

3,465

2,625

10,716

2,708

2,464

0.44

13,315

8,069

956

11,165

9,263

8,220

1.40



Statements of Income-R.O.C GAAP In NT$ millions

Financial Reports

53

bank.sinopac.com

II. Auditors' Report

INDEPENDENT AUDITORS' REPORT

Notice to Readers

The Board of Directors and StockholdersBank SinoPac

We have audited the accompanying balance sheets of Bank SinoPac as of December 31, 2013, December 31, 2012 and January 1, 2012, and the related statements of comprehensive income, changes in equity and cash flows for the years ended December 31, 2013 and 2012. These financial statements are the responsibility of the Bank's management. Our responsibility is to express an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Bank SinoPac as of December 31, 2013, December 31, 2012 and January 1, 2012, and its financial performance and its cash flows for the years ended December 31, 2013 and 2012, in conformity with Criteria Governing the Preparation of Financial Reports by Public Banks, Criteria Governing the Preparation of Financial Reports by Securities Firms and the guidelines issued by the authority.

February 27, 2014

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

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

54

Financial Reports

(In Thousands of New Taiwan Dollars)

BANK SINOPAC

January 1, 2012December 31, 2012December 31, 2013

AmountAmountAmount ％％％

$ 17,789,825

73,672,240

32,788,680

41,323

3,080,168

51,039,007

1,177,570

712,005,897

32,704,993

229,879,924

4,564,911

8,329,171

11,247,131

951,678

2,306,592

1,060,030

$ 1,182,639,140

$ 18,633,817

85,616,140

27,010,687

15,616

236,006

61,702,122

1,168,527

750,309,439

51,061,892

217,319,165

5,417,496

8,312,429

10,894,873

1,564,818

1,789,067

1,624,434

$ 1,242,676,528

$ 23,545,074

58,955,096

25,370,342

-

-

118,432,710

1,271,286

781,918,923

56,309,091

211,578,290

15,516,534

19,924,558

10,742,005

1,490,433

1,649,751

1,103,212

$ 1,327,807,305

2

6

3

-

-

4

-

60

3

20

-

1

1

-

-

-

100

2

7

2

-

-

5

-

60

4

18

-

1

1

-

-

-

100

2

4

2

-

-

9

-

59

4

16

1

2

1

-

-

-

100

ASSETS

CASH AND CASH EQUIVALENTS (Notes 6 and 41)

DUE FROM THE CENTRAL BANK AND CALL LOANS TO OTHER BANKS (Note 7)

FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (Notes 4, 8, 41 and 42)

DERIVATIVE FINANCIAL ASSETS FOR HEDGING (Notes 4 and 10)

SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL (Notes 4, 11 and 41)

RECEIVABLES, NET (Notes 4, 5, 12 and 41)

CURRENT TAX ASSETS (Notes 4, 29 and 41)

DISCOUNT AND LOANS, NET (Notes 4, 5, 13, 41 and 42)

AVAILABLE-FOR-SALE FINANCIAL ASSETS (Notes 4, 9, 14 and 42)

HELD-TO-MATURITY FINANCIAL ASSETS, NET (Notes 4, 14 and 42)

EQUITY INVESTMENTS - EQUITY METHOD, NET (Notes 4 and 15)

OTHER FINANCIAL ASSETS, NET (Notes 4, 16 and 41)

PROPERTY AND EQUIPMENT, NET (Notes 4, 17 and 41)

INTANGIBLE ASSETS, NET (Notes 4 and 18)

DEFERRED TAX ASSETS (Notes 4, 5 and 29)

OTHER ASSETS, NET (Notes 4, 19 and 41)

TOTAL

BALANCE SHEETS

55

bank.sinopac.com

LIABILITIES AND EQUITY

DEPOSITS FROM THE CENTRAL BANK AND BANKS (Note 20)

FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS (Notes 4, 8 and 41 )

DERIVATIVE FINANCIAL LIABILITIES FOR HEDGING (Notes 4 and 10)

SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE (Notes 4, 9, 21 and 41)

PAYABLES (Notes 22, 27, 30 and 41)

CURRENT TAX LIABILITIES (Notes 4, 29 and 41)

DEPOSITS AND REMITTANCES (Notes 23 and 41)

BANK DEBENTURES (Notes 4 and 24)

OTHER FINANCIAL LIABILITIES (Note 25)

PROVISIONS (Notes 4, 5, 26 and 27)

DEFERRED TAX LIABILITIES (Notes 4, 5 and 29)

OTHER LIABILITIES (Notes 28 and 41)

Total liabilities

EQUITY

Share capital

Ordinary shares

Capital surplus

Additional paid-in capital in excess of par

Capital surplus from business combination

Others

Total capital surplus

Retained earnings

Legal reserve

Special reserve

Unappropriated earnings

Total retained earnings

Other equity

Total equity

TOTAL



$ 66,166,811

7,309,754

54,319

7,071,871

19,088,655

17,989

963,100,250

37,027,843

7,565,838

2,767,122

819,136

1,987,378

1,112,976,966

52,574,469

1,884,561

8,076,524

1,733

9,962,818

4,411,447

367,188

2,451,634

7,230,269

( 105,382)

69,662,174

$ 1,182,639,140

$ 69,989,084

8,671,057

22,576

1,201,450

21,376,897

271,459

1,008,785,799

43,001,812

5,684,826

2,738,274

826,270

1,856,217

1,164,425,721

53,862,022

2,335,205

8,076,524

1,733

10,413,462

5,150,542

367,188

8,326,111

13,843,841

131,482

78,250,807

$ 1,242,676,528

$ 87,282,453

11,831,968

3,789

451,771

16,631,252

724,735

1,065,373,051

45,087,336

6,721,787

2,754,549

827,807

2,564,895

1,240,255,393

59,616,160

2,335,205

8,076,524

1,733

10,413,462

7,616,601

367,188

9,665,834

17,649,623

( 127,333)

87,551,912

$ 1,327,807,305

5

1

-

1

2

-

81

3

1

-

-

-

94

4

-

1

-

1

1

-

-

1

-

6

100

6

1

-

-

2

-

81

4

-

-

-

-

94

4

-

1

-

1

-

-

1

1

-

6

100

7

1

-

-

1

-

80

3

1

-

-

-

93

5

-

1

-

1

-

-

1

1

-

7

100

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

56

Financial Reports

Share Capital (Note 30)

Shares in Thousands Amount

Capital Surplus (Note 30) Legal Reserve

5,257,447

-

-

-

-

-

128,755

5,386,202

-

575,414

-

-

-

5,961,616

$ 52,574,469

-

-

-

-

-

1,287,553

53,862,022

-

5,754,138

-

-

-

$ 59,616,160

$ 9,962,818

-

-

-

-

-

450,644

10,413,462

-

-

-

-

-

$ 10,413,462

$ 4,411,447

739,095

-

-

-

-

-

5,150,542

2,466,059

-

-

-

-

$ 7,616,601

Special Reserve

$ 367,188

-

-

-

-

-

-

367,188

-

-

-

-

-

$ 367,188

BALANCE AT JANUARY 1, 2012

Appropriation of 2011 earnings

Legal reserve

Cash dividends

Net profit for the year ended December 31, 2012

Other comprehensive income for the year ended December 31, 2012

Total comprehensive income for the year ended December 31, 2012

Capital raising

BALANCE AT DECEMBER 31, 2012


Legal reserve

Stock dividends





BANK SINOPAC

Retained Earnings (Note 30)

(In Thousands of New Taiwan Dollars)STATEMENTS OF CHANGES IN EQUITY

57

bank.sinopac.com


Cash Flow Hedges (Notes 4 and 30) Total

Total EquityUnappropriated Earning

$ 2,451,634

( 739,095)

( 1,724,556)

8,348,066

( 9,938)

8,338,128

-

8,326,111

( 2,466,059)

( 5,754,138)

9,602,909

( 42,989)

9,559,920

$ 9,665,834

Total

$ 7,230,269

-

( 1,724,556)

8,348,066

( 9,938)

8,338,128

-

13,843,841

-

( 5,754,138)

9,602,909

( 42,989)

9,559,920

$ 17,649,623

$( 42,506)

-

-

-

23,768

23,768

-

( 18,738)

-

-

-

15,593

15,593

$( 3,145)

Exchange Differences on Translating Foreign Operations (Notes 4 and 30)

$( 215,972)

-

-

-

4,356

4,356

-

( 211,616)

-

-

-

( 1,159)

( 1,159)

$( 212,775)

$( 105,382)

-

-

-

236,864

236,864

-

131,482

-

-

-

( 258,815)

( 258,815)

$( 127,333)

$ 69,662,174

-

( 1,724,556)

8,348,066

226,926

8,574,992

1,738,197

78,250,807

-

-

9,602,909

( 301,804)

9,301,105

$ 87,551,912


Other EquityUnrealized Gain (Loss) on Available-

for- sale Financial Assets (Notes 4 and 30)

$ 153,096

-

-

-

208,740

208,740

-

361,836

-

-

-

( 273,249)

( 273,249)

$ 88,587

58

Financial Reports

$ 9,417,279

442,798

74,818

1,171,062

9,243,020

( 22,402,755)

( 51,839)

80,502

3,895

( 1,609,106)

4,799

( 6,912)

257,828

460

( 4,540)

( 9,642,578)

5,777,993

( 10,701,007)

( 39,226,726)

3,822,273

1,361,303

2,394,890

45,685,549

( 124,903)

( 4,031,897)

22,217,844

637,285

( 9,201,217)

( 52,099)

9,569,916

( 440,781,876)

422,524,062

( 1,780,758,486)

1,793,320,178

2,815

-

( 628,807)

111

35,794

( 221,811)

( 987,681)

( 7,495,701)

2013 2012

$ 10,691,374

444,787

169,155

3,114,376

9,994,514

( 23,789,473)

( 57,210)

( 11,378)

6,904

( 1,191,298)

( 195,140)

( 10,641)

74,957

( 4,659)

1,272

8,576,363

1,640,345

( 57,065,955)

( 34,611,036)

17,293,369

3,160,911

( 4,449,026)

56,587,252

( 31,468)

( 9,661,705)

23,798,939

876,044

( 10,080,944)

( 79,623)

4,852,711

( 445,637,932)

429,956,762

( 1,830,097,021)

1,845,995,029

12,500

( 9,714,624)

( 434,670)

287,061

15,466

( 11,629,074)

( 146,458)

( 21,392,961)

CASH FLOWS FROM OPERATING ACTIVITIES


Adjustments for:

Depreciation expenses

Amortization expenses

Allowance for doubtful accounts

Interest expenses

Interest revenues

Dividend revenues

Net change in provisions for losses on guarantees

Net change in other provisions

Share of profit of subsidiaries

(Gains from) losses on disposal of property and equipment

Gains from disposal of investments

Impairment losses on financial assets

(Reversal gains) impairment losses on non-financial assets

Losses on (gains from) disposal of collaterals assumed

Changes in operating assets and liabilities

Decrease (increase) in due from the central banks and call loans to other banks

Decrease in financial assets at fair value through profit or loss

Increase in receivables

Increase in discounts and loans

Increase in deposits from the central bank and banks

Increase in financial liabilities at fair value through profit or loss

(Decrease) increase in payables

Increase in deposits and remittances

Decrease in provision for employee benefits

Net cash used in operations

Interest received

Dividend received

Interest paid

Income tax paid

Net cash generated from operating activities

CASH FLOWS FROM INVESTING ACTIVITIES

Acquisition of available-for-sale financial assets

Proceeds from disposal of available-for-sale financial assets

Acquisition of held-to-maturity financial assets

Proceeds from redemption of held-to-maturity financial assets

Proceeds from capital reduction of financial assets measured at cost

Acquisition of equity investments

Acquisition of property and equipment

Proceeds from disposal of property and equipment

Proceeds from disposal of collaterals assumed

Increase in other financial assets

Increase in other assets

Net cash used in investing activities

For the Years Ended December 31

(Continued)

BANK SINOPAC

(In Thousands of New Taiwan Dollars)STATEMENTS OF CASH FLOW

59

bank.sinopac.com

$ 5,996,840

-

( 5,870,421)

( 1,881,012)

( 131,161)

( 1,724,556)

1,738,197

( 1,872,113)

99,050

301,152

64,133,779

$ 64,434,931

$ 3,497,948

( 1,400,000)

( 749,679)

1,036,961

708,678

-

-

3,093,908

36,912

( 13,409,430)

64,434,931

$ 51,025,501

$ 23,545,074

27,480,427

-

$ 51,025,501

$ 18,633,817

45,565,108

236,006

$ 64,434,931

CASH FLOWS FROM FINANCING ACTIVITIES

Bank debentures issued

Repayment of bank debentures on maturity

Decrease in securities sold under agreements to repurchase

Increase (decrease) in other financial liabilities

Increase (decrease) in other liabilities

Cash dividends

Capital raising

Net cash generated from (used in) financing activities

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

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR

CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR

Cash and cash equivalents in balance sheets

Due from the Central Bank and call loans to other banks reclassified as cash and cash equivalents under

IAS 7 "Statement of Cash Flows"

Securities purchased under agreement to resell reclassified as cash and cash equivalents under IAS 7

"Statement of Cash Flows"

Cash and cash equivalents in statements of cash flows

2013 2012



2013 2012

December 31

Reconciliation of the amounts in the statement of cash flows with the equivalent items reports in the balance sheets as of December 31, 2013 and 2012:

60

95

40

55

17

16

-

5

-

5

2

45

100

9

30

2

17

49

42

4

38

( 1)

-

-

-

-

( 1)

37

INTEREST REVENUE

LESS: INTEREST EXPENSE

NET INTEREST (Notes 4, 31 and 41)

NET REVENUES OTHER THAN INTEREST (Note 4)

Commission and fee revenues, net (Notes 32 and 41)

Gains on financial assets and liabilities at fair value through profit or loss (Notes 33 and 41)

Realized gains on available-for-sale financial assets (Note 34)

Foreign exchange gains, net

Impairment losses on assets (Notes 5 and 35)

Share of profit of subsidiaries (Note 15)

Other noninterest net revenues (Notes 36 and 41)

Total net revenues other than interest

TOTAL NET REVENUES

ALLOWANCE FOR DOUBTFUL ACCOUNTS AND GUARANTEES

OPERATING EXPENSES

Employee benefits (Notes 4, 5 and 37)

Depreciation and amortization (Notes 4 and 38)

Others (Notes 39 and 41)

Total operating expenses

INCOME BEFORE INCOME TAX

INCOME TAX EXPENSE (Notes 4, 5 and 29)

NET INCOME

OTHER COMPREHENSIVE INCOME

Unrealized valuation (losses) gains on available-for-sale financial assets

Cash flow hedges

Actuarial loss arising from defined benefit plans

Share of other comprehensive income of subsidiaries

Income tax relating to the components of other comprehensive income (Notes 4, 5 and 28)

Other comprehensive income for the period, net of income tax

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

EARNINGS PER SHARE (Note 40)

Basic

BANK SINOPAC


Amount Amount％％

PercentageIncrease

(Decrease)

$ 23,789,473

9,994,514

13,794,959

4,218,483

4,102,807

11,097

1,398,512

( 70,298)

1,191,298

446,652

11,298,551

25,093,510

2,092,031

7,408,553

613,942

4,287,610

12,310,105

10,691,374

1,088,465

9,602,909

( 188,305)

18,787

( 51,794)

( 103,739)

23,247

( 301,804)

$ 9,301,105

$ 1.61

$ 22,402,755

9,243,020

13,159,735

3,476,744

2,688,638

6,989

291,611

( 258,288)

1,609,106

145,699

7,960,499

21,120,234

394,862

7,014,394

517,616

3,776,083

11,308,093

9,417,279

1,069,213

8,348,066

221,203

28,636

( 11,973)

( 9,768)

( 1,172)

226,926

$ 8,574,992

$ 1.42

6

8

5

21

53

59

380

( 73)

( 26)

207

42

19

430

6

19

14

9

14

2

15

( 185)

( 34)

333

962

2,084

( 233)

8

106

44

62

16

13

-

1

( 1)

8

1

38

100

2

33

2

18

53

45

5

40

1

-

-

-

-

1

41


(In Thousands of New Taiwan Dollars, Except Per Share Amounts)STATEMENTS OF COMPREHENSIVE INCOME

2013 2012

％

Financial Reports

1. ORGANIZATION

August 8, 1991 Bank SinoPac (the “Bank”) obtained government approval to incorporate. January 28, 1992 The Bank started operations. May 9, 2002 The Bank swap shares with SinoPac Securities Corporation and SinoPac Securities Co., Ltd.

(the “SPS”) to establish SinoPac Financial Holdings Company Limited (the “SPH”), a financial holding company, resulting in the Bank becoming an unlisted wholly owned subsidiary of SPH, the ultimate parent company of SPH.

December 26, 2005 SPH finished the merger with International Bank of Taipei Co., Ltd. (IBT), through a 100%

share swap. May 8, 2006 The boards of directors of IBT resolved to transfer credit card business and related assets and

liabilities to SinoPac Card Services Co., Ltd. (“SinoPac Card”). The transaction has been approved by the authorities on June 22, 2006 and the assets have been transferred at the book value of $5,171,080 on August 4, 2006.

November 13, 2006 The preliminary effective date of the share swap and merger. The Bank acquired the assets

and liabilities of IBT through a share swap at ratio of 1.175 shares of the Bank to swap for 1 share of IBT.

June 1, 2009 The Bank’s cash merger with SinoPac Card took effect, with this merger amounting to

$3,873,675. Under this merger, the Bank was the surviving entity. The Bank’s ultimate parent and controller is SinoPac Holdings which holds 100% ordinary shares of the Bank. The functional currency of the Bank is New Taiwan dollars. The financial statements are presented in New Taiwan dollars.

2. APPROVAL OF FINANCIAL STATEMENTS

The financial statements were approved by the board of directors on February 27, 2014. 3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS

a. New, amended and revised standards and interpretations (the “New IFRSs”) in issue but not yet effective

The Bank has not applied the following International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), Interpretations of IFRS (IFRIC), and Interpretations of IAS (SIC) issued by the IASB. As of the date that the financial statements were authorized for issue, the Financial Supervisory Commission (the “FSC”) has not announced the effective dates for the following new, amended and revised standards and interpretations (the “New IFRSs”). On January 28, 2014, the Financial Supervisory Commission (FSC) announced the framework for the adoption of updated IFRSs version in the ROC. Under this framework, starting January 1, 2015, the previous version of IFRSs endorsed by the FSC (the 2010 IFRSs version) currently applied by companies with shares listed on the Taiwan Stock Exchange or traded on the Taiwan GreTai Securities Market, Emerging Stock Market or financial institutions governed by FSC will be replaced by the updated IFRSs without IFRS 9 (the 2013 IFRSs version). However, as of the date that the financial statements were authorized for issue, the FSC has not endorsed the following new, amended and revised standards and interpretations issued by the IASB (the “New IFRSs”) included in the 2013 IFRSs version. Furthermore, the FSC has not announced the effective date for the following New IFRSs that are not included in the 2013 IFRSs version.

BANK SINOPAC

FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012(In Thousands of New Taiwan Dollars, Unless Otherwise Stated) NOTES TO FINANCIAL STATEMENTS

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The New IFRSs Included in the

2013 IFRSs Version Not Yet Endorsed by the FSC Effective Date

Announced by IASB (Note 1) Improvements to IFRSs (2009) - amendment to IAS 39 January 1, 2009 and January 1, 2010,

as appropriate Amendment to IAS 39 “Embedded Derivatives” Effective for annual periods ending

on or after June 30, 2009 Improvements to IFRSs (2010) July 1, 2010 and January 1, 2011, as

appropriate Annual Improvements to IFRSs 2009-2011 Cycle January 1, 2013 Amendment to IFRS 1 “Limited Exemption from Comparative IFRS 7 Disclosures

for First-time Adopters” July 1, 2010

Amendment to IFRS 1 “Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters”

July 1, 2011

Amendment to IFRS 1 “Government Loans” January 1, 2013 Amendment to IFRS 7 “Disclosure - Offsetting Financial Assets and Financial

Liabilities” January 1, 2013

Amendment to IFRS 7 “Disclosure - Transfer of Financial Assets” July 1, 2011 IFRS 10 “Consolidated Financial Statements” January 1, 2013 IFRS 11 “Joint Arrangements” January 1, 2013 IFRS 12 “Disclosure of Interests in Other Entities” January 1, 2013 Amendments to IFRS 10, IFRS 11 and IFRS 12 “Consolidated Financial Statements,

Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance”

January 1, 2013

Amendments to IFRS 10 and IFRS 12 and IAS 27 “Investment Entities” January 1, 2014 IFRS 13 “Fair Value Measurement” January 1, 2013 Amendment to IAS 1 “Presentation of Other Comprehensive Income” July 1, 2012 Amendment to IAS 12 “Deferred Tax: Recovery of Underlying Assets” January 1, 2012 IAS 19 (Revised 2011) “Employee Benefits” January 1, 2013 IAS 27 (Revised 2011) “Separate Financial Statements” January 1, 2013 IAS 28 (Revised 2011) “Investments in Associates and Joint Ventures” January 1, 2013 Amendment to IAS 32 “Offsetting Financial Assets and Financial Liabilities” January 1, 2014 IFRIC 20 “Stripping Costs in Production Phase of a Surface Mine” January 1, 2013

The New IFRSs Not Included in the 2013 IFRSs Version Effective Date

Announced by IASB (Note 1) Annual Improvements to IFRSs 2010-2012 Cycle July 1, 2014 (Note 2) Annual Improvements to IFRSs 2011-2013 Cycle July 1, 2014 IFRS 9 “Financial Instruments” Effective date not determined Amendments to IFRS 9 and IFRS 7 “Mandatory Effective Date of IFRS 9 and

Transition Disclosures” Effective date not determined

IFRS 14 “Regulatory Deferral Account” January 1, 2016 Amendment to IAS 19 “Defined Benefit Plans: Employee Contributions” July 1, 2014 Amendment to IAS 36 “Impairment of Assets: Recoverable Amount Disclosures

for Non-financial Assets” January 1, 2014

Amendment to IAS 39 “Novation of Derivatives and Continuation of Hedge Accounting”

January 1, 2014

IFRIC 21 “Levies” January 1, 2014

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

Note 2: The amendment to IFRS 2 applies to share-based payment transactions for which the grant date is on or after July 1,

2014; the amendment to IFRS 3 applies to business combinations for which the acquisition date is on or after July 1, 2014; the amendment to IFRS 13 is effective immediately; the remaining amendments are effective for annual periods beginning on or after July 1, 2014.

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b. Significant impending changes in accounting policy resulted from New IFRSs in issue but not yet effective

Except for the following, the initial application of the above New IFRSs has not had any material impact on the Bank’s accounting policies:

1) IFRS 9 “Financial Instruments”

Recognition and measurement of financial assets

With regards to financial assets, all recognized financial assets that are within the scope of IAS 39 “Financial Instruments: Recognition and Measurement” are subsequently measured at amortized cost or fair value. Specifically, financial assets that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest on the principal outstanding are generally measured at amortized cost at the end of subsequent accounting periods. All other financial assets are measured at their fair values at the end of reporting period. However, the Bank may make an irrevocable election to present subsequent changes in the fair value of an equity investment (that is not held for trading) in other comprehensive income, with only dividend income generally recognized in profit or loss. Recognition and measurement of financial liabilities As for financial liabilities, the main changes in the classification and measurement relate to the subsequent measurement of financial liabilities designated as at fair value through profit or loss. The amount of change in the fair value of such financial liability attributable to changes in the credit risk of that liability is presented in other comprehensive income and the remaining amount of change in the fair value of that liability is presented in profit or loss, unless the recognition of the effects of changes in the liability's credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss. Changes in fair value attributable to a financial liability's credit risk are not subsequently reclassified to profit or loss. If the above accounting treatment would create or enlarge an accounting mismatch in profit or loss, the Bank presents all gains or losses on that liability in profit or loss. Hedge accounting The main changes in hedge accounting amended the application requirements for hedge accounting to better reflect the entity’s risk management activities. Compared with IAS 39, the main changes include: (1) enhancing types of transactions eligible for hedge accounting, specifically broadening the risk eligible for hedge accounting of non-financial items; (2) changing the way hedging derivative instruments are accounted for to reduce profit or loss volatility; and (3) replacing retrospective effectiveness assessment with the principle of economic relationship between the hedging instrument and the hedged item. Effective date The mandatory effective date of IFRS 9, which was previously set at January 1, 2015, was removed and will be reconsidered once the standard is complete with a new impairment model and finalization of any limited amendments to classification and measurement.

2) IFRS 13 “Fair Value Measurement”

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

3) Revision to IAS 19 “Employee Benefits”

Revision in 2011

To the extent that the benefits are already vested immediately following the changes to a defined benefit plan, an entity shall recognize past service cost immediately. An entity shall recognize past service cost as an expense on a straight-line basis over the average period until the benefits become vested.

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Amendment in 2013

Past service cost is recognized as an expense wholly when it occurs.

4) Amendment to IAS 36 “Recoverable Amount Disclosures for Non-financial Assets”

In issuing IFRS 13 “Fair Value Measurement”, the IASB made consequential amendment to the disclosure requirements in IAS 36 “Impairment of Assets”, introducing a requirement to disclose in every reporting period the recoverable amount of an asset or each cash-generating unit. The amendment clarifies that such disclosure of recoverable amounts is required only when an impairment loss has been recognized or reversed during the period. Furthermore, the Bank is required to disclose the discount rate used in measurements of the recoverable amount based on fair value less costs of disposal measured using a present value technique.

c. Significant impending changes in accounting policy resulted from the amendments to the Regulations Governing the

Preparation of Financial Reports by Securities Issuers in issue but not yet effective

The Bank is in the process of estimating the impact of the initial application of the Standards, Amendments and Interpretations on its financial position and results of operations. Disclosures will be provided until a detailed review of the impact has been completed.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICY

The financial statements for the year ended December 31, 2013 is its first IFRS financial statements prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Public Banks and Criteria Governing the Preparation of Financial Reports by Securities Firms. Statement of Compliance The financial statements have been prepared in accordance with Criteria Governing the Preparation of Financial Reports by Public Banks, Criteria Governing the Preparation of Financial Reports by Securities Firms, and the guidelines issued by the authority (the “Regulations”). Basis of Preparation The financial statements have been prepared on the historical cost basis except for certain properties and financial instruments that are measured at revalued amounts or fair values, as explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange for assets. When preparing its financial statements, the Bank used equity method to account for its investment in subsidiaries. In order for the amounts of the net profit for the year, other comprehensive income for the year and total equity in the financial statements to be the same with the amounts attributable to the owner of the Bank in its consolidated financial statements, adjustments arising from the differences in accounting treatment between basis and consolidated basis were made to equity investment - equity method, share of profit or loss of subsidiaries and share of other comprehensive income of subsidiaries and related equity items, as appropriate, in the financial statements. Since the operating cycle in the banking industry cannot be reasonably identified, the accounts included in the financial statements were not classified as current or noncurrent. Nevertheless, accounts were properly categorized in accordance with the nature of each account and sequenced by their liquidity. Please refer to Note 45 for the maturity analysis of assets and liabilities. The significant accounting policies are set out as below. Principles for Preparing Financial Statements The accompanying financial statements include the accounts of the Head Office, OBU, all branches and the representative office. All interoffice transactions and balances have been eliminated.

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Foreign Currencies In preparing the financial statements of the Bank, transactions in currencies other than the Bank’s functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions. Functional currency is the currency of the primary economic environment in which the entity operates. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items measured at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences arising from settlement or translation are recognized in profit or loss. Exchange differences arising on the retranslation of non-monetary assets (such as equity instruments) or liabilities measured at fair value are included in profit or loss for the period at the rates prevailing at the end of reporting period except for exchange differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognized directly in other comprehensive income, in which case, the exchange differences are also recognized directly in other comprehensive income. For the purposes of presenting the financial statements, the assets and liabilities of the Bank’s foreign operations are translated into New Taiwan dollars using exchange rates prevailing at the end of each reporting period. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising are recognized in other comprehensive income.

Investments Accounted for Using Equity Method The Bank uses equity method of accounting on investment of subsidiaries. The subsidiaries are the entities controlled by the Bank. Under the equity method, the investment is initially recognized at cost and the carrying amount is increased or decreased to recognize the Bank 's share of the profit or loss and other comprehensive income of the subsidiary after the date of acquisition. Besides, the Bank also recognizes the Bank’s share of the change in other equity of the subsidiary. When the Bank’s share of losses of a subsidiary equals or exceeds its interest in that subsidiary (which includes any carrying amount of the investment in subsidiary accounted for by the equity method and long-term interests that, in substance, form part of the Bank’s net investment in the subsidiary), the Bank continues recognizing its share of further losses. The acquisition cost in excess of the acquisition-date fair value of the identifiable net assets acquired is recognized as goodwill. Goodwill is not amortized. Profits and losses from downstream transactions with a subsidiary are eliminated in full. Profits and losses from upstream with a subsidiary and side stream transactions between subsidiaries are recognized in the financial statements only to the extent of interests in the subsidiary that are not related to the Bank. Financial Instruments Financial assets and financial liabilities are recognized when the Bank becomes a party to the contractual provisions of the instruments. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss. Financial assets All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis. a. Measurement category

Financial assets are classified into the following specified categories: Financial assets at fair value through profit or loss, held-to-maturity investments, available-for-sale financial assets and loans and receivables.

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1) Financial assets at fair value through profit or loss

Financial assets are classified as at fair value through profit or loss when the financial asset is either held for trading or it is designated as at fair value through profit or loss.

A Financial asset is classified as designated as at fair value through profit or loss if:

a) Such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise

arise; b) The financial asset forms part of a group of financial assets or financial liabilities or both, which is managed and its

performance is evaluated on a fair value basis, in accordance with the Bank’s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or

c) A contract contains one or more embedded derivatives, the entire hybrid (combined) contract can be designated as a

whole.

Financial assets at fair value through profit or loss are stated at fair value. The net gain or loss which incorporates any dividend or interest earned on the financial asset recognized in profit or loss.

2) Available-for-sale financial assets

Available-for-sale financial assets are non-derivatives that are either designated as available-for-sale or are not classified as loans and receivables, held-to-maturity investments or financial assets at fair value through profit or loss. Fair value is determined in the manner described in Note 44. Available-for-sale financial assets are measured at fair value. Changes in the carrying amount of available-for-sale monetary financial assets relating to changes in foreign currency exchange rates, interest income calculated using the effective interest method and dividends on available-for-sale equity investments are recognized in profit or loss. Other changes in the carrying amount of available-for-sale financial assets are recognized in other comprehensive income. When the investment is disposed of or is determined to be impaired, the cumulative gain or loss that previously accumulated in the investments revaluation reserve is reclassified to profit or loss. The effective interest method is a method of calculating the amortized cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition. Dividends on available-for-sale equity instruments are recognized in profit or loss when the Bank’s rights to receive the dividends are established. Available-for-sale equity investments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured and derivatives that are linked to and must be settled by delivery of such unquoted equity investments are measured at cost less any identified impairment loss at the end of each reporting period and are recognized in a separate line item as financial assets carried at cost. If, in a subsequent period, the fair value of the financial assets cannot be reliably measured, the financial assets are remeasured at fair value. The difference between carrying amount and fair value is recognized in other comprehensive income on financial assets and recognized in profit or loss when impairment loss is identified.

3) Held-to-maturity investments

Held-to-maturity investments are investments with specific ratings that the Bank has the positive intent and ability to hold to maturity such as corporate bonds and governments bonds. Subsequent to initial recognition, held-to-maturity investments are measured at amortized cost using the effective interest method less any impairment.

4) Loans and receivables

Loans and receivables are measured at amortized cost using the effective interest method, less any impairment. Interest income is recognized by applying the effective interest rate, except for short-term receivables when the effect of discounting is immaterial.

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b. Impairment of financial assets

Financial assets, other than those at fair value through profit or loss, are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected. In determining the allowance for credit losses and provision for losses on guarantees, the Bank assesses the collectability of discounts and loans, receivables, and other financial assets, as well as guarantees and acceptances as of the balance sheet date. Loans and receivables are assessed for impairment at the end of each reporting period and considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the foregoing discounts and loans, receivables, and other financial assets, the estimated future cash flows of the asset have been affected. Objective evidence of impairment could include:

� Significant financial difficulty of the debtor; � The foregoing discounts and loans, receivables, and other financial assets becoming overdue; or � Probability that the debtor will enter into bankruptcy or undergo financial reorganization.

Discounts and loans, receivables, and other financial assets that are assessed as not impaired individually are further assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of discounts and loans, receivables, and other financial assets could include the Bank’s past experience of collecting payments and an increase in the number of delayed payments, as well as observable changes in national or local economic conditions that correlate with defaults on loans and receivables. The amount of the impairment loss recognized is the difference between the asset carrying amount and the present value of estimated future cash flows, after taking into account the related collaterals and guarantees, discounted at the original effective interest rates. The carrying amount of the discounts and loans, receivables, and other financial assets is reduced through the use of an allowance account. Under the “Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Nonperforming/Nonaccrual Loans” (the “NPL Regulations”), the Bank evaluates credit losses on the basis of the estimated collectability. In accordance with the NPL Regulations, credit assets are classified as normal assets, assets that require special mentioned, assets with substandard, assets with doubtful collectability, and assets on which there is loss. Based on the above NPL Regulations, the minimum allowance for credit losses and provision for losses on guarantees for the assets that require special mentioned, assets that are substandard, assets with doubtful collectability, and assets on which there is loss were 2%, 10%, 50% and 100%, respectively of outstanding. Effective January 1, 2011, however, under an amendment to the NPL Regulations, the minimum provisions for possible losses should be the sum of (a) 0.5% of the outstanding balance of normal on-and off-balance sheet credit assets (excluding assets that represent claims against an ROC government agency) and (b) 0.5% of the foregoing provisions for unsound credit assets. The minimum loan loss provision and reserves against liability on guarantees of normal credit assets should be allocated sufficiently within three years of the execution of the amendment. In addition, under Financial Supervisory Commission (FSC) guidelines No. 10010006830 there should be a provision at more than 1% of sum of a minimum allowance for credit losses and the provision for losses on guarantees. For available-for-sale equity investments, a significant or prolonged decline in the fair value of the security below its cost is considered to be objective evidence of impairment. When an available-for-sale financial asset is considered to be impaired, cumulative gains or losses previously recognized in other comprehensive income are reclassified to profit or loss in the period. In respect of available-for-sale equity securities, impairment loss previously recognized in profit or loss are not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss is recognized in other comprehensive income and accumulated under the heading of investments revaluation reserve. In respect of available-for-sale debt securities, impairment loss are subsequently reversed through profit or loss if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss. For financial assets that are carried at cost, the amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment loss will not be reversed in subsequent periods.

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The carrying amount of the financial asset is reduced through the use of an allowance account or accumulated impairment account. When those financial assets are considered uncollectible, they are written off against the allowance account and accumulated impairment account. Subsequent recoveries of amounts previously written off are debited against the bad debt expense or credited against the allowance account in according with Criteria Governing the Preparation of Financial Reports by Public Banks.

c. Derecognition of financial assets

The Bank derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. On derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognized in other comprehensive income and accumulated in equity is recognized in profit or loss.

Financial liabilities and equity instruments Debt and equity instruments issued by the Bank are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument. Equity and debt instruments are recognized at the proceeds received, net of direct issue costs. a. Measurement and recognition

Except the following situation, all the financial liabilities are measured at amortized cost using the effective interest method (see above for the definition of effective interest method): Financial liabilities at fair value through profit or loss Financial liabilities are classified as at fair value through profit or loss when the financial liability is either held for trading or it is designated as at fair value through profit or loss.

A financial liability is classified as designated as at fair value through profit or loss if:

1) Such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise

arise; 2) The financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its


3) The contract contains one or more embedded derivatives, so that the entire hybrid (combined) contract can be designated

at fair value through profit or loss.

Financial liabilities at fair value through profit or loss are stated at fair value. The net gain or loss recognized in profit or loss incorporates any dividends paid on the financial liability. Fair value is determined in the manner described in Note 44.

b. Derecognition of financial liabilities

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

Financial Guarantee Contracts Financial guarantee contracts issued by the Bank is initially recognized at their fair values and, if not designated as at fair value through profit or loss, are subsequently measured at amortized cost. If obligation of a financial guarantee contract will most likely to be paid, it will be measured at the higher of the best estimate or the amortized amount of the obligation under the contract.

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Derivative Financial Instruments and Hedge Accounting Derivatives are initially recognized at fair value at the date the derivative contracts are entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognized in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship. When the fair value of derivative financial instruments is positive, the derivative is recognized as a financial asset; when the fair value of derivative financial instruments is negative, the derivative is recognized as a financial liability. Derivatives embedded in non-derivative host contracts are treated as separate derivatives when they meet the definition of a derivative, their risks and characteristics are not closely related to those of the host contracts and the contracts are not measured at fair value through profit or loss. The Bank designates certain hedging instruments as either fair value hedges or cash flow hedges. a. Fair value hedges

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recognized in profit or loss immediately, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. The change in the fair value of the hedging instrument and the change in the hedged item attributable to the hedged risk are recognized in profit or loss in the line item relating to the hedged item. Hedge accounting is discontinued prospectively when the Bank revokes the designated hedging relationship, or when the hedging instrument expires or is sold, terminated, or exercised, or when it no longer meets the criteria for hedge accounting.

b. Cash flow hedges

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognized in other comprehensive income. The gain or loss relating to the ineffective portion is recognized immediately in profit or loss. The associated gains or losses that were recognized in other comprehensive income are reclassified from equity to profit or loss as a reclassification adjustment in the line item relating to the hedged item in the same period when the hedged item affects profit or loss. If a hedge of a forecast transaction subsequently results in the recognition of a non-financial asset or a non-financial liability, the associated gains and losses that were recognized in other comprehensive income are removed from equity and are included in the initial cost of the non-financial asset or non-financial liability. Hedge accounting is discontinued prospectively when the Bank revokes the designated hedging relationship, or when the hedging instrument expires or is sold, terminated, or exercised, or when it no longer meets the criteria for hedge accounting. The cumulative gain or loss on the hedging instrument that has been previously recognized in other comprehensive income from the period when the hedge was effective remains separately in equity until the forecast transaction occurs. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in equity is recognized immediately in profit or loss.

Repurchase and Reverse Repurchase Transactions Securities purchased under agreements to resell (reverse repurchase) agreements and securities sold under agreements to repurchase are generally treated as collateralized financing transactions. Interest earned on reverse repurchase agreements or interest incurred on repurchase agreements is recognized as interest income or interest expense over the life of each agreement. Property and Equipment Property and equipment are stated at cost, less subsequent accumulated depreciation and subsequent accumulated impairment loss when it is probable that future economic benefits associated with the item will flow to the Bank and the cost of the item can be measured reliably. Depreciation of property and equipment is recognized so as to write off the cost of assets less their residual values over their estimated useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period.

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An item of property and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss. Leasing Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. a. The Bank as lessor

Rental income from operating leases is recognized on a straight-line basis over the term of the relevant lease unless another systematic basis is representative of the time pattern of the lessee’s benefit from the use of the leased asset.

b. The Bank as lessee

Operating lease payments are recognized as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

Intangible Assets a. Intangible assets acquired separately

Intangible assets with finite useful lives that are acquired separately are initially measured at cost and subsequently measured at cost less accumulated amortization and accumulated impairment loss. Amortization is recognized on a straight-line basis. The estimated useful life, residual value, and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. The residual value of an intangible asset with a finite useful life shall be assumed to be zero unless the Bank expects to dispose of the intangible asset before the end of its economic life.

b. Intangible assets acquired in a business combination

Intangible assets acquired in a business combination and recognized separately from goodwill are initially recognized at their fair value at the acquisition date (which is regarded as their cost). Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortization and accumulated impairment loss, on the same basis as intangible assets that are acquired separately.

c. Derecognition of intangible assets

An intangible asset is derecognized on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognized in profit or loss when the asset is derecognized.

Goodwill For the purposes of impairment testing, goodwill is allocated to each of the Bank's cash-generating units (or groups of cash-generating units) that is expected to benefit from the synergies of the combinations. A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognized directly in profit or loss. An impairment loss recognized for goodwill is not reversed in subsequent periods. In assessing whether a controlled equity investment is impaired, the Bank considers the cash generating units in entire financial reports aspect. If the recoverable amount of the cash-generating unit increase, the reversal of impairment loss is recognized as gain. However, the increase of carrying amount after impairment loss reversal can only to the extent of the carrying amount that would have been determined had no impairment loss been recognized for the asset or cash-generating unit in prior years. Collaterals Assumed Collaterals assumed are recorded at cost and revalued at the lower of cost or net fair value as of the balance sheet date.

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Impairment of Tangible and Intangible Assets (Excluded Goodwill) At the end of each reporting period, the Bank reviews the carrying amounts of its tangible and intangible assets, excluding goodwill, to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. When it is not possible to estimate the recoverable amount of an individual asset, the Bank estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to the individual cash-generating units; otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified. Recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount. When an impairment loss subsequently is reversed, the carrying amount of the asset or cash-generating unit is increased to the revised estimate of its recoverable amount, but only to the extent of the carrying amount that would have been determined had no impairment loss been recognized for the asset or cash-generating unit in prior years. A reversal of an impairment loss is recognized immediately in profit or loss. Provisions Provisions are recognized when the Bank has a present obligation (legal or constructive) as a result of a past event, it is probable that the Bank will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Provisions, including those arising from the contractual obligation specified in the service concession arrangement to maintain or restore the infrastructure before it is handed over to the grantor, are measured at the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (where the effect of the time value of money is material). When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably. Employee Benefits a. Retirement benefit costs

Payments to defined contribution retirement benefit plans are recognized as an expense when employees have rendered service entitling them to the contributions. For defined benefit retirement benefit plans, the cost of providing benefits is determined using the Projected Unit Credit Method. Any actuarial gains and losses generated from retirement benefit obligation are recognized in other comprehensive income. Past service cost is recognized immediately to the extent that the benefits are already vested, and otherwise is amortized on a straight-line basis over the average period until the benefits become vested. The retirement benefit obligation recognized in the consolidated balance sheets represents the present value of the defined benefit obligation as adjusted for unrecognized past service cost, and as reduced by the fair value of plan assets. Any asset resulting from this calculation is limited to the unrecognized past service cost, plus the present value of available refunds and reductions in future contributions to the plan. Curtailment or settlement gains or losses on the defined benefit plan are recognized when the curtailment or settlement occurs.

b. Preferential interest on employees’ deposits

The Bank offers preferential interest rate to its current employees for their deposits within a prescribed amount. Under Article 28 of the Criteria Governing the Preparation of Financial Reports by Public Bank, if the Bank’s preferential deposit interest rate for as stated in the employment contract exceeds the market interest rate, the excess will be subject to IAS 19 “Employee Benefits” upon the employee’s retirement. The actuarial valuation assumptions and parameters are based on those announced by authority, if any.

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Revenue Recognition Interest income and expense Except for financial assets and liabilities at fair value through profit or loss, all interest-earning financial assets and interest-bearing financial liabilities are accrued using the effective interest rate method and are accounted for as interest revenue and interest expense in the statement of comprehensive income. Transaction costs and all other premium or discounts associated with the loans and receivables are adjusted to the carrying amount of the loans and receivables. The calculation of effective interest rate includes transaction costs and all other premium or discounts paid or received by the Bank that is an integral part of the effective interest rate. Interest should not be accrued for loans that are transferred to nonperforming loans. The interest revenue on those loans/credits is recognized upon collection. Under Ministry of Finance (MOF) regulations, the interest revenue on structured loans is recognized upon collection. Interest income on revolving credit card receivables and cash advance is recognized on an accrual basis. Commission revenue Commission fee revenue and expenses are recognized when loans or other services are provided. Service fees on significant projects are recognized when the project has been completed, for instance, loans syndicated fees are recognized over the period during which the service is performed, or as an adjustment to the effective interest rate on the loan and receivables. Annual fee income is the membership fee received from card members and is recognized when card members fail to meet the criteria for annual fee exemption; an allowance is estimated using past experience and is recognized as a deduction from annual fee income within the year the annual fee income is recognized. Dividend income Dividend income from investments is recognized when the shareholder’s right to receive payment has been established provided that it is probable that the economic benefits will flow to the Bank and the amount of income can be measured reliably. Income Tax Income tax expense represents the sum of the current tax and deferred tax. a. Current tax

According to the Income Tax Act, an additional tax at 10% of unappropriated earnings is provided for as income tax in the year the shareholders approve to retain the earnings. Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.

b. Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences and unused loss carry forward that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries, except where the Bank able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. A previously unrecognized deferred tax asset is also reviewed at the end of each reporting period and recognized to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

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Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Bank expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

c. Current and deferred tax for the period

Current and deferred tax are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognized in other comprehensive income or directly in equity respectively.

d. Linked-tax system

SPH adopted the linked-tax system for income tax filings with its qualified subsidiaries, including the Bank. The different amounts between tax expense and deferred tax liabilities and assets based on consolidation and SPH with its qualified subsidiaries are adjusted on SPH; related amounts are recognized as current tax assets or current tax liabilities.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Bank’s accounting policies, which are described in Note 4, management is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. a. Impairment loss on loans and receivables

The Bank reviews loan portfolios and receivables to assess impairment periodically. In determining whether an impairment loss should be recorded, the Bank makes judgments as to whether there is any observable data indicating that impairment is occurred. This evidence may include observable data indicating that there has been an adverse change in the payment status of borrowers (e.g. payment delinquency or default), or economic conditions that correlate with defaults on assets. For the purpose of assessing impairment, the management uses estimates based on historical loss experience for assets with credit risk characteristics and objective evidence of impairment similar to those in the portfolio when estimating expected future cash flows. The methodology and assumptions used for estimating both the amount and timing of future cash flows are reviewed regularly in order to decrease the difference between estimated loss and actual loss. Impairment losses of loans and receivables are shown in Note 12 and Note 13.

b. Fair value of financial instruments

As described in Note 45, the Bank’s management use its judgment in selecting an appropriate valuation technique for financial instruments that do not have quoted market price in an active market. Valuation techniques commonly used by market practitioners are applied. For derivative financial instruments, assumptions were based on quoted market rates adjusted for specific features of the instruments. Other financial instruments were valued using a discounted cash flow analysis that includes assumptions based on quoted market prices or rates (if available). The measurement for the fair value of unlisted equity investments includes assumptions not based on observable market prices or rates. Note 45 provides detail information about the key assumptions used in the determination of the fair value of financial instrument. The Bank’s management believe that the chosen valuation techniques and assumption used are appropriate in determining the fair value of financial instruments.

c. Estimation of goodwill impairment

Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units to which goodwill has been allocated. The value in use calculation requires management to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value. When the actual future cash flows are less than expected, a material impairment loss may arise. Estimation of goodwill impairment is shown in Note 18.

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d. Income tax

As of December 31, 2013, December 31, 2012 and January 1, 2012, the carrying amounts of deferred tax assets are $1,649,751, $1,789,067 and $2,306,592, respectively. As of December 31, 2013, December 31, 2012 and January 1, 2012, deferred tax asset has not been recognized is $26,500, due to the unpredictability of future profit streams. The realizability of the deferred tax asset mainly depends on whether sufficient future profits or taxable temporary differences will be available in the future. In cases where the actual future profits generated are less than expected, a material reversal of deferred tax assets may arise, which would be recognized in profit or loss for the period in which such reversal takes place.

e. Employee benefit obligation reserve

The present value of defined benefit obligation and preferential interest on employees’ deposits are based on several actuarial assumptions. Any changes on these assumptions will influence the fair value of the employee benefit obligations. One of assumptions used to determine net pension cost (income) is discount rate. The Bank determined the appropriate discount rate at the end of each year, and used the rate to calculate the present value of future cash flows on estimated payment of employee benefit obligation. Employee benefit obligation reserve is shown in Note 27.

6. CASH AND CASH EQUIVALENTS

December 31,

2013 December 31,

2012 January 1,

2012 Cash on hand $ 7,459,671 $ 7,009,686 $ 5,866,186 Due from other banks 14,341,809 5,391,764 6,765,193 Checks for clearing 1,743,594 6,232,367 5,158,446 $ 23,545,074 $ 18,633,817 $ 17,789,825 Cash and cash equivalents as of December 31, 2013, December 31, 2012 and January 1, 2012 as shown in the statements of cash flows can be reconciled to the related items in the balance sheets as follows:

December 31,

2013 December 31,

2012 January 1,

2012 Cash and cash equivalents in balance sheets $ 23,545,074 $ 18,633,817 $ 17,789,825 Due from the Central Bank and call loans to other banks

reclassified as cash and cash equivalents under IAS 7 “Statement of Cash Flows” 27,480,427 45,565,108 43,263,786

Securities purchased under agreement to resell reclassified as cash and cash equivalents under IAS 7 “Statement of Cash Flows” - 236,006 3,080,168

Cash and cash equivalents in statements of cash flows $ 51,025,501 $ 64,434,931 $ 64,133,779

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

December 31,

2013 December 31,

2012 January 1,

2012 Call loans to banks $ 26,148,448 $ 46,122,446 $ 33,633,978 Deposit reserve - checking accounts 7,889,096 13,888,006 15,319,773 Due from Central Bank - interbank settlement funds 802,160 835,207 800,372 Deposit reserve - demand accounts 23,929,683 24,639,366 23,781,812 Deposit reserve - foreign currencies 185,709 131,115 136,305 $ 58,955,096 $ 85,616,140 $ 73,672,240

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Under a directive issued by the Central Bank of the ROC, New Taiwan dollar (NTD)-denominated deposit reserves are determined monthly at prescribed rates based on average balances of customers’ NTD-denominated deposits. Deposit reserve - demand account should not be used, except for adjusting the deposit reserve account monthly. In addition, the foreign-currency deposit reserves are determined at prescribed rates based on the balances of foreign-currency deposits. These reserves may be withdrawn momentarily at based on any time at no interest earning.

8. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

December 31,

2013 December 31,

2012 January 1,

2012 Held-for-trading financial assets

Government bonds $ 5,432,683 $ 10,981,735 $ 3,110,330 Corporate bonds 4,251,470 2,174,342 2,944,445 Bank debentures 250,382 885,491 656,135 Listed stocks 124,746 104,402 33,046 Convertible bonds 6,895 19,385 60,851 Beneficiary certificates 5,000 385,813 445,813 Treasury bills - 513,382 - Collateralized debt obligations - 60,038 62,415 Negotiable certificates of deposits - - 17,000,000 Currency swap and option contracts 7,128,234 4,088,806 833,430 Forward contracts 2,738,960 1,778,951 2,101,499 Interest rate swap contracts 1,764,616 2,726,906 4,569,158 Cross-currency swap contracts 103,315 89,422 192,369 Others 111,183 28,875 24,036 Adjustment for change in value of held-for-trading

financial assets 35,473 (55,720) (120,915) 21,952,957 23,781,828 31,912,612 Financial assets designated at fair value through profit or

loss Convertible bonds 3,413,264 3,226,505 885,321 Adjustment for change in value of financial assets

designated at fair value through profit or loss 4,121 2,354 (9,253) 3,417,385 3,228,859 876,068 $ 25,370,342 $ 27,010,687 $ 32,788,680 Held-for-trading financial liabilities

Currency swap and option contracts $ 7,280,607 $ 4,082,824 $ 957,453 Forward contracts 2,533,490 1,711,301 1,605,822 Interest rate swap contracts 1,724,590 2,783,076 4,583,328 Cross-currency swap contracts 185,253 59,948 123,602 Others 108,028 33,908 39,549 $ 11,831,968 $ 8,671,057 $ 7,309,754

a. The Bank designated hybrid instruments as financial assets and liabilities at FVTPL. b. Financial assets at fair value through profit or loss had not been sold with agreement to repurchase. Please refer to Note 42

for information relating to financial assets at fair value through profit or loss pledged as security.

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c. The Bank engages in derivative transactions mainly to accommodate customers’ needs and manage their own exposure positions. Outstanding derivative contracts (nominal) on December 31, 2013, December 31, 2012 and January 1, 2012 are shown as follows:

Contract Amount

December 31,

2013 December 31,

2012 January 1,

2012 Currency swap contracts $ 579,499,783 $ 342,886,217 $ 379,929,660 Interest rate swap contracts 478,289,635 631,767,938 836,221,169 Option contracts

Long position 195,011,294 283,134,468 146,307,870 Short position 189,339,438 283,964,933 145,337,961

Non-deliverable forward contracts Long position 79,328,873 256,278,267 270,945,746 Short position 79,853,568 256,187,238 270,144,366

Forward contracts Long position 26,847,334 18,802,164 5,310,071 Short position 22,392,937 14,423,966 3,381,876

Cross-currency swap contracts 19,565,547 10,050,740 8,590,579 Assets swap contracts 3,413,264 3,226,505 1,036,771 Equity-linked swap contracts 2,030,257 962,766 35,057 Futures contracts 580,849 1,529 1,288,682 Commodity-linked swap contracts 263,743 297,575 273,825 Credit default swap contracts - 800,000 1,100,000 Credit-linked swap contracts - 800,000 1,100,000

9. AVAILABLE-FOR-SALE FINANCIAL ASSETS

December 31,

2013 December 31,

2012 January 1,

2012 Corporate bonds $ 18,476,989 $ 21,857,346 $ 8,181,722 Commercial papers 13,782,378 5,671,685 5,024,505 Government bonds 11,955,118 16,067,406 12,174,696 Bank debentures 6,398,049 6,717,511 6,119,105 Negotiable certificates of deposits 5,497,025 437,049 454,350 Others 20,983 6,472 667,396 56,130,542 50,757,469 32,621,774 Adjustments for change in value of available-for-sale

financial assets 178,549 304,423 83,219 $ 56,309,091 $ 51,061,892 $ 32,704,993 As of December 31, 2013, December 31, 2012 and January 1, 2012, available-for-sale financial assets had been sold under repurchase agreements amounted to $451,771, $1,201,450 and $7,071,871, respectively. Please refer to Note 42 for information relating to available-for-sale financial assets pledged as security.

10. DERIVATIVE FINANCIAL INSTRUMENTS FOR HEDGING The Bank’s management had established related risk management policy.

December 31,

2013 December 31,

2012 January 1,

2012 Derivative financial assets under hedge accounting Fair value hedge - interest rate swap $ - $ 15,616 $ 41,323

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December 31,

2013 December 31,

2012 January 1,

2012 Derivative financial liabilities under hedge accounting

Cash flow hedge - interest rate swap $ 3,789 $ 22,576 $ 51,212 Fair value hedge - interest rate swap - - 3,107 $ 3,789 $ 22,576 $ 54,319 a. Fair value hedge

The fair value risk on the interest of the fixed rate bank debentures and fixed rate loans may fluctuate as market rates change. The Bank used interest rate swap contracts as hedging instruments. January 1 to December 31, 2012

Hedged Items Hedging Instruments Notional Amount Fair Value

Adjustments for Change in Value

of Derivative Financial

Instruments under Hedge Accounting

Adjustments for Change in Value of Hedged Items

Bank debentures Interest rate swap $ 1,400,000 $ 15,616 $ (25,707) $ 25,707

January 1, 2012

Hedged Items Hedging Instruments Notional Amount Fair Value Bank debentures Interest rate swap $ 14,000,000 $ 41,323 Fixed rate loans Interest rate swap 134,123 (3,107)

b. Cash flow hedge

The Bank uses interest rate swap contracts to hedge against the risk of adverse interest rate fluctuations. The above-mentioned derivative financial instruments are used to adverse cash flow risk caused by interest rate change of future cash flow. January 1 to December 31, 2013

Hedged Items Hedging Instruments Notional Amount Fair Value Unrealized Gain or

Losses on Cash Flow Hedges

Bank debentures Interest rate swap $ 3,600,000 $ (3,789) $ 18,787

January 1 to December 31, 2012




January 1, 2012

Hedged Items Hedging Instruments Notional Amount Fair Value Bank debentures Interest rate swap $ 3,600,000 $ (51,212)

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11. SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL

December 31,

2012 January 1,

2012 Bank debentures $ 236,006 $ 1,306,810 Government bonds - 1,773,358 $ 236,006 $ 3,080,168 Agreed resell amount $ 236,172 $ 3,081,182 Expiration date January 2013 January 2012 The Bank did not purchase any securities under agreements to resell on December 31, 2013. Securities purchased under agreement to resell are not underlying for agreements to repurchase.

12. RECEIVABLES, NET

December 31,

2013 December 31,

2012 January 1,

2012 Account receivables - forfaiting $ 69,232,903 $ 18,880,671 $ 11,542,182 Credit card receivables 17,115,895 17,295,213 18,118,724 Acceptances - forfaiting 15,422,003 1,268,824 - Account receivables - factoring 11,769,326 19,389,452 16,629,573 Interest and revenue receivables 1,987,449 2,108,661 1,700,905 Acceptances 1,709,103 1,916,100 2,061,715 Trust administration fee revenue receivables 574,288 586,951 501,696 Others 1,123,050 708,147 913,838 118,934,017 62,154,019 51,468,633 Less: Allowance for credit losses 501,307 451,897 429,626 Net amount $ 118,432,710 $ 61,702,122 $ 51,039,007

The Bank assessed the collectability of receivables to determine the allowance. Movements in the allowance of receivables were shown as follows: Year Ended December 31 2013 2012 Balance, January 1 $ 451,897 $ 429,626 Additional provisions recognized 231,349 205,932 Write-off (184,267) (181,470) Reclassification 26 - Effect of exchange rate changes 2,302 (2,191) Balance, December 31 $ 501,307 $ 451,897 Please refer to Note 45 for impairment loss analysis of receivables.

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13. DISCOUNTS AND LOANS, NET

December 31,

2013 December 31,

2012 January 1,

2012 Export negotiation $ 575,232 $ 884,274 $ 2,079,089 Import negotiation - - 21,614 Overdrafts 3,276 5,756 7,691 Secured overdrafts 316,050 455,345 580,451 Account receivables - financing 2,473,607 1,804,137 2,342,299 Short-term loans 112,798,763 102,869,111 95,076,025 Secured short-term loans 92,997,816 68,782,301 55,351,063 Medium-term loans 123,042,572 120,012,657 111,660,760 Secured medium-term loans 84,019,282 88,719,720 83,922,325 Long-term loans 11,300,362 12,223,682 14,085,119 Secured long-term loans 360,504,376 360,373,497 351,526,264 Nonperforming loans transferred from loans 2,674,492 2,004,359 2,749,635 790,705,828 758,134,839 719,402,335 Less: Allowance for credit losses 8,546,558 7,582,257 7,156,156 Less: Premium or discount on discounts and loans 240,347 243,143 243,389 Add: Adjustment of hedge valuation - - 3,107 Net amount $ 781,918,923 $ 750,309,439 $ 712,005,897 Please refer to Note 45 for impairment loss analysis of discounts and loans. Please refer to Note 42 for information relating to discounts and loans pledged as security. The Bank assessed the collectability of discounts and loans to determine the allowance. Movement in the allowance of discounts and loans is shown as follows: Year Ended December 31 2013 2012

Specific Reserve

General Reserve Subtotal

Specific Reserve


Balance, January 1 $ 602,141 $ 6,980,116 $ 7,582,257 $ 1,084,183 $ 6,071,973 $ 7,156,156 Additional provisions

recognized 1,569,598 1,408,933 2,978,531 74,554 908,143 982,697 Write-off (2,037,251) - (2,037,251) (495,830) - (495,830) Effect of exchange rate

changes 23,021 - 23,021 (60,766) - (60,766) Balance, December 31 $ 157,509 $ 8,389,049 $ 8,546,558 $ 602,141 $ 6,980,116 $ 7,582,257

14. HELD-TO-MATURITY FINANCIAL ASSETS, NET

December 31,

2013 December 31,

2012 January 1,

2012 Negotiable certificates of deposit $ 199,934,765 $ 215,825,683 $ 229,220,900 Government bonds 9,875,177 1,214,743 127,561 Corporate bonds 1,752,937 250,141 500,921 Bank debentures 25,685 24,984 25,974 Collateralized debt obligations - 3,614 4,568 211,588,564 217,319,165 229,879,924 Less: Accumulated impairment 10,274 - - Net amount $ 211,578,290 $ 217,319,165 $ 229,879,924 Because of a change of intention, the Bank reclassified available-for-sale financial assets (government bonds $8,410,928 and corporate bonds $1,753,088) into held-to-maturity financial assets. Please refer to Note 47 for the related information. Please refer to Note 42 for information relating to held-to-maturity financial assets pledged as security.

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15. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD, NET

December 31,

2013 December 31,

2012 January 1,

2012 Investments in subsidiaries - unlisted companies

Bank SinoPac (China) Ltd. (preparatory office) $ 9,760,662 $ - $ - SinoPac Bancorp 3,499,035 3,313,835 2,664,605 SinoPac Capital Limited (H.K.) 1,360,210 1,261,900 1,241,505 SinoPac Life Insurance Agent Co., Ltd. 863,905 803,697 624,451 SinoPac Property Insurance Agent Co., Ltd. 32,722 38,064 34,350

$ 15,516,534 $ 5,417,496 $ 4,564,911 As the end of the reporting period, the proportion of ownership and voting rights in subsidiaries held by the Bank were all 100%. For the information of Bank SinoPac (China) Ltd., Please refer Note 51. The Bank’s share of profit and other comprehensive income of subsidiaries for the years ended December 31, 2013 and 2012 was based on the subsidiaries’ financial statements audited by the accountants for the same period. The investments share of profit of subsidiaries were as follows: Year Ended December 31 2013 2012 Bank SinoPac (China) Ltd. (preparatory office) $ 59,315 $ - SinoPac Bancorp 198,838 775,150 SinoPac Capital Limited (H.K.) 59,445 65,549 SinoPac Life Insurance Agent Co., Ltd. 847,123 736,488 SinoPac Property Insurance Agent Co., Ltd. 26,577 31,919 $ 1,191,298 $ 1,609,106

16. OTHER FINANCIAL ASSETS, NET

December 31,

2013 December 31,

2012 January 1,

2012 Unquoted equity instruments-Unlisted equity investments $ 6,493,254 $ 6,526,737 $ 6,529,172 Time deposits not belong to cash and cash equivalent 11,468,108 - - Purchase of PEM instruments 4,224,732 3,909,134 3,772,340 Excess margin of futures and options 151,561 149,699 121,150 Short-term loan advance 22,544 20,598 22,927 Nonperforming receivables transferred from other than

loans 5,388 147,329 176,581 Exchange bills negotiated 695 607 362 22,366,282 10,754,104 10,622,532 Less: Allowance for credit loss 11,184 139,292 164,375 Less: Accumulated impairment 2,430,540 2,302,383 2,128,986 $ 19,924,558 $ 8,312,429 $ 8,329,171

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The Bank assessed the collectability of other financial assets to determine the allowance. Movements in the allowance of other financial assets were shown as follows: Year Ended December 31 2013 2012 Balance, January 1 $ 139,292 $ 164,375 Reversal provisions recognized (94,775) (17,614) Write-off (36,613) (3,374) Reclassification (26) - Effect of exchange rate changes 3,306 (4,095) Balance, December 31 $ 11,184 $ 139,292 The Bank designated unquoted equity instruments amounted to $6,529,172 disclosure as available-for-sale financial assets on January 1, 2012 (the transition date of IFRSs). The assumption of fair value of these financial assets is shown in Note 44. The amounts of investments in unquoted equity instruments were deducted from accumulated impairment $2,500 on January 1, 2012. The Bank was delegated by professional investors to sell investment products of the PEM Group amounting to US$146,000 thousand through private placement, which was allowed under Hong Kong’s regulations. A court appointed a permanent receiver for all assets that belong to, are being managed by, or in the possession of or control of, the PEM Group and any of their subsidiaries and affiliates. If the products fail to be repaid on maturity cause of questionable underlying assets, the Bank will buy back the products at the price of initial payment net of the distribution and redemption cost. Later, there were significant defaults on maturity payments. Thus, the Bank initiated local and overseas investigations on this case delegated a lawyer to handle the incident and informed related investors of this situation. On December 24, 2010, the board of directors resolved to abide by a court’s appointment of the PEM Group receiver to take the insurance policies at the price of approximately US$40.4 million, and recognized impairment losses of US$11,152 thousand. On March 7, 2011, the receiver transferred a portion of the insurance policies to a trustee established jointly by the banks intended to hold insurance policies. And the Bank had submitted to the authorities the results of this policy transfer. As of December 31, 2013, a reserve of US$81,145 thousand (NT$2,430,540 thousand) had been set aside to cover the accumulated impairment losses.

17. PROPERTY AND EQUIPMENT, NET

The movements of property and equipment for the years ended December 31, 2013 and 2012 are summarize as follow:

Year Ended December 31, 2013

Land Buildings

Computer and

Machinery Equipment

Transportation Equipment

Other Equipment

Prepayments for

Equipment and

Construction in Progress

Total Cost Balance, January 1 $ 6,609,808 $ 5,814,113 $ 2,181,733 $ 1,128 $ 2,457,663 $ 114,219 $17,178,664 Addition - 33,453 100,421 - 130,106 170,690 434,670 Deduction 48,703 69,155 196,953 - 87,138 97 402,046 Reclassifications - 33,383 22,306 - 59,309 (168,020 ) (53,022 ) Adjustments in

currency exchange - - 3,799 31 2,845 8 6,683 Balance, December 31 6,561,105 5,811,794 2,111,306 1,159 2,562,785 116,800 17,164,949 Accumulated

depreciation Balance, January 1 - 2,647,293 1,699,811 1,128 1,933,842 - 6,282,074 Depreciation expense - 154,390 147,047 - 143,350 - 444,787 Deduction - 33,377 192,079 - 84,536 - 309,992 Reclassifications - 26 - - - - 26 Adjustments in

currency exchange - - 3,498 31 2,520 - 6,049 Balance, December 31 - 2,768,332 1,658,277 1,159 1,995,176 - 6,422,944

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Land Buildings

Computer and

Machinery Equipment


Other Equipment

Prepayments for

Equipment and


Total Accumulated

impairment Balance, January 1 $ 1,115 $ 602 $ - $ - $ - $ - $ 1,717 Deduction 1,115 576 - - - - 1,691 Reclassifications - (26 ) - - - - (26 ) Balance, December 31 - - - - - - - Net amount Balance, December 31 $ 6,561,105 $ 3,043,462 $ 453,029 $ - $ 567,609 $ 116,800 $10,742,005


Land Buildings

Computer and

Machinery Equipment


Other Equipment

Prepayments for

Equipment and

Construction in Progress Total

Cost Balance, January 1 $ 6,609,808 $ 5,775,997 $ 1,976,133 $ 1,166 $ 2,408,303 $ 476,208 $17,247,615 Addition - 25,002 280,348 - 80,011 243,446 628,807 Deduction - - 100,307 - 56,656 532,295 689,258 Reclassifications - 13,114 30,489 - 29,528 (73,132 ) (1 ) Adjustments in

currency exchange - - (4,930 ) (38 ) (3,523 ) (8 ) (8,499 ) Balance, December 31 6,609,808 5,814,113 2,181,733 1,128 2,457,663 114,219 17,178,664 Accumulated

depreciation Balance, January 1 - 2,492,641 1,680,205 1,146 1,824,775 - 5,998,767 Depreciation expense - 154,655 127,901 19 160,223 - 442,798 Deduction - - 97,301 - 54,530 - 151,831 Reclassifications - - (6,368 ) - 6,368 - - Adjustments in

currency exchange - - (4,626 ) (37 ) (2,997 ) - (7,660 ) Balance, December 31 - 2,647,296 1,699,811 1,128 1,933,839 - 6,282,074 Accumulated

impairment Balance, January 1 1,115 602 - - - - 1,717 Reclassification - - - - - - - Balance, December 31 1,115 602 - - - - 1,717 Net amount Balance, December 31 $ 6,608,693 $ 3,166,215 $ 481,922 $ - $ 523,824 $ 114,219 $10,894,873 Prepayments for equipment and construction in progress had reclassified to computer and machinery equipment, other equipment and computer software (list in intangible assets).

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The above items of property and equipment were depreciated based on the estimated useful life of the asset:

Category Useful Lives Buildings 15-55 years Computer and machinery equipment 3-5 years Transportation equipment 5 years Other equipment 3-15 years There are no property and equipment pledged as security.

18. INTANGIBLE ASSETS, NET

December 31, 2013

Items Original Cost Accumulated Amortization Carrying Amount

Goodwill $ 876,717 $ - $ 876,717 Computer software 852,177 238,461 613,716 $ 1,728,894 $ 238,461 $ 1,490,433

December 31, 2012


Goodwill $ 876,717 $ - $ 876,717 Computer software 813,435 125,334 688,101 $ 1,690,152 $ 125,334 $ 1,564,818

January 1, 2012


Goodwill $ 876,717 $ - $ 876,717 Computer software 201,624 126,663 74,961 $ 1,078,341 $ 126,663 $ 951,678 Movements in the intangible assets are shown as follows:

Year Ended December 31 2013 2012 Costs

Balance, January 1 $ 1,690,152 $ 1,078,341

Addition 41,743 156,098 Deduction 56,029 76,147 Reclassifications 53,023 531,860 Adjustments in foreign exchange 5 - Balance, December 31 1,728,894 1,690,152 Accumulated amortization Balance, January 1 125,334 126,663 Addition 169,155 74,818 Deduction 56,029 76,147 Adjustments in foreign exchange 1 - Balance, December 31 238,461 125,334 Net amount $ 1,490,433 $ 1,564,818

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The above items of other intangible assets were depreciated based on the estimated useful life of the asset:

Category Useful Lives Computer software 5 years Goodwill includes referred to $876,717, resulted from the Bank’s cash merger with SinoPac Card Services in September 2003, and this merger was treated as a reorganized of SPH. The Bank takes impairment review of goodwill annually or more frequently if events or changes in circumstance indicate goodwill impairment. In assessing whether goodwill is impaired, the Bank considers the credit card department as a cash generating unit and estimates the recoverable amount by its value in use. The Bank uses the department’s or investee’s actual profitability in making key assumption to predict future cash flows and thus calculates its value in use. Under the going-concern assumption, the Bank predicts the net cash flows provided by its operating activities in the next 5 years and estimated salvage value and uses its parent company’s weighted average cost of capital as the discount rate to calculate the value in use. After assessment, the Bank found no objective evidence that goodwill had been impaired as of December 31, 2013, December 31, 2012 and January 1, 2012.

19. OTHER ASSETS, NET

December 31,

2013 December 31,

2012 January 1,

2012 Guarantee deposits $ 568,953 $ 1,049,100 $ 556,112 Prepayment 252,980 251,904 234,193 Temporary payment and suspense accounts 242,886 268,656 216,095 Collaterals 36,071 49,913 40,697 Others, net 45,417 51,612 59,457 1,146,307 1,671,185 1,106,554 Less: Allowance for credit losses 7,024 7,752 7,705 Less: Accumulated impairment - collaterals 36,071 38,999 38,819 $ 1,103,212 $ 1,624,434 $ 1,060,030

20. DEPOSITS FROM THE CENTRAL BANK AND BANKS

December 31, 2013

December 31, 2012

January 1, 2012

Call loans from banks $ 77,688,792 $ 60,544,419 $ 54,346,379 Redeposit from the directorate general of postal remittance 9,503,860 9,358,180 11,806,420 Due to banks 89,801 86,485 14,012 $ 87,282,453 $ 69,989,084 $ 66,166,811

21. SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

December 31,

2013 December 31,

2012 January 1,

2012 Government bonds $ 451,771 $ 1,201,450 $ 7,071,871 Agreed repurchase price $ 452,281 $ 1,202,323 $ 7,075,742 Maturity date March 2014 March 2013 March 2012

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22. PAYABLES

December 31,

2013 December 31,

2012 January 1,

2012 Accounts payable - factoring $ 5,992,485 $ 6,006,343 $ 5,777,254 Accrued expenses 2,842,116 2,329,594 1,547,223 Notes and checks in clearing 1,743,594 6,232,367 5,158,446 Interest payables 1,723,827 1,810,257 1,768,454 Acceptance 1,709,103 1,916,100 2,061,715 Dividends payables to SPH 1,435,025 1,435,025 1,435,025 Remittance payables 268,999 165,164 527,041 Tax payables 173,178 162,200 152,259 Others 742,925 1,319,847 661,238 $ 16,631,252 $ 21,376,897 $ 19,088,655

23. DEPOSITS AND REMITTANCES

December 31,

2013 December 31,

2012 January 1,

2012 Checking $ 13,618,613 $ 12,952,251 $ 12,689,442 Demand 208,496,127 193,823,267 169,666,216 Savings - demand 245,106,148 233,998,552 223,682,682 Time deposits 355,034,441 312,040,252 314,743,482 Negotiable certificates of deposit 17,212,500 28,494,600 26,592,200 Savings - time 225,225,649 226,342,379 215,151,937 Inward remittances 620,852 970,398 496,482 Outward remittances 58,721 164,100 77,809 $ 1,065,373,051 $ 1,008,785,799 $ 963,100,250

24. BANK DEBENTURES

To raise capital for its financial operation and increase its capital adequacy ratio, the Bank obtained approval to issue bank debentures. Bank debentures list below:

December 31,

2013 December 31,

2012 January 1,

2012 Maturity Date Rates First subordinated bank

debentures issued in 2008 $ - $ 1,415,496 $ 1,441,040 2008.03.17-2013.09.17

Principal is repayable on maturity date.

Fixed interest rate of 3.05%, interest is paid annually.

Second subordinated bank debentures issued in 2008 (A)

4,499,536 4,499,175 4,498,825 2008.03.25-2015.03.25 Principal is repayable on

maturity date.

Index rate plus 1%. Interest rate is reset quarterly since the issuance date and paid annually.

Second subordinated bank debentures issued in 2008 (B)

499,949 499,908 499,870 2008.03.25-2015.03.25 Principal is repayable on

maturity date.


Third subordinated bank debentures issued in 2008


maturity date.

Index rate plus 0.95%. Interest rate is reset quarterly since the issuance date and paid annually.

First subordinated bank debentures issued in 2009


maturity date.




maturity date.




maturity date.


First subordinated bank debentures issued in 2010 (A)


maturity date.


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December 31,

2013 December 31,

2012 January 1,

2012 Maturity Date Rates First subordinated bank

debentures issued in 2010 (B)

$ 2,899,128 $ 2,898,912 $ 2,898,698 2010.12.09-2017.12.09 Principal is repayable on

maturity date.




maturity date.




maturity date.




maturity date.




maturity date.



4,697,962 4,697,623 - 2012.09.18-2019.09.18 Principal is repayable on

maturity date.


First subordinated bank debentures issued in 2012 (B)


maturity date.



1,499,000 - - 2013.09.27-2019.03.27 Principal is repayable on

maturity date.


Second subordinated bank debentures issued in 2013

1,998,995

-

-

2013.12.23-2019.06.23 Principal is repayable on

maturity date.


$45,087,336 $43,001,812 $37,027,843 25. OTHER FINANCIAL LIABILITIES

December 31,

2013 December 31,

2012 January 1,

2012 Principal received on structured notes $ 6,677,942 $ 5,613,926 $ 7,165,848 Cumulative earnings on appropriated loan fund 43,845 70,900 399,990 $ 6,721,787 $ 5,684,826 $ 7,565,838

26. PROVISIONS

December 31,

2013 December 31,

2012 January 1,

2012 Provisions for employee benefits $ 2,568,984 $ 2,548,658 $ 2,661,588 Provisions for guarantee liabilities 124,344 135,299 55,112 Provisions for decommissioning liabilities 61,221 54,317 50,422 $ 2,754,549 $ 2,738,274 $ 2,767,122

27. PROVISIONS FOR EMPLOYEE BENEFITS

December 31,

2013 December 31,

2012 January 1,

2012 Recognized in balance sheet (account payables and

provisions)

Defined contribution plans $ 30,052 $ 27,190 $ 27,270 Defined benefit plans 2,290,136 2,350,091 2,491,040 Preferential interest on employees’ deposits 230,214 198,567 170,548 Deferred annual leave 48,634 - - $ 2,599,036 $ 2,575,848 $ 2,688,858

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a. Defined contribution plans

The Bank adopted a pension plan under the Labor Pension Act (the “LPA”), which is a state-managed defined contribution plan. Based on the LPA, the Bank makes monthly contributions to employees’ individual pension accounts at 6% of monthly salaries and wages. The total expense recognized in profit or loss for the years ended December 31, 2013 and 2012 was $182,271 and $173,375, respectively, represents contributions payable to these plans by the Bank at rates specified in the rules of the plans.

b. Defined benefit plans

For the Bank employees who adopt for defined benefit plans regulated by the Labor Standards Act, the retirement benefits are paid to employees as follow: (i) a lump sum payment equal to two base units for each year of service; (ii) that each year of service exceeding 15 years is entitled to only one base unit of wage; and (iii) that the maximum payment is for up to 45 base units. Any fraction of a year that is equal to six months or more is counted as one year of service, and any fraction of a year that is less than six months is counted as half a year of service. The Bank contributes pension fund to a pension fund administered by the pension fund monitoring committee. Pension contributions are deposits in the Bank of Taiwan or Bank SinoPac in the committee’s name. The actuarial valuations of plan assets and the present value of the defined benefit obligation were carried out by qualifying actuaries. The principal assumptions used for the purposes of the actuarial valuations were as follows:

Valuation at

December 31,

2013 December 31,

2012 January 1,

2012 Discount rate 1.75% 1.70% 1.75% Expected future salary growth rate 1.75% 1.75% 1.75% Expected future return on investment of plan assets 1.50% 1.75% 2.00%

Amounts recognized in profit or loss in respect of these defined benefit plans are as follows:

Year Ended December 31 2013 2012 Current service cost $ 106,758 $ 113,122 Interest cost 89,226 93,369 Expected return on plan assets (49,156) (55,636) Past service cost 27,138 27,138 $ 173,966 $ 177,993

Actuarial gains and losses recognized in other comprehensive income for the years ended December 31, 2013 and 2012 was loss of $44,188 and gain of $6,370, respectively. The cumulative amount of actuarial gains and losses recognized in other comprehensive income as of December 31, 2013 and 2012 was loss of $37,818 and gain of $6,370, respectively. The amount included in balance sheets arising from the Bank’s obligation in respect of its defined benefit plans were as follows:

December 31,

2013 December 31,

2012 January 1,

2012 Present value of funded defined benefit obligation $ 5,030,429 $ 5,310,328 $ 5,392,520 Fair value of plan assets (2,550,324) (2,743,130) (2,657,235) Deficit 2,480,105 2,567,198 2,735,285 Past service cost not yet recognized (189,969) (217,107) (244,245) The provision of defined benefit plans $ 2,290,136 $ 2,350,091 $ 2,491,040

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Movements in the present value of the defined benefit obligations were as follows:

Year Ended December 31 2013 2012 Opening defined benefit obligation $ 5,310,328 $ 5,392,520 Current service cost 106,758 113,122 Interest cost 89,226 93,369 Actuarial losses (gains) 41,158 (26,626) Benefits paid (517,041) (262,057) Closing defined benefit obligation $ 5,030,429 $ 5,310,328

Movements in the fair value of the plan assets were as follows:

Year Ended December 31 2013 2012 Opening fair value of plan assets $ 2,743,130 $ 2,657,235 Expected return on plan assets 49,156 55,636 Loss on plant assets (12,081) (18,952) Contributions 287,160 311,268 Benefits paid (517,041) (262,057) Closing fair value of plan assets $ 2,550,324 $ 2,743,130

The percentages of the major categories of plan assets at the end of the reporting period in balance sheet were listed below.

December 31,

2013 December 31,

2012 January 1,

2012 Cash and cash equivalents 100.00% 90.20% 85.54% Others - 9.80% 14.46% 100.00% 100.00% 100.00%

The overall expected rate of return was based on historical return trends and analysts’ predictions of the market for the asset over the life of the related obligation, with reference to the use of the Labor Pension Fund by Labor Pension Fund Supervision Committee, taking into consideration the effect of possible differences between the guaranteed minimum income and the return on local banks’ two-year time deposits. The Bank chose to disclose the history of experience adjustments as the amounts determined for each accounting period prospectively from the date of transition to the Regulations: (Please refer to Note 52)

December 31,

2013 December 31,

2012 January 1,

2012 Present value of defined benefit obligation $ 5,030,429 $ 5,310,328 $ 5,392,520 Fair value of plan assets $ 2,550,324 $ 2,743,130 $ 2,657,235 Deficit $ 2,480,105 $ 2,567,198 $ 2,735,285 Losses on experience adjustments on plan assets $ 12,081 $ 18,952 $ 16,202

The Bank expects to make a contribution of $247,033 and $255,056, respectively to the defined benefit plans during the annual period beginning after 2013 and 2012.

c. Preferential interest on employees’ deposits

The Bank offers preferential interest on employees’ deposits to both current and retired employees.

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The principal assumptions used for the purposes of the actuarial valuations were as follows:

Valuation at

December 31,

2013 December 31,

2012 January 1,

2012 Discount rate 4.00% 4.00% 4.00% Expected interest rate on preferential interest on

employees’ deposits Manager 7.38% 13.00% 13.00% Staff 13.00% 13.00% 13.00%

Normal deposit interest rate 1.38% 1.37% 1.15% Return on deposits 2.00% 2.00% 2.00% Excess preferential interest

Manager 4.00% 9.63% 9.85% Staff 9.62% 9.63% 9.85%

The probability of preferential interest on employees’ deposits is canceled within ten years 50.00% 50.00% 50.00%

The gains (losses) of preferential interest on employee’s deposits are as follows:

Year Ended December 31 2013 2012 Interest cost $ 7,546 $ 6,452 Past service cost 45,259 21,485 $ 52,805 $ 27,937

For the years ended 2013 and 2012, the Bank has recognized actuarial gains $1,199 and loss $16,307 in other comprehensive income, respectively. As the end of December 31, 2013 and 2012, the accumulated amounts of actuarial loss of $15,108 and $16,307 were recognized in other comprehensive income. The amount included in balance sheets arising from the Bank’s obligation in respect of its defined benefit plans were as follows:

December 31,

2013 December 31,

2012 January 1,

2012 Present value of defined benefit obligation $ 230,214 $ 198,567 $ 170,548 Past service costs not yet recognized - - - The provision of defined benefit plans $ 230,214 $ 198,567 $ 170,548

Movements in the present value of the obligation the preferential interest on employees’ deposits:

Year Ended December 31 2013 2012 Opening obligation of preferential interest on employees $ 198,567 $ 170,548 Effect on policy change 45,259 21,486 Interest cost 7,546 6,452 Actuarial (gains) losses (1,445) 19,647 Benefit paid (19,713) (19,566) Closing obligation of preferential interest on employees $ 230,214 $ 198,567

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The Bank chose to disclose the history of experience adjustments as the amounts determined for each accounting period prospectively from the date of transition to the Regulations (refers to Note 52):

December 31,

2013 December 31,

2012 January 1,

2012 Present value of preferential interest on employees $ 230,214 $ 198,567 $ 170,548 Deficits $ 230,214 $ 198,567 $ 170,548 Experiences losses on the obligation of preferential

interest on employees’ deposits $ 4,926 $ 8,856 $ - Change of actuarial hypothesis on the obligation of

preferential interest on employees’ deposits $ 6,371 $ (10,791) $ - 28. OTHER LIABILITIES

December 31,

2013 December 31,

2012 January 1,

2012 Advance receipt $ 1,100,360 $ 434,133 $ 302,576 Temporary receipt and suspense accounts 1,010,928 975,723 1,276,555 Guarantee deposits received 289,730 270,424 227,317 Deferred revenue 143,120 153,020 153,389 Others 20,757 22,917 27,541 $ 2,564,895 $ 1,856,217 $ 1,987,378

29. INCOME TAX

Under Rule No. 910458039 issued by the Ministry of Finance on February 12, 2003, a financial holding company and its domestic subsidiaries that held over 90% of shares issued by the financial holding company for 12 months within the same tax year may choose to adopt the linked-tax system for income tax filings. Thus, SPH adopted the linked-tax system for income tax and unappropriated earnings tax filings with its qualified subsidiaries since 2003. a. Income tax recognized in profit or loss

The major components of tax expense were as follows:

Year Ended December 31 2013 2012 Current tax

In respect of the current year $ 1,140,589 $ 559,013 In respect of prior periods (65,977) (4,775)

1,074,612 554,238 Deferred tax

In respect of the current year 13,853 514,975 Income tax expenses recognized through profit or loss $ 1,088,465 $ 1,069,213

A reconciliation of accounting profit and current income tax expenses is as follows:

Year Ended December 31 2013 2012 Income before income tax $ 10,691,374 $ 9,417,279 Income tax expense at the 17% statutory rate $ 1,817,534 $ 1,600,937 Tax effect of adjusting items:

Permanent differences (643,283) (515,409) Tax-exempt income (41,355) (11,212) Additional income tax under the Alternative Minimum Tax Act 21,692 - Temporary differences (146) (328)

Adjustments for prior years (65,977) (4,775) Income tax expense recognized in profit or loss $ 1,088,465 $ 1,069,213

As the status of 2014 appropriations of earnings is uncertain, the potential income tax consequences of 2013 unappropriated earnings are not reliably determinable.

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b. Income tax recognized in other comprehensive income Year Ended December 31 2013 2012 Deferred tax Recognized in other comprehensive income

Cash flow hedges $ (3,194) $ (4,868) Share of other comprehensive income of subsidiaries 17,636 1,661 Actuarial loss arising from defined benefit plans 8,805 2,035

Income tax recognized in other comprehensive income $ 23,247 $ (1,172) c. Current tax assets and liabilities

December 31,

2013 December 31,

2012 January 1,

2012 Current tax assets

Receivables from adopting the linked-tax system $ 1,256,073 $ 1,155,349 $ 1,167,569 Others 15,213 13,178 10,001

$ 1,271,286 $ 1,168,527 $ 1,177,570 Current tax liabilities

Payables form adopting the linked-tax system $ 700,560 $ 248,469 $ - Others 24,175 22,990 17,989

$ 724,735 $ 271,459 $ 17,989

d. Deferred tax assets and liabilities

December 31,

2013 December 31,

2012 January 1,

2012 Deferred tax assets Loss carryforwards $ 912,798 $ 1,078,422 $ 1,431,752 Defined benefit plan 382,758 387,417 406,616 Equity investment - equity method 211,265 245,067 376,842 Others 142,930 78,161 91,382 $ 1,649,751 $ 1,789,067 $ 2,306,592 Deferred tax liabilities Land value increment tax $ 591,993 $ 591,993 $ 591,993 Unrealized commission revenue 95,890 98,281 84,332 Equity investment - equity method 93,368 73,325 62,509 Others 46,556 62,671 80,302 $ 827,807 $ 826,270 $ 819,136

Deferred tax expenses recognized in profit or loss is shown as follows:

Year Ended December 31 2013 2012 Equity investment $ 53,845 $ 142,591 Defined benefit plan 13,464 26,461 Provisions 266 781 Loss carryforwards - 353,330 Others (53,722) (8,188) $ 13,853 $ 514,975

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The unused loss carryforwards as of December 31, 2013 were as follows:

Amount The Last Year of Claiming Deductible Loss $ 3,847,321 2018 1,522,078 2019 $ 5,369,399

e. The related information under the Integrated Income Tax System was as follows:

December 31,

2013 December 31,

2012 January 1,

2012 Balances of the imputation tax credit account (ICA) $ 61,893 $ 1,551,693 $ 1,924,606

The creditable ratio for distribution of earning of 2013 and 2012 was 0.64% (expected ratio) and 20.48%, respectively. Under the Income Tax Law, for distribution of earnings generated after January 1, 1998, the imputation credits allocated to ROC resident shareholders of the Bank was calculated based on the creditable ratio as of the date of dividend distribution. The actual imputation credits allocated to shareholders of the Bank was based on the balance of the Imputation Credit Accounts as of the date of dividend distribution. Therefore, the expected creditable ratio for the 2013 earnings may differ from the actual creditable ratio to be used in allocating imputation credits to the shareholders. According to legal interpretation No. 10204562810 announced by the Taxation Administration of the Ministry of Finance, when calculating imputation credits in the year of first-time adoption of IFRSs, the cumulative retained earnings include the net increase or net decrease in retained earnings arising from first-time adoption of the Regulations. As of December 31, 2013, the unappropriated earnings generated before January 1, 1997 was $8,758, which was recorded as capital surplus owing to merger of IBT.

f. The Bank’s tax returns through 2007 had been assessed by the tax authorities. However, the tax authorities had a different

opinion about recognizing the interest expenses as the deduction of the income from trading of domestic securities which is untaxed temporarily. Thus, the tax authorities got rid of the interest expenses deduction and increased the amount of taxed income about $54,865. The Bank had proposed administrative remedy to above event.

30. EQUITY Ordinary Shares The Bank's authorized capital is $80,000,000. And the Bank issued 8,000,000 thousand ordinary shares with each par value of NT$10. The board of directors of the Bank resolved to raise capital in private placement on March 23, 2012, amounting to $1.74 billion, with 128,755 thousand shares, par value at $10, and issue price at $13.5. And the Bank set June 29, 2012 as the effective date of capitalization. The board of directors of the Bank resolved to raise capital on March 13, 2013, capital increased to $59,616,160, with 575,414 thousand shares, par value at $10. The appropriations of earnings had been resolved by the board of directors which execute the rights and functions of the stockholder’s meeting on May 24, 2013. The above transaction was approved by authorities, and the subscription base date was determined at July 31, 2013. Capital Surplus The capital surplus from the issuance of new shares at a premium (additional paid-in capital from issuance of common shares, conversion of bonds and treasury stock transactions) and endowments received by the Bank may be used to offset a deficit; in addition, when the Company has no deficit, such capital surplus may be distributed as cash dividends or transferred to capital (limited to a certain percentage of the Company’s paid-in capital every year). The capital surplus from long-term equity investments under equity method may not be used for any purpose.

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Special Reserve Under Rule No. 1010012865 issued by the FSC on April 6, 2012 and the directive titled “Questions and Answers for Special Reserves Appropriated Following Adoption of IFRSs”, on the first-time adoption of IFRSs, a company should appropriate to a special reserve of an amount that was the same as these of unrealized revaluation increment and cumulative translation differences (gains) transferred to retained earnings as a result of the Company’s use of exemptions under IFRS 1. However, at the date of transitions to IFRSs, if the increase in retained earnings that resulted from all IFRSs adjustments is not enough for this appropriation, only the increase in retained earnings that resulted from all IFRSs adjustments will be appropriated to special reserve. The special reserve appropriated as above may be reversed to retained earnings in proportion to the usage, disposal or reclassification of the related assets and thereafter distributed. The special reserve appropriated on the first-time adoption of IFRSs may be used to offset deficits in subsequent years. No appropriation of earnings shall be made until any shortage of the aforementioned special reserve is appropriated in subsequent years if the Company has earnings and the original need to appropriate a special reserve is not limited. The Bank did not appropriate a special reserve because the Bank’s retained earnings decreased through the first adoption of IFRSs. Other Equity Items

Exchange Differences on

Translating Foreign

Operations

Available-for- sale Financial

Assets Cash Flow Hedge Total Balance, January 1, 2013 $ (211,616) $ 361,836 $ (18,738) $ 131,482 Available-for-sale financial assets

Current valuation - (177,664) - (177,664) Realized gain or loss on revaluation - (10,641) - (10,641)

Cash flow hedge Unrealized gain or loss on revaluation - - 18,787 18,787 Income tax - - (3,194) (3,194)

Share of other comprehensive income of subsidiaries Current year (1,397) (102,342) - (103,739) Income tax 238 17,398 - 17,636

Balance, December 31, 2013 $ (212,775) $ 88,587 $ (3,145) $ (127,333)


Translating Foreign

Operations


Assets Cash Flow Hedge Total Balance, January 1, 2012 $ (215,972) $ 153,096 $ (42,506) $ (105,382) Available-for-sale financial assets

Current valuation - 227,736 - 227,736 Realized gain or loss on revaluation - (6,533) - (6,533)


Share of other comprehensive income of subsidiaries Current year 5,248 (15,016) - (9,768) Income tax (892) 2,553 - 1,661

Balance, December 31, 2012 $ (211,616) $ 361,836 $ (18,738) $ 131,482

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Earnings Distribution and Dividend Policy The Bank’s Articles of Incorporation provide that annual net income should be appropriated after it has: a. Deducted any deficit of prior years; b. Paid all outstanding taxes; c. Set aside 30% of remaining earnings as legal reserve; d. Set aside any special reserve or retained earnings allocated at its option; e Allocated stockholders’ dividends; f. Allocated at least 2.5% of the remaining earnings which allocated stockholders’ dividends as employee bonus. The Banking Act provides that, before the balance of the reserve reaches the aggregate par value of the outstanding capital stock, annual cash dividends, remuneration to directors and supervisors, and bonus to employees should not exceed 15% of the aggregate par value of the outstanding capital stock of the Bank. When legal reserve meets the total capital reserve or well financial position and setting aside legal reserve under Company Act is not limited to the restriction. To comply with the Bank’s globalization strategy, strengthen its market position, integrate its diversified business operation and be a major local bank, the Bank has adopted the “Balanced Dividend Policy”. Under this policy, dividends available for distribution are determined by referring to its capital adequacy ratio (CAR). Cash dividends may be declared if the Bank’s CAR is above 10% and stock dividends may be declared if the CAR is equal to or less than 10%. However, the Bank may make discretionary cash distribution even if the CAR is below 10%, if approved at the stockholders’ meeting, for the purpose of maintaining the cash dividends at a certain level in any given year. Cash dividends and cash bonus are paid after the approval of the stockholders, while the distribution of stock dividends requires the additional approval of the authorities. The Bank accrued bonus to employees of $168,967 and $76,526 for the years ended December 31, 2013 and 2012, respectively. The Bank accrued bonus to remuneration to directors of $35,000 and $28,000 for the years ended December 31, 2013 and 2012, respectively. The bonus to employees and the remuneration to directors and supervisors recognized were estimated on the basis of the Bank’s Articles of Incorporation and past experience. Material differences between such estimated amounts and the amounts proposed by the Board of Directors in the following year are retroactively adjusted for in the current year. If the actual amounts subsequently resolved by the stockholders differ from the proposed amounts, the differences are recorded in the year of stockholders’ resolution as a change in accounting estimate. Under the Company Act, legal reserve shall be appropriated until it has reached the Company’s paid-in capital. This reserve may be used to offset a deficit. Under the revised Company Act issued on January 4, 2012, when the legal reserve has exceeded 25% of the Bank’s paid-in capital, the excess may be transferred to capital or distributed in cash. In addition, the Banking Act provides that, before the balance of the reserve reaches the aggregate par value of the outstanding capital stock, annual cash dividends, remuneration to directors and supervisors, and bonus to employees should not exceed 15% of the aggregate par value of the outstanding capital stock of the Bank. Under Article 50-2 of the Banking Act revised on December 30, 2008, when legal reserve meet the total capital reserve or well financial position and setting aside legal reserve under Company Act is not limited to the restriction of setting aside 30% of remaining earnings as legal reserve, and the appropriation of the remainder and retained earnings from previous year was limited to 15% of total capital reserve when legal reserve has not meet the total capital reserve. The requirements for financial positions of banks to be established in accordance with this Act revised on April 30, 2012 shall be as prescribed by the FSC, Executive Yuan, R.O.C. An amount equal to the net debit balance of shareholders’ other equity items shall be transferred from unappropriated earnings to a special reserve before any appropriation of earnings generated. Any special reserve appropriated may be reversed to the extent of the decrease in the net debit balance. Under the Financial Holding Company Act, the board of directors is empowered to execute the authority of the stockholders’ meeting, which is under no jurisdiction in the related regulations in the Company Act.

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On May 24, 2013 and June 22, 2012, separately, the board of directors which execute the rights and functions of the stockholders’ meeting resolved the appropriation of earnings for 2012 and 2011 as follows: Appropriation of Earnings Dividends Per Share (NT$) 2012 2011 2012 2011 Legal reserve $ 2,466,059 $ 739,095 Stock dividends 2,693,101 - $ 0.5 $ - Bonus to stockholders - stocks 3,061,037 - 0.56831083 - Cash dividends - 1,204,556 - 0.22911420 Bonus to stockholders - cash - 520,000 - 0.09890732 The board of directors which execute the right and functions of the stockholders’ meeting also resolved the appropriation of bonus to employees and remuneration of directors and supervisors in 2012 and 2011 as follows: For the Year Ended 2012 For the Year Ended 2011 Cash Dividends Stock Dividends Cash Dividends Stock Dividends Bonus to employees $ 76,526 $ - $ 13,000 $ - Remuneration of directors and

supervisors 28,000 - 10,400 -

There was no difference between the amounts of the bonus to employees and the remuneration to directors and supervisors approved in the shareholders’ meetings in 2013 and 2012 and the amounts recognized in the financial statements for the years ended December 31, 2012 and 2011. The appropriations of earnings, bonus to employees and remuneration of directors and supervisors for 2012 were proposed according to the Bank’s financial statements for the year ended December 31, 2012, which were prepared in accordance with the unamended Criteria Governing the Preparation of Financial Reports by Public Bank, Regulations Governing the Preparation of Financial Reports by Securities Firms and GAAP, and by reference to the balance sheet for the year ended December 31, 2012, which was prepared in accordance with the Regulations. In accordance with FSC guideline No. 09900146911, cash dividends and bonus to stockholders for 2009 amounting to $1,435,025 shall not be remitted to the parent company until the land transferred to SPL from the Bank is disposed and the gain is realized. The appropriations of earnings for 2013 will be proposed by the Bank’s board of directors on February 27, 2014. The appropriations and dividends per share were as follows:

Appropriation of

Earnings Dividends Per Share (NT$)

Legal reserve $ 2,880,873 Special reserve 26,264 Cash dividends - $ - Share dividends - - The appropriations of earnings, the bonus to employees, and the remuneration to directors and supervisors for 2013 are subject to the resolution of the shareholders’ meeting in 2014. The information on the proposed and approved of the bonus to employees and the remuneration to directors and supervisor is available on the Market Observation Post System (M.O.P.S.) website of the Taiwan Stock Exchange.

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31. INTEREST REVENUE, NET

Year Ended December 31 2013 2012 Interest income

Loans $ 17,462,586 $ 16,989,860 Held-to-maturity financial assets 1,781,543 2,118,824 Account receivables - forfaiting 1,245,389 339,406 Available-for-sale financial assets 872,261 746,274 Others 2,427,694 2,208,391 23,789,473 22,402,755

Interest expense Deposits 8,424,509 7,835,808 Bank debentures 892,323 827,708 Others 677,682 579,504

9,994,514 9,243,020 $ 13,794,959 $ 13,159,735

32. COMMISSION AND FEE REVENUES, NET

Year Ended December 31 2013 2012 Commission and fee revenues

Mutual fund and structured note service $ 1,672,956 $ 1,097,055 Credit card service 1,162,128 999,592 Loan service 677,078 558,034 Insurance service 471,942 436,006 Foreign exchange and import/export services 321,470 318,673 Trust and custody service 179,298 257,271 Others 505,859 471,288

4,990,731 4,137,919 Commission and fee expenses

Credit card service 412,040 338,844 Automatic equipment commission 131,795 128,360 Financial trading service 87,211 67,866 Others 141,202 126,105

772,248 661,175 $ 4,218,483 $ 3,476,744

33. GAINS ON FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS

Year Ended December 31 2013 2012 Realized gain or loss on financial assets at fair value through profit or loss

Convertible bonds $ 96,628 $ 14,944 Listed stock 55,391 (879) Corporate bonds 54,152 64,520 Government bonds 24,761 67,384 Beneficiary certificates 12,691 (7,128) Bank debentures 12,058 18,468 Negotiable certificates of deposit 90 78,528 Others 1,059 1,528

Derivative financial instruments Currency swap and option contracts 4,487,448 1,800,734 Future contracts 2,097 35,911 Cross-currency swap contracts 802 32,712 Interest rate swap contracts (38,662) 16,408 Forward contracts (332,220) 336,370 Others 8,711 4,247 4,385,006 2,463,747

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Year Ended December 31 2013 2012 Unrealized gain or loss on financial assets at fair value through profit or loss

Government bonds $ 28,104 $ (70) Listed stock 11,305 5,626 Convertible bonds 2,283 50,816 Bank debentures 578 14,849 Corporate bonds 418 2,603 Negotiable certificates of deposit - (5,311) Beneficiary certificates (10,225) 5,345 Others 423 (1,104)

Derivative financial instruments Forward contracts 130,613 (70,694) Interest rate swap contracts 96,660 (41,438) Cross-currency swap contracts (12,565) (19,082) Currency swap and option contracts (537,981) 272,870 Others 8,188 10,481 (282,199) 224,891 $ 4,102,807 $ 2,688,638

a. Realized gain or loss on financial assets and liabilities at fair value through profit or loss including disposal gain or loss were

$4,116,320 and $2,209,582 for the years ended December 31, 2013 and 2012, respectively. Related interest revenue and dividend income were $268,686 and $254,165 for the years ended December 31, 2013 and 2012, respectively.

b. When the Bank designated financial instruments measure at fair value through profit or loss, fair value change in derivate

instruments is also listed in “financial assets and liabilities at fair value through profit or loss”. 34. REALIZED GAINS ON AVAILABLE-FOR-SALE FINANCIAL ASSETS

Year Ended December 31 2013 2012 Gain from disposal of corporate bonds $ 7,855 $ 438 Gain from disposal of stocks 3,480 1,744 Dividends income 456 456 Gain from disposal of treasury bill - 45 Loss from disposal of commercial papers (12) (1) (Loss) gain from disposal of bank debentures (682) 4,307 $ 11,097 $ 6,989

35. GAINS ON REVERSAL (LOSSES) OF IMPAIRMENT

Year Ended December 31 2013 2012 Impairment loss on held-to-maturity financial assets $ (10,198) $ - Impairment loss on other financial assets (64,759) (257,828) Reversal gain (impairment loss) on property and equipment 1,691 (282) Reversal gain (impairment loss) on other assets 2,968 (178) $ (70,298) $ (258,288)

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36. OTHER NON INTEREST NET REVENUES

Year Ended December 31 2013 2012 Gain (loss) from disposal of assets $ 201,726 $ (778) Rental income 121,819 121,793 Net gains on unquoted equity investments 51,384 50,085 Claim settlement income 49,276 24,094 Lawsuit compensation income 46,453 - Overdue accounts income 2,311 9,848 Loss from disposal of nonperforming loan - (78,153) Net gain (loss) on sale of collaterals assumed (1,272) 4,540 Provision of complaint for money management (15,810) (3,317) Others (9,235) 17,587 $ 446,652 $ 145,699

37. EMPLOYEE BENEFITS EXPENSE

Year Ended December 31 2013 2012 Salaries and wages $ 6,063,399 $ 5,735,485 Labor insurance and health insurance 386,250 358,471 Pension costs 356,237 351,368 Others 602,667 569,070 $ 7,408,553 $ 7,014,394

38. DEPRECIATION AND AMORTIZATION EXPENSE

Year Ended December 31 2013 2012 Depreciation expense

Buildings $ 154,390 $ 154,655 Computers and machines 147,047 127,901 Transportation equipment - 19 Other equipment 143,350 160,223

444,787 442,798 Amortization expense 169,155 74,818 $ 613,942 $ 517,616

39. OTHER GENERAL AND ADMINISTRATIVE EXPENSE

Year Ended December 31 2013 2012 Taxation and charge $ 647,403 $ 613,656 Marketing 612,199 564,933 Rent 609,926 565,372 Professional advisory 531,981 504,521 Donation 428,267 100,239 Location fee 379,583 372,828 Automatic equipment 248,210 263,099 Insurance 232,762 220,684 Communication expense 220,277 213,203 Others 377,002 357,548 $ 4,287,610 $ 3,776,083

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40. EARNINGS PER SHARE Basic earnings per share is calculated by gain or loss on the Bank’s stockholders divide by current common stock weight-average shares outstanding. The numerators and denominators used in computing earnings per shares (EPS) are summarized as follows: Denominator Numerator (Amounts) (Shares in EPS (NT$) Pretax After-tax Thousands) Pretax After-tax Year ended December 31, 2013 Basic EPS $ 10,691,374 $ 9,602,909 5,961,616 $ 1.79 $ 1.61 Year ended December 31, 2012 Basic EPS $ 9,417,279 $ 8,348,066 5,891,529 $ 1.60 $ 1.42 The Bank’s recordation date of stock dividends due to appropriation of 2012 earnings was on July 31, 2013. The weighted average number of shares outstanding for EPS calculation has been retroactively adjusted for the issuance of stock dividends. This adjustment caused the basic after income tax EPS for the year ended December 31, 2012 to decrease from NT$1.57 to NT$1.42.

41. RELATED-PARTY TRANSACTIONS

In addition to the disclosure in other footnotes, transactions between the Bank and related party were summarized as follows: a. Related parties

Name Relationship with the Bank SinoPac Financial Holdings Company Limited (SPH) Parent company of the Bank SinoPac Securities Corporation (SinoPac Securities) Subsidiary of SPH SinoPac Call Center Co., Ltd. (SinoPac Call Center) Subsidiary of SPH SinoPac Venture Capital Co., Ltd. (SinoPac Venture Capital) Subsidiary of SPH SinoPac Leasing Corporation (SPL) Subsidiary of SPH SinoPac Securities Investment Trust Co., Ltd. (SinoPac

Securities Investment Trust) Subsidiary of SPH

SinoPac Property Insurance Agent Co., Ltd. (SPPIA) Subsidiary of the Bank SinoPac Life Insurance Agent Co., Ltd. (SPLIA) Subsidiary of the Bank Bank SinoPac (China) Ltd. (preparatory office) Subsidiary of the Bank (Note) SinoPac Capital Ltd. Overseas subsidiary of the Bank Far East National Bank (FENB) Overseas affiliate of the Bank SinoPac Futures Corporation (SinoPac Futures) Subsidiary of SinoPac Securities SinoPac Capital (Asia) Ltd. Affiliate of SinoPac Securities SinoPac Securities (Asia) Ltd. Affiliate of SinoPac Securities Intellisys Corporation Subsidiary of SinoPac Venture Capital (liquidated in

April 2013) Grand Capital International Limited (Grand Capital) Subsidiary of SPL E Ink Holdings Co., Ltd. (E Ink Holdings) Affiliate of the SPH’s president Foundation of Fire Fighting Development Affiliate of the SPH’s president YFY International BVI Corp. Affiliate of the SPH’s president Yung An Leasing Corporation (Yung An Leasing) Affiliate of the SPH’s president Taiwan Genome Sciences, Inc. (Taiwan Genome Sciences) Affiliate of the SPH’s president Liver Disease Prevention & Treatment Research Foundation Affiliate of the SPH’s president Taipei Foreign Exchange Inc. (Taipei Foreign Exchange) Affiliate of the SinoPac Property Insurance Agent’s

president

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Name Relationship with the Bank Taiwan Futures Exchange (TAIFEX) Affiliate of the president of SinoPac Securities Taiwan Depository & Clearing Corporation (TDCC) Affiliate of the president of SinoPac Securities (before

July 2013) SiPix Technology, Inc. (SiPix) Affiliate of second-degree kin of the SPH’s president LinkCom Manufacturing Co., Ltd. (LinkCom) Affiliate of the spouse of the president of SinoPac

Securities Investment Trust (before August 2013) Financial Information Service Co., Ltd. (Financial Information) Affiliate of the president of the Bank’s general manager MiCareo Taiwan Co., Ltd. (MiCareo Taiwan) Affiliate of the SinoPac Venture Capital’s general

manager BoardTek Electronics Corp. (BoardTek Electronics) Affiliate of the SPH’s director Ho, Shou Chuan President of SPH Others The Bank’s directors, supervisors, managers and their

relatives, department chiefs, the investees accounted for by the equity method and their subsidiaries, and the investees of SPH’s other subsidiaries, etc.

(Concluded)

Note: For the information of Bank SinoPac (China) Ltd., please refer to Note 51. b. Significant transactions between the Bank and the related parties

1) Cash and cash equivalents

December 31,

2013 December 31,

2012 January 1,

2012 Due from banks - FENB $ 21,445 $ 55,664 $ 104,763

2) Derivative financial instruments

December 31, 2013

Contract (Notional) Amount

Contract Period

Valuation Gains or Losses Account Balance

Currency swap

contracts

SinoPac Securities $ 39,545 2013.12.11- 2014.1.13

$ (648) Financial liabilities at fair value through profit or loss

$ 648

E Ink Holdings 524,178 2013.11.25- 2014.3.6

(7,901) Financial liabilities at fair value through profit or loss

7,901

Interest rate swap contracts

SinoPac Securities 13,100,000 2009.3.10- 2018.4.26

(32,617) Financial assets at fair value through profit or loss

64,008


45,326 Financial liabilities at fair value through profit or loss

64,044

Asset exchange contracts

SinoPac Securities 115,000 2012.7.31- 2016.8.9

(86) Financial assets at fair value through profit or loss

143

Forward contracts YFY International

BVI Corp. 116,367 2013.12.27-

2014.1.29 46 Financial assets at fair

value through profit or loss

46

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Financial Reports

December 31, 2012


Contract Period


Currency swap

contracts

SinoPac Capital Limited

$ 845,090 2012.12.18- 2013.1.18

$ 426 Financial assets at fair value through profit or loss

$ 426

SinoPac Securities 874,098 2012.12.5- 2013.1.24

2,630 Financial assets at fair value through profit or loss

2,630




113,749



128,862

Asset exchange contract SinoPac Securities 40,000 2012.7.31-



229

January 1, 2012 Contract

(Notional) Contract Amount Period Account Balance

Currency swap contracts SinoPac Capital Limited $ 874,817 2011.12.23-

2012.1.20 Financial assets at fair value

through profit or loss $ 41

SinoPac Capital (Asia) Ltd. 323,203 2011.12.1- 2012.2.1


47



185

FENB 682,290 2011.12.23- 2012.1.27


38

Interest rate swap contracts SinoPac Securities 18,450,000 2007.1.3-


through profit or loss 191,622



242,651

Forward contracts E Ink Holdings 212,030 2011.11.23-


through profit or loss 71

3) Securities purchased under agreement to resell

2013

Balance, December 31 Year Ended

December 31, 2013 Face Amount Carrying Amount Interest Revenue SinoPac Capital (Asia) Ltd. $ - $ - $ 198 SinoPac Securities (Asia) Ltd. - - 138

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2012


December 31, 2012 Face Amount Carrying Amount Interest Revenue

SinoPac Securities (Asia) Ltd. $ 203,956 $ 183,560 $ 454 SinoPac Capital (Asia) Ltd. 58,273 52,446 7,386

2012 Balance, January 1 Face Amount Carrying Amount

SinoPac Capital (Asia) Ltd. $ 1,455,889 $ 1,279,549

4) Receivables and payables

December 31,

2013 December 31,

2012 January 1,

2012

Receivables $ 453,828 $ 134,196 $ 127,427 Payables $ 17,352 $ 15,077 $ 19,829 Cash dividends payable to SPH $ 1,435,025 $ 1,435,025 $ 1,435,025

Receivables include the accrued of SPPIA and SPLIA amounted to $121,848, $103,383 and $89,908 as of December 31, 2013, December 31, 2012 and January 1, 2012, respectively. And including the accrued of Bank SinoPac (China) amounted to $322,281 as of December 31, 2013.

5) Current income tax assets and liabilities

December 31,

2013 December 31,

2012 January 1,

2012 Receivables from adopting the linked-tax system $ 1,256,073 $ 1,155,349 $ 1,167,569 Payables from adopting the linked-tax system $ 700,560 $ 248,469 $ -

6) Loans

Year Ended December 31, 2013 Ending Balance Highest Balance Interest/Fee Rates (%) Interest Revenue Loans $ 4,697,453 $ 7,772,709 0-6.89 $ 115,907

Category

December 31, 2013

Account Volume or Name of Related

Party

Highest Balance

Ending Balance Normal Overdue Type of Collaterals

Is the Transaction at Arm’s Length Commercial

Term Employees’

consumer loans 53 $ 20,359 $ 11,680 V - None Yes

Household mortgage loans

282 1,972,200 1,676,344 V - Real estate Yes

Others: SPL 2,522,000 1,654,000 V - Real estate and

movable Yes

Grand Capital 2,315,180 973,970 V - Movable Yes SiPix 499,996 - V - None Yes Yung An Leasing 198,800 193,800 V - Real estate Yes Liver Disease

Prevention & Treatment Research Foundation

100,000 100,000 V - Real estate

Taiwan Genome Sciences Inc.

86,000 86,000 V - Real estate Yes

BoardTek Electronics

50,000 - V - Real estate Yes

Others 8,174 1,659 V - Movable and certificates of deposit

Yes

Others subtotal 5,780,150 3,009,429 Total 7,772,709 4,697,453

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Ending

Balance

Highest Balance Interest/

Fee Rates (%)

Interest Revenue Loans $ 6,560,088 $ 7,941,533 0-6.88 $ 150,267

Category

December 31, 2012


Party

Highest Balance



Term Employees’



282 1,896,905 1,661,275 V - Real estate Yes

Others Grand Capital 2,682,464 2,304,355 V - Movable Yes SPL 2,334,000 2,222,000 V - Real estate and

movable Yes

SinoPac Securities 556,000 - V - Real estate Yes Yung An Leasing 198,800 198,800 V - Real estate Yes BoardTek

Electronics 133,229 50,000 V - Real estate Yes

Taiwan Genome Sciences


LinkCom 22,080 21,384 V - Real estate Yes Others 12,976 4,608 V - Real estate,

movable, certificates of deposit and securities

Yes


Category

January 1, 2012


Party

Highest Balance



Term Employees’



234 1,528,657 1,528,657 V - Real estate Yes

Others Grand Capital 2,682,460 2,682,460 V - Movable Yes

SPL 1,934,000 1,934,000 V - Real estate and

movable Yes

Yung An Leasing 198,800 198,800 V - Real estate Yes

Taiwan Genome

Sciences 85,000 85,000 V - Real estate Yes

BoardTek


Others 9,043 9,043 V - Real estate, movable, certificates of deposit and securities

Yes


Note: Debtor of related party loans are all normal credit ranking. The Bank estimated the provision of doubtful debt

periodically in accordance with the guidelines issued by the authority and IFRS.

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7) Guarantees

December 31, 2013

Related Party The Highest Balance in

Current Year

Ending Balance Provision Rates Type of Collaterals Note

MiCareo Taiwan $ 11,980 $ 11,980 $ - 1.25% Certificates of deposit SinoPac Securities 2,000 2,000 - 0.3% Certificates of deposit

and real estate

December 31, 2012


Current Year


SinoPac Securities $ 2,000 $ 2,000 $ - 0.3% Certificates of deposit and real estate

Others 30 - - 1.13%-1.32% None Note

January 1, 2012


Current Year



Others 30 30 - 1.33%-1.49% None Note

Note: Employees’ consumer loans.

8) Other financial assets

Ending Balance

December 31, 2013 December 31, 2012 January 1,

2012 Unquoted equity instruments

Financial Information $ 91,000 $ 91,000 $ 91,000 TAIFEX 21,490 21,490 21,490 Taipei Foreign Exchange 6,800 - - TDCC - 4,639 4,639

9) Property and equipment

In January and September 2012, the Bank purchased properties with book value of $1,583 and $183 from SinoPac Call Center.

10) Other assets

Ending Balance


2012 Guarantee deposits

SinoPac Futures $ 29,903 $ 30,862 $ 32,140 SPL 7,984 7,984 10,344

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11) Securities sold under agreement to repurchase

2013


December 31, 2013 Face Amount Carrying Amount Interest Expense Ho, Shou Chuan $ 337,000 $ 340,185 $ 2,373 SinoPac Securities - - 7

2012



2012

Balance, January 1 Face Amount Carrying Amount

Ho, Shou Chuan $ 539,000 $ 540,767

12) Deposits

2013

Year Ended December 31, 2013 Ending Balance Interest Rates (%) Interest Expense $ 18,000,674 0-13 $ 146,653

Ending Balance Interest Rate (%) SinoPac Securities $ 4,768,170 0-1.35 SPLIA 991,483 0.17 E Ink Holdings 778,542 0.01-1.35 Foundations of Fire Fighting Development 755,844 0-1.395 SinoPac Securities Investment Trust 715,704 0-1.4 Others 9,990,931 0-13 $ 18,000,674

2012

Year Ended December 31, 2012 Ending Balance Interest Rates (%) Interest Expense $ 19,864,849 0-13 $ 203,293

Ending Balance Interest Rate (%) SinoPac Securities $ 3,211,551 0-1.35 E Ink Holdings 1,818,979 0.01-0.17 SinoPac Venture Capital 1,074,684 0.02-0.65 SinoPac Futures 945,424 0.17-1.35 SPLIA 897,034 0.17 Others 11,917,177 0-13 $ 19,864,849

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January 1, 2012 Ending Balance

SinoPac Securities $ 3,964,629 E Ink Holdings 1,298,308 SinoPac Futures 1,199,473 SinoPac Venture Capital 919,151 SinoPac Securities (Asia) Ltd. 804,753 Others 11,219,129 $ 19,405,443

13) Other liabilities

Ending Balance


2012 Guarantee deposits received

SinoPac Securities $ 2,876 $ 2,870 $ 2,868 SinoPac Securities Investment Trust 2,274 - - SPL 1,474 1,474 1,474 SPLIA 738 738 560 SinoPac Call Center 581 594 594 SPPIA 148 148 84 Intellisys Corporation - - 76

Advance receipts SinoPac Securities 4 1 1 SPL 1 - -

14) Revenues and expenses

Year Ended December 31 2013 2012

Commissions and fee revenues $ 511,016 $ 478,056 Commissions and fee expenses 6,692 5,871 Gains from unquoted equity instruments 32,761 33,578 Other revenues 6,434 6,236 Other operating expense (Note) 275,735 271,564

Note: Other operating expenses are mainly for professional advisory charges and marketing expense.

The Bank had entered into several co-sell insurance contracts with SPLIA and SPPIA. The service fee revenue for the years ended December 31, 2013 and 2012 were $471,942 and $436,006, respectively. The Bank had entered into professional advisory contracts with SinoPac Call Center. The professional advisory charges and other operating expenses paid in years 2013 and 2012 were $161,455 and $166,640, respectively.

15) Lease

a) The Bank as a lessee

Other Operating Expense Year Ended December 31 Lease Payment Lessor 2013 2012 Term Frequency SPL $ 124,239 $ 125,483 February 2020 Rentals paid monthly

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b) The Bank as a lessor

Rental Income Year Ended December 31 Lease Receive Lessee 2013 2012 Term Frequency SinoPac Securities $ 24,249 $ 23,939 December 2017 Rentals received

monthly SinoPac Securities

Investment Trust 13,886 13,872 September 2017 Rentals received

monthly SPL 5,964 5,964 July 2016 Rentals received

monthly SPLIA 4,426 3,922 December 2015 Rentals received

monthly SinoPac Call Center 3,350 3,373 September 2015 Rentals received

monthly SPPIA 888 504 December 2015 Rentals received

monthly Intellisys Corporation - 228 June 2012 Rentals received

monthly Transactions between the Bank and the related parties are at arm’s length commercial terms except for the preferential interest rates offered to employees for savings and loans up to prescribed limits. Under the Banking Law, except for government and consumer loans, credit extended by the Bank to any related party should be fully secured, and the credit terms for related parties should be similar to those for unrelated parties.

c. Compensation of directors, supervisors and management personnel

Year Ended December 31 2013 2012 Other short-term employee benefits $ 190,814 $ 142,446 Retirement benefit 2,762 2,944 $ 193,576 $ 145,390

The management personnel are composed of general manager, vice general manager and other employee whose job grade is higher than the former.

42. PLEDGED OR MORTGAGED ASSETS

In addition to those disclosed in other Notes, pledged or restricted assets of the Bank is summarized as follows:

Restricted Assets Object December 31,

2013 December 31,

2012 January 1,

2012 Purposes Financial assets at fair value

through profit or loss Convertible bonds $ 1,018,887 $ - $ - Note 1


Negotiable certificate of deposits

- - 5,001,988 Note 2

Discounts and loans Loans 2,608,996 1,340,925 1,907,288 Note 3 Available-for-sale financial

assets Government bonds 306,395 539,353 555,699 Note 4

Held-to-maturity investments Negotiable certificate of deposits

5,149,765 5,145,683 151,450 Note 5

Held-to-maturity investments Government bonds 484,408 187,814 97,400 Note 6 Note 1: Pledged by LA branch of the Bank. Note 2: Pledged with the Central Bank for foreign-exchange transactions. Note 3: Pledged with the Federal Reserve Bank and the Federal Home Loan Bank under the discount window program.

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Note 4: Pledged to court as collaterals for filing provisional seizure, deposits for conducting of discretionary investment business by SICE, guarantees of brokerage dealing and underwriting business, a trust reserve fund, reserve for payment of VISA international card.

Note 5: Pledged in accordance with requirements of the California Department of Financial Institutions, and with the Central Bank for foreign-exchange transactions.

Note 6: Guarantees of brokerage dealing and underwriting business, a trust reserve fund, guarantees of bills financial service, reserve for payment of VISA international card, Hong Kong branch’s clearing system of real - time gross settlement.

43. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS a. In addition to those disclosed in other notes, significant unrecognized commitments of the Bank as of December 31, 2013,

December 31, 2012 and January 1, 2012 were as follows:

December 31,

2013 December 31,

2012 January 1,

2012 Trust assets $ 209,327,463 $ 202,874,160 $ 200,772,395 Securities under custody 95,598,132 92,001,960 92,538,072 Receipts under custody 49,395,283 45,099,960 46,082,192 Agent for government bonds 25,761,200 27,242,200 13,873,600 Guarantee notes payable 6,741,267 5,652,183 5,675,650 Appointment of investment 4,614,028 4,527,557 5,057,232 Agent for marketable securities under custody 2,775,500 1,654,500 2,350,000 Goods under custody 1,201,298 797,195 185,362 Travelers’ checks consigned-in 372,311 379,761 435,078 Others 225,420 275,691 -

b. Equipment purchase contract

The Bank entered into contracts to buy computer equipment and office equipment for $381,990 of which $217,648 had been paid as of December 31, 2013.

c. Commitments

The Bank has signed industry-academy contract cooperation with National Chung Hsing University on July 25, 2012 for the building of food safety and agricultural material research, development and promotion. The total expenditure estimated at 255 million and shall not exceed 300 million.

d. Contingencies

The Securities and Futures Investors Protection Center (SFIPC) filed a lawsuit against the Bank and SPL’s subsidiary, Grand Capital, on the ground that Procomp Informatics Ltd. deposited US$10,000 thousand in the Bank’s Shisung Branch (formally Sungshan Branch) and placed a restriction on the use of this deposit as a condition for a short-term loan to Addie International Limited granted by SPL and for allegedly helping Yeh, Sue-Fei and Procomp Informatics Ltd. (“Procomp”) do irregular trading but, at the same time, Procomp used the restricted deposit for fictitious sale transactions. Later, when problems on Procomp’s account arose, the Bank and Grand Cathay demanded compensation, which was taken from Procomp’s account, resulting in damage to Procomp. The Bank was suspected of misleading investors by concealing the restricted status of Procomp’s deposit and window dressing Procomp’s financial statements. The SFIPC filed a lawsuit against the Bank, SPL and all other parties related to Procomp and demanded required. The Shihlin District Court rejected the SFIPC’s lawsuit against the Bank and SPL on March 11, 2008. SFIPC then filed an appeal. Compensation amount claimed now is $4,207,212. The Bank entered a plea on SFIPC’s charges, and as of December 31, 2013, this case was being tried in the Taiwan High Court. The SFIPC filed a lawsuit against the Bank on the ground that the Bank’s Tunpei Branch provided National Aerospace Fasteners Corporation (NAFC) with its accounts receivable factoring services. NAFC recorded this significant-amount loan transaction as an accounts receivable financing to window-dress its financial position in order to attract investments. The SFIPC filed a lawsuit against the Bank and other parties and demanded compensation approximately $543,233 and interest rate was calculated at 5% from the next date of indictment delivered to the debt clearance. The lawsuit had been declared conclusion of the debate by Taiwan Taipei District Court, and the court originally determined October 25, 2013 as the date of sentencing date. However, on the sentencing date, the court sentenced that there would be a debate on November 21, 2013. After the debate on November 21, 2013, the court declared that the lawsuit will be conducted and there will be another debate on February 27, 2014. The Bank entered a plea on this lawsuit, and this case was being tried in the Taiwan Taipei District Court as of December 31, 2013.

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44. HIERARCHY AND FAIR VALUE INFORMATION OF FINANCIAL INSTRUMENTS

a. Fair value information of financial instruments

December 31, 2013 Items Carrying Amount Fair Value Financial assets Cash and cash equivalent $ 23,545,074 $ 23,545,074 Due from the Central Bank and call loans to other banks 58,955,096 58,955,096 Financial assets at fair value through profit or loss 25,370,342 25,370,342 Available-for-sale financial assets 56,309,091 56,309,091 Receivables 118,432,710 118,432,710 Discounts and loans 781,918,923 781,918,923 Held-to-maturity financial assets, net 211,578,290 211,618,931 Equity investment - equity method, net 15,516,534 - Unquoted equity instruments 6,493,254 - Other financial assets 13,431,304 13,431,304 Other assets - guarantee deposits 561,953 561,953 Financial liabilities Deposits from the Central Bank and banks 87,282,453 87,282,453 Financial liabilities at fair value through profit or loss 11,831,968 11,831,968 Hedging derivative financial liabilities 3,789 3,789 Securities sold under agreement to repurchase 451,771 451,771 Payables 16,631,252 16,631,252 Deposits and remittances 1,065,373,051 1,065,373,051 Bank debentures 45,087,336 45,588,389 Other financial liabilities 6,721,787 6,721,787 Other liabilities - guarantee deposits received 289,730 289,730

December 31, 2012

Items Carrying Amount Fair Value Financial assets Cash and cash equivalent $ 18,633,817 $ 18,633,817 Due from the Central Bank and call loans to other banks 85,616,140 85,616,140 Financial assets at fair value through profit or loss 27,010,687 27,010,687 Available-for-sale financial assets 51,061,892 51,061,892 Hedging derivative financial assets 15,616 15,616 Securities purchased under agreement to resell 236,006 236,006 Receivables 61,702,122 61,702,122 Discounts and loans 750,309,439 750,309,439 Held-to-maturity financial assets, net 217,319,165 217,315,185 Equity investment - equity method, net 5,417,496 - Unquoted equity instruments 6,526,737 - Other financial assets 1,785,692 1,785,692 Other assets - guarantee deposits 1,042,094 1,042,094 Financial liabilities Deposits from the Central Bank and banks 69,989,084 69,989,084 Financial liabilities at fair value through profit or loss 8,671,057 8,671,057 Hedging derivative financial liabilities 22,576 22,576 Securities sold under agreement to repurchase 1,201,450 1,201,450 Payables 21,376,897 21,376,897 Deposits and remittances 1,008,785,799 1,008,785,799 Bank debentures 43,001,812 43,688,721 Other financial liabilities 5,684,826 5,684,826 Other liabilities - guarantee deposits received 270,424 270,424

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January 1, 2012 Items Carrying Amount Fair Value Financial assets Cash and cash equivalent $ 17,789,825 $ 17,789,825 Due from the Central Bank and call loans to other banks 73,672,240 73,672,240 Financial assets at fair value through profit or loss 32,788,680 32,788,680 Available-for-sale financial assets 32,704,993 32,704,993 Hedging derivative financial assets, net 41,323 41,323 Securities purchased under agreement to resell 3,080,168 3,080,168 Receivables 51,039,007 51,039,007 Discounts and loans 712,005,897 712,005,897 Held-to-maturity financial assets, net 229,879,924 229,880,918 Equity investment - equity method, net 4,564,911 - Unquoted equity instruments 6,529,172 - Other financial assets 1,799,999 1,799,999 Other assets - guarantee deposits 548,417 548,417 Financial liabilities Deposits from the Central Bank and banks 66,166,811 66,166,811 Financial liabilities at fair value through profit or loss 7,309,754 7,309,754 Hedging derivative financial liabilities 54,319 54,319 Securities sold under agreement to repurchase 7,071,871 7,071,871 Payables 19,088,655 19,088,655 Deposits and remittances 963,100,250 963,100,250 Bank debentures 37,027,843 37,666,805 Other financial liabilities 7,565,838 7,565,838 Other liabilities - guarantee deposits received 227,317 227,317

b. Fair value estimation of financial instruments not carried at fair value

Methods and assumptions applied in estimating the fair values of financial instruments not carried at fair value are as follows:

1) The carrying amounts of financial instruments such as cash and cash equivalents, due from the Central Bank and call loans to other banks, securities purchased under agreement to resell, receivables, due to the Central Bank and other banks, securities sold under agreement to repurchased and payables approximate its fair value because of the short maturity or the similarity of the carrying amount and future price.

2) Discounts and loans (include nonperforming loans): The Bank usually use base rate (floating rate) as loan rate because it

can reflect market rate. Thus, using its carrying amount to consider the probability of repossession and estimate its fair value is reasonable. Long-term loans with fixed rate should estimate its fair value by its discounted value of expected cash flow. Because this kind of loans is not significant in this item, using its carrying amount to consider the probability of repossession and estimate its fair value should be reasonable.

3) Held-to-maturity financial assets: Held-to-maturity financial assets with quoted price in an active market are using

market price as fair value; held-to-maturity financial assets with no quoted price in an active market are estimated by valuation methods or opponent’s price.

4) Deposits and remittances: Considering banking industry’s characteristic, since deposits have one year maturity and

measured by market rate (market value), using carrying value to assess fair value is reasonable. Because deposits with three years maturity are measured by discounted cash flow, using carrying value to assess fair value is reasonable.

5) Bank debentures: Bank debentures with quoted price in an active market are using market price as fair value; bank

debentures with no quoted price in an active market are estimated by valuation methods. 6) Unquoted equity investments: The fair value of unquoted equity investments cannot be reliably measured because it has

no quoted price in an active market, the variability interval of fair value measurements is significant or the probability of the estimations in the variability interval cannot be reasonably assessed. Hence, the fair value is not disclosed.

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c. Financial instruments measured at fair value

Financial instruments at fair value, available-for-sale financial assets and hedging derivative financial instruments with quoted price in an active market are using market price as fair value; financial instruments above with no quoted price in an active market are estimated by valuation methods. The estimation and assumption of valuation method the Bank used is the same as market participants’. The Bank can obtain this information. The basis of fair value estimation used by the Bank is shown as follows:

The fair value of hedging derivative financial instruments, forward contract, interest rate swap contracts and currency swap contracts is measured by the cash flow discount method; the fair value of option is measured by Black & Scholes Model. Fair values of forward contracts are estimated on the basis of the foreign exchange rates provided by Reuters. Structured product is measured by opponents’ price based on match basis. This method diminished market risk to zero. Fair value of interest rate swap contracts and cross currency swap contracts are estimated on the basis of market quotation provided by Reuters. Fair value are determined as follows: (a) listed stocks and GreTai Securities Market (GTSM) stocks - closing prices as of the balance sheet date; (b) beneficiary certificates (open-end funds), net asset values as of the balance sheet date; (c) bonds - period-end reference prices published by the GTSM; (d) bank debentures issued overseas and the overseas bonds-period-end reference prices published by Bloomberg, calculated through an internal model or provided by a counter-party. The Bank assessed the active level of market and the adequacy of fair value of investments original included in unquoted financial asset in January 1 to December 31, 2013 and measured the investments at fair value.

d. Hierarchy information of fair value of financial instruments

1) The definition of the hierarchy is listed below:

a) Level one

Level 1 financial instruments are traded in active market and have the identical price for the same financial instruments. “Active market” should fit the following characteristics:

i. All financial instruments in the market are homogeneous; ii. Willing buyers and sellers exist in the market all the time; iii. The public can access the price information easily.

b) Level two

The products categorized in this level have the prices that can be inferred from either direct or indirect observable inputs other than the active market’s prices. Examples of these inputs are:

i. Quoted prices from the similar products in the active market. This means the fair value can be derived from the

current trading prices of similar products. It is also noted that whether they are similar products should be judged by the characteristics and trading rules. The fair value valuation in this circumstance may make some adjustment due to time lags, trading rule’s differences, related parties’ prices, and the correlation of price between itself and the similar goods.

ii. Quoted prices for identical or similar financial instruments in inactive markets. iii. When marking-to-model, the input of model in this level should be observable (such as interest rates, yield curves

and volatilities). The observable inputs mean that they can be attained from market and can reflect the expectation of market participants.

iv. Inputs which can be derived from other observable prices or whose correlation can be verified through other

observable market data.

c) Level three

The fair prices of the products in this level are based on the inputs other than the direct market data. For example, historical volatility used in valuing options is an unobservable input, because it cannot represent the entire market participants’ expectation for future volatility.

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2) Hierarchy information of fair value of financial instruments

Financial Instruments Measured at Fair Value December 31, 2013 Total Level 1 Level 2 Level 3

Non-derivative financial instruments Assets Financial assets at fair value through profit or loss

Held-to-trading financial assets Stocks $ 139,802 $ 139,802 $ - $ - Bonds 9,961,842 5,637,038 4,226,682 98,122 Others 5,005 - 5,005 -

Financial assets designated at fair value through profit or loss 3,417,385 - 3,417,385 -

Available-for-sale financial assets Stocks 143,057 - - 143,057 Bonds 36,888,103 15,630,745 18,918,318 2,339,040 Others 19,277,931 - 19,277,931 -

Derivative financial instruments Assets Financial assets at fair value through profit or loss

Held-to-trading financial assets 11,846,308 1,592 10,606,822 1,237,894 Liabilities Financial liabilities at fair value through profit or

loss Held-to-trading financial liabilities 11,831,968 10,331 10,591,950 1,229,687

Hedging derivative financial liabilities 3,789 - 3,789 -




Financial assets designated at fair value through profit or loss 3,228,859 - 3,051,854 177,005

Available-for-sale financial assets Stocks 6,937 6,937 - - Bonds 44,946,611 24,746,251 17,785,053 2,415,307 Others 6,108,344 - 5,671,295 437,049


Held-to-trading financial asset 8,712,960 1,451 7,882,762 828,747 Hedging derivative financial assets 15,616 - 15,616 - Liabilities Financial liabilities at fair value through profit or

loss Held-to-trading financial liabilities 8,671,057 10,066 7,832,244 828,747


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Financial Instruments Measured at Fair Value January 1, 2012

Total Level 1 Level 2 Level 3 Non-derivative financial instruments Assets Financial assets at fair value through profit or loss

Held-to-trading financial assets Stocks $ 31,171 $ 31,171 $ - $ - Bonds 6,704,160 5,571,608 756,314 376,238 Others 17,456,789 450,698 17,005,311 780

Financial assets designated at fair value through profit or loss 876,068 - 697,945 178,123

Available-for-sale financial assets Stocks 62,959 62,959 - - Bonds 27,165,031 14,790,190 12,374,841 - Others 5,477,003 - 5,024,470 452,533





3) Reconciliation of Level 3 items of financial instruments

a) Reconciliation of Level 3 items of financial assets


Items Beginning Balance

Gains (Losses) on Valuation Increase Decrease Effects of Changes in Exchange

Rate

Ending Balance Profit and Loss

Other Comprehensive

Income

Purchase/ Issued

Transfer to Level 3

Disposed/Sold Transfer Out of Level 3

Non-derivative financial instruments


Held-to-trading financial assets $ 365,340 $ 69,535 $ - $ - $ - $ 359,792 $ - $ 23,039 $ 98,122

Financial assets designated at fair value through profit or loss 177,005 206 - - - 182,176 - 4,965 -

Available-for-sale financial assets 2,852,356 (979 ) (55,537 ) 1,965,482 171,899 2,542,764 - 91,640 2,482,097

Derivative financial instruments


Held-to-trading financial assets 828,747 763,273 - 13,209 - 10,064 357,261 (10 ) 1,237,894

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Rate


Other Comprehensive

Income

Purchase/ Issued

Transfer to Level 3




Held-to-trading financial assets $ 377,018 $ 41,949 $ - $ - $ - $ 40,150 $ - $ (13,477 ) $ 365,340

Financial assets designated at fair value through profit or loss 178,123 5,897 - - - - - (7,015 ) 177,005

Available-for-sale financial assets 452,533 (1,213 ) (1,467 ) 2,609,219 - - 189,415 (17,301 ) 2,852,356



Held-to-trading financial assets 111,022 719,178 - - - 1,398 - (55 ) 828,747

For the years ended December 31, 2013 and 2012, the gains and losses on valuation included in net income with assets still held were $1,048,504 and $861,554, respectively. For the years ended December 31, 2013 and 2012, the gains and losses on valuation included in other comprehensive income with assets still held were losses $55,537 and $1,467, respectively.

b) Reconciliation of level 3 items of financial liabilities



Valuation Gain/Loss

Reflected on Profit or

Loss

Increase Decrease Effects of Changes in Exchange

Rate

Ending Balance Purchase/

Issued Transfer to

Level 3 Disposed/

Sold

Transfer Out of Level 3



Held-to-trading financial liabilities $828,747 $1,030,590 $542,840 $ - $810,477 $362,419 $ 406 $1,229,687



Valuation Gain/Loss


Loss

Increase Decrease Effects of Changes in Exchange

Rate


Issued Transfer to

Level 3 Disposed/

Sold




Held-to-trading financial liabilities $111,067 $ 719,725 $ - $ - $ 1,967 $ - $ (78 ) $828,747

For the years ended December 31, 2013 and 2012, the gains and losses on valuation included in net income with liabilities still held were loss $148,599 and $814,920, respectively.

4) Transfer between Level 1 and Level 2

The Bank transferred part of the NTD central government bonds, corporate bonds, bank debentures and beneficiary certificates from level 1 to level 2 because the Bank determined that these investments were not in an active market.

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45. FINANCIAL RISK MANAGEMENT

a. Overview

The Bank document the risk management policies, including overall operating strategies and risks control philosophy. The Bank’s overall risk management policies are to minimize the possibility of potential unfavorable factors. The board of directors approves the documentation of overall risk management policies and specific risk management policies; including credit risk, liquidity risk, market risk, operational risk, derivative instruments transactions and managements. The board of directors reviews the policies regularly, and reviews the operation to make sure the Bank’s policies are executed properly.

b. Risk management framework

The board of directors is the top risk supervisor of the Bank. The board not only reviewed risk management policies and rules but also authorized management to be in charge of daily risk management work. The Bank has set up a risk management committee to be responsible for the services above; the Bank has also set up a credit committee to review the policies and supervise the abnormal cases. The credit committee also helps the board of directors approve cases over general manager’s authority under the board’s authorization. The board of directors authorized the Bank’s management to supervise risk management activities, evaluate the performance and confirm every risk management agent having essential code of ethic and professional skills. Internal audit is responsible for the periodic review of risk management and the control environment, then reports the results directly to the board of directors. The Bank has set up a risk management department to control risk management policies, establish rules, plan and set up risk management system. The risk management department executes these policies based on the board’s approval, then reports the results and performance reviews to the authority or the board.

c. Credit risk

1) Sources and definitions of credit risk

Credit risk is the risk of financial loss if a customer or counterparty fails to meet an obligation under a contract. It arises principally from lending, trade finance, treasury and credit derivatives. The issuer’s credit risk should be considered as part of the market risk when the investment target is securities in an active market.

2) Policies and strategies

The Bank established policies based on operating goals and strategies, business plans and risk management goals authorized by the board of directors. These policies were established to lower potential financial losses, minimize risks and rewards to raise the performance and protect shareholders’ equity through appropriate managing policies and procedures based on risk-diversification principle. The Bank’s risk strategy is to strengthen the credit risk management framework, establish complete credit verification system and procedure, develop and use efficient and scientific credit risk managing instruments to identify, measure, manage and supervise credit risks. These strategies transparentize, systematize, specialize and formalize credit risk management to manage loans, nonperforming assets and every kind of assets’ credit risk. The Bank has set up policies of main risks as prime direction based on legislations and operational goals. These policies include risk appetite, management goals, organization structure of responsibility and accountability, measurement, evaluation, supervision and report procedure of risks. These policies are established to reach the purposes of consistency and centralized management and are put into practice in corporate government. Credit risk management procedures and measurements are as follows:

a) Loan business (includes loan commitment and guarantee)

Loan business classification and qualities are shown as follows:

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i. Classification

Under the “Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Nonperforming/Nonaccrual Loans” (the “Regulations”) issued by the Banking Bureau, the Bank evaluates credit losses on the basis of the estimated collectability. In accordance with the Regulations, credit assets are classified as normal assets, assets that require special mentioned, assets with substandard, assets with doubtful collectability, and assets on which there is loss.

ii. Credit quality level

The Bank set up credit quality level (ex. internal credit risk assessment model, credit assessment rules) based on business characteristic and scale to manage risks. In order to measure clients’ credit risks, the Bank established credit risk assessment model for corporate banking, personal banking and consumer banking through statistic methods, professional judgment and clients’ information. Every model should be reviewed regularly to examine whether the calculations match to the actual conditions or not, then the Bank will adjust parameters to optimize the results. For personal banking and consumer banking customers, every case will be reviewed individually to assess default risks except that micro-credit and credit card business should be assessed by internal credit assessment model. The Bank’s customers’ credit qualities are classified as excellent, good, acceptable, weak and no ratings. Customers’ credit quality should be evaluated annually to make sure the valuation results are accurate.

b) Debt investment and derivative financial instruments

The Bank manages and identifies credit risks of debt investment through credit ratings by outsiders, credit qualities of the debt, regional conditions and counterparties’ risks. The Bank carries out derivative instrument transactions with counterparties in financial industry which are over the investment level. The Bank would control credit risks based on counterparties’ credit lines; counterparties with no credit ratings or investment level should be reviewed individually. Normal customers’ credit exposure positions should be controlled by approved derivative instrument credit line and condition based on normal credit procedure. The Bank classifies credit qualities of debt investment and derivative financial instruments as excellent, good, acceptable, weak and no ratings.

3) Credit risk hedge or mitigation policies

a) Collateral

For credit exposures and collaterals requirements, the Bank has set up several standards such as disposal of collateral, acceptance of real estate disposal, real estate appraisal and credit policies for every commodity to regulate collaterals’ categories, appraisals, procedures, deduction percentages, loan rate, loan-to-value and maturity, control, management and disposal to confirm these standards can mitigate credit risks and maintain creditor’s right. To maintain collateral’s effectiveness, the Bank supervises and manages it based on after-loan management and review policies examines through examining the usage, custody and maintenance of collaterals regularly and irregularly to avoid selling, leasing, pledging, moving and disposing collaterals without authorization. Once the case is due and willing to extend the contract, it should be seen as a new case and the collateral should be revalued.

b) Credit risk limits and credit risk concentration control

The Bank manages credit line and concentration of all credit assets through appropriate information managing system to gather information, credit exposure centralized conditions and large credit exposure of every credit assets combination, including national risk, large credit exposure, credit line of single corporation, group and industry. For cases approaching credit line, the Bank should report to related management and make control strategies; for cases over credit line, the Bank should enhance authorization level based on credit review authority.

c) Agreement of net settlement

The Bank often makes gross settlement on transactions, sign net settlement contract with other counterparties or cancel every transactions and make net settlement when default occurs to mitigate credit risk.

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4) The maximum credit exposure of the financial instruments held by the Bank

Maximum credit exposures of assets on balance sheet (excluding collaterals and other credit enhancement instruments) are almost equivalent to its carrying value. The maximum credit exposures (excluding collaterals, other credit enhancement instruments and undrawn maximum exposure) off balance sheet are shown as follows:

Off-Balance Sheet Items The Maximum Credit Exposure

December 31, 2013 December 31, 2012 January 1, 2012 Undrawn credit card commitments $ 219,240,697 $ 215,223,711 $ 209,633,194 Undrawn loan commitments 17,788,146 14,941,501 16,291,073 Guarantees 17,630,846 19,899,676 12,507,393 Standby letter of credit 5,292,643 5,917,622 6,499,734 Total $ 259,952,332 $ 255,982,510 $ 244,931,394

The Bank adopt a strict evaluate procedure and review the result regularly to control and minimize off-balance sheet credit risk exposures continuously.

5) Credit risk concentration of the Bank

When financial instruments transactions concentrated on counter-party, which engaged in similar business activities, had similar economic characteristics and abilities to execute contracts, the credit risk concentration arises. Credit risk concentrations can arise in the Bank’s assets, liabilities or off-balance sheet items through the execution or processing of transactions (either product or service) or through a combination of exposures across these broad categories. It includes credit, loan and deposits, call loan to banks, investment, receivables and derivatives. The Bank maintains a diversified portfolio, limits its exposure to any one geographic region, country or individual creditor and monitors its exposures continually. The Bank’s most significant concentrations of credit risk is summarized by industry, region and collateral as follows:

a) By industry

Industries December 31, 2013 December 31, 2012 January 1, 2012 Amount % Amount % Amount %

Private enterprise $ 350,654,548 44.35 $ 333,861,985 44.04 $ 297,235,261 41.32 Public enterprise 30,919,288 3.91 33,131,150 4.37 40,811,112 5.67 Non-profit organization 920,323 0.12 79,629 0.01 1,029,855 0.14 Private organization 392,673,616 49.66 391,062,075 51.58 380,326,107 52.87 Financial institution 15,538,053 1.96 - - - - Total 790,705,828 100.00 758,134,839 100.00 719,402,335 100.00

b) By region

Regions December 31, 2013 December 31, 2012 January 1, 2012 Amount % Amount % Amount %

Domestic $ 672,676,716 85.07 $ 660,864,583 87.17 $ 636,881,167 88.53 Asia 65,013,542 8.22 45,874,858 6.05 41,202,366 5.73 North America 38,859,446 4.91 34,081,521 4.50 27,165,647 3.78 Others 14,156,124 1.80 17,313,877 2.28 14,153,155 1.96 Total 790,705,828 100.00 758,134,839 100.00 719,402,335 100.00

c) By collateral

Collateral December 31, 2013 December 31, 2012 January 1, 2012 Amount % Amount % Amount %

Credit $ 246,627,166 31.19 $ 234,454,443 30.93 $ 228,905,777 31.82 Secured

Stocks 1,545,233 0.20 1,803,206 0.24 3,433,187 0.48 Liabilities 10,918,308 1.38 5,721,968 0.75 3,651,741 0.51 Real estate 445,799,410 56.38 450,668,129 59.44 430,557,134 59.85 Movables 26,801,680 3.39 29,564,946 3.90 30,558,122 4.25 Guarantees 22,984,854 2.91 7,066,490 0.93 517,250 0.07 Others 36,029,177 4.55 28,855,657 3.81 21,779,124 3.02

Total 790,705,828 100.00 758,134,839 100.00 719,402,335 100.00

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6) Credit quality and impairment assessment

Some financial assets such as cash and cash equivalents, due from Central Bank and call loan to banks, financial asset at fair value through profit or loss, and securities purchased under agreement to resell are regarded as very low credit risk owing to the good credit rating of counterparties. Except for the analysis above, other financial assets’ analyses are summarized as follows:

a) Discounts, loans and receivables

December 31, 2013

Neither Past Due Nor Impaired

Past Due Not Impaired (B)

Impaired Amount (C)

Total (A)+(B)+(C)

Loss Recognized (D)

Excellent Good Acceptable Weak No Ratings Subtotal (A)

With Objective

Evidence of Impairment

With No Objective


Net Total (A)+(B)+(C)

-(D)

Receivables Credit card business $ 9,625,713 $ 1,158,517 $ 3,759,027 $ 408,459 $ 507,646 $ 15,459,362 $ 85,490 $ 1,571,043 $ 17,115,895 $ 181,480 $ 145,376 $ 16,789,039 Others 39,260,756 24,517,457 25,531,853 562,049 11,139,752 101,011,867 705,862 100,393 101,818,122 60,540 113,911 101,643,671

Discounts and loans 151,013,990 146,737,410 399,171,841 71,242,115 3,802,920 771,968,276 7,419,204 11,318,348 790,705,828 1,501,645 7,044,913 782,159,270 Other financial asset -

nonperforming receivables transferred other than loan - - - - - - - 5,388 5,388 5,388 - -

December 31, 2012



Impaired Amount (C)

Total (A)+(B)+(C)

Loss Recognized (D)


With Objective


With No Objective



-(D)

Receivables Credit card business $ 9,162,342 $ 1,299,904 $ 4,330,199 $ 409,411 $ 221,141 $ 15,422,997 $ 99,895 $ 1,772,321 $ 17,295,213 $ 193,731 $ 133,092 $ 16,968,390 Others 17,234,426 8,292,461 12,892,526 506,588 4,244,556 43,170,557 1,660,313 27,936 44,858,806 11,665 113,409 44,733,732


nonperforming receivables transferred other than loan - - - - - - - 147,329 147,329 133,670 - 13,659

January 1, 2012



Impaired Amount (C)

Total (A)+(B)+(C)

Loss Recognized (D)


With Objective


With No Objective



-(D)

Receivables Credit card business $ 9,419,554 $ 1,910,485 $ 4,186,911 $ 362,024 $ 86,010 $ 15,964,984 $ 97,262 $ 2,056,478 $ 18,118,724 $ 241,305 $ 88,432 $ 17,788,987 Others 6,635,619 4,241,861 5,663,650 1,125,776 14,801,737 32,468,643 862,462 18,804 33,349,909 11,502 88,387 33,250,020



b) Credit analysis for non-overdue nor non-impaired discounts and loans by consumer type and corporate type are as follows:

December 31, 2013 Non-overdue Nor Non-impaired Amount Excellent Good Acceptable Weak No Ratings Total

Consumer banking Mortgage $105,850,366 $ 92,082,167 $132,825,427 $ 21,866,599 $ 148 $352,624,707 Cash card - - - 162 - 162 Micro credit 8,085,605 3,610,962 2,127,003 271,160 - 14,094,730 Others 1,158,606 1,689,404 2,802,216 263,398 3,802,772 9,716,396

Corporate banking Secured 1,025,288 7,667,794 133,719,590 23,572,690 - 165,985,362 Unsecured 34,894,125 41,687,083 127,697,605 25,268,106 - 229,546,919

Total $151,013,990 $146,737,410 $399,171,841 $ 71,242,115 $ 3,802,920 $771,968,276

December 31, 2012 Non-overdue Nor Non-impaired Amount

Excellent Good Acceptable Weak No Ratings Total Consumer banking

Mortgage $ 97,809,121 $ 84,397,301 $142,569,034 $ 32,377,283 $ 205 $357,152,944 Cash card - - - - 251 251 Micro credit 6,431,005 2,599,508 1,707,088 181,774 145,110 11,064,485 Others 128,016 852,972 2,110,175 139,205 2,425,606 5,655,974


Total $146,639,975 $130,913,236 $373,377,804 $ 87,392,922 $ 2,571,172 $740,895,109

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January 1, 2012 Non-overdue Nor Non-impaired Amount


Mortgage $101,393,220 $ 78,634,746 $133,423,072 $ 31,919,017 $ 4,547 $345,374,602 Cash card - - - - 478 478 Micro credit 4,633,050 1,965,282 1,220,761 93,772 627,067 8,539,932 Others 79,384 565,098 1,665,490 119,027 2,129,842 4,558,841


Total $150,625,522 $123,660,832 $341,193,201 $ 87,696,541 $ 2,761,934 $705,938,030

c) Credit analysis for marketable securities

December 31, 2013

Non-overdue Nor Non-impaired Amount Overdue But Not Yet

Impaired (B)

Impaired Amount (C)

Total (A)+(B)+(C)

Loss Recognized

(D)


-(D) Excellent Good Acceptable Weak No Ratings Subtotal (A)

Available-for-sale financial assets Investment in bonds $34,216,098 $17,408,161 $ 3,464,010 $ - $ 1,077,765 $56,166,034 $ - $ - $56,166,034 $ - $ 56,166,034

Held-to-maturity financial assets Investment in bonds 211,562,879 - - - - 211,562,879 - 25,685 211,588,564 10,274 211,578,290

Other financial assets Investment in stocks - - 173,496 - 276,593 450,089 - - 450,089 - 450,089 Others (Note) 11,468,108 - - - - 11,468,108 - 4,224,732 15,692,840 2,430,540 13,262,300

December 31, 2012


Impaired (B)

Impaired Amount (C)

Total (A)+(B)+(C)

Loss Recognized

(D)



Available-for-sale financial assets Investment in bonds $38,094,906 $11,856,899 $ 724,197 $ - $ 378,953 $51,054,955 $ - $ - $51,054,955 $ - $51,054,955

Held-to-maturity financial assets Investment in bonds 217,044,040 250,141 - 24,984 - 217,319,165 - - 217,319,165 - 217,319,165

Other financial assets Investment in stocks - - 173,496 - 310,076 483,572 - - 483,572 - 483,572 Others (Note) - - - - - - - 3,909,134 3,909,134 2,302,383 1,606,751

January 1, 2012


Impaired (B)

Impaired Amount (C)

Total (A)+(B)+(C)

Loss Recognized

(D)



Available-for-sale financial assets Investment in bonds $ 24,052,539 $ 7,728,269 $ 861,226 $ - $ - $ 32,642,034 $ - $ - $32,642,034 $ - $32,642,034


Other financial assets Investment in stocks - - 173,496 - 310,076 483,572 - 4,935 488,507 2,500 486,007 Others (Note) - - - - - - - 3,772,340 3,772,340 2,128,986 1,643,354

Note: Other financial assets include time deposits not belong to cash and cash equivalent and purchase of PEM

instruments.

7) Aging analysis for overdue but not yet impaired financial assets

Delayed procedures by borrowers and other administrative reasons could result in financial assets overdue but not yet impaired. According to the Bank’s internal risk management policies, financial assets overdue within 90 days are not considered impairment loss (account receivables - factoring if no prepayment) unless other evidences provided. Aging analysis for overdue but not yet impaired financial assets is as follows:

Items December 31, 2013

Overdue Less Than One Month

Overdue One to Three Months

Overdue Four to Six Months Total

Account receivable Credit card $ 52,150 $ 33,340 $ - $ 85,490 Others 661,560 37,075 7,227 705,862

Discounts and loans Mortgage 6,561,212 123,909 - 6,685,121 Micro credit 456,994 18,250 - 475,244 Corporate banking 20,295 62,625 - 82,920 Others 173,839 2,080 - 175,919

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Account receivable Credit card $ 64,890 $ 35,005 $ - $ 99,895 Others 1,584,375 73,523 2,415 1,660,313

Discounts and loans Mortgage 4,984,384 205,860 - 5,190,244 Micro credit 235,084 8,818 - 243,902 Corporate banking 2,561 24,099 - 26,660 Others 83,103 - - 83,103

Items January 1, 2012





Discounts and loans Mortgage 6,445,169 307,653 - 6,752,822 Micro credit 225,361 13,074 - 238,435 Corporate banking 440,112 145,716 - 585,828 Others 85,101 36 - 85,137

8) Analysis of impairment for financial assets

Analysis of impairment for investment on bonds is summarized as Note 45 C (6) (c). Analysis of impairment for discounts, loans and receivables is summarized as follows:

Items Discounts and Loans Allowance for Credit Losses

December 31, 2013

December 31, 2012

January 1, 2012

December 31, 2013

December 31, 2012

January 1, 2012

With objective evidence of impairment

Individually assessed $ 8,700,008 $ 9,152,918 $ 2,834,259 $ 682,331 $ 924,709 $ 377,212

Collectively assessed 2,618,340 2,542,903 2,967,824 819,314 1,067,727 1,361,748

With no objective evidence of impairment

Collectively assessed 779,387,480 746,439,018 713,600,252 7,044,913 5,589,821 5,417,196

Items Receivables Allowance for Credit Losses

December 31, 2013

December 31, 2012

January 1, 2012

December 31, 2013

December 31, 2012

January 1, 2012

With objective evidence of impairment (Note 2)

Individually assessed $ 92,598 $ 129,800 $ 124,747 $ 59,459 $ 111,968 $ 115,652

Collectively assessed 1,584,226 1,817,786 2,127,116 187,949 227,098 294,157



Note 1 The loans and receivables exclude the amount of allowance for credit losses and adjustments for discount

(premium).

Note 2 Nonperforming receivables transferred other than loan is included.

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9) Management policies of collaterals assumed

The Bank’s collaterals assumed is all real estate as of December 31, 2013, December 31, 2012 and January 1, 2012. Related information are shown in Note 19. Collaterals assumed are classified as other assets. According to regulations, the Bank should dispose collaterals within four years.

10) Disclosures prepared in conformity with Regulations Governing the Preparation of Financial Reports by Public Banks

a) Overdue loans and receivables

Date December 31, 2013

Items Nonperforming

Loan (NPL) (Note 1)

Total Loans NPL Ratio (Note 2)

Loan Loss Reserves

(LLR)

Coverage Ratio

(Note 3)

Corporate loan Secured $ 1,985,058 $174,735,696 1.14% $ 2,508,269 126.36% Unsecured 522,458 231,101,706 0.23% 2,229,759 426.78%

Consumer loan

Mortgage (Note 4) 376,856 359,737,908 0.10% 3,247,430 861.72% Cash card 225 24,944 0.90% 15,185 6748.89% Micro credit (Note 5) 63,767 15,208,643 0.42% 456,222 715.45%

Others (Note 6) Secured 3,682 9,896,931 0.04% 89,693 2,435.99% Unsecured Total 2,952,046 790,705,828 0.37% 8,546,558 289.51%

Overdue Receivables

Account Receivables

Delinquency Ratio

Allowance for Credit Losses

Coverage Ratio

Credit card 55,102 17,115,895 0.32% 326,856 593.18% Account receivables - factoring with no

recourse (Notes 7 and 8)

5,853 11,774,546 0.05% 63,887 1091.53%


Items Nonperforming

Loan (NPL) (Note 1)


Loan Loss Reserves

(LLR)

Coverage Ratio

(Note 3)

Corporate loan Secured $ 619,986 $156,161,453 0.40% $ 1,267,629 204.46% Unsecured 1,232,839 221,414,893 0.56% 2,890,170 234.43%

Consumer loan



Overdue Receivables

Account Receivables

Delinquency Ratio


Coverage Ratio



41,247 19,430,389 0.21% 111,688 270.78%

Note 1: For loan business: Overdue loans represent the amounts of overdue loans reported in accordance with “Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Nonperforming/Non-accrual Loans”.

For Credit card business: Overdue receivables are regulated by the Banking Bureau letter dated July 6, 2005 (Ref. No. 0944000378).

Note 2: For loan business: NPL ratio = NPL/Total loans.

For credit card business: Delinquency ratio = Overdue receivable/Account receivables.

Note 3: For loan business: Coverage ratio = LLR/NPL

For credit card business: Coverage ratio = Allowance for credit losses/Overdue receivables.

Note 4: Household mortgage loan is a financing to be used by a borrower to buy, build, or fix a dwelling, and the

dwelling owned by the borrower, spouse, or children is used to fully secure the loan.

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Note 5: Micro credit is regulated by the Banking Bureau letter dated December 19, 2005 (Ref. No. 09440010950). Note 6: Others in consumer loans refers to secured or unsecured loans excluding mortgage, cash card, micro credit,

and credit cards. Note 7: For account receivables - factoring with no recourse, as required by the Banking Bureau letter dated July 19,

2005 (Ref. No. 094000494), and allowance for bad debts is recognized once no compensation is made from factoring or insurance within three months.

Note 8: Part of nonperforming receivables transferred from other than loans was included.

b) Excluded NPLs and excluded overdue receivables

Date December 31, 2013 December 31, 2012

Items Excluded NPL Excluded Overdue

Receivables Excluded NPL

Excluded Overdue

Receivables As a result of debt negotiation and loan

agreements (Note 1) $ 8,067 $ 316,347 $ 10,327 $ 427,870 As a result of consumer debt clearance

(Note 2) 7,831 842,682 9,579 821,125 Total 15,898 1,159,029 19,906 1,248,995

Note 1. The disclosure of excluded NPLs and excluded overdue receivables resulting from debt negotiations and loan agreements is based on the Banking Bureau letter dated April 25, 2006 (Ref. No. 09510001270).

Note 2. The disclosure of excluded NPLs and excluded overdue receivables resulting from consumer debt clearance is

based on the Banking Bureau letter dated September 15, 2008 (Ref. No. 09700318940).

c) Concentration of credit extensions

Year December 31, 2013

Rank (Note 1) Industry Category (Note 2)

Total Credit Consists of Loans

(Note 3)

Percentage of Net Worth

(%) 1 A Group (manufacture of liquid crystal panel and components) $ 13,056,705 14.91 2 B Group (manufacture of liquid crystal panel and components) 12,180,728 13.91 3 C Group (manufacture of plastics, sheets, pipes and tubes) 9,771,377 11.16 4 D Group (manufacture of computers) 5,994,352 6.85 5 E Group (water transportation) 5,180,790 5.92 6 F Group (manufacture of computers) 5,059,135 5.78 7 G Group (manufacture of computers) 5,032,176 5.75 8 H Group (smelting and refining of iron and steel) 4,692,866 5.36 9 I Group (cable and other subscription programming) 4,134,775 4.72

10 J Group (mechanics, telecommunications and electricity facilities installation)

3,936,514 4.50




(Note 3)


(%) 1 A Group (manufacture of liquid crystal panel and components) $ 13,528,638 17.29 2 B Group (manufacture of liquid crystal panel and components) 12,973,578 16.58 3 C Group (manufacture of plastics, sheets, pipes and tubes) 12,618,614 16.13 4 D Group (manufacture of computers) 6,400,532 8.18 5 E Group (manufacture of computers) 4,914,051 6.28 6 F Group (financing leasing) 4,662,355 5.96 7 G Group (smelting and refining of iron and steel) 4,594,042 5.87 8 H Group (cable and other subscription programming) 4,468,119 5.71 9 I Group (mechanics, telecommunications and electricity facilities

installation) 3,960,509 5.06

10 J Group (manufacture of the basic metals not else where classified) 2,577,708 3.29

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Note 1: Ranking top ten groups (excluding government or state - owned utilities) whose total credit consists of loans. Note 2: Groups were those as defined in the Supplementary Provisions to the Taiwan Stock Exchange Corporation

Rules for Review of Securities Listings Law Article 6. Note 3: Total credit is the sum of all loans (including import and export bills negotiated, discounts, overdrafts,

short-term loans, short-term secured loans, marginal receivables, medium-term loans, medium-term secured loans, long-term loans, long-term secured loans, and nonperforming loans), exchange bills negotiated, account receivables factored without recourse, acceptances receivable, and grantees issued.

d. Liquidity risk management

1) Source and definition of liquidity risk

Liquidity is the ability that banks can provide sufficient funding for assets growth and matured liabilities. Liquidity risk means banks cannot provide sufficient funding acquired on a reasonable price for obligations, then cause earnings or capital losses.

To enhance cash liquidity, holding sufficient cash and self-liquidating securities, adjusting period differences, absorbing deposits or accommodating borrowing channel are available.

a) Strategies

The Bank established a sound liquidity risk managing system to maintain sufficient liquidity and confirm the Bank would have sufficient funding for obligations in regular or specific stressful situation based on business’ scale and characteristic, assets and liabilities’ structure, funding strategies and diversity of funding sources.

b) Risk measurement

The Bank adopted quantitative method to manage liquidity risk. Use cash flow deficit and liquidity management goal as measure instrument to report the result to assets and liabilities managing committee monthly. Perform stress testing to confirm the Bank would have sufficient liquidity fundings for assets growth and matured liabilities when there are internal operating problems or extremely changes on financial environment.

c) Risk monitor

The Bank established liquidity deficit limit and early warnings of liquidity risk managing goal to monitor the change of liquidity risk and take responses at the right time. The Bank sets up “crisis management team” when liquidity crisis occurs. General manager is the convener of the team, manager of financial obligation department and risk management department should be the member of the team. General manager can also assign related departments to join the team depends on the situation. Members’ rights and responsibilities are listed in “The Bank Liquidity Risk Emergency Response Rule”.

2) Maturity analysis of financial liabilities held to manage liquidity risk

a) Maturity analysis of non-derivative financial liabilities

Cash out-flow analyses of non-derivative financial liabilities of the Bank is summarized as follows. These tables are provided by contract cash flow basis so part of the amounts will not match the amounts on consolidate balance sheet.

December 31, 2013 0-30 Days 31-90 Days 91-180 Days

181 Days to 1 Year Over 1 Year Total

Deposits from the Central Bank and banks $ 58,455,328 $ 19,405,594 $ 1,952,824 $ 7,684,995 $ - $ 87,498,741

Securities sold under agreement to repurchase 267,988 184,292 - - - 452,280

Payables 5,468,631 1,126,601 393,499 197,416 1,687,319 8,873,466 Deposits and remittances 580,871,826 157,370,375 146,856,326 169,933,205 14,818,733 1,069,850,465 Bank debentures 42,082 3,801,305 85,315 441,286 44,137,223 48,507,211

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December 31, 2012 0-30 Days 31-90 Days 91-180 Days 181 Days to

1 Year Over 1 Year Total Deposits from the Central Bank and

banks $ 46,775,633 $ 14,286,415 $ 952,220 $ 8,133,942 $ - $ 70,148,210 Securities sold under agreement to

repurchase 888,639 313,684 - - - 1,202,323 Payables 10,458,445 818,547 596,641 49,091 1,642,834 13,565,558 Deposits and remittances 533,901,402 143,343,962 156,210,683 165,719,503 13,791,288 1,012,966,838 Bank debentures 114,276 70,146 141,754 1,894,118 44,653,703 46,873,997

January 1, 2012 0-30 Days 31-90 Days 91-180 Days


Deposits from the Central Bank and banks $ 42,112,692 $ 15,974,237 $ 717,767 $ 7,526,355 $ 60,768 $ 66,391,819

Securities sold under agreement to repurchase 5,672,489 1,403,254 - - - 7,075,743

Payables 8,486,248 1,271,018 176,522 28,335 1,554,944 11,517,067 Deposits and remittances 502,797,968 123,012,283 167,903,638 161,268,025 12,171,811 967,153,725 Bank debentures 135,856 41,332 110,148 433,896 40,100,499 40,821,731

b) Maturity analysis of derivative financial liabilities

Since hedged derivative financial instrument is managed within the rest of the contract period, it is disclosed as undiscounted cash flow based on the maturity. The Bank engages in derivative financial liabilities at fair value through profit or loss transactions mainly to accommodate customers’ needs and manage their own exposure positions an disclosed at fair value based on recent demand period.


1 Year Over 1 Year Total Derivative financial liabilities at fair

value through profit or loss $11,831,968 $ - $ - $ - $ - $11,831,968 Derivative financial liabilities -

hedging Derivative interest rate instrument 5,192 3,420 - - - 8,612

Total $11,837,160 $ 3,420 $ - $ - $ - $11,840,580




hedging Derivative interest rate instrument 5,448 - 4,879 8,263 8,566 27,156

Total 8,676,505 - 4,879 8,263 8,566 8,698,213

January 1, 2012 0-30 Days 31-90 Days 91-180 Days 181 Days to



hedging Derivative interest rate instrument 453 6,550 5,270 12,333 23,825 48,431

Total 7,310,207 6,550 5,270 12,333 23,825 7,358,185

Note: Derivative interest rate instrument is settled at net amount.

3) Maturity analysis of operating lease commitments

Operating lease commitment is the minimum lease payment when the Bank is lessee or lessor with non-cancelling condition.

Maturity analysis of operating lease commitments is summarized as follows:

December 31, 2013 Less Than 1 Year 1-5 Years Over 5 Years Total

Operating lease commitments Operating lease expense (lessee) $ 464,023 $ 981,188 $ 165,176 $ 1,610,387 Operating lease income (lessor) 82,517 152,434 3,870 238,821

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December 31, 2012 Less Than

1 Year 1-5 Years Over 5 Years Total

Operating lease commitments Operating lease expense (lessee) $ 431,227 $ 926,771 $ 201,685 $ 1,559,683 Operating lease income (lessor) 90,593 154,223 594 245,410

January 1, 2012 Less Than

1 Year 1-5 Years Over 5 Years Total

Operating lease commitments Operating lease expense (lessee) $ 349,323 $ 627,198 $ 142,126 $ 1,118,647 Operating lease income (lessor) 86,279 186,987 2,741 276,007

4) Disclosures prepared in conformity with Criteria Governing the Preparation of Financial Reports by Public Banks

a) Maturity analysis of assets and liabilities of the Bank (New Taiwan dollars)

December 31, 2013

Total 1-30 Days 31-90 Days 91-180 Days 181 Days to 1 Year Over 1 Year

Main capital inflow on maturity $1,138,430,937 $ 323,975,076 $ 150,124,686 $ 75,343,460 $ 51,137,216 $ 537,850,499

Main capital outflow on maturity 1,163,571,737 180,310,761 191,432,702 152,583,971 172,541,674 466,702,629

Gap (25,140,800 ) 143,664,315 (41,308,016 ) (77,240,511 ) (121,404,458 ) 71,147,870

December 31, 2012




Gap (17,237,478 ) 139,504,117 (37,175,702 ) (84,473,412 ) (145,796,010 ) 110,703,529

Note: This table is shown as New Taiwan dollars.

b) Maturity analysis of assets and liabilities of the Bank (U.S. dollars)

December 31, 2013


Main capital inflow on maturity $20,448,656 $ 5,974,241 $ 5,378,145 $ 3,837,444 $ 2,828,106 $ 2,430,720

Main capital outflow on maturity 19,908,591 7,047,923 5,688,301 2,939,046 2,800,751 1,432,570

Gap 540,065 (1,073,682 ) (310,156 ) 898,398 27,355 998,150

December 31, 2012




Gap 226,033 (505,078 ) 7,276 (268,253 ) 608,068 384,020

Note: This table is shown as U.S. dollars.

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e. Market risk

1) Source and definition of market risk

Market risk is defined as the change in market prices (such as interest rate, exchange rate, equity securities and commodity prices) which may cause the fluctuation of financial instrument’s fair value or future cash flow. The Bank’s net revenue and investment portfolio value may fluctuate when risk factors above change. Main market risks the Bank should conquer are interest rate, exchange rate and equity securities. Interest rate risks primarily include: Bonds and derivative interest rate financial commodity such as fixed and fluctuate interest rate swap and bonds option; exchange rate risk is foreign currency investment the Bank holds such as derivative financial commodity at foreign currency and foreign currency bonds; equity securities risk includes listed stocks and derivative financial commodity - stocks.

2) Management strategies and procedures

To follow “Market Risk Management Rule” and other regulations, the Bank established standards about identification, measurement, supervision and reporting to set up appropriate risk management framework for every kinds of market risk. In accordance with risk management limit approved by the board of directors, the Bank supervised every risk component and loss limit such as interest rate, exchange rate, equity security, spot trading and forward contract, option, future, swap, related sensitivity information derived from spot trading to confirm that market risk exposure can be accepted by the Bank.

The Bank separates its transactions into hedged and non-hedged based on trading purposes. For hedged transactions, the Bank should measure hedge relations, risk management goals and hedge strategies. The Bank should also perform hedge testing, evaluate related effectiveness between hedge instruments and hedged items.

3) Organization and framework

The board of directors is the top supervision and determination level of the Bank; it determines every risk management procedure and limit based on operating strategy and business environment. The Bank set up risk management department under general manager to regulate risk managing policies, establish principles, set up and plan risk management system. Following internal control and separation of duties principles, the Bank separated related departments of market risk into three independent departments: Trading, risk control and settlement departments, usually called front office, middle office and back office. The risk management department is in charge of market risk control, it is responsible for identifying measuring, controlling and reporting market risk.

4) The procedure of market risk control

a) Identification and measurement

The scope of risk measurement includes exposures originated from change in market price of interest rate, exchange rate, equity security, spot trading and forward, option, future, swap or other related combined transactions derived from spot trading. The Bank set up appropriate market risk limit target based on commodities’ category, characteristic and complexity. The limit targets are nominal amount exposure, risk factor sensitivity measure value Delta/Vega/DVO1 and loss control limit. Targets above are calculated by risk control department through measurements (ex. Option Black & Scholes Model) provided by transaction systems (ex. Murex, Bloomberg) based on market prices.

b) Supervision and reporting

The Bank’s market risk management department offers measured profit or loss of market price, risk value and limit control reports every day. If the risk is over limit, the department should report to transaction department and appropriate managers in risk management department. The department should also collect and organize bank market risk exposure information, risk value, risk limit rules, over limit information and analyze security investments regularly to the board of directors.

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5) Trading book risk management policies a) Definitions

Trading book is financial instruments and physical commodities held for trading or hedging by the Bank. Held-for-trading position means revenues earned from practical or impractical trading differences. Positions not belong to trading book above are banking book.

b) Strategies

The Bank earns revenues from trading differences or fixed arbitrage through properly control short-term fluctuation of market risk factors (interest rate, exchange rate and stock price). The Bank will execute hedge transaction if necessary.

c) Policies and procedures

The Bank carried out “Market Risk Management Policy” to control the market risk. Traders can autonomously operate and manage positions in the range of authorized limit and trading strategy; market risk management department supervises trading positions (including limit, liquidity, the ability to establish hedge position and investment portfolio risk) based on market information and evaluates market information’ quality, acquirability, liquidity and scale which are calculated into pricing model.

d) Valuation policies

The Bank assesses financial instruments by accessible information from independent sources once a day if market prices are acquirable; if the Bank assesses financial instruments by pricing model, the Bank should carefully use mathematic method and review pricing model’s assumptions and parameters regularly.

e) Measurements

i. Assumptions and calculation methods of risk value are shown in Note 45, (e), (10). ii. Calculate nominal amount exposure and risk factors sensitivity value Delta/Vega/DVO1 through trading systems. iii. The Bank performs stress test through light situation (change in interest rate ± 100bp, change in securities ± 15%

and change in exchange rate ± 3%) and serious situation (change in interest rate ± 200bp, change in securities ± 30% and change in exchange rate ± 6%) and report to the board of directors.

6) Trading book interest rate risk management

a) Definitions

Interest rate risk is the risk to earnings and value of financial instruments caused by fluctuations in interest risk. Major contracts includes interest rate related securities and derivative instruments.

b) Procedures

The Bank sets trading limit and stop-loss limit (including dealing room, dealers, trading instruments) by management strategy and market condition, and the limits are approved by the board of directors.

c) Measurements

i. Assumptions and calculation methods of risk value are shown in Note 45, (e), (10). ii. Daily using DV01 to measure impact of investment portfolio value due from interest rate changes.

7) Trading book exchange rate risk management

a) Definitions

Exchange rate risk is the income or loss arisen from exchange two currencies during different time. The Bank’s exchange rate risk is major caused from financial instruments of spot contract, forward contracts, and FX option.

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b) Policies and procedures

For controlling the exchange rate risk, the Bank sets trading limit and stop-loss limit for dealing room, and dealers, etc., hold the loss to be acceptable.

c) Measurements

i. Assumptions and calculation methods of risk value are shown in Note 45, (e), (10). ii. Daily using exposure positions to measure impact of investment portfolio value due from exchange rate risk.

8) Trading book equity risk management

a) Definitions

Market risk of equity securities includes specific risk by individual securities price volatility and general market risk from all market securities price volatility.

b) Procedures

For controlling the equity risk, the Bank sets investment positions limit and stop-loss limit. The limits are approved by the board of directors. Within the limit of authority, the Bank sets investment positions limit and stop-loss limit for each dealer.

c) Measurements

i. Assumptions and calculation methods of risk value are shown in Note 45, (e), (10). ii. Daily using exposure positions to measure impact of investment portfolio value due from equity risk.

9) Banking book interest rate risk management

Banking book interest rate risk means the value of banking book portfolio shocked by un-favored interest rate changes. Banking book interest rate risk is not from interest rate position of trading book. Banking book interest rate risk management let the Bank can measure and manage the risk to earnings and financial position caused by fluctuations in interest risk.

a) Strategies

Reduce negative effect and adjust position within authority to increase positive effect of interest rate fluctuations for net interest revenue or economic value. The Bank reviews the interest rate sensitivity regularly for creating maximum profit and attending to interest rate risk.

b) Risk measurement

Risk measurement includes interest rate risk of assets, liabilities, and off-balance-sheet position. The Bank makes periodic report of interest rate sensitivity position and measures interest rate fluctuations impact to interest-rate sensitive gap.

c) Risk monitor

Risk management sector reports risk measurement result monthly to authority, for examining and monitoring interest rate risk exposure condition. If risk exposure condition exceed the limit or target value, risk management sector should analysis the reason and notice executive division. Executive division should call relevant divisions to make solution way. The solution way should approve by authority and let relevant divisions execute.

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10) Market risk measurement technique a) Value at Risk, “VaR”

The Bank uses Risk Manager system and stress-testing to measure the investment portfolio risk of the Bank and uses several hypotheses of market conditions to measure market risk and maximum expect loss of holding positions. The Bank’s board of directors sets limit to VaR. The VaR is daily controlled by market risk management sector. VaR is the statistics estimates of holding positions potential loss from un-favored market condition changes. It’s the evaluation of one-day worst loss on holding positions, with a 99% confidence level. The Bank uses the value-at-risk approach and Monte Carlo Simulation Method to derive quantitative measures for the holding positions market risks under normal condition. The calculated result is used to monitor and test the validity of parameters and hypotheses periodically. Using the approach above can’t prevent loss from huge un-favored market condition changes. The Bank considers maximum expect loss, budget profit goal, and operating strategy to set the limit of VaR, which is proposed by market risk management sector and approved by the board of directors. The Bank’s trading book VaR overview

Year Ended December 31, 2013 Average Maximum Minimum

Exchange rate risk 11,593 33,795 1,628 Interest rate risk 13,931 27,135 7,473 Equity risk 2,801 4,376 1,346 Total VaR 18,141 46,435 9,409

Note 1: Estimated VaR: Prediction interval = 1 day, Confidence level = 99%, Decay factor = 0.94.

Note 2: Historical data period: 2013.01.02 - 2013.12.31.


Exchange rate risk 10,844 47,013 3,240 Interest rate risk 17,724 37,790 7,691 Equity risk 1,997 5,167 688 Total VaR 21,969 67,169 9,387

Note 1: Estimated VaR: Prediction interval = 1 day, Confidence level = 99%, Decay factor = 0.94.

Note 2: Historical data period: 2012.01.03 - 2012.12.31.

January 1, 2012 Exchange rate risk 15,872 Interest rate risk 29,819 Equity risk 4,116 Total VaR 30,338

Note: Estimated VaR: Prediction interval = 1 day, Confidence level = 99%, Decay factor = 0.94.

11) Information of exchange rate risks

Information about exchange rate risks of holding net positions of foreign currencies are shown as below:

December 31, 2013

Original Currency

(In Thousands) Exchange Rate Converted to TWD Financial assets

Monetary items

USD $ 8,936,157 29.953 $ 267,664,703 CNY 12,644,981 4.94315 62,506,038

Non-monetary items USD 741,077 29.953 22,399,809

Financial liabilities Monetary items

USD 8,081,092 29.953 242,052,958 CNY 14,267,485 4.94315 70,526,318

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December 31, 2012

Original Currency

(In Thousands) Exchange Rate Converted to TWD Financial assets Monetary items

USD $ 7,079,427 29.1366 $ 206,270,447 CNY 4,051,069 4.67785 18,950,293



USD 7,236,063 29.1366 210,834,273 CNY 4,179,800 4.67785 19,552,477

January 1, 2012

Original Currency


USD $ 6,202,917 30.29 $ 187,886,356 CNY 2,702,631 4.80809 12,994,493



USD 6,480,588 30.29 196,297,011 CNY 2,694,457 4.80809 12,955,192

12) Disclosures of Regulations Governing the Preparation of Financial Reports by Public Banks

a) Interest rate sensitivity information (New Taiwan dollars)

December 31, 2013

Items 1 to 90 Days (Included)

91 to 180 Days (Included)

181 Days to One Year (Included)

Over One Year Total

Interest rate-sensitive assets $792,396,642 $ 32,045,089 $ 35,633,090 $ 71,458,579 $931,533,400 Interest rate-sensitive liabilities 331,533,253 425,124,578 81,508,986 41,946,658 880,113,475 Interest rate-sensitive gap 460,863,389 (393,079,489) (45,875,896) 29,511,921 51,419,925 Net worth 88,423,172 Ratio of interest rate-sensitive assets to liabilities (%) 105.84% Ratio of interest rate-sensitive gap to net worth (%) 58.15%

December 31, 2012




Over One Year Total

Interest rate-sensitive assets $776,383,457 $ 42,438,568 $ 41,916,628 $ 77,287,158 $938,025,811 Interest rate-sensitive liabilities 337,333,354 418,251,512 87,737,208 38,147,913 881,469,987 Interest rate-sensitive gap 439,050,103 (375,812,944) (45,820,580) 39,139,245 56,555,824 Net worth 79,845,233 Ratio of interest rate-sensitive assets to liabilities (%) 106.42% Ratio of interest rate-sensitive gap to net worth (%) 70.83%

Note 1: The above amounts include only New Taiwan dollars held by the Bank, and exclude contingent assets and

contingent liabilities.

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Note 2: Interest rate-sensitive assets and liabilities mean the revenues or costs of interest-earning assets and

interest-bearing liabilities are affected by interest rate changes. Note 3: Interest rate-sensitivity gap = Interest rate-sensitive assets - Interest rate-sensitive liabilities. Note 4: Ratio of interest rate-sensitive assets to liabilities = Interest rate-sensitive assets/Interest rate-sensitive

liabilities (in New Taiwan dollars).

b) Interest rate sensitivity information (U.S. dollars)

December 31, 2013




Over One Year Total

Interest rate-sensitive assets $ 6,711,757 $ 1,130,861 $ 532,117 $ 144,570 $ 8,519,305 Interest rate-sensitive liabilities 3,369,441 3,708,122 360,448 - 7,438,011 Interest rate-sensitive gap 3,342,316 (2,577,261) 171,669 144,570 1,081,294 Net worth 105,591 Ratio of interest rate-sensitive assets to liabilities (%) 114.54% Ratio of interest rate-sensitive gap to net worth (%) 1,024.04%

December 31, 2012




Over One Year Total

Interest rate-sensitive assets $ 5,880,318 $ 163,728 $ 67,508 $ 140,091 $ 6,251,645 Interest rate-sensitive liabilities 2,949,143 3,687,695 220,917 6,531 6,864,286 Interest rate-sensitive gap 2,931,175 (3,523,967) (153,409) 133,560 (612,641) Net worth 90,708 Ratio of interest rate-sensitive assets to liabilities (%) 91.07% Ratio of interest rate-sensitive gap to net worth (%) (675.40%)

Note 1: The above amounts include only USD held by the Bank and exclude contingent assets and contingent

liabilities. Note 2: Interest rate-sensitive assets and liabilities mean the revenues or costs of interest-earnings assets and

interest-bearing liabilities are affected by interest-rate changes. Note 3: Interest rate-sensitive gap = Interest rate-sensitive assets - Interest rate-sensitive liabilities. Note 4: Ratio of interest rate-sensitive assets to liabilities = Interest rate-sensitive assets/Interest rate-sensitive

liabilities (in U.S. dollars) 46. CAPITAL MANAGEMENT

a. Overview

The Bank’s capital management goals are as follows: As a basic target, the Bank’s eligible capital should be sufficient to meet their operation need, and higher than minimum requirements of the capital adequacy ratio. Eligible capital and legal capital are calculated under the regulations announced by the authority. The Bank should have adequacy capital to bear the risks, measure capital demand according to risk combination and risk characteristics, fulfill the optimization of resource and capital allocation by risk management.

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b. Capital management procedure

The Bank’s capital adequacy ratio should meet the regulations announced by the authority. Also, the Bank’s should maintain capital adequacy ratio by considering the Bank’s business scale, major operating strategy, risk condition, eligible capital structure, and future capital increase plan, etc. The Bank reported to the authority regularly. Overseas subsidiaries’ capital management is in accordance with local regulations. The Bank’s capital maintenance is in accordance with “Regulations Governing the Capital Adequacy and Capital Category of Banks”, etc., and is managed by the Bank’s risk management and accounting divisions.

c. Statement of capital adequacy

Year Analysis Items

December 31, 2013 Standalone Consolidation

Eligible capital

Ordinary shares equity $ 70,204,331 $ 79,348,426 Other Tier 1 capital - - Tier 2 capital 19,446,441 30,585,284 Eligible capital 89,650,772 109,933,710

Risk-weighted assets

Credit risk Standardized approach 782,726,199 816,744,157 Internal rating - based approach - - Securitization - -

Operational risk

Basic indicator approach 39,463,613 42,938,563 Standardized

approach/alternative standardized approach

- -

Advanced measurement approach - -

Market risk Standardized approach 20,158,638 23,287,575 Internal model approach - -

Total risk-weighted assets 842,348,450 882,970,295 Capital adequacy ratio 10.64% 12.45% Ordinary shares equity risk - based capital ratio 8.33% 8.99% Tier 1 risk - based capital ratio 8.33% 8.99% Leverage ratio 5.09% 5.59%

Note 1: These tables were filled according to “Regulations Governing the Capital Adequacy Ratio of Banks” and related

calculation tables. Note 2: The Bank shall disclose the capital adequacy ratio for the current and previous period in annual financial reports.

For semiannual financial report, the Bank shall disclose the capital adequacy ratio for the current period, previous period, and previous year end.

Note 3: The formula:

1) Eligible capital = Ordinary shares equity + Other Tier 1 capital + Tier 2 capital. 2) Total risk - weighted assets = Risk-weighted assets for credit risk + (Capital requirements for operational risk +

Capital requirement for market risk) x 12.5. 3) Ratio of capital adequacy = Eligible capital/Total risk - weighted assets. 4) Ordinary shares equity risk - based capital ratio = Ordinary shares equity/Total risk - weighted assets. 5) Tier 1 risk - based capital ratio = (Ordinary shares equity + Other Tier 1 capital)/Total risk - weighted assets. 6) Leverage ratio = Tier 1 capital/Total exposure risk.

Note 4: In accordance with Financial Supervisory Commission guideline No. 09900146911, gains from the sale of idle

assets are not to be included in the Bank’s capital adequacy ratio calculation.

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Year Analysis Items

December 31, 2012 (Note 5) Standalone Consolidation

Eligible capital

Tier 1 capital $ 67,331,426 $ 72,338,629 Tier 2 capital 29,937,518 36,062,151 Tier 3 capital - - Eligible capital 97,268,944 108,400,780


Credit risk Standardized approach 706,571,756 729,504,805 Internal rating - based approach - - Securitization 723 631,950

Operational risk



- -



Total risk-weighted assets 760,274,241 792,183,872 Capital adequacy ratio 12.79% 13.68% Tier 1 risk - based capital ratio 8.86% 9.13% Tier 2 risk - based capital ratio 3.93% 4.55% Tier 3 risk - based capital ratio - - Ratios of common stockholders’ equity to total assets 4.33% 4.25% Leverage ratio 5.58% 5.84%





1) Eligible capital = Tier 1 capital + Tier 2 capital + Tier 3 capital. 2) Total risk - weighted assets = Risk-weighted assets for credit risk + (Capital requirements for operational risk +

Capital requirement for market risk) × 12.5. 3) Ratio of capital adequacy = Eligible capital/Total risk - weighted assets. 4) Tier 1 risk - based capital ratio = Tier 1 capital/Total risk - weighted assets. 5) Tier 2 risk - based capital ratio = Tier 2 capital/Total risk - weighted assets. 6) Tier 3 risk - based capital ratio = Tier 3 capital/Total risk - weighted assets. 7) Ratios of common stockholders’ equity to total assets = Common stock/Total assets. 8) Leverage ratio = Tier 1 capital/Adjusted average assets (average assets - goodwill, unamortized losses on sale of

non-performing loans and the amount deducted from Tier 1 capital according to “Regulations Governing the Capital Adequacy Ratio of Banks”).


assets are not to be included in the Bank’s capital adequacy ratio calculation. Note 5: The Bank’s statement of capital adequacy was calculated in according with Criteria Governing the Preparation of

Financial Reports by Public Bank and accounting principles generally accepted in the Republic of China (ROC).

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47. RECLASSIFICATION

Financial assets have been reclassified on September 25, 2013. The fair value on the reclassification day were as follows:

Before

Reclassification After

Reclassification Available-for-sale securities $ 10,164,016 $ - Held-to-maturity securities - 10,164,016 $ 10,164,016 $ 10,164,016

The effective interest rate of reclassified financial assets on the reclassification day was between 0.9795% and 2.0696%, and the estimated recoverable cash flow was $10,879,405.

The book value and fair value of financial assets reclassified:

December 31, 2013 Held-to-maturity securities Book value $ 10,152,801 Fair value 10,190,705

The gains or losses recorded for the reclassified financial assets (excluding those that had been derecognized) for 2013 and 2012 and the pro forma gains or losses assuming no reclassifications had been made were as follows:

September 26, 2013 to December

31, 2013 Held-to-maturity securities Recognition in profit (included in interest revenue) $ 30,048 Assumed equity adjustment without such reclassification 39,542

48. CROSS-SELLING INFORMATION

For the years ended December 31, 2013 and 2012, the Bank charged SinoPac Securities for $2,223 and $3,223, respectively, as marketing and opening accounts. The rental fee the Bank has charged SinoPac Securities for the years ended December 31, 2013 and 2012 were $3,488 and $3,408, respectively. The rental fee the Bank paid to SinoPac Securities were $656 and $668, respectively for the years ended December 31, 2013 and 2012. The Bank has paid to SinoPac Securities $4,901 and $3,245 for the years ended December 31, 2013 and 2012 for bonus as part of the cross-selling agreement. For other transactions between SPH and its subsidiaries, please refer to Note 41.

49. PROFITABILITY

Items December 31 2013 2012

Return on total assets Before income tax 0.83% 0.78% After income tax 0.75% 0.69%

Return on net worth Before income tax 12.90% 12.73% After income tax 11.58% 11.29%

Profit margin 38.27% 39.53% Note 1: Return on total assets = Income before (after) income tax/Average total assets.

Note 2: Return on net worth = Income before (after) income tax/Average net worth.

Note 3: Profit margin = Income after income tax/Total net revenues.

Note 4: Income before (after) income tax represents income for years ended December 31, 2013 and 2012.

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50. TRUST BUSINESS UNDER THE TRUST LAW a. Balance sheets, income statement and trust properties of trust accounts

These statements were managed by the Bank’s Trust Department. However, these items were not included in the Bank’s financial statements.

Balance Sheets of Trust Accounts December 31, 2013 and 2012

December 31, 2013

Other Trust

Business

Financial Assets and Real Estate

Trust Plan Total Trust assets Bank deposits $ 5,746,758 $ - $ 5,746,758 Bonds 2,575,463 - 2,575,463 Stocks 9,016,125 - 9,016,125 Funds 113,915,842 - 113,915,842 Securities lent 5,136,399 - 5,136,399 Receivables 14,037 - 14,037 Prepayments 6,988 - 6,988 Real estate

Land 6,304,443 - 6,304,443 Buildings 95,968 - 95,968 Construction in process 4,769,334 - 4,769,334

Securities under custody 61,748,781 - 61,748,781 Total trust assets $ 209,330,138 $ - $ 209,330,138 Trust liabilities Payables $ 2,675 $ - $ 2,675 Payable on securities under custody 61,748,781 - 61,748,781 Trust capital 145,890,434 - 145,890,434 Reserves and cumulative earnings

Net income (loss) 1,759,832 - 1,759,832 Cumulative earnings 445,603 - 445,603 Deferred amount (517,187) - (517,187)

Total trust liabilities $ 209,330,138 $ - $ 209,330,138

December 31, 2012

Other Trust

Business



Land 6,549,890 - 6,549,890 Buildings 1,289,377 - 1,289,377 Construction in process 3,817,626 - 3,817,626

Securities under custody 60,183,115 - 60,183,115 Total trust assets $ 202,879,907 $ - $ 202,879,907

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December 31, 2012

Other Trust

Business


Trust Plan Total Trust liabilities Payables $ 5,748 $ - $ 5,748 Payable on securities under custody 60,183,115 - 60,183,115 Trust capital 142,245,441 - 142,245,441 Reserves and cumulative earnings

Net income (loss) 973,173 - 973,173 Cumulative earnings 541,507 (34,069) 507,438 Deferred amount (1,069,077) 34,069 (1,035,008)


Trust Properties of Trust Accounts

December 31, 2013 and 2012

December 31 Investment Portfolio 2013 2012 Bank deposits $ 5,746,758 $ 2,657,699 Bonds 2,575,463 1,611,352 Stocks 9,016,125 6,480,917 Funds 113,915,842 116,814,926 Securities lent 5,136,399 3,457,380 Real estate

Land 6,304,443 6,549,890 Buildings 95,968 1,289,377 Construction in process 4,769,334 3,817,626

Securities under custody 61,748,781 60,183,115 $ 209,309,113 $ 202,862,282

Income Statement of Trust Account

Years Ended December 31, 2013 and 2012


Other Trust

Business


Trust Plan Total Trust income

Interest income $ 22,551 $ - $ 22,551 Borrowed Securities income 128,630 - 128,630 Cash dividends 147,935 - 147,935 Gains from beneficiary certificates 2,987 - 2,987 Realized investment income 218,283 - 218,283 Unrealized investment income 1,308,848 - 1,308,848 Total trust income 1,829,234 - 1,829,234

Trust expense Trust administrative expenses 27,589 - 27,589 Tax expenses 204 - 204 Realized investment loss 38,416 - 38,416 Others 3,193 - 3,193 Total trust expense 69,402 - 69,402

Income before income tax 1,759,832 - 1,759,832 Income tax expense - - - Net income $ 1,759,832 $ - $ 1,759,832

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Other Trust

Business



Interest income $ 24,894 $ - $ 24,894 Borrowed Securities income 136,433 - 136,433 Cash dividends 167,749 - 167,749 Gains from beneficiary certificates 139 - 139 Realized investment income 104,958 - 104,958 Unrealized investment income 630,551 - 630,551 Total trust income 1,064,724 - 1,064,724


Income before income tax 973,173 - 973,173 Income tax expense - - - Net income $ 973,173 $ - $ 973,173

b. The operations of the Bank’s Trust Department consist of planning, managing and operating of trust business and affiliated

business. These operations are governed by the Banking Law and the Trust Law. c. IBT, a trustee in behalf of its corporate customers, purchased CDOs issued by Lehman Brothers for US$20 million in 2005.

A civil case have been brought against the issuer, custodians and bond holders (the Bank based on trust deed) by the insolvency administrator of Lehman Brothers at United States Bankruptcy Court, New York. The civil case is still in preliminary case of proceeding. The Bank has notified the lawsuit to customers and appointed attorney. However, customers still received the notice of being charged for the civil case from the insolvency administrator and the customers appointed attorney by themselves. The United States Bankruptcy Court processed mandatory conciliation procedures, and the Bank had already replied that there is no possibility of conciliation on July 15, 2013. Since the conciliation is mandatory, the conciliation will be executed in March or April 2014.

51. ADDITIONAL DISCLOSURES

a. Related information of the Bank and material transaction:

1) Marketable securities acquired and disposed at costs or prices of at least NT$300 million or 10% of the issued capital: Table 1

2) Acquisition of individual real estates at costs of at least NT$300 million or 10% of the issued capital: None 3) Disposal of individual real estates at prices of at least NT$300 million or 10% of the issued capital: None 4) Allowance for service fee to related parties amounting to at least NT$5 million: None 5) Receivables from related parties amounting to at least NT$300 million or 10% of the issued capital: Table 2 6) Trading information - sale of nonperforming loans: Table 3 7) Financial asset securitization: None 8) Other significant transactions which may affect the decisions of users of financial reports:

After the approval of Financial Supervisory Commission and Investment Commission, MOEA, SinoPac Bank (China) preparatory office is a temporary office approved by China Banking Regulatory Commission. SinoPac Bank (China) will be formally set up and apply to start business after the completion of the pre-opening work.

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b. Financing provided, endorsements/guarantees provided, marketable securities held, acquisition and disposal of marketable securities at costs or prices of at least NT$300 million or 10% of the issued capital, and derivative transactions of the Subsidiary: Table 4

c. The related information and proportionate share in investees: Table 5 d. Information on investment in Mainland China: Table 6

52. FRIST-TIME ADOPTION OF THE REGULATIONS

a. Influences caused by transition from R.O.C. GAAP to the Regulations

Reconciliation of balance sheets and comprehensive income statements are shown as below:

1) Reconciliation of balance sheet as of January 1, 2012

R.O.C. GAAP Affecting Amounts The Regulations Description Assets Cash and cash equivalents $ 17,789,825 $ - $ 17,789,825 Due from the Central Bank and call loans to

other banks 73,672,240 - 73,672,240


32,791,036 (2,356 ) 32,788,680 c. 4)


3,080,168 - 3,080,168

Receivables, net 51,656,213 550,363 52,206,576 c. 4) Discount and loans, net 712,005,897 - 712,005,897 Available-for-sale financial assets 32,600,632 104,361 32,704,993 c. 4) Held-to-maturity financial assets, net 229,879,924 - 229,879,924 Equity investment - equity method 4,569,539 (4,628 ) 4,564,911 Other financial assets, net 8,918,911 (548,417 ) 8,370,494 d. 1) Property and equipment, net 9,377,488 1,869,643 11,247,131 c. 5) Intangible assets 951,678 - 951,678 Other assets 4,648,721 (1,272,098 ) 3,376,623 c. 5), d. 1) Total $ 1,181,942,272 $ 696,868 $ 1,182,639,140 Liabilities Deposits from the Central Bank and banks $ 66,166,811 $ - $ 66,166,811 Financial liabilities at fair value through profit

or loss 7,309,754 - 7,309,754


7,071,871 - 7,071,871

Payables 19,093,254 13,390 19,106,644 c. 4) Deposits and remittances 963,100,250 - 963,100,250 Bank debentures 37,027,843 - 37,027,843 Other financial liabilities 7,847,474 (227,317 ) 7,620,157 d. 1) Other liabilities 3,780,167

1,793,469

5,573,636

c. 1), c. 2), c. 3),

d. 1) Total liabilities 1,111,397,424 1,579,542 1,112,976,966 Equity Share capital $ 52,574,469 $ - $ 52,574,469 Capital surplus 9,962,818 - 9,962,818 Retained earnings 7,242,286 (12,017 ) 7,230,269 c. 8) Other equity 765,275 (870,657 ) (105,382 ) c. 8) Total equity 70,544,848 (882,674 ) 69,662,174 Total $ 1,181,942,272 $ 696,868 $ 1,182,639,140

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2) Reconciliation of balance sheet as of December 31, 2012

R.O.C. GAAP Affecting Amounts The Regulations Description Assets Cash and cash equivalents $ 18,633,817 $ - $ 18,633,817 Due from the Central Bank and call loans to

other banks 85,616,140 - 85,616,140


27,060,490 (49,803 ) 27,010,687 c. 4)


236,006 - 236,006

Receivables, net 62,174,574 682,897 62,857,471 c. 4) Discount and loans, net 750,309,439 - 750,309,439 Available-for-sale financial assets 51,061,892 - 51,061,892 Held-to-maturity financial assets, net 217,319,165 - 217,319,165 Equity investment - equity method 5,424,038 (6,542 ) 5,417,496 Other financial assets, net 9,370,139 (1,042,094 ) 8,328,045 d. 1) Property and equipment, net 9,213,899 1,680,974 10,894,873 c. 5) Intangible assets 1,564,818 - 1,564,818 Other assets 4,005,061 (578,382 ) 3,426,679 c. 5), d. 1) Total $ 1,241,989,478 $ 687,050 $ 1,242,676,528 Liabilities Deposits from the Central Bank and banks $ 69,989,084 $ - $ 69,989,084 Financial liabilities at fair value through profit

or loss 8,671,057 - 8,671,057


1,201,450 - 1,201,450

Payables 21,735,405 (87,049 ) 21,648,356 c. 4) Deposits and remittances 1,008,785,799 - 1,008,785,799 Bank debentures 43,001,812 - 43,001,812 Other financial liabilities 5,977,826 (270,424 ) 5,707,402 d. 1) Other liabilities 3,662,605

1,758,156

5,420,761

c. 1), c. 2),

c. 3), d. 1) Total liabilities 1,163,025,038 1,400,683 1,164,425,721 Equity Share capital 53,862,022 - 53,862,022 Capital surplus 10,413,462 - 10,413,462 Retained earnings 13,737,927 105,914 13,843,841 c. 8) Other equity 951,029 (819,547 ) 131,482 c. 8) Total equity 78,964,440 (713,633 ) 78,250,807 Total $ 1,241,989,478 $ 687,050 $ 1,242,676,528

3) Reconciliation of statement of comprehensive income for the year ended December 31, 2012

R.O.C. GAAP Affecting Amounts The Regulations Description Net interest $ 13,314,810 $ (155,075 ) $ 13,159,735 c. 2), d. 2) Net revenues other than interest

Commissions and fee revenues, net 3,389,604 87,140 3,476,744 c. 7) Gains from financial assets and liabilities at

fair value through profit or loss 2,436,266 252,372 2,688,638 c. 4)

Realized gains from available-for-sale financial assets

6,989 - 6,989

Share of profit of subsidiaries 1,611,666 (2,560 ) 1,609,106 Foreign exchange gain, net 291,317 294 291,611 Impairment losses on assets (258,288 ) - (258,288 )

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R.O.C. GAAP Affecting Amounts The Regulations Description

Recovery of bad debts $ 561,481 $ (561,481 ) $ - c. 6) Other net gains 30,615 115,084 145,699 d. 2)

Total net revenues 21,384,460 (264,226 ) 21,120,234 Reversal of bad debts (956,343 ) 561,481 (394,862 ) c. 6) Operating expenses

Employee benefits (6,937,941 ) (76,453 ) (7,014,394 ) c. 1), c. 2) Depreciation and amortization (488,942 ) (28,674 ) (517,616 ) Others (3,738,041 ) (38,042 ) (3,776,083 ) Total operating expenses (11,164,924 ) (143,169 ) (11,308,093 )

Income before income tax 9,263,193 154,086 9,417,279 Income tax expense (1,042,996 ) (26,217 ) (1,069,213 ) Profit or loss $ 8,220,197 $ 127,869 8,348,066 Other comprehensive income

Unrealized gains on available-for-sale financial assets

221,203

Unrealized valuation gains on cash flow hedge

28,636

Actuarial loss arising from defined benefit plans

(11,973 )

Share of other comprehensive income of subsidiaries

(9,768 )

Income tax relating to the components of other comprehensive income

(1,172 )

Other comprehensive income for the year 226,926

Comprehensive income for the year $ 8,574,992

4) Material adjustment of cash flow statement for the year ended December 31, 2012

Under R.O.C. GAAP, receiving interests, receiving dividends, tax payment, and interest payment are classified as cash flows from operating activities in cash flow statement under indirect method and below transactions are not asked to be disclosed separately. However, under IAS 7 “Statement of Cash Flows” recognized by Financial Supervisory Commission (FSC), the Bank discloses receiving interests amounted to $22,217,844, receiving dividend amounted to $637,285, interest payment amounted to $9,201,217, and tax payment amounted to $52,099, separately and are all classified as cash flows from operating activities.

c. Reconciliation of transition to the Regulations

1) Employment benefit - actuarial gain and loss of defined benefit plan

Under R.O.C. GAAP, net transition obligation resulted from first-time adoption of SFAS No. 18 “Accounting for Pensions” should be amortized on a straight line basis over average remaining service life of active plan participants and recognized as net periodic pension cost. Transitional rules in IAS 19 “Employee Benefits” will not be applicable once transited to the Regulations, and the related affected amounts of net transition obligation should be recognized at once and adjusted with retained earnings. Under R.O.C. GAAP, actuarial gains and losses use a corridor approach when measuring its obligations, and amortized over the expected average remaining working lives of the participating employees. Instead, under IAS No. 19 “Employee Benefits” the Bank will recognize actuarial gains and losses of defined benefit obligation immediately in full in the period which they occur, as other comprehensive income, and then it will be recognized in retained earnings in statement of changed in equity. The subsequent reclassification to earnings is not permitted. As of December 31, 2012 and January 1, 2012, the Bank reapplied actuarial valuation of defined benefit obligation in accordance with IAS 19, resulted in increments of accrued pension liabilities amounted to $917,454 and $1,034,553 under IFRS 1, respectively. For the year ended December 31, 2012 resulted in decrements of pension cost amounted to $85,990.

2) Employment benefit - preferential interest on employees’ deposits

Under Article 28 of the Criteria Governing the Preparation of Financial Reports by Public Bank, the excess preferential interest the Bank offers to the employees under an employment arrangement or internal guideline should be recognized as post-employee benefits on the retirement date.

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As of December 31, 2012 and January 1, 2012, the Bank applied actuarial valuation to preferential interest on retired employees’ deposits in conformity with IAS 19 and Criteria Governing the Preparation of Financial Reports by Public Banks, resulted in increments of provisions for employee amounted to $198,567 and $170,548, respectively, and increment of employment benefit expense amounted to $8,372 with reclassification of interest expense of employees’ deposit to employment benefit expense amounted to $168,131 for the year ended December 31, 2012.

3) Recognition of provisions

The amount recognized as a provision should be the best estimate of the expenditure required to settle the present obligation at the balance sheet date, that is, the amount based on fee revenues. The Bank reversed the provisions after the transition to the Regulations. As of December 31, 2012 and January 1, 2012, the Bank adjusted with decrements respectively in provisions amounted to $23,348 and deferred tax assets amounted to $3,969 in accordance with IAS 37 “Provisions, Contingent Liabilities and Contingent Assets”.

4) Regular way transactions of financial assets

Under R.O.C. GAAP, entities have flexibility to use either trade date or settlement date accounting for recognition by the product category of financial instruments. The Bank applied settlement date accounting on bonds transactions and trade date accounting to regular way purchased or sold financial assets. After the transition to the Regulations, financial assets in the same category should be applied trade date or settlement date accounting consistently. As of December 31, 2012 and January 1, 2012, the Bank adjusted respectively in following accounts in accordance with IAS 39 “Financial Instruments: Recognition and Measurement”: Increments in receivables amounted to $102,737 and $53,281; decrements in financial assets at fair value through profit or loss amounted to $49,803 and $2,356; increments in payables amounted to $53,094 and $155,332. For the year ended December 31, 2012, the Bank adjusted decrement in gains on financial assets and liabilities at fair value through profit or loss amounted to $114. As of January 1, 2012, the Bank adjusted increments in available-for-sale financial assets amounted to $104,361 and decrements in retained earnings amounted to $46.


Under R.O.C. GAAP, rental assets and idle assets are classified as other assets. After the transition to the Regulations, assets held to earn rentals, or for capital appreciation, or both, are classified as investment properties, and others are reclassified as property and equipment. As of December 31, 2012 and January 1, 2012, the Bank reclassified other assets to property and equipment amounted to $1,681,750 and $1,871,807.

6) Recovery of bad debts

For the year ended December 31, 2012, the Bank reclassified recovery of bad debts to bad debt expense amounted to $561,481 in accordance with the revised Criteria Governing the Preparation of Financial Reports by Public Banks.

7) Reconciliation of commission revenues

The Bank adjusted recognition basis of commission revenues. For the year ended December 31, 2012, the Bank adjusted commission revenues with increment of $87,140.

8) Reclassification

Major differences of retained earnings for January 1, 2012 under R.O.C. GAAP and IFRSs are due to IFRS 1, the Bank reclassified unrealized revaluation increment on land as retained earnings amounted to $1,735,887 and adjusted in related pension liabilities amounted to $2,144,391. In accordance with IAS 19, the Bank retrospectively recognized employment benefit provision of retired servicemen’s preferential interest on deposit amounted to $170,548. Adjustment of recognition basis of commission revenues caused increment of retained earnings amounted to $485,635. Estimated amount recognized as a provision caused increment of retained earnings amounted to $23,348 and related tax effect which caused increment of retained earnings amounted to $114,875.

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d. Reconciliation of transition to the Regulations

1) According to classification of account code of financial service industry, guarantee deposits are reclassified from other financial assets to other assets and guarantee deposits received are reclassified from other financial liabilities to other liabilities.

2) Interest expense of principal of structured products is reclassified from net (expense) revenues other than interest to net

interest. e. Exemptions

Except for optional exemptions and mandatory exceptions to retrospective application provided under the Regulations, the Bank retrospectively applied the Regulations to prepare its opening balance sheet at the date of transition, January 1, 2012. The major optional exemptions the Company elected are summarized as follows:

1) The Bank elected not to apply the Regulations retrospectively to business combinations that occurred before the date of

transition. The Bank applied exemptions to the business combinations occurred before the date of transition and therefore no adjustment to the book value.

2) The Bank take R.O.C. GAAP revaluation as deemed cost for parts of lands on the transition date. Other properties and

equipment adopted related retrospective application of IAS 16 “Property, Plant and Equipment”. Meanwhile, the Bank adopted both application of IAS 16 and IAS 37 “Provisions, Contingent Liabilities and Contingent Assets” to measure the original estimated cost of dismantling and removing the asset and restoring the site.

3) The Bank recognized all unrecognized cumulative actuarial gain and loss related to employee benefit plan in retained

earnings on the transition date of the Regulations. 4) The Bank adopted related retrospective application of IAS 21 “The Effects of Changes in Foreign Exchange Rates” for

cumulative translation adjustment on the transition date of the Regulations.

TABLE 1 BANK SINOPAC AND INVESTEES MARKETABLE SECURITIES ACQUIRED AND DISPOSED AT COSTS OR PRICES OF AT LEAST $300 MILLION OR 10% OF THE ISSUED CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2013 (In Thousands of New Taiwan Dollars or Shares)

Company Name

Type and Name of

Marketable Securities

Financial Statement Account

Counterparty Relationship

Beginning Balance Acquisition Disposal Ending Balance

Shares Amount Shares Amount Shares Amount Carrying Amount

Gain (Loss) on Disposal Shares Amount

Equity

investment

Bank SinoPac

Bank SinoPac (China) Ltd. (preparatory office)

Equity investment - equity method

- The subsidiary of the Bank

- $ - - $ 9,700,905 - $ - $ - $ - - $ 9,700,905

Note 1: Excluded the adjustment of original investing cost. Note 2: Foreign currency are translated to New Taiwan dollars with current rate of the date of balance sheet. Note 3: For the information of Bank SinoPac (China) Ltd. Please refer to Note 51.

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TABLE 2 BANK SINOPAC AND INVESTEES RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$300 MILLION OR 10% OF THE ISSUED CAPITAL DECEMBER 31, 2013 (In Thousands of New Taiwan Dollars)

Company Name Related Party Relationship Ending

Balance Turnover

Rate

Overdue Amounts Received in Subsequent

Period

Allowance for

Bad Debts Amount Action Taken

Bank

SinoPac SinoPac Financial

Holdings Company Limited

The parent company of the Bank

$ 1,256,246 (Note 1)

- $ - - $ - $ -


The subsidiary of the Bank

322,281 (Note 2)

- - - 183,585 -

Note 1: Most of receivables resulted from the use of the linked-tax system (recognized in current tax assets) and related parties.

Note 2: The balance mainly included working capital of Bank SinoPac (China) Ltd. (preparatory office) and other related parties receivables.

Note 3: For the information about Bank SinoPac (China) Ltd. Please refer to Note 51.

TABLE 3

BANK SINOPAC AND INVESTEES TRADING INFORMATION - SALE OF NONPERFORMING LOANS FOR THE YEAR ENDED DECEMBER 31, 2013 (In Thousands of New Taiwan Dollars)

Date Counter-parties Loans Carrying Amount (Note)

Selling Price (Note)

Gain or (Loss) on Disposal Attachment Relation

Bank SinoPac December 24, 2013 Macquarie Bank Ltd. Commercial secured

loans $ 61,961 $ 75,335 $ 4,908 - None

FENB March 21, 2013 Basar Investment LLC Commercial secured

loans 63,472 63,472 - - None

March 25, 2013 Spiegel Development, Inc. Commercial secured loans 11,812 11,812 - - None

March 29, 2013 TerraCotta Realty Fund, LLC Commercial secured loans 11,447 11,447 - - None

March 29, 2013 Miracle Day Investments LLC and Dayco Funding Corporation

Commercial secured loans 31,250 31,250 - - None

April 25, 2013 Spiegel Development, Inc. Commercial secured loans 23,880 23,880 - - None

April 26, 2013 Piercy Road Investors II, LLC Commercial secured loans 28,067 28,067 - - None

April 26, 2013 3150 24th Street Investors, LLC Commercial secured loans 8,305 8,305 - - None

May 16, 2013 TerraCotta Realty Fund, LLC Commercial secured loans 33,176 33,176 - - None

May 20, 2013 15401-15475 E. Valley Blvd. Trust Commercial secured loans - 716 716 - None

June 28 2013 TerraCotta Realty Fund, LLC Commercial secured loans 11,243 11,243 - - None

July 31 2013 Spiegel Development, Inc. Commercial secured loans 62,151 62,151 - - None

Note: Carrying amount of Bank SinoPac is original credit amount net of doubtful account. Carrying amount of FENB is the

original credit amount, and foreign-currency amounts are translated at the exchange rate of balance sheet date.

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TABLE 4 BANK SINOPAC AND INVESTEES MARKETABLE SECURITIES HELD DECEMBER 31, 2013 (In Thousands of New Taiwan Dollars or Shares)

Name of Holding Company Type and Name of Marketable Securities Relationship Financial Statement

Account

December 31, 2013

Note Shares/Units/ Face Amount

Carrying Amount (Note 1)

Percentage of

Ownership

Market Value or Net Asset Value

(Note 1)

SinoPac Bancorp Stock

Far East National Bank Subsidiary Equity investments - equity method and unquoted equity investments

8,070 $ 9,592,966 100.00 $ 9,592,966 Note 2

SinoPac Capital Limited (H.K.) Stock

SinoPac Capital (B.V.I.) Ltd. Subsidiary Equity investments - equity method

4,450 32,047 100.00 49,367 Note 2

SinoPac Insurance Brokers Ltd. Subsidiary Equity investments - equity method

100 1,159 100.00 153,471 Note 2

MeiTa Industrial Co., Ltd. - Unquoted equity investments

212 12,847 0.49 12,847 Note 3

Fund

China Enterprise Capital - Available-for-sale financial assets

0.02 33,382 0.85 33,382 Note 4

SinoPac Capital (B.V.I.) Ltd. Stock

RSP Information Service Company Limited

Subsidiary Equity investments - equity method

1,000 3,863 100.00 11,870 Note 2

SinoPac Property Insurance Agent Co., Ltd.

Bond

Government bond 88-3 - Guarantee deposits 600 621 - 718 Pledge

SinoPac Life Insurance Agent Co., Ltd.

Bond

Government bond 88-3 - Guarantee deposits 600 621 - 718 Pledge

Note 1: Foreign-currency amounts were translated to New Taiwan dollars at the exchange rate as of the balance sheet date. Note 2: Net asset values were based on the investees’ audited financial statements for the latest period. Note 3: Net asset values were based on the carrying amounts. Note 4: Fair values were based on the closing prices of the underlying assets of the beneficiary certificates as of December 31, 2013.

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TABLE 5 BANK SINOPAC AND INVESTEES INFORMATION ON INVESTED ENTERPRISES FOR THE YEAR ENDED DECEMBER 31, 2013 (In Thousands of New Taiwan Dollars or Shares)

Investee Company Location Main Businesses and Products Percentage

of Ownership

Carrying Amount

Investment Gains

Consolidated Investment

Note Shares

Imitated Shares

Total

Shares Percentage

of Ownership

Financial related enterprise


Nanking Commercial Bank 100.00 $ 9,760,662 $ 59,315 - - - 100.00 Subsidiary and Note 1

SinoPac Bancorp California Holding company 100.00 3,499,035 198,838 20 - 20 100.00 Subsidiary and Note 2

SinoPac Capital Limited (H.K.) Hong Kong

Credit and investment service 100.00 1,360,210 59,445 229,998 - 229,998 100.00 Subsidiary and Note 2


Taipei Life insurance agent 100.00 863,905 847,123 300 - 300 100.00 Subsidiary


Taipei Property insurance agent 100.00 32,722 26,577 300 - 300 100.00 Subsidiary

SinoPac Bancorp California Holding company 100.00 6,043,165 - 7,800 - 7,800 100.00 Preferred stock

Global Securities Finance Corporation

Taipei Securities financing 2.63 173,496 2,957 21,552 - 21,552 2.87 Note 3

Taipei Foreign Exchange Inc. Taipei Foreign exchange market maker 3.43 6,800 2,176 680 - 680 3.43 Note 3

Taiwan Futures Exchange Taipei Futures exchange and settlement 1.07 21,490 5,837 5,923 - 5,923 2.08 Note 3

Fuh Hwa Securities Investment Trust Co., Ltd.

Taipei Securities investment trust and consultant

4.63 15,000 9,000 1,500 - 1,500 4.63 Note 3

Financial Information Service Co., Ltd.

Taipei Planning and developing the information system of across banking institution and managing the information web system

2.28 91,000 26,618 10,238 - 10,238 2.28 Note 3

Taiwan Asset Management Corporation

Taipei Evaluating, auctioning, and managing for financial institutions’ loan

0.28 37,500 3,378 3,750 - 3,750 0.28 Note 3

Taiwan Financial Asset Service Co.

Taipei Auction 5.88 100,000 1,000 10,000 - 10,000 5.88 Note 3

Sunny Asset Management Corp. Taipei Purchasing for financial institutions’ loan assets

1.42 164 112 85 - 85 1.42 Note 3

Taiwan Depository and Clearing Co.

Taipei Computerizing book-entry operation for securities

0.08 4,639 306 3,012 - 3,012 0.92 Note 3

Nonfinancial related enterprise

Taiwan Television Enterprise, Ltd. Taipei Wireless television company 4.84 143,057 - 13,924 - 13,924 4.96

Note 1: Foreign-currency amounts were translated at the exchange rate as of the balance sheet date, except for

foreign-currency-denominated income and expenses, which were translated to New Taiwan dollars at the average exchange rate from August 6, 2013 (capital injection date) to December 31, 2013.


foreign-currency-denominated income and expenses, which were translated to New Taiwan dollars at the average exchange rate for the year ended December 31, 2013.

Note 3: Investment gains are dividends income. Note 4. For the information about Bank SinoPac (China) Ltd., please refer to Note 51.

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TABLE 6 BANK SINOPAC INFORMATION ON INVESTMENT IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2013 (In Thousands of New Taiwan Dollars)

Investee Company

Main Businesses

and Products

Total Amount of

Paid-in Capital

Method of Investment

Accumulated Outflow of Investment

from Taiwan as of January

1, 2013

Investment Flows Accumulated Outflow of Investment

from Taiwan as of

December 31, 2013

Percentage of

Ownership

Equity in the Earnings (Losses)

(Notes 2 and 3)

Carrying Value (Notes 2 and 3)

Accumulated Inward

Remittance of Earnings

Outflow Inflow

Bank SinoPac (China) Ltd.

Commercial Bank

$ 9,700,905 Investment in Mainland China directly

$ - $ 9,700,905 $ - $ 9,700,905 100.00 $ 59,315 $9,760,662 $ -

Accumulated Investment in Mainland China as of December 31, 2013

Investment Amounts Authorized by Investment Commission, MOEA

Limit on Investment

$ 9,700,905 $ 9,700,905 $ 52,531,147

Note 1: The accumulated investment amounts in Mainland China as of December 31, 2013 are US$323,871 thousand and had been

authorized by the Investment Commission, MOEA are US$323,871 thousand. Note 2: The gain on investment recognized and the value of investment presented for the year ended December 31, 2013 have been

audited by independent certified public accountants. Note 3: Foreign currency are translated to New Taiwan dollars with current rate of the date of balance sheet, only the gains or losses

investments are translated with current period average rate. Note 4: For the information of Bank SinoPac (China) Ltd., please refer to Note 51.

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III. Auditors' Report - Consolidated

DECLARATION OF CONSOLIDATION OF FINANCIAL STATEMENTS OF AFFILIATES

The Bank and its subsidiaries required to be included in the consolidated financial statements

of affiliates in accordance with the "Criteria Governing Preparation of Affiliation Reports,

Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises"

for the year ended December 31, 2013 are all the same as the companies required to be included

in the consolidated financial statements of parent and subsidiary companies as provided in

International Accounting Standard 27 "Consolidated and Separate Financial Statements". Relevant

information that should be disclosed in the consolidated financial statements of affiliates has

all been disclosed in the consolidated financial statements of parent and subsidiary companies.

Hence, we do not prepare a separate set of consolidated financial statements of affiliates.

Very truly yours,

BANK SINOPAC

February 27, 2014

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Financial Reports

INDEPENDENT AUDITORS' REPORT

Notice to Readers

The Board of Directors and StockholdersBank SinoPac

We have audited the accompanying consolidated balance sheets of Bank SinoPac (the Bank) and its subsidiaries as of December 31, 2013, December 31, 2012 and January 1, 2012, and the related consolidated statements of comprehensive income, changes in equity and cash flows for the years ended December 31, 2013 and 2012. These consolidated financial statements are the responsibility of the Bank’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Bank and its subsidiaries as of December 31, 2013, December 31, 2012 and January 1, 2012, and their consolidated financial performance and their consolidated cash flows for the years ended December 31, 2013 and 2012, in conformity with Criteria Governing the Preparation of Financial Reports by Public Banks, the guidelines issued by the authority, and International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed by the Financial Supervisory Commission of the Republic of China.

We have also audited the parent company only financial statements of Bank SinoPac as of and for the years ended December 31, 2013 and 2012 on which we have issued an unqualified report.

February 27, 2014

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

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

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95

39

56

21

16

-

5

-

2

44

100

8

31

2

18

51

41

5

36

-

( 1)

-

-

-

( 1)

35

INTEREST REVENUE

LESS: INTEREST EXPENSE

NET INTEREST (Notes 4, 30 and 40)

NET REVENUES OTHER THAN INTEREST (Note 4)

Commission and fee revenues, net (Notes 31 and 40)

Gains on financial assets and liabilities at fair value through profit or loss (Notes 32 and 40)

Realized gains on available-for-sale financial assets (Note 33)

Foreign exchange gains, net

Impairment losses on assets (Notes 5 and 34)

Other non interest net revenues (Notes 35 and 40)

Total net revenues other than interest

TOTAL NET REVENUES

ALLOWANCE FOR (REVERSAL OF) DOUBTFUL ACCOUNTS AND GUARANTEES

OPERATING EXPENSES

Employee benefits (Notes 4, 5 and 36)

Depreciation and amortization (Notes 4 and 37)

Others (Notes 38 and 40)

Total operating expenses

INCOME BEFORE INCOME TAX

INCOME TAX EXPENSE (Notes 4, 5 and 28)

NET INCOME

OTHER COMPREHENSIVE INCOME

Exchange differences on translating foreign operations

Unrealized valuation gains (losses) on available-for-sale financial assets

Cash flow hedges

Actuarial gains and losses arising from defined benefit plans

Income tax relating to the components of other comprehensive income (Notes 4, 5 and 28)

Other comprehensive income for the period, net of income tax

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

EARNINGS PER SHARE (Note 39)

Basic

BANK SINOPAC AND SUBSIDIARIES


Amount Amount％％

PercentageIncrease

(Decrease)

$ 24,993,667

10,120,065

14,873,602

5,521,512

4,132,750

9,188

1,410,999

( 71,217)

501,049

11,504,281

26,377,883

1,950,110

8,048,860

653,985

4,725,514

13,428,359

10,999,414

1,396,505

9,602,909

( 1,397)

( 367,385)

18,787

( 51,794)

99,985

( 301,804)

$ 9,301,105

$ 1.61

$ 23,663,081

9,400,713

14,262,368

4,652,424

2,718,533

31,337

325,379

( 287,334)

195,442

7,635,781

21,898,149

( 597,399)

7,698,692

563,666

4,310,759

12,573,117

9,922,431

1,574,365

8,348,066

5,248

195,292

28,636

( 11,973)

9,723

226,926

$ 8,574,992

$ 1.42

6

8

4

19

52

( 71)

334

( 75)

156

51

20

426

5

16

10

7

11

( 11)

15

( 127)

( 288)

( 34)

333

928

( 233)

8

108

43

65

21

12

-

2

( 1)

1

35

100

( 3)

35

3

20

58

45

7

38

-

1

-

-

-

1

39

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

(In Thousands of New Taiwan Dollars, Except Per Share Amounts)CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

2013 2012

％

150

Financial Reports

(In Thousands of New Taiwan Dollars)




$ 18,012,075

82,753,425

33,434,820

43,431

3,080,168

51,322,112

1,262,280

732,363,961

37,189,737

233,697,727

4,658,606

11,471,382

1,457,004

3,940,813

1,585,610

$ 1,216,273,151

$ 19,131,502

87,672,292

27,630,871

15,616

236,006

61,879,579

1,240,468

770,309,413

55,787,623

219,843,943

4,459,419

11,099,490

2,047,080

2,812,794

2,276,619

$ 1,266,442,715

$ 34,215,330

61,147,642

25,969,402

-

-

118,269,246

1,290,258

808,898,242

59,755,506

214,417,922

16,029,799

11,002,439

1,981,735

2,570,192

1,484,973

$ 1,357,032,686

2

7

3

-

-

4

-

60

3

19

1

1

-

-

-

100

2

7

2

-

-

5

-

61

5

17

-

1

-

-

-

100

3

4

2

-

-

9

-

60

4

16

1

1

-

-

-

100

ASSETS

CASH AND CASH EQUIVALENTS (Note 6)

DUE FROM THE CENTRAL BANK AND CALL LOANS TO OTHER BANKS (Note 7)

FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (Notes 4, 8, 40 and 41)

DERIVATIVE FINANCIAL ASSETS FOR HEDGING (Notes 4 and 10)

SECURITIES PURCHASED UNDER AGREEMENT TO RESELL (Notes 4, 11 and 40)

RECEIVABLES, NET (Notes 4, 5, 12 and 40)

CURRENT TAX ASSETS (Notes 4, 28 and 40)

DISCOUNT AND LOANS, NET (Notes 4, 5, 13, 40 and 41)

AVAILABLE-FOR-SALE FINANCIAL ASSETS (Notes 4, 9, 14 and 41)

HELD-TO-MATURITY FINANCIAL ASSETS, NET (Notes 4, 14 and 41)

OTHER FINANCIAL ASSETS, NET (Notes 4, 15 and 40)

PROPERTY AND EQUIPMENT, NET (Notes 4, 16 and 40)

INTANGIBLE ASSETS, NET (Notes 4, 17 and 40)

DEFERRED TAX ASSETS (Notes 4, 5 and 28)

OTHER ASSETS, NET (Notes 4, 18 and 40)

TOTAL

CONSOLIDATED BALANCE SHEETSBALANCE SHEETS

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LIABILITIES AND EQUITY

DEPOSITS FROM THE CENTRAL BANK AND BANKS (Note 19)

FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS (Notes 4, 8 and 40)

DERIVATIVE FINANCIAL LIABILITIES FOR HEDGING (Notes 4 and 10)

SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE (Notes 4, 9, 20 and 40)

PAYABLES (Notes 21, 26, 29 and 40)

CURRENT TAX LIABILITIES (Notes 4, 28 and 40)

DEPOSITS AND REMITTANCES (Notes 22 and 40)

BANK DEBENTURES (Notes 4 and 23)

SHORT-TERM BORROWINGS

OTHER FINANCIAL LIABILITIES (Note 24)

PROVISIONS (Notes 4, 5, 25 and 26)

DEFERRED TAX LIABILITIES (Notes 4, 5 and 28)

OTHER LIABILITIES (Notes 27 and 40)

Total liabilities

EQUITY

Share capital

Ordinary shares

Capital surplus

Additional paid-in capital in excess of par

Capital surplus from business combination

Others

Total capital surplus

Retained earnings

Legal reserve

Special reserve

Unappropriated earnings

Total retained earnings

Other equity

Total equity

TOTAL



$ 66,374,829

7,308,944

54,319

7,071,871

19,940,553

229,300

994,056,325

37,027,843

899,480

7,565,838

2,965,270

1,043,348

2,073,057

1,146,610,977

52,574,469

1,884,561

8,076,524

1,733

9,962,818

4,411,447

367,188

2,451,634

7,230,269

( 105,382)

69,662,174

$ 1,216,273,151

$ 70,454,184

8,671,564

22,576

1,201,450

22,251,660

383,197

1,029,885,089

43,001,812

903,218

5,684,826

2,860,437

1,001,579

1,870,316

1,188,191,908

53,862,022

2,335,205

8,076,524

1,733

10,413,462

5,150,542

367,188

8,326,111

13,843,841

131,482

78,250,807

$ 1,266,442,715

$ 87,589,163

11,831,968

6,095

451,771

17,233,408

855,547

1,092,091,840

45,087,336

323,492

7,620,377

2,880,136

897,440

2,612,201

1,269,480,774

59,616,160

2,335,205

8,076,524

1,733

10,413,462

7,616,601

367,188

9,665,834

17,649,623

( 127,333)

87,551,912

$ 1,357,032,686

5

1

-

-

2

-

82

3

-

1

-

-

-

94

4

-

1

-

1

1

-

-

1

-

6

100

6

1

-

-

2

-

81

3

-

1

-

-

-

94

4

-

1

-

1

-

-

1

1

-

6

100

7

1

-

-

1

-

81

3

-

1

-

-

-

94

4

-

1

-

1

-

-

1

1

-

6

100


152

Financial Reports

Share Capital (Note 29)

Shares in Thousand Amount

Capital Surplus

(Note 29) Legal Reserve

5,257,447

-

-

-

-

-

128,755

5,386,202

-

575,414

-

-

-

5,961,616

$ 52,574,469

-

-

-

-

-

1,287,553

53,862,022

-

5,754,138

-

-

-

$ 59,616,160

$ 9,962,818

-

-

-

-

-

450,644

10,413,462

-

-

-

-

-

$ 10,413,462

$ 4,411,447

739,095

-

-

-

-

-

5,150,542

2,466,059

-

-

-

-

$ 7,616,601

Special Reserve

$ 367,188

-

-

-

-

-

-

367,188

-

-

-

-

-

$ 367,188

BALANCE AT JANUARY 1, 2012


Legal reserve

Cash dividends




Capital raising



Legal reserve

Stock dividends







(In Thousands of New Taiwan Dollars)CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

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Retained Earnings (Note 29)Cash Flow Hedges (Notes 4 and 29) Total

Total EquityUnappropriated Earning

$ 2,451,634

( 739,095)

( 1,724,556)

8,348,066

( 9,938)

8,338,128

-

8,326,111

( 2,466,059)

( 5,754,138)

9,602,909

( 42,989)

9,559,920

$ 9,665,834

Total

$ 7,230,269

-

( 1,724,556)

8,348,066

( 9,938)

8,338,128

-

13,843,841

-

( 5,754,138)

9,602,909

( 42,989)

9,559,920

$ 17,649,623

$( 42,506)

-

-

-

23,768

23,768

-

( 18,738)

-

-

-

15,593

15,593

$( 3,145)

Exchange Differences on TranslatingForeign Operations (Notes 4 and 29)

$( 215,972)

-

-

-

4,356

4,356

-

( 211,616)

-

-

-

( 1,159)

( 1,159)

$( 212,775)

$( 105,382)

-

-

-

236,864

236,864

-

131,482

-

-

-

( 258,815)

( 258,815)

$( 127,333)

$ 69,662,174

-

( 1,724,556)

8,348,066

226,926

8,574,992

1,738,197

78,250,807

-

-

9,602,909

( 301,804)

9,301,105

$ 87,551,912


Other Equity

Unrealized Gain (Loss) on Available-for-sale Financial Assets (Notes 4 and 29)

$ 153,096

-

-

-

208,740

208,740

-

361,836

-

-

-

( 273,249)

( 273,249)

$ 88,587

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(In Thousands of New Taiwan Dollars)STATEMENTS OF CASH FLOWS


$ 9,922,431

474,887

88,779

249,888

9,400,713

( 23,663,081)

( 82,249)

9,414

4,770

9,573

( 31,262)

280,625

6,709

-

( 14,244)

( 9,031,011)

5,803,949

( 10,993,440)

( 37,866,242)

4,079,355

1,362,620

2,436,466

35,830,872

( 124,903)

( 11,845,381)

23,921,653

92,000

( 9,389,069)

( 282,854)

2,496,349

( 445,210,743)

426,672,533

( 1,780,997,929)

1,794,845,802

( 32,620)

136,338

2,815

( 654,408)

111

182,791

( 216,152)

( 1,208,095)

( 6,479,557)

2013 2012

$ 10,999,414

478,676

175,309

3,256,536

10,120,065

( 24,993,667)

( 95,844)

( 11,378)

7,381

( 195,024)

( 8,732)

75,876

-

( 4,659)

4,989

7,404,114

1,661,469

( 56,629,545)

( 41,749,816)

17,134,979

3,160,404

( 5,920,557)

62,206,751

( 31,468)

( 12,954,727)

24,955,278

95,844

( 8,982,880)

( 255,427)

2,858,088

( 445,637,932)

431,069,149

( 1,830,930,309)

1,846,498,083

( 6,352)

108,757

12,500

( 522,105)

287,061

242,501

( 11,693,053)

( 61,431)

( 10,633,131)

CASH FLOWS FROM OPERATING ACTIVITIES


Adjustments for:

Depreciation expenses

Amortization expenses

Allowance for doubtful accounts

Interest expenses

Interest revenues

Dividend revenues

Net change in provisions for losses on guarantees

Net change in other provisions

(Gains from) losses on disposal of property and equipment

Gains on disposal of investments

Impairment loss on financial assets

Impairment loss on non-financial assets

Reversal of impairment loss on non-financial assets

Losses on (gains from) disposal of collaterals assumed

Changes in operating assets and liabilities

Decrease (increase) in due from the central banks and call loans to other banks

Decrease in financial assets at fair value through profit or loss

Increase in receivables

Increase in discounts and loans

Increase in deposits from the central bank and banks

Increase in financial liabilities at fair value through profit or loss

(Decrease) increase in payables

Increase in deposits and remittances

Decrease in provision for employee benefits

Net cash used in operations

Interest received

Dividend received

Interest paid

Income tax paid

Net cash generated from operating activities

CASH FLOWS FROM INVESTING ACTIVITIES

Acquisition of available-for-sale financial assets

Proceeds from disposal of available-for-sale financial assets

Acquisition of held-to-maturity financial assets

Proceeds from redemption of held-to-maturity financial assets

Acquisition of financial assets measured at cost

Proceeds from disposal of financial assets measured at cost

Proceeds from capital reduction of financial assets measured at cost

Acquisition of property and equipment

Proceeds from disposal of property and equipment

Proceeds from disposal of collaterals assumed

Increase in other financial assets

Increase in other assets

Net cash used in investing activities


(Continued)

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( 202,741)

( 1,881,012)

3,738

5,996,840

-

( 5,870,421)

( 1,724,556)

1,738,197

( 1,939,955)

86,284

( 5,836,879)

72,679,964

$ 66,843,085

2013 2012

741,885

1,935,551

( 579,726)

3,497,948

( 1,400,000)

( 749,679)

-

-

3,445,979

56,350

( 4,272,714)

66,843,085

$ 62,570,371


CASH FLOWS FROM FINANCING ACTIVITIES

Increase (decrease) in other liabilities

Increase (decrease) in other financial liabilities

(Decrease) increase in short-term borrowings

Bank debentures issued

Repayment of bank debentures on maturity

Decrease in securities sold under agreements to repurchase

Cash dividends

Capital raising

Net cash generated from (used in) financing activities

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

NET DECREASE IN CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD

CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD


2013 2012

December 31

Cash and cash equivalents in consolidated balance sheets

Due from the Central Bank and call loans to other banks reclassified as cash and cash equivalents under

IAS 7 "Statement of Cash Flows"

Securities purchased under agreement to resell reclassified as cash and cash equivalents under IAS 7

"Statement of Cash Flows"

Cash and cash equivalents in consolidated statements of cash flows

Reconciliation of the amounts in the consolidated statement of cash flows with the equivalent items reports in the consolidated balance sheets as of December 31, 2013 and 2012:

$ 34,215,330

28,355,041

-

$ 62,570,371

$ 19,131,502

47,475,577

236,006

$ 66,843,085

1. ORGANIZATION

August 8, 1991 Bank SinoPac (the “Bank”) obtained government approval to incorporate. January 28, 1992 The Bank started operations. May 9, 2002 The Bank swap shares with SinoPac Securities Corporation and SinoPac Securities Co., Ltd.

(the “SPS”) to establish SinoPac Financial Holdings Company Limited (the “SPH”), a financial holding company, resulting in the Bank becoming an unlisted wholly owned subsidiary of SPH, the ultimate parent company of SPH.

December 26, 2005 SPH finished the merger with International Bank of Taipei Co., Ltd. (IBT), through a 100%

share swap. May 8, 2006 The boards of directors of IBT resolved to transfer credit card business and related assets and

liabilities to SinoPac Card Services Co., Ltd. (“SinoPac Card”). The transaction has been approved by the authorities on June 22, 2006 and the assets have been transferred at the book value of $5,171,080 on August 4, 2006.

November 13, 2006 The preliminary effective date of the share swap and merger. The Bank acquired the assets

and liabilities of IBT through a share swap at ratio of 1.175 shares of the Bank to swap for 1 share of IBT.

June 1, 2009 The Bank’s cash merger with SinoPac Card took effect, with this merger amounting to

$3,873,675. Under this merger, the Bank was the surviving entity. The Bank’s ultimate parent and controller is SinoPac Holdings which holds 100% ordinary shares of the Bank. The functional currency of the Bank is New Taiwan dollars. The consolidated financial statements are presented in New Taiwan dollars. For the information of consolidated entities, please refer to Note 4.

2. APPROVAL OF FINANCIAL STATEMENTS

The consolidated financial statements were approved by the board of directors on February 27, 2014. 3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS

a. New, amended and revised standards and interpretations (the “New IFRSs”) in issue but not yet effective

The Bank and its subsidiaries have not applied the following International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), Interpretations of IFRS (IFRIC), and Interpretations of IAS (SIC) issued by the IASB. As of the date that the consolidated financial statements were authorized for issue, the Financial Supervisory Commission (the “FSC”) has not announced the effective dates for the following new, amended and revised standards and interpretations (the “New IFRSs”). On January 28, 2014, the Financial Supervisory Commission (FSC) announced the framework for the adoption of updated IFRSs version in the ROC. Under this framework, starting January 1, 2015, the previous version of IFRSs endorsed by the FSC (the 2010 IFRSs version) currently applied by companies with shares listed on the Taiwan Stock Exchange or traded on the Taiwan GreTai Securities Market or Emerging Stock Market or financial instruments governed by FSC will be replaced by the updated IFRSs without IFRS 9 (the 2013 IFRSs version). However, as of the date that the consolidated financial statements were authorized for issue, the FSC has not endorsed the following new, amended and revised standards and interpretations issued by the IASB (the “New IFRSs”) included in the 2013 IFRSs version. Furthermore, the FSC has not announced the effective date for the following New IFRSs that are not included in the 2013 IFRSs version.


FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012(In Thousands of New Taiwan Dollars, Unless Otherwise Stated) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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The New IFRSs Included in the 2013 IFRSs Version Not Yet Endorsed by the FSC

Effective Date Announced by IASB (Note 1)

Improvements to IFRSs (2009) - amendment to IAS 39 January 1, 2009 and January 1, 2010, as

appropriate Amendment to IAS 39 “Embedded Derivatives” Effective for annual periods ending on

or after June 30, 2009 Improvements to IFRSs (2010) July 1, 2010 and January 1, 2011, as

appropriate Annual Improvements to IFRSs 2009-2011 Cycle January 1, 2013 Amendment to IFRS 1 “Limited Exemption from Comparative IFRS 7

Disclosures for First-time Adopters” July 1, 2010

Amendment to IFRS 1 “Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters”

July 1, 2011

Amendment to IFRS 1 “Government Loans” January 1, 2013 Amendment to IFRS 7 “Disclosure - Offsetting Financial Assets and Financial

Liabilities” January 1, 2013

Amendment to IFRS 7 “Disclosure - Transfer of Financial Assets” July 1, 2011 IFRS 10 “Consolidated Financial Statements” January 1, 2013 IFRS 11 “Joint Arrangements” January 1, 2013 IFRS 12 “Disclosure of Interests in Other Entities” January 1, 2013 Amendments to IFRS 10, IFRS 11 and IFRS 12 “Consolidated Financial

Statements, Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance”

January 1, 2013

Amendments to IFRS 10 and IFRS 12 and IAS 27 “Investment Entities” January 1, 2014 IFRS 13 “Fair Value Measurement” January 1, 2013 Amendment to IAS 1 “Presentation of Other Comprehensive Income” July 1, 2012 Amendment to IAS 12 “Deferred Tax: Recovery of Underlying Assets” January 1, 2012 IAS 19 (Revised 2011) “Employee Benefits” January 1, 2013 IAS 27 (Revised 2011) “Separate Financial Statements” January 1, 2013 IAS 28 (Revised 2011) “Investments in Associates and Joint Ventures” January 1, 2013 Amendment to IAS 32 “Offsetting Financial Assets and Financial Liabilities” January 1, 2014 IFRIC 20 “Stripping Costs in Production Phase of a Surface Mine” January 1, 2013

The New IFRSs Not Included in the 2013 IFRSs Version Effective Date

Announced by IASB (Note 1) Annual Improvements to IFRSs 2010-2012 Cycle July 1, 2014 (Note 2) Annual Improvements to IFRSs 2011-2013 Cycle July 1, 2014 IFRS 9 “Financial Instruments” Effective date not determined Amendments to IFRS 9 and IFRS 7 “Mandatory Effective Date of IFRS 9 and

Transition Disclosures” Effective date not determined

IFRS 14 “Regulatory Deferral Account” January 1, 2016 Amendment to IAS 19 “Defined Benefit Plans: Employee Contributions” July 1, 2014 Amendment to IAS 36 “Impairment of Assets: Recoverable Amount

Disclosures for Non-financial Assets” January 1, 2014

Amendment to IAS 39 “Novation of Derivatives and Continuation of Hedge Accounting”

January 1, 2014

IFRIC 21 “Levies” January 1, 2014

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

Note 2: The amendment to IFRS 2 applies to share-based payment transactions for which the grant date is on or after July 1,

2014; the amendment to IFRS 3 applies to business combinations for which the acquisition date is on or after July 1, 2014; the amendment to IFRS 13 is effective immediately; the remaining amendments are effective for annual periods beginning on or after July 1, 2014.

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b. Significant impending changes in accounting policy resulted from New IFRSs in issue but not yet effective

Except for the following, the initial application of the above New IFRSs has not had any material impact on the Bank and its subsidiaries’ accounting policies:

1) IFRS 9 “Financial Instruments”

Recognition and measurement of financial assets With regards to financial assets, all recognized financial assets that are within the scope of IAS 39 “Financial Instruments: Recognition and Measurement” are subsequently measured at amortized cost or fair value. Specifically, financial assets that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest on the principal outstanding are generally measured at amortized cost at the end of subsequent accounting periods. All other financial assets are measured at their fair values at the end of reporting period. However, the Bank and its subsidiaries may make an irrevocable election to present subsequent changes in the fair value of an equity investment (that is not held for trading) in other comprehensive income, with only dividend income generally recognized in profit or loss. Recognition and measurement of financial liabilities As for financial liabilities, the main changes in the classification and measurement relate to the subsequent measurement of financial liabilities designated as at fair value through profit or loss. The amount of change in the fair value of such financial liability attributable to changes in the credit risk of that liability is presented in other comprehensive income and the remaining amount of change in the fair value of that liability is presented in profit or loss, unless the recognition of the effects of changes in the liability's credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss. Changes in fair value attributable to a financial liability's credit risk are not subsequently reclassified to profit or loss. If the above accounting treatment would create or enlarge an accounting mismatch in profit or loss, the Bank and its subsidiaries presents all gains or losses on that liability in profit or loss. Hedge accounting The main changes in hedge accounting amended the application requirements for hedge accounting to better reflect the entity’s risk management activities. Compared with IAS 39, the main changes include: (1) enhancing types of transactions eligible for hedge accounting, specifically broadening the risk eligible for hedge accounting of non-financial items; (2) changing the way hedging derivative instruments are accounted for to reduce profit or loss volatility; and (3) replacing retrospective effectiveness assessment with the principle of economic relationship between the hedging instrument and the hedged item. Effective date The mandatory effective date of IFRS 9, which was previously set at January 1, 2015, was removed and will be reconsidered once the standard is complete with a new impairment model and finalization of any limited amendments to classification and measurement.

2) IFRS 13 “Fair Value Measurement”

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

3) Revision to IAS 19 “Employee Benefits”

Revision in 2011 To the extent that the benefits are already vested immediately following the changes to a defined benefit plan, an entity shall recognize past service cost immediately. An entity shall recognize past service cost as an expense on a straight-line basis over the average period until the benefits become vested. Amendment in 2013 Past service cost is recognized as an expense wholly when it occurs.

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Financial Reports

4) Amendment to IAS 36 “Recoverable Amount Disclosures for Non-financial Assets”

In issuing IFRS 13 “Fair Value Measurement”, the IASB made consequential amendment to the disclosure requirements in IAS 36 “Impairment of Assets”, introducing a requirement to disclose in every reporting period the recoverable amount of an asset or each cash-generating unit. The amendment clarifies that such disclosure of recoverable amounts is required only when an impairment loss has been recognized or reversed during the period. Furthermore, the Bank and its subsidiaries are required to disclose the discount rate used in measurements of the recoverable amount based on fair value less costs of disposal measured using a present value technique.

c. Significant impending changes in accounting policy resulted from the amendments to the Regulations Governing the

Preparation of Financial Reports by Securities Issuers in issue but not yet effective

The Bank and its subsidiaries are in the process of estimating the impact of the initial application of the Standards, Amendments and Interpretations on its financial position and results of operations. Disclosures will be provided until a detailed review of the impact has been completed.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICY

On May 14, 2009, the FSC announced the “Framework for the Adoption of IFRSs by the Companies in the ROC.” In this framework, starting 2013, the Bank should prepare their consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Public Banks and IFRS, IAS, IFRIC, and SIC (“IFRSs”) endorsed by the FSC. The Bank’s consolidated financial statements for the year ended December 31, 2013 is its first IFRS consolidated financial statements. The date of transition to IFRSs was January 1, 2012. Refer to Note 52 for the impact of IFRSs conversion on the consolidated financial statements. Statement of Compliance The consolidated financial statements have been prepared in accordance with Criteria Governing the Preparation of Financial Reports by Public Banks, the guidelines issued by the authority, and IFRS endorsed by the FSC. Basis of Preparation The consolidated financial statements have been prepared on the historical cost basis except for certain properties and financial instruments that are measured at revalued amounts or fair values, as explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange for assets. The opening consolidated balance sheets as of the date of transition to IFRSs was prepared in accordance with IFRS 1 “First-time Adoption of International Financial Reporting Standards”. The applicable IFRSs have been applied retrospectively by the Bank and its subsidiaries except for some aspects where other IFRSs prohibit retrospective application and specified areas where IFRS 1 grants limited exemptions from the requirements of other IFRSs. For the exemptions that the Bank and its subsidiaries elected, refer to Note 52. Since the operating cycle in the banking industry cannot be reasonably identified, the accounts included in the Bank and its subsidiaries financial statements were not classified as current or noncurrent. Nevertheless, accounts were properly categorized in accordance with the nature of each account and sequenced by their liquidity. Please refer to Note 44 for the maturity analysis of assets and liabilities. The significant accounting policies are set out as below. Principles for Preparing Consolidated Financial Statements The consolidated financial statements incorporate the financial statements of the Bank and the entities controlled by the Bank (i.e. its subsidiaries). Control is achieved when the Bank has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. When necessary, adjustments are made to the financial statements of its subsidiaries to bring its accounting policies into line with those used by the Bank. All intra-group transactions, balances, income and expenses are eliminated in full upon consolidation related information please refer to Table 6.

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The consolidated entities as of December 31, 2013, December 31, 2012 and January 1, 2012 were as follows:

% of Ownership

Investor Investee Main Business December 31,

2013 December 31,

2012 January 1,

2012 Remark Bank SinoPac SinoPac Bancorp Holding company 100 100 100 SinoPac Capital Limited

(H.K.) Credit and

investment service

100 100 100


Life insurance agent

100 100 100


Property insurance agent

100 100 100


Commercial bank 100 - - Note 1

SinoPac Bancorp Far East National Bank Commercial bank 100 100 100 Far East Capital, LLC Real Estate

Holding Company

- 100 100 Note 2

SinoPac Capital Limited (H.K.)

SinoPac Capital (B.V.I.) Ltd. Financial advisory 100 100 100

SinoPac Insurance Brokers Ltd.

Insurance brokerage

100 100 100

SinoPac Capital (B.V.I.) Ltd.


General trading and internet service

100 100 100

Note 1: For the information of SinoPac (China) Ltd., please refer to Note 50. Note 2: Far East Capital, LLC had been approved to dissolve in June 2013, and was dissolved in July 2013. Foreign Currencies In preparing the financial statements of each individual group entity, transactions in currencies other than the entity’s functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Exchange differences on monetary items arise from settlement or translation are recognized in profit or loss in the period in which they arise. Non-monetary items measured at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Exchange differences arising on the retranslation of non-monetary items are included in profit or loss for the period except for exchange differences arising from the retranslation of non-monetary items in respect of which gains and losses are recognized directly in other comprehensive income, in which case, the exchange differences are also recognized directly in other comprehensive income. Non-monetary items that are measured at historical cost in a foreign currency are not retranslated. For the purposes of presenting consolidated financial statements, the assets and liabilities of the Bank’s foreign operations (including of the subsidiaries, associates, joint ventures or branches operations in other countries or currencies used different with the Bank) are translated into New Taiwan dollars using exchange rates prevailing at the end of each reporting period. Income and expense items are translated at the average exchange rates for the period. Exchange differences arising are recognized in other comprehensive income. Financial Instruments Financial assets and financial liabilities are recognized when the Bank and its subsidiaries become a party to the contractual provisions of the instruments. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.

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

Financial assets are classified into the following specified categories: Financial assets at fair value through profit or loss, held-to-maturity investments, available-for-sale financial assets and loans and receivables.

1) Financial assets at fair value through profit or loss

Financial assets are classified as at fair value through profit or loss when the financial asset is either held for trading or it is designated as at fair value through profit or loss.

A Financial asset is classified as designated as at fair value through profit or loss if:

a) Such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise

arise; b) The financial asset forms part of a group of financial assets or financial liabilities or both, which is managed and its


c) The contract contains one or more embedded derivatives, the entire hybrid (combined) contract can be designated as a

whole.

Financial assets at fair value through profit or loss are stated at fair value. The net gain or loss which incorporates any dividend or interest earned on the financial asset recognized in profit or loss.

2) Available-for-sale financial assets

Available-for-sale financial assets are non-derivatives that are either designated as available-for-sale or are not classified as loans and receivables, held-to-maturity investments or financial assets at fair value through profit or loss. Fair value is determined in the manner described in Note 43. Available-for-sale financial assets are measured at fair value. Changes in the carrying amount of available-for-sale monetary financial assets relating to changes in foreign currency exchange rates, interest income calculated using the effective interest method and dividends on available-for-sale equity investments are recognized in profit or loss. Other changes in the carrying amount of available-for-sale financial assets are recognized in other comprehensive income. When the investment is disposed of or is determined to be impaired, the cumulative gain or loss that previously accumulated in the investments revaluation reserve is reclassified to profit or loss. The effective interest method is a method of calculating the amortized cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition. Dividends on available-for-sale equity instruments are recognized in profit or loss when the Bank and its subsidiaries’ rights to receive the dividends are established. Available-for-sale equity investments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured and derivatives that are linked to and must be settled by delivery of such unquoted equity investments are measured at cost less any identified impairment loss at the end of each reporting period and are recognized in a separate line item as financial assets carried at cost. If, in a subsequent period, the fair value of the financial assets cannot be reliably measured, the financial assets are remeasured at fair value. The difference between carrying amount and fair value is recognized in other comprehensive income on financial assets and recognized in profit or loss when impairment loss is identified.

3) Held-to-maturity investments

Held-to-maturity investments are investments with specific ratings that the Bank and its subsidiaries have the positive intent and ability to hold to maturity such as corporate bonds and governments bonds.

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Subsequent to initial recognition, held-to-maturity investments are measured at amortized cost using the effective interest method less any impairment.

4) Loans and receivables

Loans and receivables are measured at amortized cost using the effective interest method, less any impairment. Interest income is recognized by applying the effective interest rate, except for short-term receivables when the effect of discounting is immaterial.

b. Impairment of financial assets

Financial assets, other than those at fair value through profit or loss, are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected. In determining the allowance for credit losses and provision for losses on guarantees, the Bank and its subsidiaries assess the collectability of discounts and loans, receivables, and other financial assets, as well as guarantees and acceptances as of the balance sheet date. Loans and receivables are assessed for impairment at the end of each reporting period and considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the foregoing discounts and loans, receivables, and other financial assets, the estimated future cash flows of the asset have been affected. Objective evidence of impairment could include:

� Significant financial difficulty of the debtor; � The foregoing discounts and loans, receivables, and other financial assets becoming overdue; or � Probability that the debtor will enter into bankruptcy or undergo financial reorganization.

Discounts and loans, receivables, and other financial assets that are assessed as not impaired individually are further assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of discounts and loans, receivables, and other financial assets could include the Bank’s past experience of collecting payments and an increase in the number of delayed payments, as well as observable changes in national or local economic conditions that correlate with defaults on loans and receivables. The amount of the impairment loss recognized is the difference between the asset carrying amount and the present value of estimated future cash flows, after taking into account the related collaterals and guarantees, discounted at the original effective interest rates. The carrying amount of the discounts and loans, receivables, and other financial assets is reduced through the use of an allowance account. Under the “Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Nonperforming/Nonaccrual Loans” (the “Regulations”), the Bank evaluates credit losses on the basis of the estimated collectability. In accordance with the Regulations, credit assets are classified as normal assets, assets that require special mentioned, assets with substandard, assets with doubtful collectability, and assets on which there is loss. Based on the above Regulations, the minimum allowance for credit losses and provision for losses on guarantees for the assets that require special mentioned, assets that are substandard, assets with doubtful collectability, and assets on which there is loss were 2%, 10%, 50% and 100%, respectively of outstanding. Effective January 1, 2011, however, under an amendment to the Regulations, the minimum provisions for possible losses should be the sum of (a) 0.5% of the outstanding balance of normal on-and off-balance sheet credit assets (excluding assets that represent claims against an ROC government agency) and (b) 0.5% of the foregoing provisions for unsound credit assets. The minimum loan loss provision and reserves against liability on guarantees of normal credit assets should be allocated sufficiently within three years of the execution of the amendment. In addition, under Financial Supervisory Commission (FSC) guidelines No. 10010006830 there should be a provision at more than 1% of sum of a minimum allowance for credit losses and the provision for losses on guarantees. For available-for-sale equity investments, a significant or prolonged decline in the fair value of the security below its cost is considered to be objective evidence of impairment. When an available-for-sale financial asset is considered to be impaired, cumulative gains or losses previously recognized in other comprehensive income are reclassified to profit or loss in the period.

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In respect of available-for-sale equity securities, impairment loss previously recognized in profit or loss are not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss is recognized in other comprehensive income and accumulated under the heading of investments revaluation reserve. In respect of available-for-sale debt securities, impairment loss are subsequently reversed through profit or loss if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss. For financial assets that are carried at cost, the amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment loss will not be reversed in subsequent periods. The carrying amount of the financial asset is reduced through the use of an allowance account, accumulated impairment account, or book value. When those financial assets are considered uncollectible, they are written off against the allowance account and accumulated impairment account. Subsequent recoveries of amounts previously written off are debited against the bad debt expense or credited against the allowance account in according with Criteria Governing the Preparation of Financial Reports by Public Banks.

c. Derecognition of financial assets

The Bank and its subsidiaries derecognize a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. On derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognized in other comprehensive income and accumulated in equity is recognized in profit or loss.

Financial liabilities and equity instruments Debt and equity instruments issued by the Bank and its subsidiaries are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument. Equity and debt instruments are recognized at the proceeds received, net of direct issue costs. a. Measurement and recognition

Except the following situation, all the financial liabilities are measured at amortized cost using the effective interest method (see above for the definition of effective interest method): Financial liabilities at fair value through profit or loss Financial liabilities are classified as at fair value through profit or loss when the financial liability is either held for trading or it is designated as at fair value through profit or loss. A financial liability is classified as designated as at fair value through profit or loss if:

1) Such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise

arise; 2) The financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its


3) The contract contains one or more embedded derivatives, so that the entire hybrid (combined) contract can be designated

at fair value through profit or loss.

Financial liabilities at fair value through profit or loss are stated at fair value with any gains or losses arising on remeasurement recognized in profit or loss. The net gain or loss recognized in profit or loss incorporates any dividends paid on the financial liability. Fair value is determined in the manner described in Note 43.

b. Derecognition of financial liabilities

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

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Financial Guarantee Contracts Financial guarantee contracts issued by the Bank and its subsidiaries are initially recognized at their fair values and, if not designated as at fair value through profit or loss, are subsequently measured at amortized cost. If obligation of a financial guarantee contract will most likely to be paid, it will be measured at the higher of the best estimate or the amortized amount of the obligation under the contract. Derivative Financial Instruments and Hedge Accounting Derivatives are initially recognized at fair value at the date the derivative contracts are entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognized in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship. When the fair value of derivative financial instruments is positive, the derivative is recognized as a financial asset; when the fair value of derivative financial instruments is negative, the derivative is recognized as a financial liability. Derivatives embedded in non-derivative host contracts are treated as separate derivatives when they meet the definition of a derivative, their risks and characteristics are not closely related to those of the host contracts and the contracts are not measured at fair value through profit or loss. The Bank and its subsidiaries designate certain hedging instruments as either fair value hedges or cash flow hedges. a. Fair value hedges

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recognized in profit or loss immediately, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. The change in the fair value of the hedging instrument and the change in the hedged item attributable to the hedged risk are recognized in profit or loss in the line item relating to the hedged item. Hedge accounting is discontinued prospectively when the Bank and its subsidiaries revokes the designated hedging relationship, or when the hedging instrument expires or is sold, terminated, or exercised, or when it no longer meets the criteria for hedge accounting.

b. Cash flow hedges

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognized in other comprehensive income. The gain or loss relating to the ineffective portion is recognized immediately in profit or loss. The associated gains or losses that were recognized in other comprehensive income are reclassified from equity to profit or loss as a reclassification adjustment in the line item relating to the hedged item in the same period when the hedged item affects profit or loss. If a hedge of a forecast transaction subsequently results in the recognition of a non-financial asset or a non-financial liability, the associated gains and losses that were recognized in other comprehensive income are removed from equity and are included in the initial cost of the non-financial asset or non-financial liability. Hedge accounting is discontinued prospectively when the Bank and its subsidiaries revokes the designated hedging relationship, or when the hedging instrument expires or is sold, terminated, or exercised, or when it no longer meets the criteria for hedge accounting. The cumulative gain or loss on the hedging instrument that has been previously recognized in other comprehensive income from the period when the hedge was effective remains separately in equity until the forecast transaction occurs. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in equity is recognized immediately in profit or loss.

Repurchase and Reverse Repurchase Transactions Securities purchased under agreements to resell (reverse repurchase) agreements and securities sold under agreements to repurchase are generally treated as collateralized financing transactions. Interest earned on reverse repurchase agreements or interest incurred on repurchase agreements is recognized as interest income or interest expense over the life of each agreement. Property and Equipment Property and equipment are stated at cost, less subsequent accumulated depreciation and subsequent accumulated impairment loss when it is probable that future economic benefits associated with the item will flow to the Bank and its subsidiaries and the cost of the item can be measured reliably.

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Depreciation of property and equipment is recognized so as to write off the cost of assets less their residual values over their estimated useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period. An item of property and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss. Leasing Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. a. The Bank and its subsidiaries as lessor

Rental income from operating leases is recognized on a straight-line basis over the term of the relevant lease. b. The Bank and its subsidiaries as lessee

Operating lease payments are recognized as an expense on a straight-line basis over the lease term.

Intangible Assets a. Intangible assets acquired separately

Intangible assets with finite useful lives that are acquired separately are initially measured at cost and subsequently measured at cost less accumulated amortization and accumulated impairment loss. Amortization is recognized on a straight-line basis. The estimated useful life, residual value, and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. The residual value of an intangible asset with a finite useful life shall be assumed to be zero unless the Bank and its subsidiaries expects to dispose of the intangible asset before the end of its economic life.

b. Intangible assets acquired in a business combination

Intangible assets acquired in a business combination and recognized separately from goodwill are initially recognized at their fair value at the acquisition date (which is regarded as their cost). Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortization and accumulated impairment loss, on the same basis as intangible assets that are acquired separately.

c. Derecognition of intangible assets

Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognized in profit or loss when the asset is derecognized.

Goodwill For the purposes of impairment testing, goodwill is allocated to each of the Bank's cash-generating units (or groups of cash-generating units) that is expected to benefit from the synergies of the combinations. A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognized directly in profit or loss. An impairment loss recognized for goodwill is not reversed in subsequent periods. Collaterals Assumed Collaterals assumed are recorded at cost and revalued at the lower of cost or net fair value as of the balance sheet date.

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Impairment of Tangible and Intangible Assets (Excluded Goodwill) At the end of each reporting period, the Bank and its subsidiaries review the carrying amounts of its tangible and intangible assets, excluding goodwill, to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. When it is not possible to estimate the recoverable amount of an individual asset, the Bank and its subsidiaries estimate the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to the individual cash-generating units; otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified. Recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount. When an impairment loss subsequently is reversed, the carrying amount of the asset or cash-generating unit is increased to the revised estimate of its recoverable amount, but only to the extent of the carrying amount that would have been determined had no impairment loss been recognized for the asset or cash-generating unit in prior years. A reversal of an impairment loss is recognized immediately in profit or loss. Provisions Provisions, including those arising from the contractual obligation specified in the service concession arrangement to maintain or restore the infrastructure before it is handed over to the grantor, are measured at the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (where the effect of the time value of money is material). When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably. Employee Benefits a. Retirement benefit costs

Payments to defined contribution retirement benefit plans are recognized as an expense when employees have rendered service entitling them to the contributions. For defined benefit retirement benefit plans, the cost of providing benefits is determined using the Projected Unit Credit Method. Any actuarial gains and losses generated from retirement benefit obligation are recognized in other comprehensive income. Past service cost is recognized immediately to the extent that the benefits are already vested, and otherwise is amortized on a straight-line basis over the average period until the benefits become vested. The retirement benefit obligation recognized in the consolidated balance sheets represents the present value of the defined benefit obligation as adjusted for unrecognized past service cost, and as reduced by the fair value of plan assets. Any asset resulting from this calculation is limited to the unrecognized past service cost, plus the present value of available refunds and reductions in future contributions to the plan.

Curtailment or settlement gains or losses on the defined benefit plan are recognized when the curtailment or settlement occurs.

b. Preferential interest on employees’ deposits

The Bank and its subsidiaries offer preferential interest rate to its current employees for their deposits within a prescribed amount. Under Article 28 of the Criteria Governing the Preparation of Financial Reports by Public Bank, if the Bank’s preferential deposit interest rate for as stated in the employment contract exceeds the market interest rate, the excess will be subject to IAS 19 “Employee Benefits” upon the employee’s retirement. The actuarial valuation assumptions and parameters are based on those announced by authority, if any.

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Revenue Recognition Interest income and expense Except for financial assets and liabilities at fair value through profit or loss, all interest-earning financial assets and interest-bearing financial liabilities are accrued using the effective interest rate method and are accounted for as interest revenue and interest expense in the consolidated statement of comprehensive income. Transaction costs and all other premium or discounts associated with the loans and receivables are adjusted to the carrying amount of the loans and receivables. The calculation of effective interest rate includes transaction costs and all other premium or discounts paid or received by the Bank that is an integral part of the effective interest rate. Service charge for irrevocable loan commitments and handling fee received by FENB are amortized as adjustments to interest revenue within the loan period. Interest should not be accrued for loans that are transferred to nonperforming loans. The interest revenue on those loans/credits is recognized upon collection. Under Ministry of Finance (MOF) regulations, the interest revenue on structured loans is recognized upon collection. Interest income on revolving credit card receivables and cash advance is recognized on an accrual basis. Commission revenue Commission fee revenue and expenses are recognized when loans or other services are provided. Service fees on significant projects are recognized when the project has been completed, for instance, loans syndicated fees are recognized over the period during which the service is performed, or as an adjustment to the effective interest rate on the loan and receivables. Annual fee income is the membership fee received from card members and is recognized when card members fail to meet the criteria for annual fee exemption; an allowance is estimated using past experience and is recognized as a deduction from annual fee income within the year the annual fee income is recognized. Dividend income Dividend income from investments is recognized when the shareholder’s right to receive payment has been established provided that it is probable that the economic benefits will flow to the Bank and its subsidiaries and the amount of income can be measured reliably. Income Tax Income tax expense represents the sum of the current tax and deferred tax. a. Current tax

According to the Income Tax Act, an additional tax at 10% of unappropriated earnings is provided for as income tax in the year the shareholders approve to retain the earnings. Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.

b. Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences and unused loss carry forward that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint ventures, except where the Bank and its subsidiaries are able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

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The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. A previously unrecognized deferred tax asset is also reviewed at the end of each reporting period and recognized to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Bank and its subsidiaries expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

c. Current and deferred tax for the period

Current and deferred tax are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognized in other comprehensive income or directly in equity respectively.

d. Linked-tax system

SPH adopted the linked-tax system for income tax filings with its qualified subsidiaries, including the Bank. The different amounts between tax expense and deferred tax liabilities and assets based on consolidation and SPH with its qualified subsidiaries are adjusted on SPH; related amounts are recognized as current tax assets or current tax liabilities.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY In the application of the Bank and its subsidiaries’ accounting policies, which are described in Note 4, management is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. a. Impairment loss on loans and receivables

The Bank and its subsidiaries review loan portfolios and receivables to assess impairment periodically. In determining whether an impairment loss should be recorded, the Bank and its subsidiaries make judgments as to whether there is any observable data indicating that impairment is occurred. This evidence may include observable data indicating that there has been an adverse change in the payment status of borrowers (e.g. payment delinquency or default), or economic conditions that correlate with defaults on assets. For the purpose of assessing impairment, the management uses estimates based on historical loss experience for assets with credit risk characteristics and objective evidence of impairment similar to those in the portfolio when estimating expected future cash flows. The methodology and assumptions used for estimating both the amount and timing of future cash flows are reviewed regularly in order to decrease the difference between estimated loss and actual loss. For FENB, the allowance for loan losses is maintained at a level considered adequate to provide for losses on the loan portfolio at the balance sheet date. The adequacy of the allowance is determined by management on the basis of a periodic review of the loan portfolio, historical loan loss experience, current economic conditions, changes in the composition of the loan portfolio, analysis of collateral values and other pertinent factors. Although management believes the level of the allowance is adequate to absorb losses inherent in the loan portfolio, it cannot be reasonably predicted if additional declines in the local economy or rising interest rates may result in increases in losses. Impairment losses of loans and receivables are shown in Note 12 and Note 13.

b. Fair value of financial instruments

As described in Note 43, the Bank and its subsidiaries’ management use its judgment in selecting an appropriate valuation technique for financial instruments that do not have quoted market price in an active market. Valuation techniques commonly used by market practitioners are applied. For derivative financial instruments, assumptions were based on quoted market rates adjusted for specific features of the instruments. Other financial instruments were valued using a discounted cash flow analysis that includes assumptions based on quoted market prices or rates (if available). The measurement for the fair value of unlisted equity investments includes assumptions not based on observable market prices or

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rates. Note 43 provides detail information about the key assumptions used in the determination of the fair value of financial instrument. The Bank and its subsidiaries’ management believe that the chosen valuation techniques and assumption used are appropriate in determining the fair value of financial instruments.

c. Estimation of goodwill impairment

Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units to which goodwill has been allocated. The value in use calculation requires management to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value. When the actual future cash flows are less than expected, a material impairment loss may arise. Estimation of goodwill impairment is shown in Note 17.

d. Income tax

As of December 31, 2013, December 31, 2012 and January 1, 2012, the carrying amount of deferred tax assets is $2,570,192, $2,812,794 and $3,940,813, respectively. As of December 31, 2013, December 31, 2012 and January 1, 2012, deferred tax asset has not been recognized of $1,709,156, $1,612,944 and $1,694,595, respectively, due to the unpredictability of future profit streams. The realizability of the deferred tax asset mainly depends on whether sufficient future profits or taxable temporary differences will be available in the future. In cases where the actual future profits generated are less than expected, a material reversal of deferred tax assets may arise, which would be recognized in profit or loss for the period in which such reversal takes place.

e. Employee benefit obligation reserve

The present value of defined benefit obligation and preferential interest on employees’ deposits are based on several actuarial assumptions. Any changes on these assumptions will influence the fair value of the employee benefit obligations. One of assumptions used to determine net pension cost (income) is discount rate. The Bank and its subsidiary determined the appropriate discount rate at the end of each year, and used the rate to calculate the present value of future cash flows on estimated payment of employee benefit obligation. Employee benefit obligation reserve is shown in Note 26.

6. CASH AND CASH EQUIVALENTS

December 31,

2013 December 31,

2012 January 1,

2012 Cash on hand $ 7,552,114 $ 7,101,652 $ 5,982,845 Due from other banks 24,919,622 5,797,483 6,870,784 Checks for clearing 1,743,594 6,232,367 5,158,446 $ 34,215,330 $ 19,131,502 $ 18,012,075 Cash and cash equivalents as of December 31, 2013, December 31, 2012 and January 1, 2012 as shown in the consolidated statements of cash flows can be reconciled to the related items in the consolidated balance sheets as follows:

December 31,

2013 December 31,

2012 January 1,

2012 Cash and cash equivalents in consolidated balance sheets $ 34,215,330 $ 19,131,502 $ 18,012,075 Due from the Central Bank and call loans to other banks

reclassified as cash and cash equivalents under IAS 7 “Statement of Cash Flows” 28,355,041 47,475,577 51,587,721

Securities purchased under agreement to resell reclassified as cash and cash equivalents under IAS 7 “Statement of Cash Flows” - 236,006 3,080,168

Cash and cash equivalents in consolidated statements of

cash flows $ 62,570,371 $ 66,843,085 $ 72,679,964

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

December 31,

2013 December 31,

2012 January 1,

2012 Call loans to banks $ 27,825,816 $ 46,705,178 $ 40,733,389 Deposit reserve - checking accounts 7,889,096 13,888,006 15,319,773 Due from Central Bank - interbank settlement funds 802,160 835,207 800,372 Deposit reserve - demand accounts 23,929,683 24,639,366 23,781,812 Deposit reserve - foreign currencies 185,709 131,115 136,305 Due from Federal Reserve Bank 515,178 1,473,420 1,981,774 $ 61,147,642 $ 87,672,292 $ 82,753,425 Under a directive issued by the Central Bank of the ROC, New Taiwan dollar (NTD)-denominated deposit reserves are determined monthly at prescribed rates based on average balances of customers’ NTD-denominated deposits. Deposit reserve - demand account should not be used, except for adjusting the deposit reserve account monthly. In addition, the foreign-currency deposit reserves are determined at prescribed rates based on the balances of foreign-currency deposits. These reserves may be withdrawn momentarily at based on any time at no interest earning.

8. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

December 31,

2013 December 31,

2012 January 1,

2012 Held-for-trading financial assets

Government bonds $ 5,432,683 $ 10,981,735 $ 3,110,330 Corporate bonds 4,251,470 2,174,342 2,944,445 Bank debentures 250,382 885,491 656,135 Listed stocks 124,746 104,402 33,046 Convertible bonds 6,895 19,385 60,851 Beneficiary certificates 5,000 385,813 445,813 Treasury bills - 513,382 - Collateralized debt obligations - 60,038 62,415 Negotiable certificates of deposits - - 17,000,000 Currency swap and option contracts 7,128,234 4,088,380 833,346 Forward contracts 2,738,960 1,778,951 2,101,499 Interest rate swap contracts 1,764,616 2,726,906 4,569,158 Cross-currency swap contracts 103,315 89,422 192,369 Others 111,183 28,875 24,036 Adjustment for change in value of held-for-trading

financial assets 35,473 (55,720) (120,915) 21,952,957 23,781,402 31,912,528 Financial assets designated at fair value through profit or

loss Convertible bonds 3,413,264 3,226,505 885,321 Auction-rate securities 599,060 620,610 1,400,912 Derivative instruments - - 5,282 Adjustment for change in value of financial assets

designated at fair value through profit or loss 4,121 2,354 (769,223) 4,016,445 3,849,469 1,522,292 $ 25,969,402 $ 27,630,871 $ 33,434,820 Held-for-trading financial liabilities

Currency swap and option contracts $ 7,280,607 $ 4,083,331 $ 956,643 Forward contracts 2,533,490 1,711,301 1,605,822 Interest rate swap contracts 1,724,590 2,783,076 4,583,328 Cross-currency swap contracts 185,253 59,948 123,602 Others 108,028 33,908 39,549 $ 11,831,968 $ 8,671,564 $ 7,308,944

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a. The Bank and its subsidiaries designated hybrid instruments as financial assets and liabilities at FVTPL. b. Financial assets at fair value through profit or loss had not been sold with agreement to repurchase. Please refer to Note 41

for information relating to financial assets at fair value through profit or loss pledged as security. c. The Bank and its subsidiaries engage in derivative transactions mainly to accommodate customers’ needs and manage their

own exposure positions. Outstanding derivative contracts (nominal) on December 31, 2013, December 31, 2012 and January 1, 2012 are shown as follows:

Contract Amount

December 31,

2013 December 31,

2012 January 1,

2012 Currency swap contracts $ 579,499,783 $ 342,041,127 $ 378,372,554 Interest rate swap contracts 478,289,635 631,767,938 836,221,169 Option contracts

Long position 195,011,294 283,134,468 146,307,870 Short position 189,339,438 283,964,933 145,337,961

Non-deliverable forward contracts Long position 79,328,873 256,278,267 270,945,746 Short position 79,853,568 256,187,238 270,144,366

Forward contracts Long position 26,892,431 18,860,671 5,384,036 Short position 22,392,937 14,423,966 3,381,876

Cross-currency swap contracts 19,565,547 10,050,740 8,590,579 Assets swap contracts 3,413,264 3,226,505 1,036,771 Equity-linked swap contracts 2,030,257 962,766 35,057 Futures contracts 580,849 1,529 1,288,682 Commodity-linked swap contracts 263,743 297,575 273,825 Credit default swap contracts - 800,000 1,100,000 Credit-linked swap contracts - 800,000 1,100,000

9. AVAILABLE-FOR-SALE FINANCIAL ASSETS

December 31,

2013 December 31,

2012 January 1,

2012 Corporate bonds $ 18,925,208 $ 21,857,346 $ 8,181,722 Commercial papers 13,782,378 5,671,685 5,024,505 Government bonds 11,955,118 16,067,406 12,174,696 Bank debentures 6,398,049 6,717,511 6,119,105 Negotiable certificates of deposits 5,497,025 437,049 454,350 GSE (government-sponsored enterprise) debentures 3,019,986 4,584,395 4,289,768 Others 58,916 28,451 717,103 59,636,680 55,363,843 36,961,249 Adjustments for change in value of available-for-sale

financial assets 118,826 423,780 228,488 $ 59,755,506 $ 55,787,623 $ 37,189,737 As of December 31, 2013, December 31, 2012 and January 1, 2012, available-for-sale financial assets had been sold under repurchase agreements amounted to $451,771, $1,201,450 and $7,071,871, respectively. Please refer to Note 41 for information relating to available-for-sale financial assets pledged as security.

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10. DERIVATIVE FINANCIAL INSTRUMENTS FOR HEDGING The Bank and its subsidiaries’ management had established related risk management policy.

December 31,

2013 December 31,

2012 January 1,

2012 Derivative financial assets under hedge accounting Fair value hedge - interest rate swap $ - $ 15,616 $ 43,431 Derivative financial liabilities under hedge accounting Cash flow hedge - interest rate swap $ 3,789 $ 22,576 $ 51,212 Fair value hedge - interest rate swap 2,306 - 3,107 $ 6,095 $ 22,576 $ 54,319 a. Fair value hedge

The fair value risk on the interest of the fixed rate bank debentures, fixed rate loans and fixed rate deposit may fluctuate as market rates change. The Bank and its subsidiaries used interest rate swap contracts as hedging instruments.







Fixed rate loans Interest rate swap $ 1,247,093 $ (2,306) $ 2,292 $ (2,292)







Bank debentures Interest rate swap $ 1,400,000 $ 15,616 $ (25,707) $ 25,707

January 1, 2012

Hedged Items Hedging Instruments Notional Amount Fair Value Bank debentures Interest rate swap $ 1,400,000 $ 41,323 Negotiable certificates of deposit Interest rate swap 240,821 2,108 Fixed rate loans Interest rate swap 134,123 (3,107)

b. Cash flow hedge

The Bank uses interest rate swap contracts to hedge against the risk of adverse interest rate fluctuations. The above-mentioned derivative financial instruments are used to adverse cash flow risk caused by interest rate change of future cash flow.

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January 1, 2012

Hedged Items Hedging Instruments Notional Amount Fair Value Bank debentures Interest rate swap $ 3,600,000 $ (51,212)

11. SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL

December 31,

2012 January 1,

2012 Bank debentures $ 236,006 $ 1,306,810 Government bonds - 1,773,358 $ 236,006 $ 3,080,168 Agreed resell amount $ 236,172 $ 3,081,182 Expiration date January 2013 January 2012 The Bank and its subsidiaries didn’t purchase any securities under agreements to resell on December 31, 2013. Securities purchased under agreement to resell are not underlying for agreements to repurchase.

12. RECEIVABLES, NET

December 31,

2013 December 31,

2012 January 1,

2012 Account receivables - forfaiting $ 69,232,903 $ 18,880,671 $ 11,542,182 Credit card receivables 17,115,895 17,295,213 18,118,724 Acceptances - forfaiting 15,422,003 1,268,824 - Account receivables - factoring 11,769,326 19,389,452 16,629,573 Interest and revenue receivables 2,119,780 2,192,679 1,821,966 Acceptances 1,713,472 1,945,159 2,079,326 Trust administration fee revenue receivables 574,288 586,951 501,696 Account receivables and notes receivables 401,530 480,741 254,290 Others 421,356 291,786 803,981 118,770,553 62,331,476 51,751,738 Less: Allowance for credit losses 501,307 451,897 429,626 Net amount $ 118,269,246 $ 61,879,579 $ 51,322,112 The Bank and its subsidiaries assessed the collectability of receivables to determine the allowance. Movements in the allowance of receivables were shown as follows:

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Year Ended December 31 2013 2012 Balance, January 1 $ 451,897 $ 429,626 Additional provisions recognized 231,349 205,932 Write-off (184,267) (181,470) Reclassification 26 - Effect of exchange rate changes 2,302 (2,191) Balance, December 31 $ 501,307 $ 451,897 Please refer to Note 44 for impairment loss analysis of receivables.

13. DISCOUNTS AND LOANS, NET

December 31,

2013 December 31,

2012 January 1,

2012 Export negotiation $ 575,232 $ 884,274 $ 2,079,089 Import negotiation - - 21,614 Overdrafts 3,916 6,624 8,112 Secured overdrafts 316,050 455,345 580,451 Account receivables - financing 2,473,607 1,804,137 2,342,299 Short-term loans 114,254,888 103,682,732 95,836,055 Secured short-term loans 103,828,187 75,151,055 60,950,649 Medium-term loans 123,075,520 120,018,067 111,678,522 Secured medium-term loans 96,021,813 98,866,323 95,643,311 Long-term loans 11,300,362 12,223,682 14,272,547 Secured long-term loans 363,775,939 363,597,635 354,692,219 Nonperforming loans transferred from loans 2,674,492 2,124,326 3,541,440 818,300,006 778,814,200 741,646,308 Less: Allowance for credit losses 9,129,564 8,229,891 9,021,594 Less: Premium or discount on discounts and loans 274,506 274,896 263,860 Add: Adjustment of hedge valuation 2,306 - 3,107 Net amount $ 808,898,242 $ 770,309,413 $ 732,363,961 Please refer to Note 44 for impairment loss analysis of discounts and loans. Please refer to Note 41 for information relating to discounts and loans pledged as security. The Bank and its subsidiaries assessed the collectability of discounts and loans to determine the allowance. Movement in the allowance of discounts and loans is shown as follows: Year Ended December 31 2013 2012

Specific Reserve


Specific Reserve


Balance, January 1 $ 602,141 $ 7,627,750 $ 8,229,891 $ 1,084,183 $ 7,937,411 $ 9,021,594 Additional (reversal)

provisions recognized 1,569,598 1,551,092 3,120,690 74,554 (13,031) 61,523 Write-off (2,037,251) (224,063) (2,261,314) (495,830) (353,259) (849,089) Recovery of written-off

credits - - - - 137,849 137,849 Effect of exchange rate

changes 23,021 17,276 40,297 (60,766) (81,220) (141,986) Balance, December 31 $ 157,509 $ 8,972,055 $ 9,129,564 $ 602,141 $ 7,627,750 $ 8,229,891

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14. HELD-TO-MATURITY FINANCIAL ASSETS, NET

December 31,

2013 December 31,

2012 January 1,

2012 Negotiable certificates of deposit $ 199,934,765 $ 215,825,683 $ 229,220,900 Government bonds 9,875,177 1,214,743 127,561 GSE (government-sponsored enterprise) debentures 2,236,189 1,808,461 2,896,637 Corporate bonds 1,752,937 250,141 500,921 U.S. municipal bonds 303,913 424,951 618,267 Asset backed securities 299,530 291,366 302,899 Bank debentures 25,685 24,984 25,974 Collateralized debt obligations - 3,614 4,568 214,428,196 219,843,943 233,697,727 Less: Accumulated impairment 10,274 - - Net amount $ 214,417,922 $ 219,843,943 $ 233,697,727 Because of a change of intention, the Bank and its subsidiaries reclassified available-for-sale financial assets (government bonds $8,410,928 and corporate bond $1,753,088) into held-to-maturity financial assets. Please refer to Note 46 for the related information. Please refer to Note 41 for information relating to held-to-maturity financial assets pledged as security.

15. OTHER FINANCIAL ASSETS, NET

December 31,

2013 December 31, 2012 January 1,

2012 Unquoted equity instruments

Unlisted equity investments $ 913,739 $ 999,511 $ 1,129,464 Beneficiary certificates 399,087 462,724 511,991

Time deposits not belong to cash and cash equivalent 11,468,108 - - Purchase of PEM instruments 4,224,732 3,909,134 3,772,340 Cash surrender value managers’ life insurance 1,285,669 1,211,492 1,217,152 Excess margin of futures and options 151,561 149,699 121,150 Short-term loan advance 22,544 20,598 22,927 Nonperforming receivables transferred from other than

loans 5,388 147,329 176,581 Exchange bills negotiated 695 607 362 18,471,523 6,901,094 6,951,967 Less: Allowance for credit loss 11,184 139,292 164,375 Less: Accumulated impairment 2,430,540 2,302,383 2,128,986 Net amount $ 16,029,799 $ 4,459,419 $ 4,658,606 The Bank and its subsidiaries assessed the collectability of other financial assets to determine the allowance. Movements in the allowance of other financial assets were shown as follows: Year Ended December 31 2013 2012 Balance, January 1 $ 139,292 $ 164,375 Reversal provisions recognized (94,775) (17,614) Write-off (36,613) (3,374) Reclassification (26) - Effect of exchange rate changes 3,306 (4,095) Balance, December 31 $ 11,184 $ 139,292 The Bank and its subsidiaries designated unquoted equity instruments and beneficiary certificates amounted to $1,641,455 disclosure as available-for-sale financial assets on January 1, 2012 (the transition date of IFRSs). The assumption of fair value of these financial assets is shown in Note 43.

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The amounts of investments in unquoted equity instruments were deducted from accumulated impairment $2,500 on January 1, 2012. The Bank was delegated by professional investors to sell investment products of the PEM Group amounting to US$146,000 thousand through private placement, which was allowed under Hong Kong’s regulations. A court appointed a permanent receiver for all assets that belong to, are being managed by, or in the possession of or control of, the PEM Group and any of their subsidiaries and affiliates. If the products fail to be repaid on maturity cause of questionable underlying assets, the Bank will buy back the products at the price of initial payment net of the distribution and redemption cost. Later, there were significant defaults on maturity payments. Thus, the Bank initiated local and overseas investigations on this case delegated a lawyer to handle the incident and informed related investors of this situation. On December 24, 2010, the board of directors resolved to abide by a court’s appointment of the PEM Group receiver to take the insurance policies at the price of approximately US$40.4 million, and recognized impairment losses of US$11,152 thousand. On March 7, 2011, the receiver transferred a portion of the insurance policies to a trustee established jointly by the banks intended to hold insurance policies. And the Bank had submitted to the authorities the results of this policy transfer. As of December 31, 2013, a reserve of US$81,145 thousand (NT$2,430,540 thousand) had been set aside to cover the accumulated impairment losses.

16. PROPERTY AND EQUIPMENT, NET

The movements of property and equipment for the years ended December 31, 2013 and 2012 are summarize as follow: Year Ended December 31, 2013

Land Buildings

Computer and

Machinery Equipment

Transportation

Equipment Other

Equipment

Prepayments for

Equipment and


Total Cost Balance, January 1 $ 6,660,617 $ 5,888,376 $ 2,261,473 $ 5,780 $ 2,851,217 $ 114,259 $17,781,722 Addition - 33,453 120,972 - 154,875 212,805 522,105 Deduction 48,703 69,155 198,238 - 89,235 40 405,371 Reclassifications - 33,383 17,714 - 70,670 (180,521 ) (58,754 ) Adjustments in

currency exchange 1,423 2,081 5,926 162 13,688 8 23,288 Balance, December 31 6,613,337 5,888,138 2,207,847 5,942 3,001,215 146,511 17,862,990 Accumulated

depreciation Balance, January 1 - 2,683,771 1,770,244 4,118 2,222,382 - 6,680,515 Addition - 156,799 152,228 666 168,983 - 478,676 Deduction - 33,377 193,150 - 86,089 - 312,616 Reclassifications - (7 ) (6,523 ) - 3,196 - (3,334 ) Adjustments in

currency exchange - 1,037 5,435 119 10,719 - 17,310 Balance, December 31 - 2,808,223 1,728,234 4,903 2,319,191 - 6,860,551 Accumulated

impairment Balance, January 1 1,115 602 - - - - 1,717 Deduction 1,115 576 - - - - 1,691 Reclassifications - (26 ) - - - - (26 ) Balance, December 31 - - - - - - - Net amount Balance, December 31 $ 6,613,337 $ 3,079,915 $ 479,613 $ 1,039 $ 682,024 $ 146,511 $11,002,439

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Land Buildings

Computer and

Machinery Equipment

Transportation

Equipment Other

Equipment

Prepayments for

Equipment and

Construction in Progress Total

Cost Balance, January 1 $ 6,662,628 $ 5,853,200 $ 2,060,087 $ 6,002 $ 2,847,379 $ 476,862 $17,906,158 Addition - 25,002 287,873 - 98,047 243,486 654,408 Deduction - - 108,946 - 103,742 935 213,623 Reclassifications - 13,114 30,489 - 29,517 (605,146 ) (532,026 ) Adjustments in

currency exchange (2,011 ) (2,940 ) (8,030 ) (222 ) (19,984 ) (8 ) (33,195 ) Balance, December 31 6,660,617 5,888,376 2,261,473 5,780 2,851,217 114,259 17,781,722 Accumulated

depreciation Balance, January 1 - 2,528,114 1,756,670 3,577 2,144,698 - 6,433,059 Addition - 157,207 133,357 681 183,642 - 474,887 Deduction - - 105,872 - 96,989 - 202,861 Reclassifications - (155 ) (6,368 ) - 6,523 - - Adjustments in

currency exchange - (1,395 ) (7,543 ) (140 ) (15,492 ) - (24,570 ) Balance, December 31 - 2,683,771 1,770,244 4,118 2,222,382 - 6,680,515 Accumulated

impairment Balance, January 1 1,115 602 - - - - 1,717 Reclassification - - - - - - - Balance, December 31 1,115 602 - - - - 1,717 Net amount Balance, December 31 $ 6,659,502 $ 3,204,003 $ 491,229 $ 1,662 $ 628,835 $ 114,259 $11,099,490 Prepayments for equipment and construction in progress had reclassified to computer and machinery equipment, other equipment and computer software (list in intangible assets). The above items of property and equipment were depreciated based on the estimated useful life of the asset:

Category Useful Lives Buildings 15-55 years Computer and machinery equipment 3-5 years Transportation equipment 5 years Other equipment 19 months-15 years There are no property and equipment pledged as security.

17. INTANGIBLE ASSETS, NET

December 31, 2013


Goodwill $ 1,359,661 $ - $ 1,359,661 Computer software 954,222 332,148 622,074 $ 2,313,883 $ 332,148 $ 1,981,735

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December 31, 2012


Goodwill $ 1,346,498 $ - $ 1,346,498 Computer software 913,666 213,084 700,582 $ 2,260,164 $ 213,084 $ 2,047,080

January 1, 2012


Goodwill $ 1,365,094 $ - $ 1,365,094 Computer software 297,838 214,710 83,128 Core deposit 210,758 201,976 8,782 $ 1,873,690 $ 416,686 $ 1,457,004 Movements in the Bank and its subsidiaries’ intangible assets are shown as follows: Year Ended December 31 2013 2012 Costs

Balance, January 1 $ 2,260,164 $ 1,873,690

Addition 42,255 165,931 Deduction 58,578 281,236 Reclassifications 54,216 531,860 Adjustments in foreign exchange 15,826 (30,081) Balance, December 31 2,313,883 2,260,164 Accumulated amortization Balance, January 1 213,084 416,686 Addition 175,309 88,779 Deduction 58,578 281,236 Reclassifications (80) - Adjustments in foreign exchange 2,413 (11,145) Balance, December 31 332,148 213,084 Net amount $ 1,981,735 $ 2,047,080 The above items of other intangible assets were depreciated based on the estimated useful life of the asset:

Category Useful Lives Computer software 3-6 years Core deposit 15 years Goodwill includes referred to (1) $876,717, resulted from the Bank’s cash merger with SinoPac Card Services in September 2003, and this merger was treated as a reorganized of SPH, and (2) the Bank’s acquisition of Far East National Bank (FENB) through SinoPac Bancorp on August 15, 1997, which was accounted for using the purchase method. The assets and liabilities of FENB were revalued to estimate its fair market value as of the date of acquisition. The purchase price in excess of the fair market value of the net tangible assets acquired was US$16,123 thousand, which was recorded as goodwill. The Bank and its subsidiary take impairment review of goodwill annually or more frequently if events or changes in circumstance indicate goodwill impairment.

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In assessing whether goodwill is impaired, the Bank considers the credit card department or each investee as a cash generating unit and estimates the recoverable amount by its value in use. The Bank uses the department’s or investee’s actual profitability in making key assumption to predict future cash flows and thus calculates its value in use. Under the going-concern assumption, the Bank predicts the net cash flows provided by its operating activities in the next 5 years and estimated salvage value and uses its parent company’s weighted average cost of capital as the discount rate to calculate the value in use. After assessment, the Bank and its subsidiaries found no objective evidence that goodwill had been impaired as of December 31, 2013, December 31, 2012 and January 1, 2012.

18. OTHER ASSETS, NET

December 31,

2013 December 31,

2012 January 1,

2012 Guarantee deposits $ 596,289 $ 1,065,386 $ 569,748 Prepayment 272,279 279,467 260,405 Temporary payment and suspense accounts 243,565 269,127 242,395 Collaterals 160,073 344,430 361,847 Others, net 294,760 413,141 287,106 1,566,966 2,371,551 1,721,501 Less: Allowance for credit losses 7,024 7,752 7,705 Less: Accumulated impairment - collaterals 74,969 87,180 128,186 $ 1,484,973 $ 2,276,619 $ 1,585,610

19. DEPOSITS FROM THE CENTRAL BANK AND BANKS

December 31, 2013

December 31, 2012

January 1, 2012

Call loans from banks $ 77,950,942 $ 60,544,419 $ 54,376,919 Redeposit from the directorate general of postal remittance 9,503,860 9,358,180 11,806,420 Due to banks 134,361 551,585 191,490 $ 87,589,163 $ 70,454,184 $ 66,374,829

20. SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

December 31,

2013 December 31,

2012 January 1,

2012 Government bonds $ 451,771 $ 1,201,450 $ 7,071,871 Agreed repurchase price $ 452,281 $ 1,202,323 $ 7,075,742 Maturity date March 2014 March 2013 March 2012

21. PAYABLES

December 31,

2013 December 31,

2012 January 1,

2012 Accounts payable - factoring $ 5,992,485 $ 6,006,343 $ 5,777,254 Accrued expenses 3,010,825 2,520,686 1,774,965 Notes and checks in clearing 2,118,777 6,854,882 5,704,407 Interest payables 1,752,619 1,834,319 1,822,676 Acceptance 1,713,472 1,945,159 2,079,326 Dividends payables 1,435,025 1,435,025 1,435,025 Remittance payables 268,999 165,164 527,041 Tax payables 181,774 169,558 158,092 Others 759,432 1,320,524 661,767 $ 17,233,408 $ 22,251,660 $ 19,940,553

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22. DEPOSITS AND REMITTANCES

December 31,

2013 December 31,

2012 January 1,

2012 Checking $ 17,226,300 $ 16,696,382 $ 18,561,671 Demand 215,505,716 200,029,019 179,322,566 Savings - demand 246,551,122 235,927,224 226,313,234 Time deposits 369,690,980 321,260,987 327,538,318 Negotiable certificates of deposit 17,212,500 28,494,600 26,592,200 Savings - time 225,225,649 226,342,379 215,151,937 Inward remittances 620,852 970,398 496,482 Outward remittances 58,721 164,100 77,809 1,092,091,840 1,029,885,089 994,054,217 Adjustment in hedge valuation - - 2,108 $ 1,092,091,840 $ 1,029,885,089 $ 994,056,325

23. BANK DEBENTURES

To raise capital for its financial operation and increase its capital adequacy ratio, the Bank obtained approval to issue bank debentures. Bank debentures list below:

December 31,

2013 December 31, 2012

January 1, 2012 Maturity Date Rates

First subordinated bank

debentures issued in 2008

$ - $ 1,415,496 $ 1,441,040 2008.03.17-2013.09.17 Principal is repayable on

maturity date.




maturity date.

Index rate plus 1%. Interest rate is reset quarterly since the issuance date and paid annually.



maturity date.




maturity date.




maturity date.




maturity date.




maturity date.




maturity date.




maturity date.




maturity date.




maturity date.




maturity date.


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Financial Reports

December 31,

2013 December 31, 2012

January 1, 2012 Maturity Date Rates

Third subordinated bank

debentures issued in 2011

3,198,762 3,198,520 $ 3,198,282 2011.11.04-2018.11.04 Principal is repayable on

maturity date.




maturity date.




maturity date.



1,499,000 - - 2013.09.27-2019.03.27 Principal is repayable on

maturity date.


Second subordinated bank debentures issued in 2013

1,998,995

-

-

2013.12.23-2019.06.23 Principal is repayable on

maturity date.


$45,087,336 $43,001,812 $37,027,843

24. OTHER FINANCIAL LIABILITIES

December 31,

2013 December 31,

2012 January 1,

2012 Principal received on structured notes $ 6,677,942 $ 5,613,926 $ 7,165,848 Federal Home Loan Banks fund 898,590 - - Cumulative earnings on appropriated loan fund 43,845 70,900 399,990 $ 7,620,377 $ 5,684,826 $ 7,565,838

25. PROVISIONS

December 31,

2013 December 31,

2012 January 1,

2012 Provisions for employee benefits $ 2,568,984 $ 2,548,658 $ 2,661,588 Provisions for guarantee liabilities 232,503 240,511 237,184 Provisions for decommissioning liabilities 78,649 71,268 66,498 $ 2,880,136 $ 2,860,437 $ 2,965,270

26. PROVISIONS FOR EMPLOYEE BENEFITS

December 31,

2013 December 31,

2012 January 1,

2012 Recognized in consolidated balance sheet (account

payables and provisions)

Defined contribution plans $ 30,576 $ 27,615 $ 27,701 Defined benefit plans 2,290,136 2,350,091 2,491,040 Preferential interest on employees’ deposits 230,214 198,567 170,548 Deferred annual leave 48,634 - - $ 2,599,560 $ 2,576,273 $ 2,689,289

a. Defined contribution plans

The Bank, SinoPac Life Insurance Agent Co., Ltd. and SinoPac Property Insurance Agent Co., Ltd. adopted a pension plan under the Labor Pension Act (the “LPA”), which is a state-managed defined contribution plan. Based on the LPA, the Bank, SinoPac Life Insurance Agent Co., Ltd. and SinoPac Property Insurance Agent Co., Ltd. make monthly contributions to employees’ individual pension accounts at 6% of monthly salaries and wages.

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Far East National Bank (FENB) has a 401(k) plan in which all employees of FENB may elect to enroll at the beginning of each month provided that they have been employed for at least three months prior to the enrollment date. Employees may contribute up to 15% of their annual salary with FENB matching up to 3% of the employee’s annual salary.

The total expense recognized in profit or loss for the years ended December 31, 2013 and 2012 was $192,351 and $187,736, respectively, represents contributions payable to these plans by the Bank and its subsidiaries at rates specified in the rules of the plans.

b. Defined bebefit plans

For the Bank and SinoPac Life Insurance Agent’s employees who adopt for defined benefit plans regulated by the Labor Standards Act, the retirement benefits are paid to employees as follow: (i) a lump sum payment equal to two base units for each year of service; (ii) that each year of service exceeding 15 years is entitled to only one base unit of wage; and (iii) that the maximum payment is for up to 45 base units. Any fraction of a year that is equal to six months or more is counted as one year of service, and any fraction of a year that is less than six months is counted as half a year of service.

The Bank and SinoPac Life Insurance Agent Co., Ltd. contribute pension funds to a pension fund administered by the pension fund monitoring committee. Pension contributions are deposits in the Bank of Taiwan or Bank SinoPac in the committee’s name. The pension expenses amounted to $174,081 and $178,093 for the years ended in 2013 and 2012, respectively. The actuarial valuations of plan assets and the present value of the defined benefit obligation were carried out by qualifying actuaries. The principal assumptions used for the purposes of the actuarial valuations were as follows:

Valuation at

December 31,

2013 December 31,

2012 January 1,

2012 Discount rate 1.75% 1.70% 1.75% Expected future salary growth rate 1.75% 1.75% 1.75% Expected future return on investment of plan assets 1.50% 1.75% 2.00%

Amounts recognized in profit or loss in respect of these defined benefit plans are as follows:

Year Ended December 31 2013 2012 Current service cost $ 106,758 $ 113,122 Interest cost 89,226 93,369 Expected return on plan assets (49,156) (55,636) Past service cost 27,138 27,138 $ 173,966 $ 177,993

Actuarial gains and losses recognized in other comprehensive income for the years ended December 31, 2013 and 2012 was loss of $44,188 and gain of $6,370, respectively. The cumulative amount of actuarial gains and losses recognized in other comprehensive income as of December 31, 2013 and 2012 was loss of $37,818 and gain of $6,370, respectively. The amount included in consolidated balance sheets arising from the Bank’s obligation in respect of its defined benefit plans were as follows:

December 31,

2013 December 31,

2012 January 1,

2012 Present value of funded defined benefit obligation $ 5,030,429 $ 5,310,328 $ 5,392,520 Fair value of plan assets (2,550,324) (2,743,130) (2,657,235) Deficit 2,480,105 2,567,198 2,735,285 Past service cost not yet recognized (189,969) (217,107) (244,245) The provision of defined benefit plans $ 2,290,136 $ 2,350,091 $ 2,491,040

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Movements in the present value of the defined benefit obligations were as follows:

Year Ended December 31 2013 2012 Opening defined benefit obligation $ 5,310,328 $ 5,392,520 Current service cost 106,758 113,122 Interest cost 89,226 93,369 Actuarial losses (gains) 41,158 (26,626) Benefits paid (517,041) (262,057) Closing defined benefit obligation $ 5,030,429 $ 5,310,328

Movements in the fair value of the plan assets were as follows:

Year Ended December 31 2013 2012 Opening fair value of plan assets $ 2,743,130 $ 2,657,235 Expected return on plan assets 49,156 55,636 Loss on plant assets (12,081) (18,952) Contributions 287,160 311,268 Benefits paid (517,041) (262,057) Closing fair value of plan assets $ 2,550,324 $ 2,743,130

The percentages of the major categories of plan assets at the end of the reporting period in balance sheet were listed below.

December 31,

2013 December 31,

2012 January 1,

2012 Cash and cash equivalents 100.00 90.20 85.54 Others - 9.80 14.46 100.00 100.00 100.00

The overall expected rate of return was based on historical return trends and analysts’ predictions of the market for the asset over the life of the related obligation, with reference to the use of the Labor Pension Fund by Labor Pension Fund Supervision Committee, taking into consideration the effect of possible differences between the guaranteed minimum income and the return on local banks’ two-year time deposits. The Bank chose to disclose the history of experience adjustments as the amounts determined for each accounting period prospectively from the date of transition to IFRSs: (Please refer to Note 52)

December 31,

2013 December 31,

2012 January 1,

2012 Present value of defined benefit obligation $ 5,030,429 $ 5,310,328 $ 5,392,520 Fair value of plan assets $ 2,550,324 $ 2,743,130 $ 2,657,235 Deficit $ 2,480,105 $ 2,567,198 $ 2,735,285 Experience adjustments on plan assets $ 12,081 $ 18,952 $ 16,202

The Bank expects to make a contribution of $247,033 and $255,056, respectively to the defined benefit plans during the annual period beginning after 2013 and 2012.

c. Preferential interest on employees’ deposits

The Bank offers preferential interest on employees’ deposits to both current and retired employees.

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The principal assumptions used for the purposes of the actuarial valuations were as follows:

Valuation at

December 31,

2013 December 31,

2012 January 1,

2012 Discount rate 4.00% 4.00% 4.00% Expected interest rate on preferential interest on

employees’ deposits Manager 7.38% 13.00% 13.00% Staff 13.00% 13.00% 13.00%

Normal deposit interest rate 1.380% 1.37% 1.15% Return on deposits 2.00% 2.00% 2.00% Excess preferential interest

Manager 4.00% 9.63% 9.85% Staff 9.62% 9.63% 9.85%

The probability of preferential interest on employees’ deposits is canceled within ten years 50.00% 50.00% 50.00%

The gains (losses) of preferential interest on employee’s deposits are as follows:

Year Ended December 31 2013 2012 Interest cost $ 7,546 $ 6,452 Past service cost 45,259 21,485 $ 52,805 $ 27,937

For the year ended 2013 and 2012, the Bank has recognized actuarial gains $1,199 and loss $16,307 in other comprehensive income, respectively. As the end of December 31, 2013 and 2012, the accumulated amounts of actuarial loss of $15,108 and $16,307 were recognized in other comprehensive income. The amount included in consolidated balance sheets arising from the Bank’s obligation in respect of its defined benefit plans were as follows:

December 31,

2013 December 31,

2012 January 1,

2012 Present value of defined benefit obligation $ 230,214 $ 198,567 $ 170,548 Past service costs not yet recognized - - - The provision of defined benefit plans $ 230,214 $ 198,567 $ 170,548

Movements in the present value of the obligation the preferential interest on employees’ deposits:

Year Ended December 31 2013 2012 Opening obligation of preferential interest on employees $ 198,567 $ 170,548 Effect on policy change 45,259 21,486 Interest cost 7,546 6,452 Actuarial losses (gains) (1,445) 19,647 Benefit paid (19,713) (19,566) Closing obligation of preferential interest on employees $ 230,214 $ 198,567

The Bank chose to disclose the history of experience adjustments at the amounts determined for each accounting period prospectively from the date of transition to IFRSs: (Please refer to Note 52)

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Financial Reports

December 31,

2013 December 31,

2012 January 1,

2012 Opening obligation $ 230,214 $ 198,567 $ 170,548 Deficits $ 230,214 $ 198,567 $ 170,548 Experiences gains (loss) on the obligation of

preferential interest on employees’ deposits $ (4,926) $ (8,856) $ - Change of actuarial hypothesis on the obligation of

preferential interest on employees’ deposits $ 6,371 $ (10,791) $ - 27. OTHER LIABILITIES

December 31,

2013 December 31,

2012 January 1,

2012 Advance receipt $ 1,100,532 $ 434,577 $ 303,262 Temporary receipt and suspense accounts 1,016,900 989,116 1,361,900 Guarantee deposits received 289,116 269,705 226,965 Deferred revenue 143,120 153,020 153,389 Others 62,533 23,898 27,541 $ 2,612,201 $ 1,870,316 $ 2,073,057

28. INCOME TAX

Under Article 49 of the Financial Holding Company Act and related directives issued by the Ministry of Finance, a financial holding company and its domestic subsidiaries that held over 90% of shares issued by the financial holding company for 12 months within the same tax year may choose to adopt the linked-tax system for income tax filings. Thus, SPH adopted the linked-tax system for income tax and unappropriated earnings tax filings with its qualified subsidiaries since 2003. a. Income tax recognized in profit or loss

The major components of tax expense were as follows:

Year Ended December 31 2013 2012 Current tax

In respect of the current period $ 1,353,491 $ 611,287 In respect of prior periods (69,759) (76,929)

1,283,732 534,358 Deferred tax

Recovery of temporary difference 112,773 1,040,007 Income tax expenses recognized through profit or loss $ 1,396,505 $ 1,574,365

A reconciliation of accounting profit and current income tax expenses is as follows:

Year Ended December 31 2013 2012 Income before income tax $ 10,999,414 $ 9,922,431 Income tax expense at the 17% statutory rate $ 1,869,900 $ 1,686,813 Tax effect of adjusting items:

Permanent differences (531,622) (389,503) Tax-exempt income (42,701) (11,211) Additional income tax under the Alternative Minimum Tax Act 21,692 - Temporary differences 85,517 162,730 Different income tax rate effects of subsidiaries operating in other area 63,478 202,465 Adjustments for prior years’ tax (69,759) (76,929)

Income tax expense recognized in profit or loss $ 1,396,505 $ 1,574,365

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As the status of 2014 appropriations of earnings is uncertain, the potential income tax consequences of 2013 unappropriated earnings are not reliably determinable.

b. Income tax recognized in other comprehensive income

Year Ended December 31 2013 2012 Deferred tax Recognized in other comprehensive income

Translation of foreign operations $ 238 $ (892) Fair value remeasurement of available-for-sale financial assets 94,136 13,448 Fair value remeasurement of hedging instruments entered into for cash

flow hedges (3,194) (4,868) Actuarial gains and losses on defined benefit plan 8,805 2,035

Income tax recognized in other comprehensive income $ 99,985 $ 9,723

c. Current tax assets and liabilities

December 31,

2013 December 31,

2012 January 1,

2012 Current tax assets

Receivables from adopting the linked-tax system $ 1,256,073 $ 1,155,349 $ 1,167,569 Income tax receivable of subsidiaries 18,972 71,941 84,710 Others 15,213 13,178 10,001

$ 1,290,258 $ 1,240,468 $ 1,262,280 Current tax liabilities

Payables form adopting the linked-tax system $ 700,560 $ 248,469 $ - Income tax payable of subsidiaries 130,812 111,738 211,311 Others 24,175 22,990 17,989

$ 855,547 $ 383,197 $ 229,300

d. Deferred tax assets and liabilities

December 31,

2013 December 31,

2012 January 1,

2012 Deferred tax assets Loss carryforwards $ 912,798 $ 1,078,422 $ 1,431,752 Loss carryforwards of foreign subsidiaries 195,312 421,555 - Provisions 258,741 425,939 962,368 Defined benefit plan 382,758 387,417 406,616 Equity investment 211,265 245,067 376,842 Others 609,318 254,394 763,235 $ 2,570,192 $ 2,812,794 $ 3,940,813 Deferred tax liabilities Land value increment tax $ 591,993 $ 591,993 $ 591,993 Unrealized commission revenue 122,960 135,479 143,075 Equity investment 93,369 73,325 62,509 Franchise tax 34,415 40,816 82,564 Fair value remeasurement of available-for-sale

financial assets - 61,944 75,391 Others 54,703 98,022 87,816 $ 897,440 $ 1,001,579 $ 1,043,348

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Deferred tax expenses recognized in profit or loss is shown as follows:

Year Ended December 31 2013 2012 Loss carryforwards $ 238,055 $ (75,215) Equity investment 53,845 142,591 Defined benefit plan 13,464 26,461 Provisions 178,965 508,318 Others (371,556) 437,852 $ 112,773 $ 1,040,007

The unused loss carryforwards as of December 31, 2013 were as follows:

Amount The Last Year of Claiming Deductible Loss $ 3,847,321 2018 1,522,078 2019 $ 5,369,399

e. The related information under the Integrated Income Tax System was as follows:

December 31,

2013 December 31,

2012 January 1,

2012 Balances of the imputation tax credit account (ICA)

The Bank $ 61,893 $ 1,551,693 $ 1,924,606 SinoPac Life Insurance Agent Co., Ltd. 96,903 89,199 84,996 SinoPac Property Insurance Agent Co., Ltd. 3,419 3,029 2,863

The Excepted Creditable Tax

Ration Generated in 2013

The Actual Creditable Tax

Ratio Generated in 2012

The Actual Creditable Tax

Ratio Generated in 2011

The Bank 0.64% 20.48% 20.48% SinoPac Life Insurance Agent Co., Ltd. 20.48% 22.22% 20.48% SinoPac Property Insurance Agent Co., Ltd. 20.48% 20.48% 20.48%

Under the Income Tax Law, for distribution of earnings generated after January 1, 1998, the imputation credits allocated to ROC resident shareholders of the Bank was calculated based on the creditable ratio as of the date of dividend distribution. The actual imputation credits allocated to shareholders of the Bank was based on the balance of the Imputation Credit Accounts as of the date of dividend distribution. Therefore, the expected creditable ratio for the 2013 earnings may differ from the actual creditable ratio to be used in allocating imputation credits to the shareholders. According to legal interpretation No. 10204562810 announced by the Taxation Administration of the Ministry of Finance, when calculating imputation credits in the year of first-time adoption of IFRSs, the cumulative retained earnings include the net increase or net decrease in retained earnings arising from first-time adoption of IFRSs As of December 31, 2013, the unappropriated earnings generated before January 1, 1997 was $8,758, which was recorded as capital surplus owing to merger of IBT.

e. The Bank’s tax returns through 2007 had been assessed by the tax authorities. However, the tax authorities had a different

opinion about recognizing the interest expenses as the deduction of the income from trading of domestic securities which is untaxed temporarily. Thus, the tax authorities got rid of the interest expenses deduction and increased the amount of taxed income about $54,865. The Bank had proposed administrative remedy to above event.

The tax returns of SinoPac Life Insurance Agent Co., Ltd. And SinoPac Property Insurance Agent Co., Ltd. through 2011 had been assessed by the tax authorities.

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29. EQUITY Ordinary Shares The Bank's authorized capital is $80,000,000. And the Bank issued 8,000,000 thousand ordinary shares with each par value of NT$10. The board of directors of the Bank resolved to raise capital in private placement on March 23, 2012, amounting to $1.74 billion, with 128,755 thousand shares, par value at $10, and issue price at $13.5. And the Bank set June 29, 2012 as the effective date of capitalization. The board of directors of the Bank resolved to raise capital on March 13, 2013, capital increased to $59,616,160, with 575,414 thousand shares, par value at $10. The appropriations of earnings had been resolved by the board of directors which execute the rights and functions of the stockholder’s meeting on May 24, 2013. The above transaction was approved by authorities, and the subscription base date was determined at July 31, 2013. Capital Surplus The capital surplus from the issuance of new shares at a premium (additional paid-in capital from issuance of common shares, conversion of bonds and treasury stock transactions) and endowments received by the Bank may be used to offset a deficit; in addition, when the Company has no deficit, such capital surplus may be distributed as cash dividends or transferred to capital (limited to a certain percentage of the Company’s paid-in capital every year). The capital surplus from long-term equity investments under equity method may not be used for any purpose. Special Reserve Under Rule No. 1010012865 issued by the FSC on April 6, 2012 and the directive titled “Questions and Answers for Special Reserves Appropriated Following Adoption of IFRSs”, on the first-time adoption of IFRSs, a company should appropriate to a special reserve of an amount that was the same as these of unrealized revaluation increment and cumulative translation differences (gains) transferred to retained earnings as a result of the Company’s use of exemptions under IFRS 1. However, at the date of transitions to IFRSs, if the increase in retained earnings that resulted from all IFRSs adjustments is not enough for this appropriation, only the increase in retained earnings that resulted from all IFRSs adjustments will be appropriated to special reserve. The special reserve appropriated as above may be reversed to retained earnings in proportion to the usage, disposal or reclassification of the related assets and thereafter distributed. The special reserve appropriated on the first-time adoption of IFRSs may be used to offset deficits in subsequent years. No appropriation of earnings shall be made until any shortage of the aforementioned special reserve is appropriated in subsequent years if the Company has earnings and the original need to appropriate a special reserve is not limited. The Bank did not appropriate a special reserve because the Bank’s retained earnings decreased through the first adoption of IFRSs. Other Equity Items


Translating Foreign

Operations


Assets Cash Flow Hedge Total Balance, January 1, 2013 $ (211,616) $ 361,836 $ (18,738) $ 131,482 Available-for-sale financial assets

Current valuation - (358,653) - (358,653) Realized gain or loss on revaluation - (8,732) - (8,732) Income tax - 94,136 - 94,136


Foreign currency exchange difference Current exchange difference (1,397) - - (1,397) Income tax 238 - - 238

Balance, December 31, 2013 $ (212,775) $ 88,587 $ (3,145) $ (127,333)

Financial Reports

188

Financial Reports


Translating Foreign

Operations


Assets Cash Flow Hedge Total Balance, January 1, 2012 $ (215,972) $ 153,096 $ (42,506) $ (105,382) Available-for-sale financial assets

Current valuation - 226,173 - 226,173 Realized gain or loss on revaluation - (30,881) - (30,881) Income tax - 13,448 - 13,448


Foreign currency exchange difference Current exchange difference 5,248 - - 5,248 Income tax (892) - - (892)

Balance, December 31, 2012 $ (211,616) $ 361,836 $ (18,738) $ 131,482 Earnings Distribution and Dividend Policy

The Bank’s Articles of Incorporation provide that annual net income should be appropriated after it has:

a. Deducted any deficit of prior years; b. Paid all outstanding taxes; c. Set aside 30% of remaining earnings as legal reserve; d. Set aside any special reserve or retained earnings allocated at its option; e Allocated stockholders’ dividends; f. Allocated at least 2.5% of the remaining earnings which allocated stockholders’ dividends as employee bonus.

The Banking Act provides that, before the balance of the reserve reaches the aggregate par value of the outstanding capital stock, annual cash dividends, remuneration to directors and supervisors, and bonus to employees should not exceed 15% of the aggregate par value of the outstanding capital stock of the Bank. When legal reserve meets the total capital reserve or well financial position and setting aside legal reserve under Company Act is not limited to the restriction. To comply with the Bank’s globalization strategy, strengthen its market position, integrate its diversified business operation and be a major local bank, the Bank has adopted the “Balanced Dividend Policy”. Under this policy, dividends available for distribution are determined by referring to its capital adequacy ratio (CAR). Cash dividends may be declared if the Bank’s CAR is above 10% and stock dividends may be declared if the CAR is equal to or less than 10%. However, the Bank may make discretionary cash distribution even if the CAR is below 10%, if approved at the stockholders’ meeting, for the purpose of maintaining the cash dividends at a certain level in any given year. Cash dividends and cash bonus are paid after the approval of the stockholders, while the distribution of stock dividends requires the additional approval of the authorities. The Bank accrued bonus to employees of $168,967 and $76,526 for the years ended December 31, 2013 and 2012, respectively. The Bank accrued bonus to remuneration to directors of $35,000 and $28,000 for the years ended December 31, 2013 and 2012, respectively. The bonus to employees and the remuneration to directors and supervisors recognized were estimated on the basis of the Bank’s Articles of Incorporation and past experience. Material differences between such estimated amounts and the amounts proposed by the Board of Directors in the following year are retroactively adjusted for in the current year. If the actual amounts subsequently resolved by the stockholders differ from the proposed amounts, the differences are recorded in the year of stockholders’ resolution as a change in accounting estimate.

www.banksinopac.com.tw

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Under the Company Act, legal reserve shall be appropriated until it has reached the Company’s paid-in capital. This reserve may be used to offset a deficit. Under the revised Company Act issued on January 4, 2012, when the legal reserve has exceeded 25% of the Bank’s paid-in capital, the excess may be transferred to capital or distributed in cash. In addition, the Banking Act provides that, before the balance of the reserve reaches the aggregate par value of the outstanding capital stock, annual cash dividends, remuneration to directors and supervisors, and bonus to employees should not exceed 15% of the aggregate par value of the outstanding capital stock of the Bank. Under Article 50-2 of the Banking Act revised on December 30, 2008, when legal reserve meet the total capital reserve or well financial position and setting aside legal reserve under Company Act is not limited to the restriction of setting aside 30% of remaining earnings as legal reserve, and the appropriation of the remainder and retained earnings from previous year was limited to 15% of total capital reserve when legal reserve has not meet the total capital reserve. The requirements for financial positions of banks to be established in accordance with this Act revised on April 30, 2012 shall be as prescribed by the FSC, Executive Yuan, R.O.C. An amount equal to the net debit balance of shareholders’ other equity items shall be transferred from unappropriated earnings to a special reserve before any appropriation of earnings generated. Any special reserve appropriated may be reversed to the extent of the decrease in the net debit balance. Under the Financial Holding Company Act, the board of directors is empowered to execute the authority of the stockholders’ meeting, which is under no jurisdiction in the related regulations in the Company Act. On May 24, 2013 and June 22, 2012, separately, the board of directors which execute the rights and functions of the stockholders’ meeting resolved the appropriation of earnings for 2012 and 2011 as follows: Appropriation of Earnings Dividends Per Share (NT$)

2012 2011 2012 2011 Legal reserve $ 2,466,059 $ 739,095

Stock dividends 2,693,101 - $0.5 $-

Bonus to stockholders - stocks 3,061,037 - 0.56831083 - Cash dividends - 1,204,556 - 0.22911420

Bonus to stockholders - cash - 520,000 - 0.09890732

The board of directors which execute the right and functions of the stockholders’ meeting also resolved the appropriation of bonus to employees and remuneration of directors and supervisors in 2012 and 2011 as follows: For the Year Ended 2012 For the Year Ended 2011

Cash Dividends Stock Dividends Cash Dividends Stock Dividends Bonus to employees $ 76,526 $ - $ 13,000 $ -

Remuneration of directors and supervisors 28,000 - 10,400 -

There was no difference between the amounts of the bonus to employees and the remuneration to directors and supervisors approved in the shareholders’ meetings in 2013 and 2012 and the amounts recognized in the financial statements for the years ended December 31, 2012 and 2011. The appropriations of earnings, bonus to employees and remuneration of directors and supervisors for 2012 were proposed according to the Bank’s financial statements for the year ended December 31, 2012, which were prepared in accordance with the unamended Criteria Governing the Preparation of Financial Reports by Public Bank, Regulations Governing the Preparation of Financial Reports by Securities Firms and GAAP, and by reference to the balance sheet for the year ended December 31, 2012, which was prepared in accordance with the IFRSs. In accordance with FSC guideline No. 09900146911, cash dividends and bonus to stockholders for 2009 amounting to $1,435,025 shall not be remitted to the parent company until the land transferred to SPL from the Bank is disposed and the gain is realized.

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Financial Reports

The appropriations of earnings for 2013 will be proposed by the Bank’s board of directors on February 27, 2014. The appropriations and dividends per share were as follows:

Appropriation of

Earnings Dividends Per Share (NT$)

Legal reserve $ 2,880,873 Special reserve 26,264 Cash dividends - $ - Share dividends - - The appropriations of earnings, the bonus to employees, and the remuneration to directors and supervisors for 2013 are subject to the resolution of the shareholders’ meeting in 2014. The information on the proposed and approved of the bonus to employees and the remuneration to directors and supervisor is available on the Market Observation Post System (M.O.P.S.) website of the Taiwan Stock Exchange.

30. INTEREST REVENUE, NET

Year Ended December 31 2013 2012 Interest income

Loans $ 18,384,643 $ 17,971,923 Held-to-maturity financial assets 1,855,954 2,213,673 Account receivables - forfaiting 1,245,389 339,406 Available-for-sale financial assets 950,836 880,725 Others 2,556,845 2,257,354 24,993,667 23,663,081

Interest expense Deposits 8,534,678 7,973,575 Bank debentures 892,323 827,708 Others 693,064 599,430

10,120,065 9,400,713 $ 14,873,602 $ 14,262,368

31. COMMISSION AND FEE REVENUE, NET

Year Ended December 31 2013 2012 Commissions and fees revenue

Insurance service $ 1,741,222 $ 1,539,809 Mutual fund and structured note service 1,672,956 1,097,055 Credit card service 1,162,128 999,622 Loan service 684,436 566,301 Foreign exchange and import/export services 322,138 319,950 Trust and custody service 179,298 257,271 Others 541,251 547,356

6,303,429 5,327,364 Commissions and fees expense

Credit card service 412,015 340,102 Automatic equipment commission 131,795 128,360 Financial trading service 87,211 67,866 Others 150,896 138,612

781,917 674,940 $ 5,521,512 $ 4,652,424

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32. GAINS ON FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS

Year Ended December 31 2013 2012 Realized gain or loss on financial assets at fair value through profit or loss

Convertible bonds $ 96,628 $ 14,944 Listed stock 55,391 (879) Corporate bonds 54,152 64,520 Auction-rate securities 29,488 31,298 Government bonds 24,761 67,384 Beneficiary certificates 12,691 (7,128) Bank debentures 12,058 18,468 Negotiable certificates of deposit 90 78,528 Others 1,059 1,528

Derivative financial instruments Currency swap and option contracts 4,487,448 1,800,734 Future contracts 2,097 35,911 Cross-currency swap contracts 802 32,712 Interest rate swap contracts (38,662) 16,408 Forward contracts (332,220) 336,370 Others 8,711 2,115 4,414,494 2,492,913

Unrealized gain or loss on financial assets at fair value through profit or loss Government bonds 28,104 (70) Listed stock 11,305 5,626 Convertible bonds 2,283 50,816 Bank debentures 578 14,849 Corporate bonds 418 2,603 Negotiable certificates of deposit - (5,311) Beneficiary certificates (10,225) 5,345 Others 423 3,037

Derivative financial instruments Forward contracts 130,613 (70,694) Interest rate swap contracts 96,660 (41,438) Cross-currency swap contracts (12,565) (19,082) Currency swap and option contracts (537,526) 272,501 Others 8,188 7,438 (281,744) 225,620 $ 4,132,750 $ 2,718,533

a. Realized gain or loss on financial assets and liabilities at fair value through profit or loss including disposal gain or loss

were $4,116,320 and $2,207,449 for the years ended December 31, 2013 and 2012, respectively. Related interest revenue and dividend income were $298,174 and $285,464 for the years ended December 31, 2013 and 2012, respectively.

b. When the Bank and its subsidiaries designated financial instruments measure at fair value through profit or loss, fair value

change in derivate instruments is also listed in “financial assets and liabilities at fair value through profit or loss”. 33. REALIZED GAIN OR LOSS ON AVAILABLE-FOR-SALE FINANCIAL ASSETS

Year Ended December 31 2013 2012 Gain from disposal of corporate bonds $ 7,854 $ 438 Gain from disposal of stocks 3,480 1,744 Dividends income 456 456 Gain (loss) from disposal of GSE (government-sponsored enterprise) debentures (1,909) 24,348 Other (693) 4,351 $ 9,188 $ 31,337

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34. GAINS ON REVERSAL (LOSSES) OF IMPAIRMENT

Year Ended December 31 2013 2012 Impairment loss on available-for-sale financial assets $ (919) $ (13,046) Impairment loss on held-to-maturity financial assets (10,198) - Impairment loss on other financial assets (64,759) (267,579) Reversal gain (impairment loss) on property and equipment 1,691 (282) Reversal gain (impairment loss) on other assets 2,968 (6,427) $ (71,217) $ (287,334)

35. NET REVENUES OTHER THAN INTEREST

Year Ended December 31 2013 2012 Gain (loss) from disposal of assets $ 201,726 $ (5,552) Rental income 118,809 118,939 Net gains on unquoted equity investments 94,960 83,891 Claim settlement income 49,276 24,094 Lawsuit compensation income 46,453 - Life insurance cash surrender revenue 39,987 41,361 Overdue accounts income 2,311 9,848 Outsource overdue expense 1,017 (8,985) Gain (loss) from disposal of nonperforming loan 711 (76,078) Net gain (loss) on sale of collaterals assumed (4,989) 14,244 Provision of complaint for money management (15,810) (3,317) Others (33,402) (3,003) $ 501,049 $ 195,442

36. EMPLOYEE BENEFITS EXPENSE

Year Ended December 31 2013 2012 Salaries and wages $ 4,338,337 $ 4,288,893 Bonus 2,309,694 2,054,042 Labor insurance and health insurance 417,152 395,106 Pension costs 366,432 365,829 Others 617,245 594,822 $ 8,048,860 $ 7,698,692

37. DEPRECIATION AND AMORTIZATION EXPENSE

Year Ended December 31 2013 2012 Depreciation expense

Buildings $ 156,799 $ 157,207 Computers and machines 152,228 133,357 Transportation equipment 666 681 Other equipment 168,983 183,642

478,676 474,887 Amortization expense 175,309 88,779 $ 653,985 $ 563,666

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38. OTHER GENERAL AND ADMINISTRATIVE EXPENSE

Year Ended December 31 2013 2012 Professional advisory $ 703,372 $ 742,970 Taxation and charge 688,262 650,832 Rent 659,196 624,348 Marketing 625,718 587,072 Donation 428,717 101,220 Location fee 397,441 392,836 Automatic equipment 293,210 317,276 Insurance 250,752 243,885 Communication expense 249,849 246,883 Others 428,997 403,437 $ 4,725,514 $ 4,310,759

39. EARNINGS PER SHARE

Basic earnings per share is calculated by gain or loss on the Bank’s stockholders divide by current common stock weight-average shares outstanding. The numerators and denominators used in computing earnings per shares (EPS) are summarized as follows: Denominator Numerator (Amounts) (Shares in EPS (NT$) Pretax After-tax Thousands) Pretax After-tax Year ended December 31, 2013 Basic EPS $ 10,999,414 $ 9,602,909 5,961,616 $ 1.85 $ 1.61 Year ended December 31, 2012 Basic EPS $ 9,922,431 $ 8,348,066 5,891,529 $ 1.68 $ 1.42 The Bank’s recordation date of stock dividends due to appropriation of 2012 earnings was on July 31, 2013. The weighted average number of shares outstanding for EPS calculation has been retroactively adjusted for the issuance of stock dividends. This adjustment caused the basic after income tax EPS for the year ended December 31, 2012 to decrease from NT$1.57 to NT$1.42.

40. RELATED-PARTY TRANSACTIONS

In addition to the disclosure in other footnotes, relationship with the Bank and its subsidiaries and significant transactions, between the Bank and related party were summarized as follows: a. Related parties

Name Relationship with the Bank SinoPac Financial Holdings Company Limited (SPH) Parent company of the Bank SinoPac Securities Corporation (SinoPac Securities) Subsidiary of SPH SinoPac Call Center Co., Ltd. (SinoPac Call Center) Subsidiary of SPH

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Financial Reports

Name Relationship with the Bank SinoPac Venture Capital Co., Ltd. (SinoPac Venture Capital) Subsidiary of SPH SinoPac Leasing Corporation (SPL) Subsidiary of SPH SinoPac Securities Investment Trust Co., Ltd. (SinoPac

Securities Investment Trust) Subsidiary of SPH

SinoPac Futures Corporation (SinoPac Futures) Subsidiary of SinoPac Securities SinoPac Capital (Asia) Ltd. Affiliate of SinoPac Securities SinoPac Securities (Asia) Ltd. Affiliate of SinoPac Securities Intellisys Corporation Subsidiary of SinoPac Venture Capital (liquidated in

April 2013) Grand Capital International Limited (Grand Capital) Subsidiary of SPL Yung An Leasing Corporation (Yung An Leasing) Affiliate of the SPH’s president Taiwan Genome Sciences, Inc. (Taiwan Genome Sciences) Affiliate of the SPH’s president E Ink Holdings Co., Ltd. (E Ink Holdings) Affiliate of the SPH’s president Foundation of Fire Fighting Development Affiliate of the SPH’s president Liver Disease Prevention & Treatment Research Foundation Affiliate of the SPH’s president Hsin-Yi Foundation Affiliate of the SPH’s president YFY International BVI Corp. Affiliate of the SPH’s president Taipei Foreign Exchange Inc. (Taipei Foreign Exchange) Affiliate of the SinoPac Property Insurance Agent’s

president Taiwan Futures Exchange (TAIFEX) Affiliate of the president of SinoPac Securities Taiwan Depository & Clearing Corporation (TDCC) Affiliate of the president of SinoPac Securities (before

July 2013) Financial Information Services Co., Ltd. (Financial Information) Affiliate of the president of the SPL SiPix Technology, Inc. (SiPix) Affiliate of second-degree kin of the SPH’s president LinkCom Manufacturing Co., Ltd. (LinkCom) Affiliate of the spouse of the president of SinoPac

Securities Investment Trust (before August 2013) MiCareo Taiwan Co., Ltd. (MiCareo Taiwan) Affiliate of the SinoPac Venture Capital’s general

manager BoardTek Electronics Corp. (BoardTek Electronics) Affiliate of the SPH’s director Ho, Shou Chuan President of SPH Others The Bank’s directors, supervisors, managers and their

relatives, department chiefs, the investees accounted for by the equity method and their subsidiaries, and the investees of SPH’s other subsidiaries, etc.

b. Significant transactions between the Bank and the related parties

1) Derivative financial instruments December 31, 2013


Contract Period


Currency swap contracts


$ (648) Financial liabilities at fair value through profit or loss

$ 648

E Ink Holdings 524,178 2013.11.25- 2014.3.6

(7,901) Financial liabilities at fair value through profit or loss

7,901


2018.4.26


64,008



64,044

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December 31, 2013


Contract Period


Asset exchange contracts


$ (86) Financial assets at fair value through profit or loss

$ 143

Forward contracts YFY International

BVI Corp. 116,367 2013.12.27-



46

December 31, 2012


Contract Period


Currency swap contracts SinoPac Securities $ 874,098 2012.12.5-

2013.1.24 $ 2,630 Financial assets at fair


$ 2,630




113,749



128,862

Asset exchange contract SinoPac Securities 40,000 2012.7.31-



229

January 1, 2012 Contract

(Notional) Contract Amount Period Account Balance

Currency swap contracts

SinoPac Capital (Asia) Ltd. $ 323,203 2011.12.1- 2012.2.1


$ 47



185



through profit or loss 191,622



242,651

Forward contracts E Ink Holdings 212,030 2011.11.23-


through profit or loss 71

2) Securities purchased under agreement to resell

2013


December 31, 2013 Face Amount Carrying Amount Interest Revenue SinoPac Capital (Asia) Ltd. $ - $ - $ 198 SinoPac Securities (Asia) Ltd. - - 138

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Financial Reports

2012


December 31, 2012 Face Amount Carrying Amount Interest Revenue SinoPac Securities (Asia) Ltd. $ 203,956 $ 183,560 $ 454 SinoPac Capital (Asia) Ltd. 58,273 52,446 7,386

2012 Balance, January 1 Face Amount Carrying Amount SinoPac Capital (Asia) Ltd. $ 1,455,889 $ 1,279,549

3) Receivables and payables

December 31,

2013 December 31,

2012 January 1,

2012 Receivables $ 6,578 $ 27,646 $ 33,129 Payables $ 17,485 $ 15,100 $ 19,499 Cash dividends payable $ 1,435,025 $ 1,435,025 $ 1,435,025

4) Current income tax assets and liabilities

December 31,

2013 December 31,

2012 January 1,

2012 Receivables from adopting the linked-tax system $ 1,256,073 $ 1,155,349 $ 1,167,569 Payables from adopting the linked-tax system $ 700,560 $ 248,469 $ -

5) Loans


Ending

Balance


Fee Rates (%)


Category

December 31, 2013

Account Volume or Name of

Related Party

Highest Balance

Ending Balance Normal Overdue Type of

Collaterals

Is the Transaction

at Arm’s Length

Commercial Term

Employees’ consumer loans

53 $ 20,359 $ 11,680 V - None Yes


284 1,977,273 1,681,225 V - Real estate Yes

Others: SPL 2,522,000 1,654,000 V - Real estate and

movable Yes

Grand Capital 2,315,180 973,970 V - Movable Yes SiPix 499,996 - V - None Yes Yung An Leasing 198,800 193,800 V - Real estate Yes Liver Disease

Prevention & Treatment Research Foundation

100,000 100,000 V - Real estate

Taiwan Genome Sciences Inc.


BoardTek Electronics

50,000 - V - Real estate Yes

Others 8,174 1,659 V - Movable and securities

Yes


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Ending

Balance


Fee Rates (%)


Category

December 31, 2012


Related Party

Highest Balance


Collaterals

Is the Transaction

at Arm’s Length

Commercial Term


53 $ 20,079 $ 13,666 V - None Yes


286 1,899,917 1,661,839 V - Real estate Yes

Others Grand Capital 2,682,464 2,304,355 V - Movable Yes SPL 2,334,000 2,222,000 V - Real estate and

movable Yes

SinoPac Securities 556,000 - V - Real estate Yes Yung An Leasing 198,800 198,800 V - Real estate Yes BoardTek


Taiwan Genome Sciences


LinkCom 22,080 21,384 V - Real estate Yes Others 12,976 4,608 V - Real estate,

movable, certificates of deposit and securities

Yes


Category

January 1, 2012


Related Party

Highest Balance


Collaterals

Is the Transaction

at Arm’s Length

Commercial Term


38 $ 11,961 $ 11,961 V - None Yes


238 1,530,137 1,530,137 V - Real estate Yes

Others Grand Capital 2,682,460 2,682,460 V - Movable Yes

SPL 1,934,000 1,934,000 V - Real estate and

movable Yes

Yung An Leasing 198,800 198,800 V - Real estate Yes

Taiwan Genome

Sciences 85,000 85,000 V - Real estate Yes

BoardTek


Others 9,043 9,043 V - Real estate, movable, certificates of deposit and securities

Yes


Note: Debtor of related party loans are all normal credit ranking. The Bank estimated the provision of doubtful debt

periodically in accordance with the guidelines issued by the authority and IFRS.

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6) Guarantees

December 31, 2013


Current Year


MiCareo Taiwan $ 11,980 $ 11,980 $ - 1.25% Certificates of deposit SinoPac Securities 2,000 2,000 - 0.3% Certificates of deposit

and real estate

December 31, 2012


Current Year



Others 30 - - 1.13%-1.32% None Note

January 1, 2012


Current Year



Others 30 30 - 1.33%-1.49% None Note

Note: Employees’ consumer loans.

7) Other financial assets Ending Balance December 31, 2013 December 31, 2012 January 1, 2012 Unquoted equity instruments

Financial Information $ 91,000 $ 91,000 $ 91,000 TAIFEX 21,490 21,490 21,490 Taipei Foreign Exchange 6,800 - - TDCC - 4,639 4,639


In January and September 2012, the Bank purchased properties with book value of $1,583 and $183 from SinoPac Call Center.

9) Intangible assets

The Bank’s subsidiary purchased computer software with value of $2,900 from Intellisys Corporation on March 14, 2012.

10) Other assets

Ending Balance December 31, 2013 December 31, 2012 January 1, 2012 Guarantee deposits

SinoPac Futures $ 29,903 $ 30,862 $ 32,140 SPL 7,984 7,984 10,344

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11) Securities sold under agreement to repurchase 2013



2012



2012

Balance, January 1 Face Amount Carrying Amount

Ho, Shou Chuan $ 539,000 $ 540,767

12) Deposits

2013 Year Ended December 31, 2013 Ending Balance Interest Rates (%) Interest Expense $ 16,866,684 0-13 $ 141,758

Ending Balance Interest Rate (%) SinoPac Securities $ 4,768,170 0-1.35 E Ink Holdings 893,651 0.01-1.35 Foundations of Fire Fighting Development 755,844 0-1.395 SinoPac Securities Investment Trust 715,704 0-1.4 Hsin-Yi Foundation 547,613 0.08-1.38 Others 9,185,702 0-13 $ 16,866,684

2012 Year Ended December 31, 2012 Ending Balance Interest Rates (%) Interest Expense $ 18,906,014 0-13 $ 201,275

Ending Balance Interest Rate (%) SinoPac Securities $ 3,211,551 0-1.35 E Ink Holdings 1,991,703 0.01-0.17 SinoPac Venture Capital 1,074,684 0.02-0.65 SinoPac Futures 945,424 0.17-1.35 Foundations of Fire Fighting Development 736,195 0.3-1.395 Others 10,946,457 0-13 $ 18,906,014

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January 1, 2012 Ending Balance

SinoPac Securities $ 3,964,629 E Ink Holdings 1,468,988 SinoPac Futures 1,199,473 SinoPac Venture Capital 919,151 SinoPac Securities (Asia) Ltd. 804,753 Others 10,271,271 $ 18,628,265

13) Other liabilities

Ending Balance

December 31,

2013 December 31,

2012 January 1,

2012 Guarantee deposits received

SinoPac Securities $ 2,876 $ 2,870 $ 2,868 SinoPac Securities Investment Trust 2,274 - - SPL 1,474 1,474 1,474 SinoPac Call Center 581 594 594 Intellisys Corporation - - 76

Advance receipts SinoPac Securities 4 1 1 SPL 1 - -

14) Revenues and expenses

Year Ended December 31 2013 2012

Commissions and fee revenues $ 38,010 $ 42,042 Commissions and fee expenses 7,830 5,316 Gains from unquoted equity instruments 32,761 33,578 Other revenues 4,544 4,566 Other operating expense (Note) 264,852 259,535

Note: Other operating expenses are mainly for professional advisory charges and marketing expense.

The Bank had entered into professional advisory contracts with SinoPac Call Center. The professional advisory charges and other operating expenses paid in years 2013 and 2012 were $161,455 and $166,640, respectively.

15) Lease

a) The Bank and its subsidiaries as a lessee

Other Operating Expense Year Ended December 31 Lease Payment Lessor 2013 2012 Term Frequency SPL $ 124,707 $ 126,029 February 2020 Rentals paid monthly

b) The Bank as a lessor Rental Income Year Ended December 31 Lease Receive Lessee 2013 2012 Term Frequency SinoPac

Securities $ 24,249 $ 23,939 December 2017 Rentals received monthly

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Rental Income Year Ended December 31 Lease Receive Lessee 2013 2012 Term Frequency SinoPac

Securities Investment Trust

$ 13,886 $ 13,872 September 2017 Rentals received monthly

SPL 5,964 5,964 July 2016 Rentals received monthly SinoPac Call

Center 3,350 3,373 September 2015 Rentals received monthly

Intellisys Corporation

- 228 June 2012 Rentals received monthly

Transactions between the Bank and the related parties are at arm’s length commercial terms except for the preferential interest rates offered to employees for savings and loans up to prescribed limits.

Under the Banking Law, except for government and consumer loans, credit extended by the Bank to any related party should be fully secured, and the credit terms for related parties should be similar to those for unrelated parties. For transactions between related parties with FENB and its subsidiaries, SinoPac Capital Limited and its subsidiaries, SPLIA, and SPPIA the terms are similar to those transacted with unrelated parties.

c. Compensation of directors, supervisors and management personnel

Year Ended December 31 2013 2012 Other short-term employee benefits $ 205,302 $ 157,689 Retirement benefit 2,762 2,944 $ 208,064 $ 160,633

The management personnel are composed of general manager, vice general manager and other employee whose job grade is higher than the former.

41. PLEDGED OR MORTGAGED ASSETS

In addition to those disclosed in other Notes, pledged or restricted assets of the Bank and its subsidiaries are summarized as follows:

Restricted Assets Object December 31, 2013

December 31, 2012

January 1, 2012 Purposes

Financial assets at fair value

through profit or loss Convertible bonds $ 1,018,887 $ - $ - Note 1


Negotiable certificate of deposits - - 5,001,988 Note 2

Discounts and loans Loans 11,052,773 7,324,477 7,047,092 Note 3 Available-for-sale financial

assets Government bonds 306,395 539,353 555,699 Note 4

Held-to-maturity investments Negotiable certificate of deposits 5,149,765 5,145,683 151,450 Note 5 Held-to-maturity investments GSE bonds and municipal bonds 1,944,896 2,205,295 437,960 Note 6 Held-to-maturity investments Government bonds 484,408 187,814 97,400 Note 7 Note 1: Pledged by LA branch of the Bank. Note 2: Pledged with the Central Bank for foreign-exchange transactions. Note 3: Pledged with the Federal Reserve Bank and the Federal Home Loan Bank under the discount window program.

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Note 4: Pledged to court as collaterals for filing provisional seizure, deposits for conducting of discretionary investment business by SICE, guarantees of brokerage dealing and underwriting business, a trust reserve fund, reserve for payment of VISA international card.

Note 5: Pledged in accordance with requirements of the California Department of Financial Institutions, and with the Central

Bank for foreign-exchange transactions. Note 6: Pledged with the Federal Reserve Bank and Federal Home Loan Bank as loans, foreign exchange, and deposits

guarantees. Note 7: Guarantees of brokerage dealing and underwriting business, a trust reserve fund, guarantees of bills financial service,

reserve for payment of VISA international card, Hong Kong branch’s clearing system of real - time gross settlement. 42. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

a. In addition to those disclosed in other notes, significant unrecognized commitments of the Bank as of December 31, 2013,

December 31, 2012 and January 1, 2012 were as follows:

December 31,

2013 December 31,

2012 January 1,

2012 Trust assets $ 209,327,463 $ 202,874,160 $ 200,772,395 Securities under custody 100,504,961 97,667,783 101,043,601 Receipts under custody 49,395,283 45,099,960 46,082,192 Agent for government bonds 25,761,200 27,242,200 13,873,600 Guarantee notes payable 6,741,267 5,652,183 5,675,650 Appointment of investment 4,614,028 4,527,557 5,057,232 Agent for marketable securities under custody 2,775,500 1,654,500 2,350,000 Goods under custody 1,201,298 797,195 185,362 Travelers’ checks consigned-in 372,311 379,761 435,078 Others 225,420 275,691 -

b. Equipment purchase contract

The Bank and its subsidiaries entered into contracts to buy computer equipment and office equipment for $407,822 of which $227, 311 had been paid as of December 31, 2013

c. Commitments

The bank has signed industry-academy contract cooperation with National Chung Hsing University on July 25, 2012 for the building of food safety and agricultural material research, development and promotion. The total expenditure estimated at 255 million and shall not exceed 300 million.

d. Contingencies

The Securities and Futures Investors Protection Center (SFIPC) filed a lawsuit against the Bank and SPL’s subsidiary, Grand Capital, on the ground that Procomp Informatics Ltd. deposited US$10,000 thousand in the Bank’s Shisung Branch (formally Sungshan Branch) and placed a restriction on the use of this deposit as a condition for a short-term loan to Addie International Limited granted by SPL and for allegedly helping Yeh, Sue-Fei and Procomp Informatics Ltd. (“Procomp”) do irregular trading but, at the same time, Procomp used the restricted deposit for fictitious sale transactions. Later, when problems on Procomp’s account arose, the Bank and Grand Cathay demanded compensation, which was taken from Procomp’s account, resulting in damage to Procomp. The Bank was suspected of misleading investors by concealing the restricted status of Procomp’s deposit and window dressing Procomp’s financial statements. The SFIPC filed a lawsuit against the Bank, SPL and all other parties related to Procomp and demanded required. The Shihlin District Court rejected the SFIPC’s lawsuit against the Bank and SPL on March 11, 2008. SFIPC then filed an appeal. Compensation amount claimed now is $4,207,212. The Bank entered a plea on SFIPC’s charges, and as of December 31, 2013, this case was being tried in the Taiwan High Court.

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The SFIPC filed a lawsuit against the Bank on the ground that the Bank’s Tunpei Branch provided National Aerospace Fasteners Corporation (NAFC) with its accounts receivable factoring services. NAFC recorded this significant-amount loan transaction as an accounts receivable financing to window-dress its financial position in order to attract investments. The SFIPC filed a lawsuit against the Bank and other parties and demanded compensation approximately $543,233 and interest rate was calculated at 5% from the next date of indictment delivered to the debt clearance. The lawsuit had been declared conclusion of the debate by Taiwan Taipei District Court, and the court originally determined October 25, 2013 as the date of sentencing date. However, on the sentencing date, the court sentenced that there would be a debate on November 21, 2013. After the debate on November 21, 2013, the court declared that the lawsuit will be conducted and there will be another debate on February 27, 2014. The Bank entered a plea on this lawsuit, and this case was being tried in the Taiwan Taipei District Court as of December 31, 2013.

43. HIERARCHY AND FAIR VALUE INFORMATION OF FINANCIAL INSTRUMENTS

a. Fair value information of financial instruments

December 31, 2013 Items Carrying Amount Fair Value Financial assets Cash and cash equivalent $ 34,215,330 $ 34,215,330 Due from the Central Bank and call loans to other banks 61,147,642 61,147,642 Financial assets at fair value through profit or loss 25,969,402 25,969,402 Available-for-sale financial assets 59,755,506 59,755,506 Receivables 118,269,246 118,269,246 Discounts and loans 808,898,242 808,898,242 Held-to-maturity financial assets, net 214,417,922 214,464,359 Unquoted equity instruments 1,312,826 - Other financial assets 14,716,973 14,716,973 Other assets - guarantee deposits 596,289 596,483 Financial liabilities Deposits from the Central Bank and banks 87,589,163 87,589,163 Financial liabilities at fair value through profit or loss 11,831,968 11,831,968 Hedging derivative financial liabilities 6,095 6,095 Securities sold under agreement to repurchase 451,771 451,771 Payables 17,233,408 17,233,408 Deposits and remittances 1,092,091,840 1,092,091,840 Bank debentures 45,087,336 45,588,389 Other financial liabilities 7,620,377 7,620,377 Short-term borrowings 323,492 323,492 Other liabilities - guarantee deposits received 289,116 289,116

December 31, 2012 Items Carrying Amount Fair Value Financial assets Cash and cash equivalent $ 19,131,502 $ 19,131,502 Due from the Central Bank and other banks 87,672,292 87,672,292 Financial assets at fair value through profit or loss 27,630,871 27,630,871 Available-for-sale financial assets 55,787,623 55,787,623 Hedging derivative financial assets 15,616 15,616 Securities purchased under agreement to resell 236,006 236,006 Receivables 61,879,579 61,879,579 Discounts and loans 770,309,413 770,309,413 Held-to-maturity financial assets, net 219,843,943 219,951,792 Unquoted equity instruments 1,462,235 - Other financial assets 2,997,184 2,997,184 Other assets - guarantee deposits 1,058,380 1,058,624

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December 31, 2012 Items Carrying Amount Fair Value Financial liabilities Deposits from the Central Bank and banks $ 70,454,184 $ 70,454,184 Financial liabilities at fair value through profit or loss 8,671,564 8,671,564 Hedging derivative financial liabilities 22,576 22,576 Securities sold under agreement to repurchase 1,201,450 1,201,450 Payables 22,251,660 22,251,660 Deposits and remittances 1,029,885,089 1,029,885,089 Bank debentures 43,001,812 43,688,721 Other financial liabilities 5,684,826 5,684,826 Short-term borrowings 903,218 903,218 Other liabilities - guarantee deposits received 269,705 269,705

January 1, 2012 Items Carrying Amount Fair Value Financial assets Cash and cash equivalent $ 18,012,075 $ 18,012,075 Due from the Central Bank and call loans to other banks 82,753,425 82,753,425 Financial assets at fair value through profit or loss 33,434,820 33,434,820 Available-for-sale financial assets 37,189,737 37,189,737 Hedging derivative financial assets, net 43,431 43,431 Securities purchased under agreement to resell 3,080,168 3,080,168 Receivables 51,322,112 51,322,112 Discounts and loans 732,363,961 732,363,961 Held-to-maturity financial assets, net 233,697,727 233,773,911 Unquoted equity instruments 1,641,455 - Other financial assets 3,017,151 3,017,151 Other assets - guarantee deposits 562,053 562,316 Financial liabilities Deposits from the Central Bank and banks 66,374,829 66,374,829 Financial liabilities at fair value through profit or loss 7,308,944 7,308,944 Hedging derivative financial liabilities 54,319 54,319 Securities sold under agreement to repurchase 7,071,871 7,071,871 Payables 19,940,553 19,940,553 Deposits and remittances 994,056,325 994,056,325 Bank debentures 37,027,843 37,666,805 Other financial liabilities 7,565,838 7,565,838 Short-term borrowings 899,480 899,480 Other liabilities - guarantee deposits received 226,965 226,965

b. Fair value estimation of financial instruments not carried at fair value

Methods and assumptions applied in estimating the fair values of financial instruments not carried at fair value are as follows:

1) The carrying amounts of financial instruments such as cash and cash equivalents, due from the Central Bank and other banks, securities purchased under agreement to resell, receivables, due to the Central Bank and other banks, short-term borrowings, securities sold under agreement to repurchased and payables approximate its fair value because of the short maturity or the similarity of the carrying amount and future price.

2) Discounts and loans (include nonperforming loans): The Bank and its subsidiaries usually use base rate (floating rate) as

loan rate because it can reflect market rate. Thus, using its carrying amount to consider the probability of repossession and estimate its fair value is reasonable. Long-term loans with fixed rate should estimate its fair value by its discounted value of expected cash flow. Because this kind of loans is not significant in this item, using its carrying amount to consider the probability of repossession and estimate its fair value should be reasonable.

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3) Held-to-maturity financial assets: Held-to-maturity financial assets with quoted price in an active market are using market price as fair value; held-to-maturity financial assets with no quoted price in an active market are estimated by valuation methods or opponent’s price.

4) Deposits and remittances: Considering banking industry’s characteristic, since deposits have one year maturity and

measured by market rate (market value), using carrying value to assess fair value is reasonable. Because deposits with three years maturity are measured by discounted cash flow, using carrying value to assess fair value is reasonable.

5) Bank debentures: Bank debentures with quoted price in an active market are using market price as fair value; bank

debentures with no quoted price in an active market are estimated by valuation methods. 6) Unquoted equity investments: The fair value of unquoted equity investments cannot be reliably measured because it has

no quoted price in an active market, the variability interval of fair value measurements is significant or the probability of the estimations in the variability interval cannot be reasonably assessed. Hence, the fair value is not disclosed.

c. Financial instruments measured at fair value

Financial instruments at fair value, available-for-sale financial assets and hedging derivative financial instruments with quoted price in an active market are using market price as fair value; financial instruments above with no quoted price in an active market are estimated by valuation methods. The estimation and assumption of valuation method the Bank and its subsidiaries used is the same as market participants’. The Bank and its subsidiaries can obtain this information. The basis of fair value estimation used by the Bank and its subsidiaries is shown as follows: The fair value of hedging derivative financial instruments, forward contract, interest rate swap contracts and currency swap contracts is measured by the cash flow discount method; the fair value of option is measured by Black & Scholes Model. Fair values of forward contracts are estimated on the basis of the foreign exchange rates provided by Reuters. Structured product is measured by opponents’ price based on match basis. This method diminished market risk to zero. Fair value of interest rate swap contracts and cross currency swap contracts are estimated on the basis of market quotation provided by Reuters. Fair value are determined as follows: (a) listed stocks and GreTai Securities Market (GTSM) stocks - closing prices as of the balance sheet date; (b) beneficiary certificates (open-end funds), net asset values as of the balance sheet date; (c) bonds - period-end reference prices published by the GTSM; (d) bank debentures issued overseas and the overseas bonds-period-end reference prices published by Bloomberg, calculated through an internal model or provided by a counter-party. The Bank and its subsidiaries assessed the active level of market and the adequacy of fair value of investments original included in unquoted financial asset in January 1 to December 31, 2013 and measured the investments at fair value.

d. Hierarchy information of fair value of financial instruments

1) The definition of the hierarchy is listed below:

a) Level one

Level 1 financial instruments are traded in active market and have the identical price for the same financial instruments. “Active market” should fit the following characteristics:

i. All financial instruments in the market are homogeneous; ii. Willing buyers and sellers exist in the market all the time; iii. The public can access the price information easily.

b) Level two

The products categorized in this level have the prices that can be inferred from either direct or indirect observable inputs other than the active market’s prices. Examples of these inputs are:

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i. Quoted prices from the similar products in the active market. This means the fair value can be derived from the current trading prices of similar products. It is also noted that whether they are similar products should be judged by the characteristics and trading rules. The fair value valuation in this circumstance may make some adjustment due to time lags, trading rule’s differences, related parties’ prices, and the correlation of price between itself and the similar goods.

ii. Quoted prices for identical or similar financial instruments in inactive markets. iii. When marking-to-model, the input of model in this level should be observable (such as interest rates, yield curves

and volatilities). The observable inputs mean that they can be attained from market and can reflect the expectation of market participants.

iv. Inputs which can be derived from other observable prices or whose correlation can be verified through other

observable market data.

c) Level three

The fair prices of the products in this level are based on the inputs other than the direct market data. For example, historical volatility used in valuing options is an unobservable input, because it cannot represent the entire market participants’ expectation for future volatility.

2) Hierarchy information of fair value of financial instruments

Financial Instruments Measured at Fair Value December 31, 2013

Total Level 1 Level 2 Level 3 Non-derivative financial instruments Assets Financial assets at fair value through profit or loss


Financial assets designated at fair value through profit or loss 4,016,445 - 4,016,445 -

Available-for-sale financial assets Stocks 143,057 - - 143,057 Bonds 40,301,136 15,630,745 22,331,351 2,339,040 Others 19,311,313 - 19,311,313 -


Held-to-trading financial assets 11,846,308 1,592 10,606,822 1,237,894 Liabilities Financial liabilities at fair value through profit or

loss Held-to-trading financial liabilities 11,831,968 10,331 10,591,950 1,229,687

Hedging derivative financial liabilities 6,095 - 3,789 2,306

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Financial assets designated at fair value 3,849,469 - 3,672,464 177,005 Available-for-sale financial assets

Stocks 6,937 6,937 - - Bonds 49,672,342 24,746,251 22,510,784 2,415,307 Others 6,108,344 - 5,671,295 437,049





Financial Instruments Measured at Fair Value January 1, 2012 Total Level 1 Level 2 Level 3


Held-to-trading financial assets Stocks $ 31,171 $ 31,171 $ - $ - Bonds 6,704,160 5,571,608 756,314 376,238 Others 17,456,789 450,698 17,005,311 780

Financial assets designated at fair value 1,517,010 - 1,338,887 178,123 Available-for-sale financial assets

Stocks 62,959 62,959 - - Bonds 31,649,775 14,790,190 16,859,585 - Others 5,477,003 - 5,024,470 452,533


Held-to-trading financial asset 7,720,408 5,268 7,604,118 111,022 Financial assets designated at fair value 5,282 - - 5,282

Hedging derivative financial assets 43,431 - 41,323 2,108 Liabilities Financial liabilities at fair value through profit or



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3) Reconciliation of Level 3 items of financial instruments

a) Reconciliation of Level 3 items of financial assets




Rate


Other Comprehensive

Income

Purchase/ Issued

Transfer to Level 3




Held-to-trading financial assets $ 365,340 $ 69,535 $ - $ - $ - $ 359,792 $ - $ 23,039 $ 98,122

Financial assets designated at fair value 177,005 206 - - - 182,176 - 4,965 -

Available-for-sale financial assets 2,852,356 (979 ) (55,537 ) 1,965,482 171,899 2,542,764 - 91,640 2,482,097



Held-to-trading financial assets 828,747 763,273 - 13,209 - 10,064 357,261 (10 ) 1,237,894




Rate


Other Comprehensive

Income

Purchase/ Issued

Transfer to Level 3




Held-to-trading financial assets $ 377,018 $ 41,949 $ - $ - $ - $ 40,150 $ - $ (13,477 ) $ 365,340

Financial assets designated at fair value 178,123 5,897 - - - - - (7,015 ) 177,005

Available-for-sale financial assets 452,533 (1,213 ) (1,467 ) 2,609,219 - - 189,415 (17,301 ) 2,852,356



Held-to-trading financial assets 111,022 719,178 - - - 1,398 - (55 ) 828,747

Financial assets designated at fair value 5,282 (5,282 ) - - - - - - -

Hedging derivative financial assets 2,108 (2,108 ) - - - - - - -

For the years ended December 31, 2013 and 2012, the gains and losses on valuation included in net income with assets still held were $1,048,504 and $861,554, respectively. For the years ended December 31, 2013 and 2012, the gains and losses on valuation included in other comprehensive income with assets still held were losses $55,537 and $1,467, respectively.

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b) Reconciliation of level 3 items of financial liabilities



Valuation Gain/Loss


Loss

Increase Decrease Effects of Changes

in Exchange

Rate


Issued

Transfer to

Level 3

Disposed/Sold


Financial liabilities at fair value through profit or loss Held-to-trading financial

liabilities $828,747 $1,030,590

$542,840 $ -

$810,477

$362,419 $ 406 $1,229,687 Derivative financial liabilities

- hedging - - 2,306 - - - - 2,306



Valuation Gain/Loss


Loss

Increase Decrease Effects of Changes

in Exchange

Rate


Issued

Transfer to

Level 3

Disposed/Sold



Financial liabilities at fair

value through profit or loss Held-to-trading financial

liabilities $111,067 $719,725 $ - $ - $ 1,967 $ - $ (78 ) $828,747

For the years ended December 31, 2013 and 2012, the gains and losses on valuation included in net income with liabilities still held were loss $150,905 and $814,920, respectively.

4) Transfer between Level 1 and Level 2

The Bank and its subsidiaries transferred part of the NTD central government bonds, corporate bonds, bank debentures and beneficiary certificates from level 1 to level 2 because the Bank and its subsidiaries determined that these investments were not in an active market.

44. FINANCIAL RISK MANAGEMENT

a. Overview

The Bank and its subsidiaries document the risk management policies, including overall operating strategies and risks control philosophy. The Bank and its subsidiaries’ overall risk management policies are to minimize the possibility of potential unfavorable factors. The board of directors approves the documentation of overall risk management policies and specific risk management policies; including credit risk, liquidity risk, market risk, operational risk, derivative instruments transactions and managements. The board of directors reviews the policies regularly, and reviews the operation to make sure the Bank and its subsidiaries’ policies are executed properly.

b. Risk management framework

The board of directors is the top risk supervisor of the Bank and its subsidiaries. The board not only reviewed risk management policies and rules but also authorized management to be in charge of daily risk management work. The Bank has set up a risk management committee to be responsible for the services above; the Bank has also set up a credit committee to review the policies and supervise the abnormal cases. The credit committee also helps the board of directors approve cases over general manager’s authority under the board’s authorization. The board of directors authorized the Bank and its subsidiaries’ management to supervise risk management activities, evaluate the performance and confirm every risk management agent having essential code of ethic and professional skills. Internal audit is responsible for the periodic review of risk management and the control environment, then reports the results directly to the board of directors. The Bank has set up a risk management department to control risk management policies, establish rules, plan and set up risk management system. The risk management department executes these policies based on the board’s approval, then reports the results and performance reviews to the authority or the board.

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c. Credit risk

1) Sources and definitions of credit risk

Credit risk is the risk of financial loss if a customer or counterparty fails to meet an obligation under a contract. It arises principally from lending, trade finance, treasury and credit derivatives. The issuer’s credit risk should be considered as part of the market risk when the investment target is securities in an active market.

2) Policies and strategies

The Bank and its subsidiaries established policies based on operating goals and strategies, business plans and risk management goals authorized by the board of directors. These policies were established to lower potential financial losses, minimize risks and rewards to raise the performance and protect shareholders’ equity through appropriate managing policies and procedures based on risk-diversification principle. The Bank and its subsidiaries’ risk strategy is to strengthen the credit risk management framework, establish complete credit verification system and procedure, develop and use efficient and scientific credit risk managing instruments to identify, measure, manage and supervise credit risks. These strategies transparentize, systematize, specialize and formalize credit risk management to manage loans, nonperforming assets and every kind of assets’ credit risk. The Bank and its subsidiaries have set up policies of main risks as prime direction based on legislations and operational goals. These policies include risk appetite, management goals, organization structure of responsibility and accountability, measurement, evaluation, supervision and report procedure of risks. These policies are established to reach the purposes of consistency and centralized management and are put into practice in corporate government.

Credit risk management procedures and measurements are as follows:

a) Loan business (includes loan commitment and guarantee)

Loan business classification and qualities are shown as follows:

i. Classification

Under the “Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Nonperforming/Nonaccrual Loans” (the “Regulations”) issued by the Banking Bureau, the Bank evaluates credit losses on the basis of the estimated collectability. In accordance with the Regulations, credit assets are classified as normal assets, assets that require special mentioned, assets with substandard, assets with doubtful collectability, and assets on which there is loss. FENB evaluates credit losses on the basis of the estimated collectability. Credit assets are classified as pass, assets that require special mentioned, assets with substandard, assets with doubtful collectability.

ii. Credit quality level

The Bank and its subsidiaries set up credit quality level (ex. internal credit risk assessment model, credit assessment rules) based on business characteristic and scale to manage risks. In order to measure clients’ credit risks, the Bank and its subsidiaries established credit risk assessment model for corporate banking, personal banking and consumer banking through statistic methods, professional judgment and clients’ information. Every model should be reviewed regularly to examine whether the calculations match to the actual conditions or not, then the Bank will adjust parameters to optimize the results. For personal banking and consumer banking customers, every case will be reviewed individually to assess default risks except that micro-credit and credit card business should be assessed by internal credit assessment model. The Bank and its subsidiaries’ customers’ credit qualities are classified as excellent, good, acceptable, weak and no ratings. Customers’ credit quality should be evaluated annually to make sure the valuation results are accurate.

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b) Debt investment and derivative financial instruments

The Bank and its subsidiaries manage and identify credit risks of debt investment through credit ratings by outsiders, credit qualities of the debt, regional conditions and counterparties’ risks. The Bank and its subsidiaries carry out derivative instrument transactions with counterparties in financial industry which are over the investment level. The Bank would control credit risks based on counterparties’ credit lines; counterparties with no credit ratings or investment level should be reviewed individually. Normal customers’ credit exposure positions should be controlled by approved derivative instrument credit line and condition based on normal credit procedure. The Bank and its subsidiaries classify credit qualities of debt investment and derivative financial instruments as excellent, good, acceptable, weak and no ratings.

3) Credit risk hedge or mitigation policies

a) Collateral

For credit exposures and collaterals requirements, the Bank and its subsidiaries have set up several standards such as disposal of collateral, acceptance of real estate disposal, real estate appraisal and credit policies for every commodity to regulate collaterals’ categories, appraisals, procedures, deduction percentages, loan rate, loan-to-value and maturity, control, management and disposal to confirm these standards can mitigate credit risks and maintain creditor’s right. To maintain collateral’s effectiveness, the Bank and its subsidiaries supervise and manage it based on after-loan management and review policies examines through examining the usage, custody and maintenance of collaterals regularly and irregularly to avoid selling, leasing, pledging, moving and disposing collaterals without authorization. Once the case is due and willing to extend the contract, it should be seen as a new case and the collateral should be revalued.

b) Credit risk limits and credit risk concentration control

The Bank and its subsidiaries manage credit line and concentration of all credit assets through appropriate information managing system to gather information, credit exposure centralized conditions and large credit exposure of every credit assets combination, including national risk, large credit exposure, credit line of single corporation, group and industry. For cases approaching credit line, the Bank and its subsidiaries should report to related management and make control strategies; for cases over credit line, the Bank and its subsidiaries should enhance authorization level based on credit review authority.

c) Agreement of net settlement

The Bank and its subsidiaries often make gross settlement on transactions, sign net settlement contract with other counterparties or cancel every transactions and make net settlement when default occurs to mitigate credit risk.

4) The maximum credit exposure of the financial instruments held by the Bank and FENB

Maximum credit exposures of assets on balance sheet (excluding collaterals and other credit enhancement instruments) are almost equivalent to its carrying value. The maximum credit exposures (excluding collaterals, other credit enhancement instruments and undrawn maximum exposure) off balance sheet are shown as follows:

Off-Balance Sheet Items The Maximum Credit Exposure


2012 Undrawn credit card commitments $ 219,240,697 $ 215,223,711 $ 209,633,194 Undrawn loan commitments 21,497,345 18,645,376 20,001,245 Guarantees 17,630,846 19,899,676 12,507,393 Standby letter of credit 6,016,987 6,960,686 7,619,130 Total $ 264,385,875 $ 260,729,449 $ 249,760,962

The Bank and FENB adopt a strict evaluate procedure and review the result regularly to control and minimize off-balance sheet credit risk exposures continuously.

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5) Credit risk concentration of the Bank and its subsidiaries

When financial instruments transactions concentrated on counter-party, which engaged in similar business activities, had similar economic characteristics and abilities to execute contracts, the credit risk concentration arises.

Credit risk concentrations can arise in a bank’s assets, liabilities or off-balance sheet items through the execution or processing of transactions (either product or service) or through a combination of exposures across these broad categories. It includes credit, loan and deposits, call loan to banks, investment, receivables and derivatives. The Bank maintains a diversified portfolio, limits its exposure to any one geographic region, country or individual creditor and monitors its exposures continually. The Bank and its subsidiaries’ most significant concentrations of credit risk are summarized by industry, region and collateral as follows:

a) By industry

Industries December 31, 2013 December 31, 2012 January 1, 2012 Amount % Amount % Amount %

Private enterprise $372,747,080 45.55 $352,143,679 45.22 $316,858,334 42.72 Public enterprise 30,919,288 3.78 33,131,150 4.25 40,811,112 5.50 Non-profit

organization 920,323 0.11 79,629 0.01 1,029,855 0.14 Private organization 394,400,358 48.20 393,060,147 50.47 382,947,007 51.64 Financial institution 19,312,957 2.36 399,595 0.05 - - Total 818,300,006 100.00 778,814,200 100.00 741,646,308 100.00

b) By region

Regions December 31, 2013 December 31, 2012 January 1, 2012 Amount % Amount % Amount %

Domestic $672,677,746 82.20 $661,447,304 84.93 $637,361,727 85.93 Asia 66,892,373 8.18 47,068,510 6.04 42,638,325 5.75 North America 59,404,021 7.26 51,652,119 6.63 46,099,679 6.22 Others 19,325,866 2.36 18,646,267 2.40 15,546,577 2.10 Total 818,300,006 100.00 778,814,200 100.00 741,646,308 100.00

c) By collateral

Collateral December 31, 2013 December 31, 2012 January 1, 2012 Amount % Amount % Amount %

Credit $248,498,402 30.37 $235,400,036 30.23 $230,014,661 31.01 Secured

Stocks 1,545,233 0.19 2,589,883 0.33 3,993,799 0.54 Liabilities 12,316,539 1.51 7,029,194 0.90 4,925,928 0.66 Real estate 460,478,239 56.27 463,577,942 59.52 445,884,182 60.12 Movables 32,681,613 3.99 33,895,404 4.35 34,479,932 4.65 Guarantees 26,750,804 3.27 7,466,084 0.96 568,682 0.08 Others 36,029,176 4.40 28,855,657 3.71 21,779,124 2.94

Total 818,300,006 100.00 778,814,200 100.00 741,646,308 100.00

6) Credit quality and impairment assessment

Some financial assets such as cash and cash equivalents, due from Central Bank and call loan to banks, financial asset at fair value through profit or loss, and securities purchased under agreement to resell are regarded as very low credit risk owing to the good credit rating of counterparties. Except for the analysis above, other financial assets’ analyses are summarized as follows:

a) Discounts, loans and receivables

December 31, 2013



Impaired Amount (C)

Total (A)+(B)+(C)

Loss Recognized (D)


With Objective


With No Objective



-(D)

Receivables Credit card business $ 9,625,713 $ 1,158,517 $ 3,759,027 $ 408,459 $ 507,646 $15,459,362 $ 85,490 $ 1,571,043 $ 17,115,895 $ 181,480 $ 145,376 $ 16,789,039 Others 39,403,879 24,548,944 25,604,741 565,030 10,717,910 100,840,504 707,483 106,671 101,654,658 60,540 113,911 101,480,207


nonperforming receivables transferred other than loan - - - - - - - 5,388 5,388 5,388 - -

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December 31, 2012



Impaired Amount (C)

Total (A)+(B)+(C)

Loss Recognized (D)


With Objective


With No Objective



-(D)

Receivables Credit card business $ 9,162,342 $ 1,299,904 $ 4,330,199 $ 409,411 $ 221,141 $ 15,422,997 $ 99,895 $ 1,772,321 $ 17,295,213 $ 193,731 $ 133,092 $ 16,968,390 Others 17,369,321 8,333,855 12,939,445 511,927 4,184,257 43,338,805 1,663,892 33,566 45,036,263 11,665 113,409 44,911,189



January 1, 2012



Impaired Amount (C)

Total (A)+(B)+(C)

Loss Recognized (D)


With Objective


With No Objective



-(D)

Receivables Credit card business $ 9,419,554 $ 1,910,485 $ 4,186,911 $ 362,024 $ 86,010 $15,964,984 $ 97,262 $ 2,056,478 $ 18,118,724 $ 241,305 $ 88,432 $ 17,788,987 Others 6,645,227 4,306,559 5,712,026 1,140,141 14,935,512 32,739,465 869,444 24,105 33,633,014 11,502 88,387 33,533,125



b) Credit analysis for non-overdue nor non-impaired discounts and loans by consumer type and corporate type are as

follows:


Consumer banking Mortgage $105,850,365 $ 92,100,432 $134,446,644 $ 21,900,598 $ 148 $354,298,187 Cash card - - - 162 - 162 Micro credit 8,085,605 3,610,962 2,127,003 271,160 - 14,094,730 Others 1,158,606 1,689,404 2,802,216 263,398 3,802,807 9,716,431

Corporate banking Secured 1,031,271 7,792,085 154,680,923 23,911,960 1,398,230 188,814,469 Unsecured 34,894,126 41,687,083 129,479,913 25,314,458 6,856 231,382,436

Total 151,019,973 146,879,966 423,536,699 71,661,736 5,208,041 798,306,415


Consumer banking Mortgage $ 97,809,121 $ 84,409,935 $144,354,852 $ 32,413,209 $ 205 $358,987,322 Cash card - - - - 251 251 Micro credit 6,431,005 2,599,508 1,707,088 181,774 145,110 11,064,485 Others 128,017 852,973 2,110,174 139,203 2,425,934 5,656,301


Total 146,683,680 131,161,657 388,687,396 88,486,466 4,488,221 759,507,420

January 1, 2012 Non-overdue Nor Non-impaired Amount


Mortgage $101,393,220 $ 78,652,829 $135,510,320 $ 31,980,349 $ 4,547 $347,541,265 Cash card - - - - 478 478 Micro credit 4,633,050 1,965,282 1,220,761 93,772 627,068 8,539,933 Others 79,384 565,098 1,665,490 119,028 2,130,185 4,559,185


Total 150,743,457 124,448,631 354,243,562 90,421,476 4,625,942 724,483,068

c) Credit analysis for marketable securities

December 31, 2013 Non-overdue Nor Non-impaired Amount Overdue But

Not Yet Impaired (B)

Impaired Amount (C)

Total (A)+(B)+(C)

Loss Recognized

(D)



Available-for-sale financial assets Investment in bonds $ 37,619,132 $ 17,408,161 $ 3,464,010 $ 9,998 $ 1,077,767 $ 59,579,068 $ - $ - $ 59,579,068 $ - $59,579,068 Beneficiary investments - - - - 33,381 33,381 - - 33,381 - 33,381

Held-to-maturity financial assets Investment in bonds 214,402,511 - - - - 214,402,511 - 25,685 214,428,196 10,274 214,417,922

Other financial assets Investment in stocks 448,023 - 173,496 - 292,220 913,739 - - 913,739 - 913,739 Others (Note) 11,468,108 - - - 399,087 11,867,195 - 4,224,732 16,091,927 2,430,540 13,661,387

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December 31, 2012


Impaired (B)

Impaired Amount (C)

Total (A)+(B)+(C)

Loss Recognized

(D)



Available-for-sale financial assets Investment in bonds $42,772,599 $ 11,856,899 $ 724,197 $ 48,038 $ 378,953 $55,780,686 $ - $ - $55,780,686 $ - $55,780,686


Other financial assets Investment in stocks 515,939 - 173,496 - 310,076 999,511 - - 999,511 - 999,511 Others (Note) - - - - 462,724 462,724 - 3,909,134 4,371,858 2,302,383 2,069,475

January 1, 2012


Impaired (B)

Impaired Amount (C)

Total (A)+(B)+(C)

Loss Recognized

(D)



Available-for-sale financial assets Investment in bonds $28,487,344 $ 7,728,269 $ 861,226 $ 49,939 $ - $37,126,778 $ - $ - $37,126,778 $ - $37,126,778


Other financial assets Investment in stocks 643,457 - 173,496 - 310,076 1,127,029 - 4,935 1,131,964 2,500 1,129,464 Others (Note) - - - - 511,991 511,991 - 3,772,340 4,284,331 2,128,986 2,155,345

Note: Other financial assets include unquoted beneficiary certificates, time deposits with original maturity over three

months and purchase of PEM instruments.

7) Aging analysis for overdue but not yet impaired financial assets

Delayed procedures by borrowers and other administrative reasons could result in financial assets overdue but not yet impaired. According to the Bank and its subsidiary’s internal risk management policies, financial assets overdue within 90 days are not considered impairment loss (account receivables - factoring if no prepayment) unless other evidences provided. Aging analysis for overdue but not yet impaired financial assets is as follows:





Account receivable Credit card

Others $ 52,150 $ 33,340 $ - $ 85,490 Discounts and loans 663,100 37,156 7,227 707,483

Mortgage 6,610,372 127,977 - 6,738,349 Micro credit 456,993 18,250 - 475,243 Corporate banking 395,650 62,625 - 458,275 Others 173,839 2,080 - 175,919





Account receivable Credit card $ 64,890 $ 35,005 $ - $ 99,895 Others 1,587,128 74,349 2,415 1,663,892

Discounts and loans Mortgage 5,072,542 209,734 - 5,282,276 Micro credit 235,084 8,818 - 243,902 Corporate banking 445,901 169,954 - 615,855 Others 83,103 - - 83,103

Items January 1, 2012





Discounts and loans Mortgage 6,512,506 307,654 - 6,820,160 Micro credit 225,361 13,074 - 238,435 Corporate banking 1,552,658 190,248 - 1,742,906 Others 85,101 36 - 85,137

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8) Analysis of impairment for financial assets

Analysis of impairment for investment on bonds is summarized as Note 44 C (6) (c). Analysis of impairment for discounts, loans and receivables is summarized as follows:

Items Discounts and Loans Allowance for Credit Losses

December 31, 2013

December 31, 2012

January 1, 2012

December 31, 2013

December 31, 2012

January 1, 2012

With objective evidence of impairment

Individually assessed $ 9,318,942 $ 10,260,936 $ 2,938,339 $ 733,643 $ 1,030,146 $ 404,715

Collectively assessed 2,826,863 2,820,708 5,338,263 819,963 1,079,498 1,416,024


Collectively assessed 806,154,201 765,732,556 733,369,706 7,575,958 6,120,247 7,200,855

Items Receivables Allowance for Credit Losses

December 31, 2013

December 31, 2012

January 1, 2012

December 31, 2013

December 31, 2012

January 1, 2012

With objective evidence of impairment (Note 2)

Individually assessed $ 92,598 $ 129,800 $ 124,747 $ 59,459 $ 111,968 $ 115,652




Note 1: The loans and receivables exclude the amount of allowance for credit losses and adjustments for discount

(premium). Note 2: Nonperforming receivables transferred other than loan is included.

9) Management policies of collaterals assumed

The Bank and its subsidiaries’ collaterals assumed are all real estate as of December 31, 2013, December 31, 2012 and January 1, 2012. Related information are shown in Note 18. Collaterals assumed are classified as other assets. According to regulations, the Bank should dispose collaterals within four years and FENB should dispose collaterals within five years.

10) Disclosures prepared in conformity with Regulations Governing the Preparation of Financial Reports by Public Banks

a) Overdue loans and receivables


Items Nonperforming

Loan (NPL) (Note 1)

Total Loans NPL Ratio

(Note 2)

Loan Loss Reserves

(LLR)

Coverage Ratio

(Note 3)

Corporate loan Secured $ 1,985,058 $174,735,696 1.14% $ 2,508,269 126.36% Unsecured 522,458 231,101,706 0.23% 2,229,759 426.78%

Consumer loan


Others (Note 6) Secured

3,682 9,896,931 0.04% 89,693 2,435.99% Unsecured

Total 2,952,046 790,705,828 0.37% 8,546,558 289.51%

Overdue Receivables

Account Receivables

Delinquency Ratio


Coverage Ratio



5,853 11,774,546 0.05% 63,887 1091.53%

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Financial Reports


Items Nonperforming

Loan (NPL) (Note 1)


Loan Loss Reserves

(LLR)

Coverage Ratio

(Note 3)

Corporate loan Secured $ 619,986 $156,161,453 0.40% $ 1,267,629 204.46% Unsecured 1,232,839 221,414,893 0.56% 2,890,170 234.43%

Consumer loan



Overdue Receivables

Account Receivables

Delinquency Ratio


Coverage Ratio



41,247 19,430,389 0.21% 111,688 270.78%

Note 1: For loan business: Overdue loans represent the amounts of overdue loans reported in accordance with

“Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Nonperforming/Non-accrual Loans”.

For Credit card business: Overdue receivables are regulated by the Banking Bureau letter dated July 6, 2005 (Ref. No. 0944000378).

Note 2: For loan business: NPL ratio = NPL/Total loans.

For Credit card business: Delinquency ratio = Overdue receivable/Account receivables.

Note 3: For loan business: Coverage ratio = LLR/NPL

For credit card business: Coverage ratio = Allowance for credit losses/Overdue receivables.

Note 4: Household mortgage loan is a financing to be used by a borrower to buy, build, or fix a dwelling, and the

dwelling owned by the borrower, spouse, or children is used to fully secure the loan. Note 5: Micro credit is regulated by the Banking Bureau letter dated December 19, 2005 (Ref. No. 09440010950).

Note 6: Others in consumer loans refers to secured or unsecured loans excluding mortgage, cash card, micro credit,

and credit cards. Note 7: For account receivables - factoring with no recourse, as required by the Banking Bureau letter dated July 19,

2005 (Ref. No. 094000494), and allowance for bad debts is recognized once no compensation is made from factoring or insurance within three months.

Note 8: Part of nonperforming receivables transferred from other than loans was included.

b) Excluded NPLs and excluded overdue receivables

Date December 31, 2013 December 31, 2012

Items Excluded NPL Excluded Overdue

Receivables Excluded NPL

Excluded Overdue

Receivables As a result of debt negotiation and loan

agreements (Note 1) $ 8,067 $ 316,347 $ 10,327 $ 427,870 As a result of consumer debt clearance

(Note 2) 7,831 842,682 9,579 821,125 Total 15,898 1,159,029 19,906 1,248,995 Note 1: The disclosure of excluded NPLs and excluded overdue receivables resulting from debt negotiations and loan

agreements is based on the Banking Bureau letter dated April 25, 2006 (Ref. No. 09510001270). Note 2: The disclosure of excluded NPLs and excluded overdue receivables resulting from consumer debt clearance is

based on the Banking Bureau letter dated September 15, 2008 (Ref. No. 09700318940).

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c) Concentration of credit extensions




(Note 3)


(%) 1 A Group (manufacture of liquid crystal panel and components) $ 13,056,705 14.91 2 B Group (manufacture of liquid crystal panel and components) 12,180,728 13.91 3 C Group (manufacture of plastics, sheets, pipes and tubes) 9,771,377 11.16 4 D Group (manufacture of computers) 5,994,352 6.85 5 E Group (water transportation) 5,180,790 5.92 6 F Group (manufacture of computers) 5,059,135 5.78 7 G Group (manufacture of computers) 5,032,176 5.75 8 H Group (smelting and refining of iron and steel) 4,692,866 5.36 9 I Group (cable and other subscription programming) 4,134,775 4.72

10 J Group (mechanics, telecommunications and electricity facilities installation)

3,936,514 4.50




(Note 3)


(%) 1 A Group (manufacture of liquid crystal panel and components) $ 13,528,638 17.29 2 B Group (manufacture of liquid crystal panel and components) 12,973,578 16.58 3 C Group (manufacture of plastics, sheets, pipes and tubes) 12,618,614 16.13 4 D Group (manufacture of computers) 6,400,532 8.18 5 E Group (manufacture of computers) 4,914,051 6.28 6 F Group (financing leasing) 4,662,355 5.96 7 G Group (smelting and refining of iron and steel) 4,594,042 5.87 8 H Group (cable and other subscription programming) 4,468,119 5.71 9 I Group (mechanics, telecommunications and electricity facilities

installation) 3,960,509 5.06

10 J Group (manufacture of the basic metals not else where classified) 2,577,708 3.29

Note 1: Ranking top ten groups (excluding government or state - owned utilities) whose total credit consists of loans. Note 2: Groups were those as defined in the Supplementary Provisions to the Taiwan Stock Exchange Corporation

Rules for Review of Securities Listings Law Article 6. Note 3: Total credit is the sum of all loans (including import and export bills negotiated, discounts, overdrafts,

short-term loans, short-term secured loans, marginal receivables, medium-term loans, medium-term secured loans, long-term loans, long-term secured loans, and nonperforming loans), exchange bills negotiated, account receivables factored without recourse, acceptances receivable, and grantees issued.

d. Liquidity risk management

1) Source and definition of liquidity risk

Liquidity is the ability that banks can provide sufficient funding for assets growth and matured liabilities. Liquidity risk means banks cannot provide sufficient funding acquired on a reasonable price for obligations, then cause earnings or capital losses. To enhance cash liquidity, holding sufficient cash and self-liquidating securities, adjusting period differences, absorbing deposits or accommodating borrowing channel are available.

a) Strategies

The Bank established a sound liquidity risk managing system to maintain sufficient liquidity and confirm the Bank would have sufficient funding for obligations in regular or specific stressful situation based on business’ scale and characteristic, assets and liabilities’ structure, funding strategies and diversity of funding sources.

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b) Risk measurement

The Bank adopted quantitative method to manage liquidity risk. Use cash flow deficit and liquidity management goal as measure instrument to report the result to assets and liabilities managing committee monthly.

Perform stress testing to confirm the Bank would have sufficient liquidity fundings for assets growth and matured liabilities when there are internal operating problems or extremely changes on financial environment.

c) Risk monitor

The Bank established liquidity deficit limit and early warnings of liquidity risk managing goal to monitor the change of liquidity risk and take responses at the right time. The Bank sets up “crisis management team” when liquidity crisis occurs. General manager is the convener of the team, manager of financial obligation department and risk management department should be the member of the team. General manager can also assign related departments to join the team depends on the situation. Members’ rights and responsibilities are listed in “The Bank Liquidity Risk Emergency Response Rule”.

2) Maturity analysis of financial liabilities held to manage liquidity risk

a) Maturity analysis of non-derivative financial liabilities

Cash out-flow analyses of non-derivative financial liabilities of the Bank and FENB are summarized as follows. These tables are provided by contract cash flow basis so part of the amounts will not match the amounts on consolidate balance sheet. Bank SinoPac



Deposits from the Central Bank and banks $ 58,455,328 $ 19,405,594 $ ,1,952,824 $ 7,684,995 $ - $ 87,498,741

Securities sold under agreement to repurchase 267,988 184,292 - - - 452,280

Payables 5,468,631 1,126,601 393,499 197,416 1,687,319 8,873,466 Deposits and remittances 580,871,826 157,370,375 146,856,326 169,933,205 14,818,733 1,069,850,465 Bank debentures 42,082 3,801,305 85,315 441,286 44,137,223 48,507,211



Deposits from the Central Bank and banks $ 46,775,633 $ 14,286,415 $ 952,220 $ 8,133,942 $ - $ 70,148,210

Securities sold under agreement to repurchase 888,639 313,684 - - - 1,202,323

Payables 10,458,445 818,547 596,641 49,091 1,642,834 13,565,558 Deposits and remittances 533,901,402 143,343,962 156,210,683 165,719,503 13,791,288 1,012,966,838 Bank debentures 114,276 70,146 141,754 1,894,118 44,653,703 46,873,997

January 1, 2012 0-30 Days 31-90 Days 91-180 Days


Deposits from the Central Bank and banks $ 42,112,692 $ 15,974,237 $ 717,767 $ 7,526,355 $ ,60,768 $ 66,391,819

Securities sold under agreement to repurchase 5,672,489 1,403,254 - - - 7,075,743

Payables 8,486,248 1,271,018 176,522 28,335 1,554,944 11,517,067 Deposits and remittances 502,797,968 123,012,283 167,903,638 161,268,025 12,171,811 967,153,725 Bank debentures 135,856 41,332 110,148 433,896 40,100,499 40,821,731

FENB

(In Thousands of U.S. Dollars)



banks $ 10,240 $ - $ - $ - $ - $ 10,240 Payables 17,100 11 17 180 38 17,346 Deposits and remittances 485,039 162,324 125,715 98,414 66,518 938,010 Federal Home Loan Banks fund - - - - 30,000 30,000

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banks $ 15,963 $ - $ - $ - $ - $ 15,963 Payables 28,048 17 22 35 117 28,239 Deposits and remittances 472,887 93,619 106,717 57,037 37,338 767,598




banks $ 6,868 $ - $ - $ - $ - $ 6,868 Payables 29,916 49 54 50 183 30,252 Deposits and remittances 671,979 159,275 92,552 82,304 56,269 1,062,379

b) Maturity analysis of derivative financial liabilities

Since hedged derivative financial instrument is managed within the rest of the contract period, it is disclosed as undiscounted cash flow based on the maturity. The Bank and its subsidiaries engage in derivative financial liabilities at fair value through profit or loss transactions mainly to accommodate customers’ needs and manage their own exposure positions an disclosed at fair value based on recent demand period.

Bank SinoPac




hedging Derivative interest rate instrument 5,192 3,420 - - - 8,612

Total $11,837,160 $ 3,420 $ - $ - $ - $11,840,580




hedging Derivative interest rate instrument 5,448 - 4,879 8,263 8,566 27,156

Total 8,676,505 - 4,879 8,263 8,566 8,698,213



value through profit or loss $ - $ - $ - $ - $ - $7,309,754 Derivative financial liabilities -

hedging Derivative interest rate instrument 453 6,550 5,270 12,333 23,825 48,431

Total 7,310,207 6,550 5,270 12,333 23,825 7,358,185

FENB



1 Year Over 1 Year Total Deposits financial liabilities -

hedging Derivative interest rate instrument $ 61 $ 139 $ 193 $ 410 $ 3,930 $ 4,733

Note: Derivative interest rate instrument is settled at net amount.

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3) Maturity analysis of operating lease commitments

Operating lease commitment is the minimum lease payment when the Bank and its subsidiaries are lessee or lessor with non-cancelling condition.

Maturity analysis of operating lease commitments is summarized as follows:

December 31, 2013 Less Than 1

Year 1-5 Years Over 5 Years Total Operating lease commitments

Operating lease expense (lessee) $ 518,634 $ 1,081,324 $ 166,898 $ 1,766,856 Operating lease income (lessor) 79,264 147,979 3,870 231,113

December 31, 2012 Less Than 1


Operating lease expense (lessee) $ 474,298 $ 1,033,144 $ 210,520 $ 1,717,962 Operating lease income (lessor) 87,253 146,436 594 234,283

January 1, 2012 Less Than 1


Operating lease expense (lessee) $ 388,304 $ 728,469 $ 150,513 $ 1,267,286 Operating lease income (lessor) 83,807 187,198 2,741 273,746

4) Disclosures prepared in conformity with Criteria Governing the Preparation of Financial Reports by Public Banks

a) Maturity analysis of assets and liabilities of the Bank (New Taiwan dollars)

December 31, 2013




Gap (25,140,800 ) 143,664,315 (41,308,016 ) (77,240,511 ) (121,404,458 ) 71,147,870

December 31, 2012




Gap (17,237,478 ) 139,504,117 (37,175,702 ) (84,473,412 ) (145,796,010 ) 110,703,529

Note: This table is shown as New Taiwan dollars.

b) Maturity analysis of assets and liabilities of the Bank (U.S. dollars)

December 31, 2013




Gap 540,065 (1,073,682 ) (310,156 ) 898,398 27,355 998,150

December 31, 2012




Gap 226,033 (505,078 ) 7,276 (268,253 ) 608,068 384,020

Note: This table is shown as U.S. dollars.

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e. Market risk

1) Source and definition of market risk

Market risk is defined as the change in market prices (such as interest rate, exchange rate, equity securities and commodity prices) which may cause the fluctuation of financial instrument’s fair value or future cash flow. The Bank’s net revenue and investment portfolio value may fluctuate when risk factors above change. Main market risks the Bank should conquer are interest rate, exchange rate and equity securities. Interest rate risks primarily include: Bonds and derivative interest rate financial commodity such as fixed and fluctuate interest rate swap and bonds option; exchange rate risk is foreign currency investment the Bank holds such as derivative financial commodity at foreign currency and foreign currency bonds; equity securities risk includes listed stocks and derivative financial commodity - stocks.

2) Management strategies and procedures

To follow “Market Risk Management Rule” and other regulations, the Bank established standards about identification, measurement, supervision and reporting to set up appropriate risk management framework for every kinds of market risk. In accordance with risk management limit approved by the board of directors, the Bank supervised every risk component and loss limit such as interest rate, exchange rate, equity security, spot trading and forward contract, option, future, swap, related sensitivity information derived from spot trading to confirm that market risk exposure can be accepted by the Bank. The Bank separates its transactions into hedged and non-hedged based on trading purposes. For hedged transactions, the Bank should measure hedge relations, risk management goals and hedge strategies. The Bank should also perform hedge testing, evaluate related effectiveness between hedge instruments and hedged items.

3) Organization and framework

The board of directors is the top supervision and determination level of the Bank; it determines every risk management procedure and limit based on operating strategy and business environment. The Bank set up risk management department under general manager to regulate risk managing policies, establish principles, set up and plan risk management system. Following internal control and separation of duties principles, the Bank separated related departments of market risk into three independent departments: Trading, risk control and settlement departments, usually called front office, middle office and back office. The risk management department is in charge of market risk control, it is responsible for identifying measuring, controlling and reporting market risk.

4) The procedure of market risk control

a) Identification and measurement

The scope of risk measurement includes exposures originated from change in market price of interest rate, exchange rate, equity security, spot trading and forward, option, future, swap or other related combined transactions derived from spot trading. The Bank set up appropriate market risk limit target based on commodities’ category, characteristic and complexity. The limit targets are nominal amount exposure, risk factor sensitivity measure value Delta/Vega/DVO1 and loss control limit. Targets above are calculated by risk control department through measurements (ex. Option Black & Scholes Model) provided by transaction systems (ex. Murex, Bloomberg) based on market prices.

b) Supervision and reporting

The Bank’s market risk management department offers measured profit or loss of market price, risk value and limit control reports every day. If the risk is over limit, the department should report to transaction department and appropriate managers in risk management department. The department should also collect and organize bank market risk exposure information, risk value, risk limit rules, over limit information and analyze security investments regularly to the board of directors.

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5) Trading book risk management policies a) Definitions

Trading book is financial instruments and physical commodities held for trading or hedging by the Bank. Held-for-trading position means revenues earned from practical or impractical trading differences. Positions not belong to trading book above are banking book.

b) Strategies

The Bank earns revenues from trading differences or fixed arbitrage through properly control short-term fluctuation of market risk factors (interest rate, exchange rate and stock price). The Bank will execute hedge transaction if necessary.

c) Policies and procedures

The Bank carried out “Market Risk Management Policy” to control the market risk. Traders can autonomously operate and manage positions in the range of authorized limit and trading strategy; market risk management department supervises trading positions (including limit, liquidity, the ability to establish hedge position and investment portfolio risk) based on market information and evaluates market information’ quality, acquirability, liquidity and scale which are calculated into pricing model.

d) Valuation policies

The Bank assesses financial instruments by accessible information from independent sources once a day if market prices are acquirable; if the Bank assesses financial instruments by pricing model, the Bank should carefully use mathematic method and review pricing model’s assumptions and parameters regularly.

e) Measurements

i. Assumptions and calculation methods of risk value are shown in Note 44, (e), (10). ii. Calculate nominal amount exposure and risk factors sensitivity value Delta/Vega/DVO1 through trading systems. iii. The Bank performs stress test through light situation (change in interest rate ± 100bp, change in securities ± 15%

and change in exchange rate ± 3%) and serious situation (change in interest rate ± 200bp, change in securities ± 30% and change in exchange rate ± 6%) and report to the board of directors.

6) Trading book interest rate risk management

a) Definitions

Interest rate risk is the risk to earnings and value of financial instruments caused by fluctuations in interest risk. Major contracts includes interest rate related securities and derivative instruments.

b) Procedures

The Bank sets trading limit and stop-loss limit (including dealing room, dealers, trading instruments) by management strategy and market condition, and the limits are approved by the board of directors.

c) Measurements

i. Assumptions and calculation methods of risk value are shown in Note 44, (e), (10).

ii. Daily using DV01 to measure impact of investment portfolio value due from interest rate changes.

7) Trading book exchange rate risk management

a) Definitions

Exchange rate risk is the income or loss arisen from exchange two currencies during different time. The Bank’s exchange rate risk is major caused from financial instruments of spot contract, forward contracts, and FX option.

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b) Policies and procedures

For controlling the exchange rate risk, the Bank sets trading limit and stop-loss limit for dealing room, and dealers, etc., hold the loss to be acceptable.

c) Measurements

i. Assumptions and calculation methods of risk value are shown in Note 44, (e), (10). ii. Daily using exposure positions to measure impact of investment portfolio value due from exchange rate risk.

8) Trading book equity risk management

a) Definitions

Market risk of equity securities includes specific risk by individual securities price volatility and general market risk from all market securities price volatility.

b) Procedures

For controlling the equity risk, the Bank sets investment positions limit and stop-loss limit. The limits are approved by the board of directors. Within the limit of authority, the Bank sets investment positions limit and stop-loss limit for each dealer.

c) Measurements

i. Assumptions and calculation methods of risk value are shown in Note 44, (e), (10). ii. Daily using exposure positions to measure impact of investment portfolio value due from equity risk.

9) Banking book interest rate risk management

Banking book interest rate risk means the value of banking book portfolio shocked by un-favored interest rate changes. Banking book interest rate risk is not from interest rate position of trading book. Banking book interest rate risk management let the Bank can measure and manage the risk to earnings and financial position caused by fluctuations in interest risk.

a) Strategies

Reduce negative effect and adjust position within authority to increase positive effect of interest rate fluctuations for net interest revenue or economic value. The Bank reviews the interest rate sensitivity regularly for creating maximum profit and attending to interest rate risk.

b) Risk measurement

Risk measurement includes interest rate risk of assets, liabilities, and off-balance-sheet position. The Bank makes periodic report of interest rate sensitivity position and measures interest rate fluctuations impact to interest-rate sensitive gap.

c) Risk monitor

Risk management sector reports risk measurement result monthly to authority, for examining and monitoring interest rate risk exposure condition.

If risk exposure condition exceed the limit or target value, risk management sector should analysis the reason and notice executive division. Executive division should call relevant divisions to make solution way. The solution way should approve by authority and let relevant divisions execute.

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10) Market risk measurement technique a) Value at Risk, “VaR”

The Bank uses Risk Manager system and stress-testing to measure the investment portfolio risk of the Bank and uses several hypotheses of market conditions to measure market risk and maximum expect loss of holding positions. The Bank’s board of directors sets limit to VaR. The VaR is daily controlled by market risk management sector. VaR is the statistics estimates of holding positions potential loss from un-favored market condition changes. It’s the evaluation of one-day worst loss on holding positions, with a 99% confidence level. The Bank uses the value-at-risk approach and Monte Carlo Simulation Method to derive quantitative measures for the holding positions market risks under normal condition. The calculated result is used to monitor and test the validity of parameters and hypotheses periodically. Using the approach above can’t prevent loss from huge un-favored market condition changes. The Bank considers maximum expect loss, budget profit goal, and operating strategy to set the limit of VaR, which is proposed by market risk management sector and approved by the board of directors. The Bank’s trading book VaR overview


Exchange rate risk $ 11,593 $ 33,795 $ 1,628 Interest rate risk 13,931 27,135 7,473 Equity risk 2,801 4,376 1,346 Total VaR 18,141 46,435 9,409

Note 1: Estimated VaR: Prediction interval = 1 day, Confidence level = 99%, Decay factor = 0.94. Note 2: Historical data period: 2013.01.02 - 2013.12.31.


Exchange rate risk $ 10,844 $ 47,013 $ 3,240 Interest rate risk 17,724 37,790 7,691 Equity risk 1,997 5,167 688 Total VaR 21,969 67,169 9,387

Note 1: Estimated VaR: Prediction interval = 1 day, Confidence level = 99%, Decay factor = 0.94. Note 2: Historical data period: 2012.01.03 - 2012.12.31.

January 1, 2012

Exchange rate risk $ 15,872 Interest rate risk 29,819 Equity risk 4,116 Total VaR 30,338

Note: Estimated VaR: Prediction interval = 1 day, Confidence level = 99%, Decay factor = 0.94.

11) Information of exchange rate risks Information about exchange rate risks of holding net positions of foreign currencies are shown as below:

December 31, 2013

Original Currency

(In Thousands) Exchange Rate Converted to TWD Financial assets

Monetary items

USD $ 10,489,532 29.953 $ 314,192,964 CNY 12,653,730 4.94315 62,549,386

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December 31, 2013

Original Currency

(In Thousands) Exchange Rate Converted to TWD Non-monetary items

USD $ 104,593 29.953 $ 3,132,874


USD 9,074,463 29.953 271,807,390 CNY 14,290,127 4.94315 70,638,241

Non-monetary items USD - 29.953 -

December 31, 2012

Original Currency


USD $ 8,104,406 29.1366 $ 236,134,836 CNY 4,051,069 4.67785 18,950,293



USD 8,043,876 29.1366 234,371,197 CNY 4,179,800 4.67785 19,552,477


January 1, 2012

Original Currency


USD $ 7,464,692 30.29 $ 226,105,521 CNY 2,702,631 4.80809 12,994,493



USD 7,572,670 30.29 229,376,174 CNY 2,694,457 4.80809 12,955,192


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12) Disclosures of Regulations Governing the Preparation of Financial Reports by Public Banks

a) Interest rate sensitivity information (New Taiwan dollars)

December 31, 2013




Over One Year Total

Interest rate-sensitive assets $ 792,396,642 $ 32,045,089 $ 35,633,090 $ 71,458,579 $ 931,533,400 Interest rate-sensitive liabilities 331,533,253 425,124,578 81,508,986 41,946,658 880,113,475 Interest rate-sensitive gap 460,863,389 (393,079,489) (45,875,896) 29,511,921 51,419,925 Net worth 88,423,172 Ratio of interest rate-sensitive assets to liabilities (%) 105.84% Ratio of interest rate-sensitive gap to net worth (%) 58.15%

December 31, 2012




Over One Year Total

Interest rate-sensitive assets $ 776,383,457 $ 42,438,568 $ 41,916,628 $ 77,287,158 $938,025,811 Interest rate-sensitive liabilities 337,333,354 418,251,512 87,737,208 38,147,913 881,469,987 Interest rate-sensitive gap 439,050,103 (375,812,944) (45,820,580) 39,139,245 56,555,824 Net worth 79,845,233 Ratio of interest rate-sensitive assets to liabilities (%) 106.42% Ratio of interest rate-sensitive gap to net worth (%) 70.83%

Note 1: The above amounts include only New Taiwan dollars held by the Bank, and exclude contingent assets and

contingent liabilities. Note 2: Interest rate-sensitive assets and liabilities mean the revenues or costs of interest-earning assets and

interest-bearing liabilities are affected by interest rate changes. Note 3: Interest rate-sensitivity gap = Interest rate-sensitive assets - Interest rate-sensitive liabilities. Note 4: Ratio of interest rate-sensitive assets to liabilities = Interest rate-sensitive assets/Interest rate-sensitive

liabilities (in New Taiwan dollars).

b) Interest rate sensitivity information (U.S. dollars)

December 31, 2013




Over One Year Total

Interest rate-sensitive assets $ 6,711,757 $ 1,130,861 $ 532,117 $ 144,570 $ 8,519,305 Interest rate-sensitive liabilities 3,369,441 3,708,122 360,448 - 7,438,011 Interest rate-sensitive gap 3,342,316 (2,577,261) 171,669 144,570 1,081,294 Net worth 105,591 Ratio of interest rate-sensitive assets to liabilities (%) 114.54% Ratio of interest rate-sensitive gap to net worth (%) 1,024.04%

December 31, 2012




Over One Year Total

Interest rate-sensitive assets $ 5,880,318 $ 163,728 $ 67,508 $ 140,091 $ 6,251,645 Interest rate-sensitive liabilities 2,949,143 3,687,695 220,917 6,531 6,864,286 Interest rate-sensitive gap 2,931,175 (3,523,967) (153,409) 133,560 (612,641) Net worth 90,708 Ratio of interest rate-sensitive assets to liabilities (%) 91.07% Ratio of interest rate-sensitive gap to net worth (%) (675.40%)

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Note 1: The above amounts include only USD held by the Bank and exclude contingent assets and contingent liabilities.

Note 2: Interest rate-sensitive assets and liabilities mean the revenues or costs of interest-earnings assets and

interest-bearing liabilities are affected by interest-rate changes. Note 3: Interest rate-sensitive gap = Interest rate-sensitive assets - Interest rate-sensitive liabilities. Note 4: Ratio of interest rate-sensitive assets to liabilities = Interest rate-sensitive assets/Interest rate-sensitive

liabilities (in U.S. dollars) 45. CAPITAL MANAGEMENT

a. Overview The Bank and its subsidiaries’ capital management goals are as follows: As a basic target, the Bank and its subsidiaries’ eligible capital should be sufficient to meet their operation need, and higher than minimum requirements of the capital adequacy ratio. Eligible capital and legal capital are calculated under the regulations announced by the authority. The Bank and its subsidiaries should have adequacy capital to bear the risks, measure capital demand according to risk combination and risk characteristics, fulfill the optimization of resource and capital allocation by risk management.

b. Capital management procedure

The Bank and its subsidiaries’ capital adequacy ratio should meet the regulations announced by the authority. Also, the Bank and its subsidiaries should maintain capital adequacy ratio by considering the Bank and its subsidiaries’ business scale, major operating strategy, risk condition, eligible capital structure, and future capital increase plan, etc. The Bank and its subsidiaries reported to the authority regularly. Overseas subsidiaries’ capital management is in accordance with local regulations. The Bank and its subsidiaries’ capital maintenance is in accordance with “Regulations Governing the Capital Adequacy and Capital Category of Banks”, etc., and is managed by the Bank’s risk management and accounting divisions.

c. Statement of capital adequacy

Year Analysis Items

December 31, 2013 Standalone Consolidation

Eligible capital

Ordinary shares equity $ 70,204,331 $ 79,348,426 Other Tier 1 capital - - Tier 2 capital 19,446,441 30,585,284 Eligible capital 89,650,772 109,933,710


Credit risk Standardized approach 782,726,199 816,744,157 Internal rating - based approach - - Securitization - -

Operational risk



- -



Total risk-weighted assets 842,348,450 882,970,295 Capital adequacy ratio 10.64% 12.45% Ordinary shares equity risk - based capital ratio 8.33% 8.99% Tier 1 risk - based capital ratio 8.33% 8.99% Leverage ratio 5.09% 5.59%


calculation tables.

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Note 2: The Bank shall disclose the capital adequacy ratio for the current and previous period in annual financial reports.



1) Eligible capital = Ordinary shares equity + Other Tier 1 capital + Tier 2 capital. 2) Total risk - weighted assets = Risk-weighted assets for credit risk + (Capital requirements for operational risk +

Capital requirement for market risk) x 12.5. 3) Ratio of capital adequacy = Eligible capital/Total risk - weighted assets. 4) Ordinary shares equity risk - based capital ratio = Ordinary shares equity/Total risk - weighted assets. 5) Tier 1 risk - based capital ratio = (Ordinary shares equity + Other Tier 1 capital)/Total risk - weighted assets. 6) Leverage ratio = Tier 1 capital/Total exposure risk.


assets are not to be included in the Bank’s capital adequacy ratio calculation.

Year Analysis Items

December 31, 2012 (Note 5) Standalone Consolidation

Eligible capital

Tier 1 capital $ 67,331,426 $ 72,338,629 Tier 2 capital 29,937,518 36,062,151 Tier 3 capital - - Eligible capital 97,268,944 108,400,780


Credit risk Standardized approach 706,571,756 729,504,805 Internal rating - based approach - - Securitization 723 631,950

Operational risk



- -



Total risk-weighted assets 760,274,241 792,183,872 Capital adequacy ratio 12.79% 13.68% Tier 1 risk - based capital ratio 8.86% 9.13% Tier 2 risk - based capital ratio 3.93% 4.55% Tier 3 risk - based capital ratio - - Ratios of common stockholders’ equity to total assets 4.33% 4.25% Leverage ratio 5.58% 5.84%





1) Eligible capital = Tier 1 capital + Tier 2 capital + Tier 3 capital. 2) Total risk - weighted assets = Risk-weighted assets for credit risk + (Capital requirements for operational risk +

Capital requirement for market risk) × 12.5. 3) Ratio of capital adequacy = Eligible capital/Total risk - weighted assets.

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4) Tier 1 risk - based capital ratio = Tier 1 capital/Total risk - weighted assets. 5) Tier 2 risk - based capital ratio = Tier 2 capital/Total risk - weighted assets. 6) Tier 3 risk - based capital ratio = Tier 3 capital/Total risk - weighted assets. 7) Ratios of common stockholders’ equity to total assets = Common stock/Total assets. 8) Leverage ratio = Tier 1 capital/Adjusted average assets (average assets - goodwill, unamortized losses on sale of

non-performing loans and the amount deducted from Tier 1 capital according to “Regulations Governing the Capital Adequacy Ratio of Banks”).


assets are not to be included in the Bank’s capital adequacy ratio calculation. Note 5: The Bank’s statement of capital adequacy was calculated in according with Criteria Governing the Preparation of

Financial Reports by Public Bank and accounting principles generally accepted in the Republic of China (ROC). 46. RECLASSIFICATION

Financial assets have been reclassified on September 25, 2013. The fair value on the reclassification day were as follows:

Before

Reclassification After

Reclassification Available-for-sale securities $ 10,164,016 $ - Held-to-maturity securities - 10,164,016 $ 10,164,016 $ 10,164,016 The effective interest rate of reclassified financial assets on the reclassification day was between 0.9795% and 2.0696%, and the estimated recoverable cash flow was $10,879,405. The book value and fair value of financial assets reclassified: December 31, 2013 Held-to-maturity securities Book value $ 10,152,801 Fair value 10,190,705 The gains or losses recorded for the reclassified financial assets (excluding those that had been derecognized) for 2013 and 2012 and the pro forma gains or losses assuming no reclassifications had been made were as follows:

September 26, 2013 to December

31, 2013 Held-to-maturity securities Recognition in profit (included in interest revenue) $ 30,048 Assumed equity adjustment without such reclassification 39,542

47. CROSS-SELLING INFORMATION

For the years ended December 31, 2013 and 2012, the Bank charged SinoPac Securities for $2,223 and $3,223, respectively, as marketing and opening accounts. The rental fee the Bank has charged SinoPac Securities for the years ended December 31, 2013 and 2012 were $3,488 and $3,408, respectively.

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Financial Reports

The rental fee the Bank paid to SinoPac Securities were $656 and $668, respectively for the years ended December 31, 2013 and 2012. The Bank has paid to SinoPac Securities $4,901 and $3,245 for the years ended December 31, 2013 and 2012 for bonus as part of the cross-selling agreement. For other transactions between SPH and its subsidiaries, please refer to Note 40.

48. PROFITABILITY

Items December 31

2013 2012

Return on total assets Before income tax 0.84% 0.80% After income tax 0.73% 0.67%

Return on net worth Before income tax 13.27% 13.42% After income tax 11.58% 11.29%

Profit margin 36.41% 38.12% Note 1: Return on total assets = Income before (after) income tax/Average total assets. Note 2: Return on net worth = Income before (after) income tax/Average net worth. Note 3: Profit margin = Income after income tax/Total net revenues. Note 4: Income before (after) income tax represents income for years ended December 31, 2013 and 2012.

49. TRUST BUSINESS UNDER THE TRUST LAW

a. Balance sheets, income statement and trust properties of trust accounts

These statements were managed by the Bank’s Trust Department. However, these items were not included in the Bank’s financial statements.

Balance Sheets of Trust Accounts

December 31, 2013 and 2012

December 31, 2013

Other Trust

Business



Land 6,304,443 - 6,304,443 Buildings 95,968 - 95,968 Construction in process 4,769,334 - 4,769,334

Securities under custody 61,748,781 - 61,748,781 Total trust assets $ 209,330,138 $ - $ 209,330,138

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December 31, 2013

Other Trust

Business


Trust Plan Total Trust liabilities

Payables $ 2,675 $ - $ 2,675 Payable on securities under custody 61,748,781 - 61,748,781 Trust capital 145,890,434 - 145,890,434 Reserves and cumulative earnings

Net income (loss) 1,759,832 - 1,759,832 Cumulative earnings 445,603 - 445,603 Deferred amount (517,187) - (517,187)


December 31, 2012

Other Trust

Business


Trust Plan Total Trust assets

Bank deposits 2,657,699 - 2,657,699 Bonds 1,611,352 - 1,611,352 Stocks 6,480,917 - 6,480,917 Funds 116,814,926 - 116,814,926 Securities lent 3,457,380 - 3,457,380 Receivables 15,312 - 15,312 Prepayments 2,313 - 2,313 Real estate

Land 6,549,890 - 6,549,890 Buildings 1,289,377 - 1,289,377 Construction in process 3,817,626 - 3,817,626

Securities under custody 60,183,115 - 60,183,115 Total trust assets $ 202,879,907 $ - $ 202,879,907 Trust liabilities

Payables 5,748 - 5,748 Payable on securities under custody 60,183,115 - 60,183,115 Trust capital 142,245,441 - 142,245,441 Reserves and cumulative earnings

Net income (loss) 973,173 - 973,173 Cumulative earnings 541,507 (34,069) 507,438 Deferred amount (1,069,077) 34,069 (1,035,008)


Trust Properties of Trust Accounts

December 31, 2013 and 2012 December 31 Investment Portfolio 2013 2012 Bank deposits $ 5,746,758 $ 2,657,699 Bonds 2,575,463 1,611,352 Stocks 9,016,125 6,480,917 Funds 113,915,842 116,814,926 Securities lent 5,136,399 3,457,380 Real estate

Land 6,304,443 6,549,890 Buildings 95,968 1,289,377 Construction in process 4,769,334 3,817,626

Securities under custody 61,748,781 60,183,115 $ 209,309,113 $ 202,862,282

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Income Statement of Trust Account Years Ended December 31, 2013 and 2012


Other Trust

Business



Interest income $ 22,551 $ - $ 22,551 Borrowed Securities income 128,630 - 128,630 Cash dividends 147,935 - 147,935 Gains from beneficiary certificates 2,987 - 2,987 Realized investment income 218,283 - 218,283 Unrealized investment income 1,308,848 - 1,308,848 Total trust income 1,829,234 - 1,829,234


Income before income tax 1,759,832 - 1,759,832 Income tax expense - - - Net income $ 1,759,832 $ - $ 1,759,832


Other Trust

Business



Interest income $ 24,894 $ - $ 24,894 Borrowed Securities income 136,433 - 136,433 Cash dividends 167,749 - 167,749 Gains from beneficiary certificates 139 - 139 Realized investment income 104,958 - 104,958 Unrealized investment income 630,551 - 630,551 Total trust income 1,064,724 - 1,064,724


Income before income tax 973,173 - 973,173 Income tax expense - - - Net income $ 973,173 $ - $ 973,173

b. The operations of the Bank’s Trust Department consist of planning, managing and operating of trust business and affiliated

business. These operations are governed by the Banking Law and the Trust Law. c. IBT, a trustee in behalf of its corporate customers, purchased CDOs issued by Lehman Brothers for US$20 million in 2005.

A civil case have been brought against the issuer, custodians and bond holders (the Bank based on trust deed) by the insolvency administrator of Lehman Brothers at United States Bankruptcy Court, New York. The civil case is still in preliminary case of proceeding. The Bank has notified the lawsuit to customers and appointed attorney. However, customers still received the notice of being charged for the civil case from the insolvency administrator and the customers appointed attorney by themselves. The United States Bankruptcy Court processed mandatory conciliation procedures, and the Bank had already replied that there is no possibility of conciliation on July 15, 2013. Since the conciliation is mandatory, the conciliation will be executed in March or April 2014.

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50. ADDITIONAL DISCLOSURES

a. Related information of the Bank and material transaction:

1) Marketable securities acquired and disposed at costs or prices of at least NT$300 million or 10% of the issued capital: Table 1

2) Acquisition of individual real estates at costs of at least NT$300 million or 10% of the issued capital: None 3) Disposal of individual real estates at prices of at least NT$300 million or 10% of the issued capital: None 4) Allowance for service fee to related parties amounting to at least NT$5 million: None 5) Receivables from related parties amounting to at least NT$300 million or 10% of the issued capital: Table 2 6) Trading information - sale of nonperforming loans: Table 3 7) Financial asset securitization: None 8) Other significant transactions which may affect the decisions of users of financial reports:

After the approval of Financial Supervisory Commission and Investment Commission, MOEA, SinoPac Bank (China) preparatory office is a temporary office approved by China Banking Regulatory Commission. SinoPac Bank (China) will be formally set up and apply to start business after the completion of the pre-opening work.

b. Financing provided, endorsements/guarantees provided, marketable securities held, acquisition and disposal of marketable

securities at costs or prices of at least NT$300 million or 10% of the issued capital, and derivative transactions of the Subsidiary: Table 4

c. The related information and proportionate share in investees: Table 5 d. Information on investment in Mainland China: Table 7

51. OPERATING SEGMENT INFORMATION

Based on chief of decision maker’s resource allocation and department performance review, the Bank has divided the business segments based on the services and products provided, excluding subsidiary accounted under the equity method. The accounting standards and policies apply to all of the business segments in accordance to IFRS 8 “Operating Segments”, the Bank reports the following. Domestic Branches: Provides service and products through 128 branches and Banking Division of the Head Office. Oversea Branches: Provides service and products for oversea customers through oversea branches. Consumer Banking: Provides credit card and other commercial paper products and services through direct sales personnel. Financial Trading: Provides investment, due from other banks, and bonds transaction services through financial operation units. United States Subsidiary: Provides service and products through SinoPac Bancorp and FENB. Other Business Segments: Includes Institutional Trust service, wealth management custodian service, automobile loan, and other services of SinoPac Capital Limited.

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Segment revenues and results


Domestic Branches

Consumer Banking

Financial Transaction

Oversea Branches

United States

Subsidiary Others Operating

Segments Non-operating Segments Total

Income (loss)

Net interest $ 10,054,593 $ 991,029 $ (36,086) $ 1,938,282 $ 920,615 $ 267,710 $ 14,136,143 $ 737,459 $ 14,873,602 Interest revenue 15,578,804 1,264,413 (11,281) 3,788,413 1,042,101 370,179 22,032,629 2,961,038 24,993,667

Revenue amount segments 2,521,788 (260,898) 68,249 (1,319,720) - (92,116) 917,303 (917,303) - Interest expense 8,045,999 12,486 93,054 530,411 121,486 10,353 8,813,789 1,306,276 10,120,065

Commission and fee revenues, net 4,327,012 741,473 (32,563) 275,393 38,185 21,789 5,371,289 150,223 5,521,512 Others 3,651,727 9,002 3,846,920 826,310 92,151 24,653 8,450,763 (2,467,994) 5,982,769 Net revenue (loss) 18,033,332 1,741,504 3,778,271 3,039,985 1,050,951 314,152 27,958,195 (1,580,312) 26,377,883 Allowance for (reversal of) doubtful accounts

and guarantees 1,286,023 (314,460) - 305,133 (141,921) 1,318 1,136,093 814,017 1,950,110

Operating expense 9,497,183 1,527,725 534,222 1,177,566 891,415 140,940 13,769,051 (340,692) 13,428,359 Depreciation and amortization 162,441 23,198 2,885 13,470 33,918 11,271 247,183 406,802 653,985

Income before income tax 7,250,126 528,239 3,244,049 1,557,286 301,457 171,894 13,053,051 (2,053,637) 10,999,414 Income tax (expense) benefit (1,050,477) (87,963) (389,286) (166,527) (102,619) (30,649) (1,827,521) 431,016 (1,396,505) Net income 6,199,649 440,276 2,854,763 1,390,759 198,838 141,245 11,225,530 (1,622,621) 9,602,909

Geographical information


Domestic and Others USA Hong Kong and Macau Adjustments and Eliminations Total

Income of clients outside the Bank and its subsidiaries $ 22,831,174 $ 1,429,702 $ 2,117,007 $ - $ 26,377,883

Income from other departments 1,196,412 (599) 15,234 (1,211,047) - Net revenue 24,027,586 1,429,103 2,132,241 (1,211,047) 26,377,883 Income before income tax 9,448,581 328,813 1,222,020 - 10,999,414 Identifiable assets 1,201,045,226 53,485,001 102,502,459 - 1,357,032,686

Segment revenues and results


Domestic Branches

Consumer Banking

Financial Transaction

Oversea Branches

United States

Subsidiary Others Operating

Segments Non-operating Segments Total

Income (loss)

Net interest $ 9,708,606 $ 1,195,058 $ 997,012 $ 1,446,637 $ 1,029,492 $ 169,083 $ 14,545,888 $ (283,520) $ 14,262,368 Interest revenue 15,288,035 1,467,273 3,031,362 2,378,315 1,170,483 267,876 23,603,344 59,737 23,663,081

Revenue amount segments 1,996,847 (260,459) (1,679,769) (491,208) - (78,497) (513,086) 513,086 - Interest expense 7,576,276 11,756 354,581 440,470 140,991 20,296 8,544,370 856,343 9,400,713

Commission and fee revenues, net 3,579,414 650,676 (29,774) 248,353 72,159 (10,991) 4,509,837 142,587 4,652,424 Others 1,713,810 237,888 1,748,977 109,736 113,751 23,123 3,947,285 (963,928) 2,983,357 Net revenue (loss) 15,001,830 2,083,622 2,716,215 1,804,726 1,215,402 181,215 23,003,010 (1,104,861) 21,898,149 Allowance for (reversal of) doubtful accounts

and guarantees 101,652 (110,562) - 144,700 (992,261) (1,055) (857,526) 260,127 (597,399)

Operating expense 8,596,602 1,461,489 554,696 1,035,695 1,084,380 106,361 12,839,223 (266,106) 12,573,117 Depreciation and amortization 166,177 19,093 3,568 20,185 42,253 6,526 257,802 305,864 563,666

Income before income tax 6,303,576 732,695 2,161,519 624,331 1,123,283 75,909 11,021,313 (1,098,882) 9,922,431 Income tax (expense) benefit (941,318) (124,558) (241,885) 73,962 (348,134) (2,438) (1,584,371) 10,006 (1,574,365) Net income 5,362,258 608,137 1,919,634 698,293 775,149 73,471 9,436,942 (1,088,876) 8,348,066

Geographical information


Domestic and Others USA Hong Kong and Macau Adjustments and Eliminations Total

Income of clients outside the Bank and its subsidiaries $ 19,137,588 $ 1,579,265 $ 1,181,296 $ - $ 21,898,149

Income from other departments 1,622,743 (1,731) 8,050 (1,629,062) - Net revenue 20,760,331 1,577,534 1,189,346 (1,629,062) 21,898,149 Income before income tax 7,950,610 1,324,261 647,560 - 9,922,431

Identifiable assets 1,143,781,797 46,776,159

75,884,759 - 1,266,442,715

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52. FRIST-TIME ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS a. Accounting basis for IFRSs information

Besides from adoption of the material accounting policies mentioned at Note 4, the consolidated financial statement for the year ended December 31, 2013 of the Bank and its subsidiaries adopted application of IFRS 1 “First-time Adoption of International Financial Reporting”.

b. Influences caused by transition from R.O.C. GAAP to IFRSs

Reconciliation of consolidated balance sheets and comprehensive income statements are shown as below:

1) Reconciliation of consolidated balance sheet as of January 1, 2012

R.O.C. GAAP Affecting Amounts IFRSs Description

Assets Cash and cash equivalents $ 18,012,075 $ - $ 18,012,075 Due from the Central Bank and call

loans to other banks 82,753,425 - 82,753,425


33,437,176 (2,356) 33,434,820 c. 4)


3,080,168 - 3,080,168

Receivables, net 51,939,318 550,363 52,489,681 c. 4) Discount and loans, net 732,363,961 - 732,363,961 Available-for-sale financial assets 37,085,376 104,361 37,189,737 c. 4) Held-to-maturity financial assets, net 233,697,727 - 233,697,727 Other financial assets, net 5,264,090 (562,053) 4,702,037 d. 1) Property and equipment, net 9,601,903 1,869,479 11,471,382 c. 5) Intangible assets 1,457,004 - 1,457,004 Other assets 6,656,822 (1,035,688) 5,621,134 c. 5), d. 1) Total $ 1,215,349,045 $ 924,106 $ 1,216,273,151 Liabilities Deposits from the Central Bank and

banks 66,374,829 - 66,374,829

Short-term borrowings 899,480 - 899,480 Financial liabilities at fair value through

profit or loss 7,308,944 - 7,308,944


7,071,871 - 7,071,871

Payables 20,169,513 340 20,169,853 c. 4) Deposits and remittances 994,056,325 - 994,056,325 Bank debentures 37,027,843 - 37,027,843 Other financial liabilities 7,847,122 (226,965) 7,620,157 d. 1) Other liabilities 4,048,270

2,033,405

6,081,675

c. 1), c. 2), c.

3), d. 1) Total liabilities 1,144,804,197 1,806,780 1,146,610,977 Equity Share capital 52,574,469 - 52,574,469 Capital surplus 9,962,818 - 9,962,818 Retained earnings 7,242,286 (12,017) 7,230,269 c. 8) Other equity 765,275 (870,657) (105,382) c. 8) Total equity 70,544,848 (882,674) 69,662,174 Total $ 1,215,349,045 $ 924,106 $ 1,216,273,151

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2) Reconciliation of consolidated balance sheet as of December 31, 2012


Assets Cash and cash equivalents $ 19,131,502 $ - $ 19,131,502 Due from the Central Bank and call

loans to other banks 87,672,292 - 87,672,292


27,680,674 (49,803) 27,630,871 c. 4)


236,006 - 236,006

Receivables, net 62,354,485 682,897 63,037,382 c. 4) Discount and loans, net 770,309,413 - 770,309,413 Available-for-sale financial assets 55,787,623 - 55,787,623 Held-to-maturity financial assets, net 219,843,943 - 219,843,943 Other financial assets, net 5,533,415 (1,058,380) 4,475,035 d. 1) Property and equipment, net 9,418,888 1,680,602 11,099,490 c. 5) Intangible assets 2,044,968 2,112 2,047,080 Other assets 5,562,245 (390,167) 5,172,078 c. 5), d. 1) Total $ 1,265,575,454 $ 867,261 $ 1,266,442,715 Liabilities Deposits from the Central Bank and

banks 70,454,184 - 70,454,184

Short-term borrowings 903,218 - 903,218 Financial liabilities at fair value through

profit or loss 8,671,564 - 8,671,564


1,201,450 - 1,201,450

Payables 22,733,956 (99,099) 22,634,857 c. 4) Deposits and remittances 1,029,885,089 - 1,029,885,089 Bank debentures 43,001,812 - 43,001,812 Other financial liabilities 5,977,107 (269,705) 5,707,402 d. 1) Other liabilities 3,782,634

1,949,698

5,732,332

c. 1), c. 2),

c. 3), d. 1) Total liabilities 1,186,611,014 1,580,894 1,188,191,908 Equity Share capital 53,862,022 - 53,862,022 Capital surplus 10,413,462 - 10,413,462 Retained earnings 13,737,927 105,914 13,843,841 c. 8) Other equity 951,029 (819,547) 131,482 c. 8) Total equity 78,964,440 (713,633) 78,250,807 Total $ 1,265,575,454 $ 867,261 $ 1,266,442,715

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3) Reconciliation of consolidated statement of comprehensive income for the year ended December 31, 2012


Net interest $ 14,448,742 $ (186,374) $ 14,262,368 c. 2), d. 2) Net revenues other than interest

Commissions and fee revenues, net 4,565,284 87,140 4,652,424 c. 7) Gains on financial assets and liabilities

at fair value through profit or loss 2,434,862 283,671 2,718,533 c. 4)

Realized gains on available-for-sale financial assets

31,337 - 31,337

Foreign exchange gains, net 325,085 294 325,379 Impairment losses on assets (287,334) - (287,334) Recovery of bad debts 561,481 (561,481) - c. 6) Losses on sale of non-performing loan (76,078) - (76,078) Other non-interest income 157,521 113,999 271,520 d. 2)

Total net revenues 22,160,900 (262,751) 21,898,149 Reversal of bad debts 35,918 561,481 597,399 c. 6) Operating expenses

Employee benefits (7,623,916) (74,776) (7,698,692) c. 1), c. 2) Depreciation and amortization (532,493) (31,173) (563,666) Others (4,271,894) (38,865) (4,310,759) Total operating expenses (12,428,303) (144,814) (12,573,117)

Income before income tax 9,768,515 153,916 9,922,431 Income tax expense (1,548,318) (26,047) (1,574,365) Net income $ 8,220,197 $ 127,869 8,348,066 Other comprehensive income

Exchange differences on translating foreign operations

5,248

Unrealized valuation gains on available-for-sale financial assets

195,292

Unrealized gains on cash flow hedge 28,636 Actuarial gain and loss arising from

defined benefit plans (11,973)

Income tax relating to the components of other comprehensive income

9,723

Other comprehensive income for the year

226,926

Comprehensive income for the year $ 8,574,992

4) Material adjustment of consolidated cash flow statement for the year ended December 31, 2012

Under R.O.C. GAAP, receiving interests, receiving dividends, tax payment, and interest payment are classified as cash flows from operating activities in consolidated cash flow statement under indirect method and below transactions are not asked to be disclosed separately. However, under IAS 7 “Statement of Cash Flows” recognized by Financial Supervisory Commission (FSC), the Bank and its subsidiaries disclosure receiving interests amounted to $23,921,653, receiving dividend amounted to $92,000, interest payment amounted to $9,389,069, and tax payment amounted to $282,854, separately and are all classified as cash flows from operating activities.

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In addition to all of the above, there are not material differences between consolidated cash flow statement under IAS 7 recognized by FSC and under R.O.C. GAAP.

c. Reconciliation of transition to IFRSs

1) Employment benefit - actuarial gain and loss of defined benefit plan

Under R.O.C. GAAP, net transition obligation resulted from first-time adoption of SFAS No. 18 “Accounting for Pensions” should be amortized on a straight line basis over average remaining service life of active plan participants and recognized as net periodic pension cost. Transitional rules in IAS 19 “Employee Benefits” will not be applicable once transited to IFRSs, and the related affected amounts of net transition obligation should be recognized at once and adjusted with retained earnings. Under R.O.C. GAAP, actuarial gains and losses use a corridor approach when measuring its obligations, and amortized over the expected average remaining working lives of the participating employees. Instead, under IAS No. 19 “Employee Benefits” the Bank and its subsidiaries will recognize actuarial gains and losses of defined benefit obligation immediately in full in the period which they occur, as other comprehensive income, and then it will be recognized in retained earnings in statement of changes in equity. The subsequent reclassification to earnings is not permitted. As of December 31, 2012 and January 1, 2012, the Bank and its subsidiaries reapplied actuarial valuation of defined benefit obligation in accordance with IAS 19, resulted in increments of accrued pension liabilities amounted to $917,454 and $1,034,553 under IFRS 1, respectively. For the year ended December 31, 2012 resulted in decrements of pension cost amounted to $85,990.

2) Employment benefit - preferential interest on employees’ deposits

Under Article 28 of the Criteria Governing the Preparation of Financial Reports by Public Bank, the excess preferential interest the Bank offers to the employees under an employment arrangement or internal guideline should be recognized as post-employee benefits on the retirement date. As of December 31, 2012 and January 1, 2012, the Bank and its subsidiaries applied actuarial valuation to preferential interest on retired employees’ deposits in conformity with IAS 19 and Criteria Governing the Preparation of Financial Reports by Public Banks, resulted in increments of provisions for employee amounted to $198,567 and $170,548, respectively, and increment of employment benefit expense amounted to $8,372 with reclassification of interest expense of employees’ deposit to employment benefit expense amounted to $168,131 for the year ended December 31, 2012.

3) Recognition of provisions

The amount recognized as a provision should be the best estimate of the expenditure required to settle the present obligation at the balance sheet date, that is, the amount based on fee revenues. The Bank and its subsidiaries reversed the provisions after the transition to IFRSs. As of December 31, 2012 and January 1, 2012, the Bank and its subsidiaries adjusted with decrements respectively in provisions amounted to $35,398 and $36,398 and deferred tax assets amounted to $5,237 and $5,407 in accordance with IAS 37 “Provisions, Contingent Liabilities and Contingent Assets”.

4) Regular way transactions of financial assets

Under R.O.C. GAAP, entities have flexibility to use either trade date or settlement date accounting for recognition by the product category of financial instruments. The Bank and its subsidiaries applied settlement date accounting on bonds transactions and trade date accounting to regular way purchased or sold financial assets. After the transition to IFRSs, financial assets in the same category should be applied trade date or settlement date accounting consistently.

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As of December 31, 2012 and January 1, 2012, the Bank and its subsidiaries adjusted respectively in following accounts in accordance with IAS 39 “Financial Instruments: Recognition and Measurement”: Increments in receivables amounted to $102,737 and $53,281; decrements in financial assets at fair value through profit or loss amounted to $49,803 and $2,356; increments in payables amounted to $53,094 and $155,332. For the year ended December 31, 2012, the Bank and its subsidiaries adjusted decrement in gains on financial assets and liabilities at fair value through profit or loss amounted to $114. As of January 1, 2012, the Bank and its subsidiaries adjusted increment in available-for-sale financial assets amounted to $104,361 and decrement in retained earnings amounted to $46.


Under R.O.C. GAAP, rental assets and idle assets are classified as other assets. After the transition to IFRSs, assets held to earn rentals, or for capital appreciation, or both, are classified as investment properties, and others are reclassified as property and equipment. As of December 31, 2012 and January 1, 2012, the Bank and its subsidiaries reclassified other assets to property and equipment amounted to $1,681,750 and $1,871,807.

6) Recovery of bad debts

For the year ended December 31, 2012, the Bank and its subsidiaries reclassified recovery of bad debts to bad debt expense amounted to $561,481 in accordance with the revised Criteria Governing the Preparation of Financial Reports by Public Banks.

7) Reconciliation of commission revenues

The Bank and its subsidiaries adjusted recognition basis of commission revenues. For the year ended December 31, 2012, the Bank and its subsidiaries adjusted commission revenues with increment of $87,140.

8) Reconciliation of retained earnings

Major differences of retained earnings for January 1, 2012 under R.O.C. GAAP and IFRSs are due to IFRS 1, the Bank and its subsidiaries reclassified unrealized revaluation increment on land as retained earnings amounted to $1,735,887 and adjusted in related pension liabilities amounted to $2,144,391. In accordance with IAS 19, the Bank and its subsidiaries retrospectively recognized employment benefit provision of retired servicemen’s preferential interest on deposit amounted to $170,548. Adjustment of recognition basis of commission revenues caused increment of retained earnings amounted to $485,635. Estimated amount recognized as a provision caused increment of retained earnings amounted to $36,398 and related tax effect which caused increment of retained earnings amounted to $113,438.

d. Reclassification

1) According to classification of account code of financial service industry, guarantee deposits are reclassified from other

financial assets to other assets and guarantee deposits received are reclassified from other financial liabilities to other liabilities.

2) Interest expense of principal of structured products is reclassified from net (expense) revenues other than interest to net

interest. e. IFRS 1 optional exemptions

IFRS 1 - “First-time Adoption of International Financial Reporting Standards” states the procedures of entity’s first-time adoption of IFRSs. According to the standard, the Bank and its subsidiaries should establish the accounting policy under IFRSs and apply retrospectively to the opening statement of financial position on effective date of IFRSs. IFRS 1 provides a number of optional exemptions from the general principle of full retrospective application, the Bank and its subsidiaries choose as below. 1) The Bank and its subsidiaries elected not to apply IFRS 3 (revised in 2008), “Business Combinations,” retrospectively to

business combinations that occurred before the date of transition. The Bank and its subsidiaries applied exemptions to the business combinations occurred before the date of transition and therefore no adjustment to the book value.

2) The Bank and its subsidiaries take R.O.C. GAAP revaluation as deemed cost for parts of lands on the transition date.

Other properties and equipment adopted related retrospective application of IAS 16 “Property, Plant and Equipment”. Meanwhile, the Bank and its subsidiaries adopted both application of IAS 16 and IAS 37 “Provisions, Contingent Liabilities and Contingent Assets” to measure the original estimated cost of dismantling and removing the asset and restoring the site.

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3) The bank and its subsidiaries recognized all unrecognized cumulative actuarial gain and loss related to employee benefit plan in retained earnings on the transition date of IFRS.

4) The bank and its subsidiaries adopted related retrospective application of IAS 21 “The Effects of Changes in Foreign

Exchange Rates” for cumulative translation adjustment on the transition date of IFRS.

TABLE 1 BANK SINOPAC AND INVESTEES MARKETABLE SECURITIES ACQUIRED AND DISPOSED AT COSTS OR PRICES OF AT LEAST $300 MILLION OR 10% OF THE ISSUED CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2013 (In Thousands of New Taiwan Dollars or Shares)

Company Name

Type and Name of

Marketable Securities


Counterparty Relationship

Beginning Balance Acquisition Disposal Ending Balance

Shares Amount Shares Amount Shares Amount Carrying Amount

Gain (Loss) on Disposal Shares Amount

Equity

investment

Bank SinoPac


Equity investment - equity method

- The subsidiary of the Bank

- $ - - $ 9,700,905 - $ - $ - $ - - $ 9,700,905

Note 1: Excluded the adjustment of original investing cost. Note 2: Foreign currency are translated to New Taiwan dollars with current rate of the date of balance sheet. Note 3: For the information of Bank SinoPac (China) Ltd. Please refer to Note 50.

TABLE 2 BANK SINOPAC AND INVESTEES RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$300 MILLION OR 10% OF THE ISSUED CAPITAL DECEMBER 31, 2013 (In Thousands of New Taiwan Dollars)

Company Name Related Party Relationship Ending

Balance Turnover

Rate

Overdue Amounts Received in Subsequent

Period

Allowance for

Bad Debts Amount Action Taken

Bank

SinoPac SinoPac Financial

Holdings Company Limited

The parent company of the Bank

$ 1,256,246 (Note 1)

- $ - - $ - $ -


The subsidiary of the Bank

322,281 (Note 2)

- - - 183,585 -

Note 1: Most of receivables resulted from the use of the linked-tax system (recognized in current tax assets) and related parties. Note 2: The balance mainly included working capital of Bank SinoPac (China) Ltd. (preparatory office) and other related parties

receivables, which have been eliminated in the consolidated financial statements. Note 3: For the information about Bank SinoPac (China) Ltd. Please refer to Note 50.

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TABLE 3 BANK SINOPAC AND INVESTEES TRADING INFORMATION - SALE OF NONPERFORMING LOANS FOR THE YEAR ENDED DECEMBER 31, 2013 (In Thousands of New Taiwan Dollars)

Date Counter-parties Loans Carrying Amount (Note)

Selling Price (Note)

Gain or (Loss) on Disposal

Attachment Relation

Bank SinoPac

December 24, 2013 Macquarie Bank Ltd. Commercial secured loans

$ 61,961 $ 75,335 $ 4,908 - None

FENB

March 21, 2013 Basar Investment LLC Commercial secured loans

63,472 63,472 - - None

March 25, 2013 Spiegel Development, Inc.

Commercial secured loans

11,812 11,812 - - None

March 29, 2013 TerraCotta Realty Fund, LLC


11,447 11,447 - - None

March 29, 2013 Miracle Day Investments LLC and Dayco Funding Corporation


31,250 31,250 - - None

April 25, 2013 Spiegel Development, Inc.


23,880 23,880 - - None

April 26, 2013 Piercy Road Investors II, LLC


28,067 28,067 - - None

April 26, 2013 3150 24th Street Investors, LLC


8,305 8,305 - - None

May 16, 2013 TerraCotta Realty Fund, LLC


33,176 33,176 - - None

May 20, 2013 15401-15475 E. Valley Blvd. Trust


- 716 716 - None

June 28 2013 TerraCotta Realty Fund, LLC


11,243 11,243 - - None

July 31 2013 Spiegel Development, Inc.


62,151 62,151 - - None

Note: Carrying amount of Bank SinoPac is original credit amount net of doubtful account. Carrying amount of FENB is the

original credit amount, and foreign-currency amounts are translated at the exchange rate of balance sheet date.

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TABLE 4 BANK SINOPAC AND INVESTEES MARKETABLE SECURITIES HELD DECEMBER 31, 2013 (In Thousands of New Taiwan Dollars or Shares)

Name of Holding Company

Type and Name of Marketable Securities Relationship


December 31, 2013

Note Shares/ Units/ Face

Amount

Carrying Amount (Note 1)

Percentage of

Ownership

Market Value or Net Asset

Value (Note 1)

SinoPac Bancorp Stock Far East National Bank Subsidiary Equity

investments - equity method and unquoted equity investments

8,070 $9,592,966 100.00 $9,592,966 Note 2

SinoPac Capital Limited

(H.K.) Stock

SinoPac Capital (B.V.I.) Ltd.


4,450 32,047 100.00 49,367 Note 2

SinoPac Insurance Brokers Ltd.


100 1,159 100.00 153,471 Note 2

MeiTa Industrial Co., Ltd.

- Unquoted equity investments

212 12,847 0.49 12,847 Note 3

Fund China Enterprise Capital

Ltd. - Available-for-sale

financial assets 0.02 33,382 0.85 33,382 Note 4

SinoPac Capital (B.V.I.)

Ltd. Stock



1,000 3,863 100.00 11,870 Note 2

SinoPac Property

Insurance Agent Co., Ltd.

Bond

Government bond 88-3 - Guarantee deposits

600 621 - 718 Pledge

SinoPac Life Insurance

Agent Co., Ltd. Bond

Government bond 88-3 - Guarantee deposits

600 621 - 718 Pledge

Note 1: Foreign-currency amounts were translated to New Taiwan dollars at the exchange rate as of the balance sheet date. Note 2: Net asset values were based on the investees’ audited financial statements for the latest period. Note 3: Net asset values were based on the carrying amounts. Note 4: Fair values were based on the closing prices of the underlying assets of the beneficiary certificates as of December 31, 2013.

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TABLE 5 BANK SINOPAC AND INVESTEES INFORMATION ON INVESTED ENTERPRISES FOR THE YEAR ENDED DECEMBER 31, 2013 (In Thousands of New Taiwan Dollars or Shares)

Investee Company Location Main Businesses and Products Percentage

of Ownership

Carrying Amount

Investment Gains

Consolidated Investment

Note Shares

Imitated Shares

Total

Shares Percentage

of Ownership

Financial related enterprise Bank SinoPac (China) Ltd. (preparatory office)

Nanking Commercial Bank 100.00 $ 9,760,662 $ 59,315 - - - 100.00 Subsidiary and Note 1

SinoPac Bancorp California Holding company 100.00 3,499,035 198,838 20 - 20 100.00 Subsidiary and Note 2

SinoPac Capital Limited (H.K.) Hong Kong

Credit and investment service 100.00 1,360,210 59,445 229,998 - 229,998 100.00 Subsidiary and Note 2


Taipei Life insurance agent 100.00 863,905 847,123 300 - 300 100.00 Subsidiary


Taipei Property insurance agent 100.00 32,722 26,577 300 - 300 100.00 Subsidiary

SinoPac Bancorp California Holding company 100.00 6,043,165 - 7,800 - 7,800 100.00 Preferred stock

Global Securities Finance Corporation

Taipei Securities financing 2.63 173,496 2,957 21,552 - 21,552 2.87 Note 3

Taipei Foreign Exchange Inc. Taipei Foreign exchange market maker 3.43 6,800 2,176 680 - 680 3.43 Note 3 Taiwan Futures Exchange Taipei Futures exchange and settlement 1.07 21,490 5,837 5,923 - 5,923 2.08 Note 3 Fuh Hwa Securities Investment Trust Co., Ltd.

Taipei Securities investment trust and consultant

4.63 15,000 9,000 1,500 - 1,500 4.63 Note 3

Financial Information Service Co., Ltd.

Taipei Planning and developing the information system of across banking institution and managing the information web system

2.28 91,000 26,618 10,238 - 10,238 2.28 Note 3

Taiwan Asset Management Corporation

Taipei Evaluating, auctioning, and managing for financial institutions’ loan

0.28 37,500 3,378 3,750 - 3,750 0.28 Note 3

Taiwan Financial Asset Service Co.

Taipei Auction 5.88 100,000 1,000 10,000 - 10,000 5.88 Note 3

Sunny Asset Management Corp. Taipei Purchasing for financial institutions’ loan assets

1.42 164 112 85 - 85 1.42 Note 3

Taiwan Depository and Clearing Co.

Taipei Computerizing book-entry operation for securities

0.08 4,639 306 3,012 - 3,012 0.92 Note 3

Nonfinancial related enterprise Taiwan Television Enterprise, Ltd. Taipei Wireless television company 4.84 143,057 - 13,924 - 13,924 4.96


foreign-currency-denominated income and expenses, which were translated to New Taiwan dollars at the average exchange rate from August 6, 2013 (capital injection date) to December 31, 2013.


foreign-currency-denominated income and expenses, which were translated to New Taiwan dollars at the average exchange rate for the year ended December 31, 2013.

Note 3: Investment gains are dividends income. Note 4: For the information about Bank SinoPac (China) Ltd., please refer to Note 50.

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TABLE 6 BANK SINOPAC AND INVESTEES RELATED PARTIES TRANSACTIONS FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012 (In Thousands of New Taiwan Dollars) 2013

No. (Note 1)

Transaction Company Counter-party Nature of

Relationship (Note 2)

Description of Transactions

Financial Statement Account Transaction Amount

Transaction Item

Percentage of Consolidated

Revenue/Assets (Note 3)

0 Bank SinoPac SinoPac Bancorp and subsidiaries 1 Cash and cash equivalents $ 19,546 Note 4 -

SinoPac Bancorp and subsidiaries 1 Receivables, net 2,153 Note 4 -

SinoPac Bancorp and subsidiaries 1 Deposits and remittances 5,192 Note 4 -

SinoPac Capital (H.K.) Limited and subsidiaries

1 Deposits and remittances 221,945 Note 4 0.02


1 Commission and fee revenues, net 9 Note 4 -


1 Other operating expense 11,061 Note 4 0.04

SinoPac Life Insurance Agent 1 Receivables, net 118,986 Note 4 0.01

SinoPac Life Insurance Agent 1 Deposits and remittances 991,483 Note 4 0.07

SinoPac Life Insurance Agent 1 Commission and fee revenues, net 457,221 Note 4 1.73

SinoPac Life Insurance Agent 1 Other non interest net revenues 4,511 Note 4 0.02

SinoPac Property Insurance Agent 1 Deposits and remittances 29,657 Note 4 -

SinoPac Property Insurance Agent 1 Commission and fee revenues, net 14,721 Note 4 0.06

SinoPac Property Insurance Agent 1 Other non interest net revenues 994 Note 4 -


1 Receivables, net 315,766 Note 4 0.02

1 SinoPac Bancorp and subsidiaries Bank SinoPac 2 Cash and cash equivalents 5,192 Note 4 -

Bank SinoPac 2 Deposits and remittances 21,699 Note 4 -

2 SinoPac Capital (H.K.) Limited and subsidiaries

Bank SinoPac 2 Cash and cash equivalents 44,523 Note 4 -

Bank SinoPac 2 Other financial assets, net 177,422 Note 4 0.01

Bank SinoPac 2 Other non interest net revenues 11,061 Note 4 0.04

Bank SinoPac 2 Other operating expense 9 Note 4 -

3 SinoPac Life Insurance Agent Bank SinoPac 2 Cash and cash equivalents 991,483 Note 4 0.07

Bank SinoPac 2 Payables 118,986 Note 4 0.01

Bank SinoPac 2 Commission and fee revenues, net 457,221 Note 4 1.73

Bank SinoPac 2 Other operating expense 4,511 Note 4 0.02

4 SinoPac Property Insurance Agent Bank SinoPac 2 Cash and cash equivalents 21,657 Note 4 -

Bank SinoPac 2 Other financial assets, net 8,000 Note 4 -



5 Bank SinoPac (China) Ltd. (preparatory office)

Bank SinoPac 2 Payables 315,766 Notes 4 and 5

0.02

(Continued)

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2012

No. (Note 1)

Transaction Company Counter-party Nature of

Relationship (Note 2)

Description of Transactions

Financial Statement Account Transaction Amount

Transaction Item

Percentage of Consolidated

Revenue/Assets (Note 3)

0 Bank SinoPac SinoPac Bancorp and subsidiaries 1 Cash and cash equivalents $ 55,664 Note 4 -

SinoPac Bancorp and subsidiaries 1 Receivables, net 2,093 Note 4 -

SinoPac Bancorp and subsidiaries 1 Deposits and remittances 6,159 Note 4 -


1 Deposits and remittances 179,889 Note 4 0.01


1 Commission and fee revenues, net 5 Note 4 -


1 Other operating expense 12,451 Note 4 0.06

SinoPac Life Insurance Agent 1 Receivables, net 100,762 Note 4 0.01

SinoPac Life Insurance Agent 1 Deposits and remittances 897,034 Note 4 0.07

SinoPac Life Insurance Agent 1 Commission and fee revenues, net 420,799 Note 4 1.92

SinoPac Life Insurance Agent 1 Other non interest net revenues 3,922 Note 4 0.02

SinoPac Property Insurance Agent 1 Deposits and remittances 32,026 Note 4 -

SinoPac Property Insurance Agent 1 Commission and fee revenues, net 15,207 Note 4 0.07

SinoPac Property Insurance Agent 1 Other non interest net revenues 504 Note 4 -

1 SinoPac Bancorp and subsidiaries Bank SinoPac 2 Cash and cash equivalents 6,159 Note 4 -

Bank SinoPac 2 Deposits and remittances 57,757 Note 4 -

2 SinoPac Capital (H.K.) Limited and subsidiaries

Bank SinoPac 2 Cash and cash equivalents 53,972 Note 4 -

Bank SinoPac 2 Other financial assets, net 125,917 Note 4 0.01

Bank SinoPac 2 Other non interest net revenues 12,451 Note 4 0.06


3 SinoPac Life Insurance Agent Bank SinoPac 2 Cash and cash equivalents 897,034 Note 4 0.07

Bank SinoPac 2 Payables 100,762 Note 4 0.01


Bank SinoPac 2 Other operating expense 3,922 Note 4 0.02

4 SinoPac Property Insurance Agent Bank SinoPac 2 Cash and cash equivalents 12,026 Note 4 -

Bank SinoPac 2 Other financial assets, net 20,000 Note 4 -



Note 1: Transactions between parent company and subsidiaries should be distinguished as follows:

a. Parent company: 0. b. Subsidiaries are numbered in sequence from 1.

Note 2: Types of transactions with related parties were classified as follows:

1. Parent company to subsidiaries. 2. Subsidiaries to parent company. 3. Subsidiaries to subsidiaries.

(Continued) Note 3: In the computation of percentage of consolidated revenue/assets, if the amount is the ending balance of assets or liabilities,

the accounts percentage will be calculated by dividing the consolidated assets or liabilities; if the amount is the amount of income or expense, the accounts percentage will be cumulated by dividing the consolidated revenues in the same period.

Note 4: For the transactions between the Bank and related parties, the terms are similar to those transacted with unrelated parties. Note 5: For the information about Bank SinoPac (China) Ltd. Please refer to Note 50.

246

Financial Reports

TABLE 7 BANK SINOPAC AND SUBSIDIARIES INFORMATION ON INVESTMENT IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2013 (In Thousands of New Taiwan Dollars)

Investee Company

Main Businesses

and Products

Total Amount of

Paid-in Capital

Method of Investment

Accumulated Outflow of Investment

from Taiwan as of January

1, 2013

Investment Flows Accumulated Outflow of Investment

from Taiwan as of

December 31, 2013

Percentage of

Ownership

Equity in the Earnings (Losses)

(Notes 2 and 3)

Carrying Value (Notes 2 and 3)

Accumulated Inward

Remittance of Earnings

Outflow Inflow

Bank SinoPac (China) Ltd.

Commercial Bank

$ 9,700,905 Investment in Mainland China directly

$ - $ 9,700,905 $ - $ 9,700,905 100.00 $ 59,315 $9,760,662 $ -

Accumulated Investment in Mainland

China as of December 31, 2013 Investment Amounts Authorized by

Investment Commission, MOEA Limit on Investment

$ 9,700,905 $ 9,700,905 $ 52,531,147

Note 1: The accumulated investment amounts in Mainland China as of December 31, 2013 are US$323,871 thousand and had been

authorized by the Investment Commission, MOEA are US$323,871 thousand. Note 2: The gain on investment recognized and the value of investment presented for the year ended December 31, 2013 have been

audited by independent certified public accountants. Note 3: Foreign currency are translated to N.T. dollars with current rate of the date of balance sheet, only the gains or losses

investments are translated with current period average rate. Note 4: For the information of Bank SinoPac (China) Ltd., please refer to Note 50.

247

bank.sinopac.com

248

bank.sinopac.com

In US$ millions

National income

GDP

GDP per capital (in US$)

Economic growth rate (GDP)

Foreign trade

Export

Import

Trade surplus

Price indexes

Consumer price Index

Wholesale price Index

Money supply

Annual growth in M2

Annual growth in M1b

Annual growth in M1a

Key interest rates (end of period)

Rates of central bank

Discounted rate

Rate on accommodations with collateral

Interbank call loan market

Weighted average of overnight

Stock market

Weighted Stock Index (TAIEX)

Average

Year-end

Daily average trading value*

Foreign exchange

Foreign exchange reserve

Exchange rate (NT$/US$) Average

Year-end

Balance of payment

Others

Industrial production index

Unemployment rate

Growth rate of investment in private sector

Population

2013 2012

489,256

20,958

2.11%

305,451

270,070

35,381

0.79%

(2.43%)

4.78%

7.27%

9.15%

1.875%

2.250%

0.386%

8092.77

8611.51

77.00

416,811

11,318

0.75%

4.18%

7.38

23,373,517

475,257

20,423

1.48%

301,181

270,473

30,708

1.93%

(1.16%)

4.17%

3.45%

3.55%

1.875%

2.250%

0.428%

7,481.34

7,699.50

80.95

403,169

29.615

29.136

15,484

(0.25%)

4.24%

(1.85%)

23,315,822

2011

465,187

20,057

4.19%

308,257

281,438

26,820

1.42%

4.32%

5.83%

7.16%

8.08%

1.875%

2.250%

0.341%

8,155.79

7,072.08

106.06

385,547

29.475

30.290

6,239

4.44%

4.39%

(0.25%)

23,224,912

2010

428,186

18,503

10.76%

274,601

251,236

23,364

0.96%

5.46%

4.53%

14.93%

14.51%

1.625%

2.000%

0.185%

7,949.63

8,972.50

112.43

382,005

31.628

30.368

40,173

24.17%

5.21%

29.76%

23,162,123

2009

377,529

16,359

(1.81%)

203,675

174,371

29,304

(0.86%)

(8.73%)

7.45%

16.54%

13.37%

1.25%

1.625%

0.109%

6459.56

8188.11

118.25

348,198

54,126

(7.91%)

5.85%

(18.15%)

23,119,772

Items

* (In NT$ billions)


SinoPac BancorpAddress : 977 N. Broadway, Los Angeles, CA 90012, U.S.A.Telephone：1-886-336-2872

Far East National BankAddress : 977 N. Broadway, Los Angeles, CA 90012, U.S.A.Telephone：1-866-336-2872

SinoPac Life Insurance Agent Co., Ltd.Address : 10F, No. 36, Nanking East Road, Sec. 3, Taipei 104, Taiwan (R.O.C.)Telephone：886-2-2506-3333

SinoPac Property Insurance Agent Co., Ltd.Address : 6F, No. 36, Nanking East Road, Sec. 3, Taipei 104, Taiwan (R.O.C.)Telephone：886-2-2506-3333

SinoPac Capital Ltd.Address : Units 03-06, 12A Floor, One Peking, 1 Peking Road, Tsim Sha Tsui, Kowloon, Hong KongTelephone：852-3655-8688

SinoPac Capital (B.V.I) Ltd.Address : P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin IslandsTelephone: 852-3655-8688

SinoPac Insurance Brokers Ltd.Address : Units 03-06, 12A Floor, One Peking, 1 Peking Road, Tsim Sha Tsui, Kowloon, Hong Kong Telephone: 852-3655-8688

Major Subsidiaries

Bank SinoPac

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