Cathay ANNUAL REPORT 2010 Financial Holdings

Working together towards a common goal, reaching beyond limits WorldReginfo - af615e37-0be6-4548-9e99-d2cbd50dd787 Working together towards a common goal, reaching beyond limits

Convergence of force is the key to the success of an enterprise. Cathay Financial Holdings aspires to be a leader, converging the power and momentum of all entities in the organization into an invincible force in order to, stride forward and reach beyond limits! WorldReginfo - af615e37-0be6-4548-9e99-d2cbd50dd787 Contents Letter to Shareholders ...... 2

Overview of Cathay Financial Holding Co., Ltd

1. Company Profile ...... 4 2. Organizational Chart ...... 4 3. Parent/Subsidiary Relationship Chart...... 5 4. Board of Directors, Independent Directors and Key Management ...... 6 5. Company Capital and Shares ...... 6 6. 2011 Business Plan ...... 7 7. Capital Allocation Plan ...... 7

Overview of Subsidiaries

Cathay Life Insurance Co., Ltd. Cathay Securities Corporation 1. Message from the Presidents ...... 8 1. Message from the Chairman ...... 24

2. Company Profile ...... 9 2. Company Profile ...... 25

3. Business Scope ...... 11 3. Business Scope ...... 27

4. 2011 Business Plan and Operational Targets .....11 4. 2011 Business Plan and Operation Targets .. . 27

Cathay United Bank Co., Ltd Cathay Venture Inc. 1. Message from the Chairman ...... 14 1. Company Profile ...... 28 2. Company Profile ...... 15 2. Business Scope ...... 29 3. Business Scope ...... 17 3. 2011 Business Plan...... 29 4. 2011 Business Plan and Operation Targets ..... 18 Cathay Century Insurance Co., Ltd. Overseas Branches and Offices ..... 30 1. Message from the Chairman ...... 20 The Year in Review 2010 ..... 32 2. Company Profile ...... 21 ...... 3. Business Scope ...... 22 Honors and Accolades 34 4. 2011 Business Plan and Operation Targets ..... 23 Financial Report ...... 35

2010.12.31 NTD/USD Exchange Rate：29 .13 WorldReginfo - af615e37-0be6-4548-9e99-d2cbd50dd787 01 WorldReginfo - af615e37-0be6-4548-9e99-d2cbd50dd787 Letter to Shareholders

Looking back on 2010, amid the gradual recovery of the global economy Taiwan’s economy saw stellar growth, boosted in part by the increasingly close economic ties with China. The positive momentum is expected to continue in the coming years with the signing of the Economic Cooperation Framework Agreement (ECFA) with China.

Based on the efforts of our employees, our company turned in a strong performance in 2010. Cathay United Bank generated pre-tax earnings of US$420 million in 2010, the best performance in the past six years. Cathay United Bank also continued to maintain excellent asset quality with an non-performing loan (NPL) ratio of 0.28% in 2010, ranking in the top tier among domestic banks in terms of asset quality. Cathay Life generated US$11.33 billion and US$19.27 billion in first-year premium income and total premium income, respectively in 2010, both hitting record highs. Cathay Life’s first-year premium equivalent, which better reflects policy value, amounted to US$2.7 billion in 2010, growing 48% from the previous year and making it a solid industry leader. In addition, the net worth of Cathay Life continued to rise, reaching US$3.9 billion. Its unrealized gain on valuation reached US$410 million, surpassing the level at the end of 2009. Cathay Century Insurance also saw stable premium income in 2010 and ranked second among non-life insurance companies in the market. Cathay Securities had strong performance in cross-selling and its 2010 after-tax profit reached a record high.

Along with the opening of the financial service market between Taiwan and China, we have also made strong headway in China. Cathay United Bank’s Shanghai Branch opened for business on December 23, 2010, the first Taiwan bank to open a branch in China. The Shanghai Branch will seek to achieve qualification to engage in RMB business in the shortest time possible, and in the longer term will evaluate the potential to establish a bank subsidiary bank. Our life and non-life insurance subsidiaries are also steadily yet prudently expanding their reach in China. As of year-end 2010, Cathay Life has 9 offices (head office and branches) and 37 sales and service offices across China. Cathay Century Insurance established a head office in Shanghai, and as of the end of March 2011, had 6 branches in Jiangsu, Fujian, Guangdong, Jejiang, Shangdong (under preparation) and Beijing (under preparation), and 2 sales and service offices in Xiamen and Kunshan, thus having a presence in nine major cities with large concentrations of Taiwanese companies. With the establishment of Cathay United Bank’s Shanghai Branch, Cathay Financial Holding’s dual-engine strategy of “Insurance + Banking” in China is complete and able to provide high quality, diverse and innovative financial services to meet the needs of clients in Taiwan, China and Hong Kong.

With respect to our expansion in Vietnam, Cathay Life Insurance Vietnam opened for business in July 2008 and had offices set up in five major municipalities by the end of 2010. Cathay United Bank also continues to expand in the Vietnamese market. As of year-end 2010, Cathay United Bank and its subsidiary Indovina Bank had 38 offices in Vietnam. Indovina Bank also received the 2007 ~ 2009 Excellence Award in Banking from Vietnam’s Presidential Office. It is the only foreign bank that received such an honor, reflecting its excellent performance in the country. Cathay Insurance Vietnam launched its business in December 2010. Headquartered in Ho Chi Minh City, Cathay Insurance Vietnam will seek to serve Taiwanese companies in Vietnam and the local Vietnam market. We are confident that we will continue to lead our peers in extending our success in Taiwan to other parts of the world as we aspire to become the best financial institution serving Chinese communities.

Looking ahead to 2011, with ECFA becoming effective as of January 1, 2011, the economic and trade cooperation between Taiwan and China will enter a new era and is expected to drive growth in the domestic economy. Further, increasing private consumption and business investment will also bring a new wave of opportunities for the domestic financial industry. Under the guiding principle of “innovative service and pursuit of excellence,” Cathay Financial Holdings will continue to take advantage of all opportunities and seek to continue to generate steady growth in each of its core businesses and maintain its market leader status as we strive to create maximum value for all our shareholders. .

Chairman Hong-Tu Tsai

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03 WorldReginfo - af615e37-0be6-4548-9e99-d2cbd50dd787 Overview of Cathay Financial Holding Co., Ltd.

Company Profile Reflecting the diversification and globalization of financial markets, and to provide more comprehensive services to our customers, Cathay Financial Holding Co., Ltd. was established on December 31, 2001 and has registered capital of US$4.12 billion. Our primary subsidiaries include Cathay Life Insurance, Cathay United Bank, Cathay Century Insurance, Cathay Securities, and Cathay Venture, serving collectively close to 12 million customers through nearly 800 business offices around Taiwan.

Looking into the future, we will continue to seek suitable partners to further strengthen our operations. With a corporate culture that stresses integrity and trustworthiness, we will continue to integrate our products and services and leverage our extensive network of business locations and professional sales forces to provide our customers with convenient “one-stop shopping” and differentiated services. Based on our core principle of “managing for the long-term,” we aspire to be the most trustworthy and reliable financial holding company and the best financial institution serving Chinese communities.

Assets US$160.91 billion

Net income US$148 million

Number of branches and sale offices 790

Number of customers: Approx. 11,700,000

Number of employees 43,000

Organizational Shareholders

Board of Directors Audit Committee

Strategic Management Committee Chairman Operations Committee Vice Chairman

President

Corporate Economic Administration Auditing Div. Financial Div. Risk Mgnt. Div. Planning Div. Information Div. Research Div. Div. Accounting Dept. Financial Planning Dept. Integrated Marketing Dept. Investor Relations Dept. Strategic Planning Dept. Public Relations Dept. Administration Dept. Legal Dept.

04 WorldReginfo - af615e37-0be6-4548-9e99-d2cbd50dd787 Cathay Financial Holdings Annual Report

國泰金融控股股份有限公司概況

Hong-Tu Tsai, Chairman of Cathay Financial Holdings Gregory K.H. Wang, Vice Chairman of Cathay Financial Holdings

Parent-Subsidiary關係企業架構圖 Structure Cathay Financial Holding Co., Ltd.

Cathay United Bank Cathay Century Cathay Life Insurance Cathay Securities Cathay Venture Inc. Co., Ltd. Insurance Co., Ltd. Co., Ltd. Corporation

Cathay Insurance Symphox Information Cathay Futures Corp. Co., Ltd.(China) Co., Ltd.

Cathay Insurance (Vietnam) Co., Ltd. Cathay Life Insurance Co., Ltd. (China)

Indovina Bank Cathay Securities Investment Limited Consulting Co., Ltd.

Seaward Card Co., Cathay Insurance Ltd. (Bermuda) Co., Ltd.

Cathay Life Insurance Cathay Life Insurance Agency Corp. (Vietnam) Co., Ltd.

05 WorldReginfo - af615e37-0be6-4548-9e99-d2cbd50dd787 Overview of Cathay Financial Holdings Co., Ltd.

Cathay Financial Holdings published “Taiwan Monthly GDP Cathay Financial Holdings, Cathay Life, and Cathay Century and Economic Climate Forecast.” Insurance were chosen No. 1 Ideal Brand by consumers in 2010. Board of Directors, Independent Directors, Supervisors and Key Managers Board of Directors Name Education Experience Hong-Tu Tsai J.D., Southern Methodist University Chairman, Cathay Life Insurance Cheng-Ta Tsai B.A., Chinese Culture University Managing Director, Cathay Life Insurance Cheng-Chiu Tsai M.A., Keio University Chairman, Cathay Century Insurance

Gregory K.H. Wang B.A., Tamkang University Vice Chairman, Cathay Financial Holdings, Chairman, Cathay United Bank Tsu-Pei Chen B.A., National Chengchi University Vice Chairman, Cathay United Bank Chang-Ken Lee M.B.A., University of Pennsylvania President, Cathay United Bank Ming-Ho Hsiung M.A., University of Iowa President, Cathay Life Insurance Fa-Te Chang B.A., National Chung Hsing University Chairman, Cathay Insurance (China) J.H. Hsu M.B.A., National Chengchi University President, Cathay Century Insurance David P. Sun M.B.A., Harvard University Chairman, Cathay Securities Corporation

Independent Directors Name Education Experience Min-Houng Hong Ph.D. Michigan State University Chairman, Panasonic Taiwan Co., Ltd.

Tsing-Yuan Huang Ph.D. Business Graduate School, Nihon Supervisor, Hon Hai Precision Industry Co., Ltd. University, Japan Andrew Ming-Jian Kuo M.B.A., Baruch College, City University of New York Vice Chairman, The Blackstone Group (HK) Limited.

Chief Executive Officer Position Name Education Chairman Hong-Tu Tsai J.D., Southern Methodist University

Key Managers Position Name Education President Chang-Ken Lee M.B.A., University of Pennsylvania Exective Vice President Tzung-Han Tsai J.D., Georgetown University Chief Auditor J. H. Chen B.A., Fu Jen Catholic University Chief Financial Officer Grace Chen M.B.A., National Chengchi University Division Head David P. Sun M.B.A., Harvard University Exective Vice President Alan Lee M.B.A., National Taiwan University Division Head Hsin-Hsun Chen B.A., Feng Chia University Division Head Shun-Yu Chuang M.B.A., Massachusetts Institute of Technology

Type of stock No. of shares Amount Capital and Shares Common stock 10,154,421 thousands of shares US$3,484,702 thousands of dollars

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2011 Business Plan Cathay Financial Holdings is committed to maximizing value for its with Indovina Bank to develop the local market. Cathay Life shareholders, customers and employees. Our future business goals also employs a prudent strategy in expanding its life insurance emphasize integration across businesses, cross-selling and overseas business and is focused on replicating our dual-engine strategy expansion with the aim to further strengthen the competitiveness of “Insurance + Banking” in the Vietnam market. In addition to of Cathay Group and achieve our goal of being the best financial China and Vietnam, we will continue to evaluate the potential of institution serving Chinese communities. Our 2011 business plan is other Southeast Asian markets as we work towards becoming the outlined below best financial institution serving Chinese communities.addition to China and Vietnam, we will continue to evaluate the potential of 1.Focus on customer demand, leverage cross-selling other Southeast Asian markets as we work towards becoming the opportunities and provide complete range of financial best financial institution serving Chinese communities. services In response to changing demographics and growing demand for financial services, Cathay Financial Holdings seeks to Capital Utilization Plan provide a broad range of financial products and services through 1.Continually monitor capital allocation of the group and make our extensive network of business locations and professional adjustments whenever appropriate sales forces to meet the investment needs of customers at each In response to the drastic changes in global financial markets stage of their lives. Furthermore, we will continue to develop in recent years, we will pay close attention to developments competitive financial products, and through our dual engine of in the global markets and their potential impact on the capital “Insurance + Banking” and integrated marketing, solidify the adequacy of each subsidiary, group growth strategies, stock core competitiveness of the Cathay Group to achieve the goals of dividend policy, outside capital and capital needs of subsidiaries. reducing costs , sharing resources sharing and realizing synergies We actively manage our capital in order to maximize the capital across business, and in the process, become the most trustworthy efficiency of each of our subsidiaries. and reliable financial institution to our customers 2. Seek optimal financing terms and timing and maintain 2.Continue to achieve organic growth while seeking strategic liquidity partnerships In order to improve our capital structure and adequacy, we In addition to continuing to seek organic growth in the Taiwan issued NT$20 billion of subordinated bonds in 2008 and 2009 market, Cathay Financial Holdings constantly evaluates the respectively. Going forward, we will continue to evaluate opportunity to forge strategic partnerships. Following Cathay the markets for senior (subordinated) bonds, convertible United Bank’s acquisition of Lucky Bank and China United Trust (exchangeable) bonds, preferred stocks and global depository and Investment Corporation, Cathay United Bank increased the receipts to improve capital flexibility. We will also seek to ensure number of its business locations to 162 branches by the end of the availability of sufficient funds for expansion of our financial 2010, further strengthening its service quality and competitive services platforms at home and abroad and our goal of becoming advantage. In the future, we will continue to evaluate potential the best financial group serving Chinese communities. strategic partners in financial services that will further strengthen the level of our professionalism, diversity and globalization, and enable Cathay Financial Holdings to become a first-class regional financial institution. 3.Become the best financial institution serving Chinese communities Our overseas operations are currently focused on China and Vietnam, and we have gained considerable ground in these two markets in recent years. In China, Cathay Life and Cathay Century Insurance continue to expand business locations, and the Shanghai Branch of Cathay United Bank just opened for business. In Vietnam, Cathay United Bank continues to work closely The final of Cathay Financial Holdings’ 3-on-3 basketball tournament.

Lot drawing for Cathay Financial Holdings’ scholarship for children Cathay Financial Holdings’ press conference for children’s painting competition. of customers.

07 WorldReginfo - af615e37-0be6-4548-9e99-d2cbd50dd787 Overview of Subsidiary Companies Cathay Life Insurance Co., Ltd.

Message from the President

Looking back at 2010, with many countries implementing economic stimulus programs and adopting easing monetary policies, the global economy showed signs of emerging from the financial crisis. The domestic economy also saw obvious signs of recovery in an improved business environment under active government policies, closer ties with China and the signing of Economic Cooperation Framework Agreement (ECFA).

In 2010, the domestic life insurance market remained competitive. Adopting a prudent approach and through product innovation and sales channel diversification, we have been endeavoring to deepen penetration in the target markets, and thanks to the concerted efforts of all employees, are able to maintain our market leader position in 2010 with first-year premium income of US$11.33 billion, that represents 26% growth from the year before and 28.4% market share. It is indicative of our success in rapidly adjusting business strategies in response to changing market conditions, and grasping consumer preference when economy was on the rebound. It also showcases the trust and recognition of our policyholders in us. In the overseas markets, the Tianjin Office of Cathay Life Insurance (China) has opened for business in 2010. The Dongnai and Haiphong Branches of Cathay Life Insurance (Vietnam) have also commenced operations. In the near future, we will focus on the business of existing locations and fostering local personnel as we expand our overseas operations at a measured place and move towards the goal of becoming the best financial institution serving Chinese speaking communities.

Our stellar performance in 2010 is recognized by a myriad of domestic and foreign professional institutions. We were chosen the best life insurance company in Taiwan by World Finance and the only financial company in Taiwan on the list of Fortune Magazine’s Global 500 2010. We were again ranked number one life insurance company in the “Ideal Brands for Business People” survey conducted by Taiwan’s Business Today, on the list of “Ideal Brands” of Management Magazine twelve years consecutively, ranked number one in Common Wealth’s Top 100 in Financial Industry, and received the “Arts and Business Award” from the Council for Cultural Affairs. In honoring our longstanding commitment to giving back to the community, we also continue to support all kinds of public interest activities. Aside from being a long-term sponsor of the outdoor performances by Cloud Gate Dance Theater for which we received the “Sports Contribution Award” in two categories from the Sports Affairs Council two years in a row, we also mobilized our entire workforce in 2010 to participate in Volunteer for A Day to assist disadvantaged groups with real actions, and assisted the government in promoting micro- insurance. All of the awards and honors we have received reflect the recognition bestowed upon us by various parties in the society.

Looking into 2011, all economic indicators suggest steady growth and interest rate is expected to rise slowly. However, the business environment faced by life insurance companies is still replete with challenges. We will continue to uphold our philosophy of “Innovative service, pursuit of excellence” to put innovative ideas into actions, hone the professional capability of our employees, and strengthen innovative services and sales channels. We will actively initiate contact with customers to understand their needs and provide them with a diversity of value-added services so as to maintain our market leader position. Moreover, our investment strategies will focus on selecting suitable investments, maintaining flexibility in assets allocation and seeking long-term steady returns while maintaining our discipline in risk management.

All employees at Cathay Life are united by the core value of honesty and integrity as well as the philosophy of stability and reliability. We will leverage the corporate resources to provide best-quality financial services with innovation and diligence as we strive to become a trusted lifetime friend to our customers. We like to thank the competent authorities and all of our customers for their encouragement and support over the years. Cathay Life and its entire workforce will continue to strive for excellence and serve the society better. President Ming-Ho Hsiung

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Company Profile Cathay Life Insurance Co., Ltd. was founded in August 1962 and became listed on Taiwan Stock Exchange in November 1964. In 2001, we recorded US$19.27 billion in premium income and US$104.62 billion in assets. We rank number one in the industry by market share and assets. With more than 7,500,000 customers, we are not only a premium brand in the minds of consumers, we have also won the unanimous recognition of professional institutions at home and abroad. In Fortune Magazine’s Global 500 2010, we made it to the top 10 list of insurance companies, the only financial institution in Taiwan on the list. We have received credit rating of “twAA+” from Taiwan Ratings, “A-“ from S&P, and “A3” from Moody’s, making us a top rated insurance company. In the “Third Taiwan Insurance Excellence Award”, the highest honor in Taiwan’s insurance industry, we received the highest number of awards.

In the efforts of developing overseas markets, we have established a subsidiary in China and Vietnam in 2005 and 2007 respectively, becoming the first Taiwan insurer with a presence in those two markets, and plan to continue our overseas expansion efforts. Looking into the future, we will continue to seek growth and steady profits, and offer proactive services to enhance customer satisfaction as we move towards to the goal of becoming the best financial institution serving Chinese speaking communities.

Workforce No. of employees / 31,075 Average age / 41.4 Average years of services / 10.1

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Board of Directors, Independent Directors, Supervisors and Key Managers

Board of Directors Name Education Experience Hong-Tu Tsai J.D., Southern Methodist University Chairman, Cathay Financial Holdings Cheng-Ta Tsai B.A., Chinese Culture University Managing Director, Cathay Life Insurance Cheng-Chiu Tsai M.A., Keio University Chairman, Cathay Century Insurance Tiao-kuei Huang M.A., National Tsing Hua University Vice Chairman, Cathay Life Insurance Ming-Ho Hsiung M.A., University of Iowa President, Cathay Life Insurance Tzung-Han Tsai J.D., Georgetown University Vice President, Cathay Life Insurance Chung-Yan Tsai M.A., San Francisco State University Vice President, Liang Ting Industrial Co. Ltd Chairman, May Foong Woolen & Chung-Yuen Chu M.A., Columbia University, USA Worsted Textile Mill. Ltd.

Chin-Lin Hsu Tatung University Chairman, Fu Chun Smc Industries. Co. Ltd Wei-Ming Lu Kainan Commercial & Technical School Chairman, Seng Hong Co., Ltd. Young-Jann Lee M.A., National Taiwan University Vice President, Cathay Life Insurance Han-Chang Tsai B.A., National Chung Hsing University Vice President, Cathay Life Insurance

Independent Directors Name Education Experience Min-Houng Hong Ph.D. in EE of Michigan State University Chairman, Panasonic Taiwan Co., Ltd.

Tsing-Yuan Hwang Ph.D. Candidate, Business Graduate School, Supervisor, Hon Hai Precision Industry Co., Ltd. Nihon University, Japan

Andrew Ming-Jian Kuo M.B.A., Baruch College, City University of New York Vice Chairman, The Blackstone Group (HK) Limited.

Supervisors Name Education Experience Wan-Teh Tsai Nisho Gakusha University Chairman, An Teh Development Co., Ltd. Kai-Mo Chen B.A., National Taiwan University Vice Chairman, Cathay General Hospital Chih-Ming Lin B.A., National Taiwan University Superintendent, Cathay General Hospital

Chief Executive Officer Position Name Education Chairman Hong-Tu Tsai J.D., Southern Methodist University

Key Managers Position Name Education President Ming-Ho Hsiung M.A., University of Iowa Chief Auditor Ching-Ming Pan M.A., National Chengchi University Vice President Tzung-Han Tsai J.D., Georgetown University Vice President Young-Jann Lee M.B.A., National Taiwan University Vice President Han-Chang Tsai B.A., National Chung Hsing University Vice President Chih-Chiang Liao B.A., National Chung Hsing University Vice President Chih-Jung Kung M.B.A., China Europe International Business School Vice President Shan-Chi Liu M.A., National Taiwan University Vice President Chao-Ting Lin M.A., National Taiwan University Vice President Hui-Bin Wu B.A., Chinese Culture University Vice President Chong-Yi Teng M.B.A., MIT, USA Chief Risk Officer Shun-Yu Chuang M.B.A., MIT, USA

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Business Scope Life insurance and related businesses.

2010 Revenue Breakdown (million USD) 2010 Revenue Amount % of Total Premium income 17,682 47.33% Recovered premium reserves 8,334 22.31% Insurance gain from unit-linked products 4,706 12.59% Interest income 2,655 7.11% Gain on valuation of financial assets/liabilities 1,811 4.85% Revenue from real estate investment 202 0.54% Other income 1,970 5.27% Total 37,360 100%

2011 Business Targets (million USD) Business Target New life insurance policy coverage 10,636.4 In-force life insurance policy coverage 287,053.5 Total premium income 17,062.0

Cathay Life’s 2010 Japan Hakone Summit.

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2011 Business Plan

Business Development 1. Step up the cultivation of first line managers and replenish the sources of corporate officers to drive the organizational growth and improve organizational productivity. 2. Bolster business development, create business-oriented topics in the market, and initiate contact with customers to boost business activities and increase the opportunities of additional purchase and business referral. 3. Leverage the extensive sales network and improve profit margin while maintaining the market leader position. 4. Integrate resources under Cathay Financial Holdings to develop prospective clients and offer one-stop financial services to improve the operating efficiency of Cathay Group. 5. Continue to seek growth in China and Vietnam markets with an emphasis on local strategies and overseas market expansion while keep working toward being the best financial institution serving Chinese speaking communities.

Product Development 1. Through group integration and cross-industry alliance, promote proprietary products in line with popular market topics and economic condition to elicit consumer demands. 2. Develop products tailored to specific customer attributes and undertake market segmentation to attract more business.

Cathay Life’s 2010 Innovative Record Award.

Cathay Life launched VIP service. Cathay Life received the “Yahoo! Taiwan Brand” award.

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Customer Services 1.Develop a variety of value-added services to enhance customer loyalty. 2. Proactively discover customer needs through target customer analysis, offer personalized services and undertake thoughtful marketing. 3. Strengthen two-way customer service efficiency and reflect customer opinions in a timely manner to enhance customer satisfaction.

Back Office Support 1. Build a customer-oriented organization and a working environment conducive to innovation and improvement, and retain quality staff with incentives. Cathay Life received the “Ideal Brands for Business People” award. 2. Make use of video technology and learning platform to provide comprehensive education resources, thereby improving the organiza- tional and business efficiency. 3. Improve internal control and optimize system process to enhance operational quality and efficiency as well as competitive advantages.

Cathay Life received ISO 10002 certification. Cathay Life received the “Sports Contribution Award.”

Cathay Life’s Employee Fun Short Film award ceremony.

13 WorldReginfo - af615e37-0be6-4548-9e99-d2cbd50dd787 Overview of Subsidiary Companies Cathay United Bank Co., Ltd.

Message from the Chairman As the global economy recovered from the impact of financial crisis and gradually warmed up in 2010, Cathay United Bank also turned out brilliant performance in the year in sales, financial structure, asset quality, capital intensity and earnings on the strength of a solid foundation and the core value of honesty and integrity as well as the concerted efforts of all colleagues. As a member of Cathay Financial Holdings, the benefits of resources integration among the Bank and other subsidiaries become all the more apparent.

The Bank now has 162 branches in Taiwan, which is the highest among privately-owned banks in the market and provides an effective sales channel. With respect to overseas offices, the Bank now has six branches and four representative offices in Shanghai, Hong Kong, Vietnam, Singapore, Malaysia, Philippines, Thailand and the U.S. (Los Angeles). The Shanghai Branch opened for business in December 2010, making the Bank the first Taiwan bank to establish a branch in China, and will allow the Bank to provide better and more financial services to customers in Greater China Area. Indovina Bank, a joint venture of the Bank in Vietnam currently has 35 offices and branches in Vietnam, which is the highest among Taiwan-funded banks. It is also the only Taiwan-funded bank that offers ATM and inter-bank services in Vietnam. As the subsidiaries under Cathay Financial Holdings have extended their reach in China and Vietnam markets, the Bank is poised to provide Taiwanese companies with better and more convenient services.

In addition to branch expansion, the Bank also showed strong growth in various performance indicators in 2010. We had US$54.12 billion in total assets at the end of 2010, up 4% from the end of 2009. Our deposit balance was US$46.52 billion, a 2% increase, while our loan balance reached US$31.02 billion, a 9% increase. The number of credit cards in circulation totaled 3.04 million, up 3% from the previous year. Boosted by increase in the demand deposit ratio and a falling cost of deposits in combination with rising fee income, our profits recorded sustained growth. Our pre-tax profit amounted to US$425 million, up 12% from the previous year and after-tax net profit was US$389 million, which is translated into an EPS of US$0.07. With significantly improved asset quality, our NPL dropped to 0.28%, while our coverage ratio increased sharply to 277.15%.

While creating value and seeking profit growth, the Bank, as a corporate citizen believing in giving back to the society, has been a supporter of public interest, charity, art and cultural activities and the Bank’s efforts in those domains are widely recognized by the public. Under the Bank’s Big Tree Project, more than US$2.4 million have been donated to help pay for tuition and school expenses of more than 40,000 children living in remote areas. The Project also raised children’s books and sponsored writing competitions to provide underprivileged children with equal learning opportunity and help them develop reading habits and writing skills. In addition, the Project has sponsored large-scale parenting workshops taught by experts in parent-child relationship to bring child development education into homes. Our longstanding efforts in promoting art and cultural activities help us win the “Tenth Arts and Business Award” from the Council for Cultural Affairs in 2010. We have also won many awards in other areas in 2010. To name a few, we were selected “Outstanding Enterprise in Self-Management of Workplace Safety and Health” by the Labor Standards Inspection Office of Taipei City Government, the only bank in the domestic banking industry to win this special honor, and won the 5th Taiwan Financial Elite Award: honorable mention in Best Risk Management from Taiwan Academy of Banking and Finance, 2010 Job Contribution Award from the Ministry of Economic Affairs and Council of Labor Affairs, second place in Financial XML System Stability Award from Banking Association, fifth place in 2010 Smart Pay Issuers – Outstanding Trading Volume Award, third place in Acquiring Bank – Outstanding Online Store Award, and Special Contribution in Business Promotion Award. All those awards are public recognitions of our performance.

Looking into the new year, we will continue to strengthen our financial structure and asset quality and seek balanced development of our commercial banking, retail banking, credit card and wealth management businesses based on the beliefs of customer first, pursuit of excellence and service innovation. We will follow the dual core model of Cathay Financial Holdings and integrate our operations with other subsidiary companies to offer a full range of products and services for one-stop shopping. We will also vigorously develop the overseas markets as we continue to work towards the goal of being the “best financial institution in Chinese speaking communities.”

Chairman Gregory K.H. Wang

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Company Profile

Cathay United Bank was created from a merger of United World Chinese Commercial Bank and Cathay Bank on October 27, 2003, which was followed by acquisitions of Lucky Bank and China United Trust and Investment Corporation on January 1 and December 29, 2007 respectively. As of the end of 2010, Cathay United Bank has 162 branches in Taiwan. Our representative office in Shanghai has been upgraded to a branch on December 23, 2010, which together with overseas branches in Los Angeles, Chu Lai (Vietnam), Labuan (Malaysia), Singapore and Hong Kong build a Asian financial platform to provide Chinese around the world financial services including commercial banking, retail banking, credit cards, and wealth management. We have around 1,800 multifunction ATMs as well as electronic banking access offering a variety of convenient banking services anytime, anywhere. In terms of credit ratings, the long-term and short-term rating of Cathay United Bank in 2010 were twAA+ and twA-1+ as rated by Taiwan Ratings; A2 and P-1 as rated by Moody’s Investors Service; and A- and A-2 as rated by Standard & Poor’s, with stable outlook.

Workforce No. of employees / 6,062 Average age / 35.13 Average years of services / 8.46

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Board of Directors, Independent Directors, Supervisors and Key Managers

Board of Directors Name Education Experience Gregory K.H. Wang B.A., Tamkang University Vice Chairman, Cathay Financial Holdings Tsu-Pei Chen B.A., National Chengchi University Vice Chairman, Cathay United Bank President, Cathay Financial Holdings Grace Chen M.B.A., National Chengchi University Senior Executive Vice President, Cathay United Bank Alan Lee M.B.A., National Taiwan University Senior Executive Vice President, Cathay United Bank William C.W. Huang M.A., University of Washington, USA Chairman, TaiLong Industrial Co., Ltd. Irene Lee B.A., University of California, Berkeley, USA President & CEO, Japan HI Group Benjamin Ching B.A., Ateneo de Manila University, the Philippines President & CEO, LA Suerte Cigar & Cigarette Factory Chan Boon Teong M.A., Polytechnic University of New York City, USA Chairman, Coastal Realty Group Limited Ming-Ho Hsiung M.A., University of Iowa President, Cathay Life Insurance David P. Sun M.B.A., Harvard University Chairman, Cathay Securities Corporation Allen Peng M.B.A., New Mexico Highlands University, USA Senior Executive Vice President, Cathay United Bank Monica Chiou B.A., National Taiwan University Senior Vice President & General Manager, Department of Credit Management, Bank of Taiwan

Independent Directors Name Education Experience Tsing-Yuan Huang Ph.D. Candidate, Business Graduate School, Supervisor, Hon Hai Precision Industry Co., Ltd. Nihon University, Japan Min-Houng Hong Ph.D. in EE of Michigan State University Chairman, Panasonic Taiwan Co., Ltd. Andrew Ming-Jian Kuo M.B.A., Baruch College, City University of New York Vice Chairman, The Blackstone Group (HK) Ltd.

Supervisors Name Education Experience Peggy Wang B.A., National Taiwan University Chairman, Cathay Futures Corp. J.Y. Yeh B.A., National Chung Hsing University Chief Secretary, Chunghwa Post Co., Ltd. Kuo-Hsim Yeh B.A., National Taiwan University Chairman, United National Bank

Chief Executive Officer Position Name Education Chairman Gregory K.H. Wang B.A., Tamkang University

Key Managers Position Name Education President Chang-Ken Lee M.B.A., University of Pennsylvania Chief Auditor J. H. Chen B.A., Fu Jen Catholic University Vice President Grace Chen M.B.A., National Chengchi University Vice President Alan Lee M.B.A., National Taiwan University Vice President Allen Peng M.B.A., University of New Mexico

16 WorldReginfo - af615e37-0be6-4548-9e99-d2cbd50dd787 Cathay Financial Holdings Annual Report

Business Scope 1. All types of deposits 25.Trust business authorized by the Authority to be handled 2. Loans and credits by head office trust department 3. Cheque discounting 26. Non-discretionary money trust investing on foreign securities 4. Securities investment 27. Dealing of government bonds 5. Domestic remittances 28. Brokerage and dealing of short-term notes and bills 6. Commercial draft acceptance 29. Brokerage, dealing, certification, and underwriting of short- 7. Issuance of domestic letters of credit term notes and bills 8. Corporate guarantee bonds 30. Issuance of cash cards 9. Domestic guarantee services 31. Financial consulting for financing related businesses 10. Payment settlement 32. Financial consulting for non-financing related businesses 11. Sales of government bonds/bills and corporate bonds/stocks 33. Dealing of corporate bonds and financial bonds 12. Securities underwriting 34. Wealth Management 13. Securities dealing 35. Money Trust 14. Custody and Warehousing services 36. Trust of encumbrance and related security interests 15. Rental of safe deposit boxes 37. Securities trust 16. Agency services covered by the business scope specified on 38. Movable property trust business license or approved by competent authorities 39. Real estate trust 17. Credit card services 40. Land right trust 18. Brokered sales of gold bars/coins and silver coins 41. Discretionary investment trust services 19. Purchases and sales of gold bars/coins and silver coins 42. Acting as agents for issuance, transfer, registration and 20. Import and export foreign exchange transactions, inbound/ payment of interests or dividends of securities outbound wire transfer, and foreign currency deposits, 43. Providing consulting services for securities issuance or loans, and payment guarantee offering 21. General foreign exchange transactions, inbound/outbound 44. Acting as attesters for issuance of stock or bond wire transfer; foreign currency deposits 45. Acting as attesters for issuance of securities 22. Dealing foreign currency cash and travelers cheques 46. Acting as executor of wills and managing legacies 23. Financial derivative commodities approved by competent 47. Acting as trustees for issuance of bond and providing related authorities agent securities 24. Trust business authorized by the Trust Enterprise Act 48. Custody services 49. Acting as custodians of securities investment trust funds 50. Providing advisory services for investment, financial management, and real estate development

2010 Net Operating Income Breakdown (thousand USD) Income Amount % of Total Net interest income 505,382 54.16% Net fee income 224,719 24.08% Gain (loss) on financial assets and liabilities at fair value through profit or loss 18,185 1.95% Realized gain on available-for-sale financial assets 80,086 8.58% Investment income recognized by the equity method 9,725 1.04% Gain on foreign currency exchange, net 22,402 2.40% Others 72,602 7.79% Net Operating income 933,101 100.00%

17 WorldReginfo - af615e37-0be6-4548-9e99-d2cbd50dd787 Cathay United Bank Co., Ltd.

2011Business Plan

1. Overall business directions 1.Continue to strengthen the bank structure and incorporate the culture of corporate governance and risk management on the basis of stability and reliability to build the competitive advantages for sustained operations. 2.Focus on core businesses while enhancing the overall operational efficiency, seeking growth and service improvement to maximize shareholder’s return. 3.Optimize resources within the Bank and in other members of Cathay Group and offer corporate financing and cross- border financing channel through an extensive service Cathay United Bank’s “Big Tree Project” made donations. network, both real and virtual, and furthermore, make inroads into personal financial planning and money services to meet the various demands of customers. 3. Corporate banking business 4.Continue the training programs to enhance the professional 1.Continue to develop primary clientele and SME customers skills and productivity of employees, and possess a stable and provide them with payroll direct deposits, financing, and multifunctional information system to improve work TMU, group insurance and securities brokerage services, efficiency and lower operational risk. with the goal of becoming their major correspondent bank. 2.Bolster customer relationship management to grasp 2. International banking business customer needs, emphasize on quality service instead 1.Use Shanghai Branch as the starting point of extensive of price competition, review business performance deployment in China and leverage the existing locations periodically, and augment business capacity. and clientele of affiliates to reach the profit goal soon, and 3.Actively vie for the opportunity to act as the bookrunner further integrate the financial services in Greater China in syndicated loan by putting equal emphasis on quality Area to meet the financing needs of Taiwanese companies and income, and broaden contact with customers through with establishments in the area. participation in syndicated loans. 2.Continue to expand overseas niche markets and capitalize 4.Engage in strategic lending in line with the opening on the advantage of overseas platforms to develop local trends of the overall economic environment by extending clientele and boost international competitiveness. loans to hotels, plants and Taiwanese companies with 3.Continue to cultivate foreign exchange professionals establishments in Greater China Area so as to prudently and offer convenient remittance services to increase the increase total loan balance. volume of foreign exchange business and market share.

Cathay United Bank led the peers in launching “My MobiBank” services.

Cathay United Bank hosted the “Eternal Classics Super Star Concert”

18 WorldReginfo - af615e37-0be6-4548-9e99-d2cbd50dd787 Cathay Financial Holdings Annual Report

4. Personal banking business products to meet the diverse investment and hedging needs 1.Continue to build local advantages and customer relations of customers in a timely manner. to develop the competitive advantage of low funding costs by offering the convenience service to absorb demand 6. Automated distribution deposits. 1.Organize promotional activities on ATMs and take 2.Adopt a prudent approach to mortgage loan business to advantage of the benefits of ATM as an advertising media comply with the housing market stabilization policy of the to increase ATM utilization and their added value. Central Bank, and advertise personal unsecured products 2.Make the most out of uniqueness and convenience offered to premium customers under risk management to optimize by the Bank’s ATMs installed along Taipei Mass Rapid the income structure. Transit stations to develop demand deposit business. 3.To secure the leading position in credit card market, 3.Continue to develop the functions of mobile banking continue to issue new cards to expand potential customer and offer friendly interface to provide customers with a bases, undertake promotional activities in different market convenient and fast transaction platform. segments to offer more incentives for consumption, and 4.Encourage use of 24-hour electronic financial network actively develop collection business and installment (MyATM, MyBank, MyB2B, etc.) through online payment service to tap new profit streams. marketing and media exposures to increase customer 4.Continue to enhance the professional skills of wealth entanglement and loyalty. management teams to provide all-round financial planning services and develop younger rich clientele to build a wider base of VIP high-asset customers.

5. Financial management 1.Dynamically adjust investment positions in view of global economic and financial situations, and undertake effective asset allocation to create maximum income. 2.Actively manage long-term and short-term funding gap and ensure flexibility in fund maneuvering with equal emphasis on liquidity and revenue. 3.Strengthen the functions of treasury marketing units and improve the capability to develop innovative financial Cathay United Bank held a press conference announcing its agreement with Chinese Professional Baseball League to act as a trustee bank for 2011 Operational Targets baseball players. (thousand USD) Item Targets Deposits 47,640,371 Loans (including revolving credit) 34,658,805 Credit cards 3,300,000 cards

Cathay United Bank held a press conference together with ezTravel and Cathay United Bank won the “Outstanding Enterprise in Self-Management” China Eastern Airlines. award.

19 WorldReginfo - af615e37-0be6-4548-9e99-d2cbd50dd787 Overview of Subsidiary Companies Cathay Century Insurance Co., Ltd.

Message from the Chairman

In 2010, the global economy started to show signs of recovery from the financial tsunami. The domestic property and casualty (P&C) insurance market also created 3.8% growth in premium income, boosted by closer economic ties between Taiwan and China following the signing of Economic Cooperation Framework Agreement (ECFA), the first increase in car sales in four years in the domestic auto market, and the smooth implementation of rate deregulation. However, the hits of natural disasters and some huge fire losses eroded the profits of P&C insurers.

Facing a challenging business environment, Cathay Century Insurance sticks to its philosophy of “equal emphasis on both quality and quantity, stability and reliability” and continues to seek new opportunities and growth in Taiwan market. In terms of sales, we outperformed our major competitors in 2010 by reporting 7.2% growth in premium income and achieved a higher market share of 11.6% from 11.2% in 2009. We remained in the second place in the industry by premium income. With respect to overseas markets, Cathay Insurance (China) has established three first Tiwan branches in Jiangsu, Fujian and Guangdong, and two sales and service agencies in Kunshan and Xiamen. We are the first P&C insurer in Taiwan that experiences the fastest growth and has the most business locations in China. Cathay Insurance (Vietnam) has also been opened for business in December 2010 as we take another step forward to be the best financial institution serving Chinese-speaking communities.

Our adherence to good corporate governance practices, sound financial structure and outstanding business performance in 2010 again won the recognition of international credit rating agencies with a “A-“ rating from S&P, “twAA+” from Taiwan Ratings and “A2” from Moody’s. We are equally recognized by the domestic consumers and again named the “No. 1 Consumer Ideal Brand” in P&C insurance industry in 2010.

Looking forward to 2011, we will strive to make Cathay Century Inaurance “Premium Brand, Taiwan No.1” and position ourselves as a respected company in the market. We will take actions to strengthen the corporate structure from all aspects, and enhance the core competence in “discipline”, “professionalism” and “service” with innovative ideas and outstanding execution. Our goal is to upgrade our administrative efficiency and customer service, and lift our brand value to establish Cathay Century Insurance as the top brand in the market and the most trusted company by customers, shareholders, and employees. Lastly, we would like to thank the competent authorities and our customers for your kind support and encouragement over the years and we will continue to seek improvement, growth and excellence.

Chairman Cheng-Chiu Tsai

20 WorldReginfo - af615e37-0be6-4548-9e99-d2cbd50dd787 Cathay Financial Holdings Annual Report

Company Profile Since establishment in 1993, Cathay Century Insurance has upheld the philosophy of stable growth in both quality and quantity and offered all lines of property and casualty insurance products. At the same time, Cathay Century Insurance is keen to maintain customer relationship and enhance service quality. In 2007, we became the second largest P&C insurer in Taiwan. In addition to ISO9001 certification for motor insurance claims and loss prevention services, we received ratings of twAA+ from Taiwan Ratings, A- from S&P, and A2 from Moody’s. Since becoming a member of Cathay Financial Holdings in 2002, we have been offering more comprehensive professional services by leveraging group resources. We have also become the best risk management advisor to our clients. We were again No. 1 on Management Magazine’s list of “Ideal Brand” in P&C insurance industry published in early 2011. We are not only recognized and trusted by the consumers in Taiwan, we also received the internationally acclaimed honor of “the General Insurance Company of the Year 2009” in Asia, proving ourselves a first class P&C insurer in Asia.

Workforce No. of employees / 1,297 Average age / 35.5 Average years of services / 7.92

21 WorldReginfo - af615e37-0be6-4548-9e99-d2cbd50dd787 Cathay Century Insurance Co., Ltd.

Board of Directors, Independent Directors, Supervisors and Key Managers

Board of Directors Name Education Experience Cheng-Chiu Tsai M.A., Keio University Chairman, Cathay Century Insurance C.Y. Lee B.A., National Chung Hsing University Consultant, Cathay Century Insurance J.H. Hsu M.A., National Chengchi University President, Cathay Century Insurance K.C. Tsai College Chairman, Central Construction Co., Ltd. Chu-Yao Lu B.A., Shih Hsin University President, Wen Yi Investment Co., Ltd. T. James Yang M.A., UC Irvine, USA Vice President, Cathay Century Insurance Min-Yang Wu M.A., Georgia State University, USA Vice President, Cathay Century Insurance

Independent Directors Name Education Experience Andrew Ming-Jian Kuo M.B.A., Baruch College, City University of New York Vice Chairman, The Blackstone Group (HK) Ltd. Min-Houng Hong Ph.D. in EE of Michigan State University Chairman, Panasonic Taiwan Co., Ltd.

Supervisors Name Education Experience R.C. Sun Tainan Commercial College Supervisor, Cathay Century Insurance Ching-Tien Su National Taipei Teachers College Supervisor, Cathay Century Insurance

Chief Executive Officer Position Name Education Chairman Cheng-Chiu Tsai M.A., Keio University

Key Managers Position Name Education President J.H. Hsu M.A., National Chengchi University Vice President T. James Yang M.A., UC Irvine, USA Vice President Min-Yang Wu M.A., Georgia State University, USA Chief Auditor Chih-I Yu B.A., National Taiwan University Vice President Pin-Yao Lin M.A., National Chengchi University Vice President Jin-Chou Chen B.A., Fu Jen Catholic University

Business Scope All types of non-life insurance (including motor, fire, marine, engineering, health, accident, and other liability and property) and related business.

Revenue Breakdown (million USD) Item Amount % of Total Premium income 433.54 56.4% Reserves released 234.64 30.5% Other income 90.56 11.8% Interest income 10.16 1.3% Total 768.90 100.0%

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2011 Business Plan Objective 1: Strengthen corporate organization and Objective 3: Cultivate professional personnel and develop develop diverse sales channels overseas markets 1. Actively forge partnerships with premium financial institutions 1. Improve the quality and quantity of professional personnel, and companies in related industries to develop new sources for establish a fair employee promotion system, and enhance business and boost competitiveness. personnel cultivation and utilization. 2. Grasp market opportunities by watching closely the trends 2. Bolster the professional training of employees at all levels and of different sales channels and develop different packaged encourage them to obtain professional credentials and licenses. products tailored to the attributes of different channels to boost 3. Continue to extend the reach of service network and take product competitiveness. steps to become the best financial institution serving Chinese 3. Speed up the recruitment of outstanding sales personnel to speaking communities. expand the sales force and undergo organization restructuring to increase the breadth of sales and improve administrative and Objective 4: Allocate capital flexibly and Strengthen risk service efficiency. management 1. Step up loss prevention and control techniques and make proper Objective 2: Develop group synergy and enhance brand reinsurance arrangement to take into account both business value 1. Continue to integrate channel platform, strengthen distribution development and risk management. assistance programs, improve service quality and encourage 2. Adopt flexible asset allocation in line with changes in the cross-selling. financial market to enhance financial security and profitability. 2. Utilize information technology to expedite underwriting and 3. Leverage investment resources of Cathay Group to achieve claim procedures and enhance administrative efficiency and optimal fund utilization. quality. 3. Provide differentiated, refined, professional and thoughtful services to establish brand image and continue to be the most ideal P&C insurer in the minds of customers.

2011 Operational Targets Premium Income US$ 467 million

Cathay Century Insurance’s Power Kings award ceremony.

The Fujian Branch of Cathay Insurance (China) opened for business. Cathay Insurance (Vietnam) opened for business.

23 WorldReginfo - af615e37-0be6-4548-9e99-d2cbd50dd787 Overview of Subsidiary Companies Cathay Securities Corporation

Message from the Chairman

Looking back on 2010, stock markets all over the world rebounded strongly as governments launched economic stimulus programs and the global economy continued its recovery. The stock market capitalization of many major countries approached their 2008 pre-financial crisis levels, indicating that the global economy is gradually emerging from the impact of the financial crisis. Benefiting from the strong economic growth of China and inflows of international funds, Asian countries experienced strong currency appreciation and their stock markets reached new highs. The Indonesian stock market gained 46% in 2010, followed by Korea with 22% growth, and India, Malaysia and Singapore all gained more than 10%. Taiwan’s stock market and currency exchange market were driven higher in 2010 in part by improved cross-strait relations. Foreign investors were bullish on the Taiwan stock market and bought US$9,646 million of shares, pushing the stock index 10% higher to a record high since June 2008. Looking into 2011, if the U.S. and Europe stay on the track of economic recovery and the trend of hot money flowing into Asia continues as expected, Taiwan’s economy should grow further with rising exports and strong domestic demand supported by the effects of ECFA. Under those scenarios, there is a high probability that the domestic stock market will rise further in 2011.

In response to the challenges posed by the drastically changing business environment in the aftermath of the financial crisis, we practiced strict cost control and stepped up business integration. The results of our efforts were beginning to show in 2010. All business indicators were on the rise and after-tax earnings per share reached US$0.02, a record high since our inception. An overview of 2010 business is as follows: market share in the brokerage business was 0.7%, representing growth of 23% from the previous year with total trading volume of US$17,594 million, an increase of 20% from the year before. The balance of our margin lending amounted to US$69 million, up 49% from the year before. The number of our securities counters rose from 25 to 29. Furthermore, in order to expand our brokerage business, we continued to leverage the distribution strength of Cathay United Bank. Our sales force was organized to work in teams. Marketing events were held from time to time to attract new accounts and encourage existing ones to remain in use. The total number of customer accounts grew from 74,783 in 2009 to 85,638 in 2010, representing growth of 15% and our registered co-selling workforce reached 1,618 persons, clearly reflecting the benefits of integrated marketing. The number of warrants issued by our Financial Products Department reached 358, another record high since our inception. The Underwriting Department was the lead underwriter in 3 secondary public offerings (SPO) and joint underwriter in 11 other offerings with a total underwritten amount of US$129 million. We were also the lead advisor for 1 corporate bond issuance and co-advisor for 16 other issuances. The total amount involved in financial advisory was US$386 million, accounting for 2.84% market share and ranking ninth in the industry.

Looking forward to the new year, the securities industry is expected to remain fiercely competitive. Aside from continuing with our cost control measures, we will continue to develop our core businesses. With respect to the brokerage business, we hope to continue to build on our current foundation and increase our market share in margin lending and expand our integrated selling efforts with Cathay United Bank and Cathay Life Insurance. With respect to financial products, we will continue to expand warrant issuance and sales and actively employ a variety of trading strategies to lower market risk while seeking to maximize profits. With respect to the underwriting business, we will continue to work with other members of Cathay Financial Holdings to provide listed companies with more extensive and professional capital markets services.

Finally, we would like to thank all of our employees for their efforts and express our gratitude to the competent authorities and our customers for their guidance and support. We will continue to maintain our commitment to stability and reliability, leverage our competitive advantages, expand services and strive for consistent growth that will contribute to the overall performance of Cathay Financial Holdings.

Chairman David P. Sun

24 WorldReginfo - af615e37-0be6-4548-9e99-d2cbd50dd787 Cathay Financial Holdings Annual Report

Company Profile Cathay Securities Corporation is a member of Cathay Financial Holdings. We have paid-in- capital of US$127 million, 329 employees and an operational network composed of a head office, 5 branches, and 29 securities counters. The Company’s business scope encompasses brokerage, proprietary trading, and underwriting as well as the issuance of various financial derivatives such as warrants and structured products.

In 2011, we will continue to focus on the following business operations: With respect to retail brokerage, we will collaborate with distribution channels under the holding company and leverage shared sales forces to offer one-stop financial services; with respect to institutional brokerages, we will enrich our research reports and expand our base of domestic and foreign institutional clients. With respect to financial products, we will expand our warrant business and seek steady returns while maintaining strict risk management, and develop new businesses approved by the regulators in order to develop new sources of profit. With respect to underwriting, we will seek to participate in the emerging stock market and expand our fixed-income business. We will also seek to strengthen our collaboration with other members of the holding company in order to create maximum value for the Cathay Group as a whole.

Looking into the future, we will continue to balance financial innovation and disciplined risk management and seek stable returns and sustainable growth through integrated marketing.

Workforce No. of employees / 329 Average age / 35.8 Average years of services / 3.2

25 WorldReginfo - af615e37-0be6-4548-9e99-d2cbd50dd787 Cathay Securities Corporation

Board of Directors, Independent Directors, Supervisors and Key Managers

Board of Directors Name Education Experience David P. Sun M.B.A., Harvard University Chairman, Cathay Securities Corporation Yao-Cyun, Lai M.A., Tamkang University President, Cathay Securities Corporation Tsu-Jien Cheng B.A., Hamilton College Senior Vice President, Cathay Securities Corporation Jinn-Shing Leou M.A., University of Iowa Chief Auditor, Cathay Financial Holdings Su-Jhu Li M.A., University of Central Florida Senior Vice President, Cathay United Bank

Independent Directors Name Education Experience Tsing-Yuan Huang Ph.D. Candidate, Business Graduate School, Supervisor, Hon Hai Precision Industry Co., Ltd. Nihon University, Japan Andrew Ming-Jian Kuo M.A., City University of New York, Brooklyn College Vice Chairman, The Blackstone Group (HK) Ltd.

Supervisors Name Education Experience Wan-Chie Ma M.A., Tamkang University Chairman, Cathay Insurance Co., Ltd (China) Hsin-Hsun Chen Feng Chia University Senior Vice President, Cathay United Bank

Chief Executive Officer Position Name Education Chairman David P. Sun M.B.A., Harvard University

Key Managers Position Name Education President Yao-Cyun, Lai M.A., Tamkang University Senior Vice President Tsu-Jien Cheng B.A., Hamilton College

Songjiang Branch of Cathay Securities opened for business.

26 WorldReginfo - af615e37-0be6-4548-9e99-d2cbd50dd787 Cathay Financial Holdings Annual Report

Business Scope 2011 Business Plan 1. Securities underwriting 1.Follow the guiding principle of stable operations in seeking 2. Dealing of securities on central exchange business expansion and integrate and leverage the resources of 3. Brokerage trading of securities on central exchange Cathay Group. 4. Dealing of over-the-counter securities 2.Conduct business with integrity and honesty and expand 5. Brokerage trading of over-the-counter securities business in compliance with Securities and Exchange Act, 6. Margin financing and stock lending Regulations Governing Securities Firms and other relevant 7. Registrar and transfer services securities rules and regulations. 8. Introducing futures brokering 3.Develop and implement internal control and audit systems and 9. Futures business strengthen operations by adopting scientific management. 10. Other securities-related businesses approved by the regulator. 4.Strengthen employee management, including the development and training of our employees. 5.Strive for efficient cost control to maximize profitability.

2011 Operational Targets No. of securities accounts: 100,000

Cathay Securities upholds the philosophy of “Professional Excellence and Stable Growth.”

Cathay Securities participated in the First Taiwan Warrant Contest.

27 WorldReginfo - af615e37-0be6-4548-9e99-d2cbd50dd787 Overview of Subsidiary Companies Cathay Venture Inc.

Company Profile The Company’s main businesses are investing in unlisted companies with growth potential, and assisting in the development of those companies for the purpose of maximizing return on investment.

Directors, Supervisors, and Key Managers Directors and Supervisors Position Name Education Experience Chairman Jen-Ho Chang M.Sc., Warwick University (UK) Senior Vice President, Cathay Life Insurance Director Tzung-Han Tsai J.D., Georgetown University Exective Vice President, Cathay Financial Holdings, Vice President, Cathay Life Insurance Director Alan Lee M.B.A., National Taiwan University Vice President, Cathay Financial Holdings Director Shan-Chi Liu EMBA, National Taiwan University Vice President, Cathay Life Insurance Director Chuan-Yen Hu M.A., University of Wisconsin, USA President, Cathay Venture Supervisors Shun-Yu Chuang M.A., MIT, USA Division Head, Cathay Financial Holdings

Chief Executive Officer and Key Managers Position Name Education Chairman Jen-Ho Chang M.Sc., Warwick University (UK) President Chuan-Yen Hu M.A., University of Wisconsin

2010 Revenue Breakdown (thousand USD) Item Amount % of Total

Management consulting fees 670 13.93

Securities sales and investment income 4,085 84.86

Interest and other income 58 1.21

Others 4,813 100.00

28 WorldReginfo - af615e37-0be6-4548-9e99-d2cbd50dd787 Cathay Financial Holdings Annual Report

Business Scope 2011 Business Plan Venture captial. 1. Investment strategies: discover undervalued companies or companies which exhibit growth potential by conducting industry research and company visits, nurture invested companies over the long term and realize gain when the time is ripe for exit. 2. Target stages: Companies mainly in expansion stage or mature stage. 3. Target regions: Primarily in the Greater China Area.

29 WorldReginfo - af615e37-0be6-4548-9e99-d2cbd50dd787 Overseas Branches and Offices

Cathay Life Insurance Co., Ltd.(China) Guangdong Branch 5F No. 233, Dongfeng Xi Road, Yuexiu District, Guangzhou City, Guangdong Province, PRC (Qianshu Panfu Building) ZIP: 510180 Cathay Insurance Company Tel: 86-20-83545288 (mainline) Fax: 86-20-83553405 Cathay Life Insurance Co., Ltd. Cathay Life Insurance Co., Ltd. (China) Cathay Life Insurance Co., Ltd.(China) (Ho Chi Minh City Headquarters, Vietnam) Shanghai Headquarters Liaoning Branch The World Center Building 9th floor, 46-48-50 Pham Hong Thai Street, District 1, 11F, No. 88, Jin-Mao Tower, Century Ave., Pudong 14F, N.H.M. International Plaza, No.51, North Ho Chi Minh City, Vietnam New Area, Shanghai, PRC Station Road, Shenhe District, Shenyang, Liaoning Tel: 84-8-6255 6699 ZIP: 200121 Province, PRC Fax: 84-8-6255 6399 Tel: 86-21-61006168 (mainline) ZIP: 110013 Website: www.cathaylife.com.vn Fax: 86-21-61001682 Tel: 86-24-22566866 (mainline) e-mail: [email protected] Website: www.cathaylife.cn Fax: 86-24-22566766 Cathay Life Insurance Co., Ltd. Cathay Life Insurance Co., Ltd.(China) Cathay Life Insurance Co., Ltd.(China) Jiangsu Branch Tianjin Branch Hanoi Branch 167 Bui Thi Xuan Street, Hai Ba Trung District, 5 F, Huijie Plaza, No. 268, Zhongshan Rd., Xuanwi 11F, Building B1, Jun Lung Square at No. 85, Ha Noi City, Vietnam District, Nanjing, Jiangsu, PRC Nanjing Road, Hoping District, Tianjin, PRC Tel: 84-4-6278 7888 ZIP: 210008 ZIP: 300040 Fax: 84-4-6278 7887 Tel: 86-25-83718688 (mainline) Tel: 86-22-58366908 Fax: 86-25-83197171 Fax: 86-22-58366909 Cathay Life Insurance Co., Ltd. Cathay Life Insurance Co., Ltd.(China) Beijing Representative Office Da Nang Branch Zhejiang Branch Room 1008, 10F, No. 88, Capital Times Square, 6th Floor, Sacombank Building,130-132 Bach Dang Street, Hai Chau District, Da Nang City, Vietnam 23 F, Hai Hua Guang Chang, No. 658, Jian Guo Chang’an W. St., Xicheng District, Beijing, PRC ZIP: 100031 Tel: 84-511-6252 888 North Road, Xia Cheng District, Hang Zhou City, Fax: 84-511-6253 288 Zhejiang Province, PRC Tel: 86-10-8391-3425 ZIP: 310004 Fax: 86-10-8391-3427 Tel: 86-571-28039899 (mainline) Cathay Life Insurance Co., Ltd. Fax: 86-571-28033189 Chengdu Representative Office Can Tho Branch Room 2516, 25 F, Sichuan China Construction 2nd floor, Hanh Phuc Building, Lot 28-33, Cathay Life Insurance Co., Ltd.(China) Bank Building, No. 88, Tidu St., Chengdu, Sichuan Pham Ngoc Thach Street, Ninh Kieu District, Fujian Branch Province, PRC Can Tho City, Vietnam ZIP: 610016 Tel: 84-710-625 1999 10F, Guluo Service Center Building, No. 28, Fax: 84-710-620 0160 Wenquan Garden Rd., Guluo District, Fuzhou, Tel: 86-28-86766498 Fujian, PRC Fax: 86-28-86766500 ZIP: 350003 Cathay Life Insurance Co., Ltd. Tel: 86-591-87401668 (mainline) Hong Kong Representative Office Dong Nai branch Fax: 86-591-87824373 Room 4706, 47F, Central Plaza, No. 18, Harbour 20 Dong Khoi Street, Lot 3, Tam Hoa ward, Rd., Wanchai, Hong Kong Bien Hoa, Dong Nai City, Vietnam Cathay Life Insurance Co., Ltd.(China) Tel: 852-2877-5488 ext 123 Tel: 84-61-629 3558 Beijing Branch Fax: 852-2527-0966 Fax: 84-61-629 2575 8F, Joy City, No. A131, Xidan N. St., Xicheng District, Beijing, PRC Tokyo Office Cathay Life Insurance Co., Ltd. ZIP: 100032 10F KN Ginza Building, 1-15-6, Ginza, Chou-Ku, Hai Phong branch Tel: 86-10-59716818 (mainline) Tokyo 4th floor Sacombank Building, 62- 64 Fax: 86-10-59716001 Tel: 81-3-3566-3199 Ton Duc Thang Street, Le Chan District, Fax: 81-3-3566-3099 Hai Phong City, Vietnam Cathay Life Insurance Co., Ltd.(China) Tel: 84-31-625 5160 Shandong Branch Fax: 84-31-625 5150 Room615, 6F SK Modern City, No. 29, Luoyuan Street, Lower District, Chinan, Hanoi Representative Office Shandong Province, PRC 167 Bui Thi Xuan Street, Hai Ba Trung District, ZIP: 250014 Ha Noi City, Vietnam Tel: 86-531-86931688 (mainline) Tel: 84-4-6278 7888 Fax: 86-531-81671169 Fax: 84-4-6278 7887

30 WorldReginfo - af615e37-0be6-4548-9e99-d2cbd50dd787 Cathay Financial Holdings Annual Report

Bangkok Representative Office 13th Fl, Sathorn City Tower, No. 175 South Sathorn Road, Tungmahamek Sathorn, Bangkok 10120, Thailand Tel: 66-2-679-5316 66-2-679-5317 Fax: 66-2-679-5318 Cathay Insurance Co., Ltd. (China) Cathay United Bank Co., Ltd. Kunshan Sales Office Shanghai Branch 10 F, Chuang Ye Building, No. 180, Qian Jin Los Angeles Agency Suite 1905, BEA Finance Tower, Zhong Rd., Kunshan, Jiangsu, PRC 725, S. Figueroa Street, Suite 4150, Los Angeles, 66 Huayuanshiqiao Rd., Shanghai, PRC ZIP: 215300 CA 90017-5441 U.S.A. Postal code: 200120 Tel: 86-512-57300300 Tel: 1-213-2431234 Tel: 86-21-6886-3785 Fax: 86- 512-57302588 Fax: 1-213-627-6817 Fax: 86-21-6886-3787 Cathay Insurance Co., Ltd. (China) Labuan Branch, Malaysia Fujian Branch Hanoi Representative Office Level 3(C), Main Office Tower, 22F, Zhidi Plaza, No.89 Wusi Rd., Gulo District, Financial Park Labuan Complex Jalan Merdeka, 7F, 88 Hai Ba Trung Street, Fuzhou, Fujian, PRC 87000, Labuan F.T, Malaysia Hoan Kiem District, Hanoi, Vietnam ZIP: 350003 Tel: 60-87-452-168 Tel: 844-3936-6566 Tel: 86-591-87275828 60-87-453-168 844-3936-6567 Fax: 86-591-87273066 Fax: 60-87-453-678 Fax: 844-3936-6568 Cathay Insurance Co., Ltd. (China) Hong Kong Branch HCMC Representative Office Xiamen Sales Office Suite 4706, 47th Floor, Central Plaza, 5F, 46-48 Pham Hong Thai Street, 20F, Zhong Min Tower, No. 72, Hu Bin North Road, 18 Harbour Road, District 1, Ho Chi Minh City, Vietnam Si Ming District, Xiamen, PRC Wanchai Hong Kong Tel: 848-3825-8761 ZIP: 361012 Tel: 852-2877-5488 848-3825-8762 Tel: 86-592-5370288 Fax: 852-2527-0966 848-3825-8763 Fax: 86-592-5066160 852-2802-8358 Fax: 848-3825-8700 Cathay Insurance Co., Ltd. (China) Chu Lai Branch, Vietnam Guangdong Branch No. 123, Tran Quy Cap, Tam Ky City, Cathay Century Insurance Room 1002,10 F, Qianshu Panfu Building, Quang Nam Province, Vietnam No. 233, Dongfeng Xi Road, Guangzhou City, Tel: 845-1038-13035~42 Guangdong Province, PRC Fax: 845-1038-13043~44 Cathay Insurance Co., Ltd.(China) ZIP: 510180 Shanghai Headquarters Tel: 86-20-83960060 Singapore Branch The Center, 30F, No.989, Chang Le Rd., Fax: 86-20-83543392 6 Raffles Quay, #20-06, Singapore 048580 Shanghai, PRC Tel: 65-6593-9280 ZIP: 200031 Cathay Insurance Co., Ltd. (China) Fax: 65-6324-1959 Tel: 86-21-61032288 Zhejiang Branch Fax: 86-21-61032289 West 1 F, Yong Tong Sin Si plaza No. 147, Manila Representative Office Huan Cheng North Road, Xia Cheng District, Cathay Insurance Co., Ltd. (China) Unit 5A, 5/F, Hang Zhou City, Zhejiang Province, PRC Jiangsu Branch ZIP: 310006 Citibank Center 8741 Paseo de Roxas 6 F, Huijie Plaza, No. 268, Zhongshan Rd., Makati City 1200, Tel: 86-571-28072288 Xuanwi District, Nanjing, Jiangsu, PRC Fax: 86-571-28172188 Metro Manila Philippines ZIP: 210008 Tel: 63-2-751-1161 Tel: 86-25-83715188 Cathay Insurance Co., Ltd. Fax: 63-2-751-1163 Fax: 86-25-83199288 (Ho Chi Minh City Headquarters, Vietnam) Kuala Lumpur Marketing Office 6F, 46 -48- 50 Pham Hong Thai Str., Lot 13A, 13th Floor, UBN Tower 10, Ben Thanh Ward, Dist.1, HCMC, Vietnam Jalan P. Ramlee 50250 Kuala Lumpur Malaysia Tel: 84-8-62888385 Tel: 60-3-2070-6729 Fax: 84-8-62909838 Fax: 60-3-2078-9057

31 WorldReginfo - af615e37-0be6-4548-9e99-d2cbd50dd787 The Year in Review 2010

J ia ng su s. B es ran sin ch r bu of C d fo athay pene Insurance (China) o

. Ti ss an ne jin usi B r b In ranc d fo do the h of pene vin of Cathay Life (China) o a Ba ank R nk and ort B ent. epub The Export-Imp em lic C agre hina signed a refiinancing January Jiangsu Branch of Cathay Insurance (China) opened for business. The Export-Import Bank of the Republic of China signed a May refinancing agreement with Indovina Bank. Cathay United Bank together with Indovina Bank signed a syndicated loan agreement with Tan Cang - Cai Mep International Terminal Company Limited. February Fujian Branch of Cathay Insurance (China) opened for business. Hong Kong Branch of Cathay United Bank launched RMB Cathay Life received the ISO 10002 certification from SGS services. Taiwan, the first company in Taiwan that passed the certification Thien Long Transaction Office of Hanai Branch and My Dinh on ISO 10002 on complaint management system. Transaction Office of Dong Da Branch, a subsidiary of Cathay Guangdong Branch of Cathay Insurance (China) received United Bank opened for business. approval for establishment. Cathay Insurance (Vietnam) received approval for establishment. Cathay Century Insurance held an “Earthquake Loss Prevention March Seminar” in Taoyuan. Cathay Life launched VIP service with SOS as the first company Duong Hoang Trancaction office of Da Nang Branch of Indovina in the industry to offer Express Customs Service at China airports. Bank opened for business. Cathay United Bank and Chinese Professional Baseball League signed a trust agreement, which makes Cathay United Bank as a sale trustee for the Anti-Gambling fund and pension fund of the professional baseball players in Taiwan. June Ly Thuong Kiet Trancaction office of Tan Binh Branch of Cathay United Bank acted as the leading bank of syndicated loan Indovina Bank opened for business. to Horizon Securities. Cathay United Bank acted as the leading bank of syndicated loan to Mayfull Co. April Cathay Financial Holdings held the 2010 shareholders’ meeting. Cathay Life held its 2010 Sales Conference and Summit. The Dongnai Branch of Cathay Life (Vietnam) opened for business. July Cathay Financial Holdings named Dr. Chung-Ming Kuan of Cathay Life held the first “Cathay Walk Day” activity. National Taiwan University as chief economic advisor. Cathay Financial Holdings sponsored the charity basketball game Cathay Financial Holdings and National Taiwan University held “2010 NBA, China and Taiwan Basketball Superstar Charity a press conference to announce the creation of a macroeconomic Game.” indicator- “Monthly GDP.” Cathay United Bank led its peers in introducing “My MobiBank” Cathay United Bank Culture and charity Foundation held the services that offers designated account transfer and account donation ceremony for 2010 “Big Tree Project”(Ⅰ), offering inquiry services. financial aid for underprivileged students. Le Trong Tan Trancaction office of Hanoi Branch and Nguyen Cathay United Bank Culture and Charity Foundation hosted 2010 Tri Phuong Trancaction office of Da Nang Branch of Indovina “Eternal Classics Super Star Concert”(Ⅰ) for the Plaza 7 series Bank opened for business. activities.

32 WorldReginfo - af615e37-0be6-4548-9e99-d2cbd50dd787 Cathay Financial Holdings Annual Report

C

a th ” M a t y en Ji . a U m a s n n e ng es ag i g . s in e te na rd u B us m d B a a C r b en a M w at . anc or t” nk isk s A ha ns h o ed f c wo t R ite y io f Ca en ate n th Bes El Un nat thay I na) op go e ho the “ ial ited do nsurance (Chi ry o norary mention in anc Ba ade f the Fin nk’s “B ect” m Fifth nding ig Tree Proj October Taiwan Outsta Hai phong Branch of Cathay Life (Vietnam) opened for business. Credit Ratings ★★★ Cathay United Bank acted as the leading bank of syndicated loan to Shinkong Synthetic Fiber Corp. Company Moody’s S&P Taiwan Ratings Cathay United Bank received the approval of China Banking Cathay Financial Holdings Baa1 BBB+ twAA Regulatory Commission to set up a branch in Shanghai. Hong Kong Branch of Cathay United Bank offered new RMB Cathay Life A3 A- twAA+ services, including RMB financing and inter-bank transactions. twAA+/ Cathay United Bank A2/P-1 A-/A-2 Cathay United Bank continues with the “Big Tree Project in twA-1+ Vietnam” and donated $600 million Vietnamese Dongs in March Cathay Century Insurance A2 A- twAA+ and October respectively to help underprivileged students in Cathay Securities N.A. N.A. twA+ Quang Nam Province and Ho Chi Minh City. ★ Up to date as of December 31, 2010 Cathay United Bank Culture and Charity Foundation held the donation ceremony for 2010 “Big Tree Project(Ⅱ)”, offering financial aid for underprivileged students. August Guangdong Branch of Cathay Insurance (China) received Kunshan Sales Office of Cathay Insurance (China) received approval to open for business. approval to open for business, and Jejiang Branch received Cathay United Bank won the 2nd Prize of “Excellence in approval for establishment. Stability of Fund Transfer System with Financial XML Service” Cathay Life Insurance won the bid for Taiwan Student Group in the “Promotion for National Payment Platform and Financial Insurance for 2010 School Year, which provides coverage XML Service” competition held by The Bankers Association of to students from high school down to children in registered the Republic of China (BAROC). childcare facilities in Taiwan, the fifth consecutive year Cathay Life underwrites the insurance. November Cathay Securities participated in the First Taiwan Warrant Cathay Insurance (Vietnam) received operation permit from Contest (hosted by Commercial Times). Vietnam’s Ministry of Finance. Cathay Century Insurance hosted a “Engineering Insurance Xiamen Sales Office of Cathay Insurance (China) received Planning, Purchase and Claims Seminar” at National Taiwan approval to open for business. University of Science and Technology. Cathay Century Insurance hosted a “Building Fire Safety Seminar” in Taoyuan. Financial Supervisory Commission approved the application of Cathay United Bank launched the first “Mutual Fund Investment Cathay United Bank to set up a branch in Shanghai. Trust Platform” in Taiwan that integrates the financial services Trang Bom Tracaction office of Dong Nai of Dongnai Branch of and provide more protection to mutual fund investors. Indovina Bank, the 35th office in Vietnam opened for business. Cathay United Bank received the approval of Investment Commission under the Ministry of Economic Affairs to set up a branch in Shanghai. September Cathay Financial Holdings sponsored the performance of Cloud December Gate Dance Theater in Hangzhou, China. Cathay Financial Holdings donated through Red Cross Taiwan Tianjin Branch of Cathay Life (China) opened for business. 1,000,000 RMB to help the victims of August 8 mudslide in Cathay Insurance (Vietnam) opened for business. Guangdong Branch of Cathay Insurance (China) opened for Gansu Province, China rebuild their homes. The donation business. ceremony took place on September 11. The Shanghai Branch of Cathay United Bank received the Cathay United Bank acted as the leading bank of syndicated loan approval of China Banking Regulatory Commission to open for to Alliance International Development Corporation. business. Cathay United Bank Culture and Charity Foundation hosted Cathay United Bank was honored with three awards including “Eternal Classics Super Star Concert”(Ⅱ) for the Plaza 7 series “Excellence in Smart Pay Transaction Volume”, “Excellence in activies. Smart Pay Online Store Deal”, and “Special Contribution Award Cathay Financial Holdings sponsored the Shanghai tour of of Service Promotion” in the competition for “Smart Pay Service Evergreen Symphony Orchestra Promotion” held by The Bankers Association of the Republic of China(BAROC).

33 WorldReginfo - af615e37-0be6-4548-9e99-d2cbd50dd787 Honors and Accolades

January ■ Cathay Financial Holdings received the IR magazine’s “Taiwan Best Annual Report and Disclosure” Award. ■ In the Ideal Brand Survey 2010 by Management Magazine, Cathay Life was the #1 ideal brand for the 11th consecutive year; Cathay Financial Holdings and Cathay Century Insurance also remained in first place. ■ In the “2010 Best Life Insurance Company” survey by Modern Insurance, Health and Wealth Management Magazine, Cathay Life was ranked No. 1 by consumers as “The Most Recommended”, “The Best Claims Service”, “The Best Sales Agent”, and “The Most Highly Recognized.” February ■ Cathay Financial Holdings was recognized as the “2010 Organizations with Contribution to Tourism” by the Tourism Bureau, the only organization in the banking and insurance industry to win this accolade. ■ In Global Views Magazine’s “Wealth Management Survey”: ◆ Cathay Financial Holdings was No. 1 in “Financial Holding Companies by Image” for the sixth consecutive year(2004~2009). ◆ Cathay United Bank was No. 1 in “Most Recommended Bank for Wealth Management by Wealth Management Clients” for the third consecutive year. March ■ Cathay Financial Holdings Chairman Hong-Tu Tsai was honored by Forbes Asia as “48 Heroes of Philanthropy.” ■ Cathay United Bank was named Best Retail Bank in Taiwan in 2008 by the Asian Banker Excellence in Retail Financial Services Award 2009. April ■ Cathay Charity Foundation was recognized as “Outstanding Organization in Blood Donation” by Taiwan Blood Services Foundation for the ninth consecutive year. May ■ Cathay Life received the ISO 10002 certification from SGS Taiwan, the first company in Taiwan that passed the certification on ISO 10002 on complaint management system. ■ Cathay Life Insurance ranked #1 in Top 100 Financial Institutions in Taiwan 2010 in Common Wealth Magazine’s Top 1000 Enterprises Survey. ■ Cathay Financial Holdings ranked #1 among financial institutions in Taiwan (in terms of total market value) in Top 1000 Companies in Greater China by Business Today Weekly. ■ Cathay Financial Holdings was on the list of Financial Times Global 500, the only financial service company in Taiwan listed. ■ Cathay United Bank was selected “Outstanding Enterprise in Self-Management of Workplace Safety and Health” in the “2010 Labor Safety Awards” of the Labor Standards Inspection Office Taipei City Government two years consecutively, the only bank in the domestic banking industry to win this special honor. June ■ Cathay Life was named the champion of “Yahoo! Taiwan Brand Awards” in the category of insurance company. ■ Cathay Life was again recognized by consumers to win the gold medal in the Trust Brand Survey of Readers Digest published in 2010 for the 7th consecutive year. July ■ The Indovina Bank was recommended by the Central Bank of Vietnam to Vietnam’s Presidential Office for 2007 ~ 2009 Excellence Award in Banking. August ■ Cathay Life ranked No. 281 in Fortune Magazine’s 2010 Global 500 , the only financial company in Taiwan on the list. ■ Cathay Financial Holdings was recognized in the “Tenth Arts and Business Award” of the Council for Cultural Affairs: ◆ Cathay Financial Holdings and Cathay United Bank won the gold medal; Cathay Life won the gold medal ten times in a row. ◆ Cathay Real Estate Development Co. also won a bronze medal. September ■ Cathay Life was named “Best Insurance Company in Taiwan 2010” by the internationally renowned World Finance. ■ Cathay Life received “The Second Sports Contribution Award” in sponsorship and promotional effort categories from the Sports Affairs Council. October ■ Cathay Life’s nursery room received “Outstanding Nursery Room Certification” from Taipei City Government. November ■ Cathay Life won the “Health Excellence Award” in the “2010 Workplace Health Self-Accreditation Program” of Taipei City Government. ■ Cathay Life passed the Taiwan TrainQuali System (TTQS) evaluation of Bureau of Employment and Vocational Training, Council of Labor Affairs, the first life insurance company in the country that has passed the TTQS evaluation. ■ Cathay Life was again number one life insurance company in the third “Ideal Brands for Business People” survey conducted by Taiwan’s Business Today. ■ Cathay Bank ranked second among privately-owned banks by loan balance according to the statistics published by the Banking Bureau. ■ Cathay United Bank won honorable mention in the “Best Risk Management” category of “The Fifth Taiwan Banking and Finance Best Practice Awards” conferred by Taiwan Acadmy of Banking and Finance. December ■ Cathay Life received the double accolades of “Gold Security Award” and “Gold Quality Award” from Joint Credit Information Center. ■ The Corporate Banking Division of Cathay United Bank won the annual “Golden Eagle Award” for customer loyalty in the “Banking Service, Capital and Innovative Service” survey of China Productivity Center. ■ Cathay United Bank ranked 5th among privately-owned banks in Bloomberg’s “2010 Taiwan’s Syndicated Loan Providers.”

34 WorldReginfo - af615e37-0be6-4548-9e99-d2cbd50dd787 2010 2010 2010 2010 2010 2010 2010 Financial Report

35 WorldReginfo - af615e37-0be6-4548-9e99-d2cbd50dd787 Independent Auditors' Report ...... 37 Consolidated Balance Sheets ...... 38 Consolidated Statements of Income ...... 39 Consolidated Statements of Changes in Stockholders' Equity ...... 40 Consolidated Statements of Cash Flows ...... 41 Parent company financial statements ...... 42-45 The major subsidiaries' condensed balance sheets and

statements of income ...... 46-56

36 WorldReginfo - af615e37-0be6-4548-9e99-d2cbd50dd787 English Translation of Report Originally Issued in Chinese

Independent Auditors’ Report

To:Board of Directors Cathay Financial Holding Co., Ltd.

We have audited the accompanying consolidated balance sheets of Cathay Financial Holding Co., Ltd. (the “Company”) and its subsidiaries (“Subsidiaries”) as of December 31, 2009 and 2010, and the related consolidated statements of income, changes in stockholders’ equity and cash flows for the years ended. These consolidated financial statements are the responsibility of the Company’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 generally accepted auditing standards in the Republic of China and Guidelines for Certified Public Accountants’ Examination and Reporting on Financial Statements. Those 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 statement. 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 consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company and Subsidiaries as of December 31, 2009 and 2010, and the results of its operations and its cash flows for the years ended in conformity with Requirements of the Guidelines Governing the Preparation of Financial Reports by Securities Issuers, Guidelines Governing the Preparation of Financial Reports by Financial Holding Companies and generally accepted accounting principles in the Republic of China.

Ernst & Young Taipei, Taiwan The Republic of China March 9, 2011

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

37 WorldReginfo - af615e37-0be6-4548-9e99-d2cbd50dd787 2010 2010 Financial Report 2010

English Translation of Financial Statements Originally Issued in Chinese

Cathay Financial Holding Co., Ltd. and Subsidiaries Consolidated Balance Sheets As of December 31, 2009 and 2010 (Expressed in thousands of dollars) December 31, 2009 December 31, 2010 NT $ US $ NT $ US $

Assets Cash and cash equivalents $644,422,576 $20,169,721 $643,534,846 $22,084,243 Due from the Central Bank and call loans to banks 79,124,653 2,476,515 99,059,544 3,399,435 Financial assets at fair value through profit or loss 143,643,937 4,495,898 170,120,430 5,838,038 Securities purchased under agreements to resell 43,401,815 1,358,429 48,984,493 1,681,005 Receivables -net 99,153,661 3,103,401 128,356,622 4,404,826 Loans -net 1,328,382,255 41,576,909 1,383,494,210 47,477,495 Available-for-sale financial assets -net 553,416,933 17,321,344 661,992,457 22,717,655 Held-to-maturity financial assets -net 672,357,520 21,044,054 631,827,811 21,682,492 Investments under equity method 2,505,287 78,413 2,500,997 85,827 Other financial assets -net 67,685,776 2,118,491 52,307,393 1,795,037 Investments in debt securities with no active market 177,544,458 5,556,947 371,297,943 12,741,865 Separate account products assets 274,311,184 8,585,639 269,250,514 9,239,894 Investments in real estate 117,426,032 3,675,306 126,428,907 4,338,672 Property and equipment -net 39,657,723 1,241,243 37,940,551 1,302,009 Goodwill and intangible assets -net 8,227,881 257,524 8,390,821 287,949 Other assets -net 44,274,330 1,385,738 53,449,920 1,834,246 Total assets $4,295,536,021 $134,445,572 $4,688,937,459 $160,910,688

Liabilities & stockholders' equity Liabilities Due to the Central Bank and call loans from banks $45,571,009 $1,426,323 $45,351,211 $1,556,321 Bankers acceptances and funds borrowed 1,601,500 50,125 1,456,500 49,983 Commercial paper payable 1,170,000 36,620 1,450,000 49,760 Financial liabilities at fair value through profit or loss 26,703,247 835,782 23,795,837 816,604 Securities sold under agreements to repurchase 8,745,465 273,723 22,139,556 759,765 Payables 38,143,397 1,193,847 81,645,082 2,801,822 Deposits 1,288,413,420 40,325,929 1,337,174,083 45,887,923 Bonds payable 56,437,209 1,766,423 58,654,684 2,012,858 Other borrowings 300,000 9,390 - - Other financial liabilities 269,216 8,426 191,601 6,575 Separate account products liabilities 274,311,184 8,585,639 269,250,514 9,239,894 Reserve for operations and liabilities 2,328,637,481 72,883,802 2,613,983,437 89,704,305 Other liabilities 9,809,725 307,034 11,370,278 390,195 Total liabilities 4,080,112,853 127,703,063 4,466,462,783 153,276,005

Stockholders' Equity attributable to equity holders of the parent Stock Common stock 96,708,774 3,026,879 101,544,213 3,484,702 Capital surplus 78,240,933 2,448,855 78,508,148 2,694,171 Retained earnings Legal reserve 12,540,295 392,498 13,645,400 468,270 Special reserve 7,107,732 222,464 - - Unappropriated retained earnings 11,051,057 345,886 11,716,176 402,065 Other stockholders' equity Land revaluation increment 1,461 46 1,461 50 Cumulative conversion adjustments 4,444 139 (893,051) (30,647) Unrealized gains or losses on financial instruments 6,547,332 204,924 14,672,596 503,521 Net loss not yet recognized as net pension cost (6,791) (213) (650,993) (22,340) Total stockholder's equity attributable to equity holders of the parent 212,195,237 6,641,478 218,543,950 7,499,792 Minority interest 3,227,931 101,031 3,930,726 134,891 Total stockholders' equity 215,423,168 6,742,509 222,474,676 7,634,683 Total liabilities and stockholders' equity $4,295,536,021 $134,445,572 $4,688,937,459 $160,910,688

(The exchange rates provided by the Federal Reserve Bank of New York on December 31, 2009 and 2010 were NT$31.95 and NT$29.14 to US$1.00,respectively)

38 WorldReginfo - af615e37-0be6-4548-9e99-d2cbd50dd787 Cathay Financial Holdings Annual Report

English Translation of Financial Statements Originally Issued in Chinese

Cathay Financial Holding Co., Ltd. and Subsidiaries Consolidated Statements of Income For the years ended December 31, 2009 and 2010 (Expressed in thousands of dollars, except earnings per share) 2009 2010 NT $ US $ NT $ US $

Interest income $99,534,032 $3,115,306 $102,405,387 $3,514,255 Less: Interest expenses (11,604,601) (363,211) (9,670,068) (331,849) Net interest income 87,929,431 2,752,095 92,735,319 3,182,406 Net income other than interest Net commission and handling fee 1,870,210 58,536 184,742 6,340 Net premiums from insurance business 223,192,764 6,985,689 236,595,977 8,119,285 Gains on financial assets and liabilities at fair value 20,557,813 643,437 61,944,679 2,125,761 through profit or loss Realized gains on available-for-sale financial assets 3,286,871 102,875 26,174,834 898,244 Realized gains (losses) on held-to-maturity financial assets 1,900,726 59,491 (444,960) (15,270) Gains on investments under equity method 311,837 9,760 195,548 6,711 Gains on investments in real estate 6,253,074 195,714 5,482,035 188,127 Losses on foreign exchange (18,701,596) (585,339) (83,640,690) (2,870,305) Impairment losses (971,525) (30,408) (75,107) (2,577) Net other non-interest (losses) gains (2,825,547) (88,437) 4,840,053 166,097 Total income 322,804,058 10,103,413 343,992,430 11,804,819 Bad debt expenses (3,451) (108) - - Provision for premiums reserve (252,371,298) (7,898,945) (284,463,658) (9,761,965) Operating expenses Personnel expenses (39,339,997) (1,231,299) (41,291,104) (1,416,990) Depreciation and amortizations expenses (4,110,485) (128,653) (4,145,218) (142,252) Other general and administration expenses (10,679,280) (334,250) (11,501,448) (394,696) Income from continuing operations before income taxes 16,299,547 510,158 2,591,002 88,916 Income taxes (expense) benefit (5,467,666) (171,132) 1,717,242 58,931 Income from continuing operations after income taxes 10,831,881 339,026 4,308,244 147,847 Consolidated net income $10,831,881 $339,026 $4,308,244 $147,847 Include: Parent company $11,051,057 $345,886 $4,600,585 $157,879 Minority interest (219,176) (6,860) (292,341) (10,032) Consolidated net income $10,831,881 $339,026 $4,308,244 $147,847 Earnings per share (expressed in dollars) : Primary earnings per share: Before taxes After taxes Before taxes After taxes Before taxes After taxes Before taxes After taxes Income from continuing operations $1.61 $1.07 $0.05 $0.03 $0.26 $0.42 $0.01 $0.01 Consolidated net income $1.61 $1.07 $0.05 $0.03 $0.26 $0.42 $0.01 $0.01

(The exchange rates provided by the Federal Reserve Bank of New York on December 31, 2009 and 2010 were NT$31.95 and NT$29.14 to US$1.00,respectively)

39 WorldReginfo - af615e37-0be6-4548-9e99-d2cbd50dd787 2010 2010 Cathay Financial Holdings Financial Report 2010 Annual Report

English Translation of Financial Statements Originally Issued in Chinese

Cathay Financial Holding Co., Ltd. and Subsidiaries Consolidated Statements of Changes in Stockholders' Equity For the years ended December 31, 2009 and 2010 (Expressed in thousands of dollars)

Stock Retained earnings Other stockholders' equity

Unappropriated Land revaluation Cumulative conversion Unrealized gains or losses on Net loss not yet recognized Minority interest Total Summary Common stock Capital surplus Legal reserve Special reserve Treasury stock retained earnings increment adjustments financial instruments as net pension cost

NT $ US $ NT $ US $ NT $ US $ NT $ US $ NT $ US $ NT $ US $ NT $ US $ NT $ US $ NT $ US $ NT $ US $ NT $ US $ NT $ US $

Balance on January 1, 2009 $97,375,372 $3,047,743 $81,971,213 $2,565,609 $12,320,672 $385,624 $- $- $7,060,140 $220,974 $2,106 $66 $344,257 $10,775 ($52,309,533) ($1,637,231) $(4,140,047) $(129,579) $(270,687) $(8,472) $3,145,462 $98,450 $145,498,955 $4,553,959

Minority interest 301,645 9,441 301,645 9,441

Appropriations and distribution for 2008

Legal reserve 219,623 6,874 (219,623) (6,874) - -

Special reserve (267,215) (8,364) 7,107,732 222,464 (6,840,517) (214,100) - -

Land revaluation increment (645) (20) (645) (20)

Capital surplus 386 12 386 12

Cumulative conversion adjustments (339,813) (10,636) (339,813) (10,636)

Unrealized gains or losses of financial instruments 58,856,865 1,842,155 58,856,865 1,842,155

Cancellation of treasury stock (666,598) (20,864) (3,473,449) (108,715) 4,140,047 129,579 - -

Net loss not yet recognized as net pension cost 263,896 8,259 263,896 8,259

Other capital surplus 9,998 313 9,998 313

Consolidated net income (loss) for the year 11,051,057 345,886 (219,176) (6,860) 10,831,881 339,026 ended December 31, 2009

Balance on December 31, 2009 $96,708,774 $3,026,879 $78,240,933 $2,448,855 $12,540,295 $392,498 $7,107,732 $222,464 $11,051,057 $345,886 $1,461 $46 $4,444 $139 $6,547,332 $204,924 $- $- $(6,791) $(213) $3,227,931 $101,031 $215,423,168 $6,742,509

Balance on January 1, 2010 $96,708,774 $3,318,764 $78,240,933 $2,685,001 $12,540,295 $430,346 $7,107,732 $243,917 $11,051,057 $379,239 $1,461 $50 $4,444 $153 $6,547,332 $224,685 $- $- $(6,791) $(233) $3,227,931 $110,773 $215,423,168 $7,392,695

Minority interest 995,136 34,150 995,136 34,150

Appropriations and distribution for 2009

Legal reserve 1,105,105 37,924 (1,105,105) (37,924) - -

Special reserve 267,215 9,170 (7,107,732) (243,917) 6,840,517 234,747 - -

Cash dividend (4,835,439) (165,938) (4,835,439) (165,938)

Stock dividend 4,835,439 165,938 (4,835,439) (165,938) - -

Cumulative conversion adjustments (897,495) (30,800) (897,495) (30,800)

Unrealized gains or losses of financial instruments 8,125,264 278,836 8,125,264 278,836

Net loss not yet recognized as net pension cost (644,202) (22,107) (644,202) (22,107)

Consolidated net income (loss) for the year 4,600,585 157,879 (292,341) (10,032) 4,308,244 147,847 ended December 31, 2010

Balance on December 31, 2010 $101,544,213 $3,484,702 $78,508,148 $2,694,171 $13,645,400 $468,270 $- $- $11,716,176 $402,065 $1,461 $50 $(893,051) $(30,647) $14,672,596 $503,521 $- $- $(650,993) $(22,340) $3,930,726 $134,891 $222,474,676 $7,634,683

Note: The remuneration of directors and supervisors NT $5,400 (US$169) thousands, employee bonus (The exchange rates provided by the Federal Reserve Bank of New York on December 31, 2009 and 2010 were NT$31.95 and NT$29.14 to US$1.00,respectively) NT $968 (US$30) thousands were recorded as operating cost and expense in 2009.

40 WorldReginfo - af615e37-0be6-4548-9e99-d2cbd50dd787 Cathay Financial Holdings Annual Report

English Translation of Financial Statements Originally Issued in Chinese

Cathay Financial Holding Co., Ltd. and Subsidiaries Consolidated Statements of Cash Flows For the years ended December 31, 2009 and 2010 (Expressed in thousands of dollars)

2009 2010 NT $ US $ NT $ US $

Cash flows from operating activities Consolidated net income $10,831,881 $339,026 $4,308,244 $147,847 Adjustments: Income and other adjustments with no cash flow effects Depreciation and amortization expenses 4,110,485 128,653 4,145,218 142,252 Investment income recognized by equity method (more) less than (35,162) (1,100) 147,160 5,050 cash dividends received Bad debt expenses 3,451 108 - - Provision for premiums reserve from insurance business 252,371,298 7,898,945 284,463,658 9,761,965 Gain on disposal of property and equipment (999,961) (31,298) (1,198,961) (41,145) Impairment loss 971,525 30,408 75,107 2,577 Other adjustments (559,680) (17,517) (824,579) (28,297) Decrease (increase) on operating assets and liabilities Increase in receivables (6,449,192) (201,852) (29,180,152) (1,001,378) Decrease(increase) in deferred income tax assets 2,988,739 93,544 (2,671,653) (91,683) Increase in financial assets at fair value through profit or loss (16,714,728) (523,153) (26,732,035) (917,366) Increase in other financial assets (3,437,815) (107,600) (3,838,057) (131,711) (Increase) decrease in other assets (6,189,697) (193,731) 976,519 33,511 Increase in payables 3,095,426 96,884 43,218,252 1,483,125 Decrease in financial liabilities at fair value through profit or loss (46,481,527) (1,454,821) (2,896,426) (99,397) Increase (decrease) in deferred income tax liabilities 1,144,167 35,811 (1,270,728) (43,608) Decrease in other financial liabilities (123,254) (3,858) (55,892) (1,918) Increase in other liabilities 1,029,728 32,230 3,350,233 114,970 Net cash provided by operating activities 195,555,684 6,120,679 272,015,908 9,334,794

Cash flows from investing activities Decrease in restricted assets 83,000 2,598 - - Decrease (increase) in loans 34,838,822 1,090,417 (56,737,397) (1,947,063) Increase in due from the Central Bank and call loans to banks (31,517,238) (986,455) (21,152,810) (725,903) Increase in available-for-sale financial assets (7,564,968) (236,775) (101,280,765) (3,475,661) (Increase) decrease in held-to-maturity financial assets (19,030,527) (595,635) 40,224,262 1,380,380 Decrease in investments under equity method 430,142 13,463 62,937 2,160 Increase investments in real estate (8,834,105) (276,498) (10,568,012) (362,664) (Acquisition) disposal of property and equipment (1,292,650) (40,459) 1,541,762 52,909 Increase in securities purchased under agreements to resell (31,653,568) (990,722) (5,582,678) (191,581) Increase in other financial assets (77,082,740) (2,412,605) (182,015,315) (6,246,236) Decrease (increase) in other assets 1,336,252 41,823 (148,030) (5,080) Net cash used in investing activities (140,287,580) (4,390,848) (335,656,046) (11,518,739)

Cash flows from financing activities Decrease in due to the Central Bank and call loans from banks (17,740,144) (555,247) (5,506,625) (188,971) Increase in deposits 198,363,169 6,208,550 50,294,577 1,725,964 (Decrease) increase in securities sold under agreements to repurchase (11,555,174) (361,664) 13,394,091 459,646 Increase in banker's acceptances and funds borrowed 417,948 13,081 5,753,200 197,433 Increase in bonds payable 17,571,231 549,960 2,457,084 84,320 Increase (decrease) in other financial liabilities 1,035,449 32,409 (80,098) (2,749) Increase in other liabilities 257,889 8,072 530,969 18,222 Cash dividends (170,601) (5,340) (4,978,300) (170,841) Increase in minority stockholders 229,954 7,197 1,536,589 52,731 Net cash provided by financing activities 188,409,721 5,897,018 63,401,487 2,175,755 Effects of exchange rate changes (300,833) (9,416) (649,079) (22,275) Effects on merger of subsidiaries 58,782 1,840 - - Increase (decrease) in cash and cash equivalents 243,435,774 7,619,273 (887,730) (30,465) Cash and cash equivalents at the beginning of period 400,986,802 12,550,448 644,422,576 22,114,708 Cash and cash equivalents at the end of period $644,422,576 $20,169,721 $643,534,846 $22,084,243 Supplemental disclosure of cash flows information Interest paid during the period (excluding capitalized interest) $13,284,478 $415,790 $8,814,069 $302,473 Income tax paid $2,291,530 $71,722 $1,796,408 $61,647 Investing and financing activities with no cash flow effects Reclassification of property and equipment to other assets $- $- $107,377 $3,685

(The exchange rates provided by the Federal Reserve Bank of New York on December 31, 2009 and 2010 were NT$31.95 and NT$29.14 to US$1.00, respectively)

41 WorldReginfo - af615e37-0be6-4548-9e99-d2cbd50dd787 2010 2010 Financial Report 2010

English Translation of Financial Statements Originally Issued in Chinese

Cathay Financial Holding Co., Ltd. Audited Balance Sheets As of December 31, 2009 and 2010 (Expressed in thousands of dollars)

December 31, 2009 December 31, 2010 NT $ US $ NT $ US $

Assets Cash and cash equivalents $10,812,475 $338,419 $14,561,773 $499,718 Receivables -net 6,665,004 208,607 7,664,904 263,037 Held-to-maturity financial assets 25,000,000 782,472 25,000,000 857,927 Investments under equity method 216,251,195 6,768,425 218,763,041 7,507,311 Other financial assets -net 31,720 993 31,720 1,089 Property and equipment -net 4,022 126 4,346 149 Goodwill and intangible assets -net - - 123 4 Other assets -net 2,309,690 72,291 1,983,651 68,073 Total assets $261,074,106 $8,171,333 $268,009,558 $9,197,308

Liabilities & stockholders' equity Payables $8,851,563 $277,044 $9,430,336 $323,622 Bonds payable 40,000,000 1,251,956 40,000,000 1,372,684 Other liabilities 27,306 855 35,272 1,210 Total liabilities 48,878,869 1,529,855 49,465,608 1,697,516

Stockholders' equity Capital stock Common stock 96,708,774 3,026,879 101,544,213 3,484,702 Capital surplus 78,240,933 2,448,855 78,508,148 2,694,171 Retained earnings Legal reserve 12,540,295 392,498 13,645,400 468,270 Special reserve 7,107,732 222,464 - - Unappropriated retained earnings 11,051,057 345,886 11,716,176 402,065 Equity adjustments Reserve for land revaluation increment 1,461 46 1,461 50 Cumulative conversion adjustments 4,444 139 (893,051) (30,647) Unrealized gains or losses on financial instruments 6,547,332 204,924 14,672,596 503,521 Net loss not yet recognized as net pension cost (6,791) (213) (650,993) (22,340) Total stockholders' equity 212,195,237 6,641,478 218,543,950 7,499,792 Total liabilities and stockholders' equity $261,074,106 $8,171,333 $268,009,558 $9,197,308

42 WorldReginfo - af615e37-0be6-4548-9e99-d2cbd50dd787 Cathay Financial Holdings Annual Report

English Translation of Financial Statements Originally Issued in Chinese

Cathay Financial Holding Co., Ltd. Audited Statements of Income For the years ended December 31, 2009 and 2010 (Expressed in thousands of dollars, except earnings per share)

2009 2010 NT $ US $ NT $ US $

Income Gain on investment-equity method $12,184,272 $381,355 $5,331,619 $182,966 Gain on foreign exchange 8 - - - Other operating income 61,095 1,912 59,358 2,037 Total income 12,245,375 383,267 5,390,977 185,003 Expenses and loss Interest income 553,282 17,317 868,994 29,821 Less: interest expenses (751,896) (23,534) (1,154,629) (39,623) Net interest income (198,614) (6,217) (285,635) (9,802) Losses on foreign exchange - - (128) (4) Operating expenses (318,836) (9,979) (328,544) (11,275) Income from continuing operations before income taxes 11,727,925 367,071 4,776,670 163,922 Income taxes expense (676,868) (21,185) (176,085) (6,043) Net income $11,051,057 $345,886 $4,600,585 $157,879

Earnings per share (expressed in dollars) Primary earnings per share: Before taxes After taxes Before taxes After taxes Before taxes After taxes Before taxes After taxes Net income $1.15 $1.09 $0.04 $0.03 $0.47 $0.45 $0.02 $0.02

43 WorldReginfo - af615e37-0be6-4548-9e99-d2cbd50dd787 2010 2010 Cathay Financial Holdings Financial Report 2010 Annual Report

English Translation of Financial Statements Originally Issued in Chinese

Cathay Financial Holding Co., Ltd. Audited Statements of Chages in Stockholders' Equity For the years ended December 31, 2009 and 2010 (Expressed in thousands of dollars)

Retained earnings Other stockholders' equity

Common stock Capital surplus Unappropriated Land Cumulative conversion Unrealized gains or losses on Net loss not recognized Total Summary Legal reserve Special reserve Treasury stock retained earnings revaluation increment adjustments financial instruments as pension cost

NT $ US $ NT $ US $ NT $ US $ NT $ US $ NT $ US $ NT $ US $ NT $ US $ NT $ US $ NT $ US $ NT $ US $ NT $ US $

Balance on January 1, 2009 $97,375,372 $3,047,743 $81,971,213 $2,565,609 $12,320,672 $385,624 $- $- $7,060,140 $220,974 $2,106 $66 $344,257 $10,775 $(52,309,533) $(1,637,231) $(4,140,047) $(129,579) $(270,687) $(8,472) $142,353,493 $4,455,509

Appropriations and distribution for 2008

Legal reserve 219,623 6,874 (219,623) (6,874) - -

Special reserve (267,215) (8,364) 7,107,732 222,464 (6,840,517) (214,100) - -

Land revaluation increment (645) (20) (645) (20)

Capital surplus 386 12 386 12

Cumulative conversion adjustments (339,813) (10,636) (339,813) (10,636)

Unrealized gains or losses of financial instruments 58,856,865 1,842,155 58,856,865 1,842,155

Cancellation of treasury stock (666,598) (20,864) (3,473,449) (108,715) 4,140,047 129,579 - -

Other capital surplus 9,998 313 9,998 313

Net loss not recognized as pension cost 263,896 8,259 263,896 8,259

Net income for the year ended December 31, 2009 11,051,057 345,886 11,051,057 345,886

Balance on December 31, 2009 $96,708,774 $3,026,879 $78,240,933 $2,448,855 $12,540,295 $392,498 $7,107,732 $222,464 $11,051,057 $345,886 $1,461 $46 $4,444 $139 $6,547,332 $204,924 $- $- $(6,791) $(213) $212,195,237 $6,641,478

Balance on January 1, 2010 $96,708,774 $3,318,764 $78,240,933 $2,685,001 $12,540,295 $430,346 $7,107,732 $243,917 $11,051,057 $379,239 $1,461 $50 $4,444 $153 $6,547,332 $224,685 $- $- $(6,791) $(233) $212,195,237 $7,281,922

Appropriations and distribution for 2009

Legal reserve 1,105,105 37,924 (1,105,105) (37,924) - -

Special reserve 267,215 9,170 (7,107,732 ) (243,917) 6,840,517 234,747 - -

Cash dividends (4,835,439) (165,938) (4,835,439) (165,938)

Stock dividend 4,835,439 165,938 (4,835,439) (165,938) - -

Cumulative conversion adjustments (897,495) (30,800) (897,495) (30,800)

Unrealized gains or losses of financial instruments 8,125,264 278,836 8,125,264 278,836

Net loss not recognized as pension cost (644,202) (22,107) (644,202) (22,107)

Net income for the year ended December 31, 2010 4,600,585 157,879 4,600,585 157,879

Balance on December 31, 2010 $101,544,213 $3,484,702 $78,508,148 $2,694,171 $13,645,400 $468,270 $- $- $11,716,176 $402,065 $1,461 $50 $(893,051) $(30,647) $14,672,596 $503,521 $- $- $(650,993) $(22,340) $218,543,950 $7,499,792

Note: The remuneration of directors and supervisors NT $5,400 (US$169) thousands, employee bonus NT $968 (US$30) thousands were recorded as operating cost and expense in 2009.

44 WorldReginfo - af615e37-0be6-4548-9e99-d2cbd50dd787 Cathay Financial Holdings Annual Report

English Translation of Financial Statements Originally Issued in Chinese

Cathay Financial Holding Co., Ltd. Auited Statements of Cash Flows For the years ended December 31, 2009 and 2010 (Expressed in thousands of dollars)

2009 2010 NT $ US $ NT $ US $

Cash flows from operating activities Net income $11,051,057 $345,886 $4,600,585 $157,879 Adjustments: Income and other adjustments with no cash flow effects Amortizations 533 17 62 2 Depreciation 1,003 31 972 33 Losses on disposal of property and equipment 205 6 382 13 Investment income recognized by equity method(more) less than cash dividends received (12,132,072) (379,721) 4,071,720 139,730 Effects of exchange rate changes (8) - 128 4 Changes in operating assets and liabilities Increase in accounts receivable (2,605,528) (81,550) (999,900) (34,313) (Increase) decrease in deferred income tax assets (70,616) (2,210) 326,098 11,191 (Increase) decrease in other assets (117) (4) 65 2 Increase (decrease) in accounts payable 2,657,150 83,166 (161,893) (5,556) Increase in income tax payable - - 740,665 25,417 Decrease in deferred income tax liabilities (3) - (3) - Increase in other liabilities 4,211 132 7,969 274 Net cash(used in) provided by operating activities (1,094,185) (34,247) 8,586,850 294,676 Cash flows from investing activities Acquisition of held-to-maturity financial assets (10,000,000) (312,989) - - Acquisition of property and equipment (764) (24) (1,677) (58) Acquisition of intangible assets - - (185) (6) Increase in refundable deposit (24) (1) (123) (4) Net cash used in investing activities (10,000,788) (313,014) (1,985) (68) Cash flows from financing activities Increase in bonds payable 20,000,000 625,978 - - Cash received from capital reduction in long-term stock investment 533,300 16,692 - - Long-term stock investment (925,246) (28,959) - - Cash dividends - - (4,835,439) (165,938) Net cash provided by (used in) financing activities 19,608,054 613,711 (4,835,439) (165,938) Effects of exchange rate changes 8 - (128) (5) Increase in cash and cash equivalents 8,513,089 266,450 3,749,298 128,665 Cash and cash equivalents at the beginning of year 2,299,386 71,969 10,812,475 371,053 Cash and cash equivalents at the end of year $10,812,475 $338,419 $14,561,773 $499,718

Supplemental disclosure of cash flows information Interest paid during the period $629,320 $19,697 $1,154,629 $39,624 Income tax paid $293,909 $9,199 $6,465 $222

45 WorldReginfo - af615e37-0be6-4548-9e99-d2cbd50dd787 2010 2010 Financial Report 2010

English Translation of Financial Statements Originally Issued in Chinese

Cathay Life Insurance Co., Ltd. Condensed Balance Sheets As of December 31, 2009 and 2010 (Expressed in thousands of dollars)

December 31, 2009 December 31, 2010 Items NT $ US $ NT $ US $

Assets Current assets $701,947,793 $21,970,197 $817,635,594 $28,058,874 Loans 506,130,108 15,841,318 481,605,977 16,527,316 Funds and investments 1,229,316,465 38,476,259 1,450,401,024 49,773,542 Property and equipment 12,504,702 391,383 11,894,833 408,196 Intangible assets 560,518 17,544 386,920 13,278 Other assets 292,410,357 9,152,124 285,727,077 9,805,322 Total assets $2,742,869,943 $85,848,825 $3,047,651,425 $104,586,528

Liabilities Current liabilities $19,752,642 $618,236 $44,292,901 $1,520,004 Long-term liabilities 26,441,827 827,600 26,287,494 902,110 Other liabilities 2,583,545,777 80,862,153 2,863,305,784 98,260,322 Total liabilities 2,629,740,246 82,307,989 2,933,886,179 100,682,436 Stockholders' equity Capital stock 52,686,158 1,649,019 53,065,274 1,821,046 Capital surplus 13,009,649 407,188 13,009,649 446,453 Retained earnings 43,393,520 1,358,169 36,033,075 1,236,550 Others 4,040,370 126,460 11,657,248 400,043 Total stockholders' equity 113,129,697 3,540,836 113,765,246 3,904,092 Total liabilities and stockholders' equity $2,742,869,943 $85,848,825 $3,047,651,425 $104,586,528

Cathay Life Insurance Co., Ltd. Condensed Statements of Income For the years ended December 31, 2009 and 2010 (Expressed in thousands of dollars, except earnings per share)

2009 2010 Items NT $ US $ NT $ US $

Operating revenues $929,473,158 $29,091,492 $1,088,289,018 $37,346,912 Operating costs (913,744,207) (28,599,193) (1,086,808,553) (37,296,107) Operating gross profit 15,728,951 492,299 1,480,465 50,805 Operating expenses (11,323,451) (354,412) (12,338,680) (423,427) Non-operating revenues 1,570,558 49,157 2,070,256 71,045 Non-operating expenses (1,343,531) (42,051) (822,209) (28,216) Income (loss) from continuing operations before income taxes $4,632,527 $144,993 $(9,610,168) $(329,793) Net income (loss) $2,662,301 $83,327 $(6,515,586) $(223,596) Earnings per share (in dollars) Income (loss) from continuing operations before income taxes $0.87 $0.03 $(1.81) $(0.06) Net income (loss) $0.50 $0.02 $(1.23) $(0.04)

46 WorldReginfo - af615e37-0be6-4548-9e99-d2cbd50dd787 Cathay Financial Holdings Annual Report

English Translation of Financial Statements Originally Issued in Chinese

Cathay Century Insurance Co., Ltd. Condensed Balance Sheets As of December 31, 2009 and 2010 (Expressed in thousands of dollars)

December 31, 2009 December 31, 2010 Items NT $ US $ NT $ US $

Assets Current assets $14,638,565 $458,171 $15,917,534 $546,243 Loans 1,144,564 35,823 705,214 24,201 Funds and investments 4,190,557 131,160 4,102,430 140,784 Property and equipment 116,339 3,641 101,842 3,495 Intangible assets 14,177 444 24,802 851 Other assets 708,444 22,174 896,912 30,779 Total assets $20,812,646 $651,413 $21,748,734 $746,353

Liabilities Current liabilities $1,822,864 $57,054 $1,689,157 $57,967 Long-term liabilities 17,590 551 57,548 1,975 Other liabilities 14,672,157 459,222 16,530,353 567,273 Total liabilities 16,512,611 516,827 18,277,058 627,215 Stockholders' equity Capital stock 2,317,006 72,520 2,317,006 79,513 Capital surplus 1,929 60 1,929 66 Retained earnings 1,785,198 55,874 1,075,361 36,903 Others 195,902 6,132 77,380 2,656 Total stockholders' equity 4,300,035 134,586 3,471,676 119,138 Total liabilities and stockholders' equity $20,812,646 $651,413 $21,748,734 $746,353

Cathay Century Insurance Co., Ltd. Condensed Statements of Income For the years ended December 31, 2009 and 2010 (Expressed in thousands of dollars, except earnings per share)

2009 2010 Items NT $ US $ NT $ US $

Operating revenues $20,767,354 $649,995 $22,469,299 $771,081 Operating costs (17,025,809) (532,889) (19,102,591) (655,545) Operating gross profit 3,741,545 117,106 3,366,708 115,536 Operating expenses (2,690,464) (84,209) (3,041,366) (104,371) Non-operating revenues 3,052 95 16,319 560 Non-operating expenses (78) (2) (157) (5) Income from continuing operations before income taxes $1,054,055 $32,990 $341,504 $11,720 Net income $785,247 $24,577 $301,148 $10,335 Earnings per share (in dollars) Income from continuing operations before income taxes $4.55 $0.14 $1.47 $0.05 Net income $3.39 $0.11 $1.30 $0.04

47 WorldReginfo - af615e37-0be6-4548-9e99-d2cbd50dd787 2010 2010 Financial Report 2010

English Translation of Financial Statements Originally Issued in Chinese

Cathay Life Insurance Company(China) Condensed Balance Sheets As of December 31, 2009 and 2010 (Expressed in thousands of dollars)

December 31, 2009 December 31, 2010 Items NT $ US $ NT $ US $

Assets Current assets $4,605,504 $144,147 $5,558,075 $190,737 Loans 15,392 482 18,853 647 Funds and investments 5,041,993 157,809 4,794,680 164,539 Property and equipment 224,158 7,016 176,754 6,066 Intangible assets 143,279 4,485 119,939 4,116 Other assets 1,304,015 40,814 1,612,614 55,340 Total assets $11,334,341 $354,753 $12,280,915 $421,445

Liabilities Current liabilities $417,315 $13,062 $420,724 $14,438 Other liabilities 9,085,498 284,366 9,485,024 325,498 Total liabilities 9,502,813 297,428 9,905,748 339,936 Stockholders' equity Capital stock 3,257,376 101,952 5,134,155 176,189 Retained earnings (2,166,817) (67,819) (3,160,401) (108,456) Others 740,969 23,192 401,413 13,776 Total stockholders' equity 1,831,528 57,325 2,375,167 81,509 Total liabilities and stockholders' equity $11,334,341 $354,753 $12,280,915 $421,445

Cathay Life Insurance Company(China) Condensed Statements of Income For the years ended December 31, 2009 and 2010 (Expressed in thousands of dollars, except earnings per share)

2009 2010 Items NT $ US $ NT $ US $

Operating revenues $4,252,958 $133,113 $5,368,713 $184,239 Operating costs (3,942,382) (123,392) (4,960,956) (170,246) Operating gross profit 310,576 9,721 407,757 13,993 Operating expenses (1,099,512) (34,414) (1,421,009) (48,765) Non-operating revenues 10,890 341 6,608 227 Non-operating expenses (1,059) (33) (315) (11) Loss from continuing operations before income taxes $(779,105) $(24,385) $(1,006,959) $(34,556) Net loss $(717,847) $(22,468) $(993,584) $(34,097) Earnings per share (in dollars) Loss from continuing operations before income taxes Note Note Note Note Net loss Note Note Note Note

Note: Cathay Life(China) is a limited company, there is no information about earnings per share.

48 WorldReginfo - af615e37-0be6-4548-9e99-d2cbd50dd787 Cathay Financial Holdings Annual Report

English Translation of Financial Statements Originally Issued in Chinese

Cathay Life Insurance Co., Ltd. (Vietnam) Condensed Balance Sheets As of December 31, 2009 and 2010 (Expressed in thousands of dollars)

December 31, 2009 December 31, 2010 Items NT $ US $ NT $ US $

Assets Current assets $447,073 $13,993 $409,051 $14,037 Loans 18 1 1,084 37 Funds and investments 1,391,750 43,560 1,181,275 40,538 Property and equipment 37,720 1,181 37,291 1,280 Intangible assets 31,005 970 20,109 690 Other assets 53,777 1,683 49,560 1,701 Total assets $1,961,343 $61,388 $1,698,370 $58,283

Liabilities Current liabilities $24,115 $755 $29,003 $995 Other liabilities 63,293 1,981 123,022 4,222 Total liabilities 87,408 2,736 152,025 5,217 Stockholders' equity Capital stock 1,940,080 60,722 1,940,080 66,578 Retained earnings 44,208 1,384 16,754 575 Others (110,353) (3,454) (410,489) (14,087) Total stockholders' equity 1,873,935 58,652 1,546,345 53,066 Total liabilities and stockholders' equity $1,961,343 $61,388 $1,698,370 $58,283

Cathay Life Insurance Co., Ltd.(Vietnam) Condensed Statements of Income For the years ended December 31, 2009 and 2010 (Expressed in thousands of dollars, except earnings per share)

2009 2010 Items NT $ US $ NT $ US $

Operating revenues $335,248 $10,493 $368,229 $12,637 Operating costs (85,442) (2,674) (127,072) (4,361) Operating gross profit 249,806 7,819 241,157 8,276 Operating expenses (264,920) (8,292) (274,893) (9,433) Non-operating revenues 1,342 42 70 2 Loss from continuing operations before income taxes $(13,772) $(431) $(33,666) $(1,155) Net loss $(8,288) $(259) $(27,454) $(942) Earnings per share (in dollars) Loss from continuing operations before income taxes Note Note Note Note Net loss Note Note Note Note

Note: Cathay Life (Vietnam) is a limited company, there is no information about earnings per share.

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2010 2010 Financial Report 2010

English Translation of Financial Statements Originally Issued in Chinese

Cathay Insurance Company Limited (China) Condensed Balance Sheets As of December 31, 2009 and 2010 (Expressed in thousands of dollars)

December 31, 2009 December 31, 2010 Items NT $ US $ NT $ US $

Assets Current assets $1,540,676 $48,222 $1,385,396 $47,543 Property and equipment 48,597 1,521 38,417 1,319 Intangible assets - - 763 26 Other assets 384,944 12,048 375,011 12,869 Total assets $1,974,217 $61,791 $1,799,587 $61,757

Liabilities Current liabilities $56,675 $1,774 $80,364 $2,758 Other liabilities 210,245 6,580 320,851 11,011 Total liabilities 266,920 8,354 401,215 13,769 Stockholders' equity Capital stock 1,745,942 54,646 1,745,942 59,916 Retained earnings (173,576) (5,432) (394,134) (13,526) Others 134,931 4,223 46,564 1,598 Total stockholders' equity 1,707,297 53,437 1,398,372 47,988 Total liabilities and stockholders' equity $1,974,217 $61,791 $1,799,587 $61,757

Cathay Insurance Company Limited(China) Condensed Statements of Income For the years ended December 31, 2009 and 2010 (Expressed in thousands of dollars, except earnings per share)

2009 2010 Items NT $ US $ NT $ US $

Operating revenues $324,887 $10,169 $644,838 $22,129 Operating costs (268,621) (8,408) (613,253) (21,045) Operating gross profit 56,266 1,761 31,585 1,084 Operating expenses (152,674) (4,778) (264,923) (9,091) Non-operating revenues 13,940 436 12,801 439 Non-operating expenses - - (22) (1) Loss from continuing operations before income taxes $(82,468) $(2,581) $(220,559) $(7,569) Net loss $(82,468) $(2,581) $(220,559) $(7,569) Earnings per share (in dollars) Loss from continuing operations before income taxes Note Note Note Note Net loss Note Note Note Note

Note: Cathay Century (China) is a limited company, there is no information about earnings per share.

50 WorldReginfo - af615e37-0be6-4548-9e99-d2cbd50dd787 Cathay Financial Holdings Annual Report

English Translation of Financial Statements Originally Issued in Chinese

Cathay Insurance Co., Ltd. (Vietnam) Condensed Balance Sheets As of December 31, 2010 (Expressed in thousands of dollars)

December 31, 2010 Items NT $ US $

Assets Current assets $434,356 $14,906 Property and equipment 53,339 1,830 Intangible assets 14,313 491 Other assets 27,737 952 Total assets $529,745 $18,179

Liabilities Current liabilities $91,264 $3,132 Other liabilities 70 2 Total liabilities 91,334 3,134 Stockholders' equity Capital stock 517,502 17,759 Retained earnings (2,271) (78) Others (76,820) (2,636) Total stockholders' equity 438,411 15,045 Total liabilities and stockholders' equity $529,745 $18,179

Cathay Insurance Co., Ltd. (Vietnam) Condensed Statements of Income From November 2 to December 31, 2010 (Expressed in thousands of dollars, except earnings per share)

2010 Items NT $ US $

Operating revenues $232 $8 Operating costs (73) (3) Operating gross profit 159 5 Operating expenses (3,850) (132) Non-operating revenues 1,420 49 Loss from continuing operations before income taxes $(2,271) $(78) Net loss $(2,271) $(78) Earnings per share (in dollars) Loss from continuing operations before income taxes Note Note Net loss Note Note

Note1: Cathay Century(Vietnam) is a limited company, there is no information about earnings per share. Note2: Cathay Century(Vietnam) was incorporate on November 2, 2010, thus there was no information about 2009.

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2010 2010 Financial Report 2010

English Translation of Financial Statements Originally Issued in Chinese

Cathay United Bank Co., Ltd. Condensed Balance Sheets As of December 31, 2009 and 2010 (Expressed in thousands of dollars)

December 31, 2009 December 31, 2010 Items NT $ US $ NT $ US $

Assets Cash and cash equivalents $19,378,285 $606,519 $22,770,606 $781,421 Due from the Central Bank and call loans to banks 78,836,983 2,467,511 100,094,188 3,434,941 Financial assets at fair value through profit or loss 41,430,963 1,296,744 65,975,661 2,264,093 Securities purchased under agreements to resell 1,736,000 54,335 18,926,393 649,499 Receivables-net 44,816,287 1,402,701 58,314,517 2,001,185 Discounts and loans-net 804,171,890 25,169,699 880,450,829 30,214,510 Available-for-sale financial assets -net 97,991,344 3,067,022 75,699,236 2,597,777 Held-to-maturity financial assets-net 4,089,081 127,984 4,964,381 170,363 Investments under equity method-net 3,892,029 121,816 4,320,844 148,279 Other financial assets-net 4,919,872 153,986 4,716,102 161,843 Investments in debt securities with no active market 369,671,743 11,570,321 302,776,432 10,390,406 Property and equipment-net 26,250,655 821,617 25,282,185 867,611 Intangible assets-net 7,072,206 221,352 7,457,296 255,913 Other assets-net 5,924,651 185,435 4,867,696 167,045 Total assets $1,510,181,989 $47,267,042 $1,576,616,366 $54,104,886

Liabilities Due to the Central Bank and call loans from banks $45,350,827 $1,419,431 $39,898,632 $1,369,205 Funds borrowed from the Central and other banks 1,601,500 50,125 1,456,500 49,983 Financial liabilities at fair value through profit or loss 24,996,981 782,378 29,315,431 1,006,020 Securities sold under agreements to repurchase 8,745,465 273,724 21,679,556 743,979 Payables 21,089,973 660,093 35,843,439 1,230,043 Deposits and remittances 1,296,636,382 40,583,298 1,334,092,471 45,782,171 Financial debentures payable 16,437,209 514,467 15,764,495 540,992 Other financial liabilities 240,494 7,527 180,396 6,191 Other liabilities 2,047,292 64,078 3,187,069 109,371 Total liabilities 1,417,146,123 44,355,121 1,481,417,989 50,837,955 Shareholders' equity Capital stock 52,277,026 1,636,214 52,277,026 1,793,995 Capital surplus 15,213,292 476,159 15,213,292 522,076 Retained earnings 23,319,476 729,874 26,831,582 920,782 Others 2,226,072 69,674 876,477 30,078 Total shareholders' equity 93,035,866 2,911,921 95,198,377 3,266,931 Total liabilities and shareholders' equity $1,510,181,989 $47,267,042 $1,576,616,366 $54,104,886

Cathay United Bank Co., Ltd. Condensed Statements of Income For the years ended December 31, 2009 and 2010 (Expressed in thousands of dollars, except earnings per share)

2009 2010 Items NT $ US $ NT $ US $

Net interest income $13,796,484 $431,816 $14,726,817 $505,382 Non-interest income 11,655,077 364,791 12,463,742 427,719 Net operating income 25,451,561 796,607 27,190,559 933,101 Operating expenses (14,400,411) (450,717) (14,805,813) (508,092) Income from continuing operations before income taxes $11,051,150 $345,890 $12,384,746 $425,009 Net income $8,617,150 $269,708 $11,331,746 $388,873 Earnings per share (in dollars) Income from continuing operations before income taxes $2.11 $0.07 $2.37 $0.08 Net income $1.65 $0.05 $2.17 $0.08

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English Translation of Financial Statements Originally Issued in Chinese

Indovina Bank Limited Condensed Balance Sheets As of December 31, 2009 and 2010 (Expressed in thousands of dollars)

December 31, 2009 December 31, 2010 Items NT $ US $ NT $ US $

Assets Cash and cash equivalents $1,453,651 $45,498 $8,315,566 $285,366 Due from the Central Bank and call loans to banks 675,800 21,152 713,156 24,473 Financial assets at fair value through profit or loss 187,449 5,867 152,416 5,230 Available-for-sale financial assets-net 490,140 15,341 298,993 10,261 Held-to-maturity financial assets - - 1,146,305 39,338 Receivables-net 221,103 6,920 239,764 8,228 Discounts and loans-net 16,759,762 524,562 20,544,314 705,021 Property and equipment-net 179,765 5,627 178,217 6,116 Intangible assets-net 400,153 12,524 360,955 12,387 Other assets-net 16,111 504 4,624 159 Total assets $20,383,934 $637,995 $31,954,310 $1,096,579

Liabilities Due to the Central Bank and call loans from banks $616,973 $19,311 $7,261,767 $249,203 Payables 381,772 11,949 509,999 17,501 Deposits and remittances 14,760,994 462,003 15,806,210 542,423 Bonds payables - - 2,890,189 99,183 Total liabilities 15,759,739 493,263 26,468,165 908,310 Shareholders' equity Capital stock 4,017,093 125,730 5,269,493 180,834 Retained earnings 654,139 20,474 777,315 26,675 Others (47,037) (1,472) (560,663) (19,240) Total shareholders' equity 4,624,195 144,732 5,486,145 188,269 Total liabilities and shareholders' equity $20,383,934 $637,995 $31,954,310 $1,096,579

Indovina Bank Limited Condensed Statements of Income For the years ended December 31, 2009 and 2010 (Expressed in thousands of dollars, except earnings per share)

2009 2010 Items NT $ US $ NT $ US $

Net interest income $589,497 $18,451 $737,031 $25,293 Non-interest income 287,372 8,994 177,549 6,093 Net operating revenue 876,869 27,445 914,580 31,386 Provision for loan losses (71,449) (2,236) - - Operating expenses (342,509) (10,720) (387,656) (13,304) Income from continuing operations before income taxes $462,911 $14,489 $526,924 $18,082 Net income $371,200 $11,618 $408,899 $14,032 Earnings per share (in dollars) Income from continuing operations before income taxes Note Note Note Note Net income Note Note Note Note

Note: Indovina Bank is a subsidiary of foreign bank, there is no information about earnings per share.

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2010 2010 Financial Report 2010

English Translation of Financial Statements Originally Issued in Chinese

Cathay Securities Corporation Condensed Balance Sheets As of December 31, 2009 and 2010 (Expressed in thousands of dollars)

December 31, 2009 December 31, 2010 Items NT $ US $ NT $ US $

Assets Current assets $5,611,672 $175,639 $6,049,349 $207,596 Funds and investments 730,589 22,867 738,694 25,350 Property and equipment 38,830 1,215 34,195 1,173 Intangible assets 6,969 218 7,692 264 Other assets 378,590 11,850 341,947 11,735 Total assets $6,766,650 $211,789 $7,171,877 $246,118

Liabilities Current liabilities $2,500,246 $78,255 $2,828,700 $97,073 Long-term liabilities 1,096 34 681 23 Other liabilities 54,695 1,712 78,725 2,702 Total liabilities 2,556,037 80,001 2,908,106 99,798 Stockholders' equity Capital stock 3,700,000 115,806 3,700,000 126,973 Capital surplus 258,434 8,089 258,434 8,869 Retained earnings 183,509 5,744 298,468 10,242 Others 68,670 2,149 6,869 236 Total shareholders' equity 4,210,613 131,788 4,263,771 146,320 Total liabilities and shareholders' equity $6,766,650 $211,789 $7,171,877 $246,118

Cathay Securities Corporation Condensed Statements of Income For the years ended December 31, 2009 and 2010 (Expressed in thousands of dollars, except for earnings per share)

2009 2010 Items NT $ US $ NT $ US $

Revenue $1,141,880 $35,740 $1,148,666 $39,419 Expenses (893,506) (27,966) (927,667) (31,835) income from continuing operations before income taxes $248,374 $7,774 $220,999 $7,584 Net income $168,371 $5,270 $221,930 $7,616 Earnings per share (in dollars) income from continuing operations before income taxes $0.67 $0.02 $0.60 $0.02 Net income $0.46 $0.01 $0.60 $0.02

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English Translation of Financial Statements Originally Issued in Chinese

Cathay Pacific Venture Capital Co., Ltd. Condensed Balance Sheets As of December 31, 2009 and 2010 (Expressed in thousands of dollars)

December 31, 2009 December 31, 2010 Items NT $ US $ NT $ US $

Assets Current assets $217,124 $6,796 $296,504 $10,175 Funds and investments 1,649,175 51,617 2,166,659 74,353 Property and equipment 1,002 31 721 25 Other assets 17,084 535 19,398 666 Total assets $1,884,385 $58,979 $2,483,282 $85,219

Liabilities Current liabilities $3,643 $114 $3,860 $132 Total liabilities 3,643 114 3,860 132 Stockholders' equity Capital stock 1,895,224 59,318 1,895,224 65,039 Retained earnings (29,916) (936) 72,159 2,476 Others 15,434 483 512,039 17,572 Total stockholders' equity 1,880,742 58,865 2,479,422 85,087 Total liabilities and stockholders' equity $1,884,385 $58,979 $2,483,282 $85,219

Cathay Pacific Venture Capital Co., Ltd. Condensed Statements of Income For the years ended December 31, 2009 and 2010 (Expressed in thousands of dollars, expect earnings per share)

2009 2010 Items NT $ US $ NT $ US $

Operating revenues $84,097 $2,632 $140,211 $4,812 Operating costs (340,936) (10,671) (40,352) (1,385) Operating gross (loss) profit (256,839) (8,039) 99,859 3,427 Operating expenses (8,192) (256) (6,614) (227) Non-operating revenues 1,317 41 2,855 98 Non-operating expenses (22) (1) - - (Loss) income from continuing operations before income taxes $(263,736) $(8,255) $96,100 $3,298 Net (loss) income $(256,435) $(8,026) $102,074 $3,503 Earnings per share (in dollars) (Loss) income from continuing operations before income taxes $(1.29) $(0.04) $0.51 $0.02 Net (loss) income $(1.25) $(0.04) $0.54 $0.02

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2010 2010 Financial Report 2010

English Translation of Financial Statements Originally Issued in Chinese

Symphox Information Co., Ltd. Condensed Balance Sheets As of December 31, 2009 and 2010 (Expressed in thousands of dollars)

December 31, 2009 December 31, 2010 Items NT $ US $ NT $ US $

Assets Current assets $812,414 $25,428 $983,910 $33,765 Property and equipment 86,300 2,701 83,104 2,852 Intangible assets 2,672 84 2,537 87 Other assets 11,168 349 15,692 538 Total assets $912,554 $28,562 $1,085,243 $37,242

Liabilities Current liabilities $345,816 $10,824 $491,531 $16,868 Other liabilities 80 2 63 2 Total liabilities 345,896 10,826 491,594 16,870 Stockholders' equity Capital stock 499,000 15,618 499,000 17,124 Retained earnings 67,658 2,118 94,649 3,248 Total stockholders' equity 566,658 17,736 593,649 20,372 Total liabilities and stockholders' equity $912,554 $28,562 $1,085,243 $37,242

Symphox Information Co., Ltd. Condensed Statements of Income For the years ended December 31, 2009 and 2010 (Expressed in thousands of dollars, expect earnings per share)

2009 2010 Items NT $ US $ NT $ US $

Operating revenues $1,335,282 $41,793 $1,678,572 $57,604 Operating costs (1,147,643) (35,920) (1,443,686) (49,543) Operating gross profit 187,639 5,873 234,886 8,061 Operating expenses (110,210) (3,450) (138,115) (4,740) Non-operating revenues 7,253 227 4,082 140 Non-operating expenses (4) - (72) (2) Income from continuing operations before income taxes $84,678 $2,650 $100,781 $3,459 Net income $66,253 $2,074 $86,619 $2,973 Earnings per share (in dollars) Income from continuing operations before income taxes $1.70 $0.05 $2.02 $0.07 Net income $1.33 $0.04 $1.74 $0.06

56 WorldReginfo - af615e37-0be6-4548-9e99-d2cbd50dd787 Cathay Financial Holdings Annual Report

English Translation of Financial Statements Originally Issued in Chinese

Cathay Futures Corp. Condensed Balance Sheets As of December 31, 2009 and 2010 (Expressed in thousands of dollars)

December 31, 2009 December 31, 2010 Items NT $ US $ NT $ US $

Assets Current assets $1,433,668 $44,872 $1,374,125 $47,156 Funds and investments 30,500 955 30,500 1,047 Property and equipment 166,632 5,215 56,310 1,932 Intangible assets 4,745 149 2,633 90 Other assets 285,128 8,924 393,022 13,488 Total assets $1,920,673 $60,115 $1,856,590 $63,713

Liabilities Current liabilities $1,179,872 $36,929 $1,104,211 $37,893 Other liabilities 10,162 318 13,634 468 Total liabilities 1,190,034 37,247 1,117,845 38,361 Stockholders' equity Capital stock 650,000 20,344 650,000 22,306 Retained earnings 80,639 2,524 88,745 3,046 Total stockholders' equity 730,639 22,868 738,745 25,352 Total liabilities and stockholders' equity $1,920,673 $60,115 $1,856,590 $63,713

Cathay Futures Corp. Condensed Statements of Income For the years ended December 31, 2009 and 2010 (Expressed in thousands of dollars, expect earnings per share)

2009 2010 Item NT $ US $ NT $ US $

Operating revenues $118,432 $3,707 $101,035 $3,467 Operating costs (69,563) (2,177) (58,128) (1,995) Operating gross profit 48,869 1,530 42,907 1,472 Operating expenses (62,166) (1,946) (49,967) (1,715) Non-operating revenues 22,137 693 23,297 799 Non-operating expenses (1,067) (34) (1,655) (56) Income from continuing operations before income taxes $7,773 $243 $14,582 $500 Net income $6,104 $191 $12,379 $425 Earnings per share (in dollars) Income from continuing operations before income taxes $0.12 $- $0.22 $0.01 Net income $0.09 $- $0.19 $0.01

57 WorldReginfo - af615e37-0be6-4548-9e99-d2cbd50dd787 This publication is for reference only and is in no way intended to offer financial advice for specific clients or investors. Investors should consult professional advisers for risk assessment and are responsible for the outcomes of their investment decisions. Any reprint or quote from this publication requires prior written consent of the Company.

58 WorldReginfo - af615e37-0be6-4548-9e99-d2cbd50dd787 Financial Holdings

No.296,Jen-Ai Road,Sec.4,Taipei,10633 Taiwan TEL:02-2708 7698 FAX:02-2325 2488 http://www.cathayholdings.com.tw WorldReginfo - af615e37-0be6-4548-9e99-d2cbd50dd787