Ⅰ . Names, titles, phone numbers, and e-mail addresses of spokesman and acting Spokesman Spokesman: Spike Wu Title : Chief Executive Officer, Retail Banking Group Tel : 886-2- 5576-3701 E-mail address : [email protected] Acting spokesman: Wilson Chou Title : Senior Vice President Tel : 886-2-5576-2568 E-mail address : [email protected] Ⅱ . Addresses and phone number of headquarters and branches Headquarters : 1st fl., and 1st basement, No. 44, Zhongshan N. Rd., Sec. 2, Zhongshan District, Taipei City Tel : 886-2-2568-3988 Addresses and telephones of branches : see the “domestic and overseas business points” section of the annual report. Ⅲ . Name, address, website, and phone number of the institution for handling stock register Name : Stock Affairs Agency Department of Taishin International Commercial Bank Address : B1 No.96, Jianguo N. Rd., Sec.1, Zhonghsan Dist.,Taipei City. Website : http://www.taishinbank.com.tw Tel : 886-2-2504-8125 Ⅳ . Names, addresses, and phone numbers of credit rating institutions Name : Fitch Ratings Address : Room1306, 13th fl., No.205, Dunhua N. Rd., Songshan Dist., Taipei City Tel : 886-2-8175-7600 Name : Taiwan Ratings Address : 49th fl. Taipei 101 Tower, No. 7, Xinyi Rd., Sec. 5, Taipei City Tel : 886-2-8722-5800 Ⅴ . Name, address, website, and phone number of certified public accountant and accounting firm for the financial statement in the recent year CPAs : Qinzhen Yang, Peter Tsai Name of accounting firm : Deloitte & Touche Tax Consulting Co., Ltd. Address : 12th fl., No. 156, Minsheng E. Rd., Sec. 3, Taipei City Website : http://www.deloitte.com.tw Tel : 886-2-2545-9988 Ⅵ . Name of exchange for trading in overseas listed securities and information inquiry for the securities: Nil. Ⅶ . Company website: http: //www.taishinbank.com.tw I. Letter to Shareholders 2 II. Brief Introduction of The Bank 5 III. Corporate Governance Report 7 IV. Fund Raising Activities 52 V. Business Status 64 VI. Financial Status 83 VII.Review and Analysis of Financial Status 92 and Business Performance and Risk-Management Items VIII.Special Notes 106 IX. Directory of Head Office & Branches 115 X. Notes to Financial Statements 121 Rating Agency Date Ratings Issuer L-Term BBB+ Issuer S-Term F2 Outlook Stable Fitch Ratings 2012.10.09 Support 3 National L-Term AA- (twn) National S-Term F1+ (twn) Issuer L-Term BBB Issuer S-Term A-2 Taiwan Ratings 2012.12.11 Outlook Stable National L-Term twA+ National S-Term twA-1 I. Letter to Shareholders In 2012, many of the world's developed economies were challenged by the possibilities of a sequent recession. As the European debt crisis escalated and members such as Greece and Spain both calling for financial aid, the EU was forced to adopt its own expansionary measures after the United States, and enforce strict rules on austerity. As a result, the lack of import demands from Europe and the United States had negatively impacted export-driven countries in Asia. In 2012, Taiwan, Japan, South Korea and Singapore all registered negative export growth at -2.3%, -2.9%, -1.3% and -0.3% respectively. Even though China and Hong Kong were still able to hold on to growth, their growth rates were merely 1/3 of what they used to be in 2011. In order to stimulate the economy, US, EU and Japan had all maintained interest rates at historical low levels and taken more aggressive expansionary approaches. For example, The Japanese dollar (Yen) has continued to depreciate.This caused a dramatic shift of capital into emerging markets in 2012, resulting in more than 20% year- one-year gains to be seen in stock market in areas such as Hong Kong, India, Thailand, and Philippines. In light of the strong money supply, the most significant challenge to Asian governments this year becomes how they are able to direct this capital towards real economic developments. Overall, Taiwan posted an economic growth of 1.26% in 2012, which was far lesser than the 4.07% registered in 2011. However, as the economic indicator turned yellow-blue since September, there had been signs of economic recovery supported by stock market gains during the second half of the year. At the end of the year, the stock market index closed 9% above previous year's level at 7,700 points, and recovered all grounds that had been lost in the first half because of concerns toward the export slump, rising oil and power prices, and the taxation of capital gains on securities. Despite drastic changes in the global financial environment, Taiwan's banking industry as a whole still achieved growing profitability with ROA and ROE totalling 0.68% and 10.41% respectively in 2012. At the end of 2012, Taiwanese banks averaged an overdue loan ratio of 0.4% and a coverage ratio of 274%. The outstanding asset quality had provided local banks the needed confidence to extend 9.72% additional credit to SMEs, while taking initiatives to explore opportunities in China and other markets around the world. In operating performance, the bank raked in after-tax profit of NT $ 8.646 billion in 2012, representing growth of 11.7%; Equivalent to NT$1.80 of earnings per share (EPS). As for capital structure, BIS ratio move up to 13.19% at the end of 2012, compared with12.76% at the end of 2011. Tier1 ratio was as high as 8.44%, capital structure is very sound. In terms of Credit Rating of Taishin International Bank, Fitch Ratings released its rating list in Oct. 2012: L-Term IDR is “BBB+”, National L-Term is “AA-(twn)”, outlook is ”Stable”. Taiwan Ratings released its rating list in Dec.2012: L-Term IDR is “BBB”, National L-Term is “twA+”, outlook is ”Stable”. Performances of the bank’s two major business units, retail banking group and wholesale banking group, follow: Retail Banking Group As of the end of 2012, outstanding amount of retail mortgage loans reached NT$292 billion, for market share of 5%; outstanding auto loans amounted to NT$21.7 billion, for market share of 25.6%, ranking first place in the 2 I. Letter to Shareholders 01 market. The number of credit cards in circulation reached 3.15 million cards, for market share of 9.2%, ranking fourth place, and annual credit-card spending value reached 152.7 billion, for market share of 8.7%, ranking fifth place. The number of merchants hit 58,000 stores, for market share of 19.9%, ranking third place. With regards to the credit card business: the enormous potentials presented in UnionPay Cards had prompted the bank to introduce "UnionPay Card Online Acquiring" services since March 2012. Taishin was the pioneering bank to approve this new business, it now ranks second in acquiring purchases made using UnionPay Cards. Furthermore, Taishin Bank's co-brand cards with Shinkong Mitsukoshi had accumulated 1.16 million cardholders in total as of the end of 2012; more surprisingly, the new Infinity Card/Jade Card introduced in 2012 had amassed 200,000 new users at first launch, generating nearly NT $60 billion credit card transactions. This co-brand effort has reached a new milestone, as Taishin cardholders spent a record-breaking NT$20 billion at Shinkong Mitsukoshi stores. With regards to branch services: the bank has teamed with Visa International to introduce "Visa Money Transfer" services targeted at customers who have smaller overseas remittances requirements. This new innovation has greater flexibility than conventional wire transfers in terms of amounts, charges and operating hours, and therefore appealed to those who have the need to make small, regular remittances. Wholesale Banking Group As of the end of 2012, outstanding corporate loans reached NT$196.1billion, up 2.8% than a year earlier, ranking fourteenth out of 38 domestic financial institutions. In addition, in line with the government’s policy of financing small and medium enterprises, the outstanding loans to small and medium enterprises reached 66.6 billion as of the end of 2012, compared with the previous year 54.6 billion, growth up 22%, which performance is quite excellent . The bank undertook NT$241.6 billion of factoring business in 2012, ranking third place in the market, and outstanding amount of US$59.7 billion for derivative contracts, ranking fifth place. It undertook stock-affair service for 186 listed firms, ranking fourth place. The profit of overseas branch is NT$446 million before income tax in 2012 for Hong Kong branch, compared with NT$347 million before income tax in 2011, growth up 28.5%. With regards to new services: the bank launched its "Gold account" in June 2012, giving customers the access to purchase gold denominated in USD on February 6, 2013, the bank officially commenced its RMB services and gave customers the convenience of transferring funds and conducting exports/imports with Chinese counterparts at any DBU nationwide. Meanwhile, the bank will draw valuable experiences from its Hong Kong Branch and OBUs (offshore banking units) to assist customers manage RMB cash flows with the best flexibility. To ensure the sustainable growth and global competitiveness of our financial industry, the government has identified "Financial Globalization" as one of the nation's "Golden Decade" initiatives. In addition, several strategies have also been targeted specifically for the financial service industry, such as: "Development of a Taiwan-centric financial platform," "Enhancing cross-strait financial interactions through featured services," "Funding platforms for featured industries," and "World-connected financial practices." Over the long run, the financial service industry shall focus on incorporating modern technologies, developing unique features, and adopting globalized practices. In response to this upcoming trend, the bank shall place more emphasis on financial product R&D and cross- border opportunities.