2017新光年報英文版 Pk8nantlnnyg.Pdf

Words from the Chairman

p.02

Honors and CONTENTS Achievements

p.06

SKFH Overview

p.08

Business Plan

p.18

Corporate Social Responsibility p.34

Financial Highlights

p.44 2017 ANNUAL REPORT／Words from the Chairman 02 03

dimensions to further strengthen performance, increase mance indicators (KPIs) of subsidiaries will be includ- brand recognition, and maximize benefits to sharehold- ed in the company's corporate governance index and ers: corporate governance will be given a higher weighting in KPIs. Information security, anti-money (1) Stabilize profits and strengthen risk control: SKL laundering, consumer protection, and regulatory accounts for three-fourths of the total assets of SKFH. compliance will also be listed as key items to Consequently, stabilizing the company's profits is the enhance customer service quality and strengthen top primary. In ongoing adjustments to its business corporate governance. structure, SKL is increasing the proportion of foreign currency policies and protection products to (5) Expand abroad: SKFH will scale up overseas earnings Words from the Chairman optimize liability structure, enhancing the competi- and operations with strict compliance to related laws tiveness of business units, and actively developing and regulations. The company will grow the scale internal and third-party channels. The company will and profit ratios of overseas banking units (OBUs) Impact of the Overall Economic Picture, also strengthen sales of foreign currency policies to and offshore insurance units (OIUs), as well as External Competition, and Regulatory Environment reduce foreign exchange hedging costs and increase enhance the functions of overseas offices and its investment return. At SKB, new profit sources will strengthen strategic alliances with overseas institu- In 2017, the global economy steadily recovered as international trade expanded, US interest rates trended up, and equity gained 23.1% to NT$90.8 billion. be developed, with an emphasis on expanding scale, tions. the stock market reached a series of new highs. Taiwan's economy also gained on record high export orders, while the Overall first year premium (FYP) reached including on growth in overseas earnings, wealth TAIEX crossed the 10,000 mark, driving development in the financial sector. The stronger New Taiwan dollar (NTD) and NT$110.96 billion, with foreign currency management and fee income. Moreover, SKFH and Future Development Strategy regulatory tightening affected business costs, but were net positives overall for profitability in the financial sector. policies accounting for 46.9%, up 118.9% its main subsidiaries undergo monthly stress tests year over year (YoY), reducing the and prepare response measures to strengthen risk SKFH's future development strategy will adhere to Looking ahead to 2018, the International Monetary Fund (IMF) expects the global economy to improve slightly over company's foreign exchange hedging asset quality to continue the steady upward trend in its subsidiaries and required subsidiaries to prepare management. the following principles and operational focuses: costs. SKL also added five state-owned BIS capital adequacy ratio. response plans to promptly control risk.

2017 on sustained growth in the US, Europe, China, Japan and other major economies. In Taiwan, the Directorate △ General of Budget, Accounting and Statistics forecasts further gains in exports and domestic fixed investment. US banks to its channel network, boosting (2) Integrate resources: SKFH will identify and develop Adjust structure to stabilize profitability FYP by 198.3% YoY to cross the NT$10 △ interest rates are anticipated to slowly rise, widening the spread with interest rates in Taiwan and further supporting Other SKFH subsidiaries also achieved steady SKFH and its subsidiaries also earned external financial products needed by customer and deeply Integrate resources to deepen synergies growth in the financial industry. At the same time, the impact of higher income tax on business profits, inflating finan- billion mark. New policy sales and growth: Shin Kong Investment Trust (SKIT) grew plaudits and awards in 2017. The company earned develop cross-selling and precision marketing. △ Prioritize e-operations and pioneer mobile cial asset prices, and potential uncertainties in the political and economic arenas (such as a trade war) could lead to a stacked renewal premium effectively management fee income by 8.1% YoY, Shin Kong CommonWealth magazine's Corporate Social Responsi- Efforts will also be made to expand and deepen services Minsky moment, black swan, or gray rhino incident. reduced cost of liabilities by 14 bps Property Insurance Agency (SKPIA) increased net bility Award in recognition of its long-term dedication to business cooperation among subsidiaries. △ (0.14%). income by 5.5%, and Shin Kong Venture Capital (SKVC) corporate social responsibility (CSR) and sustainability. Create profit sources and expand markets

boosted net income by 110.5%, erasing accumulated SKL's achievements in social responsibility, personnel (3) Develop digital banking: SKFH will respond to △ Business Results in 2017 Enhance funds utilization with attention to Shin Kong Bank (SKB), one of SKFH's losses ahead of plan. training, product, service innovation, and information disruptive innovation and changing modes of finan- compliance and risk control dual profit engines, posted a consolidat- security were recognized by more than 20 top awards, cial consumption in the digital era through the "Shin Shin Kong Financial Holding (SKFH) posted a strong performance in 2017 thanks to the collective efforts of its direc- △ tors and employees. The company and its subsidiaries significantly exceeded annual profit targets. SKFH's consolidated ed after-tax profit of NT$4.06 billion in Enhancing resource integration across subsidiaries including the Taiwan Corporate Sustainability Award Kong: Pioneering a Digital Mobile Future" strategy. Fulfill corporate responsibility and implement after-tax profit rose by 120.0% from the previous year to NT$11.22 billion. Consolidated total comprehensive income 2017. Over the year, the bank grew its to build synergy has been a focal task for SKFH. In 2017, (TCSA) in the Overall Performance Category, Top 10 corporate governance gained 58.1% to NT$20.51 billion, consolidated total assets rose 7.2% to NT$3.4 trillion, shareholders' equity increased loan portfolio by 5.2% while paying the company launched several integration mechanisms. Outstanding Corporation in the Golden Peak Award, 1. Automating workflow to boost service efficiency: by 16.4% to NT$141.31 billion, and book value per share reached NT$13.87, the highest level since the end of 2008. As attention to both income and risk The SKFH Investment Information Platform (House View) Taiwan Insurance Excellence Award Gold Award, Insur- SKFH will optimize service flow with big data and these figures show, SKFH is steadily moving forward and reaping preliminary results. management, and scaled up its interna- integrates subsidiaries' strengths in information and ance Faith, Hope, and Love Award, and Smart Monthly's artificial intelligence (AI) applications, including tional syndicated loan portfolio by analysis to give investment departments an accurate big Smart Recommended Outstanding Policy. SKB was risk prediction models and smart robots. The SKFH's improved performance also earned high marks from market investors. The company's market value rose by 92.4%. Customer segmentation and picture view of the economy and market trends, awarded the Best Service Innovation Award for company will also continue to develop and NT$26.7 billion from NT$80.8 billion at the end of 2016 to NT$107.5 billion at the end of 2017. In the same period, the preferential lending were focal areas. improve the quality and effectiveness of investment Electronic Cashflow and the Best Financial Services promote new payment tools. ratio of foreign holdings grew from 17.8% to 26.8%. The bank also increased earnings from decisions by subsidiaries, and introduce financial Award in Excellence Magazine's Best Bank Survey, fund utilization and boosted net interest products to meet market demand in a timely manner. affirming the bank's ongoing progress in providing a 2. Attracting and retaining clients with an innova- SKFH's core subsidiary Shin Kong Life Insurance (SKL) significantly improved operations as investment income grew income by 4.7%. The bank's net interest SKFH also continued developing its customer relation- spectrum of convenient digital financial services. tive service experience: SKFH will introduce LIFE and cost of liabilities fell. In 2017, the company's consolidated after-tax profit surged by NT$6.83 billion to NT$6.97 spread was 1.96%, beating the industry ship management (CRM) system to deepen integrated Lab and other new types of channels; use AI and billion, consolidated total comprehensive income rose 79.4% to NT$16.77 billion, and consolidated shareholders’ average. SKB also skillfully managed and precision marketing to clients across subsidiaries. Overview of 2018 Business Plan big data to mine customer needs and increase Apart from intensifying product cross-selling, SKFH repurchase rates; apply Fintech to optimize expanded mechanisms for business cooperation across Effective management of group subsidiaries is the customer experience and improve transaction subsidiaries. Such efforts have reaped strong results, core guiding value of SKFH's development strategy and security; and expand click-and-mortar branches among them a maturity payment cooperation project execution. SKFH is also building platforms and provid- to attract young customers. between SKB and SKL and a bridge loan project ing cooperation mechanisms to tap synergies through between MasterLink Securities and SKB. SKFH also resource integration. In 2018, the company will carry (4) Strengthen corporate governance: SKFH will strictly established a monthly stress test mechanism for group out a strategic development with the following five implement corporate governance. The key perfor- 2017 ANNUAL REPORT／Words from the Chairman 04 05

dimensions to further strengthen performance, increase mance indicators (KPIs) of subsidiaries will be includ- brand recognition, and maximize benefits to sharehold- ed in the company's corporate governance index and ers: corporate governance will be given a higher weighting in KPIs. Information security, anti-money (1) Stabilize profits and strengthen risk control: SKL laundering, consumer protection, and regulatory accounts for three-fourths of the total assets of SKFH. compliance will also be listed as key items to Consequently, stabilizing the company's profits is the enhance customer service quality and strengthen top primary. In ongoing adjustments to its business corporate governance. structure, SKL is increasing the proportion of foreign currency policies and protection products to (5) Expand abroad: SKFH will scale up overseas earnings optimize liability structure, enhancing the competi- and operations with strict compliance to related laws tiveness of business units, and actively developing and regulations. The company will grow the scale internal and third-party channels. The company will and profit ratios of overseas banking units (OBUs) Impact of the Overall Economic Picture, also strengthen sales of foreign currency policies to and offshore insurance units (OIUs), as well as External Competition, and Regulatory Environment reduce foreign exchange hedging costs and increase enhance the functions of overseas offices and its investment return. At SKB, new profit sources will strengthen strategic alliances with overseas institu- In 2017, the global economy steadily recovered as international trade expanded, US interest rates trended up, and equity gained 23.1% to NT$90.8 billion. be developed, with an emphasis on expanding scale, tions. the stock market reached a series of new highs. Taiwan's economy also gained on record high export orders, while the Overall first year premium (FYP) reached including on growth in overseas earnings, wealth TAIEX crossed the 10,000 mark, driving development in the financial sector. The stronger New Taiwan dollar (NTD) and NT$110.96 billion, with foreign currency management and fee income. Moreover, SKFH and Future Development Strategy regulatory tightening affected business costs, but were net positives overall for profitability in the financial sector. policies accounting for 46.9%, up 118.9% its main subsidiaries undergo monthly stress tests year over year (YoY), reducing the and prepare response measures to strengthen risk SKFH's future development strategy will adhere to Looking ahead to 2018, the International Monetary Fund (IMF) expects the global economy to improve slightly over company's foreign exchange hedging asset quality to continue the steady upward trend in its subsidiaries and required subsidiaries to prepare management. the following principles and operational focuses: costs. SKL also added five state-owned BIS capital adequacy ratio. response plans to promptly control risk.

boosted net income by 110.5%, erasing accumulated SKL's achievements in social responsibility, personnel (3) Develop digital banking: SKFH will respond to △ Business Results in 2017 Enhance funds utilization with attention to Shin Kong Bank (SKB), one of SKFH's losses ahead of plan. training, product, service innovation, and information disruptive innovation and changing modes of finan- compliance and risk control dual profit engines, posted a consolidat- security were recognized by more than 20 top awards, cial consumption in the digital era through the "Shin Shin Kong Financial Holding (SKFH) posted a strong performance in 2017 thanks to the collective efforts of its direc- △ tors and employees. The company and its subsidiaries significantly exceeded annual profit targets. SKFH's consolidated ed after-tax profit of NT$4.06 billion in Enhancing resource integration across subsidiaries including the Taiwan Corporate Sustainability Award Kong: Pioneering a Digital Mobile Future" strategy. Fulfill corporate responsibility and implement after-tax profit rose by 120.0% from the previous year to NT$11.22 billion. Consolidated total comprehensive income 2017. Over the year, the bank grew its to build synergy has been a focal task for SKFH. In 2017, (TCSA) in the Overall Performance Category, Top 10 corporate governance gained 58.1% to NT$20.51 billion, consolidated total assets rose 7.2% to NT$3.4 trillion, shareholders' equity increased loan portfolio by 5.2% while paying the company launched several integration mechanisms. Outstanding Corporation in the Golden Peak Award, 1. Automating workflow to boost service efficiency: by 16.4% to NT$141.31 billion, and book value per share reached NT$13.87, the highest level since the end of 2008. As attention to both income and risk The SKFH Investment Information Platform (House View) Taiwan Insurance Excellence Award Gold Award, Insur- SKFH will optimize service flow with big data and these figures show, SKFH is steadily moving forward and reaping preliminary results. management, and scaled up its interna- integrates subsidiaries' strengths in information and ance Faith, Hope, and Love Award, and Smart Monthly's artificial intelligence (AI) applications, including tional syndicated loan portfolio by analysis to give investment departments an accurate big Smart Recommended Outstanding Policy. SKB was risk prediction models and smart robots. The SKFH's improved performance also earned high marks from market investors. The company's market value rose by 92.4%. Customer segmentation and picture view of the economy and market trends, awarded the Best Service Innovation Award for company will also continue to develop and Chairman NT$26.7 billion from NT$80.8 billion at the end of 2016 to NT$107.5 billion at the end of 2017. In the same period, the preferential lending were focal areas. improve the quality and effectiveness of investment Electronic Cashflow and the Best Financial Services promote new payment tools. Shin Kong Financial Holding Co., Ltd. ratio of foreign holdings grew from 17.8% to 26.8%. The bank also increased earnings from decisions by subsidiaries, and introduce financial Award in Excellence Magazine's Best Bank Survey, fund utilization and boosted net interest products to meet market demand in a timely manner. affirming the bank's ongoing progress in providing a 2. Attracting and retaining clients with an innova- SKFH's core subsidiary Shin Kong Life Insurance (SKL) significantly improved operations as investment income grew income by 4.7%. The bank's net interest SKFH also continued developing its customer relation- spectrum of convenient digital financial services. tive service experience: SKFH will introduce LIFE and cost of liabilities fell. In 2017, the company's consolidated after-tax profit surged by NT$6.83 billion to NT$6.97 spread was 1.96%, beating the industry ship management (CRM) system to deepen integrated Lab and other new types of channels; use AI and billion, consolidated total comprehensive income rose 79.4% to NT$16.77 billion, and consolidated shareholders’ average. SKB also skillfully managed and precision marketing to clients across subsidiaries. Overview of 2018 Business Plan big data to mine customer needs and increase Apart from intensifying product cross-selling, SKFH repurchase rates; apply Fintech to optimize expanded mechanisms for business cooperation across Effective management of group subsidiaries is the customer experience and improve transaction subsidiaries. Such efforts have reaped strong results, core guiding value of SKFH's development strategy and security; and expand click-and-mortar branches among them a maturity payment cooperation project execution. SKFH is also building platforms and provid- to attract young customers. between SKB and SKL and a bridge loan project ing cooperation mechanisms to tap synergies through between MasterLink Securities and SKB. SKFH also resource integration. In 2018, the company will carry (4) Strengthen corporate governance: SKFH will strictly established a monthly stress test mechanism for group out a strategic development with the following five implement corporate governance. The key perfor- 2017 ANNUAL REPORT／Honors and Achievements 06 07 ▲ ▲ ▲ ▲ SKL was awarded for "Best Social Responsibility," "Best 子公司新光銀行榮獲經濟部能源局「節能企業子公司新光人壽榮獲第十五屆保險信望愛獎「最新光金控榮獲證基會評為資訊透明度「A」公司佳社會責任獎」、「最佳保險專業獎」、「最佳

Contribution in Insurance Education Award," "Best ▲

2017▲ 保險教育貢獻獎」獎」佳社會責任獎」、「最佳保險教育貢獻獎」、子公司新光人壽榮獲第四屆台灣保險卓越獎「商 ▲ Channel Strategy Award," "Best Branch Award," and ▲ SKFH ranked among the top 20% in the Third Corporate 「最佳通路策略獎」及「最佳通訊處獎」 Honors and "Best Professional Consultant Award" in the eighteenth 子公司新光銀行榮獲卓越雜誌「2015年卓越最佳品創新卓越獎」子公司新光人壽榮獲第三屆台灣保險卓越獎「公 Governance Evaluation by the Taiwan Stock Exchange ▲ ▲ ▲ Insurance Faith, Hope, and Love Award 銀行評比」金控類-最佳永續經營子公司新光人壽榮獲現代保險雜誌全國最佳壽險益關懷卓越獎」及「公益關懷特別獎」 SKFH won the "2017 CommonWealth Magazine Corpo- ▲ 子公司新光人壽榮獲「TTQS 訓練品質系統評鑑」 ▲ ▲ 奬 SKL won the seventeenth Golden Peak Award for "Top 10 rate Citizenship Award" 子公司新光銀行榮獲財政部「轉介輸出保險業務公司排行榜調查「知名度最高特優」、「業務員銀牌獎子公司新光銀行榮獲「VISA無限卡亞太區最高發 Achievements ▲ Outstanding Enterprises of the Year" and "Top 10 SKL was awarded for "Best Social Responsibility," "Best 最優優等」、「理賠服務最佳優等」及「最值得 ▲ Outstanding Leaders" 績優金融機構」子公司新光人壽榮獲第十三屆保險信望愛獎「最卡量」大獎 Contribution in Insurance Education Award," "Best ▲ 推薦優等」 Channel Strategy Award," "Best Integrated Marketing SKL won first place in the "Taipei City Outstanding ▲ 佳社會責任獎」、「最佳保險專業獎」、「最佳子公司新光人壽榮獲台灣永續能源研究基金會 and Communication Award," and "Best Communication Healthy Workplace Certification" 商品創意獎」、「最佳保險教育貢獻獎」、「最 ▲ 2014 「2013台灣企業永續獎」金融業特優 2008 ▲ Department Award " in the 19th Insurance Faith, Hope, SKL was designated as an outstanding unit for "Enterprise ▲ 佳通訊處獎」 ▲

and Love Award and Group Promotion of Green Procurement and Green 新光金控榮獲證基會評為資訊透明度「A++」公司 ▲ 新光金控榮獲證基會評為資訊透明度最高等級

▲ 子公司新光銀行榮獲金管會頒發「中小企業放款 Consumption Plans" by the Environmental Protection ▲ 子公司新光人壽為首家保險公司入圍「國家訓練 SKL won the gold award for the "Policyholder Service 績優銀行」第三名「A+」公司 Administration 新光金控榮獲天下雜誌「2014天下企業公民獎」品質獎」 ▲ ▲

Project Planning Excellence Award" and silver awards ▲ ▲ ▲ 子公司新光人壽榮獲第十屆保險信望愛獎「最佳 for the "Public Welfare Excellence Award," "Protection SKL won the silver award for best customer communica- 新光金控榮獲臺北市政府勞動局「2014第四屆幸子公司新光銀行榮獲「VISA台灣區無限卡第一大子公司新光人壽榮獲台北市第四屆金省能獎「工 Policy Promotion Excellence Award," "IT Application tion in Business Next Magazine's "2016 Future Com- 社會責任獎」、「最佳保險專業獎」、「最佳通福企業獎」發卡行」大獎商產業甲組第一名」 ▲ 路策略獎」、「最佳形象廣告獎-網路類」 Excellence Award," and "Personnel Training Excellence merce Awards" ▲ ▲ ▲ ▲ 新光金控榮獲香港財資雜誌Triple A大中華地區最子公司新光銀行榮獲VISA國際組織頒發「新光三 Award" in the Seventh Taiwan Insurance Excellence SKB was ranked as the best digital bank in Excellence 前副董事長吳家錄榮獲第四屆台灣保險卓越獎子公司新光人壽榮獲第九屆「行政院文馨獎」

Award Magazine's "2016 Excellence Best Bank Ranking" 佳金融服務-保險業務獎越聯名卡首波十萬張發卡成功」大獎 ▲

▲ 「終身成就獎」 ▲ ▲ ▲

▲ 子公司新光銀行榮獲遠見雜誌第六屆傑出服務獎- SKL won the "Best Financial Product Innovation Award" in SKB won the Information Security Management Award 子公司新光人壽榮獲第十六屆保險信望愛獎「最子公司新光銀行榮獲遠見雜誌「金融類最佳服 Excellence Magazine's 2017 Excellence Insurance 子公司新光銀行榮獲今周刊雜誌第五屆「財富管「金融銀行類」首獎 from ISO certification body the British Standards Institu- 佳社會責任獎」、「最佳保險教育貢獻獎」、務」第二名 Ranking tion (BSI) at the 2016 BSI Management Standards Annual 理銀行評鑑卓越成長獎」第二名 ▲ 「最佳通路策略獎」及「最佳通訊處獎」 ▲ SKL was selected as a "Top-10 Outstanding Enterprises of Meeting ▲ 子公司新光銀行榮獲金管會頒發「防治金融詐騙 the Year" in the 18th Golden Peak Award ▲ 子公司新光人壽榮獲現代保險雜誌全國最佳壽險 2007

SKB was honored as a model for children's support by the ▲ ▲ 2012 績優金融機構」 ▲ SKL won the Taiwan Institute for Sustainable Energy's Taiwan Fund for Children and Families at the "2016 公司排行榜調查「知名度最高」、「業務員最 ▲ 新光金控榮獲證基會評為資訊透明度最高等級 "Taiwan TOP50 Corporate Sustainability Report Award" National Assembly for Gratitude and Commendation in 優」、「理賠服務最好」及「最值得推薦」等四新光金控榮獲證基會評為資訊透明度「A+」公司孫公司新光海航人壽榮獲大陸第三屆首都金融業「A+」公司 ▲

gold award for the finance and insurance industry and Children's Support" 服務創新大賽之「最佳服務創新獎」及「最受歡 ▲ 項優等新光金控連續四年(2009~2012)榮獲IR Global 子公司新光人壽榮獲第九屆保險信望愛獎「最佳

"TOP50 Corporate Sustainability Award" in the finance ▲ Rankings台灣區及亞太區最佳投資人關係網站大迎電銷產品」 and insurance industry 子公司新光人壽榮獲台灣永續能源研究基金會社會責任獎」及「最佳通路策略獎」 ▲ 獎 ▲ SKL won the "Health Benchmark Award" in the Ministry of 2015▲ 「台灣TOP50企業永續報告獎」金融業金獎及 The Securities & Futures Institute rated SKFH A++, the ▲ 子公司新光人壽榮獲第七屆「國家公益獎」、行 Health and Welfare's 2017 National Outstanding Healthy highest ranking in the Corporate Information Disclosure 「TCSA社會共融獎」兩項大獎子公司新光人壽榮獲2012年台北市工商業辦公場 2010 政院「人力創新獎」 ▲ ▲

Workplace Assessment ▲ ▲ and Transparency Survey. SKFH won the recognition for 子公司新光人壽於金管會舉辦「2014微型保險競所節能減碳優等獎新光金控榮獲IR Global Rankings台灣區最佳投資 ▲ 子公司新光投信榮獲第九屆證券暨期貨金彝獎 SKL received "Exercise Enterprise Certification" from the the tenth consecutive year (2006~2015) Sports Administration under the Ministry of Education ▲ 賽」名列人壽保險業第一名子公司新光人壽獲頒台北市政府「第五屆金省能人關係網站金獎「傑出金融創新獎」 ▲ ▲ ▲ SKFH won the "2015 CommonWealth Magazine Corpo- 獎」工商產業甲組第二名 SKL won the 2017 Taipei Golden Eagle Micro-Movie 子公司新光人壽榮獲經理人雜誌「影響力品牌大新光金控榮獲證基會評為資訊透明度最高等級 rate Citizenship Awards" ▲ Festival's "Outstanding Film Award" ▲ 調查」壽險業優選子公司新光人壽榮獲第十四屆保險信望愛獎「最「A+」公司 ▲ SKL won the "Best Contribution in Insurance Education SKB won the "Best Service Innovation Award for Cashflow ▲ ▲ 2006 Award," "Best Channel Strategy Award" and "Best Branch 子公司新光人壽榮獲「2014數位服務標竿企業」佳社會責任獎」、「最佳商品創意獎」、「最佳子公司新光人壽榮獲第十二屆保險信望愛獎「最 ▲ Operations" from Financial Information Service Co., Ltd. Award" in the seventeenth Insurance Faith, Hope, and 新光金控榮獲證基會評為資訊透明度最高等級

▲ 保險教育貢獻獎」、「最佳通訊處獎」優等佳社會責任獎」、「最佳保險專業獎」、「最佳 SKB won the "Best Financial Services Award" in Excel- Love Award ▲

▲ 「A+」公司 ▲

保險教育貢獻獎」、「最佳通路策略獎」 ▲ lence Magazine's 2017 Excellence Bank Ranking 子公司新光銀行榮獲卓越雜誌「2013年台灣最佳子公司新光人壽獲頒「2012台灣企業永續報告 SKL won the Taiwan Institute for Sustainable Energy's ▲ ▲ 獎」金融組銀獎子公司新光人壽榮獲第八屆保險信望愛獎「最佳 SKIT's Shin Kong Fortune Balanced Fund won the "Thom- "Taiwan TOP50 Corporate Sustainability Report Award" 銀行服務暨財富管理評比」最佳財富管理創新獎子公司新光人壽榮獲第十屆「行政院文馨獎」 ▲ 社會責任獎」、「最佳保險專業獎」、「最佳通 son Reuters Lipper Taiwan Fund Award" and "20th Best gold award for the finance and insurance industry and ▲ 子公司新光人壽榮獲天下雜誌「2012天下企業公 ▲ Fund Award" "TCSA Creative Communication Award" 子公司新光銀行榮獲財團法人金融聯合徵信中心子公司新光銀行榮獲金融聯合徵信中心「99年度路策略獎」 ▲ ▲ ▲ 頒發「第八屆金安獎績優機構」民獎」金質獎」 SKPIA won the "Best Insurance Professionalism Award" in SKL won the Sixth Taiwan Insurance Excellence Award ▲ 子公司新光人壽榮獲《亞洲投資人雜誌》「年度 ▲ ▲ the 19th Insurance Faith, Hope, and Love Award "Micro-Insurance Promotion Excellence Award" gold 子公司新光銀行榮獲財政部「轉介輸出保險業務子公司新光銀行為首家民營銀行榮獲財政部「轉孫公司新光海航人壽榮獲大陸第二屆保險服務創最佳投資機構」殊榮� award and silver awards for "IT Application Excellence 績優金融機構」介輸出保險業務績優金融機構」第三名新大賽之「最具創新力保險公司」及「最具市場 ▲ Award," "Personnel Training Excellence Award" and ▲ 子公司新光人壽榮獲「2006台灣超級品牌」認證子公司新光銀行榮獲金管會頒發「中小企業放款潛力保險公司」 ▲

2016▲ "Protection Insurance Policy Promotion Excellence 子公司新光人壽榮獲第八屆「行政院文馨獎」 The Taiwan Stock Exchange ranked SKFH among the top Award" 績優銀行」第二名 ▲ 5% in the Second Corporate Governance Evaluation ▲ 2013 ▲ SKB won the "Outstanding Energy-Saving Business ▲ 子公司新光銀行榮獲「VISA無限卡簽帳金額突破 SKFH won the "2016 CommonWealth Magazine Corpo- Award" from the Bureau of Energy, Ministry of Economic 新光金控榮獲證基會評為資訊透明度「A++」公司 2009 百億元」大獎 ▲ 2005 ▲ rate Citizenship Awards" Affairs ▲

▲ 新光金控榮獲IR Global Rankings大中華區前五佳 ▲ 子公司新光人壽榮獲台北市政府「第六屆金省能子公司新光人壽榮獲第七屆保險信望愛獎「最佳 SKL won the Taiwan Institute for Sustainable Energy's SKB won Best Sustainable Operations Award in the 投資人關係網站獎」工商產業甲組優等獎 "Taiwan Top50 Corporate Sustainability Report Award" financial holding company category of the "2015 Excel- ▲ 社會責任獎」、「最佳商品創意獎」、「最佳形 gold award for the finance and insurance industry and ▲ 2011 新光金控榮獲證基會評為資訊透明度最高等級 lence Best Bank Ranking" by Excellence Magazine 子公司新光人壽榮獲第五屆台灣保險卓越獎「資 ▲ 象廣告獎-電視類」 ▲ "TCSA Innovation Growth Award" 新光金控榮獲IR Global Rankings台灣區投資人關「A+」公司 ▲ ▲ SKB won the "Outstanding Financial Institution in Refer- 訊應用卓越獎」、「風險管理卓越獎」及「人才子公司新光人壽榮獲第一屆台灣保險卓越獎「人 SKL won first place in the Insurance category of Global 係網站金獎 ▲ ral Export Insurance" by the Ministry of Finance 培訓卓越獎」三項銀質獎子公司新光人壽榮獲第十一屆保險信望愛獎「最才培訓卓越獎」及「公益形象卓越獎」 Views Monthly's fourteenth "Global Views Five-Star Service Award" 2004 ▲ 子公司新光人壽榮獲第六屆保險信望愛獎「最佳社會責任獎」及「最佳保險專業獎」 SKFH Overview Our light and heart are always with you 2017 ANNUAL REPORT／SKFH Overview 10 11

opportunities to expand overseas. group will continue in the spirit of integrity, innovation, For more than five decades, the Shin Kong group service, and giving back to society and become an has been cultivating markets, accumulating experience industry leader in financial services in the eyes of and trust, and building a reputation for excellence that employees, shareholders, and customers alike. has earned widespread recognition. Going forward, the

Information as of 2017/12/31 Business Locations The Total Number of Employee

Company Number of branches Company Number of employees

Shin Kong Financial Holding 1 Shin Kong Financial Holding 57 Shin Kong Life Insurance 317 Shin Kong Life Insurance 12,052 Shin Kong Bank 106 Shin Kong Bank 3,774 Shin Kong Investment Trust 3 Shin Kong Investment Trust 83 Shin Kong Property Insurance Agency 1 Shin Kong Property Insurance Agency 13 Shin Kong Venture Capital 1 Shin Kong Venture Capital 4 Total 15,983

Credit Ratings The list below shows credit ratings of SKFH and its major subsidiaries Information as of 2018/05/18

Shin Kong Financial Holding

Agency National Long-term National Short-term Outlook

SKFH Overview Taiwan Ratings twA+ twA-1 Stable

Company Overview Shin Kong Life Global Global National National Agency Outlook Shin Kong Financial Holding (SKFH) was established efficiency, and leveraging big data and artificial intelli- Long-term Short-term Long-term Short-term on February 19, 2002. It is headquartered at the Shin gence (AI) to optimize service processes through the Kong Life Tower, a financial landmark building in Taipei. "Shin Kong: Pioneering a Digital Mobile Future" strate- Taiwan Ratings -- -- twAA- -- Stable SKFH is committed to sustainable operations, corporate gy. The company is also delivering an innovative social responsibility and corporate governance. Its customer experience to further attract and retain digital Standard & Poor's BBB ------Stable subsidiaries include Shin Kong Life Insurance Co., Ltd. clients. (SKL), Taiwan Shin Kong Commercial Bank Co., Ltd. In overseas markets, SKFH maintained exchanges (SKB), Shin Kong Investment Trust Co., Ltd. (SKIT), Shin and cooperation with financial groups in China, Japan, Shin Kong Bank Kong Property Insurance Agency Co., Ltd. (SKPIA), and Southeast Asia, and other regions to collect market Global Global National National Shin Kong Venture Capital International Co., Ltd. information, track international trends, and plot a sound Agency Long-term Short-term Long-term Short-term Outlook (SKVC). SKFH serves more than six million customers strategy to grow in overseas markets, enhance OIU and through the 317 branches of SKL and 106 branches of OBU services, and increase overseas earnings. SKB has Taiwan Ratings -- -- twAA- twA-1+ Stable SKB throughout Taiwan. established its Hong Kong branch to deepen coopera- SKFH is responding to the disruptive innovation and tion with international banks and serve premier Standard & Poor's BBB A-2 -- -- Stable changing modes of financial consumption in the digital overseas customers. SKFH is also integrating group era by promoting e-operations, improving service strengths to jointly develop the ASEAN market and seize 2017 ANNUAL REPORT／SKFH Overview 12 13

Information as of 2018/06/01

Management

Team Lee, Jih-Chu Tsai, Jason Lee, Tseng-Chang Hsieh, Charles Shin Kong Financial Holding Shin Kong Life Insurance Shin Kong Bank Shin Kong Bank Vice Chairperson President Chairman President Responsibilities Responsibilities Responsibilities Responsibilities ▲ ▲ ▲ ▲ Vice Chairperson, President, Shin Kong Life Chairman, Shin Kong Bank President, Shin Kong Bank ▲ ▲ ▲ Shin Kong Financial Holding Vice Director, the Life Chairman, Director, ▲ Vice Chairperson, Insurance Association of Shin Fu Insurance Agency Shin Fu Insurance Agency Shin Kong Life the Republic of China

Huang, Min-Yi Lee, Ding-Yi Fang, Matthew Cheng, Shih-Yi Shin Kong Financial Holding Shin Kong Investment Trust Shin Kong Property Shin Kong Venture Capital Acting President Chairman Insurance Agency Chairman & President Responsibilities Responsibilities Chairman & President Responsibilities ▲ ▲ ▲ Acting President, Chairman, Responsibilities Chairman & President, Shin Kong Financial Holding Shin Kong Investment Trust ▲ Shin Kong Venture Capital

▲ Chairman & President, Shin ▲ Supervisor, Kong Property Insurance Agency Senior Vice President, Shin Kong Bank ▲ Shin Kong Financial Holding

Director, Chinese Insurance ▲ Service Association Director, ▲ Supervisor, Life Insurance MasterLink Securities Management Institute of the Republic of China 2017 ANNUAL REPORT／SKFH Overview 14 15

SKFH Highlights Unit: NT$ Thousands Information as of 2017/12/31 Year 2017 2016

Capital 102,419,027 102,281,441 Shin Kong Life Consolidated total assets 3,384,388,449 3,157,672,572 Organization Real Estate Consolidated shareholders' equity 155,970,601 135,568,085 Service Company Consolidated net income 11,218,876 5,098,510 Chart 72.01% EPS (NT$) 1.05 0.48 Subsidiaries and Return on equity (%) 7.70% 3.94% Shin Kong Life Affiliated Companies Insurance Co., Ltd. Return on assets (%) 0.34% 0.17% of MasterLink Securities Corporation

2017 Asset Mix by Subsidiary (Subsidiary's Share in Percentage) Unit: NT$ Thousands 100% ﹙2﹚ Shin Kong MasterLink Subsidiary Total Assets Share of Total（%） 100% Investment Trust Securities Shin Kong Life Insurance 2,496,241,106 73.44% Corporation Co., Ltd. ﹙1﹚ Shin Kong Bank 812,478,011 23.90% 100% Shin Kong Investment Trust 715,892 0.02% 33.45% Shin Kong Venture Capital 1,522,635 0.04% Shin Kong Shin Kong Property Insurance Agency 146,067 0.01% Financial Holding Shin Kong Marketing MasterLink Securities 88,091,102 2.59% Co., Ltd. Consultant Co., Ltd. 3,399,194,813 100.00% 100%

100% 49.7% Unit: NT$ Thousands Shin Kong Property Taiwan Shin Kong Insurance Agency Year Total Assets Shareholders' Equity Operating Income Net Income 100% Commercial Bank 50.3% Co., Ltd. ﹙3﹚ Co., Ltd. 2017 2,496,241,106 90,452,329 374,048,419 6,911,292 100% Shin Kong Life Insurance 2016 2,319,556,116 73,667,221 347,100,356 122,041 Shin Kong Venture Shin Fu Insurance 2017 812,478,011 52,487,769 15,345,557（1) 4,059,232 Capital International Agency Co., Ltd. Shin Kong Bank Co., Ltd. (SFIA) 2016 782,380,782 49,197,312 14,662,028（1) 4,630,315 100% ﹙5﹚

2017 715,892 631,039 221,470 30,564 Shin Kong Lion Investment Investment Trust (Samoa) Co., Ltd. 2016 762,446 662,641 207,598 85,897 and subsidiaries ﹙4﹚ 2017 1,522,635 1,518,368 68,720 53,448 Shin Kong Venture Capital 2016 1,467,342 1,464,540 35,026 25,388 （1）"Subsidiary" is defined according to Article 4 of the Financial Holding Company Act, not according to the definition of the Company Act. （2）Included companies and holding ratios：MasterLink Futures Co., Ltd.（100％）、MasterLink Securities Investment Advisory Corporation Shin Kong 2017 146,067 77,320 321,736 55,660 Property （100％）、MasterLink British Virgin Islands Corporation（100％）、MasterLink Insurance Agency Co., Ltd.（100％）、MasterLink Insurance Agency 2016 127,970 71,660 302,814 52,758 Venture Management Corp., Ltd.（100％）、MasterLink Venture Capital Corp., Ltd.（100％）、MasterLink Securities (HK) Co., Ltd. （99.99％）、MasterLink Investment Advisory (Tianjin) Corp.（100％）、MasterLink Nominees (HK) Ltd.（99.99％）、MasterLink 2017 88,091,102 88,091,102 4,290,302（2) 942,304 MasterLink Innovation Venture Management (Tianjin) Co., Ltd.（100%）、MasterLink Securities Venture Capital (Tianjin) Co., Ltd.（100%）。 Securities 2016 76,408,329 21,060,881 3,163,482（2) 407,064 （3）According to the board resolution passed on October 8, 2013, Shin Kong Property Insurance Agency Co., Ltd. (SKPIA) changed its Chinese name and retained its English name. (1) Since there is no operating income item for the banking industry under the Regulations Governing the Prepa- （4）Shin Kong Leasing Corp. (Suzhou) is a wholly owned subsidiary of Lion Investment (Samoa) Co., Ltd. ration of Financial Reports by Public Banks, these figures are net revenues. （5）According to the board resolution passed on May 19, 2017, Shin Fu Insurance Agency Co., Ltd. (SFIA) changed its Chinese name and (2) Since there is no operating income item for the securities industry under the Regulations Governing the Prepa- ration of Financial Reports by Securities Firms, these figures are gross incomes. retained its English name. 2017 ANNUAL REPORT／SKFH Overview 16 17

2001

2009▲ 2010▲ 2012▲ 2002 Shin Kong-HNA Life Insurance SKHNA Life officially opened a SKFH successfully raised NT$5 Company Ltd. (SKHNA Life) branch in Chaoyang District, billion through a new issue of officially established, marking Beijing. domestic unsecured convert- Shin Kong's entry to the ▲ ible corporate bonds (CB). SKHNA Life officially opened a 2003 mainland Chinese market. ▲ Hainan Branch. SKL successfully raised NT$5 2004 2005 2006 2007 ▲ 2008 NT$13.1 billion raised in a billion through issuance of successful GDR issue. perpetual cumulative subordi- ▲

2011▲ GDR awarded Taiwan Capital nated corporate bonds. SKB's Hong Kong Branch 2009 Markets Deal of the Year by officially opened for opera- International Financing Review tions. 2013▲

Asia magazine. ▲ ▲ Shin Kong Property Insurance Shin Kong Securities merged Shin Kong Venture Capital Agency Co., Ltd. is incorporat- with MasterLink Securities International Co., Ltd. (SKVC) ed directly under SKFH and officially established. Corp. ▲ Milestones 2010 upgraded to subsidiary status, Sub-subsidiary Shin Kong changing its Chinese name but Leasing Corp. (Suzhou) (Shin retaining the original English Kong Leasing) established. ▲ 2001▲ name. Shaanxi Branch of SKHNA Life

Shin Kong Life (SKL) and 2011 ▲ Powerworld Securities permissibly operated. SKL celebrated its 50th anniversary of establishment.

(renamed Shin Kong Securities) ▲ merged to form Shin Kong SKFH completed a domestic Financial Holding Co., Ltd. 2012 cash capital raising of NT$6.5 billion through the issue of 650 million common shares.

2002▲ Shin Kong Financial Holding Co., Ltd. (SKFH) was established and went public. 2013 2014 2015 2016 2017

2003▲ SKFH successfully raised NT$5 billion through a new issue of domestic secured subordinated corporate bonds. ▲ Shin Kong Insurance Brokerage established as a subsidiary of 2006▲ SKFH. SKFH signed cooperation agreement with Dai-ichi Mutual Life Insurance Company

2004▲ of Japan; Dai-ichi paid NT$7 United-Credit Commercial Bank billion in subscription for SKFH

2007▲ merged under SKFH and common shares through SKB established a representa- renamed Taiwan Shin Kong private placement. tive o ce in Ho Chi Minh

2014▲ 2016▲ 2017▲ Commercial Bank Co., Ltd. ▲ ﬃ Shin Kong Investment Trust City,Vietnam. SKFH successfully raised NT$5 SKB served for the first time as SKFH successfully raised NT$4 (SKB) billion through a new issue of the lead bank in an overseas billion through the fourth issue ▲ incorporated into SKFH and New Light Asset Management merged with New Light Asset domestic unsecured convert- syndicated loan, successfully of domestic unsecured convert-

Company established as a Management to form Shin 2008▲ ible corporate bonds (CB). completing a US$75 million ible corporate bonds (CB). subsidiary of SKFH. Kong Investment Trust Co., Ltd. Dai-ichi Mutual Life Insurance syndicated loan for Cambodia's ▲ (SKIT) Company of Japan acquired largest bank ACLEDA Bank Plc. SKFH issued US$260 million ▲ private placement common ▲

2015▲ Euro Convertible Bonds. Shin Kong Insurance Brokerage SKL issued unsecured perpetual shares of SKFH in the amount SKFH was the first financial Co., Ltd. and Taiwan Shin Kong cumulative subordinated of NT$6.3 billion and acquired holding company in Taiwan to Insurance Brokers Co., Ltd. corporate bonds of NT$13 preferred shares in Shin Kong simultaneously open life 2005▲ merged to form Taiwan Shin billion. Macoto Bank incorporated into Kong Insurance Brokers Co., Life Insurance (SKL) in the insurance and banking repre- SKFH and merged with SKB. Ltd. (SKIB) amount of NT$1.7 billion. sentative offices in Myanmar. ▲ ▲ ▲ ▲ SKFH issued US$250 million SKFH made first investment in SKIT became the master agent SKL made first overseas real Euro Convertible Bonds. MasterLink Securities. for DWS Invest Offshore Funds. estate acquisition (London). FinTech

Business Plan Our light and heart are always with you 2017 ANNUAL REPORT／Business Plan 20 21

2018 Business Plan 4. Establishing electronic/mobile fee payment services: Chiayi. The Nangang Software Park Building will be Last 5 Years Unit: NT$ Millions Last 5 Years Unit: NT$ Millions SKL customers can make fee payments from the completed in 2018 and eight additional buildings will member page on the SKL website or via the SKL app. Total Assets First Year Premium In 2018, SKL will focus on sales of foreign currency be constructed over the next three years. Upon comple- policies and protection products. The company will In 2018, SKL plans to release an electronic/mobile tion, these properties will generate an estimated annual payment fee payment service to provide customers 2,496,241 optimize its product mix to contain hedging costs, rental income of approximately NT$600 million. In May 114,892 with an even more convenient and secure payment 2,319,556 110,963 generate stable interest spreads, and accumulate value 2018, SKL opened the Shin Kong LOHAS Future Pavilion of new business (VNB). It will also continue to promote channel. near Taipei main Station. The newly renovated building 5. Increasing customer self-service rate: Policyholders 90,190 e-service platforms, customer self-services, e-policies, provides a fast food restaurant, a coffee shop, a conve- 2,113,313 can apply for online accounts to enjoy counter-free 78,207 and other digital services to achieve an expected nient store, SKB e-branch, and "LIFE Lab" insurance 1,967,767 double-digit gain in online membership and transac- services through internet banking, financial chip channel for a new type of insurance marketing, creating tions. SKL will also implement the AI customer support cards (in partnership with 21 banks), or citizen digital an interacion model to better serve customer needs 1,802,449 56,385 chatbot to more effectively serve clients and boost certificate channels. Such self-services are available through digital technology and relaxing atmosphere. customer satisfaction. On the investment front, SKL to customers for updating their contact information, plans to enhance new money and reinvestment yield making simple policy modifications, applying for 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 with eyes on rising interest rates, as well as invest in develop "ageing" business opportunities serving the policy loans, or filing claims online, further realizing high-dividend yield stocks to generate stable recurring health promotion, financial security, and active aging the FinTech advantages of anytime/any place service. Note: Stand-alone total assets of SKL Note: Stand-alone total assets of SKL income. The company will also launch a new marketing needs of seniors. channel, "LIFE Lab," by the end of the second quarter of ture. In 2017, the company introduced the "e-Pilot" proactively care for policyholders, providing digital 2018 to offer insurance plans, product consultation and Premium Innovative E-Services digital activity management app. Integrating precision service content and retaining a complete service % % digital self-services aimed at increasing customer loyal- Business Mix Unit: NT$ Millions Individual accident insurance2.60 Annuity insurance0.01 marketing, business lead system, activity management, record to improve service quality. In 2017, a total of ty and developing potential customer sources. SKL will establish an E-Service Development turf system, and other resources, the app helps agents 42,274 customer calls were accomplished through Department in 2018 to respond to the rapid changes Category 2017 Premium Income Share of Total (%) % Individual health12.13 insurance to effectively call on customers, better manage time, the e-Visit system and 7,558 policyholders used the brought by digital financial technology. The company

Individual life insurance 237,856 84.65% and thereby improve policy contracting rates and app to sign up for SMS notifications, reducing the designs innovative e-services incorporating FinTech and productivity. The productivity of full-time agents (mea- need for mailed paper notices. % ▲ insurance technology to optimize the internal and Individual health insurance 34,093 12.13% Group insurance0.60 sured by conversion premiums) reached NT$76,000 in Mobile e-Policy Application: Agents can provide external customer experience. Individual accident insurance 7,302 2.60% 2017, up 7.0% YoY since the project's launch to sustain customers with real-time policy application services 1. Mobile e-Policy Adjustment: Policyholders can growth into the second year. SKL also increased the through this tablet PC based app. The app speeds up Annuity insurance 28 0.01% complete 15 types of transaction, including policy ratio of new employees under 30 years old to 42.7%, up the policy application time and boosts underwriting changes, through this tablet-based platform, includ- Group insurance 1,698 0.60% Total premium income from 40.3% at the end of 2016. efficiency with real-time online verification. In 2017, ing policy adjustments. The app sends the updated In the third-party channel segment, SKL cooperated the app utilization rate reached 90%. 280,976 ▲ information in real time to SKL's service center and Total premium income 280,976 100.00% （ NT$ Millions） closely with banks and insurance brokers to develop Mobile e-Payment: This tablet PC-based app enables notifies policyholders of the changes after review. Business Plan new customer sources, as well as continued to develop agents to provide real-time claim payment estimates, 2. Mobile e-Claims Settlement: This tablet-based app Note: Due to rounding, figures may not add up to the total. new partnerships. In 2017, FYP from bancassurance improving service efficiency. In 2017, a total of replaces paper-based claims applications with Individual life84.65 insurance% channels reached NT$60.44 billion. Shin Kong Bank 81,949 claims were paid over the platform, repre- Value-oriented Product Strategy real-time data input. Image files can also be transmit- (SKB) continued to promote NTD and foreign currency senting 48% of all cases. Shin Kong Life Insurance ▲ ted via the app to expedite reviews and reduce claims policy sales to develop cross-selling synergies within e-Policy: The e-Policy app is a travel insurance service SKL's product strategy is focused on stacking processing time. the group. Such sales amounted to NT$16.49 billion in giving customer's round-the-clock access policy long-term fundamental interests and reducing cost of 3. E-Agent: This integrated information platform brings 2017. In addition, FYP from traditional broker channels information. In 2017, the system processed 12,007 liabilities. In 2018, the company will actively market together various digital service transaction indica- 2017 Operations Overview of liabilities by a target-beating 14 bps to 4.23%, Developing Strategic Products to Provide providing coverage for dread diseases as defined reached NT$15.55 billion, highest in the insurance e-policies. interest sensitive whole life, foreign currency, protec- tors, as well as special promotions and specialized exceeding the yearly target. NTD strength and policy- Comprehensive Protection under Taiwan's national health insurance program. The brokerage market. tion, and health policies and insurance riders. training to boost agent quality. Shin Kong Life Insurance (SKL) increased recurring holder demand lifted foreign currency policy sales by company continued to develop strategic products for In the foreign currency policy segment, SKL will income and reduced cost of liabilities to sustain strong 118.9% over the year to NT$52.04 billion, representing SKL is actively cultivating the long-term care (LTC) specific demographic groups, including policies pro- Building E-Services, Expanding E-insurance continue to promote US dollar (USD), Australian dollar Successive Completion of 12 Development performance in 2017. The company's consolidated 46.9% of total FYP. Such policies have helped SKL to market. The company led the industry with the intro- viding additional accident coverage for males, ▲ (AUD), and renminbi (RMB) denominated interest sensi- Projects after-tax profit reached NT$6.97 billion, up sharply by stabilize interest spreads and contain hedging costs duction of three series of long-term care (LTC) policies senior-friendly policies, and retirement planning poli- Upgrading smart customer service: In July 2017, SKL tive whole life policies to facilitate asset-liability match- NT$6.83 billion year-on-year (YoY). Consolidated total through proper asset-liability matching. offering health coverage. These policies have earned cies to help policyholders enjoy a high-quality retired rolled out the industry's first smart robot customer ing and achieve stable interest spreads without hedging SKL is actively targeting real estate investments comprehensive income rose by 79.4% to NT$16.77 SKL increased its investment return by 12 bps YoY multiple awards and broad plaudits from the market. life. service incorporating natural language analysis, costs. In 2018, the company will also continue to devel- with stable yields, while also regenerating existing billion, consolidated total assets increased by 7.6% to to 3.92% despite hedging costs reaching 1.55% (1.29% In 2017, SKL continued to promote sales of protection machine learning, and data processing technology. op foreign currency interest sensitive policies. SKL will building assets, developing raw land in freehold or NT$2.5 trillion, and consolidated shareholders' equity excluding foreign exchange gains or losses arising from products to stack long-term fundamental interests. Implementing Activity Management and The system provides 24-hour automated text services also innovate new products in the health insurance superficies, and constructing high-quality assets to gained 23.1% to NT$90.8 billion. the disposal of foreign equities) due to high volatility in The company was first among industry peers to devel- Growing Channels through SKL's website and apps. ▲ segment, including spillover policies, long-term care generate rental income and create real estate value. In First-year premium (FYP) reached NT$110.96 the foreign exchange market. Investments in high-divi- op interest sensitive foreign currency protection prod- Mobile e-Visit: The Mobile e-Visit app helps agents to (LTC) policies without death benefits, and new-tech 2017, the company inaugurated the Chengde Enterprise billion in 2017, securing an 8.8% market share. SKL dend yield stocks and overseas fixed-income boosted ucts to help policyholders diversify assets and risks. In SKL overhauled its agent system with the launch of surgery policies. The company will also integrate the Building in Taipei, Xinban Financial Building in Xinban continued a strategy of selling New Taiwan dollar (NTD) recurring yield before hedging by 8 bps to 3.98%. the health insurance segment, SKL launched the Shin the Agent+ project in 2016 to comprehensively enhance real estate and affiliate resources of SKFH subsidiaries to Special District, Banqiao, and Zhongxing Building in and foreign currency whole life policies to reduce cost Kong AN-SIN-KA Catastrophic Illness Term Insurance agent productivity and optimize organizational struc- 2017 ANNUAL REPORT／Business Plan 22 23

Last 5 Years Unit: Policies 2018 Business Plan 4. Establishing electronic/mobile fee payment services: Chiayi. The Nangang Software Park Building will be In-force Policies Direct marketing, brokers, and other SKL customers can make fee payments from the completed in 2018 and eight additional buildings will % 8,488,566 14.21 In 2018, SKL will focus on sales of foreign currency member page on the SKL website or via the SKL app. be constructed over the next three years. Upon comple- policies and protection products. The company will 8,281,490 In 2018, SKL plans to release an electronic/mobile tion, these properties will generate an estimated annual Channel Mix Unit: NT$ Millions Agents optimize its product mix to contain hedging costs, payment fee payment service to provide customers rental income of approximately NT$600 million. In May 31.33% generate stable interest spreads, and accumulate value 8,036,858 with an even more convenient and secure payment 2018, SKL opened the Shin Kong LOHAS Future Pavilion Category First Year Premium Share of Total (%) channel. near Taipei main Station. The newly renovated building of new business (VNB). It will also continue to promote 7,760,359 e-service platforms, customer self-services, e-policies, 5. Increasing customer self-service rate: Policyholders provides a fast food restaurant, a coffee shop, a conve- Agents 34,760 31.33% 7,624,164 and other digital services to achieve an expected can apply for online accounts to enjoy counter-free nient store, SKB e-branch, and "LIFE Lab" insurance Bancassurance 60,437 54.47% double-digit gain in online membership and transac- services through internet banking, financial chip channel for a new type of insurance marketing, creating cards (in partnership with 21 banks), or citizen digital Direct marketing, First Year Premium tions. SKL will also implement the AI customer support an interacion model to better serve customer needs 15,765 14.21% brokers, and other chatbot to more effectively serve clients and boost 2013 2014 2015 2016 2017 certificate channels. Such self-services are available through digital technology and relaxing atmosphere. to customers for updating their contact information, 110,963NT$ Millions customer satisfaction. On the investment front, SKL （） First Year Premium 110,963 100.00% plans to enhance new money and reinvestment yield making simple policy modifications, applying for Bancassurance with eyes on rising interest rates, as well as invest in develop "ageing" business opportunities serving the policy loans, or filing claims online, further realizing 54.47% Note: Due to rounding, figures may not add up to the total. high-dividend yield stocks to generate stable recurring health promotion, financial security, and active aging the FinTech advantages of anytime/any place service. income. The company will also launch a new marketing needs of seniors. channel, "LIFE Lab," by the end of the second quarter of ture. In 2017, the company introduced the "e-Pilot" proactively care for policyholders, providing digital 2018 to offer insurance plans, product consultation and Premium Innovative E-Services digital activity management app. Integrating precision service content and retaining a complete service digital self-services aimed at increasing customer loyal- marketing, business lead system, activity management, record to improve service quality. In 2017, a total of ty and developing potential customer sources. SKL will establish an E-Service Development turf system, and other resources, the app helps agents 42,274 customer calls were accomplished through Department in 2018 to respond to the rapid changes to effectively call on customers, better manage time, the e-Visit system and 7,558 policyholders used the brought by digital financial technology. The company and thereby improve policy contracting rates and app to sign up for SMS notifications, reducing the designs innovative e-services incorporating FinTech and productivity. The productivity of full-time agents (mea- need for mailed paper notices. ▲ insurance technology to optimize the internal and sured by conversion premiums) reached NT$76,000 in Mobile e-Policy Application: Agents can provide external customer experience. 2017, up 7.0% YoY since the project's launch to sustain customers with real-time policy application services 1. Mobile e-Policy Adjustment: Policyholders can growth into the second year. SKL also increased the through this tablet PC based app. The app speeds up complete 15 types of transaction, including policy ratio of new employees under 30 years old to 42.7%, up the policy application time and boosts underwriting changes, through this tablet-based platform, includ- from 40.3% at the end of 2016. efficiency with real-time online verification. In 2017, ing policy adjustments. The app sends the updated In the third-party channel segment, SKL cooperated the app utilization rate reached 90%. ▲ information in real time to SKL's service center and closely with banks and insurance brokers to develop Mobile e-Payment: This tablet PC-based app enables notifies policyholders of the changes after review. new customer sources, as well as continued to develop agents to provide real-time claim payment estimates, 2. Mobile e-Claims Settlement: This tablet-based app new partnerships. In 2017, FYP from bancassurance improving service efficiency. In 2017, a total of replaces paper-based claims applications with channels reached NT$60.44 billion. Shin Kong Bank 81,949 claims were paid over the platform, repre- Value-oriented Product Strategy real-time data input. Image files can also be transmit- (SKB) continued to promote NTD and foreign currency senting 48% of all cases. ▲ ted via the app to expedite reviews and reduce claims policy sales to develop cross-selling synergies within e-Policy: The e-Policy app is a travel insurance service SKL's product strategy is focused on stacking processing time. the group. Such sales amounted to NT$16.49 billion in giving customer's round-the-clock access policy long-term fundamental interests and reducing cost of 3. E-Agent: This integrated information platform brings 2017. In addition, FYP from traditional broker channels information. In 2017, the system processed 12,007 liabilities. In 2018, the company will actively market together various digital service transaction indica- 2017 Operations Overview of liabilities by a target-beating 14 bps to 4.23%, Developing Strategic Products to Provide providing coverage for dread diseases as defined reached NT$15.55 billion, highest in the insurance e-policies. interest sensitive whole life, foreign currency, protec- tors, as well as special promotions and specialized exceeding the yearly target. NTD strength and policy- Comprehensive Protection under Taiwan's national health insurance program. The brokerage market. tion, and health policies and insurance riders. training to boost agent quality. Shin Kong Life Insurance (SKL) increased recurring holder demand lifted foreign currency policy sales by company continued to develop strategic products for In the foreign currency policy segment, SKL will income and reduced cost of liabilities to sustain strong 118.9% over the year to NT$52.04 billion, representing SKL is actively cultivating the long-term care (LTC) specific demographic groups, including policies pro- Building E-Services, Expanding E-insurance continue to promote US dollar (USD), Australian dollar Successive Completion of 12 Development performance in 2017. The company's consolidated 46.9% of total FYP. Such policies have helped SKL to market. The company led the industry with the intro- viding additional accident coverage for males, ▲ (AUD), and renminbi (RMB) denominated interest sensi- Projects after-tax profit reached NT$6.97 billion, up sharply by stabilize interest spreads and contain hedging costs duction of three series of long-term care (LTC) policies senior-friendly policies, and retirement planning poli- Upgrading smart customer service: In July 2017, SKL tive whole life policies to facilitate asset-liability match- NT$6.83 billion year-on-year (YoY). Consolidated total through proper asset-liability matching. offering health coverage. These policies have earned cies to help policyholders enjoy a high-quality retired rolled out the industry's first smart robot customer ing and achieve stable interest spreads without hedging SKL is actively targeting real estate investments comprehensive income rose by 79.4% to NT$16.77 SKL increased its investment return by 12 bps YoY multiple awards and broad plaudits from the market. life. service incorporating natural language analysis, costs. In 2018, the company will also continue to devel- with stable yields, while also regenerating existing billion, consolidated total assets increased by 7.6% to to 3.92% despite hedging costs reaching 1.55% (1.29% In 2017, SKL continued to promote sales of protection machine learning, and data processing technology. op foreign currency interest sensitive policies. SKL will building assets, developing raw land in freehold or NT$2.5 trillion, and consolidated shareholders' equity excluding foreign exchange gains or losses arising from products to stack long-term fundamental interests. Implementing Activity Management and The system provides 24-hour automated text services also innovate new products in the health insurance superficies, and constructing high-quality assets to gained 23.1% to NT$90.8 billion. the disposal of foreign equities) due to high volatility in The company was first among industry peers to devel- Growing Channels through SKL's website and apps. ▲ segment, including spillover policies, long-term care generate rental income and create real estate value. In First-year premium (FYP) reached NT$110.96 the foreign exchange market. Investments in high-divi- op interest sensitive foreign currency protection prod- Mobile e-Visit: The Mobile e-Visit app helps agents to (LTC) policies without death benefits, and new-tech 2017, the company inaugurated the Chengde Enterprise billion in 2017, securing an 8.8% market share. SKL dend yield stocks and overseas fixed-income boosted ucts to help policyholders diversify assets and risks. In SKL overhauled its agent system with the launch of surgery policies. The company will also integrate the Building in Taipei, Xinban Financial Building in Xinban continued a strategy of selling New Taiwan dollar (NTD) recurring yield before hedging by 8 bps to 3.98%. the health insurance segment, SKL launched the Shin the Agent+ project in 2016 to comprehensively enhance real estate and affiliate resources of SKFH subsidiaries to Special District, Banqiao, and Zhongxing Building in and foreign currency whole life policies to reduce cost Kong AN-SIN-KA Catastrophic Illness Term Insurance agent productivity and optimize organizational struc- 2017 ANNUAL REPORT／Business Plan 24 25

2018 Business Plan 4. Establishing electronic/mobile fee payment services: Chiayi. The Nangang Software Park Building will be Shin Kong Bank transaction patterns to help the bank develop highly Customers can enjoy an optimized online service from Growing Assets and Loan Income promote the conversion of NTD maturity payment into SKL customers can make fee payments from the completed in 2018 and eight additional buildings will tailored services and products. In September 2017, SKB any browser, as well as clearly track asset status and foreign currency SKB deposits at favorable exchange rates and cross-sell various types of insurance In 2018, SKL will focus on sales of foreign currency member page on the SKL website or via the SKL app. be constructed over the next three years. Upon comple- launched an updated e-banking website with respon- easily complete transactions with the help of graphical 1. Expanding SME lending: SKB will continue to develop small and medium enterprise (SME) customers, policies. SKB has also partnered with MasterLink In 2018, SKL plans to release an electronic/mobile tion, these properties will generate an estimated annual improve overall profitability. sive web design, multiple browser support, graphical financial analysis and the intuitive transaction interface. policies and protection products. The company will 2017 Operations Overview Securities on joint underwriting and referral of SKB payment fee payment service to provide customers improving the quality of SME loans and deepening optimize its product mix to contain hedging costs, rental income of approximately NT$600 million. In May financial analysis, and an intuitive transaction interface. In the mobile payment sector, SKB offered Android Pay, related business transactions through SME credit customers to open accounts at MasterLink Securities. with an even more convenient and secure payment generate stable interest spreads, and accumulate value 2018, SKL opened the Shin Kong LOHAS Future Pavilion Shin Kong Bank (SKB) is committed to expanding Strong Performance in International Syndicated Taiwan Pay, Line Pay, and Apple Pay services. Ranked guarantee funds and overseas credit guarantee funds. Through such integration with group resources, SKB of new business (VNB). It will also continue to promote channel. near Taipei main Station. The newly renovated building overseas and wealth management income. The bank is Loans and Steady Growth in Trade Financing as the best digital bank by Excellence Magazine in 2. Developing target customer groups and expanding is enhancing joint marketing and providing customers e-service platforms, customer self-services, e-policies, 5. Increasing customer self-service rate: Policyholders provides a fast food restaurant, a coffee shop, a conve- also actively developing digital financial services, with 2016, SKB gained further recognition in 2017 as winner business scope: In the corporate banking sector, SKB with a full range of services. will deeply cultivate and develop business with and other digital services to achieve an expected can apply for online accounts to enjoy counter-free nient store, SKB e-branch, and "LIFE Lab" insurance consideration to both profitability and capital adequa- SKB regularly surveys overseas markets and active- of the "Best Financial Services Award." medium and large corporate clients and actively Expanding International Syndicated Lending services through internet banking, financial chip channel for a new type of insurance marketing, creating ly cultivates professional talent in international syndi- double-digit gain in online membership and transac- cy. SKB's business remained steady in 2017. Pre-provi- expand services to overseas Taiwanese enterprises to to Increase Overseas Income cards (in partnership with 21 banks), or citizen digital tions. SKL will also implement the AI customer support an interacion model to better serve customer needs sion profit increased 6.2% to NT$7.19 billion cated lending. In 2017, the banks' overseas syndicated develop overseas lending and syndicated loan opera- chatbot to more effectively serve clients and boost certificate channels. Such self-services are available through digital technology and relaxing atmosphere. year-on-year (YoY) and consolidated after-tax profit loan balance rose by 92.4% to NT$17.37 billion. SKB 2018 Business Plan tions. In the consumer banking segment, the bank will 1. Building international syndicated loan operations: customer satisfaction. On the investment front, SKL to customers for updating their contact information, amounted to NT$4.06 billion. Consolidated total assets focused on high-quality loans to locally well-known continue to strengthen training to enhance profes- SKB regularly conducts overseas market research and making simple policy modifications, applying for sional caliber and productivity, as well as leverage big industry exchanges. The bank currently has loans in plans to enhance new money and reinvestment yield 1 Xinban Financial Building rose 3.8% to NT$812.49 billion, shareholders' equity large enterprises with strong international credit SKB will focus its business strategy in 2018 on "integrat- data analysis to develop target customers and dynam- Southeast Asia and Greater China to local expand with eyes on rising interest rates, as well as invest in develop "ageing" business opportunities serving the policy loans, or filing claims online, further realizing gained 6.7% to NT$52.49 billion, and the bank's BIS ratings, with a loan portfolio covering Southeast Asia, ing SKFH resources to grow operations and expanding ically adjust strategy according to market conditions. with investment grade international credit ratings. In health promotion, financial security, and active aging the FinTech advantages of anytime/any place service. 2 Chengde Enterprise Building high-dividend yield stocks to generate stable recurring capital adequacy ratio reached 13.06%. Australia, and Greater China. SKB also increased trade wealth management and overseas revenue." The 3. Increasing customer contribution with funds transfer the future, SKB will continue to identify high-quality income. The company will also launch a new marketing needs of seniors. In terms of business momentum, SKB ended 2017 financing by NT$250 million in 2017, extending steady following specific measures will be taken in 2018: pricing (FTP): SKB will implement a FTP system to companies in these regions to increase income from 3 Chiayi Zhongxing Building channel, "LIFE Lab," by the end of the second quarter of with a deposit balance (excluding interbank deposits) of growth in the segment into the third consecutive year. focus on core customers and enhance customer international syndicated loans. ture. In 2017, the company introduced the "e-Pilot" proactively care for policyholders, providing digital contribution management. In response to market 2. Increasing the profitability of the Hong Kong branch: 2018 to offer insurance plans, product consultation and Premium Innovative E-Services 4 Shin Kong Jasper Villa Xinban A NT$712.25 billion, with the average demand deposit digital activity management app. Integrating precision service content and retaining a complete service competition, the bank will also set loan interest rates SKB will build the revenue of its Hong Kong branch digital self-services aimed at increasing customer loyal- ratio increasing by 1.4% to 41.7%. Loan balance (includ- Wealth Management Income Continues marketing, business lead system, activity management, record to improve service quality. In 2017, a total of based on customer segmentation and contribution to through a strategy of developing lending, deposit, ty and developing potential customer sources. SKL will establish an E-Service Development 5 Shin Kong Jasper Villa Xinban B ing revolving balance on credit cards and excluding Upward Trend turf system, and other resources, the app helps agents 42,274 customer calls were accomplished through enhance deposit and loan income. and remittance operations to high-quality public- Department in 2018 to respond to the rapid changes overdue receivables) expanded by 5.2% to NT$534.82 ly-listed companies in Hong Kong, cooperating more to effectively call on customers, better manage time, the e-Visit system and 7,558 policyholders used the 6 Shin Kong Jasper Villa Xinban C brought by digital financial technology. The company billion, helped mainly by a 9.8% gain in consumer SKB continued to closely follow market changes Deepening Customer Relationships to closely with investment banks (i.e. on structured and thereby improve policy contracting rates and app to sign up for SMS notifications, reducing the financing) to enhance its international reputation, designs innovative e-services incorporating FinTech and 7 Nangang Software Park Building lending. Effective controls on funding cost boosted net and trends, identify high-quality financial products, and Increase Fee Income productivity. The productivity of full-time agents (mea- need for mailed paper notices. and continuing to increase its wealth management ▲ insurance technology to optimize the internal and interest spread for the full year to 1.96%. Net interest enhance the professional caliber and average produc- sured by conversion premiums) reached NT$76,000 in Mobile e-Policy Application: Agents can provide 1. Increasing income with digital technology: SKB will client base and assets under management. external customer experience. 8 Chongqing South Road Residential Building margin rose by 7 bps to 1.57%. Asset quality also tion value of financial consultants. In 2017, wealth 2017, up 7.0% YoY since the project's launch to sustain customers with real-time policy application services continue to optimize business processes and increase 1. Mobile e-Policy Adjustment: Policyholders can remained strong, with non-performing loan (NPL) ratio management income rose by 3.7% to NT$2.05 billion, Strengthening Development in Digital growth into the second year. SKL also increased the through this tablet PC based app. The app speeds up 9 Shin Kong Jasper Villa Shuiyang the number and quality of loans through a digital loan complete 15 types of transaction, including policy of 0.24% and coverage ratio of 488.29% at year-end. while strong customer demand boosted fee income application platform. In the credit card segment, the Finance ratio of new employees under 30 years old to 42.7%, up the policy application time and boosts underwriting changes, through this tablet-based platform, includ- 10 Shin Kong Jasper Villa Jiantan In addition to loan operations, SKB actively from mutual funds and overseas securities by 84.9% and bank will increase credit card balances and fee from 40.3% at the end of 2016. efficiency with real-time online verification. In 2017, ing policy adjustments. The app sends the updated increased non-interest income. In 2017, wealth 83.7%, respectively. SKB's non-discretionary money income through ongoing promotion of mobile 1. Growing e-customer base: SKB will continue to In the third-party channel segment, SKL cooperated the app utilization rate reached 90%. payment services via cell phone-bound credit cards. integrate market research and big data analysis, as ▲ information in real time to SKL's service center and 11 Shin Kong Jasper Villa Taichung management income grew 3.7% to NT$2.05 billion, trust balance reached NT$108.64 billion at the end of closely with banks and insurance brokers to develop Mobile e-Payment: This tablet PC-based app enables 2. Strengthening customer management and productiv- well as collect customer digital tracking data and notifies policyholders of the changes after review. while strong sales of mutual funds and overseas securi- 2017, giving the bank an approximately 3.0% market 12 Joint Venture Development on Yangguang St. Neihu ity of financial consultants: SKB will arrange special arrange marketing activities to attract new e-custom- new customer sources, as well as continued to develop agents to provide real-time claim payment estimates, 2. Mobile e-Claims Settlement: This tablet-based app ties drove related fee income up 84.3%. SKB also share and 13th place industry ranking. activities to deepen financial consultant interactions ers and expand e-transactions, such as interbank new partnerships. In 2017, FYP from bancassurance improving service efficiency. In 2017, a total of replaces paper-based claims applications with skillfully deployed funds to increase total investment with clients and increase customer satisfaction. The transfers and fund transactions. The bank will also use channels reached NT$60.44 billion. Shin Kong Bank 81,949 claims were paid over the platform, repre- Value-oriented Product Strategy real-time data input. Image files can also be transmit- income by 4.2% year-on-year (YoY). Enhancing Digital Financial Services to Meet bank will strengthen the managerial functions of CRM analysis, email direct marketing, and text (SKB) continued to promote NTD and foreign currency senting 48% of all cases. messaging to target potential customers and increase ▲ ted via the app to expedite reviews and reduce claims Customer Demand wealth management supervisors and arrange policy sales to develop cross-selling synergies within e-Policy: The e-Policy app is a travel insurance service certified financial planner (CFP) training programs the number and usage of digital service subscribers. SKL's product strategy is focused on stacking processing time. Industry-leading Net Interest Spread and related courses to cultivate a wealth manage- 2. Continuing to optimize e-services: SKB will develop the group. Such sales amounted to NT$16.49 billion in giving customer's round-the-clock access policy 3. E-Agent: This integrated information platform brings long-term fundamental interests and reducing cost of 北投 In response to the development of digital finance, ment team with the comprehensive professional robo-advisor services and leverage the advantages of 2017. In addition, FYP from traditional broker channels information. In 2017, the system processed 12,007 together various digital service transaction indica- liabilities. In 2018, the company will actively market 11 SKB deeply cultivated business with medium and SKB introduced a digital tracking and collection system abilities needed to provide customers with superior its mobile financial consultant system to provide 2017 Operations Overview of liabilities by a target-beating 14 bps to 4.23%, Developing Strategic Products to Provide providing coverage for dread diseases as defined reached NT$15.55 billion, highest in the insurance e-policies. 士林 tors, as well as special promotions and specialized combining front-end tracking of customer behavior with financial services. customers with a broad range of information, stream- exceeding the yearly target. NTD strength and policy- Comprehensive Protection under Taiwan's national health insurance program. The interest sensitive whole life, foreign currency, protec- large corporate customers to maintain steady profitabil- brokerage market. training to boost agent quality. line work flow, and standardize services. The bank holder demand lifted foreign currency policy sales by company continued to develop strategic products for tion, and health policies and insurance riders. ity. The bank promoted overseas lending and actively back-end big data analysis customer preferences and Shin Kong Life Insurance (SKL) increased recurring 10 Promoting Joint Marketing and Sharing will launch the SKB Global e-Banking (GEB) app to specific demographic groups, including policies pro- In the foreign currency policy segment, SKL will 12 內湖 participated in international syndicated loans to income and reduced cost of liabilities to sustain strong 118.9% over the year to NT$52.04 billion, representing SKL is actively cultivating the long-term care (LTC) 9 Customer Resources help corporate customers track capital flows in real Building E-Services, Expanding E-insurance Successive Completion of 12 Development 3 2 46.9% of total FYP. Such policies have helped SKL to viding additional accident coverage for males, continue to promote US dollar (USD), Australian dollar increase loan income. It also continued to optimize time and quickly allocate funds across areas. performance in 2017. The company's consolidated market. The company led the industry with the intro- 三重大同中山松山 ▲ Projects (AUD), and renminbi (RMB) denominated interest sensi- deposit structure and controlling funding cost to use 1. Sharing internal customer resources: With a focus on after-tax profit reached NT$6.97 billion, up sharply by stabilize interest spreads and contain hedging costs duction of three series of long-term care (LTC) policies senior-friendly policies, and retirement planning poli- Upgrading smart customer service: In July 2017, SKL 7 through proper asset-liability matching. cies to help policyholders enjoy a high-quality retired tive whole life policies to facilitate asset-liability match- 8中正南港 funds more effectively. In 2017, interest expenses fell to a customer-centric business strategy and decentral- NT$6.83 billion year-on-year (YoY). Consolidated total offering health coverage. These policies have earned rolled out the industry's first smart robot customer 信義 ing and achieve stable interest spreads without hedging SKL is actively targeting real estate investments 萬華大安 NT$4.32 billion in 2017, down 5.8% from the previous ized financial services, SKB will establish a bank-wide comprehensive income rose by 79.4% to NT$16.77 SKL increased its investment return by 12 bps YoY multiple awards and broad plaudits from the market. life. service incorporating natural language analysis, 板橋 costs. In 2018, the company will also continue to devel- with stable yields, while also regenerating existing year, the average demand deposit ratio increased by customer resource sharing platform. It will also billion, consolidated total assets increased by 7.6% to to 3.92% despite hedging costs reaching 1.55% (1.29% In 2017, SKL continued to promote sales of protection 永和 machine learning, and data processing technology. building assets, developing raw land in freehold or 4 5 6 increase cross-selling effectiveness through customer op foreign currency interest sensitive policies. SKL will 文山 1.4% to 41.7%, and the loan-to-deposit ratio (including NT$2.5 trillion, and consolidated shareholders' equity excluding foreign exchange gains or losses arising from products to stack long-term fundamental interests. Implementing Activity Management and The system provides 24-hour automated text services 1 中和 segmentation and precision marketing, as well as also innovate new products in the health insurance superficies, and constructing high-quality assets to revolving credit card balance) advanced from 73.3% in gained 23.1% to NT$90.8 billion. the disposal of foreign equities) due to high volatility in The company was first among industry peers to devel- Growing Channels through SKL's website and apps. integrate virtual and physical channels to expand use ▲ generate rental income and create real estate value. In segment, including spillover policies, long-term care 2016 to 74.3%. As a result of the aforementioned strate- of digital channels and deepen customer relations. First-year premium (FYP) reached NT$110.96 the foreign exchange market. Investments in high-divi- op interest sensitive foreign currency protection prod- Mobile e-Visit: The Mobile e-Visit app helps agents to (LTC) policies without death benefits, and new-tech 2017, the company inaugurated the Chengde Enterprise gy, SKB increased its net interest margin by 7 bps to 2. Enhancing joint marketing with subsidiaries: SKB will billion in 2017, securing an 8.8% market share. SKL dend yield stocks and overseas fixed-income boosted ucts to help policyholders diversify assets and risks. In SKL overhauled its agent system with the launch of Building in Taipei, Xinban Financial Building in Xinban integrate the resources of SKFH to increase the recurring yield before hedging by 8 bps to 3.98%. the Agent+ project in 2016 to comprehensively enhance surgery policies. The company will also integrate the 1.57% and achieved a net interest spread of 1.96%, continued a strategy of selling New Taiwan dollar (NTD) the health insurance segment, SKL launched the Shin number of products that a customer purchases. For real estate and affiliate resources of SKFH subsidiaries to Special District, Banqiao, and Zhongxing Building in higher than the 1.36% average for domestic banks, to and foreign currency whole life policies to reduce cost Kong AN-SIN-KA Catastrophic Illness Term Insurance agent productivity and optimize organizational struc- Note: Listed in the order of expected completion example, the bank is working closely with SKL to 2017 ANNUAL REPORT／Business Plan 26 27

transaction patterns to help the bank develop highly Customers can enjoy an optimized online service from Growing Assets and Loan Income promote the conversion of NTD maturity payment into tailored services and products. In September 2017, SKB any browser, as well as clearly track asset status and foreign currency SKB deposits at favorable exchange launched an updated e-banking website with respon- easily complete transactions with the help of graphical 1. Expanding SME lending: SKB will continue to develop rates and cross-sell various types of insurance small and medium enterprise (SME) customers, policies. SKB has also partnered with MasterLink improve overall profitability. sive web design, multiple browser support, graphical financial analysis and the intuitive transaction interface. 2017 Operations Overview improving the quality of SME loans and deepening Securities on joint underwriting and referral of SKB financial analysis, and an intuitive transaction interface. In the mobile payment sector, SKB offered Android Pay, related business transactions through SME credit customers to open accounts at MasterLink Securities. Shin Kong Bank (SKB) is committed to expanding Strong Performance in International Syndicated Taiwan Pay, Line Pay, and Apple Pay services. Ranked guarantee funds and overseas credit guarantee funds. Through such integration with group resources, SKB overseas and wealth management income. The bank is Loans and Steady Growth in Trade Financing as the best digital bank by Excellence Magazine in 2. Developing target customer groups and expanding is enhancing joint marketing and providing customers also actively developing digital financial services, with 2016, SKB gained further recognition in 2017 as winner business scope: In the corporate banking sector, SKB with a full range of services. will deeply cultivate and develop business with consideration to both profitability and capital adequa- SKB regularly surveys overseas markets and active- of the "Best Financial Services Award." medium and large corporate clients and actively Expanding International Syndicated Lending ly cultivates professional talent in international syndi- cy. SKB's business remained steady in 2017. Pre-provi- expand services to overseas Taiwanese enterprises to to Increase Overseas Income sion profit increased 6.2% to NT$7.19 billion cated lending. In 2017, the banks' overseas syndicated develop overseas lending and syndicated loan opera- year-on-year (YoY) and consolidated after-tax profit loan balance rose by 92.4% to NT$17.37 billion. SKB 2018 Business Plan tions. In the consumer banking segment, the bank will 1. Building international syndicated loan operations: amounted to NT$4.06 billion. Consolidated total assets focused on high-quality loans to locally well-known continue to strengthen training to enhance profes- SKB regularly conducts overseas market research and industry exchanges. The bank currently has loans in rose 3.8% to NT$812.49 billion, shareholders' equity large enterprises with strong international credit SKB will focus its business strategy in 2018 on "integrat- sional caliber and productivity, as well as leverage big data analysis to develop target customers and dynam- Southeast Asia and Greater China to local expand gained 6.7% to NT$52.49 billion, and the bank's BIS ratings, with a loan portfolio covering Southeast Asia, ing SKFH resources to grow operations and expanding ically adjust strategy according to market conditions. with investment grade international credit ratings. In capital adequacy ratio reached 13.06%. Australia, and Greater China. SKB also increased trade wealth management and overseas revenue." The 3. Increasing customer contribution with funds transfer the future, SKB will continue to identify high-quality In terms of business momentum, SKB ended 2017 financing by NT$250 million in 2017, extending steady following specific measures will be taken in 2018: pricing (FTP): SKB will implement a FTP system to companies in these regions to increase income from with a deposit balance (excluding interbank deposits) of growth in the segment into the third consecutive year. focus on core customers and enhance customer international syndicated loans. NT$712.25 billion, with the average demand deposit contribution management. In response to market 2. Increasing the profitability of the Hong Kong branch: competition, the bank will also set loan interest rates SKB will build the revenue of its Hong Kong branch ratio increasing by 1.4% to 41.7%. Loan balance (includ- Wealth Management Income Continues based on customer segmentation and contribution to through a strategy of developing lending, deposit, ing revolving balance on credit cards and excluding Upward Trend Last 5 Years Unit: NT$ Millions Last 5 Years Unit: NT$ Millions enhance deposit and loan income. and remittance operations to high-quality public- overdue receivables) expanded by 5.2% to NT$534.82 ly-listed companies in Hong Kong, cooperating more billion, helped mainly by a 9.8% gain in consumer SKB continued to closely follow market changes Deposit Balance Loan Balance Deepening Customer Relationships to closely with investment banks (i.e. on structured 534,822 financing) to enhance its international reputation, lending. Effective controls on funding cost boosted net and trends, identify high-quality financial products, and 712,253 Increase Fee Income and continuing to increase its wealth management interest spread for the full year to 1.96%. Net interest enhance the professional caliber and average produc- 1. Increasing income with digital technology: SKB will client base and assets under management. margin rose by 7 bps to 1.57%. Asset quality also tion value of financial consultants. In 2017, wealth 686,883 508,522 679,593 continue to optimize business processes and increase management income rose by 3.7% to NT$2.05 billion, remained strong, with non-performing loan (NPL) ratio 487,734 the number and quality of loans through a digital loan Strengthening Development in Digital while strong customer demand boosted fee income 482,536 of 0.24% and coverage ratio of 488.29% at year-end. 643,680 application platform. In the credit card segment, the Finance In addition to loan operations, SKB actively from mutual funds and overseas securities by 84.9% and bank will increase credit card balances and fee increased non-interest income. In 2017, wealth 83.7%, respectively. SKB's non-discretionary money income through ongoing promotion of mobile 1. Growing e-customer base: SKB will continue to 614,517 450,822 payment services via cell phone-bound credit cards. integrate market research and big data analysis, as management income grew 3.7% to NT$2.05 billion, trust balance reached NT$108.64 billion at the end of 2. Strengthening customer management and productiv- well as collect customer digital tracking data and 2017, giving the bank an approximately 3.0% market while strong sales of mutual funds and overseas securi- ity of financial consultants: SKB will arrange special arrange marketing activities to attract new e-custom- ties drove related fee income up 84.3%. SKB also share and 13th place industry ranking. activities to deepen financial consultant interactions ers and expand e-transactions, such as interbank skillfully deployed funds to increase total investment 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 with clients and increase customer satisfaction. The transfers and fund transactions. The bank will also use income by 4.2% year-on-year (YoY). Enhancing Digital Financial Services to Meet bank will strengthen the managerial functions of CRM analysis, email direct marketing, and text Customer Demand Note: Numbers exclude interbank deposits Note: Figures include credit card revolving balances but exclude wealth management supervisors and arrange messaging to target potential customers and increase overdue receivables and indirect financing. certified financial planner (CFP) training programs the number and usage of digital service subscribers. Industry-leading Net Interest Spread and related courses to cultivate a wealth manage- 2. Continuing to optimize e-services: SKB will develop In response to the development of digital finance, ment team with the comprehensive professional robo-advisor services and leverage the advantages of SKB deeply cultivated business with medium and SKB introduced a digital tracking and collection system its mobile financial consultant system to provide % abilities needed to provide customers with superior large corporate customers to maintain steady profitabil- combining front-end tracking of customer behavior with Net72.49 interest income financial services. customers with a broad range of information, stream- Net fee20.75 income% ity. The bank promoted overseas lending and actively back-end big data analysis customer preferences and line work flow, and standardize services. The bank Promoting Joint Marketing and Sharing will launch the SKB Global e-Banking (GEB) app to participated in international syndicated loans to Business Mix Unit: NT$ Thousands Customer Resources help corporate customers track capital flows in real increase loan income. It also continued to optimize time and quickly allocate funds across areas. Category 2017 Revenue Share of Total (%) % deposit structure and controlling funding cost to use Gains on bills and securities6.08 1. Sharing internal customer resources: With a focus on funds more effectively. In 2017, interest expenses fell to Net interest income 11,191,420 72.49% a customer-centric business strategy and decentral- NT$4.32 billion in 2017, down 5.8% from the previous ized financial services, SKB will establish a bank-wide year, the average demand deposit ratio increased by Net fee income 3,202,870 20.75% % customer resource sharing platform. It will also Other net0.68 income increase cross-selling effectiveness through customer 1.4% to 41.7%, and the loan-to-deposit ratio (including Gains on bills and securities 938,131 6.08% segmentation and precision marketing, as well as revolving credit card balance) advanced from 73.3% in Other net income 104,965 0.68% Total integrate virtual and physical channels to expand use 2016 to 74.3%. As a result of the aforementioned strate- of digital channels and deepen customer relations. gy, SKB increased its net interest margin by 7 bps to 2. Enhancing joint marketing with subsidiaries: SKB will Total 15,437,386 100.00% 15,437,386NT$ Thousands 1.57% and achieved a net interest spread of 1.96%, （） integrate the resources of SKFH to increase the number of products that a customer purchases. For higher than the 1.36% average for domestic banks, to Note: Due to rounding, figures may not add up to the total example, the bank is working closely with SKL to 2017 ANNUAL REPORT／Business Plan 28 29

Shin Kong Investment Trust Promoting Regular Saving Plan and Balanc- Seizing Investment Trends to Enhance Invest- ing Use of Channel Resources ment Management Performance

2017 Operations Overview Strengthening Investment Performance with SKIT is actively promoting regular saving plan. The SKIT will strengthen its capabilities in asset alloca- Award-winning Results company is also committed to developing a young, tion to increase the value of fund assets. It will also high-quality customer base, consolidating its existing implement strict risk control measures, refine invest- Shin Kong Investment Trust (SKIT) had NT$36.98 customer base, strengthening fund brand positioning, ment decision making, and pursue stable fund perfor- billion in funds under management at the end of 2017. In recent years, SKIT has leveraged its extensive and increasing scale of assets under management mance to create value for customers. Public funds under management (including money investment experience and strict risk control measures (AUM). SKIT has extensive investment management market funds) contributed NT$25.5 billion to the total, to enhance fund performance. In 2017, the Shin Kong experience and operational strength. In addition to Planning Strategic Products to Strengthen private equity funds amounted to NT$430 million, and Fortune Balanced Fund won the Thomson Reuters Lipper integrating with SKFH's channel resources, the company Channel Cooperation and Synergy discretionary trust operations added NT$11.05 billion. Taiwan Fund Award and 20th Best Fund Award, and the is developing external channels and expanding the Shin Kong China Growth Fund was ranked among the scale of discretionary investment accounts to boost yield SKIT closely follows mainstream market trends and top-ten industry performers. SKIT prudently manages for customers. opportunities. In addition to its newly issued multi-asset fund and investment accounts. The company is also fund and target maturity fund, the company launched committed to improving operational performance and Establishing a Diverse Product Line to Meet exchange traded funds (ETFs) offering customers a implementing the functions of the Investment Manage- Customer Needs at Every Level variety of product choices. SKIT will also continue to ment Committee. develop new channels and maintain opportunities for SKIT offers a complete line of funds, including collaborative product development with several life mutual funds and private equity funds, as well as discre- insurers to achieve win-win business cooperation % Sales fee1.44 income tionary trust business. To further meet investor's asset through strategic alliances. allocation planning needs, the company launched the Shin Kong Emerging ASEAN Bond Fund and Shin Kong Boosting Profitability with Active and Passive Consulting fee3.56 income% Business Mix Unit: NT$ Thousands Global Total Return Balanced Fund in 2017. SKIT contin- Funds ues to closely watch high-quality overseas funds and Category 2017 Amount Share of Total (%) cooperate with well-known foreign asset management In 2018, SKIT will continue to build its diversified Management95.00% companies. In 2017, the company successively line of funds with the addition of several discretionary Management fee income 210,396 95.00% fee income introduced Old Mutual Global Funds and Amundi funds investment accounts (including new linked accounts) to build fund sales momentum. and ETFs. The company also plans to introduce Sales fee income 3,182 1.44% multi-currency and dividend funds meeting market Consulting fee income 7,893 3.56% Operating Income 2018 Business Plan trends and providing suitable funds for investors. SKIT is driven to achieve consistently outstanding In 2018, SKIT will advance on performance, performance over the long term in the belief that Total 221,471 100.00% NT$221,471 Thousands （） product, and scale fronts through a three-pronged sustained stable yields are vital to building its customer strategy focused on "strengthening investment perfor- base. Going forward, the company will continue to mance," "expanding income products," and "implement- develop new channels and strengthen high-quality ing integrated marketing." The company will also imple- channel relationships to expand business sources. Assets Under Management Unit: NT$ Million Bond2.78 funds% 1.15Private% equity funds ment the policies of SKFH to improve performance, Creating a triple win for products, performance, and Category 2017 Amount Share of Total (%) provide customers with a full-spectrum of asset alloca- customers will be the key to healthy growth in 2018. % Balanced6.79 funds 0.44Fund of% funds tion choices, and grow client asset value. Equity funds 4,763 12.88% Fund of funds 163 0.44% Principal protected11.65 funds% Money-market funds 12,730 34.42% Balanced funds 2,510 6.79% AUM Principal protected funds 4,308 11.65% % Equity12.88 funds NT$36,980 Million Bond funds 1,027 2.78% （） Private equity funds 425 1.15% Discretionary accounts 11,054 29.89%

Total 36,980 100.00% Discretionary29.89 accounts%

Money-market34.42 funds% 2017 ANNUAL REPORT／Business Plan 30 31

Shin Kong Property Insurance Agency

2017 Operations Overview and advanced courses on traffic accident reconciliation negotiations to strengthen the professional expertise Shin Kong Property Insurance Agency (SKPIA) coop- and image of agents and achieve consultative sales. It erated closely with SKFH affiliate, Shinkong Insurance, also focused on developing new high quality channels. to develop high-quality non-life insurance policies and In the first half of 2017, SKPIA signed a three-party deliver premier customer services. The company also agreement with Keelung First Credit Cooperative and tapped the channel resources of Shin Kong Life, Shin Shinkong Insurance to jointly market non-life insurance Kong Bank, and MasterLink Securities to expand opera- products and services, helping the company to expand tions, enhance the core competitiveness, develop new business reach. customer sources, and provide a full range of services. This strategy powered solid business growth in 2017. 2018 Business Plan Over the year, operating revenue rose 6.2% to NT$320 million, net income gained 5.5% to NT$55.66 million, In 2018, SKPIA will continue to develop new chan- and return on equity outperformed at 74.7%. The strong nels, and provide property insurance policies tailored to business momentum boosted total premium income by customer needs to generate steady profits. The compa- 8.5% to NT$1.65 billion, beating the industry average ny will also strengthen agents' professional expertise and achieving the company's target. Auto policies through product education and training courses to (including compulsory insurance) contributed the consolidate customer sources and enhance business biggest share of premium income, at 77.3% of the total. performance. The company will implement the follow- The next biggest category was fire insurance, accounting specific business strategy: ing for 14.0% of total premium. In 2017, SKPIA steadily increased its total number of policies to 853,000. Developing High-quality Channels and Insurance. SKPIA also seeks to raise public awareness of SKPIA continued to provide appropriate products Innovative Products risk and increase earthquake insurance coverage rates and a broad range of services to seize market trends and by adding Shinkong Insurance's "An-Xin Home Protec- meet customer demand. The company expanded its In the area of new channel development, SKPIA tion" fire insurance policy to its marketing system. This product offering with a new comprehensive home fire successively signed joint promotion agreements with policy provides the dual protection of basic home fire insurance policy combining liability and accident cover- Keelung First Credit Cooperative and Tamshui First and earthquake insurance with additional earthquake age, limited auto body damage policy with economical Credit Cooperative Bank in the first half of 2017 to coverage to help customers shift personal risk. SKPIA premiums, and excess liability policy. SKPIA also held expand market share in northern Taiwan. In 2018, the plans to arrange a touring supplemental marketing various sales support activities, including the "Golden company expects to finalize a three-party agreement to activity throughout Taiwan to promote comprehensive Opportunity Triple Draw" lottery to build sales momen- jointly market non-life insurance products and services home insurance coverage and develop potential tum. The company arranged regional business seminars with First Credit Cooperative of Changhua and Shinkong customers.

Strengthening Employee Training to Enhance Professional Ability Last 5 Years Unit: NT$ Millions Last 5 Years Unit: NT$ Millions

Premium Income Business Revenue SKPIA will continue to hire outside consultants to 322 arrange "Regional Elite Seed Courses" on the study and 1,651 assessment of car accident liability and reconciliation 1,522 303 negotiations to enhance the professional abilities and image of agents. The company will also focus on basic 1,426 283 training for employees, provide licensing guidance and 1,303 study plans, and encourage employees to take non-life 255 insurance licensing exams and register with associa- 1,164 241 tions. In addition, SKPIA will regularly hold agent basic training (ABT) courses on non-life policies for new employees during their first year with the company, as 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 well as arrange advanced seminars on non-life insurance to help agents hone their practical and claims related knowledge in non-life insurance and boost Note: 2013 figures for Shin Kong Insurance Brokers; Note: 2013 figures for Shin Kong Insurance Brokers; performance. figures from 2014 for Shin Kong Property Insurance Agency figures from 2014 for Shin Kong Property Insurance Agency 2017 ANNUAL REPORT／Business Plan 32 33

Shin Kong Venture Capital policy support in Taiwan, including green technology, the company will expand its operations base according Asia's Silicon Valley, biomedical, and defense. SKVC will to business development conditions to balance regional continue to integrate with group resources to jointly development and reduce the risk of regional and indus- 2017 Operations Overview 2018 Business Plan identify startups with development potential, as well as try concentration, with an aim to have 170 customers by use SKFH's integrated marketing platform to increase the end of 2018. Following the strategy of focusing on "stabilizing In 2018, SKVC will follow the medium term strate- business exchanges and enhance investment returns. Shin Kong Leasing will implement IoT remote asset profit growth" and "controlling Shin Kong Leasing’s gies of "controlling asset quality" and "prudently select- management project, involving the installation of non-performing loan (NPL) ratio" in 2017, Shin Kong ing investment targets." Business development will Growing Steadily with Strict Controls on sensors and monitoring devices on leased items. The Venture Capital (SKVC) achieved 154.9% of its consoli- focus on the three strategies of "strictly controlling asset Asset Quality system will be able to monitor equipment utilization dated annual profit target through three years of opera- quality of leasing subsidiary and steadily growing rates in real-time and lock equipment when leasing tion adjustments and risk management, representing operations in tandem," "gradually expanding venture Shin Kong Leasing will continue to expand its loan payment delayed. This will reduce the chance of lessor the second consecutive annual beat, while net income investment scale and continuing to build a professional portfolio and increase loan balance with risk manage- delays, prevent unexpected equipment relocation by posted at a record high NT$53.45 million. investment team," and "expanding business exchanges ment as the highest principle. The company will imple- lessors, and effectively track the location of leased Venture capital investment operations: In 2017, and enhancing investment returns through SKFH's ment supplier projects to accelerate the loan review items to safeguard equipment ownership rights. The SKVC looked for green energy and environmental integrated marketing platform." process and increase the weighting of direct leasing to company will also control asset quality and maintain protection, biotech and medical devices, Internet of boost competitiveness, and target loan balance to financial soundness in 2018, with the goal of NPL ratio Things (IoT), aerospace, FinTech sectors and potential Positioning in Trending Technologies to Build RMB350 million by the end of 2018. containing less than 2.75% and coverage ratio in excess startups. In line with connecting the innovative and on Scale and Profit Potential Shin Kong Leasing focuses on SME customers in east of 175%. disruptive trends, SKVC leveraged its creative industry and south China. In addition to deeply cultivating platform portfolio to connect with 135 startups in the In 2018, SKVC will focus investments in the areas of markets around its existing operation bases (Suzhou and entertainment technology sector. The company also artificial intelligence, IoT, intelligent transportation Dongguan) and developing local specialty industries, combined with group resources, including Shin Kong systems and energy, medical devices, and other indus- Bank and MasterLink Securities, along with the share- tries applying emerging technology. The company will holders from creative industries, startup ecosystem, and also invest in sectors with national innovative industries third-party mentors to provide guidance and cross-industry cooperation opportunities for 24 potential startups and screen for investment candidates. Leasing business in mainland China: Shin Kong Leasing achieved solid business growth in 2017. The company's total loan balance increased by 45.9% year-on-year to RMB248 million, with an NPL ratio of 1.94% and coverage ratio of 209.12%. The company achieved 164.2% of its annual profit target and contributed NT$43.15 million to SKVC's investment gains.

Overall Profitability of SKVC Unit: NT$ Millions

25 17

2015 2016 2017 Corporate Social Responsibility Our light and heart are always with you 2017 ANNUAL REPORT／Corporate Social Responsibility 36 37

ments of rural areas. In 2017, children were invited to as well as value autonomy and independence in their ▲ The blood drives represent action rooted in As of 2017, Shin Kong has signed submit essays on newspaper articles for a competition later years. It also supported the establishment of social the spirit of insurance as a stabilizing force industry-academic cooperation con- under the theme of "Walking on the Road to Dreams." enterprise New and Alive Art Service Company to in society. tracts with insurance related depart- The contest gave the children a chance to gain knowl- promote the Legacy Art Works program, improve the ▲ ments at 30 universities and col- edge, develop a sense of money management and quality of senior life, and achieve the goal of active This activity has attracted donations of leges. In 2017, the company provid- saving, and build the confidence to steadily realize their aging. approximately 20,000 bags of blood over ed 406 internship positions and dreams on the road of life. ▲ nine consecutive years to the end of 2017. Oral history programs have attracted nearly 190,000 helped interns to earn 194 licenses In addition, SKL has provided parking ▲ participants and produced 10 life dramas. These for personal, foreign currency, Now in its fourth consecutive year, the reading activi- space for a bloodmobile at Shin Kong Life programs have been joined by around 70,000 seniors investment type, and non-life insur- ty series has expanded from Liugui Elementary Tower Plaza since 2003. As of the end of and given nearly 100,000 children new perspectives ance policies. From 2009 to the end School to 12 elementary schools, i.e. 37 classes, in 2017, the bloodmobile had received on aging. of 2017, the Employment Guarantee Taoyuan and Maolin districts, serving a total of 365 donations of more than 310,000 bags of Project has benefited 42 students students over the years. Through exchanges with the blood from over 170,000 donors, helping and led to the recruitment of 31 participants, SKFH has witnessed the seeds of to save more lives. graduates by SKL.

reading bloom in the children's lives. ▲ From 2015 to the end of 2017, approximately 670,000 Green Finance and Environmental new policies were processed through SKL's mobile Protection Promoting micro-insurance to provide basic protec- Protecting the Public e-policy application service. Based on an average of tion to the economically disadvantaged. nine printed pages and NT$5.67 in printing costs per In its commitment to a "Green Finance" strategy, application, the e-service has reduced paper usage ▲ Shin Kong has promoted digital finance, green market- Nearly 70,000 people signed up for micro-insurance by 6.04 million sheets and saved about NT$3.8 For 35 consecutive years, SKFH has provided condo- ing, transformation of the paper-based culture, and coverage between the program's launch in 2014 and million. lence payments of NT$100,000 each to the families of diamond-rated green building to reduce dependency on the end of 2017. Established to promote the social ▲ police officers and firefighters killed in the line of duty energy and resources and make a positive impact on the In 2017, more than 40,000 SKL customer visits were policy of caring for economically disadvantaged, the to provide life security for their families and raise police environment. completed through the company's e-Visit service. Of Corporate Social Responsibility program has provided free micro-insurance coverage morale. Shin Kong is extending its environmental protection this total, 7,558 policyholders signed up for text to more than 30,000 qualified applicants at a total message notifications through e-Visit's "Heart Touch-

▲ mission to the public sphere by promoting e-policies, premium expense of NT$15.43 million. "Our light and heart are always with you" has As of 2017, a total of NT$52.4 million in such Launched at the Shin Kong Life Tower mobile e-policy applications, and other activities. The ing Service," reducing the amount of printed mail always been at the core of SKFH's corporate mission. It is payments had been made to the families of 524 Plaza in 2017, the Shin Kong Farmers Market group's life insurance operations have received three notifications. also an unwavering pledge to the public rooted in the police officers and firefighters killed in the line of provides a platform for the sale of farm environment-related certifications (ISO14001- Environ- ▲ spirit of "Shin Kong: Always with You." SKFH acts on this duty. products to support small farms and sustain- mental Management System, ISO50001- Energy Shin Kong's e-billing service has grown steadily over pledge through public welfare activities in five major The Shin Kong Life Tower Run Up has able agriculture through concrete action. Management System, ISO14064-1 Greenhouse Gas the years to reach a total of two million applications areas: "envisioning a better senior life, protecting the as of the end of 2017, accounting for 23.6% of all been held for 24 consecutive years under ▲ Emission Inventories). public, cultivating students, caring for the disadvan- As of 2017, Shin Kong has held 28 farmers policies in force. Shin Kong launched the "Life is Beautiful" seminar themes related to health and safety. A call taged, and promoting green finance." These initiatives markets at five locations, including the series in 2006 with a mission to improve the quality of to charity, this event raises funds that are have earned the company plaudits for its action in agricultural departments of county and life and cultural attainment in Taiwan. The series invites fully donated to support public welfare corporate social responsibility (CSR), including winning city governments (Pingtung, Hualien, scholars from all walks of life to present lectures on causes. the Finance and Insurance Industry Gold Award in the Miaoli and Yilan County). topics related to investment, health care, leisure, and ▲ "Taiwan Corporate Sustainability Award" - "Taiwan Top Over the years, the Shin Kong Life Tower recreation. 50 Corporate Sustainability Report Award" for five Run Up has attracted about 200,000

consecutive years since 2013. ▲ participants and raised more than NT$150 The seminar series has held 375 sessions and attract- million for donation to charity. SKFH Public Welfare Highlights and Achievements : ed nearly 70,000 participants over the past 12 consecutive years to the end of 2017. ▲ Shin Kong sponsored supplementary classes in Total sponsorship: Over NT$10 million Jianshi Township, Hsinchu County for the 13th consecutive year. 2017 ANNUAL REPORT／Corporate Social Responsibility 38 39

Helping the Disadvantaged Shin Kong has long been con- Illuminating a Vision for Senior Life Fostering Academic Excellence through cerned for young students. The compa- Industry Partnerships After Typhoon Morakot in 2009, employees of ny has invested extensive resources to ▲ promote industry-academic coopera- SKFH and its subsidiaries donated NT$15.22 million to SKFH has held hundreds of "Senior Community A total of 1,009 "Senior Community Care" activities fund the construction of the Liugui Shin Kong Knowl- Aging is an import issue that Taiwan's graying tion and develop company internships. Care" activities to encourage employees to visit agen- were held throughout Taiwan between 2014 and the Shin Kong proactively organizes blood edge Center. SKFH has also partnered with the Manda- society cannot ignore. In 2005, Shin Kong Life Founda- It has also arranged the Financial De- cies serving seniors in Taiwan. Joining seniors in healthy end of 2017. donation drives during the Lunar New Year rin Daily News to promote a series of activities aimed at tion (SKLF) introduced the "Legacy Art Works" and Histo- velopment Camp and Employment massage exercises and making Shin Kong hand holiday period to ensure an adequate supply fostering children's reading ability and raising aware- ry Alive" oral history senior service programs from New Guarantee Project to help students lanterns, the volunteers bring a smile to seniors through of blood at this time, when blood donation ness of need for improvement in the reading environ- York City to encourage seniors to care for their health, compete in the job market. their caring, joyful company. centers in Taiwan typically face shortages. ments of rural areas. In 2017, children were invited to as well as value autonomy and independence in their ▲ The blood drives represent action rooted in As of 2017, Shin Kong has signed submit essays on newspaper articles for a competition later years. It also supported the establishment of social the spirit of insurance as a stabilizing force industry-academic cooperation con- under the theme of "Walking on the Road to Dreams." enterprise New and Alive Art Service Company to in society. tracts with insurance related depart- The contest gave the children a chance to gain knowl- promote the Legacy Art Works program, improve the ▲ ments at 30 universities and col- edge, develop a sense of money management and quality of senior life, and achieve the goal of active This activity has attracted donations of leges. In 2017, the company provid- saving, and build the confidence to steadily realize their aging. approximately 20,000 bags of blood over ed 406 internship positions and dreams on the road of life. ▲ nine consecutive years to the end of 2017. Oral history programs have attracted nearly 190,000 helped interns to earn 194 licenses In addition, SKL has provided parking ▲ participants and produced 10 life dramas. These for personal, foreign currency, Now in its fourth consecutive year, the reading activi- space for a bloodmobile at Shin Kong Life programs have been joined by around 70,000 seniors investment type, and non-life insur- ty series has expanded from Liugui Elementary Tower Plaza since 2003. As of the end of and given nearly 100,000 children new perspectives ance policies. From 2009 to the end School to 12 elementary schools, i.e. 37 classes, in 2017, the bloodmobile had received on aging. of 2017, the Employment Guarantee Taoyuan and Maolin districts, serving a total of 365 donations of more than 310,000 bags of Project has benefited 42 students students over the years. Through exchanges with the blood from over 170,000 donors, helping and led to the recruitment of 31 participants, SKFH has witnessed the seeds of to save more lives. graduates by SKL. reading bloom in the children's lives. ▲ From 2015 to the end of 2017, approximately 670,000 Green Finance and Environmental new policies were processed through SKL's mobile Protection Promoting micro-insurance to provide basic protec- Protecting the Public e-policy application service. Based on an average of tion to the economically disadvantaged. nine printed pages and NT$5.67 in printing costs per In its commitment to a "Green Finance" strategy, application, the e-service has reduced paper usage ▲ Shin Kong has promoted digital finance, green market- Nearly 70,000 people signed up for micro-insurance by 6.04 million sheets and saved about NT$3.8 For 35 consecutive years, SKFH has provided condo- ing, transformation of the paper-based culture, and coverage between the program's launch in 2014 and million. lence payments of NT$100,000 each to the families of diamond-rated green building to reduce dependency on the end of 2017. Established to promote the social ▲ police officers and firefighters killed in the line of duty energy and resources and make a positive impact on the In 2017, more than 40,000 SKL customer visits were policy of caring for economically disadvantaged, the to provide life security for their families and raise police environment. completed through the company's e-Visit service. Of program has provided free micro-insurance coverage morale. Shin Kong is extending its environmental protection this total, 7,558 policyholders signed up for text to more than 30,000 qualified applicants at a total message notifications through e-Visit's "Heart Touch-

consecutive years since 2013. ▲ participants and raised more than NT$150 The seminar series has held 375 sessions and attract- million for donation to charity. SKFH Public Welfare Highlights and Achievements : ed nearly 70,000 participants over the past 12 consecutive years to the end of 2017. Shin Kong sponsored supplementary classes in Jianshi Township, Hsinchu County for the 13th consecutive year. 2017 ANNUAL REPORT／Corporate Social Responsibility 40 41

consecutive years since 2013. ▲ participants and raised more than NT$150 The seminar series has held 375 sessions and attract- million for donation to charity. SKFH Public Welfare Highlights and Achievements : ed nearly 70,000 participants over the past 12 consecutive years to the end of 2017. Shin Kong sponsored supplementary classes in Jianshi Township, Hsinchu County for the 13th consecutive year. 2017 ANNUAL REPORT／Corporate Social Responsibility 42 43

Helping the Disadvantaged Shin Kong has long been con- Illuminating a Vision for Senior Life Fostering Academic Excellence through cerned for young students. The compa- Industry Partnerships After Typhoon Morakot in 2009, employees of ny has invested extensive resources to ▲ promote industry-academic coopera- SKFH and its subsidiaries donated NT$15.22 million to SKFH has held hundreds of "Senior Community A total of 1,009 "Senior Community Care" activities fund the construction of the Liugui Shin Kong Knowl- Aging is an import issue that Taiwan's graying tion and develop company internships. Care" activities to encourage employees to visit agen- were held throughout Taiwan between 2014 and the Shin Kong proactively organizes blood edge Center. SKFH has also partnered with the Manda- society cannot ignore. In 2005, Shin Kong Life Founda- It has also arranged the Financial De- cies serving seniors in Taiwan. Joining seniors in healthy end of 2017. donation drives during the Lunar New Year rin Daily News to promote a series of activities aimed at tion (SKLF) introduced the "Legacy Art Works" and Histo- velopment Camp and Employment massage exercises and making Shin Kong hand holiday period to ensure an adequate supply fostering children's reading ability and raising aware- ry Alive" oral history senior service programs from New Guarantee Project to help students lanterns, the volunteers bring a smile to seniors through of blood at this time, when blood donation ness of need for improvement in the reading environ- York City to encourage seniors to care for their health, compete in the job market. their caring, joyful company. centers in Taiwan typically face shortages. ments of rural areas. In 2017, children were invited to as well as value autonomy and independence in their ▲ The blood drives represent action rooted in As of 2017, Shin Kong has signed submit essays on newspaper articles for a competition later years. It also supported the establishment of social the spirit of insurance as a stabilizing force industry-academic cooperation con- under the theme of "Walking on the Road to Dreams." enterprise New and Alive Art Service Company to in society. tracts with insurance related depart- The contest gave the children a chance to gain knowl- promote the Legacy Art Works program, improve the ▲ ments at 30 universities and col- edge, develop a sense of money management and quality of senior life, and achieve the goal of active This activity has attracted donations of leges. In 2017, the company provid- saving, and build the confidence to steadily realize their aging. approximately 20,000 bags of blood over ed 406 internship positions and dreams on the road of life. ▲ nine consecutive years to the end of 2017. Oral history programs have attracted nearly 190,000 helped interns to earn 194 licenses In addition, SKL has provided parking ▲ participants and produced 10 life dramas. These for personal, foreign currency, Now in its fourth consecutive year, the reading activi- space for a bloodmobile at Shin Kong Life programs have been joined by around 70,000 seniors investment type, and non-life insur- ty series has expanded from Liugui Elementary Tower Plaza since 2003. As of the end of ▲ and given nearly 100,000 children new perspectives ance policies. From 2009 to the end For the 14th consecutive year, Shin Kong held the Attracting 133 hip-hop teams in 2017, the competition School to 12 elementary schools, i.e. 37 classes, in 2017, the bloodmobile had received on aging. of 2017, the Employment Guarantee "Shin Kong Street Dance Competition" and arranged has become a must-join annual event for hip-hop Taoyuan and Maolin districts, serving a total of 365 donations of more than 310,000 bags of Project has benefited 42 students competitive dance workshops taught by foreign dancers and student groups. students over the years. Through exchanges with the blood from over 170,000 donors, helping and led to the recruitment of 31 hip-hop masters to incubate hip-hop talent. participants, SKFH has witnessed the seeds of to save more lives. graduates by SKL. reading bloom in the children's lives. ▲ From 2015 to the end of 2017, approximately 670,000 Green Finance and Environmental new policies were processed through SKL's mobile The Shin Kong Life Scholarship Protection Promoting micro-insurance to provide basic protec- Protecting the Public Foundation was established in 1973 to e-policy application service. Based on an average of tion to the economically disadvantaged. encourage the pursuit of academic nine printed pages and NT$5.67 in printing costs per In its commitment to a "Green Finance" strategy, excellence by young people. In 2017, application, the e-service has reduced paper usage ▲ Shin Kong has promoted digital finance, green market- Nearly 70,000 people signed up for micro-insurance the foundation added grants to provide by 6.04 million sheets and saved about NT$3.8 For 35 consecutive years, SKFH has provided condo- ing, transformation of the paper-based culture, and coverage between the program's launch in 2014 and substantive assistance to the disadvan- million. lence payments of NT$100,000 each to the families of diamond-rated green building to reduce dependency on the end of 2017. Established to promote the social taged. ▲ police officers and firefighters killed in the line of duty energy and resources and make a positive impact on the In 2017, more than 40,000 SKL customer visits were policy of caring for economically disadvantaged, the ▲ to provide life security for their families and raise police environment. completed through the company's e-Visit service. Of program has provided free micro-insurance coverage In 2017, the foundation awarded morale. Shin Kong is extending its environmental protection this total, 7,558 policyholders signed up for text to more than 30,000 qualified applicants at a total NT$8.85 million in scholarships to message notifications through e-Visit's "Heart Touch-

▲ mission to the public sphere by promoting e-policies, premium expense of NT$15.43 million. 3,305 recipients. In the 45 years "Our light and heart are always with you" has As of 2017, a total of NT$52.4 million in such Launched at the Shin Kong Life Tower since its establishment, the founda- mobile e-policy applications, and other activities. The ing Service," reducing the amount of printed mail always been at the core of SKFH's corporate mission. It is payments had been made to the families of 524 Plaza in 2017, the Shin Kong Farmers Market tion has awarded more than NT$260 group's life insurance operations have received three notifications. also an unwavering pledge to the public rooted in the police officers and firefighters killed in the line of provides a platform for the sale of farm million in scholarships. environment-related certifications (ISO14001- Environ- ▲ spirit of "Shin Kong: Always with You." SKFH acts on this duty. products to support small farms and sustain- mental Management System, ISO50001- Energy Shin Kong's e-billing service has grown steadily over pledge through public welfare activities in five major The Shin Kong Life Tower Run Up has able agriculture through concrete action. Management System, ISO14064-1 Greenhouse Gas the years to reach a total of two million applications areas: "envisioning a better senior life, protecting the The Shin Kong National Children's as of the end of 2017, accounting for 23.6% of all been held for 24 consecutive years under ▲ Emission Inventories). public, cultivating students, caring for the disadvan- As of 2017, Shin Kong has held 28 farmers Drawing Contest for kindergartners and policies in force. Shin Kong launched the "Life is Beautiful" seminar themes related to health and safety. A call taged, and promoting green finance." These initiatives markets at five locations, including the elementary school children took place series in 2006 with a mission to improve the quality of to charity, this event raises funds that are have earned the company plaudits for its action in agricultural departments of county and in 2017. Under the theme of "Illuminat- life and cultural attainment in Taiwan. The series invites fully donated to support public welfare corporate social responsibility (CSR), including winning city governments (Pingtung, Hualien, ing Dreams: I'm a Little Inventor," the scholars from all walks of life to present lectures on causes. the Finance and Insurance Industry Gold Award in the Miaoli and Yilan County). contest encouraged children to devel- topics related to investment, health care, leisure, and ▲ "Taiwan Corporate Sustainability Award" - "Taiwan Top Over the years, the Shin Kong Life Tower op their powers of observation and recreation. 50 Corporate Sustainability Report Award" for five Run Up has attracted about 200,000 thinking and build the confidence to

consecutive years since 2013. ▲ participants and raised more than NT$150 innovate and invent. The seminar series has held 375 sessions and attract- million for donation to charity. ▲ The contest attracted drawing sub- SKFH Public Welfare Highlights and Achievements : ed nearly 70,000 participants over the past 12 consecutive years to the end of 2017. missions by nearly 10,000 children Shin Kong sponsored supplementary classes in and about 9,000 online votes. Jianshi Township, Hsinchu County for the 13th consecutive year. 2017 ANNUAL REPORT ／ Financial Highlights 44 45

SHIN KONG FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES DECEMBER 31, 2017 AND 2016 CONSOLIDATED BALANCE SHEETS (In Thousands of New Taiwan Dollars)

2017 2016 2017 2016 ASSETS Amount ( ％ ) Amount ( ％ ) LIABILITIES AND EQUITY Amount ( ％ ) Amount ( ％ ) CASH AND CASH EQUIVALENTS $ 104,540,929 3 $ 48,594,815 2 DUE TO CENTRAL BANK AND OTHER BANKS $ 3,871,190 - $ 2,685,360 - DUE FROM CENTRAL BANK AND OTHER BANKS 36,877,507 1 80,861,581 3 FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS 4,247,263 - 24,096,961 1 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS 162,295,384 5 111,206,127 4 NOTES AND BONDS ISSUED UNDER REPURCHASE AGREEMENTS 36,373,039 1 26,987,935 1 AVAILABLE-FOR-SALE FINANCIAL ASSETS 423,514,613 13 362,155,777 11 COMMERCIAL PAPER PAYABLE 1,499,936 - - - NOTES AND BONDS PURCHASED UNDER RESALE AGREEMENTS 9,500,275 - 15,483,759 - ACCRUED EXPENSES 6,722,295 - 6,117,391 - ACCOUNTS RECEIVABLE 68,774,189 2 83,891,232 3 BONDS PAYABLE - CURRENT PORTION 3,500,000 - 4,075,817 - CURRENT TAX ASSETS 3,048,330 - 4,282,426 - OTHER PAYABLES 23,787,447 1 21,293,850 1 NONCURRENT ASSETS CLASSIFIED AS HELD FOR SALE 37,976 - - - CURRENT TAX LIABILITIES 195,952 - 134,266 - LOANS, NET 697,269,130 21 688,641,256 22 DEPOSITS AND REMITTANCES 686,523,027 20 657,104,926 21 HELD-TO-MATURITY FINANCIAL ASSETS 980,606,580 29 761,286,083 24 BONDS PAYABLE 51,008,565 2 45,802,604 1 FINANCIAL ASSETS MEASURED AT COST 2,915,219 - 3,281,110 - OTHER LOANS 1,588,332 - 2,653,000 - DEBT INVESTMENTS WITH NO ACTIVE MARKET 657,169,492 20 753,941,406 24 ASSETS ON INSURANCE PRODUCTS - SEPARATE ACCOUNT 46,637,540 1 55,237,519 2 PROVISIONS MISCELLANEOUS FINANCIAL ASSETS 6,499,531 - 3,578,415 - Insurance liability reserves 2,323,833,724 69 2,139,079,588 68 INVESTMENT PROPERTIES 108,999,896 3 110,288,861 3 Reserve for employee benefits 1,687,129 - 854,667 - PROPERTY AND EQUIPMENT 31,454,925 1 28,819,220 1 Other reserves 415,586 - 174,747 - INTANGIBLE ASSETS, NET 2,953,112 - 2,858,002 - DEFERRED TAX ASSETS 14,072,574 - 13,668,876 - LIABILITIES ON INSURANCE PRODUCTS - SEPARATE-ACCOUNT 46,637,540 1 55,237,519 2 OTHER ASSETS 27,221,247 1 29,596,107 1 MISCELLANEOUS FINANCIAL LIABILITIES 16,733,523 1 18,368,709 1 DEFERRED TAX LIABILITIES 3,539,977 - 4,131,864 - OTHER ADVANCE RECEIPTS 4,007,801 - 5,053,806 - OTHER LIABILITIES 12,245,522 - 8,251,477 - Total liabilities 3,228,417,848 95 3,022,104,487 96

EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY Share capital Ordinary shares 102,419,027 3 102,281,441 3 Capital surplus 10,033,789 - 9,577,224 1 Retained earnings Legal reserve 4,464,679 - 3,983,647 - Special reserve 27,217,124 1 27,235,954 1 Unappropriated earnings 10,441,856 - 4,031,680 - Other equity Exchange differences on translating foreign operations 69,907 - 115,451 - Unrealized losses on available-for-sale financial assets ( )12,852,496 - ( )23,921,607 ( )1 Treasury shares ( )483,387 - ( )1,907,115 - Total equity attributable to owners of the Company 141,310,499 4 121,396,675 4

NON-CONTROLLING INTERESTS 14,660,102 1 14,171,410 - Total equity 155,970,601 5 135,568,085 4

TOTAL $ 3,384,388,449 100 $ 3,157,672,572 100 TOTAL $ 3,384,388,449 100 $ 3,157,672,572 100 2017 ANNUAL REPORT ／ Financial Highlights 46 47

SHIN KONG FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

Percentage Percentage Increase Increase 2017 2016 (Decrease) 2017 2016 (Decrease) Amount ( ％ ) Amount ( ％ ) ( ％ ) Amount ( ％ ) Amount ( ％ ) ( ％ ) INTEREST INCOME $ 93,943,443 39 $ 86,649,751 37 8 OPERATING EXPENSES Employee benefits expense ( )$ 14,504,739 ( )6 ( )$ 13,931,378 ( )6 4 INTEREST EXPENSE ( )5,363,242 ( )2 ( )5,120,388 ( )2 5 Depreciation and amortization expenses ( )1,994,292 ( )1 ( )1,989,004 ( )1 - Other selling and administrative expenses ( )7,819,455 ( )3 ( )7,127,959 ( )3 10 NET INTEREST INCOME 88,580,201 37 81,529,363 35 9 Total operating expenses ( )24,318,486 ( )10 ( )23,048,341 ( )10 6 CONSOLIDATED INCOME BEFORE INCOME TAX 10,175,936 4 5,127,444 2 98 NET INCOME AND GAINS (LOSS)OTHER THAN INTEREST INCOME Net processing fee and commission loss ( )6,454,143 ( )3 ( )9,027,415 ( )4 ( 29 ) INCOME TAX BENEFIT (EXPENSE) 1,042,940 1 ( )28,934 - 3705 Net income on life insurance operation 141,355,051 60 154,479,700 66 ( )8

Gain on financial assets and liabilities at CONSOLIDATED NET INCOME 11,218,876 5 5,098,510 2 120 67,504,463 28 10,349,401 4 552 fair value through profit or loss

Realized gain on available-for-sale financial assets 22,960,323 10 10,402,030 4 121 OTHER COMPREHENSIVE INCOME Realized gain on held-to-maturity financial assets - - 761 - ( 100 ) Items that may not be reclassified subsequently to profit or loss: Share of gain of associates and joint ventures - - 55,404 - ( 100 ) Remeasurement of defined benefit plans ( )1,980,317 ( )1 ( )940,491 - 111

Gain on investment properties 3,527,255 2 3,545,125 2 ( )1 Income tax relating to items that may not be 336,654 - 159,884 - 111 Exchange loss ( )87,212,071 ( )37 ( )28,511,724 ( )12 206 reclassified subsequently to profit or loss Loss on reversal of impairment loss on investment assets ( )26,628 - ( )489,468 - ( 95 ) Items that may be reclassified subsequently to profit or loss: Gain on financial assets measured at cost 102,137 - 75,188 - 36 Exchange differences on translating foreign operations ( )80,340 - ( )161,137 - ( 50 ) Realized gain on debt investments with no active market 7,127,692 3 10,387,243 4 ( 31 ) Unrealized gain on available-for-sale financial assets 12,634,024 6 10,241,615 4 23

Other miscellaneous income, net ( )248,454 - 1,151,759 1 ( 122 ) Share of the other comprehensive loss of associates and - - ( )12,236 - 100 joint ventures accounted for using the equity method

PROFIT FROM OPERATIONS 237,215,826 100 233,947,367 100 1 Income tax relating to items that may be reclassified ( )1,618,861 ( )1 ( )1,409,973 - 15 subsequently to profit or loss

NET CHANGES IN INSURANCE LIABILITY RESERVES ( )200,585,847 ( )85 ( )204,356,270 ( )87 ( )2 Total other comprehensive income, net of income tax 9,291,160 4 7,877,662 4 18

PROVISION FOR BAD DEBT EXPENSES ( )2,135,557 ( )1 ( )1,415,312 ( )1 51 TOTAL COMPREHENSIVE INCOME $ 20,510,036 9 $ 12,976,172 6 58

NET INCOME ATTRIBUTABLE TO: Owners of the Company $ 10,531,170 5 $ 4,810,317 2 119 Non-controlling interests 687,706 - 288,193 - 139 $ 11,218,876 5 $ 5,098,510 2 120

TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO: Owners of the Company $ 19,964,952 9 $ 13,045,990 6 53 Non-controlling interests 545,084 - ( )69,818 - 881 $ 20,510,036 9 $ 12,976,172 6 58

EARNINGS PER SHARE Basic $ 1.05 $ 0.48 Diluted $ 0.98 $ 0.45 2017 ANNUAL REPORT ／ Financial Highlights 48 49

SHIN KONG FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016 CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (In Thousands of New Taiwan Dollars)

Equity Attributable to Owners of the Company Equity Attributable to Owners of the Company Other Equity Retained Earnings Exchange Unrealized Total Equity Differences on Losses on Attributable to Unappropriated Translating Available-for-sale Owners of the Non-controlling Ordinary Shares Capital Surplus Legal Reserve Special Reserve Earnings Foreign Operations Financial Assets Treasury Shares Company Interests Total BALANCE AT JANUARY 1, 2016 $ 102,281,441 $ 9,557,397 $ 3,405,633 $ 22,695,543 $ 5,118,425 $ 232,457 ( $ 33,053,872 ) ( 1,907,115 ) $ 108,329,909 $ 14,803,423 $ 123,133,332

Appropriation of 2015 earnings Legal reserve - - 578,014 - ( 578,014 ) ------Special reserve - - - 4,540,411 ( 4,540,411 ) ------

Cash dividends distributed by subsidiaries ------( 425,032 ) ( 425,032 )

Buy-back of treasury shares by subsidiaries - 20,171 - - - 161 788 - 21,120 ( 137,163 ) ( 116,043 )

Others - ( 344 ) ------( 344 ) - ( 344 )

Net income for the year ended December 31, 2016 - - - - 4,810,317 - - - 4,810,317 288,193 5,098,510

Other comprehensive (loss) income, net of - - - - ( 778,637 ) ( 117,167 ) 9,131,477 - 8,235,673 ( 358,011 ) 7,877,662 tax for the year ended December 31, 2016

Total comprehensive income (loss) for the - - - - 4,031,680 ( 117,167 ) 9,131,477 - 13,045,990 ( 69,818 ) 12,976,172 year ended December 31, 2016 - - - - BALANCE AT DECEMBER 31, 2016 102,281,441 9,577,224 3,983,647 27,235,954 4,031,680 115,451 ( 23,921,607 ) ( 1,907,115 ) 121,396,675 14,171,410 135,568,085

Special reserve reversed under Rule No. - - - ( 18,830 ) 18,830 ------1010012865 issued by the FSC

Appropriation of 2016 earnings Legal reserve - - 481,032 - ( 481,032 ) ------Cash dividends distributed by the Company - - - - ( 2,045,628 ) - - - ( 2,045,628 ) - ( 2,045,628 )

Cash dividends distributed by subsidiaries ------( 139,247 ) ( 139,247 )

Buy-back of treasury shares by subsidiaries - 15,610 - - - ( 20 ) ( 451 ) - 15,139 ( 120,990 ) ( 105,851 )

Disposal of partial interest in subsidiaries - 112,481 - - - - ( 22,908 ) - 89,573 203,845 293,418

Equity component of convertible bonds - 185,600 ------185,600 - 185,600 issued by the Company

Share-based payment transactions - 157,511 - - - - - 1,423,728 1,581,239 - 1,581,239

Convertible bonds converted to ordinary shares 137,586 ( 14,637 ) ------122,949 - 122,949

Net income for the year ended December 31, 2017 - - - - 10,531,170 - - - 10,531,170 687,706 11,218,876

Other comprehensive (loss) income, net of - - - - ( 1,613,164 ) ( 45,524 ) 11,092,470 - 9,433,782 ( 142,622 ) 9,291,160 tax for the year ended December 31, 2017

Total comprehensive income (loss) for the - - - - 8,918,006 ( 45,524 ) 11,092,470 - 19,964,952 545,084 20,510,036 year ended December 31, 2017

BALANCE AT DECEMBER 31, 2017 $ 102,419,027 $ 10,033,789 $ 4,464,679 $ 27,217,124 $ 10,441,856 $ 69,907 ( $ 12,852,496 ) ( $ 483,387 ) $ 141,310,499 $ 14,660,102 $ 155,970,601

2017 ANNUAL REPORT ／ Financial Highlights 50 51

SHIN KONG FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016 CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars)

2017 2016 2017 2016 CASH FLOWS FROM OPERATING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES Consolidated income before income tax $ 10,175,936 $ 5,127,444 Disposal of partial interest in the subsidiaries $ 293,418 $ -

Adjustments for: Capital return received from investments accounted for - 2,789 Depreciation expenses 1,653,031 1,646,335 using the equity method Amortization expenses 341,261 342,669 Acquisition of property and equipment ( 1,664,967 ) ( 1,386,360 ) Provision for doubtful accounts 2,135,557 1,415,312 Proceeds from disposal of property and equipment 6,267 5,260

Profit on financial assets and liabilities at fair value Decrease in guarantee deposits paid 2,614,025 7,936,324 ( 67,504,463 ) ( 10,349,401 ) through profit or loss Acquisition of intangible assets ( 286,810 ) ( 157,030 ) Interest expense 5,363,242 5,120,388 Acquisition of investment properties ( 1,644,528 ) ( 595,233 ) Interest income ( 93,943,443 ) ( 86,649,751 ) Proceeds from disposal of investments properties 209,507 58,603 Dividend income ( 10,470,226 ) ( 7,265,845 ) (Increase) decrease in other assets ( 169,782 ) 232,241 Changes in insurance liability reserves 184,754,136 195,258,580 Net cash (used in) provided by investing activities ( 642,870 ) 6,096,594 Compensation cost of share-based payments 216,200 -

Gain of associates and joint venture accounting for CASH FLOWS FROM FINANCING ACTIVITIES - ( 55,404 ) using equity method Increase (decrease) in commercial paper payable 1,499,936 ( 1,299,811 ) Loss on disposal of property and equipment 5,739 3,808 Proceeds from issue of corporate bonds 9,000,000 16,000,000 Gain on disposal of investment properties ( 29,436 ) ( 5,805 ) Repayments of corporate bonds ( 4,136,161 ) ( 6,500,000 ) Gain on sale of investments ( 19,719,926 ) ( 13,599,377 ) Decrease in other loans ( 1,064,668 ) ( 684,793 )

Impairment loss recognized on financial asset 729 489,468 Increase (decrease) in notes and bonds issued under 9,385,104 ( 13,336,771 ) Loss on reversal of impairment on non-financial asset 25,899 - repurchase agreements Net changes in operating assets and liabilities Increase (decrease) in guarantee deposits received 1,914,946 ( 9,804 )

(Increase) decrease in due from the Central Bank and Cost of treasury shares buyback 1,365,039 - ( 676,253 ) 21,381 other banks Dividends paid ( 2,045,628 ) -

(Increase) decrease in financial assets at fair value Non-controlling interests changes ( 245,098 ) ( 541,075 ) ( 14,184 ) 37,953,666 through profit or loss Other financing activities - ( 344 ) Increase in available-for-sale financial assets ( 37,286,241 ) ( 11,915,059 ) Net cash provided by (used in) financing activities 15,673,470 ( 6,372,598 )

Decrease (increase) in notes and bonds purchased 5,983,484 ( 6,659,610 ) under resale agreements EFFECT OF EXCHANGE RATE CHANGES 2,004,016 489,138 Decrease (increase) in receivables 15,310,600 ( 17,890,521 ) Increase in loans ( 9,385,909 ) ( 10,592,096 ) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 11,285,787 ( 53,905,306 ) Increase in held-to-maturity financial assets ( 213,687,649 ) ( 381,250,197 ) Decrease in other financial assets 107,132,518 170,882,658 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 112,522,186 166,427,492 Decrease in other assets 6,501 1,481,844 Increase (decrease) in due to Central Bank and other banks 1,185,830 ( 4,959,495 ) CASH AND CASH EQUIVALENTS, END OF YEAR $ 123,807,973 $ 112,522,186

Decrease in financial liabilities at fair value through Reconciliation of the amounts in the consolidated statements of cash flows with the equivalent items reported in the ( 3,679,910 ) ( 11,334,025 ) profit or loss consolidated balance sheets at December 31, 2017 and 2016: Increase (decrease) in payables 2,331,030 ( 2,019,356 ) December 31 (Decrease) increase in other financial liabilities ( 1,635,186 ) 1,979,219 2017 2016 Increase in other liabilities 1,033,094 469,464 Cash and cash equivalents reported in consolidated balance sheets $ 104,540,929 $ 48,594,815

Increase in deposits and remittances 29,418,101 17,717,619 Due from Central Bank and other banks qualifying for cash 19,267,044 63,927,371 Decrease in reserve for employee benefits ( 1,147,855 ) ( 2,498,890 ) and cash equivalents under the definition of IAS 7 Cash used in operations ( 92,107,793 ) ( 127,134,977 ) Cash and cash equivalents at end of year $ 123,807,973 $ 112,522,186 Interests received 80,183,087 71,832,735 Dividends received 10,791,217 8,112,035 Interests paid ( 4,560,577 ) ( 5,151,688 ) Income tax paid ( 54,763 ) ( 1,776,545 ) Net cash used in operating activities ( 5,748,829 ) ( 54,118,440 ) Shin Kong Financial Holding Co., Ltd.

38F., No. 66, Sec. 1, Chung-Hsiao W. Rd., Taipei 10018, Taiwan Tel: +886-2-2389-5858 Website: www.skfh.com.tw

Shin Kong Life Insurance Co., Ltd.

No. 66, Sec. 1, Chung-Hsiao W. Rd., Taipei 10018, Taiwan Tel: +886-2-2389-5858 Website: www.skl.com.tw

Taiwan Shin Kong Commercial Bank Co., Ltd.

5F., No. 36, Songren Rd., Taipei 11073, Taiwan Tel: +886-2-8758-7288 Website: www.skbank.com.tw

Shin Kong Investment Trust Co., Ltd.

12F., No. 123, Sec. 2, Nanjing E. Rd., Taipei 10485, Taiwan Tel: +886-2-2507-1123 Website: www.skit.com.tw

Shin Kong Property Insurance Agency Co., Ltd.

19F., No. 66, Sec. 1, Chung-Hsiao W. Rd., Taipei 10018, Taiwan Tel: +886-2-2389-5858

Shin Kong Venture Capital International Co., Ltd.

38F., No. 66, Sec. 1, Chung-Hsiao W. Rd., Taipei 10018, Taiwan Tel: +886-2-2389-5858

The inner pages of Shin Kong's annual reports are printed on paper certiﬁed by Forest Stewardship Council (FSC) with eco-friendly soybean-based ink.