E.Sun Bank E

E.SUN BANK E. SUN BANK 5847 https://www.esunbank.com.tw http://mops.twse.com.tw 29th Printing Date：2021.3.27 2020 Spokeperson Deputy Spokeperson Name: Mao-Chin Chen Name: Anthony Cheng Position: President Position: Vice President Telephone: +886 2 2175 1313 Telephone: +886 2 2175 1313 email: [email protected] email: [email protected] Registered Office and Branches Name Address Telephone Website Registered Office No.115 & 117, Sec.3, Minsheng E. Rd., Songshan District, Taipei, Taiwan +886 2 2175 1313 www.esunbank.com.tw Branches Please refer to the back cover Stock Transfer and Service Contact Name: Stock Service Department, General Affairs Division, E.SUN Bank Address: No.115, Sec. 3, Minsheng E. Rd., Songshan District Taipei, Taiwan, R.O.C. Website: www.esunbank.com.tw Telephone: +886 2 2719 1313 Rating Agency Name: Moody's Investors Service Inc. Address: 7 World Trade Center, 250 Greenwich Street, New York, NY 10007, U.S.A. Telehone: +1 212 553 0300 Name: S&P Global Ratings Address: 55 Water Street, New York, NY 10041, USA Telehone: +1 212 438 6150 Independent Auditor Independent Auditor: Chen Yin-Chou and Yang Chen-Hsiu Accounting Firm: Deloitte Taiwan Address: 20F, No. 100, Songren Rd., Xinyi District, Taipei, Taiwan. Website: www.deloitte.com.tw Telephone: +886 2 2725 9988 E.SUN BANK 29th CONTENTS 1. Letter to Shareholders 1 2. Company profile 3 3. Corporate Governance Report 7 3.1 Organization 8 3.2 Directors, Independent Directors and Management Team 9 3.3 Implementation of Corporate Governance 26 4. Capital Overview 35 4.1 Shares and Dividends 36 4.2 Preferred Shares Issuance 38 4.3 GDR Issuance 38 4.4 Status of Employee Stock Option Plan and Restricted Stock Awards 38 4.5 Basic Information of Other Financial Institutions Acquired or Transferred 38 4.6 Merger and Acquisition 38 5. Business Operation 39 5.1 Business Scope 40 5.2 Business Plan 41 5.3 Market Analysis 41 5.4 Financial Products R&D and Business Status 43 5.5 Short-term and Long-term business development plan 44 5.6 Human Resource 45 5.7 Corporate Responsibility and Ethics 47 5.8 Environmental protection expenditure information 48 5.9 IT Facilities 48 5.10 Labor-Management Relations 50 6. Financial Information 52 6.1 Condensed Financial Statements in Recent 5 Years 53 6.2 Independent Auditors’ Auditing Opinion in Recent 5 Years 59 6.3 Condensed Financial Statements in Recent 5 Years 61 6.4 Audit Committee Report 66 7. Risk Management 67 7.1 Qualitative and Quantitative Information Concerning Risk Types 68 7.2 Important policies adopted and changes in the legal environment at home and abroad, their effect on the Bank's finances and operations, and measures taken in response 75 7.3 Effect of developments in science and technology as well as industrial change on the Bank's finances and operations, and measures taken in response 76 7.4 The influence of bank image change on corporate crisis management and corresponding measures 77 7.5 Anticipated Benefits and Possible Risks Associated with Mergers and Acquisitions, and Countermeasures 77 7.6 Anticipated Benefits and Possible Risks of Expansion, and Countermeasures 77 7.7 Anticipated Benefits and Possible Risks from Concentration of Operations, and Countermeasures. 78 7.8 Influence of Changes in Ownership of the Bank, Possible Risks and Countermeasures 78 7.9 Effect upon and risk to the Bank in the event a major quantity of shares belonging to director(s) or shareholder(s) holding greater than 1% stake in the Bank has been transferred or has other wise changed hands, and mitigation measures 78 7.10 Litigious or Non-litigious Incidents 78 7.11 Other Major Risk Countermeasures 78 8. Special Disclosure 79 8.1 Summary of Affiliated Companies 80 8.2 Declaration of Consolidated Financial Statements of Affiliated Enterprises 82 8.3 Private Placement Securities and Financial Debentures in the Most Recent Years 82 8.4 The Shares in the Company Held or Disposed of by Subsidiaries in the Most Recent Years 82 8.5 Other Required Supplementary Disclosure 82 Appendix Consolidated Financial Statements and Independent Auditors’ Report 83 1. Letter to Shareholders Dear shareholders, E.SUN Bank’s Credit Ratings Due to the impact of COVID-19 on the global economy and Category Credit Rating Agency Long-Term Ratings Short-Term Ratings Outlook Effective Date financial markets in 2020, central banks around the world have one after another introduced larger interest-reducing and Moody's A2 P-1 Stable 2020.12 International Ratings quantitative easing policies. Amid the transfer, competition, S&P A- A-2 Stable 2020.06 and cooperation among supply chains in different countries, Domestic Ratings Taiwan Ratings twAA+ twA-1+ Stable 2020.06 Taiwan has kept the pandemic well under control, overseas Taiwanese businesses are continuing to make investments in Taiwan, and investments in semiconductors, ICT, and and commit to the fight against climate change. Regarding Integrating digital banking services, E.SUN introduces the electronic components are increasing. All of these activities social inclusion, E.SUN continues to invest in education, digital brand e.Fingo that offers membership and reward have driven a stable economic growth for Taiwan. The social participation, arts and culture, and sports development. points to create memorable digital experiences for customers. pandemic has prompted companies to speed up their digital We have built 158 E.SUN libraries and rewarded Outstanding transformation, and the increase in the prevalent use of digital Management Talent Scholarship to experts in the fields of "Honesty, integrity, professionalism, and accountability" services has to an extent promoted a lifestyle change in management, science and technology, humanities, ASEAN, are the core values of E.SUN. We are deeply regrettable society. and nursing. for the events that occurred in 2020 involving our financial consultants. We conducted self-inspection with a responsible Environmental, social, and governance (ESG) factors are E.SUN has been included as a constituent of the DJSI for 7 attitude and actively made improvements. We will continue to a key global trend and important indicators of corporate consecutive years and ranked 1st in the banking sector of improve our operating procedures, risk management, internal sustainable development. The impact of climate change is Taiwan, setting another record for the financial institutions. For audit and control, and disciplinary culture, while exerting a spreading across the globe, prompting international leading 4 years in a row, E.SUN has obtained the highest MSCI ESG firm resolve and taking disciplinary actions to prevent similar companies to successively announce their commitment rating of AA in the banking sector of Taiwan. We were also occurrences in the future. to carbon neutrality and request suppliers to take actions rated as the Best Bank in Taiwan by Global Finance and the against carbon emission. As a result, energy conservation Best Performing Bank in Taiwan by The Banker. Marching toward sustainable development and carbon reduction have become a crucial issue in sustainable development. For this reason, financial institutions A focus on cross-border, digital, and risk Named after the tallest mountain in Taiwan, E.SUN vows to be the best bank in Taiwan when it was established in 1992. should work on their main business activities in the areas management of responsible lending, responsible investment, and ESG E.SUN is committed to advancing and achieving our three aims: overall performance, corporate social responsibility, and products, and join forces with like-minded individuals, For our future development strategy, E.SUN will focus on sustainable development. In a rapidly changing environment, including clients and stakeholders, to work together for the cross-border, digital, and risk management. Concerning companies must firmly uphold their core values, possess benefit of the society and environment. cross-border expansion, we will continue to build financial the ability to identify trends and quickly respond to changes, platforms in Taiwan and overseas, link up locations in the Asia and have the courage and resilience to face all kinds of Pacific, Greater China, and ASEAN countries, cultivate the Strengthening capability for robust challenges, in order to realize their vision and strive toward Asian market, and provide customers with complete banking sustainable development. We will continue to focus on development solutions. Given the growing demand for business succession improvements that will make E.SUN better and the world a E.SUN Bank has continued to strengthen its capabilities in Fee income of wealth management grew by 9.3% and family inheritance, we will further integrate corporate better place. Thank you for continuous support and valuable 2020, delivering robust performance. E.SUN Bank reported and private banking services and provide the best family advices. net earnings of NT$53.12 billion, with an annual growth rate of With respect to ESG and sustainable development, we inheritance advisory services for business owners so that we 0.28%, after-tax earnings of NT$16.47 billion, with an annual actively improve corporate governance and information may hope to become a strong supporter of business success reduction of 16.18%, EPS at NT$1.73, ROA at 0.62%, ROE disclosure. E.SUN is the only financial institution in the and a reliable partner for sustainable succession. at 9.45%, and capital adequacy ratio at 15.64%. E.SUN has industry to be ranked top 5% by TWSE Corporate Governance been keeping asset quality sound with an NPL ratio of 0.19% Evaluation for 6 consecutive years and obtain the “Excellent” With respect to digital development, E.SUN has completed and an NPL coverage ratio of 656.29%. rating in the Corporate Governance Assessment. In response switching its banking core system, becoming the first financial to climate change, E.SUN has been a long-term participant institution in Taiwan to independently develop and design E.SUN Bank has total assets at NT$2.95 trillion, total deposits of financing and investments in green energy industries that a new banking core system.

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