ANNUAL REPORT 2018 Contents Prologue
SinoPac Financial Holdings Company Limited was established 02 Message to Shareholders on May 9th, 2002 (Stock Code: 2890), consisting of subsidiaries in a wide range of financial services including banking, securities, investment trusts, insurance broking, leasing, and venture capital. The Company includes a global 188 service network with locations in Hong Kong, Macau, Nanjing, 06 Financial Overview Shanghai, Guangzhou, Chongqing, Tianjin, Dongguan, Kunshan, Branches Xiamen, Vietnam, Thailand, Myanmar, Los Angeles, and London.
SinoPac Holdings was established when Bank SinoPac and 08 Awards and Accolades National Securities merged, creating the first successful integration between a banking institution and a securities firm in the history of Taiwan's financial services industry. At its shareholders' meeting held on August 26, 2005, Sinopac Holdings approved a share swap transaction with the 12 Corporate Profile International Bank of Taipei to make the latter a wholly owned subsidiary, a move meant to strengthen the Company's 15 international competitiveness and expand its business scope. On July 20, 2006, SinoPac Holdings changed its Chinese 20 Performance of Major Subsidiaries in 2018 Overseas Offices name to Yong Fong Holdings. Bank SinoPac and International Bank of Taipei completed its merger that same year, with the former as the surviving entity.
22 SinoPac Holdings Five Major Themes for 2019 Bank SinoPac consists of 125 branches, plus its subsidiary, Bank SinoPac (China), in Nanjing which was inaugurated in February 2014, the first wholly-owned subsidiary of a Taiwanese bank in mainland China.
24 Risk Management SinoPac Securities is the first securities firm listing on Taiwan’s TPEx. In September 2016, SinoPac Securities 29 accepted the transfer of IBT Securities' brokerage business, Subsidiaries business equipment, and the net assets of its margin trading 26 Information Security Management and short selling accounts, providing a catalyst to improve SinoPac Securities' brokerage market share and profitability for the benefit of its shareholders.
Looking towards the future, SinoPac Holdings shall continue 28 Our Employees to reinvent and innovate the business, strengthen compliance and risk management, and under strict risk controls fulfill customer requirements and develop appropriate products per market demand, expand the scale of our “digital finance” 30 Sustainability Achievements offerings, provide specialty products and services, and 8,796 respond to changing economic trends and optimize asset allocation to create sustainable and stable profitability. Employees SinoPac Holdings upholds the vision of “Fulfillment a beautiful life through finance”, and places great emphasis on human 39 Condensed Financial Statements values, professionalism, and principles of good faith as well as provide our customers overall financial solutions.
Printed on : May 1, 2019 1 Fulfillment of a Beautiful Life Through Finance www.sinopac.com
Message to Shareholders
In terms of Strategic Leadership, SinoPac Holdings built a specialized, lean decision-making organization after restructuring. SinoPac Holdings also accelerated our transformation in digital finance by establishing the Digital & Technology Division and the Information Security Committee, which are responsible for information infrastructure, increasing the number of mobile payment service providers, and deepening industry-academia collaboration. As for our overseas businesses, Bank SinoPac (China), the flagship bank for SinoPac Holdings in mainland China, has established its headquarters in Nanjing, its Shanghai Branch on the Yangtze River Delta, and its Guangzhou Branch on the Pearl River Delta; it has also proposed opening a branch in Chengdu. With the operations of Bank SinoPac (China) and SinoPac Leasing spanning eastern, northern, southern, and southwestern China, SinoPac Holdings has achieved significant results in cross-border financial services. In the ASEAN region, Bank SinoPac first opened the Ho Chi Minh City Branch in Vietnam, followed by SinoPac Leasing representative offices in Thailand and Myanmar. At the same time, we have been expanding our collaboration with local financial industries to extend our business presence and create business opportunities in neighboring markets such as Cambodia.
In terms of Realization of Synergy, SinoPac Holdings integrated group resources and established a designated team in charge of facilitating cross-selling among SinoPac Holdings and its subsidiaries. In response to our business development, SinoPac Holdings prudently reviewed the efficiency of capital allocation and continuously conducted mergers and acquisitions of subsidiaries to improve the use of capital. The number of subsidiaries was reduced from 33 at the end of 2017 to 29 at the end of 2018.
Business Strategies and Performance of Major Subsidiaries Bank SinoPac is committed to putting customers first and to providing innovative products and services. Our goal is to expand the depth and breadth of business dealings with customers and to grow our business scale with proper risk management. Bank SinoPac boasted a consolidated net income of NT$9.674 billion, EPS after tax of NT$1.12, and ROE of 7.60% in 2018. Regarding the scale of business, at the end of 2018, Bank SinoPac's consolidated assets totaled NT$1,485.3 billion, an increase of NT$52.1 billion from the previous year. Deposits totaled NT$1,195.1 billion and loans totaled NT$932.6 billion, increases of 3.62% and 6.13%, respectively, from the end of the previous year. The loan-to-deposit ratio was 78.04%, an increase of 1.84% from the end of the previous year. In terms of wealth management, Bank Chairman / ONG Wen-Chyi SinoPac worked actively to develop a customer-oriented business model, to obtain an in-depth understanding of client needs and risk tolerance, and to offer asset allocation services that paid equal attention to risks and returns. Bank SinoPac has actively participated in multiple financial transactions in financial markets across Taiwan and Asia. We have established comprehensive platforms for FX, interest Fulfillment of a Beautiful Life Through Finance rates, fixed income, and derivatives, making it one of the key market makers among domestic banks. In August 2018, the Financial Supervisory Commission (FSC) approved Bank SinoPac’s Offshore Banking Unit (OBU) for bond underwriting and bond trading, allowing 2018 Economic and Market Retrospective Bank SinoPac to provide more comprehensive financial products and services. After the global economy's revival in 2017, the outlook for the global economy and for financing needs was generally positive at the SinoPac Securities continues to develop our wealth management business, taking clear steps toward building a fintech securities firm beginning of 2018. However, financial market conditions soon changed in response to the dynamic macro environment. First, the U.S. featuring wealth management services. In 2018, we launched an investment consulting service through Line@ to provide AI-based wealth confronted monetary policy normalization as the U.S. Fed continuously hiked rates, restricting the momentum of economic growth. Second, management. An industry-leading wealth management website was also established in conjunction with Reuters to integrate the offer U.S. tax cuts led to cross-border capital flows and a corresponding increase in the volatility of global financial markets. Third, growing prices of Taiwanese stocks, options, and overseas stocks, creating a digital environment centered on customer experience. With innovative trade protectionism occurred after U.S. President Donald Trump provoked tensions with major trading partners including China, Germany, strategies and comprehensive professional services, SinoPac Securities added new sources of income and outperformed our peers with Canada, and Mexico, in response to negative trade balances. This slowed the growth of global trade and caused uncertainty in the regard to many business indicators. In 2018, SinoPac Securities posted a consolidated net income after tax of NT$467 million, EPS after tax industrial chain, thereby sideling corporate investment. In addition to this, the political turmoil caused by Brexit induced the G7 countries to of NT$0.29, and ROE of 1.80%. In terms of market share, SinoPac Securities maintained the ranking for our core brokerage business and tighten monetary policy, which resulted in the common challenge of a worldwide economic slowdown. advanced the sub-brokerage business market share to second place. Assets under management (AUM) surged 34% YoY to NT$13.7 billion, With regard to Taiwan's economy, the results from the first and second quarters of 2018 were favorable, posting growth rates of 3% or above. making SinoPac Securities the market leader in terms of growth. However, in the third quarter, exports slowed and the trade balance decreased month over month. Coupled with the uncertainty of the global economy and of financial markets, this affected consumer confidence and further restricted domestic demand growth. The growth rate Strong Capital Structure and Record-High Credit Ratings throughout 2018 was estimated at 2.63%, according to the Directorate General of Budget, Accounting, and Statistics of the Executive Yuan. SinoPac Holdings had a stable capital adequacy ratio (CAR), which reached 123.63% at the end of 2018. Bank SinoPac maintained a high CAR, while the consolidated CAR reached 14.44% at the end of 2018. With stringent control over the quality of assets, Bank SinoPac's non- SinoPac Holdings Business Strategies and Performance performing loan ratio was merely 0.25% in 2018, a decrease of 0.03% from the end of 2017. The debt coverage ratio reached 561.17%. Upholding Supervision and Management, Strategic Leadership, and the Realization of Synergy were the major themes for 2018. Under the framework of sound corporate governance and risk management, SinoPac Holdings witnessed steady growth in profits thanks to the Starting from the inception of SinoPac Holdings in 2002, improved capital and business operations have propelled upgrades in our credit diligent efforts of the management and employees. In 2018, SinoPac Holdings posted a consolidated net income after tax of NT$9.428 ratings by international institutions, which reached a record high in 2018. This demonstrates wide recognition of our restructuring efforts. billion, EPS after tax of NT$0.84, and return on equity (ROE) of 6.72%. Our consolidated net income after tax expanded 3.79% from 2017. The results of the latest credit ratings are summarized below: At the end of 2018, our net value reached NT$141.8 billion, and our net value per share was NT$12.58. Type of Credit Credit Rating Long-term Credit Short-term Credit Outlook for Credit Date of Credit In terms of Supervision and Management, SinoPac Holdings established the Ethical Management Committee, consisting of all independent Rating Institution Rating Rating Rating Rating directors of SinoPac Holdings and its subsidiaries and a whistle-blowing system to demonstrate our commitment to ethical management. The Standard & Poor's BBB A-2 Stable August 13, 2018 Sustainable Development Committee was also incorporated into the organization to achieve four major missions : Ethics and Decency, Wealth International Building, Environmental Sustainability and Social Responsibility. SinoPac Holdings, in keeping with the international trend toward corporate Fitch Ratings BBB F2 Stable September 12, 2018 social responsibility, introduced a performance evaluation mechanism for the board of directors and established a human rights policy. In addition, SinoPac Holdings strengthened our three lines of defense to enhance our internal auditing, compliance, and risk management Fitch Ratings A+(twn) F1+(twn) Stable September 12, 2018 corporate culture. Beginning in 2018, full-time internal auditing, compliance, and risk management officers are now appointed and held to the Domestic highest standards. A more stringent related-party managing mechanism was also implemented and further enhanced. Taiwan Ratings twA+ twA-1 Stable August 13, 2018
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years in a row, Bank SinoPac has also sponsored SinoPac Legacy Taipei, a music performance event held in Huashan 1914 Creative Park, providing a stage for young performers to realize their dreams. Using corporate strength, Bank SinoPac additionally sponsored the 2018 Taichung World Flora Exposition with the aim of promoting local tourism, industrial upgrades, and art performances. We also sponsored the Toyota BOTY Taiwan 2018 dance competition to encourage youth to express themselves.
As for the promotion of education, Bank SinoPac has also initiated a three-year industry-academia collaboration with National Cheng Kung University, which incorporated the university’s R&D capabilities and talent cultivation to create the first Financial AI Technology Center in Taiwan. By combining financial big data and deep-learning techniques, new applications for FinTech have been developed. Bank SinoPac has also introduced AI to credit investigations and chosen National Cheng Kung University as its future financial life lab. To cultivate talent, Bank SinoPac has provided scholarships for 100 students in the fields of information engineering, medicine, business administration, and finance and accounting for two consecutive years.
Business Outlook and Strategies for 2019 Looking ahead to 2019, although the U.S. will continue to maintain steady growth, its GDP growth rate is expected to drop 2.9% in 2018, according to U.S. Bureau of Economic Analysis, due to the impact of tax cuts and the Sino-US trade war. China will be most affected by the trade war, and its GDP growth rate is expected to fall from 6.6% in 2018 (estimated by National Bureau of Statistics, China) to 6.5-6.0% in 2019, according to Chinese government statistics. Subject to an economic slowdown in both the U.S. and China, Taiwan's economic growth rate in 2019 is expected to fall 2.27%, according to Directorate General of Budget, Accounting, and Statistics of the Executive Yuan. As the economy slows, inflation will moderate, and the economy will flash a green or yellow-blue light. Thus, the Central Bank is very likely to maintain current interest rates in 2019. President / Stanley CHU To prepare for the opportunities and challenges of FinTech in a dynamic market, since 2018, SinoPac Holdings has operated on the principles of "Construct, Ascend, Align, Ahead" and proposed five major themes for 2019: 1. Enhance portfolios and raise operational efficiency Fulfillment of Corporate Social Responsibility 2. Boost fee income 2018 marks the seventieth anniversary of Bank SinoPac and the thirtieth anniversary of SinoPac Securities. In 2018, SinoPac Holdings 3. Elevate overseas revenues established the Sustainable Development Committee and was selected for the FTSE4Good TIP Taiwan ESG Index, showing that our 4. Accelerate digital transformation commitment to sustainable development was widely recognized. SinoPac Holdings has been caring for Taiwan too, cultivating the cultural 5. Strengthen corporate governance, sustainable development and risk management frameworks and creative industries, and making immense efforts to promote art, culture and academic education for the long term. We provide resources and take specific action to give back to clients, shareholders, and society, thereby fulfilling our corporate social responsibility and In addition, SinoPac Holdings expects to shape five aspects of corporate culture, namely: Contribution Orientation, Discussion and achieving a triple-win outcome. Decision, Professional Respect, Systematic Governance, and Team Collaboration, which guide all employees to face future challenges with a new work mindset under the framework of sound and sustainable governance. SinoPac Holdings will urge its subsidiaries to In terms of charity, SinoPac Holdings hosted 20 charitable events across 17 cities and counties in 2018, including a mountain-and-beach continuously strengthen their risk management core capacities and to maximize profits under a proper risk control framework, in addition cleanup and other community-involvement programs. SinoPac Holdings volunteers participated in the events, which reached more to strengthening key business development and undertaking structural adjustments. than 4,000 local residents. Bank SinoPac has also sponsored the Taipei Children's Arts Festival organized by the Taipei City Government Department of Cultural Affairs for 11 consecutive years. This has opened up the world of art to children and allowed them to experience Over the past 70 years, SinoPac Holdings has contributed to the economic growth and transformation of Taiwan with its financial expertise creativity and life. In 2018, Bank SinoPac especially arranged two charitable "Buchettino" performances for the Eden Social Welfare and quality services. We have expanded our service network overseas to continuously achieve excellence for both the business operations Foundation, hoping to delight and amaze children with a variety of different needs. In addition, Bank SinoPac worked with the Sunshine of SinoPac Holdings and our clients. In 2019, SinoPac Holdings will adhere to our customer-first business philosophy and transform into Social Welfare Foundation to promote the Sunshine Foundation Mentorship, where Bank SinoPac volunteers helped the victims of the New a forward-looking financial service provider for both offline and online channels. Upholding the core value of "Fulfillment a beautiful life Taipei water park explosion who had intended to work in the financial industry understand the necessary qualifications through interaction, through finance," the board of directors, the management, and all employees at SinoPac Holdings will strive to provide better customer internships, and training. We are extremely pleased that some of the victims who participated in the Sunshine Foundation Mentorship experience, enhance shareholder value, and live up to shareholders' high expectations. program now work for Bank SinoPac. SinoPac Securities has also participated in a long-term lunchbox project for the Children Are Us Foundation. In 2018, more than 1,000 employees ordered 8,889 lunchboxes from the Children Are Us Foundation to support remote areas. Finally, long-term care has been a topic of interest in recent years. In 2018, volunteers from SinoPac Securities Investment Trust visited Taitung to participate in a volunteer event organized by TFF-Bloomberg Best Funds Awards. The volunteers helped harvest and dry pandan leaves, accompanied the elderly with dementia through the Christmas event, and provided them with free haircuts. Chairman President
In terms of the cultural and creative industries, and as a responsible corporate citizen, Bank SinoPac is fully committed to garnering more ONG Wen-Chyi Stanley CHU praise and recognition for the culture and beauty of Taiwan. Bank SinoPac actively contributes to local culture, encouraging youth to return to the countryside and start new businesses. For five consecutive years, Bank SinoPac has been the title sponsor of the Simple Life Festival, which enables participants to focus on their passions and to create value with them. Bank SinoPac creates digital banking experiences at the festival, where a demonstration of accessible, convenient, and safe financial services is provided to deliver the message to younger generations that "banking is simple" and that it can assist them in achieving their dreams of becoming young entrepreneurs. For five
4 5 Total assets Total equity (Ex-dividends)
Fulfillment of a Beautiful Life Through Finance www.sinopac.com 1,604,926 NT$ million 141,821 NT$ million 2018 1,604,926 2018 141,821
2017 1,599,161 2017 138,260
Financial Overview 2016 1,678,930 2016 133,898
SinoPac Holdings Operation and Profitability Net interest revenues Net fee revenues Unit : NT$ million
Item 2016 2017 2018 15,799 NT$ million 9,946 NT$ million 2018 15,799 2018 9,946 Total assets 1,678,930 1,599,161 1,604,926 2017 16,103 2017 9,514 Total equity (Ex-dividends) 133,898 138,260 141,821 2016 16,613 2016 9,193 Net interest revenues 16,613 16,103 15,799
Net fee revenues 9,193 9,514 9,946 Total net revenues Profit Total net revenues 30,820 32,506 32,113 Profit 8,282 9,084 9,428 32,113 NT$ million 9,428 NT$ million Earnings per share (NT$) 0.73 0.81 0.84 2018 32,113 2018 9,428
Book value per share (NT$) 12.54 12.51 12.58 2017 32,506 2017 9,084
Return on equity (%) 6.24 6.68 6.72 2016 30,820 2016 8,282
Return on assets (%) 1.07 1.17 1.27
Group capital adequacy ratio (%) 119.2 130.4 123.6 Earnings per share (NT$) Book value per share (NT$)
Bank SinoPac CAR (%) 14.1 15.3 14.4 0.84 NT$ 12.58 NT$ Bank SinoPac Tier 1 Ratio (%) 11.9 13.2 12.7 2018 0.84 2018 12.58
Bank SinoPac Common Equity Tier 1 Ratio (%) 11.5 12.5 12.0 2017 0.81 2017 12.51
2016 073 2016 12.54
Total assets Total equity (Ex-dividends) Return on equity (%) Return on assets (%)
1,604,926 NT$ million 141,821 NT$ million 6.72% 1.27% 2018 1,604,926 2018 141,821 2018 6.72 2018 1.27
2017 1,599,161 2017 138,260 2017 6.68 2017 1.17
2016 1,678,930 2016 133,898 2016 6.24 2016 1.07 ROE = Net income / Average equity ROA = ﹝Net income + interest expense X (1- Tax Rate)﹞ / Average total assets
6 Net interest revenues Net fee revenues 7 15,799 NT$ million 9,946 NT$ million 2018 15,799 2018 9,946
2017 16,103 2017 9,514
2016 16,613 2016 9,193
Total net revenues Profit
32,113 NT$ million 9,428 NT$ million 2018 32,113 2018 9,428
2017 32,506 2017 9,084
2016 30,820 2016 8,282
Earnings per share (NT$) Book value per share (NT$)
0.84 NT$ 12.58 NT$ 2018 0.84 2018 12.58
2017 0.81 2017 12.51
2016 073 2016 12.54
Return on equity (%) Return on assets (%) 6.72% 1.27% 2018 6.72 2018 1.27
2017 6.68 2017 1.17
2016 6.24 2016 1.07 Fulfillment of a Beautiful Life Through Finance www.sinopac.com
Awards and Accolades
2018.03 Bank SinoPac’s Feng Yun Mortgage was awarded The Asian Banker’s Mortgage and Home Loan Product of SinoPac FTSE ood FinTech and the Year in Asia for 2018. Holdings Innovation A constituent of the FTSE4Good TIP Taiwan ESG Index. SinoPac Securities won Wealth Magazine’s Best Digital Wealth Management in Securities, and Best Video Marketing in the 2018 Wealth Management Awards.
2018.06 Bank SinoPac’s Feng Yun Mortgage and Temple Finance were awarded Taiwan’s Outstanding Enterprise Manager Association Design Innovation Award of the Year in the Top 10 Outstanding Innovations of the Year Awards. Bank The Asset SinoPac SinoPac Securities’s Fintech Services Project was awarded by Outstanding Enterprise Manager Association The Asset’s prestigious Triple A Digital Awards for : of the 14th Golden Torch Awards for the Top Ten Innovative Design of the year. Best Retail Digital Payments Experience, Most Innovative ATM Project, 2018.07 Most Innovative Corporate Payment Project. Bank SinoPac was awarded Asian Banking & Finance’s Taiwan Domestic Technology & Operations Bank of the Year in 2018.
Derivatives House of the Year SinoPac Securities was the winner of the Best Digital Platform Experience Award and the runner-up for the Best Digital Innovation Award in the 12th Wealth Management Banks and Securities Firms Evaluation Best FX Derivatives House conducted by Business Today. 2018.09 Best Index Provider SinoPac Securities was awarded the Most Well-Rounded Digital Services Award in the 2018 Securities Company Evaluation conducted by Excellence Magazine. Best Structured Investment Product Award - 30 Days USD/ 2018.10 CNH CCS Linked Deposit Bank SinoPac was honored with the Best E-Commerce Efficiency Award and the Best Chargeback Processing Effectiveness Award at the Visa Global Service Quality Performance Awards. Best Flow Derivatives House SinoPac Securities won Excellence in Fintech Securities in Wealth Magazine’s 2018 Taiwan Financial Awards.
2018.11 Taiwan Academy of anking and Finance Bank SinoPac won Taipei Computer Association’s Information Technology Month 2018 Top 100 Most Innovative Products – FinTech Award. Best Digital Finance Award from the Taiwan Academy of Banking and Finance at the Ninth Annual Taiwan Banking and Bank SinoPac was awarded the Best E-payment Service Innovation Award by Financial Information Service Finance Best Practice Awards. Co., Ltd. 2018.12 Bank SinoPac was recognized by the Taiwan Academy of Banking and Finance with the Best Digital Finance Award in the Ninth Annual Outstanding Financial Enterprises Awards.
2019.03 SinoPac The Asset SinoPac Securities’s Open Finance Ecosystem was awarded the 2019 Golden Peak Award of Outstanding Securities Commodities of the Year by Outstanding Enterprise Manager Association. Best ETF Market Maker – Highly Commended in Taiwan SinoPac SITC was awarded the 2019 Golden Peak Award for Outstanding Commodities of the Year. Best Equity Derivatives House – Highly Commended in Taiwan 2019.04 Bank SinoPac was honored with The Asset’s prestigious Triple A Digital Awards for the Best Retail Digital Payments Experience, the Most Innovative ATM Project, and the Most Innovative Corporate Payment Project.
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2018.01 2018.03 Bank SinoPac was named runner-up for the IRS Trading Competition Team Award, held by Taipei Exchange. Bank SinoPac was the winner of the Excellent Credit Growth Award of the Year from the Overseas Credit Capital Sustainability Guarantee Fund (Taiwan) in 2017. Markets and Bank SinoPac was awarded the Thomson Reuters Top CNH (Spot) Entity Award and the Top CNH (Spot) and Overall Financial Trader Award. Outstanding 2018.07 Transactions Performance Bank SinoPac was awarded the Best Green Finance Award by Excellence Magazine. Bank SinoPac became the first Taiwanese bank to join the National Association of Financial Market Institutional Investors (NAFMII). 2018.10 SinoPac Securities won second place in the Taiwan Stock Exchange’s Negotiable Securities Award for Bank SinoPac proudly received a Top Solar Quality Financial Services Provider Award from the Energy Underwriter in 2017. Bureau of the Ministry of Economic Affairs.
SinoPac Securities was awarded second place for Excellence in Warrants Issuer and third place for SinoPac Securities received the iCAP Course Quality Certification from the Ministry of Labor. Impressive Warrants Sales in the 2017 Awards for Warrants Issuers conferred by Taipei Exchange. The Company also won second place for the Market Making Heroes Award in the 2017 Bond ETF Trading Contest in Nanjing was recognized as the Jiangsu Province Financial Leasing Company and was awarded the Excellent Central Government Bonds Market Maker Award in the second half of 2017. SinoPac International Leasing of the Year in 2018 by the Financial Leasing Industry Association of Jiangsu Province. 2018.04 Bank SinoPac was named the Best Interbank FX Market Offshore Member by the China Foreign Exchange 2018.11 Trading System. SinoPac Holdings won the Innovation Growth Award for Best Performance in a Single Category and was named one of the Top 50 Corporations in the Corporate Sustainability Report Awards held by the Taiwan 2018.07 Institute for Sustainable Energy. SinoPac Securities won the Taipei Exchange’s Excellent Central Government Bonds Market Maker Award in the first half of 2018. Bank SinoPac won the Excellent Green Procurement Award from the Taipei City Government Department of Environmental Protection. 2018.08 Bank SinoPac was honored with five trading awards from The Asset, including Derivatives House of the Year, 2018.12 Best FX Derivatives House, Best Index Provider, Best Structured Investment Product Award - 30 Days USD/ SinoPac Holdings was selected as a constituent of the FTSE4Good TIP Taiwan ESG Index. CNH CCS Linked Deposit, and Best Flow Derivatives House.
SinoPac Securities was awarded The Asset’s Best ETF Market Maker - Highly Commended in Taiwan and Best Equity Derivatives House - Highly Commended in Taiwan. 2018.01 Bank SinoPac was awarded the Exchange Rate Commodity Market Making Performance Diamond Award SinoPac SITC was honored house awards from the 2nd Benchmark Fund of the Year Award, namely the (Banking) by Taiwan Futures Exchange. Outstanding Performance in the technology sector、Greater China Equity and the Best Performing of Wealth Balanced Fund. 2018.09 Management SinoPac Securities won second place in the Futures Introducing Broker Trading Volume Diamond Award and 2018.03 the FX Market Maker Performance Diamond Award - Futures Proprietary Merchants at the Fourth TAIFEX SinoPac Securities was awarded Wealth Magazine’s Best Digital Wealth Management in Securities and Best Futures Diamond Awards organized by Taiwan Futures Exchange. Service in Securities in the 2018 Wealth Management Awards.
2018.10 SinoPac SITC nominated the Twenty-First Annual Gold Diamond Award for Three-Year-Term Domestic SinoPac Securities won Excellence Allocation Award, Stocks Rising Award, and Taiwan ETF Liquidity Technology Equity Funds hosted by Taipei Foundation of Finance. Provider Award in the ETF Trading and Market Making Competition held by the Taiwan Stock Exchange in 2018. SinoPac SITC won the Lipper Fund Awards: Taiwan - 5-year Technology Equity Fund and 10-year Balanced Fund in NTD. SinoPac SITC won third place for the highest trading volume in investment trusts in the Taiwan Futures Exchange Diamond Awards. 2018.06 SinoPac Securities’s Channel Transition (Transaction toward Wealth Management) was awarded by the 2019.01 Outstanding Enterprise Manager Association of the 14th Golden Torch Awards for the Top Ten Innovative Design of SinoPac Securities won first place in the Taiwan Stock Exchange’s Economy Accelerator Award - IPO the year. Funding, second place for Negotiable Securities Award -Underwriter, and third place for Economy Accelerator Award - IPO Market Value in 2018. 2018.09 SinoPac Securities won Excellence Magazine’s Best Wealth Management Award for the 2018 Securities SinoPac Securities won the Taipei Exchange’s Excellent Central Government Bonds Market Maker Award in Company Evaluation. the second half of 2018. 2018.10 2019.02 SinoPac Securities was honored with Wealth Magazine’s Excellence in Broker Service in the 2018 Taiwan Bank SinoPac was the winner of six prestigious awards from Refinitiv: Top 5 High Trading Volume Bank 2018, Financial Awards. Top CNH (Spot) Entity 2018, Top CNH (Spot) Trader 2018, Top FX Swap Entity 2018, Top FX Swap Trader 2018, and FX Regulation Adoption Entity 2018. 2019.01 SinoPac SITC was honored house awards from the 3rd Benchmark Fund of the Year Award, namely the SinoPac Securities won Warrants Number Breakthrough Award, Warrants Number Circulation Award, and Outstanding Performance in SME Equity、China Equity and the Best Performing in the Technology Sector Excellent Warrants Value Award in 2018 incentive activities for warrants issuers and securities brokers held and Greater China Equity. by the Taiwan Stock Exchange. 2019.03 SinoPac Securities won No 2 in Warrants Sales Award for warrants issuers, and No 2 in Excellent Warrants SinoPac Securities won Wealth Magazine’s Best Wealth Management in Securities, Best Wealth Value Value Award in 2018 incentive activities for warrants issuers held by the Taipei Exchange. Added in Securities, and Best Sales Team in Securities in the 2019 Wealth Management Awards.
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Corporate Profile
China Shanghai / Kunshan Chongqing Bank SinoPac(China), Shanghai Branch SinoPac Leasing (Tianjin), Chongqing Branch SinoPac Financial Consulting (Shanghai) SinoPac Securities (Asia), Shanghai Rep. Office Guangzhou / Dongguan SinoPac International Leasing, Kunshan Branch Bank SinoPac (China), Guangzhou Branch SinoPac International Leasing, Dongguan Branch Nanjing Bank SinoPac (China), Headquarters/ Nanjing Branch Xiamen SinoPac International Leasing, Headquarters Golden Trust SinoPac Fund Management London SinoPac International Leasing, Xiamen Branch Tianjin SinoPac Leasing (Tianjin), Headquarters
Tianjin
Los Angeles Nanjing Kunshan Chongqing Shanghai
Xiamen Dongguan Taiwan Canton Macau Hong Kong Myanmar Thailand Vietnam
USA / Los Angeles UK / London Myanmar Hong Kong Taiwan
Bank SinoPac Los Angeles Branch SinoPac Securities (Europe) SinoPac Leasing, Myanmar Rep. Office Bank SinoPac, Hong Kong Branch / Bank SinoPac Kowloon Branch SinoPac Securities SinoPac Insurance Brokers SinoPac Futures SinoPac Securities (Asia) SinoPac Securities Investment Service Thailand SinoPac Asset Management (Asia) SinoPac Leasing SinoPac Solutions and Services SinoPac SITC SinoPac Leasing, Bangkok Rep. Office SinoPac Capital (Asia) SinoPac Venture Capital SinoPac (Asia) Nominees
Vietnam Macau
Bank SinoPac, HO Chi Minh Branch Bank SinoPac, Macau Branch Bank SinoPac, Vietnam Rep. Office
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SinoPac Holdings SinoPac Holdings (the Company) was established on May 9, 2002 (Stock Code: 2890), and consists of a broad range of financial services subsidiaries including banking, securities, investment trusts, insurance broking, leasing, and venture capital. The Company includes a global service network with locations in Hong Kong, Macau, Nanjing, Shanghai, Canton, Chongqing, Tianjin, Dongguan, Kunshan, Xiamen, Vietnam, Thailand, Myanmar, Los Angeles, and London. SinoPac Holdings was established when Bank SinoPac and National Securities merged, creating one of the earliest successful horizontal alliances between a banking institution and a securities firm in the history of Taiwan's financial services industry. In 2005, Bank SinoPac made the International Bank of Taipei its subsidiary through a share swap transaction. On July 20, 2006, SinoPac Holdings changed its Chinese name to Yong Feng Holdings. Bank SinoPac and International Bank of Taipei completed their merger in the same year, changing the name to Bank SinoPac (Yong Feng Bank in Chinese). Bank SinoPac Bank SinoPac was founded in a merger of equals between Bank SinoPac under SinoPac Holdings and International Bank of Taipei on November 13, 2006. Major business areas encompass corporate banking services, retail banking services, consumer banking services, wealth management services, financial markets services, and digital banking services. Bank SinoPac has 125 domestic branches, including 84 in greater Taipei, as well as branches in metropolitan areas in central Taiwan, southern Taiwan, Hualien, and Kinmen. Bank SinoPac has proactively established multiple overseas branches across the global market, including the Hong Kong Branch, the Kowloon Branch, and the Macau Branch. In 2014, Bank SinoPac (China) Limited, the first Taiwan-invested, wholly-owned subsidiary incorporated in Nanjing, China, was established. It is currently headquartered in Nanjing, consisting of two branches – Shanghai and Guangzhou. With the help of branches located in the coastal area in the pan-Pacific region, including the Los Angeles Branch (California, USA), the Ho Chi Minh City Branch (Vietnam), and the Vietnam Representative Office, Bank SinoPac was able to build an extensive business network which provides customers with comprehensive services. SinoPac Securities SinoPac Holdings Organizational Structure Unit : NT$ million SinoPac Securities, established in 1988, was the first among its peers to be listed on Taiwan’s TPEx market. SinoPac Securities’ services include broking, proprietary trading, underwriting, international business, fixed income, and new financial products, and it is a major integrated securities firm with 54 service locations in Taiwan. The company prides itself on offering top-ranking, leading services in the financial sector and is actively expanding its business to international markets, including Hong Kong, Shanghai, and London, structuring the best financial integration service platform. SinoPac Securities is developing digital finance actively, with the expectation of building up its brand as a digital technology securities firm offering wealth management services, and to become the financial innovation leader in the securities industry . With innovative, digital business strategies and professional services, our ultimate goal is to provide customers with the best integrated financial services. SinoPac Leasing SinoPac Leasing Corporation (SPL) was established in 1997. In response to clients’ needs for corporate development at different stages, SinoPac Holdings SPL provides a diverse range of services including finance leasing, operating leasing, real estate leasing, and installment sales and financing. In addition to continuous dedication to providing services in Taiwan, SPL has also been expanding in the Asian market, with two subsidiaries located in China, SinoPac International Leasing Corporation and SinoPac Leasing (Tian Jin) Co., Ltd. Service locations span Nanjing, Dongguan, Xiamen, Kunshan, Tianjin, and Chongqing. In recent years, SPL has accelerated growth in Southeast Asia, opening branches in Myanmar and Thailand in order to seize business opportunities and serve local overseas Chinese customers. As the global market structure has changed in terms of business transformation and innovation, SPL has successfully launched outstanding and flexible services, which have garnered wide recognition. SPL’s subsidiary, SinoPac International Leasing was recognized as the Jiangsu Province Financial Lease Company of the Year by the Financial Leasing Industry Association of Jiangsu Province for the second time. Operating in a new and rapidly changing environment, SPL is committed to providing diversified, professional financial leasing services to its customers across various regions and industries.
SinoPac SITC Bank SinoPac SinoPac SinoPac SinoPac SITC SinoPac Venture Established in 1997, SinoPac Securities Investment Trust (SinoPac SITC), adheres to the business philosophy of “professional Securities Leasing Capital management, service integrity, and excellence in performance,” and provides diversified and innovative products and services Investment Amount Investment Amount Investment Amount Investment Amount Investment Amount for mutual funds, discretionary investment services, and private offered funds. As of 2018, a total of 20 mutual funds had been launched, including international and domestic equity funds, balanced funds, funds of funds, index funds, ETFs, principal NT$75,400 NT$18,267 NT$3,654 NT$2,298 NT$2,000 guaranteed funds, and fixed-income funds. Discretionary investment services were offered to clients with varying needs, including 100% 100% 100% 100% 100% government funds, individual clients, and institutional clients. SinoPac SITC headquarters is located in Taipei, and also have branches in Taichung and Kaohsiung. In 2014, SinoPac SITC with Xiamen International Trust Co., Ltd. in a joint venture to establish Golden Trust SinoPac Fund Management Co., Ltd., It is the first west coast joint venture fund management company in west-strait economic zone.
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SinoPac Venture Capital Diverse Board Members SinoPac Venture Capital was established in 2003. In recent years, the company has focused on six core investments: FinTech, Our board of directors is diverse in gender, age, professional skills and backgrounds, possessing crucial knowledge, skills, and biotechnology and medical devices, intelligent manufacturing, cultural and creative industries, circular economies, AIOT, proactively capabilities to perform their duties. The Board is currently comprised of nine directors with three-year terms, including three managing current portfolios to reduce investment risks and maximize steady and satisfactory returns on investment. At the moment, independent directors, one executive director and five non-executive directors. The selection and appointment of candidates are investments are primarily made in Taiwan. SinoPac Venture Capital will continue to expand overseas investment businesses, not limited by age or gender, as decisions are made primarily based on professional abilities, observance of ethical standards, and especially in Southeast Asia, to broaden our global vision and develop international investment abilities by building industry reputation. Three current members have doctorate degrees and six have master’s degrees, facilitating their operational decisions, networks and promoting overseas cooperation. Meanwhile, constant effort has gone into integrating SinoPac Holdings’ resources accounting and financial aspects analyses, business management, crisis management, application of professional knowledge and strengthening cooperation. This includes the cross-selling mechanism across SinoPac Holdings’ subsidiaries, which ensures that related to the industry, insights into international markets, leadership skills, general decision making skills, and risk management one-stop purchasing can fulfill customers’ financial needs at different stages, thereby boosting customer satisfaction and trust. skills. Furthermore, the Board’s expertise aligns with the Company’s long-term development strategies. SinoPac Holdings Organizational Structure Title Name Education & Key Past Positions Chairman, Chunghwa Post Co., Ltd. General Shareholders’ Meeting Hsinex International Corp. / BA, International Relations, Dept. of Political Science, National Taiwan University Representative (Ambassadorial ranking), Taipei Economic and Cultural Center in India Chairman ONG Wen-Chyi Director, Taiwan's Financial Supervisory Commission, Office in New York Counsellor, Permanent Mission of Taiwan to the WTO (Geneva) Professor, Department of Finance, National Chengchi University Audit Committee Professor, National Taiwan University Chair Professor, Shih Hsin University Secretariat Independent Chair Professor, Shih Hsin University SCHIVE Chi Director Minister without Portfolio, The Executive Yuan, R.O.C. Remuneration Committee Board of Directors Chairman, Taiwan Stock Exchange Corporation Ph. D., Case Western Reserve University Audit Division Independent Director of Bank SinoPac Independent Chief Risk Officer, Chinatrust Financial Holding Co., Ltd. James J. SHEU Ethical Management Director President, Chinatrust Financial Holding Co., Ltd. Committee MBA, The Wharton School of the University of Pennsylvania, USA Chairman Associate Professor, Department of Applied Economics, National University of Risk Management Kaohsiung the Head of the Department of Applied Independent Economics, National University of Kaohsiung Division TSAI Ying-Yi Director Independent Director of SinoPac Securities Independent Director of Bank SinoPac Ph. D. in Economics, University of Essex, UK Sustainable Development Chairman, Bank SinoPac Committee Vice Premier, Executive Yuan, R.O.C. YFY Inc. / Minister, Ministry of Finance, R.O.C. Management Committee Director President CHIU Cheng-Hsiung Deputy Governor, The Central Bank of the Republic of China Chairman, EnTie Commercial Bank. Ph. D. in Economics, The Ohio State University, USA Honor Reward/Penality President Office Chairman, Cathay Securities Corporation Evaluation Committee Adjunct Professional Expert, Graduate Institute of International Business, National YFY Inc. / Taiwan University Director Stanley CHU Spokesman and Senior Executive Vice President, Taiwan Stock Exchange Corporation Information Security Director / Senior Executive Vice President, Taiwan Futures Exchange Committee E.M.B.A., National Taiwan University Owner, Davinci Personal Data Protection and high-Tech Law Firm YFY Inc. / Assistant Professor, Law school, Soochow University Director YEH Chi-Hsing Master in Law, Soochow University Intellectual Property Diploma, Franklin Pierce Law Center, USA Chairman, SinoPac Call Center Co., Ltd. Other Subsidiaries SinoPac Securities Bank SinoPac Finance Operation Digital & Human Risk Legal & Director CHEN Chia-Hsien Director, International Bank of Taipei Management Management Technology Resources Management Compliance MBA, University of Virginia, USA Division Division Division Division Division Division Chairman, Yuen Foong Co., Ltd. Hsinex International Corp. / President and CEO, Yuen Foong Co., Ltd. Director Chairman & President ,Yuen Foong Yu Consumer Products Co., Ltd. HO Yi-Da MBA, MIT Sloan School of Management, USA Bachelor of Science in Management Science, MIT Sloan School of Management
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Diverse Board Members Our board of directors is diverse in gender, age, professional skills and backgrounds, possessing crucial knowledge, skills, and capabilities 3. The Ethical Management Committee to perform their duties. The Board is currently comprised of nine directors with three-year terms, including three independent directors, The Ethical Management Committee at SinoPac Holdings consists of three to nine members, all of whom are independent one executive director and five non-executive directors. The selection and appointment of candidates are not limited by age or gender, directors from SinoPac Holdings, Bank SinoPac and SinoPac Securities. The Committee is responsible for reviewing ethics as decisions are made primarily based on professional abilities, observance of ethical standards, and reputation. Three current members management policies and prevention programs and for supervising the performance of the managerial departments. The have doctorate degrees and six have master's degrees, facilitating their operational decisions, accounting and financial aspects analyses, committee shall report regularly to the Board on the company’s compliance status. Principal responsibilities are listed below. business management, crisis management, application of professional knowledge related to the industry, insights into international markets, leadership skills, general decision making skills, and risk management skills. Furthermore, the Board's expertise aligns with the (1) Facilitate the integration of integrity and ethical values into the Company's business strategy, review relevant preventive Company's long-term development strategies. measures in accordance with laws and regulations, and monitor checks and balances. (2) Review preventive programs that address unethical conduct, including operational standards and procedures as well as conduct guidelines. Financial Cyber- Securities/ Other Accounting Cyber-security/ Int'l Risk Name Gender Holdings/ security/ (3) Supervise the internal organization, constitution, and responsibilities of the managing departments. Establish mechanisms Investment Industrial /Finance Information Experience Mgmt Banking Information that allow mutual checks and balances for higher-risk business activities within current business scopes. (4) Oversee the implementation and coordination of effective ethics policies training. Wen-Chyi ONG Male 3 3 3 3 3 3 (5) Set up a reporting mechanism and monitor its effectiveness. (6) Assist the Board in monitoring the auditing of the management team and evaluate the effectiveness of the preventive Chi SHIVE* Male 3 3 3 3 3 3 measures used to implement ethical business operations. Regularly evaluate the company’s adherence to related policies James J. SHEU* Male 3 3 3 3 3 3 based on applicable procedures and write relevant reports.
Ying-Yi TSAI* Male 3 3 3 3 3 SinoPac Holdings’ Ethical Management Committee consists of eight members. Two meetings were held in 2018 with an average Cheng-Hsiung CHIU Male 3 3 3 3 3 3 attendance rate of 100%.
Stanley CHU Male 3 3 3 3 3 3
Chi-Hsing YEH Male 3 3 3 3 3 Chia-Hsien CHEN Male 3 3 3 3 3 3 100% 96.67% 100% Yi-Da HO Male 3 3 3 3 3 3 3 Attendance Audit Remuneration Ethical Corporate Note : *Independent Director Rate Committee Committee Management Committee Duties and Operations of the Functional Committees
1. The Audit Committee The Audit Committee at SinoPac Holdings is composed of all the independent directors. Objectives of the Audit Committee include overseeing the company’s financial reporting process, monitoring the appointment and dismissal of independent accountants, assessing independence and performance of accountants, promoting effective internal corporate governance, ensuring compliance with applicable laws and regulations, and evaluating existing or potential risks in the company. The Audit Committee is expected to facilitate decision making for the Board with its technical expertise, while remaining independent throughout the process. In order to perform its required responsibilities, the Committee has the right to conduct any appropriate review and investigation, including hiring lawyers, accountants, or other consultants to assist committee members in carrying out their duties. The audit committee at SinoPac Holdings consists of three members. In 2018, eight meetings were held with an average attendance rate of 100%.
2. The Remuneration Committee The Remuneration Committee at SinoPac Holdings is required to have at least three members, all of whom must be the company’s independent directors. Objectives of the Committee are to establish appropriate reward policies for the company’s directors and managers, whose performance and rewards framework will be reviewed on a regular basis. Remuneration for directors and managers will also be evaluated and determined. The Remuneration Committee at SinoPac Holdings consists of three members, as well as all independent directors of the company. In 2018, ten meetings were held with an average attendance rate of 96.67%.
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Performance of Major Subsidiaries in 2018
Bank SinoPac： SinoPac Securities：
Corporate Lending Balance Mortgage Loans Stood Brokerage Business Sub-Brokerage Business $503.7 $418.3 No.4 No.2 Unit : NT$ billion Unit : NT$ billion Market share 4.86%. Two consecutive years
Sub-Brokerage Business Wealth Management Trust Foreign Exchange Volume SME Loans Trading Volume AUM $218.5 $165.3 $355.7 $13.654 Unit : US$ billion Unit : NT$ billion Unit : NT$ billion Unit : NT$ billion
Stock Transfer Agent Business Warrants Business Custody Assets Credit Loans (number of services companies) (number of warrants issued) $302.8 $19.2 271 3,596 Unit : NT$ billion Unit : NT$ billion Ranked sixth Ranked fourth
As of the end of 2018, the outstanding corporate lending balance was NT$503.7 billion, approximately 37% of which was ● Brokerage business yielded steady profits, ranking fourth in the industry with a market share of 4.86%. E-Trading business Corporate foreign currency lending. The volume for factoring was NT$60.5 billion, and the volume for foreign exchange was US$218.5 Brokerage also ranked fourth in the industry, with a market share of 5.36%. banking services billion. Loans to SMEs stood at NT$165.3 billion, with market share ranking sixth among domestic private banks. Total SME business credit guarantees amounted to NT$33.7 billion, ranking third among domestic private banks. ● Futures and options business gained a market share of 6.08%, ranking fourth in the industry.
The total outstanding balance of non-discretionary money trust investments for domestic and foreign securities at the end ● Wealth of 2018 totaled NT$111.4 billion, and the total volume of sales amounted to NT$49.3 billion. The outstanding balance of Sub-brokerage business ranked second in market share for two consecutive years. The trading volume in 2018 reached management general trust business (including real estate trusts, employee stock ownership trust and employee benefit savings trusts, and NT$355.7 billion, with an increase of 11.30% YOY compared to NT$319.6 billion in 2017. services securities trusts) was NT$26.5 billion. The total outstanding balance of assets under custody was NT$302.8 billion, and the Wealth ● total premium received from bancassurance operations was NT$28.2 billion. management Pan-wealth management income delivered steady profits. In 2018, the income total was NT$1.253 billion with an increase of 7.83% YOY compared to NT$1.162 billion in 2017. business Bank SinoPac has been working on innovative digital applications. In 2018, credit card holders on the credit card service ● The wealth management trust AUM amounted to NT$13.654 billion, with an increase of 34.11% YOY, achieving the highest platform were integrated into the retail banking services MMA trading platform in order to provide comprehensive services annual growth rate in the industry. Electronic and enhance customer experience and convenience. Bank SinoPac received the Taiwan Domestic Technology & Operations banking services Bank of the Year Award in May of 2018 from Asian Banking & Finance in recognition of its Paybill Platform and efforts to create payment solutions and connect business partners via APIs. Bank SinoPac was awarded the Best E-Payment Service Innovation Warrants Award from Financial Information Service Co., Ltd. for the second year in November of 2018. business 3,596 warrants were issued with a market share of 9.78%, ranking fourth in the industry.
Retail banking As of the end of 2018, the outstanding balance of mortgage loans stood at NT$418.3 billion, the outstanding balance of auto services loans was NT$6.3 billion, and the outstanding balance of for personal loans was NT$2.8 billion. ● Underwriting business ranked fifth with 15 underwriting cases handled and a market share of 7.81%. An overall underwriting Underwriting volume of NT$6.573 billion came from underwriting cases as lead underwriter, ranking fifth with a market share of 6.52%. The In August 2018, the offshore banking units of Bank SinoPac gained approval from the Financial Supervisory Commission (FSC) business underwriting fees income was NT$361 million, which grew by 17.59% from NT$307 million in the previous year. to underwrite bonds and issue various types of bonds at their branches, delivering a more comprehensive range of financial ● Financial products and services to clients. To further boost market share for domestic and foreign exchange markets, Bank SinoPac Stock transfer agent business ranked sixth, with services provided to 271 companies. markets has been optimizing self-developed digital forex trading platforms. Taking advantage of the CFETS (China Foreign Exchange business Trade System) certification, which few domestic financial institutions possess, Bank SinoPac sustained dynamic RMB trading volume growth for two consecutive years and effectively generated profits, making the Bank one of the key market makers for foreign exchange futures and foreign exchange futures options.
Various new credit cards were launched in the third quarter of 2018. The number of credit cards in circulation grew by 2% Consumer compared with the previous year. The value of credit card transactions increased 3%. Overall assets were stable and credit banking card profits remained stable. services As of the end of 2018, the outstanding balance of credit card receivables was NT$15.079 billion. Credit loans rose slightly across branches, with an outstanding balance totaling NT$19.2 billion, representing 7% in YOY growth.
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SinoPac Holdings Five Major Themes for 2019
SinoPac Holdings established five major themes on the basis of four stages:
Fulfillment of a Beautiful Life Through Finance
01. Enhance portfolios FIVE MAJOR THEMES and raise operational efficiency 01. Enhance portfolios and raise 04. Accelerate digital transformation Corporate Culture operational efficiency ‧Expand partner APIs to embrace Open Banking. ‧Make prompt and proper adjustments to our ‧Actively collaborate with universities and Team portfolio and increase asset utilization start-ups to leverage digital technologies. Collaboration efficiency. 05. Strengthen corporate governance, FIVE 02. Boost fee income 05. Strengthen corporate 02. sustainable development, and risk governance, Boost fee ‧Adopt digital marketing strategies and collaborations management frameworks Systematic MAJOR income sustainable to attract potential customers. ‧Implement risk-based internal auditing for Bank Governance development, THEMES ‧Enhance customer engagement with our products and SinoPac. and risk management the diversification of our services through data ‧Promote responsible finance. frameworks analysis. ‧Develop information security blueprints and ‧Build a new business model for wealth management. strengthen network security. ‧Continue to expand our sub-brokerage business. ‧Strengthen risk appetite frameworks and use Professional fintech to elevate the quality of risk control. Respect 04. 03 Elevate overseas revenues Accelerate Elevate 03. digital overseas ‧Expand overseas businesses and launch a transformation revenues cross-subsidiary business platform. ‧Cultivate relationships with major industrial parks Discussion and in ASEAN countries and seek opportunities for Decision SME relocation.
Contribution Management Strategy Orientation Construct Ascend Align Ahead
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Risk Management
The board of directors is the highest supervisory unit. The chairman of the board of directors oversees the Risk Management Committee, which consists of six members: four board members, the director of the Risk Management Division, and a risk management professional. The committee is responsible for reviewing risk management policies, evaluating overall risk exposure and risk conditions, and supervising the risk management activities of all units. The Risk Management Division, established under the president of SinoPac Holdings, is responsible for coordinating the development of SinoPac Holdings’ overall financial holdings risk management policies and principles, and also the planning and implementation of the risk management system. In addition, Bank SinoPac, SinoPac Securities, and all other subsidiaries also established risk management units responsible for promoting risk management policies, reporting risk exposures, and offering comprehensive risk management advice to new or significant businesses in order to fully define the risk management rules and limits for each risk and achieve the best balance between profits and risk management. At the same time, the General Audit Division functions as an independent third line of defense. It is under the board of directors to ensure continuous improvement, and so that progress and results will be reported directly to the board.
Risk Management Risk Management Board of Directors Audit Division Committee Division
The board of directors The Risk Management Responsible for coordinating The Audit Division, under is the highest unit of risk Committee methodically and developing SinoPac the Board of Directors, supervision. In addition reviews risk management Holdings’ overall risk is responsible for Risk Management Organizational Structure to being responsible policies, risk management management policy and independent auditing and SinoPac Financial Holdings has established a clear risk management structure consisting of four specialized layers. From top for approving the risk organization systems and system, planning and model is the third line of defense to bottom, it consists of: the board of directors, the Risk Management Committee, the Risk Management Division, and the management guidelines processes, and overall risk verification, calculating and in the risk management Audit Division. This clearly distinguishes the authorities and responsibilities, hierarchical authorization, and fully defines the risk of SinoPac Holdings, it also limits. evaluating risk-weighted hierarchy. It is responsible management rules and limits for each risk to achieve the best balance between profits and risk management. authorizes the management assets and capital adequacy, for the planning and to be responsible for daily and consolidating risk data implementation of various risk management. for SinoPac Holdings and its types of audits. subsidiaries. The Board of Directors Risk Management Objectives and Policies Audit Division By establishing an appropriate risk management organizational structure, management standards, control mechanisms, a risk- reporting system, and a sound risk management culture, SinoPac Holdings integrates and manages all relevant risks and timely Chairman reviews the revised management mechanisms and measures to fully define the risk management rules and limits for each risk to prevent the occurrence of major risk events and to obtain the best balance between profits and risk management. SinoPac Holdings Risk Management Committee 1. Emerging Risk Identification Process and Results Due to climate change, emerging technologies, and demographic changes, various emerging risks have appeared. Effective President identification and assessment of emerging risks and the development of response measures are important issues for financial institutions. Each year, SinoPac Holdings refers to emerging-risk-related reports issued by external organizations, provides Management Committee subsidiaries with annual emerging risk assessments and establishes risk response measures, collects data on the emerging risks facing subsidiaries, identifies emerging risks at the financial holdings level, and develops risk response measures for management.
SinoPac Holdings 2. Management Policies and Response Strategies for Climate Change Risks Risk Management Division SinoPac Holdings understands the risks and opportunities climate change poses to business operations, and continues to pay attention to climate-related financial disclosure (TCFD) issues. By regularly holding SinoPac ESG Seminars, we stay abreast of climate-change issues facing the financial industry and raise risk awareness from the highest corporate levels to regular employees to clients, thereby promoting industry exchanges on climate-change issues and taking advantage of international climate change development trends. In February of 2019, Bank SinoPac held a SinoPac ESG Seminar, which focused on the challenges climate Bank SinoPac SinoPac Securities Other Subsidiaries change poses to the financial industry. Lectures and seminars were given by external experts and scholars, and over 200 of Risk Management Division Risk Management Division Risk Management Division SinoPac’s senior executives, clients, and peers attended. Views on international climate change trends were exchanged, and the current state of the financial industry, appropriate responses, strategic adjustments, and future prospects were all discussed.
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Information Security Management
Information Security Objectives As a member of the financial services industry, SinoPac Holdings understands that with the rapid growth of digital finance, the focus on information security management has become a critical issue. We recognize that information is as important as any other business asset and must be properly managed and protected. Therefore, by establishing a management system that conforms to international standards, enhancing information security awareness, setting specific goals, continuing to improve, and striving to maintain the security of information systems, we will protect consumer rights and ensure the confidentiality, integrity, and availability of important information assets. Confidentiality: Ensure that only authorized personnel have access to information. Integrity: Protect the accuracy and integrity of information and processing methods. Availability: Ensure that authorized users have access to information and related assets when needed.
Customer Data Privacy In order to protect the security and privacy of customers' personal data, SinoPac Holdings has established relevant management policies, including the creation of a customer information confidentiality measures page on the website to announce the collection, storage, and protection of customer data, and to provide customers with the right to opt-in or opt-out of information sharing. The Compliance Division is always poised to adjust confidentiality measures in response to changes in technology, society, and the law, and to make the relevant public announcements. In order to ensure personal data maintenance, each subsidiary has invested considerable resources in establishing personal data protection management teams responsible for promoting and reviewing all matters and plans related to personal data protection and management. These teams also aperiodically holding meetings to report and discuss issues. Information Security Developments in 2018 1. To effectively promote information security, SinoPac Holdings established the Information Security Committee. Additionally, in response to Article 38-1, Paragraph 1, of the Implementation Rules of Internal Audit and Internal Control System of Financial Information Security Organizational Structure Holding Companies and Banking Industries and Article 36-2, Paragraph 1, of the Criteria for Establishment of Internal Control Systems by Securities and Futures Service Enterprises, Bank SinoPac and SinoPac Securities also established information security To strengthen the information security management of SinoPac Holdings and its subsidiaries, a secure and reliable information units. system has been established to ensure the security of data, systems, equipment and networks. This, in conjunction with raising 2. Bank SinoPac and SinoPac Securities ISO 27001 Information Security Management System (ISMS) certifications passed the annual employee information security awareness, helps us protect customer rights and interests and comply with the relevant information reviews. security regulations. The Company has established information security policy measures and an information security committee responsible for information security promotion and governance, security risk monitoring, and management. The convener of the Risk Type Impacts Response Measures Information Security Committee, Inadequate design of information 1. Continuous ISO 27001 Information Security Management System (ISMS) certification either the president or a senior executive specified security architecture, or inadequate improves information security protection mechanisms and strengthens personal information protections, including advanced persistent threat (APT) protection, defense by the president, is primarily responsible for the The Board of Directors control of the system, network, or privacy management mechanisms, against DDoS attacks, email-content filtering, malware detection, website and APP following: could increase the possibilities of vulnerability scanning, and security testing. 1. Review information security policies and Information hacking incidents and personal 2. To ensure the continuity of operations, we coordinate with disaster recovery plans to Security Risks conduct regular on-site and off-site backup exercises. practices. data leaks. In addition to affecting 3. For high-risk systems (such as ATM and SWIFT systems), architecture isolation and system 2. Inspect and review of the information security Chairman of the Board the Company's information protection enhancement are employed. management system. security, this could also result in 4. To enhance employee information security awareness, social engineering exercises litigation, fines, interruption of are regularly conducted, information security and personal data protection awareness 3. Review information security awareness and business operations, and other is enhanced, and emergency response planning exercises for individual infringement educational training programs. risks, triggering a credibility crisis. incidents are conducted. 4. Assess and determine information security President infrastructure. 1. SinoPac’s subsidiaries are supervised and comprehensive money-laundering and terrorism- financing risk assessments are conducted on a regular basis so that management can decide 5. Other information security management the protection mechanisms to be established, develop the appropriate risk reduction measures, matters. Failure to comply with the relevant and implement prevention plans in a timely and dynamic manner. Anti-terrorism regulations for preventing money 2. Before launching a new product or service or handling a new business, the Company Information Security Committee laundering and combating will conduct money-laundering and terrorism-financing risk assessments and establish and money corresponding risk management measures to reduce the identified risks. laundering terrorism would be detrimental to 3. SinoPac Holdings established an information-sharing process and an information-sharing controls the Company's reputation and also platform to share money-laundering and terrorism-financing information with subsidiaries put the Company at risk for severe on a regular (or as needed) basis for use by subsidiaries in the prevention of money penalties. laundering and counter-terrorism purposes. Bank SinoPac SinoPac Securities Other subsidiaries Information 4. Employees are assigned to participate in anti-money laundering and anti-terrorism- financing education training so that colleagues can understand the latest legal Information Security Division Information Security Division security management units developments and related internal regulations.
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Our Employees
ladders were designed, and customized management competency courses were tailored to each level. This will strengthen management competencies at each level and allow managers to strive for the upper echelons of their careers. In addition, management suitability tests and management competency evaluations will be administered and, based on the results, the talent requirements for key positions will be gradually adjusted. The EMBA training series for reserve managers will also be employed to enhance the talent pool and cultivate the core management of the Company.
2. EMBA+ and EMBA Programs In addition to strengthening the six core management competencies, SinoPac Holdings also focuses on communication and consensus among management. Therefore, a special EMBA+/EMBA class was created as a talent platform that combines learning, interaction, and observation. The classes are composed of management selected from SinoPac Holdings’ various subsidiaries; the EMBA+ class is composed of senior executive vice presidents and executive vice presidents, while the EMBA class is composed primarily of senior vice presidents and vice presidents. Both tracks have small class sizes to enhance overall interaction and learning outcomes. The course design combines the Company's six core management competencies, and collaborates with well-known domestic management consulting firms and lecturers to offer systematic and relevant courses rich in content that inspire management to think innovatively, understand current trends, and further enhance leadership and management capabilities. In addition to classroom courses, activities such as reading workshops, speeches, laser paintball, golf lessons, the Leader Campus Innovation Institute, and Mountain Climbing are arranged to increase the diversity of the overall training content and to create a space for interaction to enhance the effectiveness of the program overall. At the same time, it is hoped that participants can strengthen their internal networks and enhance mutual interaction, trust, and understanding, thereby creating a strong foundation upon which to build their future careers.
3. SinoPac Elite Talent (MA/IMA) Expertise-Oriented Reserve Training Program SinoPac’s Elite Reserve Training is based on the three main concepts: professional development, experiential learning, and comprehensive division rotation training. Through a variety of intensive classes, activities, and division rotation, Bank SinoPac’s new elite talents progress rapidly and accumulate practical experience during the training period, toward the goal of cultivating dynamic new management professionals. The training program employs phased training, providing basic finance training, as well as training and internship experience across divisions; IMA has also added a training course abroad to ensure that the development of professional ability has both depth and breadth. In addition, learning aids such as Coaches and Mentors have been introduced to strengthen Talent Cultivation and Retention interaction and communication and to accelerate learning and development. In order for employees to have ample opportunities to grow and learn, SinoPac Holdings has created an optimal learning environment Future Plans to Strengthen Managerial Professional Development where, based on professional and personal traits, each employee is given training and self-improvement opportunities. Each year, our talent cultivation program is formulated based on the business strategies, business priorities, and human resources strategies of SinoPac Holdings 360-Degree Create a SinoPac Develop a Task-Based and its subsidiaries. Our systematic curriculum not only enhances employees’ professional knowledge, it also enables them to grow with the Management Management Talent Leadership Training organization. In 2018, overall investment in training was approximately NT$47.27 million, or an average of NT$6,053 per person; training Competency Evaluation Pool Module hours totaled 380,053 hours, averaging 48.66 hours per person. In 2018, overall funding and time investment in education and training increased over the previous year, demonstrating SinoPac Holdings’ continued commitment to and support of talent cultivation. • Through in-depth interviews peers and • Using a variety of evaluation indicators, the • Develop a task-based leadership training feedback from subordinates, the qualifications required for each position can module that combines more flexible Professional Ability Development Plan management competency evaluation will be identified and made into talent pool. curriculum design, project-oriented be more complete and comprehensive, These can then be further analyzed to cross-group collaboration, feedback from giving upper management more determine which employees are best professionals and management, competency confidence when deciding whom to suited to SinoPac’s culture and to clearly models, and project task indicators. Fintech and Systematic Finance Comprehensive promote. define the qualities and characteristics of • In the future, data will be combined and digital professional professional investment exceptional management. analyzed to ascertain whether the transformation development development management management trainees in each course have training training talent talent aligned to the organization’s development and to assess the effectiveness of the Digital Grassroots Professional Management task-based leadership training module. Talent Development Talent Cultivation Talent Cultivation Talent Cultivation • Digital Talent Development • Corporate university training program • SinoPac Securities was the first • Management Competency Program • Internal auditing, compliance, and to receive the iCap Course Training Prograr Talent Incentive and Promotion Mechanisms • Digital seminars risk management training programs Quality Certification • EMBA+ & EMBA Programs Each year, SinoPac Holdings conducts regular performance reviews based on the Employee Assessment Criteria, in addition to workplace • Continued support of the • Talent cultivation focused on • Elite Talent (MA/IMA) Reserve behavior and management behavior evaluations so that employees can assess their learning and performance results and use them as the Mentor Program training effectiveness Training Program basis for future development. After the assessment process is established at the beginning of each year, direct supervisors/unit supervisors regularly review performance and correct targets, as well as conducting semi-annual and year-end performance reviews. Full-time Comprehensive Investment Management Talent employees who have already passed the probationary employee evaluation prior to the performance review are required to participate in the review process. In 2018, the proportion of employees receiving regular performance reviews was 100%. 1. Management Competency Training Program Since 2015, SinoPac Holdings has been comprehensively enhancing the cultivation of management leadership. In 2017, SinoPac’s On the annual year-end self-assessment performance reviews, employees outline their career development plans (cross-company, or cross-business) and request training courses that would be helpful to their career development. Then, during performance interviews with six core management competencies were established to define competency indicators and management behaviors, and to evaluate management, career development plans are discussed and follow-up arrangements are made. Once the annual assessment of employees management, ensuring that every level of management has a clear understanding of the organization’s requirements and their own has been approved and finalized, direct supervisors will schedule two-way interviews to exchange opinions with employees. After the positions. In 2018, the Management Competency Training Program was launched, providing comprehensive training to reserve interviews, employees comment on and sign their performance evaluation forms, which are reviewed by unit supervisors before being managers, new managers and senior executives. Based on management levels and the six core competencies, management blueprint transferred to the human resources department to be added to employees’ personal files.
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Sustainability Achievements
In December 2018, SinoPac Holdings was listed as a constituent of the FTSE4Good TIP Taiwan ESG Index, which as of the end of 2018, consisted of 69 listed companies. Following the Company’s sustainable development blueprints, several plans have since been launched to attain short-term and medium-term goals and to meet international ESG selection criteria. Action plans for sustainability in 2019 include the following: Strengthening Information Security, Inclusive Finance, Promoting Workplace Health and Safety, Enhancing Employee Connections with the Company, and the Task-Force on Climate-related Financial Disclosures. In addition, seven action plan have been set for 2019:
1. Get listed as a constituent in a national and international ESG index 2. Participate in corporate governance evaluations conducted by assessment agencies 3. Enhance information disclosure quality and channels 4. Enter ESG-related awards competitions 5. Host forums and lectures 6. Obtain a variety of international certifications 7. Participate in and sign various international ESG initiatives
Notable Corporate Governance, Environmental and Social Achievements in 2018: I. Corporate Governance SinoPac Holdings initiated the Corporate Governance Inspection and Improvement Project in 2017. The President of SinoPac Holdings doubled as the project manager. Our company was the first financial holding company to proactively take the initiative to Practice Corporate Social Responsibility conduct thorough inspections of corporate governance to effect continuous improvements. Collaborating with a credible third-party In order to practice corporate social responsibility and achieve the goal of sustainable development, the Sustainable Development inspection agency, and based on the results of their inspection, a two-year action plan was derived, with the ultimate goal of “setting Committee was formally established in 2018. The chairman of the board of directors serves as the chairman, and the committee members a benchmark of excellence in the industry.” According to the results of Corporate Governance Review published by the Taiwan Stock consist of the president of SinoPac Holdings, as well as chairmen and presidents of its subsidiaries. The five task forces created under the Exchange on April 30, 2019, SinoPac Holdings had leapt to the top 6%-20% (the second best category) in the ranking of the overall committee are: Corporate Governance, Customer Relations, Employee Welfare, Social Involvement, and Environmental Protection. The listed companies, distinguishing itself by strengthening the structure and operation of the Board, safeguarding shareholders' rights Sustainable Development Committee meets quarterly and present its performance reports and plans to the Board on a semi-annual basis. and treating shareholders equally, improving information transparency and fulfilling corporate social responsibility.
The Sustainable Development Committee integrated the core financial business of SinoPac Holdings into strategic blueprints to promote 1. Blueprints for the Corporate Governance Inspection and Improvement Project sustainability. The Committee proposed four sustainability missions including “Ethics and Decency, Wealth Building, Environmental Sustainability and Social Responsibility” to foster mutually-beneficial relationships with the public. Based on these four missions, the Aug - Nov 2017 Committee can assist the Company fulfill its corporate social responsibility duties and pursue sustainable business. ‧External consultants completed May 2017 empirical research on the corporate Main Theme SinoPac Holdings governmance of SinoPac Holdings 2018 Mission of Sustainability Long-Term Goal announced the launch of management within three months. SinoPac Holdings accom- ‧Optimize the corporate governanceframework Corporate Governance ‧The External consulting firm drafted the plished 99% of the Corporate Corporate ‧Integrate information security protection framework for the domestic Ethics and Inspection and Improvement Corporate Governance Improvement Governance Improvement Governance and overseas business system Decency Project. Action Plan. Action Plan. ‧Implement sustainable finance ‧Optimize and expand green financialproducts and services Customer ‧Sign the Equator Principles ‧Implement the Stewardship Principles for Institutional Investors Relations Wealth ‧Expand the implementation of inclusive finance 2017 2018 2019 Building ‧Strengthen the breadth and depth of ESG topic education and training ‧Follow up on international human rights issues and strengthen Employee the human rights risk management framework Welfare ‧Improve employees' remuneration structure ‧Promote employee health and safety June - July 2017 Dec. 2017 2019 Environmental ‧Contribute to the better life of employees SinoPac Holdings consulted SinoPac Holdings released SinoPac Holdings will apply Sustainability Social ‧Establish comprehensive benefit assessment mechanisms for social an internationally-renowned the consulting firm’s for a risk-based internal Committee Involvement involvement activities ‧Review and optimize social involvement themes management consulting firm inspection results and auditing to complete the ‧Improve suppliers' sustainability awareness and voluntary actions about the Corporate implemented the Corporate ongoing project. Social Environmental ‧Establish science-based targets (SBT) for carbon emissions reduction Governance Inspection and Governance Improvement
Sustainable Development ‧Establish response measures for climate change risks and opportunities Responsibility Protection ‧Expand the scope of greenhouse gas inventory Improvement Project. Action Plan.
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2. Six Key Areas, Objectives and Results of the Corporate Governance Inspection and Improvement Project Six Key Areas Objectives 2018 Execution Results In 2018, SinoPac Holdings resolved to promote corporate governance, formulating four basic principles as well as establishing the Ethical Management Committee and internal whistleblowing system. In August, the rating of SinoPac Holdings was elevated by international credit rating Optimization • Improved legal compliance management quality and formulated standard operating agencies, the greatest feat it has achieved since it was founded in 2002. International credit rating agencies have affirmed the improvements of the legal procedures for the management and random sampling inspections on compliance Legal & compliance system in SinoPac Holdings' corporate governance standards. SinoPac Holdings have established a comprehensive system to manage related-party compliance operations. and investigation • Bank SinoPac established a risk-based compliance risk assessment methodology for overseas transactions and have refined our holding framework to enhance overall operational transparency. Furthermore, SinoPac Holdings established mechanisms for branches. the Sustainable Development Committee in 2018 and set the four main missions for sustainable development including "Ethics and Decency, related parties. • SinoPac Securities (Asia) and SinoPac Capital International Limited tailored their compliance Wealth Building, Environmental Sustainability and Social Responsibility". SinoPac Holdings were also selected as a constituent of the FTSE4Good regulations to meet the managerial needs of their parent companies and the special needs TIP Taiwan ESG Index for the first time. These are testaments of the improved performance of SinoPac Holdings’ structural adjustments of local businesses. and intensification of sustainable development goals and SinoPac Holdings received widespread recognition from external entities. Assessment of • SinoPac Holdings, Bank SinoPac, SinoPac Securities, and SinoPac Leasing included digital financial Six Key Areas Objectives 2018 Execution Results the Group's risk risks, strategic risks, reputation risks, compliance risks, and other risks into their risk management Risk regulations management management Optimization • Established the Ethical Management Committee, the fifth such committee nationwide, including the • SinoPac Securities and SinoPac Securities (Asia) added guidelines and measures for the liquidity Corporate management to improve the comprehensiveness of its risk management regulations. governance and of governance consisting entirely of independent directors of SinoPac Holdings and key subsidiaries. The control framework, sustainable framework and scope of the committee members is unmatched in the industry. risk-monitoring • SinoPac Holdings included risk appetite management mechanisms into its risk management development the Board of • Established the Sustainable Development Committee which is chaired by the Chairman coverage, and risk policies; Bank SinoPac, SinoPac Securities, and SinoPac Leasing completed the establishment of Directors oversight of SinoPac Holdings. Members include the President of SinoPac Holdings and chairmen exposure assignment related regulations on risk appetite and drafted their risk appetite statements in accordance with mechanisms for and presidents of major subsidiary companies. The Committee developed short, medium, and management the 2019 budget and business plan. material issues, and long-term plans for the sustainable development blueprint and it proposed four main mechanisms for the • After SinoPac Holdings reviewed the appropriateness of the risk management organizational improvement missions for sustainable development including "Ethics and Decency, Wealth Building, compilation of risk structure of subsidiary companies, the role of the risk management unit of SinoPac Leasing, of information Environmental Sustainability and Social Responsibility". exposure to the same previously the President's Office, was assigned to the new Risk Management Division to strengthen disclosure • Formulated the " Guidelines for Corporate Social Responsibility", "Guidelines for Code of person or the same risk management functions. transparency, and Ethical Conduct", "Guidelines for Ethical Corporate Management" and "Procedures for concerned party. • Bank SinoPac, SinoPac Securities, and SinoPac Leasing initiated the annual operating risk self- establishment of Ethical Management and Guidelines for Conduct" which were applied to all subsidiary assessment which shall be implemented on an annual basis. internal rules and companies. • Bank SinoPac adopted a more advanced methodology to complete stress tests of the Bank. guidelines for • Established the "Guidelines for Corporate Governance" for Bank SinoPac and SinoPac Securities. The results showed that the capital adequacy ratio under stressed conditions met qualification sustainable corporate • Introduced a performance evaluation to enhance the effectiveness of the Board of Directors. standards set by the competent authorities. governance. • Formulated a Human Rights Policy, vowed to respect human rights and freedom of • Bank SinoPac incorporated the qualitative verification factors into its model verification association in the workplace, and highlighted the importance of building a safe and healthy methodology. workplace for all employees. • Bank SinoPac optimized the credit extension and tiered authorization for corporate customers • Completed an internal annual inspection to “Detect Business Risk"; annual inspections will be and added different scopes of authorization for different levels of managers of credit extension conducted hereafter to ensure effective operation of the internal control system. management units for corporate financing based on the different credit limits on the credit ratings. • Reviewed the division of authority between three lines of defenses in internal controls, and • SinoPac Leasing established qualitative rating standards for industries with higher risk exposures reaffirmed the responsibilities of the first, second, and third lines of defense to ensure they and incorporated the development of risk measurement tools into its medium to long-term plans. function properly. • Improved information disclosure transparency and instituted a system to notify the Board of major emergencies. Improvement of • Formulated a Whistleblowing Policy, stipulating acceptable methods and promising to the quality of protect whistleblowers from improper punishment. All reports involving directors of the Internal audit internal audit, Board or supervisors shall be submitted to the Ethical Management Committee of SinoPac establishment of Optimization of • Strengthened the reporting obligations and responsibilities for management about the Holdings. whistleblowing and the Know Your related parties they declare. Management must verify the correctness and completeness • Formulated Whistleblowing Procedures, establishing standard procedures for the acceptance Operations internal investigation Customer (KYC), of their declared related parties on a monthly basis and must be examined by systems for of reports, investigations, and the submission of s reports. management mechanisms, and credit extension, anomalies in unreported information about their declared related parties. For example, • Improved auditing methodology by adding sampling methods and sampling standards; promotion of a and other internal information must be cross-verified when a manager applies for company benefits and for classified auditing deficiencies by levels in writing. risk-based internal control procedures addition of their dependents to insurance, or when multiple managers declare the same • Improved the quality of internal auditing and established standards for retaining audit logs auditing system. for related party related party. A penalty system was established for detected errors, and for unreported and and set up sampling standards and instructions. transactions. unconfirmed information within the specified time limit. • Promoted risk-based internal auditing, adjusted risk assessment factors for the annual audit • Strengthened the related-party transaction summary and verification mechanisms k and plans, established risk assessment procedures, and regular inspection mechanisms. regularly checked the inconsistent declarations in the related-party database. • Established a quality-control mechanism for internal auditing. • Bank SinoPac strengthened its credit risk early warning mechanism and added early-warning patterns for industrial competitive status in its internal regulations. It also established Review of the • Enhanced the performance assessment for internal auditing, compliance and risk automatic early-warning mechanisms for high-risk customers with abnormal credit Enhancement professional knowledge management at each subsidiary according to the highest standards in the industry. information. of talents and skills required • Recruited supervisors with practical experience in internal auditing, compliance and risk • Bank SinoPac completed the automated review mechanisms for credit cards. in audit, for internal audit, compliance management and increased full-time positions in compliance and risk management • For customers whose securities margin financing or trading amount reached a certain level, and risk compliance, and departments. SinoPac Securities (Asia) required the customers to provide relevant documents to prove management risk management • Expanded manpower in internal auditing, compliance and risk management at SinoPac functions their financial resources in accordance with Taiwan’s regulations. For customers with higher personnel to identify Holdings, Bank SinoPac, and SinoPac Securities by 15% to tighten supervision. amount of securities financing position, SinoPac Securities (Asia) adopted a more strict the gaps and room • Made special recruiting plans and courses for internal auditing, compliance and risk assessment of the value of collaterals provided by the customers. It also established more for improvement of management and developed a comprehensive training program. stringent operation procedures for credit and limit management. key competencies.
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II. Environmental Achievements 2. Green Operations 1. Green Finance The Environmental Policy and Environmental Management SinoPac Holdings promotes sustainable finance as its core business. The main sustainable financial products include green System Objectives and Measures, formulated in 2018, are bonds, green financing, green investment and green funds. In 2017, Bank SinoPac became the first qualified domestic bank for successfully implemented by the company and its subsidiaries, green bond issuance. It also provided financing to the solar energy industry and the eco-friendly textile industry. SinoPac Venture dedicated to environmental sustainability management. The Capital reduces its impact on the environment by investing in eco-friendly industries. In order to promote the development of contexts of organizations are further examined from lifecycle domestic energy-saving industries, SinoPac Investment Trust is actively investing in green funds, such as China's new energies perspectives to reduce the impact of business operations on and green manufacturing, while issuing SinoPac China Economic Construction Fund. SinoPac Holdings and its subsidiaries the natural environment. Recently, we have obtained two pass combine the core values of the financing industry to promote sustainable development. certificates issued by an internationally-renowned institute, the British Standards Institute, in the ISO 14001 Environmental (1) Green Bonds Management System and ISO 14064-1 Greenhouse Gas Inventory. Bank SinoPac became the first qualified green bond issuer in 2017 and was recognized by the internationally-renowned bond market information platform MTN-i. Advocating the government's green finance policy and following the 5+2 Industrial 3. Green Procurement Transformation Plan, Bank SinoPac helped the green energy technology industry obtain medium- and long-term funds to In 2018, the total purchase amount of the company and promote environmental sustainability. Bank SinoPac also dedicated itself to the green bond market. In 2017, it raised and its subsidiaries was NT$1.863 billion. Green procurement issued US$45 million in 30-year green bonds to loan money to the Solar Power Equipment Financing Project, which aims accounted for 5.1%, or NT$96 million, of the total amount. boost renewable energy and energy technology. The funds raised by the bonds had been fully injected into the project by The main purchases included eco-friendly equipment, November 29, 2017. The Project is expected to generate approximately 38 million kWh of electricity per year, which would green building materials, and products with carbon neutral reduce CO2 emissions by 20,000 metric tons per year. Moreover, Bank SinoPac acted as the financial advisor to the Societe certifications. In 2018, the Company was once again awarded Generale, Taipei Branch during its first debenture issuance in 2018. The bond aimed to raise funds for Societe Generale to 2018 Corporate Green Procurement Excellence Award by the offer loans for its Offshore Wind Power Project. Bank SinoPac raised NT$200 million of principal. Taipei City Government Environmental Protection Bureau for Green purchasing eco-friendly products. (2) Green Financing Since the launch of the Green Energy Project Financing Plan in 2012, Bank SinoPac has been committed to the green energy Procurement Annual Procurement 2017 2018 industry supply chain. Adopting a multi-channel promotion model, Bank SinoPac strongly advocated for the Million Solar Amount of Local Roofs Project and closely collaborated with local governments. Project finances and loans were provided to enterprises and 1,528,752,191 1,820,776,879 Procurement (NTD) households to install solar power generators. The amount of green energy financing in 2018 was estimated to reach NT$15.597 Percentage of Local billion, 2.2 times higher than that of 2017. In addition, Bank SinoPac financed domestic textile manufacturers that incoporated 77.6% 97.7% eco-friendly processing. As of the end of 2018, Bank SinoPac had provided financing to 27 manufacturers, equivalent to NT$4.06 Procurement billion in total. Amount of Green 25,150,000 95,535,818 Procurement (NTD) (3) Green Investment Percentage of Green 1.28% 5.1% After incorporating ESG policies of corporate bond issuers into its bond investment evaluation in 2018, Bank SinoPac Procurement invested up to US$61 million in five companies that showed outstanding ESG performance. SinoPac Securities underwrote two eco-friendly energy companies and helped them apply for primary listing or primary OTC listing. SinoPac Venture Capital 4. Sustainable Supply Chain Management increased its investment in the green industry to NT$326 million, which was 2.4 times higher than that of 2017. SinoPac Holdings launched a sustainable supply chain management plan in 2018. Integrating with its Code of Conduct for Corporate Social Responsibility, it developed a Supplier Corporate Social Responsibility Code of Conduct with four dimensions: (4) Green Funds labor rights, occupational safety and health, environmental protection and business ethics. SinoPac Holdings and its subsidiaries SinoPac SITC, investing in theme funds, such as China's new energy and green manufacturing, issued the China Economic urged their suppliers to fulfill their social responsibility by the same standards. In the first quarter of 2019, SinoPac Holdings Construction Fund. The fund size reached NT$890 million in 2018. Its main investment focuses on the industries supported by conducted a sustainability risk assessment for 224 suppliers. The coverage rate reached 58% and accounted for 65.48% of total China's five-year economic construction program, including new economy, new energy, environmental protection equipment, purchases in 2018. The supplier sustainability assessment will aid SinoPac Holdings in identifying, classifying, and managing major and green manufacturing. To accommodate environmental changes and market demand, SinoPac SITC is planning to issue risks in the supply chain in the future. SinoPac Holdings is planning to conduct a due diligence investigation on its key suppliers in green funds related to solar energy, electric vehicles, and smart energy conservation. 2019, including field visits and information sharing meetings regarding ESG-related managing methods and findings. A supplier conference will be held at the end of 2019 to discuss its policies with suppliers and discuss sustainability knowledge as it relates to the global supply chain. At the conference, suppliers can share their practical experience and discuss possible collaborations.
In 2016, SinoPac Holdings started signing Human Rights and Environmental Sustainability Commitment Letters with major suppliers. Up to 69% of the suppliers signed the contract. In 2018, to promote sustainable supply chains, the scope of the letter was expanded Green Bonds Green Green Green Funds to include the four major aspects of the Supplier Code of Corporate Social Responsibility. All suppliers were requested to sign the Financing Investment Supplier Corporate Social Responsibility Commitment, and commit to respecting labor human rights, prohibiting discrimination and US$45 NT$19.6 US$61 NT$890 million billion million million child labor, and promoting safety and health. Also included are environmental protection, procurement of eco-friendly products, business ethics, and integrity management. The goals of the letter were to boost the economy, maintain a balance between society and environment, and pursue sustainability. Up to 50.6% of the suppliers signed the letter in 2018. SinoPac Holdings aims to increase the percentage to 60% by the end of 2019.
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III. Positive Contributions to Society 2. Smart Wholesale Market Transaction Facilitation Platform 2018 Quantitative Results for Charity Events Bank SinoPac aims to create a new type of digital finance in agricultural transactions. Its collaboration with the wholesale market transformed financial services in the traditional wholesale market. Given the fact that the wholesale market was still operating on a manual In 2018, SinoPac Holdings charity events focused on four main aspects: environmental sustainability, local care, educational cooperation, basis, Bank SinoPac conducted an in-depth study of the wholesale market trading system and operating procedures. Using the Internet, and culture and the arts. Through various means, including title sponsorships, joint activities, corporate volunteer participation, and Internet of Things, Big Data and Cloud Technology, Bank SinoPac introduced financial technology processes into the existing trading in-depth counseling, SinoPac gave back to Taiwanese society. Charity contributions by SinoPac Holdings and its subsidiaries have platform and built a Smart Wholesale Market Transaction Facilitation Platform. New Taipei City Fruits and Vegetables Whole Marketing increased annually over the previous three years. In 2018, total charity expenditures reached NT$45 million, accounting for 0.14% of and Transporting Co., Ltd. now has become the first wholesale market to use the Smart Wholesale Market Transaction Facilitation Platform total revenue, and employee volunteer hours totaled 1,580 hours. since January 2016. By the end of 2018, Bank SinoPac had introduced the Smart Wholesale Market Transaction Facilitation Platform to six other companies, including Sanchong Fruits and Vegetables Marketing and Transporting Company, Banqiao Fruits and Vegetables 2018 Charity Event Contributions Marketing and Transporting Company, Taoyuan Comprehensive Agricultural Products Wholesale Market, Taipei Fishery Production and Marketing Co., Ltd., Hualien County Vegetable Marketing Cooperative and Taipei Livestock Transporting and Marketing Co., Ltd. Type Funds (in thousands of NT dollars) Volunteer hours The introduction of the Smart Wholesale Market Transaction Facilitation Platform has brought many changes to how goods are traded Environmental sustainability 248 743 on the wholesale market. Particularly, Bank SinoPac has brought merchants convenience, flexibility, smart finance and customer-oriented Localized care 397 837 experience. The merchantse are given merchant cards with RFID tags that allow cardholders to engage in trades, check credit limits, Smart Wholesale Market Transaction Facilitation Platform and print transaction details after they register with the wholesale market. As soon as the merchants make a deposit by scanning their Educational cooperation 418 0 cards’ QR codes on a deposit machine, the available limit is automatically raised. The merchant cards also provide advanced payments Culture and the arts 2,125 0 and auto-payment services to process management fees and miscellaneous expenses.
Other donationsCash advance 1,330 0 In addition, it is not easy for most merchants to obtain bank credit lines because they usually do not set up or belong to companies services reached and are thus not able to provide complete financial statements as supporting documents. Bank SinoPac provides credit lines to the 2,000 12.5% 11% merchants based on their transaction records and the amounts approved by the wholesale market. Based on analyses of the merchants' transaction data and potential needs, their credit limits may be raised on peak trading days (such as Chinese New Year and Mid-Autumn 1. "Heart-for-Taiwan" Round-the-Island Charity Project billion Festival) to meet their purchase needs. In 2018, fromNT$11.3 July 21 to October 13, with joy and positiveServing thinking, more threethan charity Fruitvans representingand vegetable happiness, caringFishery and market environmental protection toured 17 cities and counties in Taiwan for2,000 nearly Merchants three months. Withmarket a focus coverageon environmental sustainabilityaccounted forand 11% localized As of the end of 2018, the Platform had a coverage rate of 12.5% in the fruit and vegetable market and 11% in the fishery market. More care, 20 public charity festivals were held in order to give back to the communities.reached Over 600 12.5% SinoPac employees volunteered for the than 2,000 merchants were using the service, with service financing amounting to NT$11.3 billion. Fintech was successfully integrated project, as did more than 1,000 relatives and customers, all of which benefitted in excess of 4,000 people and cleaned up over seven into the wholesale market ecology, making this an achievement of inclusive finance and garnering greater recognition for Bank SinoPac. metric tons of debris at five major beaches in Taiwan. In 2018, Bank SinoPac participated in the Ninth Annual Taiwan Outstanding Financial Business Awards for Innovative Eco-Financial Services - New Type of Digital Transaction in Wholesale Market and was honored with the Best Digital Finance Award.
"Heart-for-Taiwan" Round-the-Island Charity Project Smart Wholesale Market Transaction Facilitation Platform
Cash advance services reached 2,000 12.5% 11%
Social Concern Charitable event Marine Pollutant NT$11.3 billion Serving more than Fruit and vegetable Fishery market 2,000 Merchants market coverage accounted for 11% 17 Cities 20 Festivals 7 MT reached 12.5%
"Heart-for-Taiwan" Round-the-Island Charity Project
Social Concern Charitable event Marine Pollutant 17 Cities 20 Festivals 7 MT 36 37 Fulfillment of a Beautiful Life Through Finance www.sinopac.com
Condensed Financial Statements
Consolidated Balance Sheets Consolidated Statements Of Comprehensive Income
Unit: NT$ thousand Unit: NT$ thousand (expect EPS in NT$)
2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 Item Item Cash and cash equivalents, due from the central bank and call loans to other banks, net 135,683,585 120,954,583 170,529,104 124,094,306 117,306,767 Interest revenue 30,981,428 29,989,072 27,671,502 28,201,870 29,549,174 Financial assets at fair value through profit or loss 89,579,463 115,223,185 117,189,893 132,109,580 84,863,422 Less：Interest expense 12,840,730 12,750,282 11,058,904 12,098,814 13,750,214 Available-for-sale financial assets, net 210,731,779 198,608,674 241,794,535 231,553,240 - Net interest 18,140,698 17,238,790 16,612,598 16,103,056 15,798,960 Financial assets at fair value through other comprehensive income - - - - 209,421,072 Net revenues other than interest 20,356,638 15,327,551 14,207,589 16,402,895 16,313,996 Investments in debt instruments at amortised cost - - - - 93,680,834 Total net revenues 38,497,336 32,566,341 30,820,187 32,505,951 32,112,956 Securities purchased under agreement to resell 21,223,630 11,121,490 16,758,811 26,716,912 22,205,182 Allowance for doubtful accounts and guarantees 4,037,666 496,379 1,592,243 2,435,754 1,506,551 Receivables, net 176,436,847 108,175,419 75,586,574 81,073,680 75,646,292 Current tax assets 223,665 260,197 393,253 353,015 327,581 Operating expenses 19,576,070 19,612,956 19,701,784 19,520,429 19,353,480 Discounts and loans, net 790,968,841 879,165,818 894,394,211 869,373,052 922,363,664 Income (loss) from continuing operations before income tax 14,883,600 12,457,006 9,526,160 10,549,768 11,252,925 Held-to-maturity financial assets, net 46,114,048 69,118,675 78,132,231 56,607,945 - Income tax expense 1,866,397 1,600,564 1,244,612 1,465,349 1,824,600 Investment accounted for using the equity method 472,255 449,707 420,179 400,982 486,466 Income from continuing operations after income tax 13,017,203 10,856,442 8,281,548 9,084,419 9,428,325 Other financial assets, net 41,870,795 46,102,980 45,466,838 34,933,428 39,666,796 Profit (loss) 13,017,203 10,856,442 8,281,548 9,084,419 9,428,325 Property and equipment, net 13,807,482 12,960,235 12,565,470 12,307,080 12,573,066 Other comprehensive income, net of tax 153,951 120,487 (1,705,854) (998,313) (995,612) Investment property, net 1,735,411 2,383,510 2,649,839 2,606,685 2,589,456 Total comprehensive income 13,171,154 10,976,929 6,575,694 8,086,106 8,432,713 Intangible assets, net 2,837,131 2,702,649 3,209,306 2,334,566 2,234,897 Profit attributable to owners of parent 13,017,551 10,856,550 8,283,153 9,085,309 9,428,419 Deferred tax assets 3,255,311 2,940,812 2,988,558 2,257,074 2,352,648 Profit attributable to non-controlling interests (348) (108) (1,605) (890) (94) Other assets, net 14,793,593 17,436,717 16,851,549 22,439,338 19,207,974 Total assets 1,549,733,836 1,587,604,651 1,678,930,351 1,599,160,883 1,604,926,117 Comprehensive income attributable to owners of parent 13,171,502 10,977,037 6,577,299 8,086,996 8,432,807 Deposits from the central bank and banks 69,606,337 61,329,958 29,854,651 29,620,926 37,964,931 Comprehensive income attributable to non-controlling interests (348) (108) (1,605) (890) (94) Financial liabilities at fair value through profit or loss 24,135,076 30,188,309 26,801,740 24,036,034 22,778,944 Earnings per share (Note2) 1.22 0.96 0.73 0.81 0.84
Derivative financial liabilities for hedging 32,887 42,569 19,705 - - Note1：The financial statements for each year were audited by CPA. There is no audited or reviewed SinoPac Financial Holdings Company Limited and its subsidiaries financial statements in 2019 before the date of Securities sold under agreements to repurchase 41,761,224 44,552,287 45,686,894 66,003,594 46,778,129 printing. Note2：Earnings per share are retroactively adjusted with earnings recapitalization. Commercial paper payable, net 27,877,220 31,704,540 46,819,831 44,881,207 33,813,602 Payables 35,417,648 30,997,414 34,745,908 40,590,035 37,637,667 Current tax liabilities 1,416,960 356,048 790,532 1,093,265 1,095,078 Deposits and remittances 1,115,170,251 1,148,614,361 1,249,596,128 1,148,590,896 1,190,750,602 Bonds Payable 48,565,756 43,428,046 41,779,336 42,529,694 35,722,483 Preferred stock liabilities 18,437 18,437 18,437 18,437 18,437 Other financial liabilities (Note2) 48,254,142 51,682,555 56,479,034 47,046,753 43,988,080 Provisions 3,326,772 3,342,224 3,215,411 3,121,843 3,431,929 Deferred tax liabilities 1,444,509 1,716,199 1,562,452 1,281,032 1,544,742 Other liabilities 7,233,259 7,916,877 7,662,339 12,087,464 7,580,096 Ex-dividends 1,424,260,478 1,455,889,824 1,545,032,398 1,460,901,180 1,463,104,720 Total liabilities Post-dividends 1,428,995,938 1,460,282,392 1,548,705,072 1,466,426,206 (Note3) Equity attributable to owners of the Company Ex-dividends 94,709,209 101,679,807 106,763,797 110,500,530 112,710,541 Share capital Post-dividends 101,679,807 106,763,797 110,500,530 112,710,541 (Note3) Capital surplus 2,227,009 2,227,009 2,227,009 2,228,771 2,228,771 Ex-dividends 26,267,887 25,256,910 24,016,672 25,546,808 27,244,218 Retained earnings Post-dividends 14,561,829 15,780,352 16,607,265 17,811,771 (Note3) Other equity 2,209,702 2,491,658 832,637 (19,910) (365,543) Non-controlling interests 59,551 59,443 57,838 3,504 3,410 Ex-dividends 125,473,358 131,714,827 133,897,953 138,259,703 141,821,397 Total equity Post-dividends 120,737,898 127,322,259 130,225,279 132,734,677 (Note3) Note1：The financial statements for each year were audited by CPA. There is no audited or reviewed SinoPac Financial Holdings Company Limited and its subsidiaries financial statements in 2019 before the date of printing. Note2：Other financial liabilities include short-term borrowings and long-term borrowings. Note3：The appropriation of earnings for 2018 has not been resolved by the shareholders' meeting.
38 39 Contents
01 Message to Shareholders
02 Financial Overview
03 Awards and Accolades
04 Corporate Profile
05 Performance of Major Subsidiaries in 2018
06 SinoPac Holdings Financial Management Strategic Directions for 2019 Annual Report Download 07 Sustainability Achievements
08 Risk Management
09 Information Security Management
10 Our Employees
11 Condensed Financial Statements
Address: 3&6~13F., No. 306, Bade Rd. Sec. 2, Taipei City 104, Taiwan (R.O.C.) Tel: 886-2-8161-8935 Website: http://www.sinopac.com ANNUAL REPORT 2018