Bank Sinopac
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Bank SinoPac Financial Statements for the Nine Months Ended September 30, 2007 and 2006 and Independent Accountants’ Review Report INDEPENDENT ACCOUNTANTS’ REVIEW REPORT The Board of Directors and Stockholders Bank SinoPac We have reviewed the accompanying balance sheets of Bank SinoPac as of September 30, 2007 and 2006, and the related statements of income, and cash flows for the nine months then ended. These financial statements are the responsibility of the Bank SinoPac’s management. Our responsibility is to issue a report on these financial statements based on our reviews. We conducted our reviews in accordance with Statement of Auditing Standards No. 36 “Review of Financial Statements” in the Republic of China. A review of interim financial statements consists primarily of applying analytical procedures, comparisons and making inquiries. It is substantially less in scope than an audit in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our reviews, we are not aware of any material modifications that should be made to the financial statements referred to above for them to be in conformity with the Criteria Governing the Preparation of Financial Reports by Public Banks, requirements of the Business Accounting Law and Guidelines Governing Business Accounting relevant to financial accounting standards, and accounting principles generally accepted in the Republic of China. As stated in Notes 1 and 30 to the accompanying financial statements, Bank SinoPac merged with International Bank of Taipei Co., Ltd., a wholly-owned subsidiary of SinoPac Financial Holding Company Limited, by means of share swap with Bank SinoPac as the surviving company. In accordance with Statement of Financial Accounting Standards Interpretation No. (91) 243 and 244 issued by the Accounting Research and Development Foundation of the Republic of China, the transaction is treated as reorganization and should be recorded at the book value of both entities’ assets and liabilities. Also in accordance with Statement of Financial Accounting Standards Interpretation No. (95) 141, the financial statements of Bank SinoPac should be retroactively restated assuming both entities to be merged. - 1 - As stated in Note 3 to the accompanying financial statements, effective January 1, 2006, Bank SinoPac adopted the Statement of Financial Accounting Standards No. 34 “Accounting for Financial Instruments”, No. 36 “Disclosure and Presentation of Financial Instruments” and other standards amended for harmonising with those two standards. October 29, 2007 Notice to Readers The accompanying financial statements are intended only to present the financial position, results of operations and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such financial statements are those generally accepted and applied in the Republic of China. For the convenience of readers, the auditors’ report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language auditors’ report and financial statements shall prevail. - 2 - BANK SINOPAC BALANCE SHEETS SEPTEMBER 30, 2007 AND 2006 (In Thousands of New Taiwan Dollars, Except Par Value) (Reviewed, Not Audited) 2006 2006 2007 (Restated, Note 30) 2007 (Restated, Note 30) ASSETS Amount Amount % LIABILITIES AND STOCKHOLDERS’ EQUITY Amount Amount % CASH AND CASH EQUIVALENTS (Note 4) $ 25,651,345 $ 21,861,708 17 CALL LOANS AND DUE TO BANKS (Notes 17 and 32) $ 55,031,186 $ 101,445,236 (46) DUE FROM THE CENTRAL BANK AND OTHER BANKS (Notes 5 and 27) 184,003,491 71,468,847 157 FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS (Notes 2, 3, 6, 31 and 37) 6,466,382 3,275,967 97 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (Notes 2, 3, 6, 27, 28, 31 and 37) 35,438,697 42,583,603 (17) SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE (Notes 2, 7 and 27) 12,027,881 20,565,220 (42) SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL (Notes 2 and 7) 8,514,597 15,080,062 (44) ACCOUNTS, INTEREST AND OTHER PAYABLES (Notes 2, 18, 25 and 27) 25,569,829 34,312,650 (25) ACCOUNTS, INTEREST AND OTHER RECEIVABLES, NET (Notes 2, 8, 26 DEPOSITS AND REMITTANCES (Notes 19 and 27) 770,999,254 743,403,071 4 and 27) 32,111,737 47,761,913 (33) BANK DEBENTURES (Notes 2, 20, 32 and 37) 31,010,772 36,010,888 (14) DISCOUNTS AND LOANS, NET (Notes 2, 9, 27, 32 and 37) 599,253,812 598,844,483 - BONDS PAYABLE (Notes 2 and 20) 5,734,080 5,816,800 (1) AVAILABLE-FOR-SALE FINANCIAL ASSETS (Notes 2, 3, 10, 28, 32 and 37) 54,324,448 186,512,494 (71) OTHER FINANCIAL LIABILITIES (Note 2) 1,098,728 1,242,810 (12) HELD-TO-MATURITY INVESTMENTS (Notes 2, 12, 27, 28, 32 and 37) 2,742,915 2,258,223 21 OTHER LIABILITIES (Notes 2, 21, 25 and 32) 2,725,079 2,612,956 4 EQUITY INVESTMENTS - EQUITY METHOD (Notes 2, 13 and 32) 9,477,033 9,078,197 4 Total liabilities 910,663,191 948,685,598 (4) OTHER FINANCIAL ASSETS, NET STOCKHOLDERS’ EQUITY (Notes 2, 3, 22, 29 and 32) Unquoted equity instruments (Notes 2, 14, 32 and 37) 722,997 722,259 - Capital stock, $10 par value 45,851,972 45,851,972 - Non-active market debt instruments (Notes 2, 14, 32 and 37) 4,883,990 2,789,443 75 Capital surplus Others (Notes 14 and 37) 2,259,362 1,723,549 31 Additional paid-in capital 118,226 118,226 - Capital surplus from business combination 8,076,524 9,115,773 (11) Other financial assets, net 7,866,349 5,235,251 50 Other 178 178 - Total capital surplus 8,194,928 9,234,177 (11) PROPERTIES (Notes 2 and 15) Retained earnings Cost and revaluation increment Legal reserve 6,927,060 6,280,113 10 Land 4,762,673 5,079,812 (6) Special reserve 282,977 282,977 - Buildings 4,248,878 4,534,385 (6) Unappropriated 1,534,260 2,860,514 (46) Computer and machinery equipment 4,546,635 4,536,992 - Total retained earnings 8,744,297 9,423,604 (7) Transportation equipment 25,015 38,316 (35) Cumulative translation adjustments (7,593 ) 58,374 (113) Total cost 13,583,201 14,189,505 (4) Unrealized gains (losses) on financial instruments (176,998 ) 106,906 (266) Less: Accumulated depreciation 4,871,978 4,707,621 3 Net loss not recognized as pension cost (155,953 ) (221,269 ) (30) 8,711,223 9,481,884 (8) Unrealized revaluation increment on land 1,030,154 1,033,595 - Advances on acquisitions of equipment and construction in progress 176,163 77,210 128 Total stockholders’ equity 63,480,807 65,487,359 (3) Net properties 8,887,386 9,559,094 (7) INTANGIBLE ASSETS (Notes 3) 178,199 151,957 17 OTHER ASSETS (Notes 2, 16 and 26) 5,693,989 3,777,125 51 TOTAL $ 974,143,998 $ 1,014,172,957 (4) TOTAL $ 974,143,998 $ 1,014,172,957 (4) The accompanying notes are an integral part of the financial statements. (With Deloitte & Touche review report dated October 29, 2007) - 3 - BANK SINOPAC STATEMENTS OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006 (In Thousands of New Taiwan Dollars, Except Earnings Per Share) (Reviewed, Not Audited) 2006 (Restated, 2007 Note 30) Amount Amount % INTEREST REVENUE (Notes 2, 27 and 32) $30,097,582 $26,479,876 14 INTEREST EXPENSE (Notes 27 and 32) 20,064,226 15,080,981 33 NET INTEREST 10,033,356 11,398,895 (12 ) NET REVENUES OTHER THAN INTEREST Commissions and fee revenues, net (Notes 2, 23 and 27) 3,208,088 2,287,024 40 Losses (gains) from financial assets and liabilities at fair value through profit or loss (Notes 2 and 6) (1,405,336 ) 908,617 (255 ) Realized gains from available-for-sale financial assets 10,317 254,181 (96 ) Income from equity investments - equity method, net (Notes 2 and 13) 891,742 785,499 14 Foreign exchange gain , net (Note 2) 1,421,062 293,570 384 (Losses on) reversal of asset impairment (Note 2) (1,215,052 ) 9,705 (12,620) Gains from unquoted equity instruments (Note 2) 35,096 54,688 (36 ) Recovery of bad debts 557,296 128,332 334 Other net revenues 144,718 128,449 13 Total net revenues 13,681,287 16,248,960 (16 ) PROVISION FOR LOAN LOSSES (Notes 2 and 9) 4,598,000 4,225,687 9 OPERATING EXPENSES (Notes 2 and 24) Personnel expenses 4,848,849 4,368,428 11 Depreciation and amortization 472,390 570,206 (17 ) Others 2,413,796 2,453,064 (2 ) Total operating expenses 7,735,035 7,391,698 5 INCOME BEFORE INCOME TAX 1,348,252 4,631,575 (71 ) INCOME TAX (BENEFIT) EXPENSE (Notes 2 and 26) (186,008 ) 668,485 (128 ) INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGES 1,534,260 3,963,090 (61 ) CUMULATIVE EFFECT OF ACCOUNTING CHANGES (NET OF TAX BENEFIT $8,542) (Note 3) - 294,839 (100 ) NET INCOME $ 1,534,260 $ 4,257,929 (64 ) (Continued) - 4 - BANK SINOPAC STATEMENTS OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006 (In Thousands of New Taiwan Dollars, Except Earnings Per Share) (Reviewed, Not Audited) 2006 2007 (Restated, Note 30) After After Pretax Tax Pretax Tax EARNINGS PER SHARE (Note 22) Basic earnings per share $ 0.29 $ 0.33 $ 1.07 $ 0.93 Diluted earnings per share $ 0.28 $ 0.31 $ 1.01 $ 0.87 The accompanying notes are an integral part of the financial statements.