SinoPac Financial Holdings Company Limited and Subsidiaries

Consolidated Financial Statements for the Six Months Ended June 30, 2019 and 2018 and Independent Auditors’ Report

WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders SinoPac Financial Holdings Company Limited

Opinion

We have audited the accompanying consolidated financial statements of SinoPac Financial Holdings Company Limited and its subsidiaries (collectively referred to as the Group), which comprise the consolidated balance sheets as of June 30, 2019, December 31, 2018 and June 30, 2018, and the related consolidated statements of comprehensive income for the three months ended June 30, 2019 and 2018, six months ended June 30, 2019 and 2018, and changes in equity and cash flows for the six months ended June 30, 2019 and 2018, and the notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of June 30, 2019, December 31, 2018 and June 30, 2018, and its consolidated financial performance for the three months ended June 30, 2019 and 2018, and their consolidated financial performance and cash flows for the six months ended June 30, 2019 and 2018 in conformity with the Regulations Governing the Preparation of Financial Reports by Financial Holding Companies, Regulations Governing the Preparation of Financial Reports by Public Banks, Regulations Governing the Preparation of Financial Reports by Securities Issuers, Regulations Governing the Preparation of Financial Reports by Securities Firms, Regulations Governing the Preparation of Financial Reports by Futures Commission Merchants, the guidelines issued by the competent authority, and International Accounting Standard 34 “Interim Financial Reporting” endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements of Financial Institutions by Certified Public Accountants, Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the six months ended June 30, 2019. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

- 1 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 The key audit matters of the Group’s consolidated financial statements for the six months ended June 30, 2019 are stated as follows:

Estimated Impairment of Discounts and Loans

To assess collectively the estimated impairment of discounts and loans, management makes judgments on assumptions of probability of default and loss given default based on historical experience, current market situation and forward-looking information. Assessment of evidence of default and credit impairment, whether the credit risk has increased significantly since the original recognition (including the adoption of forward-looking factors), and the assessment of the methodology and assumptions used for estimating impairment and the estimation of the amount and timing of future cash flows are critical judgments and estimates; therefore, the estimation of the provision for impairment of discounts and loans is identified as a key audit matter for the six months ended June 30, 2019.

Refer to Notes 4, 5 and 50 to the accompanying consolidated financial statements for the relevant accounting policies, judgments for estimations, estimation uncertainty and other related disclosures of the estimated impairment of discounts and loans.

Our key audit procedures performed in respect of the above area included the following:

We understood and assessed management’s impairment practices, accounting policies and related internal control procedures for discounts and loans to evaluate whether the methodology, assumptions and inputs used conform to the IFRS 9 impairment model and appropriately reflected the actual outcome. We assessed the rationality and consistency of the probability of default, the estimation of forward-looking factors, loss given default and exposure at default, etc. We performed sampling of discounts and loans to verify their completeness and rationality. Finally, we considered related guidelines issued by the authorities and tested whether the classification and the provision for impairment of discounts and loans complied with the related regulation issued by the authority.

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Financial Holding Companies, Regulations Governing the Preparation of Financial Reports by Public Banks, Regulations Governing the Preparation of Financial Reports by Securities Issuers, Regulations Governing the Preparation of Financial Reports by Securities Firms, Regulations Governing the Preparation of Financial Reports by Futures Commission Merchants, the guidelines issued by the competent authority, and International Accounting Standard 34 “Interim Financial Reporting” endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance, including the audit committee, are responsible for overseeing the Group’s financial reporting process.

- 2 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with the auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

1. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.

3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group to cease to continue as a going concern.

5. Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

6. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

- 3 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements for the six months ended June 30, 2019 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent auditors’ report are Yi-Chun Wu and Cheng-Hung Kuo.

Deloitte & Touche Taipei, Taiwan Republic of China

August 23, 2019

Notice to Readers

The accompanying consolidated financial statements are intended only to present the consolidated financial position, financial performance 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 consolidated financial statements are those generally applied in the Republic of China.

For the convenience of readers, the independent auditors’ report and the accompanying consolidated 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 independent auditors’ report and consolidated financial statements shall prevail.

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CONSOLIDATED BALANCE SHEETS (In Thousands of New Taiwan Dollars)

June 30, 2019 December 31, 2018 June 30, 2018 ASSETS Amount % Amount % Amount %

CASH AND CASH EQUIVALENTS, NET (Notes 6 and 45) $ 28,609,669 2 $ 25,417,365 2 $ 26,895,906 2

DUE FROM THE CENTRAL BANK AND CALL LOANS TO BANKS, NET (Notes 7 and 45) 116,350,613 7 91,889,402 6 81,325,798 5

FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (Notes 8, 14 and 45) 89,573,353 5 84,863,422 5 121,671,401 8

FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME (Notes 9 and 45) 228,987,184 13 209,421,072 13 238,577,061 15

INVESTMENTS IN DEBT INSTRUMENTS MEASURED AT AMORTIZED COST (Notes 10 and 46) 113,134,428 6 93,680,834 6 79,439,937 5

SECURITIES PURCHASED UNDER RESELL AGREEMENTS (Notes 11 and 45) 20,389,328 1 22,205,182 1 23,177,579 1

RECEIVABLES, NET (Notes 12 and 45) 79,228,165 5 75,646,292 5 86,547,956 5

CURRENT TAX ASSETS (Notes 4, 33 and 45) 296,198 - 327,581 - 326,818 -

DISCOUNTS AND LOANS, NET (Notes 5, 13, 45 and 46) 1,019,302,654 57 922,363,664 57 880,440,674 55

INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (Note 15) 519,886 - 486,466 - 444,762 -

OTHER FINANCIAL ASSETS, NET (Notes 16, 45 and 46) 41,395,232 2 39,666,796 3 35,395,716 2

INVESTMENT PROPERTIES, NET (Notes 4, 17, 45 and 46) 2,535,901 - 2,589,456 - 2,614,662 -

PROPERTY AND EQUIPMENT, NET (Notes 4, 18, 45 and 46) 12,523,300 1 12,573,066 1 12,611,985 1

RIGHT-OF-USE ASSETS, NET (Notes 3, 4, 19, 45 and 46) 3,543,284 - - - - -

INTANGIBLE ASSETS, NET (Notes 20 and 45) 2,243,004 - 2,234,897 - 2,309,664 -

DEFERRED TAX ASSETS (Notes 4 and 33) 2,083,931 - 2,352,648 - 2,340,885 -

OTHER ASSETS, NET (Notes 21, 45 and 46) 16,797,147 1 19,207,974 1 21,257,177 1

TOTAL $ 1,777,513,277 100 $ 1,604,926,117 100 $ 1,615,377,981 100

LIABILITIES AND EQUITY

DEPOSITS FROM THE CENTRAL BANK AND BANKS (Notes 22 and 45) $ 51,638,487 3 $ 37,964,931 3 $ 53,634,753 3

FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS (Notes 8 and 45) 21,397,682 1 22,778,944 2 27,308,959 2

SECURITIES SOLD UNDER REPURCHASE AGREEMENTS (Notes 8, 9, 10, 11, 23 and 45) 44,618,570 3 46,778,129 3 62,209,513 4

COMMERCIAL PAPERS ISSUED, NET (Notes 24, 45 and 46) 25,596,413 2 33,813,602 2 50,364,998 3

PAYABLES (Notes 25, 30, 41 and 45) 49,080,999 3 37,637,667 2 43,551,738 3

CURRENT TAX LIABILITIES (Notes 4, 33 and 45) 1,108,293 - 1,095,078 - 1,029,650 -

DEPOSITS AND REMITTANCES (Notes 26 and 45) 1,339,585,220 75 1,190,750,602 74 1,137,098,764 70

BONDS PAYABLE (Notes 27 and 45) 40,221,383 2 35,722,483 2 42,680,788 3

CURRENT BORROWINGS (Notes 28, 45 and 46) 4,513,033 - 4,621,520 - 10,003,004 1

NON-CURRENT PORTION OF NON-CURRENT BORROWINGS (Notes 28, 45 and 46) 4,679,804 - 4,278,635 - 3,475,089 -

PREFERRED STOCKS LIABILITIES (Note 34) 18,437 - 18,437 - 18,437 -

PROVISIONS (Notes 29 and 30) 3,251,892 - 3,431,929 - 3,296,321 -

OTHER FINANCIAL LIABILITIES (Notes 31 and 45) 35,699,451 2 35,087,925 2 31,261,169 2

LEASE LIABILITIES (Notes 3, 4, 19 and 45) 2,877,472 - - - - -

DEFERRED TAX LIABILITIES (Notes 4 and 33) 1,667,116 - 1,544,742 - 1,458,669 -

OTHER LIABILITIES (Notes 32 and 45) 8,496,370 1 7,580,096 1 9,875,138 -

Total liabilities 1,634,450,622 92 1,463,104,720 91 1,477,266,990 91

EQUITY Equity attributable to owners of parent Share capital Common shares 112,710,541 6 112,710,541 7 110,500,530 7 Reserve for capitalization - - - - 2,210,011 - Total share capital 112,710,541 6 112,710,541 7 112,710,541 7 Capital surplus 2,228,771 - 2,228,771 - 2,228,771 - Retained earnings Legal reserve 17,951,839 1 17,008,997 1 17,008,997 1 Special reserve 849,362 - 503,729 - 503,729 - Unappropriated earnings 7,721,112 1 9,731,492 1 5,208,870 1 Total retained earnings 26,522,313 2 27,244,218 2 22,721,596 2 Other equity 1,597,568 - (365,543 ) - 446,557 - Total equity attributable to owners of parent 143,059,193 8 141,817,987 9 138,107,465 9 Non-controlling interests 3,462 - 3,410 - 3,526 -

Total equity 143,062,655 8 141,821,397 9 138,110,991 9

TOTAL $ 1,777,513,277 100 $ 1,604,926,117 100 $ 1,615,377,981 100

The accompanying notes are an integral part of the consolidated financial statements.

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

For the Three Months Ended June 30 For the Six Months Ended June 30 2019 2018 2019 2018 Amount % Amount % Amount % Amount %

INTEREST REVENUE $ 8,434,816 94 $ 7,250,988 90 $ 16,389,274 87 $ 14,175,888 88

INTEREST EXPENSE (4,579,653 ) (51 ) (3,316,076 ) (41 ) (8,675,430 ) (46 ) (6,396,465 ) (40 )

NET INTEREST (Notes 35 and 45) 3,855,163 43 3,934,912 49 7,713,844 41 7,779,423 48

NET REVENUES OTHER THAN INTEREST (Note 4) Commission and fee revenues, net (Notes 36 and 45) 2,516,199 28 2,538,351 31 5,584,342 30 5,459,039 34 Gains on financial assets and liabilities at fair value through profit or loss (Notes 37 and 45) 1,870,270 21 397,079 5 4,243,336 23 1,436,445 9 Gains on investment properties 35,975 - - - 35,975 - - - Realized gains on financial assets at fair value through other comprehensive income (Notes 38 and 45) 106,798 1 78,625 1 130,851 1 75,258 1 Foreign exchange gains, net 408,741 5 991,370 12 712,925 4 1,190,493 7 (Impairment loss on assets) reversal of impairment loss on assets (Notes 5 and 39) 79,191 1 (13,104 ) - 106,568 - (10,942 ) - Share of the gains of associates (Note 15) 13,555 - 12,199 - 28,321 - 43,302 - Other noninterest net revenues (Notes 40 and 45) 114,140 1 126,650 2 229,296 1 225,533 1

Total net revenues other than interest 5,144,869 57 4,131,170 51 11,071,614 59 8,419,128 52

TOTAL NET REVENUES 9,000,032 100 8,066,082 100 18,785,458 100 16,198,551 100

BAD DEBT EXPENSE, COMMITMENT AND GUARANTEE LIABILITY PROVISION (Notes 5, 6, 7, 12, 13, 16, 21 and 29) (566,914 ) (6 ) (791,493 ) (10 ) (757,439 ) (4 ) (745,904 ) (5 )

OPERATING EXPENSES Employee benefits expenses (Notes 30, 41 and 45) (3,298,722 ) (37 ) (3,067,083 ) (38 ) (6,763,445 ) (36 ) (6,248,719 ) (39 ) Depreciation and amortization expenses (Notes 19, 42 and 45) (460,844 ) (5 ) (242,890 ) (3 ) (912,592 ) (5 ) (479,213 ) (3 ) Others (Notes 43 and 45) (1,410,921 ) (16 ) (1,519,847 ) (19 ) (2,738,252 ) (14 ) (2,971,116 ) (18 )

Total operating expenses (5,170,487 ) (58 ) (4,829,820 ) (60 ) (10,414,289 ) (55 ) (9,699,048 ) (60 )

INCOME BEFORE INCOME TAX 3,262,631 36 2,444,769 30 7,613,730 41 5,753,599 35

INCOME TAX EXPENSE (Notes 4 and 33) (464,685 ) (5 ) (324,603 ) (4 ) (1,060,707 ) (6 ) (994,109 ) (6 )

NET INCOME 2,797,946 31 2,120,166 26 6,553,023 35 4,759,490 29 (Continued)

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

For the Three Months Ended June 30 For the Six Months Ended June 30 2019 2018 2019 2018 Amount % Amount % Amount % Amount %

OTHER COMPREHENSIVE INCOME (LOSS) Items that will not be reclassified subsequently to profit or loss Revaluation gains (losses) on investments in equity instruments measured at fair value through other comprehensive income (Note 34) $ 72,677 1 $ 93,648 1 $ 338,553 2 $ 76,351 1 Changes in fair value of financial liability attributable to changes in the credit risk of liabilities (Note 34) (19,973 ) - 11,917 - (59,177 ) - 16,950 - Income tax relating to items that will not be reclassified subsequently to profit or loss (Notes 4, 33 and 34) 1,095 - 828 - 2,895 - 6,000 - Items that will not be reclassified subsequently to profit or loss 53,799 1 106,393 1 282,271 2 99,301 1 Items that may be reclassified subsequently to profit or loss Exchange differences on translating foreign operations (Note 34) (70,175 ) (1 ) 382,201 5 223,742 1 (59,873 ) - Gains (losses) from investments in debt instruments measured at fair value through other comprehensive income (Note 34) 708,139 8 (21,405 ) - 1,389,708 7 (109,002 ) (1 ) Share of the other comprehensive income of associates accounted for using the equity method (Notes 15 and 34) (1,542 ) - (5,124 ) - 318 - (479 ) - Income tax relating to the components of other comprehensive income (Notes 4, 33 and 34) 8,351 - (71,686 ) (1 ) (39,414 ) - 32,870 - Items that may be reclassified subsequently to profit or loss 644,773 7 283,986 4 1,574,354 8 (136,484 ) (1 )

Other comprehensive gain (loss) for the period, net of income tax 698,572 8 390,379 5 1,856,625 10 (37,183 ) -

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD $ 3,496,518 39 $ 2,510,545 31 $ 8,409,648 45 $ 4,722,307 29

NET PROFIT ATTRIBUTABLE TO: Owners of parent $ 2,797,974 31 $ 2,120,199 26 $ 6,552,971 35 $ 4,759,468 29 Non-controlling interests (28 ) - (33 ) - 52 - 22 -

$ 2,797,946 31 $ 2,120,166 26 $ 6,553,023 35 $ 4,759,490 29 (Continued)

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

For the Three Months Ended June 30 For the Six Months Ended June 30 2019 2018 2019 2018 Amount % Amount % Amount % Amount %

COMPREHENSIVE INCOME ATTRIBUTABLE TO: Owners of parent $ 3,496,546 39 $ 2,510,578 31 $ 8,409,596 45 $ 4,722,285 29 Non-controlling interests (28 ) - (33 ) - 52 - 22 -

$ 3,496,518 39 $ 2,510,545 31 $ 8,409,648 45 $ 4,722,307 29

EARNINGS PER SHARE (Note 44) Basic $ 0.25 $ 0.19 $ 0.58 $ 0.42 Diluted $ 0.25 $ 0.19 $ 0.58 $ 0.42

The accompanying notes are an integral part of the consolidated financial statements. (Concluded)

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CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (In Thousands of New Taiwan Dollars)

Total Equity Attributable to Owners of Parent Other Equity (Notes 34) Unrealized Gain (Loss) on Changes in Financial Assets Fair Value of Exchange Unrealized Gain Measured at Fair Liability Differences on (Loss) on Value through Attributable to Share Capital (Note 34) Retained Earnings (Note 34) Translating Available-for- Other Changes in Reserve for Capital Surplus Unappropriated Foreign sale Financial Comprehensive Credit Risk of Total Equity of Non-controlling Common Shares Capitalization Total (Note 34) Legal Reserve Special Reserve Earnings Total Operations Assets Income Liabilities Total the Parent Interests Total Equity

BALANCE AT JANUARY 1, 2018 $ 110,500,530 $ - $ 110,500,530 $ 2,228,771 $ 16,114,109 $ 483,818 $ 8,948,881 $ 25,546,808 $ (683,250 ) $ 683,510 $ - $ (20,170 ) $ (19,910 ) $ 138,256,199 $ 3,504 $ 138,259,703

Effect of retrospective application and retrospective restatement ------126,702 126,702 - (683,510 ) 1,210,815 - 527,305 654,007 - 654,007

BALANCE AT JANUARY 1, 2018 AS RESTATED 110,500,530 - 110,500,530 2,228,771 16,114,109 483,818 9,075,583 25,673,510 (683,250 ) - 1,210,815 (20,170 ) 507,395 138,910,206 3,504 138,913,710

Appropriation and distribution of retained earnings generated in 2017 Legal reserve - - - - 894,888 - (894,888 ) ------Special reserve - - - - - 19,911 (19,911 ) ------Cash dividends - common share ------(5,525,026 ) (5,525,026 ) - - - - - (5,525,026 ) - (5,525,026 ) Stock dividends - common share - 2,210,011 2,210,011 - - - (2,210,011 ) (2,210,011 ) ------

Net profit for the six months ended June 30, 2018 ------4,759,468 4,759,468 - - - - - 4,759,468 22 4,759,490

Other comprehensive income for the six months ended June 30, 2018, net of income tax ------13,680 13,680 (23,009 ) - (44,804 ) 16,950 (50,863 ) (37,183 ) - (37,183 )

Total comprehensive income for the six months ended June 30, 2018 ------4,773,148 4,773,148 (23,009 ) - (44,804 ) 16,950 (50,863 ) 4,722,285 22 4,722,307

Disposal of equity instruments at fair value through other comprehensive income ------9,975 9,975 - - (9,975 ) - (9,975 ) - - -

BALANCE AT JUNE 30, 2018 $ 110,500,530 $ 2,210,011 $ 112,710,541 $ 2,228,771 $ 17,008,997 $ 503,729 $ 5,208,870 $ 22,721,596 $ (706,259 ) $ - $ 1,156,036 $ (3,220 ) $ 446,557 $ 138,107,465 $ 3,526 $ 138,110,991

BALANCE AT JANUARY 1, 2019 $ 112,710,541 $ - $ 112,710,541 $ 2,228,771 $ 17,008,997 $ 503,729 $ 9,731,492 $ 27,244,218 $ (909,745 ) $ - $ 552,038 $ (7,836 ) $ (365,543 ) $ 141,817,987 $ 3,410 $ 141,821,397

Appropriation and distribution of retained earnings generated in 2018 Legal reserve - - - - 942,842 - (942,842 ) ------Special reserve - - - - - 345,633 (345,633 ) ------Cash dividends - common share ------(7,168,390 ) (7,168,390 ) - - - - - (7,168,390 ) - (7,168,390 )

Net profit for the six months ended June 30, 2019 ------6,552,971 6,552,971 - - - - - 6,552,971 52 6,553,023

Other comprehensive income for the six months ended June 30, 2019, net of income tax ------182,116 - 1,733,686 (59,177 ) 1,856,625 1,856,625 - 1,856,625

Total comprehensive income for the six months ended June 30, 2019 ------6,552,971 6,552,971 182,116 - 1,733,686 (59,177 ) 1,856,625 8,409,596 52 8,409,648

Disposal of equity instruments at fair value through other comprehensive income ------(106,486 ) (106,486 ) - - 106,486 - 106,486 - - -

BALANCE AT JUNE 30, 2019 $ 112,710,541 $ - $ 112,710,541 $ 2,228,771 $ 17,951,839 $ 849,362 $ 7,721,112 $ 26,522,313 $ (727,629 ) $ - $ 2,392,210 $ (67,013 ) $ 1,597,568 $ 143,059,193 $ 3,462 $ 143,062,655

The accompanying notes are an integral part of the consolidated financial statements.

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CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars)

For the Six Months Ended June 30 2019 2018

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax $ 7,613,730 $ 5,753,599 Adjustments to reconcile profit Depreciation expenses 766,254 343,576 Amortization expenses 146,338 135,637 Provision for bad debt expense 1,268,345 1,091,973 Interest expenses 8,675,430 6,396,465 Interest revenues (16,389,274) (14,175,888) Dividend revenues (127,808) (139,352) Net change in provisions for guarantee liabilities (16,151) 11,845 Net change in other provisions (87,585) (62,073) Share of the gain of associates (28,321) (43,302) (Gains) losses on disposal and retirement of property and equipment (799) 748 Gains on disposal of investment properties (35,975) - Losses on disposal of intangible assets 6 - (Reversal of) impairment loss on financial assets (106,568) 10,942 Net losses on changing in leasing contracts 86 - Changes in operating assets and liabilities Increase in due from the Central Bank and call loans to banks (6,639,878) (2,788,356) (Increase) decrease in financial assets at fair value through profit or loss (4,709,931) 12,485,937 Increase in financial assets at fair value through other comprehensive income (17,846,371) (29,097,483) (Increase) decrease in investments in debt instruments measured at amortized cost (19,453,795) 2,664,650 Decrease in securities purchased under resell agreements 418,004 306,957 Increase in receivables (2,518,753) (4,957,252) Increase in discounts and loans (98,129,557) (11,499,276) Increase in other financial assets (1,486,530) (5,424,475) Decrease in other assets 1,660,110 1,178,215 Increase in deposits from the Central Bank and banks 13,673,556 24,013,827 (Decrease) increase in financial liabilities at fair value through profit or loss (1,440,439) 3,289,875 Decrease in securities sold under repurchase agreements (2,159,559) (3,794,081) Increase (decrease) in payables 2,429,268 (3,611,371) Increase (decrease) in deposits and remittances 148,834,618 (11,492,132) Decrease in provisions for employee benefits (88,921) (83,801) Increase in other financial liabilities 611,849 1,527,013 Increase (decrease) in other liabilities 916,274 (2,212,326) Net cash generated from (used in) operations 15,747,653 (30,169,909) Interest received 16,332,696 14,047,941 Dividend received 45,532 83,100 (Continued)

- 10 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 SINOPAC FINANCIAL HOLDINGS COMPANY LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars)

For the Six Months Ended June 30 2019 2018

Interest paid $ (7,872,073) $ (6,023,360) Income tax paid (648,759) (875,569)

Net cash generated from (used in) operating activities 23,605,049 (22,937,797)

CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of property and equipment (318,761) (715,187) Proceeds from disposal of property and equipment 9,104 15,782 Acquisition of intangible assets (113,806) (64,358) Acquisition of right-of-use-assets (113) - Acquisition of investment properties (1,015) (653) Proceeds from disposal of investment properties 52,010 -

Net cash used in investing activities (372,581) (764,416)

CASH FLOWS FROM FINANCING ACTIVITIES (Decrease) increase in short-term borrowings (113,795) 1,851,534 (Decrease) increase in commercial paper payable (8,217,189) 5,483,791 Bank debentures issued 8,000,000 1,150,000 Repayment of bank debentures on maturity (3,500,000) (1,000,000) Proceeds from long-term borrowings 15,367,783 11,238,854 Repayments of long-term borrowings (14,995,219) (16,938,642) Repayments of lease liabilities (421,518) -

Net cash (used in) generated from financing activities (3,879,938) 1,785,537

EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH HELD IN FOREIGN CURRENCIES 277,519 17,661

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 19,630,049 (21,899,015)

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD 102,289,860 118,170,657

CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD $ 121,919,909 $ 96,271,642 (Continued)

- 11 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 SINOPAC FINANCIAL HOLDINGS COMPANY LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars)

Reconciliation of the amounts in the consolidated statements of cash flows with the equivalent items reported in the consolidated balance sheets as of June 30, 2019 and 2018:

June 30 2019 2018

Cash and cash equivalents in consolidated balance sheets $ 28,609,669 $ 26,895,906 Due from the Central Bank and call loans to other banks reclassified as cash and cash equivalents under IAS 7 “Statement of Cash Flows” 73,036,919 46,845,810 Securities purchased under agreements to resell reclassified as cash and cash equivalents under IAS 7 “Statement of Cash Flows” 20,273,321 22,529,926 Cash and cash equivalents in consolidated statements of cash flows $ 121,919,909 $ 96,271,642

The accompanying notes are an integral part of the consolidated financial statements. (Concluded)

- 12 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 SINOPAC FINANCIAL HOLDINGS COMPANY LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2019 AND 2018 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

1. ORGANIZATION AND OPERATIONS

May 9, 2002 Following its incorporation, SinoPac Financial Holdings Company Limited (the Company or SPH) issued shares to swap with the shares of Bank SinoPac (BSP), National Securities Corporation (NSC), and SinoPac Securities Corporation (SPS), resulting in all three companies becoming wholly owned subsidiaries of SPH.

December 26, 2005 The International Bank of Taipei became a wholly owned subsidiary of SPH through a share swap made in accordance with the Financial Holding Company Act. The share swap ratio was 1.3646 (with 1 representing the SPH’s share). The trading of IBT’s shares on the Taiwan Stock Exchange then ceased.

June 2006 SPH convened a shareholders’ meeting to reach the decision of changing SPH’s Chinese name, and completed the registration on July 2006.

SPH invests and manages financial institutions.

The consolidated financial statements of the Company and its subsidiaries (collectively referred to as the Group) are presented in the New Taiwan dollar, the Company’s functional currency.

The information on consolidated entities is shown in Note 4.

2. APPROVAL OF FINANCIAL STATEMENTS

The consolidated financial statements were approved by the board of directors on August 23, 2019.

- 13 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS

a. Initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Financial Holding Companies, Regulations Governing the Preparation of Financial Reports by Public Banks, Regulations Governing the Preparation of Financial Reports by Securities Issuers, Regulations Governing the Preparation of Financial Reports by Securities Firms, Regulations Governing the Preparation of Financial Reports by Futures Commission Merchants, and the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), Interpretations of IFRS (IFRIC), and Interpretations of IAS (SIC) (collectively referred to as IFRSs) endorsed and issued into effect by the Financial Supervisory Commission (FSC)

Except for the following, the initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Financial Holding Companies, Regulations Governing the Preparation of Financial Reports by Public Banks, Regulations Governing the Preparation of Financial Reports by Securities Issuers, Regulations Governing the Preparation of Financial Reports by Securities Firms, Regulations Governing the Preparation of Financial Reports by Futures Commission Merchants, and the IFRSs endorsed and issued into effect by the FSC did not have any material impact on the Group’s accounting policies:

 IFRS 16 “Leases”

IFRS 16 provides a comprehensive model for the identification of lease arrangements and their treatment in the financial statements of both lessee and lessor. It supersedes IAS 17 “Leases”, IFRIC 4 “Determining whether an Arrangement contains a Lease”, and a number of related interpretations. Refer to Note 4 for information relating to the relevant accounting policies.

Definition of a lease

The Group elects to apply the guidance of IFRS 16 in determining whether contracts are, or contain, a lease only to contracts entered into (or changed) on or after January 1, 2019. Contracts identified as containing a lease under IAS 17 and IFRIC 4 are not reassessed and are accounted for in accordance with the transitional provisions under IFRS 16.

The Group as lessee

Upon initial application of IFRS 16, the Group will recognize right-of-use assets, and lease liabilities for all leases on the consolidated balance sheets except for those whose payments under low-value and short-term leases will be recognized as expenses on a straight-line basis. On the consolidated statements of comprehensive income, the Group will present the depreciation expense charged on right-of-use assets separately from interest expense accrued on the lease liability; interest is computed by using the effective interest method. On the consolidated statements of cash flows, cash payments for the principal portion of lease liabilities will be classified within financing activities; cash payments for the interest portion will be classified within operating activities. Currently, payments under operating lease contracts are recognized as expenses on a straight-line basis. Cash flows for operating leases are classified within operating activities on the consolidated statements of cash flows. Leased assets and finance lease payables were recognized for contracts classified as finance leases.

The Group is expected to recognize lease liability for leases classified as operating leases on the date of the initial application of IAS 17 and on the basis of individual leases, recognizing the right-of-use assets of lease liability. Comparative information will not be restated.

- 14 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 Lease liabilities were recognized on January 1, 2019 for leases previously classified as operating leases under IAS 17. Lease liabilities were measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate on January 1, 2019. Right-of-use assets are measured at their carrying amount as if IFRS 16 had been applied since the commencement date, but discounted using the aforementioned incremental borrowing rate. The Group accessed the impairment to all right-of-use assets under IAS 36.

The Group also applies the following practical expedients:

1) The Group will apply a single discount rate to a portfolio of leases with reasonably similar characteristics to measure lease liabilities.

2) The Group will account for those leases for which the lease term ends on or before December 31, 2019 as short-term leases.

3) The Group will exclude initial direct costs from the measurement of right-of-use assets on January 1, 2019.

4) The Group will use hindsight, such as in determining lease terms, to measure lease liabilities.

The interest rate range using the aforementioned incremental borrowing rate is 0.5609%-5.8366% on January 1, 2019. In compliance with the various types of underlying leases and certain equipment leases that qualifies as low-value assets, for which the recognition exemption is applied. The amount of the lease liability recognized on the initial application date is $2,829,363.

The Group as lessor

Except for sublease transactions, the Group does not make any adjustments for leases in which it is a lessor, and it accounts for those leases with the application of IFRS 16 starting from January 1, 2019.

The Group subleased its material leasehold to a third party which was classified as an operating lease under IAS 17. The Group determines the sublease is classified as a finance lease on the basis of the remaining contractual terms and conditions of the head lease and sublease on January 1, 2019, and the Group accounts for the sublease as a new finance lease entered into at that date.

The impact on assets and liabilities as of January 1, 2019 from the initial application of IFRS 16 is set out as follows:

Carrying Adjustments Adjusted Amount as of Arising from Carrying December 31, Initial Amount as of 2018 Application January 1, 2019

Receivables, net $ 75,646,292 $ 4,501 $ 75,650,793 Other financial assets, net 39,666,796 80,084 39,746,880 Property and equipment, net 12,573,066 (22,324) 12,550,742 Right-of-use assets, net - 3,508,714 3,508,714 Other assets, net 19,207,974 (741,935) 18,466,039

Total effect on assets $ 147,094,128 $ 2,829,040 $ 149,923,168

Other financial liabilities $ 35,087,925 $ (323) $ 35,087,602 Lease liabilities - 2,829,363 2,829,363

Total effect on liabilities $ 35,087,925 $ 2,829,040 $ 37,916,965

- 15 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758

Except for the above impact, as of the date the consolidated financial statements were authorized for issue, the Group assessed that the application of interpretations would not have a material impact on the Group’s financial position and financial performance.

b. The IFRSs endorsed by the Financial Supervisory Commission (FSC) for application starting from 2020

Effective Date New IFRSs Announced by IASB

Amendments to IFRS 3 “Definition of a Business” January 1, 2020 (Note 1) Amendments to IAS 1 and IAS 8 “Definition of Material” January 1, 2020 (Note 2)

Note 1: The Group shall apply these amendments to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 1, 2020 and to asset acquisitions that occur on or after the beginning of that period.

Note 2: The Group shall apply these amendments prospectively for annual reporting periods beginning on or after January 1, 2020.

c. New IFRSs in issue but not yet endorsed and issued into effect by the FSC

Effective Date New IFRSs Announced by IASB (Note)

Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets To be determined by IASB between an Investor and its Associate or Joint Venture” IFRS 17 “Insurance Contracts” January 1, 2021

Note: Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on or after their respective effective dates.

Except for the above impact, as of the date the consolidated financial statements were authorized for issue, the Group is continuously assessing the possible impact that the application of other standards and interpretations will have on the Group’s financial position and financial performance, and will disclose the relevant impact when the assessment is completed.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Statement of Compliance

The consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Financial Holding Companies, Regulations Governing the Preparation of Financial Reports by Public Banks, Regulations Governing the Preparation of Financial Reports by Securities Issuers, Regulations Governing the Preparation of Financial Reports by Securities Firms, Regulations Governing the Preparation of Financial Reports by Futures Commission Merchants, the guidelines issued by the authority, and International Accounting Standard 34 “Interim Financial Reporting” as endorsed and issued into effect by the FSC. Disclosure information included in the consolidated financial statements is less than the disclosure information required in a complete set of annual financial statements.

- 16 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 Basis of Preparation

The consolidated financial statements have been prepared on the historical cost basis except for financial instruments that are measured at fair value, net defined benefit liability which present value of defined benefit obligation deduct fair value of plan assets and properties and equipment that are chosen the deemed cost as exemptions by IFRS 1 through the Regulations Governing the Preparation of Financial Reports by Financial Holding Companies, Regulations Governing the Preparation of Financial Reports by Public Banks, Regulations Governing the Preparation of Financial Reports by Securities Issuers, Regulations Governing the Preparation of Financial Reports by Securities Firms and Regulations Governing the Preparation of Financial Reports by Futures Commission Merchants on the IFRS transition date. Historical cost is generally based on the fair value of the consideration given in exchange for assets.

The fair value measurements are grouped into Levels 1 to 3 based on the degree to which the fair value measurement inputs are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows: a. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities; b. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and c. Level 3 inputs are unobservable inputs for the asset or liability.

Classification of Current and Non-current Assets and Liabilities

Since the operating cycle in the finance industry cannot be reasonably identified, the accounts included in the Group’s consolidated financial statements were not classified as current or noncurrent. Nevertheless, accounts were properly categorized in accordance with the nature of each account and sequenced by their liquidity. Please refer to Note 50 for the maturity analysis of assets and liabilities.

Principles for Preparing Consolidated Financial Statements

The consolidated financial statements incorporate the financial statements of the Company and the entities controlled by the Company (i.e., its subsidiaries). Control is achieved when the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

When necessary, adjustments are made to the financial statements of its subsidiaries to bring its accounting policies into line with those used by the Company.

All intragroup transactions, balances, income and expenses are eliminated in full upon consolidation. Related information is shown in Table 10.

Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

- 17 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 The consolidated entities were as follows:

% of Ownership December 31, Investor Investee Main Business June 30, 2019 2018 June 30, 2018 Note

SinoPac Financial Holdings Bank SinoPac Commercial bank, trust and foreign 100 100 100 Notes 1, 2 Company Limited exchange services and 3 SinoPac Securities Corporation (“SinoPac Securities brokering, dealing and 100 100 100 Securities”) underwriting SinoPac Venture Capital Corporation (“SinoPac Venture capital investment 100 100 100 Note 2 Venture Capital”) SinoPac Call Center Company Limited (“SinoPac Dissolved - 100 100 Note 1 Call Center”) SinoPac Securities Investment Trust Corporation Securities investment trust, 100 100 100 (“SinoPac Securities Investment Trust”) discretionary investment and investment consulting services SinoPac Leasing Corporation (“SinoPac Leasing”) Leasing and installment sales 100 100 100 Bank SinoPac SinoPac Capital Limited (H.K.) (“SinoPac Capital In liquidation 100 100 100 Note 2 (H.K.)”) SinoPac Life Insurance Agent Company Limited Life insurance agent 100 100 100 Note 3 (“SinoPac Life Insurance Agent”) SinoPac Property Insurance Agent Company Property insurance agent 100 100 100 Note 3 Limited (“SinoPac Property Insurance Agent”) Bank SinoPac (China) Limited (“Bank SinoPac Commercial bank 100 100 100 (China)”) SinoPac Insurance Brokers Limited (“SinoPac Insurance brokerage 100 100 100 Note 2 Insurance Brokers”) SinoPac Capital (H.K.) SinoPac Capital (B.V.I.) Limited In liquidation 100 100 100 Note 2 SinoPac Capital (B.V.I.) RSP Information Service Company Limited In liquidation 100 100 100 Note 2 Limited SinoPac Securities SinoPac Futures Corporation (“SinoPac Futures”) Future contract brokering and dealing 100 100 100 and consulting business SinoPac Securities Investment Service Corporation Investment consulting and 100 100 100 (“SinoPac Securities Investment Service”) discretionary investment business SinoPac Securities (Cayman) Holdings Limited Holding company 100 100 100 (“SinoPac Securities (Cayman)”) SinoPac Financial Consulting (Shanghai) Limited Corporation management, investment 100 100 100 (“SinoPac Financial Consulting (Shanghai)”) and business information consulting SinoPac Securities (Cayman) SinoPac Securities (Europe) Limited (“SinoPac European stock agent business 100 100 100 Securities (Europe)”) SinoPac Asset Management (Asia) Limited Asset management and investment 100 100 100 (“SinoPac Asset Management (Asia)”) consulting SinoPac Securities (Asia) Limited (“SinoPac Hong Kong stock and future contract 100 100 100 Securities (Asia)”) brokerage and dealing business SinoPac International Holdings Limited (“SinoPac Investment Holdings 100 100 100 International Holdings”) SinoPac Securities (Asia) SinoPac (Asia) Nominees Limited Nominee trust account for overseas 100 100 100 stock holdings SinoPac Capital (Asia) Limited (“SinoPac Capital Securities dealing 100 100 100 (Asia)”) SinoPac Solutions and Services Limited (“SinoPac Fund management 100 100 100 Solutions and Services”) SinoPac International SinoPac Bullion (Brokers) Limited (“SinoPac Liquidation completed - - 100 Note 4 Holdings Bullion (Brokers)”) SinoPac Financial Service (Brokers) Limited Liquidation completed - - 100 Note 5 (“SinoPac Financial Service (Brokers)”) SinoPac Service (Brokers) Limited (“SinoPac In liquidation 100 100 100 Note 6 Service (Brokers)”) SinoPac Leasing Sinopac Capital International Limited Leasing and installment sales 100 100 100 Note 7 SinoPac International Leasing Corporation Financing and leasing 100 100 100 (“SinoPac International Leasing”) SinoPac Leasing (Tianjin) Company Limited Financing, leasing, factoring and 100 100 100 (“SinoPac Leasing (Tianjin)”) trade financing SinoPac Venture Capital SinoPlus Venture Capital Corporation (“SinoPlus Venture capital investment 70 70 70 Note 8 Venture Capital”)

Note 1: The board of directors of the Company approved to adjust the investment structure in December 2018. Bank SinoPac announced that SinoPac Call Center which is a wholly-owned subsidiary of SPH will be cash merged by Bank SinoPac. Under this merger, SinoPac Call Center will be the dissolved company and Bank SinoPac will be the surviving entity, assuming all business, assets, liabilities and all rights and obligations. The acquisition date was May 1, 2019.

Note 2: To adjust the investment structure, the board of directors of Bank SinoPac originally approved the liquidation plan of SinoPac Capital (H.K.) and SinoPac Capital (B.V.I.) Limited in June and September 2016. The board of directors of Bank SinoPac also resolved the purchase of 100% of the shares of SinoPac Insurance Brokers, a subsidiary of SinoPac Capital (H.K.), and transfer 100% of the shares of RSP Information Service Company Limited, a subsidiary of SinoPac Capital (B.V.I.) Limited, to SinoPac Venture Capital. Bank SinoPac obtained 100% equity of SinoPac Insurance Broker on November 1, 2017 (using the book value on the day before the date of the transfer as the transfer price). In August 2018, the board of directors of Bank SinoPac resolved to adjust the above-mentioned plan, deciding to liquidate RSP Information Service Company Limited directly and no longer transfer it to SinoPac Venture Capital. RSP Information Service Company Limited has entered into the liquidation process since February 2019. SinoPac

- 18 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 Capital (B.V.I.) Limited has entered into the liquidation process since March 2019. SinoPac Capital Limited has entered into the liquidation process since April 2019.

Note 3: Under legal permission, a bank may also operate within the insurance industry. The board of directors of Bank SinoPac has planned to apply for the qualification to operate as an insurance agency and for the rights to merge, through 100% shareholdings, SinoPac Life Insurance Agent and SinoPac Property Insurance Agent, which are both subsidiaries of Bank SinoPac. After the merger, Bank SinoPac will be the surviving company, and the two subsidiaries will be liquidated, and hence Bank SinoPac can achieve the integration of resources, reduced operating costs and improved operational efficiency. The competent authorities approved that Bank SinoPac may operate within the insurance industry in July 2019.

Note 4: The board of directors of SinoPac Bullion (Brokers) resolved in March 2017 to liquidate the company, and was approved by the FSC under letter No. 1060012731 in April 2017, and completed liquidation in September 2018.

Note 5: The board of directors of SinoPac Financial Service (Brokers) resolved in March 2017 to liquidate, and was approved by the FSC under letter No. 1060012731 in April 2017, and repaid its capital to shareholders in June 2018 and was completed in December 2018.

Note 6: The board of directors of SinoPac Service (Brokers) resolved in November 2018 to liquidate, and was approved by the FSC under letter No. 1070346532 in December 2018. But the liquidation process has not been completed as of the report date.

Note 7: The special shareholders’ meeting of Grand Capital International Limited resolved to change its name to SinoPac Capital International Limited on September 25, 2018 and was approved by the local competent authority on October 4, 2018.

Note 8: The board of directors resolved to dissolve SinoPlus Venture Capital in April 2019.

Other Significant Accounting Policies

Please refer to the Group’s consolidated financial statements for the year ended December 31, 2018 for the significant accounting policies, except for those described below. a. Leases

2019

At the inception of a contract, the Group assesses whether the contract is, or contains, a lease.

1) The Group as lessor

Leases are classified as finance leases whenever the terms of a lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

When the Group subleases a right-of-use assets, the sublease is classified by reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset. However, if the head lease is a short-term lease that the Group, as a lessee, has accounted for applying recognition exemption, the sublease is classified as an operating lease.

- 19 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 Under finance leases, the lease payments comprise fixed payments, in-substance fixed payments, variable lease payments which depend on an index or a rate, residual value guarantees, the exercise price of a purchase option if the lessee is reasonably certain to exercise that option, and payments of penalties for terminating a lease if the lease term reflects such termination, less any lease incentives payable. The net investment in a lease is measured at the present value of the sum of the lease payments receivable by a lessor and any unguaranteed residual value accrued to the lessor plus initial direct costs and is presented as a finance lease receivable. Finance lease income is allocated to the relevant accounting periods so as to reflect a constant, periodic rate of return on the Group’s net investment outstanding in respect of leases.

Lease payments (less any lease incentives payable) from operating leases are recognized as income on a straight-line basis over the terms of the relevant leases. Initial direct costs incurred in obtaining operating leases are added to the carrying amounts of the underlying assets and recognized as expenses on a straight-line basis over the lease terms.

When a lease includes both land and building elements, the Group assesses the classification of each element separately as a finance or an operating lease based on the assessment as to whether substantially all the risks and rewards incidental to ownership of each element have been transferred to the Group. The lease payments are allocated between the land and the building elements in proportion to the relative fair values of the leasehold interests in the land element and building element of the lease at the inception of a contract. If the allocation of the lease payments can be made reliably, each element is accounted for separately in accordance with its lease classification. When the lease payments cannot be allocated reliably between the land and building elements, the entire lease is generally classified as a finance lease unless it is clear that both elements are operating leases; in which case, the entire lease is classified as an operating lease.

2) The Group as lessee

The Group recognizes right-of-use assets and lease liabilities for all leases at the commencement date of a lease, except for short-term leases and low-value asset leases accounted for applying a recognition exemption where lease payments are recognized as expenses on a straight-line basis over the lease terms.

Right-of-use assets are initially measured at cost, which comprises the initial measurement of lease liabilities adjusted for lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs needed to restore the underlying assets, and less any lease incentives received. Right-of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses and adjusted for any remeasurement of the lease liabilities. Right-of-use assets are presented on a separate line in the consolidated balance sheets.

Right-of-use assets are depreciated using the straight-line method from the commencement dates to the earlier of the end of the useful lives of the right-of-use assets or the end of the lease terms.

Lease liabilities are initially measured at the present value of the lease payments, which comprise fixed payments, in-substance fixed payments, variable lease payments which depend on an index or a rate, and payments of penalties for terminating a lease if the lease term reflects such termination, less any lease incentives receivable. The lease payments are discounted using the interest rate implicit in a lease, if that rate can be readily determined. If that rate cannot be readily determined, the Group uses the lessee’s incremental borrowing rate.

- 20 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 Subsequently, lease liabilities are measured at amortized cost using the effective interest method, with interest expense recognized over the lease terms. When there is a change in a lease term or a change in future lease payments resulting from a change in an index or a rate used to determine those payments, the Group remeasures the lease liabilities with a corresponding adjustment to the right-of-use assets. However, if the carrying amount of the right-of-use assets is reduced to zero, any remaining amount of the remeasurement is recognized in profit or loss. Lease liabilities are presented on a separate line in the consolidated balance sheets.

Variable lease payments that do not depend on an index or a rate are recognized as expenses in the periods in which they are incurred.

2018

Leases are classified as finance leases whenever the terms of a lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

1) The Group as lessor

Amounts due from lessees under finance leases are recognized as receivables at the amount of the Group’s net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the Group’s net investment outstanding in respect of the leases.

Rental income from operating leases is recognized on a straight-line basis over the term of the relevant lease unless another system could be more representative of the effectiveness of time consumption of lease assets.

2) The Group as lessee

The financial leases are accounted at the smaller amount of the fair value of the leased assets at the beginning of the lease and the total amount of minimum lease payment. At the same time, the leasing liabilities are recognized.

The implied interest on the lease payments for each period is the current financial expense and is capitalized if it is directly attributable to the assets that meet the requirements.

Operating lease payments are recognized as an expense on a straight-line basis over the lease term unless another system could be more representative of the effectiveness of time consumption of lease assets.

3) Leasehold land for own use

When a lease includes both land and building elements, the Group assesses the classification of each element separately as a finance or an operating lease based on the assessment as to whether substantially all the risks and rewards incidental to ownership of each element have been transferred to the Group. The minimum lease payments are allocated between the land and the building elements in proportion to the relative fair values of the leasehold interests in the land element and building element of the lease at the inception of the lease.

If the allocation of the lease payments can be made reliably, each element is accounted for separately in accordance with its lease classification. When the lease payments cannot be allocated reliably between the land and building elements, the entire lease is generally classified as a finance lease unless it is clear that both elements are operating leases; in which case, the entire lease is classified as an operating lease.

- 21 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 b. Retirement benefits

The pension cost of the period adopts the pension cost rate valuated through actuarial valuation based on the beginning to the end of the previous period. Adjustments might be applied due to significant market volatility, significant reduce or pay off, or other significant events occurred after the end of the period.

c. Income tax

Income tax expense represents the sum of the tax currently payable and deferred tax. Interim period income taxes are assessed on an annual basis and calculated by applying to an interim period's pre-tax income the tax rate that would be applicable to expected total annual earnings.

The accounting principle of the effect of tax rate amendment during interim period are the same as transactions with tax consequences. They are recognized as profit or loss, other comprehensive income or equity when they occurred.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Group’s accounting policies, which are described in Note 4, management is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

Estimated Impairment of Discounts and Loans

The estimate of impairment of discounts and loans is based on assumptions about probability of default and loss given default. The Group uses judgement in making these assumptions and in selecting the inputs to the impairment calculation, based on the Group’s past history, existing market conditions as well as forward looking estimates at the end of each reporting period. For details of the key assumptions and inputs used, see Note 50. Where the actual future cash inflows are less than expected, a material impairment loss may arise. Also, the Group considers the specifications of the relevant authorities’ letter to make sure that the classification and allowance for impairment are in compliance with the requirements of the regulations.

Impairment losses on loans and receivables are shown in Notes 12, 13, 16, 50, Tables 7, 8 and 9.

- 22 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 6. CASH AND CASH EQUIVALENTS, NET

December 31, June 30, 2019 2018 June 30, 2018

Cash on hand $ 7,057,418 $ 6,919,664 $ 6,655,853 Notes and checks for clearing 4,887,731 4,741,346 5,031,341 Deposits in banks and due from other banks 12,173,280 9,423,305 12,974,638 Short-term bills 4,491,535 4,334,228 2,235,679 28,609,964 25,418,543 26,897,511 Less: Allowance for credit losses (295) (1,178) (1,605)

Net amount $ 28,609,669 $ 25,417,365 $ 26,895,906

Cash equivalents include short-term bills acquired by SinoPac Securities and SinoPac Securities Investment Trust that have a maturity of three months or less from the date of acquisition, high liquidity, readily convertible to a known amount of cash, and subject to an insignificant risk of change in value; these were held for the purpose of meeting short-term cash commitments.

Under the Guidelines on the Management of Country Risk by Banking Financial Institutions issued by the China Banking Regulatory Commission for countries or regions with low risks, Bank SinoPac (China) recognized the country risk provisions at 0.5% of the due from other banks and call loans to banks (Note 7), both due from bank and call loans to banks are assessed the allowance based on 0.05%.

The ranges of market rates for intervals of short-term bills at the end of the reporting period are as follows:

December 31, June 30, 2019 2018 June 30, 2018

Short-term bills 0.48%-0.63% 0.32%-0.60% 0.30%-0.51%

The carrying amounts of time deposits with original maturities of over three months or without early termination option and pledge were classified as other financial assets. Related information is shown in Note 16.

7. DUE FROM THE CENTRAL BANK AND CALL LOANS TO BANKS, NET

December 31, June 30, 2019 2018 June 30, 2018

Call loans to banks $ 70,594,433 $ 44,243,397 $ 38,353,759 Trade finance advance - interbank 1,243,173 568,902 2,485,968 Deposit reserve - checking accounts 11,925,883 17,364,948 11,515,793 Due from the Central Bank - interbank settlement funds 2,500,944 1,533,060 1,522,993 Deposit reserve - demand accounts 27,578,761 25,619,713 25,911,717 Deposit reserve - foreign currencies 326,333 292,139 289,805 Deposit reserve - other 2,210,937 2,282,832 1,252,622 116,380,464 91,904,991 81,332,657 Less: Allowance for credit losses (29,851) (15,589) (6,859)

Net amount $ 116,350,613 $ 91,889,402 $ 81,325,798

- 23 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 Under a directive issued by the Central Bank of the ROC, New Taiwan dollar (NTD) - denominated deposit reserves of Bank SinoPac are determined monthly at prescribed rates based on average balances of customers’ NTD-denominated deposits. Deposit reserve - demand account should not be used, except for adjusting the deposit reserve account monthly. In addition, the foreign-currency deposit reserves are determined at prescribed rates based on the balances of foreign-currency deposits. These reserves can be withdrawn momentarily anytime at no interest.

Under the relevant provisions issued by the People’s Bank of China, Bank SinoPac (China) Limited showed deposit reserves in proportion on the basis of deposit account balances at the end of the months.

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

December 31, June 30, 2019 2018 June 30, 2018

Financial assets mandatorily classified as at fair value through profit or loss

Government bonds $ 35,379,203 $ 21,040,447 $ 20,617,269 Operating securities - dealing 25,505,945 30,676,082 48,401,872 Bank debentures 4,657,791 8,518,499 13,134,784 Certificates of deposit purchased 2,235,659 2,531,143 2,561,074 Stocks 1,898,143 1,713,795 2,698,116 Corporate bonds 1,523,377 1,614,640 6,750,808 Operating securities - hedging 1,455,780 1,350,068 4,636,257 Operating securities - underwriting 104,253 336,852 734,619 Currency swap contracts 9,406,803 11,108,571 14,554,971 Interest rate swap contracts 4,332,254 2,690,901 3,144,333 Forward contracts 860,555 985,247 1,469,051 Hybrid FX swap structured instruments 736,713 1,040,193 1,017,067 Others 1,476,877 1,256,984 1,951,180

$ 89,573,353 $ 84,863,422 $ 121,671,401

Held-for-trading financial liabilities

Securities purchased under resell agreements - short sales $ 612,085 $ 832,106 $ 1,922,617 Currency swap contracts 7,047,176 11,229,075 13,115,202 Liabilities for issuance of warrants 6,384,543 5,076,940 9,555,914 Repurchase of issued warrants (6,193,631) (4,829,335) (8,543,317) Interest rate swap contracts 4,012,295 2,155,604 2,107,295 Option contracts 2,609,288 2,724,951 2,725,655 Hybrid FX swap structured instruments 735,962 1,039,128 1,016,030 Forward contracts 725,502 898,164 1,589,013 Others 929,048 1,179,508 1,059,233 16,862,268 20,306,141 24,547,642 Financial liabilities designated as at fair value through profit or loss

Bank debentures 1,550,624 1,500,806 1,456,351 Liabilities for structured notes 2,984,790 971,997 1,304,966 4,535,414 2,472,803 2,761,317

$ 21,397,682 $ 22,778,944 $ 27,308,959

- 24 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 a. The Group designated hybrid instruments and eliminating accounting inconsistencies as financial assets and liabilities at FVTPL. b. As of June 30, 2019, December 31, 2018 and June 30, 2018, the par values of financial assets at FVTPL under repurchase agreements were $19,429,851, $18,600,019 and $47,667,140, respectively. c. Information on financial liabilities designated as at fair value through profit or loss was as follows:

December 31, June 30, 2019 2018 June 30, 2018

Difference between carrying amounts and the amounts due on maturity Fair value $ 1,550,624 $ 1,500,806 $ 1,456,351 Amounts due on maturity (1,742,872) (1,724,486) (1,710,707)

$ (192,248) $ (223,680) $ (254,356)

Changes in Fair Value Attributable to Changes in Credit Risk

Change in amount during the period For the three months ended June 30, 2019 $ (19,973) For the three months ended June 30, 2018 $ 11,917 For the six months ended June 30, 2019 $ (59,177) For the six months ended June 30, 2018 $ 16,950 Accumulated amount of change As of June 30, 2019 $ (67,013) As of December 31, 2018 $ (7,836) As of June 30, 2018 $ (3,220)

The change in fair value attributable to changes in credit risk recognized as other comprehensive income was calculated as the difference between the total change in fair value of bank debentures and the change in fair value due to the change in market risk factors. The change in fair value due to market risk factors was calculated using benchmark interest yield curves as at the end of the reporting period holding the credit risk margin constant and interest rates swap volatility surface. The fair value of bank debentures was estimated by discounting future cash flows using quoted benchmark interest yield curves as at the end of the reporting period and credit risk margin is estimated by obtaining credit default swap spread of the company with similar credit rating.

On May 19, 2017, Bank SinoPac issued unsecured senior bank debentures amounting to US$45,000 thousand with a 30-year maturity, 0% coupon issued and an implicit internal, rate of return of 4.5%. In accordance with the terms of the bank debentures, Bank SinoPac may either redeem the bonds at an agreed-upon price after five years from the issue date or make bond repayments on the maturity date.

- 25 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 d. The Group engages in derivative transactions mainly to accommodate customers’ needs and manage its own exposure positions. Outstanding derivative contracts (nominal) as of June 30, 2019, December 31, 2018 and June 30, 2018 are shown as follows:

Contract Amount December 31, June 30, 2019 2018 June 30, 2018

Currency swap contracts $ 1,538,149,886 $ 1,620,237,896 $ 1,335,785,375 Interest rate swap contracts 838,909,842 794,007,453 762,178,152 Forward contracts 134,192,238 125,009,992 108,652,527 Option contracts 76,477,825 67,352,133 66,330,389 Cross-currency swap contracts 16,136,411 18,561,695 23,681,802 Futures contracts 11,757,134 17,161,914 25,347,652 Hybrid FX swap structured instruments 10,845,599 11,258,638 11,611,628 Asset swap contracts 7,449,700 4,682,700 3,937,600 Principal guaranteed contracts 2,840,904 800,907 1,035,000 Equity-linked swap contracts 332,924 547,660 734,218 Credit-linked swap contracts 30,000 21,800 71,000 Commodity-linked swap contracts 9,075 6,017 - Equity derivative instrument contracts - - 1,390,544

9. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

December 31, June 30, 2019 2018 June 30, 2018

Equity instruments at fair value through other comprehensive income $ 6,422,201 $ 5,716,667 $ 6,161,735 Debt instruments at fair value through other comprehensive income 222,564,983 203,704,405 232,415,326

$ 228,987,184 $ 209,421,072 $ 238,577,061

a. Equity instruments at fair value through other comprehensive income

December 31, June 30, 2019 2018 June 30, 2018

Listed common shares $ 3,278,851 $ 2,703,286 $ 3,715,044 Unlisted common shares 2,061,250 1,925,871 2,446,691 Real estate investment trust beneficiary securities 1,082,100 1,087,510 -

$ 6,422,201 $ 5,716,667 $ 6,161,735

Since the Group holds equity instruments for the purpose of long-term strategic investment, for acquiring stable income distribution to achieve the goal of increasing the rate of return of investment portfolio or for acquiring stable dividends instead of for trading, the equity investments are designated as at fair value through other comprehensive income. Since the Group adjusts the amount of investment or dispose of the stocks for the six months ended June 30, 2019 and 2018, fair value at the date of disposal was $548,563 and $382,399, respectively, and the cumulative gain or loss transferred from other equity to retained earnings was loss $106,486 and gain $9,975, respectively.

- 26 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 b. Debt instrument at fair value through other comprehensive income

December 31, June 30, 2019 2018 June 30, 2018

Certificates of deposits purchased $ 100,776,980 $ 107,365,202 $ 114,359,750 Bank debentures 50,988,525 37,901,034 32,972,372 Commercial paper 46,829,952 42,941,882 69,216,078 Corporate bonds 21,547,632 13,187,733 12,006,405 Others 2,421,894 2,308,554 3,860,721

$ 222,564,983 $ 203,704,405 $ 232,415,326

1) Loss allowance of debt instruments at fair value through other comprehensive income was $32,721, $25,714 and $22,926, respectively, on June 30, 2019, December 31, 2018 and June 30, 2018. Credit risk management and information of impairment valuation are shown in Note 50.

2) As of June 30, 2019, December 31 2018, and June 30, 2018, the par value of debt instruments at FVTOCI had been under repurchase agreements was $15,379,579, $8,276,597 and $4,377,138, respectively.

10. INVESTMENTS IN DEBT INSTRUMENTS AT AMORTIZED COST

December 31, June 30, 2019 2018 June 30, 2018

Government bonds $ 48,424,492 $ 37,655,313 $ 27,719,552 Certificates of deposits purchased 36,900,738 32,204,098 25,697,854 Bank debentures 19,083,587 17,760,343 16,763,361 Corporate bonds 8,054,653 5,255,718 7,548,928 Others 678,283 812,430 1,721,926 113,141,753 93,687,902 79,451,621 Less: Impairment loss (7,325) (7,068) (11,684)

$ 113,134,428 $ 93,680,834 $ 79,439,937

a. Credit risk management and information of impairment valuation of debt instruments at amortized cost are shown in Note 50.

b. Please refer to Note 46 for information relating to debt instruments at amortized cost pledged as security.

c. As of June 30, 2019, December 31, 2018 and June 30, 2018, the par value of debt instruments at amortized cost under repurchase agreements was $4,667,366, $12,467,673 and $12,042,100, respectively.

- 27 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 11. SECURITIES PURCHASED UNDER RESELL AGREEMENTS

December 31, June 30, 2019 2018 June 30, 2018

Bonds $ 11,296,538 $ 12,238,025 $ 15,688,579 Bills 9,092,790 9,967,157 7,489,000

$ 20,389,328 $ 22,205,182 $ 23,177,579

Agreed-upon resell amount $ 20,459,902 $ 22,248,216 $ 23,222,437 Par value 21,223,900 23,673,730 24,944,264

Expiry December 2019 March 2019 December 2018

As of June 30, 2019, December 31, 2018 and June 30, 2018, the par value of securities purchased under resell agreements under repurchase agreements were $6,961,605, $8,647,883 and $981,609, respectively.

12. RECEIVABLES, NET

December 31, June 30, 2019 2018 June 30, 2018

Credit card receivables $ 17,938,838 $ 15,430,592 $ 16,678,521 Margin loans receivable 12,926,876 14,391,644 22,368,645 Accounts receivable - factoring 10,746,472 15,146,375 10,799,806 Accounts receivable - forfaiting 8,265,676 7,507,355 8,311,723 Accounts receivable - settlement 6,523,884 5,509,668 10,989,823 Receivables from securities sale 4,969,381 977,813 1,633,073 Lease receivables and installment 4,701,110 4,201,952 2,150,730 Accounts and notes receivable 4,343,897 3,853,799 4,909,291 Interest and revenue receivables 4,245,845 4,643,050 3,710,841 Acceptances 2,575,060 1,508,623 2,318,636 Settlement price 644,323 1,105,404 159,230 Accounts receivable - disposal of subsidiary 546,299 540,536 1,072,433 Others 2,390,898 2,420,587 2,800,935 80,818,559 77,237,398 87,903,687 Less: Allowance for credit losses (1,590,345) (1,590,993) (1,355,629) Premium or discount on receivables (49) (113) (102)

Net amount $ 79,228,165 $ 75,646,292 $ 86,547,956

The lease receivables and installments listed in the above periods refer to the receivables due within one year and the balance of unrealized interest income.

- 28 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 The Group assessed the collectability of receivables to determine the related allowance. Movements in the related allowance of receivables are shown as follows:

For the Six Months Ended June 30 2019 2018

Balance, January 1 $ 1,590,993 $ 2,311,081 Adjustments of IFRS 9 application - 247,745 Provision 180,945 160,469 Write-off (58,162) (1,300,814) Recovery of written-off credits (89,158) (699) Reclassification (38,619) (91,858) Effect of exchange rate changes 4,346 29,705

Balance, June 30 $ 1,590,345 $ 1,355,629

Please refer to Note 50 and Tables 7 and 9 for the analysis of receivable impairment loss. The recovery of receivables write-off as deduction of provision for the six months ended June 30, 2019 and 2018 were $178,608 and $92,438, respectively.

The board of directors of Bank SinoPac has resolved to sell 100% equity of SinoPac Bancorp to Cathay General Bancorp on July 8, 2016. The case was approved by the FSC on July 6, 2017, and the settlement was completed on July 14, 2017 (US time). The total transaction price is US$351,551 thousand, and the buyer will pay 10% of the total transaction price by issuing 926,192 shares of stock. Bank SinoPac has already disposed all the stock and then pay US$100,000 thousand according to the schedule of the contract (no later than one year after the settlement date). The above US$100,000 thousand was received on November 2017. Besides according to the stock purchase agreement, the buyer reserves 10% of the transaction price (US$35,155 thousand, listed in accounts receivable - disposal of subsidiary) as compensation in the event Bank SinoPac breaches the contract. The buyer will repay the amount plus interest within three years after the settlement date to Bank SinoPac. The above compensation price of 50 % and 30% (US$17,578 thousand and US$10,546 thousand) had been received in July 2018 and 2019 and Bank SinoPac recognized the gain on disposal of the subsidiary amounting to $537,205 and $327,628.

Huishan Dairy applying for suspension in HKEx caused the collateral value that the borrowers of SinoPac Securities (Asia) pledged shares of Huishan Dairy as collateral became insufficient and had been fully provided with allowance for credit loss in the amount of HK$261,000 thousand and written off in second quarter of 2018.

13. DISCOUNTS AND LOANS, NET

December 31, June 30, 2019 2018 June 30, 2018

Export negotiation $ 693,864 $ 572,583 $ 811,672 Overdrafts - - 7,018 Secured overdrafts 74,116 83,772 84,577 Accounts receivable - financing 1,159,672 1,875,454 1,214,821 Short-term loans 190,812,801 174,019,884 161,355,006 Secured short-term loans 106,706,396 99,753,764 96,974,588 Medium-term loans 198,029,035 169,452,118 154,129,970 Secured medium-term loans 75,780,073 63,771,605 59,936,765 Long-term loans 7,259,072 5,949,425 5,095,446 (Continued)

- 29 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758

December 31, June 30, 2019 2018 June 30, 2018

Secured long-term loans $ 451,114,060 $ 418,413,005 $ 411,836,899 Nonperforming loans transferred from loans 1,939,225 1,890,228 1,921,100 1,033,568,314 935,781,838 893,367,862 Less: Allowance for credit losses (13,837,679) (13,087,745) (12,619,159) Less: Premium or discount on discounts and loans (427,981) (330,429) (308,029)

Net amount $ 1,019,302,654 $ 922,363,664 $ 880,440,674 (Concluded)

Please refer to Note 50 and Tables 7 and 8 for the analysis of impairment loss on discounts and loans. Please refer to Note 46 for information relating to discounts and loans pledged as security.

The Group assessed the collectability of discounts and loans to determine the required allowance. Movements of the allowance of discounts and loans are shown as follows:

For the Six Months Ended June 30 2019 2018

Balance, January 1 $ 13,087,745 $ 12,556,743 Adjustments of IFRS 9 application - 6,137 Provision 1,162,991 386,875 Write-off (440,633) (369,238) Effect of exchange rate changes 27,576 38,642

Balance, June 30 $ 13,837,679 $ 12,619,159

The Group received loans previous written-off $223,327 and $191,857 for the six months ended June 30, 2019 and 2018, respectively, which recognized as deductions on provision expenses.

14. INVOLVEMENT WITH UNCONSOLIDATED STRUCTURED ENTITIES

The tables below show the information of unconsolidated structures entities in which the Group had an interest at the reporting date:

Type of Structured Entity Nature and Purpose The Group’s Ownership

Funds Funds under management by the a. The Group invests in those funds under third party management by the third party. The Group also invests units in b. The Group entitled to receive management these funds fee based on the assets under management.

The total assets of Funds unrecognized in the consolidated balance sheets were as follows:

December 31, June 30, 2019 2018 June 30, 2018

Funds $ 35,826,487 $ 51,383,485 $ 56,345,605

- 30 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 The carrying amounts of the funds in which the Group also invests were as follows:

December 31, June 30, 2019 2018 June 30, 2018

Financial assets at fair value through profit or loss $ 789,605 $ 876,814 $ 819,035

The maximum exposure of loss was the carrying amount of the funds.

As of June 30, 2019, December 31, 2018 and June 30, 2018, the Group did not provide any financial support to those unconsolidated structures.

15. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD

December 31, June 30, 2019 2018 June 30, 2018

Golden Trust SinoPac Fund Management $ 419,657 $ 389,410 $ 347,843 Telexpress 100,229 97,056 96,919

$ 519,886 $ 486,466 $ 444,762

Principal Proportion of Ownership and Voting Rights Place of December 31, Name of Associate Nature of Activities Business June 30, 2019 2018 June 30, 2018

Golden Trust Fund raising and sale, China 49.00% 49.00% 49.00% SinoPac Fund asset management Management business approved by CSRC Telexpress Stockholding Cayman Islands/ 34.21% 34.21% 34.21% Taiwan

The board of directors of SinoPac Security Investment Trust Corporation (SITC) determined to dispose of 49% of its shares in Golden Trust SinoPac Fund Management Company Limited on October 21, 2016. However due to the fact that the transaction schedule was not as expected, the Company announced on April 20, 2018 that the aforementioned equity transfer agreement was terminated and the disciplinary action was terminated.

The Group accounts for investments using the equity method, and hence the profit or loss and other comprehensive income resulting from the investments thereof are prorated accordingly based on the shares. The calculation of the share of other investments was based on the investee’s unaudited financial statements except for Golden Trust SinoPac Fund Management which was based on the investee’s audited financial statements; however, the management of the Group believes that the aforesaid investment should not cause material impact to the Group’s financial statements.

The associates’ reviewed financial information is summarized as follows:

For the Three Months Ended For the Six Months Ended June 30 June 30 2019 2018 2019 2018 The Group’s share of: Net income (loss) $ 13,555 $ 12,199 $ 28,321 $ 43,302 Other comprehensive income (loss) (1,542) (5,124) 318 (479)

$ 12,013 $ 7,075 $ 28,639 $ 42,823

- 31 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758

16. OTHER FINANCIAL ASSETS, NET

December 31, June 30, 2019 2018 June 30, 2018

Customer margin deposits $ 19,332,174 $ 15,798,668 $ 17,356,407 Time deposits not belong to cash and cash equivalents 15,763,918 18,187,297 11,527,952 Purchase of the PEM Group’s instruments 4,528,271 4,468,375 4,360,747 Long-term lease receivables and installment 3,053,191 2,469,716 4,628,964 Nonperforming receivables transferred from other than loans 364,423 646,655 298,515 Others 630,486 734,047 175,461 43,672,463 42,304,758 38,348,046 Less: Allowance for credit loss (304,109) (571,343) (848,014) Less: Accumulated impairment (1,973,122) (2,066,619) (2,104,316)

Net amount $ 41,395,232 $ 39,666,796 $ 35,395,716

Above time deposits not belong to cash and cash equivalent include over three months, no advanced termination time deposits, or pledged time deposits. The long-term leases receivable and installments presented in each period are the balance of deducting unrealized interest income.

Please refer to Note 46 for information on other financial assets pledged as security.

The Group assessed the collectability of other financial assets to determine the required allowance. Movements in the allowance of other financial assets are shown as follows:

For the Six Months Ended June 30 2019 2018

Balance, January 1 $ 571,343 $ 223,525 Adjustments of IFRS 9 application - 33,739 (Reversal of) provision (85,817) 546,781 Write off (220,246) (49,443) Recovery of written-off credits (456) (60) Reclassifications 38,619 91,899 Effect of exchange rate changes 666 1,573

Balance, June 30 $ 304,109 $ 848,014

The Group’s recovery of other financial assets written-off as deducted of provision for the six months ended June 30, 2019 and 2018 were $14,455 and $6,401, respectively.

Bank SinoPac was delegated by professional investors to sell the PEM Group’s investment products amounting to US$146,000 thousand through private placement. A U.S. Federal Court appointed a receiver for all assets that belonged to, were being managed by, or were in the possession of or control of the PEM Group. To protect the client’s interests, Bank SinoPac bought back the products at the price of the initial payment net of the distribution and redemption costs. On December 24, 2010, Bank SinoPac’s board of directors resolved to abide by the Court’s appointment of a PEM Group receiver to take the PEM Group’s insurance policies at the price of approximately US$40.4 million, and Bank SinoPac thus recognized impairment losses of US$11,152 thousand. On March 7, 2011, the receiver transferred a portion of the insurance policies to a trustee established jointly by certain banks to hold insurance policies. And Bank

- 32 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 SinoPac had submitted to the authorities the results of this policy transfer. As of June 30, 2019, according to trust report, a reserve of US$63,487 thousand (NT$1,973,122) had been set aside to cover the accumulated impairment losses.

17. INVESTMENT PROPERTY, NET

The movements of investment property are summarized as follows:

For the Six Months Ended June 30, 2019 Land Land Improvements Buildings Total

Cost

Balance, January 1 $ 1,994,620 $ 6,583 $ 1,026,093 $ 3,027,296 Addition - - 1,015 1,015 Deduction (2,053) - (22,771) (24,824) Reclassifications (19,673) - (14,141) (33,814) Balance, June 30 1,972,894 6,583 990,196 2,969,673

Accumulated depreciation

Balance, January 1 - 2,944 397,592 400,536 Addition - 834 11,122 11,956 Deduction - - (8,665) (8,665) Reclassifications - - (7,359) (7,359) Balance, June 30 - 3,778 392,690 396,468

Accumulated impairment

Balance, January 1 14,532 - 22,772 37,304 Addition - - - - Deduction - - - - Balance, June 30 14,532 - 22,772 37,304

Net amount

Balance, June 30 $ 1,958,362 $ 2,805 $ 574,734 $ 2,535,901

For the Six Months Ended June 30, 2018 Land Land Improvements Buildings Total

Cost

Balance, January 1 $ 2,010,455 $ 6,583 $ 993,057 $ 3,010,095 Addition - - 653 653 Deduction - - - - Reclassifications 8,128 - 15,398 23,526 Balance, June 30 2,018,583 6,583 1,009,108 3,034,274 (Continued)

- 33 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758

For the Six Months Ended June 30, 2018 Land Land Improvements Buildings Total

Accumulated depreciation

Balance, January 1 $ - $ 1,278 $ 377,745 $ 379,023 Addition - 833 10,943 11,776 Deduction - - - - Reclassifications - - 4,426 4,426 Balance, June 30 - 2,111 393,114 395,225

Accumulated impairment

Balance, January 1 5,087 - 19,300 24,387 Addition - - - - Deduction - - - - Balance, June 30 5,087 - 19,300 24,387

Net amount

Balance, June 30 $ 2,013,496 $ 4,472 $ 596,694 $ 2,614,662 (Concluded)

The above investment properties are depreciated at the following estimated useful lives:

Category Useful Lives

Land improvements 2.75-10 years Buildings 2-61 years

The investment property of Bank SinoPac was held for earning rentals and/or for capital appreciation. The fair values of properties used mainly or partially for Bank SinoPac’s investment properties as of June 30, 2019, December 31, 2018 and June 30, 2018 were $9,619,885, $9,619,885 and $9,537,535, respectively. The fair values, which were based on an internal valuation yearly report instead of an assessment by an independent professional appraiser, were unobservable inputs (Level 3).

The fair values of SinoPac Securities’ investment properties as of June 30, 2019, December 31, 2018 and June 30, 2018 were $268,794, $268,794 and $255,954, respectively. The fair values were arrived at not through the valuations of independent experts but by reference to unobservable inputs (Level 3), i.e., neighboring area transaction prices from 2018 and 2017.

The fair values of SinoPac Leasing’s investment properties as of June 30, 2019, December 31, 2018 and June 30, 2018 were $7,120,896, $7,120,896 and $7,117,606, respectively. The fair values were based on external valuation report issued by independent experts or estimated transaction price using level 2 and level 3 inputs from November 2016 to November 2018.

Please refer to Note 46 for information on investment properties pledged as security. Fair value information was described in Note 49.

- 34 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 18. PROPERTY AND EQUIPMENT, NET

The movements of property and equipment are summarized as follows:

For the Six Months Ended June 30, 2019 Prepayments for Equipment Machinery and and Land and Land Computer Transportation Other Leasehold Construction in Improvements Buildings Equipment Equipment Equipment Improvement Progress Total Cost

Balance, January 1 $ 7,285,328 $ 7,523,323 $ 2,289,634 $ 167,574 $ 1,619,198 $ 2,060,732 $ 139,430 $ 21,085,219 Adjustment on initial application of IFRS 16 - - - - (3,148 ) (105,584 ) - (108,732 ) Balance at January 1, 2018 as restated 7,285,328 7,523,323 2,289,634 167,574 1,616,050 1,955,148 139,430 20,976,487 Addition 290 13,527 158,266 16,693 23,373 16,775 89,837 318,761 Deduction - - (46,481 ) (23,637 ) (27,068 ) (35,984 ) - (133,170 ) Reclassifications 19,673 16,700 24,754 - 1,176 7,953 (73,976 ) (3,720 ) Effect of exchange rate changes - 3,865 5,380 17 942 3,287 218 13,709 Other (Note) - 594 - - - (594 ) - - Balance, June 30 7,305,291 7,558,009 2,431,553 160,647 1,614,473 1,946,585 155,509 21,172,067

Accumulated depreciation

Balance, January 1 - 3,797,724 1,699,249 84,448 1,249,559 1,681,173 - 8,512,153 Adjustment on initial application of IFRS 16 - - - - (2,828 ) (83,580 ) - (86,408 ) Balance at January 1, 2018 as restated - 3,797,724 1,699,249 84,448 1,246,731 1,597,593 - 8,425,745 Depreciation 2 88,014 113,471 14,476 53,562 63,210 - 332,735 Deduction - - (45,136 ) (17,467 ) (26,648 ) (35,738 ) - (124,989 ) Reclassifications - 7,359 422 - (422 ) - - 7,359 Effect of exchange rate changes - 57 4,553 17 803 2,487 - 7,917 Other (Note) - 282 - - - (282 ) - - Balance, June 30 2 3,893,436 1,772,559 81,474 1,274,026 1,627,270 - 8,648,767

Net amount

Balance, June 30 $ 7,305,289 $ 3,664,573 $ 658,994 $ 79,173 $ 340,447 $ 319,315 $ 155,509 $ 12,523,300

For the Six Months Ended June 30, 2018 Prepayments for Equipment Machinery and and Computer Transportation Other Leasehold Construction in Land Buildings Equipment Equipment Equipment Improvement Progress Total Cost

Balance, January 1 $ 7,274,721 $ 7,094,671 $ 2,138,840 $ 175,778 $ 1,607,390 $ 2,045,191 $ 141,682 $ 20,478,273 Addition - 365,066 138,012 20,734 44,142 21,846 125,387 715,187 Deduction - - (65,912 ) (32,931 ) (49,881 ) (69,122 ) (699 ) (218,545 ) Reclassifications (8,128 ) 18,779 7,750 - 5,031 23,826 (115,022 ) (67,764 ) Effect of exchange rate changes - - 4,664 17 790 (856 ) 1,257 5,872 Balance, June 30 7,266,593 7,478,516 2,223,354 163,598 1,607,472 2,020,885 152,605 20,913,023

Accumulated depreciation

Balance, January 1 - 3,625,510 1,602,926 92,990 1,225,099 1,624,668 - 8,171,193 Depreciation - 83,308 99,770 14,199 57,159 77,364 - 331,800 Deduction - - (62,732 ) (22,862 ) (48,201 ) (68,220 ) - (202,015 ) Reclassifications - (4,426 ) - - - - - (4,426 ) Effect of exchange rate changes - (47 ) 4,545 17 241 (270 ) - 4,486 Balance, June 30 - 3,704,345 1,644,509 84,344 1,234,298 1,633,542 - 8,301,038

Net amount

Balance, June 30 $ 7,266,593 $ 3,774,171 $ 578,845 $ 79,254 $ 373,174 $ 387,343 $ 152,605 $ 12,611,985

Note: Arising on assets, liabilities and operations of SinoPac Call Center merged by Bank SinoPac.

The above property and equipment are depreciated at the following estimated useful lives:

Category Useful Lives

Land improvements 8-30 years Buildings 2-60 years Machinery and computer equipment 0.58-15 years Transportation equipment 5-6 years Other equipment 1-15 years Leasehold improvement 1-15 years

- 35 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758

Please refer to Note 46 for the information on property and equipment pledged as security. The balance of other equipment and transpiration equipment rented out on June 30, 2019 was $79,752.

19. LEASE ARRANGEMENTS

a. Right-of-use assets, net

June 30, 2019 Carrying amounts

Land and surface rights $ 1,044,267 Buildings 2,415,027 Machinery and computer equipment 42,276 Transportation equipment 11,090 Other equipment 2,426 Decommissioning restoration costs 28,198

$ 3,543,284

For the Six Months Ended June 30, 2019

Additions to right-of-use assets $ 450,130

Depreciation charge for right-of-use assets Land and surface rights $ 18,416 Buildings 379,889 Machinery and computer equipment 13,510 Transportation equipment 3,573 Other equipment 619 Decommissioning restoration costs 5,556

$ 421,563

Right-of-use assets sublease revenue (financing interest revenue) $ 645

Please refer to Note 46 for information on right-of-use assets pledged as security.

b. Lease liabilities

June 30, 2019

Carrying amounts $ 2,877,472

Range of discount rate for lease liabilities was as follows:

June 30, 2019

Land and surface rights 0.7357%-4.8096% Buildings 0.5609%-5.8366% Machinery and computer equipment 0.7357%-1.8909% Transportation equipment 0.5609%-5.8366% Other equipment 0.5609%-5.8366%

- 36 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758

c. Material lease-in activities and terms

The Group leases certain land and buildings for the use of business locations and operating assets with lease terms of 1 year to 30.1 years. The lease contract for major buildings for 30.1 years located in Taiwan for the use of offices specifies that lease payments will be adjusted a year on the basis of current announcement land value 5%. The lease contract for major buildings located in Hong Kong for the use of management units with fixed lease payments. The lease contract for parking space for 15.9 years located in Taiwan for clients’ using will be adjusted since the fourth year of the rent day. The Group does not have bargain purchase options to acquire the leasehold land and buildings at the end of the lease terms.

d. Other lease information

Lease arrangements under operating leases for the leasing out of investment properties and equipment are set out in Notes 17, 18 and 48.

2019

For the Six Months Ended June 30, 2019

Expenses relating to short-term leases $ 23,267 Expenses relating to low-value asset leases $ 15,772 Expenses relating to variable lease payments not included in the measurement of lease liabilities $ 3,753 Total cash outflow for leases $ (478,013)

Recognition exemption is applied which qualifies as short-term leases such as various types of assets and low-value asset leases such as other equipment. The Group has elected to apply the recognition exemption and thus, did not recognize right-of-use assets and lease liabilities for these leases.

20. INTANGIBLE ASSETS, NET

December 31, Items June 30, 2019 2018 June 30, 2018

Goodwill $ 1,155,771 $ 1,155,059 $ 1,205,797 Computer software 636,787 589,901 573,982 Customer relationships 401,203 440,642 480,235 Membership fees 41,413 41,413 41,413 Others 7,830 7,882 8,237

$ 2,243,004 $ 2,234,897 $ 2,309,664

- 37 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 Movements in the Group’s intangible assets are shown as follows:

Computer Customer Membership Goodwill Software Relationships Fees Others Total

2019

Balance, January 1 $ 1,155,059 $ 589,901 $ 440,642 $ 41,413 $ 7,882 $ 2,234,897 Addition - 113,806 - - - 113,806 Deduction - (6) - - - (6) Amortization - (105,595) (40,609) - (134) (146,338) Reclassifications - 37,534 - - - 37,534 Effect of exchange rate changes 712 1,147 1,170 - 82 3,111

Balance, June 30 $ 1,155,771 $ 636,787 $ 401,203 $ 41,413 $ 7,830 $ 2,243,004

2018

Balance, January 1 $ 1,203,298 $ 571,817 $ 518,038 $ 41,413 $ - $ 2,334,566 Addition - 56,029 - - 8,329 64,358 Deduction - (736) - - - (736) Amortization - (95,298) (40,246) - (93) (135,637) Reclassifications - 44,238 - - - 44,238 Effect of exchange rate changes 2,499 (2,068) 2,443 - 1 2,875

Balance, June 30 $ 1,205,797 $ 573,982 $ 480,235 $ 41,413 $ 8,237 $ 2,309,664

The above intangible assets are amortized on a straight-line basis over the following estimated useful lives:

Items Years

Computer software 3-10 years Customer relationships 8-15 years

Goodwill in each above periods will be tested for impairment annually and whenever there is an indication that it may be impaired. In assessing whether goodwill on an equity investment or an unamortized difference between the acquisition cost and the equity is impaired, the Company considered the credit card department of Bank SinoPac, SinoPac Securities Investment Trust domestic sales group or the Company’s investee company as a cash generating unit and estimated the recoverable amount of the investee’s value in use. The Group used an investee’s actual profitability and estimated salvage value in making key assumptions to predict the investee’s future cash flows and thus calculate the investee’s value in use. Under a going concern assumption, the Group predicted the net cash flows generated from the investee’s operating activities in the next 5 years and estimated the salvage value and used the Company’s weighted average cost of capital to calculate the value in use. The goodwill impairment test had been proceeded on October 31, 2018 and 2017 recently.

Information on goodwill is summarized as follows: a. The amounts of $876,717 was recognized as goodwill from Bank SinoPac’s cash merger with SinoPac Card Services, and this merger was treated as a reorganization of the Company.

For the six months ended June 30, 2019, the year ended December 31, 2018 and the six months ended June 30, 2018, the amounts of net income affiliated with cash generating units were $26,839, $190,146 and $97,392, respectively. The amounts of expected net income for the years 2019 and 2018 as assessed by the impairment test on goodwill would be $81,907 and $62,319, respectively. The recoverable amount was expected to be higher than the book value. Therefore, the Company found no objective evidence that goodwill had been impaired as of June 30, 2019 and June 30, 2018.

- 38 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 b. As of June 30, 2019, SinoPac Securities and its subsidiaries had the following goodwill:

1) The goodwill on the merger of SinoPac Securities merged with Pacific Securities and BEA Securities Broker was $147,944.

For the six months ended June 30, 2019, the year ended December 31, 2018 and the six months ended June 30, 2018, the amounts of net income which are not included share of profit of associates accounted for using equity method were $563,376, $395,925 and $215,831, respectively. The amounts of expected net income were $1,237,755, and $1,073,630 in 2019 and 2018, respectively. Due to the rise of bond yields and the trade war between the United States and China, operating securities of dealing was beyond expectation during 2018. However, the recoverable amount was expected to be higher than the book value based on the total number of actual forecasts. Therefore, the Group found no objective evidence that goodwill had been impaired.

2) The goodwill on the merger of SinoPac Futures merged with Pacific Securities Futures Broker and the shares that bought from others shareholders of SinoPac Futures was $63,582.

For the six months ended June 30, 2019, the year ended December 31, 2018 and the six months ended June 30, 2018, the amounts of actual net income were $174,166, $280,707 and $91,154, respectively. The amounts of expected net income were $345,195 and $276,166 in 2019 and 2018, respectively. There was no significant difference between practical operation and expected benefit. The recoverable amount exceeded the book value as assessed, there was no impairment loss as of June 30, 2019, December 31, 2018 and June 30, 2018.

3) The goodwill on the merger of SinoPac Securities (Cayman) with Tung Shing Holdings Ltd’s brokerage and financing business was $67,528.

For the six months ended June 30, 2019, the year ended December 31, 2018 and the six months ended June 30, 2018, the amounts of actual net income and loss of Tung Shing Holding Ltd. affiliated with cash generating loss were $31,653, $67,918 and income $26,840, respectively. The amounts of expected amounts of net income was $34,438 and $82,482 in 2019 and 2018, respectively. According to the test result, there was $50,698 impairment loss as of December 31, 2018.

Membership fees are considered to have an indefinite useful life. A membership fee will not be amortized until its useful life is determined to be finite. Instead it will be tested for impairment annually and whenever there is an indication that it may be impaired.

21. OTHER ASSETS, NET

December 31, June 30, 2019 2018 June 30, 2018

Amounts held for settlement $ 7,704,017 $ 8,076,149 $ 8,512,631 Securities borrowing margins 4,258,118 4,297,356 4,563,426 Guarantee deposits 2,679,974 3,928,177 4,768,640 Operating guarantee deposits and settlement fund 1,417,158 1,384,240 1,372,827 Prepayment 456,986 471,189 923,527 Temporary payment and suspense accounts 153,822 154,504 139,873 Collaterals 38,835 38,442 39,506 (Continued)

- 39 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758

December 31, June 30, 2019 2018 June 30, 2018

Prepaid lease payments - surface rights $ - $ 720,431 $ 732,438 Others, net 95,237 148,482 214,231 16,804,147 19,218,970 21,267,099 Less: Allowance for reduction of inventory to market - gold - - (96) Less: Accumulated impairment (7,000) (10,996) (9,826)

Net amount $ 16,797,147 $ 19,207,974 $ 21,257,177 (Concluded)

The surface rights are amortized on a straight-line basis over 44 years and reclassified as right-of-use assets since 2019.

Refer to Note 46 for information on other assets pledged as security.

Operating guarantee deposits is mainly for using cash, governing bonds or bank debentures as the legal deposit paid to financial institutions designated by relevant authorities to hold these deposits when the domestic subsidiaries register or sets up a branch office in accordance with the Regulations Governing Securities Firms, Regulations Governing Futures Firms and overseas clearing regulations.

Under the Regulations Governing Securities Firms, Regulations Governing Futures Firms and overseas clearing regulations, when SinoPac Securities and its domestic and overseas subsidiaries accept consignments for trading on the centralized securities exchange market, they should deposit a settlement/clearing fund in the Taiwan Stock Exchange, Taipei Exchange, Taiwan Futures Exchange and overseas stock and futures exchanges before or after the start of business operation.

Collaterals are customer’s debt assets of SinoPac International Leasing to offset its claim. Collaterals are measured at fair value of acquisition and perform the impairment test to assess the impairment periodically.

22. DEPOSITS FROM THE CENTRAL BANK AND BANKS

December 31, June 30, 2019 2018 June 30, 2018

Call loans from banks $ 41,330,980 $ 37,317,591 $ 52,776,084 Redeposits from Chunghwa Post 10,190,900 543,485 664,491 Due to banks 116,607 103,855 194,178

$ 51,638,487 $ 37,964,931 $ 53,634,753

- 40 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 23. SECURITIES SOLD UNDER REPURCHASE AGREEMENTS

December 31, June 30, 2019 2018 June 30, 2018

Bank debentures $ 23,484,901 $ 13,405,156 $ 20,427,712 Corporate bonds 8,097,656 9,552,660 15,155,875 Bonds purchased resell agreements 6,596,982 8,032,853 915,444 Convertible bonds 2,965,728 2,794,692 3,519,691 Government bonds 2,873,303 12,392,768 21,546,645 Financial assets securitization 600,000 600,000 600,000 Financial preferred stocks - - 44,146

$ 44,618,570 $ 46,778,129 $ 62,209,513

Agreed-upon repurchase price $ 44,819,841 $ 46,956,449 $ 62,387,272 Pair value 46,438,401 47,992,172 65,067,987

Expiry December 2019 June 2019 December 2018

24. COMMERCIAL PAPERS ISSUED, NET

December 31, June 30, 2019 2018 June 30, 2018

Commercial paper $ 25,610,000 $ 33,830,000 $ 50,390,000 Less: Unamortized discount (13,587) (16,398) (25,002)

Net amount $ 25,596,413 $ 33,813,602 $ 50,364,998

Maturity date 2019.7-2019.9 2019.1-2019.3 2018.7-2018.12

Discount rate 0.43%-1.8380% 0.58%-1.8100% 0.39%-1.6897%

Except for free-guarantee items commercial paper was guaranteed or acceptances were issued by the bill finance corporations or banks. For information on related collaterals, refer to Note 46.

25. PAYABLES

December 31, June 30, 2019 2018 June 30, 2018

Accounts payable for settlement $ 15,305,351 $ 14,248,600 $ 16,422,491 Cash dividends payable 7,168,390 - 5,525,026 Accounts and notes payable 3,281,370 995,031 1,100,333 Purchase of security 3,219,818 724,735 1,343,764 Notes and checks in clearing 4,887,731 4,741,346 5,031,341 Interest payables 3,192,841 2,413,604 2,269,342 Accrued expense 2,920,641 3,540,115 2,684,586 Accounts payable - factoring 2,558,074 2,360,478 2,373,266 Acceptances payable 2,171,046 1,508,623 2,318,636 Financing guarantees payable 1,355,231 2,917,232 1,529,615 (Continued)

- 41 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758

December 31, June 30, 2019 2018 June 30, 2018

Deposits on short sales $ 1,217,114 $ 2,640,923 $ 1,392,323 Others 1,803,392 1,546,980 1,561,015

$ 49,080,999 $ 37,637,667 $ 43,551,738 (Concluded)

Bank SinoPac signed a business-university collaboration contract with National Chung Hsing University in July 2012, to donate for the construction of a Food Safety & Agricultural Chemicals and Machinery Research Building. With a budget not more than $300,000, Bank SinoPac had obtained the construction permit and signed the contract with the building contractor in November 2016. The contract price is $250,998 and will be paid with previously estimated accrued expenses of $295,000. The balance of the accrued expenses was $6,413 as of June 30, 2019.

26. DEPOSITS AND REMITTANCES

December 31, June 30, 2019 2018 June 30, 2018

Checking $ 16,084,260 $ 14,189,678 $ 13,090,036 Demand 260,551,880 237,719,433 240,855,927 Savings - demand 306,051,266 286,800,971 277,855,761 Time deposits 482,731,483 383,991,515 333,643,848 Negotiable certificates of deposit 21,903,300 25,324,300 27,578,700 Savings - time 251,205,156 241,827,107 243,147,156 Inward remittances 1,012,369 809,448 873,186 Outward remittances 45,506 88,150 54,150

$ 1,339,585,220 $ 1,190,750,602 $ 1,137,098,764

27. BONDS PAYABLE

December 31, June 30, 2019 2018 June 30, 2018

Bank debentures $ 37,221,383 $ 32,722,483 $ 39,680,788 Corporate bonds payable 3,000,000 3,000,000 3,000,000

$ 40,221,383 $ 35,722,483 $ 42,680,788

- 42 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 a. Bank SinoPac

To raise capital for its financial operation and increase its capital adequacy ratio, Bank SinoPac obtained approval from the FSC to issue bank debentures as follows:

December 31, June 30, 2019 2018 June 30, 2018 Maturity Rates

Second subordinated bank $ - $ - $ 3,799,958 2011.08.18-2018.08.18 Fixed interest rate of 1.95%, debentures issued in 2011 (A) Principal is repayable on maturity date. interest is paid annually. Second subordinated bank 2,999,635 2,999,553 2,999,470 2011.08.18-2021.08.18 Fixed interest rate of 2.18%, debentures issued in 2011 (B) Principal is repayable on maturity date. interest is paid annually. Third subordinated bank - - 3,199,907 2011.11.04-2018.11.04 Fixed interest rate of 1.85%, debentures issued in 2011 Principal is repayable on maturity date. interest is paid annually. First subordinated bank debentures 4,699,917 4,699,735 4,699,549 2012.09.18-2019.09.18 Fixed interest rate of 1.53%, issued in 2012 (A) Principal is repayable on maturity date. interest is paid annually. First subordinated bank debentures 1,299,766 1,299,731 1,299,696 2012.09.18-2022.09.18 Fixed interest rate of 1.65%, issued in 2012 (B) Principal is repayable on maturity date. interest is paid annually. First subordinated bank debentures - 1,499,952 1,499,851 2013.09.27-2019.03.27 Fixed interest rate of 1.80%, issued in 2013 Principal is repayable on maturity date. interest is paid annually. Second subordinated bank - 1,999,873 1,999,746 2013.12.23-2019.06.23 Fixed interest rate of 1.75%, debentures issued in 2013 Principal is repayable on maturity date. interest is paid annually. First subordinated bank debentures 1,999,941 1,999,810 1,999,687 2014.03.20-2019.09.20 Fixed interest rate of 1.70%, issued in 2014 Principal is repayable on maturity date. interest is paid annually. Second subordinated bank 2,499,846 2,499,690 2,499,539 2014.06.23-2019.12.23 Fixed interest rate of 1.65%, debentures issued in 2014 Principal is repayable on maturity date. interest is paid annually. Third subordinated bank 1,879,802 1,879,677 1,879,551 2014.09.30-2020.03.30 Fixed interest rate of 1.75%, debentures issued in 2014 (A) Principal is repayable on maturity date. interest is paid annually. Third subordinated bank 699,721 699,697 699,672 2014.09.30-2024.09.30 Fixed interest rate of 2.05%, debentures issued in 2014 (B) Principal is repayable on maturity date. interest is paid annually. First subordinated bank debentures 749,887 749,836 749,785 2015.07.22, no maturity date (Note 1) Fixed interest rate of 3.90% issued in 2015 (Note 4) Second subordinated bank 459,922 459,891 459,859 2015.09.08, no maturity date (Note 2) Fixed interest rate of 3.90% debentures issued in 2015 (Note 4) Third subordinated bank 709,865 709,818 709,770 2015.11.05, no maturity date (Note 2) Fixed interest rate of 3.90% debentures issued in 2015 (Note 4) Fourth subordinated bank 139,970 139,960 139,951 2015.12.15, no maturity date (Note 2) Fixed interest rate of 3.90% debentures issued in 2015 (Note 4) First subordinated bank debentures 1,499,682 1,499,588 1,499,499 2016.02.23, no maturity date (Note 2) Fixed interest rate of 3.90% issued in 2016 (Note 4) Second subordinated bank 1,029,752 1,029,683 1,029,617 2016.03.30, no maturity date (Note 2) Fixed interest rate of 3.90% debentures issued in 2016 (Note 4) Third subordinated bank 1,419,436 1,419,376 1,419,315 2016.12.23-2023.12.23 Fixed interest rate of 1.50%, debentures issued in 2016 Principal is repayable on maturity date. interest is paid annually. First subordinated bank debentures 149,895 149,884 149,873 2017.02.24-2024.02.24 Fixed interest rate of 1.60%, issued in 2017 (A) Principal is repayable on maturity date. interest is paid annually. First subordinated bank debentures 2,099,116 2,099,062 2,099,010 2017.02.24-2027.02.24 Fixed interest rate of 1.90%, issued in 2017 (B) Principal is repayable on maturity date. interest is paid annually. Third subordinated bank 199,902 199,893 199,883 2017.06.28-2024.06.28 Fixed interest rate of 1.70%, debentures issued in 2017 (A) Principal is repayable on maturity date. interest is paid annually. Third subordinated bank 539,710 539,693 499,701 2017.06.28-2027.06.28 Fixed interest rate of 1.95%, debentures issued in 2017 (B) Principal is repayable on maturity date. interest is paid annually. Forth subordinated bank 2,998,902 2,998,759 2,998,619 2017.06.28, no maturity date (Note 3) Fixed interest rate of 4.00% debentures issued in 2017 (Note 4) First subordinated bank debentures 649,652 649,623 649,595 2018.04.30-2025.04.30 Fixed interest rate of 1.40%, issued in 2018 (A) Principal is repayable on maturity date. interest is paid annually. First subordinated bank debentures 499,715 499,699 499,685 2018.04.30-2028.04.30 Fixed interest rate of 1.65%, issued in 2018 (B) Principal is repayable on maturity date. interest is paid annually. First subordinated bank debentures 1,998,930 - - 2019.01.25, no maturity date (Note 3) Fixed interest rate of 2.40% issued in 2019 (Note 4) Second subordinated bank 1,199,374 - - 2019.01.25-2026.01.25 Fixed interest rate of 1.40%, debentures issued in 2019 (A) Principal is repayable on maturity date. interest is paid annually. Second subordinated bank 1,799,045 - - 2019.01.25-2029.01.25 Fixed interest rate of 1.55%, debentures issued in 2019 (B) Principal is repayable on maturity date. interest is paid annually. Third senior bank debentures 3,000,000 - - 2019.06.26-2024.06.26 Fixed interest rate of 0.76%, issued in 2019 Principal is repayable on maturity date. interest is paid annually.

$ 37,221,383 $ 32,722,483 $ 39,680,788

Note 1: The bond has neither a maturity date nor fixed callable date. Bank SinoPac has the right to call or buy back the bond from the market after five years of its issuance if one of the conditions listed below is met, and bank debenture issuance has been approved by regulatory authorities.

a) Bank SinoPac’s ratio of regulatory capital to risk-weighted assets will still meet the minimum requirement prescribed in Article 5 of Section 1 of the Regulations Governing the Capital Adequacy and Capital Category of Banks after bond repayment.

b) Bank SinoPac replaces the bond with another capital market instrument that offers interest equal to or higher than that on the bond that has been called.

- 43 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 Note 2: The bond has neither a maturity date nor fixed callable date. Bank SinoPac has the right to call or buy back the bond from the market after five years of its issuance if both of the conditions listed below are met, and bank debenture issuance has been approved by regulatory authorities.

a) Bank SinoPac’s ratio of regulatory capital to risk-weighted assets still meets the minimum requirement prescribed in Article 5 of Section 1 of the Regulations Governing the Capital Adequacy and Capital Category of Banks after bond repayment.

b) Bank SinoPac replaces the bond with another capital instrument that offers interest equal to or higher than that on the bond that has been called.

Note 3: The bond has neither a maturity date nor fixed callable date. Bank SinoPac has the right to call or buy back the bond from the market after five and a half years of its issuance if one of the conditions listed below are met, and bank debenture issuance has been approved by regulatory authorities.

a) Bank SinoPac’s ratio of regulatory capital to risk-weighted assets still meets the minimum requirement prescribed in Article 5 of Section 1 of the Regulations Governing the Capital Adequacy and Capital Category of Banks after bond repayment.

b) Bank SinoPac replaces the bond with another capital instrument that offers interest equal to or higher than that on the bond that has been called.

Note 4: Interest payment amount on the bond will be based on Bank SinoPac’s calculation. Calculation of the interest starts on the issuance date, accrues on the basis of actual days, and is payable annually. Bank SinoPac is not obligated to pay interest when Bank SinoPac has no profit from the prior year and does not distribute any dividends (both cash and stock dividends). However, this does not apply when accumulated undistributed earnings less the proceeds on unamortized nonperforming loans losses is larger than the interest payment amount while the condition for interest payment has not been modified. Interest payments that were not issued due to the reason described previously shall not be accumulated nor deferred. If Bank SinoPac’s regulatory capital to risk-weighted assets ratio does not meet the minimum requirement prescribed in Article 5, Section 1 of the Regulations Governing the Capital Adequacy and Capital Category of Banks on an interest payment date, the bond shall defer interest payments. Accrued interest on the bond shall be deferred till the next interest payment date that conforms to the condition of an interest payment date described above. Deferred interest does not incur additional interest. b. SinoPac Securities

For the purpose of raising operating capital and strengthening financial structure. SinoPac Securities issued the first domestic unsecured bonds on December 8, 2017 as follows

December 31, June 30, 2019 2018 June 30, 2018 Maturity Rates

First subordinated unsecured $ 3,000,000 $ 3,000,000 $ 3,000,000 Principal is repayable on maturity date Fixed interest rate of 0.9%, bonds issued in 2017 2017.12.08-2020.12.08 interest is paid annually.

- 44 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 28. BORROWINGS

a. Current borrowings

December 31, June 30, 2019 2018 June 30, 2018

Credit loans $ 4,123,033 $ 3,881,520 $ 9,913,004 Guaranteed loans 390,000 740,000 90,000

$ 4,513,033 $ 4,621,520 $ 10,003,004

Maturity date 2019.7-2020.6 2019.1-2019.12 2018.7-2019.5

Range of interest rates per annum 1.04%- 1.04%- 1.05%- 6.17384% 6.47065% 6.4707%

b. Non-current portion of non-current borrowings

December 31, June 30, 2019 2018 June 30, 2018

Credit loans $ 3,429,804 $ 3,678,635 $ 2,734,939 Guaranteed loans 1,250,000 600,000 740,150

$ 4,679,804 $ 4,278,635 $ 3,475,089

Maturity date 2019.7-2021.4 2019.1-2020.11 2018.7-2020.4

Range of interest rates per annum 1.37%- 1.30450%- 1.15%- 5.44268% 5.58023% 5.5575%

SinoPac Securities

To meet capital requirements, SinoPac Securities (Cayman) obtained syndicated loans from financial institutions on December 18, 2018 and November 26, 2015 in the amounts of US$60,000 thousand and US$120,000 thousand, respectively. The term of the syndicated loans is three years from the first drawdown date. The dates of first drawdowns were December 28, 2018 and January 8, 2016, respectively. The loans could be taken on revolving basis. SinoPac Securities (Cayman) could not pledge its securities to others during the term of the loans. As of June 30, 2018, since the term for syndicated loan transactions of SinoPac Securities (Cayman) was shorter than 12 months after the balance sheet date, the amount of $2,684,506 has been transferred to current borrowings.

SinoPac Leasing

To raise working capital, SinoPac Leasing entered into a syndicated loan agreement (the “2015 Agreement”) of $6,250,000 with a syndicate of 15 banks led by Mega International Commercial Bank in April 2015. The term for syndicated loan transactions is five years from the first used date, the date of first drawdown is May 20, 2015.

To raise working capital, SinoPac Leasing entered into a syndicated loan agreement (the “2017 Agreement”) of $3,000,000 with a syndicate of 13 banks led by Mega International Commercial Bank in November 2017. The term for syndicated loan transactions is four years from the first used date, the date of first drawdown is December 14, 2017.

- 45 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 To raise working capital, SinoPac Capital International Limited entered into a syndicated loan agreement (the “2016 Agreement”) of US$240,000 thousand with a syndicate of 15 banks led by Mega International Commercial Bank in March 2016. The term for syndicated loan transactions is three years from the first used date, the date of first drawdown is July 28, 2016. SinoPac Capital International Limited has the option to apply for extension of the maturity date by one year, if there will be no case of breaching the contract. Therefore SinoPac Capital International Limited entered into first supplement of the “2016 Agreement”, and extended of the maturity date by one year at December 26, 2018.

The loans above were for the operating purposes of SinoPac Leasing and SinoPac Capital International Limited. According to the contract, the restriction conditions were as below.

1) During the term of the Agreement, the Group should maintain following financial ratios:

a) Debt ratio: Ratio of liability to equity not more than 800%.

b) Interest coverage ratio: Ratio of net income before interest expenses, taxation, depreciation and amortization to interest expenses not less than 110%.

2) The aforementioned financial ratios should be reviewed annually and determined based on SinoPac Leasing’s annual consolidated financial statements audited by independent auditors.

3) Failing to meet the financial covenants, a penalty of 0.125% annual interest rate (calculated daily and paid monthly based on the outstanding principal, for the period starting from October 1 subsequent to the year breach to the date that the financial ratios were improved) would be imposed. Furthermore, during the period that the covenants were breached and the Group drew the second line of credit, additional guarantee fee with an annual rate of 0.125% would be charged, and the guarantee fee previously paid was not refundable.

To pay for the purchase of leased assets, SinoPac International Leasing entered into a syndicated loan agreement of CNY 280,000 thousand with a syndicate of 5 banks led by Bank of Taiwan in March 2017. The term for syndicated loan transactions is three years from the first used date, the date of first drawdown is April 10, 2017. As of January 2019, the above syndicated loan has been settled.

Assets mortgaged or pledged as collaterals for borrowings are shown in Note 46.

29. PROVISIONS

December 31, June 30, 2019 2018 June 30, 2018

Provision for employee benefits $ 2,812,874 $ 2,901,795 $ 2,726,583 Provision for guarantee liabilities 182,834 198,466 204,489 Provision for decommissioning liabilities 116,198 114,526 115,778 Provision for financing commitment 112,196 211,380 244,707 Other provision 27,790 5,762 4,764

$ 3,251,892 $ 3,431,929 $ 3,296,321

- 46 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 The Group’s movements of provision for financing commitment, provision for guarantee liabilities and other provision were shown as follows: Provision for Provision for Financing Guarantee Commitment Liabilities Other Provision

Balance at January 1, 2019 $ 211,380 $ 198,466 $ 5,762 (Reversal of) provision (99,566) (16,151) 22,160 Effect of exchange rate changes 382 519 (132)

Balance at June 30, 2019 $ 112,196 $ 182,834 $ 27,790

Balance at January 1, 2018 $ - $ 199,563 $ - Adjustments of IFRS 9 application 305,071 - 1,552 (Reversal of) provision (61,814) 11,845 (4,141) Reclassifications 260 (7,612) 7,311 Effect of exchange rate changes 1,190 693 42

Balance at June 30, 2018 $ 244,707 $ 204,489 $ 4,764

30. PROVISION FOR EMPLOYEE BENEFITS

December 31, June 30, 2019 2018 June 30, 2018 Recognized in the consolidated balance sheets (payables and provisions) Defined contribution plans $ 58,152 $ 58,584 $ 56,834 Defined benefit plans 2,529,566 2,620,002 2,468,021 Preferential interest on employees’ deposits 271,214 264,531 251,880 Deferred annual leave and retirement benefits 12,094 17,262 6,682

$ 2,871,026 $ 2,960,379 $ 2,783,417

The pension expenses related to defined benefit plans and preferential interest on employee’s deposits plan recognized according to the results of actuarial valuation on December 31, 2018 and 2017.

For the Six Months Ended June 30 2019 2018

Operating expenses $ 75,134 $ 79,153

31. OTHER FINANCIAL LIABILITIES

December 31, June 30, 2019 2018 June 30, 2018

Futures trader’s equity $ 19,332,174 $ 15,798,668 $ 17,356,407 Principal of structured products 15,605,988 18,791,470 13,191,988 Equity for each customer in the account 364,506 77,558 114,918 Overseas certificate of deposit 310,781 307,488 - Others 86,002 112,741 597,856

$ 35,699,451 $ 35,087,925 $ 31,261,169

- 47 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758

32. OTHER LIABILITIES

December 31, June 30, 2019 2018 June 30, 2018

Securities lending refundable deposits $ 3,858,561 $ 3,659,120 $ 4,867,016 Guarantee deposits received 2,398,076 2,153,044 2,301,048 Temporary receipts and suspense accounts 767,109 701,321 856,100 Deferred revenue 661,205 658,630 1,205,712 Receipts under custody 622,023 242,667 473,840 Others 189,396 165,314 171,422

$ 8,496,370 $ 7,580,096 $ 9,875,138

33. INCOME TAX

Under Article 49 of the Financial Holding Company Act and related directives issued by the Ministry of Finance, a financial holding company and its domestic subsidiaries that hold over 90% of shares issued by the financial holding company for 12 months within the same tax year may choose to adopt the linked-tax system for income tax filings.

The Company has used the linked-tax system for income tax and unappropriated earnings tax filings with its qualified subsidiaries since 2003.

a. Income tax recognized in profit or loss

The major components of tax expense were as follows:

For the Three Months Ended For the Six Months Ended June 30 June 30 2019 2018 2019 2018

Current tax Current period $ 379,245 $ 300,920 $ 908,598 $ 852,961 Unappropriated earnings 47,898 28,971 47,898 28,971 Prior periods (27,702) (9,786) (27,642) (9,786) 399,441 320,105 928,854 872,146 Deferred tax Temporary differences 65,244 4,459 131,853 235,530 Adjustments of tax rate - 39 - (113,567)

Income tax expenses recognized in profit or loss $ 464,685 $ 324,603 $ 1,060,707 $ 994,109

In February 2018, since the ROC Income Tax Act was amended, the corporate income tax rate was adjusted from 17% to 20% and was implemented since 2018. In addition, the rate of unappropriated earnings will be reduced from 10% to 5% in 2018. The tax amount generated in other regions is calculated based on the applicable tax rate in each region.

- 48 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 b. Income tax recognized in other comprehensive income

For the Three Months Ended For the Six Months Ended June 30 June 30 2019 2018 2019 2018

Deferred tax

Adjustments of tax rate $ - $ 39 $ - $ 28,857 Adjustments of current period Exchange difference on translating foreign operations 14,648 (68,726) (41,880) 14,463 Unrealized gain or loss on financial assets measured at fair value through other comprehensive income (5,510) (2,266) 5,425 (4,545) Share of the other comprehensive income of associate and joint venture 308 95 (64) 95

Income tax recognized in other comprehensive income $ 9,446 $ (70,858) $ (36,519) $ 38,870

Included in the effect of tax rate adjustments, $13,680 is the effect of deferred tax of defined benefit plans remeasurement which is recognized as retained earnings transferred from other comprehensive income. c. The income tax returns of SinoPac Securities through 2014 have been examined by the tax authorities. However, the tax authorities disallowed the treatment of items such as operating expenses and interest expenses allocated to the dealing department and the assessment of warrants as deductions against SinoPac Securities’ income tax obligations for 2007 to 2014. SinoPac Securities thus filed an appeal on its 2007 to 2014 returns for the authorities’ reconsideration of the assessments. Even if this matter was still unresolved, SinoPac Securities accrued $104,186 as additional income tax expense. Under directive No. 10701031420 on share-based payment issued by the Ministry of Finance on December 28, 2018, SinoPac Securities have applied for correction to the tax authorities. d. The income tax returns of SinoPac Futures through 2017 have been examined by the tax authorities. However, the tax authorities disallowed the treatment of items such as futures brokerage business’s amortization in 2012 to 2016, which were related to the acquisitions of Pacific Securities. It is expected to propose tax administrative relief for 2017. SinoPac Futures thus filed an appeal for the authorities’ reconsideration of the assessments. Even if this matter was still unresolved, SinoPac Futures accrued income tax expense in advance. Under directive No. 10701031420 on share-based payment issued by the Ministry of Finance on December 28, 2018, SinoPac Futures have applied for correction to the tax authorities and have obtained a settlement. e. The income tax returns of SinoPac Venture Capital through 2014 have been examined by the tax authorities. However, the tax authorities had a different opinion about SinoPac Venture Capital’s amortization of certain operating expenses in 2007 to 2010 and 2014. Thus, the tax authorities canceled the operating expense deduction and increased taxable income by $149,437. SinoPac Venture Capital thus filed an appeal on its 2007 to 2011 and 2014 returns for the authorities’ reconsideration of the assessments.

- 49 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 f. The income tax returns of SinoPac Leasing through 2014 have been examined by the tax authorities. However, the tax authorities had a different opinion about recognition of bad debt loss in 2014. SinoPac Leasing has filed an appeal for the authorities’ reconsideration of the assessments. Under directive No. 10701031420 issued by the Ministry of Finance on December 28, 2018, SinoPac Leasing applied for correction to the tax authorities.

g. The status of the subsidiaries’ examined income tax returns is as follows:

Examined Year

SPH 2014 Bank SinoPac 2014 (Note) SinoPac Life Insurance Agent 2017 SinoPac Property Insurance Agent 2017 SinoPac Securities Investment Service 2017 SinoPac Securities Investment Trust 2014 (Note)

Note: Directive No. 10701031420 issued by the Ministry of Finance on December 28, 2018 is beneficial to the Company. Therefore the Company planned to submit to the tax authorities application for correction.

34. EQUITY

a. Share capital

1) Common shares

The Company had an authorized capital of $120,000,000 divided into 12,000,000 thousand shares, with a par value of NT$10. The authorized capital can be issued in installments upon approval of the board of directors. Of the authorized capital, 500,000 thousand shares had been reserved for issuing stock option certificates, stock warrants associated with preferred stock and stock warrants associated with corporate bonds. The subscription shares issued on the exercise of employee stock options were subject to the regulations of the Securities and Futures Bureau.

In the meeting on June 15, 2018, the shareholders approved the issuance of stock dividends totaling $2,210,011 or 221,001 thousand shares at the par value of NT$10. Total capital stock thus increased to $112,710,541. This stock dividend appropriation was approved by the Securities and Futures Bureau; the record date of earnings capitalization was August 21, 2018.

On February 11, 2019, the Company obtained 2 shares from foreign shareholders and calculated by the closing price. The transaction was recognized as treasury stock and capital surplus-donated surplus. On February 22, 2019, the treasury stock was disposed.

2) Preferred shares

To strengthen its financial structure, raise its capital adequacy ratio and increase its operating capital, the Company proposed the issuance of preferred Class A shares, with the effective date of May 15, 2009, at a price of NT$6.00 per share.

- 50 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 Major terms and conditions of the preferred Class A shares are as follows: a) The current year’s earnings will be first used to cover losses of the past years as well as settle all taxes payable. The balance will then be used to appropriate legal reserve and special reserve and to reverse a special reserve in accordance with relevant laws and regulations and the corporate charter. The remainder will then be used to pay the accrued dividends of the past years and dividend of the current year. b) In the 15 years after the offering, dividends will be calculated at floating rates, using the annual deposit interest rates of Chunghwa Post Co., Ltd. for the period starting from the capital increase record date to the first anniversary of the offering plus 0.7%; from the 16th year and on, dividends will be calculated at the annual interest rates of Chunghwa Post Co., Ltd. at the anniversary of the offering, plus 1.5%. Dividend are payable in cash annually on the basis of the actual offering price. The date of dividend payment will be determined by the board after the shareholders’ meeting approves the Company’s audited operating results. The Board will then decide the record date for the payment of the previous year’s dividend. Dividends for the year of initial share offering and for the buyback year are calculated using the number of days the shares have been outstanding, and the dividend for the buyback year should be paid when a notice is served after the following year’s shareholders’ meeting. c) If no earnings are available, earnings are insufficient to fully pay dividends of preferred Class A stock, or the dividend payout will result in the consolidated capital adequacy ratio falling below the minimum amount set by laws and regulations or administrative bodies, the current year’s dividends should be accrued together with those of the past years and paid preferentially in the following surplus years. d) For the distribution of the Company’s residual assets, preference is given to preferred Class A shareholders instead of common shareholders and preferred Class B shareholders, with the amount not exceeding the offering amount and accrued dividends payable. e) Preferred Class A shareholders do not have voting rights in shareholders’ meetings but have the right to be elected as board directors. Nonetheless, preferred Class A shareholders are entitled to in the meetings of preferred Class A shareholders. f) Preferred Class A shareholders are not entitled to payouts from earnings as well as capital reserve meant for common stock, but they may receive dividends mentioned in paragraph (b) above. g) If new shares are issued, preferred Class A shareholders have the preferential right of subscription. h) Within three years of the preferred Class A stock offering, preferred Class A shareholders are entitled to convert all or part of their holdings into common stock on a one-for-one basis at any time, except when the registration of the conversion is suspended in accordance with relevant laws and regulations and when the offering falls within a period starting from the third business day after the date of the board of directors’ announcement of its decision on the ex-dividend dates for the stock dividends, cash dividends and rights issues - which involve the suspension of stock registration on certain dates - till the record dates on the above dividends and rights. After conversion, the rights of the holders of the converted shares become the same as those of the common shares.

- 51 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 i) Preferred Class A shares are not entitled to preferred dividends of the current year and the following year’s dividend payout for the preferred stock if they had been converted into common stock before the record date (for common dividend distribution). In addition, if preferred stock dividends have already been paid in the year when preferred Class A shares have been converted to common stock, holders of the converted shares are not entitled to common dividends paid out in the year of the conversion. In the following years, accrued preferred dividends should be paid ahead of common dividends in the year and thereafter.

j) Preferred Class A stock has no maturity date. Within 15 years of share offering, all or part of the preferred Class A shares may be bought back at a price based on the offering price plus accrued dividends of the past years and on the basis of the number of days the shares have been outstanding in the current year. For this buyback, the Company will use the money raised through earnings generation, new share offerings or any other means as permitted by relevant laws and regulations. If the Company wants to buy back preferred Class A shares, a written notice should be given to the shareholders 30 days before the buyback. The right to convert the preferred shares into common shares within this period will not be affected by this notice.

There were 70,000 thousand preferred Class A shares. Under IAS 32 “Financial Instruments: Presentation”, the Company bifurcated the conversion rights embedded in the preferred Class A stock and the liability component, which amounted to $290,940, recorded as capital surplus - conversion rights, and $129,060, respectively. The related public issuance procedures had been completed, with the registration of these procedures approved by the Financial Supervisory Commission (FSC) under guidelines No. 1010058323. As of June 30, 2019, preferred Class A shares had been converted into 60,000 thousand common shares. b. Capital surplus

December 31, June 30, 2019 2018 June 30, 2018

Arising from issuance of common stock $ 2,080,001 $ 2,080,001 $ 2,080,001 Conversion rights 41,562 41,562 41,562 Employee share option - issuance of common stock 102,570 102,570 102,570 Others 4,638 4,638 4,638

$ 2,228,771 $ 2,228,771 $ 2,228,771

The premium from shares issued in excess of par (share premium from issuance of common stock, conversion of bonds and treasury stock transactions) and donations may be used to offset a deficit; in addition, when the Company has no deficit, the capital surplus may be distributed as cash dividends or transferred to capital (limited to a certain percentage of the Company’s paid-in capital and once a year).

In accordance with the Company Act, the amount recognized from changes in equity of local associates and joint venture accounted for using equity method can be used to cover accumulated deficits. Besides, the capital surplus from employee share options may not be used for any purpose due to its transitional nature.

Under the Financial Holding Company Act and related directives of the Securities and Futures Bureau, if the capital surplus obtained by a financial holding company through a share swap comes from its subsidiaries’ unappropriated retained earnings after legal and special reserves, the surplus is exempted from the restriction stated in the Securities and Exchange Act (Ref No. 0910016280). This surplus was distributed together with 2004 earnings.

- 52 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 c. Other equity items

Change in Fair Value of Exchange Unrealized Gain or Loss on Financial Differences Financial Assets Measured at Fair Liability Arising on Value Through Other Attributable to Translating Comprehensive Income Changes in Foreign Equity Debt Credit Risk of Operations Instrument Instrument Liabilities Total

Balance January 1, 2019 $ (909,745) $ 730,561 $ (178,523) $ (7,836) $ (365,543) Exchange differences Exchange differences arising on translating foreign operations 223,742 - - - 223,742 Related income tax (41,880) - - - (41,880) Financial assets at fair value through other comprehensive income Current adjustment for change in value - 338,553 1,409,589 - 1,748,142 Adjustment for loss allowance of debt instruments - - 8,869 - 8,869 Current disposal - - (28,750) - (28,750) Cumulative realized gain or loss transferred to retained earnings due to disposal - 106,486 - - 106,486 Related income tax - 2,895 2,530 - 5,425 Share of the other comprehensive income of associates accounted for using equity method Current amounts 318 - - - 318 Related income tax (64) - - - (64) Change in fair value of financial liability attributable to change in credit risk of liability Change in amount - - - (59,177) (59,177)

Balance June 30, 2019 $ (727,629) $ 1,178,495 $ 1,213,715 $ (67,013) $ 1,597,568

Change in Fair Value of Exchange Unrealized Gain or Loss on Financial Differences Unrealized Financial Assets Measured at Fair Liability Arising on Gain or Loss on Value Through Other Attributable to Translating Available-for- Comprehensive Income Changes in Foreign sale Financial Equity Debt Credit Risk of Operations Assets Instruments Instruments Liabilities Total

Balance January 1, 2018 (IAS 39) $ (683,250 ) $ 683,510 $ - $ - $ (20,170 ) $ (19,910 ) Effect of retrospective application and restatement of IFRS 9 - (683,510 ) 1,360,339 (149,524 ) - 527,305 Restated balance January 1, 2018 (IFRS 9) (683,250 ) - 1,360,339 (149,524 ) (20,170 ) 507,395 Exchange differences Exchange differences arising on translating foreign operations (59,873 ) - - - - (59,873 ) Related income tax 37,336 - - - - 37,336 Financial assets at fair value through other comprehensive income Current adjustment for change in value - - 76,351 (105,407 ) - (29,056 ) Adjustment for loss allowance of debt instruments - - - (8,747 ) - (8,747 ) Current disposal - - - 5,152 - 5,152 Cumulative realized gain or loss transferred to retained earnings due to disposal - - (9,975 ) - - (9,975 ) Related income tax - - (7,679 ) (4,474 ) - (12,153 ) (Continued)

- 53 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758

Change in Fair Value of Exchange Unrealized Gain or Loss on Financial Differences Unrealized Financial Assets Measured at Fair Liability Arising on Gain or Loss on Value Through Other Attributable to Translating Available-for- Comprehensive Income Changes in Foreign sale Financial Equity Debt Credit Risk of Operations Assets Instruments Instruments Liabilities Total

Share of the other comprehensive income of associates accounted for using equity method Current amounts $ (479 ) $ - $ - $ - $ - $ (479 ) Related income tax 7 - - - - 7 Change in fair value of financial liability attributable to changes in credit risk of liabilities Change in amount - - - - 16,950 16,950

Balance June 30, 2018 $ (706,259 ) $ - $ 1,419,036 ($ 263,000 ) $ (3,220 ) $ 446,557 (Concluded) d. Earnings distribution and dividend policy

The Company’s Articles of Incorporation provide that annual net income should be appropriated after deducting any accumulated losses and taxes and providing legal and special reserves and reversing special reserve. The remaining earnings will be used to pay the accumulated and current year’s dividends of Class-A preferred shares, the board of directors will then prepare a proposal for approval at the shareholders’ meeting on the appropriation of the remaining earnings and the retained earnings from previous years.

When legal reserve reaches the full amount of the Company’s paid-in capital, legal reserve appropriation could be suspended.

Based on the Company’s operating plans, the dividend policy is to distribute most dividends in the form of stock to meet capital needs. The cash dividends will be declared only when there is an excess of cash and cash dividends should not be less than 10% of total dividends declared.

Cash dividends and cash bonuses are paid after the approval of the shareholders, while the distribution of stock dividends requires the additional approval of the authorities.

Legal reserve should be appropriated until it has reached the amount of the Company’s paid-in capital. This reserve may be used to offset a deficit. Under the revised Company Act issued on January 4, 2012, when the legal reserve has exceeded 25% of the Company’s paid-in capital, the excess may be transferred to capital or distributed in cash.

The Company appropriates or reverses a special reserve in accordance with Rule No. 1010012865 and the directive entitled “Questions and Answers on Special Reserves Appropriated Following the Adoption of IFRSs”. Distributions can be made out of any subsequent reversal of the debit to other equity items.

The appropriation of earnings for 2017 had been approved in the shareholder’s meeting on June 15, 2018. The appropriation is as follows:

Appropriation Dividends Per of Earnings Share (NT$)

Legal reserve $ 894,888 Special reserve 19,911 Cash dividends 5,525,026 $0.5 Share dividends 2,210,011 0.2

- 54 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 The shareholders’ meeting resolved to authorize the board of directors to adjust the amount of dividends to be distributed in these situations: (a) treasury stock buyback (b) preferred stock converted to common stock (c) shareholders renouncement of their rights to dividends and bonus distribution; or (d) other circumstances.

The appropriations of earnings for 2018 had been approved in the shareholder’s meeting on June 14, 2019. The appropriation is as follows:

Appropriation Dividends Per of Earnings Share (NT$)

Legal reserve $ 942,842 Special reserve 345,633 Cash dividends 7,168,390 $0.636

The shareholders’ meeting resolved to authorize the board of directors to adjust the amount of dividends to be distributed in these situations: (a) treasury stock buyback (b) preferred stock converted to common stock (c) shareholders renouncement of their rights to dividends and bonus distribution; or (d) other circumstances.

35. INTEREST REVENUE, NET

For the Three Months Ended For the Six Months Ended June 30 June 30 2019 2018 2019 2018

Interest revenue Discounts and loans $ 5,876,099 $ 4,969,542 $ 11,349,205 $ 9,582,456 Investment securities interest 1,203,238 987,725 2,329,856 1,956,492 Due from the Central Bank and other banks 493,221 366,850 1,028,709 801,665 Financing 338,753 428,760 651,771 874,907 Credit Card revolving interest rate income 148,889 146,047 300,387 289,396 Deposits 110,249 82,468 216,245 156,142 Others 264,367 269,596 513,101 514,830 8,434,816 7,250,988 16,389,274 14,175,888 Interest expense Deposits (3,533,970) (2,349,736) (6,612,352) (4,508,283) Call loans from banks (265,316) (171,326) (525,079) (287,026) Securities sold under repurchase agreements (236,121) (230,971) (451,514) (464,262) Bank debentures (200,520) (216,743) (399,540) (431,451) Interest expense of structured products (141,443) (117,673) (287,278) (232,248) Borrowing (131,429) (176,350) (258,141) (363,495) Others (70,854) (53,277) (141,526) (109,700) (4,579,653) (3,316,076) (8,675,430) (6,396,465)

Net amount $ 3,855,163 $ 3,934,912 $ 7,713,844 $ 7,779,423

- 55 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 36. COMMISSION AND FEE REVENUES, NET

For the Three Months Ended For the Six Months Ended June 30 June 30 2019 2018 2019 2018

Commissions and fees revenues Brokerage services $ 1,162,114 $ 1,313,503 $ 2,155,665 $ 2,652,200 Insurance services 539,870 522,517 1,509,783 1,160,333 Trust and related services 529,088 497,145 1,145,653 1,113,100 Loan services 240,401 145,822 617,501 344,785 Credit card services 246,139 273,658 494,689 540,376 Others 249,246 260,597 533,774 601,401 2,966,858 3,013,242 6,457,065 6,412,195 Commissions and fees expense Credit card services (120,011) (111,410) (231,934) (220,544) Brokerage services (102,521) (138,060) (196,510) (280,286) Interbank services (39,537) (38,209) (80,342) (77,593) Futures commission (35,294) (37,668) (65,773) (77,349) Settlement and delivery services (27,621) (37,066) (53,333) (79,077) Others (125,675) (112,478) (244,831) (218,307) (450,659) (474,891) (872,723) (953,156)

Net amount $ 2,516,199 $ 2,538,351 $ 5,584,342 $ 5,459,039

37. GAINS OR LOSSES ON FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS

For the Three Months Ended For the Six Months Ended June 30 June 30 2019 2018 2019 2018

Realized gain (loss) on financial assets and liabilities at fair value through profit or loss Issuance of call (put) warrants $ 1,153,125 $ 723,318 $ 2,602,554 $ 3,578,861 Operating securities - dealing 602,793 222,773 965,658 719,924 Government bonds 198,847 (383,874) 312,808 (259,444) Operating securities - hedging (28,225) 391,883 147,074 114,959 Stocks 74,156 112,775 110,782 163,457 Bank debentures 95,451 42,775 110,237 127,162 Operating securities - underwriting 4,447 53,564 22,041 145,546 Currency swap contracts and hybrid FX swap structured instruments 967,762 35,101 1,494,056 459,944 Interest rate swap contracts 521,812 604,217 308,273 488,715 Forward contracts 94,961 (101,047) 78,756 (100,423) Futures contracts (42,901) (10,967) (216,763) (21,446) Others (134,669) (44,615) (256,879) 89,794 3,507,559 1,645,903 5,678,597 5,507,049 (Continued)

- 56 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758

For the Three Months Ended For the Six Months Ended June 30 June 30 2019 2018 2019 2018

Unrealized gain (loss) on financial assets and liabilities at fair value through profit or loss Operating securities - dealing $ 5,851 $ (58,951) $ 505,036 $ (430,816) Stocks (45,914) (115,197) 160,076 (87,663) Bank debentures (25,342) (105,765) 97,738 (193,427) Government bonds (2,180) 184,346 61,743 (487,445) Operating securities - hedging (49,044) (345,622) 52,104 (183,380) Operating securities - underwriting 371 (81,440) 11,872 (176,844) Currency swap contracts and hybrid FX swap structured instruments (79,528) (8,848) 497,041 156,050 Forward contracts 118,813 (32,458) 50,557 (77,639) Interest rate swap contracts (444,577) (35,277) (221,144) 928,537 Issuance of call (put) warrants (1,052,590) (794,018) (2,541,936) (3,350,083) Others (63,149) 144,406 (108,348) (167,894) (1,637,289) (1,248,824) (1,435,261) (4,070,604)

$ 1,870,270 $ 397,079 $ 4,243,336 $ 1,436,445 (Concluded)

a. For the three months ended June 30, 2019 and 2018, realized gains on financial assets and liabilities at fair value through profit or loss, including capital gain, were $3,241,583 and $1,032,492, respectively; related interest and dividend revenues were $265,976 and $613,411, respectively. For the six months ended June 30, 2019 and 2018, realized gains on financial assets and liabilities at fair value through profit or loss, including capital gain, were $5,180,653 and $4,279,234, respectively; related interest and dividend revenues were $497,944 and 1,227,815, respectively.

b. Financial assets designated as at fair value through profit or loss and its derivatives changes in the fair value recognized as financial assets at fair value through profit or loss.

38. REALIZED GAINS (LOSSES) ON FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

For the Three Months Ended For the Six Months Ended June 30 June 30 2019 2018 2019 2018

Dividends revenue Held at the end of the reporting period $ 96,872 $ 80,124 $ 97,950 $ 80,410 Disposed in the reporting period 4,151 - 4,151 - Gain or loss from disposal of debt instruments 5,775 (1,499) 28,750 (5,152)

$ 106,798 $ 78,625 $ 130,851 $ 75,258

- 57 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 39. IMPAIRMENT (LOSSES) REVERSALS ON ASSETS

For the Three Months Ended For the Six Months Ended June 30 June 30 2019 2018 2019 2018

Reversal of impairment (losses) on other financial assets $ 74,089 $ (21,135) $ 115,290 $ (21,282) Others 5,102 8,031 (8,722) 10,340

$ 79,191 $ (13,104) $ 106,568 $ (10,942)

40. OTHER NONINTEREST NET REVENUES

For the Three Months Ended For the Six Months Ended June 30 June 30 2019 2018 2019 2018

Stock affairs agent revenue $ 32,352 $ 29,981 $ 56,016 $ 53,025 Securities lending 32,317 27,699 52,328 55,529 Administration fee revenue 22,252 22,167 45,753 37,570 Operating assets rental income 21,596 21,974 43,317 43,820 Rental income 15,436 13,384 31,094 27,222 Transaction bonus 10,727 11,345 23,640 24,137 Advisory revenue 1,322 9,600 15,512 10,000 Expense arising from issuance of call (put) warrants (22,665) (33,216) (47,306) (63,441) Others 803 23,716 8,942 37,671

$ 114,140 $ 126,650 $ 229,296 $ 225,533

41. EMPLOYEE BENEFITS EXPENSE

For the Three Months Ended For the Six Months Ended June 30 June 30 2019 2018 2019 2018

Salaries and wages $ 2,789,090 $ 2,554,443 $ 5,715,687 $ 5,212,692 Labor insurance and national health insurance 165,273 167,619 364,582 352,456 Pension costs 120,110 120,162 240,606 239,343 Others 224,249 224,859 442,570 444,228

$ 3,298,722 $ 3,067,083 $ 6,763,445 $ 6,248,719

The Company’s Articles of Incorporation provide that the Company allocate from annual profit more than 0.01% as employees’ compensation and not more than 1% as remuneration of directors. For the six months ended June 30, 2019 and 2018, the employees’ compensation were $655 and $478, respectively and the remuneration of directors were $20,292 and $15,295, respectively. These amounts were estimated on the basis of the Company’s Articles of Incorporation and past experience.

If there is a change in the proposed amounts after the annual consolidated financial statements are authorized for issue, the differences are recorded as a change in accounting estimate.

- 58 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 The board of directors approved $1,000 as employees’ compensation and $27,500 as remuneration of directors on January 25, 2019 and February 22, 2019, respectively. These amounts were the same as those recognized in the financial statements and will be delivered entirely in cash. The above approval has been reported in the shareholders’ meeting on June 14, 2019.

The board of directors approved $1,000 as employees’ compensation and $26,267 as remuneration of directors on February 2, 2018. These amounts were the same as those recognized in the financial statements and will be delivered entirely in cash. The above approval has been reported in the shareholders’ meeting on June 15, 2018.

The information on compensations to employees and supervisor is available at the Market Observation Post System (M.O.P.S.) website of the Taiwan Stock Exchange.

42. DEPRECIATION AND AMORTIZATION EXPENSE

For the Three Months Ended For the Six Months Ended June 30 June 30 2019 2018 2019 2018 Depreciation expense Buildings $ 49,560 $ 48,521 $ 99,136 $ 94,251 Machinery and computer equipment 56,692 50,249 113,471 99,770 Transportation equipment 7,454 7,326 14,476 14,199 Other equipment 26,398 28,388 53,562 57,159 Leasehold improvements 31,310 42,221 63,210 77,364 Land improvements 420 417 836 833 Right-of-use assets 214,078 - 421,563 - 385,912 177,122 766,254 343,576 Amortization expense 74,932 65,768 146,338 135,637

$ 460,844 $ 242,890 $ 912,592 $ 479,213

43. OTHER OPERATING EXPENSES

For the Three Months Ended For the Six Months Ended June 30 June 30 2019 2018 2019 2018

Taxation and fees $ 352,682 $ 334,745 $ 707,938 $ 667,032 Automated equipment 213,067 179,434 405,832 343,976 Marketing 166,796 153,329 337,888 302,377 Professional advisory 141,188 112,335 273,597 227,432 Location fee 110,544 105,730 214,132 206,770 Communications expense 82,751 77,916 160,810 153,690 Insurance expense 70,928 70,376 141,854 140,605 Rent 25,856 235,825 54,991 464,322 Others 247,109 250,157 441,210 464,912

$ 1,410,921 $ 1,519,847 $ 2,738,252 $ 2,971,116

- 59 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 44. EARNINGS PER SHARE

Basic earnings per share are calculated by dividing net income by the weighted-average number of common shares outstanding.

In the calculation of diluted earnings per share, the preferred shares, which have a dilutive effect, are included in the weighted-average number of common shares outstanding by which net income will be divided. The Company has preferred stocks which are potential dilutive common shares.

Dollars Per Share

For the Three Months Ended For the Six Months Ended June 30 June 30 2019 2018 2019 2018

Basic EPS $ 0.25 $ 0.19 $ 0.58 $ 0.42 Diluted EPS $ 0.25 $ 0.19 $ 0.58 $ 0.42

The weighted-average number of common shares outstanding in the computation of EPS are as follow:

Net Income

For the Three Months Ended For the Six Months Ended June 30 June 30 2019 2018 2019 2018

Net income for calculating basic EPS $ 2,797,974 $ 2,120,199 $ 6,552,971 $ 4,759,468 Effect of potentially dilutive common shares: Preferred shares 260 260 518 518 Employee stock bonus - - - -

Net income for calculating diluted EPS $ 2,798,234 $ 2,120,459 $ 6,553,489 $ 4,759,986

Shares

Shares in Thousands

For the Three Months Ended For the Six Months Ended June 30 June 30 2019 2018 2019 2018

The weighted-average number of common shares outstanding in computation of basic EPS 11,271,054 11,271,054 11,271,054 11,271,054 Effect of potentially dilutive common shares: Preferred shares 10,000 10,000 10,000 10,000 Employee stock bonus 50 43 63 61

The weighted-average number of common shares outstanding in computation of diluted EPS 11,281,104 11,281,097 11,281,117 11,281,115

- 60 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 When calculating the earing per share, the effects of changes in the number of shares resulted from bonus issue has already adjusted retrospectively and the bonus issue date is on August 21, 2018. There is only cash dividends, no bonus issue in 2019.

If the Group decides to give an employee bonus in the form of cash or shares, the Group should presume that the entire amount of the bonus will be in the form of shares and if the resulting potential shares have a dilutive effect, these shares should be included in the weighted-average number of shares outstanding to be used in the calculation of diluted earnings per share. The dilutive effect of the potential shares should be included in the computation of diluted earnings per share until the board of directors resolve at their meeting in the following year the number of shares to be distributed to employees.

45. RELATED-PARTY TRANSACTIONS

In addition to those disclosed in other notes to the financial statements, relationships with the Group and significant transactions, as well as the subsidiaries’ related-party transactions, are summarized as follows:

a. Related parties and their relationships with the Group

Related Party Relationship with the Group

YFY International BVI Corp. (YFY International) Affiliate of the Company’s corporate director Taigen Biopharmaceuticals Holdings Limited Affiliate of the Company’s corporate director YFY Cayman Co., Ltd. (YFY Cayman) Affiliate of the Company’s director Asia Cement Corporation (Asia Cement) Affiliate of the Company’s director Taiwan Stock Exchange Corporation (TWSE) Affiliate of the Company’s general manager Boardtek Electronics Corporation (Boardtek Affiliate of the Company’s manager Electronics) Financial Information Services Co., Ltd. (FISC) Affiliate of the Company’s manager Chunghwa Telecom Co., Ltd. (Chunghwa Telecom) Affiliate of Bank SinoPac’s director Chailease Auto Rental Co., Ltd. (Chailease Auto Affiliate of Bank SinoPac’s manager’s spouse Rental) Evercast Precision Industry Corporation (Evercast Affiliate of first-degree kin of Bank SinoPac’s Precision) manager Taiwan Printed Circuit Board Techvest Co., Ltd. Affiliate of first-degree kin of Bank SinoPac’s (Taiwan PCB Techvest) manager Kim Great Co., Ltd. (Kim Great) Affiliate of second-degree kin of Bank SinoPac’s manager Shyang Yih Logistics Co., Ltd. (Shyang Yih Logistics) Affiliate of third-degree kin of Bank SinoPac’s manager Bolin Company Ltd. (Bolin Company) Affiliate of third-degree kin of Bank SinoPac’s manager Greatwell Enterprise Co., Ltd. Affiliate of second-degree in-laws of Bank SinoPac’s manager Kung Sing Engineering Corporation (Kung Sing Affiliate of second-degree in-laws of Bank Engineering) SinoPac’s manager Taipei Fubon Commercial Bank Co., Ltd (Taipei Affiliate of SPL’s director Fubon Bank) Hua Nan Commercial Bank, Ltd. (Hua Nan Bank) Affiliate of SPL’s director spouse Hoss Venture Inc. (Hoss Venture) Related party Jelyte Infodata Inc. (Jelyte Infodata) Related party (before November 2018) SinoPac Multi Strategy Quant Fund Limited Related party SinoPac Multi-Series FundⅡ Limited Related party SinoPac Multi-Series Fund SPC Related party (Continued)

- 61 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758

Related Party Relationship with the Group

Taiwan Futures Exchange (TAIFEX) Related party (before July 2019) Chunghwa Post Co., Ltd. (Chunghwa Post) Related party (before July 2018) Cathay Securities Corporation (Cathay Securities) Related party (before December 2018) Mega Financial Holding Company Ltd. (Mega Related party (before July 2018) Holdings) Chung Kuo Insurance Co., Ltd. (Chung Kuo Related party (before March 2018) Insurance) Others The Group’s directors, supervisors, managers and their relatives, department chiefs, investments accounted for using the equity method and their subsidiaries, and investees of the Company’s other subsidiaries, etc. (Concluded) b. Significant transactions with related parties

1) Cash and cash equivalents

December 31, June 30, 2019 2018 June 30, 2018

Bank SinoPac and its subsidiaries Due from other bank Others $ - $ - $ 1,679 SinoPac Venture Capital and its subsidiaries Bank deposits Others 175,838 - -

2) Due from the Central Bank and call loans to banks

For the Six Months Ended June 30, 2019 Interest Ending Balance Interest (%) Revenue

Bank SinoPac and its subsidiaries Call loans to banks Others $ 293,923 1.2-4.9 $ 7,542

For the Year Ended 2018 Ending Balance Interest (%)

Bank SinoPac and its subsidiaries Call loans to banks Others $ 922,544 0.05-4.1

For the Six Months Ended June 30, 2018 Interest Ending Balance Interest (%) Revenue

Bank SinoPac and its subsidiaries Call loans to banks Others $ 1,435,702 0.05-4.1 $ 5,499

- 62 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758

3) Financial assets at fair value through profit or loss

December 31, June 30, 2019 2018 June 30, 2018

SinoPac Securities and its subsidiaries Others $ 851,667 $ 1,263,433 $ 1,277,895 SinoPac Securities Investment Trust Others 24,629 386 591 SinoPac Venture Capital and its subsidiaries Others 944,868 917,325 1,109,752

4) Derivative financial instruments

June 30, 2019 Contract (Notional) Contract Valuation Amount Period Gains or Losses Account Balance

Bank SinoPac and its subsidiaries Forward contracts YFY International $ 466,190 2019.5.24- $ 1,929 Financial assets at fair value $ 1,929 2019.7.31 through profit or loss YFY International 621,587 2019.5.9- (5,461 ) Financial liabilities at fair 5,461 2019.7.22 value through profit or loss YFY Cayman 621,587 2019.5.24- 3,245 Financial assets at fair value 3,245 2019.7.31 through profit or loss YFY Cayman 1,553,967 2019.5.2- (15,046 ) Financial liabilities at fair 15,046 2019.7.24 value through profit or loss Boardtek Electronics 31,079 2019.5.8- 295 Financial assets at fair value 295 2019.7.10 through profit or loss Boardtek Electronics 31,079 2019.6.4- (319 ) Financial liabilities at fair 319 2019.8.2 value through profit or loss

December 31, 2018 Contract (Notional) Amount Contract Period Account Balance

Bank SinoPac and its subsidiaries Currency swap contracts Taipei Fubon Bank $ 7,380,350 2018.5.21-2019.8.27 Financial assets at fair value through $ 35,831 profit or loss Taipei Fubon Bank 16,298,274 2018.6.28-2019.9.18 Financial liabilities at fair value 127,722 through profit or loss Interest rate swap contracts Taipei Fubon Bank 3,230,000 2014.6.19-2023.11.16 Financial assets at fair value through 15,629 profit or loss Taipei Fubon Bank 6,523,810 2014.2.24-2023.10.18 Financial liabilities at fair value 40,088 through profit or loss Forward contracts YFY International 1,691,330 2018.10.18-2019.5.6 Financial assets at fair value through 19,957 profit or loss YFY Cayman 2,306,360 2018.10.4-2019.5.20 Financial assets at fair value through 29,084 profit or loss

- 63 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758

June 30, 2018 Contract (Notional) Contract Valuation Amount Period Gains or Losses Account Balance

Bank SinoPac and its subsidiaries Currency swap contracts Taipei Fubon Bank $ 12,202,300 2018.2.22- $ 218,662 Financial assets at fair value $ 218,662 2019.4.2 through profit or loss Taipei Fubon Bank 9,456,783 2018.2.21- (264,476 ) Financial liabilities at fair 264,476 2018.12.17 value through profit or loss Interest rate swap contracts Taipei Fubon Bank 4,730,000 2013.8.20- (7,939 ) Financial assets at fair value 18,652 2022.3.29 through profit or loss Taipei Fubon Bank 5,930,001 2013.10.28- 8,021 Financial liabilities at fair 41,682 2022.6.20 value through profit or loss Forward contracts YFY International 1,067,701 2018.4.17- (47,385 ) Financial liabilities at fair 47,385 2018.11.5 value through profit or loss YFY Cayman 2,287,931 2018.4.12- (107,541 ) Financial liabilities at fair 107,541 2018.11.2 value through profit or loss

5) Financial assets at fair value through other comprehensive income

December 31, June 30, 2019 2018 June 30, 2018

Bank SinoPac and its subsidiaries Others $ 736,137 $ 599,916 $ 650,656 SinoPac Securities and its subsidiaries Others 1,234,683 1,236,541 1,493,617 SinoPac Venture Capital and its subsidiaries Others 78,090 98,974 122,517

6) Securities purchased under resell agreements

For the Six Months Ended June 30, 2019 June 30, 2019 Carrying Interest Face Amount Amount Revenue

SinoPac Securities and its subsidiaries Others $ 183,772 $ 144,734 $ 1,771

For the Six Months Ended June 30, 2018 June 30, 2018 Carrying Interest Face Amount Amount Revenue

SinoPac Securities and its subsidiaries Others $ - $ - $ 7

- 64 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 7) Receivables

December 31, June 30, 2019 2018 June 30, 2018

Bank SinoPac and its subsidiaries Others $ 46,246 $ 5,188 $ 46,246 SinoPac Securities and its subsidiaries Others 27,642 22,495 9,984 SinoPac Securities Investment Trust Others 14,762 15,843 19,120 SinoPac Leasing and its subsidiaries Lease receivable and installment receivable Others 804 994 1,178 Accounts and notes receivable Others 38 38 38

8) Loans

For the Six Months Ended June 30, 2019 Ending Highest Interest/ Interest Balance Balance Fee Rates (%) Revenue

Loans $ 8,101,577 $ 8,619,872 0-11.99 $ 61,887

June 30, 2019 Is the Transaction Account Volume or Category Highest Ending at Arm’s Name of Related Normal Overdue Type of Collaterals Balance Balance Length Party Commercial Term Employees’ consumer 314 $ 486,165 $ 455,650 V - None Yes loans Household mortgage 1,001 4,960,766 4,743,730 V - Real estate Yes loans Others: Boardtek Electronics 600,000 600,000 V - Real estate Yes Evercast Precision 70,955 47,901 V - Real estate Yes Hoss Venture 30,000 30,000 V - Real estate Yes Taiwan PCB 19,938 16,313 V - None, Note 1 Yes Techvest Kim Great 18,721 18,004 V - Real estate Yes Greatwell Enterprise 8,200 8,200 V - Real estate Yes Co., Ltd. Shyang Yih 493 267 V - Vehicle Yes Logistics Others 2,424,634 2,181,512 V - Certificates of Yes deposits, certificates of fund and real estate Others subtotal 3,172,941 2,902,197 Total $ 8,619,872 $ 8,101,577

For the Year Ended December 31, 2018 Ending Highest Interest/ Balance Balance Fee Rates (%)

Loans $ 7,792,573 $ 8,796,429 0-8.66

- 65 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758

December 31, 2018 Is the Transaction Account Volume Category Highest Ending at Arm’s or Name of Normal Overdue Type of Collaterals Balance Balance Length Related Party Commercial Term Employees’ consumer 450 $ 187,307 $ 137,893 V - None Yes loans Household mortgage 1,369 7,736,223 7,072,522 V - Real estate Yes loans Others: Boardtek 450,000 450,000 V - Real estate Yes Electronics Taiwan PCB 216,857 19,938 V - None, Note 1 Yes Techvest Evercast Precision 39,034 36,955 V - Real estate Yes Hoss Venture 30,000 30,000 V - Real estate Yes Bolin Company 26,400 - V - Real estate Yes Kim Great 20,129 18,721 V - Real estate Yes Greatwell 8,200 8,200 V - Real estate Yes Enterprise Co., Ltd. Kung Sing 6,323 - V - None, Note 1 Yes Engineering Shyang Yih 936 493 V - Vehicle Yes Logistics Others 75,020 17,851 V - Vehicle, certificates Yes of deposit, certificates of fund and real estate Others subtotal 872,899 582,158 Total $ 8,796,429 $ 7,792,573

For the Six Months Ended June 30, 2018 Ending Highest Interest/ Interest Balance Balance Fee Rates (%) Revenue

Loans $ 7,946,112 $ 8,510,979 0-8.66 $ 62,534

June 30, 2018 Is the Transaction Account Volume Category Highest Ending at Arm’s or Name of Normal Overdue Type of Collaterals Balance Balance Length Related Party Commercial Term Employees’ consumer 514 $ 192,882 $ 160,049 V - None Yes loans Household mortgage 1,416 7,705,661 7,212,203 V - Real estate Yes loans Others: Boardtek 400,000 400,000 V - Real estate Yes Electronics Evercast Precision 39,034 37,999 V - Real estate Yes Hoss Venture 30,000 30,000 V - Real estate Yes Bolin Company 26,400 25,200 V - Real estate Yes Kim Great 20,129 19,428 V - Real estate Yes Jelyte Infodata 17,087 16,307 V - Real estate Yes Greatwell 8,200 8,200 V - Real estate Yes Enterprise Co., Ltd. Kung Sing 6,323 - V - None, Note 1 Yes Engineering Shyang Yih 936 716 V - Vehicle Yes Logistics Others 64,327 36,010 V - Vehicle, certificates Yes of deposits and real estate Others subtotal 612,436 573,860 Total $ 8,510,979 $ 7,946,112

- 66 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758

Note 1: It is non-related party of Bank SinoPac at the loan’s sign date.

Note 2: Debtors of related party loans are all within normal credit ranking. The Group estimated the provision for doubtful debt periodically in accordance with the guidelines issued by the authority and IFRSs.

9) Guarantees

June 30, 2019

Highest Balance in Ending Related Party Provision Rates Type of Collaterals Note Current Balance Period Other $ 146 $ 39 $ - 1.75%-2.25% None, Note

December 31, 2018

Highest Ending Related Party Balance in Provision Rates Type of Collaterals Note Balance Current Year Kung Sing Engineering $ 39,027 $ - $ - 1.00% None, Note Others 194 146 - 1.75%-2.25% None, Note

June 30, 2018

Highest Balance in Ending Related Party Provision Rates Type of Collaterals Note Current Balance Period Kung Sing Engineering $ 39,027 $ - $ - 1.00% None, Note

Note: It is non-related party of Bank SinoPac at the loan’s sign date.

10) Property and equipment

For the six months ended June 30, 2019, Bank SinoPac and its subsidiaries purchased property and equipment from its related parties with a total of $6,950, recognized under machinery and computer equipment.

For the six months ended June 30, 2019 and 2018, SinoPac Securities Investment Trust purchased property and equipment from its related parties with a total of $200 and $185, respectively, recognized under machinery and computer equipment.

11) Intangible assets

For the six months ended June 30, 2019 and 2018, Bank SinoPac purchased computer software from its related parties for a total of $6,634 and $48, respectively, recognized under intangible assets.

For the six months ended June 30, 2018, SinoPac Securities and its subsidiaries purchased computer software from its related parties for a total of $75, recognized under intangible assets.

- 67 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 12) Other assets

December 31, June 30, 2019 2018 June 30, 2018

Bank SinoPac and its subsidiaries Prepaid expenses Others $ 9 $ - $ - Guarantee deposits Others 1,460 11,432 11,473 SinoPac Securities and its subsidiaries Securities borrowing margins Others 1,004,281 3,288,678 3,542,911 Clearing and settlement fund Others 242,055 233,400 230,745 Guarantee deposits Others 2,637 2,650 2,674 Other Others 5 5 601 SinoPac Securities Investment Trust Guarantee deposits Others 11 14 29 SinoPac Call Center Guarantee deposits Others - 36 36 SinoPac Leasing and its subsidiaries Guarantee deposits Others 36 36 36

Bank SinoPac and its subsidiaries signed an agreement with others for the purchase. Bank SinoPac paid $15,441 and $7,696 for the six months ended June 30, 2019 and 2018, respectively, which were recorded as prepayments (other assets) or operating expenses.

On June 30, 2019, undiscounted guarantee deposits from lease contract by Bank SinoPac and its subsidiaries were $780.

On June 30, 2019, undiscounted guarantee deposits from lease contract by SinoPac Securities and its subsidiaries were $158.

13) Notes and bonds transaction

For the Six Months Ended June 30, 2019 Purchase of Notes and Sell of Notes Bonds and Bonds

Bank SinoPac and its subsidiaries Others $ 2,901,599 $ 2,905,606 SinoPac Securities and its subsidiaries Others 58,524 215,293

- 68 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758

For the Six Months Ended June 30, 2018 Purchase of Notes and Sell of Notes Bonds and Bonds

Bank SinoPac and its subsidiaries Others $ 14,621,178 $ 17,511,355 SinoPac Securities and its subsidiaries Others - 1,894,210

14) Deposits from the Central Bank and other banks

For the Six Months Ended June 30, 2019 June 30, 2019 Ending Interest Rate Interest Balance (%) Expense

Bank SinoPac and its subsidiary Others $ 621,587 0.05-4.4 $ 3,813

December 31, 2018 Ending Interest Rate Balance (%)

Bank SinoPac and its subsidiary Others $ 800,043 0.001-4.8

For the Six Months Ended June 30, 2018 June 30, 2018 Ending Interest Rate Interest Balance (%) Expense

Bank SinoPac and its subsidiary Others $ 3,190,327 0.001-4.40 $ 16,805

15) Securities sold under repurchase agreements

For the Six Months Ended June 30, 2019 June 30, 2019 Carrying Interest Face Amount Amount Expense

SinoPac Securities and its subsidiaries Others $ 14,470 $ 14,739 $ 3,217

December 31, 2018 Ending Carrying Balance Amount

SinoPac Securities and its subsidiaries Others $ 367,406 $ 369,007

- 69 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758

For the Six Months Ended June 30, 2018 June 30, 2018 Carrying Interest Face Amount Amount Expense

SinoPac Securities and its subsidiaries Others $ 309,617 $ 304,737 $ 5,854

16) Commercial papers issued

For the Six Months Ended June 30, 2019 June 30, 2019 Interest Rate Interest Face Amount (%) Expense

The Company Others $ - 0.668 $ 320

December 31, 2018 Interest Rate Face Amount (%)

The Company Others $ - 0.508-0.658

For the Six Months Ended June 30, 2018 June 30, 2018 Interest Rate Interest Face Amount (%) Expense

The Company Others $ 1,540,000 0.508-0.548 $ 3,084

17) Payables

December 31, June 30, 2019 2018 June 30, 2018

Bank SinoPac and its subsidiaries Others $ 7,514 $ 1,836 $ 6,679 SinoPac Securities and its subsidiaries Others 32,886 42,686 56,172 SinoPac Leasing and its subsidiaries Others 66 2 6

- 70 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 18) Deposits

For the Six Months Ended June 30, 2019 June 30, 2019 Ending Interest Rate Interest Balance (%) Expense

Others $ 19,879,393 0-13 $ 116,117

December 31, 2018 Ending Interest Rate Balance (%)

Others $ 15,951,437 0-13

For the Six Months Ended June 30, 2018 June 30, 2018 Ending Interest Rate Interest Balance (%) Expense

Others $ 18,469,849 0-13 $ 94,888

19) Bond payable

Bank SinoPac paid for the interest of bank debenture for the six months ended June 30, 2019 and 2018 in the amount of $1,650 and $5,490, respectively.

Third subordinated bank debentures issued in 2015 by Bank SinoPac were subscribed by related parties for a total amount of $630,000. The balance does not changed after the prior interest payment date.

20) Current borrowings

December 31, June 30, 2019 2018 June 30, 2018

SinoPac Securities and its subsidiaries Others $ - $ 1,076,301 $ - SinoPac Leasing and its subsidiaries Others 207,946 - -

21) Other financial liabilities

December 31, June 30, 2019 2018 June 30, 2018

SinoPac Securities and its subsidiaries Futures traders’ equity Others $ 155,254 $ 118,682 $ 193,635

- 71 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 22) Operating lease

Bank SinoPac and its subsidiaries as a lessee

a) Right-of-use assets, net

Bank SinoPac and its subsidiaries is in contract with others and the amount is $5,362 on June 30, 2019.

b) Lease liabilities

Bank SinoPac and its subsidiaries is in contract with others and the amount is $5,372 on June 30, 2019.

c) Guarantee deposits - 2019

Please refer to Note 45,b.12.

d) The interest revenue of guarantee deposits, lease interest expense, lease depreciation expense and other lease expense (recognized as operating expenses) from lease contracts with related parties for the six months ended June 30, 2019, please refer to Note 45,b.24, 25 and 30.

SinoPac Securities and its subsidiaries as a lessee

a) Right-of-use assets, net

SinoPac Securities and its subsidiaries is in contract with others and the amount is $2,729 on June 30, 2019.

b) Lease liabilities

SinoPac Securities and its subsidiaries is in contract with others and the amount is $2,735 on June 30, 2019.

c) Guarantee deposits - 2019

Please refer to Note 45,b.12.

d) The interest revenue of guarantee deposits, lease interest expense, lease depreciation expense and other lease expense (recognized as operating expenses) from lease contracts with related parties for the six months ended June 30, 2019, please refer to Note 45,b. 24, 25 and 30.

SinoPac Leasing and its subsidiaries as a lessee

a) Right-of-use assets, net

SinoPac Leasing and its subsidiaries is in contract with others and the amount is $1,855 on June 30, 2019.

b) Lease liabilities

SinoPac Leasing and its subsidiaries is in contract with others and the amount is $1,863 on June 30, 2019.

- 72 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 c) The lease interest expense and lease depreciation expense (recognized as operating expenses) from lease contracts with related parties for the six months ended June 30, 2019, please refer to Note 45,b. 25 and 30.

23) Other liabilities

December 31, June 30, 2019 2018 June 30, 2018

Bank SinoPac and its subsidiaries Guarantee deposits received Others $ 1,947 $ 2,114 $ 2,114 SinoPac Securities and its subsidiaries Others 73 - - SinoPac Securities Investment Trust Deferred revenue Others 26,366 34,644 44,401

24) Interest revenue

For the Six Months Ended June 30 2019 2018

Bank SinoPac and its subsidiaries Others $ 3 $ - SinoPac Securities and its subsidiaries Others 5,893 3,536 SinoPac Venture Capital and its subsidiaries Others 298 - SinoPac Leasing and its subsidiaries Others 26 37

25) Interest expense

For the Six Months Ended June 30 2019 2018

Bank SinoPac and its subsidiaries Others $ 22 $ - SinoPac Securities and its subsidiaries Others 9,029 76 SinoPac Leasing and its subsidiaries Others 2,956 -

- 73 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 26) Commission and fee revenues, net

For the Six Months Ended June 30 2019 2018

Bank SinoPac and its subsidiaries Fee revenues Others $ 2,341 $ 2,671 Fee expenses Others 66,101 79,353 SinoPac Securities and its subsidiaries Fee revenues Others 62,000 81,104 Fee expenses Others 205,722 297,812 SinoPac Securities Investment Trust Fee revenues Others 101,090 111,871 SinoPac Leasing and its subsidiaries Fee expenses Others 1 -

27) Gains (losses) on financial assets and liabilities at fair value through profit or loss

For the Six Months Ended June 30 2019 2018

SinoPac Securities and its subsidiaries Others $ 12,465 $ (6,598) SinoPac Securities Investment Trust Others 257 684 SinoPac Venture Capital and its subsidiaries Others 36,480 20,754

28) Realized gains (losses) on financial assets at fair value through other comprehensive income

For the Six Months Ended June 30 2019 2018 Bank SinoPac and its subsidiaries Others $ 50,226 $ 46,891 SinoPac Securities and its subsidiaries Others 12,317 - SinoPac Venture Capital and its subsidiaries Others - 412

- 74 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 29) Other noninterest net revenues (expenses)

For the Six Months Ended June 30 2019 2018

Bank SinoPac and its subsidiaries Operating assets rental revenue Others $ 5,479 $ 5,677 Other revenues Others 2,313 1,882 SinoPac Securities and its subsidiaries Stock affairs agent revenue Others 6,401 6,414 Expenses arising from issuance of call (put) warrants Others 25,381 39,264 Other net revenues Others 37,766 42,148 SinoPac Venture Capital and its subsidiaries Other revenues Others 30 60 SinoPac Leasing and its subsidiaries Other expenses Others 214 8

30) Operating expenses

For the Six Months Ended June 30 2019 2018 The Company Others $ 8,010 $ 3,513 Bank SinoPac and its subsidiaries Others 57,850 76,017 SinoPac Securities and its subsidiaries Others 61,685 56,194 SinoPac Securities Investment Trust Others 1,457 1,716 SinoPac Venture Capital and its subsidiaries Others 77 49 SinoPac Call Center Others 817 1,234 SinoPac Leasing and its subsidiaries Others 2,781 545

31) Other transactions

The subsidiaries of SinoPac Securities held a total of $6 management shares from SinoPac Multi Strategy Quant Fund Limited, SinoPac Multi-Series FundⅡ Limited and SinoPac Multi-Series Fund SPC, and three corporate funds set up in Cayman Island in September 2017. Management shares were issued to the investment manager in compliance with specific legal procedures, and the holders do not have the rights to participate in profit, assets or distributions of surplus funds.

- 75 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 32) Compensation of key management personnel

For the Six Months Ended June 30 2019 2018

Short-term employee benefits $ 62,234 $ 68,320 Post-employment benefits 1,288 1,462

$ 63,522 $ 69,782

The management personnel are composed of general manager, vice general manager and other employees with higher positions. c. Related-party transactions amounting to over $100,000

Bank SinoPac and its subsidiaries

1) Due from the Central Bank and call loans to banks, net

For the Six Months Ended June 30, 2019 June 30, 2019 Ending Interest Rate Interest Balance (%) Revenue

Call loans to bank Hua Nan Bank $ 293,923 1.2-4.9 $ 1,974

December 31, 2018 Interest Rate Ending Balance (%)

Call loans to bank Taipei Fubon Bank $ 922,544 0.05-4.10

For the Six Months Ended June 30, 2018 June 30, 2018 Ending Interest Rate Interest Balance (%) Revenue

Call loans to bank Taipei Fubon Bank $ 1,435,702 0.05-4.10 $ 5,499

- 76 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 2) Derivative financial instruments

June 30, 2019 Contract (Notional) Contract Valuation Amount Period Gains or Losses Account Balance

Interest rate swap contracts SinoPac Securities $ 900,000 2014.10.2- $ (2,442 ) Financial assets at fair value $ 3,681 2020.8.26 through profit or loss SinoPac Securities 300,000 2015.9.1- 494 Financial liabilities at fair 1,350 2020.9.1 value through profit or loss Forward contracts YFY International 466,190 2019.5.24- 1,929 Financial assets at fair value 1,929 2019.7.31 through profit or loss YFY International 621,587 2019.5.9- (5,461 ) Financial liabilities at fair 5,461 2019.7.22 value through profit or loss YFY Cayman 621,587 2019.5.24- 3,245 Financial assets at fair value 3,245 2019.7.31 through profit or loss YFY Cayman 1,553,967 2019.5.2- (15,046 ) Financial liabilities at fair 15,046 2019.7.24 value through profit or loss

December 31, 2018 Contract (Notional) Amount Contract Period Account Balance

Currency swap contracts Taipei Fubon Bank $ 7,380,350 2018.5.21-2019.8.27 Financial assets at fair value through $ 35,831 profit or loss Taipei Fubon Bank 16,298,274 2018.6.28-2019.9.18 Financial liabilities at fair value 127,722 through profit or loss Interest rate swap contracts SinoPac Securities 900,000 2014.10.2-2020.8.26 Financial assets at fair value through 6,123 profit or loss SinoPac Securities 300,000 2015.9.1-2020.9.1 Financial liabilities at fair value 1,843 through profit or loss Taipei Fubon Bank 3,230,000 2014.6.19-2023.11.16 Financial assets at fair value through 15,629 profit or loss Taipei Fubon Bank 6,523,810 2014.2.24-2023.10.18 Financial liabilities at fair value 40,088 through profit or loss Forward contracts YFY International 1,691,330 2018.10.18-2019.5.6 Financial assets at fair value through 19,957 profit or loss YFY Cayman 2,306,360 2018.10.4-2019.5.20 Financial assets at fair value through 29,084 profit or loss

June 30, 2018 Contract (Notional) Contract Valuation Amount Period Gains or Losses Account Balance

Currency swap contracts Taipei Fubon Bank $ 12,202,300 2018.2.22- $ 218,662 Financial assets at fair value $ 218,662 2019.4.2 through profit or loss Taipei Fubon Bank 9,456,783 2018.2.21- (264,476 ) Financial liabilities at fair 264,476 2018.12.17 value through profit or loss Interest rate swap contracts SinoPac Securities 900,000 2014.10.2- (1,717 ) Financial assets at fair value 7,664 2020.8.26 through profit or loss SinoPac Securities 800,000 2015.9.1- 865 Financial liabilities at fair 2,254 2020.9.1 value through profit or loss Taipei Fubon Bank 4,730,000 2013.8.20- (7,939 ) Financial assets at fair value 18,652 2022.3.29 through profit or loss Taipei Fubon Bank 5,930,001 2013.10.28- 8,021 Financial liabilities at fair 41,682 2022.6.20 value through profit or loss Forward contracts YFY International 1,067,701 2018.4.17- (47,385 ) Financial liabilities at fair 47,385 2018.11.5 value through profit or loss YFY Cayman 2,287,931 2018.4.12- (107,541 ) Financial liabilities at fair 107,541 2018.11.2 value through profit or loss

- 77 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 3) Securities purchased under resell agreements

For the Six Months Ended June 30, 2019 June 30, 2019 Carrying Interest Face Amount Amount Revenue

SinoPac Securities $ 3,667,050 $ 3,261,222 $ 64,762

December 31, 2018 Carrying Face Amount Amount

SinoPac Securities $ 4,446,661 $ 3,963,434

For the Six Months Ended June 30, 2018 June 30, 2018 Carrying Interest Face Amount Amount Revenue

SinoPac Securities $ 2,275,729 $ 2,033,536 $ 3,035

4) Payables

December 31, June 30, 2019 2018 June 30, 2018

Cash dividend payable to the Company $ 1,435,025 $ 1,435,025 $ 6,839,244

5) Current income tax assets and liabilities

December 31, June 30, 2019 2018 June 30, 2018

Receivable from adopting the linked-tax system $ 1,276,102 $ 1,276,102 $ 1,273,998 Payable from adopting the linked-tax system $ 472,429 $ 272,975 $ 262,421

6) Loan - to other related parties

Ending Highest Interest/ Interest Balance Balance Fee Rates (%) Revenue

For the six months ended June 30, 2019 $ 9,001,577 $ 9,519,872 0-11.99 $ 61,810

Ending Highest Interest/ Balance Balance Fee Rates (%)

For the year ended December 31, 2018 $ 8,692,573 $ 9,696,429 0-8.66

- 78 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758

Ending Highest Interest/ Interest Balance Balance Fee Rates (%) Revenue

For the six months ended June 30, 2018 $ 8,806,112 $ 9,370,979 0-8.66 $ 65,129

7) Financial assets at fair value through other comprehensive income

December 31, June 30, 2019 2018 June 30, 2018

FISC $ 526,737 $ 394,196 $ 363,984 TAIFEX 196,650 192,521 255,079

8) Other assets

December 31, June 30, 2019 2018 June 30, 2018

Guarantee deposits SinoPac Futures $ 307,249 $ 351,730 $ 372,225 SinoPac Securities (Asia) 41,723 104,240 37,910

9) Notes and bonds transaction

For the Six Months Ended June 30, 2019 Purchase of Notes and Sell of Notes Bonds and Bonds

Hua Nan Bank $ 2,701,671 $ 2,705,613 Chailease Auto Rental 199,928 199,993 SinoPac Securities - 4,800,000

For the Six Months Ended June 30, 2018 Purchase of Notes and Sell of Notes Bonds and Bonds

Taipei Fubon Bank $ 14,621,178 $ 12,625,485 Chunghwa Post - 3,235,943 Cathay Securities - 1,649,927

10) Deposits from the Central Bank and other banks

For the Six Months Ended June 30, 2019 June 30, 2019 Ending Interest Rate Interest Balance (%) Expense

Hua Nan Bank $ 621,587 0.7-3.8 $ 2,915

- 79 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758

December 31, 2018 Ending Interest Rate Balance (%)

Taipei Fubon Bank $ 800,043 0.05-4.8

For the Six Months Ended June 30, 2018 June 30, 2018 Interest Rates Interest Ending Balance (%) Expense

Taipei Fubon Bank $ 2,370,391 1.47-4.40 $ 11,345 Chunghwa Post 819,936 0.001-1.11 5,460

11) Deposits

For the Six Months Ended June 30, 2019 June 30, 2019 Interest Rates Interest Ending Balance (%) Expense

Others $ 26,574,642 0-13 $ 147,066

December 31, 2018 Ending Interest Rate Balance (%)

Others $ 23,416,993 0-13

For the Six Months Ended June 30, 2018 June 30, 2018 Interest Rate Interest Ending Balance (%) Expense

Others $ 26,614,972 0-13 $ 125,769

12) Bank debentures

Third subordinated bank debentures issued in 2015 by Bank SinoPac were subscribed by related parties for a total amount of $630,000. The balance has not changed after the prior interest payment date.

13) Commissions expense

For the Six Months Ended June 30 2019 2018

Others $ 112,699 $ 111,205

- 80 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 14) Other operating expenses

For the Six Months Ended June 30 2019 2018

Others $ 109,944 $ 160,860

SinoPac Securities and its subsidiaries

1) Bank deposits

December 31, June 30, 2019 2018 June 30, 2018

Bank SinoPac $ 2,890,055 $ 3,094,120 $ 2,667,207

Bank deposits included cash and cash equivalents, other financial assets - current, other current assets - settlement, underwriting receipts under custody and separated account for customer.

December 31, June 30, 2019 2018 June 30, 2018

2) Customers’ margin accounts

Bank SinoPac $ 48,746 $ 80,469 $ 308,106

3) Operating securities

Fund managed by SinoPac Asset Management (Asia) $ 764,976 $ 876,428 $ 818,447 Asia Cement Corporation domestic 1st unsecured corporation bond - 299,600 299,998

$ 764,976 $ 1,176,028 $ 1,118,445

4) Securities purchased under resell agreements

Others $ 144,734 $ - $ -

5) Securities borrowing deposits

TWSE $ 1,004,281 $ 3,288,678 $ 3,542,911

6) Current tax assets

The Company $ 107,115 $ 100,132 $ 100,132

7) Restricted assets - current

Bank SinoPac $ 1,525,000 $ 1,525,000 $ 1,525,000

- 81 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758

December 31, June 30, 2019 2018 June 30, 2018

8) Guarantee deposits

Bank SinoPac $ 764,678 $ 760,255 $ 760,255 TAIFEX 129,558 133,996 131,341 TWSE 112,497 99,404 99,404

$ 1,006,733 $ 993,655 $ 991,000

9) Financial assets at fair value through other comprehensive income

Chunghwa Telecom $ 791,226 $ 791,226 $ 770,220 TWSE 258,607 264,345 347,348 TAIFEX 184,850 180,970 239,774 Mega Financial Holdings Co., Ltd. - - 136,275

$ 1,234,683 $ 1,236,541 $ 1,493,617

10) Current borrowing

Taipei Fubon Bank $ - $ 1,076,301 $ -

11) Liabilities for bonds with attached repurchase agreements

Bank SinoPac $ 3,261,222 $ 3,963,434 $ 2,033,536 Funds managed by SinoPac Securities Investment Trust 14,739 369,007 304,737

$ 3,275,961 $ 4,332,441 $ 2,338,273

12) Futures trader’s equity

Bank SinoPac $ 351,177 $ 460,838 $ 419,757 Funds managed by SinoPac Securities Investment Trust 153,162 116,432 190,599

$ 504,339 $ 577,270 $ 610,356

13) Current tax liabilities

The Company $ 74,195 $ 234,329 $ 157,635

14) Other payables

The Company $ - $ - $ 506,251

- 82 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 15) Notes and bonds transaction

For the Six Months Ended June 30, 2019 Purchase of Notes and Sell of Notes Bonds and Bonds

Bank SinoPac $ 4,800,000 $ - Others 58,524 215,293

For the Six Months Ended June 30, 2018 Purchase of Notes and Sell of Notes Bonds and Bonds

Chunghua Post $ - $ 1,748,465 Chung Kuo Insurance - 145,745

16) Brokerage services expenses

For the Six Months Ended June 30 2019 2018

TAIFEX $ 78,775 $ 115,396

SinoPac Securities Investment Trust

December 31, June 30, 2019 2018 June 30, 2018

Cash and cash equivalents and other financial assets Bank deposits Bank SinoPac $ 20,750 $ 2,381 $ 229,922

For the Six Months Ended June 30 2019 2018

Commission revenues Funds managed by SinoPac Securities Investment Trust $ 101,090 $ 111,871

- 83 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 SinoPac Venture Capital and its subsidiaries

December 31, June 30, 2019 2018 June 30, 2018

Cash and cash equivalents and other financial assets Bank deposits Bank SinoPac $ 256,966 $ 331,252 $ 628,442 Hua Nan Bank 175,838 - -

$ 432,804 $ 331,252 $ 628,442

Financial assets at fair value through profit or loss Taigen Biopharmaceuticals Holdings Limited $ 528,446 $ 543,765 $ 708,738

SinoPac Leasing and its subsidiaries

December 31, June 30, 2019 2018 June 30, 2018

1) Cash and cash equivalents and other financial assets

Bank deposits and compensating deposits Bank SinoPac $ 105,644 $ 108,177 $ 509,373

2) Account payables

The Company $ 4,452 $ 75,256 $ 499,451

3) Current and non-current portion of non-current borrowings

Borrowings from banks Bank SinoPac $ 900,000 $ 900,000 $ 860,000 Hua Nan Bank $ 207,946 $ - $ -

4) As of June 30, 2019, December 31, 2018 and June 30, 2018, borrowings and derivative financial instruments from Bank SinoPac for SinoPac Leasing and its subsidiaries totaling $1,380,793, $1,377,515 and $1,375,058, respectively, and investment properties were provided as collaterals for SinoPac Leasing’s borrowings.

- 84 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 46. PLEDGED OR MORTGAGED ASSETS

In addition to those disclosed in other notes, pledged or restricted assets of the Group are summarized as follows:

December 31, Company/Restricted Assets Object June 30, 2019 2018 June 30, 2018 Remarks

Investment in debt instruments Certificates of deposit $ 8,155,397 $ 5,153,757 $ 8,152,529 Note 1 measured at amortized cost Investment in debt instruments Government bonds 1,404,177 1,674,078 1,616,691 Note 2 measured at amortized cost Discounts and loans Loans 2,338,539 3,113,555 3,706,022 Note 3 Other financial assets Certificates of deposit 3,163,134 2,875,720 2,970,006 Note 4 and time deposits Investment properties Land and land 723,642 725,237 726,831 Note 5 improvements and buildings Properties and equipment Land and buildings 915,129 928,296 943,082 Note 5 Right-of use assets Land and surface rights 1,040,677 - - Note 6 Other assets Surface rights - 720,431 732,438 Note 6

Note 1: Pledged, with the Central Bank for foreign-exchange, and with Mega Bank for USD foreign-exchange settlement and pledged in accordance with the requirements of the California Department of Financial Institutions.

Note 2: Guarantees of dealing and underwriting business, a trust reserve fund, guarantees of bills financial service, reserve for payment of VISA international card, pledged to court as collaterals for filing provisional seizure and disposition, Hong Kong branch’s clearing system of real-time gross settlement and mortgage of derivative instrument outstanding.

Note 3: Pledged with the Federal Reserve Bank under the discount window program.

Note 4: Pledged with intraday overdraft of settlement banks, and assets pledged to financial institutions as guarantees for commercial papers issued and pledged to obtain credit line for current borrowings and bank overdraft.

Note 5: Assets pledged to financial institutions as guarantees for commercial papers issued and pledged to obtain credit line for borrowings and bank overdraft.

Note 6: Loan collateral.

47. SIGNIFICANT CONTINGENCIES LIABILITIES AND UNRECOGNIZED COMMITMENTS

a. In addition to those disclosed in other notes, significant unrecognized commitments of the Group as of June 30, 2019, December 31, 2018 and June 30, 2018 are as follows:

December 31, June 30, 2019 2018 June 30, 2018

Trust assets $ 421,480,851 $ 305,152,045 $ 277,023,932 Securities under custody 151,474,416 147,845,328 148,884,111 Agent for government bonds 77,925,700 46,772,200 28,388,600 Receipts under custody 30,479,020 31,876,430 33,698,519 Guarantee notes payable 11,988,331 9,065,977 12,217,735 (Continued)

- 85 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758

December 31, June 30, 2019 2018 June 30, 2018

Agent for marketable securities under custody $ 9,207,100 $ 9,412,200 $ 4,274,300 Appointment of investment 3,286,851 3,612,119 4,057,404 Goods under custody 1,125,794 1,295,570 1,149,046 Travelers’ checks consigned-in 179,001 189,626 194,078 Others - 3,299 5,028 Entrusted loans - - 28,903 (Concluded)

As of June 30, 2019, in addition to above mentioned unrecognized commitments, Bank SinoPac and SinoPac Securities had applied for tax concessions to the Ministry of Finance regarding their technical support service expenditure relating to their financial transaction system, and had jointly signed to the system manufacturer the letter of indemnity of the total compensation is not more than US$1,300 thousand to obtain a proxy of the manufacturer thereof to apply for foresaid tax concession. The compensation distributable to Bank SinoPac is US$867 thousand and to SinoPac Securities is US$433 thousand. The last deadline for indemnity is December 31, 2027.

In response to the development of technology, Bank SinoPac signed with National Cheng Kung University an enterprise and industry cooperation and donation agreement with budget amount of $120,000. The donation will be used to build a research center for developing AI depth learning and big data application about FinTech. The cooperation agreement was signed on August 7, 2017, and is valid retrospectively from July 1, 2017. Except when the two parties agreed to extend the maturity date, the agreement is valid from July 1, 2017 to September 30, 2020. As of June 30, 2019, Bank SinoPac recognized operating expense in the amount of $111,000 and related payable in the amount of $42,482. b. The Group entered into contracts to buy computers and office equipment for $708,936, of which $553,427 had not been paid as of June 30, 2019. c. Contingencies liabilities and contingencies

1) The Securities and Futures Investors Protection Center (SFIPC) filed a lawsuit against Bank SinoPac and SinoPac Leasing Corporation’s (SPL) subsidiary, Grand Capital International Limited (renamed as SinoPac Capital International Limited on October 4, 2018), on the ground that Procomp Informatics Ltd. (Procomp) deposited US$10,000 thousand in Bank SinoPac’s Shisung Branch (formally Sungshan Branch) and placed a restriction on the use of this deposit as a condition for a short-term loan to Addie International Limited granted by SPL and for allegedly helping Yeh, Sue-Fei and Procomp do irregular trading but, at the same time, Procomp used the restricted deposit for fictitious sale transactions. Later, when problems on Procomp’s account arose, Bank SinoPac and Grand Cathay demanded compensation, which was taken from Procomp’s account, resulting in damage to Procomp. Bank SinoPac was suspected of misleading investors by concealing the restricted status of Procomp’s deposit and window dressing Procomp’s financial statements. On behalf of investors, the SFIPC filed a lawsuit against Bank SinoPac, SPL and all other parties related to Procomp for $4,207,212. Both the court of the first instance and the second instance ruled in favor of Bank SinoPac and SPL. However, the SFIPC decided to file an appeal on January 20, 2016. The Supreme Court reversed the declared judgement on July 26, 2017 and remanded the case to Taiwan High Court. The SFIPC reduced their declaration to $4,161,219 because of reaching an accord with part of the defendants and withdrawing their right to litigation implementation by part of investors during process. Taiwan High Court ruled in favor of Bank SinoPac and SinoPac Leasing at May 7, 2019, but the SFIPC decided to file an appeal on June 6, 2019.

- 86 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 2) The SFIPC filed a lawsuit against Bank SinoPac on the ground that Bank SinoPac’s Tunpei Branch provided National Aerospace Fasteners Corporation (NAFCO) with its accounts receivable factoring services. NAFCO recorded this significant-amount loan transaction as an accounts receivable financing to window-dress its financial position in order to attract investments. The SFIPC filed a lawsuit against Bank SinoPac and other parties and demanded compensation approximately $543,233 the court of the first instance ruled in favor of Bank SinoPac. However, the SFIPC decided to file an appeal to the second instance and stated to reduce the amount of compensation to $293,940 on November 13, 2015, Taiwan High Court ruled in favor of Bank SinoPac on December 13, 2016. Nevertheless, the SFIPC filed another appeal to the Supreme Court on January 6, 2017. The Supreme Court ruled in favor of Bank SinoPac on June 13, 2019 and the conviction affirmed.

3) Bank SinoPac dealt with Skwentex International Corporation (Skwentex) regarding Skwentex’s receivables from Siltrontech Electronics Corporation. The relevant accounts receivable transaction involved suspected false cycle trading and was investigated by the Taiwan New Taipei District Prosecutors in 2015. This case was still under process by the Taiwan New Taipei District Prosecutors in 2016. Due to the abnormal and suspected unlawful accounts receivable transaction, Bank SinoPac cannot pay the consideration of accounts receivable to Skwentex in accordance with the credit contract. Skwentex sued Bank SinoPac in July 2017 and demanded a compensation of $214,471. This case was still under process.

4) A certain Mr. Jane, SinoPac Securities’ brokerage client, sued an employee of SinoPac Securities, Mr. Jun, for allegedly committing fraud from 2012 to 2014. But evidence presented for this trial showed that SinoPac Securities was not jointly liable for the injury arising from its employee’s actions. Had the Court determined otherwise, SinoPac Securities would have been required to make only a partial compensation payment. SinoPac Securities on this lawsuit with the Taiwan Taoyuan District Court. SinoPac Securities won the case. Taiwan High Court ruled in favor of SinoPac Securities without any compensation obligation in July 2016. Nevertheless, Mr. Jane filed another appeal to the Supreme Court. This case was sent back to the Supreme Court for a retrial and is still under process.

5) During August 2017, the former operation manager Mr. Huang of SinoPac Securities accused SinoPac Securities in Taiwan Taichung District Court of unlawful dismissal and wanted to reconfirm the employment relationship and be reinstated with back salaries until the reinstatement date on a monthly basis. Upon investigation, the job performance of the plaintiff did not meet the long-term goals when he was on the job and SinoPac Securities already paid him severance fee. The appeal was rejected by the Taichung District Court and Taiwan High Court Taichung Branch Court and SinoPac Securities won the case.

6) In the years 1999 to 2006, the former salesman, Mr. Zhu of Pacific Securities which was merged by SinoPac Securities in 2012, appeared to have debt disputes with the customer Mr. Chen and other three people due to bond sales. The customers filed civil complaint at the Taiwan Taipei, District Court against SinoPac Securities asking for $13,000 damage compensation. This case happened long ago, and Mr. Zhu resigned in 2016. At present, it is only known that Mr. Zhu appeared to fabricate the fact of government bonds repurchase transaction to cause the customer to be defrauded and Mr. Chen also sued the plaintiff Mr. Zhu of this case for criminal lawsuit. Since the plaintiff did not submit the original copy of the exhibit, the existence of the content rights of the plaintiff is still controversial, and there is no significant adverse effect on SinoPac Securities. The case is currently under the jurisdiction of the Taiwan Taipei District Court, and subsequent litigation has been entrusted to an outside lawyer.

- 87 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 7) Plaintiff Mr. Tang filed a civil complaint against SinoPac Securities (Asia) in January 2018. The plaintiff claimed that the company committed a breach of obligation and liable for HK$59,670 thousand for his loss in stock transfer without authorization. However, the company transferred the stocks based on stock purchase and sale agreement and Mr. Tang’s order and was not liable for the loss. The company entrusted an external lawyer to handle the case and would take all necessary actions to defend the company against the claim.

8) SinoPac Securities (Asia) received the letter of legal representative from four clients in October 2018, claiming that they received a forged statement of accounts and proposing that SinoPac Securities (Asia) should be liable for damages. An internal investigation by SinoPac Securities (Asia) shoed that a former and a current employees were involved in this case, and have reported to Hong Kong Securities and Futures Commission and the police simultaneously. Since the case with the maximum claim about HK$16,000 is still in the investigation and search stage with controversial issues, clients have not filed a civil complaint against SinoPac Securities (Asia), thus there is no compensation for the loss of them. The case has been entrusted to an outside lawyer.

48. LEASE AGREEMENT

a. The Group as lessee

All the Group’s lease agreements on business space and transportation equipment with terms of between 1 year and 15 years. The Group has no bargain purchase option.

The future minimum lease payments for the Group’s lease commitments are as follows:

1 Year Within 1 Year Over 5 Years Total to 5 Years As of June 30, 2019 $ 864,371 $ 1,685,879 $ 548,893 $ 3,099,143 As of December 31, 2018 824,821 1,501,610 501,369 2,827,800 As of June 30, 2018 734,992 1,404,257 524,985 2,664,234

b. The Group as lessor

Leased properties are mainly from the investment properties owned by the Group. All lease agreements have market review clauses when lessees exercise lease renewal potions. The lessees have no bargain purchase option on the leased properties.

The Group’s lease commitments are as follows:

Within 1 1 Year June 30, 2019 Over 5 Years Total Year to 5 Years Operating lease revenue $ 97,997 $ 196,133 $ 387,251 $ 681,381 Financial lease revenue 1,701,154 2,027,558 63,415 3,792,127 Financial lease revenue, present value 1,438,326 1,866,720 58,511 3,363,557

Within 1 1 Year December 31, 2018 Over 5 Years Total Year to 5 Years Operating lease revenue $ 104,901 $ 230,957 $ 471,113 $ 806,971 Financial lease revenue 1,279,298 1,987,796 - 3,267,094 Financial lease revenue, present value 1,072,248 1,795,623 - 2,867,871

- 88 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758

Within 1 1 Year June 30, 2018 Over 5 Years Total Year to 5 Years Operating lease revenue $ 97,566 $ 231,230 $ 491,099 $ 819,895 Financial lease revenue 1,279,688 2,127,281 - 3,406,969 Financial lease revenue, present value 1,046,283 1,909,194 - 2,955,477

49. HIERARCHY AND FAIR VALUE INFORMATION OF FINANCIAL INSTRUMENTS

a. The definition of the hierarchy:

1) Level one

Level 1 financial instruments are traded in active market and have the identical price for the same financial instruments. “Active market” should fit the following characteristics:

a) All financial instruments in the market are homogeneous;

b) Willing buyers and sellers exist in the market all the time;

c) The public can access the price information easily.

2) Level two

The products categorized in this level have the prices that can be inferred from either direct or indirect observable inputs other than the active market’s prices. Examples of these inputs are:

a) Quoted prices from the similar products in the active market. This means the fair value can be derived from the current trading prices of similar products. It is also noted that whether they are similar products should be judged by the characteristics and trading rules. The fair value valuation in this circumstance may make some adjustment due to time lags, trading rule’s differences, related parties’ prices, and the correlation of price between itself and the similar instruments.

b) Quoted prices for identical or similar financial instruments in inactive markets.

c) When marking-to-model, the input of model in this level should be observable (such as interest rates, yield curves and volatilities). The observable inputs mean that they can be attained from market and can reflect the expectation of market participants.

d) Inputs which can be derived from other observable prices or whose correlation can be verified through other observable market data.

3) Level three

The fair prices of the products in this level are based on the inputs other than the direct market data. For example, historical volatility used in valuing options is an unobservable input, because it cannot represent the entire market participants’ expectation for future volatility.

- 89 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 b. Financial instrument measured at fair value

1) Hierarchy information of fair value of financial instruments

June 30, 2019 Financial Instruments Measured at Fair Value Total Level 1 Level 2 Level 3 Measured on a recurring basis

Non-derivative financial instruments

Assets

Financial assets at fair value through profit or loss Financial assets mandatorily classified as at FVTPL Stocks $ 3,284,878 $ 2,200,420 $ 7,098 $ 1,077,360 Bonds 63,601,615 48,820,579 7,104,001 7,677,035 Others 5,930,282 2,897,651 3,031,643 988 Financial assets at fair value through other comprehensive income Equity instruments at fair value through other comprehensive income Stocks and others 6,422,201 3,278,851 1,082,100 2,061,250 Debt instruments at fair value through other comprehensive income Bonds 74,885,656 53,454,011 20,499,265 932,380 Certificates of deposit purchased and others 147,679,327 - 147,679,327 -

Liabilities

Financial liabilities at fair value through profit or loss Held-for-trading financial liabilities 869,593 869,593 - - Financial liabilities designated as at fair value through profit or loss 1,550,624 - 1,550,624 -

Derivative financial instruments

Assets

Financial assets at fair value through profit or loss Financial assets mandatorily classified as at FVTPL 16,756,578 310,769 15,653,129 792,680

Liabilities

Financial liabilities at fair value through profit or loss Held-for-trading financial liabilities 15,992,675 239,129 14,721,306 1,032,240 Financial liabilities designated as at fair value through profit or loss 2,984,790 - 2,874,146 110,644

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December 31, 2018 Financial Instruments Measured at Fair Value Total Level 1 Level 2 Level 3 Measured on a recurring basis

Non-derivative financial instruments

Assets

Financial assets at fair value through profit or loss Financial assets mandatorily classified as at FVTPL Stocks $ 3,182,525 $ 2,011,749 $ 138,718 $ 1,032,058 Bonds 59,307,617 40,070,547 9,687,832 9,549,238 Others 5,619,346 1,884,198 3,734,215 933 Financial assets at fair value through other comprehensive income Equity instruments at fair value through other comprehensive income Stocks and others 5,716,667 2,703,286 1,087,510 1,925,871 Debt instruments at fair value through other comprehensive income Bonds 53,339,088 39,636,506 12,780,038 922,544 Certificates of deposit purchased and others 150,365,317 - 150,365,317 -

Liabilities

Financial liabilities at fair value through profit or loss Held-for-trading financial liabilities 1,469,163 1,469,163 - - Financial liabilities designated as at fair value through profit or loss 1,500,806 - 1,500,806 -

Derivative financial instruments

Assets

Financial assets at fair value through profit or loss Financial assets mandatorily classified as at FVTPL 16,753,934 166,348 15,156,836 1,430,750

Liabilities

Financial liabilities at fair value through profit or loss Held-for-trading financial liabilities 18,836,978 320,982 17,305,533 1,210,463 Financial liabilities designated as at fair value through profit or loss 971,997 - 824,120 147,877

- 91 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758

June 30, 2018 Financial Instruments Measured at Fair Value Total Level 1 Level 2 Level 3 Measured on a recurring basis

Non-derivative financial instruments

Assets

Financial assets at fair value through profit or loss Financial assets mandatorily classified as at FVTPL Stocks $ 10,368,428 $ 8,767,371 $ 57,468 $ 1,543,589 Bonds 82,983,695 66,935,310 16,048,385 - Others 6,621,989 2,803,156 3,817,880 953 Financial assets at fair value through other comprehensive income Equity instruments at fair value through other comprehensive income Stocks 6,161,735 3,715,044 - 2,446,691 Debt instruments at fair value through other comprehensive income Bonds 48,839,498 33,785,428 15,054,070 - Certificates of deposit purchased and others 183,575,828 - 183,575,828 -

Liabilities

Financial liabilities at fair value through profit or loss Held-for-trading financial liabilities 1,981,857 1,981,857 - - Financial liabilities designated as at fair value through profit or loss 1,456,351 - 1,456,351 -

Derivative financial instruments

Assets

Financial assets at fair value through profit or loss Financial assets mandatorily classified as at FVTPL 21,697,289 643,788 19,538,758 1,514,743

Liabilities

Financial liabilities at fair value through profit or loss Held-for-trading financial liabilities 22,565,785 1,216,830 20,171,961 1,176,994 Financial liabilities designated as at fair value through profit or loss 1,304,966 - 1,106,385 198,581

2) Fair value measurement technique

Financial instruments at fair value through profit or loss and financial assets at fair value through other comprehensive income, with quoted price in an active market are using market price as fair value; financial instruments above with no quoted price in an active market are estimated by valuation methods. The estimation and assumption of valuation method the Group used is the same as market participants’. The Group can obtain this information.

The basis of fair value estimation used by the Group is shown as follows:

The fair value of forward contract, interest rate swap contracts, cross currency swap contracts is measured by the discounted cash flow method; the fair value of option is measured by Black & Scholes Model.

Fair values of forward contracts are estimated on the basis of the foreign exchange rates provided by Reuters. Structured product is measured by opponents’ price based on match basis. This method diminished market risk to zero. Fair value of interest rate swap contracts and cross currency swap contracts are estimated on the basis of market quotation provided by Reuters.

- 92 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 Fair value are determined as follows: (a) listed stocks, Taipei Exchange stocks and Stocks of Real Estate Investment Trust - closing prices as of the balance sheet date; (b) beneficial certificates (open-end funds), net asset values as of the balance sheet date; (c) bonds - period-end reference prices published by the Taipei Exchange or internal model prices; (d) overseas bonds-period-end reference prices published by Bloomberg, calculated through an internal model or provided by a counter-party.

The Group assessed the active level of market and the adequacy of fair value of emerging stocks and measured the investments at fair value.

The Group assessed the fair value of unlisted counters using the market method. It uses the price and other relevant information generated by the market transactions involving comparable or comparable assets, liabilities or assets and liabilities.

3) Credit risk valuation adjustment is set out below:

Credit risk valuation consists of credit valuation adjustment and debit valuation adjustment.

Credit valuation adjustment adopts for derivative contracts trading in other than exchange market, over-the-counter, and reflects the non-performance risk of counter party on fair value.

Debit valuation adjustment adopts for derivative contracts trading in other than exchange market, over-the-counter, and reflects the non-performance risk of the Group on fair value.

The Group calculated debit and credit valuation adjustment based on models with inputs of Probability of Default (PD) and Loss Given Default (LGD) multiplying Exposure at Default (EAD).

The Group calculated EAD based on mark-to-market fair value of OTC derivative instruments.

The Group takes 60% as the standard LGD of counter parties, and subject to change under the risk nature and data feasibility.

The Group take credit risk valuation adjustment into valuation of the fair value of financial instruments, thus reflect the credit quality of counter parties and the Group.

4) Transfer between Levels 1 and 2

For the six months ended June 30, 2019, the Group transferred part of the NTD corporate bonds and foreign bank debentures from Level 1 to Level 2 because the Group determined these investments were not in an active market.

For the six months ended June 30, 2018, the Group transferred part of the NTD corporate bonds and foreign bank debentures from Level 1 to Level 2 because the Group determined these investments were not in an active market.

- 93 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 5) Reconciliation of Level 3 items of financial instruments

a) Reconciliation of Level 3 items of financial assets

For the Six Months Ended June 30, 2019 Gains (Losses) on Valuation Increase Decrease Effects of Beginning Other Transfer to Transfer Out of Items Purchase/ Changes in Ending Balance Balance Profit and Loss Comprehensive Level 3 Disposed/Sold Level 3 Issued Exchange Rate Income (Note) (Note) Non-derivative financial instruments

Financial assets at fair value through profit or loss Financial assets mandatorily classified as at FVTPL Stock $ 1,032,058 $ 84,360 $ - $ 126,121 $ 8,219 $ (126,294 ) $ (47,104 ) $ - $ 1,077,360 Bonds 9,549,238 225,066 - 19,912 1,339,099 (3,497,958 ) - 41,678 7,677,035 Other 933 55 ------988 Financial assets at fair value through other comprehensive income Equity instruments at FVTOCI Stock 1,925,871 - 135,400 - - (21 ) - - 2,061,250 Debt instruments at FVTOCI Bonds 922,544 ------9,836 932,380

Derivative financial instruments

Financial assets at fair value through profit or loss Financial assets mandatorily classified as at FVTPL 1,430,750 (638,070 ) ------792,680

Note: Items are transferred to Level 3 for the six months ended June 30, 2019 for lack of observable price (due to the inactive transaction in the securities market); items transferring out of Level 3 are because the price can be attained from the securities market.

For the Six Months Ended June 30, 2018 Gains (Losses) on Valuation Increase Decrease Beginning Effect of Other Transfer Out of Items Balance Purchase/ Transfer to Changes in Ending Balance Profit and Loss Comprehensive Disposed/Sold Level 3 (Note 1) Issued Level 3 Exchange Rate Income (Note 2) Non-derivative financial instruments

Financial assets at fair value through profit or loss Financial assets mandatorily classified as at FVTPL Stock $ 1,839,234 $ 118,062 $ - $ 23,757 $ - $ (361,143 ) $ (76,321 ) $ - $ 1,543,589 Other 2,485 (1,532 ) ------953 Financial assets at fair value through other comprehensive income Equity instruments at FVTOCI Stock 2,417,060 - 24,296 - - - - 5,335 2,446,691

Derivative financial instruments

Financial assets at fair value through profit or loss Financial assets mandatorily classified as at FVTPL 654,607 860,136 ------1,514,743

Note 1: The beginning balance of financial assets at FVTPL and equity instruments at FVTOCI contains unlisted shares classified as available-for-sale and unlisted shares measured at cost under IAS 39.

Note 2: Items transferring out of Level 3 are because the price can be attained from the securities markets.

For the six months ended June 30, 2019 and 2018, the gain or loss on valuation included in net gain and loss with assets still held were loss $64,834 and gain $974,865, respectively.

For the six months ended June 30, 2019 and 2018, the gain or loss on valuation included in other comprehensive income with assets still held were gain $135,399 and $24,296, respectively.

- 94 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 b) Reconciliation of Level 3 items of financial liabilities

For the Six Months Ended June 30, 2019 Valuation Increase Decrease Effect of Beginning Gain/Loss Items Purchase/ Transfer to Transfer Out of Changes in Ending Balance Balance Reflected on Disposed/Sold Issued Level 3 Level 3 Exchange Rate Profit or Loss Derivative financial instruments

Financial liabilities at fair value through profit or loss Held-for-trading financial liabilities $ 1,210,463 $ (178,223 ) $ - $ - $ - $ - $ - $ 1,032,240 Financial liabilities designated as at fair value through profit or loss 147,877 13,499 191,542 - (242,274 ) - - 110,644

For the Six Months Ended June 30, 2018 Valuation Increase Decrease Effect of Beginning Gain/Loss Items Purchase/ Transfer to Transfer Out of Changes in Ending Balance Balance Reflected on Disposed/Sold Issued Level 3 Level 3 Exchange Rate Profit or Loss Derivative financial instruments

Financial liabilities at fair value through profit or loss Held-for-trading financial liabilities $ 686,411 $ 490,583 $ - $ - $ - $ - $ - $ 1,176,994 Financial liabilities designated as at fair value through profit or loss 69,086 (11,086 ) 821,289 - (680,708 ) - - 198,581

For the six months ended June 30, 2019 and 2018, the gain or loss on valuation included in net income with liabilities still held were gain $52,818 and loss $525,880, respectively.

- 95 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 6) Quantitative information about the significant unobservable inputs (Level 3) used in the fair value measurement

Quantitative information about the significant unobservable inputs is set out below:

June 30, 2019

Significant Interval Financial Instruments Financial Financial Valuation Techniques Unobservable (Weighted- Measured at Fair Value Assets Liabilities Inputs average) Derivative financial instruments

Financial instruments at fair value through profit or loss Financial assets mandatorily classified as at FVTPL and held-for-trading financial liabilities Hybrid FX swap $ 736,713 $ 735,962 Sellers’ quote (Note 1) - structured instruments Others 55,967 296,278 Sellers’ quote (Notes 1 and 2) -

$ 792,680 $ 1,032,240

Financial instruments designated as at fair value through profit or loss Liabilities for structured $ - $ 110,644 Self-built option pricing model Volatility 3%-28% note (Note 4)

Non-derivative financial instruments

Financial assets at fair value through profit or loss Financial assets mandatorily classified as at FVTPL Bonds $ 7,677,035 $ - Taipei Exchange’s quote or (Note 3) Bloomberg’s quote Unlisted common shares 1,077,360 - Market approach or asset Others shareholders 0%-35% approach or market value and discount with liquidity valuation factor of liquidity discount Others 988 - Asset approach Discount factor of 0%-30% liquidity

$ 8,755,383 $ -

Financial assets at fair value through other comprehensive income Equity instruments at FVTOCI Unlisted common shares $ 2,061,250 $ - Market approach or asset Others shareholders 0%-35% approach or income approach and discount or market value with liquidity factor of liquidity valuation discount Debt instruments at fair value through other comprehensive income Bonds 932,380 - Taipei Exchange’s quote or (Note 3) Bloomberg’s quote

$ 2,993,630 $ -

- 96 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 December 31, 2018

Significant Interval Financial Instruments Financial Financial Valuation Techniques Unobservable (Weighted- Measured at Fair Value Assets Liabilities Inputs average) Derivative financial instruments

Financial instruments at fair value through profit or loss Financial assets mandatorily classified as at FVTPL and held-for-trading financial liabilities Hybrid FX swap $ 1,040,193 $ 1,039,128 Sellers’ quote (Note 1) - structured instruments Others 390,557 171,335 Sellers’ quote (Notes 1 and 2) -

$ 1,430,750 $ 1,210,463

Financial instruments designated as at fair value through profit or loss Liabilities for structured $ - $ 147,877 Self-built option pricing model Volatility 3%-54% note (Note 5)

Non-derivative financial instruments

Financial assets at fair value through profit or loss Financial assets mandatorily classified as at FVTPL Bonds $ 9,549,238 $ - Taipei Exchange’s quote or (Note 3) Bloomberg’s quote Unlisted common shares 1,032,058 - Market approach or asset Others shareholders 0%-35% approach or market value and discount with liquidity valuation factor of liquidity discount Others 933 - Asset approach Discount factor of 0%-30% liquidity

$ 10,582,229 $ -

Financial assets at fair value through other comprehensive income Equity instruments at FVTOCI Unlisted common shares $ 1,925,871 $ - Market approach or asset Others shareholders 0%-35% approach or income approach and discount or market value with liquidity factor of liquidity valuation discount Debt instruments at fair value through other comprehensive income Bonds 922,544 - Taipei Exchange’s quote or (Note 3) Bloomberg’s quote

$ 2,848,415 $ -

- 97 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 June 30, 2018

Significant Interval Financial Instruments Financial Financial Valuation Techniques Unobservable (Weighted- Measured at Fair Value Assets Liabilities Inputs average) Derivative financial instruments

Financial instruments at fair value through profit or loss Financial assets mandatorily classified as at FVTPL and held-for-trading- financial liabilities Hybrid FX swap $ 1,017,067 $ 1,016,030 Sellers’ quote (Note 1) - structured instruments Others 497,676 160,964 Sellers’ quote (Notes 1 and 2) -

$ 1,514,743 $ 1,176,994

Financial instruments designated as at fair value through profit or loss Liabilities for structured $ - $ 198,581 Self-built option pricing model Volatility 3%-44% note (Note 6)

Non-derivative financial instruments

Financial assets at fair value through profit or loss Financial assets mandatorily classified as at FVTPL Unlisted common $ 1,543,589 $ - Market approach or asset Others shareholders 0%-35% shares approach or income approach and discount or market value with liquidity factor of liquidity valuation discount Others 953 - Asset approach Discount factor of 0%-30% liquidity

$ 1,544,542 $ -

Financial assets at fair value through other comprehensive income Equity instruments at FVTOCI Unlisted common shares $ 2,446,691 $ - Market approach or asset Others shareholders 0%-35% approach or income approach and discount or market value with liquidity factor of liquidity valuation discount

Note 1: On pairs of back-to-back transactions, consequences of significant unobservable inputs and fair values are not fully captured in practice. Therefore, both inputs are not disclosed.

Note 2: Considering the risk of the model, the amount of sellers’ quote were recorded. Consequences of significant unobservable inputs and fair values are not fully captured in practice. Therefore, inputs are not disclosed.

Note 3: No disclosure have been made because zero coupon callable bonds and international bonds lack liquidity in the OTC market, resulting in no observable, liquidity reduction factor could be obtained.

Note 4: The stock price volatilities of structured notes issued by SinoPac Securities and subsidiaries were between 3% and 28%.

Note 5: The stock price volatilities of structured notes issued by SinoPac Securities and subsidiaries were between 3% and 54%.

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Note 6: The stock price volatilities of structured note issued by SinoPac Securities and subsidiaries were between 3% and 44%.

7) Valuation processes for fair value measurements categorized within Level 3

The Group assesses the derivative financial instruments’ fair values according to the quote by counterparties; related assessments are compiled as risk-control reports and inform the manager and the board of directors by month.

The risk management department is responsible for independent testify of fair value of non-derivative financial instruments. The team also use the independent source date to bring the assessment results closer to market conditions, confirm that data sources are independent, reliable, consistent with other resources and represent executable price, calibrate the evaluation model periodically and update input values and data required for the evaluation model to ensure the evaluation results are reasonable.

8) The sensitivity analysis of reasonable, possible and alternative hypothesis for the third level of fair value measurements

The Group evaluates financial instruments reasonably, although using different valuation model and parameter, may cause different valuation results. For financial instruments classified as Level 3 and the fair value source used lacks observable, liquidity reduction factor. If the change of estimated liquidity cost, estimating 99% confidence interval and based on historical data of market turnover in the past two years, are included in the estimation, the impact on profit and loss is as follows:

June 30, 2019

Changes in the Fair Value Reflected on Current Profit or Item Loss Unfavorable Favorable Change Change Asset

Financial assets at fair value through profit or loss Financial assets mandatorily classified as at fair value through profit or loss $ (165,507) $ 165,507 Financial assets at fair value through other comprehensive income Debt instruments at fair value through other comprehensive income $ (17,992) $ 17,992

- 99 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 December 31, 2018

Changes in the Fair Value Reflected on Current Profit or Item Loss Unfavorable Favorable Change Change Asset

Financial assets at fair value through profit or loss Financial assets mandatorily classified as at fair value through profit or loss $ (215,142) $ 215,142 Financial assets at fair value through other comprehensive income Debt instruments at fair value through other comprehensive income $ (17,802) $ 17,802 c. Financial instruments not carried at fair value

1) Fair value information of financial instruments

Financial instruments not carried at fair value excluding the table below are reasonably close to their fair value, therefore no additional disclosure, for example: Cash and cash equivalents, due from the Central Bank and other banks, securities purchased under resell agreements, receivables, discounts and loans, some other financial assets, deposits from the Central Bank and other banks, securities sold under repurchased agreements, commercial papers issued, payables, deposits and remittances, current and non-current portion of non-current borrowing, liability component of preferred stock and other financial liabilities.

June 30, 2019 Carrying Items Amount Fair Value

Debt instrument investments at amortized cost $ 113,134,428 $ 114,251,083 Bonds Payable 40,221,383 40,769,105

December 31, 2018 Carrying Items Amount Fair Value

Debt instrument investments at amortized cost $ 93,680,834 $ 93,821,295 Bonds Payable 35,722,483 36,214,749

June 30, 2018 Carrying Items Amount Fair Value

Debt instrument investments at amortized cost $ 79,439,937 $ 79,598,087 Bonds Payable 42,680,788 43,231,826

- 100 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 2) Hierarchy information of fair value of financial instruments

June 30, 2019 Assets and Liabilities Item Total Level 1 Level 2 Level 3 Debt instrument investments at amortized cost $ 114,251,083 $ 55,777,678 $ 58,473,405 $ - Bonds Payable 40,769,105 6,007,089 25,076,116 9,685,900

December 31, 2018 Assets and Liabilities Item Total Level 1 Level 2 Level 3 Debt instrument investments at amortized cost $ 93,821,295 $ 35,071,196 $ 58,609,934 $ 140,165 Bonds Payable 36,214,749 5,170,599 23,378,250 7,665,900

June 30, 2018 Assets and Liabilities Item Total Level 1 Level 2 Level 3 Debt instrument investments at amortized cost $ 79,598,087 $ 22,036,743 $ 56,534,339 $ 1,027,005 Bonds Payable 43,231,826 8,385,435 27,180,491 7,665,900

3) Methods and assumptions applied in estimating the fair values of financial instruments not carried at fair value are as follows:

a) The carrying amounts of financial instruments such as cash and cash equivalents, due from the Central Bank and other banks, securities purchased under resell agreements, receivables, some of other financial assets, deposits from the Central Bank and other banks, commercial papers issued, securities sold under repurchased agreements, current borrowing, payables and other financial approximate their fair value because of the short maturity or the similarity of the carrying amount and future price.

b) Discounts and loans (include nonperforming loans): The Group usually uses base rate (floating rate) as loan rate because it can reflect market rate. Thus, using its carrying amount to consider the probability of repossession and estimate its fair value is reasonable. Long-term loans with fixed rate should estimate its fair value by its discounted value of expected cash flow. Because this kind of loans is not significant in this item, using its carrying amount to consider the probability of repossession and estimate its fair value should be reasonable.

c) The debt instruments investments at amortized cost: Debt instruments investments at amortized cost with quoted price in an active market are using market price as fair value; debt instruments investments at amortized cost with no quoted price in an active market are estimated by valuation methods or opponent’s price.

d) Deposits and remittances: Considering banking industry’s characteristic, since deposits have one-year maturity and measured by market rate (market value), using carrying value to assess fair value is reasonable. For deposits with three-years maturity are measured by discounted cash flow, using carrying value to assess fair value is reasonable.

e) Bonds payable: Bonds payable with quoted price in an active market use market price or price quotations from counterparties to estimate fair value; bonds payable with no quoted price in an active market are estimated by valuation methods or based on prices of similar instruments.

f) Investments accounted for using the equity method: The fair value of investments accounted for using the equity method cannot be reliably measured because there is no quoted price in an active market, the interval of variable fair value measurements is significant or the probability of the estimations in the variable interval cannot be reasonably assessed. Hence, no fair value can be disclosed.

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g) Liability components of preferred stocks: These liability components are interest-bearing liabilities with floating interest rates; thus, their carrying amounts represent fair value.

h) Non-current portion of non-current borrowings: These borrowings are interest-bearing liabilities with floating interest rates; thus, their carrying amounts represent fair value.

50. FINANCIAL RISK MANAGEMENT

Bank SinoPac

a. Overview

Bank SinoPac and its subsidiaries document the risk management policies, including overall operating strategies and risks control philosophy. Bank SinoPac and its subsidiaries’ overall risk management policies are to minimize the possibility of potential unfavorable factors. The board of directors approves the documentation of overall risk management policies and specific risk management policies; including credit risk, liquidity risk, market risk, operational risk, derivative instruments transactions and managements. The board of directors reviews the policies regularly, and reviews the operation to make sure Bank SinoPac and its subsidiaries’ policies are executed properly.

b. Risk management framework

The board of directors is the top risk supervisor of Bank SinoPac and its subsidiaries. The board not only reviewed risk management policies and rules but also authorized management to be in charge of daily risk management work. Bank SinoPac has set up a risk management committee under the chairman of the Board to be responsible for the services above; Bank SinoPac has also set up a credit committee in the board of directors to review the policies and supervise the abnormal cases. The credit committee also helps the board of directors approve cases over general manager’s authority under the board’s authorization.

The board of directors authorized Bank SinoPac and its subsidiaries’ management to supervise risk management activities, evaluate the performance and confirm every risk management agent having essential code of ethic and professional skills. Internal audit is responsible for the periodic review of risk management and the control environment, and then reports the results directly to the board of directors.

Bank SinoPac has set up a risk management department to control risk management policies, establish rules, plan and set up risk management system. The risk management department executes these policies based on the board’s approval, then reports the results and performance reviews to the authority or the board.

c. Credit risk

1) Sources and definitions of credit risk

Credit risk is the risk of financial loss if a customer or counterparty fails to meet an obligation under a contract. It arises principally from lending, trade finance, treasury, and credit derivatives. The issuer’s credit risk should be considered as part of the market risk when the investment target is securities in an active market.

- 102 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 2) Policies and strategies

Bank SinoPac and its subsidiaries established policies based on operating goals and strategies, business plans and risk management goals authorized by the board of directors. These policies were established to lower potential financial losses, minimize risks and rewards to raise the performance and protect shareholders’ equity through appropriate managing policies and procedures based on risk-diversification principle.

Bank SinoPac and its subsidiaries risk strategy is to strengthen the credit risk management framework, establish complete credit verification system and procedure, develop and use efficient and scientific credit risk managing instruments to identify, measure, manage and supervise credit risks. These strategies transparentize, systematize, specialize and formalize credit risk management to manage loans, nonperforming assets and every kind of assets’ credit risk.

Bank SinoPac and its subsidiaries have set up policies of main risks as prime direction based on legislations and operational goals. These policies include risk appetite, management goals, organization structure of responsibility and accountability, measurement, evaluation, supervision and report procedure of risks. These policies are established to reach the purposes of consistency and centralized management and are put into practice in corporate government.

Credit risk management procedures and measurements are as follows:

a) Loan business (includes loan commitment and guarantee)

Loan business classification and qualities are shown as follows:

i. Classification

Under the “Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Nonperforming/Nonaccrual Loans” (the Regulations) issued by the Banking Bureau, Bank SinoPac evaluates credit losses on the basis of the estimated collectability. In accordance with the Regulations, credit assets are classified as normal assets, assets that require special mentioned, assets with substandard, assets with doubtful collectability, and assets on which there is loss. In order to manage credit problem, the Bank issued “Evaluate Assets and Deal with Non-performing/Non-accrual Loans” for managing credit problem and debt collection.

Bank SinoPac (China) strictly follows the “Guidance for the Risk-Based Loan Categorization” established by the China Banking Regulatory Commission. It divides its loans into five categories based on a debtor’s ability to repay the full principal and interest on time. The five categories are normal, special mention, substandard, doubtful, and loss. The last three categories are considered nonperforming loans.

ii. Credit quality level

Bank SinoPac and its subsidiaries sets up credit quality level (ex. internal credit risk assessment model, credit assessment rules) based on business characteristic and scale to manage risks.

In order to measure clients’ credit risks, Bank SinoPac and its subsidiaries established credit risk assessment model for corporate banking, personal banking and consumer banking through statistic methods, professional judgment and clients’ information. Every model should be reviewed regularly to examine whether the calculations match to the actual conditions or not, then Bank SinoPac and its subsidiaries will adjust parameters to optimize the results.

- 103 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 For personal banking and consumer banking customers, every case will be reviewed individually to assess default risks except that micro-credit and credit card business should be assessed by internal credit assessment model.

b) Investment business

Bank SinoPac and its subsidiaries manages and identifies credit risks of debt investment through credit ratings by outsiders, credit qualities of the debt, regional conditions and counterparties’ risks.

Bank SinoPac and its subsidiaries carry out derivative instrument transactions with counterparties in financial industry which are almost above the investment level. Bank SinoPac and its subsidiaries would control credit risks based on counterparties’ credit lines; counterparties with no credit ratings or at non-investment level should be reviewed individually. Normal customers’ credit exposure positions should be controlled by approved derivative instrument credit line and condition based on normal credit procedure.

3) Credit risk hedge or mitigation policies

a) Collateral

Bank SinoPac and its subsidiaries have set up several standards dealing with credit exposures and collateral requirements in order to mitigate credit risks and maintain creditor’s rights. The standards cover areas such as disposal of collateral, acceptance of real estate as collateral, real estate appraisal; credit policies for every commodity to regulate collateral categories, appraisals, procedures, deduction percentages, loan rate, loan-to-value ratio, maturity analysis, control, and management.

To maintain collateral’s effectiveness, Bank SinoPac and its subsidiaries supervise and manage the collateral by examining the usage, custody and maintenance of collateral regularly and irregularly to avoid selling, leasing, pledging, moving and disposing collaterals without authorization. Once the loan is due but will be extended, the contract should be seen as a new case and the collateral should be revalued.

b) Credit risk limits and credit risk concentration control

Bank SinoPac and its subsidiaries manage credit line and concentration of credit assets through appropriate information managing system that gathers information on credit exposure to centralized conditions, exposure of credit asset combinations, including national risk, large credit exposure, credit line of single corporation, group and industry. For cases approaching credit limit, the concerned unit should report to management and make control strategies; for cases exceeding credit limit, the management should take appropriate action and the Group should review the credit approval process and authorization level.

c) Agreement of net settlement

Bank SinoPac and its subsidiaries often makes gross settlement on transactions, sign net settlement contract with other counterparties or cancel every transactions and make net settlement when default occurs to mitigate credit risk.

- 104 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 4) The determination since the initial recognition of the credit risk has increased significantly

a) Loan business

Bank SinoPac and its subsidiaries assess the change in the risk of default of various credit assets during the lifetime on each reporting date to determine if the credit risk has increased significantly since the initial recognition. In order to make this assessment, the main consideration is reasonable and supportable information that the credit risk has increased significantly since the initial recognition (including forward-looking information).

Key indicators include:

i. Quantitative indicators

Information on overdue conditions: When the contractual payments were overdue for more than 30 days to overdue 89 days, it has been determined that credit risk of the financial assets after the initial recognition was significantly increased.

ii. Qualitative indicators

i) Although the loan has not been repaid or due on the maturity date, there are other bad debts and the asset classification is not normal.

ii) The loan review report belonging to an abnormal credit.

iii) The credit card transaction with Bank SinoPac is abnormal.

On the basis of various credit asset evaluation benchmark days of Bank SinoPac and its subsidiaries, if the credit risk does not increase significantly and not belong to an impaired financial asset, it can be determined that the credit risk does not increase significantly after the initial recognition.

b) Investment business

Bank SinoPac and its subsidiaries adopt external credit rating scale to measure of whether the credit risk after the initial recognition is significantly increased for debt instrument measured at amortized cost and debt instrument measured at fair value through other comprehensive income.

The external credit rating is determined by international credit rating agency. When the external credit rating changes and the following situations occur, the credit risk is regarded to have significantly increased after the initial recognition.

i. From investment grade (Aaa-Baa3) to non-investment grade (Ba1 (inclusive) or less, without Ca-D)

ii. From grade Ba1-Ba3 to grade B1-Caa3

iii. The bonds in grade B1-Caa3 at initial recognition.

- 105 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758

Taiwan Fitch Credit Moody's S&P Fitch Ratings (Taiwan) Aaa AAA AAA Aa1 AA+ AA+ Aa2 AA AA Aa3 AA- AA- A1 A+ A+ twAAA AAA (twn) First grade A2 A A twAA+ AA+ (twn) A3 A- A- twAA AA (twn) Baa1 BBB+ BBB+ twAA- AA- (twn) Baa2 BBB BBB twA+ A+ (twn) Baa3 BBB- BBB- twA A (twn) Ba1 BB+ BB+ twA- A- (twn) Ba2 BB BB twBBB+ BBB+ (twn) Second grade Ba3 BB- BB- twBBB BBB (twn) twBBB- BBB- (twn)

B1 B+ B+ twBB+ BB+ (twn) B2 B B twBB BB (twn) B3 B- B- twBB- BB- (twn) twB+ B+ (twn) Third grade twB Caa1 CCC+ CCC+ twB- B (twn) Caa2 CCC CCC twCCC+ B- (twn) Caa3 CCC- CCC- twCCC CCC+ (twn) Ca CC CC twCCC- CCC (twn) C C C twCC CCC- (twn) SD DDD twC CC (twn) D DD twSD C (twn) R D twD DDD (twn) Fourth grade twR DD (twn) D (twn) P-1 A-1 F-1 P-2 A-2 F-2 twA-1 F1 (twn) P-3 A-3 F-3 twA-2 F2 (twn)

The external rating of each credit rating agency refers to the conversion chart of Basel III.

If a bond has multiple credit ratings, the lowest rating of such bond will be taken as its credit rating; if the bond itself has no credit rating, the guarantor’s credit rating will be taken; if there is no guarantor, the issuer’s credit rating will be taken. If the bond’s, guarantor’s, or issuer’s external credit rating is not available, the external rating of the bond is based on the internal rating of the bond in SinoPac Holdings.

5) Definition of financial asset default and credit impairment

The definition of financial asset default by Bank SinoPac is the same as financial asset credit impairment. If one or more of the following conditions are satisfied, Bank SinoPac determines that the financial asset has defaulted and has credit impairment

a) Quantitative indicators

Principal or interest is overdue for more than three months.

- 106 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 b) Qualitative indicators

If there is evidence that the debtor will not be able to pay the contract money, or the debtor is facing significant financial difficulties, for examples:

i. The main debtor has been chased, or the collateral has been disposed of.

ii. The main debtor has not paid short term advance to Bank SinoPac.

iii. The debtor applies for debt negotiation, debt extension and debt restructuring, etc. due to financial difficulties.

iv. Other situation with objective evidence of impairment.

Bond investment belongs to credit ratings Ca-D bonds when the following situations occur:

i. The issuer probably cannot repay the principal or interest on the bond maturity date.

ii. It could be objectively judged that the issuer will not be able to repay the principal and interest of the bond on time before maturity.

iii. Probability that the debtor will enter into bankruptcy or undergo financial reorganization.

iv. The issuer encounters bankruptcy or being reorganized or taken over due to financial difficulties before bond maturity.

The above definition of default and credit impairment applies to all financial assets held by Bank SinoPac. It is consistent with the definition of relevant financial assets for internal credit risk management, and applicable to relevant impairment assessment model as well.

6) Write-off policy

If one of the following situations occurred, overdue and nonperforming loans of Bank SinoPac, after deducting any estimated recoverable part, will be written off as bad debts.

a) All or part of creditor’s right couldn’t recover due to dissolution, escape, settlement, bankruptcy or other reasons of the debtors.

b) The values of collateral and properties of the main and subordinate debtors are very low, compensation are not available after deducting the first mortgage, or it is unbeneficial that execution fee is close to or may exceed Bank SinoPac’s reimbursable amount.

c) The collateral and the properties of the main and subordinate debtors are unsold after multiple discount auctions and not beneficial to Bank SinoPac.

d) Overdue and nonperforming loans have not been recovered after more than 2 years from the maturity date.

Bank SinoPac has procedures for recording accounts written off and for keeping such records for inspection. Relevant business department continues to watch for movements of the main and subordinate debtors all the time. If there is any property available for execution, Bank SinoPac will take appropriate legal action.

- 107 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 7) Amendment to financial asset contract cash flows

Bank SinoPac and its subsidiaries will amend financial asset contract cash flows when borrowers are in financial difficulties, as a result of improvement of problematic debtors’ recovery rate or for maintenance of customer relationships. Financial asset contract cash flows amendment include extension of contract period, interest payment date modification, contract interest modification, or exemption from certain requirements of part of debts. The amendment could result in Bank SinoPac and its subsidiaries’ disposal of existing financial asset and recording of new financial asset at fair value.

If the modification of the contractual cash flows of financial asset does not result in derecognition of asset, Bank SinoPac and its subsidiaries will assess whether the credit risk of financial asset has increased significantly by comparing the following:

a) Risk of breaching the contract on the reporting date (based on revised contract terms).

b) The risk of default in the original recognition (based on the original unmodified contract terms).

Bank SinoPac and its subsidiaries will consider the borrower’s subsequent payment in accordance with the revised terms and several relevant behavior indicators to assess the probability of default on the revised financial asset, and confirm whether the contract modification improves or restore the ability to recover related contract payments of Bank SinoPac and its subsidiaries.

8) Measurement of expected credit losses

For the purpose of measuring expected credit losses, Bank SinoPac and its subsidiaries will look into the business attributes of the credit assets (such as corporate finance, personal finance, consumer finance, e-finance, etc.) as well as the size of the company, types of collateral, and remaining period of maturities, etc. and group the credit risk characteristics into three stages: No significant increase in credit risk (stage 1), significant increase in credit risk (stage 2), and credit impairment (stage 3) according to the credit risk level at the valuation date.

Bank SinoPac and its subsidiaries provide allowance for 12-month expected credit losses when financial instruments did not have a significant increase in credit risk since the initial recognition. Financial instruments are provided with allowance for full-lifetime expected credit losses when there is significant increase in credit risk or credit impairment since the initial recognition.

To measure expected credit losses, Bank SinoPac and its subsidiaries take into account the borrower’s probability of default (“PD”) for the next 12 months and the period of existence, and include the loss given default (“LGD”). Multiply by the Exposure at default (“EAD”) and taking into account the impact of the time value of money, The expected credit losses for 12 months and duration are calculated.

Bank SinoPac assesses the amount of Exposure at default of lending based on outstanding loan principal of customers, interest receivable and short-term advances at the end of each period. In addition, when estimating the expected credit losses of lending financing commitments, Exposure at default used to calculate expected credit losses is determined based on the conditions and days of the financing commitment and by reference to the credit risk conversion factor of Basel Capital Accord.

- 108 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 Probability of default is the default probability of the borrower, and the default loss rate is the rate of loss caused by default of the borrower. The default probability and default loss rate used in the impairment assessment and calculation of expected credit losses of Bank SinoPac loan business are based on internal historical information (such as credit loss experience, etc.) of each borrower group, with adjustments to the historical data based on the current observable data and forward-looking economic information. The expected loss of debt instrument investment is calculated according to the default rate information and external recovery rate information published by the external credit rating agencies.

9) Forward-looking information considerations

a) Credit assets

Bank SinoPac takes forward-looking information into account when determining whether the credit risk of the credit assets has increased significantly since the initial recognition and measures the expected credit losses. Bank SinoPac uses historical data and expert judgments to analyze and identify the economic factors that affect the credit risk and expected credit losses of various asset groups, such as GDP and unemployment rate. Bank SinoPac obtains quarterly historical data and forecast information of the relevant economic factors from international financial organizations (such as the International Monetary Fund, IMF). This forecast information contains the best estimate of the economic situation in the next five years.

The relevant economic factors and their impact on PD differ among different credit business. Bank SinoPac classifies credit product types as:

i. Enterprise, sovereignty, and bank credit exposure. ii. Home Mortgage Insurance credit exposure. iii. Qualified cycling retail credit exposure. iv. Other retail credit exposure.

With reference to the Basel Capital Accord IRB method, the correlation coefficient of various types of credit products and risk category is calculated and forward-looking information is used to adjust the default probability.

b) Investment business

For the debt instrument investment measured at amortized cost and measured at fair value through other comprehensive income, one of the indicators significant increase in credit risk is the quantified change in the external rating class announced by the international credit rating agencies, and the measurement of expected credit losses is based on the information of the default ratings and loss given default regularly announced by external rating agencies and international credit rating agencies.

As international credit rating agencies have considered forward-looking information in assessing credit ratings, Bank SinoPac’s assessment of forward-looking information is appropriate, and is included in Bank SinoPac’s assessment of expected credit losses.

- 109 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 10) The allowance for losses of Bank SinoPac and its subsidiaries

Changes in allowance for discounts and loans

The Adjustments Under Regulations Governing the Lifetime ECL Procedures for Lifetime ECL (Non-purchased or Impairment in For the Six Months Ended Banking Institutions 12 Month ECL (Collectively Originated Accordance With Total June 30, 2019 to Evaluate Assets Assessed) Credit-Impaired IFRS 9 and Deal with Financial Assets) Nonperforming/ Nonaccrual Loans (Note 1) Balance, January 1 $ 1,542,056 $ 318,552 $ 1,036,959 $ 2,897,567 $ 10,115,562 $ 13,013,129 Changes due to financial instruments that have been recognized at the beginning of the period: To lifetime ECL (2,435 ) 249,366 (41,943 ) 204,988 - 204,988 From conversion to credit-impaired financial assets (1,300 ) (59,047 ) 287,302 226,955 - 226,955 To 12-month ECL 1,015 (127,918 ) (382 ) (127,285 ) - (127,285 ) Derecognizing financial assets during the current period (1,477,297 ) (188,173 ) (171,507 ) (1,836,977 ) - (1,836,977 ) Purchased or originated new financial assets 1,084,262 2,956 108,646 1,195,864 - 1,195,864 Adjustments under regulations governing the procedures for banking institutions to evaluate assets and deal with nonperforming/nonaccrual loans (Note 1) - - - - 1,383,613 1,383,613 Write-off (Note 2) - - (225,681 ) (225,681 ) - (225,681 ) Changes in model/risk parameters (12,323 ) 12,945 (80,843 ) (80,221 ) - (80,221 ) Effect of exchange rate changes and others 6,153 416 2,570 9,139 17,695 26,834

Balance, June 30 $ 1,140,131 $ 209,097 $ 915,121 $ 2,264,349 $ 11,516,870 $ 13,781,219

The Adjustments Under Regulations Governing the Lifetime ECL Procedures for Lifetime ECL Lifetime ECL (Non-purchased Impairment in Banking For the Six Months Ended 12 Month ECL (Collectively (Individually or Originated Accordance With Institutions to Total June 30, 2018 Assessed) Assessed) Credit-Impaired IFRS 9 Evaluate Assets Financial Assets) and Deal with Nonperforming/ Nonaccrual Loans (Note 1) Balance, January 1 $ 1,562,950 $ 436,203 $ 11,143 $ 1,031,971 $ 3,042,267 $ 9,480,439 $ 12,522,706 Changes due to financial instruments that have been recognized at the beginning of the period: To lifetime ECL (3,793 ) 269,879 54 (8,022 ) 258,118 - 258,118 From conversion to credit-impaired financial assets (2,410 ) (95,613 ) - 305,470 207,447 - 207,447 To 12-month ECL 1,262 (86,357 ) - (1,371 ) (86,466 ) - (86,466 ) Derecognizing financial assets during the current period (1,718,668 ) (353,715 ) (11,352 ) (152,647 ) (2,236,382 ) - (2,236,382 ) Purchased or originated new financial assets 1,603,277 1,754 - 67,164 1,672,195 - 1,672,195 Adjustments under regulations governing the procedures for banking institutions to evaluate assets and deal with nonperforming/nonaccrual loans (Note 1) - - - - - 396,194 396,194 Write-off (Note 2) - - - (192,841 ) (192,841 ) - (192,841 ) Effect of exchange rate changes and others 8,865 560 155 3,347 12,927 24,863 37,790

Balance, June 30 $ 1,451,483 $ 172,711 $ - $ 1,053,071 $ 2,677,265 $ 9,901,496 $ 12,578,761

Note 1: The amounts of the listings of Bank SinoPac (China) in accordance with local supervision regulation are included.

Note 2: The amounts to be replenished the allowance when the written-off is included.

- 110 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 Changes in allowance for receivables

The Adjustments Under Regulations Governing the Lifetime ECL Procedures for Lifetime ECL (Non-purchased Impairment in For the Six Months Ended Banking 12-month ECL (Collectively or Originated Accordance with Total June 30, 2019 Institutions to Assessed) Credit-impaired IFRS 9 Evaluate Assets Financial Asset) and Deal with Nonperforming/ Nonaccrual Loans Balance, January 1 $ 19,757 $ 5,705 $ 369,656 $ 395,118 $ 499,687 $ 894,805 Changes due to financial instruments that have been recognized at the beginning of the period: To lifetime ECL (49 ) 7,308 (2,921 ) 4,338 - 4,338 From conversion to credit-impaired financial assets (7 ) (5,088 ) 45,196 40,101 - 40,101 To 12-month ECL 20 (2,144 ) (24 ) (2,148 ) - (2,148 ) Derecognizing financial assets during the current period (20,264 ) (313 ) (39,615 ) (60,192 ) - (60,192 ) Purchased or originated new financial assets 17,087 16 813 17,916 - 17,916 Adjustments under regulations governing the procedures for banking institutions to evaluate assets and deal with nonperforming/nonaccrual loans - - - - (59,143 ) (59,143 ) Write-off (Note 2) - (96 ) (33,409 ) (33,505 ) - (33,505 ) Changes in model/risk parameters (162 ) (192 ) (1,745 ) (2,099 ) - (2,099 ) Effect of exchange rate changes and others 103 6 1,702 1,811 1,239 3,050

Balance, June 30 $ 16,485 $ 5,202 $ 339,653 $ 361,340 $ 441,783 $ 803,123

The Adjustments Under Regulations Governing the Lifetime ECL Procedures for Lifetime ECL (Non-purchased Impairment in For the Six Months Ended Banking 12-month ECL (Collectively or Originated Accordance with Total June 30, 2018 Institutions to Assessed) Credit-impaired IFRS 9 Evaluate Assets Financial Asset) and Deal with Nonperforming/ Nonaccrual Loans Balance, January 1 $ 17,118 $ 13,247 $ 408,272 $ 438,637 $ 453,111 $ 891,748 Changes due to financial instruments that have been recognized at the beginning of the period: To lifetime ECL (57 ) 12,127 (3,388 ) 8,682 - 8,682 From conversion to credit-impaired financial assets (7 ) (12,086 ) 44,631 32,538 - 32,538 To 12-month ECL 4 (1,086 ) (20 ) (1,102 ) - (1,102 ) Derecognizing financial assets during the current period (23,792 ) (2,368 ) (20,850 ) (47,010 ) - (47,010 ) Purchased or originated new financial assets 24,872 3 208 25,083 - 25,083 Adjustments under regulations governing the procedures for banking institutions to evaluate assets and deal with nonperforming/nonaccrual loans - - - - (33,105 ) (33,105 ) Write-off (Note 2) - (767 ) (47,045 ) (47,812 ) - (47,812 ) Effect of exchange rate changes and others 140 (1,937 ) 1,751 (46 ) 5,399 5,353

Balance, June 30 $ 18,278 $ 7,133 $ 383,559 $ 408,970 $ 425,405 $ 834,375

Note 1: The amounts of receivables include other financial assets’ nonperforming loans transferred from loans.

Note 2: The amounts to be replenished when the written-off is included.

- 111 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 11) The maximum credit exposure of the financial instruments held by Bank SinoPac and Bank SinoPac (China)

Maximum credit exposures of assets on balance sheet (excluding collaterals and other credit enhancement instruments) are almost equivalent to its carrying value. The maximum credit exposures (excluding collaterals, other credit enhancement instruments and undrawn maximum exposure) off balance sheet are shown as follows:

The Maximum Credit Exposure Off-Balance Sheet Items December 31, June 30, 2019 June 30, 2018 2018 Undrawn credit card commitments $ 166,369,721 $ 157,665,810 $ 153,643,616 Undrawn loan commitments 29,243,297 21,429,676 18,455,265 Guarantees 18,083,869 16,416,274 21,616,351 Standby letter of credit 4,784,873 3,796,932 3,141,045

Bank SinoPac and Bank SinoPac (China) adopt a strict and continuous evaluation procedure and review the result regularly to control and minimize off-balance sheet credit risk exposures continuously.

The contract amount in the credit business and financial instruments may not be fully paid before the maturity; therefore, the contract amount is not deemed as the amount of future cash outflow. In other words, the future cash demand is lower than contract amount. If the credit limit is exceeded and collaterals lose their value, the amount of credit risk is equal to the contract amount which is the possible maximum loss.

12) Credit risk exposures concentration of Bank SinoPac and its subsidiaries

When financial instruments transactions concentrated on one counterparty or several counter-parties, which engaged in similar business activities, had similar economic characteristics and abilities to execute contracts, the credit risk concentration arises.

Credit risk concentrations can arise in Bank SinoPac and its subsidiaries’ assets, liabilities or off-balance sheet items through the execution or processing of transactions (either product or service) or through a combination of exposures across these broad categories. It includes credit, loan and deposits, call loan to banks, investment, receivables and derivatives. Bank SinoPac and its subsidiaries maintain a diversified portfolio to limit its exposure to any geographic region, country or individual creditor and monitor its exposures continually. Bank SinoPac and its subsidiaries’ most significant concentrations of credit risk are summarized by industry, region and collateral as follows:

a) By industry

June 30, 2019 December 31, 2018 June 30, 2018 Industries Amount % Amount % Amount % Private enterprise $ 507,716,562 49.29 $ 453,640,544 48.64 $ 409,369,267 45.97 Public enterprise 9,618,079 0.93 11,883,947 1.28 10,869,325 1.22 Government sponsored enterprise and business 9,263,330 0.90 4,126,846 0.44 4,417,233 0.50 Nonprofit organization 289,858 0.03 217,467 0.02 131,816 0.01 Private 482,552,993 46.84 447,344,776 47.97 438,839,755 49.28 Financial institutions 20,697,540 2.01 15,415,404 1.65 26,861,641 3.02 Total $ 1,030,138,362 100.00 $ 932,628,984 100.00 $ 890,489,037 100.00

- 112 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 b) By region

June 30, 2019 December 31, 2018 June 30, 2018 Regions Amount % Amount % Amount % Domestic $ 844,703,445 82.00 $ 785,273,030 84.20 $ 745,881,752 83.76 Asia 103,132,640 10.01 83,307,763 8.93 84,944,000 9.54 North America 55,072,724 5.35 41,589,575 4.46 37,654,716 4.23 Others 27,229,553 2.64 22,458,616 2.41 22,008,569 2.47 Total $ 1,030,138,362 100.00 $ 932,628,984 100.00 $ 890,489,037 100.00 c) By collateral

June 30, 2019 December 31, 2018 June 30, 2018 Collaterals Amount % Amount % Amount % Credit $ 384,748,149 37.35 $ 340,758,579 36.54 $ 312,075,012 35.05 Secured Stocks 4,021,229 0.39 3,492,609 0.37 4,620,027 0.52 Bonds 17,470,331 1.69 16,043,250 1.72 13,779,875 1.55 Real estate 568,343,881 55.17 524,644,868 56.25 513,312,976 57.64 Movable collaterals 32,620,813 3.17 27,214,932 2.92 23,705,709 2.66 Guarantees 9,962,975 0.97 8,100,113 0.87 10,420,934 1.17 Others 12,970,984 1.26 12,374,633 1.33 12,574,504 1.41 Total $ 1,030,138,362 100.00 $ 932,628,984 100.00 $ 890,489,037 100.00

- 113 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 d) Credit risk exposure rating

Principal Allowance Provision for the Regulations Governing the Stage 3 Stage 3 Procedures for Stage 2 Lifetime ECL Stage 2 Lifetime ECL Banking June 30, 2019 Stage 1 Lifetime ECL (Non-purchased Stage 1 Lifetime ECL (Non-purchased Total Institutions to Total 12 months ECL (Collectively or Originated 12 months ECL (Collectively or Originated Evaluate Assets Assessed) Credit-impaired Assessed) Credit-impaired and Deal with Financial Asset) Financial Asset) Nonperforming Nonaccrual Loans (Note 1) Discounts and loans Corporate banking $ 545,771,288 $ 602,715 $ 2,683,367 $ 549,057,370 $ 1,076,000 $ 76,278 $ 681,693 $ 5,529,510 $ 7,363,481 Consumer banking 474,802,082 4,710,908 1,568,002 481,080,992 64,131 132,819 233,428 5,987,360 6,417,738 Receivables Credit card 16,816,194 234,346 888,298 17,938,838 3,173 4,532 53,850 158,759 220,314 Accounts receivable - factoring (Note 2) 8,188,398 - - 8,188,398 1,360 - - 121,448 122,808 Other receivable (Note 3) 19,410,171 12,125 336,396 19,758,692 11,952 670 285,803 161,576 460,001

Principal Allowance Provision for the Regulations Governing the Stage 3 Stage 3 Procedures for Stage 2 Lifetime ECL Stage 2 Lifetime ECL Banking December 31, 2018 Stage 1 Lifetime ECL (Non-purchased Stage 1 Lifetime ECL (Non-purchased Total Institutions to Total 12 months ECL (Collectively or Originated 12 months ECL (Collectively or Originated Evaluate Assets Assessed) Credit-impaired Assessed) Credit-impaired and Deal with Financial Asset) Financial Asset) Nonperforming Nonaccrual Loans (Note 1) Discounts and loans Corporate banking $ 482,797,976 $ 365,015 $ 2,875,406 $ 486,038,397 $ 1,488,884 $ 194,797 $ 833,836 $ 4,520,625 $ 7,038,142 Consumer banking 440,539,124 4,617,595 1,433,868 446,590,587 53,172 123,755 203,123 5,594,937 5,974,987 Receivables Credit card 14,289,719 234,006 906,867 15,430,592 3,219 5,198 58,601 153,432 220,450 Accounts receivable - factoring (Note 2) 12,785,897 - - 12,785,897 5,765 - - 185,424 191,189 Other receivable (Note 3) 18,041,742 9,631 353,264 18,404,637 10,773 507 311,055 160,831 483,166

- 114 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758

Principal Allowance Provision for the Regulations Governing the Stage 3 Stage 3 Procedures for Stage 2 Lifetime ECL Stage 2 Lifetime ECL Banking June 30, 2018 Stage 1 Lifetime ECL (Non-purchased Stage 1 Lifetime ECL (Non-purchased Total Institutions to Total 12 months ECL (Collectively or Originated 12 months ECL (Collectively or Originated Evaluate Assets Assessed) Credit-impaired Assessed) Credit-impaired and Deal with Financial Asset) Financial Asset) Nonperforming Nonaccrual Loans (Note 1) Discounts and loans Corporate banking $ 448,356,030 $ 318,178 $ 3,292,971 $ 451,967,179 $ 1,402,194 $ 39,286 $ 857,684 $ 4,227,928 $ 6,527,092 Consumer banking 432,224,158 4,857,440 1,440,260 438,521,858 49,289 133,425 195,387 5,673,568 6,051,669 Receivables Credit card 15,485,271 238,700 954,550 16,678,521 2,408 6,719 64,078 147,316 220,521 Accounts receivable - factoring (Note 2) 8,419,195 7,345 - 8,426,540 3,866 170 - 117,216 121,252 Other receivable (Note 3) 19,480,482 9,159 361,955 19,851,596 12,004 244 319,481 160,873 492,602

Note 1: The amounts of listings of Bank SinoPac (China) in accordance with local supervision regulation is included.

Note 2: Accounts receivable - factoring and accounts payable - factoring are offset and presented net.

Note 3: Other receivable contains nonperforming receivables transferred other than loan included in other financial assets.

- 115 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 13) The financial impact of credit risk mitigation policies

a) Collateral and other credit enhancements

Bank SinoPac and its subsidiaries implement a series of policies and measures to reduce credit risk for loan business; one of the commonly used methods requires borrowers to provide collateral. Bank SinoPac and its subsidiaries follow procedures for enforcing rights to collateral and the valuation, management, and disposal of collateral. The main types of collateral for financial assets of Bank SinoPac and its subsidiaries are as follows:

i. Real estate mortgage loan.

ii. Derivatives margin agreement.

The credit contract has provisions for the preservation of debts and guarantees, which clearly define that when credit incidents occur, Bank SinoPac and its subsidiaries is be able to reduce the credit limit, shorten the loan repayment deadline or treat all of them as due, so as to reduce the credit risk.

Other collateral for non-loan business depends on the nature of the financial instrument. Only asset-based securities and other similar financial instruments are secured by a group of asset-pooled financial instruments.

There was no material change in the collateral policy on the balance sheet date of Bank SinoPac, and there was no significant change in the overall collateral quality.

b) Amount of collateral for impaired financial assets

Bank SinoPac and its subsidiaries closely observe the value of the collateral of the financial instruments and consider the allowance for the credit-impaired financial assets.

On June 30, 2019, December 31, 2018 and June 30, 2018, the amount of discounts and loans were $4,251,369, $4,309,274 and $4,733,231, with a provision for loss allowance of $915,121, $1,036,959 and $1,076,556 under IFRS 9 Stage 3, and credit guarantees, real estate, movable assets or certificates of deposit, etc., which reduced the potential loss, amounted to $2,961,068, $2,817,681 and $3,037,900.

c) The contracted amount of financial assets that have been written off and still have recourse activities

The contracted amount of financial assets that have been written off by Bank SinoPac and still have recourse activities is $47,392,297, $47,276,926 and $47,110,155 on June 30, 2019, December 31, 2018 and June 30, 2018.

14) Management policies of collaterals assumed

Collaterals assumed are classified as other assets. According to regulations, the Bank should dispose of collaterals within four years. There are no assumed collaterals of the Group as of June 30, 2019, December 31, 2018 and June 30, 2018, respectively.

- 116 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 15) Disclosures prepared in conformity with the Regulations Governing the Preparation of Financial Reports by Public Banks

a) Overdue loans and receivables

Date June 30, 2019 Nonperforming Loan Loss NPL Ratio Coverage Ratio Items Loan (NPL) Total Loans Reserves (Note 2) (Note 3) (Note 1) (LLR) Secured $ 876,990 $ 175,533,369 0.50% $ 2,454,240 279.85% Corporate loan Unsecured 326,938 354,314,613 0.09% 4,695,066 1,436.07% Mortgage (Note 4) 620,776 269,450,854 0.23% 4,133,750 665.90% Cash card 23 5,797 0.40% 13,805 60,021.74% Consumer loan Micro credit (Note 5) 62,337 19,979,479 0.31% 213,852 343.06% Secured 457,164 189,198,364 0.24% 2,028,325 443.68% Others (Note 6) Unsecured 3,339 2,446,498 0.14% 28,006 838.75% Total 2,347,567 1,010,928,974 0.23% 13,567,044 577.92% Overdue Accounts Delinquency Allowance for Coverage Ratio Receivables Receivables Ratio Credit Losses Credit card $ 43,167 $ 17,938,838 0.24% $ 220,313 510.37% Accounts receivable - factoring with no recourse - 10,798,084 - 174,420 - (Notes 7 and 8)

Date June 30, 2018 Nonperforming Loan Loss NPL Ratio Coverage Ratio Items Loan (NPL) Total Loans Reserves (Note 2) (Note 3) (Note 1) (LLR) Secured $ 943,033 $ 153,948,198 0.61% $ 2,171,425 230.26% Corporate loan Unsecured 369,710 280,454,395 0.13% 4,032,319 1,090.67% Mortgage (Note 4) 516,676 244,101,211 0.21% 3,737,140 723.30% Cash card 19 7,524 0.25% 13,883 73,068.42% Consumer loan Micro credit (Note 5) 59,899 19,273,693 0.31% 204,060 340.67% Secured 436,112 172,534,597 0.25% 2,060,103 472.38% Others (Note 6) Unsecured 8,796 2,604,833 0.34% 36,483 414.77% Total 2,334,245 872,924,451 0.27% 12,255,413 525.03% Overdue Accounts Delinquency Allowance for Coverage Ratio Receivables Receivables Ratio Credit Losses Credit card $ 48,477 $ 16,678,521 0.29% $ 220,521 454.90% Accounts receivable - factoring with no recourse - 10,885,542 - 206,989 - (Notes 7 and 8)

Note 1: For loan business: Overdue loans represent the amounts of overdue loans reported in accordance with “Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Nonperforming/Non-accrual Loans”.

For credit card business: Overdue receivables are regulated by the Banking Bureau letter dated July 6, 2005 (Ref. No. 0944000378).

Note 2: For loan business: NPL ratio = NPL ÷ Total loans.

For credit card business: Delinquency ratio = Overdue receivables ÷ Accounts receivables.

Note 3: For loan business: Coverage ratio = LLR ÷ NPL.

For credit card business: Coverage ratio = Allowance for credit losses ÷ Overdue receivables.

Note 4: Household mortgage loan is a financing to be used by a borrower to buy, build, or fix a dwelling, and the dwelling owned by the borrower, spouse, or children is used to fully secure the loan.

Note 5: Micro credit loan is regulated by the Banking Bureau letter dated December 19, 2005 (Ref. No. 09440010950) and is not credit and debit cards’ micro credit loan.

- 117 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 Note 6: Others in consumer loans refers to secured or unsecured loans excluding mortgage, cash card, micro credit, and credit cards.

Note 7: For accounts receivable - factoring with no recourse, as required by the Banking Bureau letter dated July 19, 2005 (Ref. No. 0945000494), which is equal to dated August 24, 2009 (Ref. 09850003180), and allowance for bad debts is recognized once no compensation is made from factoring or insurance within three months.

Note 8: Part of nonperforming receivables transferred from other than loans was included. b) Excluded NPLs and excluded overdue receivables

Date June 30, 2019 June 30, 2018 Excluded Excluded Excluded Excluded Items Overdue Overdue NPL NPL Receivables Receivables As a result of debt negotiation and loan agreement (Note 1) $ 1,327 $ 57,597 $ 1,926 $ 78,858 As a result of consumer debt clearance (Note 2) 11,404 672,568 7,724 691,080 Total $ 12,731 $ 730,165 $ 9,650 $ 769,938

Note 1: The disclosure of excluded NPLs and excluded overdue receivables resulting from debt negotiations and loan agreement is based on the Banking Bureau letter dated April 25, 2006 (Ref. No. 09510001270).

Note 2: The disclosure of excluded NPLs, pre-mediation and excluded overdue receivables resulting from consumer debt clearance is based on the Banking Bureau’s letter dated September 15, 2008 (Ref. No. 09700318940) and September 20, 2016 (Ref. No. 10500134790). c) Concentration of credit extensions

Year June 30, 2019 Total Credit Percentage Rank Industry Category (Note 2) Consists of of Net (Note 1) Loans (Note 3) Worth (%) 1 A Group (manufacture of computers) $ 9,449,867 7.30 2 B Group (manufacture of other computer peripheral 8,717,381 6.73 equipment) 3 C Group (spinning of yarn, cotton and wool) 8,453,251 6.53 4 D Group (manufacture of computers) 6,848,794 5.29 5 E Group (rolling and extruding of iron and steel) 6,329,316 4.89 6 F Group (manufacture of computers) 6,281,313 4.85 7 G Group (manufacture of liquid crystal panel and 5,371,327 4.15 components) 8 H Company (other metalworking activities) 5,000,000 3.86 9 I Group (real estate development activities) 3,078,000 2.38 10 J Company (investment consultancy) 2,810,032 2.17

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Year June 30, 2018 Total Credit Percentage Rank Industry Category (Note 2) Consists of of Net (Note 1) Loans (Note 3) Worth (%) 1 A Group (manufacture of computers) $ 8,645,636 6.94 2 B Group (manufacture of liquid crystal panel and 5,230,020 4.20 components) 3 C Group (rolling and extruding of iron and steel) 5,171,178 4.15 4 D Company (manufacture of metal die) 5,000,000 4.01 5 E Group (manufacture of computers) 4,684,762 3.76 6 F Group (manufacture of other computer peripheral 4,519,672 3.63 equipment) 7 G Group (wired telecommunications activities) 3,582,495 2.87 8 H Group (securities) 3,475,000 2.79 9 I Group (government) 3,050,575 2.45 10 J Company (manufacture of other computer peripheral 2,894,115 2.32 equipment)

Note 1: Ranking of top 10 groups (excluding government or state - owned utilities) whose total credit consists of loans.

Note 2: Groups were those as defined in Articles 6 of the Supplementary Provision to the Taiwan Stock Exchange Corporation’s Rules for Review of Securities Listings Law.

Note 3: Total credit is the sum of all loans (including import and export bills negotiated, discounts, overdrafts, short-term loans, short-term secured loans, marginal receivables, medium-term loans, medium-term secured loans, long-term loans, long-term secured loans, and nonperforming loans), exchange bills negotiated, accounts receivable factored without recourse, acceptances receivable, and guarantee deposit issued. d. Liquidity risk management

1) Definition of liquidity risk

Liquidity is Bank SinoPac’s ability to provide sufficient funding for asset growth and matured liabilities. Liquidity risk means the risk banks cannot obtain sufficient fund with reasonable cost and correct timing, and then suffer losses on earnings or capital.

The measures of enhancing cash liquidity are holding sufficient cash and highly liquid able securities, adjusting maturities differences, savings absorption or arranging borrowings, etc.

a) Strategies

Bank SinoPac established a sound liquidity risk managing system based on business’ scale and characteristic, assets and liabilities’ structure, funding strategies and diversity of funding sources to ensure it would have sufficient funding for obligations in normal or worst scenario.

b) Risk measurement

Bank SinoPac uses quantitative analysis to manage liquidity risk. Cash flow deficit and liquidity management goals are used as measure instruments to report monthly the analysis results to the assets and liabilities managing committee.

- 119 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 Stress testing is done to ensure Bank SinoPac would have sufficient funding for asset growth and matured liabilities despite any internal operating problems or adverse changes in the financial environment.

c) Risk monitoring

Bank SinoPac established a liquidity deficit limit and an early warning system to detect liquidity risk and take appropriate action at the right time.

Bank SinoPac has formed a crisis management team to handle any liquidity crisis. The general manager is the team convener, and the managers of the financial obligation department and the risk management department are the team members. The general manager can also assign the managers of related departments to join the team, depending on the situation. Members’ rights and responsibilities are listed in “Bank SinoPac’s Liquidity Risk Emergency Response Rule”.

2) Maturity analysis of financial liabilities held to manage liquidity risk

a) Maturity analysis of non-derivative financial liabilities

Cash outflow analyses of non-derivative financial liabilities of Bank SinoPac and Bank SinoPac (China) are summarized in the following tables. The amounts are provided on a contract cash flow basis so some of the amounts will not match the amounts in the consolidated balance sheets.

Bank SinoPac

June 30, 2019 0-30 Days 31-90 Days 91-180 Days 181 Days to 1 Year Over 1 Year Total Deposits from the Central Bank and other banks $ 21,984,724 $ 8,975,093 $ 12,753,093 $ 5,096,884 $ - $ 48,809,794 Financial liabilities at fair value through profit or loss - - - - 1,742,872 1,742,872 Securities sold under repurchase agreements 5,322,294 6,319,034 3,359,184 - - 15,000,512 Payables 9,202,463 540,060 85,404 1,670,581 2,544,061 14,042,569 Deposits and remittances 724,853,147 189,952,352 153,031,100 236,505,948 27,857,621 1,332,200,168 Bank debentures 73,965 6,857,788 99,488 4,722,386 28,061,064 39,814,691 Other financial liabilities - certificate of deposit - - 311,131 - - 311,131

December 31, 2018 0-30 Days 31-90 Days 91-180 Days 181 Days to 1 Year Over 1 Year Total Deposits from the Central Bank and other banks $ 20,918,546 $ 10,159,918 $ 2,630,152 $ 948,255 $ - $ 34,656,871 Financial liabilities at fair value through profit or loss - - - - 1,724,486 1,724,486 Securities sold under repurchase agreements 18,359,589 2,959,860 4,309,792 - - 25,629,241 Payables 9,315,463 794,156 455,975 94,401 2,086,294 12,746,289 Deposits and remittances 681,629,361 161,666,678 116,558,942 201,872,039 25,871,769 1,187,598,789 Bank debentures 60,504 1,664,195 81,796 11,596,898 21,524,156 34,927,549 Other financial liabilities - certificate of deposit - - - 307,838 - 307,838

June 30, 2018 0-30 Days 31-90 Days 91-180 Days 181 Days to 1 Year Over 1 Year Total Deposits from the Central Bank and other banks $ 40,319,817 $ 5,165,370 $ 4,373,257 $ 2,765,615 $ - $ 52,624,059 Financial liabilities at fair value through profit or loss - - - - 1,710,707 1,710,707 Securities sold under repurchase agreements 23,541,133 5,060,924 - - - 28,602,057 Payables 13,329,652 985,002 536,621 1,529,847 2,253,775 18,634,897 Deposits and remittances 654,624,166 147,612,657 117,107,792 192,101,391 24,525,119 1,135,971,125 Bank debentures 23,426 3,941,859 3,398,377 3,895,279 31,056,244 42,315,185

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(In Thousands of CNY)

181 Days to June 30, 2019 0-30 Days 31-90 Days 91-180 Days Over 1 Year Total 1 Year Deposits from the Central Bank and other banks $ 609,176 $ 69,237 $ - $ - $ - $ 678,413 Payables 135,225 1,212 89 115,219 - 251,745 Deposits and remittances 1,046,994 914,722 1,609,125 666,446 432,555 4,669,842

(In Thousands of CNY)

181 Days to December 31, 2018 0-30 Days 31-90 Days 91-180 Days Over 1 Year Total 1 Year Deposits from the Central Bank and other banks $ 718,400 $ 367,105 $ 6,448 $ - $ - $ 1,091,953 Payables 27,607 1,235 5,932 28,707 447 63,928 Deposits and remittances 787,332 1,281,707 550,300 776,533 404,072 3,799,944

(In Thousands of CNY)

181 Days to June 30, 2018 0-30 Days 31-90 Days 91-180 Days Over 1 Year Total 1 Year Deposits from the Central Bank and other banks $ 577,222 $ 271,785 $ 305,696 $ - $ - $ 1,154,703 Payables 25,921 1,974 170 14,644 447 43,156 Deposits and remittances 683,802 1,275,410 416,468 290,962 375,350 3,041,992 b) Maturity analysis of derivative financial liabilities

A hedging derivative financial instrument is managed within the contract period and it is disclosed as undiscounted cash flow based on its maturity. Bank SinoPac and Bank SinoPac (China) use derivative financial liabilities at fair value through profit or loss mainly to accommodate customers’ needs and manage their own exposure positions, and disclosed at fair value based on shortest period.

Bank SinoPac

181 Days to 1 June 30, 2019 0-30 Days 31-90 Days 91-180 Days Over 1 Year Total Year Financial liabilities at fair value through profit or loss $ 14,666,112 $ - $ - $ - $ - $ 14,666,112

181 Days to 1 December 31, 2018 0-30 Days 31-90 Days 91-180 Days Over 1 Year Total Year Financial liabilities at fair value through profit or loss $ 18,235,839 $ - $ - $ - $ - $ 18,235,839

181 Days to 1 June 30, 2018 0-30 Days 31-90 Days 91-180 Days Over 1 Year Total Year Financial liabilities at fair value through profit or loss $ 20,919,925 $ - $ - $ - $ - $ 20,919,925

Bank SinoPac (China)

(In Thousands of CNY)

181 Days to June 30, 2019 0-30 Days 31-90 Days 91-180 Days Over 1 Year Total 1 Year Financial liabilities at fair value through profit or loss $ 76,914 $ - $ - $ - $ - $ 76,914

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181 Days to December 31, 2018 0-30 Days 31-90 Days 91-180 Days Over 1 Year Total 1 Year Financial liabilities at fair value through profit or loss $ 6,763 $ - $ - $ - $ - $ 6,763

June 30, 2018: None.

3) Maturity analysis of off-balance sheet items

Maturity analysis of off-balance sheet items are summarized in the following tables. Financial guarantee contracts of Bank SinoPac and Bank SinoPac (China) that assume full amount are available or require to execute at the earliest time. The amounts are provided on a contract cash flow basis so some of the amounts will not match the amounts in the consolidated balance sheets.

Bank SinoPac

181 Days to 1 June 30, 2019 0-30 Days 31-90 Days 91-180 Days Over 1 Year Total Year Undrawn loan commitments $ 299,943 $ 1,736,056 $ 2,751,941 $ 3,599,282 $ 20,714,766 $ 29,101,988 Guarantees 3,718,150 3,108,632 1,278,549 4,393,373 5,123,160 17,621,864 Standby letter of credit 1,471,430 1,654,392 597,762 253,478 14,839 3,991,901

181 Days to 1 December 31, 2018 0-30 Days 31-90 Days 91-180 Days Over 1 Year Total Year Undrawn loan commitments $ 127,470 $ 976,779 $ 847,249 $ 3,762,510 $ 15,715,668 $ 21,429,676 Guarantees 3,232,580 2,138,261 2,059,442 2,588,994 5,970,995 15,990,272 Standby letter of credit 902,827 2,045,620 749,387 43,640 - 3,741,474

181 Days to 1 June 30, 2018 0-30 Days 31-90 Days 91-180 Days Over 1 Year Total Year Undrawn loan commitments $ 621,680 $ 391,374 $ 1,344,663 $ 2,411,890 $ 13,685,658 $ 18,455,265 Guarantees 3,516,893 1,616,074 3,189,368 2,172,716 6,739,634 17,234,685 Standby letter of credit 1,076,777 1,474,794 443,128 94,324 - 3,089,023

Bank SinoPac (China)

(In Thousands of CNY)

181 Days to June 30, 2019 0-30 Days 31-90 Days 91-180 Days Over 1 Year Total 1 Year Undrawn loan commitments $ - $ - $ 31,250 $ - $ - $ 31,250 Guarantee 33,402 110,543 509,202 457,519 35,030 1,145,696 Standby letter of credit 24,391 15,395 - 135,577 - 175,363

(In Thousands of CNY)

181 Days to December 31, 2018 0-30 Days 31-90 Days 91-180 Days Over 1 Year Total 1 Year Guarantee $ 21,526 $ 136,612 $ 55,500 $ 664,781 $ 96,085 $ 974,504 Standby letter of credit 7,445 - 4,945 - - 12,390

(In Thousands of CNY)

181 Days to June 30, 2018 0-30 Days 31-90 Days 91-180 Days Over 1 Year Total 1 Year Guarantee $ 599 $ 105,299 $ 228,349 $ 614,287 $ 4,000 $ 952,534 Standby letter of credit 7,276 4,033 - - - 11,309

- 122 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 4) Maturity analysis of lease commitments

Lease agreement commitment is the minimum lease payment when Bank SinoPac and its subsidiaries are lessee or lessor with non-cancelling condition.

Maturity analysis of lease commitments is summarized as follows:

Less than June 30, 2019 1-5 Years Over 5 Years Total 1 Year Lease commitments Lease liabilities (lessee) $ 665,995 $ 1,136,792 $ 58,812 $ 1,861,599 Operating lease income (lessor) 88,808 158,490 1,474 248,772

Less than December 31, 2018 1-5 Years Over 5 Years Total 1 Year Lease commitments Operating lease expense (lessee) $ 669,045 $ 1,061,532 $ 60,078 $ 1,790,655 Operating lease income (lessor) 89,997 178,337 3,080 271,414 Financial lease expense total amount (lessee) 97 162 - 259 Financial lease expense present value (lessee) 86 154 - 240

Less than June 30, 2018 1-5 Years Over 5 Years Total 1 Year Lease commitments Operating lease expense (lessee) $ 469,173 $ 913,660 $ 68,706 $ 1,451,539 Operating lease income (lessor) 79,340 127,107 4,760 211,207 Financial lease expense total amount (lessee) 97 211 - 308 Financial lease expense present value (lessee) 83 198 - 281

5) Disclosures prepared in conformity with the Regulations Governing the Preparation of Financial Reports by Public Banks

a) Maturity analysis of assets and liabilities of Bank SinoPac (New Taiwan dollars)

June 30, 2019 181 Days to 1 Total 0-10 Days 11-30 Days 31-90 Days 91-180 Days Over 1 Year Year Main capital inflow on maturity $ 1,443,605,803 $ 193,867,897 $ 193,552,338 $ 224,772,571 $ 118,671,584 $ 100,486,796 $ 612,254,617 Main capital outflow on maturity 1,812,303,821 110,056,417 129,192,056 294,419,955 248,011,636 350,382,332 680,241,425 Gap (368,698,018 ) 83,811,480 64,360,282 (69,647,384 ) (129,340,052 ) (249,895,536 ) (67,986,808 )

June 30, 2018 181 Days to 1 Total 0-10 Days 11-30 Days 31-90 Days 91-180 Days Over 1 Year Year Main capital inflow on maturity $ 1,236,633,382 $ 140,016,163 $ 214,141,641 $ 186,656,042 $ 95,452,412 $ 74,904,311 $ 525,462,813 Main capital outflow on maturity 1,605,482,906 94,997,892 126,351,611 246,075,097 212,352,407 302,416,268 623,289,631 Gap (368,849,524 ) 45,018,271 87,790,030 (59,419,055 ) (116,899,995 ) (227,511,957 ) (97,826,818 )

Note: The amounts shown in this table are Bank SinoPac’s position denominated in NTD.

- 123 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 b) Maturity analysis of assets and liabilities of Bank SinoPac (U.S. dollars)

(In Thousands of U.S. Dollars)

June 30, 2019 181 Days to Total 0-30 Days 31-90 Days 91-180 Days Over 1 Year 1 Year Main capital inflow on maturity $ 38,363,838 $ 12,293,582 $ 9,915,444 $ 5,808,920 $ 5,863,063 $ 4,482,829 Main capital outflow on maturity 39,403,883 10,817,254 10,610,550 7,417,600 7,238,497 3,319,982 Gap (1,040,045) 1,476,328 (695,106) (1,608,680) (1,375,434) 1,162,847

(In Thousands of U.S. Dollars)

June 30, 2018 181 Days to Total 0-30 Days 31-90 Days 91-180 Days Over 1 Year 1 Year Main capital inflow on maturity $ 34,177,042 $ 12,014,247 $ 9,760,495 $ 4,585,294 $ 4,433,678 $ 3,383,328 Main capital outflow on maturity 34,755,220 11,132,398 9,830,268 5,398,547 5,617,803 2,776,204 Gap (578,178) 881,849 (69,773) (813,253) (1,184,125) 607,124

Note: The amounts shown in this table are Bank SinoPac’s position denominated in USD. e. Market risk

1) Definition of market risk

Market risk arises from market changes (such as those referring to interest rates, exchange rates, equity securities and commodity prices) which may cause the fluctuation of a financial instrument’s fair value or future cash flow. Bank SinoPac’s net revenue and investment portfolio value may fluctuate when risk factors above change.

The main market risks Bank SinoPac should overcome pertain to interest rate, exchange rate and equity securities. Interest rate risks primarily refer to bonds and interest rate related derivative instruments such as fixed rate and floating rate interest rate swaps and bond options; the exchange rate risk refers to foreign currency investments Bank SinoPac holds such as exchange rate related derivative instruments and foreign currency bonds; equity securities risk includes listed stocks, emerging stocks, and equity related derivative financial instruments.

2) Management strategies and procedures

To follow the “Market Risk Management Rule” and other regulations, Bank SinoPac established standards for risk identification, measurement, supervision and reporting to set up appropriate risk management framework for every kind of market risk.

In accordance with the risk management limit approved by the board of directors, Bank SinoPac supervises every loss limit and position at risk such as interest rate, exchange rate, equity security, spot trading and forward contract, option, futures, swap, and related sensitivity information derived from spot trading to confirm that market risk exposure is accepted to Bank SinoPac.

Bank SinoPac separates its transactions into hedge and non-hedge on the basis of trading purposes. For hedge transactions, Bank SinoPac should measure hedge relations, risk management goals and hedge strategies. Bank SinoPac should also perform hedge testing for hedging effectiveness.

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3) Organization and framework

The board of directors is the top supervision and decision making level of Bank SinoPac; it determines every risk management procedure and limit on the basis of its operating strategy and the business environment.

Bank SinoPac also set up a risk management department headed by a general manager to establish risk managing principles, regulate risk managing policies, and plan and set up a risk management system.

Following the internal control and segregation of duties principles, Bank SinoPac had certain related functions with market risk exposures transformed into three independent departments: Trading, risk control and settlement departments, usually called front office, middle office and back office. Nevertheless, the risk management department remains in charge of market risk control, i.e., it is responsible for identifying measuring, controlling and reporting market risk.

4) Market risk control procedure

a) Identification and measurement

Risk measurement includes exposures changes in the market of interest rates, exchange rates, and equity securities, which affect spot trading and forward exchange, option, futures, and swap transactions or related combined transactions derived from spot trading. Bank SinoPac set up appropriate market risk limits based on commodity category, characteristic and complexity. The limits are the nominal exposure limit, the risk factor sensitivity limit of options as measured by Delta/Vega/DV01 and the loss control limit. These limits are calculated by the risk control department through measurements (such as those of the Black & Scholes Model) provided by financial data and company information providers (e.g., Murex and Bloomberg) based on market prices.

b) Supervision and reporting

Bank SinoPac’s market risk management department prepares risk management reports such as those on daily market valuations, value at risk and risk limits. If the risk is over the limit, the department should report this situation to the transaction department and appropriate managers in the risk management department. The department should also collect and organize bank market risk exposure information, risk value, risk limit rules, and information on situations in which limits are exceeded, analyze security investments, and submit regularly to the board of directors reports on the collected information and security investment analysis.

5) Trading book risk management policies

a) Definitions

The trading book is an accounting book of the financial instruments and physical commodities held for trading or hedged by Bank SinoPac. Held-for-trading position refers to revenues earned from practical or impractical trading differences. Positions that should not be recorded in the trading book are recorded in the banking book.

b) Strategies

Bank SinoPac earns revenues from trading spreads or fixed arbitrage debt and equity instruments are held for short periods of time, purchased with the intention of profiting from short-term price changes through properly control short-term fluctuation of market risk factors (interest rate, exchange rate and stock price). It executes hedge transactions as needed.

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c) Policies and procedures

Bank SinoPac carries out “Market Risk Management Policy” to control market risk.

Under the above policy, traders may autonomously operate and manage positions within the range of authorized limits and the approved trading strategy. The market risk management department supervises trading positions (including limit, liquidity, the ability to establish hedge positions and investment portfolio risk) based on market information and evaluates market information quality, acquirability, liquidity and scale which are calculated into the pricing model.

d) Assessment policies

Bank SinoPac assesses financial instruments once a day on the basis of information obtained from independent sources if market prices are acquirable. If Bank SinoPac assesses financial instruments using a pricing model, it should be careful in making mathematical calculations and should review the pricing model’s assumptions and parameters regularly.

e) Measurements

i. The risk valuation and calculation methods are described in Note 50, e, 10).

ii. The calculation of the nominal exposure amount and the risk factor sensitivity value Delta/Vega/DV01 is done through the trading systems.

iii. Bank SinoPac makes stress tests using a light scenario (change in interest rate ± 100 bp, change in securities ± 15% and change in exchange rate ± 3%) and serious scenario (change in interest rate ± 200 bp, change in securities ± 30% and change in exchange rate ± 6%) and reports the stress test results to the board of directors.

6) Trading book interest rate risk management

a) Definitions

Interest rate risk refers to a decrease in earnings and value of financial instruments due to adverse interest rate fluctuations. Major instruments with interest rate risk include securities and derivative instruments.

b) Procedures

Bank SinoPac has a trading limit and a stop-loss limit (which should be applied to trading instrument by the dealing room and dealers) based on management strategy and market conditions; limits have been approved by the board of directors.

c) Measurements

i. The risk valuation assumptions and calculation methods are described in Note 50, e, 10).

ii. DV01 is used daily to measure the impact of interest rate changes on investment portfolios.

- 126 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 7) Trading book exchange rate risk management

a) Definitions

Exchange rate risk refers to the incurrence of loss from the exchange of currencies in different timing. Bank SinoPac’s major financial instruments exposed to exchange rate risk spot contract, forward contracts, and FX option.

b) Policies and procedures

To control the exchange rate risk, Bank SinoPac sets trading limit and stop-loss limit and requires the dealing room, dealers, etc., to observe these limits.

c) Measurements

i. The risk valuation assumptions and calculation methods are described in Note 50, e, 10).

ii. Exposure positions are measured daily for the impact of exchange rate changes on investment portfolio value.

8) Trading book equity risk management

a) Definitions

Market risk of equity securities includes individual risk which arises from volatility of market price on individual equity securities and general market risk which arises from volatility of overall market price.

b) Procedures

To control equity risk, Bank SinoPac sets investment position limits and stop-loss limits. The limits are approved by the board of directors. Within the limit of authority, Bank SinoPac sets investment position limits and stop-loss limits for each dealer.

c) Measurements

i. The risk valuation assumptions and calculation methods are described in Note 50, e, 10).

ii. Exposure positions are measured daily to measure the impact of equity risk on investment portfolio value due from equity risk.

9) Banking book interest rate risk management

Banking book interest rate risk refers to the decrease in the value of the banking book portfolio due to unfavorable interest rate changes. The banking book interest rate risk is not related to the interest rate position shown in the trading book.

Through managing the banking book interest rate risk, Bank SinoPac can measure and manage the risk to earnings and financial position caused by interest rate fluctuations.

a) Strategies

To reduce the negative effect of interest rate changes on of net interest revenue and economic value, Bank SinoPac adjusts positions within certain limits for better performance. It reviews the interest rate sensitivity regularly to create maximum profit and manage interest rate risk.

- 127 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 b) Risk measurement

Risk measurement refers to the interest rate risk of assets, liabilities, and off-balance-sheet positions. Bank SinoPac periodically reports interest rate sensitivity positions and measures the impact of interest rate fluctuations on interest rate-sensitive assets and net interest revenue.

c) Risk monitoring

The asset and liability management committee examines and monitors exposure to interest rate risk on the basis of the measurement provided by the risk management sector.

If the risk exposure condition exceeds the limit or target value, the risk management sector should investigate how this condition arose and notify the executive division accordingly. The executive division coordinates with relevant divisions to find solutions to problems. The asset and liability management committee will evaluate solutions for effectiveness. If evaluation results are positive, the relevant division will apply the solutions.

10) Market risk measurement technique

Value at Risk (VaR)

Bank SinoPac uses the Risk Manager system and stress testing to measure its investment portfolio risk and uses several hypotheses about market conditions to measure market risk and expected maximum loss of holding positions. Bank SinoPac’s board of directors has set a VaR limit. The VaR is controlled daily by the market risk management sector and is a widely used risk measure of the risk of loss on a specific portfolio of financial assets.

VaR is the statistical estimate of the potential loss of holding positions due to unfavorable market conditions. For Bank SinoPac, VaR refers to a fall in value of its holding position in a day, with a 99% confidence level. Bank SinoPac uses VaR and the Monte Carlo simulation method to derive quantitative measures for the market risks of the holding positions under normal conditions. The calculated result is used to test and monitor the validity of parameters and hypotheses periodically. However, the use of the VaR cannot prevent loss caused by huge unfavorable changes in market conditions.

Bank SinoPac considers the expected maximum loss, target profit, and operating strategy in setting the VaR, which is proposed by the market risk management sector and approved by the board of directors.

Bank SinoPac’s trading book VaR overview

For the Six Months Ended June 30, 2019

Average Maximum Minimum Exchange rate risk 12,258 29,929 5,140 Interest rate risk 65,049 88,216 52,194 Equity risk - - - Total VaR 67,353 90,511 52,866

Note 1: Estimated VaR: Time frame = 1 day, confidence level = 99%, decay factor = 0.94.

Note 2: Historical data period: 2019.01.02 - 2019.06.28

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For the Six Months Ended June 30, 2018

Average Maximum Minimum Exchange rate risk 8,848 17,371 4,322 Interest rate risk 99,110 136,537 59,272 Equity risk 20,796 49,244 4,780 Total VaR 103,115 142,152 61,145

Note 1: Estimated VaR: Time frame = 1 day, confidence level = 99%, decay factor = 0.94.

Note 2: Historical data period: 2018.01.02 - 2018.06.29

Bank SinoPac (China)’s trading book VaR overview

(In Thousands of CNY)

For the Six Months Ended June 30, 2019

Average Maximum Minimum Exchange rate risk 310 773 61 Interest rate risk 223 1,204 - Equity risk - - - Total VaR 436 1,266 49

Note 1: Estimated VaR: Time frame = 1 day, confidence level = 99%, decay factor = 0.94.

Note 2: Historical data period: 2019.01.01 - 2019.06.30

(In Thousands of USD)

For the Six Months Ended June 30, 2018

Average Maximum Minimum Exchange rate risk 43 130 6 Interest rate risk 13 32 4 Equity risk - - - Total VaR 39 99 13

Note 1: Estimated VaR: Time frame = 1 day, confidence level = 99%, decay factor = 0.94.

Note 2: Historical data period: 2018.01.02 - 2018.06.30

- 129 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 11) Exchange rate risks

Exchange rate risks of holding net positions in foreign currencies are shown as below:

June 30, 2019 Foreign Currency Converted to (In Thousands) Exchange Rate NTD

Financial assets

Monetary items USD $ 10,514,995 31.07933 $ 326,798,990 CNY 14,692,855 4.52189 66,439,475 Nonmonetary items USD 410,535 31.07933 12,759,146

Financial liabilities

Monetary items USD 13,634,987 31.07933 423,766,266 CNY 15,362,274 4.52189 69,466,513

December 31, 2018 Foreign Currency Converted to (In Thousands) Exchange Rate NTD

Financial assets

Monetary items USD $ 9,381,113 30.75146 $ 288,482,935 CNY 18,150,153 4.4762 81,243,716 Nonmonetary items USD 406,423 30.75146 12,498,106

Financial liabilities

Monetary items USD 12,127,054 30.75146 372,924,622 CNY 19,117,864 4.4762 85,575,383

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June 30, 2018 Foreign Currency Converted to (In Thousands) Exchange Rate NTD

Financial assets

Monetary items USD $ 9,682,166 30.50575 $ 295,361,727 CNY 17,501,427 4.60001 80,506,740 Nonmonetary items USD 430,726 30.50575 13,139,629

Financial liabilities

Monetary items USD 11,269,708 30.50575 343,790,880 CNY 18,125,054 4.60001 83,375,430

12) Compliance with the Regulations Governing the Preparation of Financial Reports by Public Banks

a) Interest rate sensitivity information (New Taiwan dollars)

June 30, 2019

181 Days to Items 1 to 90 Days 91 to 180 Days Over 1 Year Total 1 Year Interest rate-sensitive assets $ 948,485,572 $ 18,963,334 $ 62,467,405 $ 98,111,922 $ 1,128,028,233 Interest rate-sensitive liabilities 327,293,775 483,621,588 76,163,302 37,701,815 924,780,480 Interest rate-sensitive gap 621,191,797 (464,658,254 ) (13,695,897 ) 60,410,107 203,247,753 Net worth 127,972,832 Ratio of interest rate-sensitive assets to liabilities (%) 121.98% Ratio of interest rate-sensitive gap to net worth (%) 158.82%

June 30, 2018

181 Days to Items 1 to 90 Days 91 to 180 Days Over 1 Year Total 1 Year Interest rate-sensitive assets $ 875,317,300 $ 20,488,335 $ 54,438,122 $ 74,086,215 $ 1,024,329,972 Interest rate-sensitive liabilities 322,232,028 437,865,257 73,789,382 37,324,065 871,210,732 Interest rate-sensitive gap 553,085,272 (417,376,922 ) (19,351,260 ) 36,762,150 153,119,240 Net worth 124,588,544 Ratio of interest rate-sensitive assets to liabilities (%) 117.58% Ratio of interest rate-sensitive gap to net worth (%) 122.90%

Note 1: The above amounts include only New Taiwan dollars held by Bank SinoPac, and exclude contingent assets and contingent liabilities.

Note 2: Interest rate-sensitive assets and liabilities mean the revenues or costs of interest-earning assets and interest-bearing liabilities are affected by interest rate changes.

Note 3: Interest rate-sensitivity gap = Interest rate-sensitive assets - Interest rate-sensitive liabilities.

Note 4: Ratio of interest rate-sensitive assets to liabilities = Interest rate-sensitive assets ÷ Interest rate-sensitive liabilities (in New Taiwan dollars).

- 131 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 b) Interest rate sensitivity information (U.S. dollars)

June 30, 2019 (In Thousands of U.S. Dollars)

181 Days to Items 1 to 90 Days 91 to 180 Days Over 1 Year Total 1 Year Interest rate-sensitive assets $ 7,256,432 $ 463,531 $ 190,653 $ 1,253,286 $ 9,163,902 Interest rate-sensitive liabilities 4,913,626 4,871,408 2,114,473 149,625 12,049,132 Interest rate-sensitive gap 2,342,806 (4,407,877 ) (1,923,820 ) 1,103,661 (2,885,230 ) Net worth 29,829 Ratio of interest rate-sensitive assets to liabilities (%) 76.05% Ratio of interest rate-sensitive gap to net worth (%) (9,672.57% )

June 30, 2018 (In Thousands of U.S. Dollars)

181 Days to Items 1 to 90 Days 91 to 180 Days Over 1 Year Total 1 Year Interest rate-sensitive assets $ 5,997,964 $ 325,848 $ 232,734 $ 1,078,011 $ 7,634,557 Interest rate-sensitive liabilities 3,700,503 4,403,318 995,889 152,267 9,251,977 Interest rate-sensitive gap 2,297,461 (4,077,470 ) (763,155 ) 925,744 (1,617,420 ) Net worth 3,629 Ratio of interest rate-sensitive assets to liabilities (%) 82.52% Ratio of interest rate-sensitive gap to net worth (%) (44,569.30% )

Note 1: The above amounts include only USD held by Bank SinoPac and exclude contingent assets and contingent liabilities.

Note 2: Interest rate-sensitive assets and liabilities mean the revenues or costs of interest-earnings assets and interest-bearing liabilities are affected by interest-rate changes.

Note 3: Interest rate-sensitive gap = Interest rate-sensitive assets - Interest rate-sensitive liabilities.

Note 4: Ratio of interest rate-sensitive assets to liabilities = Interest rate-sensitive assets ÷ Interest rate-sensitive liabilities (in USD).

13) Transfers of financial assets

The transferred financial assets of Bank SinoPac and its subsidiaries that do not qualify for derecognition in the daily operation are mainly securities sold under repurchase agreements.

The transaction transfers the contractual rights to receive the cash flows of the financial assets but Bank SinoPac and its subsidiaries retains the liabilities to repurchase the transferred financial assets at fixed price in the future period.

Bank SinoPac and its subsidiaries cannot use, sell, or pledge these transferred financial assets within the validity period of the transaction. However, Bank SinoPac and its subsidiaries still bear the interest rate risk and credit risk thus, Bank SinoPac and its subsidiaries do not derecognize it.

- 132 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 The analysis of financial assets and related liabilities that did not completely meet the derecognizing condition is shown in the following table:

June 30, 2019 Transferred Related Transferred Related Category of Financial Asset Financial Financial Financial Financial Net Position - Assets - Book Liabilities - Assets - Fair Liabilities - Fair Value Value Book Value Value Fair Value Financial assets at fair value through other comprehensive income Transactions under repurchase agreements $ 10,135,658 $ 9,416,511 $ 10,135,658 $ 9,416,511 $ 719,147 Debt instruments investment at amortized cost Transactions under repurchase agreements 4,409,360 4,286,796 4,529,403 4,286,796 242,607 Securities purchased under resell agreements Transactions under repurchase agreements 855,418 927,484 855,418 927,484 (72,066)

December 31, 2018 Transferred Related Transferred Related Category of Financial Asset Financial Financial Financial Financial Net Position - Assets - Book Liabilities - Assets - Fair Liabilities - Fair Value Value Book Value Value Fair Value Financial assets at fair value through other comprehensive income Transactions under repurchase agreements $ 8,148,104 $ 7,766,751 $ 8,148,104 $ 7,766,751 $ 381,353 Debt instruments investment at amortized cost Transactions under repurchase agreements 12,388,738 12,160,744 12,400,139 12,160,744 239,395 Securities purchased under resell agreements Transactions under repurchase agreements 5,037,558 5,346,642 5,037,558 5,346,642 (309,084)

June 30, 2018 Transferred Related Transferred Related Category of Financial Asset Financial Financial Financial Financial Net Position - Assets - Book Liabilities - Assets - Fair Liabilities - Fair Value Value Book Value Value Fair Value Financial assets at fair value through profit or loss Transactions under repurchase agreements $ 13,151,566 $ 12,404,326 $ 13,151,566 $ 12,404,326 $ 747,240 Financial assets at fair value through other comprehensive income Transactions under repurchase agreements 4,332,737 4,124,021 4,332,737 4,124,021 208,716 Debt instruments investment at amortized cost Transactions under repurchase agreements 12,328,801 11,800,000 12,387,530 11,800,000 587,530

- 133 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 14) Offsetting of financial assets and financial liabilities

Bank SinoPac and its subsidiaries did not hold financial instruments covered by Section 42 of IAS 32 “Financial Instruments: Presentation” endorsed by the Financial Supervisory Commission; thus, it made an offset of financial assets and liabilities and reported the net amount in the balance sheet.

Bank SinoPac and its subsidiaries engages in transactions on the following financial assets and liabilities that are not subject to balance sheet offsetting based on IAS 32 but are under master netting arrangements or similar agreements. These agreements allow both Bank SinoPac and its subsidiaries and its counterparties to opt for the net settlement of financial assets and financial liabilities. If one party defaults, the other one may choose net settlement.

The netting information of financial assets and financial liabilities is set out below:

June 30, 2019

Netted Financial Liabilities Related Amount Not Netted on Recognized Recognized on Recognized the Balance Sheet Financial the Balance Financial Financial Assets - Gross Sheet - Gross Assets - Net Instruments Cash Received Financial Assets Amount Amount Amount (Note) as Collaterals Net Amount

Derivative instruments $ 14,828,503 $ - $ 14,828,503 $ 10,213,767 $ 1,034,782 $ 3,579,954 Securities purchased under resell agreements 16,777,698 - 16,777,698 16,777,281 - 417

$ 31,606,201 $ - $ 31,606,201 $ 26,991,048 $ 1,034,782 $ 3,580,371

Netted Financial Assets Related Amount Not Netted on Recognized Recognized on Recognized the Balance Sheet Financial the Balance Financial Cash Financial Liabilities - Sheet - Gross Liabilities - Net Financial Collaterals Liabilities Gross Amount Amount Amount Instruments Pledged Net Amount

Derivative instruments $ 14,579,907 $ - $ 14,579,907 $ 10,552,422 $ 574,552 $ 3,452,933 Securities sold under repurchase agreements 14,961,242 - 14,961,242 14,958,924 - 2,318

$ 29,541,149 $ - $ 29,541,149 $ 25,511,346 $ 574,552 $ 3,455,251

Note: Including netting settlement agreements and non-cash financial collaterals.

December 31, 2018

Netted Financial Liabilities Related Amount Not Netted on Recognized Recognized on Recognized the Balance Sheet Financial the Balance Financial Financial Assets - Gross Sheet - Gross Assets - Net Instruments Cash Received Financial Assets Amount Amount Amount (Note) as Collaterals Net Amount

Derivative instruments $ 14,896,583 $ - $ 14,896,583 $ 12,043,535 $ 936,518 $ 1,916,530 Securities purchased under resell agreements 22,710,233 - 22,710,233 22,709,331 - 902

$ 37,606,816 $ - $ 37,606,816 $ 34,752,866 $ 936,518 $ 1,917,432

- 134 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 Netted Financial Assets Related Amount Not Netted on Recognized Recognized on Recognized the Balance Sheet Financial the Balance Financial Cash Financial Liabilities - Sheet - Gross Liabilities - Net Financial Collaterals Liabilities Gross Amount Amount Amount Instruments Pledged Net Amount

Derivative instruments $ 17,637,775 $ - $ 17,637,775 $ 12,612,435 $ 1,470,152 $ 3,555,188 Securities sold under repurchase agreements 25,504,487 - 25,504,487 25,504,306 - 181

$ 43,142,262 $ - $ 43,142,262 $ $ 38,116,741 $ 1,470,152 $ 3,555,369

Note: Including netting settlement agreements and non-cash financial collaterals.

June 30, 2018

Netted Financial Liabilities Related Amount Not Netted on Recognized Recognized on Recognized the Balance Sheet Financial the Balance Financial Financial Assets - Gross Sheet - Gross Assets - Net Instruments Cash Received Financial Assets Amount Amount Amount (Note) as Collaterals Net Amount

Derivative instruments $ 19,404,162 $ - $ 19,404,162 $ 11,559,061 $ 1,347,457 $ 6,497,644 Securities purchased under resell agreements 22,312,476 - 22,312,476 22,311,859 - 617

$ 41,716,638 $ - $ 41,716,638 $ 33,870,920 $ 1,347,457 $ 6,498,261

Netted Financial Assets Related Amount Not Netted on Recognized Recognized on Recognized the Balance Sheet Financial the Balance Financial Cash Financial Liabilities - Sheet - Gross Liabilities - Net Financial Collaterals Liabilities Gross Amount Amount Amount Instruments Pledged Net Amount

Derivative instruments $ 20,059,532 $ - $ 20,059,532 $ 12,109,476 $ 1,965,743 $ 5,984,313 Securities sold under repurchase agreements 28,570,603 - 28,570,603 28,570,518 - 85

$ 48,630,135 $ - $ 48,630,135 $ 40,679,994 $ 1,965,743 $ 5,984,398

Note: Including netting settlement agreements and non-cash financial collaterals.

SinoPac Securities Corporation a. Risk management organization

SinoPac Securities Corporation (SinoPac Securities) has a risk management committee under the chairman who is the committee convener. The committee is in charge of deliberating risk management policies, regulations and overall risk limitation. It helps the board of directors fully supervise the risk management and related operations. Further, it set up a risk management division that is guided by the manager and is responsible for planning, managing, assessing and executing daily risk management procedures. The committee deliberates each policy, principle and regulation, which are presented to the board of directors for final approval and executed by the risk management division. The risk management division reviews the results and performance of the risk management committee.

- 135 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 b. Goal and policy of risk management

SinoPac Securities and its subsidiaries’ objectives and policies of risk management are based on the concept of capital allocation to define the overall total exposure limit. Under this concept and risk management principles, SinoPac Securities and its subsidiaries pursue steady growth within a certain level of risk.

1) Market risk

Market risk refers to the possible loss due to the change in market price of a financial product as a result of change in such factors as market interest rates, foreign exchange rates, share prices and consumer goods. The financial products held by SinoPac Securities and its subsidiaries include equity securities, bonds, derivatives and foreign currency - denominated commodities.

SinoPac Securities and its subsidiaries apply the concept of risk capital allocation in use to set the overall operating limit and market risk limit through the monitoring of limits, loss advisories and statistical measures to keep an eye on and control market risk in time. Moreover, for the efficient management of market risk, a regular assessment should be presented to the managerial level and board of directors.

SinoPac Securities and its subsidiaries use value-at-risk (VaR), a statistical measure to estimate and manage market risk. Through a regular stress test, sensitivity test and feedback test, SinoPac Securities will be able to verify the validity of the risk management system. SinoPac Securities and its subsidiaries use a risk managing tool, risk manager, designed by an internationally renowned institution, MSCI. The system provides more solid, precise quantitative indices and other tools for a more effective risk evaluation.

a) Value-at-risk (VaR)

VaR is a statistical measure that estimates potential losses and is defined as the predicted worst-scenario case due to changes in risk factors under normal circumstances over a specified period and at a specific level of statistical confidence. The VaR is calculated at a 99% confidence level for a one-day holding period, using changes in historical rates and prices.

SinoPac Securities and its subsidiaries’ VaR values were as follows:

June 30, December 31, June 30, 2019 2018 2018

Equities $ 40,689 $ 56,985 $ 76,857 Interest rate risk $ 104,269 $ 73,391 $ 59,809 General $ 114,161 $ 108,770 $ 100,632 Net worth ratio 0.43% 0.42% 0.39%

For the Three Months Ended June 30 2019 2018 Average Minimum Maximum Average Minimum Maximum

Equities $ 42,189 $ 25,189 $ 58,499 $ 107,343 $ 73,374 $ 153,570 Interest rate risk 98,583 68,800 135,434 64,808 23,926 90,398

For the Six Months Ended June 30 2019 2018 Average Minimum Maximum Average Minimum Maximum

Equities $ 44,392 $ 25,189 $ 80,364 $ 126,367 $ 73,374 $ 236,786 Interest rate risk 86,429 60,056 135,434 75,670 23,926 113,635

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Foreign exchange rate risk is mainly due to the purchase of foreign currency-denominated assets. SinoPac Securities and its subsidiaries use certain agreed-upon proximal and distal exchanging points on currency swap contracts to manage foreign exchange risk, so the risk is rather low.

The table below shows the foreign currency-denominated monetary assets and monetary liabilities as of the balance sheet date:

(Unit: Foreign Currencies/New Taiwan Dollars in Thousands)

June 30, 2019 Foreign Currencies Exchange Rate NTD

Financial assets

Monetary items USD $ 1,433,932 31.074 $ 44,557,829 NTD 894,612 1.000 894,612 HKD 249,981 3.977 994,293 CNY 666,263 4.522 3,012,737 EUR 158,793 35.367 5,616,052 AUD 13,792 21.788 300,494 JPY 8,472,187 0.289 2,444,388 ZAR 104,289 2.198 229,258 GBP 2,976 39.363 117,144

Financial liabilities

Monetary items USD 1,304,788 31.076 40,546,951 NTD 388,593 1.000 388,593 HKD 227,686 3.9772 905,542 CNY 329,369 4.522 1,489,327 EUR 153,902 35.368 5,443,231 AUD 5,865 21.788 127,794 JPY 8,347,474 0.289 2,408,415 ZAR 52,905 2.198 116,273

December 31, 2018 Foreign Currencies Exchange Rate NTD

Financial assets

Monetary items USD $ 1,028,740 30.744 $ 31,627,904 NTD 933,784 1.000 933,784 HKD 485,376 3.922 1,903,659 CNY 984,097 4.476 4,404,817 EUR 124,265 35.236 4,378,623 AUD 14,362 21.686 311,460 JPY 2,105,258 0.278 585,763 ZAR 61,204 2.130 130,388 (Continued)

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December 31, 2018 Foreign Currencies Exchange Rate NTD

Financial liabilities

Monetary items USD $ 895,539 30.744 $ 27,532,062 NTD 428,232 1.000 428,232 HKD 412,274 3.921 1,616,580 CNY 577,573 4.476 2,585,118 EUR 122,018 35.239 4,299,764 JPY 1,960,964 0.278 545,593 AUD 7,713 21.633 166,849 (Concluded)

June 30, 2018 Foreign Currencies Exchange Rate NTD

Financial assets

Monetary items USD $ 1,552,080 30.500 $ 47,338,424 NTD 1,149,433 1.000 1,149,433 HKD 1,024,151 3.882 3,975,416 CNY 1,078,171 4.600 4,959,271 EUR 142,654 35.442 5,055,921 AUD 77,727 22.541 1,752,072 JPY 2,593,096 0.275 714,344 ZAR 84,889 2.221 188,556

Financial liabilities

Monetary items USD 1,241,037 30.499 37,850,261 NTD 392,857 1.000 392,857 HKD 936,943 3.881 3,636,326 CNY 680,061 4.600 3,127,958 EUR 134,267 35.447 4,759,289 AUD 65,857 22.541 1,484,515 JPY 1,829,572 0.275 503,895

The table below shows the VaR for derivatives owned by SinoPac Securities and its subsidiaries:

December 31, June 30, 2019 2018 June 30, 2018

Futures and options $ 22,667 $ 19,420 $ 27,326 Warrants 18,232 18,812 35,432 Interest rate swap contracts 4,463 3,726 3,788 Cross currency swap contracts 4,250 4,864 5,143 (Continued)

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December 31, June 30, 2019 2018 June 30, 2018

Currency swap contracts $ 268 $ 252 $ 630 Asset swap option contracts 19,562 15,988 17,514 Equity-linked note transactions 1,213 1,291 1,004 Credit-linked note transactions 783 529 523 Principal guaranteed note transactions 103 28 19 Forward contracts 2,317 - 1,460 (Concluded)

b) Sensitivity analysis

Aside from using VaR, SinoPac Securities and its subsidiaries use several different sensitivity interest index (e.g., DVP and DV01) and Greeks (e.g., Delta, Gamma, and Vega) for risk assessment.

2) Credit risk

Credit risk is the risk of financial loss if a counterparty fails to meet an obligation under a contract. The maximum credit risk exposures to financial loss arises principally from the financial assets recognized in the consolidated balance sheets. Except those listed below, the credit risk amounts of financial assets held by SinoPac Securities and its subsidiaries approximated their carrying values.

June 30, 2019 Max. Credit Exposure Carrying Value Amount

Financial assets held for trading Interest rate swap contracts $ 664,761 $ 827,266 Cross-currency swap contracts 10,995 10,995 Asset swap option contracts 125,743 168,218

$ 801,499 $ 1,006,479

December 31, 2018 Max. Credit Exposure Carrying Value Amount

Financial assets held for trading Interest rate swap contracts $ 426,348 $ 598,537 Cross-currency swap contracts 65,336 65,336 Asset swap option contracts 33,988 50,171

$ 525,672 $ 714,044

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June 30, 2018 Max. Credit Exposure Carrying Value Amount

Financial assets held for trading Interest rate swap contracts $ 401,556 $ 580,277 Cross-currency swap contracts 99,845 99,845 Asset swap option contracts 32,665 38,859

$ 534,066 $ 718,981

SinoPac Securities and its subsidiaries’ credit risk of major financial assets are as follows: a) Cash and cash equivalents

Cash and cash equivalents are mainly cash deposited in banks or every transaction sellers and short-term bills. Transaction counterparties are financial institutions with good credit. The Regulation Governing Securities Firms sets the limit on the amount of short-term bills that may be transacted as well as the credit limit for the counterparty. b) Accounts receivable

Accounts receivable represent money owed by entities to SinoPac Securities and its subsidiaries on the sale of the product or service on credit, for example, payments for others, temporary debits and settlements receivable. SinoPac Securities and its subsidiaries have receivables from a diverse client base in different industries and geographic areas. Thus, SinoPac Securities and its subsidiaries have set measures on how to evaluate losses on assets. For the receivables that cannot be retrieved within six months, a report should be submitted to the managerial level for further assessment and follow-up, except those who have fulfilled the settlement according to the agreement, the rest will recover the claims one by one and recognize the appropriate expected credit losses. c) Debt instruments and derivative instruments trading

SinoPac Securities and its subsidiaries use risk-based asset allocation to set its caps for total credit risk exposure. Through risk diversification, it monitors and manages the credit limits by single client by single entity, and by single corporation. Through the internal rating system, SinoPac Securities and its subsidiaries give out an exposure limit corresponding to its trading object. It also sets trading and exposure limits by type of product and department. At the same time, the credit rating of the trading object should be above the acceptable level set by SinoPac Securities and its subsidiaries. Besides managing by product, SinoPac Securities and its subsidiaries should also consider the risk involved when of different departments handle the same financial instruments as well as the types of commodities being transacted.

SinoPac Securities and its subsidiaries have set a credit risk limit monitoring panel to keep track of trading opponents daily and regularly prepare credit risk reports for the managerial level and board of directors’ review. Of the overall transactions of SinoPac Securities and its subsidiaries as of June 30, 2019, were 59% in the financial service sector and 11% in the electronic industry. In addition, the transaction amounts for trading objects with credit ratings of TWA+ and above had a market share of 91%.

- 140 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 The target of SinoPac Securities and its subsidiaries’ debt instruments at fair value through other comprehensive income are limited to the New Taiwan dollars and foreign currency bonds approved by the competent authority and should be in compliance with the latest external credit rating, such as BBB+ or internal control for the evaluation of H3 or above. The risk management unit is included in the credit risk limit control according to the investment location on a daily basis to ensure the security of the credit position of the OCI bond investment location.

d) Brokerage business, financing business and relating loan business

By using a financing concentration system and Merton’s probability default (PD) model, SinoPac Securities and its subsidiaries can monitor the stock that has a higher default risk, analyze any abnormal condition and control the default risk. The controls of financing and brokerage related loan business including borrowing or lending money in connection with Securities Business, securities borrowing and lending and unlimited money lending are as follow:

i. Concentration control: Not only provide risk grading per share and set a limit of credit line per share and all company’s share, but also set a limit of credit line of same competitors and associates.

ii. Control of high-risk stocks: Check the list of high-risk stocks periodically and adjust the ratio of stock financing, financing purchase limit and credit line limit per share of high risk stock.

e) Security borrowing collateral price and securities borrowing margin

Security borrowing margin is the premium placed on the TWSE and domestic and foreign financial institutions with good credit rating which means the credit risk is rather low. Security borrowing collateral price is the premium on a hedge transaction, and all the institutions holding premiums have good credit rating.

f) Guarantee deposit paid

Refundable deposit paid mainly serves as the guarantee bond and clearing and settlement fund. It is the legal deposit paid to financial institutions designated by relevant authorities to hold these deposits. The clearing and settlement fund is the legal deposit paid to Taiwan Stock Exchange. The risk for both guaranty bond and clearing and settlement fund are rather low.

g) Restricted assets

Restricted assets are mainly the bank deposits used as collaterals for loans obtained by SinoPac Securities and its subsidiaries. The financial institutions holding these restricted assets all have good credit rating.

3) Liquidity risk

Liquidity risk is the risk that a security or asset cannot be traded quickly enough in the market to prevent a loss or make the required profit.

SinoPac Securities and its subsidiaries have multiple sources of funding besides their own equity fund. They can also get the funding through borrowing from banks or, issuing commercial paper and corporate bonds. Any emergencies should be reported to the general manager and the chairman immediately and be subjected to the following response measures:

a) Using a secured loan and to issue commercial paper.

- 141 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 b) Selling the property trading stock and bonds. c) Financing through other non-financial institutions.

For ensuring capital needs for business development of the subsidiary of SinoPac Securities, mid-term and long-term capital was fulfilled with credit lines from financial institutions and will be approved by authorized person on demand.

As of June 30, 2019, December 31, 2018 and June 30, 2018, the credit lines of SinoPac Securities and its subsidiaries unused were $81,178,854, $73,406,782 and $57,665,555, respectively.

The table below shows the analysis of the remaining contractual maturity for financial liabilities as of June 30, 2019, December 31, 2018 and June 30, 2018:

Repayment Period First 3 to 1 Year to June 30, 2019 Current Period 12 Months 5 Years Over 5 Years Total

Current borrowings $ 1,515,295 $ - $ - $ - $ 1,515,295 Commercial papers issued 5,450,000 2,350,000 - - 7,800,000 Current financial liabilities at fair value through profit or loss 4,326,281 105,851 516,694 - 4,948,826 Liabilities for bonds with attached repurchase agreements 32,163,920 925,066 - - 33,088,986 Securities financing refundable deposits 1,217,114 - - - 1,217,114 Deposits payable for securities financing 1,355,231 - - - 1,355,231 Securities lending refundable deposits 3,858,561 - - - 3,858,561 Futures traders’ equity 19,683,314 - - - 19,683,314 Equity for each customer in the account 364,506 - - - 364,506 Notes payable and accounts payable 19,191,131 - - - 19,191,131 Other payables 866,693 - - - 866,693 Lease liability 74,252 189,196 523,360 91,068 877,876 Bonds payable 20,268 27,020 3,007,230 - 3,054,518 Non-current portion of non-current borrowings 933,856 - - - 933,856

$ 91,020,422 $ 3,597,133 $ 4,047,284 $ 91,068 $ 98,755,907

As of June 30, 2019, there is no more than 10 years left of the acquisition company’s lease contracts.

Repayment Period First 3 to 1 Year to December 31, 2018 Current Period 12 Months 5 Years Over 5 Years Total

Current borrowings $ 1,494,483 $ - $ - $ - $ 1,494,483 Commercial papers issued 8,600,000 - - - 8,600,000 Current financial liabilities at fair value through profit or loss 2,797,625 45,254 324,994 - 3,167,873 Liabilities for bonds with attached repurchase agreements 24,433,310 869,275 - - 25,302,585 Securities financing refundable deposits 2,640,923 - - - 2,640,923 Deposits payable for securities financing 2,917,232 - - - 2,917,232 Securities lending refundable deposits 3,659,120 - - - 3,659,120 Futures traders’ equity 16,259,506 - - - 16,259,506 Equity for each customer in the account 77,558 - - - 77,558 Notes payable and accounts payable 14,962,281 - - - 14,962,281 Other payables 683,374 - - - 683,374 Bonds payable 6,658 27,057 3,020,803 - 3,054,518 Non-current portion of non-current borrowings 1,295,283 - - - 1,295,283

$ 79,827,353 $ 941,586 $ 3,345,797 $ - $ 84,114,736

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Repayment Period First 3 to 1 Year to June 30, 2018 Current Period 12 Months 5 Years Over 5 Years Total

Current borrowings $ 7,282,585 $ - $ - $ - $ 7,282,585 Commercial papers issued 20,840,000 2,300,000 - - 23,140,000 Current financial liabilities at fair value through profit or loss 4,552,280 133,784 455,117 - 5,141,181 Liabilities for bonds with attached repurchase agreements 29,881,870 5,940,990 - - 35,822,860 Securities financing refundable deposits 1,392,323 - - - 1,392,323 Deposits payable for securities financing 1,529,615 - - - 1,529,615 Securities lending refundable deposits 4,867,016 - - - 4,867,016 Futures traders’ equity 17,776,164 - - - 17,776,164 Equity for each customer in the account 114,918 - - - 114,918 Notes payable and accounts payable 17,836,518 - - - 17,836,518 Other payables 1,148,165 - - - 1,148,165 Other financial liabilities - current 461,546 - - - 461,546 Bonds payable 19,751 29,219 3,032,030 - 3,081,000

$ 107,702,751 $ 8,403,993 $ 3,487,147 $ - $ 119,593,891

The analysis of the remaining contractual maturities of financial liabilities is based on the earliest due date and prepared on the basis of undiscounted cash flows. c. Transfers of financial assets

The transferred financial assets of SinoPac Securities and its subsidiaries that do not qualify for derecognition in the daily operation are mainly securities sold under repurchase agreements. The transaction transfers the contractual rights to receive the cash flows of the financial assets but SinoPac Securities and its subsidiaries retain the liabilities to repurchase the transferred financial assets at fixed price in the future period. SinoPac Securities and its subsidiaries cannot use, sell, or pledge these transferred financial assets within the validity period of the transaction. However, SinoPac Securities and its subsidiaries still bear the interest rate risk and credit risk; thus, SinoPac Securities and its subsidiaries do not derecognize it. Analysis of financial assets and related liabilities not completely meet derecognizing condition is shown in following table:

June 30, 2019 Transferred Related Transferred Related Category of Financial Asset Financial Financial Financial Financial Net Position - Assets - Book Liabilities - Assets - Fair Liabilities - Fair Value Value Book Value Value Fair Value Transactions under repurchase agreements

Financial assets at fair value through profit or loss $ 21,771,179 $ 20,621,913 $ 21,771,179 $ 20,621,913 $ 1,149,266 Financial assets at fair value through other comprehensive income 5,455,062 4,956,757 5,455,062 4,956,757 498,305 Bond investment under resale agreements 5,669,498 7,339,880 5,669,498 7,339,880 (1,670,382)

December 31, 2018 Transferred Related Transferred Related Category of Financial Asset Financial Financial Financial Financial Net Position - Assets - Book Liabilities - Assets - Fair Liabilities - Fair Value Value Book Value Value Fair Value Transactions under repurchase agreements

Financial assets at fair value through profit or loss $ 19,998,462 $ 18,708,327 $ 19,998,462 $ 18,708,327 $ 1,290,135 Bond investment under resale agreements 2,686,211 2,738,987 2,686,211 2,738,987 (52,776)

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June 30, 2018 Transferred Related Transferred Related Category of Financial Asset Financial Financial Financial Financial Net Position - Assets - Book Liabilities - Assets - Fair Liabilities - Fair Value Value Book Value Value Fair Value Transactions under repurchase agreements

Financial assets at fair value through profit or loss $ 33,222,269 $ 30,748,878 $ 33,222,269 $ 30,748,878 $ 2,473,391 Bond investment under resale agreements 915,444 1,101,111 915,444 1,101,111 (185,667) d. Offsetting of financial assets and financial liabilities

SinoPac Securities and its subsidiaries have partial of receivables from securities sale and payables from securities purchase which meeting offsetting condition, and then offset them on the balance sheet.

SinoPac Securities and its subsidiaries engage in transactions with net settlement contracts or similar agreements with counterparties, ex: Global master repurchase agreement, global securities lending agreement and similar repurchasing agreement or reverse-repurchasing agreement. Above executable net settlement contracts or similar agreements allowed net settlement of financial assets and financial liabilities by the choice of both parties. If one party defaulted, the other one may choose to net settlement.

The offsetting information of financial assets and financial liabilities are shown as follows:

June 30, 2019

Financial Assets Under Offsetting and Executable Net Settlement Contracts or Similar Agreements Netted Financial Liabilities Recognized Recognized on Recognized Related Amount Not Netted on Financial the Balance Financial the Balance Sheet Assets - Gross Sheet - Gross Assets - Net Financial Cash Received Financial Assets Amount Amount Amount Instruments as Collateral Net Amount

Derivative assets - OTC $ 821,495 $ - $ 821,495 $ 366,118 $ - $ 455,377 Bond investment under resale agreements 6,373,918 - 6,373,918 6,373,918 - - Accounts receivables for sale of securities 9,807,954 5,200,246 4,607,708 - - 4,607,708

$ 17,003,367 $ 5,200,246 $ 11,803,121 $ 6,740,036 $ - $ 5,063,085

Financial Liabilities Under Offsetting and Executable Net Settlement Contracts or Similar Agreements Netted Financial Assets Recognized Recognized on Recognized Related Amount Not Netted on Financial the Balance Financial the Balance Sheet Liabilities - Sheet - Gross Liabilities - Net Financial Cash Collateral Financial Liabilities Gross Amount Amount Amount Instruments Pledged Net Amount

Derivative liabilities - OTC $ 791,706 $ - $ 791,706 $ 366,118 $ - $ 425,588 Liabilities for bonds with attached repurchase agreement 32,918,550 - 32,918,550 29,242,445 - 3,676,105 Accounts payables for securities purchased 7,205,155 5,200,246 2,004,909 - - 2,004,909

$ 40,915,411 $ 5,200,246 $ 35,715,165 $ 29,608,563 $ - $ 6,106,602

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Financial Assets Under Offsetting and Executable Net Settlement Contracts or Similar Agreements Netted Financial Liabilities Recognized Recognized on Recognized Related Amount Not Netted on Financial the Balance Financial the Balance Sheet Assets - Gross Sheet - Gross Assets - Net Financial Cash Received Financial Assets Amount Amount Amount Instruments as Collateral Net Amount

Derivative assets - OTC $ 539,184 $ - $ 539,184 $ 123,281 $ - $ 415,903 Bond investment under resale agreements 3,458,383 - 3,458,383 3,458,383 - - Accounts receivables for sale of securities 3,054,889 2,289,901 764,988 - - 764,988

$ 7,052,456 $ 2,289,901 $ 4,762,555 $ 3,581,664 $ - $ 1,180,891

Financial Liabilities Under Offsetting and Executable Net Settlement Contracts or Similar Agreements Netted Financial Assets Recognized Recognized on Recognized Related Amount Not Netted on Financial the Balance Financial the Balance Sheet Liabilities - Sheet - Gross Liabilities - Net Financial Cash Collateral Financial Liabilities Gross Amount Amount Amount Instruments Pledged Net Amount

Derivative liabilities - OTC $ 331,163 $ - $ 331,163 $ 123,281 $ - $ 207,882 Liabilities for bonds with attached repurchase agreement 25,237,077 - 25,237,077 21,398,212 - 3,838,865 Accounts payables for securities purchased 2,404,785 2,289,901 114,884 - - 114,884

$ 27,973,025 $ 2,289,901 $ 25,683,124 $ 21,521,493 $ - $ 4,161,631

June 30, 2018

Financial Assets Under Offsetting and Executable Net Settlement Contracts or Similar Agreements Netted Financial Liabilities Recognized Recognized on Recognized Related Amount Not Netted on Financial the Balance Financial the Balance Sheet Assets - Gross Sheet - Gross Assets - Net Financial Cash Received Financial Assets Amount Amount Amount Instruments as Collateral Net Amount

Derivative assets - OTC $ 641,292 $ - $ 641,292 $ 148,082 $ - $ 493,210 Bond investment under resale agreements 2,898,639 - 2,898,639 2,898,639 - - Accounts receivables for sale of securities 6,878,476 5,498,590 1,379,886 - - 1,379,886

$ 10,418,407 $ 5,498,590 $ 4,919,817 $ 3,046,721 $ - $ 1,873,096

Financial Liabilities Under Offsetting and Executable Net Settlement Contracts or Similar Agreements Netted Financial Assets Recognized Recognized on Recognized Related Amount Not Netted on Financial the Balance Financial the Balance Sheet Liabilities - Sheet - Gross Liabilities - Net Financial Cash Collateral Financial Liabilities Gross Amount Amount Amount Instruments Pledged Net Amount

Derivative liabilities - OTC $ 642,885 $ - $ 642,885 $ 148,082 $ - $ 494,803 Liabilities for bonds with attached repurchase agreement 35,672,446 - 35,672,446 31,835,049 - 3,837,397 Accounts payables for securities purchased 6,175,855 5,498,590 677,265 - - 677,265

$ 42,491,186 $ 5,498,590 $ 36,992,596 $ 31,983,131 $ - $ 5,009,465

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51. CAPITAL MANAGEMENT

SinoPac Financial Holdings

a. Overview

The Group’s capital management goals are as follows:

As a basic target, the Group’s eligible capital should be sufficient to meet their operating needs and should be higher than the required minimum capital adequacy ratio. Eligible capital and legal capital are calculated under regulations pronounced by the authorities.

The Group’s should also have adequate capital to bear its risks, should measure capital demand on the basis of risk combinations and risk characteristics, and should optimize resource and capital allocation through risk management.

b. Capital management procedure

The Group’s capital adequacy ratio should meet the regulations set by the authorities. Also, the Group’s should maintain capital adequacy ratio by considering the business scale, major operating strategy, risk conditions, eligible capital structure, future capital increase plan, etc. The Group’s reports to the authorities regularly. Overseas subsidiaries’ capital management is in accordance with local regulations.

The Group’s capital maintenance is in accordance with the “Regulations Governing the Consolidated Capital Adequacy of Financial Holding Companies”, “Regulations Governing the Capital Adequacy and Capital Category of Banks”, “Regulations Governing Securities Firms” etc., and is managed by the Group’s risk management and accounting divisions.

c. Capital adequacy ratio

Under the Financial Holding Company Act and related regulations, a financial holding company should maintain a consolidated capital adequacy ratio (CAR) of at least 100%. Thus, if a financial holding company’s consolidated CAR falls below 100%, the authorities may prohibit it from declaring cash dividends or distributing other properties. Under certain conditions, the authorities may impose other penalties on the Company.

1) Consolidated capital adequacy ratio

June 30, 2019

(In Thousands of New Taiwan Dollars, %)

Item Percentage Group’s Statutory Group’s Net of Capital Eligible Capital Entities Ownership Requirement SPH 100 $ 143,075,841 $ 163,936,313 Bank SinoPac 100 142,385,352 113,746,133 SinoPac Securities 100 16,916,310 5,985,419 SinoPac Leasing Corporation 100 4,445,885 1,363,800 SinoPac Venture Capital 100 2,920,309 1,466,241 SinoPac Securities Investment Trust 100 1,515,192 812,242 Deduction (172,652,569) (162,405,465) Subtotal 138,606,320 (A) 124,904,683 (B) Consolidated CARs of SPH (C)=(A)÷(B) 110.97% (C)

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(In Thousands of New Taiwan Dollars, %)

Item Percentage Group’s Statutory Group’s Net of Capital Eligible Capital Entities Ownership Requirement SPH 100 $ 141,753,998 $ 162,538,149 Bank SinoPac 100 136,705,582 97,333,560 SinoPac Securities 100 16,478,623 5,769,256 SinoPac Leasing Corporation 100 4,339,607 1,317,401 SinoPac Call Center 100 76,466 54,692 SinoPac Venture Capital 100 2,747,244 1,370,366 SinoPac Securities Investment Trust 100 1,583,217 826,447 Deduction (169,918,939) (161,010,311) Subtotal 133,765,798 (A) 108,199,560 (B) Consolidated CARs of SPH (C)=(A)÷(B) 123.63% (C)

June 30, 2018

(In Thousands of New Taiwan Dollars, %)

Item Percentage Group’s Statutory Group’s Net of Capital Eligible Capital Entities Ownership Requirement SPH 100 $ 138,048,918 $ 165,016,047 Bank SinoPac 100 134,032,568 95,654,402 SinoPac Securities 100 16,353,216 7,750,018 SinoPac Leasing Corporation 100 4,343,308 1,451,315 SinoPac Call Center 100 73,487 53,990 SinoPac Venture Capital 100 3,219,202 1,632,921 SinoPac Securities Investment Trust 100 1,540,627 808,075 Deduction (167,280,309) (157,105,986) Subtotal 130,331,017 (A) 115,260,782 (B) Consolidated CARs of SPH (C)=(A)÷(B) 113.07% (C)

2) Financial holding companies’ net eligible capital

(In Thousands of New Taiwan Dollars)

December 31, Item June 30, 2019 June 30, 2018 2018 Common stock $ 112,710,541 $ 112,710,541 $ 110,500,530 Capital Instruments that comply with the Tier 1 capital requirement - - - Other preferred stock and subordinated bank debentures 60,000 60,000 60,000 Capital collected in advance - - 2,210,011 Capital surplus 2,187,208 2,187,208 2,187,208 Legal reserve 17,951,839 17,008,997 17,008,997 Special reserve 849,362 503,729 503,729 Retained earnings 7,721,112 9,731,492 5,208,870 Equity adjustment 1,597,568 (365,543) 446,557 Deduction: Deferred assets (1,789) (82,426) (76,984) Total 143,075,841 141,753,998 138,048,918

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Bank SinoPac a. Overview

Bank SinoPac and its subsidiaries’ capital management goals are as follows:

Bank SinoPac and its subsidiaries basic target is to have an eligible capital that is sufficient to meet its operating needs, and is higher than the required minimum capital adequacy ratio. Eligible capital and legal capital are calculated under the regulations set by the authorities.

Bank SinoPac and its subsidiaries should have adequate capital to bear its risks, should measure capital demand on the basis of risk combinations and risk characteristics, and should optimize resource and capital allocation through risk management. b. Capital management procedure

Bank SinoPac and its subsidiaries capital adequacy ratio should meet the regulations set by the authorities. Also, Bank SinoPac and its subsidiaries should maintain capital adequacy ratio by considering the business scale, major operating strategy, risk conditions, eligible capital structure, future capital increase plan, etc. Bank SinoPac and its subsidiaries reports to the authorities regularly. Overseas subsidiaries’ capital management is in accordance with local regulations.

Bank SinoPac and its subsidiaries’ capital maintenance is in accordance with “Regulations Governing the Capital Adequacy and Capital Category of Banks”, etc., and is managed by the Bank SinoPac and its subsidiaries’ risk management and financing divisions. c. Statement of capital adequacy

Year June 30, 2019 Analysis Items Standalone Consolidation Common shares equity $ 119,292,621 $ 121,678,187 Other Tier 1 capital 7,021,592 9,498,553 Eligible capital Tier 2 capital 16,071,139 21,025,060 Eligible capital 142,385,352 152,201,800 Standardized approach 986,395,731 1,026,305,896 Internal rating - based Credit risk - - approach Securitization - - Basic indicator approach 42,129,799 44,607,491 Standardized approach/ Risk-weighted alternative standardized - - assets Operational risk approach Advanced measurement - - approach Standardized approach 54,770,975 54,715,225 Market risk Internal model approach - - Total risk-weighted assets 1,083,296,505 1,125,628,612 Capital adequacy ratio 13.14% 13.52% Common shares equity risk - based capital ratio 11.01% 10.81% Tier 1 risk - based capital ratio 11.66% 11.65% Leverage ratio 7.37% 7.61%

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Year December 31, 2018 Analysis Items Standalone Consolidation Common shares equity $ 119,826,740 $ 122,428,221 Other Tier 1 capital 4,804,658 7,498,553 Eligible capital Tier 2 capital 12,074,184 17,431,269 Eligible capital 136,705,582 147,358,043 Standardized approach 899,340,063 929,863,006 Internal rating - based Credit risk - - approach Securitization - - Basic indicator approach 42,129,799 44,607,491 Standardized approach/ Risk-weighted alternative standardized - - assets Operational risk approach Advanced measurement - - approach Standardized approach 44,186,438 46,127,775 Market risk Internal model approach - - Total risk-weighted assets 985,656,300 1,020,598,272 Capital adequacy ratio 13.87% 14.44% Common shares equity risk - based capital ratio 12.16% 12.00% Tier 1 risk - based capital ratio 12.64% 12.73% Leverage ratio 8.11% 8.40%

Year June 30, 2018 Analysis Items Standalone Consolidation Common shares equity $ 114,883,072 $ 117,493,437 Other Tier 1 capital 4,805,082 7,498,977 Eligible capital Tier 2 capital 14,344,414 19,732,203 Eligible capital 134,032,568 144,724,617 Standardized approach 878,113,466 908,194,197 Internal rating - based Credit risk - - approach Securitization - - Basic indicator approach 41,900,015 44,284,912 Standardized approach/ Risk-weighted alternative standardized - - assets Operational risk approach Advanced measurement - - approach Standardized approach 48,638,692 49,072,217 Market risk Internal model approach - - Total risk-weighted assets 968,652,173 1,001,551,326 Capital adequacy ratio 13.84% 14.45% Common shares equity risk - based capital ratio 11.86% 11.73% Tier 1 risk - based capital ratio 12.36% 12.48% Leverage ratio 7.81% 8.11%

Note 1: These tables were filled according to “Regulations Governing the Capital Adequacy Ratio of Banks” and related calculation tables.

- 149 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 Note 2: Bank SinoPac shall disclose the capital adequacy ratio for the current and previous years in annual financial reports. For semiannual financial report, Bank SinoPac shall disclose the capital adequacy ratio for the current period, previous period, and previous year-end.

Note 3: The formula is as follows:

1) Eligible capital = Common shares equity + Other Tier 1 capital + Tier 2 capital.

2) Total risk-weighted assets = Risk-weighted assets for credit risk + (Capital requirements for operational risk + Capital requirement for market risk) x 12.5.

3) Ratio of capital adequacy = Eligible capital ÷ Total risk-weighted assets.

4) Common shares equity risk-based capital ratio = Common shares equity ÷ Total risk-weighted assets.

5) Tier 1 risk - based capital ratio = (Common shares equity + Other Tier 1 capital) ÷ Total risk-weighted assets.

6) Leverage ratio = Tier 1 capital ÷ Total exposure risk.

Note 4: In accordance with Financial Supervisory Commission Guideline No. 09900146911, gains from the sale of idle assets are not to be included in Bank SinoPac’s capital adequacy ratio calculation until disposed outside the Group.

SinoPac Securities

As part of coping with its business scale requirements, key operational plans and future capital projects, and other company considerations, SinoPac Securities complies with Article 59 of the Regulations Governing Securities Firms on the calculation of a capital adequacy ratio based on operating risks and its capital structure. Thus, for maintaining stable operations, SinoPac Securities’ capital adequacy ratio, in principle, is at least 250% for its capital adequacy management objectives.

SinoPac Securities’ capital adequacy management procedures are as follows: a. The risk management division should calculate, monitor and analyze its capital adequacy ratio regular monthly basis, and be approval by the general manager and chairman of the Board. b. The risk management division simulates the capital adequacy ratio based on SinoPac Securities’ business plan, policy direction, investment strategy, important event, and provide to the relevant units. c. If SinoPac Securities’ capital adequacy ratio seems to be falling below the target, the risk management division should put forward to the management echelon in order to adopt the response manner as the follows, and execute after the Board’s approve.

1) Issuance of financial bonds. 2) Capital increase. 3) Adjustment of business strategies.

- 150 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 As of June 30, 2019, December 31, 2018 and June 30, 2018, SinoPac Securities’ capital adequacy ratio were as follows:

December 31, Items June 30, 2019 2018 June 30, 2018

Net eligible capital Tier 1 Capital $ 25,990,869 $ 25,655,202 $ 25,407,035 Tier 2 Capital 312,647 99,050 265,650 Tier 3 Capital - - - Deductible assets (9,387,206) (9,275,629) (9,319,469)

Net eligible capital $ 16,916,310 $ 16,478,623 $ 16,353,216

Equivalent operating risk Market risk equivalent $ 2,221,865 $ 2,229,107 $ 3,197,160 Credit risk equivalent 907,665 821,041 1,173,496 Operating risk equivalent 860,750 796,022 796,022

Equivalent operating risk $ 3,990,280 $ 3,846,170 $ 5,166,678

Capital adequacy ratio 424% 428% 317%

Note 1: Capital adequacy ratio = Net eligible capital/Equivalent operating risk.

Note 2: Net eligible capital = Tier 1 capital + Tier 2 capital + Tier 3 capital - Deductible assets.

Note 3: Equivalent operating risk = Market risk equivalent + Credit risk equivalent + Operating risk equivalent.

52. CROSS-SELLING INFORMATION

For the six months ended June 30, 2019 and 2018, Bank SinoPac charged SinoPac Securities for $1,272 and $1,992, respectively, as marketing and opening accounts. The rental fees Bank SinoPac had charged SinoPac Securities were $1,634 and $1,791 for the six months ended June 30, 2019 and 2018.

The bonuses Bank SinoPac paid to SinoPac Securities were $2,434 and $2,044 for the six months ended June 30, 2019 and 2018 as part of cross-selling agreement.

The bonus Bank SinoPac paid to SinoPac Venture Capital was $6 for the six months ended June 30, 2019 as part of cross-selling agreement.

For other transactions within the Group, please refer to Note 45 and Table 10.

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For the Six Months Ended June 30, 2019

(In Thousands of New Taiwan Dollars)

Business Segment Banking Security Others Consolidated Item Net interest $ 7,171,296 $ 350,425 $ 192,123 $ 7,713,844 Net revenues other than interest 7,277,013 3,378,184 416,417 11,071,614 Total net revenues 14,448,309 3,728,609 608,540 18,785,458 Bad debts expense, commitment and (reversal of) guarantee liability provision (759,326) 56,491 (54,604) (757,439) Operating expenses (6,994,287) (2,924,190) (495,812) (10,414,289) Income before income tax 6,694,696 860,910 58,124 7,613,730 Income tax expenses (965,003) (22,291) (73,413) (1,060,707) Net income (losses) 5,729,693 838,619 (15,289) 6,553,023

For the Six Months Ended June 30, 2018

(In Thousands of New Taiwan Dollars)

Business Segment Banking Security Others Consolidated Item Net interest $ 7,327,755 $ 238,652 $ 213,016 $ 7,779,423 Net revenues other than interest 4,927,589 3,106,095 385,444 8,419,128 Total net revenues 12,255,344 3,344,747 598,460 16,198,551 Bad debts expense, commitment and (reversal of) guarantee liability provision (69,042) (220,632) (456,230) (745,904) Operating expenses (6,406,511) (2,821,797) (470,740) (9,699,048) Income before income tax 5,779,791 302,318 (328,510) 5,753,599 Income tax expenses (851,160) (91,159) (51,790) (994,109) Net income (losses) 4,928,631 211,159 (380,300) 4,759,490

54. PROFITABILITY

SinoPac Holdings and Its Subsidiaries

(%)

Items June 30, 2019 June 30, 2018 Before income tax 0.45 0.36 Return on total assets After income tax 0.39 0.30 Before income tax 5.35 4.15 Return on net worth After income tax 4.60 3.44 Profit margin 34.88 29.38

Note 1: Return on total assets = Income before (after) income tax ÷ Average total assets.

Note 2: Return on net worth = Income before (after) income tax ÷ Average net worth (included non-controlling interests).

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Note 3: Profit margin = Income after income tax ÷ Total net revenues.

Note 4: Income before (after) tax represents income for the six months ended June 30, 2019 and 2018.

SinoPac Holdings

(%)

Items June 30, 2019 June 30, 2018 Before income tax 3.98 2.89 Return on total assets After income tax 3.97 2.89 Before income tax 4.62 3.43 Return on net worth After income tax 4.60 3.44 Profit margin 97.40 97.59

Note 1: Return on total assets = Income before (after) income tax ÷ Average total assets

Note 2: Return on net worth = Income before (after) income tax ÷ Average net worth.

Note 3: Profit margin = Income after income tax ÷ Total net revenues.

Note 4: Income before (after) tax represents income for the six months ended June 30, 2019 and 2018.

Bank SinoPac

(%)

Items June 30, 2019 June 30, 2018 Before income tax 0.42 0.38 Return on total assets After income tax 0.37 0.33 Before income tax 4.96 4.34 Return on net worth After income tax 4.37 3.82 Profit margin 40.63 41.04

Note 1: Return on total assets = Income before (after) income tax ÷ Average total assets.

Note 2: Return on net worth = Income before (after) income tax ÷ Average net worth.

Note 3: Profit margin = Income after income tax ÷ Total net revenues.

Note 4: Income before (after) tax represents income for the six months ended June 30, 2019 and 2018.

SinoPac Securities

(%)

Items June 30, 2019 June 30, 2018 Before income tax 0.92 0.24 Return on total assets After income tax 0.95 0.22 Before income tax 2.98 0.95 Return on net worth After income tax 3.07 0.85 Profit margin 24.81 7.71

- 153 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 Note 1: Return on total assets = Income before (after) income tax ÷ Average total assets.

Note 2: Return on net worth = Income before (after) income tax ÷ Average net worth.

Note 3: Profit margin = Income after income tax ÷ Total net revenues.

Note 4: Income before (after) tax represents income for the six months ended June 30, 2019 and 2018.

55. ADDITIONAL DISCLOSURES

a. Significant transactions and b. following is the additional information required for the Company and investees:

1) Financing provided: Table 1 (under certain regulations, Bank SinoPac and Bank SinoPac (China) are exempt from making related disclosure requirements)

2) Endorsement/guarantee provided: Table 2 (Bank SinoPac and Bank SinoPac (China) are exempt from making related disclosure requirements under certain regulations)

3) Marketable securities held: Table 3 (Bank SinoPac, Bank SinoPac (China), SinoPac Securities and SinoPac Securities (Asia) are excluded from related disclosure requirements under the Criteria Governing the Preparation of Financial Reports by Public Banks and the Criteria Governing the Preparation of Financial Reports by Securities Firms)

4) Marketable securities acquired and disposed of, at costs or prices of at least NT$300 million or 10% of the issued capital: Table 4

5) Acquired and disposed of investment, at costs or prices of at least NT$300 million or 10% of the issued capital: Table 4

6) Acquisition of individual real estate at prices of at least NT$300 million or 10% of the issued capital: None

7) Disposal of individual real estate at prices of at least NT$300 million or 10% of the issued capital: None

8) Allowance for service fees to related parties of at least NT$5 million: None

9) Securitization product offered by a subsidiary and under government approval in accordance with the Financial Asset Securitization Act or the Real Estate Securitization Act, and related information: None

10) Receivables from related parties amounting to at least NT$300 million or 10% of the issued capital: Table 5

11) Sale of nonperforming loans: None

12) The related information and proportionate share in investees: Table 6

13) Derivative financial transactions: Note 8

- 154 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 14) Other material transactions which will affect the decisions of financial report users: Tables 7 to 17

a) The book value of the maximum credit exposure of the financial assets: Table 7

b) Allowance for discounts and loans: Table 8

c) Allowance for accounts receivables: Table 9

d) Related party transactions: Table 10

e) Balance sheets of SPH: Table 11

f) Comprehensive income statements of SPH: Table 12

g) Statement of changes in equity of SPH: Table 13

h) Statements of cash flows of SPH: Table 14

i) Statement of balance sheet and comprehensive income of SPH’s subsidiaries: Table 15

j) Specific risk from futures dealing, and financial ratio, limitations and the related implementation of futures commission merchants subsidiary: Table 16

k) Public announcements prescribed in financial holding company ACT Article 46: Table 17

l) Other significant transactions which may affect the decisions of users of financial reports: None

c. Information related to investment in Mainland China: Table 18

56. DISCLOSURES REQUIRED UNDER MINISTRY OF FINANCE RULING NO. 10703209011 DATED JUNE 1, 2018

Information on operating activities of SinoPac Securities (Cayman), SinoPac Financial Consulting (Shanghai), SinoPac International Holdings and SinoPac Services (Brokers), the investment of SinoPac Securities which are not registered in the member of IOSCO MMoU or did not acquire the licenses of securities and futures approved by IOSCO MMoU, is as follows:

a. Balance sheets: Tables 19, 22, 24 and 27.

b. Statements of comprehensive income: Tables 20, 23, 25 and 28.

c. Securities held: Tables 21 and 26.

d. Derivative financial transactions and the source of capital: None.

e. Revenues from assets management business, service contents and litigation: None.

SinoPac Securities invested and acquired a 10.9375% shareholding in a Cayman Islands-based company, SMS Consumer Fund L.P. Since SinoPac Securities had no control over the investee and the related investment was not material to SinoPac Securities, the investee’s operating results need not be disclosed.

- 155 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 57. SEGMENT INFORMATION

The main business of the Company is the investment in and management of its subsidiaries. On the basis of the chief decision maker’s resource allocation and department performance review, the Group has divided, business segments by type of services and products provided. The accounting standards and policies mentioned in Note 4 apply to of the business segments under IFRS 8 “Operating Segments”. The Group operating segments for the six months ended June 30, 2019 and 2018 are without change. The Group reports the following:

Banking - comprise Bank SinoPac and its subsidiaries; provides commercial banking, money lending and investment, insurance agent, insurance brokerage, and other services.

Securities - comprise SinoPac Securities and its subsidiaries; provides securities dealing, futures proprietary trading, futures advisory, investment consulting and asset management services.

Other business segments - comprises SinoPac Leasing and its subsidiaries, SinoPac Securities Investment Trust, SinoPac Venture Capital and its subsidiaries, SinoPac Call Center (acquired by Bank SinoPac on May 2019) and other investment were not identified to disclose as on individual segment.

The Group’ segment revenue, operating results and segment assets are shown in the following table.

- 156 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 Segment revenues and results

(In Thousands of New Taiwan Dollars)

For the Six Months Ended June 30, 2019 Nonoperating Segments Operating Banking Security Others (Including Total Segments Intercompany Transactions) Net interest $ 7,202,756 $ 303,042 $ 264,810 $ 7,770,608 $ (56,764) $ 7,713,844 Interest revenue 15,250,106 788,572 432,324 16,471,002 (81,728) 16,389,274 Interest expense (8,047,350) (485,530) (167,514) (8,700,394) 24,964 (8,675,430) Commission and fee revenues, net 3,456,995 2,026,634 107,149 5,590,778 (6,436) 5,584,342 Others 3,822,989 1,402,170 431,612 5,656,771 (169,499) 5,487,272 Total net revenue 14,482,740 3,731,846 803,571 19,018,157 (232,699) 18,785,458 Income (loss) Bad debts expense, commitment and reversal of guarantee liability (provision) (759,326) 56,491 (54,604) (757,439) - (757,439) Operating expense (7,107,154) (2,958,464) (382,608) (10,448,226) 33,937 (10,414,289) Depreciation and amortization expense (641,295) (288,390) (81,610) (1,011,295) 98,703 (912,592) Income (loss) before income tax 6,616,260 829,873 366,359 7,812,492 (198,762) 7,613,730 Income tax expense (965,003) (22,291) (49,139) (1,036,433) (24,274) (1,060,707) Net income (loss) 5,651,257 807,582 317,220 6,776,059 (223,036) 6,553,023 Nonoperating Segments Operating Banking Security Others (Including Total Segments Intercompany Transactions) Investments accounted for using the equity method $ - $ - $ 519,886 $ 519,886 $ - $ 519,886 Asset Total assets 1,640,324,092 126,299,853 23,162,162 1,789,786,107 (12,272,830) 1,777,513,277

- 157 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 Segment revenues and results

(In Thousands of New Taiwan Dollars)

For the Six Months Ended June 30, 2018 Nonoperating Segments Operating Banking Security Others (Including Total Segments Intercompany Transactions) Net interest $ 7,302,969 $ 244,572 $ 285,026 $ 7,832,567 $ (53,144) $ 7,779,423 Interest revenue 12,958,119 772,219 465,493 14,195,831 (19,943) 14,175,888 Interest expense (5,655,150) (527,647) (180,467) (6,363,264) (33,201) (6,396,465) Commission revenues, net 2,883,008 2,451,494 137,947 5,472,449 (13,410) 5,459,039 Others 2,062,652 696,099 405,421 3,164,172 (204,083) 2,960,089 Total net revenue 12,248,629 3,392,165 828,394 16,469,188 (270,637) 16,198,551 Income (loss) Bad debts expense and guarantee liability provision (69,042) (220,632) (456,230) (745,904) - (745,904) Operating expense (6,550,279) (2,858,450) (389,637) (9,798,366) 99,318 (9,699,048) Depreciation and amortization expense (301,364) (133,929) (41,754) (477,047) (2,166) (479,213) Income (loss) before income tax 5,629,308 313,083 (17,473) 5,924,918 (171,319) 5,753,599 Income tax (expense) benefit (851,160) (91,159) (57,282) (999,601) 5,492 (994,109) Net income (loss) 4,778,148 221,924 (74,755) 4,925,317 (165,827) 4,759,490 Nonoperating Segments Operating Banking Security Others (Including Total Segments Intercompany Transactions) Investments accounted for using the equity method $ - $ - $ 444,762 $ 444,762 $ - $ 444,762 Asset Total assets 1,456,252,539 146,314,541 24,741,968 1,627,309,048 (11,931,067) 1,615,377,981

- 158 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 TABLE 1

SINOPAC FINANCIAL HOLDINGS COMPANY LIMITED AND INVESTEES

FINANCING PROVIDED FOR THE SIX MONTHS ENDED JUNE 30, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Collateral Financing Financing Maximum Amount Financial Ending Interest Rate Transaction Financing Allowance for Limit for Each Company’s No. Financier Counterparty Related Parties Balance for the Actually Financing Type Statement Account Balance (%) Amount Reasons Bad Debt Item Value Borrowing Financing Period Drawn Company Amount Limit

1 SinoPac Leasing Oakpark Construction Co., Ltd. Other receivable No $ 341,000 $ 214,645 $ 214,645 3.00-19.00 Short-term $ - Operating use $ 117,424 Real estate $ 222,506 $ 1,333,765 $ 1,778,354 financing (Note 1) (Note 1)

2 SinoPac Securities (Cayman) SinoPac Securities (Asia) Other receivable Yes 3,667,361 3,667,361 932,380 3.80 Necessary for - Operating use - - - 3,667,063 3,667,063 (Notes 3 and 4) (Notes 3 and 4) short-term (Notes 3 and 4) (Notes 3 and 4) financing

Note 1: The financial limit for each borrowing company and the financing company’s financing amount limits are 30% and 40% of the audited net worth $4,445,885 of SinoPac Leasing Corporation as of June 30, 2019, respectively. The financial limit to each subsidiary of SinoPac Leasing Corporation is 40% of its audited net worth.

Note 2: The board of directors of SinoPac Leasing Corporation processed the credit line. The maximum balance of $214,645 is the credit line SinoPac Leasing Corporation provided to Oakpark Construction Co., Ltd., the balance of Oakpark Construction Co., Ltd. was reclassified to non-performing loans.

Note 3: In January, March and June 2019, the Board of Directors of SinoPac Securities (Cayman) proceeded the credit line of US$46,000 thousand, US$42,000 thousand and US$30,000 thousand. The maximum balance and the ending balance were based on the credit line of US$118,000 thousand, respectively (NT$3,667,361). The credit line for individual and total financing amount calculated based on the net worth of SinoPac Securities (Cayman) as of June 30, 2019, which equals to US$117,990 thousand (NT$3,667,063). As of June 30, 2019, the actual balance US$30,000 thousand (NT$932,380) had been eliminated in consolidated report. The above US$30,000 thousand that proceeded the credit line will be executed after be approved by the competent authority. Meanwhile, the credit line of US$46,000 thousand will be canceled, and the credit line will be reduced to US$72,000 thousand at that time.

Note 4: Foreign currency amounts translated to NTD at spot exchange rate on balance sheet date.

- 159 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 TABLE 2

SINOPAC FINANCIAL HOLDINGS COMPANY LIMITED AND INVESTEES

ENDORSEMENT/GUARANTEE PROVIDED FOR THE SIX MONTHS ENDED JUNE 30, 2019 (In Thousands of New Taiwan Dollars)

Counterparty Ratio of Accumulated Limits on Endorsement/ Maximum Amount of Individual Maximum Guarantee Endorsement/ Amount Actually Endorsement/ No. Endorsement/Guarantee Provider Nature of Endorsement/ Balance for the Ending Balance Amount Guarantee Name Drawn Guarantee to Net Relationship Guarantee Period Collateralized by Amounts Asset Value of the Amounts Properties Allowable Latest Financial Statement (%)

1 SinoPac Leasing SinoPac Capital International Limited Subsidiary $ 35,567,080 $ 13,301,953 $ 12,804,684 $ 2,847,327 $ 621,587 288.01 $ 35,567,080 (Note 1) SinoPac International Leasing Subsidiary 35,567,080 5,727,116 4,475,478 935,280 310,793 100.67 35,567,080 (Note 1) SinoPac Leasing (Tianjin) Subsidiary 35,567,080 3,656,160 3,376,446 353,058 310,793 75.95 35,567,080 (Note 1)

2 SinoPac Venture Capital SinoPac Leasing Affiliate 1,460,154 407,174 407,174 - - 13.94 2,920,309 (Note 2)

Note 1: The limit on individual endorsement or guarantee amounts is up to 200% of the net worth of SinoPac Leasing. The maximum amount of endorsement or guarantee is 800% of the net worth of SinoPac Leasing. But the amount of endorsement or guarantee is 800% of the worth of the subsidiaries of SinoPac Leasing, which held by more than 50%. The audited net worth of SinoPac Leasing as of June 30, 2019 was $4,445,885.

Note 2: Endorsement or guarantee cannot exceed the net worth of SinoPac Venture Capital, the audited net worth as of June 30, 2019 was $2,920,309.

Note 3: Foreign-currency amounts were translated to New Taiwan dollars at the spot exchange rates on the balance sheet date.

- 160 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 TABLE 3

SINOPAC FINANCIAL HOLDINGS COMPANY LIMITED AND INVESTEES

MARKETABLE SECURITIES HELD JUNE 30, 2019 (In Thousands of New Taiwan Dollars or Shares)

June 30, 2019 Type and Issuer of Marketable Relationship with Holding Percentage of Market Value Holding Company Financial Statement Account Shares/Units/ Carrying Note Securities Company Ownership or Net Asset Face Amount Amount (%) Value

SinoPac Financial Holdings Company Limited Stock Taiwan Depository And Clearing - Financial assets at fair value through 307 $ 16,336 0.08 $ 16,336 Corporation other comprehensive income

SinoPac Futures Corporation Stock Taiwan Futures Exchange (TAIFEX) Related party Financial assets at fair value through 834 45,668 0.25 45,668 other comprehensive income GME Group Inc. - Financial assets at fair value through 20 120,581 0.01 120,581 other comprehensive income Formosa Petrochemical Corp. - Financial assets at fair value through 2 229 - 229 profit or loss Formosa Chemicals & Fibre Corporation - Financial assets at fair value through 2 206 - 206 profit or loss Zeng Hsing Industrial Co., Ltd. - Financial assets at fair value through 2 293 - 293 profit or loss Shiny Chemical Industrial Co., Ltd. - Financial assets at fair value through 2 165 - 165 profit or loss Cheng Shin Rubber Ind., Co., Ltd. - Financial assets at fair value through 5 201 - 201 profit or loss Compeq Manufacturing Co., Ltd. - Financial assets at fair value through 8 208 - 208 profit or loss Taiwan Semiconductor Manufacturing - Financial assets at fair value through 3 717 - 717 Co., Ltd. profit or loss United Integrated Services Co., Ltd. - Financial assets at fair value through 2 304 - 304 profit or loss Thinking Electronic Industrial Co., Ltd. - Financial assets at fair value through 3 239 - 239 profit or loss King’s Town Bank - Financial assets at fair value through 6 203 - 203 profit or loss Shinkong Insurance Co., Ltd. - Financial assets at fair value through 6 239 - 239 profit or loss Fubon Financial Holding Co., Ltd. - Financial assets at fair value through 5 229 - 229 profit or loss Ruentex Industries Ltd. - Financial assets at fair value through 3 227 - 227 profit or loss

(Continued)

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June 30, 2019 Type and Issuer of Marketable Relationship with Holding Percentage of Market Value Holding Company Financial Statement Account Shares/Units/ Carrying Note Securities Company Ownership or Net Asset Face Amount Amount (%) Value

Wah Lee Industrial Corp. - Financial assets at fair value through 4 $ 216 - $ 216 profit or loss Test Research, Inc. - Financial assets at fair value through 4 196 - 196 profit or loss Elite Advanced Laser Corporation - Financial assets at fair value through 4 216 - 216 profit or loss San Shing Fastech Corp. - Financial assets at fair value through 4 213 - 213 profit or loss Chailease Holding Company Ltd. - Financial assets at fair value through 2 257 - 257 profit or loss The Shanghai Commercial & Savings - Financial assets at fair value through 5 281 - 281 Bank, Ltd. profit or loss Formosa Petrochemical Corp. - Financial assets at fair value through 4 442 - 442 profit or loss Cleanaway Company Limited - Financial assets at fair value through 1 162 - 162 profit or loss Sinyi Realty Inc. - Financial assets at fair value through 7 225 - 225 profit or loss Nak Sealing Technologies Corporation - Financial assets at fair value through 3 218 - 218 profit or loss Sinmag Equipment Corporation - Financial assets at fair value through 2 232 - 232 profit or loss Acter Co., Ltd. - Financial assets at fair value through 1 169 - 169 profit or loss Solidwizard Technology Co., Ltd. - Financial assets at fair value through 2 235 0.01 235 profit or loss Xxentria Technology Materials Co., Ltd. - Financial assets at fair value through 3 215 - 215 profit or loss Macauto Industrial Co., Ltd. - Financial assets at fair value through 3 248 - 248 profit or loss

Fund Yuanta US 10+ Investment Grade Bank - Financial assets at fair value through 200 8,604 - 8,604 Bond ETF profit or loss Yuanta US 10+ Investment Grade - Financial assets at fair value through 200 8,536 - 8,536 Healthcare Bond ETF profit or loss Yuanta US 10+ Investment Grade Utility - Financial assets at fair value through 200 8,410 - 8,410 Electric Power Bond ETF profit or loss

SinoPac Venture Capital Corporation Stock Taigen Biopharmaceuticals Holdings Affiliate of SPH board of director Financial assets at fair value through 30,813 528,446 4.30 528,446 Limited profit or loss Aerowin Technology Corporation - Financial assets at fair value through 620 12,927 0.90 12,927 profit or loss TBI Motion Technology Co., Ltd. - Financial assets at fair value through 1,466 94,704 1.52 94,704 profit or loss

(Continued)

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June 30, 2019 Type and Issuer of Marketable Relationship with Holding Percentage of Market Value Holding Company Financial Statement Account Shares/Units/ Carrying Note Securities Company Ownership or Net Asset Face Amount Amount (%) Value

One Production Film Co. - Financial assets at fair value through 617 $ 2,872 2.21 $ 2,872 profit or loss Kuang Hong Arts Management In - Financial assets at fair value through 752 43,807 2.98 43,807 Corporation profit or loss Growww Media Co., Ltd. - Financial assets at fair value through 400 20,800 1.09 20,800 profit or loss MOSA Industrial Corporation - Financial assets at fair value through 2,154 115,061 1.21 115,061 profit or loss 3S Silicon Tech, Inc. - Financial assets at fair value through 1,594 21,423 6.78 21,423 profit or loss Throughtek (tutk) - Financial assets at fair value through 634 6,086 2.44 6,086 profit or loss Somnics, Inc. - Financial assets at fair value through 1,250 22,038 3.37 22,038 profit or loss Centera Photonics Inc. SinoPac Venture Capital is the Financial assets at fair value through 1,750 57,750 6.94 57,750 Company’s corporate supervisors profit or loss M2 Communication Inc. SinoPac Venture Capital is the Financial assets at fair value through 3,925 24,100 8.97 24,100 Company’s corporate director profit or loss Protectlife International Biomedical Inc. SinoPac Venture Capital is the Financial assets at fair value through 2,000 44,000 6.44 44,000 Company’s corporate director profit or loss Andros Pharmaceuticals Co., Ltd. SinoPac Venture Capital is the Financial assets at fair value through 2,040 74,113 8.15 74,113 Company’s corporate director profit or loss Knowledge Freeway Co., Ltd. SinoPac Venture Capital is the Financial assets at fair value through 572 6,252 11.44 6,252 Company’s corporate director profit or loss J-metrics Technology Co., Ltd. - Financial assets at fair value through 1,200 54,000 4.55 54,000 profit or loss Taisys Technologies Co., Ltd. - Financial assets at fair value through 379 6,099 1.91 6,099 profit or loss DA HO Marketing Co., Ltd. - Financial assets at fair value through 1,050 16,328 12.20 16,328 profit or loss New Micropore, Inc. SinoPac Venture Capital is the Financial assets at fair value through 1,000 5,350 10.00 5,350 Company’s corporate supervisors profit or loss U R A Engineering Co., Ltd. SinoPac Venture Capital is the Financial assets at fair value through 749 8,546 19.98 8,546 Company’s corporate director profit or loss Toyo Automation Co., Ltd. - Financial assets at fair value through 720 82,800 3.27 82,800 profit or loss YFY Biotech Management Company SinoPac Venture Capital is the Financial assets at fair value through 3,693 43,215 5.00 43,215 Company’s corporate director profit or loss Prudence Capital Management - Financial assets at fair value through 1,521 3,362 2.50 3,362 profit or loss Boston Life Science Venture Co. - Financial assets at fair value through 3,689 8,005 5.00 8,005 profit or loss Global Strategic Venture - Financial assets at fair value through 850 4,984 1.94 4,984 profit or loss

(Continued)

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June 30, 2019 Type and Issuer of Marketable Relationship with Holding Percentage of Market Value Holding Company Financial Statement Account Shares/Units/ Carrying Note Securities Company Ownership or Net Asset Face Amount Amount (%) Value

Maxima Capital Management SinoPac Venture Capital is the Financial assets at fair value through 52 $ 1,247 9.39 $ 1,247 Company’s corporate director profit or loss Taiwan Incubator Small & Medium SinoPac Venture Capital is the Financial assets at fair value through 3,417 30,552 4.84 30,552 Enterprises Development Corp. Company’s corporate director profit or loss Wellgen Medical Co., Ltd. SinoPac Venture Capital is the Financial assets at fair value through 1,400 24,500 15.91 24,500 Company’s corporate director profit or loss Taiwania Capital Buffalo II Bioventures, - Financial assets at fair value through - 41,007 1.69 41,007 LP profit or loss iXensor Co., Ltd. - Financial assets at fair value through 1,300 44,720 2.64 44,720 profit or loss Asia Metal Industries, Inc. - Financial assets at fair value through 500 24,235 2.77 24,235 profit or loss Hantop Intelligence Technology SinoPac Venture Capital is the Financial assets at fair value through 1,250 25,000 10.97 25,000 Corporation Company’s corporate supervisors profit or loss Brighten Optix Corporation - Financial assets at fair value through 560 33,600 4.92 33,600 profit or loss Impinj, Inc. - Financial assets at fair value through 114 101,935 0.75 101,935 profit or loss Asia Best Healthcare Co., Ltd. - Financial assets at fair value through 11 40,533 1.60 40,533 profit or loss CGK International Co., Ltd. - Financial assets at fair value through 1,800 22,842 4.90 22,842 profit or loss MiCareo Inc. SinoPac Venture Capital is the Financial assets at fair value through 6,033 71,797 14.77 71,797 Company’s corporate director profit or loss Transound Electronics Co., Ltd. - Financial assets at fair value through 1,800 36,486 5.10 36,486 profit or loss Apollo Medical Optics Inc. - Financial assets at fair value through 1,666 22,433 5.05 22,433 profit or loss Loyalty Alliance Enterprise Corp. - Financial assets at fair value through 607 529 0.51 529 profit or loss

Fund BDF II - Financial assets at fair value through - 818 - 818 profit or loss BDF IV - Financial assets at fair value through - 170 - 170 profit or loss

Stock Telexpress Corp. SinoPac Venture Capital is the Financial assets at fair value through 542 4,158 3.30 4,158 Company’s corporate supervisors other comprehensive income Taiwan Cultural - Creative Development SinoPac Venture Capital is the Financial assets at fair value through 1,700 23,035 8.50 23,035 Co., Ltd. Company’s corporate director other comprehensive income Nisho Image Tech Inc. - Financial assets at fair value through 3,000 4,080 7.36 4,080 other comprehensive income Lian An Services Co., Ltd. SinoPac Venture Capital is the Financial assets at fair value through 125 1,048 5.00 1,048 Company’s corporate director other comprehensive income

(Continued)

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June 30, 2019 Type and Issuer of Marketable Relationship with Holding Percentage of Market Value Holding Company Financial Statement Account Shares/Units/ Carrying Note Securities Company Ownership or Net Asset Face Amount Amount (%) Value

If Mobile Technology Co., Ltd. SinoPac Venture Capital is the Financial assets at fair value through 1,500 $ 17,190 16.13 $ 17,190 Company’s corporate director other comprehensive income Ecrowd Media Inc. Affiliate of SPH board of director Financial assets at fair value through 1,438 14,386 9.43 14,386 other comprehensive income Mei Ta Industrial Co., Ltd. - Financial assets at fair value through 211 173,400 0.49 173,400 other comprehensive income Brightman Optoelectronics (Cayman) - Financial assets at fair value through 855 34,091 11.69 34,091 Co., Ltd. other comprehensive income Neutron Innovation (BVI) Limited Affiliate of SinoPac Venture Capital Financial assets at fair value through 1,568 18,273 6.06 18,273 director’s spouse other comprehensive income Winking Entertainment Ltd. - Financial assets at fair value through 967 10,144 2.64 10,144 other comprehensive income Mozido C-1 - Financial assets at fair value through 59 649 0.01 649 other comprehensive income Mozido C-2 - Financial assets at fair value through 258 2,814 0.05 2,814 other comprehensive income

SinoPac Securities Investment Trust Fund Corporation Sinopac Taiex ETF Fund under SinoPac Securities Financial assets at fair value through 9 494 - 494 Investment Trust Corporation’s profit or loss management Sinopac ICE 10+ Year Core Large Cap Fund under SinoPac Securities Financial assets at fair value through 193 8,141 - 8,141 Single-A US Corporate Bond ETF Investment Trust Corporation’s profit or loss management Sinopac ICE 15+ Year Core A-BBB US Fund under SinoPac Securities Financial assets at fair value through 146 6,049 - 6,049 Insurance & Financial Services Bond Investment Trust Corporation’s profit or loss ETF management Sinopac ICE 7-10 Year China Policy Fund under SinoPac Securities Financial assets at fair value through 249 9,945 - 9,945 Bank Bond ETF Investment Trust Corporation’s profit or loss management

SinoPac Capital (Asia) Limited Bond ANZ V4.75 05/13/27 EMTN - Financial assets at fair value through 200 4,599 - 4,599 profit or loss SDBC 4.2 01/19/27 CNH - Financial assets at fair value through 1,000 4,612 - 4,612 profit or loss CGB 3.6 06/27/28 - Financial assets at fair value through 1,500 6,822 - 6,822 profit or loss DB V5.6 04/10/25 EMTN - Financial assets at fair value through 5,000 21,741 - 21,741 profit or loss FCGNZ 4 06/22/20 EMTN - Financial assets at fair value through 1,270 5,787 - 5,787 profit or loss IFC 3.1 09/24/19 GMTN - Financial assets at fair value through 100 452 - 452 profit or loss MAYMK 4 07/19/19 EMTN - Financial assets at fair value through 20,000 90,476 - 90,476 profit or loss

(Continued)

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June 30, 2019 Type and Issuer of Marketable Relationship with Holding Percentage of Market Value Holding Company Financial Statement Account Shares/Units/ Carrying Note Securities Company Ownership or Net Asset Face Amount Amount (%) Value

CABEI 3.95 09/21/19 - Financial assets at fair value through 1,000 $ 4,533 - $ 4,533 profit or loss CABEI 4.2 09/21/21 - Financial assets at fair value through 1,000 4,522 - 4,522 profit or loss CCB 3.75 11/18/19 EMTN - Financial assets at fair value through 3,400 15,420 - 15,420 profit or loss C 3 02/01/21 GMTN - Financial assets at fair value through 520 2,341 - 2,341 profit or loss QNBK 5.2 06/07/21 EMTN - Financial assets at fair value through 5,500 24,870 - 24,870 profit or loss AGRBK 3.8 08/06/19 EMTN - Financial assets at fair value through 1,000 4,522 - 4,522 profit or loss SOCGEN 3.82 07/09/20 EMTN - Financial assets at fair value through 5,000 22,610 - 22,610 profit or loss BCHINA 3.1 04/17/20 EMTN - Financial assets at fair value through 3,000 13,551 - 13,551 profit or loss BCHINA 3.3 04/17/22 EMTN - Financial assets at fair value through 2,000 9,035 - 9,035 profit or loss TABS 2005-4X SUB MTGE - Financial assets at fair value through 2,000 - - - profit or loss CNOOC 3.875 05/02/22 REGS - Financial assets at fair value through 600 19,229 - 19,229 profit or loss NIPLIF V5 10/18/42 REGS - Financial assets at fair value through 200 6,542 - 6,542 profit or loss JPM 3.375 05/01/23 - Financial assets at fair value through 155 4,937 - 4,937 profit or loss EURDEV 5 09/26/20 REGS - Financial assets at fair value through 200 6,291 - 6,291 profit or loss CHINLP V4.25 P05/29/49 - Financial assets at fair value through 365 11,359 - 11,359 profit or loss RLCONS V3.95 P02/28/49 - Financial assets at fair value through 2,900 90,053 - 90,053 profit or loss ORIEAS 3.75 09/03/19 EMTN - Financial assets at fair value through 2,250 70,025 - 70,025 profit or loss BOCOM V4.5 10/03/24 - Financial assets at fair value through 700 21,807 - 21,807 profit or loss NIPLIF V5.1 10/16/44 REGS - Financial assets at fair value through 700 23,333 - 23,333 profit or loss HRAM 4.5 01/16/20 REGS - Financial assets at fair value through 3,000 93,929 - 93,929 profit or loss SBSG 3.875 01/28/20 - Financial assets at fair value through 3,500 109,326 - 109,326 profit or loss CHCOMU V3.5 P12/29/49 - Financial assets at fair value through 1,500 46,573 - 46,573 profit or loss SAIL 2004-10 M1 - Financial assets at fair value through 6,748 20,204 - 20,204 profit or loss

(Continued)

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June 30, 2019 Type and Issuer of Marketable Relationship with Holding Percentage of Market Value Holding Company Financial Statement Account Shares/Units/ Carrying Note Securities Company Ownership or Net Asset Face Amount Amount (%) Value

NIPLIF V4.7 01/20/46 REGS - Financial assets at fair value through 3,800 $ 125,419 - $ 125,419 profit or loss BAC 3.95 04/21/25 L - Financial assets at fair value through 263 8,540 - 8,540 profit or loss BACR 5.2 05/12/26 - Financial assets at fair value through 400 12,991 - 12,991 profit or loss ANZ 4.4 05/19/26 REGS - Financial assets at fair value through 500 16,342 - 16,342 profit or loss STX 5.75 12/01/34 - Financial assets at fair value through 20 603 - 603 profit or loss JPM F 10/24/23 - Financial assets at fair value through 1,000 31,501 - 31,501 profit or loss BAC F 10/21/22 MTN - Financial assets at fair value through 1,000 31,423 - 31,423 profit or loss MS F 01/20/22 - Financial assets at fair value through 2,000 62,768 - 62,768 profit or loss TITIM 6 09/30/34 - Financial assets at fair value through 260 8,122 - 8,122 profit or loss PEMEX 5.625 01/23/46 - Financial assets at fair value through 36 893 - 893 profit or loss AAPL 4.375 05/13/45 - Financial assets at fair value through 10 351 - 351 profit or loss WFC 4.1 06/03/26 MTN - Financial assets at fair value through 60 1,971 - 1,971 profit or loss CCAMCL 3 03/09/20 - Financial assets at fair value through 1,500 46,675 - 46,675 profit or loss ABNANV V4.4 03/27/28 - Financial assets at fair value through 200 6,399 - 6,399 profit or loss INTNED F 03/29/22 - Financial assets at fair value through 3,500 110,092 - 110,092 profit or loss BAC F 04/24/23 - Financial assets at fair value through 3,000 93,777 - 93,777 profit or loss MS F 05/08/24 GMTN - Financial assets at fair value through 500 15,713 - 15,713 profit or loss XINAOG 3.25 07/24/22 - Financial assets at fair value through 2,420 75,722 - 75,722 profit or loss C 2.5 07/29/19 - Financial assets at fair value through 200 6,216 - 6,216 profit or loss SUMI 2.5 09/13/22 - Financial assets at fair value through 200 6,208 - 6,208 profit or loss T 4.3 12/15/42 - Financial assets at fair value through 200 6,100 - 6,100 profit or loss EBIUH F 01/26/20 EMTN - Financial assets at fair value through 5,000 155,997 - 155,997 profit or loss HJINTL F 09/28/20 - Financial assets at fair value through 4,000 124,908 - 124,908 profit or loss

(Continued)

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June 30, 2019 Type and Issuer of Marketable Relationship with Holding Percentage of Market Value Holding Company Financial Statement Account Shares/Units/ Carrying Note Securities Company Ownership or Net Asset Face Amount Amount (%) Value

ORIEAS F 12/21/20 EMTN - Financial assets at fair value through 3,000 $ 93,365 - $ 93,365 profit or loss BOSIBV 3.125 01/18/21 - Financial assets at fair value through 500 15,577 - 15,577 profit or loss CICCHK F 04/25/21 EMTN - Financial assets at fair value through 2,200 68,515 - 68,515 profit or loss BOCAVI F 05/21/25 GMTN - Financial assets at fair value through 500 15,523 - 15,523 profit or loss POHANG 4 08/01/23 REGS - Financial assets at fair value through 500 16,241 - 16,241 profit or loss GS 2.875 02/25/21 - Financial assets at fair value through 60 1,877 - 1,877 profit or loss CDBLFU F 11/15/21 EMTN - Financial assets at fair value through 2,000 62,273 - 62,273 profit or loss MQGAU V3.763 11/28/28 REGS - Financial assets at fair value through 6 189 - 189 profit or loss HYNMTR F 07/08/21 REGS - Financial assets at fair value through 2,000 62,185 - 62,185 profit or loss BOCOM F 01/25/21 FRCD - Financial assets at fair value through 15,000 471,346 - 471,346 profit or loss AGRBK F 01/28/22 FRCD - Financial assets at fair value through 15,000 464,507 - 464,507 profit or loss HSBC F 03/11/25 - Financial assets at fair value through 4,500 140,008 - 140,008 profit or loss EDF 4.75 10/13/35 REGS - Financial assets at fair value through 30 1,024 - 1,024 profit or loss MARUB 3.56 04/26/24 - Financial assets at fair value through 3,000 96,275 - 96,275 profit or loss UNITED TECHNOLOGIES CORP - Financial assets at fair value through 200 7,214 - 7,214 4.625% 16NOV2048 profit or loss INTNED 8.25 08/16/23 - Financial assets at fair value through 100 198 - 198 profit or loss DB 6.7 01/14/21 EMTN - Financial assets at fair value through 260 556 - 556 profit or loss DB 8 03/05/26 EMTN - Financial assets at fair value through 40 77 - 77 profit or loss RENTEN 8.25 05/23/22 EMTN - Financial assets at fair value through 410 928 - 928 profit or loss DB 5.6 09/17/20 EMTN - Financial assets at fair value through 50 106 - 106 profit or loss SHIGBK 0 06/23/20 - Financial assets at fair value through 3,500 103,183 - 103,183 profit or loss BJENTE 0 07/28/19 - Financial assets at fair value through 6,000 23,974 - 23,974 profit or loss

(Continued)

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June 30, 2019 Type and Issuer of Marketable Relationship with Holding Percentage of Market Value Holding Company Financial Statement Account Shares/Units/ Carrying Note Securities Company Ownership or Net Asset Face Amount Amount (%) Value

Fund SINOPAC CHINA STRATEGIC - Financial assets at fair value through 705 $ 287,559 - $ 287,559 GROWTH FUND - CL B (USD) profit or loss ACCUDO ASIAN VALUE - Financial assets at fair value through 2 88,523 - 88,523 ARBITRAGE FUND - CL A (USD) profit or loss SINOPAC RQFII STABLE INC. FUND - Financial assets at fair value through 47 49,207 - 49,207 - CL B (RMB) profit or loss SPIF_SINOPAC USD ST FIXED - Financial assets at fair value through 216 70,729 - 70,729 INCOME FUND - CL B (USD) profit or loss SINOPAC GREATER CHINA CB FD - - Financial assets at fair value through 10 31,610 - 31,610 CL A_DIS_CASH (USD) profit or loss SINOPAC GREATER CHINA CB FD - - Financial assets at fair value through 10 37,827 - 37,827 CL B (USD) profit or loss SINOPAC MULTI STRATEGY - Financial assets at fair value through 3 106,552 - 106,552 QUANT FUND - CL A (USD) profit or loss DB 3X USD Cert Linked to FXSTSINO - Financial assets at fair value through - 92,970 - 92,970 08JUL2019 profit or loss

Note: Foreign-currency amounts were translated to New Taiwan dollars at the exchange rates on the balance sheet date.

(Concluded)

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SINOPAC FINANCIAL HOLDINGS COMPANY LIMITED AND INVESTEES

ACQUIRED AND DISPOSED OF INVESTMENT AT COST OR PRICES OF AT LEAST NT$300 MILLION OR 10% OF THE ISSUED CAPITAL (MARKETABLE SECURITIES ACQUIRED AND DISPOSED OF, AT COST OR PRICES OF AT LEAST NT$300 MILLION OR 10% OF THE ISSUED CAPITAL) FOR THE SIX MONTHS ENDED JUNE 30, 2019 (In Thousands of New Taiwan Dollars or Shares, Unless Stated Otherwise)

Beginning Balance Acquisition Disposal Ending Balance Type and Name of Company Name Account Counterparty Nature of Relationship Gain (Loss) on Marketable Securities Units Amount Units Amount Units Amount Carrying Value Units Amount Disposal

SinoPac Capital (Asia) Limited MS 4.1 09/25/23 EMTN Financial assets at fair value - - - $ - 180,015 CNY 182,847 180,015 CNY 182,864 CNY 182,847 CNY 17 - $ - through profit or loss C 3.3 05/22/24 GMTN Financial assets at fair value - - - - 96,470 CNY 95,230 96,470 CNY 95,230 CNY 95,230 - - - through profit or loss BOCOM F 01/25/21 FRCD Financial assets at fair value - - - - 30,000 US$ 29,984 15,000 US$ 14,992 US$ 14,992 - 15,000 US$ 14,992 through profit or loss AGRBK F 01/28/22 FRCD Financial assets at fair value - - - - 30,000 US$ 29,982 15,000 US$ 14,991 US$ 14,991 - 15,000 US$ 14,991 through profit or loss T 4.5 05/15/35 Financial assets at fair value - - - - 10,222 US$ 10,139 10,222 US$ 10,152 US$ 10,139 US$ 13 - - through profit or loss BACR 5.2 05/12/26 Financial assets at fair value - - - - 12,180 US$ 12,419 11,780 US$ 12,009 US$ 12,001 US$ 8 400 US$ 418 through profit or loss SOFTBK 5.125 09/19/27 Financial assets at fair value - - - - 15,843 US$ 15,685 15,843 US$ 15,690 US$ 15,685 US$ 5 - - through profit or loss T 4.75 05/15/46 Financial assets at fair value - - - - 91,490 US$ 88,293 91,490 US$ 88,439 US$ 88,293 US$ 146 - - through profit or loss T 4.75 05/15/46 Financial assets at fair value - - - - 17,576 US$ 18,551 17,576 US$ 18,563 US$ 18,551 US$ 12 - - through profit or loss MO 5.375 01/31/44 Financial assets at fair value - - - - 84,325 US$ 84,730 84,325 US$ 84,849 US$ 84,730 US$ 119 - - through profit or loss GRNLGR 7.25 03/12/22 EMTN Financial assets at fair value - - - - 32,200 US$ 32,307 32,200 US$ 32,307 US$ 32,307 - - - through profit or loss EVERRE 10.5 04/11/24 Financial assets at fair value - - - - 22,000 US$ 21,372 22,000 US$ 21,372 US$ 21,372 - - - through profit or loss RONXIN 10.5 03/01/22 Financial assets at fair value - - - - 23,500 US$ 24,445 23,500 US$ 24,445 US$ 24,445 - - - through profit or loss EVERRE 8.9 05/24/21 Financial assets at fair value - - - - 23,000 US$ 22,487 23,000 US$ 22,487 US$ 22,487 - - - through profit or loss C 0 07/12/23 GMTN Financial assets at fair value - - - - 604,700 ZAR 436,357 604,700 ZAR 437,044 ZAR 436,357 ZAR 687 - - through profit or loss C 7.6 12/27/23 EMTN Financial assets at fair value - - - - 648,200 ZAR 639,578 648,200 ZAR 640,168 ZAR 639,578 ZAR 590 - - through profit or loss

Beginning Balance Acquisition Disposal Ending Balance Type and Name of Company Name Account Counterparty Nature of Relationship Settlements Gain (Loss) on Marketable Securities Units Amount Units Amount Units Carrying Value Units Amount Amount Disposal

SinoPac Capital (Asia) Limited MS 4.1 09/25/23 EMTN Financial liabilities at fair value - - - $ - 30,000 US$ 30,870 30,000 US$ 30,792 US$ 30,870 US$ 78 - $ - through profit or loss EVERRE 10 04/11/23 Financial liabilities at fair value - - - - 27,800 US$ 27,283 27,800 US$ 27,283 US$ 27,283 - - - through profit or loss C 0 07/12/23 GMTN Financial liabilities at fair value - - ZAR 1,350 ZAR 952 25,900 ZAR 18,746 27,250 ZAR 19,715 ZAR 19,698 ZAR (17 ) - - through profit or loss C 7.6 12/27/23 EMTN Financial liabilities at fair value - - - - 30,600 ZAR 30,444 27,250 ZAR 27,049 ZAR 27,029 ZAR (20 ) 3,350 ZAR 3,415 through profit or loss

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SINOPAC FINANCIAL HOLDINGS COMPANY LIMITED AND INVESTEES

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$300 MILLION OR 10% OF THE ISSUED CAPITAL JUNE 30, 2019 (In Thousands of New Taiwan Dollars)

Overdue Amounts Received Turnover Allowance for Company Name Related Party Relationship Ending Balance in Subsequent Rate Amount Action Taken Bad Debts Period

SinoPac Financial Holdings Bank SinoPac Subsidiary $ 1,922,222 - $ - - $ - $ - (Note 1)

Bank SinoPac SinoPac Financial Holdings Parent company of Bank 1,264,804 - - - - - SinoPac (Note 1)

SinoPac Securities (Cayman) SinoPac Securities (Asia) Subsidiary of SinoPac 932,380 - - - - - Securities (Cayman) (Note 2)

Note 1: The balance mainly included dividends receivable for earnings, linked-tax system receivable (booked as current tax assets) and other related parties’ receivables, which were not included in the consolidated financial statements.

Note 2: The balance mainly included receivable on financial lending, which was not included in the consolidated financial statements.

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SINOPAC FINANCIAL HOLDINGS COMPANY LIMITED AND INVESTEES

INFORMATION ON INVESTED ENTERPRISES FOR THE SIX MONTHS ENDED JUNE 30, 2019 (In Thousands of New Taiwan Dollars)

Consolidated Investment Percentage of Total Carrying Investment Investee Company Location Main Businesses and Products Ownership Imitated Percentage of Note Amount Gains Shares (%) Shares Shares Ownership (%)

Financial Bank SinoPac Taiwan Commercial bank, trust and foreign exchange 100.00 $ 126,837,490 $ 5,652,290 8,606,116 - 8,606,116 100.00 Subsidiary services SinoPac Securities Corporation Taiwan Brokerage, dealing and underwriting of securities 100.00 26,686,185 808,126 1,621,224 - 1,621,224 100.00 Subsidiary SinoPac Leasing Corporation Taiwan Leasing and installment sales 100.00 4,446,058 62,376 468,104 - 468,104 100.00 Subsidiary SinoPac Call Center Company Limited Taiwan Data processing, client service and client - - 879 - - - - Note 1 relationship management SinoPac Venture Capital Corporation Taiwan Venture capital investment 100.00 2,920,335 244,883 220,000 - 220,000 100.00 Subsidiary SinoPac Securities Investment Trust Taiwan Securities investment trust, discretionary investment 100.00 1,515,397 9,429 142,000 - 142,000 100.00 Subsidiary Corporation and investment consulting services Taiwan Depository and Clearing Corporation Taiwan Computerized book-entry operation for securities 0.08 16,336 1,076 3,408 - 3,408 0.92 Note 2

Note 1: The company was decided to merge SinoPac Call Center with Bank SinoPac by cash. After the merger, SinoPac Call Center was elimanated. The acquisition date was May 1, 2019.

Note 2: The investment gains recognized in this period are dividend revenues.

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SINOPAC FINANCIAL HOLDINGS COMPANY LIMITED AND INVESTEES

TOTAL BOOK VALUE OF MAXIMUM CREDIT RISK EXPOSURES FINANCIAL ASSETS JUNE 30, 2019, DECEMBER 31, 2018 AND JUNE 30, 2018 (In Thousands of New Taiwan Dollars)

Principle Allowance The Impairment under Regulations Governing the Procedures for June 30, 2019 Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 Banking Total Total 12 Months ECL Lifetime ECL Lifetime ECL 12 Months ECL Lifetime ECL Lifetime ECL Institutions to Evaluate Assets and Deal with Nonperforming/ Nonaccrual Loans (Note 1)

Discounts and loans Corporate banking $ 549,157,730 $ 646,225 $ 2,683,367 $ 552,487,322 $ 1,130,909 $ 77,829 $ 681,693 $ 5,529,510 $ 7,419,941 Consumer banking 474,802,082 4,710,908 1,568,002 481,080,992 64,131 132,819 233,428 5,987,360 6,417,738 Receivables Credit card receivable 16,816,194 234,346 888,298 17,938,838 3,173 4,532 53,850 158,759 220,314 Net accounts receivable - factoring (Note 2) 8,188,398 - - 8,188,398 1,360 - - 121,448 122,808 Other receivable (Note 3) 53,761,394 1,079,497 709,972 55,550,863 831,138 13,382 543,519 161,576 1,549,615

(Continued)

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Principle Allowance The Impairment under Regulations Governing the Procedures for December 31, 2018 Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 Banking Total Total 12 Months ECL Lifetime ECL Lifetime ECL 12 Months ECL Lifetime ECL Lifetime ECL Institutions to Evaluate Assets and Deal with Nonperforming/ Nonaccrual Loans (Note 1)

Discounts and loans Corporate banking $ 485,864,725 $ 451,120 $ 2,875,406 $ 489,191,251 $ 1,558,301 $ 199,996 $ 833,836 $ 4,520,625 $ 7,112,758 Consumer banking 440,539,124 4,617,595 1,433,868 446,590,587 53,172 123,755 203,123 5,594,937 5,974,987 Receivables Credit card receivable 14,289,719 234,006 906,867 15,430,592 3,219 5,198 58,601 153,432 220,450 Net accounts receivable - factoring (Note 2) 12,785,897 - - 12,785,897 5,765 - - 185,424 191,189 Other receivable (Note 3) 47,510,207 1,133,334 1,133,261 49,776,802 653,185 11,323 922,641 160,831 1,747,980

Principle Allowance The Impairment under Regulations Governing the Procedures for June 30, 2018 Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 Banking Total Total 12 Months ECL Lifetime ECL Lifetime ECL 12 Months ECL Lifetime ECL Lifetime ECL Institutions to Evaluate Assets and Deal with Nonperforming/ Nonaccrual Loans (Note 1)

Discounts and loans Corporate banking $ 451,234,855 $ 318,178 $ 3,292,971 $ 454,846,004 $ 1,442,592 $ 39,286 $ 857,684 $ 4,227,928 $ 6,567,490 Consumer banking 432,224,158 4,857,440 1,440,260 438,521,858 49,289 133,425 195,387 5,673,568 6,051,669 Receivables Credit card receivable 15,485,271 238,700 954,550 16,678,521 2,408 6,719 64,078 147,316 220,521 Net accounts receivable - factoring (Note 2) 8,419,195 7,345 - 8,426,540 3,866 170 - 117,216 121,252 Other receivable (Note 3) 62,930,111 1,281,103 1,141,625 65,352,839 640,093 4,645 1,054,125 160,873 1,859,736

Note 1: Including provision of Bank SinoPac (China) under local supervision regulations.

Note 2: Accounts receivable - factoring and accounts payable - factoring are offset and presented net.

Note 3: Other receivables include nonperforming receivables transferred from other than loans and long-term lease receivables which are classified as other financial assets.

(Concluded)

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SINOPAC FINANCIAL HOLDINGS COMPANY LIMITED AND INVESTEES

CHANGE IN ALLOWANCE FOR DISCOUNTS AND LOANS FOR THE SIX MONTHS ENDED JUNE 30, 2019 AND 2018 (In Thousands of New Taiwan Dollars)

The Adjustments Under Regulations Governing the Lifetime ECL Procedures for Lifetime ECL Lifetime ECL (Non-purchased Impairment in Banking For the Six Months Ended June 30, 2019 12 Months ECL (Collectively (Individually or Originated Accordance With Total Institutions to Assessed) Assessed) Credit-impaired IFRS 9 Evaluate Assets Financial Assets) and Deal with Nonperforming/ Nonaccrual Loans

Balance, January 1 $ 1,611,473 $ 318,552 $ 5,199 $ 1,036,959 $ 2,972,183 $ 10,115,562 $ 13,087,745 Changes due to financial instruments that have been identified at the beginning of the period: To lifetime ECL (2,435) 249,366 - (41,943) 204,988 - 204,988 From conversion to credit-impaired financial assets (1,300) (59,047) - 287,302 226,955 - 226,955 To 12-month ECL 1,015 (127,918) - (382) (127,285) - (127,285) Derecognizing financial assets during the current period (1,481,517) (188,173) (3,237) (171,507) (1,844,434) - (1,844,434) Purchased or originated new financial assets 1,098,028 2,956 - 108,646 1,209,630 - 1,209,630 The adjustments under regulations governing the procedures for banking institutions to evaluate assets and deal with nonperforming/nonaccrual loans (Note 1) - - - - - 1,383,613 1,383,613 Write-off (Note 2) - - - (225,681) (225,681) - (225,681) Change of model or parameter (37,074) 12,945 (456) (80,843) (105,428) - (105,428) Effect of exchange rate changes and others 6,850 416 45 2,570 9,881 17,695 27,576 Balance, June 30 $ 1,195,040 $ 209,097 $ 1,551 $ 915,121 $ 2,320,809 $ 11,516,870 $ 13,837,679

(Continued)

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The Adjustments Under Regulations Governing the Lifetime ECL Procedures for Lifetime ECL Lifetime ECL (Non-purchased Impairment in Banking For the Six Months Ended June 30, 2018 12 Months ECL (Collectively (Individually or Originated Accordance with Total Institutions to Assessed) Assessed) Credit-impaired IFRS 9 Evaluate Assets Financial Assets) and Deal with Nonperforming/ Nonaccrual Loans

Balance, January 1 $ 1,603,124 $ 436,203 $ 11,143 $ 1,031,971 $ 3,082,441 $ 9,480,439 $ 12,562,880 Changes due to financial instruments that have been identified at the beginning of the period: To lifetime ECL (3,793) 269,879 54 (8,022) 258,118 - 258,118 From conversion to credit-impaired financial assets (2,410) (95,613) - 305,470 207,447 - 207,447 To 12-month ECL 1,262 (86,357) - (1,371) (86,466) - (86,466) Derecognizing financial assets during the current period (1,725,736) (353,715) (11,352) (152,647) (2,243,450) - (2,243,450) Purchased or originated new financial assets 1,609,717 1,754 - 67,164 1,678,635 - 1,678,635 The adjustments under regulations governing the procedures for banking institutions to evaluate assets and deal with nonperforming/nonaccrual loans (Note 1) - - - - - 396,194 396,194 Write-off (Note 2) - - - (192,841) (192,841) - (192,841) Effect of exchange rate changes and others 9,717 560 155 3,347 13,779 24,863 38,642 Balance, June 30 $ 1,491,881 $ 172,711 $ - $ 1,053,071 $ 2,717,663 $ 9,901,496 $ 12,619,159

Note 1: Including provision of Bank SinoPac (China) under local supervision regulations.

Note 2: The amounts to be replenished when the written-off allowance is included.

(Concluded)

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SINOPAC FINANCIAL HOLDINGS COMPANY LIMITED AND INVESTEES

CHANGES IN ALLOWANCE FOR RECEIVABLES FOR THE SIX MONTHS ENDED JUNE 30, 2019 AND 2018 (In Thousands of New Taiwan Dollars)

The Adjustments Under Regulations Governing the Lifetime ECL Procedures for Lifetime ECL (Non-purchased Impairment in Banking For the Six Months Ended June 30, 2019 12 Months ECL (Collectively or Originated Accordance With Total Institutions to Assessed) Credit-impaired IFRS 9 Evaluate Assets Financial Assets) and Deal with Nonperforming/ Nonaccrual Loans

Balance, January 1 $ 662,169 $ 16,521 $ 981,242 $ 1,659,932 $ 499,687 $ 2,159,619 Changes due to financial instruments that have been identified at the beginning of the period: To lifetime ECL (2,733) 11,531 (2,921) 5,877 - 5,877 From conversion to credit-impaired financial assets (7) (5,088) 78,995 73,900 - 73,900 To 12-month ECL 834 (2,958) (24) (2,148) - (2,148) Derecognizing financial assets during the current period (70,978) (2,358) (201,403) (274,739) - (274,739) Purchased or originated new financial assets 110,999 418 813 112,230 - 112,230 The adjustments under regulations governing the procedures for banking institutions to evaluate assets and deal with nonperforming/nonaccrual loans - - - - (59,143) (59,143) Write-off (Note) - (96) (234,768) (234,864) - (234,864) Change of model or parameter (41,336) (192) (27,121) (68,649) - (68,649) Effect of exchange rate changes and others 176,723 136 2,556 179,415 1,239 180,654 Balance, June 30 $ 835,671 $ 17,914 $ 597,369 $ 1,450,954 $ 441,783 $ 1,892,737

(Continued)

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The Adjustments Under Regulations Governing the Lifetime ECL Procedures for Lifetime ECL (Non-purchased Impairment in Banking For the Six Months Ended June 30, 2018 12 Months ECL (Collectively or Originated Accordance With Total Institutions to Assessed) Credit-impaired IFRS 9 Evaluate Assets Financial Assets) and Deal with Nonperforming/ Nonaccrual Loans

Balance, January 1 $ 145,102 $ 13,247 $ 2,200,756 $ 2,359,105 $ 453,111 $ 2,812,216 Changes due to financial instruments that have been identified at the beginning of the period: To lifetime ECL (57) 18,138 (9,399) 8,682 - 8,682 From conversion to credit-impaired financial assets (4,456) (12,086) 272,944 256,402 - 256,402 To 12-month ECL 9,457 (1,086) (9,473) (1,102) - (1,102) Derecognizing financial assets during the current period (57,609) (2,368) (137,919) (197,896) - (197,896) Purchased or originated new financial assets 46,869 3 208 47,080 - 47,080 The adjustments under regulations governing the procedures for banking institutions to evaluate assets and deal with nonperforming/nonaccrual loans - - - - (33,105) (33,105) Write-off (Note) - (767) (1,265,728) (1,266,495) - (1,266,495) Effect of exchange rate changes and others 507,061 (3,547) 66,814 570,328 5,399 575,727 Balance, June 30 $ 646,367 $ 11,534 $ 1,118,203 $ 1,776,104 $ 425,405 $ 2,201,509

Instructions: Receivables include nonperforming receivables transferred from other than loans and long-term lease receivables which are classified as other financial assets.

Note: The amounts to be replenished when the written-off is included.

(Concluded)

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SINOPAC FINANCIAL HOLDINGS COMPANY LIMITED AND INVESTEES

RELATED-PARTY TRANSACTIONS FOR THE SIX MONTHS ENDED JUNE 30, 2019 (In Thousands of New Taiwan Dollars)

Transaction Details % to Nature of Number Consolidated Company Name Counterparty Relationship Payment (Note 1) Financial Statement Accounts Amount Net (Note 2) Terms Revenue/Assets (Note 3)

0 SinoPac Financial Holdings Bank SinoPac a Cash and cash equivalents, net $ 197,161 Note 4 0.01 Bank SinoPac a Receivables, net 1,435,025 Note 4 0.08 Bank SinoPac a Current tax assets 472,429 Note 4 0.03 Bank SinoPac a Other financial assets, net 477,964 Note 4 0.03 Bank SinoPac a Payables 530 Note 4 - Bank SinoPac a Current tax liabilities 1,264,274 Note 4 0.07 SinoPac Securities a Current tax assets 57,030 Note 4 - SinoPac Securities a Current tax liabilities 211,338 Note 4 0.01 SinoPac Securities a Other liabilities 251 Note 4 -

1 Bank SinoPac SinoPac Financial Holdings b Receivables, net 530 Note 4 - SinoPac Financial Holdings b Current tax assets 1,264,274 Note 4 0.07 SinoPac Financial Holdings b Payables 1,435,025 Note 4 0.08 SinoPac Financial Holdings b Current tax liabilities 472,429 Note 4 0.03 SinoPac Financial Holdings b Deposits and remittances 675,125 Note 4 0.04 Bank SinoPac (China) c-1 Receivables, net 100,700 Note 4 0.01 SinoPac Capital Limited c-1 Deposits and remittances 359,128 Note 4 0.02 SinoPac Life Insurance Agent c-1 Receivables, net 131,626 Note 4 0.01 SinoPac Life Insurance Agent c-1 Deposits and remittances 954,750 Note 4 0.05 SinoPac Life Insurance Agent c-1 Commission and fee revenues, net (commission and fee 384,937 Note 4 2.05 revenues) SinoPac Life Insurance Agent c-1 Other noninterest net revenues 1,500 Note 4 0.01 SinoPac Securities c-1 Securities purchased under resell agreements 3,261,222 Note 4 0.18 SinoPac Securities c-1 Receivables, net 5,429 Note 4 - SinoPac Securities c-1 Deposits and remittances 2,891,376 Note 4 0.16 SinoPac Securities c-1 Interest revenue 59,456 Note 4 0.32 SinoPac Futures c-1 Financial assets at fair value through profit or loss 7,726 Note 4 - SinoPac Futures c-1 Other assets, net 307,213 Note 4 0.02 SinoPac Futures c-1 Financial liabilities at fair value through profit or loss 5,522 Note 4 - SinoPac Securities Investment Service c-1 Deposits and remittances 130,478 Note 4 0.01 SinoPac Capital (Asia) c-1 Deposits and remittances 481,269 Note 4 0.03 SinoPac Venture Capital c-1 Deposits and remittances 245,339 Note 4 0.01 SinoPac Leasing c-1 Discounts and loans, net 900,000 Note 4 0.05 SinoPac Leasing c-1 Right-of-use assets, net 54,015 Note 4 - SinoPac Leasing c-1 Lease liabilities 54,885 Note 4 - SinoPac Leasing c-1 Interest expense 2,732 Note 4 0.01 SinoPac Leasing c-1 Depreciation and amortization expense 50,272 Note 4 0.27

(Continued)

- 179 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758

Transaction Details % to Nature of Number Consolidated Company Name Counterparty Relationship Payment (Note 1) Financial Statement Accounts Amount Net (Note 2) Terms Revenue/Assets (Note 3)

2 Bank SinoPac (China) Bank SinoPac c-2 Payables $ 100,700 Note 4 0.01

3 SinoPac Capital Limited Bank SinoPac c-2 Cash and cash equivalents, net 8,527 Note 4 - Bank SinoPac c-2 Other financial assets, net 350,601 Note 4 0.02

4 SinoPac Life Insurance Agent Bank SinoPac c-2 Cash and cash equivalents, net 954,750 Note 4 0.05 Bank SinoPac c-2 Payables 131,626 Note 4 0.01 Bank SinoPac c-2 Commission and fee revenues, net (commission and fee 384,937 Note 4 2.05 expenses) Bank SinoPac c-2 Other operating expenses 1,500 Note 4 0.01

5 SinoPac Securities SinoPac Financial Holdings b Current tax assets 109,341 Note 4 0.01 SinoPac Financial Holdings b Deferred tax assets 102,248 Note 4 0.01 SinoPac Financial Holdings b Current tax liabilities 57,030 Note 4 - Bank SinoPac c-2 Cash and cash equivalents, net 1,366,376 Note 4 0.08 Bank SinoPac c-2 Other financial assets, net 1,525,000 Note 4 0.09 Bank SinoPac c-2 Securities sold under repurchase agreements 3,261,222 Note 4 0.18 Bank SinoPac c-2 Payables 5,429 Note 4 - Bank SinoPac c-2 Interest expense 59,456 Note 4 0.32 SinoPac Futures c-1 Receivables, net 194,881 Note 4 0.01 SinoPac Futures c-1 Financial assets at fair value through profit or loss 540,724 Note 4 0.03

6 SinoPac Futures Bank SinoPac c-2 Other financial liabilities 309,417 Note 4 0.02 SinoPac Securities c-2 Payables 194,881 Note 4 0.01 SinoPac Securities c-2 Other financial liabilities 540,724 Note 4 0.03 SinoPac Securities (Asia) c-1 Other financial assets, net 1,531,646 Note 4 0.09 SinoPac Securities (Asia) c-1 Other financial liabilities 168,447 Note 4 0.01

7 SinoPac Securities Investment Service Bank SinoPac c-2 Cash and cash equivalents, net 65,478 Note 4 - Bank SinoPac c-2 Other financial assets, net 65,000 Note 4 -

8 SinoPac Securities (Cayman) SinoPac Securities (Asia) c-1 Receivables, net 932,380 Note 4 0.05

9 SinoPac Securities (Asia) SinoPac Futures c-2 Other financial assets, net 168,447 Note 4 0.01 SinoPac Futures c-2 Other financial liabilities 1,531,646 Note 4 0.09 SinoPac Securities (Cayman) c-2 Non-current portion of non-current borrowings 932,380 Note 4 0.05

10 SinoPac Capital (Asia) Bank SinoPac c-2 Cash and cash equivalents, net 481,269 Note 4 0.03

11 SinoPac Venture Capital Bank SinoPac c-2 Cash and cash equivalents, net 72,101 Note 4 - Bank SinoPac c-2 Other financial assets, net 173,238 Note 4 0.01

12 SinoPac Leasing Bank SinoPac c-2 Non-current portion of non-current borrowings 900,000 Note 4 0.05 Bank SinoPac c-2 Other noninterest net revenues 52,134 Note 4 0.28

(Continued)

- 180 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 Note 1: The parent company and subsidiaries are identified as follows:

a. Parent company: 0. b. Subsidiaries are numbered in sequence from 1.

Note 2: Flow of transactions with related parties is as follows:

a. From parent company to subsidiary b. From subsidiary to parent company. c-1. Subsidiary A to subsidiary B. c-2. Subsidiary B to subsidiary A.

On the above transaction between parent company and subsidiaries, category a and c-1 of the related - party will post on the XBRL based on the Taiwan Stock Exchange under letter No. 1030005380.

Note 3: In the computation of percentage of revenue/assets, if the amount is the ending balance of assets or liabilities, the accounts percentage will be the balance dividing the consolidated assets; if the amount is income or expense, the accounts percentage will be the amount dividing by the consolidated net revenues in the same year.

Note 4: On the transactions between the Company and related parties, the terms were similar to those for unrelated parties.

(Concluded)

- 181 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 TABLE 11

SINOPAC FINANCIAL HOLDINGS COMPANY LIMITED

BALANCE SHEETS JUNE 30, 2019, DECEMBER 31, 2018 AND JUNE 30, 2018 (In Thousands of New Taiwan Dollars)

December 31, December 31, ASSETS June 30, 2019 2018 June 30, 2018 LIABILITIES AND EQUITY June 30, 2019 2018 June 30, 2018

CASH AND CASH EQUIVALENTS $ 197,166 $ 66,730 $ 83,897 COMMERCIAL PAPERS ISSUED, NET $ 13,216,576 $ 20,244,412 $ 20,955,766

FINANCIAL ASSETS AT FAIR VALUE THROUGH PAYABLES 7,249,202 100,000 5,596,015 OTHER COMPREHENSIVE INCOME 16,336 16,066 20,459 CURRENT TAX LIABILITIES 2,270,087 2,224,730 2,143,807 SECURITIES PURCHASED UNDER RESELL AGREEMENTS 498,934 - - PREFERRED STOCK LIABILITIES 18,437 18,437 18,437

RECEIVABLES, NET 1,451,637 1,452,024 7,839,409 PROVISIONS 14,647 15,657 13,414

CURRENT TAX ASSETS 742,106 771,828 683,530 LEASE LIABILITIES 12,529 - -

INVESTMENT ACCOUNTED FOR USING THE EQUITY OTHER LIABILITIES 13,601 293 296 METHOD, NET 162,405,465 161,010,311 157,105,986 Total liabilities 22,795,079 22,603,529 28,727,735 OTHER FINANCIAL ASSETS, NET 477,964 962,383 974,742 EQUITY PROPERTIES AND EQUIPMENT, NET 10,377 11,913 13,529 Capital Common shares 112,710,541 112,710,541 110,500,530 RIGHT-OF-USE ASSETS, NET 12,506 - - Reserve for capitalization - - 2,210,011 Total capital 112,710,541 112,710,541 112,710,541 INTANGIBLE ASSETS, NET 1,304 972 1,220 Capital surplus 2,228,771 2,228,771 2,228,771 Retained earnings DEFERRED TAX ASSETS 1,789 82,426 76,984 Legal reserve 17,951,839 17,008,997 17,008,997 Special reserve 849,362 503,729 503,729 OTHER ASSETS, NET 38,688 46,863 35,444 Unappropriated earnings 7,721,112 9,731,492 5,208,870 Total retained earnings 26,522,313 27,244,218 22,721,596 Other equity 1,597,568 (365,543) 446,557

Total equity 143,059,193 141,817,987 138,107,465

TOTAL $ 165,854,272 $ 164,421,516 $ 166,835,200 TOTAL $ 165,854,272 $ 164,421,516 $ 166,835,200

- 182 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 TABLE 12

SINOPAC FINANCIAL HOLDINGS COMPANY LIMITED

STATEMENTS OF COMPREHENSIVE INCOME FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2019 AND 2018 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

For the Three Months Ended For the Six Months Ended June 30 June 30 2019 2018 2019 2018

REVENUES Share of the profit of subsidiaries and associates $ 2,934,546 $ 2,227,380 $ 6,777,983 $ 4,925,295 Others 36,365 16,651 72,828 40,662

EXPENSES AND LOSSES Operating expenses (81,235) (63,070) (150,515) (122,949) Others (78,286) (53,430) (123,052) (89,032)

INCOME BEFORE INCOME TAX 2,811,390 2,127,531 6,577,244 4,753,976

INCOME TAX (EXPENSE) BENEFIT (13,416) (7,332) (24,273) 5,492

NET INCOME 2,797,974 2,120,199 6,552,971 4,759,468

OTHER COMPREHENSIVE INCOME (LOSS) FOR THE PERIOD 698,572 390,379 1,856,625 (37,183)

TOTAL COMPREHENSIVE INCOME $ 3,496,546 $ 2,510,578 $ 8,409,596 $ 4,722,285

BASIC EARNINGS PER SHARE $0.25 $0.19 $0.58 $0.42

DILUTED EARNINGS PER SHARE $0.25 $0.19 $0.58 $0.42

- 183 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 TABLE 13

SINOPAC FINANCIAL HOLDINGS COMPANY LIMITED

STATEMENTS OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED JUNE 30, 2019 AND 2018 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Other Equity Change in Fair Unrealized Gain Value of (Loss) on Financial Exchange Unrealized Gains Financial Assets Liabilities Differences on (Losses) on at Fair Value Attributable to Capital Retained Earnings Translating Available-for- through Other Changes in the Reserve for Unappropriated Foreign sale Financial Comprehensive Credit Risk Common Shares Capitalization Total Capital Surplus Legal Reserve Special Reserve Earnings Total Operations Assets Income Of Liabilities Total Total Equity

BALANCE AT JANUARY 1, 2018 $ 110,500,530 $ - $ 110,500,530 $ 2,228,771 $ 16,114,109 $ 483,818 $ 8,948,881 $ 25,546,808 $ (683,250 ) $ 683,510 $ - $ (20,170 ) $ (19,910 ) $ 138,256,199

Effect of retrospective application and retrospective restatement ------126,702 126,702 - (683,510 ) 1,210,815 - 527,305 654,007

BALANCE AT JANUARY 1, 2018 AS RESTATED 110,500,530 - 110,500,530 2,228,771 16,114,109 483,818 9,075,583 25,673,510 (683,250 ) - 1,210,815 (20,170 ) 507,395 138,910,206

Appropriation and distribution of retained earnings generated in 2017 Legal reserve - - - - 894,888 - (894,888 ) ------Special reserve - - - - - 19,911 (19,911 ) ------Cash dividends - common share ------(5,525,026 ) (5,525,026 ) - - - - - (5,525,026 ) Stock dividends - common share - 2,210,011 2,210,011 - - - (2,210,011 ) (2,210,011 ) ------

Net profit for the six months ended June 30, 2018 ------4,759,468 4,759,468 - - - - - 4,759,468

Other comprehensive income for the six months ended June 30, 2018, net of income tax ------13,680 13,680 (23,009 ) - (44,804 ) 16,950 (50,863 ) (37,183 )

Total comprehensive income for the six months ended June 30, 2018 ------4,773,148 4,773,148 (23,009 ) - (44,804 ) 16,950 (50,863 ) 4,722,285

Disposal of equity instruments at fair value through other comprehensive income ------9,975 9,975 - - (9,975 ) - (9,975 ) -

BALANCE AT JUNE 30, 2018 $ 110,500,530 $ 2,210,011 $ 112,710,541 $ 2,228,771 $ 17,008,997 $ 503,729 $ 5,208,870 $ 22,721,596 $ (706,259 ) $ - $ 1,156,036 $ (3,220 ) $ 446,557 $ 138,107,465

BALANCE AT JANUARY 1, 2019 $ 112,710,541 $ - $ 112,710,541 $ 2,228,771 $ 17,008,997 $ 503,729 $ 9,731,492 $ 27,244,218 $ (909,745 ) $ - $ 552,038 $ (7,836 ) $ (365,543 ) $ 141,817,987

Appropriation and distribution of retained earnings generated in 2018 Legal reserve - - - - 942,842 - (942,842 ) ------Special reserve - - - - - 345,633 (345,633 ) ------Cash dividends - common share ------(7,168,390 ) (7,168,390 ) - - - - - (7,168,390 )

Net profit for the six months ended June 30, 2019 ------6,552,971 6,552,971 - - - - - 6,552,971

Other comprehensive income for the six months ended June 30, 2019, net of income tax ------182,116 - 1,733,686 (59,177 ) 1,856,625 1,856,625

Total comprehensive income for the six months ended June 30, 2019 ------6,552,971 6,552,971 182,116 - 1,733,686 (59,177 ) 1,856,625 8,409,596

Disposal of equity instruments at fair value through other comprehensive income ------(106,486 ) (106,486 ) - - 106,486 - 106,486 -

BALANCE AT JUNE 30, 2019 $ 112,710,541 $ - $ 112,710,541 $ 2,228,771 $ 17,951,839 $ 849,362 $ 7,721,112 $ 26,522,313 $ (727,629 ) $ - $ 2,392,210 $ (67,013 ) $ 1,597,568 $ 143,059,193

- 184 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 TABLE 14

SINOPAC FINANCIAL HOLDINGS COMPANY LIMITED

STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2019 AND 2018 (In Thousands of New Taiwan Dollars)

For the Six Months Ended June 30 2019 2018

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax $ 6,577,244 $ 4,753,976 Adjustments for: Depreciation expenses 11,234 1,959 Amortization expenses 205 207 Interest expense 77,361 69,919 Interest income (16,042) (16,194) Dividend revenues (1,076) (974) Net change in other provisions 18 19 Share of the profit of subsidiaries and associates (6,777,983) (4,925,295) Losses on disposal and retirement of property and equipment 6 - Changes in operating assets and liabilities (Increase) decrease in receivables (558) 58,314 Decrease (increase) in other financial assets 509,664 (38,438) Decrease in other assets 9,095 10,059 Decrease in payables (19,723) (5,878) (Decrease) increase in provisions for employee benefits (1,028) 620 Increase in other liabilities - 3 Interest received 17,142 16,340 Dividend received 7,172,324 38,774 Interest paid (76,417) (69,383) Income tax refunded 144,752 29,418

Net cash generated from (used in) operating activities 7,626,218 (76,554)

CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from disposal of investment accounted for using the equity method 66,859 - Acquisition of properties and equipment (513) (1,266) Acquisition of intangible assets (537) (252)

Net cash generated from (used in)investing activities 65,809 (1,518)

CASH FLOWS FROM FINANCING ACTIVITIES (Decrease) increase in commercial papers payable (7,027,836) 94,206 Payments of lease liabilities (9,577) -

Net cash generated from (used in) financing activities (7,037,413) 94,206 (Continued)

- 185 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758

For the Six Months Ended June 30 2019 2018

EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH HELD IN FOREIGN CURRENCIES $ (25,244) $ 19,664

NET INCREASE IN CASH AND CASH EQUIVALENTS 629,370 35,798

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD 66,730 48,099

CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD $ 696,100 $ 83,897

Reconciliation of the amounts in the statements of cash flows with the equivalent items reported in the consolidated balance sheets as of June 30, 2019 and 2018:

June 30 2019 2018

Cash and cash equivalents in balance sheets $ 197,166 $ 83,897 Securities purchased under resell agreements reclassified as cash and cash equivalents under IAS 7 “Statement of Cash Flows” 498,934 - Cash and cash equivalents in statements of cash flows $ 696,100 $ 83,897

(Concluded)

- 186 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 TABLE 15-1

Bank SinoPac

Balance Sheets June 30, 2019, December 31, 2018 and June 30, 2018 (In Thousands of New Taiwan Dollars)

December 31, December 31, Assets June 30, 2019 2018 June 30, 2018 Liabilities June 30, 2019 2018 June 30, 2018

Cash and cash equivalents $ 20,214,782 $ 17,972,121 $ 19,213,090 Deposits from the Central Bank and banks $ 48,592,052 $ 34,516,489 $ 52,526,820 Due from the Central Bank and call loan to banks 107,535,057 79,274,753 79,059,015 Financial liabilities at fair value through profit or loss 16,216,736 19,736,645 22,376,276 Financial assets at fair value through profit or loss 59,119,511 49,067,904 64,250,949 Securities sold under repurchase agreements 14,961,242 25,504,487 28,570,603 Financial assets at fair value through other Payables 19,276,669 17,287,085 23,109,615 comprehensive income 209,695,360 202,686,642 231,196,919 Current tax liabilities 588,806 313,380 330,128 Investments in debt instruments measured at amortized Deposits and remittances 1,325,065,121 1,181,910,731 1,130,983,016 cost 113,134,428 93,539,468 78,411,727 Bank debentures 37,221,383 32,722,483 39,720,764 Securities purchased under resell agreements 16,777,698 22,710,233 22,312,476 Other financial liabilities 14,283,232 17,012,828 13,328,168 Receivables, net 46,603,656 48,029,606 46,483,436 Provisions 2,773,133 2,940,932 2,860,732 Current tax assets 1,359,971 1,383,034 1,361,553 Lease liabilities 1,721,703 - - Discounts and loans, net 996,954,207 904,614,979 860,376,000 Deferred tax liabilities 950,118 863,378 778,720 Investments measured by equity method 11,070,709 11,992,507 11,752,650 Other liabilities 3,231,057 3,047,751 3,587,766 Other financial assets, net 14,805,482 16,994,235 10,814,654 Total liabilities 1,484,881,252 1,335,856,189 1,318,172,608 Property and equipment, net 8,807,512 8,715,556 8,777,461 Right-of-use assets, net 1,741,281 - - Equity Investment property, net 1,177,706 1,287,894 1,266,327 Intangible assets, net 1,296,418 1,231,227 1,234,522 Capital 86,061,159 86,061,159 86,061,159 Deferred tax assets 1,359,493 1,448,513 1,495,458 Capital surplus 12,147,640 12,147,640 12,147,640 Other assets, net 2,757,672 3,989,216 4,791,598 Retained earnings 29,924,097 30,903,534 26,016,783 Other equity 1,396,795 (30,634) 399,645 Total equity 129,529,691 129,081,699 124,625,227

Total $ 1,614,410,943 $ 1,464,937,888 $ 1,442,797,835 Total $ 1,614,410,943 $ 1,464,937,888 $ 1,442,797,835 (Continued)

- 187 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 Bank SinoPac

Statements of Comprehensive Income For the Three Months and Six Months Ended June 30, 2019 and 2018 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

For the Three Months Ended For the Six Months Ended June 30 June 30 2019 2018 2019 2018

Interest revenue $ 7,478,185 $ 6,395,967 $ 14,585,335 $ 12,470,464 Interest expense (4,048,942) (2,856,785) (7,680,164) (5,465,203) Net interest 3,429,243 3,539,182 6,905,171 7,005,261 Net revenues other than interest 3,221,629 2,614,737 7,002,834 4,637,636 Total net revenues 6,650,872 6,153,919 13,908,005 11,642,897 Bad debts expense, commitment and guarantee liability provision (502,540) (78,611) (777,662) (2,176) Operating expenses (3,309,479) (3,099,687) (6,722,861) (6,211,077) Income before income tax 2,838,853 2,975,621 6,407,482 5,429,644 Income tax expense (307,307) (324,439) (756,225) (651,496) Net income 2,531,546 2,651,182 5,651,257 4,778,148 Other comprehensive income (loss) 557,864 11,128 1,427,429 (318,701)

Total comprehensive income for the period $ 3,089,410 $ 2,662,310 $ 7,078,686 $ 4,459,447

Basic earnings per share $0.29 $0.31 $0.66 $0.56

(Concluded)

- 188 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 TABLE 15-2

SinoPac Securities Corporation

Balance Sheets June 30, 2019, December 31, 2018 and June 30, 2018 (In Thousands of New Taiwan Dollars)

December 31, Assets June 30, 2019 2018 June 30, 2018

Current assets $ 75,378,866 $ 65,055,869 $ 86,382,040 Financial assets at fair value through other comprehensive income - non-current 3,791,291 3,221,357 4,333,712 Investments accounted for using the equity method 6,351,404 6,253,545 6,157,804 Property and equipment, net 1,872,427 1,886,221 1,888,705 Investment properties, net 370,009 371,727 368,584 Right-of-use assets, net 363,314 - - Intangible assets 519,329 557,623 583,984 Deferred tax assets 486,385 492,082 460,094 Other noncurrent assets 1,367,927 1,370,658 1,378,604

Total $ 90,500,952 $ 79,209,082 $ 101,553,527

Liabilities

Current liabilities $ 60,105,255 $ 49,825,765 $ 72,091,309 Deferred tax liabilities 113,633 117,271 110,439 Other noncurrent liabilities 3,596,423 3,390,734 3,354,410 Total liabilities 63,815,311 53,333,770 75,556,158

Equity

Share capital 16,212,238 16,212,238 16,212,238 Capital surplus 476,766 476,766 476,766 Retained earnings 9,646,126 9,395,186 9,155,138 Other equity 350,511 (208,878) 153,227 Total equity 26,685,641 25,875,312 25,997,369

Total $ 90,500,952 $ 79,209,082 $ 101,553,527 (Continued)

- 189 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 SinoPac Securities Corporation

Statements of Comprehensive Income For the Three Months and Six Months Ended June 30, 2019 and 2018 (In Thousands of New Taiwan Dollars)

For the Three Months Ended For the Six Months Ended June 30 June 30 2019 2018 2019 2018

Revenues $ 1,738,457 $ 1,281,159 $ 3,255,206 $ 2,879,543 Commission fees (66,362) (92,340) (125,270) (169,676) Employee benefits expenses (790,836) (719,174) (1,601,613) (1,458,346) Share of income (loss) of subsidiaries for using equity method 98,339 (28,974) 244,205 6,093 Other operating expenditure (201,995) (165,634) (364,821) (327,344) Other operating expense (385,719) (379,979) (728,900) (726,629) Other gains and losses 48,863 4,007 103,547 42,529 Income (loss) before income tax 440,747 (100,935) 782,354 246,170 Income tax benefit (expense) (30,357) 19,312 25,227 (24,246) Net income (loss) 410,390 (81,623) 807,581 221,924 Other comprehensive income 245,925 253,834 452,903 193,942

Total comprehensive income for the period $ 656,315 $ 172,211 $ 1,260,484 $ 415,866

Basic earnings per share $(0.25) $(0.05) $0.50 $0.14

(Concluded)

- 190 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 TABLE 15-3

SinoPac Call Center Co., Ltd. (Note)

Balance Sheets December 31, 2018 and June 30, 2018 (In Thousands of New Taiwan Dollars)

December 31, Assets 2018 June 30, 2018

Current assets $ 91,036 $ 91,764 Property and equipment, net 8,340 8,993 Intangible assets 8,738 6,284 Other assets 1,268 938

Total $ 109,382 $ 107,979

Liabilities

Current liabilities $ 29,751 $ 33,359 Other liabilities 3,165 1,133 Total liabilities 32,916 34,492

Equity

Share capital 40,000 40,000 Capital surplus 987 987 Retained earnings 35,479 32,500 Total equity 76,466 73,487

Total $ 109,382 $ 107,979 (Continued)

- 191 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 SinoPac Call Center Co., Ltd.

Statements of Comprehensive Income For the One Months Ended April 30, 2019, for the Three Months Ended June 30, 2018, for the Four Months Ended April 30, 2019 and for the Six Months Ended June 30, 2018 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

For the One For the Three For the Four For the Six Month Ended Months Ended Months Ended Months Ended April 30, 2019 June 30, 2018 April 30, 2019 June 30, 2018

Operating revenues $ 12,604 $ 37,913 $ 49,358 $ 76,586 Operating costs and expenses (14,784) (32,850) (49,050) (66,694) Operating income (loss) (2,180) 5,063 308 9,892 Nonoperating income and gains 520 509 970 1,021 Nonoperating expenses and losses - - (116) (128) Income (loss) before income tax (1,660) 5,572 1,162 10,785 Income tax (expense) benefit 281 (1,153) (283) (2,134) Net income (loss) (1,379) 4,419 879 8,651 Other comprehensive income - 38 - 21

Total comprehensive income for the period $ (1,379) $ 4,457 $ 879 $ 8,672

Basic earnings per share $1.10 $2.16

Note: The board of directors of the Company approved that Bank SinoPac cash merged SinoPac Call Center in December 2018. Under this merger, SinoPac Call Center will be the dissolved company. The acquisition date was May 1, 2019; therefore, there was no balance in the balance sheet on June 30, 2019.

(Concluded)

- 192 - WorldReginfo - f50b66db-086f-413a-b90d-1910768d0758 TABLE 15-4

SinoPac Venture Capital Corporation

Balance Sheets June 30, 2019, December 31, 2018 and June 30, 2018 (In Thousands of New Taiwan Dollars)

December 31, Assets June 30, 2019 2018 June 30, 2018

Current assets $ 659,629 $ 587,900 $ 875,763 Financial assets at fair value through profit or loss 1,829,472 1,640,342 1,955,250 Financial assets at fair value through other comprehensive income 303,268 380,066 341,476 Investments accounted for using the equity method 108,308 105,013 105,148 Property and equipment, net 6,791 7,602 111 Right-of-use assets, net 9,909 - - Other assets 48,996 53,740 12,848

Total $ 2,966,373 $ 2,774,663 $ 3,290,596

Liabilities

Payables $ 25,197 $ 15,745 $ 60,331 Lease liabilities 9,935 - - Other liabilities 10,932 11,674 11,063 Total liabilities 46,064 27,419 71,394

Equity

Share capital 2,500,000 2,200,000 2,200,000 Capital surplus 1,892 1,892 1,892 Retained earnings 640,175 695,318 1,047,332 Other equity (221,758) (149,966) (30,022) Total equity 2,920,309 2,747,244 3,219,202

Total $ 2,966,373 $ 2,774,663 $ 3,290,596 (Continued)

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Statements of Comprehensive Income For the Three Months and Six Months Ended June 30, 2019 and 2018 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

For the Three Months Ended For the Six Months Ended June 30 June 30 2019 2018 2019 2018

Operating revenues $ 33,616 $ (1,434) $ 277,085 $ 176,083 Operating expenses (6,592) (7,217) (13,796) (13,843) Operating income (loss) 27,024 (8,651) 263,289 162,240 Nonoperating income and (expenses) 2,571 13,037 3,697 8,995 Income before income tax 29,595 4,386 266,986 171,235 Income tax expense (15,251) (3,975) (22,129) (4,100) Net income 14,344 411 244,857 167,135 Other comprehensive income (103,114) 8,327 (71,792) 8,927

Total comprehensive income (loss) for the period $ (88,770) $ 8,738 $ 173,065 $ 176,062

Basic earnings per share $ 0.07 $ - $ 1.11 $ 0.76

(Concluded)

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SinoPac Securities Investment Trust Co., Ltd.

Balance Sheets June 30, 2019, December 31, 2018 and June 30, 2018 (In Thousands of New Taiwan Dollars)

December 31, Assets June 30, 2019 2018 June 30, 2018

Current assets $ 973,616 $ 1,091,839 $ 1,109,826 Financial asset at fair value through profit or loss 24,629 386 591 Investments accounted for using the equity method 419,657 389,410 347,843 Property and equipment, net 2,754 3,158 3,280 Right-of-use assets, net 65,004 - - Intangible assets 2,289 2,069 2,076 Other assets 147,933 171,736 159,906

Total $ 1,635,882 $ 1,658,598 $ 1,623,522

Liabilities

Current and noncurrent liabilities $ 120,690 $ 75,381 $ 82,895

Equity

Share capital 1,420,000 1,420,000 1,420,000 Capital surplus 844 844 844 Retained earnings 118,033 189,798 137,599 Other equity (23,685) (27,425) (17,816) Total equity 1,515,192 1,583,217 1,540,627

Total $ 1,635,882 $ 1,658,598 $ 1,623,522 (Continued)

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Statements of Comprehensive Income For the Three Months and Six Months Ended June 30, 2019 and 2018 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

For the Three Months Ended For the Six Months Ended June 30 June 30 2019 2018 2019 2018

Operating revenues $ 52,076 $ 72,836 $ 107,223 $ 138,228 Operating expenses (56,876) (74,018) (114,958) (136,245) Operating (loss) income (4,800) (1,182) (7,735) 1,983 Share of profit of associates accounted for using the equity method 12,391 11,962 26,506 42,696 Nonoperating income and gains 2,228 1,795 4,197 8,720 Nonoperating expenses and losses (17,894) (2) (18,077) (4,032) Income (loss) before income tax (8,075) 12,573 4,891 49,367 Income tax benefit (expense) 4,095 (122) 4,333 (1,540) Net income (loss) (3,980) 12,451 9,224 47,827 Other comprehensive income (5,574) (4,036) 3,740 1,013

Total comprehensive income (loss) for the period $ (9,554) $ 8,415 $ 12,964 $ 48,840

Basic earnings per share $ (0.03) $ 0.09 $ 0.06 $ 0.34

(Concluded)

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SinoPac Leasing Corporation

Balance Sheets June 30, 2019, December 31, 2018 and June 30, 2018 (In Thousands of New Taiwan Dollars)

December 31, Assets June 30, 2019 2018 June 30, 2018

Current assets $ 1,571,627 $ 1,686,895 $ 1,096,378 Financial assets measured at amortised cost - 140,165 1,027,005 Investments accounted for using the equity method 5,447,795 5,220,423 5,146,854 Property and equipment, net 81,951 87,560 84,750 Right-of-use assets, net 15,347 - - Investment properties, net 5,938,828 4,916,904 4,948,481 Intangible assets 6,961 4,096 4,354 Deferred tax assets 196,690 184,539 170,538 Other noncurrent assets 406,596 961,221 2,062,593

Total $ 13,665,795 $ 13,201,803 $ 14,540,953

Liabilities

Current liabilities $ 3,774,387 $ 2,351,888 $ 1,303,835 Current tax liabilities 21,158 89,539 102,761 Long-term borrowings 4,034,517 5,476,169 7,881,401 Lease liabilities 398,921 - - Deferred tax liabilities 564,796 523,751 501,171 Other noncurrent liabilities 426,131 420,849 408,477 Total liabilities 9,219,910 8,862,196 10,197,645

Equity

Share capital 4,681,044 4,681,044 4,681,044 Capital surplus 1,498 1,498 1,498 Retained earnings (191,214) (253,417) (264,937) Other equity (45,443) (89,518) (74,297) Total equity 4,445,885 4,339,607 4,343,308

Total $ 13,665,795 $ 13,201,803 $ 14,540,953 (Continued)

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Statements of Comprehensive Income For the Three Months and Six Months Ended June 30, 2019 and 2018 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

For the Three Months Ended For the Six Months Ended June 30 June 30 2019 2018 2019 2018

Operating revenues $ 87,908 $ 102,860 $ 175,418 $ 209,460 Operating costs (70,588) (77,266) (138,710) (153,919) Operating expenses (145,536) (535,219) (173,685) (551,044) Operating loss (128,216) (509,625) (136,977) (495,503) Nonoperating income and (expenses) 109,606 63,387 219,972 220,359 Income (loss) before income tax (18,610) (446,238) 82,995 (275,144) Income tax (expense) benefit 1,583 86,778 (20,792) (23,246) Net income (loss) (17,027) (359,460) 62,203 (298,390) Other comprehensive income (loss) 4,158 119,031 44,075 75,609

Total comprehensive income (loss) for the period $ (12,869) $ (240,429) $ 106,278 $ (222,781)

Basic earnings per share $ (0.04) $ 0.77 $ 0.13 $ 0.64

(Concluded)

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SINOPAC FINANCIAL HOLDINGS COMPANY LIMITED AND INVESTEES

SPECIFIC RISK FROM FUTURES DEALING AND STATUS OF COMPLIANCE BY FUTURES COMMISSION MERCHANT - SUBSIDIARIES WITH FINANCIAL RATIOS AND LIMITATION REQUIREMENTS JUNE 30, 2019, DECEMBER 31, 2018 AND JUNE 30, 2018 (In Thousands of New Taiwan Dollars)

1. Futures dealing

SinoPac Securities and its subsidiaries pay margin deposits when entering into futures contracts. SinoPac Securities and its subsidiaries also pay margin deposits for short option contracts. The margin account of SinoPac Securities and its subsidiaries are reevaluated on the basis of the market prices of the outstanding futures and option contracts. If the margin is less than the maintenance level, SinoPac Securities and its subsidiaries should either deposit additional margin or write off the contracts.

As of June 30, 2019, December 31, 2018 and June 30, 2018, the contract amount and fair value of the outstanding futures and options held by customers of SinoPac Securities and its subsidiaries were as follows:

June 30, 2019 Contract Amount/ Opening Position Premium Paid Item Instrument Type Long/Short Volume (Received) Fair Value

Futures Stock index futures contracts Long 66 $ 126,046 $ 126,466 Single stock futures contracts Long 587 138,891 141,448 Foreign exchange futures contracts Long 59 113,701 113,620 Commodity futures contracts Long 9 4,253 4,251 Interest futures contracts Long 2 10,910 11,030 Stock index futures contracts Short 927 1,022,857 1,029,114 Single stock futures contracts Short 1,946 476,769 488,359 Foreign exchange futures contracts Short 123 115,253 115,078 Commodity futures contracts Short 156 299,118 301,693 Interest futures contracts Short 121 678,198 684,904 Options Options - call Long 112 468 432 Options - put Long 165 797 564 Options - call Short 30 (200) (183) Options - put Short 36 (230) (234)

December 31, 2018 Contract Amount/ Opening Position Premium Paid Item Instrument Type Long/Short Volume (Received) Fair Value

Futures Stock index futures contracts Long 29 $ 54,383 $ 54,486 Single stock futures contracts Long 614 76,768 75,140 Foreign exchange futures contracts Long 34 88,639 90,211 Commodity futures contracts Long 8 14,407 14,402 Stock index futures contracts Short 671 570,372 565,798 Single stock futures contracts Short 1,157 313,128 311,984 Commodity futures contracts Short 70 120,177 119,857 Interest futures contracts Short 74 359,492 367,246 Options Options - put Long 455 1,172 671 Options - put Short 10 (94) (68) (Continued)

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June 30, 2018 Contract Amount/ Opening Position Premium Paid Item Instrument Type Long/Short Volume (Received) Fair Value

Futures Stock index futures contracts Long 63 $ 179,003 $ 179,052 Single stock futures contracts Long 1,365 255,592 254,099 Foreign exchange futures contracts Long 426 684,865 690,739 Commodity futures contracts Long 321 146,692 144,033 Interest futures contracts Long 2 8,792 8,833 Stock index futures contracts Short 4,472 3,504,925 3,501,707 Single stock futures contracts Short 3,167 575,700 558,953 Foreign exchange futures contracts Short 814 689,996 697,387 Commodity futures contracts Short 222 527,832 546,631 Interest futures contracts Short 93 441,698 445,159 Options Options - put Long 184 625 653 Options - put Short 30 (253) (296)

The fair value of each contract of futures and option as of the balance sheet date was based on the closing price of the last trading day on June 30, 2019, December 31, 2018 and June 30, 2018 multiplied by the number of open contracts and calculated with each contract of futures and option respectively.

2. Futures brokering

Customers pay margin deposits when entering into futures transactions and short option contracts. Customers gain or lose a lot on the leverage resulting from the margin deposits. For the protection SinoPac Futures and SinoPac Securities (Asia) from harm arising from customers’ huge losses, the margin accounts of customers are reevaluated daily on the basis of the market prices of the outstanding futures and option contracts. SinoPac Futures and SinoPac Securities (Asia) will inform customers immediately to put in additional margin deposits when their margin accounts fall below an agreed level (the “maintenance margin”). If the customers fail to do so, SinoPac Futures and SinoPac Securities (Asia) settle their position by writing off the contracts.

As of June 30, 2019, December 31, 2018 and June 30, 2018, the outstanding futures and options held by customers of SinoPac Futures and SinoPac Securities (Asia) were as follows:

December 31, June 30, 2019 2018 June 30, 2018

Futures - carrying value $ 13,823,189 $ 38,406,193 $ 40,130,027 - unrealized gains (losses) from outstanding contracts (444,937) 698,666 3,145,002 Options - market value of long options 127,239 94,481 172,337 - market value of short options (87,160) (78,576) (153,365) Customers’ margin accounts 19,683,314 16,259,506 17,776,164 (Continued)

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The term “discretionary futures trading” refers to a managed futures enterprise accepting commissions from specified persons and performing analyses and making judgments on futures trading in order to execute futures trading operations on behalf of, and with trading funds consigned by, the principal. Before engaging in consignments with the Management Department of SinoPac Futures for discretionary futures trading, principals should note these characteristics of futures transactions: Low margin and high finance-leverage. Because of these characteristics, principals could earn high profits or suffer serious losses. Thus, principals should be closely considered in evaluating the various factors affecting futures trading before actually making the trade. Discretionary futures trading are not risk-free transactions, and the Management Department of SinoPac Futures will not use a past trading performance to guarantee minimum profitability.

4. As of June 30, 2019, December 31, 2018 and June 30, 2018, all financial ratios of SinoPac Securities - futures department and SinoPac Futures are in compliance with Criteria Governing the Preparation of Financial Reports by Futures Commission Merchants, summarized as follows:

a. SinoPac Securities - futures department

June 30, 2019 Calculation Formula Equation Ratios Benchmark Conclusion

1) Equity $927,357 ＝762.63 ≧1 Conformity Total liabilities less futures trader’s $1,216 equity

2) Current assets $917,877 ＝1,642.00 ≧1 Conformity Current liabilities $559

3) Equity $927,357 ＝232% ≧60% Conformity Minimum paid-in capital $400,000 ≧40%

4) Adjusted net capital $917,129 ＝13,246% ≧20% Conformity Amount of customers’ margin $6,924 ≧15% accounts for open position of futures customers

December 31, 2018 Calculation Formula Equation Ratios Benchmark Conclusion

1) Equity $934,570 ＝1,034.96 ≧1 Conformity Total liabilities less futures trader’s $903 equity

2) Current assets $925,381 ＝4,344.51 ≧1 Conformity Current liabilities $213

3) Equity $934,570 ＝234% ≧60% Conformity Minimum paid-in capital $400,000 ≧40%

4) Adjusted net capital $928,692 ＝113,532% ≧20% Conformity Amount of customers’ margin $818 ≧15% accounts for open position of futures customers (Continued)

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June 30, 2018 Calculation Formula Equation Ratios Benchmark Conclusion

1) Equity $936,435 ＝724.23 ≧1 Conformity Total liabilities less futures trader’s $1,293 equity

2) Current assets $927,517 ＝1,662.22 ≧1 Conformity Current liabilities $558

3) Equity $936,435 ＝234% ≧60% Conformity Minimum paid-in capital $400,000 ≧40%

4) Adjusted net capital $911,396 ＝2,202% ≧20% Conformity Amount of customers’ margin $41,385 ≧15% accounts for open position of futures customers b. SinoPac Futures

June 30, 2019 Calculation Formula Equation Ratios Benchmark Conclusion

1) Equity $2,448,533 ＝7.49 ≧1 Conformity Total liabilities less futures $327,025 trader’s equity

2) Current assets $21,768,166 ＝1.09 ≧1 Conformity Current liabilities $19,880,144

3) Equity $2,448,533 ＝342% ≧60% Conformity Minimum paid-in capital $715,000 ≧40%

4) Adjusted net capital $2,233,510 ＝48% ≧20% Conformity Amount of customers’ margin $4,680,324 ≧15% accounts for open position of futures customers (Continued)

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December 31, 2018 Calculation Formula Equation Ratios Benchmark Conclusion

1) Equity $2,464,274 ＝14.27 ≧1 Conformity Total liabilities less futures $172,732 trader’s equity

2) Current assets $18,276,377 ＝1.12 ≧1 Conformity Current liabilities $16,368,492

3) Equity $2,464,274 ＝345% ≧60% Conformity Minimum paid-in capital $715,000 ≧40%

4) Adjusted net capital $2,269,751 ＝65% ≧20% Conformity Amount of customers’ margin $3,517,801 ≧15% accounts for open position of futures customers

June 30, 2018 Calculation Formula Equation Ratios Benchmark Conclusion

1) Equity $2,277,032 ＝15.61 ≧1 Conformity Total liabilities less futures $145,889 trader’s equity

2) Current assets $20,023,584 ＝1.09 ≧1 Conformity Current liabilities $18,302,734

3) Equity $2,277,032 ＝318% ≧60% Conformity Minimum paid-in capital $715,000 ≧40%

4) Adjusted net capital $2,038,590 ＝39% ≧20% Conformity Amount of customers’ margin $5,288,905 ≧15% accounts for open position of futures customers

5. The management department of SinoPac Futures renders discretionary investment services. As shown below, the ratios of the discretionary investment account to shareholders’ equity as of June 30, 2019, December 31, 2018 and June 30, 2018 were in conformity with the benchmark stipulated in the Regulations Governing Managed Futures Enterprises.

June 30, 2019 December 31, 2018 June 30, 2018 Calculation Formula Equation Ratios Equation Ratios Equation Ratios Benchmark

Amount of discretionary $137,400 $121,900 $88,000 investment account ＝1.37 =1.18 ＝0.83 ≦10.00 $100,252 $103,323 $105,967 Equity

(Concluded)

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SINOPAC FINANCIAL HOLDINGS COMPANY LIMITED AND SUBSIDIARIES

PUBLIC ANNOUNCEMENTS PRESCRIBED IN ARTICLE 46 OF THE FINANCIAL HOLDING COMPANY ACT JUNE 30, 2019 AND 2018

Credit extensions, guarantees or other transactions made by the Company and its subsidiaries with the same person, the same related person or the same affiliate as of June 30, 2019 and 2018 are summarized as follows:

June 30, 2019 Aggregate Amount of Credit % to Extensions, Financial Guarantees Holding or Other Company’s Name Transactions Net Worth

1. With the same person:

Client A $ 208,913,268 146.03 Client B 9,130,299 6.38 Client C 9,098,468 6.36 Client D 8,463,111 5.92 Client E 6,166,822 4.31 Client F 6,000,000 4.19 Client G 5,992,435 4.19 Client H 5,434,539 3.80 Client I 5,001,770 3.50 Client J 4,984,303 3.48 Client K 4,434,037 3.10 Client L 4,397,819 3.07 Client M 4,332,957 3.03 Client N 4,204,188 2.94 Client O 4,142,947 2.90 Client P 4,133,773 2.89 Client Q 4,117,745 2.88 Client R 4,052,072 2.83 Client S 3,941,344 2.75 Client T 3,729,520 2.61 Client U 3,657,651 2.56 Client V 3,441,203 2.41 Client W 3,306,281 2.31 Client X 3,266,983 2.28 Client Y 3,256,051 2.28 Client Z 3,057,108 2.14 Client AA 3,013,793 2.11 Client AB 3,001,409 2.10 (Continued)

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June 30, 2019 Aggregate Amount of Credit % to Extensions, Financial Guarantees Holding or Other Company’s Name Transactions Net Worth

2. With the same related person:

XX Lan $ 3,761,942 2.63

3. With the same affiliate:

Cathay Financial Holdings Group 11,899,995 8.32 Hon Hai Group 10,813,272 7.56 CTBC Financial Holdings Group 10,033,714 7.01 Far Eastern Group 9,890,455 6.91 Kinpo Group 9,561,974 6.68 China Development Financial Holding Group 8,288,617 5.79 Quanta Group 7,030,927 4.91 Formosa Plastics Group 6,994,856 4.89 MiTAC - SYNNEX Group 6,757,944 4.72 Evergreen Group 6,503,751 4.55 China Development Bank Group 6,329,420 4.42 Wistron Group 6,283,603 4.39 Yulon Motor Group 6,227,809 4.35 HuaNan Financial Holdings Group 6,176,435 4.32 Fubon Group 6,064,471 4.24 Uni-President Group 5,967,512 4.17 Chailease Group 5,724,339 4.00 AU Optronics Group 5,534,031 3.87 CTCI Group 5,409,693 3.78 Taiwan Cooperative Financial Holdings Group 5,331,898 3.73 Standard Chartered Group 5,004,064 3.50 ASE Group 4,914,727 3.44 Kingston Group 4,808,106 3.36 Waterland Financial Holdings Group 4,763,252 3.33 Wisdom Marine Group 4,266,327 2.98 Union Group 4,265,932 2.98 MediaTek Group 4,205,144 2.94 Bank of Communications Group 3,820,355 2.67 Hotai Motor Group 3,811,517 2.66 Foxlink Group 3,795,405 2.65 Phoenix Property Group 3,673,247 2.57 Taishin Group 3,656,537 2.56 HSBC Group 3,640,999 2.55 Pou Chen Group 3,477,536 2.43 KDB Group 3,421,481 2.39 King’s Town Group 3,382,066 2.36 (Continued)

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June 30, 2019 Aggregate Amount of Credit % to Extensions, Financial Guarantees Holding or Other Company’s Name Transactions Net Worth

Kbro Surf Group $ 3,341,655 2.34 ANZ Group 3,326,317 2.33 Macquarie Group 3,220,111 2.25 China Steel Group 3,169,846 2.22 KHL Capital Group 3,153,934 2.20 Baolu Construction Group 3,078,000 2.15 Tcc Group 3,059,691 2.14 (Continued)

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June 30, 2018 Aggregate Amount of Credit % to Extensions, Financial Guarantees Holding or Other Company’s Name Transactions Net Worth

1. With the same person:

Client A $ 157,605,383 114.12 Client B 10,601,757 7.68 Client C 8,079,015 5.85 Client D 8,013,794 5.80 Client E 7,475,257 5.41 Client F 6,041,512 4.37 Client G 5,413,761 3.92 Client H 5,038,563 3.65 Client I 4,765,304 3.45 Client J 4,659,175 3.37 Client K 4,501,643 3.26 Client L 4,000,443 2.90 Client M 3,862,087 2.80 Client N 3,851,362 2.79 Client O 3,781,262 2.74 Client P 3,725,380 2.70 Client Q 3,642,735 2.64 Client R 3,583,947 2.59 Client S 3,384,617 2.45 Client T 3,368,764 2.44 Client U 3,340,460 2.42 Client V 3,260,185 2.36 Client W 3,255,589 2.36 Client X 3,253,835 2.36 Client Y 3,233,742 2.34 Client Z 3,116,693 2.26 Client AA 3,095,955 2.24 Client AB 3,075,547 2.23 Client AC 3,061,100 2.22 Client AD 3,050,575 2.21 Client AE 3,037,700 2.20 Client AF 3,035,936 2.20

2. With the same related person:

XX Chang 4,342,425 3.14 XX Chang 3,547,556 2.57 XX Lan 3,359,999 2.43

3. With the same affiliate:

Yuanta Financial Holdings Group 14,209,857 10.29 HuaNan Financial Holdings Group 12,659,236 9.17 (Continued)

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June 30, 2018 Aggregate Amount of Credit % to Extensions, Financial Guarantees Holding or Other Company’s Name Transactions Net Worth

China Development Financial Holding Group $ 12,119,771 8.78 Fubon Group 11,156,842 8.08 Cathay Financial Holdings Group 10,597,570 7.67 Far Eastern Group 9,483,615 6.87 Kinpo Group 8,720,791 6.31 Standard Chartered Group 7,128,628 5.16 Taiwan Cooperative Financial Holdings Group 6,966,581 5.04 Evergreen Group 6,808,024 4.93 MiTAC - SYNNEX Group 6,453,683 4.67 Hon Hai Group 6,439,657 4.66 Formosa Plastics Group 6,097,158 4.41 Yulon Motor Group 6,034,414 4.37 AU Optronics Group 5,387,299 3.90 Taishin Group 5,175,479 3.75 China Development Bank Group 5,115,559 3.70 Catcher Technology Group 5,039,575 3.65 ASE Group 4,946,939 3.58 Quanta Group 4,876,227 3.53 Lite-On Technology Corp 4,682,482 3.39 CTCI Group 4,561,677 3.30 Uni-President Group 4,507,779 3.26 CTBC Financial Holdings Group 4,463,831 3.23 Bank of Communication Group 4,345,133 3.15 Industrial and Commercial Bank of China Group 4,252,939 3.08 HSBC Group 4,189,536 3.03 O-Bank Group 4,180,411 3.03 Chailease Group 4,151,258 3.01 Tcc Group 4,123,787 2.99 Wisdom Marine Group 3,975,187 2.88 NAB Group 3,938,407 2.85 Walsin Lihwa Group 3,865,122 2.80 Societe Generale Group 3,781,494 2.74 China Minsheng Bank Group 3,771,645 2.73 Waterland Financial Holdings Group 3,686,544 2.67 Kbro Surf Group 3,582,495 2.59 First Financial Holding Group 3,513,607 2.54 ANZ Group 3,457,766 2.50 Union Group 3,391,196 2.46 King’s Town Group 3,330,691 2.41 China Steel Group 3,320,718 2.40 Bank of Panhsin Group 3,151,936 2.28 Foxlink Group 3,013,240 2.18

(Concluded)

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SINOPAC FINANCIAL HOLDINGS COMPANY LIMITED AND SUBSIDIARIES

INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE SIX MONTHS ENDED JUNE 30, 2019 (In Thousands of New Taiwan Dollars)

Accumulated Investment Flows Accumulated Percentage Accumulated Outflow of Outflow of Net Income (Loss) Equity in the Total Amount of of Carrying Value Inward Investee Company Main Businesses and Products Method of Investment Investment from Investment from of the Investment Earnings (Losses) Paid-in Capital Outflow Inflow Ownership (Note 1) Remittance of Taiwan as of Taiwan as of (Note 1) (Note 1) (%) Earnings January 1, 2019 June 30, 2019

Golden Trust SinoPac Fund Management Co., Fund raising and sale, asset management $ 904,378 Investment in Mainland China directly $ 443,145 $ - $ - $ 443,145 $ 54,094 49.00 $ 26,506 $ 419,657 $ - Ltd. business approved by CSRC

Telexpress (Shanghai) Co., Ltd. Management consultant 43,511 Investment in Mainland China companies 14,885 - - 14,885 2,457 34.21 - 14,885 - through an existing company established in a third region

Yangzhou Brightman International Co., Ltd. Panel thinning 642,954 Investment in Mainland China companies 72,437 - - 72,437 (5,084 ) 11.69 - 72,437 - through an existing company established in a third region

Zhong Shan Dong Yi Technology Co., Ltd. Cover glass 248,635 Investment in Mainland China companies 12,432 - - 12,432 25,439 4.90 - 12,432 - through an existing company established in a third region

Dong Ming Technology Co., Ltd. Cover glass 19,904 Investment in Mainland China companies 1,002 - - 1,002 13,171 4.90 - 1,002 - through an existing company established in a third region

StreetVoice International Ltd. Design of software and service for 23,391 Investment in Mainland China companies 1,716 - - 1,716 (8,706 ) 4.22 - 1,716 - computer system integration through an existing company established in a third region

Shanghai Winking Entertainment Ltd. Design development and manufacture of 486,561 Investment in Mainland China companies 341 - - 341 20,928 1.70 - 341 - software through an existing company established in a third region

Dong Guan Transound Electronics Co., Ltd. Dynamic receiver, dynamic speaker, SMD, 234,904 Investment in Mainland China companies 45,035 - - 45,035 8,222 5.10 - 45,035 - Array, MEMS ECM microphone, ear through an existing company phone module, ear phone, headphone established in a third region

SinoPac International Leasing Leasing and financing of machinery 906,466 Investment in Mainland China directly 906,466 - - 906,466 26,023 100.00 26,023 900,647 - equipment

SinoPac Leasing (Tianjin) Leasing and financing of machinery 850,115 Investment in Mainland China directly 850,115 - - 850,115 (1,162 ) 100.00 (1,162 ) 845,172 - equipment, account receivable factoring, trade receivable financing

Bank SinoPac (China) Commercial bank 10,065,691 Investment in Mainland China directly 10,065,691 - - 10,065,691 29,536 100.00 47,404 9,771,279 -

SinoPac Financial Consulting (Shanghai) Business management consulting, 62,159 Investment in Mainland China directly 62,159 - - 62,159 7,468 100.00 7,468 61,350 - investment consulting, business intelligence consulting

Beijing Sheng Chuang Hui Limited Processing production development of 245,539 Investment in Mainland China companies 25,835 - - 25,835 (23,563 ) 1.26 - 25,835 - cosmetics and sale of self-made product through an existing company established in a third region

Accumulated Investment in Mainland China as of Investment Amounts Authorized by Limit on Investment June 30, 2019 Investment Commission, MOEA

$ 12,501,259 $ 12,514,176 $ 93,720,903 (US$ 351,459 ) (US$ 351,875 ) (CNY 349,000 ) (CNY 349,000 )

(Continued)

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Note 1: Above figures have not been audited by independent certified public accountants, except those of Golden Trust SinoPac Fund Management Ltd., SinoPac International Leasing, SinoPac Leasing (Tianjin), Bank SinoPac (China) and SinoPac Financial Consulting (Shanghai), which were audited by independent certified public accountants and prepared in conformity with IFRSs

Note 2: Subsidiary invested in Telexpress (Shanghai) Co., Ltd. via Telexpress Corp.

Note 3: Subsidiary invested in Brightman International Co., Ltd. via Brightman Optoelectronics (Cayman) Co., Ltd.

Note 4: Subsidiary invested in Zhong Shan Dong Yi Technology Co., Ltd. and Dong Ming Technology Co., Ltd. via CGK International Co., Ltd.

Note 5: Subsidiary invested in StreetVoice International Ltd. via Neutron Innovation (BVI) Limited.

Note 6: Subsidiary invested in Shanghai Winking Entertainment Ltd. via Winking Entertainment Ltd.

Note 7: Subsidiary invested in Dong Guan Transound Electronics Co., Ltd. via Transound Electronics Co., Ltd.

Note 8: Subsidiary invested in Beijing Sheng Chuang Hui Limited via Hong Kong Xian-Xing Investment Limited.

Note 9: Foreign currencies are translated to N.T. dollars with current rate of the date of balance sheet, only the gains or losses investments are translated with current year average rate.

(Concluded)

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SINOPAC SECURITIES (CAYMAN) HOLDINGS LIMITED

BALANCE SHEET JUNE 30, 2019 (In U.S. Dollars)

ASSETS Amount %

CURRENT ASSETS Cash and cash equivalents $ 124,567 - Other receivables 30,000,003 19 Prepaid expenses 145,000 -

Total current assets 30,269,570 19

NONCURRENT ASSETS Investments accounted for using the equity method 131,426,314 81

Total noncurrent assets 131,426,314 81

TOTAL $ 161,695,884 100

LIABILITIES AND EQUITY

CURRENT LIABILITIES Short-term borrowings $ 13,650,000 8 Other payables 55,471 -

Total current liabilities 13,705,471 8

NONCURRENT LIABILITIES Long-term borrowings 30,000,000 19

Total noncurrent liabilities 30,000,000 19

Total liabilities 43,705,471 27

EQUITY Share capital 137,752,581 85 Capital surplus 4,220,663 3 Accumulated deficit (22,660,580) (14) Exchange differences on translation of foreign financial statements (1,367,684) (1) Unrealized gains (losses) on financial assets at FVTOCI 45,433 -

Total equity 117,990,413 73

TOTAL $ 161,695,884 100

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SINOPAC SECURITIES (CAYMAN) HOLDINGS LIMITED

STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED JUNE 30, 2019 (In U.S. Dollars)

Amount %

EXPENDITURE AND EXPENSES Financing costs $ (960,773) (49) Operating expenses (21,145) (1)

Total expenditure and expenses (981,918) (50)

OPERATING LOSS (981,918) (50)

NON-OPERATING INCOME AND EXPENSES Share of gain of subsidiaries 2,221,424 113 Other gains and losses 717,470 37

Total non-operating income and expenses 2,938,894 150

NET PROFIT 1,956,976 100

OTHER COMPREHENSIVE INCOME Items that may be reclassified subsequently to profit or loss Exchange differences on translating foreign operations 377,642 19 Unrealized gains (losses) from investments in debt instruments measured at fair value through other comprehensive income 45,433 2

Other comprehensive income 423,075 21

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD $ 2,380,051 121

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SINOPAC SECURITIES (CAYMAN) HOLDINGS LIMITED

SECURITIES HELD JUNE 30, 2019 (In U.S. Dollars, Unless Stated Otherwise)

Security Issuer’s June 30, 2019 Security Type and Issuer’s Name Relationship with the Financial Statement Account Percentage of Note Shares Carrying Value Net Worth Holding Company Ownership (%)

Stock SinoPac Securities (Europe) Limited Subsidiary Investments accounted for using the equity method 2,000,000 $ 1,800,606 100.00 $ 1,800,606 SinoPac Securities (Asia) Limited Subsidiary Investments accounted for using the equity method 82,106 117,047,726 100.00 111,488,006 SinoPac Asset Management (Asia) Limited Subsidiary Investments accounted for using the equity method 95,550,000 8,414,088 100.00 8,414,088 SinoPac International Holdings Limited Subsidiary Investments accounted for using the equity method 2,000,000 4,163,894 100.00 4,163,894

Note: Net worth was calculated based on the investee company’s audited financial statements of the same period.

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SINOPAC FINANCIAL CONSULTING (SHANGHAI) LIMITED

BALANCE SHEET JUNE 30, 2019 (In CNY)

ASSETS Amount %

CURRENT ASSETS Cash and cash equivalents ¥ 13,734,949 86 Accounts receivable 119 - Prepaid expense 22,808 -

Total current assets 13,757,876 86

NONCURRENT ASSETS Right-of-use assets 2,085,256 13 Guarantee deposits 162,741 1

Total noncurrent assets 2,247,997 14

TOTAL ¥ 16,005,873 100

LIABILITIES AND EQUITY

CURRENT LIABILITIES Other payables ¥ 64,200 - Current tax liabilities 312,605 3 Lease liabilities - current 950,444 6 Other current liabilities 800 -

Total current liabilities 1,328,049 9

NONCURRENT LIABILITIES Lease liabilities - noncurrent 1,110,384 7

Total noncurrent liabilities 1,110,384 7

Total liabilities 2,438,433 16

EQUITY Share capital 12,220,600 76 Retained earnings 1,346,840 8

Total equity 13,567,440 84

TOTAL ¥ 16,005,873 100

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SINOPAC FINANCIAL CONSULTING (SHANGHAI) LIMITED

STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED JUNE 30, 2019 (In CNY)

Amount %

REVENUE Revenue from advisory ¥ 3,214,789 100

Total revenue 3,214,789 100

EXPENDITURE AND EXPENSES Employee benefits expenses (290,905) (9) Depreciation and amortization expense (435,935) (14) Other operating expense (286,749) (9)

Total expenditure and expenses (1,013,589) (32)

OPERATING INCOME 2,201,200 68

NON-OPERATING INCOME AND EXPENSES Other gains and losses (1,279) -

Total non-operating income and expenses (1,279) -

INCOME BEFORE TAX 2,199,921 68

INCOME TAX EXPENSE (563,053) (18)

NET INCOME 1,636,868 50

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD ¥ 1,636,868 50

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SINOPAC INTERNATIONAL HOLDINGS LIMITED

BALANCE SHEET JUNE 30, 2019 (In H.K. Dollars)

ASSETS Amount %

CURRENT ASSETS Cash and cash equivalents $ 32,339,058 99 Other receivables - related parties 364,540 1 Other receivables 9,270 -

Total current assets 32,712,868 100

TOTAL $ 32,712,868 100

LIABILITIES AND EQUITY

CURRENT LIABILITIES Other payables $ 113,804 1 Current tax liabilities 2,507 - Other current liabilities 87,467 -

Total current liabilities 203,778 1

Total liabilities 203,778 1

EQUITY Share capital 15,488,000 47 Retained earnings 17,021,090 52

Total equity 32,509,090 99

TOTAL $ 32,712,868 100

Note: There was credit balance HK$22,741,172 in investments accounted for using the equity method of SinoPac International Holdings on June 30, 2019. Such credit balance in investments was written off to zero against SinoPac International Holdings’s other receivables from subsidiaries of HK$23,105,712.

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SINOPAC INTERNATIONAL HOLDINGS LIMITED

STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED JUNE 30, 2019 (In H.K. Dollars)

Amount %

EXPENDITURE AND EXPENSES Other operating expense $ (69,505) (55)

Total expenditure and expenses (69,505) (55)

OPERATING LOSS (69,505) (55)

NON-OPERATING INCOME AND EXPENSES Share of the gain of subsidiaries accounted for using equity method 4,068 3 Other gains and losses (61,283) (48)

Total non-operating income and expenses (57,215) (45)

NET LOSS (126,720) (100)

TOTAL COMPREHENSIVE LOSS FOR THE PERIOD $ (126,720) (100)

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SINOPAC INTERNATIONAL HOLDINGS LIMITED

SECURITIES HELD JUNE 30, 2019 (In H.K. Dollars, Unless Stated Otherwise)

Security Issuer’s June 30, 2019 Relationship with Security Type and Issuer’s Name Financial Statement Account Percentage of Note the Holding Shares Carrying Value Net Worth Ownership (%) Company

Stock SinoPac Services (Brokers) Limited Subsidiary Investments accounted for using the equity method 10,000 $ (22,741,172) 100.00 $ (22,741,172) Note 2

Note 1: Net worth was calculated based on invested enterprise’s audited financial statements of the same period.

Note 2: SinoPac Services (Brokers) have been approved by the FSC in December 2018, and the liquidation is still in process.

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SINOPAC SERVICES (BROKERS) LIMITED

BALANCE SHEET JUNE 30, 2019 (In H.K. Dollars)

ASSETS Amount %

CURRENT ASSETS Cash and cash equivalents $ 470,690 100

Total current assets 470,690 100

TOTAL $ 470,690 100

LIABILITIES AND EQUITY

CURRENT LIABILITIES Other payables - related parties $ 23,105,712 4,909 Other payables 106,150 22

Total current liabilities 23,211,862 4,931

Total liabilities 23,211,862 4,931

EQUITY Share capital 10,000 2 Accumulated deficits (22,751,172) (4,833)

Total equity (22,741,172) (4,831)

TOTAL $ 470,690 100

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SINOPAC SERVICES (BROKERS) LIMITED

STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED JUNE 30, 2019 (In H.K. Dollars)

Amount %

EXPENDITURE AND EXPENSES Depreciation and amortization expense $ (3,784) (93) Other operating expense (91,648) (2,253)

Total expenditure and expenses (95,432) (2,346)

OPERATING LOSS (95,432) (2,346)

NON-OPERATING INCOME AND EXPENSES Other gains and losses 99,500 2,446

Total non-operating income and expenses 99,500 2,446

NET INCOME 4,068 100

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD $ 4,068 100

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