Overview Do Our Best to of the Run Business! business A 60-year Journey with You!

1.1 Introduction to the Bank 7 2.1 Stakeholder Engagement 12 2.5 Anti-Money Laundering & Combating the 44 1.2 Business Philosophy 8 2.2 The Status of Corporate 30 Financing of Terrorism 1.3 Business Performance 9 Governance 2.6 Internal Control & Audit System 45 and Achievements 2.3 Business Growth through 37 2.7 Risk Management Mechanism 50 1.4 Business Achievements 10 Collaboration 2.8 External Initiatives and Important 53 2.4 Laws & Regulations and 42 Exchanges & Communications Compliance

Do Our Best to Safe Do Our Best to Care TABLE OF Guard Customers! For Our Employees! A Trustworthy Partner! Create Pleasant Work Environment for Happy Life!

3.1 Promote Financial Inclusion with 56 4.1 Employment Situation 70

Complete Business Channels 4.2 Salary and Benefits 72 CONTENTS 3.2 Diverse and innovative financial 57 4.3 Talent Cultivation and 75 products & services Career Development

3.3 Customer Rights Protection 61 4.4 Harmonious Labor Relations 77

3.4 Improve Customer Service Quality & 65 4.5 Occupational Health & Safety 79 Maintain Customer Relationships

Do Our Best to Do Our Best to Care Appreciate Blessings! for the Community! Guard our homeland! Extend Positive Influence in Society!

5.1 Management of Energy Conservation 81 6.1 Academic Education 95 6.7 Organize and Encourage Employees 101

and Carbon Reduction 6.2 Arts & Humanities 96 around Taiwan to Participate in the Blood Donation Campaign and the 2nd ‘Care with 5.2 Resource Recycling & Reuse 84 6.3 Charity & Care 96 Heart and Pass LOVE on-Help with My 5.3 Green Purchasing and Supply 87 6.4 Sports Development 97 Blood’ activity Chain Management 6.5 Community Activities 98 6.8 Appendix 102 5.4 Promote ‘Paperlessness’ 87 6.6 ‘Reward Program to Facilitate 98 5.5 Credit Policy 90 Branch’s Engagement in Corporate Social Responsibility Activity’ Report Information GRI 102-45 102-48 102-49 102-50 102-52 102-53 102-54 102-55 102-56

About This Report Contact Us This report has been formulated by Taichung Commercial Bank Co., Ltd. (hereinafter Contact Unit Taichung Bank-Business Development Department-Planning Division referred as ‘Taichung Bank ’ or ‘the Bank’ ) by following the core items of GRI Tel:(04)222-36021#5375 Standards set by Global Reporting Initiative (GRI) as well as ‘Corporate Social E-mail:[email protected] Responsibility Best Practice Principles for TWSE / GTSM Listed Companies ’, in Taichung Bank Social Responsibility Public Benefit Site: which all financial data is calculated in NT Dollar and all financial statements are https://www.tcbbank.com.tw/CSR/E_05.html created by following International Financial Reporting Standards. The Report shall be placed on Taichung Bank ’s website for download to demonstrate the Bank ’s efforts in fulfilling corporate social responsibility.

Time of the Report Taichung Bank Corporate Social Responsibility Report was first published in June 2015. The report published in 2020 is the sixth issuance and the issuance shall be continued on a yearly basis in the future.

Scope and Boundary of the Report The report depicts Taichung Bank ’s performance and achievements in relation to various issues of sustainable development in 2019 (1st January 2019 to 31st December 2019) without the inclusion of subsidiaries ’ related activities except in consolidated financial statements. Its disclosure focuses on the scope in Taiwan area, which does not differ significantly from the previous report.

Assurance of the Report Taichung Bank entrusted British Standards Institution (BSI) to conduct verification on this report according to GRI Standards and AccountAbility's AA1000 Series of Standards for Type 1- moderate level assurance. The verification results showed that the report complies with the core items disclosed in GRI Standards and the principles of significance, inclusion, responsiveness and impact based on AA1000 Accountability Principles (2018). Please refer to the Appendix for the BSI ‘Independent Assurance Opinion Statement ’.

3 Message from the Chairman GRI 102-14 102-15

The COVID-19 pandemic was spreading all over the world while this report was attention to sustainable operations while seeking financial performance. Taichung being formulated. The Bank activated epidemic prevention reactionpreparedness Bank was awarded the ‘Golden Security Award for Member Institute with Excellent plan during Chinese New Year Festival and promptly responded to government ’ s Performance’ in 2019 by Joint Credit Information Center for 5 the consecutive relief programs to help companies and individuals affected by the coronavirus go year, ‘Excellence Award for New Southbound Countries related Loan Growth ’by through the hardship caused by the pandemic. Furthermore, another event worth Overseas Credit Guarantee Fund, ‘Corporate Sustainability Awards-Bronze Award’ noticing is that the ‘Principles for Responsible Banking ’ (PRB) formulated by ‘United by Taiwan Institute for Sustainable Energy, ‘Excellent Sustainable Practice Award’ Nations Environment Finance Initiative (UNEP FI) ’ , and 30 banks from around the at the BSI International Sustainability Standards Management Conference and world was officially publicized in New York on 22nd September 2019 during the UN received ‘A-’ credit rating from Fitch Ratings Taiwan Company, et aletc etc. General Assembly. It is noticeable that the first principle of PRB expressly stated that the banking industry is required to integrate the UN ’s Sustainable Development In terms of environmental sustainability, as a member of the global village, we Goals (SDGs) and The Paris Agreement into their business development strategies have been active in resolving environmental issues through our core business, and critical decision making, which conveyed an expectation that the banking by managing energy conservation, carbon reduction and resource recycling, industry should play the role of a bellwether to influence other enterprises to pay extending to the implementation of green financing, green purchasing and supply attention to social and environmental sustainability. These global events all manifest chain management. In recent years, we have increased our support for the the importance of corporate social responsibility. Therefore, with the formulation development of green industries by providing diverse financing and loan services of this report, we disclose our concrete action in fulfilling corporate social for industries which can mitigate the greenhouse effect via energy conservation responsibility with a view to extending our influence in various sustainability issues and carbon reduction and can reduce the impact of climate change by weather and enhancing mutual prosperity with all stakeholders. shielding. In December, 2019, Taichung Bank cooperated with the Taichung City

When looking back on 2019, we note that the global economy faced a lot of challenges which included the deadlock between the U.S. and China caused by the trade war, unexpected economic slowdown in China, recurrence of geopolitical tensions, political turmoil in Hong Kong, and the No-deal Brexit, etc. et al etc. Under the influence of these factors, the impetus for global trade and investment was weakened and the economic growth slackened, based on which the major economy forecast agencies in the world kept revising the global economic growth forecast downwards. Despite the disadvantages of investing in the market, Taichung Bank has still delivered outstanding performance, which deserves recognition, by upholding the management principle of ‘Profitability from Quantity Stability ’ and ‘Progress with Stability ’ . In terms of financial indicators, NT$ 4.32 billion in earnings after tax was generated, which exceeded the level of NT$ 4.008 billion in 2018. In terms of operational scale, the total assets have reached NT$ 682.7 billion and are still growing steadily. Besides, we also pay

4 Government in setting a ‘Single point of contact for specific factory registration’ to assist. to This assisted assist fir ms in being included in the government’ s management system and legally running on the site, and also provided ‘Concessional Loan for Equipment Financing’ for 20,000 factories to assist aide assist them in funding wastewater treatment, environmental protection and fire safety equipment, so as to contribute which so as to contributed to our efforts to in the direction of to environmental protection and sustainability.

With respect to talent cultivation and care, the Bank believes that corporate growth and strength is based on employee enthusiasm and contribution, and thus we value our employees and regard them as a valuable asset, which is worth appreciation and investment. With a view to actively cultivating diverse talent and improving employee care, besides providing comprehensive educational training, we launched the Employee Assistance Programs (EAPs) this year to achieve the goals of ‘the company does its best’ , ‘ to provide professional care ’, ‘to make employees happy ’ , thereby promoting employee physical & mental health and supporting employees in achieving life-work balance. In addition, in order to encourage healthy leisure activities, ‘Club Management & Subsidy Directions’ was formulated to encourage employees to participate actively in club activities to attain physical and mental health and increase communication among employees. Taichung Bank Chairman 2020 will be a year filled with uncertainties and challenges in the global financial environment. Taichung Bank will maintain its momentum and initial aspiration to achieve the sustainability of various business development layouts through six dimensions in ‘Financial Governance, Fair Customer Treatment, Risk Management, Business Performance, Financial Innovation and Talent Cultivation’ to strengthen the momentum for the Bank ’s operational development, and will make corporate social responsibility an important part of the Bank’s corporate culture and share operating achievements with society. This is because Taichung Bank believes that the financial services sector and society are mutually dependent, and with the joint efforts, a better future is expected.

5 Overview of the business

1.1 Introduction to the Bank 1.2 Business Philosophy 1.3 Business Performance and Achievements 1.4 Business Achievements 1.1 Introduction to the Bank 01 GRI 102-1 102-2 102-3 102-4 102-5 102-6 102-7 Basic Information about Taichung Bank As of 2019/12/31 OVERVIEW OF THE BUSINESS Taichung Commercial Bank was formerly known as the “Taichung Cooperative Savings Company” , which was established in April 1953. It began operation on Company Name Taichung Commercial Bank Co., Ltd. August 1st of the same year for handling rotating savings and credit association Paid-in-Capital NT$ 37,088,348,980 business. Its business area covered the central regions of Taiwan, including Taichung County (City), Changhua County and Nantou County, etc. In compliance Total assets NT$ 675,022,995,190 (parent company only) with the announcement and implementation of the Banking Act and the needs of business development, it was reorganized and renamed as the “Taichung District Chairman Kuei-Fong Wang Small and Medium Business Bank” in 1978. In addition, to expand the scale of Head Office Address No.87, Minquan Rd. Taichung City business operation and popularize the capital, the Bank's stock was publicly listed on May 15, 1984, with which a solid foundation for operation was gradually Total number of employees 2,610 established. Number of business bases 83 (including overseas branches/units) The Bank’ s Taipei Branch was founded in September, 1995, signifying a milestone in the Bank ’s development as it expanded its business beyond the original area 2019 Net profit after tax NT$ 4,319,883,090 (parent company only) and started dispersing the business bases originally clustering in central Taiwan to 2019 Credit Rating A- northern and southern Taiwan, enabling it to become formally one of the national commercial banks.

The Bank ’ s registered capital has increased from NT$ 500,000, when it was just opened to NT$ 37.09 billion by the end of 2019. The number of business units also increased from 5 in the start-up phase to 83 branches/units (including the Labuan Branch in Malaysia) and one Offshore Banking Unit (OBU) in 2019. Moreover, with the aim of further developing the Bank’ s competitive advantages in ‘local banking’ and ‘small and medium enterprises finance’ as well as ‘diversified financial services ’ , the following investee enterprises have been founded: ‘ Taichung Bank Insurance Broker Co., Ltd. ’, ‘ Taichung Bank Leasing Co., Ltd. ’ , ‘ Taichung Bank Finance Leasing (Suzhou) Ltd. ’ and ‘ Taichung Bank Securities Co., Ltd. ’. And with the integration with the reinvested business ‘ Taichung Bank Securities Investment Trust Co., Ltd. ’, a diversified financial organization structure has been established, by which the value and mission of the Bank ’s sustainable operation can be realized and the vision of expanding its territory to the world can be attained. The current diversity of services and operational volumes are many times the scale then when it was operating in the form of Cooperative Savings Company. These achievements illustrate the concrete outcomes of the Bank ’s efforts in business management and manifest an outstanding growth. Group photo of all managers ˙

7 1.2.2 The Goal & Vision of The First-line Bank in the 01 ‘ 1.2 Business Philosophy Country , The Most Anticipated Bank for the OVERVIEW OF THE BUSINESS GRI 102-2 102-6 102-16 ’ ‘ Community and The Most Reliable Bank for ’ ‘ 1.2.1 The brand spirit of We Do Our Best for You Customers ‘ ’ ’ The brand spirit of ‘ We Do Our Best for You’has been conveyed to the public With a business foundation developed over 60 years, we always carry our initial through our five core businesses Taichung Bank, Taichung Bank Insurance Broker, enthusiasm to meet customers ’ needs. Taichung Bank is committed to building a Taichung Bank Securities, Taichung Bank Leasing and Taichung Bank Securities finance team with the best expertise to guard what has been entrusted to us by Investment Trust. Based on this spirit, we provide all-round financial services, our customers and to realizing the goal and vision of ‘ The First-line Bank in the undertake and carry out the five core values for financial services sector: ‘Service, Country ’ , ‘The Most Anticipated Bank for the Community’ and ‘The Most Reliable Product, Expertise, Customer and Public Benefit ’. Bank for Customers ’ .

The First-line Bank in the Country Despite the ongoing changes we face in the financial environment, Taichung Bank With the ‘do-our-best’ attitude, we demonstrate maintains its momentum and initial aspiration in elevating the core values of a Service professionalism and enthusiasm to provide quality financial service provider, by implementing ‘legal compliance, risk management and satisfactory services to customers and performance managementin’ its operations. In order to realize the vision of becoming “The First-line Bank in the Country”, the Bank aims to achieve the With innovative thinking, we keep goals, such as a ‘EPS reaches NT$ 2 or above’ , ‘Better business constitution than Product improving and customizing our products to create stable and diverse financial needs. peer banks’ and ‘Total asset reaches NT$ one trillion or more’ with its ceaseless commitment and efforts.

With a rigorously built base, we stay prudent Expertise and practical in achieving synergy to establish The Most Anticipated Bank for the Community a solid foundation for sustainable operations. With a journey started yesterday from Taichung, a foothold in Taiwan today and a stride towards the globe tomorrow, by upholding the corporate brand spirit of ‘ We Do Our Best for You’ , adapts to the changes and responds to the trends to achieve With consistent commitment, we a progress which is beyond the society ’ s expectation and the customers’ appreciate the trust from customers in demands. Taichung Bank believes that the financial services sector is an entity Customer creating hope together, build up excellent and exceptional customer value. which shares the same life with the society and even plays a key role in leading the whole society towards development and advancement. In facing the trends of Public Benefit－With proactive community financial digitalization, the Bank shall be committed to providing customers with Public engagement, we manifest our love in conveying the most adaptive financial services which meet customers’ needs, transcend the Benefit a corporate image of extraordinary devotion. barriers of time and space, and provide heartwarming user experience, thereby letting Taichung Bank become an all-round financial group closest to consumers’ daily life.

8 The Most Reliable Bank for Customers Earnings structure (by source of earnings) Taichung Bank, through the practice of ‘Dedication to Local Community’ , has 01 Earnings percentage 2017 2018 2019 established a profound ‘cross-generationpartnership’ with customers. With OVERVIEW OF THE BUSINESS the appreciation of this ‘trust’ , such dedication has become a heritage of the Net Interest Income 72% 72% 69% Bank’s employees and an essential part of the Bank ’s business in creating Serice Fee Income,net 21% 24% 24% customer value. It is hoped that we can continue to provide customers with more Others 7% 4% 7% complete financial services, realize the best corporate governance and demonstrate outstanding business performance, and to seek the satisfaction of customers’ needs, thereby building strength for the creation of corporate Dividends Distributions sustainable value, and becoming a first-choice financial partner for the public. Unit NT$1

Item / Year 2017 2018 2019 Cash Dividend 0.45 0.28 0.28 Stock Dividend 0.25 0.52 0.52 1.3 Business Performance Total 0.70 0.80 0.80

● Note:The proposals for 2019 profits allocation are to be determined in the regular shareholders' and Achievements meeting scheduled to be convened in June 2020. GRI 201-1

Business Performance Tax & Donation Unit NT$ 1,000 % Unit NT$ 1,000

Item / Year 2017 2018 2019 Item / Year 2017 2018 2019 Net Income 11,394,755 11,689,424 12,095,628 Profit-seeking Enterprise Income Tax 637,096 629,803 747,421 Total Assets 663,024,083 690,832,103 682,688,922 Tax Business Tax 564,168 598,411 599,228 Stockholder's Equity 43,401,940 47,823,653 51,309,206 paid Stamp Duty 39,373 41,886 43,463 Net Profit after Tax 3,632,542 4,008,369 4,319,883 Others (Land Value Tax, House Tax, etc.) 35,297 30,877 30,867 Earnings Per Share (NT$) 1.08 1.12 1.16 Donation 97,370 81,532 121,368

Cost of Employee Benefits 3,348,251 3,723,758 3,833,009 ● Note:The figures stated above were mainly data of Taichung Bank. Return on Asset 0.56 0.59 0.63 Return on Common Equity 8.57 8.79 8.72 Credit Rating Market Capitalization 32,635,404 35,960,186 44,506,019 Date of Credit Rating

● Note:The ‘Earnings Per Share’ in 2017 and 2018 are the figures after retroactive adjustment. Rating Agency Rating Long-term Short-term Outlook 2017.9.22 A-(twn) F2(twn) Stable Fitch Rating Taiwan 2018.6.5 A-(twn) F1(twn) Stable Company 2019.5.24 A-(twn) F1(twn) Stable

9 01 Corporate Governance OVERVIEW OF THE BUSINESS Do Our Best to Run Business! A 60-year Journey with You!

2.1 Stakeholder Engagement Being awarded ‘Best Digital Being awarded ‘New Southbound Being awarded ‘Best Online Popularity Award’ Finance Award’ and ‘Best Public Countries Related Loan Growth and ‘Best Cinematographic Creativity Award’ in 2.2 The Status of Corporate Governance Benefit Promotion Award’ Excellence Award’ 2019 Golden Eagle Micro-movie Festival 2.3 Business Growth through Collaboration Awarded with the ‘Excellence Award for New Southbound Countries Awarded with ‘Golden Security Award for Member Institute with Excellent related Loan Growth’ Performance’ by Joint Credit Information Center for 5 consecutive years 2.4 Laws & Regulations and Compliance 《 》 Awarded with ‘Best Digital Finance Award’ by Wealth Magazine Awarded with ‘Electronic Financial Business Best Service Innovation Award’ 2.5 Anti-Money Laundering & Combating the Ranked 492nd in The Banker - Top 1000 World Banks by Tier 1 by Financial Information Service Co., Ltd Capital—be listed in Top 500 World Banks for the first time Awarded with the ‘Customer’s Best Recommendation Award ’ in Excellent Financing of Terrorism Banking Survey 2.6 Internal Control & Audit System 2.7 Risk Management Mechanism 1.4 2.8 External Initiatives and Important Business Exchanges & Communications Achievements Environmental Sustainability Social Care

Awarded with the ‘Award for Best Corporate Social Responsibility’ Awarded with ‘Best Public Benefit Promotion’ by Excellence Bank Rating survey by《Wealth Magazine》 Awarded with ‘Sustainability Outstanding Award’ in BSI Global Awarded with ‘Online Popularity Award’ and ‘Best Cinematographic Sustainability Standards Management Annual Conference Creativity Award’ in Taipei Golden Eagle Awarded with ‘Bronze Medal Award for Report’ in TCSA’s Taiwan Micro-movie Festival Corporate Sustainability Forum Awarded with ‘Sports Activist Receiving verification of 2018 Corporate Social Responsibility Awards-Sponsorship Award-Silver Class’ Report from BSI by Ministry of Education Total paper use reduction: 478,129 sheets= reduction of Incorporated in the list of ‘Taiwan HC Being awarded ‘Sports Promoter Awards’- Sponsorship Category 3,443 kg carbon emission and saving 57 trees 100 Index’ for 5 consecutive years Silver Award by Ministry of Education

10 Do Our Best to Run Business! A 60-year Journey with You!

2.1 Stakeholder Engagement 2.2 The Status of Corporate Governance 2.3 Business Growth through Collaboration 2.4 Laws & Regulations and Compliance 2.5 Anti-Money Laundering & Combating the Financing of Terrorism 2.6 Internal Control & Audit System 2.7 Risk Management Mechanism 2.8 External Initiatives and Important Exchanges & Communications . The . The ”

Taichung Commercial Commercial Taichung “ Public benefit Business Development Department Material issues Charity and care & Sports Culture activities

Auditing Office of the Board Implementation Supervision Material issues Employee Benefits Labor Relations Employee training Employee care Human Resourses Department President Chairman Business Development Department has been designated as an integrating DepartmentBusiness Development has been designated as an integrating departments in subjects with implementation CSR associated assist to unit legal & legal general affairs, corporate governance,of resources, human reports regular and risk management, and makes business compliance, credit responsibility on the annual outcome of corporate social of directors to Board implementation. Bank Co., Ltd. Corporate Social Responsibility Best Practice Principles Social Responsibility Best Practice Bank Co., Ltd. Corporate 2.1.1 Taichung responsibility, social corporate of carryto promotion the out order In Bank started social responsibility to corporate subjects in relation to implement passed the and amended of directors after Board in 2014

Supervisory Vice President Environmental Affairs Department Material issues Energy conservation reduction carbon and of going Promotion paperless Policy Credit sustainability General CSR Executive team

Business Development Department Customer Service All departments and offices Material issues Personal Information Protection Customer Rights Protection & Service Quality Product Legal compliance

Material issues Corporate Governance

’ s management and operations. s management and Corporate Governance Board of directors Office

GRI 102-40 102-42 102-43 102-44 102-46 102-47 102-43 102-44 102-46 GRI 102-40 102-42 in social responsibility carries out corporate Bank proactively Taichung management to conformbusiness a which strikes to the global trends governance.corporate and society our With environment, balance among performance, citizenship corporate contribution economic our enhance we for employees, community and the quality of life to the nation, improve proactively and advantages competitive CSR-based the facilitate society, social ethics and In view of respecting responsibility. fulfill corporate social associated of other stakeholders, we value the factors heeding the rights governance corporate and society seeking when with environment, and incorporate them into Taichung and profitability, sustainable operations, Bank 2.1 Stakeholder Engagement Stakeholder 2.1

A 60-YEAR JOURNEY WITH YOU! 12

02 DO OUR BEST TO RUN BUSINESS! 1. Executive structure for Corporate Social Responsibility 02 This structure comprises the Chairman, CSR executive team and Auditing Office of G. Cultivate professional wealth management teams to increase high-net- the Board. CSR executive team is established by way of task allocation, which is worth individuals ’ adherence through differentiation management for different DO OUR BEST TO RUN BUSINESS! chaired by Deputy Executive President of Business Development Department and customer groups comprises members coming from team leaders or general staff of related H. Precisely provide customers with what they need and help customers enjoy departments. The CSR team summarizes subjects related to corporate social the best digital experiences responsibility, collects data and then compiles Corporate Social Responsibility I. Cultivate all-round finance professionals and deepen personnels’ Report, which is to be publicized after Board of directors ' approval. global competitiveness.

2. Sustainable Development Strategies (1) Sustainable Development Taichung Bank provides all-round financial services, undertakes and carries out the five core values placed on financial services sector: ‘Service, Product, Expertise, Customer and Public Benefit’to convey the brand spirit of ‘ We Do Our Best for You’ to the public.

(2) Business strategy SERVICE With the ongoing changes in customer behaviors and banking ecosystem brought by digital finance, the Bank shall adhere to the principle of ‘Face Challenges & Progress with Stability’ to achieve the sustainability of PRODUCT PUBLIC BENEFIT various business development layouts through six dimensions — ‘Financial Governance, Fair Customer Treatment, Risk Management, Business Performance, Financial Innovation and Talent Cultivation’to strengthen the momentum for the banks’ operational development. Five Core Values (3) Business Strategies

A. Reinforce legal compliance system and strengthen anti-money laundering EXPERTISE CUSTOMER mechanism B. Strive to realize Fair Customer Treatment Principle to accomplish consumer protection mechanism A 60-YEAR JOURNEY WITH YOU! C. Utilize risk mitigation and promote low capital consumption businesses to implement the mechanism of capital utilization and management. D. Strengthen small and medium enterprises ' competitive advantages and develop complete business financing programs for them E. Expand the scale of foreign exchanges business and proactively promote foreign currency credit business and trade finance. F. Continue to provide diverse integrated financial products to improve competitive advantages in consumption finance

13 e e d tification ts two months onmental nance segments t teams to e Do Our Best for W ‘ ter nal evaluation agencies or nal evaluation agencies Goals for 2020 for Goals formance evaluation for Boar eduction measures ectors and functional committees befor ectors and functional committees nal professional & exper & nal professional in business operations and extend the extend and operations business in ’ u o establish a complete corporate governanc corporate complete a establish o Yo and set focus on sustainable development and set focus on sustainable of dir the end of the first quar of envir Continue the promotion sustainability to echo with SDGs Continue supporting energy green Continue implementing energy conservation and carbon r Continue the fulfillment of corporate social responsibility Practice the brand spirit financial specialists diversify and Cultivate a friendly work environment and create Continue to improve all gover improve Continue to t of FinTech Accelerate the development market layout Optimize national financial part evaluation & cer in relevant Take system Implement legal compliance repor Publicize annual financial Arrange exter exter complete per system year after the end of each fiscal positive influence of financial services sector in the society • • • • • • • • • • • • • y and ’ nationally -end bonus) mance of the nment in setting ’ for 20,000 factories Academic Education, Academic s management system ’ chers could be trained eatment, etc. The —‘ equests the use of low-pollution y upgrade and low-carbon es was 1.39 times higher than the basic to extend our positive influence in the ’ over the past 5 years since 2015, which ’ e safety equipment so as to contribute our Ethical Procedures and Code of Conduct Ethical Procedures ‘ , and , and ’ and used materials with domestically and inter and used materials with ’ s operational performance perfor or individual ’ educe carbon footprint. Practice energy conservation and educe carbon footprint. Practice energy conservation Taiwan HC 100 Index Taiwan t from BSI t from ‘ Concessional Loan for Equipment Financing ‘ to assist firms in being included in government ’ s A- Credit Rating s A- Credit ’ by adding one female member in Board of directors member in Board by adding one female ’ simplicity & practicality at the BSI International Sustainability Standards Management Conference Management at the BSI International Sustainability Standards ’ ‘ ector Election Items been implemented in 2019 in implemented been Items y is equivalent to 13-month wage (12-month base salaryy is equivalent to 13-month wage (12-month base plus 1-month year eached 1,224 in 2019. eatment, environmental protection and fir protection eatment, environmental by Joint Credit Information Center by Joint Credit ’ ehensive system, thereby helping them step towards the global stage and strengthen the the global stage and strengthen helping them step towards ehensive system, thereby ’ . The team was trained through participating in contests in hope that the ar . The team was trained through from the TCSA Taiwan Corporate Sustainability Forum Report Corporate Award the TCSA Taiwan from ’ formance bonus was added based on the unit onic materials for educational training and energy-saving equipment, etc. onic materials for educational training and energy-saving s stock had been incorporated in the list of s stock had been incorporated in the list of ’ Golden Security Award Gender Equality Policy Guidelines Gender Equality Policy ‘ ‘

The Ethical Corporate Management Best Practice Principles The Ethical Corporate Management ‘ Bronze Award Bronze Excellent Sustainable Practice Award Excellent Sustainable Practice eduction in business segments by using electronic official documents, electronic certificates for employee salar official documents, electronic eduction in business segments by using electronic ‘ ‘ mation on this land by supporting green industries such as bicycles, solar energy and water tr mation on this land by supporting industries green . ecyclable construction materials. ovement activities. . tified Environmental Protection Label and Green Construction Material Label as well as r and Green Label Protection tified Environmental mulated mulated forts to environmental protection and sustainability. protection forts to environmental on the as awarded as awarded as recognized by Fitch Ratings Taiwan Company Fitch Ratings Taiwan by as recognized anchao Branch in Kaohsiung was founded anchao Branch in Kaohsiung Corporate Archery League Single Point of Contact for Specific Factory Registration tax payment, electr services and continued assisting the industr Encouraged customers to use digital financial transfor cumulative number of customers had r In response to the amendment of Factory Management Act, the Bank cooperated with Taichung City Gover to the amendment of Factory Act, the Bank cooperated with Taichung In response Management cer and r consumption to r of energy and paper Continued the reduction carbon r under a complete and compr foundation of sports development. and legally running on the site. Taichung Bank had provided Bank had provided and legally running on the site. Taichung year ‘ ‘ demonstrated the recognition of our profitability and the acknowledgement of our employee salary and benefits. of our profitability demonstrated the recognition had a fair and competitive compensation system. Salary Bank for our new hir Taichung minimum wage. Employee annual salar and operational per Charity & Care, ArtsCharity & Care, Sports & Humanities, Community Activities and Development Interior refurbishment in branches pivoted on in branches pivoted on Interior refurbishment to assist them in funding wastewater tr ef investment knowledge, sponsoring the greening/beautification of public facilities, and conducting or sponsoring neighborhood of public facilities, and conducting or sponsoring investment knowledge, sponsoring the greening/beautification impr society .with activities of the five major dimensions echo part in charitable activities and proactively Took . Bank Taichung 3. 4. 2. 2. For Taichung Bank values every segment of corporate governance and ensures compliance with regulations to protect shareholders' shareholders' to protect Bank values every with regulations compliance of corporate governance segment and ensures Taichung corporate value. rights and create 1. W 3. Implemented 9. W 4. nomination system in Dir Adopted candidate 5. Y 6. W 5. experts several archery to formfor the first time by recruiting stepped into the field of archery Bank a team for Taichung 7.Repor of Corporate Social Responsibility Received verification Won 8. the 4. 1. 1.and planning financial of propagation as such activities local parttake voluntarily to branches Encouraged related in 2 3 ain Achievements and Future Goals of Sustainable Development in 2019 Development Sustainable of Goals and Future ain Achievements

Society M

Governance Environment 3.

A 60-YEAR JOURNEY WITH YOU! 14

02 DO OUR BEST TO RUN BUSINESS! 2.1.2 Materiality Analysis employee care and public benefit) to discuss and identify stakeholders. The following 7 types of stakeholders were determined with reference examples offered 02 from different business units of the Bank and other financial service provider DO OUR BEST TO RUN BUSINESS! Identify Stakeholder

Communicate with Stakeholders

Competent Authority Investor Collect Related Subjects

Media

Conduct Materiality Analysis

Develop Management Approaches

Supplier

The public A 60-YEAR JOURNEY WITH YOU!

1. Identification of Stakeholder In order to precisely ascertain the subjects which stakeholders are concerned about and the subjects ’ connectedness in relation to the creation of the Bank’s Customer Employee long-term value, we upgraded the materiality analysis method in 2019 by following the spirit of AA1000 Account Ability Principles to allow members of

CSR Committee teams (including corporate governance, customer service, ● Note: ‘Impact’ has been added into the AA1000 AccountAbility Principles published in 2019. environmental sustainability,

15 ’ Low Low High High Issue of ‘ Material Concern Intensity of Talent Talent Cultivation Employee Benefits Labor Relations Product & Product Service Quality Customer Rights Protection Personal Information Protection ’ s business enhancement. s business ’ ’ external website ‘ ) ’ s products or services, which include Customer Service s products or services, ’ s Fun Club ’ where business information is posted and employees are where business information is posted and employees Yongxin, Guanxin and Kaixin ’

— to subsidize clubs for running activities, thereby encouraging employees to subsidize clubs for running activities, thereby ’ 3C Program ‘ internal website

‘ s ’ Taichung Bank Baby A-Zhong ‘

Communication Channels / Communication Frequency Channels / Communication Communication inquiries and grievances

’ salary and benefits on a regular (yearly) basis ’ Club Management & Subsidy Directions' ‘ ’ s FB social media website ( s FB social media website Employees can express their opinions through Hotline or present opinions in person to any of the leaders of HR department or Employees can express their opinions through about the employees who submit their opinions and should respond promptly The company should maintain confidentiality A special section has been set on the Bank Promptly deal with customers for Handling Whistleblowing Reports on Disclose Human Rights Policy and the Procedure Regularly organize professional training & education courses. Regularly organize professional training & education team leader training through IDP (Individual Development Program) on a yearly Select outstanding personnel to be trainees for Convene quarterly Labor-Management Meetings Examine employees Adopt Employee Assistance Programs (EAPs) Adopt Employee Assistance Programs (EAPs) Formulate Conduct semiannual satisfaction degree survey with wealth management customers degree survey with wealth management Conduct semiannual satisfaction complaint data Summarize monthly customer promotion meetings investment information meetings and business Organize unscheduled The Bank channels to express opinions about the Bank Provide customers with send their opinions in writing / email to HR department. the occurrence of misdeeds or unlawful events. when dealing with sexual harassment and prevent allowed to present opinions in a free manner. basis actively participate in club activities in order to attain physical and mental health. to actively participate in club activities in order to Hotline (toll-free number: 0809-096888), letters, emails, fax, service counters, mails from Competent Authorities or Financial counters, mails from Competent Authorities or 0809-096888), letters, emails, fax, service Hotline (toll-free number: Ombudsman Institution • • • • • • • • • • • • • • • • opinions ’ Materiality Pay attention to customers and provide and provide customers with quality experiences by focusing on their needs People are the key People are factor for a business to build up its competitiveness, and also is an important foundation for its sustainable operations. municate with stakeholders and collect related Issues related and collect stakeholders with municate

Com Customers Employees

Stakeholders Providing diversified communication channels and valuing opinions of every stakeholder is an important reference basis for Taichung Bank basis for Taichung valuing opinions of every channels and diversified communication stakeholder is an importantProviding reference 2.

A 60-YEAR JOURNEY WITH YOU! 16

02 DO OUR BEST TO RUN BUSINESS! 02 DO OUR BEST TO RUN BUSINESS!

Intensity of Issue of Stakeholders Materiality Communication Channels / Communication Frequency ‘ Material Concern ’ Business High Support from • Publicize monthly financial and business data erformance shareholders and • Publicize quarterly financial statements and reports Risk investors is the • Convene annual Shareholder Meeting, publish Annual Report and publicize financial conditions and business performance anagement strength for the • Convene annual earning calls, disclose corporate governance state and reinforce external communication channels Corporate Investors company ’s stable • An open information section has been set to disclose the Bank’ s business performance and mandatory disclosure information; Governance growth and a ‘contact for investors’ is offered for the communication with investors Sustainable Operations Low Gather the strength • Organize campus / community finance awareness activities from time to time High of public welfare and • Proactively take part in public benefit activities and sports events Cultural & Sports

charity groups to • Encourage branches to organize/participate in local CSR activities. Activities The public realize the belief of • A special section of ‘Social Responsibility & Public Benefit’has been set on Taichung Bank ’ s website where various Charity & Care Low love activities & achievements are shared with the public

Strictly abide by Legal High laws and regulations • Provide monthly business operation data and information compliance set by Competent • Publicize certified public accountant audited quarterly report Anti-Money Authorities and • Convene annual Shareholder Meeting Laundering Competent proactively • Publish annual reports and Corporate Social Responsibility Report Credit Policy Authorities cooperate with • Performance evaluation by Government Greenhouse government policies gas emission Low

Energy High Suppliers are • Conduct semiannual audit on contractors. conservation partners for • Publicize tender information through media or the Bank ’s website and invite non-specific suppliers to bid and carbon sustainable • In procurement, give priority to products which agree with environmental protection by using renewable materials, being reduction Supplier operations and recyclable, with low-pollution or being energy-efficient Green A 60-YEAR JOURNEY WITH YOU! business growth purchasing Low

Corporate High Media is an Governance important channel Business for the company • Interview activities and press conferences Performance and stakeholders • News Customer Media to understand each Rights other Protection Charity & Care Low

17 s. s. ’ . And . And ined in ined in ccording s operations operations s ’ ed a ed s operation ’ ifi d class d ung Bank ung Degree of impact Degree ‘ d d an d Taich utcomes were expla utcomes were appraise m, Low) an Sustainable Operations purchasing Green Gas Emission Greenhouse Product & Service Quality & Service Product Business Performance Corporate Governance Cultivation Talent Customer Rights Protection Legal compliance Employee Benefits Personal Information Protection Risk Management Anti-Money Laundering Academic, Cultural and Sports Activities Policy Credit Energy Conservation and Carbon Reduction Labor Relations Charity & Care ich was illustrated below) to help the help the below) to ich was illustrated aichung Bank impact T 1 7 9 4 5 6 2 3 8 13 15 12 14 17 11 10 18 16 Issues of major concern major of Issues issues concern Ongoing Issues of secondary concern , were , d (wh concern potentially (High, Mediu ’ g unit, the impacts on impacts the unit, g Low ’ High rn olders was produce ’ trix ’ ts otection t in ion of stakeh of ion ension of conce Tension of ‘ s ： 1 Materiality Ma Materiality d ten d ‘ 9 High Tension arious chapters and sections of this report.arious chapters and ‘ eatment Principles High r an to their a issues which Bank identify from CSR Report integratin Report CSR from Corresponding response and implementation o and response Corresponding v

7 oactive suppor 4 , Customer Rights Pr 13 Academic, Cultural and Spor Activities, its tension was raised Fair Customer T this year was adjusted to 2. With the pr 1. of to the implementation In response Comparison between 2019 and 2018 material issues matrixes 2 3 6

8 current status, current ’ 14

15 een Purchasing

edit Policy 12 17 mance 8. Risk interviews and online surveys to to and online surveys interviews ’ e 12. Academic, Cultural s discussion over the assessment results, assessment results, s discussion over the 5 ’ 11 Impact on the company’ s operations nance 10. Sustainable Operations

16. Greenhouse Gas Emission 16. Greenhouse 10 18 alent Cultivation 5. Labor Relations 6. 7.Business Perfor otection 3. Personal Information Protection 16

The degrees of stakeholder concern Low ts Activities High

1.Product & Service Quality Customer relationships issues: 1.Product 2. Customer Rights Pr Employee relations issues: 4.T Employee Benefits Corporate governance issues: Management 9. Corporate Gover Community Involvement: 11.Charity & Car and Spor Legal compliance issues: 13.Legal compliance 14. Cr 15.Anti-Money Laundering Environmental protection issues: 17. Energy Conservation and Carbon Reduction 18.Gr

Six Material issues Groups: make a list of material subjects, on which corresponding risk assessments were were risk assessments on which corresponding of material subjects, make a list executive team conducted . After CSR trends of social development, stakeholders stakeholders social development, of trends 3. Analysis Materiality Conduct might be issues which stakeholders identify the critical to order In 2019, in various considered Bank Taichung of concerned, Office Head and branches business by different on the data provided boundaries based subjects to peer companies departments,management and with reference 18 concerned subject were screened out. After the approval of team-leader of team-leader After the approval out. screened 18 concerned subject were

A 60-YEAR JOURNEY WITH YOU! 18

02 DO OUR BEST TO RUN BUSINESS! 4. Taichung Bank s relations with UN SDGs ’ UN SDGs are goals to be attained by 2030, which are the vision and priorities for private sectors and communities in the world in hope that these goals can be achieved 02 global sustainability development. SDGs called for the efforts of all governments, to eliminate poverty and create a world for people to live in dignity and peace. DO OUR BEST TO RUN BUSINESS!

Taichung Bank s UN SDGs UN SDGs Associated Targets ’ 2019 Implementation Status and Response Materiality

• Micro-enterprises Loans: 1.4.: By 2030, ensure that all people, irrespective Launch the ‘Taichung City Government's Loan for Youth Entrepreneurship and Small and Goal 1: of gender, especially the poor and disadvantaged Medium Enterprises’ to simulate youth entrepreneurship in realizing dreams (Please refer No poverty groups, will have equal rights and acquisition rights Product & Service to Chapter 3 Section 2) in relation to property, inheritance, natural resources, Quality • Small unsecured loans: new technologies and financial services (including Charity & Care Target at Welfare Lottery dealers to support customers’ seasonal funding needs (Please Microfinance) of economic resources, basic services, refer to Chapter 3 Section 2) land and other forms of resources • Assist Eden Social Welfare Foundation in conducting The Sixth Barrier-free Life Experience & Festival (Please refer to Chapter 6 Section 3

Goal 2: 2.c.: Take measures to ensure the normal functions No Hunger of commercial markets of food and its derivative • Collaborate with Eden Social Welfare Foundation to facilitate the ‘Refrigerated Pupu products, and ensure the market information, including Charity & Care Collection Program for Shelter Baking Factory’ (Please refer to Chapter 6 Section 3) food reserves, can be obtained as scheduled to reduce extreme fluctuation of food prices

• Cooperate with Taichung City Government to assist firms in smoothly obtaining specific factory registration qualification, and support factories with ‘Concessional Loan for Equipment Financing’ for them to fund their wastewater treatment, environmental Goal 3: protection and fire safety equipment.(Please refer to Chapter 2 Section 8) A 60-YEAR JOURNEY WITH YOU! Good Health 3.9.: Significantly reduce the deaths and diseases • LOHAS Care Trust Product & Service caused by hazardous chemicals, air pollution, water Proactively cooperate with Financial Supervisory Commission in promoting the business & Well-being Quality pollution, soil pollution and other pollutions o f ‘Property Trust for the Aged and Disabled’ in the hope of, through the trust mechanism, Employee Benefits 3.c.: Increase the financing and loans for maintaining the property security and reliable care for the aged and disabled. (Please Charity & Care medical & health development in developing countries refer to Chapter 3 Section 2) • Employee Group Insurance (Please refer to Chapter 4 - Salary & Benefits - Descriptions of Employee Benefits) • Employee Health (Please refer to Chapter 4 - Salary & Benefits - Descriptions of Employee Benefits)

19 efer to (Please r ’ s development strategies ’ efer to Chapter 4 - Safety & Health in efer to Chapter 4 - Safety eness activities had been held to help Care with heart Love on Care and Pass ‘ esidents build up correct concepts of consumer finance esidents build up correct 2019 Implementation Status and Response Status and 2019 Implementation Unpaid Paternity Leave Blood donation Employee Cultivation activities Organize campus / community finance awareness scholarships for schools Provide Gender equality in team leader positions Safety & Health in the workplace Safety & Health (Please refer to Chapter 4 Section 2) (Please refer Facilitate the blood donation campaign campaign Facilitate the blood donation & training plan based on the Bank Develop annual education awar 28 sessions of campus/community finance students and community r to Chapter 6 Section 1) and wealth management.(Please refer determined for outstanding in meetings annually are scholarships of quota and Amount to Chapter 6 Section 1) students with financial difficulties. (Please refer to Chapter 4 Section 1) (Please refer Provide all employees and stakeholders with a safe operational environment and stakeholders with a safe operational environment all employees and Provide OH&S management. (Please r continuously improve the workplace) and facilitate exclusive training courses for all occupations so as to improve human capital training courses for all occupations so as to improve and facilitate exclusive Cultivation and to Chapter 4 - Talent advantages. (Please refer competitive and create Development) Career • • • • • • • Chapter 6 Section 7) s ’ Corporate Materiality governance Talent Cultivation Talent Taichung Bank Employee Benefits Academic, Cultural and Sports Activities n omen w gainst a iolence sault and other forms of f v omplete participationomplete i ual as s c ’ ex ll forms o omen s abilities in all levels ’ UN SDGs Associated Targets UN SDGs Associated decision making and leadership ’ muggling, s w nsure a liminate ible legislation to facilitate gender equality and ible legislation to facilitate gender equality ensure political, economic and public decisions; and E 5.2.: that women possess equal opportunities to participate in all levels complete policies and 5.c.: Adopt and reinforce feas women improve 4.5.: Eliminate gender inequality in education and inequality in education and 4.5.: Eliminate gender occupational the education channels and ensure which training of all levels for disadvantaged groups and including the disabled, indigenous people underprivileged children which facilities education improve and Establish 4.a.: the and disabled the children, for appropriate are safe, non-violent, non- two genders; and provide learning for discriminated and effective environment all people on public and private occasions, which including people s exploitation E 5.5.:

UN SDGs Goal 5: Gender Equality Goal 4: Quality Education

A 60-YEAR JOURNEY WITH YOU! 20

02 DO OUR BEST TO RUN BUSINESS! Taichung Bank s UN SDGs UN SDGs Associated Targets ’ 2019 Implementation Status and Response 02 Materiality DO OUR BEST TO RUN BUSINESS!

Goal 6: • Resource recycling Clean Academic, Cultural (Please refer to Chapter 5 - Section2: Resource recycling) Water and and Sports Activities • Assist underprivileged families in home repairs 6b.: Support and reinforce community involvement to Sanitation Energy conservation Collaborate with Heng-Shan Social Welfare Foundation to help underprivileged families improve sanitation management and carbon in home repairs (Please refer to Chapter 6 Section 6: Branch’s Engagement in Corporate reduction Social Responsibility Activity)

Goal 7: • Energy conservation and carbon reduction management Affordable (Please refer to Chapter 5 - Section 1: Energy conservation and carbon reduction and Clean Energy conservation management) Energy 7.a.: Facilitate the investment in energy infrastructure and carbon • Credit Policy for Green Industries and clean energy technology reduction The total loan amount for green industries in 2019 was NT$ 4.2 billion (Please refer to Credit Policy Chapter 5 Section 5: Credit Policy) • Uphold the spirit of Equator Principles (Please refer to Chapter 5 Section 5: Credit Policy)

• Maintain the development momentum for the operational scale and keep improving the overall yield Goal 8: (Please refer to Chapter 1 ‘Company Information’section 3: ‘Business Performance)’ 8.3.: Encourage the normalization and growth of Employment Business • Employee Salary micro-and small & medium enterprises, including and Performance Been incorporated in the list of ‘Taiwan HC 100 Index’over the past 5 years since 2015 channels for them to acquire financial services

Sustainable (Please refer to Chapter 4) A 60-YEAR JOURNEY WITH YOU! Economic 8.5.: Realize an employment state which Operations • Set up branches in areas with less financial access Growth achieves comprehensive productivity and enable that Academic, Cultural Yanchao Branch was set in Yanchao District in Kaohsiung in May 2019 (Please refer to all men and women will have a good job, including and Sports Activities Chapter 3 section 1: Promote Financial Inclusion with complete business channels) youths and the disabled; and carry out a wage system Talent Cultivation • Conduct industry-academia cooperation programs with universities and colleges o f ‘equal pay for equal work’ Conducted industry-academia cooperation programs with 18 universities and colleges in 2019 by offering students work placement opportunities and part-time jobs. (Please refer to Chapter 4 Section 1: Employment Situation)

21 s development strategies s development strategies ’ to continue the commitment in ’ We Do Our Best for You We ‘ 2019 Implementation Status and Response Status and 2019 Implementation Rights Protection) ’ serving local customers Barrier-free facilities Barrier-free Employee Continued Development Uphold the corporate spirit of Support small and medium enterprises Industry of cultural & creative Cooperate with government the development to promote digital financial environment Promote Employee Rights financial compliance Reinforce Employee Education & Training Employee Education Actively establish Barrier-free ATM, barrier-free environment and ATM for the visually the visually for and ATM environment barrier-free ATM, Barrier-free Actively establish to Chapter 3 (Please refer a disabled-friendly service environment to provide impaired Section 3: Customers In order to cultivate employees with global perspectives, the Bank also organizes or sends employees with global perspectives, the Bank to cultivate In order Talent 3: Section 4 Chapter to refer (Please further for improvement abroad employees Development) Cultivation and Career innovative and Diverse 2: 3 Section Chapter to refer please 4 points, above the (For & services) financial products Develop annual education & training plan based on the Bank Develop annual education and facilitate exclusive training courses for all occupations so as to improve human capital training courses for all occupations so as to improve and facilitate exclusive Cultivation and to Chapter 4 - Talent refer competitive advantages. (Please and create Development) Career • • • • • • • • • s ’ Quality Protection Materiality Credit Policy Credit Labor Relations Customer Rights Legal compliance Product & Service Product Taichung Bank ’ s financial UN SDGs Associated Targets UN SDGs Associated 8.7.: Take immediate and effective measures to to measures and effective immediate 8.7.: Take the worst form and eliminate of child labor prohibit competency of the nation the 8.10.: Improve institutions to provide a wider range of banking, banking, a wider range of institutions to provide services for all people insurance and financial 10.1.: Facilitate the economic, social and political political 10.1.: Facilitate the economic, social and gender, age, of irrespective 2030, by integration economy or nation, religion, race, color, disability, other personal status and supervisions of the regulations 10.5.: Improve and global financial markets and financial institutions, regulations of such the enforcement reinforce 9.c.: Improve channels by which small-scale small-scale which by channels Improve 9.c.: financial services businesses can acquire

UN SDGs Goal 9: Industry, Innovation and Infrastructure Goal 10: Reduced Inequalities

A 60-YEAR JOURNEY WITH YOU! 22

02 DO OUR BEST TO RUN BUSINESS! Taichung Bank s UN SDGs UN SDGs Associated Targets ’ 2019 Implementation Status and Response Materiality 02 DO OUR BEST TO RUN BUSINESS!

Goal 12: • Uphold the spirit of Equator Principles Responsible (Please refer to Chapter 5 Section 5: Credit Policy) Consumption • Green purchasing and supply chain management 12.7.: Facilitate public procurement procedures and Credit Policy 1. Contractor Safety Management & Control which support sustainable development according to Production Green purchasing 2. Support local agriculture development national policies and priorities 3. Use green construction materials 4. Request suppliers and subcontractors to follow environmental protection requirements (Please refer to Chapter 5 section 3 ‘Green purchasing and supply chain management’ )

• Organize mountain cleanup activities Goal 15: Please refer to Chapter 6 Section 6: 15.a.: Call up everyone and largely increase financial Life on Land ‘Reward Program to Facilitate Branch’s Engagement in Corporate Social Responsibility and material resources from different places to protect Academic, Cultural Activity’ and ensure the sustainable utilization of biodiversity and Sports Activities • Organize beach cleanup activities and ecosystems Please refer to Chapter 6 Section 6: ‘ Reward Program to Facilitate Branch’ s Engagement in Corporate Social Responsibility Activity’

• The Ethical Corporate Management Best Practice Principles Goal 16: 16.10.: Ensure people’s acquisition of information and Please refer to 2019 Taichung Bank Annual Report Peace, the protection of basic freedoms in accordance with Risk Management • Risk Management Mechanism Justice national legislation and international agreements Personal Information (Please refer to Chapter 2 section 7: Risk Management Mechanism) and Strong 16.a.: Establish abilities of all levels through Protection • Anti-Money Laundering & Combating the Financing of Terrorism (AML & CFT) Institutions international cooperation, especially in developing Anti-Money Establish AML & CFT (Anti-Money Laundering & Combating the Financing of Terrorism) countries to prevent violence and combat terrorism Laundering systems for customer name checking, risk evaluation, transaction monitoring and data and crime Corporate retention for due diligence investigation to assist the implementation of anti-money 16.b.: Facilitate and enforce non-discriminated laws Governance laundering & combating the financing of terrorism. and policies to realize the sustainability development (Please refer to Chapter 2 section 5: Implementation of Anti-Money Laundering & A 60-YEAR JOURNEY WITH YOU! Combating the Financing of Terrorism)

Goal 17: Partnerships • Strengthen offshore banking business for the Goals 17.14.: Enhance the consistency of policies to realize Product & Service (Please refer to Chapter 3 section 1: Promote Financial Inclusion with complete business sustainable development Quality channels)

23 impact Investor External Customer authorities The public Competent (Infographics) Scope of Impact Employee (Info Graphics) Internal Impact UN SDGs Corres- ponding

s ’ information security ’ trust and satisfaction but will Opportunities ’ e-commerce sellers and financial technology consciousness and help realize the company more diverse and friendly financial setting. By the complete establishment of digital products (digital unsecured loans and home loans) and multiple identity verification platforms, the convenience of online application service and customers satisfaction shall be enhanced. Implement information security protection to protect customers rights, which will not only win customers also enhance employees sustainable development. Through the applied technology of big data analysis, we can know what customers need and use it as a reference in our marketing, credit management, product design, cross- selling and customer services so as to deepen customer relationships and maintain & establish brand loyalty. With the customer-centered online digital With the customer-centered with physical warm services incorporating together with services offered in branches financial services, innovative and diversified shall be maintained and customer relationships us face challenges deepened, which helps and opportunities. diverse, With the development of financial multidisciplinary and inclusive services, cross-industry partners (such as companies) can integrate digital loan a application procedures through API to create • • • • corresponding table corresponding Key Impact Risks & Opportunities Risks & Opportunities Key Impact ’ Risks Facing the competition from non-financial sectors which step into the finance territory with their technology expertise Breaching applicable financial customers protection which regulations, shall lead to punishment and sanction imposed by Competent Authorities and shall have negative on corporate effect image The use of emerging technologies (cloud, biometric IoT, recognition, OpenAPI) increas of data the difficulty which protection, tends to affect customers rights. • • • Corres- ponding the Report Chapters of Do our best best our Do guard to A customers! Trustworthy Partner! material issue boundaries issue material ‘ ’ and ’ Personal Appendix) information security system ‘ Information Files Security Maintenance Guidelines diverse financial products Customer Treatment Principles and consumer protection policies Guidelines Management Management (Please Refer to 4. Improve 1. Provide 2. Carry out Fair 3. Formulate Disclosures Disclosures Based on Topic- Specific Standards management guidelines management (Performance Metrics) GRI Import Subjects & GRI Import Society-Customer Privacy (GRI 418)&(GRI 418-1) Economy- Economic Performance (GRI 201)&(GRI 201-1) Society- Social & Economic Legal Compliance (GRI 419)&(GRI 419-1) ‘

Import Develop

Subjects 1 Product& Service Quality 2 Customer Rights Protection 3 Personal Information Protection 5.

A 60-YEAR JOURNEY WITH YOU! 24

02 DO OUR BEST TO RUN BUSINESS! 02

GRI Import Subjects & Key Impact Risks & Opportunities Scope of Impact DO OUR BEST TO RUN BUSINESS! Management Corres- Corres- Disclosures Import Guidelines ponding ponding Based on Topic- Subjects (Please Refer to Chapters of UN External Specific Standards Risks Opportunities Internal Impact Appendix) the Report SDGs impact (Performance Metrics)

• With the coming of an era of digital finance, human input 1. Enhance has been replaced employees’ by AI in many sense of business operations. • Departments specialized in staff training are identity Thus, it becomes entrusted to create annual education & training with the more important to plans based on the Bank’s development company Do Our cultivate personnel strategies, and formulate specific training 2. Follow Best to with multidisciplinary courses for employees of different positions applicable 4 Talent Care for our skills. and levels, And at the same time enhance the Society- Labor Relations Labor Cultivation Employees! • If the company quality, depth and effectiveness of the courses (GRI 401)&(GRI401-1) Standards Employee 6 Employee Create does not create so as to accumulate human capital and create Competent Society- Act Competent Benefits Pleasant an employment competitive advantages. authorities Training&Education regulations authorities 5 Labor Work environment of • Implement industry-academia cooperation (Infographics) (GRI 404)&(GRI 404-1) 3. Develop a (Info Graphics) Relations Environment equality and programs with universities and colleges complete for Happy provide good work by offering students work placement education & Life! conditions, it will not opportunities, which shall not only reduce HR training only cause labor cost resulted from new hire resignation due to system disputes but will ‘theory-practice gap’ but shall also fulfill our 4. Offer also affect employee CSR. various recruitment and A 60-YEAR JOURNEY WITH YOU! welfare retention, and may systems even damage the company ’s goodwill and brand image.

25

impact Investor External Customer authorities Competent (Infographics) Scope of Impact Employee (Info Graphics) Internal Impact UN SDGs Corres- ponding ’ updated regulations updated regulations Opportunities Three lines of defense control lines of defense control Three ‘ to ensure the effective implementation implementation the effective to ensure ’ of risk management system, so as to reduce of risk management system, so as to reduce of operational risks and the occurrence achieve corporate sustainable development. and requirements by precise compliance. by precise and requirements With the digital transformation driven by operation & investment a whole-new FinTech, pattern can be established and business services should be optimized to improve business efficiency. Carry out the Be observant in noticing any changes of with so as to cooperate laws and regulations, Competent Authorities system • • • Key Impact Risks & Opportunities Risks & Opportunities Key Impact Risks Breaches of Breaches resulted regulations internal control from shall bring failure sanction imposed by Competent authorities and damage the corporate image. to update Failure promptly, regulations occurrence of information security incidents, climate changes and operational risks coming emerging from technologies • • Corres- ponding the Report Chapters of Do Our Best to Run the Business! A 60-year Journey with You! ’ s Appendix) data data associated with Corporate governance Bank the on website website Market and Observation System Post publicize financial statements annual and reports internal control risk and management Guidelines Management (Please Refer to 1. Publicize Publicize 1. 2. Regularly Regularly 2. Reinforce 3. Disclosures Based on Topic- Specific Standards (Performance Metrics) GRI Import Subjects & GRI Import Economy- Economic Performance (GRI 201)&(GRI 201-1)

Import Subjects 7 Business Performance 8 Risk Management 9 Corporate Governance 10 Sustainable Operations

A 60-YEAR JOURNEY WITH YOU! 26

02 DO OUR BEST TO RUN BUSINESS! GRI Import Subjects & Key Impact Risks & Opportunities Scope of Impact Management Corres- Corres- Disclosures Import Guidelines ponding ponding Based on Topic- External 02 Subjects (Please Refer to Chapters of Risks Opportunities UN Internal Impact

Specific Standards DO OUR BEST TO RUN BUSINESS! Appendix) the Report SDGs impact (Performance Metrics)

1. Pivot on the • Long-term promotion of commitment is always Academic needed for public Education, benefit activities to Sports bring about expected Development, • Encourage branches to take part in public Do Our effectiveness. Thus, 11 Charity & Arts & benefit activities, which shall influence Best to it requires prudent Care Humanities, employees, customers and community Care for the assessment to 12 Economy- Indirect Charity & residents in a positive way and extend the Community! determine how to Academic, Economic Impact (GRI Care and implementation of public benefit to more Extend distribute resources Employee The public Cultural 203)&(GRI 203-1) Community aspects of the society, which shall not only (Info Graphics) (Infographics) Positive in the most efficient and Sports Activities improve corporate image but shall also Influence in way and to integrate Activities 2. Set up reward increase business revenue and enhance the Society! it with the five core mechanism business performance. competencies of to encourage financial services branches to sector while assisting participate in in solving social or community environmental issues. activities.

• Failure to comply with procedures of anti- 1. Do Our 1. Comply money laundering Best with laws & & combating to Run • Carrying out applicable AML / CFL regulations regulations the financing of 13Legal Business! shall help the development of at home and 2. Anti-Money terrorism may bring Compliance A 60-year abroad. Customer Laundering about sanction, 14 Credit Society- Social & Journey • With the process of due diligence customer A 60-YEAR JOURNEY WITH YOU! & Combating correction or other Policy Economic Compliance with You! investigation, the Bank shall understand the Financing punishment imposed Employee 15 Anti- (GRI 419)&(GRI419-1) 2. Do Our customers' financial status, income sources (Info Graphics) of Terrorism by Competent Competent Money Best to and operational situation, thereby improving 3. Assist the Authorities and shall authorities Laundering Appreciate credit quality and reducing non-performing development have negative effect (Infographics) Blessings! loans ratio. of green on corporate image Guard our industries and development of homeland! business at home and abroad.

27 impact External Scope of Impact Scope Internal Impact UN SDGs Corres- ponding Opportunities financial status, income sources

’ Carrying out applicable AML / CFL regulations Carrying out applicable diligence customer With the process of due shall help the development of domestic & shall help the development overseas businesses shall understand investigation, the Bank customers and operational situation, thereby improving credit quality and reducing non-performing loans ratio. • • Key Impact Risks & Opportunities & Opportunities Risks Key Impact job ’ Risks Enforcement of Enforcement applicable AML and may CFT regulations cause additional compliance cost The compliance with AML / CFT may regulations lead to the loss of customer owing to the complicated credit and the procedures difficulty to clearly between differentiate of the relevance customers attributes to high-risk customer groups. • • Corres- ponding the Report Chapters of Chapters of Appendix) Guidelines Management Management (Please Refer to (Please Refer Disclosures Disclosures Based on Topic- Specific Standards Specific Standards (Performance Metrics) (Performance GRI Import Subjects & Subjects GRI Import

Import Subjects

A 60-YEAR JOURNEY WITH YOU! 28

02 DO OUR BEST TO RUN BUSINESS! GRI Import Subjects & Key Impact Risks & Opportunities Scope of Impact Management Corres- Corres- Disclosures Import Guidelines ponding ponding Based on Topic- External Subjects (Please Refer to Chapters of Risks Opportunities UN Internal Impact 02 Specific Standards impact

Appendix) the Report SDGs DO OUR BEST TO RUN BUSINESS! (Performance Metrics) • Suppliers do not comply with applicable environmental protection regulations or use hazardous 1. Promote the substances in the use of energy products provided, efficient which may result in devices staff’s or customers ’ 2. Continue the physical discomfort • The practice of energy conservation and promotion of or health hazards. Customer 16 Green- carbon reduction will help reduce operational procedure • With Taipowers’ house Gas cost. Continue to promote the concept of simplification energy system Emission Environment - Energy energy saving in daily operation to help and paper transition, the (Issues of (GRI 302) Do Our employees build up good habits in power The public consumption electricity price is secondary Environment - Emission Best to consumption. reduction expected to rise concern) (GRI 305) Appreciate • Purchase products which agree with 4. Use products gradually in the Employee 17 Energy Environment – Blessings! environmental protection and energy saving in with future, which may (Info Graphics) Competent Conservation Supplier environmental Guard our company’ s procurement. Support companies domestically/ cause an increase authorities and Carbon assessment homeland! in developing related technologies or receiving internationally of the companys’ Reduction (GRI 308) certification of Environmental Protection Label certified operational cost. 18 Green to jointly establish a society highlighting Environmental And the CO purchasing 2 environmental protection and sustainable Protection emission coefficient Supplier development. Label and of electricity (Infographics) Green consumption will also Construction gradually increase, Material Label which may become A 60-YEAR JOURNEY WITH YOU! an obstacle for the Bank to accomplish the goal of carbon reduction or the carbon reduction effect may be lessened.

29 ’ s external website so that investors Male Director 84% ’ s affairs through various channels. through s affairs s 2019 Annual Report for the implementation Report Annual 2019 s implementation the for ’ Operation Standards for Handling Internal Material for Handling Internal Material Operation Standards “ and implemented the Spokesperson System. Besides, Contact for Spokesperson System. Besides, Contact and implemented the ” Gender Distribution of Directors of Distribution Gender Female Director 16% status of Board of Directors) status of Board Attached website link: Information Investors is also disclosed on Taichung Bank on Taichung Investors is also disclosed about the company can understand more (Please refer to Taichung Bank Taichung to refer (Please 9 Board meetings were called in 2019, and the actual average attendance rate and the actual average attendance rate called in 2019, meetings were 9 Board and the proportion of has 2 female directors, currently was 95.4%. The board The companies. listed TWSE/TPEx average the than higher is directors female of the directors. the diversity reinforce Bank will continue to channels with stakeholders, Taichung to establish good communication In order Bank has formulated , ” Chief Other ‘ “ , ” Corporate Corporate ‘ Creating board board Creating “ position taking- position ’ , ” Operation Directions Operation Directions “ in article 24. And they should ” Handling the mandatory affairs Handling the mandatory affairs “ Assist directors Assist “ Continuing Professional Education Education Professional Continuing was set in 2014 and the the was set in 2014 and ’ , “ ” Rules for Regulating the Standards Rules for Regulating the Standards “ was formulated by the Board on 2nd May May 2nd on formulated was Board by the ” has been set since 14th December 2018. The The has been set since 14th December 2018. ’ Providing directors with information needed for with information directors needed for Providing “ s Exercise of Powers s Exercise ’ , Audit Committee ‘ ” ’ s Board is comprised of 12 members, and three of of and three 12 members, of is comprised s Board Requests Assisting directors in complying with regulations in complying with Assisting directors ’ “ was set in 2018 to provide support for directors and serve support for directors was set in 2018 to provide ’ , ” Governance ’ s for the Chief Corporate Governance Officer to realize good company to realize s for the Chief Corporate Governance Officer hours), the Chief Corporate Governance Officer should also complete complete also should Governance Corporate Chief the Officer hours), ’

ups and further training take the responsibility for supervising and implementing the operations of for supervising and implementing the operations of take the responsibility the corporate governance. Moreover, Governance Division job items specified in regulations, the Articles or contracts of Incorporation regulations, in job items specified a minimum of 12 CPE hours per year in accordance with accordance a minimum of 12 CPE hours per year in (CPE) 2019. It business operations as a communication channel between directors and the company so as to as to and the company so channel between directors as a communication the supervisory and management functions of the Board. reinforce governance the making to of view a With position the complete, framework meeting & shareholder meeting minutes meeting shareholder & meeting in relation to board meetings and shareholder meetings meetings and shareholder to board in relation for Handling Directors Handling for GRI 102-10 102-18 should be built operations as its goal, which The Bank sets sustainable of to achieve the ideal goals governance.on good corporate In order as a whole, should be competent of directors, corporate governance, Board for leadership as for business and making judgment in making decisions analysis, business of accounting & financial well as possess strengths management and a global market management and crisis management, risk Bank perspective. The The Status of Corporate Corporate Status of The 2.2 for Compliance with the Establishment of Board of Directors by TWSE Listed Listed TWSE by Directors of Board of Establishment the with Compliance for Companies and the Board etc. Besides the requirement (A newly appointed chief corporate governance(A newly appointed chief etc. Besides the requirement 18 of minimum a complete shall officer governance, assist directors in implementing their duties with sufficient support with sufficient in implementing their duties governance, assist directors and enhance the performance of Directors. of Board Corporate Governance Officer position is served by those who have experiences in handling legal, financial legal, financial handling in experiences have who by those position is served publicly listed companies or have/had held team- in affairs or shareholder The governance corporate to more. or 3 years for related positions leader of this position include main responsibilities them are independent directors. In order to establish a complete corporate corporate a complete establish to order In directors. independent are them governance the system,

A 60-YEAR JOURNEY WITH YOU! 30

02 DO OUR BEST TO RUN BUSINESS! 2.2.1 The operation status of Taichung Bank s corporate governance is listed in the table below ’ 02

Item Operation status in Taichung Bank DO OUR BEST TO RUN BUSINESS!

The method of managing shareholders’ Taichung Bank has set up a hotline and an email address for the management of shareholders’ recommendations and disputes recommendations and disputes and has made them public on Taichung Bank’s website.

The status of controlling the main The Company s Taichung Bank monitors and takes heed of the equity changes (such as increase, decrease or pledge) of ’ shareholders who actually have charge Equity the shareholders who own more than 10% of the Banks’ stock, or are directors or supervisors of the Bank. of the Bank and the name list of ultimate Structure and The information is also disclosed in Market Observation Post System. Shareholders' controlling shareholders Rights The status of establishing risk control The transactions between Taichung Bank and its affiliates all comply with regulatory requirements and are mechanisms and creating firewalls between processed under necessary monitoring procedures. Besides, ‘Principles for the Supervision of the Bank's the Bank and its affiliates Subsidiary’ has been formulated for this purpose.

The status of setting independent directors Three independent directors have been set in accordance with Taichung Bank ’s Articles of Incorporation.

The status of regularly reviewing the Taichung Bank has never appointed the same certified public accountants for auditing for several independence of certified public consecutive years. And the “Taichung Bank Certified Public Account Independence Evaluation Report” Board accountants had already been assed and approved in the Board Meeting held on 14th March 2019. Composition and Responsibility Board of Directors Performance Evaluation The result of 2018 Board evaluation was reported in Board meeting held on 2nd May 2019.

Directors’ liability Insurance has been purchased from Shinkong Insurance Co., Ltd. since April 2019. The Directors' Liability Insurance policy period is from May 2019 to May 2020 with an insured amount of US$ 10 million. A 60-YEAR JOURNEY WITH YOU!

• The credit limits on stakeholders set by the Banking Act and Competent Authorities have been disclosed on Taichung Banks’ internal website. In addition, training courses about the regulations are provided at irregular intervals to enhance personnel ’ s understanding and compliance. In the event where The Status of Establishing Channels fo a stakeholder transfers to another job, the ‘Stakeholder Information Formshould’ be requested and Communicating with Stakeholders completed, and thus a good communication channel can be maintained. • In addition to information disclosure in the Market Observation Post System in accordance with regulations, Taichung Bank also discloses the information on its website for investors to inquire.

31

rson s Corporate s Corporate ’ Units Business make statements r Spokespe Governance Information Governance Taichung Bank he Spokesperson is . T th n sperson s Financial & Financial s ompanys' head to ’ President s. Business Status Business Taichung Bank March 2019 and 27 have been placed o have been placed ommand of the c 5th nd one Acting Spoke hould manage the role and duties fo hould manage the role c a ords n 1 n s Chairman o follows Operation status in Taichung Bank Operation sperso o and audio rec pervises responsible units on press release, media contact and other public units on press release, media contact pervises responsible rences were held o President, wh ty Committee ung Bank has one Spokesperson Risk Management investor confe Directors en Spokesperson is not able to exercise the dutie en Spokesperson is ’ s financial & business status and s financial Publish annual financial reports within two months after the end of a fiscal year to provide two months after the end of a fiscal within reports Publish annual financial that all users and ensure objective and ascertained shareholders and information to the Board the informationcan equally and timely obtain critical information transmission channels through Regularly formulate of ethical management policies and and supervise the implementation measures prevention related Arrange external & expert evaluation agencies or external teams professional and functional to complete performance of directors evaluation on Board shall be Evaluation results the end of the first quarter. committees before meeting of the year. board regular in the latest reported Taich Two relations affairs. Acting Spoke relations affairs. Acting for the Bank and su acted by Depu wh August 2019, The vide the Banks' website. Website has been set to disclose Taichung has been set to disclose Website Bank • • • • • corporate governance information Board of Managing Auditing Office of the Board s ’ Board of Directors s utilization of other ’ Committee Remuneration ’ s financial & business status s financial Item Meeting information disclosure methods (such as information disclosure designating setting up English websites, collect and disclose specified personnel to information about the Bank, implementing and placing records Spokesperson system on the Bank of investor conference websites, etc.) and corporate governanceand corporate information The status of the Bank The status of setting up website to disclose of setting up website The status Bank Taichung Shareholder Office of the Board Corporate Governance Goals for 2020

Availability Information Audit Committee

2.2.2 Operational Framework of Corporate Governance 2.2.2 Operational Framework

A 60-YEAR JOURNEY WITH YOU! 32

02 DO OUR BEST TO RUN BUSINESS! 2.2.3 Basic information on directors (including independent directors)

Date of election / Position Title Name Gender Education and Experience appointment 02 DO OUR BEST TO RUN BUSINESS! Education: Master of Business Administration, New York University, USA Hsu Tian Investment Co., Ltd. Experiences: Deputy president of Peregrine Investments Holdings Limited-Business Chairman Authorized representative: 2017/6/7 Male Financing Department, Chairman of China Man-made Fiber Corporation, Chairman of Pan Kuei -Fong Wang Asia Chemical Corporation, Chairman of Taichung Bank Insurance Broker Co., Ltd., vice chairman of Taichung Commercial Bank Co., Ltd.

Hsu Tian Investment Co., Ltd. Education: Department of International Trade of Tamkang University Managing Authorized representative 2017/6/7 Male Experiences: Chairman of Taichung Bank Securities Investment Trust Co., Ltd., Deputy Director Ming-Hsiung Huang president of Cosmos Bank

Hsu Tian Investment Co., Ltd. Managing Education: Department of Accounting & Statistics of Tamkang University Authorized representative 2017/6/7 Male Director Experiences: President of Chang Hwa Bank Wei-Liang Lin

Education: Bachelor of Arts (with Distinction) in Economics, Stanford University; Master of Managing Science in Electrical Engineering, Stanford University; Master of Business Administration, Director Stanford University Li-Woon Lim 2017/6/7 Male (Independent Experience: UBS AG- Managing Director; Director) BANK OF AMERICA Merrill Lynch-Board of Directors, Merrill Lynch (Asia Pacific) Limited;BANK OF AMERICA Merrill Lynch-Managing Director, Head of Credit Products, Asia

Education: Department of Finance, National Taiwan University, Division of International Independent Hsin -Chang Tsai 2017/6/7 Male Business Management, National Taiwan University Director Experiences: Chief Financial Officer of Nan-Ya Division, HTC Corporation

Education: graduated from Business School, Harvard University, USA Independent Experience: CEO of Cathay International Holdings Ltd.; Responsible person of JP Morgan Jin-Yi Lee 2017/6/7 Male Director Chase in China; Co-responsible person of BNP in Asia; CEO of Fubon Bank (Hong Kong) Limited A 60-YEAR JOURNEY WITH YOU! Hsu Tian Investment Co., Ltd. Education: Department of Statistics of National Cheng Kung University Director Authorized representative Te- 2017/6/7 Male Experiences: Senior deputy president of Taichung Commercial Bank Co., Ltd. Wei Chia

Hsu Tian Investment Co., Ltd. Education: Department of Commerce of National Taiwan University Director Authorized representative Lai 2018/4/27 Female Experiences: Audit Manager of China Man-made Fiber Corporation, Chief of Audit Division of

-Hsiang Tsai Cosmos Bank

Education: Master Program; Dept. of Accounting, National Chengchi University; Doctor of Hsu Tian Investment Co., Ltd. Business Administration, Renmin University of China, Beijing Director Authorized representative 2019/5/28 Female Experience: Independent Director of Shin-Shin Department Store, President of Concords Shiow -Huey Yeh Securities Corp.; Director of Mega Holdings

33 Board of Directors Illustrated with Pie Chart ( Data as of 2019/12/31) Other 5.27% 43.25% Financial institutions institutions Education and Experience Education Directors 9 Directors 3 Independent Foreign institutions and foreigners 14.41% Individuals 37.07 % Education: Department of Politics of National Taiwan University Education: Department Taiwan of Politics of National chairman of Pan Asia Manager of Itochu Corporation, Vice Branch Experiences: Taipei Chemical Corporation Education: Graduate Institute of Land Economics of National Chung Hsing University Chung Hsing Land Economics of National Graduate Institute of Education: of Land Bank of Taiwan Experiences: Chief Auditor University Chinese Culture Law, Education: Institute of Co., Sunline NP Telecom Co, Ltd., Supervisor, Pau Jar Real Estate Experience: President, City; Legislator Ltd., Mayor of Luzhou Gender 0 3 9 12 Individuals Total 2017/6/7 Male 2017/6/7 Male 2017/6/7 Male appointment Date of election / election of Date Number of Directors and

Foreign Foreigners Institutions

Ming

Other Institutions Name 5.27 43.25 14.41 37.07 100 -Shan Chuang Chien -Hui Huang Hsin -Ching Chang Hsu Tian Investment Co., Ltd. Hsu Tian Investment representative Authorized He Yang Management He Yang Consulting Co., Ltd. Authorized representative Pan Asia Chemical Corporation Authorized representative Financial Institutions Total 30~50 Under 30 Age range 50 years old ≧

Ratio Director Director Director Structure

Ownership Average age of directors was 63. age of directors Average Percentage Position Title Shareholder 2.2.5 Shareholder structure • 2.2.4 The age distribution of directors 2.2.4 The age distribution of

A 60-YEAR JOURNEY WITH YOU! 34

02 DO OUR BEST TO RUN BUSINESS! 2.2.6 Operation Status of Functional Organizations 02 Audit Committee Eight meetings were held in 2019, and the average attendance rate was 87.5% DO OUR BEST TO RUN BUSINESS!

In order to accomplish the supervision over corporate governance, the Bank set 1. Fair representation of the financial statements Audit Committee which was comprised solely of independent directors in 2014. 2. Appointment, dismissal, evaluation of independence and performance of Audit Committee and its members (independent directors), besides exercising certified public accountants power in accordance with “Securities and Exchange Act” , “Regulations Governing 3. Effective implementation of internal control the Exercise of Power by Audit Committee of Public Companies” and regulations 4. Compliance with regulations and rules. set by Securities Exchange or Taipei Exchange, also play a main role in supervising 5. Management of existing or potential risks. the following governance items:

Position Name Frequency of Actual Attendance Frequency of Proxy Attendance Actual Attendance Rate (%)

Independent Director Jin-Yi Lee 7 1 87.5

Independent Director (convener) Hsin-Chang Tsai 7 1 87.5

Independent Managing Director Li-Woon Lim 7 1 87.5

Remuneration Committee Four meetings were held in 2019, and the average attendance rate was 100%

Remuneration system plays an important part in corporate governance and risk Frequency Frequency Actual management. The Bank set Remuneration Committee in 2011. The members were Position Name of actual of proxy attendance appointed and finally decided by the Board. Currently the Committee members attendance attendance rate (%) include two independent directors and one outsider, and they shall loyally implement the following responsibilities with prudent administration and submit Independent Hsin- suggestions to the Board for discussion: Director Chang 4 0 100 1. Formulate and regularly review performance appraisal and remuneration criteria (convener) Tsai A 60-YEAR JOURNEY WITH YOU! of managers and business personnel as well as the remuneration structure and system of directors. Independent Li-Woon 4 0 100 2. Regularly review and formulate regulations in relation to director and manager Managing Director Lim remuneration. Ying -Hui Committee Member 4 0 100 Wu

35 h e g aliz asin pace. rights to Taichung existing '

their rights aichung Bank is , Taichung Bank ” areholders You g has been incre ok, started uploading Englis hung Bank, besides the lations with investors. In order to re In order lations with investors. Taic We Do Our Best for Do Our Best We “ ting Handbo governances and limits of time the to due ’ s aging its re 2019. Thus foreign investors would see lder meetings, Meeting Handbook and Meeting Notice to the Market eeting aichung Bank started to employ electronic voting system in Taichung Bank started electronic to employ Shareholder Mee lder

ho ion shareho Activism, g the service attitude of g the service in mber of shareholders using electronic votin 2012 2013 2014 2015 2016 2017 2018 2019 2012 2013 2014 2015 2016 the system was introduced. In regard to foreign sh s efforts and emphasis on corporate governance. s efforts and emphasis

’ M Shareholder Electronic Voting Rate(%) Voting Electronic 5 0 ce inese vers e nu participate in the company 20 15 10 in ersion Share s Th Ch v Observation Post System in Bank participate Shareholder Shareholder investors would not lose meeting to ensure shareholders' 2012 regular to proactively committed to man committed proactively 2.2.7 Investor Relations 2.2.7 Investor 1. By upholdin s s ’ e to was was were ” ” Principle “ exposures exposures the Board the Board nd review all risk nd review r Recommending aichung Commercial aichung Commercial tment Evaluation tment regulation amendments regulation s ’ ery three months. Ad-hoc ery three ’ s capital utilization efficiency. ment report to of the Bank for Recommending Foreign Exchange for Recommending Foreign erm Inve Short-Term & s Authorization Principles fo “ , g- nder Board of Directors. And the Bank also of Directors. nder Board s various risk exposures. For those s various risk exposures. ’ u ” e Management Regulations for T “ re amended. Moreover, proposals such as and we ” t changes or closed to the risk tolerance limits du t changes or closed to the risk tolerance ” gement policies approved by the Board a by the Board gement policies approved nt Committee holds meetings ev nt Committee nagement Committee meetings were held in 2019, which nagement Committee meetings were an ess status. Therefore Authorization Principle “ Risk Ma Manageme ’ s busin k arterly

’ s Overall Risk Limits Chairman, while positions of committee members are served by the President, by the President, served Chairman,members are while positions of committee Lon Banks' Commercial Taichung Risk Management Committee Committee Risk Management

ur qu ets Risk Management Committe ets Risk Management Four quarterly Risk Management Committee meetings were meetings Committee Risk Management Four quarterly in 2019 held also revised with the aim of improving the Bank with the aim of improving also revised Basic Forward Foreign Exchange & Foreign Exchange Product Business Product Exchange & Foreign Exchange Foreign Forward Basic related Structured Product Structured related which showed signific influences of internal or external summary and shall provide factors, the Committee suggestions on portfolio for members to discuss. adjustment explanation and offer And it shall submit an overall risk manage Bank can grasp the so the Board after the Risk Management Committee meeting, or the Bank summarized and analyzed the Bank meetings can also be held depending on the needs of business operations. held depending on the needs of business meetings can also be Fo implements the risk mana is set in the Risk Management Committee. A Minister affairs. management related is served by the ChairmanThe position of the Minister by designated or a director the departments management business and heads of Head the of presidents deputy Office. Ris In order to implement legal compliance and facilitate sound management and and management sound and facilitate compliance legal implement to order In Bank the qualities, financial and asset ensuring in Bank the of development s Bank formulated and for current risk status and take response measures with timely decision making. measures risk status and take response current In addition to regular quarterly meetings, four ad hoc Risk Management Committee Authorities Competent to response in called were meetings

A 60-YEAR JOURNEY WITH YOU! 36

02 DO OUR BEST TO RUN BUSINESS! 2. Spokesperson 2.3 Business Growth through 02 In order to establish a good mechanism for the processing and disclosure of insider information and avoiding improper information leaks and ensuring Collaboration DO OUR BEST TO RUN BUSINESS! the consistency and correctness of publicized information, Taichung Bank GRI 102-45 formulated“Operation Standards for Handling Internal Material Information” . Its purpose is to expressly declare that the disclosure of Taichung Bank ’ s insider The Bank, after 60-year efforts and commitment, has established the information, except regulated by laws or regulations, which should be performed following investee companies: “Taichung Bank Securities Co., Ltd.” , by the Spokesperson or Acting Spokesperson of Taichung Bank. “Taichung Bank Leasing Co., Ltd.” , “Taichung Bank Finance Leasing (Suzhou) Ltd.” , “Taichung Bank Insurance Broker Co., Ltd.” and“Taichung 3. Disclosure of information Bank Securities Investment Trust Co., Ltd.” . An organizational structure of a In order to enable investors and stakeholders to grasp the company’s quasi-finance holding company has been established. With the integration information promptly, Taichung bank is committed to implementing the full of these five major business entities, the Bank is able to provide customers disclosure of information and improving information transparency by upholding with complete and comprehensive financial services. the principles of“ , complete and transparent” , in publicizing financial and business information in the hope of helping stakeholders understand more about Taichung Bank’s operations and protecting shareholders' rights. Taichung Taichung Commercial Bank s Investee ’ Bank understands that it is important for shareholders and stakeholders to fully Enterprises Organizational Chart understand the company’s financial and business conditions and the status of Taichung Bank’s governance. Thus it increases the transparency of information disclosure through shareholder meetings and the publishing of monthly Taichung Commercial Bank Co., Ltd. operating reports. In addition, the Bank also discloses material information in Market Observation Post System in accordance with applicable regulations of “Taiwan Stock Exchange Corporation Procedures for Verification and Disclosure of Material Information of Companies with Listed Securities”. And public information and annual reports are also available on Taichung Banks’ website Taichung Taichung Taichung Bank for investors to download. Therefore, the goal of complete and full information Commercial Taichung Bank Insurance disclosure can be achieved. Bank Bank Leasing Securities Broker Co., Securities Co., Ltd. Investment Ltd. 4. Communication with Investors Co., Ltd. Trust Co., Ltd. Since good interaction with investors is a critical factor for a company’ s progress, Taichung Bank provides Contact for Investors on the Bank ’ s website so that investors can have direct channels to contact Taichung Bank and offer their A 60-YEAR JOURNEY WITH YOU! suggestions and advice. TCCBL CO., LTD. (B.V.I.)

Taichung Bank Finance Leasing (Suzhou) Corporation Limited

37

, ” ” and and ’ and and ” s philosophy of s philosophy of ’ ) products as the as the products ’ Promote Financial Financial Promote ’

Hand & Love Caring Hand & Love Caring “ Market layout in Taiwan Market layout in Taiwan “ We Do Our Best for You We “ Taichung Bank Taichung — Niche Market Development s birthday parties or other irregular s birthday parties irregular or other ’ ’ Taiwan-China Dual Engine Strategy Taiwan-China “ 2019 Award for Upgrading Account Opening 2019 Award ‘ for staff ” by purchasing local farmers by purchasing ” small-medium enterprises financing patternfinancing enterprises small-medium ‘ to activate a financial environment for elders, thereby thereby elders, for environment financial a activate to

. It meets diversified corporate fund needs with its with its . It meets diversified corporate fund needs Taichung Bank Leasing ” , Taichung Bank Securities supports , Taichung ‘ ” financial independence. ’ Small-medium Enterprises Good People Center “ “ , ” by Taiwan Depository & Clearing Corporation to recognize its promotion of its promotion Depository & Clearing Corporation to recognize by Taiwan ’ s Moon Festival gifts. It also encourages employees to buy agricultural agricultural buy to employees encourages It also gifts. Festival s Moon ’ referred as Diversified Fund Sources We Do Our Best for You Do We Association for the Visually Impaired Association for the Visually activities, by which employees can practice good deeds in a timely way to support way a timely practice good deeds in can employees by which activities, elders in communities, Taichung in view of caring for individual farmers. Moreover, of activity management wealth the promoted Securities Bank Inclusion for Senior Citizens Senior for Inclusion Procedures TDCC e-passbook. company of the parent By inheriting the spirit enthusiastic service attitudes and professional spirit by providing business owners business owners spirit by providing enthusiastic service attitudes and professional market Taiwan in more financial services. It will commit with comprehensive the generating from with the driven force enhancing elders “ Taichung Bank Securities was awarded Bank Securities was awarded Taichung “ 2.3.2 Taichung Bank Leasing Co., Ltd. (hereinafter subsidiary a wholly-owned is Leasing Bank was which Bank, the of Taichung founded on 13th January was NT$ 1.897 billion. 2012. Its paid-up capital in 2019 including leasing business, diverse services and financial products It provides transfer service and financing installment payment service, domestic receivables loan service, etc. of Bank Leasing upholds the philosophy Taichung core competitiveness, and focuses its strategies on competitiveness, and focuses core marketing channels, develop niche market and increase to integrate product and China so as to attain richer business business collaboration between Taiwan achievements. produce from from produce highlights its uniqueness with its its with uniqueness its highlights and China company - n n d ra, nic nic & tent ngli ngli s in s in ality ality ie ave the ave the ch) is to ch) is to tion an digital e rting qu create an preparation preparation er Specialist, p by step into ign securities ign securities ) and Zho ements of the s. The business s. The business ng Bran h to r the lified to h by division on 2nd

iu ck; it obtained the the obtained it ck; ’ fo to chiev d Fund (ETF) for the (ETF) for the d Fund d suppo rd for Whole-strength COSO Internal Control COSO Internal Control Taiwan Depository g Branch a Award for Number of e- ‘ onsultation to build up a onsultation to build up a . It is hoped that, under the s Co., Ltd. d by r Fuxin tion Taichung Bank Taichung ation of Social Work ember 2019 warded ecurities firms in the over-the Annual Awa hange Trade ‘ ‘ lific sulta rities passbook mobiliza Branch), 23rd (Brokerage Business ar, curities cooperated with Compe g Department assists compan onducte 18 and became qua g and emerging s l responsibility an l responsibility 1.5 billion. c ’ 900 s ichung Bank Securitie an ia Ta e of Exc nagement System) and secure electro nagement System) and secure g and financial c s and was a , in response to the coming of a r, in response April 2019 with the l Bank Securitie ipei (the forme gust 20 ia am. In the meantime, the lopment Program of FinTec Ta in ’ r Ma 2018 nd Initial Public Offerings (IPO). It has undertaken It (IPO). Public Offerings nd Initial r / TPEx listin Competition nd customer con needs in secu . Moreove ’ dic purcha dic Taichung Bank Se ion g Commerc ) s rs, for electronic passbook business. It participated in the ’ provided. Underwritin provided. motion un Ye who possesses the qua apital in 2019 was NT$

ich nlin, Fengyuan, Ta moting the Deve ‘ rms (Orde for OMS ation to Kaohsiung and the setting up of Kaohs ation to Kaohsiung and fessionals in underwritin ices are d 85th (Yuanlin Branch) and won t) be ranked 21st (Fengyu pro al of fulfilling corporate soc in recent yea s in Yua he Ltd. (hereinafter referred as referred Ltd. (hereinafter Securities g its loc f Brokerage Business Department Business Divisio include f Brokerage (Head Office) g environment irs associated with TWSE associated irs ation of lead underwriter in Au ’

. Furthermore, in November of the same ye ter marke motion of financial inclu ck, Futures investment and business of consignment trading of fore and business of consignment trading investment ck, Futures

partment) an un d branc ere are Brokerage Business Department Brokerage (Headquarter), are Dealing Department ere and e Bank founded well as the service of perio as the service well operations of internal control a operations of internal control e affa llowing branches: (among approximately order to meet investors adership of Chairman s peratin omprehensive investing & banking te investing omprehensive everal IPO and Secondary Public Offering (SPO) projects, and will continue to to continue will and projects, (SPO) Secondaryand IPO everal Offering Public to TDCC e-passbook Pro Sprint passbook Holders in Business Unit co De fo Clearing Corporation in Novembe digitalization Authorities in o ‘ In 2.3.1 Taichung Commercial Bank Securities Co., Co., Bank Securities Commercial 2.3.1 Taichung Th pro diversified platfo a transaction serv th qualific its enterprises can be achieved. bases o ste has also been introduced & Self-Assessment System used in the U.S. le an suspended since 28th Dec (the business has been of movin TWSE / TPEx stock, emerging with services associated with customers provide s a underwriting for primary directive s pro more recruit c the ultimate go May 2013. Its paid-up c May 2013. Its paid-up Th Underwriting Department in established

A 60-YEAR JOURNEY WITH YOU! 38

02 DO OUR BEST TO RUN BUSINESS! 2.3.3 Taichung Bank Finance Leasing (Suzhou) 2.3.4 Taichung Bank Insurance Broker Co., Ltd. 02 (hereinafter referred (hereinafter referred as Taichung Bank Corporation Limited DO OUR BEST TO RUN BUSINESS! ‘ as Taichung Bank Finance Leasing (Suzhou) ) Insurance Broker ) ‘ ’ ’ The Bank, through the subsidiary of its wholly-owned subsidiary ‘Taichung Taichung Bank Insurance Broker is a wholly-owned subsidiary of the Bank, which Bank Leasing Co., Ltd.’ TCCBL CO., LTD. (B.V.I.), invested in Suzhou (China) was set up on 26th September 2007 and started operating in 2008. Its paid-up and set up ‘Taichung Bank Finance Leasing (Suzhou) Corporation Limited’ capital in 2019 was NT$ 1.286 billion. on 11th De-cember 2012. Its paid-in capital in 2019 was USD 30 million. Taichung Bank Insurance Broker has been upholding the belief of “Enthusiasm for Life & Appreciation for Trust” since its establishment. It is always attentive to Taichung Bank Finance Leasing (Suzhou) has started its financial leasing customers’ needs and provides customers with professional insurance products services by focusing on China ’s leasing market in relation to products/ planned with customized insurance protection for risk management. Therefore, services such as direct leasing and leaseback, and step by step it becomes the first bank insurance broker providing customized policies. The building up and improving the completeness of relevant markets and company’s employees are all proactive and enthusiastic and regard “Customer product lines to meet customers’ needs and enhance customers’ First” as their highest service standard. The company believes that proper risk satisfaction degree. Besides continuing to provide services for the management can facilitate stability of the society. It carries out its business manufacturing industry and Taiwanese companies, it will actively explore philosophy and manifests the best example of social responsibility fulfillment. new market, industries and services in the future. Moreover, it will not Despite the keen competition in insurance industry in recent years, Taichung Bank only seek business growth but will also continue to facilitate personnel Insurance Broker still stands out from other peer companies, by being listed in the training, resources integration, procedures innovation, system upgrade best three insurance brokers ranked by China Credit Information Service TOP5000 and risk management with the aim of becoming an outstanding financial Survey for 3 consecutive years, and also won 2018 and 2019 ‘Insurance Dragon services provider. & Phoenix Prize’ (please refer to the Appendix), which makes it the best insurance broker company. Thus the graduates of Finance & Insurance departments/ institutes want to work with us, and our bank receives recognition from the public. A 60-YEAR JOURNEY WITH YOU!

Taichung Bank Insurance Broker is one Being awarded‘Insurance Dragon & ˙ ˙ of the best insurance broker companies Phoenix Prize’ that graduates of Finance & Insurance departments/institutes want to work with

39 s leasing s leasing ’ ： Money Market Fund Quantitative Chinese Fund Quantitative Chinese Taichung Bank Digital Era Fund Bank Digital Era Taichung Taichung Bank TAROBO Robotics Bank TAROBO Taichung Taichung Bank- The RSIT Enhanced Bank- The RSIT Taichung ： s current brokerage business and increasing business and increasing brokerage s current ’ Growth Fund Growth Taichung Bank Securities Investment Trust - Fund Issuance Taichung Bank Securities Medium-small Fund ross the Strait and among the three places three the and among Strait the ross s receipt/payment outlets can be set to serve securities customer groups, and outlets can be set to serve securities customer groups, s receipt/payment Taichung Bank Dah-fa Fund Taichung xpand Leasing Business to Serve Taiwanese Companies Taiwanese Serve to Business Leasing xpand ’ Taichung Bank Selected China Bank Selected Taichung ac E Taichung Bank Taiwan Mainstream Mainstream Bank Taiwan Taichung business in China is expected to be expanded step by step in the future. With With future. the step by step in be expanded to is expected in China business Taichung Bank Finance Leasing (Suzhou) has established 5 business bases in the Bank Finance Leasing (Suzhou) has Taichung Changsha and Zhengzhou Chengdu, Xiamen, Suzhou, 2019: in cities following in Xian, Qingdao and Chongqing. The company as well as 3 offices 2.3.6 Synergy of Industry Value Chain Management 2.3.6 Synergy of Industry Value Territory Securities 1.Expand Besides expanding the Bank between the Bank and Taichung thus the collaboration and mutual development Bank Securities shall be reinforced. 2. commission income, Taichung Bank Securities also provides domestic customers domestic customers Bank Securities also provides commission income, Taichung and dealing its through services complete financial diversified and with more the 5 business bases in 2019, where underwriting services. The company has built Bank s ’ . With the ” surpassing ‘ Taichung Bank Bank Taichung ‘ ) Taichung Bank Taichung ’ ‘ needs and satisfying customers needs and satisfying customers Taichung Bank TAROBO Robotics Robotics Bank TAROBO Taichung ’ ‘ on 5th March 2020. on 5th March ’ index funds also grow obviously in the domestic obviously in the domestic index funds also grow ’ , the stocks of which were picked through a quantitative picked through , the stocks of which were ’ Fund Scoring System for Due Diligence Investigation “ passive management ‘ Securities Investment Trust Investment Securities Ltd. (hereinafter referred as referred Ltd. (hereinafter and pivots on the development of actively managed funds with proactive managed funds with proactive and pivots on the development of actively ’

operation and management. With good corporate governanceoperation and management. With good and personnel use of technologies and the support and use of technologies the box can step outside Data, investors of Big Bank Securities a new thinking pattern decision. Taichung and create when making stable and creating will keep developing diversified products Investment Trust performance asset product of professional a becoming of aim the with growth management company oriented by customers Securities Investment Trust Co., Ltd. Trust Securities Investment fund market. However, as a professional asset management company, Taichung Taichung asset management company, as a professional fund market. However, always aims at the management goal of Bank Securities Investment Trust index Reliance Securities Investment Trust Co., Ltd. was founded on 1st June 1995. Its 1995. Its Co., Ltd. was founded on 1st June Trust Reliance Securities Investment 38.46% of its stock, was NT$ 0.312 billion. The Bank owns paid-in capital in 2019 to renamed was It company. the of shareholder major a and is 2.3.5 Taichung Bank Securities Investment Trust Co., Trust Securities Investment Bank 2.3.5 Taichung Quantitative Chinese Fund with tailored products. with tailored module (developed by TAROBO Advisors) built up on the basis of Big Data and a Advisors) built up on the basis module (developed by TAROBO patented system of investment research and expertise, Taichung Bank Securities Investment Trust Bank Securities Investment Trust and expertise, Taichung investment research issued funds stock the 2019, In index. the of surpassing goal the attain also can all outperformed the performance Securities Investment Trust Bank by Taichung no always spares Investment Trust Securities Bank Taichung of index. Moreover, its ability to pick stocks. It started to collaborate with TAROBO effort in improving a fund named Advisors in July 2019 to create The main business of Taichung Bank Securities Investment Trust involves the involves the Investment Trust Bank Securities of Taichung The main business discretionaryissuance of mutual funds, investment services, private placement The mutual by Competent Authorities. approved services and other businesses Digital Bank Taichung Fund, Dah-fa Bank Taichung include 2019 in issued funds Bank- Fund, Taichung Medium-small Mainstream Taiwan Bank Era Fund, Taichung Growth China Selected Bank Taichung Fund, Market Money Enhanced RSIT The etc. Robotics Quantitative Chinese Fund, Bank TAROBO Fund Taichung funds, onshore years, index funds have been actively developed among In recent and such

A 60-YEAR JOURNEY WITH YOU! 40

02 DO OUR BEST TO RUN BUSINESS! the collaborative combination of the leasing business in Taiwan and China, and (5) The Bank holds monthly meetings based on information such as management the Bank’s credit business, the Bank’s non-operating revenue increases and the conditions and material risk exposures, etc., reported by subsidiaries to assess 02 diversification is enhanced. Thus domestic businesses’ financial needs can be and examine subsidiaries’ business performance, legal compliance and risk DO OUR BEST TO RUN BUSINESS! met and the Taiwanese companies in China can be provided with better financial management, etc., to check if there is any defect and how the corresponding services. improvements are implemented.

2. Supervision on financial and business information 2.3.7 Supervision on Investee Enterprises ： In accordance with the Bank’s regulations related to subsidiary supervision, (1) Supervise subsidiaries establishing independent financial & business the supervision units perform supervision on subsidiaries’ business information system which should comply with related laws & regulations and management, finance, business information, legal compliance, anti- the Bank’s requirements. money laundering & combating the financing of terrorism and audit (2) Establish independent and effective financial & business communication management, etc. They also strengthens subsidiaries’ internal audit and risk systems between the Bank and subsidiaries. Besides major financial/business management system to reduce operating risks. affairs which should be reported to the Bank via official documents before a certain situation arises, when major events publicized or declared in 1. Supervision on business management accordance with related regulations occur, subsidiaries should immediately ： report to the Bank’s responsible units when the situation arises, or on the day (1) Establish proper organization control framework between the Bank and the occurrence is expected. The Bank’s responsible units should supervise subsidiaries, conduct performance evaluation on the directors and supervisors subsidiaries’ reports or make reports for subsidiaries. designated by the Bank on a yearly basis and determine their suitability by referencing the evaluation results. 3. Supervision on legal compliance, anti-money laundering & (2) Develop business strategies, risk management policies and guidelines applied combating the financing of terrorism between the Bank and subsidiaries. In the events where material risk exposures ： which impact subsidiaries’ financial & business conditions or legal compliance (1) Subsidiaries should make regular reports to the Bank about the implementation occur, take necessary measures to respond and make reports to the Bank’s of the following legal compliance items based on their business attributes relevant responsible units for deciding further response action. Issues of risk A. Make semiannual reports about the status of timely updating operation and and response measures should be summarized and reported to the Board of management requirements in accordance with related regulations. the subsidiary. B. Make semiannual reports about the implementation of legal compliance (3) Set up policies and procedures for business connection and management education and training. between the Bank and subsidiaries in relation to business segmentation, C. Make reports to Competent Authorities about main points of supervision of the receivables/payables conditions and account processing, etc. year at the beginning of each year. (4) Supervise subsidiaries’ material financial & business affairs, business projects D. Compliance-related defects identified in recent external and internal inspections and budgets, capital investment and reinvestments, debt financing, loaning of and the corresponding improvement implementation.

funds, making of endorsements/guarantees, debt commitment, investments A 60-YEAR JOURNEY WITH YOU! in securities and derivatives, important contracts, major property changes (2) Supervision items on subsidiaries in relation to anti-money laundering & and policies, and procedures applicable to International Financial Reporting combating the financing of terrorism are listed as follows Standards, professional judgments, important accounting policies and process A. Subsidiaries should make semiannual reports about the implementation of anti- management for estimated changes, etc. money laundering & combating the financing of terrorism. Besides, in regard to the weak points identified in risk assessment report and defects pointed out in internal and external audits, subsidiaries should implement improvements, follow up the progress status and make reports to the Bank. In the events where

41

” ” ” Consumer “ , ” to ensure the the to ensure ” rights. ’ legal compliance system compliance legal personal information. It personal information. It “ ’ Employee Work Rules Employee Work rights and carrying out ethical rights and carrying out ethical “ ’ 2017 Personal Information Management 2017 Personal Information Management

Fair- Dealing Policy and Strategy Fair- “ Implementation Rules of Legal Compliance System Implementation Rules BS10012 “ Implementation Rules of InternalImplementation and Internal Audit “ “ and ” Compliance law-abiding consciousness. Legal & Compliance Department law-abiding consciousness. Legal & Compliance is ’ ISO certification from British Standards Institution (BSI) for its its for (BSI) Institution Standards British certification ISO from ” corporate management, the Bank has set corporate management, the Bank has set set for the responsibilities of planning, management and implementation of of of planning, management and implementation set for the responsibilities up setting includes It system. compliance legal The Bank received The Bank received System The Bank formulated 2.4 Laws & Regulations and and Regulations Laws & 2.4 GRI 102-16 compliance with ethical conduct and implementation of consumer protection. of consumer protection. compliance with ethical conduct and implementation to the undertaking financial of new business services, Besides, with regard operation or important business activities including promotion, products assessment is etc., legality business collaboration agreement outsourcing, new products businesses and the relevant that ensure to conducted always and consumers requirements comply with regulatory Control System of Financial Holding Companies and Banking Industries and Banking Companies Holding System of Financial Control in accordance with in accordance on these rules. A Legal Compliance System based and established the to act who is appointed President) (equivalent to Vice senior management of all legal of Head Institution, charge Officer as the Chief Compliance make reports Committee and Board to Audit regularly and compliance affairs implementation status of Legal can know the Thus the Board of Directors. in their decision making. Compliance System system to improve to facilitating the legal compliance The Bank is committed employees of communication consultation and transmission, the for channels define to timely amendment, ongoing attention to changes of regulations, regulation with applicable formulating in accordance and updating internal regulations legal semiannual conducting all units supervising regulations, & laws conducting legal compliance compliance self-assessment and regularly education and training. consumers With a view to protecting Protection Policies Protection security control and protection of customers and protection control security s ’ audit ’ business information Supervision on financial and ： s AML & CFT responsible units and units responsible CFT & AML s ’ s audit units should review subsidiaries s audit units should review ’ management Supervision on Supervision on business compliance, AML & CFT s AML & CFT responsible units and approval of the units and approval s AML & CFT responsible ’ management & CFT requirements. In cases where legal compliance and conformityand compliance legal where cases In requirements. CFT & Supervision on audit

s internal Bank audit units. The upervision on audit management on audit upervision ’ S response measures should be proposed. measures response cannot be realized due to requirements of local regulations, notifications should of local regulations, due to requirements cannot be realized Bank be submitted to the AML or investigation, punishment or sanction is conducted or imposed on or sanction is conducted or investigation, punishment should, to the extent permitted Authorities, reports subsidiaries by Competent Bank the to made immediately be law, by Bank should be obtained. laundering & combating the financing of terrorism and conform to the Bank of terrorism & combating the financing laundering regulations related to AML & CFT have changed or internal procedures have have internal or changed have & CFT to AML procedures related regulations Bank to the be presented explanations should major adjustments, undergone the changes. regarding Subsidiaries should comply with laws and regulations related to anti-money to related regulations and laws with comply should Subsidiaries In the events where major suspected AML or CFT incidents occur in subsidiaries major suspected In the events where

The Bank instructs subsidiaries to establish their own internal control systems and to establish their own internalThe Bank instructs subsidiaries control to submit incorporates this into its internal required audit operation. Subsidiaries are Self-inspection or Plan Audit Annual Plan, Audit Special to relation in reports of correction status as well as the implementation Plan, and the corresponding the to system internal the in control discovered irregularities and deficiencies any Bank 4. C. reports or self-inspection reports, and follow up the correction of any deficiencies of any deficiencies and follow up the correction or self-inspection reports, reports in the internal system. discovered control and irregularities B.

A 60-YEAR JOURNEY WITH YOU! 42

02 DO OUR BEST TO RUN BUSINESS! enhances employees’ risk awareness of information leakage or misuse through education and training to ensure the security of customers’ Number of 02 personal information. In response to the implementation of EU “General participants Course content DO OUR BEST TO RUN BUSINESS! Data Protection Regulation” (hereinafter referred as GDPR), the Bank has A checked the personal information of EU citizens and taken related control E & management measures. Ongoing attention to approaches adopted or T sanctions cases occurred in EU regions shall be paid to respond to the 63963 possible influences from GDPR. R Training hours & The Bank understands that the realization of corporate social responsibility Number of lessons comes from employees’ regulatory compliance and implementation, and the E education and training is exactly the best approach to enhance employees’ T 12hrs I legal awareness and legal compliance. 2019 In order to build up a culture of legal compliance and improve the convenience video 25 N of legal compliance education, the Bank offers online courses designed for the “12 hours per year” educational training from which personnel of various 63,963 business fields can select courses they needs. There are three categories of courses provided: ‘Mandatory Education & Training about the Protection of 2018 Financial Consumer ’, ‘Regulations related to various business operations’ and N ‘Mandatory Education & Training about the Security of Information ’, etc., in 59,295 which 25 video lessons in total are provided. With the explanation of regulations 2017 and case studies, employees are able to develop compliance consciousness N through the illustration of actual examples. Post-course tests are provided to verify the effectiveness of the courses. The actual number of participants has 24,835 reached 63,963 in 2019. A 60-YEAR JOURNEY WITH YOU!

In-service Personnel Workshop on Anti-money Laundering and Countering the Financing of ˙ Terrorism’

43 82 AML & CFT professional professional AML & CFT ’ CAMS certification Number of staff who received the 1014 certificates obtained Number of AML & CFT professional With a view to continuously enhancing employees to continuously enhancing With a view competence, the Bank encourages employees to obtain the CAMS certification encourages employees to obtain the CAMS competence, the Bank (CAMS: Certified & CFT professional AML domestic and Specialist) Laundering Anti-Money 82 staff were knowledge. There certification professional and to continuously enhance the CAMS certificationin total who had obtained received who had staff and 1,014 of 2019. by the end certification awarded AML & CFT professional & Countering AML&CFT (Anti-Money Laundering The Bank has also established name checking, risk evaluation, systems for customer the Financing of Terrorism) to assist the and Due Diligence Investigation data retention transaction monitoring of Terrorism. Laundering & Countering the Financing implementation of Anti-Money

Legal & Compliance Department s AML ’

Risk Management Department

Wealth Management s Board of Directors Directors of Board s ’ Department

Loan Administration

Financial Action Task Force on Force Financial Action Task Department “ has also been set, which is chaired has also been set, which is chaired ” Corporate Finance Department

Trust Department s Legal Compliance Head Compliance Legal s ’

Information Department has kept urging all countries in the world to reinforce the in the world to reinforce has kept urging all countries ”

International Banking

Head Office Head Department AML & CFT Management Team “ of Terrorism Consumer Banking Department s AML & CFT operations. s AML & CFT operations.

’ Business Development Organizational structure of AML & CFT Management Team Management CFT & AML of structure Organizational

Department Money Laundering, FATF & CFT mechanism and improving internal control system, the Chief Compliance internal system, the Chief Compliance improving & CFT mechanism and control Bank the by appointed been has Institution Head of Officer to act as the dedicated supervisor for AML & CFTsince2017. The Anti-money The Anti-money supervisor for AML & CFTsince2017. to act as the dedicated laundering anti-money for unit a responsible as acts which Division, Laundering Department Compliance & the Legal under supervise to set been has affairs, Bank anti-money laundering & Countering the financing of terrorism system to prevent the system to prevent & Countering the financing of terrorism anti-money laundering government conduct. With the aim of cooperating with expansion of unlawful by the Chief Compliance Officer of Head Institution and comprises the heads of Institution and comprises the heads of by the Chief Compliance Officer of Head the following departments as team members: Business Development Department, Consumer Banking Department, International Banking Department, & Legal Compliance Department, Risk Management Department, Information Department, Management Department, Department, Administration Loan Wealth Trust Department examines the Finance Department. and Corporate The team regularly defects and discusses improvement AML & CFT implementation status, reviews operation of AML & CFT the establishment, integration and to ensure measures mechanism. Besides the formulation of AML & CFT related rules & regulations and operations operations and regulations & rules formulationthe Besides related CFT & AML of handbook, the In view of the threats posed by money laundering and terrorism to global social global social to terrorism laundering and posed by money the threats In view of the international association security and economy, GRI 102-16 2.5 Anti-Money Laundering & Countering the Financing & Countering Laundering Anti-Money 2.5

A 60-YEAR JOURNEY WITH YOU! 44

02 DO OUR BEST TO RUN BUSINESS! 2.6 Internal Control & Audit System GRI 102-16 02 2.6.1 DO OUR BEST TO RUN BUSINESS! In accordance with “Implementation Rules of Internal Audit and Internal Control 4. Continually conduct follow-up reviews on any examination opinions or audit System of Financial Holding Companies and Banking Industries”, Taichung Bank deficiencies brought up by the financial examination authority, CPA, internal has established Chief Auditor System and set up Auditing Office of the Board. audit unit and business unit’s self-inspection, and on matters specified in the Auditing Office of the Board takes charge of the internal audit system and performs internal control system statement as requiring stronger improvement efforts, and audits in an independent manner to check and assess whether the internal submit a written report to the board of directors, all together with a copy to Audit control system is working effectively or not, and provides timely suggestions for Committee. improvement to ensure the continued and effective implementation of internal 5. From 2019 onwards, it takes turns with Legal & Legal Compliance Department control system to assist Board of Directors and the management in precisely and Risk Management Department holding quarterly internal control joint fulfilling their responsibilities. The main duties and responsibilities are as follows: meetings to establish horizontal communication mechanism. The communication 1. Prepare internal audit working manual and working papers, which should at focuses on the Bank’s internal control, legal compliance weaknesses and high- least include the assessment of various rules and operating procedures of the risk businesses, based on which operation procedures and internal control internal control system to see if adequate internal controls are already in place in system are reviewed to fortify the operation of “Three lines of defense”. the current rules and procedures. It’s to see if each department has realistically 6. With a view to improving the control of credit information security, credit inquiries carried out the internal controls, and if the internal controls are carried out in a operation is listed as a key item for inspection in internal audits, in which Auditing reasonably effective manner. Office of the Board acts as the contact during the audit conducted by Joint Credit 2. Supervise the formulation of rules and procedures for self-inspection and the Information Center and takes the responsibility for the following audit-related implementation of self-inspection in each unit. affairs: all units’ W20periodic inspection, W01 non-periodic inspection, inquiry 3. Formulate annual audit plans and, based on the business risk profile and and inspection on the security control of data connection & transmission through implementation of internal audits by each subsidiary or department, determine small-medium enterprises financing service platform, summarizing and making audit plans targeted at each individual subsidiary or department. Conduct a reports about the status of annual implementation of the security control in credit routine audit at least annually, and a special audit on its and all its subsidiaries' information inquiry operation and coordinating Joint Credit Information Center’s operation, finance, asset quality and information departments; at least one onsite inspection. It assists employees in precisely implementing improvements special audit annually on other management departments; at least one routine to carry out information security control measures. audit annually on all its business centers and foreign business units; and one special audit semiannually on subsidiaries. A 60-YEAR JOURNEY WITH YOU!

45

’ - s ’ ’ s internal audit & s internal audit & ’ s business fields and provide provide and fields business s ’ Work Manual for Internal Control Work ‘ , ’ s leading auditors to attend external training Principles for Budget Creation, Review and Review and Creation, Principles for Budget ’ ‘ s audit personnel to collect related rules & rules & s audit personnel to collect related ’ Improvement Measures Improvement Guidelines for Senior Management Entertainment Management Entertainment Guidelines for Senior ‘ Principles for Subsidiary for Principles Entertainment Operation Expense ‘ , Accounting System ’ ‘ s audit engagement to reinforce the depth and breadth of of the depth and breadth s audit engagement to reinforce s audit. Chief Auditor called team leaders of Auditing Office s audit. Chief Auditor called team leaders ’ ’ , ’ Accounting Cycle inspection. internal training courses afterwards to share experiences and experiences and to share internal training courses afterwards of internal the depth and breadth audits reinforcing knowledge, thereby and inspections. courses in relation to the subsidiarythe to relation in courses audit. Chief Auditor and team leaders of Auditing Office reminded audit audit reminded Office Auditing of leaders team and Auditor Chief audit. personnel of key points of inspection. and submitted it to Board of Directors on 25th February 2020 of Directors and submitted it to Board regulations, key items and points to note associated with the with the key items and points to note associated regulations, subsidiary Execution Urged Taichung Bank Insurance Broker Co. to revise its related related its to revise Co. Bank Insurance Broker Taichung Urged including regulations ‘ Formulated the Bank of records the examine Periodically Urged subsidiary auditors per day in this or number of audit frequency Increased subsidiary Designated subsidiary inspection on Taichung Bank Insurance Broker Co. at a minimum Co. at a minimum Bank Insurance Broker inspection on Taichung period of every six months to check if internal audit inspection items and have completely with regulations in accordance have been revised importantencompassed relevant included and activities business actual operation procedures. Expense in auditors who were together and held a meeting with the leading leading auditors had fully charge of the audit engagement to see if the with the subsidiaryunderstood the key items and points associated • • • • • • s related expenses expenses s related ’ was deemed to be was deemed to be ’ s audit. ’ Defect s Defect Cases in 2019Financial Supervisory Commission Audit (Please refer to Taichung to Taichung (Please refer Audit Commission Supervisory Cases in 2019Financial s Defect ’ Case Summary Case s 2019 Annual Report) s 2019 Taichung Bank Insurance Broker Co. Bank Insurance Broker Taichung ’ ‘ s implementation of internal control and audit system on internals implementation of and audit system on control ’ Bank be questioned and not conform to Profit-seeking Enterprise Income Tax Enterprise Income Tax be questioned and not conform to Profit-seeking Act. Inspection Principles or Business Entity Accounting No related defects were identified and comments provided in the two two the in provided comments and identified were defects related No Bank Insurance Broker special audits conducted yearly on Taichung supervision and appraisal Co., which implied that the inspection, not precisely on the subsidiaryof internal were audit effectiveness implemented. Failed to assist or supervise the subsidiary establishing effective Failed to assist or supervise the subsidiary establishing effective of to the operation and audit system in relation system internal control entertainment which made the company expense,

subsidiary defective in Financial Supervisorydefective in Financial Commission • • The Bank

2.6.2 Taichung Bank 2.6.2 Taichung

A 60-YEAR JOURNEY WITH YOU! 46

02 DO OUR BEST TO RUN BUSINESS! 02 DO OUR BEST TO RUN BUSINESS!

2.6.3 Case Summary In order to effectively improve internal control system and strengthen corporate constitution, the Bank promotes the implementation of “Three lines of defense” in the internal control. The Bank’s “Code of Practice for the Three Lines of Defense The Bank’s risk attributes assessment operation was deemed to be in Internal Control” has been formulated by reference to the “Code of Practice for defective in Financial Supervisory Commission’s audit. the Three Lines of Defense in Internal Control of Banks” announced by the Bankers Association of the Republic of China. The framework and responsibilities of the Bank’s “Three lines of defense in the internal control” are as follows:

Defect The third line of defense

The Bank’s risk attributes assessment operation in relation to processing a Supervised by independent minor’s risk attributes assessment did not completely conform to the actual internal audit unit conditions of a party to a contract, which breached the Financial Consumer Protection Act article 9, Paragraph 1 and the regulations instructed in Before the Financial Supervisory Commission’s document (No. 1010054522 issued on Regular Inspection incident Control 22nd March 2012 ) ― During the Regular Inspection incident Supervise ― The second line of defense After the incident ― Improvement Measures Monitored by Risk Management, Legal Verification Compliance and other responsible units • Conducted overall surveys on the status of minor’s risk attributes Perform respective assessment operation in all business units. duties

• Upgraded the Bank’s internet banking system with control mechanism Ongoing supervision A 60-YEAR JOURNEY WITH YOU! over minorswho are of or under fifteen years of age. Complementary to • Add a ‘Confirm’ step in internet banking’s ‘investment risk attributes each other analysis’ process when a customer’s assessment result differs from the previous one. The investment attributes assessment process can only be completed when customer’s confirmation is received. The first line of defense Business unit s self-control mechanism ’

47 s ’ ： ： s goals and ’ The business management items and ： Departments implement monitoring based ： ： ： s internal risk of and fully understand the business regulations ’ s internal regulations to implement risk identification, assessment and to implement risk identification, s internal regulations ’ ransaction units belonging to Head Office departments: with the Comply to Head Office ransaction units belonging The second line of defense (Risk Management Department, Legal The second line of defense (Risk Management business management rules and bylaws for each departmentbusiness management rules and bylaws defined through delegation of responsibilities hierarchical units belonging to Head Office departments or Head Office or departments Office Head to belonging units defense) line of first the involving duties with departments & Legal Compliance Department and other responsible units) & Legal Compliance Department and on control measures established in accordance with the business management established in accordance measures on control hierarchical items and business management rules and bylaws defined through delegation of responsibilities T Head Office departments with duties involving the first line of defense: Comply All branches: Identify, assess, control and reduce risks coming from business from coming risks reduce and control assess, Identify, branches: All missions. Bank their departments, thereby precisely implementing all operation regulations. their departments, precisely thereby activities to ensure that the business activities conform that the business activities to the Bank activities to ensure measurement, and take appropriate risk response measures to proactively to measures risk response appropriate take and measurement, with regulations. in accordance monitor various risk limits and submit reports with the Bank Conduct monthly Risk Control Self- Assessment (RCSA) Conduct monthly Risk Control Conduct semiannual legal compliance self-assessment Ongoing monitoring based on transaction operations Ongoing monitoring based on transaction Conduct monthly self-inspection B. (2) Control points of the defense line A. A. B. C. D. 2. managing risks and identifying in defense of first line the monitor and Assist the risks). Formulatebased on the risk characteristics (based on risk management categories of risk, monitor the Bank policies for the whole bank based on main 1.transaction units, business (all defense of line first The functional and business in respective daily operations Undertake from risks coming for identifying transaction operations) and be responsible scopes (based on the internal effective implementing and designing as well as risks managing and related characteristics to encompass all risk the based on procedures control operating activities. (1) line Responsibilities of the defense C. overall risk-bearing capacity and current status of risks already incurred, and make incurred, status of risks already overall risk-bearing capacity and current & or senior management about the status of risk control of Director reports to Board management. (1) Responsibilities of the defense line (2) Control points of the defense line Method Implementation Implementation Periodic operation based on the risks Ongoing implementation based on transaction operations Ongoing implementation or periodic operation based on the risks

Scope of Responsibilities Be independent of the first line of defense and not of the functions and units of line of defense the third Perform audit business independently and honestly of Directors and assist Board and senior management in inspecting and assessing of the risk the effectiveness management and internal system operations. control of Assess the effectiveness risk monitoring performed in the first and the second lines of defense and timely provide suggestions for improvement the ensure to reasonably ongoing implementation system, of internal control based on which to establish and a basis for the review modification of the system. Be responsible for for Be responsible and managing identifying risks as well as designing and implementing internal control effective based on procedures the risk characteristics to encompass all related operating activities. Undertake risks coming daily operations in from functional and respective business scopes assist and monitor the first line of defense in identifying and managing risks based on the risk characteristics Unit Management Department Compliance Department Departments of the Head Office units units belonging to Head Office departments departments with duties involving the first line of defense Implementation Implementation 2. Legal & Legal 3. Other 1. Risk Auditing Office of Auditing Office the Board 2. Transaction 3. Head Office 1. All business

De- De- The The Third fense fense fense of De- st Line Line of Line of The Fir Second

A 60-YEAR JOURNEY WITH YOU! 48

02 DO OUR BEST TO RUN BUSINESS! 3. The third line of defense (Auditing Office of the Board): (1) Responsibilities of the defense line: depending on the issues discussed in the meeting. 02

Perform audit business independently and honestly and assist Board of Directors The main purpose of the joint meeting is to facilitate the coordination between DO OUR BEST TO RUN BUSINESS! and senior management in inspecting and assessing the effectiveness of the risk the lines of defense, and thus to improve effectiveness and efficiency. The management and internal control system operations (based on the risks), which content of the meetings includes reviewing the responsibility fulfillment in terms of includes assessing the effectiveness of risk monitoring performed in the first and management and supervision in each line of defense, material risk events identified the second lines of defense and timely providing suggestions for improvement to while monitoring the business risks in the first line of defense, task allocation reasonably ensure the ongoing implementation of internal control system, based on between each line of defense/sharing internal control information of each line of defense, recent sanctions cases occurred in peer companies, and the case which to establish a basis for the review and modification of the system. contexts and sharing information about recent significant regulatory changes, etc. (2) Control points of the defense line ： A. Internal audit: Conduct regular internal audits on the first line of defense and the second line of defense and perform inspection to assess the effectiveness of internal control, and Risk Management submit the audit results to Audit Committee and board of Directors. Internal Control Joint Meeting The third line of B. Self-inspection Committee defense Supervise business management units of the second line of defense formulating Internal Audit rules and procedures for self-inspection and review the implementation of self- inspection in the first and the second lines of defense, and submit the review results to Audit Committee and board of Directors. The defects listed in the self-inspection of the first line of defense should be sent to the business management units of the second line of defense to help them avoid similar defects.

4. Establish the Joint Meeting operating model for internal “ ” control With a view to reinforcing the implementation of the “Three lines of defense” in the Bank’s internal control and enhancing the communication and coordination The second line between the second and the third lines as well as effectively detecting business The first line of defense of defense risks, the Bank’s “Guidelines for the Implementation of Internal Control Joint All business units Legal Compliance, Risk Meeting” has been announced, which specifies that internal control joint meetings and Head Office Management and other should be called on a quarterly basis. The participants of the meetings include business management

business management A 60-YEAR JOURNEY WITH YOU! Chief Auditor, Head Office’s Legal Compliance Head, and Deputy Executive departments departments President of Legal & Legal Compliance Department, Deputy Executive President of Risk Management Department and related team leaders as well as personnel assigned by Head Office business management departments or business units

49 Committee Risk Management Risk Management Management Planning & Operational Risk Division Division Chairman President Market Risk Vice President Board of Directors Risk Management Department s business, transactions, and information exchanges or other ’ e, equity capital, and characteristics of liabilities, and establishing e, equity capital, and characteristics of Division Credit Risk Making various investment allocations with the consideration of overall risk Making various investment allocations with exposur to manage business risks various measures rating and classifying the quality of Establishing assessment methodologies for carrying out periodic large risk exposures, assets, calculating and controlling for loss and faithfully setting aside allowances or reserves reviews, Building informationmechanisms and contingency plans with respect security to the Bank activities Risk Management Organizational Framework Organizational Management Risk Taichung Bank sets various risk management policies and management sets various risk management policies and management Bank Taichung or define concentration limits of mechanisms to build up stop-loss mechanism to the operations according and credit risks for various transactions, investments And with businesses to avoid risk over-concentration. characteristics of different identifying, measuring and monitoring various risks, Risk the aim of effectively and rules management risk formulatedis related the and Management Procedure the basis of to provide and continuously revised reviewed regularly are directions the implementation of risk management. (4) (5) (6) 2. Mechanism Management Risk s sound operation s sound operation ’ Mechanism k Management Principles Management k

and operational risks, and future business trends and operational risks, and future for measuring and monitoring the Establishing management mechanisms liquidity risks liquidity positions, by which to manage the for identifying, measuring and Establishing management mechanisms operation standard the with complying and risk CFT & AML the monitoring the AML & CFT risks to reduce specified in AML regulations procedures Evaluating the capital adequacy based on its business scale, credit, market, scale, credit, business adequacy based on its capital the Evaluating Ris

and development to ensure its asset and financial qualities, Taichung Bank has Bank has its asset and financial qualities, Taichung ensure and development to the guidelines for risk as the Board by policies approved set risk management have also been And various risk management mechanisms management system. the scales and risk levels to implement business different established based on risk for effective procedures system and control operation of risk management control. 2.7.3 Risk Management Policies 1. (1) (2) (3) Taichung Bank Board of Directors is the highest governing of Directors body in risk management Bank Board Taichung management. In order for overall risk mechanism and takes ultimate responsibility has the mechanism of risk management, Risk Management Committee to reinforce by to carry risk management policies approved been set under the Board out the to risk management to ensure related various affairs and review of Directors Board the smooth operation of risk management. the effectiveness meetings to supervise Risk Management Committee holds regular status, risk decision making exposure of risk management implementation, risk makes and regulations, related and compliance status of risk management Department Management Risk risk various executes also Board. the to reports and of Directors made or entrusted by Board management decisions and affairs units. up the handling status in related Risk Management Committee and follows 2.7.2 Risk Management Organizational Framework 2.7.2 Risk Management GRI 102-11 102-16 Management 2.7.1 Goal of Risk the Bank implement risk management and facilitate to In order 2.7 Risk Management Risk Management 2.7

A 60-YEAR JOURNEY WITH YOU! 50

02 DO OUR BEST TO RUN BUSINESS! 2.7.4 Effectiveness of Risk Management Process Risk Management Procedures 02

1. For individual business risks, set up different levels of authorization structure, DO OUR BEST TO RUN BUSINESS! determine risk limit and control method for each business risk, define reporting Identify procedures and approaches for handling over-limit risks and produce various risk management statements, etc. to ensure real-time and effective risk control 2. Regularly review and modify risk management procedures and policies/ regulations in response to competent authorities’ regulation amendments, the Response Measure Bank’s business development conditions and adjustment of organizational measures structure so as to effectively and correctly measure the risks we face.

Report Monitor

Risk Management Outcomes and Goals

2019 Risk Management Outcomes 2020 Risk Management Goals

• Submitting “Domestic Banks’ Compliance Reporting under Monitoring & Reviewing Principles” to Financial Supervisory Commission • Activating the upgrading program of “Quarterly Risk Management Report (Info Graphic)” to increase the breadth, depth and rapid conveyance of risk management • Revise the Bank’s capital • Presenting news in relation to industrial economy and the Bank’s relevant positions or suggestions and adequacy ratio calculation providing “Brief Risk Management Reports” to senior management for them to grasp real-time economic and capital management situation, industrial trends and financial dynamics policies in response to • Presenting “Risk Monitor” to monitor 45 important indexes and providing reminders with ‘Yellow Light’ signal Competent Authorities’ when the indexes appear to be unpromising, change from positive to negative, be lower than expected level, General Risk amendments to capital approach the level of alert or limitation Management requirement. • Incorporating capital consumption and risk mitigation efficiency into the items for branch performance A 60-YEAR JOURNEY WITH YOU! • Keep reinforcing the appraisal, which shall reduce the impact coming from credit business on capital adequacy ratio and increase Bank’s capital level and overall capital return assess the development • Establishing 14 risk categories for monitoring by reference to the major risk categories listed by the Basel and issuance feasibility of Committee on Banking Supervision, in which 161 risk items are used to fortify the role and competency of the various capital instruments second line of defense applied in Head Office business management units, and submitting risk monitoring reports in relation to each risk category and the major business content • Conducting reviews on the overall operation of the three line of defense internal control in relation to businesses of deposit, loan and remittance, and proposing improvement plans for risk control points and the whole system

51 s s ’ ’ remote work and data work and data remote system backup remote have been activated. operations, and then make operations, and then and reports risk brief conduct risk assessment. Cooperate with Competent the to discuss Authorities amendments of planning to capital requirement. Participate relevant in information meetings and form-filling trial provide data. the reduce to order In operational risk caused by COVID-19, personnel Take notice of issues issues of notice Take such to risk events related policy rates as COVID-19, monetary world's the of trade authorities and and events between China and the United States, etc. of analyze the impacts Bank these events on the establish and Proactively models related introduce or systems to strengthen derivative Standard Counterparty Approach Risk (SACCR) Credit calculation 2020 Risk Management Goals 2020 Risk • • • • ’ s real-time overall risk exposure risk exposure overall s real-time ’ ’ to Board of Directors to Board ’ ’ ’ derivative transactions ’ comments provided in inspections and the concentration and the concentration in inspections comments provided ’ Head Office Departments/Divisions Management ImportantHead Office Affairs ‘ 2019 Risk Management Outcomes 2019 Risk Legal Compliance Risk Assessment Project ‘ Liquidity Coverage Ratio (LCR) Net Stable Funding Ratio (NSFR) ‘ ‘ Status Report of Derivative Transaction Exception Management Exception Status Report of Derivative Transaction ‘ and making reports about various risk exposures so that timely response can be made so that timely response exposures about various risk and making reports Reinforcing Operational Risk Management mechanisms Reinforcing Reporting of major spontaneous incident and managing the section of Controlling joint meetings to internal control related Affairs Assisting the implementation of Improving the control/quota limit and monitoring of China-region credit, investment and aggregate call-loans call-loans investment and aggregate credit, limit and monitoring of China-region the control/quota Improving quota Establishing internal monitoring facilitate automatic output and system system to of Calculating and reporting of Calculating and reporting Submitting to customers setting transactions related Checking off and checking derivative transaction appraisals Verifying market information of long term/shortMonitoring prices and related term targets investment Following the Pillar 3 Market Discipline of Basel II to process information disclosure affairs associated with 2019 associated with 2019 affairs information disclosure to process of Basel II the Pillar 3 Market Discipline Following management ratio and risk capital adequacy the Bank meetings to grasp Committee holding Risk Management Regularly risk management policies reviewing and regularly Developing, modifying measures response Analyzing specific portfolios developing corresponding and scope of fund belonging to 72-2) into the guaranty balance (the use of CP guarantee Incorporating commercial Authorities to Competent management in response sector investment in accommodation on the cross-industry monitoring Adding risk exposure control specified in the Banking Act 72-2 specified in the Banking control • • • • • • • • • • • • • • • • • • •

Risk

Credit Risk Operational Market Risk Management Management Management

A 60-YEAR JOURNEY WITH YOU! 52

02 DO OUR BEST TO RUN BUSINESS! 2.8 External Initiatives and Important Exchanges & 02

Communications DO OUR BEST TO RUN BUSINESS!

GRI 102-12 102-13 203-2

2.8.1 In order to enhance the financial customers protection and facilitate the establishment of a corporate culture pivoting on “Fair Customer Treatment”, the Calculate Taichung Bank’s Capital Adequacy Ratio and Leverage Ratio Bank has set up “Fair Customer Treatment Principles’ polices” and strategies in accordance with the “Reform Program for Reinforcing Bank’s Capital in accordance with Financial Supervisory Commission’s “Principle for Financial Regulations” proposed by Basel Committee on Banking Supervision and the Service Industries to Treat Clients Fairly” as the highest guiding principle for the “Regulations Governing the Capital Adequacy Ratio and Capital Grade of Bank’s “Fair Customer Treatment” to ensure that regulations related to financial Banks” and “Calculating Method Explanation and Form for Bank’s Regulatory customers protection are always followed in the process of providing financial Capital and Risk-Weighted Assets” announced by Financial Supervisory products or services or handlings customer complaint, etc. Commission to comply with competent authorities’ regulatory requirements. The Bank regularly performs Stress Testing and conducts Internal Capital Adequacy Assessment Process ICAAP to assess the stress of possible loss that existing 2.8.4 capital and set-aside allowances or reserves can withstand. And, it discloses Taichung Bank requests financial institutions to collect and report relevant information about capital adequacy and risk management on external websites. information about account holders for tax purposes in accordance with “Foreign Account Tax Compliance Act” (FATCA), FATCA Intergovernmental Agreements 2.8.2 between Taiwan and the USA (facilitated by Taipei Economic and Cultural Representative Office in the United States and American Institute in Taiwan), With the aim of effectively enhancing the formulation efficiency of national and the “Regulations Governing the Implementation of the Common Standard on accounting standards and global image, elevating the international credit rating Reporting and Diligence for Financial Institutions” (also known as ‘Taiwan CRS’) of Taiwan’s capital market, increasing the comparability of domestic corporate specified in our country’s ‘Tax Collection Act’ article 5-1, paragraph 6, etc. financial statements with global corporate financial statements and attracting foreign capital to invest in Taiwan’s capital market, Financial Supervisory Commission started to adopt the IFRS 9 Financial Instruments in 2018. In 2.8.5 considering that the amendments to classification, measurement and depreciation In response to the “Regulations Governing the Implementation of the Common of financial assets specified in IFRS 9, are likely to have a wider impact on Standard on Reporting and Diligence for Financial Institutions” (CRS), CRS financial services sector., the Company has entrusted accounting firms to assist clauses have been added since January 2018 for the Bank to obtain client’s the introduction of international standards to analyze the major differences and self-certification document by law in order to identify client’s country/region of possible effects, and conduct ongoing assessment of the impacts caused by the tax residence when business relationships are established between customers amendments to other standards or explanations on the Bank’s financial conditions and the Bank. And it also exchanges financial account information and A 60-YEAR JOURNEY WITH YOU! and financial performance in hope that the creation and disclosure of the Bank’s provides the information to tax agencies in the other country/region for tax financial statements will be compatible with international standards. purposes through intergovernmental agreements for the improvement of global tax information transparency and fulfillment of social responsibility. 2.8.3

53 A Trustworthy Partner! A Trustworthy Do Our Best to Safe Guard Do Our Best to Safe Customers! with Complete Business Channels 3.1 Promote Financial Inclusion products & services 3.2 Diverse and innovative financial 3.3 Customer Rights Protection & Maintain Customer Relationships 3.4 Improve Customer Service Quality to fund their to fund their ” professional competency, Taichung Taichung competency, professional ’ regulations, facilitate the development facilitate the development regulations, ’ s management system and legally running running legally and system management s ’ smoothly ’ Concessional Loan for Equipment Financing Concessional Loan for “ Organizations

specific factory registration ‘

for Cooperating with Taichung City Government to assist firms in obtaining the qualification Cooperating with Taichung wastewater treatment, environmental protection and fire safety equipment. With With equipment. safety fire and protection environmental treatment, wastewater City Government and Small & Medium Enterprise the collaboration of Taichung million 3 NT$ is line credit highest (the guarantees credit Fund, Guarantee Credit firmsassist to smoothly in provided were 1.9%) of rate interest concessional a with helping small widely qualification, thereby obtaining specific factory registration economic, social and state of &medium enterprises and achieving a co-prosperity harmony. environmental 2.8.7 Bank to assist firms Government City works together with Taichung Taichung government in included being in In order to implement Competent Authorities to implement Competent In order 2.8.6 Take Part in Associations and External and Part in Associations 2.8.6 Take ˙ on the site, and to support factories which were not legally registered by by registered legally not support to and site, the on were which factories them with providing Bank proactively takes part in organizations such as the Bankers Association, Trust takes part Association, Trust in organizations such as the Bankers Bank proactively Information Financial Services Roundtable, Financial Service Association, Taiwan Academy Payment Co. and Taiwan Mobile Taiwan Center, Card Co., National Credit encourage employees to also provided etc. Subsidies are of Banking and Finance, as Lions Clubs clubs or organizations such to take part registered in legally International, Rotaries, Junior Chamber International, Kiwanis International, etc. of financial business and enhance employees business and enhance of financial

A 60-YEAR JOURNEY WITH YOU! 54

02 DO OUR BEST TO RUN BUSINESS! Do Our Best to Safe Guard Customers! A Trustworthy Partner!

3.1 Promote Financial Inclusion with Complete Business Channels 3.2 Diverse and innovative financial products & services 3.3 Customer Rights Protection 3.4 Improve Customer Service Quality & Maintain Customer Relationships 03 3.1 Promote Financial Inclusion with Complete Business

DO OUR BEST TO SAFE GUARD CUSTOMERS! Channels

3.1.1 Actively establish more branches in Taiwan to Item Goal for 2020 Medium-Term Goal Long-Term Goal expand territory in banking industry Number of Taichung Bank has established 83 branches (including Labuan Branch in Malaysia) 87 95 100 Branches and one Offshore Banking Unit (OBU) in 2019. Most of the Bank’s business bases are located in the areas of Taichung, Changhua and Nantou, and more bases shall be set to expand its territory in Taiwan in the future. In order to implement strategies of improving regional access network competitiveness and increasing market share in rural areas which possess business potentials, branches shall be set in the north, south and southeast of Taiwan and link to neighboring branches to establish a complete business channel layout aiming at the goal of realizing the optimal business size of 100 branches.

2019

A TRUSTWORTHY PARTNER! 年 Yanchao Branch

was opened in 2019

56 3.1.2 Facilitate balanced rural and urban development 3.2 Diverse and innovative 03 in view of the fulfillment of Corporate Social DO OUR BEST TO SAFE GUARD CUSTOMERS! Responsibility financial products & 1. The Bank’s Yanchao Branch was set in Yanchao District in Kaohsiung in May services 2019. Thus young people is encouraged to return home and commit themselves to local development so as to increase service opportunity in southern Taiwan. By focusing on the approach of “Customer Orientation”, we provide momentum And we shall continue our commitment in developing domestic market with our for businesses to create their sustainable value and have become a first-choice corporate brand spirit — “We Do Our Best for You”. financial partner for the public. 2. With a view to supporting Competent Authorities’ financial policies, fulfilling corporate social responsibility and promoting financial inclusion, the Bank shall 3.2.1 Boost entrepreneurial energy & help realize continue the planning of setting up business bases in areas with less financial dreams access. It is to be hoped that , with the Bank’s efforts in operating local business, We cooperate with Taichung City Government in implementing policies which local residents can be provided with diverse financial services., and financial assist youth entrepreneurship, such as continuing the services of “Taichung City exclusion in the areas can be reduced so as to improve the fundamental Government's Loan for Youth Entrepreneurship and Small and Medium Enterprises”, conditions for economic development and attract more investments from private and “Loan for Youth Entrepreneurship in Agriculture and Agri-business in Taichung sectors to facilitate the balanced urban-rural development. City”. It is to support youths, small & medium enterprises and agri-businesses in Taichung City in acquiring funds for their entrepreneurial ventures or businesses so 3.1.3 Incorporate the planning of digital channels to as to boost youth’s entrepreneurial energy and help them realize their dreams as strengthen business channel layout well as facilitate the development of creative economy in the city. The Bank has developed various featured products for its business services through digital marketing channels to provide customers with the most optimal and 3.2.2 Promote consumer financial services by competitive products. Through the innovative services offered by virtual channels bundling credit card with mobile payment and operational process modification implemented in physical branches, the 1. Allow more mobile payment tools to be bundled with credit cards to provide overall digital capacity of the Bank is reinforced, and the service quality of internet customers with more diverse and convenient payment methods for consumption. banking & physical branches’ online channels is enhanced. Moreover, the Bank is Mobile payment tools which can be bundled with Taichung Bank credit cards also actively seeking cross-industry alliance for the establishment of collaborative include Taiwan Mobile Payments, JKOPAY, LINE Pay and O'Pay, etc. channels. 2. Target at scratch-off ticket Welfare Lottery dealers to support customers’ 3.1.4 Strive for the establishment of overseas bases in the future

With the aim of reinforcing business foundations in overseas territory and enhancing A TRUSTWORTHY PARTNER! depth and breadth of globalization, the Bank shall continuously cooperate with government’s southbound policies by integrating the strength of domestic & Introduce Promotional Activities overseas bases to actively expand overseas business. With the outstanding performance in assisting Taiwanese companies in utilizing the loan guarantee mechanism offered by “Overseas Credit Guarantee Fund (Taiwan)” in fund Mobile payment in 2019 acquisition, the Bank won the “Excellence Award for New Southbound Countries Total number of transactions: 30,549 Related Loan Growth” in 2019. The Bank shall aim at setting overseas branches in Amount: $11,664,909 Southeast Asia to meet the financial needs of local Taiwanese companies and other customers, thereby increasing the Bank’s foreign exchange business and overseas Mobile payment in 2018 earnings. Total number of transactions: 24,441 Amount: $7,757,375 57 seasonal funding needs. What has been accomplished? “Retirement is a worry”after retirement. This business enables companies, apart 03 from the pension provided by labor regulations, to pay another pension for There had been 37 loan cases granted with a total amount of $45,250,000 employees to improve employee benefits and stabilize the society. DO OUR BEST TO SAFE GUARD CUSTOMERS! from 21st November 2018 to 28th February 2019. And there had been 159 4. Launch the business of “LOHAS Care Trust”: In response to the issues of loan cases granted with a total amount of $235,740,000 from 2nd September declining fertility rates and aging population in our country, and in order to 2019 to 31st December 2019. The estimated loan amount shall exceed $0.3 improve the care for underprivileged groups, the Bank actively cooperates with billion by the end of the project in February 2020. Financial Supervisory Commission in promoting the business of “Property Trust for the Aged and Disabled”. It is to be hoped that through the trust mechanism, Taichung Bank can maintain property security and reliable care for the aged and disabled as well as fulfilling the social responsibility of a trusted provider.

3.2.3 Integrate the strength of cross-industry cooperation to assist customers who are faced 2011 with force majeure circumstances in selling Real Estate Development Trust their real estate Pre-sale House Values Trust By basing on the corporate core business and incorporating the professional assistance from real estate agencies, we have established a two-way contact to provide added-value services to our customers — for customers using real estate as collateral for loans (for deferred loans or for real estate that needs to be sold), 2013 the Bank offers free referral to assist customers in disposing of their properties through Yungching Real Estate Agency’s services with an agent commission lower Advance Payment Trust (including than market rates. Pre-sale House Values Trust)

3.2.4 Improve the quality of trust services from a care-for-the-public perspective 1. Launch the operations of“Real Estate Development Trust”and“Pre-sale House 2014 Values Trust”to protect pre-sale house buyers by preventing real estate Employee Stock Ownership and developers from using buyers’ down payments without authorization and failing Benefits Deposit Trust to complete the building projects. 2. Launch the business of“Advance Payment Trust (including Pre-sale House Values Trust)”: With a trend of increasing consumer consciousness, besides A TRUSTWORTHY PARTNER! the trust concerning the issuance of restaurants/hotels vouchers which can ensure the security of civil transactions, the Bank also provides this protection mechanism to protect the disadvantaged party of a transaction and will actively 2015 promote this trust to fulfill our social responsibility in the future. LOHAS Care Trust 3. Launch the business of“Employee Stock Ownership and Benefits Deposit Trust”: Entering the aging society is an inevitable trend in Taiwan. However, since the Income Replacement Ratio based on current labor retirement system still cannot be effectively raised, workers might be faced with the situation of

58 3.2.5 Continue to optimize digital financial services and improve the service functions of virtual channels ： 03 ’ 1. Taichung Bank is one of the first banks which use the Open API platform. The that the Bank s customers can directly debit the money from their accounts in the DO OUR BEST TO SAFE GUARD CUSTOMERS! ‘MoneyBook’app operated under the cooperation with third-party service bank when making payment via electronic payment service providers’ APP. And providers, has been officially available since 26th September 2019. We shall promotional activities are launched to reward customers under this service. continue to contact various third-party service providers in the future to discover 7. With the aim of improving operational efficiency, we are planning to integrate potential companies and institutions that we can cooperate with. For example, the currently applied account-opening operations and optimize the regulatory investment & wealth management, e-commerce, telecommunication, retail compliance procedures with the introduction of AI technology. so that we can channels, electronic payment, FinTech, etc., in the hope of creating more diverse achieve the goal of ‘less form-filling for customers & less data-entry for tellers’ in and practical API apps for consumers to experience more API related financial account-opening operations, and the services of TWD, foreign currency, internet services provided by Taichung Bank more easily. banking and trust account shall be ‘packed’ in one package for customers. 2. In order to optimize users’ operating experiences and increase ATM usage rate, 8. In order to meet the needs of multi-dimensional customer service channels and Usability, eXperience and Interface (UXI) Team has been introduced to assist attract young age groups to our services, the implementation of the ‘online smart the Bank in implementing the “User Experience and Interface Design” of “ATM customer service word system’ is developed. It integrates SmartRobot response Optimization Program” to achieve the goal of making ATM closer to users’ needs and 'real-person words' customer service to provide customers with answers in the market. The upgraded service is estimated to be available in the second which can effectively solve their questions and reduce their waiting time. Thus it quarter of 2020. improves the Bank’s service efficiency. 3. It is planned that at least one ATM equipped with deposit function is to be 9. With the corporate spirit of “Care with Heart & Make It Shine”, we not only serve installed in each business unit with the aim of ‘expanding internal/external customers with our heart but also treat employees with hearty commitment. After and virtual / physical channels’ in order to achieve the goal of automating and understanding employees’ pain points in daily operations, the “RPA (Robotic improving operational processes and providing customers with more convenient Process Automation)” mechanism has been introduced. “RPA (Robotic Process services. Besides, the over-the-counter businesses shall also be directed to the Automation)” is to be used in accounting and tax affairs to complete data operations through automatic service facilities. collection and summarization, statement production, tax-filing, etc, in the first 4. With the optimization of mobile banking APP operation, foreign currency transfer/ quarter of 2020 to improve operational efficiency. remittance in mobile banking has been available since the first quarter of 2020. 10. The external website is presented in a manner of ‘Concise & Attractive with Customers can process foreign currency transactions of designated accounts through mobile banking and will bring ‘finance’even closer to their daily life through the improved convenience and more user-friendly functions. The Bank Robotic Process Automation (RPA) This mechanism simulates what

will continue to make financial life more convenient and create more pleasant users frequently do while sitting in front of the desk and automatically experiences for mobile users in the future. replaces the human input for the repetitive and boring desktop 5. The Bank provides customers with “Electronic Comprehensive Bank Statement procedures with automated process. Service” by integrating account data of deposit, loan, trust, foreign exchange, etc. It enables users to view statements with mobile devices, which is easier than before. In addition, “Interactive Mobile Account Statement” is also clear themes’ combined with user-friendly designs to make it easy to browse. A TRUSTWORTHY PARTNER! presented via the Responsive Web Design (RWD) platform technology to provide The website was rebuilt in April 2019 to bring customers much better browsing interactive services such as setting up bill payment in installments, converting experiences. bonus points, online payment, etc. 11. English version business/operation items have been added on the external 6. In order to provide the Bank’s deposit customers with more convenient mobile English website since November 2019. payment service, the Bank started collaborating with electronic payment service providers from 3rd December 2018 onwards It offers the service of “Link Taichung Bank Deposit Account for Debit Payment and Account Top up”, so

59 3.2.6 Promote bilingual services environment We use official fan page to share our corporate social responsibility, promote 03 advertising and conduct online activities such as ‘lucky draw’ or sports ticket In response to the policy promoted by Financial Supervisory Commission that giveaway to reward fans. Besides, propagation of financial information & knowledge DO OUR BEST TO SAFE GUARD CUSTOMERS! domestic banks are expected to build up a bilingual environment in front-line is also carried out through social media platform. The social media campaigns/ service counters and to offer bilingual consultation service for customers, the activities include the annual blood donation campaign, the latest information about Bank conducted projects to establish Taichung City Business Division into a promotional favors for credit card holders, sports ticket (sponsored by the Bank) demonstration branch with the following settings: giveaway, propagation concerning anti-money laundering, etc. Moreover, in order 1. Environment and facilities Establish a bilingual over-the-counter service to enhance personal information security in the ‘lucky draw’ activity, we created environment with bilingual settings applied in signage, counters and special registration form for lucky draw to prevent the risk of retaining participants’ data on sections, automatic service facilities, ticket dispensers and multimedia, etc. third party platforms. 2. Information system Add the functions of ‘bilingual service counter’ and ‘bilingual 1. Social Responsibility consultation service’in systems such as internal operations, digital financial services The Bank coordinated several charity campaigns to fulfill our corporate social and customer service center, etc. responsibility, among which the annual blood donation campaign was promoted via 3. Documents used over the counter: Provide bilingual documents/forms for social media to invite fans to support this ‘Donate Your Love’ activity. deposit/remittance transactions and agreements for account-related businesses. 2. Propagation of Financial Information & Knowledge 4. Bilingual service personnel Arrange bilingual personnel to perform over-the- In response to the rapidly changing technological innovation in a digital era, we counter deposit/remittance transactions and assist in related bilingual business advocate knowledge concerning anti-money laundering and digital financial consultation service. services, etc. to help increase fans’ sensitivity to financial issues so as to reduce the fraud occurrences. 3.2.7 Taichung Bank Baby A-Zhong s Fun Club ‘ ’ ’ 3. Promotional Activities Taichung Bank establishes official fan page ‘Taichung Bank Baby A-Zhong’s Fun Irregularly announce messages about the Bank’s promotional activities, including Club’ on Facebook to create an interaction channel with the public via social media credit card, TWD/foreign currency deposit, mobile payment, etc., for fans to platform and to increase the Bank’s visibility among young age groups. In 2019, receive the latest information and enjoy promotional favors and rewards in their the Bank set its social media management strategy as ‘increasing interaction with consumptions. customers and facilitating customer adherence’ by attracting more diverse groups 4. Interaction with fans and potential customers. Moreover, we are also active in increasing our fans base Conduct online activities for fans. For example, the ‘lucky draw’ activity was aimed in the hope of promoting our brand image via digital channels and increasing the at attracting young age groups; sports ticket (sponsored by the Bank) giveaway Bank’s amiability with adorable cartoon characters so as to collect the attention was offered to reward fans; ‘Online Voting’ was designed for fans to select the of those who are averse to commercial ads with this reverse marketing approach. promotional credit card favors they prefer. The number of fans was 23,074 by the end of 2019 with an increase of 12,866 5. Season's Greetings people and a growth rate of 126.04 as compared with the year-end number of Produce the Bank’s mascot stickers for important festivals or use some animated ％ 10,208 in 2018. The total impression of post is 19,045,637 which has significantly stickers to celebrate with fans and improve interaction. Fans can also send the increased the Bank’s visibility and has changed and effectively improved the tools pictures to family and friends as season’s greetings.

A TRUSTWORTHY PARTNER! for communication with the public. Unit: Person

Year 2017 2018 2019

Number of fans 6,293 10,208 23,074

60 3.3.1 Create Policies and Strategies related to 03 Treating Customer Fairly Principle DO OUR BEST TO SAFE GUARD CUSTOMERS! With “Treating“ Customer Fairly Principle”, Taichung Bank establishes” the core of its company culture and develops strategies to carry out this principle by increasing employees’ consciousness of financial consumer protection, and the compliance with regulations related to financial consumer protection, which shall reduce costs resulted from regulatory breaches, and shall increase financial consumer trust and confidence in banks. In order to improve staff’s understanding of “Treating Customer Fairly Principle” and make it to be internalized and become Taichung Bank’s corporate culture, educational trainings on “Treating Customer Fairly” have been conducted since the fourth quarter of 2019 to enhance customer service quality and reduce customer grievances. Through this training, cases happened in various business scopes and might be against the principle of “Treating Customer Fairly” were discussed and customer complaints/grievances were shared. These improvement measures and verbal communication skills were instructed for staff so that they would know how to deal with similar situations.

3.3.2 The Bank was awarded “Golden Security Award for Member Institute with Excellent Performance” in 2019 by Joint Credit Information Center. It signified a recognition of our achievements in implementing ‘credit information security control’. And it showed our efforts in maintaining the correctness of joint credit information, security control and inspection of joint credit information and control & management of system operations, and also 3.3 Customer Rights Protection demonstrated the Bank’s commitment to protecting customers’ information. GRI 102-16 3.3.3 Personal Information Protection Measures Taichung Bank collects, processes and utilizes all personal information on the basis 1. In response to the enforcement of Personal Information Protection Act, Taichung of customers’ rights and with the attitude of a prudent administrator, and shall never Bank has fortified personal information protection & guard mechanisms and use the information in scopes which exceed the boundaries of specific purposes, improved information service quality with the ISO certification BS 10012 A TRUSTWORTHY PARTNER! and will only use the information within the scopes which is reasonably related to 2017 Personal Information Management System’ granted by British Standards the purpose of collection. Proper information security measures have been taken Institution (BSI) to enhance the information security in relation to the following for files and systems with personal information to prevent the information from being dimensions: personal information protection, asset classification and risk stolen, falsified, destroyed, destructed or revealed. Data whose retention period has management, physical facilities and environment safety, communication and expired or with no reference value should be checked and destroyed according to operation management, system development and maintenance management, regulations to protect customers’ rights and fulfill our duty in maintaining customer business sustainable operations management, access control & management, data confidentiality. There were no complaints in relation to privacy data breaches incidents management & analysis and regulatory compliance, etc. It is to and data loss in 2019. keep personal information secure in every business aspect to fulfill the duty

61 of a prudent administrator and demonstrate our determination in information as TWD, foreign currencies, trust, internet banking, etc.), at least one drill and review 03 protection. on different scenarios should be conducted twice a year. For other “Secondary 2. For the storage, transmission and usage of files containing personal information, Level” or “General Level” server hosts, system restoration drills should also be DO OUR BEST TO SAFE GUARD CUSTOMERS! proper control & management mechanisms have been established in relation run regularly. For important level system host, “Remote Data Synchronization” is to access management & review, data encrypting and exchange, financial adopted to synchronically backup the data to a remote backup system in Banqiao communication terminal encryption, system development procedures control, to increase emergency response ability and shorten restoration time as well as database audit and monitoring, portable storage media control & management, reduce operations risk and improve customer service level. personal information stocktaking, mails filing & retention, screening out personal 3.“ Directions for the management of SWIFT Messaging System Operations” information from emails, web links control and system log files filing, protection, etc. and “Directions for the management of SWIFT Work Station Operations” are 3. When a natural person entrusts a third party with the performance of foreign developed to ensure that the Bank’s “SWIFT Messaging System” and SWIFT work exchange related business, personal information such as trustee and agent ID station operations comply with regulatory requirements, thereby fortifying the No./Resident Certificate No./Passport No. is recorded on the Power of Attorney. transaction security in SWIFT system. Moreover, in response to the introduction The trustee and agent should be advised the purpose and content of the of SWIFT’s SWALLOW system in which information security regulations are personal information collection, processing or usage for the compliance with upgraded, the Bank entrusted the audit to PricewaterhouseCoopers Taiwan (PwC) Personal Information Protection Act. Management Consulting Co., Ltd. for the 2019 Customer Security Program (CSP) Inspection and submitted the SWIFT CSP Inspection Report in December 2019. 3.3.4 Information Security Measures 4. In order to ensure that the Bank’s computer systems possess the best security 1. The Bank received ISO 27001 certification protection mechanisms as well as to comply with the“Regulations on Financial in September 2012. Re-evaluation has been Institute’s Computer System Information Security Evaluation” regulated by regularly conducted on a yearly basis, and the Competent Authorities, professional service providers (project members of the certification has been renewed triennially to providers must have professional certifications and related work experiences) implement information security management are entrusted every year to conduct ‘technical inspection’ and ‘regulatory and continuously improve the Bank’s information compliance inspection’ in relation to information security. With the aim of complying with competent authorities’ requirements, the Bank security maintenance and management. 5. entrusts external independent professionals (Big Four accounting firms) on a According to ISO 27001 information security yearly basis to conduct evaluation concerning the Bank’s overall implementation management system, 14 control domains, of information security. Therefore, it ensures the compliance with regulations 35 control objectives and 114 control items set by the bankers associations and Competent Authorities, and a Declaration are specified. The Bank focuses on the of Overall Implementation of Information Security’ is jointly signed by Chairman, following dimensions to fortify its information General Manager, General Auditor and responsible team leaders for information security management: asset management, security. And then it is submitted to board of directors. risk management, physical facilities and environmental safety, telecommunication security and operations management, system 3.3.5 A TRUSTWORTHY PARTNER! development & maintenance management, Taichung Bank’s customer data and files are regularly checked and inspected. business sustainable operations management, Data whose retention period has expired or with no reference value shall be access control & management, incident destroyed according to regulations to avoid data breaches. management & analysis, supplier management and regulatory compliance, etc. 2. For “Important Level” information host systems (such

62 3.3.6 3.3.7 Carry out Know Your Customer (KYC) “ ” 03 In upholding the spirit of supporting the underprivileged and complying with procedures and value the investment rights of Competent Authorities’ policies, Taichung Bank has designated responsible units DO OUR BEST TO SAFE GUARD CUSTOMERS! and personnel to take the responsibility for handling affairs concerning various debt disadvantaged customers negotiation mechanisms. The related handling methods are listed as followed The Bank develops wealth management business and has formulated “Directions

1. Debt negotiation mechanism: A debtor can submit the application if faced with for the KYC Operations when Processing Wealth Management Business”. a circumstance that the customers are not imputed, or the debt contract cannot Strict and compliant KYC procedures are employed to evaluate and explore be performed. The Bank shall develop debt payment programs based on the customers’ real needs for wealth management, and allow customers to choose the debtor’s actual debt-paying ability to enable those being trapped in financial financial products which suit their needs in order, to protect customers’ financial plight to restart their lives. consumption rights. In addition, we value the investment rights of disadvantaged 2. Individual negotiation for agreed plan If the debtor breaches his or her promise customers and with system controlling and regular statement reviewing, the over

for some reason midway but still has debt-paying ability and willingness, he selling can be avoided. or she can request the Bank to reactivate negotiation to fix the debt, thereby retuning his or her life and restoring self-confidence. 3.3.8 Reinforce Know Your Product (KYP) 3. Plan of changing repayment terms If a debtor fails to continue repaying the debt “ ”

due to sudden income loss or increased burden of livelihood, he or she can procedures and improve products review before apply for the change of repayment terms to lower monthly payment and ease the marketing to protect customers rights burden. In order to protect investors’ rights, the Bank establishes “’Financial Product： Review 4. With a view to caring for economically underprivileged groups, the Bank has Committee” and “Review Team” to review all financial products offered by the been cooperating with government in implementing “Statute for Consumer Bank to customers from various professional dimensions (including compliance, Debt Clearance” since 2008 by setting up the single point of contact for pre- conditions of issuing entities, product structure, risk level, et aletc. etc.) before their negotiation in order to undertake customers’ negotiation applications and marketing. provide negotiation consultation and suggestion. This act had successfully assisted 2,255 people in restarting their lives in the win-win negotiation by the 3.3.9 Make pre-transaction sound recording for end of 2019. specific items as confirmation to protect customers rights Statistical data of 2018-2019 Pre-negotiations Pre-transaction sound recording’ for the following transaction-related business Unit: person items should be completed as confirmation before transactions are processed: non-professional investors’ huge investments, specific disadvantaged customers’ 2500 2255 high-risk product investments, investments of Non-Principal Guaranteed Structured 2000 1989 1766 Notes, application for the qualification of ‘professional investor’ and non-OTC (over-

1541 the-counter) customer investment risk attributes assessment, etc. A TRUSTWORTHY PARTNER! 1500 1326 1000 1046 3.3.10 Provide customers with investment information 865 ’ 685 In terms of after sales service, we value customers rights to know. Besides 500 531 irregularly advise customers of investment information through OTC service or 394 in-person visits, the Bank also sends trust account statements and derivatives 0 276 56 immature position market value assessment statements to customers on a regular Year basis. Therefore, customers will know the changes in their financial position 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 and the information about financial products changes, so as to help customers determine their investment timing.

63 3.3.11 Conduct Educational training on Code of Ethics for wealth 03 ‘ ’ In order to protect customers’ rights, the “Fee Structure Declaration of Offshore management specialists on a half-yearly basis to reinforce DO OUR BEST TO SAFE GUARD CUSTOMERS! Fund with Back-end Load” was added on 21st December 2018 according to personnel s law-abiding consciousness and the responsibility to “Guidelines for Channel Remuneration Payments and Sales Activities for Members ’ protect customers rights and Their Sales Agents Issued by the SITCA”, article 8, subparagraph 4, to ’ help customers be fully advised of the fee structures, by providing computation examples, of ‘front-end load class’ offshore funds and ‘back-end load class’ offshore funds.

3.3.12 In order to protect customers’ rights, the ‘Fee Structure Declaration of Offshore Fund Justly and fairly consider the with Back-end Load’ was added on 21st December 2018 according to ‘ Guidelines Before , During and ‘ ’‘ ’ for Channel Remuneration Payments and Sales Activities for Members and Their After factors to formulate ‘ ’ Sales Agents Issued by the SITCA’, article 8, subparagraph 4, to help customers a reasonable reward system Conduct wealth be fully advised of the fee structures, by providing computation examples, of ‘front- management personnel s for wealth management ’ end load class’ offshore funds and ‘back-end load class’ offshore funds. personnel. The Before credit inquiry and follow- ‘ ’ evaluation criteria include the up review once a year 3.3.13 amount of commission, the to understand their real- The Bank has started to provide investors with past 5-year load and return time credit and financial information of a fund (with different class shares) since 1st October 2019 according growth of assets entrusted status so as to prevent the to “Guidelines for Channel Remuneration Payments and Sales Activities for by customers, the growth occurrence of misdeeds. Members and Their Sales Agents Issued by the SITCA”, article 8, subparagraph 3. of customer base, and completeness of training and And conduct inspections 3.3.14 certification, etc.; the of wealth management personnel s own deposit In order to prevent wealth management personnel from receiving commissions During and After ’ ‘ ’ ‘ ’ through improper sale behavior, Taichung Bank takes the following concrete evaluation criteria include transactions twice a year measures to protect customers’ rights: audit nonconformities, for the early warning of customer complaints and improper fund transactions. disputes and service quality monitoring, etc. A TRUSTWORTHY PARTNER!

64 3.3.15 3.4.1 Customer Communication Channels 03 Provide disabled-friendly financial services and facilities In order to improve service quality, the Bank provides customers with diverse,

Taichung Bank has been actively establishing Barrier-free ATM, barrier-free convenient and real-time channels to offer consultation and assist customers in DO OUR BEST TO SAFE GUARD CUSTOMERS! environment and ATM for the visually impaired to provide a disabled-friendly service solving their questions. Customers are welcome to directly address their opinions environment. Barrier-free website has been set up for checking exchange rates and to business units, or disclosing their questions and problems via the 24/7/365 interest rates, which conforms to the guidelines for barrier-free website design and Customer Service Hotline (for national calls in Taiwan, please dial 4499888 and add has obtained the recognition of A Grade “Barrier-free Public Information Website”. 04 for mobiles), or P.O. boxes, emails, etc. The opinions shall be responded and ＋ The Online Banking System and Online ATM have also received the “Barrier-free handled as soon as they have been received by our contacts. Online Banking Label” granted by “National Communications Commission” and the barrier-free transfer service for mobile banking has been planned to extend our services. Statistical data of customer service hotline over the past 3 years

68,202 Cumulative numbers of Barrier-Free ATM & ATM for the 2019 133,296 138,035 Visually Impaired over the past 3 years 62,280 Unit: Person 2018 143,222 Year 2017 2018 2019 151,380

Barrier-Free ATM 140 153 155 62,389 2017 152,566 ATM for the Visually Impaired 2 2 2 165,409

0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000

Number of Customer Number of Customer Number of Customer Service Hotline Service Hotline Service Hotline 3.4 Improve Customer outbound calls answered calls inbound calls Service Quality & Maintain 2017 2018 2019 Response rate (Note 1) 92.2% 94.6% 96.6% Customer Relationships Service level (Note 2) 70.2% 80.4% 88.4% In realizing the mission of “Care with Heart & Make It Shine”, the Bank attentively

● Note1: Customer Service Hotline Response Rate is the percentage A TRUSTWORTHY PARTNER! listens to customers’ needs, values customers’ opinions and provides customers that total answered calls count for total inbound calls with exceptional, comprehensive and quality financial services to foster and ● Note2: The standard of service is that a call must be answered within develop sustained, stable and mutually trusting customer relationships. 30 seconds.

65 03 3.4.2 Customer Complaint Mechanism 1. In order to protect consumers’ rights, the Bank offers comprehensive, transparent 3. The Bank values the complaint right of every customer by actively facing the DO OUR BEST TO SAFE GUARD CUSTOMERS! and effective complaint channels for customers’ opinions. Customers can use problems, managing the complaint handling efficiency and figuring out the best the Bank’s 24-hour free call 0809-096888 or address complaint by writing or handling methods through discussion with complaint related units. The number emails. In addition, responsible unit for financial consumption dispute handling is of complaint cases received in 2019 was 181 with a reduction of 13 as compared set to collaborate in handling customer complaint and increase complaint with that of 2018 (194). Customers were all replied within 30 calendar days as handling efficiency with a view to properly handling customers’ grievances and regulated by Financial Consumer Protection Act. All business and administration improve the Bank’s service quality and corporate image. units are requested to offer improvement measures for customer grievances 2. Bring the customer grievances received from different channels such as of the month, and grievances are summarized and analyzed on a quarterly customer service hotline, service counters, competent authorities, Financial basis for the improvement of service quality, and the compiling of propagation Ombudsman Institution, emails, letters, etc., into “Customer Complaint materials for educational trainings. “Educational Training courses on Frequent Management System”. Control and manage customer complaint related Grievances” are conducted on an irregular basis to strengthen staff’s attitudes processing procedures with systematic methods and quantitative complaint towards complaint handling and regulatory compliant consciousness. Moreover, data to ensure customers are properly replied. Conduct follow-up reviews upon explanatory reports of grievances of previous year are regularly submitted to the grievances to identify and improve the problems revealed to avoid the board of directors for management personnel to understand how the grievances recurrence. of the bank are handled and processed. 4. Customers’ opinions and feedback are the momentum of the Bank’s high-quality service. We believe that customers’ trust can only be won with earnest and Complaint Customer Service Hotline Branch Service Counter enthusiastic service attitudes and through attentively listening to customers’ Channel Via Governing Agencies By writing or email needs and promptly responding to and solving issues raise by customers, by which the Bank’s corporate image of ‘We Do Our Best for You’ can be manifested. Register complaint in the system Request complaint related unit to report the fact and handling Responsible 3.4.3 Conduct Tax-related Information Meetings for of the complaint Unit VIP Customers Request Head Office responsible units to figure out the best In cooperating with government policies and in response to customers’ needs, handling method Taichung Bank conducted seven “Tax-related Information Meetings for VIP Customers” for local customers in Taipei, Taoyuan, Hsinchu, Taichung, Changhua, Tainan and Kaohsiung Check handling efficiency and reply to customers / governing during October and Customer agencies November to explain the key content and A TRUSTWORTHY PARTNER! Service Business responsible units develop improvement measures Conduct complaint satisfaction degree survey application of special laws and interpretations for customers to understand how to smoothly transfer Regularly summarize & analyze the contexts, reasons offshore funds back to Business and improvement measures of/for grievances for internal Taiwan, and to give advice Team educational training on how to optimize asset Regularly submit explanatory reports to board of directors allocation.

66 3.4.4 Conduct Information Meetings in branches 3.4.5 A control principle focuses on events before, “ ” 03 There were 8 medium-large scale and 43 small scale information meetings held in during, and after a process is employed to ensure branches in 2019. The topics of medium-large scale information meetings focused DO OUR BEST TO SAFE GUARD CUSTOMERS! on Mother’s Day and Father’s Day, in which “Investment Prospect Information that customers understand the characteristics of Meeting in celebration of Mother’s Day”and“Wine Tasting Party in celebration products and the possible risks. of Father’s Day”were conducted in northern, central and southern Taiwan for customers to understand the investment market trends through our analysis of the state of current world economy and development trends. In small scale information meetings, besides offering analysis of the prospect of investment market for After customers to understand the investment market trends, we also arranged some ‘soft’topics such as Health Maintenance in Chinese Medicine, retirement planning, traveling, new medical knowledge and how to activate good luck, etc, to improve A the relationships with customers in the hope of stimulating the customers who haven’t dealt with us for a long period time to adjust their asset allocation to match market trends, and also improving customers’ investment performance in their wealth management through these small scale information meetings. During

W

Before S Y YP

A A TRUSTWORTHY PARTNER!

67 03 3.4.6 Number of customer grievances in relation to service Taichung Bank conducts customer satisfaction surveys on a half-yearly basis with courtesy over the last three years (All cases closed) DO OUR BEST TO SAFE GUARD CUSTOMERS! wealth management specialist’s performance to reinforce the monitoring over wealth management specialist’s sales and service quality. The satisfaction degrees Year 2017 2018 2019 all exceeded 95%. Do Our Best to Care For Our Number of Grievances 23 6 21 Year of Survey 2017 2018 2019

● Note: In order to improve service quality and reduce customer grievances, the Bank continues to add Employees! Satisfaction Degree (%) 96% 96% 96.5% service courtesy training hours in ‘New Hire Training Course’ and conducts ‘Customer Complaint Case Study Workshop’ to strengthen employees’ service courtesy competency. Create Pleasant Work Environment for Happy Life!

3.4.7 4.1 Employment Situation In order to reinforce employees’ courtesy in customer service and improve 4.2 Salary and Benefits service quality as well as practice our philosophy of “We Do Our Best For You” in daily operations, Taichung Bank has created standards and training materials 4.3 Talent Cultivation and Career Development for customer service courtesy and established a position of “Seed Lecturer for Customer Service Courtesy” to take the responsibility for business units’ courtesy 4.4 Harmonious Labor Relations training. A quantifiable appraisal mechanism is designed to examine branches’ 4.5 Occupational Health & Safety over-the-counter and phone service courtesy from the perspective of customers, which includes items of onsite inspection, phone testing and customer complaints (percentage of each item is determined according to the key appraisal points of the year). Appraisal results and list of business units receiving merits and demerits in group competition are announced by the end of the year, which will serve as one of the criteria for evaluating the business unit’s operational performance for bonus grant with a view to managing and maintaining service quality in a systematic and standardized way.

Annual Service Quality Appraisal Result

Year 2017 2018 2019

Service quality sores A TRUSTWORTHY PARTNER! 91.19 90.48 88.80 (hundred-mark system)

● Note: In calculating service quality scores, weight (percentage) of each appraisal item may vary from year to year owing to different appraisal focuses of the year

68 03 DO OUR BEST TO SAFE GUARD CUSTOMERS! Do Our Best to Care For Our Employees! Create Pleasant Work Environment for Happy Life!

4.1 Employment Situation 4.2 Salary and Benefits 4.3 Talent Cultivation and Career Development 4.4 Harmonious Labor Relations 4.5 Occupational Health & Safety A TRUSTWORTHY PARTNER! 04 4.1 Employment Situation GRI 102-8 202-1 202-2 401-1 405-1 DO OUR BEST TO CARE FOR OUR EMPLOYEES!

Taichung Bank has 2,610 full-time employees by the end of 2019. Employees Distribution of permanent employees by gender, age, ― are recruited through various channels such as Job Banks, Campus Job Fairs, and position (team-leader /general) employees’ recommendation, etc. We comply precisely with government employment regulations and prohibit the use of child labor. Taiwan Overseas We are committed to creating a diverse and fair work environment for employees and to maintaining localized advantages and ensuring local workers’ rights by Team Team General General Total prioritizing the recruitment of personnel living locally in business unit’s recruitment. Gender Age range Leader Leader Position Position Senior management personnel (managers and above) in major business units in Position Position Taiwan are 100% local residents, and senior management personnel in overseas 50 years old 254 126 1 0 381 business units are all Taiwanese citizens. HR management directions and work ≧ rules are carefully formulated to ensure the rights of all employees, by which 30 ~50 years old 216 313 2 0 531 employees are to be informed, based on job tenure, at least 10 days prior to the Male Under 30 years 0 231 0 1 232 company’s significant operational changes to reduce the impacts on employees. old

The Bank’s employment related distributions are illustrated as follows Subtotal (male) 470 670 3 1 1,144

50 years old 95 60 0 0 155 Distribution of employees by gender ≧ ― 30 ~50 years old 182 533 2 0 717 Female Number of Employees Permanent Permanent Under 30 years Dispatched 1 591 0 2 594 (by gender) (Taiwan area) (Overseas area) old Subtotal female) 278 1,184 2 2 1,466 Male 1,140 4 7 Total 748 1,854 5 3 2,610 Female 1,462 4 34

Total 2,602 8 41 • Number of non-managerial employees was 1,857 in 2019 with an increase of 185 as compared with 1,672 in 2018. • ‘Team leader position’ refers to personnel responsible for management. ● Note The workforce of the Bank is all permanent employees.

ENVIRONMENT FOR HAPPY LIFE! CREATE PLEASANT WORK Distribution of employees by salary/commission Education levels of current employees ― (data been collected on 2019/12/31) Number of Employees Permanent Permanent Dispatched (by salary/commission) (Taiwan area) (Overseas area) Degree Graduate School University/ Senior High/ Vocational Total Salary 2,602 8 41 Level (and above) College Schools (and below)

Commission 0 0 0 Taiwan 311 2,130 161 2,602

Total 2,602 8 41 Overseas 3 4 1 8

70 Number of people with physical disabilities employed by the end of 2019 (Taiwan) 04 ● Note

The number of actual The number of mandatory Insufficient places for 1. The number of employees with physical disability in the Bank is 20, among which 4 with severe DO OUR BEST TO CARE FOR OUR EMPLOYEES! places for physically places for physically physically disabled physical disability. The number of places to be filled is 2. disabled employees disabled employees employees 2. We prioritize the review of physically disabled workers’ resumes in recruitment and continue to offer employment opportunities through Labor Affairs Bureau of Taichung City Government’s special site of ‘Job Opportunity for Physically- disabled Workers’. 20(Note) 26 2

New hire turnover rate

Year-End Number Age Range Female Male Total New Hire Year Turnover Female Male Gender under 30 30-49 50 under 30 30-49 50 Female Male ≧ ≧ Rate New hire 147 56 3 73 55 5 206 133 15.27% 2017 1,199 1,021 Resigned 101 93 5 53 55 7 199 115 14.14%

New hire 201 83 5 90 76 5 289 171 19.37% 2018 1,314 1,061 Resigned 82 70 4 36 51 5 156 92 10.44%

New hire 326 83 3 151 85 13 412 249 25.33% 2019 1,466 1,144 Resigned 145 95 3 79 56 14 243 149 15.02%

● Note: 1. The number of ‘Resigned’ did not include part-time workers. 2. Turnover rate=number of employees resigned/year-end number of employees

3. New hire rate=number of new hires/ year-end number of employees ENVIRONMENT FOR HAPPY LIFE! CREATE PLEASANT WORK

4.1.1 Industry-academia cooperation 4.1.2 Employee Performance Appraisal & 1. The Bank has assisted industry-academia cooperation programs with 18 Management universities and colleges by offering students work placement opportunities, by The performance of all employees of the Bank is required to be appraised which 50 students became our employees after internship. By continuing the and managed on a yearly basis, by which employees can be assisted in the programs, 67 students in total undertook their work placements in different units enhancement of ‘work performance’, ‘professional knowledge and skills’, of the Bank in 2019. ‘service attitude’ and ‘degree of compliance with rules and regulations’, and 2. This enables us to select outstanding students from the graduates-to- the organizational effectiveness shall be strengthened. The results of annual be for future employment and reduce HR cost resulted from new hire performance appraisal shall be used as references for personnel development resignation due to ‘theory-practice gap’.

71 programs such as operational performance bonus, pay adjustment and promotion, birthdays, deaths, travels, children scholarships and gifts for three major festivals, etc. In addition, periodic appraisals with additional frequency and different et aletc.) etc.) in the hope of helping employees build a sense of identity. In appraisal methods are also conducted for positions such as Relationship Manager/ addition, in order to help employees make up a sound retirement plan, 6% of the 04 Account Officer; the percentages of this category counting for overall employees monthly salary is allocated to the Individual Retirement Account overseen by the are shown in the table below (%) Bureau of Labor Insurance on a monthly basis for those who are applicable to the DO OUR BEST TO CARE FOR OUR EMPLOYEES! new system according to government regulations. As for those who are applicable Employees Number Percentages of This to the old system, the allocation rate is accurately calculated by actuarial firms Number of Subject to of Wealth Appraisal Category entrusted by the company, according to which the company allocates employees’ Relationship pension to the “Retirement Pension Account” managed by the Trust Department, Periodic Management Counting for Overall Managers Bank of Taiwan on a monthly basis. Appraisals Staff Employees (By Gender)

Male 86 375 17.66 Taichung Bank has been incorporated in the list of ‘Taiwan HC 100 Index’ over the past 5 years since 2015, which demonstrates the recognition of our profitability Female 204 176 14.56 and the acknowledgement of our employee salary and benefits. Taichung Bank’s employee salary and benefits expenses in 2019 was NT$ 3,390.15 million, Total 290 551 32.22 which counts for 30.77% of revenue (not including overseas). And we become the backing and support for more than 2,000 families and hope to attract more outstanding people to work with us in the future. 4.2 Salary and Benefits Salary ratio (by position level) GRI 401-1 401-2 401-3 405-2 Minimum Wage Ratio Average Annual Salary Level Two earning categories are applied in Taichung Bank’s salary system: regular (Male: Female) Ratio (Male: Female) earnings (base salary and various allowances) and irregular earnings (for example: Management 1:1 1:0.889 overtime pay). Salaries are determined for new hires, regardless of gender, based on criteria such as education and work experiences, work performance General Staff 1:1 1:0.851 & competency, professional skills required, etc. We also participate in the salary survey conducted by management consulting companies to compare our • Explanation salaries with those of equivalent positions in the same industry to design a fair The average annual salary ratio of male is higher than that of female, which results from the fact that and competitive salary system for employees. Salary for our new hires is 1.39 on the one hand, there were more males than females in management level in 2019; on the other hand, times as high as the basic minimum wage. Employee annual salary is equivalent in general staff level, more males take the positions requiring technical skills (positions such as IT and maintenance, etc., which have a different salary structure from that of general staff) to 13-month wage (12-month base salary plus 1-month year-end bonus) and operational performance bonus might be added based on the unit’s operational ENVIRONMENT FOR HAPPY LIFE! CREATE PLEASANT WORK performance or individual performance of the year. Moreover, in order to relate the Non-managerial permanent employees salary information

operational performance bonus to future risks and prevent management personnel Unit amount: NT$ 1,000 from investing in or undertaking high-risk businesses for high returns, part of the ‘operational performance bonus’ payment has been deferred since 2014. Item 2018 2019 Difference Number of Non-Managerial Permanent Employees 2,014 2,225 211 In addition, “Remuneration Committee” has been set by the company to determine Mean Salary 1,074 1,061 (13) and regularly review the reasonability of the remuneration of senior management. Four “Remuneration Committee” meetings were held in 2019 to discuss related Median Salary 921 939 18 issues. Furthermore, “Taichung Commercial Bank Employee Welfare Committee” has been established by the company based on “Employees' Welfare Funds Act” Description: The term “Non-managerial employees” used in the table refers to with a view to taking care of employees living and increasing workplace efficiency employees exclusive of ‘managers’ according to the instructions specified in the by providing various beneficial subsidies/allowances (including marriages, births, official document issued by Ministry of Finance (No. 920001301) on 2003.3.27.

72 Descriptions of Employee Benefits

Benefit Descriptions item 04 1. ‘ Taichung Commercial Bank ESOT Committee’ was founded to undertake the business of employee stock ownership trust, which DO OUR BEST TO CARE FOR OUR EMPLOYEES! helps improve employee benefits and assist employees in long-term savings and investments for them to accumulate wealth for Employee financial stability after retirement. It also helps enhance group cohesion by letting employees hold company stock and share operating Stock achievements of the Company. Ownership 2. Employees can choose whether to participate in this plan or not, and they can increase or decrease the amount invested within listed Trust range during specified time period. A fixed amount is allocated on a monthly basis to the trust. The company may also offer incentives and deposit the money in the trust for employees. The incentive amount is calculated by multiplying the employee’s allocation amount with an allocation ratio determined by the employee’s previous-year appraisal.

1. Besides the regulatory labor insurance, National Health Insurance and 6% of pension allocation, the Bank, in order to take care of employees’ living and improve employees’ benefits, also insures employees with Group Injury Insurance, Accident Injury Medical Employee Insurance, Term life insurance and Hospital & Surgery insurance (on daily basis), etc. And ‘Cancer Insurance’ has been added since Insurance August 2019. Plan 2. Group insurances exclusively for employees are also planned, which include Life Insurance, Critical Illness Insurance, Accident Insurance and Medical Insurance, etc. Employees can choose to insure for themselves or for their family for a more complete protection.

1. Provide various subsidies in relation to births, marriages, birthdays, deaths, birthday parties and children scholarships, etc.) Various 2. In response to government’s policies that encourage births, the birth subsidy will be raised from NT$ 2,000 to NT$10,000 from 2020 Beneficial onwards. Subsidies 3. In order to encourage healthy leisure activities, the Bank formulated ‘Club Management & Subsidy Directions’ to subsidize clubs for running activities, thereby encouraging employees to actively participate in club activities to attain physical and mental health.

Employee In order to help employees enhance physical health, achieve soundness in mind and body and encourage the communication among Travel Allow- employees, the Bank allocates a fixed fund on a yearly basis (based on the per capita amount determined in Employee Welfare Committee ances meetings) for business units to make plans for their own employee tours.

Employee The Bank adopts an employee-supporting project ‘3 Heart Project — Yongxin (literally means ‘use heart: the company uses its heart’), Assistance Guanxin (literally means ‘caring: provide professional care’) and ‘Kaixin’ (literally means ‘happy: make employees happy’) ’ to care for Programs employees, promote employee physical & mental health and support employees in achieving life-work balance. (EAPs)

Employee ENVIRONMENT FOR HAPPY LIFE! CREATE PLEASANT WORK In order to stimulate employee morale, the Bank distributes a fixed amount or ratio of profit of the current year as employees’ compensation Remunera- according to Company Act, article 235-1, paragraph 3, and calculates the distributable cash and stock based on ratios determined by tion Alloca- employees’ appraisal results and job tenure. tion

Regular Heal According to “Labor Health Protection Rules”, employers should regularly conduct health examination for employees of different ages at th Checkup different frequencies. The Bank provides free health checkups for all employees every two year.

Taichung Bank, by law, has formulated “Employee Work Rules” and “Regulations on Employee Leave-taking Management” for leave- Employee Le granting operation. And we offer better conditions than what is specified by law: ave Man- 1. Marriage leave — for employees themselves : 10 days; for children: 3 days; for siblings: one day agement Promoting healthy leisure activities and 2. Funeral leave — 10 days for deaths of parents, foster parents, step parents and spouses ˙ System encouraging employees to participate in 3. General injury/sick leave — within 30 days: full paid; more than 30 days: half paid (limited to one year) club activities 73 04 Average Cost of Employee Benefits (per year) Unpaid Paternity Leave Data in 2019 Unit amount: NT$ 1,000 DO OUR BEST TO CARE FOR OUR EMPLOYEES! 2018 2019 Difference Item Male Female Total (Overall-not (Overall-not compared including including Year 2017 with Number of Additional Employees Eligible for Unpaid overseas overseas 17 54 71 ‘ ’ ‘ ’ previous Paternity Leave in 2019 (A) and director's and director's ‘ ‘ year emoluments ) emoluments ) ’ ’ Number of Employees Who Applied for Unpaid Leave Benefits Cost/ 2 12 14 1,359 1,381 1,327 (54) after Maternity Leave in 2019 (B) Per Employee

Total Benefits Cost for Non- Application Rate in 2019 (B/A) 12% 22% 20% 1,810,405 1,947,031 1,808,130 (138,901) Managerial Employees Number of Employees Supposed to Resume Work 3 22 25 Benefits Cost/ after Unpaid Paternity Leave in 2019 C Per Non- （ ） 1,169 1,169 1,034 (135) Managerial Number of Employees Who Resumed Work after Employee 1 16 17 Unpaid Paternity Leave in 2019 D （ ） • Explanation

1. The number of people in 2019 was calculated at the average value of the year. 2. The amount of general business bonus decreased in 2019 as compared with 2018 and the number of Work Resumption Rate in 2019 (D/C) 33% 73% 68% new hires, with a comparatively low salary, increased for about 150, which resulted in a decrease in ‘benefits cost/per employee’. Number of Employees Who Resumed Work after Unpaid Paternity Leave in 2018 And Remained 0 19 19 Working One Year after Work Resumption in 2019 (E)

ENVIRONMENT FOR HAPPY LIFE! CREATE PLEASANT WORK Number of Employees Who Resumed Work after 0 25 25 Unpaid Paternity Leave in 2018 (F)

Retention Rate in 2019 (E/F) 0 76% 76%

• Explanation

The reason for female staff’s resignation after unpaid paternity leave and work resumption is that they need to take care of family and are temporarily unable to work. And very few male staff members in the Bank apply for unpaid paternity leave, which results in a significant difference in retention rate between male and female employees.

74 4.3 Talent Cultivation and 04

Career Development DO OUR BEST TO CARE FOR OUR EMPLOYEES! GRI 404-1 404-2 404-3 Employee Average Training Hours in 2019

The Bank believes that education & training is the key factor for corporate Employees Average Training Hours sustainable development and continuous progress. In order to cultivate outstanding personnel and fulfill the developmental needs of employees of all levels, Team-Leader Position General Position departments specialized in staff training are entrusted to create annual education & training plans based on the Bank’s development strategies, and formulate Female 58 58 specific training courses for employees of different positions and levels, and at the same time enhance the quality, depth and effectiveness of the courses so as to Male 49 52 accumulate human capital and create competitive advantages. Overall 52 56 4.3.1 Statistics of the Bank s education & training ’ As we know, education & training can foster shared values among employees, Number of employee training hours in attending courses of strengthen group cohesion and enhance work efficiency, and it becomes more important especially in rapidly changing financial markets. Therefore, the Bank human rights policy conducts various trainings for different businesses (such as deposit & remittance, The fundamental training courses for new hires include the company’s history & credit, foreign exchange and wealth management, etc.) and extensively sends culture, company’s organizational structure, personal career blueprint & promotion personnel to participate in internal and external educational training courses system, the combination of career development and company vision. Through the for employees to be familiar with the latest financial knowledge, commodity introduction about various Regulatory Compliance requirements (such as Act of information, regulations & systems as well as market trends, thereby providing Gender Equality, OH&S, personal information protection, etc.), relevant rights & customers with quality and professional services. obligations and introduction about benefits items, employee rights are reiterated and the emphasis the Bank places on human rights protection is stressed. Training related achievements in 2019

2017 2018 2019 Number of Training Hours in Percentage of New Hires Year Number of Internal Training Sessions 139 231 243 Human Rights Policy Trained Number of Participants in Internal Training 2019 5,410 hours 83% 7,317 13,637 14,066 ENVIRONMENT FOR HAPPY LIFE! CREATE PLEASANT WORK Sessions

● Note Total Hours for Internal Training Courses 72,748 121,560 133,034 1. Percentage of new hires trained=Number of new hires trained in human rights policy course/Total Number of External Training Sessions in Which number of new hires 353 340 465 2. Number of new hires trained in human rights policy course= Total number of new hires –Number of Employees Participate new hires resigned Number of Employees Participating in External 3. Information about business related human rights policy is continuously delivered to in-service 918 835 1,069 employees on an irregular basis through electronic official documents/announcements or videos. Training Courses Total Hours for External Training Courses 8,095 10,027 10,849 Per Capita Training Hours 36.42 55.4 55.6

75 4.3.2 Training for professional expertis “Passing it on”and“Grooming the Next Generation” is an important corporate culture of the Bank. We facilitate various educational trainings and select staff with professional expertise to deliver lectures on job skills and pass on professional knowledge to help employees in their career planning and aptitude development.

04 Program Purpose Content

DO OUR BEST TO CARE FOR OUR EMPLOYEES! The fundamental training courses for new hires include the company’s history & culture, company’s organizational structure, personal career With a comprehensive training mechanism, new hires blueprint & promotion system, the combination of career development and company vision, various Regulatory Compliance requirements and are able to know the Bank’s businesses and improve New Hire introduction about relevant rights & obligations and benefits items. There are also training courses designed for new hires to understand daily their competencies through the professional courses Training operational procedures and key points of control, which include “New Hire Training Course”, “Work Placement Student/Part-time Worker Training provided, by which the Bank’s human capital shall be Course”, “Training Course on Finance Related Regulations”, “Assistant RM/AO Training Course” and “Account Officer Trainee Training Course”, enriched. etc. The total number of courses is 24, and the total number of participants is 856.

Provide comprehensive educational trainings according to employees’ positions and needs for aptitude development; help employees Develop all-round & talented personnel for financial Training for create their career maps and receive related trainings; for example: “Trust Clerk On-the-job Training” in Operation Section, “Educational industry and stimulate work potential by fully under- Different Training for Account Officer” in Wealth Management Section, “Credit Guarantee Practice Workshop” in Business Section, and “Training standing various job contents so as to accumulate ex- Positions Course for Writing Corporate Social Responsibility Report” for Head Office personnel, etc. Numbers of participants of the sections were: periences in different scopes. Operation Section: 5,107, Wealth Management Section: 3,475, Business Section: 3,552 and Head Office personnel: 3,001.

Conduct professional courses for top managers, team leaders of various levels, team leader trainees and general staff to reinforce Training employees’ expertise and competency so as to manifest the company's core competencies. The courses provided include “Lectures for Differ- Effectively equip employees and leaders of all levels on Corporate Governance” for top managers and unit managers, “Operation/Business Manager Workshop” for junior managers and ent Man- with required knowledge, skills, expertise and manage- above, “Compliance Officer Pre-service Workshop” for team leader trainees and “Derivatives Workshop” for general staff, etc. Numbers agement ment ability. of participants are as follows: top manager: 37; unit managers: 585; junior managers and above: 5,531; team leader trainees: 3,948; and Levels general staff: 5,034.

Establish operational and management ideology based Employee on dimensions of ‘ performance development’, ‘per- In order to further support employees in developing personal career plans, outstanding staff are selected and interviewed for aptitude test Individual sonnel management’, ‘career development ’ , ‘ training to understand their aspiration, ambition and disposition. And potential personnel of excellence are identified through complete educational Develop- development’ and ‘key personnel management & training and professional occupational evaluation to establish the Bank’s ‘talent base’. Training examples of this category include “Leading ment Plan development’ to help with the cultivation of strategic Executive Apex Program”, “LIFO Talent Development Workshop” and “Super Innovation (talent team)”, in which 6 courses were provided (IDP) analysis and organizational planning so as to maintain and the total number of participants was 171. organization development and team work.

In order to reinforce employees’ law-abiding consciousness and enhance business knowledge to avoid the recurrence of errors, the Regulatory Enable employees to understand the regulatory pro- following educational trainings are regularly conducted: regulatory compliance, anti-money laundering and internal audit/internal control. Com- cedures for various business operations to ensure the The courses provided include: “In-service Compliance Officer Workshop” for regulatory compliance, “In-service Personnel Workshop pliance compliance of internal regulations and legal require- about Anti-money Laundering and Countering the Financing of Terrorism” for anti-money laundering and “Self-Audit Personnel Workshop” Training ments. and “Consumer Protection Act — training on Principle for Financial Service Industries to Treat Clients Fairly” for internal audit/internal control, in which 110 sessions in total were provided and the total number of participants was 6,856. ENVIRONMENT FOR HAPPY LIFE! CREATE PLEASANT WORK Subsidies Encourage employees to study on their own to enrich to En- professional knowledge after work, and be active in ac- Those who have acquired finance-related professional certifications and language certificates shall be subsidized according to the Bank’s courage quiring finance-related professional certifications and ‘Incentive Measures for Certifications’. The total number of certifications/certificates subsidized was 1,726 with a total amount of $1,429,204. Certificate language certificates to improve career competitive- Acquisition ness.

Completion of New Employee Training Course Making plans for employees to participate in‘Super Conducting courses concerning the latest trends in 76 ˙ ˙ ˙ Innovation Course’ revision of Company Act and its analysis 4.3.3 Employee Career Developmen The Bank help employees to have a clear view of their career blueprint, and provide 4.4 Harmonious Labor Relations comprehensive educational trainings according to employees’ positions and needs GRI 406-1 411-1 412-2 for their aptitude development to help them create their own career maps and receive related training. We also strengthen the skills which employees can utilize 4.4.1 Regular Labor-Management Meetings 04 throughout their lives and help build up ideas and concepts which shall benefit Good Labor Relations is one of the key success factors of a business. The number DO OUR BEST TO CARE FOR OUR EMPLOYEES! employees in lifelong learning and career planning after retirement. of employee representatives and employer representatives of Taichung Bank are both 6 in 2019, by whom regular labor-management meetings are held to 1. Job Rotation negotiate issues related to Labor Relations and to facilitate labor-management In order to develop all-round & talented personnel for financial industry and collaboration. Four labor-management meetings have been held this year in which stimulate work potential, the Bank implements job rotation and also“Unit Rotation” representatives of both sides had offered detailed discussion of issues of employee to comply with the regulatory“Five Principles For Job Rotation” to foster the concerns. Bargaining representatives for Collective Bargaining Agreement have capability of mutual support and full understanding of various job contents, thereby been decided and shall carry out negotiation at the right time. enabling employees to accumulate experiences in different scopes and optimizing employees’ workplace adaptability. 4.4.2 Diverse employee opinion communication 2. Training for Professional Competence In implementing business diversion, facilitating professional services and channels supporting employees’ long-term career development, we conduct various Employees’ group cohesion and sense of identity can be established only when professional courses, which include business regulations, operating procedures, effective bilateral communication is realized. In order to prevent misdeeds in marketing techniques and customer relationship management, etc., for different workplace, staff can submit a complaint or statement by means of a formal business departments to reinforce employees’ professional competence. Moreover, complaint procedure, such as written document, email, internal website or in response to the development of financial technology (FinTech) and overseas complaint hotline when any of the following misdeeds are identified: unlawful or business, we continuously send personnel to participate in training courses on new sexual harassment, team leaders or staff violating internal control regulations or businesses to foster employees’ new ideas and skills to face the rapid changes being involved in high-risk speculative activities, etc. in emerging workplaces, enhance adaptability to environmental changes and The company shall maintain confidentiality about the employees who submit their encourage growth of the organization. opinions and respond promptly. The number of employee grievances which had 3. Digital Learning Platform been investigated and closed in 2019 was 3. None of them were involved in the The Bank shall establish a digital learning platform with various courses to issues of human rights, discrimination, the Rights of Indigenous Peoples and forced develop a life-long learning environment for employees, which shall allow a self- or compulsory labor. learning option not limited by time and space for employees to strengthen their own profession and management competencies anytime and anywhere, thereby establishing a foundation for diverse career development.

JOB ROTATION Number of employee grievances over the last three years

Foster mutual support capability Unit: Number of cases ENVIRONMENT FOR HAPPY LIFE! CREATE PLEASANT WORK Full understanding of various job contents Accumulate experiences and optimize workplace adaptability 2017 2018 2019

PROFESSIONAL TRAINING 6 2 3 Support employees’ career development Send personnel to participate in training courses on new businesses Foster new ideas and new skills ENHANCE PROFESSIONAL COMPETENCE FOR APTITUDE DEVELOPMENT

77 04 4.4.3 Achieve Gender Equality In the Workplace In response to Ministry of Labor’s promotion in facilitating employment equality, Meeting Item and Frequency in 2019

DO OUR BEST TO CARE FOR OUR EMPLOYEES! preventing workplace gender discrimination caused by gender stereotype in the workplace and workplace sexual harassment, the Bank creates gender equality Supervisory Board Committee Meeting 6 times in the workplace by following the measures facilitating employment equality and regulations on preventing workplace sexual harassment specified in Act of Labor-management Meeting 4 times Gender Equality as well as regulations on preventing employment discrimination specified in Employment Service Act. In order to prevent sexual harassment, the Employee Welfare Committee Meeting 3 times Bank is committed to creating gender equality in the workplace and protecting Supervisory Committee of Workers' Retirement victims’ rights. In the case of sexual harassment, an investigation team shall be 11 times set up to look into the case within 5 working days after the case is received. The Reserve Fund Meeting investigation process and information shall be kept confidential and the report shall Human Resource Evaluation and Appraisal be submitted to “Employee Sexual Harassment Complaint Handling Committee”. 9 times The related personnel shall be punished and moved from original position. A report Committee Meeting is also required to be submitted to Competent Authorities according to regulatory Employee Sexual Harassment Complaint procedures. No sexual harassment occurred in 2019. 0 time Handling Committee Meeting Taichung Bank is committed to creating a pleasant work environment and maintaining harmonious Labor Relations by following related labor regulations in Labor Affairs Bureau s Labor Inspection ’ 11 times protecting employees’ rights. Moreover, various measures have also been taken Enforcement Seminar to improve gender equality, which include ‘Menstrual Leave’, ‘Family Care Leave’, ‘Pregnancy Checkup Leave’, ‘Paternity Leave’, ‘Maternity Leave’ and related Take Part in Minquan & Minzu Buildings Twice regulations on ‘Unpaid Paternity Leave’. Besides, Administration units can check Employee Operating Environment Monitoring employees’ business trip/attendance records through “Business trip/Attendance Management System” to see if employees are working overtime. Regulations related to Labor Standards Act are also frequently reiterated in hope that an overall harmonious Labor Relations can be achieved and a win-win situation for business growth and employees’ rights can be created. Diverse Gender Labor- Labor equality Management communication 4.4.4 Labor Union workplace Meetings channels union The Labor Union was founded in 27th March 1999, which regularly convenes Supervisory Board Committees and General Meeting of Members' Representatives ENVIRONMENT FOR HAPPY LIFE! CREATE PLEASANT WORK as well as elects representatives of the employees to take part in the company’s Employee Welfare Committee, labor-management meetings and Supervisory Committee of Workers' Retirement Reserve Fund. It also negotiates for the Harmonious Labor Relations amendments to “Taichung Bank Employee Work Rules” to protect members’ rights, increase members' intelligence, improve working conditions, communicate labor- management opinions, enhance company productivity, enhance employee benefits and facilitate labor-management collaboration so as to achieve the goal of Taichung Bank’s sustainable development.

78 4.5 Occupational Health & 04

Safety DO OUR BEST TO CARE FOR OUR EMPLOYEES! In order to provide all employees and stakeholders with a safe operating 4. Appoint doctors who practice in labor health services to provide onsite health environment, Taichung Bank has been continuously improving its management service and conduct doctor health workshops or health consultations on a of occupational health and safety form two aspects explained in the following quarterly basis to reinforce employees’ health consciousness. descriptions 5. Following the Workplace Maternal Health Protection Direction, our bank ensures that the hazardous factors in the workplace are reduced and further removed, 4.5.1 Foster Employees Safety Perceptions and and never let pregnant employees or postnatal employees who are within their ’ first postpartum year be involve in the work which may affect maternal health in Habits embryonic development, pregnancy or breastfeeding. 1. Promote employee safety and health rules and prevent the occurrence of 6. In terms of hard services facilities, our bank provides female employees with occupational disasters. All units formulate their own annual ‘Self-Check Plan’ to Breastfeeding Room to create a maternity-friendly work environment under the carry out self-safety & health management consideration of both maternity protection and employment equality. 2. In order to effectively carry out the management of branches’ OH&S personnel, 7. Conduct employee health checkup every two years. Medical & nursing personnel the “OH&S Personnel List of the Unit” system has been designed by the take the responsibility for the health check records analysis, evaluation, company’s IT Department to work with HR system, by which the list can be management and retention for employees to have a better understanding about instantaneously updated if the OH&S personnel are re-designated to different their own health. Besides, items of “Health Abnormality” shall be tracked to units. Besides, regular trainings are prepared for units’ OH&S supervisors, first achieve the goal of “Early detection, early treatment”. aiders and Fire Services Administrators, and education-training & propaganda 8. In order to reduce the work-induced brain & cardiovascular risk, the following materials for in-service employees are compiled to enhance employees’ measures are taken to ensure employee physical and mental health: employee professional expertise. physical checkup data analysis, high-risk groups identification and evaluation, 3. Safety Response Action drill is conducted at least twice per year in all business doctor interviews and health workshops, work hours adjustment/shortening units. Scenarios are designed and simulated beforehand for personnel to be and job content change, health examination, management and promotion, familiar with the use of equipment and the response and handling of disastrous effectiveness assessment and improvement as well as other safety and health situations, thereby implementing hazard awareness training and improving related approaches, etc. employees’ ability to protect themselves and respond to disasters. 4. The“Prevention Plan against Workplace Unlawful Violence”has been developed this year to ensure employees’ workplace security and prevent the occurrence of bullying in the workplace. There was one investigation involving workplace Doctor Health Workshops and Health Consultations in 2019 unlawful violence this year but no workplace unlawful violence cases confirmed

are listed as follows ENVIRONMENT FOR HAPPY LIFE! CREATE PLEASANT WORK throughout all units. 5. Reinforce the procedure for construction hazard notification in all branches. The Number of Head Office also assists in the processing of this notification. No. Topic Date Participants

4.5.2 Health Promotion & Management 1 Frequently Diagnosed Cancer in Taiwan 2019.03.19 34 1. Identify and assess the environmental and operational hazards in the workplace. 2. Survey the relationship between employees’ work and health and conduct 2 Periodic Health Checkup 2019.06.18 38 health risk assessment on high health risk groups, based on which necessary preventive and health-facilitating measures shall be taken. 3 Health Consultation with Doctor 2019.09.16 5 3. Set up Medical Clinic and appoint professional nursing personnel for onsite 4 Knowing and Preventing Fatigue 2019.12.16 38 employee health services according to labor health protection regulations.

79 Do Our Best to Appreciate Blessings! Guard our homeland!

5.1 Management of Energy Conservation and Carbon Reduction 5.2 Resource Recycling & Reuse 5.3 Green Purchasing and Supply Chain Management 5.4 Promote ‘Paperlessness’ 5.5 Credit Policy In facing the issue of climate change, the United Nations set 17 ‘Sustainable Taichung Bank understands the key importance of the financial sector in the Development Goals (SDGs)’ in 2015, in which mitigation and adaption in mitigation of and adaptation to climate change. With our influence on the 05 response to climate change was expressly set in SDG13 ‘Climate Action’ as financial sector, we concern about the disastrous impacts caused by climate DO OUR BEST TO APPRECIATE BLESSINGS! the vision and goal for sustainable development. It also called the global and change and its effects on financial market/economic development, and identify business attention to the need for taking emergency action to cope with climate risks in credit business and other business operation to facilitate risk control and change and its related impacts as well as seek ‘green’ economic growth while management as well as seek further potential opportunities for development. implementing environmental protection. Fortunately, our company operation We have been committed to the promotion of environmental protection since does not involve too much environmental impacts. 2018 with a management system which aims at energy conservation and carbon reduction, resource recycling, green purchasing and supply chain management and promotion of going paperless. The achievements of related management With the support of “CSR Promotional Team”, the Bank implements measures are listed in the table below: Administration effective management for climate change and incorporates ‘climate risks and opportunities’ in related business administration.

After evaluation, the company’s climate related risk is specified as ‘technological & market transformation risk’, while the opportunity is 5.1 Management of Energy specified as ‘supporting the development of green industries with financial flow’ Conservation and Carbon Market transformation risk and related regulatory risk With our influence on the financial sector, we concern about the Reduction disastrous impacts caused by climate change and its effects on GRI 302-1 305-1 305-2 Strategy financial market/economic development, and identify the risks in credit business and other business operation to facilitate risk control Goal: save 1% per capita energy use and management Initial stage Modify management approach and replace old equipment The opportunity of supporting the development of green industries (2019) Green Elevator System with financial flow The funds provided by the Bank for the development of green industries in solar energy, renewable energy and electric cars, etc. have reached NT$ 6.9 billion during 2018~2019. Goal: save 1% per capita energy use Based on the climate relate risk and opportunity defined by TCFD, Mid-term Regularly promote the importance of energy saving the climate related risks of the Bank are categorized into two types: (2020-2022) in branches and use slogans to encourage energy (1) Transformation risk related to low-carbon economy-such as green consumption reduction. financing and regulatory changeability Risk (2) Respond to physical risk related to climate change and seek

Management GUARD OUR HOMELAND! further potential opportunities for development. The company’s “CSR Promotional Team” evaluates climate relate risks and opportunities based on their impacts on the company’s operation Goal: Totally save 4% per capita energy use in and the likelihood of their occurrence. comparison with 2019 Goals for energy conservation and carbon reduction Long-term The new Headquarter Building was built based on gold- Short-term goal: save 1% per capita energy use (2023) level Green Building standards and silver-level Smart Index and Medium-term goal: save 1% per capita energy use every year Building standards Goals Long-term goal: totally save 4% per capita energy use in comparison Choose grade-one energy-saving electrical devices and with 2019 LED display lighting in branch buildings refurbishment.

81 05 5.1.1 Energy-saving in air-conditioning system Taichung Bank has been making efforts to save energy in air conditioning system. 3. In cooperating with government’s policies in energy conservation and carbon DO OUR BEST TO APPRECIATE BLESSINGS! Business units of the Bank have been working collaboratively with Bureau of reduction, all lighting devices in Dounan Branch have been upgraded to the Energy, MOEA in implementing energy saving policies and responding to the energy efficient lights certified by MOEA, which makes the branch eligible for “Energy Saving for All Campaign” by affixing “Energy Saving Enabled” stickers in Yunlin County’s energy saving subsidy (total cost of the work is NT$ 127,500) lobbies, using sun shading devices such as door/window curtains and awnings and 4. The Bank always promotes more natural lighting and less artificial illumination setting the AC to 26~28 . As for air-conditioning systems, equipment with high for office spaces in its buildings refurbishment by means of proper spatial ℃ EER has been chosen for the Headquarter (with VAV systems) and all branches framework planning and traffic flow arrangement so as to achieve the goal of (with VRF systems). The systems are equipped with excellent inverter technology energy conservation and carbon reduction. and accompanied with varied types of indoor units which are regularly serviced and maintained for stable performance and efficiency. Using fans with air cons not only enables AC compressors to work efficiently but also improve indoor air quality, Timing when lighting for advertising and signage is switched on which shall lower electric bills and reduce energy consumption as well as achieve the goal of energy conservation and carbon reduction. Oct. ~ next Feb. ~ May May ~Aug. Aug. ~Oct. Feb. Winter Summer Summer In order to reduce energy consumption in business units, we replaced the old air- Winter months months months months conditioning system in branch buildings refurbishment Time to 17:30 18:00 18:30 18:00 switch the to to to to Cost in relation to air-conditioning system lights on 23:00 23:00 23:00 23:00 NT$1,900,000 upgrade, repair and maintenance

• Note: 5.1.3 Video Conferencing The so-called EER (Energy Efficiency Ratio) refers to the cooling capacity to the power input. The lesser For the purposes of enhancing time efficiency, saving business trip expenses the power input is, the higher the EER value is for the same cooling capacity. and avoiding unexpected risks to facilitate real-time decision making and prompt market reaction, video conferences have been employed on a weekly basis for branch educational trainings and inter-branch communication since 2019. 5.1.2 Energy-saving in lighting 1. In cooperating with government’s energy saving policies, Taichung Bank, in considering that the energy used for office lighting constitutes 40% of total electricity consumption, replaced all traditional lighting devices with LED lights in its new installation and refurbishment projects in 2019 (the replacement rate

GUARD OUR HOMELAND! is about 45%). In addition, damaged and old lighting devices in the Head Office Building are to be gradually replaced by LED lights (the replacement rate shall be about 35%) to effectively reduce heat production and energy consumption. 2. Illumination in offices and car parks is regularly checked on a yearly basis to ensure that timely illumination is provided. Automatic light sensor switches are used for outdoor lighting control at nights. Lighting used for advertising and signage is seasonally adjusted and should only be switched on after sunset and switched off at 23:00.

82 5.1.4 The energy-saving effects achieved by the Bank are listed as follows 2019 Head Office energy and carbon emission data

Item (Head Office) 2017 2018 2019 Increase /Decrease as compared with previous year ↑ ↓ 05 Natural Gas (kWh) 21,700 22,320 22,671 1.57% ↑ DO OUR BEST TO APPRECIATE BLESSINGS! Natural Gas (MJ) 726,690 747,453 759,207 1.57% ↑

(scope 1) Carbon Emission from Natural Gas (t CO2-e) 40.8 41.94 42.60 1.57% ↑

(scope 1) CH4 Emission from Natural Gas kg CH4-e) 0.716 0.737 0.748 1.57% ↑

(scope 1) N2O Emission from Natural Gas (kg N2O-e) 0.065 0.067 0.068 1.57% ↑ Per Capita Energy Use (kWh/ person) 34.7 34.7 34.0 0.2% ↓ Total Fuel Consumption (L) 40,647 54,427 33,608 38.25% ↓ Total Fuel Consumption (MJ) 1,384,274 1,853,566 1,144,554 38.25% ↓

(scope 1) Carbon Emission from Fuel Consumption (t CO2-e) 92 123 76 38.25% ↓

(scope 1) CH4 Emission from Fuel Consumption (kg CH4-e) 3.983 5.334 3.294 38.25% ↓

(scope 1) N2O Emission from Fuel Consumption (kg N2O-e) 0.813 1.089 0.672 38.25% ↓ Total Electricity Consumption (kWh) 3,697,880 3,652,480 3,636,560 0.44% ↓ Total Electricity Consumption (MJ) 13,312,368 13,148,928 13,091,616 0.44% ↓

(scope 2) Carbon Emission from Electricity Consumption (t CO2-e) 2,049 1,947 1938 0.46% ↓ Per Capita Energy Use (kWh/ per capita) 5,907 5,689 5,468 3.88% ↓

Total Carbon Emission from Energy Consumption (t CO2-e) 2,141 2,146 2,057 4.14% ↓

Total CH4 Emission from Fuel and Gas (kg CH4-e) 4.699 6.071 4.790 21.1% ↓

Total N2O Emission from Fuel and Gas (kg N2O-e) 0.878 1.156 0.740 35.99% ↓

Per Capita Total Carbon Emission (t CO2-e/ ) 3.43 3.34 3.09 7.5% 人 ↓

• Note: (5) Fuel usage in liter*CO²e per liter (fuel) = metric tons of carbon dioxide equivalent (Environmental 1. How are carbon emissions calculated: Protection Administration, Executive Yuan — Greenhouse Gas (GHG) Emission Coefficient Management (1) Electricity usage in kWh*CO²e per kWh=metric tons of carbon dioxide equivalent (Bureau of Energy, Table version 6.04) CO² emission coefficient of motor fuel consumption: 2.2631(KgCO2/L) MOEA) (6) Fuel usage in liter * CH4 e per liter (fuel) = metric tons of CH4 equivalent (Environmental Protection

In 2017, CO2 emission coefficient of power consumption is 0.554 (KgCO2e/kWh); in 2018 and 2019, Administration, Executive Yuan — Greenhouse Gas (GHG) Emission Coefficient Management Table GUARD OUR HOMELAND! CO2 emission coefficient of power consumption is 0.533(KgCO2e/kWh) version 6.04) CH4 emission coefficient of motor fuel consumption: 0.000098(KgCH4/M³)

(2) Natural gas usage in cubic meter*CO² = e per cubic meter (natural gas) = metric tons of carbon (7) Fuel usage in liter * N2O e per liter (fuel) = metric tons of N2O equivalent (Environmental Protection 當量 dioxide equivalent (Environmental Protection Administration, Executive Yuan — Greenhouse Gas Administration, Executive Yuan — Greenhouse Gas (GHG) Emission Coefficient Management Table

(GHG) Emission Coefficient Management Table version 6.04) CO2 emission coefficient of natural version 6.04) N2O emission coefficient of motor fuel consumption: 0.000020(KgN20/M³)

gas1.879(KgCO2/M³) 2. The total number of people in Head Office was calculated at 625 in 2017, 642 in 2018 and 665 in 2019.

(3) Natural gas usage in cubic meter *CH4 e per cubic meter (natural gas) = metric tons of CH4 3. In order to save energy and efficiently use business vehicles via effective management, the number equivalent (Environmental Protection Administration, Executive Yuan — Greenhouse Gas (GHG) of vehicles used for business has been reduced from 34 in 2017 and 47 in 2018 to 19 in 2019 with a

Emission Coefficient Management Table version 6.04) CH4 emission coefficient of natural gas reduction of 20,819 L in total fuel consumption.

:0.000033(KgCH4/M³) 4. The total natural gas consumption in Head Office increased, which resulted from an increase in the

(4) Natural gas usage in cubic meter *N2O e per cubic meter (natural gas) = metric tons of number of dining guests in staff canteen.

N20equivalent (Environmental Protection Administration, Executive Yuan — Greenhouse Gas (GHG) 5. The water/power consumption data being analyzed was collected only from Minzu Building &

Emission Coefficient Management Table version 6.04) N2O emission coefficient of natural gas: Minquan Building of the Head Office. Branch water/power consumption was incorporated into data

:0.000003(KgN20/M³) collection in 2019, so there is no data for comparison. 83 2019 Branch electricity consumption and carbon emission data to the design to enhance soil water content of the land base. In addition, in 05 gardening areas on artificial grounds such as roofs, balconies, and basement grounds, etc., we’ve tried to employ designs which enable rainwater to be caught DO OUR BEST TO APPRECIATE BLESSINGS! Item (Branch) 2019 and allow a function of ‘partial water content’. Total Electricity Consumption (kWh) 707,6131 • The achievements of the Bank’s water conservation measures are limited to those taken in the Total Electricity Consumption (MJ) 1,965,592 Headquarter. Achievement data of branches shall be incorporated into analysis next year.

(scope 2) Carbon Emission from Electricity Consumption (t CO2-e) 3,772

Per Capita Use (kWh/person) 4,078 Rescue Archaeology Excavation Program for the

• Note: construction of new Taichung Bank Headquarter building 1. The total number of people in branches is calculated at 1,735. • The Niumatou Site (dating from the mid Neolithic period about 3,400 to 2. Since branch electricity consumption was first listed from this year, no comparison value is available in the table. 4,500 years ago) was discovered during the construction of the Bank’s new Headquarter building. In order not to destroy the heritage, we entrusted archaeologist Professor Liu, Yichang (National Cheng Kung University) and Dongsheng Engineering Consulting Co.,Ltd. to undertake 5.2 Resource Recycling & the Rescue Archaeology Excavation Program. From 11th September 2017 onwards, a team of 2 research assistants, 6 field excavation workers, 2 Reuse bulldozer operators, 2 field recording personnel was led by Professor Liu GRI 303-1 to set up a field work station for the archaeology excavation of an area of 960 square meters for 47 working days. 5.2.1 Land Base Soil Water Content • On 27th November 2017, the Bank conducted an onsite inspection of The ‘Land Base Metric Soil Water Content’ in architecture design is an approach the rescue excavation results with the participation of Cultural Heritage which enhances soil water content and sets as many rainwater absorbent facilities Department of Taichung. An archaeological report was submitted by as possible to boost the water circulation capacity of the earth, improve the National Cheng Kung University on 10th April 2018 saying that “Heritage ecological environment, regulate microclimate and reduce heat island effect in objects found on the site included Historic cities. The higher the soil water content, the better infiltration capacity the land base Period objects (Modern period and Qing possesses, which promotes activity of soil microorganisms and further enhances Dynasty) and Prehistoric objects (Fanchi soil activity and sustains ecological balance of natural environment within the Garden Site and Niumatou Site). 285 building’s land base. baskets of various heritage objects were Currently most of the Bank’s buildings are old, so in future renovation planning, we excavated and rich phenomenon were shall consider to use permeable pavements and maximize the extent of greening discovered in this excavation, which shall GUARD OUR HOMELAND! in the vacant spaces surrounding the land base. Moreover, when planning the be incorporated into what was discovered construction project of the new Head Office building with regard to the basement, in Huilai Monument Archaeology Park to we specially reduced the excavated area in B1 to make the excavation ratio complete cultural heritage conservation by be lowered to a point under 60%, which not only facilitated the ground surface record”. permeability but also increased the soil depth for ground vegetation and ensured a good growing environment for plants. Impervious surfaces such as driveways, pathways and public squares, etc. were paved with permeable materials according

84 5.2.2 Indoor Environment 5.2.3 Water Resources Management 05 Taichung Bank pivots on ‘simplicity & practicality’ and adopts designs which • Grease traps are set for wastewater treatment in kitchens DO OUR BEST TO APPRECIATE BLESSINGS! use lightweight approaches in its interior refurbishment. Four major metrics are Wastewater and are regularly maintained and cleaned. used to evaluate the Indoor Environment, which include sound environment, light Treatment • Toilet wastewater is correctly directed to sewage system. environment, ventilation & air circulation and building materials used for interior refurbishment. • Use water saving toilets; convert old type toilets to dual-flush • Upgrade urinal flush to automatic sensor type and adjust the flush time and water flow Use equipment which can be disassembled and assembled • Adjust the water flow on faucets to 60% of the original Sound such as system furniture or dividing screens for the purpose volume Environment of environmental protection and resource recycling as well Ways to Save • Regularly check and repair toilets, water tanks, reservoirs or as lowering cost and reducing waste. Water other pipe connectors to see if there is any leakage. • Water plants in the morning and evening when sunlight is Gradually replace the old lighting devices with energy- weaker and evaporation is lesser. efficient lights that prevent glare and are equipped with Light • Use groundwater for toilet flush to reduce tap water louvers in indoor environment. Use lightweight glass or low- Environment consumption. emissivity glass for exterior walls rather than high reflectance glass or dark-color tinted glass to allow more light in. • Clean building water tanks once a year and conduct water quality inspection to check if the PH value and chlorine Equip the central air-conditioning system with fresh air level conform to standards. Check pond or tank related intakes to retain healthy air in indoor environment. From 2017 Water Quality equipment to ensure water safety. Ventilation & onwards, CO2 amount of office areas in the Head Office & Safety • Conduct regular inspection and maintenance for drinking Air Circulation has been checked to ensure the comfort of staff’s work fountains in buildings and check if the water quality environment. conforms to standards. Replace the water filter to ensure the safety of drinking water.

Building In interior refurbishment, we encourage designs that The water used by the Bank mainly comes from Taiwan Water Corporation. The Bank’s type of water demand is categorized Materials Used minimize the extent of refurbishment by integrating old office Water as ‘civil use’ (for offices staff and some customers only), which for Interior furniture into new spaces to reduce wastes and promote the Sources Refurbishment reuse of goods and the appeal of environmental protection. does not have great impact on the water source. And we use groundwater for toilets to reduce tap water consumption.

• Note: Promote concepts of water conservation via diverse ways Promoting In planning interior refurbishment, we mainly use materials with domestically/internationally certified such as posters, slogans and educational courses to enable Water GUARD OUR HOMELAND! Environmental Protection Label and Green Construction Material Label. Wastes produced during employees to internalize the concepts in their daily routines to refurbishment are correctly classified to reduce impacts on the environment. Conservation achieve the goal of water saving.

85 05 2019 Head Office water consumption data (cubic meter) 5.2.4 Categories of recycling 1. Two-dimensional items DO OUR BEST TO APPRECIATE BLESSINGS! Increase / ↑ Newspaper, copy paper, magazines, paper bags, recycled paper and other pure Decrease as Item (Headquarter) 2017 2018 2019 ↓ pulp products — bundle them and hand them to environmental protection groups compared with for recycling (Separate old books from other waste paper. Bundle them according previous year to their features) 2. Three-dimensional items Total Surface Water Consumption (cubic 13,312 13,359 13,359 0.7% General recyclable items, bottles/tins/cans, containers, lunch boxes, other plastics, ↑ meter) metal, Acrylic products, Styrofoam, light bulbs/fluorescent tubes, batteries and containers of environmental and sanitation agents, etc. — classify the wastes first

Metric Tons of CO2e 2.157 2.137 2.137 0.7% and give them to environmental protection groups for recycling. ↑ 3. Other items per Capita Water Use 21 21 21 5% Glass, big office furniture, electric home appliances, air conditioners, computers (cubic meter/person) ↓ and other bulk recyclable wastes — notify professional recycling service providers or local cleaners to clean them away. • Note: 1. The total number of people in Head Office was calculated at 625 in 2017, 642 in 2018 and 665 in 2019. 2. The water/power consumption data being analyzed was collected only from Minzu Building & 5.2.5 Food waste Minquan Building of the Head Office. Branch water consumption will be incorporated into data analysis next year. Leftover food ingredients, vegetables/fruits or expired food products which can still 3. The groundwater consumption of the Head Office is not incorporated into the analysis. be used — give them to stock farmers who can use the wastes as animal feeds. The annual recycled food waste is about 5 metric tons. 2019 Branch water consumption data (cubic meter)

Item (Branches) 2019 2-dimensional Items Total Surface Water Consumption (cubic meter) 49,114

Metric Tons of CO2e 1.958

per Capita Water Use (cubic meter/person) 28.3 3-dimensional Other items Items • Note: 1. The total number of people in branches is calculated at 1,735. GUARD OUR HOMELAND! 2. Since branch water consumption was first listed from this year, no comparison value is available in the table.

Food waste

86 5.3 Green Purchasing and 05

Supply Chain Management DO OUR BEST TO APPRECIATE BLESSINGS! GRI 102-9 102-10 308-1

The scope of the Bank’s suppliers mainly includes construction, IT equipment, 5.3.4 OH&S Requirements for suppliers and office equipment and consumables, details of which are stated as follows collaborative contractors 5.3.1 Management and Control of Contractor Safety In procurement tendering, we give priority consideration to suppliers who have Units of the Bank, from purchasing, designing to construction, all comply with received government certified environmental protection label(s) or whose product/ OH&S related regulations to list our safety & health management items which service providing process and wastes handling procedures comply with the are to be specified in tendering documents such as drawings or Safety & Health principles of renewable materials, recyclability, low-pollution or energy saving so Regulations on Construction and shall be incorporated in construction contract for as to enhance the public interest and reduce social costs. In addition, we also implementation. request suppliers/contractors to provide construction personnel with appropriate personal protective equipment according to OH&S regulations, and dangerous machinery and equipment related to the construction should not be used unless 5.3.2 Support Local Agriculture Development they are certified by inspection agencies. With the increasing concern about food safety, the ingredients used in the Bank’s staff canteen, including meat and vegetables & fruits, are selected by personnel from a wide range of local and seasonal produce in the markets every day. 5.3.5 Encourage suppliers to jointly carry out As shown in the statistics, the purchase amount in 2019 was as much as NT$ Corporate Social Responsibility 12,000,000. By doing so, we are not only able to provide employees with fresh In order to carry out the bank’s promises and responsibilities in supplier and safe food but also have established a mutually supportive relationship with management, and to encourage suppliers to jointly follow ethical standards, local meat and vegetables & fruits vendors. And we will continue the investment value working & human rights, facilitate environmental sustainability and carry out of resources in providing employees with reliable and enjoyable food services in Corporate Social Responsibility with us, we started to promote suppliers’ signing of future planning. Letter of Commitment with regard to regulations related to environmental protection, OH&S and working & human rights in 2019. 5.3.3 Use Green Construction Materials Taichung Bank pivots on ‘simplicity & practicality’ and adopts designs which use lightweight approaches in its interior refurbishment. We mainly use materials with domestically and internationally certified Environmental Protection Label and Green Construction Material Label to reduce air pollution. We also request the use of low- 5.4 Promote‘Paperlessness’ pollution and recyclable construction materials. Besides, office equipment which

can be disassembled/assembled and reused such as system furniture or dividing 5.4.1 GUARD OUR HOMELAND! screens is used for the purpose of lowering cost and avoiding resource waste. In response to environmental protection by going ‘Green’, ‘paperlessness’ has been adopted via the following approaches: “Online official documents system” was launched in November 2018; stopped the issuance of employees’ Salary Income Tax Withholding Statement, Labor/Health Insurance Premium Payment Certificate and Individual TWD/Foreign Currency Deposit Interest Income Tax Withholding Statement from 2014 and recommended staff to check these statements via income tax filing software with the use of Citizen Digital Certificate.

87 05 5.4.2 Simplified flowchart for form pre-filling We promote paperless services by establishing internal online systems for DO OUR BEST TO APPRECIATE BLESSINGS! employees to check application progress, education & training courses, business handbooks and rules & regulations, accounting related business and electronic management statements, etc. 5.4.3 Step 1 In response to energy conservation and carbon reduction, we have established Log in ‘Form prefilling’ a special website for video teaching & learning, in which the annually regular & mandatory courses or preparation courses for physical courses are provided to reduce paper consumption and the costs of copying. Step 2 Select booking for TWD deposit, 5.4.4 withdrawal, transfer or remittance We transfer official documents among branches by using computers and telecommunications network, and allow access to official documents and regulations through internal network under the prerequisite of information security. Step 3 The use of used paper or 2-sided copying is also encouraged to reduce paper and Pre-fill the form toner consumption.

5.4.5 Step 4 In realizing the concept of “Love the Earth” and to reduce the consumption of Select ‘Continue transaction’ to pre- social resources as well as protect consumer rights, electronic bank statements fill more transaction data or ‘Pre-filling were integrated and upgraded to ‘Comprehensive Bank Statement’. Besides, TWD completed’ and proceed to booking accounts/foreign currency accounts, trust accounts and gold passbook accounts were also integrated to reduce paper consumption and enhance efficiency. Step 5 5.4.6 Booking completed We promote online banking service by launching ‘Online Counter’, which converts the businesses used to be processed over the counter to being processed online to help customers save the time in waiting and reduce paper consumption. Step 6 Proceed to the Digital Service Counter GUARD OUR HOMELAND! to process booked transaction

88 5.4.7 05 In response to energy conservation and carbon reduction and to carry out sheets since paperlessness was launched (equivalent to a reduction of 5,524 kg DO OUR BEST TO APPRECIATE BLESSINGS! Corporate Social Responsibility, many business operations of the Bank have been carbon emission and saving 92 trees). The main achievements are listed in the processed in a ‘paperless’ manner or in a way that reduces the use of paper and table below: accounting vouchers. The cumulative reduction in paper use has reached 767,160

Effectiveness Achieved in 2018 Effectiveness Achieved in 2019 Effectiveness in No. Item Number of Paper Reduction Number of Paper Reduction Paper Reduction Implementations (sheet) Implementations (sheet)

Online Electronic Official Documents 1 49,638 148,914 79,603 238,809 59% increased Management System

2 Batch Account Processing 84,371 84,371 137,206 137,206 63% increased

Prepaid Expense Amortization 3 5,482 5,482 5,580 5,580 2% increased System

Operating Expenses Charged by 4 2,404 2,404 12,237 12,237 409% increased Central Processing

Automatic Property Depreciation & 5 4,165 4,165 16,615 16,615 299% increased Amortization

Pay Interest by Cheque or Online to 6 87,998 41,292 65,944 65,944 60% increased Save Stamp Duty

Online Application for Important 7 1,405 1,405 1,736 1,736 24% increased Accounting Entry Offsetting

Total 235,463 289,033 318,921 478,127 65% increased

• Note: 1. By reference to the carbon label information regarding A4 GUARD OUR HOMELAND! Paper Star copy paper provided by Environmental Protection Administration, Executive Yuan, the carbon footprint of 500 sheets of copy paper is 3.6 kg 2. One sheet of A4 paper weighs about 4 g 6 g: a box of A4

paper weighs about 25kg (5,000 sheets). One ton of pulp requires 24 trees (average height: 12 m, diameter: 15~20 cm). Use one ton of pulp to produce 40 boxes of paper, so 24 40

0.6 tree is required for the production of one box of paper ＝ (by reference to data provided by Construction and Planning Agency, MOI)

89 05 5.5 Credit Policy GRI 201-2 DO OUR BEST TO APPRECIATE BLESSINGS!

5.5.1 Support small and medium enterprises and

assist the economic development in Taiwan Facilitate Financial Support businesses 1. Small and medium enterprises are the foundation of Taiwan’s economic cultural&creative intermediation New Southbound development. Since small and medium enterprises’ scales of operation tend industryUpgrading Diversity investment to be limited by their comparatively small capital investments, together with the intensifying globalization and pressure from their industries, the financing support provided by financial institutions is playing a highly important role Undertake government- Promote in small and medium enterprises’ business development. Taichung Bank is Flexibly utilize Credit run Industrial Area Loan Small-scale business committed to providing small and medium enterprises with financial services Guarantee Fund Projects development which include various financial products and investment services in the hope of becoming a most reliable and trustworthy financial partner for small and medium enterprises. 2. Taichung Bank has provided small and medium enterprises with various (1) In order to facilitate the upgrade of cultural & creative industry, the Bank financing support via the guarantee service offered by Small & Medium cooperates with the program “Concessional Loan for Cultural & Creative Enterprise Credit Guarantee Fund of Taiwan (Taiwan SMEG), by which many Industry” promoted by Ministry of Culture to assist the businesses in acquiring small and medium enterprises have been assisted in meeting their capital needs funds they need. The Bank’s total value of loans for cultural & creative industry and receiving desired financial services. With this contribution, Taichung Bank was NT$ 5.4 billion by the end of December 2019. We shall continue to assist was approved by Financial Supervisory Commission as a bank with “Excellent and promote related loans to facilitate the development of cultural & creative Performance in Making Loans to Key Industry Startups”. industry. 3. In response to the amendment of Factory Management Act, the Bank has (2) In cooperating with government’s “Taiwanese Company’s Return” policy and assisted firms in being included in government’s management system and in supporting local small & medium enterprises, the Bank offers concessional legally running business on the site. We have also supported factories which are loans focusing on “The Three Major Programs to Invest in Taiwan” (which are not legally registered by providing them with “Concessional Loan for Equipment “Project Loan for Welcoming Taiwanese Companies to Return and Invest in Financing” to fund their wastewater treatment, environmental protection and fire Taiwan”, “Loan for Small & Medium Enterprise Acceleration Investment” and safety equipment. We also collaborate with Taichung City Government and Small “Project Loan for ‘Keep root in Taiwan’—Business Acceleration Investment”) & Medium Enterprise Credit Guarantee Fund to provide credit guarantees to to support companies to upgrade investments, thereby creating stable assist firms in smoothly obtaining specific factory registration qualification. employment opportunities. 4. As for the performance in small & medium enterprise financial services, Taichung (3) The Bank cooperates with the program “Loan for Little Boss” and “Project Loan Bank provides small & medium enterprises with various financing options and for Small & Medium Enterprise’s Innovation Development” promoted by Small

GUARD OUR HOMELAND! diverse products to support them in obtaining funds for operation, which is & Medium Enterprise Administration, MOEA to facilitate small-scale business shown below development with our financing support. (4) For small & medium enterprises with inadequate collateral and being inexperienced in dealing with banks, we flexibly utilize the credit guarantee fund to actively promote various loans under the guarantee of Credit Guarantee Fund, which includes small & medium enterprises guarantee fund, agriculture credit guarantee fund or overseas credit guarantee fund. With the guarantee transferred under Credit Guarantee Fund, businesses are able to obtain banking support to effectively grow and develop in their business operations.

90 (5) In order to assist businesses and firms intending to purchase land in effect via energy conservation and carbon reduction and also reduce the climate industrial areas in acquiring funds for such capital expenditure, we undertake change impacts by weather shielding, which include bicycles, solar energy, water 05 government-run industrial area project loans for businesses to expand their treatment, electric cars, forestry, landscape, herbs, renewable energy, public DO OUR BEST TO APPRECIATE BLESSINGS! factories so as to effectively enhance production capacity and scale-up their transport and environmental protection facilities, etc. The cumulative number of businesses. green industry loan customers had shown an increase from 148 (in 2011) to 1,224 (6) In cooperating with government’s policy to assist small & medium enterprises (in 2019). in investing in “New Southbound” countries, we undertake “New Southbound The green financing achievements are listed as follows: Project Financing Credit Guarantee” for businesses to acquire funds for their New Southbound development and momentums and support businesses to build up firm foundation for future development. The total loan amount for green industries in 2019 was about 5.5.2 Supporting the development of green industries NT$ 4.3 billion. The green financing amount is listed in the table with financial flow below “ ” Governments of all countries have been promoting The Green New Deal since Unit: NT$1,000/% Framework Convention on Climate Change was signed by the United Nations in

1992. At the meantime, businesses around the world have also experienced more Amount of Ratio of 2018 2019 and more rigorous climate impacts since then. In response to this trend, besides Change Change the promotion of energy conservation and carbon reduction, we also provide impetus to the development of green industries for the adaptation to and mitigation Landscape 91,600 94,000 2,400 3% of climate change impacts. With the rapid development of global economy and the accompanying Public Transport 1,038,200 858,233 -179,967 -17% environmental and ecological impacts, and extreme climate conditions due to the climate change, the disastrous climate phenomena can be found everywhere, Environmental which not only causes serious biological and ecological problems but also results Protection 7,591 155,200 147,609 1945% in significant economic losses and greatly affects business operation and supply Equipment chain development. Taichung Bank has been cooperating with government in Forestry 30,000 0 -30,000 -100% developing green energy technology, Asia Silicon Valley, bio-pharmacy, arms industry, AI machinery, new agriculture and key industry startups of recycling Bicycles 15,355 233,500 218,145 1421% economy and undertaken the project of “Encouraging Domestic Bank to Make Loans to Key Industry Startups”. We also work collaboratively with government Water Treatment 287,350 609,005 321,655 112% to promote the green energy of ‘5+2’ industries by providing green financing for Solar Energy 1,149,809 2,113,300 963,490 84% the establishment of environmental protection equipment. Moreover, “Solar Power Equipment Financing Program” has been developed for the fulfillment of our Renewable 17,700 50,000 32,300 182% GUARD OUR HOMELAND! Corporate Social Responsibility. Energy As we know, it is a long journey for green industries to grow and develop. Financial institutions should transcend the traditional stereotype for the industry risk faced by Electric Vehicles 17,000 165,000 148,000 871% green industries, and to communicate with them about the acceptability of the loan Raw Medicine/ products. Since financial flow is an essential factor in the process of development 57,000 0 -57,000 -100% Herbal Medicine or transformation for green industries, Taichung Bank has been boosting the financial flow services for green industries in recent years by providing diverse Total 2,711,605 4,278,238 1,566,632 58% financing and loan services for industries. And they can mitigate the greenhouse

91 Changes in cumulative loan amount for green industries 2011-2019 Cumulative number of green industry customers 05 Unit Number of customers (2014 to 2019)

DO OUR BEST TO APPRECIATE BLESSINGS! Unit NT$ 1,000 1400 1200 Amount Cumulative amount 1000 800 2014 5,220,700 23,391,513 600 400 2015 4,408,224 27,799,738 200 2016 5,132,162 32,931,900 0

2017 2,695,894 35,627,794 2011 2012 2013 2014 2015 2016 2017 2018 2019 2018 2,711,605 38,339,399 As for the distribution of loans for green industries, under the factors of varied 2019 4,278,238 42,617,637 industry capital concentration and business-scale characteristics, the percentages, in sequence, of Taichung Bank’s major customer numbers allocated among green industries in 2019 are as follows: solar energy, landscape, water treatment, bicycles and public transport, which count for 89% of the total green industry customers.

Changes in the number of green industry customers Pie chart of green industry customer numbers (2014 to 2019) ： Unit Number of customers Landscape 20% Electric cars 5%

Cumulative Number of Number of Customers Renewable energy 3% Customers 2014 258 689 Public transport 12%

2015 249 938 Environmental protection 2016 116 1054 equipment 3%

2017 45 1099 GUARD OUR HOMELAND! 2018 61 1160 Solar energy 30% Bicycles 13%

2019 64 1224 Water treatment 14%

92 The percentages, in sequence, of Taichung Bank’s major loans allocated among green industries in 2019 are as follows: Solar energy, public transport and water 05

treatment, which count for 83% of the total green industry loans. DO OUR BEST TO APPRECIATE BLESSINGS!

Pie chart of loan amount for green industries

Electric cars 4% Landscape 2%

Renewable energy 1%

Public transport 20%

Environmental protection equipment 4%

Bicycles 6%

Solar energy 49% Water treatment 14%

5.5.3 Uphold Green Gate-keeping Principles to keep environmental protection under surveillance Under the spirit of Equator Principles, Taichung Commercial Bank conducts loan applicant’s environmental risk assessment and carries out onsite visits during the review stage. Loan cases which violate the Equator Principles shall be rejected. For outstanding loans, should there be any issues related to environmental pollution or harms to public interests, their interest rates shall be raised or extension shall not be approved when they mature. Through the said review & assessment and post-loan management, we shall actively act the role of a gatekeeper to keep environmental protection under surveillance. (No loan case violated the said ‘Green GUARD OUR HOMELAND! Gate-keeping Principles’ in 2019).

93 05 DO OUR BEST TO APPRECIATE BLESSINGS!

Do Our Best to Care for the Community! Extend Positive Influence in Society!

6.1 Academic Education 6.2 Arts & Humanities 6.3 Charity & Care 6.4 Sports Development 6.5 Community Activities

GUARD OUR HOMELAND! 6.6 ‘Reward Program to Facilitate Branch’s Engagement in Corporate Social Responsibility Activity’ 6.7 Organize and Encourage Employees around Taiwan to Participate in the Blood Donation Campaign and the 2nd ‘Care with Heart and Pass LOVE on-Help with My Blood’ activity 6.8 Appendix Over the past six decades of Taichung Bank’s history, with staff’s practice of ‘Dedication to Local Community’ for a long period of time, the Bank has established 6.1 Academic Education 06 a profound relationship with local businesses, groups and residents, which is not GRI 203-1 DO OUR BEST TO CARE FOR THE COMMUNITY! only limited to financial connections but also a kind of partnership. In upholding the five core values for financial services sector — ‘Service, Product, Expertise, Substantial Benefit / Customer and Public Benefit’, we have practiced the belief of being caring and Item compassionate with our proactive action to convey the corporate spirit of ‘We Do Resources Our Best for You’. By carrying the belief of ‘Take from society, give back to society’, Invested Taichung Bank shall continue its practice and, hopefully with the participation of Total Investment Amount NT$19,436,200 employees, to extend the love-empowerment to more people in the society. Number of Sessions 28 Number of Participants 1,405

Cumulative Participation Conducting industry-academia cooperation 1,509 hours ˙ Hours programs with universities and colleges

2019 Total Social Investment • 28 sessions of campus/community finance awareness activities had been held in 2019 to help students and community residents build up correct concepts of consumer finance and wealth management. NT$ 82,924,829 • The Bank has assisted industry-academia cooperation programs with 18 universities and colleges by offering students work placement opportunities, by which 50 students became our employees after finishing placements. By continuing the programs, 67 students in total undertook their work placements in different units of the Bank in 2019. • Taichung Bank set up “Taichung Commercial Bank Culture and Education Corporate Social Foundation” on 30th September 1975 with the aim of encouraging and helping Responsibility Activity 0.1% Blood Donation Campaign 4.7% outstanding students with financial difficulties, thereby cultivating talents for the society and the country. Amount and quota of the scholarships are determined Community Activities 0.3% annually in meetings with a view to helping outstanding students with financial difficulties continue their study or support their living expenses.

Taichung Commercial Bank Culture and Education Foundation scholarships were awarded to 10 students (NT$ 10,000 each) in 2019.

Academic Educatio 23.4% EXTEND POSITIVE INFLUENCE IN SOCIETY! Arts & Humanities 0.9% National Taipei University 1 student Ling Tung University 1 student Kun Shan University 1 student Charity & Care 3.9% Ming Chuan University 1 student National Chung Cheng Tamkang University 1 student 1 student University Shu-Te University 1 student Asia University 1 student Sports Development 66.7% Chung Chou University of National Taiwan 1 student 1 student Science and Technology University

• Provide scholarships to ‘Changhua County Private Da Der Commercial and Technical Vocational School’ and ‘Changhua County Private Holy Savior High School’.

95 • Donating a fixed percentage cash back of “Taichung Bank Mazu Safety Affinity Card” 06 6.2 Arts & Humanitieson transactions to Dajia Mazu Jenn Lann Temple to support the development of religions GRI 203-1 and fulfill the responsibility of giving back to the community. DO OUR BEST TO CARE FOR THE COMMUNITY! • Donating a fixed percentage cash back of “Taichung Bank Maria Social Welfare Affinity Card” to Maria Social Welfare Foundation to help children with disabilities have a better living environment and receive better care.

Issuing cards in support of charity let the community be filled with love ― Project Gather the strength of public benefit entities and charitable organizations Purpose to realize the belief of love Substantial Benefit / Item Resources Invested Project Support the development of the country’s traditional religions & customs Sound of Heaven in the Clouds — ˙ Context and help children with disabilities receive proper and wholesome care Total Investment Pingtan Classics Reading performed NT$ 750,000 by Sheng, Xiaoyun and Suzhou City Amount Taichung Bank continued to allocate fund for credit card sign-up rewards Pingtan Team Project and recruitment bonus in 2019 to encourage branch employees to promote • Sponsoring National Taichung Theater for its “Art & Offering Rite Collaborative Approach ‘Mazu Safety Affinity Card’ and ‘Maria Social Welfare Affinity Card’ as well as Project” and Fulfillment Amphitheatre for its art space for three years to enhance participated in activities such as Dajia Mazu Cultural Festival, etc. the Bank’s corporate image • Sponsoring the performance “Sound of Heaven in the Clouds — Pingtan Classics Reading performed by Sheng, Xiaoyun and Suzhou City Pingtan Team” Achievements Over the Past Three Years jointly organized by C. F. Koo Foundation and Suzhou City Pingtan Team to experience the charm of traditional art of hundreds-year history with the public Dajia Mazu Safety Maria Social Welfare • Organizing a live music performance played by Neo-Classical Chamber Affinity Card Affinity Card Ensemble for Yanchao Branch’s opening ceremony, which added artistic and NT NT cultural atmosphere to the ceremony and also provided an extraordinary musical 4,000,000 150,000 feast for the community 3,586,808 3,413,291 3,500,000 125,000

EXTEND POSITIVE INFLUENCE IN SOCIETY! 3,025,200 118,537 3,000,000

100,000 105,446 6.3 Charity & Care 2,500,000 GRI 203-1 2,000,000 75,000 Item Substantial Benefit /Resources Invested 1,500,000 50,000 Total Investment Amount NT$ 3,213,847 88,647 1,000,000 700,000 500,000 25,000 • Fulfilling corporate social responsibility by assisting Eden Social Welfare 500,000 Foundation in conducting The Sixth Barrier-free Life Experience & Festival to 100,000 help people with disabilities stay carefree when getting old. 0 0 2017 2018 2019 2017 2018 2019 • Collaborating with Eden Social Welfare Foundation to facilitate the “Refrigerated Pupu Collection Program for Shelter Baking Factory” by providing the Bank’s Donating cash back rewards to Dajia Jenn Lann Temple Donating cash back rewards to mascot —‘Baby A-Zhong’ musical stuffed animals to encourage people to Sponsoring Dajia Mazu Cultural Festival activities Maria Social Welfare Affinity Card donate. 96 6.4 Sports Development 06 GRI 203-1 DO OUR BEST TO CARE FOR THE COMMUNITY!

• Sponsoring Chen Chong-guang Cultural Foundation in organizing the ‘11th Item Substantial Benefit /Resources Invested Chong-guang Cup Little League Championship’ Total Investment Amount NT$ 55,341,596 • Supporting Chinese Taipei Volleyball Association in organizing the ‘2019 Number or Volunteers Participated 210 Taichung Bank Asian Men's Club Volleyball Championship’ and ‘2019 Taichung Bank Asian Beach Volleyball Open’ to improve the Bank’s business image Cumulative Volunteer Hours 352 hours through increased exposure in the highest-level volleyball games in Taiwan. • Continuously supporting Karting games with action by sponsoring the ‘2019 Asian Karting Open Championship - Asia Max Challenge’ to carry out corporate social responsibility Opening Ceremony of ‘Corporate Archery League’ and support sports development ˙ by means of cross-border • In order to level up Taiwanese games sponsorship • Dajia Branch participated in 2019 Karting activities archers’ skills and help leading ˙ the archery development 2019 Dajia Mazu Cultural Festival in Taiwan into a new era, activities —‘2019 Ten Thousand People Bike Riding’ and ‘2019 Dajia Mazu Chinese Taipei Archery Marathon — BoBi (Blessing) Run’. Association invited businesses • Supporting Tianzhong Township Office (Changhua County) in hosting ‘2019 to facilitate the establishment Taiwan Rice Heaven-Tianzhong Marathon’to market the local tourist attractions of ‘Corporate Archery League’. at Tianzhong Township through the combination of sports, recreation, agriculture In this context, Taichung and commercial activities • Organizing the activity of ‘The 8th Taichung Bank Golf Friendly Match’ to Bank stepped into the field ‘Golden Eagle Archery Team’participating in ˙ enhance friendships through games participation and improve the closeness in of archery for the first time contest EXTEND POSITIVE INFLUENCE IN SOCIETY! and set up‘Taichung Bank customer relationships Golden Eagle Archery Team’ led by coach Liu, Ming-huang, who was a silver • Puli Branch participated in the ‘2019 the 4th PULI POWER — Mountain City medal winner in archery in Athens 2004 Summer Olympics, by recruiting several Party Marathon’ by setting up refreshment station to empower runners with archery experts are recruited. The team was trained through participating refreshments and full POWER. in contests in hope that the archers can be trained under a complete and • With the long-standing support for sports development (domestic & abroad), the comprehensive system, thereby helping them step towards the global stage and Bank won ‘Silver Medal Award of Sponsorship Category’ for the first time in the enabling archery to take root in community. ‘11th Sports Promoter Awards’. • Sponsoring Taiwan Aboriginal Baseball Development Association (TABDA)in organizing the ‘26th Care Cup Baseball Game’ to foster indigenous groups and help baseball sports taking root in community. • Promoting the culture of sports by supporting Ironman Triathlon (swimming, cycling and running) player Wang, Yi wen and Billiard player Li, Xin yu

97 6.5 Community Activities 6.6 “Reward Program to 06 GRI 203-1 Facilitate Branch’s DO OUR BEST TO CARE FOR THE COMMUNITY! Item Substantial Benefit /Resources Invested Engagement in Corporate Total Investment Amount NT$ 221,337 Social Responsibility Number or volunteers participated 102 Activity Cumulative volunteer hours 510 hours ” GRI 203-1

• Playing the ‘Anti-fraud’, ‘Anti-bribery’, 6.6.1 ‘Financial Knowledge Propagation’ Besides the ongoing charitable activities promotion conducted by the Head Office, and ‘Anti-money laundering’ videos Taichung Bank started to invite all branches in Taiwan from 2015 to voluntarily in business units’ multimedia system participate in local charitable activities to get closer to our homeland and spread in cooperation with government’s the seeds of goodness around. The activities include propagating financial regulations propagation planning and investment knowledge, sponsoring the greening and beautification • Assisting the campaign of ‘Hearts Link of public facilities, organizing or sponsoring neighborhood improvement activities, Up Home Warm Up’ organized by participating in charity fairs, hosting hiking & mountain cleanup, river cleanup and • Child Welfare League Foundation with ‘Financial Service and Caring Charity beach cleanup activities, participating in environmental and resource classification ˙ putting posters up to looking for missing Carnival 2019’ (Hsinchu session) &recycling volunteer activities, providing services for volunteers in associations in children and youths and putting web support of the disadvantaged, encouraging employees to purchase agricultural links to the foundation on the Bank’s external website produce & souvenirs from underprivileged families, etc. The program has so • Participating in the ‘Financial Service and Caring Charity Carnival 2019’ hosted by far been achieved by 162 sessions of activities completed, in which the Bank’s Taiwan Financial Services Roundtable by setting up booths in Tainan session and employees and their families together with the Bank’s customers made their Hsinchu session to propagate financial knowledge such as anti-fraud, anti-money efforts in promoting public benefit with their participation and contribution to the laundering, etc. community.

EXTEND POSITIVE INFLUENCE IN SOCIETY! 2019 Branches Achievements in Corporate Social Responsibility Activities ’

Number of Sessions of CSR Activities Number of Participants Total Investment Amount Cumulative Hours

Propagation of Financial Knowledge 24 1,334

Participation in Community Activities 1 30

Community Environment Cleanups 14 283 NT$ 97,349 2,960 hours Blood Donation 2 29

Participation in Sports Activities 2 47

Caring for Underprivileged Groups 5 160

98 6.6.2 06 By upholding the spirit of ‘Take from society, give back to

society’, Taichung Bank manifests its care for the society DO OUR BEST TO CARE FOR THE COMMUNITY! with action by proactively promoting ‘Campus/community Finance Awareness Activities’ in the hope of propagating the financial management and consumption knowledge through the community-based education carried out by all staff to improve financial literacy in the community.

Sponsoring neighborhood improvement activities Conducting meetings to propagate financial planning and ˙ ˙ investment knowledge

2020 Medium and 2015~2019 Objective Long Term Goal Item Cumulative (Cumulative (Cumulative Sessions Sessions) Sessions)

Numbers of Finance Aware- 98 130 500 ness Sessions

Participating in Daodong Tutorial Academy cleaning Encouraging customers and employees to purchase ˙ ˙ activities products from underprivileged families EXTEND POSITIVE INFLUENCE IN SOCIETY!

Participating in Tianzhong Marathon related activities ˙

99 6.6.3 Case sharing - 2019 Branches engagement in 06 ’ Corporate Social Responsibility Activities DO OUR BEST TO CARE FOR THE COMMUNITY! Propagation of Financial Knowledge and Anti-fraud Information • With the aim of enhancing the Bank’s corporate image, Taichung Bank’s Business Division was very happy to invite students of Washington Bilingual Elementary School to visit the Bank and join a community-based financial Care for the Society by You and Me ― knowledge propagation activity. This activity inspired the children with some (Collaborate with Heng-Shan Social Welfare Foundation fundamental financial and monetary knowledge and also expanded their views through the introduction to the use of Safe Deposit Box as well as to help underprivileged families in home repairs) knowledge related to credit cards and loans in hope that children could have • In order to manifest the Bank’s long standing commitment to local a better understanding about the relationship between ‘banking stuff’ and communities, dedication to the society and action in fulfilling corporate their lives. social responsibility, Taichung Bank’s Beidou Branch collaborates with Heng-Shan Social Welfare Foundation to help underprivileged • Before entering the activity topics, families in home repairs, which offers underprivileged families Taichung Bank’s overview was emotional support and living environment improvement, and thus they introduced to the children and children can maintain a safe and sound haven and meanwhile the Bank can were guided to know what the staff of accomplish the purpose of caring for the underprivileged and fulfilling the bank was doing every day, what corporate social responsibility. people came to banks for and what services banks could provide besides • Tired and exhausted as they were, deposit and withdrawal operations, etc. the employees were happy and deeply content in this process as they • Children were also encouraged to perceive the importance of saving money realized that ‘It is in the giving that we and the difference between putting money in piggy banks and in ‘real’ banks. receive and benefit from’. Moreover, with this activity, the Bank’s reputation Leave No Trace & Mountain Cleanup and amiability had increased EXTEND POSITIVE INFLUENCE IN SOCIETY! enormously in the community. Staff of Shetou Branch gathered in high spirits at Qing-shui Rock Forest Recreation Area in Shetou for a meaningful mountain cleanup activity aiming at the cleaning of a historical tourist attraction ‘18 Bends Salt-porters Trail’. People hiking along the trail all acknowledged the Bank’s efforts in organizing this activity. And surprisingly, staff met aka Wu Feng - a Turkish -Taiwanese stand-up TV host by chance and the Deputy Executive President was also interviewed by Wu Feng explaining the purpose of this activity, which enormously enhanced the Bank’s corporate image and visibility as well as created good impression and positive advertising effect on customers.

100 6.7 Organize and Encourage Employees around Taiwan to Par- ticipate in the Blood Donation Campaign and the 2nd Care ‘ 06

GRI 203-1 DO OUR BEST TO CARE FOR THE COMMUNITY! with Heart and Pass LOVE on-Help with My Blood’activity

Item Substantial Benefit / Resources Invested Total Investment Amount NT Number or Volunteers Participated

Cumulative Volunteer Hours

Background

T T D O Y T O T S F C P LOVE I

Implementation Strategy

T T

F EXTEND POSITIVE INFLUENCE IN SOCIETY! T

Implementation Outcome

T CC T I

101 06 6.8 Appendix

DO OUR BEST TO CARE FOR THE COMMUNITY! GRI 102-55 103-1 103-2 103-3

獨立保證意見聲明書

台中銀行 2019 年度企業社會責任報告書

英國標準協會與台中商業銀行股份有限公司(簡稱台中銀行)為相互獨立的公司，英國標準協會除了針對台中銀行 2019 年度企業社會責任報告書進行評估和查證外，與台中銀行並無任何財務上的關係。 本獨立保證意見聲明書的目的，僅作為對下列有關台中銀行企業社會責任報告書所界定範圍內的相關事項進行保證 之結論，而不作為其他之用途。除對查證事實提出獨立保證意見聲明書外，對於關於其他目的之使用，或閱讀此獨 立保證意見聲明書的任何人，英國標準協會並不負有或承擔任何有關法律或其他之責任。 本獨立保證意見聲明書係基於台中銀行提供予英國標準協會之相關資訊審查所作成之結論，因此審查範圍乃基於並 侷限在這些提供的資訊內容之內，英國標準協會認為這些資訊內容都是完整且準確的。 對於這份獨立保證意見聲明書所載內容或相關事項之任何疑問，將由台中銀行一併回覆。

查證範圍

台中銀行與英國標準協會協議的查證範圍包括: 1. 本查證作業範疇與台中銀行 2019 年度企業社會責任報告書揭露之報告範疇一致。 2. 依照 AA1000 保證標準(2008)及其 2018 年附錄的第 1 應用類型評估台中銀行遵循 AA1000 當責性原則(2018)的 本質和程度，不包括對於報告書揭露的資訊/數據之可信賴度的查證。 本聲明書以英文作成並已翻譯為中文以供參考。

意見聲明

我們總結台中銀行 2019 年度企業社會責任報告書內容，對於台中銀行的相關運作與績效則提供了一個公平的觀點。 基於保證範圍限制事項、台中銀行所提供資訊與數據以及抽樣之測試，此報告書並無重大的不實陳述。我們相信有 關台中銀行 2019 年度的經濟、社會及環境等績效資訊是被正確無誤地呈現。報告書所揭露的績效資訊展現了台中銀 行對識別利害關係人的努力。 我們的工作是由一組具有依據 AA1000 保證標準(2008)及其 2018 年附錄查證能力之團隊執行，以及策劃和執行這部 分的工作，以獲得必要的訊息資料及說明。我們認為就台中銀行所提供的足夠證據，表明其依循 AA1000 保證標準 (2008)及其 2018 年附錄的報告方法與自我聲明符合 GRI 永續性報導準則核心選項係屬公允的。

查證方法

為了收集與作成結論有關的證據，我們執行了以下工作：

EXTEND POSITIVE INFLUENCE IN SOCIETY! ─ 對來自外部團體的議題相關於政策進行訪談，以確認本報告書中聲明書的合適性 ─ 與台中銀行管理者討論有關利害關係人參與的方式，然而，我們並無直接接觸外部利害關係人 ─ 訪談 24 位與永續性管理、報告書編製及資訊提供有關的員工 ─ 審查有關組織的關鍵性發展 ─ 審查內部稽核的發現 ─ 審查報告書中所作宣告的支持性證據 ─ 針對公司報告書及其相關 AA1000 當責性原則(2018)中有關包容性、重大性、回應性及衝擊性原則之流程管理 進行審查

結論

針對 AA1000 當責性原則(2018)之包容性、重大性、回應性及衝擊性與 GRI 永續性報導準則的詳細審查結果如下：

102 06 DO OUR BEST TO CARE FOR THE COMMUNITY! EXTEND POSITIVE INFLUENCE IN SOCIETY!

103 2019 Management Guidelines and the key elements 06 DO OUR BEST TO CARE FOR THE COMMUNITY! Material Purpose of Performance Complaint Assessment How to Manage Management Relevant Policies Topic Guidelines Achievement Mechanism Mechanism

• Directions for the management of initiating new financial • By focusing on the approach of ‘Customer products, services 1. Do our best to orientation’, we provide momentum for businesses and new business guard customers! Product to create their sustainable value and have become a • Provide diverse Complaint operations A Trustworthy & Service first-choice financial partner for the public. financial products Mechanism • Consumer protection Partner! Quality • Taichung Bank collects, processes and utilizes all to meet customers’ Internal Audit policies 2. Diverse and personal information on the basis of customers’ rights needs Free calls 0809- Competent • Financial Institutions innovative Customer and with the attitude of a prudent administrator • Protect financial 096888, 4499888 authorities’ Information System financial products Rights • Proper information security measures have been consumers’ rights (Please dial area inspection & Security Standards & services Protection taken for files and systems with personal information • Protect the security code 04 first for monitoring • Operation Standards 3. Customer Rights to prevent the information from being stolen, falsified, of customers’ mobiles) Financial for Financial Protection Personal destroyed, destructed or revealed. Data whose personal information Ombudsman Institutions’ Security 4. Improve Customer Information retention period has expired or with no reference and respect Institution Control over the Service Quality & Protection value should be checked and destroyed according customers’ rights Processing of Maintain Customer to regulations to protect customers’ rights and fulfill Electronic Banking Relationships our duty in maintaining customer data confidentiality. Business • Personal Information Protection Act

• The Bank is committed to cultivating the employees. Departments specialized in staff training are entrusted to create annual education & training plans based on the Bank’s • To improve

EXTEND POSITIVE INFLUENCE IN SOCIETY! development strategies and facilitate exclusive employees’ 1. Do Our Best to Talent Free calls 0809- training courses for all occupations so as to occupational Care for Our Complaint 096888, 4499888 Cultivation improve human capital and create competitive competency and • Employee Work Rules Employees! Mechanism (Please dial area advantages. future career • Guidelines for the Create Pleasant Remuneration code 04 first for Labor • Hold regular labor-management meetings planning Implementation of Work Environment Committee mobiles) Relations through Labor Union, establish diverse employee • To achieve Employee Benefits for Happy Life! Labor Union The Bank’s HR opinion communication channels, and achieve harmonious labor Subsidy 2. Salary & Benefits Various internal Department email gender equality in the workplace to realize the relations in the • Employee Welfare 3. Talent Cultivation training courses Employee address: harmony of labor-management relations. workplace Fund Act and Career Certification Benefits personnel@tcbbank. • With a view to taking care of employees living • Hopefully to help Development exams com.tw and increasing workplace efficiency, the Bank employees build a 4. Labor Relations provides various beneficial subsidies/allowances sense of identity (including marriages, births, birthdays, deaths, travels, children scholarships and gifts for three major festivals, etc.)

104 06 DO OUR BEST TO CARE FOR THE COMMUNITY! Material Purpose of Performance Complaint Assessment How to Manage Management Relevant Policies Topic Guidelines Achievement Mechanism Mechanism

• Formulate guidelines for Head Office units’ performance appraisal and announce the annual performance appraisal results of all branches to clearly define the business performance objectives of the year and ensure its accomplishment • Strengthen Overview of the • In order to establish good communication business business Performance channels with stakeholders, Taichung Bank has constitution 3. Business Appraisal formulated ‘Operation Standards for Handling and improve Performance Internal Material Information’ and implements profitability to Do Our Best to Run Corporate the Spokesperson System. Besides, Contact for achieve the set Business Business! A 60-year Governance Investors is also disclosed on Taichung Bank’s goals • Corporate Performance Journey with You! Evaluation external website so that investors can understand • Enhance the Governance Code 1. Stakeholder more about the company’s affairs through various capabilities of the • Operation Standards Corporate Engagement Risk Management channels. And positions in relation to corporate board of directors for Handling Internal Free calls 0809- Governance governance are set to enhance the performance and protect 2. The Status Committee Material Information 096888, 4499888 of Board of Directors. shareholders’ of Corporate • Risk Management (Please dial area Risk • In order to reinforce the mechanism of risk and stakeholders’ Governance Board of Directors Policies & code 04 first for Management management, Risk Management Committee has rights to facilitate 4. Laws & Performance Management mobiles) been set under the Board to carry out the risk the Bank’s Regulations and Evaluation Mechanism Sustainable management policies approved by Board of sustainable Compliance Directors and review various affairs related to risk operation. • The brand spirit of ‘We Operations 5. Anti-Money Awarded with management to ensure the smooth operation of • Implement the Do Our Best for You’ Laundering & ‘TCSA Taiwan risk management. operation of risk • Through the practice of ‘Dedication to Local management Combating the Corporate Financing of Sustainability Community’, the Bank has established a system and EXTEND POSITIVE INFLUENCE IN SOCIETY! profound ‘cross-generation’ partnership with control procedures Terrorism Forum Report customers. With the appreciation of this ‘trust’, for effective risk 7. Risk Management Award’ such dedication has become a heritage of the control. Mechanism Bank’s employees and an essential part of the Bank’s business in building strength for the creation of corporate sustainable value, thereby making the Bank a first-choice financial partner for the public.

105 Material Purpose of Performance Complaint Assessment 06 How to Manage Management Relevant Policies Topic Guidelines Achievement Mechanism Mechanism DO OUR BEST TO CARE FOR THE COMMUNITY! • Focus the promotion on the dimensions of Academic Education, Arts Project closure • Undertake the five core values for financial & Humanities, Charity & Do Our Best Free calls 0809- reports in relation services sector — ‘Service, Product, Expertise, Charity & Care • Corporate Social to Care for the 096888, 4499888 to public benefit/ Customer and Public Benefit’ and practice the Care, Sports Cultural Responsibility Best Community! Extend (Please dial area charitable, sports belief of being caring and compassionate with Development & Sports Practice Principles Positive Influence code 04 first for and cultural proactive action to convey the corporate spirit of and Community Activities in the Society! mobiles) sponsorship “We Do Our Best for You” Activities and activities carry them out with Taichung Bank’s resources to contribute to society

• To ensure Taichung Bank’s legal compliance • Set up ‘legal compliance structure’ to define management channels for the transmission, consultation and • To ensure the Complaint communication of regulation updates, ongoing establishment, Mechanism attention to changes of regulations, timely Do Our Best to Run integration and formulating and updating internal regulations in • Regulations for the Business! A 60-year operation of AML Competent Legal accordance with applicable laws & regulations, Implementation of Journey with You! & CFT mechanism authorities’

EXTEND POSITIVE INFLUENCE IN SOCIETY! Compliance supervising all units conducting semiannual Legal Compliance 4. Laws & Free calls • To support supervision legal compliance self-assessment and regularly System Regulations and 0809-096888, small-medium Anti-Money conducting legal compliance education and • Points to note Compliance 4499888(Please dial enterprises Corporate Laundering training. about anti-money 5. Anti-Money area code 04 first for and assist Governance • The Bank formulates AML & CFT related rules & laundering & Laundering & mobiles) the economic Evaluation Credit Policy regulations and operations handbook and sets up combating the Combating the development in the ‘AML & CFT Management Team’ to regularly financing of terrorism Financing of Taiwan Uphold the examines the AML & CFT implementation status, Terrorism Reinforce the spirit of Equator reviews defects and discusses improvement financial flow Principles measures to ensure the establishment, integration services for green and operation of AML & CFT mechanism. industries to reduce the cost of climate change

106 Material Purpose of Performance Complaint Assessment How to Manage Management Relevant Policies 06 Topic Guidelines Achievement Mechanism Mechanism DO OUR BEST TO CARE FOR THE COMMUNITY! • Taichung Bank is committed to providing small and medium enterprises with financial services which include various financial products and investment services in the hope of becoming a most reliable and trustworthy financial partner for small and medium enterprises. • Taichung Bank has been boosting the financial flow services for green industries in recent years by providing diverse financing and loan services for industries which can mitigate the greenhouse effect via energy conservation and carbon reduction and can reduce the climate change impacts by weather shielding.

• Regulations Do Our Best Governing the to Appreciate Implementation Blessings! Guard our Greenhouse • Facilitate environmental protection with a of construction homeland! Gas Emission management system which aims at energy and affairs related 1. Energy Management conservation and carbon reduction, resource • To reduce to purchasing, conservation and Free calls 0809- and Control of Energy recycling, green purchasing and supply chain greenhouse gas customizing and carbon reduction 096888, 4499888 Contractor Safety Conservation management and promotion of going paperless. emission selling-off goods or management (Please dial area and Carbon • Enhance the public interest and reduce social • Mitigate the properties 2. resource code 04 first for Give Priority to Reduction costs through the use of green construction impacts of climate • Select branches recycling& reuse mobiles) Local Agricultural materials and requesting suppliers and change to conduct simple 3. Green purchasing Products Green subcontractors to follow environmental protection energy consumption

and supply chain EXTEND POSITIVE INFLUENCE IN SOCIETY! Purchasing requirements evaluation and management develop related 4. Promote strategies to reduce ‘Paperlessness’ energy consumption.

107 06 GRI sustainability reporting standards (GRI Standards:2016)

DO OUR BEST TO CARE FOR THE COMMUNITY! GRI 102: Page General Disclosures Description Chapter Remark number 2016

Overview of the organization

102-1 Name of the organization 7

102-2 Major Brands, products and services 7-9

102-3 Location of organization head offices 7

Number of countries where the organization operates, and the names of countries where 102-4 7-9 Overview of the business it has significant operations and/or that are relevant to the topics covered in the report

102-5 Ownership and legal form 7

102-6 Markets served by the organization 7-9

102-7 Scale of the organization 7

102-8 Employee composition 70-72 Employment Situation

Green purchasing and 102-9 Description of organization’s supply chain 87 supply chain management

The Status of Corporate 30-37 Governance Significant changes to the organization’s scale, structure, ownership and supply chain 102-10 during reporting period No significant

EXTEND POSITIVE INFLUENCE IN SOCIETY! Green purchasing and 87 change to supply supply chain management chain

Risk Management 102-11 Explain whether the organization applies the precautionary principle/approach or not 50-52 Mechanism

External initiatives and A list of externally-developed economic, environmental and social charters, principles, or 102-12 53-54 Important Exchanges & other initiatives to which the organization subscribes, or which it endorses Communications

External initiatives and A list of the main memberships of industry or other associations, and national or 102-13 53-54 Important Exchanges & international propagation organizations Communications

108 06

GRI 102: DO OUR BEST TO CARE FOR THE COMMUNITY! Page General Disclosures Description Chapter Remark number 2016

Statement from senior decision-maker in relation to the sustainability of the organization Message from the 102-14 4-5 and its strategies Chairman

Message from the 102-15 Description of key impacts, risks and opportunities 4-5 Chairman

Business Philosophy, Laws & Regulations and 7 Compliance, Internal Description of organization values, principles, standards and conduct norms, such as 102-16 42-52 Control & Audit System, code of conduct and code of ethics 61-65 Risk Management Mechanism, Customer Rights Protection

Governance

The Status of Corporate 102-18 Description of organization governance structure 30-37 Governance

Communicating with stakeholders EXTEND POSITIVE INFLUENCE IN SOCIETY! 102-40 A list of stakeholder groups engaged by the organization 12-29

No Collective 102-41 Percentage of total employees covered by collective bargaining agreements Bargaining in 2019

102-42 The basis for identifying and selecting stakeholders with whom to engage 12-29

The organization’s approach to stakeholder engagement, including frequency of Stakeholder Engagement 102-43 engagement by type and by stakeholder group, and an indication of whether any of the 12-29 engagement was undertaken specifically as part of the report preparation process

Key topics and concerns that have been raised through stakeholder engagement, including: how the organization has responded to those key topics and concerns, 102-44 12-29 including through its reporting; the stakeholder groups that raised each of the key topics and concerns 109 GRI 102: 06 Page General Disclosures Description Chapter Remark number DO OUR BEST TO CARE FOR THE COMMUNITY! 2016

Reporting Practices

List of entities included in organization’s consolidated financial statements or equivalent (Please refer documents to Taichung Report Information and Whether any entity included in the organization’s consolidated financial statements or 102-45 Bank’s 2019 Business Growth through equivalent documents is not covered by the report Annual Collaboration An organization can report Disclosure by referencing the information in publicly available Report) consolidated financial statements or equivalent documents.

GRI 102: Page General Disclosures Description Chapter Remark number 2016

Process for defining the report content and the topic Boundaries 102-46 An explanation of how the organization has implemented the Reporting Principles for 12-29 defining report content Stakeholder Engagement

102-47 List of material topics identified in the process for defining report content 12-29

The effect of any restatements of information given in previous reports, and the reasons 102-48 3 for such restatements Report Information Significant changes from previous reporting periods in the list of material topics and topic 102-49 3 boundaries.

102-50 Reporting period of information provided (such as fiscal year or calendar year) 3 Report Information EXTEND POSITIVE INFLUENCE IN SOCIETY! 102-51 Date of most recent report 2018/6

102-52 Reporting cycle 3

102-53 Contact point for questions regarding the report 3 Report Information

102-54 Claims of reporting in accordance with the GRI Standards 3

The GRI content index, which specifies each of the GRI Standards used and lists all 102-55 108-113 Appendix disclosures included in the report

A description of the organization’s policy and current practice with regard to seeking Appendix: Assurance 102-56 - external assurance for the report Handbook

110 Topic-specific Disclosures 06

GRI DO OUR BEST TO CARE FOR THE COMMUNITY! Material Topic Description Page number Chapter Remark Standards

103-1 Explanation of the material topic and its Boundaries GRI 103

ManagementGuidelines 103-2 Management Guidelines and its components 104-107 Appendix 2016 103-3 Evaluation of the management guidelines

Economic Performance Disclosure

201-1 Direct economic value generated and distributed 9 Business Performance GRI 201 Economic ※ Performance 2016 Financial implications and other risks and opportunities due to 201-2 90-93 Credit Policy climate change

Ratios of standard entry-level wage by gender compared to local 202-1 GRI 202 Market minimum wage 70-72 Employment Situation Presence2016 202-2 Proportion of senior management hired from the local community

Do Our Best to Care for the Impacts of infrastructure investments and development of services 203-1 95-101 Community! Extend Positive supported GRI 203 Indirect Influence in the Society! ※ Economic Impacts 2016 External initiatives and Important 203-2 Significant indirect economic impacts, including degree of impacts 53-54 Exchanges & Communications

Environmental Performance Disclosure

Energy conservation and carbon EXTEND POSITIVE INFLUENCE IN SOCIETY! GRI 302 Energy 2016 302-1 Energy consumption within the organization 81-84 ※ reduction management

GRI 303 Water 2018 303-1 Water withdrawal by source 84-86 Resource recycling

305-1 Direct (Scope 1) GHG emissions Energy conservation and carbon GRI 305 Emissions 81-84 reduction management ※ 305-2 Energy indirect (Scope 2) GHG emissions

111 GRI Material Topic Description Page number Chapter Remark Standards

GRI 307 Environmental 307-1 Non-compliance with environmental laws and regulations - - N/A 06 Compliance2016

DO OUR BEST TO CARE FOR THE COMMUNITY! GRI 308 Supplier ※ Green purchasing and supply Environmental 308-1 New suppliers that were screened using environmental criteria 87 chain management Assessment 2016

Social Performance Disclosure

401-1 New employee hires and employee turnover 71 Employment Situation

GRI 401 Employment Benefits provided to full-time employees that are not provided to ※ 401-2 72-74 2016 temporary or part-time employees Salary & Benefits 401-3 Parental leave 74

No Collective GRI 402 Labor/ Minimum notice periods regarding significant operational changes Bargaining Management Relations 402-1 been concretely explained in collective bargaining or not Agreement 2016 signed in 2019

404-1 Average hours of training per year per employee

Programs for upgrading employee skills and transition assistance GRI 404 Training and 404-2 Talent Cultivation and Career ※ programs 75-77 Education 2016 Development Percentage of employees receiving regular performance and 404-3 career development reviews

GRI 405 Employee 405-1 Diversity of governance bodies and employees 70-72 Employment Situation

Diversity and Equal Opportunity 2016 405-2 Ratio of basic salary and remuneration of women to men 72 Salary & Benefits

EXTEND POSITIVE INFLUENCE IN SOCIETY! GRI 406 Non- 406-1 Incidents of discrimination and corrective actions taken 77-78 Labor Relations discrimination 2016

GRI 411 Rights of 411-1 Incidents of violations involving rights of indigenous peoples 77-78 Labor Relations Indigenous Peoples2016

GRI 412 Human Rights Talent Cultivation and Career 412-2 Employee training on human rights policies or procedures 75-77 Assessment 2016 Development

GRI 418 Customer Substantiated complaints concerning breaches of customer ※ 418-1 - - N/A privacy2016 privacy and losses of customer data

Please refer GRI 419Socioeconomic Non-compliance with laws and regulations in the social and to Taichung ※ 419-1 Compliance 2016 economic area Bank’s 2019 Annual Report

• Note: is used to denote ‘Material Topic’ 112 ※ GRI Sector Disclosure - Financial Services Sector 06

Page DO OUR BEST TO CARE FOR THE COMMUNITY! Topic Index Description Chapter Remark number

FS1 / Product portfolio Policies with specific environmental and social components applied to business lines. 4-5 Message from the Chairman DMA

FS2 / Product portfolio Procedures for assessing and screening environmental and social risks in business lines. 12-29 Stakeholder Engagement DMA

FS3 / Processes for monitoring clients’ implementation of and compliance with environmental Product portfolio 90-94 Credit Policy DMA and social requirements included in agreements or transactions.

FS4 / Process(es) for improving staff competency to implement the environmental and social Product portfolio 12-29 DMA policies and procedures as applied to business lines Stakeholder Engagement Interactions with clients/ investees/business partners regarding environmental and social Product portfolio FS5 12-29 risks and opportunities

Percentage of the portfolio for business lines by specific region, size (e.g. micro/SME/ Product portfolio FS6 9-10 Business Performance Large) and by sector

Monetary value of products and services designed to deliver a specific social benefit for Do our best to guard customers! Product portfolio FS7 56-68 each business line broken down by purpose A Trustworthy Partner!

Monetary value of products and services designed to deliver a specific environmental Do Our Best to Appreciate Product portfolio FS8 81-93 benefit for each business line broken down by purpose Blessings! Guard our homeland!

Coverage and frequency of audits to assess implementation of environmental and social Internal Control & Audit System,

Audit FS9 45-52 EXTEND POSITIVE INFLUENCE IN SOCIETY! policies and risk assessment procedures Risk Management Mechanism

Active Percentage and number of companies held in the institution’s portfolio with which the Business Collaboration, Laws & FS10 37-43 Ownership reporting organization has interacted on environmental or social issues. Regulations and Compliance

Active No related FS11 Percentage of assets subject to positive and negative environmental or social screening Ownership issue

Active Voting policy (or policies) applied to environmental or social issues for shares over which No related FS12 Ownership the reporting organization holds the right to vote shares or advises on voting issue

Occupational Financial institutions should report their policies and practices regarding threats and DMA 79 Occupational Health & Safety Health & Safety violence in place to assist workforce members, their families, or community members

113 06 Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies

DO OUR BEST TO CARE FOR THE COMMUNITY! Chapter Chapter of the Report

1. Implementation of corporate governance Do Our Best to Run Business! A 60-year Journey with You!

2. Development of environmental sustainability Do Our Best to Appreciate Blessings! Guard our Homeland!

Do Our Best to Care for the Community! Extend Positive Influence in 3. Maintenance of public benefit the Society!

4. Disclosure of corporate social responsibility information Do Our Best to Run Business! A 60-year Journey with You!

Regulations Governing the Implementation of TWSE Listed Companies CSR Report Formulation and Filing ’

Page Article Description Chapter of the Report number

The content of Corporate Social Responsibility Report should encompass risk assessments in relation to environment, community Stakeholder Article 3 12-29 and corporate governance, and should include related performance Engagement indexes for the management of the identified material topics.

A listed company under Article 2 shall disclose the number of its full- time employees who are not in a managerial position, the average

EXTEND POSITIVE INFLUENCE IN SOCIETY! Article 4, (1) of Paragraph4 and medium of the salaries of the full-time employees who are not in 72 Salary & Benefits a managerial position, and the difference of the three figures from the previous year.

Corporate governance in relation to climate-related risks and opportunities; actual and potential climate-related impacts; how to Energy conservation Article 4, (2) of Paragraph4 identify, assess and manage climate-related risks and as well as the 81-84 and carbon reduction indexes and objectives used to assess and manage climate-related management issues

114