Taipei Fubon Commercial Bank Co., Ltd

2017 1. Spokesperson Name：Roman Cheng Title ：President Tel ：（886）2-2771-6699#66233 E-mail：[email protected] Acting Spokesperson Name：Mike Liu Title ：Senior VP Tel ：（886）2-2771-6699#66023 E-mail：[email protected] 2. Contact Information – Corporate Headquarters and Branches Please see page27 3. Stock Registration Agent Name：Fubon Securities Co., Ltd. Address：2F, No.17, Hsuchang St.,Taipei, Taiwan, R.O.C. Website：www.fubon.com/securities Tel：（886）2-2361-1300 4. Credit Rating Institution Name Address Tel Taiwan Ratings Corporation 49F. Taipei 101 Tower, No.7, Sec. 5, (886)-2-8722 5800 Xinyi Rd., Taipei city 110, Taiwan (R.O.C.) Moody’s Investors Service 24/F, One Pacific Place 88 Queensway (852)-3758-1300 Admiralty, Hong Kong Standard & Poor’s Ratings 49F. Taipei 101 Tower, No.7, Sec. 5, (886)-2-8722 5800 Service Xinyi Rd., Taipei city 110, Taiwan (R.O.C.) 5. Certified Public Accountants for Fiscal Year 2017 CPAs：Jessie Wu , Casey K.C.Lai Company：Deloitte & Touche Address：12F., No. 156, Sec. 3, Minsheng E. Rd., Taipei City 105, Taiwan (R.O.C.) Website：www.deloitte.com.tw Tel：（886）2-2545-9988 6. Exchange Houses where Overseas Securities are Listed：None 7. Website：www.fubon.com/banking CONTENTS I. Message to Shareholders 1 II. Corporate Profile 7 1. Introduction 7 2. Organizational Structure 9 III. Business Operations 13 1. Business Information 13 2. Business Strategies and Business Plans 14 3. Research & Development Plans 18 4. Employees Profile 20 IV. Special Notes 21 1. Dividend Policy and Implementation Status 21 2.Implementation of the Internal Controls System 22 V. Headquarters and Branches 27 Appendix ： Annual Financial Reports for 35 2017 and 2016 I. Message to Shareholders In 2017, economic stimulants combined with expansionary fiscal and monetary policies from countries including USA, Japan and the EU triggered a recovery of investment, trading and industrial production activities around the world. This recovery coincided with an upturn in international commodity prices, causing significant growth in global trade while spreading the growth momentum to emerging economies as well. Driven by the worldwide economic recovery, Taiwan saw its export volume grow and the stock market rise, which in turn boosted private consumption. Meanwhile, the government's continuous efforts to improve the investment environment had yielded positive results and contributed to the growth of the domestic economy. According to statistics published by the Directorate General of Budget, Accounting and Statistics, Taiwan's 2017 full-year economic growth rate was concluded at 2.86%, which was higher than the 1.41% a year ago. The Bank has long been committed to achieving consistent growth, and exploring innovations via financial technologies based on risk control. Meanwhile, digital trends and ongoing social development have also prompted the Bank to utilize resources and synergies from the financial group to provide comprehensive and suitable range of financial products and services for customers. Owing to the efforts of our employees, the Bank managed to achieve growth in all business categories, and generated consolidated net income totaling NT$16.931 billion for the year 2017, representing an 11% growth. With respect to wholesale banking, the Bank aims not only to secure its existing business foundation and customer relations, but is also actively exploring new services, overseas markets, and further business collaboration with peers. We aim to raise customers' loyalty by introducing differentiated services while adopting a customer-centric strategy and proper risk controls. It is our goal to rediscover the value of banks as financial intermediaries and win the preferences of our customers. As for retail banking, we adopt a customer-centric business philosophy to offer customized product lines and financial services that are closely associated with customers' lifestyles. From insurance, investment, digital deposit account, mortgage, personal loan, student loan, credit card to digital platforms, we satisfy customers' needs to access these services anytime, anywhere and on the go. The Bank has responded actively to the ongoing digital transformation of the financial environment by introducing innovative business models and payment services that incorporate the latest technologies. We continue to build and optimize our electronic trading platforms and integrate virtual and physical channels, and became one of the first financial institutions to be approved by the Financial Supervisory Commission for blockchain services. In terms of overseas markets, the Bank made a significant breakthrough in 2014 after acquiring Fubon Bank (China) Co., Ltd as its subsidiary, which enabled it to reach Taiwanese businesses gathered around Yangtze River Delta, the Pearl River Delta, Beijing, Tianjin, Hebei, Chengdu and Chongqing and satisfy their needs for financial service. This acquisition made Fubon the Taiwanese bank with the broadest network coverage and the only one to possess full banking - 1 - license in China. The Bank now has the leading advantage over peers to deliver cross-border financial service, and make greater contributions to cross-strait financial collaboration and development in the future. The Bank opened its Singapore Branch in March 2016 and later acquired approval from the Financial Supervisory Commission in 2017 to establish a representative office in Indonesia. These new developments signified a leap from the Greater China Markets toward ASEAN countries, and brought us closer to our goal of financial integration in Asia. With this new presence, we hope to participate in the growth of ASEAN countries by providing Taiwanese businesses with more comprehensive and better quality financial services across borders, and take steps toward becoming "The Best Financial Institution in Asia." The Bank had made some significant adjustments to its organization in 2017 in response to changes in the environment and new business requirements. The details are as follows: 1. For better support of wealth management services, a "Wealth Management Risk Management Committee" has been assembled to alert market risk, credit risk and price risk of all products offered through wealth management, and to monitor abnormal sales behaviors such as excessive concentration, inappropriate solicitation, and short-term trading of wealth management products. 2. For performance enhancement to the SME segment and for better support of the Bank's branch localization strategy, functionality and responsibilities of the "Emerging Banking Division" have been consolidated under the Retail Banking Division. 3. For more effective promotion, expansion and development of new payment services, a new "Payment Service Department " has been created under the Retail Banking Division. Corporate sustainability and social responsibility are two issues that the Bank has devoted significant attention to. The Bank supports Fubon Financial Holding's Co., Ltd "ESG Vision" and fulfills its role by implementing action plans in five different strategies, namely: pilot investment, innovation, localization, responsible lending and positive care. The Bank has aligned its practices with the rest of the world by signing the Equator Principles, and hopes to exert financial influence to direct the attention of its borrowers toward the environmental and social impacts of their business activities. The Bank also encourages innovation and supports the green energy industry, and is constantly exploring commercial models that are friendly to the environment and the society, and bringing sustainable concepts into economic practices. While we maximize returns for the shareholders, we also try to give back what was earned from the society. Through Taipei Fubon Bank Charity Foundation, we continue to devote efforts into elderly care, care for persons with disability, and charity. By extending care to the socially disadvantaged, we aim to fulfill our goal of giving back to the society. The Bank makes annual donations to Fubon Charitable Foundation, Fubon Cultural & Educational Foundation and Fubon Art Foundation to finance their charity activities, and thereby contributes to creating a better society. Below are descriptions of the Bank's 2017 business results and 2018 business plans: - 2 - 1. 2017 business results The Bank generated consolidated net income totaling NT$16.931 billion in 2017, which was equivalent to an EPS of NT$1.58. Consolidated total assets amounted to NT$2,671.7 billion at the end of the year, while net loan balance stood at NT$1,383.8 billion and net deposit balance at NT$2,067.9 billion. The Bank continued to maintain diligent risk management practices while growing profits, and managed to keep overdue loan ratio and loan coverage ratio strong at 0.17% and 764.46%, respectively, at the end of 2017. Sound asset quality is what supports the Bank's profitability and future potentials, and because of the strong business performance and asset quality it had exhibited throughout the year, the Bank sustained a long-term credit rating of "twAA+," a short-term credit rating of "twA-1+," and a "Stable" outlook from Taiwan Ratings Corp. in the report dated November 13, 2017, which was an affirmation to the Bank's outstanding profitability and asset quality. The Bank's professionalism and excellent business performance had been well-recognized by the financial world in 2017, winning multiple awards from renowned institutions local and abroad. In terms of investment banking, cash management and bond

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