Bank Sinopac and Subsidiaries
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Bank SinoPac and Subsidiaries Consolidated Financial Statements for the Nine Months Ended September 30, 2017 and 2016 and Independent Auditors’ Review Report INDEPENDENT AUDITORS’ REVIEW REPORT The Board of Directors and Stockholders Bank SinoPac We have reviewed the accompanying consolidated balance sheets of Bank SinoPac and its subsidiaries (collectively referred to as the Group) as of September 30, 2017 and 2016, and the related consolidated statements of comprehensive income for the three months ended September 30, 2017 and 2016, nine months ended September 30, 2017 and 2016, as well as the consolidated statements of changes in equity and cash flows for the nine months ended September 30, 2017 and 2016. These consolidated financial statements are the responsibility of the Group’s management. Our responsibility is to issue a report on these consolidated financial statements based on our reviews. We conducted our reviews in accordance with Statement of Auditing Standards No. 36 “Review of Financial Statements” issued by the Auditing Standards Committee of the Accounting Research and Development Foundation of the Republic of China. A review consists principally of applying analytical procedures to financial data and of making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the Republic of China, the objective of which is the expression of an opinion regarding the consolidated financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our reviews, we are not aware of any material modifications that should be made to the consolidated financial statements referred to above for them to be in conformity with the Regulations Governing the Preparation of Financial Reports by Public Banks, the guidelines issued by the authority, and International Accounting Standard 34 “Interim Financial Reporting” endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China. Deloitte & Touche Taipei, Taiwan Republic of China November 10, 2017 Notice to Readers The accompanying consolidated financial statements are intended only to present the consolidated financial position, financial performance and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to review such consolidated financial statements are those generally applied in the Republic of China. For the convenience of readers, the independent auditors’ review report and the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ review report and consolidated financial statements shall prevail. - 1 - BANK SINOPAC AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In Thousands of New Taiwan Dollars) September 30, 2017 December 31, 2016 September 30, 2016 (Reviewed) (Audited) (Reviewed) ASSETS Amount % Amount % Amount % CASH AND CASH EQUIVALENTS, NET (Notes 4 and 6) $ 20,267,223 1 $ 22,298,826 2 $ 16,854,767 1 DUE FROM THE CENTRAL BANK AND CALL LOANS TO OTHER BANKS, NET (Note 7) 91,786,055 6 142,406,843 9 136,587,344 9 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (Notes 3, 4, 8 and 42) 64,513,122 5 59,381,207 4 47,041,541 3 SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL (Notes 4 and 10) 14,910,677 1 7,861,758 1 25,076,230 2 RECEIVABLES, NET (Notes 4, 5, 11, 42 and 43) 45,992,255 3 35,623,216 2 34,946,371 2 CURRENT TAX ASSETS (Notes 4, 30 and 42) 1,367,463 - 1,392,885 - 1,369,538 - DISCOUNTS AND LOANS, NET (Notes 4, 5, 12, 42 and 43) 883,034,247 61 889,037,662 59 868,895,167 60 AVAILABLE-FOR-SALE FINANCIAL ASSETS, NET (Notes 4, 13, 14, 42, 43 and 48) 247,922,469 17 238,315,525 16 233,170,298 16 HELD-TO-MATURITY FINANCIAL ASSETS (Notes 4, 14, 43 and 48) 59,826,321 4 78,132,231 5 67,945,107 5 INVESTMENT ACCOUNTED FOR USING THE EQUITY METHOD (Notes 4 and 15) - - 54,579 - 48,493 - OTHER FINANCIAL ASSETS, NET (Notes 4, 16, 42 and 43) 9,272,995 1 13,847,727 1 13,611,799 1 PROPERTY AND EQUIPMENT, NET (Notes 4, 17, 18 and 42) 9,024,282 1 9,134,981 1 9,388,429 1 INVESTMENT PROPERTY, NET (Notes 4, 17 and 18) 1,219,667 - 1,247,127 - 1,121,521 - INTANGIBLE ASSETS, NET (Notes 4, 5, 17, 19 and 42) 1,280,455 - 1,887,792 - 1,901,432 - DEFERRED TAX ASSETS (Notes 3, 4 and 30) 1,674,175 - 2,550,769 - 2,556,202 - OTHER ASSETS, NET (Notes 4, 20 and 42) 5,444,516 - 2,480,195 - 1,770,935 - TOTAL $ 1,457,535,922 100 $ 1,505,653,323 100 $ 1,462,285,174 100 LIABILITIES AND EQUITY DEPOSITS FROM THE CENTRAL BANK AND BANKS (Notes 21 and 42) $ 31,626,425 2 $ 29,854,651 2 $ 39,597,583 3 FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS (Notes 3, 8 and 42) 19,150,165 2 21,084,744 2 12,113,957 1 DERIVATIVE FINANCIAL LIABILITIES FOR HEDGING (Notes 4, 9 and 12) - - 19,705 - 45,302 - SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE (Notes 4, 8, 10, 13, 14, 22 and 42) 28,665,181 2 1,836,801 - 6,323,103 - PAYABLES (Notes 23, 28, 38 and 42) 14,294,124 1 16,884,370 1 15,122,059 1 CURRENT TAX LIABILITIES (Notes 4, 30 and 42) 377,731 - 564,967 - 375,449 - DEPOSITS AND REMITTANCES (Notes 24 and 42) 1,173,734,726 81 1,255,712,491 83 1,212,347,892 83 BANK DEBENTURES (Notes 4, 25 and 42) 45,568,658 3 41,779,336 3 40,359,161 3 OTHER FINANCIAL LIABILITIES (Notes 26 and 42) 13,214,033 1 12,369,859 1 11,348,499 1 PROVISIONS (Notes 3, 4, 27 and 28) 2,641,227 - 2,849,446 - 2,887,617 - DEFERRED TAX LIABILITIES (Notes 4 and 30) 743,137 - 960,723 - 1,003,948 - OTHER LIABILITIES (Notes 29 and 42) 3,849,886 - 2,014,325 - 1,586,932 - Total liabilities 1,333,865,293 92 1,385,931,418 92 1,343,111,502 92 EQUITY Share capital Common shares 86,061,159 6 83,954,571 5 83,954,571 6 Capital surplus Additional paid-in capital in excess of par 4,001,872 - 4,001,872 - 4,001,872 - Capital surplus from business combination 8,076,524 1 8,076,524 1 8,076,524 1 Others 69,244 - 69,244 - 69,244 - Total capital surplus 12,147,640 1 12,147,640 1 12,147,640 1 Retained earnings Legal reserve 18,712,695 1 16,656,395 1 16,656,395 1 Special reserve 457,565 - 266,120 - 266,120 - Unappropriated earnings 6,057,067 - 6,854,333 1 5,425,961 - Total retained earnings 25,227,327 1 23,776,848 2 22,348,476 1 Other equity 234,503 - (157,154) - 722,985 - Total equity 123,670,629 8 119,721,905 8 119,173,672 8 TOTAL $ 1,457,535,922 100 $ 1,505,653,323 100 $ 1,462,285,174 100 The accompanying notes are an integral part of the consolidated financial statements. - 2 - BANK SINOPAC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share) (Reviewed, Not Audited) For the Three Months Ended September 30 For the Nine Months Ended September 30 2017 2016 2017 2016 Amount % Amount % Amount % Amount % INTEREST REVENUE $ 6,311,280 122 $ 6,165,519 110 $ 18,967,750 108 $ 18,606,122 106 INTEREST EXPENSE 2,646,583 51 2,391,503 43 7,848,938 45 7,526,779 43 NET INTEREST (Notes 4, 32 and 42) 3,664,697 71 3,774,016 67 11,118,812 63 11,079,343 63 NET REVENUES OTHER THAN INTEREST (Note 4) Commission and fee revenues, net (Notes 33 and 42) 1,315,851 25 1,278,369 23 3,938,690 23 4,439,690 25 Gains on financial assets and liabilities at fair value through profit or loss (Notes 34 and 42) 511,464 10 382,489 7 1,881,667 11 1,462,848 8 Realized gains on available-for-sale financial assets (Note 35) 3,448 - 4,378 - 7,591 - 2,582 - Foreign exchange gains, net 241,454 5 98,809 2 1,025,426 6 249,154 2 Reversal of impairment on assets (Notes 5 and 36) 95,474 2 64,788 1 37,795 - 79,883 1 Share of gains (losses) of associates (Note 15) 2 - (829 ) - (3,197 ) - 851 - Loss on disposal of subsidiary (Note 50) (657,901 ) (13 ) - - (657,901 ) (4 ) - - Other noninterest net revenues (Notes 37 and 42) 18,299 - 24,214 - 219,454 1 185,375 1 Total net revenues other than interest 1,528,091 29 1,852,218 33 6,449,525 37 6,420,383 37 TOTAL NET REVENUES 5,192,788 100 5,626,234 100 17,568,337 100 17,499,726 100 ALLOWANCE FOR DOUBTFUL ACCOUNTS AND GUARANTEES (Notes 4, 6, 7, 11, 12, 16 and 20) 140,802 3 532,514 10 343,641 2 467,044 2 OPERATING EXPENSES Employee benefits (Notes 4, 28 and 38) 1,925,154 37 1,989,877 35 6,211,113 35 6,259,991 36 Depreciation and amortization (Notes 4 and 39) 169,501 3 186,866 3 518,806 3 553,866 3 Others (Notes 40 and 42) 1,233,537 24 1,266,516 23 3,518,799 20 3,828,164 22 Total operating expenses 3,328,192 64 3,443,259 61 10,248,718 58 10,642,021 61 INCOME BEFORE INCOME TAX 1,723,794 33 1,650,461 29 6,975,978 40 6,390,661 37 INCOME TAX EXPENSE (Notes 4 and 30) 140,399 3 252,139 4 918,911 5 964,700 6 NET INCOME 1,583,395 30 1,398,322 25 6,057,067 35 5,425,961 31 (Continued) - 3 - BANK SINOPAC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share) (Reviewed, Not Audited) For the Three Months Ended September 30 For the Nine Months Ended September 30 2017 2016 2017 2016 Amount % Amount % Amount % Amount % OTHER COMPREHENSIVE INCOME (LOSS) Items that will not be reclassified subsequently to profit or loss Changes in the fair value attributable to changes in credit risk of financial liabilities designated as at fair value