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WorldReginfo - eac7b8aa-a6a7-4ef5-bcce-71042370289d I. Names, titles, phone numbers, and e-mail ■ Taishin Holdings Insurance Brokers Co., Ltd. addresses of spokesman and acting Spokesman Address: 11F, No.44, Sec. 2, Jhongshan N. Rd., Jhongshan Name of spokesman: Welch Lin Dist., Taipei City 104, Taiwan (R.O.C.) Title: Chief Financial Officer Tel: 886-2-2562-1867 Tel: 886-2- 5576-1888 Website: http://www.thib.tw E-mail address: [email protected] III. Name, address, website, and phone number of the Acting spokesman: Wilson Chou institution for handling stock register Title: Senior Vice President Name: Stock Affairs Agency Department of Taishin International Tel: 886-2-5576-2568 commercial Bank E-mail address: [email protected] Address: B1, No. 96, Sec. 1, Jianguo N. Rd., Jhongshan Dist., Taipei city. II. Addresses and phone number of Taishin Financial Website: http://www.taishinbank.com.tw Holding Company and subsidiaries Tel: 886-2-2504-8125 ■ Taishin Financial Holding Co., Ltd. Address: 9F, 12F, 13F, 16F, 20F~23F, No.118, Sec. 4, Ren-ai IV. Names, addresses, and phone numbers of credit Rd., Da-an Dist., Taipei City 106, Taiwan (R.O.C.) rating institutions Tel: 886-2-2326-8888 Name: Fitch Ratings Website: http://www.taishinholdings.com.tw Address: 13F, No.205, Dunhua N. Rd., Songshan Dist., Taipei City 105, Taiwan (R.O.C.) ■ Taishin International Bank Co., Ltd. Website: http://www.fitchratings.com.tw Address: B1&1F, No.44, Sec. 2, Jhongshan N. Rd., Jhongshan Tel: 886-2-8175-7600 Dist., Taipei City 104, Taiwan (R.O.C.) Tel: 886-2-2568-3988 Name: Taiwan Ratings Website: http://www.taishinbank.com.tw Address: 49F, Taipei 101 Tower, No.7, Sec. 5, Xinyi Rd., Xinyi ■ Taishin Securities Co., Ltd. Dist., Taipei City 110, Taiwan (R.O.C.) Address: 2F, No.44, Sec. 2, Jhongshan N. Rd., Jhongshan Website: http://www.taiwanratings.com Dist., Taipei City 104, Taiwan (R.O.C.) Tel: 886-2-8722-5800 Tel: 886-2-2181-5888 Website: http://www.tssco.com.tw V. Name, address, website, and phone number of certified public accountant and accounting firm for ■ Taishin Asset Management Co., Ltd. the financial statement in the recent year Address: 2F-3, No.9, Dehui St., Jhongshan Dist., Taipei City CPAs: Qinzhen Yang , Jerry Gung 104, Taiwan (R.O.C.) Name of accounting firm: Deloitte & Touche Tax Consulting Co., Tel: 886-2-2596-9388 Ltd. Website: None. Address: 12F, No. 156, Sec. 3, Minsheng E. Rd., Songshan Dist., ■ Taishin Venture Capital Investment Co., Ltd. Taipei City 105, Taiwan (R.O.C.) Address: 18F, No.118, Sec. 4, Ren-ai Rd., Da-an Dist., Taipei Website: http://www.deloitte.com.tw City 106, Taiwan (R.O.C.) Tel: 886-2-2545-9988 Tel: 886-2-2706-6919 Website: None. VI. Names of Exchanges Where Overseas Securities ■ Taishin Securities Investment Trust Co., Ltd. Are Listed and Methods of Inquiry: None. Address: 13F, No.96, Sec. 1, Jianguo N. Rd., Jhongshan Dist., Taipei City 104, Taiwan (R.O.C.) Tel: 886-2-2501-1000 Website: http://www.tsit.com.tw ■ Taishin Securities Investment Advisory Co., Ltd. Address: 16F, No.118, Sec. 4, Ren-ai Rd., Da-an Dist., Taipei City 106, Taiwan (R.O.C.) Tel: 886-2-5589-9558 Website: http://www.tss-c.com.tw WorldReginfo - eac7b8aa-a6a7-4ef5-bcce-71042370289d CONTENTS 1. Message to Shareholders 03 2. Brief Introduction to the Financial Holding Company 08 3. Corporate Governance 12 4. Fund-Raising Activities 57 5. Operating Status 71 6. Financial Status 117 7. Financial Status, Review of Business Performance, 305 and Risk Management 8. Special Notes 322 9. Items with major effect on shareholders’ benefits or 331 securities prices in 2014 and as of the date for the publication of the 2015 annual report WorldReginfo - eac7b8aa-a6a7-4ef5-bcce-71042370289d WorldReginfo - eac7b8aa-a6a7-4ef5-bcce-71042370289d Message to Shareholders 01WorldReginfo - eac7b8aa-a6a7-4ef5-bcce-71042370289d I. Message to Shareholders Dear shareholders, The global economy as a whole exhibited mild recovery in 2014, despite significant diversity in the performances of major economies. The U.S. economy expanded by 2.4%, achieving its highest growth in nearly four years; the Eurozone, though undergoing recovery, posted a growth rate of only 0.8% due to structural problems and uneven competitiveness among EU members. The increase of consumption tax in Japan has had a direct impact on private consumption; although the country was able to avoid a recession by the 4th quarter, economic growth for the full year was marginal at 0.1%. China has posted a full-year growth of 7.4%, the lowest in 24 years. In light of the reforms and structural changes that the nation is going through, this slowdown should endure over the next few years. Mass production of shale gas in the United States led to a series of price cuts from OPEC; furthermore, the dwindling demands for oil had caused oil prices to fall since the second half of the year, which significantly reduced global inflationary pressures. In an attempt to stabilize prices and avoid deflation, Europe and Japan had both stepped up their expansionary monetary policies, causing a major shift of capital that created more volatility to the financial market. As of today, more than 20 countries have reduced interest rates and joined the race in currency depreciation. Businesses will have to adapt to lower margins as the world enters the age of “New Mediocre” characterized by low interest rate, low growth and low inflation. Taiwan’s economic performance is largely determined by the rest of the world. Although Europe, China and Japan had achieved lower than expected growth, growth in the U.S. had driven Taiwan’s export volume to a new height of US$313.8 billion for the whole year. Meanwhile, sales of Trade and Food Service held steady and contributed to a total business revenue of NT$14 trillion, which also set a new record. Driven by domestic and foreign demand, Taiwan achieved an economic growth of 3.74% in 2014, outperforming Korea, Hong Kong and Singapore for the first time since 1999. The stock market performed well, with the weighted average index closing at 9,307 at the end of 2014, up 8.1% from the previous year and set a new year-end record (the previous high was 9,624 in 1989). Apart from improved fundamentals, this performance was also contributed by the policies of Financial Supervisory Commission and an inflow of foreign capital. With more competitive in global financial markets and further cross-strait banking deregulation underway, the Financial Supervisory Commission (FSC) has opened the banking industry to more offshore opportunities including OBU (offshore banking unit), OSU (offshore securities unit) and OIU (offshore insurance unit), and promote financial services and products import substitution that contributed to the growth of profitability in the local banking industry. In 2014, local banks as a whole produced cumulative pre-tax earnings of MT$320.1 billion, ROA of 0.79%, and ROE of 11.65% while maintaining NPL ratio at 0.25% and coverage ratio at 516.4%; all the aforementioned metrics have shown improvement from the year before. In response to FSC’s ambition of building Taiwan’s stature as an Asia Pacific banking hub, local banks have been actively venturing into overseas market including China, and searching for merger opportunities as a quick means to grow. A one-time loss of $14.8 billion was recognized during the year following the company's loss of control over Chang Hwa Bank. In 2014, consolidated after-tax profit amounted to NT$9.648 billion, of which NT$1.624 billion were attributable to shareholders of Taishin Financial Holdings. This represented an EPS of NT$0.08, an ROE of 0.73%, and net worth per ordinary share of NT$11.21.If the one-time loss was excluded, the company would have delivered record- high performance with consolidated after-tax profit amounting to NT$24.423 billion, of which NT$16.374 billion were 4 WorldReginfo - eac7b8aa-a6a7-4ef5-bcce-71042370289d Message to Shareholders 2014 ANNUAL REPORT 01 attributable to shareholders of Taishin Financial Holdings; this would have represented a growth of 18.7% and 18.3%, respectively, an EPS of NT$1.78, an ROE of 14.74%, and net worth per share of NT$12.89. In November 2014, Fitch Ratings gave the company a long-term credit rating of A+(twn) and a short-term credit rating of F1(twn), while Taiwan Ratings Corp. gave the company a long-term rating of “twA “ and a short-term rating of “twA-1;” both rating agencies had concluded a “Stable” outlook for the company. In terms of capital structure, the company was able to maintain its capital adequacy ratio at a healthy 122.70%, and reduce debt ratio from 23.4% at the end of 2013 to 21.5% at the end of 2014. With regards to international banking businesses, the company has established one financial leasing company in Nanjing and one in Tianjin to provide leasing, trade and insurance agency services. Once the Cross-Strait Service Trade Agreement takes effect, the company will accelerate its branch and subsidiary deployments in Mainland China. Following its success with the Hong Kong Branch, Taishin Bank had opened its second overseas branch in June 2014 at one of the world’s most prominent financial hubs - Singapore. Meanwhile, the Brisbane, Tokyo and Myanmar Branches are currently in the midst of preparation, and an application for opening a Vietnam Branch is scheduled to be submitted in 2015. In the future, the company will continue to expand its overseas presence, offering more comprehensive and higher quality services to customers.