FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES Consolidated Financial Statements June 30, 2010 and 2009 (With Independent Auditors’ Report Thereon) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc Independent Auditors’ Report The Board of Directors Fubon Financial Holding Co., Ltd.: We have audited the accompanying consolidated balance sheets of Fubon Financial Holding Co., Ltd. and its subsidiaries (the Company) as of June 30, 2010 and 2009, and the related consolidated statements of income, changes in stockholders’ equity, and cash flows for the six-month periods ended June 30, 2010 and 2009. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to issue an opinion on these financial statements based on our audit. We conducted our audits in accordance with generally accepted auditing standards and the “Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants” of the Republic of China. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements audited by us present fairly, in all material respects, the financial position of Fubon Financial Holding Co., Ltd. and its subsidiaries as of June 30, 2010 and 2009, and the results of their operations and their cash flows for the six-month periods then ended, in conformity with the “Principles for Compiling the Financial Statements of Financial Holding Companies”, the related financial accounting standards of the “Business Entity Accounting Act” and of the “Regulation on Business Entity Accounting Handling”, and Republic of China generally accepted accounting principles. August 10, 2010 Note to Reader The accompanying consolidated financial statements are intended only to present the financial position, results of operations and cash flows in accordance with the accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such consolidated financial statements are those generally accepted and applied in the Republic of China. The auditors’ report and the accompanying financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of, the English and Chinese language auditors’ report and financial statements, the Chinese version shall prevail. WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES Consolidated Balance Sheets June 30, 2010 and 2009 (Expressed in thousands of New Taiwan Dollars) Change of Change of Assets 2010 2009 percentage Liabilities and Stockholders’ Equity 2010 2009 percentage Cash and cash equivalents (notes 4, 34 and 35) $ 133,007,569 69,115,858 92 Due to Central Bank and other banks $ 80,009,237 106,321,361 (25) Due from Central Bank and call loans to banks (note 5) 96,898,404 286,970,343 (66) Commercial paper payable, net (notes 19 and 35) 7,908,739 1,084,067 630 Financial assets measured at fair value through profit or loss Financial liabilities measured at fair value through profit or (notes 6, 34 and 35) 47,667,992 46,896,645 2 loss (note 18) 33,126,480 34,413,137 (4) Bonds and bills purchased under resell agreements (notes 7 Bonds and bills sold under repurchase agreements (notes 7 and and 34) 35,995,363 7,844,913 359 34) 15,120,171 12,497,526 21 Receivables, net (notes 8 and 27) 137,960,837 101,549,217 36 Payables (note 27) 100,786,768 51,922,686 94 Loan, net (notes 9 and 34) 1,052,210,779 1,016,795,323 3 Deposits (notes 20 and 34) 1,269,768,922 1,194,476,347 6 Available-for-sale financial assets, net (notes 10 and 35) 681,417,198 609,958,447 12 Bonds payable (notes 21 and 37) 80,878,169 71,464,872 13 Held-to-maturity financial assets, net (notes 11 and 35) 426,652,907 161,790,861 164 Other borrowings (notes 22 and 35) 5,600,000 3,800,000 47 Investments under equity method, net (note 12) 3,797,886 1,505,334 152 Other financial liabilities (notes 13 and 25) 165,477,961 151,406,129 9 Other financial assets, net (notes 13 and 25) 209,619,896 155,993,975 34 Reserve for operations and other liabilities (note 23) 1,260,419,238 997,691,738 26 Debt investments in non-active market (note 14) 291,770,014 259,625,534 12 Other liabilities (notes 24 and 26) 11,154,201 12,365,595 (10) Real estate investments, net (notes 15 and 34) 60,184,654 39,377,004 53 Total liabilities 3,030,249,886 2,637,443,458 15 Fixed assets, net (note 35) 23,645,844 23,979,446 (1) Total stockholders’ equity (note 28) Intangible assets, net (note 16) 11,935,890 10,933,704 9 Common stock 81,385,520 81,253,615 - Other assets, net (notes 17, 27, 34 and 35) 18,469,640 20,856,247 (11) Stock dividend to be distributed 4,069,298 - - Total stock 85,454,818 81,253,615 5 Capital surplus 54,185,938 53,917,063 - Retained earnings: Legal reserve 23,962,851 21,969,088 9 Special reserve 1,285,676 13,842,513 (91) Unappropriated retained earnings 20,847,274 6,213,732 236 Total retained earnings 46,095,801 42,025,333 10 Equity adjustments Cumulative foreign currency translation adjustments (409,049) (74,497) 449 Unrealized gain (loss) on financial assets 10,523,406 (5,592,534) (288) Net loss from unrecognized pension cost 712,827 (260,124 ) (374) Total equity adjustments 10,827,184 (5,927,155) (283) Treasury stock (195,220 ) (238,220 ) (18) Minority interest 4,616,466 4,718,757 (2) Total stockholders’ equity 200,984,987 175,749,393 - Total Assets $ 3,231,234,873 2,813,192,851 15 Total Liabilities and Stockholders’ equity $ 3,231,234,873 2,813,192,851 15 See accompanying notes to consolidated financial statements. WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES Consolidated Statements of Income For the six-month periods ended June 30, 2010 and 2009 (Expressed in thousands of New Taiwan Dollars, except earnings per share) Change of 2010 2009 percentage Interest income (note 34) $ 30,139,523 27,548,191 9 Less: interest expense (note 34) 4,633,112 6,713,604 (31) Net interest income 25,506,411 20,834,587 22 Non-interest income, net Service fees income, net (note 34) 185,045 1,390,726 (87) Insurance income, net (notes 31 and 34) 206,516,677 123,298,923 67 Gain on financial assets or liabilities measured at fair value through profit or loss 5,150,015 2,797,749 84 Realized gain on available-for-sale financial assets 6,898,632 5,611,852 23 Income from equity investments under equity method (note 12) 76,532 63,991 20 Gain on real estate investments (note 34) 500,829 293,107 71 Foreign exchange loss (5,251,233) (1,211,509) 333 Impairment loss (notes 10, 13, 14 and 15) (176,633) (2,976,491) (94) Other non-interest income (note 34) 2,026,675 1,511,369 34 Net revenue 241,432,950 151,614,304 59 Bad debt expense (note 9) 393,316 2,456,854 (84) Provision for insurance reserves (note 32) 210,339,339 125,708,592 67 Operating expense: Personnel expenses 9,645,312 8,734,194 10 Depreciation and amortization expenses 1,055,748 1,069,082 (1) Other general and administrative expense 6,594,510 6,142,205 7 Total operating expense 17,295,570 15,945,481 8 Net income before income tax 13,404,725 7,503,377 79 Income tax expense (note 27) 2,460,445 1,166,926 111 Net income $ 10,944,280 6,336,451 73 Attribution: The Company’s income $ 10,694,098 6,213,732 72 Minority interest’s income 250,182 122,719 104 $ 10,944,280 6,336,451 73 Before tax After tax Before tax After tax Earnings per shares (EPS) (note 30): Earnings per share – basic $ 1.62 1.32 0.92 0.77 Earning per share – diluted $ 1.62 1.31 - - See accompanying notes to consolidated financial statements. WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES Consolidated Statements of Changes in Stockholders’ Equity For the six-month periods ended June 30, 2010 and 2009 (expressed in thousands of New Taiwan dollars) Retained Earnings Stock Cumulative Unrealized Stock Foreign Gains or Dividend Unappropriated Currency Losses Common to be Capital Legal Special Retained Translation Unrecognized on Financial Treasury Minority Stock Distributed Surplus Reserve Reserve Earnings Adjustments Pension Cost Instruments Stock Interest Total Balance on January 1, 2009 $ 77,190,935 - 49,091,476 20,881,553 2,341,478 12,588,570 196,777 (260,124) (18,315,548) - 4,559,355 148,274,472 Capital increase by cash (note 28) 4,062,680 - 4,825,587 - - - - - - - - 8,888,267 Net income - - - - - 6,213,732 - - - - - 6,213,732 Appropriations of retained earnings (note 28): - Legal reserve - - - 1,087,535 - (1,087,535) - - - - - - Special reserve - - - - 11,501,035 (11,501,035) - - - - - - Change in minority interest - - - - - - - - - - 159,402 159,402 Cumulative foreign currency translation adjustments - - - - - - (271,274) - - - - (271,274) Unrealized gains or (losses) from remeasurement of financial instruments - - - - - - - - 12,723,014 - - 12,723,014 Treasury stock - - - - - - - -