1. Spokesperson Name：Jerry Harn Title ：President Tel ：（886）2-2771-6699#62111 E-mail：[email protected] Acting Spokesperson Name：Sunny Yao Title ：Executive VP Tel ：（886）2-2771-6699#62700 E-mail：[email protected] 2. Contact Information – Corporate Headquarters and Branches Please see page 20 3. Stock Registration Agent Name：Fubon Securities Co., Ltd. Address：2F, No.17, Hsuchang St.,Taipei, Taiwan, R.O.C. Website：www.fubon.com 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 Room 2510, One International Finance (886)-852-2509 Centre One Harbour View Street Central, 0200 Hong Kong 5. Certified Public Accountants for Fiscal Year 2013 CPAs：Jessie Wu, S. C. Huang 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 CONTENTS I. Message to Shareholders 1 II. Corporate Profile 4 1. Introduction 4 2. Organizational Structure 6 III. Business Operations 10 1. Business Information 10 2. Business Strategies and Business Plans for 2013 12 3. Research & Development Plans 15 4. Employees Profile 15 IV. Special Notes 16 1. Dividend Policy and Implementation Status 16 2.Implementation of the Internal Controls System 17 V. Headquarters and Branches 20 Appendix ： Annual Financial Reports for 27 2013 and 2012 I. Message to Shareholders In 2013, despite continuing recovery, the global economy witnessed only limited growth momentum, making Taiwan‟s economic performance fail to meet expectations. Weak demand in Europe, sub-par growth in China, lower domestic demand due to a decline in substantive wages, and low stock trading added further to the headwinds on Taiwan's economy in the first half of the year. The economy gradually picked up in the second half, thanks to gradual stabilization of a number of international economic indices and sustained private investment. According to the Cabinet-level Directorate General of Budget, Accounting, and Statistics (DGBAS), Taiwan's economy grew by 2.11% in 2013, slightly higher than 2012's 1.48%. Amid the lackluster economic performance, Taipei Fubon Bank still managed to stage steady growth in both sales and profit margin, thanks to the backing of the abundant resources of its parent firm, Fubon Financial Holding, and further strengthening of cross sales with affiliates and customer relationships. In institutional banking, the bank adjusted customer makeup and bolstered its platform for renminbi (RMB)-denominated products by expanding cross-border RMB businesses, loans, and transactions. In retail banking, the bank boosted customer satisfaction with wealth-management services, strengthened management of customer investment portfolios, deepened understanding of customers' risk tolerance and needs for wealth management, and offered, through advanced risk-management mechanism, tailor-made wealth-management products. In housing loans, the bank closely followed market trends and endeavored to consolidate existing assets to enhance the quality of customers and collateral. The bank also raised its product visibility, customer satisfaction, and profit margins by increasing sales of products with higher interest spreads, raising added value on housing loans, and making greater use of digital marketing tools. In the credit-card business, the bank actively cultivated topnotch customer segments and attracted market attention by seizing market trends. It also built up customer loyalty with Fubon cards highlighting "convenience" and "fun." In the unsecured-loan sector, the bank continued to cultivate quality credit-card holders, solicit salary-transfer accounts, and group customers, in addition to lifting product visibility and competitiveness through flexible risk management, convenient payment channels, and digital-media promotion. While pursuing business growth and profits, the bank still carefully implemented risk management. Consequently, as of the end of 2013, the bank's non-performing loan (NPL) rate and NPL coverage rate stood at the remarkable levels of 0.12% and 973.96%, respectively, laying a solid foundation for the bank's development. Thanks to satisfactory business performance and asset quality, Taiwan Ratings announced on Nov. 19, 2013 that it maintained the bank's long-term credit rating at "twAA+" and short-term credit rating at "twA-1+," on top of a "stable" outlook, underscoring the bank's industry-beating profitability and asset quality. In 2014, major international forecast bodies have taken a positive outlook for the global economy despite a number of uncertainties, such as the impact of the scaling down of the U.S. quantitative easing policy on emerging economies. The optimism is linked to the subsidence of the European sovereign-debt crisis, recovery of the U.S. economy, and steady growth of the Japanese economy. With the government also planning measures to bolster the economy, the DGBAS predicted that Taiwan's economy will grow 2.82% in 2014. Fubon hopes to enhance business performance and profits through organizational restructuring and joint marketing. In addition, it will actively upgrade service quality and develop competitive products to meet customer needs. Following its takeover of Shanghai-based First Sino Bank, the bank will also continue to advance towards its goal of becoming a premier regional bank in Asia by way of business cooperation and integration of resources through a financial service platform spanning China, Taiwan, and Hong Kong. - 1 - Overview of operations in 2013 and plans for 2014: 1. 2013 Business Report As of the end of 2013, the bank's outstanding deposits stood at NT$1,351.2 billion, up 8.36% over a year earlier and outstanding loans reached NT$1,102.7 billion, up 7.42%. Net interest income amounted to NT$15.78 billion in 2013, up 7.83%, with fee income growing 2.06% to NT$8.45 billion and total net income jumping 15% to NT$33.63 billion. Operating expenses grew by 5.69% to NT$15.58 billion. In 2013, after-tax net profits hit NT$12.1 billion, with after-tax earnings per share reaching NT$1.57. 2. Summary of 2014 Business Plan With Taiwan's economy expected to grow moderately in 2014, the bank will further enhance risk vigilance and strengthen risk recognition, implement risk-management mechanisms, and increase operational efficiency and quality. Moreover, the bank will step up efforts to establish a service-oriented corporate culture with an aim to become the most trustworthy bank in the minds of customers. (1). Institutional Banking Business In institutional banking, the bank will continue to provide various products and services to customers under the strategy of consolidating existing businesses and tapping business opportunities across the Taiwan Straits, taking advantage of a platform spanning Taiwan, mainland China, Vietnam, and the U.S., as well as joint efforts by customer- and product-oriented marketing teams. In order to expand its business scale, the bank will accelerate deployment of overseas offices, enhance the operations of overseas branches, broaden its service reach to meet the global operational needs of customers, and set up regional and industrial matrixes. The bank will also continue cultivating the customer base of small- and medium-sized enterprises (SMEs), increase the asset share contributed by SMEs, and further expand cross sales of products to utilize internal resources and cultivate core customers. In product planning and infrastructure, the bank will continue launching new types of trade financing businesses and actively deploying RMB-related businesses to increase business scale in this segment and meet customer needs. In addition, the bank will continue establishing basic core systems, strengthening credit-reviewing function, and integrating the inquiry function of financial trading systems, as well as set up overseas core systems and overseas business network to enhance operating efficiency and support the development of regional business. In financial trading, the bank will expand the scope and capability for quotes for RMB-denominated products, develop foreign currency-denominated bond trading, and diversify deployment in positions of various currencies to respond to market changes, meet customer needs and achieve balanced development for different profit sources. Meanwhile, the bank will further strengthen cooperation and strengthen market-making function with peers to hone the brand image of Taipei Fubon Bank in the international financial market. - 2 - (2). Retail Banking Business In the mortgage segment, the bank will consolidate existing mortgage assets and offer a spectrum of products for customers. In terms of sales channels, the bank will intensify cross-sales of products and expand the magnitude and depth of dealings with customers. Regarding credit cards, the bank will strengthen cultivation of high-consumption customer groups and promote the status of Taipei Fubon card as the first-choice card to increase customer loyalty. The bank will concentrate on high-value cards, eliminate weak cards, and launch new co-branded cards in partnership with major enterprises. Customer satisfaction is an important factor in the wealth-management business. In line with the principle of active risk management for customers, the bank will continue building customer wealth. It will