0424_§§�H���Ê≠^§�2018�~�‾��≠±.pdf 1 2019/4/24 下午3:33 CTBC BANK CO., LTD. 2018 ANNUAL REPORT Stock Code:5841 Printed on April 26, 2019 http://www.ctbcbank.com http://mops.twse.com.tw C M Y CM MY CY CMY K CTBC Bank Co., Ltd. Fitch Australia Pty Ltd., Taiwan Branch Address: No. 166, 168, 170, 186, 188, Jingmao 2nd Rd., Nangang Address: Suite 1306, 13F., No. 205, Tun Hwa N. Rd., Dist., Taipei City 115, Taiwan (R.O.C.) Songshan Dist., Taipei City 105, Taiwan (R.O.C.) Tel: +886-2-3327-7777 Tel: +886-2-8175-7600 Website: http://www.ctbcbank.com Website: http://fitchratings.com/site/taiwan Spokesperson Moody’s Investors Service Hong Kong Limited Name: Ya-Ling Chiu Address: 24F., One Pacific Place, 88 Queensway, Admiralty, Position: Executive vice president Hong Kong Tel: +886-2-3327-7777 Tel: +852-3758-1300 Email: [email protected] Website: http://www.moodys.com Acting Spokesperson Overseas exchange for trading of company Name: Roger Kao securities Position: Senior executive vice president (None) Tel: +886-2-3327-7777 Email: [email protected] For the contact information of our headquarters and various branches in Taiwan and overseas, please refer to page 35 Stock Transfer Agency Agency: Corporate Trust Operation and Service Department, CTBC Bank Co., Ltd. Address: 5F., No. 83, Sec. 1, Chongqing S. Rd., Zhongzheng Dist., Taipei City 100, Taiwan (R.O.C.) Tel: +886-2-6636-5566 Website: http://www.ctbcbank.com Certified Public Accountants Names: Jeff Chen, Lin Wu Business Office: KPMG Certified Public Accountants Address: 68F., No. 7, Sec. 5, Xinyi Rd., Xinyi Dist., Taipei City 110, Taiwan (R.O.C.) Tel: +886-2-8101-6666 Website: http://www.kpmg.com.tw Credit Rating Institutions Taiwan Ratings Corp. Address: 49F., No. 7, Sec. 5, Xinyi Rd., Xinyi Dist., Taipei City 110, Taiwan (R.O.C.) Tel: +886-2-8722-5800 Website: http://www.taiwanratings.com S&P Global Ratings Address: Unit 1, Level 69, International Commerce Centre, 1 Austin Rd., West Kowloon, Hong Kong Tel: +852-2533-3500 Website: http://www.standardandpoors.com 2018中信銀行英文封面裡.indd 1 2019/5/10 下午6:17 Contents I. Letter to shareholders................................................................................................................ 2 II. Company profile A. Company overview............................................................................................................... 6 B. The organization................................................................................................................... 11 III. Business overview A.Business Serformance........................................................................................................... 17 B. Employees............................................................................................................................. 21 C. Social responsibility……………………............................................................................. 21 IV. Dividend policy and earnings distribution A. Dividend policy and execution status.................................................................................... 29 B. Impact of proposed stock dividend on the Bank’s business performances and EPS…….... 29 C. Information relating to compensation of employees, directors, and supervisors.................. 30 V. Internal control statement…….................................................................................................. 32 VI. Audit Committee 5eport on last year’s financial statement..................................................... 34 VII. Head office and domestic branches........................................................................................... 35 <Appendix 1> Consolidated Financial Reports for 2018 <Appendix 2> Annual Financial Reports for 2018 1 I. Letter to shareholders Dear Shareholders: With Taiwan’s economy sustaining moderate growth and a slight increase in loan demand momentum throughout the market in 2018, CTBC Bank was able to continue its outstanding performance, achieving record-high profits in its three major business domains of corporate banking, retail banking, and capital markets. The Bank’s various businesses also received significant recognition from domestic and international industry assessment institutions, further demonstrating its position as Taiwan’s banking industry leader. 2018 business plan and implementation results For last year, we reported an industry-leading NT$95.4 billion of net revenue, NT$35.7 billion of consolidated pre-tax income, and NT$29.7 billion of consolidated after-tax income, while our consolidated after-tax ROE reached 10.32%. The Bank’s consolidated net revenue grew by 2% from the 2017 fiscal year and its consolidated pre-tax income decreased by 3%. The pre-tax income budget achievement rate was 100%. Excluding one-off property disposal gains, its consolidated pre-tax income rose by 5%. A highlight of our business development in 2018 was our continued leadership in Taiwan’s mobile payments market. In this direction, we have introduced more diverse payment tools and expanded our mobile payment channels. Our LINE Pay co-branded card was the driving force behind our credit card issuance volume topping the market in 2017 and 2018. Our success in engaging social media communities was crucial to cultivating younger consumer groups. Last year also saw our active international expansion of recent years pay off, with the Bank’s overseas profits increasing by 22%. The excellent performance of Thailand’s LH Financial Group, in which CTBC Bank invested in 2017, was particularly demonstrative of the benefits of our network’s synergies. Xiamen Jinmeixin Consumer Finance Co., Ltd., a joint venture established in Xiamen by CTBC Bank and two mainland Chinese companies, began operations toward the end of 2017. Its future development is looking bright as it realized profits within its first fiscal year of operations. We place great importance on customer experience. To this end, we strive to develop innovative and intuitive digital financial services. For example, noting that a growing number of customers are accessing financial services through their mobile devices, we upgraded our Home Bank app in 2018 to include industry-leading and user-friendly functions like voice-command transfers, a simplified log-in process, faster browsing, more diverse payment methods, and a robo-adviser. This combination of innovative technology and robo-advisory services is providing local customers with a new financial experience. CTBC Bank’s digital innovation plan also includes its physical branches across Taiwan, all 152 of which have been upgraded to allow digital operations. Furthermore, we launched D mobile financial service, which combines online and offline financial services across 2 various channels such that the services provided are no longer subject to the time and location constraints of physical branches. We have also continued to use ATMs as a centerpiece of our digital financial service efforts; in 2018, we launched first-of-their-kind smart X-ATMs, which integrate four major functions: finger-vein recognition, multi-language support, coin deposits, and foreign currency withdrawal. The Bank also developed technology that integrates Big Data and facial recognition and can be used in the future to detect suspicious cash withdrawals and prevent fraud. In addition, CTBC Bank harnessed blockchain technology to successfully accelerate the trade financing process. The Bank also applied the same technology to its payment confirmation services to provide a verifiable, trustworthy money flow mechanism that can greatly increase the operational efficiency of merchant clients and reduce the risks of identity theft and fraud. Regarding organizational changes, CTBC Bank established in September 2018 an International Business Group charged with international business management and development. The group directly supervises the International Country Management Division, the Global Financial Institutions Division, all the regional divisions, and the Overseas Division, Retail Banking. Established in January 2018, the International Country Management Division is responsible for the policy, guidelines planning, overseas business management, project planning, and business coordination of overseas affiliates. Effectively integrating the business coordination and governance structure of these affiliates facilitates communication between them and headquarters, in turn benefiting our international expansion. In addition, to expand our base of high net worth customers and further fulfill their needs, CTBC Bank established a Private Wealth Management Division in November 2018. It is charged with the segment management of high net worth customers in order to meet the market’s needs, enhance customer satisfaction, and grow company profits. Both the Bank’s innovation and expertise were honored by domestic and international industry organizations and publications in 2018. We were named the Best Bank in Asia at the Financial Insights Innovation Awards held by International Data Corporation. In addition to being the top- rated Taiwanese bank for the sixth consecutive year in %UDQG)LQDQFH¶s Global 500 survey of the world’s top banking brands, we were crowned the Best Bank in Taiwan by FinanceAsia for the 17th time. For its institutional banking services, CTBC Bank was named Taiwan’s Best Commodities Derivatives House by The Asset for the eighth time and Taiwan’s Best Trade Finance Bank by Global Finance for the 11th time. We also received the Best Private Bank