Stock Code:2845 www.feib.com.tw mops.twse.com.tw Published Date: March 29, 2021 2020 Annual Report Spokesperson Name: Jiann Jong Lin Title: Chief Executive Vice President Tel.:(02) 2378-6868 Email: [email protected] Acting Spokesperson Name: Shin Hwa Chou Title: Executive Vice President Tel.:(02) 2378-6868 Email: [email protected] Headquarter and branches address and telephone Add.: 26, 27F, No. 207, Sec.2, Dunhua S. Rd., Daan Dist., Taipei City, Taiwan Tel.: (02) 2378-6868 Branches address refer to context Stock Agent Name: Oriental Securities Corporation Add.: 13F., No. 16, Xinzhan Rd., Banqiao Dist., New Taipei City, Taiwan Tel.:(02) 7753-1699 Website: http://www.osc.com.tw Credit Rating Institution Name: Fitch Australia Pty Ltd., Taiwan Branch Add.: Rm. A2, 23F., No. 68, Sec. 5, Zhongxiao E. Rd., Xinyi Dist., Taipei City 110, Taiwan Tel: (02) 8175-7600 Recent Annual Financial Statement Auditor Name: Deloitte & Touche CPA: Chun-Hung Chen, Ying-Chou Chen Add.: 20F, Taipei Nan Shan Plaza, No. 100, Songren Rd., Xinyi Dist., Taipei, Taiwan Tel.: (02) 2725-9988 Name of Exchange of Overseas Securities and Inquiry Contact Luxembourg Stock Exchange Website: https://www.bourse.lu/ ISIN: US30733T2069, US30733T1079 Our website https://www.feib.com.tw CONTENTS I. Chairperson’s Message 5 II. Company Profile 12 1. Date of Establishment............................................................................................... 12 2. Company History ...................................................................................................... 12 III. Corporate Governance Report 14 1. Organization Structure .............................................................................................. 14 2. Information on Directors, Management Team, Department Heads, Branch Manager and Consultants ....................................................................................... 17 3. Implementation of Corporate Governance .................................................................. 44 4. Information on CPA audit fees ................................................................................... 84 5. Replacement of CPAs ................................................................................................ 85 6. Chairman, President, and Managers in Charge of Finance or Accounting who holds any positions in the Bank’s Independent Auditing Firm or its Affiliates within the recent year ............................................................................................................. 86 7. The Changes in Shareholding .................................................................................... 86 8. Relationship among the Top Ten Shareholders ............................................................ 93 9. Shareholding in Affiliated Enterprises ......................................................................... 94 IV. Fund Raising Status 95 1. Capital and Shares ................................................................................................... 95 2. Issuance of Bank Debentures .................................................................................... 101 3. Issuance of Preferred Stocks ..................................................................................... 106 4. Issuance of Global Depository Receipt ........................................................................ 107 5. Issuance of Employee Stock Options .......................................................................... 107 6. Issuance of New Restricted Shares to Employee ......................................................... 107 7. Mergers and Acquisitions ........................................................................................... 108 8. The Execution of Fund Utilization Plan ........................................................................ 108 V. Operation Highlights 109 1. Business Activities .................................................................................................... 109 2. Human Resources .................................................................................................... 119 3. Corporate Social Responsibility .................................................................................. 123 4. Number of Full Time Non-Managers, the Average and Median of Non-Managers’ salary ..................................................................................................................... 125 5. IT Equipment ........................................................................................................... 126 6. Labor Relations ........................................................................................................ 127 7. Important Contracts ................................................................................................. 130 8. Securitization ........................................................................................................... 132 Far Eastern International Bank 2 2020 Annual Report CONTENTS VI. Financial Information 133 1. Five-Year Financial Summary ..................................................................................... 133 2. Five-Year Financial Analysis ....................................................................................... 139 3. 2020 Audit committee’s Review Report ....................................................................... 144 4. 2020 Audited Consolidated Financial Statement .......................................................... 145 5. 2020 Audited Non-Consolidated Financial Statement ................................................... 145 6. Impact to the Bank from Financial Difficulty of the Bank or Its Affiliates ........................ 145 VII. Review of Financial Conditions, Financial Performance, and Risk Management 146 1. Analysis of Financial Status ....................................................................................... 146 2. Analysis of Financial Performance .............................................................................. 147 3. Analysis of Cash Flow ............................................................................................... 147 4. Major Capital Expenditure in Recent Years .................................................................. 148 5. Investment Policy in Last Year, Main Causes of Profits or Losses, Improvement Plans and Investment Plans for the Coming Year ........................................................ 148 6. Analysis of Risk Management .................................................................................... 149 7. Contingency Plans for Crisis Management ................................................................... 162 8. Other Important Items ............................................................................................. 162 VIII. Special Disclosure 163 1. Summary of affiliated companies ............................................................................... 163 2. Private Placement and Financial Debentures ............................................................... 165 3. The Company Shares Held or Disposed of by Subsidiaries ............................................ 165 4. Other Major Supplementary Information .................................................................... 165 5. Major Events Affecting Shareholders’ Equity or Share Prices ......................................... 165 IX. Memorabilia (including Headquarter and Branches) 166 Far Eastern International Bank 3 2020 Annual Report Chairperson Ms. Ching-Ing Hou Far Eastern International Bank 4 2020 Annual Report Chairperson’s Message Looking back in 2020, COVID-19 pandemic spread globally, causing slump of global economy, and disruption of trade flow and supply chains. However, due to proper control of COVID-19 pandemic, prosperous recovery of domestic market, and 10 consecutive months of export growth, Taiwan’s GDP grew by 3.11% in 2020, as the highest among 4 Asia Tigers. Looking forward to 2021, COVID-19 vaccines will help ease the pandemic, and the global economy is expected to recover gradually, which would then be good for Taiwan's trade expansion and growth in various industries. In the post-pandemic era, the low interest rate environment will continue eroding profitability of Taiwan’s financial industry. Only by accelerating digital finance development, controlling risk, and strengthening ESG governance will banks be able to achieve goals of business sustainability. In 2020, global economy went into recession due to pandemic. FEIB nonetheless strived for long-term steady growth, that total asset was NT$680 billion by end of 2020, or 4% growth, and core revenue of net interest income and net fee income also grew by 4%. But, due to increased provision of overseas bad debts, and earnings volatility from financial investment, FEIB’s net income was NT$2.519 billion in 2020, and earnings per share (EPS) was NT$0.73, or 31% down. FEIB continued core business growth in the mist of pandemic. Digital Banking was in rapid growth, that off-counter rate and digital customer acquisition rate were at all-time high at 94% and 41%, respectively. Via pioneering “Open Banking” application, the digital sub-brand “Bankee” expanded customer base and deposit balance, and gained numerous award-winning recognition. Retail Banking won three wealth management awards from “Wealth Magazine”, was, for three consecutive years, recognized by Financial Management Awards from the HK- based “The Asset