Stock Code: 2892

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2022 ANNUAL REPORT
Date：Feb. 28, 2023
This report is also available at our website.
(http://www.firstholding.com.tw)
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FIRST FINANCIAL HOLDING

Contents	Contents
Financial Highlights		2
I.	Letter to Shareholders	4
II.	Company Profile	14
III.	Corporate Governance	16
IV.	Capital Overview	126
V.	Operation Results	132
VI.	Financial Overview	196
VII.	Financial Performance Review & Risk Management	224
VIII.	Supplementary	258
Appendix. Financial Statement		264

This English version annual report is a translation of the Chinese version and is not an official document of the shareholders’ meeting. If there is any discrepancy between the English version and Chinese version, the Chinese version shall prevail.

Financial Highlights

2022 Net Income Breakdown by Subsidiaries

98.7% 2.0% 0.3% 0.4% 0.7% -2.1% First Bank First Securities FSIC First Life First Financial AMC Others[2]

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in NT$ mn
2022 Net Income % of Group1
First Bank 20,328 98.7
First Securities 403 2.0
FSIC 76 0.4
First Life 62 0.3
First Financial AMC 154 0.7
Others [2] (427) (2.1)
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Estimated by sum-of-the-parts method.
Including other subsidiaries and Financial Holding standalone.

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Net Income Consolidated basis, in NT$ mn EPS Consolidated basis, in NT$
2022 20,596 2022 1.56
2021 19,739 2021 1.49
2020 16,807 2020 1.27
ROAE Consolidated basis, in % ROAA Consolidated basis, in %
2022 9.18 2022 0.52
2021 8.86 2021 0.55
2020 7.62 2020 0.50
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FFHC at a Glance

Consolidated basis, data as of December 31, 2020, 2021 and 2022

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2022 2021 2020
Income statements (in NT$ mn)
Net Revenue 67,756 62,604 59,568
Expenses (43,269) (39,171) (39,948)
Income before tax 24,487 23,433 19,620
Net income 20,596 19,739 16,807
EPS (in NT$) 1.56 1.52 1.31
Adjusted EPS (in NT$) [1] 1.56 1.49 1.27
Balance sheets (in NT$ mn)
Total assets 4,157,196 3,739,594 3,494,502
Total liabilities 3,933,073 3,515,047 3,273,295
Total shareholders’ equity 224,123 224,547 221,207
Shares issued (in mn shares) 13,223 12,964 12,836
Dividends (in NT$)
Cash dividends [2] 0.80 1.00 0.90
Stock dividends [2] 0.30 0.20 0.10
Total dividends [2] 1.10 1.20 1.00
Ratios (%)
ROAE 9.18 8.86 7.62
ROAA 0.52 0.55 0.50
Double Leverage Ratio [3] 110.38 108.75 107.55
Group CAR 125.16 130.35 125.21
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Credit Ratings

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S&P BBB/A-2/Stable
Moody’s A2/Stable
Taiwan Ratings twAA-/twA-1+/Stable
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EPS is adjusted retroactively for stock dividends.
2022’s dividend proposal is subject to final approval at 2023 annual shareholders’ meeting.
Double Leverage Ratio = Long-term equity investment/Shareholders’ equity.

Chairperson, First Financial Ye-Chin Chiou

I. Letter to Shareholders

Strengthen Corporate Sustainable Competitiveness to Face New Challenges in the Global Political and Economic Landscape

Reflecting on the overall global economic situation in 2022, most European and American countries

began to adapt to coexist with the coronavirus at the start of the year, with expectations that the global economy would continue to recover. However, the war between Ukraine and Russia caused a surge in global raw material and energy prices. Furthermore, as the pandemic abated, central

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banks in various countries gradually implemented monetary tightening policies. This process was accelerated due to the conflict in Ukraine and Russia, leading to interest rate hikes to combat inflationary pressures. The result was increased volatility in the international financial market and concerns about a global economic recession. In addition to these factors, the imbalance in the food supply chain caused by global climate change has led to an ongoing crisis in economic development, and the US-China trade and technology war has continued to cause tightening in the global supply chain, all of which have increased the downward pressure of the global economy. Along with geopolitical risks, the spread of global inflationary pressures, and the slowdown in international trade volume, these factors have had far-reaching and long-lasting effects on various regions. This situation could lead to a prolonged global economic stagnation similar to that experienced during a long COVID recovery period.

On the domestic front, as the impact of the pandemic subsides and epidemic prevention measures are gradually eased, private consumption is steadily recovering. However, subdued global economic demand and ongoing supply chain inventory adjustments are impeding production and expansion of foreign trade demands. Furthermore, corporate capital investment has slowed due to weak global economic conditions and interest rate hikes, significantly limiting the growth momentum of private investment. The Directorate General of Budget, Accounting, and Statistics has released the

latest gross domestic product (GDP) and economic outlook, showing a 2.45% economic growth rate for the full year of 2022. Looking ahead, the government aims to counteract the downward risks of the global economy through a range of measures, including moderate fiscal expenditure expansion, enhancement of the six core strategic industries, and promotion of industry innovation and net-zero transition to further integrate global industrial chains. The government will also focus on strengthening post-pandemic economic and social resilience. As domestic pandemic prevention measures are gradually relaxed and borders are opened, the gradual return of daily economic activities will foster moderate domestic economic growth driven by domestic demand.

Looking forward to 2023, the Group recognizes the changes in the domestic and international economic and financial situations, including the ongoing conflict between Ukraine and Russia, persistent global inflationary pressures, and the geopolitical competition between China and the US, as well as the trend of global supply chain relocation and netzero transition. To address these challenges, we will build on our solid business foundation to enhance operational resilience, create new post-pandemic momentum, expand our presence in overseas markets, and improve the quality of our core businesses. We will also make risk management, internal control, legal compliance, information security, and anti-money laundering part of our corporate culture. By combining our core businesses with ESG considerations and leveraging the Group’s

investment and financing capabilities, we will lead in promoting carbon reduction and sustainable development among our customers and the industry.

2022 Operational Achievements

Activate Resilient Profit-Growth Model Towards Sustainable Innovation and Transformation

In the prior year, the Group leveraged the postpandemic economic restart to strengthen operational resilience and promote businesses. First Bank secured its predominant position in SME loans for the 13th year running. First Securities was commended for two consecutive years by the Taiwan Stock Exchange for “Excellent Securities Firm for Institutional Investor Stewardship Information Disclosure” while supporting StarLux Airlines to list on the emerging stock market. Moreover, First Securities Investment Trust won investment mandates from the Bureau of Labor Funds for the second consecutive year. In addition, the scale of First Life Insurance’s investment funds continued to expand, reaching NT$66 billion.

Following energy transfer policies, First Consulting actively raised capital for green funds. In terms of digital transformation, the number of First Bank’s iLeo digital accounts tops the fifth largest in the market. First Securities, First Investment Trust, and First Insurance continued to strengthen its electronic trading platform, introduce RPA to improve efficiency, and advertised online policy purchasing

business. Moreover, to further innovate business, First Bank has supported the growth in green financing and sustainable bonds and has integrated cross-departmental resources to provide high-networth wealth management and comprehensive trust services. Furthermore, First Securities Investment Trust has launched new funds such as core strategic construction and space satellite ETF.

In terms of operating profit, the Group and its banking subsidiaries concluded record-high profits. The Group ended 2022 with NT$4.16 trillion in total assets. Our consolidated net revenue was NT$67.756 billion. Annual net profit was NT$20.596 billion, an increase of 4.34% from 2021, and after-tax profit was NT$1.56 per share. Profit from banks reached NT$20.328 billion, an advance of 15.16% from 2021. Both the financial holding company and the bank exceeded the NT$20 billion profit mark. Despite the headwind against markets, the subsidiary companies outside the bank displayed remarkable resilience in maintaining their operations.

As we pursue decent financial results, we are also committed to governance that is rooted in integrity and aimed at a sustainable future. We focus on corporate governance, environmental sustainability, employee well-being, and social inclusion, continuously enhancing the value of “top brand in sustainable finance.”

Regarding sustainability and net-zero transition, our company has been selected by the Financial Supervisory Commission to be a member of the

President, First Financial Fen-Len Chen

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“Sustainable Finance Pioneer Alliance.” We have also received the “Elite Award-Best ESG AwardDistinction Award” while our bank has received six major awards, including the “Taiwan Corporate Sustainability Award.” Furthermore, we have joined the Partnership for Carbon Accounting Financials (PCAF) and the Science-Based Targets Initiative (SBTi) to gradually achieve the Group’s mid to long-term carbon reduction goals.

Strengthen Resilience on Management, Stabilize Growth Momentum

In retrospect of the Group’s operations in 2022, we have prioritized trends such as global supply chain transfer and low-carbon transformation. In addition, by establishing a strong foundation in legal compliance, internal control systems, information security, and risk management, we have advanced in both physical and virtual channels and constantly

innovated and refined our service models to create optimal customer value. We aim to continue to promote corporate governance and implement core strategies such as green finance to enhance our operating structure’s resilience and ensure sustainable competitiveness for the Group.

Below are the financial and operational highlights of our banking, securities, investment trust, life insurance, and other subsidiaries for the year 2022.

First Bank

To align with global political and economic developments, steadily expand on a global level, and strengthen local operations, First Bank added its American subsidiary, the San Mateo branch, opened in February 2022. Other than that the bank’s Frankfurt branch in Germany was granted approval for establishment in May 2022 and opened in January 2023, becoming the first German branch among Taiwan banks. Overall, the bank’s overseas branches continue to rank first among state-owned banks. The bank has been actively implementing digital strategies to effectively manage its online customer base, optimize digital channels, and utilize crosssector digital marketing, resulting in recognition from various stakeholders and being named a “Digital Transformation Leader” in the banking and financial technology survey conducted by the Taiwan Academy of Banking and Finance. Additionally, the bank is committed to promoting green finance by incorporating ESG screening factors into investment and financing decisions, collaborating with

customers to achieve sustainable development, and enhancing its climate governance capabilities by monitoring climate-related financial disclosure (TCFD) and carbon disclosure (CDP) issues.

First Bank’s pre-tax net profit in the year 2022 reached a new high of NT$23.788 billion, an increase of 13.72% from 2021. While business and profit have grown steadily, the quality of assets has also improved simultaneously. The year-end nonperforming loan ratio was 0.18% while the loan-loss coverage ratio was 709.24%, reflecting the bank’s determination in taking control of risks. First Bank reported an after-tax net profit of NT$20.328 billion in 2022 or NT$2.15 per share.

First Securities

In 2022, the trading volume of the Taiwan Stock Exchange dropped by over 30%, leading to a decrease in brokerage fees and financing interest income. As a result, the investment banking and asset management businesses also experienced a simultaneous decline in operations, leading to falling profits for First Securities. In recent years, the firm has continued to reduce operating expenses and focus on expanding its per capita and securities counter market share in the brokerage business, expanding its sub-brokerage trading volume, and enhancing wealth management service revenue. In addition, First Securities is dedicated to strengthening its digital financial product services, improving digital FinTech capabilities, and creating a youthful brand image. Its percentage of trades in

electronic trading rose to 78.35%, up from 77.05% in 2021. In regards to the underwriting business, the firm will strengthen the quality of IPO and SPO engagements while actively engaging in leading and supporting such cases. It will also seek to boost revenue from advisory services and improve the quality of advised cases submitted. As for the asset management business, First Securities will continue to strengthen risk management, optimize current positions and boost overall profit through the development of new trading strategies. First Securities reported after-tax net profits of NT$403 million, or NT$0.66 per share, for 2022.

First Securities Investment Trust

As of the end of 2022, total assets under management were NT$100.1 billion, in which assets of publicly-offered funds totaled NT$91.4 billion, ranking 14th among its peers. Continuing its trend of innovative branding in recent years, First Securities Investment Trust Company (FSITC) launched two new funds in 2022 - the “FSITC Taiwan Core Strategic Infrastructure fund,” the first fund in Taiwan to focus on national economic policies, and the “FSITC Aerospace and Satellite ETF,” the only fund in Taiwan to feature space satellite themes. FSITC also secured the mandate to manage the Labor Pension Fund for the second consecutive year, demonstrating its commitment to expanding its asset management business and boosting its overall scale. In addition, responding to the government’s policy and aiming to develop its private equity fund business, FSITC established a wholly-owned subsidiary, First Private

Capital Co., Ltd., which completed its registration on November 1, 2022, making FSITC the first publicowned investment trust to obtain a license to operate a private equity business. First Securities Investment Trust reported after-tax net profits of NT$76 million, or NT$1.27 per share, for 2022.

First Life Insurance

To enlarge its business scale, First Life Insurance has been actively boosting its bancassurance and external channel sales momentum. Through a focus on product transformation and digital service upgrades, the company has successfully increased its company value and profitability. Although overall profits declined in 2022 due to market volatility, some of the company’s products such as variable-rate life insurance, mortgage insurance and other protection products saw growth of 175.30%, 37.06%, and 15.00%, respectively, compared to the previous year. Total premium income for 2022 stood at NT$16.369 billion while first-year premium income was NT$12.711 billion. In the future, the focus will be on protection and regular payment products, aiming for steady growth in premiums. Apart from that the company will continue to strengthen its risk-bearing capacity. In 2022, the capital adequacy ratio was 608.55%, and asset reclassification will be implemented starting in 2023. First Life Insurance reported an after-tax profit of NT$62 million, or NT$0.12 per share, for the year 2022.

First AMC, First Venture Capital & First Consulting

In 2022, First Financial AMC saw stable profitability owing to increased income from non-performing loan recovery and urban renewal financing. First Venture Capital’s profit was reduced compared to the previous year due to market volatility, resulting in lower disposal gains and valuations. Meanwhile, First Consulting’s earnings remained steady due to stable management fee income from green energy funds and decent cost control. First AMC, First Venture Capital, and First Consulting reported after-tax net profits of NT$154 million, NT$67 million, and NT$6 million, respectively, for the year 2022.

2023 Priorities: Maintain Stable Profit Growth and Achieve Sustainable Net-Zero Transition

The Group’s key business strategies and operational plans for 2023 are divided into five aspects and described below:

Cultivate overseas markets and expand the business foundation.
Focus on core business and enhance customer penetration.
Deepen digital transformation and lead innovative services.
Strengthen capital structure and refine risk control and compliance.
Pursue net-zero goals and implement sustainable finance.

As the banking subsidiaries are striving to become regional financial institutions as part of the business expansion plans, we will continue to evaluate the establishment of overseas branches in key regions such as Europe, America, Japan, and the new southbound region, and implement differentiated management by region to enhance operational performance. On the other hand, the banks will be directing their attention towards post-pandemic recovery and rising interest rate opportunities, with a specific target on medium to large clients in the industrial parks and manufacturing industry. They aim to establish mechanisms to maintain relationships between the Group and medium to large enterprises while integrating financing needs arising from factory construction by enterprises returning to Taiwan, cross-border financing, green transformation, and renovation of aging buildings. Additionally, the banks will continue to promote highnet-worth wealth management and comprehensive trust services, while grouping customers based on their asset levels to steadily expand operations.

First Securities aims to improve the effectiveness of its distribution channels, with a focus on enhancing the quality of underwriting cases. The goal for their investment positions is to reduce volatility and achieve stable interest income while strengthening profitability through diversified business. The investment trust subsidiary is focused on building a comprehensive product line and has planned a “ten billion-dollar fund expansion program” to develop flagship funds that will boost overall sales momentum. Lastly, First Life Insurance is working to

increase the proportion of protection-type and longterm products in their product structure, while also implementing a stable investment strategy to build a foundation for sustained long-term operations.

In recent years, the Group has prioritized the main business of each subsidiary to enhance its channel management. Leveraging the core channel banks’ extensive customer base, the Group has integrated its marketing platform to drive overall volume and profit growth. We have also utilized its financial resources to expand cross-selling synergies between subsidiaries and improve customer loyalty by offering high-quality and competitive products. Additionally, in response to the post-pandemic financial landscape, we are embracing digital transformation and cross-industry alliances to extend the reach of our core financial products into various open banking services. Furthermore, we are cultivating talent in the field of grey-hair finance to address the dual challenges of an aging population and declining birth rates. We will actively promote comprehensive trust services, high-new-worth wealth management, and diverse insurance products to meet the needs of our clients. In line with the global sustainability trend, the Group will strengthen the sustainability finance DNA of all members, explore new business opportunities and markets, guide customers to achieve sustainable net-zero goals, and expand the scope of Group business and overall profitability as it enhances the synergy for comprehensive marketing.

In the realm of digital innovation, driven by the concept of contactless services, the post-

pandemic era has accelerated the process of digital transformation. This includes transformation in remote services, AI, big data, automation, and information security. Furthermore, the integration of finance with emerging technologies has brought new inspirations. By linking different fields, a mutually beneficial financial ecosystem can be created to realize the value of inclusive finance. Bank subsidiaries will build active-active data centers, optimize IT service management systems, apply data to support business promotions, and deploy digital platforms and membership points to enhance customer stickiness. The securities subsidiary will build a cloud-based smart order system, optimize the features of the mobile platform First Securities Maji app, and strategize the use of self-media to create a youthful brand image. Furthermore, the investment trust and life insurance subsidiaries will continue to integrate digital services and products, centering on customer experience, and through operational process optimization, achieve one-stop financial services that realize the vision of “finance as life.”

In terms of capital strengthening, efforts will be made to ensure that the bank subsidiaries comply with D-SIBs regulations and that the life insurance subsidiary smoothly integrates the changes of IFRS 17 international accounting standards and ICS 2.0 international insurance capital standards. At the same time, while maintaining the appropriate capital adequacy of the Group and considering a sustainable operation, and enhancing shareholder equity, continuous efforts will be made to boost the capital efficiency of the financial holding company and

its subsidiaries which improve operational performance. Additionally, while pursuing a stable transformation and striving to expand our business, we are committed to complying with regulations, implementing internal control and risk management, and enhancing our Group’s ability to prevent money laundering and combat terrorism financing. We will also focus on improving employees’ risk awareness and capabilities, strengthening our risk-based management, and building a resilient and sustainable competitive edge.

To further deepen the culture of sustainable development within the Group and increase awareness of sustainable finance and climate change risks, active efforts are being made to establish an ESG performance assessment mechanism for subsidiaries. ESG and inclusive finance will be incorporated into daily business operations. In addition to integrating ESG evaluation factors into investment and financing processes, industryspecific indicators for sustainable performance will be developed to assist clients in implementing ESG practices. The management of climate change issues will also be integrated into the company’s operations, assessing potential financial impacts and developing corresponding counter measures to strengthen the Group’s resilience against climate risks. Moreover, in response to the trend of achieving net-zero carbon emissions, our company has joined the Financial Supervisory Commission’s Sustainable Finance Leading Alliance and continues to adopt PCAF financial carbon assessment and SBTi decarbonization pathway, to establish a sound sustainable finance ecosystem and lead Taiwan’s industries to accelerate towards the netzero target.

Ratings Affirmed, Reflecting Strong Integrity and Forward- Looking Operations

Credit ratings reports issued by Taiwan Ratings, S&P, and Moody’s all indicate that the Group enjoys strong competitive edge and robust corporate governance, as well as steady corporate values, diverse client bases, stable financial structure and risk control, and sound asset quality, as reflected in the financial market. Our long-term and short-term credit ratings and outlooks are listed below.

Ratings Agency	Taiwan Ratings ST LT Outlook Date twA-1+ twAA- Stable Oct. 25, 2022	Taiwan Ratings ST LT Outlook Date twA-1+ twAA- Stable Oct. 25, 2022	Taiwan Ratings ST LT Outlook Date twA-1+ twAA- Stable Oct. 25, 2022	Taiwan Ratings ST LT Outlook Date twA-1+ twAA- Stable Oct. 25, 2022
First Financial Holding
First Bank	twA-1+	twAA+	Stable	Oct. 25, 2022
First Securities	twA-1+	twAA-	Stable	Aug. 30, 2022
First Life	--	twAA-	Stable	Aug. 4, 2022

Ratings Agency	S&P ST LT Outlook Date A-2 BBB Stable Oct. 25, 2022	S&P ST LT Outlook Date A-2 BBB Stable Oct. 25, 2022	S&P ST LT Outlook Date A-2 BBB Stable Oct. 25, 2022	S&P ST LT Outlook Date A-2 BBB Stable Oct. 25, 2022
First Financial Holding
First Bank	A-1	A	Stable	Oct. 25, 2022
First Securities	--	--	--	--
First Life	--	--	--	--

Ratings Agency	Moody’s ST LT Outlook Date -- A2 Stable Mar. 29, 2023	Moody’s ST LT Outlook Date -- A2 Stable Mar. 29, 2023	Moody’s ST LT Outlook Date -- A2 Stable Mar. 29, 2023	Moody’s ST LT Outlook Date -- A2 Stable Mar. 29, 2023
First Financial Holding
First Bank	P-1	A1	Stable	Mar. 29, 2023
First Securities	--	--	--	--
First Life	--	--	--	--

Looking ahead, we will navigate the challenges brought on by changing global economic conditions with caution. With global perspectives, localized operations, and professional services, our group aim at enhanced business resilience and steady growth. We will also align with the global ESG trend, collaborate with our supply chain and customers, and work towards a net-zero transformation for a mutually beneficial cycle.

Sincerely,

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Ye-Chin Chiou Chairperson, First Financial

II. Company Profile

First Financial Holding Co., Ltd.(“FFHC”) was incorporated on January 2, 2003. History of FFHC:

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Date Description
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FFHC was incorporated with First Commercial Bank as its flagship entity and listed on Taiwan
Jan, 2, 2003
Stock Exchange under the stock code 2892.
Successfully raised the equivalent of NT$17.3 billion via a global depository receipt program, the
Jul. 28, 2003
first ever issued by a Taiwanese financial institution
Further diversified its business portfolio into securities trading, property and casualty insurance
Jul. 31, 2003 and asset management on July 31, 2003, by acquiring First Taisec Securities Co., Ltd., Mingtai Fire
& Marine Insurance Co., Ltd. and National Investment Trust Co., Ltd.
Participation of Subsidiary First Securities rights issue of NT$938 mn to expand its capital and
Oct. 3, 2003
business.
Participation of Subsidiary First Bank rights issue of NT$14 bn to expand its capital and strengthen
Oct. 6, 2003
business.
Subsidiary National Investment Trust Co., Ltd.was permitted to reduce its capital of NT$ 516 mn
Apr. 7, 2004
for FFHC to build up venture capital subsidiary.
Set up First Financial AMC of capital of NT$ 250 mn, mainly engages in the acquisition and
May 31, 2004
management of non-performing loans.
Founded First Venture Capital, a NT$ 300 mn capital subsidiary targeting invest in start-up
Jun. 3, 2004
companies for development potentials.
Founded First Financial Mgt Consulting for a capital of NT$ 20 mn, mainly providing consulting
Jun.10, 2004
and Mgt services to venture capital funds.
Participated rights issue from First Securities for NT$1.65 bn to strengthen its financial structure
Aug. 31, 2004
and capital adequacy level.
Founded First P&C Insurance Agency for a capital of NT$ 30 mn, targeting on property insurance
Sep. 16, 2004
company service.
Invested in Taipei Financial Center Corporation (Taipei 101) with a discounted price of NT$ 6 per
Nov. 23, 2004
share for a total of 50 mn shares, amounting to NT $ 300 mn.
Participation the 2nd rights issue from First Venture Capital for a total of NT$ 400 mn to expand
Jul. 5, 2005
its scale.
Sep. 2, 2005 Sold-out subsidiary Mingtai Fire & Marine Insurance Co., to MitsuiSumitomo Insurance Group.
Acquired 300 common shares of Taiwan Asset Management Corp. for NT$ 12.04 per share from
Dec. 22, 2005
First Bank, a total of NT$ 3.612 bn deal.
Apr. 26, 2007 Joint-Ventured company- First-Aviva Insurance Co., was set up with Aviva UK group.
Participating the 3rd rights issue from First Venture Capital for a total of NT$ 300 mn to expand
Aug. 14, 2007
its scale.
Jan. 2, 2008 First-Aviva Insurance Co., was established, 51% ownership for a total of NT$ 1.145 bn.
Renamed subsidiaries as First Securities, First Securities Investment Trust and First Financial
Dec. 31, 2008
Management Consulting for a better recognition of First Financial Group.
May. 22, 2009 Independent Director system was adapted.
Aug. 25, 2009 Participating First Bank’s rights issue of NT$ 3 bn to lift capital adequacy ratio.
Oct. 10, 2009 Renamed Subsidiary First-Aviva Insurance as First Life Insurance Co.,
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Date Description
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Set up Remuneration Committee under Board of Directors of FFHC to better facilitate corporate
Aug. 25, 2011
governance practices, independent Directors are the committee members.
Accomplished rights issue of NT$ 16.4 bn for 800 mn common shares to assist subsidiaries’ long-
Sep. 29, 2011
term development.
Sep. 30, 2011 Participating First Bank’s rights issue of NT$ 15 bn to lift capital adequacy ratio.
Participating the 4th rights issue from First Venture Capital for a total of NT$ 500 mn to expand
Oct. 25, 2011
its scale.
Participating rights issue from First Financial AMC for a total of NT$ 1.2 bn to expand leasing
Oct. 31, 2011
business in China.
Audit Committee was set up to replace supervisor system under FFHC’s Board of Directors,
Jun. 22, 2012
independent Directors are the committee members.
Reduction of capital from Taiwan Asset Management Corp. for NT$ 2.5 per share, a total of NT$
Jul. 10, 2013
750 mn was retrieved from investment.
Participating the 5th rights issue from First Venture Capital for a total of NT$ 300 mn to expand
Sep. 19, 2014
its scale.
Based on “Implementation Rules of Internal Audit and Internal Control System of Financial
Oct. 24, 2014 Holding Companies and Banking Industries” to add group’s Chief Legal Compliance Officer and
Legal Compliance Division and adjust the organization structure of the group.
Participating First Bank’s rights issue of NT$ 5 bn to broaden its risk appetite and maintain
Dec. 15, 2014
business momentum.
Accomplished rights issue of NT$ 23.52 bn for 1.6 bn common shares to assist First Bank’s capital
Sep. 17, 2015
adequacy level for long-term development.
Sep. 18, 2015 Participating First Bank’s rights issue of NT$ 20 bn to broaden its economy scale.
Ethical Management Committee was set up under Board of Directors, all Directors are the
Oct. 29, 2015
members.
Jul. 1, 2016 First P&C Insurance Agency was dissolved and merged with First Bank.
Jul. 14, 2016 Reduction of capital from First Securities for a total of NT$ 250 mn was retrieved from investment.
Acquired Aviva International Holdings Ltd’s 49% ownership of First-Aviva, First Life Insurance
Jan. 19, 2018
became FFHC’s 100% owned subsidiary.
Mar. 20, 2018 Investing Taiwan Urban Regeneration & Financial Services Co., Ltd. for NT$ 25 mn.
Participating First Life’s rights issue of NT$ 1.5 bn to strengthen its capital structure and adequacy
Mar. 20, 2018
to explore more business opportunities.
Capital reduction from investment of Taiwan Asset Management Corp. for NT$ 2.0 per share, a
Sep. 26, 2018
total of NT$ 450 mn cash relief was received.
Leasing subsidiaries mergers under the Group to enhance operating efficiency: FCB Leasing
Apr. 11, 2019 acquired First Financial Assets Management (B.V.I.) Ltd. And indirectly owned First Financial
Leasing (Chengdu) Ltd.
May 9, 2019 First P&C Insurance Agency completed its process of dissolution.
Participating First Life’s rights issue of NT$ 600 mn to strengthen its capital structure and
May 11, 2021
adequacy to explore more business opportunities.
Participating First Life’s rights issue of NT$ 500 mn to strengthen its capital structure and
May 10, 2022
adequacy to explore more business opportunities.
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In the year of 2022 and as of report publication date:

Acquisition/reinvestment/restructuring issues: None.
Change of Directors or controlling shareholders: None.
Significant change on ownership or business model: None.
Anything else to affect equity of shareholders: None.

III. Corporate Governance

3.1 Organization

3.1.1 FFHC Operational Structure

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General Meeting of Shareholders
Ethical Management
Committee Company Secretary
Board of Directors Chief Auditor Auditing Dept.
Chairperson Strategic Development Committee
Risk Management Committee
Audit Remuneration
Committee Committee
ESG Committee
President Business Decisions Committee
President’s Office
IT Development Committee
Marketing Integration Committee
Executive Vice President Executive Vice President
Chief Cyber Security Officer Chief Compliance Officer Executive Vice President
Information Technology Compliance
Dept. Dept.
Administration Strategy
Management Dept. Planning Dept.
Risk Management Business
Dept. Development Dept.
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*A simplified version is listed.

3.1.2 Departments and Functions

1. Auditing Department

The department is responsible for audit affairs, including planning and executing internal audit, supervising audit quality of subsidiaries, recording auditing outcomes, and reporting audit results to the Board of Directors and the Audit Committee periodically.

2. Strategy Planning Department

The department is responsible for strategic planning, investment activities, M&A transactions, corporate finance management and credit rating program.

3. Business Development Department

The department includes Subsidiaries Management Unit and Marketing Integration Unit:

y[Subsidiaries Management Unit is in charge ] of the execution of investment activities and M&A transactions, long-term equity portfolio management, review of the operational targets of the subsidiaries, and admin. issues of appointment of Directors and supervisors for subsidiary companies.
y[Marketing Integration Unit is in charge of ] the cross-sales campaigns, sales targets and performance management, cross-channel integration and products bundles, clients’ relationship management, alliances planning, education and training of cross-sales activities.
y[Cyber Security Unit works for security planning, ] execution and management of subsidiaries’ information technology safety.

5. Risk Management Department

The department is responsible for implementation of risk management policies at the company and subsidiaries, outcome assessments, construction of composite risk indicators, operational risk analysis, disclosures of related information, calculation and control of the eligible capital and capital adequacy, scrutiny of the trading activities between interest related parties, establishment of the internal control systems at the company and subsidiaries.

6. Administration Management Department

y[CG Unit is responsible for corporate governance, ] ethical management, ESG, share registration affairs, compiling annual report, amendments to Articles of Incorporations and CG related rules and regulations, filing for important managerial rules and regulations, handling matters relating to shareholders meetings, preparation of minutes of Shareholders meetings, legal affairs, assistance in the directors’ compliance of law.
y[The Administration Unit is responsible for general ] affairs, cashier, documentations, company seals, human resources and payroll systems, the planning of employee training programs, public relations, and branding, etc.
y[The Accounting Unit is responsible for the funding, ] accounting and budgeting.

4. Information Technology Department

y[IT Planning Unit is responsible for construction ] of the information system, development of the group’s IT strategies, planning of information sharing, application system integration. subsidiaries’ information technologies, research, assessment and implementation of new information technology products.

7. Compliance Department

The department is responsible for planning, management and execution of the regulatory compliance system. Drafting the overall plan for antimoney laundering (AML) and combating financing of terrorism (CFT), including intra-group information sharing policies and procedures for AML/CFT purposes.

3.1.3 Committees under the Board of Directors

1. Ethical Management Committee

The committee is responsible for establishing and reviewing the ethical management policy, and shall report the implementation and improvements of the ethical management policies to the Board on a regular basis.

2. Audit Committee

The Audit Committee assists the Board in carrying out its financial oversight responsibilities and other duties as set forth in the Company Act, the Securities and Exchange Act, and other applicable laws and regulations. Matters required to be reviewed by the Audit Committee include the Company’s financial reports; internal control systems; material asset or derivatives transactions; offering or issuance of any equity-type securities; hiring or dismissal of an attesting CPA, or the compensation given thereto; and appointment or discharge of financial, accounting, or internal auditing officers.

6. Risk Management Committee

The committee is responsible for the review and approval of the risk management policy, the analysis of the capital adequacy, the monitoring and control of the risk exposure at each subsidiary, and the coordination of risk assessment work across the company and subsidiaries.

7. Business Decisions Committee

The committee is responsible for the review of the operational performances, organizational structures, investment strategies and administrative affairs at the company and subsidiaries.

8. IT Development Committee

The committee is responsible for the review of the IT development strategies, IT infrastructure, IT securities policy and resources integration at the company and subsidiaries. In addition, the committee is in charge of reviewing the annual IT plans of subsidiaries periodically and coordinating IT management across the group.

9. Marketing Integration Committee

3. Remuneration Committee

Review and determine the Group’s compensation and benefits policies, guidance and framework on the performance base, and in the evaluation and approval for the compensation of the Group’s Board members and executives regularly.

The committee is responsible for the review of the cross-sales results, channel integration program and strategic alliance plan as well as the coordination of the cross-selling issues among subsidiaries.

4. ESG Committee

Approve the annual project and action plan of the Group’s ESG target. Monitor and review the implementation on these matters. Define guidelines for editing the ESG report.

5. Strategic Development Committee

The committee is responsible for the business plan and development strategies and the monitoring of the strategic planning at the subsidiaries.

3.1.4 FFHC Subsidiaries & Affiliates

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FFHC
----- End of picture text -----

First Commercial Bank

Ownership: 100 % Shares: 9,472,500,000 shares $ invested: NT$ 114,289,806 thousand

First Securities Inc.

Ownership: 100 % Shares: 615,000,000 shares $ invested: NT$ 5,053,851 thousand

First Commercial Bank (U.S.A.) Ownership: 100 % Shares: 7,000,000 shares $ invested: USD 70,000 thousand

FCB Leasing Co., Ltd. Ownership: 100 % Shares: 400,000,000 shares $ invested: NT$ 4,000,000 thousand

First Financial Assets

Management (B.V.I.) Ltd. Ownership: 100 % Shares: 30,000,000 shares $ invested: USD 18,933 thousand

FCB Lease (Chengdu) Ltd.

FCBL Capital Int’l (B.V.I.) Ltd. Ownership: 100%

Shares: 60,050,000 shares $ invested: USD 60,050 thousand

FCB International Leasing Ownership: 100% $ invested: USD 30,000 thousand

FCB Lease (Xiamen) Ltd. Ownership: 100% $ invested: USD 30,000 thousand

Ownership: 100% $ invested: USD 18,933 thousand

First Securities Investment Trust Co., Ltd First Capital Management Inc. Ownership: 100 % Ownership: 100 % Shares: 60,000,000 shares Shares: 10,000,000 shares $ invested: NT$ 1,061,461 thousand $ invested: NT$ 89,304 thousand

First Life Insurance Co., Ltd

Ownership: 100 % Shares: 535,000,000 shares $ invested: NT$ 4,247,500 thousand

FSC Asia Investment Limited Ownership: 100 % Shares: 1,000,000 shares $ invested: USD 1,000 thousand

First Financial Assets Management Co., Ltd Ownership: 100 % Shares: 145,000,000 shares $ invested: NT$ 1,450,000 thousand

First Worldsec Securities Limited Ownership: 100 % Shares: 66,000,000 shares $ invested: HKD 66,000 thousand

First Venture Capital Co., Ltd.

Ownership: 100 % Shares: 180,000,000 shares $ invested: NT$ 1,800,000 thousand

First Private Capital Co., Ltd. Ownership: 100 % Shares: 5,000,000 shares $ invested: NT$ 50,000 thousand

First Financial Management Consulting Co., Ltd.

Ownership: 100 % Shares: 2,000,000 shares $ invested: NT$ 20,000 thousand

3.2 Director, Management Team & Divisions

3.2.1 Shares Holding of Directors

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Date First
Title M/F On Board Term Expired
Nationality Name Elected
(Note 1) Age Date Date
(Note 2)
Ye-Chin Chiou F
Chairperson ROC 2021/07/20 2024/07/19 2020/10/30
(Delegate of MOF) 68
Fen-Len Chen F
Director ROC 2021/07/20 2024/07/19 2021/05/04
(Delegate of MOF) 63
Chun-Yi Lee M
Director ROC 2023/02/20 2024/07/19 2023/02/20
(Delegate of MOF) 57
Shing-Rong Lo F
Director ROC 2021/07/20 2024/07/19 2015/10/26
(Delegate of MOF) 57
Chih-Chuan Chen M
Director ROC 2021/07/20 2024/07/19 2021/03/12
(Delegate of MOF) 56
Hsin-Lu Chang F
Director ROC 2021/07/20 2024/07/19 2021/07/20
(Delegate of MOF) 50
Shih-Yuan Tai M
Director ROC 2022/08/15 2024/07/19 2022/08/15
(Delegate of Bank of Taiwan) 61
Li-Lin Yao F
Director ROC 2022/02/08 2024/07/19 2022/02/08
(Delegate of Bank of Taiwan) 61
An-Fu Chen
M
Director ROC (Delegate of Global 2021/07/20 2024/07/19 2009/05/22
58
Investment Co., Ltd)
Independent F
ROC Rachel J. Huang 2021/07/20 2024/07/19 2018/06/26
Director 55
Independent M
ROC Chun-Hung Lin 2021/07/20 2024/07/19 2018/06/26
Director 58
Independent M
ROC Yen-Liang Chen 2021/07/20 2024/07/19 2018/06/26
Director 55
Independent F
ROC Wen-Ling Hung 2021/07/20 2024/07/19 2021/07/20
Director 62
Independent F
ROC Hung-Yu Lin 2021/07/20 2024/07/19 2021/7/20
Director 42
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Note 1: A representative of a legal entity shareholder shall indicate the name of the legal entity shareholder and shall fill in the following form 2.

Note 2: Shall fill in the first elected date, and mark disruption during the terms, if any: None.

Data as of May 1, 2023

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Shares (%) Shares (%) Shares (%) Shares (%)
1,474,578,352 11.49 1,519,110,617 11.49 103,020 0 0 0
1,474,578,352 11.49 1,519,110,617 11.49 0 0 0 0
1,474,578,352 11.49 1,519,110,617 11.49 0 0 0 0
1,474,578,352 11.49 1,519,110,617 11.49 0 0 0 0
1,474,578,352 11.49 1,519,110,617 11.49 0 0 0 0
1,474,578,352 11.49 1,519,110,617 11.49 0 0 0 0
956,887,491 7.45 985,785,492 7.45 0 0 0 0
956,887,491 7.45 985,785,492 7.45 0 0 0 0
6,002,220 0.05 6,183,486 0.05 11,958,295 0.09 0 0
0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0
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Managers who are
Spouses or Within Two
Title Name Experience Other Position Degrees of Kinship
Title Name Relation
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Title	Name	Experience	Other Position	Managers who are Spouses or Within Two Degrees of Kinship	Managers who are Spouses or Within Two Degrees of Kinship	Managers who are Spouses or Within Two Degrees of Kinship
				Title	Name	Relation
Chairperson	Ye-Chin Chiou (Delegate of MOF)	B.S, Economics, National Taiwan University. Managing Director & President, Bank of Taiwan; Director, Taiwan Financial Holdings & Mega Financial Holding & TPEX Company & Cathay Bank & Hua- Nan Financial Holding & Taiwan SMEG & Taiwan United Bank; Supervisor, Tai- Power Company.	Chairperson of First Commercial Bank; Chairperson of First Education Foundation; Chairperson of Trust Association R.O.C.; Director of National Credit Card Center; Managing Director of The Bankers Association of The Republic of China; Consultant of The Bankers Association of Taipei.	-	-	-
Director	Fen-Len Chen (Delegate of MOF)	M.S. Economics, State University of New York. EVP, First Commercial Bank; Advisor & Head, Risk Management Division, FFHC; Supervisor, FCB Leasing; Director, FCB (USA); Director; TWN Urban Regeneration & Financial Services Co.; G.M, Branch Manager, FCB.	Chairperson of First Life Insurance Co., Ltd; Managing Director of FCB; Director of Taiwan Asset MGT Corp; Director of First Education Foundation.	-	-	-
Director	Chun-Yi Lee (Delegate of MOF)	M.S. Political Science, Boston College. Secretary-General to the President, Ofce of the President; Political Deputy Minister, Ministry of Civil Service; Deputy Mayor, Chiayi City Current as Deputy Minister, Ministry of Labor.	None
Director	Shing- Rong Lo (Delegate of MOF)	B.S., Accounting, National Chunghsing University. Deputy Director of National Treasury Administration, M.O.F.; Deputy Head of Finance Dept., New Taipei City Government. Current as Director, National Treasury Administration, M.O.F.	None
Director	Chih- Chuan Chen (Delegate of MOF)	M.S. Business Management, Oklahoma City University. Director and President, Mega Securities; Portfolio Manager, Capital Securities; Independent Director & Audit Committee Member, Wan-Hai Shipping Co.; Director, Mega Futures.	Chairperson of First Securities; Director of FSA Asia Investment & First Worldsec Securities.

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Managers who are
Spouses or Within Two
Title Name Experience Other Position Degrees of Kinship
Title Name Relation
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Title	Name	Experience	Other Position	Managers who are Spouses or Within Two Degrees of Kinship	Managers who are Spouses or Within Two Degrees of Kinship	Managers who are Spouses or Within Two Degrees of Kinship
				Title	Name	Relation
Director	Hsin-Lu Chang (Delegate of MOF)	Ph.D., Information Management University of Illinois at Urbana- Champaign Associate Professor, Assis’t Professor, Information Management Department, National Chengchi University. Current as Professor, Information Management Department, National Chengchi University	Director of FCB
Director	Shih- Yuan Tai (Delegate of Bank of Taiwan)	B.S., Dept. of Mechanical Engineering, National Taiwan University of Science and Technology Managing director of Taiwan Business Bank, SEVP of Bank of Taiwan.	EVP of Bank of Taiwan
Director	Li-Lin Yao (Delegate of Bank of Taiwan)	B.S., Business Management National Open University Director of TFASC; GM of Credit Analysis Department, Bank of Taiwan	Manager of Credit Analysis Dept., Bank of Taiwan; Director of SME Credit Guarantee Fund.
Director	An-Fu Chen (Delegate of Global Investment Co., Ltd)	B.S., Pharmacy, Taipei Medical University. EVP, Transamerica Occidental Life Insurance Co; EVP, TransGlobe Life Insurance Inc., Director, Mintai Fire & Marine Insurance Company.	Director of First Life Insurance; Chairperson of Global Investment Co., Ltd.
Independent Director	Rachel J. Huang	Ph. D., Finance, National Taiwan University. Associate Professor, Finance Department, Ming Chuan University; Associate Professor, Department of Finance, Yuan Ze University; Associate Professor, Graduate Institute of Finance, National Taiwan, University of Science and Technology. Current as Distinguished Professor, Department of Finance, National Central University.	ndependent Director of First Commercial Bank; Board Member of Taiwan Risk and Insurance Association.
Independent Director	Chun-Hung Lin	Ph.D., Economics, Iowa State University, United States. M.S, Computer Science/ Engineering MGT, University of Missouri. Associate Professor, Chinese Culture University; Director, EMBA Program, Tamkang University; Dean, Dept. of Industrial Economics, Tamkang University; Director, Taiwan Economics Association. Current as Professor, Dept. of Industrial Economics, Tamkang University and Dean of Student Afairs.	Managing Independent Director of First Commercial Bank; Director of Eminent II. Venture Capital; Chairperson of Yu-Gen Inc.

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Managers who are
Spouses or Within Two
Title Name Experience Other Position Degrees of Kinship
Title Name Relation
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Title	Name	Experience	Other Position	Managers who are Spouses or Within Two Degrees of Kinship	Managers who are Spouses or Within Two Degrees of Kinship	Managers who are Spouses or Within Two Degrees of Kinship
				Title	Name	Relation
Independent Director	Yen-Liang Chen	Ph.D., Law, University of Mainz, Germany. Dean, Dept. of Law, National Taipei University; Dean, Institute of Financial and Economic Law, National Donghwa University; Professor and Dean, Dept. of Law, National Taipei University; Arbitrator, Chinese Arbitration Association; Arbitrator, Labor Disputes Dept., Taipei City Government; Member, Petitions and Appeals Committee, Hualien County; Member, Listing Qualifcation Committee, Taipei Exchange (GreTai Securities Market). Current as Professor, Dept. of Law, National Taipei University.	Independent Director of First Commercial Bank.
Independent Director	Wen-Ling Hung	Ph.D., Law, National Chengchi University Professor,Department of Administrative Police,Central Police University; Dean, Department of Administrative Police; Director of Institute of Police Policy Research; Central Police University; Director of Mega Financial Holding & Mega Bank. Current as Professor,Department og Police Policy Research, Central Police University.	None
Independent Director	Hung-Yu Lin	Ph.D., Economics,National Central University. Vice Dean, Research Division II, Taiwan Institute of Economic Research; Associate Researcher & Project Leader, Research Division II, Taiwan Institute of Economic Research; Adjunct Assistant Professor, Department of International Business, Soochow University Current as Vice Dean, Research Division II, Taiwan Institute of Economic Research	Director of Han-Tech Venture Capital Corp. & Shan-Yuan Venture Capital Corp.

Note 3: Experience related to the current position. If the person have worked in an accounting firm providing attesting or auditing service or worked in an affiliated company, please describe the title of the position and job responsibilities. Note 4: Where the chairman and the general manager or the equivalent (the highest level of managers) are the same person, have a marital relationship or are relatives within first degree of kinship, the company shall disclose relevant information: None.

3.2.2 Major Shareholders of Institution Shareholder

Data as of Apr. 18, 2023

	Data as of Apr. 18, 2023
Institution Shareholder Ministry of Finance	Major Shareholders of Institution Shareholder (Note 2) -
Bank of Taiwan	Taiwan Financial Holdings Co., (100%)
Global Investment Co., Ltd.	An-Fu Chen(98.4%), Hwei-Chi Huang(1.6%)

Note 1: Institution shareholder should list their names.

Note 2: Major shareholders of institution shareholder are institution shareholders, fill in below column.

Note 3: Where the institutional shareholder is not a corporate organization, the disclosed name of the shareholder and the holding percentage shall be the investor or donor name and the investment or donation percentage.

3.2.3 Major Shareholders of Institution Shareholders (3.2.2)

Data as of Apr. 18, 2023

	Institution Shareholder (Note 1) Taiwan Financial Holdings Co.,	Major Shareholders of Institution Shareholder (Note 2) Ministry of Finance (100%)

Note 1: Institution shareholder should list their names.

Note 2: Major shareholder and ownership.

3.2.4 Professional Qualification and Independence Analysis of Directors

Data as of May 1, 2023

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Number of
Other Public
Co., in which
Professional
the individual
Qualification Independence
is Concurrently
& Experience
Serving as an
Independent
Director
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Ye-Chin Chiou	1. Pls refer to		-
	the annual
Fen-Len Chen	report		-
	2. Company
Chun-Yi Lee	Act Article		-
	30 : N/A	-
Shing-Rong Lo			-
Chih-Chuan Chen			-
Hsin-Lu Chang			-

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	Professional Qualifcation & Experience	Independence	Number of Other Public Co., in which the individual is Concurrently Serving as an Independent Director
Shih-Yuan Tai			-
Li-Lin Yao			-
An-Fu Chen			-
Rachel J. Huang	1. Pls refer to the annual report 2. Company Act Article 30 : N/A	1. To comply with the Article 3 of “Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies” (1) Not an employee of the Company or any of its afliates. (2) Not a Director or supervisor of the Company or any of its afliates. The same does not apply to independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent. (3) Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company or ranking in the Top 10 in holdings. (4) Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of the persons in the preceding Note 2 & 3 subparagraphs or managers of Note 1. (5) Not a Director, supervisor, or employee of a corporate shareholder that directly holds 5% or more of the total number of outstanding shares of the Company or that holds shares ranking in the Top fve in holdings. Or Company Act Article 27- 1, 27-2 .(The same does not apply to independent directors appointed in accordance with the Securities and Exchange Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent). (6) Not a director, supervisor, or employee of another company or institution where a majority of the Company’s director seats or voting shares and those of that other company are controlled by the same person. (The same does not apply to independent directors appointed in accordance with the Securities and Exchange Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent)	1
Chun-Hung Lin			1
Yen-Liang Chen			1
Wen-Ling Hung			-
Hung-Yu Lin			-

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(7) Not a director, supervisor, or employee of another company or institution where the chairperson, general manager, or person holding an equivalent position of the Company and a person in any of those positions at that other company or institution are the same person or are spouses. (The same does not apply to independent directors appointed in accordance with the Securities and Exchange Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent).
(8) Not a director, supervisor, officer, or shareholder holding 5% or more of the share of a specified company or institution that has a financial or business relationship with the company. (The same does not apply in cases where the specified company or institution holds 20% or more and no more than 50% of the total number of issued shares of the Company and the person is an independent directors appointed in accordance with the Securities and Exchange Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent).
(9) Not a provider of auditing service to the company or any affiliate of the company, or a professional individual who, or an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that provides commercial, legal, financial, accounting or related services for which the provider in the past 2 years has received cumulative compensation not exceeding NT$500,000, or a spouse thereof; provided, this restriction does not apply to a member of the remuneration committee, public tender offer review committee, or special committee for merger/ consolidation and acquisition, who exercises powers pursuant to the Securities and Exchange Act or to the Business Mergers and Acquisitions Act or related laws or regulations.
Not a provider of commercial, legal, financial, accounting or related services to the company or any affiliate of the company in the past 2 years and has received compensation.
Not positioning as Independent Director for over 2 terms.

3.2.5 Diversification and Independence of the Board

3.2.5.1 Diversification of the Board

TThe Company’s Code of Corporate Governance set out the diversity policy for the Board of Directors of the Company and the appointment of directors and supervisors for its Subsidiaries. Except that the director who concurrently serves as the executives of the company or its subsidiary should not exceed one-third of the board seats, in which at least one female director should be included. Any gender should have more than one-third of the seats on the board of directors, and have industry experience in banking, insurance, securities, investment, etc., and professional skills in law, accounting, finance, taxation, technology, or risk management, and generally have the requisites to perform their duties, knowledge, skills and literacy; in addition, each of its major subsidiaries shall have at least one director with expertise in each subsidiary, and directors with different professional backgrounds, genders or fields of work should be appointed. In order to implement the above board diversity policy, the company has listed as a sustainable development goal that the single gender of directors should account for more than one-third of the board seats and that each subsidiary should appoint at least one female director or supervisor, and it will be reviewed and tracked regularly every year.

The industrial experience and professional skills of the members of the 7[th] board of directors of the company cover a wide range of fields related to the operation and management of financial holding industry. Concept, industry and risk management knowledge. Among them, female directors account for 57% of the board seats (8 seats/14 seats, the remaining seat has not been assigned), and either gender accounts for more than one-third of the board seats, and there is only one director who concurrently serves as the manager of the company or subsidiary.

Diversification of the 7[th] Board of Members

As of May 1, 2023

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Diversification Industry Experience Background & Expertise
Names Bank Insurance Security Law Accounting Finance Taxation Tech. Risk MGT Economics
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Diversifcation Names	Diversifcation Names	Industry Experience	Industry Experience	Industry Experience	Background & Expertise	Background & Expertise	Background & Expertise	Background & Expertise	Background & Expertise	Background & Expertise	Background & Expertise
		Bank	Insurance	Security	Law	Accounting	Finance	Taxation	Tech.	Risk MGT	Economics
Chairperson	Ye-Chin Chiou	V		V							V
President & Director	Fen-Len Chen	V	V							V	V
Director	Chun-Yi Lee				V
Director	Shing- Rong Lo	V				V
Director	Chih- Chuan Chen			V

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Diversifcation Names	Diversifcation Names	Industry Experience	Industry Experience	Industry Experience	Background & Expertise	Background & Expertise	Background & Expertise	Background & Expertise	Background & Expertise	Background & Expertise	Background & Expertise
		Bank	Insurance	Security	Law	Accounting	Finance	Taxation	Tech.	Risk MGT	Economics
Director	Hsin-Lu Chang								V
Director	Shih- Yuan Tai	V	V						V
Director	Li-Lin Yao	V
Director	An-Fu Chen		V
Independent Director	Rachel J. Huang	V					V			V
Independent Director	Chun- Hung Lin	V							V		V
Independent Director	Yen-Liang Chen	V			V
Independent Director	Wen-Ling Hung	V			V
Independent Director	Hung-Yu Lin										V

3.2.5.2 Independence of the Board

The Company’s 7[th] Board of Director consists of 15 directors, of which 5 are independent directors, accounting for one-third, which is superior than the Securities and Exchange Law’s regulations on the number and ratio of independent directors, and no spouse or second degree of kinship among directors, being in line with the Article 26-3(3) of the Securities and Exchange Act. All independent directors served less than three consecutive terms, which will effectively improve the quality of supervision and reduce the possibility of conflict of interest, and strengthen the independence of the board.

3.2.6 FFHC Management Team

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Spouse &
Ownership Spouse & Minor Proxy holding
Title Nation- Name M/F On Board Shareholding
ality Date
Shares (%) Shares (%) Shares (%)
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Title	Nation- ality	Name	M/F	On Board Date	Ownership	Ownership	Spouse & Spouse & Minor Shareholding	Spouse & Spouse & Minor Shareholding	Proxy holding	Proxy holding
					Shares	(%)	Shares	(%)	Shares	(%)
President	ROC	Fen-Len Chen	F	2021/06/02	0	0	0	0	0	0
EVP & Head of Strategy Planning Dept.	ROC	Annie Lee	F	2020/12/25	112,217	0	0	0	0	0
EVP & Chief Compliance Ofcer(Note )	ROC	-	-	-	-	-	-	-	-	-
EVP & Chief Cyber Security	ROC	Pei-Wen Liu	M	2022/04/21	0	0	0	0	0	0
Chief Auditor & Head of Auditing Dept.	ROC	Mico H.C. Lin	F	2020/07/20	0	0	0	0	0	0
Senior Vice President & Chief Secretary of the Board & Company Secretary	ROC	Li-Fang Hung	F	2020/06/30	5,925	0	0	0	0	0
Head of Admin. Mgt. Dept.	ROC	Mandy Horng	F	2021/05/27	13,714	0	0	0	0	0
Head of Legal Compliance Dept.	ROC	Fen-Ying Wu	F	2021/10/28	73,354	0	11,535	0	0	0
Head of Business Development Dept.	ROC	Patty Tsai	F	2022/02/24	0	0	0	0	0	0
Head of Risk Mgt. Dept.	ROC	Ferng-Chern Yang	M	2022/04/21	97,386	0	0	0	0	0
Acting Head of IT Dept.	ROC	Chih-Ping Wang	M	2022/04/21	44,454	0	63	0	0	0

Note : Mr. Chih-Kuang Chien was assigned EVP & Chief Compliance Office and to be on-board, before that, Head of Legal Compliance will act for him.

Data as of May 1, 2023

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Managers who are Spouses
or Within Two Degrees of
Experience (Education) Other Position Kinship
Relation-
Title Name
ship
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Experience (Education)	Other Position	Managers who are Spouses or Within Two Degrees of Kinship	Managers who are Spouses or Within Two Degrees of Kinship	Managers who are Spouses or Within Two Degrees of Kinship
		Title	Name	Relation- ship
M.S. Economics, State University of New York. EVP, First Commercial Bank; Advisor & Head, Risk Management Division, FFHC; Supervisor, FCB Leasing; Director, FCB (USA); Director; TWN Urban Regeneration & Financial Services Co.; G.M, Branch Manager, FCB.	Chairperson of First Life Insurance Co., Ltd.; Managing Director of FCB; Director of Taiwan Asset MGT Corp.	-	-	-
B.A.,Dept. of Int’l Trade, NTU. Head of Strategy & Planning Division & IR;VP of SME Business Dept. FCB; Director of First Life.	Director of FSITC; Member of Financial Holding Business of The Bankers Association of Republic of China.	-	-	-
-	-	-	-	-
P.h. , E.E. National Cheng-Kung University. Chair of National Center for Cyber Security Technology, Executive Yuan; Deputy Head of Cybersecurity Institution of Institute for Information Technology; EVP & Head of IT Division of FB.	EVP of FCB; Supervisor of Financial Information Service Co.,	-	-	-
M.S. Finance, National Taiwan University of Science and Technology. VP, Overseas Afairs Division, International Division; Corp. Banking Division; First Bank.	Supervisor of FS	-	-	-
B.A. Business Administration, National Taiwan University VP & Manager of Treasury Division of FB; SVP of Branch of FB; Chief Secretary of the Board of FFHC & FB	Chief Secretary of the Board of FB; Director of First Consulting & First Venture Capital	-	-	-
Bachelor of Law, National Taiwan University. VP & Manager of Admin. MGT & Planning Division of FFHC; Director of First AMC; Director of FCB Lease (Chengdu).	None	-	-	-
Bachelor of Law, National Taiwan University. SVP of Branch of FB; Manager of Special Asset MGT Division ; Head of Legal Compliance Division; Director of First Leasing.	None	-	-	-
B.S. Cooperative Economics, National Chung-Hsing University SVP & Manager of Risk MGT Division of FFHC & FB; SP of Branch Manager of FB.	Director of First Venture Capital & First Consulting.	-	-	-
M.S. Accounting, Tamkang University VP & Manager of Accounting Division of FB; SVP of Branch of FB; Deputy Head of Risk MGT Division of FFHC.	Head of Risk MGT Division of FB; Director of First Venture Capital & First Consulting.	-	-	-
B.S. Computer Science, Tamkang University Deputy Head of IT Division of FFHC; SVP of IT Division of FB.	Deputy Head of IT Division of FCB;	-	-	-

3.2.7 Employment of retired chairman and president as advisors: None

3.2.8 Remuneration of Directors, Independent Directors, President and Vice President

3.2.8.1 Remuneration of Directors at First Financial Holding and Group

Data as of Dec. 31, 2022, in NT$ and %

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Remuneration
$ and Ratio of (A+B+C+D)
Base Severance to net income
Remuneration Reimbursed
Compensation Pay (%)
(C) Pay (D)
Delegates (A) (B)
FHC FHC Group
FHC FHC FHC FHC
FHC FHC FHC FHC
Group Group Group Group
$ % $ %
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Total
Directors
(excluding 2,069,989 15,532,669 0 0 187,277,761 187,277,761 75,800 2,043,365 189,423,550 0.9197 204,853,795 0.9946
independent
directors)
(to be continued)
Relevant remuneration received by Directors
who are also employees
$ and Ratio of (A+B+C+D+E+F+G) Compensation
Salary, Profit-sharing to net income (%) paid to
Severance Pay
Remuneration and from Employee Directors from
Delegates (F)
Allowance (E) Compensation (G) invested co.,
other than
FHC FHC Group FHC FHC Group group
FHC FHC
FHC FHC
Group Group
Cash Stock cash Stock $ % $ %
Total
Directors
(excluding 5,920,100 5,920,100 0 0 0 0 0 0 195,343,650 0.9485 210,773,895 1.0234 122,400
independent
directors)
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Data as of Dec. 31, 2022, in NT$ and %

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Remuneration
$ and Ratio of (A+B+C+D)
Base Severance
Remuneration Reimbursed to net income (%)
Compensation Pay
(C) Pay (D)
Delegates (A) (B)
FHC FHC Group
FHC FHC FHC FHC
FHC FHC FHC FHC
Group Group Group Group
$ % $ %
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Independent Directors	3,600,000	3,972,000	0	0	0	0	0	0	3,600,000	0.0175	3,972,000	0.0193

(to be continued)

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Relevant remuneration received by Directors
who are also employees
$ and Ratio of Compensation
Salary, Severance (A+B+C+D+E+F+G) paid to
Remuneration Pay Employee Compensation Profit-sharing from to net income (%) Directors from
Delegates and Allowance
(F) (G) invested co.,
(E) other than
FHC FHC FHC FHC Group FHC FHC Group group
FHC FHC
Group Group Cash Stock Cash Stock $ % $ %
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Independent
0 0 0 0 0 0 0 0 3,600,000 0.0175 3,972,000 0.0193 0
Directors
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Name of Directors
Bracket Total of (A+B+C+D) Total of (A+B+C+D+E+F+G)
FHC FHC Group FHC FHC Group
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Bracket	Name of Directors	Name of Directors	Name of Directors	Name of Directors
	Total of (A+B+C+D)		Total of (A+B+C+D+E+F+G)
	FHC	FHC Group	FHC	FHC Group
Under 1,000,000	Fen-Len Chen, Shang-Chih Wang, Shing-Rong Lo, Chih-Chuan Chen, Hsin-Lu Chang, Chien-Cha Wang, Bin-Shen Kuo	Fen-Len Chen, Shang-Chih Wang, Shing-Rong Lo, Hsin-Lu Chang, Chien-Cha Wang, Bin-Shen Kuo, An- Fu Chen	Shang-Chih Wang, Shing-Rong Lo, Hsin-Lu Chang, Chien-Cha Wang, ,Bin-Shen Kuo	Shang-Chih Wang, Shing-Rong Lo, Hsin-Lu Chang, Chien-Cha Wang, Bin-Shen Kuo, An- Fu Chen
1,000,000~2,000,000 (not included)	-	-	-	-
2,000,000~3,500,000 (not included)	-	-	-	-
3,500,000~5,000,000 (not included)	-	-	-	-
5,000,000~10,000,000 (not included)	-	Ye-Chin Chiou, Chih-Chuan Chen	Fen-Len Chen	Ye-Chin Chiou, Fen-Len Chen, Chih-Chuan Chen
10,000,000~15,000,000 (not included)	Global Investment Co. Ltd.	Global Investment Co. Ltd.	Global Investment Co. Ltd.	Global Investment Co. Ltd.
15,000,000~30,000,000 (not included)	Bank of Taiwan	Bank of Taiwan	Bank of Taiwan	Bank of Taiwan
30,000,000~50,000,000 (not included)	-	-	-	-
50,000,000~100,000,000 (not included)	-	-	-	-
Above 100,000,000	MOF	MOF	MOF	MOF
Total	10	12	10	12

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Name of Independent Directors
Bracket Total of (A+B+C+D) Total of (A+B+C+D+E+F+G)
FHC FHC Group FHC FHC Group
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Bracket	Name of Independent Directors	Name of Independent Directors	Name of Independent Directors	Name of Independent Directors
	Total of (A+B+C+D)		Total of (A+B+C+D+E+F+G)
	FHC	FHC Group	FHC	FHC Group
Under 1,000,000	Rachel J. Huang, Chun-Hung Lin, Yen-Liang Chen, Wen-Ling Hung, Hung-Yu Lin	Rachel J. Huang, Chun-Hung Lin, Yen-Liang Chen, Wen-Ling Hung, Hung-Yu Lin	Rachel J. Huang, Chun-Hung Lin, Yen-Liang Chen, Wen-Ling Hung, Hung-Yu Lin	Rachel J. Huang, Chun-Hung Lin, Yen-Liang Chen, Wen-Ling Hung, Hung-Yu Lin
1,000,000~2,000,000 (not included)	-	-	-	-
2,000,000~3,500,000 (not included)	-	-	-	-
3,500,000~5,000,000 (not included)	-	-	-	-
5,000,000~10,000,000 (not included)	-	-	-	-
10,000,000~15,000,000 (not included)	-	-	-	-
15,000,000~30,000,000 (not included)	-	-	-	-
30,000,000~50,000,000 (not included)	-	-	-	-
50,000,000~100,000,000 (not included)	-	-	-	-
Above 100,000,000	-	-	-	-
Total	5	5	5	5

3.2.8.2 Remuneration of Executives at First Financial Holding and Group

Data as of Dec. 31, 2022, in NT$ and %

Title President & EVP & Chief Auditor*	Salary (A)	Salary (A)	Severance Pay (B)	Severance Pay (B)	Compensation and Allowance (C)	Compensation and Allowance (C)	Proft-sharing Employee Compensation (D)	Proft-sharing Employee Compensation (D)	Proft-sharing Employee Compensation (D)	Proft-sharing Employee Compensation (D)

President & EVP & Chief Auditor*	FHC 8,765,722	FHC Group 14,300,783	FHC 0	FHC Group 0	FHC 5,748,223	FHC Group 10,617,995	FHC		FHC Group
							Cash 843,472	Stock 0	Cash 1,579,712	Stock 0

(to be continued)

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$ and Ratio of (A+B+C+D) to net income (%)
Any compensation from
Title FHC FHC Group an invested Co. other
than group
$ % $ %
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President & EVP & Chief
Auditor*	15,357,417	0.0746	26,498,490	0.1287	226,667

*Fen-Len Chen, Annie Lee, Mei-Chu Kan(discharged in Apr.2023) , Pei-Wen Liu (on-boarded in Apr.2022) and Mico H.C. Lin.

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Name of President and Executive Officers
Bracket
FHC Parent Company and All Subsidiaries
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Bracket	Name of President and Executive Ofcers	Name of President and Executive Ofcers
	FHC	Parent Company and All Subsidiaries
Under 1,000,000	Mei-Chu Kan, Pei-Wen Liu	-
1,000,000~2,000,000 (not included)	-	-
2,000,000~3,500,000 (not included)	-	-
3,500,000~5,000,000 (not included)	Annie Lee, Mico H.C. Lin	Annie Lee, Pei-Wen Liu, Mico H.C. Lin
5,000,000~10,000,000 (not included)	Fen-Len Chen	Mei-Chu Kan, Fen-Len Chen
10,000,000~15,000,000 (not included)	-	-
15,000,000~30,000,000 (not included)	-	-
30,000,000~50,000,000 (not included)	-	-
50,000,000~100,000,000 (not included)	-	-
Above 100,000,000	-	-
Total	5	5

3.2.8.3 Employee Compensation at First Financial Holding

Data as of Dec. 31, 2022, in NT$

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Ratio of (A+B) to
Title Name Stock (A) Cash (B) Total
net income (%)
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Title	Name	Stock (A)	Cash (B)	Total	Ratio of (A+B) to net income (%)
EVP & Head of Strategy Planning Dept.	Annie Lee	0	1,907,303	1,907,303	0.0093
Chief Auditor & Head of Auditing Dept.	Mico H.C. Lin
Head of Business Development Dept.	Yung-Hua Chen*
Head of Admin. Mgt. Dept.	Mandy Horng
Head of Legal Compliance Dept.	Fen-Ying Wu
Head of Business Development Dept	Patty Tsai*

Ms Tsai was on boarded in Feb. 2022 when Ms Chen retired in Jan. 2022.

3.2.8.4 Distribution of Top 10 Employees’ Compensation at First Financial Holding

Data as of Dec. 31, 2022, in NT$

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Name Title Stock Cash
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Name	Title	Stock	Cash
Annie Lee	EVP & Head of Dept.	0	2,882,455
Yuri Y.H. Hsieh*	EVP & Chief Compliance Ofcer & Head of Dept.
Mico H.C. Lin	Chief Auditor & Head of Dept.
Yung-Hua Chen*	Head of Dept.
Mandy Horng	Head of Dept.
Li-Mei Guo	Manager
Jason Wang	Manager
K.C. Lee	Manager
Ren-Ho Chen*	Manager
Li-Chin Chiang	Auditor

*Ms. Hsieh & Ms Chen retired; Mr. Chen was reallocated to FCB in 2022.

3.2.8.5 Analysis of Remuneration of Directors and Executives in the Most Recent Two Fiscal Years

Data as of Dec. 31, 2022, in NT$

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Year 2021 2022
Title Amount % Amount %
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Year Title	Year Title	2021	2021	2022	2022
		Amount	%	Amount	%
Directors	FFHC	194,392,074	0.9848	198,943,650	0.9659
	FFHC Group	224,579,478	1.1377	214,745,895	1.0427
Executives	FFHC	23,124,678	0.1172	15,357,417	0.0746
	FFHC Group	43,546,225	0.2206	26,498,490	0.1287

3.2.8.6 Compensation Policy, Remuneration Standard, Package and performanceLink Procedures

A. Directors

Non-independent Directors: in which remuneration include monthly base salary, compensation, transportation expenses incurred in attending board meetings and health check fees of no more than NT$35,000 per person. Distribution of compensation is followed by Remuneration Committee, after evaluating Board’s performance result and company’s earnings, shall propose the remuneration plan, in which within 1% of the pre-tax profit before deduction of directors’ and employees’ compensation to the board for resolution. Meanwhile, total monthly base salary paid to directors is capped at NT$ 2,400,000 and upon board’s discretion for each director’s monthly payment. The Chairperson receives a cash retainer 1.25 times that paid to the president.
Independent director: The Company has established five independent directors. All independent directors are members of the Auditing Committee, Remuneration Committee and Ethical Management Committee. For the responsibilities, operations and performance evaluation of the independent directors and committees, please refer to the “Attendance at Board Meetings”, “Evaluation of the Board of Directors”, “Audit Committee Meeting Attendance” and “Operation of the Remuneration Committee” of this Annual Report. In addition, according to the fourth article of the “Regulation on the Scope and Responsibilities of Independent Directors”, the company’s independent directors shall only receive a fixed monthly salary and not any other remuneration provided to directors. In consideration that all independent directors are members of the functional committees, the 28th meeting of the third Board of Directors approved that each independent director shall receive a salary of NT$60,000 each month.

B. Executives

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Referenced
Payment Standard
Policy (Note)
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Base salary

The remuneration standard is recommended by Remuneration Committee, approved by the Board of Directors and regularly evaluated by Remuneration Committee.

Floating salary

Balanced evaluation from financial and non-financial performance, personal achievement and company’s future risk and recommended by Remuneration Committee, approved by the Board of Directors.

1. Performance bonus

B. Executives
Referenced Policy (Note)	Payment Standard Base salary The remuneration standard is recommended by Remuneration Committee, approved by the Board of Directors and regularly evaluated by Remuneration Committee. Floating salary Balanced evaluation from fnancial and non-fnancial performance, personal achievement and company’s future risk and recommended by Remuneration Committee, approved by the Board of Directors. 1. Performance bonus
Company Charter, Regulations on Employee Salary, Regulations on Employee Bonus, Regulations on Employee Remuneration		Indicators Proftability indicator	Weight (%) 70	Description Including the budget target achievement rate of the current year’s pre-tax proft and its growth rate compared to the previous year
		Co-marketing indicator	15	Including the budget target achievement rate of the current year’s co-marketing income and its growth rate compared to the previous year
		Cost saving indicator	15	The savings rate calculated by comparing the ratio of the current year’s operating expense after deducting personnel expense and divided by net income and the ratio of the budgeted operating expense
		Risk indicator	Add-itional	Including the current year’s asset quality, customer compliant, legal compliance and material internal control incident
		Strategic indicator		Including non-fnancial and external indicators such as corporate governance implementation efectiveness, green fnance promotion results, corporate image and credit rating results.

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Referenced
Payment Standard
Policy (Note)
----- End of picture text -----

Referenced Policy (Note)	Payment Standard	Payment Standard	Payment Standard	Payment Standard	Payment Standard
Company Charter, Regulations on Employee Salary, Regulations on Employee Bonus, Regulations on Employee Remuneration	Indicators	Weight (%)	Description
	Others
	Earnings per share(EPS)			Simple avg. of Peers	15
	Pre-tax ROE(%)				15
	Pre-tax ROA(%)				10

Note: Salary (Including President), bonus and compensation payment standard for employees shall be proposed by Remuneration Committee and reviewed and approved by the Board of Directors.

3.3 Corporate Governance Operation

3.3.1 Attendance and Performance Review at Board

During 2022, total 12 meetings were held (A), the number of meetings attended by each director was as follows:

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Attendance Attendance
Attendance
Name in Person Rate (%) Notes
by Proxy
(B) (B/A)
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Name	Attendance in Person (B)	Attendance by Proxy	Attendance Rate (%) (B/A)	Notes
Ye-Chin Chiou, Chairperson Delegate of Ministry of Finance	12	0	100.00%
Fen-Len Chen, Director Delegate of Ministry of Finance	12	0	100.00%
Shing-Rong Lo, Director Delegate of Ministry of Finance	12	0	100.00%
Shang-Chih Wang, Director Delegate of Ministry of Finance	11	1	91.67%	Resigned on Jan. 31, 2023; total 12 meetings were held (A) in 2022.
Chih-Chuan Chen, Director Delegate of Ministry of Finance	12	0	100.00%
Hsin-Lu Chang, Director Delegate of Ministry of Finance	12	0	100.00%
Chen-Chia Wang, Director Delegate of Ministry of Finance	4	0	100.00%	Resigned on May. 1, 2022; total 4 meetings were held (A) in 2022.
Bin-Shen Guo, Director Delegate of Ministry of Finance	6	0	100.00%	Assigned on Jun. 12, 2022 and resigned on Nov. 28, 2022 ; total 6 meetings were held (A) in 2022
Ming-Jen Yao, Director Delegate of Bank of Taiwan	6	0	100.00%	Resigned on Jul. 16, 2022; total 6 meetings were held (A) in 2022.
Li-Lin Yao, Director Delegate of Bank of Taiwan	11	0	100.00%	Assigned on Feb. 8, 2022; Total 11 meetings were held (A) in 2022.
Shih-Yuan Tai, Director Delegate of Bank of Taiwan	5	0	100.00%	Assigned on Aug. 15, 2022 ; total 5 meetings were held (A) in 2022
An-Fu Chen, Director Delegate of Global Investment Co., Ltd.	12	0	100.00%
Chun-Hung Lin, Independent Director	12	0	100.00%
Rachel J. Huang, Independent Director	11	1	91.67%
Yen-Liang Chen, Independent Director	12	0	100.00%

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Attendance Attendance
Attendance
Name in Person Rate (%) Notes
by Proxy
(B) (B/A)
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Wen-Ling Hung, Independent Director	12	0	100.00%
Hung-Yu Lin, Independent Director	12	0	100.00%

Other mentionable items:

I. Any of the following circumstances occur, the dates of the meetings, sessions, contents of motion, all independent Directors’ opinions and the company’s response should be specified:
(1) Matters referred to in Article 14-3 of the Securities and Exchange Act.: Since FFHC has set up Audit Committee, the Article 14-3 Article 14-3 of the Securities and Exchange Act. is not applicable.
(2) Other matters involving objections or expressed reservations by independent Directors that were recorded or stated in writing that require a resolution by the board of Directors.
II. The effort of directors in avoiding a conflict of interest, in which the name of the director, the proposal, the cause of conflict, and the director’s participation in voting are listed as follow:

Name Chairperson Ye-Chin Chiou, Director and President Fen-Len Chen, Director Hsin-Lu Chang, Independent Director Rachel J, Huang, Chun- Hung Lin and Yen-Liang Chen	Proposal Rental Re-New Project within subsidiary FCB company for the Company	Cause of confict of interest Director listed herein (left column) is a person of interest	Voting status Did not participate in discussion or voting on the proposal
Director Ming-Jen Yao and Li-Lin Yao	Release of the non- competition restriction on the 7thboard of directors of the Company	Director listed herein (left column) is a person of interest	Did not participate in discussion or voting on the proposal
President & Director Fen- Len Chen	The 2021 performance bonus for the managers of the Company	Directors listed herein (left column) are persons of interest	Did not participate in discussion or voting on the proposal
Chairperson Ye-Chin Chiou, Director and President Fen-Len Chen	Household rental subsidy or the President of the Company	Director listed herein (left column) is a person of interest	Did not participate in discussion or voting on the proposal
Director and President Fen-Len Chen	The 2022 pay-hike for the managers of the Company	Director listed herein (left column) is a person of interest	Did not participate in discussion or voting on the proposal
Chairperson Ye-Chin Chiou	Operation subsidy for the Chairperson and President of subsidiary FCB company	Director listed herein (left column) is a person of interest	Did not participate in discussion or voting on the proposal

Name Chairperson Ye-Chin Chiou, Director and President Fen-Len Chen	Proposal Operation subsidy for the President of the Company	Cause of confict of interest Director listed herein (left column) is a person of interest	Voting status Did not participate in discussion or voting on the proposal
Director and President Fen-Len Chen	The approval of the Company’s 2023 Auditing Project	Directors listed herein (left column) are persons of interest	Did not participate in discussion or voting on the proposal

III. Evaluation on the Board of Directors:

Evaluation Cycle Evaluated once every year	Evaluation Period 2022/1/1 to 2022/12/31	Evaluation Scope The overall operation of the Board of Directors and functional committees and(including Audit, Remuneration and Ethical Management) the performance evaluation of individual Directors.	Evaluation Method Self-evolution by the Board members, the Board of Directors and functional committees (including Audit, Remuneration and Ethical Management)	Evaluation Item 1. Performance evaluation of the Board of Directors: Degree of participation in the Company’s operations, knowledge of responsibilities, maintenance of internal relations and communications, improvement of the quality of the Board’s decision-making and understanding of goals and tasks, composition and structure of the Board of Directors, selection of Directors, professional and continuing education, and internal control. 2. Performance evaluation of individual directors: Degree of participation in the Company’s operations, knowledge of responsibilities, maintenance of internal relations and communications, improvement of the quality of the Board’s decision-making and understanding of goals and tasks, composition and structure of the Board of Directors, selection of Directors, professional and continuing education, and internal control. 3. Performance evaluation of functional committees (including Audit, Remuneration and Ethical Management): Degree of participation in the Company’s operations, knowledge of responsibilities, maintenance of internal relations and communications, improvement of the quality of the functional committee’s decision-making and understanding of goals and tasks, composition and structure of the functional committee, selection of committee members, professional and continuing education, and internal control.

The average score of the 2022 board of directors and individual directors performance evaluation indicators is 4.93 points in Jan. 2023. The result is “excellent”; the average score on performance evaluation of functional committees such as Audit, Remuneration and Ethical Management Committees is 4.98 points, and the evaluation result is “excellent”, which was reported on February 23, 2023 at the 21[st] meeting of the 7[th] Board of Directors.

Performance evaluation result for Board of Directors has been disclosed on our website for year 2016~2022. https:// www.firstholding.com.tw/sites/firstholding/governance/performance

IV. Goals of enhancing the functions of the board of directors during the underlying year and the last fiscal year (including setting up an audit committee or improving information transparency) and the evaluation on achieving these goals:
(1) The Company set up a compensation committee in 2011 and during the first meeting of the 7[th] board of directors on July 21[st] 2021, appointed independent directors Chun-Hung Lin, Yen-Liang Chen, Wen-Ling Hung as the 5[th] Compensation Committee, which regularly reviews the performances of the Company’s board (including Functional Committees) and managers, and the compensation policy, system, standard, and structure. The Compensation Committee also reviews the compensation of the board and managers of the subsidiary companies that require the approval of the board, to strengthen corporate governance and the compensation system. In 2022, Compensation Committees convened 8 meetings with 100% of member attendance, achieving target of each member above 2 attendances per year.
(2) The Company established an Ethical Management Committee composed of 3 independent Directors in 2015, and during the first meeting of the 7[th] board of directors, appointed independent directors Yen-Liang Chen, Rachel J. Huang, Hung-Yu Lin as the 3[rd] Ethical Management Committee, which is responsible for compiling ethics policies, reviewing the Group’s compliance to these policies and at least reporting once to the Board of Members. In 2022, the Committee convened 2 meetings with 100% of member attendance.
(3) The attendance of board meetings, major resolutions of the board, education of the directors, the result of the performance evaluation, and the diversification of the members of the board are disclosed on the Company’s website. In 2022, the board held 12 meetings with average 98.86% of directors’ attendance, each director achieved over 80% attendance target.
(4) The Company established the Regulation on the Scope and Responsibilities of Independent Directors in 2009 to ensure the independence and functionality of the board of directors and appointed three independent directors since the third board of directors. The Company fully adopted the director nomination system starting from the election of the fifth board of directors in 2015. On July 20, 2021, 15 directors (including 5 independent directors) of the 7[th] board of directors were elected according to the candidate nomination system. The number of independent directors has reached one-third of the directors, and not exceeding consecutive 3 terms of limits, also, female independent directors account for 60%. Besides, the Company’s audited consolidated financial report will be approved in Auditing Committee to strengthen the supervisory function of Audit Committee toward the Company’s financial operation.

3.3.2 Audit Committee Meeting Attendance

Total 6 meetings (A) were held in 2022:

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Attendance Attendance
Attendance
Title Name in Person Rate (%) Notes
by Proxy
(B) (B/A)
----- End of picture text -----

Title	Name	Attendance in Person (B)	Attendance Rate (%) (B/A)
Independent Director (Convener)	Rachel J. Huang	6	100.00
Independent Director	Chun-Hung Lin	6	100.00
Independent Director	Yen-Liang Chen	6	100.00
Independent Director	Wen-Ling Hung	6	100.00
Independent Director	Hung-Yu Lin	6	100.00

Other mentionable items:

I. If any of the following circumstances occur, the dates of meetings, sessions, contents of motion, resolutions of the Audit Committee and the Company’s response to the Audit Committee’s opinion should be specified:
(1) Matters referred to in Article 14-5 of the Securities and Exchange Act.

Board Date/ Term Feb. 22, 2022- the 3rdmeeting of the 4thAuditingCommittee	Matters content 2021 Business Report and Financial Statements.	Opinions from Independent Director None	Resolution Result Approved
Mar. 22, 2022- the 4thmeeting of the 4thAuditing Committee	2021 “Internal Control System Declaration”	None	Approved
	Release of the non- competition restriction on the 7thboard of directors of the Company	None	Approved
Apr. 19, 2022- the 5thmeeting of the 4thAuditing Committee	Propose distribution of 2021 earnings on AGM.	None	Approved
	Propose earnings capitalization on AGM.	None	Approved
	Propose the amendments to the Rules Governing the Acquisition and Disposal of Assets of the Company	None	Approved
May 24, 2022- the 6thmeeting of the 4thAuditing Committee	Propose the amendments to the Rules of credits and transactions between the Company and subsidiaries with parties with interest	None	Approved with revisement after following opinions from independent directors.

Board Date/ Term	Matters content Amendments on Company’s internal control system.	Opinions from Independent Director None	Resolution Result
Aug. 23, 2022- the 7thmeeting of the 4thAuditingCommittee	20222Q Consolidated Financial Statements.	None	Approved
Nov. 22, 2022- the 8thmeeting of the 4thAuditing Committee.	CPA Assignments for 2023 Company’s fnancial reports.	None	Approved after following opinions from Chairperson and independent directors reports of related parties.
	2023 Auditing Project for the Company.	None	Approved after following opinions from Chairperson and reports of related parties.

(2) Other matters which were not approved by the Audit Committee but were approved by two-thirds or more of all Directors: None.
II. If there are independent Directors’ avoidance of motions in conflict of interest, the Directors’ names, contents of motion, causes for avoidance and voting should be specified: None
III. Communications between the independent Directors, the Company’s Chief Internal Auditor and CPAs (e.g. the material items, methods and results of audits of corporate finance or operations, etc.)

Date Feb. 22, 2022	Meeting Audit Committee	Party CPA	Issues 2021 Business Report and Financial Statements. .(talks between CPA team with independent directors before meeting)	Result Approved after following opinions from Chairperson and reports of related parties.
Mar. 22, 2022	Audit Committee	Chief Auditor	1. Reports of the Company’s Legal Compliance (including personal data protection), AML and Combat- Financing of Terrorism actions for the second half of 2021 2. Reports the implementation of audit afairs of the second half of 2021 3. Reviews of FSC Investigation and Auditing opinions report for the Company of second half of 2021.	Acknowledged
			4. Internal Control System Statement of 2021	Approved
		CPA	20221Q Consolidated Financial Statements.	Approved

			Issues Result 1. Propose the amendments to the Rules of credits and transactions between the Company and subsidiaries with parties with interest Approved 2. Amendments on Company’s internal control system. Approved after following opinions from independent directors and reports of related parties. 1. 20212H Group’s report of Legal Compliance and AML discrepancies and improvements execution plan. Acknowledged after following opinions from Chairperson and independent directors and reports of related parties. 2. Risk monitoring index report for the group in the second half of 2021. Acknowledged 3. 20212H Group’s report followed by FSC Investigation Bureau’s disclosure of similar discrepancies and improvements execution plan. Acknowledged after following opinions from Chairperson and reports of related parties. 1. Reports of the Company’s Legal Compliance (including personal data protection), AML and Combat- Financing of Terrorism actions for the frst half of 2022. 2. Reports the implementation of audit afairs of the frst half of 2022. Acknowledged after following opinions from Chairperson and independent directors and reports of related parties. 3. 20221H Group’s report followed by Auditing Dept. examination. Acknowledged 4. 20222Q Consolidated Financial Statements. Approved 1. Risk monitoring index report for the group in the frst half of 2022. Acknowledged after following opinions from independent directors & Chairperson. 2. Reports of the Company’s Legal Compliance(including personal data protection), AML and Combat- Financing of Terrorism actions for the 1sthalf of 2022. 3. Group’s improvement report after FSC Investigation Bureau’s disclosure of similar discrepancies and fned cases for the 1sthalf of 2022. Acknowledged after following opinions from Chairperson and Chief Auditor. 4. Reports from subsidiaries towards internal 3-defensive gates for high-risk business Acknowledged after following opinions from Chairman	Issues Result 1. Propose the amendments to the Rules of credits and transactions between the Company and subsidiaries with parties with interest Approved 2. Amendments on Company’s internal control system. Approved after following opinions from independent directors and reports of related parties. 1. 20212H Group’s report of Legal Compliance and AML discrepancies and improvements execution plan. Acknowledged after following opinions from Chairperson and independent directors and reports of related parties. 2. Risk monitoring index report for the group in the second half of 2021. Acknowledged 3. 20212H Group’s report followed by FSC Investigation Bureau’s disclosure of similar discrepancies and improvements execution plan. Acknowledged after following opinions from Chairperson and reports of related parties. 1. Reports of the Company’s Legal Compliance (including personal data protection), AML and Combat- Financing of Terrorism actions for the frst half of 2022. 2. Reports the implementation of audit afairs of the frst half of 2022. Acknowledged after following opinions from Chairperson and independent directors and reports of related parties. 3. 20221H Group’s report followed by Auditing Dept. examination. Acknowledged 4. 20222Q Consolidated Financial Statements. Approved 1. Risk monitoring index report for the group in the frst half of 2022. Acknowledged after following opinions from independent directors & Chairperson. 2. Reports of the Company’s Legal Compliance(including personal data protection), AML and Combat- Financing of Terrorism actions for the 1sthalf of 2022. 3. Group’s improvement report after FSC Investigation Bureau’s disclosure of similar discrepancies and fned cases for the 1sthalf of 2022. Acknowledged after following opinions from Chairperson and Chief Auditor. 4. Reports from subsidiaries towards internal 3-defensive gates for high-risk business Acknowledged after following opinions from Chairman
Date May 24, 2022	Meeting Audit Committee	Party Chief Auditor	Issues 1. Propose the amendments to the Rules of credits and transactions between the Company and subsidiaries with parties with interest	Result Approved
			2. Amendments on Company’s internal control system.	Approved after following opinions from independent directors and reports of related parties.
May 24, 2022	Audit Committee Seminar for Internal Control and Legal Compliance Enhancement	Chief Auditors of the Group and self-audit team	1. 20212H Group’s report of Legal Compliance and AML discrepancies and improvements execution plan.	Acknowledged after following opinions from Chairperson and independent directors and reports of related parties.
			2. Risk monitoring index report for the group in the second half of 2021.	Acknowledged
			3. 20212H Group’s report followed by FSC Investigation Bureau’s disclosure of similar discrepancies and improvements execution plan.	Acknowledged after following opinions from Chairperson and reports of related parties.
Aug. 23, 2022	Audit Committee	Chief Auditor	1. Reports of the Company’s Legal Compliance (including personal data protection), AML and Combat- Financing of Terrorism actions for the frst half of 2022. 2. Reports the implementation of audit afairs of the frst half of 2022.	Acknowledged after following opinions from Chairperson and independent directors and reports of related parties.
			3. 20221H Group’s report followed by Auditing Dept. examination.	Acknowledged
		CPA	4. 20222Q Consolidated Financial Statements.	Approved
Oct. 27, 2022	Seminar for Internal Control and Legal Compliance Enhancement	Chief Auditors of the Group and self-audit team	1. Risk monitoring index report for the group in the frst half of 2022.	Acknowledged after following opinions from independent directors & Chairperson.
			2. Reports of the Company’s Legal Compliance(including personal data protection), AML and Combat- Financing of Terrorism actions for the 1sthalf of 2022.
			3. Group’s improvement report after FSC Investigation Bureau’s disclosure of similar discrepancies and fned cases for the 1sthalf of 2022.	Acknowledged after following opinions from Chairperson and Chief Auditor.
			4. Reports from subsidiaries towards internal 3-defensive gates for high-risk business	Acknowledged after following opinions from Chairman

Party CPA	Issues 1. 20223Q Consolidated Financial Statements.	Result Approved.
	2. 2023 CPA assignment and Financial Auditing project for the Company.	Approved after following opinions from Chairperson and independent directors and reports of related parties.
Chief Auditor	3. 2023 Legal Compliance Execution plan.	Approved.
	4. 2023 Auditing Project for the Company. (talks between self-audit team with independent directors)	Approved after following opinions from Chairperson and reports of related parties.

IV. Audit Committee Annual Highlights:

The 7[th] term Board of Directors were elected on Jul. 20, 2021, a composition of 5 independent directors with financial, riskmanagement, technology, economics and law expertise forms Audit Committee of the 4[th] term. The Audit Committee meeting will be held at least once every quarter or anytime, if needed. The functions of Audit Committee include the monitoring of financial statements auditing, selection of Company’s CPA, effectiveness of internal control/auditing, inspection evaluation, legal compliance result and potential risk control. In 2022, total 6 meetings were held with 100% attendance ratio on 4[th] term. The Company will also report to Audit Committee for internal-auditing results and inspection report semi-annually. Independent Directors will host “Seminar of Internal Control Improvements” half a year with internal auditing chiefs among group. The content of the seminar will cover legal compliance evolution, amendments of laws and regulations, legal compliance education & training, subsidiaries management and risk monitoring index in order to provide improvement recommendation or possible impact on Group’s significant defaults. Besides, the Company’s audited consolidated financial report will be approved in Auditing Committee to strengthen the supervisory function of Audit Committee toward the Company’s financial operation.

3.3.3 Disclosed Matters as Required by the Financial Company’s Corporate Governance Best Practice

For reference, please visit our website: https://www.firstholding.com.tw/sites/firstholding/governance/ manageRule

3.3.4 Discrepancies between Corporate Governance of the Financial Holding Company and Corporate Governance Best-Practice Principles for Financial Holding Companies and Explanation

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1. Financial holding company’s shareholder structure and shareholder’s rights (1) Has the fnancial holding company established internal operating procedures to handle shareholder advice, doubts, disputes and litigation matters and implemented them in accordance with the procedures? (2) Is the fnancial holding company in control of its major shareholders and their ultimate controllers?	√ √		The Company shall have a dedicated staf to handle shareholder advice, doubts, disputes and litigation matters in accordance with the rules, and shall disclose stock afairs, investor relations and spokesperson’s contact in the “Investor Relations” page of the Company’s website and in the Market Observation Post System’s company data in order to facilitate shareholder communication and provide appropriate response. The Company shall, based on the Register of Shareholders on the day stock transfer is suspended, and using the changes in shareholding information fled by internal members or major shareholders in compliance with Article 25 of the Securities and Exchange Act and Article 16 of the Financial Holding Company Act, determine the major shareholders (the top 10 shareholders) and the ultimate controllers. Please refer to the “Major shareholders of entity shareholders” and “Major shareholders” in this annual report. The Company shall also disclose the names of major shareholders and the amount and percentage of shares held in the “Shareholder’s Section” under the “Investor Relations” page of the Company’s website, and also advocate regulations stated in Article 4, 5, 16, 60 of the Financial Holding Company Act regarding outstanding voting shares issued by the same fnancial holding company being held above a certain percentage by the same person or same concerned person, and provide relevant forms for download.	No diference No diference

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(3) Has the fnancial holding company established and enforced risk control mechanisms and frewalls between the company and its afliates?	√		The group has set out complete risk management policy and related issues among each subsidiary and the Company and major subsidiaries (including Bank, broker business) have independent risk management departments to be in charge of related risk management. In order to prevent the Company and its Subsidiaries from engaging in unconventional transactions with interested parties, the Company has established the “Credit and Transaction Rules between First Financial Holding Company and its Subsidiaries and Interested Parties” in accordance with Articles 44 and 45 of the Financial Holding Company Act. The provisions states that unsecured credits shall not be extended by the bank and its insurance subsidiaries to interested parties. In the case of extending secured credits, Article 33 of the Banking Act shall apply. In addition, the Company and its major Subsidiaries (including banks, securities frms, etc.) have established independent risk management units to perform risk control on its respective businesses and have set up security related policies for information systems. In response to risk control requirements and within the scope permitted by regulations, the Company has also established the “Detailed Guidelines for Firewall Control for First Financial Holding Co., Ltd.” to form a complete frewall mechanism.	No diference
2. Members and functions of the Board (1) Has the Board set up diversifed policy and material management goal? (2) Has the fnancial holding company voluntarily established other types of functional committees in addition to the Remuneration Committee and Audit Committee established in accordance to law?	√ √		Sections 33, 36 and 43 of the Company’s Code of Corporate Governance set out the diversity policy for the Board of Directors of the Company and the appointment of directors and supervisors for its Subsidiaries. To realize the diversity policy for the Board of Directors mentioned above, the Company has set forth the sustainable goal of ensuring all independent directors will not serve three consecutive terms, independent directors shall reach more than one third of the board, and each Subsidiary appoints at least one female independent director or supervisory, and will review and follow-up on the goals regularly each year. For the implementation of diversity among the Board of the Company, please refer to “Diversity and Independence of the Board of Directors” in this annual report. Item 3, Article 25 of the Articles of Association of the Company stipulates that “in order to strengthen management functions, the Board of Directors may set up various functional special committees, and its rules of exercise shall be determined by the Board of Directors”. The audit committee, salary remuneration committee, integrity management committee, risk management committee and ESG committee have been set up.	No diference No diference

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(3) Has fnancial holding company listed at the TWSE or TPEX established a set of policies and tools to review the Board’s performance, conducted the performance review on a regular basis annually and take the results into consideration for determining the Director’s remuneration and his/ her nomination for another term? (Note 2) (4) Does the fnancial holding company regularly evaluate the independence of its certifed accountant?	√ √		1. The Company’s “Board of Directors Performance Review Method” defnes the scope, method, procedure, indicators and other related specifcations for reviewing the performance of the Board. The evaluation is performed regularly each year and deliver an internal/external evaluation report to the Board of the Meeting. 2. The Company’s Remuneration Committee shall take into consideration the result of the annual performance review of Board and other related factors, then recommend to the Board the distribution ratio for Directors’ remuneration and allotment to each Director for approval. The certifed public accountant appointed by the Company shall not be an interested party as defned in Article 45 of the Financial Holding Company Act. The Company shall regularly (once a year) evaluate under the FSC’s guidance index (AQI) to review the independence and eligibility of the certifed public accountant based on the below items and report the results to the audit committee and the Board of Directors and deliver the AQIs: A. The Company has not appointed the same accountant for seven consecutive years. B. Whether the accountant has an interested party relationship with the group; or has served as a director, supervisor, manager of the group or an employee with signifcant infuence on the cases and has left the company for less than two years. C. Whether the accountant holds the shares of the company; or there is a joint investment or beneft-sharing relationship or money lending with the company or related companies, but not limited to normal transactions with the fnancial industry. D. Whether the accountant concurrently performs the regular work of the company or related companies, and pays a fxed salary; or receiving commissions related to the company’s business. E. Whether the accountant is involved in the management function of the company or related companies to make decisions. F. As of now, whether the accountant has been punished or undermined the principle of independence.	No diference and no discrepancies between Corporate Governance Best-Practice Principles for listed Companies. No diference

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3. Has the fnancial holding company designated competent and adequate number of personnel and appoint a Company Secretary to be in charge of corporate governance afairs (including but not limited to providing Directors and Supervisors with the information needed to perform their duties, assist Directors and Supervisors to comply with law and regulations, convention of Board Meetings and Shareholder Meetings, and preparation of meeting minutes for Board and Shareholder Meetings, etc.)?	√		(1) Ms. Li-Fang Hung, Chief Secretary of the Board since June of 2020, was assigned Company Secretary by the Board of Directors Meeting on Aug. 26, 2021, as Hung had been working as fnancial manager for over 5 years and meets the qualifcations for the Company Secretary, which is the top position responsible for overseeing the following tasks: A. Board of Directors meeting & Shareholders’ meeting related issues. B. Producing meeting minutes for the Board of Directors and the shareholders’ meetings. C. Assisting the directors in their inauguration and continuing education. D. Providing the information required for the directors to carry out their duties E. Assisting the directors in complying with the law. F. Performance evaluation of Board and board insurance issues. G. Report to the board of directors the results of its review on whether the qualifcations of independent directors comply with relevant laws and regulations at the time of nomination, election and during their tenure. H. Handle matters related to the change of directors. I. Other issues set up by law and regulations. (2) The aforementioned corporate governance tasks are handled by 10 dedicated stafs and managers (not including the Company Secretary) assigned by the Board of Directors, and the Corporate Governance Unit and Administration Unit of the Administration Management Department. (3) Please refer to annual report for the Company Secretary’s training records.	No diference
4. Has the fnancial holding company established communication channels with stakeholders (including but not limited to shareholders, employees, and customers), and provided interested parties communication channel under company’s ofcial website to respond important CSR issues which were in concern ?	√		(1) The Company shall disclose relevant fnancial business information on a regular and irregular basis to the Market Observation Post System in accordance with “Items to be announced or reported to authority” as required by the Securities and Futures Bureau and “Compulsory requirements for listed securities issuers” issued by the Taiwan Stock Exchange Corporation. The Company’s website also regularly discloses the Company’s monthly proft and loss and fnancial data such as consolidated fnancial reports reviewed and audited by certifed public accountants. When the certifed public accountants present the annual or interim fnancial reports to the Board, a governance report will also be presented in order to communicate ways for improving internal controls.	No diference

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(2) In accordance with Article 32 of the Labor Inspection Act, the Company has issued the “Worker’s Compliant Notice”, which declares the organizations, persons, scope, formats and procedures for handling worker complaints. If the Company is in violation of the Labor Standards Act, Labor Insurance Act, Labor Inspection Act or Employment Service Act, etc., the employee may raise complaints with the Company’s representatives, persons-in-charge, supervisors and competent authorities (Department of Labor, Taipei City Government, Taipei City Labor Inspection Office) following legal procedures and formats. (3) In accordance with Paragraph 2, Article 7 of the Sexual Harassment Prevention Act, Paragraph 1, Article 13 of the Act of Gender Equality in Employment, and Regulations for Establishing Measures of Prevention, Correction, Complaint and Punishment of Sexual Harassment at Workplace, the Company has issued the “Measures of Prevention, Correction, Complaint and Punishment of Sexual Harassment” and has announced the related rules, set up dedicated hotline, fax number and email address for handling complaints and will continue to provide related trainings to all employees every 6 months.

(4) The company has convened labor-management meetings in accordance with Article 83 of the Labor Standards Law and the labor-management conference implementation method. A total of 5 labor-management conferences were held in 2022 so that representatives of both parties could fully communicate on labor conditions, welfare, and working environment.
(5) The Company has listed the contacts of employees, investors, and public relation departments, email address for handling complaints, and customer compliant hotlines and email addresses of the Company and its Subsidiaries under the “Stakeholder Communication” page of the Company’s website. In addition, opinion questionnaire for interested parties are provided under the “Sustainability Report” page in order to provide diverse communication channels for interested parties and respond to sustainability related issues which they may concern.

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5. Information Disclosure (1) Has the fnancial holding company established a corporate website to disclose information related to the company’s fnancial, business and corporate governance status? (2) Does the company disclose information via other channels? (For example, setting up an English website, designating personnel responsible for the collection and disclosure of information, appointing spokespersons, webcasting investors’ conference via the company’s website.)	√ √		(1) The Company established “Investor Relations” and “Corporate Governance” items under the Company’s website to disclose fnancial, business and CG related information, and the Company posted its dividend policy, historical records of dividends payout and all sorts of information in the section of “shareholders’ meetings” on its website, including meeting notices, method for exercising electronic voting, meeting handbooks, results from various votes and meeting minutes, etc. (2) The Company releases its unaudited monthly proft and loss on its website each month and releases its consolidated fnancial report reviewed and audited by certifed public accountants on a quarterly basis. (1) The Company releases material information and fnancial and business information or holds press conferences for material information according to the “Procedures for Verifcation and Disclosure of Material Information” and “Rules Governing Information Reporting” of listed companies, and simultaneously releases the information in English to allow investors to obtain critical, adequate and reliable information on a regular and timely basis. (2) The Company has set up a spokesperson system and the “Internal Material Information Processing Procedure” to handle material information. The spokesperson (or acting spokesperson) will represent the Company within the scope of the Company’s authorization. Education on related procedures and regulations are provided to the Group company’s directors and supervisors and the Company’s managers and employees at least once a year. (3) The Company has its English website, all Mandarin & English contents of the website are collected from dedicated persons from each department and are updated in a timely manner. In 2022, the Company held earnings conference for institutional investors on a quarterly basis. The fnancial, business and other material information released, their audio-visual fles and briefng materials are all placed in the “IR Calendar” under the “Investor Relations” page of the Company’s website. Investors can visit the website and chose to listen to any earning call within one year and download its briefng materials.	No diference No diference

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(3) Has the fnancial holding company published and reported its annual fnancial report after the end of the fscal year in accordance to the Financial Holding Company Act and Securities and Exchange Act and has the company published and reported its fnancial reports for the frst, second and third quarter as well as its operating results for each month before the specifed deadline?		√	The Company has published and reported its annual fnancial report in accordance to the provisions of the Financial Holding Company Act and Securities and Exchange Act and has the reported its fnancial reports for the frst, second and third quarter before the specifed deadline. As for the operating results (unaudited earnings) for each month in 2022, only the monthly result of March was reported on the date of the deadline, while those for all other months were reported before the deadline.	No diference
6. Does the fnancial holding company have other material information to facilitate better understanding of the company’s corporate governance practices? (Including but not limited to employee rights, employee wellness, investor relations, stakeholders’ rights, Directors or supervisor’s training records, the implementation of risk management policies and risk evaluation measures, the implementation of customer relations policies, purchasing of liability insurance for Directors and supervisors and donations to political parties, stakeholders and charities.)	√		(1) For the implementation of employee rights, employee care, directors’ training, risk management policies and risk measurement standards, please refer to “Implementation of Social Responsibility”, “Labor Relations”, “Information on Directors’ Training”, and “Evaluating risk management items” in this report from the past year and up to the date of publication using the consolidated fnancial reports and business situations” of this annual report. (2) In May 2022, the Company purchased from AIG Asia Pacifc Insurance Pte. Ltd Taiwan Branch, Insurance Company of North America Taiwan Branch and MSIG Mingtai Insurance Co., Ltd. Directors and Ofcers Liability Insurance with an insured amount of USD 30 million and for the period May 24, 2022 to May 24, 2023. It aims to reduce and diversify the risk of signifcant loss to the Company and shareholders due to mistakes or negligence of the Group’s directors or employees. Important contents such as insured amount, scope of coverage, premium rate, etc., are reported to the Board of Directors. Please refer to “Important Contracts” of this annual report. (3) The Company may not provide political contributions to political parties. Donations to interested parties shall be reviewed by the Board of Directors and reported in accordance with regulations. For donations to public welfare organizations, please refer to the Company’s “Sustainability Report” and sections on “Social Inclusion”.	No diference

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(4) In order to protect consumer rights and interests, the Company has established the “Firewall Policy and Guidelines for First Financial Holding Co., Ltd. and Subsidiaries’ Integrated Marketing Scheme”, and has declared its customer’s privacy protection policy on the Company and its Subsidiaries’ websites. In addition, to comply with the “Personal Data Protection Act”, the subsidiaries have, from time to time, provided training to staffs focusing on confidentiality, requested each task to be handled with care and prudence in accordance with laws and regulations which prevent any leakage on personal and client data. All contracts signed by the Company and its subsidiaries and the customers have abided by the laws and regulations and related business processes are scrutinized from time to time for the protection of consumer rights. In addition, to comply with the “Fair Treatment of Consumers Principle for the Financial Service Industry”, Subsidiaries such as First Bank, First Securities, First Securities Investment Trust and First Life Insurance hold trainings regularly and have also established their “Fair Treatment of Consumers Principle and Policy” to protect the consumer rights of financial consumers. (5) The Company has established the “Rules for Board of Directors Meeting”. The meeting is held once a month, and the meeting notice containing the meeting motions shall be sent to the directors 7 days in advance. The Board meeting was held 12 times in 2022 and the attendance rate of the directors reached 98.86%. Another provision provides that when a director is faced with discussions and votes on a motion relating to his or her interests, he or she shall recuse himself or herself and also shall not act on behalf of other directors to vote. All directors complied with the rules. Please refer to the “Prevention of conflict of interest by the Directors” in this Annual report. (6) Succession plan for members of the Board of Directors and senior managements A. Succession plan for the members of the Board of Directors To implement corporate governance and protect Shareholders’ interest, the Company’s “Articles of Association” adopts a nomination system for the election of directors, which is chosen by the shareholders among the list of candidates. The Company’s “Corporate Governance Best Practice Principles” regulates the diversity of the Board members, specifies the professional knowledge and skills required and sets out restrictions on members holding other positions. After the re-election of each Board, the major shareholders, Ministry of Finance and Bank of Taiwan, will screen candidates from their talent pools based on the qualifications required and the number of directors to be elected and have the Shareholder’s meeting select the directors.

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B. Succession plan for the senior managements The company conducted internal and external training according to the annual programs to enhance the professional knowledge and skills of the management team. The company also holds talent recruitment and education for management associates. The training system for the senior managements is as follows: (i) Training program for senior management candidates: Appointed managements of the Group to attend the “Training for Senior Management of State owned enterprises” held by the Ministry of Finance. In 2022, total 5 people have attended and a total of 18 senior managements is in the talent pool up to date. (ii) Senior Deputy Manager candidate: Select and assign deputy manager candidates to attend the “Training for Senior Deputy Manager Candidates (Department Managers)”. A total of 29 persons attended the training in 2022. (iii) Deputy Manager Candidates: Selected personnel attended the “Deposit and Remittance Training for Deputy Manager Candidates”. A total of 94 persons attended the training in 2022. (iv) Each year the Company shall follow the “Employee Promotion Rules of First Commercial Bank” and regularly hold the selection and promotion of grade 11 and 12 employees and assign employees to management positions based on the demand of human resource. In 2022, a total of 68 persons were assigned to deputy manager positions, and a total of 33 persons were assigned to senior deputy manager (department manager) positions.

Please describe the improvements made as a result of the most recent Corporate Governance Evaluation Report published by the Corporate Governance Center of the Taiwan Stock Exchange Corporation. For items which improvements are yet to be implemented, please describe the priorities for enhancement and measures to be taken. (Not applicable to companies which were not evaluated.)

The result of the 9th Corporate Governance Evaluation issued by the Corporate Governance Center of the Taiwan Stock Exchange in 2023 the Company is listed top 5% of total listed companies and top 10% (top 4) among the financial industry. Based on the result, the company will strive to adjust the composition of the board of directors, enhancing independence of the board of directors by increasing the number of independent directors and disclose the annual financial report within the 2 months of the end of the fiscal year for transparency and effectiveness.

Note 1: All Summaries must be filled whether Yes or No ticked under the Implementation Status.

3.3.5 Composition of Remuneration Committee & Operation

3.3.5.1 Remuneration Committee Member

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Title Criteria Professional Qualification Independence Number of Other public listed company as
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Title	Criteria Name	Professional Qualifcation Experience
Independent Director	Chun-Hung Lin (Convener)	(Please refer to the Board Member Introduction)
Independent Director	Yen-Liang Chen
Independent Director	Wen-Ling Hung

3.3.5.2 Operation of the Remuneration Committee

(1) Totaled three members in Remuneration Committee.

(2) Terms, Qualification and Attendance:

The 5[th] Remuneration Committee (Jul. 21, 2021 ~ Jul. 19, 2024) , each of the committee members has obtained the professional qualifications of lecturers or higher in public and private colleges and universities in legal or financial related fields, and has more than five years of working experience and has no “Regulations Governing the Appointment and Exercise of Powers by the Remuneration Committee of a Company Whose Stock is Listed on the Taiwan Stock Exchange or the Taipei Exchange” in Item 2 of Article 5 and Item 1 of Article 6 of the Measures , total 8 meetings were held in 2022, attendance details are as follows:

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Attendance in Attendance by Attendance
Title Name Notes
Person (B) Proxy Rate (%) (B/A)
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Title	Name	Attendance in Person (B)	Attendance Rate (%) (B/A)
Convener	Chun-Hung Lin	8	100.00
Member	Yen-Liang Chen	8	100.00
Member	Wen-Ling Hung	8	100.00

Other mentionable items:

I. If the Board of Directors does not adopt or revise the recommendations of the Remuneration Committee, the meeting details with reasons shall be disclosed: None.
II. Any resolutions by Remuneration Committee, if any member has dissenting or qualified opinions on record or in written statement, the meeting details with disagreement opinions shall be disclosed: None.

III. Meeting Details of Remuneration Committee and opinions:

Remuneration Remuneration Committee Matters Content Committee Note Meeting Date/ Term Resolution Result Jan. 25, 2022- the 1st Subsidiary FCB Company Jan. 27, 2022- Resolved by the meeting of the 5th “Employee Pay-Roll Approved Company’s 8th meeting of the 7th Board Remuneration Committee Standard” Revisement of Directors

	Matters Content Remuneration Committee Resolution Result Note The Company’s management team level pay hike Approved Feb. 24, 2022- Resolved by the Company’s 9 thmeeting of the 7 thBoard of Directors 2021 Directors & Employees Compensation Plan. Approved Mar 24, 2022- Resolved by the Company’s 10 thmeeting of the 7 th Board of Directors 2021 Performance Bonus Distribution Plan. Approved Mar 24, 2022- Resolved by the Company’s 10 thmeeting of the 7 th Board of Directors Cancellation of household subsidy for the President of the Company and revisement of the managers in 2022 Approved Two proposals were divided for "CEO’s housing allowance adjustment" and "2022 executives’ salary adjustment", based on comments of Committee, and which were submitted to the 11 th meeting of the Company's 7 thboard of directors on April 21, 2022 and approved accordingly. Operational allowance for the President of the Company Approved while referral of the peers and meet the regulations from MOF Jul. 20, 2022- Resolved by the Company’s 14 thmeeting of the 7 thBoard of Directors Operational allowance for the Chairperson and President of the subsidiary FCB Approved while referral of the peers and meet the regulations from MOF Jul. 20, 2022- Resolved by the Company’s 14 thmeeting of the 7 th Board of Directors Amendments of “Articles of Corporation” of subsidiaries FS, FSIT, FL, First Consulting Approved with amendments Amendments of Articles of Corporation” of subsidiaries were submitted to the 16 thmeeting of the Company's 7 thboard of directors on Sep. 22, 2022 and approved accordingly. “Employees’ Compensation Rules” for Subsidiaries FS, FSIT, FL, First Consulting Pending After revising the verifcation procedures, scoring indicators and allocation standards based on comments of Committee, it is recommended to submit to the 7 th meetingof the 5 thCommittee meeting “Employees’ Compensation Rules” for Subsidiaries FS, FSIT, FL, First Consulting Approved with amendments Amendments of Employees’ Compensation Rules” for Subsidiaries were submitted to the 16 thmeeting of the Company's 7 thboard of directors on Sep. 22, 2022 and approved accordingly. Amendments of Subsidiary FCB “Employees’ Bonus Rules” and “ Employees’ Compensation Rules” Approved with amendments Amendments of Subsidiary FCB “Employees’ Bonus Rules” and “Employees’ Compensation Rules” were submitted to the 18 thmeeting of the Company's 7 thboard of directors on Nov. 24, 2022 and approved accordingly.	Matters Content Remuneration Committee Resolution Result Note The Company’s management team level pay hike Approved Feb. 24, 2022- Resolved by the Company’s 9 thmeeting of the 7 thBoard of Directors 2021 Directors & Employees Compensation Plan. Approved Mar 24, 2022- Resolved by the Company’s 10 thmeeting of the 7 th Board of Directors 2021 Performance Bonus Distribution Plan. Approved Mar 24, 2022- Resolved by the Company’s 10 thmeeting of the 7 th Board of Directors Cancellation of household subsidy for the President of the Company and revisement of the managers in 2022 Approved Two proposals were divided for "CEO’s housing allowance adjustment" and "2022 executives’ salary adjustment", based on comments of Committee, and which were submitted to the 11 th meeting of the Company's 7 thboard of directors on April 21, 2022 and approved accordingly. Operational allowance for the President of the Company Approved while referral of the peers and meet the regulations from MOF Jul. 20, 2022- Resolved by the Company’s 14 thmeeting of the 7 thBoard of Directors Operational allowance for the Chairperson and President of the subsidiary FCB Approved while referral of the peers and meet the regulations from MOF Jul. 20, 2022- Resolved by the Company’s 14 thmeeting of the 7 th Board of Directors Amendments of “Articles of Corporation” of subsidiaries FS, FSIT, FL, First Consulting Approved with amendments Amendments of Articles of Corporation” of subsidiaries were submitted to the 16 thmeeting of the Company's 7 thboard of directors on Sep. 22, 2022 and approved accordingly. “Employees’ Compensation Rules” for Subsidiaries FS, FSIT, FL, First Consulting Pending After revising the verifcation procedures, scoring indicators and allocation standards based on comments of Committee, it is recommended to submit to the 7 th meetingof the 5 thCommittee meeting “Employees’ Compensation Rules” for Subsidiaries FS, FSIT, FL, First Consulting Approved with amendments Amendments of Employees’ Compensation Rules” for Subsidiaries were submitted to the 16 thmeeting of the Company's 7 thboard of directors on Sep. 22, 2022 and approved accordingly. Amendments of Subsidiary FCB “Employees’ Bonus Rules” and “ Employees’ Compensation Rules” Approved with amendments Amendments of Subsidiary FCB “Employees’ Bonus Rules” and “Employees’ Compensation Rules” were submitted to the 18 thmeeting of the Company's 7 thboard of directors on Nov. 24, 2022 and approved accordingly.	Matters Content Remuneration Committee Resolution Result Note The Company’s management team level pay hike Approved Feb. 24, 2022- Resolved by the Company’s 9 thmeeting of the 7 thBoard of Directors 2021 Directors & Employees Compensation Plan. Approved Mar 24, 2022- Resolved by the Company’s 10 thmeeting of the 7 th Board of Directors 2021 Performance Bonus Distribution Plan. Approved Mar 24, 2022- Resolved by the Company’s 10 thmeeting of the 7 th Board of Directors Cancellation of household subsidy for the President of the Company and revisement of the managers in 2022 Approved Two proposals were divided for "CEO’s housing allowance adjustment" and "2022 executives’ salary adjustment", based on comments of Committee, and which were submitted to the 11 th meeting of the Company's 7 thboard of directors on April 21, 2022 and approved accordingly. Operational allowance for the President of the Company Approved while referral of the peers and meet the regulations from MOF Jul. 20, 2022- Resolved by the Company’s 14 thmeeting of the 7 thBoard of Directors Operational allowance for the Chairperson and President of the subsidiary FCB Approved while referral of the peers and meet the regulations from MOF Jul. 20, 2022- Resolved by the Company’s 14 thmeeting of the 7 th Board of Directors Amendments of “Articles of Corporation” of subsidiaries FS, FSIT, FL, First Consulting Approved with amendments Amendments of Articles of Corporation” of subsidiaries were submitted to the 16 thmeeting of the Company's 7 thboard of directors on Sep. 22, 2022 and approved accordingly. “Employees’ Compensation Rules” for Subsidiaries FS, FSIT, FL, First Consulting Pending After revising the verifcation procedures, scoring indicators and allocation standards based on comments of Committee, it is recommended to submit to the 7 th meetingof the 5 thCommittee meeting “Employees’ Compensation Rules” for Subsidiaries FS, FSIT, FL, First Consulting Approved with amendments Amendments of Employees’ Compensation Rules” for Subsidiaries were submitted to the 16 thmeeting of the Company's 7 thboard of directors on Sep. 22, 2022 and approved accordingly. Amendments of Subsidiary FCB “Employees’ Bonus Rules” and “ Employees’ Compensation Rules” Approved with amendments Amendments of Subsidiary FCB “Employees’ Bonus Rules” and “Employees’ Compensation Rules” were submitted to the 18 thmeeting of the Company's 7 thboard of directors on Nov. 24, 2022 and approved accordingly.
Remuneration Committee Meeting Date/ Term Feb. 22, 2022- the 2 nd meeting of the 5 th Remuneration Committee	Matters Content The Company’s management team level pay hike	Remuneration Committee Resolution Result Approved	Note Feb. 24, 2022- Resolved by the Company’s 9 thmeeting of the 7 thBoard of Directors
Mar 22, 2022- the 3 rd meeting of the 5 th Remuneration Committee	2021 Directors & Employees Compensation Plan.	Approved	Mar 24, 2022- Resolved by the Company’s 10 thmeeting of the 7 th Board of Directors
	2021 Performance Bonus Distribution Plan.	Approved	Mar 24, 2022- Resolved by the Company’s 10 thmeeting of the 7 th Board of Directors
Apr. 19, 2022 – the 4 th meeting of the 5 th Remuneration Committee	Cancellation of household subsidy for the President of the Company and revisement of the managers in 2022	Approved	Two proposals were divided for "CEO’s housing allowance adjustment" and "2022 executives’ salary adjustment", based on comments of Committee, and which were submitted to the 11 th meeting of the Company's 7 thboard of directors on April 21, 2022 and approved accordingly.
Jul. 15, 2022 – the 5 th meeting of the 5 th Remuneration Committee	Operational allowance for the President of the Company	Approved while referral of the peers and meet the regulations from MOF	Jul. 20, 2022- Resolved by the Company’s 14 thmeeting of the 7 thBoard of Directors
	Operational allowance for the Chairperson and President of the subsidiary FCB	Approved while referral of the peers and meet the regulations from MOF	Jul. 20, 2022- Resolved by the Company’s 14 thmeeting of the 7 th Board of Directors
Aug. 23, 2022 – the 6 thmeeting of the 5 th Remuneration Committee	Amendments of “Articles of Corporation” of subsidiaries FS, FSIT, FL, First Consulting	Approved with amendments	Amendments of Articles of Corporation” of subsidiaries were submitted to the 16 thmeeting of the Company's 7 thboard of directors on Sep. 22, 2022 and approved accordingly.
	“Employees’ Compensation Rules” for Subsidiaries FS, FSIT, FL, First Consulting	Pending	After revising the verifcation procedures, scoring indicators and allocation standards based on comments of Committee, it is recommended to submit to the 7 th meetingof the 5 thCommittee meeting
Sep. 20, 2022 – the 7 thmeeting of the 5 th Remuneration Committee	“Employees’ Compensation Rules” for Subsidiaries FS, FSIT, FL, First Consulting	Approved with amendments	Amendments of Employees’ Compensation Rules” for Subsidiaries were submitted to the 16 thmeeting of the Company's 7 thboard of directors on Sep. 22, 2022 and approved accordingly.
Nov. 22, 2022 – the 8 thmeeting of the 5 th Remuneration Committee	Amendments of Subsidiary FCB “Employees’ Bonus Rules” and “ Employees’ Compensation Rules”	Approved with amendments	Amendments of Subsidiary FCB “Employees’ Bonus Rules” and “Employees’ Compensation Rules” were submitted to the 18 thmeeting of the Company's 7 thboard of directors on Nov. 24, 2022 and approved accordingly.

3.3.6 Discrepancies between Sustainable Development of the Financial Holding Company and Sustainable Development Best Practice Principles for Listed Companies and Explanation

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Implementation Status (Note 1) Discrepancies with
the Listed or OTC
Item for Evaluation Companies Corporate
Y N Summary Note Social Responsibility
Code of Practice and
Explanation (Note 3)
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Item for Evaluation	Implementation Status (Note 1)	Implementation Status (Note 1)	Implementation Status (Note 1)	Discrepancies with the Listed or OTC Companies Corporate Social Responsibility Code of Practice and Explanation (Note 3)
	Y	N	Summary Note
1. Has the company set up the governance framework for sustainable development and establish dedicated (nondedicated) units for the promotion of sustainable development and has the Board authorized management to execute related matters while the Board supervise the execution?	√		In 2011,in accordance with the ESG Policy reviewed and approved by the Board of Directors, the Company has set up an ESG Committee comprising the Chairman of the Board, who acts as chairman, and Group presidents, who act as committee members. The committee is responsible for reviewing annual objectives in the various areas of ESG and carrying out quarterly reviews of progress in ESG implementation. The committee is composed of sub-groups: Corporate Governance, Responsible Finance, ESG Financial Products and Services, Employee Care, Environmental Sustainability, and Community Engagement. The core team consists of 92 people. The Administration Management Department is responsible for overall planning of ESG afairs and must report on implementation results to the Board of Directors within four months of the end of the fscal year. Regarding the major sustainable issues concerned by the major shareholders, according to the three major aspects of governance (Governance), environment (Environment) and society (Social), follow the Global Reporting Initiative (GRI) sustainability The framework of reporting standards, reporting to the board of directors the risks and opportunities arising from the group’s operations, the short-, medium- and long-term goals of sustainable development, and the achievement of the previous year’s goals. In order to continuously strengthen the efectiveness of the group’s promotion of ESG, the company’s board of directors has instructed each company to handle the following matters, and each company has also cooperated with it: 1. Report to the board of directors on the indicators and progress of the Sustainable Finance Pioneers Alliance every six months. 2. In addition to the promotion of gender equality in work and the prevention of sexual harassment in the workplace, the promotion of labor rights and interests protection has been added to the legal compliance project curriculum to make employees understand their rights and interests. For more information on Fair Treatment issues, please refer to annual report.	No diference.

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Item for Evaluation	Implementation Status (Note 1)	Implementation Status (Note 1)	Implementation Status (Note 1)	Discrepancies with the Listed or OTC Companies Corporate Social Responsibility Code of Practice and Explanation (Note 3)
	Y	N	Summary Note
2. Has the company, in accordance to the materiality principle, performed risk evaluations related to the environmental, social and corporate governance aspect of the company’s operations and established risk management related policy or strategy?	√		The company references international sustainable rules, international initiatives and environmental, social and corporate governance (ESG) issues collected according to our sustainable development strategy each year, and identifes diferent stakeholders based on the AA1000 Stakeholder Engagement Standards AA1000 Stakeholder Engagement Standards to identify the major shareholders, and adopt the methodology of sustainable impact evaluation from the three aspects of economy, environment, and human/ human rights, and use the perspectives of positive and negative, actual and potential, irremediable, and value chains , identify the sustainability issues that impact operations, analyze and rank them according to the three principles of “stakeholders’ attention”, “sustainability issues’ impact on operations” and “sustainable development impact”, and create a “majority analysis matrix” “, to identify the Group’s ESG material issues, analyze their risks and opportunities to the Group’s core business, and formulate relevant policies and management guidelines to reduce the impact on the Group’s operations. The identifcation of major sustainable development issues in 2022 and the communication with major stakeholders were reported to the board of directors in March 2022 for review. Using questionnaires, we survey the level of concern stakeholders place on diferent issues. After sorting the issues based on the level of concerns and their impact on the Group’s operations, a signifcance analysis matrix was created. The issues with low level concerns and low impact on the ESG aspect of the company’s operations were excluded in order to identify.	No diference.
3. Environmental Issues (1) Has the company established suitable environmental management system in line with its industry characteristics?	√		(1) The Company’s Sustainability Committee includes an Environmental Sustainability sub-group responsible for promoting sustainable environmental policies, carrying out corporate environmental protection and energy conservation policies, selecting and managing suppliers, setting and implementing greenhouse gas reduction targets, and procuring environmentally friendly products. In 2022, each domestic operation unit is ISO14001 adopted for environmental management verifcation (date Mar.7, 2016; efective from Oct.30, 2021~Oct.30, 2024), and “ISO 50001 Energy MGT System” (verifcation date Jun. 8, 2015;efective Oct.19 2021~ Oct.19, 2024) realizing carbon, water & electricity reduction and waste disposal administration.	No diference.

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Item for Evaluation	Implementation Status (Note 1)	Implementation Status (Note 1)	Implementation Status (Note 1)	Implementation Status (Note 1)	Discrepancies with the Listed or OTC Companies Corporate Social Responsibility Code of Practice and Explanation (Note 3)
	Y	N	Summary Note
(2) Is the company commitment to improving resources utilization and the use of renewable materials that has lesser impact on the environment?	√		(1)	The Company and its subsidiaries continue to strive to make more efcient use of resource and to use recyclable materials with low environmental impact. The following measures have been taken: Rooftop solar power generation systems were built on top of 20 bank branch buildings. In 2022, accumulated power generated was 257,000 kWh and 1,794,000 kWh of green electricity, renewable energy, and carbon right certifcates were purchased, totaling 2,051,000 kWh of renewable energy used. A target of 3,373,000kWh of renewable purchase for 2023 to advocate the reusable energy. In 2010, the Company established the “Green Building Certifcation Acquisition Project” team to set up standard operation procedures for acquiring green building certifcates for refurbished old buildings. By the end of 2022, the Company has converted 28 old buildings into diamond-class green buildings. One other old building received bronze-class green building certifcate while another 2 gained a certifed green building status. In addition, two new buildings constructed acquired gold-class green building certifcates and one old building in the UK was granted PASS level green building from the Building Research Establishment (BRE). Year 2019 2020 2021 2022 Purchased and used renewable energy (kWh) 422,705 891,213 1,254,678 2,050,738 Carbon reduction result (MT of CO2e) 225.30 453.63 629.85 1,043.83 (Note: 2,050,738x0.509/1,000=1,043.83 decarbonization)	No diference.

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(2) First Financial Holding gives priority to purchasing
and using equipment and appliances which
have acquired green building material labels or
environmental protection labels while meeting
regulatory requirements. In Mar. 2022, the Company
obtained the “ISO 20400 Sustainable Procurement
Guidelines Performance Evaluation” certifcation issued by a third-party verifcation agency. In 2022,
green purchase amount totaled NT$150.86 million,
and the Company was awarded “Benchmark Private
Businesses and Groups in Green Purchasing” by the
Taipei City Government Department of Environmental
Protection for the 8 thconsecutive year. The
Company implemented paperless operations and
uses products with recycled materials and which
are recyclable, low-pollution and energy-saving.
Whenever possible, video conferences are adopted
for meetings and trainings in order to reduce fuel
consumption and carbon emission from travels.
Moreover, the Company has set up battery exchange
stations and electric vehicle charging stations
at branches and encourages the use of electric
vehicles. When company feet needs replacement,
the possibility of changing to electric vehicles or
hybrid vehicles is evaluated.

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Item for Evaluation	Implementation Status (Note 1)	Implementation Status (Note 1)	Implementation Status (Note 1)	Discrepancies with the Listed or OTC Companies Corporate Social Responsibility Code of Practice and Explanation (Note 3)
	Y	N	Summary Note
(3) Has the company evaluated the impact of climate change on current and future potential risks and opportunities and adopted measures relevant to climate related issues?	√		(1) In response to the operational risk imposed on the fnancial industry and to strengthen management on climate change issues, the Company has tasked the Responsible Finance, ESG Financial Product and Service and the Environmental Sustainability Sub-group under the ESG Committee to identify potential risks and opportunities brought by climate change. The sub-group are also required to follow the Climate-related Financial Disclosure Proposal issued by the Task Force on Climate-related Financial Disclosures (TCFD) to identify risks and opportunities in the Company’s operations through conducting inventory count and by recognizing physical or transformative changes and other impacts on the operations. They have also established action plans and short-, medium and long-term goals based on the risks and opportunities, implemented tracking on related KPI measures and reported the implementation status to the Board of Directors. In order to establish an efective and systematic response mechanism, the Company performed scenario analysis on climate risk cases, quantifed the fnancial impacts caused by climate risks, and published in 2022 Climate-Related Financial Disclosure (TCFD) report, which obtained the British Standards Institution (BSI) “LEVEL-5+” certifcation, again to receive such recognition in the fnancial industry. (2) The Green Finance Committee of the subsidiary, First Bank, is composed of sub-groups: Sustainable Lending, Sustainable Investment, Task Force on Climate-related Financial Disclosure and Carbon Disclosure. The Committee incorporates climate risk into the corporate’s risk evaluation framework and meets quarterly to report on the implementation status, ensuring that climate change is reasonable refected in the related decision making process. The Bank signed the Equator Principles (EPs) in 2020 and has since undertaken 9 EPs fnancing projects by the end of 2022. First Bank also launched the “Sustainable Development Loan Connection Project”, providing loans with preferential interest rates to companies with improved environmental performance indicators. In 2022, the project provided fnancing to 69 accounts with a total of NT$106.5 billion. In addition, the project also provides funding for pollution prevention, green transportation,	No diference.

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Item for Evaluation	Implementation Status (Note 1)	Implementation Status (Note 1)	Implementation Status (Note 1)	Discrepancies with the Listed or OTC Companies Corporate Social Responsibility Code of Practice and Explanation (Note 3)
	Y	N	Summary Note
			green building, green factory and energy and resource conservation, assisting enterprises to transform and seize opportunities in the global trend of low-carbon production. Furthermore, ESG related concept funds and sustainable development fnancial bonds will be issued to assist in funding for renewable energy constructions such as wind and solar power, and for providing project loans to micro-enterprises. These initiatives are aimed at encouraging corporates and investors to invest in clean energy and to reach the goal of zero-carbon emission. (3) In 2022, the carbon footprint of green credit cards was audited, and fve major credit card products, including Living Green Card, GLORY+ World Card, Taoyuan City Citizen Co-branded Card, Yilan Afnity Card, and Leezen Card, were certifed by the Environmental Protection Administration of the Executive Yuan. The audit fnds that cards produced with environmental friendly material produces 500 grams of CO2e, and cards made with special material or inserted with chips produce 900 grams of CO2e, respectively. The “Sustainability First for Green Credit Cards, Promoting Carbon Reduction With You” marketing campaign was launched, with a goal of achieving carbon reduction certifcation in 2023.
(4) Has the company measured the greenhouse gas emission, water consumption and total weight of wastes of the past two years and established policies to reduce carbon emission, greenhouse gas emission and water usage and to manage waste?	√		(1) In order to ensure the sustainable development of the eco-environment, the Company’s ESG Policy is committed to reducing greenhouse gas emission, conserving water, electricity and other energy resources, reducing waste and adopting green building materials. The Company follows the 2050 net zero emission policy and to ensure the sustainable development of the environment and ecology, the company’s sustainable development policy clearly stipulates that it should plan greenhouse gas reduction strategies, save water, electricity and other energy, reduce waste and adopt green and environmentally friendly building materials and other measures, and cooperate with the 2050 net zero emissions Policy, the Group adopts the absolute reduction method, with the science- based reduction target (SBT) of controlling the temperature increase at 1.5°C, and stipulates that the total carbon emissions of scope 1 and scope 2 must be reduced by 4.2% compared with the base year (2021).	No diference.

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FFHC Greenhouse Gas Emission (tons CO2e) 2020 2021 2022 2022 Goals ISO-14064 Scope 1 emissions 2,459 2,470 2,657 2,359	FFHC Greenhouse Gas Emission (tons CO2e) 2020 2021 2022 2022 Goals ISO-14064 Scope 1 emissions 2,459 2,470 2,657 2,359	FFHC Greenhouse Gas Emission (tons CO2e) 2020 2021 2022 2022 Goals ISO-14064 Scope 1 emissions 2,459 2,470 2,657 2,359	FFHC Greenhouse Gas Emission (tons CO2e) 2020 2021 2022 2022 Goals ISO-14064 Scope 1 emissions 2,459 2,470 2,657 2,359	FFHC Greenhouse Gas Emission (tons CO2e) 2020 2021 2022 2022 Goals ISO-14064 Scope 1 emissions 2,459 2,470 2,657 2,359
ISO-14064 Scope 2 emissions	19,961	19,409	18,858	19,360
Total emissions (Scope 1 + Scope 2)	22,420	21,879	21,515	21,719
Percentage of business locations which completed Scope 1 and Scope 2 inventory (%)	100% of domestic and overseas business locations
Greenhouse gas emissions intensity (tons CO2e/Net Proft in NT$ million)	0.38	0.35	0.32	–
2020 2021 2022 2022 Goals ISO 14064-1 Scope 3 (Indirect Greenhouse Gas Emissions in Transportation- Business Travel) 263 290 330 <313
Scope of inventory	Bank, Securities, Securities Investment Trust, Life Insurance, and AMC
ISO 14064-1 Scope 3 (Indirect Greenhouse Gas Emissions in the Use of Products by Organizations- Waste Disposal in Operations)	77	98	104	–
Scope of inventory	Bank, Securities, Securities Investment Trust, Life Insurance, AMC and Bank information building

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Water Resource Management and Total Water Consumption for the Past Two Yearsa

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2022
2020 2021 2022
Goals
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	2020	2021	2022	2022 Goals
Total water consumption (million liters)	201.58	201.23	213.77	< 214.8
Data scope	All domestic business locations of the Bank in 2020~2021, Securities, Securities Investment Trust, Life Insurance, and AMC were added in 2022.
Water-saving measures	Total water consumption increased and various water- saving measures have been actively promoted and adopted due to scope was added in.
Waste (non-hazardous) management and waste disposal in the past 3 years 2020 2021 2022 2022 Goals Waste disposed (tons) 240.37 279.7 279.04 <287.7
Data scope	All domestic business locations of the Bank in 2020~2021, Securities, Securities Investment Trust, Life Insurance, and AMC were added in 2022.
Reduction measures	In 2022, the total amount of waste disposed decreased and the Company has actively promoted measures for resource recycling and waste reduction.

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Item for Evaluation	Implementation Status (Note 1)	Implementation Status (Note 1)	Implementation Status (Note 1)	Discrepancies with the Listed or OTC Companies Corporate Social Responsibility Code of Practice and Explanation (Note 3)
	Y	N	Summary Note
4. Social issues (1) Has the company established relevant management policies and procedures in accordance with related regulations and international human rights conventions?	√		(1) First Financial Holding is committed to abiding by the International Bill of Human Rights and other conventions such as the “United Nations Universal Declaration of Human Rights”, “United Nations Guiding Principles on Business and Human Rights”, “The Ten Principles of the United Nations Global Compact”, “International Labour Organization Core Labour Standards”, “ISO 26000 Guidance on Social Responsibility”, “Convention on the Elimination of All Forms of Discrimination against Women”, “The International Covenant on Economic, and the “Modern Slavery Act”, and has included them into the Human Rights Policy of the Group. The Company’s ESG Policy stipulates that subsidiary companies shall abide by the internationally recognized human rights of labor, including the freedom of association, the right of collective bargaining, caring for vulnerable groups, prohibiting the use of child labor, eliminating all forms of forced labor, eliminating recruitment and employment discrimination to create an equal opportunity workplace. The hiring of those under the age of 16 as regular or atypical employees (including temporary workers and security staf) is explicitly banned in our HR regulations. We also adhere to the Labor Standards Act to prevent forced labor through violence, threats, imprisonment or other illegal methods. (2) The Company’s ESG committee reviews relevant human rights issues each quarter and evaluates potential human rights risks and established a risk matrix for human rights issues. In 2022, we implemented mitigation and compensation measures for human rights issues with medium probability of occurrence and operational impact such as “abnormal workload” and “sexual harassment”. Examples include the execution of the Abnormal Workload-Triggered Diseases Prevention Plan” and the establishment procedures for daily overtime work applications and management reminders in the system to ensure reasonable adjustments of work and manpower allocation. In addition, the Company implement the “Health Protection Plan for Maternal Employees”, measures such as risk assessment, hazard control, risk communication, and work adjustments, and provide care and health education guidance to pregnant employees by telephone from resident physicians and full-time nurses.	No diference.

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(3) The Company’s Gender Equality Policy based on the spirit of the Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW) to fuse gender equality into core financial business practices. We have set up breastfeeding rooms, provided maternity leave, and ensuring equal pay for employees reinstated from maternity leave in accordance with the “Act of Gender Equality in Employment” to protect the rights of female employees. In 2022, in addition to being an excellent company in the “Friendly Family and Work Equality Measures” by the New Taipei City Government, it was also selected as one of the Bloomberg Gender Equality Index (GEI).
(4) The company provides a fair competitive workplace environment and implements gender equality. The proportion of female directors on the board of directors is 57%, and female independent directors account for 60%, in which one serves as the convener of the Audit Committee; The Chairpersons of the Company, Bank subsidiary, and Securities subsidiary are female. The CEOs of the Company and securities subsidiary are female professional managers. The proportion of female employees in the group is higher than that of men. There are 48.5% female management positions with income growth functions, and a total of 317 executives, in which 50.2% is female. With a total of 470 female employees having expertise such as Science, Technology, Engineering, Mathematics, accounting for 43.8% of STEM-related positions. There is no difference in the appointment and promotion of personnel due to gender.

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(5) We adhere to and ensure that employees enjoy internationally accepted labor rights, and related information is openly available internally. All business sites follow local laws and regulations on human rights. There is to be no discrimination against employees on the basis of race, gender or other circumstances. All employees have the right to equal pay for equal work, freedom from sexual harassment, and protected employment for female employees during pregnancy. All Directors, Supervisors, managerial officers, and employees of the Group must comply with the Code of Conduct and may not make sexual advances or commit actions that violate human rights such as implicit sexual suggestions, sexual discrimination, or violation of human dignity and personal freedom. Apart from regular training on sexual harassment prevention, new employee training also explains in full the human rights system on work rules, HR management rules, employee compensation and benefits. Union personnel are also invited to speak about employee rights relating to the Occupational Safety and Health Act. In 2022, employees of domestic and overseas operations attended human rights protection training 20,026 times for a total of 13,620 hours of human rights-related training. The training participation rate was 100%. (6) There were no human rights violations, infringement of indigenous rights, or incidents of discrimination in 2022. Companies were also required to provide effective and appropriate mechanisms to manage employee complaints, ensure that the process is equal and transparent, that the channels are concise, convenient and open, and that employee complaints receive appropriate response.

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Item for Evaluation	Implementation Status (Note 1)	Implementation Status (Note 1)	Implementation Status (Note 1)	Implementation Status (Note 1)	Discrepancies with the Listed or OTC Companies Corporate Social Responsibility Code of Practice and Explanation (Note 3)
	Y	N	Summary Note
(2) Has the company established and implemented appropriate employee beneft policies (including remuneration, vacation and other benefts), and fairly refected operational performance or achievements in the employee remuneration policy?	√		(1)	The Company provides various employee benefts, including salary conditions for sick leave and personnel leave that are superior to the law, leave days for marriage, bereavement, or miscarriage, and subsidies for marriage, maternity, further education, travel and others. The Company also implements maternity and paternity leave, maternity-accompany leave, and IVF maternity leave that are superior to the law. For detailed information, refer to Labor Relationship” of this annual report and website: www.frstholding.com.tw/sites/frstholding/career/ hrempcare. The ratio between the starting salary for men and women is 1:1, and female executives have higher average salaries than male executives. The Company is dedicated to implement equal pay for equal work and gender equality. First Financial Holding 2022 Human Development ESG Information Average employee welfare expense (Thousands) 1,777 Average employee salary expense (Thousands) 1,516 Average salary of full- time employees with non- managerial positions (Thousands) 1,337 Median salary of full- time employees with non- managerial positions (Thousands) 1,245 Percentage of women in managerial positions with revenue growth functions (e.g. sales) (%) 48.5%	No diference.

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Item for Evaluation	Implementation Status (Note 1)	Implementation Status (Note 1)	Implementation Status (Note 1)	Discrepancies with the Listed or OTC Companies Corporate Social Responsibility Code of Practice and Explanation (Note 3)
	Y	N	Summary Note
			(2) The Company has established the Regulations on Employee Bonus and Regulations on Employee Remuneration to share the company’s operating results with employees. Each year, the Company approves employees’ annual performance bonuses based on the achievement rate of proftability and other indicators, and calculate employee remuneration based on the achievement rate of pre-tax proft and the level of earnings per share, return on stockholders’ equity, return on total assets, etc. compared to industry peers. Salary is adjusted annually based on assessment to provide a competitive remuneration system. (3) The company set up pension programs applicable Labor Laws and provided pension fund required. For detailed information, please refer to “Pension Plan” chapter of this annual report.
(3) Does the company provide employees with a safe and healthy work environment, and regularly provide safety and health training to employees?	√		(1) In order to protect the safety and health of employees, the National Health Administration of the Ministry of Health and Welfare has obtained the Healthy Workplace Certifcation (Health Startup Label and Health Promotion Label), and has introduced the "ISO 45001 Occupational Safety and Health Management System" in the headquarters building since the end of 2018 Every year through the PDCA management process to identify employee health risks, plan and review various risk prevention plans, and have been verifed by BSI British Standards Institution. It is the frst public- stock bank in China to obtain this verifcation. The scope of application covers all domestic units and verifcation objects Including all employees and contractors of the headquarters building. Verifcation Date: 2018/11/29; Valid Date: 2021/11/29~2024/11/28). In 2022, risk mitigation measures were implemented through the "Hazard Identifcation List" of each unit's occupational safety and health. In accordance with the Occupational Safety and Health Law and other relevant regulations, the "Safety and Health Work Code", "Occupational Safety and Health Management Points", " Abnormal workload-promoted disease prevention plan", "human-induced hazard prevention plan", "duty execution and illegal infringement prevention plan" and "maternal employee health protection plan". In 2022, through the performance management system (KPI), the performance of the safety and health management implementation of the occupational safety and health business supervisors of each unit was regularly assessed.	No diference.

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In 2022, the Company completed the Hazard Identification Guidelines for the occupational health and safety of each department and implemented risk mitigation measures according to the guidelines. (2) A Workplace Healthcare Zone has been set up on the internal website and is staffed by a fulltime nurse and a specialist doctor who is on-site two days a week. In line with regulations, all business units have designated occupational health and safety supervisors, emergency personnel, and fire safety officers. Occupational health and safety trainings, safety maintenance and disaster prevention drills are regularly held for new employees and staffs. For employees injured due to work, we immediately report the injuries to the Emergency Response Center in accordance with the “Incident Reporting Guidelines” and formulate records to follow up on the progress. We provide necessary assistance to employees in the shortest possible time to help them with subsequent applications for labor insurance subsidies and provide occupational injury leave in accordance with related regulations and actual conditions. The number of employees who applied for injury leave was 54 in 2022. A total of 17 employees, representing 0.17% of the Group’s employees, were involved in occupational hazards such as falls, slips, improper actions and traffic accidents. In addition to advocating workplace and traffic safety through e-mail, the Company also requires cleaning personnel to keep the ground dry and clean at all times, and sets up warning signs to remind employees to pay attention to safety. The statistics of occupational safety-related training are as follows:

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Year
2022
Item
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Number of Trainees and Training
Hours for Occupational Safety 35/1,087
and Health Managers
Number of Trainees and Training
Hours for Fire Hazard Prevention 50/582
Management
Number of Trainees and Training Hours for Emergency Rescue 640/2,375
Number of Trainees and Training
Hours for ISO 45001 Management 22/33
Systems
3 hours of
General employee OSH in-service training over 3
years
In addition, the Company carries out air quality
inspections (twice a year), drinking water quality
inspections (twice a month) and fre equipment
inspections (every six months) to create a zero-
accident workplace, and provides employees of
diferent ages with regular health check-ups that
are superior to the requirements of the law. The
Company has also established a care mechanism for
major injuries and diseases, and set up automatic
external cardiac shock defbrillators to maintain the
safety and health of employees.

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Item for Evaluation	Implementation Status (Note 1)	Implementation Status (Note 1)	Implementation Status (Note 1)	Discrepancies with the Listed or OTC Companies Corporate Social Responsibility Code of Practice and Explanation (Note 3)
	Y	N	Summary Note
			(3) Faced with the COVID-19 pandemic, in January 2020, the company immediately set up an emergency response team for epidemic prevention in accordance with the Crisis Management Implementation Guidelines and issued First Financial Holding’s emergency response measures and epidemic prevention manuals. Its subsidiaries also established emergency response teams and formulated their epidemic prevention plans. The company followed the newest updates from the Central Epidemic Command Center and implemented pandemic prevention measures, including activating remote ofce and home ofce mechanisms and tracking the traveling and health status of stafs. An epidemic prevention insurance, vaccine insurance and screening fee subsidies for employees were provided, invite doctors to hold professional lectures, and set up Covid zone on the internal website to update disease care knowledge to ensure the health of employees and customers and uninterrupted operations.
(4) Does the company provide an efective career development training program for employees?	√		(1) Companies within the Group have all set up various comprehensive employee career development training programs, such as Digital Financial Talent Transformation Project, Overseas Trainee Talent Project, Securities Salesperson Transformation Project and Insurance Professional Training Program. Professional trainings are also provided in line with business needs and competency analysis. In 2022, group companies sponsored a total of 245,545 participants with average 64.48 hours per person. and adopted the “Kirkpatrick Model” to review the change of behavior and performance efectiveness after the trainings. (2) In order to improve employees’ awareness and knowledge of anti-money laundering and counter- terrorism and in response to the Financial Supervisory Commission’s bilingual branch policy, the company actively provided and subsidized employees to participate in relevant training courses.	No diference.

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Anti–money laundering certification membership fees, application fees, and incentives:

Unit: person, thousands

(5) Has the company √ followed relevant laws, regulations and international guidelines in regards to protecting the health, safety, and privacy of customers using its products and services, and while marketing or labeling products? And has the company established relevant policies and complaint procedures to protect consumer rights?

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Year 2021 2022
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Year	2021	2022
CAMS Certification	1,522	1,499
Subsidizing CAMS exam’s amount	2,712	3,166
LTTC, OELTS, TOEFL, TOEIC, BULATS, GEPT Certification	3,044	3,069
JLPT, LTTC (Japanese, Spanish, Korean and German)	307	314
Subsidizing Foreign Language Persons	2,265	989
Subsidizing Foreign Language Amount (in 10 thousand)	670	436

(1) In order to protect consumer rights, the Company’s ESG policy guarantees the following: the drafting and publishing of a consumer rights policy and the setting up of consumer complaints and dispute resolution mechanisms. Complaints and disputes will be dealt with within reasonable time limits, with the results of deliberation conveyed to the customer who filed the complaint and took extremely strict procedures to prevent from leakage of customers’ information.
(2) In order to implement the management of personal data protection, the company and its subsidiaries have established Personal Data Protection Policy and Personal Data Management Procedures, published customer data confidentiality measures on the front page of the company and its subsidiaries’ websites.

No difference.

(3) All matters relating to Company websites or products and services are marked with charging standards, various standard form contracts, product instructions, risk notification, etc. For customer convenience, information on products and services is fully disclosed in easily available prospectuses and product term sheets.

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(4) To comply with the FSC’s promotion of “the Fair Treatment of Customers in the Financial Services Industry”, First Bank, First Securities, First Securities Investment Trust, and First Life Insurance have all issued the Policy and Strategy in Fair Treatment of Customers. In order to optimize the operation process, in 2022, the Company’s subsidiary First Bank was rewarded as top 25% out of the total companies by FSC’s fair treatment evaluation. (5) In order to carry out the Sustainability of the financial industry, the company’s Sustainability policy promises to provide innovative goods or services, ensuring the transparency of service quality and safety, and focus on ESG related issues on investment, lending, brokerage and insurance business to deliver products with life-long social and society value such as “Care Forever Long-Term Care Life Insurance”, “Precious Small Amount Life Insurance”, “Safe Loan” reverse mortgage, “Medical Bio-tech or Long-Term Care Industry Financing Project” and “Preferential Loan for Accelerated Reconstruction of Damaged and Aged Buildings” to assist the economy transformation and benefits. (6) In 2022, the high net-worth wealth management business was launched and the “Implementation Guidelines for the Accountability System of High Net-worth Wealth Management Business” was formulated, which clearly defines the basis for accountability, applicable persons and process. The Accountability Committee was established at the Board level to ensure legal compliance, consumer protection and risk management, and to implement ethical management and fair treatment of customers, so as to shape a culture of accountability.

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Item for Evaluation	Implementation Status (Note 1)	Implementation Status (Note 1)	Implementation Status (Note 1)	Discrepancies with the Listed or OTC Companies Corporate Social Responsibility Code of Practice and Explanation (Note 3)
	Y	N	Summary Note
			(7) The company has set up consumer complaint and dispute handling mechanisms. In addition to establishing the Customer Complaint Handling Procedures and various business dispute handling procedures, the “Stakeholders’ Communication” section of First Financial Holding’s website ofers internet customer service provided by the company and its subsidiaries, 0800 toll-free customer service line, business consulting service line and complaint mailbox, etc. First Bank has also set up a 24-hour customer service line and a mailbox to communicate with customers in real time. In 2022, banking, securities and investment trust subsidiaries have also formulated fnancial service operation methods or procedures for elderly customers, such as adjusting the KYC allocation of elderly customers, adding factors that have a high impact on the elderly in product design, and setting investment cooling-of periods.
(6) Has the company established policies to manage suppliers and request suppliers to follow and implement rules related to environmental protection, occupational safety and health and labor rights?	√		The Company sets the policy and guiding principles for the Company and its subsidiaries in their supplier management. Suppliers are obliged to respect labor rights and occupational health and safety regulations, and to implement ESG measures in the pre-evaluate of the suppliers, we have established 29 types of companies as advanced suppliers. In 2022, a green supply chain was built up and investigated suppliers with high purchase in the current year to check whether they promote carbon inventory or set carbon reduction targets. In 2022, there were 211 suppliers with a purchase amount of more than 1 million in the past 2 years, 15 of which belong to key procurement industries and are listed OTC suppliers. They have conducted carbon inventory or set carbon reduction targets. In 2022, they plan to establish suppliers greenhouse gas inventory platform to continuously expand and grasp the carbon emissions of suppliers, and improve the low- carbon management of the supply chain. By the end of 2022, 2,686 supplier surveys were fnished and three- stage supplier screening management mechanism will be implemented. In 2021, “ISP20400 Sustainability Purchasing Guidance”-7 core topics were adopted and certifcation of the above ISO20400 purchasing performance evaluation was fnalized in Nov. 2022.	No diference.

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A. Screening: Check for environmental pollution and violation of labor regulations or social welfare before bidding. Request proof of improvement; otherwise, reject supplier. A total of 3,569 suppliers agree with our advocacy in 2022.
B. Commitment: Sign a Commitment on Human Rights and Environmental Sustainability Clause with suppliers, pledge to comply with international human rights conventions, environmental and labor-related regulations, and promote their implementation of labor human rights and environmental protection. 100% lessees agree to use green architecture materials and 2,686 suppliers signed “Human Rights & Environmental Everlasting Commitment” to support our advocacy in 2022.
C. Post-event management: Supplier meetings were held to promote the social sustainability and environmental protection concepts to ensure the suppliers follow the “ Suppliers Safety and Sanitary Regulations” and “Suppliers Management Rules”. In 2022, “Gov-owned FI Sustainability Finance Focal Point” was held by the Group for MOF to advocate the ESG mindsets to suppliers and clients for a sound sustainability ecosystem.
D. Regularly inspect qualified suppliers for signs of environmental damage, occupational accidents, or violation of labor law and regulations. If such events occur, the supplier must submit plans for improvement, or cooperation will be terminated and the supplier will be blacklisted. In 2022, the company paid on-site visits to 10 suppliers. None of them have encountered occupational accidents or violated environmental protection and labor laws. Energy management awareness trainings and supplier meetings were also held by the company.

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Item for Evaluation	Implementation Status (Note 1)	Implementation Status (Note 1)	Implementation Status (Note 1)	Discrepancies with the Listed or OTC Companies Corporate Social Responsibility Code of Practice and Explanation (Note 3)
	Y	N	Summary Note
(7) Has the company refer to international standard guidelines to edit CSR report to disclose their fnancial statement or company’s CSR report passed the verifcation standard of the relevant certifcation body?	√		(1) Starting from 2011, the Company issued Sustainability Report for 12 consecutive years, disclosing non- fnancial information such as ESG covering FFHC and subsidiaries including FB, FS, FSIT, FLI, First AMC, First Consulting and First Venture Capital total 7 subsidiaries. (2) The Company’s 2021 Sustainability Report has been verifed by the British Standards Institute (BSI), in accordance with AA1000 V3 TPYE 2 guidelines, and found to meet GRI core requirements, the SASB disclosures part of the “Consumer Finance” industry standards was handled by Ernst & Young Certifed Public Accountants for independent limited assurance (Limited Assurance). For more information, please refer to “2021 Sustainability Report”.	No diference.

If the company has established its CSR code of practice according to the Listed Companies Corporate Social Responsibility Code of Practice, please describe the implementation status and the discrepancies between the company’s actual practice and the Code: No difference.
Other important information to facilitate better understanding of the company’s implementation of its corporate social responsibility: please refer to our ESG report, https://csr.firstholding.com.tw/tc/csr_report.html

3.3.7 Discrepancies between Ethical Corporate Management of the Financial

Holding Company and Ethical Corporate Management Best Practice Principles for Listed Companies and Explanation

3.3.7.1 Implementation of Climate-Related Information

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Item

Implementation status

1. Describe the board of
directors and management’s
oversight and governance
of climate-related risks and
opportunities.

The Board of Directors of FFHC serves as the top governing unit responsible for
overseeing the Group’s climate-related risks. Their duties include approving, guiding,
and ensuring the efective operation of risk policies. The ESG Committee and the Risk
Management Committee operate under the supervision of the Board of Directors and
are tasked with overseeing critical strategies related to the group’s climate risks,
which are outlined below:
A. The ESG Committee is chaired by the Chairperson of the Board, with the Presidents
of each company in the Group serving as committee members. The committee is
primarily responsible for formulating short, medium, and long-term ESG objectives
and plans of action related to climate change. They also establish annual ESG
performance evaluation criteria for subsidiaries. Quarterly meetings are held to
track and review the progress of each climate change and ESG target and action
plan, and implementation performance from the preceding year is reported to
the Board of Directors within four months after year-end to promote the adoption
and implementation of the Group’s sustainability policies. Starting in 2022, each
subsidiary’s annual business performance evaluation will include assessments
of their climate change and comprehensive ESG performance to ensure the
achievement of each annual target.
B. The Risk Management Committee is headed by the Chairperson of the Board
and consists of the President, Vice President, and Chairpersons and Presidents
of the subsidiaries as its members. The committee provides regular reports
and continuously monitors the outcomes of climate risk assessments and the
implementation of mitigation measures, which are subsequently reported to the
Board of Directors.

2. Describe how the
identifed climate risks
and opportunities afect
the business, strategy, and
fnances of the business
(short, medium, and long
term).

A. Risks:
(1) Transition risks: These refer to policy, legal, technological, and market changes
that may occur during the low-carbon transition process, and which are used to
mitigate and adapt to climate change.
1. Short-them: The collection of carbon taxes or fees.
2. Medium-term: Investment and fnancing clients’ inability to undergo low-
carbon transformation.
3. Long-term: Changes in market preferences.
(2) Physical risks: These refer to the actual risks brought about by long-term climate
change and immediate extreme weather, which may have fnancial impacts on
the organization.
1. Short/medium-term: Increase in fooding and landslides.
2. Long-term: Sustained high temperatures cause a rise in sea levels or long-
term heat waves.

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B. Opportunities:
Short-term:
i. “Product and Service”: In response to the development of digital technology, promote paperless banking, securities, and insurance service processes; follow the Equator Principles to implement due diligence and establish customer engagement mechanisms; develop products such as sustainable linked loans, sustainable development linked bonds, and green deposits.
ii. “Resource Efficiency”: When Group-owned or invested real estate is built or replaced, priority should be given to equipment with energy-saving and environmentally friendly labels.
iii. “Energy Sources”: Gradually increase the percentage of self-generated renewable energy.
Medium-term: “Market Opportunities”:
Assist the development of the green industry, such as increasing investment in renewable energy-related companies to help clients meet green supply chain regulations and demand, actively participating in the promotion of sustainable development bonds, issuing and expanding investment in sustainable development bonds, guiding funds to invest in projects that enhance environmental and social benefits.
Long-term: “Enhance Organizational Resilience”:

Based on scenario analysis results, take relevant actions; invest in the production of renewable energy for governments or businesses, continuously evaluate investment opportunities in the renewable energy industry, and adapt to the trend of sustainable development. Proactively plan investment, financing, or insurance products to meet new customer needs resulting from changes in customer behavior.

Describe the financial impact Following the “Guidelines for Domestic Banks’ Climate Risk Financial Disclosure of extreme weather events “ established by the Financial Supervisory Commission, when disclosing financial and transformative actions. information related to climate risks for the previous year, the reporting institution must submit relevant data to the regulatory agency. This includes the expected losses from natural disasters for individuals and businesses in various scenarios, such as orderly transition, disorderly transition, and no policy involved, evaluated for the years 2030 and 2050 as a percentage of the benchmark year’s net worth and pre-tax profit. The institution should also plan to carry out climate change scenario analysis according to the “Guidelines on Climate-related Financial Disclosures of Insurance Companies,” evaluating potential losses under different scenarios, including orderly transition, disorderly transition, and too little too late.
Describe how climate risk identification, assessment, and management processes are integrated into the overall risk management system.
The First Financial Group updated its "Risk Management Policy and Guidelines for First Financial Holding Co. and Subsidiary Companies" in 2020 to include emerging risks, such as climate change risks. In 2021, each subsidiary revised its risk management policy and now conducts regular reviews of loan limits for the group's business categories and high carbon emission (energy-intensive/high pollutant) industries. The review findings are reported to the FFHC's Risk Management Committee and Board of Directors every two months for evaluation.

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Item

Implementation status

5. If scenario analysis is used to
assess resilience to climate
change risks, the scenarios,
parameters, assumptions,
analysis factors and major
fnancial impacts used
should be described.

Scenario basis: The Network for Greening the Financial System (NGFS) is the primary
basis for transformation scenarios, and the physical risk-related factors are integrated
based on the representative concentration pathways (RCPs) developed by the
Intergovernmental Panel on Climate Change (IPCC).
(1) For domestic investments, there are seven scenarios divided into "orderly
transition," "disorderly transition," and "no policy" for both 2030 and 2050, and
"no policy" for 2100. For international investments, there are only four scenarios
divided into "orderly transition" and "disorderly transition" considered for both 2030
and 2050.
(2) The "orderly transition" and "disorderly transition" scenarios aim to achieve net-
zero carbon emissions by 2050. Therefore, they are impacted by both physical and
transition risks. The "no policy" scenario assumes the absence of any transition
policies, thus only being afected by physical risks.
Types of climate risks, impact factors, and linkage factors:
(3) Types of climate risks:
1. Physical risks consider events such as "fooding," "heavy rain," and "drought."
2. Transition risks are mainly related to "carbon pricing" and "policy development."
(4) Impact factors:
1. The macroeconomic pathway mainly considers the impact of the "economic
growth rate," "unemployment rate," and "housing price level" on the benchmark
default rate.
2. The microeconomic pathway efects are as follows:
(i) "Heavy rain" and "fooding" will cause losses from production shutdowns,
asset damage, and collateral value losses.
(ii) "Drought" leads to increased corporate water costs.
(iii) "Carbon pricing" generates additional costs based on the customer's carbon
emissions, further afecting their fnancial performance.
Linkage factors: The individual pathways mentioned above will impact borrowers'
"loan-to-revenue ratio," "secured credit ratio," and "current loan-to-value ratio,"
resulting in the probability of default (PD) under stress situations. Additionally, the
decrease in collateral value will afect the loss-given default (LGD) under stress
scenarios.
Risk calculation is based on existing supervisory stress-test frameworks, incorporating
the factors and pathways of climate change mentioned above to estimate expected
losses (EL) by combining PD under pressure scenarios with LGD and exposure at
default (EAD).

6. If there is a transition plan
for managing climate-related
risks, describe the content of
the plan, and the indicators
and targets used to identify
and manage physical risks
and transition risks.

To implement sustainable lending policies, the bank subsidiaries have established
credit limit controls for industries that exacerbate climate change and environmental
pollution. The credit limit for high-pollution (energy-consuming) industries is set at
a maximum of 14.0% of the total credit limit of the bank and is monitored monthly.
To fulfll responsible investment, each subsidiary has set a limit on the proportion of
investment in high-pollution (energy-consuming) industries to avoid environmental
pollution and harm to society caused by investment. In response to the global trend
of achieving net-zero emissions, starting from 2022, the Sustainable Development
Committee of the bank has planned to stop accepting new investment projects in
mining companies that solely extract coal, and to stop accepting new fnancing
projects for coal-fred power plants from 2023, gradually avoiding credit cases
involving coal-related industries to continually enhance the bank's fnancial infuence
in promoting net-zero emissions.

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If internal carbon pricing is used as a planning tool, the pricing basis should be stated.
Since 2010, the internal carbon pricing mechanism has been introduced, and the electricity saving of domestic business units has been set in accordance with the total carbon reduction target every year to improve carbon reduction awareness and carbon costs. Since 2021, the achievement of each unit’s power saving target has been announced quarterly. After the end of the 4[th] quarter, target achievement rate will be published. Carbon reduction cost per ton based on the actual carbon reduction measures and the amount invested in carbon reduction will be disclosed and informed the unit that has not reached the target for excess carbon emissions and the additional cost. Then the proposes carbon reduction measures for the unit shall be reported. As for the units with excellent performance , reward the personnels and provide their carbon management specific practices for reference among domestic units.
If climate-related goals are set, the covered activities, scope of greenhouse gas emissions, schedule, annual progress and other information should be explained; if carbon offsets or renewable energy certificates (RECs) are used to achieve relevant goals, the offsets should be explained. The source and quantity of carbon reduction credits or the quantity of renewable energy certificates (RECs).
(1)Setting climate target:

In order to meet the national 2050 net zero emission target, the company set carbon reduction target of 2.5% of the sum of carbon emissions scope 1 and scope 2 for 2022, and the absolute reduction will be adopted from 2023 to control the temperature rise within science-based reduction target (SBT) of 1.5°C carbon reduction target. And a 4.2% reduction target of the sum of scope 1 and scope 2 emissions than prior year (2021). If the annual target cannot be achieved, green electricity should be purchased or other carbon trading such as renewable energy certificates to make up for the unfulfilled part.

(2)Carbon emission calculation scope:

The company and all its subsidiaries in the consolidated financial report have completed the inventory and confirmation of scope 1 and 2 emissions in 2022. The carbon inventory standard is based on ISO14064-1, and the total carbon emissions are 21,514.46 metric tons of CO2e. Obtained the SGS verification certificate on Apr. 26, 2023. Among them, the scope 1 emissions are mainly from official vehicle oil, generator diesel and gas, and the scope 2 emissions are mainly from electricity consumption.

(3)Progress of de-carbonization in 2022:

Scope 1:

2022 de-carbonization target: decreased by 33.42 tons than that of 2021

2022 de-carbonization achievement: increased by 186.45 tons than that of 2021.(p.s. mainly due to the parameter GWP used in 2022( increased by 100 tons), and the refrigerant added (increased by 54 tons), making emission grew by total 154 tons.) Scope 2:

2022 de-carbonization target: decreased by 523.58 tons than that of 2021

2022 de-carbonization achievement: decreased by 551.06 tons than that of 2021 (with deduction of green energy purchase of 1,148 thousand degrees and renewable energy certification, a total of 584.33 tons CO2e was decreased.

Please fill in Column 1-1 at below.

Column 1-1

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For Capitals of Companies above NT$10 bn Standalone Inspection
Density
Scope 1 Total emission Assurance
(tons CO2e/mn) Assurance (Note 3)
(Note 1) (tons CO2e) Institution
(Note 2)
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For Capitals of Companies above NT$10 bn	For Capitals of Companies above NT$10 bn	For Capitals of Companies above NT$10 bn	Standalone Inspection	Standalone Inspection
Scope 1 (Note 1)	Total emission (tons CO2e)	Density (tons CO2e/mn) (Note 2)	Assurance Institution	Assurance (Note 3)
Parent Company	1.67	0.04	SGS Taiwan Ltd.	According to the ISO 14064-1:2018 inspection standard, the company proposes the inspection of greenhouse gas claims, and has reached a bilateral agreement with SGS Taiwan Ltd. Perform greenhouse gas quantifcation, monitoring and reporting, and conduct inspections of direct and indirect greenhouse gas emissions. The greenhouse gas emissions cover the period from January 1, 2021 to December 31, 2021, and the greenhouse gas emissions during the period are 21,514.46 tons of CO2e. The inspection results of SGS have reached a reasonable assurance level to ensure the consistency and applicability of its scope of application, objectives and standards, and issue a confrmation report (please refer to Annual Report)
Subsidiary	2,655.03
Total	2,656.70
Scope 2 (Note 1)	-
Parent Company	99.02	0.28
Subsidiary	18,758.74
Total	18,857.76
Scope 3	Scope 3: Investments and Financing inspection took December 31, 2022 as base period, the categories of assets include "equity investment", "bond investment", "commercial loans", "commercial real estate", "mortgages", "sovereign debt" and "project fnancing", and mainly with holding purpose. A total of 13,849,382 tons of emissions. For more information , please refer to our group’s TCFD Report.

Note1: Scope 1 emissions are mainly from official vehicle oil, generator diesel and gas, and Scope 2 emissions are mainly from electricity consumption. The emission coefficients used are based on the 6.0.4 version of the greenhouse gas emission coefficient management table announced by the Environmental Protection Agency. In 2022, the annual inventory uses the warming potential value of the 6[th] assessment report of the IPCC in 2021, and the method used to consolidate the amount of greenhouse gases is the operation control method; the inventory standard is based on ISO14064-1.

Note 2: Total Net Revenue of 2022 is NTD$67,756,394 mn.

3.3.8 Discrepancies between Ethical Corporate Management of the Financial Holding Company and Ethical Corporate Management Best Practice Principles for Listed Companies and Explanation

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Implementation Status (Note 1) Discrepancies with
the Ethical
Corporate
Items for Evaluation Management Best
Y N Summary Practice Principles
for Listed Companies
and Explanation
(Note 2)
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Items for Evaluation	Implementation Status (Note 1)	Implementation Status (Note 1)	Implementation Status (Note 1)	Discrepancies with the Ethical Corporate Management Best Practice Principles for Listed Companies and Explanation (Note 2)
	Y	N	Summary
1. Establishing ethical corporate management policies (1) Has the company clearly stated its ethical management policies approved by Board of Directors and practices in the company’s guidelines and external documents and expressed the Board and C-level Management’s commitment to actively implement the policies?	√		(1) A. The Company has set the Ethical Corporate Management Rules and Code of Conduct as policy, which were approved by Board of Directors to defne the business behaviors of the Group and organization. There are stipulated types of unethical behaviors and their prevention, such as anti-corruption, anti-bribery, and confdentiality mechanisms, anti-trust and unfair competition practices, prohibitions on insider trading, and detection and reporting. The rules apply to all Company and subsidiary employees across the world and all contractors, suppliers, and service providers. The guidance has been amended by Board of Directors on Feb. 24, 2022, for legal compliance dept. shall be the corresponding unit for whistle-blower cases in order to adjust the related rules respectively among the group. B. The Company discloses the implementation of ethical corporate management and active measures via the ofcial website, the Market Observation Post System (MOPS) of the Taiwan Stock Exchange, annual reports, the corporate social responsibility report. Also, an external event of “Fair Treatment and Honesty of Finance” incorporated with Economic Daily News on Apr.7, 2022 to promote the related issues. Investor conference on Nov. 30, 2022 also declared the ethical management principles to suppliers, clients, and other related organizations and stafs to understand groups’ strategy on ESG and disclosed on company’s website. C. In the Corporate Governance section of the ofcial website, the Company lays out the Rules for the Implementation of the Reporting System, which state that any employee or person outside the company who discovers any crime, fraud, or legal violation should report it.	No diference.

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D. The Subsidiary, First Bank sets the

“Implementation Guidelines for the Accountability System of High Net-worth Wealth Management Business”, which clearly defines the basis for accountability, applicable persons and procedures. The Accountability Committee was established at the Board level to take charge of the accountability of the high net-worth management business and to strengthen the management and supervisory requirements laid out by the Financial Supervisory Committee. There are also "Principle of Treating Customers Fairly" and "Principle of Treating Customers Fairly" and "Principle of Treating Customers Fairly" and "Principles of Friendly Service" and "Principles of Honesty in Business" have been added in response to the FSC's 2022 fair treatment assessment mechanism, and The "Principles of Treating Customers Fairly in the Financial Services Industry" has been updated, and the supervisor above the deputy general manager should be appointed to supervise the implementation and the powers and responsibilities of the responsible unit. In order to deepen the protection of financial consumers, the company revised the "Principle of Treating Customers Fairly" in July 2022; in addition, in cooperation with the Banking Association's "SelfRegulations for Treating Elderly Customers Fairly" approved by the Financial Supervisory Commission, the company formulated the first in July 2022. The bank’s “Operation Guidelines for Treating Elderly Customers Fairly” requires friendliness to be considered in product design and development when developing and designing products for elderly customers, and strengthens care for elderly customers and protection measures for abnormal transactions, and establishes a mechanism to help elderly customers express their needs or opinions. And provide various communication channels to enhance the protection of the rights and interests of elderly customers. In addition, in 2022, it once again ranked in the top 25% of the banking industry's fair hospitality assessment, demonstrating its "customer first, service first" business philosophy.

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Items for Evaluation	Implementation Status (Note 1)	Implementation Status (Note 1)	Implementation Status (Note 1)	Discrepancies with the Ethical Corporate Management Best Practice Principles for Listed Companies and Explanation (Note 2)
	Y	N	Summary
			E. Cooperating with the above-mentioned revision of the FSC’s 2022 Fair Hospitality Assessment Mechanism, subsidiaries First Life and FSITC have revised their internal policies and regulations in June and July 2022 respectively, and FSITC has also completed relevant correction work in Aug. 2022.
(2) Has the company established mechanisms to evaluate risks of unethical conducts, regularly analyze and assess business activities with a higher risk of being involved in unethical conducts, set up prevention programs accordingly and ensure the program cover all the preventive measures against the conducts listed in Article 7, item 2 of the Ethical Corporate Management Best Practice Principles for Listed Companies?	√		(2) A. The Legal Compliance Risk Evaluation Report of the Group and its subsidiaries such as First Bank, First Securities, First Securities Investment Trust and First Life Insurance contains diferent categories of unethical conduct risks under its risk topics. In addition to analyzing risk and assessing the risk level of each risk topic, the Company evaluates the control measures of its operational procedures and internal regulations and sets up improvement plans according to the results. B. Each subsidiary conducts a dishonest management risk assessment report every year to identify the weaknesses and risks and formulate control and reduction measures accordingly to reduce the remaining risks to the risk appetite, and adopt risk improvement for projects with higher risks Plan to improve aggressively until fully improved. C. The Group’s companies and organizations have the following internal control policies relating to employee conduct: i. Giving and accepting bribes Group companies and organizations have regulations on personnel management such as the Personnel Management Rules, Work Rules, Work Standards, and Corporate Code of Ethics, which stipulate that employees must not use their positions to beneft themselves or others in violation of ethical corporate management. Where violation of this obligation is proven, the employee will be punished in line with the relevant personnel management regulations. All acts such as corruption, bribery, extortion, and embezzlement are strictly prohibited. ii. Making political contributions The Company’s Ethical Corporate Management Rules and Code of Conduct stipulate that Group companies and organizations may not provide contributions to political parties, political groups, or political candidates.	No diference.

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iii. Giving improper charitable donations and sponsorship

Group companies and organizations have procedural rules for Board of Directors meetings and regulations on donations that make it clear that donations to affiliated persons and major donations to non-affiliated persons must be discussed by the Board of Directors. The Corporate Code of Ethics clearly lays out what types of charitable partnerships may and may not be entered into and what size of donations may and may not be made. The Company’s internal control system also lays out the decision-making hierarchy and criteria for reporting of material information. Clear and reasonable information must be provided on the returns of sponsorship, and charitable donations or sponsorship may not be provided to people with whom the Company has business relations or people whose interests are linked to any Company employee. All charitable donations and sponsorship must comply with the relevant laws and internal procedures. To ensure that such contributions are not bribes disguised as donations or sponsorship, it must be confirmed that the actual purpose of the money flow is consistent with the stated purpose of the donation.

iv. Providing or accepting inappropriate gifts, hospitality, or other benefits

Group companies and organizations have regulations on personnel management such as Personnel Management Rules, Work Rules, and Work Standards, which stipulate that employees must not provide or accept any improper benefits in the course of the execution of their duties or in violation of their duties. If any violation of Company ethics is proven, the perpetrator will be punished in accordance with the relevant personnel management provisions. All acts of corruption, bribery, extortion, and embezzlement are strictly prohibited.

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v. Disclosing trade secrets or infringing on trademarks, patents, copyrights, and other intellectual property rights Group companies and organizations have drawn up Procedures for Trade Secrets and Intellectual Property Management and Implementation Rules Regarding the Processing of Confidential Information. All employees sign contracts to prevent from the leakage of trade secrets and violation of intellectual property rights. Regular training is carried out to increase staff awareness of confidentiality and self-audit and to avoid the leaking of trade secrets. The Company’s subsidiary, First Bank, has drawn up Intellectual Property Management Policies, Procedures for Trade Secrets and Intellectual Property Management and Implementation Rules Regarding Patent Management in order to establish a system for managing patents, trademarks, copyrights, trade secrets and other intellectual property rights, and to ensure business compliance and the protection of intellectual property related rights. If a subject is patentable, an application for a patent must be filed before it can be disclosed or published to the public in order to enhance patent strength. As of the end of 2022, First Bank was granted 52 invention patents, 92 utility model patents and 1 design patent, totaling 145 patents. The patents are gradually being utilized in different businesses and for managing risk. In addition, First Bank owns 49 trademarks that are in effect, which are approved and paid for. In order to protect the company’s patents and works from being leaked, it is stipulated that the external disclosure or publication of related ideas should be approved by the Vice President who supervises the business, and should be reported to the legal department for overall management to reduce risk related to intellectual property management. In addition, to effectively implement and maintain the intellectual property management system, the Bank provides training to all employees every six months to increase awareness of confidentiality issues. The company also formulated the Employee Patent Application Incentive Implementation Points to

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encourage employees to complete the research and development of patents on the job. A contact window is set up in the legal department to assist all business management units to apply for Fintech patents and acquire patent rights. The Bank also holds lectures on Fintech patent application practices in order to motivate employees to file for patent applications. By doing so, the Bank hopes to drive business innovation and the quality and quantity of patents and ensure the operation and effectiveness of the intellectual property management system. In order to improve the management system of intellectual property, the Bank passed again the Taiwan Intellectual Property Management System (TIPS) verification on Nov. 14 2022, becoming one of the banks to pass both the patent and trademark TIPS verification (level A). vi. Unfair competition The Company’s Sustainability policy pledges that the Group will conduct commercial activities in a fair and transparent manner, prohibit false advertising and unfair competition, and abide by laws and regulations on intellectual property rights. Each subsidiary follows the rules set by its own industry association regarding selfgovernance, advertising, sales, and business, as well as relevant management rules. Case studies of penalties leveled for infractions are collected for reference, and there are regulations on regular training to ensure fair competition.

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vii. Research and development, procurement,	No diference.
supply, or sale of goods and services harmful to
consumers or other stakeholders
The Company has drawn up the Rules Governing
Subsidiaries’ Investment in Other Companies
and Co-Marketing Rules and Customer
Data Usage Rules among subsidiaries with
implementation points in order to standardize
the handling of sales operations among Group
companies, including regulatory compliance,
fair dealing with customers, self-regulation, and
fnancial consumer protection. To ensure the
transparency and security of goods and services,
it has also put in place fnancial customer
protection measures such as the Personal Data
Management Policy, Personal Data Management
Procedures, Personal Data File Security
Maintenance Guidelines, Customer Data Use
and Confdentiality Management Procedures,
Financial Consumers Protection Policy, Financial
Consumers Protection Policy Procedures,
Customer Complaint Handling Procedures, and
Financial Product Review Procedures. Information
confdentiality measures are published on
the Company website to prevent the sale of
goods or services that may harm the rights of
consumers or other interested parties. In August
2022, subsidiary First Bank formulated the "Key
Points for the Management of Concentration
of Investment Commodities of high-net-worth
Customers of the First Commercial Bank" to
efectively control the concentration risks related
to the overall investment of these clients and
assist in the establishment and improvement
of high-net-worth customers for asset business
management structure and establish a sound
third-party responsibility monitoring mechanism.

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Items for Evaluation	Implementation Status (Note 1)	Implementation Status (Note 1)	Implementation Status (Note 1)	Discrepancies with the Ethical Corporate Management Best Practice Principles for Listed Companies and Explanation (Note 2)
	Y	N	Summary
(3) Has the company established programs to prevent unethical conducts and clearly stated its operational procedures, guidelines, rules for discipline and complaints and is committed to implement the programs and review it periodically?	√		(3) A. The Company has established the First Financial Holding Code of Conduct for Directors, Supervisors, and Managers and the First Financial Holding Code of Conduct for General Employees. The Group’s Directors, Supervisors, managers and employees have to sign the code of conducts at the end of each year or when they frst assume the position. Any employee proven to have violated company integrity will be reported to the Personnel Evaluation Committee and sanctioned in line with personnel management regulations. A sanctioned employee may fle a statement of defense and be prepared to answer questions at a specially convened committee meeting. The employee may also fle an appeal in line with labor complaint procedures. If the charges are verifed, the employee’s name and the nature of the violation will be disclosed in an internal company letter. The ethical corporate management policy, employee performance appraisal policy, and human resources policy in the Ethical Corporate Management Rules and Code of Conduct are incorporated into business proceedings and contract terms, and all infractions of company integrity are punished in accordance with relevant regulations and personnel management rules.
	√		B. In order to abide by various laws and regulations and internal norms, the directors, supervisors, managers and employees of the Company and subsidiaries other than bank sign the “Statement of the Code of Conduct for Directors, Supervisors and Managers of First Financial Holdings” and the “First Financial Holding Statement on Code of Conduct for Financial Holding Employees. The directors, supervisors, managers and employees of the subsidiary First Bank sign the “Statement of the First Commercial Bank’s Code of Conduct for Directors, Supervisors and Managers” and the “First Commercial Bank’s Employee Code of Conduct” respectively	No diference.

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C. The internal control system of the Company and its subsidiaries covers all the operating activities of the Company and its subsidiaries. In addition to establishing organizational procedures, management rules, relevant business specifications and processing manuals, it is reviewed and revised each year according to the additions or changes to laws and regulations, business items and operating procedures. D. In addition to the Legal Compliance Rules, which require respect for the rule of law at all levels in the Company, we are establishing clear and unimpeded channels for consultation, coordination, and communication, as well as making each department’s legal compliance managers responsible for introducing, establishing, and implementing related internal regulations. Employee professional ethics and codes of conduct and provisions prohibiting unethical behaviors stipulated in the Criminal Code, the Money Laundering Control Act, the Securities and Exchange Act, the Personal Information Protection Act, and the Financial Holding Company Act have been incorporated into the legal compliance selfassessments of all departments and will review them half a year. Appropriate procedures are used to raise awareness and drive home the message about professional integrity among employees and to effectively assess compliance. Each subsidiary must also set up its own legal compliance system in accordance with the relevant regulations and the above-mentioned rules, comply with laws and regulations in line with the Handbook of Legal Compliance, and conduct a biannual selfevaluation in writing or via spot checks to ensure that employees know how to carry out tasks in accordance with the relevant regulations. Spot checks are also used to ensure that all operations are being carried out in compliance with laws and regulations.

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E. The Subsidiary, First Bank, formulated the “Investigation Procedures for Abnormal Behaviors or Transactions of Wealth Management Specialists Supervisory and Implementation Management Points" and established an “Independent Investigation Team”. The Chief Compliance Officer acts as the convener of the "Independent Investigation Team" to review the abnormal behavior or transaction of wealth management specialists and to issue a final review report to effectively monitor and reduce the occurrence of fraudulent acts. In 2011, three meetings were held (5/3, 7/22, and 10/31) to report the results of the investigation, planning, management and execution of the "Suspected WM Specialist Misappropriation of Client Funds" and its investigation t check results (in 2022, there was one case of violation, mainly because the WM consultant violated internal operating regulations and assisted customers in using public computers to handle KYC operations throughout the process. And the principle of distribution of external rewards for commodities" points will be deducted based on the bank's regulations. Meanwhile, in 2022, test towards high-net-worth client of legal compliance was completed on May 9, 2022. F. To encourage staff and external contractors to report unethical behavior and misconduct, the Company and its subsidiaries have set up reporting systems that have been reviewed and approved by the Boards of Directors of each company. Every company must regularly conduct personnel training to teach staff how to use the reporting system and revise rules if there is amendment by law.

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Items for Evaluation	Implementation Status (Note 1)	Implementation Status (Note 1)	Implementation Status (Note 1)	Discrepancies with the Ethical Corporate Management Best Practice Principles for Listed Companies and Explanation (Note 2)
	Y	N	Summary
2. Implementation of ethical corporate management (1) Does the company evaluate the ethical record of its counterparties and include contract terms for ethical compliance when signing contracts with its counterparties?	√		(1) A. Before a Group company or organization enters into a business relationship with another entity (including but not limited to procurement, investment, credit extension, and trading), an assessment and stakeholder inquiry process are carried out in accordance with the relevant regulations. All procurement contracts clearly state that personnel and subcontractors alike may not require, invite, accept, or give bribes, commissions, rebates, broker fees, gratuities, kickbacks, gifts, hospitalities, or any other illegitimate gains. In case of violation of these regulations, the Company may terminate or cancel the contract, or deduct the premium and benefts from the contract price. B. Whenever a Group company or organization conducts business activities with external entities, all contracts must conform to an ethics policy and a dissolution clause must be included, to be invoked in the event of violation of such policy. This also enables the legal compliance department to review the legitimacy of business activities and provide advice to ensure there is no interference by unethical actors.	No diference.
(2) Has the company set up a dedicated (non-dedicated) unit under the Board for the promotion of ethical corporate management and to regularly(at least once a year) report back to the Board the implementation status and preventing from non-ethical behavior project?	√		(2) A. The Company has set up an Ethical Corporate Management Committee composed 3 independent directors under the Board of Directors. The committee is the dedicated unit responsible for the drawing up and revision of the Ethical Corporate Management Policy. The companies and organizations of the Group shall regularly (at least once a year) report to their Board of Directors on performance of ethical corporate management and adoption measures. Subsequently, the Company will present a summary of the report to the committee and the Board of Directors to monitor the execution and preventing from non- ethical behavior project. B. The implementation of Ethical Management and procedures in 2022 have been reported in Group’s 3rdand 4thmeetings in the 3rdEthical Corporate Management Committee and 15thand 21stmeetings of the Board.	No diference.

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Items for Evaluation	Implementation Status (Note 1)	Implementation Status (Note 1)	Implementation Status (Note 1)	Discrepancies with the Ethical Corporate Management Best Practice Principles for Listed Companies and Explanation (Note 2)
	Y	N	Summary
(3) Has the company established policies to prevent confict of interests, provided appropriate channels for appeals and efectively implemented the policies?	√		(3)A. The Company’s Code of Practice on Corporate Governance and the First Financial Holding Code of Conduct for Directors, Supervisors, and Managers, their spouses, second kinship relatives, or controlling ownership companies with directors, stipulate that, if proposals presented in meetings have a bearing on their own interests or the interests of the institutions that they represent, directors shall explain the interests at stake at the Board of Directors meeting. If such interests run counter to the Company’s, said directors shall recuse themselves and refrain from participating in discussions, voting, and acting on behalf of other directors in the exercise of their voting rights. Directors should exercise self-discipline and refrain from conficts of interest when supporting each other in unethical ways. The Code of Practice on Corporate Governance, the First Financial Holding Code of Conduct for Directors, Supervisors, and Managers, and the First Financial Holding Code of Conduct for General Employees also prohibit directors, managers, staf, and persons with substantial control over the Company from using their positions or infuence in the Company to obtain improper benefts for themselves, their spouse, parents, children, or anyone else. B. “FFHC M&A Disclosure Discipline Guidance” has in place that when disclosing M&A information, the related parties of directors shall be prevailed. C. The Company’s Rules of Procedure for Board of Directors Meetings, Organizational Rules of the Audit Committee and Organizational Rules of the Compensation Committee state that if a director/ committee member himself/herself or his/her legal representative has interests in a meeting motion and which is detrimental to the company’s interest, then the director/committee member shall recuse himself/herself during discussions and votes and shall not exercise voting rights on behalf of other directors. In addition, where the spouse, a blood relative within the second degree of kinship of a director/committee member, or any company which has a controlling or subordinate relation with a director/committee member has interests in a motion, the director/committee member shall be deemed to have interests in the motion.	No diference.

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D. First Bank has in place Procedures for Personnel in the Treasury Division and Financial Markets Business Administration Division to Prevent Conflicts of Interest and Insider Trading. First Securities has the Code of Ethics for Investment Managers. First Securities Investment Trust has the Code of Conduct for Managers, Code of Conduct for Investment and Trading Personnel, Rules on Discretionary Investment Accounts, and Guidelines for Fund Managers for Preventing Conflicts of Interest. First Life Insurance has its Corporate Code of Ethics and its Procedures for Prevention of Conflicts of Interest for Domestic Equity Investment Personnel. E. The whistleblower Rules has set to prevent from person of interest of interrupting. As to filing, investigation, review and reporting stages, person of interest shall be excluded for participation. The Company and its subsidiaries have put in place whistleblower systems that have been reviewed and approved by the Board of Directors of each respective company and have set up and announced reporting channels including telephone line, fax, e-mail, and surface mail for employees or external personnel to file their cases and to effectively manage communication channels and handle the reports.

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Items for Evaluation	Implementation Status (Note 1)	Implementation Status (Note 1)	Implementation Status (Note 1)	Discrepancies with the Ethical Corporate Management Best Practice Principles for Listed Companies and Explanation (Note 2)
	Y	N	Summary
(4) Has the company established efective accounting and internal control systems for the implementation of ethical management and have internal auditor setting related audit plan for non- ethical behavior risk evaluation result and certifed accountants perform regular audits to prevent from non- ethical behavior?	√		(4)A. The Group’s corporate and organizational accounting systems are formulated in accordance with the Regulations Governing the Preparation of Financial Reports by Financial Holding Companies, the Regulations Governing the Preparation of Financial Reports by Securities Issuers, the accounting templates of the respective industry associations, the International Financial Reporting Standards and other relevant laws and regulations approved by the Financial Supervisory Commission. In addition to implementing the above rules, accounting and internal control review procedures are clearly defned for business activities with higher business risk to reduce the number of external accounts and the likelihood of secret accounts. Regular internal and external audits and accounting checks are conducted to ensure that the design and implementation of the system continues to be efective. Each quarter, the Company invites certifed public accountants to attend the audit committee and the meeting of the Board of Directors to talk to directors (including independent directors) to review or check the fnancial reports that they have audited or certifed. B. The Company’s Tax Governance Policy defnes the Board of Directors as the Company’s highest tax risk management unit. In order to reduce Company tax risk and operating costs, the responsible tax management unit shall regularly report to the Board of Directors. Subsidiary First Bank, formulated the "First Bank Tax- Governance Policy" in January 2022 to ensure the implementation of tax governance and integrity management policies, it also regularly reports the implementation of tax management to the board of directors every year.	No diference.

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Items for Evaluation	Implementation Status (Note 1)	Implementation Status (Note 1)	Implementation Status (Note 1)	Discrepancies with the Ethical Corporate Management Best Practice Principles for Listed Companies and Explanation (Note 2)
	Y	N	Summary
			C. The internal control system of the Group’s companies and organizations covers the management of the fnancial report preparation process and includes three lines of defense: the self-checking system, the legal compliance system and risk management mechanism, and the internal audit. These ensure that fnancial reports and non-fnancial reports are prepared in accordance with generally accepted accounting norms, and that transactions are properly approved, reliable, timely, transparent, and compliant. D. The Company and its subsidiaries have listed ethical corporate management as a key item for inspection while preparing for the audit plan. Each subsidiary has listed the improvement plan and control measures for medium and high risk items under the non-ethical risk topic assessment result of each legal compliance risk assessment report as inspection items and compliance was checked accordingly. The Company has also listed relevant compliance as inspection items for the Company’s internal audit unit and handled all audit results according to rules.
(5) Does the company regularly hold internal and external trainings on ethical corporate management?	√		(5) A. The Company’s Directions on Legal Compliance clearly stipulates that the Company and its subsidiaries shall comply with the plan to conduct suitable and appropriate legal training at least once every six months. In addition to recent changes in important regulations, training content shall include penalties imposed on peer fnancial companies, confdentiality, ethical self-regulation, and anti-bribery and anti-corruption campaigns. All members of staf shall be required to follow all applicable laws and regulations when handling various types of business. This will also enhance the Company’s business operations and corporate culture of ethical management. B. In 2022, the Company and each of its subsidiaries held at least two staf training courses in ethical corporate management. The total training time was 89,961 hours and the total number of lessons taken was 49,512.	No diference.

100

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Items for Evaluation	Implementation Status (Note 1)	Implementation Status (Note 1)	Implementation Status (Note 1)	Discrepancies with the Ethical Corporate Management Best Practice Principles for Listed Companies and Explanation (Note 2)
	Y	N	Summary
3. Implementation of the whistle-blowing system (1) Has the company established a concreate whistle- blowing and rewarding system to enable reporting and assigned an appropriate and dedicated staf to handle matters related to the person being reported?	√		(1)A. The Company and its subsidiaries have put in place whistleblower systems that have been reviewed and approved by the Board of Directors of each respective company and have set up and announced reporting channels including telephone line, fax, e-mail, and surface mail for employees or external personnel to fle their cases and to efectively manage communication channels and handle the reports. The Legal Compliance Department is the unit to receive reported cases, and the case reviewing committee shall assign an independent authority within the company to oversee the investigation or transfer the case to a subsidiary for investigation and handling. If the accusation is proven, whistleblowers shall be rewarded according to the circumstances of the case. Any whistleblower who makes a false or malicious report shall receive penalty in accordance with the relevant personnel management provisions. B. In 2022, the Company and its subsidiaries announced to employees and trained them to use the reporting system so that they are aware of the reporting channels and whistleblower protection measures for a total of 2,193 hours of education for 2,958 participation.	No diference.
(2) Has the company established standard investigation procedures, necessary procedures after investigation or related mechanisms for maintaining confdentiality?	√		(2) The standard operating procedures, necessary procedures after investigation and confdentiality mechanisms for the whistleblower system of the Company and its subsidiaries are as follows: 1. When the Company’s accepting unit receives a case, it shall submit the handling method to the case review committee (hereinafter referred to as the committee). 2. After a case is accepted, it shall be processed as a confdential case. Depending on the type of the case, investigation will be handled by the Company or its subsidiary. The investigation unit shall complete the investigation within 30 days of receipt; after the investigation report is completed, it shall be delivered to the case accepting unit within 30 days, and the period may be extended if necessary.	No diference.

101

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According to the circumstances of the case, a number of methods may be used to verify the facts, such as telephone, written or face-toface interview, etc. During the investigation, the relevant units shall cooperate by providing the necessary documents and materials and all information or materials regarding the relevant parties involved in the report shall be kept strictly confidential and shall not be disclosed.
All persons with conflicts of interest or those whom may influence the impartiality of the investigation shall be excluded from the acceptance, investigation, review, re-examination and reporting of the case. In cases brought before the commission, investigators shall list on the checklist the persons to be recused.
The investigation unit may have the accused person state its opinions in interviews or in writing, and it shall be carried out in a closed manner in principle.
When handling the case, updates on case status shall be provided in writing or other means to the whistleblower as appropriate within ten days after the review and approval of the investigation report. For cases transferred to a subsidiary, the subsidiary shall notify the whistleblower and inform the Company of the results.
The receiving unit shall send the investigation results to the supervisor of the unit to which the accused person belongs. The supervisor of the accused person shall inform the accused person and make improvement requirements. If the accused person is the chairman of the board, his supervisor/independent director shall notify the accused person.
Full written documents or electronic files recording the receipt of the report, the investigation process, and investigation results shall be kept for at least five years. Should any litigation arise on the basis of the contents of such reports, they shall be retained until the end of the proceedings irrespective of the five-year retention provision.

102

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Items for Evaluation	Implementation Status (Note 1)	Implementation Status (Note 1)	Implementation Status (Note 1)	Discrepancies with the Ethical Corporate Management Best Practice Principles for Listed Companies and Explanation (Note 2)
	Y	N	Summary
			9. If the accused person is a director, supervisor, or manager with a seniority equal to or above that of the vice president, the investigation report shall be presented to the audit committee or supervisor for review. 10. If a whistleblower case is found to be true, the relevant units shall be instructed to review the internal control system and operating procedures and propose improvement measures. Once the subsidiary has presented its reports to its Board of Directors, they are sent to the Company’s Ethical Management Committee for reference. Major incidents or crimes shall be reported to the Company and the relevant authorities in accordance with the First Financial Group Major Incident Reporting Procedure and the First Financial Group Procedure for Legal Compliance Case Reporting.
(3) Has the company adopted measures to protect the whistle-blowers from inappropriate disciplinary actions?	√		(3) The reporting systems put in place by the Company and its subsidiaries have the following provisions for whistleblower confdentiality and the protection of the right to work: 1. The identity of the named whistleblower shall be kept confdential and no information sufcient to identify or infer their identity shall be disclosed. 2. The whistleblower may not be improperly disposed of in response to the report, including termination, removal of responsibilities, demotion, salary reduction, damage to their rights and interests under law, contract, or custom, or any other form of punishment.	No diference.
4. Enhancement of Information Disclosure Does the company disclose its ethical corporate management policies and implementation status on its website and public information observation websites?	√		The Company’s Ethical Corporate Management Rules and Code of Conduct, Code of Practice on Corporate Governance, and ESG policy are published on the Company website and the Market Observation Posting System of the Taiwan Stock Exchange and in documents such as annual reports, corporate social responsibility reports, and prospectuses to disclose the Company’s performance in ethical corporate management and active measures.	No diference.

103

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If the company has established its ethical corporate management code of practice according to the Ethical Corporate Management Best Practice Principles for Listed Companies, please describe the implementation status and the discrepancies between the company’s practice and the code: No difference.
Other important information to facilitate better understanding of the company’s implementation of its ethical corporate management (For example, review and updates to the bank’s ethical corporate management policies):
(1) In order to promote and implement fair hospitality and honest management, the board of directors of the company has instructed each subsidiary to handle the following matters, for each subsidiary has cooperated:
Develop relevant protection measures for vulnerable groups.
Follow the principle of treating customers fairly to evaluate implementation of the project, or ask for subsidiary First Bank to strive for better results.
Check whether a friendly contract is provided, such as a version with a larger font and marking the key points and improving it in time to comply with fair hospitality.
Remind subsidiary First Bank when handle the application for financing by the physically or mentally disabled in a prudent manner based on the principle of financial consumer protection.
(2) In order to continuously strengthen and implement the Principles for Fair Treatment of Customers, the Company places emphasis on the protection of consumer rights and interests of vulnerable groups such as the elderly and the physically and mentally challenged, so as to demonstrate the quality of the Group's financial services and comply with the requirements of relevant regulations of the competent authorities. The subsidiary bank, securities, securities investment trust and life insurance company have put forward relevant plans and measures to counter "financial exploitation of the elderly". In addition to enhancing the education and training of staffs and promotion of legal compliance, the Company also conforms to the relevant regulations of the competent authority to revise the contract terms and formulate the "Major Terms of the Contract" for customers to bring back for reference. Precaution measures such as red flag indicators are also planned and implemented in systems to mark the abnormal transaction patterns of elderly customers and abnormal interactive behavior between elderly customers and accompanying persons. The reports are submitted to the Company’s Ethical Management Committee and the Board of Directors for future reference.

104

3.3.9 Corporate Governance Guidelines and Regulations Disclosure

Please refer to our website: https://www.firstholding.com.tw/sites/firstholding/governance/manageRule

3.3.10 Other Information enabling better understanding of the Company’s Corporate Governance

3.3.10.1 Please refer to our website for “Procedures for Handling Material Insider Information” and “Self-Regulatory Rules on Disclosure of Merger and Acquisition Information” regulations, the Company did not receive any penalty for unlawful practice against insider conflict of interest in the year of 2022.
3.3.10.2 “Procedures for Verification and Disclosure of Material Information of Listed Companies” and “Information Filing Regulation” are adopted in the Company, no penalty was received from regulators in the year of 2022.

3.3.10.3 Directors Education & Training Records: total 111 hours for 2022.

Data as of Dec. 31, 2022

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Institution
On Board Program Comply with
Title Name Hours
Date Rules?
Core Expertise Total
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Title	Name	On Board Date	Institution Program Hours	Institution Program Hours	Institution Program Hours	Comply with Rules?
			Core	Expertise	Total
Representative of Entity Shareholder	Ye-Chin Chiou	2021/07/20	3.0	3.0	6.0	Yes
Representative of Entity Shareholder	Fen-Len Chen	2021/07/20	3.0	3.0	6.0	Yes
Representative of Entity Shareholder	Shang-Chih Wang	2021/07/20	3.0	3.0	6.0	Yes
Representative of Entity Shareholder	Shing-Rong Lo	2021/07/20	6.0	3.0	9.0	Yes
Representative of Entity Shareholder	Chih-Chuan Chen	2021/07/20	6.0	3.0	9.0	Yes
Representative of Entity Shareholder	Hsin-Lu Chang	2021/07/20	3.0	3.0	6.0	Yes

105

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Institution
On Board Program Comply with
Title Name Hours
Date Rules?
Core Expertise Total
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Title	Name	On Board Date	Institution Program Hours	Institution Program Hours	Institution Program Hours	Comply with Rules?
			Core	Expertise	Total
Representative of Entity Shareholder	Shih-Yuan Tai	2022/08/15*	6.0	0.0	6.0	Yes
Representative of Entity Shareholder	Li-Lin Yao	2021/07/20	9.0	3.0	12.0	Yes
Representative of Entity Shareholder	An-Fu Chen	2021/07/20	3.0	9.0	12.0	Yes
Independent Director	Rachel J. Huang	2021/07/20	3.0	3.0	6.0	Yes
Independent Director	Chun-Hung Lin	2021/07/20	3.0	3.0	6.0	Yes
Independent Director	Yen-Liang Chen	2021/07/20	3.0	3.0	6.0	Yes
Independent Director	Wen-Ling Hung	2021/07/20	0.0	6.0	6.0	Yes
Independent Director	Hung-Yu Lin	2021/07/20	12.0	3.0	15.0	Yes

*Mr. Tai’s first appointment as director for listed companies was Mar.18, 2019.

3.3.10.4 Company Secretary Education & Training Record

Data as of Dec. 31, 2022 Institution On Board Program Comply with Title Name Hours Date Rules? Core Expertise Total 18.0 6.0 24.0 1. In compliance with relevant Securities and Exchange Chief Secretary of regulations about the the Board & Company Li-Fang Hung 2021/08/26 education and training Yes Secretary requirements, at least 18 hours shall be finished for the 1[st] time on-board before Aug. 25, 2022. 2. The calculation starts from Aug. 26 2021 to Dec. 31, 2022.

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3.3.11 Implementation of Internal Control System

3.3.11.1 Internal Control System Statement

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3.3.11.2 Enhancements and improvement plans for the internal control system (As of December 31, 2022)

Items for improvements Subsidiary: First Commercial Bank, Ltd 1. Manila Branch penalty case The Manila Branch failed to comply with the 2020 and 2021 agricultural reform loan and other agricultural loan regulations and was charged administrative fees of PHP 1,551,359.97 (approximately equivalent to NT$843,368.35) and PHP 1,471,334.50 (approximately equivalent to NT$795,256), respectively, by the Central Bank of the Philippines. 2. Singapore Branch penalty case (1) The Monetary Authority of Singapore (MAS) issued a warning letter to the branch in 2020 when it failed to identify politically exposed persons (PEPs) as high-risk customers. (2) Due to the omission of manual calculation by the accounting department of the branch, the qualifed assets were infated, and the actual current ratio was lower than the MAS requirements. MAS required the branch to pay a penalty interest of SGD 356.28 (approximately equivalent to NT$7,595.89) for non- compliance with the current ratio.	Improvements 1. In the case of non-compliance in 2020, the Central Bank of the Philippines has already deducted the amount from the branch’s account. 2. In the case of non-compliance in 2021, our branch has fled for a review, and the Central Bank of the Philippines is still evaluating and has yet to fnalize a decision. Based on the new regulations announced by the Central Bank of the Philippines on November 8th, 2022, the “capital amount” will be removed from the denominator of the compliance ratio. According to the new regulations, the Manila branch has been fully compliant since the fourth quarter of 2022. (1) Improvement measures are as follows: 1. We have engaged a consulting company to verify the customer list scanning function of our system. 2. The system optimization has been completed and launched. 3. A monthly compliance training is being conducted to enhance the risk awareness of our staf. (2) Improvement measures are as follows: 1. The felds for the accounting report were adjusted, and the IT department will generate the required data to reduce manual errors. 2. Management targets and warning targets for the daily required current ratio have been added. 3. The current ratio report of relevant departments has been prepared and the review mechanism has been set up. 4. The frequency of compliance training has been increased to enhance the adherence of all departments to the regulations.	Estimated complete time 1. In the case of non- compliance in 2021, our branch has fled for a review, but the Central Bank of the Philippines has yet to fnalize a decision. 2. Improvement completed. Improvement completed.

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3. The Bank was engaged in the business of selling insurance and was found to have solicited customers before the products were listed for sale, and failed to adequately inform customers of the relevant risks before purchases were made. As a result, the FSC imposed a fne of NT$1.2 million and ordered the Bank to make corrections within a specifed period. 4. In the case where the branch staf changed the initial password of the ATM card on behalf of the customer, the regulatory authority ordered the situation to be corrected. 5. A branch staf transmitted customer information to personal social media and was fned NT$50,000 by the FSC. 6. The Labor Afairs Bureau of the Kaohsiung City Government inspected the bank's Kaohsiung Regional Center and found that the bank had violated the Labor Standards Act and the bank was fned NT$50,000.	1. The Bank has revised the operating rules of insurance sales, which include the following additional operating processes: (1) Sales personnel may solicit business after the start of business hours on the frst day of ofcial product sales. (2) The submission of premium payment schedules has been incorporated into reports for control. (3) The operational rules have been listed as education and training items for the business units. 2. Logins to record the sales process are now under system monitor. 3. Relevant operating rules have been included in the self-assessment items for personal insurance internal control, and items such as new risk issues and responses to the current situations have been added. 1. Operational rules have been established and notifed in writing. 2. An abnormal transaction monitoring report has been established. 1. A notice has been issued reiterating that employees should abide by their duty of confdentiality. If there is any misconduct that damages the reputation of the bank, punishments will be imposed to varying degrees depending on the severity of the violation. 2. A letter has been sent out to announce the "Precautions for using social media", and all departments are required to promote the rules. 3. The employee involved in the case was reprimanded twice by the Personnel Evaluation Committee on October 13, 2022, and the employee's direct supervisor was given a written warning. 1. An appeal has been fled in this case, and it is hoped that the regulatory authority will again review the bank's defense. 2. Due to the issue involved in the payment of the supervisory allowance, a feasible solution will be discussed in a separate case.	Improvement completed. Improvement completed. Improvement completed. Scheduled to complete before June 30, 2023.

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Subsidiary: First Securities In 2021, the Financial Examination Bureau of the FSC inspected the company’s general business and discovered the following defciencies. On April 12, 2022, the FSC issued a letter requiring the errors to be rectifed and imposed a fne of NT$480,000: (1) Handling of anti-money laundering operations: 1. Some customers who should have been evaluated as high-risk were instead assessed as medium or low- risk, and when verifying special and signifcant cases reported in the media, the list of customers to be reviewed was not communicated to the business units. As a result, the business units failed to re-examine these customers and assess their risks. 2. The risk level of a customer was downgraded from high risk to low risk without stating the reason and without approval from the district supervisor. 3. Due to a system programming error, the reports failed to flter and display transactions that met the criteria. (2) Handling foreign negotiable securities trading on behalf of customers: 1. Accepted orders from customers to purchase foreign bonds via mobile phone, but failed to retain a recording of the order. 2. Failed to inform the customer of the benefts obtained from the counterparty in the transaction, such as compensation, fees, discounts, etc., and did not complete the declaration within the time limit. (3) There was a lack of inspection and control over instances where customers provided contact information identical to that of internal personnel. Additionally, no verifcation or records were kept for customers from diferent branches who placed orders or subscribed using the same network IP address.	1. The business units have been notifed to rectify the defciencies. In the future, business units are required to review and sign of on the changes to prevent any oversights. Furthermore, the relevant operational rules will be reiterated in the education and training program. 2. It has been emphasized that in cases where the risk level for money laundering is reduced, the reason must be clearly stated and approved by the district supervisor before proceeding with any actions. 3. The system logic settings have been amended, and the necessary adjustments to the management reports have been completed. Going forward, the compliance department will arrange annual reviews of monitoring parameters, and individual cases will be randomly selected for verifcation by various business groups such as the channel business group, asset management business group, and investment banking business group. 1. It has been reiterated that customer orders cannot be accepted via mobile phone. 2. The trading model for overseas bonds has been revised, and now channel commissions and other benefts will be charged directly to the clients. The changes have been reported to the Taiwan Securities Association and announced on our ofcial website. 1. The comparison of the adjusted management reports has been completed. 2. If customers from diferent branches have the same IP address but are not related, transaction confrmation is required and records should be kept for future reference.	Improvement completed. Improvement completed. Improvement completed.

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In 2021, the Financial Examination Bureau of the FSC inspected the company’s information operations and discovered the following defciencies. On June 29, 2022, the FSC issued a letter requiring the errors to be rectifed and imposed a fne of NT$480,000: (1) Internal audit operations The audit items did not cover business- related areas such as the management of co-location services and the use of dedicated electronic lines for placing orders. (2) Information operations: 1. While managing user accounts, the account login failure records of core systems have not been monitored and analyzed daily. 2. Failure to establish a regular inspection mechanism for operating system security parameters and set appropriate system host or individual user password security parameters. 3. The retention period for frewall logs is inconsistent with the information security inspection mechanism of the securities frm. 4. Failure to assess the risks of allowing employees to use social media software, such as Facebook, Line, and Skype. 5. When the mobile app is opened, it does not detect whether USB debugging mode is enabled on the device, and users are not notifed of the potential risks. 6. It is necessary to comply with the legal requirement of a 5-year retention period for outgoing emails that contain personal information.	The audit procedures, audit schedules, and audit working papers have been updated and submitted to the Board for review and approval before implementation. 1. The "Information System Management Guidelines" have been updated to include daily monitoring and analysis of failed login attempts for the core system, as well as record-keeping of any abnormalities. 2. A checklist for "Operating System Password Security Parameters" has been created, and regular parameter checks are being conducted. 3. The export of frewall logs is being verifed to ensure compliance with the 3-year retention period required. 4. The use of social media software, such as Facebook, Line, and Skype, on company computers is now strictly prohibited for all employees. 5. The mobile app now includes a feature to detect the USB debugging mode of the device and provides users with a warning of any associated risks. 6. The retention period for outgoing emails containing personal information has been revised to comply with the 5-year retention period required by law.	Improvement completed. Improvement completed.

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(3) Tracking the status of items for improvement from the FSC’s information operation inspection: 1. The "Network Equipment Management for Server" has not defned the key principle items for reviewing frewall rules. 2. No frewall is built to control the access between the internal server area, the branch ofce, and the head ofce OA network segment. 3. For those who use portable devices such as USB to write fles, or use personal mobile phones or other mobile devices to receive company emails, a personal data fltering and blocking mechanism should be established to avoid the risk of personal data leakage. 3. On April 6, 2022, the Taiwan Stock Exchange issued a letter regarding the delayed reporting of the online order system login and information security incidents, and imposed a fne of NT$430,000, urging improvements to be made: (1) The online order system does not require multi-factor authentication during login. (2) Information security or service abnormal incidents related to the information system were not handled following the " Operational Guidelines for Reporting on the Information and Communication Security Incidents in the Securities and Futures Markets" (3) The process of applying for or updating certifcates in the online order system should be enhanced with security measures to ensure real- time confrmation of the customer's identity. (4) Fail to conduct real-time reviews of the implementation status of its internal control system.	1. The "Firewall Management SOP" has been revised to include key principles for frewall rule review and measures to support high-risk communication services. The review of frewall rules is expected to be completed by March 31, 2023. 2. The internal server frewall has been built. To avoid afecting services, network segments will be implemented in stages, and it is expected to be completed by March 31, 2023. 3. A system for preventing personal information leakage is planned to be introduced to reduce the risk of personal information leakage and is expected to be completed by December 31, 2023. (1) A revision was made and multi-factor authentication is now required to log in to the online order system. (2) A level classifcation system for information security incidents, as well as regulations and procedures for managing and reporting external information security incidents, have been added. (3) An OTP verifcation mechanism is implemented to strengthen the authentication process for certifcate applications and updates in the online order system. (4) 1. The "Information Security Incident Management Measures" was revised to increase staf’s awareness of the importance of timely reporting of information security incidents. 2. To ensure transaction security, customers are reminded to uninstall certifcates if they are not used after download.	Scheduled to complete before March 31, 2023. Improvement completed.

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The Department of Labor of the Taipei City Government has issued a letter to the company dated April 15, 2022, stating that the company violated Article 24, Paragraph 1 of the Labor Standards Act by failing to pay overtime wages to employees who extended their working hours and imposing a NT$50,000 fine on the company.

The company provides application procedures Improvement such as those set in the "Work Rules" and completed. "Employee Attendance Management Measures".
To prevent employees from providing services beyond their working hours without applying for overtime, we have implemented preventive measures by adding an "Attendance Overtime Operation" function to our Human Resources Electronic Process Management System.

Subsidiary:

Improvement completed.

First Life Insurance Co., Ltd.

During the Declared Interest Rate Meeting, the company determined the declared interest rate based on the items outlined in the "Letter of Commitment for Setting the Declared Interest Rate" and did not take into account factors such as competition with peers and expected market interest rate trends. In addition, the range for adjusting the declared interest rate of both currently sold and discontinued products in the same asset category is consistent and in line with the principle of fair treatment of customers.

To determine the declared interest rate for interest rate-sensitive insurance products, the formula took into account the interest rates declared by peers and expected future interest rate trends. As a consequence, on August 18, 2022, the regulatory authority ordered the sales of the Mei-le-duo U.S. dollar interest ratesensitive whole life insurance product to be halted.

The company neglected to demand that Eastern Insurance Agency complies with business regulations prohibiting the 1. Sign a new memorandum of cooperation and collection of money from the company process commission items that are eligible for under other pretexts. Additionally, the receipt according to law. company’s questionnaire design failed 2. The "Policyholder Investment Risk Assessment to accurately determine the true risk Form" was revised to effectively differentiate attributes of customers, resulting in the investment risk levels of customers and the ineffective implementation of the implement product suitability. product suitability policy. The company 3. The "New Contract Review Operating Manual" also failed to notify the insured in was revised to ensure that individuals are writing of the reasons for policy rejection involving physical or mental disabilities. notified in writing of the reasons for policy rejection in cases involving physical or mental Furthermore, the company did not effectively implement a management disabilities. mechanism for personnel using 4. The establishment of an independent trading information and communication equipment room and telephone recording monitoring related to domestic equity investments, equipment is completed. nor did they establish an independent trading room. Consequently, the regulatory authority imposed a fine of NT$1.2 million and ordered corrective actions to be taken on September 28, 2022.

3.3.11.3 If certified public accountants were engaged in performing audits on the internal control system, the audit report shall be disclosed: N/A

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3.3.12 Penalty Received for Unlawful Practices over the Past Two Years and up to the Publication Date of This Annual Report, and Corrective Actions Taken against Major Defects.

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Indictment by Prosecutors Against None. the Responsible Person or Staff Members because of a Crime Committed on Duty.

Penalty Fine Imposed by the Financial Supervisory Commission Due to Violation of Law or Rectification Imposed by the Financial Supervisory Commission, or Penalty Imposed by the Financial Supervisory Commission due to Violation of Article 54-1 of the Financial Holding Company Act or Sanctions imposed by the company upon its internal personnel for violations of internal control system provisions and where the sanctions may have a major impact on shareholder’s interest or securities price or violation of Article 2 by FSC’s measures to publish and clarify external punishment measures. The sanction, major deficiencies and improvements shall be disclosed.

Subsidiary First Securities.

The Financial Supervisory Commission found that the company was involved in violations of relevant laws and regulations of Securities Act about Cyber Security management from July 29, 2021 to August 13, 2021 and FSC ordered corrections to be made, before that, capital adequacy operation risk shall be increased by 0.5 times of the original one, as stipulates and fined in the letter Jin-Guan-Zen-JuenFai-Zi No. 1100371965 & 11003719651 for NT$ 480,000:

(1) For user account management operations, daily monitoring and analysis of account login failure records in core systems have not been carried out.
(2) A regular review mechanism for operating system security parameters has not been established, and some hosts or individual users’ parameters are not appropriate among passwords setting procedures.
(3) The retention period of the firewall log does not match the security inspection mechanism of the Zitong Company.
(4) The risk is not assessed for employees to use social software such as Facebook, Line, and SKYPE.
(5) When the mobile APP is activated, system failed to detect whether the mobile device is in the USB debug mode and remind the users. The security design of the mobile APP is not appropriate.
(6) The retention period for external emails containing personal information is less than the statutory retention period of 5 years.
(7) Internal auditing operations does not match with system expansion and mainframe co-location service management and electronic exclusive trading.

Subsidiary First Life Insurance Co., Ltd.

The Financial Supervisory Commission found that the company was involved in violations of relevant laws and regulations of the Insurance Act toward the rate claimed and calculation formula of “Mei-Li-Dow USD Interest Sensitive Whole Life Insurance Policy”. On August 18, 2022, FSC ordered the stop-selling from the other day in the letter Jin-Guan-Bao-Shou-Zi No. 11104359231 & 11104359232.

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Please refer to the internal control system of this chapter for matters that require enhancement and plans for improvement.

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Major Occasional Frauds or Contingencies (Fraud, Theft, Embezzlement, and Robbery, False Transaction, Forged Document and Marketable Securities, Kick Backs, Natural Disaster Loss, Loss from External Factors, Hacker Attack, Data Theft, and Disclosure None. of Confidential Information and Customer Data and Such Major Incidents) or Security Accidents Resulting from the Failure to Practice Security, or Incidents Which Resulted in Loss Over NT$50 Million In a Year or In Total. The Nature or Amount of the Loss Shall be Disclosed. Disclosure of Other Events as Required by the Financial None. Supervisory Commission Others Subsidiary First Commercial Bank, Ltd. The Manila Branch of the Bank failed to meet the regulations of the Central Bank of the Philippines regarding agricultural reform loan (Agra) and other agricultural loans (Agri) processed between Q4 2016 and Q4 2021 and was requested by the Central Bank of the Philippines to pay administration assessment fees as listed below: (1) On August 3, 2017, the Bank received a notice from the Central Bank of the Philippines to pay PHP 636,545.23 (approximately NT$345,262), On March 28, 2022, the Central Bank of the Philippines debited the Bank’s account at the Central Bank directly. (2) On December 1, 2021, the Bank received a notice from the Central Bank of the Philippines to pay PHP 6,913,821.65 (approximately NT$3,810,207). On June 17, 2022, the Central Bank of the Philippines debited the Bank’s account at the Central Bank directly. (3) On January 13, 2022, the Bank received a notice from the Central Bank of the Philippines to pay PHP 1,551,359.97 (approximately NT$843,368.35) for 2010 issues. On June 17, 2022, the Central Bank of the Philippines debited the Bank’s account at the Central Bank directly. (4) On August 18, 2022, the Bank received a notice from the Central Bank of the Philippines to pay PHP 1,471,334.50 (approximately NT$795,256), and the Bank issued a response on August 25, 2022. However, on January 5, 2023, the Central Bank of the Philippines notified the Bank that it will debit the Bank’s account at the Central Bank directly within 15 days.

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3.3.13 Major Resolutions of the Shareholders’ Meeting and the Board of Directors during the Most Recent Fiscal Year up to the Printing of the Annual Report:

3.3.13.1 Major resolutions of the shareholders’ meeting in 2022 (held on June th 17 , 2022)

Resolution: the Proposal hereby is passed by the shareholders. Content: Ratified by the Company’s Audit Committee, the Company’s 2021 business plan and consolidated financial statement (listed in the Appendix) ) were discussed and passed by the 9[th] meeting of the 7[th] board. The consolidated financial statement was audited and ratified by certified accountants, ChienHung Chou, and Shu-Mei Chi, of PwC Taiwan; the President and the Audit Committee have submitted a report.

Implementation: Relevant documents and statements were submitted to the competent authority for inspection, public announcement and report under the Company Act and the Financial Holding Company Act.

Resolution: the Proposal hereby is passed by the shareholders. Implementation: Content: The Company generated New Taiwan Dollar 1. The cash dividend was distributed on Aug. 25th, 19,739,044,758 (hereafter NT$) of profit after tax in 2021. 2022. The proposed distribution, according to Articles of 2. Stock dividend (capital increase by earnings Incorporation of the Company and relevant regulations, th are as follow: to issue new stocks) is distributed on Sep. 14 , 2022.

NT$2,032,354,431 is retained as legal reserve.
After adding the adjusted, undistributed earnings of NT$9,797,172,268 a total of NT$28,088,362,149 can be distributed as cash and stock dividends. Cash dividend per share is NT$1.0, which totals NT$12,964,159,088; stock dividend per share is NT$0.2 which totals NT$2,592,831,810. Cash dividends are distributed pro rata and are rounded down to the nearest whole number. The fractional balance of dividends less than NT$1 will be summed up and recognized as other income of the Company.

Resolution: the Proposal hereby is passed by the shareholders. Implementation:

On Aug. 24th, 2022, capital increase by earnings to issue 259,283,181 shares of common shares was approved; the shares were distributed on Sep. 14th, 2022.

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Content: To enhance the scale of capital and strengthen financial structure of the Company, according to Article 240 of the Company Act, the Company proposes to appropriate NT$2,592,831,810 from 2021 earning as capital for the issuance of new shares, with the par value of NT$10 per share. The aggregate number of common shares to be issued will be 259,283,181. Twenty free shares of stock dividends are distributed for every thousand shares based on the shareholding percentage recorded in the shareholders’ register on the exdividend date. The fractional balance of dividends less than one share may be combined by shareholders within five days of the record date; shareholders can go to the Company’s stock affairs agent; odd lots less than one share thus collected by the Company will be placed at its par value with specific parties as determined by the Chairman under the authorization of the AGM.

Resolution: the Proposal hereby is passed by the shareholders. Implementation: Content: Public Companies were allowed to hold video The amendments was made, according to conferencing as AGM according to the amendment to relevant regulations, on Jun. 12, 2022. Article 172-2 of Company Act announced on December 29th, 2021. The shareholders’ meeting may be held via video conferencing or by other means announced by the central competent authority to guarantee the shareholders’ rights.

Resolution: the Proposal hereby is passed by the shareholders. Implementation: Content: To conform to the amended “Regulations Governing The major announcement was made, according the Acquisition and Disposal of Assets by Public to relevant regulations, on Jun. 17, 2022. Companies” per the letter issued by the Financial Supervisory Commission dated January 28th, 2022, so an amendment is made.

Resolution: the Proposal hereby is passed by the shareholders. Implementation: Content: According to Paragraph 1, Article 209 of the Company The major announcement was made, according Act, “A director who does anything for himself or on to relevant regulations, on Jun. 17, 2022. behalf of another person that is within the scope of the company’s business, shall explain to the meeting of shareholders the essential contents of such an act and secure its approval,” the sixth board of directors of the Company is hereafter released from the restriction of non-competition when serving in a position of another entity within the scope of the Company’s business for oneself or on behalf of another person.

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3.3.13.2. Major resolutions of the board of directors

(1) The 8th meeting of the 7th board took place on Jan.27th , 2022
Mr. Chih-Yuan Chang, Delegate of the Bank of Taiwan, resigned since Jan. 16th, 2022.
The board passed the investment plan from FSITC to start up First Private Capital Co.,
(2) The 9th meeting of the 7th board took place on Feb.24th , 2022
Ms. Li-Lin Yao, Delegate of the Bank of Taiwan, started since Feb. 8th, 2022.
The board passed the 2021 Business Plan and consolidated Financial Statements.
(3) The 10th meeting of the 7th board took place on March 24th, 2022
The board passed the NT$500 million capital increase by cash for the Company’s subsidiary, First Life Insurance.
The board passed the date of the Company’s 2022 annual shareholders’ meeting.
The board passed the agenda for the Company’s 2022 annual shareholders’ meeting.
The board passed the rules governing shareholders’ proposals for the Company’s 2022 annual shareholders’ meeting.
The board passed the Company’s 2021 Internal Control System Declaration.
Mr. Chun-To Tso took over as standing supervisor, of First Bank, and Mr. Lieh-Ming Luo as supervisor.
(4) The 11th meeting of the 7th board took place on Apr. 21st, 2022
Director, delegate of the Ministry of Finance, Mr. Chan-Chia Wang resigned since May 1st , 2022.
The board passed the distribution of the Company’s retained earnings in 2021.
The board passed the capital increase by earnings to issue new stocks.
The board passed the amendment of provisions in its “Rules of Procedure for the Shareholders’ Meeting”.
The board passed the amendment for the agenda of the Company’s 2022 annual shareholders’ meeting.
The board passed the appointment of EVP of FB, Pei-Wen Liu, as EVP of the Company & Chief Cyber Security.

(5) The 13th meeting of the 7th board took place on Jun. 23rd , 2022

Mr. Bin-Shan Kuo took over as director, delegate of the Ministry of Finance, since Jun.21, 2022.
(6) The 14th meeting of the 7th board took place on Jul. 20th , 2022
Mr. Min-Jen Yao, Delegate of the Bank of Taiwan, resigned since Jul. 16th, 2022.
The board passed the Company’s ex-dividend date for distribution of earnings in 2021, and the record date for capital increase by earnings to issue new stocks.
(7) The 15th meeting of the 7th board took place on Aug. 25th , 2022
Mr. Shih-Yuan Tai, Delegate of the Bank of Taiwan, started since Aug. 15th, 2022.
The board passed the appointment of Mr. Chia-Hsiang Lee as President of First Bank, for Ms. Mei-Ling Jen, delegate of the Company retired.
(8) The 16th meeting of the 7th board took place on Sep. 22nd , 2022
The board passed the 13th term of directors and supervisors list of subsidiary FSIT.

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(9) The 17th meeting of the 7th board took place on Oct. 27th , 2022
- The board passed the dismiss of Mr. Jen-Yi Kao, delegate the Company in First Bank.
(10) The 18th meeting of the 7th board took place on Nov. 24th , 2022
- The board passed the appointment of certified accountants Chien-Hung Chou and Shu-Mei Chi of PwC Taiwan for the audit and ratification of the Company’s 2023 financial statement, and certified accountant, Yao-Jen Hu, also of PwC Taiwan, for ratification over corporate Income Tax.
- The board passed assignment of Mr. Ching-Yu Shieh , as delegate pf the Company in First Bank.
(11) The 19th meeting of the 7th board took place on Dec. 22nd , 2022
- Mr. Bin-Shan Kuo, resigned as director, delegate of Ministry of Finance, since Nov. 28th, 2022.
(12) The 21st meeting of the 7th board took place on Feb. 23rd , 2023
- Mr. Shang-Chi Wang, director, delegate of Ministry of Finance, since Jan.31st , 2023, and Mr. Chun-Yi Lee replaced his position from Feb. 20th , 2023.
- The board passed the Company’s 2022 business plan and consolidated financial statement.
3.3.14 Directors or Supervisors Who Were on Record or Had Submitted Written Declaration for Holding a Different Opinion of Major Resolutions Passed by the Board of Directors and Its Content, During the Most Recent Fiscal Year up to the Printing of the Annual Report: None.
3.3.15 Summary of the Resignation of the Persons Related to the Company’s Financial Statements (including Chairman of the Board, President, Finance Supervisor, Accounting Supervisor, Internal Audit Supervisor and Company Secretary) During the Most Recent Fiscal Year up to the Printing of the Annual Report: None.

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3.4 Accounting Firm Information

3.4.1 The Ratio of Non-Audit Fee to Audit Fee Exceeds One Fourth, the CPA Service Charge is Disclosed as Follows:

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Accounting Firm	Name of CPA	Period Covered by CPA’s Audit	Audit Fee	Non-Audit Fee	total	Remarks (Note)
Pricewater- house Coo- pers, Taiwan	Chien-Hung Chou	Jan. 1, 2021~Dec. 31, 2021	2,456	100	2,556	Non-Audit Fee includes tax fling, annual report review, compensation & earnings capitalization review.
	Shu-Mei Chi
	Chi-Tsun Hsu			610	610	Registration
	Wen-Li Huang			49	49	SASB Service
Total			2,456	759	3,215

3.4.2 The Ratio of Non-Audit Fee to Audit Fee Exceeds One Fourth, the CPA Service Charge is Disclosed as Follows: N/A.
3.4.3 When audit fee decrease over 10% than prior year, the amount, ratio with reasons shall be disclosed: N/A.

3.5 Change of CPA:

3.5.1 Former CPA: N/A

3.5.2 Successor CPA: N/A

3.5.3 Response by former CPA regarding No. 3, Item 2 & 1, Subparagraph 6, Article 10 of the Guidelines: N/A
3.6 The Company’s Director, president, or any C-level Executives in Charge of Finance or Accounting Matters has held a Position at the Company’s Auditing CPA firm of its Affiliates, shall disclose Its Names, Positions, and Working Period at the Aforementioned Companies: N/A.

122

3.7 Changes in Shareholding

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Year 2022 Year 2023 as of May 1, 2023
Title (Note) Name Shares Holding Shares Pledged Shares Holding Shares Pledged
+(-) +(-) +(-) +(-)
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Title (Note)	Name	Year 2022	Year 2022	Year 2023 as of May1, 2023	Year 2023 as of May1, 2023
		Shares Holding +(-)	Shares Pledged +(-)	Shares Holding +(-)	Shares Pledged +(-)
Director (Major shareholder)	MOF	29,786,482	0	0	0
Director (Major Shareholder)	Bank of Taiwan	19,329,127	0	0	0
Director	Global Investment Co., Ltd.	121,244	0	0	0
Independent Director	Rachel J. Huang	0	0	0	0
Independent Director	Chun-Hung Lin	0	0	0	0
Independent Director	Yen-Liang Chen	0	0	0	0
Independent Director	Wen-Ling Hung	0	0	0	0
Independent Director	Hung-Yu Lin	0	0	0	0
Chairperson	Ye-Chin Chiou	2,020	0	0	0
President	Fen-Len Chen	0	0	0	0
EVP& Head of Strategy PlanningDept.	Annie Lee	2,200	0	0	0
EVP & Legal Compliance Ofcer(Note)	-	-	-	-	-
EVP & Cyber Security Chief	Pei-Wen Liu	0	0	0	0
Chief Auditor & Head of AuditingDept.	Mico H.C.Lin	(165)	0	0	0
Chief Secretary of the Board & Company Secretary	Li-Fang Hung	116	0	0	0
Head of Admin. MGT. Dept.	Mandy Horng	268	0	0	0
Head of Legal Compliance	Fen-Ying Wu	1,438	0	0	0
Acting Head of Business Development Dept.	Patty Tsai	0	0	0	0
Head of Risk MGT Dept.	Ferng-Chern Yang	1,909	0	0	0
Acting Head of IT Dept.	Chih-Ping Wang	871	0	0	0
Head of Finance, AccountingDept.	Chen-Bean Lee	1,538	0	0	0

Note : Mr. Chih-Kuang Chien was assigned EVP & Chief Compliance Office and to be on-board, before that, Head of Legal Compliance will act for him.

123

3.8 Top 10 Shareholders and Related Beneficiary Information

As of April, 18, 2023

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Spouse Shareholding Top 10 shareholders who
Shareholding & Minor by Nominee are Spouses or Within Two
Name Shareholding Arrangement Degrees of Kinship Note
Shares (%) Shares (%) Shares (%) Name relationship
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Name	Shareholding	Shareholding	Spouse & Minor Shareholding	Spouse & Minor Shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Top 10 shareholders who are Spouses or Within Two Degrees of Kinship	Top 10 shareholders who are Spouses or Within Two Degrees of Kinship
	Shares	(%)	Shares	(%)	Shares	(%)	Name	relationship
MOF ( Minister: Tsui-Yun Chuang)	1,519,110,617	11.49%	0	0.00	0	0.00	Bank of Taiwan, Hua Nan Bank, Taiwan Tobacco	Investment
Bank of Taiwan (Delegate: Joseph Jye-Cherng Lyu)	985,785,492	7.45%	0	0.00	0	0.00	MOF	Investment
Hua Nan Bank (Delegate: Yun- Peng Chang )	261,420,036	1.98%	0	0.00	0	0.00	MOF, Bank of Taiwan	Investment
Government of Singapore	250,472,012	1.89%	0	0.00	0	0.00
Cathay Life Insurance Co., Ltd. (Delegate: Tiao- Kuei Huang)	235,824,399	1.78%	0	0.00	0	0.00
Taiwan Tobacco & Liquor Corporation (Delegate: Yen-Ju Ding)	205,571,581	1.55%	0	0.00	0	0.00	MOF	Investment
Taiwan Life Insurance Co., Ltd. (Delegate: Tai- Keh Cheng)	196,524,078	1.49%	0	0.00	0	0.00
New Labor Fund	189,499,648	1.43%	0	0.00	0	0.00
Fubon Life Insurance Co., Ltd. (Delegate: Richard M. Tsai)	185,049,000	1.40%	0	0.00	0	0.00
Cathay Taiwan Sustainability High Dividend Fund	170,345,777	1.29%	0	0.00	0	0.00

Note: the above shareholders should disclose relationship based on financial holding financial report guidelines.

124

3.9 Ownership of Shares in Affiliated Enterprises

Data as of Feb. 28, 2023 unit: thousand shares

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Affiliated Investment of the Company Direct or indirect investments Total
Enterprises (Note 2) from director and executives,
(Note1) Shares (%) Shares (%) Shares (%)
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Afliated Enterprises (Note1)	Investment of the Company (Note 2)	Investment of the Company (Note 2)	Direct or indirect investments from director and executives,	Direct or indirect investments from director and executives,	Total	Total
	Shares	(%)	Shares	(%)	Shares	(%)
First Bank	9,472,500	100	-	-	9,472,500	100
First Securities	615,000	100	-	-	615,000	100
First Securities Investment Trust	60,000	100	-	-	60,000	100
First Life	535,000	100	-	-	535,000	100
First AMC	145,000	100	-	-	145,000	100
First Venture Capital	180,000	100	-	-	180,000	100
First Consulting	2,000	100	-	-	2,000	100
FIRST COMMERCIAL BANK (USA)	-	-	7,000	100	7,000	100
FCB Leasing	-	-	400,000	100	400,000	100
FCBL Capital Int’l (B.V.I.)	-	-	60,050	100	60,050	100
FCB International Leasing	-	-	unlisted	100	unlisted	100
FCB Financing Lease (Xiamen) Ltd.	-	-	unlisted	100	unlisted	100
First Financial Assets MGT (B.V.I.)	-	-	30,000	100	30,000	100
FCB Lease(Chengdu)	-	-	unlisted	100	unlisted	100
First Capital Management	-	-	10,000	100	10,000	100
First Private Capital Co., Ltd.	-	-	5,000	100	5,000	100
FSC Asia	-	-	1,000	100	1,000	100
First Worldsec	-		66,000	100	66,000	100
TDCC	485	0.08	495	0.08	980	0.17
Taiwan Asset Management Corp.	180,000	17.03	-	-	180,000	17.03

125

IV. Capital Overview

4.1 Share Capital

Unit: Thousand shares/ NT$ thousands except for par value

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Authorized Capital Paid-in Capital Remark
Par
Amount Amount
Year/Month Value Sources of
Shares (NT$ Shares (NT$ Other
(NT$) Capital
thousands) thousands)
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Aug. 2022 10 20,000,000 200,000,000 13,223,442 132,234,423 Note N/A

Note: Aug, 12, 2022 is target date of earnings capitalization for 2,592,832 thousand of shares, approved by FSC on Jul. 5, 2022.

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Authorized Capital
Share Type Remark
Issued Shares Un-issued Shares Total Shares
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Common Stock 13,223,442,269 6,776,557,731 20,000,000,000

Note: listed company.

4.2 Shareholders Breakdown by Owners Type

As of April 18, 2023

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Foreign
Government Financial Other
Item Individuals Institutions & Total
Agencies Institutions Institutions
Individuals
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Item	Government Agencies	Financial Institutions	Other Institutions	Individuals	Foreign Institutions & Individuals	Total
Number of Shareholders	13	19	1,047	473,961	1,000	476,040
Shareholding (shares)	1,933,335,751	2,116,619,352	1,299,881,376	4,675,504,201	3,198,101,589	13,223,442,269
Percentage	14.62	16.01	9.83	35.35	24.19	100.00

4.3 Shareholders Breakdown by Units

As of April 18, 2023; NT$10/Share

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Class of Shareholding (Unit: Share) Number of Shareholders Shareholding (Shares) Percentage
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Class of Shareholding (Unit: Share)	Number of Shareholders	Shareholding (Shares)	Percentage
1 ~ 999	134,068	30,416,993	0.23%
1,000 ~ 5,000	195,741	420,713,486	3.18%
5,001 ~ 10,000	58,169	398,707,936	3.02%
10,001 ~ 15,000	30,302	357,916,423	2.71%
15,001 ~ 20,000	13,232	227,887,518	1.72%
20,001 ~ 30,000	15,068	359,457,009	2.72%
30,001 ~ 40,000	7,572	259,570,242	1.96%

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Class of Shareholding (Unit: Share) Number of Shareholders Shareholding (Shares) Percentage
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Class of Shareholding (Unit: Share)	Number of Shareholders	Shareholding (Shares)	Percentage
40,001 ~ 50,000	4,517	201,091,871	1.52%
50,001 ~ 100,000	9,304	632,020,602	4.78%
100,001 ~ 200,000	4,749	630,399,518	4.77%
200,001 ~ 400,000	1,796	490,009,602	3.71%
400,001 ~ 600,000	506	245,914,401	1.86%
600,001 ~ 800,000	220	152,100,570	1.15%
800,001 ~ 1,000,000	132	117,234,405	0.89%
1,000,001 or over	664	8,700,001,693	65.78%
Total	476,040	13,223,442,269	100.00%

Note: No Preferred Shares.

4.4 Major Shareholders

4.4 Major Shareholders	4.4 Major Shareholders	4.4 Major Shareholders
As of April 18, 2023
Shares Shareholder's Name	Shares	Holding %
Ministry of Finance	1,519,110,617	11.49%
Bank of Taiwan	985,785,492	7.45%
Hua Nan Bank	261,420,036	1.98%
Government of Singapore	250,472,012	1.89%
Cathay Life Insurance Co., Ltd.	235,824,399	1.78%
Taiwan Tabacco & Liquor Corporation	205,571,581	1.55%
Taiwan Life Insurance Co., Ltd.	196,524,078	1.49%
New Labor Fund	189,499,648	1.43%
Fubon Life Insurance Co., Ltd.	185,049,000	1.40%
Cathay Taiwan Sustainability High Dividend Fund	170,345,777	1.29%
Norges Bank, Norway	155,110,127	1.17%
Vanguard Emerging Markets Stock Index Fund	144,354,303	1.09%
Vanguard Total International Stock Index Fund	137,594,463	1.04%
China Life Insurance Co., Ltd.	136,273,770	1.03%

Note: ownership above 1% is listed.

4.5 Market Price, Book Value, Earnings and Dividend Information for the Past Two Years

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Year As of Feb. 28,
2021 2022
Items 2023 (Note 8)
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Year Items	Year Items	2021	2022	As of Feb. 28, 2023(Note 8)
Market Price per Share	Highest Market Price	24.60	29.75	27.10
	Lowest Market Price	20.20	23.75	26.10
	Average Market Price	22.44	26.18	26.53

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Year As of Feb. 28,
2021 2022
Items 2023 (Note 8)
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Year Items	Year Items	Year Items	2021	2022	As of Feb. 28, 2023(Note 8)
Book Value Per Share (Note 2)	Before Distribution		17.32	16.95	17.61
	After Distribution		16.32	Note 9	-
Earnings per Share (Note 3)	Weighted Average Shares (thousand shares)		12,964,159	13,223,442	13,223,442
	Earnings per Share		1.49	1.56	0.33
Dividends per Share	Cash Dividends		1.00	0.80	-
	Stock Dividends	Dividends from Retained Earnings	0.20	0.30	-
		Dividends from Capital Surplus	0.00	0.00	-
	Accumulated Undistributed Dividends (Note 4)		N/A	N/A	-
Return on Investment	Price / Earnings Ratio (Note 5)		14.76	16.78	-
	Price / Dividend Ratio (Note 6)		22.44	32.73	-
	Cash Dividend Yield Rate (Note 7)		4.46	3.06	-

Note 1: Retroactively adjusted for book value Note 2: Based on yr-end outstanding shares. Note 3: Retroactively adjusted for EPS. Note 4: Equity issuance if include dividends, shall disclose the accumulated unpaid dividend for the fiscal year. Note 5: Price / Earnings Ratio = Average Market Price / Earnings per Share Note 6: Price / Dividend Ratio = Average Market Price / Cash Dividends per Share

Note 7: Cash Dividend Yield Rate = Cash Dividends per Share / Average Market Price Note 8: preliminary data for Feb. 28, 2023

4.6 Dividend Policy

4.6.1 Dividend

(1) First Financial adopts a residual dividend policy to ensure continuous business expansion and profit growth.
(2) Any earnings concluded in a fiscal year shall be first used to pay the statutory taxes and make up for loss of previous years, and provide a legal reserve and a special reserve according to laws and regulations and business operation needs. The remainer, if any, plus the accumulated retained earnings of the last year shall be the distributable amount for shareholder dividends and bonuses, for which 30% to 100% of the amount should be distributed in accordance with the distribution proposal made by the board of directors and approved by the AGM.
(3) Cash and stock dividends shall be distributed according to the Company’s operation plan, provided that the cash dividends shall be no less than 10% of the aggregate amount of shareholder dividend and bonuses, with the remainer as the stock dividends. Unless otherwise resolved in the AGM, any cash dividend per share which is less than NT$ 0.1 shall not be distributed.

128

4.6.2 2022 shareholder’s meeting proposal:

cash dividend of NT$ 0.80 per share, with a total of NT$ 10,578,753,815; stock dividend of NT$ 0.30 per share, with a total of NT$ 3,967,032,680.

4.7 The effect of stock dividend on operation performance and earnings per share:

Not applicable due to the Company does not disclose earnings forecast of year 2023.

4.8 Employee compensation and director remuneration

4.8.1 Regulations about employees and remuneration to directors:

If there is any surplus profit concluded in a fiscal year, the Company shall, from the net profit before tax which has not deducted any compensation to employees and remuneration to directors, set aside 0.02% to 0.15% as employee compensation and no more than 1% as director remuneration; provided however that, if the Company has any accumulated losses, the Company shall reserve an amount thereof in advance for making up the losses.

4.8.2 Accounting treatment when estimated difference happens between actual distributed amount and recognized amount:

Current year’s net income, after deducting compensation and remuneration to employees and directors, will recognized as operating expense based on the Company’s remuneration regulation. Different amount from the actual differences between the resolved amounts and the subsequently distributed amounts is accounting for as a change in accounting estimate, where the difference was recognized as profit or loss in next year. Meanwhile, the Company does not distribute employees’ bonus with stocks.

4.8.3 Resolved distribution plan:

The Board of Directors has resolved to distribute employee compensation in cash for a total of NT$ 11,049,388 and director remuneration a total of NT$ 187,277,761 in 2022. The increase of NT$ 645,068 and decrease of NT$ 20,808,640 as a whole, mainly due to estimated difference and will be recognized as profit in 2023. No stock distribution of employee compensation for the Company.

4.8.4 The actual distribution amount for employees’ compensation and directors’ remuneration of the prior year (including shares, amounts and stock price):

The actual distributed amount for employee compensation and director remuneration for 2021 is NT$ 9,918,288 and NT$179,606,827, respectively, in which there is a decrease of NT$59,869 and NT$ 19,956,314, the difference is due to estimated difference, and has been recognized as expense and profit in 2022.

129

4.9 Repurchase of the Company’s Shares: None

4.10 Issuance of Financial Bonds

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Types of Bonds
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Issue Date
Face Value
Issue Place
Offering Price
Total Amount
Coupon Rate
Maturity
Rank
Guarantor
Trustee
Underwriter
Verification Attorney
Verification CPA
Payment
Outstanding AMT
Redemption or Early Settlement Terms
Restrictions Terms
Paid-in Capital
Credit Rating Agency
Amount of ordinary shares,
overseas depositary receipts
or other securities that have
been converted (exchanged or
Miscellaneous subscribed) as of the date of
the annual report
Issuance and conversion
(exchange or subscription)
regulations
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2018 First Issue of Unsecured Subordinated Corporate Bonds

Oct. 15, 2018 NT$ 1,000,000 OTC, Taiwan R.O.C

At Par Value

NT$ 10 bn

Fixed annual interest rate of 1.50%

10 yrs, Expired on Oct. 15, 2028

The creditors of the Bonds shall rank senior only to the shareholders of the Company with respect to the right to the remaining assets, but junior to all other creditors of the Company

None

Taipei Fubon Commercial Bank Co., Ltd

Yuanta Securities Co., Ltd

I-Chen Attorney at Law, Hui-Gi Kuo

PricewaterhouseCoopers, Taiwan, CPA: Shu-Mei Chi

The Bonds shall be repaid in full upon maturity

NT$ 10 bn

None

The Company will suspend its payment of the interest on and the principal of the Bonds if its capital adequacy ratio would fall below the statutory requirement of the competent authority due to such payments, until the requirement of the competent authority is met (the interest may be accumulative, and the interest and the interest on principal shall be accrued and paid at the original coupon rate for the period so extended)

NT$ 10 bn included

None

130

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Issuance and conversion, exchange or
subscription, in which possible dilution of
ownership may impact on existing shareholders
Custodian Institution
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None N/A

4.11 Preferred Shares Information: No preferred shares was issued by the Company.

4.12 GDR Price Information

Issue Date	28-Jul-2003	Total AMT	USD 505 mn
Place of Issue & Listing	Luxembourg Stock Exchange	Unit Price	USD 10.30
Subject Shares	FFHC Common Shares	Total GDS Issued	49,204,899
Shares per GDS	20 shares	Unredeemed Balance(note)	24,537
Fiduciary	Not Applicable	Holder of GDR rights	Same as Common Shareholder
Depositary	Citibank	Depositary Institution	Citibank Taiwan
Expenses for Duration of GDSs	FFHC	Key Provision in Deposit/ Custodian Agreement	None
	Highest(2022)	Lowest (2022)	AVG. (2022)
Market Price Per GDs(USD)	20.71	14.81	17.61
	Highest as of Feb. 28, 2023	Lowest as of Feb. 28, 2023	AVG.as of Feb. 28, 2023
Market Price Per GDs (USD)	17.89	17.12	17.53

Note: Data as of Feb. 28, 2023 Resources: Citi Bank GDR Issuer website

4.13 Employees’ Stock Warrant: None

4.14 New Employees T-Restricted Shares: None

4.15 Merger or Acquisition of other Financial Institutions

A. Any merger or acquisition of financial institutions in a recent year: None
B. Any merger or acquisition of financial institutions in recent 5 years:
[Any merger/acquisition within 5 years: None.]
[Any evaluation opinion from merger or acquisition from underwriter: None]
C. Any resolution from Board of Directors about merger or acquisition or new shares issuance: None

4.16 Capital Allocation Plan

None of the capital allocations has not been completed from the past public offering plans.

131

V. Operations Overview

5.1 Business Operations

5.1.1 Scope of Business

5.1.1.1 First Financial Holding Company

* Business item

First Financial Holding Company is a financial holding company. According to the Financial Holding Company Act, its business includes investment and management of the invested enterprises.

* Share of business

The net revenue from the Company’s major businesses divided by the consolidated net revenue of the Group:

Unit: Thousand NTD

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Year 2022 Year 2021 Comparison
Year
Increase Percentage
Item Amount % Amount % (Decrease) increase
in amount (decrease) %
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Year Item	Year 2022	Year 2022	Year 2021	Year 2021	Comparison	Comparison
	Amount	%	Amount	%	Increase (Decrease) in amount	Percentage increase (decrease) %
Bank	54,321,067	80.2	46,589,006	74.4	7,732,061	16.6
Securities	1,951,311	2.9	3,540,238	5.7	-1,588,927	-44.9
Securities Investment Trust	649,123	0.9	694,321	1.1	-45,198	-6.5
Insurance	10,577,580	15.6	11,354,011	18.1	-776,431	-6.8
Other	257,313	0.4	426,853	0.7	-169,540	-39.7
Total	67,756,394	100.0	62,604,429	100.0	5,151,965	8.2

New financial products and services planned for future developments

Please refer to the current year’s business plan.

132

5.1.1.2 First Bank

Business item

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Business items registered and approved
General business items commercial banks are by governing authorities and handled by
authorized to handle according to law departments dedicated to trust businesses
as stated in the bank’s business license
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(1) Receipt of various deposits
(2) Issuance of financial bonds
(3) Processing of loans
(4) Processing of discounted bills
(5) Investment in securities
(6) Processing of domestic exchange
(7) Acceptance of commercial bills of exchange
(8) Issuance of domestic letters of credit
(9) Guarantee the issuance of corporate bonds
(10) Handling domestic guarantee business
(11) Act as agent for payments
(12) Sell public debt, treasury bonds, corporate bonds and company stocks for commission
(13) Underwrite securities
(14) Proprietary trading of securities
(15) Handle custody and warehousing services
(16) Handle safe deposit box rental business
(17) Handle services stated on the business license or act as agent for services approved by governing authorities
(18) Handle credit card business
(19) Sell gold bars, gold coins and silver coins for commission
(20) Buy and sell gold bars, gold coins and silver coins
(21) Handle the guarantee business of export foreign exchange, import foreign exchange, general inward and outward remittance, foreign exchange deposit, foreign currency loan and foreign currency guarantee payments
(22) Handle general remittance and foreign exchange deposits
(1) Trust business
- A. Money trust
- B. Trust of money claims and security rights of objects
- C. Securities trust
- D. Real estate trust
- E. Superficies trust
- F. Discretionary investment via fiduciary services
(2) Ancillary business:
- A. Act as agent to issue, transfer, register and distribute stock dividend, interest and bonus of marketable securities
- B. Provide advisory service on issuance and offering of marketable securities
- C. Provide securities certification service
- D. Act as trustee for bond issuance and handle related agency services
- E. Provide custody service
- F. Act as custodian of securities investment fund
- G. Provide advisory service on investment, financial management and real estate development
- H. Provide securities investment advisory service
- I. Manage the real estate of elderly and disabled persons as an ancillary business of the trust enterprise
- J. Handle other related businesses approved by the governing authority
(23) Handle foreign currency trading and traveler's check business
(24) Handle derivative products approved by governing authorities
(25) Handle businesses approved by the Trust Enterprise Act

133

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(26) Invest in foreign securities with designated trust funds
(27) Handle proprietary trading of government bonds
(28) Handle brokerage, proprietary trading, certification and underwriting of short-term bills
(29) Provide financial advisory services related to margin trading
(30) Act as agent for handling public welfare lottery affairs approved by governing authorities
(31) Handle margin trading business between foreign currencies
(32) Invest in domestic securities investment trust fund with designated funds
(33) Handle investments in domestic securities investment trust fund using designated trust funds
(34) Proprietary trading of corporate bonds and financial bonds
(35) Act as agent for substantial transaction payments
(36) Collaborate with offshore enterprises or assist offshore enterprises to handle electronic payment businesses domestically
(37) Provide life insurance agency services while increasing agency services for property insurance
(38) High-net-worth related financial products and services
(39) Handle other related businesses approved by the governing authority.

134

* Share of business

(1) Deposit

Unit: Thousand NTD

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Dec. 31, 2022 Dec. 31, 2021 YoY
Year
Amount Percentage
Item Amount % Amount % increase increase
(decrease) (decrease) %
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Year Item	Year Item	Dec. 31, 2022	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2021	YoY	YoY
		Amount	%	Amount	%	Amount increase (decrease)	Percentage increase (decrease) %
Demand deposits (Note 1)	Cheque deposit	58,904,622	1.6	57,362,382	1.8	1,542,240	2.7
	Demand deposit	896,618,742	25.2	959,085,929	30.4	-62,467,187	-6.5
	Current savings deposit	971,933,279	27.3	917,327,300	29.1	54,605,979	6.0
	Subtotal	1,927,456,643	54.1	1,933,775,611	61.3	-6,318,968	-0.3
Time deposits (Note 1)	Time deposit	906,999,587	25.5	625,254,354	19.9	281,745,233	45.1
	Regular savings deposit	455,441,181	12.8	381,699,391	12.1	73,741,790	19.3
	Subtotal	1,362,440,768	38.3	1,006,953,745	32.0	355,487,023	35.3
Other (Note 2)	Interbank deposits	2,081,121	0.1	719,280	0.0	1,361,841	189.3
	Overdraft interbank	599,438	0.0	849,879	0.0	-250,441	-29.5
	Interbank lending	268,013,501	7.5	209,752,882	6.7	58,260,619	27.8
	Subtotal	270,694,060	7.6	211,322,041	6.7	59,372,019	28.1
	Total	3,560,591,471	100.0	3,152,051,397	100.0	408,540,074	13.0

Note: 1. Demand deposits and time deposits include foreign currency deposits and public treasury deposits.

Interbank deposits include deposits transferred from Chunghwa Post.

135

(2) Lending

Unit: Thousand NTD

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Dec. 31, 2022 Dec.31, 2021 YoY
Year
Amount Percentage
Item Amount % Amount % increase increase
(decrease) (decrease) %
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Year Item	Dec. 31, 2022	Dec. 31, 2022	Dec.31, 2021	Dec.31, 2021	YoY	YoY
	Amount	%	Amount	%	Amount increase (decrease)	Percentage increase (decrease) %
Short-term lending*	611,798,858	26.4	561,866,599	27.5	49,932,259	8.9
Mid-term lending	855,801,986	36.9	699,915,759	34.3	155,886,227	22.3
Long-term lending	850,700,139	36.7	779,286,900	38.2	71,413,239	9.2
Total	2,318,300,983	100.0	2,041,069,258	100.0	277,231,725	13.6
Share of total asset (%)	57.8		56.9		0.9

Including export import bills negotiation/discount

(3) Foreign exchange (Include overseas branches)

Unit: Thousand USD

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Year 2022 Year 2021 YoY
Year
Amount Percentage
Item Amount % Amount % increase increase
(decrease) (decrease) %
----- End of picture text -----

Export	6,703,618	2.5	4,709,364	1.8	1,994,254	42.3
Import	6,187,330	2.3	6,841,211	2.5	-653,881	-9.6
F/X exchange & remittance	252,552,880	95.2	257,545,008	95.7	-4,992,128	-1.9
Total	265,443,828	100.0	269,095,583	100.0	-3,651,755	-1.4

(4) Wealth MGT and Insurance agency business

Unit: Thousand NTD

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Year 2022 Year 2021 YoY
Year
Amount increase Percentage increase
Item Amount Amount (decrease) (decrease) %
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Trust (project trust not included)	87,839,202	128,453,021	-40,613,819	-31.6
Insurance agency business	20,477,857	24,057,470	-3,579,613	-14.9

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(5) Trust

Unit: Thousand NTD

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As of Dec. 31, As of Dec. 31,
YoY
2022 2021
Year
Amount Percentage
Item Amount Amount increase increase
(decrease) (decrease) %
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Year Item	As of Dec. 31, 2022	As of Dec. 31, 2021	YoY	YoY
	Amount	Amount	Amount increase (decrease)	Percentage increase (decrease) %
Special-purpose money trust funds investing in domestic securities	87,095,005	75,304,193	11,790,812	15.7
Special-purpose money trust funds investing in foreign securities	151,007,937	135,734,664	15,273,273	11.3
Other trustee assets	128,214,844	80,562,538	47,652,306	59.1

Subtotal	366,317,786	291,601,395	74,716,391	25.6
Custodian Business	1,137,743,190	1,129,677,357	8,065,833	0.7

TDR not included.

(6) Electronic financial services

Unit: Thousand NTD

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Year 2022 Year 2021 YoY
Year
Amount increase Percentage increase
Item Amount Amount (decrease) (decrease) %
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Year Item	Year 2022	Year 2021	YoY	YoY
	Amount	Amount	Amount increase (decrease)	Percentage increase (decrease) %
Corporate Internet Banking Transactions	7,979,660,000	8,694,938,000	-715,278,000	-8.23
Personal Internet Banking Transactions	217,357,000	208,074,000	9,283,000	4.46
Mobile Banking Transactions	653,507,000	529,521,000	123,986,000	23.41

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(7) Investment

A. Sale and purchase of domestic bills and underwriting of domestic commercial promissory note

Unit: Thousand NTD

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Year 2022 Year 2021 YoY
Year
Amount Percentage
Item Amount Amount increase increase
(decrease) (decrease) %
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Year Item	Year 2022	Year 2021	YoY	YoY
	Amount	Amount	Amount increase (decrease)	Percentage increase (decrease) %
Outright buy/sell (OB/OS) of transaction instruments	904,219,429	841,292,695	62,926,734	7.48
Repurchase/Reverse repurchase (RP/RS) of transaction instruments	50,001	50,000	1	0.00
Underwriting of transaction instruments	16,700,000	4,530,000	12,170,000	268.65

B. Balance of investment in bonds and stocks

Unit: Thousand NTD

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Year 2022 Year 2021 YoY
Year
Amount Percentage
Investment Investment
Item increase increase
bal. of Dec. 31 bal. of Dec. 31
(decrease) (decrease) %
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Bonds	500,247,436	378,507,333	121,740,103	32.16
Stock (Short-term investment)	23,281,842	22,341,084	940,758	4.21

(8) Credit card

Unit: Card; Thousand NTD

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YoY
Year
Year 2022 Year 2021 Amount Percentage
Item increase increase
(decrease) (decrease) %
----- End of picture text -----

Number of active cards	920,217	848,636	71,581	8.43
Transaction amount	65,855,064	56,526,191	9,328,873	16.50
Revolving credit balance	1,613,039	1,502,964	110,075	7.32

Note: all figures are year-end.

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(9) Revenue Mixed Map

Unit: Thousand NTD

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Year 2022 Year 2021 YoY
Year
Amount Percentage
Amount % Amount % increase increase
Item
(decrease) (decrease) %
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Year Item	Year 2022	Year 2022	Year 2021	Year 2021	YoY	YoY
	Amount	%	Amount	%	Amount increase (decrease)	Percentage increase (decrease) %
Interest income	35,000,796	64.2	32,262,852	68.8	2,737,944	8.5
Fee income	8,103,249	14.9	7,968,685	17.0	134,564	1.7
Gain on fnancial assets meas.at fair value through P/L	6,152,568	11.3	2,127,019	4.5	4,025,549	189.3
Gain on fnancial assets at fair value through other compre. income	1,421,828	2.6	2,597,401	5.6	-1,175,573	-45.3
Excluding gain on fn. assets measured at amort. cost	-58,687	-0.1	11,156	0.0	-69,843	-626.1
Assets impairment loss	-3,607	0.0	74,376	0.2	-77,983	-104.8
Investment income recognized by equity method	436,766	0.8	342,595	0.7	94,171	27.5
Net gains on foreign exchange	3,047,499	5.6	1,152,836	2.5	1,894,663	164.3
Other non-interest income	383,371	0.7	325,179	0.7	58,192	17.9
Total	54,483,783	100.0	46,862,099	100.0	7,621,684	16.3

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5.1.1.3 First Securities

Business items
(1) Entrusted to trade securities in a centralized trading market
(2) Entrusted to trade securities in a securities firm’s business premises
(3) Propriety trading of securities in a centralized trading market
(4) Propriety trading of securities in a securities firm’s business premises
(5) Underwrite securities
(6) Act as agent for securities stock affairs
(7) Futures merchant (subject to approval of business items by governing authorities of the business)
(8) Futures advisory service (subject to approval of business items by governing authorities of the business)
(9) Margin trading and short selling of securities
(10) Entrusted to trade foreign securities
(11) International securities business
(12) Other business items approved by governing authorities
Share of business

Unit: Thousand NTD

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Year Year 2022 Year 2021 YoY
Amount Amount Percentage
Amount % Amount % increase increase
Item (decrease) (decrease) %
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Broker	1,930,305	89.1	2,915,629	77.8	-985,324	-33.8
Dealer	21,575	1.0	344,598	9.2	-323,023	-93.7
Underwriter	213,481	9.9	487,573	13.0	-274,092	-56.2

2022 figures adjusted by audited statements.

5.1.1.4 First Securities Investment Trust

Business item
(1) Issuance of beneficiary certificates to raise securities investment trust funds
(2) Invest in securities and related products using the securities investment trust fund
(3) Accept the discretionary investment business from clients
(4) Provide related service as a securities investment advisor
(5) Offshore fund master agent and sales agencies
(6) Other businesses approved by the Securities and Futures Bureau of the Financial Supervisory Commission

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* Share of business

Unit: Million NT

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Product type Management fee income Fee income Year-end AUM
Year 2022 2021 2022 2021 2022 2021
Item Amount % Amount % Amount % Amount % Amount % Amount %
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Product type	Management fee income	Management fee income	Management fee income	Management fee income	Fee income	Fee income	Fee income	Fee income	Year-end AUM	Year-end AUM	Year-end AUM	Year-end AUM
Year	2022		2021		2022		2021		2022		2021
Item	Amount	%	Amount	%	Amount	%	Amount	%	Amount	%	Amount	%
Equity funds	490	77.9	425	64.8	12	60.0	14	53.8	27,972	27.7	26,437	23.2
Other funds	72	11.4	163	24.8	1	5.0	2	7.7	7,425	7.4	8,337	7.3
ETF funds	11	1.8	5	0.8	0	0.0	0	0.0	3,303	3.3	1,729	1.5
Money MKT funds	36	5.7	44	6.7	0	0.0	0	0.0	52,706	52.2	70,137	61.7
Private equity funds	13	2.1	18	2.7	0	0.0	1	3.8	1,770	1.8	2,216	2.0
Full discretionary	7	1.1	1	0.2	0	0.0	0	0.0	6,875	6.8	4,123	3.6
Ofshore funds	0	0.0	0	0.0	7	35.0	9	34.7	817	0.8	791	0.7
Total	629	100.0	656	100.0	20	100.0	26	100.0	100,868	100.0	113,770	100.0

New financial products and services planned for future developments. Please refer to the current year’s business plan.

5.1.1.5 First Financial AMC

Business item
(1) Financial institution creditor’s right purchase
(2) Financial institution creditor’s right appraisal and auction
(3) Financial institution creditor’s right management and services
(4) Account receivable purchase business
(5) Overdue receivables management services
(6) Management consulting service
(7) Investment consulting service
(8) Residential and high-rise building development, rental and sales business
(9) Industrial plant development, rental and sales business
(10) Real estate purchase and sales business
(11) Real estate leasing business
(12) Industrial and commercial credit survey service
(13) General advertising service
(14) Leasing service
(15) Agency service
(16) International trade business
(17) Specific area development
(18) Investment in the construction of infrastructure

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(19) New towns and new communities’ development industry

(20) Act as agent for handling land levy and municipal rezoning

(21) Urban renewal and reconstruction business

(22) Urban renewal and construction and maintenance business

(23) Construction management business

(24) Other financial, insurance and real estate businesses

(25) In addition to the licensing business, businesses that are not prohibited or restricted by laws

* Share of business

Unit: Thousand NTD

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Year 2022 Year 2021 YoY
Year
Amount Percentage
Item Amount % Amount % increase increase
(decrease) (decrease) %
----- End of picture text -----

Year Item	Year 2022	Year 2022	Year 2021	Year 2021	YoY	YoY
	Amount	%	Amount	%	Amount increase (decrease)	Percentage increase (decrease) %
Service income as agent for recover fnancial institution bad debt	66,233	19.2	71,863	23.5	-5,630	-7.2
Net disposal of non-performing loans	128,283	37.3	99,009	32.4	29,274	28.2
Real estate investment gain	8,508	2.5	17,418	5.7	-8,910	-51.2
Rental income	103,396	30.1	103,217	33.8	179	0.2
Net interest income(Urban Renewal)	37,612	10.9	14,174	4.6	23,438	276.7
Total	344,032	100.0	305,681	100.0	38,351	13.5

New financial products and services planned for future developments. Please refer to the current year’s business plan.

5.1.1.6 First Venture Capital

* Business item

Long-term equity investment of enterprises

Share of business

Unit: Thousand NTD

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YoY
Year
Year 2022 Year 2021
Amount increase Percentage increase
Item (decrease) (decrease) %
----- End of picture text -----

Investment income 107,210 136,118 -28,908 -21.2

New financial products and services planned for future developments. Please refer to the current year’s business plan.

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5.1.1.7 First Financial Management Consulting

Business item
(1) Escrow venture capital investment fund or provide investment advice.
(2) Provide advisory service to corporates on business management, business development and technology transfer, etc.
(3) Provide advisory service to corporates on financing, merger and acquisition, management buyout and corporate restructure, etc.
Share of business

Unit: Thousand NTD

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YoY
Year
Year 2022 Year 2021
Amount increase Percentage increase
Item (decrease) (decrease) %
----- End of picture text -----

Operating Revenue 33,586 34,792 -1,206 -3.5

New financial products and services planned for future developments. Please refer to the current year’s business plan.

5.1.1.8 First Life Insurance

* Business item

(1) Life insurance (Include endowment and group insurance)
(2) Annuity insurance
(3) Accident insurance
(4) Health insurance

* Share of business

Unit: Thousand NTD

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Year Year 2022 Year 2021 YoY
Amount First-yr First-yr Amount Percentage
premium % premium % increase increase
Item revenue revenue (decrease) (decrease) %
----- End of picture text -----

Year Amount Item	Year 2022	Year 2022	Year 2021	Year 2021	YoY	YoY
	First-yr premium revenue	%	First-yr premium revenue	%	Amount increase (decrease)	Percentage increase (decrease) %
Life insurance	7,825,122	61.6	4,389,326	28.8	3,435,796	78.3
Accident insurance	2,116	0.0	5,663	0.0	-3,547	-62.6
Health insurance	39,897	0.3	39,408	0.3	489	1.2
Annuity insurance	4,843,635	38.1	10,802,561	70.9	-5,958,926	-55.2
Total	12,710,770	100.0	15,236,958	100.0	-2,526,188	-16.6

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Unit: Thousand NTD

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Year Year 2022 Year 2021 YoY
Amount Renewal Renewal Amount Percentage
premium % premium % increase increase
Item revenue revenue (decrease) (decrease) %
----- End of picture text -----

Year Amount Item	Year 2022	Year 2022	Year 2021	Year 2021	YoY	YoY
	Renewal premium revenue	%	Renewal premium revenue	%	Amount increase (decrease)	Percentage increase (decrease) %
Life insurance	3,336,497	91.2	1,138,205	82.3	2,198,292	193.1
Accident insurance	135	0.0	123	0.0	12	9.8
Health insurance	155,456	4.2	133,342	9.6	22,114	16.6
Annuity insurance	166,635	4.6	112,304	8.1	54,331	48.4
Total	3,658,723	100.0	1,383,974	100.0	2,274,749	164.4

New financial products and services planned for future developments. Please refer to the current year’s business plan.

5.2 2023 Highlights of Business Plan

5.2.1 First Financial Holding

In light of changes in the domestic and international economic and financial landscape, the Group will prioritize the global supply chain transformation trend and the financial industry net-zero transition, and continue to explore new growth opportunities. We have identified two priorities for 2023: drive steady growth of profits and pursue sustainable net-zero transformation. Building upon a solid business foundation, we aim to further expand overseas markets, bolster the quality of our core businesses, and instill risk management, legal compliance, internal control, anti-money laundering, and information security into our corporate culture. Our goal is to integrate ESG considerations into our core businesses and utilize the investment and financing capabilities of the Group to become a driving force that promotes sustainable development, facilitates carbon reduction transformation in the industry, and delivers impact to our customers. The key operational strategies and business plans for 2023 are discussed below:

(1) Cultivate overseas markets and expand the business foundation.
(2) Focus on core business and enhance customer penetration.
(3) Deepen digital transformation and lead innovative services.
(4) Strengthen capital structure and refine risk control and compliance.
(5) Pursue net-zero goals and implement sustainable finance.

5.2.2 First Bank

(1) Corporate banking and deposits & remittances

A. Maintain the bank’s leading position in small and medium-sized enterprise loans with a focus on even growth and increasing the volume of medium to large sized SMEs, and deepening cross-business penetration.

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B. Develop diversified syndicated loan customers, strive for the opportunity to coordinate and lead cases, and strengthen the underwriting of ESG syndicated loans for industries such as the green industry.
C. Focus on the promotion of three projects including sustainable loans for renewable energy, preferential loans for green enterprises, and sustainable performance-linked loans, expand the scale of green finance, and assist enterprises in low-carbon transitions.
D. Expand the source of urban renewal cases led by the government and landlords, strengthen cooperation with real estate management agencies and trust companies, reinforce the sustainable mechanism, and engage in quality cases for the reconstruction of aged and damaged buildings.
E. Establish a maintenance mechanism between the Group and medium-to-large enterprises, strengthen customer retention and obtain business intelligence through regular visits by the bank at various levels, to enhance customer contribution.
F. Strategically absorb time deposits, adjust the structure of demand deposits and time deposits, and flexibly regulate the pricing of preferential interest rates, to expand the deposit operation base and build stable funds.
G. Integrate digital technology with automated marketing to gain knowledge of the company’s payroll schedule, payroll funds and retained amounts, provide appropriate marketing information, and increase business penetration opportunities.
H. Implement fair treatment of customers, improve financial-friendly services, ensure fairness to elderly customers and improve quality of services.
I. Review and evaluate the location and effectiveness of establishing physical branches, adapt to the shift in urban development focus, and invest in emerging development areas as appropriate.
(2) Foreign exchange and international business
A. Promote foreign exchange transactions according to the credits provided to corporate banking clients and become excellent partners in facilitating corporate trade cash flows.
B. Gain market momentum through marketing campaigns, adjust deposit interest rates and durations flexibly to continue expanding the US dollar deposit base.
C. Create exclusive foreign exchange campaigns for payroll account and digital account customer segments, and use digital channel marketing to strengthen the business.
D. Combine foreign exchange marketing campaigns with tourism and current affairs to attract interbank cash ordering/resale business and increase the volume of foreign currency cash transactions.
E. Focus on the US, Europe, Japan and Southeast Asia markets while expanding overseas, and dynamically adjust the strategies in response to the global political and economic situation.
F. Pursue steady progress for larger-scale branches while accelerating expansion for smaller-scale ones. Implement differentiated management based on regions and continuously adjust business supervision indicators.
G. Seize the opportunities in supply chain restructuring and overseas expansion by Taiwanese businesses, increase the proportion of self-loan cases, and strive to lead syndicated loans. In response to interest rate cycles, guide overseas branches to strengthen balance sheets and enhance interest margins.

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H. Deepen the concept of sustainable development in overseas business and increase the proportion of ESG investment and financing. Also, review the carbon emissions of investment and financing positions in overseas branches and set carbon reduction targets in accordance with the bank’s climate risk project planning.
I. Strengthen anti-money laundering compliance operations and upgrade AML systems in overseas branches. Additionally, leverage technology to reduce compliance costs and strengthen the review of cross-border fund flows under the RBA principle.
J. Continue to cultivate local talents, establish a talent pool and transfer system, and flexibly utilize talents from various countries to enhance local development.

(3) Treasury and financial market

A. Diversify funding sources in both domestic and foreign currencies. For long-term funds, obtain stable and low-cost domestic and foreign currency funding through bond issuance. For short-term funds, adjust the interbank lending strategy and expand the proportion of domestic and foreign currency bond repurchase agreements (RP).
B. Adjust the asset allocation structure dynamically, including adjusting SWAP strategies in response to interest rate trends, seizing opportunities to perform bond swaps, and continuously expanding the scale of foreign currency bonds with good credit ratings to improve the portfolio’s overall yield level. Also, reduce foreign currency structured financial assets gradually to reduce the impact of market price volatility on the income statement.
C. Depending on market interest rate levels and demand for green financing, issue green bonds and sustainable development bonds, and plan for the development of sustainable-linked bonds (SLB). Continuously increase the investment proportion of sustainable development bonds while restricting the investment proportion of high-polluting/energy-intensive industries.
D. Based on demands from high-net-worth clients, seize opportunities to issue foreign currency structured financial bonds to enhance the bank’s capital market visibility and provide diversified products to highnet-worth clients.
E. Utilize the advantage of branch channels to capture high-net-worth and professional investors, enhance customer loyalty and business penetration rates through product diversity, and increase customer stickiness.
F. Strengthen cross-department cooperation to explore the potential currency and interest rate needs of corporate or foreign exchange customers, provide investment recommendations, and expand business opportunities. In addition, launch tailored and subscription-based investment portfolio products in response to rising interest rates to meet the needs of different customer segments and expand the business foundation.

(4) Personal banking

A. The high-net-worth asset management team of the head office and business units work together to provide services, continuously introduce proprietary products to increase product penetration and customer stickiness, and explore new opportunities for the wealth management business.

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B. Continue to promote the dollar value averaging business and the “e-First Smart Wealth Management” to attract small-scale investment clients and online customers, expand the bank’s wealth management accounts and AUM scale, and promote family wealth management to capture the second-generation wealth management clients.
C. Facilitate Trust 2.0 Plan by strengthening cross-industry alliances, develop comprehensive trust services such as care trust, employee welfare trust, and inheritance trust, and make timely adjustments in accordance with evaluation mechanisms.
D. Explore new sources of trust customers and promote small-scale investments to assist customers to accumulate personal retirement savings through long-term disciplined investments and to expand the bank’s trust asset scale.
E. Capture market trends, focus on niche high coverage and installment savings insurance products, and provide investment-linked insurance policies based on trends in the market.
F. The online insurance business is planning to add automobile and motorcycle comprehensive insurance and small-scale endowment insurance to fulfill the diverse insurance needs of customers in digital channels.
G. Expand mortgage lending capacity by partnering with developers to increase sources of individual housing cases; also guide branches to focus on owner-occupied cases and perform moderate increases on interest rates for non-owner-occupied housing loans to increase interest income.
H. Continue to promote “lifestyle” mortgages and expand credits through online and offline channels. Attract high-quality corporate bulk loan projects to drive growth in other consumer loan businesses.
I. Develop the co-branded credit card market, strengthen the operation of green credit cards, and also cultivate the digital financial field to consolidate a young/digital customer base and bolster the use of mobile payment and digital wallets in various fields.
J. Collaborate with TM and First Life Insurance to promote credit and insurance to credit card customers to increase non-operating income; strengthen acquirer operations and participating merchants to increase the average balance of demand deposits.

(5) Risk management

A. Strengthen capital allocation and utilization, regularly review limits for risk asset growth, monitor changes in capital adequacy, and propose control measures.
B. Monitor the concentration limit of various credit risks regularly, put forward warnings or response measures timely, so as to diversify risks and comply with laws and regulations; in addition, continue to monitor the changes in major political and economic conditions of various countries, credit ratings of external institutions, risk exposures, and CDS, etc., and adjust and monitor the national risk alert thresholds as needed.
C. Strengthen market risk, counterparty credit risk, liquidity, and bank book interest rate risk management, and monitor various limits, issue warnings or take countermeasures in real-time to ensure the sound operation of the bank.

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D. Conduct a carbon footprint audit on investment and financing according to the PCAF method, set carbon reduction targets using the SBTi method, and cooperate with First Financial Holding’s instructions to provide relevant information to comply with PCAF standards and pass SBTi verification. In addition, complete disclosure requirements following the “Guidelines for Domestic Banks’ Climate Risk Financial Disclosure” issued by the Financial Supervisory Commission.
E. Continue to track major industrial and economic issues in the macroeconomic situation at home and abroad and in economic cycles, and issue analysis reports regularly and proactively, so that relevant units can gain insight into risks and capture business opportunities in advance.
F. Improve education and training to align with business practices and facilitate experience transfer and enhance the professional competence of corporate financial credit staff, thus increasing the value of credit reports and the quality of credit approval.
G. Continue to improve staff expertise in authorizing credits, conducting reviews and providing appraisals at all levels of branch offices, regional centers and the head office. In addition, adjust review authority to implement the spirit of hierarchical and streamlined management, enhance efficiency, and strengthen organizational effectiveness.
H. Consider changes in domestic and foreign industries and political and economic situations, adjust industry limits in a timely manner, and adopt exceptional measures for industries and regions with high risk or concentration, so as to flexibly adjust management strength and accuracy.
I. Improve the ESG risk assessment of credit business, strengthen the identification and assessment of climate change risks, establish a carbon reduction mechanism for financing business, and deepen the implementation of sustainable credit.
J. Strengthen post-loan review and alert systems, and handle designated review and warning notifications in response to the economic situation to improve the quality of creditor’s rights.
K. Monitor the effectiveness of M0-M2 debt collection, prevent overdue payments, actively clear collection amounts and recover bad debts.

(6) Digital banking and information technology

A. Strengthen the development of iLEO functions, integrate data sources from different industries, invest in emerging technology fields, seek niche products, and improve customer experience.
B. Establish a one-stop integrated platform for open finance, continue to implement Bank as a Service (BaaS)/ Bank as a Platform (BaaP), and expand the open banking ecosystem.
C. Bolster emerging payment businesses and continue to develop diverse payment services.
D. Build a data governance system, implement it according to the short, medium, and long-term blueprint, and continuously optimize and upgrade the intelligent marketing platform. Introduce model development and deployment platforms and strengthen sales recommendations and services.
E. Continue to implement core system transformation, adjust the information architecture towards a small core and large peripherals to facilitate interface with external systems and develop open banking.
F. Expand the capacity of the backup center, introduce a next-generation software-defined network, and build modern data centers with dual-active operations as the goal to ensure uninterrupted information service.

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G. Construct critical data security protection capabilities through containerized security protection, automatic deployment of firewall rules, optimization and integration of code detection, and expansion and support for privileged account platforms.
H. Maximize the effectiveness of cybersecurity joint alliances by collecting and responding to cybersecurity intelligence, analyzing and sharing cybersecurity events, coordinating financial data security monitoring, and promoting financial data security configuration.

(7) General administration

A. Enhance the salary system, establish diverse promotion channels, strengthen the mentoring and exit mechanisms for new recruits, and improve the ability to attract and retain talents.
B. Strengthen employees’ business knowledge, arrange cross-disciplinary business courses, encourage the development of secondary expertise, and facilitate talent reserves and business development.
C. Promote diverse welfare, strengthen occupational safety management, and build a friendly and happy workplace.
D. Revitalize and improve the efficiency of asset utilization, and create a friendly business environment.
E. Improve low-carbon operations, implement sustainable supplier management and procurement, establish a sustainable environment, use renewable energy and purchase green electricity, obtain external verification, and strive for green honors.
F. Strengthen the ability to compile financial reports, comply with changes in tax laws and regulations, and implement tax governance.
G. Assist in solving social and environmental issues and implement ESG sustainability strategy by utilizing the bank’s core functions and the four public welfare strategies of “Green Care”, “Art Creation”, “Sports Competition” and “Social Care”.
H. Promote the brand image of “Right By Your Side” to increase customer stickiness to the bank’s brand.

(8) Compliance affairs

A. Conduct bank-wide compliance and anti-money laundering education and training to deepen the bank’s culture of compliance.
B. Continue to optimize the risk assessment methodology for compliance and anti-money laundering, prevent money laundering and counter-terrorism financing based on a risk-based approach (RBA), and simplify and facilitate measures for low-risk items.
C. Promote ESG-related businesses such as fair customer treatment assessment, elderly protection, and reducing customer complaints.
D. Establish red flag indicators or include emerging risks such as virtual currencies, third-party payments, and digital account transactions in the transaction monitoring system, and plan and activate monitoring of financial advisors’ abnormal behavior/transaction pattern through system automation.

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5.2.3 First Securities

(1) Assess the possibility of mergers or peer transfers to increase single-point market shares.
(2) Enhance digital FinTech capabilities and brand image to attract young investors.
(3) Increase the proportion of over-the-counter transactions, strengthen integration with banks, and increase wealth management income.
(4) Increase the number of underwriting cases, improve advisory fees and fees revenue, and enhance the quality of advised cases delivered.
(5) Create stable investment performances through diversified investments and effective risk control.
(6) Continue to promote green and inclusive finance, responsible investment, and institutional investor stewardship to implement sustainable development goals for the financial holding company.

5.2.4 First Securities Investment Trust

(1) New fund offers

The company’s new fund development direction for 2023 includes: (1) Use ESG screening logic and investment strategies through active funds or passive ETF structures to select outstanding investment opportunities in domestic and foreign markets; (2) Invest in global mature country stocks that meet sustainability standards, with a primary investment objective of pursuing long-term capital appreciation; (3) Develop fund of funds mainly composed of global ESG-related funds and ETFs, focusing on a stable stock investment strategy, and continuously strive to incorporate ESG factors into the new product development process to expand the company’s product line.

(2) Investment operation

A. Integrate qualitative and quantitative investment talents and capabilities, and continue to develop effective investment decision-making processes and procedures.
B. Utilize various internal and external resources, including research and development, and quantitative analysis to continuously optimize the management of fund/account performance.
C. Introduce ESG factors into the investment process, collaborate with overseas investment advisors, and develop overseas ESG stock funds.
D. Strengthen team capabilities, develop high-quality product strategies, and provide long-term stable performance to attract capital inflows.
E. Actively and effectively communicate with product, marketing, channel, business teams, and customers to reduce knowledge gaps.

(3) Business promotion

A. Promote flagship funds to deepen and broaden existing and potential customers’ assets.
B. Promote dollar cost averaging business using planned themes and campaign activities to enhance the customer’s recognition of the company’s funds.

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C. Cultivate the high-net-worth departments in the banks, and expand the asset scale of various products.
D. Cultivate ETF business operations through securities brokerages, and focus on promoting key securities brokerage branches.
E. Focus on government funds and institutional clients, actively seek domestic and foreign discretionary accounts.
F. Increase the frequency of cooperation with online platform channels, enhance the brand awareness of overseas funds, and actively negotiate project cooperation with channels.
G. Improve the quality of professional forums and the accuracy of product recommendations.

(3) Marketing and promotions

A. Business support: Optimize resources to support sales and meet business needs.
B. Brand image: Promote industry-academic forums and highlight expert images.
C. Digital marketing: Deepen social management and increase interactions and attract attention.
D. Customer service: Optimize the official website structure and improve customer experience.

5.2.5 First Financial AMC

(1) Proactively pursue overdue loans and bad debts of First Bank.
(2) Participate in NPL acquisitions in a timely manner and strengthen the collection of acquired loans.
(3) Establish special incentives to effectively improve the recovery of bad debt.
(4) Extend focus on the prime commercial districts in central and southern Taiwan, participate in foreclosure bidding, and increase real estate income.
(5) Cooperate with government policies to actively participate in the redevelopment loan business, serve as an executor or developer, and assist in reconstruction.

5.2.6 First Venture Capital/First Consulting

(1) In the short-term: Enterprise inventory is expected to be reduced in 2023. Short-term investments within 6 months to 2 years will be carried out on companies with good fundamentals and where inventory is properly reduced. The expected rate of return can reach 10-20%.
(2) In the medium to long term: We look for industries with high growth potential, and seek to invest in key components in sectors such as new energy vehicles, third-generation semiconductors, circular economy, biotechnology, and low-orbit satellites and communications, etc. As the investment horizon is expected to be longer, the forecast IRR will be approximately 20%-35%.
(3) With First Venture Capital acting as the cornerstone investor, the investment in the three green funds raised and managed with First Consulting totals NT$400 million, accounting for about 22% of the assets. This will create stable returns and reduce the impact of stock market fluctuations on the venture capital’s profits.

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(4) Combining the Group resources and collaborating with the government’s development of green energy business opportunities, First Venture Capital will raise and manage renewable energy funds. First Consulting will continue to cooperate with the Group to carry out comprehensive advisory and consulting services throughout the process of financing, investment, listing or IPOs, in order to win market opportunities. It is expected that in 2023, eight investment cases will be recommended to First Venture Capital, with a total investment amount of about NT$300 million.

5.2.7 First Life Insurance

(1) Channels

A. Boost the use of installment payments to purchase investment-type products in banks and insurance agency channels, and gradually increase AUM with the promotion of retirement wealth management.
B. Improve channel service quality, and deepen the channel network and partnership with public banks.
C. Design group variable annuity policies to tap into small and medium-sized enterprises and retail banking customers in response to government pension reform.
D. Add a new sales channel for mortgage life insurance, monitor performance of large mortgages, increase the mortgage life insurance insured rate, promote coverage for the full mortgage period and amount, and place emphasis on both single and installment payments.
E. Create long-term value by increasing sales of protection-type insurance policies using the telemarketing channel.
F. Strengthen the company’s digital brand image through Fund Rich’s platform, enhance the function of online insurance purchases, and improve the efficiency of acquiring online customers.
G. Reinforce the concept of insurance protection among sales staff by providing education and training.

(2) Products

A. Gradually adjust the company’s product types and structure in response to the simultaneous implementation of IFRS 17 and ICS in 2026, with the aim of enhancing the company’s long-term value.
B. Create protection-type products that meet the needs of the elderly population and create long-term value for the company in line with government regulation amendments.
C. Integrate investment-linked products and promote a popular-product selling platform in conjunction with the government’s regulatory amendments and retain the flexibility of adding new products in order to facilitate the sales process and lower backend maintenance cost.
D. Develop products suited for online or telephone purchase to continue enhancing company value.

(2) Branding

A. Develop brand promotion plans and customer satisfaction indicators with the insurance philosophy of “providing adequate protection to every public” through marketing partners nationwide, telemarketing channels, and online sales channels.
B. Build brand awareness by communicating corporate news and product information to all channels, policyholders, and the general public through media exposure, policyholder relationship management, and by utilizing relevant marketing resources and digital channels.

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5.3 Sector Overview

5.3.1 Financial Holding Company

The financial industry has been affected by a range of international political and economic conditions since 2022. These include the ongoing pandemic, the inflationary impact of the Ukraine-Russia war, rising US interest rates, the depreciation of the New Taiwan Dollar against the US dollar, and fluctuations in the capital markets. The financial industry recorded pre-tax earnings of NT$479.8 billion in 2022, which represents a 48.77% decline from the previous year. The banking industry’s 2022 pre-tax earnings was NT$432.1 billion, an increase of 12.06% from the 2021 figure. The non-performing loan (NPL) ratio stood at 0.15% while the NPL coverage ratio was 910.46%, indicating good credit quality and financial resilience. During the same period, total outstanding loans to small and medium-sized enterprises (SMEs) amounted to NT$9.28 trillion, an increase of NT$594.5 billion from NT$8.76 trillion as of the end of 2021. Outstanding loans to private corporations as a share of total outstanding loans was 69.48%, which represented ample funding support for SMEs. In the meantime, the securities and futures industry’s 2022 pre-tax earnings reached NT$66.3 billion, a 52.51% decrease from the 2021 figure. The Financial Supervisory Commission (FSC), maintains a close watch on the potential impact of global events on Taiwan’s economy and the stock market and implements relevant stabilizing measures when necessary. As a result, the securities market remains fundamentally stable. As of the end of 2022, the number of listed companies in Taiwan grew to 1,779, with a total market capitalization of over NT$48 trillion. Lastly, the insurance industry continues to offer significant potential for growth. Premium income was NT$2.55 trillion in 2022, a 19.81% decrease from 2021, however, total assets grew from NT$33.8 trillion at the end of 2021 to NT$34.8 trillion at the end of 2022.

The Financial Supervisory Commission (FSC) is committed to fostering a better development environment for the financial market and industry, and to achieving a sustainable future. To that end, the FSC has recently introduced a range of financial policies and measures aimed at promoting industry growth, including enhancing financial resilience, promoting sustainable finance, strengthening corporate governance, developing financial supervision and technology, improving information and communication security, increasing capital market efficiency, promoting inclusive finance, protecting investors’ rights and interests, and encouraging international exchanges and cooperation.

On December 28th, 2022, the Financial Industry Net-Zero Working Platform was established to promote sustainable financial development. The goal of this platform is to collaboratively build and improve data and databases related to sustainable finance. Additionally, measures were taken to strengthen corporate governance, including the amendment of regulations regarding the “Corporation Operation Directions for Compliance with the Establishment of Board of Directors and the Board’s Exercise of Powers” on December 21st. Furthermore, to address changing information and communication security concerns, the “Financial Cyber Security Action Plan 2.0” was announced on December 27th, 2022. In addition to promoting the existing 23 items, the plan includes 12 new security measures and expanded the applications of 5 existing ones. To enhance the efficiency of the capital market, the Taiwan Stock Exchange explored ways to improve communication between companies and shareholders. Furthermore, two items were added to the corporate governance

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evaluation indicators, including “minutes of the general shareholders’ meeting shall record important content of shareholders’ questions and company replies,” and “shareholders’ meeting shall adopt online live broadcast or upload audio and video after the meeting.”

In the coming years, the FSC is committed to promoting sustainable development in the financial industry while prioritizing the stability of financial markets and the protection of consumer rights. To achieve this, the FSC plans to further relax regulations and expand business opportunities, while also driving financial innovation, improving capital market efficiency, and fostering a culture of corporate governance.

5.3.2 The Banking Industry

The government has been implementing the “New Southbound Policy” for several years, which includes signing financial regulatory cooperation agreements with both official and unofficial regulatory bodies in different countries, expediting negotiations to renew bilateral investment agreements (BIA) under the New Southbound Policy, promoting the “Green Finance Action Plan 3.0,” and encouraging financial institutions to undergo digital transformation. These measures aim to enhance the global competitiveness of Taiwan’s financial industry.

In light of the recent US-China tech war and the formation of the “CHIP 4” chip supply chain negotiation mechanism, China’s progress in advanced semiconductor fields is expected to be met with obstacles. This development has prompted Taiwanese investors to exercise greater caution when considering investments in China. However, with Southeast Asian countries reopening their borders, some Taiwanese businesses have resumed their overseas investment plans. Southeast Asian countries generally have large consumer markets, and some have larger interest rate hikes, leading to an expanded deposit rate spread. These factors serve as important incentives for Taiwan’s financial industry to expand into the region. Nonetheless, limitations on financial markets and changes in political and economic circumstances in ASEAN countries may result in increased operational costs and risks for businesses in these areas. In summary, striking a balance between risk and return and deepening local market engagement will be critical for Taiwan’s financial industry to enhance its competitive edge in cross-border financial services.

Looking ahead to 2023, the ongoing conflict between Russia and Ukraine is expected to continue to put pressure on inflation, while major central banks around the world are tightening their monetary policies, which may hinder production and consumption and result in slower economic growth compared to 2022. The tight labor market in the United States could prompt the Federal Reserve to maintain high interest rates, but this could also strain the economic outlook. In the Eurozone, the continued conflict between Russia and Ukraine and high labor costs may make it difficult to curb inflation, which could lead to upward pressure on interest rates and hamper economic growth. Japan’s economy is expected to experience moderate growth due to the government’s active promotion of fiscal expansion policies under the “Comprehensive Economic Measures,” despite sluggish external demand. China’s economic growth rate is predicted to surpass that of the previous year, with significant relaxation of COVID-19 restrictions and the dual support of expansive fiscal and monetary policies by the government and the central bank. However, Taiwan’s weak exports may hinder the recovery of private consumption and investment expansion momentum, increasing downward pressure on the economy.

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The housing market in Taiwan has been affected by various factors such as the ongoing COVID-19 pandemic, rising prices, and the central bank’s interest rate hikes, resulting in a decline in housing demand. According to data from the Ministry of the Interior, the total number of property transactions decreased by 8.6% in 2022 compared to the same period in 2021, amounting to 318,000 transactions. Looking ahead, with the era of surplus liquidity coming to an end and housing prices rising rapidly in recent years, some buyers may be unable to afford the higher prices and could potentially delay their home purchase plans. Additionally, after amending “The Equalization of Land Rights Act”, it is expected that investors will gradually withdraw from the market. As a result, it is predicted that the housing market will experience both a decrease in price and volume in 2023.

Regarding the changes in the domestic banking industry’s operating environment, negative factors such as the COVID-19 pandemic and the Ukraine-Russia conflict have caused uncertainty in industry operations and increased pressure on bank operations. However, interest rate hikes by major central banks, led by the United States, have expanded interest rate spreads, which have helped improve the banking industry’s operating environment and drive bank profitability.

Looking forward, the global rate hike cycle may weaken the overall economic growth momentum and have varying impacts on different industries. As the cost of capital increases, there may be a higher risk of corporate default. Moreover, with the increase in liquidity risk and the lack of confidence in the financial market, the European and American banking industries such as Silicon Valley Bank and Credit Suisse Bank have successively collapsed, highlighting the increasing difficulty of banking operations. However, the high-interest rate environment has a positive impact on the deposit and investment spreads, as well as foreign exchange gains of banks. In addition, the Taiwanese government’s policies to attract Taiwanese businesses to return, encourage businesses to stay and invest, and promote investment by small and medium-sized enterprises are expected to stimulate corporate demand for funds. The easing of international travel restrictions is also expected to promote global trade, and this may lead to the reactivation of the bank’s overseas expansion and related businesses, resulting in growth in both business volume and profitability. Amidst a climate of rising interest rates, customers will be further motivated to reach their ESG goals through the bank’s profit-sharing model. This is expected to become an important opportunity for promoting green finance, which could boost ESG financing business volume.

5.3.3 The Securities Industry

The financial industry has always pursued development on a large-scale, comprehensive, international, and liberalized basis. However, domestic securities industry players are struggling to generate higher profits owing to fierce competition and a cut-throat price war. As the overall market is becoming saturated and the business environment is more and more challenging, Taiwan securities companies have gone through mergers and acquisitions in a bid to enhance their competitiveness by growing bigger. As of the end of 2022, the total number of securities companies stood at 105, with a total of 849 branches, indicating that scaling up has become an unstoppable trend.

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5.3.4 The Investment Trust Industry

(1) Onshore public funds

According to statistics compiled by the Securities Investment Trust & Consulting Association of the ROC (SITCA), as of the end of 2022, the AUM of publicly raised funds managed by domestic investment trusts totaled NT$4,856.8 billion, a decrease of NT$98.4 billion, or -2.0% from 2021 figures. Among publicly raised funds in 2022, AUM of equity funds totaled NT$732.3 billion, a decrease of NT$123.3 billion, or -14.4% from 2021 figures; other funds totaled NT$1,000.4 billion, a decrease of NT$136.5 billion or-12.0%, YoY (including balanced funds, fixed-income funds, fund of funds, principal-protected funds, REIT funds, indexed funds, multi-asset funds and ETF-linked funds, in which fixed-income funds contributed the greatest decrease ); ETF funds totaled NT$2,336.5 billion, an increase of NT$ 230.4 billion or 10.9% than 2021( domestic ETF funds the most), money market funds is NT$787.6 billion, a decrease of NT$69.0 billion, or -8.1% from 2021 figures.

As of the end of 2022, the number of mutual fund investors in Taiwan had grown by 2,297,161, or 49.6%, on the 2021 figure to 6,928,464. The number of investors participating in dollar-cost averaging schemes totaled 503,658, a decrease of 83,040 over the 2021 figure.

(2) Private funds

According to statistics compiled by the SITCA, as of the end of 2022, the AUM of private funds managed by domestic investment trusts totaled NT$32.4 billion, a decrease of NT$21.5 billion, or -39.9% from 2021 figures. The number of funds at the end of 2022 was 75, the same as the end of 2021.

(3) Discretionary investment management

According to statistics compiled by the SITCA, as of the end of 2022, discretionary investment management contracts managed by investment trusts totaled NT$2,330.8 billion, an increase of NT$228.4 billion, or 10.9% from 2021 figures. Investment-linked insurance policies made up 56% of all discretionary investment management contracts, the highest percentage of all, followed by government funds at 28% and domestic institutional investors at 15%.

(4) Offshore funds

According to statistics compiled by the SITCA, as of the end of 2022, the AUM of offshore funds totaled NT$3,449.5 billion, a decrease of NT$448.5 billion, or -11.5% from 2021 figures. There are a total of 38 master agents offering 995 offshore funds (belonging to 63 offshore fund institutions), a decrease of 13 offshore funds (and a decrease of 1 offshore fund institution) from the end of 2021.

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(5) Onshore public funds issued by the investment trust industry (2022/12/31)

Unit: Thousand NTD

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----- Start of picture text -----

Type Funds # of funds AUM (NT$)
----- End of picture text -----

Type	Funds	# of funds	AUM (NT$)
Equity funds	Domestic Equity Fund	136	339,639,262,259
	International Equity Fund	205	392,654,036,433
	subtotal	341	732,293,298,692
Balanced funds	Domestic Balanced Fund	19	24,939,282,536
	International Balanced Fund	25	44,091,588,825
	subtotal	44	69,030,871,361
Fixed-income funds	Domestic Fixed-income Fund	1	4,321,072,218
	International Fixed-income Fund	145	366,918,218,046
	Financial Asset Securitization Fund	0	0
	High Yield Bond Fund	50	136,076,709,238
	subtotal	196	507,315,999,502
Money Market funds	Domestic Money Market Fund	36	781,395,527,751
	International Money Market Fund	9	6,217,999,427
	subtotal	45	787,613,527,178
Fund of funds	Domestic Fund of Funds	1	2,514,923,805
	International Fund of Funds - Equity Fund	12	11,872,562,700
	International Fund of Funds - Bond Fund	24	25,974,017,149
	International Fund of Funds - Balanced Fund	44	118,311,933,084
	International Fund of Funds - Others	4	9,301,663,010
	subtotal	85	167,975,099,748
Principle-protected funds	Principle-protected	4	1,802,238,812
	subtotal	4	1,802,238,812
REITs	REITs	13	18,142,383,252
	subtotal	13	18,142,383,252

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Type Funds # of funds AUM (NT$)
----- End of picture text -----

Type	Funds	# of funds	AUM (NT$)
ETF funds	Domestic ETF-Equity ETF	37	789,948,386,555
	Domestic ETF-Leveraged/Inverse ETF	8	81,595,849,335
	International ETF-Equity ETF	57	182,150,195,926
	International ETF-Bond ETF	88	1,211,735,687,251
	International ETF-Leveraged/Inverse-Equity ETF	21	57,415,396,040
	International ETF-Leveraged/Inverse-Bond ETF	4	5,186,044,853
	International ETF-REITs/Others	2	8,488,783,380
	subtotal	217	2,336,520,343,340
Index funds	Domestic investment	2	7,846,480,902
	International Index Fund	15	40,679,237,956
	subtotal	17	48,525,718,858
Multi-assets funds	Domestic Multi-asset Fund	2	1,565,550,483
	International Multi-asset Fund	49	179,706,645,377
	subtotal	51	181,272,195,860
ETF-linked funds	ETF-linked funds-domestic	3	6,307,536,216
	subtotal	3	6,307,536,216
	total	1,016	4,856,799,212,819

5.3.5 The Asset Management Industry

(1) NPL collection and acquisition

In recent years, as the government has imposed restrictions on the sale of NPLs, no new targets have emerged in the primary market. To achieve stable growth and increase income, in addition to stepping up the collection on current NPLs, asset management companies are also seeking to acquire NPLs in secondary and tertiary open markets. Bid-winning prices have been on the rise as a result of supply outstripping demand.

(2) Real estate investment

On March 2023, Taiwan’s central bank announced an adjustment to the discount rate, marking the first rate hike since July 2011. Governments around the world have started a cycle of rate hikes and fund tightening, leading real estate investors to exercise more caution. As a result, there was a decrease in real estate transactions, and many companies suspended or delayed their real estate investment plans. In 2023, the stock and bond markets are likely to remain volatile, and the ongoing conflict between Russia and Ukraine and high corporate inventory will continue to pose uncertainties and concerns for an economic decline. The

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proposed amendment to the Equalization of Land Rights Act has had an impact on real estate investment, which is expected to shift towards purchasing properties for self-use. Most of the real estate held by the company is for industrial and commercial use, and most have been leased out. Although they have been relatively less affected, the overall market correction of the real estate industry has also impacted the sales and leasing situation. The company will support the competent authority’s regulations based on the principle of sale and will evaluate the market environment and dispose of any real estate as needed to activate assets. This year, we will continue to bid for valuable investment targets in the foreclosure market, and lease or release some real estate to increase profit.

(3) Urban renewal business

In 2018, the Financial Supervisory Commission (FSC) issued revised operating principles that allowed financial holding companies (including banks) to invest in asset management companies (AMCs) engaged in financing for urban renewal projects and rebuilding of aged buildings, debt consolidation, and acting as executor or applicant of such projects. In March 2018, the AMC invested in Taiwan Urban Regeneration & Financial Services Co. Ltd. through equity investment to expand its revenue base, explore opportunities for transformation, and deepen its diversified business strategy.

In addition to continuing to work closely with sister company banks to undertake more urban renewal prepayment, the company also aims to expand its urban renewal business and increase its income by helping residents accelerate construction and by coordinating with the government. In addition, it will actively develop relationships with construction companies and developers, and provide preliminary loans during the integration process. After the integration for development is completed, the company then refers clients to the bank to provide comprehensive financing and to facilitate the use of Group resources. In the long term, the company will cooperate with the Taipei City Urban Renewal Promotion Center, Urban Regeneration R&D Foundation, Taiwan Urban Regeneration & Financial Services Co., and developers or private land owners to seek business opportunities. The company will also take part in related projects or act as executor or applicant by providing funds and executing the reconstruction of old and damaged buildings, and transforming itself into an AMC focused on urban regeneration.

5.3.6 The Venture Capital Industry

According to a Bloomberg survey, the world economic growth rate slowed to 2.9% in 2022, and the impact of the energy crisis is expected to lead to a further slowdown, with the global GDP growth rate projected to be 2.7% in 2023, with the US expecting to grow 1.0% and China to grow 5.2%.

In 2022, Taiwan’s GDP grew by 3.8%. Although the US Federal Reserve’s continuous interest rate hikes and the destocking process in the manufacturing industry are expected to continue to impact the economy in 2023, Taiwan is entering a new phase of coexisting with the pandemic. As a result, the supply chain and cross-border activities are expected to recover gradually, maintaining the momentum of consumption and exports. As a result, the GDP growth rate for 2023 is estimated to be 3.1%. The main focus of long-term investments will be on high-growth industries, including new energy vehicles, third-generation semiconductors, circular economy, biotechnology, low-orbit satellites, and communications. Short-term investments will also be made in projects with good fundamentals and proper inventory management. Additionally, the firm will collaborate with the government to develop green energy business opportunities and manage renewable energy funds.

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5.3.7 The Insurance Industry

The first-year premium income of the overall life insurance industry totaled NT$772.995 billion in 2022, a decrease of 26.24% over the 2021 figure of NT$1,048.040 billion. The Taiwanese life insurance market is still characterized by high concentration among top players, and in 2022 the premium income of the top ten life insurance firms made up 83.51% of total income. Of these ten, five are affiliated with financial holding groups— Cathay Life Insurance, Fubon Life, China Life (China Development Financial), Taiwan Life (CTBC Holding), and Shin Kong Life—and their premium income is mainly generated through their bancassurance channels, group subsidiaries, and company-affiliated agents. The combined first-year premium (FYP) income of these five insurance companies in 2022 accounted for 53.93% of the entire market. A breakdown of the new policy sales performance of insurance companies affiliated with financial holding groups in 2022 indicates that BNP Paribas Cardif TCB Life Insurance and Cathay Life Insurance generated the highest portion of their new policy sales from investment-linked products, accounting for 68.24% and 60.68%, respectively. Meanwhile, Taiwan Life Insurance and First Life Insurance had their highest portion of new policy sales coming from interest ratesensitive products, accounting for 77.23% and 76.80%, respectively.

The contribution of each channel to FYP income in 2022 was as follows: bancassurance (49.03%), sales agents (38.71%), insurance brokers/agents (11.69%), direct marketing/telemarketing (0.46%), and others (0.10%). Compared with the data for 2021, the contribution from the bancassurance channel lowered while sales from sales agents and insurance brokers/agents increased, and contribution from all other channels remained more or less unchanged.

5.4 Research & Development

5.4.1 First Financial Holding

(1) R&D expenditure and achievements in the last two years

R&D spending in 2022 and 2021 was 8,457 thousand and 8,690 thousand, respectively, and was mostly used to carry out projects and build, revamp, and replace systems. The major R&D results are described below:

A. As part of our efforts to enhance our corporate governance quality, maintain a two-way communication platform with both domestic and foreign shareholders, and update our investor relations webpage, we engaged international consultants Broadridge, ICS, and IPREO to address each of the above goals. They compiled voting recommendations on proposals for our peers around the time of the annual general meeting and analyzed the ownership structures of our offshore institutional shareholders. The data were submitted to our management team for their reference to raise the quality of our corporate governance.
B. Established a human resource system and a talent database to maintain the integrity of personnel information, ensure the accuracy of salaries and attendance records, and systemize the approval processes.

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(2) Future research and development plans

In line with the development trend of Fintech, we will continue to improve the digital channel platforms of subsidiaries, strengthen cyber security mechanisms, and carry out the construction, adjustment, and replacement of various support systems per the needs of each business unit.

5.4.2 Subsidiaries

5.4.2.1 First Bank

A. R&D expenditure and achievements in the last two years

R&D spending in 2022 and 2021 was 14,184 thousand and 9,223 thousand, respectively. The funds were used to purchase electronic databases and professional publications, host several industry seminars, internal training sessions, and business R&D report competitions, and host the “Financial Innovation and Sustainable Finance Research Report Award” campus competition. In addition, the funds were used to compile on a regular or ad hoc basis weeklies on the domestic and global economy and financial conditions, the global economy, the global industrial and economic development, and industry focus, to provide research reports on the latest industrial and economic developments in Taiwan and abroad with a comprehensive overview of important updates to the global economy and finance.

B. Future R&D projects

We aim to enhance the breadth and depth of our industrial and economic analysis reports and their application in our businesses. We will examine in greater depth the financial situation in Taiwan and abroad by analyzing the evolution of the economic cycle, interest rates, and foreign exchange rates in major economies, while closely monitoring global banking regulatory changes and industrial and economic data. We will also integrate the analysis of industry trends, technological development, and inputs and outputs, keep abreast of the major industrial changes across regions, and provide important information such as business opportunities and risks to the business units in a timely manner.

5.4.2.2 First Securities

A. R&D expenditure and achievements in the last two years

R&D spending in 2022 and 2021 was 21,991 thousand and 22,637 thousand, respectively. The company continued to use digital technology to strengthen digital platform services, the integrity of mobile trading commodities, and transaction convenience. As securities and futures traders have been frequently attacked by credential stuffing, to solve the problem, measures from the FSC to fortify platform two-factor certificate (OTP) have been implemented, aiming to further secure the trading system and network. In the past two years, the amount of investment in FinTech research has reached 47 million, a 16.77% increase. In 2022, First Securities (AP) and E-Winner (WEB) added 14 new or improved features, including “flash trading limit orders,” “specific customer portfolio queries,” and “optimized display of securities day trading functionality.” The “Jin-Ma-Ji” APP/WEB also improved the “scheduled investment records” interface, allowing scheduling and termination of investments at any time, and added online signature functionality for futures trading. The “E-Key Account Opening APP” also added

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new banking and securities account features, and launched the “Thunderbolt Large Account Trading System” to enhance customer satisfaction.

B. Future R&D projects

In 2023, we will build the “Smart Order” feature on our platform and introduce the “scheduled discretionary investment” feature to increase customer trading volume. We will also add “discretionary investment account opening” and “online futures account opening” to enable customers to open accounts for various markets in one go, accelerating account opening efficiency and attracting new customers.

5.4.2.3 FSITC

A. R&D expenditure and achievements in the last two years

In 2021 and 2020, the company completed the raising of “FSITC 4-6 Year Global Rich Country Investment Grade Bond Fund”, “FSITC Taiwan Core Strategic Infrastructure Fund”, and “FSITC Aerospace and Satellite ETF Fund. These new product issuances not only continued the innovative branding spirit of FSITC, but starting in 2022, the company has planned the implementation of the ESG process, and an application was submitted for an ESG investment portfolio fund. Approval was obtained by the end of 2022, and ESG-related products are expected to be officially launched in 2023 to expand the company’s ESG fund product line.

B. Future R&D projects

In consideration of inflation and the investment environment in 2023, we plan to introduce protection-type products that offer asset protection, multi-asset products that provide both growth and returns and products that are designed to address inflation concerns. Moreover, in response to the demands of high-net-worth clients and to provide them with more investment options, we will also be releasing private equity funds that offer income and inflation protections. Our future new fund development direction will focus on both active and passive fund structures, and will also incorporate ESG screening logic into investment strategies. In addition to continuing our innovative spirit and incorporating ESG factors into the new product development process, we will also learn from overseas investment advisors (in compliance with Articles 6, 8, and 9 of the EU’s Sustainable Finance Disclosure Regulation (SFDR)) to develop ESG sustainable funds and impact funds, to expand our product line related to ESG and sustainable finance.

5.4.2.4 First Life

The major expenditures on IT expenditures in 2023 will be IFRS17 adoption, internal automation within the company, digitalization, cyber security, and legal compliance. IT efficiency and revamp hardware for NT$ 104,798 thousand, software purchase for NT$ 267,819 thousand, and other leasing equity improvements for NT$ 9,250 thousand, totaling NT$ 381,867 thousand in capital expenditure in 2023.

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5.5 Short-term and Long-term Business Plans

5.5.1 Plans

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Company Short-term business plans Long-term business plans
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Company	Short-term business plans	Long-term business plans
First Financial Holding	1. Optimize overseas management and seize post-pandemic business opportunities. 2. Integrate resources to explore business opportunities, and enhance the scale and joint marketing synergy. 3. Strengthen digital competitiveness and implement fnancial innovation. 4. Stabilize capital efciency and strengthen risk management capabilities. 5. Implement ESG strategies and pursue net- zero goals.	1. Market positioning: Our short-term goal is to become a leading fnancial institution in Taiwan, while our long-term aspiration is to become a regional fnancial conglomerate in the Pan-Pacifc region. 2. Our expected fnancial targets are as follows: Return on assets≧1% Return on equity≧15% Double leverage ratio＜120% Group capital adequacy ratio≧110%
First Bank	After analyzing the external environment and the bank’s strengths and weaknesses, in 2023 we made it our vision statement to carry out stable development and realize sustainable digitalization. In response to the trend of digital transformation and sustainable development, the bank will focus on stable operations through innovative developments and sustainable empowerment with digital enhancement as a priority. We hope to construct a sustainable business with strong operational foundations and proftability and realize our vision of becoming a niche regional digital bank where people thrive.	1. Expand our international presence 2. Strengthen integrated marketing 3. Transition to digital services 4. Deepen customer relationships and value 5. Create a comprehensive cross-border operational platform 6. Enhance our ability to innovate business 7. Emphasize sustainable operation performance 8. Improve risk management, internal control, and internal audit 9. Practice climate-related governance 10. Optimize IT security and compliance regimes 11. Enhance our corporate brand value 12. Create a culture of well-being in the company
First Securities	1. Recruit competent salespersons from the sector, enhance salesperson quality, accelerate the transformation, and increase the contribution value of staf. 2. Optimize electronic trading platforms and improve customer experience to increase customer loyalty and adhesion. 3. Develop businesses such as discretionary investment, security lending and borrowing, non-restricted purpose loans, domestic and foreign equity purchase through dollar-cost averaging schemes, and structured products to expand income sources.	1. Strive to achieve a balanced development of the three core businesses of channel sales, investment banking, and asset management. 2. Implement channel transformation and integrate virtual and physical channels to enhance channel efciency. 3. Leverage the Group’s advantages to establish a reputable brand for the investment banking business.

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Aim to secure major or benchmark IPO cases, expand SPO cases by collaborating closely with banks, and boost revenue from underwriting business.
Refine investment management, enhance the ability to trade in the emerging stock market, and increase the profitability of underwriting positions.
Optimize the allocation of proprietary positions in stocks and bonds, attract new high-quality traders, and stabilize and improve investment returns on proprietary funds.
Focus on and flexibly adjust investment positions, as well as effectively manage risks, to improve the stability of proprietary trading profits.
Execute joint marketing initiatives within the financial holding company and cooperate with the government to introduce new businesses under applicable regulations.
Continue to enhance the efficiency of internal and external digital technology systems, expand online products and digital services, and establish a professional image of a digital broker.
Actively promote and implement ESG sustainable development goals following the policies of the financial holding company.

First Securities Investment Trust has achieved significant success in cultivating its innovative brand image. In 2023, the company plans to continue deepening its brand innovation by developing trend-setting products, while also expanding its business to include the promotion of ETF products. Through strategic partnerships with channel platforms and the implementation of digital advancements, the company aims to provide customers with differentiated and diversified services, First ultimately attracting a wider range of Securities customer segments. Moreover, the company Investment is committed to implementing ESG practices Trust and will continue to cultivate its existing business while also promoting private equity investments and exploring new business opportunities. By doing so, the company hopes to create new avenues for growth and profitability in the market.

Stabilize fund performance and create superior returns.
Conform to the investment environment and develop trend-setting products.
Diversify sales and expand customer base.
Enhance investment in digitalization and improve competitive advantage.
Seize ESG trends and realize sustainable development.

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Company	Short-term business plans	Long-term business plans
First Financial AMC	1. Step up a resolution of NPLs and increase their trading liquidity, while continuing to acquire suitable NPL products. 2. Search for high-quality assets in the foreclosure market or government property tenders and increase bidding for properties in the metropolitan Taipei area and Taoyuan region. Analyze operations to evaluate the best time for sales and efectively activate assets to boost income. 3. Strengthen integrated marketing and cooperate with First Bank to seek urban renewal fnancing business. Actively seek opportunities to provide preliminary loans, then refers clients to the bank after development integration is completed to provide comprehensive fnancing and to facilitate the use of Group resources.	1. Bid for foreclosed real estate such as factories, commercial ofces, and factory lands in the Taoyuan, Hsinchu, Taichung, and Kaohsiung areas, and adjust the allocation of manpower promptly. 2. Support government policy of encouraging AMCs to participate in urban regeneration projects; train personnel and work with peers while looking for suitable urban regeneration projects to invest in and transform into an AMC focused on urban regeneration.
First Venture Capital/ First Consulting	1. Due to Black Swan events, such as the ongoing confict between Russia and Ukraine, infation, rising interest rates, and accumulation of inventory, etc., the stock market and venture capital short-term investments were signifcantly impacted in 2022. Enterprise inventory is expected to be reduced in 2023. Short-term investments within 6 months to 2 years will be carried out on companies with good fundamentals and where inventory is properly reduced. The expected rate of return can reach 10- 20%. 2. To achieve proft targets and revitalize assets, we will seek opportunities to dispose of investments on the listed and OTC markets to realize profts.	1. Search for industries with high growth potential, and seek to invest in key components in sectors such as new energy vehicles, third- generation semiconductors, circular economy, biotechnology, and low-orbit satellites and communications, etc. As the investment horizon is expected to be longer, the forecast IRR will be approximately 20%-35%. 2. With First Venture Capital acting as the cornerstone investor, the investment in the three green funds raised and managed with First Consulting totals NT$400 million, accounting for about 22% of the assets. In addition, invest in solar power plants to receive a fxed income and lower the impact of stock market fuctuation on venture businesses. 3. First Financial Holding is committed to working on integrated marketing campaigns and ofering comprehensive services encompassing lending, investment, listing, and related consulting to further reach out to clients, enhance competitiveness, and diversify the income sources of our institutional banking business. First Venture Capital has made some headway in carrying out the fnancial holding company’s integrated marketing strategies and will continue to make every efort.

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Increase product penetration: Reach out to wealth management customers and young customers and enhance channel marketing performance by strengthening training and marketing skills; expand the overall customer base by offering suitable products; increase penetration of protection-type products and continue to promote mortgage life insurance policies.
Leverage First Bank and First Securities’ channels: Continue to deepen relationships with First Bank, First Securities, and their branches and subsidiaries; provide effective sales support while using the Group’s advantages in multiple channels and customer bases to enhance business

First Life performance. Insurance 3. Maintain relationships with other banks and external bancassurance and agency channels: Continue to work on relationships with state-owned banks and existing channels and promote products suited for different channels to maintain business momentum.

Strengthen the long-term capital utilization capabilities of the life insurance company and conduct comprehensive asset-liability management planning; enhance investment performance and pursue recurring income and sustainable investment to achieve profit targets.
Complete the IFRS 17 integration plan as scheduled.
In response to the implementation of IFRS 17, adjust the product and channel strategy, actively increase the proportion of firstyear premium of traditional protection-type products, and raise the ratio of revenue from external channels.
Leverage the bancassurance channel’s skills and experience and the financial holding company’s vast customer base and trusted brand image to provide customers with insurance products that truly give them adequate protection, thus putting the finishing touches to their financial management planning and their pursuit for richness in matter and mind.
Continue to develop the telemarketing channel and online application and service platform; expand the customer base via telemarketing and reach out to prospective customers through the internet: Create a multifunctional, convenient online platform by continuing to optimize the online service platform for insurance policy purchases and enhance the quality of our service.

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5.5.2 Cross-sector Cooperation and Marketing Synergy

(1) Securities and insurance counters

First Financial Holding Company provides comprehensive financial services for banking, securities, insurance, investment trust, asset management, venture capital, consulting, and leasing. In order to leverage our advantage in sales channels and create marketing synergy, the subsidiaries under the financial holding company have set up counters for joint-marketing and other forms of cooperation. First Bank, for example, currently deploys insurance counters or dedicated sales desks for insurance agency business in 187 domestic branches, while First Securities hosts banking and insurance counters in its 22 branches and builds securities counters in 132 domestic branches of First Bank.

(2) Joint-marketing

First Financial Holding Company sets joint-marketing objectives for each subsidiary on the basis of its resources and business direction. By sharing resources and channels, we continue to enhance co-marketing synergy. In 2022, premium income from First Life Insurance products sold by First Bank and First Securities amounted to NT$9.336 billion, brokerage and sub-brokerage transactions processed by First Securities for sister company channels totaled NT$53.896 billion and NT$12.247 billion, respectively, inflow into new mutual funds and ETFs offered by First Securities Investment Trust through sister company channels reached NT$3.203 billion.

5.5.3 Market and Business Overview

First Financial Holding Company’s main business is the investment and management of companies invested. Below is an overview of the markets to which belong our main subsidiaries (banking, securities, investment trust, and insurance) and their business:

5.5.3.1 First Bank

1. Main business locations

As of the end of 2022, First Bank has 188 local branches and its overseas presence includes 31 branches and sub-branches, 3 representative offices, and 1 subsidiary (with 8 branches). The bank has a presence in major international cities and financial centers in Asia, the Americas, Europe, and Oceania to provide comprehensive financial services to Taiwanese businesses across the world, and will continue to diversify its operations while expanding its markets overseas. The Southeast Asia, Europe, and the US will be bank’s major overseas development roadmaps, which are aimed at creating a global network of financial services.

2. Future supply–demand dynamic and growth potential

(1) Supply side

Due to an excess of financial institutions, the market has become exceedingly competitive. The combination of a prolonged low-interest-rate environment, the emergence of non-bank players and digital banks that offer e-commerce and online payments, and the negative impact of the Covid pandemic on corporations’ operations and consumers’ revenue have made it challenging for banks to boost their profits and expand their business.

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(2) Demand side

As the Asian economy shows great growth potential, Taiwan’s financial industry has been actively expanding into the wider Asian market, seeking to diversify its operations and take advantage of beneficial investment and cooperation opportunities. Additionally, the stable control of the Covid-19 pandemic in Taiwan, coupled with the government’s policy to encourage the return of Taiwanese businesses and investments, has helped banks to expand their corporate financing businesses. The global trend towards anti-taxation has also led high-net-worth clients to pay more attention to tax planning, business succession, and family wealth inheritance issues, which has prompted various banks to introduce wealth management services. Furthermore, the pandemic has created new opportunities for non-contact businesses, such as FinTech, open banking, and digitalization, which have become catalysts for the digitalization of financial services. However, with digitization comes financial cybersecurity risks, which the FSC is working to address through regulation amendments, consumer protection, cyber security, and the enhancement of financial information capabilities. Finally, with the global trend towards energy conservation and carbon reduction, the FSC recognizes sustainable finance as an important policy and is promoting the “Green Finance 3.0” to align with international standards and improve the sustainable finance system.

3. Tailwinds and headwinds for growth and response measures

Rapid change is constant in the international economic and financial landscape, therefore, First Bank will continue to expand its domestic and overseas markets and deepen its relationships with customers while pursuing the goals of steady business development and innovation. In response to the advent of the digital financial era, the bank will strengthen the digital capabilities of employees, actively adopt technology such as big data and AI to provide diversified digital services and create various applications for open banking, to connect banking services and people’s lives, and achieve the goal of perfecting the financial ecosystem.

(1) Tailwinds

A. Century-old brand and a business philosophy that stresses steady development
B. An extensive network of domestic channels, a strong local presence, and deep relationships with customers
C. An international presence ahead of peers, with extensive footholds in Europe, the US, and the Greater China region
D. Strong expansion into the Southeast Asian market, forming an Asia-Pacific financial service network
E. Consolidation of the core corporate banking business to maintain profitability
F. Well-recognized innovative services for corporate clients that include cross-border supply chain, sales chain, and value chain financing
G. Accelerated online and offline channel transformation and greater social media presence
H. Integration of group-wide resources and synergy from diversified businesses
I. Sound asset quality and rigorous risk control mechanisms
J. Plain ownership structure and stable management teams
K. A focus on training international finance professionals to enhance competitiveness
L. Deepening Green Finance to assist clients with decarbonization transformation
M. Tailored services for high-net-worth clients to meet their varied financial needs

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(2) Headwinds

A. Diversified corporate fundraising channels have weakened the bank’s role as financial intermediaries
B. The Fintech wave is attracting non-banks players to provide financial services and to compete with domestic banks
C. Overbanking in Taiwan and a low-spread environment lead to persistent price competitions
D. Similar financial products and services offered by domestic banks indicate a lack of innovation capability
E. The scale of domestic banks is far from that of international banks
F. International politico-economic uncertainties have intensified fluctuations in the financial market.
(3) Response measures
A. Keep abreast of the latest macroeconomic and industrial trends to devise timely response measures
B. Continue to enhance the integration of business processes; achieve steady growth by planning forward-looking transformation initiatives
C. Accelerate the transformation of online-offline channels, develop diverse smart services, and enhance data-driven marketing
D. Use capital to create value and promote value-driven businesses to increase customer stickiness and create long-term relationships with customers
E. Expand business scale by “Broaden Business Presence, Deepen Local Network” to lead overseas branches to become full-service branches.
F. Support the government’s policy of assisting Taiwanese businesses to return and invest in Taiwan, and offer a diverse and high-quality range of financial products to meet the financial service needs of Taiwanese businesses.
G. Review talent pools of the sales workforce and accelerate the cultivation of core competence of the succession teams; continue to foster international talents to enhance the synergy of talent training
H. Embody corporate social responsibility and demonstrate the value of the financial service industry’s contribution to society
I. Promote business strategies that incorporate ESG, actively utilizing the negotiating power of financial intermediaries, and implementing the business goal of “sustainable finance”

4. Overview of business development

See the list of services and their share of business revenue.

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5.5.3.2 First Securities

1. Main services and business locations

First Securities’ business scope covers securities and futures brokerage, stock and bond underwriting, stock affairs agency service, new financial products, and proprietary trading. With business locations across Taiwan, the securities and futures brokerage, and new financial product businesses mainly serve domestic and foreign institutional investors and the general public. The underwriting and stock affairs agency services mainly serve domestic public companies or large state-owned institutions and investors. In addition, in response to the government’s New Southbound Policy, the company is also seeking to help Taiwanese businesses in Southeast Asia to list on the Taiwan Stock Exchange. The proprietary trading business does not have a target clientele or specific service areas.

2. Future supply–demand dynamic and growth potential

(1) Supply side

Securities firms are the primary providers of services related to the securities market. With the advent of the digital era and the continuous growth of institutional trading, small and medium-sized and specialized brokerage firms without Group resources are finding it difficult to survive. To improve their individual competitiveness, the securities industry has been undergoing consolidation, resulting in a decreasing number of securities firms each year, and an increasing proportion of electronic trading. Faced with a decrease in net income from brokerage commissions and a long-term trend of falling margin rates, the future development in the securities industry is expected to shift towards other businesses beyond traditional brokerage services. For example, the government’s recent promotion of Trust 2.0 and Financial Management 2.0, which are built upon the foundation of existing wealth management and discretionary investment businesses, presents opportunities for securities firms to generate fee income. Other opportunities include two-way securities lending, unrestricted-use trust funds, and bridge financing related to securities investment, which regulatory authorities plan to open up to securities firms. These new business opportunities not only provide securities firms with chances to derive new revenue streams from their clients’ existing stock inventory, but also offer clients new investment and financing channels, in addition to existing stock credit trading, allowing them to create more funds to participate in the market. In the underwriting business, the Taiwan Stock Exchange and the Taipei Exchange have not only focused on their existing trading markets, but have also launched new platforms such as the Taiwan Innovation Board and Pioneer Stock Board. These platforms offer start-up companies more favorable capital-raising channels. As a result, the services provided by domestic securities firms are becoming increasingly open and diverse.

(2) Demand side

The securities market serves as a platform for both the suppliers and demanders of capital. The primary demanders are investors who invest in domestic and foreign securities and derivative products to satisfy their investment and financial needs. The second group includes domestic companies listed or planning to go public, which raise funds by issuing stocks, ordinary corporate bonds, or convertible corporate bonds to meet their capital requirements. As the government gradually relaxes regulations and expands the scope of the securities business, investors are provided with more diverse financial products and convenient trading platforms to choose from. With a service

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innovation model oriented towards meeting investors’ needs, securities firms will further improve the functionality of the securities market. In addition, the changes will encourage overseas Taiwanese businesses or potential start-ups and high-quality companies to raise funds through the domestic capital market, thereby satisfying the demands of both the capital market’s fund seekers and investors.

(3) Future growth potential

The growth of the domestic securities industry can be observed from two aspects: brokerage and wealth management services related to investment and underwriting services for corporate fundraising. In terms of investment and wealth management, despite the declining short-term momentum of Taiwan’s stock market, domestic capital remains abundant due to loose monetary policies in recent years, indicating that market investment funds are not lacking. Moreover, with the possibility of high interest rates being maintained for a while after the US rate hikes, the strengthening of the US dollar has continued to drive up the proportion of US dollar holdings among the Taiwanese. In addition to bank-held US dollar deposits, ample US funds are also seeking fixedincome products overseas with stable interest rates and good credit ratings, such as overseas investment-grade bonds that have dropped in market value due to this year’s Fed rate hikes but have not significantly increased in default rates, providing securities firms with opportunities for discretionary services. As Taiwan’s society ages and has fewer children, the demand for trust services is likely to increase. The regulatory authorities encourage securities firms to promote policies of inclusive and friendly finance, which make investment and wealth management no longer the exclusive domain of the wealthy. In the future, even small and young investors are expected to have greater participation in investment and finance, which will be beneficial for the development of securities firms’ brokerage and wealth management businesses. In terms of corporate fundraising, as the FSC, Taiwan Stock Exchange, and Taipei Exchange ease fundraising regulations, corporate fundraising channels become more diversified. In the future, this will greatly increase the willingness and possibility for small and medium-sized enterprises in Taiwan, Taiwanese companies with successful overseas development, or companies in neighboring countries with similar or high dependency on Taiwan’s industries, to consider Taiwan as their primary fundraising option. These developments will have a positive impact on the underwriting business for securities firms.

Tailwinds and headwinds for growth and response measures

(1) Competitive edge

A. First Financial Holding boasts a comprehensive network providing customers with a wide range of securities and financial services. By integrating marketing campaigns, the Group acts as a convenient one-stop shop for customers. This brings cost savings and creates cross-selling synergies for the company.
B. Business locations across Taiwan and securities service counters in First Bank branches together form a comprehensive sales network. With regulatory authorities opening up data sharing, the company not only combines local connections to expand the customer base but also utilizes precise research capabilities to promote channel business.

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(2) Tailwinds

A. The FSC is actively promoting the New Southbound Policy to attract Taiwanese businesses in Southeast Asia to raise funds in Taiwan’s capital market. In addition, the Taiwan Stock Exchange and the Taipei Exchange are promoting various IPO listing platforms and attracting professional investors to enhance the diversity and competitiveness of Taiwan’s capital market.
B. The regulatory authority is continuously loosening regulations to enhance the competitiveness of the securities industry, which helps with business development and profit growth.
C. The epidemic situation in Taiwan has increased the number of investors working from home, and the growing number of people using digital bank accounts has driven the digital transformation of securities brokers.
D. Rising interest rates may lead to higher costs of bank credit for listed companies, prompting them to raise funds through the capital market via direct financing.

(3) Headwinds

A. The volatility in the international market is affecting Taiwan’s stock market performance, in turn making proprietary trading more challenging.
B. Securities companies are growing bigger, and many are engaging in price wars to gain market share, which significantly impacts their commission fees and financing interest income.
C. In the case of a global recession, companies’ willingness to raise funds may be affected due to the potential slowdown of their businesses.

(4) Response measures

A. Continue to develop a well-balanced business portfolio that includes brokerage, proprietary trading, and underwriting. Strengthen competitiveness by improving the quality of business operations and expanding the scope of services.
B. Recruit experienced and qualified young securities specialists who have their own clients. Train securities specialists to act as wealth management managers to create a supplementary source of income from wealth management services.
C. In response to the development trend of FinTech, we will strengthen the completeness and convenience of mobile financial products. In addition, to meet the investment and financial needs of the younger generation, we will offer scheduled investment plans and odd lot trading to enhance customer engagement with our digital platform.
D. Strengthen risk management, legal compliance, and auditing processes to achieve steady growth.

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4. Overview of business development

First Securities business performance and market share data are listed in the table below:

Item / amount / % / case Brokerage turnover (100 million)	2022 20,779	2021 33,452
Brokerage market share (%)	1.3839	1.4346
Outright bond transaction volume (100 million)	157	119
Repo-style bond transaction volume (100 million)	1,592	1,191
Number of cases underwritten	11	13
Number of cases co-underwritten	54	43

5.5.3.3 First Securities Investment Trust

1. Main services and business locations

First Securities Investment Trust was the first investment trust company to be listed in the over-thecounter (OTC) trading market (now the Taipei Exchange) and the first to set up a foothold in southern Taiwan by establishing branches in Kaohsiung, Hsinchu, and Taichung to provide customers with comprehensive financial services. In addition, the company was among the first to offer online fund trading services and voice transaction services, which provided much faster and more convenient investment channels for customers.

2. Future supply–demand dynamic and growth potential

(1) Supply side

As of the end of 2022, a total of 1,016 onshore funds have been launched, with a total AUM of NT$4,856.8 billion, and a total of 38 master agents, 63 offshore fund institutions, and 995 offshore funds have been approved, with domestic investors holding NT$3,449.5 billion in these offshore funds. In 2022, after experiencing the impact of the pandemic, the war between Russia and Ukraine, and market turbulence, investors were becoming more cautious and paying greater attention to future risks when searching for investment opportunities. As a result, investments that prioritize diversification, effective risk management, and sustainable finance are gaining favor among investors. The company will continue to expand its innovative branding and develop trendy products to capitalize on future market growth opportunities and win over diverse customer segments.

(2) Demand side

In 2023, as interest rate hikes and tightening monetary policies are coming to an end, the financial market is expected to face high interest rates and low economic growth, leading to fluctuating price adjustments within a particular range. During the first half of 2023, the market’s main focus will be

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on corporate earnings as monetary policy shifts from tight to neutral and inflation pressures ease. In the latter half of the year, as economic growth slows and inflationary pressures subside, the central bank’s message of interest rate cuts is expected to create performance opportunities for both stock and bond-related assets, while also leading to increasing demand for relevant commodities.

Competitive niche, tailwinds and headwinds for growth, and response measures
(1) Competitive niche
A. Strong image of government-supported investment funds with access to Group resources.
B. Innovative brand advantages (AI series funds/Young New Life funds/Aerospace ETF).
C. Stable fund performance with rigorous risk management.
D. Continuous improvement of digital development to provide excellent customer service.
(2) Tailwinds
A. Wealth Management 2.0 brings new opportunities.
B. Customer base accumulated over the years provides opportunities.
C. Accelerated development of digital financial management after the pandemic.
D. State-owned company alliances create mutual benefits and win-win situations.

(3) Headwinds

A. Uncertainty in the investment environment.
B. Fierce competition in the fund market makes it difficult to maintain long-term performance and launch differentiated products promptly.
C. The trend of “the big becomes bigger” continues in the ETF market.
D. Changes and diversification in investment behavior under the trend of digitization.

(4) Response measures

A. Increase product penetration through diversified channel collaborations.
B. Develop new customers while maintaining existing ones.
C. Promote dollar cost averaging investment plans to withstand market fluctuations.
D. Provide asset allocation advice to stabilize asset retention.
E. Enhance marketing and promotion efforts to increase fund visibility.
F. Strengthen core investment capabilities to support business development.
G. Continue to optimize the management of fund/account performance to achieve set goals.
H. Deepen investment research and active/passive investment capabilities.
I. Cultivate a quality work environment to attract and retain top talents.
J. Incorporate ESG factors into investment processes and develop related fund products.
K. Focus on the performance of the investment mandates from the Bureau of Labor Funds to improve performance rankings and facilitate future government fund bidding.
L. Continuously improve the strategy for discretionary investments to promote the strategy as a main product for future discretionary investment bids.

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4. Business

A. Major clients for the past two years

Business A. Major clients for the past two years
Item Institution clients	End of 2022 1,512	End of 2021 1,453
Individual clients	57,450	43,824
Total	58,962	45,277

B. Major funds’ AUM for the past two years

Unit: 100 million NTD

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End of 2022 End of 2021
Type Name of Fund
AUM +(-)% AUM +(-)%
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Type	Name of Fund	End of 2022	End of 2022	End of 2021	End of 2021
		AUM	+(-)%	AUM	+(-)%
Domestic Equity	FSITC High-Tech Fund	10.19	-26.5	13.87	28.3
	FSITC OTC Fund	3.35	-3.2	3.46	3.6
	FSITC Innovation Fund	12.60	-18.1	15.38	32.4
	FSITC Smallcap Fund	5.88	-3.9	6.12	20.9
	FSITC Taiwan Core Strategic Infrastructure Fund	21.22	N/A	NA	NA
Overseas Equity	FSITC Global Trends Fund	3.74	-10.5	4.18	5.8
	FSITC Asian Technology Fund	4.13	-23.9	5.43	8.8
	FSITC Asian Emerging Market Fund	3.08	-1.6	3.13	-5.7
	FSITC China Century Fund	15.25	5.2	14.49	-4.5
	FSITC Global AI Robotics and Smart Automation Fund	33.06	-9.8	36.66	8.5
	FSITC Global AI FinTech Fund	11.34	-3.9	11.8	6.8
	FSITC Global Utilities and Infrastructure Fund	63.05	29.8	48.56	127.3
	FSITC AI Global Precision Medicine Fund	37.04	-9.6	40.96	58.7

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End of 2022 End of 2021
Type Name of Fund
AUM +(-)% AUM +(-)%
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Type	Name of Fund	End of 2022	End of 2022	End of 2021	End of 2021
		AUM	+(-)%	AUM	+(-)%
	FSITC Global Artifcial Intelligence Fund	32.99	-4.1	34.39	140.8
	FSITC Global Video Gaming & eSports Fund	15.15	-13.5	17.51	-39.0
	FSITC Global Health & Weight Loss Fund	4.81	-6.4	5.14	-44.3
	FSITC Global Pet Care Fund	2.83	-14.2	3.3	-12.0
Domestic Balance	FSITC Greater China Balanced Fund	2.79	-1.8	2.84	8.8
Domestic MMF	FSITC Money Market Fund	205.20	-17.4	248.56	-27.2
	FSITC Taiwan Money Market Fund	321.86	-28.6	450.52	11.8
Overseas MMF	FSITC RMB Money Market Fund	N/A	N/A	2.29	-38.9
High-Yield Bond	FSITC GLOBAL HIGH YIELD BOND FUND	12.85	-24.9	17.12	-21.9
Global Fixed- Income	FSITC US Top 100 Bond Fund	19.02	31.4	14.47	-39.2
	FSITC Global Wealthy Nations Bond Fund	6.35	-34.9	9.75	-40.7
	FSITC 4-Year Maturity Emerging Market Investment Grade Bond Fund	20.77	-8.3	22.65	-25.1
	FSITC 4 to 6 Year Maturity Global Wealthy Nations Investment Grade Bond Fund	10.27	-24.2	13.54	N/A
Global Balance	FSITC Global Quattro Focus Income Fund of Fund	1.03	-37.2	1.64	42.6
REITS	FSITC Global REITs Fund	1.18	-12.6	1.35	-16.1
ETF	FSITC Taiwan Industry Elite 30 ETF	27.42	168.8	10.2	292.3
	FSITC Bloomberg Barclays US Corporate 10+ Year Banking Index ETF	4.94	-30.3	7.09	-10.1
	FSITC Aerospace and Satellite ETF	0.66	N/A	N/A	N/A

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5.5.3.4 First Life Insurance

1. Main services and business locations

As a 100% subsidiary, First Life plans to leverage its substantial customer base, robust franchise network, longstanding customer relationships, strong brand recognition, and exceptional service cultivated through existing channels. The company will enhance its insurance product design capabilities and proactively penetrate other bank or insurance broker channels outside the Group to expand its domestic business and drive profit and growth, ultimately achieving its long-term objective of increasing the company’s value.

2. Future supply–demand dynamic and growth potential

(1) Supply side

In 2022, the top five players in Taiwan’s life insurance market accounted for over 56 percent of the new contract premium income. Life insurance companies under a financial holding group can take advantage of cross-selling opportunities and receive resources from the group. Life insurance companies invested by foreign investors can utilize the mother company’s resources and refine business models. In recent years, China Life Insurance, which is under the control of China Development Financial Holding, and Taiwan Life Insurance, a subsidiary of CTBC Financial Holdings, have achieved a FYP market share of 9.07% and 7.44%, ranking fourth and fifth in the market, respectively. After Taishin Financial Holdings acquired Prudential Life and rebranded it as Taishin Life, the company experienced a significant increase in sales volume and has risen to 14th place in the market rankings. The acquisition of insurance companies with diverse channel attributes has demonstrated synergy and has implications for the future of the life insurance industry, which requires long-term observation. Moreover, regulatory supervision has become more stringent, and the industry will be impacted by the adaptation to IFRS17. With the rapidly changing global environment, the ability to grasp market trends and respond promptly is crucial for success.

(2) Demand side

In Taiwan, life insurance has traditionally been viewed as an investment or savings substitute by consumers, rather than primarily for protection purposes. As a result, the market is heavily influenced by interest rate fluctuations and economic growth. However, authorities have been addressing issues such as low insurance coverage, an aging population, and low birth rates by promoting guaranteed, small amount whole life, long-term care, and annuity products. In 2022, under the strict management of savings-type products by regulatory authorities and active promotion of protection-type products, consumer protection measures for elderly insurance and individuals with disabilities will have a joint impact on product design and solicitation, underwriting, and claims processing. It is expected that the market will become more mature and sound.

3. Tailwinds, headwinds for growth, and response measures

(1) Tailwinds

A. Despite an increase in insurance coverage, protection amounts are still insufficient. Thus, regulators are advocating “The Small Amount Whole Life Insurance” products to attract more customers.

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B. Regulators encourage protection-type products and provide incentives for companies.
C. An aging population brings opportunities in retirement planning, including silver-haired health insurance products, retirement planning, and long-term care insurance products.
D. Policyholders’ risk awareness has increased in the post-pandemic era, boosting protective-type product sales, and accelerating digital finance and online services.

(2) Headwinds

A. First Life is a newly established insurance company that requires further development in terms of brand recognition and market presence.
B. In the highly competitive insurance brokerage and external bank channels, whether it is market development or expansion of scale, it poses a significant disadvantage for a new company.
C. Frequent changes and tightening of regulations make sales more challenging for insurance companies.

(3) Response measures

First Life Insurance will strive to develop core products and take advantage of the parent company’s franchise, providing customers with the most suitable policies to fulfill all-round customer service, the following countermeasures will be taken:

A. Gradually develop protection-type products to extend insurance coverage.
B. In response to the retirement planning needs of the elderly, the wealth management needs of high-net-worth clients, the demand for guaranteed returns for cautious customers, and the lack of proper life insurance protection for the general public, the company will leverage the advantages of the financial holding group, combine resources from banks, securities, investment trusts, and investment advisory, develop diversified insurance products, meet customers’ comprehensive financial planning needs, and achieve the purpose of integrating and optimizing the financial holding group.

Given the unfavorable factors mentioned earlier, the company will adopt the following countermeasures:

A. Continue to offer education and training programs to promote protection-type, assets heritage, tax mitigation, and retirement planning products.
B. Enhance the capacity and scale of the telemarketing team to improve the performance of protection-type products.
C. Develop a brand name and increase customer satisfaction by leveraging the Group’s centuryold image and extensive branch channels throughout Taiwan. Media exposure & promotion, fans/ community management, and proper promotional activities will deliver a positive corporate image and product information to the public, and gradually accumulate brand awareness.
D. By combining First Life Insurance’s public welfare resource and focusing on the practice of charity, First Life Insurance has partnered with Xinyi District Community Integrated Care Service Center to improve the quality of care provided in an aging society through its donation project “First Financial Care for Life”. Other specific actions include providing volunteer leave for employees, raising funds for charity, and promoting organic farms and environmental protection, hoping to implement corporate social responsibility, and at the same time, win the public’s recognition and trust in First Life Insurance’s brand.
Business development overview: Please refer to this annual report.

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5.5.4 Employees: List the Number of Employees, Average Length of Service, Average Age, and Academic Qualifications of Employees in the Last Two Years as of the date of Publication of the Annual Report.

5.5.4.1 Number of employees, average length of service, average age, and academic qualifications

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	Company	Year 2021	Year 2022	Current year as of 2023/2/28
Number of Employees	FFHC	58	56	56
	First Bank	8,359	8,446	8,502
	First Securities	760	780	784
	FSITC	152	151	152
	First Life	346	343	355
	First AMC	67	62	62
	First Consulting	13	13	13
Avg. age	FFHC	44.83	45.27	45.32
	First Bank	41.85	42.00	41.97
	First Securities	46.15	46.30	46.29
	FSITC	44.13	44.55	44.48
	First Life	43.80	45.00	44.90
	First AMC	44.40	46.00	46.00
	First Consulting	44.20	45.50	45.80
Avg. Serving Yrs	FFHC	6.14	7.03	7.20
	First Bank	16.44	16.51	16.43
	First Securities	10.67	10.56	10.53
	FSITC	7.94	8.33	8.25
	First Life	4.10	4.60	4.50
	First AMC	12.40	14.00	14.00
	First Consulting	5.76	6.29	6.38

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		Company	Year 2021	Year 2022	Current year as of 2023/2/28
Education Background (%)	Ph.D	FFHC	0.00	0.00	0.00
		First Bank	0.06	0.05	0.05
		First Securities	0.13	0.00	0.13
		FSITC	0.00	0.00	0.00
		First Life	0.29	0.29	0.28
		First AMC	0.00	0.00	0.00
		First Consulting	0.00	0.00	0.00
	Master	FFHC	41.38	42.86	42.86
		First Bank	24.76	25.37	25.44
		First Securities	13.68	14.36	14.29
		FSITC	31.58	35.10	34.87
		First Life	17.34	18.66	17.75
		First AMC	5.00	6.00	6.00
		First Consulting	38.00	38.00	38.00
	Bachelor	FFHC	56.90	55.35	55.35
		First Bank	69.53	69.60	69.65
		First Securities	73.95	74.49	74.62
		FSITC	65.13	61.59	61.84
		First Life	69.36	69.68	70.99
		First AMC	86.00	86.00	86.00
		First Consulting	62.00	62.00	62.00
	High School	FFHC	0.00	0.00	0.00
		First Bank	5.14	4.54	4.42
		First Securities	12.24	11.15	10.96
		FSITC	3.29	3.31	3.29
		First Life	13.01	11.37	10.98
		First AMC	9.00	8.00	8.00
		First Consulting	0.00	0.00	0.00

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Company	Year 2021	Year 2022	Current year as of 2023/2/28
FFHC	1.72	1.79	1.79
First Bank	0.51	0.44	0.44
First Securities	0.00	0.00	0.13
FSITC	0.00	0.00	0.00
First Life	0.00	0.00	0.00
First AMC	0.00	0.00	0.00
First Consulting	0.00	0.00	0.00

5.5.4.2 Name of professional certificate held by employees and number of certificate holders

Year	Year 2021	Year 2022	Current year as of 2023/2/28
Bank’s internal control and internal audit exam	6,383	6,623	6,634
Basic level international banking personnel	2,272	2,437	2,435
Basic level bank lending personnel	2,943	3,110	3,099
Stock afairs specialist	838	862	855
Bond specialist	320	327	327
FinTech knowledge basic test	2,885	3,472	3,465
FinTech Expertise Certifed	-	2	5
Securities Investment Trust and Consulting Professionals	1,670	1,733	1,724
Securities Investment Trust and Consulting related regulations	5,280	5,520	5,529
Trust Specialist	7,240	7,442	7,461
Investment-linked insurance product agent	6,265	6,469	6,464
Derivative product sales agent (include structured product sales agent)	5,398	5,703	5,690
Life insurance salesperson	7,726	7,924	7,907
Life insurance broker	8	8	8
Life insurance agent	21	22	22

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Year	Year 2021	Year 2022	Current year as of 2023/2/28
Foreign currency, non-investment insurance product sales	5,975	6,167	6,162
Property insurance agent	6,657	6,853	6,828
Securities specialist	2,149	2,260	2,268
Senior securities specialist	2,270	2,317	2,309
Securities investment analyst	250	252	252
Futures specialist	216	224	223
Futures broker	1,958	1,997	1,997
Futures trading analyst	2	1	1
Financial Risk Manager (FRM)	25	27	28
AML & NRA Specialist	103	107	107
International Anti-Money Laundering	2,712	3,166	3,159
Qualifcation	1,522	1,499	1,492
Financial Planner	2,004	2,052	2,049
Certifed Financial Planner (CFP)	40	46	46
Silver-haired Population Financial Planner	-	112	110
Certifed Financial Analyst (CFA level1)	10	9	9
Certifed Financial Analyst (CFA level2)	1	1	1
Certifed Financial Analyst (CFA level3)	10	13	13
Certifed Internal Auditor	14	14	14
Certifed Information Systems Auditor	10	8	8
Attorney	27	26	26
Certifed Public Accountant	31	33	33
US Actuary	5	3	3
Taiwan Actuary	5	3	3
Life Insurance Management Institute ROC-Underwriting personnel certifcate	15	15	15

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Year	Year 2021	Year 2022	Current year as of 2023/2/28
Life Insurance Management Institute ROC-Claims personnel certifcate	14	13	13

5.5.4.3 Qualification of personnel related to financial transparency of the company:

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Department Name of Qualification
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Department	Name of Qualifcation
Finance & Accounting Department	3 persons passed the corporate internal control basic test and 3 persons passed the bank’s internal control and internal audit exam.
Auditing Department	1 Certifed Internal Auditor, 1 Certifed Information System Auditor, 1 person passed the corporate internal control basic test and 5 persons passed the bank’s internal control and internal audit exam.

5.5.5 Education and Training of Employees Integrated Marketing Training

5.5.5.1 Integrated marketing training program

Following “First Financial Holding and Subsidiaries’ Integrated Marketing Training Implementation Rules”, the company’s major channels and product units shall develop training plans based on integrated marketing business development and talent cultivation needs, and submit the plans to the company before the start of each year. After the plans are compiled, the integrated marketing training program will be announced for implementation and shall be reviewed quarterly. The integrated marketing training program includes:

Internal training courses provided by the channel or integrated marketing training courses provided by the product unit, focusing on the explanation of real practices and description of workflows and providing hands-on training.
Product units will conduct seminars on specific business topics for the targeted sales force, focusing on business planning and execution and performance reviews.
To assist employees in obtaining qualifications for integrated marketing, channels shall appoint staff to participate in external professional training courses and assist them in obtaining the certification required for developing integrated marketing.

For the aforementioned integrated marking courses, each unit shall select or recommend suitable personnel according to the annual training program of the company. The integrated marketing training courses (including online learning and videos) for the year 2022 totaled 284.91 hours and 27,177 participants.

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5.5.5.2 Employee training

To encourage employees to receive advanced training in their spare time, in year 2022, Group companies sponsored a total of 245,545 participants with the total costs of NTD 60,710 thousand.

5.5.5.3 FFHC executives’ 2022 education & training

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Title	Name	Program	Hours
President	Fen-Len Chen	Corporate Governance Forum (the 1st session) – AML and Fair Treatment of Customers, Corporate Governance Forum –Treads and Response to Carbon Management in Net-Zero Transition	6.0
EVP & Head of Strategy Planning Dept.	Annie Lee	Corporate Governance Forum (the 1st session) – AML and Fair Treatment of Customers, Corporate Governance Forum –Treads and Response to Carbon Management in Net-Zero Transition	6.0
EVP & Chief Compliance Ofcer	Mei-Chu Kan	Corporate Governance Forum (the 1st session) – AML and Fair Treatment of Customers, Strengthening Climate Change Risk Management, Industry Trends Seminar - Metaverse and Taiwanese Businesses’ Investment Strategies in Information Service and Software, Suspicious Overseas Account Fraud Alert Mechanism Launch Ceremony and High-Level Financial Anti- Fraud Forum, Legal Compliance and AML/CFT Training Workshop, 2022 AML/CFT Training for Executives	25.7
EVP & Chief Cyber Security	Pei-Wen Liu	Strengthening Climate Change Risk Management	2.0
Chief Auditor & Head of Auditing Dept.	Mico H.C. Lin	Financial Business Seminar for Audit Personnel, Digital Impact and IT Security Threats (the 1st session), Financial Technology and Data Application (the 1st session), Corporate Governance Forum (the 1st session) – AML and Fair Treatment of Customers, Tax and Legal Risk Considerations in Equity Inheritance, Legal Risk Management in Digital Transformation, Corporate Governance Forum –Treads and Response to Carbon Management in Net-Zero Transition	36.0
Senior Vice President & Chief Secretary of the Board & Company Secretary	Li-Fang Hung	Labor Dispute Prevention and Corporate Governance, Interpretation and Preparation of ESG Disclosure Requirements for Corporate Governance 3.0, Corporate Governance Forum (the 1st session) – AML and Fair Treatment of Customers, Corporate Governance Forum – Treads and Response to Carbon Management in Net- Zero Transition, Strengthening Climate Change Risk Management	14.0

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Title	Name	Program	Hours
Head of Admin. Mgt. Dept.	Mandy Horng	Company Governance 3.0 from the Perspective of Prosecution and Investigation, Global Risk Perception - Opportunities and Challenges for the Next Decade, Development Trends of Smart City Applications under Gov.Tech, Fin & Tech Salon Exchange Meeting (the 50th session), Trends and Prospects of Open Banking Development, Seminar on Sustainability Report Disclosure and Sustainable Finance Practice, A Company's Perspective on Emerging FinTech Crimes and AML Measures	19.1
Head of Legal Compliance Dept.	Fen-Ying Wu	Corporate Governance Forum (the 1st session) – AML and Fair Treatment of Customers, Anti-Corruption and Whistleblower Protection (the 1st session), Crime Threats, Detection and Prevention Techniques, and Internal Controls for RBA (the 1st session), How to Establish Efective and Efcient Internal Controls for KYC (the 1st session), Financial Crime Control Mechanism and Risk Management (the 1st session), Financial Holding Company Act and the Banking Act: Practical Cases and Controversial Issues in (the 1st session)	15.0
Head of Business Development Dept.	Pei-Chen Tsai	Corporate Governance Forum (the 1st session) – AML and Fair Treatment of Customers, Corporate Governance Forum –Treads and Response to Carbon Management in Net-Zero Transition, Pre-job Training for Trust Industry Sales Professionals	10.0
Head of Risk Mgt. Dept.	Ferng-Chern Yang	Corporate Governance Forum (the 1st session) – AML and Fair Treatment of Customers, Corporate Governance Forum –Treads and Response to Carbon Management in Net-Zero Transition, Strengthening Climate Change Risk Management, Education and Training on Foreign Exchange Derivative Products, Trust Industry Supervisor Training Program	26.0
Acting Head of IT Dept.	Chih-Ping Wang	2022 AML/CFT, 2022 Fair Treatment of Elderly Customers, 2022 Fair Customer Treatment and Financial Consumer Protection Act, 2022 Environmental Sustainable Development Course	8.3
Dedicated Committee Member & Deputy Head of Admin Mgt. Dept., Head of Accounting & Finance	Chen-Bean Lee	Corporate Governance Forum (the 1st session) – AML and Fair Treatment of Customers, Corporate Governance Forum –Treads and Response to Carbon Management in Net-Zero Transition, Strengthening Climate Change Risk Management 2022 Controlled Foreign Corporation (CFC) System Training Program, Continuing Education Program for Principal Accounting Ofcers of Issuers, Securities Firms, and Securities Exchanges	22.0

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5.6 Corporate Responsibility and Code of Ethical Conduct

5.6.1 Fulfillment of Corporate Social Responsibility: Please refer to this Annual Report, “Fulfillment of Corporate Social Responsibility” section.

First Financial Holding combines sustainability strategy with its business philosophy, and has long been committed to improving its performance in governance, social and environmental sustainability. In 2022, FHHC was honorably selected into the “Dow Jones World Index” for the fifth year in a row, also been honorably selected by the “Dow Jones Sustainability Indices (DJSI) Emerging Markets” for seven consecutive years. It was also ranked in the top 1% of the global banking industry by the international sustainability rating agency S&P Global’s Sustainability Yearbook (The Sustainability Yearbook), and was awarded the highest grade AAA in the MSCI Global Standard Index ESG Rating banking category. It was included into the London “FTSE4Good Emerging Index” for six consecutive years. FFHC achieved “A-list” honors for its leadership in the “CDP Climate Change Project”, the only one that awarded for 4 consecutive years for it and 5 consecutive years positioned as “Leadership Level” among its domestic peers. In addition, it was selected as a constituent stock of the Bloomberg Gender Equality Index (GEI), and was awarded the “Best ESG Award - Excellent” by the Taiwan Financial Research Institute for Outstanding Financial Business. Subsidiaries Bank was rewarded “Top 100 Corporate Sustainability Model” , “Corporate Sustainability Report Award- Finance and Insurance Golden” ,“Climate Leadership Award”, “ Innovative Growth Leadership Award”, “ Cyber Security Award” and “Society Co-lived Award” total 6 awards. It has also won the “BSI Outstanding award” for seven consecutive years and FHHC was also selected into the “Taiwan Top 100 CG Index” for eight consecutive years, FFHC received “Sustainable Index” for six consecutive years, the “Taiwan Top 100 High-Pay Industry Index” for nine consecutive years, and the “Taiwan employment 99 Index” for 13 consecutive years. In addition, First Bank was awarded “SME Lending Guarantee Insurance Fund Partner”, “Lending Guarantee Insurance FundExcellent Managers”, “ Policy-Advocation Award”, “Support Start-Up Award”, “Local Development Raise Award” and “ Micro-enterprise Support Award” total 6 awards and “National Sustainable Development Award” “ by the National Sustainable Development Committee of the Executive Yuan, Also, FFHC received the fourth “National Corporate Environmental Protection Award”. In addition, First Bank was awarded two golden awards from the Joint Credit Information Center FSC’S “Top 25% for Fair-Treatment for Customers”. and First Life Insurance was awarded “Excellence in Enhanced Insurance Protection Policy” by the FSC for the 26th time in a row and the FSC’s micro-policy competition of “Considerations for Elderly and Disabled Persons” award. First Securities was awarded” 2022 Institutional Investors’ Stewardship Information Disclosure” award.

5.6.2 The Code of Conduct and Ethics of the Company

The Group is committed to promoting ethical standards and ensuring that all members, including directors, supervisors, managers, and employees, understand and adhere to these standards. To achieve this goal, we have consolidated a range of rules and guidelines, such as the “Corporate Governance Principles,” “Ethics and Management Guidelines,” “Insider Material Information Principles,” “Acquisition

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Disclosure Rules,” “Personnel Management and Compliance Regulations,” “Equal Gender Rules,” and “Industry Security Rules,” and established the “Code of Conduct for Directors, Supervisors, and Managers of First Financial Holding” and the “Code of Conduct for Employees of First Financial Holding.” These codes outline guidelines for preventing conflicts of interest, avoiding unethical behavior, fulfilling confidentiality obligations, conducting fair transactions, protecting and using company assets properly, complying with anti-money laundering and anti-terrorism financing regulations, encouraging reporting of illegal or unethical behavior, prohibiting bribery and corruption, ensuring equal employment opportunities, prohibiting unreported employment, preventing monopolies, anti-competitive behavior, and insider trading, and maintaining a safe and healthy workplace with proper supervising and reporting. These codes are signed by the directors, supervisors, managers, and employees of each company in the Group at the end of each fiscal year or upon assuming a new position. In 2022, a total of 20 directors and managers and 50 employees of this company signed, 100% achieved, while a total of 460 directors, supervisors, and managers and 9,785 employees of each subsidiary company signed, 100% achieved. The subsidiary, First Bank, has also taken into account the company’s code of conduct and its internal related regulations and has added the code of conduct for directors, supervisors, and managers, as well as the code of conduct for employees of First Commercial Bank, and translated them into six languages, including English, Simplified Chinese, Lao, Japanese, Vietnamese, and Cambodian. This is to ensure that locally employed staff at overseas operating locations fully understand the content of the code of conduct and actively prevent the risk of improper behavior. The number of signatories totals 452 people, 100% achieved.

5.7 Number of Non-managerial Full-Time Employees, Average, Median of Full-Time Employee Benefits Expenses, and the Differences from the Previous Year:

Unit: person /NT thousand

Previous Year:	,	Unit:	person /NT thousand
# of Non-managerial Employees	2021 8,171	2022 8,400	Change (%) 2.80
Avg. Beneft Expense for Non-managerial Full-Time Employees	1,294	1,337	3.32
Median Beneft Expense for Non-managerial Full- Time Employees	1,180	1,245	5.51

5.8 Information System

5.8.1 IT Strategies and Development Plans

An IT Development Committee was created as a way to enhance business performance by strengthening the company’s IT strategies and development plans and supervising subsidiaries in their participation in group-wide IT development initiatives. The committee’s main responsibilities are:

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Review of the group’s IT strategies
Review of the group’s IT structure
Review of the group’s IT security regulations
Planning for integration of group-wide IT resources
Review of the annual IT development and investment plans presented by the subsidiaries and their progress
Review of, and follow-up on, the group’s material IT contingencies
Other coordination work regarding IT management in the company and among subsidiaries

5.8.2 Hardware and Software Deployment and Maintenance

The company is equipped with personal computers, laptops, printers, and servers. In response to the development of digital finance and in order to provide customers with the best visual experience, the company applied the responsive website design(RWD) approach to build the official website. A number of application systems have been put in place to support the needs of various departments, including HR and remuneration (purchased from an outside vendor), accounting and finance (leased), and query for related parties (self-developed). Dedicated personnel have also been appointed to maintain the systems and ensure their smooth operation.

5.8.3 Hardware and software development and purchase

Subsidiaries within the group have included digital channel development and IT security strategies in their 2022 key development plans.
The company plans to replace network switch, firewall systems and invasion defensive system to enhance the efficiency and reliability of its IT systems and official websites.
The company plans to purchase HR system, Financial statement system, electronical documents, parties with interest system and legal compliance systems to adopt digital operations.

5.8.4 Emergency backup and security protection

The company has set up an automated data backup system. In addition to onsite backup, it remotely stores backup data in the data station located in the IT building of First Bank on a daily basis. Data recovery drills are conducted regularly.
All major subsidiaries have set up backup systems: First Bank’s remote backup center is located in Taichung and is also shared by First Securities. First Securities Investment Trust and First Life Insurance contracted with vendors to provide remote backup services.
Secure Browsing System was installed from 2022 to strengthen the end-point security system.
In addition to installing firewalls, antivirus systems, and cyber monitoring systems, the company is commissioning IT security vendors to conduct annual vulnerability scans and penetration tests to ensure the security of the company’s IT systems and online environment. In order to reduce the risk of disruption to company website services by distributed denial-of-service (DDoS) attack, all externalfacing websites run by subsidiaries are equipped with DDoS protection systems.

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To prevent from fake websites and mobile Apps, anti-fishing and fake websites mobile apps protection is established.

5.9 Cyber Security Management

5.9.1 Cyber security management framework, policy, specific management plan and resource invested

The company has taken measures to implement our information security management policy. We have appointed a Chief Information Security Officer (CISO), who also serves as an Executive Vice President responsible for promoting our information security policy and allocating resources accordingly. Additionally, we have established a dedicated department and assigned personnel responsible for planning, monitoring, and executing information security management operations. As for our subsidiaries, they have established CISOs and allocated appropriate manpower resources following regulatory requirements based on their respective size or conditions. Currently, First Bank and First Securities have established CISOs.

To ensure the security of the information systems, equipment, networks, and data, the Group has established the “Information Management and Cyber Security Policies for First Financial Holding Co., Ltd. and Subsidiaries” and the “Information Security Management Guideline for First Financial Holding Co., Ltd. and Subsidiaries”, requiring companies to conduct information security risk assessment and adopt appropriate and sufficient information security measures following relevant laws and regulations while taking into account the characteristics of each business. This is to ensure the security of information during the collection, processing, transmission, storage, and circulation process.

Aimed at strengthening our ability to respond to information security incidents, the Group has established a Computer Security Incident Response Team to effectively handle the impact and consequences of major security incidents. We have also developed guidelines for setting up the “Computer Security Incident Response Team” and formulated the “Key Points for Setting up a Computer Security Incident Response Team” and the “Operating Rules for Information Security Incident Reporting”, which all companies in the Group must follow. In addition, to enhance information security intelligence sharing and cooperation in security alliance policies, our company and major subsidiaries have joined the Financial Information Sharing and Analysis Center (F-ISAC).

We are dedicated to protecting our company’s information system and preventing malicious software from infiltrating through social engineering tactics. To achieve this, we provide annual information security and social engineering prevention education and training for all employees within each company in our Group. In addition, irregular email social engineering exercises are conducted each year. The exercises include clicking links, opening attachments, sending receipts, opening emails, and successful phishing attempts. Any employee who does not pass the drills is provided with additional education and training on information security and awareness.

Information security risk is part of the operational risk under the risk management framework. To establish a sound risk management framework and information operation security management

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mechanism, and to ensure the confidentiality, integrity, and availability of customer information and information operations, the Group’s major subsidiaries, First Bank, First Securities, and First Life Insurance, have established information security policies and passed the ISO 27001 international information security management standards, and they will continue to carry out the Information Security Management System (ISMS) review.

Note: The validity periods of ISO 27001 certification are as follows:

First Bank: 2021/08/01~2024/07/31;

First Securities: 2022/12/01~2025/11/30;

First Life Insurance: 2021/02/09~2024/02/09;

First Investment Trust: 2022/07/04~2025/07/03.

In 2022, First Bank was recognized with awards for cyber security such as the “Commercial Times Digital Information Security Excellence Award” and the “TCSA Information Security Leadership Award”.

5.9.2 Losses Suffered Due to Significant Cyber Security Incidents over the Past

Fiscal Year and up to the Publication Date of This Annual Report, and Possible Impacts and Measures Taken. If a Reasonable Estimate Cannot be Made, an Explanation of the Facts of Why It Cannot be Made Shall be Provided:

First Securities was attacked by hackers on December 30, 2021. In this incident, 1 customer was placed in a fake order, and the loss amounted about NT$1,700, which was absorbed by FS without any prejudice to customer rights and interests. While the abnormal monitoring, SMS real-time notification, website Application Firewall (WAF) adds credential stuffing blocking rules, malicious blacklist IP blocking and requesting customers to change passwords of enhanced measures. First Securities has also completed enhanced mechanisms such as dual-factor login and certificate OTP download in accordance with the regulations.

Since January 2022, the Group has not undergone significant cyber security incidents and have not suffered losses due to any significant cyber incident.

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5.10 Employment Relations

5.10.1 Labor Relationship

5.10.1.1 Employee Benefits

A. Promoting Work-Life Balance for Employees

To encourage population growth by largely increasing employee maternity benefits, First Financial and First Commercial Bank both granting employees wedding and maternity benefits up to NT$ 30 thousand dollars for wedding, NT$100 thousand dollars for birth of the first child from September of 2021, NT$150 thousand dollars each for plus kids (such as the 2nd birth is twins, $300 thousand will be given) as well as the transportation subsidy during pregnancy for NT$ 10 thousand. The nursery rooms are in place, as well as partnered with a renowned daycare chain to provide a corporate daycare program that offers discounted services. Female employees are eligible to the family care and combine their motherhood with career. Employees are encouraged to take multi-day consecutive vacation leave. In 2022, the company offered NT$5,000 to NT$10,000 vacation allowance for employees who took up to 7 to 14 days of vacation leave, encouraging employees to spend time with family and live a balanced life.

B. Comprehensive Insurance Package

Other than complying to the regulations to cover the employees’ Labor Insurance and National Health Insurance, the Company, First Commercial Bank and First AMC offer the employees a group insurance package at a discount rate that covers casualty insurance, personal injury insurance, hospital inpatient daily allowance, and cancer insurance. Employees, their family members, and retired employees are all eligible to purchase the group insurance. Meanwhile, First Commercial Bank employees who are dispatched overseas are eligible to both the local group health insurance and International SOS membership. The Company will pay half of the expenses for the latter in case that emergency medical services are required. Other than that, First Securities, FSITC and First Life Insurance offer an employee group insurance package as well. In regard to the Covid-19, for year of 2022, First Bank continued to offer a free “Compensation Insurance Plan for Covid-19” to the employees, insurance content includes hospitalization daily allowance, negative pressure isolation ward or intensive care unit medical insurance premium, care insurance premium and isolation expense to implement employee epidemic prevention care.

C. Health Care and Nutrition Management

The Company’s Headquarter has an employee cafeteria that hires professional nutritionists to design the recipe, preparing healthy, low-fat, and low-sodium meals with fresh ingredients from partner organic vegetable farms that charged at low-cost. Doctors’ clinic is available 6-7 times a month, in which employees could seek counsel on health and medical conditions. The Company offers periodic physical examinations to employees that is superior to the legal requirement: every 2 years, managerial employees are granted official leave to conduct physical examinations at a hospital for early detection over any disease. In 2022, continue to appoint “Teacher Zhang Foundation” to provide “psychological counseling services” for employees, and to provide free workplace flu vaccination services in the

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headquarters building to help employees protect their physical and mental health.

D. Career Development

Various on-the-job training courses, subsidies of grants for off-duty advanced studies, and rewards for professional certifications programs are all in place in a bid to encourage employees acquire certifications. Regular rotation systems help build diverse talent cultivation plans that stem proficiency for employees. Given the positive development of employees’ career planning, the loyalties then are further enhanced.

E. Sports and Other Employee Events

The Company sponsors a variety of employee hobby clubs including sports and recreational activities. Employees may rent venues to play sports events with subsidies. The Company also hosts employee birthday parties, social gatherings, and a variety of sports events, apart from offering allowances for company trips and year-end parties.

F. Employees Savings/Stock Ownership Trust Program & Annuity Insurance Program

In order to enhance the long-term willingness of employees and encourage colleagues to plan for retirement as early as possible, First Bank has launched the “Employee Savings and Employee Stock Ownership Trust Program” since 2019, providing employees who have worked for more than half a year to choose to participate in savings or stock ownership trust program based on their own needs. First Bank will subsidize and deploy the funds each month; First Life provides monthly retention benefits for employees, and the benefits are used to purchase the group annuity life insurance. FFHC has also implemented an employee group annuity insurance program since 2020 for employees to participate on their own needs, and the company will deploy a fixed amount of insurance premiums monthly to improve employees’ economic autonomy after retirement.

5.10.1.2 Pension Plan and Implementation

Retirement for employees of the Company adheres to regulations stated in Labor Standards Act, Labor Pension Act. and Group’s internal related regulations. The Supervisory Committee of Labor Retirement Reserve was set up and labor pension reserve funds was deposited accordingly. None of the aforementioned accounts are short fall of pension amount, ensuring the whole pension system is running well.

5.10.1.3 Labor Agreements

Issues between the employees and the employer among the Group are complied with relevant regulations. Issues raised by the employees shall be processed or resolved by the competent authority of each company according to proper procedures or resolutions made by Labor-Management Consultation Meeting.

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Currently, there is no major dispute between the employees and employer pending.

5.10.1.4 Measures Protecting the Employees’ Rights and Interests

Regulations related to HR Management are transparent, a Personnel Evaluation Committee was set up to review the significant award and disciplinary actions of the employees. For cases of disciplinary actions, the subject of disciplinary actions shall issue a written argument, attend the Committee meeting to answer inquiries, and file a complaint according to the procedures stated in Official Filing of Labor Complaint. Also, each subsidiary of the Group adheres to the Sexual Harassment Prevention Law and Gender Equality in Employment Act and established measures for preventing, correcting sexual harassment, as well as related complaint procedures and disciplinary actions. All these measures mentioned above are publicly displayed in the workplace, creating a harassment-free working and service environment. The mechanism is in place to secure and protect employees’ rights and interests.

5.10.1.5 Average Pay-Hike Percentage among the Group

Year 2022 Avg. Pay-Hike Percentage	Non-managerial Employees 6.74%	Managers 3.68%	Total 6.09%

5.10.2 Current and Potential Estimation of Monetary Losses Resulted from Labor Dispute as of the Date of the Most Recent Annual Report is Published, and the Proposed Response : None

5.10.3 Measures Protecting the Employees’ Working Environment and Personal Safety

5.10.3.1 Measures Ensuring Occupational Safety and Health, and Educational Training

To ensure the safety and health of employees and to fully implement occupational safety and health management, the company has established its Occupational Safety and Health Management Program and Safety and Health Work Code. The program and work code has been submitted to competent authorities and the safety of the workplace relies on the compliance of all members of the company. New and current employees are required to attend occupational safety and health management trainings in order to increase their awareness on the issues and create a zero-hazard work environment.

5.10.3.2 Periodic Security Maintenance and Disaster Prevention Drills

First Bank runs on Security Maintenance and Implement Rules on Self-Protection every 6 months for branch-operation, in which a demonstration drill and an autonomous drill both included. In addition,

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the FFHC headquarter building has assigned a Security Corp with a standard operating procedure for the emergency, ensuring that necessary measures could be taken to secure the personal safety of headquarters employees as well as property security. In 2022, 2 for fire-fighting and 1 for annual exercise were carried out.

5.10.3.3 Friendly-Working Place

We strive to advocate a smoke-free workplace and healthy environment, headquarter building of the Company introduced the “ISO 45001 Occupational Safety and Health Management System” and was certified by BSI, and was evaluated as conforming to the “Healthy Workplace Certification-Health Promotion Label”, total of 192 places. In addition, to protect the lives of colleagues and customers, as of the end of 2022, 60 branches of Bank had installed automatic external defibrillators (AED), and Obtained “AED Safe Place Certification”.

5.11 Significant Contract

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Contract Type Firm Date Content Restrictive Clauses
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Contract Type	Firm	Date	Content	Restrictive Clauses
Director, Supervisors and Executives Liability Insurance	The Group, AIG Taiwan, Chubb Limited and Ming-Tai Insurance Ltd.	May 24, 2022 ~ May 24, 2023	1. Liability Insurance 2. Corporate Reimbursement Insurance 3. Marketable Securities Coverage 4. Employment Practices Liability Insurance	Exclusion Clauses include: Financial Institutions Professional Indemnity, Intellectual Property, Investment Bankers Professional Indemnity, Known Circumstances Exclusion, Major Shareholders Exclusion, Gifts Coverage, Product Liability, Money Laundering Exclusion.

5.12 Group Key Indicators – IFRS Compliance Figures

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Year
2018 2019 2020 2021 2022
Indicators
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Year Indicators	2018	2019	2020	2021	2022
ROA
FFHC(Consolidated)	0.62	0.63	0.50	0.55	0.52
First Bank	0.65	0.64	0.48	0.50	0.53
First Securities	0.61	1.32	2.81	4.18	1.19
FSITC	8.80	7.35	6.50	8.90	6.39

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Year
2018 2019 2020 2021 2022
Indicators
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Year Indicators	2018	2019	2020	2021	2022
First AMC	4.81	3.57	3.41	3.40	3.30
First Venture Capital	-10.26	5.47	1.93	5.77	3.59
First Consulting	11.54	12.56	8.62	9.49	9.24
First Life	-0.34	0.47	0.76	0.82	0.08
ROE
FFHC(Consolidated)	8.58	9.11	7.62	8.86	9.18
First Bank	8.71	8.97	7.16	7.97	8.95
First Securities	1.81	4.28	11.05	19.79	5.22
FSITC	10.05	8.44	7.49	10.23	7.29
First AMC	9.17	6.93	7.04	7.94	8.71
First Venture Capital	-10.28	5.47	1.93	5.78	3.60
First Consulting	13.45	15.52	13.09	16.32	15.55
First Life	-13.46	10.44	14.02	13.85	1.91
CAR
FFHC Group	131.70	118.70	125.21	130.35	125.16
First Bank	13.57	13.00	13.63	14.21	13.76
First Securities	398.82	316.41	279.18	369.35	421.35
First Life	407.45	344.10	325.78	376.53	608.55
Double Leverage
FFHC Group	107.59	107.70	107.55	108.75	110.38
NPL Ratio
First Bank	0.32	0.24	0.24	0.20	0.18
Coverage Ratio
First Bank	389.64	527.52	527.32	620.31	709.24

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VI. Financial Overview

6.1 Five-Year Financial Summary

6.1.1 FFHC Consolidated Condensed Balance Sheet - IFRS

Expressed in Thousands of NT$.

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Year Recent 5 Yrs Financial Data (Note 1) As of
Feb. 28,
Dec.31, Dec. 31, Dec. 31, Dec. 31, Dec.31,
Item 2023
2018 2019 2020 2021 2022
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Year Item	Recent 5 Yrs Financial Data (Note 1)	Recent 5 Yrs Financial Data (Note 1)	Recent 5 Yrs Financial Data (Note 1)	Recent 5 Yrs Financial Data (Note 1)	Recent 5 Yrs Financial Data (Note 1)	As of Feb. 28, 2023
	Dec.31, 2018	Dec. 31, 2019	Dec. 31, 2020	Dec. 31, 2021	Dec.31, 2022
Cash and cash equivalents, Due from the Central Bank and call loans to banks	272,127,447	328,537,139	306,026,496	408,059,670	405,968,052	Note 3
Financial assets at fair value through proft or loss	152,181,380	173,429,554	189,799,677	184,856,883	176,067,526
Available-for-sale fnancial assets	-	-	-	-	-
Financial assets at fair value through other comprehensive income	234,217,615	298,965,245	294,118,157	271,675,841	325,837,173
Investments in debt instruments at amortized cost	426,599,708	495,950,441	675,637,300	705,169,501	806,716,159
Securities purchased under resell agreements	-	880,121	-	-	6,450,000
Receivables, net	84,548,758	37,897,297	44,679,517	53,802,322	48,686,706
Current tax assets	1,324,378	1,344,798	1,382,989	1,406,079	1,242,825
Loans discounted, net	1,696,244,189	1,764,974,563	1,905,741,142	2,036,175,699	2,312,361,364
Reinsurance contract assets, net.	30,338	27,013	34,945	44,214	53,975
Held-to-maturity fnancial assets	-	-	-	-	-
Investments accounted for using equity method, net	2,504,068	2,605,277	2,776,298	2,940,983	3,128,975
Other Financial assets, net	21,177,865	21,354,039	19,627,555	20,206,192	17,710,348
Property and equipment, net	27,162,270	26,568,469	27,278,460	27,492,634	27,698,974
Investment property, net	9,567,691	10,525,271	11,172,304	11,952,173	12,110,510
Property of usage assets, net	-	2,921,479	2,675,827	2,413,371	2,470,597
Intangible assets, net	515,359	683,552	919,331	1,009,262	1,102,917
Deferred income tax assets, net	2,924,461	3,056,438	3,189,517	2,785,285	4,256,251
Other assets, net	4,078,892	6,184,286	9,441,994	9,603,798	5,333,630

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Year Item	Year Item	Year Item	Recent 5 Yrs Financial Data (Note 1)	Recent 5 Yrs Financial Data (Note 1)	Recent 5 Yrs Financial Data (Note 1)	Recent 5 Yrs Financial Data (Note 1)	Recent 5 Yrs Financial Data (Note 1)	As of Feb. 28, 2023
			Dec.31, 2018	Dec. 31, 2019	Dec. 31, 2020	Dec. 31, 2021	Dec.31, 2022
Total Assets			2,935,204,419	3,175,904,982	3,494,501,509	3,739,593,907	4,157,195,982	Note 3
Deposits from the Central Bank and banks			240,743,329	285,023,923	259,115,895	213,044,550	272,729,790
Due to the Central Bank and banks			333,951	214,750	16,390,000	42,741,220	1,014,530
Financial liabilities at fair value through proft or loss			32,913,908	34,712,214	21,358,927	8,117,688	14,491,297
Securities sold under repurchase agreements			22,006,303	24,536,620	33,573,089	18,786,529	22,729,135
Commercial papers issued, net			12,172,532	15,655,594	18,952,680	23,877,347	18,642,830
Payables			91,680,591	37,735,900	40,445,835	52,255,790	52,503,677
Current tax liabilities			2,282,290	3,549,024	3,880,722	4,314,378	4,427,299
Deposits			2,175,825,711	2,399,210,430	2,705,574,422	2,955,313,068	3,305,350,983
Bonds payable			47,150,000	37,950,000	48,950,000	57,800,000	61,850,000
Other borrowings			-	1,250,000	500,000	390,000	7,600,000
Other fnancial liabilities			63,096,492	60,467,724	58,748,947	60,167,237	83,204,551
Leasing liabilities			-	2,700,947	2,484,113	2,240,307	2,322,609
Provisions			29,783,941	40,253,066	50,507,569	59,249,644	69,762,393
Deferred tax liabilities			6,743,561	7,158,840	7,016,966	6,856,515	7,429,024
Other liabilities			5,168,738	5,753,443	5,795,475	9,892,776	9,015,294
Total Liabilities		Before	2,729,901,347	2,956,172,475	3,273,294,640	3,515,047,049	3,933,073,412
		After	2,742,239,904	2,969,257,515	3,284,846,861	3,528,011,208	(Note2)
Equity attributable to owners of the parent	Capital	Before	123,385,572	124,619,428	128,358,011	129,641,591	132,234,423
		After	124,619,428	128,358,011	129,641,591	132,234,423	(Note2)
	Capital surplus		26,107,218	26,107,218	26,107,218	26,107,218	26,107,218
	Retained earnings	Before	42,446,725	48,099,897	47,684,640	55,172,383	61,151,006
		After	28,874,312	31,276,274	34,848,839	39,615,392	(Note2)
	Other equity		13,363,557	20,905,964	19,057,000	13,625,666	4,629,923
Non-Controlling Interest			-	-	-	-	-
Total Equity	Before		205,303,072	219,732,507	221,206,869	224,546,858	224,122,570
	After		192,964,515	206,647,467	209,654,648	211,582,699	(Note2)

Note 1: Audited figures.

Note 2: Earnings distribution has not been resolved by AGM.

Note 3: Preliminary data for 2023.

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6.1.2 FFHC Standalone Condensed Balance Sheet - IFRS

Expressed in Thousands of NT$.

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Recent 5 Yrs Financial Data (Note 1)
Year As of
Feb. 28
Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31,
Item 2023
2018 2018 2020 2021 2022
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Year Item	Recent 5 Yrs Financial Data (Note 1)	Recent 5 Yrs Financial Data (Note 1)	Recent 5 Yrs Financial Data (Note 1)	Recent 5 Yrs Financial Data (Note 1)	Recent 5 Yrs Financial Data (Note 1)	As of Feb. 28 2023
	Dec. 31, 2018	Dec. 31, 2018	Dec. 31, 2020	Dec. 31, 2021	Dec. 31, 2022
Cash and cash equivalents	3,026,682	3,068,868	3,781,292	2,102,772	1,568,028	Note 3
Financial assets at fair value through other comprehensive income	3,471,222	3,773,799	3,210,084	3,031,184	2,712,260
Securities purchased under resell agreements	-	-	-	-	-
Receivables, net	798	74	23	13	218
Current tax assets	727,869	1,453,653	2,193,961	2,668,840	2,713,163
Investments accounted for using equity method, net	217,409,479	232,875,524	234,703,445	241,170,692	244,672,903
Other Financial assets, net	-	-	-	-	-
Property and equipment, net	4,270	2,750	2,175	1,357	1,668
Property of usage assets, net	-	28,821	17,355	4,591	49,152
Intangible assets, net	5,434	5,089	4,293	2,554	3,731
Deferred income tax assets, net	3,758	3,963	4,472	4,441	3,255
Other assets, net	11,652	10,347	9,369	9,040	7,943
Total assets	224,661,164	241,222,888	243,926,469	248,995,484	251,732,321
Commercial papers issued, net	6,493,959	9,187,597	9,645,133	10,792,189	8,318,707
Payables	266,327	285,458	260,763	294,157	326,622
Current tax liabilities	1,075,750	1,962,826	2,767,638	3,332,269	3,397,864
Bonds payable	10,000,000	10,000,000	10,000,000	10,000,000	10,000,000
Other fnancial liabilities	1,500,000	-	-	-	5,500,000
Leasing liabilities	-	29,018	17,572	4,641	49,428
Provisions	20,590	24,020	27,844	24,976	15,931
Deferred tax liabilities	-	-	-	-	-

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Year Item	Year Item	Year Item	Recent 5 Yrs Financial Data (Note 1)	Recent 5 Yrs Financial Data (Note 1)	Recent 5 Yrs Financial Data (Note 1)	Recent 5 Yrs Financial Data (Note 1)	Recent 5 Yrs Financial Data (Note 1)	As of Feb. 28 2023
			Dec. 31, 2018	Dec. 31, 2018	Dec. 31, 2020	Dec. 31, 2021	Dec. 31, 2022
Other liabilities			1,466	1,462	650	394	1,199	Note 3
Total Liabilities		Before	19,358,092	21,490,381	22,719,600	24,448,626	27,609,751
		After	31,696,649	34,575,421	34,271,821	37,412,785	(Note2)
Capital		Before	123,385,572	124,619,428	128,358,011	129,641,591	132,234,423
		After	124,619,428	128,358,011	129,641,591	132,234,423	(Note2)
Capital surplus			26,107,218	26,107,218	26,107,218	26,107,218	26,107,218
Retained earnings		Before	42,446,725	48,099,897	47,684,640	55,172,383	61,151,006
		After	28,874,312	31,276,274	34,848,839	39,615,392	(Note2)
Other equity			13,363,557	20,905,964	19,057,000	13,625,666	4,629,923
Total Equity	Before		205,303,072	219,732,507	221,206,869	224,546,858	224,122,570
	After		192,964,515	206,647,467	209,654,648	211,582,699	(Note2)

Note 1: Audited figures. Note 2: Earnings distribution has not been resolved by AGM.

Note 3: Preliminary data for 2023.

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6.1.3 FFHC Consolidated Condensed Statement of Comprehensive Income - IFRS

Expressed in Thousands of NT$.

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Year Recent 5 Yrs Financial Data (Note 1) As of
Feb. 28,
Item 2018 2019 2020 2021 2022 2023
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Year Item	Recent 5 Yrs Financial Data (Note 1)	Recent 5 Yrs Financial Data (Note 1)	Recent 5 Yrs Financial Data (Note 1)	Recent 5 Yrs Financial Data (Note 1)	Recent 5 Yrs Financial Data (Note 1)	As of Feb. 28, 2023
	2018	2019	2020	2021	2022
Interest income	49,122,948	53,624,043	46,100,802	44,846,079	66,054,361	Note 3
Minus: interest expense	(18,855,005)	(24,019,804)	(15,617,955)	(10,257,797)	(28,085,214)
Net interest income	30,267,943	29,604,239	30,482,847	34,588,282	37,969,147
Non-interest income	29,980,803	32,713,635	29,085,381	28,016,147	29,787,247
Net revenue	60,248,746	62,317,874	59,568,228	62,604,429	67,756,394
Bad debt expense, provisions for guarantee	(5,486,345)	(3,852,196)	(4,511,292)	(3,621,467)	(6,576,606)
Provision for insurance reserve	(11,153,372)	(11,256,010)	(10,707,035)	(9,274,835)	(8,905,998)
Operating expenses	(22,906,433)	(23,901,112)	(24,730,173)	(26,274,683)	(27,787,186)
Net income from continuing operations	20,702,596	23,308,556	19,619,728	23,433,444	24,486,604
Income tax expense	(3,370,397)	(3,939,805)	(2,812,187)	(3,694,399)	(3,890,941)
Net proft from continuing operations	17,332,199	19,368,751	16,807,541	19,739,045	20,595,663
Net Proft	17,332,199	19,368,751	16,807,541	19,739,045	20,595,663
Other items(after tax)	417,026	7,399,241	(2,248,139)	(4,846,835)	(8,055,792)
Comprehensive income	17,749,225	26,767,992	14,559,402	14,892,210	12,539,871
Net Income attributed to parent	17,332,199	19,368,751	16,807,541	19,739,045	20,595,663
Net Income attributed to minority interest	-	-	-	-	-
Comprehensive income attributed to parent	17,749,225	26,767,992	14,559,402	14,892,210	12,539,871
Comprehensive income attributed to minority interest	-	-	-	-	-
EPS (Note 2)	1.31	1.46	1.27	1.49	1.56

Note 1: Audited figures.

Note 2: Earnings distribution has not been resolved by AGM.

Note 3: Preliminary data for 2023.

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6.1.4 FFHC Unconsolidated Condensed Statement of Comprehensive Income- IFRS

Expressed in Thousands of NT$.

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Year Recent 5 Yrs Financial Data (Note 1) As of
Feb. 28,
Item 2018 2019 2020 2021 2022 2023
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Year Item	Recent 5 Yrs Financial Data (Note 1)	Recent 5 Yrs Financial Data (Note 1)	Recent 5 Yrs Financial Data (Note 1)	Recent 5 Yrs Financial Data (Note 1)	Recent 5 Yrs Financial Data (Note 1)	As of Feb. 28, 2023
	2018	2019	2020	2021	2022
Income from long-term investment	17,903,755	19,835,405	17,145,690	20,163,621	21,094,554	Note 3
Other income	227,106	190,123	187,298	169,611	175,740
Loss from long-term investment	(320,693)	-	-	-	-
Operating expenses	(356,407)	(389,290)	(378,283)	(402,845)	(412,860)
Other expenses and losses	(109,867)	(201,781)	(201,267)	(183,614)	(267,285)
Income from continued op. before tax	17,343,894	19,434,457	16,753,438	19,746,773	20,590,149
Tax Expense	(11,695)	(65,706)	54,103	(7,728)	5,514
Net Income	17,332,199	19,368,751	16,807,541	19,739,045	20,595,663
Other items	417,026	7,399,241	(2,248,139)	(4,846,835)	(8,055,792)
Comprehensive income	17,749,225	26,767,992	14,559,402	14,892,210	12,539,871
EPS, after tax (Note 2)	1.31	1.46	1.27	1.49	1.56

Note 1: Audited figures. Note 2: Earnings distribution has not been resolved by AGM.

Note 3: Preliminary data for 2023.

6.1.5 Recent 5 Years CPA Names and Audit Opinions:

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Year CPA Names Opinions
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Year	CPA Names	Opinions
2022	Chien-Hung Chou, Shu-Mei Chi	unqualifed opinion
2021	Chien-Hung Chou, Shu-Mei Chi	unqualifed opinion
2020	Chien-Hung Chou, Shu-Mei Chi	unqualifed opinion
2019	Chien-Hung Chou, Shu-Mei Chi	unqualifed opinion
2018	Chien-Hung Chou, Shu-Mei Chi	unqualifed opinion

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6.2 Recent 5 Years Financial Analysis

6.2.1 Financial Analysis-- IFRS

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Recent 5 Yrs Financial Data (Note 1) As of
Feb. 28,
2018 2019 2020 2021 2022 2023
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		Recent 5 Yrs Financial Data (Note 1)	Recent 5 Yrs Financial Data (Note 1)	Recent 5 Yrs Financial Data (Note 1)	Recent 5 Yrs Financial Data (Note 1)	Recent 5 Yrs Financial Data (Note 1)	As of Feb. 28, 2023
		2018	2019	2020	2021	2022
Operating Performance	Total assets turnover (Times)	0.02	0.02	0.02	0.02	0.02	Note 3
	Loan to deposit ratio (First Bank)	78.87	74.42	71.22	69.70	70.78
	NPL ratio (First Bank)	0.32	0.24	0.24	0.20	0.18
	Average revenue per employee	6,484.64	6,467.86	6,001.84	6,236.74	6,661.07
	Average net income per employee	1,865.48	2,010.25	1,693.46	1,966.43	2,024.74
Proftability	ROA (%)	0.62	0.63	0.50	0.55	0.52
	ROE (%)	8.58	9.11	7.62	8.86	9.18
	Proft margin(%)	28.77	31.08	28.22	31.53	30.40
	EPS (in NT$)	1.31	1.46	1.27	1.49	1.56
Financial Structure	Ratio of debt to assets	93.01	93.08	93.67	94.00	94.61
	Ratio of debt to net worth	1,329.69	1,345.35	1,479.74	1,565.40	1,754.88
	Double Leverage Ratio	107.59	107.70	107.55	108.75	110.38
Leverage	Operating leverage ratio	170.70	166.45	183.36	177.33	178.02
	Financial leverage ratio of Financial Holding Company	100.59	101.02	101.17	100.90	101.27
Growth	Ratio of assets growing	11.43	8.20	10.03	7.01	11.17
	Ratio of income growing	14.08	12.59	(15.83)	19.44	4.49
Cash Flow	Cash fow ratio	3.86	18.58	-	22.11	7.17
	Cash fow adequacy ratio	172.63	225.45	131.47	244.09	286.88
	Cash fow satisfaction ratio	2,098.66	1,836.05	-	4,669.74	1,170.48
Scale	Market share of assets	5.84	5.87	5.92	5.75	6.18
	Market share of equity	6.07	5.40	4.89	4.63	5.89
	Market share of deposits (First Bank)	-	-	-	-	-
	Market share of loans (First Bank)	-	-	-	-	-

202

Note 1: Audited figures.

Note 2: EPS is adjusted retroactively for stock dividends.

Note 3: Preliminary data as of Feb. 28 2023

Note 4: Formulas used in financial analysis:

Operating performance
(1) Total assets turnover = Net income/ Average assets
(2) Loan to deposit ratio = Total loans/ Total deposits
(3) NPL ratio = Non-performing loans/ Total loans
(4) Average revenue per employee = Net revenues/ employee
(5) Average net income per employee = Net income/ employee
Profitability
(1) ROA = Income after income tax/ Average assets
(2) ROE = Income after income tax/ Average stockholders’ equity
(3) Profit margin = Income after income tax/ Net revenues
(4) EPS =(Income and loss attributable to owners of the company-Dividends for preferred stocks)/ Average outstanding shares(Note 5)
Financial structure
(1) Ratio of debt to assets = Total liabilities/ Total assets
(2) Ratio of debt to net worth = Total liabilities/ Total stockholders’ equity
(3) Double Leverage Ratio = Equity investments specified under Articles 36, Paragraph 2, and 37 of the Financial Holding Company Act/ Total stockholders’ equity.
Leverage ratio
(1) Operating leverage ratio =(Net revenues-Variable expenses) / Income before income tax
(2) Financial leverage ratio of Financial Holding Company =(Income before income tax+interest expenses) / Income before income tax

5. Growth

(1) Ratio of assets growing =(Total assets-Last year total assets)/ Last year total assets
(2) Ratio of income growing =(income before income tax-Last year income before income tax)/ Last year income before income tax
Cash flow
(1) Cash flow ratio = Net cash provided by operating activities/(Due to the bank+Commercial paper issued+Financial liabilities at fair value through profit of loss+Securities sold under repurchased issued+Current portion of Payables)
(2) Cash flow adequacy ratio = Net cash provided by operating activities (for the last five year)/ for the last five year (capital expenditure+Cash dividends)
(3) Cash flow content ratio = Net cash provided by operating activities/ Net cash provided by investing activities

7. Scale

(1) Market share of assets = Total assets/ Total assets of all Financial Holding Co., Ltd.
(2) Market share of equity = Total stockholders’ equity/ Total stockholders’ equity of all Financial Holding Co., Ltd.
(3) Market share of deposit (bank) = Total deposits/ Total deposits held by all financial institutions which are qualified in deposit and loan business
(4) Market share of loans (bank) = Total loans/ Total loans granted by all financial institutions which are qualified in deposit and loan business

203

6.2.2 Capital Adequacy Ratio and Information Regarding Company’s Lending or Endorsements to, or other Transactions with, the Same Individual or the Same Affiliated Co.

When the capital adequacy is lower than the legal standard 100% as required, the Company may start to plan on resolutions, such as increasing qualified net capital or decreasing the demand for capital, including:

Reduce total risk assets of subsidiaries.
Adjust capital allocation among subsidiaries.
Dispose equity investment of subsidiaries.
Increase capital of the Company or issue preferred stocks or subordinated bonds that can be included in qualified capital.

Expressed in Thousands of NT$.

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Recent 5 Years Financial Analysis As of
Feb. 28,
2018 2019 2020 2021 2022 2023
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		Recent 5 Years Financial Analysis	Recent 5 Years Financial Analysis	Recent 5 Years Financial Analysis	Recent 5 Years Financial Analysis	Recent 5 Years Financial Analysis	As of Feb. 28, 2023
		2018	2019	2020	2021	2022
Capital Adequacy	Capital Adequacy Ratio (%)						Note 2
	First Bank	13.57	13.00	13.63	14.21	13.76
	First Securities	398.82	316.41	279.18	369.35	421.35
	First Life Insurance	407.45	344.10	325.78	376.53	608.55
	Qualifed Capital
	First Bank	222,889,274	226,553,925	252,947,170	265,869,790	296,970,300
	First Securities	4,898,999	5,246,488	5,730,171	6,496,076	5,937,713
	First SIT	1,016,546	1,011,928	1,008,861	1,047,650	1,034,534
	First AMC	1,686,911	1,672,714	1,695,593	1,778,627	1,750,373
	First Venture Capital	1,636,610	1,728,698	1,762,459	1,867,350	1,874,076
	First Consulting	34,965	36,178	35,904	38,115	38,857
	First Life Insurance	1,700,177	2,422,091	2,679,400	3,999,058	4,968,494
	Group’s Qualifed Capital	225,790,209	230,063,166	258,100,348	271,182,522	296,863,049
	Statutory Capital Requirement
	First Bank	162,209,963	183,009,342	194,819,158	196,450,747	226,641,759
	First Securities	1,842,555	2,487,176	3,078,722	2,638,146	2,113,831
	First SIT	580,663	584,492	579,347	601,864	586,817

204

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Recent 5 Years Financial Analysis As of
Feb. 28,
2018 2019 2020 2021 2022 2023
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		Recent 5 Years Financial Analysis	Recent 5 Years Financial Analysis	Recent 5 Years Financial Analysis	Recent 5 Years Financial Analysis	Recent 5 Years Financial Analysis	As of Feb. 28, 2023
		2018	2019	2020	2021	2022
Capital Adequacy	First AMC	1,641,138	1,630,054	1,846,817	2,208,492	2,456,519	Note 2
	First Venture Capital	819,382	864,694	883,304	936,074	941,107
	First Consulting	20,417	23,528	31,232	32,421	32,309
	First Life Insurance	834,536	1,407,804	1,644,902	2,124,190	1,632,887
	Total Group’s Statutory Capital Requirement	388,849,833	426,702,368	440,830,405	449,213,252	481,852,628
	Group CAR (%)	131.70	118.70	125.21	130.35	125.16
In accordance with Article 46 of the Financial Holding co. Act, Company should disclose information regarding Company’s lending or endorsements to, or other transactions with, the same individual or the same afliated Co.		See below	See below	See below	See below	See below

Note 1: Formulas used in the above analysis:

(1) Net Group qualified capital = Qualified requirement of Financial Holding Company Law+(Shares hold in ratio of Financial Holding Company Law × Qualified capital of subsidiaries)-Deduction

(2) Legal requirement of subsidiaries’ capital = Legal requirement of Financial Holding Company Law +Shares hold in ratio of Financial Holding Company Law×Legal requirement of subsidiaries

(3) Group Capital Adequacy Ratio = Net Group qualified capital÷Legal requirement of group capital.

Note 2: Group’s CAR is disclosed semi-annually.

In accordance with Article 46-1 of the Financial Holding Company Act, the following table represents the Company and its subsidiaries’ provision of business credit or endorsements to, or other transactions with, the same individual or the same affiliated company, data as of Dec. 31, 2022: please refer to the Financial Statement Chapter.

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Total balance of transaction Percentage (%)
listed in article 46, paragraph of net value of
Name
2 of the Financial Holding financial holding
Company Act company
----- End of picture text -----*

Name Total balance of transaction listed in article 46, paragraph 2 of the Financial Holding CompanyAct Percentage (%) of net value* of fnancial holding company	Name Total balance of transaction listed in article 46, paragraph 2 of the Financial Holding CompanyAct Percentage (%) of net value* of fnancial holding company	Name Total balance of transaction listed in article 46, paragraph 2 of the Financial Holding CompanyAct Percentage (%) of net value* of fnancial holding company
Same natural or juridical person
National Treasury Administration, Ministry of Finance	101,847,903	45.35
Taiwan Power Corp.	27,561,664	12.27
Taiwan High Speed Rail Corporation	24,419,293	10.87

205

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Name	Total balance of transaction listed in article 46, paragraph 2 of the Financial Holding CompanyAct	Percentage (%) of net value* of fnancial holding company
Highwealth Construction Corp.	16,498,424	7.35
Citigroup Inc.	13,495,415	6.01
The Goldman Sachs Group, Inc.	13,107,957	5.84
Societe Generale Paris	11,284,727	5.03
MORGAN STANLEY	10,668,000	4.75
Qatar National Bank Saq	10,600,913	4.72
Taiwan Cement Corp.	9,485,976	4.22
Natixis(Natixis Capital Market)	9,214,898	4.10
First ABU Dhabi Bank PJSC	7,870,827	3.51
JP Morgan Chase Bank New York BR New York	7,078,277	3.15
Taoyuan City Government	7,000,000	3.12
Credit Industriel ET Commercial Paris	6,660,084	2.97
Formosa Ha Tinh Cayman Ltd.	6,360,648	2.83
Synnex Technology International Corporation	6,264,600	2.79
Taipei Fubon Commercial Bank Co., Ltd.	6,020,227	2.68
BPCE SA	5,962,580	2.66
Taiwan Semiconductor Manufacturing Co., Ltd.	5,876,586	2.62
Hon Hai Precision Industry Co., Ltd.	5,766,219	2.57
Chailease Finance Co., Ltd.	5,553,904	2.47
Fina Finance & Trading Co., Ltd.	5,550,527	2.47
Namchow Holdings Co., Ltd.	5,503,700	2.45
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION	5,376,446	2.39
Macquarie Group Limited	5,285,382	2.35
CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK, FRANKFURT	5,070,027	2.26
KGI Commercial Bank Co., Ltd.	5,026,247	2.24
HSBC Bank (Taiwan) Limited	4,960,504	2.21
Kadetang Co., Ltd.	4,890,447	2.18
SPRING RAIN ENTERPRISE CO., LTD.	4,853,503	2.16
E.SUN Commercial Bank	4,847,510	2.16
Kuo Yu Development Corp.	4,761,549	2.12
ING Bank NV	4,756,058	2.12
CPC Corporation	4,750,704	2.12
Kingston Technology Corporation	4,701,350	2.09

206

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Name	Total balance of transaction listed in article 46, paragraph 2 of the Financial Holding CompanyAct	Percentage (%) of net value* of fnancial holding company
DACIN Construction Co ., Ltd.	4,660,588	2.08
Chang Hwa Bank	4,545,109	2.02
Evergreen Marine Corporation (Taiwan) Ltd.	4,500,855	2.00
RSEA Engineering Corporation Privatized 2009	4,340,663	1.93
Wan Hai Lines, Ltd.	4,301,003	1.92
FORMOSA HA TINH STEEL CORP	4,300,351	1.92
Shang Chen Steel Co., Ltd.	4,269,032	1.90
Taishin International Bank Co. Ltd.	4,105,173	1.83
Cheng Shin Rubber Ind. Co., Ltd.	4,066,150	1.81
Hotai Finance Co., Ltd.	4,064,906	1.81
China Airlines Ltd.	4,050,821	1.80
MasterLink Securities Corporation	4,044,944	1.80
Longchen Paper & Packaging Co., Ltd.	4,032,743	1.80
Pescadores Investment and Development Co., Ltd.	3,960,000	1.76
CREDIT SUISSE ZURICH	3,895,979	1.73
BARCLAYS BANK PLC. LONDON	3,755,798	1.67
THE ROYAL BANK OF CANADA FINANCIAL INSTUTIONS, TORONTO	3,732,905	1.66
COMMONWEALTH BANK OF AUSTRALIA SYDNEY	3,692,008	1.64
Wistron Corporation	3,648,137	1.62
THE BANK OF NOVA SCOTIA TORONTO	3,583,912	1.60
AU Optronics Corp.	3,440,768	1.53
JPMORGAN CHASE AND CO.	3,365,791	1.50
INVENTEC CORPORATION	3,332,185	1.48
FU I INDUSTRIAL CO., LTD.	3,298,387	1.47
Shayher Properties Pty Ltd ATF Lin Brothers Trust	3,297,774	1.47
MALAYAN BANKING BERHAD (MAYBANK)	3,208,173	1.43
Ruentex Industries Limited	3,169,932	1.41
Eastern Star Automobile Ltd.	3,159,084	1.41
TRUEFULL LAND CONSTRUCTION CO., LTD.	3,155,955	1.41
Taiwan Mobile Co., Ltd.	3,121,425	1.39
FORMOSA PLASTICS CORPORATION	3,056,340	1.36
Bumble Bee Foods, LLC	3,050,202	1.36
MABUCHI MOTOR TAIWAN LTD.	3,012,459	1.34

207

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Name	Total balance of transaction listed in article 46, paragraph 2 of the Financial Holding CompanyAct	Percentage (%) of net value* of fnancial holding company
PHOENIX RESORT HOTEL CO., LTD.	3,001,600	1.34
Ruentex Development Co.,Ltd.	3,001,417	1.34
Same party
Mr./Ms. Chen and Same Party	6,997,160	3.12
Mr./Ms. Hsu and Same Party	6,922,178	3.08
Mr./Ms. Lan and Same Party	6,606,852	2.94
Mr./Ms. Chen and Same Party	6,328,739	2.82
Mr./Ms. Tsai and Same Party	6,166,370	2.75
Mr./Ms. Chen and Same Party	6,158,757	2.74
Mr./Ms. Lin and Same Party	5,688,620	2.53
Mr./Ms. Shen and Same Party	5,176,371	2.31
Mr./Ms. Lee and Same Party	4,913,311	2.19
Mr./Ms. Chen and Same Party	4,374,167	1.95
Mr./Ms. Chen and Same Party	4,316,009	1.92
Mr./Ms. Chen and Same Party	4,261,120	1.90
Mr./Ms. Liou and Same Party	4,174,112	1.86
Mr./Ms. Chen and Same Party	4,165,072	1.85
Mr./Ms. Liou and Same Party	4,134,112	1.84
Mr./Ms. Lin and Same Party	4,049,892	1.80
Mr./Ms. Tsai and Same Party	3,933,085	1.75
Mr./Ms. Huang and Same Party	3,892,042	1.73
Mr./Ms. Chen and Same Party	3,830,000	1.71
Mr./Ms. Ho and Same Party	3,558,082	1.58
Mr./Ms. Ho and Same Party	3,452,836	1.54
Mr./Ms. Liao and Same Party	3,150,800	1.40
Mr./Ms. Lin and Same Party	3,014,634	1.34
Mr./Ms. Liou and Same Party	3,010,348	1.34
Same affiliated enterprises
Formosa Plastics Group	32,195,485	14.34
Fubon Group	21,760,805	9.69
Highwealth Group	20,051,058	8.93
LinYuan Group	17,361,368	7.73
Far Eastern Group	17,300,540	7.70
Ruentex Group	17,155,707	7.64

208

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Name	Total balance of transaction listed in article 46, paragraph 2 of the Financial Holding CompanyAct	Percentage (%) of net value* of fnancial holding company
Chailease Finance Group	15,538,646	6.92
BPCE_SA	15,177,478	6.76
Baojia Group	14,095,242	6.28
Hon Hai Group	13,777,589	6.14
GS_GROUP	13,108,473	5.84
E United Group	12,718,449	5.66
MiTAC-SYNNEX Group	11,606,177	5.17
QNB Group	11,114,013	4.95
Taiwan Cement	10,536,842	4.69
JPM_NY	10,444,068	4.65
Kingston Group	9,294,986	4.14
Evergreen Group	9,203,083	4.10
Walsin Lihwa Corporation	9,058,418	4.03
H.P.W	8,725,352	3.89
Longchen Paper & Packaging	8,607,043	3.83
Blackstone Group	8,042,658	3.58
TAIWAN STEEL	7,650,410	3.41
Yulon Group	7,305,187	3.25
Shin Kong Group	7,272,166	3.24
Namchow Group	7,101,158	3.16
Chicony Clevo Group	7,073,568	3.15
Test Rite Group	6,974,972	3.11
Brookfeld Group	6,763,356	3.01
YFY Group	6,729,025	3.00
Wisdom Marine	6,606,823	2.94
China Airlines	6,586,656	2.93
CDIB Capital Group	6,553,633	2.92
Cheng Shin Group	6,512,350	2.90
AU Optronics Group	6,478,698	2.89
MACQ_GROUP	6,414,561	2.86
CALYON_FFT	6,395,750	2.85
HSBC_HCM	6,169,650	2.75
New World Development	5,907,145	2.63

209

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Name	Total balance of transaction listed in article 46, paragraph 2 of the Financial Holding CompanyAct	Percentage (%) of net value* of fnancial holding company
TSMC Group	5,880,548	2.62
Eastern Star Automobile Group	5,864,048	2.61
Hua Yu Lien Group	5,838,557	2.60
Taiya International Group	5,647,191	2.51
DACIN Construction	5,612,986	2.50
San Miguel Group	5,575,949	2.48
Hungkuo Group	5,503,627	2.45
L&K Group	5,461,226	2.43
Yeangder Group	5,403,960	2.41
Shihlin Paper	5,304,961	2.36
Wistron Group	5,272,886	2.35
Chang Chun Group	5,265,134	2.34
Hotai Motor Group	5,104,906	2.27
Shang Shing Steel	5,084,314	2.26
Compal Electronics	4,975,879	2.22
E.SUN Financial Holding	4,847,510	2.16
CTBC Group	4,739,745	2.11
Uni-President	4,713,671	2.10
Taishin Financial Holdings	4,698,595	2.09
Fong-Yi Group	4,696,111	2.09
Lih Pao Construction	4,694,693	2.09
Tatung	4,575,982	2.04
Chang Hwa Bank	4,545,109	2.02
Phoenix Resort Hotel	4,484,149	2.00
GAW Capital Partners	4,244,139	1.89
Yuanta Financial Holding	4,141,098	1.84
FCF	3,805,101	1.69
Cheng Loong Group	3,687,359	1.64
BOACORP	3,622,281	1.61
WPG Holdings	3,616,114	1.61
Sumitomo Mitsui Banking Corporation	3,588,046	1.60
YAGEO Group	3,540,397	1.58
Mercuries & Associates Group	3,512,307	1.56
Hontai Group	3,380,289	1.51

210

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HUANG HSIANG CONSTRUCTION CORPORATION	3,365,868	1.50
Inventec	3,332,185	1.48
Chien Shun Steel	3,219,316	1.43
YC Group	3,192,223	1.42

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Total balance of transaction Percentage (%)
listed in article 46, of net value of
Name
paragraph 2 of the Financial financial holding
Holding Company Act company
----- End of picture text -----*

Name Total balance of transaction listed in article 46, paragraph 2 of the Financial HoldingCompanyAct Percentage (%) of net value* of fnancial holding company	Name Total balance of transaction listed in article 46, paragraph 2 of the Financial HoldingCompanyAct Percentage (%) of net value* of fnancial holding company	Name Total balance of transaction listed in article 46, paragraph 2 of the Financial HoldingCompanyAct Percentage (%) of net value* of fnancial holding company
Same natural or juridical person
National Treasury Administration, Ministry of Finance	142,881,179	64.59
Taiwan High Speed Rail Corporation	25,895,293	11.71
Taiwan Power Company	22,164,143	10.02
Highwealth Construction Corp.	14,117,937	6.38
Citigroup Inc.	11,059,262	5.00
The Goldman Sachs Group, Inc.	9,270,557	4.19
Qatar National Bank Saq	8,587,711	3.88
First ABU Dhabi Bank PJSC	8,560,963	3.87
Shang Chen Steel Co., Ltd.	8,091,525	3.66
Namchow Holdings Co., Ltd.	7,835,000	3.54
E.SUN Commercial Bank	7,220,278	3.26
JP Morgan Chase Bank New York BR	6,913,289	3.13
Evergreen Marine Corporation (Taiwan) Ltd.	6,746,688	3.05
Greencompass Marine S.A.	6,584,765	2.98
Morgan Stanley	6,583,823	2.98
Wistron Corporation	6,471,943	2.93
Credit Industriel ET Commercial Paris	6,447,618	2.91
Synnex Technology International Corporation	6,400,555	2.89
BPCE SA	6,191,258	2.80
Taoyuan City Government	5,819,981	2.63
AU Optronics Corp.	5,755,408	2.60

211

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Name	Total balance of transaction listed in article 46, paragraph 2 of the Financial HoldingCompanyAct	Percentage (%) of net value* of fnancial holding company
Formosa Ha Tinh Cayman Ltd.	5,620,000	2.54
Societe Generale Paris	5,614,773	2.54
Credit Agricole Corporate and Investment Bank, Frankfurt	5,524,662	2.50
Far Eastern New Century Corporation	5,477,863	2.48
Pt.Maxxis International Indonesia	5,451,400	2.46
San Miguel Corporation	5,363,976	2.42
Wanbao Development Co., Ltd.	4,960,458	2.24
Kadetang Co., Ltd.	4,889,967	2.21
Natixis(Natixis Capital Market)	4,888,952	2.21
RSEA Engineering Corporation	4,829,937	2.18
Hotai Finance Co., Ltd.	4,699,771	2.12
YAGEO Corporation	4,666,950	2.11
Fina Finance & Trading Co., Ltd.	4,572,822	2.07
Chang Hwa Bank	4,495,567	2.03
Malayan Banking Berhad (Maybank)	4,266,207	1.93
HSBC Bank (Taiwan) Limited	4,245,367	1.92
Commonwealth Bank of Australia Sydney	4,243,139	1.92
Pegatron Corporation	4,193,781	1.90
Taiwan Cement Corp.	4,125,616	1.87
Longchen Paper & Packaging Co., Ltd.	4,111,539	1.86
Kuo Yu Development Corp.	4,108,549	1.86
Cheng Shin Rubber Ind. Co., Ltd.	4,000,037	1.81
Pescadores Investment and Development Co., Ltd.	3,960,000	1.79
SMC Global Power Holdings Corp.	3,762,141	1.70
Quanta International Ltd.	3,709,199	1.68
Shayher Properties Pty Ltd Atf Lin Brothers Trust	3,590,111	1.62
Wells Fargo And Company	3,502,544	1.58
Evergreen Marine (UK) Ltd.	3,464,639	1.57
Abu Dhabi Commercial Bank	3,436,948	1.55
Taiwan Semiconductor Manufacturing Co., Ltd.	3,193,090	1.44
Yieh United Steel Corporation	3,192,354	1.44
Colorful International Assets Management Co., Ltd	3,178,928	1.44
China Petrochemical Development Corporation	3,154,274	1.43
Quanta Computer Inc.	3,091,000	1.40

212

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Name	Total balance of transaction listed in article 46, paragraph 2 of the Financial HoldingCompanyAct	Percentage (%) of net value* of fnancial holding company
Yang Ming Marine Transport	3,078,345	1.39
Eastern Star Automobile Ltd.	3,054,210	1.38
Westpac Banking Corporation	3,036,151	1.37
CPC Corporation	3,029,258	1.37
MasterLink Securities Corporation	3,003,238	1.36
Same party
Mr./Ms. Chen and Same Party	8,413,548	3.80
Mr./Ms. Lan and Same Party	8,311,894	3.76
Mr./Ms. Hsu and Same Party	5,876,903	2.66
Mr./Ms. Shen and Same Party	4,955,054	2.24
Mr./Ms. Lin and Same Party	4,229,294	1.91
Mr./Ms. Lin and Same Party	3,819,397	1.73
Mr./Ms. Tsai and Same Party	3,764,211	1.70
Mr./Ms. Ho and Same Party	3,649,824	1.65
Mr./Ms. Chen and Same Party	3,444,329	1.56
Mr./Ms. Miao and Same Party	3,413,143	1.54
Mr./Ms. Liou and Same Party	3,341,140	1.51
Mr./Ms. Liou and Same Party	3,321,140	1.50
Mr./Ms. Ho and Same Party	3,315,063	1.50
Mr./Ms. Huang and Same Party	3,150,520	1.42
Mr./Ms. Lin and Same Party	3,050,000	1.38
Mr./Ms. Lin and Same Party	3,006,968	1.36
Mr./Ms. Liou and Same Party	3,002,291	1.36
Same afliated enterprises
Evergreen Group	25,372,465	11.47
Formosa Plastics Group	24,210,863	10.94
Far Eastern Group	16,408,664	7.42
LinYuan Group	15,292,812	6.91
Fubon Group	14,603,046	6.60
Highwealth Group	14,365,518	6.49
Ruentex Group	13,178,229	5.96
E United Group	12,393,655	5.60
Hon Hai Group	11,744,047	5.31

213

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Name	Total balance of transaction listed in article 46, paragraph 2 of the Financial HoldingCompanyAct	Percentage (%) of net value* of fnancial holding company
MiTAC-SYNNEX Group	11,371,428	5.14
Yulon Group	10,768,079	4.87
Wisdom Marine	10,737,392	4.85
Cheng Shin Group	10,576,937	4.78
Chailease Finance Group	10,327,454	4.67
San Miguel Group	10,176,965	4.60
Longchen Paper & Packaging	9,808,464	4.43
Namchow Group	9,604,626	4.34
Shang Shing Steel	9,440,804	4.27
Baojia Group	9,298,920	4.20
H.P.W	8,322,486	3.76
Walsin Lihwa Corporation	8,234,279	3.72
Kingston Group	8,053,088	3.64
YAGEO Group	7,688,903	3.48
YFY Group	7,455,566	3.37
Wistron Group	7,455,243	3.37
Blackstone Group	7,368,007	3.33
E.SUN Financial Holding	7,292,654	3.30
AU Optronics Group	7,291,258	3.30
Chicony Clevo Group	7,029,811	3.18
Quanta Computer Group	6,801,199	3.07
Taiya International Group	6,633,944	3.00
New World Development	6,553,618	2.96
Test Rite Group	6,329,257	2.86
Brookfeld Group	6,205,298	2.81
Hontai Group	6,202,894	2.80
L&K Group	5,954,202	2.69
Charoen Pokphand Group	5,942,210	2.69
Eastern Star Automobile Group	5,732,029	2.59
Taiwan Cement	5,333,834	2.41
CDIB Capital Group	5,082,829	2.30
Shin Kong Group	5,074,208	2.29
Lih Pao Construction	5,059,409	2.29
Hotai Motor Group	4,814,339	2.18

214

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Name	Total balance of transaction listed in article 46, paragraph 2 of the Financial HoldingCompanyAct	Percentage (%) of net value* of fnancial holding company
Hungkuo Group	4,803,749	2.17
Chien Shun Steel	4,609,481	2.08
GAW Capital Partners	4,608,449	2.08
Chang Hwa Bank	4,495,567	2.03
Phoenix Resort Hotel	4,487,535	2.03
China Airlines	4,362,944	1.97
Pegatron Group	4,195,887	1.90
YC Group	4,122,112	1.86
Core Pacifc Group	3,915,669	1.77
Shihlin Paper	3,915,350	1.77
Chiao Thai Hsing Group	3,819,392	1.73
Foremost Group	3,786,644	1.71
Cheng Loong Group	3,706,778	1.68
Yeangder Group	3,691,395	1.67
Fong-Yi Group	3,615,971	1.63
Phoenix Property Investors Group	3,585,438	1.62
Taishin Financial Holdings	3,568,880	1.61
Yang Ming Marine Transport	3,481,442	1.57
Mercuries & Associates Group	3,432,499	1.55
Chinj Group	3,341,443	1.51
CTBC Group	3,337,046	1.51
Hua Yu Lien Group	3,265,231	1.48
TSMC Group	3,197,867	1.45
Jvan An Group	3,069,602	1.39

215

Unit: In thousands of NT dollars

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Name Total balance of transaction listed in article 46, paragraph 2 of the Financial HoldingCompanyAct Percentage (%) of net value* of fnancial holding company	Name Total balance of transaction listed in article 46, paragraph 2 of the Financial HoldingCompanyAct Percentage (%) of net value* of fnancial holding company	Name Total balance of transaction listed in article 46, paragraph 2 of the Financial HoldingCompanyAct Percentage (%) of net value* of fnancial holding company
Same natural or juridical person
National Treasury Administration, Ministry of Finance	122,573,884	55.78
Taiwan High Speed Rail Corporation	27,715,874	12.61
Taiwan Power Company	21,159,014	9.63
Taiwan Semiconductor Manufacturing Co., Ltd.	8,041,584	3.66
Namchow Holdings Co., Ltd.	7,905,038	3.60
Hon Hai Precision Industry Co., Ltd.	7,645,516	3.48
Pt.Maxxis International Indonesia	7,137,620	3.25
Far Eastern New Century Corporation	6,911,108	3.14
Evergreen Marine Corporation	6,614,528	3.01
Citigroup Inc.	6,420,781	2.92
Wanbao Development Co., Ltd.	6,374,044	2.90
Formosa Ha Tinh (Cayman) Limited	5,998,000	2.73
AU Optronics Corporation	5,866,931	2.67
Societe Generale Paris	5,651,152	2.57
First ABU Dhabi Bank PJSC	5,612,104	2.55
Commonwealth Bank of Australia Sydney	5,390,579	2.45
BPCE SA	5,261,932	2.39
Kadetang Co., Ltd.	4,904,335	2.23
JP Morgan Chase Bank New York BR New York	4,782,276	2.18
National Australia Bank Ltd. Melbourne (Head Ofce)	4,707,294	2.14
RSEA Engineering Corporation	4,686,871	2.13
Taiwan Cement Corp.	4,676,441	2.13
Shang Chen Steel Co., Ltd.	4,665,013	2.12
Credit Industriel ET Commercial Paris	4,662,995	2.12
Chang Hwa Bank	4,292,947	1.95
Quanta Computer Inc.	4,288,569	1.95
KGI Securities Ofshore Securities Unit	4,198,600	1.91
Yuanta Commercial Bank Co., Ltd.	4,019,064	1.83
Credit Agricole Corporate and Investment Bank, Frankfurt	4,017,398	1.83

216

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Name	Total balance of transaction listed in article 46, paragraph 2 of the Financial HoldingCompanyAct	Percentage (%) of net value* of fnancial holding company
SMC Global Power Holdings Corp.	4,015,182	1.83
Morgan Stanley	3,974,200	1.81
Pescadores Investment and Development Inc.	3,960,000	1.80
The Goldman Sachs Group, Inc.	3,926,766	1.79
JPMorgan Chase and Co.	3,885,365	1.77
Greencompass Marine S.A.	3,816,773	1.74
Australia And New Zealand Banking Group Ltd., Melboune	3,766,250	1.71
Mercuries & Associates Holding, LTD.	3,743,206	1.70
Westpac Banking Corporation	3,727,882	1.70
Taoyuan City Government	3,707,955	1.69
Chailease Finance Co., Ltd.	3,600,837	1.64
Malayan Banking Berhad (Maybank)	3,535,088	1.61
Shayher Properties Pty Ltd Atf Lin Brothers Trust	3,520,013	1.60
Long Chen Paper Co., Ltd.	3,495,550	1.59
Fina Finance & Trading Co., Ltd.	3,454,066	1.57
Formosa Chemicals & Fibre Corporation	3,407,937	1.55
Wan Hai Lines Ltd.	3,379,019	1.54
Evergreen Marine (UK) Ltd.	3,258,092	1.48
Qatar National Bank Saq	3,179,640	1.45
Ty Steel Company Limited	3,163,944	1.44
Cheng Shin Rubber Ind. Co., Ltd.	3,104,465	1.41
MediaTek Inc.	3,046,203	1.39
Same party
Mr./Ms. Lan	10,848,579	4.94
Mr./Ms. Chen	8,468,411	3.85
Mr./Ms. Hsu	6,508,875	2.96
Mr./Ms. Miao	4,802,165	2.19
Mr./Ms. Shen	4,617,373	2.10
Mr./Ms. Lin	4,098,075	1.86
Mr./Ms. Ho	4,048,051	1.84
Mr./Ms. Lin	3,848,600	1.75
Mr./Ms. Ho	3,601,586	1.64
Mr./Ms. Huang	3,059,289	1.39

217

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Name	Total balance of transaction listed in article 46, paragraph 2 of the Financial HoldingCompanyAct	Percentage (%) of net value* of fnancial holding company
Same afliate
Formosa Plastics Group	23,719,732	10.79
Evergreen Group	23,240,505	10.58
LinYuan Group	15,885,950	7.23
Wisdom Marine Group	15,634,946	7.11
Hon Hai Group	15,454,250	7.03
Far Eastern Group	15,103,909	6.87
Fubon Group	12,918,305	5.88
Chailease Finance Group	10,922,327	4.97
Cheng Shin Group	10,877,093	4.95
E United Group	10,780,998	4.91
Yulon Group	10,458,290	4.76
Namchow Group	9,671,881	4.40
Ruentex Group	9,257,504	4.21
Long Chen Paper Group	9,154,642	4.17
H.P.W Group	8,916,102	4.06
Yuanta Group	8,189,717	3.73
TSMC Group	8,069,955	3.67
Walsin Lihwa Corporation	8,026,569	3.65
CDIB Capital Group	7,990,275	3.64
San Miguel Group	7,912,390	3.60
Chicony Clevo Group	7,416,837	3.38
Baojia Group	7,329,960	3.34
New World Group	7,218,429	3.28
Blackstone Group	7,160,852	3.26
AU Optronics Group	6,937,286	3.16
Taiya International Group	6,569,219	2.99
YFY Group	6,404,795	2.91
MiTAC-SYNNEX Group	6,348,319	2.89
Shang Shing Steel Group	6,100,961	2.78
Phoenix Property Investors Group	5,793,331	2.64
Hungtai Group	5,704,362	2.60
Test Rite Group	5,686,364	2.59
Brookfeld Group	5,670,488	2.58

218

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Name	Total balance of transaction listed in article 46, paragraph 2 of the Financial HoldingCompanyAct	Percentage (%) of net value* of fnancial holding company
Taiwan Cement Group	5,532,140	2.52
Mercuries & Associates Group	4,968,103	2.26
GAW Capital Partners Group	4,840,832	2.20
Quanta Computer Inc.	4,828,389	2.20
L&K Group	4,732,181	2.15
Chien Shun Steel Group	4,599,035	2.09
Uni-President Group	4,529,429	2.06
Shihlin Paper Group	4,348,681	1.98
Chang Hwa Bank Group	4,292,947	1.95
Same Afliated Enterprises	4,265,611	1.94
Cosmos Hotel Group	4,246,474	1.93
Jen-Ai Hospital Group	4,168,493	1.90
Phoenix Resort Hotel Group	3,915,032	1.78
YC Group	3,848,596	1.75
Chiao Thai Hsing Group	3,769,886	1.72
Cheng Loong Group	3,633,518	1.65
Hungkuo Group	3,510,038	1.60
CSC Group	3,438,442	1.56
Lih Pao Construction Group	3,345,162	1.52
Kingston Group	3,330,409	1.52
Lifestyle International Group	3,311,525	1.51
Continental Engineering Group	3,296,892	1.50
CTBC Group	3,257,169	1.48
Yeangder Group	3,256,481	1.48
Foremost Group	3,248,540	1.48
Neo Solar Power Group	3,243,363	1.48
Ta Chen Stainless Pipe Group	3,231,121	1.47
Chinj Group	3,181,611	1.45
United Microelectronics Group	3,178,810	1.45
Jvan An Group	3,129,034	1.42
Grand Ming Group	3,046,203	1.39
MediaTek Group	3,017,397	1.37

219

Unit: In thousands of NT dollars

==> picture [500 x 56] intentionally omitted <==

Name Total balance of transaction listed in article 46, paragraph 2 of the Financial HoldingCompanyAct Percentage (%) of net value* of fnancial holding company	Name Total balance of transaction listed in article 46, paragraph 2 of the Financial HoldingCompanyAct Percentage (%) of net value* of fnancial holding company	Name Total balance of transaction listed in article 46, paragraph 2 of the Financial HoldingCompanyAct Percentage (%) of net value* of fnancial holding company
Same natural or juridical person
National Treasury Administration, Ministry of Finance	81,675,634	39.78
Taiwan High Speed Rail Corporation	27,720,900	13.50
Taiwan Power Company	19,540,685	9.52
Land Bank of Taiwan Co., Ltd.	10,302,136	5.02
Taiwan Semiconductor Manufacturing Co, Ltd	7,706,833	3.75
Namchow Holdings Co., Ltd.	7,485,000	3.65
KGI Bank	6,540,260	3.19
Hon Hai Precision Industry Co., Ltd.	6,501,412	3.17
Societe Generale Paris	6,375,424	3.11
Far Eastern New Century Corporation	6,297,925	3.07
Evergreen Marine Corporation	5,779,284	2.82
The Goldman Sachs Group, Inc.	5,542,402	2.70
Wistron Corporation	5,409,360	2.63
Credit Industriel ET Commercial Paris	5,349,966	2.61
Commonwealth Bank of Australia Sydney	5,031,637	2.45
Citigroup Inc.	4,694,949	2.29
Credit Agricole Corporate and Investment Bank, Frankfurt	4,583,665	2.23
Taiwan Cement Corp.	4,453,186	2.17
First ABU Dhabi Bank PJSC	4,173,390	2.03
National Australia Bank Ltd. Melbourne (Head Ofce)	4,064,174	1.98
PT.MAXXIS International Indonesia	3,995,550	1.95
JPMorgan Chase and Co.	3,966,112	1.93
Pescadores Investment and Development Inc.	3,960,000	1.93
Cheng Shin Rubber Ind. Co., Ltd.	3,851,781	1.88
Walsin Lihwa Corporation	3,832,223	1.87
KTC-Tu & KTC-Sun	3,688,200	1.80
Natixis (Natixis Capital Market)	3,656,035	1.78
Taipei Fubon Commercial Bank Co., Ltd.	3,541,484	1.73
Powertech Technology Inc.	3,529,602	1.72

220

==> picture [500 x 55] intentionally omitted <==

Name	Total balance of transaction listed in article 46, paragraph 2 of the Financial HoldingCompanyAct	Percentage (%) of net value* of fnancial holding company
Long Chen Paper Co., Ltd.	3,491,729	1.70
Australia And New Zealand Banking Group Ltd., Melboune	3,485,627	1.70
Nan Ya Plastics Corporation	3,414,959	1.66
BPCE SA	3,406,559	1.66
Quanta Computer Inc.	3,306,849	1.61
Wan Bao Development Consulting Co., Ltd.	3,222,540	1.57
JP Morgan Chase Bank New York BR New York	3,149,891	1.53
Kuo Yu Development Corp.	3,103,706	1.51
MediaTek Inc.	3,040,152	1.48
RSEA Engineering Corporation	3,010,875	1.47
Westpac Banking Corporation	3,001,160	1.46
Phoenix Resort Hotel Co., Ltd.	3,000,000	1.46
Same party
Mr./Ms. Lan	10,213,224	4.97
Mr./Ms. Chen	8,354,885	4.07
Mr./Ms. Hsu	5,123,211	2.50
Mr./Ms. Ho	4,645,024	2.26
Mr./Ms. Chen	4,115,143	2.00
Mr./Ms. Miao	4,100,337	2.00
Mr./Ms. Lin	3,568,492	1.74
Mr./Ms. Ho	3,489,322	1.70
Mr./Ms. Huang	3,082,340	1.50
Mr./Ms. Lin	3,015,774	1.47
Mr./Ms. Liu	3,010,000	1.47
Same afliate
Evergreen Group	20,477,010	9.97
Far Eastern Group	19,824,301	9.66
Formosa Plastics Group	16,810,128	8.19
Fubon Group	14,210,275	6.92
Hon Hai Group	13,646,170	6.65
E United Group	10,625,920	5.18
Wisdom Marine Group	10,213,224	4.97
Ruentex Group	9,832,841	4.79

221

==> picture [500 x 55] intentionally omitted <==

Name	Total balance of transaction listed in article 46, paragraph 2 of the Financial HoldingCompanyAct	Percentage (%) of net value* of fnancial holding company
Namchow Group	9,494,577	4.62
Long Chen Paper Group	9,088,138	4.43
CDIB Capital Group	9,019,578	4.39
LinYuan Group	8,837,973	4.30
Walsin Group	8,365,267	4.07
YFY Group	7,964,610	3.88
Cheng Shin Group	7,944,057	3.87
TSMC Group	7,714,919	3.76
Kingston Group	7,665,152	3.73
Yulon Group	7,611,672	3.71
Wistron Group	7,505,554	3.66
Taiya International Group	6,609,762	3.22
New World Group	6,529,516	3.18
Taiwan Cement Group	6,061,462	2.95
Test Rite Group	5,951,858	2.90
MiTAC-SYNNEX Group	5,464,233	2.66
Hungtai Group	5,343,044	2.60
MediaTek Group	5,293,027	2.58
H.P.W Group	5,200,542	2.53
Chicony Clevo Group	5,123,211	2.50
Brookfeld Group	5,098,705	2.48
Jen-Ai Hospital Group	4,427,300	2.16
GAW Capital Partners Group	4,313,520	2.10
Phoenix Resort Hotel Group	4,186,677	2.04
San Miguel Group	4,005,358	1.95
Continental Engineering Group	3,888,413	1.89
Yeangder Group	3,864,530	1.88
Hungkuo Group	3,820,431	1.86
Uni-President Group	3,768,579	1.84
Blackstone Group	3,732,499	1.82
Cosmos Hotel Group	3,654,100	1.78
Quanta Computer Group	3,583,464	1.75
Chiao Thai Hsing Group	3,568,492	1.74
Chang Chun Group	3,528,080	1.72

222

==> picture [500 x 55] intentionally omitted <==

Name	Total balance of transaction listed in article 46, paragraph 2 of the Financial HoldingCompanyAct	Percentage (%) of net value* of fnancial holding company
Kindom Group	3,504,316	1.71
Yang Ming Marine Group	3,447,010	1.68
Yuanta Group	3,442,529	1.68
Chinj Group	3,352,020	1.63
Jvan An Group	3,327,914	1.62
Chailease Finance Group	3,324,108	1.62
Ta Chen Stainless Pipe Group	3,285,093	1.60
CSC Group	3,250,349	1.58
Lifestyle International Group	3,230,853	1.57
Phoenix Property Investors Group	3,176,900	1.55
YC Group	3,154,474	1.54
Grand Ming Group	3,115,941	1.52
L&K Group	3,059,735	1.49

6.3 Audited Financial Statements for the Prior Year:

Please refer to appendix.

6.4 Audited Balance Sheet, Income Statement, and Cash Flow Statement:

Please refer to appendix.

6.5 Any Affiliated Company that Impacted Financial Holding Company in Financial Status and Disclose the Affluence: None.

223

VII. Financial Performance Review & Risk Management

7.1 Financial Performance: any significant change on assets, liabilities and equity change for the past two years, if so, disclose the major reasons and impact and future plans on them.

Recent Two Years Financial Performance

Unit: NT Thousands

==> picture [500 x 516] intentionally omitted <==

----- Start of picture text -----

Year +(-)
2022 2021
Item Amount %
Cash and cash equivalents, Due from the
405,968,052 408,059,670 (2,091,618) (0.5)
Central Bank and call loans to banks
Financial assets at fair value through
176,067,526 184,856,883 (8,789,357) (4.8)
profit or loss
Financial assets at fair value through
325,837,173 271,675,841 54,161,332 19.9
other comprehensive income
Investments in debt instruments at
806,716,159 705,169,501 101,546,658 14.4
amortized cost
Secutities purchased under resell 6,450,000 0 6,450,000 -
agreements
Receivables, net 48,686,706 53,802,322 (5,115,616) (9.5)
Current tax assets 1,242,825 1,406,079 (163,254) (11.6)
Loans discounted, net 2,312,361,364 2,036,175,699 276,185,665 13.6
Investments accounted for using equity
3,128,975 2,940,983 187,992 6.4
method, net
Reinsurance contract assets, net, other
17,764,323 20,250,406 (2,486,083) (12.3)
financial assets, net
Property and equipment, net 27,698,974 27,492,634 206,340 0.8
Property of usage assets, net 2,470,597 2,413,371 57,226 2.4
Other assets, net 22,803,308 25,350,518 (2,547,210) (10.0)
Total Assets 4,157,195,982 3,739,593,907 417,602,075 11.2
Deposits from the Central Bank and
213,044,550 259,115,895 (46,071,345) (17.8)
banks
Deposits from the Central Bank and
272,729,790 213,044,550 59,685,240 28.0
banks
Financial liabilities at fair value through
profit or loss 14,491,297 8,117,688 6,373,609 78.5
Securities sold under repurchase
22,729,135 18,786,529 3,942,606 21.0
agreements
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224

==> picture [501 x 357] intentionally omitted <==

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Year +(-)
2022 2021
Item Amount %
Payables 52,503,677 52,255,790 247,887 0.5
Current tax liabilities 4,427,299 4,314,378 112,921 2.6
Deposits 3,305,350,983 2,955,313,068 350,037,915 11.8
Bonds payable 61,850,000 57,800,000 4,050,000 7.0
Other borrowings 7,600,000 390,000 7,210,000 1,848.7
Provisions 69,762,393 59,249,644 10,512,749 17.7
Other financial liabilities 102,861,911 126,785,804 (23,923,893) (18.9)
Leasing liabilities 2,322,609 2,240,307 82,302 3.7
Other liabilities 16,444,318 16,749,291 (304,973) (1.8)
Total Liabilities 3,933,073,412 3,515,047,049 418,026,363 11.9
Capital 132,234,423 129,641,591 2,592,832 2.0
Capital surplus 26,107,218 26,107,218 0 0.0
Retained earnings 61,151,006 55,172,383 5,978,623 10.8
Other equity interest 4,629,923 13,625,666 (8,995,743) (66.0)
Total Equity 224,122,570 224,546,858 (424,288) (0.2)
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7.2 Financial Performance: Any Significant Change on Net Revenue or PreTax Profit for the Past Two Years, if so, Disclose the Major Reasons and Impact and Future Plans on Them.

Recent Two Years Financial Performance

Unit：NT thousands

==> picture [500 x 37] intentionally omitted <==

----- Start of picture text -----

Year +(-)
2022 2021
Item Amount %
----- End of picture text -----

Year Item	2022	2021	+(-)	+(-)
			Amount	%
Net interest income	37,969,147	34,588,282	3,380,865	9.8
Net income except interest	29,787,247	28,016,147	1,771,100	6.3
Net revenue	67,756,394	62,604,429	5,151,965	8.2
Bad debt expense, commitment and guarantee liabilityprovisions	6,576,606	3,621,467	2,955,139	81.6
Net change in provisions for insurance liabilities	8,905,998	9,274,835	(368,837)	(4.0)
Operating expenses	27,787,186	26,274,683	1,512,503	5.8
Income from continuing operations	24,486,604	23,433,444	1,053,160	4.5

225

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----- Start of picture text -----

Year +(-)
2022 2021
Item Amount %
----- End of picture text -----

==> picture [500 x 84] intentionally omitted <==

----- Start of picture text -----

||||||
|---|---|---|---|---|
|income tax expense|3,890,941|3,694,399|196,542|5.3|
|Profit|20,595,663|19,739,045|856,618|4.3|
|Other comprehensive income|(8,055,792)|(4,846,835)|(3,208,957)|(66.2)|
|Total comprehensive income|12,539,871|14,892,210|(2,352,339)|(15.8)|

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7.3 Financial Performance: any significant change on net cash flow for the past two years, if so, disclose the major reasons and impact and future plans on them.

7.3.1 Recent Two years Cash Flow Analysis

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----- Start of picture text -----

Items 2022 2021 +(-) %
----- End of picture text -----

==> picture [500 x 64] intentionally omitted <==

----- Start of picture text -----

|||||
|---|---|---|---|
|7.2|22.1|-67.6|
|Cash flow ratio|
|283.6|240.3|18.0|
|Cash flow adequacy ratio|
|Cash flow satisfaction ratio|1,170.5|4,669.7|-74.9|

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7.3.2 Cash flow analysis for the Coming year:

Unit：NT thousands

==> picture [500 x 67] intentionally omitted <==

----- Start of picture text -----

Beginning Ending Make-up plan if insufficient
balance of Projected cash flows Projected total balance of cash flow
cash and cash from operating cash inflows for cash and cash
activities the year Investing Financing
equivalents equivalents Activities Activities
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----- Start of picture text -----

|||||
|---|---|---|---|
|-|-|
|311,099,856|-35,043,686|-24,366,976|251,689,194|

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7.3.2.1 Analysis for the Coming Year

A. Cash Flows from Operating Activities: net cash flow from operating activities of 2023.
B. Cash Flows from Investing Activities: net cash flow from purchasing property, real estate, and equipment of 2023.
C. Cash Flows from Financing Activities: net cash flow from distributing cash dividends and capital enhancement in 2023.

7.3.2.2 Projected Analysis if insufficient cash flow: N/A.

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7.4 Significant Capital Expenditure Toward Financial or Business: N/A

7.5 Reinvestment Policy of the Past Year, Main Reason for Profit or Loss, Improvement Plans and Investment Plans for the Year Ahead

7.5.1 Reinvestment Policy of the Past Year

The Group has prioritized banking as the focus of its operations. Through its subsidiaries in securities, securities trust, insurance, and leasing, the Group has generated a steady income from corporate banking, retail banking, foreign exchange, financial markets trading, financing, and leasing, as well as wealth management. The Group’s acquisition strategy and plan for domestic mergers have contributed to its expansion, resulting in increased business scales and establishing the Group as a regional financial institution. As a leader in the financial sector, the Group has achieved top market shares, steady performance, innovation in products and services, overseas deployment, and a strong emphasis on corporate governance. The Group’s subsidiary, First Bank, has been instrumental in its overseas expansion and merger plan, with a focus on regions such as Europe, America, and Southeast Asia, and has plans to continue its expansion overseas, increase operational scale through global deployment, provide value-added cross-border services, and enhance overseas profitability momentum.

7.5.2 Main reason for Profit or Loss and improvement plans

Looking back at the operations in 2022, the Group prioritized trends such as global supply chain transfer and low-carbon transformation. In addition, by establishing a strong foundation in legal compliance, internal control systems, information security, and risk management, we have advanced in both physical and virtual channels and constantly innovated and refined our service models to create optimal customer value. We aim to continue to promote corporate governance and implement core strategies such as green finance to enhance our operating structure’s resilience and ensure sustainable competitiveness for the group. The performance and success of each subsidiary may be summarized as follows:

7.5.2.1 In 2022, First Bank reported a pre-tax net profit of NT$23.788 billion, an increase of NT$2.870 billion from 2021 (+13.72%). Pre-tax EPS was NT$2.51 and ROA and ROE were 0.63% and 10.47%, respectively. As the business scale and profits continue to grow, the NPL ratio was at 0.18% and the coverage ratio was 709.24% as of the end of 2022, indicating improvement in asset quality and showing the Bank’s efforts in managing risks. Data from December 2022 shows that the capital adequacy ratio (CAR) and Tier 1 capital ratio stood at 13.76% and 11.80%, respectively. As First Bank is again considered a systemically important bank (D-SIB), it will continue to strengthen its capital structure to meet the D-SIB capital adequacy requirements.

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7.5.2.2 First Securities reported a pre-tax profit of NT$515 million in 2022, a decrease of NT$1.197 billion (-69.90%) compared to 2021, mainly due to a 30% decrease in stock trading volume, leading to a slide in net brokerage fee revenue and interest revenue from financing, which led channel businesses to decrease their profit by NT$632 million, or a 50.49% decrease over the year. Business for investment banking and asset management both declined. Pre-tax profit for the year was NT$0.84 per share and ROA and ROE were 1.51% and 6.67%, respectively. ROE made a 15.98% drop from 22.65% in 2021, ranking 10th among all 28 domestic securities firms, down 2 places from last year. The firm has continued to control its operating expense in recent years. In regards to its brokerage business, the firm is focused on increasing its market share per capita and per securities counters, expanding its sub-brokerage trading volume, and enhancing wealth management business revenue. In addition, First Securities is dedicated to strengthening all digital financial product services, improving the digital FinTech skills of staff, and creating a youthful brand image. In regards to the underwriting business, the firm will strengthen the quality of IPO and SPO engagements while actively engaging in leading or supporting such cases. It will also seek to increase revenue from advisory services and improve the quality of advised cases submitted. As for the asset management business, First Securities will continue to strengthen risk management, optimize current positions and boost overall profit through the development of new trading strategies.
7.5.2.3 First Securities Investment Trust Company (FSITC) reported a pre-tax net profit of NT$96 million in 2022, a decrease of NT$34 million (-26.03%) from 2021. Pre-tax profit was NT$1.60 per share, and ROA and ROE were 8.06% and 9.20%, respectively. As of the end of 2022, total assets under management were NT$100.1 billion, in which assets of publicly-offered funds totaled NT$91.4 billion, ranking 14th place in the industry in terms of scale. Continuing its trend of innovative branding in recent years, FSITC launched two new funds in 2022 - the “FSITC Taiwan Core Strategic Infrastructure Fund,” the first fund in Taiwan to focus on national economic policies, and the “FSITC Aerospace and Satellite ETF,” the only fund in Taiwan to feature space satellite themes. FSITC also secured the contract to manage the Labor Pension Fund, demonstrating its commitment to expanding its discretionary investment service and asset management business and increasing its overall competitiveness. In addition, responding to the government’s policy and aiming to expand its private equity fund business, FSITC established a wholly-owned subsidiary, First Private Capital Co., Ltd., which completed its registration on November 1, 2022, making FSITC the first public-owned investment trust to obtain a license to operate a private equity business. In 2023, the company is set to adapt to the changing investment landscape and market trends by developing innovative trend products while simultaneously enhancing its ESG practices. Alongside its ongoing efforts in its current business, FSITC will also engage in the private equity market to drive diversified and sustainable growth in asset management. Through these efforts, the company aims to provide investors with an expanded range of financial product services.
7.5.2.4 First Life Insurance reported a pre-tax profit of NT$145 million in 2022, a decrease of NT$456 million (-75.81%) from 2021. Pre-tax profit was NT$0.28 per share, and ROA and ROE were 0.18%

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and 4.47%, respectively. The profit decline was mainly attributable to a turbulent market caused by inflation, interest rate hikes, the pandemic, and the war between Russia and Ukraine. In the future, the company will focus on the main goal of expanding the scale of business, while also implementing product transformation and digital service improvement to enhance the company’s value and profitability.

7.5.2.5 First Financial Assets Management (FFAM) reported net revenue of NT$194 million for the year 2022, an increase of NT$21 million (+12.42%) from 2021. Pre-tax net profits were NT$344 million, its growth mainly owes to the NT$52 million increase in total net revenue from disposing of nonperforming loans and providing advance payment services for urban renewal projects. In addition, Pre-tax profit was NT$1.34 per share, and ROA and ROE were 4.16% and 11.00%, respectively. In 2023, FFAM will continue to purchase estates from the foreclosure market and actively promote urban renewal businesses to increase its profits.
7.5.2.6 First Venture Capital (FVC) reported net revenue of NT$79 million for the year 2022, a decrease of NT$29 million (-26.65%) from the previous year. Pre-tax net profit was NT$107 million, a decrease of 21.24% from 2021. This was mainly due to the global economic slowdown and a decline of over 3,500 points in the TAIEX for the year, resulting in reduced gains from sales and valuation. In addition, Pre-tax profit was NT$0.44 per share, and ROA and ROE were 3.59% and 3.60%, respectively. Going forward, the company plans to adopt a more selective approach to investments to improve profitability. Additionally, it will continue to invest in solar power plants to generate stable income and minimize the impact of stock market volatility on its earnings.
7.5.2.7 First Financial Management Consulting (FFMC) reported a pre-tax profit of NT$8 million and an operating income of approximately NT$34 million for the year 2022. The profit remained stable compared to the previous year, as the company received steady income from its financial consulting services. In addition, Pre-tax profit was NT$4.02 per share, and ROA and ROE were 9.24% and 15.55%, respectively. Looking ahead, the company expects consistent growth in management fees for managing green energy funds.

7.5.3 Investment Plans for the Year Ahead

The Group will adhere to a steady international development strategy, focusing on expanding its overseas operations. Under a bank-centric structure, the Group will continue to monitor global economic and trade trends, dynamically adjust its global and regional strategy, and diversify its overseas operational risk. By operating in major international metropolises and financial centers across Asia, America, Europe, and the Pacific, the Group will build a strong global financial service network, seizing business development opportunities and enhancing brand competitiveness through branch connections. Additionally, the Group will leverage the wide customer base of its core banking channels to enhance its sales capacity through integrated marketing platforms, driving overall growth in quantity and profit.

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7.6 Risk Management & Evaluation for the Recent Year of the Following

7.6.1 Organization Structure & Policies for Risk Management

7.6.1.1 Organization Structure

7.6.1.1.1 Our Company

The Board of Directors is the ultimate responsible unit for the Group’s overall risk management. Under the command of the Board of Directors, there is a Risk Management Committee, headed by the Chairman as the chief commissioner. Additionally, the CEO (President), EVP and the Chairman and Presidents of subsidiaries are assigned as the committee members. In line with the risk management policies and guiding principles as approved by the Board of Directors, the Risk Management Committee establishes risk managing system to coordinate and supervise risk relating matters. The main risk assumption limits and monitoring indicators must be approved by the Company’s Risk Management Committee.

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Board of Directors /
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Risk Management
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Supervise the
execution of risk
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Each subsidiary establishes Risk Management Committee and Risk Management Unit based on nature of business and the company scale.

FB \ Risk FS \ Risk FSITC \ Risk FL \ Risk Others \ Risk Management Management Management Management Management Committee Committee Committee Committee Committee

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7.6.1.1.2 First Bank

The Bank’s Board of Directors has the ultimate approval right over risk management with the Risk Management Committee (RMC) to oversee the review, supervision, and reporting of firm-wide risk management activities, and the coordination among units involved in risk management. The Risk Management Division is an independent unit under the RMC and responsible for carrying out the duties of the committee. The President of the Bank is assisted by EVPs for the execution of risk control. Risk Management Division, Credit Review Division, Credit Analysis Division, Special Asset Management Division, and six regional control centers are designed to submit regular reports on the risk assessment of the Bank to the Board of Directors and top managements based on the delegation of authorities over credit review, underwriting, appraisal of collateral and post-lending management.

7.6.1.1.3 First Securities; FSITC

The Board of Directors sets Risk Management Committee to consolidate reviews, evaluations and coordination of risk management function to establish risk control limits, authorization and monitor index for specific risk management division to proceed daily risk control and reporting issues.

7.6.1.1.4 First Life

The Board of Directors sets Risk Management Committee to consolidate reviews, evaluations and coordination of risk management function, making sure various risks are under manageable levels, and to effectively recognize risks, a Risk Management Department was set up to support and check risks, to ensure the procedures complete and correct.

7.6.1.1.5 Other Subsidiaries

The Board of Directors are the ultimate division for risk management, and will establish risk management team or expert to be in charge of the related issues.

7.6.1.2 Risk Management Policy

The Company has set up a complete risk management policy to effectively recognize, measure, monitor and control different risks among the subsidiaries, and to control potential possible risks under manageable level. The Company also has regulations toward Capital Adequacy Ratio and its warning level to ensure the group’s capital adequacy and balance it to achieve reasonable risk/award target.

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7.6.2 Methods the Financial Holding Company and its subsidiaries use to evaluate and control risk and information on risk exposure quantification

Company has set out the maximum risk tolerance limit for the credit and investment business of the Group and its subsidiaries to manage risk from large exposures. It has also set the capital adequacy ratio warning levels for subsidiaries in different businesses to maintain the Group’s capital adequacy. Key risk monitoring indicators, such as corporate credit risk, market risk, interest rate risk, liquidity risk, insurance risk, operational risk, emerging risk, legal compliance risk and anti-money laundering risk are reviewed on a regular basis. Early warning and stop loss mechanisms are implemented and an effective internal control system is put in place to reduce possible losses due to operational risks.

Based on its business characteristics, each subsidiary has set up control procedures for managing credit risk, market risk, interest rate risk, liquidity risk, insurance risk, operational risk, legal compliance risk and money laundering risk and has implemented authorization mechanisms, volume limits, monitoring indicators and reporting processes. The companies monitor indicators and regularly perform self-assessments to ensure the fine operation of the risk control mechanism. The auditing unit also reviews the implementation status regularly to ensure the effectiveness of the risk control mechanism.

First Financial Holding’s overall risk management operation can be explained in three aspects:

1. Decentralized management

Regardless of the size of the subsidiaries of the First Financial Holding Group, all shall abide to the “Risk Management Policies and Guiding Principles for the First Financial Holding Company and its Subsidiaries”. It requires each subsidiary to establish effective and feasible risk management systems in regards to the risks from business operations and have the systems to identify, measure, supervise and control all risk exposures. The Board shall be the highest decision-making body of each subsidiary and the risk control and audit departments shall ensure the effective operation of the risk control systems.

2. Centralized control

As the parent company of the Group, First Financial Holding Co. has managed all quantitative and qualitative risk management indicators of each subsidiary based on the materiality principle. This includes the establishment of various report lines, the preparation of various meeting documents, risk control rules or authorization limits. To ensure the effectiveness of the subsidiaries’ risk management system, monitoring indicators, audits and internal controls are in place. Any deviation is immediately corrected. The system may also be modified based on the needs of the overall strategy of the Group.

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3. Emphasis on macro-economy trend

Domestic and international economic, and financial and industrial trends have a profound impact on the Group’s business development and risk control, therefore, the Group values research and information exchange of such issues. In order to control risks and capture business opportunities in advance, the subsidiaries of the Group are constantly monitoring and in communication regarding the overall economic trends, major industry trends, and financial situations, etc. In addition, the First Financial Holding Risk Management Committee will, in each meeting, present the First Financial Group’s Overall Economic and Industrial Trend Analysis Report to senior management of the participating subsidiaries and provide macroeconomy and industry trend analysis for them to reference.

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Credit Risk
Market Risk
Risk MGT Policy
Recognition
Liquidity Risk
Measurement
Insurance Risk
Monitoring
Reporting
Interest Rt. Risk
Operation Risk
Emerging Risk
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The Group identified “ Reconstruction of Supply Chains” and “Aging, Birth Declining and Brain Drain” as emerging risks and in response to the possible impacts brought by the risks, the Group has taken mitigation measures as follow:

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Global reconstruction 1. Under the global trend of supply chains of reconstruction supply chain, various countries In recent years, the have strengthened global economic and the localization of trade situation and the supply chain in geopolitics (such as response to national the China-US trade war, security issues, and have Covid epidemic, and the relevant investment Russian-Ukraine war, preferential policies to etc.) have undergone attract manufacturers many changes. to transfer their

In recent years, the global economic and trade situation and geopolitics (such as the China-US trade war, Covid epidemic, and the Russian-Ukraine war, etc.) have undergone many changes. Consumer market has shifted to the production of small number of customized products and the international netzero carbon emission issue continues to ferment, resulting in industrial supply chain risks. National security and industrial supply chain security have become the priority decision-making models in various countries, resulting in the deconstruction and reorganization of the global supply chain, impacting operating production costs, investment and financing flows, etc., and exposing enterprises to financial risks.

investment. However, the overseas production layout of manufacturers is deeply affected by customers’ needs. If the company fails to respond to the needs of clients, it may lead to a series of order transfer effects, loss of orders, and financing transfer to overseas financial institutions (or restrictions on borrowing foreign debts in accordance with local government regulations), thus reducing the investment and financing business of overseas branches, resulting in the loss of domestic bank credit business.

Short Term:

When conducting credit investigations, credit investigators should strengthen their understanding of the current operating conditions of the affected manufacturers and care for customers, and disclose in the credit investigation report the degree of impact on their operations and the proposed countermeasures.
When clients apply for credit, account’s operating dynamics, inventory and changes in receivables and accounts payable, cash flow and repayment ability should be checked, and carefully evaluate the funding gap, and approve an appropriate amount and payment period.
Continue to explore and attract new customers, expand the business customer base and disperse the concentration of large groups, so as to avoid the impact on the Group’s business caused by a single customer or similar industries due to the rapid decline in business revenue.
Overseas branches should adopt quota management or establish an evaluation and mechanism for industries related to local government policies or highly subsidized by policies or concerned industries in accordance with the requirements of local competent authorities or the needs of risk management and control, and revise relevant local regulations. Disclosed when applying for credit to facilitate prudent risk assessment. In addition, continue to observe the latest international political, economic and social news, economic indicators of various countries, national conditions and rating reports, strengthen attention to the top 15 credit account operations and financial conditions, post-loan management, and focus on reasonable pricing of credit interest rates and other risk and operational control measure.

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Supply chain

reconstruction may bring potential financial risks, such as capital flow (order payment, debt payment, etc.) involved in the supply chain. If the financial market fluctuates, it will affect the cash flow among suppky chains.

Due to epidemic and the impact of geopolitical conflicts, companies may encounter slowing demand, difficulty in destocking, or adjustments to production lines and increased operating costs, which in turn will affect the quality of credit assets.
In order to respond to changes in the investment environment and the rise of short-chain production and sales models, the willingness of enterprises to return to Taiwan to invest and set up factories has increased, and actively cooperate with government policies to promote preferential policies such as “Welcome Taiwanese businessmen to return to Taiwan to invest in loans” and “Taiwanese enterprises to stay rooted in Taiwan to accelerate investment” According to the plan, if a Taiwan-funded enterprise intends to establish an overseas company that actually operates overseas, it can also cooperate with the transfer of overseas credit insurance funds to ensure financing.
Regularly monitor the quality of credit assets and the concentration of various credit risks, and issue warnings or countermeasures in a timely manner. In addition, in order to strengthen risk management and control, the current credit cases are based on existing customers and enterprises with Taiwanese business background as the priority for granting quotas, and the cases of Chinese-funded enterprises are not to add new credit transactions, or to apply for, reduce loans or not within the existing quota. Continuation as limit.
If individual company is sanctioned by other countries, it may not be able to obtain necessary production factors or face unfair competition. It may also be pressured to make investment decisions that violate economic efficiency or damage the company’s interests, making it difficult for companies to operate , and even a default crisis broke out.
Regularly implement stress tests to measure the financial impact on the Group, increase the frequency of implementation based on major events and future environmental changes, and take timely response measures based on test results.
Reduce the stocks with a high proportion of production in China, and pay attention to stocks that have the effect of transferring orders under the tense relationship between the United States and China. In addition, reduce the period of undertaking KY companies or investment, and pay attention to issuing companies whose production capacity is concentrated in China and has no plans to expand production capacity in other regions. Control regional risks and avoid over-exposure to a single region.

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On the whole, in In addition to the above, the following measures will be the face of geoimplemented in the medium and long term: economic conflicts, 1. Regularly and irregularly deliver relevant reports in

the reconstruction of response to major industrial and economic changes,

supply chains shaped and remind relevant colleagues of possible impact on

by national security customers.

will lead to a decline in global production 2. Continue to remind overseas managers to pay close

efficiency, resulting attention to the international political and economic in persistent inflation situation, improve pre-lending review, urge colleagues and sluggish economic to strengthen risk identification, check the operation growth. Sanctions and financial status of large credit accounts, and against other countries pay attention to the concentration of decentralized may It led to retaliation industries and the concentration of a single customer ,

by other countries, Master the business risks. and even turned into a military conflict. 3. Implement country-specific and industry-specific investment limit policies and conduct risk management on credit exposure to avoid concentration of investment and credit positions in specific regions or industries (such as: exposure control of total credit limit in mainland China), aiming at risk or concentration Industries and regions with relatively high risk take exception management measures, flexibly adjust management strength, and increase credit risk sensitivity. For areas with rising national risks, it is required to reduce credit exposure, shorten the deposit period and contract amount, and take timely preservation measures in response to changes in the international situation to reduce the impact of possible risks.

Adopt a defensive investment strategy, strengthen the asset quality of the investment portfolio, mainly increase the holdings of high-quality bonds, and timely match appropriate hedging tools to adjust the operation strategy flexibly.
Asset allocation is adjusted towards the flow of real economic activities to reduce the impact of supply chain adjustments.

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Aging, declining birth rate and brain drain

In view of the longterm decline in Taiwan’s population in recent years, it is estimated that it will become a “super-aged country” in 2025. The impact of the declining birth rate will cause a significant reduction in technical labor talents, and technical and professional financial talents will become more scarce in the future. The industry will face the dilemma of difficulty in recruiting talents. Under the employment environment of unbalanced supply and demand, the situation of scrambling for talents will only worsen. The financial industry needs to adjust the policy of cultivating talents in line with the trend of aging population and declining birth rate.

The decrease in the

birth rate will lead to a sharp decrease in the young and middle-aged population in the future, and the labor force entering the workplace will also be relatively reduced, resulting in a manpower gap, facing the shortage of manpower, professional talents (financial industry practitioners with experience in network technology, or climate carbon reduction strategies) ) training is not easy and other risks.

The planning of insurance products tends to be aging, and the sales control measures of the competent authorities tend to be stricter. The planning of financial products needs to strengthen the protection measures for the elderly, and the cost of legal compliance risks increases, which affects the promotion of related businesses.
In an aging society, not only does the labor force decline, it also causes an imbalance in the population structure and a heavier burden on social welfare (such as national health insurance, etc.).

Short term:

Provide employee welfare allowances (such as marriage allowances, childcare allowances, and transportation allowances during pregnancy, etc.) to encourage childbirth. It also provides leave that is superior to the Labor Standards Act (such as maternity leave, paternity leave, and paternity inspection leave).
In addition to adopting a large number of new recruits to make up for the manpower gap, in recent years, it has also recruited interns through industry-university cooperation, extending the tentacles of talent recruitment to the campus, reducing competition with other companies, and reducing the gap between industry and education. .
Improve the electronic operation of the system to cope with the lack of manpower for administrative operations, increase the salary of outstanding talents based on their performance, and establish an internship system for school students. Early deployment will enable outstanding interns to have the opportunity to transfer to full-time employees after graduation.
In terms of talent cultivation, conduct certification programs and retraining courses for “Aged Financial Planning Consultant” and “Family Trust Planning Consultant” to strengthen professional functional training for colleagues.
Newly added the assessment of the suitability of products purchased by elderly customers. The acceptance personnel will inform the customers of the risks one by one according to the checklist, and strengthen the risk notification process. Do understand the obligations and risks associated with the contract.
On top of that, the following measures will be implemented in the medium and long term:
Cultivate employees to enhance their financial technology professional functions, including arranging to participate in external organization training courses and seminars, or planning professional functional training courses within the group, and designating industry management units to assign personnel to participate in order to reserve professional capabilities.

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The needs of senior customers for financial services are different from those of customers of other age groups. The risk tolerance may be lower, but the proportion of the population increases, indicating that product suitability assessment and risk notification will be more important, including more friendly treatment, Simple communication methods, financial exploitation prevention, etc. will increase the requirements for trust business services and safeguards.
Strengthen employee financial friendly service education and training programs and professional certificate training, etc., to improve the professionalism of personnel, and introduce AI to reduce human dependence on repetitive tasks.
Continue to improve various reward systems and welfare policies, enhance overall salary competitiveness to attract outstanding professionals, maintain employee retention rates, and promote employee stock ownership savings trusts.
Launch digital trading platform suitable for young people and elderly customers through digital development technology, provide convenient and diversified product knowledge and friendly services, and implement fair treatment measures for elderly customers, etc.
Continue to cooperate with the “Banking Industry Self-Regulatory Standards for Fairly Treating Elderly Customers”, “Operating Guidelines for Fairly Treating Elderly Customers” and the Trust 2.0 “All-round Trust” promotion plan, and strengthen the promotion of “Nursing Trust” to assist the elderly in asset management and property protection Safety.

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Risk control methods for the major subsidiaries are as follows:

1. First Bank

(1) Credit Risk
A. Strategy, goal, policy and process for managing credit risk

The Bank’s risk management program is established based on its risk management strategy and business operating objectives as approved by the Board of Directors, and in accordance with the “Risk Management Policies and Guiding Principles for the First Financial Holding Company and its Subsidiaries”, Basel rules, and the relevant regulations of the competent authorities of Taiwan. The Policy is to be timely adjusted in response to economic change and industry cycle, and in view of the Bank’s loan portfolio, asset quality and its business promotion strategy, etc. by the governed laws; and its adjustment has to be approved by the Board of Directors or reported to the top executives for approval.

In order to comply with the new Basel Accord and establish applicable appraisal standards, various internal and external modeling techniques for the rating of credit risk are gradually developed and further introduced to the processes of credit analysis and loans review, as well as linked with warning mechanism employed for the post-credit control, so as to establish a complete credit risk management process.

The credit limits for the conglomerate, business type, country, stocks listed on TSE or OTC as collateral and real estate loan etc. have been prescribed so as to control loans concentration risk.

For the risk management process to operate effectively, the Bank has set up related internal auditing and control system.

B. Organization and structure for managing credit risk
i. The Board of Directors is the highest level of decision making and supervision body. Bank-wide risk management policies, systems and procedures, risk limits and authorities, risk measurement methods, evaluation procedures and monitoring systems are all subject to the supervision and management of the Board of Directors.
ii. The Risk Management Committee is under the Board of Directors and is responsible for the integration of the review, supervision, reporting and coordination of operations across the Bank.
iii. Senior management is responsible for supervising and executing the risk management related policies approved by the Board of Directors.
iv. The Risk Control Management Center is independent of the business units and manages bankwide risk management operations. EVP assists CEO in the implementation of the bank-wide risk management operations. The Center is divided into the Risk Management Division, Credit Review Division, Credit Analysis Division, Special Asset Management Division and six major risk control regional centers. Each division formulates risk management operation procedure and rules according to its authority and duties. They also execute programs and report to senior management and

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the Board based on the risk management structures and reporting lines. The risk control regional centers handles risk management business such as loan review and extension, collateral valuation and post-loan management within its authorized region.

C. Scope and characteristics of the credit risk report and measurement system
i. To avoid the excessive concentration of credit risk and monitor the changes in credit rating of the loan assets, the Bank conforms to the limits for “one person”, “a related person” and “a related enterprise”. In addition, the credit risk analysis reports including credit rating, asset quality, NPL ratio and credit concentration etc. are submitted to the Risk Management Committee or the Board of Directors for their reviews periodically.
ii. The Bank developed credit rating modules which measures the risk of borrowers in business loans, credit loans, mortgages, and credit cards, and an assessment tool that measures the risk characteristics of the quotas. The tools are put into system in order to quantify risks and to control risks within acceptable limits.
D. Credit risk hedging or risk mitigation policies, and strategies and processes for maintaining the effectiveness of tools to hedge or mitigate risks.
i. Periodic monitoring and reporting of the concentration risk by group, business type, country, collaterals using listed stocks and real estate loan. We revise the acceptable risk limits according to market environment changes, business complexity and risk management strategies to maintain the effectiveness of risk control.
ii. Proper collateral or guarantees are collected based on the borrower’s credit or type of credit limit to lower credit risk.
E. Exposure and minimum capital requirements after risk mitigation under the credit risk standardized approach.

December 31, 2022

Unit: NTD thousand

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Type of risk exposure Credit exposure after risk mitigation Minimum capital requirements
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Type of risk exposure	Credit exposure after risk mitigation	Minimum capital requirements
Sovereigns	896,528,763	280,341
Non-central government public sector entities	9,981,884	160,408
Bank (include multilateral development banks)	499,771,981	15,180,020
Corporates (include securities frm and insurance company)	717,691,657	51,030,582
Retail portfolios	174,603,712	6,060,402
Residential property	1,477,580,850	79,771,320

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Type of risk exposure Credit exposure after risk mitigation Minimum capital requirements
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Type of risk exposure	Credit exposure after risk mitigation	Minimum capital requirements
Equity investments	50,697,301	5,136,782
Equity investments from funds and venture capitals	1,378,135	146,805
Other assets	87,763,098	3,674,910
Total	3,915,997,381	161,441,570

Note: Minimum capital requirement is exposure after risk mitigation multiplied by the weight of risk and minimal required capital adequacy ratio.

(2) Asset Securitization Risk

A. Strategy and process for managing securitized products

The Bank currently holds all of its securitized products as a non-originating bank, employing strategies and processes the same as those for market risk management.

B. Organization and structure for managing securitization risks
i. The Board of Directors is the highest management and supervision body for securitized products and is responsible for the approval of the Bank’s risk strategy and policies. The strategy and policies include the verification of the strategy for purchasing securitized products, risk tolerance and risk limits.
ii. The unit managing securitized products is the Risk Management Division, which is responsible for the management and evaluation of the investment quota for securities investment. Credit-related transactions involving securitized corporate credit are subject to approval of the Credit Review Division. By utilizing the various professions of the different units, risks are identified in order to monitor investments in securitized products.
C. Scope and characteristics of the securitization risk report and measurement system

The Bank’s securitization investment positions are all allocated to the banking book. Risk assessment and reporting are in accordance with the Bank’s internal regulations. The Bank emphasizes the credit ratings and changes in market prices of the invested instruments. The results of related evaluations are reported regularly to the business management unit and top executives. Since the proportion of this investment is small, the same assessment system is employed without specific variations.

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D. Securitization hedging or risk mitigation policies, and strategies and processes for maintaining the effectiveness of tools to hedge or mitigate risks
The capital requirement for risk mitigation of securitized products is calculated and reported to competent authorities using the credit risk standard approach. The Bank’s hedging policy for securitized products is the same as for market risks.
E. Capital calculation standard adapted: “SA” Standard.
F. The Securitization Risk Exposures and Minimum Capital Requirements- Based on transaction type

December 31, 2022

Unit: NTD Thousand

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Exposure Traditional Synthetic Total
Type
Exposure Exposure
Minimum Capital
Minimum Minimum
Asset Type Held or pur- For For credit Sub-Total require-capital Heldor require-capital (5)=(1)+(3)Exposure require-capitalments require-beforements
chased Liquidity Facility enhance-ment (1) ments(2) purchased(3) ments(4) (6)=(2)+(4) securitiza-
tion
Bank Book
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Exposure Type Bank Book	Exposure Type Bank Book	Asset Type	Traditional	Traditional	Traditional	Traditional	Traditional	Synthetic	Synthetic	Total	Total	Total
			Exposure				Minimum capital require- ments (2)	Exposure	Minimum capital require- ments (4)	Exposure (5)=(1)+(3)	Minimum capital require- ments (6)=(2)+(4)	Capital require- ments before securitiza- tion
			Held or pur- chased	For Liquidity Facility	For credit enhance- ment	Sub-Total (1)		Held or purchased (3)
Non-originator bank	Banking book	Collat- eralized Mortgage Obliga- tions	9,365,156			9,365,156	149,842			9,365,156	149,842
	Trading book
	Sub- total		9,365,156			9,365,156	149,842			9,365,156	149,842
Originator Bank	Banking book
	Trading book
	Sub- total
Total			9,365,156			9,365,156	149,842			9,365,156	149,842

(3) Market Risk

A. Strategy and process for managing market risk
i. Under the market risk appetite approved by the Board of Directors, the Bank sets risk limits and managing rules, scheduled reporting process, and internal auditing system. And through the supervision of independent management units and high-level committees, high performance, balance of risks and capital optimization is achieved.
ii. With consideration to operational activities such as business decisions and financial budgets, appropriate market risk management indicators and quotas are established and updated on a scheduled basis in response to changes and trends in the market.

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iii. Risk management methods are established for different areas of business, and the recognition, measurement, monitoring, control, and reporting of market risk are included within the rules of operating procedure. The market risk management department monitors the compliance status of the business units.
iv. The market risk management department regularly reports the current status and performance of market risk management to the Board of Directors or senior management, so they can be used as references by the management executives to timely adjust the risk control policy.
B. Organization and structure for managing market risk
i. The Board of Directors is the highest management and supervision body for market risk. The Board is responsible for the verification of risk strategies, policies, risk tolerance levels and various risk limits. The Risk Management Committee is under the authority of the Board, and is responsible for reviewing, supervising and reporting of risk management matters.
ii. The Market Risk Management Unit is under the Risk Management Division and is independent of the Financial Trading Business Unit. It is responsible for the formulation, development, modification and supervision of the Bank’s risk management rules and risk assessment tools, and assesses the risk exposure of the business unit from an objective standpoint.
C. Scope and characteristics of the market risk report and measurement system
i. Scope of market risk management:

The scope covers the expected and unexpected losses on or off balance sheet which are due to changes in the market price. Factors which affect the changes in market prices include interest rates, equity, exchange rates and commodity risks.

ii. Characteristics of market risk management:
- Portfolios based on different market risk factors are distinguished for daily assessment, monitoring and management. Risk measuring indicators such as VaR or Greek are employed to measure the degree of exposure to market risks. The market risk report can reflect the extent of risk exposures and is used as references for management to timely adjust the market risk control policy.
D. Market risk hedging or risk mitigation policies, and strategies and processes for maintaining the effectiveness of tools to hedge or mitigate risks
i. The trading positions of financial products dealt with customers will be properly hedged or squared. In consideration to market changes, financial goals and risks, some will be held as risk assets within adequate risk tolerance levels. The hedging financial derivatives primarily encompass interest rate swaps, cross-currency swaps, interest rate swap options, and interest caps or floors, etc. The Bank has engaged in interest rate swaps to mitigate the fair value risk of fixed-rate loan assets held by overseas branches.

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ii. Based on the schedules set in management rules, the risk management unit regularly monitors the effects of the risk hedging and reports it to the business unit and senior management.

E. Minimum capital requirements for market risk

E. Minimum capital requirements for market risk	E. Minimum capital requirements for market risk
December 31, 2022 Unit: NTD Thousand
Item Interest rate risk	Minimum capital requirements 3,225,382
Equity exposure risk	3,572
Foreign exchange risk	401,257
Commodities risk	0
Total	3,630,211

(4) Liquidity Risk

Structure analysis of NTD time to maturity of the Bank

December 31, 2022

Unit: NTD Thousand

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Amount during time to maturity
Total
0 to 10 11 to 30 31 to 90 91 to 180 181 days Over 1
days days days days to 1 year year
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	Total	Amount during time to maturity	Amount during time to maturity	Amount during time to maturity	Amount during time to maturity	Amount during time to maturity	Amount during time to maturity
		0 to 10 days	11 to 30 days	31 to 90 days	91 to 180 days	181 days to 1 year	Over 1 year
Primary Capital infow upon maturity	3,252,444,077	429,475,068	431,458,214	444,345,089	280,909,429	271,057,931	1,395,198,346
Primary Capital outfow upon maturity	4,265,696,280	177,225,297	231,773,302	678,289,126	673,939,714	797,103,156	1,707,365,685
Maturity gap	-1,013,252,203	252,249,771	199,684,912	-233,944,037	-393,030,285	-526,045,225	-312,167,339

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Unit: USD Thousand

Structure analysis of USD time to maturity of the Bank

December 31, 2022

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----- Start of picture text -----

Amount during time to maturity
Total
0 to 30 31 to 90 91 to 180 181 days Over 1
days days days to 1 year year
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	Total	Amount during time to maturity	Amount during time to maturity	Amount during time to maturity	Amount during time to maturity	Amount during time to maturity
		0 to 30 days	31 to 90 days	91 to 180 days	181 days to 1 year	Over 1 year
Primary Capital infow upon maturity	46,046,653	15,092,279	13,409,597	4,777,639	4,358,599	8,408,539
Primary Capital outfow upon maturity	51,483,222	14,967,108	12,116,850	8,247,706	9,403,315	6,748,243
Maturity gap	-5,436,569	125,171	1,292,747	-3,470,067	-5,044,716	1,660,296

(5) Operational Risk

A. Strategy and process for managing operational risk
i. A “risk appetite” instruction manual has been compiled to serve as a basis for the establishment of the Bank’s risk control mechanism.
ii. Employees at different levels are directly charged with the management of risk within their own scope of responsibility, and are required to observe the internal control and auditing systems together with related rules.
iii. The operational risk management methods are differentiated as risk recognition, assessment, monitoring, reporting and response measures, and are exercised in line with the introduction of management tools such as Loss Data Collection (LDC), Risk and Control Self-Assessment (RCSA), Control Self-Assessment (CSA) and Key Risk Indicators (KRI).
B. Organization and structure for managing operational risk
i. The Board of Directors is the highest approval level for operational risk management and regularly reviews operational risk management policies and structures. The Risk Management Committee is responsible for reviewing the execution status for measuring, assessing, monitoring and controlling risk. Senior management is responsible for executing the operational risk management framework approved by the Board and developing relevant methods and procedures to manage operational risk.
ii. A centralized management framework in relation to operational risk is employed with three tiers of control, each with its defined authority and reporting threshold:

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  - √ All units should conduct regular control of daily business activities and carry out operational risk management within the scope of their respective duties and responsibilities.

  - √ The Risk Management Division is responsible for establishing the Bank’s risk management system, planning of management tools and procedures, and implementation of exposure monitoring and reporting.

  - √ The Audit Division, independent of business units, is responsible for auditing and assessing whether the management framework is operating effectively.

C. Scope and characteristics of the operational risk report and measurement system
i. Standardized operational risk management tools are used for risk identification and assessment, allowing managers to observe operational risk profiles and continuously monitor potential operational risk in order to control or offset the risks.
ii. The risk management unit discloses the status of exposure monitoring on a regular basis, compiles operational risk data and other major issues, and reports to top executives, Risk Management Committee, and the Board of Directors.
iii. If a unit discovers a major risk exposure that threatens the Bank’s financial or business status, it must report immediately to the Auditing Division and the business management unit, and the risk management unit involved must report to the chief auditor and top executives. Should the incident induce disciplinary action by regulatory agencies, a report must also be submitted to the compliance unit.
D. Operational risk hedging or risk mitigation policies, and strategies and processes for maintaining the effectiveness of tools to hedge or mitigate risks
i. The primary method employed to transfer or mitigate operational risk is insurance. It is used to transfer or mitigate loss due to operational risks caused by negligence, personnel, systems or external events. To ensure the continuous use of the risk mitigation tool, the risks and controlling measures are regularly identified and evaluated.
ii. In order to reduce the risk of potential loss from business disruptions caused by fire, explosion, typhoon, earthquake, robbery, bank-run, labor strikes and other major events, the Bank has established contingency plans, business non-interruption guidelines and rules for implementation.
E. Minimum capital requirements for operational risk

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December 31, 2022

Unit: NTD Thousand

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Year Operating profit Minimum capital requirements
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Year	Operating proft	Minimum capital requirements
2022	55,160,403
2021	45,627,684
2020	43,367,594
Total	144,155,681	7,296,931

Note: Above numbers are audited by certified public accounts.

2. First Securities

(1) Risk management strategy and process

A. Risk management strategy

i. First Securities aims to control the extent of various business risks within an acceptable range, pursue steady growth of assets, establish effective risk management mechanisms, formulate accurate risk management indicators for business activities, achieve the goal of rationalizing risks and rewards, and provide reference used for working capital allocation.
ii. The Firm will strengthen risk control and build up systemized, computerized and disciplined processes to reduce human error.
iii. Business departments can effectively control market risks, credit risks, liquidity risks, operational risks, legal compliance and money laundering risks involved in each business. The Risk Management Office continuously monitors operational activities and provides timely response. The Auditing Office performs thorough audits and responds to any risk faced by businesses.

B. Risk management process

The risk management process includes top-down supervision and execution from the bottom-up. The top-down supervision is carried out by the Risk Management Committee established under the Board of Directors. The Committee conducts the prevention, control and supervision of risk management affairs, and is supervised by the Chairman, CEO, head of business unit and the risk control unit. The bottom-up execution starts from the business units where relevant risk management regulations are formulated. The regulations are reviewed and approved by the Risk Management Committee, and then sent to the Board of Directors for review, approval and announcement. The relevant personnel of the units has to clearly understand the duties and responsibilities involved in managing the risks, and is to present the risk management daily report for department managers to review. The Risk Management Office is responsible for collecting the Firm’s risk management implementation results. It uses the risk management information platform to manage the Firm’s risk control operations, and produces risk management daily and monthly reports for management to review.

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(2) Organization and structure for risk management

The Board of Directors has ultimate responsibility for managing the risks for each operation. In order to improve the risk monitoring system and effectively respond to changes in the financial environment, the Board of Directors has established the Risk Management Committee to assist and enhance the supervision, prevention and control over its risk management. First Securities also establishes a risk management system consisting of the Risk Management Office, Auditing Office, Compliance Department, Finance Department and risk management persons from various lines of businesses to ensure the effectiveness of risk management.

(3) Scope and characteristics of the risk report and measurement system

A. Risk control report

i. Daily report: Each business unit prepares the “Risk Control Daily Report” according to its risk control rules. The Risk Management Office collects the data of each business unit and prepares the risk management execution report, which is sent to the CEO and the chairman for review.
ii. Monthly report: The Risk Management Office will compile the positions held by each business unit, gain and loss from trading, and various risk indicators such as market risk, credit risk, liquidity risk, operational risk and capital adequacy ratio and report it to the Risk Management Committee and the Board of Directors.
iii. The Risk Management Office will monitor the risk management information platform and related reports to see if there are risk issues such as amounts exceeding authorized quotas, losses reaching loss-stop warning levels, low capital adequacy ratio, excessive business concentrations and risks exceeding Greeks and DVO1 values. In case of such incidents, the relevant business departments, CEO and the Chairman will be informed and asked to respond within a period of time.
iv. For positions managed as an exception, the Exceptions Management Assessment Team will discuss the disposal method and report it to the Risk Management Committee and follow up on the case until it is closed.
B. Scope and characteristics of the measurement system
The risks being evaluated include market risk, credit risk, liquidity risk and operational risk, etc. In order to effectively control operating risks, business units have included processes for controlling the full scope of risks in their risk management rules. The processes include responsibilities and duties, monitoring methods, monitoring indicators and reporting processes. Any management failure is to be regularly reviewed and tracked for improvement to ensure the effective operation of the risk control procedures.

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i. Market risk

In addition to applying quota, stop-loss, and suspension on investments, the Firm manages bond position by DVO1 and control derivatives by Greeks value. The Risk Management Information Platform was established to strictly control exposure to market risks. In order to improve the Firm’s risk management capabilities, RiskMetrics, a VaR calculation platform of RiskMetrics Group, was introduced in 2010. In addition to utilizing the variance-covariance method, historical simulation method, and Monte Carlo method to calculate the VaR of the daily positions, the system can verify the values and strengthen risk management through stress test, sensitivity analysis and backtesting.

In 2022, we applied the historical simulation method to calculate the single day VaR value with a 99% level of confidence. The trial results are as follows:

Unit: NTD Million

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----- Start of picture text -----

Date Dec. 30, 2022 Average Max Min
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VaR 37.38 52.13 77.49 30.10

ii. Credit risk

Credit risks include risks arising from unanticipated changes in asset credit ratings and counterparty default risks. The Firm uses the credit ratings provided by external credit rating agencies (S&P, Moody’s, Fitch, Taiwan Ratings) and Taiwan Economic Journal (TEJ), and based on the internal rating table, assigns each investment a credit trading quota ranging from R1 to R4. For the credit business, the credit lines are managed according to the relevant rules for loan review and granting.

iii. Liquidity risk

√ Capital liquidity risk: Gap analysis for capital liquidity is established and management indicators are set to prevent the occurrence of liquidity risk.
√ Market liquidity risk: Liquidity indicators are established to warn against market liquidity risk. Investment caps are set for single positions to avoid excessive concentration.
iv. Operational risk
√ The internal control system, operational norms, emergency response plans, etc. are updated or formulated and employed by staff for operations and audits. They are also employed to prevent operational risks such as failure due to human error, system malfunction, or force majeure.
√ The operational risk management system is established to collect data during loss events, and to assess the frequency and severity of various types of loss events in order to control and reduce major operational risks.

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v. Climate change risk

Climate change is prompting a transition towards low-carbon practices that could pose risks to a company’s finances, strategies, operations, products, and reputation. In addition, extreme weather events caused by climate change could also create physical risks to a company’s finances and operations. To address these risks, companies should follow standard practices and guidelines, both domestically and internationally, and conduct greenhouse gas inventories or implement climate risk management strategies.

(4) Hedging and Risk Mitigation Policy and Strategy and Process to Monitor the Effectiveness of the Tools

Business units may be faced with asset price uncertainty during financial trading. In addition to employing administrative methods such as designating risk control persons or formulating control rules to manage risks, the Firm offsets risk from different commodities through hedging, thus circumvents or mitigates risks from unilateral transactions.

First Securities’ proprietary business uses futures, options or reverse commodities to hedge market risk from stock price fluctuations. In order to reduce the market risk from price fluctuation of underlying stocks and from investor defaults, the Firm issues call (put) warrants in order to perform dynamic hedging, and also use options and call (put) warrants of the same underlying investment as hedging tools. When trading convertible corporate bonds, hedging is performed using positions with 100% convertible bonds. If the price of the convertible bonds moves in an unfavorable direction, the position may be dynamically adjusted to reduce the market risk of the held positions. When hedging for ETF investments, related index futures and its reverse ETF are used. The correlation coefficient of the index futures used for hedging should be at least 70%.

The risk management system is established to monitor risk using established quotas, risk limits, and hedging levels. It allows units to respond and report to management in a timely manner and assists in mitigating risks of all kinds.

(5) Capital Adequacy Ratio

The capital adequacy ratio is a measure of the overall business risk of securities firms. The capital adequacy ratio at the end of 2022 was 422%. The expected values of risks are as follows:

Unit: NTD Thousand

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----- Start of picture text -----

Risk type Expected value of risk
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Risk type	Expected value of risk
Credit risk	246,416
Operational risk	426,950
Market risk	735,855
Operating risk	1,409,221

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3. First Life Insurance

(1) Risk management strategy and process
i. By following various risk management policies and regulations and considering its business attributes, the Company has set up relevant internal controls to ensure that risks are controlled within adequate tolerance levels. Risk is monitored by the Board of Directors, the Risk Management Committee, the Asset and Liability Management Committee and the Investment Committee. A warning level for the capital adequacy ratio is set up in order to maintain capital adequacy.
ii. The risk management policy covers major risks, management mechanisms, and risk management processes for effectively executing risk analysis, control, action and reporting in order to reach established goals.
(2) Risk management organization and structure

The Risk Management Committee is established as the risk management supervision, reporting and coordination unit. It is responsible for implementing risk management policies, monitoring risks associated with each business unit and ensuring that risk is controlled within an adequate tolerance level. In addition to having business units identify and manage risks on a daily basis, the Risk Management Office is set up to support and review various risk assessments, reports and mitigation plans. The Auditing Unit stands independently to ensure the soundness and effectiveness of the risk management framework and internal controls.

(3) Scope and characteristics of the risk report and measurement system
i. Asset risk

Asset risk refers to the risk leading insurers into insolvency due to asset value change in assets held by the company through trading. Faced with market risk, credit risk and liquidity risk, the Company employs risk management policies and risk indicators, and reports the risk exposure of investment positions on a regular basis to ensure solvency of the company.

ii. Insurance risk

Insurance risk refers to the risk of underestimating liability for policies issued or underestimating pricing of new businesses in the future. The Company ensures effective insurance risk management through rigorous new product developments, pricing analysis under different assumptions, claims and underwriting process controls, reinsurance assessment, and product concentration analysis.

iii. Interest rate risk

Interest rate risk refers to the mismatch of assets and liabilities due to movements in the interest rate. To effectively control interest rate risk, the company monitors the changes in market rates and predicts future interest rate movements. Interest rate fluctuation risk is controlled through managing the duration of the assets and liabilities.

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iv. Other risks

Other risks are ones not included above. Other risks mainly consist of operational risk, which refers to possible loss incurred directly or indirectly due to operations. The Company reviews all risk indicators on a regular basis and take measures to correct any errors. In addition, an operational loss reporting mechanism is set up and each department performs self-audit and presents the compliance report to management on a scheduled basis.

(4) Capital adequacy ratio

Capital adequacy ratio at the end of 2022 is 608.55%.

Unit: NTD

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Risk type Risk Based Capital
----- End of picture text -----

Risk type	Risk Based Capital
C0: Asset risk—Interested party risk	23,825
C1: Asset risk—Non-interested party risk	1,746,858
C2: Insurance risk	123,100
C3: Interest rate risk	390,551
C4: Other risks	297,081
Total risk-based capital before adjustment	2,581,415
Total risk-based capital	816,444
Regulatory Capital	4,968,494

Capital adequacy ratio	608.55%

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7.6.3. The Impact on the Company’s Financial Business due to Changes in Major Domestic or Foreign Policies and Laws and Measures Taken in Response: None

7.6.4 The Impact of Technological (Including Cyber Security and Risk) and Industrial Changes on the Company’s Financial Business and the Responsive Measures

In recent years, with the emerging wave of FinTech, the government has been actively supporting digital financial environments and encouraging the financial sector to develop diverse on-line financial services. In addition, with the pandemic reshaping consumer’s habits and driving demand for zero-contact financial services, financial institutions have accelerated the pace of digital transformation in order to strengthen competitiveness. FSC has estimated that the total amount invested in FinTech development by financial industry in 2022 is expected to increase by 96.8% compared with the previous year to reach NT$31.2 billion, which will continue to hit a record high and the highest proportion is 64.4% from banking industry.

Our core subsidiary, First Bank, have long promoted various digital financial services and implemented financial inclusion, including online banking applications “e-network” and “e-action” and online loan platform “microenterprise e-loan” and “fast e-loan”. The Bank also incorporated big data and AI to create innovative marketing models, providing customized financial management services. Furthermore, using iLEO digital accounts and APP as the core basis, various iLEO digital financial services were promoted, such as the “iLEO lab”, using Bluetooth technology to create “Bluetooth-assisted verification” to strengthen remittance protection and provide “digital account cash withdrawal at the counter”, which is a key step for multi-field transactions of digital accounts. In addition, the bank’s member points “iLEO Coin” create an innovative inclusive financial ecosystem from the inside out, and use “Coin Conversion” to provide customers with integrated use of the Bank’s iLEO Coin, credit card and Taiwan Pay bonus points, and through point check-in activities, multiple opportunities for customer acquisition are enhanced, and member management is carried out in a step-by-step manner, thereby strengthening the overall loyalty and stickiness. As the trend of digital transformation drives the application of open banking and financial technology, traditional information security defenses face emerging information security risks brought by financial technology, including open application programming interface (OPEN API), cloud service/computing, biometrics , machine learning/artificial intelligence and blockchain/distributed ledger, etc., and the original information security risks are still continuing and evolving. are likely to have an impact. At the same time, in response to the rapid development of digitalization such as information and financial technology, we also pay attention to the information security risks brought about by it. Through new technology information security protection and information-driven multi-level information security monitoring and protection structure, strengthen information security resilience To protect business innovation and achieve sustainable first. In recent years, the US-China trade war has led to the rise of manufacturing centers in Southeast Asia, coupled with China’s frequent implementation of epidemic prevention and control measures, and the strong economic growth momentum of the new southbound countries, prompting Chinese companies to accelerate the transfer of production bases from China to Southeast Asia. At the end of 2022, the total number of overseas branches of banks reached 41, and those located at new southbound countries totaled 19, the highest among pan state-owned banks. Relying on the advantages of dense global bases and the rich

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foundation of small and medium-sized enterprises, we will implement localized operations for a long time and provide customers with a wide range of high-quality financial services. In the future, it will continue to be the strongest backing of overseas companies, and focus on Europe, America and the new southbound region, and move towards the goal of global layout to drive overseas profit growth.

Securities continue to add digital financial technology to improve product integrity and enhance customer transaction convenience, and continue to optimize various digital operation interfaces to assist the development of physical channel business. The high-frequency trading system and the US stock real-time quotation system for re-entrusted transactions have all been launched to provide customers with more complete services; jointly develop new-new account opening with banks (one-time opening of bank and securities accounts), to achieve digital drainage and group joint-sales effect . In addition, in order to strengthen cyber security measures, the two-factor certificate authentication of the trading platform has been improved. At the same time, Cyber Security Officer has been set up ahead of the regulations of the authority, ensuring a safer system and websites. .

FSITC continues to improve the automation application level, strengthen operational efficiency for digital development, upgrade cyber security advanced protection, and introduce international information security standards. In 2022, electronic transaction system was upgraded, the anti-money laundering and anti-terrorism system was introduced into operation, and certified the ISO-27001 remark, core system and APP firewall were expanded and upgraded.

First Life subsidiary continues to launch injury insurance products on online platform and launched new products such as health insurance and micro insurance products such as “Jifutong Protection-type Commodity Platform”, hoping to enable people to purchases with small payments. Basic insurance protection will continue to launch protection-type products on the platform in the future to benefit clients. On the online insurance application platform of the First Bank, the products of Travel Insurance and Yibian Annuity are successively launched, and the development of small-amount end-of-life products is planned to expand the overall online insurance performance; in addition, the QWalker Health APP is integrated with the online insurance application and policyholder area, etc. The platform provides more digital services to enhance customer stickiness and loyalty; for the specific management plan and investment resources of information security risks, it has successfully obtained ISO-27001 international certification, and will continue to improve and enhance the security protection of network and information communication systems in the future ability.

Each subsidiary promotes marketing activities through virtual and physical channel services, diverts the group’s customer base, and continuously optimizes digital financial services from the perspective of user experience and to facilitate group resources, strengthens cyber security to prevent malicious attacks on the internet, and provides customers with a safe and efficient platform.

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7.6.5 The Impact on Corporate Crisis Management due to Changes in the Image of the Company and its Subsidiaries and Measures Taken in Response: None
7.6.6 Expected Benefits, Possible Risks and Measures Taken in Response to Mergers and Acquisitions

7.6.6.1 Expected benefits

(1) Able to rapidly expand the financial business landscape, enhance product development capabilities and channel marketing advantages, and increase market shares and competitiveness through complementary businesses and economies of scale.
(2) Able to integrate marketing effectively through the integration and sharing of group resources, thus providing customers with diversified products and comprehensive financial services, and capturing more niche markets and creating operational synergies.

7.6.6.2 Possible risks

(1) Employees may have a hard time adapting to different corporate cultures, spurring protests from unions and thus increasing company costs.
(2) The Company may lose talents. Without experienced staffs, major business may be lost. This will indirectly affect the competitiveness of the company and increase legal and operational risks.
(3) The cost to integrate information systems and processes may exceed expectation.
(4) Benefit evaluation may be overly optimistic and the benefits cannot be realized in the short-term.

7.6.7 Risk due to Business Concentration and Measures Taken in Response

7.6.7.1 The Company is established with the First Bank as the main body and the main source of its profits. To maintain asset quality and income, the subsidiary actively promotes foreign exchange, trust, insurance, wealth management and derivative business in addition to its main credit business. It also coordinates with the Company’s integrated marketing strategy to provide diversified products and a full range of financial services to customers. By gradually adjusting its asset and profit structure, it may lower the risk of excessive business concentration.
7.6.7.2 To maintain control of its main credit business, the subsidiary follows the Banking Act and adheres to the credit limits for the same person, the same interested person, and the same affiliated company. It also follows risk management policies and takes into account market environment changes, business characteristics, and industry trends and fluctuations to establish and control credit limits for different groups, industries, credit ratings, countries, listed stocks and real estate loans, etc. The credit limits are regularly monitored and reported to senior management, and depending on the overall market condition and financial environment, such limits maybe adjusted as needed.

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7.6.8 The Impact and Risk due to a Large Transfer or Change of Equity by a Director or a Major Shareholder with More than 1% of the Company’s Shares and Measures Taken in Response

Based on the Register of Shareholders on April 18, 2023, during which stock transfer was suspended, Cathay Taiwan Sustainability High Dividend Fund and China Life Insurance Co., Ltd. were new major shareholders of the Company holding more than 1% of the Company’s shares. The change had no impact on the Company’s stock structure.

7.6.9 The Impact and Risk of Business Ownership Change on the Bank and Measures Taken in Response

As of April 18, 2023, the major shareholder of the Company (the Ministry of Finance and its affiliated businesses, Taiwan Tobacco and Liquor Corporation and Bank of Taiwan) holds 20.49% of the issued voting shares of the Company, and there are no share releasing plans in the short term. Therefore, the company does not face risks in ownership changes.

7.6.10 Litigated or Non-Litigated Events: None

7.6.11 Other Major Risks and Measure Taken in Response

The Company and Subsidiaries will adjust related risks accordingly based on regulation and laws. Moreover, massive attack from the web and data frauds/stealing, Climate Change issues and so on are embedded in our risk control strategy following by external risk management consults’ advice in order to promote Group’s risk appetite and competitiveness in risk control and to formulate the risk-oriented defensive ability for the Group.

To manage the risks arising from misconducts or errors from internal processes, personnel and systems or from external events and legal compliance issues, the Group has established the “Operational Risk Management Guidelines for First Financial Holding Co., Ltd. and Subsidiaries”. In order to protect and manage personal data, the Company follows the Personal Information Protection Act and the relevant regulations of competent authorities to protect the rights of the parties involved. The Company has also established the “Personal Data Protection Policy” and the “Directions for Personal Data Management”. In addition, First Bank an First Life have certified “ Personal Information Managenent System (BS10012)”.

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7.7 Crisis Management Responsive Mechanism

The Company has set out the “Crisis Management Implementation Guidelines” to respond to any sudden occurrences of major risks that may jeopardize the day to day operations of the Company and its subsidiaries. In the event of a crisis, emergency response measures will be activated by way of internal and external communications and through following of procedures. If necessary, the Company’s crisis management team will coordinate the decisions being made and communicate with the public in a timely manner to effectively reduce possible damages, address public concerns and protect the rights and interests of the customers.

7.8 Other Important Matters: None.

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VIII. Supplementary

8.1 Affiliates Information

8.1.1 Organization Chart：Please refer to “Corporate Governance” Chapter in This Report.

8.1.2 Affiliates Information：

Units：thousands

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Corp. Name Establish Address Paid-In Capital Major Business
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Corp. Name	Establish	Address	Paid-In Capital	Major Business
First Commercial Bank	Mar. 1, 1947 (Reformed)	No. 30, Sec. 1, Chungking S. Rd, Taipei, Taiwan	NTD94,725,000	Commercial Bank
First Securities Inc.	Aug. 15, 1988	4F, No. 22, Sec. 1, Chang’an E. Rd, Taipei, Taiwan	NTD6,150,000	Securities
First Securities Investment Trust Co., Ltd.	Jan. 15, 1986	7F, No. 6, Sec. 3, Minquan E. Rd, Taipei, Taiwan	NTD600,000	Securities Investment Trust
First Financial Asset Mgt Co., Ltd.	May 31, 2004	9F, No. 38, Yanping S. Rd., Taipei, Taiwan	NTD1,450,000	NPL Buyout and Service
First Venture Capital Co., Ltd.	Jun. 2, 2004	10F, No. 38, Yanping S. Rd., Taipei, Taiwan	NTD1,800,000	Venture Capital
First Financial MGT Consulting Co., Ltd.	Jun. 10, 2004	10F, No. 38, Yanping S. Rd., Taipei, Taiwan	NTD20,000	Consulting Business
First Life Insurance Co.,Ltd.	Dec. 11, 2007	13F, No. 456, Sec. 4, Xin Yi Rd.Taipei, Taiwan	NTD5,350,000	Life insurance
FIRST COMMERCIAL BANK（USA）	May 20, 1997	200 E. MAIN ST., ALHAMBRA, CA 91801 U.S.A.	USD70,000	Commercial Bank
FCB Leasing Co., Ltd.	May 26, 1998	4F, No. 38, Yanping S. Rd., Taipei, Taiwan	NTD4,000,000	Leasing, Investment and Corporate Consulting
FCBL Capital Int’l (B.V.I.) Ltd.	Oct. 9, 1998	Kingston Chambers, P.O. Box 173, Road Town, Tortola, B.V.I.	USD60,050	Non-Banking business

258

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----- Start of picture text -----

Corp. Name Establish Address Paid-In Capital Major Business
----- End of picture text -----

Corp. Name	Establish	Address	Paid-In Capital	Major Business
FCB International Leasing	Mar. 16, 2011	Rm. 1008, Genway Building, No.188 Wangdun Rd., Suzhou Industrial Park, Jiangsu, China.	USD30,000	Leasing
FCB Financing Lease (Xiamen) Ltd.	Mar. 28, 2014	Room 1401, No 619, Su-shui Avenue, Huli District, Xiamen City	USD30,000	Leasing
First Financial Assets Management (B.V.I.) Ltd.	Oct. 13, 2011	Portcullis Chambers, 4th Floor, Ellen Skelton Building, 3076 Sir Francis Drake Highway, Road Town, Tortola, British Virgin Islands VG1110	USD 30,000	Non-Banking business
FCB Lease (Chengdu) Ltd.	Dec. 16, 2011	No.7, 18F, 04-05 unit, Shin- Kuan-hwa Street.,Jin Jiang District, Chengdu	USD 30,000	Leasing
First Capital Management	Nov. 2, 1992	3F, No. 35, Sec. 1, Chang’an E. Rd, Taipei, Taiwan	NTD100,000	Securities investment trust related business
First Private Capital Co., Ltd.	Nov. 1, 2022	7F, No. 6, Sec. 3, Minquan E. Rd, Taipei, Taiwan	NTD50,000	Private Equity(Venture capital, consulting, general investment)
FSC Asia Investment Limited	Feb. 12, 1997	Sea Meadow House, Blackburne Highway, (P.O. Box 116), Road Town, Tortola, British Virgin Islands	USD1,000	Holding Company
First Worldsec Securities Ltd	May 3, 2004	Shui On Centre 9F, Room 901- 902 Wan Chai, 6-8, Harbour Road, Hong Kong.	HKD 66,000	HK & TWN Securities Trading, Corp. lending Opinions and Asset MGT

8.1.3. Data for Shareholders in Common over Controlling and Affiliated Companies: None

8.1.4 Sectors across the whole group companies: Please refer to business scope detailed in above tables. All business entities are independent operation.

259

8.1.5 Directors, Supervisors and Executives of the Affiliates:

Data as of Apr.18, 2023 Unit: Share

==> picture [500 x 47] intentionally omitted <==

----- Start of picture text -----

Ownership
Enterprise Title Names
Shares (%)
----- End of picture text -----

Enterprise	Title	Names	Ownership	Ownership
			Shares	(%)
First Bank	Chairperson Managing Director & President Managing Director Managing Director Independent Managing Director Independent Director Independent Director Director Director Director Director Director Director Director Director Standing Supervisor Supervisor Supervisor Supervisor Supervisor	Ye-Chin Chiou(Delegate of FFHC) Chia-Hsiang Lee (Delegate of FFHC) Fen-Len Chen (Delegate of FFHC) Chi-Pin Hou (Delegate of FFHC) Chun-Hung Lin(Delegate of FFHC) Rachel J. Huang(Delegate of FFHC) Yen-Liang Chen(Delegate of FFHC) Chia-Yin Hung(Delegate of FFHC) Nai-Fong Kuo(Delegate of FFHC) Jer-Yuh Wan(Delegate of FFHC) Jy-Wen Wu (Delegate of FFHC) Wehn-Jyuan Tsai (Delegate of FFHC) Hsin-Lu Chang(Delegate of FFHC) Yuan-Wei Chen(Delegate of FFHC) Ching-Yu Shieh(Delegate of FFHC) Chun-To Tso (Delegate of FFHC) Liang Chen(Delegate of FFHC) Yi-Wen Chen(Delegate of FFHC) Ke-Yi Liu (Delegate of FFHC) Lieh-Ming Luo (Delegate of FFHC)	9,472,500,000	100
First Securities	Chairperson Director & President Director Independent Director Independent Director Supervisor Supervisor	Chih-Chuan Chen(Delegate of FFHC) Mei-Fang Lee(Delegate of FFHC) Ming-Sung Lee(Delegate of FFHC) Chun-Chih Chen(Delegate of FFHC) Hong Huang(Delegate of FFHC) Mico H.C. Lin(Delegate of FFHC) Wen-Ta Tu(Delegate of FFHC)	615,000,000	100
First Securities Investment Trust	Chairperson Director & President Director Director Director Supervisor Supervisor	Chou-Wen You(Delegate of FFHC) Wen-Wei Liao(Delegate of FFHC) Fu-Zong Chu(Delegate of FFHC) Fu-Ju Yang(Delegate of FFHC) Ching-Yuan Fu(Delegate of FFHC) Annie Lee(Delegate of FFHC) -------------(Delegate of FFHC)	60,000,000	100
First AMC	Chairperson Director & President Director Director Director Supervisor	Chih-Tiao Shih(Delegate of FFHC) Hsi-Lung Yang(Delegate of FFHC) Mei-Feng Hsu(Delegate of FFHC) Yeong-Yuh Chiang(Delegate of FFHC) Hsien-Chang Kuo(Delegate of FFHC) Cheng-Ping Ke(Delegate of FFHC)	145,000,000	100

260

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----- Start of picture text -----

Ownership
Enterprise Title Names
Shares (%)
----- End of picture text -----

Enterprise	Title	Names	Ownership	Ownership
			Shares	(%)
First Venture Capital	Acting Chairperson Director & President Director Director Director Supervisor Supervisor	Wen-Wei Chen (Delegate of FFHC) Wen-Wei Chen(Delegate of FFHC) Li-Fang Hung(Delegate of FFHC) Pei-Chen Tsai(Delegate of FFHC) Ferng-Chern Yang(Delegate of FFHC) Der-Cherng Lo(Delegate of FFHC) -------------(Delegate of FFHC)	180,000,000	100
First Consulting	Acting Chairperson Director & President Director Director Director Supervisor Supervisor	Wen-Wei Chen (Delegate of FFHC) Wen-Wei Chen(Delegate of FFHC) Li-Fang Hung(Delegate of FFHC) Pei-Chen Tsai(Delegate of FFHC) Ferng-Chern Yang(Delegate of FFHC) Der-Cherng Lo(Delegate of FFHC) -------------(Delegate of FFHC)	2,000,000	100
First Life	Chairperson Director & President Director Director Director Director Director Independent Director Independent Director Independent Director	Fen-Len Chen(Delegate of FFHC) Yuan-Huei Lin(Delegate of FFHC) An-Fu Chen(Delegate of FFHC) Fei-Wei- Chen (Delegate of FFHC) -------------(Delegate of FFHC) Ying-Ju Chen(Delegate of FFHC) Mei-Chu Kan(Delegate of FFHC) Tien-Wang Tsaur(Delegate of FFHC) Min-Shih Lin(Delegate of FFHC) Yi-Hong Deng(Delegate of FFHC)	535,000,000	100
FIRST COMMERCIAL BANK(USA)	Chairman Director Director Director Director Director Director Director Director	Chia-Hsiang Lee(Delegate of FB) Guo-Jer Huang(Delegate of FB) Mei-Chu Kan(Delegate of FB) ----------------- (Delegate of FB) Chih-Tiao Shih(Delegate of FB) Tien-Chun Chang(Delegate of FB) Yuan-Gan Ju(Delegate of FB) Shih-Pin Hsu(Delegate of FB) Tsu-Hsiang Hsu(Delegate of FB)	7,000,000	100
FCB Leasing	Chairperson Director Director Director Director Supervisor Supervisor	Yuan-Chung Lee(Delegate of FB) ----------------(Delegate of FB) Jin-Pau Tsai(Delegate of FB) Cheng-Bin Lee(Delegate of FB) Kuei-Lan Wang(Delegate of FB) Pang-Hsu Wang(Delegate of FB) Su-Hwei Tsai(Delegate of FB)	400,000,000	100
FCBL Capital Int’l (B.V.I.)	Director Director	Yuan-Chung Lee(Delegate of FCB Leasing) ----------------(Delegate of FCB Leasing)	60,050,000	100

261

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----- Start of picture text -----

Ownership
Enterprise Title Names
Shares (%)
----- End of picture text -----

Enterprise	Title	Names	Ownership	Ownership
			Shares	(%)
FCB International Leasing	Chairperson Director Director Director Director Supervisor Supervisor	Yuan-Chung Lee(Delegate of FCBL Capital Int’l (B.V.I.)) ----------------(Delegate of FCBL Capital Int’l (B.V.I.)) Jin-Pau Tsai(Delegate of FCBL Capital Int’l (B.V.I.)) Cheng-Bin Lee(Delegate of FCBL Capital Int’l (B.V.I.)) Kuei-Lan Wang(Delegate of FCBL Capital Int’l (B.V.I.)) Zong-Li Lin(Delegate of FCBL Capital Int’l (B.V.I.)) Su-Hwei Tsai(Delegate of FCBL Capital Int’l (B.V.I.))	Not listed
FCB Financing Lease (Xiamen) Ltd.	Chairperson Director Director Director Director Supervisor Supervisor	Yuan-Chung Lee(Delegate of FCBL Capital Int’l (B.V.I.)) ----------------(Delegate of FCBL Capital Int’l (B.V.I.)) Yeongy-Yuh Chiang(Delegate of FCBL Capital Int’l (B.V.I.)) Ching-Hung Chen(Delegate of FCBL Capital Int’l (B.V.I.)) Jenn-Hwa Wang(Delegate of FCBL Capital Int’l (B.V.I.)) Zong-Li Lin(Delegate of FCBL Capital Int’l (B.V.I.)) Su-Hwei Tsai(Delegate of FCBL Capital Int’l (B.V.I.))	Not listed
First Financial MGT (B.V.I.)	Director	Yuan-Chung Lee(Delegate of FCB Leasing)	30,000,000	100
FCB Lease (Chendu)	Chairperson Director Director Director Director Supervisor	Yuan-Chung Lee(Delegate of First Financial MGT (B.V.I.)) ------------(Delegate of First Financial MGT (B.V.I.)) Yeongy-Yuh Chiang (Delegate of First Financial MGT (B.V.I.)) Jenn-Hwa Wang(Delegate of First Financial MGT (B.V.I.)) Ching-Hung Chen(Delegate of First Financial MGT (B.V.I.)) Zong-Li Lin (Delegate of First Financial MGT (B.V.I.))	Not listed
First Capital MGT	Director & President Director Director Supervisor	Yi-Guang Chen(Delegate of FS) Jheng-Yu Liou(Delegate of FS) Chung-Ju Yu (Delegate of FS) Wan-Ying Cheng(Delegate of FS)	10,000,000	100
First Private Capital Co., Ltd.	Director Director Director Supervisor	Chou-Wen You(Delegate of FSIT) Wen-Wei Liao(Delegate of FSIT) Wang-Chi Li (Delegate of FSIT) Chih-Feng Tseng (Delegate of FSIT)	5,000,000	100
FSC Asia Investment Limited	Director Director	Chih-Chuan Chen (Delegate of FS) Mei-Fang Lee(Delegate of FS)	1,000,000	100
First Worldsec Securities Limited	Director Director Director Director Director	Chih-Chuan Chen(Delegate of FSC Asia Investment Ltd) Mei-Fang Lee(Delegate of FSC Asia Investment Ltd) Chih-Wen Yu(Delegate of FSC Asia Investment Ltd) Kit Andrew Choi(Delegate of FSC Asia Investment Ltd) Tsun Ting Alex Ho(Delegate of FSC Asia Investment Ltd)	66,000,000	100

262

8.1.6 Affiliates Operation

As of Dec. 31, 2022 Unit: NT thousands

Enterprise Name First Bank	Paid-in Capital 94,725,000	Total Assets 4,011,862,560	Total Liabilities 3,780,940,354	Net Value 230,922,206	Operating Revenue 54,483,783	Operating Income 23,788,219	Net Income (after tax) 20,327,967	EPS 2.15
First Securities	6,150,000	26,979,601	19,629,784	7,349,817	2,174,337	440,723	403,186	0.66
First Securities Investment Trust	600,000	1,173,634	139,100	1,034,534	649,092	97,319	75,941	1.27
First AMC	1,450,000	4,913,038	3,162,665	1,750,373	344,032	220,782	153,742	1.06
First Venture Capital	1,800,000	1,882,214	8,138	1,874,076	107,210	79,174	67,341	0.37
First Consulting	20,000	64,618	25,761	38,857	33,586	7,912	5,984	2.99
First Life	5,350,000	84,275,856	82,573,515	1,702,341	16,172,851	144,510	62,132	0.12
FIRST COMMERCIAL BANK (USA)	2,101,600	26,188,078	21,341,506	4,846,571	1,050,110	447,804	314,696	44.96
FCB Leasing	4,000,000	10,228,617	6,064,578	4,164,039	555,823	57,850	133,390	0.33
FCBL Capital Int’l (B.V.I.)	1,791,218	2,162,239	19,350	2,142,889	16,978	14,678	54,689	0.03
FCB International Leasing	886,103	1,020,209	284,240	735,969	98,347	36,028	21,116	-
FCB Financing Lease (Xiamen) Ltd.	903,495	1,168,028	165,578	1,002,450	90,820	24,025	18,141	-
First Financial MGT (B.V.I.)	908,634	622,983	0	622,983	0	0	22,822	0.03
FCB Lease (Chendu)	908,634	1,034,009	411,060	622,949	91,406	46,027	22,822	-
First Capital Management	100,000	129,833	10,369	119,464	44,400	-874	41	0.004
First Private Capital Co., Ltd.	50,000	50,072	617	49,455	0	-716	-545	-0.11
FSC Asia Investment Limited	33,315	140,949	342	140,607	0	-405	-23,585	-23.59
First Worldsec Securities Limited	274,900	1,142,806	1,020,417	122,389	28,752	-33,245	-23,314	-0.35

8.2 Other Supplementary Information

Any significant issues related to Securities Trading Act 36, Item 3, Point 2, in which shareholder’s equity or stock price will be infected accordingly for the prior year or until report date or any significant event after publishing date: None.

263

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264

FIRST FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND

INDEPENDENT AUDITORS’ REPORT DECEMBER 31, 2022 AND 2021 (STOCK CODE: 2892)

-----------------------------------------------------------------------------------------------------------------------------------For the convenience of readers and for information purpose only, the auditors’ report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. In the event of any discrepancy between the English version and the original Chinese version or any differences in the interpretation of the two versions, the Chinese-language auditors’ report and financial statements shall prevail.

265

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266

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267

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268

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269

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270

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271

FIRST FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2022 AND 2021

(Expressed in thousands of New Taiwan dollars)

ASSETS	December31,2022 AMOUNT % `$` `72,208,162` `2` `333,759,890` `8` `176,067,526` `4` `325,837,173` `8` `806,716,159` `19` `6,450,000` `-` `48,686,706` `1` `1,242,825` `-` `2,312,361,364` `56` `53,975` `-` `3,128,975` `-` `17,710,348` `1` `12,110,510` `-` `27,698,974` `1` `2,470,597` `-` `1,102,917` `-` `4,256,251` `-` `5,333,630` `-` `$` `4,157,195,982` `100`	December31,2021	December31,2021
	AMOUNT `$` `72,208,162` `333,759,890` `176,067,526` `325,837,173` `806,716,159` `6,450,000` `48,686,706` `1,242,825` `2,312,361,364` `53,975` `3,128,975` `17,710,348` `12,110,510` `27,698,974` `2,470,597` `1,102,917` `4,256,251` `5,333,630` `$` `4,157,195,982`	AMOUNT `$` `60,653,137` `347,406,533` `184,856,883` `271,675,841` `705,169,501` `-` `53,802,322` `1,406,079` `2,036,175,699` `44,214` `2,940,983` `20,206,192` `11,952,173` `27,492,634` `2,413,371` `1,009,262` `2,785,285` `9,603,798` `$` `3,739,593,907`	%
11000 Cash and cash equivalents 11500 Due from the central bank and call loans to banks 12000 Financial assets at fair value through profit or loss 12150 Financial assets at fair value through other comprehensive income 12200 Investments in debt instruments at amortised cost 12500 Securities purchased under resell agreements 13000 Receivables, net 13200 Current tax assets 13500 Loans discounted, net 13700 Reinsurance contract assets, net 15000 Investments accounted for using equity method, net 15500 Other financial assets, net 18000 Investment property, net 18500 Property and equipment, net 18600 Right-of-use assets, net 19000 Intangible assets, net 19300 Deferred income tax assets 19500 Other assets, net 19999 Total Assets			`2` `9` `5` `7` `19` `-` `1` `-` `55` `-` `-` `1` `-` `1` `-` `-` `-` `-`
			`100`

(Continued)

272

FIRST FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2022 AND 2021

(Expressed in thousands of New Taiwan dollars)

LIABILITIES AND EQUITY	December31,2022 AMOUNT % `$` `272,729,790` `7` `1,014,530` `-` `14,491,297` `-` `22,729,135` `1` `18,642,830` `-` `52,503,677` `1` `4,427,299` `-` `3,305,350,983` `80` `61,850,000` `2` `7,600,000` `-` `64,684,430` `2` `2,488,451` `-` `1,507,312` `-` `750,858` `-` `331,342` `-` `83,204,551` `2` `2,322,609` `-` `7,429,024` `-` `9,015,294` `-` `3,933,073,412` `95` `132,234,423` `3` `26,107,218` `1` `22,978,313` `-` `4,105,707` `-` `34,066,986` `1` `4,629,923` `-` `224,122,570` `5` `$` `4,157,195,982 100`	December31,2021	December31,2021
	AMOUNT `$` `272,729,790` `1,014,530` `14,491,297` `22,729,135` `18,642,830` `52,503,677` `4,427,299` `3,305,350,983` `61,850,000` `7,600,000` `64,684,430` `2,488,451` `1,507,312` `750,858` `331,342` `83,204,551` `2,322,609` `7,429,024` `9,015,294` `3,933,073,412` `132,234,423` `26,107,218` `22,978,313` `4,105,707` `34,066,986` `4,629,923` `224,122,570` `$` `4,157,195,982`	AMOUNT `$` `213,044,550` `42,741,220` `8,117,688` `18,786,529` `23,877,347` `52,255,790` `4,314,378` `2,955,313,068` `57,800,000` `390,000` `53,470,876` `3,864,102` `1,208,020` `514,344` `192,302` `60,167,237` `2,240,307` `6,856,515` `9,892,776` `3,515,047,049` `129,641,591` `26,107,218` `20,945,959` `4,105,707` `30,120,717` `13,625,666` `224,546,858` `$` `3,739,593,907`	%
21000 Deposits from the central bank and banks 21500 Due to the central bank and banks 22000 Financial liabilities at fair value through profit or loss 22500 Securities sold under repurchase agreements 22600 Commercial papers issued, net 23000 Payables 23200 Current tax liabilities 23500 Deposits 24000 Bonds payable 24400 Other borrowings 24600 Provisions 24610 Provisions for insurance 24620 Provisions for employee benefits 24630 Provision for guarantee liabilities 24694 Provision for loan commitments 24690 Other provisions 25500 Other financial liabilities 26000 Lease liabilities 29300 Deferred tax liabilities 29500 Other liabilities 29999 Total Liabilities Equity attributable to owners of the parent 31100 Capital 31001 Common stock 31500 Capital surplus 32000 Retained earnings 32001 Legal reserve 32003 Special reserve 32011 Unappropriated earnings 32500 Other equity interest 39999 Total Equity Total Liabilities and Equity			`6` `1` `-` `1` `1` `1` `-` `79` `2` `-` `1` `-` `-` `-` `-` `2` `-` `-` `-`
			`94`
			`3` `1` `1` `-` `1` `-`
			`6`
			`100`

The accompanying notes are an integral part of these consolidated financial statements.

273

FIRST FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2022 AND 2021

(Expressed in thousands of New Taiwan dollars, except earnings per share amounts)

Items Years endedDecember31
Changes
2022
2021
Percentage
Notes
AMOUNT
%
AMOUNT
%
(%)
$
66,054,361
97 $
44,846,079
72
47
(
28,085,214) (
41 ) (
10,257,797) (
17)
174
7
37,969,147
56
34,588,282
55
10
7
9,409,059
14
10,383,077
17 (
9 )
8,980,226
13
9,525,075
15 (
6 )
6(3)
3,270,523
5
3,355,529
5 (
3 )
190,433
-
184,890
-
3
1,983,748
3
3,176,048
5 (
38 )
6(5)
(
68,319)
- (
10,117)
-
575
5,299,529
8
876,980
2
504
(
5,905)
-
67,036
- (
109 )
6(10)
76,272
-
99,911
- (
24 )
6(3)
237,084
- (
42,519)
- (
658 )
414,597
1
400,237
1
4
67,756,394
100
62,604,429
100
8
6(8)
(
6,576,606) (
10 ) (
3,621,467) (
6)
82
(
8,905,998) (
13 ) (
9,274,835) (
15) (
4 )

(
17,818,913) (
26 ) (
17,331,619) (
27)
3
(
2,243,880) (
3 ) (
2,079,392) (
3)
8
7
(
7,724,393) (
12 ) (
6,863,672) (
11)
13
24,486,604
36
23,433,444
38
4
(
3,890,941) (
6 ) (
3,694,399) (
6)
5
20,595,663
30
19,739,045
32
4

41000
Interest income
51000
Interest expenses
49600
Net interest revenue

49700
Net revenue other than
interest
49800
Net service fee revenue and
commissions

49810
Net insurance revenue
49820
Gain on financial assets and
liabilities at fair value
through profit or loss

49825
Gains on investment
property
49835
Realised gains on financial
assets at fair value through
other comprehensive
income
43600
Losses arising from
derecognition of financial
assets measured at
amortised cost

49870
Foreign exchange gains
49880
(Impairment loss) reversal
of impairment loss on assets
49891
Share of profit of associates
and joint ventures accounted
for using equity method

47500
Gain (loss) on
reclassification under the
overlay approach

49900
Other revenue other than
interest income
Net revenue
58100
Bad debt expense,
commitment and guarantee
liability provision

58300
Net change in provisions for
insurance liabilities
58500
Operating expenses
58501
Employee benefits expense
58503
Depreciation and
amortisation expense
58599
Other general and
administrative expenses

61000
Profit from continuing
operations before tax
61003
Income tax expense
69000
Profit

(Continued)

274

FIRST FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2022 AND 2021

(Expressed in thousands of New Taiwan dollars, except earnings per share amounts)

Items Years endedDecember31
Changes
2022
2021
Percentage
Notes
AMOUNT
%
AMOUNT
%
(%)
$
1,223,244
2 $
570,151
1
115
(
3,593,054) (
5 )
2,827,269
4 (
227 )
(
244,649) (
1 ) (
114,031)
-
115
6,360,925
9 (
1,287,946) (
2) (
594 )
(
12,157,413) (
18 ) (
7,034,266) (
11)
73
6(10)
(
217,579)
-
40,396
- (
639 )
6(3)
(
237,084)
-
42,519
- (
658 )
6(3)
809,818
1
109,073
-
642
(
8,055,792) (
12 ) (
4,846,835) (
8)
66
$
12,539,871
18 $
14,892,210
24 (
16 )
$
20,595,663
30 $
19,739,045
32
4
$
20,595,663
30 $
19,739,045
32
4
$
12,539,871
18 $
14,892,210
24 (
16 )
$
12,539,871
18 $
14,892,210
24 (
16 )

$
1.56
$
1.49

69500
Other comprehensive loss
69560
Components of other
comprehensive income
that will not be reclassified
to profit or loss
69561
Gains on remeasurements
of defined benefit plans
69567
Revaluation (losses) gains
on investments in equity
instruments measured at
fair value through other
comprehensive income
69569
Income tax related to
components of other
comprehensive income
that will not be
reclassified to profit or
loss
69570
Components of other
comprehensive income
that will be reclassified to
profit or loss, net of tax
69571
Exchange differences on
translation
69585
Losses from investments
in debt instruments
measured at fair value
through other
comprehensive income
69575
Share of other
comprehensive income of
associates and joint
ventures accounted for
using equity method,
components of other
comprehensive income
that will be reclassified to
profit or loss
69590
Other comprehensive
income on reclassification
under the overlay
approach
69579
Income tax related to
components of
comprehensive income
69500
Other comprehensive loss
69700
Total comprehensive income
69900
Profit, attributable to:
69901
Owners of parent
69950
Comprehensive income
attributable to:
69951
Owners of parent
Earnings per share
70000
Basic and diluted earnings per
share (in dollars)

The accompanying notes are an integral part of these consolidated financial statements.

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								Other equity interest	Gains (losses) on	Gains (losses) on	Exchange financial assets	difference on measured at fair	translation of value through other	foreign financial comprehensive Reserve of overlay	statements income approach Total equity			`(` `$ 5,832,319` `)` `$` `24,904,991` `($` `15,672 )` `$ 221,206,869`	`-` `-` `-` `19,739,045`	`(` `1,247,550` `)` `(` `4,095,568 )` `40,163` `(` `4,846,835 )`	`(` `1,247,550` `)` `(` `4,095,568 )` `40,163` `14,892,210`		`-` `-` `-` `-`	`-` `-` `-` `(` `11,552,221 )`	`-` `-` `-` `-`		`-` `(` `128,379 )` `-` `-`	`(` `$ 7,079,869` `)` `$` `20,681,044` `$` `24,491` `$ 224,546,858`			`(` `$ 7,079,869` `)` `$` `20,681,044` `$` `24,491` `$ 224,546,858`	`-` `-` `-` `20,595,663`	`6,143,346` `(` `14,950,798 )` `(` `226,935 )` `(` `8,055,792 )`	`6,143,346` `(` `14,950,798 )` `(` `226,935 )` `12,539,871`		`-` `-` `-` `-`	`-` `-` `-` `(` `12,964,159 )`	`-` `-` `-` `-`		`-` `38,644` `-` `-`	`(` `$` `936,523` `)` `$` `5,768,890` `($` `202,444 )` `$ 224,122,570`
FIRST FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES		CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY		YEARS ENDED DECEMBER 31, 2022 AND 2021		(Expressed in thousands of New Taiwan dollars)	Equity attributable to owners of the parent	Retained earnings						Unappropriated	Ordinary share Capital surplus Legal reserve Special reserve retained earnings			`$ 128,358,011` `$ 26,107,218` `$` `19,303,913` `$ 4,105,707` `$ 24,275,020`	`-` `-` `-` `-` `19,739,045`	`-` `-` `-` `-` `456,120`	`-` `-` `-` `-` `20,195,165`		`-` `-` `1,642,046` `-` `(` `1,642,046` `)`	`-` `-` `-` `-` `(` `11,552,221` `)`	`1,283,580` `-` `-` `-` `(` `1,283,580` `)`		`-` `-` `-` `-` `128,379`	`$ 129,641,591` `$ 26,107,218` `$` `20,945,959` `$ 4,105,707` `$ 30,120,717`			`$ 129,641,591` `$ 26,107,218` `$` `20,945,959` `$ 4,105,707` `$ 30,120,717`	`-` `-` `-` `-` `20,595,663`	`-` `-` `-` `-` `978,595`	`-` `-` `-` `-` `21,574,258`		`-` `-` `2,032,354` `-` `(` `2,032,354` `)`	`-` `-` `-` `-` `(` `12,964,159` `)`	`2,592,832` `-` `-` `-` `(` `2,592,832` `)`		`-` `-` `-` `-` `(` `38,644` `)`	`$ 132,234,423` `$ 26,107,218` `$` `22,978,313` `$ 4,105,707` `$ 34,066,986`
																For the year ended December 31, 2021		Equity at beginning of period	Profit	Other comprehensive income (loss)	Total comprehensive income (loss)	Appropriation of prior year's earnings	Legal reserve appropriated	Cash dividends of ordinary shares	Stock dividends of ordinary shares	Disposal of investments in equity instruments designated at fair value through other comprehensive	income (loss)	Equity at end of period	For the year ended December 31, 2022		Equity at beginning of period	Profit	Other comprehensive income (loss)	Total comprehensive income (loss)	Appropriation of prior year's earnings	Legal reserve appropriated	Cash dividends of ordinary shares	Stock dividends of ordinary shares	Disposal of investments in equity instruments designated at fair value through other comprehensive	(loss) income	Equity at end of period

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FIRST FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2022 AND 2021

(Expressed in thousands of New Taiwan dollars)

			Years ended December 31
			2022	2021
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax		`$`	`24,486,604` `$`	`23,433,444`
Adjustments
Adjustments to reconcile profit (loss)
Provision for bad debts expense, commitment and guarantee
liability provisions			`9,115,882`	`6,633,891`
Depreciation of investment property			`40,053`	`34,276`
Depreciation of property and equipment			`929,037`	`860,826`
Depreciation of right-of-use assets			`772,845`	`748,123`
Amortisation expense			`501,945`	`436,167`
Interest income	`(`		`66,054,361` `)` `(`	`44,846,079` `)`
Interest expense			`28,085,214`	`10,257,797`
Dividend income	`(`		`2,712,378` `)` `(`	`1,933,870` `)`
Net change in insurance liabilities			`8,980,109`	`9,311,755`
Net change in provisions for foreign exchange price fluctuation			`135,150`	`13,042`
Share of gain of associates and joint ventures accounted for using
equity method	`(`		`76,272` `)` `(`	`99,911` `)`
Loss on disposal of property and equipment			`6,452`	`6,650`
Gain on disposal of investment properties	`(`		`8,508` `)` `(`	`17,418` `)`
Impairment loss (reversal of impairment loss) on assets			`5,905` `(`	`67,036` `)`
(Profit) loss reclassified by applying overlay approach	`(`		`237,084` `)`	`42,519`
Gain on lease modifications	`(`		`1,307` `)` `(`	`1,497` `)`
Changes in operating assets and liabilities
Changes in operating assets
Increase in due from the central bank and call loans to banks	`(`		`18,377,407` `)` `(`	`9,285,159` `)`
Decrease in financial assets at fair value through profit or loss			`8,789,357`	`4,942,794`
(Increase) decrease in financial assets at fair value through
other comprehensive income	`(`		`69,112,728` `)`	`18,368,974`
Increase in investments in debt instruments at amortised cost	`(`		`101,576,454` `)` `(`	`29,450,284` `)`
(Decrease) increase in receivables			`11,239,759` `(`	`8,370,096` `)`
Increase in discounts and loans	`(`		`284,830,328` `)` `(`	`136,161,395` `)`
Increase in other financial assets	`(`		`163,800` `)` `(`	`253,818` `)`
Increase in reinsurance assets	`(`		`8,694` `)` `(`	`6,586` `)`
Decrease (increase) in other assets			`4,697,925` `(`	`4,439,911` `)`
Changes in operating liabilities
Increase (decrease) in deposits from the central bank and banks			`59,685,240` `(`	`46,071,345` `)`
Increase (decrease) in financial liabilities at fair value through
profit or loss			`6,373,609` `(`	`13,241,239` `)`
(Decrease) increase in payables	`(`		`4,987,237` `)`	`12,192,228`
Increase in deposits and remittances			`350,037,915`	`249,738,646`
Increase in other financial liabilities			`25,772,261`	`1,002,070`
Decrease in provisions for employee benefits	`(`		`1,375,651` `)` `(`	`833,322` `)`
Increase in provisions			`3,460,539`	`352,574`
(Decrease) increase in other liabilities	`(`		`877,482` `)`	`4,097,301`
Cash (outflow) inflow generated from operations	`(`		`7,283,890` `)`	`47,394,111`
Interest received			`59,560,116`	`43,808,239`
Interest paid	`(`		`22,850,090` `)` `(`	`10,640,070` `)`
Dividends received			`2,711,307`	`1,931,491`
Income tax paid	`(`		`4,757,872` `)` `(`	`3,154,083` `)`
Net cash flows from operating activities			`27,379,571`	`79,339,688`

(Continued)

277

FIRST FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2022 AND 2021

(Expressed in thousands of New Taiwan dollars)

			Years ended December	31
			2022	2021
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in investments accounted for using equity method	`($`		`42,250` `)` `($`	`128,569` `)`
Acquisition of property and equipment	`(`		`1,124,801` `)` `(`	`789,971` `)`
Acquisition of investment properties	`(`		`290,346` `)` `(`	`1,166,331` `)`
Acquisition of intangible assets	`(`		`568,512` `)` `(`	`504,994` `)`
Proceeds from disposal of investment property			`100,464`	`53,062`
(Increase) decrease in other assets	`(`		`413,728` `)`	`4,235,822`
Net cash flows (used in) from investing activities	`(`		`2,339,173` `)`	`1,699,019`
CASH FLOWS FROM FINANCING ACTIVITIES
(Decrease) increase in due to the central bank and bank	`(`		`41,726,690` `)`	`26,351,220`
Increase (decrease) in notes and bonds issued under repurchase agreement			`3,942,606` `(`	`14,786,560` `)`
Increase (decrease) in other borrowings			`7,210,000` `(`	`110,000` `)`
(Decrease) increase in commercial papers payable	`(`		`5,234,517` `)`	`4,924,667`
Proceeds from issuing bank notes payable			`4,050,000`	`8,850,000`
Payments of lease liabilities	`(`		`676,529` `)` `(`	`725,912` `)`
Cash dividends paid	`(`		`12,964,159` `)` `(`	`11,552,221` `)`
Net cash flows (used in) from financing activities	`(`		`45,399,289` `)`	`12,951,194`
Effect of exchange rate changes on cash and cash equivalents			`6,348,243` `(`	`1,247,859` `)`
Net (decrease) increase in cash and cash equivalents	`(`		`14,010,648` `)`	`92,742,042`
Cash and cash equivalents at beginning of year			`325,110,504`	`232,368,462`
Cash and cash equivalents at end of year		`$`	`311,099,856` `$`	`325,110,504`
The components of cash and cash equivalents
Cash and cash equivalents reported in the statement of financial position		`$`	`72,219,480` `$`	`60,661,311`
Due from central bank and call loans to other banks qualified as cash and
cash equivalents as defined by IAS 7			`232,430,376`	`264,449,193`
Investments in bills and bonds under resale agreements qualified as cash
and cash equivalents as defined by IAS 7			`6,450,000`	`-`
Cash and cash equivalents at end of reporting period		`$`	`311,099,856` `$`	`325,110,504`

The accompanying notes are an integral part of these consolidated financial statements.

278

FIRST FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

1. Organisation and business

(1) First Financial Holding Co., Ltd. (the “Company” or “FFHC”) was incorporated as a company limited by shares under the provisions of the Company Law of the Republic of China (R.O.C.). FFHC commenced the preparation for its incorporation on November 27, 2001. On January 2, 2003, the Company was established through a share swap with First Commercial Bank Co., Ltd. (“FCB”) in accordance with the Financial Holding Company Act and other related regulations, whereby FCB became its wholly-owned subsidiary with the approval from the Securities and Futures Commission (“SFC”), renamed as the Securities and Futures Bureau, Financial Supervisory Commission R.O.C. (“SFB”). The Company was listed on the Taiwan Stock Exchange (“TSE”) on the same date. On July 31, 2003, the Company acquired First Securities Inc. (“FS”), Mingtai Fire & Marine Insurance Co., Ltd. (“MFMI”) and First Securities Investment Trust Co., Ltd. (FSIT), as wholly-owned subsidiaries. On May 31, June 2, June 10, September 16, 2004 and November 19, 2007, the Company established subsidiaries namely First Financial Asset Management Co., Ltd., (“FFAM”), First Venture Capital Co., Ltd., (“FVC”), First Financial Management Consulting Co., Ltd. (“FFMC”), First P&C Insurance Agency Co., Ltd. (“FPCIA”) and First Life Insurance Co., Ltd. (“FLI”), respectively. The Company engages mainly in the investment and management of financial institutions as approved by the authorities.
(2) On September 2, 2005, the Company completed the sale of all its common stocks in Mingtai Fire & Marine Insurance Co., Ltd. to Mitsui Sumitomo Insurance Co., Ltd.
(3) On July 27, 2017, FPCIA completed liquidation and income tax filing. On August 15, 2017, its residual value was allocated.
The date of authorisation for issuance of the consolidated financial statements and procedures for authorisation

These consolidated financial statements were authorised for issuance by to the Board of Directors and issued on February 23, 2023.

Application of new standards, amendments and interpretations
(1)Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards (“IFRS”) that came into effect as endorsed by the Financial Supervisory Commission (“FSC”)

New standards, interpretations and amendments endorsed by FSC and became effective from 2022 are as follows:

279

New Standards,Interpretations and Amendments Amendments to IFRS 3, ‘Reference to the conceptual framework’ Amendments to IAS 16, ‘Property, plant and equipment: proceeds before intended use’ Amendments to IAS 37, ‘Onerous contracts— cost of fulfilling a contract’ Annual improvements to IFRS Standards 2018–2020	Effective Date by International Accounting Standards Board
	January 1, 2022 January 1, 2022 January 1, 2022 January 1, 2022

The above standards and interpretations have no significant impact to the Company and its subsidiaries’ (collectively “First Group” or “the Group”) financial condition and financial performance based on the Group’s assessment.

(2)Effect of new issuances or amendments to IFRSs as endorsed by the FSC but not yet adopted by the Group

New standards, interpretations and amendments endorsed by FSC effective from 2023 are as follows:

	Effective Date by
	International Accounting
NewStandards,Interpretations and Amendments	Standards Board
Amendments to IAS 1, ‘Disclosure of accounting policies’	January 1, 2023
Amendments to IAS 8, ‘Definition of accounting estimates’	January 1, 2023
Amendments to IAS 12, ‘Deferred tax related to assets and liabilities	January 1, 2023
arising from a single transaction’

The above standards and interpretations have no significant impact on the Group’s financial condition and financial performance based on the Group’s assessment.

(3)IFRSs issued by IASB but not yet endorsed by the FSC

New standards, interpretations and amendments issued by IASB but not yet included in the IFRSs as endorsed by the FSC are as follows:

NewStandards,Interpretations and Amendments

Effective Date by
International Accounting
Standards Board

Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets
between an investor and its associate or joint venture’
Amendments to IFRS 16, ‘Lease liability in a sale and leaseback’
IFRS 17, ‘Insurance contracts’
Amendments to IFRS 17, ‘Insurance contracts’
Amendment to IFRS 17, ‘Initial application of IFRS 17 and IFRS 9 —
comparative information’
Amendments to IAS 1, ‘Classification of liabilities as current or
non-current’
Amendments to IAS 1, ‘Non-current liabilities with covenants’

To be determined by IASB
January 1, 2024
January 1, 2023
January 1, 2023
January 1, 2023
January 1, 2024
January 1, 2024

280

Except for the following, the above standards and interpretations have no significant impact on the Group’s financial condition and financial performance based on the Group’s assessment.

A. IFRS 17, ‘Insurance contracts’

IFRS 17 ‘Insurance Contracts’ replaces IFRS 4 and establishes principles for the recognition, measurement, presentation and disclosure of insurance contracts issued. The standard applies to insurance contracts (including reinsurance contracts) issued, to reinsurance contracts held and to investment contracts with discretionary participation features issued, provided the entity also issues insurance contracts. Embedded derivatives, distinct investment components and distinct performance obligations shall be separated from the insurance contracts. An entity shall at initial recognition to disaggregate a portfolio into three groups of contracts: onerous, no significant risk of becoming onerous, and remaining contracts. IFRS 17 requires a current measurement model, where estimates are remeasured in each reporting period. The measurement is based on the building blocks of discounted, probability-weighted cash flows, a risk adjustment and a contractual service margin (‘CSM’) representing the unearned profit of the contract. An entity may apply a simplified measurement approach (the premium allocation approach) to some insurance contracts. An entity recognises the profit from a group of insurance contracts over the period the entity provides insurance coverage, and as the entity is released from risk. If a group of contracts is or becomes loss-making, an entity recognises the loss immediately. Entities are required to present separately insurance revenue, insurance service expenses and insurance finance income or expenses and to disclose information about amounts, judgements and risks arising from insurance contracts.

B. Amendments to IFRS 17, ‘Insurance contracts’

The amendments to IFRS 17 include the deferral of effective date, expected recovery of insurance acquisition cash flows, contractual service margin attributable to investment services, reinsurance contracts held – recovery of losses and other amendments, and they are not intended to change the fundamental principles of the standard.

C. Amendment to IFRS 17, ‘Initial application of IFRS 17 and IFRS 9 – comparative information’

The amendment permits an entity to apply an optional classification overlay in the comparative period(s) presented on initial application of IFRS 17. The overlay allows all financial assets, including those held in respect of activities not connected to contracts within the scope of IFRS 17, to be classified, on an instrument-by-instrument basis, in the comparative period(s) in a way that aligns with how the entity expects those assets to be classified on initial application of IFRS 9. The overlay can be applied by entities that have already applied IFRS 9 or will apply it when they apply IFRS 17.

4. Summary of significant accounting policies

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the period presented, unless otherwise stated.

(1) Compliance statement

The consolidated financial statements of the Group have been prepared in accordance with the “Regulations Governing the Preparation of Financial Reports by Financial Holding Companies”, “Regulations Governing the Preparation of Financial Reports by Public Banks”, “Regulations Governing the Preparation of Financial Reports by Securities Firms”, “Regulations Governing the

281

Preparation of Financial Reports by Insurance Companies”, “Regulations Governing the Preparation of Financial Reports by Futures Commission Merchants”, and the International Financial Reporting Standards, ‘International Accounting Standards, IFRIC Interpretations, and SIC Interpretations that came into effect as endorsed by the FSC (collectively referred herein as the “IFRSs”).

(2) Basis of preparation

A. Except for the financial assets or financial liabilities (including derivative instruments) measured at fair value, insurance liabilities reserve set aside according to letter or rule of insurance enterprises, reinsurance contract assets, reserve for foreign exchange price fluctuation, defined benefit liabilities recognised based on the net amount of pension fund assets less present value of defined benefit obligation, and foreclosed asset (which are stated at the lower of its carrying amount or fair value less costs to sell at the end of period) these consolidated financial reports have been prepared under the historical cost convention.
B. The analysis of expense is classified based on the nature of expenses.
C. The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.

(3) Basis of consolidation

A. Principles for preparation of consolidated financial statements
(A) The Group prepares the consolidated financial statements by aggregating the Group’s assets, liabilities, revenues and expenses, which have been eliminated versus owners’ equity during the consolidation. In addition, the consolidated financial statements of the Group are made in the same reporting period. Items included in the consolidated financial statements are not classified as current and non-current items. Relevant items are arranged in order based on current and non-current nature.
(B) A subsidiary refers to an investee that the Group has controlling power over. The Group has control over an investee if the following elements are met:
- a. Power over the relevant activities of the investee, i.e. the investor has voting rights or other existing rights that give it the ability to direct the relevant activities;
- b. Exposure, or rights, to variable returns from its involvement with the investee;
- c. The ability to use its power over the investee to affect the amount of the investor’s returns.
(C) Inter-company transactions, balances and unrealised gains or losses on transactions between companies within the Group are eliminated. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Group.
B. The consolidated financial statements include the following directly and indirectly owned subsidiaries:

282

Percentage of holding shares (%)

Investor Subsidiary Business activities FFHC FCB Note 1 FFHC FS Note 2 FFHC FSIT Note 3 FFHC FLI Note 4 FFHC FFAM Note 5 FFHC FVC Note 6 FFHC FFMC Note 7 FCB First Commercial Bank (USA) Banking services xx FCB FCBL Leasing(Note 8) FS First Capital Management Co., Ltd. (“FCMI”) Securities investment consulting service FS First Taisec Securities (Asia) Limited (“FTSL”) Securities investment holding FTSL xx xxx First Worldsec Securities Limited (“FWSL”) Securities brokerage, investment consultancy FSIT First Private Capital Co., Ltd. (“FPC”) Venture capital investment, investment and management consultancy	December 31, 2022 100 100 100 100 100 100 100 100 100 100 100 100 100	December 31, 2021 100 100 100 100 100 100 100 100 100 100 100 100 -	Note
			Note 1 Note 2 Note 3 Note 4 Note 5 Note 6 Note 7 - Note 8 - - - -

Note 1: FCB was established in 1899 and had been a listed company since February 9, 1962. It was privatised on January 22, 1998. On January 2, 2003, FCB became the subsidiary of First Financial Holding Co., Ltd. through a share swap and was de-listed from the TSE, First Financial Holding Co., Ltd. become a public company in accordance with the related regulations set forth by the SFB. FCB comprises various divisions, including Operation Division, Trust Division, International Business Division, Offshore Banking Unit, domestic and overseas branches, and representative offices. FCB engages mainly in the following business activities: (1) Business activities provided by the Banking Law (2) Trust business as authorised by the authorities (3) Commercial banks are permitted to act as insurance agents under the Insurance Act. (4) Establishing overseas branches to engage in those business activities as approved by the respective local governments (5) Other business activities approved by the authorities.
Note 2: FS was established on August 15, 1988 and became a subsidiary of FFHC on July 31, 2003. FS is authorised to engage in the following business activities:
(1) Brokerage and proprietary trading of marketable securities at the securities exchange markets;
(2) Underwriting of marketable securities;
(3) Registration and transfer agency service for securities;

283

(4) Margin and stock loans of marketable securities trading;
(5) Futures introducing broker business; and
(6) Other securities-related businesses as approved by the competent authorities.

FS founded a futures dealing department to perform futures business in September 2005. With the approval from the former FSCEY on October 29, 2010, FS started futures brokerage as a side business and terminated the business of introducing futures brokers on April 21, 2011. As FCB and FS are both wholly-owned subsidiaries of the Company, the Board of Directors of FS resolved to acquire securities brokerage business of FCB at book value to leverage the synergies of the Group, effective on December 1, 2003.

Note 3: FSIT became the wholly-owned subsidiary of the Company through a share swap on July 31, 2003. FSIT engages mainly in the management of securities investment trust funds and private funds business.
Note 4: First Life Insurance Co., Ltd. (“FLI”) (formerly named First-Aviva Life Insurance) was a joint venture between the Company and Aviva International Holdings Limited with a holding ownership of 51% and 49%, respectively. FLI obtained its Insurance License issued by the FSC in December 2007. FLI commenced its business activities mainly involving the life insurance business effective from January 2, 2008 and officially changed its name to FLI from September 17, 2009 under the approval of competent authorities. On October 12, 2017, the FFHC’s Board of Directors approved the acquisition of 110,250 thousand shares of FLI from Aviva International Holdings Limited. The acquisition was approved by the Competent Authority and completed on January 19, 2018. FLI is now a wholly owned subsidiary of the Company.
Note 5: First Financial Asset Management Co., Ltd. (“FFAM”) was established under approval on May 31, 2004 and its business activities mainly involves financial institution creditor’s right, accounts receivable purchasing and real estate transaction businesses.
Note 6: First Venture Capital Co., Ltd. (“FVC”) was established under approval on June 2, 2004 and its business activities mainly involves providing funds for investees and consultancy services for enterprise operation management.
Note 7: First Financial Management Consulting Co., Ltd. (“FFMC”) was established under approval on June 10, 2004 and its business activities mainly involves venture capital business management consultancy, investment consultancy and enterprise operation management consultancy.
Note 8: FCBL was approved to establish on May 26, 1998. The main business includes chattel secured and repo trade, leasing business and receivables factoring.

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C. Unconsolidated entities are as follows:

Note 1: As the individual company’s total assets or net revenues do not materially affect the consolidated financial statement presentation taken as a whole, the Company deems that such investee companies should not be included in the consolidated financial statements. Note 2: The stock ownership ratio remained consistent as of December 31, 2022 and 2021. Note 3: The main business involves financial institution creditor’s right, accounts receivable purchasing and real estate transaction businesses. Investor Subsidiary Business activities Percentage of the Company's direct/indirect holding ownership (%) (Note 2) Note FCBL First Financial Assets Management (B.V.I) Ltd. Note 3 100 Note 1 FCBL FCBL Capital International (B.V.I) Ltd. Note 4 100 Note 1	Percentage of the Company's direct/indirect holding ownership (%) (Note 2) 100 100	Note

Note 4: The main business includes chattel secured and repo trade, lease business and receivable factoring.
D. Adjustment on different accounting periods of the subsidiaries: None.
E. Information with respect to the subsidiaries’ significant restriction to transfer its funds to the parent company: None.
F. Specific operation risks of the foreign subsidiaries: None.
G. Restrictions on earnings distribution of subsidiaries: None.

(4) Foreign currency translation

A. Functional and presentation currency

The consolidated financial statements of the entities in the Group are presented by the currency of the primary economic environment in which the entities operate (namely the “functional currency”). The consolidated financial statements are presented in New Taiwan Dollars, which is the Comapny’s functional and the Group’s presentation currency.

B. Transactions and balances

Foreign currency transactions denominated in a foreign currency or required to settle in a foreign currency are translated into the functional currency using the exchange rates prevailing at the dates of the transactions.

Foreign currency monetary items should be reported using the closing rate (market exchange rate) at the date of each balance sheet. When multiple exchange rates are available for use, they should be reported using the rate that would be used to settle the future cash flows of the foreign currency transactions or balances at the measurement date. Foreign currency non-monetary items measured at historical cost should be reported using the exchange rate at the date of the transaction. Foreign currency non-monetary items measured at fair value should be reported at the rate that existed when the fair values were determined.

Exchange differences arising when foreign currency transactions are settled or when monetary items are translated at rates different from those at which they were translated when initially

285

recognised or in previous consolidated financial statements are reported in profit or loss in the period, with one exception. The exception is that exchange differences associated with the gains or losses of the parts of effective hedges of cash flow hedges or hedges of net investments in foreign operations are recognised in other comprehensive income.

If a gain or loss on a non-monetary item is recognised in other comprehensive income, any foreign exchange component of that gain or loss is also recognised in other comprehensive income. Conversely, if a gain or loss on a non-monetary item is recognised in profit or loss, any foreign exchange component of that gain or loss is also recognised in profit or loss.

C. Translation of foreign operations

If the entity has a functional currency (not in an economy with high inflation) that is different from presentation currency in the consolidated financial statements, its operating results and financial position is translated into presentation currency using the following procedures:

(A) At the balance sheet date, all assets and liabilities are translated by the closing exchange rate of the Group;
(B) The profit and loss is translated by the average exchange rate in the period (unless the exchange rate fluctuate rapidly, the exchange rate on the trade date shall be adopted); and
(C) All gains and losses arising from translation are recognised in other comprehensive income.

The exchange difference is recognised in “exchange difference on translation of foreign consolidated financial statements” of equity item.

On consolidation, exchange differences arising from the translation of the net investment in foreign operations and a portion of currency instruments designated as hedges of such investments, are recognised in other comprehensive income. When a foreign operating is partially disposed of or sold, exchange differences that were recorded in other comprehensive income are proportionately reclassified to profit or loss.

(5) Cash and cash equivalents

“Cash and cash equivalents” in the consolidated balance sheet includes cash on hand, due from other banks, short-term highly liquid time deposits and investments that are readily convertible to known amount of cash and subject to an insignificant risk of changes in value. For the consolidated statement of cash flows, cash includes cash and cash equivalents, due from central bank and call loans to other banks, securities purchased under resell agreements qualified as cash and cash equivalents as defined by IAS 7.

(6) Securities purchased or sold under resell or repurchase agreements

The transactions of bills and bonds with a condition of repurchase agreement or resell agreement are accounted for under the financing method. The interest expense and interest income are recognised as incurred at the date of sale and purchase and the agreed period of sale and purchase. The repo trade liabilities, bond liabilities, reverse repo trade bills and bond investments are recognised at the date of sale or purchase.

(7) Financial assets and financial liabilities

The financial assets and financial liabilities of the Group including derivatives are recognised in the balance sheet and are properly classified in accordance with IFRSs as endorsed by FSC.

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A. Financial assets

All financial assets held by the Group are classified according to the business model and characteristics of the contractual cash flows of the underlying asset. The categories are: “loans discounted”, “receivables”, “financial assets at fair value through profit or loss”, “financial assets at fair value through other comprehensive income”, “investment in debt instruments at amortised cost”, and “other financial assets”.

Business model refers to the method by which the Group manages the financial assets to generate cash flows, which originates from collecting contractual cash flows, selling financial assets, or both. When determining whether the contractual cash flows of the asset are solely payments of principal and interest on principal amount outstanding, the Group assesses whether the contractual cash flows are consistent with those required in a basic loan agreement. In other words, the Group determines whether interest is solely based on the time value of money, credit risk related to the principal amount outstanding on specified dates, other risks and costs associated with the basic loan agreement, and marginal profits consideration.

(A) Regular purchase or sale

Financial assets held by the Group, regardless of type or accounting classification, are all accounted for using trade date accounting by convention at the time of purchase or sale.

(B) Loans and receivables

Loans discounted consist of export bills negotiation, export bills discount, loans, and overdue receivables arising from loans. Loans discounted are measured at amortised cost using the effective interest rate method. Measurement at initial investment amount is allowed if effect of discounting is immaterial.

If a loan discounted held by the Group is renegotiated or has its terms modified due to financial difficulties of the borrower, so that it is required to be derecognised, entirely or partially, in accordance with IFRS 9, the old financial asset is derecognised, and a new financial asset and related gains or losses are recognised.

If a loan discounted held by the Group is renegotiated or has its terms modified due to financial difficulties of the borrower, but is not required to be derecognised, or if renegotiations or modification of terms are for reasons other than financial difficulties, which rarely results in the derecognition of the asset, the carrying amount of the asset is recalculated and resulting gains or losses are recognised in profit or loss.

(C) Receivables

Receivables include those originated and those not originated by the Group. The former originated directly from money, products or services that the Group provided to the debtors, while the latter refers to all other kinds of receivables. Receivables are measured at amortised cost using the effective interest rate method. However, short-term receivables without bearing interest are measured at initial invoice amount if the effect of discounting is material.

(D) Financial assets at fair value through profit or loss
a. Financial assets at fair value through profit or loss are financial assets that are not measured at amortised cost or fair value through other comprehensive income. Financial assets at amortised cost or fair value through other comprehensive income are designated as at fair value through profit or loss at initial recognition when they eliminate or significantly reduce a measurement or recognition inconsistency. Further,

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to mitigate effects of applying IFRS 9 before IFRS 17, ‘Insurance contracts’ becomes effective, the Group applies overlay approach under IFRS 4, ‘Insurance contracts’, to remove from the profit or loss for the fair value changes and present in other comprehensive income. A financial asset is eligible for designation for the overlay approach by FLI if the following criteria are met:

  - (a) A financial asset is held in respect of an activity connected with IFRS 4.

  - (b) It is measured at fair value through profit or loss applying IFRS 9 but would not have been measured at fair value through profit or loss applying IAS 39.

  - (c) It is a designated financial asset applying overlay approach on initial application of IFRS 9 or a financial asset designated on initial recognition or qualifying when acquired.

b. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognised and derecognised using trade date accounting.
c. At initial recognition, the Group measures the financial assets at fair value and recognises the transaction costs in profit or loss. The Group subsequently measures the financial assets at fair value, and recognises the gain or loss in profit or loss.
d. The Group recognises the dividend income when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably.
(E) Financial assets at fair value through other comprehensive income
a. Financial assets at fair value through other comprehensive income comprise equity securities which are not held for trading, and for which the Group has made an irrevocable election at initial recognition to recognise changes in fair value in other comprehensive income and debt instruments which meet all of the following criteria:
- (a) The objective of the Group’s business model is achieved both by collecting contractual cash flows and selling financial assets; and
- (b) The assets’ contractual cash flows represent solely payments of principal and interest.
b. At initial recognition, the Group measures the financial assets at fair value plus transaction costs. The Group subsequently measures the financial assets at fair value:
- (a) The changes in fair value of equity instruments that were recognised in other comprehensive income are reclassified to retained earnings and are not reclassified to profit or loss following the derecognition of the investment. Dividends are recognised as revenue when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably.
- (b) Except for the recognition of impairment loss, interest income and gain or loss on foreign exchange which are recognised in profit or loss, the changes in fair value of debt instruments are taken through other comprehensive income. When the financial asset is derecognised, the cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss.

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(F) Investments in debt instruments at amortised cost
a. Financial assets at amortised cost are those that meet all of the following criteria:
- (a) The objective of the Group’s business model is achieved by collecting contractual cash flows.
- (b) The assets’ contractual cash flows represent solely payments of principal and interest.
b. At initial recognition, the Group measures the financial assets at fair value plus transaction costs. Interest income from these financial assets is amortised to profit or loss over the period of bond circulation using the effective interest method. A gain or loss is recognised in profit or loss when the asset is derecognised.
c. The Group’s time deposits which do not fall under cash equivalents are those with a short maturity period and are measured at initial investment amount as the effect of discounting is immaterial.
(G) Other financial assets

Other financial assets include investment-linked life products and claims receivable purchased.

a. Investment-linked life products

Premiums from these products are deposited to a separate and independent account, net of expenses, and invested as stipulated under the contracts. The value of this independent account’s assets is determined based on the market price at the evaluation date, and the net asset value is calculated in accordance with related regulations and in compliance with IFRSs. In accordance with the “Regulations Governing the Preparation of Financial and Business Reports by Insurance Industry”, the assets and liabilities of this separate account which are created by insurance contract or investment contract should be classified as Investment-Linked Product Assets and Investment-Linked Product Liabilities. The revenue and expense of this separate account arises from the Investment-linked products revenue and expense, which is in line with the insurance contracts. They are presented as Investment-Linked Product Income and Investmentlinked Product Expense.

b. Claims receivable purchased

The business model of “claims receivable purchased” has the objective of collecting contractual cash flows and selling financial assets. However, the contractual cash flows from distressed debt are not solely payments of principal and interest on the outstanding principal amount, therefore it fails the cash flow characteristics test. In accordance with IFRS 9 as endorsed by the Financial Supervisory Commission, these receivables should be classified as “Financial assets at fair value through profit or loss” and subsequently measured at fair value.

(H) Margin loans, stock loans and refinancing

Securities business conducts margin loan business to provide funds to its customers to purchase securities. The margin loans given to customers are recorded as “margin loans receivable” (“Receivables-net”) and are collateralised by the securities that the customers purchase. The collateral securities are recorded through memorandum accounts and are returned to customers when the loans are repaid.

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Securities business conducts stock loan business to lend securities to its customers to sell short. The deposits received from customers are recorded as “deposits received on securities lending” (“Payables”). Proceeds from sales of securities lent to customers less any securities exchange taxes, dealer’s commissions, and financing charges are used as the collateral for securities lent and are recorded under “collateralised proceeds payable from securities lending” (“Payables”). The securities lent to customers to sell short are recorded through memorandum accounts. When the customers return the securities, the securities business gives the deposits received and the proceeds from securities sold back to customers.

The “refinancing of margin loans” refers to refinancing to borrow funds from securities finance companies when there are insufficient funds to conduct margin loan business. The refinancing of margin loans is recorded as “refinancing borrowing” (“Payables”) and is collateralised by the securities purchased by customers on margin loans.

The “refinancing of stock loans” refers to refinancing to borrow securities from securities finance companies when there are insufficient securities to conduct securities lending business. The deposits or collateral given to securities finance companies by FS are recorded as “refinancing margin deposits” (“Receivables-net”). The proceeds from securities lent to customers to sell short are given to the securities finance companies as the collateral and are recorded as “collateralised proceeds payable from securities lending” (“Payables”) and “refinancing deposits receivable” (“Receivables-net”), respectively.

(I) Reclassification of financial assets

Excluding equity instruments and financial assets designated as at fair value through profit or loss that cannot be reclassified, the Group reclassifies certain financial assets when there is a change in the business model used to manage the assets. The reclassification of the asset is applied prospectively beginning on the reclassification date, and previously recognised gains, losses (including impairment or reversal of gains), and interest income cannot be restated.

(J) Derecognition of financial assets

The Group derecognises a financial asset when one of the following conditions is met:

a. The contractual rights to receive the cash flows from the financial asset expire.
b. The contractual rights to receive cash flows of the financial asset have been transferred and the Group has transferred substantially all risks and rewards of ownership of the financial asset.
c. The contractual rights to receive cash flows of the financial asset have been transferred; however, the Group has not retained control of the financial asset.

B. Financial liabilities

Financial liabilities held by the Group include financial liabilities at fair value through profit and loss and financial liabilities measured at amortised cost.

(A) Financial liabilities at fair value through profit and loss

These include financial liabilities held for trading and those designated as financial liabilities at fair value through profit and loss.

Financial liabilities are classified in this category of held for trading if acquired principally for

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the purpose of repurchasing in the short-term. Derivatives are also categorised as financial liabilities held for trading unless they are designated as hedges. Financial liabilities that meet one of the following criteria are designated as at fair value through profit or loss at initial recognition:

a. Hybrid (combined) contracts; or
b. They eliminate or significantly reduce a measurement or recognition inconsistency; or
c. They are managed and their performance is evaluated on a fair value basis, in accordance with a documented risk management policy.

At initial recognition, the Group measures the financial liabilities at fair value. All related transaction costs are recognised in profit or loss. The Group subsequently measures these financial liabilities at fair value with any gain or loss recognised in profit or loss.

If the credit risk results in fair value changes in financial liabilities designated as at fair value through profit or loss, they are recognised in other comprehensive income in the circumstances other than avoiding accounting mismatch or recognising in profit or loss for loan commitments or financial guarantee contracts.

(B) Financial liabilities carried at amortised cost

Financial liabilities, which are not classified as financial liabilities at fair value through profit

or loss or financial guarantee contract, all belong to financial liabilities at amortised cost.

A financial liability is derecognised when the obligation under the liability specified in the

contract is discharged or cancelled or expires.

(8) Offsetting financial instruments

Financial assets and financial liabilities are offset and reported in the net amount in the balance sheet only when (1) there is a legally enforceable right to offset the recognised amounts; and (2) there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.

(9) Impairment of financial assets

For loans discounted, receivables, debt instruments measured at fair value through other comprehensive income, financial assets at amortised cost, other financial assets, loan commitments and financial guarantee contracts, at each reporting date, the Group recognises the impairment provision for 12 months expected credit losses if there has not been a significant increase in credit risk since initial recognition or recognises the impairment provision for the lifetime expected credit losses (ECLs) if such credit risk has increased since initial recognition or credit that has been impaired after taking into consideration all reasonable and verifiable information that includes forward-looking information. In measuring the expected credit losses of a financial asset, the Group must reflect the following:

A. Unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes;
B. Discounting for the time value of money;
C. Reasonable and supportable information about past events, current conditions, and forecasts of future economic conditions (available at reporting date without undue cost or effort).

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At the balance sheet date, allowance for uncollectible accounts should be recognised and impairment assessment performed for credit assets in accordance with relevant regulations such as "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Nonperforming/Non-accrual Loans", Jin-Guan-Yin-Guo-Zi No. 10300329440 issued on December 4, 2014 (related to strengthening the ability of domestic banks to bear risks of real estate loans) and JinGuan-Yin-Fa-Zi No. 10410001840 issued on April 23, 2015 (related strengthening the management of domestic banks risk exposure in Mainland China and the risk bearing capacity), and the International Financial Reporting Standard 9 (“IFRS 9”). Between the allowance amount required by the relevant regulations and the allowance amount calculated under IFRS 9, the greater amount should be recorded, and the credit asset should be presented net of such allowance amount.

Loss allowance of lease receivables is measured by lifetime expected credit losses.

(10) Non-hedging and embedded derivatives

A. Non-hedging derivatives are initially recognised at fair value on the date a derivative contract is entered into and recorded as financial assets or financial liabilities at fair value through profit or loss. They are subsequently remeasured at fair value and the gains or losses are recognised in profit or loss.
B. Under the financial assets, the hybrid contracts embedded with derivatives are initially recognised as financial assets at fair value through profit or loss, financial assets at fair value through other comprehensive income and financial assets at amortised cost based on the contract terms.
C. Under the non-financial assets, whether the hybrid contracts embedded with derivatives are accounted for separately at initial recognition is based on whether the economic characteristics and risks of an embedded derivative are closely related in the host contract.When they are closely related, the entire hybrid instrument is accounted for by its nature in accordance with the applicable standard.When they are not closely related, the derivative is accounted for differently from the host contract as derivative while the host contract is accounted for by its nature in accordance with the applicable standard. Alternatively, the entire hybrid instrument is designated as financial liabilities at fair value through profit or loss upon initial recognition.
(11) Investments accounted for under the equity method
Investment of the Group accounted for under the equity method refers to investments in associates.
A. Associates are all entities over which the Group has significant influence but not control. In general, it is presumed that the investor has significant influence, if an investor holds, directly or indirectly 20 percent or more of the voting power of the investee. Investments in associates are accounted for under the equity method and are initially recognised at cost. The Group’s investments in associates include goodwill identified on acquisition, net of any accumulated impairment loss arising through subsequent assessments.
B. The Group’s share of its associates’ post-acquisition profits or losses is recognised in profit or

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loss, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred statutory/constructive obligations or made payments on behalf of the associate.

C. Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been adjusted necessarily to ensure consistency with the policies adopted by the Group.

(12) Property and equipment

The property and equipment of the Group are recognised on the basis of the historical cost less accumulated depreciation. The historical cost includes any cost directly attributable to the acquisition of the asset.

If the future economic benefit generated from subsequent cost of the asset can be measured reliably and is very likely to flow into the Group, the subsequent cost of property and equipment including the carrying amount may be individually recognised as asset. Additionally, the carrying amounts of a replaced item are derecognised.

Major renewals and improvements incurred to increase the future economic benefits of the assets are capitalised and depreciated. Routine maintenance and repairs are charged to expense as incurred.

Land is not affected by depreciation. Depreciation for other assets is provided on a straight-line basis over the estimated service lives of the assets until salvage value. Service life is as follows:

Land and improvements	3 ~ 30 years
Buildings and structures (including ancillary equipment) 5 ~ 60 years
Transportation equipment	3 ~ 15 years
Machinery and equipment	3 ~ 4 years
Miscellaneous assets	5 ~ 17 years

Leasehold improvements are depreciated over the lease terms of the lease agreements or 2~5 years.

On balance sheet date, the Group assesses or appropriately adjusts the salvage value and service life of the asset. When there is an activity or change in the environment suggesting that the carrying amount may not be recovered, the Group shall evaluate impairment on the asset. If the carrying amount of the asset is higher than the recoverable amount, the carrying amount shall be written off until it is equivalent to the recoverable amount. The recoverable amount is the higher of asset at fair value less disposal expense and value in use. Any gain or loss on disposal is calculated by the difference between the carrying amount and proceeds on disposal, and be recognised in the “other revenue other than interest income” in the consolidated statement of comprehensive income.

(13) Investment property

The properties held by the Group, with an intention to obtain long-term rental profit or capital increase or both and not being used by other entities of the consolidated Group, are classified as investment property. Investment property includes the office building and land rented in the form of an operating lease.

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Part of the property may be held by the Group and another part generates rental income or capital increase. If the property held by the Group can be sold individually, then the accounting treatment should be made separately. IAS 16 as endorsed by FSC applies to the self-used property, and property used to generate rental income or capital increase or both is applicable for investment property set out in IAS 40 as endorsed by FSC. If each part of the property cannot be sold individually and the self-used proportion is not material, then the property is deemed as investment property in its entirety.

When the future economic benefit related to the investment property is very likely to flow into the Group and the costs can be reliably measured, the investment property shall be recognised as assets. When the future economic benefit generated from subsequent costs is very likely to flow into the entity and the costs can be reliably measured, the subsequent expenses of the assets shall be capitalised. All maintenance cost are recognised as incurred in the consolidated statement of comprehensive income.

Investment property is subsequently measured by cost model. Depreciated cost is used to calculate amortisation expense after initial measurement. The depreciation method, remaining useful life and residual value should apply the same rules as applicable for property and equipment. The fair value of investment property is disclosed in the consolidated financial statements at the balance sheet date, of which the valuation should be carried out by the appraisal segment of the Group based on the internal appraisal guidelines.

(14) Foreclosed assets

Foreclosed properties initially are stated at the forclosed cost, and measured at the lower of its carrying amount or fair value less costs to sell at the end of period.

－ (15) Leasing arrangements (lessor) lease receivables/ operating leases

When the Group is the lessor, please refer to Note 4(13) for the accounting treatment of the leased assets meeting the definition of investment property set out in IAS 40, “Investment Property”.

The lease contract of the Group’s subsidiaries includes operating leases and finance leases.

A. Operating lease

Rental receivable from an operating lease is calculated through the straight-line method based on the lease term, and is recognised as “other revenue other than interest income”.

B. Finance lease

The asset is derecognised when the finance lease contract is signed and the present value of lease payment is recognised as lease payable. The difference between the total lease payable and present value is recognised as unrealised interest income, and transferred to interest income as incurred at period end. Rental income is calculated based on remaining lease payment receivable using the embedded interest rate or incremental borrowing interest rate and recognised as current gain and loss.

(16) Leasing arrangements (lessee) － right-of-use assets/ lease liabilities

A. Leases are recognised as a right-of-use asset and a corresponding lease liability at the date at which the leased asset is available for use by the Group. For short-term leases or leases of lowvalue assets, lease payments are recognised as an expense on a straight-line basis over the lease term.

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B. Lease liabilities include the net present value of the remaining lease payments at the commencement date, discounted using the incremental borrowing interest rate.

Lease payments are comprised of the following:

(A) Fixed payments, less any lease incentives receivable; and
(B) Variable lease payments that depend on an index or a rate.

The Group subsequently measures the lease liability at amortised cost using the interest method and recognises interest expense over the lease term. The lease liability is remeasured and the amount of remeasurement is recognised as an adjustment to the right-of-use asset when there are changes in the lease term or lease payments and such changes do not arise from contract modifications.

C. At the commencement date, the right-of-use asset is stated at cost comprising the following:
(A) The amount of the initial measurement of lease liability;
(B) Any lease payments made at or before the commencement date;
(C) Any initial direct costs incurred by the lessee; and
(D) An estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease.

The right-of-use asset is measured subsequently using the cost model and is depreciated from the commencement date to the earlier of the end of the asset’s useful life or the end of the lease term.When the lease liability is remeasured, the amount of remeasurement is recognised as an adjustment to the right-of-use asset.

D. For lease modifications that decrease the scope of the lease, the lessee shall decrease the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease, and recognise the difference between remeasured lease liability in profit or loss.

(17) Intangible assets

The intangible assets of the Group consist of computer software expenditures, which are recognised at cost and amortised over its economic useful life. The maximum estimated useful life is three years.

Subsequent measurements are based on the cost model.

(18) Impairment of non-financial assets

When there is any evidence indicating a possible impairment, the Group immediately performs impairment test in relation to the assets applicable for IAS 36, “Impairment of Assets”.

If the testing result of the cash-generating unit of an asset or an individual asset suggests that the recoverable amount is less than the carrying amount, impairment loss is recognised. Recoverable amount refers to the higher of an asset’s fair value less its cost or value in use. Reassess the recoverable amount of an asset when there is an indication that the impairment loss recognised in the prior period decreases or does not exist anymore. If there is any change in the estimated recoverable amount and result in an increase, asset impairment is reversed to the extent that the carrying amounts shall not exceed the amortised cost that would have been determined had no impairment loss been recognised in prior periods.

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(19) Provisions, contingent liabilities and contingent assets

A. The Group recognises liabilities when all of the following three conditions are met:
(A) present obligation (legal or constructive) has arisen as a result of past event;
(B) the outflow of economic benefits is highly probable upon settlement; and
(C) the amount is reliably measurable.

The outflow of economic benefit as a result of settlement is determined based on the overall obligation when there are several similar obligations. Contingent assets are recognised when the outflow of economic benefits is probable in order to settle the obligation as a whole even if the outflow of economic benefits from any one of the obligation is remote.

Measurements for provisions are at discounted present value of expenditure for settlement obligation using a pre-tax discount rate with timely adjustment made that reflects the current market assessments of the time value of money and the risks specific to the liabilities.

B. Contingent liability is a possible obligation that may arise from a past event, whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group. Or it could be a present obligation as a result of a past event but the payment is not probable or the amount cannot be measured reliably. The Group did not recognise any contingent liabilities but made appropriate disclosure in compliance with relevant regulations.
C. Contingent asset is a possible asset that may arise from a past event, whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group. The Group did not recognise any contingent assets and made appropriate disclosure in compliance with relevant regulations when the economic inflow is probable.
D. With regard to insurance contracts of FLI and financial instruments with or without participation discretion feature, the reserves are set aside according to “Regulations Governing the Setting Aside of Various Reserve for Insurance Enterprises”. Even though part of the insurance contracts of FLI do have a participation discretion feature and guarantee element, FLI does not separately recognise but categorises the whole contract as a liability. The following liability reserves do not adopt discounting method other than policy reserve, premium deficiency reserve and liability adequacy reserve. Details of provision basis are summarised below:
(A) Unearned premium reserve:

The policy reserve of unearned premium of any valid contract with less than one-year insured period should be set aside based on the calculation guide book of Insurance Bureau and “Regulations Governing the Setting Aside of Various Reserve for Insurance Enterprises”.

(B) Claim reserve:

Reserves are provided for “Claims Reported but Not Paid” and “Claims Incurred but Not Reported”. For “Claims Reported but Not Paid”, a reserve has been provided on a per-policyclaim-report basis for each type of insurance. Additionally, for “Claims Incurred but Not Reported,” a reserve has been provided using the following methods:

a. According to “Regulations Governing the Setting Aside of Various Reserves by Insurance Enterprises”, the claim reserve for contracts, of which the insured period is less than 1 year, is calculated and set aside based on past claim experience and expenses and through the formula assigned or approved by FSC.

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b. Starting from 2015, in accordance with (2014)-FLI-Zong-Jing-Qi-Zi Letter No. 00787 as approved by the FSC, submitted by FLI, FLI has adjusted its calculation method of “Claims Incurred But Not Reported” reserves for injury insurance, life insurance, and health insurance. It shall set aside loss reserve calculated on the basis of its past claim experience, by using the loss development triangle method.

(C) Policy reserve:

Policy reserve of life insurance is calculated on the basis of life expectancy table rectified by competent authorities upon each application approval and the estimated interest rates, and is set aside according to the method set out in revised Article 12 of “Regulation Governing the Setting Aside of Various Reserve for Insurance Enterprises” and calculation method reviewed and approved by the authorities.

(D) Premium deficiency reserve:

If the premium of a contract is less than the reserve as calculated, then the portion of the balance of premium that has not exceeded its due date should be recorded as premium deficiency reserve. This applies to life, health, and annuity insurance contracts issued, with coverage over one year. Additionally, for an unexpired effective policy with coverage less than one year, the Company should recognise the premium deficiency reserve based on the difference between claim reserves/expenses, and unearned premium reserve and the expected premium income in the future.

(E) Liability adequacy reserve:

Liability adequacy test is based on the overall contract of the whole entity in compliance with regulations announced by The Actuarial Institute of the Republic of China, of which the long-term and short-term insurance is evaluated respectively by total premium method and loss ratio. The liability adequacy is calculated using the net carrying amount of insurance liabilities less deferred acquisition cost and related intangible assets at each balance sheet date. If the test shows that liability adequacy is insufficient when compared with the present estimate of insurance contract future cash flow, the entire insufficient amount is recognised as liabilities adequacy reserve. Based on the liability adequacy testing result, the reserve needed to be set aside is the liability adequacy reserve.

(20) Reserve for foreign exchange fluctuation

According to the “Regulations Governing the Setting Aside of Various Reserve for Insurance Enterprises,” for FLI’s held foreign investment assets (not including assets that are non-investmentlinked life insurance products settled under foreign currencies), starting from March 1, 2012, reserves for foreign exchange fluctuations are provisioned under liabilities. Limits, provisions, charge-offs, and other regulated items with regard to the reserve for foreign exchange fluctuations are conducted in compliance with “Guidelines Governing Reserve for Foreign Exchange Fluctuation of Life Insurance Enterprises”.

(21) Financial guarantee contract and loan commitments

A financial guarantee contract is a contract that requires the Group to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when they are due in accordance with the original or modified terms of a debt instrument.

The Group initially recognises financial guarantee contracts at fair value on the date of issuance granted. The Group charges a service fee when the contract is signed and therefore the service fee income charged is the fair value at the date that the financial guarantee contract is signed. Service

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fee received in advance is recognised in deferred accounts and amortised through the straight-line method during the contract term.

Subsequently, the Group should measure the contract at the higher of:

A. Loss allowance recognised in accordance with IFRS 9, as endorsed by the FSC; and
B. The amount initially recognised less, when appropriate, cumulative gains recognised in accordance with IFRS 15.

Impairment loss of the aforementioned guarantee policy reserve is assessed in accordance with “Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non-performing/Non-accrual Loans” and IFRS 9, and the greater of the two amounts is recorded as provision.

Expected credit losses are recognised for loan commitments of the Group, and the measurement of expect credit losses is described in Note 4(9).

Provision for credit losses is recognised for loan commitments and financial guarantee contracts. If a financial instrument includes a loan (financial asset) and undrawn commitment component (loan commitment), and if the Group cannot separate the expected credit losses of the loan from that of the loan commitment, the expected credit loss of the loan commitment is recognised along with that of the financial asset. The amount of the total credit loss in excess of the carrying amount of the financial asset should be recognised as a provision.

The increase in liabilities due to financial guarantee contract and loan commitments is recognised in “bad debt expense, commitment and guarantee liabilities provision”.

(22) Employee benefits

A. Short-term employee benefits

The Group recognises undiscounted short-term employee benefits due in the future as expense during the period that the service is provided.

B. Employee preferential interest rate

FCB provides preferential interest rate for employees, including flat preferential savings rate for current employees and retired employees. The difference between preferential interest rate and market interest rate is deemed as employee benefits.

According to “Regulations Governing the Preparation of Financial Statements by Public Banks”, the preferential interest paid to current employees is calculated based on accrual basis, and the difference between the preferential interest and the market interest is recognised under “employee benefit expense”. According to Article 30 of “Regulations Governing the Preparation of Financial Statements by Public Banks”, the interest rate upon retirement agreed with the employees which exceeds general market interest rate is actualised in accordance with IAS 19, Defined Benefit Plan, as endorsed by the FSC. However, various parameters should be in compliance with regulations set by the competent authorities if indicated otherwise.

C. Termination benefit

Termination benefit is paid to the employee being terminated who is eligible for retirement or as a result of voluntary termination. The Group has made commitments in the formal detailed employment termination plan which is irrevocable, and recognises liabilities when providing termination benefit to employees who voluntarily resign. Termination benefit paid 12 months after the financial reporting date should be discounted.

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D. Post-employment benefit

The Group adopts both defined benefit plan and defined contribution plan. Overseas branches and subsidiaries adopt defined benefit plans based on regulations of the country in which the entities operate.

The pension in each period is recognised as pension cost in the period as incurred. Prepaid pension assets can only be recognised when there is a cash refund or deductible future pension payable.

Defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation.

The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets, together with adjustments for unrecognised past service costs. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have durations that are approximate to the durations of the related pension liability.

Remeasurement of defined benefit plan includes: (1) actuarial gains and losses; (2) return on plan assets, but not including amounts already included in net interest of net defined benefit liabilities (assets); and (3) any changes in effect of asset ceiling, but not including amounts already included in net interest of defined benefit plan. The Group chooses to categorise remeasurement of defined benefit plan under retained earnings.

Actuarial gains and losses arising from actual experiences or changes in actuarial assumption are recognised immediately in other comprehensive income. Past service cost is recognised immediately in profit in the period incurred.

Pension cost for the interim period is calculated on a year-to-date basis by using the pension cost rate derived from the actuarial valuation at the end of the prior financial year, adjusted for significant market fluctuations since that time and for significant curtailments, settlements, or other significant one-off events. And, the related information is disclosed accordingly.

E. Employees’ and directors’ remuneration

Employees’ and directors’ remuneration are recognised as expenses and liabilities, provided that such recognition is required under legal obligation or constructive obligation and those amounts can be reliably estimated. Any differences between the resolved amounts and the subsequently actual distributed amounts is accounted for as changes in estimates.

(23) Revenue and expense

Revenue and expense of the Group are recognised as incurred. Expense consists of employee benefit expense, depreciation and amortisation expense and other business and administration expenses. Dividends revenue is recognised in the consolidated statement of comprehensive income when the right to receive payment is established. However, interest income is recognised on a cash basis upon receiving the interest when (1) reclassified as non-accrual loans; and (2) interest from restructured loans whose maturities have been extended is not recognised as interest income but recorded in the memo accounts.

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A. Other than those classified as financial assets and financial liabilities at fair value through profit and loss, all the interest income and interest expense generated from interest-bearing financial assets are calculated by effective interest according to relevant regulation and recognised as “interest income” and “interest expense” in the consolidated statement of comprehensive income.
B. Handling fees and expenses are recognised when cash is received, or the earning process is substantially completed; service fee earned from performing significant items shall be recognised upon the completion of the service, such as syndication loan service fee received from sponsor, handling fees and expenses of subsequent services of loans are amortised or included in the calculation of effective interest rate of loans and receivables during the service period. However, according to the “Regulation Governing the Preparation of Financial Reports by Public Banks”, the loans and receivables may be measured by the initial amounts if the effects on discount are insignificant.
C. For more details on rental income of operating lease and unrealised interest income of finance lease in relation to lease business, please refer to Note 4(15).
D. Revenue and expense of insurance business

The first and subsequent premium of FLI’s insurance contracts and financial instruments with discretionary participation features is recognised when completing insurance procedures and when receiving payments. Costs incurred in acquiring a policy, such as commission expenses, are recognised as expenses in the period the insurance contracts become effective.

In addition to the “Revenue and Expense of Insurance Business”, FLI recognises its income according to IFRS 15, “Revenue from contracts with customers”. Interest is recognised based on interest rate method over time. For details of the recognition of dividend income, please refer to Note 4(7).

E. Income and expenses of FS is recognised on an accrual basis. The main components are as follows:
(A) Brokerage commission, gains (losses) on sale of securities, futures commission expenses and related handling fee expenses are recognised on the transaction date.
(B) Interest income and interest expense attributable to margin loan business, stock loan business, and bills and bonds under repurchase or resale agreements are recognised on an accrual basis during the transaction periods.
(C) Underwriting commission income or expenses: Subscription handling fees are recognised when the amounts are received and underwriting commission income and related commission expenses are recognised at the completion of such underwriting contracts.
(D) Service fee income from providing registration and transfer agency service for securities are recognised monthly according to the contracts.
(E) Futures contract gains or losses: The margin of futures trading is recognised at cost and measured through mark-to-market accounting. The gains or losses from mark-to-market, reversed futures trading or settled contracts are recognised as gains or losses in the current period; dealer handling fee expenditures is recognised on the transaction date of futures trading. The dealing handling fee expense is recognised based on the transaction amount on a monthly basis.

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(F) Dividend income: Dividend income is recognised as “dividend income” under the consolidated statement of comprehensive income when the shareholder’s right to receive payment is established.
(G) Operating expenses: Operating expenses are expenses arising from operations. They are primarily classified as either employee benefits expense, depreciation and amortisation expenses or other general and administration expenses.

(24) Reinsurance

In order to set a limit to losses and lower the risk of large claim policy to the minimum, FLI engages in reinsurance according to business demands and regulations. FLI shall not refuse to fulfill its obligation to the insured when the reinsurer does not fulfill its obligation.

Reinsurance ceded and inward standard, reinsurance expense, reinsurance premium income, reinsurance commission income and expense, claims recoverable from reinsurers and covered incidents are processed and recognised based on the reinsurance contracts signed with regular transactions.

In terms of the classification of reinsurance contracts, FLI assesses if objective insurance risk shall be transferred to reinsurers. For reinsurance contracts that do not transfer significant risk, the contracts shall be recognised and measured using deposit accounting.

The subsidiary, FLI estimates unrecoverable amount according to IFRS No. 4, “Insurance Contracts” and with reference to “Regulations Governing the Procedures for Insurance Enterprises to Evaluate Assets and Deal with Non-performing/Non-accrual Loans” and recognised allowance for doubtful debt, in relation to the claims recoverable from reinsurers and reinsurance receivable in the reinsurance contracts.

(25) Insurance contract classification

In an insurance contract, FLI accepts significant insurance risk from another party (the policyholder) by agreeing to compensate the policyholder if a transferred uncertain future event (insured event) adversely affects the policyholder. Generally, FLI determines the existence of significant risks from the payments with or without the insured event taking place. An insurance contract also transfers financial risks of the insured.

FLI should identify whether to it is to endure insurance risks or other risk components for its engaged insurance contracts and determine whether components of such contracts can be separated and individually calculated. In addition, FLI should determine whether insurance risks of engaged insurance contracts have been transferred, whether the transfer of the insurance risks has commercial substance, and whether the transferred insurance risks are material. Thereon, FLI should conduct transfer testing for significant insurance risks. The conclusion of these determinations will affect the classification of insurance contracts.

A contract that qualifies as an insurance contract will remain an insurance contract until all rights and obligations are extinguished or expired, even if the insurance risk is lower significantly during the policy period. However, contracts originally set as non-insurance contracts based on the degree of insurance risks (e.g. insurance contracts with the nature of financial instrument) shall be reclassified as insurance contracts when significant insurance risks are transferred to FLI.

Insurance contract with the nature of financial instruments is the contract that transfers significant financial risks. Financial risks refer to the potential risks generated from one or various specified interest rates, financial instrument prices, product prices, exchange rates, price index, rate index,

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credit rating, credit index or other variables. If the abovementioned variables are non-financial, such variables are not held by any of the contract parties.

Insurance contract can be further classified if the contract has discretionary participation feature. Discretionary participation feature is a contractual right to receive additional benefit rather than guaranteed benefits and this kind of right will meet all the criteria shown below:

A. additional benefits likely occupy a significant percentage of total contractual benefits;
B. the amount or timing of additional benefits is contractually at the discretion of FLI; and
C. additional benefits are contractually based on one of the followings:
(A) the performance of a specified pool of contracts or a specified type of contract;
(B) realised and/or unrealised investment returns on a specified pool of assets held by the issuer;
(C) the profit or loss of the company, fund or other entity that issues the contract.

An embedded derivative needs to be accounted separately if the embedded derivative (financial options and financial guarantee) does not have a closely related economic feature and risk; the embedded derivative shall be measured at fair value and the fair value movement shall be recognised as profit or loss of the period. An embedded derivative needs be accounted separately if the embedded derivative meets the definition of an insurance contract, or the entire contract is measured at fair value and the fair value movement shall be recognised as profit or loss of the period.

The identification and separation of insurance contract components and the classifications of insurance contracts will affect FLI’s revenue recognition and liability measurement, as well as the presentation of consolidated financial statements.

(26) Income tax

A. Current tax

Current tax asset (liability) is calculated on the basis of the tax laws enacted in the countries where the Group operates and generates taxable income. Except for transactions or other matters that are directly recognised in other comprehensive income or equity, all the other transactions should be recognised as income or expense and recorded as gain and loss in the period. An additional tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings.

B. Deferred tax

Deferred income tax assets and liabilities are measured based on the tax rate of the anticipated period that the future assets realisation or the liabilities settlement requires, which is based on the effective or existing tax rate at the consolidated balance sheet date. The carrying amount of assets and liabilities included in the consolidated balance sheet are calculated through liability method and recognised as deferred income tax. The temporary difference of the Group mainly occurs due to the revaluation on the depreciation of property and equipment and certain financial instruments (including derivatives) and provision and transferring of the reserve for pension and other post-employment benefits. Deductible temporary difference within the scope that it is probable to offset taxable income is recognised as deferred income tax assets.

Temporary difference related to the investees, branches and affiliated entities are recognised as deferred tax liabilities. However, when the Group is capable of controlling the time length required to reverse the temporary difference and the temporary difference is unlikely to reverse in the foreseeable future, the temporary difference is not recognised.

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The land revaluation appraisal occurred due to the revaluation assessment in line with relevant regulations, deemed as taxable temporary difference, and is recognised as deferred tax liabilities.

If the future taxable income is probable to be utilised as unused loss carryforwards or deferred income tax credit which can be realised in the future, the proportion of realisation is deemed as deferred income tax assets.

C. Certain transactions of the Group are recognised in other comprehensive income. The tax effects on these kinds of transactions are also recognised in other comprehensive income.
D. Current tax assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. Deferred income tax assets and liabilities are offset on the balance sheet when the entity has the legally enforceable right to offset current tax assets against current tax liabilities and they are levied by the same taxation authority on either the same entity or different entities that intend to settle on a net basis or realise the asset and settle the liability simultaneously.

(27) Share capital and dividends

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or stock options are shown in equity as a deduction, net of tax, from the proceeds. Dividends are recorded in the Groups’ consolidated financial statements in the period in which they are resolved by the Groups’ shareholders. Cash dividends are recorded as liabilities, stock dividends are recorded as stock dividends to be distributed and are reclassified to ordinary shares on the effective date of new shares issuance. If the date of dividends declared is later than the consolidated balance sheet date, common stocks are disclosed in the subsequent events.

(28) Operating segments

The Group’s operating segment reports are consistent with the internal reports provided to the Chief Operating Decision-Maker (“CODM”). The CODM is a team that allocates resources to operating segments and evaluates their performance, has been identified as the Board of Directors that makes strategic decisions.

5. Critical accounting judgements, estimates and key source of assumption uncertainty

The consolidated financial statements of the Group may be affected by the adoption of accounting policies, accounting estimates and assumptions. Therefore, adoption of the significant accounting policies in Note 4 requires the management’s judgement, estimate and assumption, which involves information of significant adjustment made on the carrying amount of assets and liabilities in the next consolidated financial statements due to lack of resources. Estimates and assumptions are made on the basis of past experience and other elements deemed to be relevant (including the influence of Covid19). However, the actual results may differ from the estimates. The Group will continually monitor the estimates and assumptions.

Certain accounting policies and judgements of management could have significantly affected the recognised amounts in the consolidated financial statements. Details are as follows:

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(1) Evaluation on financial instruments - debt instruments and derivatives

The Group evaluates the financial instrument at fair value not traded in an active market or with no quoted price. The fair value may be estimated with reference to observable market price in the market if there is observable information of similar instruments. If not, fair value is calculated based on the appropriate evaluation models generally used in the market. The input used in the model should first primarily be based on the observable information in the market. However, in the event that certain information or input cannot be observed directly in the market and/or the model assumption itself is comparatively subjective, then financial instrument at fair value can be retrieved from historical data or other information. Every valuation model of the Group are assessed and tested on a regular basis to ensure the output can reflect actual information and the market price. Note 12(1)C provides the main assumptions used in determining the financial instruments at fair value. The management recognises that the valuation models and assumptions chosen can be appropriately used to determine the fair value of financial instruments.

(2) Evaluation on financial instruments - equity instruments

The fair value of unlisted stocks without active market held by the Group are measured using valuation techniques that involve observable data or models of financial instruments with similar characteristics. If there are no observable inputs from the market, the fair value of the instrument is measured with appropriate assumptions. If fair value is determined by a valuation model, it should be calibrated so that the end result reflects actual data and market prices, and observable data should be used whenever it is possible.

The measurement of fair value is primarily calculated using recently published market multipliers of comparable publicly listed companies in similar industries, and discounted according to market liquidity and particularity of risk. Any changes in these judgements and estimates will impact the fair value measurement of these unlisted stocks. Please refer to Note 12(1)C for the financial instruments fair value information.

(3) Expected credit losses

For debt instruments measured at fair value through other comprehensive income and financial assets measured at amortised cost, the measurement of expected credit losses uses complex models and multiple assumptions. These models and assumptions take into account future macro-economic conditions and credit behaviors of borrowers (e.g. probability of customer default and loss). Please refer to Note 12(2)D for detailed information on parameters, assumptions, and estimation methods used in measuring expected credit losses and disclosure of the sensitivity of credit loss to the aforementioned factors.

The measurement of expected credit losses according to applicable accounting rules involves significant judgement in several areas, for example:

A. The criteria used to judge whether there is significant increase in credit risk.
B. The selection of appropriate models and assumptions for measuring expected credit losses.
C. Determining the forward-looking factors that are necessary for the measurement of expected credit losses for each type of product.
D. For the purpose of measuring expected credit losses, classifying the financial instruments according to similar credit risk characteristics.

For information on judgements and estimations used in above expected credit losses, please refer to Note 12(2)D.

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(4) Post-employment benefit

The present value of post-employment benefit obligation is based on actuarial result of various assumptions, through which any change could affect the carrying amount of post-employment benefit obligation.

Discount rate is included when determining the net pension cost (income), and the Group decides the appropriate discount rate at the end of each year, which is used to calculate the estimated present value of future cash outflow of post-employment benefit obligation needed. The Group should consider interest rate of government bonds of the same currency and maturity in order to determine the appropriate discount rate.

Other significant assumptions on post-employment benefit are made based on the current market situation.

(5) Insurance contract liabilities

FLI’s insurance contract liabilities are based on assumptions for the period or assumptions when the contract is effective to reflect the best estimate of the period. Liability adequacy tests are performed on all contracts to reflect the best estimate of future cash flows by the management.

Major assumptions include mortality rate, morbidity rate, return on investment rate, expense rate and withdrawal rate. The assumptions are in accordance with Chapter 3 Actuarial Assumption of Reserve Adequacy of “Practice Principles of Personal Insurance Actuarial Personnel” to reflect the FLI’s risk exposure, product characteristics, target market and claim experience.

Estimate of investment return of insurance contracts is based on the estimated return of FLI’s asset pool and future economic and financial development forecast. Future expenses’ assumption is based on current expenses and is adjusted with inflation from estimated expenses.

The withdrawal rate is based on FLI’s experience.

6. Summary of significant accounts

(1) Cash and cash equivalents

Cash on hand Checks for clearance Short-term bills Due from other banks Less: Allowance for bad debt expense - due from other banks Total	December 31,2022 25,900,684 $ 18,565,485 99,836 27,653,475 11,318) ( 72,208,162 $	December 31,2021 14,039,210 $ 19,604,340 239,862 26,777,899 8,174) ( 60,653,137 $

Information relating to credit risk is provided in Note 12(2)D.

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(2) Due from the central bank and call loans to banks

Reserve for deposits-account A Reserve for deposits-account B Inter-Bank clearing fund Deposits of national treasury account Deposits of overseas branches with foreign central banks Reserve for deposits - foreign currency Call loans and overdrafts to other banks Subtotal Less: Allowance for bad debt expense - call loans to banks Total	December 31,2022 33,304,458 $ 83,210,254 30,260,355 79,777 24,180,508 783,488 161,970,788 333,789,628 29,738) ( 333,759,890 $	December 31,2021 24,503,909 $ 72,824,370 25,402,708 83,462 20,013,534 694,970 203,908,085 347,431,038 24,505) ( 347,406,533 $

A.The FCB and its subsidiaries’ reserve for deposits is required by the Banking Law and is determined by applying the reserve ratios set by the central bank to the monthly average balance of each type of deposit. The reserve amount is deposited in the reserve deposit account at the central bank. According to the regulations, such reserve for deposits - account B cannot be withdrawn except for monthly adjustments of the reserve for deposits.
B.Amounts in conformity or not in conformity with cash and cash equivalents as defined by IAS No.7 were as follows:

In conformity with cash and cash equivalents as defined by IAS No.7 Not in conformity with cash and cash equivalents as defined by IAS No.7 Reserve for deposits account B Deposits by overseas branches with foreign central banks (Note) Total	December 31,2022 232,430,376 $ 83,210,254 18,148,998 333,789,628 $	December 31,2021
		264,449,193 $ 72,824,370 10,157,475
		347,431,038 $

Note: The deposits by overseas branches were reserves required by respective local central banks and are restricted from deployment.

C.Information relating to credit risk is provided in Note 12(2)D.

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(3) Financial assets at fair value through profit or loss

)Financial assets at fair value through profit or loss
Financial assets mandatorily measured at fair value through profit or loss Short-term bills Stocks Bonds (government bonds, bank debentures, and corporate bonds) Other marketable securities Derivative instruments Valuation adjustment ( Subtotal Financial assets designated as at fair value through profit or loss Bonds Valuation adjustment Subtotal Total	December 31,2022 74,415,592 $ 3,053,956 57,005,727 7,458,747 19,182,192 289,193) 160,827,021 14,295,249 945,256 15,240,505 176,067,526 $	December 31,2021
		91,653,024 $ 4,770,691 58,626,450 9,428,196 4,981,771 630,294
		170,090,426
		14,076,570 689,887
		14,766,457
		184,856,883 $

A.Amounts recognised in profit or loss in relation to financial assets and financial liabilities at fair value through profit or loss are listed below:

Net gains and losses on financial assets mandatorily measured at fair value through profit or loss and financial liabilities held for trading Net gains and losses on financial assets and liabilities designated as at fair value through profit or loss Total	2022 2021 2,863,155 $ 2,884,118 $ 407,368 471,411 3,270,523 $ 3,355,529 $ For theyears ended December 31,	2022 2021 2,863,155 $ 2,884,118 $ 407,368 471,411 3,270,523 $ 3,355,529 $ For theyears ended December 31,
		2,884,118 $ 471,411
		3,355,529 $

B.The financial instruments of the Group designated at fair value through profit or loss upon initial recognition were designated to eliminate or reduce recognition inconsistency.
C.As of December 31, 2022 and 2021, without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount of debt investments were $152,342,515 and $172,861,594, respectively; and the maximum exposure to credit risk in respect of the amount of derivatives were $19,182,192 and $4,981,771, respectively.
D.As of December 31, 2022 and 2021, financial assets at fair value through profit or loss for trading purposes undertaken for repurchase agreements were $6,358,173 and $8,522,931, respectively.

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E. FLI’s financial assets that are designated using overlay approach were as follows:

Beneficiary certificates Listed stocks Unlisted stocks Bond investments	December 31,2022 1,415,809 $ 413,811 48,622 718,649 2,596,891 $	December 31,2021
		1,774,629 $ 1,966,418 - 493,032
		4,234,079 $

F. FLI’s financial assets that are designated using overlay approach, and were reclassified between profit or loss and other comprehensive income are as follows:

		For theyears ended	For theyears ended	December	31,
		2022		2021
Amount classified as (loss) profit after adopting IFRS 9	($	490,328)	$	250,713
Less: Amount classified as (loss) profit after adopting
IAS 39	(	253,244)		208,194
Other comprehensive (loss) income on reclassification
under overlay approach	($	237,084)	$		42,519
Effect from income tax	$	10,149	($		2,356)

G.Changes in FLI’s financial assets and liabilities at fair value through profit or loss due to overlay approach were as follows:

Loss (gain) from financial assets and liabilities before adjustment Loss (gain) from financial assets and liabilities after adjustment	For theyears ended December 31,	For theyears ended December 31,
	2022 2,848,003) ($ 2,610,919) ($	2021
		418,403 $
		375,884 $

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(4) Financial assets at fair value through other comprehensive income

)Financial assets at fair value through other comprehensive in	come
Debt instruments Bonds Other marketable securities Valuation adjustment Subtotal Equity instruments Stocks - listed Stocks - unlisted Other marketable securities Valuation adjustment Subtotal Total	December 31,2022 278,830,397 $ 4,063,502 282,893,899 10,134,702) ( 272,759,197 30,492,466 5,880,582 1,544,977 37,918,025 15,159,951 53,077,976 325,837,173 $	December 31,2021
		208,522,645 $ 5,154,819
		213,677,464 2,023,310
		215,700,774
		29,925,586 5,875,601 1,459,578
		37,260,765 18,714,302
		55,975,067
		271,675,841 $

A. The Group has selected to classify investments that are considered to be strategic investments or steady dividend income as financial assets at fair value through other comprehensive income. The fair value of such investments amounted to $53,077,976 and $55,975,067 as of December 31, 2022 and 2021, respectively.
B. For the years ended December 31, 2022 and 2021, the Group sold its investments in equity instruments measured at fair value through other comprehensive income whose fair value were $8,528,529 and $2,447,547, respectively, to adjust the investment portfolio in order to diversify, and the accumulated (loss) gain on disposal amounted to ($38,644) and $128,379, respectively.
C. For the years ended December 31, 2022 and 2021, the Group recognised dividend income arising from investments in equity instruments designated as at fair value through other comprehensive income in the amount of $2,531,802 and $1,791,544, respectively. As of December 31, 2022 and 2021, those related to investment held at the end of the period amounted to $2,140,009 and $1,689,204, respectively.
D. As of December 31, 2022 and 2021, financial assets at fair value through other comprehensive income undertaken for repurchase agreements were $10,662,805 and $4,874,605, respectively.
E. Please refer to Note 8 for details of the above financial assets at fair value through other comprehensive income pledged as collateral.
F. Information relating to credit risk is provided in Note 12(2)D.

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(5) Investments in debt instruments at amortised cost

Investments in debt instruments at amortised cost
Certificates of deposits purchased Bonds Short-term bills Others Subtotal Less: Accumulated impairment Total	December 31,2022 588,072,700 $ 218,355,731 - 337,252 806,765,683 49,524) ( ( 806,716,159 $	December 31,2021
		551,321,400 $ 153,537,428 138,275 202,345
		705,199,448 29,947)
		705,169,501 $

A. Amounts recognised in profit or loss in relation to financial assets at amortised cost are listed below:

		For theyears ended	For theyears ended	December	31,
		2022		2021
Interest income	$	9,664,870	$	5,933,454
(Impairment loss) reversal of impairment loss	(	18,512)			40,083
Loss on disposal of investments in debt
instruments	(	68,319)	(		10,117)
	$	9,578,039	$	5,963,420

B. In terms of risk management perspective, the Group sold its investments in debt instruments and the loss on disposal amounted to ($68,319) and ($10,117) for the years ended December 31, 2022 and 2021, respectively.
C. Please refer to Note 8 for details of the above financial assets at amortised cost pledged as collateral.
D. As of December 31, 2022 and 2021, the fair value of bonds purchased under resell agreements and bonds sold under repurchase agreements belonging to investments in debt instruments at amortised cost amounted to $6,091,285 and $5,698,528, respectively.
E. Information relating to credit risk is provided in Note 12(2)D.

(6) Securities purchased under resell agreements

Government bonds	December 31,2022 6,450,000 $	December 31,2021
		- $

As of December 31, 2022 and 2021, the fair value of the government bonds which were acquired as security for bills with a reverse repo and bond investment amounted to $6,455,541 and $0, respectively.

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(7) Receivables, net

)Receivables, net
Factoring receivable Interest receivable Acceptances receivable Margin loans receivable Credit card accounts receivable Accounts receivable for settlement Other receivables Subtotal Less: Allowance for doubtful accounts Net amount	December 31,2022 1,243,459 $ 13,701,428 4,887,350 5,354,004 9,424,551 3,984,797 11,128,847 49,724,436 1,037,730) ( 48,686,706 $	December 31,2021
		7,372,788 $ 7,207,183 4,767,713 8,018,341 8,359,579 8,238,348 10,651,308
		54,615,260 812,938) (
		53,802,322 $

Information relating to credit risk is provided in Note 12(2)D.

(8) Loans discounted, net

Information relating to credit risk is provided in Note 12(2)D. )Loans discounted, net
December 31,2022 Bills discounted and overdrafts 2,772,958 $ Short-term loans 608,642,001 Medium-term loans 869,272,964 Long-term loans 855,723,432 Import-export negotiations 812,830 Loans transferred to non-accrual loans 4,226,985 Insurance policy loans 425,870 Subtotal 2,341,877,040 Less: Allowance for doubtful accounts 29,515,676) ( Net amount 2,312,361,364 $	December 31,2021
	4,288,856 $ 557,569,950 711,263,334 782,563,846 1,280,177 4,043,243 392,240
	2,061,401,646 25,225,947) (
	2,036,175,699 $

A. Information relating to credit risk is provided in Note 12(2)D.

B. For the years ended December 31, 2022 and 2021, the collection of bad debts recovery were $2,539,276 and $3,012,424, respectively, and were recognised as a reversal of bad debt expense.

(9) Reinsurance contract assets, net

)Reinsurance contract assets, net
Claims recoverable from reinsurers Reinsurance reserve assets Ceded unearned premium reserve Ceded claims reserve Total	December 31,2022 33,105 $ 2,237 18,633 53,975 $	December 31,2021
		24,412 $ 2,048 17,754
		44,214 $

Please see Note 6(25)B for the changes in reinsurance reserve.

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(10) Investments accounted for using equity method, net

A. Investments accounted for using equity method:

vestments accounted for using equity method, net Investments accounted for using equity method:
IndividuallyImmaterial Associates East Asia Real Estate Management Co., Ltd. FCBL Capital International (B.V.I) Ltd. First Financial Assets Management (B.V.I) Ltd. Fertasia International Development Corporation Jiada International Development Co., Ltd. Changjia Energy Co., Ltd.	December 31,2022 16,863 $ 2,141,288 621,651 149,597 150,799 48,777 3,128,975 $	December 31,2021
		16,536 $ 2,021,499 602,995 150,421 149,532 -
		2,940,983 $

B. Share of the operating results of the Group’s immaterial associates recognised against shareholding was as follows:

shareholding was as follows:
	For theyears ended		December 31,
	2022		2021
Gain from continuing operations	76,272 $	$	99,911
Other comprehensive (loss) income	217,579) (		40,396
Total comprehensive (loss) income	141,307) ($	$	140,307

C. The affiliated enterprises invested by the Group have no quoted price. The affiliated enterprises’ capacity to transfer capital through the distribution of cash dividends, loan repayment or advances is not significantly restricted.
D. The share of profit or loss of associates accounted for using equity method of the Group in 2022 and 2021, was recognised based on the auditors’ reports of investees, except for East Asia Real Estate Management Co., Ltd., Fertasia International Development Co., Ltd., Jiada International Development Co., Ltd., and Changjia Energy Co., Ltd., which was recognised based on financial statements that were not audited by auditors (the Group assumed that the influence was also not significant even if the enterprises’ financial statements were audited by auditors).
E. FCB is the single largest shareholder of East Asia Real Estate Management Co., Ltd. with a 30% equity ownership. Given the other 4 large shareholders (non-related parties of FCB) hold more shares than FCB, indicating that FCB has no material impact on the relevant activities of East Asia Real Estate Management Co., Ltd., with its non-controlling rights on the company, in which FCB only has significant influence.
F. FVC is the single largest shareholder of Fertasia International Development Co., Ltd. with a 45% equity ownership. Given the other 3 large shareholders (non-related parties of FVC) hold more shares than FVC, indicating that FVC has no material impact on the relevant activities of Fertasia International Development Co., Ltd., with its non-controlling rights on the company, in which FVC only has significant influence.

312

G. FVC is the single largest shareholder of Jiada International Development Co., Ltd. with a 42.6% equity ownership. Given the other 4 large shareholders (non-related parties of FVC) hold more shares than FVC, indicating that FVC has no material impact on the relevant activities of Jiada International Development Co., Ltd., with its non-controlling rights on the company, in which FVC only has significant influence.
H. FVC is the single largest shareholder of Changjia Energy Co., Ltd. with a 49 % equity ownership. Given the other 2 large shareholders (non-related parties of FVC) hold more shares than FVC, indicating that FVC has no material impact on the relevant activities of Changjia Energy Co., Ltd., with its non-controlling rights on the company, in which FVC only has significant influence.

(11) Other financial assets, net

December 31,2022 Separate account product assets Securities 15,656,103 $ Bank deposits and other receivables 494,419 Non-accrual loans transferred from other accounts (excluding loans) 30,948 Customer margin accounts 1,288,946 Margin deposits for security borrowing - Others 271,332 Subtotal 17,741,748 Less: Allowance for doubtful accounts 31,400) ( Total 17,710,348 $	December 31,2021 18,287,195 $ 598,274 56,588 1,182,851 35,300 162,430 20,322,638 116,446) ( 20,206,192 $

A. Information relating to credit risk is provided in Note 12(2)D.
B. Please refer to Note 8 for details of the above other financial assets pledged as collateral.

313

(12) Investment property, net

Please see below table for the investment property of the Group for the years ended December 31, 2022 and 2021:

2022 and 2021:
		Land and land		Buildings and
		improvements		structures		Total
Cost
At January 1, 2022	$	10,565,367	$	1,860,719	$	12,426,086
Additions		212,173		78,173		290,346
Disposals	(	54,650)	(	39,407)	(	94,057)
At December 31, 2022 Accumulated depreciation		10,722,890		1,899,485		12,622,375
At January 1, 2022		-	(	463,141)	(	463,141)
Depreciation		-	(	40,053)	(	40,053)
Disposals		-		2,101		2,101
At December 31, 2022		-	(	501,093)	(	501,093)
Accumulated impairment
At January 1, 2022	(	8,917)	(	1,855)	(	10,772)
At December 31, 2022	(	8,917)	(	1,855)	(	10,772)
Investment property, net	$	10,713,973	$	1,396,537	$	12,110,510
		Land and land		Buildings and
		improvements		structures		Total
Cost
At January 1, 2021	$	9,985,442	$	1,613,505	$	11,598,947
Additions		933,426		232,905		1,166,331
Transfers	(	339,981)		40,734	(	299,247)
Disposals	(	13,520)	(	26,425)	(	39,945)
At December 31, 2021		10,565,367		1,860,719		12,426,086
Accumulated depreciation
At January 1, 2021		-	(	415,871)	(	415,871)
Depreciation		-	(	34,276)	(	34,276)
Transfers		-	(	17,295)	(	17,295)
Disposals		-		4,301		4,301
At December 31, 2021		-	(	463,141)	(	463,141)
Accumulated impairment
At January 1, 2021	(	8,917)	(	1,855)	(	10,772)
At December 31, 2021	(	8,917)	(	1,855)	(	10,772)
Investment property, net	$	10,556,450	$	1,395,723	$	11,952,173

314

A. As of December 31, 2022 and 2021, the investment property at fair value of the Group were $23,281,974 and $24,401,342, respectively. All the investment properties of the Group were assessed by the internal appraisal expert and independent appraiser. Assessments were made using the market approach and income approach. As of December 31, 2022 and 2021, the investment property categorised within Level 2 in the fair value hierarchy amounted to $17,813,099 and $19,126,483 respectively, while categorised within Level 3 in the fair value hierarchy amounted to $5,468,875 and $5,274,859, respectively.
B. For the years ended December 31, 2022 and 2021, the rental income from investment property were $241,940 and $224,122, respectively, the operating expenses from investment property were $100,068 and $90,926, respectively.
C. Details of the Group’s investment property pledged to others as collateral are provided in Note 8.
(Blank)

315

			Total		41,207,377 $	1,124,801	-	22,304) (	409,198) (	93,316		41,993,992		13,714,743) (	929,037) (	402,746	53,984) (		14,295,018) (	27,698,974 $
Construction in	progress and	prepayments for	equipment		98,426 $	340,664	124,168) (	22,632) (	-	1,871		294,161		-	-	-	-		-	294,161 $
	Machinery and	Land and land Buildings and computer Transportation Other Leasehold	improvements structures equipment equipment equipment improvements	Cost	At January 1, 2022 19,279,740 $ 13,537,384 $ 3,558,200 $ 833,714 $ 2,604,981 $ 1,294,932 $	Additions 55,030 225,263 258,173 113,480 96,099 36,092	Transfers - 79,244 7,580 682 2,657 34,005	Transfer in (out) (Note) - - 328 - - -	Disposals - - 215,745) ( 104,897) ( 59,411) ( 29,145) (	Foreign exchange 5,624 11,632 17,305 6,611 12,352 37,921		At December 31, 2022 19,340,394 13,853,523 3,625,841 849,590 2,656,678 1,373,805	Accumulated depreciation	At January 1, 2022 - 7,426,576) ( 2,574,140) ( 603,238) ( 2,024,393) ( 1,086,396) (	Depreciation - 333,958) ( 344,504) ( 61,116) ( 125,617) ( 63,842) (	Disposals - - 212,063 103,499 58,126 29,058	Foreign exchange - 3,020) ( 12,450) ( 4,402) ( 9,201) ( 24,911) (		At December 31, 2022 - 7,763,554) ( 2,719,031) ( 565,257) ( 2,101,085) ( 1,146,091) (	Net 19,340,394 $ 6,089,969 $ 906,810 $ 284,333 $ 555,593 $ 227,714 $

316

			Total		40,527,058 $	789,971	-	291,133	382,969) (	17,816) (	41,207,377		13,248,598) (	860,826) (	-	17,295	376,319	1,067	13,714,743) (	27,492,634 $
Construction in	progress and	prepayments for	equipment		145,444 $	81,838	98,782) (	30,074) (	-	-	98,426		-	-	-	-	-	-	-	98,426 $
		Leasehold	improvements		1,281,349 $	42,547	5,061	-	25,205) (	8,820) (	1,294,932		1,044,298) (	60,839) (	-	-	23,069	4,328) (	1,086,396) (	208,536 $
		Other	equipment		2,517,190 $	126,174	11	-	35,512) (	2,882) (	2,604,981		1,939,406) (	121,834) (	25	-	34,960	1,862	2,024,393) (	580,588 $
		Transportation	equipment		795,988 $	80,120	112	-	41,187) (	1,319) (	833,714		593,288) (	51,862) (	-	-	41,119	793	603,238) (	230,476 $
	Machinery and	computer	equipment		3,405,710 $	346,459	91,017	-	281,065) (	3,921) (	3,558,200		2,562,277) (	291,800) (	25) (	-	277,171	2,791	2,574,140) (	984,060 $
		Buildings and	structures		13,440,803 $	112,833	2,581	18,774) (	-	59) (	13,537,384		7,109,329) (	334,491) (	-	17,295	-	51) (	7,426,576) (	6,110,808 $
		Land and land	improvements		18,940,574 $	-	-	339,981	-	815) (	19,279,740		-	-	-	-	-	-	-	19,279,740 $
				Cost	At January 1, 2021	Additions	Transfers	Transfer in (out) (Note)	Disposals	Foreign exchange	At December 31, 2021	Accumulated depreciation	At January 1, 2021	Depreciation	Transfers	Transfer out	Disposals	Foreign exchange	At December 31, 2021	Net

317

(14) Leasing arrangements, lessee

A. The Group leases various assets including land, buildings and structures, machinery and computer equipment, and vehicles. Rental contracts are typically made for periods of 1 to 46 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. Other than leased assets may not be used as security for borrowing purposes, the lease agreements do not impose other covenants.
B. The carrying amount of right-of-use assets and the depreciation charge are as follows:

Buildings and structures Others DD Buildings and structures Others	December 31,2022 December 31,2021 Carryingamount Carryingamount 2,336,958 $ 2,238,825 $ 133,639 174,546 2,470,597 $ 2,413,371 $ 2022 2021 Depreciation charge Depreciation charge 695,574 $ 672,212 $ 77,271 75,911 772,845 $ 748,123 $ For theyears ended December 31,	December 31,2021
		Carryingamount
		2,238,825 $ 174,546
		2,413,371 $
		Depreciation charge
		672,212 $ 75,911
		748,123 $

C. For the years ended December 31, 2022 and 2021, the additions to right-of-use assets were $825,007 and $572,010, respectively.
D. The information on income and expense accounts relating to lease contracts is as follows:

		For theyears ended	For theyears ended	December 31,
		2022		2021
Items affecting profit or loss
Interest expense on lease liabilities	$	46,462	$	48,199
Expense on short-term lease contacts		94,667		121,300
Expense on leases of low-value assets		14,502		10,270
Expense on variable lease payments		8,517		6,210
Gain on lease modification		1,307		1,497

E. For the years ended December 31, 2022 and 2021, the Group’s total cash outflow for leases were $840,677 and $911,924, respectively.
(15) Leasing arrangements, lessor
A. Group leases various assets including land, buildings and structures, machinery, and vehicles. Rental contracts are typically made for periods of 1 to 16 years. Lease terms are negotiated on case-by-case basis and contain a wide range of different terms and conditions. To protect the lessor’s ownership on the leased assets, leased assets may not be used as guarantee for borrowing purposes, or a residual value guarantee was required.
B. The Group leases machinery and equipment, under a finance lease. Based on the terms of the lease contract, the ownership of machinery and equipment will be transferred to lessees when the leases expire. Information on profit or loss in relation to lease contracts is as follows:

318

Finance income from the net investment in the finance lease	For theyears ended December 31,	For theyears ended December 31,
	2022 33,380 $	2021
		2,695 $

C. The maturity analysis of the undiscounted lease payments receivables in the finance lease is as follows:

follows:
2023 2024 2025 2026 2027 Total	December 31,2022 320,598 $ 2022 236,768 2023 99,131 2024 22,541 2025 8,447 2026 687,485 $ Total	December 31,2021
		37,325 $ 17,885 3,836 1,435 -
		60,481 $

D. Reconciliation of the undiscounted lease payments and the net investment in the finance lease is provided as follows:

provided as follows:
Undiscounted lease payments Unearned finance income Net investment in the lease	December 31,2022 687,485 $ 69,504) ( ( 617,981 $	December 31,2021
		60,481 $ 1,524)
		58,957 $

E. For the years ended December 31, 2022 and 2021, the Group recognised rental income in the amounts of $794,879 and $831,979, respectively, which was based on the operating lease agreement, and did not include variable lease payment.
F. The maturity analysis of the lease payments receivables based on operating leases is as follows:

2023 2024 2025 2026 2027 2028 After 2029 Total	December 31,2022 DD 634,807 $ 2022 438,316 2023 322,524 2024 216,358 2025 118,777 2026 118,512 2027 107,302 After 2028 1,956,596 $ Total	December 31,2021
		723,167 $ 472,342 308,468 206,249 104,881 46,827 265,028
		2,126,962 $

319

(16) Other assets, net

Other assets, net
Leased assets Less: Accumulated depreciation Leased assets, net Foreclosed assets Cost Less: Accumulated impairment Net foreclosed assets Refundable deposits Operating guarantee deposits and settlement clearing funds Prepayments (Note) Collections for underwriting stock value Others Total	December 31,2022 978,517 $ 499,717) ( 478,800 32,025 32,025) ( - 1,210,916 1,354,173 1,866,754 258,384 164,603 5,333,630 $	December 31,2021
		1,377,157 $ 548,446) (
		828,711
		40,590 40,590) (
		-
		1,821,642 1,281,645 636,892 4,797,933 236,975
		9,603,798 $

Note: As of December 31, 2022 and 2021, prepayments for working capital of FCB's Frankfurt branches amounted to $1,276,800 and $0, respectively. The Frankfurt branch was officially opened on January 9, 2023.

A. The Group has assessed the impairment of refundable deposits, operating guarantee deposits and settlement clearing funds in accordance with related regulations, and no expected credit losses need to be recognised.
B. Please refer to Note 8 for details of the Group’s other assets pledged as collateral.

(17) Deposits from the central bank and banks

B. Please refer to Note 8 for details of the Group’s other as Deposits from the central bank and banks	sets pledged as collat	eral.
Financial liabilities at fair value through profit or loss Call loans from other banks Transfer deposits from Chunghwa Post Co. Overdrafts from other banks Due to other banks Due to the central bank Total Financial liabilities held for trading Derivative instruments Financial liabilities designated as at fair value through profit or loss Bonds investment Valuation adjustment Total	December 31,2022 270,010,626 $ 1,300 599,438 2,079,580 38,846 272,729,790 $ December 31,2022 13,353,888 $ 1,182,913 45,504) ( 14,491,297 $	December 31,2021
		211,439,837 $ 2,300 849,879 716,763 35,771 213,044,550 $
		December 31,2021
		8,117,688 $ - -
		8,117,688 $

(18) Financial liabilities at fair value through profit or loss

320

A. The financial instruments of FCB designated at fair value through profit or loss upon initial recognition were designated to eliminate or reduce recognition inconsistency.
B. For the years ended December 31, 2022 and 2021, the changes in the credit risk of the fair value belonging to financial debentures designated at fair value through profit and loss by the Group were $50,086 and $0, respectively.
C. The Group issued the financial debentures at the face value. As of December 31, 2022 and 2021, the carrying amounts exclusive of valuation adjustment and the amounts payable to the creditors were identical.

(19) Securities sold under repurchase agreements

creditors were identical. Securities sold under repurchase agreements
Government bonds Corporate bonds Bank debentures Total	December 31,2022 4,267,403 $ 4,673,248 13,788,484 22,729,135 $	December 31,2021
		3,464,877 $ 5,715,765 9,605,887
		18,786,529 $

The Group was obliged to repurchase the above bonds at original sale price plus a mark-up pursuant to the repurchase agreement. The repurchase agreement amounts for such bonds and bills were $22,887,700 and $18,797,243 as of December 31, 2022 and 2021, respectively.

(20) Commercial papers issued, net

Details of commercial papers issued not yet due were stated as follows:

Guarantor Commercial papers issued China Bills Finance Corporation 〃 Mega Bills Finance Co., Ltd. 〃 Yuanta Commercial Bank 〃 Union Bank of Taiwan Co., Ltd. 〃 Bank SinoPac Co., Ltd. 〃 Tachin Bills Finance Co., Ltd. 〃 Taiwan Finance Corporation 〃 Grand Bills Finance Corporation 〃 Taiwan Cooperative Bills Finance Corporation 〃 International Bills Finance Corporation 〃 KGI Bank 〃 Taishin Bank 〃 CTBC Bank 〃 Dah Chung Bills Finance Corporation Subtotal Less: discount on commercial papers issued Net commercial papers issued Interest rate (%)	December 31,2022 7,850,000 $ 2,750,000 1,790,000 1,400,000 1,000,000 800,000 800,000 700,000 500,000 300,000 250,000 200,000 200,000 150,000 18,690,000 47,170) ( 18,642,830 $ 1.000%~1.858%	December 31,2021 8,550,000 $ 6,100,000 1,200,000 1,000,000 300,000 1,630,000 600,000 1,600,000 1,110,000 400,000 - 950,000 - 450,000 23,890,000 12,653) ( 23,877,347 $ 0.300%~0.838%

321

(21) Payables

Payables
Deposits Accounts payable Bank acceptances Interest payable Accrued expenses Deposits received from securities borrowers Guaranteed price deposits received from securities borrowers Collections for others Accounts payable for settlement Other payables Total DD Checking accounts Demand deposits Time deposits Negotiable certificates of deposits Savings deposits Inward remittances Others Total	December 31,2022 20,462,513 $ 5,032,008 7,171,885 6,609,120 1,181,545 1,068,352 1,690,047 3,994,179 5,294,028 52,503,677 $ December 31,2022 58,794,008 $ 900,726,978 902,123,120 14,081,435 1,427,374,460 2,243,169 7,813 3,305,350,983 $	December 31,2021
		21,347,615 $ 5,019,534 1,936,761 6,242,922 705,789 825,120 2,105,703 8,363,124 5,709,222
		52,255,790 $
		December 31,2021
		56,907,173 $ 962,371,922 619,215,841 14,588,915 1,299,026,691 3,196,576 5,950
		2,955,313,068 $

(22) Deposits

(23) Bonds payable

A. Corporate bonds payable

In order to improve the Company’s financial structure, strengthen its capital adequacy ratio, and raise funds for mid-to-long-term operation, the Company’s Board of Directors resolved on July 26, 2018, to issue subordinated corporate bonds of $10 billion approved by the FSC. The holders of the subordinated corporate bonds shall take precedence over shareholders but would rank below other creditors in the event of liquidation. The detailed terms of issuance were as follows:

Issue date Issue amount Issue price Coupon rate Interest and repayment terms Maturity period	First issue,2018
	October 15, 2018 NT$10 billion At par Fixed rate:1.5% Interest is paid annually. The principal is to be paid pursuant to face value at maturity. 10 years

322

As of December 31, 2022 and 2021, the above-mentioned corporate bond was both unsecured subordinated bond of $10 billion, and the interest-bearing coupon rate was both 1.5%. The outstanding balances of the above-mentioned financial bonds amounted to $10 billion.

B.Bank notes payable

In order to strengthen the capital adequacy ratio and raise mid-to-long-term operating capital for FCB, FCB resolved through its Board of Directors to raise the quota of authorised financial bond shares for the issuance of senior and subordinate bonds. This proposition was approved by the Ministry of Finance, R.O.C. and the FSC. The gross approved issuance amount was: $15 billion on February 27, 2014, US $1 billion senior bonds on February 26, 2016(or equivalent foreign currency), $10 billion and equivalent to NT$10 billion equivalent foreign currency on February 24, 2017, $10 billion and equivalent to NT$10 billion equivalent foreign currency on February 23, 2018, modified the amount of the previous application of NTD perpetual non-cumulative subordinate financial bonds to $10 billion on May 11, 2018, senior bonds for $10 billion on December 20, 2019, $15 billion and equivalent to NT$5 billion equivalent foreign currency on September 18, 2020, perpetual non-cumulative subordinate financial bonds to NT$20 billion on May 12, 2021, and unsecured long-term subordinated bond of NT$10 billion on October 15, 2021. US $1 billion senior structured bonds on October 15, 2021(or equivalent foreign currency). The holders of the subordinated corporate bonds shall take precedence over the FCB shareholders but would rank below other FCB creditors in the event of liquidation. The detailed terms of each issuance were as follows:

ssuance were as follows:
Issue date Issue amount Issue price Coupon rate Interest and repayment terms Maturity period Issue date Issue amount Issue price Coupon rate Interest and repayment terms Maturity period	First issue,2015
	March 25, 2015 NT$7 billion(NT$0.65 billion was redeemed at maturity) At par Fixed rate 2.05% Interest is paid annually. The principal is to be paid pursuant to face value at maturity. 10 years First issue,2018
	May 28, 2018 NT$5 billion At par Fixed rate:2.57% Interest is paid annually. After the expiration of five years and two months, early redemption would be possible if it has approval from authority. Perpetual

323

Second issue, 2018 Issue date September 25, 2018 Issue amount NT$7 billion Issue price At par Coupon rate Fixed rate:2.36% Interest and repayment Interest is paid annually. After the expiration of five years and terms one month, early redemption would be possible if it has approval from authority. Maturity period Perpetual First issue, 2020 Issue date March 27, 2020 Issue amount NT$1 billion Issue price At par Coupon rate Fixed rate:0.55% Interest and repayment Interest is paid annually. terms The principal is to be paid pursuant to face value at maturity. Maturity period 3 years Second issue, 2020 Issue date December 28, 2020 Issue amount NT$10 billion Issue price At par Coupon rate Fixed rate:1.25% Interest and repayment Interest is paid annually. After the expiration of five years and terms seven months, early redemption would be possible if it has approval from authority. Maturity period Perpetual First issue, 2021 Issue date December 8, 2021 Issue amount NT$1 billion Issue price At par Coupon rate Fixed rate:0.52% Interest and repayment Interest is paid annually. terms The principal is to be paid pursuant to face value at maturity. Maturity period 5 years

324

Issue date Issue amount Issue price Coupon rate Interest and repayment terms Maturity period Issue date Issue amount Issue price Coupon rate Interest and repayment terms Maturity period Issue date Issue amount Issue price Coupon rate Interest and repayment terms Maturity period Issue date Issue amount Issue price Coupon rate Interest and repayment terms Maturity period	Second issue,2021
	December 22, 2021 NT$10 billion At par Fixed rate:1.40% Interest is paid annually. After the expiration of five years and seven months, early redemption would be possible if it has approval from authority. Perpetual First issue,2022
	March 22, 2022 NT$5 billion At par Fixed rate:1.05% Interest is paid annually. The principal is to be paid pursuant to face value at maturity. 10 years Second issue,2022
	March 25, 2022 NT$5 billion At par Fixed rate:1.70% Interest is paid annually. After the expiration of five years and four months, early redemption would be possible if it has approval from authority. Perpetual Third issue,2022
	August 22, 2022 US$18.8 million At par Combination of fixed interest rate and combined interest rate ( range accrual ) Interest is paid quarterly. The principal is to be paid pursuant to face value at maturity except for the issuer’s redemption. 1.5 years

325

Issue date Issue amount Issue price Coupon rate Interest and repayment terms Maturity period Issue date Issue amount Issue price Coupon rate Interest and repayment terms Maturity period	Fourth issue,2022
	August 22, 2022 US$19.7 million At par Combination of fixed interest rate and combined interest rate ( range accrual ) Interest is paid quarterly. The principal is to be paid pursuant to face value at maturity except for the issuer’s redemption. 5 years Fifth issue,2022
	September 19, 2022 NT$1.5 billion At par Fixed rate:1.50% Interest is paid annually. The principal is to be paid pursuant to face value at maturity. 5 years

As of December 31, 2022 and 2021, the range of interest rates of the above-mentioned corporate bonds were 0.52%~5.28% and 0.52%~2.57%, respectively.

As of December 31, 2022 and 2021, the outstanding balances of the above-mentioned financial bonds amounted to $53.033 billion and $47.80 billion, respectively. In addition, among the above-mentioned financial bonds, senior financial bonds with a face value of $1.183 billion, and $0 billion were designated at fair value through profit or loss, respectively.

(24) Other borrowings

(24)Other borrowings
(25)Provisions Credit borrowings Interest rate (%) Provision for insurance Provision for employee benefits Provision for guarantee liabilities Provision for loan commitments Other provisions Total	December 31,2022 7,600,000 $ 1.300%~1.754% December 31,2022 64,684,430 $ 2,488,451 1,507,312 750,858 331,342 69,762,393 $	December 31,2021
		390,000 $
		0.780%~0.820%
		December 31,2021
		53,470,876 $ 3,864,102 1,208,020 514,344 192,302
		59,249,644 $

326

A.Details of FLI’s provision for insurance as of December 31, 2022 and 2021, were as follows:

Policy reserve Unearned premium reserve Claim reserve Reserve for premium insufficiency Total	December 31,2022 64,186,281 $ 347,160 61,696 89,293 64,684,430 $	December 31,2021
		53,025,733 $ 272,769 58,764 113,610
		53,470,876 $

B.Details of FLI’s liability reserves for insurance contracts and financial instruments issued with a discretionary participation feature were as follows:

(A) Policy reserve:

a. Policy reserves are recognised and disclosed in accordance with accounting principles for insurance contracts. Except for payables to policyholders and variable unit-link products, the contract liabilities are measured on a discounted basis and reflect the interest expense over time. For the years ended December 31, 2022 and 2021, the balances of these liabilities were $232,624 and $172,910, respectively.
b.Details of policy reserve are as follows:

were $232,624 and $172,910, respectively. Details of policy reserve are as follows:
		December 31,2022			December 31,2021
Insurance contracts		$	49,305,098		$	41,258,191
Financial instruments with discretionary
participation features			14,877,307			11,764,594
Payables to policyholders			3,876			2,948
Total		$	64,186,281		$	53,025,733
Policy reserve fluctuation:
			For theyears ended			December 31,
			2022			2021
Beginning balance	$		53,025,733	$		44,068,933
Provision			14,660,655			11,963,782
Recovery	(		5,546,597)	(		2,674,580)
Income of surrender	(		180,559)	(		108,222)
Foreign currency exchange losses (gains)			2,226,122	(		224,089)
Payables to policyholders			927	(		91)
Ending balance	$		64,186,281	$		53,025,733

327

(B) Unearned premium reserve and ceded of unearned premium reserve fluctuation:

		For theyears ended	For theyears ended	December	31,
		2022		2021
Unearned premium reserve
Beginning balance	$	272,769	$	235,941
Provision		347,066		272,788
Recovery	(	272,768)	(	235,941)
Foreign currency exchange losses (gains)		93	(		19)
Ending balance	$	347,160	$	272,769
Ceded of unearned premium reserve
Beginning balance	$	2,048	$		2,079
Change in the period		187	(		31)
Foreign currency exchange losses		2			-
Ending balance	$	2,237	$		2,048

		For theyears ended December	For theyears ended December	31,
		2022	2021
Claim reserve
Beginning balance	$	58,764	$	54,991
Provision		114,928		94,831
Recovery	(	112,085)	(	91,051)
Foreign currency exchange losses (gains)		89	(	7)
Ending balance	$	61,696	$	58,764
Ceded of claim reserve
Beginning balance	$	17,754	$	15,040
Change in the period		879		2,714
Ending balance	$	18,633	$	17,754

FLI’s reported but not yet paid insurance claims are processed on a case-by-case basis, where the committed insured amount is estimated based on actual relevant data. Reserves are set aside every month according to insurance type, and reserves for settled claims are reversed. Reserves for reported but not yet paid insurance claims are appropriately assessed and should reflect the actual claim paid. Reserves for claims incurred but not reported are calculated by actuaries based on the methods for recognising unreported claim reserves used by FLI.

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(D) Reserves for premium insufficiency fluctuation:

Reserves for premium insufficiency fluctuation:
Details of liability adequacy reserve: Beginning balance Change in the period Foreign currency exchange losses (gains) Ending balance Liability reserve (Note 1) Unearned premium reserve (Note 2) Premium deficiency reserve Carrying amount of insurance liabilities within the testing scope Present estimate of future cash flows Balance of liability adequacy reserve		For theyears ended December 31,
	2022 113,610 $ 29,465) ( 5,148 89,293 $ December 31,2022 64,182,405 $ 346,329 89,293 64,618,027 $ 48,773,973 $ - $		2021 21,888 $ 92,831 1,109) ( 113,610 $ December 31,2021 53,022,785 $ 271,887 113,610 53,408,282 $ 41,467,302 $ - $

(E) Details of liability adequacy reserve:

NoteN1:Payables to policyholders were excluded.

NoteN2:Travel insurances and unearned premium reserve provided for non-guaranteed renewable one-year period policy were excluded. As of December 31, 2022 and 2021, the balance of reserves as aforementioned amounted to $831 and $881, respectively.

The method of FLI’s liability adequacy test is as follows:

December 31, 2022 Test method Gross premium valuations (GPV) Group Tested based on overall contract of the whole Group Adopted an actuarial assumption of the last actuarial report (the Description of significant 2021 actuarial report) as an assumption, discount rate is estimated assumptions taken into consideration the timely information. December 31, 2021 Test method Gross premium valuations (GPV) Group Tested based on overall contract of the whole Group Adopted an actuarial assumption of the last actuarial report (the Description of significant 2020 actuarial report) as an assumption, discount rate is estimated assumptions taken into consideration the timely information.

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C.Reserves for foreign exchange price (listed under other reserves) fluctuation:

Beginning balance Provision Compulsory deposits Additional deposits Subtotal Recovery ( Ending balance	For theyears ended December 31,	For theyears ended December 31,
	2022 94,494 $ 13,103 229,095 242,198 107,048) ( 229,644 $	2021
		81,452 $ 16,620 34,188
		50,808 37,766)
		94,494 $

D.Liability reserve for employee benefit of actuarial value was as follows:

Consolidated balance sheet - Defined benefit plans - Preferential savings plan for employees Total	December 31,2022 1,223,210 $ 1,182,775 2,405,985 $	December 31,2021
		2,532,814 $ 1,064,421
		3,597,235 $

(A) Defined contribution plans

Effective from July 1, 2005, the Group established a funded defined contribution plan pursuant to the Labor Pension Act, which covers the employees with R.O.C. nationality and those who choose to or are required to follow the Labor Pension Act. The contributions are made monthly based on not less than 6% of the employees’ monthly salaries and are deposited in the employee’s individual pension fund account at the Bureau of Labor Insurance. The payment of pension benefits is based on the employee’s individual pension fund accounts and the cumulative profit in such accounts, and the employees can choose to receive such pension benefits monthly or in lump sum. For the years ended December 31, 2022 and 2021, the pension costs of the Group under the defined contribution plan were $331,939 and $290,930, respectively. For employees working overseas, pension expenses under defined contribution plans are recognised according to the local regulations, for the years ended December 31, 2022 and 2021, overseas pension expenses for the current period amounted to $19,576 and $17,883, respectively.

(B) Defined benefit plans

The Group has a defined benefit pension plan set up in accordance with the Labor Standards Law of the R.O.C., covering all regular employees for their services prior to the implementation of the Labor Pension Act on July 1, 2005 and those employees who choose continuously to be applicable to the Labor Standards Law for the services after the implementation of the Labor Pension Act. The payment of pension benefits is based on the length of the service period and average monthly compensation in the last six months prior to retirement. Under the defined benefit plan, employees are granted two points for each year of service for the first 15 years and are granted one point for each additional year of service from the 16th year, but are subject to a maximum of 45 points. Monthly contributions made by the Group to the pension fund that are deposited in the designated pension account at the Bank of Taiwan were based on 2%~10% of the total monthly salaries and wages. Also, the Group would assess the balance in the aforementioned labor pension reserve account by the end of December 31, every year. If the account balance is insufficient to pay the pension

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calculated by the aforementioned method, to the employee expected to be qualified for retirement next year, the Group will make contributions to cover the deficit by the end of next March.

The net pension costs under defined contribution pension plans of the Group for the years ended December 31, 2022 and 2021, were $306,310 and $334,556, respectively. The aforementioned expenses are all recognised under “employee benefit expenses” within the consolidated statement of comprehensive income. The balance of the labor pension reserve account in the Bank of Taiwan amounted to $8,976,986 and $8,418,213, respectively.

a. The amounts recognised in the balance sheet are as follows:

Present value of defined benefit obligations Fair value of plan assets Net defined benefit liability Net asset in the balance sheet Net liability in the balance sheet	December 31,2022 10,255,626 $ 9,033,196) ( 1,222,430 $ 780 $ 1,223,210 $	December 31,2021 11,078,055 $ 8,545,490) ( 2,532,565 $ 249 $ 2,532,814 $

b.Changes in present value of defined benefit obligations are as follows:

b. Changes in present value of de		fined benefit obligati	ons are as follows:
Year ended December 31, 2022 Balance at January 1 Current service cost Interest expense (income) Remeasurements: Return on plan assets (excluding amounts included in interest income or expense) Actuarial gains or losses arising from change in demographic assumption Actuarial gains or losses arising from change in financial assumption Change in the effect on limit the amount of defined benefit asset to that of assets Experience adjustments Pension fund contribution Paid pension Balance at December 31		Present value of defined benefit obligations	Fair value of plan assets		Net defined benefit liability
	11,078,055 $ 264,369 62,793 11,405,217 - 141,556) ( 943,312) ( 809 538,461 545,598) ( - 603,993) ( 10,255,626 $		8,545,490) ($ - 49,374) ( 8,594,864) ( 677,646) ( - - - - 677,646) ( 364,679) ( 603,993 9,033,196) ($	2,532,565 $ 264,369 13,419 2,810,353 677,646) ( 141,556) ( 943,312) ( 809 538,461 1,223,244) ( 364,679) ( - 1,222,430 $

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Present value of defined benefit obligations Year ended December 31, 2021 Balance at January 1 12,035,996 $ Current service cost 297,904 Interest expense (income) 41,034 12,374,934 Remeasurements: Return on plan assets (excluding amounts included in interest income or expense) - Actuarial gains or losses arising from change in demographic assumption 160,224) ( Actuarial gains or losses arising from change in financial assumption 265,478) ( Change in the effect on limit the amount of defined benefit asset to that of assets 120) ( Experience adjustments 23,525) ( 449,347) ( Pension fund contribution - Paid pension 847,532) ( Balance at December 31 11,078,055 $	Fair value of plan assets		Net defined benefit liability
	8,513,163) ($ - 29,534) ( 8,542,697) ( 120,804) ( - - - - 120,804) ( 729,521) ( 847,532 8,545,490) ($	3,522,833 $ 297,904 11,500 3,832,237 120,804) ( 160,224) ( 265,478) ( 120) ( 23,525) ( 570,151) ( 729,521) ( - 2,532,565 $

c. The Bank of Taiwan was commissioned to manage the Fund of the Company’s and domestic subsidiaries’ defined benefit pension plan in accordance with the Fund’s annual investment and utilisation plan and the “Regulations for Revenues, Expenditures, Safeguard and Utilisation of the Labor Retirement Fund” (Article 6: The scope of utilisation for the Fund includes deposit in domestic or foreign financial institutions, investment in domestic or foreign listed, over-the-counter, or private placement equity securities, investment in domestic or foreign real estate securitisation products, etc.). With regard to the utilisation of the Fund, its minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. If the earnings is less than aforementioned rates, government shall make payment for the deficit after being authorised by the Regulator. The Company has no right to participate in managing and operating that fund and hence the Company is unable to disclose the classification of plan asset fair value in accordance with IAS 19 paragraph 142. As of December 31, 2022 and 2021, the Company’s and its domestic subsidiaries’ actual return on plan assets were $727,020 and $150,338, respectively.

As of December 31, 2022 and 2021, defined benefit plan recognised through “other comprehensive income remeasurement” were $1,223,244 and $569,902, respectively, for net defined benefit liability.

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d.The principal actuarial assumptions used were as follows:

Discount rate Future salary increases Future death rate (Note)	For theyears ended December 31,	For theyears ended December 31,
	2022 0.50%~1.80% 1.50%~2.00% 6th	2021
		0.30%~0.58% 1.50%~2.00% 5th~6th

Note : Assumption on future death rate is based on the historical life chart by the Taiwan life insurance enterprises.

Because the main actuarial assumption changed, the present value of defined benefit obligation is affected. The analysis was as follows:

	Impact on thepresent	Impact on thepresent	value of the defined benefit obligation	value of the defined benefit obligation	value of the defined benefit obligation
		Positive change in		Negative change in
	Change in actuarial		actuarial		actuarial
	assumption(%)		assumption		assumption
December 31, 2022
Discount rate	±0.25%	($	230,927)	$	238,954
Future salary increases	±0.25%	$	238,341	($	231,474)
December 31, 2021
Discount rate	±0.25%	($	270,556)	$	280,656
Future salary increases	±0.25%	$	277,339	($	268,769)

The sensitivity analysis above is based on the condition that only one assumption is changed while all other assumptions remain unchanged. In practice, such an assumption may not occur and correlations may exist for each assumption. The analysis for the impact on the present value of the employee preferential savings plan obligation elects the projected unit credit method for measurement.

e. Expected contributions to the defined benefit pension plan of the Company for the year ended December 31, 2023 amount to $437,492.
f. As of December 31, 2022 and 2021, the weighted average duration of the retirement plan is 6.00~11.10 years and 7.11~12.30 years, respectively.
(C) Employee stock ownership trust

On January 17, 2019, FCB started an employee savings and Employee Stock Ownership Trust (ESOT) programs. In accordance with the rules of the programs, regular employees of the FCB who have been employed for more than nine months (excluding local employees hired by overseas units) could apply for monthly deposits into the trust accounts for investment under the management of the First Bank Employee Savings and Stock Ownership Committee and apply for withdrawal of the trusted stock upon retirement, resignation, or meeting other withdrawal conditions from the Committee. FCB recognised pension expenses amounting to $89,800 and $88,521 according to aforementioned programs for the years ended December 31, 2022 and 2021, respectively.

(D) Employee preferential savings plan

The obligation for FCB to pay an allotment for preferential savings of retired and current employees after retirement is in accordance with “First Commercial Bank’s preferential savings plan for retired employees”. For the years ended December 31, 2022 and 2021, the recognised pension costs for the above-mentioned employees subject to the preferential savings plan were $628,104 and $642,172, respectively. Please see Note 4(22)B for details.

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a. As of December 31, 2022 and 2021, net liability in the balance sheet amounted to $1,182,775 and $1,064,421, respectively.
b. Change in net defined benefit liabilities are as follows:

Year ended December 31, 2022 Balance at January 1 Interest expense Remeasurements (Note): Change in demographic assumptions Change in financial assumptions Experience adjustments Pension fund contribution Paid pension Balance at December 31 Year ended December 31, 2021 Balance at January 1 Interest expense Remeasurements (Note): Change in demographic assumptions Experience adjustments Pension fund contribution Paid pension Balance at December 31	Present value of defined benefit obligations 1,064,421 $ 40,139 1,104,560 118,338 20,894) ( 235,627 333,071 - 254,856) ( 1,182,775 $ Present value of defined benefit obligations	Present value of defined benefit obligations 1,064,421 $ 40,139 1,104,560 118,338 20,894) ( 235,627 333,071 - 254,856) ( 1,182,775 $ Present value of defined benefit obligations		Fair value of plan assets		Net defined benefit liability
			- $ - - - - - - 254,856) ( 254,856 - $ Fair value of plan assets		1,064,421 $ 40,139 1,104,560 118,338 20,894) ( 235,627 333,071 254,856) ( - 1,182,775 $ Net defined benefit liability
		915,523 $ 34,261 949,784 122,787 247,057 369,844 - 255,207) ( 1,064,421 $	- $ - - - - - 255,207) ( 255,207 - $		915,523 $ 34,261 949,784 122,787 247,057 369,844 255,207) ( - 1,064,421 $

Note : Return on plan assets excluding amounts included in interest income or expense.

c.For the years ended December 31, 2022 and 2021, there were no actuarial loss recognised in other comprehensive income.

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d.The actuarial assumptions of employee preferential savings plan are as follows:

Discount rate Return on capital deposited Annual decreasing ratio of account balance Variable ratio of preferential savings program	2022 4.00% 2.00% 1.00% 50.00%	2021
		4.00% 2.00% 1.00% 50.00%

Assumptions on future mortality rate for 2022 and 2021 are based on the 6[th] and the 5[th] historical life chart by the Taiwan life insurance enterprises, respectively.

The analysis for the impact on the present value of the employee preferential savings plan obligation as a result of changes in the primary actuarial assumption is as follows:

	Impact on the present	Impact on the present	value of the employee preferential	value of the employee preferential	value of the employee preferential
		savingsplan obligation
		Positive change in		Negative change in
	Change in actuarial		actuarial		actuarial
	assumption(%)		assumption		assumption
December 31, 2022
Discount rate of
employee preferential
savings	±0.25%	($	21,891)	$	22,659
Return rate of capital
deposited	±0.25%	($	170,565)	$	170,565
Annual diminishing rate
of account balance	±0.25%	($	21,567)	$	22,242
Potential future variable
possibility of employee
preferential saving	±10.00%	$	236,555	($	236,555)

	Impact on the present	Impact on the present	value of the employee preferential	value of the employee preferential	value of the employee preferential
		savingsplan obligation
		Positive change in		Negative change in
	Change in actuarial		actuarial		actuarial
	assumption(%)		assumption		assumption
December 31, 2021
Discount rate of
employee preferential
savings	±0.25%	($	18,072)	$	18,660
Return rate of capital
deposited	±0.25%	($	149,191)	$	149,190
Annual diminishing rate
of account balance	±0.25%	($	17,695)	$	18,202
Potential future variable
possibility of employee
preferential saving	±10.00%	$	212,884	($	212,885)

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The sensitivity analysis above is based on the condition that only one assumption is changed while all other assumptions remain unchanged. In practice, such an assumption may not occur and correlations may exist for each assumption. The analysis for the impact on the present value of the employee preferential savings plan obligation adopts the projected unit credit method for measurement.

e.FCB expects contributions to the employee preferential savings plan of FCB for the year ending December 31, 2023 amount to $122,567.
E. Provisions for guarantee liabilities and loan commitments, the information relating to credit risk is provided in Note 12(2)D.

(26) Other financial liabilities

E. Provisions for guarantee liabilities and loan commitment is provided in Note 12(2)D. Other financial liabilities	s, the information rela	ting to credit risk
Other liabilities Received principal of structured notes Insurance product liabilities for separate accounts Others Total Deposits received Collections in advance Collections for underwriting stock value Temporary receipts and suspense accounts Others Total	December 31,2022 65,188,160 $ 16,150,522 1,865,869 83,204,551 $ December 31,2022 6,227,183 $ 1,929,750 258,373 452,335 147,653 9,015,294 $	December 31,2021
		39,962,682 $ 18,885,469 1,319,086
		60,167,237 $
		December 31,2021
		2,269,067 $ 2,237,098 4,797,922 458,937 129,752
		9,892,776 $

(27) Other liabilities

(28) Equity

A. Common stock

As of December 31, 2022, the Company’s authorised capital and paid-in capital were $200,000,000 and $132,234,423, respectively, consisting of 13,223,442 thousand shares of common stock outstanding with a par value of $10 (in dollars) per share.

On April 29, 2021, the shareholders’ meeting approved the capitalisation of the unappropriated earnings in the amount of $1,283,580 as resolved by the Board of Directors on July 20, 2021, and the record date for capital increase is September 3, 2021. The paid-in and authorised capital are $200,000,000 and $129,641,591, respectively, and the outstanding shares amounted to 12,964,159 thousand shares with par value of $10 (in dollars).

On April 21, 2022, the shareholders’ meeting approved the capitalisation of the unappropriated earnings in the amount of $2,592,832 as resolved by the Board of Directors on June 17, 2022, and the record date for capital increase is August 12, 2022. The paid-in and authorised capital are $200,000,000 and $132,234,423, respectively, and the outstanding shares amounted to 13,223,442 thousand shares with par value of $10 (in dollars).

B. Capital surplus

As required by the Company Act, additional paid-in capital resulting from the amount received in excess of par value of the issuance of capital stock and donated income may not only be used to offset the accumulated losses but also to issue new shares or distribute cash dividends in

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proportion to the number of shares being held by original shareholders. In addition, according to the Securities and Exchange Act, the additional paid-in capital used for capital increase shall not exceed 10% of total issued capital stock. A company should not use the capital surplus to cover its capital loss, unless the surplus reserve is insufficient.

As of December 31, 2022 and 2021, the details on the Company’s capital surplus were as follows:

Share premium Share-based payments Difference between consideration and carrying amount of subsidiaries acquired Total	December 31,2022 25,720,167 $ 196,054 190,997 26,107,218 $	December 31,2021
		25,720,167 $ 196,054 190,997
		26,107,218 $

C. Legal reserve and special reserve

a. Legal reserve

According to the Company Act of the R.O.C., except for covering accumulated deficit or issuing new stocks or cash to shareholders in proportion to their share ownership, the legal reserve shall not be used for any other purpose. The use of legal reserve for the issuance of stocks or cash to shareholders in proportion to their share ownership is permitted, provided that the distribution of the reserve is limited to the portion in excess of 25% of the Company’s paid-in capital.

b. Special reserve

Upon the first-time adoption of the IFRSs, the Company shall provision special reserve in accordance with Financial-Supervisory-Securities-Corporate Letter No. 1010012865 dated April 6, 2012. For subsequent consumptions, disposals or reclassifications of related assets, the Company shall reverse special reserve in proportion to such activities. If the aforementioned related assets are investment properties, for those that are land, special reserve reversals are performed when land is disposed or reclassified; for those other than land, special reserve reversals are performed throughout the useful life of such investment properties. In addition, the requirement for security firms to provision “trading loss reserve” and “default loss reserve” was abolished by “Regulations Governing Securities Firms”. “Trading loss reserve” and “default loss reserve” provisioned prior to the end of December 2010 should be transferred to “special reserve” in accordance with Financial-Supervisory-Securities-Firms Letter No. 0990073857 dated January 11, 2011. Such transferred amounts to special reserve shall not be used for purposes other than covering an entity’s losses or, when accumulated special reserve reaches 50% of the amount of paid-in capital, half of special reserve may be used for capitalisation. Such transferred amounts to special reserve shall not be used for purposes other than covering an entity’s losses or, when accumulated special reserve reaches 50% of the amount of paid-in capital, half of special reserve may be used for capitalisation.

(29) Unappropriated earnings

A.In accordance with the Company’s Articles of Incorporation, the current year’s earnings, if any, shall first be used to pay all taxes and offset prior years’ operating losses and then set aside legal reserve and special reserve in accordance with regulations and actual business needs. The remainder, if any, may be combined with prior year accumulated undistributed earnings as distributable stockholders’ dividends and bonuses, which shall be 30% to 100% of the distributable amount. The distribution resolution shall be proposed by the Board of Directors for the approval of the stockholders at their stockholders’ meeting.

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Cash dividends and stock dividends are distributed according to the Company’s operational planning. However, cash dividends shall account for at least 10% of the total stock dividends and bonus distributed and the remaining will be accounted for as stock dividends. In case cash dividend per share is less than $0.1, cash dividends and stock dividends are not distributed unless otherwise resolved by the stockholders at their stockholders’ meeting.

B. The appropriation of 2021 and 2020 earnings were resolved by the stockholders at the stockholders’ meeting dated June 17, 2022 and July 20, 2021, respectively. Relevant information was as follows:

was as follows:
Legal reserve Cash dividends on common stock Stock dividends on common stock	Earnings distribution 2,032,354 $ 12,964,159 2,592,832 17,589,345 $ Year	Dividend per share (NT dollar) 2021		Year	Dividend per share (NT dollar) 2020
				Earnings distribution
			- $ 1.00 0.20 1.20 $	1,642,046 $ 11,552,221 1,283,580 14,477,847 $		- $ 0.90 0.10 1.00 $

(30) Other equity interest

Balance at January 1, 2022 Financial assets at fair value through other comprehensive loss Valuation adjustment Change of accumulated impairment Realised Exchange difference on the financial statements of foreign entities Share of the profit or loss of associates accounted for using the equity method Reserve of overlay approach Effect from income tax Balance at December 31, 2022	Exchange differences on translation of foreign financial statements	Gains or losses on financial assets at fair value through other comprehensive income	Reserve of overlay approach Total 24,491 $ 13,625,666 $ - 16,299,119) ( - 598 - 586,698 - 6,360,925 - 217,579) ( 237,084) ( 237,084) ( 10,149 809,818 202,444) ($ 4,629,923 $	Total
	7,079,869) ($ - - - 6,360,925 217,579) ( - - 936,523) ($	20,681,044 $ 16,299,119) ( 598 586,698 - - - 799,669 5,768,890 $
				4,629,923 $

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Balance at January 1, 2021 Financial assets at fair value through other comprehensive loss Valuation adjustment Change of accumulated impairment Realised Exchange difference on the financial statements of foreign entities Share of the profit or loss of associates accounted for using the equity method Reserve of overlay approach Effect from income tax Balance at December 31, 2021	Exchange differences on translation of foreign financial statements	Gains or losses on financial assets at fair value through other comprehensive income	Reserve of overlay approach Total 15,672) ($ 19,057,000 $ - 2,800,267) ( - 22,226) ( - 1,512,883) ( - 1,287,946) ( - 40,396 42,519 42,519 2,356) ( 109,073 24,491 $ 13,625,666 $	Total
	5,832,319) ($ - - - 1,287,946) ( 40,396 - - 7,079,869) ($	24,904,991 $ 2,800,267) ( 22,226) ( 1,512,883) ( - - - 111,429 20,681,044 $
				13,625,666 $

(31) Net interest revenue

Net interest revenue ce at December 31, 2021 7,079,869) ($ 20,68 $	1,044	24,491 $ $	24,491 $ $	13,625,666
		For theyears ended		December 31,
		2022		2021
Interest income
Interest income on loans discounted	$	48,176,283	$	34,295,158
Interest income on deposits and call loans		3,088,016		951,419
Interest income on securities investment		13,829,019		8,718,194
Revolving interest income on credit cards		194,551		185,922
Interest income on margin trading and short selling		321,301		355,125
Interest income on repo trade		69,444		47,738
Other interest income		375,747		292,523
Subtotal		66,054,361		44,846,079
Interest expense
Interest expense for deposits	(	20,330,380)	(	7,921,669)
Interest expense for deposits of central banks and
others	(	5,824,594)	(	1,257,506)
Coupon payment on financial debenture	(	894,446)	(	689,510)
Coupon payment on corporate bonds	(	150,000)	(	150,000)
Interest expense of bonds payable under repurchase
agreements	(	303,274)	(	54,338)
Interest expense on structured notes	(	152,182)	(	43,520)
Other interest expense	(	430,338)	(	141,254)
Subtotal	(	28,085,214)	(	10,257,797)
Total	$	37,969,147	$	34,588,282

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(32) Net service fee revenue and commissions

)Net service fee revenue and commissions
		For theyears ended		December 31,
		2022		2021
Service fee income
Trust business and affiliated business	$	2,493,230	$	3,017,668
Insurance agency		1,603,471		1,206,338
Foreign exchange		757,352		762,214
Credit extension		2,107,089		1,850,935
Credit card		1,290,744		1,063,607
Brokerage		1,516,586		2,457,010
Management fee and sales income		649,092		681,546
Deposits and remittances and others		1,697,150		1,710,858
Subtotal		12,114,714		12,750,176
Service fee expense
Trust business and affiliated business	(	291,952)	(	301,100)
Insurance agency	(	367,697)	(	299,277)
Credit card	(	919,589)	(	714,134)
Brokerage	(	134,895)	(	201,867)
Deposits and remittances and others	(	991,522)	(	850,721)
Subtotal	(	2,705,655)	(	2,367,099)
Total	$	9,409,059	$	10,383,077

Note :

A. As of December 31, 2022 and 2021, the fee income generated by the Bank and its subsidiaries concurrently in electronic payment business amounted to $463 and $653, respectively.
B. As of December 31, 2022 and 2021, bank subsidiary booked interest of $2 and $0, respectively, in which the fund utilization from electronic payment business that bank subsidiary concurrently operates and in accordance with Article 4 of “Regulations Governing the Organization and Administration of Sinking Fund Established by Electronic Payment Institutions”.

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(33) Net insurance revenue

Net insurance revenue
		For theyears ended		December 31,
		2022		2021
Income on insurance business
Direct premium	$	14,910,918	$	12,428,434
Reinsurance premium expense	(	93,997)	(	78,407)
Net change in unearned premium reserve	(	74,111)	(	36,878)
Self-retained matured premium income		14,742,810		12,313,149
Separate account products (expenses) revenues	(	363,211)		3,193,014
Subtotal		14,379,599		15,506,163
Expense on insurance business
Policy claims and payment	(	5,778,636)	(	2,808,182)
Claims recovered from reinsurers		38,776		39,004
Self-retained claims and payment	(	5,739,860)	(	2,769,178)
Underwriting expenses	(	357)	(	253)
Expense on insurance stabilisation fund	(	22,367)	(	18,643)
Separate account products revenue (expenses)		363,211	(	3,193,014)
Subtotal	(	5,399,373)	(	5,981,088)
Total	$	8,980,226	$	9,525,075

(Blank)

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(34) Gain on financial assets and liabilities at fair value through profit or loss

)Gain on financial assets and liabilities at fair value thr	ough pr	ofit or loss	ofit or loss
		For theyears ended		December 31,
		2022		2021
Gain and loss on disposal of financial assets and
liabilities at fair value through profit or loss
Short-term bills	($	147,404)	($	261,336)
Bonds	(	152,454)		350,325
Stocks	(	266,274)		532,846
Interest rate	(	279,185)	(	50,126)
Exchange rate		1,621,710		1,630,042
Options		195,317		161,297
Futures		22,663		64,807
Other	(	119,603)		69,093
Subtotal		874,770		2,496,948
Evaluation gain and loss on financial assets and
liabilities at fair value through profit or loss
Short-term bills		6,849		1,106
Bonds	(	976,188)	(	181,753)
Stocks	(	180,425)		93,025
Interest rate	(	28,004)		20,764
Exchange rate		593,854	(	595,037)
Options		42,990		10,334
Futures	(	13,675)	(	5,358)
Other		211,682	(	222,363)
Credit risk valuation adjustment	(	9,069)		14,161
Subtotal	(	351,986)	(	865,121)
Interest income on financial assets at fair value
through profit or loss		2,586,604		1,581,376
Interest expense on financial liabilities at fair value
through profit or loss	(	19,441)		-
Dividend income on financial assets at fair value
through profit or loss		180,576		142,326
Total	$	3,270,523	$	3,355,529

Net income on exchange rate instruments is realised and unrealised gain and loss on spot and forward exchange contracts, FX options and FX futures.

Interest-linked instruments include interest rate swaps, money market instruments, interest-linked options and other interest related instruments.

342

(35) Realized gains on financial assets at fair value through other comprehensive income

(35)Realized gains on financial assets at fair value through ot	her c	omprehensive incom	omprehensive incom	omprehensive incom	e
		For theyears ended			December	31,
		2022			2021
Dividend income	$	2,531,802	$		1,791,544
Gain on disposal bonds	(	548,054)			1,384,504
Total	$	1,983,748	$		3,176,048
(36)(Impairment loss) reversal of impairment loss on assets
		For theyears ended			December	31,
		2022			2021
Reversal of impairment loss on debt instruments at
fair value through other comprehensive income	$	435		$		21,480
(Impairment loss) reversal of impairment loss on
debt instruments amortised at cost	(	18,512)				40,083
Reversal of impairment loss (impairment loss) on other
assets		7,065	(			7,269)
Reversal of impairment loss on foreclosed assets		5,107				12,742
Total	($	5,905)		$		67,036
(37)Other revenue other than interest income
		For theyears ended			December	31,
		2022			2021
Income from sale of non-performing loans	$	125,784	$		100,710
Net income and loss from rent		145,152			155,981
Gain on disposal of property		1,521				1,550
Loss on retired assets	(	6,452)	(			6,650)
Net change in provisions for foreign exchange price
fluctuation	(	135,151)	(			13,042)
Net income and loss from overdue accounts and other		283,400			157,340
Net gain on sale of foreclosed assets		343				4,348
Total	$	414,597	$		400,237
(38)Net change in provisions for insurance liabilities
		For theyears ended			December	31,
		2022			2021
Net change in claim reserve	$	1,964	$			1,066
Net change in liabilities reserve		8,933,499			9,180,980
Net change in insufficient premium reserve	(	29,465)				92,831
Net change in provision for insurance contracts with
the nature of financial instruments		-	(			42)
Total	$	8,905,998	$		9,274,835

343

(39) Employee benefits expenses

)Employee benefits expenses
Salary expense Labor and health insurance expense Pension expense Directors’ remuneration Other employee benefit Total	For theyears ended December 31,
	2022 14,956,634 $ 858,390 1,375,729 243,048 385,112 17,818,913 $	2021
		14,570,139 $ 809,609 1,374,062 237,387 340,422
		17,331,619 $

A.The calculation for the employee benefit expense were based on the number of employees of 10,131 and 10,006 as of December 31, 2022 and 2021, respectively. The basis for calculation of number of employees was consistent with excluding pension expenses with preferential interest deposit for retired employees (Pension expenses included preferential interest deposit for retired employees amounted to $628,104 and $642,172 for the years ended December 31, 2022 and 2021, respectively.).
B.According to the Articles of Incorporation, a ratio of distributable profit of the current year shall be distributed as employees’ compensation and directors’ remuneration. The ratio shall be 0.02%0.15% for employees’ compensation and the ratio for directors’ remuneration shall not be higher than 1%. However, the Company’s accumulated losses shall be covered first.
C.For the years ended December 31, 2022 and 2021, the Company’s estimated employees’ compensation and directors’ remuneration were $218,491 and $209,541, respectively; the aforementioned amounts were accounted for under employee benefit expenses.

Current year earnings (i.e. net income before tax less distributed employees’ compensation and directors’ remuneration) shall cover cumulative deficits first, the balance, if any, apply a rate of 0.02% to 0.15% to determine employees’ compensation and applied a rate that does not exceed 1% as directors’ remuneration.

D.The distributed amount of employees’ and directors’ remuneration for 2021 resolved at the Board of Directors’ meeting was $189,525 in 2022. As compared to the recognised amount of $209,541 in the 2021 consolidated financial statements, there was a decrease of $20,016. The amount was due to estimated differences and is treated as a change in accounting estimate, where the difference was recognised as profit or loss in 2022.
E. Information about employees’ compensation and directors’ remuneration of the Company as resolved by the Board of Directors and shareholders’ meeting will be posted on “Market Observation Post System” at the website of the Taiwan Stock Exchange.

(40) Depreciation and amortisation expense

)Depreciation and amortisation expense
Depreciation Amortisation Total	For theyears ended December 31,
	2022 1,741,935 $ 501,945 2,243,880 $	2021
		1,643,225 $ 436,167
		2,079,392 $

344

(41) Other general and administrative expenses

Other general and administrative expenses
Taxes and user fees Rental Insurance premium Printing, binding and advertisement Professional service Computer software service Post and electricity Others Total	For theyears ended December 31,
	2022 2,799,079 $ 127,503 696,091 625,900 413,238 663,718 436,387 1,962,477 7,724,393 $	2021
		2,300,230 $ 143,205 617,119 502,834 433,057 535,477 413,916 1,917,834
		6,863,672 $

(42) Income tax expense

A. Income tax expense

(A) Components of income tax expense:

e tax expense me tax expense Components of income tax expense:	$	1,962,477 7,724,393 $	1,962,477 7,724,393 $	1,917,834 6,863,672
		For theyears ended		December 31,
		2022		2021
Current tax
Current tax on profit for the period	$	4,096,630	$	3,497,763
Adjustments for over provisions of
prior years’ income tax expense and others		127,599	(	42,187)
Total current tax		4,224,229		3,455,576
Origination and reversal of temporary differences	(	333,288)		238,823
Income tax expense	$	3,890,941	$	3,694,399

(B) The tax under other comprehensive income:

The tax under other comprehensive income: Income tax expense	3,890,941 $ $	3,890,941 $ $	3,890,941 $ $	3,694,399
	For the years ended			December 31,
		2022		2021
Unrealised gains on financial assets and others	$	809,818	$	109,073
Remeasurement of defined benefit obligations	(	244,649)	(	114,031)

345

B. Details of reconciliation between income tax expense and accounting profit:

Income tax from pretax income calculated at regulated tax rate Adjustments of items not recognised under relevant regulations Adjustments for over provisions of prior years’ income tax expense and others Adjusted effects on income tax exemption and other income tax Income tax expense	2022 2021 4,706,959 $ 4,869,845 $ 4,674 17,797 124,460 42,088) ( 945,152) ( 1,151,155) ( 3,890,941 $ 3,694,399 $ For theyears ended December 31,

relevant regulations 4,674 17,797 Adjustments for over provisions of prior years’ income tax expense and others 124,460 42,088) ( Adjusted effects on income tax exemption and other income tax 945,152) ( 1,151,155) ( Income tax expense 3,890,941 $ 3,694,399 $	relevant regulations 4,674 17,797 Adjustments for over provisions of prior years’ income tax expense and others 124,460 42,088) ( Adjusted effects on income tax exemption and other income tax 945,152) ( 1,151,155) ( Income tax expense 3,890,941 $ 3,694,399 $	relevant regulations 4,674 17,797 Adjustments for over provisions of prior years’ income tax expense and others 124,460 42,088) ( Adjusted effects on income tax exemption and other income tax 945,152) ( 1,151,155) ( Income tax expense 3,890,941 $ 3,694,399 $	relevant regulations 4,674 17,797 Adjustments for over provisions of prior years’ income tax expense and others 124,460 42,088) ( Adjusted effects on income tax exemption and other income tax 945,152) ( 1,151,155) ( Income tax expense 3,890,941 $ 3,694,399 $	relevant regulations 4,674 17,797 Adjustments for over provisions of prior years’ income tax expense and others 124,460 42,088) ( Adjusted effects on income tax exemption and other income tax 945,152) ( 1,151,155) ( Income tax expense 3,890,941 $ 3,694,399 $
C. Amounts of deferred tax assets or liabilities as a result of temporary difference and loss carryforward are as follows: January1 Recognised in profit or loss Recognised in other comprehensive income December 31 Deferred tax assets: Temporary differences The excess of allowance for doubtful accounts 999,538 $ 385,662 $ - $ 1,385,200 $ Impairment loss of foreclosed assets 9,798 2,701) ( - 7,097 Unappropriated employee benefit liabilities reserve 773,203 40,432 244,604) ( 569,031 FCB’s overseas branches and subsidiaries 660,866 471,424 58,858 1,191,148 Others 341,880 181,990) ( 628,854 788,744 Loss carryforwards - 315,031 - 315,031 Subtotal 2,785,285 1,027,858 443,108 4,256,251 Deferred tax liabilities: Temporary differences Increment tax on land value 5,692,710 - - 5,692,710 Unrealised gains on financial assets 521,418 649,682 122,106) ( 1,048,994 Others 642,387 44,888 45 687,320 Subtotal 6,856,515 694,570 122,061) ( 7,429,024 Total 4,071,230) ($ 333,288 $ 565,169 $ 3,172,773) ($ 2022

		2022
	January1 999,538 $ 9,798 773,203 660,866 341,880 - 2,785,285 5,692,710 521,418 642,387 6,856,515 4,071,230) ($	Recognised in profit or loss	Recognised in other comprehensive income - $ - 244,604) ( 58,858 628,854 - 443,108 - 122,106) ( 45 122,061) ( 565,169 $	December 31
		385,662 $ 2,701) ( 40,432 471,424 181,990) ( 315,031 1,027,858 - 649,682 44,888 694,570 333,288 $		1,385,200 $ 7,097 569,031 1,191,148 788,744 315,031
				4,256,251
				5,692,710 1,048,994 687,320
				7,429,024
				3,172,773) ($

346

2021

Deferred tax assets: Temporary differences The excess of allowance for doubtful accounts Impairment loss of foreclosed assets Unappropriated employee benefit liabilities reserve FCB’s overseas branches and subsidiaries Others Loss carryforwards Subtotal Deferred tax liabilities: Temporary differences Increment tax on land value Unrealised gains on financial assets Others Subtotal Total	January1 1,160,239 $ 12,346 973,158 677,274 305,326 61,174 3,189,517 5,692,710 743,282 580,974 7,016,966 3,827,449) ($	Recognised in profit or loss	Recognised in other comprehensive income - $ - 114,031) ( 1,689 1,142) ( - 113,484) ( - 108,526) ( - 108,526) ( 4,958) ($	December 31 999,538 $ 9,798 773,203 660,866 341,880 - 2,785,285 5,692,710 521,418 642,387 6,856,515 4,071,230) ($
		160,701) ($ 2,548) ( 85,924) ( 18,097) ( 37,696 61,174) ( 290,748) ( - 113,338) ( 61,413 51,925) ( 238,823) ($

D. As of December 31, 2022, information on the Group’s income tax returns assessed by the Tax Authority were as follows:
(A)The Tax Authority has assessed income tax returns of the Company, FSIT, FFAM, FVC, FFMC and FPCIA through 2017.
(B) FCB’s filed income tax returns through 2017 have been assessed and approved by the Tax Authority. However, FCB disagreed with the assessment of income tax returns through 2015 to 2017 and availed of administrative remedy by applying for a review of the administrative action with the Tax Authority, which is currently under assessment.
(C) FS’s income tax returns through 2017 have been assessed and approved by the Tax Authority. FS’s filed income tax returns through 2015 and 2016 have been assessed and approved by the Tax Authority. However, FS disagreed with the assessment of income tax returns through 2015 and 2016 and availed of administrative remedy by applying for a review of the administrative action with the Tax Authority.
(D)The Tax Authority has assessed income tax returns of FLI through 2018.
(E)The Tax Authority has assessed income tax returns of FCBL and FCMI through 2020.

347

(43) Earnings per share

Basic

Basic earnings per share is calculated by dividing the profit attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares in issue during the period.

Gain and loss attributable to the common stock of the Group (in thousand of dollars) (after taxes) Outstanding weighted average common stock (in thousand of shares) Basic earnings per share (in dollars) (after taxes)	For theyears ended December 31,	For theyears ended December 31,
	2022 20,595,663 $ 13,223,442 1.56	2021
		19,739,045 $ 13,223,442 1.49

The share was retrospectively adjusted due to the effect of share dividend appropriation on August 12, 2022. For the years ended December 31, 2022 and 2021, the basic EPS were the same with diluted EPS.

7. Related party transactions

(1) Details of the related parties

Names of related parties Relationship with the Company Ministry of Finance, R.O.C. Director of Company Bank of Taiwan Director of Company Global Investment Co., Ltd. Director of Company East-Asia Real Estate Management Co., Ltd. FCB’s investee accounted for under the equity method (“EAREM”) Fertasia International Development FVC’s investee accounted for under the equity method Corporation Jiada International Development Co., Ltd. FVC’s investee accounted for under the equity method Changjia Energy Co., Ltd. FVC’s investee accounted for under the equity method Mutual Funds managed by First Securities Mutual funds managed by FSIT - subsidiary Investment Trust Co., Ltd. (“MF”) of the Company First Commercial Bank Education Foundation More than one-third of total fund was donated (“FCBEF”) by FCB Taiwan Business Bank Co., Ltd. Substantive parties of FCB Taiwan Asset Management Corporation The Company is one of its Directors (TAMCO) Others

FVC’s investee accounted for under the equity method

FVC’s investee accounted for under the equity method FVC’s investee accounted for under the equity method Mutual funds managed by FSIT - subsidiary of the Company More than one-third of total fund was donated by FCB Substantive parties of FCB The Company is one of its Directors

Spouses and relatives of the Group’s directors, supervisors, managers and related parties in substance.

348

(2) Major balances and transactions with related parties

A.Call loans to banks

ajor balances and transactions with related parties Call loans to banks
Highest balance Other related parties Bank of Taiwan 20,000,000 $ Taiwan Business Bank Co., Ltd. 8,000,000 Highest balance Other related parties Bank of Taiwan 20,000,000 $ Taiwan Business Bank Co., Ltd. 8,000,000	Endingbalance Annual interest rate(%) - $ 0.160~1.100 - 0.200~0.590 - $ Endingbalance Annual interest rate(%) 20,000,000 $ 0.080~0.280 4,000,000 0.090~0.280 24,000,000 $ December 31,2021 December 31,2022
		0.080~0.280 0.090~0.280

For the years ended December 31, 2022 and 2021, the interest income on above related parties were $29,945 and $20,024, respectively.

Terms and conditions of the related party transactions are not significantly different from those of transactions with third parties.

B.Call loans from banks

Call loans from banks
Other related parties Taiwan Business Bank Co., Ltd. Other related parties Bank of Taiwan Taiwan Business Bank Co., Ltd.		December 31,2022
	Highest balance 10,000,000 $	Endingbalance Annual interest rate(%) - $ 0.305~0.430 December 31,2021	Annual interest rate(%)
	Highest balance 5,000,000 $ 3,000,000	Endingbalance - $ 2,000,000 2,000,000 $	Annual interest rate(%)
			0.080~0.150 0.080~0.480

For the years ended December 31, 2022 and 2021, the interest expense on above related parties were $374 and $266, respectively.

Terms and conditions of the related party transactions are not significantly different from those of transactions with third parties.

349

C.Due from other banks

Due from other banks
Other related parties Bank of Taiwan Taiwan Business Bank Co., Ltd.	December 31,2022 682,944 $ 540,759 1,223,703 $	December 31,2021
		620,237 $ 89,517
		709,754 $

Terms and conditions of the related party transactions are not significantly different from those of transactions with third parties.

D.Deposits

Other related parties Others (Note) Other related parties Others (Note)	Endingbalance Percentage of total deposit balance(%) 1,811,323 $ 0.05 Endingbalance Percentage of total deposit balance(%) 1,645,168 $ 0.06 December 31,2021 December 31,2022

For the years ended December 31, 2022 and 2021, the interest expense on above related parties were $29,277 and $24,864, respectively.

Note: Staff savings accounts of FCB are provided to the above related parties with interest rate of 13% p.a. and limited to a balance of $480. Deposits exceeding $480 is calculated at demand savings deposit rate. Interest rates for others are the same as those offered to other customers.

350

Terms Differences Compared to Non- Related Parties	Terms Differences Compared to Non- Related Parties	None	None	None		Terms Differences Compared to Non- Related Parties	Terms Differences Compared to Non- Related Parties	None	None	None
Collateral		None	Real estate	Certificates of deposits of FCB, land, trust beneficiary right of FCB		Collateral		None	Real estate	Credit guarantee fund, certificates of deposits of FCB, land
Status of performance	Non-performing loans	- $	-	-	ember 31, 2021	Status of performance	Non-performing loans	- $	-	-
	Performing loans	15,130 $	1,034,415	2,095			Performing loans	15,388 $	1,126,850	14,142
Ending balance		15,130 $	1,034,415	2,095	Dec	Ending balance		15,388 $	1,126,850	14,142
Maximum balance for current period		18,455 $	1,182,696	21,968		Maximum balance for current period		20,012 $	1,216,725	67,411
Number or name of related party (Note 2)		47	203	10		Number or name of related party (Note 2)		42	188	15
Category of related party (Note 1)		Other related parties	Other related parties	Other related parties		Category of related party (Note 1)		Other related parties	Other related parties	Other related parties
Items		Consumer loans	Residential mortgage loans	Other loans		Items		Consumer loans	Residential mortgage loans	Other loans

351

December 31, 2022	Category of Title of derivative Gain (loss) on valuation Period-end Balance Sheet balance	Item Balance related party Name of related party instrument contract Contract period Nominal principal for current period	Other related parties A mutual fund managed by FSIT Foreign exchange contracts 2022/12/19~2023/1/31 98,320 $ 385) ($ Valuation adjustment for trading liabilities– currency exchange rate 385 $	Other related parties Bank of Taiwan Foreign exchange contracts 2022/2/11~2023/9/28 7,527,625 63,566) ( Valuation adjustment for trading liabilities– currency exchange rate 63,566	Other related parties Taiwan Business Bank Co., Ltd. Foreign exchange contracts 2022/2/8~2023/2/8 1,843,500 40,230) ( Valuation adjustment for trading liabilities– currency exchange rate 40,230	December 31, 2021	Category of Title of derivative Gain (loss) on valuation Period-end Balance Sheet balance	Item Balance related party Name of related party instrument contract Contract period Nominal principal for current period	Other related parties A mutual fund managed by FSIT Foreign exchange contracts 2021/11/18~2022/2/18 724,561 $ 2,886 $ Valuation adjustment for financial assets mandatorily measured at fair value through profit or loss– currency exchange rate 2,886 $	Other related parties Bank of Taiwan Foreign exchange contracts 2021/3/9~2022/6/23 4,424,800 1,352 Valuation adjustment for financial assets mandatorily measured at fair value through profit or loss– currency exchange rate 1,352	Other related parties Taiwan Business Bank Co., Ltd. Foreign exchange contracts 2021/4/9~2022/10/7 3,871,700 33,819 Valuation adjustment for financial assets mandatorily measured at fair value through profit or loss– currency exchange rate 33,819	Note 1: The evaluation gain and loss are those gain and loss of financial derivatives measured by fair value at the ending period as of the balance	sheet date in the year.	Note 2: The balances in the balance sheet are the ending balances of financial assets or liabilities at fair value through profit or loss.

352

G.Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss
Management fee and marketing service fee receivable Other related parties Mutual funds managed by FSIT Other related parties Mutual funds managed by FSIT	December 31,2022 131,813 $ December 31,2022 54,214 $	December 31,2021
		493,694 $
		December 31,2021
		56,184 $

H.Management fee and marketing service fee receivable

Terms and conditions of the related party transactions are not significantly different from those of transactions with third parties.

I. Handling charges income and other income

Terms and conditions of the related party transactions are transactions with third parties. Handling charges income and other income Other related parties Mutual funds managed by FSIT	not significantly different from those of 54,214 $ 56,184 $	not significantly different from those of 54,214 $ 56,184 $
Other related parties Mutual funds managed by FSIT (Note) Others	2022 2021 622,235 $ 665,181 $ 2,907 5,947 625,142 $ 671,128 $ For theyears ended December 31,
		665,181 $ 5,947
		671,128 $

Note: The above amounts represent income from management charges and trust handling charges.

The above amounts are collected based on the contracts signed among the related parties.

J. Other expenses

Other expenses
Other related parties Others	2022 2021 14,777 $ 14,311 $ For theyears ended December 31,
		14,311 $

Terms and conditions of the related party transactions are not significantly different from those of transactions with third parties.

K.Information on salaries and remunerations to the Group’s management team

Terms and conditions of the related party transactions are transactions with third parties. Information on salaries and remunerations to the Group’s Other related parties Others	not significantly different from those of management team 14,777 $ 14,311 $	not significantly different from those of management team 14,777 $ 14,311 $
Salaries and other short-term employee benefits Post-employment benefits Other long-term employee benefits Total	For theyears ended December 31,
	2022 485,052 $ 11,462 210 496,724 $	2021
		474,307 $ 10,684 201
		485,192 $

353

(3) Transactions and balances with related parties exceeding $100 million:

A.FCB and its subsidiaries

(A) Call loans to banks

Other related parties Bank of Taiwan Taiwan Business Bank Co., Ltd. Other related parties Bank of Taiwan Taiwan Business Bank Co., Ltd.	Highest balance 20,000,000 $ 8,000,000 Highest balance 20,000,000 $ 8,000,000	Endingbalance Annual interest rate(%) - $ 0.160~1.100 - 0.200~0.590 - $ Endingbalance Annual interest rate(%) 20,000,000 $ 0.080~0.280 4,000,000 0.090~0.280 24,000,000 $ December 31,2022 December 31,2021

For the years ended December 31, 2022 and 2021, the interest income on above related parties were $29,945 and $20,024, respectively.

Terms and conditions of the related party transactions are not significantly different from those of transactions with third parties.

(B) Call loans from banks

Call loans from banks
Other related parties Taiwan Business Bank Co., Ltd. Other related parties Bank of Taiwan Taiwan Business Bank Co., Ltd.		December 31,2022
	Highest balance 10,000,000 $	Endingbalance Annual interest rate(%) - $ 0.305~0.430 December 31,2021	Annual interest rate(%)
	Highest balance 5,000,000 $ 3,000,000	Endingbalance - $ 2,000,000 2,000,000 $	Annual interest rate(%)
			0.080~0.150 0.090~0.480

For the years ended December 31, 2022 and 2021, the interest expense on above related parties were $374 and $266, respectively.

Terms and conditions of the related party transactions are not significantly different from those of transactions with third parties.

354

(C) Due from other banks

Due from other banks
Other related parties Bank of Taiwan Taiwan Business Bank Co., Ltd.	December 31,2022 682,944 $ 540,759 1,223,703 $	December 31,2021
		620,237 $ 89,517
		709,754 $

Terms and conditions of the related party transactions are not significantly different from those of transactions with third parties.

(Blank)

355

Terms Differences Compared to Non- Related Parties	Terms Differences Compared to Non- Related Parties	None	None	None	None	None		Terms Differences Compared to Non- Related Parties	Terms Differences Compared to Non- Related Parties	None	None	None	None	None
Collateral		None	Real estate	Real estate	Real estate	Certificates of deposits of FCB, land, trust beneficiary right of FCB		Collateral		None	Real estate	Real estate	Other collateral	Credit guarantee fund, certificates of deposits of FCB, land
Status of performance	Non-performing loans	- $	-	-	-	-	ember 31, 2021	Status of performance	Non-performing loans	- $	-	-	-	-
	Performing loans	15,130 $	1,034,415	310,000	-	2,095			Performing loans	15,388 $	1,126,850	-	-	14,142
Ending balance		15,130 $	1,034,415	310,000	-	2,095	Dec	Ending balance		15,388 $	1,126,850	-	-	14,142
Maximum balance for current period		18,455 $	1,182,696	400,000	100,000	21,968		Maximum balance for current period		20,012 $	1,216,725	620,000	10,000	67,411
Number or name of related party (Note 2)		47	203	FFAM	FS	10		Number or name of related party (Note 2)		42	188	FFAM	FS	15
Category of related party (Note 1)		Other related parties	Other related parties	Fellow subsidiary	Fellow subsidiary	Other related parties		Category of related party (Note 1)		Other related parties	Other related parties	Fellow subsidiary	Fellow subsidiary	Other related parties
Items		Consumer loans	Residential mortgage loans	Other loans	Other loans	Other loans		Items		Consumer loans	Residential mortgage loans	Other loans	Other loans	Other loans

356

December 31, 2022 December 31, 2021	Percentage of Percentage of	Ending balance Deposits(%) Ending balance Deposits(%)	Parent company	FFHC 1,568,028 $ 0.05 2,102,773 $ 0.07	Fellow subsidiary	FLI 825,044 0.02 777,170 0.03	FS 2,767,121 0.08 1,845,975 0.06	Others 386,058 0.01 325,535 0.01	Other related parties	Others (Note) 1,811,323 0.05 1,645,168 0.06	Total 7,357,574 $ 0.21 6,696,621 $ 0.23	The interest expense paid to the above related parties for the years ended December 31, 2022 and 2021 were $43,527 and $27,923,	respectively.	Note: Staff savings accounts of FCB are provided to the above related parties with interest rate of 13% p.a. and limited to a balance	of $480. Deposits exceeding $480 is calculated at demand savings deposit rate. Interest rates for others are the same as those	offered to other customers.

357

			Balance	385 $	63,566	40,230				Balance	2,886 $	1,352	33,819
December 31, 2022	Category of Title of derivative Gain (loss) on valuation Period-end Balance Sheet balance		Item related party Name of related party instrument contract Contract period Nominal principal for current period	Other related parties A mutual fund managed by FSIT Foreign exchange contracts 2022/12/19~2023/1/31 98,320 $ 385) ($ Valuation adjustment for trading liabilities– currency exchange rate	Other related parties Bank of Taiwan Foreign exchange contracts 2022/2/11~2023/9/28 7,527,625 63,566) ( Valuation adjustment for trading liabilities– currency exchange rate	Other related parties Taiwan Business Bank Co., Ltd. Foreign exchange contracts 2022/2/8~2023/2/8 1,843,500 40,230) ( Valuation adjustment for trading liabilities– currency exchange rate	December 31, 2021	Category of Title of derivative Gain (loss) on valuation Period-end Balance Sheet balance		Item related party Name of related party instrument contract Contract period Nominal principal for current period	Other related parties A mutual fund managed by FSIT Foreign exchange contracts 2021/11/18~2022/2/18 724,561 $ 2,886 $ Valuation adjustment for financial assets mandatorily measured at fair value through profit or loss– currency exchange rate	Other related parties Bank of Taiwan Foreign exchange contracts 2021/3/9~2022/6/23 4,424,800 1,352 Valuation adjustment for financial assets mandatorily measured at fair value through profit or loss– currency exchange rate	Other related parties Taiwan Business Bank Co., Ltd. Foreign exchange contracts 2021/4/9~2022/10/7 3,871,700 33,819 Valuation adjustment for financial assets mandatorily measured at fair value through profit or loss– currency exchange rate	Note 1: Gain (loss) on valuation for the current period refers to gains or losses resulting from year-end fair value valuation on	derivative instruments as of the balance sheet date.	Note 2: Period-end balance is the year-end balance of those accounted as financial asset or liabilities measured at fair value through	profit or loss.

358

(G) Current tax assets

Current tax assets
Parent company FFHC (Note)	December 31,2022 741,710 $	December 31,2021
		741,710 $

Note: Receivable as a result of consolidated income tax return filing of the Company.

(H) Current tax liabilities

Current tax liabilities
Parent company FFHC (Note)	December 31,2022 1,912,758 $	December 31,2021
		1,717,461 $

Note: Payable as a result of consolidated income tax return filing of the Company.

(I) Handling charges income and other income

Handling charges income and other income
Parent company FFHC Fellow subsidiary FS FSIT FLI FCMI FFAM Others Other related parties Others Total	2022 2021 29,770 $ 30,024 $ 88,293 101,830 86,880 81,643 751,040 682,809 1,867 1,877 6,206 6,064 2,850 3,052 2,907 2,895 969,813 $ 910,194 $ For theyears ended December 31,
		30,024 $ 101,830 81,643 682,809 1,877 6,064 3,052 2,895
		910,194 $

Terms and conditions of the related party transactions are not significantly different from those of transactions with third parties.

B.FS and its subsidiaries

(A) Cash and cash equivalents

of transactions with third parties. FS and its subsidiaries (A) Cash and cash equivalents
Note: Including settlement accounts. (B) Customer margin deposit account FCB (Note) FCB (Note)	December 31,2022 835,885 $ December 31,2022 754,584 $	December 31,2021
		1,204,017 $
		December 31,2021
		667,422 $

Note: The above amounts represent a future margin provided for operating futures brokerage.

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(C) Other current assets

FCB (Note)

December 31,2022 1,205,500 $	December 31,2021
	5,500 $

Note: The above amounts represent a guarantee deposited in FCB.

(D) Other payables

Other payables
FFHC (Note 1) FCB (Note 2)	December 31,2022 96,225 $ 2,503 98,728 $	December 31,2021
		233,510 $ 2,534
		236,044 $

Note 1: Payable as a result of consolidated income tax return filing of the Company.

Note 2: The above amounts mainly represent accounts payable for land occupancy fees and custody fees of securities counters.

C.FLI and its subsidiaries
(A) Bank deposits

FCB

(B) Balances of the fund managed by related parties

Funds managed by FSIT

December 31,2022 822,327 $ December 31,2022 284 $	December 31,2021
	776,393 $
	December 31,2021
	360,684 $

For the years ended December 31, 2022 and 2021, proceeds from redemption of funds amounted to $1,151,139 and $128,374, respectively, and realised (loss) gain amounted to ($31,303) and $341, respectively.

FCB

For theyears ended December 31,	For theyears ended December 31,
2022 676,480 $	2021
	633,521 $

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8. Pledged assets

Pledged assets

Pledged assets provided by the Group as of December 31, 2022 and 2021
Items
December31,2022
December31,2021
Reserve for deposits -
account B
-
$ 50,000,000
$ Financial assets at
fair value through other
comprehensive income
7,473,503
6,851,312
Debt instruments
measured at
amortised cost
40,826,173
40,720,206
Other assets-time deposits
6,000
6,500
Investment property
639,693
413,191
Property and equipment
Land
30,000
30,000
Buildings and structures
27,199
27,199
Refundable deposits
1,210,916
1,821,642
Operating guarantee
deposits
1,232,500
1,157,500
51,445,984
$ 101,027,550
$

were as follows:
Purpose of Pledge

Guarantee for project loan.
Guarantees deposited with the
court for the provisional seizure,
guarantees for trust business
reserves and overfraft, FCB
foreign branch’s guarantee
deposited with Federal Reserve
Bank and Federal Credit Bank,
operating guarantee deposits,
overdraft guarantee, etc.
FCB foreign branch’s guarantee
deposited with Federal Reserve
Bank and Federal Home Loan
Bank, foreign currency settlement
overdraft guarantee, central bank
foreign currency fund lending
guarantee, etc.
Guarantees for line of settlement
advance, etc.
Short-term loan guarantee and
overdraft loan guarantee, etc.
Derivative trading margin,
guarantee deposits with the court
for the provisional seizure,
deposits for the building lease,
deposits for the office lease,
operating guarantee deposits of
discretionary business,
performance bond of
discretionary business, operating
guarantee deposits of offshore
funds business, etc.
Operating guarantee deposits for
securities, operating guarantee
deposits for insurances, etc.
Overdraft loan guarantee, etc.

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9. Significant contingent liabilities and unrecognised contractual commitments

(1) FCB has the following commitments as of December 31, 2022 and 2021:

) FCB has the following commitments as of December 31, 20	22 and 2021:
Unused loan commitments Unused credit commitments for credit cards Unused letters of credit issued Guarantees Collections receivable for customers Collections payable for customers Guaranteed notes payable Trust assets Customers’ securities under custody Book-entry for government bonds under management Depository for short-term marketable securities under management	December31,2022 211,002,585 $ 112,830,312 34,869,999 110,578,438 99,139,710 322,391,020 45,580,622 923,196,338 614,894,135 211,934,000 210,390,290	December31,2021
		207,357,785 $ 108,420,670 38,330,671 97,955,244 110,041,842 281,704,869 45,786,751 798,000,497 653,013,651 192,990,800 178,173,540

(2) As of December 31, 2022, FS had entered into agreements to purchase properties and equipment, intangible assets amounting to $79,403, which has not been repaid.

10.Significant losses from disasters

None.

11.Significant subsequent events

Reclassification of financial assets

The market interest rate rebounded sharply because the central banks of major countries have rapidly raised the base interest rate starting from 2022 in response to the rising global inflationary pressures resulting from the supply chain disruption which was caused by the global pandemic in recent years and Russia-Ukraine war. The range of rebound pertained to the extreme situation defined by the Insurance Capital Standard (ISC) and met the change in entity’s business model due to change in external environment under IFRS 9. Therefore, on December 8, 2022, FSLI’s Board of Directors resolved to change the business model of managing financial assets according to IFRS 9. The affected financial assets had been adjusted from ‘collecting contractual cash flows and selling financial assets’ to mainly ‘holding financial assets in order to collect contractual cash flows’. The reclassification of financial assets derived from the change in business model had also met the guidelines of Accounting Research And Development Foundation Interpretation 0000000354 ‘Questions on insurance companies’ reclassification of financial assets derived from the change in business model of managing financial assets resulting from the dramatic changes in the international economic situation’. FSLI reclassified the affected financial assets on January 1, 2023 including decreasing $10,143,169 of financial assets at fair value through other comprehensive income, increasing $12,910,824 of financial assets at amortised cost, decreasing $519,420 of deferred tax assets and increasing $2,248,235 of other equity interest.

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12.Others

(1) Fair value and hierarchy information on financial instruments

A. Scope

Fair value is the amount for which an asset could be exchanged or a liability can be settled between knowledgeable, willing parties in an arm’s length transaction.

Financial instruments are initially recognised by fair value, which is transaction price in most cases. Subsequent recognitions are measured by fair value except that certain financial instruments are recognised by amortised cost. The best evidence of fair value is the quoted market price in an active market. If the market in which financial instruments traded is not active, the Company then adopts valuation technique or takes reference to Bloomberg, Reuters or the fair value of financial instrument from counterparties.

B. Fair value information of financial instruments

The fair value information of financial instruments measured at fair value is provided in Note 12(1)C and E. Except for those listed in the table below, the carrying amount of some of the Group’s financial instruments (e.g. cash and cash equivalents, due from central bank and call loans to other banks, securities purchased under resell agreements, receivables, loans discounted, refundable deposits, deposits from the central bank and banks, due to central bank and other banks, securities sold under repurchase agreements, payables, deposits and remittances, financial bonds payable, other financial liabilities and guarantee deposits) was approximate to their fair value. (Please refer to Note 12(1)D).

==> picture [447 x 184] intentionally omitted <==

----- Start of picture text -----

December 31, 2022
Fair value
Financial assets Book value Level 1 Level 2 Level 3
Investments in debt
instruments at
amortised cost $ 806,716,159 $ 6,593,286 $ 771,396,061 $ -
December 31, 2021
Fair value
Financial assets Book value Level 1 Level 2 Level 3
Investments in debt
instruments at
amortised cost $ 705,169,501 $ 6,651,443 $ 699,134,451 $ -
----- End of picture text -----

C. Financial instruments measured at fair value
(A) Determination of the fair value

The quoted market price is used as the fair value when the financial instruments have an active market, such as market prices provided by the Stock Exchange Corporation, Bloomberg and Reuters are all foundation of fair value for listed equity securities and debt instruments with a quoted market price in an active market.

If the market quotation from Stock Exchange Corporation, commission merchants, underwriters or pricing service institutions can be frequently obtained on time, and the price represents the actual and frequent transactions at arm’s length, then a financial instrument is deemed to have an active market. If the above condition is not met, the

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market is deemed inactive. In general, significant price variance between the purchase price and selling price or significantly increasing price variance are both indicators of an inactive market.

In addition to above financial instruments with an active market, other financial instruments at fair value are assessed by evaluation technique with reference to other financial instruments at fair value with similar conditions and characteristics in actual practice, cash flow discounting method and other evaluation technique, including market information obtained by exercising the model at balance sheet date (such as yield curve used in OTC and the Taipei Interbank Offered Rated (Taibor) price curve).

When a financial instrument has no standardised evaluation and with less complexity involved, such as interest rate swap, currency swap and options. The Group usually adopts the valuation generally accepted by market users. The inputs used in these financial instruments valuation usually are observable information in the market.

For financial instruments with higher complexity, the fair value is assessed through the valuation model developed by general valuation methods and techniques generally accepted by competitors. These kinds of valuation models are usually applicable for derivative instruments, debt instruments with no quoted market price (including debt instrument of embedded derivatives) or other debt instruments with low market liquidity. Certain inputs used in these valuation models are not observable in the market, and the Group needs to make appropriate estimates based on the assumptions.

Valuation on derivative instrument is based on the valuation model generally accepted by market users, such as discounting method and option pricing model. FX contract usually is valuated based on current FX rate. Structured-interest derivative contract is valuated based on option pricing model.

The output of the evaluation model is always an estimate, and the valuation technique may not reflect all the relevant factors of the financial instruments held by the Group. As a result, the estimate generated by valuation model will be slightly adjusted based on additional inputs, such as model risk, liquidity risk or credit risk of counterparties. According to the Group’s valuation model management and other related controlling procedures, the adjustment made is adequate and necessary and the balance sheet is believed to present fairly, in all material aspects, the fair value of financial instruments. The pricing information and input are prudently evaluated in the valuation process, and shall be timely adjusted by market condition.

(B) Valuation methods by financial instruments of the Group are shown by types and nature as follows:
a. NTD Central Government Bond: the latest transaction price announced by Electronic Bond Trading System of GTSM or SEC or the yield rates across different contract lengths bulletined by OTC are used.
b. NTD corporate bonds & financial bonds: fair value of different maturities announced by GTSM is adopted. If the fair value is not available, yield rate curve of the corresponding credit rating provided by GTSM is used to compute the theory price.
c. Securitisation instruments: price quoted from Bloomberg.
d. Convertible corporate bond: closing prices bulletined by the GTSM or the latest closing prices is adopted as valuation standard.

364

e. NTD short-term bills: valuation is based by Taibor curve rate from The Bankers Association of the Republic of China, discounted from future cash flows.
f. Foreign securities: prices quoted from Bloomberg, Reuters, and Group’s pricing system. If none of them adopted, counterparties are adopted.
g. Listed stocks: the closing price listed in TSE or OTC is adopted.
h. Beneficiary certificates: closed-end funds use the closing price in an active market as the fair value and open-ended funds use the net asset value of the fund as the fair value.
i. Financial bonds designated at fair value issued by FCB: valuation is based by Taibor curve rate from The Bankers Association of the Republic of China, discounted from future cash flows.
j. Derivatives:
(a) Call (put) warrant, stock index futures, and stock index futures options: prices quoted from an active market are deemed the fair value.
(b) Forward FX, currency swap, interest swap and cross currency swap: discounted future cash flows is adopted.
(c) Options: Black-Scholes model is mainly adopted for valuation.
(d) Certain derivatives use the quoted price from counterparties.
k. Unlisted stock: Equity instruments that are not accounted for using the equity method are valued using the market approach, income approach, or net asset approach. The market approach uses the price-to-earnings ratio or the price-to-book ratio of investments with similar characteristics. The income approach includes the discounted cash flow method. The net asset approach includes the net value method.
(C) Adjustments for credit risks

Adjustments for credit risks are mainly credit valuation adjustments and debit valuation adjustments. Definition is as follows:

a. Credit valuation adjustment (CVA) is a measurement to derivatives which are not transacted through the Stock Exchange Market, or the over the counter (OTC) derivatives. CVA reflects fair value of counterparty default and the possibility of not collecting the full market value.
b. Debit valuation adjustment (DVA) is a measurement to derivatives which are not transacted through the Stock Exchange Market, or the over the counter (OTC) derivatives. DVA is the fair value of a derivative reflecting the default of the company and the possibility of the company unable to pay the full market value.

CVA is calculated by applying loss given default (LGD) along with the consideration of counterparty’s probability of default (PD) (under the condition that the Group does not default) and multiplies exposure at default (EAD). On the other hand, DVA is calculated by applying the Group’s estimated loss along with the consideration of the Group’s PD (under the condition that the counterparty does not default) and multiplies the risk exposure amount.

D. Financial instruments not measured at fair value

The methods and assumption used by financial instruments not measured at fair value of the Group are as follows:

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(A)The book value of cash and cash equivalents, due from central bank and call loans to banks, securities purchased under resell agreements, receivables, refundable deposits, due to central bank and banks, fund borrowed from central bank and banks, securities sold under repurchase agreements, commercial papers issued, payables, other borrowings, deposits, and other financial liabilities which have a short maturity period will be considered as their fair value.
(B) Loans discounted (including overdue receivables and assumed receivables from leasing subsidiary): Considering the nature of the financial industry, the fair value is determined by the market rate (market price). The effective interest rates of loans are generally based on the benchmark interest rate plus or minus certain adjustment (equivalent to floating rate) to reflect the market interest rate. As a result, it is reasonable to assume that the carrying amount, after adjustments of estimated recoverability, approximates the fair value. Fair values for medium-term or long-term loans with fixed interest rates shall be estimated using their discounted values of expected future cash flows. However, as such loans account for only a small portion of all loans, book value was used to estimate the fair value.
(C) Investments in debt instruments at amortised cost/ Held-to-maturity financial assets: When there is a quoted market price available in an active market, the fair value is determined using the market price. If there is no quoted market price for reference, a valuation technique or quoted price offered by the counterparties will be adopted to measure the fair value.
- a. NTD Central Government Bond: fair value of bonds of different maturities bulletined by Over-The-Counter (hereinafter OTC).
- b. NTD corporate bonds, financial bonds, government bonds and beneficiary bond certificates: future cash flow discounted by the yield curve of OTC is used to measure present valuation.
(D)Deposits and remmittances: Considering the nature of the financial industry, the fair value is determined by the market rate (market price) while the deposit transactions usually mature within one year. As a result, the carrying amount is a reasonable basis to estimate the fair value. Fair values of the long-term fixed rate deposits shall be estimated using discounted expected future cash flows. Additionally, as the maturities are less than three years, it is reasonable to use the carrying amount to estimate the fair value.
(E) Financial bonds payable: Since the coupon rates of the financial bonds issued by the Company approximate the market rates, the fair value based on the discounted value of expected future cash flow approximates the book value.
E. Hierarchy of fair value estimation of financial instruments
(A)Definition for the hierarchy classification of financial instruments measured at fair value
- a. Level 1

Inputs that are quoted prices unadjusted in active markets for identical assets or liabilities. An active market refers to a market in which transactions for an asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. The fair value of the Group’s investment in listed stocks, beneficiary certificates, on-the-run Taiwan central government bonds and derivative instruments with quoted market prices is included in Level 1.

366

b. Level 2

Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices).The fair value of the Group’s investment in off-the-run government bonds, corporate bonds, bank debentures, convertible bonds, most derivative instruments, equity instrument without active market and financial bonds issued by the Group is included in Level 2.

c. Level 3

Inputs for the asset or liability that are not based on observable market data. The fair value of the Group’s investment in equity instrument without active market and claims receivable purchased invested by the Group is included in Level 3.

(Blank)

367

(B)Hierarchy of fair value estimation of financial instrument

(B) Hierarchy of fair value estimation of fin	ancial instrument	ancial instrument	ancial instrument	ancial instrument
Financial instruments measured at fair value	December 31,2022
	Total	Level 1	Level 2	Level 3
Recurring fair value measurements Non-derivative instruments Assets Financial assets at fair value through profit or loss Financial assets mandatorily measured at fair value through profit or loss Stock investments Bond investments Short-term bills Others Financial assets designated as at fair value through profit or loss Others Financial assets at fair value through other comprehensive income Stock investments Bond investments Others Liabilities Financial liabilities at fair value through profit or loss Financial liabilities designated as at fair value through profit or loss Derivative instruments Assets Financial assets at fair value through profit or loss Liabilities Financial liabilities at fair value through profit or loss	2,751,302 $ 57,011,222 74,467,893 7,414,412 15,240,505 51,531,419 268,701,052 5,604,702 1,137,409 19,182,192 13,353,888	1,923,638 $ 557,181 - 1,732,000 - 40,349,998 27,959,785 1,546,557 - 307,856 52,991	94,279 $ 56,454,041 74,467,893 5,116,900 15,240,505 624 240,741,267 4,058,145 1,137,409 18,874,336 13,300,897	733,385 $ - - 565,512 - 11,180,797 - - - - -
Total	516,395,996 $	74,430,006 $	429,486,296 $	12,479,694 $

368

Financial instruments measured at fair value	December 31,2021	December 31,2021	December 31,2021	December 31,2021
	Total	Level 1	Level 2	Level 3
Recurring fair value measurements Non-derivative instruments Assets Financial assets at fair value through profit or loss Financial assets mandatorily measured at fair value through profit or loss Stock investments Bond investments Short-term bills Others Financial assets designated as at fair value through profit or loss Others Financial assets at fair value through other comprehensive income Stock investments Bond investments Others Derivative instruments Assets Financial assets at fair value through profit or loss Liabilities Financial liabilities at fair value through profit or loss	4,653,448 $ 59,284,889 91,689,228 9,481,090 14,766,457 54,468,435 210,545,030 6,662,376 4,981,771 8,117,688	3,945,315 $ 1,560,501 - 2,312,404 - 42,336,143 6,467,022 1,506,632 316,256 110,741	161,976 $ 57,724,388 91,689,228 6,616,329 14,766,457 - 204,078,008 5,155,744 4,665,515 8,006,947	546,157 $ - - 552,357 - 12,132,292 - - - -
Total	464,650,412 $	58,555,014 $	392,864,592 $	13,230,806 $

369

	Ending balance	1,298,897 $ 11,180,797		Ending balance	Ending balance	1,098,514 $ 12,132,292
Reduction	Transferred from Level 3	58,600) ($ -		Reduction	Transferred from Level 3	48,401) ($ -
	Sold, disposed or settled	67,167) ($ -			Sold, disposed or settled	217,204) ($ 2,030) (
Addition	Transferred to Level 3	- $ -		Addition	Transferred to Level 3	77,384 $ -
	Purchased or issued	235,589 $ 4,655			Purchased or issued	97,330 $ -
Gain and loss on valuation	Amount recognised in other comprehensive income	2,212) ($ 956,150) (		Gain and loss on valuation	Amount recognised in other comprehensive income	- $ 912,895
	Amount recognised in gain and loss	92,773 $ -			Amount recognised in gain and loss	101,413) ($ -
	Beginning balance	1,098,514 $ 12,132,292	For the year ended December 31,2021	Beginning balance		1,290,818 $ 11,221,427
	Items	Non-derivative instruments Financial assets at fair value through profit or loss Financial assets mandatorily measured at fair value through profit or loss Financial assets at fair value through other comprehensive income		Items		Non-derivative instruments Financial assets at fair value through profit or loss Financial assets mandatorily measured at fair value through profit or loss Financial assets at fair value through other comprehensive income

370

(D)Material transfers between Level 1 and Level 2

With regard to the financial instruments held by the Group, no material transfers between Level 1 and Level 2 occurred for the years ended December 31, 2022 and 2021.

(E)Fair value measurement to Level 3, and the sensitivity analysis of the substitutable appropriate assumption made on fair value

The fair value measurement that the Group made for the financial instruments is deemed reasonable; however, different valuation models or inputs could result in different valuation results. Specifically, if the valuation input of financial instruments classified in the valuation moves to 10%, the effects on gain and loss or the effects on other comprehensive income are as follows:

income are as follows:
December 31, 2022	Change in fair value recognised in profit and loss		Change in fair value recognised in other comprehensive income
	Favorable	Unfavorable	Favorable	Unfavorable
Assets Financial assets at fair value through profit or loss Financial assets mandatorily measured at fair value through profit or loss Financial assets at fair value through other comprehensive income	129,890 $ -	129,890) ($ -	- $ 1,118,080	- $ 1,118,080) (

December 31, 2021	Change in fair value recognised in profit and loss		Change in fair value recognised in other comprehensive income
	Favorable	Unfavorable	Favorable	Unfavorable
Assets Financial assets at fair value through profit or loss Financial assets mandatorily measured at fair value through profit or loss Financial assets at fair value through other comprehensive income	109,851 $ -	109,851) ($ -	- $ 1,213,230	- $ 1,213,230) (

Favorable and unfavorable movements of the Group refer to the fluctuation of fair value, and the fair value is calculated through the valuation technique according to the nonobservable inputs to different extent.

If the fair value of a financial instrument is affected by more than one input, the above table only illustrates the effect as a result of one single input, and the correlation and variance among multiple inputs are not listed here.

371

(F) Quantitative information of fair value measurement for significant unobservable inputs (Level 3)

The Group’s Level 3 fair value measurement are mainly financial assets at fair value through other comprehensive income – equity instrument without an active market.

The multiple significant unobservable inputs of equity instrument without an active market are independent from each other, thus, they are not correlative.

Table below summarises quantitative information of significant unobservable inputs:

(Blank)

372

	Fair value as of December 31, 2022	Valuation technique	Significant unobservable inputs	Range (weighted-average)	Relationship between inputs and fair value
Items measured at fair value on a repetitive basis Non-derivative financial assets Financial assets at fair value through profit or loss Financial assets mandatorily measured at fair value through profit or loss Stock investment Others Financial assets at fair value through other comprehensive income Stock investment	$ 733,385 565,512 11,180,797	Market approach – Market comparable companies Asset approach – Net asset value Market approach – Market comparable companies Income approach – Discounted cash flow Asset approach – Net asset value Bid rate method	Price-to-earnings ratio multiple Price-to-book ratio multiple Discount for marketability Discount for marketability Contact rate Repayment rate Mortality rate Price-to-earnings ratio multiple Price-to-book ratio multiple Enterprise value to EBITA multiple Discount for marketability Net price ratio multiplier Revenue growth rate Discount Rate Discount for marketability Discount for marketability	7.08 0.99~3.66 40% 15% 3.16%~62.17% 1.00%~4.07% 4.88%~13.58% 6.98~23.08 0.44~3.36 5.41~13.32 10%、22%、30% 0.74~3.36 2% 7.65% 10% 15%、30%	The higher the multiple is, the higher the fair value is. The higher the multiple is, the higher the fair value is. The higher discount for marketability is, the lower the fair value is. The higher discount for marketability is, the lower the fair value is. The higher the rate is, the higher the fair value is. The higher the rate is, the higher the fair value is. The higher the rate is, the lower the fair value is. The higher the multiple is, the higher the fair value is. The higher the multiple is, the higher the fair value is. The higher the multiple is, the higher the fair value is. The higher discount for marketability is, the lower the fair value is. The higher the multiple is, the higher the fair value is. The higher the revenue growth rate is, the higher the fair value is. The higher discount rate is, the lower the fair value is. The higher discount for marketability is, the lower the fair value is. The higher discount for marketability is, the lower the fair value is.

373

	Fair value as of December 31, 2021	Valuation technique	Significant unobservable inputs	Range (weighted-average)	Relationship between inputs and fair value
Items measured at fair value on a repetitive basis Non-derivative financial assets Financial assets at fair value through profit or loss Financial assets mandatorily measured at fair value through profit or loss Stock investment Others Financial assets at fair value through other comprehensive income Stock investment	$ 546,157 552,357 12,132,292	Market approach – Market comparable companies Asset approach – Net asset value Market approach – Market comparable companies Income approach – Discounted cash flow Asset approach – Net asset value Bid rate method	Price-to-earnings ratio multiple Price-to-book ratio multiple Discount for marketability Discount for marketability Contact rate Repayment rate Mortality rate Price-to-earnings ratio multiple Price-to-book ratio multiple Enterprise value to EBITA multiple Discount for marketability Net price ratio multiplier Revenue growth rate Discount Rate Discount for marketability Discount for marketability	15.95~21.57 1.18~15.59 40% 15% 6.71%~62.64% 0.21%~4.02% 3.83%~13.13% 8.40~33.16 0.45~3.73 2.95~15.50 22%、30% 1.64~3.14 2% 7.35% 10% 15%、30%	The higher the multiple is, the higher the fair value is. The higher the multiple is, the higher the fair value is. The higher discount for marketability is, the lower the fair value is. The higher discount for marketability is, the lower the fair value is. The higher the rate is, the higher the fair value is. The higher the rate is, the higher the fair value is. The higher the rate is, the lower the fair value is. The higher the multiple is, the higher the fair value is. The higher the multiple is, the higher the fair value is. The higher the multiple is, the higher the fair value is. The higher discount for marketability is, the lower the fair value is. The higher the multiple is, the higher the fair value is. The higher the revenue growth rate is, the higher the fair value is. The higher discount rate is, the lower the fair value is. The higher discount for marketability is, the lower the fair value is. The higher discount for marketability is, the lower the fair value is.

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(G)Fair value measurement process for instruments classified in Level 3

The Group’s financial instruments within Level 3 are primarily equity investments in unlisted stocks. In accordance with “First Financial Holding’s Regulations for Equity Investment Valuation”, the Group’s equity instruments without an active market are valued using the market approach, income approach, or asset approach. By using publicly available information, valuation results are close to market conditions, and sources for information are independent, reliable, in agreement with other sources and represent exercisable prices. Inputs, information and other necessary fair value adjustments for the valuation model are updated periodically to ensure that the valuation results are reasonable. Relevant valuation results are recorded after the Group’s internal review and approval.

(2) Management objective and policy for financial risk

A. Scope

The Group’s financial risk management objective incorporates the general operating strategy and financial targets. It considers risk appetite and external regulations along with other elements, through effective risk management policies, including but not limited to risk identification, evaluation, monitoring and reporting, and takes appropriate measures to control business risks and potential financial losses within an endurable range in order to ensure a sound business development for the Group and accomplish the objective of maintaining a reasonable risk and return, to further increase shareholders’ value.

The primary risks arising from operations of the Group includes but are not limited to credit risk incident upon on-balance-sheet and off-balance-sheet transactions, market risk, operation risk and liquidity risk. In order to put into effect the risk management culture and strategy, the Group has established a risk management policy, system, process and method. The Group abides by relevant regulations and evaluates and adjusts in a timely manner. Through, prescribing limits on each risk, monitoring and reporting periodically, as well as through the internal control and internal audit mechanisms and monitoring of high level committees, the primary risks are effectively identified, evaluated, monitored, and controlled, in order to abide regulations, accomplish strategic objectives and provide reliable financial reporting information.

The Group’s Libor-based derivative and non-derivative instruments will be affected by the interest rate benchmark reform. The Group had made the execution plan of interest rate benchmark reform to reflect the risks of financial and non-financial aspects arising from the interest rate benchmark reform. Contract modification, customer communication, effect assessment of finance and business, amendment of internal control system, changes of systems and procedures, risk management and adjustment of valuation model shall be completed before abandonment of Libor.

As of December 31, 2022, FCB non-derivative instruments which were affected by interest rate benchmark reform and not yet converted to replacement benchmarks are summarised as follows:

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USD LIBOR-linked financial assets Financial assets at fair value through profit or loss Financial assets at fair value through other comprehensive income Investments in debt instruments measured at amortised cost Loan discounted Subtotal GBP LIBOR-linked financial assets Loan discounted JPY LIBOR-linked financial assets Loan discounted EUR LIBOR-linked financial assets Loan discounted Total	December 31,2022 BookValue 17,399,721 $ 31,686,631 2,335,100 64,333,710 115,755,162 444,840 - - 116,200,002 $	December 31,2021
		BookValue
		21,984,066 $ 38,327,618 2,193,871 136,826,040
		199,331,595
		6,046,529
		965,470
		287,926
		206,631,520 $

As of December 31, 2022, FCB derivative instruments which were affected by interest rate benchmark reform and not yet converted to replacement benchmarks are summarised as follows:aaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaa

USD LIBOR-linked financial assets Interest rate swaps Cross currency swap contracts Others Total	December 31,2022 Nominalprincipal 8,789,439 $ 22,183,450 - 30,972,889 $	December 31,2021
		Nominalprincipal
		13,223,736 $ 24,391,710 32,024
		37,647,470 $

For climate risk, the Board of Directors of First Financial Holding Co., Ltd., as the highest supervisory unit of First Financial Group, is responsible for approving, guiding, and ensuring the effective implementation of risk policies. The First Financial Group has set up a "Sustainable Development Committee" and a "Risk Management Committee" to oversee important strategies related to the Group climate risks. In addition, the legal compliance unit should ensure that all operations of each unit comply with laws and regulations.

B. Organisation structure for risk management

The Board of Directors is the ultimate responsible unit for the Group’s overall risk management.Under the command of the Board of Directors, there is a Risk Management Committee, headed by the Chairman. Additionally, the CEO (President), EVP and the Chairman and Presidents of subsidiaries are assigned as the committee members. In line with the risk management policies and guiding principles as approved by the Board of Directors, the Risk Management Committee establishes risk managing system to coordinate and supervise risk relating matters. The main risk tolerance limits and monitoring indicators must be approved by the Risk Management Committee.

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In order to implement risk management, the Company and each significant subsidiary (FCB, FS, FSIT and FLI) set up “Risk Management Committee” to approve risk management policies and risk management programs (including limit authorisation, risk tolerance limit, and risk controlling procedures such as various monitoring indicators and corrective actions if limit is exceeded). The Board of Directors and senior management of each subsidiary regularly monitors various risk exposure extent and reports the implementation of risk management policies to the Company.

The Company regularly evaluates and reviews the execution of risk management of each subsidiary and reports to the Board of Directors of the Company accordingly, including risk management program and risk controlling procedures, evaluation on the exposure and trend of major risk, and monitoring and management of capital adequacy ratio.

The Auditing Department of the Company and every significant subsidiary within the Group will regularly audit the risk management procedures and internal control to ensure that the risk management mechanism and the controlling procedures are operating effectively.

The organisation structure for risk management ：

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Board of Directors /
Chairperson
President
EVP
Risk Management Risk Management
Division Committee
supervise the execution
of risk management of
each subsidiary
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Each subsidiary establishes Risk Management Committee and Risk Management Unit based on nature of business and the company scale.

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Committee FCB \Risk Management Committee FS \ Risk Management Committee FSIT \ Risk Management Committee FLI\ Risk Management Committee Others\ Risk Management
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The subsidiary, FCB

The Bank’s Board of Directors has the ultimate approval right in risk management. Major management risk items include overall risk management policy, risk tolerance limit, and authority which must be approved by the Board of Directors.

Under the Board of Directors, there is a Risk Management Committee (RMC), which is headed by the Bank’s President and composed of several committee members including the Executive Vice President. In addition, executives from the Risk Management Division, Credit Approval Division, Credit Analysis Division, Special Asset Management Division, and Compliance Division are required to participate in the meetings of the committee. The Risk Management Division is an administrative unit under the RMC and responsible for carrying out the duties of the committee. RMC is responsible for the integration of the review, supervision, and reporting of firm-wide risk management activities, and the coordination among units involved in risk management. In addition, the committee sets the risk management policies, procedures, and guidelines, risk tolerance levels and authorisation, risk measurement methods, risk assessment procedures, risk monitoring system, and the report on the prevention of money laundering and suppressing of financing of terrorism. The committee then assigns duties to each department in accordance with their responsibilities and approval procedures. RMC also submits regular reports on the risk assessment of the Bank to the Board of Directors and supervisors.

The Auditing department regularly reviews the execution of risk management based on relevant internal control system to ensure the effective operation for risk management and assessment control, which should be reported to the Board of Directors regularly.

The subsidiary, FS

The Board of Directors of FS authorises FS’ risk management provisions and limits for investments in various business lines in order to ensure the effectiveness of FS’s risk management. The Board of Directors of FS holds the ultimate responsibility for FS’s risk management. In order to strengthen monitoring over various risks and effectively respond to the movements in the financial market, FS has established a “Risk Management Committee” under its Board of Directors to assist and enhance the supervisory, prevention, and control over its risk management.

In addition to the Risk Management Committee, FS also establishes risk management system consisting of Risk Management Office, Audit Office, Compliance department, Finance department and RM Persons from various lines of businesses to ensure the effectiveness of risk management.

The subsidiary, FSIT

When engaging in its various businesses, FSIT complies with regulations promulgated by the competent authority, subsidiary management provisions established by the Group, and provisions of its internal control system and related operational guidelines. When business units of FSIT establish their internal control system, they consider potential risks (including market risk, credit risk, and liquidity risk) that may occur in order to formulated feasible compliance procedures and management response measures. Aside from incorporating related risk factors into its considerations, FSIT sets the delegated authorisation and risk limits for its transactions to act as the basis for its operations.

Audit team of the subsidiary, FSIT regularly reviews and checks the execution of risk management according to the related internal control to ensure the effective operation of

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evaluations and controlling procedures of risk management and to report to the Board of FSIT on a regular basis.

The subsidiary, FLI

The Board of Directors of the subsidiary, FLI is the final approving authority for risk management. The Board assesses the risk managing policies to ensure that the risks incurred from various businesses are within durable capacity and the reasonable goal of risk and return can be achieved given that the capital is exercised in an efficient manner, and takes the ultimate responsibility for the overall risk management. FLI sets up Risk Management Committee under the Board to supervise, report and coordinate risk management execution, to practice the promotion of risk managing policies and to assist with finance, insurance, operation and monitoring of strategic risks of each business unit to ensure that various risks are controlled within its capacity, the actual execution of which is regularly reported to the Board of Directors.

C. Risk controlling procedures that the Company implemented for various risks of subsidiaries within the Group

In order to effectively evaluate the risks involved in various business of the subsidiaries within the Group, (including credit risk, market risk, liquidity risk, interest risk, insurance risk and operation risk, etc.) the Company has set up “Risk Managing Rules of First Financial Holding Company and its subsidiaries” as the principle of risk management policies and controlling procedures of every subsidiary.

The fundamental managing principle of the Company lies in the goal that various risks incurred due to the assets or liabilities held for profit or business demand can be effectively controlled in consistency of relevant regulations of every competent authority.

Risk controlling procedures that the Company implements for various risks of subsidiaries within the Group are as follows:

(A) Authorisation standards, monitoring indicators and methods of each subsidiary should be specifically defined and risk exposure is regularly escalated to the Board of Directors.
(B) When the monitoring indicator is breached, the risk management unit should assemble related business units, take necessary action and escalate the situation to the Company.
(C) Each subsidiary regularly submits the meeting minutes of its Risk Management Committee with the risk monitored results to the Company.
(D) The Company retains the right to assign members to attend the Risk Management Committee of each subsidiary.

D. Credit risk

(A) Source and definition of credit risk

If counterparties are not able to comply with their obligations at the financial instruments maturity date, the Group may incur losses. Credit risk may occur due to on or off balance sheet items. Credit risk exposure from on balance sheet of the Group is mainly comprised of bills discounted and loans and credit card business, securities financing, leases, deposits and call loans from banks, debt instrument and derivatives, etc. Off balance sheet items include finance guarantees, bank acceptances, letters of credit, and loan commitments.

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(B) Policy for credit risk management

Please refer to Note 12(2)C for risk management regulations and procedures of the subsidiaries within the Group. In addition, significant subsidiaries of the Group are required to establish credit risk control procedures, authorisation standards, evaluation methods, control measures, and credit management in accordance with relevant regulations, in order to control the credit risks from on and off balance sheet items within the Group.

Risk management program and procedures of significant subsidiaries are summarised as follows:

a. Before each transaction, significant subsidiaries should evaluate credit situation of counterparties, as well as referring to the information from domestic/foreign credit rating institutions or subsidiaries’ own rating system, in order to set and manage counterparties’ credit limits by the qualification and evaluation condition.
b. Avoiding the concentration risk, that is, through limiting the amount of financing to or investing in a single customer, single industry, single conglomerate, single stock, or related parties;
c. Monitoring credit risk by industry, counterparty (individual and group) and country by setting the limits;
d. Setting up loan approval and review procedure for credit extension business as well as specific review policy for complicated credit extension cases;
e. Establishing policy of loan percentage on collateral, collateral appraisal, management and disposal in relation to credit extension;
f. Reporting the summary of credit risk information to the senior management.

In addition, each foreign operating entity of the Group sets aside the loss reserve and appraises the assets quality, unless otherwise indicated by competent authorities of the domestic countries in which the subsidiaries reside, in conformity with risk management policy of the subsidiaries.

The significant subsidiaries of the Group classify debt instruments and credit assets into 5 categories by referring to internal ratings and external rating institutions. Comparisons between the internal rating and external long-term rating scales are as follows:

No direct correlation between the internal rating of credit assets and external rating of debt instruments has been shown in the following table, but merely shows two different rating scales of the same category.

Credit quality category	Internal rating of credit assets	The Debt Instruments	The Debt Instruments
		External rating	Taiwan rating
Low risk Medium risk High risk Default Medium-high risk	Level 1 to level 7 Level 8 to level 9 Level 11 to level 12 Level 13 Level 10	Above level BB Level BB- to level B+ Level B (including the debt instruments of non rating) Level B- to level C Level D	Above level twBBB+ twBBB～twBB+ twB+~twCC twBB～twBB-

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Procedures and methods used in credit risk management for the core businesses of the Group are as follows:

a. Credit business (including accounts receivable of lease business, loan commitments and guarantees of the lease subsidiaries):

Classification for credit assets and internal risk ratings are as follows:

(a) Credit asset classification

Credit assets are classified into 5 categories. Other than normal credit assets that shall be classify ed as Category One, the remaining unsound assets are assessed based on the collateral provided and the time period of overdue payment as follows: Category Two for assets requiring special mention. Category three for assets deemed recoverable. Category Four for assets that are doubtful. Category Five for assets that are not recoverable. In order to manage credit extension, the Bank and its subsidiaries established Operation Guidelines for Credit Extension Assets Risks, Regulations Governing the Setting Aside of Asset Losses Valuation and Non-Performing Loans, Guidelines for Claims Receivables, Standard Procedures for Collection of Overdue receivables as the principles for managing nonperforming and overdue payments.

(b) Internal risk rating

In response to the characteristics and scale of business, the Bank and its subsidiaries implemented a credit risk internal evaluation module or set up a credit rating table in order to practice risk management.

The Bank and its subsidiaries, mainly based on the statistics and professional judgement of experts and in consideration of client information, developed an objective indicator for evaluating client’s credit risk. That is the “Borrower’s risk rating” of the Bank and its subsidiaries, among which 13 thresholds are set up based on the default possibility, and then divided into 5 sub-categories as follows:

I. Low risk:The default rate is lower than 2% from Level 1 to level 7. Clients in this threshold usually have ability to sustain the payment of interest and principal even under the adverse impact of economic environment, and the default rate is low.
II. Medium risk:The default rate is ranging around 2-5% from Level 8 to level 9. Clients in this threshold usually have potential issues and adverse economic environment that could damage the borrower’s willingness and capacity to make the payment of interest and principal.
III. Medium-high risk: The default rate is ranging around 5-10 ％ at Level 10. Clients ’ ability to make the payment of interest and principal are relatively lower and easily affected by the economic fluctuation.
IV. High risk: The default rate ranging from 10% and above to less than 100% from Level 11 to level 12. Clients’ ability the make the payment of interest and principal are extremely weak with a high possibility of default.
V. Default: The default rate is 100% at Level 13. Definition of default includes interest or principal payments that have been overdue for more than 60 days, overdue or non-performing loans transferred, suspended interest, C Chart, debt negotiation records and others.

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The Bank should perform credit rating to the corporations at least once a year, as well as to those who sign the mid-long-term credit contracts during the contract term. Same applies to the collective credit extension. Credit rating is mainly processed by the investigation division and regional center that are independent from operating units and only cases with certain amount and below may be processed by operating units.

Petty loans and mortgage loans are assessed through internal credit rating module, and the rest of retail banking are assessed by experts. Methods used in rating credit for petty loans and mortgage loans are as follows:

I. Credit rating for petty loans:

The results of borrowers’, possibility of default (PD), loss given default (LGD) and expected loss rate (EL%) are assessed by credit evaluation module, are divided into 3 categories as follows: “Passed the credit standard”, “Highly risky” and “Failed the credit rating standard”.

II. Credit rating for mortgage loans:

Possibility of default (PD), loss given default (LGD) and exposure at default (EAD) of the borrowers assessed by credit evaluation module are used to calculate the expected loss (EL). The expected loss (EL) together with cost of capital, operation cost, and service fee are integrated into information on cost aspect. In addition, information on income aspect such as interest income and service fee income are assessed based on the credit line and interest rate at the time the borrowers applied for loans to produce ‘expected profit’ (revenue minus cost) and expected loss. Based on the expected default frequency within the next year, the credit rating results are classified into four levels, which are ‘low risk’, ‘medium risk’, ‘medium-high risk’ and ‘high risk’, respectively.

b. Deposits and call loans

The Bank regularly reviews the limit (including limit of call loan) set up for every counterparty in the financial industry. The credit approval unit, with reference to credit risk limit granted based on long-term credit rating of external rating institutions, is responsible for individual assessment and implementation.

c. Debt instruments and derivatives

The risk management of the Company’s and its subsidiaries’ debt instruments is based on credit rating of external institutions, credit quality of bonds, condition by geographical location and counterparty risk to identify the credit risk.

The counterparties of the derivative instruments are mostly financial institutions being rated at BB or above, and the credit extension (including the extension of call loan) granted to each financial institution counterparty is regularly reviewed and controlled by the Credit Approval Division. Those counterparties without credit rating or being rated below BB should apply risk limit to the Credit Approval Division by case, then being managed and controlled individually. If the counterparties are general clients, controlling is implemented through risk limits and conditions of derivatives as approved by general credit extension procedures to manage credit exposure of counterparties.

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d. Margin trading and short selling

Credit risks of the subsidiary, FS are on margin trading and short selling, which are divided into clients’ credit extension and credit trade on management securities.

The credit facility on every client is assessed based on “Guidelines for Accounts Opening for Credit Trading and Investigation on Credit Management”. In addition, the corresponding facility in accordance with the client’s asset proof is granted through segregation, the trading limit on single client and single security are stringently defined. The controlling mechanism in relation to the credit trading on management securities is processed in accordance with “Controlling Practice for Credit Trading Risks”, in which the definition of management securities as well as the controlling and authorisation are detailed.

(C) Recognition and measurement of expected credit losses

In the assessment of impairment and calculation of expected credit losses, the Group considers reasonable and supportable information (including forward-looking information) about past events, current conditions and reasonable and supportable forecasts of future economic conditions. The Group determines at the balance sheet date whether there has been a significant increase in credit risk since initial recognition or whether credit impairment has occurred, and recognises expected credit loss according to which stage the asset belongs: no significant increase in credit risk or low credit risk at balance sheet date (Stage 1), significant increase in credit risk (Stage 2), and credit impaired (Stage 3). 12-month expected credit losses are recognised for assets in Stage 1, and lifetime expected credit loses are recognised for assets in Stage 2 and Stage 3.

The definition of and expected credit losses recognised for each stage are as follows:

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Stage1 Stage2 Stage3
Definition There has been no There has been The financial asset is
significant deterioration significant deterioration credit impaired at the
of the credit quality of of the credit quality of financial reporting date.
the financial asset since the financial asset since
initial recognition, or initial recognition, but
the financial asset is the asset is not yet credit
considered low-risk at impaired.
the balance sheet date.
Expected credit
12-month expected Lifetime expected credit Lifetime expected credit
losses
credit losses losses losses
recognition
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As a result of the COVID-19 outbreak in the beginning of 2020, certain entities and global economic were impacted, and the quality of the credit assets or the amount of revenue of the FCB might be futher affected to some extent. However, the actual impact would be determined based on the subsequent control and the duration of the pandemic as well as the affected degree of economic. The various assumptions and parameters of the impairment model and related assessment methodology has taken the historical, current and future available information into consideration for continuous assessment and adjustment. The Group will continually follow the development of the pandemic, and assess and positively resolve the related impact on financial conditions and operating performance of the Group.

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(a) Credit business

FCB considers reasonable and supportable information (including forward-looking information) when determining whether there has been significant increase in credit risk. The main indicators that are taken into account are as follows:

I. The borrower is over 30 days past due.
II. Placed on the warning list of FCB.
III. Both internal and external credit ratings have deteriorated:
i. Internal rating: The rating on the rating date has dropped more than 3 scales compared to the rating on the initial recognition date.
ii. External rating: The external rating agency has lowered the rating by more than 2 scales to a non-investment grade.
IV. Record of bad credit after assessment, including the following circumstances:
i. Approved the delay of principal payments by borrower while continuing the collection of interest payments due to the deterioration of the financial condition of borrower or concern that loan is not recoverable.
ii. Terms of the loan agreement have been modified, before being classified as non-performing, so that borrower can pay back principal and interest in installments due to the deterioration of the financial condition of the borrower or concern that loan is not recoverable.
iii. Borrower makes partial interest payments with the unpaid amount recorded as owed.
iv. The length of the loan is repeatedly extended.
v. The debtor is on a “No business transaction” list.
vi. The pledged collateral of the debtor is seized by another bank.
vii. The debtor is no longer in business.
viii. The auditor issues an opinion expressing material uncertainty over the company’s ability to continue as a going concern.
ix. FCB reported a returned check issued by debtor.
x. The credit of the borrower has deteriorated or subsidiaries, affiliates, or parents of the borrower have ceased operations.
xi. The debtor has other records of bad credit.

If the internal and external credit ratings of a credit asset satisfies the following conditions, it is considered to be “low-risk at the balance sheet date” and assumed to have no significant increase in credit risk.

I. According to internal credit ratings of FCB, the asset meets the requirements of a “low-risk level” asset, which is estimated to have a default probability less than 2%, and is considered to be “low-risk at the financial reporting date”.
II. External credit ratings: investment grade or above.

FCB will periodically review and assess the appropriateness of the criteria used to determine where there has been a significant increase in credit risk.

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(b) Bond or bill investments

If there is a change in a credit risk indicator that crosses a threshold since initial recognition, it is considered to have significant increase in credit risk. The thresholds for changes in the stage of credit risk indicators are as follows:

I. Bonds or bills are over 30 days past due.
II. The final external credit rating has lowered by 2 scales or more, and the bond or bill is rated as non-investment grade at the reporting date.
III. The cost of the financial asset measured at amortised cost compared to its fair value: The market price of the instrument is not more than 50% of its original investment cost, and the decrease is not the result of changes in market interest rates.
IV. Bond or bill is on FCB’s warning list.

A bond or bill investment of FCB that is not considered to be in Stage 2 or Stage 3 of credit impairment is considered to have no significant increase in credit risk or an asset with low credit risk (Stage 1).

After the impairment assessment of bond or bill investments the associated sales unit will review and confirm the results of the assessment and report to senior management. Data on impairment parameters should be reviewed periodically and updated if necessary; parameters should be updated at least once every year.

a. Definitions of financial assets in default and credit-impaired financial assets

According to the definition stated in Appendix A of IFRS 9, a financial asset is creditimpaired when one or more events that have occurred and have a significant impact on the expected future cash flows of the financial asset.

(a) Credit business

I. Principal or interest payments over 3 months (90 days) past due, or the bank has begun collection procedures or liquidation of collateral.
II. New payment schedule is negotiated so that loan is not classified as nonperforming.
III. Non-performing loans in negotiation according to the rules of the Debt Negotiation Mechanism issued by the Bankers Association in 2006. (including pre-mediation)
IV. Loans that have gone through pre-mediation and have signed agreements in accordance with the Consumer Debt Clearance Act. (excluding secured loans where the original terms of the loans are enforced)
V. Cases where the court has initiated reorganisation or liquidation proceedings.
VI. Declaration of bankruptcy in court.
VII. Reclassified as overdue receivables.
VIII.Special criterion for credit card products: credit card accounts closed by the issuer.
IX. Debtor’s loans from other banking institutions have been recognised as nonperforming, and reclassified as non-accrual or written off as uncollectible.
X. Debtor has filed for bankruptcy, reorganisation, or other debt clearance proceedings.

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XI. Debtor renews, extends the length of, and negotiates new payment terms on the loan in accordance with applicable rules issued by the Bankers Association.
XII. Non-performing loans with negotiated payment installment plan.
XIII.Loans classified as “in default” according to the Bank’s internal credit rating model.

XIV. Insurance loans whose principal and interest exceed the insurance policy value.

(b) Bond or bill investments

A bond or bill investment by the Group is considered credit impaired if any of the following conditions apply:

I. Principal or interest payments are over 3 months (90 days) past due.
II. The S&P credit rating of the bond is “in default” or the equivalent rating is assigned by another credit rating agency.
III. Court has initiated reorganisation or liquidation proceedings.
IV. Declaration of bankruptcy in court.
V. Bond or bill issuer has led for bankruptcy, reorganisation, or other debt clearance proceedings.

b. Write-off policy

If any of the following conditions apply, the Group writes off its non-performing and nonaccrual loans as uncollectible, less the estimated recoverable amount:

(a) The loan cannot be fully or partially recovered due to the dissolution of, disappearance of, settlement with, or declaration of bankruptcy by the debtor.
(b) The collateral and assets of the primary and secondary debtors cannot be used to recover the loan due to low appraisal value, liquidity preference, or high administrative costs associated with seizure and liquidation.
(c) The collateral and assets of the primary and secondary debtors could not be auctioned off after multiple attempts.
(d) The non-performing and non-accrual loans are two years past due, and could not be recovered from collection procedures.
c. Measurement of expected credit losses

Expected credit losses (ECL) are calculated from the following three parameters: probability of default (PD), loss given default (LGD), and exposure at default (EAD).

(a) Credit business
I. Probability of default (PD)

The estimation and grouping of the PD of domestic credit assets is based on the product type and internal credit ratings, with the one-year PD and multi-year PD estimated separately.

i. One-year PD: Calculate the actual one-year PD from historical data and use it to estimate the one-year PD parameter.
ii. Multi-year PD: The multi-year PD is estimated using a Markov Chain with a transition matrix constructed from historical one-year credit ratings, assuming

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the credit rating transition probability remains constant in each period. Applying the multi-year PD to each loan requires selecting the corresponding lifetime. The lifetime of the loan is estimated based on the length of the remaining contract.

II. Loss given default (LGD)

Loans are grouped according to type (corporate or consumer) and the presence of collateral, and the LGD of each group is calculated based on historical recovery experience.

III. Exposure at default (EAD)

i. On balance sheet-Loans and loan receivables: calculated from credit balance.
ii. Off balance sheet-Loan commitments and financial guarantees: off balance sheet figures multiplied by the credit conversion factor (CCF). The credit conversion factor is estimated according to the rules described in the “Calculation Method of Equity Capital and Risky Assets and Accompanying Forms-Credit Risk Standard Rules” and the Group’s internal historical information on actual drawn down amount.

(b) Bond or bill investments

I. PD calculated based on external credit ratings, incorporating forward-looking information.
II. LGD: Average LGD published by external credit rating agencies.
III. EAD:
i. Stage 1 and stage 3: Total carrying amount (including interest receivable).
ii. Stage 2: The cash flows as determined by the bond or bill issuance agreement in lifetime.

Total carrying amount is the amortised cost of the financial asset before any adjustment to the loss allowance.

d. Consideration of forward-looking information

(a) Credit business

FCB incorporates forward-looking information when determining whether there has been a significant increase in credit risk since initial recognition and measuring expected credit loss.

I. Pertaining to significant increase in credit risk
i. FCB’s credit approval process includes evaluation of forward-looking information such as business potential, financial condition, industry outlook, loan collateral, and ability to repay.
ii. Identify customers with potential risk through FCB’s early warning system.
II. Pertaining to measuring expected credit loss

Reflected in the adjustment of model parameters including PD and LGD. Historical data is used to identify the important economic factors that affect the credit risk and expected credit loss of each asset portfolio, including the economic growth rate, inflation, unemployment rate, and real estate prices.

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Subsequent predictions of the important economic factors are made, including the best estimates for the economy in the coming year. In addition to the basic economic scenario, FCB also evaluates other possible economic scenarios and relevant information that is weighted accordingly.

By nature, the predicted values and estimated probabilities are highly uncertain, and the actual results may be very different from the predictions. However, FCB believes the predictions provide the best estimates of the most probable outcomes.

(b) Bond or bill investments

The forward-looking estimate of PD incorporates changes in the business cycle, which can be measured based on economic growth rates. The overall process of the pointintime (PIT) framework begins with constructing country-specific models, then the PD derived from the country-specific models are linked to GDP growth factor of each nation through regression modeling. The regression models are then adjusted using correction factors in order to obtain the PD rate for each credit rating level and the term structure of conditional default rate.

(D) Credit risk hedging and mitigation policy

a. Collateral

The Group adopts a series of policies and measures to mitigate credit risks in relation to credit business, and one of the most common methods is requesting the borrower for the collateral. The Group sets up the scope of collateral that can be recovered and the appraisal, as well as the management and disposing procedures to ensure the credit right. On the other hand, the loan security, terms of collateral, conditions to offset are addressed in the credit extending contract. The reduced facility and shortened repayment period or whether or not a loan is deemed matured are all well defined to mitigate credit risk in case that the credit event does incur.

b. Credit risk limit and risk concentration control

The Group complies with the Banking Act in relation to the provision of business credit to the same individual, the same related parties, or the same affiliated companies as well as residential architecture, corporate architecture. In order to effectively control credit risk concentration, the Group sets up risk assumption limit by rating, industry types, groups, countries and listed securities based on risk management strategy, change in market environment, business complexity, and report to senior management regularly. Assessment and modification shall be performed to various credit risk assumption limit based on overall economic cycle, finance environment and business development strategy regularly (at least once a year) or irregularly.

c. Net settlement with gross agreement

The transactions of the Group and its subsidiaries are usually carried out by gross settlement. Despite that, net settlement is signed in a form of agreement with some trading counterparties, and is executed when a default occurs and all transactions were to terminate in order to further mitigate credit risk.

d. Other credit enhancements

Primarily refers to guarantees by a third-person or credit providing institutions.

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(E) Maximum credit risk exposure and concentration of the Group

Maximum credit risk exposure

The maximum risk exposure of assets in the consolidated balance sheet, without consideration of the collateral or other credit strengthening instruments, is equivalent to the carrying amount. The maximum credit risk exposure relating to accounts off the balance sheet (without consideration of collaterals or the maximum exposure of other credit enhancements) are the unused loan commitments, unused credit commitments for credit cards, unused letters of credit and other guaranteed commitments. As of December 31, 2022 and 2021, please see Note 9 for details.

The management of the Group believes that through a series of stringent evaluation procedures and follow-up reviews afterwards, credit risk exposure off the balance sheet of the Group can be minimised and continuously controlled.

The Group’s largest credit risk exposure - total carrying amount of loans discounted is as follows:

The management of the Group believes that through a series of stringent evaluation procedures and follow-up reviews afterwards, credit risk exposure off the balance sheet of the Group can be minimised and continuously controlled. The Group’s largest credit risk exposure - total carrying amount of loans discounted is as follows:	The management of the Group believes that through a series of stringent evaluation procedures and follow-up reviews afterwards, credit risk exposure off the balance sheet of the Group can be minimised and continuously controlled. The Group’s largest credit risk exposure - total carrying amount of loans discounted is as follows:	The management of the Group believes that through a series of stringent evaluation procedures and follow-up reviews afterwards, credit risk exposure off the balance sheet of the Group can be minimised and continuously controlled. The Group’s largest credit risk exposure - total carrying amount of loans discounted is as follows:	The management of the Group believes that through a series of stringent evaluation procedures and follow-up reviews afterwards, credit risk exposure off the balance sheet of the Group can be minimised and continuously controlled. The Group’s largest credit risk exposure - total carrying amount of loans discounted is as follows:	The management of the Group believes that through a series of stringent evaluation procedures and follow-up reviews afterwards, credit risk exposure off the balance sheet of the Group can be minimised and continuously controlled. The Group’s largest credit risk exposure - total carrying amount of loans discounted is as follows:	The management of the Group believes that through a series of stringent evaluation procedures and follow-up reviews afterwards, credit risk exposure off the balance sheet of the Group can be minimised and continuously controlled. The Group’s largest credit risk exposure - total carrying amount of loans discounted is as follows:
Expressedin Thousands ofNewTaiwan Dollars
December 31, 2022	12-month expected credit losses	Lifetime expected credit losses	Lifetime expected credit losses (credit- impaired financial assets that were neither purchased nor originated)	Difference in impairment recognised under "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non- performing/Non-accrual Loans"	Total
Level of risk
Low risk	2,041,980,497 $	30,544,670 $	- $	- $	2,072,525,167 $
Medium risk	177,596,205	299,686,869	-	-	477,283,074
Medium-high risk	7,426,278	20,422,432	-	-	27,848,710
High risk	410,471	23,579,088	2,148,179	-	26,137,738
Default	-	-	7,872,103	-	7,872,103
Gross carrying amount of financial assets	2,227,413,451	104,415,059	10,020,282	-	2,341,848,792
Allowance for doubtful account (total impairment recognised under IFRS 9)	6,534,382) (	2,592,758) (	1,777,248) (	-	10,904,388) (
Difference in impairment recognised under "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non-performing/ Non-accrual Loans"	-	-	-	18,611,288) (	18,611,288) (
Net	2,220,879,069 $	101,822,301 $	8,243,034 $	18,611,288) ($	2,312,333,116 $

389

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Expressed in Thousands of New Taiwan Dollars
Lifetime expected Difference in impairment
credit losses (credit- recognised under "Regulations
12-month expected Lifetime expected impaired financial Governing the Procedures for
December 31, 2021 Total
credit losses credit losses assets that were neither Banking Institutions to Evaluate
purchased nor Assets and Deal with Non-
originated) performing/Non-accrual Loans"
Level of risk
Low risk $ 1,781,857,497 $ 28,159,868 $ - $ - $ 1,810,017,365
Medium risk 170,931,381 29,174,013 - - 200,105,394
Medium-high risk 8,314,631 11,709,450 - - 20,024,081
High risk 303,234 20,146,091 633,427 - 21,082,752
Default - - 10,157,146 - 10,157,146
Gross carrying amount of
financial assets 1,961,406,743 89,189,422 10,790,573 - 2,061,386,738
Allowance for doubtful
account (total impairment
recognised under IFRS 9) ( 5,891,817) ( 2,139,652) ( 1,570,123) - ( 9,601,592)
Difference in impairment
recognised under "Regulations
Governing the Procedures for
Banking Institutions to
Evaluate Assets and Deal
with Non-performing/
Non-accrual Loans" - - - ( 15,624,355) ( 15,624,355)
Net $ 1,955,514,926 $ 87,049,770 $ 9,220,450 ($ 15,624,355) $ 2,036,160,791
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Mix of credit risk of the credit assets in the balance sheet

The credit risks are deemed significantly concentrated when the financial instrument transactions significantly concentrate on a single person, or when there are multiple trading counterparties engaging in similar business activities with similar economic characteristics making the effects on their abilities of fulfilling the contractual obligation due to economy or other forces similar.

The credit risks of the Group concentrate on accounts on and off balance sheet that occurs through obligation fulfilling or implementation of transactions (either products or services), or through transtype exposure portfolio, including loans, placements and call loan from the banks, securities investment, receivables and derivatives. The nature that the debtor engages in could be a sign of credit risk concentration. FCB does not significantly carry out transactions with single client or single counterparty, nor does any of total trading volume to a single client or a single counterparty account for more than 5% the balance of loans discounted and overdue receivable. The credit risk concentration of the bills discounted, overdue receivables and lease business of FCB by industry, location and collateral are shown as follows:

390

	December 31, 2021	Amount %		1,055,949,193 $ 51.23	724,787,106 35.17	259,497,375 12.59	11,648,907 0.56	5,496,791 0.27	3,630,034 0.18		2,061,009,406 $ 100.00		December 31, 2021	Amount %		1,930,143,531 $ 93.65	73,995,575 3.59	42,902,773 2.08	13,967,527 0.68		2,061,009,406 $ 100.00
Loans discounted, and overdue receivable of FCB by sector were shown as follows:	December 31, 2022	Industry Amount %		Private enterprises 1,205,365,357 $ 51.47	Private individual 785,146,191 33.53	Overseas and others 326,083,013 13.92	Government institutions 9,645,672 0.41	Public enterprises 11,640,715 0.50	Non-profit organisations 3,880,222 0.17		Total 2,341,761,170 $ 100.00	Loans discounted, and overdue receivable of FCB by location (Note) were shown as follows:	December 31, 2022	Geographical location Amount %		Asia 2,169,243,901 $ 92.63	North America 102,624,916 4.38	Oceania 47,662,353 2.04	Europe 22,230,000 0.95		Total 2,341,761,170 $ 100.00	Note: the above geographical analysis was made on the basis of the branch of debtor.

391

December 31, 2021	Amount %		468,792,289 $ 22.74		1,108,799,958 53.80	163,586,156 7.94	53,621,061 2.60	14,221,475 0.69	251,988,467 12.23	2,061,009,406 $ 100.00
December 31, 2022	Collateral type Amount %		Unsecured loans 572,631,366 $ 24.45	Secured loans	-Real estate 1,221,110,303 52.14	-Guarantee 154,303,626 6.59	-Financial collateral 69,962,606 2.99	-Other collateral 17,732,844 0.76	Overseas and others 306,020,425 13.07	Total 2,341,761,170 $ 100.00	(Blank)

392

The affected financials from collateral, net settled master netting arrangements and other credit enhancement for the Group’s assets exposed to credit risk were as follows:

The affected financials from collateral, net settled master netting arrangements and other credit enhancement for the Group’s assets exposed to credit risk were as follows:	The affected financials from collateral, net settled master netting arrangements and other credit enhancement for the Group’s assets exposed to credit risk were as follows:	The affected financials from collateral, net settled master netting arrangements and other credit enhancement for the Group’s assets exposed to credit risk were as follows:	The affected financials from collateral, net settled master netting arrangements and other credit enhancement for the Group’s assets exposed to credit risk were as follows:	The affected financials from collateral, net settled master netting arrangements and other credit enhancement for the Group’s assets exposed to credit risk were as follows:
Expressed in Thousands of New Taiwan Dollars
December 31, 2022	Collateral	Net settled master netting arrangements	Other credit enhancement	Total
Balance sheet items
Financial assets at fair value through profit or loss
－Debt instruments	- $	- $	21,330,598 $	21,330,598 $
－Derivative instruments	5,992,393	8,593,740	-	14,586,133
Receivables
－Credit card business	8,274	-	-	8,274
－Others	11,093,915	-	285,362	11,379,277
Loans discounted	1,539,633,003	-	171,657,584	1,711,290,587
Financial assets at fair value through other comprehensive income
－Bond investments	-	-	12,345,353	12,345,353
Investments in debt instruments at amortised cost
－Bond investments	-	-	41,531,706	41,531,706
Off-balance sheet items
Irrevocable loan commitments	5,733,246	-	298,781	6,032,027
Unused letters of credit issued	6,364,167	-	3,510,280	9,874,447
All types of guarantees	19,516,595	-	9,815,086	29,331,681
Total	1,588,341,593 $	8,593,740 $	260,774,750 $	1,857,710,083 $
Expressed in Thousands of New Taiwan Dollars
December 31, 2021	Collateral	Net settled master netting arrangements	Other credit enhancement	Total
Balance sheet items
Financial assets at fair value through profit or loss
－Debt instruments	- $	- $	16,739,649 $	16,739,649 $
－Derivative instruments	905,009	2,759,725	-	3,664,734
Receivables
－Credit card business	11,113	-	-	11,113
－Others	12,391,155	-	276,961	12,668,116
Loans discounted	1,342,129,213	-	170,554,682	1,512,683,895
Financial assets at fair value through other comprehensive income
－Bond investments	-	-	15,162,278	15,162,278
Investments in debt instruments at amortised cost
－Bond investments	-	-	33,477,719	33,477,719
Other financial assets
－Others	301	-	-	301
Off-balance sheet items
Irrevocable loan commitments	5,606,189	-	294,479	5,900,668
Unused letters of credit issued	4,912,673	-	3,437,877	8,350,550
All types of guarantees	15,762,212	-	7,150,048	22,912,260
Total	1,381,717,865 $	2,759,725 $	247,093,693 $	1,631,571,283 $

Note 1: “ Collateral” refers to fixed and non-fixed asset liens, as well as non-fixed asset or equity pledges and guarantees; Collateral for credit assets refer to the lower of appraisal value and maximum exposure.

Note 2: Details of improvement to net settlement master netting arrangements and other credits are provided in Note 12(2)C.(c).

393

The Group closely monitors the value of collateral of financial instruments, taking into account creditimpaired financial assets for which impairment should be recognised. Information on credit-impaired financial assets and the value of collateral that can offset potential losses was as follows:

The Group closely monitors the value of collateral of financial instruments, taking into account credit- impaired financial assets for which impairment should be recognised. Information on credit-impaired financial assets and the value of collateral that can offset potential losses was as follows:	The Group closely monitors the value of collateral of financial instruments, taking into account credit- impaired financial assets for which impairment should be recognised. Information on credit-impaired financial assets and the value of collateral that can offset potential losses was as follows:	The Group closely monitors the value of collateral of financial instruments, taking into account credit- impaired financial assets for which impairment should be recognised. Information on credit-impaired financial assets and the value of collateral that can offset potential losses was as follows:	The Group closely monitors the value of collateral of financial instruments, taking into account credit- impaired financial assets for which impairment should be recognised. Information on credit-impaired financial assets and the value of collateral that can offset potential losses was as follows:	The Group closely monitors the value of collateral of financial instruments, taking into account credit- impaired financial assets for which impairment should be recognised. Information on credit-impaired financial assets and the value of collateral that can offset potential losses was as follows:
Expressed in Thousands of New Taiwan Dollars
December 31, 2022	Gross carrying amount	Total impairment recognised under IFRS 9	Total risk exposure (amortised cost)	Fair value of collateral
Impaired financial assets:
Balance sheet items
Receivables
Credit card business	172,178 $	53,112 $	119,066 $	100 $
Loans discounted	10,020,282	1,777,248	8,243,034	5,441,400
Off-balance sheet items
Irrevocable loan commitments	1,574	632	942	-
All types ofguarantees	9,891	9,417	474	-
Total	10,203,925 $	1,840,409 $	8,363,516 $	5,441,500 $
Expressed in Thousands of New Taiwan Dollars
December 31, 2021	Gross carrying amount	Total impairment recognised under IFRS 9	Total risk exposure (amortised cost)	Fair value of collateral
Impaired financial assets:
Balance sheet items
Receivables
Credit card business	166,781 $	74,320 $	92,461 $	100 $
Loans discounted	10,790,573	1,570,123	9,220,450	6,684,012
Off-balance sheet items
Irrevocable loan commitments	1,170	472	698	-
All types ofguarantees	1,291	18	1,273	-
Total	10,959,815 $	1,644,933 $	9,314,882 $	6,684,112 $

On December 31, 2022 and 2021, the Group’s written-off financial assets that are still under recourse procedures amounted to $4,280,607 and $4,926,933, respectively.

(Blank)

394

Allowance for bad debts	25,225,947 $		-	-	-	713,425	3,916,365	3,007,775) (	2,986,933	495,757) (	176,538	29,515,676 $
Difference in impairment recognised under "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non- performing/ Non-accrual Loans"	15,624,355 $		-	-	-	-	-	-	2,986,933	-	-	18,611,288 $
Total impairment recognised under IFRS 9	9,601,592 $		-	-	-	713,425	3,916,365	3,007,775) (	-	495,757) (	176,538	10,904,388 $
Lifetime expected credit losses (credit-impaired financial assets that were neither purchased nor originated)	1,570,123 $		32) (	9,255) (	424,546	330,367	17,386	108,132) (	-	483,908) (	36,153	1,777,248 $
Lifetime expected credit losses	2,139,652 $		40,233) (	973,379	216,551) (	388,964) (	423,206	322,571) (	-	4,532) (	29,372	2,592,758 $
12-month expected credit losses	5,891,817 $		40,265	964,124) (	207,995) (	772,022	3,475,773	2,577,072) (	-	7,317) (	111,013	6,534,382 $
For the year ended December 31, 2022	Balance at the beginning of the period	Changes from financial instruments recognised at the beginning of the period:	Transferred to 12-month expected credit losses	Transferred to lifetime expected credit losses	Transferred to credit-impaired financial asset	Additional provision and reversal	Originated or purchased	Derecognised	Difference in impairment recognised under "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non-performing/Non-accrual Loans"	Write-off of uncollectible amount	Foreign exchange and other changes	Balance at the end of the period

395

Allowance for bad debts	23,931,115 $		-	-	-	69,706	3,362,825	3,400,085) (	2,172,273	850,613) (	59,274) (	25,225,947 $
Difference in impairment recognised under "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non- performing/ Non-accrual Loans"	13,452,082 $		-	-	-	-	-	-	2,172,273	-	-	15,624,355 $
Total impairment recognised under IFRS 9	10,479,033 $		-	-	-	69,706	3,362,825	3,400,085) (	-	850,613) (	59,274) (	9,601,592 $
Lifetime expected credit losses (credit-impaired financial assets that were neither purchased nor originated)	1,858,423 $		15) (	1,239) (	565,279	22,537) (	19,987) (	182,406) (	-	622,755) (	4,640) (	1,570,123 $
Lifetime expected credit losses	2,669,039 $		53,995) (	844,007	265,269) (	581,898) (	332,097	559,835) (	-	226,591) (	17,903) (	2,139,652 $
12-month expected credit losses	5,951,571 $		54,010	842,768) (	300,010) (	674,141	3,050,715	2,657,844) (	-	1,267) (	36,731) (	5,891,817 $
For the year ended December 31, 2021	Balance at the beginning of the period	Changes from financial instruments recognised at the beginning of the period:	Transferred to 12-month expected credit losses	Transferred to lifetime expected credit losses	Transferred to credit-impaired financial asset	Additional provision and reversal	Originated or purchased	Derecognised	Difference in impairment recognised under "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non-performing/Non-accrual Loans"	Write-off of uncollectible amount	Foreign exchange and other changes	Balance at the end of the period

396

Allowance for bad debts	681,992 $		-	-	-	12,191) (	35,361	142,661) (	374,468	13,154) (	4,925	928,740 $
Difference in impairment recognised under "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non- performing/ Non-accrual Loans"	230,161 $		-	-	-	-	-	-	374,468	-	-	604,629 $
Total impairment recognised under IFRS 9	451,831 $		-	-	-	12,191) (	35,361	142,661) (	-	13,154) (	4,925	324,111 $
Lifetime expected credit losses (credit-impaired financial assets that were neither purchased nor originated)	289,887 $		20,483) (	42) (	26,910	30,793) (	3,652) (	29,396) (	-	12,430) (	24	220,025 $
Lifetime expected credit losses	54,965 $		750) (	4,331	18,280) (	15,522	1,768	17,648) (	-	691) (	4,974	44,191 $
12-month expected credit losses	106,979 $		21,233	4,289) (	8,630) (	3,080	37,245	95,617) (	-	33) (	73) (	59,895 $
For the year ended December 31, 2022	Balance at the beginning of the period	Changes from financial instruments recognised at the beginning of the period:	Transferred to 12-month expected credit losses	Transferred to lifetime expected credit losses	Transferred to credit-impaired financial asset	Additional provision and reversal	Originated or purchased	Derecognised	Difference in impairment recognised under "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non-performing/Non-accrual Loans"	Write-off of uncollectible amount	Foreign exchange and other changes	Balance at the end of the period

397

Allowance for bad debts	529,040 $		-	-	-	12,771	189,513	78,543) (	139,321	111,342) (	1,232	681,992 $
Difference in impairment recognised under "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non- performing/ Non-accrual Loans"	90,840 $		-	-	-	-	-	-	139,321	-	-	230,161 $
Total impairment recognised under IFRS 9	438,200 $		-	-	-	12,771	189,513	78,543) (	-	111,342) (	1,232	451,831 $
Lifetime expected credit losses (credit-impaired financial assets that were neither purchased nor originated)	240,453 $		4) (	41) (	20,914	4,961) (	80,960	19,314) (	-	28,107) (	13) (	289,887 $
Lifetime expected credit losses	139,759 $		530) (	5,178	12,334) (	7,442	9,739	12,478) (	-	83,162) (	1,351	54,965 $
12-month expected credit losses	57,988 $		534	5,137) (	8,580) (	10,290	98,814	46,751) (	-	73) (	106) (	106,979 $
For the year ended December 31, 2021	Balance at the beginning of the period	Changes from financial instruments recognised at the beginning of the period:	Transferred to 12-month expected credit losses	Transferred to lifetime expected credit losses	Transferred to credit-impaired financial asset	Additional provision and reversal	Originated or purchased	Derecognised	Difference in impairment recognised under "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non-performing/Non-accrual Loans"	Write-off of uncollectible amount	Foreign exchange and other changes	Balance at the end of the period

398

Allowance for bad debts	116,446 $		335) (	6	7,771) (	73,810) (	3,136) (	31,400 $	Allowance for bad debts	740,185 $		2,412	10,882	2) (	69,557	706,588) (	116,446 $
Difference in impairment recognised under "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non- performing/ Non-accrual Loans"	82,298 $		-	-	-	73,810) (	-	8,488 $	Difference in impairment recognised under "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non- performing/ Non-accrual Loans"	12,741 $		-	-	-	69,557	-	82,298 $
Total impairment recognised under IFRS 9	34,148 $		335) (	6	7,771) (	-	3,136) (	22,912 $	Total impairment recognised under IFRS 9	727,444 $		2,412	10,882	2) (	-	706,588) (	34,148 $
Lifetime expected credit losses (credit-impaired financial assets that were neither purchased nor originated)	34,145 $		335) (	-	7,768) (	-	3,136) (	22,906 $	Lifetime expected credit losses (credit-impaired financial assets that were neither purchased nor originated)	727,442 $		2,412	10,879	-	-	706,588) (	34,145 $
Lifetime expected credit losses	- $		-	-	-	-	-	- $	Lifetime expected credit losses	- $		-	-	-	-	-	- $
12-month expected credit losses	3 $		-	6	3) (	-	-	6 $	12-month expected credit losses	2 $		-	3	2) (	-	-	3 $
For the year ended December 31, 2022	Balance at the beginning of the period	Changes from financial instruments recognised at the beginning of the period:	Additional provision and reversal	Originated or purchased	Derecognised	Difference in impairment recognised under "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non-performing/Non-accrual Loans"	Write-off of uncollectible amount	Balance at the end of the period	For the year ended December 31, 2021	Balance at the beginning of the period	Changes from financial instruments recognised at the beginning of the period:	Additional provision and reversal	Originated or purchased	Derecognised	Difference in impairment recognised under "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non-performing/Non-accrual Loans"	Write-off of uncollectible amount	Balance at the end of the period

399

Allowance for bad debts	1,802,352 $		-	-	-	70,270) (	419,366	316,750) (	501,586	2,220	2,338,504 $
Difference in impairment recognised under "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non- performing/ Non-accrual Loans"	1,147,156 $		-	-	-	-	-	-	501,586	-	1,648,742 $
Total impairment recognised under IFRS 9	655,196 $		-	-	-	70,270) (	419,366	316,750) (	-	2,220	689,762 $
Lifetime expected credit losses (credit-impaired financial assets that were neither purchased nor originated)	727 $		-	1) (	10,058	461) (	94	159) (	-	-	10,258 $
Lifetime expected credit losses	78,131 $		5,108) (	9,593	9,716) (	15,642) (	23,923	4,564) (	-	15	76,632 $
12-month expected credit losses	576,338 $		5,108	9,592) (	342) (	54,167) (	395,349	312,027) (	-	2,205	602,872 $
For the year ended December 31, 2022	Balance at the beginning of the period	Changes from financial instruments recognised at the beginning of the period:	Transferred to 12-month expected credit losses	Transferred to lifetime expected credit losses	Transferred to credit-impaired financial asset	Additional provision and reversal	Originated or purchased	Derecognised	Difference in impairment recognised under "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non-performing/Non-accrual Loans"	Foreign exchange and other changes	Balance at the end of the period

400

Allowance for bad debts	1,329,510 $		-	-	-	29,477) (	452,484	340,737) (	391,086	16) (	498) (	1,802,352 $
Difference in impairment recognised under "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non- performing/ Non-accrual Loans"	756,070 $		-	-	-	-	-	-	391,086	-	-	1,147,156 $
Total impairment recognised under IFRS 9	573,440 $		-	-	-	29,477) (	452,484	340,737) (	-	16) (	498) (	655,196 $
Lifetime expected credit losses (credit-impaired financial assets that were neither purchased nor originated)	2,235 $		1) (	2) (	525	573) (	127	1,584) (	-	-	-	727 $
Lifetime expected credit losses	35,994 $		1,631) (	17,938	217) (	140	37,545	11,570) (	-	-	68) (	78,131 $
12-month expected credit losses	535,211 $		1,632	17,936) (	308) (	29,044) (	414,812	327,583) (	-	16) (	430) (	576,338 $
For the year ended December 31, 2021	Balance at the beginning of the period	Changes from financial instruments recognised at the beginning of the period:	Transferred to 12-month expected credit losses	Transferred to lifetime expected credit losses	Transferred to credit-impaired financial asset	Additional provision and reversal	Originated or purchased	Derecognised	Difference in impairment recognised under "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non-performing/Non-accrual Loans"	Write-off of uncollectible amount	Foreign exchange and other changes	Balance at the end of the period

401

Allowance for bad debts	2,061,386,738 $		-	-	-	72,022,301) (	1,104,794,911	764,395,104) (	4,338,532) (	16,423,080	2,341,848,792 $
Lifetime expected credit losses (credit-impaired financial assets that were neither purchased nor originated)	10,790,573 $		23,697) (	322,077) (	3,741,317	519,171) (	440,065	1,032,860) (	3,301,139) (	247,271	10,020,282 $
Lifetime expected credit losses	89,189,422 $		18,937,773) (	40,149,862	1,232,772) (	4,297,504) (	25,255,489	26,518,158) (	112,859) (	919,352	104,415,059 $
12-month expected credit losses	1,961,406,743 $		18,961,470	39,827,785) (	2,508,545) (	67,205,626) (	1,079,099,357	736,844,086) (	924,534) (	15,256,457	2,227,413,451 $
For the year ended December 31, 2022	Balance at the beginning of the period	Changes from financial instruments recognised at the beginning of the period:	Transferred to 12-month expected credit losses	Transferred to lifetime expected credit losses	Transferred to credit-impaired financial asset	Additional provision and reversal	Originated or purchased	Derecognised	Write-off of uncollectible amount	Foreign exchange and other changes	Balance at the end of the period

402

Allowance for bad debts	1,929,643,837 $		-	-	-	78,390,205) (	949,694,193	728,780,031) (	4,310,140) (	6,470,916) (	2,061,386,738 $
Lifetime expected credit losses (credit-impaired financial assets that were neither purchased nor originated)	10,415,095 $		35,530) (	59,697) (	4,425,660	524,123) (	479,401	1,461,018) (	2,447,709) (	1,506) (	10,790,573 $
Lifetime expected credit losses	86,926,328 $		16,889,551) (	36,010,323	2,725,100) (	4,001,592) (	23,980,438	31,804,610) (	1,607,572) (	699,242) (	89,189,422 $
12-month expected credit losses	1,832,302,414 $		16,925,081	35,950,626) (	1,700,560) (	73,864,490) (	925,234,354	695,514,403) (	254,859) (	5,770,168) (	1,961,406,743 $
For the year ended December 31, 2021	Balance at the beginning of the period	Changes from financial instruments recognised at the beginning of the period:	Transferred to 12-month expected credit losses	Transferred to lifetime expected credit losses	Transferred to credit-impaired financial asset	Additional provision and reversal	Originated or purchased	Derecognised	Write-off of uncollectible amount	Foreign exchange and other changes	Balance at the end of the period

403

					Total		6,101,054 $	108,990) (		5,992,064 $				Total		4,936,671 $	130,946) (		4,805,725 $
(c) The simplification of loans, accounts receivable, contract assets and lease receivables	The FCBL included loans and accounts receivable in the impairment assessment, and the results were as follows:	Overdue day of loans and receivables	Overdue for Overdue for Overdue for Overdue for more	December 31, 2022 Not overdue 1~90 days 91~180 days 181~360 days than 361 days	Percentage of expected credit losses 1% 3% 10% 50% 100%		Gross carrying amount 6,039,428 $ 13,790 $ 28,580 $ 11,802 $ 7,454 $	Amount of expected credit losses 92,255) ( 522) ( 2,858) ( 5,901) ( 7,454) (		Net value of loans and receivables 5,947,173 $ 13,268 $ 25,722 $ 5,901 $ - $	Overdue day of loans and receivables	Overdue for Overdue for Overdue for Overdue for more	December 31, 2021 Not overdue 1~90 days 91~180 days 181~360 days than 361 days	Percentage of expected credit losses 1% 3% 10% 50% 100%		Gross carrying amount 4,837,251 $ 10,878 $ 42,700 $ 18,238 $ 27,604 $	Amount of expected credit losses 89,627) ( 326) ( 4,270) ( 9,119) ( 27,604) (		Net value of loans and receivables 4,747,624 $ 10,552 $ 38,430 $ 9,119 $ - $

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Other equity	64,208 $		3,342) (	15,243	10,609) (	694) (	64,806 $	Other equity	86,434 $		9,043) (	22,932	31,626) (	4,489) (	64,208 $
Total impairment recognised under IFRS 9	64,208 $		3,342) (	15,243	10,609) (	694) (	64,806 $	Total impairment recognised under IFRS 9	86,434 $		9,043) (	22,932	31,626) (	4,489) (	64,208 $
Lifetime expected credit losses (credit-impaired financial assets that were neither purchased nor originated)	- $		-	-	-	-	- $	Lifetime expected credit losses (credit-impaired financial assets that were neither purchased nor originated)	- $		-	-	-	-	- $
Lifetime expected credit losses	- $		-	-	-	-	- $	Lifetime expected credit losses	- $		-	-	-	-	- $
12-month expected credit losses	64,208 $		3,342) (	15,243	10,609) (	694) (	64,806 $	12-month expected credit losses	86,434 $		9,043) (	22,932	31,626) (	4,489) (	64,208 $
For the year ended December 31, 2022	Balance at the beginning of the period	Changes from financial instruments recognised at the beginning of the period:	Additional provision and reversal	Originated or purchased	Derecognised	Foreign exchange and other changes	Balance at the end of the period	For the year ended December 31, 2021	Balance at the beginning of the period	Changes from financial instruments recognised at the beginning of the period:	Additional provision and reversal	Originated or purchased	Derecognised	Foreign exchange and other changes	Balance at the end of the period

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Accumulated impairment	29,947 $		-	7,077	11,874	1,158) (	1,784	49,524 $	Accumulated impairment	70,387 $		16,089) (	14,447	38,179) (	619) (	29,947 $
Total impairment recognised under IFRS 9	29,947 $		-	7,077	11,874	1,158) (	1,784	49,524 $	Total impairment recognised under IFRS 9	70,387 $		16,089) (	14,447	38,179) (	619) (	29,947 $
Lifetime expected credit losses (credit-impaired financial assets that were neither purchased nor originated)	- $		-	-	-	-	-	- $	Lifetime expected credit losses (credit-impaired financial assets that were neither purchased nor originated)	- $		-	-	-	-	- $
Lifetime expected credit losses	- $		249	6,047	-	42) (	23	6,277 $	Lifetime expected credit losses	1,262 $		-	-	1,262) (	-	- $
12-month expected credit losses	29,947 $		249) (	1,030	11,874	1,116) (	1,761	43,247 $	12-month expected credit losses	69,125 $		16,089) (	14,447	36,917) (	619) (	29,947 $
For the year ended December 31, 2022	Balance at the beginning of the period	Changes from financial instruments recognised at the beginning of the period:	Transferred to lifetime expected credit losses	Additional provision and reversal	Originated or purchased	Derecognised	Foreign exchange and other changes	Balance at the end of the period	For the year ended December 31, 2021	Balance at the beginning of the period	Changes from financial instruments recognised at the beginning of the period:	Additional provision and reversal	Originated or purchased	Derecognised	Foreign exchange and other changes	Balance at the end of the period

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December 31, 2022	Coverage ratio (Note 3)	335.24%	1532.06%	1951.67%	-	1317.40%	414.06%	-	709.24%	Coverage ratio	764.51%	-
	Allowance for doubtful accounts	9,501,128 $	10,528,305	8,351,895	18	195,436	648,335	414	29,225,531	Allowance for doubtful accounts	79,027	12,621
	Non-performing loan ratio (%) (Note 2)	0.35%	0.08%	0.07%	-	0.08%	0.25%	-	0.18%	Non-performing loan ratio (%)	0.11%	-
	Gross loans	811,914,734 $	852,914,278	578,266,227	168	17,863,663	61,528,947	39,951	2,322,527,968	Balance of receivables	9,424,551	1,243,459
	Non-performing loans (Note 1)	2,834,116 $	687,200	427,936	-	14,835	156,580	-	4,120,667	Non-performing loans	10,337	-
Date	Business / Items	Secured loans	Unsecured loans	Residential mortgage loans (Note 4)	Cash cards	Micro credit loans (Note 5)	Secured	Unsecured	Gross loans business		Credit card services	Without recourse factoring (Note 7)
							Others (Note 6)
		Corporate Banking		Consumer Banking

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December 31, 2021	Coverage ratio (Note 3)	313.16%	1279.24%	1408.26%	-	1852.38%	733.48%	-	620.31%	Coverage ratio	2152.91%	-
	Allowance for doubtful accounts	8,694,336 $	8,000,582	7,533,989	23	136,039	649,048	278	25,014,295	Allowance for doubtful accounts	98,625	74,036
	Non-performing loan ratio (%) (Note 2)	0.37%	0.09%	0.10%	-	0.06%	0.14%	-	0.20%	Non-performing loan ratio (%)	0.05%	-
	Gross loans	748,704,682 $	698,503,598	523,439,761	246	12,305,045	62,133,657	25,512	2,045,112,501	Balance of receivables	8,359,579	7,372,788
	Non-performing loans (Note 1)	2,776,321 $	625,417	534,984	-	7,344	88,489	-	4,032,555	Non-performing loans	4,581	-
Date	Business / Items	Secured loans	Unsecured loans	Residential mortgage loans (Note 4)	Cash cards	Micro credit loans (Note 5)	Secured	Unsecured	Gross loans business		Credit card services	Without recourse factoring (Note 7)
							Others (Note 6)
		Corporate Banking		Consumer Banking

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Total amount of overdue receivables exempted from reporting to the competent authority	4,620 $	134,703	139,323 $	Total amount of overdue receivables exempted from reporting to the competent authority	5,967 $	137,233	143,200 $
Total amount of non-performing loans exempted from reporting to the competent authority	371 $	6,346	6,717 $	Total amount of non-performing loans exempted from reporting to the competent authority	191 $	2,556	2,747 $
	Amounts exempted from reporting to the competent authority under debt negotiation and the contract (Note 1)	Perform in accordance with debt liquidation program and restructuring program (Note 2)	Total		Amounts exempted from reporting to the competent authority under debt negotiation and the contract (Note 1)	Perform in accordance with debt liquidation program and restructuring program (Note 2)	Total

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c. Profile of concentration of credit risk and credit extensions of FCB

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December 31, 2022
Total outstanding
Total outstanding
Ranking loan amount/FCB
Type of industry (Note II) loan amount
(Note І) net worth of the
(Note III)
current period (%)
1 A Group Iron and Steel Refining $ 33,423,955 14.47%
2 B Group Real Estate Industry 19,590,669 8.48%
3 C Group Real Estate Rental and Sales 18,529,224 8.02%
4 D Group Real Estate Development Industry 17,733,442 7.68%
5 E Group Other Financial Services 16,605,646 7.19%
6 F Group Retail Sale of Other Integrated 16,068,692 6.96%
G Group Iron and Steel Rolls over Extends
7
and Crowding 12,094,553 5.24%
8 H Group Financial Leasing Industry 11,689,296 5.06%
I Group Manufacture of Liquid Crystal Panel
9 4.99%
and Components 11,517,618
10 J Group other transportation leasing industry 11,078,392 4.80%
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December 31,2021	December 31,2021	December 31,2021	December 31,2021
Ranking (Note І)	Type of industry (Note II)	Total outstanding loan amount (Note III)	Total outstanding loan amount/FCB net worth of the current period (%)
1 2 3 4 5 6 7 8 9 10	A Group Other Holding Companies B Group Real Estate Development Industry C Group Retail Sale of Other Integrated D Group Real Estate Industry E Group Iron and Steel Rolls over Extends and Crowding F Group Electronic Components Manufacturing G Group Cardboard Manufacturing H Group Real Estate Development Industry I Group Department Store J GroupManufacture of Integrated Circuits	28,815,982 $ 19,529,972 13,531,644 12,521,854 12,163,727 8,827,230 8,529,391 8,525,406 8,472,235 8,397,122	12.89% 8.74% 6.05% 5.60% 5.44% 3.95% 3.82% 3.81% 3.79% 3.76%

Note:

I. Ranking the top 10 enterprise groups other than government and government enterprise according to their total outstanding loan amount.

II. Definition of enterprise group is based on the Article 6 of Supplementary Provisions to the Taiwan Stock Exchange Corporation Rules for Review of Securities Listings.

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III.Total outstanding loan amount is the sum of balances of all types of loans (including import negotiation, export negotiation, bills discounted, overdraft, short-term unsecured loan, shortterm secured loan, margin loans receivable, medium-term unsecured loan, medium-term secured loan, long-term unsecured loan, long-term secured loan and overdue loan), purchases in remittances, without recourse factoring, acceptance receivable and guarantees.

E. Liquidity risk

(A) Resource and definition of liquidity risk

The liquidity risk of the Group refer to a financial loss when assets are not convertible or not enough financing aid can be obtained to inject fund for the financial liabilities soon to be matured. For instance, the client terminates the deposit contract in advance, or financing channel of call loan becomes difficult due to market influence, or deterioration on the credit default rate giving rise to unusual fund collection, difficulty in converting the financial instrument and interest sensitive insurer exercise the right to terminate contract in advance. Above events may mitigate the cash inflows from loan origination, transactions and investing activities from the lease subsidiaries.

Liquidity risk exists in the Group’s operation, which may be given rise by specific event of various industries or overall market movement, such as liquidation protocol of deposit or call loan payment, source of loan or time required for asset liquidation are affected by various industries or certain overall market events, including but not limited to insufficient depth of market, market disorder, low liquidity on funds, credit event, merging or acquisition activities, systematic impact and natural disasters.

The working capital of leasing is sufficient, therefore there is no liquidity risk from the inability to raise capital for fulfilling contractual obligations.

(B) Procedures and evaluation method used for liquidity risk management

Please see Note 12(2)C for the risk controlling regulations and procedures.

In order to prevent liquid risk that gives rise to operating risk, crisis reaction procedures have been set up in relation to liquidity risk and fund liquidity gap shall be monitored on a regular basis.

Management procedure and evaluation method for the liquidity risk of the Group are as follows:

a. The subsidiary, FCB

Procedure

In consideration of the operating demand, the sources of fund need to be diverse and stable. The use of fund should avoid high concentration, and the liquid assets held should take precedence of highly liquid earning assets of high quality.

In accordance with the “Management policy of assets and liabilities” and “Management principle of liquidity and interest risk”, risk management division is the investigation unit for liquidity risk indicator. Finance division is the execution unit for fund transferring. Also, attention needs to be paid on the movement of market condition and day-to-day capital liquidity to ensure appropriate liquidity and long-term profitability. Unless otherwise indicated by offshore branches, sufficient liquidity shall be maintained in accordance with the local competent authorities.

Risk management division sets up liquid position or indicator limit by the duration and implements after obtaining the approval from assets and liabilities management committee

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and Board of Directors. Each liquidity risk monitoring indicator are assessed and appraised regularly in the meeting of assets and liabilities management committee.

Risk management division is responsible for reporting the assets and liabilities management committee, risk management committee and Board of Directors to represent the liquidity risk and other monitoring result.

Evaluation method

The content of the liquidity risk report mainly used to estimate cash flow from various business line and the effects on fund transferring so that early warning area and target goal can be set up for cash gap and relevant indicator in order to control both under the tolerable risk limit.

Risk Management Division regularly makes “Analysis table for cash flow gap” and “Adjustment table for cash flow gap” to ensure that the cash flow gap is within the granted limit and reports to the management in relation to fund liquidity matters. Given that the limit has been reached or an obvious deteriorated indicator shown internally or externally, immediate escalation should be made to the assets and liabilities management committee for further response action and report to the Board of Directors. Given the liquidity risk, action shall be taken in accordance with “Contingent plan for liquidity risk”.

b. The subsidiary, FS

Procedure

In order to maintain proper liquidity and security, enhance liquidity risk management, increase return on capital utilisation and integrate business operation, the management, planning and risk controlling execution of liquidity risk is carried out in accordance with “Regulations Governing the Capital Liquidity Risks”.

In addition to operating funds and long-term investment of various businesses, proper revolving fund is required for the daily operation. Additionally the remaining capital, in principle, should hold liquid and superior earning assets in avoidance of high concentration according to the “Regulations Governing the Acquisition of Funds and Utilisation” of FS. The responsible unit for capital transferring adjusts liquidity gap based on the daily capital liquidity volume and market movement to ensure appropriate liquidity.

In the event of credit rating being downgraded, financial crisis, natural disaster or other irresistible event which gives rise to insufficient liquidity, strategic actions should be taken based on the guidelines for crisis management of FS.

Evaluation method

To manage liquidity risks, FS is required to maintain the lowest liquidity ratio by the competent authorities and make “Structural Analysis on Maturities of Assets and Liabilities” by month. The liquidity gap is computed based on the remaining time before maturities of assets and liabilities. In general, accumulative gap of each period should be more than 0 and is submitted to the responsible manager for approval. If the gap for accounts located in 1-10 days is less than 0 in “Structural Analysis on Maturities of Assets and Liabilities”, specific adjustment on the balance structure is needed in an effort to make the gap become greater than 0.

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c. The subsidiary, FLI

Procedure

Liquidity risk refers to a gap between supply and demand of funds due to inability to acquire necessary and sufficient supply of funds by reasonable cost within a reasonable time, or the risk of loss FLI may assume when it has to sell its asset at a price lower than market price in order to acquire necessary supply of funds. FLI’s working capital is sufficient for daily operations, therefore there is no liquidity risk event arising from inability to raise fund for fulfilment of contractual obligations. Most of FLI’s investments in bonds and stocks have an active market. Thus FLI expects that its financial assets can be sold at a price close to the fair value in the market. In order to ensure sufficient funds for fulfilling liabilities as maturity comes due or meeting the demands for increase in assets, FLI reconciles funds by deposits of financial institutions, short-term notes and bills (including bills and bonds under repurchase or resale agreements), and monetary funds. To cope with requirements for fund liquidity, FLI estimates yearly and monthly net cash inflow (outflow) according to revenues and expenditures from annual plan, and checks cash inflow and outflow every day in accordance with the fund procurement procedures for basis of fund allocation.

Evaluation method

In relation to the nature and purposes of holding, the investment segment evaluates market liquidity of the underlying investment with consideration of the commensuration between market trading volume and the position held. As most of FLI’s non-derivative financial liabilities mature within one year, there is no significant risk.

d. The subsidiary, FSIT

Procedure

Aside from utilising capital for long-term and short-term investment, FSIT needs to maintain proper operating capital for daily operations. The remaining capital should avoid overconcentration in particular positions and, in principle, should be utilised in holding liquid and superior interest-bearing assets in accordance with FSIT’s “Guideline Governing Capital Liquidity Risk”.

FSIT’s unit responsible for managing capital adjusts liquidity gaps according to changes in the daily capital movement volume and market conditions to ensure appropriate liquidity. In the event of a credit rating downgrade, financial crisis, natural disaster or other force majeure events that result in its capital being critically insufficient, FSIT’s responses are conducted according to its “Crisis Management Guideline”.

Evaluation method

According to “Structural Analysis on Maturities of Assets and Liabilities” made every month, the capital gap is calculated based on the remaining period of time by asset or liability. In general, the gap should be greater than 0. If the capital gap is less than 0 for the accounts under 0-30 days, specific adjustment on the balance structure is needed in an effort to make the gap become greater than 0.

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(C) Duration analysis for the financial assets and financial liabilities held for liquidity risk management are as follows:
a. Financial assets held for liquidity risk management

In order to fulfill the payment obligation and potential emergent fund demand in the market, as well as manage the liquidity risk at the same time, sound earning assets held by the Group with high liquidity include cash and cash equivalents, due from the central bank and call loans to banks, financial assets at fair value through profit and loss, financial assets at fair value through other comprehensive profit and loss, investments in debt instruments at amortised cost, securities purchased under resell agreements, term receivables, bills discounted and call loan, etc.

b. Duration analysis for the financial assets and financial liabilities held for liquidity risk management

The following table illustrates the cash inflow and outflow of financial assets and financial liabilities of the Group held for liquidity risk management based on the remaining maturity from the balance sheet date to the contract expiration date. While the amounts disclosed in the table are not discounted by contract cash flow, certain accounts may differ from the responding accounts in the balance sheet.

(Blank)

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Total			192,112,179 $	162,555,959	6,450,000	1,294,453,929	2,342,030,360	112,558,062	19,182,192	4,129,342,681			272,153,682	1,936,124,003	1,370,522,582	61,850,000	2,627,783		1,137,409	221,960,863	13,353,888	3,879,730,210	249,612,471 $
Over 1 year			49,170,735 $	-	-	536,082,645	1,371,012,119	9,423,903	3,633,368	1,969,322,770			-	1,510,924,576	57,649,704	60,850,000	1,875,939		-	70,356,288	3,736,393	1,705,392,900	263,929,870 $
181 days~1 year			12,125,176 $	3,967,678	-	71,892,471	232,434,267	2,868,853	2,606,769	325,895,214			458,183	181,129,897	387,150,143	-	358,297		-	6,045,292	1,080,642	576,222,454	250,327,240) ($
91 ~ 180 days			5,474,689 $	13,059,378	-	49,205,987	237,211,422	4,422,998	3,633,789	313,008,263			14,320,709	80,900,558	244,328,924	-	176,377		-	17,091,542	1,019,585	357,837,695	44,829,432) ($
31 ~ 90 days			9,016,976 $	48,555,905	1,450,000	73,545,366	303,216,275	8,568,862	6,093,538	450,446,922			109,725,012	84,338,836	397,877,006	1,000,000	142,486		-	29,613,140	4,239,396	626,935,876	176,488,954) ($
0 ~ 30 days			116,324,603 $	96,972,998	5,000,000	563,727,460	198,156,277	87,273,446	3,214,728	1,070,669,512			147,649,778	78,830,136	283,516,805	-	74,684		1,137,409	98,854,601	3,277,872	613,341,285	457,328,227 $
December 31, 2022	1.Primary capital inflow upon maturity	Non-derivative instrument	Cash and due from other banks	Call loans and overdrafts	Securities purchased under resell agreements	Securities investment	Loans discounted	Other capital inflow upon maturity	Derivative instrument	Total	2.Primary capital outflow upon maturity	Non-derivative instrument	Call loans, overdrafts and due to other banks	Demand deposits	Time deposits	Bank notes payables	Lease liabilities	Financial liability at fair value through profit	or loss-non-derivative	Other capital outflow upon maturity	Derivative instrument	Total	3.Gap upon maturity

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December 31, 2021 0 ~ 30 days 31 ~ 90 days 91 ~ 180 days 181 days~1 year Over 1 year Total	1.Primary capital inflow upon maturity	Non-derivative instrument	Cash and due from other banks 90,677,135 $ 9,263,765 $ 4,888,753 $ 9,342,873 $ 46,337,137 $ 160,509,663 $	Call loans and overdrafts 141,727,800 45,519,779 15,628,609 1,904,539 - 204,780,727	Securities investment 505,847,766 36,581,680 40,636,706 147,134,800 430,779,889 1,160,980,841	Loans discounted 201,223,673 224,468,579 206,236,398 201,980,848 1,227,599,796 2,061,509,294	Other capital inflow upon maturity 87,496,645 8,237,293 4,819,931 2,422,288 5,703,442 108,679,599	Derivative instrument 1,129,981 731,172 1,336,134 750,912 1,033,572 4,981,771	Total 1,028,103,000 324,802,268 273,546,531 363,536,260 1,711,453,836 3,701,441,895	2.Primary capital outflow upon maturity	Non-derivative instrument	Call loans, overdrafts and due to other banks 166,342,583 55,770,195 7,630,307 25,210,903 - 254,953,988	Demand deposits 79,314,840 82,049,788 74,075,719 123,969,799 1,582,454,008 1,941,864,154	Time deposits 167,035,460 234,980,050 223,852,654 350,631,359 34,873,042 1,011,372,565	Bank notes payables - 650,000 - 6,800,000 50,350,000 57,800,000	Lease liabilities 65,471 136,940 184,199 385,772 1,763,747 2,536,129	Other capital outflow upon maturity 103,852,541 23,632,952 9,423,619 3,095,745 44,753,963 184,758,820	Derivative instrument 1,621,312 2,573,890 1,087,325 1,223,546 1,611,615 8,117,688	Total 518,232,207 399,793,815 316,253,823 511,317,124 1,715,806,375 3,461,403,344	3.Gap upon maturity 509,870,793 $ 74,991,547) ($ 42,707,292) ($ 147,780,864) ($ 4,352,539) ($ 240,038,551 $	Maturity analysis for above demand deposits is amortised to each period based on historical experience of FCB. Given that all the demand deposits	have to be paid in the shortest period, as of December 31, 2022 and 2021, the payment on period of 0-30 days will be increased by $1,857,293,867	and $1,862,549,314, respectively.

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(D) Maturity analysis for items off the balance sheet

FCB’s loans, credit commitments and the balance of letters of credit included the unused loan commitments and unused balance of letters of credit; the financial guarantee contracts are limited to those in which FCB is either guarantors or in another case, issuers of standby letters of credit.

Please refer to the below table for maturity analysis for off-balance sheet items of FCB:

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Financial instruments contracts December 31, 2022
More than
Within one year Total
one year
Unused loan commitments (Note) $ 16,164,354 $ 194,838,231 $ 211,002,585
Unused credit commitments for
credit cards 112,830,312 - 112,830,312
Unused letters of credit issued 33,985,302 884,697 34,869,999
Various guarantees 47,118,472 63,459,966 110,578,438
Total $ 210,098,440 $ 259,182,894 $ 469,281,334
Financial instruments contracts December 31, 2021
More than
Within one year Total
one year
Unused loan commitments (Note) $ 12,940,022 $ 194,417,763 $ 207,357,785
Unused credit commitments for
credit cards 108,420,670 - 108,420,670
Unused letters of credit issued 37,377,034 953,637 38,330,671
Various guarantees 33,761,117 64,194,127 97,955,244
Total $ 192,498,843 $ 259,565,527 $ 452,064,370
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Note: Above unused loan commitments included irrevocable loan commitment except for the significant adverse movement.

(E) Disclosure required by Regulations Governing the Preparation of Financial Statements by Financial Holdings Companies
a. Structural analysis of NTD time to maturity (FCB)

Note: Above unused loan commitments included irrevocable loan commitment except for the significant adverse movement. (E) Disclosure required by Regulations Governing the Preparation of Financial Statements by Financial Holdings Companies a. Structural analysis of NTD time to maturity (FCB)	Note: Above unused loan commitments included irrevocable loan commitment except for the significant adverse movement. (E) Disclosure required by Regulations Governing the Preparation of Financial Statements by Financial Holdings Companies a. Structural analysis of NTD time to maturity (FCB)	Note: Above unused loan commitments included irrevocable loan commitment except for the significant adverse movement. (E) Disclosure required by Regulations Governing the Preparation of Financial Statements by Financial Holdings Companies a. Structural analysis of NTD time to maturity (FCB)	Note: Above unused loan commitments included irrevocable loan commitment except for the significant adverse movement. (E) Disclosure required by Regulations Governing the Preparation of Financial Statements by Financial Holdings Companies a. Structural analysis of NTD time to maturity (FCB)	Note: Above unused loan commitments included irrevocable loan commitment except for the significant adverse movement. (E) Disclosure required by Regulations Governing the Preparation of Financial Statements by Financial Holdings Companies a. Structural analysis of NTD time to maturity (FCB)	Note: Above unused loan commitments included irrevocable loan commitment except for the significant adverse movement. (E) Disclosure required by Regulations Governing the Preparation of Financial Statements by Financial Holdings Companies a. Structural analysis of NTD time to maturity (FCB)	Note: Above unused loan commitments included irrevocable loan commitment except for the significant adverse movement. (E) Disclosure required by Regulations Governing the Preparation of Financial Statements by Financial Holdings Companies a. Structural analysis of NTD time to maturity (FCB)	Note: Above unused loan commitments included irrevocable loan commitment except for the significant adverse movement. (E) Disclosure required by Regulations Governing the Preparation of Financial Statements by Financial Holdings Companies a. Structural analysis of NTD time to maturity (FCB)
Expressed in Thousands of New Taiwan Dollars
December 31, 2022
	Total	0~10 days	11~30 days	31~90 days	91 ~ 180 days	181 days ~ 1 year	Over 1 year
Primary capital inflow upon maturity Primary capital outflow upon maturity	3,252,444,077 $ 4,265,696,280) (	429,475,068 $ 177,225,297) (	431,458,214 $ 231,773,302) (	444,345,089 $ 678,289,126) (	280,909,429 $ 673,939,714) (	271,057,931 $ 797,103,156) (	1,395,198,346 $ 1,707,365,685) (
Gap	1,013,252,203) ($	252,249,771 $	199,684,912 $	233,944,037) ($	393,030,285) ($	526,045,225) ($	312,167,339) ($

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December 31, 2021
Total 0~10 days 11~30 days 31~90 days 91 ~ 180 days 181 days ~ 1 year Over 1 year
Primary capital
inflow upon
maturity $ 3,080,742,041 $ 363,486,281 $ 471,478,131 $ 281,648,586 $ 317,442,980 $ 357,147,402 $ 1,289,538,661
Primary capital
outflow upon
maturity ( 4,013,614,619) ( 154,938,036) ( 250,989,387) ( 654,774,175) ( 588,586,935) ( 710,469,867) ( 1,653,856,219)
Gap ($ 932,872,578) $ 208,548,245 $ 220,488,744 ($ 373,125,589) ($ 271,143,955) ($ 353,322,465) ($ 364,317,558)
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Note: The amounts listed above represent from FCB denominated in New Taiwan dollars only.

b. Structural analysis of USD time to maturity (FCB)

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Expressed in Thousands of USD
December 31, 2022
Total 0~30 days 31~90 days 91~180 days 181 days ~ 1 year Over 1 year
Primary capital
inflow upon
maturity $ 46,046,653 $ 15,092,279 $ 13,409,597 $ 4,777,639 $ 4,358,599 $ 8,408,539
Primary capital
outflow upon
maturity ( 51,483,222) ( 14,967,108) ( 12,116,850) ( 8,247,706) ( 9,403,315) ( 6,748,243)
Gap ($ 5,436,569) $ 125,171 $ 1,292,747 ($ 3,470,067) ($ 5,044,716) $ 1,660,296
December 31, 2021
Total 0~30 days 31~90 days 91~180 days 181 days ~ 1 year Over 1 year
Primary capital
inflow upon
maturity $ 48,614,781 $ 13,657,784 $ 13,949,108 $ 6,370,174 $ 5,561,420 $ 9,076,295
Primary capital
outflow upon
maturity ( 53,292,164) ( 13,425,162) ( 9,376,244) ( 10,319,808) ( 10,387,049) ( 9,783,901)
Gap ($ 4,677,383) $ 232,622 $ 4,572,864 ($ 3,949,634) ($ 4,825,629) ($ 707,606)
----- End of picture text -----

Note: The amounts listed above represent from FCB denominated in U.S. dollars only.

F. Market risk

(A) Market risk definition

Market risk occurs when the market price fluctuates leading to movement in fair value of financial instrument held by the Group in or off the balance sheet or the future cash flow. The risk factors that could give rise to market price movement usually include interest rate, exchange rate, equity securities and instrument price. Any movement in above risk factors could result in risk of fluctuation on net profit or value of investment portfolio held by the Group.

The market risks that the Group faces mainly are equity securities, interest rate and exchange rate risk. Market risk position of equity securities mainly include domestic listed stocks, domestic stock index options and stock index futures and call and put warrants, etc. Positions with interest rate risk mainly include: bonds and interest-derivative instruments, such as fixed and floating interest swap and bond option, etc. Positions with exchange rate risk mainly include: the consolidated positions invested by the subsidiaries, indirect subsidiaries of the Group, such as various derivatives denominated in foreign currency, credit-linked bonds, US government bonds, and other foreign bonds, etc.

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(B) Goal of market risk management

In order to effectively identify, evaluate, control and monitor the market risks of the Group, as well as to enhance the managing mechanism of market risk, please see Note 12(2)C. for the risk management policies and controlling procedures that the Company places for subsidiaries within the Group.

Major subsidiaries of the Group have various market risk management policies, standards, key points and the regulations from competent authorities and the Company to comply.

a. FCB sets up “Management policy for market risk”, “Management standards for market risk”, “Management standards for liquidity and interest rate risk” and “Management guidelines for market risk” and others in an attempt to effectively regulate market risk and ensure that the market risk is under the Bank’s bearable capacity.

FCB divided market risk management into trading book and banking book. Interest rate risk management in relation to trading book and banking book is provided in Note 12(2)F(G) and (H). ‘Trading book’ refers to A. positions held with an intention to earn profit from interest rate movement or price variance between the purchase price and selling price, B. positions held for hedging purpose, and C. interest rate related instruments positions and equity securities positions held for brokerage or proprietary trading on which regular market value assessment and capital provision against market risk shall be made. Financial instrument positions not classified as trading book are classified into the scope of ‘banking book’.

b. FS breaks down market risks by segment and sets up “Risk Management Procedure and Implementation Standards” and guidelines for other business management, through which risk control procedures are planned and implemented.
(C) Policy and procedure for market risk management

In order to identify, evaluate, control and monitor market risks that the Group faces and strengthen managing mechanism for market risks, management policies and procedures have been set up to effectively manage market risk and ensure that market risk is controlled under a bearable capacity.

Policy

The Board of FCB is the highest command and supervisory unit in charge of the granting of risk management policy, major risk assumption limit and relevant authorisation. The Risk Management Committee under the Board of Directors executes various risk management implementations as resolved and granted by the Board and performs risk supervision. In addition, risk management division set up independent from the business unit is responsible for establishing market risk management structure for the market risk management.

Procedure

Please see Note 12(2)C or the risk managing regulations and controlling procedures that the Company places for each subsidiary within the Group.

Each key subsidiary sets up stop-loss point, pre-warning program, market risk limit and trading authorisation, annual risk limit of investment portfolio respectively as resolved and approved by the Board of Directors. Followed by the annual reviews, revision and adjustment may be made depending on the actual situation.

a. The risk management division of FCB assesses various risk indicators regularly as required by the policies and monitors various risk indicators to be within the limits

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authorised by the Board of Directors. Any excess over the limits and the usage level of risk limits are summarised and reported to the Board of Directors, risk management committee, general manager, vice-general manager and other related segments. Business unit, before the engagement in new transaction or developing new market, should identify and evaluate risk in compliance with related procedures. The evaluation module before adoption should be verified through module testing technicians in order to effectively identify various market risks. For financial instruments that cannot be assessed by market price or module evaluation, the risks should be transferred by backto-back method to avoid that the Bank may assume uncertain market risk.

b. The subsidiary, FS controls the trading limits to the traders directly through the on-line trading system. When developing a new derivative product, the authorisation standards, approval procedures, risk management and controlling procedures, all should be discussed and reviewed by the risk managing unit and audit segment, and initialed by the General Manager.

(D) Management procedure for market risk

The Group’s management procedure for market risk of interest rate risk, exchange risk and equity securities are as follows:

a. Identification and evaluation

Risk identification: When there is any new product, market or currency of a financial instrument, market risk factors and market risk source should first be identified before the underwriting is permitted.

Risk evaluation: Establish appropriate risk indicators and prescribe risk limits for management. The significant risk indicators of the subsidiaries include, but are not limited to positions, gains and losses, and sensitivity measures (PV01, Delta, Vega, and Gamma). The evaluation of investment portfolios are affected by interest risk, exchange rate risk and equity securities.

b. Monitoring and report

For financial instrument evaluated by the market price, the information of independent source should be assessed at least once a day. For those evaluated by modules, the assumption and input used in the evaluation module as provided by the market data of Reuters and Bloomberg, after the module experience is tested and granted, the calculation on evaluation and sensitivity may be carried on, which is used to control the risk incurred through investment portfolio.

The key subsidiaries of the Group establish risk reporting programs and procedures. The risk management division should regularly present the daily report, monthly report and other risk management report to the Board of Directors and senior management based on the needs of segment heads, general manager, general president or the Board of Directors to report interest risk, exchange risk and equity securities exposure, including gain and loss, trading position, various risk indicators, risk limit usage, all limit excess or fault and so on, and regularly follow-up and send out warning reminder to ensure corrective action has been taken in a timely manner and in compliance with regulations.

(E) Risk evaluation method (market risk evaluation technique)

In order to effectively evaluate market risks, each key subsidiary in the Group sets up methods and limits to measure evaluate risks and performs market price evaluations for the financial instrument position held on a daily/weekly basis, which are then reported to the

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Board or each responsive unit regarding the positions held, gains and losses on transactions and market risks on a weekly/monthly basis.

a. The subsidiary, FCB

In order to effectively evaluate the market risks, FCB establishes appropriate risk indicators and measurement instruments based on each investment portfolio and business characteristics of trading book and banking book. Meanwhile, by setting up risk limits and controlling mechanism, risk limit control is regularly reported to each responsible segment and reported to the Board of Directors. Above risk indicators include: positions, gains and losses, sensitivity indexes (PV01, Delta, Vega, Gamma), stress losses and others.

Definitions of various indicators:

PV01: It is the change in related amount of interest rate instrument when the interest rate moves by 1 bp (1bp = 0.01%).

Delta: When the price of underlying asset moves by 1 unit that leads to related movement in Delta ratio of the derivative, by which is multiplied the nominal amount to measure to Delta position.

Vega: It is the change in related amount of derivative instrument when the value of underlying asset moves by 1 unit. It is the change in related amount of the interest rate instrument when the interest rate moves by 100 basic points.

Gamma: It is the change in related amount of Delta when the underlying asset value moves by 1 unit.

Interest rate-sensitive instruments are the change in related amount of PV01 that incurred to the interest rate instrument when interest rate moves by unit.

Exchange rate-sensitive instruments are the change in related amount of Delta that incurred to the exchange rate instrument when exchange rate moves by 1% of the unit.

Stress loss: Provided that all other conditions remain constant, it is the effects from ±150bps interest rate movement, ±15% overall market movement of equity securities, ±3% exchange rate fluctuation on New Taiwan Dollars versus major currencies or ±5% exchange rate fluctuation on New Taiwan Dollars versus other currencies.

b. The subsidiaries, FS, FLI and FSIT

Basically, financial instruments are valued through Mark-to-Market. However, if there is no quoted market price available for the public, valuation models may be adopted accompanied with related model controlling rules after verification.

(F) Policy and procedure of risk management on trading book

The so-called trading book includes the financial instrument and physical instrument position held for trading or held for hedging purpose in relation to the trading position. The positions held for trading are instruments held with an attempt to sell in short-term or gain profit or arbitrage from the actual or estimated short-term price fluctuations. For example, self-operating position, discretionary account (such as agent facilitating transaction), position generated through market transaction or the position held to offset another position in the trading book, total or major investment portfolio. For positions not included in above trading book are banking book position.

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FCB establishes specific policy and procedure for the trading strategy of trading book position in order to manage potential market risk of trading position and well control the risk within the limits.

a. Strategy

In order to effectively control market risk and ensure the mobility and adaptability of the trading strategy implemented by sale units, market risk limit of the trading book is set at the level of “investment portfolio” to carry out various assessments and controls. In addition, risk limits of each portfolio are set up according to the trading strategy, types of trading instruments and annual profit objective for better management.

b. Policy and procedure of risk management

In principle, management policy is carried out based on annually revised risk limits of each investment portfolio.

c. Evaluation policy and procedure

Generally, financial instruments are assessed through Mark-to-Market, however, Markto-Model may be adopted if there is no fair value in the market. Nonetheless, the model should be independently verified before adoption and relevant guideline model management needs to be set up and implemented accordingly.

Evaluation procedure: The risk management unit confirms that the risk evaluation is consistent with the position information posted on the evaluation system at day-end and the market data adopted. In addition, the risk management unit monitors daily evaluation and risk limit and regularly report risk quota usage and limit exceeding event.

d. Evaluation method

FCB executes stress testing on ±150bps interest rate movement, ±15% equity securities movement, and ±5% exchange rate fluctuation and ±5% and reports to the risk management committee regularly.

(G) Interest risk management for trading book

Risk management on the interest rate of trading book for FCB is as follows:

a. Interest risk definition

Interest risk occurs when there is an adverse movement of interest rate resulting in change in fair value of trading book position held.

b. Management objective

The management objective of interest risk lies in effective identification, evaluation, controlling and monitoring of interest rate to enhance managing mechanism of market risk.

c. Management policy and procedure

In principle, annual risk limits are controlled based on investment portfolio of trading book with interest rate revised annually.

d. Evaluation method

Evaluation is calculated based on the risk-sensitive index verified by system calculation. In addition, stress testing is performed based on ±150bps annual interest rate movement and reported to the risk management committee regularly.

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(H) Risk management for banking book interest

Interest risk is the risk that a bank suffers from an adverse movement of interest rate or financial condition of FCB. Interest movement might change FCB’s net interest income and other interest-sensitive incomes which further affects FCB’s earnings. Meanwhile, interest movement could also affect positions in and off FCB’s balance sheet.

The banking book risk management of the Bank is as follows:

a. Strategy

The objective of interest rate management is to improve banks’ adaptability so that the earnings and economic value in the balance sheet can be assessed and managed through avoiding the impact from interest rate movement.

b. Policy and procedure of risk management

According to “Management policy of asset and liability” and “Management guideline for liquidity and interest risk” of FCB, risk management division is the monitoring unit that is responsible for interest risk index, analysis and monitoring interest-sensitive position, and regular reporting the monitoring result of interest risk to the asset and liability management committee, risk management committee and Board of Directors.

If various interest risk indexes and stress testing results fall in the warning threshold, risk management division should issue warning notice to the asset and liability management committee. However, if interest risk index exceed the planned threshold, it should be reported to the asset and liability management committee for discussing the responding measures, which is followed by relevant business unit and reported to the Board of Directors.

c. Evaluation method

The interest rate risk of FCB is mainly the repricing gap risk resulting from the difference between maturities and repricing date of banking book assets and liabilities and off balance sheet accounts. In order to stabilise long-term profit and business development at the same time, Risk Management Division sets up various monitoring indicators for interest rate of most common period and executes stress testing, and tests the effects on net interest income and net fair economic value within one year using Interest Rate Risk in the Banking Book (IRRBB) issued by the competent authorities and public program. Every interest rate risk indicator and stress testing result should be reported to management for review..

(I) Risk management for foreign exchange
a. Definition of foreign exchange

Foreign exchange risk occurs when the net foreign position held fluctuates with the currency exchange rate giving rise to an exchange gain or loss. The foreigner exchange risks of financial instruments held by the Group mainly include foreign investment position, spot exchange and forward contract, FX option and other derivative or nonderivative instruments. Major currencies involving foreign exchange risk include: USD, EUR, JPY, HKD, AUD, CAD, RMB, etc.

b. Objective

The objective of foreign exchange lies in effective identification, evaluation, controlling and monitoring foreign exchange risk of the Company and enhancement of management mechanism for market risk.

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c. Management policy and procedure

Management policy for market risk is adjusted based on the annual risk limit revised by foreign exchange trading investment portfolio annually.

d. Evaluation method

Through risk sensitive indicators calculated by the validated system as a benchmark, the Bank regularly carries out testing and reports the results to the risk management committee given that the currency and other currency movement at +/-5%.

(J) Risk management for equity securities
a. Definition of equity securities risk

The market risk of the equity securities held by the Group includes the individual risk resulting from market price movement of each equity securities and general market risk resulting from overall market price movement.

b. Risk management objective

The objective for equity risk management lies in effective identification, evaluation, risk controlling and monitoring for the equity securities of the Group and enhancement of managing mechanism for market risk.

c. Management policy

Management policy for market risk is adjusted based on the annual risk limit revised by stock trading investment portfolio annually.

d. Evaluation method

FCB executes stress testing on +/-15% weighted average index of Taiwan stock movement on a monthly basis and reports to the risk management committee regularly.

(K) Market risk assessment techniques

Value at Risk (VaR)

The VaR model is utilised to measure the maximum potential loss, caused by changes in market risk factors, for investment portfolios under a specific time frame and confidence level. For transaction positions, FCB utilise the VaR model as an instrument to control market risk. Currently, FCB’s standard of measuring market risk is electing the historical simulation method to estimate VaR and setting the maximum potential loss under a 99% confidence interval. The VaR of FCB continually undertakes backtesting in order to assess the accuracy of the model.

The Board of Directors of FCB annually re-sets the VaR limit and the risk management departments of FCB conduct the daily controls and management.

	Expressed in Thousands of New Taiwan Dollars	Expressed in Thousands of New Taiwan Dollars	Expressed in Thousands of New Taiwan Dollars
	For theyear ended December 31,2022
	Average	Maximum	Minimum
Foreign exchange VaR Interest VaR Equitysecurities VaR	64,790 $ 39,221 4,450	107,469 $ 116,359 13,977	42,296 $ 4,349 55

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----- Start of picture text -----

Expressed in Thousands of New Taiwan Dollars
For the year ended December 31, 2021
Average Maximum Minimum
Foreign exchange VaR $ 46,672 $ 106,950 $ 16,732
Interest VaR 31,342 49,623 23,100
Equity securities VaR 7,250 16,159 1,607
----- End of picture text -----

(L) Foreign exchange risk gap

As of December 31, 2022 and 2021, the following table summarises financial instruments of foreign denominated assets and liabilities by currency of which the foreign exchange exposure was presented by the carrying amount:

Foreign exchange risk gap As of December 31, 2022 and 2021, the following table summarises financial instruments of foreign denominated assets and liabilities by currency of which the foreign exchange exposure was presented by the carrying amount: Equitysecurities VaR 7,250 16,159 1,607	Foreign exchange risk gap As of December 31, 2022 and 2021, the following table summarises financial instruments of foreign denominated assets and liabilities by currency of which the foreign exchange exposure was presented by the carrying amount: Equitysecurities VaR 7,250 16,159 1,607	Foreign exchange risk gap As of December 31, 2022 and 2021, the following table summarises financial instruments of foreign denominated assets and liabilities by currency of which the foreign exchange exposure was presented by the carrying amount: Equitysecurities VaR 7,250 16,159 1,607
USD RMB Financial assets Cash and cash equivalents 17,795,395 $ 2,339,932 $ Due from the central bank and call loans to other banks 103,214,562 47,661,665 Financial assets at fair value through profit or loss 48,415,729 4,704,570 Financial assets at fair value through other comprehensive income 82,911,185 8,650,282 Loans discounted 289,420,623 21,836,517 Receivables 24,351,136 2,011,843 Investments in debt instruments at amortised cost 119,703,621 28,982,309 Other financial assets 4,190 3,088,066 Other assets 44,162 - Subtotal-financial assets 685,860,603 $ 119,275,184 $ Financial liabilities Deposits from the central bank and banks 144,321,666 $ 19,792,186 $ Deposits and remittances 847,372,869 49,708,744 Financial liabilities at fair value through profit or loss 1,529,753 14,172 Other financial liabilities 23,218,306 1,064,114 Payables 28,184,610 1,052,954 Subtotal-financial liabilities 1,044,627,204 $ 71,632,170 $ Expressed in Thousands of New Taiwan Dollars December31,2022
	USD 17,795,395 $ 103,214,562 48,415,729 82,911,185 289,420,623 24,351,136 119,703,621 4,190 44,162 685,860,603 $ 144,321,666 $ 847,372,869 1,529,753 23,218,306 28,184,610 1,044,627,204 $	RMB
		2,339,932 $ 47,661,665 4,704,570 8,650,282 21,836,517 2,011,843 28,982,309 3,088,066 -
		119,275,184 $
		19,792,186 $ 49,708,744 14,172 1,064,114 1,052,954
		71,632,170 $

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USD RMB Financial assets Cash and cash equivalents 16,498,119 $ 4,680,494 $ Due from the central bank and call loans to other banks 124,766,460 38,482,465 Financial assets at fair value through profit or loss 40,870,953 4,546,457 Financial assets at fair value through other comprehensive income 56,135,805 11,309,339 Loans discounted 260,473,528 20,701,040 Receivables 27,659,909 965,269 Investments in debt instruments at amortised cost 76,130,021 26,680,995 Other financial assets 4,023 1,736,760 Subtotal-financial assets 602,538,818 $ 109,102,819 $ Financial liabilities Deposits from the central bank and banks 123,962,477 $ 5,539,191 $ Deposits and remittances 747,505,007 52,678,889 Financial liabilities at fair value through profit or loss 454,502 7,063 Other financial liabilities 8,747,056 1,305,907 Payables 19,350,739 1,900,935 Subtotal-financial liabilities 900,019,781 $ 61,431,985 $ Expressed in Thousands of New Taiwan Dollars December31,2021	USD RMB Financial assets Cash and cash equivalents 16,498,119 $ 4,680,494 $ Due from the central bank and call loans to other banks 124,766,460 38,482,465 Financial assets at fair value through profit or loss 40,870,953 4,546,457 Financial assets at fair value through other comprehensive income 56,135,805 11,309,339 Loans discounted 260,473,528 20,701,040 Receivables 27,659,909 965,269 Investments in debt instruments at amortised cost 76,130,021 26,680,995 Other financial assets 4,023 1,736,760 Subtotal-financial assets 602,538,818 $ 109,102,819 $ Financial liabilities Deposits from the central bank and banks 123,962,477 $ 5,539,191 $ Deposits and remittances 747,505,007 52,678,889 Financial liabilities at fair value through profit or loss 454,502 7,063 Other financial liabilities 8,747,056 1,305,907 Payables 19,350,739 1,900,935 Subtotal-financial liabilities 900,019,781 $ 61,431,985 $ Expressed in Thousands of New Taiwan Dollars December31,2021	USD RMB Financial assets Cash and cash equivalents 16,498,119 $ 4,680,494 $ Due from the central bank and call loans to other banks 124,766,460 38,482,465 Financial assets at fair value through profit or loss 40,870,953 4,546,457 Financial assets at fair value through other comprehensive income 56,135,805 11,309,339 Loans discounted 260,473,528 20,701,040 Receivables 27,659,909 965,269 Investments in debt instruments at amortised cost 76,130,021 26,680,995 Other financial assets 4,023 1,736,760 Subtotal-financial assets 602,538,818 $ 109,102,819 $ Financial liabilities Deposits from the central bank and banks 123,962,477 $ 5,539,191 $ Deposits and remittances 747,505,007 52,678,889 Financial liabilities at fair value through profit or loss 454,502 7,063 Other financial liabilities 8,747,056 1,305,907 Payables 19,350,739 1,900,935 Subtotal-financial liabilities 900,019,781 $ 61,431,985 $ Expressed in Thousands of New Taiwan Dollars December31,2021
	USD 16,498,119 $ 124,766,460 40,870,953 56,135,805 260,473,528 27,659,909 76,130,021 4,023 602,538,818 $ 123,962,477 $ 747,505,007 454,502 8,747,056 19,350,739 900,019,781 $	RMB
		4,680,494 $ 38,482,465 4,546,457 11,309,339 20,701,040 965,269 26,680,995 1,736,760
		109,102,819 $
		5,539,191 $ 52,678,889 7,063 1,305,907 1,900,935
		61,431,985 $

Note: As of December 31, 2022 and 2021, the exchange rate of USD to NTD were 30.725 and 27.655, respectively. In addition, as of December 31, 2022 and 2021, the exchange rate of RMB to NTD were 4.411 and 4.341, respectively.

(M)Sensitivity analysis

a. Interest rate risk

If the market yield curve shifts upwards or downwards by 20 bps, it could affect the assessed fair value and interest income.

The Group assumes that yield curve is the only variable when all the other interest curves remain constant and sums up the gain and loss resulting from changes in each yield curve. According to the above estimated net interest income and assessed gain and loss on fair value, sensitivity analysis is shown in the below table.

b. Foreign exchange risk

Given that all the other variables remain constant, as of 2022 and 2021, if NTD to USD depreciate / appreciate by 3%, NTD to EUR depreciate / appreciate by 3% or NTD to RMB and other currencies depreciate / appreciate by 4%, the sensitivity of the gain and loss on the net foreign exchange position held by the Group is shown in the below table.

c. Equity securities risk

Given that all the other variables remain constant, if the equity price rises/falls by 5% (based on the average interest rate of Taiwan Stock Exchange Market Index in the latest three years), the fair value of listed stocks, emerging stocks in the trading book and other equity interest relating position held by the Group are shown in the below table.

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d. Sensitivity analysis is summarised as follows:

d. Sensitivity analysis is summarised as follows:	d. Sensitivity analysis is summarised as follows:	d. Sensitivity analysis is summarised as follows:	d. Sensitivity analysis is summarised as follows:
December 31,2022 Expressed in Thousands of New Taiwan Dollars
Main risk	Movements	Effects on gain and loss	Effects on equity
Foreign exchange risk	NTD to USD depreciate by 3%, NTD to EUR depreciate by 3%, NTD to RMB and other currencies depreciate by 4%. (Note 1)	133,797 $	6,730 $
Foreign exchange risk	NTD to USD appreciate by 3%, NTD to EUR appreciate by 3%, NTD to RMB and other currencies appreciate by 4%. (Note 2)	133,797) (	6,730) (
Interest rate risk	Main interest rate curve increases by20 bps	742,224) (	2,756,535) (
Interest rate risk	Main interest rate curve decreases by20 bps	765,264	2,819,061
Equity securities risk	Weighted average index of Taiwan Stock Exchange Market rises by5%.	402,042	1,037,649
Equity securities risk	Weighted average index of Taiwan Stock Exchange Market falls by5%.	402,064) (	1,037,649) (

December 31,2021 Expressed in Thousands of New Taiwan Dollars	December 31,2021 Expressed in Thousands of New Taiwan Dollars	December 31,2021 Expressed in Thousands of New Taiwan Dollars	December 31,2021 Expressed in Thousands of New Taiwan Dollars
Main risk	Movements	Effects on gain and loss	Effects on equity
Foreign exchange risk	NTD to USD depreciate by 3%, NTD to EUR depreciate by 3%, NTD to RMB and other currencies depreciate by 4%. (Note 3)	175,166 $	6,696 $
Foreign exchange risk	NTD to USD appreciate by 3%, NTD to EUR appreciate by 3%, NTD to RMB and other currencies appreciate by 4%. (Note 4)	175,166) (	6,696) (
Interest rate risk	Main interest rate curve increases by20 bps	750,662) (	2,753,817) (
Interest rate risk	Main interest rate curve decreases by20 bps	720,815	2,819,224
Equity securities risk	Weighted average index of Taiwan Stock Exchange Market rises by5%.	416,157	1,357,562
Equity securities risk	Weighted average index of Taiwan Stock Exchange Market falls by5%.	418,309) (	1,357,562) (

Note 1: If NTD to USD, EUR, RMB and other currencies respectively depreciate by 3%, 3%, 4% and 4%, the effects on profit (loss) will be $48,727, ($13,391), ($74,266) and $172,727, the effect on equity for USD is $6,730 and for other currency is $0.

Note 2: If NTD to USD, EUR, RMB and other currencies respectively appreciate by 3%, 3%, 4% and 4%, the effects on profit (loss) will be ($48,727), $13,391, $74,266 and ($172,727), the effect on equity for USD is ($6,730) and for other currency is $0.
Note 3: If NTD to USD, EUR, RMB and other currencies respectively depreciate by 3%, 3%, 4% and 4%, the effects on profit (loss) will be $52,912, ($10,608), ($11,579) and $144,441, the effect on equity for USD is $6,696 and for other currency is $0.
Note 4: If NTD to USD, EUR, RMB and other currencies respectively appreciate by 3%, 3%, 4% and 4%, the effects on profit (loss) will be ($52,912), $10,608, $11,579 and ($144,441), the effect on equity for USD is ($6,696) and for other currency is $0.

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(N) Disclosure made in accordance with Regulations Governing the Preparation of Financial Reports by Public Banks

FCB sensitivity analysis of interest rate for assets and liabilities (NTD)

December 31, 2022

Expressed in Thousands of New Taiwan Dollars, %

Item	1~90 days	91~180 days	181 days~1year	Over 1year	Total
Interest-rate-sensitive assets	2,476,215,904 $	62,454,059 $	67,270,991 $	246,169,206 $	2,852,110,160 $
Interest-rate-sensitive liabilities	610,968,276	1,565,281,740	125,492,732	57,387,241	2,359,129,989
Interest-rate-sensitivegap	1,865,247,628	1,502,827,681) (	58,221,741) (	188,781,965	492,980,171
Net value					230,922,206
Ratio of interest-rate-sensitive assets to interest-rate-sensitive liabilities(%)					120.90%
Ratio of interest-rate-sensitivegapto stockholders’ equity (%)					213.48%

FCB sensitivity analysis of interest rate for assets and liabilities (NTD)

December 31, 2021

230,922,206 120.90% 213.48% Ratio of interest-rate-sensitive assets to interest-rate-sensitive liabilities(%) Ratio of interest-rate-sensitivegapto stockholders’ equity (%) Net value FCB sensitivity analysis of interest rate for assets and liabilities (NTD) December 31, 2021	230,922,206 120.90% 213.48% Ratio of interest-rate-sensitive assets to interest-rate-sensitive liabilities(%) Ratio of interest-rate-sensitivegapto stockholders’ equity (%) Net value FCB sensitivity analysis of interest rate for assets and liabilities (NTD) December 31, 2021	230,922,206 120.90% 213.48% Ratio of interest-rate-sensitive assets to interest-rate-sensitive liabilities(%) Ratio of interest-rate-sensitivegapto stockholders’ equity (%) Net value FCB sensitivity analysis of interest rate for assets and liabilities (NTD) December 31, 2021	230,922,206 120.90% 213.48% Ratio of interest-rate-sensitive assets to interest-rate-sensitive liabilities(%) Ratio of interest-rate-sensitivegapto stockholders’ equity (%) Net value FCB sensitivity analysis of interest rate for assets and liabilities (NTD) December 31, 2021	230,922,206 120.90% 213.48% Ratio of interest-rate-sensitive assets to interest-rate-sensitive liabilities(%) Ratio of interest-rate-sensitivegapto stockholders’ equity (%) Net value FCB sensitivity analysis of interest rate for assets and liabilities (NTD) December 31, 2021	230,922,206 120.90% 213.48% Ratio of interest-rate-sensitive assets to interest-rate-sensitive liabilities(%) Ratio of interest-rate-sensitivegapto stockholders’ equity (%) Net value FCB sensitivity analysis of interest rate for assets and liabilities (NTD) December 31, 2021
Expressed in Thousands of New Taiwan Dollars, %
Item	1~90 days	91~180 days	181 days~1year	Over 1year	Total
Interest-rate-sensitive assets	2,195,375,522 $	50,916,507 $	147,650,170 $	217,056,033 $	2,610,998,232 $
Interest-rate-sensitive liabilities	420,973,593	1,514,520,961	165,399,734	49,277,482	2,150,171,770
Interest-rate-sensitivegap	1,774,401,929	1,463,604,454) (	17,749,564) (	167,778,551	460,826,462
Net value					223,539,719
Ratio of interest-rate-sensitive assets to interest-rate-sensitive liabilities(%)					121.43%
Ratio of interest-rate-sensitivegapto stockholders’ equity (%)					206.15%

Explanation: The amounts listed above represent the items denominated in NTD for the Bank, excluding contingent assets and contingent liabilities.

FCB sensitivity analysis of interest rate for assets and liabilities (USD)

December 31, 2022

Explanation: The amounts listed above represent the items denominated in NTD for the Bank, excluding contingent assets and contingent liabilities. 206.15% Ratio of interest-rate-sensitivegapto stockholders’ equity (%) FCB sensitivity analysis of interest rate for assets and liabilities (USD) December 31, 2022	Explanation: The amounts listed above represent the items denominated in NTD for the Bank, excluding contingent assets and contingent liabilities. 206.15% Ratio of interest-rate-sensitivegapto stockholders’ equity (%) FCB sensitivity analysis of interest rate for assets and liabilities (USD) December 31, 2022	Explanation: The amounts listed above represent the items denominated in NTD for the Bank, excluding contingent assets and contingent liabilities. 206.15% Ratio of interest-rate-sensitivegapto stockholders’ equity (%) FCB sensitivity analysis of interest rate for assets and liabilities (USD) December 31, 2022	Explanation: The amounts listed above represent the items denominated in NTD for the Bank, excluding contingent assets and contingent liabilities. 206.15% Ratio of interest-rate-sensitivegapto stockholders’ equity (%) FCB sensitivity analysis of interest rate for assets and liabilities (USD) December 31, 2022	Explanation: The amounts listed above represent the items denominated in NTD for the Bank, excluding contingent assets and contingent liabilities. 206.15% Ratio of interest-rate-sensitivegapto stockholders’ equity (%) FCB sensitivity analysis of interest rate for assets and liabilities (USD) December 31, 2022	Explanation: The amounts listed above represent the items denominated in NTD for the Bank, excluding contingent assets and contingent liabilities. 206.15% Ratio of interest-rate-sensitivegapto stockholders’ equity (%) FCB sensitivity analysis of interest rate for assets and liabilities (USD) December 31, 2022
Expressed in Thousands of USD, %
Item	1~90 days	91~180 days	181 days~1year	Over 1year	Total
Interest-rate-sensitive assets	17,658,967 $	1,422,889 $	406,128 $	3,672,842 $	23,160,826 $
Interest-rate-sensitive liabilities	21,311,904	11,636,512	2,922,294	2,986	35,873,696
Interest-rate-sensitivegap	3,652,937) (	10,213,623) (	2,516,166) (	3,669,856	12,712,870) (
Net value					7,515,776
Ratio of interest-rate-sensitive assets to interest-rate-sensitive liabilities(%)					64.56%
Ratio of interest-rate-sensitivegapto stockholders’ equity (%)					-169.15%

FCB sensitivity analysis of interest rate for assets and liabilities (USD)

December 31, 2021

7,515,776 64.56% -169.15% Ratio of interest-rate-sensitive assets to interest-rate-sensitive liabilities(%) Ratio of interest-rate-sensitivegapto stockholders’ equity (%) Net value FCB sensitivity analysis of interest rate for assets and liabilities (USD) December 31, 2021	7,515,776 64.56% -169.15% Ratio of interest-rate-sensitive assets to interest-rate-sensitive liabilities(%) Ratio of interest-rate-sensitivegapto stockholders’ equity (%) Net value FCB sensitivity analysis of interest rate for assets and liabilities (USD) December 31, 2021	7,515,776 64.56% -169.15% Ratio of interest-rate-sensitive assets to interest-rate-sensitive liabilities(%) Ratio of interest-rate-sensitivegapto stockholders’ equity (%) Net value FCB sensitivity analysis of interest rate for assets and liabilities (USD) December 31, 2021	7,515,776 64.56% -169.15% Ratio of interest-rate-sensitive assets to interest-rate-sensitive liabilities(%) Ratio of interest-rate-sensitivegapto stockholders’ equity (%) Net value FCB sensitivity analysis of interest rate for assets and liabilities (USD) December 31, 2021	7,515,776 64.56% -169.15% Ratio of interest-rate-sensitive assets to interest-rate-sensitive liabilities(%) Ratio of interest-rate-sensitivegapto stockholders’ equity (%) Net value FCB sensitivity analysis of interest rate for assets and liabilities (USD) December 31, 2021	7,515,776 64.56% -169.15% Ratio of interest-rate-sensitive assets to interest-rate-sensitive liabilities(%) Ratio of interest-rate-sensitivegapto stockholders’ equity (%) Net value FCB sensitivity analysis of interest rate for assets and liabilities (USD) December 31, 2021
Expressed in Thousands of USD, %
Item	1~90 days	91~180 days	181 days~1year	Over 1year	Total
Interest-rate-sensitive assets	16,853,511 $	2,131,479 $	457,963 $	2,550,231 $	21,993,184 $
Interest-rate-sensitive liabilities	14,546,774	15,062,045	4,278,415	2,680	33,889,914
Interest-rate-sensitivegap	2,306,737	12,930,566) (	3,820,452) (	2,547,551	11,896,730) (
Net value					8,083,157
Ratio of interest-rate-sensitive assets to interest-rate-sensitive liabilities(%)					64.90%
Ratio of interest-rate-sensitivegapto stockholders’ equity (%)					-147.18%

Explanation: The amounts listed above represent the items denominated in USD for FCB, excluding contingent assets and contingent liabilities.

428

Note:

A. Interest-rate-sensitive assets and liabilities are those interest earned assets and interest bearing liabilities, revenues and costs which are sensitive to changes in interest rates.
B. Ratio of interest-rate-sensitive assets to interest-rate-sensitive liabilities = Interest-rate-sensitive assets / interest-ratesensitive liabilities.
C. Interest-rate-sensitive gap = Interest-rate-sensitive assets - interest-rate-sensitive liabilities.

G. Transfer of financial assets

Transferred financial assets that are not derecognised entirely.

During the Group’s activities, the transferred financial assets that do not meet derecognition conditions are mainly debt instruments with purchase agreements. The cash flow of the contract has been transferred and related liabilities of transferred financial assets that will be repurchased at a fixed price in the future have been reflected. The Group may not use, sell or pledge the transferred financial assets during the valid period of the transaction. The financial assets were not derecognised as the Group is still exposed to interest rate risk and credit risk.

During the Group’s activities, the transferred financial assets that do not meet derecognition conditions are mainly debt instruments with purchase agreements. The cash flow of the contract has been transferred and related liabilities of transferred financial assets that will be repurchased at a fixed price in the future have been reflected. The Group may not use, sell or pledge the transferred financial assets during the valid period of the transaction. The financial assets were not derecognised as the Group is still exposed to interest rate risk and credit risk.	During the Group’s activities, the transferred financial assets that do not meet derecognition conditions are mainly debt instruments with purchase agreements. The cash flow of the contract has been transferred and related liabilities of transferred financial assets that will be repurchased at a fixed price in the future have been reflected. The Group may not use, sell or pledge the transferred financial assets during the valid period of the transaction. The financial assets were not derecognised as the Group is still exposed to interest rate risk and credit risk.	During the Group’s activities, the transferred financial assets that do not meet derecognition conditions are mainly debt instruments with purchase agreements. The cash flow of the contract has been transferred and related liabilities of transferred financial assets that will be repurchased at a fixed price in the future have been reflected. The Group may not use, sell or pledge the transferred financial assets during the valid period of the transaction. The financial assets were not derecognised as the Group is still exposed to interest rate risk and credit risk.
December 31,2022 Expressed in Thousands of New Taiwan Dollars
Financial assets category	Carrying amount of transferred financial assets	Carrying amount of related financial liabilities
Financial assets at fair value through profit or loss –Repurchase agreement	6,360,025 $	6,411,241 $
Financial assets at fair value through other comprehensive income –Repurchase agreement	8,117,974	7,672,357
Investments in debt instruments at amortised cost –Repurchase agreement	6,842,804	5,693,300
December 31,2021 Expressed in Thousands of New Taiwan Dollars
Financial assets category	Carrying amount of transferred financial assets	Carrying amount of related financial liabilities
Financial assets at fair value through profit or loss –Repurchase agreement	8,524,598 $	8,516,453 $
Financial assets at fair value through other comprehensive income –Repurchase agreement	3,534,008	3,321,294
Investments in debt instruments at amortised cost –Repurchase agreement	5,638,177	5,397,666

429

H. Offsetting financial assets and financial liabilities

The Group has financial instruments that meet the offsetting criteria in paragraph 42 of IAS 32, the gross financial liability is set off against the gross financial asset, resulting in the presentation of a net amount presented in the balance sheet.

The Group has transactions that do not meet the offsetting criteria but follow the net settled master netting arrangements or other similar arrangements, i.e. global master repurchase agreement, global securities lending agreement or similar agreement with repurchase agreements or reverse repurchase agreement. The above transactions are settled on a net basis after offsetting financial assets with financial liabilities if both parties of the transaction choose to use net settlement; the above transactions are settled on a gross basis if both parties do not choose to use net settlement. However, if one party breaches the contract, the counterparty can choose to use net settlement.

(Blank)

430

		Financial instruments (Note) Cash collateral received Derivative instrument 18,874,336 $ - $ 18,874,336 $ 8,593,740 $ 5,992,393 $ 4,288,203 $ Resell agreement 6,450,000 - 6,450,000 - 6,450,000 - Total 25,324,336 $ - $ 25,324,336 $ 8,593,740 $ 12,442,393 $ 4,288,203 $ Financial instruments (Note) Cash collateral received Derivative instrument 13,300,897 $ - $ 13,300,897 $ 8,593,740 $ 668,685 $ 4,038,472 $ Repurchase agreement 13,653,458 - 13,653,458 13,653,458 - - Total 26,954,355 $ - $ 26,954,355 $ 22,247,198 $ 668,685 $ 4,038,472 $ Description recognised financial assets (a) recognised financial liabilities set off in the balance sheet (b) assets presented in the balance sheet (c)=(a)-(b) Net amount (e)=(c)-(d) Note : Including net settled master netting arrangements and non-cash collaterals. Financial liabilities that are offset, or can be settled under agreements of net settled master netting arrangements or similar arrangements Description Gross amounts of recognised financial assets (a) Gross amounts of recognised financial liabilities set off in the balance sheet (b) Net amounts of financial assets presented in the balance sheet (c)=(a)-(b) Not set off in the balance sheet (d) Net amount (e)=(c)-(d) Note : Including net settled master netting arrangements and non-cash collaterals.	Financial instruments (Note) Cash collateral received Derivative instrument 18,874,336 $ - $ 18,874,336 $ 8,593,740 $ 5,992,393 $ 4,288,203 $ Resell agreement 6,450,000 - 6,450,000 - 6,450,000 - Total 25,324,336 $ - $ 25,324,336 $ 8,593,740 $ 12,442,393 $ 4,288,203 $ Financial instruments (Note) Cash collateral received Derivative instrument 13,300,897 $ - $ 13,300,897 $ 8,593,740 $ 668,685 $ 4,038,472 $ Repurchase agreement 13,653,458 - 13,653,458 13,653,458 - - Total 26,954,355 $ - $ 26,954,355 $ 22,247,198 $ 668,685 $ 4,038,472 $ Description recognised financial assets (a) recognised financial liabilities set off in the balance sheet (b) assets presented in the balance sheet (c)=(a)-(b) Net amount (e)=(c)-(d) Note : Including net settled master netting arrangements and non-cash collaterals. Financial liabilities that are offset, or can be settled under agreements of net settled master netting arrangements or similar arrangements Description Gross amounts of recognised financial assets (a) Gross amounts of recognised financial liabilities set off in the balance sheet (b) Net amounts of financial assets presented in the balance sheet (c)=(a)-(b) Not set off in the balance sheet (d) Net amount (e)=(c)-(d) Note : Including net settled master netting arrangements and non-cash collaterals.	Financial instruments (Note) Cash collateral received Derivative instrument 18,874,336 $ - $ 18,874,336 $ 8,593,740 $ 5,992,393 $ 4,288,203 $ Resell agreement 6,450,000 - 6,450,000 - 6,450,000 - Total 25,324,336 $ - $ 25,324,336 $ 8,593,740 $ 12,442,393 $ 4,288,203 $ Financial instruments (Note) Cash collateral received Derivative instrument 13,300,897 $ - $ 13,300,897 $ 8,593,740 $ 668,685 $ 4,038,472 $ Repurchase agreement 13,653,458 - 13,653,458 13,653,458 - - Total 26,954,355 $ - $ 26,954,355 $ 22,247,198 $ 668,685 $ 4,038,472 $ Description recognised financial assets (a) recognised financial liabilities set off in the balance sheet (b) assets presented in the balance sheet (c)=(a)-(b) Net amount (e)=(c)-(d) Note : Including net settled master netting arrangements and non-cash collaterals. Financial liabilities that are offset, or can be settled under agreements of net settled master netting arrangements or similar arrangements Description Gross amounts of recognised financial assets (a) Gross amounts of recognised financial liabilities set off in the balance sheet (b) Net amounts of financial assets presented in the balance sheet (c)=(a)-(b) Not set off in the balance sheet (d) Net amount (e)=(c)-(d) Note : Including net settled master netting arrangements and non-cash collaterals.	Financial instruments (Note) Cash collateral received Derivative instrument 18,874,336 $ - $ 18,874,336 $ 8,593,740 $ 5,992,393 $ 4,288,203 $ Resell agreement 6,450,000 - 6,450,000 - 6,450,000 - Total 25,324,336 $ - $ 25,324,336 $ 8,593,740 $ 12,442,393 $ 4,288,203 $ Financial instruments (Note) Cash collateral received Derivative instrument 13,300,897 $ - $ 13,300,897 $ 8,593,740 $ 668,685 $ 4,038,472 $ Repurchase agreement 13,653,458 - 13,653,458 13,653,458 - - Total 26,954,355 $ - $ 26,954,355 $ 22,247,198 $ 668,685 $ 4,038,472 $ Description recognised financial assets (a) recognised financial liabilities set off in the balance sheet (b) assets presented in the balance sheet (c)=(a)-(b) Net amount (e)=(c)-(d) Note : Including net settled master netting arrangements and non-cash collaterals. Financial liabilities that are offset, or can be settled under agreements of net settled master netting arrangements or similar arrangements Description Gross amounts of recognised financial assets (a) Gross amounts of recognised financial liabilities set off in the balance sheet (b) Net amounts of financial assets presented in the balance sheet (c)=(a)-(b) Not set off in the balance sheet (d) Net amount (e)=(c)-(d) Note : Including net settled master netting arrangements and non-cash collaterals.	Financial instruments (Note) Cash collateral received Derivative instrument 18,874,336 $ - $ 18,874,336 $ 8,593,740 $ 5,992,393 $ 4,288,203 $ Resell agreement 6,450,000 - 6,450,000 - 6,450,000 - Total 25,324,336 $ - $ 25,324,336 $ 8,593,740 $ 12,442,393 $ 4,288,203 $ Financial instruments (Note) Cash collateral received Derivative instrument 13,300,897 $ - $ 13,300,897 $ 8,593,740 $ 668,685 $ 4,038,472 $ Repurchase agreement 13,653,458 - 13,653,458 13,653,458 - - Total 26,954,355 $ - $ 26,954,355 $ 22,247,198 $ 668,685 $ 4,038,472 $ Description recognised financial assets (a) recognised financial liabilities set off in the balance sheet (b) assets presented in the balance sheet (c)=(a)-(b) Net amount (e)=(c)-(d) Note : Including net settled master netting arrangements and non-cash collaterals. Financial liabilities that are offset, or can be settled under agreements of net settled master netting arrangements or similar arrangements Description Gross amounts of recognised financial assets (a) Gross amounts of recognised financial liabilities set off in the balance sheet (b) Net amounts of financial assets presented in the balance sheet (c)=(a)-(b) Not set off in the balance sheet (d) Net amount (e)=(c)-(d) Note : Including net settled master netting arrangements and non-cash collaterals.	Financial instruments (Note) Cash collateral received Derivative instrument 18,874,336 $ - $ 18,874,336 $ 8,593,740 $ 5,992,393 $ 4,288,203 $ Resell agreement 6,450,000 - 6,450,000 - 6,450,000 - Total 25,324,336 $ - $ 25,324,336 $ 8,593,740 $ 12,442,393 $ 4,288,203 $ Financial instruments (Note) Cash collateral received Derivative instrument 13,300,897 $ - $ 13,300,897 $ 8,593,740 $ 668,685 $ 4,038,472 $ Repurchase agreement 13,653,458 - 13,653,458 13,653,458 - - Total 26,954,355 $ - $ 26,954,355 $ 22,247,198 $ 668,685 $ 4,038,472 $ Description recognised financial assets (a) recognised financial liabilities set off in the balance sheet (b) assets presented in the balance sheet (c)=(a)-(b) Net amount (e)=(c)-(d) Note : Including net settled master netting arrangements and non-cash collaterals. Financial liabilities that are offset, or can be settled under agreements of net settled master netting arrangements or similar arrangements Description Gross amounts of recognised financial assets (a) Gross amounts of recognised financial liabilities set off in the balance sheet (b) Net amounts of financial assets presented in the balance sheet (c)=(a)-(b) Not set off in the balance sheet (d) Net amount (e)=(c)-(d) Note : Including net settled master netting arrangements and non-cash collaterals.	Financial instruments (Note) Cash collateral received Derivative instrument 18,874,336 $ - $ 18,874,336 $ 8,593,740 $ 5,992,393 $ 4,288,203 $ Resell agreement 6,450,000 - 6,450,000 - 6,450,000 - Total 25,324,336 $ - $ 25,324,336 $ 8,593,740 $ 12,442,393 $ 4,288,203 $ Financial instruments (Note) Cash collateral received Derivative instrument 13,300,897 $ - $ 13,300,897 $ 8,593,740 $ 668,685 $ 4,038,472 $ Repurchase agreement 13,653,458 - 13,653,458 13,653,458 - - Total 26,954,355 $ - $ 26,954,355 $ 22,247,198 $ 668,685 $ 4,038,472 $ Description recognised financial assets (a) recognised financial liabilities set off in the balance sheet (b) assets presented in the balance sheet (c)=(a)-(b) Net amount (e)=(c)-(d) Note : Including net settled master netting arrangements and non-cash collaterals. Financial liabilities that are offset, or can be settled under agreements of net settled master netting arrangements or similar arrangements Description Gross amounts of recognised financial assets (a) Gross amounts of recognised financial liabilities set off in the balance sheet (b) Net amounts of financial assets presented in the balance sheet (c)=(a)-(b) Not set off in the balance sheet (d) Net amount (e)=(c)-(d) Note : Including net settled master netting arrangements and non-cash collaterals.	Financial instruments (Note) Cash collateral received Derivative instrument 18,874,336 $ - $ 18,874,336 $ 8,593,740 $ 5,992,393 $ 4,288,203 $ Resell agreement 6,450,000 - 6,450,000 - 6,450,000 - Total 25,324,336 $ - $ 25,324,336 $ 8,593,740 $ 12,442,393 $ 4,288,203 $ Financial instruments (Note) Cash collateral received Derivative instrument 13,300,897 $ - $ 13,300,897 $ 8,593,740 $ 668,685 $ 4,038,472 $ Repurchase agreement 13,653,458 - 13,653,458 13,653,458 - - Total 26,954,355 $ - $ 26,954,355 $ 22,247,198 $ 668,685 $ 4,038,472 $ Description recognised financial assets (a) recognised financial liabilities set off in the balance sheet (b) assets presented in the balance sheet (c)=(a)-(b) Net amount (e)=(c)-(d) Note : Including net settled master netting arrangements and non-cash collaterals. Financial liabilities that are offset, or can be settled under agreements of net settled master netting arrangements or similar arrangements Description Gross amounts of recognised financial assets (a) Gross amounts of recognised financial liabilities set off in the balance sheet (b) Net amounts of financial assets presented in the balance sheet (c)=(a)-(b) Not set off in the balance sheet (d) Net amount (e)=(c)-(d) Note : Including net settled master netting arrangements and non-cash collaterals.	Financial instruments (Note) Cash collateral received Derivative instrument 18,874,336 $ - $ 18,874,336 $ 8,593,740 $ 5,992,393 $ 4,288,203 $ Resell agreement 6,450,000 - 6,450,000 - 6,450,000 - Total 25,324,336 $ - $ 25,324,336 $ 8,593,740 $ 12,442,393 $ 4,288,203 $ Financial instruments (Note) Cash collateral received Derivative instrument 13,300,897 $ - $ 13,300,897 $ 8,593,740 $ 668,685 $ 4,038,472 $ Repurchase agreement 13,653,458 - 13,653,458 13,653,458 - - Total 26,954,355 $ - $ 26,954,355 $ 22,247,198 $ 668,685 $ 4,038,472 $ Description recognised financial assets (a) recognised financial liabilities set off in the balance sheet (b) assets presented in the balance sheet (c)=(a)-(b) Net amount (e)=(c)-(d) Note : Including net settled master netting arrangements and non-cash collaterals. Financial liabilities that are offset, or can be settled under agreements of net settled master netting arrangements or similar arrangements Description Gross amounts of recognised financial assets (a) Gross amounts of recognised financial liabilities set off in the balance sheet (b) Net amounts of financial assets presented in the balance sheet (c)=(a)-(b) Not set off in the balance sheet (d) Net amount (e)=(c)-(d) Note : Including net settled master netting arrangements and non-cash collaterals.	Financial instruments (Note) Cash collateral received Derivative instrument 18,874,336 $ - $ 18,874,336 $ 8,593,740 $ 5,992,393 $ 4,288,203 $ Resell agreement 6,450,000 - 6,450,000 - 6,450,000 - Total 25,324,336 $ - $ 25,324,336 $ 8,593,740 $ 12,442,393 $ 4,288,203 $ Financial instruments (Note) Cash collateral received Derivative instrument 13,300,897 $ - $ 13,300,897 $ 8,593,740 $ 668,685 $ 4,038,472 $ Repurchase agreement 13,653,458 - 13,653,458 13,653,458 - - Total 26,954,355 $ - $ 26,954,355 $ 22,247,198 $ 668,685 $ 4,038,472 $ Description recognised financial assets (a) recognised financial liabilities set off in the balance sheet (b) assets presented in the balance sheet (c)=(a)-(b) Net amount (e)=(c)-(d) Note : Including net settled master netting arrangements and non-cash collaterals. Financial liabilities that are offset, or can be settled under agreements of net settled master netting arrangements or similar arrangements Description Gross amounts of recognised financial assets (a) Gross amounts of recognised financial liabilities set off in the balance sheet (b) Net amounts of financial assets presented in the balance sheet (c)=(a)-(b) Not set off in the balance sheet (d) Net amount (e)=(c)-(d) Note : Including net settled master netting arrangements and non-cash collaterals.	Financial instruments (Note) Cash collateral received Derivative instrument 18,874,336 $ - $ 18,874,336 $ 8,593,740 $ 5,992,393 $ 4,288,203 $ Resell agreement 6,450,000 - 6,450,000 - 6,450,000 - Total 25,324,336 $ - $ 25,324,336 $ 8,593,740 $ 12,442,393 $ 4,288,203 $ Financial instruments (Note) Cash collateral received Derivative instrument 13,300,897 $ - $ 13,300,897 $ 8,593,740 $ 668,685 $ 4,038,472 $ Repurchase agreement 13,653,458 - 13,653,458 13,653,458 - - Total 26,954,355 $ - $ 26,954,355 $ 22,247,198 $ 668,685 $ 4,038,472 $ Description recognised financial assets (a) recognised financial liabilities set off in the balance sheet (b) assets presented in the balance sheet (c)=(a)-(b) Net amount (e)=(c)-(d) Note : Including net settled master netting arrangements and non-cash collaterals. Financial liabilities that are offset, or can be settled under agreements of net settled master netting arrangements or similar arrangements Description Gross amounts of recognised financial assets (a) Gross amounts of recognised financial liabilities set off in the balance sheet (b) Net amounts of financial assets presented in the balance sheet (c)=(a)-(b) Not set off in the balance sheet (d) Net amount (e)=(c)-(d) Note : Including net settled master netting arrangements and non-cash collaterals.
Financial assets that are offset, or can be settled under agreements of net settled master netting arrangements or similar arrangements		Net amount (e)=(c)-(d)	4,288,203 $	-	4,288,203 $		ents	Net amount (e)=(c)-(d)		4,038,472 $	-	4,038,472 $
	Not set off in the balance sheet (d)	Cash collateral received	5,992,393 $	6,450,000	12,442,393 $		ster netting arrangements or similar arrangem	Not set off in the balance sheet (d)	Cash collateral received	668,685 $	-	668,685 $
		Financial instruments (Note)	8,593,740 $	-	8,593,740 $				Financial instruments (Note)	8,593,740 $	13,653,458	22,247,198 $
	Net amounts of financial	assets presented in the balance sheet (c)=(a)-(b)	18,874,336 $	6,450,000	25,324,336 $	Note : Including net settled master netting arrangements and non-cash collaterals.	Financial liabilities that are offset, or can be settled under agreements of net settled ma	Net amounts of financial assets presented in the balance sheet (c)=(a)-(b)		13,300,897 $	13,653,458	26,954,355 $
	Gross amounts of	recognised financial liabilities set off in the balance sheet (b)	- $	-	- $			Gross amounts of recognised financial liabilities set off in the balance sheet (b)		- $	-	- $
	Gross amounts of	recognised financial assets (a)	18,874,336 $	6,450,000	25,324,336 $			Gross amounts of recognised financial assets (a)		13,300,897 $	13,653,458	26,954,355 $
		Description	Derivative instrument	Resell agreement	Total			Description		Derivative instrument	Repurchase agreement	Total

431

	Net amount (e)=(c)-(d)	1,000,781 $	1,000,781 $		ents	Net amount (e)=(c)-(d)	Net amount (e)=(c)-(d)	4,082,713 $	-	4,082,713 $
Not set off in the balance sheet (d)	Cash collateral received	905,009 $	905,009 $		ster netting arrangements or similar arrangem	Not set off in the balance sheet (d)	Cash collateral received	1,164,509 $	-	1,164,509 $
	Financial instruments (Note)	2,759,725 $	2,759,725 $				Financial instruments (Note)	2,759,725 $	9,005,687	11,765,412 $
Net amounts of financial	assets presented in the balance sheet (c)=(a)-(b)	4,665,515 $	4,665,515 $	Note : Including net settled master netting arrangements and non-cash collaterals.	Financial liabilities that are offset, or can be settled under agreements of net settled ma	Net amounts of financial assets presented in the balance sheet (c)=(a)-(b)		8,006,947 $	9,005,687	17,012,634 $
Gross amounts of	recognised financial liabilities set off in the balance sheet (b)	- $	- $			Gross amounts of recognised financial liabilities set off in the balance sheet (b)		- $	-	- $
Gross amounts of	recognised financial assets (a)	4,665,515 $	4,665,515 $			Gross amounts of recognised financial assets (a)		8,006,947 $	9,005,687	17,012,634 $
	Description	Derivative instrument	Total			Description		Derivative instrument	Repurchase agreement	Total

432

I. Insurance risks

(A) Policy, procedure and method of risk management relating to insurance liabilities:

Risks relating to insurance liabilities happen when the policy sales underestimate the liability leading to a failure of fulfilling the future obligation. The subsidiary, FLI establishes appropriate risk managing mechanism in relation to various reserves for insurance business which is actually implemented accordingly. The contents include:

a. Review on the legitimacy of the setting aside of provision for insurance.
b. Setting up proper procedures for the setting aside of provision for insurance.
c. Evaluation on the risk of provision for insurance.
d. Controlling methods for risks relating to provision for insurance.
(B) Commensurate policy, procedure and method between risk management and assets and liabilities:

Risk of assets and liabilities commensuration refer to risks occurring due to inconsistent movement in the value of asset and liability. According to the nature and complexity of the insurance liabilities sold, proper assets and liabilities managing mechanism are set up making FLI form, execute, monitor and adjust strategies relating to the assets and liabilities under durable capacity in order to achieve its pre-set financial goals. The content includes:

a. Commensurate risk identification of assets and liabilities.
b. Commensurate risk evaluation of assets and liabilities.
c. Responding commensurate risk of assets and liabilities.
(C) Insurance risk concentration:

All businesses of FLI occur within the territory of Taiwan, and the insurance risks from every location as assumed by FLI have no significant difference between them. Moreover, FLI sets up durable accumulative limits based on each risk unit and each risk event and transfers the risks exceeding risk limit through reinsurance.

(D) Sensitivity analysis on insurance risk:

According to insurance regulations, the assumption variables used for computing policy reserve are locked-in upon pricing. However, such assumption may differ from the actual experience as time passes. In addition, according to IFRS No. 4, FLI should perform liability adequacy test to evaluate if the provision for insurance recognised is sufficient or not. In particular, for changes in various assumptions on death rate, insurance rate, lapse rate, discount rate and rate of return on investment, the results of sensitivity testing have shown that inadequacy of FLI’s liabilities did not exist for the years ended December 31, 2022 and 2021, given that the death rate moves by 10%, insurance rate rises by 10%, assumed lapse rate moves by 10% or 30%, fluctuates by 1%.

(E) Credit risk:

With regard to the insurance contracts taken over by FLI, credit risks happen mainly when the reinsurer fails to carry out the obligation of reinsurance contract leading to a financial loss of FLI. Any dispute between FLI and reinsurer could give rise to further impairment on the reinsured assets. In addition, receivables from insurance agents or representatives could also involve credit risks.

433

To avoid the above risks, the subsidiary, FLI chooses to transact with reinsurance companies with good credit rating. The maximum exposure on reinsurance contract of FLI is the carrying amount of reinsured asset.

(F) Liquidity risk:

The liquidity risk of insurance contract mainly happens when FLI fails to liquidate assets or obtain sufficient fund leading to a failure in fulfilling obligation from various insurance liabilities. In order to manage the liquidity risk of insurance contracts, FLI carries out maturity analysis on insurance contract regularly and reviews the assets and liabilities.

The following table contains an analysis on estimated timing for net cash flow of insurance contracts of FLI. The figures in the table represent estimates that the total insurance payment and expense at certain time in the future less undiscounted cash inflow, premiums for example. However, the actual payments in the future may differ from the estimated experience.

Net cash outflow of insurance contract:

experience. Net cash outflow of insurance contract:
December 31,2022 Less than 1 year 2,318,238 $ 1~5 years 22,379,469 5~15 years 28,042,376 More than 15 years 33,654,569 Total contractual cash flow 86,394,652 $	December 31,2021
	336,351 $ 17,455,587 23,779,068 18,319,016
	59,890,022 $

(G) Market risk:

Main risks of insurance contracts assumed by the subsidiary, FLI include: death rate, mortality rate, insurance rate and return rate, etc. FLI calculates and sets aside statutory reserves in accordance with “Regulations Governing the Setting Aside of Various Reserves by Insurance Enterprises”. As the assumed interest rate is pre-determined as at policy issuance, the statutory reserves will not change with market interest rate fluctuations. The regulator will regularly review the discount rate assumption, which however may not necessarily correspond to the market risk factors (e.g. market interest rate) in terms of time, amount, or direction, and it is only applicable to the new policies. In case the regulator changes the discount rate assumption, its impact on profit/loss or equity will vary depending on the range of the change and FLI ‘s overall product mix.

In addition, when FLI conducts liability adequacy testing, its best estimate of the investment return rate is set as the discount rate. For the related effects of the discount rate to the adequacy of FLI’s current provision for insurance, please refer to the explanations under sensitivity analysis on insurance risk.

(H) Regarding derivatives embedded in the main insurance contract not measured by fair value, information on market risk exposure is as follows:

The following embedded derivatives issued by FLI, of which the contracts are not measured by fair value. Surrender value of such instruments varies with the announced interest rates, and the announced interest rates are the interest rates used to compute the value of insurance contract reserve in the year in which the policy effective date or the month of policy anniversary date announced by the life insurance company. FLI assumes risks when the overall return on investment or separated return rate on investment is lower than the lowest

434

guaranteed interest rate. However, FLI regularly reviews the return on investment and investment portfolios to mitigate risk of interest-spread.

(3) Capital management

For the effective control on capital adequacy of the Group and each of its subsidiary, as well as for ensuring the business development and risk controlling, the Company has established “Management Policies for Capital Adequacy of The First Financial Holdings Company” as approved by the Board of Directors to improve capital utilisation efficiency of the Group, through which the Risk Management Committee then sets up “Warning Indicators for Capital Adequacy ” for each subsidiary accordingly as authorised by the Board so that the capital strategies from senior management can be practiced and implemented. Related information should be reported to the Board of Directors accordingly on a regular basis.

In addition, in order to establish evaluation process for capital adequacy and maintain proper selfowned capital structure of each significant subsidiary within the Group, also to develop business and control risk on both sides for better improvement of capital utilisation, subsidiaries have established capital management policies to implement the strategies of senior management and the related information shall be disclosed or reported accordingly.

The management objectives and procedures for capital management of the significant subsidiaries within the Group are as follows:

A. Objective of capital management

(A) To ensure that the Group and its subsidiaries comply with regulations governing capital adequacy and minimum requirements set up by competent authorities of each industry, the consolidated capital adequacy ratio for the Group shall not be lower than 100%, capital adequacy ratio for FCB should be not be lower than 10.5% as set out in “Regulations Governing Capital Adequacy of Banks”, capital adequacy ratio for FS should not be lower than 150% as set out in “Regulations Governing Securities Firms”, and capital adequacy ratio for FLI should be not be lower than 200% as set out in “Regulations Governing Capital Adequacy of Insurance Companies”.
(B) In response to the capital required from each subsidiary’s operation plan, and to make them have sufficient capital for various risks derived from capital demand, capital allocation is distributed under a goal of utilisation of capital arrangement.
(C) Significant subsidiaries such as FCB, FS and FLI should evaluate its capital adequacy on a regular basis and appropriately plan on its capital structure, tool to exercise and portfolio adjustment through duty segregation to carry out capital management.

B. Capital management procedures

The Board of Directors of the Company is the highest authority of the Group. To maintain the capital adequacy, the Board authorises Risk Management Committee of the Company to set up “Warning indicators of Capital Adequacy” and review the budgeted business goals for each subsidiary every year. When the capital adequacy ratio of each subsidiary is lower than the warning indicator, the Company has to take action depending on the significance.

When the capital adequacy is lower than the legal standard as required, the Group may start to plan on resolutions, such as increasing qualifying net capital or decreasing the legal standards, including:

435

(A) Reduce total risk assets of subsidiaries.
(B) Adjust asset portfolios of subsidiaries.
(C) Dispose the stock investments of subsidiaries; or
(D) Increase capital of the Company or issue preferred stocks or subordinated bonds that can be included in qualifying capital.

The Company performs evaluation for the Group’s capital adequacy and reports to the senior management in order to effectively monitor the capital adequacy of the Group on time.

The responsible segments of significant subsidiaries such as FCB, FS and FLI should effectively identify, evaluate, monitor and control market risk, credit risk, operating risk, banking book interest risk, liquidity risk as set up by competent authorities and comply with legal and compliance risk regulations with an attempt to reflect evaluation on the minimum capital required. The subsidiary, FCB also sets up separately a team for capital planning and holds a meeting to ensure the implementation of the Board’s capital strategies on a regular basis in respect of capital managing objectives of capital adequacy, fund gap, responding measures that could impose an effect on risk assets or qualifying self-owned capital and so on.

(A) Capital adequacy

al and compliance risk regulations with an attempt to reflect evaluation on the minimum ital required. The subsidiary, FCB also sets up separately a team for capital planning and ds a meeting to ensure the implementation of the Board’s capital strategies on a regular is in respect of capital managing objectives of capital adequacy, fund gap, responding asures that could impose an effect on risk assets or qualifying self-owned capital and so on. Capital adequacy	al and compliance risk regulations with an attempt to reflect evaluation on the minimum ital required. The subsidiary, FCB also sets up separately a team for capital planning and ds a meeting to ensure the implementation of the Board’s capital strategies on a regular is in respect of capital managing objectives of capital adequacy, fund gap, responding asures that could impose an effect on risk assets or qualifying self-owned capital and so on. Capital adequacy	al and compliance risk regulations with an attempt to reflect evaluation on the minimum ital required. The subsidiary, FCB also sets up separately a team for capital planning and ds a meeting to ensure the implementation of the Board’s capital strategies on a regular is in respect of capital managing objectives of capital adequacy, fund gap, responding asures that could impose an effect on risk assets or qualifying self-owned capital and so on. Capital adequacy	al and compliance risk regulations with an attempt to reflect evaluation on the minimum ital required. The subsidiary, FCB also sets up separately a team for capital planning and ds a meeting to ensure the implementation of the Board’s capital strategies on a regular is in respect of capital managing objectives of capital adequacy, fund gap, responding asures that could impose an effect on risk assets or qualifying self-owned capital and so on. Capital adequacy
December 31,2022 Expressed in Thousands of New Taiwan Dollars,%
Item Company	Ownership of financial holdings	Qualifying capital	Legal capital demand
FFHC	100%	234,118,839 $	247,447,399 $
FCB	100%	296,970,300	226,641,759
FS	100%	5,937,713	2,113,831
FLI	100%	4,968,494	1,632,887
FSIT	100%	1,034,534	586,817
FVC	100%	1,874,076	941,107
Other subsidiaries	100%	1,789,230	2,488,828
Deductible item	100%	249,830,137) (	244,672,903) (
Subtotal		296,863,049	237,179,725
Capital adequacy			125.16%

December 31, 2021 Expressed in Thousands of New Taiwan Dollars, %	December 31, 2021 Expressed in Thousands of New Taiwan Dollars, %	December 31, 2021 Expressed in Thousands of New Taiwan Dollars, %	December 31, 2021 Expressed in Thousands of New Taiwan Dollars, %
Item Company	Ownership of financial holdings	Qualifying capital	Legal capital demand
FFHC	100%	234,544,304 $	244,221,318 $
FCB	100%	265,869,790	196,450,747
FS	100%	6,496,076	2,638,146
FLI	100%	3,999,058	2,124,190
FSIT	100%	1,047,650	601,864
FVC	100%	1,867,350	936,074
Other subsidiaries	100%	1,816,742	2,240,913
Deductible item	100%	244,458,448) (	241,170,692) (
Subtotal		271,182,522	208,042,560
Capital adequacy			130.35%

436

Note : group capital adequacy ratio = group net eligible capital / group statutory capital requirement

(B) Qualifying capital of financial holdings company

Note : group capital adequacy ratio = group net eligible capital / group statutory capital requirement Qualifying capital of financial holdings company	Note : group capital adequacy ratio = group net eligible capital / group statutory capital requirement Qualifying capital of financial holdings company
December 31, 2022 Expressed In Thousands of New Taiwan Dollars, %
Item	Amount
Common stock	132,234,423 $
Capital instrument met regulation of other Tier I capital for bank	-
Otherpreferred stock and subordinated bonds	10,000,000
Capital collected in advance	-
Additionalpaid-in capital	26,107,218
Legal reserve	22,978,313
Special reserve	4,105,707
Retained earnings	34,066,986
Adjustment of equity	4,629,923
Less : capital deductible item	3,731) (
Totalqualifyingcapital	234,118,839 $

December 31, 2021 Expressed In Thousands of New Taiwan Dollars, %	December 31, 2021 Expressed In Thousands of New Taiwan Dollars, %
Item	Amount
Common stock	129,641,591 $
Capital instrument met regulation of other Tier I capital for bank	-
Otherpreferred stock and subordinated bonds	10,000,000
Capital collected in advance	-
Additionalpaid-in capital	26,107,218
Legal reserve	20,945,959
Special reserve	4,105,707
Retained earnings	30,120,717
Adjustment of equity	13,625,666
Less : capital deductible item	2,554) (
Totalqualifyingcapital	234,544,304 $

(C) According to Article 46 of Financial Holding Company Act, disclosures of the sum of amounts of endorsements and guarantees provided by all subsidiaries of Financial Holding Company to the same natural person, same related natural person, or same related company for loans or other transactions:

437

December 31, 2022

Name

Total balance of transaction
listed in article 46,
paragraph 2 of the Financial
HoldingCompanyAct
Percentage (%) of net
value on effective date
of financial
holdingcompany
125,852,327
$ 56.15
36,674,476
16.36
21,959,293
9.80
17,898,504
7.99
15,569,255
6.95
14,814,085
6.61
14,676,620
6.55
14,298,597
6.38
14,090,820
6.29
12,016,713
5.36
11,677,027
5.21
11,259,265
5.02
10,751,946
4.80
10,032,027
4.48
9,480,551
4.23
9,364,111
4.18
8,981,684
4.01
8,413,625
3.75
8,411,985
3.75
8,216,410
3.67
7,930,022
3.54
7,605,964
3.39
7,183,811
3.21
7,074,400
3.16
6,694,781
2.99
6,656,344
2.97
6,586,350
2.94
6,586,191
2.94
6,412,843
2.86
6,401,746
2.86
6,261,048
2.79
6,225,162
2.78
6,086,000
2.72
6,065,613
2.71
6,000,000
2.68

Same natural or juridical person
National Treasury Administration, Ministry of
Finance
Taiwan Power Corporation
Taiwan High Speed Rail Corporation
US GOV BOND
Citigroup Inc.
Societe Generale Paris
Morgan Stanley
The Goldman Sachs Group, Inc.
Highwealth Construction Corporation
NATIXIS
Qatar National Bank Saq
Taiwan Cement Corporation
Hotai Finance Co., Ltd.
ING Bank NV
Macquarie Group Limited
Government National Mortgage Association
First ABU Dhabi Bank PJSC
Credit Industriel ET Commercial Paris
BPCE SA
Taiwan Semiconductor Manufacturing Co., Ltd.
Barclays Bank Plc. London
Chang Hwa Bank
Jpmorgan Chase And Corporation
Wan Bao Development Co., Ltd.
Cheng Shin Rubber Ind. Co., Ltd.
AU Optronics Corp.
Standard Chartered Bank London
Hon Hai Precision Industry Co., Ltd.
Chailease Finance Co., Ltd.
The Royal Bank Of Canada Financial
Instutions, Toronto
Shang Chen Steel Co., Ltd.
HSBC Bank (Taiwan) Limited
Namchow Holdings Co., Ltd.
The Bank Of Nova Scotia Toronto
Taoyuan City Government

438

December 31, 2022

	Total balance of transaction	Total balance of transaction	Percentage (%) of net
Name	listed in article 46, paragraph 2 of the Financial		value on effective date of financial
		HoldingCompanyAct	holdingcompany
Same natural or juridical person
KGI Commercial Bank Co., Ltd.	$	5,880,681	2.62
RSEA Engineering Corporation Privatized 2009		5,868,743	2.62
JP Morgan Chase Bank New York BR New
York		5,620,610	2.51
Credit Agricole Corporate And Investment
Bank, Frankfurt		5,552,894	2.48
Commonwealth Bank Of Australia Sydney		5,522,978	2.46
Bank Of America Corporation		5,145,856	2.30
Prosperity Tieh Enterprise Co., Ltd.		5,060,344	2.26
Kuo Yu Development Corporation		4,994,169	2.23
Quanta Computer Inc.		4,829,294	2.15
Formosa Ha Tinh Steel Corp		4,777,736	2.13
Chun Yu Works & Co., Ltd.		4,650,187	2.07
YFY Inc.		4,513,656	2.01
Far Eastern New Century Corporation		4,386,598	1.96
Kadetang Co., Ltd.		4,307,950	1.92
E.SUN Commercial Bank		4,297,388	1.92
National Australia Bank Ltd. Melbourne
(Head Office)		4,158,312	1.86
Taishin International Bank		4,116,165	1.84
Himax Technologies,inc.		4,083,352	1.82
Wistron Corporation		4,070,096	1.82
Longchen Paper & Packaging Co., Ltd.		4,032,801	1.80
Formosa Ha Tinh Cayman Ltd.		3,994,249	1.78
Synnex Technology International Corporation		3,970,183	1.77
Dacin Construction Co ., Ltd.		3,967,731	1.77
Far Eastern Resource Development Co., Ltd.		3,930,000	1.75
Nan Ya Plastics Corporation		3,891,465	1.74
Pescadores Investment and Development Co., Ltd.		3,860,000	1.72
Cathay United Bank		3,837,323	1.71
Credit Suisse Zurich		3,790,711	1.69
Bumble Bee Foods, LLC		3,787,235	1.69
Westpac Banking Corporation		3,646,129	1.63
MasterLink Securities Corporation		3,582,254	1.60
Tatung Company		3,554,360	1.59
Ruentex Industries Limited		3,549,701	1.58
San Miguel Corporation		3,470,215	1.55
Greencompass Marine S.a.		3,446,472	1.54
Wells Fargo Bank		3,427,684	1.53

439

December	December	31, 2022
Name		Total balance of transaction listed in article 46, paragraph 2 of the Financial HoldingCompanyAct Percentage (%) of net value on effective date of financial holdingcompany 3,424,370 $ 1.53 3,422,370 1.53 3,349,729 1.49 3,329,262 1.49 3,312,292 1.48 3,302,177 1.47 3,300,602 1.47 3,265,318 1.46 3,262,508 1.46 3,239,156 1.45 3,222,608 1.44 3,222,340 1.44 3,198,028 1.43 3,196,600 1.43 3,188,000 1.42 3,184,963 1.42 3,183,063 1.42 3,157,681 1.41 3,148,661 1.40 3,145,494 1.40 3,139,141 1.40 3,133,051 1.40 3,129,520 1.40 3,100,000 1.38 3,072,498 1.37 3,032,721 1.35 3,017,829 1.35 726,465,100 $ 11,270,618 $ 5.03 9,498,818 4.24 7,645,794 3.41 6,791,954 3.03 6,482,422 2.89 5,555,825 2.48 5,463,689 2.44 5,314,001 2.37 4,813,921 2.15 4,709,503 2.10
Same natural or juridical person Truefull Land Construction Co., Ltd. Chyi Yuh Construction Co., Ltd. Wan Hai Lines, Ltd. Winbond Electronics Corporation Chin Hong Investments Corporation Pty Ltd Atf Chin Hong Inve Fubon Insurance Co., Ltd. Formosa Heavy Industries Corporation Eastern Star Automobile Ltd. Wt Microelectronics Co., Ltd. Inventec Corporation BNP-paribas Sa (formerly Banque Nationale De Paris S.a.) Macronix International Co., Ltd National Housing and Urban Regeneration Center Walsin Technology Corp. LinYuan Investment Corporation Ruentex Development Co., Ltd. China Petrochemical Development Corporation Eva Airways Corporation Hua Yu Lien Development Co., Ltd. CTBC Bank Co., Ltd. Formosa Plastics Corporation Shinshin Credit Corporation Lin Jiahong Chung Kuo Insurance Company, Limited Kingston Technology International Limi Phoenix Resort Hotel Huang Hsiang Construction Corporation Subtotal Same Party Mr./Ms. Lin and Same Party Mr./Ms. Chen and Same Party Mr./Ms. Chen and Same Party Mr./Ms. Chen and Same Party Mr./Ms. Ho and Same Party Mr./Ms. Liou and Same Party Mr./Ms. Ho and Same Party Mr./Ms. Shen and Same Party Mr./Ms. Chen and Same Party Mr./Ms. Lee and Same Party

440

December 31, 2022

Name		Total balance of transaction listed in article 46, paragraph 2 of the Financial HoldingCompanyAct Percentage (%) of net value on effective date of financial holdingcompany 4,489,679 $ 2.00 4,277,323 1.91 4,175,616 1.86 4,033,319 1.80 3,903,719 1.74 3,834,117 1.71 3,447,829 1.54 3,442,503 1.54 3,044,827 1.36 3,040,931 1.36 105,236,408 $ 37,182,593 $ 16.59 25,141,621 11.22 24,098,080 10.75 21,056,214 9.40 20,428,698 9.12 18,961,592 8.46 18,881,676 8.42 17,829,743 7.96 15,774,341 7.04 15,656,784 6.99 15,014,085 6.70 14,539,354 6.49 14,304,043 6.38 13,079,889 5.84 13,079,167 5.84 13,007,281 5.80 12,264,861 5.47 11,802,014 5.27 11,705,909 5.22 11,582,211 5.17 11,477,297 5.12 11,374,394 5.08 10,706,660 4.78 10,669,928 4.76 10,342,930 4.61 10,183,627 4.54 9,867,200 4.40
Same Party Mr./Ms. Lin and Same Party Mr./Ms. Chen and Same Party Mr./Ms. Chen and Same Party Mr./Ms. Tsai and Same Party Mr./Ms. Huang and Same Party Mr./Ms. Wu and Same Party Mr./Ms. Liao and Same Party Mr./Ms. Liou and Same Party Mr./Ms. Lin and Same Party Mr./Ms. Liou and Same Party Subtotal Same affiliated enterprises Formosa Plastics Group LinYuan Group Far Eastern Group Baojia Group BPCE_SA Ruentex Group Highwealth Group Fubon Group Chailease Finance Group Citigroup SG_PAR Hon Hai Group GS_Group Taiwan Cement JPM_NY E United Group QNB Group AU Optronics Group Walsin Lihwa Corporation Evergreen Group MiTAC-Synnex Group Hotai Motor Group MACQ_Group HSBC_HCM Blackstone Group Inggroup YFY Group

441

December 31, 2022

Name

Total balance of transaction
listed in article 46,
paragraph 2 of the Financial
HoldingCompanyAct
Percentage (%) of net
value on effective date
of financial
holdingcompany
9,853,093
$ 4.40
9,405,054
4.20
9,095,865
4.06
9,084,701
4.05
8,915,796
3.98
8,731,055
3.90
8,220,975
3.67
8,027,461
3.58
7,954,198
3.55
7,792,160
3.48
7,761,884
3.46
7,696,794
3.43
7,589,428
3.39
7,033,407
3.14
7,011,650
3.13
7,010,730
3.13
6,934,493
3.09
6,806,173
3.04
6,800,380
3.03
6,709,334
2.99
6,699,250
2.99
6,644,650
2.96
6,622,654
2.95
6,524,169
2.91
6,508,579
2.90
6,445,971
2.88
6,320,692
2.82
6,084,132
2.71
5,921,910
2.64
5,768,973
2.57
5,732,413
2.56
5,662,964
2.53
5,526,530
2.47
5,425,859
2.42
5,417,211
2.42
5,416,962
2.42
5,118,595
2.28
5,052,031
2.25
4,980,700
2.22

Same affiliated enterprises
H.P.W
BFCM_FR
Brookfield
Shanyuan
Yulon Group
Cheng Shin Group
TSMC Group
Test Rite Group
SCB_PLC
Longchen Paper & Packaging
Chicony Clevo Group
Namchow Group
CDIB Capital Group
L&K Group
Shang Shing Steel
CTBC Group
Lih Pao Construction
Shin Kong Group
Quanta Computer Inc.
Fong-Yi Group
RBCFIN_TOR
CALYON_FFT
GAW Capital Partners
Wisdom Marine
Kingston Group
Ta Chen Stainless Pipe Co., Ltd.
Taiwan Steel Group
San Miguel Group
Eastern Star Automobile Group
Hungkuo Group
Hua Yu Lien Group
Chang Chun Group
BOACORP
Taishin Financial Holdings
Wistron Group
Taiya International Group
Dacin Construction
Chinj industrial Co., Ltd.
Phoenix Resort Hotel

442

December	December	31, 2022
Name		Total balance of transaction listed in article 46, paragraph 2 of the Financial HoldingCompanyAct Percentage (%) of net value on effective date of financial holdingcompany 4,638,651 $ 2.07 4,591,932 2.05 4,577,468 2.04 4,561,318 2.04 4,556,376 2.03 4,468,341 1.99 4,447,368 1.98 4,441,228 1.98 4,404,002 1.97 4,403,693 1.96 4,335,079 1.93 4,331,152 1.93 4,304,420 1.92 4,297,388 1.92 4,286,863 1.91 4,239,991 1.89 4,128,659 1.84 4,092,727 1.83 4,050,811 1.81 3,985,327 1.78 3,953,379 1.76 3,719,809 1.66 3,676,630 1.64 3,582,905 1.60 3,499,430 1.56 3,456,433 1.54 3,421,282 1.53 3,311,009 1.48 3,285,750 1.47 3,239,156 1.45 3,228,829 1.44 3,178,192 1.42 3,175,751 1.42 3,088,216 1.38 3,044,796 1.36 3,029,854 1.35 3,023,600 1.35 834,378,883 $
Same affiliated enterprises Mega Financial Holding Company Ltd. Cheng Loong Group Shihlin Paper Jvan An International Company, Ltd. Sumitomo Mitsui Banking Corporation YAGEO Group FCF China Airlines GIC ANZ_Group Yuanta Financial Holding Yeangder Group Macronix International Co., Ltd. E.SUN Financial Holding Hontai Group Core Pacific Group Charoen Pokphand Enterprise(taiwan) Co., Ltd. Uni-President Csuissegroup Wt Microelectronics Co., Ltd. WESTPAC_SYD Hermes-epitek Corporation China Steel Corporation. Huang Hsiang Construction Sunlit Motors Company Limited Chien Shun Steel Kuo Yang Construction Co.,ltd King's Town Shinkong Synthetic Fibers Corporation Inventec Huang Long Compal Electronics WPG Holdings Farglory Group Deguang New World Development Tong Chuang Subtotal

443

(4) Information with respect to the transferring of financial assets and extinguishing of liabilities: Please refer to Note 12(2) G.

(5) Adjustment of key organisation and significant change in regulatory system: None.

(6) Significant impact arising from changes in government laws and regulations: None.

(7) Information with respect to the subsidiary holding the capital stock of parent company: None.

(8) Information for private placement securities: None.

(9) Information for discontinued operations: None.

(10) Major operating assets or liabilities transferred from (or to) other financial institutions: None.

(11) Research developing plan and the amounts sponsored by others:

None.

(12) Employee benefit information:

Please see Notes 6(25)D and (39).

(13) The main asset additions, expansion, construction, leasing, abandoned, idle, sale, transfer or long

term lease:

None.

(14) The major contract signed, completed, canceled or lapsed: None.

’ -
(15) Information of the Group s engagement in co marketing:
A. Transactions among the Group

Please refer to Notes 7 and 13(1) H.

B. Joint promotion of businesses

In order to create synergies within the Group and provide customers financial services in all aspects, FCB and FS have continuously established other financial service desks (including banking service, securities trading service, and insurance service desks) in its banks and securities subsidiaries to provide customers one-stop-shopping services.

C. Sharing of information

The Company has established “Measures for Protection of Customers’ Information for the Financial Holding Co., Ltd. and its Subsidiaries” in accordance with the “Financial Holding Company Act”, “Computer-Process Personal Data Protection Law” and the related regulations stipulated by the Financial Supervisory Commission and the Company is required to publish its “Measures for Protection of Customers’ Information” at its website. Customers also reserve the right to have their information withdrawn from the information sharing mechanism.

444

D. Sharing of operating facilities or premises

The Company’s subsidiaries have set up cross-selling service desks cooperation and promotion desks, among which FCB has established an insurance agency area or insurance service desks in its 187 domestic branches, FS has set up securities trading service desks in 132 domestic branches of FCB. Besides, FS set up banking service desks and insurance service desks in the brokerage department of its 22 branches.

E. Apportionment of revenues, costs, expenses, gains and losses

Revenues, costs, expenses, gains and losses arising from the mutual use of business facilities and cross-sales between the Company's subsidiaries are directly attributed to subsidiaries by nature of services.

(Blank)

445

	Consolidated	37,969,147 $	29,787,247	67,756,394		6,576,606) (	8,905,998) (	27,787,186) (		24,486,604	3,890,941) (	20,595,663 $
Other	businesses	248,182) ($	505,495	257,313		1,231) (	-	522,981) (		266,899) (	48,852) (	315,751) ($
Insurance	business	1,781,823 $	8,795,757	10,577,580		-	8,905,998) (	774,126) (		897,456	83,273) (	814,183 $
Investment trust	business	691 $	648,432	649,123		-	-	477,183) (		171,940	19,746) (	152,194 $
Securities	business	299,161 $	1,652,150	1,951,311		-	-	1,437,012) (		514,299	112,181) (	402,118 $
Banking	business	36,135,654 $	18,185,413	54,321,067		6,575,375) (	-	24,575,884) (		23,169,808	3,626,889) (	19,542,919 $
	For the year ended December 31, 2022	Net interest income (loss)	Net non-interest income	Net revenues	Bad debt expense, commitment and	guarantee liabilities provision	Net change in insurance liabilities reserve	Operating expenses	Profit (loss) from continuing operations	before tax	Income tax expense	Profit (loss) from continuing operations

446

Banking Securities Investment trust Insurance Other	For the year ended December 31, 2021 business business business business businesses Consolidated	Net interest income (loss) 33,082,412 $ 388,542 $ 265 $ 1,288,341 $ 171,278) ($ 34,588,282 $	Net non-interest income 13,506,594 3,151,696 694,056 10,065,670 598,131 28,016,147	Net revenues 46,589,006 3,540,238 694,321 11,354,011 426,853 62,604,429	Bad debt expense, commitment and	guarantee liabilities provision 3,621,467) ( - - - - 3,621,467) (	Net change in insurance liabilities reserve - - - 9,274,835) ( - 9,274,835) (	Operating expenses 22,636,554) ( 1,823,945) ( 498,986) ( 796,472) ( 518,726) ( 26,274,683) (	Profit (loss) from continuing operations	before tax 20,330,985 1,716,293 195,335 1,282,704 91,873) ( 23,433,444	Income tax expense 3,405,414) ( 216,462) ( 24,386) ( 839) ( 47,298) ( 3,694,399) (	Profit (loss) from continuing operations 16,925,571 $ 1,499,831 $ 170,949 $ 1,281,865 $ 139,171) ($ 19,739,045 $	Note: Financial information by business line which shall be shown separately is determined according to each company’s classification methods for	business group management to fill in amounts offset through business combination.

447

							2021	10,792,189 $	294,157	3,332,269	10,000,000	24,976	4,641	-	394		24,448,626				129,641,591	26,107,218			20,945,959	4,105,707	30,120,717	13,625,666		224,546,858		248,995,484 $
							2022	8,318,707 $	326,622	3,397,864	10,000,000	15,931	49,428	5,500,000	1,199		27,609,751				132,234,423	26,107,218			22,978,313	4,105,707	34,066,986	4,629,923		224,122,570		251,732,321 $
A. First Financial Holding Co., Ltd.	(A)	First Financial Holding Co., Ltd.		Individual balance sheet	December 31	(Expressed in Thousands of New Taiwan Dollars)	Assets 2022 2021 Liabilities	Cash and cash equivalents 1,568,028 $ 2,102,772 $ Commercial papers issued, net	Financial assets at fair value Payables	through other comprehensive Current tax liabilities	income 2,712,260 3,031,184 Bonds payable	Receivables, net 218 13 Liabilities reserve	Current tax assets 2,713,163 2,668,840 Lease liabilities	Investments accounted for Other borrowings	using equity method, net 244,672,903 241,170,692 Other liabilities		Property and equipment, net 1,668 1,357 Total liabilities		Right-of-use assets, net 49,152 4,591 Equity		Intangible assets, net 3,731 2,554 Common stock	Deferred income tax assets 3,255 4,441 Capital surplus	Other assets, net 7,943 9,040 Retained earnings		Legal reserve	Special reserve	Unappropriated earnings	Other equity interest		Total equity		Total assets 251,732,321 $ 248,995,484 $ Total liabilities and equity

448

(B)

First Financial Holding Co., Ltd. Individual Statements of Comprehensive Income For the years ended December 31

(Expressed in Thousands of New Taiwan Dollars, Except Earnings Per Share)

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----- Start of picture text -----

Accounts 2022 2021
Revenues
Share of profit of associates accounted
for using equity method $ 21,094,554 $ 20,163,621
Other revenues 175,740 169,611
Total revenues 21,270,294 20,333,232
Expenses and losses
Operating expenses ( 412,860) ( 402,845)
Other expenses and losses ( 267,285) ( 183,614)
Total expenses and losses ( 680,145) ( 586,459)
Profit from continuing operations before tax 20,590,149 19,746,773
Income tax benefit (expense) 5,514 ( 7,728)
Profit from continuing operations 20,595,663 19,739,045
Other comprehensive loss ( 8,055,792) ( 4,846,835)
Total comprehensive income $ 12,539,871 $ 14,892,210
Earnings per share
Basic and diluted earnings per share (in dollars) $ 1.56 $ 1.49
----- End of picture text -----

449

										Total equity	221,206,869 $	19,739,045	4,846,835) (	14,892,210		-	11,552,221) (	-			-	224,546,858 $		224,546,858 $	20,595,663	8,055,792) (	12,539,871		-	12,964,159) (	-			-	224,122,570 $
									Reserve of overlay	approach	15,672) ($	-	40,163	40,163		-	-	-			-	24,491 $		24,491 $	-	226,935) (	226,935) (		-	-	-			-	202,444) ($
				Other equity	Gains (losses) on	financial assets	measured at fair	value through other	comprehensive	income	24,904,991 $	-	4,095,568) (	4,095,568) (		-	-	-			128,379) (	20,681,044 $		20,681,044 $	-	14,950,798) (	14,950,798) (		-	-	-			38,644	5,768,890 $
						Exchange	differences on	translation of	foreign financial	statements	5,832,319) ($	-	1,247,550) (	1,247,550) (		-	-	-			-	7,079,869) ($		7,079,869) ($	-	6,143,346	6,143,346		-	-	-			-	936,523) ($
First Financial Holding Co., Ltd.	Individual Statement of Change in Equity	For the years ended December 31	(Expressed in Thousands of New Taiwan Dollars)	Retained earnings					Unappropriated	Capital surplus Legal reserve Special reserve retained earnings	26,107,218 $ 19,303,913 $ 4,105,707 $ 24,275,020 $	- - - 19,739,045	- - - 456,120	- - - 20,195,165		- 1,642,046 - 1,642,046) (	- - - 11,552,221) (	- - - 1,283,580) (			- - - 128,379	26,107,218 $ 20,945,959 $ 4,105,707 $ 30,120,717 $		26,107,218 $ 20,945,959 $ 4,105,707 $ 30,120,717 $	- - - 20,595,663	- - - 978,595	- - - 21,574,258		- 2,032,354 - 2,032,354) (	- - - 12,964,159) (	- - - 2,592,832) (			- - - 38,644) (	26,107,218 $ 22,978,313 $ 4,105,707 $ 34,066,986 $
										Ordinary share	128,358,011 $	-	-	-		-	-	1,283,580			-	129,641,591 $		129,641,591 $	-	-	-		-	-	2,592,832			-	132,234,423 $
										For the year ended December 31, 2021	Equity at beginning of period	Profit	Other comprehensive income (loss)	Total comprehensive income (loss)	Appropriation of prior year's earnings	Legal reserve appropriated	Cash dividends of ordinary shares	Stock dividends of ordinary shares	Disposal of investments in equity instruments	designated at fair value through	other comprehensive income (loss)	Equity at end of period	For the year ended December 31, 2022	Equity at beginning of period	Profit	Other comprehensive income (loss)	Total comprehensive income (loss)	Appropriation of prior year's earnings	Legal reserve appropriated	Cash dividends of ordinary shares	Stock dividends of ordinary shares	Disposal of investments in equity instruments	designated at fair value through	other comprehensive (loss) income	Equity at end of period

450

(D)

First Financial Holding Co., Ltd. Individual Cash Flow Statement For the years ended December 31

(Expressed in Thousands of New Taiwan Dollars)

		2022		2021
Cash Flows used in Operating Activities
Net income	$	20,590,149	$	19,746,773
Adjustments to reconcile net income to net cash
provided by operating activities:
Income and expenses having no effect on cash flows
Depreciation and other amortisation		15,296		17,248
Interest revenue	(	6,823)	(	1,074)
Interest expense		261,202		177,808
Dividend revenue	(	142,180)	(	141,856)
Share of profit of associates accounted for
using the equity method	(	21,094,554)	(	20,163,621)
Loss on lease modifications		35		225
Changes in assets and liabilities
Changes in assets
Increase in other assets		-	(	728)
Changes in liabilities
Increase in payables		10,067		33,394
Decrease in provision	(	3,114)	(	2,715)
Cash flows used in operations activities	(	369,922)	(	334,546)
Interest received		6,618		1,084
Interest paid	(	238,804)	(	177,808)
Dividends received		10,492,910		9,769,948
Income tax received		26,786		82,024
Net cash flows from operating activities		9,917,588		9,340,702
Cash Flows used in Investing Activities
Increase in equity investments under the equity
method	(	500,000)	(	600,000)
Acquisition of property and equipment	(	911)	(	85)
Acquisition of intangible assets	(	2,947)	(	735)
Net cash flows used in investing activities	(	503,858)	(	600,820)
Cash Flows from Financing Activities
(Decrease) increase in commercial papers issued, net	(	2,473,482)		1,147,056
Increase in other borrowings		5,500,000		-
Payments of lease liabilities	(	11,638)	(	12,981)
Increase (decrease) in guarantee deposits		805	(	256)
Cash dividends paid	(	12,964,159)	(	11,552,221)
Net cash flows used in financing activities	(	9,948,474)	(	10,418,402)
Net decrease in cash and cash equivalents	(	534,744)	(	1,678,520)
Beginning balance of cash and cash equivalents		2,102,772		3,781,292
Ending balance of cash and cash equivalents	$	1,568,028	$	2,102,772

451

						2021	211,357,812 $	42,741,220		7,493,438		10,556,802	39,386,549	3,569,520	2,943,931,882	47,800,000	40,100,508	5,506,122	2,053,520	6,573,435	3,844,795	3,364,915,603			90,880,000	34,470,351	86,253,185	11,936,183	223,539,719	3,588,455,322 $
						2022	270,732,906 $	1,014,530		13,943,931		16,605,695	43,732,903	3,704,338	3,292,148,393	51,850,000	65,767,019	4,740,801	2,153,936	7,049,263	7,496,639	3,780,940,354			94,725,000	34,470,351	94,664,833	7,062,022	230,922,206	4,011,862,560 $
		First Commercial Bank	Individual Condensed Balance Sheets	December 31	(Expressed in Thousands of New Taiwan Dollars)	2021 Liabilities	57,848,705 $ Deposits from the central bank and banks	Due to the central bank and banks	342,405,023 Financial liabilities at fair value	through profit or loss	164,561,017 Securities sold under repurchase	agreements	244,996,333 Payables	Current tax liabilities	678,337,912 Deposits and remittances	Financial bonds payable	- Other financial liabilities	29,597,747 Liabilities reserve	1,378,450 Lease liabilities	2,020,098,206 Deferred tax liabilities	Other liabilities	8,178,809 Total liabilities	102,572	26,686,265 Equity	2,229,285 Common stock	6,983,971 Capital surplus	806,919 Retained earnings	2,297,726 Other equity interest	1,946,382 Total equity	3,588,455,322 $ Total liabilities and equity
						2022	69,601,536 $		328,519,557		159,901,813		298,147,834		772,657,841		6,450,000	30,157,286	1,234,878	2,293,302,437		9,025,182	270,880	26,802,037	2,308,163	6,972,725	842,907	3,080,213	2,587,271	4,011,862,560 $
B. First Commercial Bank	(A)					Assets	Cash and cash equivalents	Due from the central bank and	call loans to other banks	Financial assets at fair value	through profit or loss	Financial assets at fair value through	other comprehensive income	Investments in debt instruments	at amortised cost	Securities purchased under	resell agreements	Receivables, net	Current tax assets	Loans discounted, net	Investments accounted for	under the equity method, net	Other financial assets, net	Property and equipment, net	Right-of-use assets, net	Investment property, net	Intangible assets, net	Deferred income tax assets	Other assets, net	Total assets

452

(B)

First Commercial Bank

Individual Condensed Statements of Comprehensive Income

For the years ended December 31

(Expressed in Thousands of New Taiwan Dollars, Except Earnings Per Share)

Accounts		2022		2021
Interest income	$	62,522,478	$	42,214,655
Interest expenses	(	27,521,682)	(	9,951,803)
Net interest revenue		35,000,796		32,262,852
Net revenue other than interest		19,482,987		14,599,247
Net Revenue		54,483,783		46,862,099
Bad debts expense, commitment and guarantee
liability provision	(	6,485,564)	(	3,565,559)
Operating expenses	(	24,210,000)	(	22,378,606)
Profit from continuing operations before tax		23,788,219		20,917,934
Income tax expense	(	3,460,252)	(	3,266,277)
Profit from continuing operations		20,327,967		17,651,657
Other comprehensive loss	(	3,945,480)	(	4,424,619)
Total comprehensive income	$	16,382,487	$	13,227,038

Earnings per share
Basic and diluted earnings per share (in dollars)	$	2.15	$	1.86

453

			2021	32,725,106 $	65,554	43,691	135,541	32,969,892						6,150,000	1,793,737	154,235	8,097,972	41,067,864 $
			2022	19,498,686 $	42,784	20,560	67,754	19,629,784						6,150,000	1,167,963	31,854	7,349,817	26,979,601 $
Individual Condensed Balance Sheets	December 31	(Expressed in Thousands of New Taiwan Dollars)	2022 2021 Liabilities	14,479,897 $ 25,631,746 $ Current liabilities	Lease liabilities – current	10,528,757 12,917,156 Lease liabilities – non-current	Other liabilities – non-current	Total liabilities	774,629 1,310,246		260,071 267,832	125,670 125,034	65,997 112,829 Equity	71,815 72,183 Common stock	58,153 45,452 Retained earnings	5,831 22,247 Other equity interest	608,781 563,139 Total equity	26,979,601 $ 41,067,864 $ Total liabilities and equity
			Assets	Current assets	Financial assets at fair value	through profit or loss	Financial assets at fair value	through other comprehensive	income	Investments accounted for	using equity method, net	Property and equipment, net	Right-of-use assets, net	Investment property, net	Intangible assets, net	Deferred income tax assets	Other assets – non-current	Total assets

454

(B)

First Securities

Individual Condensed Statements of Comprehensive Income

For the years ended December 31

(Expressed in Thousands of New Taiwan Dollars, Except Earnings Per Share)

Accounts		2022		2021
Revenues	$	2,272,514	$	3,850,966
Service fee expense	(	266,368)	(	260,102)
Employee benefit expense	(	884,210)	(	1,204,454)
Share of loss of associates accounted for
using equity method	(	23,544)	(	21,448)
Operating expenses	(	583,036)	(	652,850)
Profit from continuing operations before tax		515,356		1,712,112
Income tax expense	(	112,170)	(	216,418)
Profit from continuing operations		403,186		1,495,694
Other comprehensive (loss) income	(	137,586)		33,696
Total comprehensive income	$	265,600	$	1,529,390

Earnings per share
Basic and diluted earnings per share (in dollars)	$	0.66	$	2.43

455

D. First Securities Investment Trust Co., Ltd. Assets 2022 2021 Liabilities 2022 2021 Current assets 206,141 $ 272,064 $ Current liabilities 121,838 $ 128,509 $ Financial assets at fair value Lease liabilities – current 2,218 2,747 through profit or loss 131,529 133,010 Lease liabilities – non-current 1,343 3,561 Financial assets at fair value Other liabilities – non-current 13,701 21,260 through other comprehensive Total liabilities 139,100 156,077 income 1,425 1,306 Investments accounted for using equity method, net 49,456 - Property and equipment, net 475,042 479,241 Right-of-use assets, net 3,519 6,266 Equity Investment property, net 148,545 148,763 Common stock 600,000 600,000 Intangible assets, net 25,702 20,157 Retained earnings 434,246 447,481 Deferred income tax assets 2,475 3,783 Other equity interest 288 169 Other assets– non-current 129,800 139,137 Total equity 1,034,534 1,047,650 Total assets 1,173,634 $ 1,203,727 $ Total liabilities and equity 1,173,634 $ 1,203,727 $ (A) First Securities Investment Trust Co., Ltd. Individual Condensed Balance Sheets December 31 (Expressed in Thousands of New Taiwan Dollars)	156,077	600,000 447,481 169	1,047,650	1,203,727 $

456

(B)

First Securities Investment Trust Co., Ltd. Individual Condensed Statements of Comprehensive Income For the years ended December 31

(Expressed in Thousands of New Taiwan Dollars, Except Earnings Per Share)

Accounts Operating revenues Operating expenses Operating income Non-operating (loss) income Profit from continuing operations before tax Income tax expense Profit from continuing operations Other comprehensive income Total comprehensive income Earnings per share Basic and diluted earnings per share (in dollars)	2022 649,092 $ 551,773) ( 97,319 1,495) ( 95,824 19,883) ( 75,941 5,675 81,616 $ 1.27 $	2021 681,546 $ 563,874) ( 117,672 11,867 129,539 24,386) ( 105,153 224 105,377 $ 1.75 $

457

E. First Life Insurance Co., Ltd. Assets 2022 2021 Liabilities 2022 2021 Cash and cash equivalents 2,428,079 $ 2,263,783 $ Payables 523,368 $ 522,504 $ Receivables, net 580,393 527,806 Financial liabilities at fair value Current tax assets 14,393 27,353 through profit or loss 272,178 6,192 Financial assets at fair value Liabilities reserve 64,928,274 53,576,604 through profit or loss 4,077,501 5,799,277 Lease liabilities 57,600 69,305 Financial assets at fair value Other liabilities 416,996 502,034 comprehensive income 23,181,440 21,257,773 Current tax liabilities - 16,689 Investments in debt instruments Deferred tax liabilities 224,578 140,529 at amortised cost 33,768,920 26,622,139 Insurance product liabilities of Investment property, net 1,502,235 1,509,277 separate accounts 16,150,522 18,885,469 Loans 57,257 44,214 Total liabilities 82,573,516 73,719,326 Reinsurance reserve assets, net 425,870 20,225 Property and equipment, net 53,975 69,414 Right-of-use assets, net 47,731 392,240 Intangible assets, net 160,337 118,490 Equity Deferred income tax assets 943,490 235,142 Common stock 5,350,000 4,850,000 Other assets, net 883,713 745,544 Accumulated deficit 617,189) ( 694,406) ( Insurance product assets of Other equity interest 3,030,471) ( 643,226 separate accounts 16,150,522 18,885,469 Total equity 1,702,340 4,798,820 Total assets 84,275,856 $ 78,518,146 $ Total liabilities and equity 84,275,856 $ 78,518,146 $ (A) First Life Insurance Co., Ltd. Individual Condensed Balance Sheets December 31 (Expressed in Thousands of New Taiwan Dollars)	73,719,326	4,850,000 694,406) 643,226	4,798,820	78,518,146 $

458

(B)

First Life Insurance Co., Ltd.

Individual Condensed Statements of Comprehensive Income For the years ended December 31

(Expressed in Thousands of New Taiwan Dollars, Except Earnings Per Share)

Accounts		2022		2021
Operating revenues	$	16,172,851	$	17,511,126
Operating costs	(	15,225,873)	(	16,100,845)
Operating expenses	(	802,468)	(	809,225)
Operating income		144,510		601,056
Non-operating income		895		39
Profit from continuing operations before tax		145,405		601,095
Income tax expense	(	83,273)	(	839)
Profit from continuing operations		62,132		600,256
Other comprehensive loss	(	3,658,611)	(	268,117)
Total comprehensive (loss) income	($	3,596,479)	$	332,139

Earnings per share
Basic and diluted earnings per share (in dollars)	$	0.12	$	1.30

459

F. First Financial Assets Management Co., Ltd.

(A)

First Financial Assets Management Co., Ltd. Individual Condensed Balance Sheets

December 31

(Expressed in Thousands of New Taiwan Dollars)

Assets Current assets Financial assets at fair value through profit or loss Financial assets at fair value through other comprehensive income Property and equipment, net Right-of-use assets, net Investment property, net Intangible assets , net Deferred income tax assets Other assets– non-current Total assets	2022 1,370,611 $ 75,328 10,075 4,537 27,743 3,415,190 1,056 2,509 5,989 4,913,038 $	2021 Liabilities 1,120,968 $ Current liabilities Lease liabilities – current - Lease liabilities – non-current Other liabilities – non-current Total liabilities 16,775 5,810 17,819 Equity 3,237,979 Common stock 1,487 Retained earnings 3,600 Other equity interest 12,545 Total equity 4,416,983 $ Total liabilities and equity	2022 3,100,151 $ 6,130 21,677 34,707 3,162,665 1,450,000 315,298 14,925) ( 1,750,373 4,913,038 $	2021
				2,581,764 $ 6,065 11,926 38,601
				2,638,356
				1,450,000 336,852 8,225) (
				1,778,627
				4,416,983 $

(B)

First Financial Assets Management Co., Ltd.

Individual Condensed Statements of Comprehensive Income For the years ended December 31

(Expressed in Thousands of New Taiwan Dollars, Except Earnings Per Share)

Accounts Operating revenues Operating expenses Operating income Non-operating loss Profit from continuing operations before tax Income tax expense Profit from continuing operations Other comprehensive loss Total comprehensive income Earnings per share Basic and diluted earnings per share (in dollars)	2022 344,032 $ 123,250) ( 220,782 26,697) ( 194,085 40,343) ( 153,742 6,150) ( 147,592 $ 1.06 $	2021
		305,681 $ 124,285) (
		181,396 8,751) (
		172,645 34,730) (
		137,915 9,627) (
		128,288 $
		0.95 $

460

G.First Venture Capital Co., Ltd.

(A)

First Venture Capital Co., Ltd. Individual Condensed Balance Sheets

December 31

(Expressed in Thousands of New Taiwan Dollars)

Assets Current assets Financial assets at fair value through profit or loss Investments accounted for using equity method, net Right-of-use assets, net Other assets,net Total assets	2022 202,436 $ 1,328,070 349,173 2,494 40 1,882,213 $	2021 Liabilities 253,669 $ Current liabilities Lease liabilities Total liabilities 1,316,264 299,953 Equity 2,225 Common stock 37 Retained earnings Total equity 1,872,148 $ Total liabilities and equity	2022 5,636 $ 2,501 8,137 1,800,000 74,076 1,874,076 1,882,213 $	2021
				2,553 $ 2,245
				4,798
				1,800,000 67,350
				1,867,350
				1,872,148 $

(B)

First Venture Capital Co., Ltd.

Individual Condensed Statements of Comprehensive Income

For the years ended December 31

(Expressed in Thousands of New Taiwan Dollars, Except Earnings Per Share)

Accounts		2022		2021
Operating revenues	$	107,210	$	136,118
Operating expenses	(	28,036)	(	28,030)
Non-operating income		142		46
Profit from continuing operations before tax		79,316		108,134
Income tax expense	(	11,975)	(	3,243)
Profit from continuing operations		67,341		104,891
Total comprehensive income	$	67,341	$	104,891
Earnings per share
Basic and diluted earnings per share (in dollars)	$	0.37	$	0.58

461

H.First Financial Management Consulting Co., Ltd.

(A)

First Financial Management Consulting Co., Ltd. Individual Condensed Balance Sheets

December 31

(Expressed in Thousands of New Taiwan Dollars)

Assets Current assets Property and equipment, net Intangible assets, net Deferred income tax assets Right-of-use assets, net Other assets, net Total assets	2022 40,733 $ 4,473 183 78 19,066 85 64,618 $	2021 Liabilities 41,837 $ Current liabilities 5,020 Lease liabilities - Other liabilities – 563 non-current 17,331 Total liabilities 90 Equity Common stock Retained earnings Total equity 64,841 $ Total liabilities and equity	2022 6,241 $ 19,128 392 25,761 20,000 18,857 38,857 64,618 $	2021
				6,398 $ 17,489 2,839
				26,726
				20,000 18,115
				38,115
				64,841 $

(B)

First Financial Management Consulting Co., Ltd.

Individual Condensed Statements of Comprehensive Income

For the years ended December 31

(Expressed in Thousands of New Taiwan Dollars, Except Earnings Per Share)

Accounts Operating revenues Operating expenses Operating income Non-operating income Profit from continuing operations before tax Income tax expense Profit from continuing operations Other comprehensive income Total comprehensive income Earnings per share Basic and diluted earnings per share (in dollars)	2022 33,586 $ 25,674) ( 7,912 120 8,032 2,048) ( 5,984 541 6,525 $ 2.99 $	2021
		34,792 $ 27,335) (
		7,457 180
		7,637 1,597) (
		6,040 386
		6,426 $
		3.02 $

462

(18) Profitability, asset quality, management information, and liquidity and market risk sensitivity of subsidiaries

A. Consolidated

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For the years ended December 31,
2022 2021
Before taxes 0.62 0.65
Return on total assets (%)
After taxes 0.52 0.55
Before taxes 10.92 10.51
Return on stockholders’ equity (%)
After taxes 9.18 8.86
Net profit margin ratio (%) 30.40 31.53
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Note 1: Return on total assets = Income before (after) income tax / average total assets. Note 2: Return on stockholders’ equity = Income before (after) income tax / average stockholders’ equity.
Note 3: Net profit margin ratio = Income after income tax / net revenues.
Note 4: The term “Income before (after) income tax” means net income from January 1 to the balance sheet date of the reporting period.
B. FFHC

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----- Start of picture text -----

For the years ended December 31,
2022 2021
Before taxes 8.22 8.01
Return on total assets (%)
After taxes 8.23 8.01
Before taxes 9.18 8.86
Return on stockholders’ equity (%)
After taxes 9.18 8.86
Net profit margin ratio (%) 98.06 97.96
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Note 1: Return on total assets = Income before (after) income tax / average total assets. Note 2: Return on stockholders’ equity = Income before (after) income tax / average stockholders’ equity.
Note 3: Net profit margin ratio = Income after income tax / net revenues.
Note 4: The term “Income before (after) income tax” means net income from January 1 to the balance sheet date of the reporting period.

463

C. FCB and Its subsidiaries

(A)Profitability

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----- Start of picture text -----

For the years ended December 31,
2022 2021
Before taxes 0.63 0.60
Return on total assets (%)
After taxes 0.53 0.51
Before taxes 10.47 9.45
Return on stockholders’ equity (%)
After taxes 8.95 7.97
Net profit margin ratio (%) 37.31 37.67
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Note 1: Return on total assets = Income before (after) income tax / average total assets.
Note 2: Return on stockholders’ equity = Income before (after) income tax / average stockholders’ equity.
Note 3: Net profit margin ratio = Income after income tax / net revenues.
Note 4: The term “Income before (after) income tax” means net income from January 1 to the balance sheet date of the reporting period.
(B) Asset quality of FCB
a. Non-performing loans and assets quality

Please refer to Note 12(2)D(H)a.

b. Non-performing loans and overdue receivables exempted from reporting to the competent authority

Please refer to Note 12(2)D(H)b.

c. Profile of concentration of credit risk and credit extensions of FCB
Please refer to Note 12(2)D(H)c.
d. Structure analysis of time to maturity of FCB
i. Structure analysis of NTD time to maturity

Please refer to Note 12(2)E(F)a.

ii. Structure analysis of USD time to maturity of FCB
- Please refer to Note 12(2)E(F)b.
e. Sensitivity analysis of interest rate for assets and liabilities of FCB
Please refer to Note 12(2)F(M).

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D. Information for FS and its subsidiaries is stated below:
Profitability

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For the years ended December 31,
2022 2021
Before taxes 1.51 4.78
Return on total assets (%)
After taxes 1.19 4.18
Before taxes 6.67 22.65
Return on stockholders’ equity (%)
After taxes 5.22 19.79
Net profit margin ratio (%) 20.34 41.90
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Note 1: Return on total assets = Income before (after) income tax / average total assets.
Note 2: Return on stockholders’ equity = Income before (after) income tax / average stockholders’ equity.
Note 3: Net profit margin ratio = Income after income tax / net revenues.
Note 4: The term “Income before (after) income tax” means net income from January 1 to the balance sheet date of the reporting period.
E. Information for FLI is stated below:

Profitability

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For the years ended December 31,
2022 2021
Before taxes 0.18 0.82
Return on total assets (%)
After taxes 0.08 0.82
Before taxes 4.47 13.87
Return on stockholders’ equity (%)
After taxes 1.91 13.85
Net profit margin ratio (%) 6.56 42.56
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Note 1: Return on total assets = Income before (after) income tax / average total assets.
Note 2: Return on stockholders’ equity = Income before (after) income tax / average stockholders’ equity.
Note 3: Net profit margin ratio = Income after income tax / net revenues.
Note 4: The term “Income before (after) income tax” means net income from January 1 to the balance sheet date of the reporting period.

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(19) Content and amount of investment trust business in accordance with Trust Enterprise Act

Expressed in Thousands of New Taiwan Dollars Balance Sheet of Trust Accounts

Trust assets Bank deposits Bonds Stocks Mutual funds Structured notes Real estate (Net) Land Buildings and structures Construction in progress Customers’ securities under custody Total Trust liabilities Payables-customers securities under custody Payables Trust capital Various reserves and accumulated profit or loss Net income Accumulated profit Deferred transferred amount Total	December 31,2022 December 31,2021 44,708,048 $ 37,382,435 $ 3,973,264 2,943,624 8,476,886 5,602,641 236,598,668 210,686,002 4,107,183 2,620,000 60,615,129 27,485,534 15,291 15,291 7,823,316 4,865,868 556,878,552 506,399,102 923,196,337 $ 798,000,497 $ 556,878,552 $ 506,399,102 $ 265 219 365,729,052 291,168,586 185,597 138,434 447,551 319,703 44,680) ( 25,547) ( 923,196,337 $ 798,000,497 $

As of December 31, 2022 and 2021, the Offshore Banking Unit had book balance of $4,601,961 and $3,790,920 for designated money trust funds investing in foreign securities; the Offshore Banking Unit had book balance of $722,105 and $661,327 for designated money trust funds investing in local securities, respectively.

466

Expressed in Thousands of New Taiwan Dollars Property List of Trust Accounts

Investment items Bank deposits Bonds Stocks Mutual funds Structured notes Real estate (Net) Land Buildings and structures Construction in progress Customers’ securities under custody Total	December 31,2022 44,708,048 $ 3,973,264 8,476,886 236,598,668 4,107,183 60,615,129 15,291 7,823,316 556,878,552 923,196,337 $	December 31,2021
		37,382,435 $ 2,943,624 5,602,641 210,686,002 2,620,000 27,485,534 15,291 4,865,868 506,399,102
		798,000,497 $

Expressed in Thousands of New Taiwan Dollars Income Statement of Trust Accounts

			For theyears ended	For theyears ended	December 31,
Trust revenues			2022		2021
Interest income		$	72,388	$	54,098
Cash dividend income			118,209		51,617
Realised gain on bonds			-		5,354
Realised gain on stocks			13,118		15,315
Realised gain on mutual funds			14,860		35,875
Total trust revenues			218,575		162,259
Trust expenses
Management fee	(		6,508)	(	3,050)
Other expenses	(		1,256)	(	635)
Service fee	(		2,104)	(	4,910)
Realised loss on bonds	(		4,055)	(	2,502)
Realised loss on stocks	(		2,258)	(	471)
Realised loss on mutual funds	(		16,661)	(	12,228)
Total trust expenses	(		32,842)	(	23,796)
Profit before tax			185,733		138,463
Income tax expense	(		136)	(	29)
Net income after tax		$	185,597	$	138,434

In accordance with Zhong-Tuo-Cha-Zi Letter No. 1100002097 issued by Trust Association of Republic of China on October 20, 2021, "The Operating Specifications for the Establishment, Classification and Contents of Trust Account Items, Financial Reports and Business Reports of

467

the Trust Industry", since 2022, the "Specific Money Trust - Business without Decision-making" shall be recorded at cost when purchasing funds; when redeeming funds, it shall be written off as "trust capital" and there is no need to record any other accounting entries. At the same time, the amount of "Trust Account Balance Sheet" and "Trust Account Income Statement" in 2021 should be retrospectively adjusted.

(Blank)

468

Relationship between counterparty and bank	Non-related parties	Non-related parties
Additional terms	None	None
Gain (loss) on disposal	67,569 $	74,785
Sale price	67,569 $	74,785
Book value (Note)	- $	-
Composition of creditor’s rights	Unsecured	Unsecured
Counterparty	Merrill Lynch International	Merrill Lynch International
Transaction date	December 16, 2022	December 16, 2022

469

Percentage (%) of total consolidated net revenues or assets (Note 3)	0.04%	0.05%	0.02%	0.00%	0.04%	0.05%	0.02%	0.07%	0.11%	0.09%	0.00%	0.11%	0.02%	1.06%	0.00%	0.10%	0.01%	0.00%	0.00%	0.00%	0.11%	0.00%	0.04%	0.03%
Conditions	No significant difference from general customers	″	″	″	″	″	″	″	″	″	″	″	″	″	″	″	″	″	″	″	″	″	″	″
Amount	1,568,028 $	1,912,758	741,710	49,267	1,568,028	1,912,758	741,710	2,766,543	72,321	60,975	65,145	72,295	820,827	720,352	75,515	66,233	310,000	39,498	66,251	40,317	72,295	65,145	1,566,043	1,200,500
Account	Cash and cash equivalents	Current tax assets	Current tax liabilities	Lease Liabilities	Deposits and remittances	Current tax liabilities	Current tax assets	Deposits and remittances	Other general and administrative expenses	Other revenue other than interest income	Deposits and remittances	Net service fee and commission	Deposits and remittances	Net service fee and commission	Receivables, net	Other general and administrative expenses	Loan discounted, net	Deposits and remittances	Deposits and remittances	Deposits and remittances	Other general and administrative expenses	Cash and cash equivalents	Cash and cash equivalents	Other assets
Relationship (Note 2)	1	1	1	1	2	2	2	3	3	3	3	3	3	3	3	3	3	3	3	3	3	3	3	3
Counterparty	FCB	FCB	FCB	FCB	FFHC	FFHC	FFHC	FS	FS	FS	FSIT	FSIT	FLI	FLI	FLI	FFAM	FFAM	FFAM	FVC	FFMC	FCB	FCB	FCB	FCB
Company	FFHC				FCB																FSIT		FS
No. (Note 1)	0				1																2		3

470

	Note 1: The numbers filled in for the transaction company in respect of inter-company transactions are as follows: (1) Parent company is ‘0’. (2) The subsidiaries are numbered in order starting from ‘1’. Note 2: Relationship between transaction company and counterparty is classified into the following three categories: (1) Parent company to subsidiary. (2) Subsidiary to parent company. (3) Subsidiary to subsidiary. Note 3: Regarding percentage of transaction amount to consolidated total operating revenues or total assets, it is computed based on period-end balance of transaction to consolidated total assets for balance sheet accounts and based on accumulated transaction amount for the period to consolidated total operating revenues for consolidated income statement accounts. Note 4: Disclosures are transaction amounts exceeding $30,000. I.Other significant transactions that may affect the decisions made by consolidated financial statements users as of December 31, 2022: None. (2) Information regarding reinvested business A. Funds lent to others (A) The subsidiaries, FCB, FLI and FS belong to financial industry, insurance industry and securities industry, and no disclosure is required. (B) Not applicable for the subsidiaries, FSIT, FVC, and FFMC. (C) Indirect investment First Commercial Bank (USA) and FTSL belong to financial industry and securities industry, and no disclosure is required. In addition, aside from those of the following table, other indirect investment subsidiaries are not applicable. Account Amount Conditions Percentage (%) of total consolidated net revenues or assets (Note 3) 3 FS FCB 3 Other revenue other than interest income 72,321 $ No significant difference from general customers 0.11% FCB 3 Lease Liabilities 58,133 ″ 0.00% 4 FLI FCB 3 Cash and cash equivalents 820,827 ″ 0.02% FCB 3 Net service fee and commission 720,352 ″ 1.06% FCB 3 Payables 75,515 ″ 0.00% 5 FFAM FCB 3 Net service fee and commission 66,233 ″ 0.10% FCB 3 Other borrowings 310,000 ″ 0.01% FCB 3 Cash and cash equivalents 39,498 ″ 0.00% 6 FVC FCB 3 Cash and cash equivalents 66,251 ″ 0.00% 7 FFMC FCB 3 Cash and cash equivalents 40,317 ″ 0.00% No. (Note 1) Company Counterparty Relationship (Note 2)	Note 1: The numbers filled in for the transaction company in respect of inter-company transactions are as follows: (1) Parent company is ‘0’. (2) The subsidiaries are numbered in order starting from ‘1’. Note 2: Relationship between transaction company and counterparty is classified into the following three categories: (1) Parent company to subsidiary. (2) Subsidiary to parent company. (3) Subsidiary to subsidiary. Note 3: Regarding percentage of transaction amount to consolidated total operating revenues or total assets, it is computed based on period-end balance of transaction to consolidated total assets for balance sheet accounts and based on accumulated transaction amount for the period to consolidated total operating revenues for consolidated income statement accounts. Note 4: Disclosures are transaction amounts exceeding $30,000. I.Other significant transactions that may affect the decisions made by consolidated financial statements users as of December 31, 2022: None. (2) Information regarding reinvested business A. Funds lent to others (A) The subsidiaries, FCB, FLI and FS belong to financial industry, insurance industry and securities industry, and no disclosure is required. (B) Not applicable for the subsidiaries, FSIT, FVC, and FFMC. (C) Indirect investment First Commercial Bank (USA) and FTSL belong to financial industry and securities industry, and no disclosure is required. In addition, aside from those of the following table, other indirect investment subsidiaries are not applicable. Account Amount Conditions Percentage (%) of total consolidated net revenues or assets (Note 3) 3 FS FCB 3 Other revenue other than interest income 72,321 $ No significant difference from general customers 0.11% FCB 3 Lease Liabilities 58,133 ″ 0.00% 4 FLI FCB 3 Cash and cash equivalents 820,827 ″ 0.02% FCB 3 Net service fee and commission 720,352 ″ 1.06% FCB 3 Payables 75,515 ″ 0.00% 5 FFAM FCB 3 Net service fee and commission 66,233 ″ 0.10% FCB 3 Other borrowings 310,000 ″ 0.01% FCB 3 Cash and cash equivalents 39,498 ″ 0.00% 6 FVC FCB 3 Cash and cash equivalents 66,251 ″ 0.00% 7 FFMC FCB 3 Cash and cash equivalents 40,317 ″ 0.00% No. (Note 1) Company Counterparty Relationship (Note 2)	Note 1: The numbers filled in for the transaction company in respect of inter-company transactions are as follows: (1) Parent company is ‘0’. (2) The subsidiaries are numbered in order starting from ‘1’. Note 2: Relationship between transaction company and counterparty is classified into the following three categories: (1) Parent company to subsidiary. (2) Subsidiary to parent company. (3) Subsidiary to subsidiary. Note 3: Regarding percentage of transaction amount to consolidated total operating revenues or total assets, it is computed based on period-end balance of transaction to consolidated total assets for balance sheet accounts and based on accumulated transaction amount for the period to consolidated total operating revenues for consolidated income statement accounts. Note 4: Disclosures are transaction amounts exceeding $30,000. I.Other significant transactions that may affect the decisions made by consolidated financial statements users as of December 31, 2022: None. (2) Information regarding reinvested business A. Funds lent to others (A) The subsidiaries, FCB, FLI and FS belong to financial industry, insurance industry and securities industry, and no disclosure is required. (B) Not applicable for the subsidiaries, FSIT, FVC, and FFMC. (C) Indirect investment First Commercial Bank (USA) and FTSL belong to financial industry and securities industry, and no disclosure is required. In addition, aside from those of the following table, other indirect investment subsidiaries are not applicable. Account Amount Conditions Percentage (%) of total consolidated net revenues or assets (Note 3) 3 FS FCB 3 Other revenue other than interest income 72,321 $ No significant difference from general customers 0.11% FCB 3 Lease Liabilities 58,133 ″ 0.00% 4 FLI FCB 3 Cash and cash equivalents 820,827 ″ 0.02% FCB 3 Net service fee and commission 720,352 ″ 1.06% FCB 3 Payables 75,515 ″ 0.00% 5 FFAM FCB 3 Net service fee and commission 66,233 ″ 0.10% FCB 3 Other borrowings 310,000 ″ 0.01% FCB 3 Cash and cash equivalents 39,498 ″ 0.00% 6 FVC FCB 3 Cash and cash equivalents 66,251 ″ 0.00% 7 FFMC FCB 3 Cash and cash equivalents 40,317 ″ 0.00% No. (Note 1) Company Counterparty Relationship (Note 2)	Note 1: The numbers filled in for the transaction company in respect of inter-company transactions are as follows: (1) Parent company is ‘0’. (2) The subsidiaries are numbered in order starting from ‘1’. Note 2: Relationship between transaction company and counterparty is classified into the following three categories: (1) Parent company to subsidiary. (2) Subsidiary to parent company. (3) Subsidiary to subsidiary. Note 3: Regarding percentage of transaction amount to consolidated total operating revenues or total assets, it is computed based on period-end balance of transaction to consolidated total assets for balance sheet accounts and based on accumulated transaction amount for the period to consolidated total operating revenues for consolidated income statement accounts. Note 4: Disclosures are transaction amounts exceeding $30,000. I.Other significant transactions that may affect the decisions made by consolidated financial statements users as of December 31, 2022: None. (2) Information regarding reinvested business A. Funds lent to others (A) The subsidiaries, FCB, FLI and FS belong to financial industry, insurance industry and securities industry, and no disclosure is required. (B) Not applicable for the subsidiaries, FSIT, FVC, and FFMC. (C) Indirect investment First Commercial Bank (USA) and FTSL belong to financial industry and securities industry, and no disclosure is required. In addition, aside from those of the following table, other indirect investment subsidiaries are not applicable. Account Amount Conditions Percentage (%) of total consolidated net revenues or assets (Note 3) 3 FS FCB 3 Other revenue other than interest income 72,321 $ No significant difference from general customers 0.11% FCB 3 Lease Liabilities 58,133 ″ 0.00% 4 FLI FCB 3 Cash and cash equivalents 820,827 ″ 0.02% FCB 3 Net service fee and commission 720,352 ″ 1.06% FCB 3 Payables 75,515 ″ 0.00% 5 FFAM FCB 3 Net service fee and commission 66,233 ″ 0.10% FCB 3 Other borrowings 310,000 ″ 0.01% FCB 3 Cash and cash equivalents 39,498 ″ 0.00% 6 FVC FCB 3 Cash and cash equivalents 66,251 ″ 0.00% 7 FFMC FCB 3 Cash and cash equivalents 40,317 ″ 0.00% No. (Note 1) Company Counterparty Relationship (Note 2)	Note 1: The numbers filled in for the transaction company in respect of inter-company transactions are as follows: (1) Parent company is ‘0’. (2) The subsidiaries are numbered in order starting from ‘1’. Note 2: Relationship between transaction company and counterparty is classified into the following three categories: (1) Parent company to subsidiary. (2) Subsidiary to parent company. (3) Subsidiary to subsidiary. Note 3: Regarding percentage of transaction amount to consolidated total operating revenues or total assets, it is computed based on period-end balance of transaction to consolidated total assets for balance sheet accounts and based on accumulated transaction amount for the period to consolidated total operating revenues for consolidated income statement accounts. Note 4: Disclosures are transaction amounts exceeding $30,000. I.Other significant transactions that may affect the decisions made by consolidated financial statements users as of December 31, 2022: None. (2) Information regarding reinvested business A. Funds lent to others (A) The subsidiaries, FCB, FLI and FS belong to financial industry, insurance industry and securities industry, and no disclosure is required. (B) Not applicable for the subsidiaries, FSIT, FVC, and FFMC. (C) Indirect investment First Commercial Bank (USA) and FTSL belong to financial industry and securities industry, and no disclosure is required. In addition, aside from those of the following table, other indirect investment subsidiaries are not applicable. Account Amount Conditions Percentage (%) of total consolidated net revenues or assets (Note 3) 3 FS FCB 3 Other revenue other than interest income 72,321 $ No significant difference from general customers 0.11% FCB 3 Lease Liabilities 58,133 ″ 0.00% 4 FLI FCB 3 Cash and cash equivalents 820,827 ″ 0.02% FCB 3 Net service fee and commission 720,352 ″ 1.06% FCB 3 Payables 75,515 ″ 0.00% 5 FFAM FCB 3 Net service fee and commission 66,233 ″ 0.10% FCB 3 Other borrowings 310,000 ″ 0.01% FCB 3 Cash and cash equivalents 39,498 ″ 0.00% 6 FVC FCB 3 Cash and cash equivalents 66,251 ″ 0.00% 7 FFMC FCB 3 Cash and cash equivalents 40,317 ″ 0.00% No. (Note 1) Company Counterparty Relationship (Note 2)	Note 1: The numbers filled in for the transaction company in respect of inter-company transactions are as follows: (1) Parent company is ‘0’. (2) The subsidiaries are numbered in order starting from ‘1’. Note 2: Relationship between transaction company and counterparty is classified into the following three categories: (1) Parent company to subsidiary. (2) Subsidiary to parent company. (3) Subsidiary to subsidiary. Note 3: Regarding percentage of transaction amount to consolidated total operating revenues or total assets, it is computed based on period-end balance of transaction to consolidated total assets for balance sheet accounts and based on accumulated transaction amount for the period to consolidated total operating revenues for consolidated income statement accounts. Note 4: Disclosures are transaction amounts exceeding $30,000. I.Other significant transactions that may affect the decisions made by consolidated financial statements users as of December 31, 2022: None. (2) Information regarding reinvested business A. Funds lent to others (A) The subsidiaries, FCB, FLI and FS belong to financial industry, insurance industry and securities industry, and no disclosure is required. (B) Not applicable for the subsidiaries, FSIT, FVC, and FFMC. (C) Indirect investment First Commercial Bank (USA) and FTSL belong to financial industry and securities industry, and no disclosure is required. In addition, aside from those of the following table, other indirect investment subsidiaries are not applicable. Account Amount Conditions Percentage (%) of total consolidated net revenues or assets (Note 3) 3 FS FCB 3 Other revenue other than interest income 72,321 $ No significant difference from general customers 0.11% FCB 3 Lease Liabilities 58,133 ″ 0.00% 4 FLI FCB 3 Cash and cash equivalents 820,827 ″ 0.02% FCB 3 Net service fee and commission 720,352 ″ 1.06% FCB 3 Payables 75,515 ″ 0.00% 5 FFAM FCB 3 Net service fee and commission 66,233 ″ 0.10% FCB 3 Other borrowings 310,000 ″ 0.01% FCB 3 Cash and cash equivalents 39,498 ″ 0.00% 6 FVC FCB 3 Cash and cash equivalents 66,251 ″ 0.00% 7 FFMC FCB 3 Cash and cash equivalents 40,317 ″ 0.00% No. (Note 1) Company Counterparty Relationship (Note 2)	Note 1: The numbers filled in for the transaction company in respect of inter-company transactions are as follows: (1) Parent company is ‘0’. (2) The subsidiaries are numbered in order starting from ‘1’. Note 2: Relationship between transaction company and counterparty is classified into the following three categories: (1) Parent company to subsidiary. (2) Subsidiary to parent company. (3) Subsidiary to subsidiary. Note 3: Regarding percentage of transaction amount to consolidated total operating revenues or total assets, it is computed based on period-end balance of transaction to consolidated total assets for balance sheet accounts and based on accumulated transaction amount for the period to consolidated total operating revenues for consolidated income statement accounts. Note 4: Disclosures are transaction amounts exceeding $30,000. I.Other significant transactions that may affect the decisions made by consolidated financial statements users as of December 31, 2022: None. (2) Information regarding reinvested business A. Funds lent to others (A) The subsidiaries, FCB, FLI and FS belong to financial industry, insurance industry and securities industry, and no disclosure is required. (B) Not applicable for the subsidiaries, FSIT, FVC, and FFMC. (C) Indirect investment First Commercial Bank (USA) and FTSL belong to financial industry and securities industry, and no disclosure is required. In addition, aside from those of the following table, other indirect investment subsidiaries are not applicable. Account Amount Conditions Percentage (%) of total consolidated net revenues or assets (Note 3) 3 FS FCB 3 Other revenue other than interest income 72,321 $ No significant difference from general customers 0.11% FCB 3 Lease Liabilities 58,133 ″ 0.00% 4 FLI FCB 3 Cash and cash equivalents 820,827 ″ 0.02% FCB 3 Net service fee and commission 720,352 ″ 1.06% FCB 3 Payables 75,515 ″ 0.00% 5 FFAM FCB 3 Net service fee and commission 66,233 ″ 0.10% FCB 3 Other borrowings 310,000 ″ 0.01% FCB 3 Cash and cash equivalents 39,498 ″ 0.00% 6 FVC FCB 3 Cash and cash equivalents 66,251 ″ 0.00% 7 FFMC FCB 3 Cash and cash equivalents 40,317 ″ 0.00% No. (Note 1) Company Counterparty Relationship (Note 2)	Note 1: The numbers filled in for the transaction company in respect of inter-company transactions are as follows: (1) Parent company is ‘0’. (2) The subsidiaries are numbered in order starting from ‘1’. Note 2: Relationship between transaction company and counterparty is classified into the following three categories: (1) Parent company to subsidiary. (2) Subsidiary to parent company. (3) Subsidiary to subsidiary. Note 3: Regarding percentage of transaction amount to consolidated total operating revenues or total assets, it is computed based on period-end balance of transaction to consolidated total assets for balance sheet accounts and based on accumulated transaction amount for the period to consolidated total operating revenues for consolidated income statement accounts. Note 4: Disclosures are transaction amounts exceeding $30,000. I.Other significant transactions that may affect the decisions made by consolidated financial statements users as of December 31, 2022: None. (2) Information regarding reinvested business A. Funds lent to others (A) The subsidiaries, FCB, FLI and FS belong to financial industry, insurance industry and securities industry, and no disclosure is required. (B) Not applicable for the subsidiaries, FSIT, FVC, and FFMC. (C) Indirect investment First Commercial Bank (USA) and FTSL belong to financial industry and securities industry, and no disclosure is required. In addition, aside from those of the following table, other indirect investment subsidiaries are not applicable. Account Amount Conditions Percentage (%) of total consolidated net revenues or assets (Note 3) 3 FS FCB 3 Other revenue other than interest income 72,321 $ No significant difference from general customers 0.11% FCB 3 Lease Liabilities 58,133 ″ 0.00% 4 FLI FCB 3 Cash and cash equivalents 820,827 ″ 0.02% FCB 3 Net service fee and commission 720,352 ″ 1.06% FCB 3 Payables 75,515 ″ 0.00% 5 FFAM FCB 3 Net service fee and commission 66,233 ″ 0.10% FCB 3 Other borrowings 310,000 ″ 0.01% FCB 3 Cash and cash equivalents 39,498 ″ 0.00% 6 FVC FCB 3 Cash and cash equivalents 66,251 ″ 0.00% 7 FFMC FCB 3 Cash and cash equivalents 40,317 ″ 0.00% No. (Note 1) Company Counterparty Relationship (Note 2)	Note 1: The numbers filled in for the transaction company in respect of inter-company transactions are as follows: (1) Parent company is ‘0’. (2) The subsidiaries are numbered in order starting from ‘1’. Note 2: Relationship between transaction company and counterparty is classified into the following three categories: (1) Parent company to subsidiary. (2) Subsidiary to parent company. (3) Subsidiary to subsidiary. Note 3: Regarding percentage of transaction amount to consolidated total operating revenues or total assets, it is computed based on period-end balance of transaction to consolidated total assets for balance sheet accounts and based on accumulated transaction amount for the period to consolidated total operating revenues for consolidated income statement accounts. Note 4: Disclosures are transaction amounts exceeding $30,000. I.Other significant transactions that may affect the decisions made by consolidated financial statements users as of December 31, 2022: None. (2) Information regarding reinvested business A. Funds lent to others (A) The subsidiaries, FCB, FLI and FS belong to financial industry, insurance industry and securities industry, and no disclosure is required. (B) Not applicable for the subsidiaries, FSIT, FVC, and FFMC. (C) Indirect investment First Commercial Bank (USA) and FTSL belong to financial industry and securities industry, and no disclosure is required. In addition, aside from those of the following table, other indirect investment subsidiaries are not applicable. Account Amount Conditions Percentage (%) of total consolidated net revenues or assets (Note 3) 3 FS FCB 3 Other revenue other than interest income 72,321 $ No significant difference from general customers 0.11% FCB 3 Lease Liabilities 58,133 ″ 0.00% 4 FLI FCB 3 Cash and cash equivalents 820,827 ″ 0.02% FCB 3 Net service fee and commission 720,352 ″ 1.06% FCB 3 Payables 75,515 ″ 0.00% 5 FFAM FCB 3 Net service fee and commission 66,233 ″ 0.10% FCB 3 Other borrowings 310,000 ″ 0.01% FCB 3 Cash and cash equivalents 39,498 ″ 0.00% 6 FVC FCB 3 Cash and cash equivalents 66,251 ″ 0.00% 7 FFMC FCB 3 Cash and cash equivalents 40,317 ″ 0.00% No. (Note 1) Company Counterparty Relationship (Note 2)	Note 1: The numbers filled in for the transaction company in respect of inter-company transactions are as follows: (1) Parent company is ‘0’. (2) The subsidiaries are numbered in order starting from ‘1’. Note 2: Relationship between transaction company and counterparty is classified into the following three categories: (1) Parent company to subsidiary. (2) Subsidiary to parent company. (3) Subsidiary to subsidiary. Note 3: Regarding percentage of transaction amount to consolidated total operating revenues or total assets, it is computed based on period-end balance of transaction to consolidated total assets for balance sheet accounts and based on accumulated transaction amount for the period to consolidated total operating revenues for consolidated income statement accounts. Note 4: Disclosures are transaction amounts exceeding $30,000. I.Other significant transactions that may affect the decisions made by consolidated financial statements users as of December 31, 2022: None. (2) Information regarding reinvested business A. Funds lent to others (A) The subsidiaries, FCB, FLI and FS belong to financial industry, insurance industry and securities industry, and no disclosure is required. (B) Not applicable for the subsidiaries, FSIT, FVC, and FFMC. (C) Indirect investment First Commercial Bank (USA) and FTSL belong to financial industry and securities industry, and no disclosure is required. In addition, aside from those of the following table, other indirect investment subsidiaries are not applicable. Account Amount Conditions Percentage (%) of total consolidated net revenues or assets (Note 3) 3 FS FCB 3 Other revenue other than interest income 72,321 $ No significant difference from general customers 0.11% FCB 3 Lease Liabilities 58,133 ″ 0.00% 4 FLI FCB 3 Cash and cash equivalents 820,827 ″ 0.02% FCB 3 Net service fee and commission 720,352 ″ 1.06% FCB 3 Payables 75,515 ″ 0.00% 5 FFAM FCB 3 Net service fee and commission 66,233 ″ 0.10% FCB 3 Other borrowings 310,000 ″ 0.01% FCB 3 Cash and cash equivalents 39,498 ″ 0.00% 6 FVC FCB 3 Cash and cash equivalents 66,251 ″ 0.00% 7 FFMC FCB 3 Cash and cash equivalents 40,317 ″ 0.00% No. (Note 1) Company Counterparty Relationship (Note 2)	Note 1: The numbers filled in for the transaction company in respect of inter-company transactions are as follows: (1) Parent company is ‘0’. (2) The subsidiaries are numbered in order starting from ‘1’. Note 2: Relationship between transaction company and counterparty is classified into the following three categories: (1) Parent company to subsidiary. (2) Subsidiary to parent company. (3) Subsidiary to subsidiary. Note 3: Regarding percentage of transaction amount to consolidated total operating revenues or total assets, it is computed based on period-end balance of transaction to consolidated total assets for balance sheet accounts and based on accumulated transaction amount for the period to consolidated total operating revenues for consolidated income statement accounts. Note 4: Disclosures are transaction amounts exceeding $30,000. I.Other significant transactions that may affect the decisions made by consolidated financial statements users as of December 31, 2022: None. (2) Information regarding reinvested business A. Funds lent to others (A) The subsidiaries, FCB, FLI and FS belong to financial industry, insurance industry and securities industry, and no disclosure is required. (B) Not applicable for the subsidiaries, FSIT, FVC, and FFMC. (C) Indirect investment First Commercial Bank (USA) and FTSL belong to financial industry and securities industry, and no disclosure is required. In addition, aside from those of the following table, other indirect investment subsidiaries are not applicable. Account Amount Conditions Percentage (%) of total consolidated net revenues or assets (Note 3) 3 FS FCB 3 Other revenue other than interest income 72,321 $ No significant difference from general customers 0.11% FCB 3 Lease Liabilities 58,133 ″ 0.00% 4 FLI FCB 3 Cash and cash equivalents 820,827 ″ 0.02% FCB 3 Net service fee and commission 720,352 ″ 1.06% FCB 3 Payables 75,515 ″ 0.00% 5 FFAM FCB 3 Net service fee and commission 66,233 ″ 0.10% FCB 3 Other borrowings 310,000 ″ 0.01% FCB 3 Cash and cash equivalents 39,498 ″ 0.00% 6 FVC FCB 3 Cash and cash equivalents 66,251 ″ 0.00% 7 FFMC FCB 3 Cash and cash equivalents 40,317 ″ 0.00% No. (Note 1) Company Counterparty Relationship (Note 2)
Details of transactions	Percentage (%) of total consolidated net revenues or assets (Note 3)	0.11%	0.00%	0.02%	1.06%	0.00%	0.10%	0.01%	0.00%	0.00%	0.00%
	Conditions	No significant difference from general customers	″	″	″	″	″	″	″	″	″
	Amount	72,321 $	58,133	820,827	720,352	75,515	66,233	310,000	39,498	66,251	40,317
	Account	Other revenue other than interest income	Lease Liabilities	Cash and cash equivalents	Net service fee and commission	Payables	Net service fee and commission	Other borrowings	Cash and cash equivalents	Cash and cash equivalents	Cash and cash equivalents
	Relationship (Note 2)	3	3	3	3	3	3	3	3	3	3
	Counterparty	FCB	FCB	FCB	FCB	FCB	FCB	FCB	FCB	FCB	FCB
	Company	FS		FLI			FFAM			FVC	FFMC
	No. (Note 1)	3		4			5			6	7

471

Ceiling on total loans granted	Ceiling on total loans granted	$ 2,498,423	2,498,423	2,498,423	2,498,423	2,498,423	2,498,423	2,498,423	2,498,423	2,498,423	2,498,423	2,498,423	2,498,423	2,498,423	2,498,423	2,498,423	2,498,423	2,498,423	2,498,423	2,498,423	2,498,423	2,498,423	2,498,423	2,498,423
Limit on loans granted to a single party		$ 416,404	416,404	416,404	416,404	416,404	416,404	416,404	416,404	416,404	416,404	416,404	416,404	416,404	416,404	416,404	416,404	416,404	416,404	416,404	416,404	416,404	416,404	416,404
Collateral	Value	$ 328,629	-	4,000	-	120,000	24,000	-	-	330,000	42,000	-	3,543	9,000	77,190	120,000	78,000	46,509	2,000	-	2,000	-	144,000	-
	Item	Real estate	None	Deposit	None	Real estate	Real estate	None	None	Real estate	Stock	None	Chattel estate	Stock	Real estate	Real estate	Real estate	Real estate	Deposit	None	Deposit	None	Vessel	None
Allowance for doubtful accounts		$ -	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
Reason for short-term financing		Operation turnover	Operation turnover	Operation turnover	Operation turnover	Operation turnover	Operation turnover	Operation turnover	Operation turnover	Operation turnover	Operation turnover	Operation turnover	Operation turnover	Operation turnover	Operation turnover	Operation turnover	Operation turnover	Operation turnover	Operation turnover	Operation turnover	Operation turnover	Operation turnover	Operation turnover	Operation turnover
Amount of transactions with the borrower		$ -	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
Nature of Loan (Note)		Short-term financing	Short-term financing	Short-term financing	Short-term financing	Short-term financing	Short-term financing	Short-term financing	Short-term financing	Short-term financing	Short-term financing	Short-term financing	Short-term financing	Short-term financing	Short-term financing	Short-term financing	Short-term financing	Short-term financing	Short-term financing	vul4	Short-term financing	Short-term financing	Short-term financing	Short-term financing
Interest Rate(%)		2.50~3.50	4.50~5.50	4.00~5.00	4.59~5.59	3.25~4.25	6.14~7.14	5.19~6.19	5.50~6.50	4.55~5.55	3.10~4.10	4.65~5.65	3.86~4.86	3.51~4.51	4.99~5.99	3.52~4.52	5.29~6.29	3.35~4.35	4.27~5.27	4.44~5.44	5.93~6.93	5.59~6.59	3.48~4.48	3.88~4.88
Actual amount drawn down		100,000 $	1,042	4,569	17,800	100,000	16,685	30,016	7,302	275,000	109,125	232,000	3,016	30,000	27,338	76,500	-	40,000	1,703	6,756	6,789	37,679	49,889	13,675
Balance at December 31, 2022		100,000 $	1,042	4,569	17,800	100,000	16,685	30,016	7,302	275,000	109,125	232,000	3,016	30,000	27,338	76,500	-	40,000	1,703	6,756	6,789	37,679	49,889	13,675
Maximum outstanding balance during the year ended December 31, 2022		100,000 $	4,066	17,847	20,000	100,000	100,000	30,016	10,000	275,000	131,625	290,000	5,329	30,000	31,033	79,900	19,000	40,000	20,000	53,526	20,000	50,000	86,320	53,526
Related party (Y/N)		N	N	N	N	N	N	N	N	N	N	N	N	N	N	N	N	N	N	N	N	N	N	N
General ledger account		Other receivables- direct financing	Other receivables- direct financing	Other receivables- direct financing	Other receivables- direct financing	Other receivables- direct financing	Other receivables- direct financing	Other receivables- direct financing	Other receivables- direct financing	Other receivables- direct financing	Other receivables- direct financing	Other receivables- direct financing	Other receivables- direct financing	Other receivables- direct financing	Other receivables- direct financing	Other receivables- direct financing	Other receivables- direct financing	Other receivables- direct financing	Other receivables- direct financing	Other receivables- direct financing	Other receivables- direct financing	Other receivables- direct financing	Other receivables- direct financing	Other receivables- direct financing
Borrower		Da cheng feng Construction Co., Ltd.	Syuyue Steel Co., Ltd	Unitary Enterprise Co., Ltd	Fengxin Development Co., Ltd.	Shangcheng Industrial Co., Ltd.	Chong Yu international Co., Ltd.	Dynacard Co., Ltd.	Jinfeng Development Co., Ltd.	He Tzung Construction Co., Ltd.	Qiaoding Investment Co., Ltd	Uni-Wagon Marine Co., Ltd.	Xinyi Dentist	Ruitian Development Co., Ltd.	Ji - Gi Shoe Co., Ltd.	Yuguan Construction Co., Ltd.	Suntory Construction Co., Ltd.	Guang Xuan Construction & Development Co.,Ltd	Chao-Chi Property Management Consulting Co., Ltd.	Dun - Qian Intelligent Technology Co., Ltd	Shiners Zone Enterprise Co., Ltd.	Baoding Investment Co., Ltd.	Xiang-Hao Fishery Co., Ltd.	Kuo Yang Environment Technology Co., Ltd.
Creditor		FCBLeasing Co., Ltd.	FCB Leasing Co., Ltd.	FCB Leasing Co., Ltd.	FCB Leasing Co., Ltd.	FCB Leasing Co., Ltd.	FCB Leasing Co., Ltd.	FCB Leasing Co., Ltd.	FCB Leasing Co., Ltd.	FCB Leasing Co., Ltd.	FCB Leasing Co., Ltd.	FCB Leasing Co., Ltd.	FCB Leasing Co., Ltd.	FCB Leasing Co., Ltd.	FCB Leasing Co., Ltd.	FCB Leasing Co., Ltd.	FCB Leasing Co., Ltd.	FCB Leasing Co., Ltd.	FCB Leasing Co., Ltd.	FCB Leasing Co., Ltd.	FCB Leasing Co., Ltd.	FCB Leasing Co., Ltd.	FCB Leasing Co., Ltd.	FCB Leasing Co., Ltd.
Number		1	2	3	4	5	6	7	8	9	10	11	12	13	14	15	16	17	18	19	20	21	22	23

472

Ceiling on total loans granted	Ceiling on total loans granted	$ 2,498,423	2,498,423	12,450,388	12,450,388	12,450,388	12,450,388	12,450,388	12,450,388	12,450,388	12,450,388	12,450,388	12,450,388	12,450,388	12,450,388	12,450,388	12,450,388	12,450,388	12,450,388	12,450,388	12,450,388	12,450,388	12,450,388
Limit on loans granted to a single party		$ 416,404	416,404	1,067,176	1,067,176	1,067,176	1,067,176	1,067,176	1,067,176	1,067,176	1,067,176	1,067,176	1,067,176	1,067,176	1,067,176	1,067,176	1,067,176	1,067,176	1,067,176	1,067,176	1,067,176	1,067,176	1,067,176
Collateral	Value	$ 5,012	400	60,000	-	184,279	20,000	52,407	282,878	74,084	139,969	145,969	57,293	-	77,616	372,209	509,021	74,857	149,568	117,206	144,340	472,610	316,929
	Item	Real estate	Deposit	Real estate	None	Real estate	Real estate	Real estate	Real estate	Real estate	Real estate	Real estate	Real estate	None	Real estate	Real estate	Real estate	Real estate	Real estate	Real estate	Real estate	Real estate	Real estate
Allowance for doubtful accounts		$ -	-	-	600	376	39	-	58	114	293	18	161	20	-	83	750	-	-	-	150	56	-
Reason for short-term financing		Operation turnover	Operation turnover	Operation turnover	Operation turnover	Operation turnover	Operation turnover	Operation turnover	Operation turnover	Operation turnover	Operation turnover	Operation turnover	Operation turnover	Operation turnover	Operation turnover	Operation turnover	Operation turnover	Operation turnover	Operation turnover	Operation turnover	Operation turnover	Operation turnover	Operation turnover
Amount of transactions with the borrower		$ -	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
Nature of Loan (Note)		Short-term financing	Short-term financing	Short-term financing	Short-term financing	Short-term financing	Short-term financing	Short-term financing	Short-term financing	Short-term financing	Short-term financing	Short-term financing	Short-term financing	Short-term financing	Short-term financing	Short-term financing	Short-term financing	Short-term financing	Short-term financing	Short-term financing	Short-term financing	Short-term financing	Short-term financing
Interest Rate(%)		5.18~6.18	5.54~6.54	2.00~10.00	2.00~10.00	2.00~10.00	2.00~10.00	2.00~10.00	2.00~10.00	2.00~10.00	2.00~10.00	2.00~10.00	2.00~10.00	2.00~10.00	2.00~10.00	2.00~10.00	2.00~10.00	2.00~10.00	2.00~10.00	2.00~10.00	2.00~10.00	2.00~10.00	2.00~10.00
Actual amount drawn down		- $	8,714	-	200,000	125,260	13,000	-	19,180	38,000	97,800	6,000	53,780	6,700	-	27,500	250,000	-	-	-	50,000	18,590	-
Balance at December 31, 2022		- $	8,714	170,000	200,000	132,660	13,000	10,000	75,000	56,000	130,000	20,000	360,000	25,000	80,000	200,000	400,000	80,000	25,000	90,000	50,000	199,440	80,000
Maximum outstanding balance during the year ended December 31, 2022		5,000 $	12,000	170,000	200,000	132,660	13,000	10,000	75,000	56,000	130,000	20,000	360,000	25,000	80,000	200,000	400,000	80,000	25,000	90,000	50,000	199,440	80,000
Related party (Y/N)		N	N	N	N	N	N	N	N	N	N	N	N	N	N	N	N	N	N	N	N	N	N
General ledger account		Other receivables- direct financing	Other receivables- direct financing	Receivables	Receivables	Receivables	Receivables	Receivables	Receivables	Receivables	Receivables	Receivables	Receivables	Receivables	Receivables	Receivables	Receivables	Receivables	Receivables	Receivables	Receivables	Receivables	Receivables
Borrower		Jingsheng Enterprise	Ming Feng Aquatic Products Co., Ltd.	Downtown Development Co., Ltd.	Chau-Hong Construction Co., Ltd.	Fang Yuan Development and Construction Co.,Ltd.	Jun Mei Construction Co., Ltd.	Bao Cheng International Property Co., Ltd.	Jun Shuo Construction Co., Ltd.	Xinpu Construction Co., Ltd.	Tengtai Construction Co., Ltd.	Jiou Huang Development and Construction Co.,Ltd.	Kingland Property Co., Ltd.	Ciao Wei Construction & Development Co.,Ltd.	Xin Lian Development Co., Ltd.	Chuang Xin Development Co., Ltd.	Chau-Hong Construction Co., Ltd.	Kuo Huang Development Co., Ltd.	Jie Wun Construction Co., Ltd.	Vibo Development Co., Ltd	Chen, Jun Liang & Co - Borrower Chen Jun Jie	10 Others Including Yang, Yi Xing	Fucheng Development Co., Ltd.
Creditor		FCB Leasing Co., Ltd.	FCB Leasing Co., Ltd.	FFAM	FFAM	FFAM	FFAM	FFAM	FFAM	FFAM	FFAM	FFAM	FFAM	FFAM	FFAM	FFAM	FFAM	FFAM	FFAM	FFAM	FFAM	FFAM	FFAM
Number		24	25	26	27	28	29	30	31	32	33	34	35	36	37	38	39	40	41	42	43	44	45

473

Expressed in Thousands of New Taiwan Dollars	Item Value Limit on loans granted to a single party Ceiling on total loans granted Number Creditor Borrower General ledger account Related party (Y/N) Maximum outstanding balance during the year ended December 31, 2022 Balance at December 31, 2022 Actual amount drawn down Interest Rate(%) Nature of Loan (Note) Amount of transactions with the borrower Reason for short-term financing Allowance for doubtful accounts Collateral	46 FFAM Daguang Construction Co., Ltd. Receivables N 80,000 $ 80,000 $ 65,460 $ 2.00~10.00 Short-term financing $ - Operation turnover $ 196 Real estate $ 104,899 $ 1,067,176 $ 12,450,388	47 FFAM Tycoon Construction Industry Co., Ltd Receivables N 600,000 600,000 - 2.00~10.00 Short-term financing - Operation turnover - Real estate 750,000 1,067,176 12,450,388	48 FFAM Sun - Chi Construction Co., Ltd Receivables N 55,000 55,000 35,920 2.00~10.00 Short-term financing - Operation turnover 108 Real estate 71,219 1,067,176 12,450,388	49 FFAM An Jia Du Geng Construction Co., Ltd. Receivables N 16,100 16,100 4,860 2.00~10.00 Short-term financing - Operation turnover 15 Real estate 153,759 1,067,176 12,450,388	50 FFAM Li Jun Construction Co., Ltd. Receivables N 8,000 8,000 - 2.00~10.00 Short-term financing - Operation turnover - Real estate 89,169 1,067,176 12,450,388	51 FFAM Kuo Huang Development Co., Ltd. Receivables N 86,000 86,000 19,360 2.00~10.00 Short-term financing - Operation turnover 58 Real estate 103,777 1,067,176 12,450,388	52 FFAM Yuxing Construction Co., Ltd. Receivables N 30,000 30,000 - 2.00~10.00 Short-term financing - Operation turnover - Real estate 50,121 1,067,176 12,450,388	53 FFAM 4 Others Including Lin, Yinling Receivables N 60,000 60,000 60,000 2.00~10.00 Short-term financing - Operation turnover 180 Real estate 175,066 1,067,176 12,450,388	54 FFAM Peng Kee Construction Co., Ltd. Receivables N 200,000 200,000 200,000 2.00~10.00 Short-term financing - Operation turnover 600 Real estate 258,874 1,067,176 12,450,388	55 FFAM Shanyue Development Co., Ltd. Receivables N 1,000,000 1,000,000 - 2.00~10.00 Short-term financing - Operation turnover - Real estate 1,275,940 1,067,176 12,450,388	56 FFAM Kingland Property Co., Ltd. Receivables N 110,000 110,000 - 2.00~10.00 Short-term financing - Operation turnover - Real estate 132,064 1,067,176 12,450,388	Note: 1. The amount of loans for individual companies due to business transactions shall not exceed 10% net asset value of FCBL’s latest financial statements. The total amount of loans for individual companies due to business transactions	shall not exceed 40% net value of FCBL’s latest financial statements.	2. With regard to short-term financing capital borrowers who did not have business transactions with FCB Leasing, the amount of loans for individual companies due to business transactions shall not exceed 10% net asset value of	FCBL’s latest financial statements. For those who have the demand for short-term financing capital, the total amount of loans shall not exceed 40% net asset value of FCBL’s latest financial statements. If the borrower is FCBL’s	subsidiary, the amount of loans shall not exceed 40% net asset value of FCBL’s latest financial statements.	3. The total amount of FCBL shall not exceed 60% net asset value of its latest financial statements.	4. According to Paragraph 1 of Article 5 of “Operating Policies for Loans to Others” of FFAM, the loan amount to a single party must not exceed 40% of the company’s net assets; the total loan amount must not exceed seven times the	net assets of the Company.	B. Endorsements and guarantees provided for others	(A) The subsidiaries, FCB, FLI and FS belong to financial industry, insurance industry and securities industry, and no disclosure is required.	(B) Not applicable for the subsidiaries, FSIT, FVC and FFMC.	(C) Indirect investment First Commercial Bank (USA) and FTSL belong to financial industry and securities industry, and no disclosure is required.	In addition, aside from those of the following table, other indirect investment subsidiaries are not applicable.

474

Provision of endorsements/ guarantees to the party in Mainland China	Provision of endorsements/ guarantees to the party in Mainland China	N	Y	Y	Y
Provision of endorsements/ guarantees by subsidiary to parent company		N	N	N	N
Provision of endorsements/ guarantees by parent company to subsidiary		N	N	N	N
Maximum limit		$ 41,640,390	41,640,390	41,640,390	41,640,390
The ratio of accumulated endorsement and guarantee amount and the net value of the latest financial statements		63.60%	39.50%	4.77%	32.12%
	Property- backed endorsement and guarantee	None	None	None	None
	Actually used amount	$ -	255,022	41,675	224,079
	Ending balance of endorsement and guarantee	$ 2,648,495	1,644,850	198,495	1,337,600
	Maximum balance accumulated as of the period	$ 2,898,000	1,794,400	200,880	1,337,600
	Limit for endorsement and guarantee for single enterprise	$ 12,492,117	12,492,117	12,492,117	12,492,117
Endorsed and guaranteed company	Relationship	Subsidiary	Sub-subsidiary	Sub-subsidiary	Sub-subsidiary
	Name of company	FCBL Capital International (B.V.I) Ltd.	FCB International Leasing Ltd.	First Financial Leasing (Xiamen) Ltd.	First Leasing (Chengdu) Ltd.
	Endorsing and guarantee company	FCB Leasing Co., Ltd.	FCB Leasing Co., Ltd.	FCB Leasing Co., Ltd.	FCB Leasing Co., Ltd.
	No.	1	2	3	4

475

Investor
Relationship
Account
Shares / Units
(in thousands)
Book value
Ownership
Percentage
(%)
Market Value/
Net Equity (Note 1)
Note
Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Indicated
Name of Investee and Type of Securities

FCBL
FCBL Capital International (B.V.I) Ltd.
Stocks
An investee of FCBL under the equity method
Investments accounted for
using equity method
$ 60,050 $ 2,141,288
100.00% $ 2,141,288
Note 2
〃
First Financial Assets Management (BVI) Ltd.
〃
〃
〃
30,000 621,651
100.00% 621,651
Note 2
FCBL Capital International
(B.V.I) Ltd
FCB International Leasing Ltd.
Equity
An investee of FCBL Capital
International (B.V.I) Ltd
under the equity method
〃
USD 30,000 thousand
735,969
100.00% 735,969
Note 2
〃
FCB Financial Leasing (Xiamen) Ltd.
〃
〃
〃
USD 30,000 thousand
1,002,450
100.00% 1,002,450
Note 2
FFAM (B.V.I.) Ltd.
FCB Financial Leasing (Chengdu) Ltd.
〃
An investee of FFAM(B.V.I) Co., Ltd.
under the equity method
〃
USD 30,000 thousand
622,949
100.00% 622,949
Note 2
FSIT
FSITC Global Pet Care Fund (TWD)
Beneficiary
certificates
A mutual fund managed by FSIT
Financial assets at fair value through
profit or loss -current
844 8,249
2.92% 8,249
〃
FSITC Global Video Gaming & eSports Fund (TWD)
〃
〃
〃
900 8,031
0.53% 8,031
〃
FSITC Global High Yield Bond Fund A (TWD)
〃
〃
〃
1,018 13,461
1.05% 13,461
〃
FSITC Taiwan Industry Elite 30 ETF (00728)
〃
〃
〃
6 138
0.01% 138
〃
FSITC Bloomberg US Treasury 10+ Year Index ETF (00834B)
〃
〃
〃
6 194
0.04% 194
〃
First Gold Space Satellite ETF Fund (00910)
〃
〃
〃
5 69
0.10% 69
〃
FSITC Money Market Fund
〃
〃
〃
280 50,657
0.25% 50,657
〃
FSITC Taiwan Money Market Fund
〃
〃
〃
3,262 50,730
0.16% 50,730
〃
Fundrich Securities Co., Ltd.
Stocks
An investee of FSIT
Financial assets at fair value through
other comprehensive income
114 1,425
0.19% 1,425
FVC
All Cosmos Bio-Tech Holding Corporation (Cayman)
Convertible bond
None
Financial assets at fair value
through profit or loss
75 7,121
0.00% 7,121
〃
Taishan Buffalo No. 2 Biotech Venture Capital Limited Partnership
Other marketable
securities
〃
〃
-
47,852
0.85% 47,852
〃
Space Shuttle Hi-Tech Co., Ltd.
Stocks
〃
〃
3,095 37,446
2.22% 37,446
〃
All Cosmos Bio-Tech Holding Corporation (Cayman)
〃
〃
〃
488 26,206
0.76% 26,206
〃
JPP Holding Co.,Ltd.
〃
〃
〃
520 35,100
1.08% 35,100
〃
Mycenax Biotech Inc.
〃
〃
〃
750 28,125
0.37% 28,125
〃
Evergreen Steel Corporation
〃
〃
〃
1,000 51,600
0.24% 51,600
〃
E&R Engineering Corporation
〃
〃
〃
50 2,530
0.05% 2,530
〃
Gigastorage Corporation
〃
〃
〃
1,200 22,080
0.34% 22,080
〃
Chenfull Precision Co., Ltd
〃
〃
〃
156 11,450
0.26% 11,450
〃
Dingzing Advanced Materials Inc.
〃
〃
〃
330 19,932
0.48% 19,932
〃
Longchen Paper & Packaging Co., Ltd.
〃
〃
〃
200 3,270
0.02% 3,270
〃
Jorjin Technologies Inc.
〃
〃
〃
565 21,950
1.70% 21,950
〃
Nww Manufacturing Co., Ltd.
〃
〃
〃
500 15,865
3.70% 15,865
〃
3S Silicon Tech Inc.
〃
〃
〃
980 13,948
4.17% 13,948
〃
Femco Steel Technology Co., Ltd.
〃
〃
〃
2,448 87,516
5.83% 87,516
〃
iXensor Co., Ltd.
〃
〃
〃
650 7,540
1.19% 7,540
〃
Luminescence Technology Corp.
〃
〃
〃
995 15,025
3.95% 15,025
〃
Mem Dental Technology Co. Ltd
〃
〃
〃
880 52,356
4.29% 52,356
〃
Advanced Wireless & Antenna Inc.
〃
〃
〃
500 11,500
1.99% 11,500
〃
Winston Medical Supply Co., Ltd
〃
〃
〃
200 11,670
1.09% 11,670
〃
Evergreen Aviation Technologies Corp
〃
〃
〃
728 59,478
0.21% 59,478
〃
Long Time Tech Co., Ltd.
〃
〃
〃
385 15,843
0.32% 15,843
〃
Arch Meter Co., Ltd.
〃
〃
〃
982 37,905
2.53% 37,905
〃
Sr Suntour Inc.
〃
〃
〃
1,000 95,280
1.66% 95,280
〃
A Plus Biotechnology Co., Ltd
〃
〃
〃
735 14,605
2.41% 14,605

476

FVC
Tai-ling Biotech Inc.
Stocks
None
Financial assets at fair value
through profit or loss
$ 1,275 $ 15,402
3.57% $ 15,402
〃
Tong Bao Corporation
〃
〃
〃
1,700 20,479
2.50% 20,479
〃
Cando Corporation
〃
〃
〃
800 -
0.21% -
〃
Power Source Energy Co., Ltd.
〃
〃
〃
1,207 -
1.79% -
〃
Jingyue Microwave Integrated Circuit Manufacturing Co., Ltd.
〃
〃
〃
12 -
0.20% -
〃
Mylight Technology Co., Ltd.
〃
〃
〃
1,200 -
3.63% -
〃
Chuan Shih Industrial Co., Ltd.
〃
〃
〃
3,300 -
8.49% -
〃
Zowie Technology Corp.
〃
〃
〃
459 7,719
1.68% 7,719
〃
Sino Applied Material Company Ltd.
〃
〃
〃
2,000 -
15.06% -
〃
Green Rich Technology Co., Ltd.
〃
〃
〃
45 -
0.45% -
〃
Entropy Precision System Inc.
〃
〃
〃
616 6,083
9.01% 6,083
〃
Goldenway Electronics Co., Ltd.
〃
〃
〃
1,213 3,031
3.07% 3,031
〃
Everready Precision Industrial Corp.
〃
〃
〃
1,589 11,695
4.08% 11,695
〃
TPM Fund
〃
〃
〃
-
22,276
0.00% 22,276
〃
D&Y Intelligent Co., Ltd.
〃
〃
〃
588 -
5.25% -
〃
Advanced Material Systems Corporation
〃
〃
〃
1,766 63,572
5.23% 63,572
〃
Bravo Ideas (Preferred Stock)
〃
〃
〃
1,600 5,408
2.85% 5,408
〃
Episonica Holdings LTD. (Preferred Stock)
〃
〃
〃
3,066 9,658
10.73% 9,658
〃
Amaryllo Inc. (Samoa)
〃
〃
〃
600 1,374
3.09% 1,374
〃
Chimei Motor Electronics Co., Ltd.
〃
〃
〃
700 16,800
2.09% 16,800
〃
MoBagel (USA)
〃
〃
〃
524 53,602
2.85% 53,602
〃
I-Serve Holdings Limited (Cayman)
〃
〃
〃
770 30,002
1.44% 30,002
〃
Mycropore Corporation Ltd.
〃
〃
〃
1,000 5,920
5.74% 5,920
〃
Taiwan Color Optics, Inc.
〃
〃
〃
746 14,709
2.65% 14,709
〃
Brain Navi (Cayman) (Preferred Stock)
〃
〃
〃
1,000 27,830
2.54% 27,830
〃
Huaquan Energy Co., Ltd
〃
〃
〃
2,000 9,420
7.27% 9,420
〃
Greenway Environmental Technology Co., Ltd.
〃
〃
〃
2,682 24,809
5.83% 24,809
〃
InnoPack China (Preferred Stock)
〃
〃
〃
1,350 -
12.56% -
〃
Mega Union Technology Incorporated
〃
〃
〃
990 69,283
1.65% 69,283
〃
Yu-Chen System Technology Corp.
〃
〃
〃
800 48,000
5.74% 48,000
〃
Chenfeng Optronics Corporation
〃
〃
〃
1,500 46,500
1.60% 46,500
〃
Yang Bao Enterprise Co., Ltd.
〃
〃
〃
1,250 50,000
2.17% 50,000
〃
Black Marble Capital Management Co., LTD.
〃
〃
〃
180 2,005
3.27% 2,005
〃
Wan Fu Investment Co., Ltd.
〃
〃
〃
900 9,000
0.00% 9,000
〃
Outstanding Management Limited Partnership
〃
〃
〃
-
300
0.00% 300
〃
Fertasia International Development Corporation
〃
〃
Investments accounted for using equity
method
13,320 149,597
45.00% 149,597
〃
Jiada International Development Co., Ltd.
〃
〃
〃
14,597 150,799
42.60% 150,799
〃
Changjia Energy Co., Ltd.
〃
〃
〃
4,900 48,777
49.00% 48,777
FFAM
Taiwan Financial Union Urban Renewal Services Co., Ltd.
〃
An investee of FFAM
Financial assets at fair value through other
comprehensive income
25,000 10,075
5.00% 10,075
Note 1: Market value of unlisted stock is calculated based on the investee’s most recent unaudited financial statements, whereas market value of emerging stock is calculated based on reference price in an emerging stock market.
Note 2: The above-mentioned long-term investments were not provided as liens or pledges.
Note 3: For details of liens and pledges, please refer to Note 8.

477

D. Cumulative purchases or sales of the marketable securities up to NT$300 million or over 10% of the issued capital stock:
The subsidiaries, FCB, FLI and FS belong to financial industry, insurance industry and securities industry, and no disclosure is required. Indirect
investees belong to financial industry and securities industry and no disclosure is required for First Commercial Bank (USA) and FTSL. Not applicable
for the remaining indirect investees.
E. Information of derivative instrument transactions:
The subsidiaries, FCB, FS and FLI belong to financial industry, insurance industry and securities industry, and no disclosure are required. Indirect
investees belong to financial industry and securities industry and no disclosure is required for First Commercial Bank (USA) and FTSL. Not applicable
for the remaining indirect investees.
F. Information regarding reinvested business and consolidated stock holdings:
Number of shares
(in thousands)
Percentage of
ownership (%)
The combined ownership of the investee company’s common shares held by
Name of investor
company
Name of investee
company
Address
Major
operating
activities
Percentage of
ownership (%)
at the end of
current period
Carrying value of
investment
Investment
income
(loss) recognised
by the Company
for current period
Number of owned
shares
(in thousands)
Number of pro
forma shares
(Note 9)
Total

FFHC
FCB
30, Chung-King S. Road, Sec. 1,
Taipei, Taiwan
Note 1
100
230,920,532
$ 20,326,008
$ 9,472,500
-
9,472,500
100
"
FS
6F, 27, An Ho Road, Sec. 1,
Taipei, Taiwan
Note 2
100
7,351,498
403,068
615,000
-
615,000
100
"
FSIT
7F, 6, Min Chuan E. Road Sec. 3, Taipei,
Taiwan
Note 2
100
1,034,554
75,956
60,000
-
60,000
100
"
FFAM
7F, 94, Chung Hsiao E. Road, Sec 2, Taipei,
Taiwan
Note 5
100
1,750,435
153,633
145,000
-
145,000
100
"
FVC
10F, 38, Yanping S. Rd, Taipei, Taiwan
Note 4
100
1,874,083
67,328
180,000
-
180,000
100
"
FFMC
10F, 38, Yanping S. Rd, Taipei, Taiwan
Note 5
100
38,914
5,887
2,000
-
2,000
100
"
FLI
13F, 456, Xin-Yi Road, Sec.4, Taipei,
Taiwan
Note 3
100
1,702,887
62,674
535,000
-
535,000
100
FCB
FCBL
4F, 38, Yanping S. Rd, Taipei, Taiwan
Note 5
100
4,161,748
-
400,000
-
400,000
100
"
First Commercial Bank
(USA)
200 East Main Street, Alhambra,
CA91801, USA
Note 1
100
4,846,571
-
7,000
-
7,000
100
"
EAREM
9F, 94, ChungHsiaoE.Road., Sec.2, Taipei,
Taiwan
Note 6
30
16,863
-
1,500
-
1,500
30
FCBL
FCBL Capital
International (B.V.I) Ltd.
Kingston Chambers, P.O.Box 173, Road
Town,Tortola, Virgin Islands,British
Note 5
100
2,141,288
-
60,050
-
60,050
100
"
First Financial Assets
Management (BVI) Ltd.
Portcullis Chambers, 4th Floor, EllenSkelton
Building, 3076 Sir Francis DrakeHighway,
Road Town, Tortola, BritishVirgin Islands
VG1110
Note 5
100
621,651
-
30,000
-
30,000
100
FCBL Capital
International (B.V.I)
Ltd
FCB International Leasing
Co., Ltd.
Rm. 1008, Jianwu Building, No.
188, Wangdun Rd., Suzhou, China
Note 5
100
735,969
-
USD 30,000 thousand
-
USD 30,000
thousand
100

478

Number of shares
(in thousands)
Percentage of
ownership (%)
Number of pro
forma shares
(Note 9)
Total
Name of investor
company
Name of investee
company
Address
Major
operating
activities
Percentage of
ownership (%)
at the end of
current period
Carrying value of
investment
Investment
income
(loss) recognised
by the Company
for current period
Number of owned
shares
(in thousands)

Note 1：Banking industry
Note 2：Securities and futures industry and security investment trust industry
Note 3：Insurance industry
Note 4：Venture capital industry.
Note 5：Leasing, investment consulting, and business consulting industries and holding company.
Note 6：Construction proposal consulting and contract certification.
Note 7：Energy Technical Services
Note 8：Venture capital, investment consulting and management consulting services.
Note 9：Shares or pro forma shares of the investees held by the Bank, directors, supervisors, general manager, vice general manager, and companies
satisfying the definition of affiliated companies in the Company Act shall all be included.
FCBL Capital
International (B.V.I)
Ltd
FCB Leasing (Xiamen)
Ltd.
Rm. 1401, No.619, Sishui Road, Huli
District, Xiamen City
Note 5
100
1,002,450
$ -
$ USD 30,000 thousand
-
USD 30,000
thousand
100
First Financial Assets
Management (B.V.I)
Co., Ltd.
FCB Leasing (Chengdu)
Ltd.
No. 04 and No. 05, Fl. 18, No. 7,
Xinguanghua St., Jingjiang, Chengdu, China
Note 5
100
622,949
-

USD 30,000 thousand
-
USD 30,000
thousand
100
FS
FCMI
11F, 22, Sec. 1, Chang'an E. Rd, Taipei,
Taiwan
Note 5
100
119,464
-
10,000
-
10,000
100
"
FTSL
International Trust Building, Wickhams Cay
I, Road Town, Tortola, British Virgin
Islands
Note 5
100
140,607
-
1,000
-
1,000
100
FTSL
FWSL
Room 1003, 10F, Infinity Plaza, 199 Des
Voeux Road Central, Central, Hong Kong
Note 2、5
100
122,389
-
66,000
-
66,000
100
FVC
Fertasia International
Development Co., Ltd.
10F, 38, Yanping S. Rd, Taipei, Taiwan
Note7
45
149,597
-
13,320
-
13,320
45
"
Jiada International
Development Co., Ltd.
10F, 38, Yanping S. Rd, Taipei, Taiwan
Note7
42.6
150,799
-
14,597
-
14,597
42.6
"
Changjia Energy Co., Ltd. 10F, 38, Yanping S. Rd, Taipei, Taiwan
Note7
49
48,777
-
4,900
-
4,900
49
FSIT
FPC
7th Floor, No. 6, Section 3, Minquan East
Road, Zhongshan District, Taipei City
Note8
100
49,456
-
5,000
-
5,000
100

479

Net income of investee Percentage of Ownership Equity in the Earnings (Losses) (Note 2)	Net income of investee Percentage of Ownership Equity in the Earnings (Losses) (Note 2)	$ 4,676,508 $ 274,345 (USD 157,440) (2)A N/A $ 274,345
Accumulated Outflow of Investment from Taiwan as of December 31, 2022
Investment Flows	Inflow	$ -
	Outflow	$ -
Accumulated Outflow	of Investment from Taiwan as of January 1, 2022	$ 4,676,508 (USD 157,440)
Method of Investment (Note 1)		(1)
Total Amount of Paid-in Capital		$ 4,676,508 (CNY 1,000,000)
Major Businesses and Products		Banking businesses approved by local government
Investee Company		First Commercial Bank Shanghai Branch

480

Equity in the Earnings (Losses) (Note 2)	Equity in the Earnings (Losses) (Note 2)	$ 238,438 (2)A	C. FCB’s investments in Xiamen branch: $ 4,896,697 $ 4,896,697 (USD 162,269) (USD 162,269) $ 5,679,309 $ - $ 138,553,324 Carrying Value as of December 31, 2022 Accumulated Inward Remittance of Earnings as of December 31, 2022 Accumulated Investments in Mainland China as of December 31, 2022 Investment Amounts Authorised by Investment Commission, MOEA Upper Limit on Investment Expressed in Thousands of New Taiwan Dollars/ Thousands of US Dollars/ Thousands of CNY	C. FCB’s investments in Xiamen branch: $ 4,896,697 $ 4,896,697 (USD 162,269) (USD 162,269) $ 5,679,309 $ - $ 138,553,324 Carrying Value as of December 31, 2022 Accumulated Inward Remittance of Earnings as of December 31, 2022 Accumulated Investments in Mainland China as of December 31, 2022 Investment Amounts Authorised by Investment Commission, MOEA Upper Limit on Investment Expressed in Thousands of New Taiwan Dollars/ Thousands of US Dollars/ Thousands of CNY
Percentage of Ownership		N/A
Net income of investee		$ 238,438
Accumulated Outflow of Investment from Taiwan as of December 31, 2022		$ 4,896,697 (USD 162,269)
Investment Flows	Inflow	$ -
			Upper Limit on Investment	$ 138,553,324	Upper Limit on Investment	$ 138,553,324
	Outflow	$ -
Accumulated Outflow	of Investment from Taiwan as of January 1, 2022	$ 4,896,697 (USD 162,269)	Investment Amounts Authorised by Investment Commission, MOEA	$ 4,896,697 (USD 162,269)	Investment Amounts Authorised by Investment Commission, MOEA	$ 5,132,801 (USD 162,946)
Method of Investment (Note 1)		(1)	Accumulated Investments in Mainland China as of December 31, 2022	$ 4,896,697 (USD 162,269)	Accumulated Investments in Mainland China as of December 31, 2022	$ 5,132,801 (USD 162,946)
Total Amount of Paid-in Capital		$ 4,896,697 (CNY 1,000,000)
			Accumulated Inward Remittance of Earnings as of December 31, 2022	$ -	Accumulated Inward Remittance of Earnings as of December 31, 2022	$ -
Major Businesses and Products		Banking businesses approved by local government
			Carrying Value as of December 31, 2022	$ 5,679,309	Carrying Value as of December 31, 2022	$ 5,614,398
Investee Company		First Commercial Bank Chengdu Branch

481

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----- Start of picture text -----

(2)A
(2)A Earnings (Losses) (Note 2)
Equity in the Earnings (Losses) (Note 2) $ 21,116 Equity in the $ 18,141
100% 100%
Percentage of Ownership Percentage of Ownership
Net income of investee $ 21,116 Net income of investee
$ 18,141
(USD 30,000)
2022 (USD 30,000)
Taiwan
of Investment from as of December 31,
Accumulated Outflow of Investment from Taiwan as of December 31, 2022 $ 886,103 Accumulated Outflow $ 903,495
Expressed in Thousands of New Taiwan Dollars/ Thousands of US Dollars
Expressed in Thousands of New Taiwan Dollars/ Thousands of US Dollars
Inflow
Inflow
$ - 2,498,423 2,498,423
$ -
Investment Investment
Investment Flows Upper Limit on Upper Limit on
Investment Flows
Outflow $ Outflow $
$ -
$ -
886,103 903,495
(USD 30,000) (USD 30,000) (USD 30,000)
Taiwan MOEA Taiwan (USD 30,000) MOEA
Authorised by Authorised by
Accumulated Outflow of Investment from as of January 1, 2022 $ 886,103 Investment Amounts Investment Commission, $ Accumulated Outflow of Investment from as of January 1, 2022 $ 903,495 Investment Amounts Investment Commission, $
(2) (2)
886,103 903,495
(Note 1) (Note 1)
Method of Investment Method of Investment
(USD 30,000) (USD 30,000)
China China
Accumulated Accumulated
Investments in Mainland as of December 31, 2022 $ Investments in Mainland as of December 31, 2022 $
(USD 30,000) (USD 30,000)
Total Amount of Paid-in Capital Total Amount of Paid-in Capital
$ 886,103 $ 903,495
Financial Leasing Accumulated Inward Remittance of Earnings as of December 31, 2022 $ - Financial Leasing Accumulated Inward Remittance of Earnings as of December 31, 2022 $ -
and Products and Products
Major Businesses Major Businesses
735,969 1,002,450
FCB Ltd.
Investee Company Carrying Value Investee Company Carrying Value
International Leasing Ltd.
FCB Financial
Information on FCB’s investment in FCB International Leasing Ltd. through its indirect subsidiary, FCBL Capital International (B.V.I.) Ltd., is as follows: as of December 31, 2022 $ Information on FCB’s investment in FCB Financial Leasing (Xiamen) Ltd. through its indirect subsidiary, FCBL Capital International (B.V.I.) Ltd., is as follows: Leasing (Xiamen) as of December 31, 2022 $
D. E.
----- End of picture text -----

482

Information on FCB’s investment in FCB Leasing (Chengdu) Ltd. through its indirect subsidiary, First Financial Assets Management (B.V.I) Ltd., is	as follows:	Expressed in Thousands of New Taiwan Dollars/ Thousands of US Dollars	Outflow Inflow Accumulated Outflow of Investment from Taiwan as of December 31, 2022 Net income of investee Percentage of Ownership Equity in the Earnings (Losses) (Note 2) Investment Flows Investee Company Major Businesses and Products Total Amount of Paid-in Capital Method of Investment (Note 1) Accumulated Outflow of Investment from Taiwan as of January 1, 2022	$ 908,634 $ 908,634 $ 908,634 22,822 $ (USD 30,000) (USD 30,000) (USD 30,000) (2)A 100% 22,822 $ FCB Leasing (Chengdu) Ltd. Financial Leasing (2) - $ - $	Carrying Value as of December 31, 2022 Accumulated Inward Remittance of Earnings as of December 31, 2022 Accumulated Investments in Mainland China as of December 31, 2022 Investment Amounts Authorised by Investment Commission, MOEA Upper Limit on Investment	$ 908,634 $ 908,634 622,949 $ $ - 2,498,423 $	(USD 30,000) (USD 30,000)	Note 1: Investment methods are classified into the following three categories; fill in the number of category each case belongs to:	(1) Directly invest in a company in Mainland China.	(2) Through investing in an existing company in the third area, which then invested in the investee in Mainland China. The companies are FCBL Capital International	(B.V.I.) Ltd and First Financial Assets Management (BVI) Ltd.	(3) Others	Note 2: In the ‘Investment income (loss) recognised by the Company for the year ended December 31, 2022’ column:	(1 )It should be indicated if the investee was still in the incorporation arrangements and had not yet any profit during this period.	(2) Indicate the basis for investment income (loss) recognition in the number of one of the following three categories:	A. The financial statements that are audited and attested by international accounting firm which has cooperative relationship with accounting firm in R.O.C.(For	interim and annual financial reports. For quarterly financial reports, they are financial statements that are reviewed by international accounting firm which has	cooperative relationship with accounting firm in R.O.C..)	B. The financial statements that are audited and attested by R.O.C. parent company’s CPA.(For interim and annual financial reports. For quarterly financial	reports, they are financial statements that are reviewed by R.O.C. parent company’s CPA.)	C. Others.	Note 3: Expressed in Thousands of NT Dollars.
F.

483

(4) Major shareholders’ information

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----- Start of picture text -----

Shares
Number of shares held Ownership (%)
Name of major shareholders
Ministry of Finance 1,519,110,617 11.49%
Bank of Taiwan 985,785,492 7.45%
----- End of picture text -----

A. The major shareholders’ information was derived from the data using the Company issued common shares (including treasury shares) and preference shares in dematerialised form which were registered and held by the shareholders above 5% on the last operating date of each quarter and was calculated by Taiwan Depository & Clearing Corporation. The share capital which was recorded on the financial statements may be different from the actual number of shares in dematerialised form due to the difference of calculation basis.
B. The shareholding ratio information of major shareholders in the above table is calculated to the second decimal place of a percent and rounded the third decimal place to the second decimal place of a percent.
C. If the aforementioned data contains shares which were kept in the trust by the shareholders, the data was disclosed as a separate account of the client which was set by the trustee. As for the shareholder who reports share equity as an insider whose shareholding ratio was greater than 10% in accordance with Securities and Exchange Act, the shareholding ratio included the self-owned shares and trusted shares, at the same time, persons who have power to decide how to allocate the trust assets. For the information on reported share equity of insiders, please refer to the Market Observation Post System.

14.Disclosure of financial information by segments

(1) General information

The Group’s operation segment reports are consistent with the internal reports provided to chief operating decision-maker (“CODM”). The CODM is a team that allocates resources to operating segments and evaluates their performance.

Inter-segmental transactions are arm’s length transactions, and gain and loss arising from such transactions are eliminated by the parent company upon the preparation of the consolidated financial statements. Profit and loss directly attributable to various segments have been considered when segment performance is being evaluated.

The operating segments of the Group comprise banking, securities, insurance and other businesses. The operating results are reviewed by the CODM regularly and are referenced when allocating resources and evaluating operating performance.

The Group has a global market, comprising three major business segments; there was no change in the reporting segments during the period.

The operating results have different income items due to different nature of the operating segments, and the Group evaluates segment performance based on the net profit before tax of various segments. Therefore, performance of all reporting segments is presented by the net value of operating net profit less various operating expenses. Income from external clients provided for the CODM to review is measured on the same basis of the consolidated statement of comprehensive income.

484

Adjustments of internal pricing and transfer pricing are reflected in segment performance evaluation. Income from external clients has been allocated based on the regulated allocation standard between segments.

The internal management’s operating reports are prepared based on net operating profit, including net interest income, net service fee income, recovered bad debts (provision), and loan impairment loss, net gain (loss) on financial instruments and other operating gain (loss). Measurement basis does not include non-recurring items, e.g. litigation expenses.

Segment information is mainly based on the internal management reports provided by various operating segments to the CODM, including segmental gain (loss), segmental assets, segmental liabilities and other related information.

(Blank)

485

	Consolidated		37,969,147 $	29,787,247	67,756,394		6,576,606) (	8,905,998) (	27,787,186) (		24,486,604	3,890,941) (		20,595,663 $		Consolidated	34,588,282 $	28,016,147	62,604,429		3,621,467) (	9,274,835) (	26,274,683) (		23,433,444	3,694,399) (		19,739,045 $
Reconciliation	and elimination		2,881 $	21,518,357) (	21,515,476) (		-	-	419,183		21,096,293) (	-		21,096,293) ($	Reconciliation	and elimination	2,970 $	20,510,953) (	20,507,983) (		-	-	422,535		20,085,448) (	16,158) (		20,101,606) ($
Banking Securities Insurance Other	For the year ended December 31, 2022 business business business businesses		Net interest revenue (loss) 36,118,735 $ 305,944 $ 1,784,464 $ 242,877) ($	Net revenue other than interest 19,135,938 1,739,605 8,076,449 22,353,612	Net revenue 55,254,673 2,045,549 9,860,913 22,110,735	Bad debt expense, commitment and guarantee	liabilities provisions 6,575,375) ( - - 1,231) (	Net change in provisions for insurance liabilities - - 8,905,998) ( -	Operating expenses 24,724,442) ( 1,530,182) ( 809,510) ( 1,142,235) (		Profit from continuing operations before tax 23,954,856 515,367 145,405 20,967,269	Income tax expense 3,626,889) ( 112,181) ( 83,273) ( 68,598) (		Profit from continuing operations 20,327,967 $ 403,186 $ 62,132 $ 20,898,671 $	Banking Securities Insurance Other	For the year ended December 31, 2021 business business business businesses	Net interest revenue (loss) 33,079,494 $ 387,925 $ 1,289,155 $ 171,262) ($	Net revenue other than interest 14,387,696 3,254,250 9,399,383 21,485,771	Net revenue 47,467,190 3,642,175 10,688,538 21,314,509	Bad debt expense, commitment and guarantee	liabilities provisions 3,621,467) ( - - -	Net change in provisions for insurance liabilities - - 9,274,835) ( -	Operating expenses 22,804,810) ( 1,930,019) ( 812,608) ( 1,149,781) (		Profit from continuing operations before tax 21,040,913 1,712,156 601,095 20,164,728	Income tax expense 3,389,256) ( 216,462) ( 839) ( 71,684) (		Profit from continuing operations 17,651,657 $ 1,495,694 $ 600,256 $ 20,093,044 $

486

December 31, 2022	Banking Securities Insurance Other Reconciliation and	businesses businesses businesses businesses elimination Consolidated	Segment assets 4,038,597,586 $ 28,006,535 $ 84,275,856 $ 259,766,440 $ 253,450,435) ($ 4,157,195,982 $	Segment liabilities 3,807,675,380 20,656,718 82,573,516 30,946,030 8,778,232) ( 3,933,073,412	December 31, 2021	Banking Securities Insurance Other Reconciliation and	businesses businesses businesses businesses elimination Consolidated	Segment assets 3,611,394,631 $ 42,180,209 $ 78,518,146 $ 256,553,183 $ 249,052,262) ($ 3,739,593,907 $	Segment liabilities 3,387,854,912 34,082,237 73,719,326 27,274,583 7,884,009) ( 3,515,047,049	(3) Geographical information	Financial information of the Group by area for the years ended December 31, 2022 and 2021 were as follows:	For the years ended December 31,	2022 2021	Taiwan 58,273,615 $ 54,934,865 $	Asia 5,708,335 4,682,826	America 2,537,301 1,790,421	Others 1,237,143 1,196,317	Total 67,756,394 $ 62,604,429 $	(4)Information product	The Group’s information on products is consistent with their segment, please refer to Note 14(2).	(5)Major customer information	The Group has no major customers with which the revenues from a single external customer accounting for more than 10% of net income.

487

General Information

Corporate Headquarters

First Financial Holding Co., Ltd.

18F, 30, Sec. 1, Chung King S. Rd., Taipei 100, Taiwan Phone (886 2) 2311 1111 www.firstholding.com.tw

First Commercial Bank

30, Sec. 1, Chung King S. Rd., Taipei 100, Taiwan Phone (886 2) 2348 1111 www.firstbank.com.tw

Ordinary Share Transfer Agent & Registrar

First Bank Personal Banking Business Unit Shareholder Service Department, Trust Division 42 Yen Ping S. Rd., Taipei 100, Taiwan Phone (886 2) 2348 1137-40

GDR Depositary, Transfer Agent & Registrar

Citibank, N.A. 388 Greenwich Street, 14th Floor New York, NY 10013, U.S.A. Phone (1) 888 250 3985 wwss.citissb.com/adr/www

Independent Auditor

First Securities Inc.

4F, 22, Sec. 1, Chang An E. Rd., Taipei 104, Taiwan Phone (886 2) 2563 6262 www.ftsi.com.tw

First Securities Investment Trust Co., Ltd.

7F, 6, Sec. 3, Min Chuan E. Rd., Taipei 104, Taiwan Phone (886 2) 2504 1000 www.fsitc.com.tw

First Life Insurance Co., Ltd.

13F, 456, Sec. 4, Xin Yi Rd., Taipei 110, Taiwan Phone (886 2) 8758 1000 www.firstlife.com.tw

PricewaterhouseCoopers, Taiwan 27/F, International Trade Building, 333 Keelung Road, Sec.1, Taipei 110, Taiwan Phone (886 2) 2729 6666

2022 Annual Financial Statements

An annual financial statements in Englsih version is available on the FFHC website at www.ffhc.com.tw

2023 Annual Shareholders’ Meeting

When: Friday, June 16, 2023 Time: 9:00 a.m. Where: First Bank Headquarter Address: No. 30, Chung King South Rd., Sec.1, Taipei 100, Taiwan

First Financial Asset Management Co., Ltd.

9F, 38, Yan Ping S Rd., Taipei 100, Taiwan Phone (886 2) 3343 7000

First Venture Capital Co., Ltd.

10F, 38, Yan Ping S Rd., Taipei 100, Taiwan Phone (886 2) 2348 4982

First Financial Management Consulting Co., Ltd.

10F, 38, Yan Ping S Rd., Taipei 100, Taiwan Phone (886 2) 2348 4982

Shareholder Information

Listing

The ordinary shares of First Financial Holding Co., Ltd. are listed on the Taiwan Stock Exchang under the ticker code 2892. The global deposit receipts (GDR) are listed on the Euro MTF market of the Luxembourg Stock Exchange with ISIN No. and ISIN code US32021V1098 and 017339818 respectively.

Contact Information

Spokesperson

Annie Lee / EVP / Head of IR / Head of Strategy Planning Dept. Phone (886 2) 2348 4974 [email protected]

Deputy Spokesperson

Mandy Horng / Head of Admin. MGT Dept. Phone (886 2) 2348 5361 [email protected]

Investor Relations

K.C. Lee / IR Manager Keith Ke / IRO Phone (886 2) 2348 4956 2348 4975 [email protected] [email protected]

Disclaimer: This shareholder report cannot be expected to provide as full understanding of the financial performance, financial position, operating, financing and investment activities of the First Financial Group as the 2022 FFHC annual report in Chinese and the full annual financial statements. This publication contains certain forward -looking statements and future expectations. These expec-

tations are based on management’s current views and assumptions and involve known and unknown risks and uncertainties. Actual results, performance or events may differ materially from those expressed or implied in such statements. There can be no assurance that actual outcomes will not differ materially from these statements. FFHC assumes no obligation to update any forward-looking information contained in this report.

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本年報採用不含重金屬之環保紙張及環保油墨印製 FFHC 2022 ANNUAL REPORT is printed on post-consumer-waste recycled paper, using vegetable-based inks.

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AI assistant

First Financial Holding Co. Ltd. — Annual Report 2022

52222_rns_2023-06-26_05f31cdb-2b17-493d-a522-6b2c1c53d0c8.pdf

FIRST FINANCIAL HOLDING

Contents

Financial Highlights

2022 Net Income Breakdown by Subsidiaries

FFHC at a Glance

Credit Ratings

I. Letter to Shareholders

2022 Operational Achievements

Activate Resilient Profit-Growth Model Towards Sustainable Innovation and Transformation

Strengthen Resilience on Management, Stabilize Growth Momentum

First Bank

First Securities

First Securities Investment Trust

First Life Insurance

First AMC, First Venture Capital & First Consulting

2023 Priorities: Maintain Stable Profit Growth and Achieve Sustainable Net-Zero Transition

Ratings Affirmed, Reflecting Strong Integrity and Forward- Looking Operations

II. Company Profile

III. Corporate Governance

3.1 Organization

3.1.1 FFHC Operational Structure

3.1.2 Departments and Functions

1. Auditing Department

2. Strategy Planning Department

3. Business Development Department

5. Risk Management Department

6. Administration Management Department

4. Information Technology Department

7. Compliance Department

3.1.3 Committees under the Board of Directors

1. Ethical Management Committee

2. Audit Committee

6. Risk Management Committee

7. Business Decisions Committee

8. IT Development Committee

9. Marketing Integration Committee

3. Remuneration Committee

4. ESG Committee

5. Strategic Development Committee

3.1.4 FFHC Subsidiaries & Affiliates

First Commercial Bank

First Securities Inc.

First Life Insurance Co., Ltd

First Venture Capital Co., Ltd.

First Financial Management Consulting Co., Ltd.

3.2 Director, Management Team & Divisions

3.2.1 Shares Holding of Directors

3.2.2 Major Shareholders of Institution Shareholder

3.2.3 Major Shareholders of Institution Shareholders (3.2.2)

3.2.4 Professional Qualification and Independence Analysis of Directors

3.2.5 Diversification and Independence of the Board

3.2.5.1 Diversification of the Board

Diversification of the 7[th] Board of Members

3.2.5.2 Independence of the Board

3.2.6 FFHC Management Team

3.2.7 Employment of retired chairman and president as advisors: None

3.2.8 Remuneration of Directors, Independent Directors, President and Vice President

3.2.8.1 Remuneration of Directors at First Financial Holding and Group

(to be continued)

3.2.8.2 Remuneration of Executives at First Financial Holding and Group

3.2.8.3 Employee Compensation at First Financial Holding

3.2.8.4 Distribution of Top 10 Employees’ Compensation at First Financial Holding

3.2.8.5 Analysis of Remuneration of Directors and Executives in the Most Recent Two Fiscal Years

3.2.8.6 Compensation Policy, Remuneration Standard, Package and performanceLink Procedures

A. Directors

B. Executives

Base salary

Floating salary

1. Performance bonus

3.3 Corporate Governance Operation

3.3.1 Attendance and Performance Review at Board

Other mentionable items:

3.3.2 Audit Committee Meeting Attendance

Other mentionable items:

3.3.3 Disclosed Matters as Required by the Financial Company’s Corporate Governance Best Practice

3.3.4 Discrepancies between Corporate Governance of the Financial Holding Company and Corporate Governance Best-Practice Principles for Financial Holding Companies and Explanation

3.3.5 Composition of Remuneration Committee & Operation

First Financial Holding Co. Ltd. Annual Report 2022