Taichung Commercial Bank Co., Ltd. and subsidiaries Consolidated

Transcription

Stock No: 2812
Taichung Commercial Bank Co., Ltd. and subsidiaries
Consolidated Financial Statements and Independent
Auditor’s Report
Second Quarter, 2014 and 2013
Address:
No. 87, Min Chuan Road, West District, Taichung
Tel. No.:
(04)22236021
-1-
§TABLE OF CONTENTS§
ITEM
PAGE
SERIAL
NUMBER OF
NOTES TO
FINANCIAL
STATEMENTS
1.
Cover page
1
-
2.
Table of contents
2
-
3.
Auditor’s Report
3
-
4.
Consolidated Balance Sheet
4
-
5.
Consolidated Income Statement
5~6
-
6.
Consolidated Statements of Changes in Shareholders’
Equity
7
-
7.
Consolidated Statements of Cash Flow
8~10
-
8.
Notes to consolidated financial statements
(1)
History of the company
11
1
(2)
The date and procedures of approving the
financial statements
11
2
(3)
Application of new and revised standards and
interpretations
12~15
3
(4)
Summary of significant accounting policies
16~17
4
(5)
Major sources of significant accounting
judgment, estimates, and uncertainties for
assumptions
17
5
(6)
Details of significant accounting titles
17~49
6 to 33
(7)
Related party transactions
49~53
34
(8)
Pledged assets
54
35
(9)
Significant contingent liabilities and contractual
commitments not recognized
54~59
36
59
37
(11) Others
60~91
38 to 42
(12) Segmental information
91~93
43
1. Information on significant transactions
93, 95~96
44
2. Information on investees
94, 97~100
44
94, 101
44
94, 102~105
44
(10) Significant subsequent events
(13) Notes of disclosures
3. Information on investments in China
4. Relationships and significant intercompany
transactions between the parent company and
subsidiaries
-2-
Auditor’s Report
To Taichung Commercial Bank Co., Ltd.:
We have reviewed the accompanying consolidated balance sheets of Taichung Commercial
Bank Co., Ltd. and its subsidiaries as of June 30, 2014 and 2013, and the related consolidated
statements of comprehensive income, changes in shareholders’ equity, and cash flows for the
quarters and half-years then ended. The preparation of said consolidated financial statements was
the responsibility of the management. Our responsibility was to provide a report on said
consolidated financial statements based on our review.
We planned and performed the review according to Statement of Audit Standards No. 36,
“Engagements to Review Financial Statements.” Because we only applied analytical procedures to
and made comparisons of management's financial data and making inquiries of company
management, and did not perform an audit based on generally accepted audit standards, we cannot
express an audit opinion on said consolidated financial statements.
Based on our review, we are not aware of any material modifications that should be made to
said consolidated financial statements, in all material aspects, due to non-conformity with
Regulations Governing the Preparation of Financial Reports by Public Banks, Regulations
Governing the Preparation of Financial Reports by Securities Firms, and International Accounting
Standards 34 “Interim Financial Reporting” as approved by the Financial Supervisory Commission.
Taichung Commercial Bank has prepared entity financial statements for the second quarters of
2014 and 2013, and we have issued unqualified opinions on these financial statements. They are
available for reference.
Deloitte & Touche
Min-Xian Yang, CPA
Kuan-Chung Lai, CPA
Securities and Futures Bureau Approval
Document No.
Securities and Futures Bureau Approval
Document No.
Tai-Cai-Jheng (6) No. 0920123784
Tai-Cai-Jheng (6) No. 0920123784
August 12, 2014
-3-
Consolidated Balance Sheets
June 30, 2014, December 31 and June 30 2013
Unit: NTD thousand
June 30, 2014 (Reviewed)
Amount
%
$ 5,789,532
1
December 31, 2013 (Audited)）
Amount
%
$ 5,590,728
1
June 30, 2013 (Reviewed)
Amount
%
$ 9,821,772
2
Code
11000
Assets
Cash and cash equivalents (Note 6)
11500
Due from Central Bank and other banks (Note 7)
77,983,758
15
75,496,734
15
66,605,446
14
12000
Financial assets at fair value through income statement (Note 8)
12,600,082
3
12,195,016
3
13,870,783
3
12500
Bonds and securities sold under repurchase agreements (Note 9)
1,654,260
-
4,550,801
1
4,380,862
1
13000
Receivables -net (Notes 10, 11, & 35)
7,269,704
2
6,485,651
1
5,207,362
1
13200
Current income tax asset (Note 4)
57,164
-
57,372
-
56,589
-
13500
Discounts and loans -net (Notes 11, 34)
373,932,438
74
362,916,674
73
345,620,987
73
14000
Available-for-sale financial assets -net (Notes 12 and 35)
20,292,989
4
19,197,158
4
19,358,300
4
14500
Held-to-maturity financial assets -net (Notes 13 and 35)
905,695
-
3,340,584
1
3,688,457
1
141,206
-
142,654
-
132,232
-
174,243
-
164,290
-
81,443
-
15000
Investment accounted for under the equity method -net (Note 14 )
15100
Restricted assets -net (Notes 15 and 35)
15500
Other financial assets -net (Note 16)
1,109,973
-
1,158,259
-
1,142,323
-
18500
Property and equipment -net (Note 17)
3,384,419
1
3,416,335
1
3,434,225
1
19000
Intangible assets – net (Note 18)
118,767
-
97,380
-
91,297
-
435,015
-
391,478
-
358,290
-
1,481,027
-
1,011,621
-
952,991
-
100
$ 496,212,735
100
$ 474,803,359
100
19300
Deferred income tax assets
19500
Other asset (Notes 19 and 35)
10000
Total assets
$ 507,330,272
Code
21000
Liabilities and shareholders’ equity
Due to Central Bank and other banks (Note 20)
$
21500
Funds borrowed from Central Bank and other banks (Notes 21 and 35)
22000
Financial liabilities at fair value through income statement (Note 8)
22500
Bills and bonds sold under repurchase agreements (Note 22)
23000
Payables (Notes 23)
23200
Current income tax liability
23500
Deposits and remittances (Notes 24 and 34)
24000
9,900,983
2
1
3,266,172
1
74,800
-
47,291
-
-
358,769
-
262,811
-
4,773,387
1
4,420,341
1
9,248,772
2
251,127
-
292,018
-
212,084
-
436,821,480
86
429,704,469
87
408,224,418
86
Financial bonds payable (Note 25)
14,400,000
3
16,042,869
3
13,504,169
3
25500
Other financial liabilities (Note 26)
207,979
-
111,741
-
42,277
-
25600
Liability reserve (Notes 4 and 27)
374,822
-
348,829
-
255,943
-
29300
Deferred tax liabilities
111,021
-
111,021
-
111,021
-
29500
Other liabilities (Note 28)
509,478
-
400,541
-
322,931
-
20000
Total liabilities
473,082,889
93
465,175,145
94
445,398,872
94
28,515,063
683,751
6
-
25,345,339
675,435
5
-
24,868,532
675,537
5
-
2,885,334
72,861
2,045,701
44,673
34,247,383
1
7
1,993,524
134,085
2,923,384
34,177 )
31,037,590
1
6
1,993,524
134,085
1,623,227
109,582
29,404,487
1
6
34,247,383
7
31,037,590
6
29,404,487
6
$ 507,330,272
100
$ 496,212,735
100
$ 474,803,359
100
31100
31500
32001
32003
32011
32500
31000
Equity attributable to shareholders of the parent company (Note 29)
Capital stock
Capital increase reserve
Additional paid-in capital
Retained earnings
Legal reserve
Special reserve
Undistributed earnings
Other equity
Total equity of the shareholders of the parent company
30000
Total equity
Total Liabilities and Equity
11,607,909
2
3,726,573
$
8,341,508
2
1
4,968,239
41,620
-
257,493
(
$
The accompanying notes constitute an integral part of these consolidated financial statements.
Chairman: Jin-Fong Su
Manager: Chun-Sheng Lee
-4-
Chief accountant: Yi-Ying Chung
Consolidated Statements of Comprehensive Income
April 1 to June 30, 2014 and 2013, and January 1 to June 30, 2014 and 2013
(Only reviewed and not audited with generally accepted auditing standards)
Unit: NTD thousand, except NTD for EPS
Code
41000
51000
49010
49100
49200
49300
49600
49700
49750
49821
58000
April 1 to June 30, 2014
Amount
%
Interest revenue (Notes 30
and 34)
Interest expenses (Notes 30
and 34)
Net income (loss) other than
interest income
Net income from service
fees (Notes 30 and 34)
Gain (loss) on financial
assets and liabilities at
fair value through
income statement
(Notes 30)
Realized net gain (loss) on
available-for-sale
financial assets (Note
30)
Exchange gain (loss)
Net gain (loss) on reversal
of asset impairment
(Notes 13, 16, 19, and
30)
Profit or loss of affiliated
companies and joint
ventures under the
equity method (Notes
14)
Net gain or loss from the sale
of delinquent loans
Net losses other than interests
(Note 30)
Net revenue
58200
Bad debt expense and
guaranty reserve (Notes 11
and 27)
59000
59500
58400
61001
61003
64000
(
Net interest income
4xxxx
58500
$ 2,733,098
Operating expenses
Employee benefits
expenses (Notes 4 and
30)
Depreciation and
amortization expenses
(Note 30)
Business and
administrative expenses
(Notes 30 and 34)
Total operating expenses
Current year net income after
tax
$ 2,445,198
$ 5,396,325
104
$ 4,762,458
102
(
891,834 )
( 1,967,339 )
( 38 )
( 1,751,516 )
( 38 )
98
( 36 )
73
1,553,364
62
3,428,986
66
3,010,942
64
502,776
21
478,497
19
1,021,274
19
887,282
19
174,634
8
2)
150,327
3
(
9,493 )
-
(
4,846 )
117,431
2
699,370
15
41,144 )
(
(
115
( 42 )
January 1 to June 30,
2013
Amount
%
1,740,353
(
(
39,636 )
(
2)
363
44,519
2
89,209
2
6,881 )
-
473,713
19
457,199
9
1,037
-
-
1,552
-
-
-
-
68,712
1
(
456 )
-
2,370,319
(
761 )
-
(
100
4,023 )
-
2,506,036
(
100
1,651 )
-
5,215,608
(
537 )
-
(
100
-
17,982 )
-
4,682,167
100
(
155,643 )
(
7)
(
505,129 )
( 20 )
(
764,152 )
( 15 )
(
787,204 )
( 17 )
(
612,049 )
( 26 )
(
622,997 )
( 25 )
( 1,242,881 )
( 24 )
( 1,234,235 )
( 26 )
(
46,603 )
(
2)
(
47,758 )
(
(
(
(
(
( 15 )
( 43 )
(
(
324,825 )
995,580 )
(
370,862 )
( 1,029,514 )
Income before tax from
continuing operations
Income tax expenses (Notes 4
& 31)
992,745 )
2014
Amount
%
Amount
%
1,185,162
(
176,300 )
1,008,862
50
(
8)
42
( 13 )
( 40 )
1,005,327
(
88,497 )
916,830
(Continued on the next page)
-5-
2)
(
798,245 )
( 2,134,537 )
40
(
3)
37
93,411 )
( 15 )
( 41 )
2,316,919
(
271,218 )
2,045,701
2)
(
658,466 )
( 1,985,445 )
44
(
5)
39
92,744 )
( 14 )
( 42 )
1,909,518
(
198,716 )
1,710,802
2)
41
(
4)
37
(From the previous page)
Amount
%
Code
65001
65011
65091
65000
66000
67501
67701
Other comprehensive income
Exchange differences from
the translation of
financial statements of
foreign operations
Unrealized valuation gains
and losses of
available-for-sale
financial assets
Income tax related to
components of other
comprehensive income
Other comprehensive
income -net (after tax)
Current
period
comprehensive
(after tax)
($
20,692 )
(
1)
Amount
%
$
12,867
1
2014
Amount
%
($
20,094 )
-
2013
Amount
%
$
(
27,978
-
10,738 )
-
60,738
3
10,086
-
97,855
2
326
-
-
-
1,089
-
-
-
40,372
2
22,953
1
78,850
2
17,240
-
$ 1,049,234
44
$ 939,783
38
$ 2,124,551
41
$ 1,728,042
37
other
income
Consolidated EPS (Note 32)
From business units in
continuing operation
Basic
Diluted
$
$
0.36
0.36
$
$
0.35
0.32
$
$
0.74
0.72
$
$
0.65
0.61
-6-
Consolidated Statements of Changes in Shareholders’ Equity
January 1 to June 30, 2014 and 2013
Unit: NTD thousand
Equity attributable to shareholders of the company
Capital stock
Retained earnings
Code
Common stock
$ 23,187,442
Capital increase
reserve
$
-
Additional paid-in
capital
$
675,537
Legal reserve
$ 1,160,137
Undistributed
earnings
$ 2,704,214
Special reserve
$
88,647
Other equity
Exchange
differences from the
translation of
Unrealized gain on
available-for-sale
of foreign
financial
operations
instruments
$
477
$
91,865
Total equity
$ 27,908,319
A1
Balance, January 1, 2013
B3
Special earnings reserve appropriated pursuant
to Financial Supervisory Securities Category
Decree No.1010012865
-
-
-
-
10,178
(
10,178 )
-
-
B1
B3
B5
B9
Appropriation and distribution of 2012 earnings
Legal reserve
Special reserve
Cash dividend
Stock dividend
-
1,681,090
-
833,387
-
35,260
-
(
(
(
(
833,387 )
35,260 )
231,874 )
1,681,090 )
-
-
D1
Net income from January 1 to June 30, 2013
-
-
-
-
-
1,710,802
-
-
D3
Other comprehensive income from January 1 to
June 30, 2013
-
-
-
-
-
-
27,978
(
10,738 )
17,240
Total other comprehensive income from
January 1 to June 30, 2013
-
-
-
-
-
1,710,802
27,978
(
10,738 )
1,728,042
D5
-
(
231,874 )
1,710,802
Z1
Balance, June 30, 2013
$ 23,187,442
$ 1,681,090
$
675,537
$ 1,993,524
$
134,085
$ 1,623,227
$
28,455
$
81,127
$ 29,404,487
A1
Balance, January 1, 2014
$ 25,345,339
$
$
675,435
$ 1,993,524
$
134,085
$ 2,923,384
$
24,742
($
58,919 )
$ 31,037,590
B1
B5
B9
B17
Appropriation and distribution of 2013 earnings
Legal reserve
Cash dividend
Stock dividend
Reverse of special reserve
-
1,579,241
-
-
891,810
-
D1
Net income from January 1 to June 30, 2014
-
-
-
-
D3
Other comprehensive income from January 1 to
June 30, 2014
-
-
-
Total other comprehensive income from
-
-
1,590,483
-
$ 26,935,822
$ 1,579,241
D5
I1
Conversion of convertible bonds
Z1
-
$
61,224 )
891,810 )
513,557 )
1,579,241 )
61,224
-
-
-
2,045,701
-
-
2,045,701
-
-
-
(
20,094 )
98,944
78,850
-
-
-
2,045,701
(
20,094 )
98,944
2,124,551
8,316
-
-
-
-
1,598,799
683,751
$ 2,885,334
72,861
$ 2,045,701
40,025
$ 34,247,383
(
$
-7-
(
(
(
$
4,648
$
(
513,557 )
-
Consolidated Statements of Cash Flows
Unit: NTD thousand
Code
A10000
A20100
A20200
A20300
A20400
A22500
A20900
A21200
A21300
A21800
A22300
A23100
A23500
A23800
A24100
A24300
A24400
A20010
A41110
A41120
A41150
A41160
A41190
Cash flow from operating activities
Current year net profit before taxation
Revenue, expenses, and losses that do not
affect the cash flows
Depreciation expenses
Amortization expenses
Appropriation of bad debt expense
Gain (loss) on financial assets and
liabilities at fair value through income
statement
Disposal and obsolescence loss of
property and equipment
Interest expenses
Interest revenue
Dividend income
Net changes in other liability reserves
(Profit) Loss of affiliated companies
accounted for under the equity method
Loss (gain) on disposal of investments
Financial assets impairment loss
(reversal gain)
Non-financial assets impairment loss
(loss reversal gain)
Unrealized foreign currency exchange
(gain) loss
Gain on sale of NPL
Loss on disposal of collateral
Total income, expense and loss that
do not affect the cash flows
Changes in assets/liabilities related to
operating activities
Due from Central Bank and other banks
Financial assets at fair value through
income statement
Accounts receivable
Discounts and loans
Other financial assets
-8-
January 1 to June
30, 2014
January 1 to June
30, 2013
$ 2,316,919
$ 1,909,518
76,582
16,829
764,152
82,370
10,374
787,204
(
(
(
150,327 )
263
1,967,339
5,396,325 )
357 )
800
9,493
(
(
6
1,751,516
4,762,458 )
287 )
-
(
1,552 )
43
(
454,956 )
(
664,751 )
(
2,243 )
(
34,619 )
(
(
31,275 )
68,712 )
1,435
(
3,278,304 )
(
2,793,804 )
(
2,777,099 )
(
1,087,382 )
(
76,035 )
(
735,549 )
( 11,979,389 )
28,124
537
3,758
7,949
15,104
( 7,070,543 )
( 1,247,808 )
( 22,326,877 )
(
246,078 )
Code
A41990
A42110
A42120
A42140
A42150
A42160
A42170
A42180
A42990
A40000
A33000
A33100
A33200
A33300
A33500
AAAA
B00300
B00400
B01000
B01100
B01400
B02700
B02800
B03700
B04500
B04700
B06300
BBBB
C00300
C00400
C00700
Other assets
Due to the Central Bank and other banks
Financial liabilities at fair value through
income statement
Bills and bonds sold under repurchase
agreements
Payables
Customer deposits and remittances
Other financial liabilities
Employee benefit liabilities reserve
Other liabilities
Total changes in operating activities
related assets/liabilities
Cash inflow (outflow) from operating
activities
Interest received
Dividends received
Interest payment
Income tax payment
Net cash inflow (outflow) from
operating activities
Cash flow from investing activities
Acquisition of available-for-sale financial
assets
Disposal of available-for-sale financial
assets
Disposal of held-to-maturity financial
assets
Return of capital from held-to-maturity
financial assets
Stock capital returned from decrease of
capital for financial assets measured at
cost
Acquisition of property, plant, and
equipment
Disposal of Property and equipment
Increase in refundable deposits
Acquisition of Intangible assets
Disposal of collateral
Cash collected from NPL sold
Net cash inflow (outflow) from investing
activities
Cash flow from financing activities
Increase in funds borrowed from Central
Bank and other banks
Decrease in funds borrowed from Central
Increase in commercial papers payable
-9-
January 1 to June
30, 2014
($
15,022 )
3,266,401
January 1 to June
30, 2013
($
66,936 )
4,749,435
(
211,884 )
(
(
(
101,276 )
203,608 )
7,117,011
3,673 )
4,467
110,287
(
(
(
5,577,245 )
(
4,981,672 )
(
(
(
(
6,538,630 )
5,336,644
357
1,918,412 )
354,349 )
(
(
5,865,958 )
4,710,300
287
1,686,734 )
310,553 )
(
3,474,390 )
(
3,152,658 )
(
1,707,577 )
(
3,545,629 )
(
(
(
(
(
308,754 )
1,234 )
178,675 )
22,713,523
25,069
(
18,940 )
83,528
711,800
2,843,525
2,465,400
5,802,240
-
50,000
757
1,090
43,678 )
33
42,435 )
30,275 )
808
343,494
(
(
(
63,318 )
2,190
79,760 )
42,165 )
19,515
-
1,698,327
4,987,688
-
851,967
1,241,666 )
99,911
-
Code
C01400
C01500
CCCC
DDDD
EEEE
E00100
E00200
January 1 to June
30, 2014
$
(
49,900 )
Issuing financial bonds
Paying back financial bonds
Net cash inflow (outflow) from
financing activities
January 1 to June
30, 2013
$ 2,500,000
( 2,561,664 )
(
1,191,655 )
790,303
Impact of changes in exchange rates on cash
and cash equivalents
(
20,094 )
27,978
Current cash and cash equivalents increase
(decrease)
(
2,987,812 )
2,653,311
Balance of cash and cash equivalents,
beginning of period
72,438,282
65,866,855
Balance of cash and cash equivalent, end of
period
$ 69,450,470
$ 68,520,166
Reconciliation of cash and cash equivalents at the end of the period
Code
E00210
E00220
E00230
E00200
June 30, 2014
June 30, 2013
Cash and cash equivalents on the balance
sheet
$ 5,789,532
$ 9,821,772
The “Due from Central Bank and other
banks” that meet the definition of cash
and cash equivalents under IAS 7
62,006,678
54,317,532
The “bonds and securities sold under
repurchase agreements” that meet the
definition of cash and cash equivalents
under IAS 7
1,654,260
4,380,862
Balance of cash and cash equivalent, end
of period
$69,450,470
$68,520,166
- 10 -
Notes to consolidated financial statements
(In thousands of NTD, unless otherwise noted)
1.
History of the company
Taichung Commercial Bank Co., Ltd. (hereinafter referred to as the “Bank” or Taichung
Bank) was incorporated as a cooperative savings company in Taichung per the order of the
Taiwan Provincial Government decree on Sept. 27, 1952 and its incorporation was approved
in April 1953. The Bank started business as of August in the same year. With the revision of
Banking Act in July 1975, the Bank was approved to be reorganized as “Taichung Small and
Medium Business Bank Company Limited” in Jan. 1, 1978 and to offer its stocks to the public
on May 15, 1984.
In order to comply with national financial policy, provide the pubic with financial
services, support economic development, and develop industrial and commercial businesses,
the Taichung Bank was renamed Taichung Commercial Bank Co., Ltd. in Dec. 1998. As of
June 30, 2014, it has a Business Department, a Trust Department, an International Banking
Department, 79 local branches, and an Offshore Banking Unit. Its major services are financial
operations approved to be offered under the Banking Act, trust services, offshore banking
services, and others approved by regulators.
Taichung Bank’s capital was NTD500 thousand when the Bank was incorporated. In
order to substantiate its capital structure and comply with regulations, the Bank has
increased/reduced its capital over the years. As of June 30, 2014, its paid-in capital was
NTD26,935,822 thousand.
Taichung Bank’s functional currency is the New Taiwan Dollar. The consolidated
financial statements are prepared in NTD to increase the comparability and consistency of
financial reporting since the stocks of Taichung Bank are traded on the Taiwan Stock
Exchange.
2.
The date and procedures of approving the financial statements
The Board of Directors approved the consolidated financial statements for publication on
August 12, 2014.
- 11 -
3.
Application of new and revised standards and interpretations
(1)
The 2013 version of IFRS, IAS, IFRIC, and SIC that are released but not yet effective
According to Financial Supervisory Securities Audit Category Letter No.
1030010325 issued on April 3, 2014 from the Financial Supervisory Commission
(referred to as “FSC” hereafter), the consolidated company must adopt the 2013 version
of IFRS, IAS, IFRIC, and SIC (referred to as “IFRSs” hereafter) that have been released
by the International Accounting Standards Board (IASB) and approved by the FSC,
beginning from 2015.
The new / amended standards and interpretation
The amendment to the IFRS “IFRSs amendment –
Amendments to IAS 39 (2009)”
Amendments to the IAS 39 “Embedded Derivatives”
“IFRSs improvements (2010)”
“2009-2011 IFRSs improvements”
Amendments to IFRS 1 “IFRS 7 Limited exemption
of comparative disclosures for first-time adoption”
Amendments to IFRS 1 “Severe hyperinflation and
first-time adoption deadline cancellation”
Amendments to IFRS 1 “Government loans”
Amendments to IFRS 7 “Disclosures - Financial
assets and financial liabilities offsetting”
Amendments to IFRS 7 “Disclosures - financial
assets transfer”
IFRS 10 “Consolidated Financial Statements”
IFRS 11 “Collective Agreement”
IFRS 12 “Disclosure of interests in other entities”
Amendments to the IFRS 10, IFRS 11, and IFRS 12
“Consolidated Financial Statements, the collective
agreement and disclosure of interests in other
entities: the transitional provisions guidelines”
Amendments to the IFRS 10, IFRS 12, and IAS 27
“Investment Entity”
IFRS 13 “Fair Value Measurement”
Amendments to the IAS 1 “The expression of other
comprehensive profit or loss”
Amendments to the IAS 12 “Deferred income tax:
Recovery of underlying assets”
Amendments to the IAS 19 “Employee Benefits”
Amendments to the IAS 27 “Individual Financial
Statements”
Amendments to the IAS 28 “Investments in affiliated
companies and joint ventures”
Amendments to the IAS 32 “Financial assets and
financial liabilities offsetting”
IFRIC 20 “Stripping Costs in the production stage of
an open-pit mine”
- 12 -
IASB publication effective
date (Note)
January 1, 2009 or January 1,
2010
Effective in the years after
June 30, 2009
July 1, 2010 or January 1,
2011
January 1, 2013
July 1, 2010
July 1, 2011
January 1, 2013
January 1, 2013
July 1, 2011
January 1, 2013
January 1, 2013
January 1, 2013
January 1, 2013
January 1, 2014
January 1, 2013
July 1, 2012
January 1, 2012
January 1, 2013
January 1, 2013
January 1, 2013
January 1, 2014
January 1, 2013
Note: Unless otherwise stated, the aforementioned new / amended / revised standards or
interpretation are effective in the year that begins after the respective date.
Except for the following explanations, the application of these new / amended /
revised standards or interpretations will not result in significant changes in the
consolidated company’s accounting policies:
IAS 19 “Employees benefits”
The revised standard requires having the changes in the defined benefit obligation
and changes in the fair value of the plan assets recognized upon occurrence. Therefore,
the choice of the “corridor approach” is eliminated, and the recognition of prior service
cost is accelerated. The amendments require all actuarial gains and losses to be
recognized immediately in “other comprehensive income” so that the recognized
pension plan assets or liabilities can reflect the overall project deficit or surplus. In
addition, “net interest” will replace the expected return of the interest cost, and the plan
assets prior to the application of the amendments and the net interest is derived by
having the defined benefit liability (asset) multiplied by the discount rate.
After retroactive application in 2015, the consolidated company expects to
recognize all unrecognized prior service costs. The company will increase accrued
pension liability by NTD188,211 thousand, deferred income tax assets by NTD31,996
thousand, and reduce retained earnings by NTD156,215 thousand on January 1, 2014.
The company will increase accrued pension liability by NTD175,126 thousand, deferred
income tax assets by NTD29,771 thousand, and reduce retained earnings by
NTD145,355 thousand on June 30, 2014. On that day, the company will reduce
operating expenses from January 1 to June 30, 2014 by NTD13,085 thousand and
increase income tax expense in the same period by NTD2,225 thousand.
Aside from the impacts mentioned above, as of the date when consolidated
financial statements are approved for publication, the consolidated company continues
to assess the impact of the 2013 version of IFRSs on the financial position and results of
operations. The related impact will be disclosed upon the completion of the assessment.
(2)
IFRSs that have been released by the IASB but not yet approved by the FSC
The consolidated company has not adopted the IFRSs that have been released by
the IASB but not yet approved by the FSC. As of the date when these consolidated
financial statements are approved and released, the FSC has not announced an effective
date yet.
IFRS 9 “Financial Instruments”
Amendments to IFRS 9 and IFRS 7 “Mandatory
Effective Date and Transitional Disclosures”
Amendments to IFRS 11 “Acquisition of an interest
in a joint operation”
(Continued on the following page)
- 13 -
date (Note 1)
July 1, 2014 (Note 2)
July 1, 2014
January 1, 2018
January 1, 2018
January 1, 2016
(From previous page)
IFRS 14 “Restricted Deferred Account”
IFRS 15 “Revenue from Contracts with Customers”
Clarification of Acceptable Methods
of Depreciation and Amortisation (Amendments
to IAS 16 and IAS 38)
Amendments to IAS 16 and IAS 41 - Agriculture:
Bearer Plants
Amendments to the IAS 19 “Defined benefit plans:
employees contribution”
Amendments to the IAS 36 “Disclosure of
recoverable amount of non-financial assets”
Amendments to the IAS 39 “Derivatives contract
replacement and hedge accounting continuity”
IFRIC 21 “Levies”
date (Note 1)
January 1, 2016
January 1, 2017
January 1, 2016
January 1, 2016
July 1, 2014
January 1, 2014
January 1, 2014
January 1, 2014
Note 1: Unless otherwise stated, the aforementioned new / amended / revised standards
or interpretation are effective in the year that begins after the respective date.
Note 2: Share-based payment transactions that have payment dates after July 1, 2014
are subjected to the revision of IFRS 2. The business mergers whose
acquisition dates are after July 1, 2014 are subjected to the revision of IFRS 3.
IFRS 13 is effective immediately after revision. Other revisions are adopted in
the year that begins after July 1, 2014.
Except for the following explanations, the adoption of aforementioned new /
amended / revised standards or interpretation will not cause significant changes of the
accounting policy of the consolidated company.
IFRS 9 “Financial Instruments”
Recognition and measurement of financial assets
In terms of financial assets, the subsequent measurement of financial assets within
the scope of IAS 39 “Financial Instruments: Recognition and Measurement” is
measured at cost after amortization or fair value.
The classification and measurement of debt instruments held as investment by the
consolidated company are as follows, if their contractual cash flows are completely used
for paying the principal and the interest on outstanding principal:
1.
If the consolidated company has held the financial asset for the purpose of
collecting the contractual cash flows and the contractual cash flows are solely for
the purpose of paying for the principal and interest on the principal amount
outstanding, the financial assets are carried at amortized costs.
- 14 -
2.
When the company holds such financial assets with the purpose of receiving
contractual cash flows and selling financial assets, such financial assets are
measured at fair value through other comprehensive income. Subsequently, the
company recognizes the interest income from such financial assets in the income
statement at effective interest rates and continues to evaluate the impairment.
Impairment and exchange gains and losses are also recognized in the income
statement. The changes in other comprehensive income are recognized in other
comprehensive income.
Other financial assets held by the consolidated company as investment that do not
meet the aforementioned conditions are measured at fair value. The change in fair value
is recognized in the income statement. However, the consolidated company may choose,
at the time of initial recognition, to designate the non-trading equity investments to be
measured at fair value through other comprehensive income. Other than dividends,
which are recognized in the income statement, other related gains and losses are
recognized in other comprehensive income, and there is no need for subsequent
evaluation of impairment subsequently.
The impairment of financial assets
IFRS9 uses a new approach and adopts the “expected credit loss model” to
recognize the impairment of financial assets. The company recognizes credit loss
allowance for financial assets measured at amortized cost, financial assets required to be
measured at fair value through other comprehensive income, lease receivables, the
contractual assets or loan commitments or financial guarantee contracts generated by
IFRS 15 “Revenue from Contracts with Customers.” If there has been no significant
increase in the credit risk of said financial assets since initial recognition, the company
measures the allowance for credit loss for such assets with the expected credit loss in
the next 12 months. If there has been significant increase in the credit risk of said
financial assets, the company measures the allowance for credit loss with the expected
credit loss in the remaining duration. However, the company must measure allowance
for credit loss of accounts receivable based on the expected credit loss in the remaining
duration.
Additionally, for financial assets that have suffered credit impairment upon initial
recognition, the consolidated company must consider the expected credit loss at the time
of initial recognition to calculate the effective interest rate after credit adjustment.
Subsequent allowance for credit loss is measured at cumulative changes of subsequent
expected credit loss.
Aside from the impacts mentioned above, as of the date when consolidated
financial statements are approved for publication, the consolidated company continues
to assess the impact of the revision of standards and interpretations on the financial
position and results of operations. The related impact will be disclosed upon the
completion of the assessment.
- 15 -
4.
Summary of significant accounting policies
(1)
Compliance Statement
The consolidated financial statements are prepared in accordance with the “Rules
Governing the Preparation of Financial Statements of Publicly Issued Banks,” “Rules
Governing the Preparation of Financial Statements of Securities Firms” and the IAS 34
“Interim Financial Reporting” approved by the FSC. These consolidated financial
statements do not include all IFRSs information disclosure for the financial statements
of the entire year.
(2)
Basis of consolidation
1.
Subsidiaries included in the consolidated financial statements
The business entities of the consolidated financial statements are as follows:
Investor
Taichung Commercial
Bank Co.
Taichung Commercial
Bank Co.
Taichung Commercial
Bank Co.
Taichung Bank
Leading Co., Ltd.
TCCBL Co., Ltd.
Subsidiary name
Taichung Commercial
Bank Insurance
Brokerage Co., Ltd.
Taichung Commercial
Bank Leasing
Taichung Bank Securities
Nature of the operation
Insurance brokerage
TCCBL Co., Ltd.
Taichung Commercial
Bank Leasing (Suzhou)
Ltd.
Percentage of ownership
June 30,
December
June 30,
2014
31, 2013
2013
100
100
100
Leasing
100
100
100
Securities Brokerage
100
100
100
Financing, leasing and
investments.
Financing Leasing and
investments
100
100
100
100
100
100
Taichung Commercial Bank Securities Co., Ltd. (hereinafter referred to as
the “Taichung Bank Securities”) was spun-off from the Company with the
operating assets and liabilities of the Security Department assigned on May 2,
2013. The Taichung Commercial Bank Securities Co., Ltd. issued stock shares
that are wholly owned by the Company. The major business operations include: (1)
Brokerage of marketable securities; (2) Proprietary trading of marketable
securities; (3) Margin and short transactions of securities; (4) Futures trading
support services; and (5) other approved services. Assets and liabilities that are
assumed by Taichung Commercial Bank Securities Co., Ltd. are as follows:
Amount
Assets
Cash and cash equivalents
Receivable -net
Discounts and loans -net
Available-for-Sale financial assets-net
Property and equipment – net
Intangible assets
Other assets
Liabilities
Payables
Other liabilities
Net operating assets and liabilities that were
spun-off
2.
$166,429
493,007
315,888
352,656
31,258
5,799
29,968
( 542,334 )
(
2,671 )
$850,000
Subsidiaries not included in the consolidated financial statements: None.
- 16 -
(3)
Explanations on other significant accounting policies
Other than the following explanations, the accounting policies adopted for these
consolidated financial statements are identical to those in the 2013 consolidated
financial statements.
1.
Post-retirement benefits
The pension cost in the interim report is calculated on the basis from the
beginning of the year to the end of the period according to the pension cost rate
determined by actuarial calculation at the end of the previous fiscal year. The
company adjusts such cost for the material market fluctuations, material reduction
or repayment, or other significant one-off events after the end of the period.
2.
Income tax
Income tax expense is the sum of current period income tax and deferred
income tax. The interim income tax is estimated based on the whole year. It is
calculated with the tax rate applicable to the expected total annual income and the
interim pre-tax net income.
5.
Major sources of significant accounting judgment, estimates, and uncertainties for
assumptions
The major sources of significant accounting judgment, estimates, and uncertainties for
assumptions adopted for these consolidated financial statements are identical to those in the
consolidated financial statements of 2013.
6.
Cash on hand
Notes and checks for clearing
Deposits at other banks
June 30, 2014
$ 3,153,610
1,038,000
1,597,922
$ 5,789,532
December 31, 2013
$ 3,180,663
1,190,949
1,219,116
$ 5,590,728
June 30, 2013
$ 2,914,450
5,816,890
1,090,432
$ 9,821,772
The cash and cash equivalents balances on the Consolidated Statement of Cash Flow as
of June 30, 2014, and December 31 and June 30, 2013, and the related adjustments of the
consolidated balance sheet are reconciled as follows:
June 30, 2014
Cash and cash equivalents on
the consolidated balance sheet
The “Due from Central Bank
and other banks” that meet
the definitions of IAS 7
“Definition of Cash and cash
equivalents,” which was
approved by the FSC.
December 31, 2013
June 30, 2013
$ 5,789,532
$ 5,590,728
$ 9,821,772
62,006,678
62,296,753
54,317,532
- 17 -
June 30, 2014
The “Bonds and securities sold
under re-purchase agreements”
that meet the definition of IAS
7 “Definition of Cash and cash
equivalents,” which was
approved by the FSC.
Cash and cash equivalents on the
Consolidated Statement of
Cash Flows
7.
June 30, 2013
$ 1,654,260
$ 4,550,801
$ 4,380,862
$69,450,470
$72,438,282
$68,520,166
Due from the Central Bank and other banks
June 30, 2014
Reserve for deposits
Reserve for
deposits –checking account
Reserve for
deposits –demand account
Financial Information
Service Co., Ltd. – clearance
account
Reserve for deposits in
foreign currency
Certificate of deposit of the
Central Bank
Call loans to banks
Reserve for trust funds
compensation
8.
December 31, 2013
December 31, 2013
June 30, 2013
$ 7,961,946
$ 9,798,719
$ 6,169,785
13,482,590
12,682,676
12,052,124
582,209
592,568
499,379
29,867
29,800
24,600
51,900,000
3,977,146
50,200,000
2,142,971
47,100,000
709,558
50,000
$77,983,758
50,000
$75,496,734
50,000
$66,605,446
(1)
The deposit reserves at the Central Bank are the average balances of all kinds of
deposits that should be appropriated as reserve each month per regulations. They are
calculated by multiplying the average monthly balances of all deposit accounts by the
legally required ratio. The demand account reserve can be used only for the monthly
adjustment of the deposit reserve. The remainder can be accessed any time.
(2)
The consolidated company uses government bonds held to maturity as trust fund
compensation reserve on June 30, 2014, and December 31 and June 30, 2013. Those
balances were booked at the face value of NTD50,000 thousand. Please refer to Note 35
for details.
Financial instruments measured at fair value through income statement
June 30, 2014
Held-for-sale financial assets
Commercial papers
Publicly traded stocks domestic
Beneficiary certificate
Convertible assets swap
agreements
December 31, 2013
June 30, 2013
$11,471,325
$10,528,040
$12,393,910
760,692
283,030
971,487
583,096
945,027
387,212
24,702
63,863
91,031
- 18 -
June 30, 2014
$
17,162
8,321
34,850
$12,600,082
Foreign exchange contracts
Forward contracts
FX options contracts
Trading financial liabilities
Foreign exchange contracts
Forward contracts
FX options contracts
$
$
4,461
3,518
33,641
41,620
December 31, 2013
$
27,688
3,455
17,387
$12,195,016
$
$
45,881
12,368
16,551
74,800
June 30, 2013
$
34,197
4,909
14,497
$13,870,783
$
$
24,286
8,529
14,476
47,291
(1)
The consolidated company performs transactions in financial derivative contracts
related to exchange rates. The major purpose of this service is providing customers with
a hedging tool for the foreign exchange positions generated from import/export
transactions, and hedging the risk from such transactions, and non-trading operation for
covering the gap of foreign exchange positions.
(2)
As of June 30, 2014, and December 31 and June 30, 2013, the consolidated company’s
outstanding foreign exchange swap contracts are as follows:
June 30, 2014
Contract amount
(Thousands of
dollars)
Maturity date
Sell EUR
5,000
2014/07/02
USD 63,332
2014/07/03-2014/08/29
JPY 1,158,243
2014/07/02-2014/07/16
HKD 175,819
2014/07/03-2014/07/25
Buy AUD 35,000
2014/07/02-2014/07/16
CAD
3,550
2014/07/07-2014/07/08
CNY
4,000
2014/07/03
EUR 19,200
2014/07/15-2014/07/25
GBP
1,800
2014/07/07-2014/07/25
JPY 152,808
2014/07/07
NZD
4,000
2014/07/03
SGD
750
2014/07/08
USD
5,500
2014/07/07-2014/07/25
ZAR 94,264
2014/07/02-2014/07/03
(3)
December 31, 2013
Contract amount
(Thousands of
dollars)
Maturity date
Sell EUR 61,412
2014/01/03-2014/01/16
USD 80,000
2014/01/27-2014/03/10
JPY 782,834
2014/01/06
HKD 174,441
2014/01/09-2014/02/12
Buy AUD 12,791
2014/01/06
CAD
4,519
2014/01/06-2014/01/10
GBP
1,600
2014/01/06
NZD
7,237
2014/01/07
SGD
1,745
2014/01/10
USD 80,657
2014/01/03-2014/03/31
ZAR 100,874
2014/01/03-2014/01/07
June 30, 2013
Contract amount
(Thousands of
dollars)
Maturity date
Sell AUD 1,000
2013/07/02
CHF
1,424
2013/07/03
CNY 7,996
2013/07/05
EUR 47,400
2013/07/01-2013/09/30
HKD 114,831
2013/07/02-2013/09/10
JPY 1,521,865
2013/07/03-2013/09/12
SEK
1,676
2013/07/26
USD 54,433
2013/07/01-2013/12/04
ZAR
6,226
2013/07/01-2013/07/22
Buy AUD 4,000
2013/07/03
CAD 3,817
2013/07/05-2013/07/22
CNY 55,733
2013/07/02
GBP
2,314
2013/07/22
HKD 3,881
2013/07/02
NZD 8,886
2013/07/01-2013/07/03
SEK
1,682
2013/07/26
SGD
1,890
2013/07/22
USD 71,751
2013/07/01-2013/11/04
ZAR 86,881
2013/07/22-2013/07/25
As of June 30, 2014, and December 31 and June 30, 2013, the consolidated company’s
outstanding foreign exchange forward contracts are as follows:
Currency
June 30, 2014
Forward exchange
sold
Forward exchange
sold
Forward exchange
bought
Forward exchange
bought
USD to NTD
Maturity date
2014/07/01-2015/06/30 USD48,498/NTD1,455,824
USD to JPY
NTD to USD
Contract amount (Thousands
of dollars)
2015/06/30
USD400/ JPY40,464
2014/07/24-2015/11/07 NTD468,481/USD15,600
NTD to JPY
2015/09/10
- 19 -
NTD8,868/JPY30,000
Currency
December 31, 2013
Forward exchange
sold
Forward exchange
sold
Forward exchange
bought
Forward exchange
bought
Forward exchange
bought
June 30, 2013
Forward exchange
sold
Forward exchange
sold
Forward exchange
bought
Forward exchange
bought
Forward exchange
bought
Forward exchange
bought
Forward exchange
bought
9.
Maturity date
Contract amount (Thousands
of dollars)
USD to NTD
2014/01/06-2014/08/15 USD43,960/NTD1,297,804
JPY to NTD
2014/01/28-2014/05/30 JPY130,157/NTD38,514
NTD to USD
2014/01/06-2014/04/08 NTD282,387/USD9,522
NTD to JPY
2014/02/04-2014/03/04 NTD5,961/JPY20,655
HKD to USD
2014/01/09
USD to NTD
2013/7/1-2013/12/4
USD19,253/NTD569,602
JPY to NTD
2013/7/5-2013/8/14
JPY40,004/NTD12,065
NTD to USD
2013/7/18-2013/11/4
NTD281,659/USD9,524
NTD to JPY
2013/7/19-2013/11/11
NTD11,449/JPY36,950
USD to JPY
2013/8/30
USD300/JPY30,630
HKD to USD
2013/7/2
HKD2,715/USD350
JPY to USD
2013/7/19
JPY13,221/USD150
HKD4,265/USD550
(4)
As of June 30, 2014, and December 31 and June 30, 2013, the consolidated company
entered into convertible bond swap contracts amounting to NTD24,500 thousand,
NTD63,700 thousand, and NTD90,600 thousand respectively, at interest rate ranges of
1.0% to 1.4%, 1.3% to 1.7%, and 1.3% to 1.7%.
(5)
As of June 30, 2014, and December 31 and June 30, 2013, the consolidated company
entered into foreign currency option contracts at NTD103,661 thousand (USD3,471
thousand), NTD67,236 thousand (USD2,256 thousand), and NTD26,695 thousand
(USD890 thousand).
Bonds and securities sold under repurchase agreements
On June 30, 2014, and December 31 and June 30, 2013, the consolidated company held
bonds and bills sold under repurchase agreements at NTD1,645,260 thousand, NTD4,550,801
thousand, and NTD4,380,862 thousand, and their contractual repurchase prices after the end
of the period were NTD1,654,627 thousand, NTD4,551,626 thousand, and NTD4,381,580
thousand.
10.
Receivables – net
Notes receivable
Accounts receivable
Acceptances receivable
Interests receivable
June 30, 2014
$ 3,703,680
560,455
737,716
724,534
- 20 -
December 31, 2013
$ 2,858,428
525,194
695,684
645,032
June 30, 2013
$ 1,832,308
504,674
587,653
711,498
June 30, 2014
Receivable spot exchange
settlement payment
Rent receivables
$
Litigation fee advance
receivable
Other receivables
Less: Unrealized interest income
Less: allowance for bad debt
(Note 11)
(1)
485,122
937,120
$
33,811
553,210
7,735,648
271,318 )
(
(
December 31, 2013
194,626 )
$ 7,269,704
(
589,087
856,689
42,244
650,577
6,862,935
210,420 )
(
June 30, 2013
166,864 )
$ 6,485,651
$
30,455
360,435
5,505,191
151,874 )
(
(
793,508
684,660
145,955 )
$ 5,207,362
The consolidated company classifies receivables based on credit risk characteristics of
instruments as follows:
Total amount
Item
June 30, 2014
Corporate
banking
Personal
banking
Individual
evaluation
of
With specific
impairment
objective
Others
evidence of
Portfolio Corporate
impairment
banking
evaluation
of
Personal
impairment banking
Corporate
Without
Portfolio
banking
specific
evaluation Personal
objective
of
banking
evidence of
impairment
impairment
Others
Total
$ 246,939
Allowance for
bad debt
Total amount
December 31,
June 30, 2014
2013
$
44,798
$ 225,483
Allowance for bad
debt
Total amount
Allowance for bad debt
December 31,
2013
June 30, 2013
June 30, 2013
$
22,922
$ 243,457
$
24,651
2,856
83
2,941
83
2,757
117
93,497
93,497
71,343
71,343
69,506
69,506
6,220
1,562
4,938
1,156
4,489
1,401
31,476
14,325
25,905
12,065
38,516
21,656
959,607
16,000
897,410
11,437
810,949
10,680
718,254
3,348
687,321
3,537
664,831
3,367
86,122,599
88,181,448
50,527
224,140
85,264,903
87,180,244
30,590
153,133
74,625,179
76,459,684
22,931
154,309
As of June 30, 2014, and December 31 and June 30, 2013, aforementioned
receivables of the consolidated company include amount due from the Central Bank of
the Republic of China (Taiwan) and other banks, accounts receivable, interest receivable,
acceptance receivable, notes receivable, lease receivable, receivables from delinquent
receivables reclassified from assets other than loans, and refundable deposits.
The allowance for bad debt referred to above is calculated and disclosed under the
requirements on credit risk characteristics in IAS 39. Taichung Commercial Bank’s
allowance for bad debt as of June 30, 2014, and December 31 and June 30, 2013, was
less than the requirement of over 1% of total loan that was prescribed by the Financial
Supervisory Banking Legal Category Letter No. 10010006830; therefore, additional
allowances for bad debts of NTD16,718 thousand, NTD38,722 thousand, and
NTD18,743 thousand were recognized, respectively.
(2)
Please refer to Note 35 for the notes receivable used as collateral of interbank financing.
- 21 -
11.
Discounts and loans – net
Bills negotiation
Overdraft
Secured overdraft
Accounts receivable financing
Securities receivable financing
Short-term loan
Short-term secured loans
Mid-term loans
Mid-term secured loans
Long-term loans
Long-term secured loans
Delinquent loans
Add: Adjustment of
premium/discount
Less: allowance for bad debt
June 30, 2014
$
548,122
1,268
33,729
210,087
592,934
37,066,235
67,689,201
41,373,150
98,485,452
3,092,101
128,208,379
1,321,082
378,621,740
December 31, 2013
$
458,754
963
16,450
305,259
466,635
36,850,255
67,497,398
37,980,674
93,717,250
2,970,735
124,828,290
2,191,487
367,284,150
104,557
(
4,793,859 )
$ 373,932,438
90,667
(
4,458,143 )
$ 362,916,674
June 30, 2013
$
375,673
3,172
15,520
355,612
363,612
40,332,367
61,378,217
35,790,613
92,208,298
2,999,692
114,579,114
972,176
349,374,066
67,484
(
3,820,563 )
$ 345,620,987
(1)
As of June 30, 2014, and December 31 and June 30, 2013, the balances on loans and
other credit extensions that are no longer accruing interest internally at Taichung Bank
were NTD1,306,369 thousand, NTD2,169,787 thousand, and NTD962,250 thousand,
respectively. The interest receivables that were no longer accrued internally were
NTD22,263 thousand, NTD48,648 thousand, and NTD17,281 thousand, respectively.
(2)
There was no loan written off without the collection process from January 1 to June 30,
2014 and 2013.
(3)
The consolidated company classifies discounts and loans with credit risk characteristics
of instruments as follows:
Discounts and loans
Total amount
Allowance for bad
debt
Total amount
Allowance for
bad debt
Total amount
Allowance for bad
debt
June 30, 2014
June 30, 2014
December 31,
2013
December 31,
2013
June 30, 2013
June 30, 2013
Individual Corporate
banking
evaluation
of
Personal
impairment banking
$ 6,202,313
$ 1,609,969
$ 5,844,463
$ 1,521,311 $
1,384,047
108,957
908,291
69,884
871,834
73,394
Portfolio Corporate
banking
evaluation
of
Personal
impairment banking
604,955
200,102
448,612
153,696
432,251
162,324
1,647,938
185,449
1,191,188
150,699
1,150,861
156,929
Corporate
banking
198,791,256
1,816,686
192,171,865
1,358,593
187,740,584
1,346,926
169,991,231
378,621,740
181,438
4,102,601
166,719,731
367,284,150
138,334
3,392,517
154,718,904
349,374,066
133,857
3,351,186
Item
With specific
objective
evidence of
impairment
Without
specific
objective
evidence of
impairment
Total
Portfolio
evaluation
of
impairment
4,459,632 $
1,477,756
Personal
banking
The allowance for bad debt referred to above is calculated and disclosed under the
requirements on credit risk characteristics in IAS 39. Taichung Commercial Bank’s
allowance for bad debt as of June 30, 2014, and December 31 and June 30, 2013, was
less than the requirement of over 1% of total loan that was prescribed by the Financial
Supervisory Banking Legal Category Letter No. 10010006830; therefore, additional
allowances for bad debts of NTD691,258 thousand, NTD1,065,626 thousand, and
NTD469,377 thousand were recognized, respectively.
- 22 -
(4)
The details and changes of allowance for bad debt for receivables and discounts and
loans from January 1 to June 30, 2014 and 2013 are disclosed according to accounting
titles as follows:
Balance, beginning
Provided in the current
period
Write-off of
non-performing loans
Collection of written-off
bad debt
Exchange rate impact
Reclassification
Balance, ending
Balance, beginning
period
Write-off of
non-performing loans
Collection of written-off
bad debt
Exchange rate impact
Reclassification
Balance, ending
Receivables
Discounts and loans
Total
$ 191,855
$ 4,458,143
$ 4,649,998
72,207
(
14,743 )
(
(
8,507
34 )
16,934 )
240,858
$
671,204
(
490,550 )
743,411
(
137,423
705
16,934
$ 4,793,859
505,293 )
145,930
671
$ 5,034,717
Receivables
Discounts and loans
Total
$ 125,114
$ 3,318,621
$ 3,443,735
45,798
(
8,782 )
$
10,622
300
173,052
727,974
(
350,843 )
117,476
7,335
$ 3,820,563
773,772
(
359,625 )
128,098
7,635
$ 3,993,615
Allowance for bad debts for aforementioned receivables includes allowance for
bad debts for receivables from delinquent receivables reclassified from assets other than
loans. Please refer to Note 16 for details.
12.
Available-for-Sale Financial Assets
Corporate bonds
Foreign bonds
Government bonds
Foreign publicly traded stocks
Domestic publicly traded stocks
Bonds and depository receipts
June 30, 2014
$19,750,675
348,271
12,472
74,515
107,056
$20,292,989
- 23 -
December 31, 2013
$18,042,574
885,052
188,679
80,853
$19,197,158
June 30, 2013
$18,189,049
916,594
189,843
62,814
$19,358,300
(1)
Details on foreign bonds priced in foreign currencies are as follows:
USD
AUD
(2)
June 30, 2014
$
11,661
-
December 31, 2013
$
11,817
20,040
June 30, 2013
$
11,854
20,192
Details on bond certificates and depository receipts priced in foreign currencies are as
follows:
USD
June 30, 2014
$
-
December 31, 2013
$
-
June 30, 2013
$
-
As of June 30, 2014 and December 31 and June 30, 2013, after evaluating
available-for-sale bonds and depository receipts, our company has recognized
impairments on these assets in full.
13.
(3)
The consolidated company provided available-for-sale foreign bonds as collateral for
interbank financing, and the amounts of such bonds on June 30, 2014, December 31,
2013, and June 30, 2013 are NTD59,734 thousand (USD2,000 thousand), NTD591,400
thousand (USD 2,000 thousand and AUD20,000 thousand) and NTD615,400 thousand
(USD 2,000 thousand and AUD20,000 thousand). See Note 35.
(4)
The amounts of available-for-sale government bonds used as operation deposit for
Taichung Bank Securities on June 30, 2014, and December 31 and June 30, 2013 were
NTD190,000 thousand, NTD165,000 thousand,and NTD165,000 thousand, respectively.
They are classified as refundable deposit. See Note 19.
Held-to-maturity financial assets – net
Foreign bonds
Government bonds
Financial bonds
Less: Cumulative impairment
(1)
June 30, 2014
$ 627,207
751,581
1,378,788
(
473,093 )
$ 905,695
December 31, 2013
$ 3,091,200
1,175,351
100,000
4,366,551
( 1,025,967 )
$ 3,340,584
June 30, 2013
$ 2,979,000
1,714,733
100,000
4,793,733
( 1,105,276 )
$ 3,688,457
Details on foreign bonds priced in foreign currencies are as follows:
USD
EUR
June 30, 2014
$
21,000
-
- 24 -
December 31, 2013
$
21,000
60,000
June 30, 2013
$
21,000
60,000
14.
(2)
The amount of held-to-maturity government bonds with R/P agreements on June 30,
2014, December 31, 2013, and June 30, 2013 were NTD0 thousand, NTD100,000
thousand, and NTD0 thousand; the amount of held-to-maturity government bonds with
R/P agreements were NTD268,803 thousand (USD9,000 thousand), NTD268,200
thousand (USD9,000 thousand) and NTD270,000 thousand (USD9,000 thousand).
(3)
After evaluating overseas bonds from January 1 to June 30, 2014 and 2013, the
consolidated company recognized asset impairment reversal gains of NTD454,956
thousand and NTD676,361 thousand, respectively. As of June 30, 2014, the
consolidated company has already recognized impairment loss of NTD473,093
thousand (USD15,840 thousand).
(4)
The face value of held-to-maturity foreign bonds used for inter-bank loan guarantee by
the consolidated company as of June 30, 2014, December 31, 2013, and June 30, 2013
were NTD149,335 thousand (USD5,000 thousand), NTD2,614,400 thousand
(USD5,000 thousand and EUR60,000 thousand), and NTD1,324,500 thousand
(USD5,000 thousand and EUR30,000 thousand), respectively. See Note 35.
(5)
The face value of the held-to-maturity government bond used for security of provisional
attachment at the court and the USD clearing account overdraft balance, trust fund
compensation reserve, and operation deposit as of June 30, 2014, December 31, 2013,
and June 30, 2013 were NTD936,500 thousand, NTD528,900 thousand, and
NTD505,800 thousand. See Note 19.
Investment accounted for under the equity method
June 30, 2014
Ownership
Book value
%
Domestic non-publicly traded
companies
Reliance Securities Investment
Trust Co., Ltd.
$ 141,206
38.46
December 31, 2013
Ownership
Book value
%
$ 142,654
38.46
June 30, 2013
Ownership
Book value
%
$ 132,232
38.46
The share and details of profit and loss from affiliated companies recognized under the
equity method by the consolidated company from January 1 to June 30, 2014 and 2013 are as
follows:
Investee
Reliance Securities Investment Trust Co.,
Ltd.
April 1 to June
30, 2014
$
1,037
- 25 -
April 1 to June
30, 2013
January 1 to
June 30, 2014
($
$
761 )
1,552
January 1 to
June 30, 2013
($
537 )
The summary financial information on the affiliated companies of the consolidated
company is as follows:
June 30, 2014
$ 383,802
$
16,666
Total assets
Total liabilities
December 31, 2013
$ 382,704
$
11,804
June 30, 2013
$ 354,877
$
11,074
April 1 to
April 1 to
January 1 to
June 30, 2014 June 30, 2013 June 30, 2014
Revenue, current period
Net income, current period
Total amount of other
comprehensive income,
current period
January 1 to
June 30, 2013
$ 12,352
$ 2,697
$ 13,062
( $ 1,979 )
$ 24,142
$ 4,035
$ 29,480
( $ 1,397 )
$
($
$
($
2,697
1,979 )
4,035
1,397 )
The share of profit and loss and other comprehensive income from affiliated companies
accounted for under the equity method from January 1 to June 30, 2014 and 2013 is based on
the financial statements of affiliated companies reviewed by CPAs in the same period.
15.
Restricted assets
Restricted assets – Bank deposit
Funds to be delivered
Transit payment of stock capital
from underwriting
June 30, 2014
$ 174,243
-
$
174,243
December 31, 2013
$ 135,954
26
$
28,310
164,290
June 30, 2013
$
81,326
117
$
81,443
The restricted Central Bank time deposit of the consolidated company is the security for
interbank fund movement and clearing operation. The restricted bank deposit is the collateral
of interbank financing. See Note 35.
16.
Other financial assets – net
Financial assets at cost
Other financial assets - other
Other collections - net
(1)
June 30, 2014
$ 142,684
786,469
180,820
$ 1,109,973
December 31, 2013
$ 143,484
835,604
179,171
$ 1,158,259
June 30, 2013
$ 143,484
805,323
193,516
$ 1,142,323
December 31, 2013
June 30, 2013
Details of financial assets at cost are as follows:
June 30, 2014
Domestic non-public
common stock
$
142,684
$
143,484
$
143,484
Said investment in non-publicly traded stocks held by the consolidated company is
measured at cost less impairment loss on balance sheet date. Because its range of
reasonable estimates for fair values is significant and it is impossible to reasonably
- 26 -
evaluate the probability of all kinds of estimates, the management of the consolidated
company believes that its fair value cannot be reliably measured.
(2)
Other financial assets - others
June 30, 2014
Products issued by PEM
Group. repurchased
Less: accumulated impairment
(
$ 1,989,709
1,203,240 )
$ 786,469
December 31, 2013
(
$ 2,036,144
1,200,540 )
$ 835,604
June 30, 2013
(
$ 1,990,711
1,185,388 )
$ 805,323
The consolidated company followed the resolution of the interim board meeting on
May 6, 2009 and drafted the “Plan to protect the rights of customers who hold
structured notes from Private Equity Management Group (PEM Group).” The company
resolved to buy back all structured notes from PEM Group and assumed that group’s
insurance policy assets on February 2011.
After the consolidated company evaluated the asset value of the insurance policies
written by PEM Group from January 1 to June 30, 2014 and 2013, the company
recognized asset impairment losses of NTD0 thousand and NTD11,610 thousand.
(3)
Details of other accounts in collection – net are as follows:
June 30, 2014
Accounts in collection restated
from assets other than loans
Less: Allowance for bad debt
(Note 10 and 11)
17.
$
227,052
$
46,232 )
180,820
(
December 31, 2013
$
204,162
$
24,991 )
179,171
(
June 30, 2013
$
220,613
$
27,097 )
193,516
(
Property and equipment
June 30, 2014
The book amount of each category
Land
Buildings
Transportation equipment
Miscellaneous equipment
Lease improvement
Prepayments for equipment
$ 2,029,800
987,545
9,767
351,306
401
5,600
$ 3,384,419
- 27 -
December 31, 2013
$ 2,029,800
1,004,638
11,269
368,228
2,400
$ 3,416,335
June 30, 2013
$ 2,029,800
1,021,802
12,865
369,758
$ 3,434,225
Cost
Balance, beginning
Increase
Decrease
Reclassified in the current
period
Net exchange differences
Balance, ending
Accumulated depreciation
Balance, beginning
Increase
Decrease
period
Balance, ending
Accumulated impairment
Balance, beginning
period
Current reversal
period
Balance, ending
Net, ending
Cost
Balance, beginning
Increase
Decrease
period
Balance, ending
Accumulated depreciation
Balance, beginning
Increase
Decrease
period
Balance, ending
Accumulated impairment
Balance, beginning
period
Current reversal
period
Balance, ending
Net, ending
Transportation
and
Prepayments
communication Miscellaneous
for
Lease
equipment
equipment
improvements equipment
Land
Buildings and
structures
$2,106,800
-
$1,992,863
-
2,106,800
1,992,863
11
31,805
(
1,199
169 )
1,241,716
-
988,225
17,093
-
21,410
1,743
1,115 )
-
1,005,318
22,038
(
77,000
-
-
-
-
77,000
$2,029,800
$ 32,679
230
(
1,115 )
(
$ 987,545
$
$1,226,107
40,024
( 25,445 )
$
2,400
3,200
-
$5,360,849
43,678
( 26,560 )
197
421
5,600
(
857,879
57,726
( 25,149 )
20
-
-
1,867,514
76,582
( 26,264 )
46 )
890,410
20
-
(
-
-
-
77,000
-
-
-
-
-
9,767
$ 351,306
$
224
-
$
Total
401
$
5,600
Transportation
and
Prepayments
communication Miscellaneous
for
Lease
equipment
equipment
improvements equipment
1,407
169 )
5,379,205
46 )
1,917,786
77,000
$3,384,419
Land
Buildings and
structures
$2,106,800
-
$1,992,863
-
2,106,800
1,992,863
34,355
27,272
3
1,220,523
-
-
953,339
17,722
-
23,681
1,910
4,101 )
793,028
62,738
(
5,017 )
-
-
1,770,048
82,370
(
9,118 )
-
971,061
21,490
16
850,765
-
-
16
1,843,316
77,000
-
-
-
-
-
77,000
-
-
-
-
-
-
-
$ 12,865
$ 369,758
-
-
77,000
$2,029,800
$1,021,802
$ 38,820
1,270
(
5,735 )
(
$1,141,644
57,183
(
5,579 )
$
$
-
$ 12,087
4,865
(
16,952 )
-
$
Total
$5,292,214
63,318
( 11,314 )
10,320
3
5,354,541
77,000
$3,434,225
The real estate and equipment of the consolidated company are depreciated with the
following useful lives on a straight-line basis:
Buildings
Buildings
Remodeling
Transportation equipment
Miscellaneous equipment
30 to 60 years
10 to 29 years
3 to 5 years
2 to 15 years
Lease improvements
5 years
- 28 -
18.
Intangible assets
Changes in computer software are as follows:
2014
$ 97,380
30,275
( 16,829 )
7,941
$ 118,767
Balance, beginning
Increase
Amortization in the current period
Reclassified in the current period
Balance, ending
19.
2013
$ 64,696
42,165
( 10,374 )
(
5,190 )
$ 91,297
Other assets
Refundable deposits
Prepayments
Collateral accepted – net
Others
June 30, 2014
$ 1,400,544
76,968
3,515
$ 1,481,027
December 31, 2013
$ 925,509
85,221
891
$ 1,011,621
June 30, 2013
$ 883,278
65,121
4,592
$ 952,991
(1)
The face value of the held-to-maturity government bond used for security of provisional
attachment at the court and the USD clearing account overdraft balance, trust fund
compensation reserve, and operation deposit as of June 30, 2014, December 31, 2013,
and June 30, 2013 were NTD1,126,500 thousand, NTD693,900 thousand, and
NTD505,800 thousand. These assets are classified as refundable deposits. See Note 35.
(2)
Details of collateral accepted – net are as follows:
Land
Buildings
Less: Allowance for price
declines
June 30, 2014
$
-
$
December 31, 2013
$
2,243
(
$
2,243 )
-
June 30, 2013
$
47,559
103,006
(
$
150,565 )
-
Because the consolidated company had sold part of the collateral from January 1 to
June 30, 2014 and 2013 that was impaired, the reason why the impairment occurred
ceased to exist. The company recognized asset impairment reversal gains of NTD2,243
thousand and NTD34,619 thousand.
- 29 -
20.
Due to Central Bank and other banks
Interbank loans
Deposit from Chunghwa Post
Overdraft of other banks
Due to other banks
21.
June 30, 2014
$ 8,925,212
1,678,559
1,004,138
$11,607,909
December 31, 2013
$ 6,377,400
1,963,594
514
$ 8,341,508
June 30, 2013
$ 7,898,100
1,963,594
38,151
1,138
$ 9,900,983
December 31, 2013
$ 4,968,239
1.06~2.55
June 30, 2013
$ 3,266,172
1.04~2.30
Funds borrowed from Central Bank and other banks
Interbank financing
Interbank financing rate (%)
June 30, 2014
$ 3,726,573
1.08~2.80
See Note 35 for the collateral of interbank financing mentioned above.
22.
Bills and bonds sold under repurchase agreements
Foreign bonds
Government bonds
June 30, 2014
$ 257,493
$ 257,493
December 31, 2013
$ 258,769
100,000
$ 358,769
June 30, 2013
$ 262,811
$ 262,811
The details and interest rates of repurchase after the balance sheet dates are as follows:
Foreign bonds
Government bonds
Foreign bonds
Government bonds
June 30, 2014
$ 257,723
$ 257,723
0.50%
-
December 31, 2013
$ 259,000
100,029
$ 359,029
0.50%
0.56%
June 30, 2013
$ 263,034
$ 263,034
0.50%
-
Details of foreign bonds priced in foreign currencies are as follows:
USD
June 30, 2014
$
8,621
- 30 -
December 31, 2013
$
8,684
June 30, 2013
$
8,760
23.
Payables
June 30, 2014
Notes and checks in clearing
payable
Payable spot exchange
settlement payment
Acceptances payable
Interest payable
Accrued expenses
Transit payment payable
Structured notes indemnity
payable (Note 36)
Delivery payment payable
Cash dividend payable
Other payables
24.
June 30, 2013
$ 1,038,000
$ 1,190,949
$ 5,816,890
485,188
747,858
387,975
701,806
34,369
588,686
708,225
344,878
794,558
49,971
793,342
609,071
457,872
668,522
18,695
4,824
293,200
513,557
566,610
$ 4,773,387
6,000
259,154
477,920
$ 4,420,341
5,103
208,727
231,874
438,676
$ 9,248,772
Deposits and remittances
Checking deposits
Demand deposits
Demand saving deposits
Time deposits
Time saving deposits
Remittances
25.
December 31, 2013
June 30, 2014
$ 6,214,043
104,650,630
99,973,603
91,951,490
134,026,290
5,424
$ 436,821,480
December 31, 2013
$ 6,515,160
99,731,500
96,755,054
93,996,622
132,696,893
9,240
$ 429,704,469
June 30, 2013
$ 7,672,254
85,043,536
94,943,537
90,621,826
129,940,366
2,899
$ 408,224,418
June 30, 2014
$14,400,000
$14,400,000
December 31, 2013
$14,400,000
1,642,869
$16,042,869
June 30, 2013
$11,400,000
2,104,169
$13,504,169
Financial bonds payable
Subordinated financial bonds
Convertible financial bonds
(1)
Subordinated financial bonds
1.
Taichung bank received the approval letter on March 20, 2009, Financial
Supervisory Commission Financial Supervisory Bank (Four) Category No.
09800104050, that authorized the bank to issue the first to fourth tranche of
subordinated financial bonds in 2009 and the first and second tranches of
subordinated financial bonds in 2010 on June 26, December 10, December 18,
December 30, 2009, and January 28, February 9, 2010, respectively. The
conditions of their issue are as follows:
- 31 -
(1)
The amount approved for issue: NTD5,000,000 thousand.
(2)
Amount issued:
(3)
(4)
(5)
A.
2009 first tranche: NTD1,800,000 thousand.
B.
2009 second tranche: NTD100,000 thousand.
C.
2009 third tranche: NTD1,200,000 thousand.
D.
2009 fourth tranche: NTD1,100,000 thousand.
E.
2010 first tranche: NTD600,000 thousand.
F.
2010 second tranche: NTD200,000 thousand.
Face value:
A.
2009 first tranche: NTD100 thousand, issued at face value.
B.
2009 second tranche: NTD500 thousand, issued at face value.
C.
2009 third tranche: NTD500 thousand, issued at face value.
D.
2009 fourth tranche: NTD500 thousand, issued at face value.
E.
F.
2010 second tranche: NTD10,000 thousand, issued at face value.
Duration of issue:
A.
2009 first tranche: Duration of issue: 7 years, maturing on June 26,
2016.
B.
2009 second tranche: Duration of issue: 7 years, maturing on
December 10, 2016.
C.
2009 third tranche: Duration of issue: 7 years, maturing on December
18, 2016.
D.
2009 fourth tranche: Duration of issue: 6.5 years, maturing on June 30,
2016.
E.
2010 first tranche: Duration of issue: 7 years, maturing on January 28,
2017.
F.
2010 second tranche: Duration of issue: 6 years, maturing on February
9, 2016.
Bond interest rate:
A.
2009 first tranche: 1.40% over the flexible interest rate for one-year
time deposit at Chunghwa Post Co. Ltd.
B.
2009 second tranche: Fixed annual rate of 2.75%。
C.
2009 third tranche: 1.50% over the flexible interest rate for one-year
- 32 -
2.
3.
D.
2009 fourth tranche: 1.48% over the flexible interest rate for one-year
E.
2010 first tranche: 1.50% over the flexible interest rate for one-year
F.
2010 second tranche: 1.50% over the flexible interest rate for one-year
(6)
Method of principal payment: Payment in full upon maturity.
(7)
Method of interest payment: Every half-year from the issuing day.
Taichung bank received the approval letter on June 4, 2010, Financial Supervisory
Commission Financial Supervisory Bank Note Category No. 09900204230, that
authorized the bank to issue the third tranche of financial bonds in 2010 on June
25, 2010. The conditions of its issue are as follows:
(1)
The amount approved for issue: NTD900,000 thousand.
(2)
Amount issued: NTD900,000 thousand.
(3)
Face value: NTD10,000 thousand, issued at face value.
(4)
Duration of issue: Duration of issue: 7 years, maturing on June 25, 2017.
(5)
Bond interest rate: 1.75% over the flexible interest rate for one-year time
deposit at Chunghwa Post Co. Ltd.
(6)
(7)
Taichung bank received the approval letter on September 24, 2012 Financial
Supervisory Commission Financial Supervisory Bank Note Category No.
10100305900, that authorized the bank to issue the first tranche of financial bonds
in 2012 on November 13, 2012. The conditions of its issue are as follows:
(1)
(2)
Amount issued: 3,000,000 thousand.
(3)
Face value: NTD1,000 thousand, issued at face value.
(4)
Duration of issue: 7 years, maturing on November 13, 2019.
(5)
Bond interest rate: Fixed annual rate of 2.1%.
(6)
(7)
- 33 -
4.
Taichung bank received the approval letter on April 8, 2013, Financial
Supervisory Commission Financial Supervisory Bank Note Category No.
10200089330, that authorized the bank to issue the first and second tranches of
subordinated financial bonds on June 25, and December 16, 2013, respectively.
The conditions of their issue are as follows:
(1)
(2)
Amount issued:
(3)
(4)
(5)
(2)
A.
2013 first tranche: NTD2,500,000 thousand.
B.
2013 second tranche: NTD3,000,000 thousand.
Amount issued:
A.
B.
2013 second tranche: NTD500 thousand, issued at face value.
Duration of issue:
A.
2013 first tranche: 7 years, maturing on June 25, 2020.
B.
2013 second tranche: 6 years, maturing on December 16, 2019.
Bond interest rate:
A.
2013 first tranche: Fixed annual rate of 2.1%.
B.
2013 second tranche: Fixed annual rate of 2.1%。
(6)
(7)
Convertible financial bonds
June 30, 2014
First domestic unsecured
convertible financial
bonds
Less: Discount of
corporate bond
payable
1.
$
-
$
-
December 31, 2013
June 30, 2013
$ 1,654,700
(
11,831 )
$ 1,642,869
$ 2,135,800
(
31,631 )
$ 2,104,169
Taichung bank received the approval letter on May 16, 2011 Financial
Supervisory Commission Financial Supervisory Bank Issuing Category No.
1000018296, that authorized the bank to issue the first domestic tranche of
non-secured convertible financial bonds was NTD2,300,000 thousand on June 15,
2011 at 0% stated interest rate. Pursuant to IAS 39, our company detached the
conversion right from the obligation and recognized them as equity and liability,
respectively. The elements of the composition of liabilities were recognized as
- 34 -
liabilities that are hybrid derivatives and non-derivative. That hybrid instrument
matured on June 15, 2013. Of that instrument, NTD164,200 thousand was
exercised for the sellback option on maturity day. Our company recognized bond
recovery loss of NTD7,495 thousand. Investors relinquished the exercise of
sellback option for the remaining part. As of June 30, 2014, NTD2,085,900
thousand of bonds were converted into 206,729 thousand shares of common stock.
The remaining NTD49,900 thousand of bonds have been redeemed on June 15,
2014 as they matured.
2.
Taichung bank issued the first tranche of non-secured convertible financial bonds.
The conditions of issue are as follows:
(1)
(2)
Amount of issue: NTD2,300,000 thousand.
(3)
Face value: NTD100 thousand, issued at face value
(4)
Duration of issue: 3 years, maturing on June 15, 2014.
(5)
Bond interest rate: Annual interest rate of 0% stated on the bond.
(6)
Method of principal payment: The company pays the principal at once with
cash if the investor does not covert or exercise the right to sell back.
(7)
Method of interest payment: None.
(8)
Conversion price: NTD11.89.
(9)
Right to sell-back: The bond holder may request Taichung Bank to redeem
the bond with cash 40 days before two full years after this tranche of
financial bonds was issued (June 15, 2013) with an annual yield of 1.5% of
the face value of the bond.
(10) The right to recall: Taichung Bank may demand the recall of outstanding
bonds with cash at the face value of bonds if the unconverted bond is lower
than 10% of the total amount of bonds issued, and if the closing price of the
common stock of Taichung Bank is more than 30% higher than the
conversion price for 30 consecutive days, beginning from six months after
the bonds are issued and until 40 days before the bonds mature.
3.
The conversion rules for the first domestic tranche of non-secured convertible
financial bond issued by Taichung Bank are as follows:
(1)
The asset converted into:
Common stock of Taichung Bank and the conversion obligation will be
fulfilled by issuing new shares.
- 35 -
(2)
The duration of conversion:
The bond holders may request Taichung Bank to convert the bonds into
common stock from July 16, 2011 (the day following the day of the
one-month mark for the issuance day of this bond) to April 17, 2014, except
from fifteen business days before the day when Taichung Bank suspends
stock transfer for stock dividend, for cash dividend, or capital increase by
cash to the asset distribution basis day, or from the capital reduction basis
day in case of a capital reduction to the day before stocks exchanged for
capital decrease began to be traded, and during the time the transfer of
common stocks of Taichung bank is suspended.
(3)
(4)
The procedure for requesting a conversion:
A.
The
bondholders
fill
out
the
“Application
for
the
conversion/redemption/selling back of financial bond conversion in
depository transfer” (specifying conversion) and send the application to
their securities broker. The broker makes the application to Taiwan
Depository and Clearing Corporation (abbreviated as TDCC hereafter).
After TDCC accepts the application, the request is sent to the stock
transfer agent of Taichung Bank. The request becomes effective upon
receipt and cannot be revoked. The conversion procedure will be
completed within five business days after it is sent. The transfer agent
will directly deposit the stocks into the TDCC account of the
bondholder.
B.
When overseas Chinese or foreign nationals apply for conversion of
the bonds they own into stocks of Taichung Bank, the only way the
stocks are distributed is direct deposit into the account by TDCC.
The conversion price at the time of issue is NTD11.89. After the financial
bonds are issued, when the number of common stock increases, the
company should compute the new conversion price according to the formula,
except for securities with common stock conversion rights or warrants are
converted into common stocks. As of the conversion expiration day of April
17, 2014, the new conversion price according to the formula is NTD10.09.
- 36 -
4.
Changes in accounts related to convertible financial bonds payable are as follows:
-
Other Capital
surplus – stock
options of
Corporate bonds
convertible
payable
corporate bonds
$ 1,642,869
$
65,664
-
(
(
Financial
liabilities at fair
value through
income statement
Balance, beginning
Discount
amortization of
corporate bonds
Current resale
Current conversion
Evaluation
adjustments
Balance, ending
$
-
$
26.
$
$
(
7,729
$
Other Capital
surplus – stock
options of
Corporate bonds
convertible
payable
corporate bonds
$ 2,248,277
$
83,039
17,556
161,664 )
(
21,850 )
-
57,935 )
$ 2,104,169
$
83,039
$
(
5,830 )
-
($
5,830 )
Benefit (loss) from
effects of income
statement accounts
$
-
(
(
17,556 )
7,495 )
($
21,850
3,201 )
Allocated to lending fund
Commercial papers payable
27.
21,850
-
(
-
$
Financial
liabilities at fair
value through
income statement
Balance, beginning
Discount
amortization of
corporate bonds
Current resale
Evaluation
adjustments
Balance, ending
5,830
49,900 )
1,598,799 )
Benefit (loss) from
effects of income
statement accounts
June 30, 2014
$
3,932
204,047
$ 207,979
December 31, 2013
$
7,605
104,136
$ 111,741
June 30, 2013
$
12,277
30,000
$
42,277
June 30, 2014
December 31, 2013
June 30, 2013
Liability reserve
Employee benefit liabilities
reserve
Reserve for guarantee liability
Accident loss reserve
$
$
(1)
261,218
112,804
800
374,822
$
$
256,751
92,078
348,829
$
$
205,674
50,269
255,943
Details of employee benefit liabilities reserves are as follows:
Defined benefit liabilities
Other long-term employee
benefit liabilities
June 30, 2014
$ 244,495
$
16,723
261,218
- 37 -
December 31, 2013
$ 241,038
$
15,713
256,751
June 30, 2013
$ 188,328
$
17,346
205,674
1.
Defined contribution plan
The pension system defined in “Labor Pension Act” that our company and
our subsidiaries in the consolidated company are subjected to is a defined benefit
pension plan managed by the government. The company contributes 6% of each
employee’s monthly wage to the individual account at Labor Insurance Bureau.
The consolidated company has already recognized the total expense of
NTD30,522 thousand and NTD29,405 thousand according to the percentage in the
defined contribution plan in the statements of comprehensive income for January
1 to June 30, 2014 and 2013.
2.
Defined benefit plan
The pension system that the consolidated company adopted under Taiwan’s
“Labor Standards Act” is a defined benefit pension plan.
The pension expenses of the defined benefit plan are recognized in the
following categories based on the pension cost rate determined by actuarial
calculation on December 31, 2013 and 2012:
Operating expenses
3.
2014
$ 25,466
2013
$ 24,837
Other long-term employee benefits
The other long-term employee benefits of the consolidated company are
long-term disability benefits. When employees die on their jobs other than
occupational hazards or die because of accidents, the company pays benefits
based on the years of service.
The totals of benefits (costs) related to long-term employee benefits in the
consolidated statements of comprehensive income from January 1 to June 30,
2014 and 2013 were NTD1,010 thousand and NTD999 thousand. As of June 30,
2014, and December 31 and June 30, 2013, other long-term employee benefit
reserves were NTD16,723 thousand, NTD15,713 thousand, and NTD17,346
thousand.
(2)
Details and changes of guaranteed liability reserve are as follows:
Beginning balance
Appropriated in this period
Exchange rate differences
Ending balance
2014
$ 92,078
20,741
(
15 )
$ 112,804
2013
$ 36,837
13,432
$ 50,269
In this period, this expense was classified as bad debt expense.
- 38 -
(3)
Details and changes of accident loss reserve are as follows:
Beginning balance
Appropriated in this period
Ending balance
2014
$
800
$
800
2013
$
$
-
In this period, this expense was classified as net loss other than other interest.
28.
Other liabilities
Deposits received
Advance payments received
Others
29.
June 30, 2014
$ 313,673
192,111
3,694
$ 509,478
December 31, 2013
$ 252,542
147,999
$ 400,541
June 30, 2013
$ 159,179
163,752
$ 322,931
June 30, 2014
December 31, 2013
June 30, 2013
Shareholders’ Equity
(1)
Capital stock
Common stock
Authorized number of
shares (thousand shares)
Authorized capital
Number of shares issued
with fully paid-in capital
(thousand shares)
Paid-in capital
Capital increase reserve
4,320,000
$ 43,200,000
4,320,000
$ 43,200,000
4,320,000
$ 43,200,000
2,693,528
$ 26,935,822
1,579,241
$ 28,515,063
2,534,534
$ 25,345,339
$ 25,345,339
2,318,744
$ 23,187,442
1,681,090
$ 24,868,532
Common stocks already issued carry a par value of NTD10. Each share has one
voting right and one right to receive dividend.
Later, in September 2013 the company capitalized NTD1,681,090 thousand of
undistributed earnings as stock capital. In addition, NTD481,100 thousand of
convertible financial bond was converted into 47,681 thousand shares of common stock
from October 15, 2013 onwards. Therefore, the paid-in capital of Taichung Bank on
December 31, 2013 increased to NTD25,345,339 thousand and is divided into
2,534,534 thousand shares.
Taichung Bank decided to increase its capital by capitalizing NTD1,579,241
thousand of undistributed earnings as resolved at the shareholders’ meeting on June
19,2014. As of June 30, 2014, this capital increase is classified as capital increase
reserve, because the company had not been completed the change of capital registration.
Additionally, from January 1 to June 30, 2014, NTD1,604,800 thousand of convertible
financial bond was converted to 159,048 thousand shares of common stock. Therefore,
- 39 -
the actual paid-in capital on June 30, 2014 increased to NTD26,935,822 thousand and
was divided into 2,693,582 thousand shares. All of them are common stock.
(2)
Additional paid-in capital
The reconciliations of the balances of various types of additional paid-in capital
from January 1 to June 30, 2014 and 2013 are as follows:
Balance, Jan.1 2013
Convertible bonds
converted to common
stock shares
Balance, June 30,
2013
Balance, Jan.1 2014
Convertible bonds
converted to common
stock shares
Stock
issuance
premium
$ 550,109
Premium on
issuance of
shares and
employee
stock option
$ 18,949
Employee
stock option
$
6,627
-
-
-
Changes in
additional paid-in
capital of the
affiliated
company and
joint venture
recognized under
the equity
method
$ 16,813
Equity
component of
convertible
financial
bonds
$ 83,039
-
Total
$ 675,537
-
-
$ 550,109
$
18,949
$
6,627
$
16,813
$
83,039
$ 675,537
$ 567,382
$
18,949
$
6,627
$
16,813
$
65,664
$ 675,435
66,251
$ 633,633
$
18,949
$
6,627
$
16,813
$
57,935 )
7,729
8,316
$ 683,751
(
Stock premium (including common stock premium and corporate bond conversion
premium) of the additional paid-in capital and donations can be used to offset losses;
also, when there are no losses, the company may apply it to distribute cash or for
capitalization, but capitalization is limited to a certain percentage of the paid-in capital
every year.
The investment under the equity method, employee stock options and stock options
additional paid-in capital may not be used for any other purpose.
(3)
Earnings distribution and dividend policy
According to Taichung Bank’s Articles of Incorporation, any profit from the final
accounting the year shall first be used to pay applicable taxes, then to offset losses
carried forward from previous years, and then 30% of the remainder shall be
appropriated as legal reserve, and a special reserve shall be provided and reversed
pursuant to laws. Then the company should appropriate no more than 1.5% and 0.01%
of the remaining amount from January 1 to June 30, 2014 and 2013 as employee bonus,
and remuneration to directors and supervisors should be at 1.5% and 50% of allocated
employee bonus. If there is any remainder, the company should add the remainder to
undistributed retained earnings from previous years and draft an earnings distribution
proposal.
The Board should decide on the percentage of cash and stock dividends based on
the following rules and send the proposal to the shareholders’ meeting for approval,
after the Board retains the fund needed based on changes in the operation environment,
and operation and investment needs in said earnings distribution proposal:
- 40 -
1.
The cash dividends shall be no less than 10% of total dividends and bonus
distributed to shareholders.
2.
However, if the dividend per share is below NTD 0.3 (including this amount), the
company may distribute all dividend as stock dividend.
Before the legal reserve rises to the point where it equals total paid-in capital, the
maximum cash distribution of earnings shall be no more than 15% of total capital.
Where the ratio between regulatory and risk-based assets fail to meet the standard set by
regulators, distribution of earnings in cash or with other property shall be restricted or
prohibited by regulators.
While distributing earnings, Taichung Bank shall appropriate a special reserve that
is equal to the difference between loss on sale of NPL and amortized loss, and provide
special reserve from current year earnings or retained earnings for previous periods for
the amount of conra account items of shareholders’ equity for the current year and
previous years. Where the amount in contra accounts of shareholders’ equity is reversed
afterwards, earnings may be distributed from the reversal.
Employees’ bonuses and remuneration to directors/supervisors payable by the
Bank were estimated in accordance with the Bank’s Articles of Incorporation. After the
Bank appropriated legal reserve at 30% of the earnings from January 1 to June 30, 2014
and 2013, and special reserve required by laws, employees’ bonus and remuneration to
directors/supervisors as provided totaled NTD45,065 thousand and NTD15,543
thousand, respectively. Because the Bank plans to convene the annual shareholders’
meeting and revise the percentage of employee bonus and remuneration for directors
and supervisors, our company has already incorporated such revision while making the
estimate in this period. The change in the amount of distribution resolved by the Board
at year-end, if any, shall become an adjustment to the expenses in the period they
occurred. If the shareholders’ meeting resolves an amount of distribution different from
the estimate, it shall be treated as a change in accounting estimate in the year of the
resolution at the shareholders’ meeting. If the shareholders’ meeting resolves to
distribute stocks as employee bonus, the number of stocks distributed shall be
determined with the amount of the employee bonus divided by the fair value of the
stock. The fair value of the stock is calculated with the closing price on the day prior to
the day of shareholders' meeting, along with the effect of ex-right and ex-dividend.
After the Company’s initial adoption of IFRSs pursuant to letters Financial
Regulatory Security Issue Category No. 1010012865 and Financial Regulatory Security
Issue Category No. 1010047490, and the provisions of the “Applicable Q&A for the
Appropriation of Special Reserve after the Adoption of International Financial
Reporting Standards (IFRSs),” the company appropriates and reverses special reserves.
If there are reverses in other contra accounts of shareholders’ equity, the company may
distribute earnings from the reversed portion.
- 41 -
The Company convened the shareholders’ meetings on June 19, 2014 and on June
13, 2013. At these meetings, participants proposed and resolved the earnings
distribution, employee bonus, and remuneration for directors and supervisors for 2013
and 2012 as follows:
Legal reserve
Special reserve
(reversal)
Cash Dividends
Stock dividends
Employee bonus
Remuneration to
directors/
supervisors
Distribution of retained earnings
2013
2012
$ 891,810
$ 833,387
(
61,224 )
513,557
1,579,241
35,260
231,874
1,681,090
Dividend Per Share (NTD)
2013
2012
$
$
0.191
0.586
0.100
0.725
2013
2012
Cash dividend Stock dividend Cash dividend Stock dividend
$
209
$
$
219
$
105
-
110
-
The difference between employee bonus and remuneration for directors and
supervisors proposed by the Board and resolved by the shareholders’ meeting, and those
recognized in the consolidated financial statements in 2013 and 2012 arises mainly from
changes in estimates. Such difference has been reflected in the income from January 1
to June 30, 2014 and 2013.
Please look up the information on employee bonus and remuneration for directors
and supervisors proposed by the Board and resolved by the shareholders’ meeting of
Taichung Bank on Market Observation Post System of Taiwan Stock Exchange.
(4)
Other equity
January 1, 2014
Available-for-Sale Financial
Assets-net
- Current valuation
adjustment
Foreign currency translation
differences
- Current exchange
Unrealized gain
on
available-for-sale
financial assets
($
58,919 )
97,855
differences
Income tax related to the other
June 30, 2014
Exchange differences
from the translation of
of foreign operations
$
24,742
-
$
1,089
40,025
- 42 -
($
-
(
20,094 )
$
4,648
Total
34,177 )
97,855
(
20,094 )
$
1,089
44,673
January 1, 2013
Assets-net
- Current valuation
adjustment
- Current transfer
amount realized
Foreign currency translation
differences
- Current exchange
differences
Income tax related to the other
June 30, 2013
30.
Unrealized gain
on
available-for-sale
financial assets
$
91,865
Exchange differences
from the translation of
of foreign operations
$
477
Total
92,342
$
(
5,892 )
-
(
5,892 )
(
4,846 )
-
(
4,846 )
-
$
27,978
81,127
$
27,978
28,455
109,582
$
Net income from business units in continuing operation
Net income from business units in continuing operation includes the following items:
(1)
Net interest income
April 1 to June April 1 to June
30, 2014
30, 2013
Interest revenue
Discount and loan interest
income
Interbank deposit and call loan
interest income
Securities investment interest
income
Credit card revolving interest
income
Interest income on installment
Lease interest income
Receivable factoring interest
income
Interest income from bonds and
securities sold under
repurchase agreements
Other interest income
Interest expenses
Deposits interest expenses
Central Bank and banks deposit
interest expense
Central Bank interbank interest
expense
R/P bond interest expense
Bond issuance interest expense
Other Interest expenses
January 1 to
June 30, 2014
January 1 to
June 30, 2013
$ 2,377,102
$ 2,150,676
$ 4,698,993
$ 4,217,560
173,204
125,448
331,546
246,990
88,770
116,775
183,710
206,463
9,581
54,679
15,699
10,367
25,845
2,384
18,821
104,233
29,089
19,666
44,472
4,379
1,749
2,915
3,830
5,947
4,797
7,517
2,733,098
7,243
3,545
2,445,198
11,497
14,606
5,396,325
13,310
3,671
4,762,458
(
859,443)
(
784,387 )
(
1,701,675 )
(
1,541,641 )
(
8,368)
(
3,385 )
(
16,944 )
(
13,500 )
(
(
(
(
(
37,719)
331)
86,875)
9)
992,745)
$ 1,740,353
(
(
(
(
(
23,802 )
528 )
79,722 )
10 )
891,834 )
$ 1,553,364
(
(
(
(
(
70,504 )
690 )
177,509 )
17 )
1,967,339 )
$ 3,428,986
(
(
(
(
(
36,049 )
930 )
159,372 )
24 )
1,751,516 )
$ 3,010,942
- 43 -
(2)
Net fee revenue
30, 2014
30, 2013
Fee revenue
Loan fee revenue
Brokerage fee revenue
Trust fee revenue
Guarantee fee revenue
Other fee revenue
$
Fee expenses
Commission expense
Other fee expense
(
(
(
74,722
232,310
156,416
18,082
129,322
610,852
82,977 )
25,099 )
108,076 )
$ 502,776
$
(
(
(
$
January 1 to
June 30, 2014
91,290
152,291
138,140
13,289
153,508
548,518
$
46,916 )
23,105 )
70,021 )
478,497
(
(
(
January 1 to
June 30, 2013
132,826
517,020
295,596
34,453
255,115
1,235,010
$
165,208 )
48,528 )
213,736 )
$ 1,021,274
(
(
(
$
136,626
302,892
247,927
26,192
313,740
1,027,377
95,705 )
44,390 )
140,095 )
887,282
The consolidated company provides custody, trust, investment management, and
advisory services to third parties. Therefore, the consolidated company is involved in
the planning, management, and the use of trading decision of financial instruments. For
trust fund or investment portfolio that is entrusted for management and utilization, a
separate bookkeeping is arranged and financial statements are prepared for internal
management purposes. Such funds are excluded from the financial statements of the
consolidated company.
(3)
Gain (loss) on financial assets and liabilities at fair value through income statement
April 1 to June
30, 2014
The realized gain (loss)
of financial assets
and liabilities
measured at fair
value through income
statement
Commercial papers
Stock
Derivatives
The valuation gain (loss)
of financial assets
and liabilities
measured at fair
statement
Commercial papers
Stock
Derivatives
$
(
(
(
$
1.
31,239
19,022
110,475
50,502
211,238
April 1 to June
30, 2013
$
(
(
(
1,502
9,774 )
52,765 )
24,433
36,604 )
174,634
(
(
($
15,874
65,591 )
2,146
9,556 )
57,127 )
9,661
24,173
14,350 )
1,993 )
17,491
39,636 )
January 1 to
June 30, 2014
$
(
(
(
(
$
50,926
31,384
127,904
52,081 )
158,133
4,473
27,598 )
33,088 )
48,407
7,806 )
150,327
January 1 to
June 30, 2013
$
(
(
(
(
($
25,315
65,591 )
4,674
64,719 )
100,321 )
9,794
42,963
13,102 )
51,173
90,828
9,493 )
The realized gains and losses of the financial assets and liabilities measured at fair
value through profit or loss in January 1 to June 30, 2014 and 2013 included
disposal gains (losses) of NTD106,968 thousand and (NTD126,585) thousand,
plus interest income of NTD51,165 thousand and NTD26,264 thousand,
respectively.
- 44 -
2.
(4)
Net income of the exchange rate instrument includes realized and unrealized gains
and losses of forward exchange rate contracts, exchange rate options, and
currency swaps. For the foreign currency financial assets and liabilities that are
not designated as a hedge and are measured at fair value through profit or loss, the
translation gains and losses of those assets and liabilities are included in the net
income of the exchange rate instruments.
Realized gain/loss on available-for-sale financial assets
April 1 to June
30, 2014
Gain (loss) from disposal
Corporate bond
(5)
$
-
$
Held-to-maturity
financial assets
impairment reversal
gain (loss)
impairment loss
Collateral impairment
reversal gain
($
363
April 1 to June
30, 2013
9,124 )
-
($
$
-
January 1 to
June 30, 2013
($
4,846 )
$
(
2,243
6,881 )
January 1 to
June 30, 2014
January 1 to
June 30, 2013
$
$
480,941
7,228 )
$
454,956
-
473,713
$
(
2,243
457,199
676,361
11,610 )
$
34,619
699,370
Net loss other than interest
Asset transaction (loss)
gain
Net gain on financial
assets measured at
cost
Net loss on disposal of
collateral
Other provisions (Notes
27 and 36)
Other net gains (losses)
April 1 to June
30, 2014
April 1 to June
30, 2013
($
($
13 )
357
306 )
January 1 to
June 30, 2014
($
1,375
263 )
1,435 )
-
(
1,435 )
(
679 )
-
(
1,979 )
($
1,712
1,651 )
1,314
456 )
(
($
5,092 )
4,023 )
January 1 to
June 30, 2013
($
314
(
($
(7)
January 1 to
June 30, 2014
Asset impairment loss reversal gain (loss)
April 1 to June
30, 2014
(6)
April 1 to June
30, 2013
6)
1,375
(
15,104 )
-
(
($
4,247 )
17,982 )
Employee benefit expenses
Salaries and wages
Labor insurance and
national health
insurance
Pension expenses
Other employee benefit
expenses
April 1 to June
30, 2014
$ 529,294
$
April 1 to June
30, 2013
$ 537,376
January 1 to
June 30, 2014
$ 1,056,191
January 1 to
June 30, 2013
$ 1,048,622
29,705
39,094
80,568
87,308
28,155
27,201
55,988
54,242
24,895
19,326
50,134
44,063
622,997
$ 1,242,881
$ 1,234,235
612,049
$
- 45 -
(8)
Depreciation and amortization expenses
April 1 to June
30, 2014
Depreciation expenses
on property and
equipment
Amortization expenses
of intangible assets
(9)
January 1 to
June 30, 2014
January 1 to
June 30, 2013
$
37,721
$
43,286
$
76,582
$
82,370
$
8,882
46,603
$
4,472
47,758
$
16,829
93,411
$
10,374
92,744
Business and administrative expenses
Taxation
Professional labor
service fee
Advertising expenses
Insurance expenses
Rental expense
Entertainment expense
Donations
Postal and telephone
expenses
Others
April 1 to June
30, 2014
$
79,111
$
31.
April 1 to June
30, 2013
April 1 to June
30, 2013
$
74,127
January 1 to
June 30, 2014
$ 156,133
January 1 to
June 30, 2013
$ 144,188
35,909
46,209
70,261
92,809
57,617
36,434
39,105
24,295
15,098
31,192
34,140
30,121
13,667
10,671
147,454
73,025
73,723
55,636
28,386
70,296
68,471
56,452
36,338
21,793
12,678
11,599
24,224
22,155
70,615
370,862
$
73,099
324,825
$
169,403
798,245
$
145,964
658,466
Income tax for business units in continuing operation
(1)
Income tax recognized in the income statement
April 1 to June
30, 2014
Income tax expenses in
the current period
Accrued in current
period
Surtax on undistributed
earnings
Adjustments for previous
years
Deferred income tax
Accrued in current
period
Income tax expense
recognized in the
income statement
(2)
$
151,390
$
January 1 to
June 30, 2014
January 1 to
June 30, 2013
$
$
106,592
292,563
248,552
115
-
115
-
12,366
-
20,988
-
12,429
$
April 1 to June
30, 2013
(
176,300
18,095 )
$
88,497
(
42,448 )
$
271,218
(
49,836 )
$
198,716
Income tax recognized in other comprehensive income
April 1 to June
30, 2014
Deferred income tax
Accrued in current year
- Unrealized gain or
loss on
available-for-sale
financial assets
Income tax benefits
recognized in other
comprehensive
income
April 1 to June
30, 2013
January 1 to
June 30, 2014
January 1 to
June 30, 2013
($
326 )
$
-
($
1,089 )
$
-
($
326 )
$
-
($
1,089 )
$
-
- 46 -
(3)
Information on integrated income tax
June 30, 2014
Accumulated earnings
before 1997
after 1998
Shareholders’ tax credit
balance
$
-
December 31, 2013
$
-
June 30, 2013
$
-
2,045,701
2,923,384
1,623,227
$ 2,045,701
$ 2,923,384
$ 1,623,227
$
316,090
$
603,993
$
347,678
The percentages of earnings distribution credit applicable to the 2013 and 2012
earnings are 20.50% (estimated) and 20.52%, respectively.
According to the Income Tax Act, when the Company allocates the earnings
retained after 1998 (inclusive), domestic shareholders may have the respective
shareholders’ tax credit calculated in with the deductible rate of earnings on the
dividend distribution date. Since the actual tax credit distributed to shareholders shall be
based on the shareholders’ tax credit account balances on dividend distribution date, the
Company’s 2013 projected deductible rate of earnings allocation may differ from the
deductible rate of earnings actually distributed to the shareholders.
According to regulations in the Income Tax Act revised on June 4, 2014, beginning
from January 1, 2015, when Taichung Bank distributes earnings from 1998 (inclusive)
and thereafter, domestic individual shareholders receive 50% of the shareholders’ credit
of the credit ratio on the dividend distribution date.
According to Taiwan Finance Tax Category Letter No. 10204562810, when
calculating the deductible rate of earnings in the year of the initial adoption of IFRSs,
the booked cumulative unappropriated earnings account should include the net increase
or decrease of retained earnings resulting from the initial application of individual
financial reporting accounting standards.
(4)
The assessment of income tax
1.
The income tax of Taichung Bank has been assessed up to year 2012. However,
the tax for 2011 has not been assessed yet.
2.
The income tax of Taichung Bank Insurance Brokerage Corporation has been
assessed up to year 2011.
3.
Taichung Bank Leasing Corp. was incorporated in 2012. Taichung Bank
Securities Corp. was incorporated in 2013. These companies do not have
corporate income tax assessments yet.
- 47 -
32.
Earnings per share
Unit : Dollars per share
Basic EPS
Diluted EPS
30, 2014
30, 2013
$
0.36
$
0.35
$
0.36
$
0.32
January 1 to
June 30, 2014
$
0.74
$
0.72
January 1 to June
30, 2013
$
0.65
$
0.61
When calculating earnings per share, the impact of the stock dividend was retroactively
adjusted. The stock dividend distribution basis date is tentatively determined as September 3,
2014. Due to the retroactive adjustment, changes in basic and diluted EPS from January 1 to
June 30, 2013 are as follows:
Unit : Dollars per share
Before retroactive
adjustment
$
0.69
$
0.64
Basic EPS
Diluted EPS
After retroactive
adjustment
$
0.65
$
0.61
The earnings and weighted average common stock shares used in calculating the
earnings per share are as follows:
Net income in the current period
April 1 to June
30, 2014
Net profit attributable to the
shareholders of the company
Effect of dilutive potential
common stock:
Net interest on
convertible bonds
Earnings used to calculate
diluted earnings per share of
the continuing business units
$ 1,008,862
April 1 to June
30, 2013
$
360
$ 1,009,222
$
January 1 to June
30, 2013
916,830
$ 2,045,701
$ 1,710,802
7,281
4,734
14,571
924,111
$ 2,050,435
$ 1,725,373
Number of shares
Unit: Thousands of shares
April 1 to June
30, 2014
Weighted average common
stock shares used to
calculate basic earnings per
share
Effect of dilutive potential
common stock:
Convertible financial
bonds
Employee bonus
Weighted average common
stock shares used to calculate
diluted earnings per share
January 1 to
June 30, 2014
April 1 to June
30, 2013
January 1 to
June 30, 2014
January 1 to
June 30, 2013
2,782,257
2,644,777
2,782,257
2,644,777
15,969
2,369
210,041
971
72,134
2,371
197,394
973
2,800,595
2,855,789
2,856,762
2,843,144
If the consolidated company is allowed to choose to issue the bonus to the employees in
stocks or cash, the company has to assume that the bonus for the employees is in the form of
- 48 -
stocks while calculating diluted EPS, and the company has to include the weighted average
number of shares outstanding when the potential common stocks have a dilutive effect. When
the company calculates diluted EPS in the next year before the Board of Directors resolves the
number of share distributed as employee bonus, the company should also consider the dilution
effect for such potential common shares.
33.
Non-cash transactions
Bondholders of convertible financial bonds issued by the consolidated company
exercised the right of conversion between January 1 and June 30, 2014. Based on the
NTD1,604,800 thousand face value of the bonds held for conversion, in total, 159,048
thousand shares of common stock were converted. See Note 29 (1), (2).
34.
Material related party transactions
Names of related parties
Jin-Fong Su (Institutional Representative of
Hsutien Investment Co., Ltd.)
Kuei-Fong Wang (Institutional Representative of
Hsutien Investment Co., Ltd.)
Hsutien Investment Co., Ltd., I Joung Investment
Co., Ltd., Pan Asia Chemical Corporation, and
He Yang Management Consultant Co., Ltd.
His-Rong Huang, Chin-Yi Lee, Chen-Le Liu,
Ming-Shan Chuang, Hsin-Ching Chang,
Cheh-Hsiung Tsai, Gui-Feng Wang,
Ching-Hsin Chang (Note 2), Wei-Liang Lin,
Meng-Liang Chang, Chin-Feng Su,
Chun-Sheng Lee, Yi-De Chen, Chia-Hung Lin,
Shu-Yuan Lin, and Chien-Hui Huang (Note 2)
Xin Rui Investment Co., Ltd. and Tai Jiunn
Enterprise Co., Ltd. (Note 1)
Chien-Er Huang, Shu-Li Huang, Chin-Huang
Tsai, Chien-Hua Lee-Fu, and Chao-Nan Hsieh
(Note 1)
100 persons including Chih-Chuan Fang
41 persons including the Chairman’s spouse
Taichung Commercial Bank Cultural and
Educational Foundation, Taichung Commercial
Bank Workers’ Welfare Commission
Reliance Securities Investment Trust Co., Ltd.
China Man-Made Fiber Co., Ltd.
Chung Chien Investment Co., Ltd.
Pan Asia Investment Co., Ltd.
Deh Hsing Investment Co., Ltd.
Greencol Taiwan Corporation
- 49 -
Affiliation with this company
The management
The management
Institutional representatives of
directors of the company
The management
Institutional representatives of
supervisors of the company
Supervisors
The management
Spouses and kin at the second degree
as defined by the Civil Code, of
directors, supervisors, Chairman of
the Board and President of the
Taichung Commercial Bank
Corporations receiving donation
amounted to more than one-third of
the Taichung Commercial Bank’s
Paid-in capital
Affiliated company under the equity
method
Ultimate parent company
Substantial related party
Names of related parties
Chou Chin Industrial Co., Ltd.
Ge Ling Co., Ltd.
Nan Chung Petrochemical Corp.
Melasse Co., Ltd.
Rai Yu Investment Co., Ltd.
Rai Yen Investment Co., Ltd.
Rai Chia Investment Co., Ltd.
Hsiang Feng Development Co., Ltd.
Deh Hsing Securities Co., Ltd.
Sheng Jen Knitted Textiles Co., Ltd.
Ta Fa Investment Co., Ltd.
Tai Yi Investment Co., Ltd.
Formosa Imperial Wineseller Corp.
Tou-Min Industrial Co., Ltd.
Affiliation with this company
Note 1: The term of representatives Huang Chien-Er, Huang Shu-Li, Tsai Chin-Huang,
Lee-fu Chien Hua, and Hsieh Chao-Nan, who were representatives of institutional
supervisor Hsinrui Investment Co., Ltd. and Taichun Co., Ltd., expired on June 19,
2014.
Note 2: The term of representative Chang Ching-Hsin, who was the representative of
institutional director Yirong Investment Co., Ltd. on June 19, 2014. Our bank
selected Huang Chien-Hui as the representative of institutional director Hoyang
Management Consulting Co., Ltd. at the 2014 shareholders’ meeting.
A summary of significant transactions between the consolidated company and related
parties are as follows:
(1)
Loans
Unit: NTD thousand
Condition of fulfilling
the contract
Type
Customer loans to
employees
Residential
mortgage loans
Other loans
Number of
accounts or
the names
of related
parties
18
accounts
24
accounts
Lu ○○
Maximum
balance,
current
period
$ 5,796
Ending
balance
$ 4,005
Normal
loans
$ 4,005
Past-due
loans
$
-
Interest
income
$
46
47,298
45,170
45,170
-
382
1,000
-
-
-
-
Ni OO
1,614
1,505
1,505
-
11
Ni OO
1,000
1,000
1,000
-
9
- 50 -
Transaction
conditions –
whether they are
different from
Details
those with
of the
non-related
collateral
parties
Credit
No
loan
Real
〃
estate
Time
〃
deposit
Real
〃
estate
〃
〃
the contract
Type
Number of
accounts or
the names
of related
parties
You ○○
Yang ○○
Yang ○○
Tsai ○○
Liang ○○
Wu○○
Chuang ○○
Chiu○○
Lee ○○
Maximum
balance,
current
period
$ 10,300
Ending
balance
$ 4,000
Normal
loans
$ 4,000
Past-due
loans
$
-
Interest
income
$
31
2,821
1,818
7,500
2,950
2,737
2,272
4,802
-
2,821
1,818
7,500
2,950
2,737
2,272
4,802
-
-
26
16
59
26
32
18
43
3
3,031
1,818
7,500
4,405
3,908
2,341
4,935
3,000
Details
of the
collateral
Real
estate
〃
〃
〃
〃
〃
〃
〃
〃
Transaction
conditions –
whether they are
different from
those with
non-related
parties
No
〃
〃
〃
〃
〃
〃
〃
〃
Unit: NTD thousand
the contract
Type
Customer loans to
employees
Residential mortgage
loans
Other loans
Number of
Maximum
accounts or the balance,
names of
current
related parties
period
Ending
balance
Normal
loans
Past-due
loans
$
-
Interest
income
27 accounts
$ 10,316
$ 6,783
$ 6,783
$
86
20 accounts
34,333
32,698
32,698
-
251
Chuang ○○
Ni ○○
You ○○
Yang ○○
Yang ○○
Liang ○○
Chuang ○○
You ○○
Lee ○○
Chiu ○○
Wu ○○
4,849
829
3,500
686
356
3,112
2,478
1,263
1,000
2,777
4,700
722
3,500
578
327
3,059
2,410
1,159
1,000
2,712
4,001
722
3,500
578
327
3,059
2,410
1,159
1,000
2,712
4,001
-
45
8
22
7
4
27
19
11
9
24
37
Transaction
conditions –
whether they are
Details
different from
of the
those with
collateral non-related parties
Credit
No
loan
Real
No
estate
〃
No
〃
“
〃
“
〃
“
〃
“
〃
“
〃
“
〃
“
〃
“
〃
“
〃
“
According to Articles 32 and 33 of the Banking Act, no non-secured loans shall be
granted to related parties, unless such loans are consumer loans and loans extended to
the government agencies; secured loans shall be granted with sufficient collateral and
the terms of such loans shall not be more favorable than those offered to other
customers in the same category.
(2)
Deposits
Balance, ending
Trust Co., Ltd.
Workers’ Welfare
Commission
China Man-Made Fiber Co.,
Ltd.
$
Interest rate range %
178,370
0.00~1.35
131,200
0.02~2.38
77,255
0.13
- 51 -
Interest expenses
$
1,126
1,545
24
Balance, ending Interest rate range % Interest expenses
Deh Hsing Securities Co.,
Ltd.
Taichung Commercial
Bank Cultural and
Educational Foundation
Formosa Imperial
Wineseller Corp.
Ge Ling Co., Ltd.
Pan Asia Chemical
Corporation
Chou Chin Industrial Co.,
Ltd.
Chou Chang Co., Ltd.
Melasse Co., Ltd.
Others
$
$
18,426
0.13~1.09
$
8,204
0.00~1.37
55
118
2,285
0.13
0.13
1
751
0.02~0.13
4
386
1,304
21
220,011
638,331
0.13
0.02
0.13
0.00~2.38
1,260
4,097
$
82
Balance, ending Interest rate range % Interest expenses
Reliance Securities
Investment Trust Co.,
Ltd.
Taichung Commercial
Bank Workers’ Welfare
Commission
China Man-Made Fiber
Co., Ltd.
Deh Hsing Securities Co.,
Ltd.
Taichung Commercial
Bank Cultural and
Educational Foundation
Pan Asia Chemical
Corporation
Ge Ling Co., Ltd.
Formosa Imperial
Wineseller Corp.
Chou Chin Industrial Co.,
Ltd.
Chou Chang Co., Ltd.
Melasse Co., Ltd.
Others
$ 161,163
0.00-1.35
129,659
0.02-2.38
36,737
0.13
23
18,581
0.13-1.09
82
8,192
0.02-1.37
55
1,726
1,713
0.02-0.13
0.13
1
1
0.13
-
912
685
424
18
218,754
$ 578,564
- 52 -
$
877
1,522
0.13
0.02
0.13
0.00-2.38
$
772
3,333
With the exception of the interest rate for employee deposits on June 30, 2014 and
December 31 and June 30, 2013 being 2.38% on both dates, other terms of
aforementioned deposits are not materially different from the deposit of general
customers.
(3)
Fee revenue
April 1 to June
30, 2014
Reliance Securities
Investment Trust
Co., Ltd.
$
1,622
April 1 to June
30, 2013
$
631
January 1 to
June 30, 2014
January 1 to
June 30, 2013
$
$
2,651
2,272
Said balance refers to the revenue from promotion and sale channels. The
transaction prices between the consolidated company and related parties are similar to
those between the company and non-related parties.
(4)
Other business expenses
Ge Ling Co., Ltd.
Melasse Co., Ltd.
Formosa Imperial
Wineseller Corp.
April 1 to June
30, 2014
$
125
45
$
170
April 1 to June
30, 2013
$
62
20
$
82
January 1 to
June 30, 2014
$
214
45
$
5
264
January 1 to
June 30, 2013
$
208
20
$
228
Said balances are the expenses for other services. The transaction prices between
the consolidated company and related parties are similar to those between the company
and non-related parties.
(5)
Compensation for top management
The totals of remuneration for directors and other top-managers from January 1 to
June 30, 2014 and 2013 are as follows:
April 1 to June
30, 2014
Short-term employee
benefits
Retirement benefits
Other long-term
employee benefits
$
$
15,949
182
4
16,135
April 1 to June
30, 2013
$
$
15,227
90
15,317
January 1 to
June 30, 2014
January 1 to
June 30, 2013
$
$
$
47,554
355
8
47,917
$
41,673
175
41,848
The performance evaluation and compensation for directors and top managers are
based on industry payment level. The company also considers personal performance,
operating performance, and reasonableness of linkage with future risks. As for the
short-term performance bonus percentage for directors and top management and the
timing for partial variable compensation, the company makes decisions on those issues
after considering the industry’s nature and the business nature of the Company.
- 53 -
35.
Pledged assets
Details of pledged assets are as follows:
Restricted assets – bank deposit
Notes receivable
Available-for-sale financial
assets- foreign bond
Available-for-sale financial
assets - Government bond
Held-to-maturity financial
assets-government bond
Held-to-maturity financial assets
- foreign bond
June 30, 2014
$ 174,243
2,417,750
December 31, 2013
$ 135,954
2,700,416
June 30, 2013
$
81,326
1,349,329
59,734
591,400
615,400
190,000
165,000
165,000
986,500
578,900
555,800
149,335
$ 3,977,562
2,614,400
$ 6,786,070
1,324,500
$ 4,091,355
Foreign bonds and restricted assets – Bank deposit is used as collateral for interbank
loans. Government bonds are used for security of provisional attachment at the court and of
the clearing account overdraft balance, and for the deposit of securities and trust services. The
details are as follows:
June 30, 2014
Collateral for provisional
attachment at the court
Collateral for clearing account
overdraft balance
Securities Brokerage business
security deposit
Reserve for trust funds
compensation
36.
$
486,500
December 31, 2013
$
528,900
June 30, 2013
$
505,800
450,000
-
-
190,000
165,000
165,000
50,000
$ 1,176,500
50,000
743,900
50,000
720,800
$
$
Significant commitments and contingent liabilities
Other than the commitments for the financial instruments offered that are mentioned in
Notes 8, 9, and 22, as of June 30, 2014 and December 31 and June 30, 2013, the company had
the following commitments and contingent liabilities:
(1)
Commitments:
June 30, 2014
Loan commitments not yet
used (not including
credit cards)
Credit card credit
commitment
All types of guarantees
Trust liabilities
Balance of application for
L/C
Lease contract
commitments
December 31, 2013
June 30, 2013
$ 119,183,560
$ 114,395,694
$ 118,703,420
12,271,744
10,530,281
50,081,322
11,608,548
9,141,991
44,660,285
10,903,807
7,677,913
45,212,925
3,458,041
3,894,760
4,275,504
970,734
739,615
397,524
- 54 -
(2) The Bank sold structured notes issued and guaranteed by Lehman Brothers Holdings Inc.
through the special monetary trust at the request of investors’ request. However,
Lehman Brothers Holdings Inc. filed for bankruptcy with U.S. courts on September 15,
2008. The quotation and redemption of the structured notes issued and guaranteed by
that company were suspended. Afterwards, Lehman Brothers petitioned for an extension
and submitted a reorganization plan with a U.S. court for approval in December 2008,
and further petitioned for an extension and submitted two motions in the duration of
debt clearance. The U.S. court approved its petition later.
The Bank codified the “Regulations for Settlement of Dispute over Lehman
Brothers Structured Notes” and policy for settlement according to the resolution made
by the temporary directors’ meeting on May 6, 2009, and indemnified investors at the
ratio assessed by the “Banking Dispute Review Board” of the Bankers Association of
the Republic of China. Upon evaluation, the Bank has recognized indemnity losses in
the following amount and years: NTD161,668 thousand, NTD44,199 thousand,
NTD5,050 thousand, NTD10,400 thousand, NTD1,900 thousand, and NTD1,179
thousand in 2009, 2010, 2011, 2012, 2013, and Q2 2014, respectively. These balances
were classified as other deposits. As of June 30, 2014, the Bank has paid investors
NTD219,572 thousand in indemnity, and the outstanding indemnity of NTD4,824
thousand was booked as payables.
(3)
The balance sheet and trust property catalogue of the trust account are disclosed as
follows, pursuant to Article 17 of the “Enforcement Rules of Trust Enterprise Act”:
Balance Sheet of Trust Accounts
June 30, 2014
Trust assets
Bank deposits
Short-term investment
Structured instrument
investment
Real estate
Land
Buildings
Securities in custody
Total trust assets
Amount
$ 3,821,456
40,566,940
647,502
1,205,133
19,824
3,820,467
$ 50,081,322
- 55 -
Trust liabilities
Payables of securities
in custody
Trust capital
Money trust
Real estate trust
Net income
Deferral carry-over
Total trust liabilities
Amount
$ 3,820,467
45,035,898
(
1,224,957
372,303
372,303 )
$ 50,081,322
Property Catalogue of Trust Accounts
June 30, 2014
Investments
Amount
$ 3,821,456
40,566,940
647,502
Bank deposits
Structured instrument investment
Real estate
Land
Buildings
1,205,133
19,824
3,820,467
$ 50,081,322
Income Statement of Trust Accounts
Amount
Trust revenue
Interest revenue
Trust expenses
Administration expenses
Taxation
Income before tax
Income tax expenses
Income after tax
$
670,331
$
298,028 )
372,303
372,303
(
December 31, 2013
Trust assets
Bank deposits
investment
Real estate
Land
Buildings
Total trust assets
Amount
$ 3,644,466
37,855,537
611,118
984,364
18,236
1,546,564
$ 44,660,285
- 56 -
Trust liabilities
Payables of securities in
custody
Trust capital
Money trust
Real estate trust
Net income
Deferral carry-over
Amount
$ 1,546,564
42,111,121
(
1,002,600
683,705
683,705 )
$ 44,660,285
December 31, 2013
Investments
Amount
$ 3,644,466
37,855,537
611,118
Bank deposits
Structured instrument investment
Real estate
Land
Buildings
984,364
18,236
1,546,564
$ 44,660,285
2013
Amount
Trust revenue
Interest revenue
Trust expenses
Taxation
Income before tax
Income tax expenses
Income after tax
$ 1,163,775
(
(
479,787 )
283 )
683,705
$ 683,705
June 30, 2013
Trust assets
Bank deposits
investment
Real estate
Land
Buildings
Total trust assets
Amount
$ 2,501,018
37,140,212
619,415
913,176
18,236
4,020,868
$ 45,212,925
- 57 -
Trust liabilities
Payables of securities in
custody
Trust capital
Money trust
Real estate trust
Net income
Deferral carry-over
Amount
$ 4,020,868
40,260,645
(
931,412
324,793
324,793 )
$45,212,925
June 30, 2013
Investments
Bank deposits
investment
Real estate
Land
Buildings
Amount
$ 2,501,018
37,140,212
619,415
913,176
18,236
4,020,868
$ 45,212,925
Amount
Trust revenue
Interest revenue
Trust expenses
Taxation
Income before tax
Income tax expenses
Income after tax
(4)
$
574,024
$
249,231 )
324,793
324,793
(
Analysis on the maturity of leasing contracts and capital expenditure commitments
The consolidated company’s leasing contract commitments include operating
leases and financing leases.
The operating lease commitment refers to the minimum lease payment of the
consolidated company as a lessee or lessor under the irrevocable operating lease.
The financing lease commitment refers to the future total lease payment and its
present value of the consolidated company as a lessee under the financing lease
conditions or the total lease investment amount or the present value of the minimum
lease receivable of the lessor under the financing lease condition.
Capital expenditure commitment refers to the contract signed for the capital
expenditures paid to receive buildings and equipment.
- 58 -
The analysis on the maturity of the consolidated company’s lease contractual
commitments and capital expenditure commitments are as follows:
June 30, 2014
Less than 1 year
1 to 5 years
$ 157,971
$ 245,444
2,079
Lease contract
commitments
Operating lease
expense (lessee)
Operating lease
income (lessor)
Gross financial lease
income (lessor)
Present value of
financial lease
income (lessor)
Capital expenditure
commitments
Total
More than 5 years
$
Total
325
$ 403,740
216
-
2,295
360,126
180,713
-
540,839
324,617
169,024
-
493,641
72,107
$ 916,900
1,225
$ 596,622
325
73,332
$ 1,513,847
Less than 1 year
1 to 5 years
$ 133,994
$ 231,464
1,179
$
December 31, 2013
Lease contract
commitments
Operating lease
expense (lessee)
Operating lease
income (lessor)
income (lessor)
Present value of
financial lease
income (lessor)
Capital expenditure
commitments
Total
More than 5 years
$
Total
357
$ 365,815
648
-
1,827
254,225
178,720
-
432,945
225,286
167,552
-
392,838
64,152
$ 678,836
22,839
$ 601,223
357
86,991
$ 1,280,416
Less than 1 year
1 to 5 years
$
June 30, 2013
Lease contract
commitments
Operating lease
expense (lessee)
Operating lease
income (lessor)
income (lessor)
Present value of
financial lease
income (lessor)
Capital expenditure
commitments
Total
37.
$
$
113,699
$
185,839
More than 5 years
$
535
Total
$
300,073
2,079
1,080
-
3,159
141,762
80,296
-
222,058
135,327
78,963
-
214,290
94,887
21,754
-
116,641
487,754
$
367,932
$
535
$
856,221
Significant subsequent events
The consolidated company signed an acquisition contract with Fenghsing Securities
Co., Ltd. on March 13, 2014 and assumed all rights and obligations of Fenghsing
Securities Co., Ltd. with NTD28,000 thousand, and created the Fengyuan Branch from the
acquisition. The consolidated company took over the operation on July 21, 2014.
- 59 -
38.
Disclosure of financial instruments
(1)
Fair value information
June 30, 2014
Book value
Fair value
Financial assets
Due from Central Bank and other
banks
Financial assets at fair value through
income statement
Bonds and securities sold under
Receivable -net
Discounts and loans -net
Available-for-Sale Financial Assets
Held to maturity investments -net
Investment under the equity method
Restricted assets
Other financial assets - net
Financial liabilities
Funds borrowed from the Central
Financial liabilities at fair value
through income statement
Bills and bonds sold under
Payables
(2)
December 31, 2013
Book value
Fair value
June 30, 2013
Book value
Fair value
$ 5,789,532
$ 5,789,532
$ 5,590,728
$ 5,590,728
$ 9,821,772
$ 9,821,772
77,983,758
77,983,758
75,496,734
75,496,734
66,605,446
66,605,446
12,600,082
12,600,082
12,195,016
12,195,016
13,870,783
13,870,783
1,654,260
7,269,704
373,932,438
20,292,989
905,695
141,206
174,243
1,109,973
1,654,260
7,269,704
373,932,438
20,292,989
884,754
141,206
174,243
1,109,973
4,550,801
6,485,651
362,916,674
19,197,158
3,340,584
142,654
164,290
1,158,259
4,550,801
6,485,651
362,916,674
19,197,158
3,332,948
142,654
164,290
1,158,259
4,380,862
5,207,362
345,620,987
19,358,300
3,688,457
132,232
81,443
1,142,323
4,380,862
5,207,362
345,620,987
19,358,300
3,575,568
132,232
81,443
1,142,323
11,607,909
11,607,909
8,341,508
8,341,508
9,900,983
9,900,983
3,726,573
3,726,573
4,968,239
4,968,239
3,266,172
3,266,172
41,620
41,620
74,800
74,800
47,291
47,291
257,493
4,773,387
436,821,480
14,400,000
207,979
257,493
4,773,387
436,821,480
14,237,752
207,979
358,769
4,420,341
429,704,469
16,042,869
111,741
358,769
4,420,341
429,704,469
16,026,480
111,741
262,811
9,248,772
408,224,418
13,504,169
42,277
262,811
9,248,772
408,224,418
13,431,233
42,277
The methods and hypotheses for the valuation of fair value of financial instruments of
the consolidated company are as follows:
1.
The book values of short-term financial instruments stated in the balance sheet are
the fair value of such instruments. The reason is that the maturity dates of these
instruments are close and it would be reasonable to use the book value in the
valuation of fair value. This method is used for the valuation of cash and cash
equivalents, due from the Central Bank and interbank loans, bonds and securities
sold under repurchase agreements, receivables, due to the Central Bank and other
banks, the central bank and interbank deposits, Bills and bonds sold under
repurchase agreements, accounts payables, and remittances.
2.
The fair values of the financial assets and financial liabilities associated with the
standard terms and conditions and traded in an active market are determined by
referring to market prices. Such assets and liabilities include domestic and foreign
corporate bonds, government bonds, stocks, commercial papers, beneficiary
certificates, financial bond payables, convertible financial bonds ... etc. When
market prices are not available, it is assessed by the valuation method. The
estimates and assumptions used in the evaluation methods by the consolidated
company are consistent with the estimates and assumptions that are used by
market participants of price financial instruments.
3.
When derivative instruments, such as forward exchange contracts, currency swaps,
and exchange rate options, are quoted in an active market, the market price is the
fair value. If the market price is not available, the fair value of a non-option
derivative is calculated with the applicable yield curve for the duration of the
derivatives and then analyzed for discounted cash flow. The fair value of the
option derivative is calculated with the option pricing model. The estimates and
assumptions used in the evaluation methods by the consolidated company are
- 60 -
consistent with the estimates and assumptions that are used by market participants
to price financial instruments.
(3)
4.
The fair value of other financial assets and financial liabilities (other than the
aforementioned) is calculated with the generally accepted pricing models based on
the cash flow discount analysis.
5.
The investments under the equity method refer to privately held companies for
which no open market prices are available. Additionally, the range of variation in
the estimates of their fair value is significant, or the probabilities of estimates in
the range of variation cannot be reasonably estimated.
6.
Discounts and loans, central bank and interbank financing, and deposits are all
interest-bearing financial instruments therefore their book values approximate
their current fair value. The book value of delinquent loans refers to the projected
collection amount less allowance for bad debt therefore their book values are also
their fair value.
7.
The financial instrument measured at cost refers to the financial instrument of
privately-held companies without significant influence from the consolidated
company and without an open market price. Moreover, the fair value estimate is
with a significant variation interval, or it is impossible to evaluate the possibility
of various estimates in the variance interval.
The fair value of financial assets and financial liabilities held by the consolidated
company and determined by the open market quotations, and evaluated under the
evaluation methods are:
Determined by open market quotation
June 30, 2014
December 31, 2013 June 30, 2013
Financial assets
Financial assets at fair value
Assets
Held-to-maturity financial
assets
Investment by equity
method – net
Financial liabilities at fair
value through profit and
loss
(4)
Evaluated under evaluation method
June 30, 2014 December 31, 2013
June 30, 2013
$ 12,515,047
$ 12,082,623
$ 13,726,149
$
85,035
$
112,393
$
144,634
20,292,989
19,197,158
19,358,300
-
-
-
730,640
1,167,715
1,601,844
154,114
2,165,233
1,973,724
-
-
-
141,206
142,654
132,232
14,237,752
16,026,480
13,431,233
41,620
-
74,800
-
47,291
-
Levels of fair value of financial instruments
An analysis of the financial instruments measured at fair value after initial
recognition is provided in the table below. The measurement is classified into Levels 1
to 3, depending on the observability of the fair value.
1.
Level 1
It refers to the quote of similar financial instruments in an active market. An
active market means a market meeting all of the following conditions:
Homogeneous instruments are traded in the market. Buyers and sellers are readily
available to trade, and price information is available to the public. The fair value
of the company’s investments in publicly traded stocks, beneficiary certificates,
Taiwan central government bond investments that are in demand, and derivative
instruments with quotes in an active market, is classified as Level 1.
- 61 -
2.
Level 2
It refers to the observable prices other than the quote in an active market,
including the observable input parameters directly (such as prices) or indirectly
(for example, derived from prices) acquired from an active market. It includes the
company’s investments in government bonds that are not in high demand,
corporate bonds, financial bonds, convertible bonds, most derivatives, and the
financial bonds issued by the company.
3.
Level 3
It refers to the input parameters for measuring the fair value that are not
based on obtainable market data. It includes some of the derivative instruments
held by the company and equity instruments without an active market.
Financial instruments at
fair value through
income statement
Non-derivative financial
instruments
Assets
Financial assets at fair
statement
Stock investment
Others
Available-for-Sale
financial assets
Stock investment
Bond investment
Derivatives
Assets
statement
Liabilities
Financial liabilities at
fair value through
income statement
Total
fair value through
income statement
instruments
Assets
statement
Stock investment
Others
June 30, 2014
Total
$
(
760,692
11,754,355
Level 1
$
Level 2
760,692
11,754,355
$
Level 3
-
$
-
181,571
20,111,418
181,571
20,111,418
-
-
85,035
-
85,035
-
41,620 )
$32,851,451
$32,808,036
(
$
41,620 )
43,415
-
$
December 31, 2013
Total
$
971,487
11,111,136
(Continued on following page)
- 62 -
Level 1
$
971,487
11,111,136
Level 2
$
Level 3
-
$
-
(Continued from previous page)
fair value through
income statement
Available-for-Sale
financial assets
Stock investment
Bond investment
Derivatives
Assets
value through
income statement
Liabilities
fair value through
income statement
Total
December 31, 2013
Total
$
39.
$
(
74,800 )
$31,317,374
Level 2
80,853
19,116,305
112,393
fair value through
income statement
instruments
Assets
value through
income statement
Stock investment
Others
Available-for-Sale
financial assets
Stock investment
Bond investment
Derivatives
Assets
value through
income statement
Liabilities
fair value through
income statement
Total
80,853
19,116,305
Level 1
$
-
$31,279,781
Level 3
-
$
-
112,393
(
74,800 )
37,593
$
-
-
$
June 30, 2013
(
Total
Level 1
$ 945,027
12,781,122
$ 945,027
12,781,122
62,814
19,295,486
62,814
19,295,486
-
-
144,634
-
144,634
-
47,291 )
$33,181,792
Level 2
$33,084,449
$
(
$
Level 3
-
47,291 )
97,343
$
$
-
-
Financial risk management objectives and strategy
Overview
The consolidated company’s financial risk management objective is balancing business
objectives, the overall risk tolerance, and legal restrictions in order to reach the balance of
risks and returns. The main operating risks faced by the consolidated company include the
credit risk on and off the financial statements, market risks (including interest rates, foreign
exchange rates, equity securities, and instrument price risks) and liquidity risks.
- 63 -
The Company has codified risk management policies that are defined and approved by
the Board in order to effectively identify, measure, monitor, and control credit risk, market
risk, and liquidity risk.
Risk management organizational structure
The Board of Directors is the highest decision-making body of the Bank and assumes the
ultimate responsibility for risk management. The Bank has established a Risk Management
Committee and a Risk Management Department that are subordinated to the Board and are
responsible for granting risk authority and the relevant authorities to the relevant departments
to ensure the successful operation of risk management. The Committee’s functions are
specified as follows:
(1)
Review of risk management projects.
(2)
Evaluating various risk management scopes.
(3)
Review of motions for institutionalization of risk management.
(4)
Periodical reporting to the Board.
The members of the Risk Management Committee set the various risk management
indicators by nature of their business and functions of departments and report them to
the Risk Management Committee for high-ranking supervisors’ reference in decision
making.
1.
Market risk
(1)
Source and definition of market risk
Market risk refers to the unfavorable changes in market price causing
possible losses on and off the Bank’s balance sheet. The market price refers
to interest rates, exchange rates, equity security prices and instrument prices.
(2)
Market risk management policy
The Company’s market risk management objective is to develop a
sound and effective market risk management mechanism that is compatible
with the Company’s business scale, nature, and complexity in order to
ensure that the Company’s risks can be properly managed. The company
aims to effectively identify, measure, monitor, and control market risks as
well as to establish a balance between the tolerable risk level and the
expected rate of return.
(3)
Market risk management process
A.
Identification and Measurement
Before the promotion and operation of new products, business
activities, processes, and systems, the company should assess relevant
market risks through appropriate procedures and determine whether the
risk exposure is within the range of risk tolerance. The Company’s
relevant business units shall use business analysis or product analysis
to verify the source of market risk and define market risk factors for
each financial instrument and codify proper regulations.
- 64 -
Market risk measurement can be done with a variety of effective
measurement methods to properly measure risk, including but not
limited to the following methods: statistics-based measurement method,
sensitivity analysis, and scenario analysis. The Risk Management
Department should measure the risk position daily and conduct stress
tests regularly to measure the possible extraordinary loss amount of
current positions under the simulated extreme situations or historically
extreme situations.
B.
Monitoring and reporting
The Risk Management Department should regularly report and
make suggestions to the Risk Management Committee and the Board
of Directors on the Bank’s overall market risk management, including
the Bank’s market risk positions, risk level, profit and loss, use of quota,
and market risk management related compliance. The Business
Department has defined the relevant rules governing the breach of limit,
stop-loss mechanism, and operating procedure for breach of limit in
order to effectively control the market risk. The breach of limit or
exceptions shall be reported immediately to implement response
measures.
(4)
Interest rate risk
A.
Definition of interest rate risk
Interest rate risk refers to the changes in interest rates that cause
changes in the fair value of the consolidated company’s interest rate
positions or losses in the income statement. The main sources of risk
include deposit and loan and interest rate related marketable securities.
B.
Measurement methods and management procedures
The Company adopts a gap management mechanism for interest
rate risk with the target range set for monitoring and with the
monitoring results periodically presented to the Asset and Liability
Management Committee and the Board of Directors. The company also
makes timely adjustments in accordance with the Company’s overall
operating conditions. In addition, the Company measures interest rate
risks with DV01, which is a method that assumes the extent of impact
on earnings and equity when there is a parallel shift of yield curve by
100BP. The company uses this method to control interest rate risks.
(5)
Exchange rate risk
A.
Definition of exchange rate risk
Exchange rate risk refers to the gains and losses resulting from the
conversion of two currencies at different times. The consolidated
company’s exchange rate risk mainly arises from spot and forward
foreign exchange transactions. Since the Company’s foreign exchange
transactions are mostly done with the principle of closing the
customer’s positions each day, the exchange rate risk is relatively low.
- 65 -
B.
The Company uses the limit control mechanism on exchange rate
risk. The company designates the specific limitation of each currency
in the trading day and overnight. The company controls the maximum
net foreign exchange position for personnel at all levels and designates
the maximum trading limit depending on the counterparty. The
company presents the result of control to the Risk Management
Committee and the Board of Directors for discussion on a regular
basis.
In addition, the Company creates scenarios for the degree of
impact when the USD/NTD, EUR/NTD, and CNY/NTD exchange
rates appreciate/depreciate by 3% on earnings and equity in order to
control the exchange rate risks.
(6)
Equity securities price risk
A.
Definition of equity securities price risk
The market risk of the consolidated company’s equity securities
includes individual risks arising from changes in the prices of equity
securities and general market risks arising from changes in the overall
market prices. The main sources of risk are publicly traded stocks and
beneficiary certificates.
B.
The Company controls the equity security price risk with the
specific limitation mechanism to ensure that the transactions are carried
out at all levels within the authorized limits. The company also adopts
stop-loss control mechanisms and reports the monitoring results
regularly to the Risk Management Committee and the Board of
Directors for discussion.
In addition, the Company creates scenarios for the degree of
impact when equity securities prices go up/down by 15% on earnings
and equity in order to control the equity securities price risks.
(7)
Market risk sensitivity analysis
Interest rate risk
The consolidated company assumes that, other variables being constant,
when the yield curve rises/falls by 100 points, the consolidated company’s
net income before tax on June 30, 2014, and December 31 and June 30,
2013, would increase/decrease by NTD590,216 thousand, NTD548,078
thousand, and NTD497,551 thousand, while its equity would
decrease/increase by NTD859,221 thousand, NTD834,547 thousand, and
NTD 1,209,815 thousand, respectively.
- 66 -
Exchange rate risk
when the USD/NTD, EUR/NTD, and CNY/NTD exchange rates
appreciate/depreciate by 3%, the consolidated company’s net income before
taxes on June 30, 2014, and December 31 and June 30, 2013, would
decrease/increase by NTD61,510 thousand, NTD97,498 thousand, and
NTD48,694 thousand, while its equity would increase/decrease by
NTD27,367 thousand, NTD31,491 thousand, and NTD23,525 thousand,
respectively.
Equity securities price risk
when its equity securities portfolio advances/declines by 15%, the
consolidated company’s net income before tax on June 30, 2014, and
December 31 and June 30, 2013, would increase/decrease by NTD156,558
thousand, NTD233,187 thousand, and NTD199,836 thousand, while its
equity would increase/decrease by NTD27,236 thousand, NTD12,128
thousand, and NTD9,422 thousand, respectively.
Sensitivity analysis is summarized as follows:
June 30, 2014
Major risks
Interest rate risk
Foreign Exchange
risk
Equity securities
price risk
Extent of change
Affected amount
Equity
Profit and loss
( $ 859,221 ) $ 590,216
859,221 (
590,216 )
Yield curve rises by 100 BPS
Yield curve falls by 100 BPS
USD/NTD, EUR/NTD,
CNY/NTD appreciate by 3%
USD/NTD, EUR/NTD,
CNY/NTD depreciate by 3% (
Equity securities price increase
by 15 %.
Equity securities price
(
decrease by 15%.
27,367
(
61,510 )
27,367 )
61,510
27,236
156,558
27,236 ) (
156,558 )
December 31, 2013
Major risks
Interest rate risk
Foreign Exchange
risk
Equity securities
price risk
Extent of change
Affected amount
Equity
Profit and loss
( $ 834,547 ) $ 548,078
834,547 (
548,078 )
USD/NTD, EUR/NTD,
USD/NTD, EUR/NTD,
by 15 %.
(
decrease by 15%.
- 67 -
31,491
(
97,498 )
31,491 )
97,498
12,128
233,187
12,128 ) (
233,187 )
June 30, 2013
Major risks
Interest rate risk
Foreign Exchange
risk
Equity securities
price risk
2.
Extent of change
Affected amount
Equity
Profit and loss
( $ 1,209,815 ) $ 497,551
1,209,815 (
497,551 )
USD/NTD, EUR/NTD,
USD/NTD, EUR/NTD,
by 15 %.
(
decrease by 15%.
23,525
(
48,694 )
23,525 )
48,694
9,422
199,836
9,422 ) (
199,836 )
Credit risk
The financial instruments held or issued by the consolidated company might
cause losses due to the counterparty’s or the other party’s failure to fulfill
contractual obligations. The consolidated company always makes prudent credit
evaluations before granting loans or providing loan commitments and guarantees.
The loans secured by collateral accounted for about 76% of the total loans on June
30, 2014. The proportion of financing guarantee and commercial L/C secured by
collateral was approximately 20%. Because the collateral used to secure loans,
loan commitments or guarantees is usually cash, inventory, marketable securities,
or other property, in the event of the trading counterparty’s or other party’s default,
the consolidated company was entitled to liquidate the collateral or other
guarantees. Thus, the company can effectively reduce its credit risk. However,
while disclosing the maximum risk exposure, the company does not consider the
fair value of collateral. The consolidated company evaluates the contracts whose
fair values are positive on the balance sheet date. The maximum credit exposures
on June 30, 2014, and December 31 and June 30, 2013 were NTD351,488,245
thousand, NTD335,983,142 thousand, and NTD319,754,353 thousand,
respectively. In addition, the maximum exposures of commitment contracts that
are off balance sheet and with credit risk are specified as follows:
June 30, 2014
Credit commitment
(exclusive of
credit cards)
Credit card
commitment
December 31, 2013
June 30, 2013
$119,183,560
$114,395,694
$118,703,420
12,271,744
11,608,548
10,903,807
When the counterparties of financial instrument transactions are obviously
concentrated in one entity, or while there are several trading counterparties of
financial instruments, they nevertheless engaged in similar business activities and
possess similar economic characteristics, and therefore the impacts by economic
or other conditions on their ability to fulfill the contracts are similar, the
concentration of credit risk occurs. The characteristics of significant credit risk
concentration include the nature of business activities conducted by debtors. The
consolidated company does not concentrate any transactions on one single
customer or counterparty, but it has counterparties, industries, and regions that are
similar. The contract balances with significant credit risk concentrations are as
follows:
- 68 -
Counterparties
Private enterprises
Natural persons
Others
June 30, 2014
$ 220,665,557
173,588,198
842,889
$ 395,096,644
December 31, 2013
$ 211,189,377
169,346,288
862,349
$ 381,398,014
June 30, 2013
$ 202,503,083
157,250,664
999,307
$ 360,753,054
Industries type
Individuals
Manufacturing
Commerce
Real estate
Construction
Commercial and
industrial service
Transportation,
warehousing,
information, and
communications
Others
June 30, 2014
$ 173,588,198
78,373,189
59,886,433
42,620,680
13,110,560
December 31, 2013
$ 169,346,288
79,562,175
58,154,153
34,927,317
11,383,873
June 30, 2013
$ 157,250,664
77,987,930
56,180,130
31,064,240
12,762,569
Regions
Domestic
Asia
Americas
Others
June 30, 2014
$ 374,967,477
13,834,202
4,850,339
1,444,626
$ 395,096,644
December 31, 2013
$ 363,079,444
9,277,443
7,434,038
1,607,089
$ 381,398,014
June 30, 2013
$ 346,014,146
7,942,031
4,865,610
1,931,267
$ 360,753,054
By collateral type
Non-secured
Secured
Secured by real
estate
Secured by Letter of
Guarantee
Secured by Chattel
Secured by
obligation
documents
Secured by notes
receivable
Secured by stocks
Others
June 30, 2014
$ 77,405,777
December 31, 2013
$ 75,353,595
June 30, 2013
$ 77,045,759
9,469,938
9,678,942
8,112,430
8,769,974
9,277,672
$ 395,096,644
8,624,755
9,720,511
$ 381,398,014
8,540,641
8,854,450
$ 360,753,054
277,968,806
266,693,133
246,257,376
21,079,649
21,367,647
21,129,354
5,168,507
6,087,745
6,412,299
5,105,310
4,526,517
4,295,281
2,310,078
1,660,211
1,680,405
1,882,295
4,176,222
$ 395,096,644
2,105,755
3,603,411
$ 381,398,014
1,711,437
2,221,143
$ 360,753,054
- 69 -
Because the counterparties are with good credit rating, certain financial
assets held by the consolidated company, such as cash and cash equivalents, due
from the Central Bank and other banks, financial assets measured at fair value
through profit or loss, bonds and securities sold under repurchase agreements,
refundable deposits, operating bond, and settlement and clearing funds, are
deemed by the consolidated company to have low credit risks profiles, based on
the evaluation of the consolidated company. In addition to the above, the credit
quality analysis of financial assets is as follows:
- 70 -
(1)
Credit quality analysis on discounts and loans and receivables
Position amount that is neither overdue nor impaired
June 30, 2014
Items on the statement
Receivable
Credit card
Others
Discounts and loans
Level 1
$ 104,495
81,612,016
171,459,553
Level 3
Level 2
$
96,699
290,059
119,678,804
$
90,316
84,389
48,862,712
Level 4
Subtotal (A)
211,274
5,140,964
20,743,375
$ 502,784
87,127,428
360,744,444
$
Overdue
unimpaired
position
amount (B)
Impaired
position
amount (C)
$
$
39,897
130,351
8,038,043
23,473
357,515
9,839,253
Total
(A)+(B)+(C)
$ 566,154
87,615,294
378,621,740
December 31, 2013
Receivable
Credit card
Others
Discounts and loans
Level 1
$
79,312
81,234,558
160,120,873
Level 3
Level 2
$
95,178
392,430
118,399,909
$
86,693
110,073
50,451,283
Level 4
Subtotal (A)
215,559
4,516,794
23,602,102
$ 476,742
86,253,855
352,574,167
$
Overdue
unimpaired
position
amount (B)
Impaired
position
amount (C)
$
$
29,631
89,406
6,317,429
19,829
310,781
8,392,554
Total
(A)+(B)+(C)
$ 526,202
86,654,042
367,284,150
June 30, 2013
Receivable
Credit card
Others
Discounts and loans
Level 1
$
78,205
72,101,675
141,009,664
Level 3
Level 2
$
90,439
264,120
108,130,421
$
78,169
72,794
46,257,771
Level 4
Subtotal (A)
195,725
3,106,471
24,002,343
$ 442,538
75,545,060
319,400,199
$
- 71 -
Overdue
unimpaired
position
amount (B)
Impaired
position
amount (C)
$
$
35,754
77,607
23,059,289
31,650
327,075
6,914,578
Total
(A)+(B)+(C)
$ 509,942
75,949,742
349,374,066
Appropriated loss amount (D)
Without
With specific
specific
objective
objective
evidence of
evidence of
impairment
impairment
$
3,140
66,735
1,998,124
$ 549,634
87,407,674
374,519,139
Without
With specific
specific
objective
objective
evidence of
evidence of
impairment
impairment
Net
(A)+(B)+(C)(D)
$
13,380
140,885
2,104,477
3,371
42,193
1,496,927
$ 511,585
86,515,526
363,891,633
Without
With specific
specific
objective
objective
evidence of
evidence of
impairment
impairment
Net
(A)+(B)+(C)(D)
$
11,246
96,323
1,895,590
$
Net
(A)+(B)+(C)(D)
20,566
96,765
1,870,403
$
$
3,184
33,794
1,480,783
$ 486,192
75,819,183
346,022,880
(2)
The credit quality analysis on the consolidated company’s discounts and loans that are neither overdue nor impaired, depending on the credit
quality of customers.
June 30, 2014
Consumer banking
Residential mortgage loans
Cash card
Small credit loans
Others (secured)
Others (non-secured)
Corporate Finance
Secured
Non-secured
Total
December 31, 2013
Consumer banking
Cash card
Small credit loans
Others (secured)
Corporate Finance
Secured
Non-secured
Total
Level 1
Level 2
Level 3
Level 4
Total
$ 15,118,640
54,072
59,959,762
2,952,574
78,085,048
$ 19,265,494
127,605
31,498,306
1,133,398
52,024,803
$ 13,234,238
35
146,580
12,467,103
512,606
26,360,562
$
5,793,352
605
134,632
3,657,791
247,639
9,834,019
$ 53,411,724
640
462,889
107,582,962
4,846,217
166,304,432
55,910,975
37,463,530
93,374,505
$ 171,459,553
45,992,222
21,661,779
67,654,001
$ 119,678,804
15,535,976
6,966,174
22,502,150
$ 48,862,712
3,305,713
7,603,643
10,909,356
$ 20,743,375
120,744,886
73,695,126
194,440,012
$ 360,744,444
Level 1
Level 2
Level 3
Level 4
Total
$ 14,534,146
48,538
56,510,074
2,797,970
73,890,728
$ 19,604,715
4
109,349
30,836,200
1,083,311
51,633,579
$ 13,573,832
40
143,631
12,446,035
680,744
26,844,282
$
6,085,364
1,092
158,908
4,428,347
267,290
10,941,001
$ 53,798,057
1,136
460,426
104,220,656
4,829,315
163,309,590
52,144,495
34,085,650
86,230,145
$ 160,120,873
44,491,426
22,274,904
66,766,330
$ 118,399,909
17,787,587
5,819,414
23,607,001
$ 50,451,283
3,944,207
8,716,894
12,661,101
$ 23,602,102
118,367,715
70,896,862
189,264,577
$ 352,574,167
- 72 -
Corporate Finance
Secured
Non-secured
Total
(3)
Level 2
Level 3
Level 4
Level 1
June 30, 2013
Consumer banking
Cash card
Small credit loans
Others (secured)
Total
$ 12,183,432
46,684
48,716,019
2,667,339
63,613,474
$ 17,392,439
11
96,968
27,260,858
1,104,833
45,855,109
$ 11,702,520
51
123,527
11,600,996
714,214
24,141,308
$
5,817,246
1,435
174,318
4,010,733
257,840
10,261,572
$ 47,095,637
1,497
441,497
91,588,606
4,744,226
143,871,463
45,454,869
31,941,321
77,396,190
$ 141,009,664
38,813,753
23,461,559
62,275,312
$ 108,130,421
16,954,934
5,161,529
22,116,463
$ 46,257,771
4,382,338
9,358,433
13,740,771
$ 24,002,343
105,605,894
69,922,842
175,528,736
$ 319,400,199
Credit quality analysis on marketable securities investment
June 30, 2014
Assets
Bond investment
Equity investment
Others
Bond investment
Equity investment
Others
Level 1
Level 2
$19,763,147
181,571
-
$
Level 3
348,271
-
$
Subtotal (A)
-
$20,111,418
181,571
-
Overdue
unimpaired
position
amount (B)
$
-
Impaired
position
amount
(C)
$
Total
(A)+(B)+(C)
63,150
14,463
$20,174,568
181,571
14,463
Recognized
loss amount
(D)
$
Net
(A)+(B)+(C)(D)
63,150
14,463
$20,111,418
181,571
-
900,916
4,779
-
905,695
-
473,093
1,378,788
473,093
905,695
-
-
142,684
-
142,684
-
-
1,989,709
142,684
1,989,709
1,203,240
142,684
786,469
- 73 -
December 31, 2013
Assets
Bond investment
Equity investment
Others
Bond investment
Equity investment
Others
Level 1
Level 2
$18,764,109
80,853
-
$
Level 3
352,196
-
$
Subtotal (A)
-
$19,116,305
80,853
-
Assets
Bond investment
Equity investment
Others
Bond investment
Equity investment
Others
$
-
Impaired
position
amount
(C)
$
Total
(A)+(B)+(C)
63,009
14,431
$19,179,314
80,853
14,431
Recognized
loss amount
(D)
$
Net
(A)+(B)+(C)(D)
63,009
14,431
$19,116,305
80,853
-
1,324,351
-
-
1,324,351
-
3,042,200
4,366,551
1,025,967
3,340,584
-
-
143,484
-
143,484
-
-
2,036,144
143,484
2,036,144
1,200,540
143,484
835,604
Total
(A)+(B)+(C)
Recognized
loss amount
(D)
June 30, 2013
Overdue
unimpaired
position
amount (B)
Level 1
Level 2
$18,939,624
62,814
-
$
Level 3
355,862
-
$
Subtotal (A)
-
$19,295,486
62,814
-
Overdue
unimpaired
position
amount (B)
$
-
Impaired
position
amount
(C)
$
63,432
14,527
$19,358,918
62,814
14,527
$
Net
(A)+(B)+(C)(D)
63,432
14,527
$19,295,486
62,814
-
1,864,733
-
-
1,864,733
-
2,929,000
4,793,733
1,105,276
3,688,457
-
-
143,484
-
143,484
-
-
1,990,711
143,484
1,990,711
1,185,388
143,484
805,323
- 74 -
(4)
Aging analysis on assets that are overdue but not yet impaired
The borrower’s processing delays and other administrative reasons may
cause financial assets to become overdue but not impaired. According to the
consolidated company’s internal risk management rules, financial assets that
are overdue for less than 90 days are usually not considered impaired, unless
evidence suggests otherwise.
An aging analysis on assets that are overdue but not yet impaired is as
follows:
June 30, 2014
Item
Receivable
Credit card
Others
Discounts and loans
Consumer banking
Residential
mortgage loans
Cash card
Small credit
loans
Others (secured)
Others
(non-secured)
Less than one month
overdue
$
1 to 3 months overdue
$
$
30,965
28,078
59,043
$
1,287,088
$
$
8,932
102,273
111,205
$
39,897
130,351
170,248
$
25,692
$
1,312,780
73
Corporate Finance
Secured
Non-secured
$
Total
-
73
12,929
28
12,957
2,050,520
177,677
2,228,197
131,347
1,445
132,792
3,481,957
204,842
3,686,799
3,197,960
1,043,000
4,240,960
7,722,917
103,204
7,080
110,284
315,126
3,301,164
1,050,080
4,351,244
8,038,043
$
$
December 31, 2013
Item
Receivable
Credit card
Others
Discounts and loans
Consumer banking
Residential
mortgage loans
Cash card
Small credit
loans
Others (secured)
Others
(non-secured)
Less than one month
overdue
$
$
$
21,804
31,035
52,839
$
914,908
Corporate Finance
Secured
Non-secured
$
Total
$
$
7,827
58,371
66,198
$
29,631
89,406
119,037
$
32,191
$
947,099
30
13
43
9,587
969
10,556
2,295,783
6,984
2,302,767
148,806
869
149,675
3,369,114
41,026
3,410,140
2,282,223
621,389
2,903,612
6,272,726
2,866
811
3,677
44,703
2,285,089
622,200
2,907,289
6,317,429
- 75 -
$
$
June 30, 2013
Item
Receivable
Credit card
Others
Less than one month
overdue
$
28,891
61,657
90,548
$
3,135,981
168
$
$
Discounts and loans
Consumer banking
Residential
mortgage loans
Cash card
Small credit
loans
Others (secured)
Others
(non-secured)
$
Corporate Finance
Secured
Non-secured
$
3.
$
Total
6,863
15,950
22,813
$
48,081
136
$
$
35,754
77,607
113,361
3,184,062
304
26,505
7,247,788
1,595
118,486
28,100
7,366,274
253,351
10,663,793
15,349
183,647
268,700
10,847,440
9,371,664
2,832,685
12,204,349
22,868,142
6,468
1,032
7,500
191,147
9,378,132
2,833,717
12,211,849
23,059,289
$
$
Liquidity risk
Taichung Bank’s Liquidity Reserve Ratios on June 30, 2014, December 31,
2013, and June 30, 2013 were all 21%. Taichung Bank’s capital and operation
funds are sufficient for fulfilling all contractual obligations. Therefore, there is no
liquidity risk arising from the failure to raise funds to fulfill contractual
obligations. It is very unlikely that the financial derivatives held by the Bank
could not be sold at a reasonable price on the market. Therefore, the liquidity risk
for realization is very low.
Taichung Bank’s basic management policy is to coordinate the maturity dates
and interest rates of assets and liabilities, and to control unmatched gaps. Due to
the uncertainty of trade conditions and the different types of transactions, the
maturity dates and interest rates of assets and liabilities usually cannot be
perfectly matched. Such gaps may cause a potential gains or losses.
A maturity analysis on non-derivative financial liabilities
The following table is a cash outflow analysis on the non-derivative
liabilities of the consolidated company, based on the remaining duration from the
consolidated balance sheet date to the contract maturity date. The amounts
disclosed in the table are compiled based on contractual cash flows. Therefore, the
amounts of some items disclosed do not agree with the corresponding items on the
consolidated balance sheet.
- 76 -
June 30, 2014
Funds borrowed from Central Bank
and other banks
Payables
Current Tax Liability
Other capital outflow items that are
due
0 to 30 days
$ 7,692,765
31 to 90 days
$ 2,421,468
91 to 180 days
$ 1,127,425
181 days to 1 year
$
366,251
More than 1 year
$
-
829,600
1,069,962
779,962
430,155
616,894
Total
$ 11,607,909
3,726,573
8,109
5,258
9,910
14,920
3,423
41,620
257,723
3,208,089
41,362,996
-
340,909
62,346,629
-
437,645
74,717,115
-
605,816
251,127
106,171,174
-
180,928
152,223,566
14,400,000
257,723
4,773,387
251,127
436,821,480
14,400,000
54,211
88,652
100,577
209
278,856
522,505
December 31, 2013
and other banks
Payables
due
0 to 30 days
$ 5,196,447
31 to 90 days
$ 1,510,657
91 to 180 days
$
167,380
1,263,340
2,227,816
252,917
515,833
708,333
4,968,239
39,879
12,779
9,204
12,938
-
74,800
100,029
3,363,395
41,432,648
-
259,000
278,326
56,819,905
-
365,670
292,018
68,142,773
1,654,700
195,921
115,820,316
-
217,029
147,488,827
14,400,000
359,029
4,420,341
292,018
429,704,469
16,054,700
10,957
19,998
105,617
16,520
211,955
365,047
June 30, 2013
and other banks
Payables
due
0 to 30 days
$ 6,776,568
31 to 90 days
$ 1,791,248
91 to 180 days
$
828,755
1,781,267
837,405
392,500
22,500
232,500
3,266,172
25,126
9,717
8,548
3,840
60
47,291
263,034
7,885,871
36,675,728
-
232,515
142,536
46,428,445
-
425,958
70,044,360
-
509,912
69,548
112,501,514
2,135,800
194,516
142,574,371
11,400,000
263,034
9,248,772
212,084
408,224,418
13,535,800
16,756
6,300
33,090
32,940
112,370
201,456
181 days to 1 year
$ 1,467,024
More than 1 year
$
-
181 days to 1 year
$
504,412
Total
8,341,508
$
More than 1 year
$
-
Total
9,900,983
$
Maturity analysis of derivative financial liabilities
(1)
Derivative instruments cleared and settled at net value
Derivative instruments cleared and settled at net value held by the
consolidated company include:
Foreign exchange derivatives: Exchange rate options.
Based on the company’s assessment, the contractual maturity date is
the most fundamental element for understanding all derivative financial
instruments listed on the consolidated balance sheet. The amounts in the
table are compiled based on contractual cash flows. Therefore, the amounts
of some items disclosed do not agree with the corresponding items on the
consolidated balance sheet. A maturity analysis on financial liabilities
cleared and settled at net amount is as follows:
June 30, 2014
measured at fair value
through income
statement
Foreign exchange
derivatives
Total
December 31, 2013
through income
statement
Foreign exchange
derivatives
Total
0 to 30 days
31 to 90 days
91 to 180 days
181 days to 1 year More than 1 year
Total
$
4,546
$
13,715
$
18,514
$
16,193
$
2,953
$
55,921
$
4,546
$
13,715
$
18,514
$
16,193
$
2,953
$
55,921
0 to 30 days
31 to 90 days
91 to 180 days
Total
$
2,163
$
3,183
$
6,704
$
23,965
$
-
$
36,015
$
2,163
$
3,183
$
6,704
$
23,965
$
-
$
36,015
- 77 -
June 30, 2013
through income
statement
Foreign exchange
derivatives
Total
(2)
0 to 30 days
$
$
7,671
7,671
31 to 90 days
91 to 180 days
$
$
$
$
6,979
6,979
5,397
5,397
$
$
6,648
6,648
$
$
-
Total
$
$
26,695
26,695
Derivatives cleared and settled at gross value
Derivatives cleared and settled at gross value of the consolidated
company include:
Foreign exchange derivatives: Foreign exchange forward contracts and
foreign exchange swaps.
The following table lists the consolidated company’s derivatives that
are settled at total value, in the order of the remaining duration from the
consolidated balance sheet date to the contract maturity date. Based on the
company’s assessment, the contractual maturity date is the most
fundamental element for understanding all derivative financial instruments
listed on the consolidated balance sheet. The amounts in the table are
compiled based on contractual cash flows. Therefore, the amounts of some
items disclosed do not agree with the corresponding items on the
consolidated balance sheet. A maturity analysis on financial liabilities
cleared and settled at gross amount is as follows:
June 30, 2014
through income
statement
Foreign exchange
derivatives
- Cash outflow
- Cash inflow
Subtotal of cash outflow
Subtotal of cash inflow
Net cash flow
December 31, 2013
through income
statement
Foreign exchange
derivatives
- Cash outflow
- Cash inflow
Net cash flow
June 30, 2013
through income
statement
Foreign exchange
derivatives
- Cash outflow
- Cash inflow
Net cash flow
4.
0 to 30 days
$
($
1,524,243
$
1,519,588
1,524,243
1,519,588
4,655 ) ( $
0 to 30 days
$
($
($
610,785
606,346
610,785
606,346
4,439 )
11,947
11,921
11,947
11,921
26 )
$
$
-
Total
$
($
544,457
$
537,695
544,457
537,695
6,762 ) ( $
91 to 180 days
888,514
$
881,707
888,514
881,707
6,807 ) ( $
338,276
$
336,538
338,276
336,538
1,738 ) ( $
91 to 180 days
1,237,228
$
1,169,400
1,237,228
1,169,400
67,828 ) ( $
31 to 90 days
2,348,468
$
2,326,898
2,348,468
2,326,898
21,570 ) ( $
91 to 180 days
202,393
$
200,834
202,393
200,834
1,559 ) ( $
31 to 90 days
3,730,096
$
3,690,765
3,730,096
3,690,765
39,331 ) ( $
0 to 30 days
$
31 to 90 days
11,911
11,730
11,911
11,730
181 )
$
$
-
Total
$
($
$
$
-
$
$
-
2,076,859
2,068,881
2,076,859
2,068,881
7,978 )
5,523,692
5,409,590
5,523,692
5,409,590
114,102 )
Total
$
($
3,847,767
3,814,951
3,847,767
3,814,951
32,816 )
A maturity analysis of off balance sheet items
The following table offers a maturity analysis of off balance sheet items, in
the order of the remaining duration from the consolidated balance sheet date to the
contract maturity date. The company takes the earliest date when the guarantee
may be required to be performed on the maximum amount of outstanding
financial guarantee contracts into consideration. The amounts in the table are
compiled based on contractual cash flows. Therefore, the amounts of some items
disclosed do not agree with the corresponding items on the consolidated balance
sheet.
- 78 -
June 30, 2014
Customer’s outstanding
and irrevocable loan
commitments
Customer’s irrevocable
credit card credit
commitments
letters of credit amount
Guarantee payments
Lease contract
commitments
Total
December 31, 2013
commitments
credit card credit
commitments
Guarantee payments
Lease contract
commitments
Total
June 30, 2013
commitments
credit card credit
commitments
Guarantee payments
Lease contract
commitments
Total
5.
0 to 30 days
31 to 90 days
91 to 180 days
181 days to 1
year
More than 1 year
Total
$ 8,032,678
$ 15,109,351
$ 24,497,997
$ 51,150,864
$ 20,392,670
$119,183,560
7,635
63,252
201,447
762,001
11,237,409
12,271,744
1,006,951
2,264,735
2,176,415
2,626,131
217,176
444,415
57,499
1,787,552
3,407,448
3,458,041
10,530,281
970,734
$ 12,282,733
$ 19,975,149
$ 25,361,035
$ 53,757,916
$ 35,037,527
970,734
$146,414,360
0 to 30 days
31 to 90 days
91 to 180 days
181 days to 1
year
More than 1 year
Total
$ 4,036,857
$ 11,185,706
$ 27,433,921
$ 47,514,103
$ 24,225,107
$114,395,694
2,630
650
11,250
422,345
11,171,673
11,608,548
1,040,435
1,880,427
2,722,631
1,128,051
65,688
831,924
66,006
2,447,813
2,853,776
3,894,760
9,141,991
739,615
$ 7,699,964
$ 15,037,038
$ 28,342,783
$ 50,450,267
$ 38,250,556
739,615
$139,780,608
0 to 30 days
31 to 90 days
91 to 180 days
181 days to 1
year
More than 1 year
Total
$ 8,370,602
$ 13,117,802
$ 24,915,567
$ 46,330,294
$ 25,969,155
$118,703,420
2,790
83,321
284,471
641,825
9,891,400
10,903,807
1,218,659
1,488,628
2,813,775
1,032,768
190,737
840,224
52,333
1,765,307
2,550,986
4,275,504
7,677,913
117,024
$ 11,197,703
230,500
$ 17,278,166
$ 26,230,999
$ 48,789,759
50,000
$ 38,461,541
397,524
$141,958,168
Cash flow risk under interest rate fluctuations
The floating interest rate assets held by and floating interest rate liabilities
assumed by Taichung Bank may cause fluctuation in the future cash flow of such
assets and liabilities, and even generate risks, due to changes in interest rates.
Upon evaluation, however, Taichung Bank controls the net liquidity gap in its
operations to reduce cash flow risks resulting from interest rate changes.
- 79 -
40.
Information to be disclosed pursuant to Article 16 of the “Rules Governing the Preparation of Financial Statements of Public Issued Banks”
(1)
Asset quality
June 30, 2014
Item
836,273
418,475
129,185,759
76,412,764
0.65%
0.55%
1,212,866
2,787,119
128,422
55,908,623
0.23%
209,142
67
12,373
0.54%
5,802
523,945
118,317
110,148,363
5,836,979
378,028,806
NPL amount
(Note 1)
Line of business
Secured
Non-secured
Residential
mortgage loans
(Note 4)
Cash card
Personal
banking Small credit loans
(Note 5)
Secured
Others
Non(Note 6)
secured
Total loan amount
Corporate
banking
Total loan
amount
8,923
1,516,279
Credit card
Factoring without recourse
(Note 7)
801,032
531,769
118,059,891
74,572,577
0.68%
0.71%
1,138,501
2,106,102
Allowance for
bad debt
coverage rate
(Note 3)
142.13%
396.06%
162.86%
61,577
51,168,158
0.12%
153,253
248.88%
8,043
12,004.48%
175
18,182
0.96%
11,777
6,729.71%
1.11%
50,951
878.16%
7,491
530,620
1.41%
54,083
721.97%
0.11%
395,047
333.89%
214,191
99,509,464
0.22%
262,902
122.74%
0.15%
130,691
1,464.65%
17,110
5,151,562
0.33%
93,945
549.06%
0.40%
4,793,859
316.16%
1,633,345
349,010,454
0.47%
3,820,563
233.91%
NPL rate
(Note 2)
Allowance for
bad debt
NPL amount
(Note 1)
Total loan
amount
NPL rate
(Note 2)
June 30, 2014
Item
Line of business
June 30, 2013
Allowance for
bad debt
coverage rate
(Note 3)
145.03%
666.02%
7,603
Balance of
receivable
accounts
564,982
-
-
NPL amount
Allowance for
bad debt
June 30, 2013
Allowance for
Allowance for
NPL rate
bad debt
bad debt
coverage rate
1.35%
31,040
408.26
-
-
6,673
Balance of
receivable
accounts
509,066
-
-
NPL amount
-
Allowance for
bad debt
coverage rate
29,169
437.12%
Allowance for
bad debt
NPL rate
1.31%
-
-
-
NPL or overdue receivable accounts exempted from reporting
June 30, 2014
Total NPL exempted from
Total non-performing receivable
reporting
accounts exempted from reporting
Amount exempted from reporting upon debt negotiation and
performance (Note 8)
Performance of debt clearance program and rehabilitation program
(Note 9)
Total
June 30, 2013
Total NPL exempted from
Total non-performing receivable
reporting
accounts exempted from reporting
33,808
4,558
49,351
6,167
19,553
11,702
24,490
11,906
53,361
16,260
73,841
18,073
- 80 -
Note 1: The NPL amount is recognized according to "Regulations Governing the Procedures for
Banking Institutions to Evaluate Assets and Deal with Non-performing/Non-accrual Loans."
The past-due credit card receivables is recognized with the regulations provided under the
Letter Financial Supervisory Banking Category (4) No. 0944000378 dated July 6, 2005.
Note 2: NPL ratio = NPL/Total loan balance; Credit card NPL rate=NPL/balance of receivable
accounts.
Note 3: Allowance for bad debt coverage ratio = Allowance for bad debt provided for loans/NPL
amount; allowance for bad debt coverage ratio for receivable accounts of credit cards =
Allowance for bad debt provided for receivable accounts of credit cards/NPL amount.
Note 4: Borrowers apply for residential mortgage loans for the purpose of purchasing or building
residences or remodeling houses. The loans shall be secured by the residence purchased
(owned) by the borrower himself/herself, or his/her spouse or minor children in full, and the
mortgage shall be pledged to the financial institution.
Note 5: Small credit loans mean those provided in the Letter under Financial Supervisory Banking
Category (4) No. 09440010950 dated December 19, 2005 and those other than small loans
by credit cards/cash cards.
Note 6: “Others” for personal banking refers to the secured or non-secured consumer loans other
than “residential mortgages,” “cash card loans,” and “small credit loans,” and it excludes
credit cards loans.
Note 7: According to the Letter under Financial Supervisory Banking Category (5) No. 094000494
dated July 19, 2005, factoring without recourse shall be recognized as NPL within three
months from the day when the factor or the insurance company confirms that no
compensation could be granted.
Note 8: Total NPL exempted from reporting after debt negotiation and successful performance of
contractual obligations, and the balance of total non-performing receivable accounts
exempted from reporting after debt negotiation and successful performance of contractual
obligations, were disclosed pursuant to the Letter under Financial Supervisory Banking
Category (1) No. 09510001270 dated April 25, 2006.
Note 9: The balance of total NPL exempted from report upon performance of debt clearance program
and rehabilitation program, and balance of total non-performing receivable accounts
exempted from reporting after the execution of debt clearance program and rehabilitation
program, were disclosed pursuant to the Letter under Financial Supervisory Banking
Category (1) No. 09700318940 dated September 15, 2008.
- 81 -
(2)
Condition of credit risk concentration
June 30, 2014
Unit: NTD thousand
Ranking
(Note 1)
1
2
3
4
5
6
7
8
9
10
Business type of company or group
(Note 2)
A Group
016700 Real estate development
B Group
015510 Short-term lodging service
C Group
012411 Iron and steel Manufacturing
D Group
011810 Chemical material
manufacturing
E Group
015590 Other lodging service
F Group
015101Civil aviation
G Group
010892Noodle products food
manufacturing
H Group
016811Real estate lease
I Group
015101 Civil aviation
J Group
016700 Real estate development
- 82 -
Total balance of Percentage of net
loan
assets as of June 30,
(Note 3)
2014
3,323,495
9.70%
3,280,597
9.58%
2,921,767
8.53%
2,754,120
8.04%
2,541,575
7.42%
1,940,103
5.66%
1,766,709
5.16%
1,680,027
4.91%
1,335,364
3.90%
1,324,373
3.87%
June 30, 2013
Unit: NTD thousand
Ranking
(Note 1)
1
2
3
4
5
6
7
8
9
10
Business type of company or group
(Note 2)
K Group
010320 Electronics component
manufacturing
B Group
015510 Short-term lodging service
E Group
015590 Other lodging service
C Group
012411 Steel manufacturing
G Group
010892Noodle products food
manufacturing
F Group
015101 Civil aviation
L Group
012641Manufacturing of LCD panels
and their components
H Group
016811 Real estate leasing
M Group
015610 Restaurants
N Group
014100 Construction
Total balance of Percentage of net
loan
assets as of June 30,
(Note 3)
2013
4,832,360
16.43%
3,485,892
11.85%
2,704,273
9.20%
2,426,742
8.25%
2,324,346
7.90%
2,029,429
6.90%
1,818,494
6.18%
1,663,154
5.66%
1,533,828
5.22%
1,403,767
4.77%
Note 1: The top ten enterprises other than public or state enterprises were identified
according to rank of the total balance of loans to these enterprises. If the
account refers to a group, the loan to the group should be identified and
summed up, and disclosed in the form of “code” and “industry.” In the case of
group, the industry of the group with the highest exposure should be disclosed.
The industry shall be specified in “detailed item” according to the business
classification defined by Directorate General of Budget, Accounting and
Statistics (e.g. Company (Group) A, electronic components’ manufacturing).
Note 2: The group enterprises refer to those defined in Article 6 of “Supplementary
Rules of Taiwan Stock Exchange Corporation’s Criteria for Reviewing Listing
of Marketable Securities.”
Note 3: The balance of total credit extension refers to the total balance of various types
of loans (including import negotiation, export negotiation, discount, overdraft,
short-term loans, short-term secured loans, receivable securities financing,
mid-term loans, mid-term secured loans, long-term loans, long-term secured
loans, and delinquent loans), inward remittances, factoring without recourse,
acceptances receivable, and guarantee payments.
- 83 -
(3)
Interest rate sensitivity
Analysis table for interest rate sensitive assets and liabilities (NTD)
June 30, 2014
Unit: NTD thousand, %
Item
1 to 90 days
(inclusive)
91 to 180 days
(inclusive)
181 days to 1
year
(inclusive)
Interest rate
357,866,334
12,316,902
16,513,042
sensitive assets
Interest rate
127,031,161
239,291,129
47,991,520
sensitive liabilities
Interest rate
230,835,173 ( 226,974,227 ) ( 31,478,478 )
sensitive gap
Equity
Ratio between interest rate sensitive assets and liabilities
Ratio between interest rate sensitivity gap and equity
Over 1 year
Total
61,410,147
448,106,425
11,957,179
426,270,989
49,452,968
21,835,436
34,247,383
105.12%
63.76%
June 30, 2013
Item
1 to 90 days
(inclusive)
91 to 180 days
(inclusive)
181 days to 1
year
(inclusive)
Interest rate
328,403,982
15,023,673
14,568,472
sensitive assets
Interest rate
113,952,864
212,490,222
64,239,043
Interest rate
214,451,118 ( 197,466,549 ) ( 49,670,571 )
sensitive gap
Equity
Over 1 year
Total
61,600,633
419,596,760
9,331,662
400,013,791
52,268,971
19,582,969
29,404,487
104.90%
66.60%
Note : 1.
The table discloses the amount in NTD (exclusive of foreign currencies) of
Taichung Bank Head Office and all branches.
2.
Interest rate sensitive assets and liabilities refer to the interest bearing assets
and interest accruing liabilities whose income or cost varies with the interest
rate.
3.
Interest rate sensitivity gap = Interest rate sensitive assets - Interest rate
sensitive liabilities.
4.
Interest rate sensitive assets and liabilities ratio = Interest rate sensitive
assets ÷ interest rate sensitive liabilities (This ratio refers to interest rate
sensitive assets and interest rate sensitive liabilities in NTD)
- 84 -
Analysis table for interest rate sensitive assets and liabilities (USD)
June 30, 2014
Unit: USD thousand, %
Item
1 to 90 days
(inclusive)
91 to 180 days
(inclusive)
181 days to 1
year
(inclusive)
Interest rate
693,048
243,729
sensitive assets
Interest rate
318,994
427,075
Interest rate
374,054 ( 183,346 ) (
sensitive gap
Equity
Over 1 year
Total
-
32,268
969,045
75,336
-
821,405
32,268
147,640
75,336 )
1,146,663
117.97%
12.88%
June 30, 2013
Unit: USD thousand, %
Item
1 to 90 days
(inclusive)
91 to 180 days
(inclusive)
181 days to 1
year
(inclusive)
Interest rate
324,227
224,954
sensitive assets
Interest rate
301,329
378,748
Interest rate
22,898 ( 153,794 ) (
sensitive gap
Equity
Over 1 year
Total
16,858
272,761
838,800
66,316
-
746,393
272,761
92,407
49,458 )
980,150
112.38%
9.43%
Note : 1.
The table discloses the amount in USD of Taichung Bank Head Office and
all branches, OBU, and overseas branches, not including contingent assets
or contingent liabiliites.
2.
Interest rate sensitive assets and liabilities refer to the interest bearing assets
and interest accruing liabilities whose income or cost varies with the interest
rate.
3.
Interest rate sensitivity gap = Interest rate sensitive assets - Interest rate
sensitive liabilities.
4.
Interest rate sensitive assets and liabilities ratio = Interest rate sensitive
assets ÷ interest rate sensitive liabilities (This ratio refers to interest rate
sensitive assets and interest rate sensitive liabilities in USD)
- 85 -
(4)
Profitability
Unit: %
Item
Before taxation
ROA
After taxation
Before taxation
ROE
After taxation
Net profit rate
Note : 1.
(5)
June 30, 2014
0.46
0.41
7.05
6.27
42.67
June 30, 2013
0.41
0.37
6.60
5.97
38.12
Return on assets = Pre-tax (after tax) income / average assets
2.
Return on net assets = Pre-tax (after tax) income / average net assets
3.
Net profit (loss) rate = After-tax income or loss / net income
4.
Pre-tax (after-tax) income refers to the cumulative income from January of
that year to that quarter.
Analysis on maturity of assets and liabilities
Table of analysis of New Taiwan Dollar maturity structure
June 30, 2014
Unit: NTD thousand
Remaining balance to maturity
Total
Main capital inflow
472,754,057
upon maturity
Main capital
outflow upon
563,841,892
maturity
( 91,087,835 )
Gap
0 to 10 days
11 to 30 days
31 to 90 days
41,385,076
51,239,400
27,865,897
24,142,082
34,363,025
79,214,620
17,242,994
16,876,375
(
181 days to 1
year
More than 1
year
38,165,499
67,419,593
246,678,592
107,600,932
120,427,636
198,093,597
91 to 180 days
51,348,723 ) (
69,435,433 ) (
53,008,043 )
48,584,995
June 30, 2013
Unit: NTD thousand
Total
Main capital inflow
446,711,953
upon maturity
Main capital
540,351,312
outflow upon
maturity
( 93,639,359 )
Gap
181 days to 1
year
More than 1
year
39,093,287
60,704,324
225,993,438
68,409,138
95,542,979
133,905,742
183,085,089
42,158,041 ) (
56,449,692 ) (
0 to 10 days
11 to 30 days
31 to 90 days
42,511,363
52,158,444
26,251,097
28,205,657
31,202,707
14,305,706
20,955,737
(
91 to 180 days
73,201,418 )
42,908,349
Note: The table only discloses the amount in NTD (exclusive of foreign currencies) of
Taichung Bank Head Office and local branches.
- 86 -
Table of analysis of USD maturity structure
June 30, 2014
Unit: Thousands of USD
Total
Main capital inflow upon
maturity
Main capital outflow upon
maturity
Gap
(
91 to 180
days
0 to 30 days 31 to 90 days
181 days to 1
year
More than 1 year
1,097,391
165,804
201,666
224,377
50,579
454,965
1,424,892
279,509
408,849
243,493
392,124
100,917
113,705 ) (
207,183 ) (
341,545 )
354,048
327,501 ) (
19,116 ) (
June 30, 2013
Unit: Thousands of USD
Total
Main capital inflow upon
maturity
Main capital outflow upon
maturity
Gap
41.
91 to 180
days
0 to 30 days 31 to 90 days
181 days to 1
year
More than 1 year
1,020,151
171,242
241,802
248,142
16,961
342,004
897,009
233,029
181,599
389,473
67,045
25,863
141,331 ) (
50,084 )
316,141
123,142
(
61,787 )
60,203
(
Note : 1.
The table discloses the total amount in USD of Taichung Bank Head Office,
domestic branches, and Overseas Banking Unit. Unless otherwise specified,
it shall be stated at the Book Value, and it is not necessary to include any
balances that are not yet booked (e.g. negotiable certificates of deposit,
bonds, or stocks scheduled to be issued).
2.
Where offshore assets account for more than 10% of the Bank’s total assets,
it is necessary to provide supplementary disclosure.
Capital Management
(1)
The consolidated company’s qualified regulatory capital should be sufficient to meet the
legal capital requirements and achieve the minimum statutory capital adequacy ratio.
This condition is the basic objective of the Company’s capital management. The
appropriation and calculation methods of the relevant qualified regulatory capital and
statutory capital shall be drafted in accordance with the requirements of regulators.
The consolidated company’s capital management structure is properly designed,
taking into consideration factors such as the capital market conditions, features of
capital instruments, capital utilization efficiency, and operating performance, in order to
keep the ratio of regulatory capital to risk assets above the target level.
- 87 -
(2)
The consolidated company discloses the information of capital adequacy periodically in
accordance with the relevant specifications of the regulators and the Company’s internal
operating procedures. The company also reports it to regulators each quarter.
Regulatory capital is classified as Tier I capital and Tier II capital, as defined in
“Regulations Governing Bank’s Capital Adequacy and Capital Classification.”
1.
2.
Tier I capital: It includes common stock equity and other Tier I capital that is not
common stock equity.
(1)
The common stock equity includes common stock and stock premium,
capital received in advance, additional paid-in capital, legal reserves, special
reserves, retained earnings or losses, non-controlling equity, and other
equity items.
(2)
Other Tier I capital other than common stock equity includes perpetual
non-cumulative preferred stock and its stock premium, non-cumulative
subordinated bonds without maturity dates, perpetual non-cumulative
preferred stocks issued by the Bank’s subsidiary that are not directly or
indirectly held by the Bank and their stock premium, and non-cumulative
subordinated bonds without maturity dates.
Tier II capital:
This category includes perpetual cumulative preferred shares and its stock
premium, cumulative subordinated bonds without maturity dates, convertible
subordinated bond, long-term subordinated bond, non-perpetual preferred stock
and its stock premium, the increase in retained earnings arising from the property
measured at fair value or reappraisal price as cost for the first-time adoption of the
IFRS, 45% of the available-for-sale financial assets unrealized gain, the operating
reserve and allowance for bad debts, as well as the perpetual cumulative preferred
stock issued by the Bank’s subsidiary that are not directly or indirectly held by the
Bank and its stock premium, cumulative subordinated debts without a maturity
date, convertible subordinated bonds, long-term subordinated bonds, and
non-perpetual preferred stocks and its stock premium.
- 88 -
(3)
Capital adequacy
Year
Analysis item
Common stock equity
Regulatory Other Tier I Capital
Capital Tier II Capital
Total Regulatory Capital
Standard method
Credit
Internal rating method
Risk
Asset securitization
Basic indicator approach
RiskStandard method/ selective
Operation
weighted
standard method
Risk
assets
Advanced measurement
approach
Market Standard approach
Risk Internal modeling approach
Total risk-weighted assets
Capital adequacy ratio
Ratio of common stock equity to risk assets
Ratio of Tier I capital to risk assets
Leverage ratio
June 30, 2014
June 30, 2013
33,637,956
10,531,108
44,169,064
351,486,623
13,340,988
28,797,817
8,285,588
37,083,405
319,754,353
11,659,675
-
-
-
-
3,636,963
368,464,574
11.99%
9.13%
9.13%
5.17%
4,033,763
335,447,791
11.05%
8.58%
8.58%
4.66%
Note 1: The regulatory capital and risk-weighted assets and total exposure should be
calculated pursuant to regulations in “Regulations Governing the Capital
Adequacy and Capital Category of Banks” and “Explanation and Forms for the
Calculation of Regulatory Capital and Risk Assets by Banks”.
Note 2: The annual financial statement should disclose the capital adequacy ratios for
the current period and the previous period. The semiannual financial statement
shall also disclose the capital adequacy ratio at the end of the previous year, in
addition to those for the current period and previous period.
Note 3: This table lists the following equations:
1.
Total regulatory capital = Common stock equity + other Tier I Capital +
Tier II Capital.
2.
Total amount of risk-weighed-assets = Credit risk-weighted assets +
Capital charge of (operational risk + market risk) x 12.5.
3.
Capital Adequacy ratio = Total regulatory capital / Total risk-weighted
assets.
4.
Ratio of common stock equity to risk assets = Common stock equity /
Total risk-weighted assets.
5.
Ratio of Tier I capital to risk assets = Common stock equity + other Tier I
Capital / Total risk-weighted asset
6.
Leverage ratio=Tier I Capital/ Total exposure
- 89 -
42.
Information on exchange rates for financial assets and liabilities denominated in foreign
currencies
The information on the consolidated company’s assets and liabilities that are
denominated in foreign currencies and have material effects are as follows:
June 30, 2014
Foreign currency
financial assets
Cash and cash
equivalents
Due from Central
Bank and other
banks
value through
income statement
Available-for-Sale
financial assets
Discounts and loans
Accounts receivable
Held-to-maturity
financial assets
Other assets
USD
$
Foreign currency
financial liabilities
Due to Central Bank
and other banks
Funds borrowed from
Central Bank and
other banks
Customer deposits and
remittances
fair value through
income statement
Payables
Bills and bonds sold
under repurchase
agreements
Liability reserve
Other liabilities
New Taiwan Dollar
exchange rates
December 31, 2013
Foreign currency
financial assets
Cash and cash
equivalents
Due from Central
Bank and other
banks
value through
income statement
Available-for-Sale
financial assets
Discounts and loans
Accounts receivable
Held-to-maturity
financial assets
Other assets
Foreign currency
Due to Central Bank
and other banks
Funds borrowed from
Central Bank and
other banks
remittances
fair value through
income statement
Payables
under repurchase
agreements
Liability reserve
Other liabilities
New Taiwan Dollar
exchange rates
816,849
AUD
$
33,995
$
EUR
109,164
$
Other foreign
currencies
RMB
32,951
$
369,753
$
118,806
29,867
61,798
-
-
3,830,352
84,997
Total
$
1,481,518
4,007,014
47,741
-
-
-
-
-
47,741
422,786
26,647,215
1,175,051
213,322
57,887
425,544
140,623
307,478
33,975
267,464
448,829
741,284
27,906
422,786
28,629,307
1,884,271
154,114
786,469
86,017
970,442
-
578,756
15,750
584,984
154,114
786,469
2,235,949
2,594,112
-
12,280
617,193
-
1,627
3,225,212
449,600
-
-
-
88,731
-
538,331
21,517,280
1,243,409
230,737
307,706
4,294,738
826,038
28,419,908
55,921
641,417
94,035
136,885
27,774
15,289
47,499
55,921
962,899
257,493
3,275
2,819,815
-
330,531
487
45,239
682,813
257,493
3,275
2,878,885
29.87
28.09
0.29
40.79
4.81
USD
$
JPY
654,895
AUD
$
JPY
14,360
$
EUR
134,141
$
Other foreign
currencies
RMB
25,920
$
294,588
$
125,118
Total
$
1,249,022
178,800
106,360
-
-
1,879,058
8,553
2,172,771
48,076
-
-
-
-
-
48,076
433,049
23,905,619
1,061,682
532,856
199,425
22,072
353,963
68,400
307,697
36,395
269,593
260,506
806,935
23,171
965,905
25,843,232
1,472,226
491,197
837,698
85,824
338,394
-
1,674,036
-
4,470
710,816
2,165,233
837,698
1,139,504
1,870,006
-
5,647
1,354
-
393
1,877,400
2,408,239
-
-
-
-
-
2,408,239
18,983,280
1,160,347
239,124
277,493
2,281,123
932,161
23,873,528
16,551
1,189,116
51,873
32,151
13,851
12,613
52,573
16,551
1,352,177
258,769
1,848
1,293,598
183
279,582
2,542,713
18,938
689,466
258,769
1,848
4,824,480
29.80
26.59
0.28
41.09
4.92
- 90 -
June 30, 2013
Foreign currency
financial assets
Cash and cash
equivalents
Due from Central
Bank and other
banks
value through
income statement
Available-for-Sale
financial assets
Discounts and loans
Accounts receivable
Held-to-maturity
financial assets
Other assets
Foreign currency
Due to Central Bank
and other banks
Funds borrowed from
Central Bank and
other banks
remittances
fair value through
income statement
Other financial
liabilities
Payables
under repurchase
agreements
Liability reserve
Other liabilities
New Taiwan Dollar
exchange rates
43.
USD
$
361,579
AUD
$
JPY
4,239
$
EUR
67,622
$
Other foreign
currencies
RMB
23,926
$
87,265
$
120,740
Total
$
665,371
24,600
55,540
-
-
640,459
13,559
734,158
14,859
-
-
-
-
-
14,859
418,676
23,605,074
1,147,478
560,732
208,978
83,180
575,429
40,225
281,119
106,282
6,617
79,715
608,915
7,712
979,408
25,286,132
1,464,592
483,780
805,323
86,400
70,765
-
1,489,944
-
232,212
712,358
1,973,724
805,323
1,101,735
2,264,065
1,856
10,286
557,363
-
2,681
2,836,251
1,500,000
-
-
-
-
-
1,500,000
18,797,773
893,497
176,046
303,752
959,869
924,170
22,055,107
14,475
-
-
-
-
-
14,475
942,553
262,811
79,153
-
35,937
-
35,357
-
12,407
-
52,020
-
1,157,427
262,811
840
1,164,698
3,576
461,006
1,863,854
1,655
-
484,414
1,655
840
3,977,548
30.00
27.77
0.30
39.15
4.89
Financial information for operating segments
Financial information for operating segments is provided for main decision makers for
the sake of allocating resources and evaluating the performance of each segment. Such
information focuses on each delivered or offered product or service. According to the
International Financial Reporting Standards No. 8, “Operating Segments,” the consolidated
company’s reportable segments are as follows:
First District in Taichung
Second District in Taichung
North District
Changhua Area
OBU
Head Office and others
- 91 -
(1)
Revenues and operating results of segments
Revenues and operating results of the consolidated company’s continuing units are
analyzed along the lines of segments to be reported. See below:
First District in Second District
Taichung
` in Taichung
2014
Interest revenue
Interest expenses
Net interest income
Net income (loss)
other than interest
income
Fee revenue -net
Net gain or loss
of financial
instruments
Other gains
(losses)
Bad debt expenses
Operating expenses
Income (loss) before
tax
2013
Interest revenue
Interest expenses
Net interest income
Net income (loss)
other than interest
income
Fee revenue -net
Net gain or loss
of financial
instruments
Other gains
(losses)
Bad debt expenses
Operating expenses
Income (loss) before
tax
$
(
942,571
357,714 )
584,857
(
$ 1,253,408
526,972 )
726,436
$
(
315,636
106,796 )
208,840
53,518
17,761
-
-
-
-
454,543
$
862,999
334,258 )
528,741
163,727
24,865
221,642 )
(
$
563,434
$
678,967
228,161 )
450,806
(
153,527
37,507 )
283,240 )
(
(
$
(
740,133
$ 1,247,808
466,933 )
780,875
497,320
3,933
392,763 )
(
$
(
888,444
$ 1,167,999
485,932 )
682,067
75,842
70,187 )
-
(
-
-
-
-
679,029
(
568,720
$
471,536
$
626,277
430,270
15,348 )
383,285 )
$
770,019
(
(
(
576,630 )
661,472 )
991,704 )
(
19,502
(
(
304,216 )
213,830
81,014 )
132,816
56,315
93,389
39,275 )
261,579 )
(
$
(
(
(
9,645 )
54,773 )
$
766,929
Total
(
815,993
( $ 1,214,184 )
52,867
(
(
731,241
227,396 )
503,845
686,799
31,864
182,837
22,719
216,690 )
$
(
$
35,368
266,173
26,766 )
234,796 )
$
$ 1,344,725
499,323 )
845,402
61,951
652,293
(
(
(
Head Office
and other
OBU
36,878
$
(
808,744
249,138 )
559,606
Changhua Area
35,173
301,235
23,784 )
245,188 )
(
(
$
(
North District
$
590,855
155,218 )
435,637
$ 5,396,325
1,967,339 )
3,428,986
1,021,274
150,327
(
(
615,021
764,152 )
2,134,537 )
$ 2,316,919
(
691,366
$ 4,762,458
1,751,516 )
3,010,942
887,282
(
693,368 )
(
14,339 )
(
(
(
164,742 )
673,761 )
889,095 )
(
(
798,282
787,204 )
1,985,445 )
( $ 1,293,963 )
$ 1,909,518
Revenues reported above are generated from transactions with external customers.
There were no interdepartmental sales from January 1 to June 30, 2014 and 2013.
These figures are provided for major decision makers so that they can allocate
resources to segments and evaluate their performance.
(2)
Segmental assets
Segmental assets
First District in Taichung
Second District in
Taichung
North District
Changhua Area
OBU
Head Office and other
Total segmental assets
June 30, 2014
$ 75,375,269
68,130,947
127,185,018
102,895,008
19,290,977
114,453,053
$ 507,330,272
- 92 -
December 31, 2013
$ 75,727,603
66,618,270
120,869,265
99,432,503
20,994,300
112,570,794
$ 496,212,735
June 30, 2013
$ 70,621,094
62,751,898
122,741,209
94,770,175
17,162,646
106,756,337
$ 474,803,359
(3)
Revenue from major products and services
The consolidated company’s main service is interest revenue. There is no
information on product and service types.
(4)
Regional information
Details of the consolidated company’s net income are as follows:
January 1 to June
30, 2014
$ 5,181,783
26,511
7,314
$ 5,215,608
Regions
Taiwan
Asia
Americas
(5)
January 1 to June
30, 2013
$ 4,676,076
(
2,169 )
8,257
$ 4,682,167
Information on key customers
No one customer accounts for more than 10% of the interest revenue of the
consolidated company. Therefore, there is no information on key customers.
44.
Notes of disclosure
(1)
Information on significant transactions:
Information to be disclosed pursuant to Article 18 of the “Rules Governing the
Preparation of Financial Statements of Public Issued Banks” is as follows:
No.
1
2
3
4
5
6
7
8
Item
Cumulative amount of the stock of the same investee purchased
or sold for more than NTD 300 million or more than 10% of the
paid-in capital.
Acquisition amount of real estate for more than NTD300
million or more than 10% of the paid-in capital.
Amount on disposal of real estate reaching NTD300 million or
more than 10% of the paid-in capital.
Discount of service charges in transaction with related party
reaching more than NTD5 million.
Accounts receivable-related party reaching NTD300 million or
Information in the sale of NPL.
Securitization of financial assets or real estate.
Other important transactions that are sufficient to affect
decision-making with the use of financial statements.
- 93 -
Remark
Table 1
None
None
None
None
Table 2
None
None
(2)
Information on investees:
No.
1
2
3
4
5
6
7
8
9
10
11
12
13
Item
Information regarding investees and total share ownership.
Loans to others.
Endorsements/guarantees to others.
Marketable securities – end of period.
Cumulative amount of the same marketable securities
purchased or sold for NTD300 million or more than 10% of the
paid-in capital.
Acquisition amount of real estate reaching NTD300 million or
Amount on disposal of real estate reaching NTD300 million or
Discount of service charges in transactions with related parties
for more than NTD5 million.
Accounts receivable-related party reaching NTD300 million or
Disposal of non-performing loans amounting to NTD5 billion
or more.
Securitization of financial assets or real estate.
Derivative transactions
Other material transactions sufficient to affect decision-making
with the use of financial statements.
Remark
Table 3
Table 4
Table 5
Table 6
None
None
None
None
None
None
None
None
None
Note: If the investee is in the financial, insurance, or securities industries, no disclosure
is necessary.
(3)
Information on investments in China: Table 7.
(4)
Relationships and significant intercompany transactions between the parent company
and subsidiaries: Table 8.
- 94 -
Table 1: Cumulative buying or selling the stocks of the same investee for over NTD 300 million or more than 10% of paid-in capital:
Unit: NTD thousand / 1000 units
The company
making the
transactions
Taichung
Commercial
Bank Co.,
Ltd.
Types and names of
securities
Taichung Commercial
Bank Securities Co.,
Ltd.
Accounting titles in
the book
Investment under
the equity
method
Beginning of period
Counterparties
-
Relationship
A subsidiary of
the company
Quantity
Amount
120,000
$ 1,203,278
Bought
Quantity
30,000
Amount
$
299,198
Quantity
-
Sold
Cost on the
Selling price
book
$
-
$
-
End of period
Gain or loss on
disposal
$
-
Quantity
Amount
150,000
$ 1,502,476
Note: Increase in this period is the common stocks paid for in cash for the capital increase of Taichung Bank Securities. Increase in this period also includes the share of income of affiliated companies recognized with the equity method.
- 95 -
Table 2 Information on the sale of NPL
1.
Summary table on the transactions in the sale of NPL
Unit: NTD thousand
Transaction
date
Counterparty
Details on the
composition of Book value (Note 1)
the receivable
Secured loan to
2014.01.29 JP MORGAN
CHASE BANK corporations
NATIONAL
ASSOCIATION
$
221,979
Selling price
Disposal gain or
loss (Note 2)
$
$
343,494
121,515
Additional
conditions
None
Relationship
between the
counterparty and
this bank
None
Note 1: The book value is the balance after allowance for bad debt is deducted from the original receivables.
Note 2: Disposal gains and losses include NTD68,712 thousand in the proceeds from the sale of delinquent loans
and the NTD52,803 thousand decrease in the reduction in bad debt expense.
- 96 -
Table 3: Information on investees:
Unit: NTD thousand, thousand shares, %
Name of the
investor
Taichung
Commerical
Bank
Name of the
investee (Note 1)
Deh Hsin
Securities
Investment
Trust Co., Ltd.
Location
Taipei City
Major services
Securities
investment trust
Consolidate share ownership of our company and
affiliated companies(Note 1)
Ownership
Investment
at the end Investment
income
Current
Pro forma
Total
of the
book value recognized number of
number of
Number of Ownership
period %
in this period
shares
shares owned
shares
%
owned
(Note 2)
38.46
$ 141,206
$ 1,552
18,643
18,643
59.75
Remarks
Note 1:
The stocks or pro forma stocks of the investee held by our company, directors, supervisors, general managers, vice general managers, and affiliated companies that meet its
definition in the Company Act should be included.
Note 2:
(1) Pro forma share ownership refers to the shares acquired from conversion under pro forma conversion of securities with the nature of shares and were bought, or of
derivative contracts entered into (that have not been converted into share ownership), that are connected to the shares of the investee and are regarded as the purpose
of investment defined in Article 74 of Banking Act according to the transaction terms agreed upon and the purpose why the bank entered into such contracts.
(2) Said “securities with the nature of shares” refer to the securities defined in Article 11-1 of Securities and Exchange Act Enforcement Rules, such as convertible bonds
or warrants.
(3) Said “derivative contracts” refer to the derivatives that meet the definition of derivatives in IAS 39, such as stock options.
Note 3:
This table does not have to be disclosed in the financial statements in Q1 and Q3.
- 97 -
Table 4 Funds loaned to other parties:
Unit: NTD thousand unless otherwise specified
Number
(Note
1)
1
The company
loaning the fund
Taichung Bank
Leasing Co., Ltd.
The borrower
Type of
Highest balance
Is it a related
Ending
transaction(N
this period (Note
party
balance(Note 8)
ote 2)
3)
TCCBL Co., Ltd. Other
(B.V.I.)
receivables
Yes
$
32,110
$
30,826
The amount
actually used
$
30,826
Range of
interest
rate
2%
Nature of the
loan (Note 4)
There is the
need for
short-term
financing
Reason why
short-term
Transaction
financing is
amount (Note 5)
needed (Note
6)
$
Operation
financing
Collateral
Bad debt
allowance
recognized
$
-
Name
Value
-
-
Limit of loan for
individual parties
(Note 7)
Total limit on
loans (Note 7)
$ 1,042,866
$ 1,042,866
Remarks
Limited to the
net value of
TCBL at the
end of the
period
Note 1: Instructions on the number column are as follows:
(1) Fill in 0 for the issuer.
(2) Number investees from 1 and in sequence for one company after another.
Note 2: If receivables from affiliated companies, receivables from related parties, shareholders’ accounts, prepayments, transit payments, and so on in the balance sheet are in the nature of loans, they have to be disclosed in these
cells.
Note 3: The highest balance of funds loaned to others in the current year.
Note 4: The preparer should fill in “regular course of business” or “for short-term financing needs” for the nature of the loan.
Note 5: When the nature of the loan is in the regular course of business, the preparer should fill out the amount of business transaction. The amount of business transaction refers to the business transaction amount in the most
recent year between the lending company and borrowing entity.
Note 6: When the nature of the loan is for short-term financing needs, the company should substantially state the reason why the funds needed to be loaned and how the entity that borrows the fund will use such funds, such as:
repaying loans, buying equipment, operation financing, and so on.
Note 7: The preparer should fill out the limit for loaning funds to individual entities and the limit of total loans set by the company pursuant to the procedure of loaning funds to other entities. The preparer should explain the
method of calculating loaning funds to individual entities and the limit of total loans.
Note 8: If the public company submits each loan to the Board for a decision pursuant to Article 14-1 of Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies, even if such loan
is not disbursed, the preparer should still include the amount of the Board decision in the disclosed balance to disclose the risk assumed. However, when the loan is repaid, the company should disclose the balance after
the repayment to reflect the adjustment in risks. If the public company authorizes the Chairman of the Board to disburse the loan in several parts within a limit and within a year, or to offer revolving credit, pursuant to
Article 14-2 of Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies, the balance disclosed should still be the amount resolved by the Board. While the loan could be
repaid, the company should still use amount of loan authorized by the Board for the amount disclosed, considering the company may disburse more funds in the future.
- 98 -
Table 5: Endorsements/guarantees for others:
Unit: NTD thousand
The party receiving the endorsement and/or guarantee
No.
1
2
The company
providing the
endorsement
and/or guarantee
Company name
Taichung Bank
TCCBL Co., Ltd. (B.V.I.)
Leasing Co., Ltd.
Taichung Bank
Taichung Bank Financing and
Leasing Co., Ltd. Leasing (Suzhou) Ltd.
Relationship
Wholly and directly
owned subsidiary
Wholly and indirectly
owned subsidiary
The limit of
endorsements
and/or
guarantees to a
single business
entity
(Note 1)
The highest
balance of
endorsements
and/or
guarantees in
the current
period
The ending
balance of
endorsements
and/or
guarantees
The actual
amounts
disbursed
$ 6,257,192
$ 1,680,000
$ 1,210,000
$ 300,265
6,257,192
1,680,000
150,000
88,731
The
endorsements
and/or
guarantees
secured with
property
$
-
Total
endorsements The upper limit
and guarantees
of an
as a percentage endorsement
of equity in the
and/or
most recent
guarantee
financial
(Note 1)
statement %
116.03
$ 10,428,654
14.38
10,428,654
Note 1:According to the “Regulations Governing Endorsement and Guarantees” of Taichung Commercial Bank Lease Enterprise Co., Ltd., the endorsement/guarantee amount made for one single entity
shall not exceed six times the net worth of the Taichung Commercial Bank Lease Enterprise Co., Ltd.. The total endorsement/guarantee amount should not exceed ten times the net worth of the
Taichung Commercial Bank Lease Enterprise Co., Ltd.
- 99 -
Table 6: Marketable securities – end of period:
Unit: NTD thousand / thousand shares
Companies holding
the securities
Types and names of securities
Taichung Commercial Domestic stocks not traded
Bank Co.
publicly
Leasing Co., Ltd.
Insurance Agency Co., Ltd.
Securities Co., Ltd.
Trust Co., Ltd.
Taichung Bank and
Leasing Co., Ltd.
TCCBL Co., Ltd.
(B.V.I.)
Foreign stocks not traded
publicly
TCCBL Co., Ltd. （B.V.I.）
Foreign stocks not traded
publicly
Taichung Bank Financing and
Leasing (Suzhou) Ltd.
Relationship with the
securities issuer
Subsidiaries
Account titles in the book
At the end of period
Percentage
Book value
of ownership
Quantity
100,000
〃
Investment under the equity
method
〃
〃
1,042,866
100
28,436
365,414
100
365,414
〃
150,000
1,502,476
100
1,502,476
Affiliated business
〃
12,000
141,206
38
141,206
Sub-subsidiary
〃
16,500
515,000
100
515,000
Sub-subsidiary
〃
-
493,422
100
493,422
Note: No disclosure is necessary because it is in the finance, insurance, and securities industries.
- 100 -
$
Market price
$
1,042,866
Remarks
Table 8: Information on investments in Mainland China:
Unit: NTD thousand
Names of
Principal business
investees in China
Taichung
Commercial
Bank Leasing
(Suzhou) Ltd.
Financing
Leasing and
investments
Paid-in
capital
Method of
investment
Accumulated
amount of
investment
remitted
from Taiwan
at beginning
Amount of investment
remitted or recovered in
current period
Remitted
$ 485,984 Investment in $ 395,159
$ 90,825
( CNY
Mainland
( CNY
( CNY
103,510
China
84,901
18,609
thousand )
through an thousand ) thousand)
existing
company in
a
third
country/terri
tory
Cumulative investment from Taiwan to Mainland China at
the end of period
$ 485,984
Percentage
of ownership Investment
Book value
of
income
Returns
of
investment recognized
remitted to
investment at
directly or in the current
Taiwan at the
the end of
indirectly
period
end of period
period
made by the
(Note 1)
Company
$ 485,984
100%
$ 10,675
$ 493,422
$
( CNY
( CNY
( CNY
103,510
2,178
102,540
thousand )
thousand ) thousand )
Accumulated
amount of
investment
remitted
from Taiwan
Recovered
at the end of
the period
$
Amount of investment approved by Investment
Commission of MOEA
$ 485,984
Compliance with the limit of investment in Mainland China
set forth by Investment Commission of MOEA (Note 2)
$ 625,719
Note 1: Investment return/loss has been recognized by parent company based on the reviewed financial statements.
Note 2: It is the limit calculated by the applicant – Taichung Commercial Bank Lease Enterprise Co., Ltd. – in accordance with requirements set forth in “Principle of Review of
Investment or Technology Joint Venture in Mainland China” of Investment Commission of MOEA.
Note 3: Where foreign currencies are involved, foreign currencies were converted into NTD at the exchange rate at the end of the period and the average exchange rate applicable in
the period as of the financial reporting date (CNY1=NTD 4.81, CNY1=NTD 4.90).
- 101 -
Table 8 Business relationship and significant transactions between the parent company and subsidiaries:
Unit: NTD thousand
No.
(Note 1)
Name of principal party
Counterparty
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
Insurance Brokerage Co., Ltd.
Taichung Commercial Bank Taichung Commercial Bank
1
Relationship with
the principal party
(Note 2)
Taichung Commercial Bank Leasing
Co., Ltd.
Co., Ltd.
Co., Ltd.
Co., Ltd.
TCCBL Co., Ltd.
1
Transactions
1
remittances
Interest expense
1
Fee revenue
1
Accounts receivable
1
Deposits received
1
Rent revenue
1
1
remittances
Interest expense
1
Deposits received
1
Rent revenue
1
1
remittances
Interest expense
1
Deposits received
1
Rent revenue
1
Fee expense
1
1
remittances
Payables
1
Other business expenses
2
Cash and cash
equivalents
Interest revenue
2
Amount
(Note 3)
Accounting title
- 102 -
$
Terms and conditions
484,223 No material difference between this transactiona
and the transaction with regular customers
947 No material difference between this transactiona
Percentage of consolidated
net income or total assets
(Note 4)
2%
-
No.
(Note 1)
4
Leasing Co., Ltd.
Leasing Co., Ltd.
Leasing Co., Ltd.
Leasing Co., Ltd.
TCCBL Co., Ltd
0
0
0
0
0
1
1
1
1
2
2
2
2
2
2
2
3
3
3
3
Counterparty
Relationship with the
principal party
(Note 2)
Transactions
Amount
(Note 3)
Accounting title
2
Fee expense
2
Accounts payable
2
Refundable deposit
2
2
2
2
Refundable deposit
2
Rent expense
1,374
2
Fee income
1,938
2
Accounts receivable
10,650
2
Non-operating revenue
10,650
2
2
Cash and cash
equivalents
Interest income
2
Refundable deposit
120
2
Rent expense
360
2
Cash and cash
equivalents
62
1
386,959
1
remittances
Interest expense
1
Fee revenue
160,903
1
Accounts receivable
1
Deposits received
Rent expense
Cash and cash
equivalents
Interest income
- 103 -
$
(Note 4)
No material difference between this transactiona
2%
100,002
16,667
150
451
520,693
1,832
458
295,786
742
698
27,662
58
3%
-
No.
(Note 1)
0
0
0
0
0
0
0
1
Leasing Co., Ltd.
Leasing Co., Ltd.
Leasing Co., Ltd.
1
1
1
1
1
2
2
2
3
3
3
Counterparty
Relationship with
the principal party
(Note 2)
Transactions
Amount
(Note 3)
Accounting title
Leasing Co., Ltd.
Leasing Co., Ltd.
Leasing Co., Ltd.
1
Rent revenue
1
1
remittances
Interest expense
1
Deposits received
1
1
remittances
Interest expense
1
Refundable deposit
2
386,959
2
Cash and cash
equivalents
Interest income
2
Fee revenue
160,903
2
Accounts receivable
2
Refundable deposit
2
2
2
Cash and cash
equivalents
Interest income
2
Refundable deposit
2
2
Cash and cash
equivalents
Interest income
2
Refundable deposit
Rent expense
$
(Note 4)
3%
174
72,162
187
120
72,490
31
458
698
27,662
58
174
72,490
31
458
72,162
187
120
Note 1: The information of business operation between the parent company and its subsidiaries should be documented in the respectively numbered column as
follows:
1.
Fill in “0” for parent company.
2.
The subsidiaries are sequentially numbered from 1 and so forth.
- 104 -
Note 2: The relationship with the counterparty is classified into three categories. Only the type has to be indicated:
1.
The Bank to the Subsidiary.
2.
The Subsidiary to the Bank.
3.
The Subsidiary to the Subsidiary.
Note 3: Cancelled upon consolidation.
Note 4: While calculating the ratio of the transaction balance to the consolidated total income or total assets, the preparer should calculate the ratio of the ending
balance to the consolidated total assets for balance sheet accounts, and the preparer should calculate the ratio of the interim cumulated amount to the
consolidated total income for income statement accounts.
- 105 -

Taichung Commercial Bank Co., Ltd. and subsidiaries Consolidated

Transcription

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