2014 Annual Report

Transcription

2014 Annual Report

Contents
Report to Shareholders .............................................................................................
5
Company Profile ........................................................................................................
16
I.
Date of establishment: ....................................................................................
17
II.
Corporate history:...........................................................................................
17
Corporate Governance ..............................................................................................
27
I.
Organizational structure .................................................................................
II.
Background information of Directors, Supervisors, President, Vice
28
Presidents, Assistant Vice Presidents, and supervisors of departments
and branches ...................................................................................................
32
III.
Corporate governance ....................................................................................
67
IV.
Disclosure of CPAs’ remuneration .................................................................. 94
V.
Change of CPA: None. ..................................................................................... 94
VI.
Disclosure of any of the Company’s Chairman, President, or managers
involved in financial or accounting affairs being employed by the
CPA’s firm or any of its affiliated company within the last year: None. .......... 94
VII. Details of equity transfer and the change in pledge of stock with voting
rights in the most recent year and up to the publication date of the
annual report among directors, supervisors, managers and those who
are required to declare share ownership according to Article 11 of the
“Regulations Governing the Same Person or the Same Related Party
Holding Voting Shares of the Same Bank over a Certain Percentage. ............ 95
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VIII. Disclosure of relationships between the Bank’s top ten shareholders
including spouses, second degree relatives or closer ....................................... 97
IX.
The shareholding in the same transfer invested business of the
financial holding company and its subsidiaries, the directors,
supervisors and managers of the financial holding companies and the
enterprise directly or indirectly controlled by the financial holding
company
and
the
consolidated
comprehensive
shareholding
percentages. ...................................................................................................... 98
Funding Status ............................................................................................................. 99
I.
Capital and outstanding shares ....................................................................... 100
II.
Issuance of corporate bonds ........................................................................... 109
III.
Disclosure relating to preferred shares: Not applicable ................................. 109
IV.
Overseas depository receipts: ......................................................................... 109
V.
Employee stock warrants ............................................................................... 109
VI.
Management of new restricted employee stock ............................................. 109
VII. Disclosure relating to the merger or acquisition of other financial
institutions ...................................................................................................... 110
VIII. Progress on the plan for use of funds ............................................................. 110
Overview of Business Performance.......................................................................... 111
I.
Content of business ........................................................................................ 112
II.
Effectiveness of cross-industry marketing and co-marketing ........................ 165
III.
Market and business overview ....................................................................... 165
IV.
Employees ...................................................................................................... 177
V.
Corporate responsibility and social morale .................................................... 180
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VI.
IT equipment .................................................................................................. 180
VII. Employer and employee relationships ........................................................... 183
VIII. Environmental protection expenditure: .......................................................... 185
IX.
Working environment and employees’ personal safety.................................. 186
X.
Employees’ behaviors and moral principles................................................... 187
XI.
Operating procedures for handling material insider information ................... 190
XII Major contracts: ............................................................................................. 191
Financial Summary ................................................................................................... 193
I.
Summarized financial information for the last 5 years .................................. 194
II.
Financial analysis for the last 5 years ............................................................ 205
III.
Audit Committee’s report on the review of the last financial reports ............ 211
IV.
Latest financial statements: ............................................................................ 212
V.
If the Financial Holding Company or any of its affiliated companies
had, in the last year up until the publishing of this annual report,
experienced financial distress, the impacts to the Company’s financial
status must be disclosed: ................................................................................ 212
Review and analysis of financial status and business performance, and risk
management issues......................................................................................... 213
I.
Consolidated Financial status ......................................................................... 214
II.
Consolidated financial performance .............................................................. 215
III.
Cash flow ....................................................................................................... 215
IV.
Material capital expenditures in the last year and impacts on business
performance.................................................................................................... 217
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V.
The major causes for profits or losses of investments made in the last
year, rectifications and investment plans in the next year ............................. 217
VI.
Analyses and assessments of the following risk management issues in
relation to the consolidated financial and business performance during
the last fiscal year, up until the publication date of this annual report: .......... 220
VII. Crisis Management......................................................................................... 234
VIII. Other Material Issues ...................................................................................... 234
Special remarks.......................................................................................................... 237
I.
Affiliated companies ...................................................................................... 238
II.
Private placements of securities in the last year up till the publication
date of this annual report ................................................................................ 246
III.
The disposal of the Company’s shares by its subsidiaries during the
last financial year, up to the publication date of this annual report: .............. 246
IV.
Any occurrences of events defined under Article 36, Paragraph 3,
Subparagraph 2 of the Securities and Exchange Act in the last year up
till the publication date of this annual report that significantly impacted
the shareholders equity or the securities prices must be disclosed: None...... 246
V.
Other supplementary information: ................................................................. 246
Attachment:The last audited consolidated financial statements of the parent
company and its subsidiaries ........................................................................ 247
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Report to Shareholders
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Driven by the recovery of the domestic economy and efforts of all staff in 2014, the
Company was able to deliver exceptional results with after-tax profit reaching NT$24.43 billion
for the whole year, representing a growth of 17% over 2013. 2015 will become Jih Sun Holding's
shining moment, because both of its main subsidiaries will strive to achieve further success in
their fields of expertise and aim to broaden their reach towards the Greater China Market. 2014
performance results and 2015 business plans of the Company and its subsidiaries are described as
follows:
1. 2014 performance
(1) Changes to the domestic and foreign financial environment
Taiwan had continued its mild expansion throughout 2014, which was met by
upward adjustments of the growth rate from the Directorate-General of Budget,
Accounting and Statistics (DGBAS). In January 2015, the DGBAS concluded Taiwan's
2014 real GDP growth at 3.74%, surpassing all previous estimates. Contrary to
Taiwan's strong performance, the U.S. had been the only highlight among the world's
major economies. Despite having been struck by a severe blizzard in the beginning of
the year, the U.S began its recovery in the Q2 and reclaimed its position as the main
driving force behind the world's economic growth. Despite the solid performance of
the U.S. economy, conflicts ensued in Ukraine and the Middle East, causing the IMF to
revise down the world's growth forecast from 3.4% in July 2014 to 3.3%.
From a regulatory perspective, FSC has been encouraging Taiwanese financial
institutions to expand outwards into Asia since 2013, given the immense growth
potentials that the region had exhibited. For this reason, a number of policies have been
implemented to support expansions of Taiwanese banks in Asia over the next 3 to 5
years. FSC's policy focus in 2013 had been the banking sector, where it offered
incentives for banks to create new branches or acquire subsidiaries as a means to
expand into Asia. In 2014, FSC's focus had extended to cover securities and insurance
sectors as well.
(2) Changes to the organization
According to the Financial Holding Company Act, business activities of a
financial holding company are confined to the investment and management of
investees. The Company was founded on February 5, 2002. It currently holds
controlling interests over investees including Jih Sun International Commercial Bank
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Ltd. (Jih Sun Bank or the subsidiary bank), Jih Sun Securities Co., Ltd. (Jih Sun
Securities or subsidiary securities firm), and Jih Sun International Property Insurance
Agency Co., Ltd. (Jih Sun Property Insurance Agency or subsidiary property insurance
agency).
Founded on December 8, 1961, Jih Sun Securities is one of the longest standing
securities firms in Taiwan with more than 50 years of history. It attained the stature of
an integrated securities firm in 1989. The company's main business activities comprise
of: securities brokerage, proprietary trading, securities underwriting, fixed income,
derivatives, and sub-brokerage trading of overseas securities. Over the years, the
company has won the trust of investors through its professional knowledge, advanced
equipment, and convenient trade services. In 2013, the company set up a new branch in
Kinmen, which increased its total branch count to 45.
Jih Sun Bank opened for business on April 9, 1992; it was among the first wave
of new banks established under the new regulation. The company's business activities
are centered around lending with plans to expand into the wealth management segment.
Its main services currently include: deposits, remittance, corporate banking, consumer
banking, credit cards, wealth management, trust, treasury investment, and electronic
banking. The Bank had set up Nangang Branch and Tucheng Branch in 2012, and
Luzhou Branch in 2013, which increased its total branch count to 44.
Jih Sun Property Insurance Agency was founded on August 12, 2004, and was
mainly involved in the distribution of property insurance products. The insurance
subsidiary distributes a broad range of property insurance solutions offered by different
companies, including fire, accident, vehicle, engineering, credit, liabilities and other
forms of property insurance policies.
(3) Business plans and results
The Company's subsidiaries have made progress in 2014 with regards to their
expansions into China; Jih Sun Bank had sign an MOU with Chongqing Yijifu
Technology Co., Ltd. for the launch of third party payment services, while Jih Sun
Securities had signed an MOU with Chongqing Liangjiang Financial Development Co.,
Ltd. to set up a fully licensed joint-venture securities firm at Liangjiang New District,
Chongqing City, once the cross-strait service trade agreement has been signed. The
Company has also performed exceptionally in terms of corporate governance, as it was
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rated A++ by the Securities and Futures Institute during its 11th "Information
Disclosure Evaluation" in 2014. In the meantime, Jih Sun Bank received "Young
Entrepreneur Assistance Award" and "Startup Business Assistance Award" from the
Ministry of Economic Affairs for actively participating in the SME Credit Guaranteed
Lending Program, and was ranked third among banking institutions during Global
Views Magazine's "12th Global View 5-star Service Award." As for Jih Sun Securities,
the company was rated an A-grade firm by Taiwan Stock Exchange Corporation
during its derivative market maker review.
The Company had effectively executed its business plans in 2014; the following
are detailed descriptions of the progresses made:
1. Banking - setting up Hong Kong office and branch in eastern Taiwan.
The subsidiary bank has established its Hong Kong office and opened for
business on August 29, 2014, according to plan. The branch in eastern Taiwan,
however is still being carefully reviewed.
2. Securities - finding partners to set up fully licensed overseas joint ventures;
engaging Chinese partners via Jih Sun Investment Consulting (Shanghai) for
business development.
In February 2014, the subsidiary securities firm founded Jih Sun Investment
Consulting (Shanghai) Co., Ltd. for the purpose of serving Taiwanese enterprises
and Chinese local companies. In December 2014, Jih Sun Securities signed an
MOU with Chongqing Liangjiang Financial Development Co., Ltd. as a
commitment to founding fully licensed joint ventures in China, among other
collaborations in the banking services.
3. Implementation of employee career development and job rotation programs
that build up employees' skills.
A series of courses have been launched to train employees of 7 different job
roles, including: CSR, consumer banking AO, consumer credit approver, corporate
banking RM, corporate banking approver, proprietary trading, and financial
management. In addition, courses were arranged to help employees attain
certification in foreign currency, property insurance, and life insurance services, and
prepare them for the next stage of their careers.
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4. Adjust accounting policies and internal control procedures in accordance with
IFRS9. Revise the classification of financial assets and evaluate losses on loans
and receivables ahead of the new standards. Adopt an expected loss model
instead of the historical model and simulate impacts of regulatory changes on
the Company and its subsidiaries.
Given the fact that IFRS9 has been postponed until 2018, the Company will
continue to keep track and plan ahead of the standards, and adjust its accounting
policies and internal control procedures accordingly.
5. Virtualization and centralization of computer servers.
The IT department has set up a virtual server and a database center, and is
currently consolidating system and database servers to achieve centralized
management while reducing operating costs.
6. Supervise subsidiaries in the development of differentiated electronic services
for e-commerce.
All subsidiaries have adhered to their plans to develop differentiated electronic
platforms that will help boost e-commerce both in volume and in quality.
(4) Revenues, expenses, and profitability analysis
Driven by the recovery of the domestic economy, the Company was able to deliver
exceptional results with after-tax profit reaching NT$2.443 billion in 2014, representing
a growth of 17% over 2013. The Company generated NT$2.522 billion in revenues
during 2014, of which NT$2.5 billion were investment gains recognized using the
equity method. Operating expenses amounted to NT$83 million while interest expense,
other expenses and losses totaled NT$37 million. Income tax benefit totaled NT$41
million, which resulted in an after-tax profit of NT$2.443 billion. This was equivalent to
an after-tax earnings per share of NT$0.76, a return on asset of 6.06%, and a return on
equity of 7.03%. The Company's business plans were considered to have been soundly
executed.
Jih Sun Bank has shown continuous improvements in its performance; in 2014, the
Bank delivered: NT$2.336 billion in net interest revenue, NT$1.576 billion in
non-interest net revenue, NT$3.912 billion in total net revenue, NT$2.837 billion in
operating expenses, NT$288 million in bad debt reversal, NT$3 million in income tax
expense, NT$1.263 billion in after-tax profit, and an EPS of NT$0.8. It had met its
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target after-tax profit. In addition, Jih Sun Bank's control over asset quality has
improved progressively and in many ways surpassed peer average. Although capital
adequacy ratio had dropped from 12.61% at 2013 year-end to 11.12% at 2014 year-end
due to development of in-house products, non-performing loan ratios during this period
had dropped from 0.55% to 0.08%, whereas loan loss coverage ratio had increased from
209.94% to 1,355.57%. Both non-performing loan ratio and loan loss coverage ratio had
surpassed peer average.
Performance of Jih Sun Securities was even more stunning; in 2014, the subsidiary
delivered: NT$4.015 billion in net revenues, NT$2.673 billion in operating expenses,
NT$1.342 billion in pre-tax profit, NT$104 million in income tax expense, NT$1.238
billion in after-tax profit, and an EPS of NT$1.07. The amount of after-tax profit earned
was 124% of the targets set for the year. Not only had this performance exceeded the
subsidiary's full-year target, it represented a 58% growth over 2013.
Jih Sun Property Insurance Agency delivered after-tax profits totaling NT$429
thousand in 2014, representing an after-tax earnings per share of NT$1.43.
(5) Business targets, budgets, and execution
Below are the Company's performance targets and achievements in 2014:
1. Maintain stable profits.
The Company delivered an after-tax ROE of 7.03% in 2014, which exceeded
its 6.33％ target. This was mainly due to additional after-tax profits contributed by
the subsidiary securities firm to the group.
2. Improve profitability ranking among peers; aim to achieve top 9 or top 10 in
terms of after-tax ROE, and top 12 or top 13 in terms of after-tax EPS.
The Company delivered an after-tax ROE of 7.03% in 2014, ranking 11th
among peers; the Company's 2014 after-tax EPS amounted to NT$0.76, ranking
12th among peers. The Company had failed to attain its desired ranking in ROE
terms mainly because other financial peers had also improved their performance.
Although the Company's profits had increased in 2014, they did not surpass the
performance of other peers and hence fell short of the desired ROE ranking.
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3. Improve the efficiency at which subsidiaries' capital is used; aim to achieve a
consolidated asset-to-net worth ratio of 7.5 times.
Consolidated asset-to-net worth ratio was calculated at 7.2 times at the end of
2014, which fell short of the Company's target set at 7.5 times. This was largely due
to the lack of growth in Jih Sun Bank's loan portfolio and in Jih Sun Securities'
investment positions.
(6) Research and development
The Company and its subsidiaries are actively invested in the development of new
information systems and risk management tools. In 2014, the Company had undertaken
R&D projects relating to financial market management, strategy research, IT system
development, risk management tools, derivatives, and education & training.
2. Summary of 2015 business plans
Ongoing performance improvements have won the Company the recognition of
Fitch Ratings. On May 26, 2014, the Company and its main subsidiaries were given the
following credit ratings by Fitch Ratings.:
(1) Impacts of the competitive environment, regulatory environment, and
overall business environment
The world economy is expected to continue its recovery throughout 2015.
According to the forecasts made by Global Insight (GI), growth of the global economy
in 2015 may increase by 0.4% to 0.6% compared to 2014, while U.S. and Europe may
improve by as much as 1.0% and 0.5%, respectively, to offset the slowdown in China.
Taiwan may well benefit from this change, but having already delivered strong
performance in 2014, there may be limited room as to how much economic growth can
improve in 2015. According to the latest forecast made by the Directorate-General of
Budget, Accounting and Statistics in November 2014, Taiwan is expected to deliver a
real GDP growth of 3.78% in 2015. Taiwan Institute of Economic Research, on the
other hand, has raised its forecast on Taiwan's economic growth to 3.67% for year
2015, based on the notion that falling oil prices helps boost economic activities.
Overall, economic outlook remains favorable both in the domestic and
international context. However, the U.S. is perhaps the only nation that has been
expected to undergo recovery with much certainty, because the Eurozone remains
troubled by problems involving debt, currency and employment even till this date,
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whereas China's growth has fallen to a slower rate and Japan continues to show
weakened demands. The ending of QE measures and expectations toward an interest
rate hike in the U.S. coupled with expansionary monetary policies in Europe and Japan
will eventually contribute greater uncertainty to global exchange rates, especially for
emerging nations. In the domestic context, the signing of free trade agreement (FTA)
between China and Korea coupled with the formation of the Chinese supply chain will
pose a double impact on Taiwan's exports. Lastly, the government's fiscal shortfalls
may also present limitations to the nation's growth.
According to the FSC's 5-year "Corporate Governance Enhancement Roadmap"
introduced at the end of 2014, TSEC/GTSM listed companies will become subject to
mandatory corporate governance assessments starting in 2015. Under the new policy,
companies will be required to appoint independent directors, broaden the scope of
audit, and implement an electronic voting system for use in shareholder meetings. The
purpose of a corporate governance assessment is to help companies understand how
their organizations are being managed, which in turn facilitates comparison and
competition across peers for the better. Eventually, this assessment will help local
companies connect corporate governance practices with the rest of the world,
benefiting them and the capital market as a whole.
(2) Future strategies
The Company's business activities have been centered around commercial
banking and securities services. It adopts a strategy that focuses on "Rooting,"
"Expanding," and "Balancing" its business activities. "Rooting" involves raising
competitiveness across subsidiaries and finding suitable targets that can be acquired as
a means of growth. "Expanding" involves mainly the extension of core services into
the overseas market. Lastly, "Balancing" promotes the idea of growing the Company's
business activities in a balanced manner that is sustainable over the future.
(3) Key operating policies
The Company has set its goals to "become customers' most trusted financial
partner" and adopted a business philosophy that emphasizes on "customer service,
trustworthiness, teamwork and harmony." Below are the operating guidelines that the
Company has developed based on its strategies:
1. Strengthen financial structure via improved profitability.
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2. Reduce business risks with enhanced risk management
3. Reduce operating costs
4. Raise service quality via innovation
(4) Operating policies and plans
The Company holds controlling interests in Jih Sun International Commercial
Bank Ltd., Jih Sun Securities Co., Ltd., and Jih Sun International Property Insurance
Agency Co., Ltd. The subsidiary bank and securities firm are the Company's primary
business focus. As for Jih Sun International Property Insurance Agency, the company
will continue to operate on its current base without any major developments planned.
2015 will undoubtedly become Jih Sun Holding's shining moment, because both of its
main subsidiaries will strive to achieve further success in their fields of expertise and
aim to broaden their reach towards the Greater China Market. Below is a description of
the business plans adopted by the Company, the banking subsidiary, and the securities
subsidiary.
1. Strengthen financial structure via improved profitability
To improve financial position, the Bank will actively supervise the performance
and profitability of its subsidiaries and use cash dividends received as a source of
working capital for the parent company. Meanwhile, the Company will carefully
evaluate all possible sources of capital that can be used to enhance its financial
structure.
To effectively reduce business risks and facilitate decision-making, steps will be
taken to continually improve the Company's risk management policies, procedures,
tools and information.
3. Raise operating performance via reduce operating costs
To effectively reduce operating costs, business units will be making collective
purchases for greater bargaining power. Furthermore, the IT department will
continue to virtualize and centralize the database server, using one sizable
machine to host the needs of all different applications for lesser costs.
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In terms of e-commerce, the Bank will continue to invest in new systems and new
functions, and create a digital platform that distinguishes itself from competitors.
These new features may include trading, mobile, and social network services for
the securities sector, and mobile payment, mobile banking and webATM for the
banking sector. Meanwhile, the Bank will strive to make good use of mobile tools
and technologies to promote management and efficiency within the organization,
and raise customers' satisfaction outside the organization.
(5) Business targets
The global economic outlook remains favorable in 2015, as the world's major
economies are still in the state of recovery. Taiwan may well benefit from this
recovery and achieve an estimated growth of 3.67% in 2015, according to the estimates
made by Taiwan Institute of Economic Research. Although we are committed to
delivering better performance, we remain conservative in setting our business targets
for 2015:
1. Maintain profit growth; aim to raise after-tax ROE to 6.63% or above.
2. Improve profitability ranking among peers; aim to achieve top 9 or top 10 in terms
of after-tax ROE, and top 12 or top 13 in terms of after-tax EPS.
3. Improve the efficiency at which subsidiaries' capital is used; aim to achieve a
3. Credit rating
Ongoing performance improvements have won the Company the recognition of Fitch
Ratings. The Company and its main subsidiaries were previously rated Fitch on January 9,
2013; and Fitch had later confirmed on December 18, 2013, that the following ratings
remained effective:
1. Jih Sun Holding - awarded a domestic long-term rating of A-(twn), a domestic
short-term rating of F2(twn), and a stable outlook.
2. Jih Sun Bank - awarded a domestic long-term rating of A-(twn), a domestic short-term
rating of F2(twn), and a stable outlook.
3. Jih Sun Securities - awarded a domestic long-term rating of A(twn), a domestic
short-term rating of F1(twn), and a stable outlook.
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This concludes the report of our business performance for the previous year and
prospects for the upcoming year. We are grateful to shareholders' long-time support over
the years and wish to have your continual encouragement. We give you our best regards
for the upcoming future.
Chairman: Huang Chin-Tang
President: Wang Chih-Fang
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Company Profile
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I. Date of establishment:
5 February 2002
II. Corporate history:
The establishment of Jih Sun Financial Holding Co., Ltd. was a response to the latest
trend of global financial development and to our government’s efforts in financial reform.
It aimed to enlarge economies of scale, maximize synergy, and enhance competitiveness.
As of the end of February 2015, the Company employed a total of 3,167 staff (including
those employed by Jih Sun Financial Holding Co., Ltd., Jih Sun Securities, Jih Sun Bank,
and Jih Sun Property Insurance Agency). Some of its major historical events are listed as
below:
2001/08
Assembled a professional management team for Jih Sun Financial
Holding Co., Ltd.; appointed KPMG and Chien Yeh Law Offices as
project consultants.
2001/11/14
Submitted an application for company registration for Jih Sun Financial
Holding Co., Ltd. to the Ministry of Finance. Approval granted on
2001/12/31.
2001/11/29
Submitted an application and notification for merger to the Fair Trade
Commission, Executive Yuan. Permission granted on 2001/12/31.
2001/12/14
Jih Sun Securities and Jih Sun Bank held separate extraordinary
shareholders’ meetings. (This was also the founders’ meeting for Jih Sun
Financial Holding Co., Ltd.)
2002/01/14
Applied for the public listing of Jih Sun Financial Holding Co., Ltd. on
the GreTai Securities Market.
2002/02/05
Jih Sun Financial Holding Co., Ltd. was established through a share
conversion with Jih Sun Securities and Jih Sun Bank. 2002/02/05 was set
as the share conversion base date. After obtaining the certificate of
company registration from the Ministry of Economic Affairs, business
license from the Ministry of Finance, and the certificate of business
registration from Taipei City Government, Jih Sun Financial Holding Co.,
Ltd. was officially listed on the OTC Market.
2002/09/10
Jih Sun Bank acquired Hsin-Ying Credit Cooperative Association. The
quantity of branches increased from 27 to 34.
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2002/10/04
Jih Sun Securities acquired Tou-Fen Securities; adding 3 branch offices to
a total of 37.
2002/10/11
Jih Sun Securities acquired Yuan-Hsin Securities through an issuance of
new shares; adding 5 branch offices to a total of 42.
2002/10/30
Jih Sun Securities acquired He-Mei Securities. The quantity of branch
offices increased to 43.
2003/06/06
Jih Sun Financial Holding Co., Ltd. held its annual shareholders’ ordinary
meeting. In compliance with Articles 29 and 30 of the Business Mergers
and Acquisitions Act, Jih Sun Financial Holding Co., Ltd. acquired the
shares of Jih Sun Securities held by all of the shareholders except for Jih
Sun Holding itself on the record date remaining ownership interest in Jih
Sun Securities, apart from Jih Sun Financial Holding Co., Ltd. itself,
through a share transfer. Thus, Jih Sun Securities became a 100% owned
subsidiary of Jih Sun Financial Holding Co., Ltd.
2004/01/01
From 2004 onwards, Jih Sun Financial Holding Co., Ltd. re-organized its
management structure toward a functional-oriented structure. Four major
business groups were established: Individual Banking, Corporate
Banking, Investment Management, and Wealth Management.
2004/08/12
Established Jih Sun Property Insurance Agency.
2004/12/24
Jih Sun Securities opened 10 new branch offices in 2004 to a total of 52.
2005/01/27
Jih Sun Bank acquired the Trust Department of Taiwan Development &
Trust Corp, the quantity of branches increased from 34 to 46.
2005/01/28
Obtained long-term and short-term credit ratings of twBBB and twA-3,
respectively, from Taiwan Ratings; credit outlook was rated Stable.
2005/03/28
Jih Sun Financial Holding Co., Ltd. issued its first domestic unsecured
convertible corporate bond with a par value of NT$6 billion and a
maturity of 5 years.
2005/05/23
Jih Sun Bank signed a “Business Entitlement and Property Ownership
Transfer Agreement” with Taiwan Land Development Corporation.
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2005/06/01
Adjusted the boundaries of Individual Banking business and Wealth
Management business based on customers’ characteristics; established
strategic planning units within each of the four major business groups to
enhance the integration of our planning and marketing efforts.
2005/08/06
Settled Jih Sun Bank’s acquisition of the Trust Division of Taiwan Land
Development Corporation.
2005/11/02
Obtained long-term and short-term credit ratings of twBBB and twA-3,
respectively, from Taiwan Ratings; credit outlook was rated Stable.
2006/01/12
For the purpose of increasing market share and profit, the Company sold
its corporate franchise and some business properties of Netbroker
Securities Co., Ltd.
2006/01/15
Based on the statistics produced by Taiwan Stock Exchange Corporation,
Jih Sun Securities was the most profitable securities firm in 2005 with
profits totaling NT$1,444.97 million.
2006/01/19
Jih Sun Bank opened its Ren-Ai branch; the quantity of branches totaled
37.
2006/07/12
The Securities and Futures Development Foundation announced the Third
Information Disclosure System Evaluation of TWSE/GTSM Listed
Companies. Jih Sun Financial Holding Co., Ltd. was the only OTC-listed
company which received an “A+” rating (a total of 630 TWSE-listed
companies and 402 OTC-listed companies were evaluated).。
2006/07/21
To comply with international as well as local financial accounting
standards while improving the financial statement quality of Jih Sun
Bank, the NT$9.87 billion loss on disposal of non-performing loans,
which were originally amortized over five years as permitted under the
Financial Institution Merger Act, were written off at once.
2006/07/21
Jih Sun Financial Holding Co., Ltd. completed its first private placement
of cash capital in 2006. Shinsei Bank subscribed 1.08 billion (31.8%) of
the Company’s common shares and 630 million perpetual non-cumulative
preferred shares, which are convertible into common shares after 5 years.
Total capital contribution amounted to NT$11.34 billion.
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2006/08/23
To improve the financial structure, Jih Sun Bank reduced its capital by
NT$17,067,013 thousand to offset the accumulated losses.
2006/08/25
In order to enhance the financial structure and capital adequacy ratio, Jih
Sun Bank issued additional cash capital of NT$12,000,000 thousand.
2006/08/29
The new President of Jih Sun Financial Holding Co., Ltd., Dai Rui-Hong,
came onboard.
2006/09/29
Obtained long-term and short-term credit ratings of “A-(twn)” and
“F2(twn)”, respectively, from Fitch Ratings; the long-term credit outlook
was rated “Stable”.
2006/11/17
Jih Sun Bank established its “Trade Financing Unit”. Trade service
specialist teams were assembled in Taipei, Taichung, and Kaohsiung
branches to enhance our services to domestic trading companies.
2006/12/18
Taiwan Academy of Banking and Finance was appointed by the Financial
Supervisory Commission to conduct an “Evaluation on Banks’ Protection
of Consumer Interests”. Jih Sun Bank was selected as one of the 13
top-performing banks.
2007/03/28
To provide sufficient working capital for Jih Sun Bank while
strengthening its financial structure and raising its capital adequacy ratio,
Jih Sun Financial Holding Co., Ltd. increased its investment in Jih Sun
Bank by NT$1 billion.
2007/06/26
To offset previous losses and strengthen the financial structure, Jih Sun
Financial Holding Co., Ltd. reduced its capital by NT$13,711,490
thousand.
2007/07/27
Jih Sun Financial Holding Co., Ltd. was rated A+ in the Securities and
Futures Development Foundation’s Fourth Information Disclosure
System Evaluation of TWSE/GTSM Listed Companies. It clearly
indicated that the Company was completely transparent on all material
disclosures and withheld no information from investors.
2007/10/15
The new President of Jih Sun Bank, Liu Yu-Chun, came onboard.
-20-
2007/10/17
Obtained long-term and short-term credit ratings of “A-(twn)” and
“F2(twn)”, respectively, from Fitch Ratings; the long-term credit outlook
was rated “Stable”.
2008/02/15
Jih Sun Bank opened its new Nanjing branch; the quantity of branches
totaled 38.
2008/04/08
Jih Sun Bank opened its new Zhubei branch; the quantity of branches
totaled 39.
2008/04/18
Jih Sun Bank opened its new Anping branch; the quantity of branches
totaled 40.
2008/06/04
The Company was rated A in the Securities and Futures Development
Foundation’s Fifth Information Disclosure System Evaluation of
TWSE/GTSM Listed Companies. It clearly indicated that the Company
was completely transparent on all material disclosures and withheld no
information from investors.
2008/11/14
Fitch Ratings gave Jih Sun Financial Holding Co., Ltd. a domestic
long-term rating of “BBB+(twn)”, a domestic short-term rating of
“F2(twn)”, a standalone rating of “D/E”, a supportive rating of “5”, and a
credit outlook of “Negative”.
2009/02/03
Jih Sun Financial Holding Co., Ltd. issued cash capital totaling
NT$23,503,740 thousand in 2,350,374 thousand common shares.
NT$9,401,496,000 of which was used to invest in Jih Sun Bank and the
remaining was used to strengthen the Company’s financial structure and
increase the capital adequacy ratio.
2009/03/04
The newly appointed President of Jih Sun Bank, Yang Shu-Chao, came
on board.
2009/03/21
Jih Sun Securities and Jih Sun Futures were awarded the “Top Trade
Volume Award” respectively in the division of futures introducing broker
(IB) and futures merchant in the “Futures Brokerage Exceptional
Performance Awards 2008” organized by Taiwan Futures Exchange.
-21-
2009/04/14
Jih Sun Financial Holding Co., Ltd. completed its issuance of cash capital,
to which the major corporate shareholder, Shinsei Bank, participated in
the subscription. However, the former Chairman Chen Kuo-Ho and his
associates withdrew from the subscription, and invited Capital Target
Limited to subscribe the remaining shares. The shareholding structure
changed significantly after the cash issue. Shinsei Bank and Capital
Target Limited became the two largest shareholders. The board of
directors was re-elected to accommodate the change of the shareholding
structure, and Mr. Chen Tang was elected Chairman, while James C. Tang
was elected Vice Chairman.
2009/04/15
The new Board of Directors of the Jih Sun FHC resolved to reorganize its
management team, and appointed Mr. Chao Yung-Fei as the President, Mr.
Chen Tang as the Chairman of Jih Sun Bank and Mr. Chao Yung-Fei as
the Chairman of Jih Sun Securities. President Chao Yung-Fei spearheaded
the reorganization of his management team. The newly appointed
President of Jih Sun Securities, Tsai Yu-Bin, came on board on 19 May
2009 with the other key management members reporting to duty
gradually.
Apart from re-building the Company’s business strategies, the management team also
realigned the management structure of its subsidiaries. The four business
groups were abolished and the Company resumed its former management
structure. The responsibilities of Wealth Management, Investment
Management, Individual Banking, and Corporate Banking business
groups were allocated into the bank subsidiary, the securities subsidiary,
the insurance agency subsidiary, and other back-end supports.
2009/04/23
“F2(twn)”, and adjusted its credit outlook from “Negative” to “Stable”.
2009/05/21
To improve financial structures, Jih Sun Bank simultaneously reduced
and raised capital. The capital reduction amounted to NT$12,536,511,460
or
82.58%.
The
share
capital
after
the
reduction
became
NT$2,644,075,620; the new capital raised totaled NT$9,401,496
thousand, increasing the share capital to NT$12,045,572 thousand.
-22-
2009/06/19
Jih Sun Financial Holding Co., Ltd. established its Audit Committee to
ensure sound corporate governance practice.
2009/06/22
The new Chairman of Jih Sun Property Insurance Agency, Chang
Wen-Cheng, came on board.
2009/07/24
President of Jih Sun Bank, Yang Shu-Chao, resigned and was replaced by
the Acting President Wang Chih-Fang.
2009/09/09
Jih Sun Bank established its Audit Committee to ensure sound corporate
governance practice.
2009/09/30
Jih Sun Securities established its Audit Committee to ensure sound
corporate governance practice.
2010/02/09
“F2(twn)”, and rated credit outlook “Stable”.
2010/05/27
The former Acting President Wang Chih-Fang was approved by the board
of directors to officially assume the role of President for Jih Sun Bank.
2010/06/03
A capital reduction totaling NT$23.812 billion was resolved during the
Company’s annual shareholders’ ordinary meeting held on 6 May 2010.
The competent authority approved this capital reduction on 26 May, and
the board of directors resolved on 3 June to set the base date for capital
reduction on 8 June. This capital reduction was intended to offset
accumulated losses. The paid-in capital was reduced from NT$49.628
billion to NT$25.816 billion, or by 47.98%. The shareholders’ equity and
ownership structure remained unchanged after the capital reduction, but
net worth per share increased from NT$5.28 (31 March 2010) to
NT$10.14. The capital reduction resulted in an increase in net worth per
share, which was beneficial to the Company’s operations, and facilitated
faster resumption of share financing in the trading market.
2010/09/10
Jih Sun Bank opened its new Hsintian branch; the quantity of branches
totaled 41.
2010/11/12
Jih Sun Securities held an extraordinary shareholders’ meeting and
elected Mr. James C. Tang as the new Chairman.
-23-
2010/12/15
Jih Sun Financial Holding Co., Ltd. announced its new corporate identity
(CI) and relocated its Head Office to 10F, No. 85, Section 2, Nanjing East
Road, Zhongshan District, Taipei City.
2010/12/31
Jih Sun Financial Holding Co., Ltd. and Jih Sun Bank held a board of
directors meeting to elect Mr. Yang Chih-Kuang as the new Chairman.
2011/01/17
long-term rating of “A-(twn)”, a domestic short-term rating of “F2(twn)”,
a standalone rating of “C/D”, a supportive rating of “5”, and a credit
outlook of “Stable”.
2011/03/31
Jih Sun Bank held a board of directors meeting to elect Mr. Huang
Chin-Tang as the new Chairman.
2011/04/15
Jih Sun Financial Holding Co., Ltd. held a board of directors meeting to
elect Mr. Huang Chin-Tang as the new Chairman.
2011/04/22
Mr. Yang Chih-Kuang came onboard as the new Chairman of JihSun
Property Agency.
2011/07/18
Jih Sun Securities opened its new Xingfu branch office; the quantity of
branch offices totaled 44.
2011/10/31
A new share issue totaling NT$1,932,523,200 was resolved during the
Company’s annual general shareholders’ meeting held on 24 Jun 2011.
The competent authority approved this issue on 19 Jul 2011, and the
board of directors resolved on 29 Jul 2011 to set the base date at 3 Sep
2011. These new shares were issued against capitalized earnings, which
increased
the
share
capital
from
NT$25,816,100,940
to
NT$27,748,624,140.
2012/01/01
President of Jih Sun Financial Holding Co., Ltd., Chao Yung-Fei,
resigned and was succeeded by the Acting President Wang Chih-Fang;
President of Jih Sun Securities, Tsai Yu-Bin, resigned and was succeeded
by the acting President Chiang Yen-Hsiu.
2012/01/10
and rated its credit outlook “Stable”.
-24-
2012/1/18
Madam Chiang Yen-Hsiu, the Acting President of Jih Sun Securities, was
officially approved by the board of directors and the Financial
Supervisory Commission on 18 January 2012 to assume the role of
President.
2012/02/01
Mr. Wang Chih-Fang, the acting President of Jih Sun Financial Holding
Co., Ltd., was officially approved by the board of directors and the
Financial Supervisory Commission on 1 February 2012 to assume the
role of President.
2012/04/27
Jih Sun Bank opened its new Tucheng branch; the quantity of branches
totaled 42.
2012/05/30
Jih Sun Bank opened its new Nangang branch; the quantity of branches
totaled 43.
2013/01/09
and rated its credit outlook “Stable”.
2013/07/05
Jih Sun Bank opened its new Luzhou Branch; the quantity of branches
totaled 44.
2013/07/19
A new share issue totaling NT$1,538,884,610 was resolved during the
Company’s annual general shareholders’ meeting held on 21 Jun 2013.
The competent authority approved this issue on 11 Jul 2013, and the
board of directors resolved on 19 Jul 2013 to set the base date at 12 Aug
2013. These new shares were issued against capitalized earnings, which
increased
the
share
capital
from
NT$29,452,195,620
to
NT$30,991,080,230.
2013/09/24
Jih Sun Securities opened its new Kinmen branch office; the quantity of
branch offices totaled 45.
2013/12/17
JS CRESVALE SECURITIES INTERNATIONAL LIMITED conducted
equity investment in the establishment of Jih Sun Investment Consulting
(Shanghai) Co., Ltd.
-25-
Recent Developments 2014-2015
2014/05/26
Fitch Ratings gave Jih Sun Holding a domestic long-term rating of
A-(twn), a domestic short-term rating of F2(twn), and a "stable" outlook.
2014/06/05
Jih Sun Venture Investment Co., Ltd. was founded by Jih Sun Securities.
2014/06/20
The Company was rated A++ during the 11th Information Disclosure
System Evaluation of TSEC/GTSM Listed Companies organized by the
Securities and Futures Development Foundation. It was a testament to the
Company's utmost transparency and disclosure to investors with respect
to material information.
2014/07/24
An issue of new shares totaling NT$1,160,736,640 was passed during the
Company's annual general meeting held on June 20, 2014. This issue was
later approved by the authority on July 11, 2014, for which the board of
directors had resolved on July 24, 2014, to set the ex-rights date on
August 17, 2014. These new shares were issued against capitalized
earnings, which increased share capital from NT$30,991,080,230 to
NT$32,151,816,870.
2014/08/29
Jih Sun Bank set up its new office in Hong Kong.
2014/10/09
President Jiang Yen-Hsiu of Jih Sun Securities resigned.
2014/11/14
Huang Chin-Min succeeded as Acting President for Jih Sun Securities.
2015/03/12
Acting President Huang Chin-Min of Jih Sun Securities was approved by
the board of directors and the FSC on March 12, 2015, to officially
succeed as President of Jih Sun Securities.
-26-
Corporate Governance
-27-
I. Organizational structure
Committee
(I)Organizational structure of the financial holding company (dated: 2014.12.31)
President
Vice Chairman
E-Commerce Division
Chairman
Board of Directors
Shareholders’ Meeting
Subsidiary
Financial Planning Division
Administration Division
President’s Office
Risk Management
Division
Audit Division
Remuneration
Committee
Audit Committee
IT Division
Legal Affairs Division
-28-
(II) The responsibilities of various divisions
1. Jih Sun Financial Holding Co., Ltd. was incorporated in accordance with the Financial
Holding Company Act, the Company Act, and other relevant regulations.
2. The Shareholders’ Meeting holds the ultimate authority of the Company; the Board of
Directors, Chairman, President etc. were established beneath in descending order of authority.
3. The Audit Division and the Risk Management Division are established under the Board of
Directors. They are responsible for the audit and risk management of the Company and its
subsidiaries, and report regularly to the Board of Directors.
4. The Company has one President and several Vice Presidents to assist in the President’s
managerial affairs. If the President is unable to perform his/her duties, the Chairman may
appoint one of the Vice Presidents to act on his/her behalf.
5. There are several divisions in the Company, directed and supervised by the President,
including President’s Office, IT Division, Financial Planning Division, Administration
Division, E-Commerce Division, and Legal Affairs Division.
The responsibilities of each unit are listed as below:
Main Divisions
Responsibilities
President’s Office
1. To establish the Company’ medium and long-term business
strategies, guidelines, and business plans.
2. To execute strategies to achieve business targets; to promote and
convey the Company’s corporate culture and visions.
3. To plan and execute job specialization within the organization.
4. To assess and execute investment, merger, and acquisition projects.
5. To supervise subsidiaries in accomplishing business and financial
targets.
6. To manage the performance of individual departments.
7. To enforce corporate governance practices.
8. To supervise subsidiaries in product integration and joint marketing.
IT Division
1. Responsible for developing information technologies required for
business growth. Analyzes technological changes in the external
environment, adopt suitable IT models and data solutions to
accommodate internal activities, thereby achieving financial targets.
2. Responsible for making modifications to the IT system. Evaluates
whether IT solutions should be developed in-house or outsourced;
performs system development, establishment, upgrades, and
modifications.
3. Responsible for managing daily corporate IT operations; performs
resource management over network, server, system, security, storage
media etc.; controls server switches, arranges work schedules, service
monitoring and other daily operations.
4. Responsible for providing technical support to corporate customers;
conducts customer service management, inquiry management, event
management, troubleshooting and other maintenance.
-29-
Main Divisions
Responsibilities
Financial Planning
Division
1. Responsible for compiling financial reports and regulatory reporting,
while ensuring all contents are on time, accurate, and comply with all
legal requirements.
2. To make short, medium and long-term capital structure plans for the
FHC and its subsidiaries, and recommends asset allocation strategies.
3. To assist the Asset and Liability Management Committee in reporting
financial performance.
4. To review and manage external credit ratings on the FHC (and its
subsidiaries).
5. To perform financial evaluations prior to mergers, acquisitions, and
commencements of new business activities.
6. To plan earnings appropriation for the FHC and its subsidiaries.
7. To establish business plans and budgets for the FHC and its
subsidiaries; to carry out performance tracking as well as budget
amendments.
8. To plan, move, and raise short, medium, and long-term capital for the
FHC and its subsidiaries.
9. To perform evaluation and analysis prior to long-term investments for
the FHC and its subsidiaries, and to conduct performance tracking
and management after investments are made.
10.To assist and supervise financial accounting operations of the FHC
and its subsidiaries; to handle all accounting affairs of the Company.
11.To ensure that securities settlements, disbursements, and clearance
operations are completed promptly and accurately.
12.To prepare the managerial reports.
13.To handle tax return filings and matters relating to withholding tax
statements.
Administration
Division
1. To establish the Company’s human resource policy; to arrange job
transfers and employees’ training etc.
2. To handle office maintenance works, procurements, general affairs
etc.; to assist in the search, lease, or purchase of office premises.
3. Fixed asset management.
4. To handle the Company’s marketing, advertising, and other relevant
affairs.
5. To manage official correspondences and corporate seals.
6. To hold custody of corporate seals.
7. To arrange the meetings of the Shareholders’ Meeting, Board of
Directors, and Audit Committee.
8. Media relationship, investor relationship, relationship with
government authorities, and crisis management.
9. Charity events; to maintain and promote Jih Sun Financial Holding
Co., Ltd.’s corporate image.
10.News releases.
11.To compile annual reports in both Chinese and English.
1. Responsible for the overall planning of electronic banking services.
2. To promote and manage electronic banking services.
3. To design and maintain the trading platform and the Company’s
E-Commerce Division
website.
4. To manage network resources.
5. To provide troubleshooting services to electronic trading customers.
1.
2.
Legal Affairs Division
3.
4.
To review the contracts and legal instruments.
The consultation and handling of lawsuit cases.
Legal compliance affairs.
Other matters involving legal issues.
-30-
Shares held: 68,696,435 shares
Initial investment: NTD 618,268 thousand
Percentage held: 100%
Initial investment: HKD 10,000
Jih Sun Investment Consulting
Jih Sun Futures Co., Ltd
Percentage held: 98.138%
JihSun Venture Capital
Shares held: 1,579,888,953 shares
Initial investment: NTD 46,906,793 thousand
JIH SUN FINANCIAL SERVICES
(CAYMAN) LIMITED
Initial investment: USD 8,050 thousand
JS CRESVALE SECURITIES
INTERNATIONAL LIMITED
Initial investment: USD 47,160 thousand
Initial investment: HKD 20,000 thousand
JS Cresvale Capital
Jih Sun Capital Management Ltd.
31
Note 1: None of the subsidiaries held shares of their parent company
Initial investment: USD 100 thousand
Shares held: 100,000 shares
Initial investment: NTD1,980 thousand
JIH SUN INTERNATIONAL
INVESTMENT HOLDING COMPANY
Jih Sun Life Insurance Agency Co., Ltd
Jih Sun International Commercial Bank Limited
Jih Sun Securities Co., Ltd.
Jih Sun Securities Investment Consulting
Co., Ltd.
Jih Sun International Property Insurance
Agency Co.,Ltd.
dated: 28 February
Jih Sun Financial Holding Co Ltd.
(III) Organizational chart of the financial holding company and its subsidiaries
2015
-32-
Chairman
Capital Target
Limited
Representative:
Huang
Chin-Tang
The Republic
of China
2012.6.22
2012.6.22
Name
Independe The Republic
Lin Chih-Chung
nt Director
of China
Title
Date
elected /
appointed
Country or
place of
registration
3 years 2007.4.10
Common
share 0.00%
Preferred
share
None
Common
share
26.04%
Preferred
share
None
Common
share
664,803,504
3 years 2011.4.14
Preferred
share
None
Common
share
1,452
Preferred
share
None
Percentage
held
Shareholding as of
elected date
Shares held
Term
Date first
elected
(I) Directors
1. Background of Directors
Common
share
1,688
Preferred
share
None
Common
share
774,167,194
Preferred
share
None
Shares held
Common
share
0.00%
Preferred
share
None
Common
share
24.08%
Preferred
share
None
Percentage
held
Current shareholding
None
None
Shares
held
None
None
Percentage
held
Shareholdings of
spouse and underage
children
None
None
Shares
held
None
None
Percenta
ge held
Shares held on
behalf by others
1. Bachelor of Law,
National Taiwan
University
2. Master Degree, Sun
Yat-Sen University
3. President and Vice
Chairman of Ta
Chong Securities Co.,
Ltd.
4. President and Vice
Chairman of
Waterland Securities
Co., Ltd.
5. President of Ta Chong
Bank Ltd.
6. President of King’s
Town Bank
1. Master of Law,
Soochow University
2. Partner Accountant of
Xu Yao Accounting
Firm
3. Lawyer of Gongdao
Law Office
4. Licensed accountant
of Ernst & Young
5. Chief Accountant of
An Chen Accounting
Firm
Major academic and
career achievements
None None
None
None
Title Name Relationship
Spouse or relatives of second
degree or closer acting as
Directors, Supervisors, or
other department heads
1. Independent Director
of Jih Sun Bank.
of Jih Sun Securities
3. Lead accountant of
AY Commercial Law
Offices
4. Chief Accountant of
An Chen Accounting
Firm
5. Supervisor of Guang
Chang Asset
Management Co.,
Ltd.
None None
6. Supervisor of Eng
Electric Co., Ltd.
7. Supervisor of Jinghe
Health Enterprise
Co., Ltd.
of Cayman Tung Ling
Co., Limited9.
Independent Director,
Yi Sheng Precision
Industries Co., Ltd.,
British Cayman
Island
1. Chairman of Jih Sun
International
Commercial Bank
Limited
2. Director of Jih Sun
Securities
3. Director of Yong Li
International
Development Co.,
Ltd.
Current positions in
the Jih Sun Financial
Holding Co., Ltd. and
other companies
20 March 2015; unit: shares; %
II. Background information of Directors, Supervisors, President, Vice Presidents, Assistant Vice Presidents,
and supervisors of departments and branches
-33-
Vice
Chairman
Independe
nt Director
USA
Canada
Independe The Republic
nt Director
of China
Title
Country or
place of
registration
SIPF B.V.
Representative:
James C. Tang
Joseph Tong
Tang
Yeh, Min-Kung
Name
2012.6.22
2012.6.22
2012.6.22
Date
elected /
appointed
Date first
elected
None
None
Common
share
30.38%
Preferred
share
97.87%
None
None
Percentage
Shares held
held
Common
share
775,673,297
3 years 2006.7.21
Preferred
share
217,117,845
3 years 2009.6.19
3 years 2009.6.19
Term
Shareholding as of
elected date
Common
share
1,140,294,764
Preferred
share
None
None
None
Shares held
Common
share
35.47%
Preferred
share
None
None
None
Percentage
held
None
None
None
None
None
None
Common
share
0.00%
Preferred
share
None
Common
share 8,600
Preferred
share
None
None
Shares
held
Percentage
held
None
None
None
Percenta
ge held
Shares held on
behalf by others
Shares
held
Shareholdings of
spouse and underage
children
1. Bachelor of
Sociology, The
University of Hong
Kong
2. Master of Business
Administration, The
Chinese University of
Hong Kong
3. Senior member of the
Association of
Chartered Certified
Accounts, UK
4. Managing Director
and Chief Executive
Officer of Sun Hong
Kai Ltd. (Capital
Market and
Institutional
Brokerage)
1. Juris Doctor, St.
John’s University
School of Law
2. MBA, Columbia
University Graduate
School of Business
3. General Manager,
Shinsei Bank
4. Manager, Merrill
Lynch
5. Licensed Attorney in
USA
Securities
International
Commercial Bank
Limited
3. General Manager,
Shinsei Bank
1. Managing Director
and Chief Executive
Officer of Sun Hung
Kai Ltd. (Capital
Market and
Institutional
Brokerage)
None None
None None
None
None
None
1. Master of Law,
Soochow University
of Jih Sun Bank.
2. Tie-E
Attorney-at-Law
3. AY Commercial Law 3. Partner of AY
Offices
Commercial Law
None None
Offices
4. Supervisor of Ernst &
Young Asset
Management Co.,
Ltd.
Major academic and
career achievements
other companies
-34-
Director
Japan
India
Title
Director
Country or
place of
registration
SIPF B.V.
Representative:
Chunmei Huang
SIPF B.V.
Representative:
Nitin Bajpai
Name
2012.8.31
2012.6.22
Date
elected /
appointed
2012.6.5
Date first
elected
Common
share
30.38%
Preferred
share
97.87%
Common
share
1,140,294,764
Preferred
share
None
Common
share
1,140,294,764
Preferred
share
None
Common
share
775,673,297
Preferred
share
217,117,845
Common
share
30.38%
Preferred
share
97.87%
Shares held
Common
share
35.47%
Preferred
share
None
Common
share
35.47%
Preferred
share
None
Percentage
held
Percentage
Shares held
held
Common
share
775,673,297
3 years 2012.8.31
Preferred
share
217,117,845
3 years
Term
Shareholding as of
elected date
None
None
Shares
held
None
None
Percentage
held
Shareholdings of
spouse and underage
children
None
None
Shares
held
None
None
Percenta
ge held
Shares held on
behalf by others
1. University of Delhi – 1. Shinsei Bank Ltd.
India: B. A
Chief Investment
Economics
Officer
2. University of Delhi India: M.A
Economics
3. University of
Wisconsin - Madison
(USA): MSc Finance
4. Lehman Brothers,
New York: Senior
Associate
5. Montgomery Asset
Management, San
Francisco: Portfolio
Analyst
6. Morgan Stanley Hong
Kong and Tokyo:
Vice President
7. Shinsei Bank Ltd.
Tokyo: Deputy
General Manager,
General Manager
8. Shinsei International
Ltd. UK: Co-CEO,
CEO
9. Shinsei Bank Ltd.
Tokyo: Institutional
Group, Chief
Investment Officer
1. Kobe University:
1. Shinsei Bank Private
MBA(Management
Placement Equity
system)
Investment Officer
2. AICPA
Manager
3. CFA
4. Shinsei Bank ,
Limited(Private
Equity
Division)Manager
5. Raffia Capital Inc.,
Supervisor
6. Yamaichi Co., Ltd.,
Supervisor
7. Raffia Partners, Inc.,
Supervisor
Major academic and
career achievements
other companies
None None
None None
None
None
-35-
2012.6.22
The Republic
of China
Director
2012.6.22
Capital Target
Limited
Representative:
Huang, Chi Yun
Capital Target
Limited
Representative:
Yang
Chih-Kuang
Director
2012.6.22
Capital Target
Limited
Representative:
Huang Flynn
Xuxian
2012.6.22
Canada
Director
Name
Director
USA
Title
Date
elected /
appointed
Hong Kong
Capital Target
SAR, People's
Limited
Republic of Representative:
China
Hsieh Chih-Wei
Country or
place of
registration
Common
share
26.04%
Preferred
share
None
Common
share
26.04%
Preferred
share
None
Common
share
664,803,504
3 years 2010.12.30
Preferred
share
None
Common
share
664,803,504
3 years 2009.4.14
Preferred
share
None
Common
share
774,167,194
Preferred
share
None
Common
share
774,167,194
Preferred
share
None
Common
share
774,167,194
Preferred
share
None
Common
share
26.04%
Preferred
share
None
Common
share
664,803,504
3 years 2009.4.14
Preferred
share
None
2012.8.1
Common
share
774,167,194
Preferred
share
None
Common
share
26.04%
Preferred
share
None
Common
share
664,803,504
Preferred
share
None
3 years
Shares held
Date first
elected
Common
share
24.08%
Preferred
share
None
Common
share
24.08%
Preferred
share
None
Common
share
24.08%
Preferred
share
None
Common
share
24.08%
Preferred
share
None
Percentage
held
Percentage
Shares held
held
Term
Shareholding as of
elected date
None
None
None
None
Shares
held
None
None
None
None
Percentage
held
Shareholdings of
spouse and underage
children
None
None
None
None
Shares
held
None
None
None
None
Percenta
ge held
Shares held on
behalf by others
International
Commercial Bank
Limited
Securities
Life Insurance
Agency Co., Ltd.
Futures Co., Ltd.
5. Director of Carry
Wealth Holdings
Limited
1. Simon Fraser
University
International
2. Financial Consultant
Commercial Bank
of TD Bank / TD
Limited
Trust
Securities
3. Vice President of
Capital Target
Limited
1. Bachelor of Social
Sciences, The
International
University of Hong
Commercial Bank
Kong
Limited
2. Director of AGCA
CPA Limited HK
Securities
Branch
3. Financial Controller
3. Financial Controller
and Secretary of
and Secretary of
China Information
Shandong Jinchuang
Technology
Co., Ltd.
Development Limited
4. Financial Controller 4. Executive Director of
and Secretary of
China Information
Shanxi Sanyuan Coal
Technology
Industry Co., Ltd.
Development Limited
5. Independent
non-executive
Director of Sunac
China Holdings
Limited
1. MBA of Azusa
Pacific University
International
2. Nickent Golf. Inc.
Commercial Bank
General Manager and
Limited
Senior Director of
Operation and
Securities
Finance
3. Jack Tam
International Property
Accountancy
Insurance Agency
Corporation Senior
Co., Ltd.
Accountant
Futures Co., Ltd.
5. Director of Capital
Target Limited
1. Master of Business
Administration,
University of Chicago
2. Accountant of CPA,
Ernst & Young
3. Co-founder and
director of Wealth
Bank Los Angeles,
USA
of Jih Sun Bank.
Major academic and
career achievements
other companies
None None
None None
None None
None None
None
None
None
None
-36Best Fortune Investments Limited
SIPF B.V.
Capital Target Limited
Note 1: If the Directors and Supervisors are representatives of corporate shareholders, the names of corporate shareholders are displayed.
Note 2: The names and shareholding percentages of the major shareholders (top 10 shareholders) of the corporate shareholders. Table 2 below is applicable if such
major shareholders are corporate entities.
24.08
35.47
Shinsei Bank Limited
Shinsei Trust & Banking Co., Ltd.
SIPF B.V. is owned 100%, directly and indirectly, by Shinsei
Bank.
Name of corporate shareholder (Note 1)
Shareholding percentage (%)
31 March 2015
Major shareholders of the corporate shareholders (Note
2)
(1) Table 1: Major shareholders of the corporate shareholders
2. Major shareholders of the corporate shareholders
Note 1: The Company’s 5th term of board of directors was reappointed on 22 June 2012; the date elected is the date on which the current representatives assumed
their positions.
Note 2: The date first elected is the date on which directors or representative first assumed their positions.
Note 3: Capital Target Limited reappointed Huang Flynn Xuxian as a director on 1 March 2012; the former director Chu Huei-Min resigned in the meantime.
Note 4: The juristic (corporate) representative of SIPF B.V. reappointed Nitin Bajpai as director on 5 June 2012; the former director Demir Sadikoglu resigned in
the meantime.
Note 5: The juristic (corporate) representative of SIPF B.V. reappointed Chunmei Huang as director on 31 August 2012; the former director Edward P. Gilbert was
resigned in the meantime.
-37-
Major shareholders of the corporate shareholders (Note 2)
SATURN IV SUB LP (JPMCB 380111)
Deposit Insurance Corporation of Japan
THE RESOLUTION AND COLLECTION CORPORATION
SATURN JAPEN III SUB C.V. (JPMCB 380113)
THE MASTER TRUST BANK OF JAPAN, LTD.
(TRUST ACCOUNT)
SHINSEI BANK,LIMITED
UBS SECURITIES LLC-HFS
CUSTOMER SEGREGATED ACCOUNT
JP MORGAN CHASE BANK 380055
J. CHRISTOPHER FLOWERS
JAPAN TRUSTEE SERVICE BANK,LTD. (TRUST ACCOUNT)
STATE STREET BANK AND TRUST COMPANY
Shinsei Trust & Banking Co., Ltd.
Derek Ming Dar Chen
Best Fortune Investments Limited
NBS Limited
Note 1: If the major shareholders listed in Table 1 are corporate entities, the names of the corporate entities shall be displayed.
Note 2: The names and shareholding percentage of the major shareholders (top 10 shareholders) of the corporate shareholders.
Name of corporate shareholder
(Note 1)
(2) Table 2: Major shareholders of the major corporate shareholders listed in Table 1
3.22%
2.88%
2.79%
2.07%
100%
40%
60%
3.45%
3.50%
3.95%
11.76%
9.78%
7.27%
4.01%
Shareholding percentage (%)
3. Background of Directors and Supervisors (2)
31 March 2014
Qualification Having more than 5 years’ work experience
Compliance of independence
(Note)
and the following qualifications
Lecturer or
Certified
Commercial,
Number of
above of
judge,
legal, financial,
positions as
commerce,
attorney,
accounting or
an
law, finance, lawyer,
other work
Independent
accounting, or accountant, or experiences
Director in
any subject
holders of
relevant to
1 2 3 4 5 6 7 8 9 10 other public
relevant to the professional
business
listed
Company’s
qualification operations as
companies
business
relevant to
required to
operations in a banking
perform the
public or
operations
assigned duties
Name
private college
0
Huang Chin-Tang
3
3
3 3 3 3 3 3 3
Lin Chih-Chung
3
3
3
3 3 3 3 3 3 3 3 3 3
Yeh, Min-Kung
1
3
3
3 3 3 3 3 3 3 3 3 3
Joseph Tong Tang
0
3
3
3 3 3 3 3 3 3 3 3 3
0
James C. Tang
3
3
3
3 3 3 3 3 3 3
0
Nitin Bajpai
3
3
3 3 3 3 3 3 3
0
Chunmei Huang
3
3
3
3 3 3 3 3 3 3
0
Huang Flynn Xuxian
3
3
3
3 3
3 3 3 3
0
Huang, Chi Yun
3
3
3 3
3 3 3 3
Hsieh Chih-Wei
0
3
3
3
3 3 3 3 3 3 3
0
Yang Chih-Kuang
3
3
3 3
3 3 3 3
Note 1: adjust the number of columns as needed.
Note 2: place a "9" in the box below if the director or supervisor met the following conditions at any time during
active duty and two years prior to the date elected.
(1) Not employed by other companies or any of their affiliated companies.
(2) Not a director or supervisor of any company or its affiliated companies (not applicable to the independent director of
any company, its parent company, or subsidiaries to which the Company holds more than 50% direct or indirect voting
interest).
(3) Does not hold more than 1% of the Company’s outstanding share capital under the director/supervisor, spouse,
underage children, or in any other person’s name; nor is any party listed herein one of the top 10 natural person
shareholders of the Company.
(4) Not a spouse, relative of second degree, or direct kin of third degree or closer to persons not qualified for criteria 1~3.
(5) Not a director, supervisor, or employee of the Company’s corporate shareholder holding more than 5% of the
Company’s outstanding capital; nor a director, supervisor, or employee of the Company’s top 5 corporate shareholders.
(6) Not a director, supervisor, manager, or shareholder with more than 5% ownership interest of companies or institutions
to whom the Company has business dealings with.
(7) Not a professional, business owner, partner, director, supervisor, or manager of any sole-proprietorship, partnership,
company, or institution providing commercial, legal, financial, or accounting services or consultation to the Company
or any of its affiliated companies; nor a spouse to anyone listed herein. Notwithstanding, this restriction does not apply
to any member of the remuneration committee who exercises powers pursuant to Article 7 of the Regulations
Governing the Establishment and Exercise of Powers of Remuneration Committees of Publicly Traded Companies.
(8) Not a spouse or relative of second degree or closer to any other directors.
(9) Does not meet any descriptions stated in Article 30 of the Company Act.
(10) Not elected as a government or corporate representative according to Article 27 of the Company Act.
-38-
-39-
Nitin Bajpai
Chunmei Huang
Director
Director
Huang Qi-Yun
Hsieh Chih-Wei
Director
Director
Senior Executives Forum - CFO's New Roles and
Responsibilities
Taiwan Corporate Governance
Association
Taiwan Academy of Banking
and Finance
Taiwan Financial Services
Roundtable
Organizer
2014.03.13 Trust Regulations and Practices
2014.03.13
2014.08.28 Internet Financing
2014.12.03 Corporate governance - new trend
2014.12.03
2014.03.13
2014.08.28
2014.03.13
2014.08.28
2014.12.09 2015 Economic and Insurance Development Forum
2014.12.09
2014.08.25
Securities and Futures Institute
Association
Association
Association
Association
Taiwan Insurance Institute
Association
Association
Business integrity and corporate social responsibility seminar
for TSEC/GTSM listed companies
Association
Association
Association
2014.05.26 New Opportunities to the Financial Service Sector
2014.05.12
Course name
2014.12.03
2014.12.03
2014.12.03
2014.08.28
2014.03.13
2014.08.28
2014.08.25
2014.05.26
2014.05.12
2014.03.13
Training date
Start
End
Huang Flynn Xuxian 2014.08.28
James C. Tang
Director
Director
Huang Chin-Tang
Chairman
Name
3 hours
3 hours
3 hours
3 hours
3 hours
5 hours
3 hours
3 hours
3 hours
3 hours
3 hours
3 hours
3 hours
3 hours
3 hours
2.5 hours
3 hours
3 hours
Training hours
Date of record: December 31, 2014
4. Directors' and managers' ongoing education
The Company's directors have completed their mandatory courses and learning hours in 2014.
-40-
Yeh, Min-Kung
Tang Teng
Independent
Director
Lin Chi-Chung
Independent
Director
Independent
Director
Yang Chih-Kuang
Director
Name
2014.08.28
2014.12.03
2014.03.13
2014.10.08
2014.09.24
2014.09.22
2014.09.19
2014.09.17
2014.09.15
2014.09.11
2014.08.28
2014.06.18
2014.12.03
Association
Association
Organizer
Association
Capital Market and Directors/Supervisors' Responsibilities - a
2014.06.18
Corporate Governance and Insider Trading Perspective
Association
Corporate Merger Strategies and Secrets to Successful
Corporate Organization
2014.09.11
Business Management
Association
2014.09.15 On-site Credit and Financial Assessment in M&A Decisions
Association
2014.09.17 Trends and Strategies of Cross-strait M&A
Association
Practical Merger of Intangible Assets, Goodwill and
2014.09.19
Intellectual Properties
Association
2014.09.22 Tax after M&A - with Chinese Case Study
Association
Practical Guidelines for Board of Directors and Shareholders Corporate Organization
2014.09.24
in M&A
Association
2014.10.08 Corporate M&A Laws
Association
Association
Course name
2014.08.28
2014.03.13
Training date
Start
End
3 hours
3 hours
2 hours
3 hours
3 hours
3 hours
3 hours
3 hours
3 hours
3 hours
3 hours
3 hours
3 hours
3 hours
3 hours
Training hours
-41-
Su Bao-Hsiu
Chang Bo-Hsiung
Senior Assistant Vice
President
Chief Auditor
Wu Wen-Ko
President - JihSun
Venture Capital
Cheng Ru-Mu
Wang Chih-Fang
President
President
Name
Title
2014/8/15
2014/9/25
2014/7/17
2014/9/25
2014/7/17
2014/8/20
2014/8/20
2014/8/15
2014/4/23
2014/4/23
2014/11/17
2014/3/13
2014/3/13
2014/11/17
2014/11/6
2014/11/6
2014/8/28
2014/9/23
2014/9/23
2014/8/28
2014/11/6
2014/11/6
2014/10/3
2014/10/3
2014/9/29
2014/9/29
2015/3/05
2014/8/28
2014/8/28
2015/3/05
2014/3/13
2014/3/13
2014/11/3
2014/8/28
2014/8/28
2014/11/3
2014/3/13
2014/3/13
Training date
Start
End
Post-financial Crisis Risk Management for Bank
Convertible Bond Asset Transfers and Risk
Management
Insider Trading Prevention and Case Study
Health Seminar _"Workplace EQ and SMART"
Directors'/Supervisors'/Managers' ongoing education _
Internet Financing
Health Seminar _"Healthy Diet for Diner-out"
IT Security Training 2014
Trust Regulations and Practices
OSU and Securities Specialists
Email Social Engineering Course - 2nd Half
Directors'/Supervisors'/Managers' ongoing education_
Internet Financing
Internet Financing
2014 Money Laundering Prevention Act & Financial
Consumer Protection Act
Course name
Managers' ongoing education
The Company
Taiwan Securities
Association
Taiwan Securities
Association
Taiwan Securities
Association
The Company
The Company
The Company
The Company
The Company
The Company
The Company
The Company
The Company
The Company
The Company
The Company
The Company
The Company
The Company
Organizer
3
3
3
2
3
2
2
3
0.3
0.5
0.3
1
3
0.3
1
3
3
3
3
Training hours
Date of record: March 5, 2015
-42-
Name
Hou Kuan
Wu Zhen
Chang Shou-Hsien
Chung Hsueh-Ti
Yen Chien-Hua
Lin Tao-Hsiao
Long Tao-Ming
Title
Senior
Project Assistant Vice
President
Assistant Vice
President
President
Senior
Vice President
President
President
Assistant Vice
President
2014/10/14
2014/11/3
2014/10/14
2014/11/3
2014/11/6
2014/11/6
2014/8/28
2014/10/17
2014/10/17
2014/8/28
2014/8/20
2014/8/20
2014/3/13
2014/3/13
2014/3/13
2014/3/13
2014/11/6
2014/11/6
2014/11/4
2014/11/4
2014/10/17
2014/11/6
2014/11/6
2014/10/17
2014/10/17
2014/10/17
2014/8/28
2014/11/3
2014/11/3
2014/8/28
2014/9/30
2014/9/30
2014/3/13
2014/11/3
2014/11/3
2014/3/13
2014/9/30
2014/11/2
2014/11/24
2014/9/30
2014/2/26
2014/2/26
Training date
Start
End
Internet Financing
Health Seminar _"Workplace EQ and SMART"
Directors'/Supervisors'/Managers' ongoing education
_Internet Financing
Audit Manager Workshop
"Forensic Accounting" in Fraud Detection
Course name
The Company
The Company
The Company
The Company
The Company
The Company
The Company
The Company
The Company
The Company
The Company
The Company
The Company
The Company
The Company
The Company
The Company
The Company
The Company
Taiwan Securities
Association
Taiwan Academy of
Banking and Finance
Organizer
0.3
1
3
3
0.3
1
2
3
0.3
1
3
3
0.3
0.3
1
0.3
1
0.3
1
16
3
Training hours
-43-
Chen Chung-Hung
Wang Bi-Hsia
Assistant Vice
President
Assistant Vice
President
Name
Title
2014/7/29
2014/10/14
2014/11/4
2014/3/13
2014/8/28
2014/7/22
2014/7/22
2014/7/24
2014/7/24
2014/7/29
2014/10/14
2014/11/4
2014/3/13
2014/8/28
2014/7/22
2014/7/22
2014/7/24
2014/7/24
2014/11/3
2014/7/29
2014/7/29
2014/11/3
2014/7/28
2014/7/28
2014/7/24
2014/7/28
2014/7/28
2014/7/24
2014/7/28
2014/7/28
2014/7/24
2014/7/28
2014/7/28
2014/7/24
2014/7/28
2014/7/28
2014/7/24
2014/8/28
2014/8/28
2014/7/24
2014/3/13
2014/3/13
Training date
Start
End
Overview on Investment-Linked Insurance
Keys to Selling Mutual Funds - KYC, KYP and Mutual
Benefits
Overview on Non-investment Foreign Currency
Insurance
Overview on Annuity Insurance
Personal Information Protection Training
Insurance Regulations
Overview of the Insurance Act
_Trust Regulations and Practices
_Internet Financing
The Company
The Company
The Company
The Company
The Company
The Company
The Company
The Company
The Company
The Company
The Company
The Company
The Company
The Company
The Company
The Company
The Company
The Company
The Company
The Company
The Company
Organizer
Overview on Investment-Linked Insurance
Keys to Selling Mutual Funds - KYC, KYP and Mutual
Benefits
Overview on Non-investment Foreign Currency
Insurance
Overview on Annuity Insurance
Personal Information Protection Training
Insurance Regulations
_Internet Financing
Overview of the Insurance Act
Course name
0.3
2
1
3.4
2.6
0.6
0.5
1
3
3
0.3
1
1.6
1.5
3
2
0.5
1
1.5
3
3
Training hours
-44-
Lin Che-Li
Vice President
Hsu Mu-Chun
President
Lloyd Lin
Yang Dun-Ren
Assistant Vice
President
Vice President
Name
Title
2014/3/6
2014/2/21
2014/3/13
2014/3/13
2014/8/28
2014/6/10
2014/6/9
2014/8/28
2014/8/28
2014/3/13
2014/8/28
2014/3/13
2014/5/30
2014/5/26
2014/3/13
2014/3/13
2014/8/28
2014/12/16
2014/12/16
2014/8/28
2014/8/28
2014/8/28
2014/10/21
2014/10/21
2014/11/3
2014/8/28
2014/8/28
2014/11/3
2014/3/13
2014/3/13
Training date
Start
End
Legal Workshop for TSEC/GTSM Listed Companies
_Internet Financing
Audit Manager Workshop (Session 40)
_Internet Financing
Trust Planning for Securities Specialists (Basic)
_Internet Financing
_Internet Financing
_Internet Financing
Course name
3
6
The Company
Association
3
15
The Company
3
The Company
Taiwan Academy of
Banking and Finance
3
15
Taiwan Securities
Association
The Company
3
3
0.3
3
0.3
1
3
3
Training hours
The Company
The Company
The Company
The Company
The Company
The Company
The Company
The Company
Organizer
-45-
Chang Bo-Hsiung
Cheng, Ru-Mu
Su, Bao-Hsiu
Hou Kuan
Wu Zhen
Chang Shou-Hsien
Senior Assistant V.P.
Chief Auditor
Senior Project Assistant
Vice President
President
President
Wu Wen-Ko
Executive Vice President
Wang Chih-Fang
Name
President
Title
Current
shareholdings
2004.07.01
2012.01.16
2012.12.30
2013.12.20
2005.06.01
2010.07.01
2010.12.22
2012.03.01
38,005
324,508
1,406
355,729
466
0
505,648
0
0.001
0.010
0.000
0.011
0.000
0
0.016
0
0
19,663
0
0
0
0
0
0
0
0.001
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Shareholdings of
Shares held on
spouse and
behalf by others
Date elected /
underage children
appointed
Shares Percentage Shares Percentage Shares Percentage
held
held
held
held
held
held
1. JihSun Financial Holding Co., Ltd.
None
None
None
None
None
Master of Business
Administration, University of
South Carolina, USA
Master of Business
Administration, National Taipei
None
University
1. MBA, University of Missouri
Columbia
None
2. Master of Health Care
Management, Yale University
Department of International
Jih Sun Securities Co., Ltd. Trade, Chinese Culture University Assistant Vice President
Department of Computer Science,
Jih Sun Bank - Project Assistant
National Taipei College of
Vice President
Business
None
None
None
None
Title
1. Senior Assistant V.P. of Jih Sun
Securities
2. Director of JIH SUN
FINANCIAL SERVICES
(CAYMAN) LIMITED
3. Director of Jih Sun Technology
Management Consulting
4. Director of JS CRESVALE
CAPITAL
SECURITIES
None
1. President of Jih Sun
International Commercial Bank
Limited
CAPITAL
SECURITIES
4. Director of Jih Sun Investment
Consulting
Current positions in the
Company and other companies
Master of International Trade,
Tamkang University
1. Master’s Degree Seminar of
The Chinese University of
Hong Kong about High Level
Managerial Personnel
(Asia-Pacific Region)
2. Master’s Degree Programs of
National Sun Yat-Sen
University for Advanced
Business Administration
Department of Finance and
Economics, National Taiwan
University EMBA
Major academic and career
achievements
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
Name Relationship
managers
31 December 2014
(II) Background information of the President, Vice Presidents, Assistant Vice Presidents, and supervisors of various
departments and branches
-46-
Yang, Dun-Ren
Assistant V.P.
Lin Che-Li
Chen, Chung-Hung
Assistant V.P.
Vice President
Wang, Bi-Hsia
Assistant V.P.
Lloyd Lin
Long Tao-Ming
Assistant V.P.
Vice President
Lin Tao-Hsiao
Hsu, Mu-Chun
Yen Chien-Hua
Chung, Hsueh-Ti
Name
Senior Vice President
Title
2012.12.01
2010.12.31
2009.08.27
2004.06.01
2013.01.09
2010.07.01
2007.08.01
2004.06.01
2004.06.01
2007.05.22
Date elected /
appointed
0
0
9,610
0
0
9,830
0
0
525
285,406
0
0
0.000
0
0.000
0.000
0
0
0.000
0.009
0
0
0
0
0
0
0
0
0
5,389
0
0
0
0
0
0
0
0
0
0.000
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Shareholdings of
Shares held on
spouse and
behalf by others
underage children
held
held
held
held
held
held
Current
shareholdings
None
None
None
Senior Assistant V.P. of Jih Sun
Bank
Senior Assistant V.P. of Jih Sun
Bank.
Assistant Vice President of Jih Sun
Bank
Securities
1. Senior Assistant V.P. of Jih Sun
Securities
CAPITAL
SECURITIES
FINANCIAL SERVICES
Master of Finance, Catholic
(CAYMAN) LIMITED
University of America
5. Director of Jih Sun Capital
Management
INTERNATIONAL
INVESTMENT HOLDING
COMPANY LIMITED
7. Chairman of Jih Sun Securities
Investment Consulting
1. Director of Jih Sun Securities
2. Supervisor Jih Sun Life
Insurance Agency Co., Ltd.
Master of International Business, 3 Supervisor of Jih Sun Property
TamKang University
Agency
4. Vice President of Jih Sun Bank
5. Director of Jih Sun Bank
1. Vice President of Jih Sun Bank
2. Supervisor of Jih Sun
3. Supervisor of Jih Sun Futures
Master of Law, National Taiwan 4. Director of Jih Sun Life
Ocean University
5. Director of Jih Sun Property
Agency
6. Supervisor of Jih Sun Securities
Securities
Securities
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
Name Relationship
None
Title
Senior Vice President Manager of
Jih Sun Securities
Applied Mathematics, National
Chengchi University
Department of Management
Science, National Chiao Tung
University
Department of Electrical
Engineering, Chung Cheng
Institute of Technology
Master of Information
Management, Fu Jen Catholic
University
Department of Computing, Ming
Chuan University
Department of Information
University
Master of Business Management,
National Chengchi University
managers
achievements
-47-
Cheng Shang-Hao
Chung, Hsueh-Ti
Wang, Bi-Hsia
Chen, Chung-Hung
Zo, Jun-Yi
Chou, Da-Kuang
Yen Hsieh, Yu-Run 2013.04.01
Tsui, Li-Yun
Hsu, Chiong-Wen
Vice President
Assistant V.P.
Assistant V.P.
Vice President
Assistant V.P.
Assistant V.P.
Assistant V.P.
2013.04.01
2013.04.01
2012.02.01
2010.12.15
2013.01.14
2002.02.01
2007.05.22
2014.05.01
2014.12.31
Wu Tsui-Chiang
2012.02.01
2009.04.29
Assistant Vice President
Cheng, Ru-Mu
2011.02.01
Yu, Da-Long
Newman Su
Vice President
2014.11.14
Assistant V.P.
Huang, Chin-Min
Name
Acting President
Title
Date elected
/ appointed
2. JihSun Securities Co., Ltd.
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Shareholdings of
Current
Shares held on behalf
spouse and
shareholdings
by others
underage children
held
held
held
held
held
held
Master of Durham University,
UKMBA
Department of Finance, Fortune
University
Master of Statistics, University
of Iowa
Applied Mathematics, National
Chengchi University
Chuan University
University
Department of Politics, Chinese
Culture University
Department of Mass
Communication, Chinese Culture
University
Department of Accounting and
Statistics, National Huanan
Commercial High School
Trade, Ming Chuan University
Department of Agricultural
Economics, National Chiayi
Master of Business
Administration, University of
South Carolina, USA
Master of Management,
University of Virginia
Management, National Taiwan
University
achievements
None
None
None
None
None
Assistant V.P. of Jih Sun FHC
None
None
None
None
None
None
None
None
Assistant V.P. of Jih Sun FHC
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
Name Relationship
None
None
None
None
Title
Spouse or relatives of
second degree or closer
acting as managers
Senior Vice President of Jih Sun
FHC
1. Director of Jih Sun Securities
3. Supervisor of Jih Sun Futures
1. Senior Assistant V.P. of Jih
Sun Financial Holding Co.,
Ltd.
FINANCIAL SERVICES
(CAYMAN) LIMITED
3. Director of Director of Jih Sun
Technology Management
Consulting
CAPITAL
SECURITIES
Director of Jih Sun Investment
Consulting
Jih Sun Securities Investment
Consulting Co., Ltd. - Director
None
31 December 2014
-48-
Lin, Mei-Chih
Chen, Chao-Chuan
Assistant V.P.
Assistant V.P.
Assistant V.P.
Hsu, Mu-Chun
Wu, Zhen
Liu, Su-Huei
Chen, Hsin-Liang
Chang,
Chiao-Hsiang
Assistant V.P.
Hsia Kuan-Ying
President
Wang, Ming-Song
2011.01.26
Huang Wen-Bo
Assistant V.P.
2014.01.23
Kao, Shu-Hui
Vice President
2011.06.28
2014.05.02
2010.10.08
2010.12.04
2010.12.04
2007.08.01
2012.07.25
2014.07.01
2003.11.11
2011.03.02
Liu, Hsiang-Li
Assistant V.P.
2013.04.01
Yeh, Li-Chen
Name
Assistant V.P.
Title
Date elected
/ appointed
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Shareholdings of
spouse and
by others
underage children
held
held
held
held
held
held
Current
shareholdings
Master of Finance, National
Taiwan University
Master of Financial
Management, National
Kaohsiung First University of
Science and Technology
Master of Finance, Catholic
University of America
University
Department of Banking and
Insurance, Hsingwu University
Master of Finance, National Sun
Yat-Sen University
Department of Business
Administration, National
Chengchi University
Master of Finance, Fu Jen
Catholic University
MBA, University of Texas at
Arlington
Master Degree, New York
Department of Accounting,
Tunghai University
Trade, Chinese Culture
University
Master of Financial
Management, Temple
University, USA
Master of Business
Administration, National Taipei
University
achievements
None
None
None
None
None
None
None
1. Senior Assistant V.P. of Jih
Sun FHC
CAPITAL
SECURITIES
FINANCIAL SERVICES
(CAYMAN) LIMITED
None
5. Director of Jih Sun Technology
Management Consulting
INTERNATIONAL
INVESTMENT HOLDING
COMPANY LIMITED
7. Chairman of Jih Sun Securities
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
Name Relationship
None
None
None
None
None
None
None
None
None
None
None
None
None
Title
acting as managers
None
None
None
None
None
None
-49-
Hsieh Wen-Bin
Lin, Yong-Heng
Chang, Kuo-Ching
Lin, Chi-Hung
Wu Chiu-Yin
Cheng Chung-Hsing 2014.11.01
Assistant V.P.
Assistant V.P.
Senior Manager
Manager
Manager
2014.03.10
2014.03.10
2013.04.01
2010.03.01
2014.03.10
2011.03.02
2014.01.23
Manager
2013.04.01
2011.07.15
Chang, Hsiu-Yue
Shih, Yong-Jie
Assistant V.P.
2014.11.01
Assistant V.P.
Chiu Chi-Ming
2013.04.01
Jiang, Hung-Bin
Chan, Chung-Chin
Assistant V.P.
2013.11.14
Assistant V.P.
Huang, Hung-Yi
Assistant V.P.
2012.11.01
Wang Yung-Hsiang 2014.01.23
Gong, Wen-Zhong
Assistant V.P.
2014.03.10
Manager
Liu Kun-Song
2014.05.30
Tang Ya-Ping
Chen, Hsiang-Chun
Senior Manager
2008.12.24
Manager
Yang, Dun-Ren
Name
Assistant V.P.
Title
Date elected
/ appointed
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Shareholdings of
spouse and
by others
underage children
held
held
held
held
held
held
Current
shareholdings
Master of Applied Statistics, Fu
Jen Catholic University College
of Management
None
Master of Business Management, Assistant V.P. of Jih Sun
National Chengchi University
Financial Holding Co., Ltd.
Department of Co-operative
Economics, Feng Chia
None
University
None
Trade, Tong Hai University
Department of Mass
Communication, Ming Chuan
None
University
Department of Industrial
Management, Tamsui Institute of
None
Business Administration
Administration, Kainan
None
University
MBA, Fu Jen Catholic
None
University
Department of Finance, National
None
Chung Hsing University
Doctoral studies in management,
None
Chung Nan University
Department of Applied
Commerce, National Taipei
None
University of Business
Department of Radio, Television
None
and Film, Shih Hsin University
None
Chuan University
None
University of Business
Department of Electronics, Far
None
East University
Management, National Cheng
None
Kung University
Department of Chemical
Engineering, Lunghwa
None
University of Science and
Technology
Department of Finance, Shih
None
Chien University
achievements
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
Name Relationship
None
None
None
None
None
None
None
None
None
None
None
Title
acting as managers
-50-
Chen Hsin-Li
Shen Mei-Mei
Li, Wei-Ying
Wang, Chien-Da
Yang Jie-Ling
Tsai, Ming-Hui
Wu, Yu-Fang
Senior Manager
Senior Manager
Manager
Manager
Manager
Manager
Wang Shih-Jing
Manager
Chung, Yue-Ying
Senior Manager
Cheng Dong-Hui
Chin, De-Lan
Senior Manager
Manager
Sun, Hsieh-Chiang
Senior Manager
Chen Chih-Hong
Chang, Hsiu-Chen
Senior Manager
Hsu Rong-Hsu
Yang, Huan-Lu
Senior Manager
Senior Manager
Bo Hsia-Jun
Senior Manager
Manager
Lin, Chi-Hsiung
Name
Senior Manager
Title
2012.06.01
2010.10.01
2014.08.01
2013.04.01
2013.04.01
2013.04.01
2011.03.02
2014.03.10
2013.06.20
2014.03.10
2014.01.23
2011.03.02
2011.07.01
2010.04.01
2005.09.15
2010.12.04
2014.03.10
2011.03.02
Date elected
/ appointed
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Shareholdings of
spouse and
by others
underage children
held
held
held
held
held
held
Current
shareholdings
Administration, Fu Jen Catholic
University
Department of Mechanical
Engineering, National Tung-Shih
Senior High School
Department of Accounting &
Statistics, Tatung Institute of
Technology
Administration, National Cheng
Kung University
Department of Commerce,
Providence University
College of Business
Taiwan University
Department of Mathematics,
National Taiwan University
Department of General
Commerce, Yudah Vocational
High School of Commerce
Administration, Chung Hua
University
Department of Mathematics,
National Tamkang University
Department of Marketing and
Distribution, Dayeh University
MBA, Feng Chia University
Master of Economics, Soochow
University
Department of Electronic
Engineering, De Lin Institute of
Technology
Management, Lung Hua College
of Engineering
Administration, Feng Chia
University
Department of Electrical
Engineering, Jing Wen
Vocational High School
achievements
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
Title
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
Name Relationship
acting as managers
None
None
None
None
-51-
Chen Yo-Chu
Hsu, Jih-Hao
Wu, Chi-Hsien
Cheng Ya-Fen
Kung Kuan-Chu
Kao, Chun-Ying
Lin Ming-Chi
Manager
Manager
Manager
Manager
Manager
Senior Manager
Name
Manager
Title
2014.11.01
2012.10.30
2014.11.01
2014.07.01
2010.10.01
2011.03.02
2014.03.10
Date elected
/ appointed
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Shareholdings of
spouse and
by others
underage children
held
held
held
held
held
held
Current
shareholdings
MBA, Chung Hua University
Trade, Chinese Culture
University
Chiao Tung University
Master of Business
Administration, National Chung
Cheng University
Department of Public
Administration, Tunghai
University
Administration, R.O.C Military
Academy
Department of economics, Fu Jen
Catholic University
achievements
None
None
None
None
None
None
None
None
None
Title
None
None
None
None
None
None
None
None
None
None
None
None
None
None
Name Relationship
acting as managers
None
None
None
None
None
-52-
2009.05.21
2010.12.31
Executive Vice Chang
President
Wen-Cheng
Vice President
2010.09.27
2012.12.01
Senior Manager Ho Ying-Min
Vice President
Lin Che-Li
2009.12.04
Senior Assistant
Kao Hsiu-Jia
V.P.
Lloyd Lin
2013.09.07
Lee Yi-Jay
Assistant V.P.
2011.05.12
Tu Ming-Sung
Vice President
2010.09.01
Date elected
/ appointed
Wang Chih-Fang
Name
President
Title
0
0
0
0
0
0
0
0
Shares
held
0
0
0
0
0
0
0
0
Percentage
held
Current shareholdings
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Shareholdings of spouse
and underage children
Shares
Percentage
held
held
3. JihSun International Commercial Bank Limited
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Shares held on behalf by
others
Shares
Percentage
held
held
1. President of Jih Sun
Financial Holding Co.,
Ltd.
2. Director of JS
Department of Finance
CRESVALE CAPITAL
and Economics,
3. Director of JS
National Taiwan
CRESVALE
University EMBA
SECURITIES
4. Director, Jih Sun
Securities Investment
Consulting
MBA, National Taiwan
None
University
Master of Management
Sciences, Tamkang
None
University Institute
Department of
Banking, Tamkang
None
University
Securities
2. Supervisor of Jih Sun Life
Insurance Agency Co.,
Master of International
Ltd.
Business, TamKang
University
Property Agency
4. Vice President of Jih Sun
Ltd.
Master of Business
None
Chengchi University
Department of
Statistics, Tamkang
None
University
1. Vice President of Jih Sun
Master of Laws,
Ltd.
Institute of the Law of
the Sea National
Taiwan Ocean
University
Futures Co., Ltd.
4. Director of Jih Sun Life
Major academic and
career achievements
Company and other
companies
31 December 2014
None
None
None
None
None
None
None
None
Title
None
None
None
None
None
None
None
None
Name
None
None
None
None
None
None
None
None
Relationship
Spouse or relatives of second degree
or closer acting as managers
-53-
2009.12.04
2014.06.06
2014.04.24
Lin
Chung-Cheng
Senior Assistant Chou
V.P.
Ting-Chiang
Chen Kuo-Kung
Chiu Hsin-Chu
Vice President
Assistant Vice
President
Assistant Vice
President
2014.12.04
2011.05.19
Lu Rui-Lan
Assistant V.P.
2012.10.01
Senior Assistant
Mao Nien-Chu
V.P.
2010.04.01
Date elected
/ appointed
2009.12.03
Chen De-Huei
Name
Senior Assistant
Lin Chang-Liang
V.P.
Manager
Title
0
0
0
0
0
0
0
0
Shares
held
0
0
0
0
0
0
0
0
Percentage
held
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Shares
Percentage
held
held
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
others
Shares
Percentage
held
held
Department of Land
Administration,
National Chung Hsing
University
Department of
Accounting, Chung
Yuan Christian
University
Administration,
Wan-Neng Senior &
Commercial Vocational
School
Department of
Accounting, Chinese
Culture University
Department of
Industrial Management,
National Taiwan
University of Science
and Technology
Master of Accounting,
Soochow University
None
Doctor of Economics,
Tianjin Nankai
University
None
None
None
None
None
1. Senior Assistant V.P. of
Jih Sun Life Insurance
Agency Co., Ltd.
2. Senior Assistant V.P. of
Jih Sun Property
Insurance Agency
3. Director of Jih Sun Life
Ltd.
Property Insurance
Agency
None
Ltd.
Property Insurance
Agency
Securities Investment
Consulting
Company and other
companies
Master of Economics,
Soochow University
Major academic and
career achievements
None
None
None
None
None
None
None
None
Title
None
None
None
None
None
None
None
None
Name
None
None
None
None
None
None
None
None
Relationship
-54-
Huang Hsiao-Hsi
Assistant V.P.
2010.07.20
Assistant V.P.
Ma Chien-Huei
2014.04.24
2009.09.01
Senior Manager Hsiao Yi-Cheng
Tsai Pei-Chen
Assistant V.P.
2009.07.15
Senior Assistant
Tseng Bing-Wen
V.P.
2010.12.25
2014.02.20
Senior Manager Tang Li-Chih
Kao
Kuang-Kuan
2014.08.15
Senior Project
Lin Chih-An
Manager
Assistant V.P.
2011.03.21
2012.07.19
2014.07.01
2004.07.01
Wu Dao-Jun
Chief Auditor
Senior Manager
Chang
Wen-Yuan
Senior Assistant Sung Hsiang
V.P.
Feng
Project Assistant Chang
Vice President Shou-Hsien
2007.08.01
Long Tao-Ming
Assistant V.P.
2009.07.15
2009.11.03
Senior Assistant
Yen Chien-Hua
V.P.
Date elected
/ appointed
2004.08.16
Name
Senior Assistant
Lin Tao-Hsiao
V.P.
Title
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Shares
held
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Percentage
held
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Shares
Percentage
held
held
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
others
Shares
Percentage
held
held
Department of
Electrical Engineering,
Chung Cheng Institute
of Technology
Master of Business
Administration, Royal
Roads University,
Canada
Master of Information
Management, Fu Jen
Catholic University
MBA, National Taiwan
and Technology
Department of
Computer Science,
National Taipei College
of Business
Department of Finance,
Tam Kang University
Department of Law, Fu
Jen Catholic University
Department of Banking
and Insurance,
Hsingwu College
Executive MBA,
National Chengchi
University
Executive MBA, Ming
Chuan University
Department of
Economics, National
Chung Hsing
University
Department of Banking
and Insurance, National
Taipei College of
Business
Corndale University,
Canada
Department of
Taxation, National Tam
Shui Vocational High
School
Department of Law,
Tunghai University
Major academic and
career achievements
None
Assistant V.P. of Jih Sun
Financial Holding Co., Ltd.
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
Jih Sun Holding - Project
None
None
Senior Assistant V.P. of Jih
Ltd.
None
None
Title
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
Name
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
Relationship
Senior Assistant V.P. of Jih
Ltd.
Company and other
companies
-55-
2013.07.11
2010.08.12
Lin Pei-Tsan
Cheng
Yuan-Ming
Assistant V.P.
Assistant V.P.
2014.06.27
Chen Bao-Ching
Li Ming-Yu
Chiu Jin-Hsien
Chen Chih-Hsien
Chuang
Chien-Ren
Assistant V.P.
Assistant Vice
President
Assistant V.P.
Assistant V.P.
Senior Manager
Senior Manager Kuo Nai-Wen
2010.05.29
Chou Rui-Ming
Assistant V.P.
2011.08.22
2009.07.15
2014.06.27
2010.11.22
2011.08.22
Luo Ching-Yang
Assistant V.P.
2010.09.29
2014.06.27
Yao Chi
Assistant Vice
President
2009.07.15
2014.12.04
Muo Chen-Hua
Assistant V.P.
2014.06.06
Date elected
/ appointed
Senior Manager Lin Heng-Yu
Lin Li-Kang
Name
Manager
Title
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Shares
held
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Percentage
held
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Shares
Percentage
held
held
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
others
Shares
Percentage
held
held
Administration, Tamsui
Institute of Business
Administration
Department of
Banking, Feng Chia
University
Master of Financial
Sun Yat-Sen University
Department of
Co-operative
University
MBA, National
Tamkang University
Postgraduate Program
of Management, Fu Jen
Catholic University
Department of
Statistics, National
Chung Hsing
University
Department of
Banking, Tamkang
University
Department of
Industrial Management,
National Taiwan
and Technology
MBA, Drexel
University
Master of Business
Administration, Chang
Jung Christian
University
Chihlee Institute of
Technology
Department of
International Trade,
Feng Chia University
Master of Finance,
Chaoyang University of
Technology
Major academic and
career achievements
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
Title
None
None
None
None
None
None
None
None
None
None
None
None
None
None
Name
None
None
None
None
None
None
None
None
None
None
None
None
None
None
Relationship
None
None
None
None
None
None
None
Company and other
companies
-56-
2009.07.15
2012.07.16
2014.12.04
2011.12.12
2013.07.04
2013.07.05
Senior Manager Yin Chi-Ren
Senior Manager Kuo Yu-Lin
Senior Manager Lin Ya-Ying
Senior Manager Liu Hsin-Chen
Senior Manager Lo Ming-Dao
Manager
Hsieh Lian-Deh
2010.11.12
2012.10.01
Senior Manager Chen Chih-Nan
Huang
Long-Hsien
2012.05.14
Senior Manager Lin Li-Wen
Senior Manager
2012.05.14
Senior Manager Hu Hui-Ling
2012.05.14
2011.05.09
Senior Manager Lin Jin-Dian
Cheng
Tsung-Min
2010.05.07
Senior Manager Liu Wen-Tsen
Senior Manager
2010.12.01
Senior Manager Chen Jun-Hsu
Date elected
/ appointed
2012.05.14
Name
Senior Manager Li Ching-Shan
Title
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Shares
held
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Percentage
held
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Shares
Percentage
held
held
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
others
Shares
Percentage
held
held
Administration,
Tunghai University
Department of Mass
Communication
Tamkang University
Department of
Electronic Data
Processing, Tatung
EMBA, National Sun
Yat-Sen University
Master of International
Trade, TamKang
University
Department of
Financial Taxation,
National Chengchi
University
Administration,
Soochow University
Master of Financial
Kaohsiung First
and Technology
Department of Law,
Open University of
Kaohsiung
Department of
Economics, Chinese
Culture University
Department of
Chemistry , Chung
Yuan Christian
University
UNIVERSITG OF
NORTH
ALABAMA - MBA
Department of
Agricultural
Economics, National
Chiayi University
Department of Law, Fu
Jen Catholic University
Lunghwa University of
Science and
Technology
Major academic and
career achievements
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
Company and other
companies
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
Title
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
Name
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
Relationship
-570
0
0
0
0
0
0
0
0
0
Shares
held
0
0
0
0
0
0
0
0
0
0
Percentage
held
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Shares
Percentage
held
held
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
others
Shares
Percentage
held
held
Chinese Culture
University
Department of
Accounting, Soochow
University
Department of
Economics, Chinese
Culture University
MBA, National Dong
Hua University
Department of
University
Commerce, National
Taichung Institute of
Technology
TamKang University
Executive Master of
Business
Administration
Program College of
Management, Yuan Ze
University
Department of
International Trade,
National Taipei College
of Business
Department of
Accounting, Feng Chia
University
Major academic and
career achievements
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
Title
None
None
None
None
None
None
None
None
None
None
Name
None
None
None
None
None
None
None
None
None
None
Relationship
None
None
None
Company and other
companies
4. JihSun International Property Insurance Agency Co.,Ltd.: None
Note 1: include background information on the President, Vice Presidents, Assistant Vice Presidents, heads of various departments and branches, and anyone of equivalent authority
to the above, regardless of their job titles.
Note 2: the work experiences of anyone above relating to their current roles, e.g. previous employment in the CPA’s firm or employment in a related company, must be addressed
with detailed job titles and responsibilities.
2013.02.01
Hong Min-Nan
2009.12.04
Manager
Liu Yi-Hsien
Manager
2009.07.15
2009.07.15
Lai Tsung-Ming
Manager
2013.07.05
Chiang
Wen-Wen
Liu Kuo-Shun
Manager
2014.12.04
Manager
Pan Ya-Hui
Manager
2010.06.01
2009.07.15
Tsai Tung-Chin
Manager
2010.09.29
Wang Wan-Yi
Li Wan-Tzu
Manager
2014.06.27
Date elected
/ appointed
Manager
Yeh Kuo-Ping
Name
Manager
Title
-58-
The
Company
0
0
1,500,000
1,500,000
1,973,400
9,105,015
0.6990
All
All
All
All
companies
companies
companies
companies
The
The
The
The
included in
included in
included in
included in
Company
Company
Company
Company
the financial
the financial
the financial
the financial
statements
statements
statements
statements
Remuneration (A)
Huang
Chin-Tang
James C.
Tang
Lin
Chih-Chung
Yeh,
Min-Kung
Joseph Tong
Tang
Nitin Bajpai
13,604,008 43,512,676
Huang, Chi
Yun
Yang
Chih-Kuang
Chunmei
Huang
Hsieh
Chih-Wei
Huang
Flynn
Xuxian
Name
2.2151
0
0
0
0
All
All
All
companies
companies
companies
The
The
included in
included in
included in
Company
Company
the financial
the financial
the financial
statements
statements
statements
Retirement pension (F)
0
0
0
0
0
0
0
0
0.6990
2.2151
None
Remuneration
from
investments
other than the
subsidiaries
31 December 2014; unit: NTD
Remuneration received as a staff
The sum of A, B, C, D, E,
Proposed share of profit as an
Total shares exercisable
Number of new restricted F and G as a percentage
employee
under employee stock
of after tax profit (%)
employee shares obtained
(G) (Proposed)
options (H)
All companies
All
All
All
included in the
The Company
companies
companies
companies
financial
The
The
The
included in
included in
included in
statements
Company
Company
Company
the financial
the financial
the financial
Cash Stock Cash Stock
statements
statements
statements
bonus bonus bonus bonus
Note 1: The remuneration to the drivers amounts to NT$0.
Note 2: The basis of remuneration disclosed above is different according to the basis of the income tax law; hence, the above table has been prepared solely for information
disclosure, and not for tax purposes.
Note 3: The Company’s Board of Directors is organized by juristic (corporate) director representatives with (8 seats) and independent directors (3 seats), 11 seats in total. The
remuneration as officially resolved in the shareholders’ meeting amounts to NT$5.5 million, i.e., NT$500,000 per director/independent director, including juristic (corporate)
director representatives (8 seats) who receive a total of NT$4 million which, nevertheless, belongs to the juristic (corporate) entities represented by them. A total of 3
independent directors received NT$1.5 million.
Note 4: All pension provisions and contributions are expensed as incurred.
Note 5: Since the Company did not incur a net loss after tax in the last year, it was not required to disclose individually the remuneration made to the Directors; furthermore, none of
the Directors received remuneration from invested businesses other than subsidiaries, and thus are not required to disclose details of remuneration received.
Director
Director
Director
Director
Director
Vice
Chairman
Independent
Director
Independent
Director
Independent
Director
Director
Chairman
Title
Director’s remuneration
The sum of A, B, C and D
Proposed Share of Profit
Fees for services rendered as a percentage of after Salaries, bonuses, special
Retirement Pension (B)
(C)
tax profit (%)
(D)
allowances etc. (E)
(Proposed)
(2) Remuneration to Directors (including Independent Director) (the names of the Directors are disclosed in the remuneration scale
table)
(1) Remuneration to Directors (including Independent Directors) (the name and remuneration of each Director is disclosed individually):
Not applicable.
1. Remuneration to Directors
(III) Remuneration to Directors, Supervisors, President, and Vice Presidents
-59-
11
11
11
11
Name of director
Sum of the first 4 items (A+B+C+D)
Sum of the first 7 items (A+B+C+D+E+F+G)
All companies included
All companies included
The Company
The Company
in the statements I
in the statements J
James C. Tang, Lin
James C. Tang, Lin
Chi-Chung, Yeh,
Chi-Chung, Yeh,
Min-Kung, Joseph Tong
Joseph Tong Tang, Nitin
Min-Kung, Joseph Tong
Joseph Tong Tang, Nitin
Tang, Nitin Bajpai, Huang, Bajpai, Huang, Chi Yun,
Tang, Nitin Bajpai, Huang, Bajpai, Huang, Chi Yun,
Chi Yun, Yang
Hsieh Chih-Wei, Chunmei Chi Yun, Yang
Hsieh Chih-Wei, Chunmei
Chih-Kuang, Hsieh
Huang
Chih-Kuang, Hsieh
Huang
Chih-Wei, Huang Flynn
Chih-Wei, Huang Flynn
Xuxian, Chunmei Huang
Xuxian, Chunmei Huang
Lin Chi-Chung, Yeh,
Lin Chi-Chung, Yeh,
Min-Kung
Min-Kung
Yang Chih-Kuang, Huang
Yang Chih-Kuang, Huang
Flynn Xuxian
Flynn Xuxian
Huang Chin-Tang, James C.
Huang Chin-Tang, James C.
Huang Chin-Tang
Huang Chin-Tang
Tang
Tang
Note 1: Directors' names should be presented separately (for corporate shareholders, state separately the name of the corporate shareholder and its representatives);
the amount of benefits and allowances can be presented in aggregate sums. Any directors who co-headed the President or Vice President positions must be
disclosed in this table and in Table (3-1) or (3-2) below.
Note 2: Refers to Director's remuneration in the latest year (including salaries, allowances, severance pay, various bonuses and incentives etc).
Note 3: This is the Directors' remuneration which the Board of Directors has proposed as part of last year's earnings appropriation and is pending shareholders'
resolution.
Note 4: Refers to compensations for services rendered (including travel, special allowances, subsidies, accommodation, corporate vehicle and other items). Where
housing, cars, vehicles, or personal allowances were granted, please describe the nature and cost of assets, the rental rates (calculated based on actual or fair
value), cost of petrol and other subsidies. Where personal drivers were allocated, please make a footnote disclosure explaining the amount of salaries made
to drivers, but do not count them as part of the remuneration paid to the above beneficiaries.
NT$15,000,000 (inclusive) ~ NT$30,000,000 (not inclusive)
NT$100,000,000 and above
Total
Below NT$2,000,000
Range of remunerations to the Company’s directors
(3) Remuneration scale table:
-60-
* The basis of remuneration disclosed above is different according to the basis of the income tax law; hence, the above table has been prepared solely for
information disclosure, and not for tax purposes.
Note 5: Refers to any salaries, allowances, severance pay, bonuses, incentives, travel allowances, special allowances, subsidies, accommodation, vehicles etc which
the Director has received in the latest year for assuming the role of a company employee (such as President, Vice President, manager or other employee).
Where housing, cars, vehicles, or personal allowances were granted, please describe the nature and cost of assets, the rental rates (calculated based on
actual or fair value), cost of petrol and other subsidies. Where personal drivers were allocated, please make a footnote disclosure explaining the amount of
salaries made to drivers, but do not count them as part of the remuneration paid to the above beneficiaries.
Note 6: Refers to any employees' bonuses which the Director has received (in cash or in shares) in the latest year for assuming the role of a company employee
(such as President, Vice President, manager or other employees). Please disclose the amount of employees' bonus proposed by the Board of Directors
before the proposal was resolved in the shareholders meeting (if the amount could not be estimated, please use last year's payout ratio instead). Please also
complete Table 1-3.
Note 7: Refers to the amount of shares exercisable through employees' warrants, which the Director has received up till the publication date of this annual report
(excluding amounts that have been exercised), for assuming the role of a company employee (such as President, Vice President, manager or other
employees). Please also complete Table 15.
Note 8: The disclosure should include all companies covered by the consolidated financial statements (including the Company); present the total amount of
remuneration paid by all companies above to the Company's Directors.
Note 9: The amount of remuneration made by the Company to each Director shall be disclosed in ranges.
Note 10: Disclose separately the amount of remuneration made by the consolidated entity as a whole (including the Company) to each Director in ranges.
Note 11: After-tax profit refers to the amount of profit shown in the latest financial reports of individual entities.
Note 12: a. This field shall state all forms of remuneration the Director has received from the Company's invested businesses other than subsidiaries.
b. For Directors who receive remuneration from invested businesses other than subsidiaries, the amount of remuneration from these invested businesses
should be added to column J of the Remuneration brackets table. Change the name of column J to "All invested businesses" in such cases
c. Remuneration refers to any returns, compensation, employees' bonus, professional fees etc. which the Company's Directors have received for serving as
directors, supervisors, or managers in invested businesses other than subsidiaries.
Note 13: Refers to the amount of new restricted shares that the Director has received up till the publication date of this annual report for assuming the role of a
company employee (such as President, Vice President, manager or other employees). Please also complete Table 16-1.
-61-
Wang
Chih-Fang
Chiang
Yen-Hsiu
Wu
Wen-Ko
Chung,
Hsueh-Ti
Lloyd Lin
Lin Che-Li
Su,
Bao-Hsiu
Name
7,121,111
29,033,883
216,000
731,700
All
All companies
companies
The
The
included in the
included in
Company
Company
financial
the financial
statements
statements
Retirement Pension (B)
2,421,951
The
Company
12,400,479
All companies
included in the
financial
statements
22,674
Cash
bonus
0
Stock
bonus
The Company
48,161
0
All companies
included in the
financial
statements
Cash
Stock
bonus
bonus
Proposed employee profit sharing
(D)(Proposed)
0.4004
The
Company
1.7279
All
companies
included in
the financial
statements
The sum of A, B, C and D
as a percentage of after
tax profit (%)
0
The
Company
0
0
The
Company
0
None
Remuneration
from investments
All
other than the
companies
subsidiaries
included in
the financial
statements
Number of new restricted
employee shares obtained
All
companies
included in
the financial
statements
Employee stock options
received
*Disclosure is mandatory for persons who hold positions equivalent to a president or vice president (e.g. group president, CEO, general manager etc.)
Note 1: The remuneration to the drivers amounts to NT$0.
Note 2: The basis of remuneration disclosed above is different according to the basis of the income tax law; hence, the above table has been prepared solely for
Note 3: All pension provisions and contributions are expensed as incurred.
Note 4: Since the Company did not incur a net loss after tax in the last year, it was not required to disclose individually the remuneration made to the President and
to each Vice President. Furthermore, neither the President nor any of the Vice Presidents received remuneration from invested businesses other than
subsidiaries. Thus, they are not required to disclose details of remuneration received.
Chief Auditor
Senior Vice
President
Executive Vice
President
Senior Vice
President
Vice President
Vice President
President
Title
Salary (A)
Bonus and special
allowances etc. (C)
2. Remuneration to Supervisors
(1) Remuneration to supervisors (the name and remuneration of each Supervisor is disclosed individually): Not applicable.
(2) Remuneration to supervisors (the names of the Directors are disclosed in the remuneration scale table): Not applicable.
(3) Remuneration scale table: Not applicable.
3. Remuneration to President and Vice Presidents
(1) Remuneration to the President and Vice President (the name and remuneration of each Supervisor is disclosed individually): Not
applicable.
(2) Remuneration to the President and Vice President (the names of the Directors are disclosed in the remuneration scale table)
-62Total
7
Note 1: The names of President and Vice Presidents should be presented separately; the amount of benefits and allowances can be presented in aggregate sums.
Any directors who co-headed the President or Vice President positions must be disclosed in this table and in Table (1-1) or (1-2) above.
Note 2: Refers to salaries, allowances, and severance pay made to the President and Vice Presidents in the latest year.
Note 3: Refers to other compensations such as bonuses, incentives, travel allowances, special allowances, subsidies, accommodation, corporate vehicle or other
in-kind benefits made to the President and Vice Presidents. Where housing, cars, vehicles, or personal allowances were granted, please describe the nature
and cost of assets, the rental rates (calculated based on actual or fair value), cost of petrol and other subsidies. Where personal drivers were allocated,
please make a footnote disclosure explaining the amount of salaries made to drivers, but do not count them as part of the remuneration paid to the above
beneficiaries.
Note 4: Refers to the amount of employees' bonuses provided for the President/Vice Presidents (in cash or in shares), which the Board of Directors has proposed as
part of last year's earnings appropriation and is pending shareholders' resolution (if the amount could not be estimated, please use last year's payout ratio
instead). Please also complete Table 1-3.
NT$100,000,000 and above
7
Wang Chih-Fang, Chiang Yen-Hsiu, Wu
Wen-Ko, Lloyd Lin
Wu Wen-Ko
Chung Hsueh-Ti, Lin Che-Li, Su, Bao-Hsiu
Su, Bao-Hsiu
All companies included in the statements
Wang Chih-Fang, Chiang Yen-Hsiu, Chung
Hsueh-Ti, Lloyd Lin, Lin Che-Li
The Company
Name of the President and Vice Presidents
Below NT$2,000,000
Range of remunerations to the President and Vice Presidents
(3) Remuneration scale table
-63-
* The basis of remuneration disclosed above is different according to the basis of the income tax law; hence, the above table has been prepared solely for
Note 5: Refers to the amount of shares exercisable through employees' warrants, which the President/Vice Presidents have received up till the publication date of
this annual report (excluding amounts that have been exercised). Please also complete Table 15.
Note 6: The disclosure should include all companies covered by the consolidated financial statements (including the Company); present the total amount of
remuneration paid by all companies above to the Company's President/Vice Presidents.
Note 7: The amount of remuneration made by the Company to its President/Vice Presidents shall be disclosed separately in ranges.
Note 8: Disclose separately the amount of remuneration made by the consolidated entity as a whole (including the Company) to its President/Vice Presidents in
ranges.
Note 9: After-tax profit refers to the amount of profit shown in the latest financial reports of individual entities.
Note 10: a. This field shall state all forms of remuneration the President/Vice Presidents have received from the Company's invested businesses other than
subsidiaries.
b. For President/Vice Presidents who receive remuneration from invested businesses other than subsidiaries, the amount of remuneration from these
invested businesses should be added to column E of the Remuneration brackets table. Change the name of column E to "All invested businesses" in
such cases.
c. Remuneration refers to any returns, compensation, employees' bonus, professional fees etc. that the Company's President/Vice Presidents have received
for serving as directors, supervisors, or managers in invested businesses other than subsidiaries.
Note 11: Refers to the amount of new restricted shares that the President/Vice Presidents have received up till the publication date of this annual report as
employees. Please also complete Table 16-1.
-64Wang Huei-Chen
Wu Zhen
Chang Shou-Hsien
Chen Chung-Hung
Lin Tao-Hsiao
Chang Bo-Hsiung
Long Tao-Ming
Yang, Dun-Ren
Wang, Bi-Hsia
Hou Kuan
Wu Wen-Ko
Chung, Hsueh-Ti
Lin Che-Li
Lloyd Lin
Su, Bao-Hsiu
Yen Chien-Hua
Cheng, Ru-Mu
Hsu, Mu-Chun
Wang Chih-Fang
Name
0
68,014
Cash bonus
(Proposed)
68,014
Total
(Proposed)
0.0028
As a percentage of net profit after tax (%)
(Proposed)
comes to NT$145,092.
who served the Company for the entire fiscal year and who satisfied the qualification requirements. The total bonus so granted
In terms of bonus to employees, the Company holds a policy of granting NT$11,335 to each and every employee on average
(5) The names, position ranks of the top ten employees who won bonuses and the total amounts of bonus in the top ten:
Executive Vice President
Vice President
Vice President
Chief Auditor
Senior Project Assistant
Managers Vice President
Assistant V.P.
Assistant V.P.
Assistant V.P.
President
President
Senior Manager
President
Title
Stock bonus
(Proposed)
(4) Names of managers receiving employees’ bonuses and the details of the distribution:
(IV) Remuneration made in the last 2 years by the Company and all companies
included in the consolidated financial statements to the Company’s directors,
supervisors, the President, and Vice Presidents. Disclose their respective
proportions to the after-tax net profit in the individual or consolidated
financial statements, as well as the policies, standards, and packages based on
which they were paid, the procedures of determining the remunerations, and
their association with business performance and future risks
The 2014 sum as a The 2014 sum as a
The 2013 sum as a The 2013 sum as a
percentage of
percentage of
percentage of
percentage of
after-tax net profit after-tax net profit
after-tax net profit after-tax net profit
(%)-Group
(%)-Company
(%)-Company
(%)-Group
(Proposed)
(Proposed)
Remuneration to
Directors
0.8206
2.3450
0.6990
2.2151
Remuneration to
President and Vice
Presidents
0.4330
2.4116
0.4004
1.7279
1. Remuneration to directors
(1) Remuneration policy: Remuneration policy of Directors is prescribed in Article 19.5 of
the Articles of Incorporation of the Company and is conducted with the approval by the
Shareholder’s Meeting.
(2) Remuneration standards and combination: Remuneration includes rewards, distribution of
earnings and business execution fees.
(3)Remuneration determination procedure: In addition to the principle of director’s
remuneration prescribed in the Articles of Incorporation of the Company, the Company
appoints outside professional institutions to conduct salary investigations across the
industry, and establishes its own salary system and policies with reference to those of the
peers.
(4) Correlation of remuneration and business performance: The Board of Directors is
authorized to determine remuneration in relation to the industry level based on the degree
of involvement in the Company’s management, value of contribution, earnings, and
overall performance.
2. Remuneration to managers
(1) Remuneration policy: Based on the manager’s job responsibility, apart from considering
the factor of attracting and retaining outstanding management personnel, the Company
-65-
appoints outside professional institutions to provide the industry level for reference and
determines reasonable remuneration for the job position.
(2) Remuneration standards and combinations
a. Base salaries, allowances and supervisors’ allowances are determined in accordance
with the “Rules Governing Wages and Salaries of Employees” of the Company.
b. Performance bonuses: The performance appraisal system of the Company is based on
the “Rules Governing the Employees' Performance Management and Development of
Jih Sun Financial Holding Co., Ltd. and its Subordinate Companies” to give appraisal
ratings. Performance bonuses are distributed to employees in accordance with the
appraisal results and the “Rules of Performance Rewards.”
c. Employee bonuses: It is conducted in accordance with Article 23 of the Articles of
Incorporation of the Company.
(3) Remuneration determination procedure
a. The Company refers to the industry level to establish the “Rules Governing Wages and
Salaries of Employees in Jih Sun Financial Holding Co., Ltd.,” which has been
approved by the Board of Directors. The Chairman is authorized to ratify in
accordance with the salary brackets as defined in the “Rules Governing Wages and
Salaries of Employees in Jih Sun Financial Holding Co., Ltd.” (please refer to the
explanation in the Letter of Jin-Shang-Tzu No. 0902415710 issued by the Ministry of
Economic Affairs).
b. The Company has established the Remuneration Committee to regularly review
salaries and compensations and to offer opinions on the salaries and compensations to
the Board of Directors from time to time.
(4) Correlation of remuneration and operating performance: The Company has established
the “Rules Governing the Employees' Performance Management and Development of Jih
Sun Financial Holding Co., Ltd. and its Subordinate Companies” to evaluate the
performance of managers as a basis to distribute performance bonuses. The performance
bonuses will not be distributed in the month with deferred mechanisms designed in
consideration of future risks.
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III. Corporate governance
(I)Functionality of Board of Directors
A total of 14 board of directors meetings (A) were held in the latest year
(2014.01.01~2015.03.20); below are the attendance records:
Name
Title
CAPITAL TARGET LIMITED
Actual
Attendance
Proxy
Attendance
Percentage of actual
attendance (%)
(B)
(C)
[(B+C)/A]
Remarks:
14
0
100%
14 meetings were held
during active duty
Independent
Lin Chi-Chung
Director
13
1
100%
during active duty
Independent
Yeh, Min-Kung
Director
12
0
86%
during active duty
7
7
100%
during active duty
14
0
100%
during active duty
7
7
100%
during active duty
14
0
100%
during active duty
11
3
100%
during active duty
Chairman
Representative: Huang Chin-Tang
Independent
Tang Teng
Director
Vice Chairman
Director
Director
Director
SIPF B.V.
Representative: James C. Tang
SIPF B.V.
Representative: Nitin Bajpai
SIPF B.V.
Representative: Chunmei Huang
Representative: Huang Flynn Xuxian
Director
Representative: Huang Qi-Yun
10
4
100%
during active duty
Director
Representative: Hsieh Chih-Wei
12
2
100%
during active duty
Director
Representative: Yang Chih-Kuang
14
0
100%
during active duty
Other remarks:
I. Disclosures required by Article 14-3 of the Securities and Exchange Act and any documented opposition or
qualified opinions made by Independent Directors against Board of Directors' resolutions; state the date and
details of the resolution, the meeting session, the Independent Directors’ opinions and how the Company has
responded: None.
II.Avoidance of involvements in interest-conflicting agendas by Directors; state the names of Directors, the
agenda, the nature of conflicting interests, and the voting process:
1.[The 18th meeting of the 5th Board of Directors]
Agenda: Motion to remove restrictions imposed against the Company's directors for involving in competing businesses.
(Shareholder meeting agenda)
※ Avoidance of conflicting interests:
(1) Applicable director: Independent Director Lin Chi-Chung
(2) Reasons: the removal of restrictions against involvement in competing business posed a conflict of interest between the
Director and the Company.
(3) Avoidance: the subject had disassociated from all discussions and voting of this agenda.
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Resolution: except for the disassociated party, the agenda was passed as proposed without objections from all present
directors, and was raised for approval during the 2014 annual general meeting.
2.【The 22nd Board of Directors Meeting of Session Five】
Subject: It is proposed that the directors of Session Eight be appointed for the Subsidiary Jih Sun International Bank Co.,
Ltd. (hereinafter referred to as Jih Sun International Bank) (including Independent Directors). Please resolve the
decision as appropriate.
※. The present issues were put to a voting process one by one. The interested parties withdrew from the voting
process under avoidance from conflict of interests according to law:
(1) Directors subject to avoidance of conflicts of interest:
A. Independent Director: Lin Chi-Chung, Yeh Ming-Kung.
B. Directors: Huang Chin-Tang, James C. Tang, Huang Flynn Xuxian, Huang Qi-Yun, Hsieh Chih-Wei, Yang
Chih-Kuang.
(2) Reasons for avoidance of conflicts of interest: The issue in appointment of the Subsidiary’s Directors and
Independent Directors would get involved in their personal interests.
(3) Procedures for avoidance of conflicts of interest: The issues were put to voting one after another. The interested
parties withdrew from the voting process under avoidance of conflicts of interest according to law.
Decisions resolved: The present issues were put into voting process one after another. The interested parties withdrew from
the voting process under avoidance of conflicts of interest according to law. After deducting the directors in
avoidance, no objection was heard in response to the chairperson’s inquiry with other directors present in the
meeting. In the present case, the directors and independent directors appointed for Jih Sun International Bank for
Session Eight are enumerated below:
(1) Independent Three Director seats: Lin Chi-Chung, Yeh Ming-Kung, Tang Chak Lam,Charlie.
(2) Eight director seats: Huang Chin-Tang, James C. Tang, Huang Flynn Xuxian, Huang Qi-Yun, Hsieh Chih-Wei,
Yang Chih-Kuang, Lloyd Lin, Newman Su.
3.【The 22nd Board of Directors Meeting of Session Five】
Subject: It is proposed that Directors (including Independent Directors) be appointed for the Subsidiary Jih Sun Securities
Co., Ltd. (hereinafter referred to as Jih Sun Securities) for Session XIV (including Independent Directors)Please
resolve the decision as appropriate.
※. The present issues were put to a voting process one by one. The interested parties withdrew from the voting
process under avoidance of conflicts of interest according to law:
A. Independent Director: Lin Chi-Chung, Yeh Ming-Kung.
Chih-Kuang.
(2) Reasons for avoidance of conflicts of interest: The appointment of the Subsidiary’s directors and independent
directors would get involved in the personal interested relationship.
(3) Procedures for avoidance from conflict of interests: The issues were put to a voting process one after another. The
interested parties withdrew from the voting process under avoidance from conflict of interests according to law.
Decisions resolved: The present issues were put to a voting process one by one. The interested parties withdrew from the
voting process under avoidance of conflicts of interest according to law. After deducting the directors in
avoidance, no objection was heard in response to the chairperson’s inquiry with other directors present in the
meeting. In the present case, the list of the Directors and Independent Directors of Jih Sun Securities in Session XIV
are enumerated below:
(1) Three Independent Directors: Lin Chi-Chung, Yeh Ming-Kung, Tang Chak Lam,Charlie.
(2) Eight Directors: Huang Chin-Tang, James C. Tang, Huang Flynn Xuxian, Huang Qi-Yun, Hsieh Chih-Wei, Yang
Chih-Kuang, Lloyd Lin, Newman Su.
-68-
4.【The 27th Board of Directors Meeting of Session Five】
Subject: The issues regarding remuneration to directors of Jih Sun Financial Holding Co., Ltd. in Year 2013.
※. The issues regarding remuneration to directors were put to a voting process one after another The interested parties
withdrew from the voting process under avoidance from conflict of interests according to law:
A. Independent Directors: Lin Chi-Chung, Yeh Ming-Kung.
Chih-Kuang.
(2) Reasons for avoidance of conflicts of interest: The issue regarding remuneration to directors in Year 2013 would
get involved personal interests.
(3) Procedures for avoidance of conflicts of interest: The issues were put to a voting process one after another. The
interested parties withdraw from the voting process under avoidance from conflict of interests according to law.
Decisions resolved: The issues after discussion procedures were put to a voting process one after another. The interested
parties withdrew from the voting process under avoidance of conflicts of interest according to law, After deducting
the directors in avoidance, no objection was heard in response to the chairperson’s inquiry with other directors
present in the meeting. The present issue is duly resolved exactly as proposed.
IV. Enhancements to the functionality of the Board of Directors in the current and the most recent year (e.g.
establishment of an Audit Committee, improvement of information transparency, etc.), and the progress of
such enhancements.
1. [Audit Committee]
(1) Amendments to the Company's Memorandum of Association were passed in the annual general meeting held
on June 19, 2009, during which an Audit Committee was assembled to replace supervisors. The Company's
Audit Committee comprises entirely of independent directors. The initial panel of Audit Committee held its
first meeting on July 21, 2009, whereas the second panel held its first meeting on July 5, 2012. Audit
Committee meetings were held in accordance with the Company's Remuneration Committee Foundation
Principles. The committee's audit results were subjected to the final resolution of the Board of Directors.
2. [Remuneration Committee]
(1) During the Board of Directors meeting held on September 28, 2011, a resolution was passed to assemble the
Company's initial Remuneration Committee. The initial panel of Remuneration Committee held its first
meeting on December 14, 2011. Remuneration Committee meetings were held in accordance with the
Company's Memorandum of Association. The committee's decisions were subjected to the final resolution of
the Board of Directors.
(2) During the Board of Directors meeting held on March 1, 2012, a resolution was passed to re-elect the
Company's initial Remuneration Committee.
(3) During the Board of Directors meeting held on July 5, 2012, a resolution was passed to elect the Company's
second Remuneration Committee.
(4) During the Board of Directors meeting held on January 17, 2014, a resolution was passed to resize the
Company's second Remuneration Committee.
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(II) Operating of the Audit Committee
16 (A) Audit Committee’s meetings were held in the last year (2014/01/01 – 2015/03/20); details of
independent directors’ involvements are listed as below:
Title
Independent
Director
Name
Lin
Chih-Chung
Actual
Attendance B
Proxy
Attendance C
14
(proxy) attendance
(%)((B+C)/A)
Remarks
100
During the tenure of office
within this fiscal year, a total
of 16 meetings should be
convened.
2
Independent
Director
Yeh, Min-Kung
16
0
100
Independent
Director
Joseph Tong
Tang
9
7
100
convened.
convened.
Other remarks:
I. Disclosures required by Article 14-5 of the Securities and Exchange Act and any resolutions unapproved by
the Audit Committee but passed by more than two-thirds of all Directors; state the date and session of the
Board of Directors meeting, the agenda, Audit Committees' resolutions, and how the Company has
responded.
None.
II. Avoidance of involvements in interest-conflicting agendas by Independent Directors; state the names of
Independent Directors, the agenda, the nature of conflicting interests, and the voting process.
According to "Jih Sun Financial Holding Audit Committee Foundation Principles," independent directors who serve as members
of the Company’s Audit Committee must disassociate from any agenda that present self-interest in conflict with those of the
Company’s.
1. [19th meeting of the 2nd term of Audit Committee]
Agenda: Motion to remove restrictions imposed against the Company's directors for involving in competing
businesses. [Shareholder Meeting Agenda]
※ Avoidance of conflicting interests:
(1)
Applicable director: Independent Director Lin Chi-Chung
(2)
Reasons: the removal of restrictions against involvement in competing business posed a conflict
of interest between the Director and the Company.
(3)
Avoidance: the subject had disassociated from all discussions and voting of this agenda.
Resolution: Independent Director Lin Chi-Chung had disassociated from all discussion and voting of this
agenda due to conflicting interests. This agenda was proceeded by Acting Chairman/Independent
Director Yeh Min-Kung, and passed as proposed without objection from remaining directors.
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2. [ 29th meeting of the 2nd Audit Committee]
Agenda: Distribution of 2013 directors' remuneration for directors of Jih Sun Financial Holding Co., Ltd.
※ The 11 directors and independent directors of the Company had adopted a 2-stage voting process;
stakeholders were requested to avoid involvement where applicable.
Avoidance of conflicting interests:
(1) A package vote was made for matters concerning 8 "non-independent directors" of Jih Sun Financial Holding
Co., Ltd.
Outcome of votes: passed as proposed.
(2) For matters concerning the 3 "independent directors" of Jih Sun Financial Holding Co., Ltd., each stakeholder
had avoided discussion and voting on cases that pertained to their interests.
A. Discussions concerning 2013 remunerations to Independent Director Lin Chi-Chung:
Nature of conflicting interests:
Independent Director Lin Chi-Chung was a stakeholder to this agenda; for the avoidance of conflicting
interests, the party had disassociated from all discussions and voting pertaining to this case.
The meeting was proceeded by Independent Director Yeh, Min-Kung in place of the chairperson.
Outcome of votes: except for the disassociated party, all remaining independent directors had
unanimously agreed.
B. Discussions concerning 2013 remunerations to Independent Director Yeh, Min-Kung:
Independent Director Yeh, Min-Kung was a stakeholder to this agenda; for the avoidance of conflicting
unanimously agreed.
C. Discussions concerning 2013 remuneration to Independent Director Tang Teng:
Independent Director Tang Teng was a stakeholder to this agenda; for the avoidance of conflicting
unanimously agreed.
Resolution: A 2-stage voting process was adopted for this agenda. During the 1st stage, all 8 "non-independent directors"
had unanimously passed the agenda has proposed in a package vote. During the 2nd stage, the 3 "independent
directors" had avoided discussion and voting in separate cases that concerned their interests; except for the
disassociated parties, all remaining independent directors had unanimously agreed to the agenda proposed.
III. Communication between Independent Directors and internal/external auditors; state the matters discussed
(e.g. the Company's financial and business affairs, the methods and outcome of communication).
1. According to "Jih Sun Financial Holding Audit Committee Foundation Principles," the Audit Committee
may request for the presence of any relevant manager, internal auditor, accountants, legal advisor, or any
personnel of the Company to provide the necessary information.
2. Communication between the Independent Director and the Head of internal Audit:
(1). Before the end of each fiscal year, the company should submit the audit plan for the next year to the
Board for resolution after the plan is ratified by the Audit Committee.
(2). Report the implementation of the audit service to the Audit Committee on a quarterly basis.
(3). Within two months from the conclusion of the audit, the company must deliver the internal audit
report to the Audit Committee (Independent Directors) for review.
-71-
(4). The company must follow up and review the following issues: Inspection opinions or deficiencies
found in the inspection from financial regulators, the Internal Audit Department, and self-inspection
from internal units; and issues that require improvement listed in internal control declaration. The
company must deliver written reports on the improvements of the matters that require follow up to the
Audit Committee.
(5). Submit the Company’s annual internal control system effectiveness assessment and statement of
internal control system to the Audit Committee for review.
3. The Company's annual and half-yearly financial reports are subject to approval by more than 50% of Audit
Committee members before submitting to the Board of Directors for their final resolution. Prior to its
review, the Audit Committee invites auditors to provide comprehensive reports on their findings and
opinions. The management would also invite independent directors and certified public accounts to discuss
and communicate matters relating to corporate governance and internal control. Meanwhile, relevant
managers of the Company are also made present to provide information where necessary.
4. Auditors' independence is reviewed regularly once a year. Financial statement auditors and their teams are
required to produce a declaration of independence each year for review by the Company's Audit Committee
and Board of Directors before their service agreements can be renewed. The Company has not changed its
financial statement auditors for 7 consecutive years. The appointment of auditors for the 2014 financial
statements had been passed during the 19th meeting of the 2nd Audit Committee held on 2014.3.20, and
resolved during the 18th meeting of the 5th Board of Directors held on 2014.3.20.
1. The involvement of Supervisors in Board of Directors meetings: Not applicable.
(III) Disclosures required by the Corporate Governance Best-Practice Principles
for Financial Holding Companies:
The relevant requirements have been disclosed in the following website:
http://www.jsun.com
-72-
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(2) The Company has a concentrated shareholding structure. Corporate
shareholders represented in the Board of Directors have accounted
for more than 60% of ownership. The Company maintains sound
relationship with shareholders and is in constant control of their
identity.
(3)A stakeholders system had been implemented in accordance with
the Financial Holding Company Act, the Securities and
Exchange Act, and the Banking Act to facilitate real time checks
on whether a counterparty is a stakeholder. Transactions with
stakeholders will then proceed according to the relevant
regulations. Lending and non-lending transactions with the
Company's person-in-charge, major shareholders, affiliated
companies, and stakeholders are conducted in compliance with
V
V
(3) Has the financial holding company
established and implemented risk
management and firewalls on
companies it is affiliated with?
Summary description
(2) Is the financial holding company
constantly informed of the identities of
its major shareholders and the ultimate
controller?
No
(1) The Company's spokesperson and acting spokesperson are
responsible for handling shareholders' suggestions, disputes and
queries. Where the issue concerns share administration or legal
affairs, the Company would approach the share administration
agency or legal department for assistance.
Yes
V
1. Shareholding structure and shareholders'
rights within the financial holding company
implemented a set of internal
procedures to handle shareholders'
suggestions, queries, disputes and
litigations?
Assessment criteria
Actual governance (Note 1)
Best-Practice Principles for Financial Holding Companies
Complied
Deviation and causes of
deviation from Corporate
Governance Best-Practice
Principles for Financial
Holding Companies
(IV) Deviation and causes of deviation of the Company’s corporate governance practices from the Corporate Governance
-74-
(2) Does the financial holding company
conduct regular assessments regarding
the independence of its financial
statement auditors?
2. Assembly and obligations of the board of
directors
(1) Apart from the Remuneration
Committee and Audit Committee, has
the financial holding company
assembled other functional committees
at its own discretion?
Assessment criteria
V
Yes
V
No
(2) Auditors' independence is reviewed regularly once a year. Financial
statement auditors and their teams are required to produce a
declaration of independence each year for review by the Company's
Audit Committee and Board of Directors before their service
agreements can be renewed. The Company has not changed its
financial statement auditors for 7 consecutive years. Appointment of
2014 financial statement auditors was discussed as Agenda 1 during
the 19th meeting of the 2nd Audit Committee held on 2014.3.20,
and later passed as Agenda 3 during the 18th meeting of the 5th
(1) During the 2009 annual general meeting, three independent
directors were elected according to laws and the Memorandum to
assemble the Audit Committee and Remuneration Committee. No
other functional committees had been assembled.
Articles 44 and 45 of the Financial Holding Company Act.
Based on the above regulation, the Company has implemented
internal policies including "Jih Sun International Bank
Stakeholders Lending Policy," "Jih Sun Financial Holding
Mandatory Reporting and Disclosure Guidelines for Article 46
of the Financial Holding Company Act," and "Jih Sun Financial
Holding and Subsidiaries Operating Principles for Non-credit
Transactions with Stakeholders."
Summary description
Complied
Holding Companies
-75-
5. Does the financial holding company have
other information that enables a better
understanding of the company's corporate
governance practices (including but not
3. Does the financial holding company have
any means to communicate with
stakeholders?
4. Disclosure of information
established a website that discloses
financial, business, and corporate
governance-related information?
adopted other means to disclose
information (e.g. English website,
assignment of specific personnel to
collect and disclose corporate
information, implementation of a
spokesperson system, broadcasting of
investor conferences via the company
website)?
Assessment criteria
V
(2) Other means of information disclosure:
A. The Company has implemented a Spokesperson Policy, an
Acting Spokesperson Policy, and "Jih Sun Holding External
Communication Policy."
B. A system was established for posting public information over
the Internet.
C. An English website has been established.
D. The Company has assigned dedicated personnel for the
collection of information relating to the Company, thereby
facilitate more transparent and timely disclosure of information.
E.The Company has disclosed all information relevant to corporate
governance in compliance with the regulations.
1. To enhance supervisory and managerial efficiency of the Board of
Directors, "Jih Sun Financial Holding Board of Directors Conference
Rules" have been established to serve as a guideline for board meetings.
2. Directors' and supervisors' ongoing education: all of the Company's
V
The Company has designated its Administration Division to serve as the
point of contact and to maintain data on a regular basis.
Board of Directors held on 2014.3.20.
Summary description
(1) The Company has established a website for the disclosure of
financial performance and corporate governance.
No
V
V
Yes
Complied
Complied
Complied
Holding Companies
-76-
limited to employee rights, employee care,
investor relations, stakeholders' rights,
continuing education of
directors/supervisors, implementation of
risk management policies and risk
measurements, implementation of customer
policy, insuring against liabilities of
company directors and supervisors, and
donation to political parties, stakeholders
and charity organizations)?
Assessment criteria
Yes
No
directors and supervisors had completed the mandatory courses and
training hours in 2014. Please see the annual report for details of their
training.
3. Risk management policies and risk assessments: please see P.220~P.236
of the annual report.
4. Customer policies: the Company has implemented and enforced
confidentiality measures to protect customers' interests throughout Jih
Sun Holding and subsidiaries. All disclosures, transfers, or uses of
customers' information are consent in writing by the respective
customers.
5. Insurance against directors' and supervisors' liabilities: the Company has
insured itself against liabilities of its directors and supervisors in
accordance with Articles 39 and 49 of Corporate Governance
Best-Practice Principles for TWSE/GTSM Listed Companies; these
insurance policies cover the entire duration of service of the above
parties.
6. Rights and care for employees: the Company is especially dedicated to
improving employees' work efficiency and loyalty by providing the best
welfare and maintaining sound employer/employee relationship through
care and protection.
7. Investor relations: to enhance the transparency of financial and business
information, the Company has appointed a spokesperson and an acting
spokesperson to address the public with accurate and reasonable
explanations to investors' queries. Furthermore, the Company makes
regular public announcements as required by law and publishes
information to the Market Observation Post System and to the
Summary description
Holding Companies
-77-
Yes
V
No
Company's own website for easy access.
8. Supplier relations: the Company has maintained good relationship with
its suppliers and developed mutual trust through sharing of information,
which in turn raises satisfaction and loyalty between the two parties and
facilitates positive influences to work efficiency.
The Company neither prepares a corporate governance self-assessment
report nor commissions a professional organization to compile a corporate
governance assessment report.
Summary description
Holding Companies
Description: the Company will be changing the list of mandatory disclosures to conform with "Corporate Governance Principles for Financial Holding Companies."
Note 1: always provide explanations in the summary description column, regardless of whether actual governance is ticked "Yes" or "No."
Note 2: The corporate governance self-assessment report mentioned here refers to any assessments relating to corporate governance that are conducted and
addressed by the Company itself, including a report on how the Company has enforced its corporate governance.
6. Has the financial holding company
prepared a corporate governance
self-assessment report or commissioned a
professional organization to compile a
corporate governance assessment report?
(If so, please state the board of directors'
opinions, the result of the self/external
assessment, any major weaknesses or
suggestions raised, and improvements
made.) (Note 2)
Assessment criteria
(V) If a remuneration Committee is established within the Company, the
composition, responsibilities, and functioning of such a committee must be
disclosed:
1. Information of the Remuneration Committee members
Having more than 5 years’ work
Compliance of independence
experience and the following qualifications
(Note 2)
Qualification
Identity
(Note 1)
Name
Independent
Director
Independent
Director
Independent
Director
Director
Director
Others
Lecturer or
above of
commerce, law,
finance,
accounting, or
any subject
relevant to the
Company’s
business
operations in a
public or private
college
Certified
judge,
attorney,
lawyer,
accountant,
or holders
of
professional
qualificatio
n relevant
to banking
operations
Commercial
, legal,
financial,
accounting
or other
work
experiences
1
relevant to
business
operations
as required
to perform
the assigned
duties
2
3
4
5
6
7
Number of
positions at
Remuneration
Committees
of other
8
stock-issuing
companies
Joseph Tong Tang
3
3
3 3 3 3 3 3 3 3
0
Lin Chih-Chung
3
3
3 3 3 3 3 3 3 3
2
Yeh, Min-Kung
3
3
3 3 3 3 3 3 3 3
0
3
3
3
3
3
3 3 3 3 3 3
3 3 3 3 3 3
0
0
3
3
3 3 3 3 3 3 3 3
0
Huang Chin-Tang
James C. Tang
Tang Chak Lam,
Charlie
Remarks
(Note 3)
Compliance
Compliance
Other remarks:
Note 1:Please state whether the person is a director, independent director, or others in the “Identity”
column.
Note 2:For the members who match the following descriptions within the two years before they assume
the positions and during their term of office, please enter “9” under the corresponding code.
(1) Not employed by other companies or any of their affiliated companies.
(2) Not a director or supervisor of any company or its affiliated companies (not applicable to the
independent director of any company, its parent company, or subsidiaries to which the
Company holds more than 50% direct or indirect voting interest).
(3) Does not hold more than 1% of the Company’s outstanding share capital under the
director/supervisor, spouse, underage children, or in any other person’s name; nor is any
party listed herein one of the Top 10 natural person shareholders of the Company.
(4) Not a spouse, relative of second degree, or direct kin of third degree or closer to persons not
qualified for criteria 1~3.
(5) Not a director, supervisor, or employee of the Company’s corporate shareholder holding
more than 5% of the Company’s outstanding capital; nor a director, supervisor, or employee
of the Company’s top 5 corporate shareholders.
(6) Not a director, supervisor, manager, or shareholder with more than 5% ownership interest of
companies or institutions to whom the Company has business dealings with.
(7) Not a professional, business owner, partner, director, supervisor, or manager of any
sole-proprietorship, partnership, company, or institution providing commercial, legal,
financial, or accounting services or consultation to the Company or any of its affiliated
companies, nor a spouse to anyone listed herein.
(8) Does not meet any descriptions stated in Article 30 of the Company Act.
Note 3:If the status of the member is a director, please state whether the member complies with Article 6,
Paragraph 5 of the “Regulations Governing the Appointment and Exercise of Powers by the
Remuneration Committee of a Company Whose Stock is Listed on the Stock Exchange or Traded
over the Counter”.
-78-
2. Operations of Remuneration Committee
(1) The Company’s Remuneration Committee consists of 4 members.
(2) The term of this Committee is from 5 July 2012 to 21 June 2015. In the last year, the
Remuneration Committee has met seven times (A) (1 January 2014 ~ 20 March
2015. The qualifications of members and their attendance record are as follows:
Actual
Attendance
(B)
Proxy
Attendance
(proxy) attendance
(%)
(B/A) (Note)
7
0
100%
Committee Lin Chih-Chung
5
2
71.4%
Committee Yeh, Min-Kung
7
0
100%
1
0
100%
1
0
100%
7
0
100%
Title
Convener
Committee
Name
Joseph Tong
Tang
Huang
Chin-Tang
Committee James C. Tang
Committee
Tang Chak Lam,
Charlie
Remarks
during active duty
during active duty
during active duty
Resigned 2014.1.17
during active duty
Resigned 2014.1.17
during active duty
during active duty
Note:
(1) The date of resignation must be specified for members of the Remuneration Committee who had
resigned prior to the close of the financial year. The percentage of actual attendance (%) is
calculated based on the number of Remuneration Committee meetings held and the number of
meetings actually attended during active duty.
(2) If a re-election of Remuneration Committee members had taken place prior to the close of the
financial year, members of both the previous and the current Remuneration Committee must be
listed; in which case, the remarks column shall specify whether the committee member was
elected in the previous board, the new board, or both. The percentage of actual attendance (%) is
calculated based on the number of Remuneration Committee meetings held and the number of
meetings actually attended during active duty.
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1. Implementation of sound corporate
governance
(1) Does the company have a corporate
social responsibility policy or system in
place? Is progress reviewed on a regular
basis?
(2) Does the company organize social
responsibility training on a regular basis?
(3) Does the company have a unit that
specializes (or is involved) in CSR
practices? Is the CSR unit run by senior
management and reports its progress to
the board of directors?
(4) Has the company implemented a
reasonable remuneration system that
associates employees' performance
appraisals with CSR? Is the
remuneration system supported by an
effective reward/discipline system?
Assessment criteria
(2) Training courses of relevant topics have been included in the
orientation.
(3) This responsibility is jointly assumed by the President's Office and
the Administration Division. Following the gas explosion incident in
Kaohsiung, a proposal for donation had been raised and was passed
by the Board of Directors.
(4) A.Training courses on professional ethics, risk management, and
work safety have been organized to help new recruits build up
awareness towards professional conducts, risks and safety.
Compliance tests and internal control courses are held on a regular
basis to convey the importance of working within the confines of
law and controlling risks.
B.The Company assesses employees' performance in terms of
innovation, team work, and several other aspects related to
corporate ethics. Reward and disciplinary actions have also been
outlined in the work rules.
Yes
Yes
Yes
(1) The structure and content of the CSR report is reviewed on a yearly
basis to ensure comprehensive disclosure of the Company's CSR
efforts.
Summary Description (Note 2)
Yes
Yes No
(VI) Fulfillment of social responsibilities
Social Responsibility Best
Practice Principles for
TWSE/GTSM Listed
Companies (Note 3)
-81-
Yes
Yes No
Yes
(2) Has the company developed an
appropriate environmental management
system, given its distinctive
characteristics?
Yes
(3) Is the company aware of how climate
changes affect its business activities?
Are there any actions taken to measure
and reduce greenhouse gas emission and
energy use?
2. Fostering a sustainable environment
(1) Is the company committed to achieving
efficient use of resources, and using
renewable materials that produce less
impact on the environment?
Assessment criteria
(1) The Company's energy-saving programs are conveyed, monitored
and reviewed on a regular basis; in the meantime, the Company pays
close attention to new laws and agreements that have been
introduced around the world to address climate changes, and the
impacts they have on the Company so that responsive measures
could be devised.
(2) The Company has been actively raising employees' awareness
towards environmental protection and energy conservation by setting
example in managing water resources, waste, power, and use of
office.
(3) A.The Company engages external contractors to clean, sterilize, and
maintain its work environment on a regular basis.
B.The Company has a department dedicated to the maintenance and
environmental friendliness of office premises.
C.The Company adopts stringent energy management during
summers, requiring all offices to set air-conditioning at 26
degrees and increase temperature setting of compressor units by
1~2 degrees.
D.The Company purchases and rents office equipment with
energy-saving features.
E. Garbage sorting is both promoted and enforced within the
Company.
F. Employees are encouraged to take stairs instead of elevators and
use it as a means of exercise. Some elevators are shut down
outside office hours and during public holidays to reduce power
usage. The number of hours for which signboards are lit have
been cut down at 90 office locations nationwide.
TWSE/GTSM Listed
Companies (Note 3)
-82-
Yes No
(6) Has the company implemented
consumer protection and grievance
policies with regards to its research,
(4) Does the company have means to
communicate with employees on a
regular basis, and inform them of
operational changes that may be of
significant impact?
(5) Has the company implemented an
effective training program that helps
employees develop skills over their
career?
(3) Does the company provide employees
with a safe and healthy work
environment? Are employees trained
regularly on safety and health issues?
Yes
Yes
Yes
Yes
3. Enforcement of public welfare
(1) Has the company developed its policies Yes
and procedures in accordance with laws
and International Bill of Human Rights?
(2) Does the company have means through Yes
which employees may raise complaints?
Are employee complaints being handled
properly?
Assessment criteria
(6) A.The Company complies with the "Financial Consumer Protection
Act" and protects the interests of its customers.
B.The Company has published a "Declaration of network security"
(5) Human resource development is part of the Company's long-term
strategy. We have established a training system to accommodate
employees' career development and provide opportunities for them
to learn and grow. A career development program has also been
introduced along with courses that help employees develop new
skills for the next challenges ahead.
(1) The Company complies with labor regulations and protects
employees' rights; it has human resource policies and proper
management practices and procedures in place to support its goals.
(2) The Company's employees are entitled to raise complaints on issues
concerning the Labor Standards Act, Occupational Safety and Health
Act, Employee Welfare Fund Act, Labor Insurance Act, Labor
Inspection Act, Employment Welfare Act or any regulation deemed
relevant. Complaints can be made via phone: (02)2561-5888 ext
6323, FAX: (02)2567-5889, or email: [email protected].
(3) In addition to providing employees with a safe and healthy work
environment, the Company also arranges to have new recruits
undergo safety training so that they understand more about the
hazards at work. Health Seminars and counseling sessions are held
on a quarterly basis, whereas arrangements have been made for
employees to undergo annual health check-ups.
(4) Employer/employee meetings are held to promote employment
relations and to protect employees' interests; it serves as a channel
for two-way communication and mutually beneficial solutions.
TWSE/GTSM Listed
Companies (Note 3)
-83-
Yes No
Yes
(7) Has the company complied with laws
and international standards with regards
to the marketing and labeling of products
and services?
Yes
(8) Does the company evaluate suppliers'
environmental and social conducts
before commencing business
relationships?
Yes
(9) Is the company entitled to terminate
supply agreement at any time with a
major supplier, if the supplier is found to
have violated its corporate social
responsibilities and caused significant
impacts against the environment or the
society?
development, procurement, production,
operating and service activities?
Assessment criteria
(9) All agreements that the Company has signed with major suppliers
contain clauses that enable the Company to terminate business
arrangement if the supplier is found to have violated prohibitions,
public orders, moral standards, consumer protection laws, or any
environmental/safety/health laws that it is bound to comply.
(8) Prior to dealing with a supplier, the Company would conduct
investigations regarding the supplier's reputation.
on its homepage that explains the types of firewalls, encryptions,
and protections taken to ensure security of customers' online
transactions, as well as notes on usage of online services.
C.In addition to offering a great variety of innovative products and
financial solutions, the Company commissions external agencies
to conduct customer satisfaction surveys and monitor service
quality.
D.The Company has disclosed its consumer complaint hotline on the
website of the Banking Bureau of the Financial Supervisory
Commission, and assigned staff of Vice President grade to handle
complaints.
E. The Company also has toll-free, 24-hour Internet banking service
hotline in place, with details such as service hours disclosed on the
Bank's homepage. Any consumer disputes reported over the
hotline will be referred to the accountable department and
promptly reported back to the consumer.
(7) The Company has labeled and marketed its products and services in
accordance with laws and international standards.
TWSE/GTSM Listed
Companies (Note 3)
-84-
Yes No
TWSE/GTSM Listed
Companies (Note 3)
Note 2: if the company has prepared a CSR report, the summary description may be completed by providing page references to the CSR report
instead.
Note 3: non-public listed financial holding companies need not explain "Deviation and causes of deviation from Corporate Social Responsibility
Best Practice Principles for TWSE/GTSM Listed Companies."
4. Enhanced information disclosure
Has the company disclosed relevant and
Yes
CSR information has been disclosed both on Market Observation Post
reliable CSR information on its website and
System and the Company's website.
at the Market Observation Post System?
5. If the company has established its own CSR policies in accordance with "Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed
Companies," please describe its current practices and any deviations from the Best Practice Principles: None.
6. Other information useful to the understanding of corporate social responsibilities:
(1) Kinmen Branch: participated in the "2014 Charity Carnival" organized by Taiwan Fund for Children and Families Kinmen Branch. The NT$8,000 sale made
on that day had been donated. (2014.12.7)
(2) Nanjing Branch: participated in a help-garlic-farmers campaign by purchasing 6 bags totaling 180 kg of garlic for NT$4,500 (2014.4.30-2014.5.31)
(3) Nanjing Branch: sponsored NT$14,400 in the 2014 1919 Let's Run event organized by Studio Classroom, during which 16 employees had participated in the
run (2014.8.2)
(4) Nanjing Branch: the person-in-charge donated NT$20,000 to the 1919 Walk event (2014.9.1-2015.1.31)
(5) A carton of bags was donated for the charity auction organized by Catholic Tainan Diocese (2014.12.7)
(6) Organized summer internship for 10 students from Kun Shan University (2014.07.07-2014.07.11~2014.07.14-2014.07.18)
(7) Luzhou Branch organized a blood donation event in joint effort with Luzhou District Yunlin Folk Association, during which the branch staff volunteered and
prepared 300 concessions for blood donors (2014.1.5).
(8) In an effort to care for children living in remote areas, the Company donated used computers and word processing software to Tzih Huai Social Welfare
Foundation (20 units; 2014.10.13), Kanting Elementary School (10 units; 2014.11.21), Chulai Elementary School (10 units; 2014.11.21), Degao Elementary
School (10 units; December 2014), and Feng Nian Elementary School (15 units; December 2014).
(9) A donation of NT$5 million was made to victims of the Kaohsiung gas explosion incident (2014.08.22)
7. Describe the criteria undertaken by any institution to certify the Company's CSR report: None.
Assessment criteria
-85-
Yes
Yes
(2) Does the company have any measures
against dishonest conducts? Are these
measures supported by proper procedures,
behavioral guidelines, disciplinary actions
and complaint systems?
Yes
(3) Has the company taken steps to prevent
occurrences listed in Article 7, Paragraph 2
of "Ethical Corporate Management Best
Practice Principles for TWSE/GTSM-Listed
Companies" or business conducts that are
prone to integrity risks?
2. Integrity actions
(1) Does the company evaluate the integrity of Yes
all counterparties it has business
relationships with? Are there any integrity
clauses in the agreements it signs with
business partners?
1. Establishment of integrity policies and solutions
(1) Has the company stated in its Memorandum Yes
or external correspondence about the policy
and practices it has to maintain business
integrity? Are the board of directors and the
management committed in fulfilling this
commitment?
Assessment criteria
(VII) Integrity performance
No
(1) When lending, Jih Sun Bank assesses the credit backgrounds of its
borrowers and approves limits based on its findings. The loan
agreement has explicitly stated that any violation against the integrity
clause would entitle the Bank to demand repayments earlier than the
scheduled maturity.
(1) The Company believes integrity and honesty to be the foundation of
all business activities, and has therefore specified "credibility,
honesty, and accountability" as the three principles that employees are
bound to uphold. This devotion to business integrity has been
disclosed to all employees through the Company's internal system,
and announced to the public through Jih Sun Holding's website and
the 2014 CSR report. The Company already has Directors' and
Managers' Moral Guidelines in place to govern the conducts of
Directors, Independent Directors, and managers.
(2) Standard operating procedures have been created based on internal
policies of the financial holding company and the banking subsidiary.
Disciplinary actions are carried out in accordance with internal
policies. Malpractices are reported and handled according to the
Company's internal procedures.
(3) Certain job roles are rotated on an irregular basis to prevent fraud. In
an attempt to prohibit dishonest conducts, the Company has
developed self-discipline guidelines, directors' and managers' code of
conduct etc. based on the version created by the Bankers Association.
Summary description
deviation from Integrity
Best-Practice Principles
for TSEC/GTSM Listed
Companies (Note 2)
-86-
Yes
3. Reporting of malpractice
Yes
(1) Does the company provide incentives and
means for employees to report malpractices?
Does the company assign dedicated
personnel to investigate the reported
(5) Does the company organize internal or
external training on a regular basis to
maintain business integrity?
(3) Does the company have any policy that
prevents conflict of interest, and channels
that facilitate the report of conflicting
interests?
(4) Has the company implemented effective
accounting and internal control systems for
maintaining business integrity? Are these
systems reviewed by internal or external
auditors on a regular basis?
(1) The Company has implemented a multitude of communication
channels as well as reporting mechanisms inside the organization.
Upon discovering any violation against the code of conducts,
employees may report the incident to the management or to human
(4) The Company has implemented effective accounting policies. The
internal audit department conducts audits regularly in accordance with
Financial Statement Preparation Guidelines for Public Listed Banks,
and assists external auditors on the audit of financial statements. The
Company has implemented effective internal control systems. It has
an internal audit department that audits and assists external auditors in
the audit of the system in accordance with Implementation Rules of
Internal Audit and Internal Control System of Financial Holding
Companies and Banking Industries and the Company's policies.
(5) All new recruits are required to undergo integrity training during
orientation. The "Jih Sun Principles" are read once a month during
monthly meetings to remind employees of the standards they need to
uphold. The Legal & Compliance Division also conducts monthly
communications on dishonest conducts noticed within the society and
among peers.
Summary description
Yes
No
(2) The Company has assembled a team that specializes in handling
corporate integrity matters, implemented internal controls and audit
policies, and designated both internal and external auditors to review
progress from time to time. Auditors' findings are reported by the
Audit Division to the Board of Directors on a regular basis.
(3) The Investor Relations section in Jih Sun Holding's website serves as
a means of communication; meanwhile, complaint mailboxes have
also been made available within the organization.
Yes
Yes
(2) Does the company have a unit that
specializes (or is involved) in business
integrity? Does this unit report its progress to
the board of directors on a regular basis?
Assessment criteria
Companies (Note 2)
-87-
Yes
No
resources via email, opinion boxes, or in writing. A customer opinion
mailbox has also been created to accept complaints and reports from
outside the organization.
(2) The Company has implemented standard procedures and
confidentiality measures for handling reported malpractices.
Summary description
Companies (Note 2)
Note 2: non-TWSE and non-GTSM listed financial holding companies need not explain "Deviation and causes of deviation from Corporate Governance Best-Practice
Principles for TWSE/GTSM Listed Companies."
6. Other information relevant to understanding the company's business integrity (e.g. reviews over business integrity principles):
To facilitate sound governance and management, the Company's Board of Directors has been founded and operated in accordance with the Memorandum of
Association and the responsibility guidelines. 3 independent directors have been appointed in compliance with law and the Memorandum to form an Audit
Committee that specializes in supervising operations and enhancing management practices within the Company. An Investor Relations section has been created on
the Company's website to serve as means of communication to the public.
(2) Has the company implemented any standard
procedures or confidentiality measures for
handling reported malpractices?
(3) The Company has measures in place to assure that malpractice
(3) Does the company assure malpractice
reporters will not be mistreated in any way.
reporters that they will not be mistreated for
making such reports?
4. Enhanced information disclosure
Has the company disclosed its integrity principles Yes
Such information has been disclosed on Jih Sun Holding's website and
and progress onto its website and MOPS?
MOPS.
5. If the company has established business integrity policies in accordance with "Ethical Corporate Management Best Practice Principles for TWSE/GTSM-Listed
Companies," please describe its current practices and any deviations from the Best Practice Principles: None.
malpractices?
Assessment criteria
(X) Disclosures relating to the execution of internal control:
1. Statement of internal control
Declaration of Internal Control of Jih Sun Financial Holding Co., Ltd.
On behalf of Jih Sun Financial Holding Co., Ltd., we hereby declare that between the
period January 1 and December 31, 2014, the Company has established internal control policies
and exercised risk management in accordance with "Implementation Rules of Internal Audit and
Internal Control System of Financial Holding Companies and Banking Industries." These
policies and practices were also inspected by an independent audit department that reported
regularly to the Board of Directors and the Audit Committee. After a careful assessment, it was
found that all units were able to effectively execute internal control and compliance-related
tasks during the year. This statement forms an integral part of the Company's annual report and
prospectus, and shall be made public. Any illegal misrepresentation or omission relating to the
public statement above are subject to the legal consequences under Articles 20, 32, 171, and 174
of the Securities and Exchange Act.
To
Financial Supervisory Commission
Declarers
Chairman:
(Signature & seal)
President:
(Signature & seal)
Chief Auditor:
(Signature & seal)
Legal and Compliance Officer:
(Signature & seal)
19 March 2015
-88-
2. Where the Certified Public Accountant was retained to conduct special review of
the internal control system, the Certified Public Accountants review report should
be disclosed: None.
(XI)
The penalties imposed upon Jih Sun FHC and its subsidiaries, and the
major faults and corrective action (remedial measure) over the past two
years shall be disclosed:
1. Company representatives or staff prosecuted by attorney for criminal conducts:
(1) Jih Sun Financial Holding Co., Ltd.: None.
(2) Jih Sun Securities Co., Ltd.: None.
(3) Jih Sun International Commercial Bank Limited: None.
(4) Jih Sun International Property Insurance Agency Co., Ltd.: None.
2. Fines imposed by the Financial Supervisory Commission for regulatory violations:
3. Faults for which the Company received rectification from the Financial Supervisory
Commission, Executive Yuan:
(1) Jih Sun Financial Holding Co., Ltd.: none.
(2) Jih Sun Securities Co., Ltd.:
FSC Letter No. Financial-Supervisory-Securities-10300003374 dated 2014.3.20
read: Chiang, former trade manager of the company's Yongkang Branch, was found
to have made private arrangements with customers to conduct unauthorized
discretionary investment services and to share profits from securities trading. These
conducts had violated securities regulations, for which an order of rectification was
issued in accordance with Article 65 of the Securities and Exchange Act.
Improvements:
The subsidiary had reiterated the importance of complying with regulations and
internal controls while conducting business activities, and empowered business
departments to enhance management over their staff and internal auditors to escalate
audit intensity over business practices.
(3) Jih Sun International Commercial Bank Ltd.:
FSC Letter No. Financial-Supervisory-Banking-Control-10100354950 dated
2013.1.4 read: Chen ○○, former staff of the bank's Xinyi Branch, was found to have
embezzled funds from customers' investment accounts. An order of rectification has
been issued in accordance with Article 61-1, Paragraph 1 of the Banking Act, and the
Financial Supervisory Commission hereby orders the immediate dismissal of Chen's
duties under Article 61-1, Paragraph 1, Subparagraph 3 of the Banking Act.
Improvements:
The subsidiary has implemented additional controls and monitoring measures
-89-
for elderly customers. In addition, business managers have been instructed to
accompany staff to their sales.
(4) Jih Sun International Property Insurance Agency Co., Ltd.: none.
4. Penalties imposed by the Financial Supervisory Commission in accordance with
Article 54, Paragraph 1 of the Financial Holding Company Act: None.
5. Disclosure of losses exceeding NT$50 million incurred during the year, whether
individually or in total, as a result of conspiracy, extraordinary non-recurring events,
(including fraud, theft, misappropriation and steal of assets, fictitious transactions,
forgery of documents and securities, kick-backs, natural disasters, external forces,
hackers’ attacks, theft and leakage of confidential information, disclosure of
customers’ details or other major events), or accidents arising from failure to comply
with Safety and Maintenance Guidelines for Financial Institutions:
6. Other disclosures deemed necessary by the authority: None.
(XII) Major resolutions made by the Shareholders’ Meeting and the Board of
Directors during the latest financial year, up to the publication date of this
annual report.
1. The major resolutions of the 2014 shareholders’ ordinary meeting and their execution
progress:
Year
2014 shareholders’
ordinary meeting
Date
20 June 2014
Contents of the subject issue
Implementation of the decision
so resolved
Passed; conducted according to
the resolution.
Acknowledging the
Company’s 2013 business
report and financial statements.
Passed; conducted according to
Acknowledging the
the resolution.
Company’s 2013 earnings
appropriation.
The Company’s 2013 earnings Passed as proposed; conducted
capitalization and the issuance according to the resolution.
of stock dividends.
Amended "Jih Sun Financial Passed as proposed; conducted
Holding Asset Acquisition and according to the resolution.
Disposal Procedures."
Release the Company’s 5th
Passed as proposed; conducted
term directors from the
according to the resolution. The
non-competition restriction. information was uploaded to the
Market Observation Post System
(MOPS) on 20 June 2014.
-90-
2. Significant board of directors resolutions made in the latest financial year, up to the
publication date of this annual report:
Year/quarter
Major Board of Directors resolutions
1.
2.
3.
4.
5.
6.
7.
2014 Q1
8.
9.
10.
11.
12.
1.
2.
2014 Q2
3.
4.
5.
1.
2.
3.
4.
2014 Q3
5.
6.
7.
8.
9.
Passed proposal to adjust the size of the Company's 2nd Remuneration
Committee.
Passed the Company's 2014 business plan.
Passed the Company's 2014 budget.
Set limits on market risk exposure for the financial holding company, its
subsidiaries, and individual departments for 2014.
Appointed a CPA firm for the Company's 2014 financial statement audit
and profit-seeking enterprise business income tax filing, and determined
the level of CPA's remuneration.
Passed the Company's "2013 Internal Control Assessment Report" and
"2013 Declaration of Internal Control Policies."
Passed the Company's 2013 business overview report. (Shareholder
meeting agenda)
Passed the Company's 2013 business report and financial statements.
(Shareholder meeting agenda)
Amended "Jih Sun Financial Holding Asset Acquisition and Disposal
Procedures." (Shareholder meeting agenda)
Passed the proposal to remove restrictions imposed against the Company's
directors for involving in competing businesses. (Shareholder meeting
agenda)
Finalized details regarding the Company's 2014 annual general meeting.
(Shareholder meeting operations)
Passed details regarding acceptance of shareholders' written proposals for
the Company's 2014 annual general meeting. (Shareholder meeting
operations)
Passed the Company's 2013 earnings appropriation. (Shareholder meeting
agenda)
Passed to capitalize the Company's 2013 earnings against issuance of new
shares. (Shareholder meeting agenda)
Reappointed the 5th board of directors and supervisors for subsidiary - Jih
Sun International Property Insurance Agency Co., Ltd.
Amended "Jih Sun Financial Holding Procurement and Inspection Rules."
Passed the Company's 2014 Q1 financial statements.
Appointed the 8th board of directors (including independent directors) for
subsidiary - Jih Sun International Commercial Bank Ltd.
Appointed the 14th board of directors (including independent directors) for
the subsidiary – Jih Sun Securities Co., Ltd.
Set the "ex-rights date," "ex-dividend date," "share issuance date," and
"book closure period" relating to the Company's ordinary share dividends.
Amended "Jih Sun Financial Holding and Subsidiaries Operating
Principles for Non-credit Transactions with Stakeholders."
Amended "Jih Sun Financial Holding Employee Salary Policy."
Passed the Company's 2014 first-half financial statements.
Passed a donation of NT$5 million to Kaohsiung City Government Social
Affairs Bureau following the gas explosion incident in Kaohsiung City.
Amended "Jih Sun Financial Holding and Subsidiaries Information
Security Rules."
Amended "Jih Sun Financial Holding and Subordinates Performance
Bonus Rules."
-91-
Year/quarter
Major Board of Directors resolutions
1.
2.
3.
2014 Q4
4.
5.
6.
7.
1.
2.
3.
4.
5.
6.
7.
8.
9.
2015 Q1-
10.
11.
12.
13.
14.
15.
16.
Passed 2014 Q3 financial statements of Jih Sun Financial Holding Co.,
Ltd.
Amended "Jih Sun Financial Holding Audit Rules."
Passed distribution of 2013 bonus for employees of Jih Sun Financial
Holding Co., Ltd.
Passed distribution of 2013 remuneration for directors of Jih Sun Financial
Holding Co., Ltd.
Passed 2015 audit plan for Jih Sun Financial Holding Co., Ltd.
Amended "Jih Sun Financial Holding and Subsidiaries Operating
Principles for Non-credit Transactions with Stakeholders."
Passed to establish "Jih Sun Financial Holding General Bonus Rules."
Passed "Jih Sun Financial Holding Management Foundation Principles."
Amended "Jih Sun Financial Holding Compliance Rules."
Appointed a CPA firm for the Company's 2015 financial statement audit
and profit-seeking enterprise business income tax filing; reappointed CPA
and determined the level of CPA's remuneration.
Passed the Company's plans to deploy throughout Asia.
Passed the Company's 2015 business plan.
Passed the Company's 2015 budget.
Set limits on market risk exposure for the financial holding company, its
subsidiaries, and individual departments for 2015.
The Company’s “Overall Evaluation of Internal Control System 2014” and
Internal Control Declaration 2014” be duly resolved in the Meeting.
The amendment of “Regulations of Jih Sun Financial Holding Co., Ltd.
Governing Review over New Products of Its Auxiliaries” should be
resolved in the Meeting.
The Company’s Business Report 2014 was duly resolved in the Meeting.
The Company’s Business Report and Financial Statements 2014 were duly
The issue to convene the Company’s regular shareholders meeting 2015
was duly resolved in the Meeting.
The issue to entertain proposals to be posed by shareholders in writing for
the Company’s regular shareholders meeting 2015 was duly resolved in
the Meeting.
The issue for the regular shareholders meeting 2015 to entertain proposed
candidates for directors (including independent directors) was duly
The issue to propose to the shareholders’ meeting for reelect the
Company’s directors of Session VI was duly resolved in the Meeting.
The issue to propose to the shareholders’ meeting to lift the
non-competition ban on the Company’s directors elected for Session VI
was duly resolved in the Meeting.
-92-
(XIII) Documented opinions or declarations made by Directors or Supervisors
against the major resolutions of the Board of Directors in the last year, up
until the publication date of this annual report: None.
(XIV) Resignation of personnel related to the preparation of financial statements
in the last year, up until the publication date of this annual report:
Jih Sun Financial Holding Co., Ltd.: None.
Jih Sun Securities Co. Ltd:
Title
Name
Date onboard
Date discharged
President
Jiang Yen-Hsiu
2012.01.18
2014.10.10
Reasons for
resignation or
discharge
Resigned
Jih Sun International Commercial Bank Ltd.: none.
Jih Sun International Property Insurance Agency Co., Ltd.: none.
Note: personnel related to the preparation of financial statements include Chairman, President,
Head of Accounting, Head of Finance, Chief Auditor, Head of R&D etc.
-93-
-94-
Chen
Fu-Wei
Chung
Dan-Dan
Name of CPA
1,100
Audit fee
0
Policy
design
200
0
0
License
Human
Others
registration resources
Non-audit fee
200
Subtotal
1,310
Total
Remarks
Non-audit remuneration comprised of
2014.01.01-2014.12.31 fees paid for handling capitalized
earnings.
Audit period
Unit: NTD thousand
VI. Disclosure of any of the Company’s Chairman, President, or managers involved in financial or accounting
affairs being employed by the CPA’s firm or any of its affiliated company within the last year: None.
V. Change of CPA: None.
KPMG
Name of
firm
amount of audit and non-audit services must be disclosed:
(I)For fee of non-audit services to CPAs, CPAs’ firm and its affiliated companies exceeding one quarter of audit fee, the nature and
IV. Disclosure of CPAs’ remuneration
VII. Details of equity transfer and the change in pledge of stock with
voting rights in the most recent year and up to the publication
date of the annual report among directors, supervisors, managers
and those who are required to declare share ownership according
to Article 11 of the “Regulations Governing the Same Person or
the Same Related Party Holding Voting Shares of the Same Bank
over a Certain Percentage.
(I)Shareholding
changes
of
directors,
supervisors,
managers,
and major
shareholders
Title
(Note 1)
Name
Representative: Huang
Chin-Tang
Vice Chairman
SIPF B.V.
(major shareholder)
Representative: James C. Tang
Director
SIPF B.V.
(major shareholder)
Representative: Nitin Bajpai
SIPF B.V.
Director
Representative: Chunmei
(major shareholder)
Huang
Director
Representative: Huang Flynn
(major shareholder)
Xuxian
Director
Representative: Huang, Chi
(major shareholder)
Yun
Director
Representative: Hsieh
(major shareholder)
Chih-Wei
Director
Representative: Yang
(major shareholder)
Chih-Kuang
Independent Director Lin Chih-Chung
Independent Director Yeh, Min-Kung
Independent Director Joseph Tong Tang
President
Wang Chih-Fang
Senior Vice President Huang Chin-Min
Executive Vice
Wu Wen-Ko
President
Vice President
Lin Che-Li
Vice President
Lloyd Lin
Senior Vice President Chung, Hsueh-Ti
Chief Auditor
Su, Bao-Hsiu
Senior Assistant V.P. Cheng, Ru-Mu
Senior Assistant V.P. Yen Chien-Hua
Senior Assistant V.P. Lin Tao-Hsiao
Senior Assistant V.P. Hsu, Mu-Chun
Senior Assistant V.P. Chang Bo-Hsiung
Junior Project V.P.
Chang Shou-Hsien
Senior Assistant V.P. Hou Kuan
Chairman
(major shareholder)
2014
Up till 14 April 2015
Increase
Increase
Increase
Increase
(Decrease) in (Decrease) in (Decrease) in (Decrease) in
current
shares
current
shares
holding
collateralized
holding
collateralized
27,948,785
None
None
None
41,166,628
None
None
None
41,166,628
None
None
None
41,166,628
None
None
None
27,948,785
None
None
None
27,948,785
None
None
None
27,948,785
None
None
None
27,948,785
None
None
None
60
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
345,424
None
None
None
None
None
10,303
65,691
16
18
None
346
None
1,372
50
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
-95-
Title
(Note 1)
Assistant V.P.
Assistant V.P.
Assistant V.P.
Assistant V.P.
Assistant Vice
President
Assistant V.P.
Senior Manager
Same person or same
related party
Same person or same
related party
2014
Up till 14 April 2015
Increase
Increase
Increase
Increase
(Decrease) in (Decrease) in (Decrease) in (Decrease) in
current
shares
current
shares
holding
collateralized
holding
collateralized
11,715
None
None
None
(294)
None
None
None
(98,488)
None
None
None
None
None
None
None
Name
Wu, Zhen
Chen, Chung-Hung
Long Tao-Ming
Yang, Dun-Ren
Chen Yo-Chien
None
None
None
None
Wang, Bi-Hsia
Wang Huei-Chen
354
None
None
None
None
None
None
None
Dutch firm SIPF B.V.
41,166,628
None
None
None
Hong Kong firm CAPITAL
TARGET LIMITED
27,948,785
None
None
None
Note 1: All personnel listed above with more than 1% shareholding in the Financial Holding must be
identified as major shareholders and presented separately.
Note 2: If the counterparty of the shareholding transfer or collateralization is a related party, the
following report must be completed.
(II) Transfer of shareholdings: None.
(III) Collateralization of shareholding: None.
-96-
VIII. Disclosure of relationships between the Bank’s top ten
shareholders including spouses, second degree relatives or closer
14 April 2015
Name (Note 1)
Spouse, relative of
or related parties
defined in the
Shareholdings of
Shares held by the
Shares held in the Statement of Financial
spouse and
Investors
names of others Accounting Standards
underage children
Remarks
No. 6 among the top
ten shareholders with
detailed names and
relationships. (Note 3)
Shareholding Shares Shareholding Shares Shareholding
Shares held
Name Relationship
percentage held percentage held percentage
SIPF B.V.
1,140,294,764
Representative: David
None
Jaarsma
35.47
None
None
None
None
None
None
None
Common
shares
774,167,194
Representative: Lee
None
Betty Mei Wan
24.08
None
None
None
None
None
None
None
Common
shares
4.32
None
None
None
None
None
None
None
Common
shares
3.91
None
None
None
None
None
None
Common
shares
2.54
None
None
None
None
None
None
None
Common
shares
80,731,297
2.51
None
None
None
None
None
None
Common
shares
75,573,621
2.35
None
None
None
None
None
None
Common
shares
28,021,337
0.87
None
None
None
None
None
None
Common
shares
19,961,916
0.62
None
None
None
None
None
None
Common
shares
14,674,491
None
0.46
None
None
None
None
None
None
None
Common
shares
Fubon Life Insurance
Co., Ltd.
139,024,214
Representative: Cheng
None
Ben-Yuan
KGI Securities
investment account
held in trust by
125,603,421
Standard Chartered
Bank
Far Glory Life
Insurance Co., Ltd.
81,681,238
Representative: Lu
None
Chih-Chien
Yuanta Securities
(Hong Kong) held in
trust by HSBC
Capital Securities HK
customers’ investment
account entrusted to
Citibank (Taiwan)
Investment account of
the Central Bank of
Norway managed by
Morgan Stanley
Fiduciary trust
property accounts held
in trust by Jih Sun
International
Commercial Bank
Limited
The special investment
account of Advanced
Overall International
Stock Index Fund of
Optoelectronics Co.,
Ltd as delegated by
Datong.
Note 1: All of the top 10 shareholders shall be listed. The names of the shareholders shall be disclosed
(for corporate shareholders, the names of the corporate shareholders and their representatives
shall be disclosed).
Note 2: The calculation of shareholding percentage shall include the shares registered with the name of
the shareholder, the shareholder’s spouse, underage children, and the name of other people.
Note 3: The relationship among the abovementioned shareholders, including corporate shareholders and
natural person shareholders, shall be disclosed.
-97-
IX. The shareholding in the same transfer invested business of the
financial holding company and its subsidiaries, the directors,
supervisors and managers of the financial holding companies and
the enterprise directly or indirectly controlled by the financial
holding company and the consolidated comprehensive shareholding
percentages.
31 December 2014; unit: shares; %
Investments
Jih Sun International
Commercial Bank Limited
Jih Sun International
Property Insurance Agency
Co.,Ltd.
Jih Sun Futures Co., Ltd.
Jih Sun Securities
Investment Consulting Co.,
Ltd.
JIH SUN
INTERNATIONAL
INVESTMENT HOLDING
COMPANY LIMITED
JS CRESVALE
SECURITIES
INTERNATIONAL
LIMITED
JIH SUN FINANCIAL
SERVICES (CAYMAN)
LIMITED
Jih Sun Capital
Management Ltd.
JS CRESVALE CAPITAL
LIMITED
Jih Sun Securities
Investment Trust Co., Ltd.
Jih Sun Life Insurance
Agency Co., Ltd.
Jih Sun Venture Capital
Co., Ltd.
Jih Sun Investment
Consulting (Shanghai)
Co.Ltd.
Held by directors, supervisors,
Held by the Company
managers, and directly or
indirectly controlled enterprises
Shareholding
Shareholding
Shares held
Shares held
percentage
percentage
1,157,212,760
100%
0
0
Aggregate ownership
Shareholding
percentage
1,157,212,760
100%
Shares held
1,579,888,953
100%
0
0
1,579,888,953
100%
300,000
100%
0
0
300,000
100%
68,696,435
98.138%
107,777
0.154%
68,804,212
98.292%
10,000,000
100%
0
0
10,000,000
100%
54,600,000
100%
0
0
54,600,000
100%
370,000,000
100%
0
0
370,000,000
100%
8,050,000
100%
0
0
8,050,000
100%
100,000
100%
0
0
100,000
100%
2,000,000
100%
0
0
2,000,000
100%
7,800,000
20.00%
0
0
7,800,000
20.00%
297,000
99.00%
0
0
297,000
99.00%
30,000,000
100%
0
0
30,000,000
100%
Not applicable
100%
Not applicable
0 Not applicable
100%
-98-
Funding Status
-99-
I.
Capital and outstanding shares
(I) Categories of outstanding shares in the last year, until the publishing date
of this annual report
1. Source of capital
Year /
month
Issue price
2002/2
10
Authorized capital
Shares held
Amount
Paid-in capital
Shares held
Amount
Source of
capital
Remarks
5,000,000,000 50,000,000,000 2,253,273,187 22,532,731,870 Share conversion
Of which,
1,142,857,142
Common share 7
Common shares
(Par value: 10)
and 666,666,668
2006/7
5,000,000,000 50,000,000,000 4,062,796,997 40,627,969,970
Preferred share 6
preferred shares
(Par value: 10)
were issued
through private
placements.
2007/6
Capital reduction
5,000,000,000 50,000,000,000 2,691,648,044 26,916,480,440 against previous
losses.
2007/9
5,000,000,000 50,000,000,000 2,612,449,482 26,124,494,820
2009/4
Retirement of
treasury stock.
Common share 4
Cash capital
8,000,000,000 80,000,000,000 4,962,823,482 49,628,234,820
(Par value: 10)
issue.
Others
Approved under Letter
of Jin-Guan-Yin-6-Zi
No. 0950036886 dated
2006.08.22.
of Jin –Guan –Zheng
-1-Zi. No.
0960024642 dated
2007.06.14 and
Jin-Guan-Yin-6-Zi
No. 09600343790
dated 2007.08.07.
of Jin-Guan-Yin-6-Zi
No. 09600437580
dated 2007.10.16.
of Jin- Guan –Zheng
-1-Zi No. 0980005396
dated 2009.03.06 and
Jin-Guan-Yin-Kong-Z
i No. 09800542830
dated 2009.11.30.
of Jin
-Guan-Zheng-Fa-Zi
No. 0990025442 dated
2010.05.26 and
Jin-Guan-Yin-Kong-Z
i No. 09900254680
dated 2010.06.30.
of Jin- Guan –Zheng
-Fa-Zi No.
1000032213 dated
2011.07.19.
-Fa-Zi No.
1010030018 dated
2012.07.13.
-Fa-Zi No.
1020026130 dated
2013.07.11.
2010/6
Capital reduction
8,000,000,000 80,000,000,000 2,581,610,094 25,816,100,940 against previous
losses.
2011/9
8,000,000,000 80,000,000,000 2,774,862,414 27,748,624,140
Capitalization of
retained earnings.
2012/9
8,000,000,000 80,000,000,000 2,945,219,562 29,452,195,620
Capitalization of
retained earnings.
2013/8
8,000,000,000 80,000,000,000 3,099,108,023 30,991,080,230
Capitalization of
retained earnings.
2014/8
Approved under
Letter No.
Capitalization of Jin –Guan –Zheng
8,000,000,000 80,000,000,000 3,215,181,687 32,151,816,870
retained earnings. -Quan-Zi No.
1030025504 dated
2014.07.11.
-100-
Share categories
2.
Categories
Authorized capital
Unissued shares
4,784,818,313 shares
Outstanding shares
3,215,181,687 shares
Total
8,000,000,000 shares
Remarks
Common share
Note: outstanding shares were listed for trading on GTSM.
None
(II) Shareholders structure
Common shares
14 April 2015
Shareholders
structure Government
Quantity
institution
Financial
institution
Other
corporate
entities
Individual
Foreign
institutions
and foreign
individuals
129
Number of
shareholders
6
3
144
82,6217
Current holding
13,368
230,284,349
76,165,884
572,057,349
Shareholding
percentage (%)
0.00
7.162
2.370
17.792
Total
82,499
2,336,660,737 3,215,181,687
72.676
100
(III) Diversity of ownership
Common shares
Face value at NT$10 per share
14 April 2015
Shareholding
percentage (%)
Shareholding interval
Number of
shareholders
Current holding
1 to 999
40,983
10,627,839
0.330
1,000 to 5,000
27,693
58,051,948
1.806
5,001 to 10,000
5,683
40,061,972
1.246
10,001 to 15,000
2,607
31,838,077
0.990
15,001 to 20,000
1,053
18,383,738
0.572
20,001 to 30,000
1,426
34,555,471
1.075
30,001 to 50,000
1,169
44,668,627
1.389
50,001 to 100,000
946
64,794,344
2.015
100,001 to 200,000
486
65,139,912
2.026
200,001 to 400,000
218
59,280,132
1.844
400,001 to 600,000
85
40,708,051
1.266
600,001 to 800,000
41
28,114,404
0.874
800,001 to 1,000,000
15
13,429,547
0.418
1,000,001 and above to be duly
graded at the investors’ discretion
as the actual situations may justify.
94
2,705,527,625
84.149
Total
82,499
3,215,181,687
100
-101-
Preferred share
Shareholding interval
Number of
shareholders
Current holding
To be duly graded at the
investors’ discretion as the
actual situations may justify
Total
14 April 2015
Shareholding percentage
(%)
None
(IV) List of major shareholders
List of major shareholders
14 April 2015
Shareholding
Shares held
Shareholding
percentage (%)
1,140,294,764
35.47
774,167,194
24.08
Fubon Life Insurance Co., Ltd.
139,024,214
4.32
KGI Securities investment account held in trust by Standard
Chartered Bank
125,603,421
3.91
Far Glory Life Insurance Co., Ltd.
81,681,238
2.54
Yuanta Securities (Hong Kong) held in trust by HSBC
80,731,297
2.51
Capital Securities HK customers’ investment account entrusted
to Citibank (Taiwan)
75,573,621
2.35
28,021,337
0.87
19,961,916
0.62
14,674,491
0.46
Name of shareholder
SIPF B.V.
Investment account of the Central Bank of Norway managed
by Morgan Stanley
Fiduciary trust property accounts held in trust by Jih Sun
International Commercial Bank Limited
MasterLink Securities Corp.
-102-
(V) Information relating to the market price, net worth, earnings, and
dividends per share for the last two years
Year
Item
2014
(Note 1)
Year to date
28 February 2015
(Note 6)
2013
High
9.18
10.05
8.56
Market price
Low
per share
7.86
8.11
8.20
8.44
8.81
8.34
11.15
10.85
11.22
Note 1
10.37
Note 7
3,215,181,687
3,046,935,757
3,215,181,687
0.76
0.68
0.08
Note 1
0.66
Note 7
Cash dividends
0.14
0.09
Note 7
Stock
dividends
0.56
0.37
Note 7
0
0
Note 7
0
0
0
P/E ratio (Note 3)
11.11
13.35
Note 7
Price to dividends ratio (Note 4)
60.29
97.89
Note 7
Cash dividend yield (%) (Note 5)
1.66
1.02
Note 7
Average
Net worth
per share
Before distribution
After distribution
Weighted average outstanding
shares (in shares)
Earnings per Earnings per share - before the
share
proposed distributions (Note 2)
Earnings per share - after the
proposed distributions (Note 2)
Dividends
per share
Accumulated unpaid dividends
Analysis of
investment
returns
Note 1: Appropriation of 2014 earnings is till pending for shareholders' resolution in the 2015 annual
general meeting.
Note 2: If stock dividends were issued, EPS shall be disclosed in amounts before and after retrospective
adjustments.
Note 3: P/E ratio = average closing price per share for the year / earnings per share.
Note 4: Price to dividend ratio = average closing price per share for the year / cash dividends per share.
Note 5: Cash dividend yield = Cash dividend per share / average closing price per share for the current
year.
Note 6: Based on company-prepared information.
Note 7: Not applicable.
-103-
(VI) Dividend policy and execution
1. The Company’s dividend policy
Class-A preferred share dividends were payable annually in cash, at 5.5% per
annum on the issuance price.
The Company adopts a residual dividend policy. The Company first retains
capital required for operations and investments, based on its future capital budgets;
the residual earnings are distributed in either cash or stock dividends. The
proportion of cash dividends must be no less than 10%. If employees’ bonuses are
paid in shares, these payments are also applicable to the employees of the
Company’s subordinated companies.
2. Dividend distribution to be proposed in the shareholders’ ordinary meeting
2014 Earnings Appropriation Report
Expressed in New Taiwan Dollars
Unappropriated retained earnings at beginning of the term
1
Minus: Actuarial loss counted into retained earnings.
(1,681,873)
Post-adjustment unappropriated retained earnings
(1,681,872)
Gain: Net earnings this term
2,443,092,911
Loss: Amortization of legal reserve (10%)
(244,141,104)
Gain: Special reserve—restored to unappropriated retained
earnings—appropriated in the previous year(Note 1)
Balance of allocable earnings this term
66,744,737
2,264,014,672
Loss: Stock dividend (80%)
(1,811,211,730)
Loss: Cash dividend (20%)
(452,802,940)
Unappropriated retained earnings at end of the term
2
Note 1: Restoration with the variable of the deduction of the shareholders’ equity on book
as required by law.
Note 2: The proposed allocation of 2014 earning was pending to be resolved in the regular
shareholders meeting 2015.
-104-
(VII) How the stock dividends proposed for the shareholders’ ordinary
meeting affects the Company’s business performance or earnings per
share:
Year
Item
Opening paid-in capital
Cash dividends per share
Cash and stock
dividends for the Capitalized earnings to be issued for every share held
current year
Capitalized reserves to be issued for every share held
Changes in
business
performance
Operating Profits
Percentage increase (decrease) in operating profit as compared to
the previous year
After-tax net profit
Percentage increase (decrease) in after-tax net profit as compared to
the previous year
Earnings per share
Percentage increase (decrease) in earnings per share as compared to
the previous year
Annual return on investment (the reciprocal of the P/E ratio)
2015(estimated)
$ 32,151,817
thousand
$ 0.14
$ 0.56
0
Not applicable
(Note)
Pro-forma EPS
Pro-forma annual return on
investment
Pro-forma EPS
Pro-forma EPS
If reserves were not capitalized
Pro-forma annual return on
and P/E ratio
investment
Pro-forma EPS
If reserves were not capitalized
and all capitalized earnings were Pro-forma annual return on
distributed as cash dividends
investment
Note: The Company did not announce its 2014 financial forecast. Pursuant to Letter of
(89)-Tai-Cai-Zheng-(1)-Zi No. 00371 issued by the Securities and Futures Commission, Ministry
of Finance, on 1 February 2000, companies that do not publish financial forecasts are not required
to disclose this information.
If all capitalized earnings were
distributed as cash dividends
-105-
(VIII)Employee profit sharing and remuneration to directors and supervisors
1. Proportion of employee profit sharing and ranges of remuneration to
directors and supervisors specified in the Articles of Incorporation:
Article 19-5 and Article 23 of the Company’s Articles of Incorporation read:
Article 19-5: The Company may remunerate its directors for performing
their duties for the Company in the forms of monthly salaries, bonuses etc. The
Board of Directors were authorized to decide the remuneration levels based on
the levels of their involvements in the Company’s management, contribution
value, and earnings results that are comparable to industry peers. The Company
may offer reasonable remuneration packages to independent directors that are
different from those offered to general directors.
Article 7-1: If the Company concludes a surplus for the fiscal year, it must
first fulfill all tax duties, make the necessary accounting adjustments according
to the financial accounting standards, and offset previous losses. Any surpluses
remaining are subject to the provision of statutory reserves and special earnings
reserves as required by regulations and the Company’s Articles of Incorporation.
Any remaining surpluses will be prioritized to pay Class-A preferred share
dividends for the year.
The rate of Class-A preferred share dividends is 5.5% per annum on the
issuance price, distributable in cash on an annual basis. Once acknowledged
during the annual general meeting, the Board of Directors will set the base dates
for distributing last year earnings to Class-A preferred stockholders. The
amount of Class-A preferred share dividends payable for the year of initial issue
and the year of retirement is based on the actual number of days outstanding.
The issuance date is defined as the date the capital is raised.
Article 23: Any earnings remaining after the closure of the current fiscal
year are subject to tax and reimbursement of previous losses, followed by the
provision of statutory earnings reserve and special earnings reserve as required
by law. Any earnings remaining are then subject to the provision of an
employees’ bonus of no less than 0.01%; the residual amount will be added to
undistributed earnings accumulated from previous years, and based on which
the Board of Directors will submit an earnings appropriation proposal for the
-106-
shareholders’ resolution on the final distribution. The Company provides for
special earnings reserve as required by law; in the event of regulatory
amendments or if the provision of such special earnings reserve is no longer
legally applicable, the Company may reverse the amount of excess reserves
provided into undistributed earnings.
2. The accounting for changes to the estimation basis for employees’ bonus,
directors and supervisors’ remuneration, changes to the calculation basis
for stock dividends, and discrepancies between the amounts actually paid
and the amounts estimated:
The Company has appropriated legal reserve of NT$244,141 thousand and
special reserve of NT$66,745 thousand for the year, respectively. Appropriated
0.01% of the balance amount as employee’s bonus that is estimated to be
NT$226 thousand for the year; also, remuneration for the directors is NT$5,500
thousand. If the actual distribution amount is different from the estimated
amount, it is deemed as changes in accounting estimates and booked in the
2015 profit and loss.
3. Employees’ share of profits resolved by the Board of Directors:
(1) Employees’ cash/stock bonuses and remuneration to directors and
supervisors:
A. Employees’ cash bonus:
Estimated amount: NT$ 226,206
Amount paid: NT$ 226,401
Amount of difference: NT$195
B. Employees’ stock bonus:
Estimated amount: NT$ 0
Amount paid: NT$ 0
C. Directors’ remuneration:
Estimated amount: NT$ 5,500,000
Amount paid: NT$ 5,500,000
(2) If the actual amount is different from the amount estimated, please disclose
the difference, reasons for the difference, and the subsequent treatments:
A. Amount of difference: The current employee’s bonus was NT$195 and
-107-
was underestimated while there was no difference from the estimated
remuneration to directors.
B. Cause of difference: It was mainly due to the difference between the
amount audited by the CPA in 2014 and the profit and loss compiled by
the Company.
C. Handling process: It is to be adjusted to the 2015 bookkeeping.
(3) The ratio of the proposed stock dividends to employees and the total amount
of individual net income and stock bonus to employees:
A. Employees’ stock bonus: 0 shares
B. Employees’ stock bonus as a percentage to capital increase through
capitalization of retained earnings: 0 %
(4) Earnings per share estimated after distributing employees’ bonus, directors’
and supervisors’ remuneration: It is estimated earnings per share after
distribution is NT$ 0.76.
4. If the actual distribution of employees’ bonus, directors’ and supervisors’
remuneration estimated in the previous year (including the number of shares, the
amount, and price at which they were issued) is different from the estimated
amount of employees’ bonus and the remuneration to the directors and
supervisors, the difference, causes of difference, and the subsequent treatments
must be disclosed:
(1) Employees' bonus: NT$145,092; the amount paid was NT$854 different
from the amount estimated in the previous year. This discrepancy had been
recognized in 2014.
(2) Directors' remuneration: NT$5,500,000; the amount paid was indifferent to
the amount recognized in the previous year.
(IX) Shares repurchased by the Company
The Company did not buyback any of its shares in year 2014 or up until the
publication date of this annual report; neither were there any shares being
restricted by the competent authority for failing to meet their intended purposes
within 3 years after the buyback.
-108-
II. Issuance of corporate bonds
(I) Issuance of Corporate Bonds: Not applicable
(II) Convertible corporate bonds: Not applicable.
(III) Exchangeable corporate bonds: Not applicable.
(IV) Corporate bond information relevant to aggregate reporting: Not
applicable.
(V) Corporate bonds with warrants: Not applicable.
III. Disclosure relating to preferred shares: Not applicable
IV.
Overseas depository receipts:
Not applicable
V.
Employee stock warrants
(I) Employees’ stock warrants unexpired and outstanding as of the publication
date of this annual report, and their impacts to shareholders’ equity: The
Company did not issue any employees’ stock warrants.
(II) Names of managers who have acquired employee stock warrants and
employees ranking top 10 in convertible shares as of the publication date of
this annual report: None.
VI.
Management of new restricted employee stock
(I) Details regarding the restricted stock compensation that the vesting conditions
have not been fully satisfied as of the publication date of this annual report,
and their impact on the shareholders’ equity: The Company has not yet granted
any restricted stock compensation.
(II) The executives who have received the restricted stock compensation before
the publication date of this annual report, and the names of the top 10
employees who receive the highest number of shares, and other relevant
details: None.
-109-
VII. Disclosure relating to the merger or acquisition of other financial
institutions
(I) CPA’s opinions relating to the rationality of share conversion ratios at which
the Company has merged, acquired, or transferred shares in the last year: Not
applicable.
(II) Mergers or acquisitions of other financial institutions in the last five years. If
the merger, acquisition, or share transfer was by way of issuance of new
shares, the lead underwriter’s evaluation opinions must be disclosed: Not
applicable.
(III) The Company must disclose the fundamental information of any financial
institution merged, acquired, or to whom the Bank had transferred shares to
through the issuance of new shares which were resolved by the Board of
Directors during the last financial year up till the publication date of this
annual report. The impacts of new shares issued for the merger, acquisition,
or share transfer to other financial institutions to shareholders’ equity must be
disclosed: Not applicable.
VIII. Progress on the plan for use of funds
(I) Contents of the plan
The Company has no existing plans to issue cash capital or financial bonds,
nor was there complete cash issues or issuance of financial bonds, or planned uses
of working capital in the last 5 years whose expected yields have yet to materialize;
hence, this is not applicable.
(II) Execution progress
The Company has no existing plans to issue cash capital or financial bonds,
nor was there complete cash issues or issuance of financial bonds, or planned uses
of working capital in the last 3 years whose expected yields have yet to materialize;
hence, this is not applicable.
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Overview of Business Performance
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I.
Content of business
(I)
Business activities
Jih Sun Financial Holding Co., Ltd.
1. Principal business activities
The Company is a financial holding company whose business activities are
restricted to investments and the management of invested businesses. The
Company’s principal business activities are as follows:
(1)
Investing in the businesses approved by the competent authorities.
(2)
Managing the invested business
The Company has three subsidiaries, namely Jih Sun Securities, Jih Sun
Bank, and Jih Sun Property Insurance Agency. The business activities of each
subsidiary are detailed below:
(1)
Securities broker
(2)
Proprietary securities dealer
(3)
Securities underwriter
(4)
Futures merchant (H401011)
(5)
Futures introducing broker (H408011)
(6)
Trust (H105011)
(7)
Other business activities approved by the competent authority
2. Business percentage
Unit: NTD thousand
2014
Year
Item
Brokerage business
Amount
2013
Amount
％
％
3,375,265
80.31
2,899,549
84.05
Proprietary trading business
716,509
17.05
421,789
12.23
Underwriting business
111,221
2.64
128,421
3.72
4,202,995
100.00
3,449,759
100.00
Total
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3. Derivatives and services planned for the future
(1)
Securities brokerage:
A. Brokerage services
Expand business in support of the authority's stock market incentives
a. Support to FSC's globalization measures: plans are being
formulated to attract more foreign investors (including Mainland
residents) into Taiwan's stock market. The plan will take into
account existing restrictions and policies on foreigners' investments,
and will be made to comply with "Act Government Relations
Between People of the Taiwan Area and the Mainland Area" and
relevant laws.
b. The authority's permission on derivative day-trading will give
investors greater flexibility when hedging or leveraging investment
performance.
c. Major rule changes to Taiwan's stock market: FSC has made a
preliminary decision to widen the daily gain/loss limit from 7% to
10% for all TSEC and GTSM listed shares. In addition to widening
the daily gain/loss limit and removing margin trading restrictions on
natural person traders, other stock market incentives such as trade
hour extension, short sale limits, day trades, margin maintenance
ratios etc. are also currently under discussion. In the future, Jih Sun
Securities will support the authority's new measures and provide
investors with a more flexible and diverse platform to trade in.
B. International businesses
a. Applying for the service of Overseas Securities Unit (OSU): By
offering the service of Overseas Securities Unit (OSU), the
Company hopes it can provide a wider variety of products and
services for international funds and expand the scope of service and
international competitiveness at Jih Sun Securities.
b. Improving the “Global Gateway” function of the electronic trading
platform: In the past year, competitors have been developing
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integrated quotation/order placing systems that cover stock markets
in the US and Hong Kong. In the future, Jih Sun will commit more
resources to introduce professional information systems and
integrate the existing functions of order placing, quotation, and
account inquiry in Global Gateway so that the Company can offer a
more complete and stable quotation and order placing system.
c. Introducing a mobile device platform to create a quotation and
order placing system for US and Hong Kong stock markets: Mobile
devices are a global trend. In the future, the Company plans to add
an order placing and quotation system for mobile devices such as
phones and tablets so that customers will have a more convenient
order-placing tool.
d. Adding offshore structured product service; providing a wide range
of products for customers and achieving the service goal of
well-rounded asset allocation.
e. By signing competitive upstream contracts with sub-brokerage
dealers, the Company will continue to provide a wide selection of
products and trading markets.
a. The launch of offshore securities unit (OSU) enables the group with
broader and better quality services for high net worth customers
local and abroad.
b. More varieties of offshore structured instruments will be introduced
to satisfy customers' investment and asset allocation needs.
c. By engaging world-renowned financial institutions in collaborative
agreements, the group will be able to broaden its product line and
market exposure.
C. Wealth management business
Subsequent enhancements will include the integration of a trust
service platform, which creates opportunities for consultation on asset
allocation and financial planning, as well as financial product marketing
through the form of trust, thereby giving customers more flexibility and
variety to their financial options, to meet different periods, different
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customers and different needs, thereby securing the stable asset
allocation of the Company’s customers.
With respect to customized services, the Company has
implemented a CRM system to provide in-depth knowledge on
customers’ status. This knowledge will facilitate effective integration of
consultation, derivatives, futures brokerage, and other partners, thereby
enabling the development of customized financial products targeted to
satisfy specific customer groups and take initiative in creating services
desired by customers to achieve differentiated, exclusive service
standards.
Since the launch of trust services in January 2014, the company
has devoted substantial resources to providing customers with
comprehensive wealth management services. In response to the new
digital lifestyle, the company has introduced online wealth management
services since December to provide customers with more immediate
product information as well as a more user-friendly trading platform.
In terms of new services, the company will be implementing a
more robust customer relationship management (CRM) system that
assists customers with more efficient asset allocation and investment
suggestions. In addition, services such as collective account
management, discretionary insurance, and multidimensional wealth
management are currently being planned.
(2)
Proprietary trading: To invest into overseas markets depending on the
extent of deregulation. Apart from directional trading, the Company will
also develop strategic trading and other means to maximize profitability.
(3)
Fixed income:
The competent authority has been deregulating rules on bonds
denominated in foreign currencies and providing greater room of trading
and sales for bond denominated in foreign currencies. The Company will
develop more diverse bond products denominated in foreign currencies and
expand the sales network of institutional investors to provide a wider range
of bond products and enhance profit of bond business. The Competent
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authority is working hard to increase the issuing volume of Formosa bonds
and encouraging underwriters to help expand the size of this market. The
Company will commit manpower to expand the underwriting and trading
volume of this market.
The regulations and implementation details for another international
securities branch office Unit were released in December 2013. The
Company will march toward the goal of providing an overseas platform for
securities trading and wealth management. The Company will provide a
wider range of overseas bond products to satisfy the wealth management
needs of customers and be more exposed to the international market.
As part of the government's Capital Importation initiatives, the
authority has been actively removing restrictions previously imposed on
foreign currencies in an attempt to attract foreign financial transactions
back into Taiwan, and thereby create business opportunities for local
financial institutions. In the future, the company will be sourcing a broader
range of foreign currency-denominated bonds and introducing new sales
networks to give corporate customers more bond varieties to choose from.
With the availability of offshore securities unit (OSU), the company will
aim to develop sales talents that are well-connected to customers
throughout China, Hong Kong and Taiwan, and delve deeper into the laws
of the Chinese capital market to better assist customers in maintaining the
best capital structure and raising the capital they need.
(4)
Capital market: As the competent authority opens the business of OSU and
encourages the foreign enterprises to list their stock in TWSE/GTSM, the
Company will explore business opportunities in the underwriting of
international convertible bonds denominated in foreign currencies, attract
primary listing of foreign enterprises, and promote the financial consulting
business at home and abroad so that we can offer the best services when
enterprises enter capital markets.
(5)
Derivatives products: With the competent authority’s approval of new
warrants, we will be able to offer customers broader ranges of services, and
seek to enhance risk management and control and generate stable earnings
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to the Company. Meanwhile, with respect to the structured notes, we will
also continue design and provide diversified stock equity linked products
based on customers’ needs.
(6)
E-Commerce:
A. Transformation of online services from function-driven to user-driven:
given the growing popularity of mobile devices, the company will be
taking steps to enhance the compatibility of its online services across
different platforms and devices. These services will be integrated with
personalized information to deliver better user experience, whereas a
customer service web page will be created with FAQ section, search
engine, and online assistant to answer customers' queries at any time of
the year.
B. GTS quotation: the new quotation interface, developed using the latest
technology, integrates functionalities of the old version and makes more
efficient use of system resources. The interface is available in
Traditional Chinese/Simplified Chinese/English and is able to run on
non-Microsoft browsers without the customers having to download any
additional software. Given the growing number of users, the company
will focus on optimizing user experience, service capacity, and system
stability to satisfy customers' needs.
C. Upgrades to sub-brokerage services: the company will provide
customers with an optimized online sub-brokerage trade platform that
not only is easy to use, but has the ability to integrate international stock
quotes, technical analysis, and trade/market/account information all in
one screen. Combined with the use of push messages and mobile
technologies, the company will give customers full control of their
investments anytime, anywhere, without time or border restrictions.
D. Wealth management website: by integrating functionalities such as fund
search, financial news, trial calculation, online fund quotation, price
reminder, electronic trading, securities lending trust and trust account
management, the company is able to assist and guide customers toward
improving their decisioning abilities and achieving financial goals.
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E. Automated voice trading: in light of increasing trade activities in the
Emerging Stock Market, the company will further enhance its trading
system to enable order placement and account inquiry functions for this
growing market.
F. Reward redemption platform: the reward redemption platform will have
an enriched selection of items to choose from to give customers more
incentives for using our products. Furthermore, to familiarize customers
with the use of reward points, the company will aim to develop regular
interactions with them on how to utilize reward points. In the future, the
company will continue bringing customers more useful items, discounts
and privileges to add value to the reward point program.
1. The following are the Bank’s current main business functions:
(1)
Check deposits
(2)
Demand deposits
(3)
Time deposits
(4)
Issue financial bonds
(5)
Underwrite short-term, medium-term, and long-term loans
(6)
Bills discounts
(7)
Invest in government bonds, short-term notes, corporate bonds, financial
bonds, and corporate stocks
(8)
Exchange of local and foreign currencies
(9)
Acceptance of commercial bills
(10) Issue local and foreign letters of credit
(11) Provide guarantees to corporate bond issuers
(12) Provide local and foreign guarantees
(13) Collections and payments on behalf
(14) Sale of government bonds, treasury bills, corporate bonds, and corporate
shares
(15) Warehousing, depository, and administration of the above businesses
(16) Other business functions approved by the central authority
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2. Proportions of revenues to the total net revenue:
Unit: NTD thousand
2014
Year
2013
Item
Amount
Net interest revenue
2,336,540
58.64%
2,094,354
52.31%
Net commission revenue
956,417
24.01%
1,126,080
28.13%
Profit/loss from financial assets
358,250
8.99%
499,329
12.47%
Others
332,985
8.36%
283,684
7.09%
3,984,192
100.00%
4,003,447
100.00%
Net revenue
Weight (%)
Amount
Weight (%)
Note: This list presented the weightings in terms of net revenues for consistency with the
disclosures in the profit and loss statement.
(1)
Deposits and remittance business
A. To improve the operating efficiency of branches, request colleagues to
help make referrals for the major business and continue to conduct staff
training in order to improve the staff’s expertise and productivity and to
reduce the cost of human error.
B. To continue the standardization of operating procedures and the
consolidation of certain operations.
C. To execute differentiated customer management. Exercise sound
customer relationship management across customers of different asset
levels through data warehouse systems. Enhance strategic planning and
product research and development through data mining and analysis;
retain quality customers and improve the contributions of marginallyprofitable customers.
D. The Bank also aims to increase the weight of its demand deposits by
promoting the collection/payment of investment settlements (in
association with securities firm under JihSun Financial Holding Co.,
Ltd.), collection of tuition and building management fees, salary
payments, and the collection of parcel proceeds in association with
postal services.
E. To launch marketing activities and deposits competitions timely in
accordance with the Bank’s deposit/loan ratio and loan demand.
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a
Continually improve branch efficiency, especially with regards to
employees' cross-selling performance; organize training programs
whenever appropriate to develop employees' professional abilities.
b
Simplify trade procedures and launch deposit products that provide
customers with greater flexibility.
c
Deploy customer service representatives (CSR) throughout
branches. Promote business dealings and raise customers'
satisfaction through service and care.
d
Campaigns will be held to attract opportunities such as salary
transfer, collection of building management fees etc for a wider
source of fee income.
e
Keep track of lending requirements and make appropriate
adjustments to the deposit structure, thereby keeping funding costs
low.
(2)
Corporate Banking
A. The mission is to increase profitability by upholding a steady pace and
risk prevention, to adjust corporate loan structure, reduce large loan
concentration and increase the percentage of secured loans.
B. To continue to monitor the changes in the interest rates of foreign
exchange market, to reflect fund costs in the price quotes of foreign
exchange market and to control foreign exchange interest rate in order
to maintain loan earnings.
C. We will continue to coordinate with other departments to utilize our
effective resources and strengthen services. We will follow risk control
principles and the pricing policy based on “cost, expense, risks, and
returns.” Through the internal credit rating system and profit analysis
and based on the premise of maintaining a balance between risk control
and interest rate pricing, we select clients that fit the corporate credit
policy profile.
D. We use the CPA system to analyze client contributions on a
case-by-case basis and seek to understand the difference. In doing so,
we can find a strategy to increase the Bank’s profit.
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E. We seek to increase the ratio of non-risk revenues. Aside from the
ordinary loan operations, we aim to provide financial product services
with high added values, such as TMU and trust products, based on the
details of the client’s trades.
F. We continue to promote “Domestic Bank Loans Made More
Extensively to Small and Medium Businesses.” We coordinate our
operations with Small and Medium Business Credit Guarantee Fund to
promote financing for small and medium scale businesses. We will seek
to understand the development niches and difficulties of small and
medium businesses in a realistic manner to provide the optimal service.
We will also utilize the credit guarantee institutions to lower asset risks.
a
Raise profitability via broadened distribution. Adjust the corporate
banking credit portfolio in ways that reduce concentration to large
borrowers, shift towards secured lending, and increase loans to
SMEs.
b
Pay close attention to changes in exchange rates and interest rates;
reflect funding costs in foreign currency quotes; maintain revenues
by applying stringent control over foreign currency lending.
c
Integrate resources with other departments for service enhancement.
Adhere to credit risk policy and a pricing strategy that takes into
account "costs, fees, risks and returns." Combine internal credit
rating with profit analysis to find suitable corporate lending
customers and to strike the right balance between risk management
and interest rate pricing.
d
Utilize the CPA system to analyze customers' contribution
case-by-case. Investigate discrepancies and explore ways to boost
profitability.
e
Increase the weight of riskless revenues by providing local and
foreign customers with value-adding services such as TMU, cash
flow planning, trust etc.
f
Promote "Youth Venture Startup Fund" and "SME Innovation
Loan," and draw support from SME Credit Guarantee Fund to
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explore SME lending. Gain insights to the opportunities and
challenges of SMEs in order to provide the most suitable services.
Utilize credit guarantees to mitigate risks of the credit portfolio.
(3)
Consumer Banking
A. To continue to operate stably, maintain the existing asset quality, and
regularly monitor asset quality in order to adjust the direction of
underwriting instruments at any time.
B. To manage customer risks and maintaining market competitiveness at
the same time according to the differentiated pricing for risk attribute of
different customer groups.
C. To conduct focus marketing based on customers’ attributes; to offer
suitable products and services.
D. To execute existing customers maintenance policy; to continue to retain
assets of outstanding clients and enhance their relationships with the
Bank.
E. To screen target clients with data analysis tools; to continue to build
relationships with the Bank’s existing customers in order to increase
their contributions.
F. Increase the weight of unsecured loans; launch revolving facilities for
natural-person customers at higher interest.
(4)
Credit card business
A. To accelerate the recruitment of new cardholders to increase the amount
of credit consumption and consumption installment. In addition, we will
modify the incentive system to enhance teller willingness in promoting
credit card sales and to attract high-quality customers in order to create
more earnings for the Company.
B. To regularly cooperate with the comprehensive marketing activity of
each medium and large distribution channel (3C, department stores,
virtual channels, etc.) to activate customer’s willingness to use credit
cards. In addition, offer birthday gifts and preferential privileges to
high-end consumers in order to strengthen high-end customer’s
consumption loyalty.
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C. To add installment features to the credit card, extend credit card
installment payments in width and in depth and to program interest-free
automatic installments depending on customer’s consumption to
enhance customer’s amount of consumption and to encourage
customers to use credit cards.
a Develop loyalty of new card customers while maintain spending
activities of existing customers.
b Work with medium and large-sized retailers (3C, departmental stores,
online shopping etc.) in regular campaigns to boost the Bank's
exposure.
c Offer zero-interest installments and cash back to entice large
purchases (e.g. travel package, insurance premium...).
d Improve the professionalism of credit card service personnel and raise
customers' satisfaction.
(5)
Wealth management business
A. To launch product promotions
a. In terms of funds, in addition to the new funds introduced for
customer’s diversified choices, the “Dynamic Profitable Investment
Program” is promoted continuously with improved functions to
provide investors with systematic financial planning. In addition, for
the diversity of instruments, carefully select ETF subjects to meet
customer’s investment demands.
b. Insurance Marketing Plan: In terms of insurance, work with a
number of insurance companies through the Jih Sun Life Insurance
Agency Co., Ltd. on investment, financial management and
retirement planning with diversified instruments provided to
customers for selection, including investment-based insurance
products, pension insurance, additional life insurance, etc.
c. To promote DCN / FX swap business: DCN / FX swap business is
integrated into the telephone banking platform through customer’s
personal preferences and risk tolerance; also, promote DCN / FX
swap sales and customer acceptance through telephone transactions.
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B. To distinguish customer groups and active customers: Distinguish
customers as VIP and non-VIP (potential customers), introduce different
marketing programs in a timely manner with the SUNNY Lion of the
Bank offered to attract customers to conduct transactions with the Bank.
In other word, we will continue to cultivate and activate the relationship
between customer and the Bank.
C. To cooperate closely with the channel funds and insurance companies to
carefully select the subjects, to hold sales contests internally, and to
compete positively and stimulate production.
D. To continue to hold moderate seminars: Insurance companies and fund
companies will invite professional instructors and hold seminar on taxes,
market trends, or a financial subject related to current affairs, to
enhance customer’s recognition of the professionalism of wealth
management consultants, to increase the interaction between financial
salespersons and customers, and to explore and understand customer’s
potential financial needs.
A. Projects by product type
a. Funds: work with fund issuers in bringing new funds to investors.
Promote dynamic locked return investment as a systematic yet
versatile plan that satisfies customers' needs.
b. Insurance: engage insurance companies via Jih Sun Life Insurance
Agency to bring investment and retirement solutions that aim to
address Taiwan's aging society and low fertility rate. Classify
customers by the levels of their needs; introduce broader product
varieties such as investment-linked, pension, incremental life, and
nursing policies to address customers' needs.
c. Domestic/offshore structured instruments and currency swaps:
identify trends of the global market; distinguish risk tolerance levels
between professional/non-professional investors. Combine products
into a variety of long and short strategies that meet the needs of
different customers.
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(2) Customer management: grow relationship with the Bank's VIP
customers; upgrade services to non-VIP customers and cross-sell
with customers from different business segments.
Launch
marketing campaigns to create opportunities to interact with
customers.
(3) Increasing market depth and breadth: identify trends of the global
market; familiarize with the characteristics of each financial
instrument to facilitate product suggestions at proper occasions.
(6)
Trust business
A. Main business activities: (Article 16 of the Trust Enterprise Act)
To cooperate with the Ministry of the Interior to promote the
mechanism of performance bond for pre-sale house to actively promote
the business for the “Real Estate Development Trust” and “Fund trust”
for pre-sale house and control the construction fund to be used only for
the intended use in order to safeguard the interests of the purchaser and
law and regulations. The establishment of the website query system has
been completed. We will provide customers with a full range of
products and services through the diversified business platform of Jih
Sun FHC.
B. Complementary services: (Article 17 of the Trust Enterprise Act)
a. Foreign investment custodial business: We will cooperate with
external channels through the customer relationship unit of JihSun
Financial Holding Co., Ltd.’s internal channels and provide
comprehensive services to offshore natural persons or legal persons
that are willing to invest in the domestic securities.
b. Fund custody business: Select stable investment trust companies to
cooperate and seek to increase the number and size of fund custody
through the fund sales of the bank and security company.
c. Discretionary
custody
business:
Continue
to maintain
the
relationship with the investment trust, investment consulting, and
futures commission merchants that have discretionary businesses
arranged; also, cooperate with the Jih Sun Life Insurance Agency
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Co., Ltd. and the Bank’s Personal Finance Credit Management
Department to actively seek new cases and provide professional
services.
d. Other services: services such as securities certification, corporate
bond administration and proxy form acquisition had all grown in
2014. The company will continue to explore opportunities in 2015
and strive for further growth.
(7)
Treasury business
A. Treasury business:
The Bank adopts the following investment strategies to accommodate
the different characteristics of the capital market:
a. Foreign exchange market: To aim to raise profitability; flexibly
adjust foreign currency positions and authorized limits; to comply
with risk management policies; achieve profitability growth.
b. Interest rate market: The trading volume of Taiwan’s bond market
has been shrinking year after year; therefore, the trading range is
limited. The Bank in the future will focus on foreign currency bonds
and appropriately trade the interest rate derivatives. Investments in
Mainland China’s interbank bond market are expected to be
initiated this year with a focus mainly on treasury bonds trading and
with a support of the financial bonds of the four major banks in
order to improve the source of profit and the diversification of assets
allocation.
c. Equity market: Through Engaging in investment and trading of
equity instruments including stock, convertible bonds and options
on futures, the Bank will gradually increase the business volume for
the swap-trading of the convertible bond assets. Through providing
diversified investment portfolios, the Bank will improve the
profitability and stability of the investment in equity instruments.
B. Funding:
We improve the control over the cost of capital and deposit-to-loan ratio
on a bank-wide basis and maintain adequate liquidity reserve. We align
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our funds with operational needs. We respond to and effectively control
market interest rates. We deploy our capital with great flexibility to
increase profits.
C. Risk management:
We follow the guidelines of Group Risk Management and monitor
value at risk (Var), which is generated by the risk management system –
Risk Metrics. The establishment of internal risk management
procedures and the implementation of transaction systems, mid and
back office systems not only improve transaction efficiency, they
provide better risk monitoring.
(1) Treasury investment: the company adopts the following investment
strategies for different sectors of the capital market:
a. Foreign currency: in light of increasing volatility, the Bank will aim
to deliver profits by flexibly adjusting its currency positions and
limits within its risk management guidelines.
b. Interest rate: trade volume of Taiwanese bonds has withered for
quite some years, resulting in lessened volatility and smaller room
for profits. For this reason, the Bank will seek to overweight in
foreign bonds.
Government bonds of high liquidity and credit rating will continue
to be the prime choice; uses of interest rate derivatives may be
considered for greater flexibility.
With respect to convertible bond asset swaps (CBAS), the Bank will
aim to trade or unbundle instruments of good credit rating and
potentials for more diverse asset allocation and income source.
c. Equity: the Bank will be investing in domestic equity, convertible
bonds, and equity-related futures and options in this regard. By
raising holding position on foreign ETFs, the Bank will gain
exposure to a broader region and more diverse instruments, which
eventually lessens the Bank's concentration to a single market and
secures profitability.
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(2) Funding:
The Bank will manage its funding costs and loan-to-deposit ratio
while maintain adequate liquidity reserves to support its operations. In
the meantime, the Bank also aims to profit by adjusting funding
solutions in line with changes in the market rate.
(3) Risk management:
The Bank will follow the guidelines given by Group Risk
Management Division and monitor value at risk (Var) generated by the
risk management system - Risk Metrics. Coupled with the
implementation
of
internal
risk
management
procedures,
the
implementation of transaction systems and mid-office and back-office
systems, the Bank shall be able to trade and monitor risks more
effectively.
(8)
Electronic banking business
Electronic banking transactions accounted for 66.56% of the Bank’s
entire transactions in 2013, which indicates that our electronic banking
platform has become a necessity in customers’ financial activities. The
Bank is also dedicated in the development of various e-banking
functionalities, in order to develop the most suitable electronic services for
the public and for corporate customers. The following developments were
planned for the current year:
A. To build a financial trading platform that integrates all parts of the
financial holding group
To meet customer’s comprehensive demands for financial instruments
and wealth management, in addition to over one hundred wealth
management services offered currently, the “WebATM” service is
newly introduced to shorten the collection process and enhance timely
trading in order to attract online shoppers and merchants. The Bank will
continue to introduce more wealth management products and
instruments to deliver more comprehensive and diverse financial
services 24 hours a day.
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B. To enhance the functions of the foreign exchange services
This year, the DBUs are allowed to engage in RMB transactions such as
exchange, wire transfers and time deposits and to provide the service of
full payment in USD to be paid in a day so as to provide customers with
more diverse and convenient wealth management service of foreign
currency.
C. To enhance the service functions of trust business
Through launching the product of “Funds denominated in foreign
currencies issued by the domestic investment trust companies,” the
Bank expands the selections of investment and wealth management for
customers. In addition, the Bank will add the trading function to
overweight in the Fund of Fund (FoF) in the product of “Chih-Fu
Dynamic Locked-return Investment Plan.” Through this plan, the
investors can define the portfolio according to individual risk tolerance,
execute stop profit redemption with efficiency, and gradually earn the
profits to become a top performer.
D. To improve mobile service functions
We have offered the functions of mobile banking such as NTD deposits
account balance, transfer of pre-designated accounts and credit card
payments for the Bank’s cards. This year, we added credit card services,
including providing the information of the latest activities, billing
details and payment history so that mobile users can use convenient
electronic banking service anywhere, anytime.
E. To expand the corporate E-banking platform
Our goal is to improve credit guarantee and cash flow management for
SMEs and we will continue the bundled marketing strategy. The Bank
focuses on the needs of SMEs, continues to add autonomous
information disclosure of SMEs in bank reconciliations and statement
of cash flows. The Bank also continues to improve internal promotion
of services, gain promotional capabilities and improve the training of
electronic banking for employees to increase sales.
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The Bank has made use of modern digital networks to provide convenient
cash flow services such as: personal/corporate Internet banking, webATM,
mobile banking, and online cash collection. Cash flow services are no longer
confined to physical branches or stores, but instead made accessible via
electronic devices such as PC, laptop, smart phone, tablet, or anything that
connects to the Internet. This frees customers from the constraint of time and
space, allowing them access to the Bank's services anytime, anywhere.
The Bank has been active in the development of electronic banking
solutions to stay ahead of the ongoing trend and satisfy customers' banking needs.
In 2014, electronic banking had accounted for 69.18% of the Bank's total
transactions, which proved itself an inseparable part of customers' financial
activities. For this reason, the Bank has been paying close attention to the
development of electronic banking services and finding ways to make services
more accessible to the public. The following plans have been made for the
current year:
(1)
Foreign currency services
The Internet banking system will feature new functions that allow
consumers to make advanced purchases of foreign currency and inquiries of
exchange rate history. Meanwhile, the mobile banking system will feature a
foreign currency inquiry function that gives customers more convenient
means to access the services required.
(2)
Trust services
New functions will be introduced to enable inquiries on preferred
stock holding positions, transaction records, quotations, and the prospectus.
(3)
Mobile banking services
In addition to existing functions such as NTD deposit inquiry, pre-set
account transfer, card bill payments, credit card inquiries (such as latest
events, statement details, payment records) etc, new features including
foreign account inquiry/transaction and fund inquiry/transaction will also
become available this year.
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(4)
Mobile payment
The Bank has become a member of Taiwan Mobile Payment
Company's "PSP TSM" platform. Customers who apply for "Mobile ATM
card" are able to download an APP called T Wallet over-the-air (OTA)
from "PSP TSM" into their cellphones; once installed, customers are able to
shop at physical merchants using near field communication (NFC) as well
as making purchases, transfers, and payments remotely.
(5)
Corporate Internet banking enhancements
The Bank will continue to provide cash flow services to small and
medium enterprises by bundling Small and Medium Enterprise Credit
Guarantee Fund into its financial solution. Bank reconciliation and cash
flow statements are the two features that have been planned to give SME
entrepreneurs more information about their businesses. In the meantime, the
Bank will continue to provide employees with enhanced training on
electronic banking and thus broaden the scope of their sales efforts.
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Jih Sun International Property Insurance Agency Co., Ltd.
(1)
Fire insurance
(2)
Accident insurance
(3)
Vehicle insurance
(4)
Engineering insurance
(5)
Credit guarantee insurance
(6)
Various liabilities insurance
(7)
Other property insurance
2. Proportions of businesses
Commission income from property insurance agency
Unit: NTD thousand
2014
Year
Item
Amount
2013
Proportion (%) Amount
Proportion (%)
Commission income-fire
insurance
5,147
62.87%
4,865
62.03%
Commission
income-accident insurance
(including health insurance)
2,063
25.20%
2,004
25.55%
Commission income-other
liability insurance
37
0.45%
51
0.65%
Commission
income-vehicle insurance
940
11.48%
922
11.76%
Total commission income
8,187
100.00%
7,842
100.00%
At the moment, the non-life insurance market is virtually saturated. A
non-life insurance firm when developing new products must call for investments
in research & development costs and call for support of the reinsurance firms
behind it. Besides, the non-life insurance products call for the review process
only for the first license. The products of the same category require only an easy
process with a report. As a result, the non-life insurance firms have been copying
the same products and seldom created new products. In the recent years, only the
medical fault liability insurance, group sportsman injury insurance, pet insurance
have come into being but have seen sluggish sales performance amidst the
limited markets.
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In addition, from the perspective of the insurance agent at the Bank, the
premium and fee income of property insurance products subject to the warranty
period and instrument specifications are much cheaper than the other financial
instruments. While product innovation is hard to come by, how to increase the
fee income has become the most daunting challenge currently faced by the
property insurance agent of the Bank. The Company will carefully partner with
insurance companies that possess strong brand images and highly efficient
cooperation in administrative operation. We will also evaluate whether insurance
companies have packaged their products and granted claims in conformity to
market expectations before providing the sales channels and recommending them
to customers.
Product innovations are rare in the property insurance business not only
because of the costs involved in developing new products, but also because of
imitations from peers. Due to the lack of innovation and ease of price
comparisons, the Company will try to distinguish itself from peers by having
branch employees provide customers with faster quotation and more immediate
responses and more immediate responses, thereby enhancing customers' loyalty.
Customers have become increasingly acceptive of insurance protections in
recent years, which presented a good timing to introduce health insurance
products. In light of this trend, the Company will first aim to enrich its product
line by working with insurance companies that are characterized by solid
reputation and good administrative efficiency. In the meantime, the Bank will
observe how the insurance partner's health insurance products have performed
via the distribution channels and met market's expectations, before referring them
to the Bank's customers.
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(II) Business plan for this year
In prospects for 2014, the domestic and international economy is expected to
recover, but some uncertainties may affect the economic development in the future,
which will also affect the future development of the Company. We will continuously
boost our business performance, work out the targets of our business operation on a
conservative basis. The overall 2014 business operation targets are as follows:
1. Server virtualization and database server centralization.
2. To guide the subsidiaries to plan and develop differentiated electronic trading
services for the purpose of promotions for the e-commerce businesses.
3. To create the career development program for the employees, including the trainings
for the key talents and the backup candidates.
4. Based on the amendments to IFRS No. 9, we will adjust the accounting system and
relevant internal management control procedures. According to the process of the
Statement, we will examine the classifications of the financial assets, the change of
loss evaluation for loans and receivables from historical experience to the expected
loss model, and to simulate the impacts of changes of laws/regulations on the
Company and its subsidiaries.
Although economic outlook remains positive for 2015, there are uncertainties that
may work against the market's expectations and the company's performance as a result.
Although will remain committed in improving our future performance, we have
narrowed the Company's business strategies and plans down to those that are feasible,
as shown below:
1. Strengthen financial structure via improved profitability
To improve financial position, the Bank will actively supervise the performance and
profitability of its subsidiaries and use cash dividends received as a source of
working capital for the parent company. Meanwhile, the Company will carefully
evaluate all possible sources of capital that can be used to enhance its financial
structure.
To effectively reduce business risks and facilitate decision-making, steps will be
taken to continually improve the Company's risk management policies, procedures,
tools and information.
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3. Reduce operating costs
To effectively reduce operating costs, business units will be making collective
purchases for greater bargaining power. Furthermore, the IT department will
continue to virtualize and centralize the database server, using one sizable machine
to host the needs of all different applications for lesser costs.
In terms of e-commerce, the Bank will continue to invest in new systems and new
functions, and create a digital platform that distinguishes itself from competitors.
These new features may include trading, mobile, and social network services for the
securities sector, and mobile payment, mobile banking and webATM for the banking
sector. Meanwhile, the Bank will strive to make good use of mobile tools and
technologies to promote management and efficiency within the organization, and
raise customers' satisfaction outside the organization.
Overall, Taiwan’s economy will benefit from the economic recoveries in the US
and Europe and the opening of the Chinese market. The economy will exit the bottom
and head for growth. GDP growth in Taiwan is estimated to exceed 3% in 2014.
1. Operational guidelines
(1) To maintain stable earnings growth, enhance the efficiency in using capital and
increase return to shareholders.
(2) To monitor cross-strait financial deregulation, and explore business opportunities
in Mainland China for westward expansion.
(3) To enhance the design and sales of financial products.
(4) To enhance risk management in all units related to proprietary trading.
(5) To expand wealth management business through the trust platform.
(6) To develop smart financial service and commit to the operation of e-trading
communities.
(7) To implement rigorous data security measures and personal information
protection for customers.
(8) To create the business model for innovative brokerage locations to enhance
paperless and electronic processes for cost reduction.
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2. Major operational policies
(1) To seek for the opportunities of expanding business scale at home and abroad.
(2) To continuing to develop successors to supply management-level positions
needed for business expansion at home and abroad in the future.
(3) To focus on strategic industries to exert the synergy of cross-department
cooperation.
(4) To enhance multi-platform e-commerce, and increase the utilization of smart
devices.
(5) To establish the well-rounded information security protection.
3. The Company’s future development strategies
(1) The focus of the channel management strategy is on the efficiency of brokerage
business locations.
(2) To adopt the sales strategy of focus management, to improve VIP customer
service, to expand the customer base of institutional customers and to invest in
mobile service and community management.
(3) To improve market position, to focus on strategic industries and to develop
common professional business across different departments.
(4) To design differentiated products through integrating the specialties of various
departments.
(5) To continue to hire young sales specialists and back-office employees, to expand
the talent database for business needs at home and abroad.
(6) To implement electronic processes within the internal operation to improve
operational efficiency and reduce operational costs.
(7) To evaluate the application for the establishment of a fully licensed overseas
subsidiary.
Overall, there is significant disparity in the performance of the global economy as
well as monetary policies. One the on hand, the U.S. FED made an announcement in
October 2014 to scale back QE measures, while halfway across the world the European,
Japanese and Chinese central banks through the implementation of negative interest
rates, interest rates reduction, and accelerating capital market open-up, and had caused
the global money are bringing money supply to new heights with lower interest rates
and deregulation.
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1. Business guidelines
(1) Pursue sustainable growth; create shareholders' value.
(2) Improve competitiveness and capitalize on upcoming deregulations.
(3) Enhance risk management in proprietary trading function; aim to deliver absolute
returns.
(4) Grow wealth management services using the trust platform.
(5) Introduce user-oriented digital services and differentiated system functionalities.
(6) Implement rigorous data security measures.
(1)Look for expansion opportunities local and abroad.
(2)Recruit and train talents to support business expansions.
(3)Focus on strategic industries and utilize synergies across departments.
(4)Improve functionalities across multiple e-commerce platforms to capitalize on the
increasing use of mobile devices.
(5)Develop robust information protection.
3. Future strategies
(1) Aim to raise operating efficiency per branch.
(2) Adopt a segmented marketing strategy that targets VIP customers, corporate
customers, mobile e-commerce and social media.
(3) Raise the company's stature within the market; focus on strategic industries and
develop common profession across different departments.
(4) Combine expertise across departments to design differentiated products.
(5) Recruit young sales and back-office support; build up reserve talents to support
business expansions.
(6) Implement digital procedures within the organization for greater efficiency and
lower operating costs.
(7) Explore opportunities to create fully licensed overseas subsidiaries.
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Looking to the future, in addition to extending the business strategy of
“Balanced Growth and Sustainable Profits,” our theme of management in 2014 will
be “management, innovation, growth.” Our strategic goal will be “focus
management delivers quality, innovation delivers growth.”
(1) To continue to adjust the structure of risk-weighted assets and reduce the
concentration level of the clients with large credit loan to reduce risks.
(2) To enhance the capital structure and conform to Basel III to enhance the
competence to deal with contingencies.
(3) To manage spending and cut operating expenses to stabilize earnings.
(4) To strengthen sales capabilities and improve staff productivity to increase the
growth momentum.
(5) To substantiate operating quality, position management and credit rating system
to enhance risk management capabilities.
(6) To enhance capital utilization efficiency, to match assets properly with liabilities
for greater efficiency in fund utilization.
(7) To increase innovation businesses and enter the new markets, to cooperate with
international banks in Taiwan, Hong Kong and Mainland China and Shinsei Bank
to enhance international financial business capability.
(8) To enhance information security operation management and provide steady and
safe electronic services.
(9) To keep on developing the career map, developing outstanding employees and
enhancing employee loyalty.
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"Segmentation and innovation" will be the main growth strategies in 2015, and
for which 6 business goals have been identified: 1. Accumulate assets and customers
for greater profitability. 2. Diversify risks in terms of product line and region. 3.
Maintain pricing discipline for higher spread. 4. Increase the percentage of risk-less,
fee-based income. 5. Enhance customer relationships. 6. Improve service quality.
Competition and uncertainties are expected to remain throughout 2015, which the
Bank will respond by continually pursue performance growth and achieve the goals
it has set.
2. Key policies
The following policies have been devised based on the Bank's "segmentation
and innovation" strategies:
Strategies
Policies and business focus
Increase ROE
Adjust asset structure
Raise productivity among sales people
1. Accumulate assets and
customers; raise profitability Build up holding position and revenue base
Increase customer number
Launch new products and services for greater
profitability
Product development
Overseas expansion
2. Diversify risks in terms of
product line and region
Reduce concentration risk of deposits and loans
3. Maintain pricing discipline;
higher interest spread
Raise customers' contribution
Micro-manage branch employees and business
staff
Increase fee-based income
Enhance asset quality
Implement robust risk management procedures
and tools
Expand net interest margin
Segmentation
Innovation
4. Increase percentage of
risk-less, fee-based income
5. Enhance customer
relationships
6. Improve service quality
Explore cross-industry collaborations
Match opportunities with service
Build up relationships and increase product
penetration
Introduce user-oriented digital services
Provide customers with more convenient tools
and products
Raise customers' satisfaction
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This year, the Company will focus on raising customer satisfaction, help its parent
company manage operational risks, and carry out its business strategies with the goal of
achieving perpetual growth.
Overall business plans and operational guidelines:
(1) Enhance risk management and business management
The Company executes its business policies from the perspective of a financial
holding company. It ensures compliance to the various policies and regulations
through open disclosure of information, sound internal control and audit practices.
The Company also provides insurance information and suggestions at times deemed
appropriate in hope to maximize shareholders' interests and to sustain growth.
(2) Raising profitability in line with group business strategies
By packaging insurance with other financial products, the company not only is able
to anchor customer relationship, but also broadens the scope at which its products
are distributed to and secures profitability for other subsidiaries of the financial
holding group as well.
(3) Product innovations and customer relationships
The extensive reach of our distribution network enables us to learn the needs of our
customers, and satisfy them with innovation, customization and exclusivity
customization and exclusivity. The company will focus on raising sales awareness
of its staff to market property insurance products on a broader scale.
2. Projected business goals
Item
2015 - budgeted
Commission revenue - fire insurance
Commission revenue - auto and
4,968 thousand
960 thousand
motorcycle insurance
Commission revenue - accident insurance
Commission revenue - other liabilities
insurance
Commission revenue - total
2,020 thousand
53 thousand
8,001 thousand
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(III)
Industry overview
Since the “Financial Holding Company Act” was enacted and put into effect in
July 2001, a total of 16 financial holding corporations have applied and been approved
for incorporation. Among the domestic financial holding groups, with the exception of
the Company, Yuanta, and Waterland, domestic financial holding companies tend to
focus on banking or life insurance businesses. With comparative analyses of asset sales
and profitability of the 16 financial holding corporations in Taiwan, the Company might
be relatively smaller in scale, with total assets and shareholder’s equity slightly greater
than the Waterland.
In the domestic banking market, the Taiwan branch of ANZ Bank (Taiwan)
Limited was reorganized as a Taiwan subsidiary in April 2013. The total number of
domestic banks increased to 39. In recent years, domestic banks have been establishing
branches in Mainland China and Southeast Asia actively, participating in equity
investment or directly conducting M&A of the local banks to establish a trans-regional
operating structure. In response to the overseas deployment, many financial holding
companies and banks had arranged a cash capital increase in 2013 to raise funds for
overseas investments and to enrich the banks’ proprietary capital and enhance their
financial structure. Peer companies which completed the fund-raising include Cathay
Financial Holdings for NT$12.7 billion, Shin Kong Financial Holding for NT$6.5
billion, Chinatrust for NT$20 billion, and Mega Financial Holding for NT$21.5 billion.
In the domestic securities market, large securities firms continue to conduct M&A
to enhance their market share. In 2009, KGI Securities Investment Trust Co., Ltd.
merged with Taiwan Securities Co., Ltd., KGI Securities Investment Trust Co. Ltd.
merged with Concord Securities and Waterland Securities merged with Great Wall
Securities. In 2011, Capital Securities merged with International Securities and Yuanta
Securities merged with Polaris Securities. In 2012, Mainland China Development
Financial Holding acquired 50.1% shareholding of KGI Securities and SinoPac
Securities merged with Pacific Securities. In 2013, KGI Securities merged with Grand
Cathay Securities. The trend of centralizing the stock market becomes evident after the
merger and integration of large securities firms. After the merger, Yuanta Securities
now owns the market share of over 13%. KGI Securities, after merging with Grand
Cathay Securities, now owns the market share close to 9%.
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To analyze the aspect of the policies and regulations, the “Cross-Strait Services
Trade Agreement” was signed on 21 June 2013. The commitment to open financial
service industry made by both sides is a major progress for cross-strait financial
transactions. Mainland China has made commitments to Taiwan to open insurance,
banking and securities & futures business on 1 item, 6 items, and 8 items. Taiwan has
made commitments to Mainland China to open insurance, banking, and securities &
futures business with 1 item, 4 items, and 4 items. In addition, in terms of accounting
and auditing, Mainland China has made commitments to Taiwan to open 3 items that
contribute to further interaction of the cross-strait financial sectors. In addition to the
items on the ECFA preliminary list, the Financial Supervisory Commission solicits
more preferential terms for our financial industry than any other WTO member
countries, which is helpful in entering the Chinese market. It helps our financial
industry to expand market deployment and operation in Mainland China.
In addition, regarding the promotion of the “Free Economic Pilot Zones (FEPZs),”
the Council for Economic Planning and Development had announced the “Promotion
and Practices of the FEPZs in Phase I” on 8 August 2013. Those which can be promoted
with the amendments to the administrative regulations before passing the “FEPZs
Special Statute,” are listed as the items for promotion in Phase I. In Phase 1, the
restrictions will be lifted through administrative deregulations to promote the free flow
of people, instruments, capital and information, including the amendments to 13
administrative regulations and 112 other promotion practices. The wealth and asset
management business related to financial service will be included in the FEPZs Phase I.
The qualified financial institutions are encouraged to develop financial instruments by
virtual methods and through business and regulatory classifications to be ready for a
more open market, the soon, the better.
Since the implementation of the "Financial Holding Company Act" in July 2001, a
total of 16 financial holding companies have been approved and founded. With the
exception of Jih Sun, Yuanta, and Waterland, domestic financial holding companies
tend to be based upon banking or life insurance services. Judging by asset size,
profitability and other business indicators, the Company's consolidated assets and
shareholders' equity are only slightly larger than Waterland Financial Holdings.
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There had been two prominent local mergers in 2014. One of which involved Bank
of Panhsin's general acquisition of all operating and non-reserved assets and liabilities
held by Ninth Credit Cooperative of Taipei on July 21, 2014. After the acquisition,
Bank of Panhsin was able to increase its total assets from NT$162.9 billion to
NT$189.3 billion and gain control to 18 new branches within Taipei City. The other
merger involved acquisition of Cosmos Bank by China Development Financial Holding
Corporation (CDFHC), for which the FSC had approved on July 29, 2014, to proceed
by way of a share exchange. After the share exchange, Cosmos Bank will become a
100%-owned subsidiary of CDFHC. What Cosmos Bank brings to the merger are full
commercial banking service capacity covering everything from corporate banking,
consumer banking, deposits, foreign currencies to wealth management that
complements what CDFHC has to offer. This merger is expected to bring more
comprehensive financial services and increase branch size to 53 nationwide.
In the securities segment, many of the large players have been actively acquiring
smaller businesses not only to increase their local market share, but also to in 2014
extend reach towards the Asian market. One of the above examples was Yuanta Polaris
Securities' attempt to bid for a controlling interest in Tongyang Securities, Korea.
Tongyang Securities was court-auctioned following the bankruptcy announcements
made by two of its largest shareholders, namely Tongyang International and Tongyang
Leisure. In light of this development, Yuanta Polaris Securities had submitted a bid to
the Korean court to acquire a 27.27% ownership interest from the two shareholders.
Meanwhile KGI Securities, a subsidiary of CDFHC, acquired a 100% ownership
interest in AmFraser Securities Pte. Ltd. (AmFraser) through its Singaporean entity KGI Asia (Holdings) Pte. Ltd. The acquired entity is expected to commence wealth
management services in 2015 first half by the latest. The number of securities firms in
Taiwan in January 13 2014 has gradually dwindled in midst of the series of mergers;
however, the founding of Friendly Securities Co., Ltd. in 2014 had brought new energy
into Taiwan's securities services for the first time in more than a decade. Friendly
Securities has had extensive business experience in China, Hong Kong and Taiwan; its
expertise lies particularly in the IPO of A-shares in China. Friendly Securities has been
founded with the goal of becoming an "unconventional" securities firm that assists
Taiwanese enterprises in IPO listing and bridging them to the capital market.
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From a regulatory perspective, FSC has also been encouraging Taiwanese financial
institutions to expand outwards into Asia since 2013, given the immense growth
potentials that the region had exhibited. For this reason, a number of policies have been
implemented to support expansions of Taiwanese banks in Asia over the next 3 to 5
years. FSC's policy focus in 2013 had been the banking sector, where it offered
incentives for banks to create new branches or acquire subsidiaries as a means to expand
into Asia. In 2014, FSC's focus had extended to cover securities and insurance sectors
as well.
In terms of foreign regulations, Taiwan has developed collaborative relationship
with the United States on "Foreign Account Tax Compliance Act" (FATCA); on June
23, 2014, the U.S. Department of the Treasury included Taiwan as one of the nations
that are deemed complied with FATCA, thus avoided the 30% tax that would otherwise
be imposed on certain parties because of the act. According to FATCA, Taiwanese
financial institutions are required to obtain a "Global Intermediary Identification
Number" (GIIN) from the U.S. Internal Revenue Services as a proof that they have
complied with the act.
Based on the figures from the TWSE and the GTSM, the total trading volume in
2013 in TWSE and GTSM was NT$23.0406 trillion, declining by 0.8% from the
NT$23.2252 trillion in 2012. In 2013, the TAIEX closed at 8,611.51, an increase of
11.85% from the 7,699.5 in 2012. In 2013, foreign investors made up 24.6% of the
trading volume, a 22.6% increase from the level in 2012.
Major figures of the Taiwanese stock market are as follows. Compared to 2012, in
2013, the market value of publicly traded stocks rose from NT$21.35 trillion to
NT$24.52 trillion, marking an increase of 14.83%; the number of publicly traded
companies rose from 809 to 838; the number of individuals with securities trading
accounts rose from 9.11 million to 9.27 million, marking an increase of 160,000
investors. Daily average trading dollar amount, however, declined from NT$81 billion
to NT$77 billion, or by 4.89%. The number of accounts with active trading as a
percentage of total accounts declined from 22.23% to 20.41%, putting enormous
pressure on the revenue of securities brokerage service. The result was that there were
84 securities brokerage head offices and 956 branch offices at the end of 2013,
declining form the level at the end of 2012.
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According to the statistics compiled by Taiwan Stock Exchange Corporation
(TSEC) and Gretai Securities Market (GTSM), foreign investors accounted for 23.8%
of all TSEC trade volume in 2014, which was slightly lesser than the 24.6% concluded
in 2013; in dollar terms, foreign investors had overweighted Taiwan's stock market by
NT$388 billion. In 2014, the TAIEX averaged 8992 points, up 11.1% from the 8093
points in 2013. TSEC and GTSM combined a total trade volume of NT$29.52 trillion in
2014, representing a significant increase of 25.6% over the NT$23.51 trillion concluded
in 2013.
Key statistics regarding Taiwan's stock market showed that total market
capitalization had increased from NT$24.5 trillion to NT$26.9 trillion, representing a
9.7% increase in 2014; meanwhile, the number of listed companies had increased from
838 to 854, and the number of securities account holders had increased by 180 thousand
from 927 thousand to 945 thousand. At the end of 2014, there were 81 securities firms
operating 931 branches nationwide; which represented a decrease from the 84 firms and
956 branches registered in 2013. In light of the ongoing merger, the number of
securities firms in Taiwan should continue to fall in 2015.
The pre-tax profits of all domestic banks was NT$257.6 billion in 2013,
representing a 7% growth from the NT$240.1 billion in 2012 that was a record high in
profitability for four consecutive years. The excellent performance of the domestic
banks in profitability was mainly due to the significant profit growth of overseas
branches and OBU. The pre-tax profits of the domestic bank’s overseas branches and
OBU was NT$48 billion in 2011, accounting for 24% of the NT$200 billion generated
by the domestic banks; also, it was NT$74.4 billion in 2012 with a profit ratio as high as
31%. The pre-tax profits was NT$80 billion in 2013 with a profit ratio as high as 32%.
The Directorate-General of Budget, Accounting and Statistics (DGBAS)
announced on 18 February 2014 that Taiwan’s 2013 economic growth rate was 2.11%,
representing a 0.63% growth from 1.48% in 2012. Although domestic finance and
commodity prices remained stable, the growth momentum of foreign trade was
significantly decreased and the growth rate of production and wages remained unclear,
added to the sluggish domestic demand; however, due to the international economic
recovery, the government is promoting the “Economic momentum enhancement
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program” and accelerate the signing of trade agreements with other countries. Taiwan’s
2014 economic growth momentum will be accelerated moderately. The DGBAS on 18
February 2014 also announced that Taiwan’s GDP was expected to reach 2.82% in
2014.
Along with the cross-strait currency settlement mechanism introduced, the RMB
business is implemented in full scale. The government continues to promote the
“Financial Industry Development Direction and Plan.” The promotion of the financial
industry development policy has been gradually moving towards a planned economy
model. The management model is shifting from eliminating defaults to generating
profits. Each financial policy is becoming more active and open that it is expected to
further enhance the domestic bank’s earnings momentum and the net interest and fee
income growth of the banking sector is expected to remain stable. The overall
profitability of Taiwan’s financial market in 2014 is optimistic.
In 2014, the world economy had underperformed to what the public had expected
by the end of 2013. This was largely due to slower recovery in Europe and sluggish
performance from Japan following the increase of consumption taxes. Although the
United States had shown recovery as expected, it came one quarter too late to provide
any significant boost to the growth of emerging economies.
Taiwan, on the other hand, delivered much better economic performance in 2014
than the year before. On February 16, 2015, the Directorate-General of Budget,
Accounting and Statistics estimated Taiwan's economic growth at 3.74% for 2014,
representing a significant improvement over the 2.11% registered in 2013. According to
the forecasts made by Chung-Hua Institution for Economic Research, the world
economy may only inch forward in 2015 at best, because even if both Japan and the
Eurozone resolve to expansionary measures, the falling oil price will once again put the
two economies in risk of deflation and undermine their recovery. As for the U.S., an
interest rate hike planned sometime over the next year coupled with falling price of oil
and reduced output from U.S. shale gas producers will limit the potentials of the U.S.
economy. Lastly, China lacks the ambition to stimulate its economic growth beyond the
normal rate, therefore growth of the global economy may be as little as 3.00% in 2015.
Taiwan's economic growth will inevitably be affected by this general slowdown, and
according to the DGBAS' forecast, Taiwan may delivered as small a growth as 3.78% in
2015.
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Although the overall economy had performed below expectation, the Bank still
managed to hold on to its focus of "management, innovation and growth" and won
"Young Entrepreneur Assistance Award" and "Startup Business Assistance Award"
from the Ministry of Economic Affairs for actively participating in the SME Credit
Guaranteed Lending Program in 2014. Also, the Bank was ranked third among banking
institutions during Global Views Magazine's "12th Global View 5-star Service Award."
This was also the year when we completed setting up our Hong Kong office and took a
giant step toward globalization, and combined new technologies to introduce the
industry's first "SMART BANKING" APP. Our success in 2014 had laid down the
foundation for our future growth. As of the end of 2014, the Bank maintained a capital
adequacy ratio of 11.13%, a performing loan coverage ratio of 1.09%, a non-performing
loan coverage ratio of 1335.57%, a non-performing loan ratio of 0.08%, and delivered
NT$1.264 billion in after-tax profit, which was equivalent to an EPS of NT$0.80.
Despite intensive competition within the domestic banking environment, the Bank had
performed exceptionally and won a sustained long-term credit of "A-(twn)" with a
"stable" outlook from Fitch Ratings.
Although the external environment is expected to remain uncertain and competitive
throughout 2015, the authority's financial liberalization measures should prove
favorable to the banking industry as far as profitability is concerned.
JihSun Life International Property Insurance Agency Co., Ltd.
Key indicators of the property insurance industry (source: Taiwan Insurance
Institute):
1. Business:
Business overview – Premium structure
In year 2013, the Company’s non-life insurance premium income amounted to
NT$124.9 billion in total, growing by 3.67 % when compared with the
correspondent period of the preceding year. Of these, car insurance premium
accounted for 51.60% of the total direct insurance policy premium, the highest (auto
insurance accounted for 38.70% and mandatory auto insurance accounted for
12.90%), followed by fire insurance accounting for 17.53%, accident insurance
accounting for 10.69% and liability insurance accounting for 6.89%. Then, marine
insurance accounting for 6.13%, engineering insurance accounting for 3.52%, other
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property insurance accounting for 1.22% and health insurance accounting for 1.06%,
the credit guarantee insurance accounted for 0.80%, and aviation insurance
accounted for 0.56%, respectively.
Business overview – Claims structure
In year 2013, the Company paid a total compensation for non-life insurance
policies amounting to NT$61.55 billion in total, growing by 1.12 % when compared
with the correspondent period of the preceding year. The direct claim rate was
49.27%, of which, car insurance accounted for 61.20%, the highest. Marine
insurance accounting for 58.39%, came in second. Accident accounted for 43.66%,
engineering insurance accounted for 42.70%, health insurance accounted for 42.68%,
credit guarantee insurance accounted for 38.36%, liability insurance accounted for
34.04%, followed by, fire insurance accounted for 25.16% and other property
insurance accounted for 24.65%, and aviation insurance accounted for 22.73%.
Note 1. Insurance compensation rate = Amount of direct insurance compensation
/Revenues of direct insurance premiums.
Note 2. Car insurance includes optional car insurance and mandatory liabilities
insurance.
2. Finance:
Overview of finance – Balance Sheet
In year 2013, the total assets of non-life insurance was NT$289.17 billion,
including capital funds (sources) of NT$257.00 billion. The total liabilities was
NT$198.97 billion includes a variety of reserve funds of NT$166.79 billion. Besides,
the total stockholders' equity was NT$90.20 billion.
Overview of finance – Income Statement
In year 2013, the profit (loss) after tax of non-life insurance was NT$13.45
billion, operating income was NT$101.05 billion, operating cost was NT$61.88
billion, operating expense was NT$25.82 billion and net non-operating income was
NT$1.83 billion.
Overview of finance – Utilization of working capital
In year 2013, the total amount spent as insurance capital fund was NT$206.24
billion and the total capital fund utilization rate came to 80.25 %. Among all items of
capital fund utilization, the securities was NT$98.84 billion (at 47.92%) at the top,
followed by deposits in bank of NT$41.06 billion (at 19.91%), overseas investment
of NT$34.70 billion (at 16.82 %) and investment in real estate of NT$28.34 billion
(at 13.74%).
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Business overview - premiums
Business aspect:
Business overview – premiums
In 2014, the property insurance industry earned premiums from underwritten policies
totaling NT$132.22 billion, representing a 5.86% over the previous year. Vehicle
insurance accounted for the largest portion of direct written premiums at 53.09 %
(among which, optional vehicle insurance accounted for 40.74 % while mandatory
vehicle insurance accounted for 12.35 %), followed by fire insurance 17.17 %,
accidental insurance 10.61 %, liabilities insurance 6.87 %, marine insurance 5.56 %,
engineering insurance 2.97 %, other property insurance 1.21 %, health insurance
1.08 %, credit guarantee insurance 0.83 % and aviation insurance 0.61 %.
Business overview – claims
In 2014, the property insurance industry paid claims totaling NT$64.9 billion,
representing a 5.44 % increase over the previous year. Direct claim ratio was
concluded at 49.08 %; a breakdown by products showed that aviation insurance had
the highest ratio at 80.28 %, followed by marine insurance 69.29 %, vehicle
insurance 60.08 %, engineering insurance 49.78 %, accidental insurance 43.34 %,
health insurance 39.35 %, liabilities insurance 36.17 %, other property insurance
33.06 %, credit guarantee insurance 22.71 %, and fire insurance 19.01 %.
Note 1. Claim ratio = direct claim / direct premium income
2. Vehicle insurance includes optional insurance and cars and mandatory
liabilities insurance for cars and motorcycles.
Financial aspect:
Financial overview - balance sheet
In 2014, the property insurance industry held NT$302.88 billion in total assets, of
which NT$269.58 billion were funded by capital and NT$205.31 billion were funded
by liabilities. In addition, reserves amounted to NT$172.01 billion while
shareholders' equity totaled NT$97.57 billion for the entire industry.
Financial overview - income statement
In 2014, the property insurance industry delivered an after-tax profit of NT$10.55
billion, revenues of NT$107.09 billion and incurred NT$67.46 billion in operating
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costs, NT$27.4 billion in operating expenses, and NT$150 million in net
non-operating income.
Financial overview - use of capital
In 2014, the property insurance industry used capital totaling NT$217.39 billion,
which represented a utilization rate of 80.64 %. Among the various uses of capital,
securities investment was the most significant of with a total of NT$99.2 billion
(45.63 %), followed by foreign investments NT$44.14 billion (20.31 %), bank
deposit NT$39.7 billion (18.26 %) and real estate investment NT$31.1 billion (14.31
%).
(IV) Research and development
1. R&D expenditures and results in the last two years:
(1) R&D expenditures
The Company's and subsidiaries' research and development expenses were
mainly spent on the development of information systems and risk management
tool. Total R&D expenditures spent as a group had amounted to NT$65.05
million in 2013 and NT$42.4 million in 2014.
(2) R&D results in the last 2 years
The Company and its subsidiaries had been active in the development of
information systems and risk management tools. Below is a list of R&D projects
and results for the last two years:
A. IT system development:
Year
Project
Amount
invested
2013
Upgrades to the securities host
(continued)
NT$25 million
2013
Upgrades to the banking
system core (continued)
NT$31 million
2013
Mobile banking platform (for
iOS APP)
NT$3 million
2014
Mobile banking platform (for
Android APP)
NT$3 million
2014
Virtual machine (VM)
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NT$28.6 million
Time of
completion
(year/month)
Commissioned
since 2013 3rd
quarter
Commissioned
since July 2013
Commissioned
since December
2013
Commissioned
since June 2014
Server
consolidation
completed in
December 2014
2014
Database server integration
(SQL)
NT$5.8 million
Database server
integration
completed in
December 2014
Amount
invested
Time of
completion
(year/month)
NT$4 million
Commissioned
between 2013
Q2~Q4
B. Development of risk management tools:
Year
2013
2013
2013
2014
2014
2014
Project
Upgrades to Basel III credit
risk capital provisioning
platform / automation of
market risk capital adequacy
calculations / corporate
banking LGD system (phase 1)
Optimization of risk
decisioning engine
Optimization of securities
market risk analysis system
Corporate banking LGD
system (phase 2)
Development of Basel III
liquidity measurements liquidity coverage ratio (LCR)
and net stable funding ratio
(NSFR)
Expansion to the risk
decisioning engine (adopting
the indicator information for
dimensions such as measuring
credit risk at the secondary
subsidiary and for bond
guarantors)
NT$550
thousand
NT$1.5 million
NT$1 million
Commissioned
since 2013 Q4
Commissioned
since 2013 Q4
Commissioned
since 2014 Q1
NT$2 million
Commissioned
since 2014 Q4
NT$2 million
Commissioned
since 2014 Q4
2. Future R&D plans
The Company and its subsidiaries will continue to devote resources into the
development of information systems and risk management tools. Below is a list of
projects planned in advance:
(1) Development of advanced information systems:
Project
Mobile e-commerce
platform
TSM mobile payment
platform
Virtual machine
(continued)
(continued)
Amount invested
NT$10 million
NT$6 million
NT$8 million
NT$16 million
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Estimated progress
Scheduled to be commissioned by
2015 Q1~Q4
2015 Q2
Scheduled to achieve annual
targets by 2015 Q4
targets by 2015 Q4
(2) Development of advanced risk management tools:
Project
Development of foreign
currency options pricing
platform
Display of information
such as securities holding
position, brokerage
volume, gains/losses, and
updates of invested
instruments onto the risk
decisioning engine
Automation of
risk-adjusted return on
capital (RAROC)
Development of automated
checks to the derivative
pricing model
Automated reporting of
proprietary trading
gains/losses
Amount invested
Estimated progress
NT$2 million
2015 Q1
NT$1 million
2015 Q3
NT$2 million
2015 Q4
NT$2 million
2015 Q4
NT$2 million
2015 Q4
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The Company's research and development expenses were mainly spent on
the development of information systems and risk management tools. Total R&D
expenditures had amounted to NT$27.05 million in 2013 and NT$17.4 million in
2014.
The Company had been active in the development of information systems
and risk management tools. Below is a list of R&D projects and results for the
last two years:
Year
Project
Amount invested
Upgrades to the
2013 securities host
(continued)
NT$25 million
2014 Virtual machine (VM)
2014
Database server
integration (SQL)
NT$13.6 million
NT$2.8 million
Time of completion
(year/month)
Commissioned since
2013 Q3
Server integration
completed in December
2014
Database server
integration completed in
December 2014
Year
Project
Amount invested
Optimization of risk
decisioning engine
Optimization of
2013 securities market risk
analysis system
decisioning engine (to
accommodate new credit
2014
risk measurements, new
business units, bond
guarantors etc)
2013
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NT$550 thousand
Time of completion
(year/month)
Commissioned since
2013 Q4
NT$1.5 million
Commissioned since
2013 Q4
NT$1 million
Commissioned since
2014 Q4
2. Future R&D plans
The Company will continue to devote resources into the development of
information systems and risk management tools. Below is a list of projects planned
in advance:
Project
Amount invested
Estimated progress
Mobile e-commerce platform
NT$5 million
Scheduled to be
commissioned by 2015
Q1~Q4
Virtual machine (continued)
NT$4 million
targets by 2015 Q4
(continued)
NT$8 million
targets by 2015 Q4
Project
Amount invested
Estimated progress
Display of information such
as securities holding
position, brokerage volume,
gains/losses, and updates of
invested instruments onto the
risk decisioning engine
NT$1 million
Scheduled to be
commissioned by 2015 Q3
Automation of risk-adjusted
return on capital (RAROC)
NT$1 million
Scheduled to be
Development of automated
checks to the derivative
pricing model
NT$2 million
Scheduled to be
Automated reporting of
proprietary trading
gains/losses
NT$2 million
Scheduled to be
The Bank's research and development expenses were mainly spent on the
development of information systems and risk management tools. Total R&D
expenditures had amounted to NT$38 million in 2013 and NT$25 million in
2014.
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The Bank had been active in the development of information systems and
risk management tools. Below is a list of R&D projects and results for the last
two years:
Year
Project
Amount invested
Upgrades to the banking
system core (continued)
Mobile banking platform
2013
(for iOS APP)
Mobile banking platform
2014
(for Android APP)
2013
NT$31 million
NT$3 million
NT$3 million
2014 Virtual machine (VM)
2014
Database
integration (SQL)
NT$15 million
server
NT$3 million
Time of completion
(year/month)
Commissioned since July
2013
Commissioned since
December 2013
Commissioned since June
2014
Server consolidation
completed in December 2014
completed in December 2014
Year
2013
2014
2014
2014
Project
Amount invested
Time of completion
(year/month)
NT$4 million
Commissioned between 2013
Q2~Q4
NT$1 million
Commissioned since 2014 Q1
NT$2 million
NT$1 million
Upgrades to Basel III
credit risk capital
provisioning platform /
automation of market risk
capital adequacy
calculations / corporate
banking LGD system
(phase 1)
Corporate banking LGD
system (phase 2)
Development of Basel III
liquidity measurements liquidity coverage ratio
(LCR) and net stable
funding ratio (NSFR)
decisioning engine
(adopting the indicator
information for
dimensions such as
measuring credit risk at
the secondary subsidiary
and for bond guarantors)
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2. Future R&D plans
The Bank will continue to devote resources into the development of
information systems and risk management tools. Below is a list of projects planned
in advance:
Project
Amount invested
Estimated progress
Mobile e-commerce platform
NT$5 million
Scheduled to be
commissioned by 2015
Q1~Q4
TSM mobile payment platform
NT$6 million
Scheduled to be
Virtual machine (continued)
NT$4 million
targets by 2015 Q4
(continued)
NT$8 million
targets by 2015 Q4
Project
Amount invested
Estimated progress
Development of foreign
currency options pricing
platform
NT$2 million
Scheduled to be
Automation of risk-adjusted
return on capital (RAROC)
NT$1 million
Scheduled to be
In 2014, the following plans were made with regards to the distribution of the
company's financial products:
1. Securities branches: branches are currently turning towards high-yielding products
such as life insurance; meanwhile, car and motorcycle insurance are two products
that present constant demands in the property insurance category. To complete the
protection package, products such as accidental insurance and travel insurance are
offered as complements.
2. Consumer banking channels: by packaging with mortgage and credit loans, products
such as fire insurance, residential insurance, home appliance insurance, accidental
insurance, and vehicle insurance can all be marketed using an integrated channel,
thereby satisfy customers' needs for one-stop shopping experience.
3. Corporate banking channels: fire insurance, engineering insurance, and liabilities
insurance is marketed to corporate customers as part of Jih Sun's financial solutions
to protect them against risks control to ensure sustainable operations.
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(V) Long and short-term business development plans
The Company holds controlling interests in Jih Sun International Commercial
Bank Ltd., Jih Sun Securities Co., Ltd., and Jih Sun International Property Insurance
Agency Co., Ltd. The subsidiary bank and securities firm are the Company's primary
business focus.
1. Short-term business plans
(1) Strengthen financial structure via improved profitability.
(2) Reduce business risks with enhanced risk management.
(3) Reduce operating costs.
(4) Raise service quality via innovation.
2. Long-term business plans
banking and securities services. Below is a description of our long-term business
plans:
(1) The Company adopts a strategy that focuses on "Rooting," "Expanding," and
"Balancing" its business activities. "Rooting" involves raising competitiveness
across subsidiaries and finding suitable targets that can be acquired as a means of
growth. "Expanding" involves mainly the extension of core services into the
overseas market. Lastly, "Balancing" promotes the idea of growing the
Company's business activities in a balanced manner that is sustainable over the
future.
(2) For the banking sector, "segmentation and innovation" will be the focus of our
growth strategies, and for which 6 business goals have been identified.
(3) For the securities sector, transformation and change will set the tone of our
future, and for which four main directions have been identified including the
founding of a fully licensed joint venture in China.
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1. Securities brokerage:
(1) Brokerage services
A.
Securities specialists have now been granted the permission to concurrently
engage in wealth management services. Therefore, in addition to
emphasizing the necessity of obtaining licenses, the company will also be
enhancing training and practicing proper credit assessment to minimize
operational risks associated with new business opportunities.
B.
Support the government's economic stimulants and product deregulation
efforts. In addition to the Taiwanese stocks, Leverage upon the company's
existing competitive advantage in securities brokerage to capture wealth
C.
D.
E.
management opportunities.
Assess regional potentials of each branch; relocate or resize branches that
present no economic benefit. Explore opportunities to merge or establish
strategic alliance with other securities firms as a means of increasing Jih
Sun's market share.
Source talented employees and high-value customers; improve capabilities
of the entire sales force and aim to increase asset size.
Enhance relationships with corporate customers; take initiative in promoting
sub-brokerage and trust services Utilize electronic platforms and mobile
technologies to improve the depth and quality of customer relations.
(2) International businesses
A. Short-term business plans:
Increase market share in sub-brokerage services by upgrading the electronic
platform, enriching product line, developing professional partnerships, and
strengthening relationships with corporate customers.
B. Long-term business plans:
Recruit sales staff and investment advisors; support them with a complete
product line that helps customers achieve optimal asset allocation, creating
win-win solutions that develop Jih Sun's professional image in
sub-brokerage services.
(3) Wealth management
A. Short-term plan: following the introduction of trust services, the company
will first focus on enriching its trust product line and then develop online
trading functions to give customers more immediate financial information
and more convenient trading services.
B. Long-term plan: grade customers by their wealth and needs using CRM data;
provide professional consultation services including the design of asset
allocation and financial planning solutions.
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2. Proprietary trading:
(1) Investments:
A.
Short-term business plans:
a. The company shall base its decisions upon fundamental analysis, and
adopt trading strategies over short-term and medium-term horizons.
Investment meetings will be held on a regular basis to discuss global
market movements, market factors, the overall environment, economic
cycles, commodity prices, and other major issues. These discussions
provide the basis for our investment strategies.
b. Diversify risks by adopting a strategic investment approach; use hedging
instruments such as futures to secure profitability.
B.
Long-term business plans:
a. Assemble investment teams for different types of capital markets,
thereby reduce impacts of a single market on department earnings.
b. Assemble teams of experts for different financial instruments, thereby
reduce impacts of a single financial instrument on department earnings.
(2) Research:
A.
Short-term business plans:
a. Increase the depth and breadth of research conducted on Great China
Region, ASEAN, and emerging markets, and thereby comprehend
changes in overseas markets.
b. Develop research on Taiwan's conventional industries to broaden tock
selections.
c. Strengthen collaborative relationship with internal as well as external
research resources.
d. Create a quality research environment and reduce employee attrition.
B.
Long-term business plans:
a. Enhance the depth of research in all markets. Identify trends within the
Great China Region (China/Hong Kong/Taiwan) to complement our
existing advantage in the Taiwan market, and contribute to the stability
of our overseas returns.
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b. With more deregulations on the way, the company will assist the
financial holding group in exploring new investment opportunities and
designing new products, both as means of broader revenue sources and
as a complement to the group's services to its customers.
3. Fixed income:
(1) Short-term plan: improve trading capacity; adopt trading strategies that involve
combined long/short positions in TWD currency, foreign currencies, futures and
interest rate derivatives. Actively engage in the trading and underwriting of
international bonds. Explore underwriting opportunities for higher market share.
(2) Long-term plan: given the launch of OSU, the company will be developing a
marketing network and a trading platform specifically for the full range of
international bonds and derivatives that will become available in the future. As
the market progresses into the next level of globalization, more human resources
will be assigned to study the foreign bond market to create new business
opportunities.
4. Capital market:
(1) Short-term plans: broaden involvement in domestic securities underwriting;
invest in the Emerging Stock Market; explore opportunities in financial
consultancy; reduce costs and build up competitiveness in the capital market.
(2) Long-term business plans: devote greater efforts into the development of
overseas market; search for overseas securities issuers that are interested in
raising capital from Taiwan; offer comprehensive range of financial services to
regional customers, and take progressive steps toward becoming a regional
investment bank.
5. Derivatives:
(1) Short-term plans: secure the company's competitive position and profitability.
With regards to options, we shall utilize our competitive advantage in hedging
strategies to introduce the right products, knowledge and tools to investors. This
approach helps build our professional image and secure stable earning streams.
With respect to structured products, we shall focus our efforts on educating and
growing customers, and introducing new fixed income instruments to
complement customers' trading strategies.
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(2) Long-term plan: in addition to raising our market standing, we shall also aim to
develop a sustainable business size and a consistent profit model to
accommodate the new products and services that will be introduced in the future
and new risk management systems and trading strategies developed alongside
them. In the meantime, we will strive to develop synergies through different
combinations of products and risks. Furthermore, we shall develop a wealth
management product line that is centered around structured products to derive
revenues from diverse sources.
6. E-commerce:
Growing applications of smartphones, cloud services and big data have
enabled the company to perform real-time analyses on customers' behaviors and
financial needs, and respond to them with information or services over mobile
devices. When used appropriately, this technology will strengthen customers'
confidence in the Jih Sun brand. With more deregulations underway, the trust
platform will become the focus of our e-commerce efforts.
Short-term
Deposit &
remittance
Long-term
Short-term
Corporate
banking
Long-term
A. Make appropriate allocation of capital and adjust deposit structure in line
with changing interest rates to keep funding costs low.
B. Continue standardization and centralization of procedures and processes
for greater service efficiency,
C. Promote digital services; introduce higher degree of automation to Internet
banking, mobile banking and Mobile ATM card.
Enhance internal control and improve operational efficiency to reduce
operating costs and risks. Mobilize employees to assist in the sale of key
products and service. Exercise effective control over operating expenses;
launch improved digital services for customers' convenience.
A. Grow SME financing with the support of "SME Credit Guarantee Fund."
Utilize the credit guarantee system to mitigate risks and generate revenues
for the corporate banking segment.
B. Continually adjust the corporate banking portfolio to increase the
percentage of secured lending and reduce the weight of large credit
customers. Shift business focus towards medium-size customers with good
revenue potentials and high profit contribution.
C. Work with Trade-Van Information, credit guarantee fund and accounts
receivable insurers into launching "innovative trade financing" services
and helping SMEs obtain the funding they need for exports.
A. Take a customer-oriented approach to integrate resources throughout the
financial group. Offer customized solutions that satisfy corporate
customers' needs from financing, plant development to operations. Raise
profitability and broaden income sources by offering win-win solutions.
B. Focus on providing transaction-based and self-repaying loans to get hold
of customers' cash flow and maximize revenue contribution. Improve
service quality via training and grow customer relations via
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Short-term
Consumer
banking
Long-term
Short-term
Credit cards
Long-term
Wealth
Short-term
management
professionalism.
C. Exercise stringent quality control over corporate credit; aim to surpass
industry peers in terms of loan loss coverage and capital adequacy.
A. Maintain and grow mortgage portfolio in line with the government's
housing policies.
B. Actively promote mortgage-linked financial solutions and balance
transfers to secure a broader income source.
C. Launch online credit applications to improve the efficiency and quality by
which customers' requests are handled.
D. Promote use of digital services such as E-Loan, call memo, and mobile
consumer banking for greater service efficiency.
E. Anchor customer relationship by offering value-adding services. Design
suitable products and services that attract potential customers and
penetrate through the existing customer base.
F. Improve sales force selling skills; enhance training on product knowledge
and marketing practices; implement performance management and raise
contribution per employee.
G. Adopt new product management techniques, sales contests, and packaging
strategies to increase risk-less income.
H. Execute a retention policy that maintains and builds up interaction with
customers. Offer customized services based on contribution levels; make
additional sales efforts in the form of product suggestions.
I. Closely monitor market changes and product pricing to flexibly adjust
interest rates and credit policy.
A. Steadily grow the consumer banking portfolio in terms of size, revenues
and profitability.
B. Develop affiliated enterprises to become part of the sales network that
helps generate revenues.
C. For loans, the Bank will execute a pricing strategy that takes into account
"costs, fees, risks and returns." In the meantime, the Bank will maintain a
moderately competitive rate that is comparable to peer levels, and compete
on product differentiation instead of price. Lastly, the Bank will strictly
monitor its asset quality by developing robust risk management practices.
D. Source customers via physical (branches) and virtual (Internet) channels.
Strive to bring in target customers quickly in large volumes by utilizing
cloud computing technology.
E. Simplify operating procedures in ways that reduce operating costs and
risks; apply proper training to improve the accuracy and quality of
employees' services, and ultimate enhance overall competitiveness.
A. Launch top-tier cards to satisfy the needs of high net worth customers.
B. Launch contactless and OTA cards for customers' convenience.
C. Commence acquiring services to complement performance of the Bank's
credit card segment.
A. Digitize credit card services to conform with the trends of the banking
industry.
B. Investigate customers' needs; introduce new products (e.g. dual currency
credit cards) to capture market opportunities.
A. Fee income contribution: offer broad product varieties for customers to
choose from; organize marketing campaigns and create opportunities
where sales people can develop customer relations and loyalty.
B. Customer management: grow relationships with VIP customers; cross-sell
and organize marketing campaigns targeted at non-VIP customers; attract
customers into branches where financial advisors may have a chance to
interact and earn commission revenues.
C. Education & training: develop professional standards among financial
advisors; improve selling skills while in the meantime ensure compliance
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Long-term
Short-term
Trust
services
Long-term
Short-term
Treasury
Long-term
Short-term
E-banking
services
Long-term
with laws. Retain performers and eliminate non-performers to deliver the
best results.
A. Pay close attention to changes in the global market. Enrich product line by
including broader selections. Satisfy customers' financial needs by
offering a diverse range of investment tools.
B. In light of changes in customers' purchasing habits and increasing
popularity in the use of automated channels, the Bank will be actively
developing a mobile service platform that conforms with its differentiated
marketing approach and satisfies the needs of different customers.
C. Monitor closely any changes in law. Enhance existing trade system and
services; offer short-term, medium-term, long-term investments and
retirement planning as solutions to customers' asset allocation.
A. Develop custodian services; generate custodian fees and increase the size
of assets held in custody.
B. In response to regulations from regulators, the bank focuses on long-term
care family trust, real estate development, and pre-sold housing escrow
service and management.
C. Offer trust consultation services via branch staff and financial advisors;
enrich product line and explore potential customers within the bank.
A. Enhance risk management on all existing product lines; develop new
service types in line with upcoming deregulations.
B. Raise operating efficiency by enhancing system functionality.
C. Develop trust services and infrastructures in response to changes in market
conditions and regulations.
Improve the workflow and information system currently used on structured
products to improve service efficiency and quality. Develop new financial
products and expand the Bank's product lines to secure existing customers.
Explore new customers by offering solutions that satisfy their financial and
hedging needs. Enhance business cooperation among branches; arrange
training courses for branch staff; raise service standards and increase sales of
structured products.
Create robust systems and functions for managing customers' exposures.
Assist customers in wealth management and investment planning from a
portfolio perspective. Continually develop new financial instruments to
satisfy customers' financing and hedging requirements; build long-term
partnership relations through which we may profit.
Support the authority's "Digital Banking 3.0" initiative by introducing a
larger number of digital services. Enable customers to apply for deposit, loan,
credit card, and wealth management services online.
WebATM and online cash collection will become the two highlights of the
Bank's Internet banking services. To attract online shoppers, the Bank will be
collaborating with various portals such as Yahoo and Rakuten for the purpose
of promoting its online cash collection services.
Mobile banking service will be one of the highlights of the Bank's business
development efforts. By combining cellphones with mobile payments, the
Bank seeks to create a whole new system where consumers take charge in
purchasing the items they need at any time using cellphones. Mobile banking
gives customers easy access to a comprehensive range of financial services
and information. It has the potential to increase the number of active
accounts, trade volume, level of satisfaction, revenues and overall business
performance.
Apart from e-commerce, the Bank also monitors changes of online
shopping behaviors in China and Taiwan, and actively searches for
opportunities to form cross-strait alliances.
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The development of the insurance agency business will be focused on managing
our existing channels and satisfying the needs of our customers. Product simplicity
and comprehensiveness are the first priorities; combined with securities, banking,
and proper personnel training, we will raise the standards of our financial services
offered to customers.
In terms of coordinated marketing, the incorporation of a financial holding
company allows insurance agents to perform intra-group cross-sell using
subsidiaries’ database. This involves lower customer acquisition costs and better
satisfies consumers’ desires for “one stop shopping” while reducing their searching
costs. Although Internet marketing is growing in popularity, the sale of insurance
products through banking channels remains a stable and irreplaceable option.
1. Short-term objectives:
To introduce simple products that are easy to understand; To guide our sales
staff to their completion of insurance representative proficiency exams, register them
as insurance representatives and enhance training on product knowledge as well as
selling skills, and thereby achieving greater customer penetration. To respond to the
growing variety of products being introduced by insurance providers in light of the
challenging market, we should broaden our insurance partners to capture the latest
market trends, and therefore enriching our products on shelf and ultimately satisfy
consumers’ needs.
2. Medium and long-term objectives:
Develop insurance knowledge across the distribution channel. Identify elite
leaders from top performers and apply advanced training to help them gain more
in-depth knowledge towards insurance, so that they can lead their colleagues to
accomplish more challenging targets accomplish more challenging targets and
develop proper sales habits. Explore greater potentials out of existing customers by
introducing them to the company's rich product line.
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II. Effectiveness of cross-industry marketing and co-marketing
In order to provide more comprehensive products and services to its customers, Jih
Sun Financial Holding Co., Ltd. has established co-marketing counters at certain
branches/branch offices of its subsidiary bank and securities company; this
establishment was intended to achieve reductions in operating costs, resource sharing,
and the full utilization of synergies within a financial holding company.
To provide network services that help customers find what they need quickly, the
Company has integrated all online functions of its subsidiaries into the homepage of Jih
Sun Financial Holding Co., Ltd., thereby providing the customers with easy access to
product information offered by our various subsidiaries and complete transactions
online. This improvement has substantially raised customers’ satisfaction and
contributed favorably to our corporate image.
Our future growth will still be driven by customers’ needs. By adhering to our
service quality standards and ensuring satisfaction in the financial products we offer,
while leveraging on the co-marketing efforts of our subsidiaries, we will improve the
profitability of Jih Sun Financial Holding Co., Ltd. and maximize the benefits of our
integrated marketing strategy.
III. Market and business overview
1. Regions where our primary products (services) are mainly sold (provided)
The Company currently targets the sale (provision) of its primary products
(services) in Taiwan, with overseas markets as secondary targets.
Main product and service categories
Securities and futures related businesses
(brokerage, proprietary trading, underwriting,
futures, bonds, wealth management,
derivatives, financial consultation, stock
transfer agent, international business, securities
investment consultation etc.)
Banking related businesses (deposits, loans,
foreign exchange, wealth management,
consumer banking, credit cards, corporate
banking, trust, and electronic banking etc.)
Agency for property and life insurance
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Major markets
Based in Taiwan and progressing into the
Greater China region
2. The market’s future supply and demands
Currently there are 16 financial holding companies registered in Taiwan; most
of which have allocated a significant amount of resources in their banking
subsidiaries. The banking industry as a whole remains over-populated with service
providers. In an attempt to compete in size, several securities firms have voluntarily
resolved to merger in recent years; banks, however, have not delivered results in this
respect. As a solution, the Ministry of Finance will be spearheading a number of
mergers involving state-owned banks.
Due to implementation of the new Basel Accord, lack of eligible capital is
likely to become the biggest challenge to local banks. Because the new Basel Accord
(Basel III) requires banks to maintain an increasing capital adequacy ratio,
state-owned banks have been estimated to encounter a shortage of capital by 2016,
meaning that there will be ongoing needs to strengthen capital over the next few
years. Given the general lack of capital among state-owned banks, the Ministry of
Finance is currently working on three solutions to address the problem. The first
solution involves the government making budgets to subscribe to cash issues; the
second solution allows state-owned banks to contribute a lesser portion of their
earnings to the treasury and instead use this money to boost special reserves; the
third solution gives privatized state-owned banks more incentives to issue stock
dividends.
According to the FSC's 5-year "Corporate Governance Enhancement Roadmap"
introduced at the end of 2014, TSEC/GTSM listed companies will become subject to
mandatory corporate governance assessments starting in 2015. Under the new policy,
companies will be required to appoint independent directors, broaden the scope of
audit, and implement an electronic voting system for use in shareholder meetings.
The purpose of a corporate governance assessment is to help companies understand
how their organizations are being managed, which in turn facilitates comparison and
competition across peers for the better. Eventually, this assessment will help local
companies connect corporate governance practices with the rest of the world,
benefiting them and the capital market as a whole.
The world economy is expected to continue its recovery throughout 2015.
According to the forecasts made by Global Insight (GI), growth of the global
economy in 2015 may increase by 0.4% to 0.6% compared to 2014, while U.S. and
Europe may improve by as much as 1.0% and 0.5%, respectively, to offset the
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slowdown in China. Taiwan may well benefit from this change, but having already
delivered strong performance in 2014, there may be limited room as to how much
economic growth can improve in 2015. According to the latest forecast made by the
Directorate-General of Budget, Accounting and Statistics in November 2014,
Taiwan is expected to deliver a real GDP growth of 3.50% in 2015. Taiwan Institute
of Economic Research, on the other hand, has raised its forecast on Taiwan's
economic growth to 3.67% for year 2015, based on the notion that falling oil prices
helps boost economic activities in January 2015.
Overall, economic outlook remains favorable both in the domestic and
international context in 2015. However, the U.S. is perhaps the only nation that has
been expected to undergo recovery with much certainty, because the Eurozone
remains troubled by problems involving debt, currency and employment even till this
date, whereas China's growth has fallen to a slower rate and Japan continues to show
weakened demands. The ending of QE measures and expectations toward an interest
rate hike in the U.S. coupled with expansionary monetary policies in Europe and
Japan will eventually contribute greater uncertainty to global exchange rates,
especially for emerging nations. In the domestic context, the signing of free trade
agreement (FTA) between China and Korea coupled with the formation of the
Chinese supply chain will pose a double impact on Taiwan's exports. Lastly, the
government's fiscal shortfalls may also present limitations to the nation's growth.
3. Business targets
The global economic outlook remains favorable in 2015, as the world's major
economies are still in the state of recovery. Taiwan may well benefit from this
recovery and achieve an estimated growth of 3.67% in 2015, according to the
estimates made by Taiwan Institute of Economic Research. 2015 will undoubtedly
become Jih Sun Holding's shining moment, because both of its main subsidiaries will
strive to achieve further success in their fields of expertise and aim to broaden their
reach towards the Great China Market. Although we are committed to delivering
better performance, we remain conservative in setting our business targets for 2015:
(1) Maintain profit growth; aim to raise after-tax ROE to 6.63% or above.
(2) Improve profitability ranking among peers; aim to achieve top 9 or top 10 in
terms of after-tax ROE, and top 12 or top 13 in terms of after-tax EPS.
(3) Improve the efficiency at which subsidiaries' capital is used; aim to achieve a
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4. Upcoming opportunities and threats, and the responsive strategies
(1) Opportunities
A. New e-commerce opportunities being made available in BANK3.0
The Bank will strive to make good use of mobile tools and technologies to
promote management and efficiency within the organization, and raise
customers' satisfaction outside the organization. In terms of e-commerce, the
Bank will continue to invest in new systems and new functions, and create a
digital platform that distinguishes itself from competitors. These new features
may include trading, mobile, and social network services for the securities
sector, and mobile payment, mobile banking and webATM for the banking
sector.
B. Competitive advantage capable of dominating overseas markets
Jih Sun Securities has already accumulated abundant experience from Taiwan
and Hong Kong, whereas Jih Sun Cresvale's Shanghai office has also built up
complete knowledge bank about the Chinese market. The Chinese government
is expected to release 9~10 licenses for joint-venture securities firms in the
future. By signing MOU with a counterpart in China, Jih Sun Securities may
have access to one of the few fully licensed joint ventures in China.
(2) Threats and responsive measures
Threats
Local and foreign
uncertainties undermine
Taiwan's economic
development and the
financial sector
Potentials of the
subsidiary bank are
confined by its small
asset size
Responsive measures
The parent company conducts annual reviews of its business
strategies and plans, and guides subsidiaries toward developing
their own plans as well. Uncertainties and impacts they have on
Taiwan's economic development have been taken into
consideration as one of the key risk assessments.
The parent company will continue to monitor changes in the
external environment and keep track of how subsidiaries have
accomplished their targets. Any abnormalities will be discussed
and addressed immediately in meetings.
The subsidiary bank will continue to adhere to its
"segmentation and innovation" strategies, and find the best mix
of revenues that is sustainable over the long term. Apart from
corporate banking, consumer banking and wealth management,
the Bank will also dedicate a part of its resources to
e-commerce, enhancing system functionalities and introducing
third-party payment among other payment tools for the
convenience of customers.
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1. Regions where our primary products (services) are sold (provided)
The Company currently targets the sale (provision) of its primary products
(services) in Taiwan, while overseas markets serve as secondary targets.
Main products and services
Major markets
Securities and futures related businesses
Mainly focused in Taiwan. In terms of world
(brokerage, proprietary trading, underwriting,
market exposure, the Company is able to reach
futures, wealth management, bonds, derivatives, the U.S., Japan, Hong Kong, Singapore, U.K.,
stock agency, international business, securities
Australia, South Korea and other markets
investment consultation etc.)
through sub-brokerage.
Securities have long been regarded as a leading economic indicator. According
to the "World Economic Outlook" published by IMF In January 2015, growth
estimates for the global economy had been adjusted downwards by 0.3% to 3.5% in
2015 and 3.7% in 2016; the United States was the only nation to have its GDP
growth raised, by 0.1% to 3.6% in 2015. The world's GDP growth estimates were
revised downwards mainly due to concerns that the U.S. expansion does not
compensate the slowdown in China's growth, its impacts on Asian emerging
economies, weakened prospects in Russia, and the slump experienced by commodity
exporters. Meanwhile, IMF issued a warning to developed nations that they should
maintain a loose monetary policy in order to weather through the risks of deflation.
There are upsides to the world's economy, as falling oil prices are believed to boost
economic activities; meanwhile, downsize risks and changes in market sentiment are
largely connected with performances of individual markets, especially among
emerging economies where the fall of oil price has given rise to concerns toward oil
exporters. For Europe and Japan, stagnant economy and low inflation rates are the
two issues of concern.
3. Business targets
(1) Lead industry peers in terms of financial health.
(2) Achieve excellence in branch efficiency.
(3) Secure profitability from brokerage services.
(4) Explore underwriting opportunities and build up brand image overseas.
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(5) Achieve efficiency in the sale of derivatives and hedging solutions.
4. Upcoming opportunities and threats, and the responsive strategies
(1) Opportunities
A. Policy aspect: the authority has been active in the promotion of Banking 3.0
and opening securities firms to OSU services. In light of this change, the
company will aim to broaden the scope of its securities services, bringing new
products such as derivatives and ETFs into the mix. Meanwhile, the "Stock
Market Enhancement Program" that has been planned for the future will
connect the local market to the rest of the world, and present securities firms
with even greater prospects.
B. Market aspect: the availability of RMB bonds and Formosa bonds not only
gives investors more options to place their assets, but presents securities firms
with viable income sources as well. Listing of T-shares and F-shares should
result in a boost in the company's underwriting services. Lastly, the
introduction of RMB currency futures and other new systems have been
expected to boost the market's trade volumes.
(2) Threats
A. Policies: although capital gains tax on billion-dollar traders has been postponed
until January 1, 2018, the reduction of imputation tax credit and introduction of
affluent tax will pose additional costs for investors and may undermine their
intent in making short-term investments. In addition, introduction of the U.S.
Foreign Account Tax Compliance Act (FATCA) will present additional
operating costs to financial institutions. In response to this threat, the company
will first try to maintain interactions with brokerage customers and secure their
relationships, while in the meantime explore other sources of revenue such as
securities lending, dividends etc. to make up for the lost interests and revenue
from long-term investment dividend and interest.
B. Market aspect: Taiwan's stock market, currently dominated by natural-person
investors, may undergo structural changes in the future given the prevailing
disparity of wealth. This development will inevitably limit the company's
commission income. In response to this change, the company will begin
targeting
wealth
management
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services
at
corporate
customers
and
natural-person customers, and exploring non-brokerage revenues from sources
such as derivatives, underwriting, and financial consultancy. Meanwhile, we
shall shift our underwriting efforts to prominent industries such as Internet,
communications, biomedicine, culture and creativity.
The Bank holds the license of a commercial bank and offers services throughout
Taiwan. As of the end of 2014, the Bank owned 44 offices in Taiwan. In an attempt
to expand into the Great China Region, the Bank has set up its Hong Kong office on
August 29, 2014, and uses it to source customers from Hong Kong, eastern and
southern China. Currently, the majority of its products are marketed within Taiwan,
whereas overseas markets remain a secondary focus.
(1) As the world economy progresses into an era of mediocrity characterized by low
growth, low inflation, low investments and low interest rate, integration with the
regional economy becomes as necessary as it is viable. To participate in such a
movement, a financial institution needs to raise the strength of its products and
services and constantly innovate to satisfy customers' changing demands.
(2) Evolution of mobile communication and Internet technologies have presented us
with four main trends: social networking, mobile applications, data analysis,
application and cloud computing. In the future, e-commerce should evolve and
become a main driver of economic activities, while at the same time enabling
financial institutions to monitor customers' behaviors and satisfy needs.
(3) FSC has continued its support for the "SME Lending Initiative," under which
banks are encouraged to extend loans to small and medium enterprises within
manageable risks. According to FSC's statistics, local banks had lent a total of
NT$5,163.9 billion to SMEs by the end of December 2014, which was NT$402.9
billion higher than the balance outstanding as at the end of 2013 and represented
an achievement rate of 167.88%. The Bank has set its goals to lend NT$240
billion to SMEs in 2015, which still remains its highest target to date.
(4) Today, the FSC continues to deregulate and open up the market to broader
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opportunities. In terms of opening up to Asian prospects, the FSC has identified
four main strategies that involve: "Overseas Database Development,"
"International
Supervision,"
"Simplifying
Regulatory
Procedures,"
and
"Nurturing Global Talents." With regards to the creation of an "Asia Pacific
Financial Hub," the FSC has introduced offshore banking, securities and
insurance units as means through which local financial institutions may offer
services to overseas customers, and encouraged them to develop financial
products that appeal to Chinese customers. With regards to the execution of
"Capital Importation" initiative, the FSC has devised a 2-stage strategy that
involves deregulation in stage 1 (enabling insurance companies to carry out
transactions at local banks and securities firms), and product innovation in stage 2
(developing innovative abilities via training, investment or acquisition of foreign
financial institutions). In terms of build up a digital financial environment, the
FSC has enabled insurance companies to accept applications online and is
currently exploring solutions to enable online account opening for banking and
securities customers.
3. Business targets
"Segmentation and innovation" will be the main growth strategies in
2015, and for which 6 business goals have been identified: 1. Accumulate
assets and customers for greater profitability. 2. Diversify risks in terms of
product line and region. 3. Maintain pricing discipline for higher spread. 4.
Increase the percentage of risk-less, fee-based income. 5. Enhance customer
relationships. 6. Improve service quality. Competition and uncertainties are
expected to remain throughout 2015, which the Bank will respond by
continually pursue performance growth and achieve the goals it has set.
4. Opportunities, threats and responsive measures
(1) Opportunities
A. In 2014, local banks as a whole delivered an after-tax earning of NT$320
billion, representing a 25% increase over the NT$257.6 billion registered in
2013. This performance marked the 5th consecutive year in which the Bank
has delivered record-high profits.
B. In December 2014, the central bank maintained its rediscount rate unchanged
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at 1.875％ for the 14th consecutive quarter, and hinted that an interest rate
hike is imminent in the future. A high interest rate environment works in favor
of the financial sector.
C. The government has completed a draft regulation for third party payment
services; this new service may provide financial institutions with new sources
of profitability.
D. Ongoing deregulations regarding the types of customers and derivatives
available to OBUs will provide banks with enhanced competitiveness to satisfy
the needs of different customers and eventually increase profits.
E. As part of FSC's "Capital Importation" initiative, banks have been granted the
permission to provide "Information and Consultative Services on Offshore
Derivatives," which not only helps nurture domestic banking talents but also
enables local banks to develop new financial products.
F. The government encourages financial institutions to venture into Asia by
loosening restrictions on overseas investments and mergers.
(2) Threats
A. FSC has required local banks to increase loan loss provisions on mortgages to
1.5% by the end of 2016, which will reduce the amount of profits reported by
banks.
B. A rise in interest rate without a corresponding increase in real salary may
suppress private consumption over the medium term.
C. The government's new fiscal policy will increase income tax rate from 2% to
5% for the banking industry, and hence reduces profitability.
D. Basel Committee on Banking Supervision (BCBS) had finalized the method of
calculation for liquidity coverage in 2013, and recommended all nations to
adopt the new calculation starting in 2015. FSC and the Central Bank have
assembled a project team and begun drafting standard processes and
calculations that will conform with international practices. Furthermore, banks
have been required to maintain a liquidity coverage of no lesser than 60% in
2015, which increases by 10% each year until 100% by 2019.
E. The new property tax reform, once effected in the near future, is likely to have
an adverse impact on real estate prices, therefore cooling the property market
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even further and reducing the number of new mortgage cases.
F. Banks that have lagged behind in overseas deployment are less able to compete
in overseas businesses.
G. Medium-term and long-term sources of capital will become a major issue if the
bank was to grow its portfolio and establish overseas branches at the same
time.
(3) Responsive measures
A. Adjust the risky asset portfolio in a way that reduces concentration to large
credit customers. Enhance quality of the lending portfolio and aim to raise loan
loss coverage.
B. Enhance capital structure; adopt the Basel III accord to strengthen the Bank's
tolerance to risks.
C. Grow wealth management services by introducing a broad variety of products
and services.
D. Optimize use of capital. Match assets properly with liabilities for greater
efficiency.
E. Manage and cut down expenses to secure earnings.
F. Exercise sales management. Raise productivity to support future growth.
G. Exercise risk management and controls over operations, exposures, and credit
rating.
H. Create a user-oriented electronic service platform where more convenient tools
and broader product varieties can be offered.
I. Create new businesses to join new markets. work with banks in China, Hong
Kong and Japan (Shinsei Bank) to build up international service capabilities.
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Our major markets are Taiwan, Penghu, Kinmen, and Matzu.
Following the establishments of financial holding companies, the use of banks
as sales channels has become the latest trend, as well as a major income source, to
Taiwan’s insurance market. The flourish of banking insurance under a financial
holding structure is inevitable. Through cross-selling within the FHC, industry
participants are able to identify potential customers at lower costs; they can also
introduce customized products by packaging different products offered in various
parts of the FHC and compete on product differentiation.
In the aspect of non-life insurance, the insurance premiums and the handling
charges are relatively low when compared with life insurance. Taking the profit gain
into account, the market shall naturally aim at life insurance products that are the
backbone targets and which would inevitably edge out non-life insurance products.
In the non-life insurance agent business, therefore, we shall firmly stick to the ratio
of renewal of the existing business lines (e.g., fire insurance policies for loan clients),
we shall try to provide a variety of market channel customers to more convenient
services in compulsory insurance policies or provide life insurance alternatives.
In the commodity strategies, we shall try to maintain integral commodities on
the shelves. For the same insurance products, we shall try to team up with multiple
firms in close cooperation to provide customers with added choices.
3. Upcoming opportunities and threats, and the responsive strategies.
(1) Opportunities
A. Local residents are placing more emphasis towards risk planning; their
understanding of finance has improved and are more receptive towards
different sales channels. The market has potential for more complex products
and sales methods.
B. Compared to peers that rely solely on one sales channel, the Company has the
advantage to utilize banking and securities networks to distribute its products.
C. The company's main distribution partners are highly receptive towards
property insurance products, and have produced good results in various
campaigns.
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(2) Threats
A. Property insurance products are mostly renewed on a yearly basis. The market
currently has an oversupply of similar products and sales personnel, which
gives customers easy access to price information and thus resulting in price
competition. This reality also has negative impacts on fees earned by insurance
agencies.
B. For fire insurance, property insurance companies need to review premium
rates regularly based on claims made in the last year. Due to reduced loss rate
and intensive peer competition, premium rates on residential fire insurance are
being adjusted downwards year after year, and therefore resulted in lower fees
earned by insurance agencies.
(3) Responsive measures
A. Increase the number of insurance partners. Enrich product line to satisfy
customers’ diverse needs and improve sales.
B. Promote insurance renewals to prevent loss of existing customers. Secure
existing customer base as the main source of income.
C. Enhance insurance selling skills (and complementary selling skills) among
securities brokerage and banking staff.
D. Increase the number of insurance products sold per customer through active
promotion.
E. Encourage employees to purchase insurance coverage from the Company,
thereby secure revenues while offer greater welfare in return.
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IV.Employees
(I) The number of employees, their average years of service, average age,
academic background, professional qualification, education and training in
the last 2 years up till the publication date of this annual report
1. Jih Sun Financial Holding Co., Ltd.
Year
2014
2013
Male
7
7
Female
7
8
Total
14
15
Average age
47.35
46.48
Average Years of service
5.55
5.07
Doctoral degree
0.00
0.00
Master’s degree
64.29
60.00
Qualification
Bachelor’s degree
35.71
40.00
High school
0.00
0.00
Below high school
0.00
0.00
Senior securities specialist
8
8
7
7
Professional Securities specialist
certificates held Futures specialist
7
7
by employees Certificate for life insurance
1
1
representative
Note: provide information up till the publication date of this annual report.
Number of
employees
Year-to-date
20 March 2015
(Note)
7
7
14
47.57
5.77
0.00
64.29
35.71
0.00
0.00
7
4
5
4
2. Jih Sun Securities Co. Ltd.
Year
2014
2013
Male
596
585
Female
1,093
1,111
Total
1,689
1,696
Average age
40.99
40.24
11.23
10.83
Doctoral degree
0.00
0.00
Master’s degree
9.30
8.90
Qualification
Bachelor’s degree
75.13
75.41
High school
15.51
15.63
Below high school
0.06
0.06
Senior securities specialist
623
637
1,007
1,035
Professional Securities specialist
certificates held Futures specialist
1,070
1,029
by employees Certificate for life insurance
1,173
1,056
representative
Number of
employees
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Year-to-date 20
March 2015
(Note)
594
1,090
1,684
41.15
11.36
0.00
9.38
75.18
15.38
0.06
641
1,039
1,029
1,061
3. Jih Sun International Commercial Bank Limited
Year
2014
2013
Male
602
565
Female
876
882
Total
1,478
1,447
Average age
38.17
37.77
7.96
7.68
Doctoral degree
0.07
0.07
Master’s degree
10.28
10.28
Bachelor’s degree
84.78
84.78
Qualification
High school
4.60
4.60
Below high school
0.27
0.27
Proficiency for Bank Internal
1,040
1,045
Controls
Professional
Certificate for Trust Operations
certificates held
958
967
Personnel
by employees
Certificate for life insurance
1,053
1,079
representative
Certificate for property insurance
453
431
representative
Certificate for investment oriented
457
461
insurance representative
Professional
Certificate for basic credit
certificates held
305
297
personnel
by employees
Certificate for advanced credit
10
11
personnel
Certificate for basic foreign
193
183
exchange specialist
Number of
employees
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Year-to-date 20
March 2015
(Note)
583
868
1,451
38.42
8.28
0.07
9.86
85.10
4.69
0.28
1,048
974
1,085
428
452
298
11
183
4. Jih Sun International Property Insurance Agency Co.,Ltd.
2014
Year
2013
Male
1
1
Female
2
2
Total
3
3
Average age
38.95
37.93
4.43
3.43
Doctoral degree
0.00
0.00
Master’s degree
0.00
0.00
Bachelor’s
degree
Qualification
100.00
100.00
High school
0.00
0.00
Below high school
0.00
0.00
Certificate for life insurance
2
2
Professional
representative
certificates held
Certificate for property insurance
by employees
2
2
representative
Number of
employees
Year-to-date 20
March 2015
(Note)
1
2
3
39.17
4.64
0.00
0.00
100.00
0.00
0.00
2
2
5. Qualification of personnel involved in financial transparency
Certified Public Accountant: 6, Certified Internal Auditor: 2, Internal Audit
Specialist: 6, BS 7799/ISO 27001: 2005 Lead Auditor: 2, Qualified share
administration specialist: 72, Qualified bond specialist: 27.
6. Employees' training and continuing education
(1)
In 2014, a total of 16,260 trainings were given at a cost of $7,884,225.
External trainings totaled 8,371 hours, internal trainings totaled 43,660 hours,
and online learning totaled 41,039 hours.
(2)
The development of human resource is the Company’s long-term goal. To
facilitate further growth while satisfying employee career development, we
have established the relevant training policies along with other supplementary
measures, thereby creating opportunities for our employees to learn and grow.
(3)
In compliance with regulations and the authority, the Company actively
appoints employees to participate in various professional training sessions
and fully subsidizes all training expenses.
(4)
To provide broader varieties of learning opportunities apart from the physical
internal and external trainings, the Company has also established a digital
learning platform and online examination platform (“JihSun College”
learning network). The network combines the Company’s KM platform and
offers more than 300 courses online, giving employees the opportunity to
self-study without the restrictions of time or space.
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V. Corporate responsibility and social morale
Please see P.80~P.84.
VI. IT equipment
(I) IT system structure
1. Most of the Company’s IT systems, including non-account management systems of
its subsidiaries, run on Microsoft structures. the Company’s strategic goal is to
establish a single line of IT supply that consolidates human and technical resources
under unified command; this in turn reduces operating costs and raises overall service
quality.
2. The banking subsidiaries use HP DL980 advanced servers and AS400 medium server
as NTD and foreign currency core bookkeeping and trust fund back office systems
platforms. In addition to the official and testing server for backup locally, the IT
remote backup center is also self-constructed.
3. The securities subsidiary currently uses a Tandem NB and S Series mainframe to
operate its accounts system. Two systems are installed in the northern and middle
regions to provide backup support for each other.
(II)Major events in the past year
1. Establishment of a data warehouse system for the financial holding
Since the completion of a data warehouse system, several data analyses were
added to enhance the effectiveness of product marketing; these functions are listed as
below:
(1) Data inquiry platform
(2) OLAP online analysis
(3) Credit risk inquiry
(4) Reports center
2. Mobile banking system upgrade
In light of rapid advancements in mobile commerce, customers will be given
more rapid means through which to transact. For this purpose, the Bank had begun
planning for the development of a mobile banking system since 2011, and later
completed Web versions for Android and iOS smartphones later in 2012, followed
by the launch of iOS APP in 2013 and Android APP in 2014.
3. Offering greater product and service varieties
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The Bank has launched new products in 2014 to accommodate deregulation
measures such as: day trading, leveraged/reverse ETF, trading of Emerging Stock
Market Funds etc. New deregulations on international securities services have made
it is possible for customers to settle transactions of U.S., Japanese, and Singaporean
stocks in NTD. A series of new upgrades has therefore been planned to improve the
electronic trading system. In terms of wealth management, customers have been
offered a broader range of financial products to choose from and a convenient trading
platform through which to invest. With regards to the mobile platform, the Bank has
introduced a Derivative APP, an Online APP, a SMART APP, and continually
enhanced new functions in its existing WTS APP. Meanwhile, the AP version of the
trading system has been given the ability to trade Emerging Stock Market shares.
4. Major projects
(1) Mobile payment service
The Bank's NFC ATM card has been successfully connected with Taiwan
Mobile Payment Company's mobile payment platform since December 2014,
making it one of the 18 financial institutions to first connect with Taiwan Mobile
Payment Company. The Bank expects to launch new NFC credit cards in the first
half of 2015, by which time customers will be able to download an APP named T
Wallet and apply a 4G USIM from a telecom company to download ATM card
and credit card functions over-the-air (OTA) into their cellphones. After which,
customers may simply run the T Wallet APP and choose the card they want to use.
This type of technological innovation is what the Bank will rely upon to give
customers better user experience.
(2) Development of Jih Sun Cloud
The Company has begun construction of Jih Sun Cloud since the end of
2014. The cloud creates a mobile office environment where consumer banking
officers and financial advisors can access back-office functions using their
handheld devices without the constraint of time and place. This added mobility
has the potential to raise customers' satisfaction towards the Company's services.
(3) Continual system efficiency improvements
To support new policies and products, the company will continue expanding
its existing system and resolving to solutions such as virtual machine and
-181-
centralized database. In addition, the company will be placing order through
Taiwan Futures Exchange's (TFE) "New FIX Platform" in 2015, thereby offering
customers a faster transaction experience with the potential to connect to the
world. An off-site backup unit will also be created to improve the stability and
service quality of the e-commerce website.
(4) Offering more comprehensive and diverse products/services
The Emerging gold spot trading platform had already been made available
in the beginning of 2015; further modifications will be made to accommodate
TFE's new policies. More refinements will be made to the mobile platform, the
AP system and the stock quote function to satisfy customers' needs and provide
them with a friendly trade environment.
5. Information security
In light of the rapid development of the IT industry that resulted in the
widespread of hackers, viruses, and security breaches to industry peers, the Company
has completed several information security projects as listed below to ensure
customers a secure trading environment and prevent security breaches with effective
protection measures.
(1) Risk evaluation on all IT assets.
(2) Personal data integrity check.
(3) System weakness evaluation.
(4) System penetration test.
(5) Creating IT security policies and manuals
(6) Establishing IT security plans.
(7) System access right review.
(8) System alteration review.
(9) Security event review, improvement, and supervision.
(10) Approval, execution, and supervision of corrective/preventive measures.
(11) Security event response and handling.
(12) IT security awareness and educational training.
(13) Anti-virus and anti-hack measures.
(14) Designing data security mechanisms.
(15) Assessment of computer security.
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VII.Employer and employee relationships
(I) The availability and execution of employee welfare and retirement, the
agreements between employers and employees, and the maintenance and
protection of employees’ rights.
The Company places great emphasis to employees’ welfare and their relationship
with the employer for the best working efficiency and loyalty. Our welfare and the
implementation of which are listed as below:
Category
Item
Description
1. Wedding gifts
2. Childbirth subsidy
3. Grievance subsidy
Core benefits
4. Emergency compensation
5. Social activity subsidy
6. Employees’ incentive trip
Flexible benefits were introduced and made available based
on the benefit points allocated per year; the benefits include:
1. Healthcare (medical check-up, fitness activities)
2. Education (EMBA/MBA, degree/credit, courses,
appreciation of fine arts)
Flexible benefits
3. Security (reimbursement for insurance premiums,
childcare, care for the elderly)
4. Leisure (transportation subsidy, gift vouchers, gourmet
Welfare
and shopping)
1. Group insurance policy (annuity life insurance, accident
insurance, medical insurance)
2. Privileged group healthcare insurance for employees’
and families
3. Labor Insurance, Health Insurance, and pension fund
contributions
Other benefits
4. Employee stock ownership trust
5. Annual leaves that are superior than the requirements of
the Labor Standards Act
6. Subsidies for certification exams
7. Fully subsidized health check-up
8. Employee assistance program (EAP)
1. To provide security to employees’ lifestyles after
retirement while protecting employees’ interests, the
Company has established its Employee Pension
Provision Supervisory Committee. The relevant
Established retirement
Retirement policy
organizational rules and retirement policies were
policy
approved by the Department of Labor, Taipei City
Government. Currently the Company contributes 2% of
employees’ monthly salaries into accounts held in trust
-183-
Category
Item
Description
by the Trust Department of the Bank of Taiwan on a
monthly basis.
2. Following the implementation of the government’s new
labor pension scheme since July 2005, the Company
complied with government policies and contributed 6%
of employees’ monthly salaries into the pension account
under the Bureau of Labor Insurance on a monthly basis.
Employer/employee meetings are held to promote
Arranged meetings
employer/employee relations and to protect employees’
between the employer
interests; it serves as a channel for two-way communication
and its employees
to achieve win-win solutions.
1. To align with the implementation of the Sexual
Harassment Prevention Act and the Act of Gender
Equality in Employment, the Company has developed
principles relating to the prevention, reporting, and
disciplinary actions of sexual harassment, and
established a Sexual Harassment Prevention Committee
to handle all complaints, investigations, and resolutions
of sexual harassment incidents. The Company is
dedicated to provide its employees an environment free
from sexual harassments and will commit to protect the
Means of negotiation
interests of victims of sexual harassment. Sexual
between the employer
harassments can be reported through the following
and its employees,
channels:
and the protection of
Telephone: (02) 2561-5888 ext. 6323.
Channels for
employees’ interests
Fax: (02)2531-0568.
complaints
Email: [email protected] (Sexual Harassment Prevention
Committee).
Sexual Harassment Prevention Committee: 6th floor, No.
85, Section 2, Nanjing East Road, Zhungshan District,
Taipei City.
2. The Company’s employees are entitled to voice out on
any compliance issues in relation to the Labor Standards
Act, Occupational Safety and Health Act, Employees’
Welfare Regulation, Labor Insurance Act, Labor
Inspection Act, Employment Welfare Act etc.
Complaints can be made through the following channels:
Telephone: (02)2561-5888 ext. 6323.
Fax: (02)2567-5889.
Email: [email protected].
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(II) Losses arising as a result of employment disputes in the last year up until
the publication date of this annual report. Please quantify the estimated
losses and state any responsive actions. Please state the reasons if losses
cannot be reasonably estimated.
Company
Year of employment
disputes
Estimated losses and responsive actions
Two resigned employees had made claims against the Bank for
overtime pay and severance pay totaling NT$436,000, plus interests
accrued at the statutory rate. The first judgment was awarded in the
Bank's favor, which the plaintiffs had appealed and reduced their
claims for overtime pay and severance pay to a sum of NT$361,000,
plus interests accrued at the statutory rate. The case is currently being
reviewed at the second instance.
A dismissed employee had filed suit to claim existence of
employment relationship with the Bank, as well as payment of
monthly salaries plus interests accruing at the statutory rate from
March 11, 2011, until the date the judgment is awarded. The Supreme
Court had rejected the employee's appeal in August 2014, and the
final judgment was awarded in the Bank's favor.
Bank
2013
Bank
2012
Securities
2014
None
Securities
2014
None
VIII.Environmental protection expenditure:
Not applicable.
-185-
IX. Working environment and employees’ personal safety
The following measures were taken to ensure employees’ personal safety and
minimize operational risks.
Category
Item
Description
Environmental safety: the Company conducts regular maintenance
projects such as electrical, fire safety, sanitation etc. to ensure the safety
of employees’ working environment.
Security access: in addition to engaging external security service
providers, the Company installs proximity access controls in each floor
and implements security access policies to ensure the safety of its
Office premise
employees.
management and
maintenance Elevator safety: to ensure the safety of all elevator equipment, the
Company hires service providers to maintain passenger as well as freight
elevators, and conducts annual inspections.
Employees’
Hygiene: in addition to hiring external sanitation contractors to provide
safety
regular cleaning services, the Company also conducts sterilization at
irregular intervals to ensure a hygienic working environment for its
employees.
The Company has “Emergency Protocols” and “Contingency and
Recovery Measures for Major Disasters” in place. Employees are
appointed to participate in the professional training for safety-related
Disaster
prevention and certifications; disaster simulations and rehearsals are held on a regular
responsive basis.
measures
The Company has installed fire safety systems in compliance with fire
safety regulations, which included alarms, sprinklers, and evacuation
systems etc. This equipment is inspected on a regular basis.
Subscribed to labor insurance (including occupational hazard insurance)
Social insurance
and national health insurance as required by law.
Offered life insurance, health, and accident insurance to employees at
Employees’ Group insurance privileged rates. Employees’ family members are also entitled to
subscribe insurance benefits at discount prices.
insurance
Travel insurance
Medical
check-up
Sexual
harassment
prevention
Employee
assistance
Mental health
program (EAP)
Physical health
The Company purchases incremental travel insurance for employees
who are required to travel overseas for business.
Medical check-ups are available to employees.
Established reporting channels and disciplinary rules for any
misconduct.
Offering consultation and assistance to employees regarding work-life
balance, career planning, human relations, and family.
Organizes stress (emotion) management, communication skill courses
Education and
etc. to ensure employees’ mental health while enhancing their
training
professional knowledge.
-186-
X. Employees’ behaviors and moral principles
(I) To ensure high ethical standards and outline moral behaviors for its employees, the
Company has established employees’ discipline and code of conducts in Chapter 2
of “Employees’ Work Rules” to serve as the basis of compliance for employees of
all grades. Any violations are subject to disciplinary actions depending on the
severity:
1. Employees shall comply and adhere to the Company’s guidelines, policies, and
subordinate to line managers’ rational commands, but may also voice out opinions
anytime, anywhere. Managers of all grades are required to command and supervise
within their delegated authority.
2. Employees shall be dedicated to their responsibilities, maintain work order, and
strive to improve work efficiency.
3. Employees are required to maintain satisfactory appearance, uphold moral standards,
and disassociate from any unethical habits.
4. Employees shall wear their staff ID cards when entering or exiting work premises.
5. Firearms, ammunition and other damage inflicting instruments, prohibited or illegal
objects and non-work related items cannot be brought into work premises without
prior approval; company properties may not be brought outside of work premises
without prior approval.
6. Employees are not allowed to organize support groups or join the support groups
organized by other employees within the Company.
7. Employees may not enter into any lending/borrowing arrangements in order to
prevent debt disputes that may affect normal business operations or work relations.
8. Employees may not utilize or withdraw company properties for personal use without
prior approval.
9. Employees may not delay the processing of any accepted cases. All received
documents, properties, books, and registries must be kept properly, and may not be
damaged, lost, or taken outside business premises. In case of any extraordinary
events, employees must arrange to make the best remedy.
10. Procurement and audit activities must be carried out in the utmost objectivity and
fairness without favoring any party.
-187-
11. Employees may not abuse their granted authorities within the Company to request
or lobby for any favors to themselves, their related businesses, or relatives.
12. Borrowing and lending with customers are prohibited.
13. Employees may not compete for businesses using bribes, kickbacks, subsidies, or
other illegitimate means.
14. Employees may not read books or newspapers (unless required as part of business
activities), slack, doze off, fool around, chat, gamble, and drink alcohol during
working hours.
15. Employees may not take opposite buy/sell positions for their own sakes when
processing customers’ securities trading orders.
16. Employees may not misappropriate or hold in custody customers’ securities, funds,
seals, or account passbooks.
17. Employees may not offer guarantees in the Company’s name or using their job titles
without permission.
18. Borrowing and lending with customers and among employees are prohibited;
employees are also prohibited to borrow from the Company using the name of any
third party.
19. Employees shall disassociate themselves from business practices that conflict
against their own interests or the interests of their families. Employees may not
abuse their granted authorities to achieve personal gains or to commit fraud.
20. Employees shall maintain confidentiality on all business practices, customer
information, and commercial secrets. This information cannot be revealed to
irrelevant colleagues, and the duty of confidentiality extends beyond employee’s
resignation.
21. Employees shall uphold their integrity in business practices and strive to maintain
the Company’s reputation. Employees may not abuse their granted authorities to
request treatments, gifts, private commissions, rewards, or other illegitimate gains
from customers.
22. Employees are required to maintain proper personal conducts; they may not be
involved in drug abuse, excessive gambling, undesirable habits, illegal conducts, or
any behaviors that damage the Company’s reputation.
-188-
23. Employees shall refrain from any dishonesty or behaviors capable of compromising
the Company’s interests and reputations.
(II) With regards to legal and compliance, the Company has clearly outlined the
relevant regulations and policies that employees are bound to comply while
performing duties in Chapter 2 of its Work Rules. The basis of disciplinary actions
for regulatory violations is clearly addressed in Chapter 7.
(III)In order to raise employees’ ethical standards and outline employees’ entitlements,
obligations, and behaviors, the Company has established several other rules and
guidelines in addition to “Employees’ Work Rules”, which are listed as below:
1. Authority and responsibility rules: it clearly outlines the levels of authority and
areas of responsibility within the Company.
2. Employees’ performance management and development rules: the Company has
implemented a fair career advancement system that promotes exceptional talents.
3. Employees’ work attendance and absence principle: outlines policies relating to
employees’ attendance and absence from work.
4. Training rules: nurture professional talents and build employees’ knowledge base.
5. Sexual harassment prevention measures, reporting and disciplinary rules: ensures
equal working opportunities; promotes respect and dignity in work.
(IV)Apart from demanding strict adherence to disciplines and rules from employees of
all levels, the “Principles of Directors’ and Managers’ Ethical Behaviors” were also
established to outline the boundaries of moral behavior for the Company’s
directors and managers (including the President, Vice Presidents, and Assistant
Vice Presidents of equivalent ranks, the Head of Finance Department, Head of
Accounting Department, and other personnel authorized to manage the
Company’s affairs or sign on behalf of the Company).
Employees may access the above guidelines at any time from the Company’s “Portal”
(http://jsidc.Jih Sun.com.tw/jsun/) under Policy Management System.
-189-
XI. Operating procedures for handling material insider information
To ensure proper processing and disclosure of material inside information, maintain
accuracy and consistency of information communicated to the public, and to prevent
information leakage within the Company and its subsidiaries, the Company has
established the “Material Information Handling Rules of Jih Sun Financial Holding” and
“Corporate Governance Best-Practice Principles for TWSEC/GTSM Listed Companies”
set forth by the Financial Supervisory Commission. These Regulations were officially
passed in the 5th meeting made by the 4th term Board of Directors and were promulgated
into enforcement on 25 December 2009.
To ensure proper disclosure of material insider information and maintain accuracy
and consistency of information communicated to the public, the Company had established
"Jih Sun Financial Holding and Subsidiaries Material Information Handling Rules" in
accordance with "Corporate Governance Best-Practice Principles for TSEC/GTSM Listed
Companies" set forth by the Financial Supervisory Commission. All handling of material
insider information within the Company and subsidiaries have complied with this rule.
-190-
XII Major contracts:
(I) Jih Sun Financial Holding Co., Ltd.: None.
(II) Jih Sun Securities Co., Ltd.:
Contract nature
Start and
maturity dates
of contract
Participants
Securities investment
consultation contract
1. Jih Sun Securities Co.,
Ltd. (Jih Sun
Securities)
2. Jih Sun Securities
Co., Ltd. (Jih Sun
Consulting)
Memorandum of
understanding
Ltd. (Jih Sun
Securities)
Contract date
2. Chongqing Liangjiang
2014.12.26
Financial Development
Co., Ltd. (CLFD)
Certification purchase
contract
Ltd. (Jih Sun
Securities)
2. TAIWAN-CA Inc.
(TWCA)
Contract date
2014.06.03
Computer & hardware
purchase contract
Ltd. (Jih Sun
Securities)
2. Syscom Computer
Engineering Co., Ltd.
(Syscom Computer)
Contract date
2014.07.01
Contract date
2014.01.16
-191-
Main contents
In order to obtain
investment researches,
analyses, or
recommendations
regarding securities
issued or permitted to
be sold or invested
within the Republic of
China, Jih Sun
Securities
commissioned Jih Sun
Consulting to provide
researches and analyses,
which the Company
may use to accomplish
higher service quality
and market
competitiveness.
Jih Sun Securities has
made plans to establish
a fully licensed
joint-venture securities
firm at Liangjiang New
District, Chongqing
City. The MOU was
signed with CLFD to
outline rules,
responsibilities, dates,
and confidentiality
regarding the
collaboration.
To facilitate customers’
trading over the
Internet, Jih Sun
Securities purchased
personal EC + Internet
trading certifications
from TWCA, thereby
allowing Jih Sun
Securities customers to
trade online and
improve its market
competitiveness.
To ensure the stability
of the company's
trading systems
including securities,
sub-brokerage trade,
bonds and futures, Jih
Sun Securities had
signed a computer
hardware maintenance
agreement for services
of The Syscom Group.
Restrictions
None
None
None
None
(III) JihSun International Commercial Bank Limited:
Contract type
Software
licensing
agreement
Service level
agreement
Participants
Start and
maturity
dates of
contract
1. Jih Sun International
Commercial Bank Ltd.
Contract date
(Jih Sun Bank)
2014.07.31
2. SAS Institute Taiwan
Ltd. (SAS Taiwan)
1. Jih Sun International
Commercial Bank Ltd.
(Jih Sun Bank)
2.
Taiwan
Mobile Contract date
Payment
Company 2014.12.18
(TWMP)
-192-
Main contents
Restrictive
clauses
This agreement involves the
purchase of software license
for SAS Banking Analytics
Architecture by Jih Sun Bank
from licenser SAS Taiwan.
None
This agreement has been
established for Jih Sun Bank's
participation in TMPC's
Payment Service Provider
Trusted Service Manager
(PSP TSM) scheme.
None
Financial Summary
-193-
I. Summarized financial information for the last 5 years
(I) Summarized balance sheet and income statement
1. Summarized balance sheet (consolidated)
Unit: NTD thousand
Financial information for the last 5 years
Year
Item
2014
2013
2012
Cash and cash equivalents,
22,203,546 32,760,278 30,144,142
deposits at CBC and loans to peer
banks
Instruments accounted at fair value
through profit and loss
45,670,933 23,621,630 33,936,870
- financial assets
Available-for-sale financial assets
8,479,415 11,281,874 14,483,681
Derivative financial assets for hedging
0
0
0
Bills & bonds purchased under resell
50,504
0
122,983
agreement
Receivables - net
19,878,044 20,269,472 17,277,562
Current income tax asset
348,298
400,602
349,958
Asset pending sale - net
0
0
0
Loans and advances - net
143,960,130 140,893,714 132,861,375
Held-to-maturity financial assets
300,000
300,000
300,000
Equity-accounted investments - net
257,376
245,647
230,256
Restricted assets
572,476
522,417 1,058,466
Other financial assets - net
7,748,179 8,233,702 8,760,842
Investment property - net
401,088
350,347
336,511
Property, plant and equipment - net
5,391,089 5,530,584 5,249,092
Intangible assets - net
212,519
151,931
164,872
Deferred income tax assets - net
57,778
75,041
80,933
Other assets
2,822,647 1,635,924 2,441,171
Total assets
258,354,022 246,273,163 247,798,714
Deposits from CBC and peer banks
6,645,253 11,056,736 8,291,201
Loans from CBC and peer banks
0
0
0
3,571,789
840,151
619,299
- financial liabilities
Derivative financial liabilities for
0
0
0
hedging
Bills & bonds sold under repurchase
7,199,640 5,746,601 12,113,668
agreements
-194-
2011
(Note 2)
Year
Year-to-date
February
28, 2015
(Note 1)
35,397,252
22,166,429
25,695,499
55,280,704
14,966,270
0
9,577,826
0
1,594,441
0
21,234,446
353,174
0
132,470,587
300,000
234,901
577,735
10,652,568
168,311
5,659,607
215,913
97,947
2,832,529
252,451,180
10,463,002
0
21,705,912
408,662
0
141,155,697
300,000
261,371
572,069
7,555,603
449,968
5,318,206
207,501
54,741
3,342,696
268,357,385
6,984,062
0
848,962
3,606,742
0
0
13,180,703
7,944,657
Year
Item
2011
(Note 2)
4,542,932 3,877,989 5,125,578 3,815,485
10,281,806 12,000,655 10,898,791 12,381,698
4,384
379,732
402,602
550,623
2014
2013
2012
Year
Commercial paper payable
Payables
Current income tax liabilities
Liabilities directly associated with
0
0
0
0
assets pending sale
Deposits and remittances
178,507,598 169,315,508 167,415,990 166,830,053
Bonds payable
2,500,000 3,000,000 3,000,000 4,500,000
Other loans
810,000
250,000
400,000
463,654
Liability provisions
287,901
368,164
512,515
578,438
Other financial liabilities
7,507,035 5,008,056 5,759,077 7,633,783
Deferred income tax liabilities
72,464
75,537
74,307
88,871
Other liabilities
540,758
689,379 1,032,173
757,900
Before dividend
222,093,172
222,471,560 212,608,508 215,645,201
distribution
Total liabilities
After dividend
Note 3 212,898,692 216,029,922 222,355,667
distribution
Equity attributable to parent company
35,854,722 33,636,751 32,126,600 30,330,861
shareholders
Before
32,151,817 30,991,080 29,452,195 27,748,624
distribution
Share capital
After distribution
Note 3 32,151,817 30,991,080 29,452,195
Capital reserves
0
0
0
0
Before dividend
3,813,115 2,822,626 2,653,328 2,741,344
distribution
After dividend
Note 3 1,371,705
729,722
775,278
distribution
Other equity
(110,210)
(176,955)
21,077 (159,107)
Treasury stocks
0
0
0
Non-controlling shareholders
27,740
27,904
26,913
27,147
Total equity
Before dividend
35,882,462 33,664,655 32,153,513 30,358,008
distribution
After dividend
Note 3 33,374,471 31,768,792 30,095,513
distribution
Note 2: Based on IFRS-compliant opening balances as at 2012.1.1.
Note 3: Appropriation of 2014 earnings is still pending for shareholders' resolution in the 2015 general
meeting.
-195-
Year-to-date
February
28, 2015
(Note 1)
4,647,649
12,059,049
75,173
0
182,381,339
5,000,000
1,170,000
287,535
7,710,631
75,671
300,742
232,243,250
Note 3
36,086,198
32,151,817
Note 3
0
4,057,098
Note 3
(122,716)
0
27,937
36,114,135
Note 3
shareholders
2. Summarized income statement (consolidated)
Unit: NTD thousand
Year
Item
2014
2013
2012
Year
Year
Year-to-date
February
28, 2015
(Note 1)
Interest revenue
4,721,802
4,271,959 4,356,778
753,511
Less: interest expenses
1,581,049
1,502,670 1,574,454
254,626
3,140,753
2,769,289 2,782,324
498,885
Non-interest net revenue
4,885,179
4,593,623 4,171,434
565,813
Net revenue
8,025,932
7,362,912 6,953,758
1,064,698
Bad debt and guarantee provision
expenses (reversal gains)
(191,105)
(169,368) (516,178)
(55,945)
Operating expenses
5,680,262
5,394,466 5,448,777
848,693
Net profit before tax from continuing
operations
2,536,775
2,137,814 2,021,159
271,950
(91,640)
(53,815) (64,348)
(25,404)
2,445,135
2,083,999 1,956,811
246,546
Income tax (expense) credit
Profit (loss) of continuing operations
Gains/losses from discontinued
operations
0
Current period net profit (loss)
2,445,135
Current other comprehensive income
(after-tax; net)
65,056
0
0
0
2,083,999 1,956,811
246,546
(186,223)
140,250
(12,676)
Total comprehensive income - current
2,510,191
1,897,776 2,097,061
233,870
Net profit attributable to parent
company shareholders
2,443,092
2,081,119 1,954,318
246,341
Net profit attributable to
non-controlling shareholders
2,043
2,880
2,493
Comprehensive income attributable to
parent company shareholders
2,508,155
Comprehensive income attributable to
non-controlling shareholders
2,036
2,904
2,528
0.76
0.66
0.63
1,894,872 2,094,533
205
233,665
205
Earnings per share ($)
After retrospective
0.08
adjustment (Note 2)
Note 2: Earnings per ordinary share were presented in dollars, adjusted retrospectively for any capital reduction or
capitalized earnings.
-196-
(II) Summarized balance sheet and income statement-Statement of Financial
Accounting Standards
1. Summarized balance sheet (consolidated)
Year
Item
Cash, cash equivalents, deposits at CBC and loans to peer
banks
Financial assets at fair value through profit and loss
Unit: NTD thousand
Financial information for the last 5 years (Note 1)
2014
Investment in resale bills and bonds
2013
2012
2011
2010
29,897,071
35,243,482
40,870,401
33,768,722
25,722,665
31,758,145
170,083
1,639,441
453,095
14,483,681
14,966,270
2,349,403
Receivables
13,984,800
17,182,384
25,034,890
132,861,375
132,470,587
128,721,950
Financial assets held to maturity
300,000
300,000
300,000
Investments accounted using the equity method
230,256
234,901
240,883
5,542,054
5,768,762
5,987,446
164,872
215,913
319,073
10,184,279
11,308,724
9,094,973
Loans and advances
Fixed assets
Intangible assets
Other financial assets
Other assets
2,594,602
3,180,137
3,264,794
Total assets
244,181,795
248,233,266
248,395,053
8,291,201
10,463,002
6,967,852
5,125,578
3,815,485
6,205,029
167,415,990
166,830,053
178,713,753
Financial liabilities at fair value through profit and loss
619,299
548,848
1,139,766
Repurchase bills and bonds
12,113,668
13,180,703
2,689,120
Payables
14,222,977
17,115,795
13,736,763
400,000
463,654
5,060,000
0
0
0
3,000,000
4,500,000
4,500,000
0
0
0
Other loans
Bonds payable
Preferred stocks (liability)
Operating and liability provisions
77,428
124,527
406,408
150,019
275,205
109,828
Other liabilities
345,513
352,154
521,788
211,761,673
217,669,426
220,050,307
27,748,624
25,816,100
26,124,494
0
0
0
2,817,422
(23,812,134)
(4,116,742)
Total liabilities
Share capital
Capital reserves
Equity
attributable to
Before dividend
parent company Retained
distribution
earnings
shareholders
After dividend distribution
594,355
(23,812,134)
(4,116,742)
(253,320)
(312,612)
(413,002)
26,895
26,479
23,836
Before dividend distribution
30,563,840
28,344,746
21,618,318
After dividend distribution
30,301,345
28,054,203
21,618,318
Other shareholders' equity items
Minority interest
Shareholders'
equity
Total
Note 1: to align with the presentation of 2012 financial statements, certain figures reported between 2010 and 2011 had
been reclassified. These alterations involved Other financial assets, Other assets, Other financial liabilities, and
Other liabilities.
-197-
2. Summarized income statement (consolidated)
Year
Item
Unit: NTD thousand
2014
2013
2012
2011
2010
3,023,514
3,299,167
3,278,286
4,737,967
5,423,093
6,142,301
Net revenue
7,761,481
8,722,260
9,420,587
311,270
692,427
568,970
0
0
0
Operating expenses
5,437,687
5,860,870
5,982,572
Pre-tax profit (loss) from continuing
operations
2,012,524
2,168,963
2,869,045
62,477
47,491
49,122
1,950,047
2,121,472
2,819,923
Gains/losses from discontinued
operations (Net of taxes)
0
0
0
Extraordinary income/expenses
(after tax)
0
0
0
Cumulative effects from changes of
accounting policies (after-tax)
0
0
0
1,950,047
2,121,472
2,819,923
1,947,557
2,118,638
2,817,422
2,490
2,834
2,501
0.63
0.69
0.93
Bad debt expense (reversal gain)
Provision for insurance obligations
Income tax expense
Consolidated after-tax profit (loss)
from continuing operations
Consolidated net profit (loss)
Consolidated
attributable to
parent company
shareholders
net profit (loss) Attributable to
minority
shareholders
After retrospective adjustment
(Note 1)
-198-
(III) Summarized balance sheet and income statement
1. Summarized balance sheet (Individual)
Unit: NTD thousand
Year
Item
2014
2013
2012
2011
(Note 3)
Cash and cash equivalents,
209,954
358,727
18,631
7,209
deposits at CBC and loans to peer banks
0
0
0
- financial assets
0
0
0
Derivative financial assets for hedging
0
0
0
Bills & bonds purchased under resell
0
0
0
agreement
Receivables - net
69,623
712,525
671,511
827,195
Current income tax asset
337,485
347,259
277,311
279,679
Asset pending sale - net
0
0
0
0
0
0
0
0
0
Equity-accounted investments - net
40,236,152 38,331,115 37,361,431 36,235,045
Restricted assets
0
0
0
Other financial assets - net
0
0
0
Property, plant and equipment - net
1,049
1,473
2,418
2,668
Investment property - net
0
0
0
Intangible assets - net
587
761
162
29
Deferred income tax assets - net
0
0
0
Other assets
1,100
699
725
1,039
Total assets
40,855,950 39,752,559 38,332,189 37,352,864
0
0
0
0
0
0
0
0
0
- financial liabilities
Derivative financial liabilities for
0
0
0
hedging
Bills & bonds sold under repurchase
0
0
0
agreements
3,483,471 3,678,068 3,628,008 2,318,456
Payables
1,207,976 1,865,405 1,783,365 1,757,867
Current income tax liabilities
0
367,419
389,777
534,778
Liabilities directly associated with assets
0
0
0
pending sale
0
0
0
Bonds payable
0
0
0 2,000,000
Other loans
300,000
200,000
400,000
400,000
0
0
0
Liability provisions
7,851
2,079
1,511
8,490
-199-
Year
Year-to-date
February 28,
2015
(Note 1)
20,126
0
0
0
0
78,973
339,482
0
0
0
40,485,120
0
0
963
555
1,850
40,927,069
3,317,858
1,217,187
0
0
300,000
2,713
Year
2014
Item
2013
2012
2011
(Note 3)
Year
Year-to-date
February 28,
2015
(Note 1)
2,326
787
Deferred income tax liabilities
1,441
2,327
2,401
1,228
Other liabilities
489
510
527
1,184
Before dividend
5,001,228 6,115,808 6,205,589 7,022,003
4,840,871
distribution
Total liabilities
After dividend
Note 2 6,405,992 6,590,310 7,284,498
Note 2
distribution
32,151,817 30,991,080 29,452,195 27,748,624
32,151,817
Before distribution
Share capita
Note 2 32,151,817 30,991,080 29,452,195
Note 2
After distribution
Capital reserves
0
0
0
0
Before dividend
3,813,115 2,822,626 2,653,328 2,741,344
4,057,097
distribution
Retained
earnings
After dividend
729,722
Note 2 1,371,705
775,278
Note 2
distribution
Other equity
(110,210) (176,955)
21,077 (159,107)
(122,716)
Treasury stocks
0
0
0
0
0
Before dividend
35,854,722 33,636,751 32,126,600 30,330,861
36,086,198
distribution
Total equity
After dividend
Note 2 33,346,567 31,741,879 30,068,366
Note 2
distribution
Note 2: Appropriation of 2014 earnings is still pending for shareholders' resolution in the 2015 general shareholders
meeting.
Note 3: Based on IFRS-compliant opening balances as at 2012.1.1.
2. Summarized income statement (individual)
Year
Unit: NTD thousand
Year-to-date
February 28,
2014
2013
2012
Year Year 2015 (Note 1)
Item
Equity-accounted
2,502,046 2,148,529 2,126,429
265,626
investment gains (losses) (Note 2)
Other income
19,819
19,483
11,118
0
Operating expenses
82,868
73,040
99,024
15,318
Interest expense
27,849
34,596
89,319
4,709
Other expenses and losses
9,093
11,582
6,976
0
Pre-tax profit
2,402,055 2,048,794 1,942,228
245,599
Current period net profit
2,443,092 2,081,119 1,954,318
246,341
Other comprehensive income
65,063 (186,247)
140,215
(12,676)
(after-tax; net)
Total comprehensive income 2,508,155 1,894,872 2,094,533
233,665
current
0.76
0.66
0.63
0.08
(Note 3)
Note 2: Equity-accounted investment gains/losses were presented in netted figures.
Note 3: Earnings per ordinary share were presented in dollars, adjusted retrospectively for any capital
reduction or capitalized earnings.
-200-
(IV) Summarized balance sheet and income statement-Statement of Financial
Accounting Standards
1. Summarized balance sheet (Individual)
Unit: NTD thousand
Year
Item
Cash and cash equivalents
Financial assets at fair value through
profit and loss
Receivables
Financial assets held to maturity
Investments accounted using the
equity method
Fixed assets
Intangible assets
Other financial assets
Other assets
Total assets
Financial liabilities at fair value
Payables
Short term loans
Corporate bond payable
Preferred stocks (liability)
Other liabilities
Before dividend
distribution
Total liabilities
After dividend
distribution
Share capital
Capital reserves
Before dividend
distribution
Retained earnings
After dividend
distribution
Other shareholders' equity items
Before dividend
Total shareholders' distribution
equity
After dividend
distribution
2014
2013
-201-
2012
2011
2010
18,631
7,209
12,666
0
0
0
0
948,822
0
0
1,106,874
0
0
1,168,376
0
37,639,105
36,446,633
34,050,673
2,418
0
0
885
38,609,861
2,668
0
0
1,067
37,564,451
1,281
0
0
1,761
35,234,757
0
0
0
2,173,142
400,000
3,628,008
0
0
0
15,484
2,292,645
400,000
2,318,456
2,000,000
0
0
15,989
2,029,847
680,000
2,188,799
2,000,000
0
0
15,201
6,216,634
7,027,090
6,913,847
6,601,355
7,289,585
7,204,390
29,452,195
0
27,748,624
0
25,816,100
0
3,023,548
3,042,057
2,817,422
1,099,942
1,075,991
594,355
(82,516)
(253,320)
(312,612)
32,393,227
30,537,361
28,320,910
32,008,506
30,274,866
28,030,367
2. Summarized income statement (individual)
Unit: NTD thousand
Year
Item
2014
2013
2012
2011
2010
2,119,574
2,276,396
3,049,845
Other income
11,118
37,918
5,590
Operating expenses
98,864
110,682
107,527
Interest expense
89,319
89,050
84,812
6,976
8,142
16,538
Pre-tax profit (loss)
1,935,533
2,106,440
2,846,558
After-tax profit (loss)
1,947,557
2,118,638
2,817,422
Equity-accounted investment gains
(losses) (Note 1)
Earnings per share ($) (pre-tax)
0.63
0.68
0.93
(Note 2)
Earnings per share ($) (after-tax)
0.63
0.69
0.93
(Note 2)
Note 1: Equity-accounted investment gains/losses were presented in netted figures.
(V) Name of auditors and audit opinions
Names of CPAs and audit opinions in the last 5 years
Year
Name of auditors
Audit opinion
2014
Chen, Fu-Wei; Chung, Dan-Dan
Standard unqualified opinion
2013
2012
2011
Modified unqualified opinion
2010
-202-
The Company was incorporated on 5 February 2002. Audit opinions issued for the
2014, 2013, 2012, 2011, 2010 consolidated financial statements are detailed as below:
1. 2014
CPAs Chen Fu-Wei and Chung Dan-Dan of KPMG issued a standard unqualified
audit opinion for the Company’s 2014 financial statements. The explanatory and
conclusion paragraphs of the audit report read:
In our opinion, all material disclosures of the consolidated financial statements
mentioned in paragraph 1 were prepared in accordance with Regulations Governing the
Preparation of Financial Reports by Financial Holding Companies, international
financial reporting standards approved by the Financial Supervisory Commission, the
International Accounting Standards and interpretations thereof, and presented a fair
view of the consolidated financial position of Jih Sun Financial Holding Co., Ltd. and
subsidiaries as at December 31, 2014 and 2013, and consolidated business performance
and cash flow for the periods January 1 to December 31, 2014 and 2013.
2. 2013
Preparation of Financial Reports by Financial Holding Companies and International
Financial Reporting Standards (IFRS), International Accounting Standards (IAS),
explanations and explanatory announcements approved by the Financial Supervisory
Commission and presented a fair view of the consolidated financial position of Jih Sun
Financial Holding Co., Ltd. and its subsidiaries as of 31 December 2013 and 2012, and
the consolidated business performance and cash flow for the periods ended 2013 and
2012.
3. 2012
Preparation of Financial Reports by Financial Holding Companies and the generally
-203-
accepted accounting principles of the Republic of China, and presented a fair view of
the consolidated financial position of Jih Sun FHC and its subsidiaries as of 31
December 2012 and 2011, and the consolidated business performance and cash flow for
the periods ended 2012 and 2011.
As stated in Note 3 to the consolidated financial statements, Jih Sun FHC and its
subsidiaries became applicable to the 3rd amendment of Statement of Financial
Accounting Standards No. 34 - “Accounting for financial instruments” since 1 January
2011.
4. 2011
CPAs Chen Fu-Wei and Chung Dan-Dan of KPMG issued a modified unqualified
audit opinion for the Company’s 2011 financial statements. The conclusion paragraph of
the audit report read:
accepted accounting principles of The Republic of China, and presented a fair view of
the consolidated financial position of Jih Sun FHC and its subsidiaries as of 31 Dec
2011 and 2010, and the consolidated business performance and cash flow for the
periods ended 2011 and 2010.
As stated in Note 3 to the consolidated financial statements, Jih Sun FHC and its
subsidiaries became applicable to the 3rd amendment of Statement of Financial
Accounting Standards No. 34 - “Accounting for financial instruments” since 1 January
2011.
5. 2010
accepted accounting principles of The Republic of China, and presented a fair view of
the consolidated financial position of Jih Sun FHC and its subsidiaries as of 31 Dec
2010 and 2009, and the consolidated business performance and cash flow for the
periods ended 2010 and 2009.
-204-
II.Financial analysis for the last 5 years
(I)Financial analysis for the last 5 years
Year
Year to date
Financial
Statement
analysis dated 28
February2015
Year
(Note 5)
Financial analysis for the previous 5 years
2014
2012
(Note 1)
2013
Analysis
Total asset turnover (%)
Loan to deposit ratio - subsidiary bank
(%)
NPL ratio - subsidiary bank (%)
Operating
efficiency
Security subsidiary’s Non-Performance
Loan (NPL) ratio (%)
Revenue per employee
Net profit per employee
Return on assets (%)
Return on shareholders’ equity (%)
Profitability
Net profit margin (%)
Earnings per share (dollars) (Note 2)
Debt to assets ratio (%)
Debt to net worth ratio (%)
Financial Holding Company’s debt to
assets ratio (%)
Financial Holding Company’s debt to
Financial
net worth ratio (%)
structure (%)
Double leverage ratio applicable to
financial holding companies (%)
Financial ratios applicable to the
financial holding company in
accordance with Article 41 of the
Financial Holding Company Act (%)
Degree of operating leverage
Leverage
Degree of financial leverage - financial
holding company
Asset growth rate (%)
Growth rate
Profit growth rate (%)
Cash flow ratio (%)
Cash flow
Cash flow adequacy ratio (%)
Cash flow reinvestment ratio (%)
Business
scale
Year
3.18
2.98
2.78
0.40%
79.09
81.98
77.96
76.57
0.08
0.55
0.41
0.08
0
0
0
0
2,362
719
1.49
7.03
30.47
0.76
86.11
620.00
2,199
622
1.35
6.33
28.30
0.66
86.33
631.55
2,060
579
1.30
6.26
28.14
0.63
87.02
670.67
315
73
0.17
0.68
23.16
0.08
86.54
643.08
12.24
15.38
16.19
11.83
13.95
18.18
19.32
13.41
112.22
113.96
116.29
112.19
None
None
None
None
1.11
1.13
1.16
1.16
1.01
1.02
1.05
1.02
4.91
18.66
Note 4
Note 4
Note 4
(0.62)
5.77
15.05
Note 4
297.95
(1.84)
Note 3
Note 4
Note 4
Note 4
3.87
(35.68)
Note 4
Note 4
783.01
Market share of assets (%)
0.62
0.64
0.69
0.62
Market share of net worth (%)
1.21
1.29
1.33
1.21
Market share of deposits - subsidiary
bank (%)
0.51
0.51
0.54
0.51
Market share of loans - subsidiary bank
(%)
0.53
0.55
0.55
0.53
-205-
Year
Year to date
Financial
Statement
analysis dated 28
February2015
Year
(Note 5)
Financial analysis for the previous 5 years
2014
Analysis
2013
2012
(Note 1)
Year
Capital adequacy ratio (%) - subsidiary
11.13
12.61
13.47
11.13
bank
726.69
667.81
645.83
726.69
securities firm
81.73
79.56
81.07
81.73
property insurance agency
Eligible capital (in thousand dollars) 18,094,496 17,226,504 17,226,351
18,094,496
subsidiary bank
Eligible capital (in thousand dollars) 16,934,340 15,964,872 15,895,341
16,934,340
subsidiary securities firm
Capital
Eligible capital (in thousand dollars) adequacy
5,371
5,333
5,131
5,371
subsidiary property insurance agency
Net eligible capital (in thousand
29,850,105 27,414,603 26,578,817
29,850,105
dollars) - group
Capital requirement (in thousand
13,008,936 10,956,894 10,228,480
13,008,936
dollars) - subsidiary bank
3,495,513 3,585,936 3,691,812
3,495,513
dollars) - subsidiary securities firm
dollars) - subsidiary property insurance
3,286
3,352
3,165
3,286
agency
Total capital requirement (in thousand
16,579,507 15,260,879 14,598,109
16,579,507
Capital
dollars) - group
adequacy
Capital adequacy ratio (%) - group
180.04
179.64
182.07
180.04
The sums and percentages of aggregate loans,
guarantees, or other transactions conducted by all
27,480
32,220
27,742
subsidiaries of the FHC with a single individual,
27,480 million
related party, or affiliated company, which are subject
million
million
million
to disclosure under Article 46 of the Financial
Holding Company Act.
Variations exceeding 20% in the last 2 years:
1. The increase of the branch’s NPL ratio was mainly because the NPL amount increased by NT$200 million in 2013 as
compared to 2012.
2. The decrease of the asset growth rate was mainly due to the continuing increase of the bond interest rate and the decrease of
the bond investment position.
3. The financial holding company's liabilities as a percentage to assets and net worth had decreased mainly due to lower
balances of related party payables and current income tax liabilities in 2013.
Note: Industry-specific key performance indicators include: loan-to-deposit ratios, NPL ratios, and debt to net worth
ratios for the subsidiary bank; double leverage ratios, market share of assets, and market share of net worth
for the financial holding company; market share of deposits, market share of loans, and capital adequacy
analysis for the subsidiary bank etc.
Note 1: The capital adequacy, market share of assets and market share of net worth in 2012 were calculated in accordance
with the Financial Accounting Standards of the R.O.C. and were not recalculated in accordance with the International
Financial Report Standards.
Note 2: Earnings per common share are presented in dollars, adjusted retrospectively for any capital reduction or capitalized
earnings.
Note 3: The profit and loss of the prior year calculated in accordance with IFRS was not available and therefore was not
counted.
Note 4: Cash flow from operating activities results in a net outflow, and thus not calculated.
Note 5: Information on capital adequacy and business scope were dated December 31, 2014; all remaining financial
information was dated February 28, 2015. Profit growth rate was a full-year estimate based on information as at
February 28, 2015.
-206-
Financial ratios are calculated as follows:
1. Operating efficiency
(1) Total asset turnover = net profit / average total assets.
(2) Loan to deposit ratio (subsidiary bank) = total loan granted/ total deposit received by the
subsidiary bank.
(3) NPL ratio (subsidiary bank) = total NPL/ total loan granted by the subsidiary bank.
(4) Revenues per employee = net profit/ total employees.
(5) Net profit per employee = after tax net profit/ total employees.
2. Profitability
(1) Return on assets = (after tax net profit + interest expenses x (1- tax rate)) / average asset balance.
(2) Return on shareholders’ equity = after tax net profit / average shareholders’ equity.
(3) Net profit margin = after tax net profit/ net profit.
(4) Earnings per share = (Profit or loss attributable to the shareholders of the parent company preferred share dividends) / weighted average outstanding shares (Note 4).
3. Financial structure
(1) Debt to asset ratio = total liabilities/ total assets.
(2) Debt to net worth ratio = total liabilities/ net equity.
(3) Double leverage ratio applicable to a financial holding company = equity investments made in
accordance with Paragraph 2, Article 36 and Article 37 of the Financial Holding Company Act /
net worth.
4. Leverage:
(1) Degree of operating leverage = (net revenue – variable costs) / net profit before tax.
(2) Degree of financial leverage (financial holding company) = (net profit before tax + interest
expense) / net profit before tax.
5. Growth rate:
(1) Asset growth rate = (current year total assets － last year total assets) / previous year total assets.
(2) Profit growth rate = (current year before tax net profit－last year before tax net profit) / previous
year before tax net profit.
6. Cash flow
(1) Cash flow ratio = net cash flow from operating activities / (loans and overdraft from other banks +
commercial bills payable + Financial liabilities at fair values through profit or loss + Bills &
bonds sold under repurchase agreements + accounts payable maturing within 1 year).
(2) Cash flow adequacy ratio = net cash flow from operating activities for the last 5 years / (capital
expenditure + cash dividends) for the last 5 years.
z 2013: net cash flow from operating activities for the last 2 years / (capital expenditure + cash
dividends) for the last 2 years.
z 2012: net cash flow from operating activities for the last 1 year / (capital expenditure + cash
dividends) for the last 1 year.
(3) Cash flow reinvestment ratio = net cash flow from operating activities / net cash flow from
investing activities.
7. Business scale
(1) Market share of assets = total assets/ total assets held by all financial holding companies.
(2) Market share of net worth = net worth/ total net worth of all financial holding companies.
(3) Subsidiary bank’s market share of deposits = total deposit/ total deposit of all financial institutions
eligible to perform deposit services.
(4) Subsidiary bank’s market share of loans = total loan/ total loan of all financial institutions eligible
to perform loan services.
8. Capital adequacy
(1) The Group’s qualified net capital = Financial Holding Company’s qualified capital + (Financial
Holding Company’s shareholding percentages × each subsidiary’s qualified capital) – mandatory
deductions.
(2) The Group’s total legal capital demand = Financial Holding Company’s legal capital demand +
Financial Holding Company’s shareholding percentages × each subsidiary’s legal capital demand.
(3) Group capital adequacy ratio = group net eligible capital / group legal capital requirement.
-207-
(II) Financial analysis for the last 5 years- Statement of Financial Accounting
Standards
Financial analysis for the last 5 years
2013
2012
2011
Year
Analysis
2014
Total asset turnover (times)
Loan to deposit ratio subsidiary bank (%)
Operating NPL ratio - subsidiary bank (%)
efficiency Revenue per employee (in
thousand dollars)
Profit per employee (in
thousand dollars)
Return on assets (%)
Return on shareholders’ equity
(%)
Profitability
Net profit margin (%)
Earnings per share (dollars)
(Note 1)
Debt to assets ratio (%)
Debt to net worth ratio (%)
Financial Holding Company’s
debt to assets ratio (%)
Financial Holding Company’s
debt to net worth ratio (%)
Financial
Double leverage ratio
structure
applicable to financial holding
companies (%)
Financial ratios applicable to
the financial holding company
in accordance with Article 41 of
the Financial Holding Company
Act (%)
Current ratio (%) - financial
holding company
Liquid ratio (%) - financial
holding company
Debt servicing Interest coverage ratio (%) capability financial holding company
Consolidated current ratio (%)
Consolidated liquid ratio (%)
Consolidated interest coverage
ratio (%)
Operating leverage
Leverage
Financial leverage - financial
holding company
Asset growth rate (%)
Growth rate
Profit growth rate (%)
Cash flow (%) (Note 2)
Cash flow
Cash flow reinvestment ratio
(%) (Note 2)
0.035
0.038
77.96
77.92
70.89
0.41
0.33
1.75
2,299
2,503
2,724
577
608
815
1.33
1.38
1.64
6.19
7.20
10.45
25.12
24.32
29.93
0.63
0.69
0.93
86.72
653.18
87.69
712.18
88.59
776.34
16.10
18.71
19.62
19.19
23.01
24.41
116.19
119.35
120.23
None
-208-
2010
0.032
None
None
15.60
17.11
26.85
15.60
17.11
26.84
22.67
24.65
34.56
2012.89
2012.71
99.54
99.35
107.28
107.14
2.27
2.39
3.16
1.15
1.16
1.21
1.05
1.04
1.03
(1.63)
(7.21)
0.00
2,875.23
(0.07)
(24.40)
51.02
4,110.94
8.12
157.25
0
3,280.95
0.00
(189.70)
0
Financial analysis for the last 5 years
2013
2012
2011
Year
Analysis
2014
Market share of assets (%)
Market share of net worth (%)
Business scale Market share of deposits (%) subsidiary bank (Note 3)
Market share of loans (%) subsidiary bank (Note 3)
Capital adequacy ratio (%) subsidiary bank
Capital adequacy ratio (%) Capital
securities subsidiary
adequacy
Capital adequacy ratio (%) subsidiary property insurance
agency
Eligible capital (in thousand
dollars) - subsidiary bank
dollars) - securities subsidiary
dollars) - subsidiary property
insurance agency
Net eligible capital (in thousand
dollars) - group
Capital requirement (in
Capital
thousand dollars) - subsidiary
adequacy bank
thousand dollars) - securities
subsidiary
thousand dollars) - subsidiary
property insurance agency
Total capital requirement (in
thousand dollars) - group
Capital adequacy ratio (%) group
The sums and percentages of aggregate loans,
guarantees, or other transactions conducted by
all subsidiaries of the FHC with a single
individual, related party, or affiliated company,
which are subject to disclosure under Article 46
of the Financial Holding Company Act.
2010
0.69
1.33
0.75
1.39
0.86
1.42
0.54
0.56
0.62
0.55
0.57
0.59
13.47
11.44
9.44
645.83
708.01
505.04
81.07
82.16
81.06
17,226,351
14,065,348
11,125,656
15,895,341
14,936,366
16,048,786
5,131
4,671
5,167
26,578,817
22,995,256
21,497,432
10,228,480
9,838,073
9,430,359
3,691,812
3,164,426
4,766,616
3,165
2,843
3,187
14,598,109
13,836,243
15,065,438
182.07
166.20
142.69
27,742 million 27,165 million 24,460 million
Variations exceeding 20% in the last 2 years: not applicable.
Note:
Industry-specific key performance indicators include: loan-to-deposit ratios, NPL ratios, and debt to net
worth ratios for the subsidiary bank; double leverage ratios, market share of assets, and market share of net
worth for the financial holding company; market share of deposits, market share of loans, and capital
adequacy analysis for the subsidiary bank etc.
Note 1: Earnings per common share are presented in dollars, adjusted retrospectively for any capital reduction or
Note 2: Cash flow from operating activities results in a net outflow, and thus not calculated.
Note 3: For the market shares of deposits and loans of the subsidiary bank, the denominator shall be the total amount
of deposits of all financial institutions allowed to engage in deposits and loans, which, pursuant to the norms
of the annual report, include domestic banks, foreign banks in Taiwan, credit cooperatives, credit
departments of farmers and fishermen’s associations, and trust investment companies, but exclude
Chunghwa Post. In previous years, the subsidiary bank counted the deposit of Chunghwa Post inclusive. To
assure the consistent comparative grounds, such data during 2008-2011 are corrected in this annual report.
-209-
Financial ratios:
1. Operating efficiency
(1) Total asset turnover = net profit / total assets.
(2) Loan to deposit ratio (subsidiary bank) = total loan granted/ total deposit received by the
subsidiary bank.
(3) NPL ratio (subsidiary bank) = total NPL/ total loan granted by the subsidiary bank.
(4) Revenues per employee = net profit/ total employees.
(5) Net profit per employee = after tax net profit/ total employees.
2. Profitability
(1) Return on assets = (after tax net profit + interest expenses x (1- tax rate)) / average asset balance.
(2) Return on shareholders’ equity = after tax net profit/ average shareholders’ equity.
(3) Net profit margin = after tax net profit/ net profit.
(4) Earnings per share = (after tax net profit－Preference shares’ dividends) / weighted average
outstanding shares.
3. Financial structure
(1) Debt to asset ratio = total liabilities/ total assets.
(2) Debt to net worth ratio = total liabilities/ shareholders’ equity.
(3) Double leverage ratio applicable to a financial holding company = equity investments made in
accordance with Paragraph 2, Article 36 and Article 37 of the Financial Holding Company Act /
net worth.
4. Debt servicing capability:
(1) Current ratio = current assets / current liabilities.
(2) Liquid ratio = (current assets - inventory - prepayments) / current liabilities.
(3) Interest coverage ratio = net profit before interest and tax / interest expenses for the current period.
5. Leverage:
(1) Degree of operating leverage = (net revenue – variable costs) / net profit before tax.
(2) Degree of financial leverage (financial holding company) = (net profit before tax + interest
expense) / net profit before tax.
6. Growth rate:
(1) Asset growth rate = (current year total assets － previous year total assets) / previous year total
assets.
(2) Profit growth rate = (current year before tax net profit－previous year before tax net profit) /
previous year before tax net profit.
7. Cash flow
(1) Cash flow ratio = net cash flow from operating activities / (loans and overdraft from other banks +
commercial bills payable + financial liabilities whose fair value changes are recognized through
the income statement + Bills & bonds sold under repurchase agreements + accounts payable
maturing within 1 year).
(2) Cash flow adequacy ratio = net cash flow from operating activities for the previous 5 years /
(capital expenditure + cash dividends) for the previous 5 years.
(3) Cash flow reinvestment ratio = net cash flow from operating activities / net cash flow from
investing activities.
8. Business scale
(1) Market share of assets = total assets/ total assets held by all financial holding companies
(2) Market share of net worth = net worth/ total net worth of all financial holding companies
(3) Subsidiary bank’s market share of deposits = total deposit/ total deposit of all financial institutions
eligible to perform deposit services.
(4) Subsidiary bank’s market share of loans = total loan/ total loan of all financial institutions eligible
to perform loan services.
9. Capital adequacy
(1) Group eligible capital = eligible capital of the financial holding company + (ownership percentage
in subsidiaries × eligible capitals of each subsidiary) – mandatory deductions.
(2) Total capital requirement – group = eligible capital of the financial holding company + ownership
percentage in subsidiaries × eligible capitals of each subsidiary.
(3) Group capital adequacy ratio = group net eligible capital / group legal capital requirement.
-210-
III. Audit Committee’s report on the review of the last financial
reports
Audit Committee’s Report
The 2014 financial statements (including consolidated financial statements) produced by
the Board of Directors were audited by CPAs Chen Fu-Wei and Chung Dan-Dan of KPMG. The
abovementioned financial statements, along with earnings appropriation reports, business
reports, etc. were reviewed by the Audit Committee and to which no irregularities were found.
We hereby issue the above report in accordance with Article 14, Paragraph 4, of the Securities
and Exchange Act and Article 219 of the Company Act.
Best regards
Jih Sun Financial Holding Co., Ltd. 2014 Shareholders’ Ordinary Meeting
Independent Director
9 April 2015
-211-
IV. Latest financial statements:
Refer to P.247~P.397
V. If the Financial Holding Company or any of its affiliated
companies had, in the last year up until the publishing of this
annual report, experienced financial distress, the impacts to the
Company’s financial status must be disclosed:
None.
-212-
Review and analysis of
financial status and
business performance, and
risk management issues
-213-
I.
Consolidated Financial status
Only the items with change of amount between two terms exceeding NT$3 billion were
analyzed:
Unit: NTD thousand
Year
%
2013
Cash, cash equivalents,
deposits at CBC and loans
to peer banks
22,203,546
8.59%
32,760,278
13.30% (10,556,732)
-32.22%
Financial assets at fair
value through profit and
loss
45,670,933
17.68%
23,621,630
9.59%
22,049,303
93.34%
143,960,130 55.72% 140,893,714 57.21%
3,066,416
2.18%
Deposits from CBC and
peer banks, and deposits
and remittances
185,152,851 71.67% 180,372,244 73.24%
4,780,607
2.65%
Item
%
Variation
2014
Amount
%
Explanation to major variations:
1. Cash and cash equivalents; deposits at CBC and loans to peer banks
Mainly due to subsidiary's bank's conversion of time deposits placed at CBC to
negotiable certificate of deposit (presented as financial assets at fair value
through profit and loss on the balance sheet).
2. Financial assets at fair value through profit and loss
Mainly due to increases in negotiable certificate of deposit held by the
subsidiary bank.
3. Loans and advances - net
Mainly due to increases in subsidiary bank's retail mortgage portfolio.
4. Deposits from CBC and peer banks, and deposits and remittances
Mainly due to increases in savings deposits acquired by the subsidiary bank.
-214-
II. Consolidated financial performance
Only the items with change of amount between two terms exceeding NT$100
million were analyzed:
Unit: NTD thousand
2014
2013
3,140,753
Operating expenses
Year
Amount
%
2,769,289
371,464
13.41%
4,885,179
4,593,623
291,556
6.35%
5,680,262
5,394,466
285,796
5.30%
65,056
(186,223)
251,279
134.93%
Item
Other comprehensive income/losses
for the current period (net, after-tax)
Variation
Explanation to major variations:
1. Net interest revenue
Mainly due to additional interests that the subsidiary bank had received from loans.
2. Non-interest net revenue
Mainly due to additional brokerage commissions and gain on sale of securities earned
by the subsidiaries securities firm.
3. Operating expenses
Mainly due to additional salary and tax expenses accrued by the subsidiary bank and
securities firm.
4. Other comprehensive income/losses for the current period (net, after-tax)
Mainly due to decrease in unrealized loss on valuation of available-for-sale financial
assets held by the subsidiary bank.
III. Cash flow
(I) Liquidity analysis for the last 2 years
Year
2014
2013
Note
15.05
Note
Note
Cash flow reinvestment ratio (%)
Note
297.95
Item
Cash flow ratio (%)
Percentage increase
(decrease)
-
Note: The net cash flow from operating activities was a negative value; therefore, the cash flow ratio,
cash flow adequacy ratio and cash reinvestment ratio were not counted.
-215-
(II) Cash liquidity analysis for the next year in the consolidated entity
Unit: NTD thousand
Opening cash
balance
Annual net cash
flow from
operating
activities
Annual cash
inflow
17,674,494
(6,321,282)
6,180,971
Financing of cash deficits
Cash surplus
(deficit)
Investment plans Finance plans
17,534,183
-
-
1. Cash flow analysis:
(1) Operating activities: the subsidiary bank's increased holding position in
financial assets at fair value through profit and loss had resulted in a
NT$6,321,282,000 outflow of net cash from operating activities.
(2) Investing activities: the subsidiary securities firm's increased holding position
in other assets and restricted assets had resulted in a NT$943,403,000
outflow of net cash from investing activities.
(3) Financing activities: increases in other loans and commercial paper payble by
the subsidiary securities firm and additional bank debentures issued by the
subsidiary bank had resulted in a NT$7,153,801,000 inflow of net cash from
financing activities.
(4) Exchange rate variations caused a cash outflow totaling NT$29,427,000 to
cash and cash equivalents.
2. Responsive measures and liquidity analysis on cash flow deficits: Not
applicable.
(III) Cash liquidity analysis for Jih Sun Financial Holding Co., Ltd. in the
next year
Unit: NTD thousand
Opening cash
balance
Annual net cash
flow from
operating
activities
Annual cash
inflow
209,954
(79,626)
973,179
Financing of cash deficits
Cash surplus
(deficit)
Investment plans Finance plans
1,103,507
-216-
-
-
1. Cash flow analysis:
(1) Operating activities: operating expenses and interest expenses have resulted
in a net cash outflow of NT$79,626,000 from operating activities.
(2) Investing activities: mainly consisted of cash dividends totaling
NT$1,401,907,000 received from subsidiaries.
(3) Financing activities: mainly consisted of additional bank loans and
commercial paper payable (NT$24,075,000) and cash dividends paid on
ordinary shares (NT$452,803,000).
2. Responsive measures and liquidity analysis on cash flow deficits: Not
applicable.
IV. Material capital expenditures in the last year and impacts on
business performance
(I) Purposes of material capital expenditures and the sources of funds:
None.
(II) Expected benefits: None.
V.
The major causes for profits or losses of investments made in the
last year, rectifications and investment plans in the next year
(I) Investment policy in recent years
The Company's subsidiaries have made progress in 2014 with regards to their
expansions into China; Jih Sun Bank had sign an MOU with Chongqing Yijifu
Technology Co., Ltd. for the launch of third party payment services, while Jih Sun
Securities had signed an MOU with Chongqing Liangjiang Financial Development
Co., Ltd. to set up a fully licensed joint-venture securities firm at Liangjiang New
District, Chongqing City, once the cross-strait service trade agreement has been
signed. In addition, all business plans made in 2014 had been soundly executed;
below is a description of the various plans taken:
-217-
1. Banking - setting up Hong Kong office and branch in eastern Taiwan.
The subsidiary bank has established its Hong Kong office and opened for
business on August 29, 2014, according to plan. The branch in eastern Taiwan,
however is still being carefully reviewed.
2. Securities - finding partners to set up fully licensed overseas joint ventures;
engaging Chinese partners via Jih Jia Investment Consultancy for business
development.
In February 2014, the subsidiary securities firm founded Jih Sun
Investment Consultancy (Shanghai) Co., Ltd. for the purpose of serving
Taiwanese enterprises and Chinese local companies. In December 2014, Jih Sun
Securities signed an MOU with Chongqing Liangjiang Financial Development
Co., Ltd. as a commitment to founding fully licensed joint ventures in China,
among other collaborations in banking services.
3. Implementation of employee career development and job rotation programs
that build up employees' skills.
A series of courses have been launched to train employees of 7 different job
roles, including: CSR, consumer banking AO, consumer credit approver,
corporate banking RM, corporate banking approver, proprietary trading, and
financial management. In addition, courses were arranged to help employees
attain certification in foreign currency, property insurance, and life insurance
services, and prepare them for the next stage of their careers.
4. Adjust accounting policies and internal control procedures in accordance
with IFRS9.
Revise the classification of financial assets and evaluate losses on loans and
receivables ahead of the new standards. Adopt an expected loss model instead of
the historical model and simulate impacts of regulatory changes on the
Company and its subsidiaries.
Given the fact that IFRS9 has been postponed until 2018, the company will
continue to keep track and plan ahead of the standards, and adjust its accounting
policies and internal control procedures accordingly.
-218-
5. Virtualization and centralization of computer servers.
The IT department has set up a virtual server and a database center, and is
currently consolidating system and database servers to achieve centralized
management while reducing operating costs.
6. Develop differentiated electronic services for e-commerce.
All subsidiaries have adhered to their plans to develop differentiated
electronic platforms that will help boost e-commerce both in volume and in
quality.
(II) 2014 profitability explained – Jih Sun Holding
In 2014, the Company accumulated NT$3.141 billion in net interest revenue
and NT$4.885 billion in non-interest net revenue for a total net revenue of
NT$8.026 billion. After deducting operating expenses NT$5.68 billion, bad debt and
guarantee provision reversal NT$0.191 billion and income tax expense NT$0.092
billion, the company produced a consolidated after-tax profit of NT$2.445 billion,
which was equivalent to an EPS of NT$0.76. The group's 2014 profits were largely
contributed by the subsidiary bank and securities firm.
(III) Investment plans for the coming year
banking and securities services. It adopts a strategy that focuses on "Rooting,"
"Expanding," and "Balancing" its business activities. "Rooting" involves raising
competitiveness across subsidiaries and finding suitable targets that can be acquired
as a means of growth. "Expanding" involves mainly the extension of core services
into the overseas market. Lastly, "Balancing" promotes the idea of growing the
Company's business activities in a balanced manner that is sustainable over the
future.
-219-
VI.
Analyses and assessments of the following risk management
issues in relation to the consolidated financial and business
performance during the last fiscal year, up until the publication
date of this annual report:
(I) Risk management framework and policies for the financial holding
company and its subsidiaries
1. Risk management framework
Board of Directors of FHC
Audit Division
Risk Management Division
Chairman of FHC
Credit Risk Department
Risk Management Committee
Market Risk Department
President of FHC
Operational Risk
Department
Risk Management Divisions of subsidiary
bank / securities firm
Risk management units in various departments
2. Risk management policy
The Company’s risk management principles
(1) To create independent and effective risk management framework and
policies, which can be used to evaluate and monitor the risk tolerance and
exposure within the Company and its subsidiaries, to determine proper
responsive actions and ensure compliance to risk management procedures.
(2) To build a scientific risk management system that can be used to identify,
analyze, assess, and handle the major risks that are likely to result in
negative impacts to the Company and its subsidiaries. This system can also
help decide how to respond to the risks involved and limit the impacts
within tolerable levels.
-220-
(II) The methods adopted by the financial holding company and its
subsidiaries for assessing and controlling risks, and their quantified
risk exposures
1. General disclosure
(1) The Company’s risk management principles
A. To establish a scientific risk management system that analyzes risk
objectively and helps achieve reasonable returns.
B. An efficient risk management structure allows each business unit to
perform its daily operations while a dedicated risk management division
within the unit reports regularly to the Board of Directors for immediate
and effective risk monitoring. Upon discovery of substantial risk
exposure that is potentially detrimental to finance, operations, or
regulatory compliance, immediate actions must be taken and reported to
the Board of Directors.
C. To adopt an overall risk management system that monitors the capital
adequacy of the Company and its subsidiaries based on their business
scales, credit risks, market risks, operational risks, and future prospects;
to supervise the Company’s total exposure and allocate investments
based on its distinct capital and debt characteristics.
(2) There are two characteristics of the Company’s risk management system
A. Timeliness:
To raises alerts, responsive actions, and avoidance measures in a timely
manner to all possible risks involved during the decision-making
processes undertaken by the Company and its subsidiaries.
B. Effectiveness:
The Company and its subsidiaries have implemented proper procedures,
supervision, and contingency plans to address the risks they are facing
and to ensure the effectiveness of their risk management systems.
(3) The Company’s risk management system is capable of identifying and
handling the following risks
A. Assets and liabilities risk:
Loans, deposits, and asset allocation are the primary businesses and
functions of a financial institution. As a result, the Company often
encounters mismatched maturities between its long term and short assets
and liabilities, and thus undertakes liquidity risks arising from different
-221-
term structures as well as any potential interest rate variations. The
Company addresses the following risks in the manners described.
a. Liquidity risk:
In addition to meeting the minimum reserve and liquidity requirements
imposed by the authority, the Company and its subsidiaries also conduct
liquidity analyses, create management indicators, set limits on indicators,
and develop responsive strategies to prevent incidents of illiquidity.
b. Structural interest rate risk:
Apart from preparing interest rate sensitivity balance sheets, the
Company and its subsidiaries also conduct interest rate sensitivity
analyses, create management indicators, set limits on indicators, and
develop responsive strategies and hedging solutions to minimize
exposure to interest rate risks.
B. Market risk:
As a result of continuing business development and active trading in
financial derivatives, the Company is consistently exposed to volatile
asset prices caused by market factors (such as changes in interest rates,
share prices, exchange rates etc.). Apart from developing scientific
methodologies and market risk management systems, the Company and
its subsidiaries also create management indicators and set limits on
indicators to effectively evaluate market risk exposure.
C. Credit risk:
As a result of active trading in financial instruments and its expanding
credit portfolio, the Company is exposed to credit risks that
counterparties or customers might default on their obligations due to
loss-making businesses or deteriorated financial position. Apart from
establishing consistent standards for evaluating and classifying asset
quality, the Company and its subsidiaries also monitor larger exposures
on a regular basis and make timely loan loss provisions as they arise.
Credit information of counterparties and loan customers are updated and
monitored on a timely manner; asset diversification and risk grading are
enforced according to credit policies; management indicators are
established to reduce default risks and concentration risks.
-222-
D. Operational risk (including legal risks):
Operational risks may arise from internal processes, staff’s misconducts,
errors of the systems, or external factors, including legal risks. To
minimize losses arising from operational risks that affect our business
goals, the Company and its subsidiaries have complied with internal
operational risk management policies, operational risk organization
framework, and operational risk management practices by carrying out a
series of risk self-assessments and event/key risk reporting mechanisms.
These practices enabled the Company to identify, assess, monitor,
manage, and minimize its exposure to operational risks.
2. Approaches undertaken by each subsidiary to manage the following risks,
and their quantified risk exposure:
(1) Subsidiary Bank
A. Credit risk
Risk category
Total credit risk-weighted assets:
Item
On-balance sheet items - Total credit
risk-weighted assets (A)
Off-balance sheet items - Total credit
risk-weighted assets of general off-balance
sheet transactions (B)
Off-balance sheet items - Total credit
risk-weighted assets of derivative financial
instruments (C)
Off-balance sheet items – Total credit
risk-weighted assets of repurchase (RP)
agreements (D)
Off-balance sheet items – Total credit
risk-weighted assets of resale (RS)
agreements (E)
Risk adjustment of credit evaluation
(CVA) (F)
Total credit risk-weighted assets
(1) = (A) + (B) + (C) + (D) + (E) + (F)
Unit: NTD thousand
31 December 2014
Amount
128,926,938
4,163,799
1,404,054
7,028
0
450,142
134,951,961
-223-
B. Liquidity risk:
Maturity Analysis of NTD Funds
31 December 2014
Unit: thousand NTD
Outstanding balance for the remaining period until maturity
Total
Major cash
inflow upon
maturity
0 to 10
Day(s)
11 to 30
Days
182,123,657 40,125,831
Major cash
outflow upon 242,792,038 6,945,194
maturity
31 to 90
Days
8,846,687 16,363,126
91 to 180
Days
181 Days to More than 1
1 Year
Year
6,704,846
9,259,565 100,823,602
12,348,473 24,287,934 27,607,747 57,770,984 113,831,706
Maturity gap (60,668,381) 33,180,637 (3,501,786) (7,924,808) (20,902,901) (48,511,419) (13,008,104)
Maturity Analysis for USD Funds
March 31, 2014
Unit: thousand NTD
Outstanding balances for the following maturities
Total
0 to 10
Days
11 to 30
Days
31 to 90
Days
91 to 180
Days
181 Days to More than 1
1 Year
Year
Major cash
inflow upon
maturity
1,175,145
392,888
219,185
97,659
181,213
284,200
1,175,145
Major cash
outflow upon
maturity
1,276,570
492,127
256,124
126,831
151,825
249,663
1,276,570
Maturity gap
(101,425)
(99,239)
(36,939)
(29,172)
29,388
34,537
(101,425)
C. Market risk
Risk category
2014.12.31
Capital requirement
Interest rate risk
$
127,277
Beneficiary certificates risk
$
1,590,966
162,163
237,467
2,968,340
-
-
1,295,669
16,195,857
Commodity risk
Total
$
12,973
Foreign currency risk
Options accounted using the simple
method
Risk assets (Note)
1,673,386
Note: represents 12.5 times of capital requirement.
-224-
$
20,917,326
(2) Securities subsidiary
A. Equivalent amount of market risk
Unit: NTD thousand
Amount as of 31 December 2013 Amount as of 31 March 2014
234,499
328,134
550,832
618,441
56,489
61,976
0
0
0
0
841,820
1,008,551
Item
Interest rate risk
Beneficiary certificates risk
Foreign exchange rate risk
Commodity risk
Specific concentration risk
Total
B. Equivalent amount of credit risk
Unit: NTD thousand
Amount as at 2014/12/31
34,094
343,868
0
198
251,340
Item
Repurchase agreements
Margin trading receivable
Securities-backed lending
OTC derivatives
Counterparty risk associated with general consigned trading
Counterparty risk associated with consigned trading of
futures and options
Four-day cumulative sum of foreign securities traded through
sub-brokerage
General on-balance sheet transactions
General off-balance sheet transactions
Asset securitization - for initiators
Untimely settled transactions
Total
0
12,597
144,337
0
0
0
786,434
C. Equivalent amount of operational risk
Unit: NTD thousand
2013
Operating gross profits in
each year
Risk coefficients
2012
2011
2,920,773
3,013,344
3,090,898
18%
18%
18%
Risk equivalent amount
541,501
D. Equivalent amount of business risk
Unit: NTD thousand
Item
Amount as of 31 December
2013
Amount as of 31 March
2014
Equivalent amount of market risk (A)
841,820
1,008,551
Equivalent amount of credit risk (B)
896,317
891,171
Equivalent amount of operational risk (C)
652,487
541,501
2,390,624
2,441,223
Equivalent amount of business risk
(D) = (A) + (B) + (C)
-225-
(III)
The effect of major policy changes in policies and legal practices, whether
domestic or foreign, to the financial holding company’s financial and
business performance, and the responsive actions:
1. The Company had amended "Jih Sun Financial Holding Asset Acquisition and
Disposal Procedures" to accommodate changes in regulations.
2.The Company had amended "Jih Sun Financial Holding Principles for Non-credit
Transactions with Stakeholders" to accommodate changes in regulations.
3.The Company had amended "Jih Sun Financial Holding Work Rules" to accommodate
changes in regulations.
4.The Company had amended "Jih Sun Financial Holding Personal Information Security
Principles" to accommodate changes in regulations.
(IV)
Effects of technological and industrial changes to the financial holding
company’s financial and business performance, and the responsive actions
For banks, new technologies present challenges as well as opportunities! Internet
banking and mobile banking services have been favored by customers for the
convenience they bring without the constraint of time and space. Using these new
technologies, the Bank will strive to explore deeper into customers' needs and behaviors,
launch new products and services from a multitude of perspectives, and even reach
customers that it never could before. The security of customers' information is of utmost
priority when it comes to designing the trading platform. Data transmission is protected
by 128-bit SSL (Secure Sockets Layer) protocol, the same mechanism that is used for
general and low-risk activities. The messages exchanged are encrypted using passwords
agreed between the customer and the system, which gives customers access to full
functionality at the level of security they deserve. For low-risk Internet banking
transactions, IC ATM cards are used as a means of security control; as for high-risk
transactions, XML certification is used as a form of enhanced identification and
protection. The system simultaneously caters for users' need for convenience and
security, giving customers the luxury to access all of our services with relief.
Given the growing popularity of mobile devices, the Bank has made its mobile
banking services easily accessible using different smartphones (iOS and Android
systems). In addition, the Bank has joined TMPC's "PSP TSM" scheme that gives
customers full control of how to pay for their purchases, whether using ATM cards or
credit cards, all with a tap of their cellphones. Plans for electronic banking services:
1. Introduce a greater range of mobile banking functionalities and manage customer
relationships over social networks
2. Bring more depth into electronic banking services by exploring new functionalities
-226-
The e-commerce system can serve its purpose only with the right equipment,
refined programs, and an increasing range of products and services. The authority's
Bank 3.0 initiative will change how people go about their banking activities. In response
to this development, the Bank shall continually monitor changes in the market and
introduce innovative products within the confines of law through a secured and stable
digital environment. This new model has the potential to reduce personnel costs and
bring greater revenues, and create a new area of expertise where we can compete in.
1. Expected benefits
(1) To strengthen capital structure; to gain market share, technology, and distribution
channels within a relatively short timeframe.
(2) To expand overseas markets, generate income, and diversify risks through
multi-dimensional business activities.
(3) To expand business coverage, reduce operating costs, improve efficiency, and
provide comprehensive financial services to customers.
(4) Synergies in co-marketing; to maximize values for our shareholders, customers,
and employees.
(5) To shorten organizational learning curves; to keep pace with market changes and
capture opportunities that are soon to disappear.
2. Potential risks
(1) The volatile stock market produces large discrepancies between the market price
and the reasonable value. Determining the reasonable merger and acquisition
price can become a challenging task.
(2) The Company must accept all asset and liability risks of the acquired or merged
financial institution.
(3) Failure to integrate corporate cultures and human resources may result in the loss
of key talents.
(4) Over-estimated synergies that cannot be materialized after the merger or
acquisition.
3. Responsive measures
(1) To seek for due diligence assessments by professional institutions, CPAs, and
independent directors etc.; to project financial and business impacts to the
Company under all possible circumstances.
(2) To conduct human resource capacity assessments to identify critical personnel as
well as skill shortages; to settle employees’ issues with the help of human
resource experts; to eliminate employees’ doubts by establishing transparent
corporate policies and direct communication channels.
(3) To assemble an experienced project team that clearly sets out purposes, plans,
long-term goals, and the forms of merger and acquisition.
-227-
(V)
Risks of Concentrated Business and the Responsive Measures
1. Bank subsidiary
2014 Proportions
102年度銀行授信業務比重
in Credit Business of the Bank
Consumer banking
消費金融業務
47.61%
4 6 .0 5 %
Corporate Banking
企業金融業務
52.39%
5 3 .9 5 %
As deposits and loans are the main businesses of the Bank, liquidity risk and credit
risk are the first priorities in our risk management. In terms of liquidity risk, apart from
maintaining 1st (i.e. required deposit reserve) and 2nd (i.e. liquidity reserve) reserves on
deposits held according to the regulations of the governing authority, we have also
added other liquidity risk management indexes with strict control measures.
In terms of credit risks, among the Bank’s 2014 credit business, consumer loans
account for about 47.61% of our total loan amount, while corporate loans account for
about 52.39%.
In 2015, the Bank will maintain its current lending policy for consumer banking,
and focus on diversifying asset concentration for its corporate banking segment, so that
the Bank is less dependent upon large borrowers. The adjustment will begin by reducing
the significance of the Bank's top 100 customers, exercising more rigorous control over
high-risk customers, and refining our credit grading system for better grasp over
business risks.
-228-
2. Securities subsidiary
2014
102年度證券各項業務比重
Proportions in Securities Business
Proprietary
trading
自營業務
17.05%
12.23%
Underwriting
承銷業務
2.64%
3.72%
Brokerage
經紀業務
80.31%
84.05%
In year 2014, our securities efforts were largely focused on brokerage, which
accounted for 84.31%. Credit risk management over the brokerage business complied
with the requirements of the competent authority by constantly monitoring the margin
ratios of share financing and short-selling customers, and implementing stringent
procedures and policies for such customers. With respect to operational risk, the
subsidiary complied with the competent authority and the Taiwan Stock Exchange
Corporation by establishing the relevant processes and procedures, and enforcing
internal audits and controls to prevent adverse occurrences. In addition to meeting the
minimum reserve and liquidity requirements imposed by the authority, the Company
and its securities subsidiary also conduct regular liquidity gap analyses to prevent
incidents of illiquidity.
(VI)
The risks and impacts of significant equity transfers by directors,
supervisors, or major shareholders with more than 1% ownership interest,
and the responsive measures to such risks:
As of the Annual Report press date, the Company had not conducted any
significant conversion or changes in equity.
(VII) The effects, risks, and responsive measures associated with any change in
management:
The Company implemented cash capital increases in year 2006 and year 2009 to
bring in two major corporate shareholders, namely Shinsei Bank (investing via a Dutch
subsidiary, SIPF B.V.) and Capital Target Limited (HK). They are the top two
shareholders of the Company, and their shareholdings remained largely unchanged since
April 2009.
-229-
(VIII) Litigation and non-contentious cases and reactive measures
Major litigations, non-contentious cases, or administrative litigations against the
Company and its Directors, Supervisors, President, actual representative, major
shareholders with more than 1% ownership interest, and companies to whom the
Company holds controlling interest, whether concluded or pending judgment, in the last
two years up until the publication date of this annual report, which may or have already
resulted in major impacts to shareholders’ equity or securities prices:
1.
Jih Sun Financial Holding Co., Ltd.: None.
2.
Jih Sun Securities Co., Ltd.:
Description
Damage
claim
Participants
Plaintiff: Hsu ○ ○,
and ○ ○ Iron Steel
Co., Ltd., and Yang
○ ○.
Defendant: Jih Sun
Securities Co., Ltd.,
Taichung Branch
and Hu ○ ○
Damage
Plaintiff: Cheng ○○
claim for
Defendant: Jih Sun
misappropria Securities Co., Ltd.
tion
Main contents
Restrictions
In February 2003, 3 customers of Taichung Branch
Office claimed that the shares in their share
depository accounts were fraudulently sold, and the
proceeds were fraudulently withdrawn by a
salesperson in Taichung Branch Office. The customers
appealed that Taichung Branch Office was liable and
made a claim of approximately NT$82,431 thousand
plus interest (which was subsequently reduced to
NT$72,899 thousand). The first judgment by the
Taichung District Court ruled the Company and its
former employee liable to compensate the 3 plaintiffs
a total of NT$33,968 thousand in 31 December 2009,
None
plus interests accrued at the statutory rate of 5% per
annum starting 21 October 2003. Over the course of
the litigation, the Company settled with one of the
customers and made an appeal on 28 January 2010 to
the claims of other two customers. The Taichung
Branch Court of Taiwan High Court rejected the
Company’s second appeal on 9 August 2011, for
which the Company made a third appeal on 1
September 2011. The Supreme Court abandoned the
original judgment on 24 October 2012. The case was
remanded to Taiwan High Court, Taichung Branch for
another judgment.
A customer of Yong Kang Branch Office filed a suit in
July 2011 that the business supervisor of Yong Kang
Branch offered discretionary investment services
without approval, and incurred losses on share and
futures trading. The customer claimed that the
Company and the supervisor jointly liable to
None
compensate a total of NT$13,000 thousand plus
interest. The Tainan District Court ruled in favor of
the Company on 28 May 2013. The customer made an
appeal on 24 Jun 2013 and the case was remanded to
Tainan Branch Court of Taiwan High Court for
judgment.
-230-
Description
Damage
claim
Damage
claim
3.
Description
Damage
claim
Return of
sums paid
Participants
Plaintiff: Huang ○○
Defendant: Jih Sun
Securities Co.,
Ltd. , Jih Sun
International
Commercial Bank
Limited, Lin ○○,
Huang ○○, Chen
○○
Plaintiff: Chen ○○,
Chen ○○, Chen ○○,
Wang ○○
Defendant: Jih Sun
Securities Co., Ltd.,
Jih Sun Futures
Co., Ltd, Huang
○○, Tsai ○○, Chang
○○
Restrictions
Main contents
The Plaintiff, Huang ○○, claimed that the Company,
Jih Sun International Commercial Bank Limited,
broker Lin ○○ of the Company, Clerk Huang ○○ and
Chen ○○ of Jih Sun Bank should be jointly liable for
None
the damages totaling NT$7,091 thousand plus interest
calculated at 5%. Taiwan Taipei District court
dismissed the plaintiff's complaint on 5 October 2012.
On 26 October 2012, the plaintiff appealed. Currently
the case is being heard at the Taiwan High Court.
The four plaintiffs, Chen ○○, Wang ○○, and the others
sued the Company, Jih Sun Futures Co., Ltd, its
broker Huang ○○, and its employees Tsai ○○ and
Chang ○○in January 2014 to jointly pay for the
damage compensation of NT$109,428 thousand and
interest accrued at 5% on this amount. This case is
being heard at Taipei District Court.
None
Jih Sun International Commercial Bank Limited:
Participants
Main contents
Plaintiff Huang ○○ had filed suit claiming the Bank
Plaintiff: Huang ○○ and Jih Sun Securities to be jointly liable with former
employees Huang ○○ (Jih Sun Bank), Chen ○○ (Jih
Defendant: Jih Sun Sun Bank) and Lin ○○ (Jih Sun Securities) for a sum
International
of NT$7,091,000 plus 5% interest. On October 5,
Commercial Bank 2012, Taiwan Taipei District Court rejected the
Ltd.
Plaintiff's lawsuit request. An appeal was later raised
Jih Sun Securities by the Plaintiff on October 26, 2012. On April 16,
2014, Taiwan High Court rejected the appellant's
Co., Ltd.
lawsuit request along with all subsequent claims and
Huang ○○
requests for provisional measures filed against the
Chen ○○
Bank. The appellant did not appeal to this decision.
Lin ○○
The outcome of the case is final as a result.
Plaintiff: Ou ○○
In a dispute of real estate transaction between Plaintiff
Ou ○○ and the Bank, Ou had demanded for the Bank
Defendant: Jih Sun
to return negotiation fees totaling NT$20,000,000
International
plus 5% interest. The case is currently being reviewed
Commercial Bank
by Taiwan Taipei District Court.
Ltd.
-231-
Restrictive
clauses
None
None
Description
Participants
Plaintiff: Yi Cheng
Construction Co.,
Ltd.
Return of
inappropriate Defendant: Jih Sun
gains
International
Commercial Bank
Ltd.
Claim of
debt
entitlement
Plaintiff: Jih Sun
International
Commercial Bank
Ltd.
Defendant: Tian Tai
Construction &
Engineering Co.,
Ltd., Taipei City
Government Public
Works Department
Hydraulic
Engineering Office
Plaintiff: Jih Sun
International
Claim of
Commercial Bank
construction Ltd.
bonds
Defendant: Tian Tai
Construction &
Engineering Co.,
Ltd.
Main contents
Plaintiff Yi Cheng Construction Co., Ltd. argued that
it had right of claim to a property foreclosed by the
Bank, and hence should be given priority to claim
proceeds of the foreclosure totaling NT$53 million.
The Plaintiff also stated that the Bank had made
inappropriate gains totaling NT$17,299,000, which
should be returned to the Plaintiff plus 5% interest,
and the sum was to be paid from the above proceeds.
Taiwan Taipei District Court had rejected the
Plaintiff's claims on November 19, 2014. An appeal
was made by the Plaintiff on December 24, 2014, and
the case is currently being reviewed by Taiwan High
Court.
This suit had been filed by the Bank for the purpose
of establishing debt entitlement of Defendant Tian Tai
Construction & Engineering Co., Ltd. over Taipei
City Government Public Works Department
Hydraulic Engineering Office for a sum of
NT$41,513,000. The lawsuit was raised by the Bank
in June 2013, which Taiwan Taipei District Court later
ruled partially in favor of the Bank on October 31,
2014, by confirming that Defendant - Tian Tai
Construction & Engineering Co., Ltd. was in fact
entitled to a claim of NT$32,036,000 over Taipei City
Government Public Works Department Hydraulic
Engineering Office. On November 26, 2014, the Bank
raised an appeal for the remaining NT$9,477,000 that
was not ruled in its favor, and the case is currently
being reviewed by Taiwan High Court.
After losing the case of performance bonds to Taipei
City Government Public Works Department
Hydraulic Engineering Office, the Bank filed a claim
against the Defendant for payment of construction
bonds totaling NT$32,036,000 plus interests accruing
at 5% per annum from May 22, 2007, until full
settlement. Taiwan Taipei District Court had ruled the
latter in favor of the Bank on March 25, 2014, and the
judgment was later made final on May 5, 2014.
-232-
Restrictive
clauses
None
None
None
Description
Participants
Main contents
The Plaintiff is a representative appointed by 8 of the
Bank's customers (3 of whom joined at the end of
2010) including Huang ○○. In October 2009, the
Plaintiff claimed the Bank and other peer banks
Plaintiff: Taiwan
responsible for inappropriate sale of linkage bonds,
Structured Note
and the Financial Supervisory Commission
Victims' Rights
responsible for illegal actions and inactions that
Foundation
Return of
resulted in the loss of property of Huang ○○ et al. The
entrusted
Plaintiff thus requested the Bank to return principals
Defendant: Jih Sun
principal
that had been invested in linkage bonds between 2007
International
and 2008, while holding the Bank and the Financial
Commercial Bank
Supervisory Commission jointly liable to compensate
Ltd.
a sum of NT$12,059,000 plus interests. This case had
been ruled in favor of the Bank by Taiwan Taipei
District Court on August 12, 2014, during the first
instance, and is currently being reviewed by Taiwan
High Court.
Plaintiff: A party of The Plaintiffs, having subscribed to the Bank's
9 including Chen
linkage bonds - "Affordable Luxury" in October
○○
2007, filed a claim in August 2013 against the Bank
Return of
for a sum of NT$7,066,000 and US$50,000 plus
invested
Defendant: Jih Sun interests. The Bank had reached settlement with 7
principal
plaintiffs in January 2014, 1 plaintiff in May 2014,
International
Commercial Bank and 1 plaintiff in October 2014. All 9 plaintiffs had
therefore withdrawn their claims.
Ltd.
Defendant Wei Cheng Enterprise Co., Ltd. had failed
to deposit sales proceeds totaling NT$32.86 million
Plaintiff: Jih Sun
into the Bank's escrow account when required to do
International
so under the terms of the real estate trust agreement it
Commercial Bank
Contract
had signed with the Bank and a concern party Chen
Ltd.
enforcement
○-Ling. As a result, the Bank filed suit on January 12,
Defendant: Wei
2015, to demand immediate transfer of the
Cheng Enterprise
abovementioned proceeds to the Bank's escrow
Co., Ltd.
account plus a penalty. The case is under the
jurisdiction of Taiwan Taipei District Court.
4. Jih Sun International Property Insurance Agency Co., Ltd.: None.
(IX)
Other major risks and respective measures: None.
-233-
Restrictive
clauses
None
None
None
VII. Crisis Management
(I) Contingency Measures for the Potential Operational Crisis Caused by Massive
Loss of Capital or Other Issues of Significant Lack of Liquidity
The Company has established Article 56 of the “Business Contingency Plan” in
accordance with Article 8 of the “Operation Directions for the Disposal of Business
Contingency
of
Financial
Institutions”
announced
in
the
Letter
of
Jin-Guan-Yin-(1)-Zi No. 09710000092, dated 12 February 2008, by the Financial
Supervisory Commission, Executive Yuan. The Bank has established “Business
Contingency Measures” which shall be acted accordingly in the event of crisis
management policies, notification procedures and the respective measures to
continue the normal operation of the Bank, should any operational crisis arise due to
massive losses of capital or other issues of significant lack of liquidity.
(II) Contingency Measures for Major Disasters
To minimize the impacts of natural and man-made disasters to the operations of
the Company and its subsidiaries, and to outline effective responses to major
disasters, a “Disaster Response and Recovery Policy” and an “Emergency Response
Policy” have been established to provide the principles and reporting procedures in
times of extraordinary events. Emergency response teams are also in place to assist in
handling major crises, maintaining business operations, and recovering from any
damages.
VIII. Other Material Issues
Although capital requirements on market risk were not calculated using the Internal
Model Approach (IMA), the Company and its subsidiaries followed the IMA minimum
requirements specified by the Bank for International Settlements (BIS) in the Basel
Capital Accord to monitor group market risks on a consolidated level. Details are as
follows:
In addition to the traditional control measures, such as authorized exposure limits,
stop-loss, stop-authority, and stop-gain thresholds, risk indicators (i.e. Greeks, DVO1,
etc.) were also used by the Company and its subsidiaries to identify, measurement,
control, and manage market risks. Furthermore, VaR (Value at Risk) was introduced to
estimate risk exposure. VaR is calculated based on the maximum potential loss arising
-234-
from market price changes within a specific holding period at the specified confidence
level.
(I)
Market Risk Identification
The Company’s internal market risk estimation models incorporate risk
factors such as interest rate, foreign exchange, equity, and commodity markets.
(II) Market Risk Measurement
1. VaR (Value at Risk)
The criteria of the Company’s VaR calculations are as follows:
Model:
The calculation of VaR is mainly based on Monte Carlo simulations,
but we also have the flexibility to use the Variance-covariance
matrices or the Historical simulations.
Method:
To calculate market price volatility of the previous year by using
the exponentially weighted moving average method (EWMA).
Frequency: Market information is updated daily. VaR is measured based on
one-tail, holding period at the confidence level of 99%.
The VaR of the bank subsidiary and securities subsidiary in Q1, 2014 are as
follows:
Unit: NTD100 million
1-Day VaR at 99% C.L.
2014/12/31
Quarterly
low
Quarterly
high
Quarterly
average
Subsidiary Bank
0.346
0.042
0.476
0.248
Securities subsidiary
0.151
0.085
0.131
0.203
Covariance Adjustment
-0.135
-0.021
-0.075
-0.109
Financial Holding as a whole
0.362
0.106
0.532
0.342
2. Stress testing
The stress testing value for the Company’s market risk represents the
simulated losses based on the following factors:
(1) Single-factor sensitivity.
(2) Historical Scenario.
(3) Self-defined Scenario; similar to item (1), but taking into account the risk
factor of the exposure and the related volatility.
-235-
3. Back testing
Gains and loss are compared against estimated market price changes,
which were calculated based on the 1 day VaR estimated at the confidence level
of 99%, assuming that position remains unchanged throughout the day. These
results are used to test the effectiveness of our modeled forecasts.
(III) Market Risk Control
The Company calculates the stress testing limit and the VaR at a confidence
level of 99% for the Group on an annual basis, based on the Risk-adjusted Return
of Capital (RAROC) and the budget surplus of its subsidiaries. The limits are then
examined and approved by the Risk Management Committee and the Board of
Directors of Jih Sun Financial Holding Co., Ltd.
(IV) Market Risk Management
The Company’s market risk management involves the daily monitoring of
VaR, calculated at a confidence level of 99%, and the stress testing value for limit
breaches. The “Daily Report of Market Risk Overview” is emailed to the
Chairmen, Presidents, and the head of the Risk Management Division throughout
the financial holding group; the “Daily Report of Market Risk Overview” is also
presented to the head of the Risk Management Division within the group in hard
copy. Monthly reports of risk management are presented to senior managers, based
on which they will raise risk-related issues during the next Audit Committee or
Board of Directors meeting. If any breaches were found, the Company and its
subsidiaries will adhere to their internal procedures and responsive measures to
mitigate accordingly.
(V) Please describe the types, objectives, methods, effects and accounting
treatment for the hedging transactions of financial products (including
derivatives financial products) if applicable.
The Company did not adopt hedge accounting; therefore, it was not
applicable.
-236-
Special remarks
-237-
Jih Sun Venture Capital Co. , Ltd.
Shareholding percentage: 100%
Initial investment: NT$
300,000,000
1. Affiliated companies
(Note 2)
Shares held: 100%
Initial investment: USD1000thousand
Percentage held: 98.138%
Initial investment: NT$ 618,268
thousand
JS CRESVALE CAPITAL LIMITED
Initial investment: HKD 20,000 thousand
Initial investment: USD 100 thousand
(CAYMAN) LIMITED
Initial investment: USD 8,050
thousand
Initial investment: USD 47,160
thousand
Note 1: None of the subsidiaries held
shares of their parent company
Jih Sun Life Insurance Agency Co., Ltd.
Initial investment: NT$1,980 thousand
Jih Sun International Commercial Bank
Limited
Initial investment: NT$ 46,906,793
thousand
LIMITED
Initial investment: NT$ 1,795,250 thousand
Jih Sun Securities Co., Ltd
Initial investment: NT$ 17,601,701
thousand
Consulting Co., Ltd.
Initial investment: NT$ 173,600
thousand
Agency Co., Ltd.
Initial investment: NT$ 3,000 thousand
(I) Consolidated business report and financial statements
I. Affiliated companies
238
-2392014/06/05
1993/01/26
2000/11/29
1984/10/12
1996/09/09
Jih Sun Venture Capital Co., Ltd.
Jih Sun Life Insurance Agency
Co., Ltd.
INVESTMENT HOLDING
COMPANY LIMITED
1994/01/27
2004/08/09
1992/03/26
Jih Sun International Commercial
Bank Limited
Jih Sun International Property
1961/12/08
Establishment Date
Company Name
2. Information of the affiliated companies
NT$ 15,798,890
NT$ 11,572,127
Paid-in Capital
18F, Euro Trade Centre, 21-23 Des
Voeux Road Central, Hong Kong
HK$ 370,000,000
7F, No. 111, Section 2, Nanjing East
NT$ 100,000
Road, Taipei City
8F, No. 85 and 87, Section 2, Nanjing
NT$ 3,000
East Road, Taipei City
7F, No. 111, Section 2 Nanjing East
NT$300,000
Road, Taipei City
Floor 4, Willow House, Cricket
Square, P O Box 2804, Grand Cayman US$ 54,600,000
KY1-1112 , Cayman Islands
8F, No. 85 and 87, Section 2, Nanjing
NT$ 3,000
East Road, Taipei City
4F, No. 111, Section 2 Nanjing East
NT$ 700,000
Road, Taipei City
1F, No. 10, Section 1 Chungching
South Road, Taipei City
Address
3F and 4F, No. 111, Section 2,
Nanjing East Road, Taipei City
Brokerage division, proprietary trading,
underwriting, and other securities-related
businesses permitted by Hong Kong laws
Venture capital investment
Life Insurance Agency
Equity investment in the following
businesses:
1. Security market brokerage and
proprietary trading
2. Provide guidance regarding corporate
finance, public offering, and securities
underwriting
3. Securities research and analysis
4. Corporate and personal financial
planning and investment consultation
5. Financial services
6. Investment trust
7. Futures services
8. Financial holding company, recognize
investment gains/losses
Performs securities investment research
related services
Futures brokerage and proprietary trading
Property Insurance Agency
Unit: NTD thousand, HKD, USD
Main Business
Stock brokerage, underwriting, and
proprietary trading
General deposit, loan, and collection services;
investment in government bonds, short term
notes, financial bonds etc.
-240-
1997/01/09
1998/01/13
1985/12/27
2013/12/17
JS CRESVALE CAPITAL
LIMITED
Establishment Date
JIH SUN FINANCIAL
SERVICES (CAYMAN)
LIMITED
Company Name
Paid-in Capital
HK$ 20,000,000
US$ 1,000,000
903-A, 9 Floor, No. 310, Tianshan
Road, Changning District, Shanghai
City
US$ 100,000
18F, Euro Trade Centre, 21-23 Des
Voeux Road Central, Hong Kong
P. O. Box146, Road Town, Tortola,
British Virgin Islands
Floor 4, Willow House, Cricket
Square, P O Box 2804, Grand Cayman US$ 8,050,000
KY1-1112 , Cayman Islands
Address
Main Business
1. Brokerage division, proprietary trading,
and financing
2. Corporate and personal financial
planning and investment consultation
3. Financial product design
4. Other securities and finance-related
businesses as approved by the local
government
1. Overseas fund management
2. Overseas asset management
3. Other asset management-related
businesses as approved by the local
government
4. Proprietary trading
1. Stock brokerage and financing
2. Futures brokerage and the sale of funds
and other financial products
3. Other business activities approved by
the local authority
Investment consulting, business information
consulting, planning for market operation and
sales (excluding advertising), business
management consulting, economic
information consulting, technical consulting
of software and network.
-241-
3. Common shareholders between the controlling and the affiliated company: None.
4. The business coverage of the affiliated company. Where the affiliated enterprises operate businesses which were interrelated, the Company should
clarify the facts of division of labor.
The Company’s affiliated companies offer services in banking, insurance agency, investment banking, futures trading, securities investment
consultation, brokerage division, proprietary trading, and securities underwriting.
(1) Jih Sun Futures Co., Ltd.
Jih Sun Futures and Jih Sun Securities conduct relevant businesses in accordance with the provision of Chapter 1, Article 3 of the Regulations
Governing the Operation of Futures Introducing Broker Business by Securities Firms that a futures introducing broker performs the following
services upon appointment of a futures merchant:
a.To solicit futures traders to trade futures.
b.To accept the application for opening of futures trading accounts on behalf of the futures merchant.
c.To accept futures trading orders from futures traders and delivers them to futures merchants for execution.
(2) Jih Sun Securities Investment Consulting Co., Ltd.
Jih Sun Securities Investment Consulting Co., Ltd. provides real-time market information, morning briefing, global stock market and foreign
exchange briefing, and daily recommended portfolios to Jih Sun Securities and its branch offices. The Company also performs market analysis
and consultation services during trading hours.
(3) JS CRESVALE SECURITIES INTERNATIONAL LIMITED
a.Sub-brokerage services:
JS CRESVALE SECURITIES acts as the broker of sub-brokerage for Hong Kong stocks undertaken by Jih Sun Securities Co., Ltd.
b.QFII:
JS CRESVALE SECURITIES and JIH SUN FINANCIAL SERVICES (CAYMAN) LIMITED are qualified foreign investment institutes and
general foreign institutional investors (QFII, GFII) approved by the competent authority. Jih Sun Securities Co., Ltd. acts as broker for their
trading of Taiwan stocks.
(4) Jih Sun Life Insurance Agency Co., Ltd.
The business lines operated include the life insurance agents. An “Insurance Agent” refers to the entity that handles insurance affairs on behalf
of insurers and earns commission in return as specified in the agency agreement or letter of authorization.
(5) Jih Sun Investment Consulting (Shanghai) Co., Ltd.
The business operation includes investment consulting, commerce information consulting, marketing and planning (other than advertising),
business management consulting, economic information consulting, software, and network technology consulting.
-242-
Title
Chairman
Director
Director
Director
Director
Director
Director
Director
President
Chairman
Director
Director
Director
Director
Director
Director
Director
President
Chairman
Director
Jih Sun International Property Insurance Agency Co.,
Director
Ltd.
Supervisor
Company Name
5. Directors and President of each affiliated company
100%
100%
100%
Shareholding
Shares held
percentage
Jih Sun FHC: James C. Tang
Jih Sun FHC: Newman Su
Jih Sun FHC: Hsieh Chih-Wei
Jih Sun FHC: Huang Flynn Xuxian
Jih Sun FHC: Huang Chin-Tang
Jih Sun FHC: Yang Chih-Kuang
1,157,212,760 shares
Jih Sun FHC: Lloyd Lin
Jih Sun FHC: Huang, Chi Yun
Jih Sun FHC: Lin Chih-Chung
Jih Sun FHC: Yeh, Min-Kung
Jih Sun FHC: Tang Chak Lam, Charlie
Jih Sun FHC: Chiang Yen-Hsiu
Jih Sun FHC: Huang Chin-Tang
Jih Sun FHC: James C. Tang
Jih Sun FHC: Huang Flynn Xuxian
Jih Sun FHC: Hsieh Chih-Wei
1,579,888,953 shares
Jih Sun FHC: Newman Su
Jih Sun FHC: Huang, Chi Yun
Jih Sun FHC: Lin Chih-Chung
Jih Sun FHC: Yeh, Min-Kung
Jih Sun FHC: Tang Chak Lam, Charlie
Jih Sun FHC: Wang Chih-Fang
Jih Sun Securities: Lin Che-Li
300,000 shares
Jih Sun FHC: Mao Nien-Chu
Name or the Name of
Representative
Unit: shares; %
-243Chairman
Director
Director
Supervisor
Director
Director
JIH SUN INTERNATIONAL INVESTMENT
HOLDING COMPANY LIMITED
Chairman
Director
Director
Supervisor
Supervisor
President
Chairman
Director
Director
Supervisor
President
Title
Chairman
Director
Director
Director
Director
Director
Supervisor
President
Jih Sun Securities Investment Consulting Co., Ltd.
Company Name
Yang Chih-Kuang
Huang Flynn Xuxian
Lin Ming-Hui
Jih Sun Securities: Newman Su
Jih Sun Securities: Lin Che-Li
Lin Ming-Hui
Jih Sun Securities Co., Ltd.: Huang Mi
Jih Sun Securities Co., Ltd.: Wu
Tray-Jiang
Jih Sun Securities Co., Ltd.: Chen
Mei-Hung
Jih Sun Securities Co., Ltd.: Lin
Che-Li
Li Hsiu-Li
Newman Su
Huang Chin-Tang
Huang Flynn Xuxian
Lloyd Lin
Yang Chih-Kuang
Wang Chih-Fang
Lin Che-Li
Wu Wen-Ko
Bank Limited: Huang Flynn Xuxian
Bank Limited: Lin Che-Li
Bank Limited: Mao Nien-Chu
Lloyd Lin
Chiang Yen-Hsiu
Hsu, Mu-Chun
Name or the Name of
Representative
54,600,000 shares
297,000 shares
100% held by Jih Sun
99%
100% held by Jih Sun
Securities Co., Ltd
100%
10,000,000 shares
30,000,000 shares
98.138%
68,696,435 shares
Shareholding
Shares held
percentage
-244-
Cheng, Ru-Mu
Hsu, Mu-Chun
Chiang Yen-Hsiu
Wang Chih-Fang
Hsu, Mu-Chun
Hung Rong-Tsung
Cheng, Ru-Mu
Wang Chih-Fang
Hsu, Mu-Chun
Hung Rong-Tsung
Cheng, Ru-Mu
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
JS CRESVALE SECURITIES INTERNATIONAL
LIMITED
Hsu, Mu-Chun
Chairman
Wang Chih-Fang
Director
Chiang Yen-Hsiu
Director
Jih Sun Investment Consulting (Shanghai) Co., Ltd.
Hsu Kung-Ming
Director
Lin Che-Li
Supervisor
Hsu Kung-Ming
President
Note: The above data was presented up until the publication date of this annual report.
Cheng, Ru-Mu
Hsu, Mu-Chun
Name or the Name of
Representative
Director
Director
Title
JIH SUN FINANCIAL SERVICES (CAYMAN)
LIMITED
Company Name
1,000,000 shares
100% held by JS
CRESVALE
SECURITIES
INTERNATIONAL
LIMITED
Shareholding
Shares held
percentage
100% held by JIH SUN
INTERNATIONAL
8,050,000 shares INVESTMENT
HOLDING
COMPANY LIMITED
INTERNATIONAL
INVESTMENT
100,000 shares
HOLDING
COMPANY LIMITED
INTERNATIONAL
370,000,000 shares INVESTMENT
HOLDING
COMPANY LIMITED
100% held by JS
CRESVALE
2,000,000 shares SECURITIES
INTERNATIONAL
LIMITED
-245-
152,669
6,742,588
128,544
3,000
700,000
100,000
268,616
3,180
(CAYMAN) LIMITED
61,557
270,585
1,387,662
1,513
25
132
25
172
11,316
5,287,266
88,885
197,048,450
1,501,675
1,925,533
890,714
88,500
87,842
3,806
30,325
28,600
360
(Shanghai)Co., Ltd.
Note 1: The exchange rates used for the balance sheet (US: 1: 31.65; HK: 1:7.7574).
Note 2: The exchange rates used for the income statement (US: 1:30.3057; HK: 1:7.7558).
1,795,250
303,527
6,699
3,000
300,000
215,537,358
15,798,890
Issued
Capital
Jih Sun International Commercial Bank
Limited
Agency Co., Ltd.
Jih Sun Securities Investment Consulting
Co., Ltd.
LIMITED
Company Name
Unit: NTD thousand
49,336
0
0
84,036
28,240
0
0
0
3,733
49,266
493,670
528,393
8,209
5,418,136
1,037,819
61,532
270,453
1,387,637
303,355
117,228
1,455,322
63,784
5,186
18,488,908
(2,872)
(172)
(55,454)
(90)
(549)
46,923
3,015
4,248
30,819
59,900
508
1,172,728
(2,891)
340
(2.89)
0.16
(0.12)
(0.61)
(46)
(50,098)
0.30
(0.91)
0.11
0.44
1.18
166.41
1.43
0.80
3,221
(47,030)
3,355
4,356
82,944
49,925
429
1,263,437
Earnings
Operating Operating Current period (losses) per
Total assets Total liability Net Worth
share
Revenue
Profits
profit (loss)
(dollars)
11,572,127
39,223,177
17,340,671
21,882,506 3,804,523
981,703
1,237,995
1.07
6. The Performance of the Affiliated Company
-246-
V.
None.
Other supplementary information:
IV. Any occurrences of events defined under Article 36, Paragraph 3, Subparagraph 2 of the Securities and
Exchange Act in the last year up till the publication date of this annual report that significantly impacted
the shareholders equity or the securities prices must be disclosed: None
None.
III. The disposal of the Company’s shares by its subsidiaries during the last financial year, up to the publication
date of this annual report:
.
II. Private placements of securities in the last year up till the publication date of this annual report
(I) Not applicable
and Its Subsidiaries
Consolidated Financial Reports as
of 31 December 2014
-247-
(English Translation of Financial Report Originally Issued In Chinese)
JIHSUN FINANCIAL HOLDING CO., LTD.
AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2014 AND 2013
AND
INDEPENDENT ACCOUNTANTS’ AUDIT
REPORT
The reader is advised that these financial statements have been prepared originally in Chinese. In the event of a conflict in
interpretation between these financial statements and the original Chinese version, interpretations as found in the original
Chinese version shall prevail.
Address: 10F, No. 85, 87 Sections 2, Nanjing E. Road, Taipei, Taiwan, R.O.C.
Telephone:886-2-2561-5888
-248-
(English Translation)
Independent Accountants’ Audit Report
The Board of Directors
JihSun Financial Holding Co., Ltd.
We have audited the accompanying consolidated balance sheets of JihSun Financial Holding Co., Ltd. and its
subsidiaries as of December 31, 2014 and 2013, and the related consolidated statements of comprehensive
income, consolidated statement of changes in equity and consolidated statement of cash flows for the years
ended December 31, 2014 and 2013. These consolidated financial statements are the responsibility of JihSun
Financial Holding Co., Ltd. management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with the Rules Governing Auditing and Certification of Financial
Statements of Financial Institutions by Certified Public Accountants and generally accepted auditing standards in
the Republic of China. Those rules and standards require that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated
financial statements. An audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall consolidated financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
consolidated financial position of JihSun Financial Holding Co., Ltd. and its subsidiaries as of December 31,
2014 and 2013, and the results of its consolidated operations and consolidated cash flows for the years then
ended, in conformity with the Regulations Governing the Preparation of Financial Reports by Financial Holding
Companies, Regulations Governing the International Financial Reporting Standards, International Accounting
Standards, International Financial Reporting Interpretations, and Standarding Interpretations endorsed by the
Financial Supervisory Commission of the Republic of China.
Taipei, Taiwan, R.O.C.
March 19, 2015
Notice to Readers
The accompanying financial statements are intended only to present the financial position, results of operations and cash
flows in accordance with IFRSs accepted by the Financial Supervisory Commission and not those of any other jurisdictions.
The standards, procedures, and practices to review such financial statements are those generally accepted and applied in the
Republic of China.
The auditors’ report and the accompanying financial statements are the English translation of the Chinese version prepared
and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of, the English and
Chinese language accountants’ report and financial statements, the Chinese version shall prevail.
-249-
-250-
TOTAL ASSETS
ʳ ASSETS
Cash and cash equivalents(Notes 4(E) and 6(A))
Due from the central bank and call loans to banks(Note
6(B))
Financial assets at fair value through profit or loss(Notes
4(H) and 6(C)(R) and 8)
Available-for-sale financial assets—net(Notes 4(H) and
6(D)(R))
Securities purchased under resell agreements(Notes 4(F)
and 6(E))
Receivables—net(Notes 4(G)(H) and 6(F) and 7(B))
Current tax assets(Notes 4(T) and 6(G))
Loans discounted—net(Notes 4(H) and 6(H) and 7(B))
Held-to-maturity financial assets—net(Notes 4(H) and
6(I))
Investments accounted for using equity methodЁ
net(Notes 4(I) and 6(J))
Restricted assets—net(Note 8)
Other financial assets—net(Notes 4(H)(N) and 6(K) and
8)
Investment property—net(Notes 4(J) and 6(L) and 8)
Property, plant and equipment—net(Notes 4(K) and 6(M)
and 8)
Intangible assetsЁnet(Notes 4(M) and 6(N))
Deferred tax assets(Notes 4(T) and 6(AC))
Other assetsЁnet(Notes 4(S)(U) and 6(O)(AB))
(English Translation of Financial Report Originally Issued in Chinese)
2
1
-
-
-
572,476
7,748,179
401,088
5,391,089
212,519
57,778
2,822,647
100
246,273,163
151,931
75,041
1,635,924
350,347
5,530,584
522,417
8,233,702
245,647
20,269,472
400,602
140,893,714
300,000
-
11,281,874
23,621,630
2013.12.31
Amount
8,451,281
24,308,997
1
2
3
100
-
-
-
-
8
57
-
-
5
10
и
4
10
TOTAL LIABILITIES AND EQUITY
(The accompanying notes are an integral part of financial statements.)
$ 258,354,022
3
-
257,376
56
-
-
19,878,044
348,298
143,960,130
300,000
8
3
8,479,415
-
18
45,670,933
50,504
3
6
и
2014.12.31
Amount
$ 7,337,534
14,866,012
LIABILITIES AND EQUITY
LIABILITIES:
Deposits from the central bank and banks(Note 6(P))
Financial liabilities at fair value through profit or loss(Notes
4(H) and 6(Q))
Securities sold under repurchase agreements(Notes 4(F) and
6(R))
Commercial paper issued—net(Note 6(S))
Payables(Notes 4(G) and 6(T))
Current tax liabilities(Notes 4(T) and 6(U))
Deposits (Notes 6(V) and 7(B))
Financial debentures(Note 6(W))
Other borrowings(Note 6(X))
Provisions(Notes 4(O) and 6(Y)(AB))
Other financial liabilities(Notes 4(N) and 6(Z))
Deferred tax liabilities(Notes 4(T) and 6(AC))
Other liabilities(Note 6(AA))
! ! Total Liabilities
Equity attributable to owners of parent:
Capital:(Notes 4(X) and 6(AE))
Common stock
Retained earnings:(Note 6(AF))
ʳ ʳ Legal reserve
ʳ ʳ Special reserve
ʳ ʳ Unappropriated earnings
Other equity interest(Note 6(AE))
Non-controlling interests
ʳ ʳ Total Equity
Significant commitments and contingencies(Notes 4(Y)
and 9)
Significant subsequent events(Note 11)
(Expressed in Thousands of New Taiwan Dollars)
AS OF DECEMBER 31, 2014 AND 2013
CONSOLIDATED BALANCE SHEETS
JIH SUN FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES
$ 258,354,022
860,069
511,636
2,441,410
(110,210)
27,740
35,882,462
32,151,817
14
1
1
12
86
3
100
-
-
-
-
69
1
2
4
3
7,199,640
4,542,932
10,281,806
4,384
178,507,598
2,500,000
810,000
287,901
7,507,035
72,464
540,758
222,471,560
3
1
-
%
$ 6,645,253
3,571,789
2014.12.31
Amount
246,273,163
688,362
417,197
1,717,067
(176,955)
27,904
33,664,655
30,991,080
3,877,989
12,000,655
379,732
169,315,508
3,000,000
250,000
368,164
5,008,056
75,537
689,379
212,608,508
5,746,601
11,056,736
840,151
2013.12.31
Amount
14
1
13
86
2
69
1
2
5
2
5
100
-
-
-
-
-
-
%
JIHSUN FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2014 And 2013
(Expressed in thousands of New Taiwan Dollars, except for earnings per share)
Revenue from interest(Notes 4(P) and 6(AH) and 7(B))
LessǺ
ǺInterest expenses(Notes 4(P) and 6(AH) and 7(B))
ʳ ʳ Net interest income
ʳ Net income except interest
Net service fee (charge) and commissions income(Notes 4(P) and 6(AI))
Gains on financial assets or liabilities at fair value through profit or loss(Notes 4(H)
and 6(AJ))
Realized gains on available-for-sale financial assets(Notes 4(H) and 6(AK))
Foreign exchange gains
Reversal of impairment loss on assets(Notes 4(Q)(R))
Share of profit of associates and joint ventures accounted for using equity
method(Notes 4(I) and 6(J))
Gains on sale of foreclosed collaterals
Other non-interest incomes (Note 6(AL))
ʳ ʳ Subtotal
ʳ ʳ ʳ Net income
Reversal of provisions for bad debt expenses and guarantee liability(Notes
4(Q)(W) and 6(F)(H)(Y))
Employee benefits expenses(Notes 4(U) and 6(AM))
Depreciation and amortization expenses(Notes 4(J)(K)(M) and 6(AN))
Other general and administrative expenses(Note 6(AO))
ʳ ʳ Total operating expenses
Income from continuing operations
Tax expense(Notes 4(T) and 6(AC))
Profit
Other comprehensive income:
Other comprehensive income, before tax, exchange differences on translation
Other comprehensive income, before tax, available-for-sale financial assets
Other comprehensive income, before tax, actuarial (losses) gains on defined benefit
plans
Share of other comprehensive income of associates and joint ventures accounted for
using equity method
Income tax related to components of other comprehensive income
Other comprehensive income, net of tax
Comprehensive income
Profit, attributable toΚ
Κ
Profit, attributable to owners of parent
Profit, attributable to non-controlling interests
For the years ended December 31
2014
2013
Amount
Amount
и
$ 4,721,802
59
4,271,959
20
1,502,670
1,581,049
3,140,753
39
2,769,289
$
$
$
$
Basic earnings per share(Dollar)(Notes 4(V) and 6(AG))
Diluted earnings per share(Dollar)(Notes 4(V) and 6(AG))
3,179,127
495,045
43
7
3
79
19,413
231,876
3,019
11,647
3
289,558
128,632
19,401
15,266
4
2
(93)
80
(84)
(24)
85,407
(20,200)
(2,133)
$
Comprehensive income attributable toΚ
Κ
Comprehensive income, attributable to owners of parent
Comprehensive income, attributable to non-controlling interests
41
11
-
3,450,032
269,322
1,960,908
5,680,262
2,536,775
(91,640)
2,445,135
$
85,132
381,462
4,593,623
7,362,912
(169,368)
1
5
62
100
(2)
43
3
25
71
31
(1)
30
3,300,077
275,824
1,818,565
5,394,466
2,137,814
(53,815)
2,083,999
45
4
25
74
28
1
34,720
(231,215)
14,078
-
82
-
1,900
65,056
2,510,191
-
125
1
31
2,443,092
2,043
2,445,135
-
2,508,155
2,036
2,510,191
-
-
6
61
100
(2)
30
30
31
31
0.76
0.76
(3,931)
(186,223)
1,897,776
28
-
(100)
19
6
9
13
5
(2)
8
5
19
70
17
-
146
(91)
(115)
-
(34)
(3)
(3)
25
2,081,119
2,880
2,083,999
-
1,894,872
2,904
1,897,776
-
-251-
58
20
38
Change in
ʘ
11
5
13
3,281,090
884,028
454,106
4,885,179
8,025,932
(191,105)
$
и
28
148
135
32
17
(29)
28
25
25
0.66
0.65
32
(30)
-252-
$
-
(2,218,469)
-
1,538,885
2,218,469
30,991,080
-
1,160,737
32,151,817
Preferred
stock
2,218,469
-
Common
stock
27,233,726
-
171,707
860,069
194,756
688,362
-
Legal
reserve
493,606
-
94,439
511,636
-
(170,804)
417,197
-
Special
reserve
588,001
-
Retained earnings
(171,707)
( 94,439)
(290,184)
(1,160,737)
2,441,410
(194,756)
170,804
(384,721)
(1,538,885)
1,717,067
2,443,092
(1,682)
2,441,410
Unappropriated
earnings
1,571,721
2,081,119
11,785
2,092,904
(157,213)
(242,620)
85,407
85,407
Exchange
differences
resulting from
translating the
financial
statements of a
foreign operation
(277,340)
34,720
34,720
-
-
-
47,003
(18,662)
(18,662)
65,665
Unrealized
gains (losses) on
available-forsale financial
assets
298,417
(232,752)
(232,752)
Other equity
NoteΚFor the years ended December 31, 2014 and 2013, directors’ remuneration and employee bonuses were deducted from the statements of comprehensive income, please refer to Note 6(AF).
Balance—January 1, 2013
Profit
Total comprehensive income
Earnings appropriation and distribution:
ʳ Legal reserve
ʳ Special reserve
ʳ Cash dividendsЁcommon stock
ʳ Stock dividendsЁcommon stock
Conversion of preferred stock to common stock
Changes in non-controlling interests
Balance—December 31, 2013
Profit
ʳ Legal reserve
ʳ Special reserve
ʳ Cash dividendsЁcommon stock
ʳ Stock dividendsЁcommon stock
Balance—December 31, 2014
$
Capital stock
(Expressed in thousands of New Taiwan Dollars)
FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(110,210)
(176,955)
66,745
66,745
Total
21,077
(198,032)
(198,032)
(290,184)
35,854,722
(384,721)
33,636,751
2,443,092
65,063
2,508,155
-
-
(2,200)
27,740
(1,913)
27,904
2,043
(7)
2,036
Total equity
attributable to
Non-controlling
owners of
interests
parent
32,126,600
26,913
2,081,119
2,880
24
(186,247)
1,894,872
2,904
(290,184)
(2,200)
35,882,462
(384,721)
(1,913)
33,664,655
2,445,135
65,056
2,510,191
Total
32,153,513
2,083,999
(186,223)
1,897,776
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013
For the years ended December 31
2014
2013
Cash flows from operating activities:
ʳ Profit before tax
ʳ Adjustments:
ʳ Adjustments to reconcile profit (loss)
ʳ ʳ ʳ Depreciation expenses
ʳ ʳ ʳ Amortization expenses
ʳ ʳ ʳ Interest expenses
ʳ ʳ ʳ Finance income
ʳ ʳ ʳ Interest income
ʳ ʳ ʳ Dividends earned
ʳ ʳ ʳ Valuation gains on financial assets and liabilities
ʳ ʳ ʳ Provisions for bad debt expenses and guarantee liability
ʳ ʳ ʳ Share of profit of associates and joint ventures accounted for using equity method
ʳ ʳ ʳ Gains on disposal of property and equipment
ʳ ʳ ʳ Losses on retirement of property and equipment
ʳ ʳ ʳ Property and equipment transferred to expenses
ʳ ʳ ʳ Gains on disposal of investments
ʳ ʳ ʳ Reversal of impairment loss on financial assets
ʳ ʳ ʳ Reversal of impairment loss on non-financial assets
ʳ ʳ ʳ Gains on disposal of foreclosed collaterals
! ! ! ! Subtotal of income and expense items with no effect on cash flows
ʳ ʳ Changes in operating assets and liabilities:
ʳ ʳ ʳ Net changes in operating assetsΚ
ʳ ʳ ʳ ʳ Due from the central bank and call loans to banks
ʳ ʳ ʳ ʳ Financial assets at fair value through profit or loss
ʳ ʳ ʳ ʳ Securities purchased under resell agreements
ʳ ʳ ʳ ʳ Receivables
ʳ ʳ ʳ ʳ Loans discounted
ʳ ʳ ʳ ʳ Available-for-sale financial assets
ʳ ʳ ʳ ʳ ʳ Net changes in operating assets
ʳ ʳ ʳ Net changes in operating liabilities:
ʳ ʳ ʳ ʳ Deposits from the central bank and banks
ʳ ʳ ʳ ʳ Financial liabilities at fair value through profit or loss
ʳ ʳ ʳ ʳ Securities sold under repurchase agreements
ʳ ʳ ʳ ʳ Payables
ʳ ʳ ʳ ʳ Deposits
ʳ ʳ ʳ ʳ Provisions
ʳ ʳ ʳ ʳ Net changes in operating liabilities
ʳ ʳ ʳ ʳ ʳ Net changes in operating assets and liabilities
ʳ ʳ ʳ Sum of adjustments
ʳ ʳ Cash (used in) provided by operating activities
ʳ ʳ Interest received
ʳ ʳ Dividends received
ʳ ʳ Interest paid
ʳ ʳ Income tax received
ʳ ʳ Income tax paid
! ! ! Net cash flows (used in) provided by operating activities
Cash flows from investing activities:
Purchase of property and equipment
Purchase of intangible assets
Proceeds from disposal of property and equipment
Acquisition of financial assets at cost
Proceeds from disposal of financial assets at cost
Proceeds from capital reduction of financial assets at cost
(Increase) decrease in restricted assets
Proceeds from disposal of foreclosed collaterals
Decrease in other financial assets
Increase in other assets
! ! Net cash flows (used in) provided by investing activities
Cash flows from financing activities:
Increase (decrease) in commercial paper issued
Increase (decrease) in other liabilities
Repayment of bank notes payable and bonds
Increase (decrease) in other financial liabilities
Decrease in other liabilities
Cash dividends paid
! ! Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents, at the beginning of the period
Cash and cash equivalents, at the end of the period
Components of cash and cash equivalents:
Cash and cash equivalents recognized in the balance sheet
Due from the central bank and call loans to banks which meet IAS 7 definition of cash and cash equivalents
Cash and cash equivalents, at the end of the period
$
2,137,814
201,125
68,197
1,581,049
(80,729)
(4,721,802)
(196,638)
(485,238)
132,697
(11,647)
(110)
1,818
281
(7,045)
(3,019)
213,627
62,197
1,502,670
(103,309)
(4,271,959)
(145,111)
(140,101)
346,589
(15,266)
(11)
1,306
-
(3,521,061)
(4,272)
(15,129)
(85,132)
(2,653,901)
(234,238)
(20,292,236)
(50,504)
376,004
(3,199,529)
2,782,259
(20,618,244)
94,754
10,286,385
4,979
(3,004,737)
(8,423,280)
2,970,592
1,928,693
(4,411,483)
1,459,809
1,453,039
(1,706,997)
9,192,090
(70,475)
5,915,983
(14,702,261)
(18,223,322)
(15,686,547)
4,819,549
196,626
(1,593,283)
74,233
(472,826)
(12,662,248)
2,765,535
389,808
(6,367,067)
1,113,845
1,899,518
(81,239)
(279,600)
1,649,093
(1,004,808)
1,133,006
4,430,947
145,111
(1,514,651)
-
(124,138)
4,070,275
(106,149)
(41,765)
15
(21,386)
(124,925)
(119,462)
284
16,460
165,377
(50,059)
82,649
536,049
509,483
428,218
(21,030)
1,366,084
313,782
(1,198,297)
(996,840)
$
$
$
-253-
2,536,775
664,943
560,000
(500,000)
2,498,979
(148,621)
(290,184)
(2,200)
2,782,917
85,201
(10,790,970)
28,465,464
17,674,494
7,337,534
10,336,960
17,674,494
(1,247,589)
(150,000)
(751,021)
(342,794)
(384,721)
(1,913)
(2,878,038)
34,565
2,592,886
25,872,578
28,465,464
8,451,281
20,014,183
28,465,464
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2014 And 2013
(All amounts expressed in thousands of New Taiwan dollars
, unless otherwise indicated)
1.
Basis of Presentation
JihSun Financial Holding Co., Ltd. (the “Company”) was established to comply with the trend in
global financial development, respond to government financial reforms, achieve greater
economies of scale, extend management efficiency, and strengthen financial cross-industry market
competitiveness. In order to cross-sell across JIHSUN group, share client sources, raise
management efficiency and enjoy tax benefits, JihSun International Commercial Bank Co., Ltd.
and JihSun Securities Co., Ltd. held extraordinary shareholders’ meetings on December 14, 2001,
respectively. The resolution reached at the meeting was to announce an exchange of shares
between the two companies and transfer into a new “JihSun Financial Holding Co., Ltd.”. The
date of transfer was settled on February 5, 2002, and the Company was officially established on
that date. The Company's registered address is 10F, No. 85, 87 Section 2, Nanjing E. Road, Taipei,
Taiwan, R.O.C.
The principal business and other activities approved by the competent authority of the
Government are H801011 financial holding company business. The Company conducts the
business in the following sectors: Investment banking, bills financing, credit cards, insurance,
securities, futures, venture capital, investment of overseas financial institutions and other financial
related businesses approved by the competent authority.
On May 21, 2002, the Company’s Board of Directors resolved to approve the case of merger
between the Company, the Company’s subsidiary, JihSun Securities Co., Ltd. and Yuan Xin
Securities Co., Ltd. According to the terms and conditions stipulated in the merger agreement,
JihSun Securities Co., Ltd. as the surviving entity, firstly merged with Yuan Xin Securities Co.,
Ltd. (conversion ratio of 1.2997 shares of Yuan Xin Securities Co., Ltd. exchanged for 1 share of
JihSun Securities Co., Ltd.). The acquisition date of record was October 10, 2002. Moreover,
shares of JihSun Securities Co., Ltd. acquired by shareholders of Yuan Xin Securities Co., Ltd.
were exchanged for shares of the Company at a conversion ratio of 1.444 shares of the Company
to one share of JihSun Securities Co., Ltd. as approved by SFC Tai-Cai-Zheng-Zi(1) No.
0920130277 dated July 15, 2003. The merger was in effect on July 15, 2003.
As of December 31, 2014 and 2013, the number of the Company’s employees were 14 and 15,
respectively, and the number of the group’s employees were 3,398 and 3,348, respectively.
2.
Approval Date and Procedures of the Financial Statements
The financial reports were approved by the board of directors on March 19, 2015.
-254-
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT’D)
3.
New Standards and Interpretations
(A)
The effect of non-application of 2013 International Financial Reporting Standards (“IFRSs”)
as accepted by the Financial Supervisory Commission
In accordance to Chin-Kuan-Chen-Shen-Zi No.1030010325 which was issued by the
Financial Supervisory Commission (FSC) on April 3, 2014, the listedΕover the counterΕ
emerging company should adopt the 2013 version of IFRSs, which are accepted by FSC,
from the year 2015 when compiling financial reports. The announcement excludes the
application of IFRS 9 “Financial Instruments.” The newly issued and revised accounting
standards and interpretations are as follows:
New Standards, Amendments and Interpretations
Amendment to IFRS 1 - Amended by "Limited Exemption from
Comparative IFRS 7 Disclosures for First-time Adopters."
Amendment to IFRS 1 - Amended by "Severe Hyperinflation and
Removal of Fixed Dates for First-time Adopters."
Amendment to IFRS 1 - Amended by "Government Loans."
Effective dates Announced by IASB
July 1, 2010
Amendment to IFRS 7 - Amended by "Disclosures - Transfers of
Financial Assets."
Amendment to IFRS 7 - Amended by "Disclosures – Offsetting
Financial Assets and Financial Liabilities."
IFRS 10 "Consolidated Financial Statements."
July 1, 2011
IFRS 11 "Joint Arrangements."
IFRS 12 "Disclosure of Interests in Other Entities."
IFRS 13 "Fair Value Measurement."
Amendment to IAS 1 - Amended by "Presentation of Items of
Other Comprehensive Income."
Amendment to IAS 12 - Amended by "Deferred Tax: Recovery of
Underlying Assets."
Amendment to IAS 19 - Superseded by "Employee Benefits."
Amendment to IAS 27 - Reissued as "Separate Financial
Statements."
Amendment to IAS 32 - Amended by "Offsetting Financial Assets
and Financial Liabilities."
IFRIC 20 "Stripping Costs in the Production Phase of a Surface
Mine."
July 1, 2011
January 1, 2013
January 1, 2013
January 1, 2013 (Effective for
investment entities on January 1, 2014)
January 1, 2013
January 1, 2013
January 1, 2013
July 1, 2012
January 1, 2012
January 1, 2013
January 1, 2013
January 1, 2014
January 1, 2013
Except for the following listed items, the adoption of the 2013 version of IFRSs by the
Company and its subsidiary would have no significant impact on financial reports:
(a) IAS1“Presentation of Financial Statements”
The amendments to IAS 1 modified the presentation of other comprehensive income.
Items of other comprehensive income are required to be classified by nature into (a)
items that will not be subsequently classified into profit or loss; and (b) items that will
be subsequently classified into profit or loss. The standard also regulated that items
under other comprehensive income should be presented by pre-tax amount. The related
tax effect should be disclosed separately based on the aforementioned categorization.
The Company and its subsidiary will change the presentation of the statement of
comprehensive income in conformity with the amendments.
-255-
(b) IFRS 12 “Disclosure of Interests in Other Entities”
The standard integrates and requires a wide range of disclosures about an entity’s
interests in subsidiaries, joint arrangements, associates and unconsolidated ‘structured
entities.’ The Company and its subsidiary will increase the disclosure of consolidated and
non-consolidated entities in conformity with the standard.
(c) IFRS 13 “Fair Value Measurement”
The standard defines fair value, provides a single IFRS framework for measuring fair
value and requires disclosures about fair value measurement. The Company and its
subsidiary are in the process of making an assessment of the impact of this standard. So
far, the Company and its subsidiary consider this is unlikely to have a significant impact
on the Company’s and its subsidiary’s financial statements and have enhanced its
disclosure about the fair value measurement accordingly.
(B)
The effect on newly issued IFRSs not yet accepted by the FSC
Listed as below are the accounting standards and interpretations newly issued and revised by
IASB but not yet included in the 2013 IFRSs as accepted by the FSCǺ
New Standards, Amendments and Interpretations
IFRS 9 "Financial Instruments."
Amendments to IFRS 10 and IAS 28 - Amended by "Sales or
Contributions of Assets Between an Investor and its
Associate/Joint Venture."
Amendments to IFRS 10, IFRS 12 and IAS 28-Amended by
"Related to the application of the Investment Entities
Exceptions."
Amendments to IFRS 11 - Amended by "Accounting for
Acquisitions of Interests in Joint Operations."
IFRS 14 "Regulatory Deferral Accounts."
IFRS 15 "Revenue from Contracts with Customers."
Amendment to IAS 1 – Amended by "Disclose about Going
Concern."
Amendment to IAS 16 and 38 - Amended by "Acceptable Methods
for Accounting for Depreciation and Impairment."
Amendment to IAS 16 and 41 - Amended by "Bearer Plants"
Amendment to IAS 19 - Amended by "Defined Benefit Plans:
Employee Contributions."
Amendment to IAS 27 – Amended by "Equity Method in Separate
Financial Statement."
Amendment to IAS 36 - Amended by "Recoverable Amount
Disclosures for Non-Financial Assets."
Amendment to IAS 39 - Amended by "Novation of Derivatives
and Continuation of Hedge Accounting."
IFRIC 21 "Levies."
-256-
Effective dates Announced by IASB
January 1, 2018
January 1, 2016
January 1, 2016
January 1, 2016
January 1, 2016
January 1, 2017
January 1, 2016
January 1, 2016
January 1, 2016
July 1, 2014
January 1, 2016
January 1, 2014
January 1, 2014
January 1, 2014
(a) IFRS 9 “Financial Instruments”
(1) Recognition and measurement of financial assets
With regards to financial assets, all recognized financial assets that are within the
scope of IAS 39 “Financial Instruments: Recognition and Measurement” are
subsequently measured at amortized cost or fair value. Under IFRS 9, the debt
instruments of the Company and its subsidiary are to be measured at amortized
cost if they are held within a business model whose objective is to collect the
contractual cash flows, and the contractual cash flows are for payments of
principal and interest on the principal amount outstanding only. Other financial
assets not meeting aforemetioned criteria are measured at fair value. At initial
recognition, the Company and its subsidiary may designate an equity investment,
which is not held for trading, recognizing its’ subsequent changes in the fair value
in other comprehensive income, and only dividend income is generally recognized
in profit or loss.
(2) Recognition and measurement of financial liabilities
With regards to financial liabilities, the major difference is the subsequent
measurement of financial liabilities designated at fair value through profit or loss.
The changes in fair value of the financial liabilities resulting from credit risk are
recognized in other comprehensive income, and are not allowed to reclassify in
profit or loss in subsequent period, the remaining changes in fair value are
recognized in profit or loss. If the accounting treatment of designated financial
liabilities at fair value through profit or loss resulted in or enhanced accounting
mismatching, then all changes in fair value of the financial liabilities are
recognized in profit or loss.
(b) Amendments to IAS 36 “Recoverable Amount Disclosures for Non-Financial Assets”
In issuing IFRS 13 “Fair Value Measurement”, the IASB made some consequential
amendments to the disclosure requirements in IAS 36 “Impairment of Assets”,
introducing a requirement to disclose in every reporting period the recoverable amount
of an asset or each cash-generating unit. The amendment clarifies that the disclosure
of such recoverable amount is required during the period when an impairment loss has
been recognized or reversed. Furthermore, the Company and its subsidiary are
required to disclose the discount rate if the Company and its subsidiary calculate the
recoverable amount by the fair value less costs of disposal using present value method.
Except for the aforementioned impact, the Company and its subsidiaries are
continuously assessing the possible impact on the financial position and financial
performance as a result of the adoption of the above standards and interpretations, and
the relevant impact will be disclosed when the assessment is completed.
4.
Summary of Significant Accounting Policies
The significant accounting policies adopted in preparing these consolidated financial statements
are as follows. Unless otherwise stated, the following significant accounting policies have already
-257-
applied consistently within the reporting period of these consolidated financial statements.
(A) Assertion of compliance
The Company and its subsidiaries’ consolidated financial statements were prepared in
conformity with the Regulations Governing the Preparation of Financial Reports by
Financial Holding Companies, Regulations Governing the Preparation of Financial Reports
by Public Banks, Regulations Governing the Preparation of Financial Reports by Securities
Firms, Regulations Governing the Preparation of Financial Reports by Futures Commission
Merchants (the “Regulation.”) and International Financial Reporting Standards (IFRSs),
International Accounting Standards and International Financial Reporting Interpretations
Committee announcements endorsed by the FSC.
(B)
Basis of compilation
The financial statements were composed of the consolidated balance sheet,
consolidated statements of comprehensive income, consolidated statements of changes
in equity, consolidated statement of cash flows, and other notes.
Except for the significant balance sheet items listed as below, the financial statements
are prepared on the basis of historical costs.
(a) Financial instrument measured at fair value through profit or loss (including
derivative instruments);
(b) Available-for-sale financial assets measured at fair value;
(c) Defined benefit assets, which are recognized as the net amount of pension plan
assets plus unrecognized past service cost and unrecognized actuarial losses,
minus unrecognized actuarial gains and present value of defined benefit
obligation.
The information of cash flows from operating activities is to be reported by using the
indirect method. The indirect method, whereby profit or loss is adjusted for the effects
of transactions of a non-cash nature, any deferrals or accruals of past or future
operating cash receipts or payments, and items of income or expense associated with
investing or financial cash flows. Interests paid and interests received are classified as
operating activities. However, the dividends received is also classified as operating
activities except from the dividends receive from the investment under equity method
which is classified as investing activities. Dividends paid are to be classified as
financing cash flows because it is the cost of obtaining financial resources.
The functional currency of the Company and its subsidiary are the currency of the
primary economic environment in which it operates. The Company's functional
currency is New Taiwan Dollar, and the financial reports are presented in New Taiwan
Dollar. All amounts expressed in thousands of New Taiwan dollars, unless otherwise
indicated.
-258-
(C)
Basis of consolidation
The Company compiles consolidated financial reports in accordance with IAS27 as endorsed
by the FSC. The similar items of same assets, liabilities, equity, revenue and expenses of the
Company's financial reports are summed up, with the necessary elimination of these items.
The Company's and its subsidiaries' financial reports are compiled by using the same
reporting date.
Subsidiary is an entity that substantially controlled by the Company and the Company has
the power to govern the financial and operating policies of it so as to obtain benefits from its
activities. The subsidiary’s financial reports are included in the consolidated financial reports
from the date that the Company is able to exercise control over the subsidiary until the date
when the Company ceases to control the subsidiary.
The Company's and its subsidiaries' consolidated financial reports include the Company's
and all consolidated subsidiaries' financial information as of December 31, 2014. There were
no affiliates not included in the consolidated financial statements.
In preparing consolidated financial statements, all inter-company transactions, balance and
unrealized gains (losses) among the consolidated entities are eliminated. Unless there is other
evidence to prove that the transferred asset has been impaired, all inter-company unrealized
gains (losses) among the Company and its subsidiaries are eliminated.
In preparing consolidated financial statements, the Company and its subsidiaries adopts
consistent accounting policies to the similar transactions and events in the same situations.
The consolidated entities of the consolidated financial reports include the Company and its
subsidiaries controlled by the Company. All significant inter-company transactions among
the Company and its subsidiaries have been eliminated.
-259-
(a)
Consolidation profileǺ
The subsidiaries including in the consolidated financial statements are summarized as
follows:
Investment
Company
JihSun Financial
Holding Co., Ltd.
2014.12.31
2013.12.31
JihSun Securities
Co., Ltd.
100%
100%
ϣ
JihSun International
Commercial Bank
Co., Ltd.
100%
100%
ϣ
JihSun
International
Property
Insurance
Agency Co.,
Ltd.
JihSun Life
Insurance
Agency Co.,
Ltd.
JihSun Futures
Co., Ltd.
100%
100%
99%
99%
98.138%
98.138%
JIH SUN
INTERNATIONAL
INVESTMENT
HOLDING
COMPANY
LIMITED
100%
100%
JihSun Securities
Investment
JihSun Venture
Capital Co., Ltd.
100%
100%
100%
-%
JS CRESVALE
SECURITIES
INTERNATIONAL
LIMITED
100%
100%
Brokerage, proprietary trading
underwriting, other related securities
business authorized by Hong Kong
Act.
JIH SUN
FINANCIAL
SERVICES
(CAYMAN)
LIMITED
100%
100%
Securities brokerage proprietary
trading, underwriting and financing
service, corporate and individual
financial planning, design of financial
instruments and other related
securities business authorized by local
Commercial Bank
Co., Ltd.
JihSun Securities
Co., Ltd.
ϣ
ϣ
ϣ
JIH SUN
INTERNATIONAL
INVESTMENT
HOLDING
COMPANY
LIMITED
ϣ
Subsidiary
-260-
Conducts business
JihSun Securities Co., Ltd. engages in
the activities of securities brokerage,
securities trading, securities
underwriting, securities margin
purchases and short sales, stock
transaction agency services, futures
trading, auxiliary services for futures
trading and stock warrant issuance.
JihSun International Commercial
Bank Co., Ltd. engages in the
activities of general deposits, loans
and discounts, government bond
investment and collection, stocks,
short term securities, financial bonds,
and other businesses approved by the
competent authority of the Central
Government. The trust business
includes domestic and overseas fund
trust transaction and employee
investment trust.
Property insurance agent.
Life insurance agent.
Futures brokerage and proprietary
trading.
Securities brokerage and proprietary
trading, underwriting, securities
research and analysis, corporate and
individual financial planning,
financing business, investment trust
and futures.
Provide advisory and consulting
related with securities investment on a
consigned basis.
Venture capital.
Investment
Company
Subsidiary
2014.12.31
2013.12.31
JIH SUN
INTERNATIONAL
INVESTMENT
HOLDING
COMPANY
LIMITED
JS CRESVALE
SECURITIES
INTERNATIONAL
LIMITED
JIH SUN CAPITAL
MANAGEMENT
LIMITED
100%
100%
JS CRESVALE
CAPITAL
LIMITED
100%
100%
ϣ
JihSun Investment
Consulting
100%
-%
Conducts business
government.
Overseas Fund
management, Overseas Asset
management, Other related Asset
management business authorized by
local government and proprietary
trading.
Stock brokerage, margin trading,
futures brokerage, sales of mutual
funds & other financial instruments,
other related securities business
authorized by local government.
Investment consulting, business
information consulting, Marketing
planning (except for advertising),
business management consulting,
economic information consulting,
software and grid technology
consulting.
(b)
Affiliates not included in the consolidated financial statements: None.
(c)
Affiliates with different accounting period with the parent company: None.
(d)
Affiliates with different accounting policies with the parent company: None.
(e)
Unusual risks from foreign affiliates: None.
(f)
Regulation or contract restrictions on earnings distribution of individual affiliates:
There were no regulations or contract restrictions on earnings distribution of oversea
affiliates- JIH SUN INTERNATIONAL INVESTMENT HOLDING COMPANY
LIMITED, JS CRESVALE SECURITIES INTERNATIONAL LIMITED, JS
CRESVALE CAPITAL LIMITED, JIH SUN FINANCIAL SERVICES (CAYMAN)
LIMITED and JIH SUN CAPITAL MANAGEMENT LIMITED. After the
appropriation of legal reserve in compliance with local related Acts, there is no
regulation or contract restriction on earnings distribution for JihSun Investment
Consulting (Shanghai) Co., Ltd. The remaining affiliates located in R.O.C., after the
appropriation of legal reserve and special reserve in compliance with related Acts,
there were no regulations or contract restrictions on their earnings distribution.
(D) Foreign currency
(a)
Functional currency and presentation currency
The functional currency of the Company and its subsidiaries is the currency of the
primary economic environment in which it operates. When preparing the consolidated
financial statements, each consolidated entity's result of operations and financial
position are denominated in New Taiwan Dollar (The functional currency and
presentation currency of the Company and its subsidiaries.) All amounts are expressed
in thousands of New Taiwan dollars, unless otherwise indicate.
-261-
(b)
Transactions and balances
When preparing the individual financial statement of each consolidated entity,
transactions using foreign currencies are translated into functional currency using the
exchange rate at the date of the transaction. Monetary foreign currency financial assets
and liabilities are using the spot rate at the balance sheet date, and the exchange
difference is recognized in the profit or loss of the current period. Non monetary
foreign currency financial assets and liabilities which are measured by fair value shall
be translated using the spot rate at the balance sheet date. Non monetary foreign
currency financial assets and liabilities which are not measured by fair value shall be
translated using the historical exchange rate at the date of transaction.
(c)
Foreign operations
The assets and liabilities of foreign operations are translated to New Taiwan Dollar at
exchange rates at the reporting date. The income and expenses of foreign operations,
excluding foreign operations in hyperinflationary economies, are translated to New
Taiwan Dollar at average rate. Foreign currency differences are recognized in other
comprehensive income.
When a disposal of foreign operations results in losing control, joint control or
significant impact on the operation, all cumulative exchange differences relating to that
foreign operation shall be reclassified as profit or loss. When a partial disposal includes
subsidiaries with foreign operations, the related cumulative exchange difference should
be re-attributed to the non-controlling interests in proportion. When a partial disposal
includes affiliates or joint ventures with foreign operations, the related cumulative
exchange difference should be re-attributed to profit or loss in proportion. If the
Company and its subsidiaries have no reimbursement plan or it is impossible to
reimburse in the foreseeable future, the exchange differences derived from monetary
receivables or payables to foreign operations should be regarded as part of the net
investment to that foreign operation, and recognized as other comprehensive income.
(E)
Cash and cash equivalents include cash on hand, checks for clearing, petty cash, due from
the other banks and short-term investments that are readily convertible to fixed amounts of
cash and the interest rate fluctuations have little effect on their values with a short term
maturity. Time deposits with maturity within one year held for the purpose of meeting
short-term cash commitments rather than for investment or other purposes are classified as
cash and cash equivalents due to they are readily convertible to fixed amount of cash and
insignificant risks of changes in value.
(F)
Securities under repurchase / resell agreements
Securities purchased under resell agreements are treated as financing transactions. When the
Company prepares the financial statements, the transactions are recognized as “securities
purchased under resell agreements”. The difference between the purchase price and resell
price is treated as interest income.
-262-
Securities sold under repurchase agreements are treated as financing transactions. When the
Company prepares the financial statements, the transactions are recognized as “securities
sold under repurchase agreements”. The difference between the cost and the repurchase price
shall be recognized as interest expenses.
(G) Margin loans, securities financing, refinancing and securities borrowing
Margin loans extended to customers for the purchase of securities are recorded as margin
loans receivable. Such loans are secured by the securities purchased by the customers.
Customers may redeem the collateral securities upon repayment of the loans.
Deposits collected from customers for short selling of securities are recorded as securities
financing refundable deposits. Proceeds from short selling of securities of stock loan (less
stock exchange tax, handling fee for consigned trading, and securities financing fee) are
collected as collateral and are recorded as deposits payable for securities financing.
Customers may receive the deposits and proceeds from repayment of the securities.
When the Company lacks sufficient funds for securities financing the margin customers, the
refinancing amount acquired from securities finance enterprises is recorded as refinancing
borrowings, and the stocks purchased by margin customers are collected as collateral by
securities finance enterprises.
When the Company refinances securities from securities finance enterprises, if it does not
have sufficient securities, the deposit paid is recorded as refinancing margin. Proceeds from
sale of loaned stocks collected as collateral should be transferred to securities finance
enterprises, and the amounts is recorded as refinancing collateral receivable.
Moreover, pursuant to Securities and Futures Bureau (SFB) (88) Tai-Cai- Zheng (2) No.
82416, whenever the collateral maintenance ratio of any customer’s margin account is lower
than the limit set by the government after disposal and if there is still a receivable remaining
and payment has yet not been made within the time limit specified, then the receivable
should be transferred to overdue receivable. If the securities in a customer’s margin account
cannot be disposed of, then the receivables for securities provided as collateral, in
accordance with the actual situation, should be recognized as other receivables or overdue
receivable.
Securities lending is only noted in memo, not recognized as the assets of the Company, vice
versa. The acquired collaterals are not stated in the reports if they are securities; whereas,
they should be recognized as securities lending refundable deposit if the collaterals are cash
collaterals. The securities lending revenue and service fee are recognized as securities
lending revenue.
-263-
(H) Financial assets and financial liabilities
(a)
Financial assets
All of the Company and its subsidiaries’ financial assets are classified as “loans and
receivables”, “financial assets at fair value through profit or loss”, “held-to-maturity
financial assets”, “available-for-sale financial assets” and “financial assets carried at
cost”.
(1) Loans and receivables
Loans and receivables include the origination and non-origination. The originated
loans and receivables are considered as providing money, products or services to
the debtor. The non-originated loans and receivables are considered as anything
except from the originated ones.
Loans and receivables are recognized initially at fair values which consist of
attributable price acquired, significant transaction costs, payment or receipt of
significant service fees and all other premiums or discounts. Subsequent
evaluation uses interest method. However, in conformity with the article 10-7 and
article 10-10 of the Regulations Governing the Preparation of Financial Reports by
Public Banks, while the influences of discount are insignificant, the loans and
receivables could be measured by initial recognized amount.
(2) Financial assets at fair value through profit or loss
A financial asset is classified in this category if it is classified as held-for-trading
or is designated as such on initial recognition. Financial assets are classified as
held for trading if they have been acquired principally for the purpose of selling or
repurchasing in the near term. Attributable transaction costs are recognized in
profit or loss as incurred. The subsequent evaluations are measured at fair value,
and changes in fair value are recognized in profit or loss. Purchases or sales of
financial assets under a customary way use trade date accounting.
Financial assets are designated as at fair value through profit or loss at initial
recognition under one of the following situations:
A. Designation eliminates or significantly reduces a measurement or recognition
inconsistency that would otherwise arise from measuring assets or liabilities
or recognizing the gains and losses on them on a different basis;
B. Performance of the financial asset is evaluated on a fair value basis;
C. A hybrid instrument contains one or more embedded derivatives.
-264-
Financial assets held for trading and financial assets designated as at fair value
through profit or loss on initial recognition are recognized under “financial assets
at fair value through profit or loss” in the balance sheet. Any change in fair value
of financial assets at fair value through profit or loss are recognized under “gain or
loss on financial assets and liabilities at fair value through profit or loss” in the
statement of comprehensive income.
The derivative financial instruments held by the Company and its subsidiaries,
except for those designated as hedging instruments, are classified under these
accounts.
(3) Held-to-maturity financial assets
Debt instruments which the Company and its subsidiaries have a positive intention
and the ability to hold to maturity are recorded under held-to-maturity financial
assets and measured at amortized cost. The financial instruments are initially
recognized at fair value plus any directly attributable transaction cost. Subsequent
to initial recognition, held-to-maturity financial assets are measured at amortized
cost using the effective interest method, less any impairment losses. Purchases or
sales of financial assets under a customary way are using trade date accounting.
(4) Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets that are
designated as available-for-sale or are not classified in any of the other categories
of financial assets. Available-for-sale financial assets are recognized initially at
fair value plus any directly attributable transaction cost. Subsequent to initial
recognition, they are measured at fair value and changes therein, except for
impairment losses, interest income calculated using the effective interest method,
dividend income, and foreign currency differences on available-for-sale debt
instruments, are recognized in other comprehensive income and presented in the
unrealized valuation gain or loss on available-for-sale financial assets. When an
investment is derecognized, the gain or loss accumulated in equity is reclassified
to profit or loss, and is included in statement of comprehensive income account as
realized gain or loss on available-for-sale financial assets. Under a customary way
purchases or sales of financial assets shall be recognized and derecognized, using
trade date accounting.
(5) Financial assets carried at cost
Equity instruments with no quoted market price are initially recognized at whose
fair value plus transaction costs. When the variances of reasonable estimation of
the financial assets’ fair value are considered as significance, and the probabilities
of the different estimation cannot be estimated reasonability, resulting in the
assets’ fair value cannot be measured reliably, should adopt cost method to
measure the financial assets.
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(b)
Financial liabilities
Financial liabilities at fair value through profit or loss which held by the Company and
its subsidiaries are including held-for-trading and designated as at fair value through
profit or loss financial liabilities. A financial liability is held for trading if it is acquired
or incurred principally for the purpose of selling or repurchasing in the near term; on
initial recognition it is part of a portfolio of identified financial instruments that are
managed together and for which there is evidence of a recent actual pattern of
short-term profit taking. A derivative, except for a derivative that is a financial
guarantee contract or a designated and effective hedging instrument, is classified as
instrument held for trading as well. Financial liabilities held for trading include
obligations to deliver financial assets borrowed by a short seller.
Financial liabilities are classified as held-for-trading and designated as at fair value
through profit or loss, both of them are classified as “Financial liabilities measured at
fair value through profit or loss”. The changes of fair value changes are recognized in
profit or loss, and are included in statement of comprehensive income account as “Gain
or loss on financial assets or liabilities measured at fair value through profit or loss”.
(c)
Derivative instruments
Derivatives instruments is initially recognized at fair value on contract date and
subsequently measured at fair value. Fair value includes quoted price in an active
market, occurring market transaction prices, discounted cash flow model or option
pricing model techniques. When the fair value of a derivative instrument is positive, it
is classified as a financial asset, and when the fair value is negative, it is classified as a
financial liability.
The Company should accounts for an embedded derivative separately from the host
contract when the host contract is not itself carried at fair value through profit or loss,
the terms of the embedded derivative would meet the definition that the economic
characteristics and risks of the embedded derivative are not closely related to the
economic characteristics and risks of the host contract, or the entire hybrid contract is
not designated as at fair value through profit or loss. In addition, the embedded
derivative is recognized as financial asset or liability at fair value through profit or loss.
(d)
Derecognition of financial assets and liabilities
The Company and its subsidiary shall derecognize a financial asset when the
contractual rights of the cash flows from the financial asset expire or transfers
substantially all the risks and rewards of ownership of the financial assets. While the
financial liabilities are discharged or cancelled, or expired, the financial liability shall
be derecognized.
When the Company and its subsidiaries have securities borrowing transactions or
pledge securities or bonds as collaterals, such financial assets shall not be derecognized
because the Company and its subsidiaries substantially still bear all the risks and
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rewards of the financial assets.
(e)
Offsetting of financial instrument
The Company and its subsidiaries present financial assets and liabilities on a net basis
when the Company and its subsidiaries present have the legally enforceable right to
offset and intend to settle such financial assets and liabilities on a net basis or to realize
the assets and settle the liabilities simultaneously.
(f)
Reclassification of financial assets
The reclassification of non-derivative financial assets is in accordance with IAS 39 as
endorsed by FSC.
(I)
Investments in associates
Investees in which the Company and its subsidiaries directly or indirectly hold more than
20% of the outstanding stock with voting right, or hold less than 20% but are able to exercise
significant influence over the investees are accounted for under the equity method and
initially recognized at cost. Goodwill, relating to an associate is included in the book value of
the investment.
After the date of acquisition the Company’s share of the profit or loss of the associates is
recognized in profit or loss. Distributions received from an associate reduce the book value
of the investment. Adjustments to the book value of the investment may also be necessary
for changes in the Company and its subsidiaries’ proportionate interest in the associates
arising from changes in the associates’ other comprehensive income.
Changes in ownership interest in a subsidiary that do not result in a loss of control are
accounted for as equity transactions. Adjustments to the book value of the controlling
interest and non-controlling interests are to reflect the changes in the subsidiaries’
proportionate interest. The difference between the adjustment amount of non-controlling
interests and the fair value of the consideration paid or received is recognized in equity
adjustment.
When investments in foreign operating institutions are under equity method, the exchange
differences, which are accounted under equity as cumulative translation adjustment, are
determined by the translation of the financial statement of foreign currency into domestic
currency. The adjustments will be incorporated into the profit or loss when the foreign
operating institution is sold out or under liquidation.
(J)
Investment property
The investment property possessed by the Company and its subsidiaries is the property held
either to earn rental income or for capital appreciation or for both. Investment property
includes office buildings and lands rented in a form of operating lease.
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Properties held by the Company’s subsidiary, JihSun International Commercial Bank Co.,
Ltd. are all in compliance with Article 75 of “The Banking Act of the Republic of China”.
Properties are classified as investment property if it is held to earn rentals or for appreciation
(or both), each floor’s property right is separate and the entire floor is rented or the owner
occupies less than 5% of the floor. Investment properties also include buildings and land
held under an operating lease and are treated in accordance with IAS 40.
Part of properties held by the Company’s subsidiary, JihSun Securities Co., Ltd. may be for
operation and the remaining is used to generate rental income or capital appreciation.
If the property held by JihSun Securities Co., Ltd. can be sold individually, it should be
recognized separately. Property for self-use is following IFRS 16 endorsed by FSC, and the
property held either to earn rental income or for capital appreciation or for both is recognized
as investment property which is in accordance with IFRS 40 endorsed by FSC. If each part
of the property cannot be sold individually and the self-use proportion is not material, then
the entire property is regarded as investment property.
The fair value of investment property is evaluated by the Appraisal Department of the
Company’s subsidiary, JihSun International Commercial Bank Co., Ltd. every year.
Cost model is used for the initial recognition and the subsequent measurement of the
Company and its subsidiaries’ investment property. Depreciation is based on the cost of the
asset minus its residual value and is calculated by using the straight-line method during its
estimated useful lives. If the useful life of a component of the assets is different from the
other components of the asset, its depreciation is recognized separately. Depreciation is
recognized in profit or loss.
Land is not affected by depreciation.
The estimated useful lives are as follows:
Main part of the buildings
10-55 years
Attachment of the buildings
5 years
The replacement cost should be recognized in the book value of the investment property,
given that the criteria of recognition can be met and the book value of the replaced items
should be derecognized. The maintenance cost shall be recognized as “Other general and
administrative expenses” when incurred.
(K) Property, plant and equipment
Property, plant and equipment are recognized after deducting any accumulated depreciation
and accumulated impairment losses from historical cost. The historical cost includes any
costs directly attributable to acquire the assets.
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Subsequent expenditure of property, plant and equipment shall be recognized as an asset or
be included in the book value of assets, when, and only when it is probable that the future
economic benefits that are associated with property, plant and equipment will flow to the
Company and its subsidiaries, and the cost of property, plant and equipment can be measured
reliably. The book value of those parts that are replaced is derecognized. The maintenance
expense shall be recognized as “Other general and administrative expenses” when incurred.
(a)
Depreciation
Depreciation is determined after deducting its residual amount, and it shall be allocated
on a systematic basis over its useful life. Items of property, plant and equipment with
the same useful life may be grouped in determining the depreciation charge. The
remainder of the items may be depreciated separately. The depreciation charge for each
period shall be recognized in profit or loss.
Land is not affected by depreciation, but other property, plant and equipment are
depreciated to their residual values using straight-line method during their useful life.
If property, plant and equipment are still usable after their original estimated useful life,
the estimated residual amount may still be depreciated over their acceptable useful
lives.
The estimated useful lives are as follows:
Main part of the building
10-55 years
Attachment of the building
5 years
Miscellaneous equipment
3-10 years
Leasehold improvement
3-15 years
Decommissioning costs: in accordance with the period of lease contract.
(b)
Gain or loss
The gain or loss arising from the disposition of an item of property, plant and
equipment is as the difference between the disposal proceeds and the carrying amount
of the item, shall be recognized as “Other non-interest incomes (losses)” in the
statements of comprehensive income.
(c)
Reclassification to investment property
The property is reclassified to investment property at its book value when the use of
the property changes from owner-occupied to investment property.
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(L)
Lease
In compliance with the International Accounting Standard 17, all leases contract are
classified as operating leases. Lease receivables and payables are recognized by using a
straight-line basis, and accounted as “Other non-interest incomes (losses)” and “Other
general and administrative expenses”, respectively.
(M) Intangible assets
Intangible assets include computer software and goodwill.
The straight-line method can be used to amortize the computer software over its useful life,
and the expected maximum useful life is five years.
The goodwill shall be recognized as the amount of the consideration transferred excess of the
acquisition-date amounts of the identifiable assets acquired. The amount of goodwill which
derived from the business combination does not need to be amortized. Goodwill is tested for
impairment periodically each year. An impairment loss is recognized when the recoverable
amount is less than the book value. Impairment losses cannot be reversed once an
impairment loss has been recognized.
(N) Customer margin deposit and futures dealer equity
(a)
Customer margin deposit
The difference between margins and premiums duly collected from a futures trader by
an FCM in the course of futures brokerage business.
(b)
Futures dealer equity
Futures dealer equity refers to the difference between margins and premiums deposited
by futures dealer and the corresponding settlement fair value and it is accounted under
current liabilities of the balance sheet. The amount can’t be offset unless it belongs to
the same category account of same customer. When a debit balance arises on Futures
trader’s equity, it shall be accounted for as futures exchange margins receivable.
(O) Provisions
The Company recognizes the provision under the circumstances below:
(a)
An entity has a present obligation, legal or constructive, as a result of a past event;
(b)
It is probable that an outflow of economic benefits resources will be required to settle
the obligation; and
(c)
The amount of the obligation can be estimated reliably.
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The amount recognized as a provision should be the estimate of the expenditure required to
settle the present obligation at the end of the reporting period. The individual provisions of
the Company and its subsidiaries are the best estimates of the individual results.
(P)
Revenue recognition
(a)
Interest income and expense
The interest income and expense of the Company and its subsidiaries are recognized on
an accrual basis.
The interest income from loans of the Company’s subsidiary, JihSun International
Commercial Bank Co., Ltd. is evaluated by the amortized cost under effective interest
rate method and also refers to the Materiality Principle of Banking Industry- Adjusting
the Recognition of Interest Income from Agreed Interest Method to Effective Interest
Rate Method (“the Materiality Principle”) drafted by the Bankers Association of the
Republic of China. According to the Materiality Principle, loans and receivables
should be adjusted from agreed interest method to effective interest method when the
credit periods are specific and over one year, and when one of the following criteria is
met:
(1)
The agreed interest rate of loans and receivables is zero.
(2)
Loans and receivables with stepped interest are still at the step-phase.
(3)
The non-service fees income of a single loan or receivable is over 1% of the loan
facility.
Loans and receivables meeting aforesaid criteria should be calculated by the difference
between interest under agreed interest method and interest under effective interest
method by products. The difference is significant when the difference exceeds 5% of
the sum of interest revenue and service fees income for the reporting period of the
Bank and these loans and receivables should be adjusted into effective interest method
to calculate interest income on the reporting date.
The Company’s subsidiary, JihSun Securities Co., Ltd., recognized interest revenue
and interest expense on margin loans and short sales of securities and bonds purchased
under resale agreements, bonds sold under repurchase agreements respectively over the
loan period, short selling period and trading period on an accrual basis.
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(b)
Service fees income and commissions income
Service fees income and commissions income of the Company’s subsidiary, JihSun
International Commercial Bank Co., Ltd. are recognized on an accrual basis when the
service is provided. Loan commitment fees received in advance of highly probable
loan agreement is considered to be the returns of such financial instruments. Such loan
commitment fees and related transaction costs should be deferred and the effective
interest rate should be adjusted. For the syndicated loan, in which the Bank does not
keep any loan proportion (or which the Bank keeps some loan proportion has the same
effective interest rate as other banks participating under similar risks), the fees received
will be recognized as revenue when the loan process is completed. The services fee
charged by the Bank which acts as coordinator is recognized as revenue when the
transaction is completed. The investment management service fees charged should be
recognized as revenue when the service is provided. The same service fee recognition
principle is applicable to wealth management, financial consultant services and custody
services. If the service fees income is linked to the performance, revenue is recognized
when the performance is achieved.
Brokerage fee income and other related expenses of the Company’s subsidiary, JihSun
Securities Co., Ltd. and its subsidiaries are recognized at the date of securities
transaction.
(c)
Consulting and financial advisory service income, revenue and expenses from
underwriting businesses, revenue from providing agency service for stock affairs,
future commission income are recognized in accordance with related agreements on
accrual basis.
(d)
Futures and options transaction income: The premium of transactions is recognized at
cost. Daily evaluation under market value, contract gain or loss through reversing trade
and transaction income or loss arising from settlement are recognized in profit or loss
of current period. Proprietary handling fee expenses are recognized at the date of the
transaction.
(e)
Dividend revenue:
Dividend revenue is recognized when the Company and its subsidiaries have the right
to retrieve the dividend.
(Q) Financial asset impairment
(a)
Financial assets carried at amortized cost (including loans and receivables)
For the securities and futures industries, the allowance for bad debts should account for
assessed impaired amounts in consideration of the ending balance of notes receivable
and accounts receivable in compliance with IAS 39.
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The Company’s subsidiary, JihSun International Commercial Bank Co., Ltd. should
identify on every reporting day if there exists any objective evidence for impairment
loss. If material impairment indicator on a single financial asset is revealed, the
impairment loss is evaluated individually; if there is non-material impairment indicator
on single financial assets either respectively or collectively, the impairment loss is
evaluated by portfolio method. If an evaluated single financial asset does not show any
objective evidence for impairment loss, it should be organized into a financial asset
category in which the financial assets have similar credit risk characteristics, and
evaluate if there is impairment loss existing in this set of asset. Financial assets of
which the individual impairment loss has been recognized or the impairment loss has
been continuingly recognized do not require reevaluating impairment loss by portfolio
method.
If objective evidences for impairment loss exist, the difference between the book value
of financial assets and the present value of estimated future cash flow discounted by
effective interest rate should be recognized as impairment loss. When impairment loss
happens, the book value of financial assets is reduced by the allowance account, and
recognized under the account ''Bad debt expenses and guarantee reserve''. In
calculating impairment amount, estimated future cash flows include the recoverable
amount of collaterals and related insurances.
If the amount of impairment loss reduces in the following period, and that reduction is
obviously related to the events which happen after the impairment loss is recognized,
the previous recognized impairment loss on financial assets will be reversed. The
reversal should not make the book value of financial assets to be higher than the
amortized cost when the impairment loss is not recognized.
The aforesaid objective evidence includes:
(1)
Significant financial difficulty of the issuer or obligor;
(2)
A breach of contract, such as a default or delinquency in interest or principal
payments;
(3)
The lender considered the economic or legal reasons relating to the borrower’s
financial difficulty, and granted the borrower a concession;
(4)
It is probable that the borrower will enter bankruptcy or other financial
reorganization;
(5)
The financial assets cannot be traded in an active market because of the financial
difficulties of issuers;
(6)
The payment status of the borrower became worse and worse;
(7)
Changes in national or local economic conditions correlate with defaults on the
assets.
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Overdue loans and non-accrual loans which have been actively demanded for
repayment and meet one of the following situations can be written off after reducing
the retrievable parts.
(1)
Part of or all of the claims cannot be retrieved because the borrowers are declared
dismissed, fled, reconciled, bankrupt or any other reason.
(2)
The appraised value of collaterals and the properties of the main- and
sub- borrowers is low; no compensation will be received after reduces the
amount attributed to priority hypothec; the execution expenses is close to or over
the compensation that the Bank will receive, which is no benefit in execution.
(3)
Collaterals and the properties of the main- and sub- borrowers could not be sold
out at auction for many times and the Bank could not have any benefit from
foreclosure.
(4)
Overdue loans, which is over the settlement period for two years and have been
actively demanded for repayment, still cannot be retrieved.
The credit card receivables, of which the lowest monthly payments are not paid over
the assigned payment duration for six months, should be written off in three months
(after that six months exceeding payment duration).
The evaluation process mentioned above also refers to Financial Supervisory
Commission R.O.C, Regulations Governing the Procedures for Banking Institutions to
Evaluate Assets and Deal with Non-performing / Non-accrual Loans, and the Rules
Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with
Nonperforming/ Non-accrual Loans of the Company’s subsidiary, JihSun International
Commercial Bank Co., Ltd. The minimum loan loss provision and guarantee reserve
shall be the sum of 1% of the outstanding balance of Category One credit asset's claim
(excluding assets that represent claims against the central and local government in
Taiwan), 2% of the balance of Category Two credit assets, 10% of the balance of
Category Three credit assets, 50% of the balance of Category Four credit assets, and
the full balance of Category Five credit assets., compare with the loss provision
calculated following IAS 39, the higher amount is considered as the basis of loss
provision.
(b)
When the reduction in fair value of available-for-sale financial assets are recognized in
other comprehensive income and there is objective evidences that show the assets are
impaired, even if the financial asset had not been derecognized, the accumulated
revaluation losses recognized in other comprehensive income shall be reclassified to
profit or loss.
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The impairment losses of equity instruments classified as available for sale assets can’t
be reversed in profit or loss, and any subsequent increase in fair value are recognized
in other comprehensive income. If, in a subsequent period, the fair value of debt
instruments classified as available for sale assets increases and the increase can be
related objectively to an event occurring after the impairment was recognized, the
previously recognized impairment loss is reversed and recognized in current period
profit or loss.
(c)
Financial assets carried at cost
If there is objective evidence that financial assets carried at cost are impaired, the
impairment amount of the assets is recognized in account “impairment loss on assets”.
However, the impairment losses should not be reversed.
(R)
Non-financial asset impairment
In compliance with IAS 36 “Impairment of Assets”, at each balance sheet date, the
recoverable amount of non-financial asset is estimated and compared with the carrying
amount whenever there is an indication that the non-financial asset may be impaired. An
impairment loss is recognized in account “impairment loss on assets” when the recoverable
amount, higher of fair market value or value in use, is less than the carrying amount. For
assets other than goodwill, reversal of impairment loss is recognized when the recoverable
amount of the asset has increased from its prior-period estimation. The carrying amount after
the reversal shall not exceed the recoverable amount or the depreciated or amortized balance
of the assets assuming no impairment loss was recognized in prior periods. Goodwill shall be
tested for impairment annually regardless whether there are signs of impairment or not. The
impairment losses of goodwill cannot be reversed.
(S)
Valuation method of foreclosed collaterals
Foreclosed collaterals are stated at realizable value, and the difference between it and the
nominal value of the original claim is reflected as bad debt loss. On the balance sheet date, if
the foreclosed collaterals are still unsold, the realizable value shall be reassessed. If there is
sufficient evidence indicating that the net fair market value is lower than the carrying amount
of foreclosed collaterals, the difference after reassessment is recognized as “impairment loss
on assets” in current period loss.
(T)
Income taxes
Income tax expenses include both current taxes and deferred taxes. Except for expenses
related to business combinations or recognized directly in equity or other comprehensive
income, all current and deferred taxes shall be recognized in profit or loss.
Current taxes include tax payables and tax deduction receivables on taxable gains (losses) for
the year calculated using the statutory tax rate on the reporting date or the actual legislative
tax rate, as well as tax adjustments related to prior years.
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Deferred taxes arise due to temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and their respective tax bases. Deferred taxes
shall not be recognized for the situations as follows:
(a)
Assets and liabilities that are initially recognized but are not related to the business
combination and have no effect on net income or taxable gains (losses) during the
transaction.
(b)
Temporary differences arising from equity investments in subsidiaries or joint ventures
where there is a high probability that such temporary differences will not be reversed.
(c)
Initial recognition of goodwill.
Deferred tax assets and liabilities shall be measured at the tax rates that are expected to apply
to the period when the asset is realized or the liability is settled, based on tax rates that have
been enacted or substantively enacted by the end of the reporting period.
Deferred tax assets and liabilities may be offset against each other if the following criteria
are met:
(a)
The entity has the legal right to settle current tax assets and current tax liabilities on a
net basis; and
(b)
The deferred tax assets and the deferred tax liabilities relate to income taxes levied by
the same taxation authority on either:
(1)
Levied by the same taxing authority; or
(2)
Levied by different taxing authorities, but where each such authority intends to
settle current tax assets and current tax liabilities (where such amounts are
significant) on a net basis every year of the period of expected asset realization or
debt liquidation, or where the timing of asset realization and debt liquidation is
matched.
A deferred tax asset should be recognized for the carry-forward of unused tax losses, unused
tax credits, and deductible temporary differences to the extent that it is probable that future
taxable profit will be available against which the unused tax losses, unused tax credits, and
deductible temporary differences can be utilized. Such unused tax losses, unused tax credits,
and deductible temporary differences shall also be reevaluated every year on the financial
reporting date, and adjusted to reduce the related tax benefit when the unused tax losses,
unused tax credits, and deductible temporary differences are not probable to be utilized.
After adopting the imputation tax method in 1998, 10 % surtax on undistributed earnings is
levied as current income tax expense in the year that the stockholder’s meeting declaring the
distribution of earnings.
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Furthermore, for the year ended December 31, 2003, the Company and its Subsidiaries,
“JihSun Securities Co., Ltd.”, “JihSun International Commercial Bank Co., Ltd.” and JihSun
International Property Insurance Agency Co., Ltd. adopted the jointly tax filing return
principle to file the annual income tax return and make tax payment. In accordance with
Interpretation (92) No.240 issued by the Accounting Research and Development Foundation
on October 3, 2003, the accrued receivable and payable between the parent company and
subsidiaries are allocated reasonably and consistently to individual companies.
Other subsidiaries, except for JihSun International Commercial Bank Co., Ltd., JihSun
Securities Co., Ltd. and JihSun International Property Insurance Agency Co., Ltd. are filing
income tax report separately.
(U) Employee benefit
(a)
Post - employment benefits
(1)
Defined contribution plan
The Labor Pension Act of R.O.C. (“the Act”), effective from July 1, 2005, adopts
a defined contribution pension plan. In accordance with the Act, employees who
were hired before July 1, 2005 may elect to be subject to either the Act and
maintain their seniority before the enforcement of the Act, or the pension
mechanism of the Labor Standards Law. Employees who were hired after July 1,
2005, are required to be covered by the pension plan as defined by the Act. For
employees subject to this Act, the Company is required to make monthly cash
contributions to the employees’ individual pension accounts at the rate of not less
than 6% of the employees’ monthly wages and deposit the contribution in a
personal retirement benefit account at Council of Labor Affairs.
Defined contribution plan of oversea subsidiaries are in accordance with the
national law of the host country.
(2)
Defined benefit plan
A defined benefit plan is a post-employment benefit plan under which benefit is
paid to an employee on the basis of their ages, year of experience, seniority and
compensated salaries.
The Company recognizes pension asset or liability in balance sheet as the net
amount of actuarial present value of defined benefit obligation, less fair value of
plan assets. The calculation of defined benefit obligation is performed annually
by an actuary using the projected unit credit method. The actuarial present value
of defined benefit obligation is calculated by discounting future cash flow at the
yield rate of high-quality corporate bond or government bond, that have maturity
dates approximating the term of the obligation and that are denominated in the
same currency in which the benefits are expected to be paid. The Company
recognizes actuarial gains and losses which are incurred by the change of actual
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experience and actuarial assumption in other comprehensive income.
The past service costs which are due to the modification of retirement plan are
currently recognized as personnel expenses in profit or loss.
(b)
Short-term employee benefitΚ
The Company charges the short-term and non-discounted benefit expectedly paid in
near future to current expenses over the periods services are rendered by employees.
(c)
Preferential savings rate for employee
The Company’s subsidiary, JihSun International Commercial Bank Co., Ltd. offers
current staffs a fixed amount of preferential savings rate. The difference between the
preferential savings rates and the market rates is the scope of employee benefits.
According to the Regulations Governing the Preparation of Financial Reports by
Publicly Held Banks, the interest paid for preferential savings rate plan is recorded
monthly under accrual basis. The difference between the preferential savings rates and
the market rates is recognized under "employee benefit expenses".
(V) Earnings (losses) per common shares
EPS is calculated as dividing current consolidated net profit or loss decreased by preferred
stock dividends, by the weighted- average number of common shares outstanding during the
period. The calculation of diluted EPS assumed that all potential shares with diluted
influence are outstanding during the current period. Therefore, both the net income and the
number of outstanding shares during the current period should all be adjusted to the
influence on potentially dilutive shares. In the event of capital decrease, the number of shares
outstanding is decreasing. On the other hand, in the event of capitalization of retained
earnings or capital surplus, or the new shares that the meeting of the shareholders, for the
year ended December 31, 2008, resolved to distribute to the employees as bonuses, the
number of shares outstanding is increasing. Both of the shares are retroactively adjusted. If
the base date for capital reduction or capitalization of earnings or capital surplus is before the
reporting date, the computation of common shares outstanding is also retroactively adjusted.
(W) Financial guarantee contracts
A financial guarantee contract is a contract that requires the issuer to make specified
payments to reimburse the holder for a loss it incurs because a specified debtor fails to make
payment when due in accordance with the original or modified terms of a debt instrument.
The Company and its subsidiaries recognize financial guarantee liabilities initially at their
fair value at the date of providing guarantee. The Company and its subsidiaries receive
commission income with non-arm’s-length transaction at contract date; this is, the income
could represent the fair value of financial guarantee contract. The advanced service fee is
recognized as deferred item and amortized by straight-line method over the contract period
of the financial guarantee.
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After initial recognition, the Company and its subsidiaries measure a financial guarantee
contract at the higher of the amount determined in accordance with IAS 37” Provisions,
Contingent Liabilities and Contingent Assets “, and the amount initially recognized less,
when appropriate, cumulative service fee recognized in accordance with IAS 18” Revenue”.
The aforesaid estimations are based on the experiences of trading, the database of historical
losses, and the management’s judgments.
The amount of increased liability from the financial guarantee contracts shall be recognized
as “Provisions for bad debt expenses and guarantee reserve”.
(X) Equity
The new issued capital shall be attributed as incremental cost and the net amount of cost after
deducting the related income tax expense being excluded from the equity. Stock dividends of
common stock are recognized in the year which the Company and its subsidiaries’
shareholders' meeting approved.
(Y) Material commitments and contingency
The Company and its subsidiaries recognize loss when it is highly probable that a loss will
incur and the amount of loss can be reasonably estimated, while the Company discloses the
information in the notes when it is reasonably potential that a loss will incur or cannot be
reasonably estimated.
(Z)
Operating segments
An operating segment is a component of the Company and its subsidiaries that engages in
business activities from which it may earn revenues and incur expenses. The segment’s
operating results are reviewed regularly by the Company’s chief operating decision maker to
make decisions pertaining to the allocation of the resources to the segment and to assess its
performance. The operational performance and resource allocation plan are approved by the
board of directors of each subsidiary and executed by relevant departments. The chief
operating decision maker of the subsidiaries is their respective board of directors. The
Company provides financial information to the senior management on a monthly basis and
consolidated financial information on a quarterly basis to the board of directors for
reviewing.
5.
Primary Sources of Significant Accounting Judgments, and Uncertainty of Estimates and
Assumptions
The consolidated financial statements are influenced by accounting policies, assumptions and
estimates. When preparing the financial statements, the management needs to make appropriate
professional judgments, estimates and assumptions, and will affect the adoption of accounting
policies, reported amounts of assets, liabilities, revenues and expenses. Actual results could differ
from these estimates. Actual results could differ from these estimates.
-279-
Management continued to monitor the accounting assumptions, estimates and judgments.
Management recognized the changes in the accounting estimates during the period and the impact
of the changes in the accounting estimates in the next period.
(A) Critical judgments in applying accounting policies
Other than the determination of estimates (please refer to Note 5(B) as shown below), other
significant judgment made by the management of the Company and its subsidiaries when
determining a recognized amount in the financial report under the application of the
accounting policies of the Company and its subsidiaries is as follows:
Financial assets classification
The Company and its subsidiaries’ management should define the classification of financial
assets. Different classification of financial assets would impact the accounting methods,
financial position and operating performance of the consolidated companies.
(B)
Major sources of uncertainty for assumptions and estimation
The Company and its subsidiaries have made proper assumptions and estimations toward
book value of assets and liabilities which may have significant risk due to significant
adjustments in the next fiscal year. The Company and its subsidiaries’ assumption and
estimation are made by following IFRS as accepted by FSC, and are considered as the best
estimation. Estimation and assumption are made based on the past experience and other
factors, encompassing the expectation for the future period, and are evaluated continuously.
The following information is the major sources of uncertainty for assumptions and
estimation which may result in adjusting book value of assets or liabilities in the next fiscal
year.
(a)
Impairment loss on loans
Loans are reviewed quarterly by the Company and its subsidiaries to assess impairment.
When the Company and its subsidiaries decide whether to recognize impairment loss,
they mainly assess if there are any observable evidence indicating possible impairment.
The evidence may include observable information indicating unfavorable changes in
debtor payment status, or sovereign or local economic situation related to debt payment
in arrears. When analyzing expected cash flow, the estimates by the management are
based on past losses experience on assets of similar credit risk characteristics. The
Company and its subsidiaries periodically review methods and assumptions behind the
amount and schedule of expected cash flow, to reduce the difference between expected
loss and actual loss.
-280-
(b)
Fair value of financial instruments
A valuation method is used for determination of financial instrument’s fair value which
is without active market or without quotation in an active market. Under this situation,
the valuation of fair value is based on the observation of similar financial instruments
with observable information. If no quotation can be referred to, fair value of a financial
instrument would be determined under proper assumptions. When valuation model is
applied for the determination of fair value, all models should be aligned in order to
ensure that the outcome reflects actual information and market price. Observable
information is applied mostly in models; however, certain items, such as credit risk
(the risk bears by the Company and its subsidiaries itself and the counterparty) should
rely on the management’s estimation toward fluctuation and correlation. Please refer to
Note 6(AP) for information on financial instruments sensitivity analyses.
(c)
Income tax
Income tax liabilities resulting from taxation issues which are recognized additionally
by the Company and its subsidiaries are cautiously evaluated in consideration of its
subsequent development. Income tax expense and current income tax liabilities will be
affected if there is a difference between the final taxation of such transaction and
calculations and the amounts initially recognized.
Please refer to Note 6(AC) for information about the evaluation of deferred tax items.
(d)
Post-employment benefits
The present value of post-employment benefits obligation is based on actuarial results
of multiple assumptions. Any assumption changes will affect the carrying amount of
postemployment benefits obligation.
6.
Summary of Major Accounts
(A) Cash and cash equivalents
Cash on hand and petty cash
Bank deposits
Short-term bills
Checks for clearing
Total
$
$
2014.12.31
1,253,066
5,340,127
454,022
290,319
7,337,534
2013.12.31
1,312,627
6,066,181
904,788
167,685
8,451,281
Checks for clearing consisted of checks deposited in the bank after the checks clearing
cut-off time.
As of December 31, 2014 and 2013, the interest rate of short-term bills mentioned above
ranged from 0.550% to 0.640% and from 0.570% to 0.630%; the maturity period is from
2015.01.05 to 2015.01.23 and from 2014.01.02 to 2014.01.24.
-281-
(B)
Due from the central bank and call loans to banks
2014.12.31
880,033
4,529,052
614,309
8,842,618
$
14,866,012
Due from the central bank – general account
Due from the central bank – deposit reserve
Financial center
Central bank time deposits
Call loans to banks
Total
$
2013.12.31
2,376,081
4,294,814
310,228
15,700,000
1,627,874
24,308,997
The reserves for deposits are calculated at prescribed rates, using the average monthly
balances of various deposit accounts and are appropriated and deposited in the reserve
account of the central bank of the Republic of China (Taiwan). Deposits in “Due from the
central bank - deposit reserve” are interest-bearing and cannot be withdrawn except for the
monthly adjustment to the required reserve permitted by relevant regulations.
(C)
Financial assets at fair value through profit or loss
Government bonds
Corporate bonds
Convertible corporate bonds
Financial debentures
Negotiable certificates of deposit
Commercial paper
Listed and TPEx securities
Emerging stocks
Beneficiary certificates
Futures margin
Derivative financial instruments
Financial asset designated as at fair value through profit
and loss-structured instruments
Total
$
$
2014.12.31
7,487,738
8,587,863
346,239
1,387,343
20,792,308
2,111,115
2,310,646
323,427
181,887
126,693
1,859,122
156,552
2013.12.31
6,029,697
8,456,841
471,320
497,445
1,351,475
3,035,911
2,273,173
351,494
156,309
55,159
55,797
887,009
45,670,933
23,621,630
(a)
The sum of financial assets shown above held under repurchase agreement as of
December 31, 2014 and 2013, please refer to Note 6(R).
(b)
Parts of the above financial assets held for trading are restricted, and please refer to
Note 8 for further details.
(c)
For the years ended December 31, 2014 and 2013, the net realized gains on the
financial assets at fair value through profit or loss of the Company and its subsidiaries
amounted to $445,918 and $373,308, respectively; net unrealized gains (losses)
amounted to $1,757,067 and ($28,855), respectively.
-282-
(D) Available-for-sale financial assetsɡnet
2014.12.31
3,644,273
4,831,814
3,328
$
8,479,415
Government bonds
Corporate bonds
Listed and TPEx securities
Total
$
2013.12.31
7,366,416
3,751,517
11,748
152,193
11,281,874
As of December 31, 2014 and 2013, the Company and its subsidiaries hold the
available-for-sale financial assets sold under repurchase agreement, please refer to Note
6(R).
(E)
Securities purchased under resell agreements
Par value
Due to resell term
Due to interest rate interval
Agreed amount of resell securities
(F)
$
$
2014.12.31
50,504
50,000
2015.01.05
0.4%
50,504
2013.12.31
-
Receivablesɡnet
Accounts receivable for credit cards
Interest receivable
Accounts receivable
Other receivables
Notes receivable
Factoring receivables - without recourse
Margin loans receivable
Receivable from sales of marketable securities
Acceptances receivable
Accounts receivable-related parties
Subtotal
Less: Allowance for bad debts
Total
2014.12.31
829,093
385,332
4,614,798
106,128
80
49,101
12,986,874
578,665
430,102
6
19,980,179
(102,135)
$
19,878,044
$
2013.12.31
941,550
402,350
5,129,585
1,350,364
149
110,148
11,636,519
603,985
213,841
9
20,388,500
(119,028)
20,269,472
The changes in allowance for bad debts are as follows:
2014
Beginning balance
Reversal of provision
Settlement
Recovery of bad debts
Write-off
Reclassification
Derecognition from NPL disposal
Exchange rate fluctuation
Ending balance
$
2013
119,028
(1,582)
180,501
(42,852)
(72)
17,537
(37,299)
(320)
18,414
(26,958)
-
$
-283-
(10,282)
3,515
102,135
1,533
119,028
Receivables and its allowance for bad debts, which were subject to the impairment test, were
as follows:
Receivables
Items
With the objective evidence of Individual assessment of
impairment
impairment
Collective assessment of
impairment
Without the objective evidence Collective assessment of
of impairment
impairment
Total
2014.12.31
72,485
Allowance for
bad debts
2014.12.31
70,088
10,563
5,470
19,897,131
26,577
19,980,179
102,135
Receivables
Items
impairment
impairment
impairment
of impairment
impairment
Total
2013.12.31
158,839
Allowance for
bad debts
2013.12.31
76,599
20,942
6,300
20,208,719
36,129
20,388,500
119,028
(G) Current tax assets
Tax refund receivable
$
2014.12.31
348,298
2013.12.31
400,602
2014.12.31
19,497
67,035
15,202,708
18,073,595
25,267,902
15,171,567
1,603,281
70,093,184
96,298
145,595,067
(1,583,077)
(51,860)
143,960,130
2013.12.31
74,467
68,306
17,364,051
16,355,048
26,900,993
12,485,289
2,447,538
66,140,027
760,488
142,596,207
(1,642,166)
(60,327)
140,893,714
(H) Loans discountedɡnet
Export bills negotiated
Accounts receivable financing
Short-term loans
Short-term secured loans
Medium-term loans
Medium-term secured loans
Long-term loans
Long-term secured loans
Non-accrual loans
Subtotal
Less: Allowance for bad debts
Less: Adjustment of discount and premium
Total
$
$
Please refer to Note 6(AP) for the industry information.
The Company’s subsidiary, JihSun International Commercial Bank Co., Ltd. has
discontinued accounting for the interest income for all of non-accrual loans. For the years
ended December 31, 2014 and 2013, suspended accrual of interest for all of non-accrual
-284-
loans accounts amounted to $8,280 and $14,560, respectively.
For the years ended December 31, 2014 and 2013, there were no loans written off without
prior recourse to the Company’s subsidiary, JihSun International Commercial Bank Co., Ltd.
The changes in allowance for bad debts are as follows:
Beginning balance
Provision
$
2014
1,642,166
133,113
(3,807)
41,251
Recovery of bad debts-Debt negotiation
Transfer to counterfeit account
Write-off
Exchange rate fluctuation
Derecognition from NPL disposal
Ending balance
$
764
(149,670)
9,487
(90,227)
1,583,077
Loans
Items
impairment
impairment
impairment
of impairment
impairment
Total
37,607
437
(359,854)
3,894
1,642,166
2014.12.31
2,036,040
Allowance for
credit losses
2014.12.31
102,839
1,143,542
149,082
142,415,485
1,331,156
145,595,067
1,583,077
Loans
Items
impairment
impairment
impairment
of impairment
impairment
Total
2013
1,583,868
390,941
(14,727)
2013.12.31
5,156,935
Allowance for
credit losses
2013.12.31
458,726
1,485,427
219,431
135,953,845
964,009
142,596,207
1,642,166
The details of provision for (Reversal of) bad debts expenses and guarantee liabilities are as
follows:
2014
Provision for bad debts expenses-discount and loans
(Reversal of) provision for bad debts expenses-receivables
Provision for (reversal of) bad debts expenses-guarantee
reserve
(Reversal of) provision for bad debts expenses-non-accrual
loans transferred from overdue
Total
-285-
$
$
133,113
(1,582)
1,198
2013
390,941
(42,852)
(43,431)
(32)
41,931
(323,802)
(191,105)
(515,957)
(169,368)
(I)Held-to-maturity financial assets – net
Private placement of corporate bonds
$
2014.12.31
300,000
2013.12.31
300,000
The coupon rate of private corporate bonds (“the Bond”) is 2.0880%.The interests of the
Bond are paid annually and will mature in November, 2015. There is no misgiving of
overdue or impairment loss on reporting date.
(J)
Investments accounted for using equity methodɡnet
Investments accounted for using equity method of the Company and its subsidiaries at the
report date are listed as follows:
AssociatesЁJih-Sun Securities Investment Trust Co., Ltd.
$
2014.12.31
257,376
2013.12.31
245,647
20%
20%
Percentage of ownership
In 2014 and 2013, the Company’s and its subsidiaries' proportionate shares of the net income
of the associate are as follows:
2014
Proportionate share of profit from the associate
$
11,647
2013
15,266
As of December 31, 2014 and 2013, investments accounted for using equity method of the
Company and its subsidiaries are not pledged as collaterals.
A summary of financial information for the Company’s and its subsidiaries’ investment in an
associate – Jih-Sun Securities Co., Ltd. Investment Trust Co., Ltd. is as follows:
2014.12.31
Total assets
Total liabilities
$
Income
Profit
-286-
2013.12.31
$
1,005,389
(94,567)
910,822
946,776
(94,592)
852,184
$
$
2014
330,961
58,232
2013
368,477
76,169
(K) Other financial assetsɡnet
Customer margin deposit
Short-term advances
Financial assets carried at cost-net
Overdue receivable
Allowance for bad debts- overdue receivable
Receipts under custody from exercise of warrant
Receipts under custody from customers’ security
subscription
Security borrowing collateral price
Security borrowing margin
Other financial assets- other
Total
$
$
2014.12.31
5,143,533
369,410
1,312,997
1,448
(1,448)
7
7
2013.12.31
4,887,071
376,087
1,486,974
33,516
(33,516)
7
325,645
147,547
158,898
615,780
7,748,179
109,671
579,963
468,284
8,233,702
2014.12.31
268,644
586,067
105,244
80,000
21,000
387,857
(135,815)
1,312,997
2013.12.31
268,644
586,067
105,244
90,000
105,000
492,873
(160,854)
1,486,974
Details of financial assets carried at cost are as follows:
Dah Chung Bills Finance Co., Ltd.
Taiwan Stock Exchange Corporation
Taiwan Futures Exchange Co., Ltd.
Top Taiwan III Venture Capital Co., Ltd.
Hui Yang Venture Capital Group
Others
Less: Accumulated impairment
Total
$
$
(a)
Pledged details of financial assets carried at cost are disclosed in Note 8.
(b)
In April, 2008, the financial assets carried at cost, which the Company’s subsidiary,
JihSun International Commercial Bank Co., Ltd. invested in Taiwan Futures Exchange
Co., Ltd., were sold to the Company’s subsidiary JihSun Securities Co., Ltd. at the
price of $ 178,550. Thus, the related unrealized gains of $140,633 had been eliminated.
(c)
The financial assets carried at cost mentioned above, which the Company’s subsidiary,
JihSun Securities Co., Ltd. invested in Parawin Venture Capital Corp. decided a
reduction of capital to shareholders on May 19, 2014, leading to a 10% decrease in its
capital. Legal procedure was completed and $4,800 was refunded to JihSun Securities
Co., Ltd.
JihSun Securities Co., Ltd. invested in Parawin Venture Capital Corp. decided a
reduction of capital to shareholders on Oct 16, 2013, leading to an 11.12% decrease in
its capital. Legal procedure was completed and $6,005 was refunded to JihSun
-287-
(d)
JihSun Securities Co., Ltd. invested in- Top Taiwan III Venture Capital Co., Ltd.
decided a reduction of capital to shareholders on April 28, 2014, leading to an 11.11%
decrease in its capital. Legal procedure was completed and $10,000 was refunded to
JihSun Securities Co., Ltd.
JihSun Securities Co., Ltd. invested in- Top Taiwan III Venture Capital Co., Ltd.
decided a reduction of capital to shareholders on May 28, 2013, leading to a 10%
(e)
JihSun Securities Co., Ltd. invested in- PK II Venture Capital Corp. decided a
reduction of capital to shareholders on June 11, 2014, leading to a 30% decrease in its
Co., Ltd.
JihSun Securities Co., Ltd. invested in- PK II Venture Capital Corp. decided a
Co., Ltd.
(f)
JihSun Securities Co., Ltd. invested in- Hui Yang Venture Capital Group decided a
first time reduction of capital to shareholders on April 15, 2014, leading to a 60%
JihSun Securities Co., Ltd. Hui Yang Venture Capital Group decided a second time
reduction of capital to shareholders on October 17, 2014, leading to a 50% decrease in
its capital. Legal procedure was completed and $21,000 was refunded to JihSun
Securities Co., Ltd. JihSun Securities Co., Ltd. recognized disposal gain $10,534.
JihSun Securities Co., Ltd. invested in- Hui Yang Venture Capital Group decided a
capital. Legal procedure was completed and $45,000 was refunded in August 2013 to
(g)
JihSun Securities Co., Ltd. invested in- Taiwan Depository & Clearing Corp. and
Taiwan Integrated Shareholder Services Company- decided to merge and the merger
case was approved by both Companies’ special shareholder meetings on February 6,
2014. Taiwan Depository & Clearing Corp. was the extended company, and Taiwan
Integrated Shareholder Services Company was the annihilation company. Taiwan
Integrated Shareholder Services Company’s legal procedure was completed and
$16,460 was refunded to JihSun Securities Co., Ltd. JihSun Securities Co., Ltd.
-288-
reversed impairment loss $3,923 and recognized disposal loss $386.
(h)
JihSun Securities Co., Ltd. invested in- Cotillion III Venture Capital decided a
Co., Ltd.
(i)
JihSun Securities Co., Ltd. invested in- Global Securities Finance Corp. decided a
reduction of capital on October 30, 2014, leading to a 46.67% decrease in its capital.
Legal procedure was completed and $30,666 was refunded to JihSun Securities Co.,
Ltd.
(j)
JihSun Securities Co., Ltd. invested in- United BioPharma issued emerging stocks on
September 19, 2014. JihSun Securities Co., Ltd. reclassified these investment from the
financial assets carried at cost to financial assets at fair value through profit or loss.
(k)
JihSun International Commercial Bank Co., Ltd. invested in- Concord IV Venture
Capital Co., Ltd. had finished liquidating on December 18, 2013, refunded the capital
$8,644 to JihSun International Commercial Bank Co., Ltd. JihSun International
Commercial Bank Co., Ltd. reversed impairment loss $6,805 and recognized disposal
loss $6,790.
(l)
JihSun International Commercial Bank Co., Ltd. invested in- First Bio Venture Capital
Co., Ltd. had finished liquidating on January 16, 2014, refunded the capital $1,675 to
JihSun International Commercial Bank Co., Ltd. JihSun International Commercial
Bank Co., Ltd. reversed impairment loss $2,578 and recognized disposal loss $2,559.
(m) The financial assets carried at cost mentioned above, which the Company’s subsidiary,
JihSun International Commercial Bank Co., Ltd. invested in- Super Tech Venture
Capital Co., Ltd. has been liquidating in 2014, refunded the capital $3,636 to JihSun
International Commercial Bank Co., Ltd on April 25, 2014. JihSun International
Commercial Bank Co., Ltd. recognized impairment loss $631 and disposal loss $544.
(n)
For the financial assets carried at cost mentioned above, the subsidiaries recognized
reversal of impairment losses amounted to $3,019 and $4,272 in 2014 and 2013,
respectively.
(o)
For the gains and losses on disposal of financial assets carried at cost are disclosed in
Note 6 (AL).
-289-
(L)
Investment propertyɡnet
Land
CostΚ
Beginning balance-2014/1/1
Transferred from property, plant and
equipment
Ending balance-2014/12/31
Beginning balance- 2013/1/1
equipment
Accumulated depreciationǺ
Depreciation expenses
equipment
equipment
Book valueΚ
Buildings
Total
$
228,840
31,614
193,710
30,492
422,550
62,106
$
$
260,454
226,901
1,939
224,202
174,813
18,897
484,656
401,714
20,836
$
228,840
193,710
422,550
$
-
72,203
3,661
7,704
72,203
3,661
7,704
$
$
-
83,568
65,203
3,505
3,495
83,568
65,203
3,505
3,495
$
-
72,203
72,203
140,634
121,507
401,088
350,347
$
$
260,454
228,840
As of December 31, 2014 and 2013, the fair value of the investment property is $720,896
and $568,707, respectively. The fair value mentioned above was evaluated by the Appraisal
Department of Credit Office (with related recognized professional qualifications and having
related experience in field of locations and types of the investment property evaluated in the
near term) semiannually. The appraisal of property relies mainly on the approach of
comparison of market value, supplemented by income approach, cost approach and land
development approach. The evaluation is based on objective comparison analysis of market
researches in order to acquire the gross value and net value of the evaluated objects. The
rental income with sustained stability or operating properties are evaluated mainly by income
approach, supplemented by the approach of comparison of market value, expounding the
estimation of gross value and net value of the evaluated objects.
Pledged details of investment property are disclosed in Note 8.
-290-
(M) Property, plant and equipmentɡnet
Land
Buildings
Other
Leasehold
Construction in
Prepayment for
equipment
improvements
progress
equipment
Total
CostΚ
Κ
2,549,414
1,826,335
631,611
Current increase
$
3,591,151
-
5,184
62,356
17,564
Current decrease(Note 1)
-
(24,555)
(145,629)
(89,611)
Current transferred into (out)
-
Current transferred out to investment
14,955
(31,614)
(30,492)
2,222
-
-
5,699
-
23,857
23,062
16,759
-
124,925
(259,795)
(6,006)
(16,870)
-
8,622,368
-
-
(62,106)
property
Current transferred out to other assets
-
-
-
-
-
(1,216)
(1,216)
Current transferred out to intangible
-
-
-
-
-
(9,133)
(9,133)
Current transferred to expenses
-
-
-
Exchange difference
-
-
assets
833
$
3,559,537
2,514,506
1,746,117
565,538
$
3,196,428
2,548,737
1,869,825
709,430
Current increase(Note 2)
-
5,676
55,070
17,333
-
(3,420)
(102,624)
(101,623)
-
Current transferred from the foreclosed
5,640
3,742
(281)
275
6,192
11,977
-
6,337
(281)
-
1,108
23,980
8,415,870
15,891
8,340,311
19,553
(3,742)
(11,977)
109,609
(207,667)
-
396,662
11,678
-
-
-
-
408,340
(1,939)
(18,897)
-
-
-
-
(20,836)
collaterals for private use
property
Current transferred out to other assets
-
-
-
-
-
(543)
(543)
Current transferred out to intangible
-
-
-
-
-
(7,302)
(7,302)
23,857
8,622,368
assets
Exchange difference
$
3,591,151
322
134
-
2,549,414
-
1,826,335
631,611
-
-
456
Accumulated depreciationǺ
Ǻ
-
1,029,366
1,569,345
493,073
-
-
Current depreciation expense
$
-
54,870
98,807
43,787
-
-
3,091,784
197,464
-
(24,402)
(144,279)
(88,980)
-
-
(257,661)
-
(7,704)
-
-
-
-
(7,704)
636
262
-
-
898
-
1,052,130
1,524,509
448,142
-
-
3,024,781
3,091,219
property
Exchange difference
-
$
$
-
-
981,179
1,568,273
541,767
-
-
Current depreciation expense
-
55,076
102,291
52,755
-
-
210,122
-
(3,392)
(101,406)
(101,559)
-
-
(206,357)
-
(2)
-
2
-
-
-
-
(3,495)
-
-
-
-
187
108
-
-
295
1,029,366
1,569,345
493,073
-
-
3,091,784
(3,495)
property
Exchange difference
$
-
-
Book valueǺ
Ǻ
Balance-2014/12/31
$
3,559,537
1,462,376
221,608
117,396
Balance-2013/12/31
$
3,591,151
1,520,048
256,990
138,538
6,192
-
23,980
5,391,089
23,857
5,530,584
Note1Κ For the year ended December 31, 2014, the decrease in cost includes the
abandonment of property, plant and equipment for $259,001, and the sale of
property, plant and equipment for $794.
Note2ΚFor the year ended December 31, 2013, the increase in cost includes the acquisition
of property, plant and equipment for $106,149 and the increase of leasehold
improvements- decommissioning costs for $3,460.
Note3 Κ For the year ended December 31, 2013, the decrease in cost includes the
abandonment of property, plant and equipment for $202,875, the sale of
property, plant and equipment for $140 and the write-off of the leasehold
-291-
Note4Ǻ For the year ended December 31, 2014, the decrease in cost includes the
abandonment of property, plant and equipment for $257,041, and the sale of
property, plant and equipment for $620.
Note5Κ For the year ended December 31, 2013, the decrease in accumulated depreciation
includes the abandonment of property, plant and equipment for $201,569, the sale of
property, plant and equipment for $136 and the write-off of the leasehold
Pledged details of property, plant and equipment are disclosed in Note 8.
(N) Intangible assetsɡnet
$
Goodwill
Computer software
Total
$
2014.12.31
32,914
179,605
212,519
2013.12.31
32,914
119,017
151,931
In the year 2002, the Company’s subsidiary, JihSun International Commercial Bank Co.,
Ltd., merged with XinYing credit co-operative in Tainan County for the purchase price over
the fair value of its identifiable net asset amounted to $94,039. Following IAS 38 as accepted
by the FSC, goodwill attributed to indefinite life intangible assets will not be amortized. The
impairment tests are implemented regularly every year or when there is indication of
impairment. Goodwill is no longer amortized, and is conducted impairment test annually.
The Company’s subsidiary, JihSun International Commercial Bank Co., Ltd., evaluated that
there was no impairment loss of goodwill for the years ended December 31, 2014 and 2013.
The movement of intangible assets is as follows:
Goodwill
Computer
software
Total
2014.1.1
$ 32,914
119,017
Current
increase
119,462
Current
decrease
(68,003)
Exchange
difference
(4)
Others
(Note)
9,133
2014.12.31
32,914
179,605
$ 151,931
119,462
(68,003)
(4)
9,133
212,519
Note: For the year ended December 31, 2014, the increase in intangible assets includes $9,133
transferred from property, plant and equipment because of reclassification.
Goodwill
Computer
software
Total
2013.1.1
$ 32,914
131,958
Current
increase
41,765
Current
decrease
(62,002)
Exchange
difference
(6)
Others
(Note)
7,302
2013.12.31
32,914
119,017
$ 164,872
41,765
(62,002)
(6)
7,302
151,931
Note: For the year ended December 31, 2013, the increase in intangible assets includes $7,302
transferred from property, plant and equipment because of reclassification.
-292-
(O) Other assetsɡnet
Operating guarantee deposits
Clearing and settlement fund
Refundable deposits
Prepayments
Other deferred assets
Other assets - other
Total
(P)
2014.12.31
820,000
354,137
1,353,516
161,878
587
132,529
2,822,647
$
$
2013.12.31
820,000
348,342
183,198
166,579
761
117,044
1,635,924
(a)
For the years ended December 31, 2014 and 2013, the amortization expense for other
deferred assets of the Company and its subsidiaries are $194 and $195, respectively,
and these expenses are recorded under operating expenses. For the years ended
December 31, 2014 and 2013, the amount of other deferred assets and prepayments
transferred from the property, plant and equipment-net are $1,216 and $543, respectively.
(b)
The Company’s subsidiary, JihSun International Commercial Bank Co., Ltd.,
foreclosed collaterals located in Xiugang, Xindian Dist., New Taipei City was disposed
through the public bidding on August 1, 2013. The agreement for sale was signed on
August 12, 2013 and the real estate was transferred on December 19, 2013. .
(c)
In 2013, the foreclosed collateral of the Company’s subsidiary, JihSun International
Commercial Bank Co., Ltd., located in Datun, Beitou Dist., Taipei City, amounting to
$408,340 was transferred into property, plant and equipment at book value, as employee
training center.
Deposits from the central bank and banks
Deposits from other banks
Post office transfer deposits
Loan financing from other banks
Call loans from other bank
Total
$
$
2014.12.31
2,768,369
3,810,483
66,401
6,645,253
2013.12.31
2,706,699
3,725,735
9,327
4,614,975
11,056,736
2014.12.31
5,024,585
(4,674,368)
175,000
50,377
2013.12.31
7,134,302
(6,845,988)
105,719
-
(Q) Financial liabilities at fair value through profit or loss
Warrants liabilities
Warrants redeemed
Liabilities on sale of borrowed securities
Investments in bonds with resale agreements-short sales and
valuation adjustment
Settlement coverage bonds payable of short sale and
valuation adjustment
Financial liabilities designated as at fair value through profit
or lossЁstructured instruments
Total
-293-
$
399,063
$
-
2,349,979
247,153
74,739
371,379
3,571,789
840,151
For the years ended December 31, 2014 and 2013, the net realized losses on the financial
liabilities at fair value through profit or loss of the Company and its subsidiaries amounted to
$47,128 and $18,364, respectively, and the unrealized (losses) and gains amounted to
($1,271,829) and $168,956, respectively.
(R)
Securities sold under repurchase agreements
Assets
value through
profit or loss
Available-for-sale
financial assets
Total
Assets
value through
profit or loss
Available-for-sale
financial assets
Total
(S)
$
$
$
$
Par value
6,628,601
2014.12.31
Designated
repurchase
Selling price
amount
6,699,640
6,702,641
500,000
500,000
500,126
7,128,601
7,199,640
7,202,767
Par value
4,774,798
2013.12.31
Designated
repurchase
amount
Selling price
4,895,999
4,898,455
850,000
850,602
851,601
5,624,798
5,746,601
5,750,056
Designated
repurchase
date
2015.1.2~2015.4.20
2015.1.12
Designated
repurchase
date
2014.1.2~2014.4.1
2014.1.17~2014.3.26
Commercial paper issuedɡnet
Bank/Bills Finance Corp.
Union Bank
China Bills Finance Corp.
Taching Bills Finance Ltd.
Mega Bills Finance Corp.
International Bills Finance Corp.
Grand Bills Finance Corp.
Taishin International Bank
Dah Chung Bills Finance Corp.
Taiwan Finance Corp.
China Trust Commercial Bank
Subtotal
Less: Discount on commercial paper payable
Total
$
$
2014.12.31
740,000
450,000
280,000
250,000
300,000
210,000
2,130,000
185,000
4,545,000
(2,068)
4,542,932
2013.12.31
800,000
450,000
410,000
300,000
300,000
1,220,000
200,000
200,000
3,880,000
(2,011)
3,877,989
The annual interest rates of commercial papers issued from 0.600% to 0.890% and from
0.680% to 1.130% as of December 31, 2014 and 2013, respectively.
-294-
(T)
Payables
Accounts payable
Accrued interests
Deposits received from securities borrowers
Guaranteed price deposits received from securities
borrowers
Accounts payable factoring
Collection payable
Accrued expenses
Other payables
Acceptances
Notes payable for clearing payable
Payable from purchase of marketable securities
Total
2014.12.31
4,352,937
299,226
1,370,615
1,560,642
2013.12.31
6,250,464
311,460
1,272,333
1,523,079
$
6,886
60,522
555,591
856,562
430,102
290,319
498,404
10,281,806
8,916
57,474
491,234
813,847
213,841
167,685
890,322
12,000,655
$
2014.12.31
4,384
2013.12.31
379,732
2014.12.31
670,265
93,014
23,667,316
43,081,860
1,582,200
109,412,943
178,507,598
2013.12.31
667,664
86,169
22,412,860
38,003,360
4,764,500
103,380,955
169,315,508
$
(U) Current tax liabilities
Income taxes payable
(V) Deposits
Checking deposits
Bank checks
Demand deposits
Time deposits
Negotiable certificates of deposit
Savings deposits
Total
$
$
(W) Financial debentures
Terms of transactions
Issue date
Maturity
date
Interest rate
Bonds
Type
Amount
2014.12.31
2007 JIHSUN unsecured
subordinated financial
debentures
2007.04.03
2014.04.03
Fixed rate of 3%
2012 JIHSUN unsecured
subordinated financial
debentures
2012.04.30
2019.04.30
Fixed rate of 2.18%
Unsecured
subordinated
financial
debentures
$
ϛ
$
-
2013.12.31
500,000
2,500,000
2,500,000
2,500,000
3,000,000
The information of the financial debentures issued by the Company’s subsidiary, JihSun
International Commercial Bank Co., Ltd., in January, 2015 refers to Note 11 Significant
Subsequent Event.
-295-
(X) Other borrowings
2014.12.31
Credit loans
Secured loans
Total
Currency
NTD
Ƀ
Rate range
1.180%
0.940%
Period
2014.11.24~2015.02.10
2014.12.22~2015.01.16
$
$
Amount
300,000
510,000
810,000
2013.12.31
Credit loans
Secured loans
Total
Currency
NTD
Ƀ
Rate range
1.166%
0.940%
Period
2013.11.29~2014.11.29
2013.12.27~2014.01.03
$
$
Amount
200,000
50,000
250,000
The details of pledged assets for secured loans please refer to Note 8.
(Y) Provisions
Employee benefits provision
Guarantee reserve
Decommissioning costs of leasehold improvements
Provision of structured notes compensation
Other provisions
Total
2014.12.31
147,964
27,853
60,612
44,972
6,500
287,901
$
$
2013.12.31
233,004
26,655
59,985
48,520
368,164
The Company’s subsidiary, JihSun International Commercial Bank Co., Ltd.’s provision of
structured notes compensation occurs due to the controversial event related to the
consignment of structured notes which were issued by international institutions. The
provision is made considering the appraisal results of the Bankers Association of the
Republic of China and individual cases' situation.
The movement of provision is as follows:
Guarantee reserve
Decommissioning costs of
leasehold improvements
Provision of structured notes
compensation
Other provisions
Total
Guarantee reserve
Decommissioning costs of
leasehold improvements
Provision of structured notes
compensation
Total
$
2014.1.1
233,004
26,655
59,985
48,520
-
Provision
18,232
1,198
1,151
-
Paid
(103,272)
(524)
2014.12.31
147,964
27,853
60,612
(3,548)
44,972
368,164
6,500
27,081
(107,344)
6,500
287,901
2013.1.1
$
325,984
70,086
61,177
Provision
(reversal)
15,599
(43,431)
3,460
Paid
(108,579)
(4,652)
2013.12.31
233,004
26,655
59,985
55,268
1,645
(8,393)
48,520
512,515
(22,727)
(121,624)
368,164
$
$
Please refer to Note 6 (AB) for the details of employee benefits provision.
-296-
(Z)
Principal of structured instruments
Appropriated loan funds
Futures traders' equity
Total
$
$
2014.12.31
2,363,502
5,143,533
7,507,035
2013.12.31
110,928
10,057
4,887,071
5,008,056
2014.12.31
188,513
36,081
264,793
50,091
1,280
-
2013.12.31
207,778
36,178
62,528
56,210
1,133
325,552
540,758
689,379
(AA) Other liabilities
Amount received in advance
Guarantee deposits received
Securities lending refundable deposits
Deferred revenue
Other liabilitiesЁothers
Receipts under custody from customers’ security
subscription
Total
$
$
(AB) Employee benefits
(a)
Defined benefits plan
Adjustments in the present value of defined benefit obligation and the fair value of
plan assets for the Company and its subsidiaries are as follows:
Present value of unfunded benefit obligations
Present value of funded benefits obligations
Total present value of benefit obligations
Fair value of plan assets
Deficit in the plan
Recognized liabilities for defined benefit obligations
$
$
2014.12.31
-
2013.12.31
-
(912,824)
(912,824)
902,564
(10,260)
(10,260)
(902,464)
(902,464)
809,682
(92,782)
(92,782)
The Company and its subsidiaries’ prepaid pension costs are as follows:
$
2014.12.31
75,445
2013.12.31
80,051
The Company and its subsidiaries’ employee benefits liabilities are as follows:
Compensated absences liabilities
Employee benefits provisionЁpension
Total
$
$
-297-
2014.12.31
62,259
85,705
147,964
2013.12.31
60,171
172,833
233,004
The Company and its subsidiaries’ defined benefits plan contributes to designated
depository account with Bank of Taiwan. Payments of pension benefits to employees
who are covered by the Labor Standards Act are calculated based on the employee’s
average monthly salary for the last 6 months prior to approved retirement and base
point (b.p.) entitlement based on years of service.
(1)
Plan assets component
The pension fund contributed by the Company and its subsidiaries are in
compliance with Labor Standards Act, R.O.C. and is under the overall
management of the Bureau of Labor Funds, Ministry of Labor (“Bureau of Labor
Funds.”) According to Regulations for Revenues, Expenditures, Safeguard and
Utilization of the Labor Retirement Fund, with regard to the utilization of the
Fund, its minimum earnings in the annual distributions on the final financial
statement shall be no less than the earnings attainable from the amounts accrued
by two year time deposits’ interest rates offered by local banks.
Components of plan assets are as follows:
Bank of Taiwan labor pension reserve account
Pension fund balance
2014.12.31
740,159
162,405
$
902,564
$
2013.12.31
649,486
160,196
809,682
Please refer to the website of Council of Labor Affairs for information on labor
pension fund assets utilization including contribution rate and earnings rate and
fund asset allocation provided by Council of Labor Affairs.
(2)
Movements in present value of the defined benefit obligations
Defined benefits obligation on January 1
Current service costs
Current interest cost
Payment
Estimated amount of defined benefit obligation
The effect of curtailments or settlements
Actuarial (losses) gains
Defined benefits obligation on December 31
-298-
$
$
2014
(902,464)
(9,414)
(17,948)
20,083
(909,743)
1,620
(4,701)
(912,824)
2013
(912,802)
(9,956)
(14,540)
17,050
(920,248)
17,784
(902,464)
(3)
Movements in fair value of the plan assets
Fair value of plan assets on January 1
Expected return on plan assets
Contributions
Benefits paid by the plan
Estimated amount of defined benefit plan assets at
the ending period
Experience gains (losses) on plan assets
Fair value of plan assets on December 31
(4)
2014
809,682
14,883
95,514
(20,083)
899,996
$
2,568
902,564
$
2013
Current service costs
Current interest cost
Gains from curtailments
Expected return on plan assets
Pension expenses
$
$
9,414
17,948
(1,620)
(14,883)
10,859
Actual return on plan assets
$
17,451
9,956
14,540
(13,416)
11,080
9,710
Actuarial (gains) losses recognized in other comprehensive income
2014
Cumulative amount on January 1
Recognized during the period
Cumulative amount on December 31
(6)
(3,706)
809,682
Expenses recognized in profit or loss
2014
(5)
2013
724,252
13,416
92,770
(17,050)
813,388
$
2013
34,035
2,133
36,168
$
48,113
(14,078)
34,035
Actuarial assumptions
The following are the Company and its subsidiaries’ primary actuarial
assumptions on reporting date:
2014
Discount rate on December 31
Salary growth rate
Incremental rate of future compensation levels
-299-
2013
2.00%
2.00%
1.75%
2.00%
2.00%
1.75%
(7)
Experience adjustments on historical information
Present value of defined benefit plans
Net liabilities of defined benefit
obligations
Experience gains (losses) on defined
benefit obligation
Gains (losses) on actuarial
assumption change of defined
benefit obligation
Gains (losses) on the change of the
actuarial assumption of
demographic statistics
Gains (losses) on the change of
financial actuarial assumption
Experience gains (losses) on plan
assets
(b)
2014.12.31
(912,824)
902,564
$
(10,260)
$
2013.12.31
(902,464)
809,682
(92,782)
2012.12.31
(912,802)
724,252
(188,550)
2012.1.1
(862,650)
647,210
(215,440)
$
3,192
1,118
(1,041)
(40,798)
$
(7,893)
(34,077)
(21,020)
(26,817)
$
-
50,743
(19,499)
(61,075)
$
2,568
(3,706)
(6,553)
(4,284)
The defined contribution plan of the Company and its subsidiaries is in accordance
with the Labor Pension Act. The Company and its subsidiaries contribute 6% of the
wages and salaries as labor pension to individual accounts of labor pension at the
Bureau for employees applicable to the Act on a monthly basis. The Company and its
subsidiaries have no extra legal obligation or constructive obligation when the
Company and its subsidiaries attribute fixed amount of money regularly to the Bureau
of Labor Insurance. The Company and its subsidiaries recognized the amount
attributed to the pension fund as the cost of pension for the period. Please refer to Note
6(AM) retirement expenses-defined contribution plans.
(c)
Others
The Company’s subsidiary, JihSun Securities Co., Ltd. (the Securities) complied with
IAS 19 Employee Benefits. In addition, there is pension plan applicable to the
employees officially recruited by March, 1998. For employees applicable to the
pension plan mentioned above, the Securities distributed 3% of each employee’s salary
to the Pension Fund account on a monthly basis. When an employee retires or leaves,
the pension or termination payment to the employee will be paid by Pension Fund
account, and it is not a defined benefit pension plan. The Securities has no longer
distributed pension expense to Pension Fund account since March, 1998. By the
reporting date, the changes of the Pension Fund account balances were as follows:
2014
Beginning balance
Add: interest
Less: payment
Ending balance
$
$
-300-
2013
54,763
425
(2,000)
53,188
56,528
451
(2,216)
54,763
(AC) Income tax
Pursuant to regulations stipulated by Tai-Cai-Shui No. 910458039 dated February 12, 2003,
“Principles and regulations of profit-seeking businesses filing joint tax returns in accordance
with Article 49 of the Financial Holding Company Law and Article 40 of Enterprise Merger
Law”, while a financial holding company holds more than 90% of issued shares of a
domestic subsidiary and holds for 12 months during a tax year. The company has to behalf of
financial holding company as the obligatory tax payer and jointly filed income tax returns.
By adopting the principal of amortization of consolidated income tax, the joint filing of the
tax returns of the Company and its subsidiaries JihSun Securities Co., Ltd, JihSun
International Commercial Bank Co., Ltd. and JihSun International Property Insurance
Agency Co., Ltd. resulted in a lowered tax burden and brought tax saving efficiency.
Moreover, the management efficiency was enhanced because of the individual company’s
tax burden was fairly distributed.
The statutory income tax rate for 2014 and 2013 were both 17%, and the Company
calculated the basic tax amount in accordance with the Income Basic Tax Act.
(a)
Income tax expenses
For the years ended December 31, 2014 and 2013, the components of income tax
expense (benefit) for the Company and its subsidiaries were as follows:
Current tax expenses
Income tax benefit from jointly filing tax
Deferred tax expense
(Over estimation) under estimation of prior year’s expense
Difference of prior year’s taxable income assessed by tax
authority
Income tax expenses from continuing operations
$
2014
214,061
(136,452)
16,090
(1,175)
(884)
$
2013
163,038
(110,638)
3,189
20,583
(22,357)
91,640
53,815
For the years ended December 31, 2014 and 2013, the components of deferred income
tax expense (benefit) for the Company and its subsidiaries were as follows:
2014
Deferred (gains) losses on warrants
Deferred (gains) losses on structured instruments
Operating loss carryforwards
$
$
-301-
2013
14,513
116
64
1,397
16,090
13,868
(8,355)
(2,324)
3,189
The income tax (benefits) expenses recognized under other comprehensive income are
as follows:
2014
Actuarial gains or losses of defined benefit plan
Unrealized valuation gains or losses on available-for-sale
financial assets
2013
$
(363)
(1,537)
2,394
1,537
$
(1,900)
3,931
The reconciliations of income tax expenses (benefits) and net income before tax are as
below:
Net income
Income tax benefit
Net income before tax from continuing
operations
Income tax using the Company’s domestic tax rate
The effects of difference of foreign tax
Non-deductible expenses
Tax-exempt income
(Over estimation) under estimation of prior year’s expense
Difference of prior year’s taxable income assessed by tax
authority
Difference between income basic tax and income
tax
Other
Total
(b)
2014
2,445,135
91,640
2,536,775
$
$
2013
2,083,999
53,815
2,137,814
431,252
7,995
6,448
(134,027)
(1,175)
(884)
363,428
5,097
6,857
(67,735)
20,583
(22,357)
51,541
18,840
(214,226)
(55,284)
91,640
(256,927)
(13,971)
53,815
Recognized deferred tax assets and liabilities
The movement in deferred tax assets and liabilities for 2014 and 2013 are as follows:
Deferred tax liabilities:
Balance on 2014/1/1
Recognized in profit or loss
Recognized in other comprehensive
income
Balance on 2014/12/31
Balance on 2013/1/1
income
Defined
benefit
plans
$
15,853
1,421
(3,021)
Fair value
gains on
available-for-sale
financial assets
1,537
(1,537)
Others
58,147
64
-
Total
75,537
1,485
(4,558)
$
14,253
-
58,211
72,464
$
16,160
1,321
(1,628)
1,537
58,147
-
74,307
1,321
(91)
1,537
58,147
75,537
$
15,853
-302-
Deferred tax assets:
Balance on 2014/1/1
income
Balance on 2013/1/1
income
(c)
Defined
benefit
plans
$
32,759
(13,092)
(2,658)
Fair value
gains on
available-for-sale
financial assets
-
Others
42,282
(1,513)
-
Total
75,041
(14,605)
(2,658)
$
17,009
-
40,769
57,778
$
49,330
(12,549)
(4,022)
-
31,603
10,679
-
80,933
(1,870)
(4,022)
$
32,759
-
42,282
75,041
Significant tax eventsΚ
(1)
The Company jointly filed income tax returns for 2014 and 2013 for the
Company, JihSun Securities Co., Ltd., JihSun International Property Insurance
Agency Co., Ltd. and JihSun International Commercial Bank Co., Ltd. The
expected income tax payable for the 2014 and 2013 tax returns are $51,541 and
$18,840, respectively.
(2)
The Company’s income tax returns had been assessed for the years up to 2008.
The Company had already compromised with National Tax Administration about
the income tax for the year ended December 31, 2006. Therefore, in
reexamination, National Tax Administration decided to change the amount of tax
shortages to $0 and the tax amount reduced $16,106.
The Company had already compromised with National Tax Administration about
the income tax for the year ended December 31, 2007. Therefore, in
reexamination, National Tax Administration decided to change the amount of tax
shortages to $0 and the tax amount reduced $16,190.
The Company also had already compromised with National Tax Administration
about the income tax for the year ended December 31, 2008 and there were no
tax shortage.
(3)
For the year ended December 31, 2006, the different amount of income tax of
$84,416 had been decided by National Tax Administration. The Company’s
subsidiary, JihSun International Commercial Bank Co., Ltd. (the Bank) had
accrued this tax shortage. The Bank applied for an administrative appeal for
different amount of income tax resulted from these items amounted to $84,416
and had been rejected in August, 2014, the Bank decided not to appeal to further
administrative remedies.
-303-
(4)
$84,164 had been decided by National Tax Administration. The Company’s
subsidiary, JihSun International Commercial Bank Co., Ltd. (the Bank) had
accrued this tax shortage. However, the Bank was unsatisfied with some items of
the decision by National Tax Administration, like operation rights resulted from
acquisition of the trust department of Taiwan Land Development Trust Ltd. and
amortization of premium on long-term bonds, so the Bank applied for
reexamination for different amount of income tax resulted from these items
amounted to $84,164. The Bank received the report of reexamination in April,
2014 the tax amount reduced $354. The Bank applied for an administrative
appeal and had been rejected in August, 2014. The Bank decided not to appeal to
further administrative remedies.
(5)
$82,631 had been decided by National Tax Administration in March, 2014. The
Company’s subsidiary, JihSun International Commercial Bank Co., Ltd. (the
Bank) had accrued this tax shortage. However, the Bank was unsatisfied with
some items of the decision by National Tax Administration, so the Bank applied
for reexamination. The Bank received the report of reexamination in December,
2014. The Bank decided not to appeal further administrative remedies.
(6)
For the year ended 2006, National Tax Administration examined additional
income tax of $269,787. The mainly adjusted items are the premium and
estimated premium of warrant issuance. Except for the part which was double
counted by National Tax Administration, the remaining amount of income tax
$177,524 had been accrued. The Company’s subsidiary, JihSun Securities Co.,
Ltd. (the Securities) received the report of reexamination in March, 2014, the tax
amount reduced $22,250. The Securities was unsatisfied with the reexamination
and had applied for an administrative appeal and had been rejected in August,
2014, the Securities decided not to appeal to further administrative remedies.
(7)
For the year ended 2007, National Tax Administration examined additional
income tax of $100,479. The mainly adjusted items are the estimated premium of
warrant issuance. Except for the part which was misprinted by National Tax
Administration, the remaining amount of income tax $96,879 had been accrued.
The Company’s subsidiary, JihSun Securities Co., Ltd. (the Securities) received
the report of reexamination in April, 2014, the tax amount reduced $60,275. The
Securities was unsatisfied with the reexamination and had applied for an
administrative appeal and had been rejected in August, 2014, the Securities
decided not to appeal to further administrative remedies.
(8)
The income tax for the year 2008 of the Company’s subsidiary, JihSun Securities
Co., Ltd., (the Securities) has been assessed by the National Tax Administration
in March, 2014 to pay supplementary payment for $38,114. The Security had
applied for reexamination, and received the report of reexamination in December,
2014, the tax amount reduced $16. The Securities decided not to appeal to further
administrative remedies.
-304-
(9)
The Company’s subsidiary, JihSun Securities Co., Ltd., estimated its income tax
on stock warrant transactions pursuant to ruling Tai-Cai-Cheng No. 861922464
issued by the Ministry of Finance on December 11, 1997. Accordingly, the
proceeds from the issuance of stock warrants are accounted for as premium
which is included as part of taxable income. When the investors exercise their
warrant rights, such transaction is subject to the securities transaction tax in
accordance with the Income Tax Act, and accordingly, any capital gain or loss is
not included in the determination of the annual corporate income tax. According
to article No. 24-2 of the Income Tax Act passed on July 11, 2007, the Company
estimated income tax on Stock warrant transactions starting from July 2007:
A) During the period of issued date to maturity date of the stock warrant, which
is issued by the issuer, the profit and the loss of the securities and financial
derivative products, traded according to risk management, should be added
to taxable income and don’t apply to the Income Tax Act, the article No. 4-1
and 4-2.
B) If the trading loss of warrants, underlying securities, and futures derived
from risk management exceed the remaining of warrants premiums less
related cost of issuance and expenses, the exceeding trading loss is not
deductible.
(10) According to R.O.C Income Tax Act, losses can be carried forward to offset
taxable income for ten years following the loss. As of December 31, 2014,
unused operating loss carry forwards and expiring year of the Company and its
subsidiaries were as followsΚ
JihSun International Commercial Bank Co., Ltd.:
Year of loss incurred
2007 (Authorized)
2008 (Authorized)
2009 (Applied)
Total
Year of expiration
2017
2018
2019
$
$
Amount
4,270,805
4,689,632
8,045,060
17,005,497
Unrecognized deferred tax assets
The unrecognized deferred tax assets for the Company’s subsidiary, JihSun
International Commercial Bank Co., Ltd. are as follows:
$
2014.12.31
2,858,545
2013.12.31
3,084,418
The tax loss is recognized following the Income Tax Act. The Company will be
levied on income tax, with the authorization of Tax Authority, losses can be
carried forward to offset the next ten years' taxable income. The Company and
the Company’s subsidiary, JihSun International Commercial Bank Co., Ltd.
hadn't recognized all operating loss carryforwards as deferred tax assets because
it's not probable to be offset by taxable income.
-305-
(11) Information regarding estimation of accumulated income tax receivable (payable)
resulting from joint filing of tax for the Company and its subsidiaries were as
follow:
Income tax payable resulting from joint
filing - JihSun International Commercial Bank
Co., Ltd.
Income tax receivable resulting from joint
filing - JihSun International Property Insurance
Agency Co., Ltd.
Income tax payable resulting from joint
filing - JihSun International Property Insurance
Agency Co., Ltd.
Income tax receivable resulting from joint
filing - JihSun Securities Co., Ltd.
$
$
2014.12.31
(1,188,236)
2013.12.31
(1,787,253)
125
130
(128)
(128)
69,491
654,057
(1,118,748)
(1,133,194)
The income tax receivable (payable) resulting from joint filing of tax is recorded
as other receivable (payable), and these balances had been written-off for
consolidation purposes.
(AD) Imputation credit account
Unappropriated earnings of 1998 and after
Imputation credit account balance
2014.12.31
2,441,410
876,367
2013.12.31
1,717,067
1,179,411
2014 (Estimated)
20.48%
2013 (Actual)
20.48%
$
$
Tax deduction ratio for earnings distribution
The aforementioned information regarding imputation credit account is in accordance with
the Order of Tai-Cai-Shui No.10204562810 issued by the Ministry of Finance on October 17,
2013.
(AE) Equity
Capital stock
In order to strengthen financial structure, reinvest the banking subsidiaries and expand
Groups’ oncoming operation, the Boards meetings on April 28, 2006, May 10, 2006 and the
shareholders’ meeting on June 9, 2006 had approved to issue common stock 1,142,857,142
shares at value of NT$7 dollars and series A preferred stock 666,666,668 shares at value of
NT$6 dollars through a private offering. Total amounts were 12 billion dollars. The base date
for offering was at July 21, 2006, and the Company’s registration had been completed on
September 26, 2006.
The important terms of issuing Class A preferred stock were listed as follows:
-306-
(a)
If the Company has the current year’s earnings, the current year’s earnings shall be
allocated in the following order:
(1)
Payment of all taxes and making certain adjustments in accordance with SFAS.
(2)
Offset prior years’ cumulative losses, if any.
(3)
After deducting (1) and (2), legal reserve and special reserve shall be set aside
with the Act and the Company’s rules.
(4)
After deducting (1), (2), and (3), the Company should distribute series A
preferred stock dividends first.
(b)
The series A preferred stock dividend will be calculated at annual rate of 5.5% base on
the issued price, and will be distributed in cash annually. The issued date was defined
as base date for offering. (July 21, 2006)
(c)
If the Company has no earnings or not enough to distribute dividend of series A
preferred stock, the undistributed or distributed insufficient part will not accumulate to
the next year.
(d)
Except for the dividends described in b, the series A preferred stock cannot join the
assignment of remaining earnings to common stock and stock dividends from capital
surplus.
(e)
The stockholders of series A preferred stock have no right to vote at stockholder
meeting, they cannot vote for directors and supervisors; whereas, they can be elected as
directors and supervisors.
(f)
The offering was closed on July 21, 2006 and presented to Financial Supervisory
Commission, Executive Yuan on the same day.
The board of directors’ meeting on February 26, 2007 and shareholders’ meeting on April 10,
2007 had approved to reduce capital $13,711,490 (common shares were reduced
1,146,156,342 shares and preferred shares were reduced 224,992,611 shares) to offset
accumulated losses. The Company had obtained the approval letter from Financial
Supervisory Commission, Executive Yuan at June 14, 2007, with the issuing number of FSC
Jin-Guan-Jheng- Zi (1) 0960024642. The base date for capital reduction was on June 26,
2007 and the Company’s registration had completed at July 4, 2007.
On February 3, 2009, the Company’s board of directors had resolved to implement a capital
increase through public placement at NT $4 dollars per share by issuing 2,350,374,000 new
common shares which amounted to $9,401,496. The Company had obtained the approval
letter from Financial Supervisory Commission, Executive Yuan, with the issuing number of
FSC Jin-Guan-Jheng-Zi (1) 0980005396. The base date for capital increase was on April 15,
2009 and the Company’s registration had completed on May 21, 2009.
-307-
Pursuant to the resolution approved by the shareholders’ meeting on May 6, 2010 and the
board of directors’ meeting on March 19, 2010, the Company adopted capital reduction
amounted to $23,812,134(common shares were reduced 2,169,293,665 shares and preferred
shares were reduced 211,919,723 shares) to offset accumulated losses. The capital reduction
was already approved by FSC Jin-Guan-Jheng-Zi (1) No. 0990025442, dated May 26, 2010.
The base date for capital reduction was on June 8, 2010 and the Company’s registration had
been completed on June 14, 2010.
The aforementioned private placement of common stock together with its bonus shares and
supplemental public issuance procedures for private placement of preferred stock became
effective after being reported to the FSC. The common stock started trading on OTC market
on June 15, 2012.
On March 12, 2013, SIPF B.V., a major shareholder of the Company, applied to convert all
its holding of 217,117,845 shares of series A preferred stock of the Company into common
stock, amounting to $2,171,178. The conversion date was on March 22, 2013. Moreover,
before April 18, 2013, other shareholder of series A preferred stock had already converted all
their holding of 4,729,110 shares of series A preferred stock into common stock, amounting
to $47,291.
Pursuant to the resolution approved by the shareholders’ meeting on June 21, 2013, the
Company resolved to implement capital increase by capitalization of retained earnings
amounted to $1,538,885 with 153,888,461 new shares. The Company had obtained the
approval letter from Financial Supervisory Commission, with the issuing number of FSC
Jin-Guan-Jheng-Zi (Fa) No. 1020026130. The board of directors’ meeting held on July 19,
2013 had decided the allotment date of stocks to be on August 12, 2013. The Company had
completed relevant registration process on August 22, 2013.
Pursuant to the resolution approved by the shareholders’ meeting on June 20, 2014, the
Company resolved to implement capital increase by capitalization of retained earnings
amounted to $1,160,737 with 116,073,664 new shares. The Company had obtained the
approval letter from Financial Supervisory Commission, with the issuing number of FSC
Jin-Guan-Jheng-Zi (Fa) No. 1030025504. The board of directors’ meeting held on July 24,
2014 had decided the allotment date of stocks to be on August 17, 2014. The Company had
completed relevant registration process on August 26, 2014.
The authorized capital is $80,000,000, including 8,000,000,000 shares at NT$10 per share
and is issued separately by authorized board of directors. The Company retained
100,000,000 shares for the warrant shares of issuing stock warrant, preferred shares with
warrants and corporate bonds with warrants. As of December 31, 2014 the Company’s total
paid-in capital was $32,151,817, total outstanding common shares were 3,215,181,687
shares and preferred shares were 0 shares.
-308-
The movement of the Company’s other equity interest is as below:
January 1, 2014
ʳ ЁValuation adjustment
ʳ ЁRealized amount
ʳ ЁTax
Exchange differences on
translation of foreign
financial statements
December 31, 2014
January 1, 2013
ʳ ЁValuation adjustment
ʳ ЁRealized amount
ʳ ЁTax
Exchange differences on
translation of foreign
December 31, 2013
Unrealized (losses)
gains on
available-for-sale
financial assets
$
65,665
(883)
(19,316)
1,537
Exchange differences
on translation of
foreign financial
statements
(242,620)
-
-
Total
(176,955)
85,407
(883)
(19,316)
1,537
85,407
$
47,003
(157,213)
(110,210)
$
298,417
(277,340)
21,077
34,720
58,270
(289,485)
(1,537)
34,720
(242,620)
(176,955)
58,270
(289,485)
(1,537)
-
$
65,665
-
(AF) Earnings distribution and dividend policy
After-tax earnings, if any, shall pay for taxes and offset cumulative losses, and the remainder
will be set aside as legal reserve and special reserve as required by relevant regulations. Any
remaining balance will be distributed as employee bonus which cannot be less than 0.01%.
The very remaining balance and accumulated unappropriated earnings from prior years
should be formulated by the Broad of Directors and distributed in accordance with the
resolution of the shareholders’ meeting. In compliance with the law, the Company set aside
special reserve from the earnings of the year. However, if the law has been amended or
reasons for setting special reserve are eliminated, special reserve can be reversed as
unappropriated earnings.
In compliance with the amended Company Act in January, 2012, 10% of the annual net
income (less any accumulated deficit) is appropriated as legal reserve. The aforementioned
appropriation for legal reserve is made until the reserve equals the Company’s capital. When
there is no deficit, the legal reserve could be transferred, after the resolution of shareholders’
meeting, to capital or distributed as cash dividends. Only the amount of the legal reserves
exceed over 25% of paid-in capital could be transferred or distributed.
-309-
According to SFC Tai-Cai-Zheng-Zi(1) No. 100116 dated January 3, 2000, and other related
regulations, prior to any distribution of earnings, if there are any deductions made to
stockholders’ equity, then an equal amount of special reserve must be provided based on net
income of the current period and unappropriated earnings from the prior period. If there are
any subsequent reversals to the deduction from stockholders’ equity, then the reversed
portion may be distributed. On January 11, 2011, the rules regarding provision for trading
loss reserve and default loss reserve are revoked from the Regulations Governing Securities
Firms and Regulations Governing Futures Commission Merchants. As of December 31,
2010, the amount of trading loss reserve and default loss reserve are reclassified as special
reserve.
The Company adopted the residual dividend policy. In consideration of the Company’s
capital budget, essential funds needed for operations and investing are retained, and the
remainder is distributed as stock or cash dividends. The cash dividends shall not be less than
10% of total dividends. When the employee bonuses are issued by stock dividends, the
allocated subjects could include the employees of the Company’s subsidiaries.
A resolution on the Company’s 2012 earnings distribution of the Company was approved by
the shareholders’ meeting on June 21, 2013, and the distribution of directors’ and
supervisors’ remuneration and the employees’ bonuses amounted to $5,500 and $194,
respectively. There was no difference between the aforementioned amount and the estimated
amount.
A resolution on the Company’s 2013 earnings distribution of the Company was approved by
the shareholders’ meeting on June 20, 2014, and the distribution of directors’ and
supervisors’ remuneration and the employees’ bonuses amounted to $5,500 and $145,
respectively. The employees’ bonus was underestimated by $1 and had been adjusted in
2014 net income. The relevant information on earnings distribution resolved by the board of
directors and approved by the shareholders’ meeting can be accessed through the Market
Observation Post System and other sites.
For the year 2014, directors’ and supervisors’ remuneration and the employees’ bonuses are
estimated to be $5,500 and $226, respectively. For the year 2013, directors’ and supervisors’
remuneration and the employees’ bonuses are estimated to be $5,500 and $144, respectively.
The relevant dividend distributions to shareholders approved by shareholders’ meeting dated
on June 20, 2014 and June 21, 2013 are as follows:
2013
2012
Dividend
per share
(in NTD)
Dividends on common shares
Cash dividends
Stock dividends
Total
$
Amount
0.09
0.37
$
-310-
290,184
1,160,737
1,450,921
Dividend
per share
(in NTD)
0.13
0.52
Amount
384,721
1,538,885
1,923,606
(AG) EPS
2014
Basic EPSΚ
Κ
Net income
Profit attributable to ordinary shareholders of the Company
Weighted average outstanding shares of common stock (in
thousands)
Basic EPS (in NT dollars)
Diluted EPSΚ
Net income
Weighted average outstanding shares of common stock (in
thousands) which is used in calculation of diluted EPS
Diluted EPS (in NT dollars)
$
2013
2,443,092
2,443,092
2,081,119
2,081,119
3,215,182
3,161,055
$
0.76
0.66
$
2,443,092
3,215,182
2,081,119
3,215,182
$
0.76
0.65
(AH) Net interest income
2014
Revenue from interest
Discount and loans
Due from banks and call loans to banks
Factoring receivables
Securities investment
Revolving credit
Financing and securities financing
Others
Subtotal
Interest expenses
Deposit
Due to central bank and other banks
Borrowings from central bank and other banks
Borrowings and commercial papers
Corporate and financial debentures
Others
Subtotal
$
$
2013
3,119,610
428,710
1,958
375
224,396
82,485
792,984
71,284
4,721,802
2,915,705
266,956
4,597
2,997
236,326
97,835
675,853
71,690
4,271,959
1,336,803
56,186
21,290
54,374
46,106
58,483
7,807
1,581,049
3,140,753
1,246,119
63,596
69,536
40,724
69,349
13,346
1,502,670
2,769,289
Interest income and expenses from financial assets and liabilities at fair value through profit
and loss are excluded.
-311-
(AI) Net service fee (charge) and commissions income
2014
Net remittances service fee
Net interbank service fee charge
Loan service fee
Net underwriting service fee
Net brokering service fee
Credit card business service fee
Trust service fee
Income from securities lending
Net other commission income
Dealing service charge
Refinancing service charge
Consignment settlement and delivery service charge
Futures commission expense
Net other service charge
Net service fee
$
$
4,916
19,641
28,162
47,913
2,366,155
97,040
332,990
10,126
534,127
(18,480)
(131)
(55,223)
(51,307)
(34,839)
3,281,090
2013
5,311
19,454
30,906
75,507
2,033,052
99,737
316,914
16,055
704,873
(11,379)
(326)
(46,777)
(39,963)
(24,237)
3,179,127
(AJ) Gains and losses on financial assets or liabilities at fair value through profit or loss
2014
Disposal gains (losses)
Commercial paper
Bonds
Stocks
Futures margin
Losses from issuance of call (put) warrants
Net loss on covering of borrowed securities and bonds with
resale agreementsЁshort sale
Interest income of financial assets
Others
Subtotal
Valuation (losses) gains
Commercial paper
Bonds
Stocks
Futures margin
Gains from issuance of call (put) warrants
Valuation net (losses) gains on borrowed securities and bonds
with resale agreementsЁshort sales at fair value through
profit or loss
Others
Subtotal
Total
-312-
$
$
2013
31,111
(26,180)
289,391
140,306
(30,672)
(252,919)
(4,780)
46,253
(194,452)
214,498
53,044
(30,821)
(43,152)
(8,515)
241,371
11,162
398,790
317,642
447
354,944
767
39,082
48,627
84,943
(298)
323,853
(13,054)
(1,374)
(18,451)
69
7,672
395
132,858
19,774
1,318
485,238
884,028
(842)
140,101
495,045
(AK) Realized gains (losses) on available-for-sale financial assets
2014
Disposal gains on government bonds
Disposal gains on corporate bonds
Disposal gains on stocks
Disposal gains on financial debentures
Dividends earned on financial assets
Total
$
$
8,088
3,708
7,388
132
97
19,413
2013
14,059
54,097
221,329
73
289,558
2014
23,862
32,365
196,638
110
17,262
80,729
(1,818)
7,045
14,560
83,353
454,106
2013
22,127
30,699
145,111
11
16,060
103,309
(1,306)
65,451
381,462
2014
2,993,775
235,748
2013
2,839,133
225,941
118,395
10,859
115,766
11,080
2,618
88,637
3,450,032
7,352
100,805
3,300,077
2014
197,464
3,661
68,003
194
269,322
2013
210,122
3,505
62,002
195
275,824
(AL) Other non-interest incomes
Rental income
Stock management incomes
Dividend revenue
Gain on disposal of property, plant and equipment
Director’s and supervisor’s remuneration
Financial income
Losses on retirement of assets
Gain on disposal of investments
Gain on sale of NPL
Others
Total
$
$
(AM) Employee benefits expenses
Salary expenses
Insurance expenses
Retirement expenses
Other personnel expenses
Termination benefits
Other employee benefits
Total
$
$
(AN) Depreciation and amortization expenses
Property, plant and equipment
Investment property
Intangible assets
Other deferred asset
Total
$
$
-313-
(AO) Other general and administrative expenses
Rent
Stationery
Traveling expenses
Postage expenses
Repairs and maintenance expenses
Advertisement expenses
Utilities expenses
Insurance expenses
Entertainment expenses
Taxes
Information technology expenses
Professional service fees
Cash on delivery fees
Security fees
Software maintenance fees
Depository service expenses
Collection service fees
Cleaning fees
Building administration expenses
Others
Total
$
$
2014
348,757
35,321
35,959
142,594
92,941
40,880
98,568
58,797
26,697
491,514
99,019
44,600
38,803
24,843
67,895
46,851
36,050
25,190
21,576
184,053
1,960,908
2013
355,342
37,735
37,236
149,893
96,454
32,538
95,054
57,700
28,039
340,595
102,278
45,858
38,025
22,902
84,543
39,175
32,515
23,812
23,159
175,712
1,818,565
(AP) Disclosure of financial instruments
(a)
Fair value of financial instruments
Financial assets
Non-derivative financial instruments
Available-for-sale financial assets—net
Receivablesɡnet
Loan discounted—net
Held-to-maturity financial assets—net
Restricted assets—net
Other financial assetsɡnet
Other assetsɡnet
Trading purpose
Forward contracts
Foreign currency swap
Options
Interest rate instruments
Asset swap
Future margins
-314-
2014.12.31
Book value
Fair value
$
7,337,534
14,866,012
43,685,118
8,479,415
50,504
19,878,044
143,960,130
300,000
572,476
7,748,179
2,527,653
7,337,534
14,866,012
43,685,118
8,479,415
50,504
19,878,044
143,960,130
303,325
572,476
7,748,179
2,527,653
736,131
170,853
896,880
36,108
19,150
126,693
736,131
170,853
896,880
36,108
19,150
126,693
Financial liabilities at fair value through profit or
loss
Commercial paper issued—net
Payables
Deposits
Other borrowings
Other liabilities
Trading purpose
Warrants
Asset swap
Forward contracts
Options
Financial assets
Available-for-sale financial assets—net
Receivablesɡnet
Loan discounted—net
Held-to-maturity financial assets—net
Restricted assets—net
Other financial assetsɡnet
Other assetsɡnet
Trading purpose
Forward contracts
Options
Asset swap
Future margins
-315-
2014.12.31
Book value
Fair value
$
6,645,253
871,593
6,645,253
871,593
7,199,640
4,542,932
10,281,806
178,507,598
2,500,000
810,000
7,507,035
264,793
7,199,640
4,542,932
10,281,806
178,507,598
2,500,000
810,000
7,507,035
264,793
350,217
55,655
20,553
730,147
158,883
1,384,741
350,217
55,655
20,553
730,147
158,883
1,384,741
2013.12.31
Book value
Fair value
$
8,451,281
24,308,997
23,510,674
11,281,874
20,269,472
140,893,714
300,000
522,417
8,233,702
1,351,540
8,451,281
24,308,997
23,510,674
11,281,874
20,269,472
140,893,714
305,824
522,417
8,233,702
1,351,540
21,422
9,324
12,365
11,926
760
55,159
21,422
9,324
12,365
11,926
760
55,159
Financial liabilities at fair value through profit or
loss
Payables
Deposits
Other borrowings
Other liabilities
Trading purpose
Warrants
Asset swap
Forward contracts
Options
(b)
2013.12.31
Book value
Fair value
$
11,056,736
477,098
11,056,736
477,098
5,746,601
3,877,989
12,000,655
169,315,508
3,000,000
250,000
5,008,056
62,528
5,746,601
3,877,989
12,000,655
169,315,508
3,000,000
250,000
5,008,056
62,528
288,314
29,825
1,074
12,512
14,814
16,514
288,314
29,825
1,074
12,512
14,814
16,514
Methods and assumptions used by the Company and its subsidiary for fair value
evaluation of financial instruments are as follows:
(1)
Fair value of financial instruments is estimated by their book value on the
consolidated balance sheet date. Since these instruments have short maturities or
their book values are similar to the future receivable/payable amounts, the book
value is adopted as a reasonable basis in estimating the fair value. The method is
applied to cash and cash equivalents, due from the Central Bank and call loans to
banks, securities purchased under resell agreements, receivables, restricted assets,
other financial assets(except for financial assets carried at cost), operating
guarantee deposits, clearing and settlement fund, refundable deposits (listed in
other assets), deposits from the Central Bank and banks, securities sold under
repurchase agreements, commercial paper issued, payables, security lending
and refundable deposits received (listed in other liabilities).
-316-
(2)
If there is a quoted price in an active market for the financial asset, including
financial instruments measured at fair value through profit or loss, available for
sale financial assets and held-to-maturity financial assets, and non-derivative
financial instruments, the quoted price is regarded as its fair value. Financial
instruments with public market prices (except for stocks and depositary receipt)
such as government bonds use the latest trade price or reference theory price
under OTC European Breakdown Tyre System as fair value. Foreign currency
bonds use latest trade price as fair value. If there is no quoted price in an active
market for the financial asset, its fair value is estimated on the basis of the result
of a valuation technique that refers to quoted prices provided by financial
institutions. The information is available for the Company and its subsidiary.
Financial derivative instruments with active market price use market value as fair
value. Futures use settlement price as fair value. Foreign exchange trading uses
average closing price as fair value. When there is no active market price,
valuation model is mainly adopted in evaluation. Financial derivative
instrumentsņ non-option use discounted cash flow; financial derivative
instrumentsņ options mainly use Blackņ Scholes Model in evaluation.
(3)
Loan discounted (including Non-accrual loans): The interest rate that the Bank
uses in loans is basically based on floating rate, which can reflect the market rate.
Therefore, it is reasonable to use its book value to evaluate the expected retrieve
possibility.
(4)
Deposits: Considering the nature of banking industry, the decision maker of
market interest rate (also refer to as market price), and most of the deposit
transaction mature in one year, its book value is considered to be a reasonable
basis in evaluating fair value. Among deposits, the fair value of long-term
deposits with fixed interest rate should be evaluated by using discounted cash
flow projections, and the longest maturity date is not more than 3 years from now.
Therefore, it should be reasonable to evaluate its fair value with book value.
(5)
The fair value of bonds payable and other borrowings are evaluated based on the
present value of expected future cash flows. The discount rate is based on rates
of equivalent long-term borrowings available elsewhere; that is, long-term
borrowings with similar maturity date and terms.
(6)
Other financial assets-financial assets at cost: Other financial assets-financial
assets at cost belong to private equities. Because there is no active market price
and the variation interval of its estimated fair value is material, or the possibility
of the estimations in the variation interval cannot be reasonably estimated, the
book value is used as the fair value.
(7)
Other financial liabilities, including interest bearing appropriated loan funds,
principal received on structured instruments and interest bearing financial
liabilities: These kinds of liabilities’ book value are current price so that book
value should be the reasonable basis in evaluating these liabilities’ fair value.
-317-
(c)
Fair value hierarchy information on financial instruments and the statements of
changes in fair value of Level 3
(1)
Fair value hierarchy information on financial instruments
Fair value measurement for
financial instruments
ʳ Assets:
profit or loss
Financial assets held for trading
Stocks
Bonds
Others
Financial assets designated as at
fair value through profit or
lossЁstructured instruments
Stocks
Bonds
ʳ Liabilities:
through profit or loss
Financial liabilities held for
trading
Financial liabilities designated as at
fair value through profit or loss
Ёstructured instruments
Assets:
profit or loss
Liabilities:
Total
$
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2014.12.31
Level 1
Level 2
(Note 1)
(Note 2)
2,634,073
17,809,183
23,085,310
156,552
2,404,968
7,487,738
20,081,887
-
229,105
10,321,445
3,003,423
-
3,328
8,476,087
3,328
3,644,273
4,831,814
624,440
624,440
-
247,153
-
-
Level 3
(Note 3)
156,552
-
247,153
1,985,815
145,147
1,840,668
-
2,700,196
374,042
2,326,154
-
Fair value measurement for
financial instruments
ʳ Assets:
profit or loss
Financial assets held for trading
Stocks
Bonds
Others
Financial assets designated as at
fair value through profit or
lossЁstructured instruments
Stocks
Bonds
ʳ Liabilities:
Financial liabilities held for
trading
Financial liabilities designated as at
fair value through profit or loss
Ёstructured instruments
Assets:
profit or loss
Liabilities:
(2)
2013.12.31
Level 1
Level 2
(Note 1)
(Note 2)
Total
$
2,624,667
15,455,303
4,543,695
887,009
2,443,062
6,029,697
156,309
-
181,605
9,425,606
4,387,386
749,057
11,748
11,270,126
11,748
7,366,416
3,903,710
105,719
105,719
-
371,379
-
-
Level 3
(Note 3)
137,952
-
371,379
110,956
59,360
51,596
-
363,053
292,892
70,161
-
Statements of changes in financial assets which were classified to Level 3 based
on fair value measurement
2014
Current increase
Beginning
balance
Items
Structured
instruments
$
137,952
Valuation
adjustment
recognized in
current net profit
(447)
Purchase
or issue
647,812
Transfer
into
level 3
-
Current decrease
Sale, disposal,
or settlement
Transfer out
of other
levels
(628,765)
-
Ending
balance
156,552
2013
Current increase
Beginning
balance
Items
Structured
instruments
$
135,414
Valuation
adjustment
recognized in
current net profit
168
Purchase
or issue
583,560
-319-
Transfer
into
level 3
-
Current decrease
Sale, disposal,
or settlement
(581,190)
Transfer out
of other
levels
-
Ending
balance
137,952
(3)
Statements of changes in financial liabilities which were classified to Level 3
based on fair value measurement
2014
Current increase
Beginning
balance
Items
Structured
instruments
$
371,379
Valuation
adjustment
recognized in
current net profit
6,401
Purchase
or issue
2,530,858
Transfer
into
level 3
-
Current decrease
Sale, disposal,
or settlement
Transfer out
of other
levels
(2,661,485)
-
Ending
balance
247,153
2013
Current increase
Beginning
balance
Items
Structured
instruments
$
197,745
Valuation
adjustment
recognized in
current net profit
(12,541)
Purchase
or issue
1,787,514
Transfer
into
level 3
-
Current decrease
Sale, disposal,
or settlement
(1,601,339)
Transfer out
of other
levels
-
Ending
balance
371,379
Note1: Fair value measurement for a financial instrument classified in Level 1
is determined as the quoted price for an identical financial instrument in
an active market. The definition of active market has all of the following
conditions: (1) the products traded in the market are homogeneous, (2)
willing parties are available anytime in the market, and (3) price
information is available for the public.
Note2: Fair value measurement for a financial instrument classified in Level 2
is determined as the observable price other than quoted price in an
active market including an observable input obtained in an active market,
either directly (i.e., as prices) or indirectly (i.e., derived from prices).
The examples of observable price are as follows:
1. The quoted price for an identical financial instrument in an active
market means the fair value from the market transaction prices for an
identical financial instrument. An identical financial instrument
should be determined by its characteristics and terms of transaction.
The fair value of a financial instrument has to be adjusted according
to the observable market price of the identical financial instrument.
The reasons for adjustments include time lag of the occurring market
transaction prices for an identical financial instrument (the quoted
prices do not represent fair value at the measurement date), the
difference in transaction terms for financial instruments, transaction
prices involving related parties, and the correlation between the
observable transaction prices of identical financial instruments and
the market prices of held financial instruments.
2. The quoted market price of the same or identical financial
instruments in an inactive market.
-320-
3. The fair value is estimated on the basis of the results of a valuation
technique, and the market inputs used (i.e., interest rate, yield curve,
and fluctuation rate) are based on obtainable data from the market (an
observable input means an input can be derived from market data and
can reflect the expectation of market participants when the inputs
were used in evaluating the prices of financial instruments).
4. A majority of inputs are derived from observable market data, or the
input correlation can be tested based on observable market data.
Note 3: Input for a fair value measurement for a financial instrument classified
in Level 3 is not based on obtainable data from the market (an
unobservable input, such as volatility for a share option derived from the
share’s historical prices, as it does not generally represent current
market expectations about future volatility).
(d)
Financial risk management
(1)
Risk management organization structure
The financial risk management structures of the Company and its subsidiaries
include the board of directors and senior management of the Company and its
subsidiaries, the Risk Management Committee, the risk management division
and risk management unit under individual business group. The major objective
of operating strategies is to monitor and manage related risk structures for overall
risk of the Company which the risk management division is responsible for
detecting relevant risks arising from risk management unit under individual
business group. The integrated management among the Risk Management
Committee, the risk management division and risk management unit under
individual business group is to meet appropriate balance between risk and return,
and the expectation return of shareholders.
In order to achieve the operating goal and increase return of shareholders’,
appropriate risk management should be implemented to enhance the effective
risk management system and sound business operation. Therefore, the board of
directors of the Company and its subsidiaries set out and approve risk
management strategies to achieve efficient and effective risk management system;
these strategies are used to control and manage relevant risk.
-321-
The risk management division focuses mainly on the overall risk consideration,
and integrates relevant risks of the business departments. There are three
subordinate departments under the risk management division, including the
department of market risk, the department of credit risk, and the department of
operation risk, which are responsible of the planning and controlling of market
risk, credit risk, and operation risk. The business departments are responsible for
daily risk management and control, especially the intraday transaction control.
Through the cooperation of the risk management division and the risk control
units of business departments enables the risk control mechanism to connect
during the premarket, after-hours and intraday transactions. Furthermore, it
complete risk control by covering the functions throughout front, middle and
back offices.
Organization chart
Board of Directors
Risk Management Division
Audit Division
Chairman
Credit Risk Division
Risk Management
Committee
Market Risk
Division
General Manager
Operational Risk
Division
Bank and Securities
Subsidiaries Risk
Management Division
Risk Management
Personnel of Each Unit of
the Bank and Securities
-322-
(2)
Risk management policy:
For the purpose of improving the operation and development of the businesses of
the Company and its subsidiaries, to help them achieve their operating strategy
and targets, the principles and objectives with which the Company and its
subsidiaries must be equipped when setting up their financial management
policies are as follows:
A) The objectives of risk management
a) The Company and its subsidiaries establish the independent and
effective risk management structure and system to assess and supervise
the risk-burden ability, the statue of the risks received, responding
strategies toward decisive risks and the compliance situation of risk
management procedures of the Company and its subsidiaries.
b) The Company and its subsidiaries establish scientific risk management
system to identify, analyze and assess and handle the significant risk,
which has potential negative impact toward the Company and its
subsidiaries and then take risk response measures to mitigate the
significant risk in a reasonable statue.
B) Principle of risk management
a) With the scientific risk management system, the Company enables to
analyze the risk and to achieve reasonable returns.
b) Under the effective risk management structure, each segment executes
the daily management respectively. The risk management division is
established to submit the risk management report to the board of
directors regularly, in order to control the risk in time and effectively
and in time. When significant risk exposure is emerging, which
threatens the financial and business situation as well as the compliance
of regulations, proper measurements should be adopted and should
report it to the board of directors immediately.
c) The risk control mechanism supervises the capital adequacy of the
Company in consideration of the scale of business, credit risks, market
risk, operation risk and the trend of future operation. It aims at making
assets allocation in compliance with the overall risk exposure,
regulatory capital and the characteristics of liabilities.
-323-
C) The operation of risk management function should have characteristics as
following:
a) Timely: The operation system should provide risk forecasting report,
strategies and avoidance to the risk in accordance with the risks resulted
from the process of decision-making of the Company and its
subsidiaries so that the system can apply the risk management function
immediately.
b) Effectiveness: The Company and its subsidiaries should set up
appropriate risk management procedure, monitoring method and
emergency response plan to keep the effectiveness of the risk
management function against any possible risk.
(3)
Risk management category
The Company's and its subsidiaries' risk management function have already
identified and controlled the various risks as follows:
A) Asset-liability riskǺ
Deposit, loan and assets allocation are the main operation of financial
holding companies. This might lead financial holding companies to face an
imbalance between the maturity structure of assets and liabilities for the long
term or the short term and to exposure to the liquidity risk and the interest
rate risk caused by potential interest rate changes. Therefore, the risk
management functions of these two risks are as follows:
a) Liquidity risk:
In addition to be in compliance with the reserve requirement and the
lowest liquidity ratio required by the competent authority, the Bank
establishes liquidity analysis, triggers, and limit of indicators in order to
set up coping strategies to prevent poor liquidity.
b) Structural interest rate risk
In order to reduce the degree of interest risk exposure effectively, the
Company and its subsidiaries has built up interest rate sensitive balance
sheet, analyzed interest sensitive gap and established limit of indicators
for setting strategies and hedging programs.
-324-
B) Market risk
Market risk is defined as the exposure to market factors (such as interest,
stock price, exchange rate, etc.) that resulted in unstable price changes of
assets which arise from operating financial instrument actively and
expansion of business. To effectively evaluate the degree of market risk
exposure, the Company and its subsidiaries has set up management
indicators and its limit by establishing scientific methods and system of
market risk management.
C) Credit risk
Credit risk is defined in the event when counterparties fail to perform its
obligation which arising from operating financial instruments actively and
expanding the business with possible loss or financial status worsen by the
counterparties or credit customers. The Company and its subsidiaries should
set up standard evaluation method of asset quality and classification to
compute and control the exposure regarding the industry characteristics. The
method should be reviewed periodically to recognize allowance for credit
loss and reserve. According to the credit policy for credit rating and asset
diversity, the credit information of counterparties and credit customers
should be monitored and collected as management indicator to minimize the
risk of default and credit concentrations.
D) Operational risk (including legal risk)
The operational risk might be caused by internal issues, such as
inappropriate system, personnel negligence and system malfunction; or the
losses caused by external issues including legal risk. The Company and its
subsidiaries comply with the operational risk management policy, structure
and function which were established internally to reduce the significant
losses caused by operational risk and its negative impact on achievement of
objectives of operating and management. The Company and its subsidiaries
also achieve risk identification, measurement, monitor, control and reduction
by risk management activities such as self risk assessment and key risk
indicators report.
-325-
(4)
Risk management process
A) The Company’s and its subsidiaries risk management process includes the
identification, assessment, management, supervision and reporting of risks.
Risk assessments and responding strategies are explained as follows:
a) Recognition and evaluation
To effectively evaluate the degree of market risk exposure, the
Company and its subsidiaries has set management indicators and its
limit by establishing scientific methods and system of market risk
management. The evaluation can serve as a basis to manage and monitor
the Company and its subsidiaries possible market risk. The Company
and its subsidiaries internal market risk estimation model include
interest rate, foreign exchange, equity, product and other risk factors. In
addition to the traditional control methods such as authorize position
limit, stop-loss limit, limit of risk indicators (i.e.: Greeks, DVO1……),
Value at Risk (VaR), stress test and limit on permission suspension are
applied to measure market risk. Nevertheless, when data is applied for
stress test, in the extreme scenario the monitor and management of limit
is valued as the whole financial holding company.
b) Monitoring and reporting
1) Risk management department of each business unit
Daily supervision is conducted by each business unit by following
related internal policies and executing hierarchical authorization
control. Furthermore, reports should be submitted. When a
divergence or exception occurs, an analysis should be accompanied
with the report. When submitting a report, one should not only
follow the Company's notification procedures, but also send
notification to risk management division. If the risk indicator is
within the limit, general manager of the Company should approve
further measures and the top executive from the financial holding
company’s risk management division should review before giving
notice to the chairman. If, however, the loss of a business unit
exceeds its limit, it should ameliorate within a period of time unless
the character of the business operation unit requires seeking
approval from the Company's chairman. When the loss can’t be
dropped below the limit, the business operation unit needs to take
specific handling procedures. If necessary, financial holding
company’s risk management committee should be held to come up
with a resolution.
-326-
2) Risk management division
In compliance with financial holding company’s risk management
mechanism, risk management division would supervise the
indicators of market risk of the Company and its managed business
unit on the daily basis. If the Company's risk indicator exceeds the
limit, risk management division should analyze the irregularity and
report to the Company's general manager and chairman.
Furthermore, the general manager and chairman of the Parent
Company should be notified the case. If necessary, financial
holding company’s risk management committee should be held and
the case should be reported in the nearest board meeting.
c) Management of price risk of equity securities
1) The definition of equity security risk
Equity security market risk includes specific risk incurs due to the
price change of a specific equity security and a general market risk
incurs due to the price change of whole market. Primary equity
instruments held in the Company and its subsidiaries' trading
portfolios include listed and OTC warrants and stocks, securities
borrowing, convertible bonds, equity index futures, equity and
index options.
2) Equity securities risk management policies, procedures and
evaluation methods
A. In order to efficiently control the risk which arise from equity
securities and the impact on profits, authorized transaction limit,
stop limit and related risk indicators are founded for each
business unit, traders and other equity security instruments.
B. Alert for a decline of single share and stop-loss percentage are
set for listed stock, convertible bond, securities lending of
convertible bonds, ETF and stock mutual funds.
C. Greeks limit (i.e. Delta, Gamma and Vega) is set for equity
related futures and options.
-327-
d) Foreign exchange risk management
1) The definition and source of foreign exchange risk
The foreign exchange risk shall mean the potential loss of an
exchange of two different currencies at different period of time. The
main foreign exchange products operated by the Company and its
subsidiaries are non-option foreign exchange products, foreign
exchange options, the foreign exchange derivative instruments and
its hedged position issued by the Company and its subsidiaries.
2) Foreign exchange risk management policies, procedures and
evaluation methods.
A. In order to effectively manage the Company and its subsidiaries'
risk incurred due to foreign exchange market operation and
gauge the influence on the Company and its subsidiaries' profit,
transaction limit, stop-loss limit and related risk indicator are
established to each business unit, traders and foreign exchange
related products.
B. USD/TWD position limit is set by the Company and its
subsidiaries' operation of non-option foreign exchange products,
including spot exchange, forward exchange, foreign exchange
swap and NDF.
C. Greeks limit (i.e. Delta, Gamma and Vega) is set by the
Company and its subsidiaries for the operation of foreign
exchange option (excluding Chinese Yuan exchange option.)
D. Greeks limit (i.e. Delta, Gamma and Vega) is set by the
Company and its subsidiaries for the Company and its
subsidiaries' foreign exchange derivatives instruments and its
hedged position.
e) The Bank's trading book risk management policies
Trading book is established in compliance with Regulations Governing
the Capital Adequacy and Capital Category of Banks. Trading book
includes the position of financial instruments and physical products
which are evaluated frequently and actively managed for trading or for
hedging.
1) Strategies
A. Intend to make a profit through the spreads of actual or expected
price of held position.
-328-
B. Intend to make a profit through the changes of other prices or
interest rate of held position.
C. Position held for the brokerage and proprietary business.
D. Position held for the need of hedge.
E. Other all transactions under predetermined investment limit.
2) Policies and procedures
Financial Investment Limit Authorization and Suspension Policies
is established by the Bank as a basis of governance of trading book.
3) Evaluation policy
Position of trading book is evaluated daily according to its fair
value or models. Market price data needed by the valuation models
should be updated daily.
4) Measurement approach
A. The assumptions and calculations of Value at Risk (VaR) refer to
(7) B). Technique of market risk valuation a. Value at Risk
(VaR)
B. Stress tests carried out by the Bank include single factor
sensitivity test, historical scenario test and custom scenario test.
These tests are conducted to understand the influence on the
Bank’s existing trading portfolio assuming a recurrence of
significant international and domestic events or an occurrence of
customized extreme condition and to verify extreme situations
which may cause extraordinary loss.
f)
Trading book interest rate risk management
1) Contents
Primary interest rate related instruments held in the Company's and
its subsidiaries' trading portfolios include domestic and overseas
bonds, interest rate derivatives, interest rate futures, interest rate
options and interest rate derivative instruments issued by the
Company and its subsidiaries and its hedging position.
-329-
2) Management procedure
In order to effectively supervise the interest rate risk and the
possible effect on the Company and its subsidiaries' profitability,
authorized trading limit, suspension limit and limit of related risk
indicator are established for each business unit, traders and interest
related product.
3) Measurement approach
A. DVO1 limit is set for domestic and overseas bonds, interest rate
derivatives and domestic and overseas interest rate futures.
B. Greeks limit (i.e. Gamma and Vega) is set for interest rate
options.
C. DVO1 limit and Greeks limit (i.e. Delta, Gamma and Vega) are
set for the interest rate derivative instruments and its hedging
position that are issued by the Company and its subsidiaries.
g) Banking book interest rate risk management
1) Strategies
In order to decrease the degree of interest risk exposure, the
Company and its subsidiaries has built up interest rate sensitive
balance sheet, analyzed interest sensitive gap and established limit
of indicators for setting strategies and hedging programs.
2) Management process
A. Identification and measurement
Interest rate sensitive balance sheet system is established by the
Company and its subsidiaries to measure the Company and its
subsidiaries' interest rate risk of banking book. The system
includes the JihSun International Commercial Bank Co., Ltd.'s
on and off balance sheet’s asset and liability positions in New
Taiwan Dollars and US Dollars. And the system is applied to
observe the influence on the Company and its subsidiaries'
economic value and the following year’s net interest revenue, if
a change in interest rate occurs.
-330-
B. Monitor and report
Monitoring the Bank’s banking book interest rate risk exposure,
supervising interest rate risk indicator, building up interest rate
sensitive balance sheet and analyzing interest rate sensitivity gap
are performed by the risk management division on the monthly
basis. During the Asset Liability Committee, a report should be
put forward. Moreover, a report of interest rate risk management
analysis should be submitted to higher level management, audit
committee and board of directors.
Holding the Asset Liability Committee on a monthly basis and
the committee should examine interest rate risk.
When the banking book interest rate risk exceeds the
predetermined threshold (medium and high risk or up), the risk
management division should analyze and report to Asset
Liability Committee and the Parent Company’s risk management
committee. Furthermore, possible walk around is developed with
the consideration of the Bank’s ability to sustain the interest risk
regarding its eligible capital.
C. Measurement
Analyzing the possible economic effect as the parallel shift of
interest rate at 200 bps divided by eligible capital is the main
indicator used to measure interest rate risk.
B) The Company and its subsidiaries’ credit risk management
a) JihSun Securities Co., Ltd.’s business
In addition to the risk management division, each the business
departments under the control of JihSun Securities Co., Ltd. also
establish risk control units to manage the credit risks. Except for
following the internal regulations to execute the risk management by
hierarchical authorization and presenting related statements, JihSun
Securities Co., Ltd. also effectively evaluates exposure to market risk by
establishing scientific methods, setting credit risk indicators, disclosing
and analyzing general risk situation of each risk. The evaluation can
serve as a basis to manage and monitor the JihSun Securities Co., Ltd.’s
probable credit risk. To avoid loss resulting from credit default, JihSun
Securities Co., Ltd. combines the internal and external credit rating to
establish the credit rating system and to determine the credit risk of the
issuers and counterparties. JihSun Securities Co., Ltd. controls the credit
risk under a bearable scope to maintain adequate capital and reach the
balance of risks and returns.
-331-
b) JihSun International Commercial Bank Co., Ltd.’s business
In order to response to credit risks, if a client of consumer banking
meets one of principles and conditions on the negative listing, JihSun
International Commercial Bank Co., Ltd. would not be willing to lend to
avoid risk. As for corporate banking, JihSun International Commercial
Bank Co., Ltd. avoids choosing clients who have poor ratings, such as
default, and warming clients. However, JihSun International
Commercial Bank Co., Ltd. still takes the extent of overall credit risk
into account and assesses whether the collaterals or guarantees could
reduce expected losses to a controllable level.
JihSun International Commercial Bank Co., Ltd. establishes a consistent
method based on its business characteristics to evaluate asset quality and
classification, calculates and controls its risk exposure and regularly
reviews and verifies its allowance for bad debts. The credit assets of the
bank are classified into 5 categories. Normal credit assets shall be
classified as “Category One”. According to the status of the loan
collaterals and the length of overdue, the remaining unsound credit
assets should be classified as category two to category five, and be
named as attention, substandard, doubtful, and loss, respectively. To
manage problematic credit, JihSun International Commercial Bank Co.,
Ltd. will make regulations as the basis of management of problematic
loans and remaining debt.
Based on business characteristics and size, JihSun International
Commercial Bank Co., Ltd. builds up the grade of credit quality,
supervises, collects credit information of all counterparties and credit
clients, and sets up the management objectives through the regulations
of credit risk management and credit policy to reduce default and
concentration risks. The systems of credit risk measurement are
described as follows.
1) Classification of credit quality
Credit risk is divided into 4 categories and level definition
described as follows:
A. Low risk: High transparency of information and strong capacity
to meet debt obligations. Low probability of default or small
expected losses.
B. Medium risk: Average transparency of information and capacity
to meet debt obligations. Average probability of default or
moderate expected losses.
-332-
C. High risk: Low capacity to meet debt obligations and is
vulnerable to external economic conditions. High probability of
default or large expected losses.
D. No rating: Impossible to use quantitative methods to segregate
risks.
2) The systems of credit risk measurement:
A. Corporate banking
To evaluate credit risk, JihSun International Commercial Bank
Co., Ltd. has to do credit investigation and financial analysis by
using relevant information provided by the credit clients and
conduct credit rating after understanding the profiles of
companies and industry. To accurately quantify credit risks,
JihSun International Commercial Bank Co., Ltd. has to develop
various probable default models (PD models) and complete a
credit rating system for corporate banking. In addition to the
probability of default model (PD), loss given default model
(LGD) is also established by JihSun International Commercial
Bank Co., Ltd. The properties of credit risk measurement system
are:
a. The risk premium is the expected loss which is measured by
probability of default (PD), loss given default (LGD), and
exposure at default, and it is treated as the basis of corporate
credit pricing.
b. Risk concentration control: the credit rating generated by the
corporate credit rating system is the basis of JihSun
International Commercial Bank Co., Ltd.’s corporate credit
limits. The credit balance of each credit rating cannot exceed
a certain percentage of the total corporate credit balance.
Lower quality of credit is granted for high-risk credit clients
who have poor credit ratings.
c. Post-loan risk warning: credit rating is used in the post-loan
management, and monitoring every warming situation.
d. Monitor the extent of credit risk: Monitors can evaluate the
extent of credit risk based on the segregation method of credit
rating, and corporate group.
-333-
B. Consumer banking
To measure credit risks of the credit clients, JihSun International
Commercial Bank Co., Ltd. must review the basic information
such as age and occupation of the credit clients when doing
consumer credit. To further quantify credit risks, JihSun
International Commercial Bank Co., Ltd. develops model to
qualify risks of consumer banking. Currently JihSun
International Commercial Bank Co., Ltd. has established the
scoring card including credit loans, automobile loans, mortgage
loans and credit card, behavioral scoring card, the probability of
default model (PD), and loss given default model (LGD). JihSun
International Commercial Bank Co., Ltd. will use these scoring
cards, behavioral scoring card, and models to control credit risk
effectively and enhance post-loan management.
C. Investment
JihSun International Commercial Bank Co., Ltd. manages the
risk of debt instrument by external institutions or internal
mechanism such as credit rating, credit quality of bond, country,
and counterparty risk to identify credit risk.
The counterparties of JihSun International Commercial Bank Co.,
Ltd.’s derivative transactions and financial peers shall be deemed
as mostly above investment grade and will be controlled
according to their credit limit (including interbank credit limit);
for counterparties that have no credit rating or are classified as
non-investment grade, the transactions are prohibited. For
general customers, credit exposure is controlled in accordance
with the derivative instrument risk limit that is approved when
applying for the credit by following a general procedure.
3) Policy of mitigation of credit risk
A. Collateral
For risk events with low probability of default but large loss
given, JihSun International Commercial Bank Co., Ltd. takes
actions such as call for additional collateral, guarantor and
on-balance sheet netting in order to mitigate or transfer risks.
When the credit cases are evaluated to be of low probability of
default and small loss given, JihSun International Commercial
Bank Co., Ltd. would bear the risk.
-334-
B. Credit extension limit and credit risk concentration control
To avoid excessive concentration of credit risk, JihSun
International Commercial Bank Co., Ltd. has built up limits of
credit balance for a same person, same related parties, same
affiliated enterprises, same enterprise group and the category of
industry, collaterals and countries, respectively.
C. General conventions of net settlement
The transactions of JihSun International Commercial Bank Co.,
Ltd. is usually settled on a gross basis, net settlement is set with
certain counterparties or in the case of default when all the
transaction with the counterparty are terminated and settled on a
net basis to reduce credit risk.
C) The company and its subsidiaries' fund liquidity risk management
a) Definition and sources of liquidity risk
Liquidity risk refers to the inability to liquidate assets or obtain
financing to meet its due obligations, and thus impact the Company’s
and its subsidiaries' earnings or shareholders' equity.
b) Liquidity risk management
The Liquidity risk management can be divided into three parts: the
Company, JihSun Securities Co., Ltd. and JihSun International
Commercial Bank Co., Ltd. as follows:
1) The Company
The Company’s controlling categories of fund liquidity
management include the source of fund, funding gap, fund
applications and liquidity risk management indicators. The
controlling contents are as follows:
A. Source of funds: The time schedule and cost, the stability and the
diversification of source should be assured.
B. Funding gap: The Company control the funding gaps on
different due days to better plan the funds.
C.Fund applications: The Company evaluates the investment target,
durations and the rate of return. The short-term should take
consideration of its safety and liquidity.
-335-
D. Liquidity risk managerial indicators are based on liquidity ratio.
The risk management division reviews the exposure statue of
liquidity risk from assets and liabilities on a monthly basis.
E. Each unit follows its internal regulation, executes the risk
management by hierarchical authorization. Furthermore, reports
should be submitted when a divergence or exception occurs,
such as excess of the limit, quality degradation assessed,
exceeding warning indicator or large loss given, etc, the business
departments should report to the risk management division. If
necessary, risk management committee should be held and the
case should be reported in the nearest audit committee and board
meeting.
2) JihSun Securities Co., Ltd.
Fund liquidity risk management of the JihSun Securities Co., Ltd.
includes the controlling of the source of funds, credit management,
funding gap, fund employment and liquidity risk management
indicators. Those are explained as follows:
A. Source of funds: The time schedule and cost, the stability and the
diversification of source should be assured.
B. Credit management: JihSun Securities Co., Ltd. maintains the
stability of credit limit, controls the collateral rate to lower the
fund cost, and maintains sufficient credit line to respond to
funding demand.
C. Funding gap: JihSun Securities Co., Ltd. control the funding
gaps on different due days to better plan the funds.
D. Fund employment: JihSun Securities Co., Ltd. evaluates the
investment target, durations and the rate of return. The
short-term employment of funds should mainly consider its
safety and liquidity.
E. JihSun Securities Co., Ltd. uses liquidity ratio as the liquidity
risk managerial indicator. The risk management division reviews
the exposure status of liquidity risk from assets and liabilities on
a monthly basis.
-336-
F. Each unit follows its internal regulation, executes the risk
management by hierarchical authorization and submits relative
reports. When a significant risk event occurs, such as excess of
the limit, quality degradation assessed, exceeding warning
indicator or large loss given, etc, the business departments
should report to the risk management division. If necessary, the
risk management division has to report to the risk management
committee to determine responding measures and the event
should be reported in the nearest audit committee and board
meeting.
G. If significant default on settlement or financial difficulties takes
place and lead to JihSun Securities Co., Ltd.’s disability in
repaying debts, which results in difficulties in operation or
disorder in securities market, corresponding measures are as
follows:
a. actively dispose of current assets and short-term investments,
such as stocks, benefit certificate fixed-income fund
b. pledge or dispose of properties and equipments
c. borrow from non-banking and insurance institutions (should
report to the authority in two days from the date of occurrence
of the borrowing event)
d. ask the competent authority for a bailout
e. plan in advanced directing against how to raise fund in
emergency and the related documents should also be prepared
beforehand
3) JihSun International Commercial Bank Co., Ltd.
A. Management process
a. Financial investment division uses the daily estimated funding
gap as the basis for allocation of funds.
b. JihSun International Commercial Bank Co., Ltd. conducts
stress tests of liquidity to assess the level of risk it can bear
when encountering crisis and the result will be reported to the
risk management division and top executives.
c. Financial investment division convenes “Asset Liability
Management Committee” every month to review JihSun
International Commercial Bank Co., Ltd.’s liquidity risk.
-337-
d. Risk management division monitors external warning
indicators on a daily basis.
e. Risk management division produces liquidity risk
management report to top executives every month. The report
includes internal indicators of the Bank’s liquidity risk
management and tables of gap analysis. The risk management
division monitors and analyzes the liquidity risk profiles then
submits a report to the Assets and Liabilities Management
Committee, and together with the monthly liquidity risk
analysis report will be reported to the top executives, audit
committee and board of directors.
B. Evaluation method
a. Prepare tables of structure analysis of maturity in accordance
with the competent authority.
b. Prepare tables of fund gap that predicts the renewal rate of
deposits and loans in order to assess JihSun International
Commercial Bank Co., Ltd.’s fund liquidity analysis.
c. The internal indicators of liquidity risk management are “LTD
ratio of Taiwanese or foreign currency”, “liquidity reserve
ratio” and “ratio of the amount of liquidity gap of new Taiwan
dollar that will mature within 30 days to total assets”. Limit of
indicators are set in accordance with risk tolerance level to
develop coping strategies.
d. In addition to internal indicators, JihSun International
Commercial Bank Co., Ltd. also uses external indicators. For
example when its credit ratings are downgraded or when it’s
significantly penalized by the competent authority,
contingency measures will be initiated by the emergency
response team.
e. Setting scenarios for stress test for liquidity is in order to
assess JihSun International Commercial Bank Co., Ltd.’s
duration under stress scenarios. Appropriate strategies for
capital allocation and countermeasures are developed when
it’s necessary.
-338-
f. JihSun International Commercial Bank Co., Ltd. sets
“Business Crisis Contingency Measures” in accordance with
the “Operational Measures when Handling Business Crisis for
Financial Institutions” issued by FSC. When JihSun
International Commercial Bank Co., Ltd. faces abnormal
deposits withdrawals, a serious shortage of funds or other
huge loss of liquidity, relevant procedures will be carried out.
(5)
Credit risk analysis
A) Credit risk analysis of JihSun Securities Co., Ltd. and its subsidiaries
The credit risks to which JihSun Securities Co., Ltd. exposes are the risks
that an issuer or counterparty fail to perform a contractual obligation and
lead to loss of the JihSun Securities Co., Ltd.
The following discloses the probable default of financial assets from aspects
of different credit risks.
a) Credit risk concentration analysis
The two tables below present the credit risk exposure of financial assets
by area and by industry:
By area
2014.12.31
Taiwan
Financial assets
profit or lossЁcurrent
$
Bonds
Stocks
Structured instruments
Futures margin
Buy optionsЁfuture
Open-end funds and money market
instruments
Securities purchased under resell
agreements
Financial assets carried at costЁ
non-current
Refinancing margin
Refinancing collateral receivable
Security margin loans receivable
Total
Percentage by area
$
Hong Kong
Asia
Europe
America
Total
4,716,407
9,609,714
165,350
80,564
126,626
1,307,528
-
950
2,892
5,009,333
11,000,698
6,995,442
2,215,647
156,552
73,305
18,454
150,314
16,799
553
862,861
361,662
83,005
-
2,892
-
7,875,102
2,580,754
156,552
73,305
18,454
296,531
63,212
50,504
-
-
-
-
50,504
158,898
1,043,791
-
-
-
-
158,898
1,043,791
13,026
13,183
147,547
12,986,874
-
-
-
-
13,026
13,183
147,547
12,986,874
28,739,944
245,914
1,434,154
-
94.47%
0.81%
4.71%
-
-339-
%
3,842
30,423,854
0.01%
100.00%
2013.12.31
Taiwan
Financial assets
profit or lossЁcurrent
$
$
Europe
America
-
Total
224,500
170,903
52,211
205,370
-
5,368,508
2,243,600
137,952
35,962
4,201
50,042
19,602
2,490
148,811
104,892
100,478
-
-
-
5,493,002
2,353,046
137,952
35,962
4,201
198,853
579,963
1,209,097
-
-
-
-
579,963
1,209,097
44,699
43,714
109,671
11,636,519
-
-
-
-
44,699
43,714
109,671
11,636,519
26,139,721
395,403
257,581
-
97.54%
1.48%
0.96%
-
Open-end funds and money market
instruments
Financial assets carried at costЁ
Total
Asia
4,675,793
7,840,265
Bonds
Stocks
Futures margin
Buy optionsЁfuture
non-current
Refinancing margin
Refinancing collateral receivable
Security margin loans receivable
Hong Kong
Percentage by area
4,952,504
8,223,016
6,478
6,478
%
6,478
26,799,183
0.02%
100.00%
Note 1: The column Asia in the table of the credit risk concentration analysis by area in which Taiwan and Hong Kong are excluded.
By industry
2014.12.31
Central or
local
government
Financial
Individual
industry
Manufacturing
Electronics
Service
Construction
Funds
-
-
-
-
Total
Financial assets
Cash and cash
$
-
-
5,009,333
-
-
1,398,862
3,413,960
2,381,982
117,330
133,686
5,009,333
equivalents
2,838,721
716,157
11,000,698
value through profit
or lossЁcurrent
Bonds
-
772,603
2,969,740
1,106,960
91,285
95,793
Stocks
2,838,721
-
-
231,731
444,220
1,275,022
26,045
37,893
Structured
-
-
156,552
-
-
-
-
-
7,875,102
565,843
-
2,580,754
156,552
instruments
Futures margin
Buy optionsЁ
-
-
73,305
-
-
-
-
-
73,305
-
-
18,454
-
-
-
-
-
18,454
-
-
146,217
-
-
-
-
150,314
296,531
Securities
purchased under
resell agreements
-
-
50,504
-
-
-
-
--
50,504
Security borrowing
-
-
158,898
-
-
-
-
-
158,898
-
-
1,043,791
-
-
-
-
-
1,043,791
futures
Open-end funds and
money market
instruments
margin
Financial assets
carried at costЁ
non-current
Refinancing margin
-
-
13,026
-
-
-
-
-
13,026
Refinancing collateral
-
-
13,183
-
-
-
-
-
13,183
-
-
147,547
-
-
-
-
-
147,547
-
12,790,798
174,657
-
-
-
-
12,986,874
$ 2,838,721
12,790,798
8,009,801
3,413,960
2,381,982
117,330
155,105
716,157
30,423,854
9.33%
42.04%
26.33%
11.22%
7.83%
0.39%
0.51%
2.35%
100.00%
receivable
Security borrowing
collateral price
Margin loans
21,419
receivable
Total
Percentage by industry
-340-
2013.12.31
Central or
local
government
Financial
Individual
industry
Manufacturing
Electronics
Service
Construction
Funds
Total
-
-
-
-
4,952,504
82,012
8,223,016
Financial assets
Cash and cash
$
-
-
4,952,504
-
-
1,097,098
2,757,307
2,603,849
161,989
38,154
equivalents
1,482,607
value through profit
or lossЁcurrent
Bonds
-
533,747
2,093,443
1,251,539
111,464
20,202
-
5,493,002
Stocks
1,482,607
-
-
236,425
663,864
1,352,310
50,525
17,952
31,970
2,353,046
Structured
-
-
137,952
-
-
-
-
-
137,952
instruments
Futures margin
-
-
35,962
-
-
-
-
-
35,962
Buy optionsЁ
-
-
4,201
-
-
-
-
-
4,201
-
-
148,811
-
-
-
-
50,042
198,853
-
-
579,963
-
-
-
-
-
579,963
-
-
1,209,097
-
-
-
-
-
1,209,097
futures
Open-end funds and
money market
instruments
Security borrowing
margin
Financial assets
carried at costЁ
non-current
Refinancing margin
-
-
44,699
-
-
-
-
-
44,699
-
-
43,714
-
-
-
-
-
43,714
-
-
109,671
-
-
-
-
-
109,671
-
11,439,276
162,332
10,348
-
14,568
9,995
-
11,636,519
$ 1,482,607
11,439,276
8,199,078
2,767,655
2,603,849
176,557
48,149
82,012
26,799,183
5.53%
42.69%
30.59%
10.33%
9.71%
0.66%
0.18%
0.31%
100.00%
receivable
Security borrowing
collateral price
Margin loans
receivable
Total
Percentage by industry
b) Maximum exposure to credit risk
Without taking collateral or other credit enhancement into mitigation
effect into account, the maximum exposure to credit risk of
on-balance-sheet financial assets is equal to their carrying values.
c) Credit risk explanations of different financial assets are as follows:
1) Cash and cash equivalents
Cash and cash equivalents are mainly composed of savings
accounts, time deposits, checking accounts and short-term notes.
Main institutions of JihSun Securities Co., Ltd. have transaction
with are as follows:
Local financial institution
Others
Total
-341-
2014.12.31
94.15%
5.85%
100.00%
2013.12.31
94.41%
5.59%
100.00%
2) Financial assets at fair value through profit or lossЁcurrent
A. Bonds
Bonds and convertible bonds are both included.
By industry
Central and local
government
Manufacturing industry
Others
Total
2014.12.31
36.05%
2013.12.31
26.99%
37.71%
26.24%
100.00%
38.11%
34.90%
100.00%
By area
Domestic enterprises
Others
Total
2014.12.31
88.83%
11.17%
100.00%
2013.12.31
97.73%
2.27%
100.00%
B. Stock
The main stock positions of JihSun Securities Co., Ltd. include
proprietary positions, underwriting position, hedging position
and warrant position.
By area
Local
Others
Total
2014.12.31
85.85%
14.15%
100.00%
2013.12.31
95.35%
4.65%
100.00%
By industry
Electronics industry
Manufacturing industry
Others
Total
2014.12.31
49.41%
17.21%
33.38%
100.00%
2013.12.31
57.47%
28.21%
14.32%
100.00%
C. Derivative financial instrumentsЁOTC
When JihSun Securities Co., Ltd. trades derivative financial
instruments with the counterparty over OTC (Over- the-Counter)
market, ISDA master agreement is necessary as the agreement
between two parties. The derivative financial instruments over
OTC include structured products and interest rate swap (IRS).
The counterparties are all financial institutions in Taiwan.
-342-
D. Future margins
The futures margin is the margin required to participate in
futures trades in the exchange market. It includes the position
held for trading or hedged purpose. Upstream futures
commission merchant by area is as follows:
Upstream future commission
merchant by area
Local future commission
2014.12.31
100.00%
2013.12.31
100.00%
E. Buy options-futures
The buy option position bought by JihSun Securities Co., Ltd. is
the market value of the premiums paid to buy option contracts of
Taiwan Future Exchange for holding-for-sale or hedging purpose,
of which the risk is quite low.
F. Open-end funds and money market instruments
Open-end funds and money market instruments position are
higher liquidity financial assets such as short-term bills and
money market funds, etc.
3) Bond investments under resale agreements
The bond investments under resale agreements of JihSun Securities
Co., Ltd. are bond transactions with terms to resale. JihSun
Securities Co., Ltd. signs up master agreement with the
counterparties, whereby the two parties agree to transact at an
aimed price, given interest rate and interval, and agree to resale with
price as promised prior to the due date. The counterparties are all
domestic financial institutions. Considering that JihSun Securities
Co., Ltd. holds the bonds as collateral, the exposed amount is
reduced effectively.
4) Security borrowing margin
Security borrowing margin is the caution money paid to the
counterparty for securities lending or short sale.
By area
Local securities firms
-343-
2014.12.31
100.00%
2013.12.31
100.00%
5) Financial assets carried at costЁnon-current
The financial assets carried at costЁnon-current held by JihSun
Securities Co., Ltd. are mainly composed of domestic financial
institutions and related for long-term investments.
6) Refinancing margin, refinancing collateral receivable and security
borrowing collateral receivables
The refinancing margin, refinancing collateral receivable and
security borrowing collateral receivables are all from domestic
financial institutions.
7) Margin loans receivable
JihSun Securities Co., Ltd.’s margin loans receivable is mainly
from domestic individuals.
d) Classification of credit risk quality
The internal credit risk classification of JihSun Securities Co., Ltd. is
determined by low, medium and high risk. The definition of each class
is as follows:
Low riskΚ High transparency of information and strong capacity to
meet debt obligations. Low probability of default.
Medium riskΚAverage transparency of information and capacity to meet
debt obligations. Average probability of default.
High riskΚ Low capacity to meet debt obligations and is vulnerable to
external economic conditions. High probability of default.
No ratingΚ Without either internal or external credit rating.
ImpairedΚ In the situation of the issuer or counterparty failing to meet
contractual obligation, JihSun Securities Co., Ltd. estimate
the expected loss which shows the sign of impairment.
JihSun Securities Co., Ltd. and its subsidiaries categorize the financial
assets into normal assets, past due not impaired, and impaired according
to the credit quality. JihSun Securities Co., Ltd. does not possess
overdue but not impaired financial assets. JihSun Securities Co., Ltd.
classifies the margin loans receivable according to account collateral
maintenance rate.
-344-
Credit quality analysis on financial assets
Normal assets
2014.12.31
Overdue but
Financial assets
Low risk
Cash and cash equivalent
$ 4,817,618
191,375
8,848,955
1,490,997
Medium risk
High risk
No rating
Reserve for
not impaired
Impaired
Impairment
340
-
-
-
5,009,333
2,070
658,676
-
-
-
11,000,698
92,641
-
-
-
7,875,102
2,070
566,035
-
-
-
2,580,754
-
-
-
-
-
156,552
-
-
-
-
-
73,305
-
-
-
-
-
18,454
-
Total
value through profit or
lossЁcurrent
Bonds
7,383,416
399,045
Stocks
961,709
1,050,940
156,552
15,855
-
Futures margin
57,450
Buy options-future
18,454
Open-end funds and
271,374
25,157
-
-
-
-
-
296,531
-
50,504
-
-
-
-
-
50,504
-
-
-
-
-
158,898
-
140,892
-
-
-
1,043,791
-
money market
instruments
Securities purchased
under resell
agreements
Security borrowing
158,898
-
margin
Financial assets carried
875,733
27,166
at costЁnon-current
Refinancing margin
-
13,026
-
-
-
-
-
13,026
-
13,183
-
-
-
-
-
13,183
-
-
-
-
-
-
147,547
148,316
-
-
-
-
-
12,986,874
receivable
Security borrowing
147,547
collateral price
Security margin loans
12,838,558
receivable
Accounts receivable
Other receivable
Total
Percentage
4,895,623
-
-
-
-
39,400
(39,400)
31,200
-
-
-
-
1,637
(1,637)
31,200
41,037
(41,037)
35,350,677
0.12%
(0.12)%
100.00%
$ 32,614,132
1,934,567
2,070
799,908
-
92.26%
5.47%
0.01%
2.26%
-
-345-
%
4,895,623
Normal assets
2013.12.31
Overdue but
Financial assets
Low risk
Cash and cash equivalent
$ 3,785,365
1,166,630
6,916,879
1,251,053
Medium risk
High risk
No rating
Impaired
Impairment
509
-
-
-
4,952,504
36,875
-
-
-
8,223,016
-
-
-
5,493,002
33,110
-
-
-
2,353,046
18,209
Reserve for
not impaired
Total
value through profit or
lossЁcurrent
Bonds
5,104,886
388,116
Stocks
1,464,073
837,654
137,952
Futures margin
Buy options-future
Open-end funds and
-
33,405
2,731
18,209
262
-
173,832
-
25,021
-
-
-
137,952
-
2,295
-
-
-
35,962
-
1,470
-
-
-
4,201
-
-
-
-
-
198,853
-
-
-
-
-
579,963
-
297,628
-
-
-
1,209,097
money market
instruments
Security borrowing
579,963
-
margin
Financial assets carried
853,637
57,832
at costЁnon-current
Refinancing margin
-
44,699
-
-
-
-
-
44,699
-
43,714
-
-
-
-
-
43,714
-
-
-
-
-
-
109,671
347,489
-
-
-
-
-
11,636,519
receivable
Security borrowing
109,671
collateral price
Security margin loans
11,289,030
receivable
Accounts receivable
Other receivable
Total
Percentage
6,670,562
-
-
-
-
37,717
(37,717)
68,245
-
-
-
-
1,197
(1,197)
68,245
38,914
(38,914)
33,537,990
0.12%
(0.12)%
100.00%
$ 30,273,352
2,911,417
18,209
335,012
-
90.27%
8.68%
0.05%
1.00%
-
%
6,670,562
B) Credit risk analysis of JihSun International Commercial Bank Co., Ltd.
a) Maximum exposure to credit risk
Without taking collateral or other credit enhancement instruments into
account, the maximum exposure to credit risk of on-balance sheet
financial assets is equal to their book values and the maximum exposure
to credit risk of off-balance sheet financial instruments are as follows:
Various guarantee proceeds
Unused amount of irrevocable letter
of credit
Unused amount of irrevocable
credit card commitments
Total
2014.12.31
$
661,558
1,030,354
2013.12.31
541,381
644,576
24,309,520
25,170,010
26,001,432
26,355,967
$
b) Information on concentrations of credit risk
Concentrations of credit risk exist when counter-parties to financial
instrument transactions are individuals or groups engaged in similar
activities with similar economic characteristics, which would impair
their ability to meet contractual obligations under negative economic or
other conditions.
-346-
The credit risk concentration of JihSun International Commercial Bank
Co., Ltd. originates from assets, liabilities or off-balance sheet items that
are generated by the transaction (irrespective of the product or service),
performance, execution or cross-category exposure combination,
including credit extension, deposits and call loans to banks, securities
investment, receivables and derivatives instruments. There is no
significant concentration of credit risk within JihSun International
Commercial Bank Co., Ltd. in terms of a single client or counterparty to
a transaction, and the transaction amount of a single client or
counterparty does not account for a significant amount of JihSun
International Commercial Bank Co., Ltd. balance of discounts and loans
and non-accrual account. The following table illustrates the
diversification of the loan portfolio among geographical regions,
industry sectors and collateral types.
1) By Industry
Industry
Private business
Public enterprises
Individual
Financial institution
Total
$
$
2014.12.31
Amount
66,136,777
293,412
77,855,732
1,309,146
145,595,067
%
45.43
0.20
53.47
0.90
100.00
2013.12.31
Amount
67,432,017
324,045
73,539,321
1,300,824
142,596,207
%
47.29
0.23
51.57
0.91
100.00
2) By Area
JihSun International Commercial Bank Co., Ltd. primarily engages
its business in Taiwan and there is no significant geographically
concentrated credit risk.
3) By Collateral
Collateral
Credit
Stocks
Bonds
Real estate
Movables
Note receivable
Guaranty
Others
Total
$
$
-347-
2014.12.31
Amount
37,525,449
10,440,661
1,935,605
85,643,411
3,869,832
976,150
4,734,805
469,154
145,595,067
%
25.78
7.17
1.33
58.82
2.66
0.67
3.25
0.32
100.00
2013.12.31
Amount
41,829,163
10,080,821
2,399,325
79,326,563
4,612,642
1,527,904
2,440,391
379,398
142,596,207
%
29.34
7.07
1.68
55.63
3.23
1.07
1.71
0.27
100.00
-348-
Total
$ 138,381,818
6,379,496
87,669
24,213
544,417
1,006,141
-
5,736,141
49,101
14,147
7,515
509,811
Medium risk
136,007,977
415,955
receivable
ЁFactoring
accounts
receivablewithout resource
Discount and loans
Off-balance-sheet
items
Guaranty
Letter of Credit
145,227
213,000
receivable
ЁAcceptance
$
Low risk
business
ЁInterest
On-balance-sheet items
Receivables
ЁCredit card
Items
29,472
415,893
-
385,427
-
-
160
834
High risk
-
-
-
-
-
425
425
No rating
Neither past due nor impaired
(A)
145,177,632
661,558
1,030,354
142,129,545
49,101
430,102
152,902
724,070
Subtotal
377,205
-
285,940
-
-
901
90,364
Past due not
impaired (B)
2014.12.31
3,199,862
-
3,179,582
-
-
5,621
14,659
Impaired (C)
1) Credit quality analysis of discounts and loans as well as receivables
148,754,699
661,558
1,030,354
145,595,067
49,101
430,102
159,424
829,093
Total
(A)+(B)+(C)
-
-
-
279,036
21,532
251,921
606
4,977
With objective
evidence of
individual
impairment
6,321
1,364,054
-
1,331,156
491
4,301
690
21,095
Without objective
evidence of
individual
impairment
Appropriated loss (D)
147,111,609
633,705
1,030,354
144,011,990
48,610
425,801
158,128
803,021
Net amount
(A)+(B)+(C)-(D)
Some financial assets held by JihSun International Commercial Bank Co., Ltd., such as cash and equivalent cash, due from
the Central bank, call loans to banks, financial assets at fair value through profit or loss, securities purchased under resell
agreements, refundable deposits, interest receivable-due from the Central bank and government bonds, receivable from
pre-issuing trading bonds, and other receivables-financial holdings, are excluded from this analysis since the counterparty
is normally with good credit quality and can be considered as low credit risk. Below tables provide the credit quality
analysis for other financial assets.
c) Credit quality and impairment analysis of financial assets
-349-
Total
6,197,041
1,000
65,016
510,909
579,560
$ 131,778,530
5,553,474
130,069,954
25,577
2,000
7,520
542,454
Medium risk
-
-
-
87,446
29,472
57,695
74
205
High risk
-
-
-
-
-
226
226
No rating
(A)
138,063,243
541,381
644,576
135,681,123
30,144
213,841
133,836
818,342
Subtotal
379,720
-
272,722
-
-
946
106,052
Past due not
impaired (B)
2013.12.31
80,004
6,747,935
-
6,642,362
-
8,413
17,156
Impaired (C)
145,190,898
541,381
644,576
142,596,207
110,148
213,841
143,195
941,550
Total
(A)+(B)+(C)
-
-
708,267
21,541
678,157
2,196
723
5,650
5,114
1,005,345
-
964,009
274
2,138
665
33,145
Without objective
evidence of
individual
impairment
Appropriated loss (D)
With objective
evidence of
individual
impairment
143,477,286
514,726
644,576
140,954,041
107,678
211,703
141,807
902,755
Net amount
(A)+(B)+(C)-(D)
Note: No rating is (1)missing (or closed card ) accounts and normal accounts which have been approved for more than 1 year but no billing recorded in the recent 1
year, or (2) bad debt, legal proceedings and doubtable accounts.
accounts
receivablewithout resource
Discount and loans
Off-balance-sheet
items
Guaranty
Letter of Credit
4,567
211,841
receivable
ЁFactoring
126,242
275,457
receivable
ЁAcceptance
$
Low risk
business
ЁInterest
On-balance-sheet items
Receivables
ЁCredit card
Items
2) Client-credit-quality-based credit quality analysis on none past
due and none impaired discount and loans
2014.12.31
Consumer banking
ʳ ЁResidential
mortgages
ʳ ЁMicro-credit
loans
ʳ ЁOther
Corporate banking
ʳ ЁSecured
ʳ ЁUnsecured
Total
2013.12.31
Consumer banking
ʳ ЁResidential
mortgages
ʳ ЁMicro-credit
loans
ʳ ЁOther
Corporate banking
ʳ ЁSecured
ʳ ЁUnsecured
Total
Medium
risk
Low risk
High risk
Total
$ 48,595,121
4,951
-
48,600,072
350,322
410,495
7,739
768,556
19,663,177
3,235
138
19,666,550
31,663,698
35,735,659
$ 136,007,977
1,492,812
3,824,648
5,736,141
61,000
316,550
385,427
33,217,510
39,876,857
142,129,545
Medium
Low risk
risk
High risk
$
Total
47,351,509
4,610
-
47,356,119
121,958
654,729
9,953
786,640
16,595,566
5,739
164
16,601,469
25,494,315
40,506,606
$ 130,069,954
1,341,590
3,546,806
5,553,474
47,578
57,695
26,835,905
44,100,990
135,681,123
3) Credit quality analysis of security investments
2014.12.31
Loss amount
Medium
Items
High risk
No rating
Subtotal (A)
Past due not
Impaired
Total
recognized
Net amount
impaired (B)
(C)
(A)+(B)+(C)
(D)
(A)+(B)+(C)-(D)
Low risk
risk
$ 7,772,121
703,966
-
-
8,476,087
-
-
8,476,087
-
8,476,087
3,328
-
-
-
3,328
-
-
3,328
-
3,328
300,000
-
-
-
300,000
-
-
300,000
-
300,000
Available-for-sale
financial assets
Held-to-maturity
financial assets
! ɡBonds
Other financial
asset
ЁStocks
Total
268,645
$ 8,344,094
703,966
-
98,675
367,320
-
52,165
419,485
12,938
406,547
-
98,675
9,146,735
-
52,165
9,198,900
12,938
9,185,962
-350-
2013.12.31
Loss amount
Medium
Items
Low risk
risk
High risk
No rating
Subtotal (A)
Past due not
Impaired
Total
recognized
Net amount
impaired (B)
(C)
(A)+(B)+(C)
(D)
(A)+(B)+(C)-(D)
Available-for-sale
financial assets
ЁBonds
$ 10,870,070
400,056
-
-
11,270,126
-
-
11,270,126
-
11,270,126
! ɡStocks
11,748
-
-
-
11,748
-
-
11,748
-
11,748
300,000
-
-
-
300,000
-
-
300,000
-
300,000
Held-to-maturity
financial assets
! ɡBonds
Other financial
asset
ЁStocks
Total
268,644
$ 11,450,462
400,056
-
98,675
367,319
-
73,482
440,801
27,787
413,014
-
98,675
11,949,193
-
73,482
12,022,675
27,787
11,994,888
Note: No rating means (1) not listed or TPEx securities without JihSun
International Commercial Bank Co., Ltd.'s rating; (2) listed and TPEx
securities whose listing period is less than one year and without the
Bank's rating.
4) Aging analysis on past due but not impaired financial assets
Past due but not impaired loans might results from some
temporary administration reasons so the customer is in the early
stages of delinquency but no actual impairment occurs yet.
According to the internal credit risk assets impairment evaluation
guideline, unless there are other objective evidences shown the
potential loss, a less than 90-day past due loan is typically not to
be treated as impairment.
The aging analysis on past due but not impaired financial assets is
as follows:
Overdue
within
1 month
Receivables
ʳ ЁCredit card business
! ɡInterest from loans
Discounts and loans
Consumer banking
! ! ɡResidential mortgages
! ! ɡMicro-credit loans
! ! ɡOthers
Corporate banking
ЁSecured
ЁUnsecured
Total
-351-
$
$
2014.12.31
Overdue
between
1 and 3 months
Total
26,119
163
63,854
228
89,973
391
154,844
7,412
27,137
65,166
1,311
29,380
220,010
8,723
56,517
215,675
655
35
160,629
655
35
376,304
2013.12.31
Overdue
between
1 and 3 months
Overdue
within
1 month
Receivables
ʳ ЁCredit card business
! ɡInterest from loans
Discounts and loans
Consumer banking
! ! ɡResidential mortgages
! ! ɡMicro-credit loans
! ! ɡOthers
Total
$
$
Total
28,984
400
77,068
546
106,052
946
121,378
7,109
33,284
191,155
82,433
3,518
25,000
188,565
203,811
10,627
58,284
379,720
5) Disclosures required by the Regulations Governing the
Preparation of Financial Reports by Public Banks
A. Asset quality
Unit: in thousands of New Taiwan Dollars, %
BusinessЯ
ЯItems
Corporate Secured
banking Unsecured
Residential
mortgages
Consumer Cash cards
Micro-credit loans
banking
Other Secured
Unsecured
Total loan business
Factoring receivables - without
recourse
2014.12.31
NonNonCoverage ratio
performing
performing Allowance for of allowance for
loans
Total loans
loans ratio
bad debts
bad debts
59,299
34,992,222
0.17 %
397,752
670.76 %
15,436
40,238,110
0.04 %
419,267
2,716.16 %
30,507
49,058,144
0.06 %
495,383
1,623.83 %
-
%
1,734.41 %
2,029.16 %
2,225.13 %
1,335.57 %
Coverage ratio
Overdue
Overdue
Allowance for of allowance for
bad debts
accounts
Receivables accounts ratio
bad debts
4,369
1,198,503
0.36 %
26,072
596.75 %
49,101
%
491
%
1,238
9,680
2,372
118,532
-352-
904,005
19,486,439
916,147
145,595,067
-
%
0.14 %
0.05 %
0.26 %
0.08 %
-
21,472
196,423
52,780
1,583,077
2013.12.31
BusinessЯ
ЯItems
Corporate Secured
banking Unsecured
Residential
mortgages
Consumer Cash cards
Micro-credit loans
banking
Other Secured
Unsecured
Total loan business
Factoring receivables - without
recourse
Nonperforming
loans
642,969
91,816
32,795
Total loans
31,463,588
44,777,807
47,830,760
2,491
9,969
2,156
782,196
956,414
16,487,808
1,079,830
142,596,207
Overdue
accounts
4,994
-
NonCoverage ratio
performing Allowance for of allowance for
bad debts
loans ratio
bad debts
2.04 %
383,935
59.71 %
0.21 %
513,757
559.55 %
0.07 %
484,349
1,476.90 %
-
%
0.26 %
0.06 %
0.20 %
0.55 %
-
%
1,046.57 %
1,673.73 %
3,116.93 %
209.94 %
Coverage ratio
Overdue
Allowance for of allowance for
bad debts
Receivables accounts ratio
bad debts
1,317,637
0.38 %
38,795
776.83 %
110,148
%
2,470
%
26,070
166,854
67,201
1,642,166
Note 1: Non-performing loans represent the amount of overdue loans as reported in accordance
with the “Regulations Governing the Procedures for Banking Institutions to Evaluate
Assets and Deal with Non-performing/Non-accural Loans.” The credit card overdue loans
represent the amount of overdue loans as reported in accordance with
Jin-Kuan-Yin-(4)-Zi No. 0944000378, dated July 6, 2005.
Note 2: Non-performing loans ratio = Non-performing loans ÷ total loans; Credit card
delinquency ratio = Overdue receivables ÷ balance of receivables.
Note 3: Coverage ratio of allowance for bad debts = allowance for credit losses ÷ non-performing
loans; Coverage ratio for credit card = allowance for credit losses ÷ overdue receivables.
Note 4: For residential mortgage loans, a borrower provides his/her (or spouse’s or minor child’s)
house as collateral in full and pledges it to the financial institution for the purpose of
obtaining funds to purchase property and to construct or repair a house.
Note 5: Micro-credit loans are defined by Jin-Kuan-Yin-(4)-Zi No. 09440010950, dated
December 19, 2005, and they do not include credit cards or cash cards.
Note 6: Others in consumer banking are secured and unsecured consumer loans other than
residential mortgage loans, cash cards, and micro-credit loans, and do not include credit
cards.
Note 7: In accordance with Jin-Kuan-Yin-(5)-Zi No. 094000494, dated July 19, 2005, the
amounts of without-recourse factoring will be classified as overdue receivables within
three months from the date that suppliers or insurance companies resolve not to
compensate the loss.
B. The information below shows supplemental disclosures of
JihSun International Commercial Bank Co., Ltd.’s loans and
receivables that may be exempted from reporting as
non-performing loans and overdue receivables, respectively.
-353-
Unit: in thousands of New Taiwan Dollars
2014.12.31
2013.12.31
Loans may be
Receivables may be
Loans may be
Receivables may be
exempted from
exempted from
exempted from
exempted from
reporting as overdue
reporting as overdue
reporting as a
reporting as a
non-performing loan
receivables
non-performing loan
receivables
Pursuant to a contract under a debt negotiation plan
(Note 1)
Pursuant to a contract under a debt liquidation plan
and a debt relief plan (Note 2)
Total
110,677
-
150,807
-
38,495
7,191
51,168
8,982
149,172
7,191
201,975
8,982
Note 1: In accordance with Jin-Kuan-Yin-(1)-Zi No.09510001270, dated April
25, 2006, a bank is required to make supplemental disclosure reporting
credit information which was approved under the “Debt Coordination
Mechanism of Unsecured Consumer Debts by the Bankers Association
of the R.O.C”.
Note 2: In accordance with Jin-Kuan-Yin-(1)-Zi No.09700318940, dated
September 15, 2008, a bank is required to make supplemental
disclosure reporting credit information once debtors apply for
pre-negotiation, relief and liquidation under the “Consumer Debt
Clearance Act.”
C. Concentration of credit extensions
2014.12.31
Rank
Enterprise group
1
A GROUPЁPetroleum and Coal Products
Manufacturing
B GROUPЁOther Financial Intermediates not
Elsewhere Classified
C GROUPЁReal Estate Development
D GROUPЁFinancial Leases
E GROUPЁCement Products Manufacturing
F GROUPЁWholesale of Electronic Equipment
and Parts
G GROUPЁLiquid Crystal Panel and Components
Manufacturing
H GROUPЁIron and Steel Refining
I GROUPЁFinancial Leases
J GROUPЁBasic Chemical Materials
Manufacturing
2
3
4
5
6
7
8
9
10
-354-
Credit
Credit amount to
shareholders'
equity ratio (%)
3,473,496
18.79%
amount
3,041,491
16.45%
2,436,552
1,419,359
1,306,480
1,295,745
13.18%
7.68%
7.07%
7.01%
1,221,060
6.60%
1,123,000
997,630
993,967
6.07%
5.40%
5.38%
2013.12.31
Rank
Enterprise group
1
A GROUPЁPetroleum and Coal Products
Manufacturing
B GROUPЁOther Financial Intermediates not
Elsewhere Classified
C GROUPЁReal Estate Development
D GROUPЁLiquid Crystal Panel and Components
Manufacturing
E GROUPЁWholesale of Electronic Equipment
and Parts
F GROUPЁCement Products Manufacturing
G GROUPЁComputer Manufacturing
H GROUPЁReal Estate Development
I GROUPЁFinancial Leases
J GROUPЁOcean transportation
2
3
4
5
6
7
8
9
10
(6)
Credit
Credit amount to
shareholders'
equity ratio (%)
3,164,552
17.90%
amount
2,828,192
16.00%
2,495,000
1,614,046
14.11%
9.13%
1,508,775
8.53%
1,472,613
1,391,513
1,296,325
1,293,906
1,286,148
8.33%
7.87%
7.33%
7.32%
7.27%
Liquidity risk analysis
A) Maturity analysis of non-derivatives liabilities
Table below shows the analysis of cash outflows of non-derivatives
liabilities based on time remaining until the contractual maturity date.
Deposits from the central bank and
banks
Securities sold under repurchase
agreements
Payables
Deposits
Bonds payable
Other borrowings
Security borrowing margin (listed
in other liabilities)
Total
Within 3 months
$
1,476,466
$
2014.12.31
3 to 12 months
Over 1 years
Total
2,825,956
2,342,831
6,645,253
871,593
-
-
871,593
7,199,640
-
-
7,199,640
4,542,932
9,845,735
53,133,540
810,000
5,269,496
264,793
-
-
396,397
51,901,121
153,529
-
39,674
73,472,937
2,500,000
2,084,010
-
4,542,932
10,281,806
178,507,598
2,500,000
810,000
7,507,035
264,793
83,414,195
55,277,003
80,439,452
219,130,650
-355-
Deposits from the central bank and
banks
agreements
Payables
Deposits
Bonds payable
Other borrowings
Security borrowing margin (listed
in other liabilities)
Total
Within 3 months
$
6,198,426
2013.12.31
3 to 12 months
Over 1 years
Total
3,237,268
1,621,042
11,056,736
435,617
$
41,481
-
477,098
5,746,601
-
-
5,746,601
3,877,989
11,583,280
46,688,852
50,000
4,948,945
62,528
-
-
372,360
55,996,011
500,000
200,000
34,356
-
45,015
66,630,645
2,500,000
24,755
-
3,877,989
12,000,655
169,315,508
3,000,000
250,000
5,008,056
62,528
79,592,238
60,381,476
70,821,457
210,795,171
B) Maturity analysis of derivatives liabilities
Table below shows the analysis of cash outflows of derivatives liabilities
(listed in financial liabilities at fair value through profit or loss) based on
the maturity date:
Call ( Put ) warrants
Forward contracts
Options
Asset swap
Total
Within 3 months
$
350,217
55,655
730,147
158,883
50,341
20,553
$
1,365,796
2014.12.31
3 to 12 months
Over 1 years
299,674
1,034,726
299,674
1,034,726
Call ( Put ) warrants
Forward contracts
Options
Asset swap
Total
Within 3 months
$
288,314
29,825
12,512
14,814
11,828
1,074
$
358,367
2013.12.31
3 to 12 months
Over 1 years
363
4,323
363
4,323
Total
350,217
55,655
730,147
158,883
1,384,741
20,553
2,700,196
Total
288,314
29,825
12,512
14,814
16,514
1,074
363,053
C) Maturity analysis of off-balance sheet items
Table below shows the maturity analysis of off-balance-sheet items for the
JihSun International Commercial Bank Co., Ltd. The amount of the
guarantee and committed credit lines will be allocated to the earliest
period when such obligation can be exercised anytime by clients.
-356-
Unused amount of
irrevocable credit card
commitments
Unused amount of
irrevocable letter of
credit
Various guarantee
proceeds
Unused amount of
irrevocable credit card
commitments
Unused amount of
irrevocable letter of
credit
Various guarantee
proceeds
0-30 days
$24,309,520
31-90 days
-
266,787
31,102
2014.12.31
181 days91-180 days
1 year
-
Over 1 year
-
Total
24,309,520
1,030,354
-
658,304
105,263
-
40,400
140,982
363,000
86,074
661,558
Over 1 year
-
Total
25,170,010
2013.12.31
181 days91-180 days
1 year
-
0-30 days
$25,170,010
31-90 days
-
192,763
361,059
90,754
29,543
31,020
294,500
-
-
32,953
153,365
644,576
541,381
D) Maturity analysis of lease contract and capital expenditure commitment
The lease contracts of the Company and its subsidiaries are operating lease.
Operating lease commitment is the future minimum rental payment under
operating lease conditions when the Company and its subsidiaries is a
lessee or lessor.
The capital expenditure commitment of the Company and its subsidiaries
is the contractual commitments signed for obtaining buildings and
equipment.
Maturity analysis of lease contract and capital expenditure commitment of
the Company and its subsidiaries are as follows:
2014.12.31
Lease contract commitments
Operating lease expense(lessee)
Operating lease revenue(lessor)
Capital expenditure commitments
Under 1 year
2013.12.31
Lease contract commitments
Operating lease expense(lessee)
Operating lease revenue(lessor)
Capital expenditure commitments
Under 1 year
$
$
269,295
22,938
43,189
258,273
15,932
15,242
-357-
1 to 5 years
377,324
35,526
3,220
1 to 5 years
395,769
35,703
2,012
Over 5 years
25,823
Over 5 years
29,112
-
Total
672,442
58,464
46,409
Total
683,154
51,635
17,254
(7)
Market risk analysis
Market risk results from the changes in market prices, such as price risk,
interest rates risk and foreign exchange rates risk, and will cause the risk of
loss.
A) Market risk analysis – JihSun Securities Co., Ltd.
a) Value at Risk (VaR)
Value at risk is the risk measure of the maximal expected loss on a
specific portfolio for given time horizon and confidence level under
normal market. JihSun Securities Co., Ltd. currently adopts 99%
C.L.1 day to measure the risk of loss on portfolio (It was 10-days 1%
VaR on December 31, 2011). JihSun Securities Co., Ltd. exercises
back testing to evaluate the appropriateness of Value at Risk model on
a daily basis to ensure that the greatest probable risk can be evaluated
effectively.
1) Value at Risk
99%C.L.1 day(VaR)
Total of departments
Covariance adjustments
Securities in All
2014.12.31
26,791
(11,692)
15,099
The lowest
The highest
Average
18,882
47,064
33,372
(10,368)
(10,148)
(13,075)
8,514
36,916
20,297
99%C.L.1 day(VaR)
Total of departments
Covariance adjustments
Securities in All
2013.12.31
23,495
(11,820)
11,675
The lowest
The highest
Average
20,675
39,359
28,262
(11,818)
(8,100)
(14,062)
8,857
31,259
14,200
2) The table of Value at Risk by risk factors
99%C.L.1 day(VaR)
2014.12.31
Average
Lowest
Highest
Securities in
All
15,099
20,297
8,514
36,916
Currency rate
2,342
1,544
3,052
1,073
Interest rate
4,334
5,431
5,418
5,051
Equity price
13,472
20,116
7,605
36,382
99%C.L.1 day(VaR)
2013.12.31
Average
Lowest
Highest
Securities in
All
11,675
14,200
8,857
31,259
Currency rate
2,349
2,545
2,778
2,072
Interest rate
5,855
8,038
6,375
4,532
Equity price
11,511
12,656
8,062
29,910
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b) Stress testing
Stress tests carried out by JihSun Securities Co., Ltd. include
single-factor sensitivity test, historical scenario test and self-defined
scenario test. These tests are conducted to understand the impact on
JihSun Securities Co., Ltd.'s portfolio assuming a recurrence of
significant international and domestic events or an occurrence of
self-defined extreme condition.
The data applied for stress test in the extreme scenario used by JihSun
Securities Co., Ltd. considered the following factors to simulate the
probable loss.
1) Single factor sensitivity testΚ
The purpose of this test is to observe the change on a portfolio’s
value whenever a specific risk factor changes. For example, when
the risk factor is stock price of listed company, the single-factor
sensitivity test evaluates change on portfolio value because of
changes to stock price.
2) Historical scenario testΚ
The purpose of this test is to o simulate the portfolio under a
historical period, where the shocks are applied to following the
historical returns.
3) Self defined scenario testΚ
This test is similar to the single-factor sensitivity test and in
addition, takes into consideration the correlation of risk factors.
The table of stress testing
Risk factor
Equity Price Risk
Interest Rate Risk
Currency Rate Risk
Movements
Equity products depreciate 20%
Interest rate curve shift up 100bps
Foreign currency depreciate 7%
against NTD
Changes in gain and loss of positions
2014.12.31
2013.12.31
(216,131)
(335,950)
(237,022)
(195,456)
(75,413)
(26,552)
c) Except for the indicators aforementioned, the Company sets up
different internal control mechanism and risk control indicators for
each department according to the natures and products of each
department.
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B) Market risk analysis- JihSun International Commercial Bank Co., Ltd.
a) Value at Risk (VaR)
Incompliance with Basel- Internal Model Approach for Market Risk,
JihSun International Commercial Bank Co., Ltd. (the Bank) updates
market data on a daily basis. Exponentially-weighted moving average
(EWMA) is applied to compute volatility (Decay Factor =0.94) based
on the market price range for the past year. Additionally, correlation
of different market risk factor is considered and assumption of price
changed of risk factor follow certain pattern is made. With an
assistance of a computer, simulation of possible price path is
identified. The Bank uses the simulation as the basis of investment
portfolio’s profit allocation. Monte Carlo simulations may be applied
to compute Value at Risk of 99% confidence interval.
Variance-covariance matrices or Historical simulations can also be
applied. Furthermore, the Bank would exercise back testing to
evaluate the appropriateness of Value at Risk model on a daily basis.
Tables shown as below are the Value at Risk portfolios of JihSun
International Commercial Bank Co., Ltd. for the years ended
December 31, 2014, and 2013Κ
Unit: in millions of New Taiwan Dollars
2014.12.31
99% C.L.1 day(VaR)
Average
24.53
4.18
3.45
24.83
Exchange instrument
Interest instrument
Equity instrument
VaR
99% C.L.1 day(VaR)
The highest
47.38
0.69
1.17
47.59
The lowest
0.99
0.37
4.07
3.88
2013.12.31
Average
Exchange instrument
Interest instrument
Equity instrument
VaR
6.40
4.58
5.51
9.95
-360-
The highest
10.46
2.69
10.90
18.11
The lowest
1.08
0.52
1.74
2.20
b) Stress testing
Stress test is exercised to evaluate the greatest potential loss of
risk-weighted assets under the worst hypothetical scenarios. The test
is composed by three parts: (1) Single factor sensitivity test: The
purpose of this test is to observe the change on a portfolio’s value
whenever a specific risk factor changes. Assuming that the risk factor
is the stock price of common stocks, the single factor sensitivity test is
to evaluate the value change on a portfolio when the stock price
changes. (2) Historical scenario test: The purpose of this test is to
simulate the portfolio under a historical period, where the portfolio is
applied to following the historical returns. (3) Custom scenario test:
This test is similar to the single-factor sensitivity test and in addition,
takes the correlation of risk factors into consideration.
c) Sensitivity analysis
Summary of sensitivity analysis are as follows:
Unit: in millions of New Taiwan Dollars
2014.12.31
Amount
Movement
Profit and loss
Equity
(198)
(199)
Interest rate curve shift down 100bps
171
172
Foreign currency appreciate 7%
3,101
against NTD
2,981
against NTD
Equity Price Equity price appreciate 20%
13
1
Risk
Equity price depreciate 20%
(13)
(1)
Risk items
Interest
Rate Risk
Foreign
Exchange
Rate Risk
2013.12.31
Amount
Movement
Profit and loss
Equity
(155)
(273)
Interest rate curve shift down 100bps
114
234
Foreign currency appreciate 7%
149
11
against NTD
(123)
(11)
against NTD
Equity Price Equity price appreciate 20%
81
2
Risk
Equity price depreciate 20%
(79)
(2)
Risk items
Interest
Rate Risk
Foreign
Exchange
Rate Risk
1) Interest rate sensitivity information for JihSun International
Commercial Bank Co., Ltd.
-361-
A. Interest rate sensitive assets and liabilities analysis sheet (in
New Taiwan Dollars)
December 31, 2014
Unit: in thousands of New Taiwan Dollars; %
181 days –
1 year
(inclusive)
Over 1 year
Total
330,458
17,001,806
170,436,311
1-90 days
91-180 days
Item
(inclusive)
(inclusive)
Interest rate sensitive $151,492,803
1,611,244
assets
Interest rate sensitive
57,538,728
73,540,825
24,154,985
liabilities
93,954,075
(71,929,581) (23,824,527)
gap
Net value
Interest-rate-sensitive assets to interest rate sensitive liabilities ratio
Interest-rate-sensitive gap to net value ratio
4,087,019
159,321,557
12,914,787
11,114,754
17,990,894
106.98
61.78
December 31, 2013
Unit: in thousands of New Taiwan Dollars; %
181 days –
1 year
(inclusive)
Over 1 year
Total
2,857,101
22,192,605
165,320,464
1-90 days
91-180 days
Item
(inclusive)
(inclusive)
Interest rate sensitive $139,026,998
1,243,760
assets
60,635,190
68,303,879
26,150,545
liabilities
78,391,808
(67,060,119) (23,293,444)
gap
Net value
3,756,198
158,845,812
18,436,407
6,474,652
17,462,448
104.08
37.08
Note 1: Listed amounts of the head office, domestic branches, offshore banking unit
and overseas branches (excluding foreign currency amounts) are denominated
in NTD.
Note 2: Interest-rate-sensitive assets and liabilities are determined by the revenue or
cost of various rates spreads between interest-earning assets and
interest-bearing liabilities.
Note 3: Interest rate sensitivity gap
Interest-rate-sensitive liabilities.
=
Interest-rate-sensitive
assets Ё
Note 4: Ratio of interest-rate-sensitive assets to liabilities = Interest-rate-sensitive
assets ÷ Interest rate-sensitive liabilities (denominated in NTD).
-362-
B. Interest rate sensitive assets and liabilities analysis sheet
(USD)
December 31, 2014
Unit: in thousands of USD; %
181 days 1 year
(inclusive)
158,141
1-90 days
91-180 days
(inclusive)
(inclusive)
Item
Interest rate sensitive $
331,897
53,540
assets
368,354
250,150
26,221
liabilities
(36,457)
(196,610)
131,920
gap
Net value
Over 1 year
232,927
Total
776,505
106
644,831
232,821
131,674
16,005
120.42
822.71
December 31, 2013
Unit: in thousands of USD; %
181 days 1 year
(inclusive)
96,368
1-90 days
91-180 days
Item
(inclusive)
(inclusive)
Interest rate sensitive $
346,464
61,955
assets
227,127
306,025
70,908
liabilities
119,337
(244,070)
25,460
gap
Net value
Over 1 year
209,035
Total
713,822
91
604,151
208,944
109,671
7,735
118.15
1,417.85
Note 1: Listed amounts of the head office, domestic branches and offshore banking
unit (excluding contingent assets and liabilities) are denominated in USD.
Note 2: Interest-rate-sensitive assets and liabilities are determined by the revenue or
cost of various rates spreads between interest-earning assets and
interest-bearing liabilities.
Note 3: Interest rate sensitivity gap
Interest-rate-sensitive liabilities.
=
Interest-rate-sensitive
assets Ё
Note 4: Ratio of interest-rate-sensitive assets to liabilities = Interest-rate-sensitive
assets ÷ Interest rate-sensitive liabilities (denominated in USD).
C) Exchange rate risk concentration information of the Company and its
subsidiaries
-363-
Unit: in thousand
2014.12.31
Foreign
currency
amount
Financial assets
Monetary items
USD
JPY
EUR
AUD
HKD
CNY
GBP
CAD
Others(Note)
$
959,765
2,156,441
9,483
47,522
291,447
1,249,229
11,752
13,006
-
Exchange
rate
31.655/31.650
0.2645/0.2646
38.473/38.470
25.925/25.905
4.082/4.080
5.093/5.092
49.257/49.270
27.272
-
NTD amount
30,380,310
570,389
364,856
1,232,010
1,189,449
6,361,828
578,846
354,709
87,789
2014.12.31
Foreign
currency
amount
Monetary items
USD
JPY
EUR
AUD
HKD
CNY
GBP
NZD
ZAR
SGD
Others(Note)
$
774,439
2,565,992
9,710
49,736
184,644
1,266,411
2,635
5,184
1,012,013
4,315
-
Exchange
rate
31.655/31.650
0.2645/0.2646
38.473/38.470
25.925/25.905
4.082/4.080
5.093/5.092
49.257/49.270
24.816
2.733
23.937/23.940
-
NTD amount
24,514,559
678,708
373,568
1,289,417
753,627
6,449,762
129,779
128,640
2,765,830
103,273
100,720
Unit: in thousand
2013.12.31
Foreign
currency
amount
Financial assets
Monetary items
USD
JPY
EUR
AUD
HKD
CNY
GBP
NZD
ZAR
Others(Note)
Non-monetary items
USD
$
NTD amount
810,971
882,570
2,437
51,426
190,342
922,091
2,479
463
95,472
29.925/29.805
0.2849/0.2839
41.240/41.090
26.690/26.585
3.859/3.843
4.939/4.919
49.500/49.280
24.580
2.860
-
24,257,015
251,392
100,486
1,372,552
732,456
4,550,372
122,690
11,384
273,050
28,384
2,208
29.925
66,065
-
-364-
Exchange
rate
2013.12.31
Foreign
currency
amount
Monetary items
USD
JPY
EUR
AUD
HKD
CNY
GBP
NZD
ZAR
SGD
CAD
Others(Note)
$
677,307
1,397,208
8,039
56,402
168,012
841,829
1,922
5,705
244,340
1,841
3,097
-
Exchange
rate
29.925/29.805
0.2849/0.2839
41.240/41.090
26.690/26.585
3.859/3.843
4.939/4.919
49.500/49.280
24.580
2.860
23.660/23.580
28.120
-
NTD amount
20,260,829
398,026
331,530
1,505,360
647,722
4,157,099
95,128
140,224
698,812
43,553
87,098
19,824
Note: Other currencies that are less than NTD 100 million are disclosed aggregately.
(f)
Capital management
(1)
Capital management objectives
A) The capital management objective of the Company is that their eligible
capital is sufficient to meet the capital requirements and the minimum
legal capital adequacy rate. The eligible capital and the authorized capital
are calculated in pursuant to the regulations set by the regulators.
B) To enable the Company to have an adequate capital to cover various risks,
the required capital should be calculated based on the risk portfolios and
the risk characteristics that the Company faced. Optimal allocation of
resources can be achieved by regularly reviewing the objectives of capital
management.
C) The Company's capital management is for ensuring that the Company has
operation plan and the enough financial resources to pay for its working
capital, capital expenditure, repayment of liabilities and dividends
payment in the next twelve months.
(2)
Capital management procedures
A) The Company maintains adequate capital to meet the requirements of the
authority and completes the overall risk management report and submitted
to the authority on a semiannual basis.
-365-
B) The Company's qualified capital is managed by the Financial Planning
division. The Financial Planning division summarizes the budgets of the
Company and its subsidiaries annually and submits a recommendation of
earnings distribution plan to the Company’s management for deliberation
annually. After the Company’s management deliberating, the
recommendation of earnings distribution plan should be presented to the
Board of Directors for deliberation.
C) The financial planning division is responsible for the Company's
consolidated capital adequacy ratio. According to the Regulations
Governing the Consolidated Capital Adequacy of Financial Holding
Companies, the financial planning division calculates the consolidated
capital adequacy ratio monthly under consolidated basis in order to control
to meet the requirement of the minimum consolidated capital adequacy
ratio required by laws and regulations.
(3)
Capital adequacy ratio of the Group:
Items
Percentage
of
ownership
100%
100%
100%
100%
-
Company
Financial holding company
Bank subsidiaries
Securities subsidiaries
Other subsidiaries
Deduction
Subtotal
Capital adequacy ratio of the group (%)
Items
Percentage
of
ownership
100%
100%
100%
100%
-
Company
Financial holding company
Bank subsidiaries
Securities subsidiaries
Other subsidiaries
Deduction
Subtotal
Capital adequacy ratio of the group (%)
-366-
December 31, 2014
Group's
statutory capital
Group's net
requirement
eligible capital
35,854,135
40,307,924
18,094,496
13,008,936
16,934,340
3,495,513
5,371
3,286
41,038,237
40,236,152
29,850,105
16,579,507
180.04
December 31, 2013
Group's
statutory capital
Group's net
eligible capital
requirement
33,635,990
39,045,812
17,266,504
10,956,894
15,964,872
3,585,936
5,333
3,352
39,458,096
38,331,115
27,414,603
15,260,879
179.64
(4)
Eligible capital of JihSun Financial Holding Co., Ltd.
Items
Common stock
Perpetual non-cumulative preferred
shares and non-cumulative subordinated
noted without a maturity date
Other preferred stock and subordinated
Noted
Advance receipts capital stock
Legal reserve
Special reserve
Unappropriated earnings
Equity adjustments
Less: Goodwill and deferred assets
Total eligible capital
7.
December 31, 2014
32,151,817
-
December 31, 2013
30,991,080
-
-
-
-
860,069
511,636
2,441,410
(110,210)
587
35,854,135
688,362
417,197
1,717,067
(176,955)
761
33,635,990
Related Party Transactions
(A) Names of related parties and relationship with the Company
Name of related party
Jih-Sun Securities Investment Trust
Co., Ltd
Other related parties
(B)
Relationship with the Company
The investee company carried under the equity method of the
Company’s subsidiary JihSun Securities Co., Ltd.
The chairman and directors of the Company and its subsidiaries
JihSun Securities Co., Ltd. and JihSun International Commercial
Bank Co., Ltd., and the general manager, vice general manager,
division level executives, branch managers, and their spouses and
children.
Material transactions with related parties:
(a) Deposits
Jih-Sun Securities Investment
Trust Co., Ltd.
Others
Ending
balance
$
77,410
$
Jih-Sun Securities Investment
Trust Co., Ltd.
Others
159,641
237,051
Ending
balance
$
275
$
98,216
98,491
2014
Maximum
balance
77,410
254,018
2013
Maximum
balance
1,673
227,887
Interest
revenue
365
Interest
interval %
0-2.90%
2,044
2,409
0-3.80%
Interest
revenue
1
1,218
1,219
Interest
interval %
0-0.16%
0-4.20%
The above interest rates on deposits are substantially the same as for comparable
transactions with non-related parties.
-367-
(b)
Loan
December 31, 2014
Agreement
Classification
Personal house
mortgaged loan
Other loans
Number or
related
party name
31
1
Maximum
balance
213,184
Ending
balance
193,096
42
42
Normal Overdue
loans
loans
Collateral
193,096
Real estate
42
-
Real estate
Terms of
trade
different or
not with
non-related
party
none
none
December 31, 2013
Agreement
Classification
Personal house
mortgaged loan
Other loans
Number or
related
party name
26
3
Maximum
balance
151,453
Ending
balance
128,730
1,519
1,427
Normal Overdue
loans
loans
Collateral
128,730
Real estate
1,427
-
Real estate
Terms of
trade
different or
not with
non-related
party
none
none
As of December 31, 2014 and 2013, there were no overdue loans from the related
parties. Allowance for bad debts is estimated in accordance with the accounting
policy of the Company’s subsidiary, JihSun International Commercial Bank Co., Ltd.
In relation to the related-party credit policy, JihSun International Commercial Bank
Co., Ltd. follows the requirements under Articles 32, 33, 33-1, 33-2, 33-4, 33-5 of
the Banking Act, and does not provide credit loans without collaterals. For
collateralized loans, the collaterals shall consists of full guarantees, and the terms
(including interest rate, collateral and its related appraisal, guarantor requirement,
loan term, repayment method of principal and interest, etc.) must not be superior to
the other parties for similar types of loan. Financing provided to the same related
party, which individually or cumulatively amounts to $100,000 or 1% of the Bank’s
net worth, whichever is lower, must be presented to the Board of Directors and
Supervisors for deliberation. Moreover, the meeting must be attended by more than
two-thirds of the directors and approved by more than three-fourths of the directors
in attendance. The terms and conditions of loans to related parties are not superior to
those given to non-related parties.
(c)
The accounts receivable and other receivable with related parties were as follows:
Accounts receivable
Jih-Sun Securities Investment Trust Co., Ltd.
-368-
2014.12.31
$
2013.12.31
6
9
(d)
The income which the Company’s subsidiary, JihSun Securities Co., Ltd. received
from Jih-Sun Securities Investment Trust Co., Ltd. was as follows:
2014
Securities registration and service fee
Income from selling fund rewards
Total
(e)
$
2013
36
1,895
1,931
$
The income which the Company’s subsidiary, JihSun International Commercial
Bank Co., Ltd. received from Jih-Sun Securities Investment Trust Co., Ltd. was as
follows:
2014
Income from selling fund rewards
(C)
$
2013
317
691
2014
147,203
1,797
149,000
2013
142,195
3,605
145,800
2014.12.31
$ 2,202,200
2013.12.31
150,800
572,476
522,417
511,444
524,127
1,075,144
301,200
1,075,144
311,732
133,576
9,545
133,576
9,962
$ 4,805,585
2,727,758
Compensation information for main management
Salary and other short-term employee benefits
Post-employment benefits
Other long-term employee benefits
Termination benefits
Share-based payment
Total
8.
36
2,344
2,380
$
$
Pledged Assets
Pledged assets
Objects
Financial assets at fair value through Deposited court guarantee,
profit or loss
guarantee of bills dealer, trust
fund reserve for compensation,
and guarantee of US dollar clear
accounts
Restricted assets (certificates of
Bank loan guarantee
deposit, demand deposits)
Other financial assets (financial
Ȼ
assets carried at cost)
Property and equipment – land
Ȼ
Property and equipment –
Ȼ
building(book value)
Investment propertyЁland
Ȼ
Investment propertyЁ
Ȼ
buildings(book value)
Total
-369-
9.
Significant Commitments and Contingents
(A) Significant contractǺ
An advisory company had informed and requested the Company to pay for the consultancy
fees in 2009. In accordance with the Company’s internal evaluations and the opinions from
the appointed lawyer, the Company could use three reasons to defend its position. One
reason was that the consultancy agreement did not complete the legal procedure within the
Company. Another was that the case of capital increase did not include in the range of the
consultancy agreement. Therefore, the Company thought that it was not necessary to
estimate and pay for the requested amount.
(B)
Significant lawsuit
(a)
Three customers of the Tai-Chung Branch of JihSun Securities Co., Ltd. alleged that
a former employee at the Tai-Chung Branch had sold their stock without their
permission, and stolen their bank savings. Therefore, the client requested JihSun
Securities Co., Ltd. to be responsible jointly and claimed $82,431 with interest (the
amount decreased to $72,899 in the lawsuit). As of December 31, 2009, Taichung
District Court had judged that JihSun Securities Co., Ltd. and the former employee
were jointly liable for the three plaintiffs amounting $33,968 with statutory interest
of 5% from October 21, 2003. During the lawsuit, JihSun Securities Co., Ltd. had
already reconciled with one of the customers and the remaining part had been denied
by Taiwan High Court Tai-Chung Branch on August 9, 2011, and JihSun Securities
Co., Ltd. had appealed to Supreme Court on September 1, 2011. The Supreme Court
on October 24, 2012 abandoned the original judgment. JihSun Securities Co., Ltd.
had already reconciled with the remaining two customers and paid $12,800 to them
on May 14, 2014.
(b)
In July, 2011, the customer of Yong-Kang Branch of JihSun Securities Co., Ltd.
alleged that he had suffered losses because an employee manipulated illegally his
stocks and futures and requested JihSun Securities Co., Ltd. to be responsible jointly
and claimed for $13,000. The Taiwan Tainan District Court has ruled in favor of
JihSun Securities Co., Ltd. The plaintiff disagreed with the adjudication made and
filed an appeal with Taiwan High Court Tainan Branch Court, which is currently still
in process. JihSun Securities Co., Ltd. determined the lawsuit to be the private
dispute between the client and the operating manager. Thus, no additional
compensation liability resides in JihSun Securities Co., Ltd. and no accrual shall be
booked.
-370-
(c)
(C)
In January, 2014, the four customers of the Company’s subsidiary, JihSun Securities
Co., Ltd.’s futures introducing broker business alleged that they had suffered losses,
and requested JihSun Securities Co. Ltd. and its subsidiary, JihSun Futures Co., Ltd.
and the employees to be jointly responsible and claimed for $109,428. The suit is
still under review by Taiwan Taipei District Court. JihSun Securities Co., Ltd.’s
futures introducing broker business had been inspected by the authority for several
times and had not been found any violation of regulation. JihSun Securities Co., Ltd.
and its subsidiary, JihSun Futures Co., Ltd. believe that no compensation liability
and no accrual shall be booked.
Significant commitments and contingencies of JihSun International Commercial Bank Co.,
Ltd.
Acted as an agent for various collections
Entrusted with the sale of U.S dollar traveler’s checks
Handled several guarantees
Outstanding bank acceptance liabilities
Letters of credit
Acted as custodian of post-dated checks for its clients
(excluding next day’s checks for clearing)
Loans commitments
Credit card commitments
Total
2014.12.31
$
347,411
25,070
661,558
430,102
1,030,354
12,247,514
2013.12.31
460,270
26,984
541,381
213,841
644,576
11,261,061
62,069,892
24,309,520
101,121,421
68,132,981
25,170,010
106,451,104
$
(D) Significant commitments and contingencies of JihSun Securities Co., Ltd.Ǻ
(a)
(E)
As of December 31, 2014 and 2013, the Company had issued post-dated checks for
future rental payments, which amounted to $51,583 and $62,734, respectively.
(b) As of December 31, 2014 and 2013, in connection with securities financing activities,
the Company’s subsidiary JihSun Securities Co., Ltd. held client-owned stocks
which amounted to approximately 700,807,093 shares and 670,851,378 shares,
respectively; stocks lent out to clients amounted to approximately 33,425,000 shares
and 35,679,000 shares, respectively. The Company’s subsidiary, JihSun Securities
Co., Ltd. had received refundable deposits in full from the clients for the lent
securities.
!
!
Except for aforementioned, other consolidated subsidiaries have no significant
commitments and contingencies
10. Significant Catastrophic LossesǺ
ǺNone.
-371-
11. Significant Subsequent EventsǺ
Ǻ
The Company’s subsidiary, JihSun International Commercial Bank Co., Ltd. issued JihSun
International Bank 2015-1 unsecured subordinated financial debentures which amounted to
$2,500,000 on January 30, 2015 to enhance working capital and capital adequacy ratio. The
maturity date of the financial debentures will be on January 30, 2022. JihSun International
Commercial Bank Co., Ltd. obtained the approval letter from Taipei Exchange, with the issuing
number of Jheng- Gre -Zhai Zi 10400016831 dated January 23, 2015.
12. Others
(A) Business segment financial information: please refer to Note 14(A): Operating Segments
Information.
(B)
Average amount and current period average interest rate of interest-earning assets and
interest-bearing liabilities are as followsΚ
2014.12.31
Interest-earning assets
Interest-bearing liabilities
(C)
2013.12.31
Average
rate
Average
(%)
amount
$ 196,300,825
2.05
189,382,563
0.79
Average
amount
182,768,471
180,606,539
Average
rate
(%)
2.05
0.77
Maturity analysis of assets and liabilities to JihSun International Commercial Bank Co.,
Ltd.Κ
(a)
Structure analysis of New Taiwan Dollars time to maturity
December 31, 2014
Total
Major capital $ 182,123,657
inflow at
maturity
242,792,038
Major capital
outflow at
maturity
Gap
(60,668,381)
1-30 days
48,972,518
Remaining amount to maturity
181 days-1
year
31-90 days
91-180 days
Over 1 year
16,363,126
6,704,846
9,259,565 100,823,602
19,293,667
24,287,934
27,607,747
57,770,984
113,831,706
29,678,851
(7,924,808)
(20,902,901)
(48,511,419)
(13,008,104)
-372-
December 31, 2013
Total
Major capital $ 180,705,075
inflow at
maturity
Major capital
242,466,061
outflow at
maturity
Gap
(61,760,986)
1-30 days
45,479,149
181 days-1
31-90 days
91-180 days
year
Over 1 year
16,364,643
8,483,623
11,434,986
98,942,674
21,024,448
25,671,087
26,737,306
59,421,048
109,612,172
24,454,701
(9,306,444)
(18,253,683)
(47,986,062)
(10,669,498)
Note: Listed amounts of the head office and domestic branches (excluding foreign
currency amounts) are denominated in NTD.
(b)
Structure analysis of US Dollars time to maturity
December 31, 2014
Unit: in thousands of USD
Major capital
inflow at
maturity
Major capital
outflow at
maturity
Gap
$
181 days-1
31-90 days
91-180 days
year
Over 1 year
219,185
97,659
181,213
284,200
Total
1,175,145
1-30 days
392,888
1,276,570
492,127
256,124
126,831
151,825
249,663
(101,425)
(99,239)
(36,939)
(29,172)
29,388
34,537
December 31, 2013
Unit: in thousands of USD
Major capital
inflow at
maturity
Major capital
outflow at
maturity
Gap
$
181 days-1
31-90 days
91-180 days
year
Over 1 year
188,083
72,871
98,329
210,395
Total
784,686
1-30 days
215,008
939,219
287,289
168,927
141,379
177,249
164,375
(154,533)
(72,281)
19,156
(68,508)
(78,920)
46,020
-373-
Note 1: Listed amounts of the head office and domestic branches and offshore
banking unit are denominated in U.S. dollars. The amounts were listed by
book value except for additional statement. Non-recorded amount shall not
be listed. (For example: planning to issue negotiable certificates of deposit,
bonds or stocks.)
Note 2: The supplementary disclosure of information shall be provided, if the
overseas assets accounts for more than 10% to the total assets.
(D) Pursuant to Article 17 of the Enforcement Rules of the Trust Enterprise Act, the balance
sheets and income statements of trust accounts are as followsǺ
(a)
The Company’s subsidiary, JihSun Securities Co., Ltd.
TRUST BALANCE SHEETS
Trust assets
Cash in bank
Stocks
Funds
$
Securities borrowed by the
other parties
Receivables
Total trust assets
2014.12.31
14,700
303,170
811,110
544,446
$
10,075
1,683,501
Trust liabilities
Payables
Trust capital
Reserves and accumulated
earnings(losses)
Net income
Income distribution
Total trust liabilities
$
2014.12.31
3,729
1,703,205
6,851
$
(30,284)
1,683,501
TRUST PROPERTY LIST
Investment items
Cash in bank
Short term investment
Stocks
Funds
Securities borrowed by other parties
Total Trust Assets
2014.12.31
-374-
$
14,700
$
303,170
811,110
544,446
1,673,426
TRUST INCOME STATEMENTS
Investment items
Trust revenues
Interest income
Rental income
Cash dividends
Realized capital gains
Unrealized capital gains
Unrealized currency exchange gains
Subtotal
Trust expenses
Administrative expenses
Service fee expenses
Realized capital losses
Unrealized capital losses
Unrealized currency exchange losses
Health insurance expenses
Tax expenses
Subtotal
Income before tax
Income tax expense
Net income
-375-
For the period from January
20, 2014 (set up date) to
December 31, 2014
$
15
5,595
11,470
22,186
37,020
1,080
77,366
1,195
123
3,083
65,728
382
3
1
70,515
6,851
-
$
6,851
(b)
The Company’s subsidiary, JihSun International Commercial Bank Co., Ltd.
TRUST BALANCE SHEETS
Trust assets
Cash in bank
Prepayments
2014.12.31
400,530
355
2013.12.31
823,962
299
Bonds
Stocks
699,554
747,385
536,958
1,468,894
Funds
22,373,615
20,882,236
91,168
554,088
Securities borrowed by
the other parties
Real Estate
Land
Buildings
Construction in
progress
Securities in custody
Total trust assets
$
2,683,340
96,374
202,878
2,760,020
110,415
183,050
2,660,378
$ 29,955,577
374,121
27,694,043
Trust liabilities
Payables
Payable for
securities in
custody
Trust capital
Reserves and
accumulated
earnings(losses)
Accumulated
earnings (losses)
Net income
2014.12.31
$
35
2,660,378
2013.12.31
102
374,121
27,293,555
27,317,885
1,935
3,441
613,727
452,539
Deferred amount
transferred from
the previous
period
(614,053)
(454,045)
$ 29,955,577
27,694,043
Total trust
liabilities
TRUST PROPERTY LIST
Trust assets
Cash in bank
Short-term investments
Bonds
Stocks
Funds
Securities borrowed by the other parties
Securities in custody
Real estate
Land
Buildings
Construction in progress
Total trust assets
$
$
-376-
2014.12.31
400,530
2013.12.31
823,962
699,554
747,385
22,373,615
91,168
2,660,378
536,958
1,468,894
20,882,236
554,088
374,121
2,683,340
96,374
202,878
29,955,222
2,760,020
110,415
183,050
27,693,744
TRUST INCOME STATEMENTS
Investment items
Trust revenues
Interest income
Dividends
Revenue from securities borrowing
Realized capital gains
Income from beneficiary
certificates
Gain on sale of properties
Subtotal
Trust expenses
Administrative expenses
Service fee expenses
Loss on sale of properties
Other expenses
Tax expenses
Subtotal
Net income
(E)
2014
$
2013
2,100
806,134
7,626
82
2,742
607,337
13,480
8,722
311
424,524
1,240,466
484,935
1,117,527
189,687
167
436,670
5
210
626,739
613,727
147,493
303
516,900
11
281
664,988
452,539
-
$
JihSun Financial Holding Co., Ltd.:
(a)
Condensed balance sheets:
2014.12.31
Assets
Receivables – net
Current tax assets
Equity investments under equity method – net
Property, plant and equipment—net
Intangible assets-net
Other assets-net
Total assets
Liabilities and equity
Short-term loans
Commercial papers issued
Payables
Current tax liabilities
Provisions
Deferred tax liabilities
Other liabilities
Total liabilities
Capital
Common stock
Retained earnings
Legal reserve
Special reserve
Other equity
Exchange differences on translation of foreign
Unrealized valuation gains on
available-for-sale financial assets
Total equity
Total liabilities and equity
-377-
$
$
209,954
69,623
337,485
40,236,152
1,049
587
1,100
40,855,950
358,727
712,525
347,259
38,331,115
1,473
761
699
39,752,559
300,000
3,483,471
1,207,976
7,851
1,441
489
5,001,228
200,000
3,678,068
1,865,405
367,419
2,079
2,327
510
6,115,808
32,151,817
30,991,080
860,069
511,636
2,441,410
688,362
417,197
1,717,067
$
-
$
2013.12.31
(157,213)
(242,620)
47,003
65,665
35,854,722
40,855,950
33,636,751
39,752,559
(b)
Condensed statements of comprehensive income:
Revenues
Share of profit of associates accounted for using equity method
Other revenues
Total
Expenses and losses
Operating expenses
Interest expenses
Total
Profit before tax
Tax income
Profit
Other comprehensive income, before tax, exchange differences on
translation
Other comprehensive income, before tax, available-for-sale
financial assets
Other comprehensive income, before tax, actuarial (losses) gains
on defined benefit plans
Share of other comprehensive income of associates and joint
ventures accounted for using equity method
Income tax related to components of other comprehensive income
Basic earnings per share (Dollar)
Diluted earnings per share (Dollar)
-378-
$
$
$
$
2014
2013
2,502,046
19,819
2,521,865
2,148,529
19,483
2,168,012
82,868
27,849
9,093
119,810
2,402,055
41,037
2,443,092
73,040
34,596
11,582
119,218
2,048,794
32,325
2,081,119
85,407
34,720
(20,200)
(231,215)
(2,125)
14,049
82
125
1,899
65,063
2,508,155
0.76
0.76
(3,926)
(186,247)
1,894,872
0.66
0.65
-379-
(c)
Balance - January 1, 2013
Profit
ʳ Legal reserve
ʳ Special reserve
ʳ Cash dividends - common stock
ʳ Stock dividends - common stock
Conversion of preferred stock to common
stock
Balance - December 31, 2013
Profit
ʳ Legal reserve
ʳ Special reserve
ʳ Cash dividends - common stock
ʳ Stock dividends - common stock
Balance - December 31, 2014
$
-
1,160,737
32,151,817
(2,218,469)
1,538,885
2,218,469
30,991,080
-
Preferred stock
2,218,469
-
Capital stock
Common stock
$
27,233,726
-
Condensed statements of changes in equity:
-
-
-
860,069
171,707
688,362
194,756
Legal reserve
493,606
-
-
-
-
511,636
94,439
417,197
(170,804)
-
Special reserve
588,001
-
Retained earnings
(171,707)
(94,439)
(290,184)
(1,160,737)
2,441,410
1,717,067
2,443,092
(1,682)
2,441,410
(194,756)
170,804
(384,721)
(1,538,885)
-
1,571,721
2,081,119
11,785
2,092,904
Unappropriated
earnings
(157,213)
(242,620)
85,407
85,407
-
Exchange
differences
resulting from
translation the
financial
statements of a
foreign operation
(277,340)
34,720
34,720
-
-
-
47,003
(18,662)
(18,662)
65,665
Unrealized gains
(losses) on
available-for-sale
financial
assets
298,417
(232,752)
(232,752)
Other equity
(110,210)
(176,955)
66,745
66,745
-
Subtotal
21,077
(198,032)
(198,032)
(290,184)
35,854,722
33,636,751
2,443,092
65,063
2,508,155
(384,721)
-
Total
32,126,600
2,081,119
(186,247)
1,894,872
(d)
Statements of cash flows:
2014
Subtotal
Cash flows from operating activities:
Profit before tax
Adjustments:
Amortization expenses
Share of profit of associates accounted
for using equity method
Interest income
Interest expenses
Losses on retirement of property, plant
and equipment
Subtotal of income and expense items
with no effect on cash flows
Changes in operating assets and
liabilitiesΚ
Κ
Decrease (increase) in receivables
(Increase) decrease in other assets
(Decrease) increase in payables
Increase in provisions
Decrease in other liabilities
Total changes in operating assets and
liabilities
Cash outflows generated from operations
Interest received
Income tax received
Income tax paid
Interest paid
Net cash flows used in by operating
activities
Cash flows from investing activities:
Dividends received
Acquisition of intangible assets
Acquisition of property and equipment
Net cash flows from investing activities
Cash flows from financing activities:
Increase (decrease) in borrowings from
banks
(Decrease) increase in commercial paper
issued
Cash dividends paid
Net cash flows used in financing activities
Net (decrease) increase in cash and cash
Equivalents
Cash and cash equivalents, at the
beginning of the period
Cash and cash equivalents, at the end of
the period
2013
Total
$
Subtotal
2,402,055
2,048,794
510
194
(2,502,046)
492
178
(2,148,529)
(1,893)
27,849
(3,086)
34,596
2
(2,475,386)
621,589
(401)
(658,446)
566
(21)
(2,116,347)
(49,226)
26
31,419
130
(17)
(36,713)
(17,668)
(110,044)
1,893
73,215
(367,630)
(27,713)
(430,279)
(85,221)
3,086
(270)
(35,474)
(117,879)
666,393
(4)
(102)
992,962
(233)
(93)
666,287
992,636
100,000
(200,000)
(194,597)
50,060
(290,184)
(384,721)
$
-380-
Total
(384,781)
(148,773)
(534,661)
340,096
358,727
18,631
209,954
358,727
(F)
The Subsidiaries’ Balance Sheets and Statements of Comprehensive Income
JihSun International Commercial Bank Co., Ltd.:
(a)
2014.12.31
Assets
Due from the central bank and call loans
to banks
profit or loss
Receivables – net
Current tax assets
Loan discounted – net
Investment accounted for using equity
methodЁnet
Other financial assets—net
Property, plant and equipment—net
Investment property—net
Intangible assetsЁnet
Deferred tax assets
Other assetsЁnet
Total assets
Financial liabilities at fair value through
profit or loss
agreements
Payables
Deposits
Provisions
Deferred tax liabilities
Other liabilities
Total liabilities
Capital
Retained earnings
Legal reserve
Other equity
Total equity
-381-
$
$
$
$
2013.12.31
3,646,461
14,866,012
3,761,789
24,308,997
34,673,527
15,404,110
3,162,872
9,773
143,960,130
8,479,415
300,000
63,146
3,683,357
51,815
140,893,714
11,281,874
300,000
89,059
775,957
3,578,948
427,264
129,305
32,543
1,432,095
215,537,358
789,101
3,681,797
378,126
109,219
33,927
267,287
205,034,172
6,645,253
2,324,748
11,056,736
70,161
500,000
964,845
2,043,592
180,272,401
2,500,000
2,363,502
134,847
42,087
222,020
197,048,450
15,798,890
1,516,997
170,223,332
3,000,000
120,985
129,917
44,321
225,661
187,352,955
15,369,980
1,388,096
1,253,442
48,480
18,488,908
215,537,358
1,020,459
1,225,458
65,320
17,681,217
205,034,172
(b)
Net interest income
Net income except interest
Net Income
Reversal of provision for bad debt expenses and
guarantee liability
Operating expenses
Profit before tax from continuing operations
Profit
Earnings per share (EPS)(NT Dollar)
2014
Amount
$ 2336,335
1,576,196
3,921,531
(190,982)
2,837,491
1,266,022
1,263,437
(26,835)
$ 1,236,602
$
0.80
%
60
40
100
(5)
73
32
32
(1)
31
2013
Amount
2,094,168
1,843,450
3,937,618
(168,908)
2,805,589
1,300,937
1,363,738
(240,372)
1,123,366
0.86
%
53
47
100
(4)
71
33
35
(6)
29
JihSun Securities Co., Ltd.:
(a)
2014.12.31
Assets
Current assets
Financial assets carried at costЁnon current
Investment accounted for using equity method, net
Investment property
Intangible assets
Deferred tax assets
Other non-current assets
Total assets
Current liabilities
Other liabilities
Total Liabilities
Capital
Capital surplus
Retained earnings
Other equity interest
Total equity
-382-
$
$
$
$
2013.12.31
31,608,991
1,008,772
3,447,676
1,571,312
232,899
71,321
25,243
1,256,963
39,223,177
30,117,577
1,174,078
3,098,784
1,604,669
234,337
32,792
41,110
1,255,847
37,559,194
17,188,881
151,790
17,340,671
11,572,127
1,298,456
9,074,819
(62,896)
21,882,506
39,223,177
16,530,607
243,389
16,773,996
11,572,127
1,298,456
8,061,096
(146,481)
20,785,198
37,559,194
(b)
Revenues
Expenses
Share of profit of associates and joint ventures
accounted for using equity method
Other gains and losses
Profit before tax
Profit
Earnings per share (EPS) (NT Dollar)
2014
Amount
$ 3,804,523
2,876,583
53,763
%
100
75
1
360,237
1,341,940
1,237,995
96,219
$1,334,214
$
1.07
9
35
32
3
35
2013
Amount
3,103,756
2,641,802
108,495
%
100
85
3
328,511
898,960
784,151
54,489
838,640
0.68
11
29
25
2
27
JihSun International Property Insurance Agency Co., Ltd.:
(a)
2014.12.31
Assets
Current assets
Intangible assets
Other assets
Total assets
Current liabilities
Total liabilities
Capital
Retained earnings
Total equity
(b)
$
$
$
$
2013.12.31
6,391
64
3
242
6,700
6,487
103
241
6,831
1,514
1,514
3,000
2,186
5,186
6,700
1,498
1,498
3,000
2,333
5,333
6,831
2014
Amount
$
8,209
4,258
3,951
3,442
8
$
517
$
429
$
1.43
Revenues
Operating costs
Gross profit
Operating expenses
Non-operating revenue and gain
Profit before tax
Profit
Earnings per share (EPS) (NT Dollar)
-383-
%
100
52
48
42
6
5
2013
Amount
7,842
3,780
4,062
3,301
10
771
640
2.13
%
100
48
52
42
10
8
(G) ProfitabilityǺ
(a)
Profitability of the Company and its subsidiaries
Item
Consolidated return on assets ratio (Before tax)
Consolidated return on assets ratio (After tax)
Consolidated return on equity ratio (Before tax)
Consolidated return on equity ratio (After tax)
Consolidated net income ratio
(b)
2014
5.96%
6.06%
6.91%
7.03%
98.32%
2013
0.87%
0.84%
6.50%
6.33%
28.30%
2013
5.25%
5.33%
6.23%
6.33%
98.08%
Profitability of JihSun Securities Co. Ltd.
Item
Return on assets ratio (Before tax)
Return on assets ratio (After tax)
Return on equity ratio (Before tax)
Return on equity ratio (After tax)
Net income ratio
(d)
1.01%
0.97%
7.30%
7.03%
30.47%
Profitability of JihSun Financial Holding Co. Ltd.
Item
Net income ratio
(c)
2014
2014
3.50%
3.22%
6.29%
5.80%
30.84%
2013
2.25%
1.97%
4.36%
3.80%
23.36%
Profitability of JihSun International Commercial Bank Co., Ltd.
Item
Net income ratio
2014
0.60%
0.60%
7.00%
6.99%
32.29%
2013
0.64%
0.67%
7.49%
7.85%
34.63%
Note 1: Return on assets ratio = Net income (loss) before/after income tax ÷
average total assets.
Note 2: Return on equity ratio = Net income (loss) before/after income tax ÷ average
total equity.
Note 3: Net income ratio = Net income (loss) after income tax ÷ Net revenue.
Note 4: Net income (loss) before/after tax represents accumulated income (loss) of the
current year.
-384-
(H) Futures commission merchant, MF Global Holding Ltd. had filed for bankruptcy
protection on October 31, 2011 and its affiliate company, MF Global Singapore Pte. Ltd.
had appointed provisional liquidator to progress on the liquidation procedure. The
$76,632 in customer margin deposits of the Company’s sub-subsidiary, JihSun Futures
Co., Ltd. JihSun Futures Co., Ltd. had recovered $40,191 in April, 2012, $662 in
February, 2012 and $35,098 in December, 2013, respectively. All these commission
receivables had been recovered.
JS CRESVALE SECURITIES INTERNATIONAL LIMITED and JIH SUN
FINANCIAL SERVICES (CAYMAN) LIMITED were affected by the incident. The
affected amount of margin call resulted from proprietary trading were $58,947 and
$76,187, respectively. In addition, JS Cresvale Securities International Ltd. had
recovered $39,480 during April and May 2012 and JIH SUN FINANCIAL SERVICES
(CAYMAN) LIMITED had recovered $68,568 during March 2012.
JS CRESVALE SECURITIES INTERNATIONAL LIMITED and JIH SUN
FINANCIAL SERVICES (CAYMAN) LIMITED had accounted 100% allowance for
the accounts receivable resulted from the MF Global incident in 2013.
(I)
The information about the Company and its subsidiaries’ transactions, operations
development, interactive use of information and use of operating equipment or place were as
follows:
(a)
The information about the Company and its subsidiaries’ operations and transactions
was as follows:
(1) For the years ended December 31, 2014 and 2013, the Company paid the fee from
providing agency service for stock affairs (including computer printing fee) to the
Company’s subsidiary, JihSun Securities Co., Ltd. amounted to $11,445 and
$11,596, respectively. For the years ended December 31, 2014 and 2013,
directors’ and supervisors’ remuneration received from JihSun Securities Co., Ltd.
amounted to $11,762 and $10,559, respectively. For the years ended December 31,
2014 and 2013, the Company’s ending balance of bank deposit with JihSun
International Commercial Bank Co., Ltd. amounted to $207,059 and $7,596,
respectively. The highest balance of bank deposit amounted to $701,765 and
$534,044, respectively. For the years 2014 and 2013, the total amount of interest
income amounted to $135 and $71, respectively. For the years ended December 31,
2014 and 2013, directors’ and supervisors’ remuneration received from JihSun
International Commercial Bank Co., Ltd. both amounted to $5,500.
-385-
(2) JihSun Securities Co., Ltd. charged to JihSun International Commercial Bank Co.,
Ltd.Ǻ
2014
Service fee – brokerage
Rental income
Stock agent income (including computer printing fee)
Revenue from management fee allocated (Note 1 )
Marketing expenses allocated (Note 2 )
Revenue from water and electricity expenses allocated
Transaction fees
Bank custodian fees
$
2013
4,277
11,621
780
225,420
905
5,572
498
3
2,719
13,259
960
202,268
874
5,202
433
3
Note 1: Refer to the management fee that JihSun Securities Co., Ltd. authorized
JihSun International Commercial Bank Co., Ltd. to deliver settlement
money from customers, stock transfer, joint marketing expenses and
management expenses allocated from related events.
Note 2: The allocation of marketing expenses between JihSun International
Commercial Bank Co., Ltd. and JihSun Securities Co., Ltd. except for the
rental expenses, which was paid at a fixed amount based on agreements,
was calculated based on the proportion of the actual usage.
(3) The deposits for JihSun International Commercial Bank Co., Ltd. to rent operation
place from JihSun Securities Co., Ltd. were as follows:
Refundable deposits
$
2014.12.31
2,480
2013.12.31
2,873
(4) For the years ended December 31, 2014 and 2013, JihSun Securities Co., Ltd.’s
ending balance of bank deposit in JihSun International Commercial Bank Co., Ltd.
amounted to $696,660 and $552,982, respectively. The bank deposits are recorded
under cash and cash equivalents, operation guarantee deposits, refundable deposits,
amounts held for settlement, debit items for trade brokerage, receipts under
custody from exercise of warrant receipts under custody from customers’ security
subscription, and customer margin deposit etc. For the years ended December 31,
2014 and 2013, the highest balance of bank deposits amounted to $2,107,674 and
$1,868,582, respectively, and interest income amounted to $847 and $786,
respectively.
(5) The commission income of JihSun Securities Co., Ltd. that acted as an agent to
promote JihSun International Property Insurance Agency Co., Ltd.’s products are
as follows:
2014
Commission income
$
-386-
2013
1,737
1,404
(6) Income which JihSun International Commercial Bank Co., Ltd. charged to JihSun
Securities Co., Ltd. are as follows:
Leasing income
$
2014
10,394
2013
10,850
(7) The deposits for JihSun Securities Co., Ltd. to rent operational place from JihSun
International Commercial Bank Co., Ltd. are as follows:
Guarantee deposits received
$
2014.12.31
2,012
2013.12.31
1,970
(8) The commission income of JihSun International Commercial Bank Co., Ltd. that
acted as an agent to promote JihSun International Property Insurance Agency Co.,
Ltd.’s products is as follows:
2014
Commission income
$
2013
2,492
2,346
(9) As of June 12, 2014 and June 27, 2013, the Company’s subsidiary, JihSun
International Commercial Bank Co., Ltd.’s guaranteed line of credit to JihSun
Securities Co., Ltd. amounted to $1,200,000. As of December 31, 2014 and 2013,
the loan balances were both $0.
(J)
According to Financial Holding Company Act, Article 46, the aggregate amounts and
percentage of credits, guarantees and other transactions taken place between all subsidiaries
of the financial holding company and any of the following counterparties such as the same
person, parties and affiliates for the year ended December 31, 2014:
Name
A. The same person
Formosa Petrochemical Corporation
Formosa Chemicals & Fibre Corporation
Chailease Finance Co., Ltd.
CPC Corporation, Taiwan
B. The same affiliate
Formosa Plastics Group
Chailease Group
Shin Kong Group
Foxconn Technology Group
Fubon Group
Tai Shin Group
-387-
Aggregate amount of
credits, guarantees or
any other transactions
Aggregate percentage
of the financial holding
company's net value
2,336,213
2,115,754
2,099,911
1,912,303
6.52%
5.90%
5.86%
5.33%
6,409,040
3,342,538
3,137,471
2,339,718
1,949,370
1,837,831
17.88%
9.32%
8.75%
6.53%
5.44%
5.13%
Note 1: If the aggregate amount of credit extended, guarantees given, or any other
transactions conducted by all subsidiaries of the financial holding company to, for,
or with the same person, same related person or same affiliate is greater than the
lower of 5% of net worth of the financial holding company or NT$3 billion, the
related transaction information needs to be filed according to the table refer above.
Note 2: Credit includes loans, discounts, overdrafts, acceptances, guarantees and other lines
of business operations designated by the Central Competent Authority.
Note 3: Guarantees here are indicative of endorsements and guarantees of for bills finance
corporations.
Note 4: Other transactions with the same person, same related person, or same affiliate
(thereinafter referred to as “the affiliates”) here are indicative of the transactions
listed below:
(1) Transaction of notes, bills, or bonds with reverse repurchase agreement;
(2) Investment in or purchase of securities issued by any of the affiliates mentioned
in the preceding paragraph;
(3) Transactions of financial derivatives; and
(4) Other transactions as prescribed by the Competent Authority.
Note 5: Aggregate percentage is calculated based on per book number of the Company’s net
value on December 31, 2014.
13. Disclosure Required
(A) Related information on significant transactions
According to the Regulations Governing the Preparation of Financial Reports by Financial
Holding Companies, the Company's related information on significant transactions for the
year ended December 31, 2014 are as follows:
(a)
Loans to other business or individuals: not applicable to financing and securities
subsidiaries others; other non-farcing industry investees: none.
(b)
Endorsement and guarantees for others: not applicable to financing and securities
subsidiaries; other non-farcing industry investees: none.
(c)
Marketable securities held as of December 31, 2014: not applicable to financing and
securities subsidiaries: none. (Excluding position in investing subsidiaries, associates
and joint ventures)
-388-
(d)
Cumulative purchases or sales of the same investee’s capital stock up to $300,000 or
10% of paid-in capital: None.
(e)
Cumulative purchase or sale of the same investee’s capital stock up to $300,000 or
10% of paid-in capital: None.
(f)
Acquisition of real estate up to $300,000 or 10% of paid-in capital: None.
(g)
Disposal of real estate up to $300,000 or 10% of paid-in capital: None.
(h)
Acquisition of real estate up to $300,000 or 10% of paid-in capitalΚNone.
(i)
Receivables from related parties up to $300,000 or 10% of paid-in capital: for more
information, please refer to Note 6 (AC) (c) 11 and these transactions were written-off.
(j)
Financial derivative transactions: Please refer to Note 6(AF).
(k)
Information on NPL disposal transaction:
(1) Summary of information on NPL disposal transaction:
Transaction
date
August 18, 2014
May 5, 2014
Deutsche Bank
AG. London
Branch
NPL
information
Corporate
Loans with
collateral
Bank of America,
National
Association
Corporate
Loans with
collateral
Trading partner
Book
value
227,346
Selling Price
216,680
Disposal gain or
loss
(10,666)
214,079
237,865
23,786
Contractual
Conditions
None
None
Relationship with
Trading partner
None
None
Note: Book value are the balances (including interest receivable) for initial loans amount less bad debt allowance.
JihSun International Commercial Bank Co., Ltd. recognized $ 14,560 sales gains for above NPL disposal
transactions.
(2) Disposal of NPL selling price up to $1,000,000: none.
(l)
Types of securitization instruments approved to be issued pursuant to financial assets
securitization rules or real estate securitization rules and other relevant information:
none.
-389-
(m) Business relationship and material transactions between the parent company and
subsidiariesΚ
No
(Note1)
Party
0
JihSun Financial Holding
Co., Ltd.
1
0
1
2
Co., Ltd.
0
Co., Ltd.
0
Co., Ltd.
2
3
0
0
3
2
2
2
1
1
1
2
Counterparty
Commercial Bank
Co., Ltd.
JihSun Financial
Holding Co., Ltd.
Commercial Bank
Co., Ltd.
JihSun Financial
Holding Co., Ltd.
JihSun Financial
Holding Co., Ltd.
JihSun Securities
Co., Ltd.
Relationship
with party
(Note2)
1
2
1
Accounts payable –
related parties
1,188,236
"
0.46%
2
Accounts receivable –
related parties
Stock management
incomes
Other general and
administrative
expenses
related parties
related parties
related parties
related parties
1,188,236
"
0.46%
11,445
"
0.14%
11,445
"
0.14%
69,491
"
0.03%
69,491
"
0.03%
128
"
-%
128
"
-%
1
related parties
125
"
-%
2
related parties
Cash and cash
equivalents
125
"
-%
558,969
"
0.22%
2
1
JihSun Securities
Co., Ltd.
JihSun Financial
Holding Co., Ltd.
JihSun International Property JihSun Financial
Insurance Agency Co., Ltd. Holding Co., Ltd.
Co., Ltd.
Property Insurance
Agency Co., Ltd.
Co., Ltd.
Property Insurance
Agency Co., Ltd.
JihSun Securities Co., Ltd. JihSun International
Commercial Bank
Co., Ltd.
Commercial Bank
Co., Ltd.
Commercial Bank
Co., Ltd.
JihSun Securities
Commercial Bank Co., Ltd. Co., Ltd.
JihSun Securities
JihSun Securities
1
3
Commercial Bank
Co., Ltd.
Transactions for the year ended December 31, 2014
Percentage of
consolidated
operating revenue
or consolidated total
assets
Account
Amount
Terms
0.08%
Cash and cash
207,059 The same terms as for
comparable transactions
equivalents
with non-related parties
Deposits
207,059
"
0.08%
2
2
1
3
3
Operation guarantee
deposits
10,000
"
-%
3
Refundable deposits
22,812
"
0.01%
3
Deposits
589,769
"
0.23%
3
Guarantee deposits
received
Other general and
administrative
expenses
Leasing incomes from
operating assets
2,012
"
-%
10,394
"
0.13%
10,394
"
0.13%
3
-390-
No
(Note1)
Party
2
1
2
1
1
2
1
1
2
1
2
1
3
1
3
2
3
Counterparty
Commercial Bank
Co., Ltd.
JihSun Securities
Co., Ltd.
Commercial Bank
Co., Ltd.
JihSun Securities
Co., Ltd.
JihSun Securities
Co., Ltd.
Commercial Bank
Co., Ltd.
JihSun Securities
JihSun Securities
Commercial Bank
Co., Ltd.
JihSun Securities
Commercial Bank
Co., Ltd.
Commercial Bank Co., Ltd. Property Insurance
Agency Co., Ltd.
JihSun International Property JihSun International
Insurance Agency Co., Ltd. Commercial Bank
Co., Ltd.
Agency Co., Ltd.
Co., Ltd.
Property Insurance
Agency Co., Ltd.
JihSun International Property JihSun Securities
Insurance Agency Co., Ltd. Co., Ltd.
Relationship
with party
(Note2)
3
3
3
3
3
3
Percentage of
consolidated
operating revenue
Account
Amount
Terms
assets
Other general and
0.14%
administrative
expenses
11,621
"
0.14%
operating assets
Other non-operating
226,325
"
2.82%
income
Other general and
administrative
expenses
Miscellaneous
expenses
related parties
225,420
"
2.81%
905
"
0.01%
19,024
"
0.01%
19,024
"
0.01%
3
Other payables
3
Refundable deposits
2,480
"
-%
3
Guarantee deposits
received
2,480
"
-%
3
Other service charge
4,277
"
0.05%
3
Service Fee,
brokering
4,277
"
0.05%
3
Deposits
5,752
"
-%
3
Cash and cash
equivalents
5,752
"
-%
3
Other service fee
2,492
"
0.03%
3
Other commission
expense
2,492
"
0.03%
3
Other non-operating
income
1,737
"
0.02%
3
Other commission
expense
1,737
"
0.02%
-391-
No
(Note1)
Party
0
Co., Ltd.
1
0
1
2
Co., Ltd.
0
Co., Ltd.
2
0
0
2
0
2
3
0
0
3
2
2
2
1
1
1
2
Counterparty
Commercial Bank
Co., Ltd.
JihSun Financial
Holding Co., Ltd.
Commercial Bank
Co., Ltd.
JihSun Financial
Holding Co., Ltd.
JihSun Financial
Holding Co., Ltd.
JihSun Securities
Co., Ltd.
JihSun Financial
Holding Co., Ltd.
JihSun Securities
Co., Ltd.
Co., Ltd.
JihSun Securities
Co., Ltd.
Co., Ltd.
JihSun Securities Co., Ltd. JihSun Financial
Holding Co., Ltd.
JihSun Securities
Co., Ltd.
Co., Ltd.
JihSun Securities Co., Ltd. JihSun Financial
Holding Co., Ltd.
Co., Ltd.
Property Insurance
Agency Co., Ltd.
Co., Ltd.
Property Insurance
Agency Co., Ltd.
Commercial Bank
Co., Ltd.
Commercial Bank
Co., Ltd.
Commercial Bank
Co., Ltd.
JihSun Securities
JihSun Securities
JihSun Securities
Commercial Bank
Co., Ltd.
Relationship
with party
(Note2)
1
2
Percentage of
consolidated
operating revenue
Account
Amount
Terms
assets
Cash and cash
-%
equivalents
Deposits
7,596
"
-%
1
related parties
1,787,253
"
0.73%
2
related parties
Stock management
incomes
Other general and
administrative
expenses
related parties
related parties
related parties
Current tax liabilities
1,787,253
"
0.73%
11,596
"
0.16%
11,596
"
0.16%
34,889
"
0.01%
34,889
"
0.01%
688,946
"
0.28%
688,946
"
0.28%
related parties
related parties
related parties
related parties
23,228
"
0.01%
23,228
"
0.01%
128
"
-%
128
"
-%
1
related parties
130
"
-%
2
related parties
Cash and cash
equivalents
130
"
-%
226,092
"
0.09%
2
1
2
1
1
2
1
2
2
1
3
3
Operation guarantee
deposits
10,000
"
-%
3
Refundable deposits
22,770
"
0.01%
3
Deposits
256,892
"
0.10%
3
Guarantee deposits
received
Other general and
administrative
expenses
operating assets
1,970
"
-%
13,259
"
0.18%
13,259
"
0.18%
3
3
-392-
No
(Note1)
Party
2
1
2
1
1
2
1
1
2
1
2
1
3
1
3
Counterparty
Commercial Bank
Co., Ltd.
JihSun Securities
Co., Ltd.
Commercial Bank
Co., Ltd.
JihSun Securities
Co., Ltd.
JihSun Securities
Co., Ltd.
Commercial Bank
Co., Ltd.
JihSun Securities
JihSun Securities
Commercial Bank
Co., Ltd.
JihSun Securities
Commercial Bank
Co., Ltd.
Agency Co., Ltd.
Co., Ltd.
Agency Co., Ltd.
Co., Ltd.
Relationship
with party
(Note2)
3
3
3
3
3
3
Percentage of
consolidated
operating revenue
Account
Amount
Terms
assets
Other general and
0.15%
administrative
expenses
10,877
"
0.15%
operating assets
Other non-operating
203,142
"
2.76%
income
Other general and
administrative
expenses
Miscellaneous
expenses
related parties
202,268
"
2.75%
874
"
0.01%
17,170
"
0.01%
17,170
"
0.01%
3
Other payables
3
Refundable deposits
2,873
"
-%
3
Guarantee deposits
received
2,873
"
-%
3
Other service charge
2,719
"
0.04%
3
Service Fee,
brokering
2,719
"
0.04%
3
Other service fee
2,346
"
0.03%
3
Other commission
expense
2,346
"
0.03%
3
Deposits
5,795
"
-%
3
Cash and cash
equivalents
5,795
"
-%
Note 1: Serial number is determined as follows:
1. 0 represents parent company.
2. Subsidiaries are numbered in a sequence of Arabic numerals from 1 based
on company category.
Note2: With the transaction the relationship between person types is as follows
1. Parent company to Subsidiary
2. Subsidiary to Parent company
3. Subsidiary to Subsidiary
(n)
Other significant transactions might influence the financial statement users in decision
making: none.
-393-
Related information on investee companies:
(B)
For the year ended December 31, 2014
Unit: shares/ in thousands of New Taiwan Dollars
Initial investment
Ratio of shares held by the Company and its associated
Total
Investment
Names of
investor
The Company
Names of investee
JihSun
Address
3F,4F,
Securities Co., Ltd. No.111,Sec.2,
Nanjing E. Rd.,
Main business scope
Brokerage,
The end of
The end of
gain ( loss)
Shares
Share to
this year
last year
recognized
currently held
be held
Ratio of
Shares
shares
Remark
100 %
21,882,506
1,237,995
1,157,212,760
-
1,157,212,760
100 % Subsidiaries
100 %
18,348,275
1,263,437
1,579,888,953
-
1,579,888,953
100 %
Ȼ
100 %
5,371
614
300,000
-
300,000
100 %
Ȼ
98.14 %
1,428,220
81,400
68,696,435
-
68,696,435
underwriting,
proprietary trading
Taipei
Ȼ
JihSun International 1F, No.10,Sec.1,
Deposits and loans,
Commercial Bank Chung Ching S.
temporary receipt,
Co., Ltd.
investment of
Rd., Taipei
government bonds,
short-term bills/ notes
and financial bonds
Ȼ
JihSun International 8F, No.85,87,Sec.2, Property insurance
Property Insurance Nanjing E. Rd.,
Agency Co., Ltd.
Taipei
JihSun Securities JihSun Futures Co., 4F, No.111,Sec.2,
Co., Ltd. Co,.
Ltd.
Ltd.
agency
Nanjing E. Rd.,
Futures brokerage and
98.14 % Sub-
proprietary trading
subsidiary
Taipei
Ȼ
JIH SUN
Floor 4, Willow
Investee companies
INTERNATIONAL
House, Cricket
operate following
INVESTMENT
Square, P.O. Box
business: 1.Securities
HOLDING COMPANY 2804, Grand
LIMITED
100 %
1,387,637
(47,030)
54,600,000
-
54,600,000
100 %
Ȼ
100 %
71,088
4,391
10,000,000
-
10,000,000
100 %
Ȼ
100 %
303,355
3,355
30,000,000
-
30,000,000
100 %
Ȼ
20 %
257,376
11,647
7,800,000
-
7,800,000
brokerage and
Cayman KY1-1112, proprietary trading
Cayman Islands
2.Underwriting
3.Securities research
and analysis
4.Corporate and
individual financial
planning 5.Financing
business 6.Investment
trust 7.Futures
Ȼ
JihSun
7F, No.111, Sec.2, Provide advisory and
Securities
Nanjing E. Rd.,
consulting related with
Investment
Taipei
securities investment
Consulting Co.,
on a consigned basis
Ltd.
Ȼ
JihSun Venture
7F, No.111, Sec.2, Venture capital
Capital Co., Ltd.
Nanjing E. Rd.,
Taipei
Ȼ
Jih-Sun
5F, No.139, Sec.2, Securities investment
Securities
Nanjing E. Rd.,
trust business and
Investment
Taipei
discretionary
Trust Co., Ltd.
JihSun Life
8F, No.85,87,
International
Insurance
Sec.2, Nanjing E.
Commercial
Agency Co.,
Rd., Taipei
Ltd.
JIH SUN
JS CRESVALE
INTERNATIONAL SECURITIES
Life insurance agency
99 %
63,146
49,425
297,000
-
297,000
99 % Subsubsidiary
18F, Euro Trade
Brokerage, proprietary
Centre, 21-23
trading underwriting,
INVESTMENT
INTERNATIONAL Des Voeux Road
Other related securities
HOLDING
LIMITED
Central, Hong
business authorized by
Kong,
Hong Kong Act.
COMPANY
Company
investment business
JihSun
Bank Co., Ltd.
20 % Investee
100 %
1,037,819
(50,098)
370,000,000
-
370,000,000
100 % Forth-level
subsidiary.
LIMITED
-394-
Initial investment
Ratio of shares held by the Company and its associated
Total
Investment
Names of
investor
Names of investee
JIH SUN
JIH SUN
INTERNATIONAL FINANCIAL
Address
Main business scope
Floor 4, Willow
1. Securities brokerage
House, Cricket
proprietary trading,
INVESTMENT
SERVICES
Square, P.O. Box
underwriting and
HOLDING
(CAYMAN)
2804, Grand
financial service
COMPANY
LIMITED
Cayman KY1-1112, 2. Corporate and
Cayman Islands
LIMITED
The end of
The end of
gain ( loss)
Shares
Share to
this year
last year
recognized
currently held
be held
100 %
270,453
3,221
8,050,000
-
Ratio of
Shares
8,050,000
shares
100 %
Remark
Forth-level
subsidiary.
individual financial
planning
3.Design of Financial
products
4.Other related
securities business
authorized by the local
government.
Ȼ
JIH SUN CAPITAL P.O.Box146, Road 1. Overseas Fund
MANAGEMENT
Town, Tortola,
management
LIMITED
British Virgin
2. Overseas Asset
Islands
management
100 %
61,532
(46)
100,000
-
100,000
100 %
Ȼ
100 %
84,036
340
2,000,000
-
2,000,000
100 %
Ȼ
100 %
28,240
(2,891)
100 %
Ȼ
3. Other related Asset
management business
authorized by the local
government
4. Proprietary trading
JS CRESVALE
JS CRESVALE
18F, Euro Trade
1. Stock brokerage,
SECURITIES
CAPITAL
Centre, 21-23
margin trading
Des Voeux, Road
2. Futures brokerageǵ
LIMITED
Central, Hong
sales of mutual funds
Kong,
& other financial
instruments
3. Other related
securities business
authorized by local
government
Ȼ
JihSun Investment 903-A, 9 Floor, No Investment consulting,
Consulting
310 Tiansan Rd.
(Shanghai) Co.,
Changing District, consulting, Marketing
Ltd.
Shanghai
-
-
-
business information
planning (except for
advertising), business
management
consulting, economic
information
consulting, software
and grid technology
consulting.
Note 1: Investments accounted for using equity method and equities of the investee companies were
written-off when preparing consolidated financial statements.
-395-
(C)
Information on investment in Mainland China
(a)
Name, major operations and other related information of investee in Mainland China
Accumulated
outflow of
inward
outflow of
investment from % Ownership of
investment from
Total amount
Accumulated
Accumulated
Investment flows
Carrying
remittance of
Taiwan
Taiwan as of
Direct or
Value as of
earnings as of
Investee
Main businesses and
of
Investment
as of
December 31,
Indirect
Investment
December 31,
December 31,
company name
products
paid-in capital
type
January 1, 2014
Gain (Loss)
2014
2014
28,240
-
JihSun Investment
Investment consulting, USD1,000,000
Note 1
-
Outflow
Inflow
2014
Investment
-
-
-
100%
(2,891)
Consulting (Shanghai) business information
Co., Ltd.
consulting, market
operating and marketing
planning( except for
commercial
advertisement),
enterprise management
consulting, economic
information consulting,
software and internet
technique consulting
(b)
Limitation on investments in Mainland ChinaǺ
Accumulated investment in
Mainland China as of
December 31, 2014
-
(c)
Investment amount approved by the
investment commission, MOEA
Maximum investment
allowable
USD1,000,000
13,129,503
Note1:Through the third area Company- JS CRESVALE SECURITIES
INTERNATIONAL LIMITED reinvested in China.
Note2:The information disclosed above was recognized based on the financial
statements audited by international audit firm.
Significant transactions with investee company of Mainland China: none.
14. Segment Information
(A) Gains/losses of operating segments and valuation of assetsΚ
Accounting treatments applied to business segments are consistent with the significant
accounting policies used by the external reports. The Company assesses the operating
performance based on earnings before tax.
-396-
2014
Consolidated
Financial Holding
Net interest income (losses)
$
Banking
Adjustment &
Securities
Others
Write-off
Total
(25,956)
2,336,335
824,061
213
6,100
2,510,879
1,576,196
3,492,123
124,832
(2,818,851)
4,885,179
Net income
2,484,923
3,912,531
4,316,184
125,045
(2,812,751)
8,025,932
(190,982)
(123)
Reversal of provisions for bad debt
-
-
-
3,140,753
(191,105)
expenses and guarantee liability
Operating expenses
Profit before tax
Tax (expense) income
Profit
Capital expenditure
$
$
82,868
2,837,491
2,957,027
64,156
(261,280)
5,680,262
2,402,055
1,266,022
1,359,280
60,889
(2,551,471)
2,536,775
41,037
(2,585)
(119,741)
(10,351)
2,443,092
1,263,437
1,239,539
50,538
-
(91,640)
(2,551,471)
-
2,445,135
102
115,635
128,643
7
Total assets
$
40,855,950
215,537,358
45,373,252
159,369
(43,571,907)
258,354,022
244,387
Total liabilities
$
5,001,228
197,048,450
23,463,644
90,214
(3,131,976)
222,471,560
2013
Consolidated
Financial Holding
Net interest income (losses)
$
Banking
Securities
Adjustment &
Others
Write-off
Total
(31,510)
2,094,168
700,846
194
5,591
2,153,344
1,843,450
2,922,099
145,045
(2,470,315)
4,593,623
Net income
2,121,834
3,937,618
3,622,945
145,239
(2,464,724)
7,362,912
(168,908)
(460)
73,040
2,805,589
2,703,912
52,782
(240,857)
5,394,466
2,048,794
1,300,937
919,493
92,457
(2,223,867)
2,137,814
32,325
62,801
(133,223)
(15,718)
2,081,119
1,363,738
786,270
76,739
Reversal of provisions for bad debt
-
-
-
2,769,289
(169,368)
expenses and guarantee liability
Operating expenses
Profit before tax
Tax (expense) income
(2,223,867)
(53,815)
Profit
$
Capital expenditure
$
93
77,040
70,716
65
Total assets
$
39,752,559
205,034,172
43,409,224
228,724
(42,151,516)
246,273,163
Total liabilities
$
6,115,808
187,352,955
22,597,022
133,432
(3,590,709)
212,608,508
-
2,083,999
147,914
(B)
Geographic segment informationΚ The Company primarily operates within the Republic of
China, and therefore, has no other regional information for disclosure.
(C)
Information on major customersΚNo customer represents 10% or more of the Company’s
revenue in the statement of income for the years ended December 31, 2014 and 2013.
-397-

2014 Annual Report

Transcription

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