Fubon Financial 2015 1H Interim Results and and 2014 Embedded - - PowerPoint PPT Presentation

Fubon Financial 2015 1H Interim Results and and 2014 Embedded Value of Fubon Life

Disclaimer

This meeting may contain forward-looking statements with respect to the financial condition, results of operations and business of the company. These forward-looking statements represent the company’s expectations or beliefs concerning future events and involve known and unknown risks and uncertainty that could cause actual results, performance or events to differ materially from those expressed. Certain statements, such as those that include the words “potential”, “estimated”, and similar

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expressions or variations on such expressions may be considered “forward-looking statements”. Financial numbers in this report may include preliminary unaudited numbers or management accounts.

Performance review by subsidiary

• Fubon Life

Performance highlights of Fubon Financial Holdings

Agenda

• Taipei Fubon Bank

3

• Fubon Life
• Fubon Securities
• Fubon Insurance
• Overseas banking operation

2014 Embedded Value of Fubon Life

Fubon Financial Holdings: Operation highlights

Taipei Fubon Bank Fubon Life

Net profits NT$42,053 million 1H15 with 47.8% yoy growth. Asset allocation and lending in overseas market are earning drivers.

Strong investment performance from recurring and capital gains Regular-paid policy premium continues to grow Market leader in agency size growth and cross-sale results Strong fee from wealth management business Improving NIM and favorable loan mix in 2Q15 4 Stable market share across business lines Fubon Securities to acquire 40% shareholdings in Huishan Futures in China

Fubon Insurance Fubon Securities

Market leader in agency size growth and cross-sale results Leading position in premium income with 22% market share P&C (China) saw premium growth of 37% yoy in 1H15, the most rapid growth foreign P&C in China

Net profits

NT$bn 29.1 38.5 60.2 2012 2013 2014

Fubon Financial Holdings: Profitability

28.5 42.1 6M14 6M15 3.07 3.90 5.89 2012 2013 2014

5

Earning per share (EPS)

NT$

Note: Fubon adopted fair value method for investment property evaluation since September 2014. 2013 and 2014 data are on pro forma basis.

5

2012 2013 2014 6M14 6M15 2.78 4.11 6M14 6M15

Taipei Fubon Bank 10.2 24% Fubon P&C 1.9 4% Fubon Securities 0.6 1% Fubon Bank (HK) 1.6 4%

Fubon Financial Holdings: Net profits by major subsidiary

Net profits by major subsidiaries Profit contribution from major subsidiaries

NT$bn NT$bn

28.5 42.1 29.1

6M14 6M15

Fubon Life 29.1 67%

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Note: (1) Profit contribution are based on the summation of five major subsidiaries; (2) Fubon Bank (China) contributed NT$680mn net profits to the Company on the basis of 80% shareholding.

10.3 14.1 1.6 1.1 10.2 1.9 0.6 Fubon FHC Taipei Fubon Bank Fubon Life Fubon P&C Fubon Securities

Total assets

NT$bn 4,106 4,597 5,438

Fubon Financial Holdings: Asset and net worth

5,149 5,575

7

Equity attributable to parent company

NT$bn 2012 2013 2014 306 342 408 2012 2013 2014

Note: Fubon adopted fair value method for investment property evaluation since September 2014. 2013 and 2014 data are on pro forma basis.

6M14 6M15 387 384 6M14 6M15

ROA

Fubon Financial Holdings: ROA & ROE

0.75% 0.88% 1.21% 2012 2013 2014 1.17% 1.53% 6M14 6M15

8

ROE

2012 2013 2014 10.71% 11.54% 16.07% 2012 2013 2014

Note: Fubon adopted fair value method for investment property evaluation since September 2014. 2013 and 2014 data are on pro forma basis.

6M14 6M15 15.62% 21.25% 6M14 6M15

11,961 12,700 11,300

1H 2H

Fubon Financial Holdings: Cash dividend income from equity investment

14,526 16,729 12,608 14,821

NT$mn

2,565 4,029 1,906 3,521 228 252 292 73 139 183 10,702 653 690 262 272 344 438 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015

9

Sum Fubon Life Taipei Fubon Bank Fubon Insurance Fubon Securities

*Note: 2H2015 Data is based on company estimate.

881 870 554 345 476 607

Performance review by subsidiary

• Fubon Life

Performance highlights of Fubon Financial Holdings

Agenda

• Taipei Fubon Bank

10

• Fubon Life
• Fubon Securities
• Fubon Insurance
• Overseas banking operation

2014 Embedded Value of Fubon Life

Fubon Bank (China) Treasury & others Net fee income Net interest income 11.1 5.2

Taipei Fubon Bank: Revenue

Revenue composition of Taipei Fubon Bank

NT$bn

Strong fee growth from wealth management business Net interest income increase due to NIM improvement and favorable loan mix

29.2 33.7 44.1 8.6 8.7 5.2 5.8 5.4 4.3 2.5 2.5 1H14 1H15 14.6 15.8 17.3 8.3 8.4 10.5 6.3 9.5 2012 2013 2014

11

29.2

Note: Consolidated basis; Fubon Bank (China) accounted starting from Jan. 7th, 2014

21.7 21.2

661 616 DCI,SI,SN and

• thers

533 575 299 374 335 249 Others

Taipei Fubon Bank: Fee and wealth management revenue

Sources of fee revenue(1) Wealth management revenue(2)

NT$mn NT$mn

Fee income growth 11.5% yoy along with wealth management and syndication business

5,161 5,757 4,787 4,433 2,007 2,156 161 292 1,604 1,723 1H14 1H15

• thers

Mutual funds Custodian and trust Insurance commission 3,994 4,559 533 1H14 1H15 Syndication loan Credit card Wealth management

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Note: (1) Fee income including Taipei Fubon Bank standalone and Taipei Fubon Bank Life Insurance Agency. (2) Other income related to wealth management revenue are inclusive in the second chart.

365.3 416.1 46.2 43.1 7.1 6.8 Credit card revolving Other consumer loans

Taipei Fubon Bank: Loan composition

Loans by type

NT$bn 1,146.6 YoY +0.5% YoY -4.1%

Corporate and mortgage loans continue growing Loan growth excluding government loans reached 7.5%

1,140.9 151.8 83.8 570.6 596.9 416.1 Jun-14 Jun-15 Other consumer loans Mortgage loan Corporate loan Government loan

13

YoY -6.7% YoY +13.9% YoY +4.6% YoY -44.8%

Note: Data are stand-alone basis in page 13-17

203 210 209 SME SME as % of corporate loan

Taipei Fubon Bank: Corporate credit

Corporate loan by currency SME loan and as % of corporate loan

NT$bn

Foreign currency loans represents 43% of corporate loans in 2Q15 SME loan accounts for 31.7% of corporate loans in 2Q15

NT$bn 350.3 337.5 340.1 345.2 340.1 41.4% 43.0%

NTD FX FX loan as % of corporate loan

190 198 203 29.0% 30.1% 31.1% 32.0% 31.7% 2Q14 3Q14 4Q14 1Q15 2Q15

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Note: Ending balance Note: Average balance

220.3 227.6 241.1 243.5 256.8 38.6% 40.3% 41.5% 41.4% 2Q14 3Q14 4Q14 1Q15 2Q15

Taipei Fubon Bank: Interest yield and margin

NIM and loan-to-deposit spread

1.07% 1.10% 1.24% 1.28% NIM Loan-to-deposit spread 1.10% 1.09% 1.29% 1.26%

15

Loan yield and deposit yield

Note: Loan rate calculation inclusive of credit card revolving

1Q15 2Q15 1H14 1H15 2.05% 2.05% 0.81% 0.77% 1Q15 2Q15 Loan rate Deposit rate 2.07% 2.05% 0.78% 0.79% 1H14 1H15

51.4% 54.5% 48.6% 45.5% Jun-14 Jun-15 Time Demand

Taipei Fubon Bank: Deposit mix and LDR

NTD loan-to-deposit ratio (LDR) Deposit mix in NTD

NT$bn 1,008 1,065 90.7% 83.0% Jun-14 Jun-15 37.1% 42.0% 62.9% 58.0% Jun-14 Jun-15 Time Demand Jun-14 Jun-15

16

Deposit mix in foreign currency

NT$bn

Note: Ending balance

Foreign currency LDR

364 391 Jun-14 Jun-15 65.5% 68.4% Jun-14 Jun-15

Taipei Fubon Bank: Asset quality

NPL ratio Coverage ratio

1320.4% 589.5% 788.6% 1096.0% 1113.1% Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 0.09% 0.20% 0.17% 0.11% 0.11% Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 0.0% 0.2% 0.4% 0.6%

Jun-12 Jun-13 Jun-14 Jun-15 Corporate loan Mortgage loan

17

NPL ratio by business Provision

0.15% 0.02% NT$m 42 1,987

• 880

1H14 2014 1H15 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15

Performance review by subsidiary

• Fubon Life

Performance highlights of Fubon Financial Holdings

Agenda

• Taipei Fubon Bank

18

• Fubon Life
• Fubon Securities
• Fubon Insurance
• Overseas banking operation

2014 Embedded Value of Fubon Life

171.0 207.2 234.0 Renewal premium 420.7 NT$bn 420.1 425.0

13% growth from renewal premium income

Fubon Life: Total premium

210.4 249.7 212.9 191.0 234.0 2012 2013 2014 Renewal premium FYP

19 19

100.8 81.0 109.6 124.1 1H14 1H15 210.4 205.1

FYP composition

Fubon Life: First year premium (FYP)

Product mix improvement from regular-paid policies

• 1. FYP from regular-paid policy grew 18% yoy
• 2. FYP from health, accidents and others grew 14% yoy

VNB reached NT$16.8bn in 1H15. Stable trend compared to 1H14 based on 2014 EV calculation assumptions

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NT$bn 1Q15 2Q15 1H15 % 1H14 % YoY growth Traditional life: Regular-paid 10.7 14.0 24.7 30.5% 20.9 20.7% 18.0% Traditional life: Single-paid 20.8 21.2 42.1 51.9% 66.1 65.6%

• 36.3%

Interest-sensitive annuity 1.5 3.3 4.8 5.9% 4.9 4.9%

• 2.6%

Investment-linked 3.1 3.3 6.4 7.9% 6.1 6.1% 3.6% Health, accidents and others 1.4 1.8 3.1 3.9% 2.7 2.7% 14.3% Total 37.4 43.6 81.0 100.0% 100.8 100.0%

• 19.6%

Traditional life: Regular-paid Traditional life: Single- paid

FYPE growth mainly came from traditional regular paid policies

27.8 NT$bn

Fubon Life: First year premium equivalent (FYPE)

28.9 16.6 10.8% 7.8% 1.3% 2.0% 2.7% 2.1% 17.0% 12.8% 68.3% 75.2% 1Q15 2Q15 10.0% 9.1% 1.8% 1.7% 2.4% 2.4% 23.7% 14.6% 62.1% 72.2% 1H14 1H15 paid Investment-linked Interest-sensitive annuity Health, accidents and

• thers

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27.6% 35.7% 12.3 32.9% 38.1% FYPE /FYP

FYP by channel

Fubon Life: Sales channel

Growth of the size in agency force

• utperformed peers. FYP contribution &

cross-sale increased NT$2.0bn of P&C insurance premium sold through agency channel, up 12.3% YoY 46, 000 new credit cards promoted by agency channel 18 new offices set up during 2014-1H15.

12% 12% Other Bancassurance: through Taipei Fubon Bank Bancassurance: through external banks Tied agents

22 Number of agency force

27% 30% 45% 35% 17% 23% 1H14 1H15

15,796 17,530 Jun-14 Jun-15

Investment income mainly came from recurring revenue Realized gains from fixed income and equity investment reached a new high level

Fubon Life: Composition of investment income

NT$bn 1H14 1H15 2012 2013* 2014 YoY growth Recurring investment income 38.7 42.6 62.7 75.2 88.7 10.0% Realized gains from fixed income 5.6 11.0 7.9 8.0 12.1 95.6% 23 23

Note: *2013 data is on pro forma basis to reflect fair value method for investment property evaluation.

Realized gains from fixed income investment 5.6 11.0 7.9 8.0 12.1 95.6% Realized gains from equity investment 8.7 23.6 4.7 4.0 14.0 170.6% FX and others

• 4.5
• 6.5
• 6.6
• 6.3
• 6.4

43.4% Investment property fair value movement 1.0 0.3

• 5.4

1.4

• 74.0%

Investment income 49.6 71.0 68.6 86.3 109.9 43.2% Total investment assets 2,401.3 2,656.5 1,932.3 2,227.2 2,588.0 10.6%

Investment scale grow steadily with diversified investment in domestic and overseas assets Investment toward overseas fixed income in 2Q 2015 in response to market volatility

Fubon Life: Investment portfolio

2014/6/30 2015/3/31 2015/6/30 NT$bn Deposit and cash equivalent 100.5 4.2% 133.3 5.1% 159.4 6.0% Domestic fixed income 645.7 26.9% 574.7 21.8% 576.3 21.7% 24 24 Overseas fixed income* 1,033.5 43.0% 1,123.1 42.6% 1,145.0 43.1% Domestic equity 264.9 11.0% 289.6 11.0% 262.4 9.9% Overseas equity 116.1 4.8% 222.3 8.4% 213.9 8.1% Mortgage loans 61.5 2.6% 75.2 2.9% 79.4 3.0% Policy loans 49.6 2.1% 50.9 1.9% 51.6 1.9% Real estate 129.6 5.4% 167.4 6.3% 168.6 6.3% Total Investments 2,401.3 100.0% 2,636.4 100.0% 2,656.5 100.0% Domestic 1,251.8 52.1% 1,238.6 47.0% 1,250.5 47.1% Overseas* 1,149.6 47.9% 1,397.9 53.0% 1,406.0 52.9%

Note: (1)* Including OTC-listed international bond, the international bonds investment reached 5.8% of total investment assets as of end-June (2) 10% of total investment assets are equity investment with yield over 4%

6.2% 4.3% 42.7% 43.9% 46.2% 47.5% 4.9% 4.3% Others Corporate credit Financial bond Government bond

Deployment in overseas fixed income

Fubon Life: Portfolio of Overseas fixed income

Active deployment in overseas fixed income assets. Incremental position mainly in corporate bond in North America Overseas fixed income by asset type

3.8 3.14% 3.75% 3.56% 3.12% Overseeas fixed income net change US 30 year government bond yield US$bn 6.2% 4.3% Jun-14 Jun-15

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Overseas fixed income by region

24.0% 20.5% 51.7% 53.2% 24.3% 26.3% Jun-14 Jun-15 Asia & Other North America Europe 1.4 3.6 2.4 2.5 (1.1) 2.56% 3.05% 1H13 2H13 1H14 2H14 1-4M15 5-7M15

• 69
• 27
• 15
• 58

1H14 1H15 CS cost FX gain/loss & net provision of FX reserve

Hedging cost & FX gain/loss FX position

Fubon Life: Hedging composition

103 bps 68 bps

• 36
• 17
• 67
• 51

1Q15 2Q15 84 bps 85 bps

Naked USD, 7.4% Other currencies , 2.2% Equities/ mutual funds , 14.9%

• 15

26 26

Recurring return

3.43% 3.36% 3.10% 3.22%

1H14 1H15

Before hedge After hedge Fully hedge, 75.5%

Fubon Life: Positive investment spread widened

Cost of liability improving and investment return increasing Positive spread between recurring return and breakeven point (net underwriting cost) widened Investment spread Recurring return and breakeven point

5.59% Cost of liabilities Investment return 2.91% 3.10% 3.22%

Breakeven point Recurring return

27 27

Breakeven point = (Profit before tax – Investment income) / Average investment assets

3.93% 3.87% 4.38% 1H14 1H15 2.91% 2.78% 3.10% 1H14 1H15

Part of the decrease in unrealized gains from AFS assets in 2Q15 reflected in net profits Mark to market valuation change mainly due to interest rate volatility

68.6 22.4 16.4 3.5 26.3 Mar-15 Jun-15

Realized gains Equity dividend Mark to market

NT$bn

Movement of unrealized gains from AFS assets

Fubon Life: Capital position

28 28

Net worth of Fubon Life

NT$bn 215.2 192.5 223.6 247.4 208.8 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15

Performance review by subsidiary

• Fubon Life

Performance highlights of Fubon Financial Holdings

Agenda

• Taipei Fubon Bank

29

• Fubon Life
• Fubon Securities
• Fubon Insurance
• Overseas banking operation

2014 Embedded Value of Fubon Life

Net combined ratio

NT$bn

Top 1 position in premium market share at 22% Solid earnings and operating performance

Fubon Insurance: Operating snapshot

Direct written premium by product

1.4 1.5

Others

15.0 15.6 86.4% 85.3%

30 30

Note: Standalone basis Note: Exclusive of auto compulsory due to the claims are reimbursed.

6.9 7.5 3.3 2.9 0.9 1.0 0.5 0.5 2.0 2.2 1H14 1H15

Others Health/Injury Engineering Marine Fire Auto

52.0% 51.9% 33.3% 34.5% 1H14 1H15

Net expense ratio Net claim ratio

77.9 RMB$m 415.6 115.1% 109.3%

Fubon P&C (China): Business progress

Net combined ratio Gross written premium 32 offices in 3 provinces with premium growth of 37% yoy Top five foreign P&C insurance in China in terms of premium market share

239.7 337.7 63.5 77.9 1H14 1H15

Commerci al line Personal line

303.2 54.5% 56.3% 14.6% 18.2% 40.2% 40.6% 1H14 1H15

Fixed Exp.Ratio Variable Exp.Ratio Loss Ratio

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Performance review by subsidiary

• Fubon Life

Performance highlights of Fubon Financial Holdings

Agenda

• Taipei Fubon Bank

32

• Fubon Life
• Fubon Securities
• Fubon Insurance
• Overseas banking operation

2014 Embedded Value of Fubon Life

Fubon Securities: Financial highlights

Market share & ranking Decent market position in major business lines Growth in wealth management business Award of leading underwriting house Approval of investment in Huishan futures from Taiwan regulators

1H15 Ranking 1H14 Ranking

Emerging stock trading 16.80%

#2

18.90%

#2

Brokerage per branch 0.093%

#2

0.110%

#1

Brokerage 5.14%

#3

5.99 %

#3

AUM of WM business (NT$mn) 14,504

#4

• 33

Operating revenue

NT$m

Net profits

business (NT$mn)

Note: 1H14 data is on pro forma basis to reflect fair value method for investment property evaluation.

1,107 555 1H14 1H15 3,347 2,886 1H14 1H15

Performance review by subsidiary

• Fubon Life

Performance highlights of Fubon Financial Holdings

Agenda

• Taipei Fubon Bank

34

• Fubon Life
• Fubon Securities
• Fubon Insurance
• Overseas banking operation

2014 Embedded Value of Fubon Life

Fubon Bank (Hong Kong): Key balance sheet items

Deposits Loans

HK$m

Aggressive in core business expansion, supported by the growth momentum in corporate and retail loans

37,856 44,338 51,164 56,901

35

Assets Net worth

Jun-14 Jun-15 Jun-14 Jun-15 82,637 89,910 Jun-14 Jun-15 10,067 10,798 Jun-14 Jun-15

Fubon Bank (Hong Kong): Financial highlight

NIM Net Profits

HK$m

49% earnings growth led by strong revenue growth, while asset quality remained sound. NIM improved due to lower funding costs and lending yield increase

254 378 1.18% 1.33%

36

ROAA & ROAE NPL ratio & Coverage ratio

1H14 1H15 1H14 1H15 0.66% 0.88% 5.61% 7.18% 1H14 1H15 ROAA ROAE

Note: ROAA and ROAE are annualized basis

0.03% 0.02% 459.1% 497.2% Jun-14 Jun-15 NPL ratio Coverage ratio

22,174 20,670 20,126 11,250 7,567 9,367 Jun-14 Mar-15 Jun-15 Rediscount Loans (excluding rediscount)

Fubon Bank (China): Key balance sheet items

Deposits Loans

RMB$m 33,424 28,237 29,493 44,429 37,882 41,185 Jun-14 Mar-15 Jun-15 Jun-14 Mar-15 Jun-15

37

Assets Net worth

Jun-14 Mar-15 Jun-15 58,418 60,885 65,541 Jun-14 Mar-15 Jun-15 4,335 4,578 4,669 Jun-14 Mar-15 Jun-15

Fubon Bank (China): Financial highlight

NIM Net Profits

RMB$m 125 84 112 2Q14 1Q15 2Q15 1.73% 1.40% 1.92% 2Q14 1Q15 2Q15

38

ROAA & ROAE NPL ratio & Coverage ratio

Note: ROAA and ROAE are annualized basis

2Q14 1Q15 2Q15 2Q14 1Q15 2Q15 0.92% 0.55% 0.71% 11.76% 7.39% 9.72% 2Q14 1Q15 2Q15 ROAA ROAE 1.48% 1.17% 1.03% 154.8% 230.0% 252.2% Jun-14 Mar-15 Jun-15 NPL Coverage ratio

Performance review by subsidiary

• Fubon Life

Performance highlights of Fubon Financial Holdings

Agenda

• Taipei Fubon Bank

39

• Fubon Life
• Fubon Securities
• Fubon Insurance
• Overseas banking operation

2014 Embedded Value of Fubon Life

Value Creation Summary

Unit: NT$ BN

Items 2013 2014 YoY Diff Impact Net Worth (Book Value) 147.8 223.6 51.3% 75.8 Adjusted Net Worth 133.8 196.2 46.6% 62.3 VIF (before CoC) 229.9 273.6 19.0% 43.7 Cost of Capital (CoC) (68.0) (73.8)

• 8.5%
• 5.8

VIF (After CoC) 161.9 199.8 23.4% 37.9 Embedded Value 295.7 395.9 33.9% 100.2 FYP 212.9 191.0

• 10.3%
• 21.9

FYPE 54.2 58.2 7.5% 4.1 VNB 31.8 34.8 9.3% 3.0 Inforce Value Creation New Sales Value Creation

40

VNB 31.8 34.8 9.3% 3.0 VNB margin (VNB/FYP) 15.0% 18.2% 21.9% 3.3% VNB margin (VNB/FYPE) 58.8% 59.8% 1.7% 1.0% Multiplier 8.8 8.8 0.0% 0.0 Appraisal Value 577.2 703.6 21.9% 126.4 Outstanding shares (FHC) 10.2 10.2 0.0% 0.0 Embedded Value 28.9 38.7 33.9% 9.8 Appraisal Value 56.4 68.7 21.9% 12.4 Outstanding shares (Life) 3.6 4.4 20.6% 0.8 Embedded Value 81.1 90.0 11.1% 9.0 Appraisal Value 158.2 160.0 1.1% 1.8 Value per FHC share Value per Life share Value Creation Appraisal Value (20 year NB)

Movement Analysis: Adjusted Net Worth

Unit: NT$ BN

147.8 22.4 170.2 19.7 35.4 (1.6) 223.6 4.1 (31.5) 196.2

41

% of change

+ 15.2% + 15.2% + 11.6% + 20.8%

• 1.0%

+ 31.4%

Adjust %

+ 1.8%

• 14.1%
• 12.3%

Statutory Net Worth@Dec. 31, 2013 (IFRS) Restatement Adj. Statutory Net Worth@Dec. 31, 2013 (IFRS_Restate) Unrealized capital gain Earning Others Statutory Net Worth@Dec. 31, 2014 (IFRS) Special Reserve (FX and RE Appraisal) Adjust Market Value of (AFS) Fixed Income Asset to Book Value Adjusted Net Worth@Dec. 31, 2014

• Figures may not add up due to rounding.

Note:

• The subsequent measurement of investment property moved from cost basis to fair value basis since 2014,

the net worth as of 2013/1/1 and the net profits of 2013 were adjusted and increased by 16.5bn and 5.9bn

• accordingly. This translates a combined restatement of 22.4bn.

229.9 (1.4) (24.6) 27.2 (0.3) (1.6) 2.5 1.3 40.5 273.6

Movement Analysis: Value of In-Force (before CoC)

Unit: NT$ BN % of change

• 0.6%
• 10.7%

+ 11.8%

• 0.1%
• 0.7%

+ 1.1% + 0.6% + 17.6% + 19.0%

• 5

2013 VIF (before CoC) Model Change Existing business - transfer to net worth Required return on existing business Data Change Tax Eco. Assumption Change Non-eco. Assumption Change 2014 VNB(before CoC) 2014 VIF(before CoC)

42

Note:

• 1. Tax increase due to regulation change on premium tax and the contribution rate for Taiwan Insurance Guaranty Fund.
• 2. Economic assumption change includes changes of foreign exchange rate (+1.4%) and investment return (-0.3%).
• 3. The equivalent return of EV2013 reporting for VIF increased from 4.57% to 4.63% to reflect rolling over effect.
• 4. The equivalent return of EV2014 reporting for VIF is 4.64%.
• 5. 2014 VNB (after CoC) is 34.8 billion.

Movement Analysis: Value of New Business

Unit: NT$ BN

31.8 (3.3) 7.8 (0.9) (1.3) 0.7 34.8

43

% of change

• 10.3%

+ 24.3%

• 2.8%
• 4.2%

+ 2.3% + 9.3% VNB/FYP 15.0% 0.0% + 4.1%

• 0.5%
• 0.7%

+ 0.4% 18.2%

• 8

• 6

• 4

• 2

2013 VNB Sales Volume Product Mix Tax Change

• Econ. Change

Non-Econ. Change 2014 VNB

Note:

• 1. The equivalent return of EV2013 reporting for VNB increased from 4.50% to 4.69% with consideration
• f rolling over effect and reflects 2014 product mix.
• 2. The equivalent return of EV2014 reporting for VNB is 4.61%.

Economic Assumption

Year 2013 Year 2014 Investment return

VIF NTD Traditional Policies : Year 2014 to Year 2051 at 3.94%~5.32%(2052+) USD Policies : Year 2014 to Year 2036 at 5.16%~5.94%(2037+) V1NB NTD Traditional Policies : Year 2014 to Year 2048 at 3.74%~5.32%(2049+) USD Policies : Year 2014 to Year 2032 at 5.14%~5.94%(2033+) VIF NTD Traditional Policies : Year 2015 to Year 2052 at 3.98%~5.43%(2053+) USD Policies : Year 2015 to Year 2030 at 5.16%~5.96%(2031+) V1NB NTD Traditional Policies : Year 2015 to Year 2048 at 3.89%~5.43%(2049+) USD Policies : Year 2015 to Year 2044 at 5.14%~5.96%(2045+)

44

ISA

Average retained spread for the Interest sensitive business is around 100bps.

ISA

Average retained spread for the Interest sensitive business is around 100bps.

Risk Discount Rate VIF: 11.0% V1NB: 10.5% VIF: 11.0% V1NB: 10.5% Equivalent Return VIF: 4.57% (rolling over to 2014: 4.63%) V1NB: 4.50% (rolling over to 2014: 4.69%) VIF: 4.64% V1NB: 4.61% YC (10 year) Initial / ultimate TWD: 1.72% / 3.50% USD : 3.09% / 5.25% TWD: 1.64% / 3.50% USD : 2.28% / 5.25%

Note:

• The FX reserve mechanism was stipulated from 2012, its respective cost is reflected in the derivation
• f portfolio return.

Economic Assumption: VIF Portfolio Return

3.98% 5.43% 3.94% 5.32% 3.00% 3.50% 4.00% 4.50% 5.00% 5.50% 1 5 9 13 17 21 25 29 33 37 41 45 49

In-force Portfolio Return: NTD Traditional Policies (excludes Interest Sensitive Annuity)

2014IF 2013IF

45

1 5 9 13 17 21 25 29 33 37 41 45 49 5.16% 5.96% 5.16% 5.94% 3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50% 1 5 9 13 17 21 25 29 33 37 41 45 49

In-force Portfolio Return: USD Policies

2014IF 2013IF

Economic Assumption: V1NB Portfolio Return

3.89% 5.43% 3.74% 5.32%

3.00% 3.50% 4.00% 4.50% 5.00% 5.50% 1 5 9 13 17 21 25 29 33 37 41 45 49

NB Portfolio Return: NTD Traditional Policies (excludes Interest Sensitive Annuity)

2014NB 2013NB

46

5.14% 5.96% 5.14% 5.94% 3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50% 1 5 9 13 17 21 25 29 33 37 41 45 49

NB Portfolio Return: USD Policies

2014NB 2013NB

Economic Assumption: Discount Rate

Fubon Life 2013/12/31 2014/12/31

Risk Free Rate 1.72%~3.50% 1.64%~3.50% Equity plus Country Risk Premium 6.50% 6.50% Beta 1.2 1.2 Calculated RDR 9.52%~11.30% 9.44%~11.30% VIF : 11.0% VIF : 11.0%

47

• RDR: According to CAPM (Capital Asset Pricing Model);

RDR = Risk Free Rate + Beta * Equity and Country Premium.

RDR used in the valuation VIF : 11.0% VNB : 10.5% VIF : 11.0% VNB : 10.5%

Cost of Capital

Cost of Capital projection

Maintain the regulatory minimum RBC level of 200% with consideration of following factors:

1) K factor: 0.50; 2) Add 10% C3 risk capital of previous year for all traditional products every year (excludes investment-linked product); 3) Reflect current business operation and future strategy.

Risk-based capital (RBC) regulation changes in 2014:

48

Risk-based capital (RBC) regulation changes in 2014:

1) Extend the recognition scope and ratio (75% 85%) of real estate appreciation for total available capital calculation, increases C1 risk of real estate accordingly; 2) Lower risk factor of overseas insurance-related business investment in C0; 3) Reclassify the foreign investment segment (G8/NG8 Developed country/Emerging market) and revise corresponding risk factors of foreign stock, foreign mutual fund and foreign real estate investments in C1; 4) Lower C2 risk factor for long-term health product and use 5-year average loss ratio instead of current adjusted claim ratio to determine risk factor adjustment; 5) Modify diversification formula to reflect the correlation effect of currency risk, C1c.

48

• 17.2%

17.1%

• 25.0%

24.9%

(47.1) 273.6 46.7 (50.0) 199.8 49.7

Sensitivity Summary: Portfolio Return

VIF (before CoC) VIF

NT$bn

• 12.6%

12.5%

• 15.9%

15.9%

Return - 0.25% Base Return + 0.25%

(50.0) 395.9 49.7

Return - 0.25% Base Return + 0.25% Return - 0.25% Base Return + 0.25%

(5.5) 34.8 5.5

Return - 0.25% Base Return + 0.25%

49

Note: ANW will not be affected by portfolio return.

EV VNB

49

9.0%

• 7.5%

14.8%

• 12.4%

24.7 273.6 (20.6) 29.6 199.8 (24.7)

VIF (before CoC) VIF

Sensitivity Summary: Risk Discount Rate

NT$bn

50

7.5%

• 6.2%

15.9%

• 13.1%

RDR - 1% Base RDR + 1%

29.6 395.9 (24.7)

RDR - 1% Base RDR + 1% RDR - 1% Base RDR + 1%

5.5 34.8 (4.6)

RDR - 1% Base RDR + 1% Note: ANW will not be affected by RDR

EV VNB

50

7.2% 8.7% 8.0% 12.6% 12.7% 15.0% 18.2%

CAGR: 17%

Unit: NT$ BN

NB Margin (VNB / FYP)

11.8 17.9 24.8 28.0 31.7 31.8 34.8

CAGR: 20%

Value of New Business

CAGR : 20% (2.9x) CAGR : 17% (2.5x)

2014 Summary: Track record of Fubon Life’s Value Creation

77.7 128.8 155.5 176.0 217.9 295.7 395.9 EV2008 EV2009 EV2010 EV2011 EV2012 EV2013 EV2014

CAGR: 31%

EV2008 EV2009 EV2010 EV2011 EV2012 EV2013 EV2014

51

EV2008 EV2009 EV2010 EV2011 EV2012 EV2013 EV2014 38.5 52.5 73.6 88.7 116.8 161.9 199.8 EV2008 EV2009 EV2010 EV2011 EV2012 EV2013 EV2014

CAGR: 32%

Value of In-Force Embedded Value

CAGR : 32% (5.2x) CAGR : 31% (5.1x)

Investment Return: Assumption vs. Actual

3.68 3.87 3.88 3.97 4.06 4.14 3.78 3.80 4.01 4.42 4.74

52 Note:

• 1. Track record shows higher actual return than EV assumption in general.
• 2. The investment return for 2013 and 2014 includes fair value recognition of investment property, which is

+0.38% and +0.05% respectively.

EV2009/2010 EV2010/2011 EV2011/2012 EV2012/2013 EV2013/2014 EV2014/2015

Independent Review by Deloitte Consulting

Deloitte Consulting

The Engagement

• Deloitte Consulting (Hong Kong) Limited (“Deloitte Consulting”) were retained by Fubon Life to perform an

independent review of the Embedded Value (EV) as at 31 December 2014 and the Value of One Year’s New Business (V1NB) written over the period of 1 January 2014 to 31 December 2014.

Scope of Deloitte Consulting’s Involvement

• Review and opine on the reasonableness of the EV and V1NB as calculated by the Company;
• Review of the reasonableness of the assumptions used in the calculations, taking into consideration both the

Company’s recent experience and the experience of the Taiwanese life insurance market; 53 53 Company’s recent experience and the experience of the Taiwanese life insurance market;

• Review, at a high-level, model changes to the actuarial projection model since the previous valuation date;
• Review of the Company’s projection approach of the Cost of Capital;
• Review of the data put through the model compared to the policy data on the Company’s policy

administration systems to judge the extent to which the business has been valued in the financial model and to identify the portion (if any) omitted and how that was valued;

• Review of the approach used to determine the Adjusted Net Worth (“ANW”), in particular, the adjustments

made in deriving the ANW, and any other adjustments made outside of the actuarial projection model;

• Review of the Company's analysis of change in the Value of In-Force Business (“VIF”) between 31 December

2013 and 31 December 2014.

Risk Adjusted Discount Rates

Fubon Life calculated the EV and V1NB at Risk Adjusted Discount Rates (“RDR”) of 11.0% and 10.5% respectively.

RFR based on current government bond yield RFR based on Company’s long- term view Equivalent RFR for New Business Equivalent RFR for In-Force Business Risk Free Rate (“RFR”) 1.64% 3.50% 2.71% 2.78% Equity and Country Risk Premium 6.50% 6.50% 6.50% 6.50%

Deloitte Consulting 54 54

Beta 1.20 1.20 1.20 1.20 Calculated Risk Discount Rate 9.44% 11.30% 10.51% 10.58% Risk Discount Rate used in the Valuation for VIF 11.00% Risk Discount Rate used in the Valuation for V1NB 10.50%

Reference – RDR based on Capital Asset Pricing Model (CAPM): RDR = RFR + Beta * Equity and Country Risk Premium

Comments on the Risk Adjusted Discount Rates

Deloitte Consulting independently derived a range of RDRs using the CAPM approach: The low end of the RDR is developed based on the current yield on 10-year Taiwan government bonds. The high end of the RDR is developed based on the Company’s view of the 10-year Taiwan government bond in the future. The equivalent RFR is the RFR equivalent to using a set of graded-up RFR from 1.64% to 3.50% that derives the same VIF and V1NB. The Equity and Country Risk Premium was developed based on the Country Default Spreads and Risk Premiums research published by New York University. Deloitte Consulting 55 55 Premiums research published by New York University. The Beta of 1.2 was set using a risk profiling approach which considers risks related to the product range, distribution diversification/vulnerability, regulatory intervention and investments. Note that this beta value is consistent with that used in previous valuations. The RDR assumption applied by Fubon Life in the valuation lies within the range of RDR that we derived. In particular, we feel comfortable with different RDRs being used for the valuation of the in-force and new business, given the specific market conditions in Taiwan: it is well-known that the legacy business has a much riskier profile than the current new business, and hence it is reasonable for shareholders to be expecting a higher rate of return for the higher risk level. We feel that Fubon Life has taken a good approach in splitting up the RDR assumption for the two distinctively different blocks of business.

Comments on Investment Return (1)

A set of rising investment return assumption has been used in this valuation which is considered reasonable for the present market conditions.

Fubon Life’s derivation of the investment return assumption is featured by the following:

• Derivation methodology is consistent with that applied in previous valuations;
• The methodology involves:
• For VIF, the investment return assumption was derived from a combination of the investment

return generated by the run-off of the existing asset portfolio and of that from future purchases

• f new assets;

Deloitte Consulting 56 56

• f new assets;
• For V1NB, the new business is not supported by returns on existing assets and the

investment return was derived from future purchases of new assets;

• New assets are purchased at the prevailing new money rates, which are set to equal to the expected

future risk free rates plus a risk margin for each asset type;

• Future risk free rates are set starting off with the actual yield curves as at the valuation date and are

assumed to rise to a long-term level over a 10-year period. For New Taiwan Dollar and US Dollar respectively, the initial risk free rates are 1.64% and 2.28% and a long-term risk free rate of 3.50% and 5.25% is assumed.

• Different assumptions were derived for different types of business, which were assumed to have a

different long-term asset allocation.

• For some business lines, the investment return assumption derived in the above-mentioned manner

was capped at a certain level for conservative reasons.

Comments on Investment Return (2)

It is in Deloitte Consulting’s view that:

Methodology

• Fubon Life’s derivation methodology for the investment return assumption is reasonable and

consistent with the way that the ANW is calculated; Economic Assumptions

• The expected long-term risk-free rate for New Taiwan Dollar yield and US Dollar yield are

maintained at 3.5% and 5.25% respectively. Deloitte Consulting 57 57

• We note that taking a view on the future capital market is not uncommon under the traditional

Embedded Value methodology. On a macro-economic level the arguments put forward for rising interest rates are plausible, and we note that the expected future rise in yields is spread

• ut over a reasonably long period of 10 years.
• Readers should be aware that capital market conditions are subject to the impact of many
• forces. Yields and prices of financial instruments can move dramatically in a short period of
• time. As a result, it is difficult to predict the interest rate level in the future with great certainty.

Readers should refer to the sensitivity tests to develop a broader understanding of the impact of the investment return assumption on the assessment of the economic value of Fubon Life.

• Overall, the economic assumptions appear to be reasonable.

Comments on Non-Economic Assumptions

Non - Economic Assumptions

• The non-economic assumptions reflect Fubon Life’s best estimate of future operating

experience, and are appropriately supported by the company’s historical operating experience. Deloitte Consulting 58 58

Comments on EV and V1NB Results

Deloitte Consulting have reviewed the Embedded Value and Value of One Year’s New Business results at a high-level under the generally accepted method for calculating traditional embedded values in Taiwan:

• Review of the changes in the VIF relative to the assumption changes and model

changes from 2013 to 2014;

• Review of the changes in the new business profit margin relative to that in 2013 based

Deloitte Consulting 59 59

• Review of the changes in the new business profit margin relative to that in 2013 based
• n information on changes in sales mix, sales volume and valuation assumptions;
• Review of the sensitivities relative to the base case results.

The Embedded Value and Value of One Year’s New Business results appear to be reasonable within the above context. Deloitte Consulting’s detailed opinion can be found in their opinion letter.

Thank you

Fubon Financial - Financial summary

(Pro Forma)

NT$ millions, except for percentages 2013 2014 YoY 1H14 1H15 YoY 1Q15 2Q15 Income Statement Data Net interest income 73,264 89,242 21.8% 43,819 44,628 1.8% 22,241 22,387 Insurance income 266,247 230,938

• 13.3%

110,969 102,357

• 7.8%

45,819 56,538 Net gains (losses) on FX and financial assets 37,776 59,792 58.3% 24,212 41,773 72.5% 19,236 22,537 Others 2,895 1,863

• 35.6%

2,864 (528)

• 118.4%

515 (1,043) Net revenue 380,182 381,835 0.4% 181,865 188,231 3.5% 87,811 100,420 Bad debt expense and reserve for guarantee 4,083 2,989

• 26.8%

399 (612) N.M. 6 (617) Net change in insurance reserve (288,362) (257,599)

• 10.7%

(123,682) (112,433)

• 9.1%

(50,667) (61,766) Operating expense (43,539) (49,299) 13.2% (23,172) (25,571) 10.4% (12,454) (13,117) Operating expense (43,539) (49,299) 13.2% (23,172) (25,571) 10.4% (12,454) (13,117) Income before tax 44,199 71,949 62.8% 34,612 50,838 46.9% 24,684 26,154 Net income 38,464 60,483 57.2% 28,592 42,170 47.5% 20,143 22,027 Net income to parent company 38,514 60,248 56.4% 28,455 42,053 47.8% 20,094 21,959 Balance Sheet Data Total assets 4,596,972 5,438,358 18.3% 5,149,217 5,575,005 8.3% 5,554,450 5,575,005 Equity attributable to parent company 341,678 408,057 19.4% 386,782 383,657

• 0.8%

439,713 383,657 Outstanding shares (million shares) 10,234 10,234 0.0% 10,234 10,234 0.0% 10,234 10,234 Key Metrics Return on average assets 0.88% 1.21% 1.17% 1.53% 1.47% 1.60% Return on average equity 11.54% 16.07% 15.62% 21.25% 18.96% 22.19% Equity / assets 7.44% 7.65% 7.65% 7.03% 8.06% 7.03% Double leverage 115.29% 114.01% 114.29% 119.36% 113.10% 119.36% Capital adequacy ratio 141.53% 137.36% 127.28% 135.71% Cash dividend per share 1.50 3.00

Taipei Fubon Bank - Financial summary

(Pro Forma)

NT$ millions, except for percentages 2013 2014 YoY 1H14 1H15 YoY 1Q15 2Q15 Income statement data Interest income 27,680 45,157 63.1% 22,154 23,013 3.9% 11,441 11,572 Interest expense (11,904) (22,964) 92.9% (11,223) (11,880) 5.9% (6,118) (5,763) Net interest income 15,775 22,194 40.7% 10,931 11,133 1.8% 5,324 5,809 Net fee income 8,445 10,967 29.9% 5,363 6,029 12.4% 3,067 2,963 Other income 9,471 10,914 15.2% 5,445 4,071

• 25.2%

1,943 2,128 Total revenue 33,691 44,075 30.8% 21,739 21,233

• 2.3%

10,333 10,900 Operating expenses (15,582) (19,287) 23.8% (8,999) (9,987) 11.0% (4,903) (5,084) Pre-provision profits 18,109 24,788 36.9% 12,740 11,246

• 11.7%

5,430 5,816 Provision for credit losses (3,857) (2,261)

• 41.4%

(172) 949 N.M. 209 740 Income before tax 14,252 22,527 58.1% 12,568 12,194

• 3.0%

5,639 6,556 Net income 12,153 19,136 57.5% 10,732 10,659

• 0.7%

5,048 5,610 Net income 12,153 19,136 57.5% 10,732 10,659

• 0.7%

5,048 5,610 Net income to parent company 12,153 18,242 50.1% 10,257 10,245

• 0.1%

4,873 5,372 Balance sheet data Loans and discounts 1,102,747 1,304,563 18.3% 1,295,700 1,329,011 2.6% 1,339,635 1,329,011 Deposits and remittances 1,351,974 1,606,174 18.8% 1,584,490 1,675,802 5.8% 1,622,975 1,675,802 Allowance for loan losses* 13,218 15,483 17.1% 13,509 14,018 3.8% 14,575 14,018 Total assets 1,766,806 2,165,405 22.6% 2,092,873 2,211,637 5.7% 2,191,409 2,211,637 Equity attributable to parent company 134,236 151,604 12.9% 143,758 157,422 9.5% 156,178 157,422 Key metrics Return on average assets 0.72% 0.97% 1.11% 0.97% 0.93% 1.03% Return on average equity 10.06% 12.76% 14.76% 13.26% 12.67% 13.91% Equity / assets 7.60% 7.88% 7.71% 7.98% 7.99% 7.98% Cost / income ratio

• 46.25%
• 43.76%
• 41.40%
• 47.04%
• 47.45%
• 46.64%

NPL ratio* 0.12% 0.17% 0.09% 0.11% 0.11% 0.11% Reserve / NPL* 973.96% 788.58% 1320.40% 1113.09% 1095.99% 1113.09% Tier 1 ratio* 10.38% 10.43% 10.03% 11.22% 11.22% BIS ratio* 13.45% 13.11% 12.69% 13.76% 13.76% Note: Data mark with * are stand-alone basis

Fubon Life - Financial summary

(Pro Forma)

NT$ millions, except for percentages 2013 2014 YoY 1H14 1H15 YoY 1Q15 2Q15 Income statement data First year premium 212,818 190,974

• 10.3%

100,756 81,022

• 19.59%

37,418 43,604 Retained earned premium 386,587 390,077 0.9% 192,743 191,627

• 0.58%

92,422 99,205 Total investment income 86,280 109,876 27.3% 49,571 70,967 43.16% 34,591 36,376 Recurring investment income 75,171 88,695 18.0% 38,736 42,621 10.03% 19,736 22,885 Other investment income 11,108 21,181 90.7% 10,835 28,346 161.62% 14,855 13,491 Realized gains (losses) from fixed income 7,984 12,127 51.9% 5,617 10,984 95.55% 6,872 4,112 Realized gains (losses) from equity 4,037 14,021 247.3% 8,720 23,602 170.67% 11,331 12,271 FX and others (6,270) (6,413) 2.3% (4,539) (6,510) 43.42% (3,541) (2,969) Investment property fair value movement 5,357 1,446

• 73.0%

1,037 270

• 73.96%

193 77 Other income 2,868 2,006

• 30.0%

969 825

• 14.82%

367 458 Total operating revenue 475,735 501,960 5.5% 243,283 263,419 8.28% 127,381 136,038 Retained claim payment 126,814 168,249 32.7% 86,203 95,536 10.83% 49,610 45,926 Net commission expense 21,744 23,215 6.8% 11,132 11,678 4.91% 5,378 6,300 Net change in insurance liability 286,668 253,157

• 11.7%

122,024 113,525

• 6.97%

51,576 61,948 Net change in insurance liability 286,668 253,157

• 11.7%

122,024 113,525

• 6.97%

51,576 61,948 General and administrative expense 12,222 13,652 11.7% 6,219 7,092 14.04% 3,491 3,601 Other expenses 897 1,078 20.2% 456 1,044 128.68% 379 664 Total operating costs and expenses 448,344 459,352 2.5% 226,035 228,875 1.26% 110,435 118,440 Net non-operating income / (expenses) 477 222

• 53.5%

276 236

• 14.51%

144 91 Income before tax 26,260 41,296 57.3% 16,737 34,018 103.25% 16,710 17,309 Net income 25,007 35,367 41.4% 14,109 29,080 106.10% 13,252 15,827 Net income to parent company 25,007 35,367 41.4% 14,109 29,080 106.10% 13,252 15,827 Balance sheet data 1 Total assets 2,435,617 2,790,427 14.6% 2,580,277 2,843,190 10.19% 2,845,002 2,843,190 Total assets (general account) 2,293,859 2,653,199 15.7% 2,440,176 2,709,001 11.02% 2,708,199 2,709,001 Insurance liabilities 1,986,309 2,257,099 13.6% 2,108,958 2,361,552 11.98% 2,303,213 2,361,552 Total liabilities 2,265,425 2,566,830 13.3% 2,388,630 2,634,408 10.29% 2,597,645 2,634,408 Total liabilities (general account) 2,123,667 2,429,603 14.4% 2,248,530 2,500,220 11.19% 2,460,842 2,500,220 Equity attributable to parent company 170,192 223,597 31.4% 191,646 208,781 8.94% 247,357 208,781 Key matrices Return on average assets 1.09% 1.35% 1.09% 2.06% 1.88% 2.25% Return on average equity 14.84% 17.96% 12.86% 26.90% 22.51% 29.28% Equity / Assets 6.99% 8.01% 8.26% 7.34% 8.69% 7.34% Claims and benefits ratio 32.80% 43.13% 44.72% 49.86% 53.68% 46.29% Expense ratio 3.16% 3.50% 3.23% 3.70% 3.78% 3.63% Persistency ratio - 13th month 94.40% 95.12% 95.45% 95.22% 95.24% 95.22% Persistency ratio - 25th month 91.17% 89.67% 88.51% 90.43% 90.13% 90.43%

Fubon Insurance - Financial summary

(Pro Forma)

NT$ millions, except for percentages 2013 2014 YoY 1H14 1H15 YoY 1Q15 2Q15 Income statement data Direct written premiums 29,448 32,718 11.1% 16,530 17,690 7.0% 8,150 9,540 Retention of earned premiums 22,152 24,653 11.3% 11,797 13,283 12.6% 6,450 6,833 Net income from investment 2,671 2,498

• 6.5%

1,291 1,587 22.9% 735 852 Other operating revenue 877 1,082 23.3% 550 601 9.3% 297 304 Retained insurance payments 11,517 13,128 14.0% 5,966 6,567 10.1% 3,218 3,348 Net change in liability reserve 731 626

• 14.4%

643 607

• 5.5%

352 256 Commission and operating expenses 9,899 11,363 14.8% 5,339 6,088 14.0% 2,885 3,203 Non-Operating Income (67) (109) 63.2% (51) (51)

• 0.4%

(22) (29) Income before tax 3,485 3,007

• 13.7%

1,641 2,158 31.5% 1,005 1,153 Net income 2,911 2,420

• 16.9%

1,322 1,788 35.2% 826 962 Net income to parent company 3,244 2,816

• 13.2%

1,491 1,945 30.4% 895 1,050 Balance sheet data Total assets 78,325 83,349 6.4% 74,360 87,732 18.0% 86,170 87,732 Investment assets 58,420 60,362 3.3% 50,800 61,978 22.0% 63,377 61,978 Policy reserve 40,586 44,930 10.7% 43,876 47,350 7.9% 45,445 47,350 Equity attributable to parent company 28,313 27,665

• 2.3%

20,493 28,829 40.7% 30,057 28,829 Summary ratios Return on average assets 3.88% 3.07% 3.46% 4.18% 3.90% 4.50% Return on average equity 12.96% 10.06% 12.22% 13.77% 12.40% 14.87% Total investment return 4.92% 4.21% 4.73% 5.19% 4.83% 5.57% Solvency margin (NWP/equity) 81.69% 94.11% 127.28% 97.91% 87.28% 104.81% Retention ratio 75.36% 76.11% 75.02% 75.30% 76.42% 74.35%

Fubon Securities - Financial summary

(Pro Forma)

NT$ millions, except for percentages 2013 2014 YoY 1H14 1H15 YoY 1Q15 2Q15 Income statement data Brokerage commissions 2,636 3,204 21.5% 1,642 1,482

• 9.7%

692 790 Net interest income 827 932 12.7% 456 520 14.1% 247 274 Fee income 271 157

• 42.1%

82 45

• 44.8%

19 26 Net principal transactions and financial products gains 872 575

• 34.1%

742 256

• 65.4%

348 (92) Other income 1,018 1,089 7.0% 426 581 36.6% 182 399 Total operating revenue 5,619 5,955 6.0% 3,347 2,886

• 13.8%

1,488 1,398 Total operating expense (4,774) (5,146) 7.8% (2,470) (2,519) 2.0% (1,214) (1,305) Net non-operating income / (expenses) 590 678 15.1% 292 308 5.4% 128 180 Net non-operating income / (expenses) 590 678 15.1% 292 308 5.4% 128 180 Income before tax 1,434 1,488 3.7% 1,169 674

• 42.3%

402 272 Net income 1,370 1,356

• 1.0%

1,107 555

• 49.8%

362 193 Net income to parent company 1,370 1,356

• 1.0%

1,107 555

• 49.8%

362 193 Balance sheet data Margin loans 14,581 16,338 12.1% 16,909 15,185

• 10.2%

17,830 15,185 Total assets 57,768 69,957 21.1% 62,360 83,085 33.2% 81,455 83,085 Equity attributable to parent company 30,455 31,333 2.9% 31,126 31,146 0.1% 32,046 31,146 Key metrics Return on average assets 2.42% 2.12% 3.68% 1.45% 1.91% 0.94% Return on average equity 4.56% 4.39% 7.19% 3.56% 4.57% 2.45% Equity / assets 52.7% 44.79% 49.91% 37.49% 39.34% 37.49% Expenses / revenues

• 85.0%
• 86.41%
• 73.80%
• 87.30%
• 81.60%
• 87.30%

Margin loans / total assets 25.2% 23.35% 27.12% 18.28% 21.89% 18.28% Margin loans / shareholders' equity 47.9% 52.14% 54.32% 48.75% 55.64% 48.75%

Fubon Bank (Hong Kong) - Financial Summary

HK$ millions, except for percentages 2013 2014 YoY 1H14 1H15 YoY Income Statement Data Interest income 1,382 1,677 21.3% 797 881 10.5% Interest expense (632) (835) 32.1% (401) (381)

• 5.0%

Net interest income 750 842 12.2% 395 499 26.4% Net fee income 271 317 17.3% 156 198 26.8% Other income 154 147

• 4.7%

96 115 20.0% Total revenue 1,175 1,306 11.2% 647 813 25.5% Operating expenses (842) (897) 6.6% (446) (455) 2.1% Provision for loan losses/ write-back (4) (16) 248.2% (7) (10) 32.4% Net non-operating income 118 161 36.3% 98 101 3.5% Income before tax 447 555 24.0% 291 449 53.9% Net income 380 481 26.8% 254 378 48.8% Net income 380 481 26.8% 254 378 48.8% Balance Sheet Data Gross loans 34,745 40,368 16.2% 37,856 44,338 17.1% Customers Deposits 48,910 52,664 7.7% 51,164 56,901 11.2% Allowance for loan losses 51 46

• 9.3%

48 46

• 4.1%

Total assets 71,777 83,860 16.8% 82,637 89,910 8.8% Shareholders' equity 8,176 10,416 27.4% 10,067 10,798 7.3% Key metrics Return on average assets 0.56% 0.62% 0.66% 0.88% Return on average equity 4.81% 5.18% 5.61% 7.18% Equity / assets 11.39% 12.42% 12.18% 12.01% Net fee income / total revenue 23.02% 24.30% 24.15% 24.39% Cost / income ratio

• 71.63%
• 68.70%
• 68.93%
• 56.04%

NPL ratio 0.04% 0.02% 0.03% 0.02% Reserve / NPL 360.68% 526.05% 459.10% 497.23% Gross Loans/Customers Deposits ratio 71.04% 76.65% 73.99% 77.92% Tier 1 ratio 10.44% 12.65% 12.72% 11.81% BIS ratio 16.33% 17.96% 17.93% 16.58%

Fubon Bank (China) - Financial Summary

RMB millions, except for percentages 2013 2014 YoY 1H14 1H15 YoY 1Q15 2Q15 Income Statement Data Interest income 2,243 2,425 8.1% 1,224 1,131

• 7.6%

572 559 Interest expense (1,361) (1,846) 35.7% (902) (997) 10.5% (515) (482) Net interest income 882 579

• 34.4%

322 134

• 58.3%

57 77 Net fee income 157 141

• 10.0%

57 64 12.2% 30 34 Other income (40) 250 N.M. 99 257 158.9% 101 156 Operating expenses (322) (378) 17.4% (165) (221) 33.3% (101) (120) Pre-provision profits 677 591

• 12.7%

313 235

• 25.1%

88 147 Provision for credit losses (337) (59)

• 82.4%

(30) 14

• 145.5%

18 (4) Income before tax 341 532 56.2% 283 248

• 12.2%

106 143 Income before tax 341 532 56.2% 283 248

• 12.2%

106 143 Net income 277 422 52.4% 224 197

• 12.2%

84 112 Balance Sheet Data Loans 31,031 31,163 0.4% 33,424 29,493

• 11.8%

28,237 29,493 Deposits 44,070 42,063

• 4.6%

44,429 41,185

• 7.3%

37,882 41,185 Total assets 49,401 61,604 24.7% 58,418 65,541 12.2% 60,885 65,541 Total equity 3,062 4,547 48.5% 4,335 4,669 7.7% 4,578 4,669 Key metrics Return on average assets 0.59% 0.76% 0.83% 0.62% 0.55% 0.71% Return on average equity 9.39% 11.09% 12.11% 8.53% 7.39% 9.75% Equity / assets 6.20% 7.38% 7.42% 7.12% 7.52% 7.12% Cost / income ratio

• 28.99%
• 35.08%
• 31.42%
• 44.09%
• 48.02%
• 41.27%

NPL ratio 0.86% 0.89% 1.48% 1.03% 1.17% 1.03% Reserve / NPL 290.53% 282.25% 154.83% 252.23% 230.00% 252.23% Loan to deposit ratio 71.07% 70.13% 73.52% 69.10% 68.74% 69.10% Tier 1 ratio 11.02% 13.93% 15.42% 13.04% 13.65% 13.04% BIS ratio 12.16% 15.08% 16.39% 14.19% 14.80% 14.19%