Taipei Fubon Bank Financial Statements(Consolidated) 2025 Q4

The Bank and its subsidiaries required to be included in the consolidated financial statements of affiliates in accordance with the "Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises" for the year ended December 31, 2025 are all the same as the companies required to be included in the consolidated financial statements of parent and subsidiary companies as provided in International Financial Reporting Standard 10 "Consolidated Financial Statements". Relevant information that should be disclosed in the consolidated financial statements of affiliates has all been disclosed in the consolidated financial statements of parent and subsidiary companies. Hence, we did not prepare a separate set of consolidated financial statements of affiliates.

Very truly yours,

Taipei Fubon Commercial Bank Co., Ltd. March 11, 2026

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INDEPENDENT AUDITORS' REPORT

11 0421 @JLTfI @ }?(Elig100 20tg

Deloitte & Touche

20F, Taipei Nan Shan Plaza No. 100, Songren Rd.,

Xinyi Dist., Taipei 110421, Taiwan

Tel :+886 (2) 2725-9988

Fax:+886 (2) 4051-6888

https://www.deloirte.com.tw

The Board ofDirectors and Shareholders Taipei Fubon Commercial Bank Co., Ltd.

Opinion

We have audited the accompanying consolidated balance sheets of Taipei Fubon Commercial Bank Co., Ltd. (the "Bank") and its subsidiaries, which comprise the consolidated balance sheets as of December 31, 2025 and 2024, the consolidated statements of comprehensive income, changes in equity and cash flows for the years ended December 31, 2025 and 2024, and the notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of Taipei Fubon Commercial Bank Co., Ltd. and its subsidiaries as of December 31, 2025 and 2024, and its consolidated financial performance and its consolidated cash flows for the years ended December 31, 2025 and 2024, in accordance with the Regulations Governing the Preparation of Financial Reports by Public Banks, certain other guidelines issued by the local authorities and International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC) and SIC Interpretations (SIC) endorsed by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and the Standards on Auditing of the Republic of China. Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Bank and its subsidiaries in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide abasis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were ofmost significance in our audit of the consolidated financial statements for the year ended December 31, 2025. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

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Key audit matters for the Bank and its subsidiaries' consolidated financial statements for the year

ended December 31, 2025 are stated as follows: Impairment of Discounts and Loans

Refer to Note 4(8) to the consolidated financial statements for the accounting policies on the impairment of discounts and loans. Refer to Note 5 to the consolidated financial statements for the critical estimations and judgments about the impairment of discounts and loans. Refer to Notes 14 and 53 to the consolidated financial statements for the details of the other related information about the impairment of discounts and loans.

Management assesses the impairment of discounts and loans in accordance with International Financial Reporting Standard 9 and complies with the regulatory requirements. As the assessment of the impairment on the aforementioned assets involves the management's critical judgments, estimations and assumptions, we considered the impairment assessment on loans as a key audit matter.

The procedures performed in respect of the above key audit matter include the following:

1. We understood and tested the internal controls relevant to the lending process and assessment of loan impairment.

2. We tested whether the expected credit loss was calculated by loans grouped by borrowers and credit risk characteristics. We further verified whether the parameters utilized in the impairment loss model (including the probability of default, loss given default, and exposure at default) to reflect the actual situation, and we recalculated the impairment loss on loans.

3. We examined the classification of loan credit assets, and assessed the loan provisions in compliance with relevant regulations.

We have also audited the parent company only financial statements of Taipei Fubon Commercial Bank Co., Ltd. as of and for the years ended December 31, 2025 and 2024 on which we have issued an unqualified opinion.

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Public Banks, the guidelines issued by the authorities, International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC) and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Bank and its subsidiaries' ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Bank and its subsidiaries or to cease operations, or has no realistic alternative but to do so.

Those charged with governance, including the audit and risk committee, are responsible for

overseeing the Bank and its subsidiaries' financial reporting process.

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Standards on Auditing of the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with the Standards on Auditing of the Republic of China, we exercise professional judgment and professional skepticism throughout the audit. We also:

1. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Bank and its subsidiaries' internal control.

3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

4. Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Bank and its subsidiaries' ability to continue as a going concern. If we conclude that a material going concern uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However, future events or conditions may cause the Bank and its subsidiaries to cease to continue as a going concern.

5. Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

6. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Bank and its subsidiaries to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the Bank and its subsidiaries audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements for the year ended December 31, 2025 and are therefore the key audit matters. We describe these matters in our auditors' report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent auditors' report are Mei-Hui Wu and Zhi-Xian Ke.

Deloitte & Touche Taipei, Taiwan Republic of China

March 11, 2026

Notice to Readers

The accompanying consolidated financial statements are intended only to present the consolidated financial position, financial performance and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such consolidated financial statements are those generally accepted and applied in the Republic of China.

For the convenience of readers, the independent auditors' report and the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors' report and consolidated financial statements shall prevail.

CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2025 AND 2024

(In Thousands of New Taiwan Dollars)

2025 2024

The accompanying notes are an integral part of the consolidated financial statements.

(Continued)

(LOSS)

Items that will not be reclassified subsequently to profit or loss:

Remeasurement of defined benefit

plans (Note 34) 153,530 - 144,675 - 6

Gain on property revaluation

(Note 34) 860,282 1 48,445 - 1,676

Gains (losses) on investments in equity instruments at fair value through other comprehensive

Items that may be reclassified subsequently to profit or loss:

Exchange differences on translating

foreign operations (Note 34) $ (388,001) - $ 3,185,999 4 (112) Share of other comprehensive (loss)

income of associates accounted for using the equity method

(Note 34) (46,786) - (621,749) (1) (92)

Gains (losses) on investments in debt instruments at fair value through other comprehensive income (Note 34)

Income tax relating to items that may be reclassified subsequently to profit or loss (Note 44)

Other comprehensive income (loss) for the year, net of

income tax 4,974,196 5 6,944,136 8 (28) TOTAL COMPREHENSIVE INCOME

(Continued)

EARNINGS PER SHARE (NEW TAIWAN DOLLARS) (Note 45)

Basic $ 2.12 $ 1.77

The accompanying notes are an integral part of the consolidated financial statements. (Concluded)

TAIPEI FUBON COMMERCIAL BANK CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

(In Thousands of New Taiwan Dollars)

Equity Attributable to Owners of the Bank (Note 34)

Other Equity

Exchange Differences on

Unrealized Gains

or Losses on Financial Assets at Fair Value

Change in Fair

Value of Financial

Liability Non-controlling

Capital Stock Retained Earnings Translating Through Other Attributable to Profit or Loss of Interests

The accompanying notes are an integral part of the consolidated financial statements.

(In Thousands of New Taiwan Dollars)

(In Thousands of New Taiwan Dollars)

Net cash (used in) generated from operating activities (17,956,445) 65,211,594

CASH FLOWS FROM INVESTING ACTIVITIES

EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE

OF CASH HELD IN FOREIGN CURRENCIES (1,251,334) 6,021,329

NET (DECREASE) INCREASE IN CASH AND CASH

EQUIVALENTS (27,902,432) 31,004,323

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE

YEAR 247,938,447 216,934,124

CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR $ 220,036,015 $ 247,938,447

(Continued)

(In Thousands of New Taiwan Dollars)

Reconciliation of the amounts in the consolidated statements of cash flows with the equivalent items reported in the consolidated balance sheets as of December 31, 2025 and 2024:

December 31

The accompanying notes are an integral part of the consolidated financial statements. (Concluded)

1. GENERAL INFORMATION

   Taipei Fubon Commercial Bank Co., Ltd. (the "Bank" or "Taipei Fubon Bank") began operations as a financial institution under the Taipei City Government ("TCG") in 1969. On July 1, 1984, it was reorganized into a limited liability corporation and was renamed City Bank of Taipei Co., Ltd. On January 1, 1993, the Bank was renamed TAIPEIBANK Co., Ltd. ("TAIPEIBANK"). On November 30, 1999, the Bank was privatized through the sale of its shares to the public, with TCG's holdings reduced to less than 50% of the Bank's outstanding capital stock. In a special meeting on October 4, 2002, the shareholders approved a share swap, which resulted in the Bank becoming a wholly-owned subsidiary of the Fubon Financial Holdings Company ("FFH"). The board of directors designated December 23, 2002 as the effective date of the share swap and the delisting of the Bank's stock from the Taiwan Stock Exchange.

   To fully benefit from the synergy of the two diversified businesses and reduce operating costs, the boards of directors of the Bank and Fubon Bank Co., Ltd. ("Fubon Bank", also a wholly-owned subsidiary of FFH) decided on January 1, 2005 to combine these two entities. On January 1, 2005, the Bank acquired the assets and liabilities of Fubon Bank through a share swap and changed its name to Taipei Fubon Commercial Bank Co., Ltd.

   On September 20, 2006, the boards of directors of the Bank and Fubon Bills Finance Co., Ltd. ("FBFC") decided to merge the Bank and FBFC to strengthen their operating synergies and lower operating costs, with the Bank as the surviving entity. The Bank set December 25, 2006 as the effective date of the merger.

   Later, under the terms and conditions of the "Sale and Assumption Agreement" signed by the Bank, Chinfon Commercial Bank Co., Ltd. ("Chinfon Bank"), the Central Deposit Insurance Corp. and the Executive Yuan's Financial Reconstruction Trust Corporation on October 30, 2009, the Bank assumed the assets, liabilities and businesses of the Hanoi branch and Ho Chi Minh City sub branch of Chinfon Bank, effective on March 6, 2010, with the relevant authorities' approval and then completed the settlement procedure.

   On December 31, 2013, the Bank acquired 10% equity interest in First Sino Bank ("FSB", which was renamed Fubon Bank (China) in April 2014). Fubon Bank (China) is the joint venture bank founded by the Shanghai Pudong Development Bank and Lotus Worldwide Ltd. on March 20, 1997 in Shanghai Pudong in accordance with "Regulations Governing Foreign Financial Institutions in the People's Republic of China" and acquired an additional 41% equity interest on January 7, 2014. With the Bank's 51% interest in FSB, the Bank became FSB's parent company. On June 28, 2021, the Bank acquired additional equity interest again, with FFH and the Bank's 42.08% and 57.92% interest in FSB.

   The boards of directors of the Bank and Taipei Fubon Bank Life Insurance Agency Co., Ltd. decided to merge the Bank and Taipei Fubon Bank Life Insurance Agency Co., Ltd. to strengthen their operating synergies, with the Bank as the surviving entity. The Bank has set April 29, 2016 as the effective date of the merger.

   On December 9, 2020, the Bank established TFB Capital Co., Ltd., which is a subsidiary of the Bank with 100% equity interest.

   In order to expand business scale, integrate resources and enhance market competitiveness, the boards of directors of the Bank and Jih-Sun International Commercial Bank Co., Ltd. ("Jih-Sun Bank") individually resolved to undertake a merger and entered into a merger contract, with the Bank as the surviving company and Jih-Sun Bank as the dissolved company, with the effective date of April 1, 2023.

   In order to integrate resources and enhance operational efficiency, the boards of directors of the Bank, Jih-Sun International Property Insurance Agency Co., Ltd. ("Jih-Sun Property Insurance Agency") and Jih-Sun Life Insurance Agency Co., Ltd. ("Jih-Sun Life Insurance Agency") individually resolved to undertake mergers and entered into merger contracts, with the Bank as the surviving company, and Jih-Sun Property Insurance Agency and Jih-Sun Life Insurance Agency as the dissolved companies, with an effective date of May 16, 2023.

   Under its business license, the Bank engages in all commercial banking operations authorized under the Banking Act.

   As of December 31, 2025, the Bank had a trust department, an offshore banking unit ("OBU"), 179

   domestic branches (including a business department), 5 overseas branches and 3 preparatory office.

   The operations of the Bank's Trust Department include: (1) planning, managing and operating a trust business; and (2) custodianship of nondiscretionary trust funds in local and foreign securities and mutual funds. These operations are regulated under the Banking Act and Trust Law.

   Fubon Bank (China) mainly renders foreign currency and RMB services to customers. As of December 31, 2025, Fubon Bank (China) had its headquarters and 24 branches (including preparatory offices) within mainland China.

   The Bank's ultimate parent is FFH, which holds all the ordinary shares of the Bank.

   The functional currency of the Bank is the New Taiwan dollar, and the consolidated financial statements are presented in New Taiwan dollars.

2. APPROVAL OF FINANCIAL STATEMENTS

   The consolidated financial statements were approved by the Bank's board of directors on March 11, 2026.

3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS

   1. Initial application of the amendments to the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) (collectively, the "IFRS Accounting Standards") endorsed and issued into effect by the Financial Supervisory Commission ("FSC")

      The application of the amendments to IAS 21, Lack of Exchangeability, will not cause major changes in the accounting policies of the Bank and its subsidiaries.

   2. The IFRS Accounting Standards endorsed by the FSC for application starting from 2026

      New, Amended and Revised Standards and Interpretations

      Effective Date

      Announced by IASB

      Amendments to IFRS 9 and IFRS 7 "Amendments to the Classification and Measurement of Financial Instruments"

      Amendments to IFRS 9 and IFRS 7 "Contracts Referencing

      Nature-dependent Electricity"

      January 1, 2026

      January 1, 2026

      Annual Improvements to IFRS Accounting Standards - Volume 11 January 1, 2026

      IFRS 17 "Insurance Contracts" (including the 2020 and 2021

      amendments to IFRS 17)

      January 1, 2023

      Amendments to IFRS 9 and IFRS 7: "Amendments to the Classification and

      Measurement of Financial Instrument"

      1. The amendments to the application guidance of classification of financial assets

         The amendments mainly amend the requirements for the classification of financial assets, including:

         1. If a financial asset contains a contingent feature that could change the timing or amount of contractual cash flows, and the contingent event itself does not relate directly to changes in basic lending risks and costs (e.g., whether the debtor achieves a contractually specified reduction in carbon emissions), the financial asset has contractual cash flows that are solely payments of principal and interest on the principal amount outstanding if, and only if,

            • In all possible scenarios (before and after the occurrence of a contingent event), the contractual cash flows are solely payments of principal and interest on the principal amount outstanding; and

            • In all possible scenarios, the contractual cash flows would not be significantly different from the contractual cash flows on a financial instrument with identical contractual terms but without the contingent feature.

         2. To clarify that a financial asset has non-recourse feature if an entity's ultimate right to receive

            cash flows is contractually limited to the cash flows generated by specific assets.

         3. To clarify that the characteristics of contractually linked instruments include a prioritization of payments to the holders of financial assets using multiple contractually linked instruments (tranches) established through a waterfall payment structure, resulting in concentrations of credit risk and a disproportionate allocation of cash shortfalls from the underlying pool between the tranches.

      2. The amendments to the application guidance of derecognition of financial liabilities

         The amendments mainly stipulate that a financial liability is derecognized on the settlement date. However, when settling a financial liability in cash using an electronic payment system, the Bank and its subsidiaries can choose to derecognize the financial liability before the settlement date if, and only if, the Bank and its subsidiaries has initiated a payment instruction that resulted in:

         • The Bank and its subsidiaries having no practical ability to withdraw, stop or cancel the payment instruction;

         • The Bank and its subsidiaries having no practical ability to access the cash to be used for settlement as a result of the payment instruction; and

         • The settlement risk associated with the electronic payment system being insignificant.

         An entity shall apply the amendments retrospectively but is not required to restate prior periods. The effect of initially applying the amendments shall be recognized as an adjustment to the opening balance at the date of initial application. An entity may restate prior periods if, and only if, it is possible to do so without the use of hindsight.

         Except for the above impact, as of the date the consolidated financial statements were authorized for issue, the Bank and its subsidiaries have assessed that the application of other standards and interpretations will not have a material impact on the Bank and its subsidiaries' financial position and financial performance.

   3. The IFRS Accounting Standards in issue but not yet endorsed and issued into effect by the FSC

      New, Amended and Revised Standards and Interpretations

      Effective Date

      Announced by IASB (Note 1)

      Amendments to IFRS 10 and IAS 28 "Sale or Contribution of Assets between an Investor and its Associate or Joint Venture"

      To be determined by IASB

      IFRS 18 "Presentation and Disclosure in Financial Statements" January 1, 2027 (Note 2)

      IFRS 19 "Subsidiaries without Public Accountability: Disclosures"

      (including the 2025 amendments to IFRS 19)

      Amendments to IAS 21 "Translation to a Hyperinflationary Presentation Currency"

      January 1, 2027

      January 1, 2027

      Note 1: Unless stated otherwise, the above IFRS Accounting Standards are effective for annual reporting periods beginning on or after their respective effective dates.

      Note 2: On September 25, 2025, the FSC announced that IFRS 18 will take effect starting from January 1, 2028. Domestic entities could elect to apply IFRS 18 for an earlier period after the endorsement of IFRS 18 by the FSC.

      1. Amendments to IFRS 10 and IAS 28 "Sale or Contribution of Assets between an Investor and its Associate or Joint Venture"

         The amendments stipulate that when the Bank and its subsidiaries sell or contribute assets that constitute a business (as defined in IFRS 3) to an associate or joint venture, the gain or loss resulting from the transaction is recognized in full. Also, when the Bank and its subsidiaries lose control of a subsidiary that contains a business but retains significant influence or joint control, the gain or loss resulting from the transaction is recognized in full.

         Conversely, when the Bank and its subsidiaries sell or contribute assets that do not constitute a business to an associate or joint venture, the gain or loss resulting from the transaction is recognized only to the extent of the Bank and its subsidiaries' interest as an unrelated investor in the associate or joint venture, i.e., the Bank and its subsidiaries' share of the gain or loss is eliminated. Also, when the Bank and its subsidiaries lose control of a subsidiary that does not contain a business but retains significant influence or joint control over an associate or a joint venture, the gain or loss resulting from the transaction is recognized only to the extent of the Bank and its subsidiaries' interest as an unrelated investor in the associate or joint venture, i.e., the Bank and its subsidiaries' share of the gain or loss is eliminated.

      2. IFRS 18 "Presentation and Disclosure in Financial Statements" and consequential amendments

         IFRS 18 will supersede IAS 1 "Presentation of Financial Statements". The main changes comprise:

         • To classify items of income and expenses presented in the statement of profit or loss into the operating, investing, financing, income taxes and discontinued operations categories, the Bank and its subsidiaries shall assess whether it has specified main business activities of investing in particular types of assets and providing financing to customers.

         • The statement of profit or loss shall present totals and subtotals for operating profit or loss, profit or loss before financing and income taxes and profit or loss.

         • Provides guidance to enhance the requirements of aggregation and disaggregation: The Bank and its subsidiaries shall identify the assets, liabilities, equity, income, expenses and cash flows that arise from individual transactions or other events and shall classify and aggregate them into groups based on shared characteristics, so as to result in the presentation in the primary financial statements of line items that have at least one similar characteristic. The Bank and its subsidiaries shall disaggregate items with dissimilar characteristics in the primary financial statements and in the notes. The Bank and its subsidiaries labels items as "other" only if it cannot find a more informative label.

         • Disclosures on Management-defined Performance Measures (MPMs): When in public communications outside financial statements and communicating to users of financial statements management's view of an aspect of the financial performance of the Bank and its subsidiaries as a whole, the Bank and its subsidiaries shall disclose related information about its MPMs in a single note to the financial statements, including the description of such measures, calculations, reconciliations to the subtotal or total specified by IFRS Accounting Standards and the income tax and non-controlling interests effects of related reconciliation items.

           In addition, the following consequential amendments have been made to IAS 7 "Statement of Cash Flows":

         • The Bank and its subsidiaries shall use operating profit or loss as the starting point when presenting cash flows from operating activities under the indirect method.

         • Interest and dividends received by the Bank and its subsidiaries shall be classified as investing activities, while interest and dividends paid shall be classified as financing activities. However, if, after assessment, the Bank and its subsidiaries has a specific main operating activity, it shall determine how to classify dividends received, interest received and interest paid in the statement of cash flows by referring to how it classifies dividend income, interest income and interest expense in the statement of profit or loss. The total of each of these cash flows shall be classified in a single category in the statement of cash flows.

         Except for the above impact, as of the date the consolidated financial statements were authorized for issue, the Bank and its subsidiaries are continuously assessing the other impacts of the above amended standards and interpretations on the Bank and its subsidiaries' financial position and financial performance and will disclose the relevant impact when the assessment is completed.

4. SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION Statement of Compliance

   The consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Public Banks, the guidelines issued by the authority, and IFRS Accounting Standards issued by the FSC.

   Basis of Preparation

   The consolidated financial statements have been prepared on the historical cost basis, except for financial instruments, investment properties and net defined benefit liabilities which are measured at the present value of the defined benefit obligation less the fair value of plan assets. that are measured at fair value.

   The fair value measurements are grouped into Levels 1 to 3, described below, on the basis of the degree to which the fair value measurement inputs are observable and the significance of the inputs to the fair value measurement in its entirety.

   1. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;

   2. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the assets or liabilities, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and

   3. Level 3 inputs are unobservable inputs for the assets or liabilities.

      Classification of Current and Non-current Assets and Liabilities

      Since the Bank's accounts are a major part of the consolidated accounts and the operating cycle in the banking industry is harder to determine, accounts included in the consolidated financial statements of the Bank and its subsidiaries were not classified as current or non-current. Nevertheless, accounts were properly categorized in accordance with the nature of each account and sequenced by their liquidity. Refer to Note 53 for the maturity analysis of assets and liabilities.

      Basis of Consolidation

      The consolidated financial statements incorporate the financial statements of the Bank and the entities controlled by the Bank (i.e., its subsidiaries).

      When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by the Bank and its subsidiaries.

      All intra-group transactions, balances, income and expenses are eliminated in full upon consolidation.

      The total comprehensive income of subsidiaries is attributed to the owners of the Bank and to the non-controlling interests even if this attribution results in the non-controlling interests having a deficit balance.

      When the Bank's changes in the ownership and equity of the subsidiary do not result in the loss of control, it is treated as an equity transaction. The carrying amount of the bank and non-controlling interests has been adjusted to reflect changes in its relative equity in subsidiaries. The difference between the adjustment amount of non-controlling interests and the fair value of the consideration paid or received is directly recognized as equity and attributable to the Bank.

      See Note 15 for the detailed information of subsidiaries (including the percentages of ownership and main businesses).

      Foreign Currencies

      In the preparation of the financial statements of each individual group entity, transactions in currencies other than the entity's functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions.

      At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Exchange differences arising from settlement are recognized in profit or loss in the period in which they arise. Exchange differences on monetary items arising from translation are recognized in profit or loss in the period in which they arise, but cash flow hedges or effective portions of the hedging of net investments in foreign operations are recognized in other comprehensive income.

      Non-monetary items measured at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. When a gain or loss on a non-monetary item is recognized in profit or loss, any exchange component of that gain or loss is recognized in profit or loss. When a gain or loss on a non-monetary item is recognized in other comprehensive income, any exchange component of that gain or loss is recognized in other comprehensive income.

      Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

      For the purposes of presenting consolidated financial statements, the assets and liabilities of the Bank's foreign operations are translated into New Taiwan dollars using exchange rates prevailing at the end of each reporting period. Income and expense items are translated at the average exchange rates for the period. Exchange differences arising are recognized in other comprehensive income and accumulated in equity (attributed to the owners of the Bank and non-controlling interests as appropriate).

      Cash and Cash Equivalents

      Cash and cash equivalents include cash on hand, demand deposits, time deposits that can be readily terminated without the reduction of principal, and highly liquid short-term investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. For the statement of cash flows, cash and cash equivalents include cash and cash equivalents in balance sheets, and those amounts due from the Central Bank and call loans to other banks and securities purchased under resell agreements that meet the definition of cash and cash equivalents under IAS 7 "Statement of Cash Flows", etc.

      Investments in Associates

      An associate is an entity over which the Bank and its subsidiaries have significant influence and that is neither a subsidiary nor an interest in a joint venture.

      The results and assets and liabilities of associates are incorporated in these consolidated financial statements using the equity method of accounting. Under the equity method, an investment in an associate is initially recognized at cost and adjusted thereafter to recognize the Bank and its subsidiaries' share of the associate's profit or loss and other comprehensive income. The Bank and its subsidiaries also recognize the changes in the Bank and its subsidiaries' share of equity of the associates.

      Any acquisition cost in excess of the Bank and its subsidiaries' share of the net fair value of the identifiable assets and liabilities of an associate or a joint venture at the date of acquisition is recognized as goodwill, which is included in the carrying amount of the investment and is not amortized. The Bank and its subsidiaries' share of the net fair value of the identifiable assets and liabilities in excess of the cost of acquisition, after reassessment, is recognized immediately as the current bargain purchase.

      The entire carrying amount of the investment (including goodwill) is tested for impairment as a single asset by comparing its recoverable amount with its carrying amount. Any impairment loss recognized forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognized to the extent that the recoverable amount of the investment subsequently increases.

      When the Bank and its subsidiaries subscribes for additional new shares of the associate at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment differs from the amount of the Bank and its subsidiaries' proportionate interest in the associate. The Bank and its subsidiaries records such a difference as an adjustment to investments with the corresponding amount charged or credited to capital surplus. If the Bank and its subsidiaries' ownership interest is reduced due to the additional subscription of the new shares of associate, the proportionate amount of the gains or losses previously recognized in other comprehensive income in relation to that associate is reclassified to profit or loss on the same basis as would be required if the investee had directly disposed of the related assets or liabilities. When the adjustment should be debited to capital surplus, but the capital surplus recognized from investments accounted for by the equity method is insufficient, the shortage is debited to retained earnings.

      Financial Instruments

      Financial assets and financial liabilities are recognized when the Bank and its subsidiaries become parties to the contractual provisions of the instruments.

      Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.

      1. Financial assets

         All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis.

         1. Measurement category

            Financial assets are classified into the following categories: Financial assets at fair value through profit or loss, financial assets at amortized cost and investments in debt instruments and equity instruments at fair value through other comprehensive income.

            1. Financial assets at fair value through profit or loss

               Financial assets are classified as at fair value through profit or loss when such a financial asset is mandatorily classified or designated as at fair value through profit or loss. Financial assets mandatorily classified as at fair value through profit or loss include investments in equity instruments which are not designated as at fair value through other comprehensive income and debt instruments that do not meet the amortized cost criteria or the fair value through other comprehensive income criteria.

               A financial asset may be designated as at fair value through profit or loss upon initial recognition if such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise.

               Financial assets at fair value through profit or loss are subsequently measured at fair value, with any gain or loss arising on remeasurement recognized in profit or loss. The net gain or loss recognized in profit or loss incorporates any dividends or interest earned on such a financial asset. Fair value is determined in the manner described in Note 52.

            2. Financial assets at amortized cost

               Financial assets that meet the following conditions are subsequently measured at amortized cost:

               1. The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and

               2. The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

                  Subsequent to initial recognition, financial assets at amortized cost are measured at amortized cost, which equals the gross carrying amount determined by the effective interest method less any impairment loss. Exchange differences are recognized in profit or loss.

            3. Investments in debt instruments at fair value through other comprehensive income

               Debt instruments that meet the following conditions are subsequently measured at fair value through other comprehensive income:

               1. The financial asset is held within a business model whose objective is achieved by both the collecting of contractual cash flows and the selling of such financial asset; and

               2. The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

                  Investments in debt instruments at fair value through other comprehensive income are subsequently measured at fair value. Changes in the carrying amounts of these debt instruments relating to changes in foreign currency exchange rates, interest income calculated using the effective interest method and impairment loss or reversals are recognized in profit or loss. Other changes in the carrying amount of these debt instruments are recognized in other comprehensive income and will be reclassified to profit or loss when the investment is disposed of.

            4. Investments in equity instruments at fair value through other comprehensive income

               On initial recognition, the Bank and its subsidiaries may make an irrevocable election to designate investments in equity instruments as at fair value through other comprehensive income. Designation as at fair value through other comprehensive income is not permitted if the equity investment is held for trading or if it is contingent consideration recognized by an acquirer in a business combination.

               Investments in equity instruments at fair value through other comprehensive income are subsequently measured at fair value with gains and losses arising from changes in fair value recognized in other comprehensive income and accumulated in other equity. The cumulative gain or loss will not be reclassified to profit or loss on disposal of the equity investments; instead, it will be transferred to retained earnings.

               Dividends on these investments in equity instruments are recognized in profit or loss when the Bank and its subsidiaries' right to receive the dividends is established, unless the dividends clearly represent a recovery of part of the cost of the investment.

         2. Impairment of financial assets

            The Bank and its subsidiaries recognize a loss allowance for expected credit losses on financial assets at amortized cost, and impairment loss in debt instruments investments that are measured at fair value through other comprehensive income. For all other financial instruments, the Bank and its subsidiaries recognize lifetime ECLs when there has been a significant increase in credit risk since initial recognition. If, on the other hand, the credit risk on a financial instrument has not increased significantly since initial recognition, the Bank and its subsidiaries measure the loss allowance for that financial instrument at an amount equal to 12-month ECLs.

            A loss allowance for full lifetime expected credit losses is required for certain trade receivables that do not constitute a financing transaction.

            The Bank and its subsidiaries recognize an impairment loss on all financial assets with a corresponding adjustment to their carrying amount through a loss allowance account, except for investments in debt instruments that are measured at fair value through other comprehensive income, for which the loss allowance is recognized in other comprehensive income and does not reduce the carrying amount of such a financial asset.

            Under the "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Nonperforming/Nonaccrual Loans" (the "Regulations") issued by the authorities, the Bank assesses the recoverability of credit assets on the basis of a customer's financial position, delinquency in interest or principal payments, and the Bank's internal valuation of collaterals.

            Under the Regulations, the Bank categorizes credit assets (other than loans to the ROC government) into normal, special mention, substandard, doubtful, and loss, for which minimum provisions are 1%, 2%, 10%, 50%, and 100%, respectively. In addition, based on Rule No. 10300329440 issued by the FSC, for the banks to have enhanced risk coverage, the minimum provision for the loan loss reserve is 1.5% of the mortgage and construction loans that have been classified as normal assets. Based on Rule No. 10410001840 issued by the FSC, for the Bank to have an enhanced control of the exposure to risk in mainland China, the minimum provision for the loan loss reserve is 1.5% of the loans that were granted to companies based in mainland China and classified as normal assets.

            Under the "Measures for the Risk Classification of Financial Assets of Commercial Banks" and "Notice of Supervisory Requirements for Loan Loss Provisioning" of the China Banking Insurance Regulatory Commission (now known as the National Financial Regulatory Administration) and The People's Bank Of China, Fubon Bank (China) classifies its credit assets into normal, concern, subprime, doubtful, and losses. In addition, provision requirements for loan loss coverage and allowances for bad debts should meet the ratio requirements.

            Credits deemed uncollectible may be written off if the write-off is approved by the board of directors.

         3. Derecognition of financial assets

            The Bank and its subsidiaries derecognize a financial asset only when the contractual rights to the cash flows from the asset expire, or when they transfer the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Bank and its subsidiaries neither transfer nor retain substantially all the risks and rewards of ownership and continue to control the transferred asset, the Bank and its subsidiaries recognize their retained interest in the asset and an associated liability for amounts they may have to pay. If the Bank and its subsidiaries retain substantially all the risks and rewards of ownership of a transferred financial asset, the Bank and its subsidiaries continue to recognize the financial asset and also recognize a collateralized borrowing for the proceeds received.

            On derecognition of an investment in a debt instrument measured at amortized cost, the difference between the asset's carrying amount and given consideration is recognized in profit and loss. On derecognition of an investment in a debt instrument at fair value through other comprehensive income, the difference between the asset's carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss which had been recognized in other comprehensive income is recognized in profit or loss. However, on derecognition of an investment in an equity instrument at fair value through other comprehensive income, the difference between the asset's carrying amount and the sum of the consideration received and receivable is recognized in profit or loss, and the cumulative gain or loss which had been recognized in other comprehensive income is transferred directly to retained earnings, without recycling through profit or loss.

            On the partial derecognition of a financial asset (e.g., when the Bank and its subsidiaries retain an option to repurchase part of a transferred asset), the Bank and its subsidiaries allocate the previous carrying amount of the financial asset between the part they continue to recognize under continuing involvement and the part they no longer recognize on the basis of the respective fair value of these parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognized and the sum of the consideration received for the part that is no longer recognized is treated in the same way as when the financial asset is derecognized in entirety. A cumulative gain or loss that had been recognized in other comprehensive income is allocated between the part that continues to be recognized and the part that is no longer recognized on the basis of their respective fair value.

      2. Equity instruments

         Debt and equity instruments issued by the Bank and its subsidiaries are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and whether the instruments meet the definitions of a financial liability or an equity instrument.

         Equity instruments issued by the Bank and its subsidiaries are recognized at the proceeds received, net of direct issue costs.

         Repurchase of the Bank's own equity instruments is recognized and deducted directly in equity. The carrying amount is calculated by using weighted averages method of the stock types. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of these repurchased instruments.

      3. Financial liabilities

         1. Subsequent measurement

            Except for the following, all financial liabilities are measured at amortized cost using the effective interest method:

            1. Financial liabilities at fair value through profit or loss

               Financial liabilities are classified as at fair value through profit or loss when the financial liabilities are either held for trading or are designated as at fair value through profit or loss.

               Financial liabilities held for trading are stated at fair value, with any gain or loss arising on remeasurement recognized in profit or loss. The net gain or loss recognized in profit or loss incorporates any interest or dividends paid on the financial liability. Fair value is determined in the manner described in Note 52.

               A financial liability may be designated as at fair value through profit or loss upon initial recognition when doing so results in more relevant information and if:

               1. Such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or

               2. The financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and has performance evaluated on a fair value basis, in accordance with Bank and its subsidiaries' documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or

               3. The contract contains one or more embedded derivatives so that the entire combined contract (asset or liability) can be designated as at fair value through profit or loss.

                  For a financial liability designated as at fair value through profit or loss, the amount of changes in fair value attributable to changes in the credit risk of the liability is presented in other comprehensive income and will not be subsequently reclassified to profit or loss. The remaining amount of changes in the fair value of that liability which incorporates any interest or dividends paid on the financial liability is presented in profit or loss. The gain or loss accumulated in other comprehensive income will be transferred to retained earnings when the financial liabilities are derecognized. If this accounting treatment related to credit risk would create or enlarge an accounting mismatch, all changes in fair value of the liability are presented in profit or loss. Fair value is determined in the manner described in Note 52.

            2. Financial guarantee contracts

               Financial guarantee contracts issued by the Bank and its subsidiaries, if not designated as at fair value through profit or loss, are subsequently measured at the higher of the amount of the loss allowance reflecting expected credit losses, and the amount initially recognized less, where appropriate, the cumulative amount of income recognized in accordance with the revenue recognition policies, and assessed according to the minimum standard stipulated by "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Nonperforming/Nonaccrual Loans".

         2. Derecognition of financial liabilities

            The difference between the carrying amount of the financial liability derecognized and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

      4. Derivative financial instruments

         Derivatives are initially recognized at fair value at the date the derivative contracts are entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognized in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship. When the fair value of derivative financial instruments is positive, the derivative is recognized as a financial asset; when the fair value of derivative financial instruments is negative, the derivative is recognized as a financial liability.

         Derivatives embedded in hybrid contracts that contain financial asset host that is within the scope of IFRS 9 are not separated; instead, the classification is determined in accordance with the entire hybrid contract. Derivatives embedded in non-derivative host contracts that are not financial assets that is within the scope of IFRS 9 (e.g. financial liabilities) are treated as separate derivatives when they meet the definition of a derivative, their risks and characteristics are not closely related to those of the host contracts, and the host contracts are not measured at fair value through profit or loss.

      5. Modification of financial instruments

      When a financial instrument is modified, the Bank and its subsidiaries assess whether the modification will result in derecognition. If modification of a financial instrument results in derecognition, it is accounted for as derecognition of financial assets or liabilities. If the modification does not result in derecognition, the Bank and its subsidiaries recalculate the gross carrying amount of the financial asset or the amortized cost of the financial liability based on the modified cash flows discounted at the original effective interest rate with any modification gain or loss recognized in profit or loss. The cost incurred is adjusted to the carrying amount of the modified financial asset or financial liability and amortized over the modified remaining period.

      Hedge Accounting

      The Bank and its subsidiaries designate certain hedging instruments, which include derivatives, embedded derivatives and non-derivatives in respect of foreign currency risk, as fair value hedges.

      At the start of a hedge relationship, the Bank and its subsidiaries document the relationship between the hedging instrument and the hedged item, along with their risk management objectives and their strategy for undertaking various hedge transactions. Further, at the start of the hedge and on an ongoing basis, the Bank and its subsidiaries document whether the hedging instrument is highly effective in offsetting the exposure to adverse changes in fair value or cash flows of the hedged item. Note 11 sets out the details of the fair value of the derivative instruments used for hedging purposes.

      Fair value hedges

      The change in the fair value of the hedging instrument (e.g., derivative) and the change in the hedged item attributable to the hedged risk are recognized in profit or loss, if the hedged item is invested in equity instruments measured at fair value through other comprehensive profit or loss, it is recognized in other comprehensive profit or loss, in the line item relating to the hedged item.

      The Bank and its subsidiaries discontinue hedge accounting only when the hedging relationship ceases to meet the qualifying criteria; for instance, when the hedging instrument expires or is sold, terminated or exercised. The fair value adjustment to the carrying amount of the hedged instrument, for which the effective interest method is used is amortized to profit or loss from the date of the discontinuation of hedge accounting. The adjustment is based on the recalculated effective interest rate at the date amortization begins.

      Repurchase and Resell Transactions

      Securities under repurchase or resell agreements are accounted for as securities sold under repurchase agreements or securities purchased under resell agreements. Related interest expenses and interest income are accrued over the period from the date of sale to the date of repurchase or from the date of purchase to the date of resell.

      Property and Equipment

      Property and equipment (P&E) are stated at cost, less accumulated depreciation and accumulated impairment loss.

      Depreciation is recognized using the straight-line method. Each part of a P&E item with a cost that is significant in relation to the total cost of the item is depreciated separately. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for prospectively.

      On derecognition of an item of property and equipment, the difference between the sales proceeds and the carrying amount of the asset is recognized in profit or loss.

      Investment Properties

      Investment properties are properties held for earning rentals and/or for capital appreciation.

      Investment properties are measured initially at cost, including transaction costs, and are subsequently measured using the fair value model. Gains or losses arising from changes in the fair value of investment properties are included in profit or loss for the period in which these changes arise.

      The decision of the Bank and its subsidiaries to transfer items of property into or out of the classification as investment properties depends on the actual use of the assets. The value of a piece of property classified as investment properties should be based on its fair value assessment when transferring it to investment properties and it should be reclassified appropriately. For a transfer of classification from investment properties to property, plant and equipment, the deemed cost of an item of property for subsequent accounting is its fair value. When property and equipment is adjusted to be recognized as investment properties, the difference between the original carrying amount and the fair value is recognized in other comprehensive income and accumulated in revaluation appreciation which is under equity. The difference will transfer to retained earnings when the assets derecognized.

      On derecognition of an item of investment property, the difference between the net disposal proceeds and the carrying amount of the asset is included in profit or loss.

      Goodwill

      Goodwill arising on an acquisition of a business is carried at cost as of the date of acquisition less accumulated impairment loss.

      For the purposes of impairment testing, goodwill is allocated to each of the cash-generating units of the Bank and its subsidiaries that are expected to benefit from the synergies resulting from the business acquisition.

      A cash-generating unit to which goodwill has been allocated is tested for impairment annually-or more frequently when there is an indication that the unit may be impaired-by comparing its carrying amount, including the allocated goodwill, with its recoverable amount. However, if the goodwill allocated to a cash-generating unit has been acquired in a business combination during the current annual period, this unit should be tested for impairment before the end of the current annual period. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is first used to reduce the carrying amount of any goodwill allocated to the unit and the rest of the impairment loss is then allocated to the other assets of the unit pro rata based on the carrying amount of each asset in the unit. Any impairment loss on goodwill is recognized directly in profit or loss, and is not reversed in subsequent periods.

      If goodwill has been allocated to a cash-generating unit and the entity disposes of an operation within that unit, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal, and is measured on the basis of the respective values of the operation disposed of and the portion of the cash-generating unit retained.

      Intangible Assets

      1. Intangible assets acquired separately

         Intangible assets with finite useful lives that are acquired separately are initially measured at cost and subsequently measured at cost less accumulated amortization and accumulated impairment loss. Amortization is recognized on a straight-line basis. The estimated useful life, residual value, and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimates accounted for prospectively. Intangible assets with indefinite useful lives that are acquired separately are measured at cost less accumulated impairment loss.

      2. Intangible assets acquired in a business combination

         Intangible assets acquired in a business combination and recognized separately from goodwill are initially recognized at their fair value (which is regarded as their cost) at the acquisition date. After initial recognition, these are measured on the same basis as intangible assets that are acquired separately.

      3. Derecognition of intangible assets

      On derecognition of an intangible asset, the difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss.

      Impairment of Property and Equipment, Right of Use and Intangible Assets Other than Goodwill

      At the end of each reporting period, the Bank and its subsidiaries review the carrying amounts of their property and equipment, right of use tangible and intangible assets, excluding goodwill, to determine if there is any indication of impairment. If any such indication exists, the recoverable amount of the asset is estimated. When it is not possible to estimate the recoverable amount of an individual asset, the Bank and its subsidiaries estimate the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to the individual cash-generating units; otherwise they are allocated to the smallest group of cash-generating units.

      Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication of asset impairment.

      The recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount, with the resulting impairment loss recognized in profit and loss.

      When an impairment loss reverses, the carrying amount of the asset or cash-generating unit is increased to the revised estimate of its recoverable amount, but only to the extent of the carrying amount that would have been determined had no impairment loss been recognized on the asset or cash-generating unit in prior years. A reversal of an impairment loss is recognized immediately in profit or loss.

      Employee Benefits

      1. Short-term employee benefits

         Liabilities recognized for short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related employee services.

      2. Retirement benefits

         Payments to defined contribution retirement benefit plans are recognized as an expense when employees have rendered services entitling them to the contributions.

         Costs (including service cost, net interest and remeasurement) of the defined benefit plans are determined using the projected unit credit method. Service cost and net interest on the net defined benefit liability (asset) are recognized as employee benefit expense in the period they arise. Remeasurement, comprising actuarial gains and losses, and the return on plan assets (excluding interest), are recognized in other comprehensive income in the period in which they occur. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss.

         Net defined benefit liabilities (assets) represent the actual deficit (surplus) in the defined benefit plan. Any surplus resulting from this calculation is limited to the present value of any refunds from the plans or reductions in future contributions to the plans.

      3. Other long-term employee benefits

         Other long-term employee benefits are accounted for in the same way as the accounting required for the defined benefit plan, except that remeasurement is recognized in profit or loss.

      4. Employee benefit - employees' preferential deposits

      The Bank has granted a preferential interest rate to its current employees and retired employees for their deposits within a prescribed amount. The preferential interest rate in excess of market interest rate is considered employee benefits.

      Under Article 30 of the "Regulations Governing the Preparation of Financial Reports by Public Banks", if the Bank's preferential deposit interest rate for an employee as stated in the employment contract exceeds the market interest rate, the excess would be subject to IAS 19 "Employee Benefits" upon the employees' retirement. The actuarial valuation assumptions and parameters are based on the guidelines announced by the authorities.

      Income Tax

      Income tax expense includes current income tax and deferred income tax. The Bank and its subsidiaries determine that the additional tax they should pay under the Pillar Two of the global minimum tax rules falls within the scope of IAS 12 "Income Taxes," and have applied temporary exemption from deferred tax accounting treatment related to additional tax, and recognize the additional tax actually incurred as current income tax.

      1. Current tax

         The Bank and its subsidiaries determine current year's tax provision in accordance with the laws and regulations established by each jurisdiction for income tax reporting, and calculates the tax liabilities accordingly.

         Based on the Income Tax Act, an additional tax rate on unappropriated earnings is provided for as income tax in the year the shareholders approve to retain earnings.

         Adjustments of prior years' tax liabilities are added to or deducted from the current year's tax provision.

      2. Deferred tax

         Deferred tax is calculated on temporary differences between the carrying amounts of assets and liabilities and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences.

         Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be used.

         The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. A previously unrecognized deferred tax asset is also reviewed at the end of each reporting period and recognized to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

         Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liabilities are settled or the assets are realized, based on tax rates and laws that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences of how the Bank and its subsidiaries expect, at the end of the reporting period, to recover or settle the carrying amount of their assets and liabilities.

      3. Current and deferred taxes for the period

      Current and deferred taxes are recognized in profit or loss, but taxes that relate to items recognized in other comprehensive income or directly in equity are also recognized in other comprehensive income or directly in equity respectively.

      Recognition of Interest Income and Interest Expense

      Except for financial assets and liabilities at fair value through profit or loss, all interest-earning financial assets and interest-bearing financial liabilities are accrued using the effective interest rate method and are accounted for as interest income and interest expense in the consolidated statement of comprehensive income.

      Recognition of Service Fee Income and Service Fee Expense

      Service fee income and expense are recognized when loans or other services are provided. Service fees on significant projects are recognized when the project has been completed, for instance, loan syndication fees are recognized as revenue when the syndication has been completed. If service fee income and expense are related to provide service on loans, service fee income and expense are either recognized over the period that service is performed or as an adjustment to the effective interest rate on the loans and receivables, mainly depending on the materiality of these loans.

      Leases

      The bank and its subsidiaries determine whether contracts are, or contain a lease at the inception of a contract.

      1. The Bank and its subsidiaries as lessor

         Leases are classified as finance leases whenever the terms of a lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

         Under operating leases, lease payments less any lease incentives payable from operating leases are recognized as income on a straight-line basis over the terms of the relevant leases. Initial direct costs incurred in obtaining operating leases are added to the carrying amounts of the underlying assets and recognized as expenses on a straight-line basis over the lease terms.

         When a lease includes both land and building elements, the Bank and its subsidiaries assesses the classification of each element separately as a finance or an operating lease based on the assessment as to whether substantially all the risks and rewards incidental to ownership of each element have been transferred to the Bank and its subsidiaries. The lease payments are allocated between the land and the building elements in proportion to the relative fair values of the leasehold interests in the land element and building element of the lease at the inception of a contract. If the allocation of the lease payments can be made reliably, each element is accounted for separately in accordance with its lease classification. When the lease payments cannot be allocated reliably between the land and building elements, the entire lease is generally classified as a finance lease unless it is clear that both elements are operating leases; in which case, the entire lease is classified as an operating lease.

      2. The Bank and its subsidiaries as lessee

      The Bank and its subsidiaries recognize right-of-use assets and lease liabilities for all leases at the commencement date of a lease, except for short-term leases and low-value asset leases accounted for applying a recognition exemption where lease payments are recognized as expenses on a straight-line basis over the lease terms.

      Right-of-use assets are initially measured at cost, which comprises the initial measurement of lease liabilities adjusted for lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs needed to restore the underlying assets, and less any lease incentives received. Right-of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses and adjusted for any remeasurement of the lease liabilities. Right-of-use assets are presented on a separate line in the consolidated balance sheets.

      Right-of-use assets are depreciated using the straight-line method from the commencement dates to the earlier of the end of the useful lives of the right-of-use assets or the end of the lease terms.

      Lease liabilities are initially measured at the present value of the lease payments, which comprise fixed payments, in-substance fixed payments, variable lease payments which depend on an index or a rate, residual value guarantees, the exercise price of a purchase option if the Bank and its subsidiaries are reasonably certain to exercise that option, and payments of penalties for terminating a lease if the lease term reflects such termination, less any lease incentives receivable. The lease payments are discounted using the interest rate implicit in a lease, if that rate can be readily determined. If that rate cannot be readily determined, the Bank and its subsidiaries use the lessee's incremental borrowing rate.

      Subsequently, lease liabilities are measured at amortized cost using the effective interest method, with interest expense recognized over the lease terms. When there is a change in a lease term, a change in the amounts expected to be payable under a residual value guarantee, a change in the assessment of an option to purchase an underlying asset, or a change in future lease payments resulting from a change in an index or a rate used to determine those payments, the Bank and its subsidiaries remeasure the lease liabilities with a corresponding adjustment to the right-of-use assets. However, if the carrying amount of the right-of-use assets is reduced to zero, any remaining amount of the remeasurement is recognized in profit or loss. Lease liabilities are presented on a separate line in the consolidated balance sheets.

5. MATERIAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

   In the application of the Bank and its subsidiaries' accounting policies, management is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

   When developing material accounting estimates, the Bank and its subsidiaries consider the possible impact of inflation and interest rate fluctuations volatility in financial markets on the cash flow projection, growth rates, discount rates, profitabilities and other relevant material estimates. The estimates and underlying assumptions are reviewed on an ongoing basis.

   Estimated impairment loss on discounts and loans

   Estimated impairment loss on discounts and loans was based on the assumptions about the probability of default and the expected loss rate made by the Bank and its subsidiaries. The Bank and its subsidiaries considered historical experience, existing market conditions, and forward-looking estimates in making the assumptions and in choosing the inputs to the impairment assessment. Refer to Note 53 for related information about material assumptions adopted. When the actual cash flows in the future are less than expected, a material impairment loss may arise.

6. CASH AND CASH EQUIVALENTS

   December 31

   2025 2024

   Cash on hand $ 7,875,041 $ 15,029,069

   Due from other banks, net 62,305,898 80,576,744 Notes and checks for clearing 1,536,557 1,225,948

   $ 71,717,496 $ 96,831,761

   Cash and cash equivalents are assessed for impairment using the approach similar to those used for investments in debt instruments. The Bank and its subsidiaries consider their cash and cash equivalents to have low credit risk, so their loss allowance evaluation is on a 12-month expected credit loss basis. As of December 31, 2025 and 2024, a loss allowance of $2,839 thousand and $15,269 thousand was recognized.

7. DUE FROM THE CENTRAL BANK AND CALL LOANS TO OTHER BANKS

   December 31

   	2025	2024
   Call loans to banks, net	$ 229,550,650	$ 225,882,474
   Deposit reserves	180,204,462	129,103,650
   Due from the Central Bank - others	25,124,625	11,942,116
   	$ 434,879,737	$ 366,928,240

   Under a directive issued by the Central Bank of China, the New Taiwan dollar (NTD) denominated deposit reserves are determined by applying a prescribed percentage to the average monthly balances of customers' NTD-denominated deposits. As of December 31, 2025 and 2024, deposit reserves for checking accounts amounted to $69,531,758 thousand and $25,430,014 thousand, respectively, and the required deposit reserves amounted to $82,374,053 thousand and $77,505,647 thousand, respectively. The deposit reserves for checking accounts are not interest bearing and may be withdrawn anytime. The required deposit reserves are subject to withdrawal restrictions. In addition, foreign-currency deposit reserves are determined at a prescribed percentage of the balances of foreign-currency deposits. These reserves may be withdrawn anytime but bear no interests.

   Fubon Bank (China) uses the ending balance of deposits at the end of the month or certain balances reached the average of 10-day periods as basis for making provisions, as required under the regulations of the People's Bank of China.

   The Bank and its subsidiaries assess the allowances for due from the Central Bank and call loans to other banks with the expected credit loss model. The assessment method is the same as for the debt instrument investment.

   Due to the low credit risk of due from the Central Bank and call loans to other banks, the allowance is recognized as 12-month expected credit losses. On December 31, 2025 and 2024, no allowances for losses was recognized for the deposits in the Central Bank and call loans to other banks.

8. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

   December 31

   	2025	2024
   Financial assets designated as at fair value through profit or loss
   Government bonds	$ -	$ 1,225,795
   Financial assets mandatorily measured as at fair value through profit or loss
   Commercial paper	116,447,590	113,428,760
   Convertible corporate bonds	19,299,987	11,986,406
   Others	25,924,789	24,838,077
   Derivatives	161,672,366	150,253,243
   Currency swap contracts	30,747,089	38,286,348
   Interest rate swap contracts	14,330,479	13,588,457
   Others	5,267,212	7,681,779
   	50,344,780	59,556,584
   Financial assets at fair value through profit or loss	$ 212,017,146	$ 211,035,622
   Financial liabilities designated as at fair value through profit or loss
   Bank debentures	$ -	$ 37,296
   Held-for-trading financial liabilities
   Securities borrowing and lending	207,432	-
   Derivatives Currency swap contracts	29,785,124	30,361,878
   Interest rate swap contracts	12,524,266	11,800,316
   Option contracts	4,974,951	4,144,399
   Others	2,692,303	4,959,124
   	49,976,644	51,265,717
   Financial liabilities at fair value through profit or loss	$ 50,184,076	$ 51,303,013

   The Bank and its subsidiaries engage in derivative transactions mainly to accommodate customers' needs,

   manage their exposure positions, and meet their funding needs in different currencies.

   The financial assets mentioned above were designated as at fair value through profit or loss because the assets were hybrid instruments or because this designation eliminated or significantly reduced a measurement or recognition inconsistency.

   On October 7, 2024, the bank issued the fourth tranche of unsecured senior financial bonds for the year, amounting to US$1,150,000. The bonds have a six-month maturity and feature a combination of fixed and structured interest rates (interval-based calculation). The bank reserves the right to redeem the bonds in full at face value on any interest payment date. If the redemption option is not exercised during the issuance period, the principal will be repaid in full upon maturity.

   The fair value changes of the aforementioned financial bonds attributable to credit risk fluctuations are recognized in other comprehensive income. This amount is derived as the difference between the total fair value change of the financial bonds and the portion attributable solely to market risk factors. The fair value change attributable to market risk factors is estimated by determining the credit risk spread based on the benchmark yield curve as of the balance sheet date and the funding cost of debt instruments with similar maturities. Future cash flows are then discounted to derive the final valuation.

   The financial liabilities designated at fair value through profit or loss by the bank and its subsidiaries are as follows:

   Changes in Fair Value Attributable to Changes in Credit Risk

   Change in amount during the year

   2025/1/1-2025/12/31 $ 65

   2024/1/1-2024/12/31 $ (65)

   Accumulated amount of change

   As of December 31, 2025 $ -

   As of December 31, 2024 $ (65)

   December 31

   2025 2024

   The difference between the carrying amount and the contract maturity amount

   Fair value $ - $ 37,296

   Less: Amounts due on maturity - 37,709

   $ - $ (413)

   The contract (notional) amounts of the Bank and its subsidiaries' outstanding derivative financial

   instruments as of December 31, 2025 and 2024 are summarized as follows:

   December 31

   2025		2024
   Currency swap contracts	$ 3,869,981,197	$ 3,979,577,339
   Interest rate swap contracts	2,723,644,572	1,669,263,311
   Option contracts	330,114,847	300,242,731
   Forward contracts	174,695,001	301,324,598
   Futures contracts	10,401,381	124,925,590
   Cross-currency swap contracts	46,211,181	33,241,387
   Equity swap contracts	2,047,942	2,506,818
   Commodity swap contracts	-	31,494

   The Bank and its subsidiaries' breakdown of gain or loss on financial assets or liabilities at fair value

   through profit or loss as of December 31, 2025 and 2024 are summarized as follows:

   For the Year Ended December 31

   	2025	2024
   Net gain on financial assets and liabilities held-for-trading	$ 13,616,213	$ 12,799,561
   Financial assets designated as at fair value through profit or loss	76,241	13,493
   	$ 13,692,454	$ 12,813,054

9. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

   December 31

   	2025	2024
   Investments in equity instruments at fair value through comprehensive income	$ 39,197,435	$ 27,866,807

   Investments in debt instruments at fair value through comprehensive

   income 352,467,675 322,579,550

   $ 391,665,110 $ 350,446,357

   1. Investments in equity instruments at fair value through comprehensive income

      December 31

      	2025	2024
      Listed shares and emerging market shares (Note 11)	$ 27,065,018	$ 17,828,772
      REITs (Note 11)	9,284,067	7,106,142
      Unlisted shares	2,848,350	2,931,893
      	$ 39,197,435	$ 27,866,807

      Since the Bank and its subsidiaries hold part of the equity instruments for the purpose of strategic investment instead of for trading, the management elected to designate these investments in equity instruments as at fair value through other comprehensive income.

      For the years ended 2025 and 2024, the Bank and its subsidiaries sold part of their shares designated as at fair value through other comprehensive income in order to manage and adjust the investment portfolio. The sold shares had fair values of $13,789,151 thousand and $23,083,458 thousand, respectively. The Bank and its subsidiaries transferred a gain of $980,761 thousand and $1,266,481 thousand from other equity to retained earnings.

      Dividend income generated from investments the Bank and its subsidiaries held at the end of the reporting period or derecognized in the reporting period are as follows:

      For the Year Ended December 31

      	2025	2024
      Dividend income
      Held at the end of the reporting period	$ 1,677,124	$ 1,105,770
      Derecognised in the reporting period	583,617	1,035,370
      	$ 2,260,741	$ 2,141,140

   2. Investments in debt instruments at fair value through comprehensive income

      December 31

      	2025	2024
      Government bonds (Note 11)	$ 197,142,632	$ 142,378,994
      Corporate bonds (Note 11)	57,613,520	55,503,921
      Bank debentures (Note 11)	51,897,762	66,116,724
      Interbank lending	39,131,364	49,415,551
      Others	6,682,397	9,164,360
      	$ 352,467,675	$ 322,579,550
      The above assets under repurchase agreements were as follows:
      December 31
      	2025	2024
      Carrying amount	$ 2,157,237	$ 1,167,031

      Refer to Note 53 for information relating to the credit risk management and impairment of debt instruments at fair value through other comprehensive income.

10. INVESTMENTS IN DEBT INSTRUMENTS MEASURED AT AMORTIZED COST

    December 31

    	2025	2024
    Negotiable certificates of deposits	$ 271,177,058	$ 244,772,889
    Bank debentures (Note 11)	227,468,182	226,809,422
    Corporate bonds (Note 11)	210,369,230	217,943,287
    Government bonds (Note 11)	150,446,290	121,946,621
    Asset-backed securities	88,498,436	61,332,697
    Others	13,407,576	9,745,508
    	961,366,772	882,550,424
    Less: Allowance for impairment loss	558,297	604,186
    	$ 960,808,475	$ 881,946,238

    The above assets sold under repurchase agreements were as follows:

    December 31

    2025 2024

    Carrying amount $ 28,707,852 $ 33,121,877

    Refer to Note 53 for information relating to the credit risk management and impairment of investments in debt instruments measured at amortized cost.

    Investments in debt instruments measured at amortized cost pledged as collateral are disclosed in Note 48.

11. FINANCIAL INSTRUMENTS FOR HEDGING

December 31

The Bank and its subsidiaries are exposed to the risk of adverse fair value fluctuations due to changes in interest rates for debt securities held and bank debentures issued. Since the risk is considered material, the Bank and its subsidiaries enter into interest rate swap contracts to hedge against this risk.

The Bank and its subsidiaries are exposed to the risk of adverse fair value fluctuations due to changes in exchange rates when foreign currencies are converted into functional currencies for the foreign currency-denominated stocks and REITs issued. Since the risk is considered material, the Bank and its subsidiaries enter into interest rate swap contracts to hedge against this risk.

The following tables summarize the information relating to the hedges for interest rate risk. December 31, 2025

Hedging Notional Line Item in Carrying Amount

Change in Value Used for Calculating Hedge

F

Carrying Amount

Accumulated Amount of Fair

Value Adjustments

Change in Value Used for Calculating Hedge

Hedged Items Asset Liability Asset Liability Ineffectiveness

Fair value hedge

Interest risk

Financial assets at amortized cost -

government bonds 21,163,654 - (178,480) - 391,318 Financial assets at amortized cost -

corporate bonds 74,886,220 - (1,239,884) - 2,278,375 Financial assets at amortized cost -

bank debentures 31,210,453 - (485,151) - 797,105 Financial assets at amortized cost -

negotiable certificates of deposits issued by the central

bank 1,592,609 - (6,993) - (6,993)

Exchange rate risk

Financial assets at fair value through other comprehensive