Integrity Accountability Creativity

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4 CONTENTS Letter to Shareholders...04 Overview of Cathay Financial Holding Co., Ltd Company Profile...05 Organizational Chart...06 Group Affiliates...06 Board of Directors, Independent Directors and Key Managers...07 Capital and Shares Business Plan...08 Overview of Subsidiaries Cathay Life Insurance Co., Ltd. Message from the President...10 Company Profile...11 Business Scope Business Plan and Operational Targets...14 Cathay United Bank Co., Ltd. Message from the Chairman...16 Company Profile...17 Business Scope Business Plan and Operational Targets...20 Cathay Century Insurance Co., Ltd. Message from the Chairman...22 Company Profile...23 Business Scope Business Plan and Operational Targets...25

5 Cathay Securities Corporation Message from the Chairman...26 Company Profile...27 Business Scope Business Plan and Operational Targets...29 Cathay Securities Investment Trust Co., Ltd. Message from the Chairman...30 Company Profile...31 Business Scope Business Plan and Operational Targets...33 Overseas Branches and Offices...36 The Year in Review Honors and Accolades...40 Financial Report NTD/USD Exchange Rate: 32.79: NTD/USD Exchange Rate: 32.4:1 Cathay Venture Inc. Company Profile...34 Business Scope Business Plan...35

6 2016 Cathay Financial Holdings Annual Report Letter to Shareholders In keeping with our commitment as Taiwan s largest financial holding company to continually improving our business, Cathay Financial Holdings accumulated US$ billion in total assets as of the end of 2016, demonstrating the trust our customers place in us and their support of Cathay Financial Holdings' brand value. While our assets continued to grow, it has been a challenge to maintain a steady business performance. However, thanks to the concerted efforts of all of our employees, Cathay Financial Holdings still delivered an exceptional performance. Looking back at 2016, the dramatic changes in the world's political and economic environment, the divergence in the direction of monetary policies implemented by central banks across the world, and the uncertainties that have arisen in the process of global economic recovery have all posed immense challenges to business operations in the financial industry. Maintaining our steady management strategy, we achieved outstanding business results in 2016 with consolidated after-tax profit of US$1.48 billion and earnings per share of NT$3.79. Our subsidiaries, Cathay Life Insurance and Cathay United Bank, were the primary contributors. We continue to expand our operations in overseas markets in China and Southeast Asia and we seek to integrate our overseas resources into a complete regional operating platform. At the same time, we are also developing new financial technologies and new business models in response to trends in Fintech. Cathay Financial Holdings will continue to persist in its efforts to provide customers with better financial services, increase profits, optimize risk management practices, and drive towards corporate sustainability. Our Subsidiaries Once Again Delivered Excellent Performance in 2016 Cathay Life Insurance generated consolidated after-tax profit of US$933 million for the year. In addition to continuous improvements in its investment performance, Cathay Life Insurance also maintained its position as the market leader. First-year premium income was US$6.14 billion. Total premium income was US$20.68 billion, which is the highest in the industry. First-year premium equivalent, an even better indicator of business value, was US$4.17 billion, and which also allowed Cathay Life Insurance to be the industry leader. Cathay United Bank recorded consolidated after-tax profit of US$540 million for the year, while the market positions of both corporate banking and retail banking continued to increase. Cathay United Bank's outstanding loans exceeded US$44.39 billion while still maintaining strong asset quality levels. With respect to fee income, Cathay United Bank s credit card business had leading performance across all relevant metrics and the wealth management business met its goal of enhancing customer satisfaction and exhibited unparalleled performance among all domestic financial institutions. Concerning the performance of our other subsidiaries, Cathay Century Insurance was ranked second in the domestic market in terms of premium income. Cathay Securities Investment Trust recorded US$14.54 billion in assets under management, making it the largest securities investment trust company in Taiwan. Cathay Securities was ranked first in the market in terms of sub-brokerage service and all of its business operations showed steady growth. Continuous Development of Overseas Markets Throughout 2016, we continued to extend our global presence. In China, the opening of Cathay United Bank s Shenzhen Branch marked our expansion into the Pearl River Delta region. Our existing banking operations in the Northern, Central, and Southern regions of China have also allowed us to effectively satisfy the needs of our customers. Our insurance business in China has also shown continued growth. Cathay Lujiazui Life Insurance currently operates 11 offices (headquarters and branch offices) and 38 sales and service agencies across China, while Cathay Century Insurance has established a total of 26 branch locations. In 2016, Cathay Century Insurance completed a capital injection by Ant Financial Services Group, bringing them in as a strategic investor to further develop our property and casualty insurance business in China. With respect to our expansion in Southeast Asia, Cathay United Bank has already established overseas offices in nine ASEAN member states, including Vietnam, Cambodia, Singapore, Malaysia, Laos, the Philippines, Thailand, Myanmar, and Indonesia, making Cathay United Bank the Taiwan banking institution with the highest number of offices in the ASEAN market. At the same time, Cathay Life Insurance also made equity investments in banks in the Philippines and Indonesia to further strengthen our regional banking business portfolio. The second stage of our equity investment in Indonesia s Bank Mayapada was completed in 2016, and our total shareholding ratio is now 40%. We will continue to strengthen our partnerships, deepen our penetration and capture opportunities as we further develop our business in overseas markets. In anticipation of potential growth in Southeast Asia's insurance markets, Cathay Life Insurance and Cathay Century Insurance have established branch offices in major cities in Vietnam, the business operations of which are steadily growing. As the formation of our platform of overseas operations approaches completion, Cathay Financial Holdings expects to be able to take full advantage of the significant growth opportunities in the Asia-Pacific region. Developing Asset Management as a Long-Term Strategic Pillar We have made further progress in the development of our asset management business. Following our acquisition of 100% of Conning Holdings Corp., we have continued to support the development of Conning s business operations and the expansion of its market presence. By capitalizing on Conning's presence in the United States and Europe, as well as leveraging Cathay Financial Holdings advantages in Greater China, we hope to build a global asset management platform. Fulfillment of Corporate Social Responsibility, Attainment of Global and Domestic Recognition With regard to corporate social responsibility, Cathay Financial Holdings has been selected as a "DJSI Emerging Markets" constituent stock of the Dow Jones Sustainability Index (DJSI), a respected international indicator of corporate sustainability management, for the second consecutive year. Our selection is tesitimony to our continuous efforts in practicing corporate sustainability and demonstrates 4

7 that we have begun to receive international recognition. Our performance in information disclosure, corporate governance, and corporate sustainability have all been highly rated and commended by well-recognized institutions both locally and internationally. As the first financial institution in Taiwan to have adopted the Equator Principles in 2015, Cathay United Bank was again at the forefront of the financial industry in 2016 with the completion of Taiwan's first Equator Principles compliant offshore wind power financing project implemented in accordance with international standards. Through this project, Cathay United Bank contributed further to sustainable development by taking concrete action towards the realization of corporate social responsibility in the financial industry. innovative, high-quality financial services that fulfill the needs of our extensive customer base. We will also carefully evaluate additional strategic investment opportunities overseas and further extend our global presence through both organic growth and mergers and acquisitions. By focusing on our three engines of growth, "Insurance + Banking + Asset Management," as our core development strategy, we will continue to seek to create value for our shareholders and advance toward our vision of becoming a "leading financial institution in the Asia-Pacific region," and thereby demonstrate our sincere gratitude and appreciation to the shareholders who have given us their invaluable support over the years. Cathay Financial Holdings Cathay life Insurance Cathay Financial Holdings attaches great importance to sustainability, and we are fully committed to addressing issues related to the environment, society, and governance (ESG) by incorporating ESG into our management and investment decisions. Even though Taiwan is as yet unable to sign the Principles for Sustainable Insurance (PSI) and the Principles for Responsible Investment (PRI), because Taiwan is not a member of the United Nations, we still remain committed to the active implementation of these principles and values. We strongly believe that the wellbeing of the financial industry is predicated upon a sustainable society and environment. Consistent with this ideal, we seek to provide a comprehensive range of financial products and services that create lasting value for the company, industry, and society. Looking forward to 2017, the world remains highly susceptible to political and economic uncertainties. As the global economy rebounds, we will continue to closely monitor and manage potential risks, seek business synergies across our businesses, optimize our organizational and operating structures, strengthen our core product and service capabilities, and strive to provide diverse, Overview of Cathay Financial Holding Co., Ltd. Cathay Financial Holdings Company Profile To reflect the diversification and globalization of financial markets, and to provide more comprehensive services to our customers, Cathay Financial Holding Co., Ltd. was established on December 31, 2001 with paid-in capital of US$3.88 billion. Primary subsidiaries of Cathay Financial Holdings include Cathay Life Insurance, Cathay United Bank, Cathay Century Insurance, Cathay Securities, Cathay Securities Investment Trust and Cathay Venture, serving collectively close to 13 million customers through nearly 730 business offices around Taiwan. Looking to the future, we will continue to seek suitable partners to further strengthen our operations. With a corporate culture that stresses integrity, trustworthiness and compliance, we will continue to integrate our products and services and leverage our extensive network of business locations and professional sales forces to provide our customers with convenient "one-stop shopping" and customized services. Based on our core principle of "sustainable management," we aspire to be the most trustworthy and reliable financial holding company and to be a leading financial institution in the Asia-Pacific region. Assets Net income Number of branches and sales offices Number of customers Number of employees US$251.1 billion US$1.48 billion 881 Chairman Hong-Tu Tsai Approximately 12,960,000 Approximately 51,000 Cathay United Bank Cathay century Cathay Securities Cathay Securities Insurance Corporation Investment Trust Cathay Venture 5

8 2016 Cathay Financial Holdings Annual Report Overview of Cathay Financial Holding Co., Ltd. Organizational Chart Shareholders Board of Directors Audit Committee Remuneration Committee Corporate Sustainability Committee Chairman Strategic Management Operations Management President Service Quality Committee Risk Management Committee Personal Data Management Committee Auditing Div. Strategic Planning Dept. Marketing Planning Div. Economic Research Div. Finance Div. Administration Div. Risk Management Div. Information Div. Project Planning Div. Legal Dept. Administration Dept. Financial Planning Accounting Dept. Digital Data and Technology Direct Marketing Planning Dept. Integrated Marketing Dept. Investment Management Dept. Strategic Investment Dept. Investors Relations Dept. Public Relations Dept. Compliance Dept Group Affiliates Cathay Financial Holding Co., Ltd. Cathay Venture Inc. (Ratio of shareholding: 100%) Cathay Century Insurance Co., Ltd. (Ratio of shareholding: 100%) Cathay Life Insurance Co., Ltd. (Ratio of shareholding: 100%) Cathay United Bank Co., Ltd. (Ratio of shareholding: 100%) Cathay Securities Corporation (Ratio of shareholding: 100%) Cathay Securities Investment Trust Co., Ltd. (Ratio of shareholding: 100%) Cathay Lujiazui Life Insurance Company Limited (Note 1) (Ratio of shareholding: 50%) Indovina Bank Limited (Note 1) (Ratio of shareholding: 50%) Cathay Futures Co., Ltd. (Ratio of shareholding: 99.99%) Cathay Insurance (Vietnam) Co., Ltd. (Ratio of shareholding: 100%) Cathay Life Insurance (Vietnam) Co., Ltd. (Ratio of shareholding: 100%) Cathay United Bank (Cambodia) Corporation Limited (Ratio of shareholding: 100%) Cathay Investment Consulting (Shanghai) Co., Ltd. (Ratio of shareholding: 100%) Lin Yuan (Shanghai) Real Estate Co., Ltd. (Ratio of shareholding: 100%) Seaward Card Co., Ltd. (Ratio of shareholding: 100%) Cathay Securities (Hong Kong) Limited (Ratio of shareholding: 100%) Cathay Securities Investment Consulting Co., Ltd. (Ratio of shareholding: 100%) Cathay Woolgate Exchange Holding 1 Limited (Ratio of shareholding: 100%) Cathay Woolgate Exchange Holding 2 Limited (Ratio of shareholding: 100%) Cathay Insurance (Bermuda) Co., Ltd. (Ratio of shareholding: 100%) Cathay Walbrook Holding 1 Limited (Ratio of shareholding: 100%) Cathay Walbrook Holding 2 Limited (Ratio of shareholding: 100%) Conning Holdings Limited (Note 2) (Ratio of shareholding: 100%) Note 1: A subsidiary other than those referred to in Article 4 of the Financial Holding Company Act. Note 2: Reflects the merger entity. 6

9 Board of Directors, Independent Directors and Key Managers Board of Directors Independent Directors Executive Officer Key Managers Name Hong-Tu Tsai Cheng-Ta Tsai Cheng-Chiu Tsai Peter V. Kwok Chi-Wei Joong Tsu-Pei Chen Tiao-Kuei Huang Chang-Ken Lee Ming-Ho Hsiung Name Min-Houng Hong Feng-Chiang Miau Tsing-Yuan Hwang Education & Experience J.D., Southern Methodist University, USA, Chairman, Cathay Life Insurance B.A., Chinese Culture University, Managing Director, Cathay Life Insurance M.A., Keio University, Japan, Chairman, Cathay Century Insurance Ph.D., UC Berkeley, USA, Chairman and Chief Executive Officer, CITIC KA WAH Bank Limited, Chairman, CITIC Resources Holdings Limited B.A., Kean College of New Jersey, USA, Chairman, ModernTimes China Co. Ltd., President, CMB Credit Card Center B.A., National Chengchi University, Chairman, Cathay United Bank M.S., National Tsing Hua University, Vice Chairman, Cathay Life Insurance M.B.A., University of Pennsylvania, USA, President, Cathay Financial Holdings M.S., University of Iowa, USA, President, Cathay Life Insurance Education & Experience Ph.D., Michigan State University, USA, Chairman, SinoPac Financial Holdings, Chairman, Panasonic Taiwan Co., Ltd. M.B.A., Santa Clara University, USA, B.A., UC Berkeley, USA, Chairman, MiTAC Holdings Corporation Ph.D. Candidate, Nihon University, Japan, Executive Officer & Head of Asia & Oceania, Daiwa Securities SMBC Co., Ltd., Director, First Financial Holdings, Director, Hon Hai Precision Industry Co., Ltd. Position Name Education Chairman Hong-Tu Tsai J.D., Southern Methodist University, USA Title Name Education President Chang-Ken Lee M.B.A., University of Pennsylvania, USA Chief Auditor/ Senior Executive VP Chih-Jung Kung E.M.B.A., China Europe International Business School Chief Financial Officer/ Senior Executive VP Grace Chen M.B.A., National Chengchi University Head of Marketing Planning Div. / Senior Executive VP David P. Sun M.B.A., Harvard University, USA Chief Investment Officer / Senior Executive VP Sophia Cheng M.S., Golden Gate University, USA Head of Strategic Planning Div. / Senior Executive VP Chung-Yi Teng M.B.A., Massachusetts Institute of Technology, USA Chief Risk Officer / Senior Executive VP Po-Tsang Hsieh B.B.A., Chinese Culture University Chief Information Officer / Senior Executive VP Chia-Sheng Chang Senior ExecutiveVP Jian -Hsing Wu M.S., Tamkang University Ph.D., Weatherhead School of Management at Case Western Reserve University, USA Head of Project Planning Div. / Senior Executive VP Shan-Chi Liu E.M.B.A., National Taiwan University Head of Administration Div. / Executive VP Deh-Yen Weng M.B.A., Massachusetts Institute of Technology, USA Cathay Financial Holdings Cathay life Insurance Cathay United Bank Cathay century Cathay Securities Cathay Securities Insurance Corporation Investment Trust Cathay Venture Capital and Shares Chief Compliance Officer/Executive VP Judie Hsu LLM, University of London, School of Oriental and African Studies As of April 10, 2017 Type of stock Number of shares(000) Amount Type of stock Number of shares(000) Amount Common stock 12,563,210 shares US$3,877,534,000 Preferred stock 833,300 shares US$257,191,000 7

10 2016 Cathay Financial Holdings Annual Report Overview of Cathay Financial Holding Co., Ltd Business Plan During the past year, Cathay Financial Holdings has faced many political and economic changes, including the U.S. presidential election, interest rate hikes, Brexit, and a slowing economy in China. Through it all, however, Cathay Financial Holdings has remained committed to maximizing value for its shareholders, customers and employees through sustainable, steady and proper management and by achieving profitability that is above industry averages. Going forward, we will prudently respond to global political and economic changes and be flexible in our strategies to develop transformational innovation and accelerate our business expansion. Our 2017 business plan is outlined below: Continue to optimize our organizational and business structures to provide high-quality financial services We will continue to optimize our organizational structure based on our core values of "Integrity, Accountability and Innovation" and seek operational synergies to achieve sustainable growth. Our subsidiaries will constantly strengthen their core products and service capabilities, reinforce the competitive advantage of our existing businesses, and increase our interaction with customers through comprehensive technology-driven channels with excellent customer user experiences. Our subsidiaries will also continue focusing on value-added products and services, promoting sales channel transformation initiatives to strengthen sales capability, and providing diverse, convenient, and secure financial services, thereby extending our market presence in Taiwan. Gradually expand regional operations and achieve the vision of being a leading financial institution in the Asia-Pacific region: Consistent with our vision of being a leading financial institution in the Asia-Pacific region, we continue to evaluate overseas strategic investment opportunities. We place equal emphasis on organic growth and acquisitions to expand our overseas operations and create a local market presence and a platform for cross-border finance. Regarding our operations in China, Cathay United Bank not only opened its Shenzhen branch in 2016, but we also continue to apply for more branch and sub branch locations. We will also simultaneously consolidate the efforts of the entire financial group and venture partners to achieve further expansion in the insurance and asset management markets in China. In terms of our operations in other Asian markets, we currently have established overseas offices in nine out of ten ASEAN member states, further completing our expansion in overseas markets. In the future, we will actively exploit local corporate and retail financial markets, and expand our business operations. We will build our asset management business based on the operations of Conning Holdings Corp. and strengthen its platform in the U.S., Europe, and Asia. Furthermore, our subsidiaries have endeavored to improve their business infrastructure and optimize internal control and legal systems to meet stringent regulatory requirements and seek corporate sustainability. Cathay FHC won the Most Prestigious Sustainability Awards-Top Ten Domestic Corporate Cathay FHC teaming up with the National Taiwan University to foster the future star of Fintech! 8

11 Capital Allocation Plan Cathay Financial Holdings Continually monitor the capital allocation of the Group and make timely adjustments In response to the substantial changes in global financial markets in recent years, we will pay close attention to developments in the global markets and their potential impact on the capital adequacy of each subsidiary. Taking into consideration the Group's growth strategies, stock dividend policy, outside capital and capital needs of subsidiaries, we will actively manage our capital through capital planning and business development to maximize the capital efficiency of each subsidiary. Seek optimal terms and timing for raising capital and maintain liquidity In order to enhance our capital structure and adequacy, we will continue to evaluate various types of financial instruments, including common stock, preferred stock, global depositary receipts, senior (subordinated) bonds, and convertible (exchangeable) bonds to Cathay Financial Holdings 2016 on-campus recruitment activity improve capital flexibility. In accordance with our goal of building an onshore/offshore financial service platform, we will also seek to ensure the availability of sufficient funds to expand the Group and become a leading financial institution in the Asia-Pacific region. Cathay FHC invites hundreds of suppliers to build a sustainable garden together Cathay FHC sponsors the Jeremy Lin Basketball Training Camp Cathay life Insurance Cathay United Bank Cathay century Cathay Securities Cathay Securities Insurance Corporation Investment Trust Cathay Venture Cathay FHC convenes "Economic Climate and Financial Conditions" outlook conference in September 2016 in Taiwan Cathay FHC sponsors the Wei-Yin Chen Baseball Training Camp 9

12 2016 Cathay Financial Holdings Annual Report Overview of Subsidiaries Cathay Life Insurance Co., Ltd. Message from the President Looking back on 2016, the life insurance market still faced challenges amid a weak global economic recovery, the continuous implementation of quantitative easing policies in Europe and Japan, the announcement of an interest increase by the United States at the end of the year, and the occurrence of a black swan event. However, thanks to the concerted efforts of all employees, we delivered an outstanding performance in all respects. We reported first-year premium equivalent of US$4.17 billion in 2016, representing market share of 23.9%. Our total premium income for the year was US$20.68 billion, which represented market share of 21.4%. Both results positioned us as number one in the market. We also reported a profit of US$930 million for the year, once again turning in an exceptional performance. Cathay Life Insurance has achieved international recognition for its business performance. Once again, we were the only financial institution in Taiwan that was included in the list of Fortune Magazine s Global 500 in For the third year in a row, Cathay Life Insurance was chosen as the "Most Admired Company in Taiwan" in the insurance category by Commonwealth Magazine. Moreover, we were also honored for the third consecutive year in the AsianInvestor Institutional Excellence Awards conducted by AsianInvestor and were the only institution in Taiwan to achieve this level of international acclaim. These honors represent recognition of our efforts as well as higher expectations for the future. As the leader in the Taiwan insurance market, and with the hope of establishing ourselves as a leader in the Asian financial market, we continue to implement our Customer-Hack Program and Corporate Sustainability (CS) efforts, both of which are centered on our customers. physical channels, the program offers products and services that exceed expectations. In combination with net promoter scores (NPS) and immediate customer feedback, the program also provides insight into customer needs and expectations, thereby facilitating concrete implementation of a customer-centric business philosophy. Cathay Life Insurance is committed to the goal of corporate sustainability and to integrating a customer-oriented approach and the principles of reciprocity. Through the concerted efforts of our employees, we have established ourselves as Asia's first life insurance company that complies with the Principles for Sustainable Insurance (PSI). By investing in the green energy industry, we seek to promote environmental protection activities. By continuing to care for economically disadvantaged students and second- generation immigrants, as well as promoting elder care products and services, we seek to promote positive energy for a prosperous society. Finally, by ensuring solid risk management practices, and actively promoting anti-fraud policies, educational training, legal compliance, and information disclosure, we seek to strengthen corporate governance. Looking forward to 2017, we will continue to uphold our core values of "Integrity, Accountability and Innovation" and adopt Innovative Management and Outstanding Service as our business focus to create a social responsible company that meets the needs of its customers, cares for the welfare of its employees, and generates profits for its shareholders. Recognizing our role as a corporate citizen, we continue to promote and improve the sustainability of Taiwan s competitiveness and of Cathay Life Insurance for everyone in the world to see. In response to rapidly changing market conditions, corporations must promote programs like our Customer-Hack Program with increased agility and using big data analytics and mobile technologies to address the different insurance needs of different customer segments. Combined with the strengths of digital and President Ming-Ho Hsiung 10

13 Company Profile Cathay Life Insurance Co., Ltd. was founded in October 1962 and listed on Taiwan Stock Exchange in November In 2016, we recorded US$20.68 billion in total premium income and US$ billion in assets. We rank number one in the industry in terms of both market share and total assets. With more than 8.15 million customers, we are not only a premium brand in the minds of consumers, but we have also won the recognition of professional institutions at home and abroad. We have been recognized in the "Taiwan Insurance Excellence Awards," the highest honor in Taiwan's insurance industry, and are a six-time consecutive winner and recipient of the highest number of medals. We were also included in Fortune Magazine s Global 500 list, and were the only Taiwan financial institution to have achieved this honor. In order to develop overseas markets, we established subsidiaries in China and Vietnam in 2005 and 2008, respectively, becoming the first Taiwan insurer with a presence in these two markets, and we plan to continue our overseas expansion efforts. Looking to the future, we will continue to seek growth and steady profits, and to offer services to enhance customer satisfaction as we advance towards becoming a leading financial institution in the Asia-Pacific region. No. of employees Average age Average years of service 30, Cathay Financial Holdings Cathay life Insurance Cathay United Bank Cathay century Cathay Securities Cathay Securities Insurance Corporation Investment Trust Cathay Venture Cathay Life 2016 Overseas Summit Meeting 11

14 2016 Cathay Financial Holdings Annual Report Cathay Life Insurance Co., Ltd. Board of Directors, Independent Directors, Supervisors and Key Managers Directors Independent Directors Supervisors Name Hong-Tu Tsai Cheng-Ta Tsai Cheng-Chiu Tsai Tiao-Kuei Huang Ming-Ho Hsiung Fa-Te Chang Tzung-Han Tsai Chung-Yan Tsai John Chung-Chang Chu Wei-Ming Lu Chao-Ting Lin Yi-Tsung Wang Name Min-Houng Hong Feng-Chiang Miau Tsing-Yuan Hwang Name Wan-Teh Tsai Kai-Mo Chen Chih-Ming Lin Education & Experience J.D., Southern Methodist University, USA, Chairman, Cathay Financial Holdings B.A., Chinese Culture University, Managing Director, Cathay Life Insurance M.A., Keio University, Japan, Chairman, Cathay Century Insurance M.S., National Tsing Hua University, Vice Chairman, Cathay Life Insurance M.S., University of Iowa, USA, President, Cathay Life Insurance B.S., National Chung Hsing University, Chief Representative for Greater China, Cathay Life Insurance J.D., Georgetown University, USA, Vice Chairman, Cathay United Bank M.A., San Francisco State University, USA, Executive Vice President, Cathay Real Estate Development M.B.A., York University, Canada, Chairman, May Foong Woolen & Worsted Textile Mill. Ltd. Kainan High School of Commerce & lndustry, Chairman, Seng Hong Enterprise Co., Ltd. M.S., National Taiwan University ; Senior Executive Vice President, Cathay Life Insurance M.B.A., Massachusetts Institute of Technology, USA, Senior Executive Vice President, Cathay Life Insurance Education & Experience Ph.D., Michigan State University, USA, Chairman, SinoPac Financial Holdings, Chairman, Panasonic Taiwan Co., Ltd. M.B.A., Santa Clara University, USA ; B.A., UC Berkeley, USA ; Chairman, MiTAC Holdings Corporation Ph.D. Candidate, Nihon University, Japan, Executive Officer & Head of Asia & Oceania, Daiwa Securities SMBC Co., Ltd., Director, First Financial Holdings, Director, Hon Hai Precision Industry Co., Ltd. Education & Experience Nisho Gakusha University, Japan, Chairman, An Teh Development Co., Ltd. National Taiwan University, Vice Chairman, Cathay General Hospital National Taiwan University, Superintendent, Cathay General Hospital Executive Officer Key Managers Position Name Education Chairman Hong-Tu Tsai J.D., Southern Methodist University, USA Title Name Education President Ming-Ho Hsiung M.S., University of Iowa, USA Chief Representative for Greater China Fa-Te Chang B.S., National Chung Hsing University Senior Executive Vice President Chih-Chiang Liao B.S., National Chung Hsing University Senior Executive Vice President Shan-Chi Liu E.M.B.A., National Taiwan University Senior Executive Vice President Chao-Ting Lin M.S., National Taiwan University Senior Executive Vice President Yi-Tsung Wang M.B.A., Massachusetts Institute of Technology, USA Chief Risk Officer Ching-Lu Huang M.S., National Tsing Hua University Chief Auditor Shu-Chuan Chen LL.M., Washington College of Law, American University, USA As of April 10,

15 Business Scope Cathay Financial Holdings Life insurance and related businesses Revenue Breakdown Unit: Million USD 2016 Revenue Amount % of Total Retained earned premium income 18, % Other income % Net investment gain (loss) 5, % Insurance gain from unit-linked products 1, % Total income 25, % (NTD/USD: 32.4/1) Other income 0.71% Net investment gain (loss) 22.77% Insurance gain from unit-linked products 4.73% Retained earned premium income 71.79% Cathay life Insurance Cathay United Bank Cathay century Cathay Securities Cathay Securities Insurance Corporation Investment Trust Cathay Venture Cathay Life's 2016 Business Meeting 13

16 2016 Cathay Financial Holdings Annual Report Cathay Life Insurance Co., Ltd Business Plan Business Development 1. Strengthen organizational development, enhance the quality of new staff, reinforce programs for new employee development, and strengthen capabilities of managerial personnel. 2. Cultivate pools of young talent through cooperative education and industry academia cooperation to prepare for future organizational growth. 3. Leverage the resources of Cathay Financial Holdings to offer onestop financial services and enhance the operating efficiency of the Cathay Group. 4. Continue to seek growth in China and Vietnam markets using local business strategies and work toward becoming a leading financial institution in the Asia-Pacific region. Product Development 1. Continue to increase the sale of protection-oriented products to offer customers more protection. 2. Employ big data analytics to analyze customer profiles, meet diverse market needs, and establish a leading brand. 3. Combine technological applications, develop innovative products, and provide customers with a new user experience. Customer Service 2. Effectively utilize Group resources and work with different industries to engage with different segments and enhance customer satisfaction. 3. Expand telephone customer service center functions and diversify online transaction channels to improve user convenience. 4. Provide unique VIP experience and support the development and expansion of our business. Back Office Support 1. Education and training: (1) Refine different levels of education and strengthen practical training in excellence to facilitate improvement of the organization as a whole. (2) Combine audiovisual resources with mobile learning to reinforce training results and create a learning organization. 2. Human resources development: (1) Shape a corporate culture that embraces autonomy, agility, and connectivity and build a friendly workplace where work life balance is achieved. 1. Strengthen mobile digital financial services by integrating digital and mobile technologies to increase service quality and efficiency. Cathay Employees Fun Contest the Final Opening of Cathay Life's service counter at Songshan Airport Terminal 1 14

17 2017 Operational Targets Cathay Financial Holdings (2) Recruit talent from multiple channels and cultivate their interdisciplinary skills to foster a pool of talent with a high level of potential and integrate a system of talent development. (3) Complete career blueprint, strengthen talent training, and refine performance incentive systems to accelerate organizational upgrade. 3. Operating process: (1) Improve various types of management tools to enhance user experience and service efficiency. (2) Promote internal information platforms that boost operational efficiency and encourage the sharing and exchange of knowledge. Cathay Life Microfilm Award Ceremony for "My Elevated Tree Era" Primary Item Targets Unit: Million USD Total premium income 21,998 First-year premium equivalent 2,818 (NTD/USD: 32.4/1) Cathay Life 2016 Employee Singing and Cheerleading Contest Finals Cathay life Insurance Cathay United Bank Cathay century Cathay Securities Cathay Securities Insurance Corporation Investment Trust Cathay Venture Cathay Life wins first place in the Consumer Brand Survey for 18 consecutive years Cathay Life once again wins the 2016 Excellence in Micro-Insurance Promotion 15

18 2016 Cathay Financial Holdings Annual Report Overview of Subsidiaries Cathay United Bank Co., Ltd. Message from the Chairman Looking back at 2016, Cathay United Bank continued to uphold our core values of "Integrity, Accountability and Innovation" with the hope of creating value for our customers through honesty and sincerity. We integrate professionalism in every aspect of our service process, and engage in constant dialogues with our customers, providing them with professional services every step of the way. Despite the impact of numerous significant global economic events, Cathay United Bank still achieved robust growth in our primary business activities. As of the end of the year, our deposit balance was US$62.18 billion, an 8% increase over last year; among this balance, foreign currency deposits amounted to US$13.29 billion, an increase of 21% from the previous year; the loan balance was US$44.39 billion, an increase of 27% from the previous year; we issued 1.18 million new credit cards, and had an annual transaction volume of US$12.2 billion, a 15% increase over last year; our number of private banking customers increased by 29%; and the amount of assets we managed for our customers rose by 32%. Regarding insurance products, we also delivered the best performance in the financial industry with commission income of US$150 million. Regarding digital banking, 38.3% more applicants have applied for MyMobiBank (mobile banking), and 33.2% more applicants have applied for MyB2B (corporate internet banking). We had the third highest number of ATMs in the banking industry and our annual transaction volume rose by 10.1%. We recently began collaborating with Family Mart to establish ATMs in their convenience stores with the hope of providing our customers with even more convenient financial services. Cathay United Bank has the highest number of business channals across Taiwan among all privately-owned banks in Taiwan. We deliver the best securities settlement, credit card, and wealth management services. In 2016, we received "Stable" ratings from Taiwan Ratings, Standard & Poor's, and Moody's. With regard to service locations, we currently operate 165 branches across Taiwan, 12 overseas branches and sub-branches, and 5 overseas representative offices. In addition, we have one wholly-owned overseas subsidiary and one overseas joint venture bank. We have over 10,000 employees, total capital of US$2.23 and our business growth is steady. In terms of awards and recognition, Cathay United Bank received three major awards from the Taiwan Outstanding Financial Business Elite Awards - the Best Corporate Financing Award, the Best Trust Financing Award, and the Best Risk Management Award. Regarding service evaluations, we have won a Gold Medal for the Taiwan Service Sector Evaluation by Commercial Times, No. 1 in Next Media Magazine's Top Service Award, and No. 1 in Global Views Monthly Five-Star Service Award. In terms of professional service, Cathay United Bank was rated as the Best Wealth Management Bank, Best Customer Recommendation Award, and Best Digital Innovation Award by Business Today Weekly, and the Deposit Product of the Year and the Best Network Integration Initiative by Asian Banker. We were also rated by VISA as having achieved global excellence in service quality according to the Authorization Approval Rate and E-commerce Efficiency. The Asset recognized us as the Best Structured Products House in Taiwan and the Best Private Bank in Taiwan. We also received the Euromoney 2016 Country Award - Best Bank in Taiwan, 2016 Best Cash Manager in Taiwan, and Real Estate Award. Regarding corporate social responsibility, Cathay United Bank also earned recognition by obtaining multiple major domestic and foreign awards, including the 9th Taiwan Corporate Sustainability Award - Social Inclusion Award for the Best Corporate Single Item Performance by the Taiwan Institute for Sustainable Energy. Looking forward to 2017, in response to the rapid development of digital banking and e-commerce applications, Cathay United Bank continues to focus on optimizing digital channels through the use of customer-oriented strategies. In order to create the best customer experience and enhance operational efficiency, we will continue to provide financial products and services not only through customer segmentation but also in a timely manner that best meet the needs of customers. In light of the changes in international political and economic trends, Cathay United Bank will also continue to monitor the development of the global financial industry and changes in international legal policies, and devise comprehensive policies for counter-terrorist financing and anti-money laundering. Furthermore, we will fulfill our corporate social responsibility by taking concrete actions to support charity groups, maximize synergies by leveraging Group resources, and extend our reach into the Asia-Pacific region to create a strong regional financial service platform. Chairman Tsu-Pei Chen 16

19 Cathay Financial Holdings Company Profile Cathay United Bank was established on May 20, 1975 and has been operating for over 40 years. During this time we have consistently adopted sound management strategies and strong risk management to achieve steady growth in earnings. Regarding expansion of our business, as of the end of 2016, Cathay United Bank had 165 branches across Taiwan, allowing us to provide a comprehensive range of services to our customers. In an effort to continue our overseas expansion, we currently have one whollyowned subsidiary, one joint venture, 12 overseas branches/ sub-branches, and five representative offices around the world. The establishment of these locations has greatly facilitated the expansion of our overseas business operations and customer base and enabled us to become the Taiwan financial institution with the most complete footprint in Southeast Asia. Through Cathay United Bank s comprehensive banking platform in Taiwan, ASEAN, and China, our customers have access to a diverse range of high-quality financial services, including wealth management, consumer banking, corporate banking, international banking, digital banking and trust investments. In 2016, Cathay United Bank won three awards from the Outstanding Financial Business Elite Awards: the Best Corporate Financing Award - Special Award, the Best Trust Financing Award - Special Award, and the Best Risk Management Award - Award of Excellence. We were also rated as the Best Cash Management Bank by Asiamoney and the Best Bank in Taiwan at the 2016 Country Award held by Euromoney. The Asset also recognized us as having the Best Deals in Southeast Asia - Country Awards 2016, the Best Private Bank in Taiwan, and the Best Structured Products House in Taiwan. Our performance in various aspects of business operations has received strong recognition at home and abroad. No. of employees 10,051 Average age Average years of service 8.15 Handover ceremony of Cathay United Bank's incoming and outgoing president Cathay life Insurance Cathay United Bank Cathay century Cathay Securities Cathay Securities Insurance Corporation Investment Trust Cathay Venture Cathay United Bank receives the 8th Taiwan Outstanding Financial Business Elite Award Cathay United Bank introduces the Formosa co-branded credit card 17

20 2016 Cathay Financial Holdings Annual Report Cathay United Bank Co., Ltd. Board of Directors, Independent Directors, Supervisors and Key Managers Directors Independent Directors Supervisors Name Tsu-Pei Chen Tzung-Han Tsai Alan Lee Chun-Wei Yang Chang-Ken Lee Chuan-Chuan Hsieh Chi-Wei Joong Chung-Yi Teng Po-Tsang Hsieh Tsung-Hsien Tsai Shan-Chi Liu Jian-Hsing Wu Name Min-Houng Hong Feng-Chiang Miau Tsing-Yuan Hwang Name Peggy Wang Shu-Chen Lan Education & Experience B.A., National Chengchi University, Chairman, Cathay United Bank J.D., Georgetown University, USA, Vice Chairman, Cathay United Bank M.B.A., National Taiwan University, President, Cathay United Bank B.A., National Chengchi University, Senior Executive Vice President, Cathay United Bank M.B.A., University of Pennsylvania, USA, President, Cathay Financial Holdings M.B.A., National Taiwan University, Executive Vice President, Bank of Taiwan B.A., Kean College of New Jersey, USA, Chairman, ModernTimes China Co. Ltd., President, CMB Credit Card Center M.B.A., Massachusetts Institute of Technology, USA, Senior Executive Vice President, Cathay United Bank B.A., Chinese Culture University, Senior Executive Vice President, Cathay United Bank M.S., Harvard University, USA, Executive Vice President, Cathay Financial Holdings E.M.B.A., National Taiwan University, Senior Executive Vice President, Cathay Life Insurance M.S., Tamkang University, Senior Executive Vice President, Cathay United Bank Education & Experience Ph.D., Michigan State University, USA, Chairman, SinoPac Financial Holdings, Chairman, Panasonic Taiwan Co., Ltd. M.B.A., Santa Clara University, USA ; B.A., UC Berkeley, USA ; Chairman, MiTAC Holdings Corporation Ph.D. Candidate, Nihon University, Japan, Executive Officer & Head of Asia & Oceania, Daiwa Securities SMBC Co., Ltd., Director, First Financial Holdings, Director, Hon Hai Precision Industry Co., Ltd. Education & Experience B.A., National Taiwan University, Chairman, Cathay Futures Co.,Ltd. B.A., National Taiwan University, Member of Strategic Planning Committee, Acting Chief Secretary, Chunghwa Post Co., Ltd. Executive Officer Position Name Education Chairman Tsu-Pei Chen B.A., National Chengchi University Title Name Education President Alan Lee M.B.A., National Taiwan University Senior Executive Vice President Chun-Wei Yang B.A., National Chengchi University Key Managers Senior Executive Vice President Po-Tsang Hsieh B.A., Chinese Culture University Senior Executive Vice President Chung-Yi Teng M.B.A., Massachusetts Institute of Technology, USA Senior Executive Vice President Jian-Hsing Wu M.S., Tamkang University Chief Auditor Hung-Chang Yang B.A., Chinese Culture University As of April 10,

21 Business Scope 01. All types of deposits (the original business license states checking deposits, current deposits, time deposits and savings deposits) 02. Issuance of bank debentures 03. Loans and credit (the original business license states short-, medium- and long-term loans, certificate of deposit loans and consumer loans) 04. Check discounting 05. Securities investment (the original business license states investment in government bonds, short-term bills, corporate bonds, bank debentures and corporate stocks) 06. Domestic remittances 07. Commercial draft acceptance 08. Issuance of domestic letters of credit 09. Corporate guarantee bonds 10. Domestic guarantee services (the original business license states guarantee services) 11. Payment settlement 12. Sales of government bonds/bills and corporate bonds/stocks 13. Securities underwriting (the original business license states underwriting of government bonds, treasury bills, corporate bonds and corporate stocks) 14. Securities dealing 15. Custody and warehousing services 16. Rental of safe deposit boxes 17. Agency services covered by the business scope specified on business license or approved by competent authorities 18. Credit card services (the original business license states credit card and cash advance) 19. Brokered sales of gold bars/coins and silver coins 20. Purchases and sales of gold bars/coins and silver coins 21. Import and export foreign exchange transactions, inbound/ outbound wire transfer, and foreign currency deposits, loans, and payment guarantee 22. General foreign exchange transactions, inbound/outbound wire transfer; foreign currency deposits 23. Dealing foreign currency cash and travelers checks 24. Financial derivative commodities approved by competent authorities 25. Trust business authorized by the Trust Enterprise Act 26. Trust business authorized by the Authority to be handled by the head office trust department 27. Non-discretionary money trust investing on foreign securities 28. Dealing of government bonds 29. Brokerage, dealing, certification, and underwriting of short-term notes and bills 30. Issuance of cash cards 31. Financial consulting for financing related businesses 32. Financial consulting for non-financing related businesses 33. Dealing of corporate bonds and financial bonds 34. Wealth management 35. Concurrent business as a securities investment consulting enterprise 36. Money trust 37. Trust of encumbrance and related security interests 38. Securities trust 39. Movable property trust 40. Real estate trust 41. Land right trust 42. Discretionary investment trust services 43. Acting as agents for issuance, transfer, registration and payment of interests or dividends of securities 44. Providing consulting services for securities issuance or offering 45. Acting as attesters for issuance of stock or bond 46. Acting as attesters for issuance of securities 47. Acting as executor of wills and managing legacies 48. Acting as trustees for issuance of bond and providing related agent securities 49. Custody services 50. Acting as custodians of securities investment trust funds 51. Providing advisory services for investment, financial management, and real estate development 52. Payment and collection services for actual transactions 53. Acceptance of deposit payments 54. Electronic fund transfer services 55. Acting as personal insurance agents 56. Acting as property insurance agents Cathay Financial Holdings Cathay life Insurance Cathay United Bank Cathay century Cathay Securities Cathay Securities Insurance Corporation Investment Trust Cathay Venture 19

22 2016 Cathay Financial Holdings Annual Report Cathay United Bank Co., Ltd Income Statement Item Amount % of Total Net interest income % Net fee income % Financial asset or financial liability at fair value through profit Realized gain on available-for-sale financial assets Share of gain (loss) from affiliates and joint ventures recognized by equity method Gain on foreign currency exchange, net Unit: Million USD 99 6% 114 7% 14 1% 37 2% Other non-interest income, net 39 3% Net Operating income 1, % Realized gain on available-for-sale financial assets 7% Financial asset or financial liability at fair value through profit 6% Net fee income 32% Share of gain (loss) from affiliates and joint ventures recognized by equity method 1% Gain on foreign currency exchange, net 2% Other non-interest income, net 3% Net interest income 49% (NTD/USD: 32.4/1) 2017 Business Plan Looking forward to 2017, despite rapid market changes and challenges in an intensely competitive environment, Cathay United Bank will continue to follow the principles of robust management, strengthen our financial structure, and ensure an optimal capital allocation. At the same time, we will establish customer-centric and value-added strategies to strengthen our relationship with our customers, and thereby achieve our profit goals. To increase our regional presence, Cathay United Bank will actively expand in Greater China and in Southeast Asia. We will seek to localize our operations, strengthen the support our head office provides to our overseas locations, and further refine the management structure and business models of our overseas businesses. We aim to render excellent services that are based on the needs of customers in different markets and that meet international standards. We are embracing the digital banking era by continuously developing innovative financial products and services through effective digital and physical channel integration to enhance the digital user experience of our customers. By arranging a complete series of training programs to improve the professionalism of our employees, we aim to continue to improve our international competitiveness thereby enabling us to achieve our vision of "deploying in the Asia-Pacific and reach new heights." Deposits and transfers Create multiple channels through which our customers can make deposits in an excellent environment where a complete range of services is provided to boost customer satisfaction, interaction, and contribution; and strengthen customer segment management to build competitive advantage, and improve customer management performance. Retail Credit Service Endeavor to develop standardized credit products and automated loan application processes to provide efficient digital financial services; create increased revenues through targeted marketing and optimized customer management; and combine digital channels to collect and integrate customer digital behavior so that suitable products and services can be provided in a timely manner. SME Credit Service Adequately use industry maps to develop financing plans for supply manufacturers, reinforce local industrial management, and establish a link among core enterprises and upstream and downstream vendors; and integrate front-, mid-, and back-stage support to provide a full range of financial services that facilitate the stable growth of SME businesses. Corporate Credit Service Segment customers into groups by their region, industry characteristics, and business size, clearly designate the target customers of each business unit and prioritize business items to be developed, strategically strengthen the reliance of our corporate customers and their contribution, while optimizing referral mechanisms to encourage departmental cooperation and establish positive cooperation. Credit Card Service Seize opportunities to develop mobile payment markets and promote Apple Pay applications; establish strategic alliances to develop innovative financial services and diverse payment models on 20

23 smart and mobile service platforms that connect business vendors to consumers; and optimize product and customer profiles, as well as strengthen cardholder management and accumulate transaction data to provide a basis for improving management effectiveness. Wealth Management Based on the strategic objective of "activate assets and customerfocused management," we provide professional financial advisors to render asset allocation services and help customers build their core assets and realize investment goals, thereby creating a win-win value for our wealth management practice and our customers. Trust Service To assist high net worth elderly customers with their wealth inheritance issues, we provide a full range of services that encompass testamentary trust, charity trust, share equity or real estate trust, in addition to a series of financial planning products to customize trust plans based on customers' actual needs, thus developing differentiated professional service and strengthening our image as an effective wealth manager. Foreign Exchange Strengthen liquidity management services, optimize foreign exchange transaction platform, assist customers with the efficient use of their funds, strengthen the integrity of overseas foreign currency products, deepen our interactive relationship with customers, and enhance the competitiveness of our foreign currency services in the international market to generate increased profits for Cathay United Bank. Develop various cooperation opportunities with our competitors, perfect the integrity of overseas foreign currency products, and enhance the competitiveness of our foreign currency services in the international market. Digital banking Adopt customer-centric business models to manage digital customers, create a premium customer user experience, and become a comprehensive channel that customers can rely on. ATM Integrate physical and virtual distribution channels, enhance ATM utilization, increase strategic cooperation, improve convenient financial services to encourage use of these services, and redesign our automated banking centers to strengthen our brand image. Financial marketing Build a complete product planning platform, adopt pre-sale, sale, post-sale risk control division of labor mechanism to effectively formulate internal regulations, and actively develop product lines and scope of sales distribution to strengthen product diversity and appropriate services. Private banking Expand the overall scale and benefits of business operations, continue to optimize Hong Kong private wealth management platforms, evaluate the solution for a second overseas business office, and integrate financial group resources to meet the comprehensive needs of individual customers or family businesses. Overseas operations Integrate our overseas and domestic resources, continue to build infrastructure, refine our overseas management framework and models, leverage Group resources to improve business synergy, and build a complete regional financial service platform according to our overseas expansion strategy Operational Targets Primary Item Targets Deposits 64,403 Loans (including revolving credit) 43,996 Credit cards Unit: Million USD 6,030,000 cards (NTD/USD: 32.4/1) Cathay Financial Holdings Cathay life Insurance Cathay United Bank Cathay century Cathay Securities Cathay Securities Insurance Corporation Investment Trust Cathay Venture Cathay United Bank Foundation Elevated Tree Program Donation Ceremony Cathay United Bank arranges syndicated loan for Bank for Investment and Development of Vietnam (BIDV) 21

24 2016 Cathay Financial Holdings Annual Report Overview of Subsidiaries Cathay Century Insurance Co., Ltd. Message from the Chairman Looking back at 2016 when the global economy steadily got back on track, and in the face of an ever-changing economic environment and a diverse financial market, we were able to uphold our principle of "equal emphasis on quality and quantity," by not only strengthening our development and market expansion, but also by optimizing our business structures to enhance the operational efficiency of various organizational systems. In addition, we improved upon the service functions of various digital applications to increase handling efficiency, thereby improving business performance and customer satisfaction. Thanks to the concerted efforts of all of our employees, we generated US$19.7 billion in premium income, up 9.5% from the previous year, outperforming all of our peers. Our market share increased to 13.6%, placing us firmly in second place within the industry. We continue to uphold the spirit of innovative services and seek to improve our business performance. In 2016, our Moody's rating shifted from stable to positive. Regarding domestic and foreign awards, we received the 13th Annual National Brand Yushan Award for the "Outstanding Enterprise Category" and the "Best Product Category." We also once again won the Golden Torch Award - Annual Top 10 Outstanding Enterprise and Annual Top 10 Best-Performing Products. In addition, we received the Celent Model Insurer Asia Award - Service in Digital and Omnichannel Technologies, organized by Celent, a global research and advisory firm focused on financial services. Regarding our overseas operations, Cathay Insurance (China) collaborated with Ant Financial Services Group to collectively develop Internet of Things (IoT) insurance. In 2016, Cathay Insurance (Vietnam) also generated a profit for the first time. To extend our reach to the international community and expand market operations, in 2016 we were the first property insurance company to complete an application for selling insurance policies denominated in foreign currencies. In the future, we will combine the resources and global operations of Cathay Financial Holdings and our foreign partners to actively develop the international insurance market. Regarding corporate social responsibility, we uphold the Group's principle of "Sustainable Development" and have identified environmental protection, social development, and corporate governance as the key aspects. In recent years, we have invested R&D resources into green insurance products, including the industryleading "Green Vehicle Insurance" project in 2013 and the first-ever "Bicycle Insurance Project" in In response to climate change issues; in 2016 we assisted farmers in alleviating their financial burden by introducing the Mango Crop Insurance Product. We insured Taiwan's very-first case of offshore wind power plant to show our support for the transformation of the green renewable energy industry. We established the Zero Accident Academy website in 2014, and in 2016 we once again promoted an all-new Driver Assessment Test which provides drivers with a comprehensive range of safety-related knowledge to reduce the likelihood of traffic accidents. Furthermore, Cathay Century Insurance continues to promote the Accident-free Campus initiative in which we arrange a series of school safety activities, as well as the Accident-free riders, which educate college students on correct driving behavior and driving etiquette. We also hosted a Loss Prevention Forum, during which we provided an overview of disaster prevention trends and risk management concepts and promoted issuing insurance policies in electronic form. These efforts are a testament to our commitment to corporate social responsibility and the realization of sustainable management. Looking forward to 2017, we will continue to focus on the development of digital technologies and continue to provide innovative, efficient, and customer-satisfying professional services based on our business theme of Cathay E-Action and Establishment of a New Century. Lastly, on behalf of my colleagues, I would like to express our heartfelt gratitude for the longstanding support and assistance of the competent authorities and our customers. Chairman Cheng-Chiu Tsai 22

25 Company Profile Cathay Century Insurance was established in 1993 and became a member of Cathay Financial Holdings in By leveraging Group resources and providing customers with a full range of financial services, we have secured our position as the second largest non-life insurer in Taiwan since We are also seeking to expand our business into foreign markets. We established Cathay Insurance (China) and Cathay Insurance (Vietnam) in 2008 and 2010, respectively. In September 2015, Cathay Insurance (China) increased its capital by bringing in Ant Financial Services Group, an affiliate company of Alibaba Group, as an investor and to develop IoT financial services. Remaining committed to the tenets of equal emphasis on quality and quantity, steadfast and dependable management, Cathay Century Insurance delivered outstanding business performance that was not only rated as twaa+ by Taiwan Ratings, A- by S&P, and A3 by Moody's, but also won a multitude of international awards and honors, including the National Brand Yushan Award, Insurance Excellence Award, Silver Stevie Award, and the Premium International Business Award. Cathay Century Insurance was also named the "Best Non-life Insurance Company in Taiwan" by the renowned British financial publication, World Finance Magazine, reflecting worldwide recognition of our performance and achievements. No. of employees Average age Average years of service 2, Cathay Financial Holdings Cathay life Insurance Cathay United Bank Cathay century Cathay Securities Cathay Securities Insurance Corporation Investment Trust Cathay Venture Cathay Century Insurance held the business unit executives meeting 23

26 2016 Cathay Financial Holdings Annual Report Cathay Century Insurance Co., Ltd. Board of Directors, Independent Directors, Supervisors and Key Managers Directors Independent Directors Supervisors Name Cheng-Chiu Tsai J.H. Hsu K.C. Tsai Chu-Yao Lu Tsung-Hsien Tsai Chih-I Yu Name Min-Houng Hong Matthew Miau Name Jinn-Shing Leou Zuo-Xing Hsu Education & Experience M.A., Keio University, Japan, Chairman, Cathay Century Insurance M.B.A., National Chengchi University, Vice Chairman, Cathay Insurance Co., Ltd (China) College, Chairman, Central Construction Co., Ltd. BA, Shih Hsin University, President, Wen Yi Investment Co., Ltd. M.S., Harvard University, USA, Director, Cathay United Bank National Taiwan University, Consultant, Cathay Century Insurance Education & Experience Ph.D., Michigan State University, USA, Chairman, SinoPac Financial Holdings, Chairman, Panasonic Taiwan Co., Ltd. Santa Clara University, EMBA, Chairman, MiTAC Holdings Corporation Education & Experience M.A., University of Iowa, USA, Director, Cathay Securities Corporation M.A., Southern Methodist University, USA, Supervisor, Cathay Hospitality Management Executive Officer Position Name Education Chairman Cheng-Chiu Tsai M.A., Keio University, Japan Position Name Education Senior Executive Vice President (Acting President) Yi-Min Hu M.B.A., Beijing University Chief Compliance Officer Pin-Yao Lin M.A., National Chengchi University Chief Auditor Jin-Chou Chen M.B.A, Beijing University Senior Executive Vice President Chia-Yuan Hsu M.B.A., National Chengchi University Key Managers Executive Vice President Wen-der Tuh M.A., National Chengchi University Executive Vice President Fu-Gee Huang B.A., Tamkang University Executive Vice President Chin-Rung Chen B.A.,Meiji University, Japan Business Scope Executive Vice President Yu-Ming Peng B.A.,Feng Chia University Executive Vice President Teng-Min Sun M.A., Tamkang University Executive Vice President Chi-Hsin Yao M.A., Tamkang University Executive Vice President Chiou-Ray Lin M.B.A., University of Wisconsin, USA As of April 10, 2017 All types of non-life insurance (including motor, fire, marine, engineering, health, accident, and other liability and property) and related business. 24

27 2016 Revenue Breakdown Cathay Financial Holdings Unit: Million USD Item Amount % of Total Retained earned premium income Reinsurance commission income Reinsurance commission income 2.46% Retained earned premium income 87.08% Fees income 0.23% Net investment gain (loss) 10.23% Cathay life Insurance Fees income Net investment gain (loss) Total income Business Plan Business Plans 1. Optimize organizational structure for sales and refine personnel competency. 2. Adjust business structure and improve business profits. 3. Develop virtual and physical products to meet diverse needs. Insurance Service Plans (NTD/USD: 32.4/1) 1. Strengthen digital development and provide electronic and mobile services to improve customer service efficiency. 2. Increase the added value of insurance policies, and deepen customers' brand identity and loyalty. 3. Implement the core concepts of corporate sustainability, placing additional emphasis on environmental protection, social development, and corporate governance. Risk Management and Financial Investment Plans 1. Reinforce financial structure, ensure favorable solvency, and properly arrange reinsurance agreements. 2. Refine risk quantification technologies and improve risk management mechanisms to strengthen risk monitoring functions. 3. Monitor international political and economic trends, properly allocate resources, optimize capital utilization, and improve investment performance Operational Targets Primary Item Premium income Targets US$651 million (NTD/USD: 32.4/1) Cathay United Bank Cathay century Cathay Securities Cathay Securities Insurance Corporation Investment Trust Cathay Venture Cathay Century Insurance receives the 13th National Brand Yushan Award Cathay Century receives the Accident and Liability Insurance - Insurance Group Bronze Award and the Best Creativity Award in the Action Micro-Insurance Competition 25

28 2016 Cathay Financial Holdings Annual Report Overview of Subsidiaries Cathay Securities Corporation Message from the Chairman 2016 was a year filled with surprises. Regardless, the market was still able to recover quickly from chaos and maintain stable growth, despite the dramatic changes in the stock market caused by the recurrence of black swan events, the trading curb of Chinese A-shares at the beginning of the year, the passing of Brexit through a public vote in the middle of the year, and the presidential election of Donald Trump at the end of the year. Under the leadership of Donald Trump, U.S. stocks projected stable growth, and the Dow Jones Industrial Index continued to reach a record-high of 20,000 points, up 13.4%. The U.K. and emerging markets increased by 14.4% and 8.6%, respectively, while market growth in Japan and South Korea remained at levels that were approximately the same as the previous year. Weak performance was registered by Chinese A-shares. Given the rise in global interest rates under the Federal Reserve System in the monetary market, the U.S. Dollar strengthened, while the RMB, which was included as a part of the SDR in October, continued to decline. Commodity markets were focused on oil, with the oil price rebounding gradually in In November 2016, OPEC agreed to its first oil production cut in eight years. Taiwan shares projected a closing index of 9,254, representing a 915 point, or 11%, increase from the previous year. Taiwan shares performed favorably in the global market, but the average daily trading volume reached only US$3.065 billion, the lowest registered in the past three years. In 2016, the average daily trading volume of Taiwan shares in the primary market and the underwriting business in the secondary market exhibited the worst performance in recent years. Our full-year pretax net profit was US$10.06 million, profit after tax was US$7.963 million, and EPS was NT$0.48. The market share of our brokerage business achieved a new high for the eighth straight year and rose to 1.89% for the whole year, a substantial increase of 0.21% compared with the previous year, ranking us No. 1 in terms of growth in the industry. In our underwriting business, we underwrote 10 IPO and SPO transactions, ranking us No. 5 in the market. The offshore securities brokerage business showed significant growth for a fourth consecutive year. The annual trading volume of our sub-brokerage business reached US$9.166 billion, up 70% from 2015, ranking us No. 2 in the industry. For our warrant issuing business, we were rated as a Class A warrant issuer for 10 quarters in a row and ranked in the top ten in the number of warrants issued and outstanding. Digital services has been the focus of our development in recent years. The Stock Lottery App developed by us has accumulated over 120,000 downloads, providing online solutions to investment problems that typically plague our customers. In 2016, we received a wide range of international awards, including the Best Local Securities Broker, the Best Business Service, the Best Trading Service, and the Best Independent Research Brokerage Team. We were also awarded the National Talent Development Award given by the Workforce Development Agency of the Ministry of Labor, and the Fastest Growing Financial Institution given by CommonWealth Magazine. Looking forward to 2017, the global economy is expected to exhibit an L-shaped recovery, although there remain uncertainties and challenges. In the first half of 2017, the US stock market is expected to continue to fluctuate, as the U.S. Federal Reserve increases interest rates. The European QE will be extended until the end of the year. Depreciation of the RMB is expected to stagnate, which will be beneficial to exporting activities. Taiwan will continue to exhibit an L-shaped recovery, growing by approximately 1.8%, although it remains at a low point. The Taiwan government will successively implement policies that can stimulate Taiwan stocks, such as by reducing the securities transactions tax from 3 to 1.5, inspecting the tax levying system for stock dividends, promoting monthly saving plans, introducing ETF measures to reinvigorate the capital market, and introducing the Regulatory Sandbox as a means of promoting industry transformation. To face the challenges presented to us in 2017, Cathay Securities will adopt innovative strategies to stimulate the growth and transformation of our business activities. Our brokerage business combines a digital cross-selling strategy to attract customers. Meanwhile, Cathay Securities seeks to increase its income by introducing new business services such as stock lending for any purpose and monthly saving plans. Our underwriting business complies with the government's industrial policy and assists new industries and overseas corporations to enter Taiwan's capital market. Our financial trading business is involved with optimizing strategic transactions and issuing warrants. The international securities brokerage business connects the Taiwan, Hong Kong, and Chinese markets and allows for integrated securities services that attract institutional and high net worth customers, as well as proprietary traders. In 2017, the development of innovative strategies for various business activities is aimed at continuously creating mutually beneficial outcomes for our customers, employees, and shareholders. Chairman Shih-Ting Chu 26

29 Company Profile Cathay Securities Corporation is a member of Cathay Financial Holdings. We have paid-in-capital of US$164.5 million, 633 employees and an operational network composed of a head office, ten branches, and 28 cross marketing securities offices located in bank branches. Our businesses cover brokerage, underwriting, proprietary trading, and the issuance of financial derivatives. In 2017, we will focus on the following business operations: Concerning the brokerage business, we will build a completely digital platform that is linked to other platforms to facilitate the expansion of our brokerage business; develop multiple mobile apps that meet the investment needs of our customers and setup digital branch companies to strengthen our digital service experience; integrate ordering and service requirements to build a one-stop service center that offers more services to customers; develop a diversity of products, including sub-brokerage, OSU, wealth management trust, loans for any purpose, and monthly savings plan, to satisfy the diverse needs of our investors and increase the sources of our income; and continue to refine the content presented in forums and conferences and build a differentiated service model to strengthen our institutional services. Regarding our financial product business, we will continue to maintain our A-rating as a warrant issuer, choose warrant targets prudently, and maintain stable profits. In terms of our proprietary trading business, Cathay Securities will extend our core arbitrage technologies in developing multiple markets, products, and product modularization to enhance operational efficiency. With regards to our underwriting business, we will promote crossselling within the Group, to collectively vie for large stock listings and increase revenue from auction handling charges; and utilize the Group's overseas subsidiary resources to build a team of experts in overseas business operations and introduce F-shares into the Taiwan market. Looking to the future, we will continue to hold onto the core values of the Group that embrace the corporate spirit of "Integrity, Accountability and Innovation" and prudently promote various businesses. No. of employees Average age Average years of service Cathay Financial Holdings Cathay life Insurance Cathay United Bank Cathay century Cathay Securities Cathay Securities Insurance Corporation Investment Trust Cathay Venture Cathay Securities receives the 2016 National Talent Development Award held by the Workforce Development Agency of the Ministry of Labor Cathay Securities launches the first and only Stock Lottery App 27

30 2016 Cathay Financial Holdings Annual Report Cathay Securities Corporation Board of Directors, Independent Directors, Supervisors and Key Managers Directors Independent Directors Supervisors Name Shih-Ting Chu Shun-Yu Chuang Hung-Huei Liao Chang-Ken Lee Jinn-Shing Leou Name Tsing-Yuan Hwang Tina Pan Name Wan-Chie Ma Chi-Chang Huang Education & Experience M.A., National Taiwan University, Chairman, Cathay Securities Corporation M.B.A., Massachusetts Institute of Technology, USA, President, Cathay Securities Corporation M.A., National Taiwan University, Senior Executive Vice President, Cathay Securities Corporation M.B.A., University of Pennsylvania, USA, President, Cathay Financial Holdings M.A., University of Iowa, USA, Director, Cathay Securities Corporation Education & Experience Ph.D. Candidate, Nihon University, Japan, Executive Officer & Head of Asia & Oceania, Daiwa Securities SMBC Co., Ltd., Director, First Financial Holding, Director, Hon Hai Precision Industry Co., Ltd. PhD in Political Science, National Taiwan Normal University, Chairman, Modern Women's Foundation, Taiwan Education & Experience M.A., Tamkang University, Supervisor, Cathay Securities M.A., Columbia University, USA, Senior Vice President, Cathay United Bank Executive Officer Position Name Education Chairman Shih-Ting Chu M.A., National Taiwan University Position Name Education President Shun-Yu Chuang M.B.A., Massachusetts Institute of Technology, USA Key Managers Senior Executive Vice President Hung-Huei Liao M.A., National Taiwan University Senior Executive Vice President Chen-Hung Lin M.A., National Kaohsiung First University of Science and Technology Senior Executive Vice President Chung-Sheng Chen M.A., Southern New Hampshire University Senior Executive Vice President Xiu-Ling Hsu National Taipei University of Business As of April 10, 2017 Business Scope 01. Securities underwriting 02. Dealing of securities on central exchange 03. Brokerage trading of securities on central exchange 04. Dealing of over-the-counter securities 05. Brokerage trading of over-the-counter securities 06. Margin financing and stock lending 07. Registrar and transfer services 08. Securities lending (except for book-entry central government bonds) 09. Wealth management - financial products advisory or sales services 10. Wealth management - asset allocation by using trust approach 11. Brokerage trading of foreign securities--sub-broker 12. Introducing futures brokering 13. Futures business 14. Other securities-related businesses approved by the regulator 28

31 2017 Business Plan 1. Build a completely digital platform to attract customers and expand the operation of our brokerage business. 2. Provide integrated services encompassing high-quality products, platforms, and activities for domestic and foreign institutional clients. 3. Develop new businesses to increase sources of revenue. 4. Promote internal cross-selling and build a cross-border subbrokerage team to sustain business growth. 5. Properly use core technologies to develop a diverse range of products, markets, and product modules for improving operational performance. 6. Leverage Group resources, promote cross-selling in the underwriting business, and attract substantial foreign investments in Taiwan's markets. 7. Implement legal compliance as a means of stronger risk management. Cathay Securities ranks first place by the Taipei Exchange in 2016 to have helped the highest number of companies to become listed in the market 2017 Operational Targets Primary Item Targets Market share of brokerage business 2.01% Number of lead underwriting cases 15 Number of warrants issued 1,080 Cathay Securities receives the 17th Golden Peak Award - Top Outstanding Enterprises of the Year and Top Ten Outstanding Products Cathay Financial Holdings Cathay life Insurance Cathay United Bank Cathay century Cathay Securities Cathay Securities Insurance Corporation Investment Trust Cathay Venture Cathay Securities' Stock Lottery App receives the Digital Content Product Award - Internet Service Category by the Industrial Bureau of the Ministry of Economic Affairs Cathay Securities receives the 2016 Warrant Issuer and Consigned Trading Securities Dealer- Excellent Warrant Issuer Award 29

32 2016 Cathay Financial Holdings Annual Report Overview of Subsidiaries Cathay Securities Investment Trust Co., Ltd. Message from the Chairman The year 2016 was filled with surprises and changes. The recurrence of black swan events in the financial markets, including Brexit, interest rate increases by the U.S. Federal Reserve, and the election of Donald Trump, have had a meaningful impact on the market. Despite these events, Cathay SITE turned in an outstanding performance. While the overall assets under management of the investment trust industry declined by 3.64%, the total assets under management of Cathay SITE was US$14.54 billion, remaining the highest in the domestic industry. In particular, we had total mutual fund assets under management of US$4.08 billion, increasing our ranking to No. 2 in the investment trust industry. Because of the increasing fluctuations in the global market, where price changes are difficult to predict, investors must not only choose the right stocks, but they must also correctly account for short-term volatility and learn to use effective hedging strategies in an uncertain market. In the rapidly changing financial market, Cathay SITE issued 10 funds in 2016, nine of which were exchange traded funds (ETFs) that provide long or short directional trading, and that track indexes in the four major investment markets: Japan, China, the United States, and Taiwan. These funds serve as flexible long-short investment options that are suitable for a rapidly changing market. Cathay SITE anticipated the changes in the investment market and was able to launch ETF products that meet investor needs in a timely manner. Supported by our investors, these products improved our fund operations rather than negatively affecting them is perhaps a year that will be filled with positive news, such as a global economic recovery, interest rate increases by the United States, low oil prices, and a stable Chinese economy following structural adjustments. We can therefore optimistically prepare for the arrival of an economic recovery. However, asset management is a globally competitive industry. Regardless of what is ahead of us, good or bad, we will continue to maintain our competitive attitude, uphold the core values of Cathay Financial Holdings - "Integrity, Accountability and Innovation," while servicing our investors, and endeavoring to deliver outstanding performance by providing diverse products that meet the needs of investors. In the future, Cathay SITE will strive toward its goal of becoming a global asset management company by continuing to improve its product line and develop innovative financial products to secure its existing equity/bond and active/passive products, strengthen operating performance, and fulfill customer needs through flexible and diverse services. Furthermore, we will continue to expand our organization, extend our global presence, and maximize benefits for the Cathay Group and our shareholders. We would like to express our heartfelt gratitude for the longstanding support and assistance of our customers. We value the trust each of our customers bestows on us. In return, we will make every effort to continuously improve our performance and corporate value, pursue excellence, improve our services, and continue advancing forward at a steady pace. Chairman Jeff Chang 30

33 Company Profile Cathay Securities Investment Trust ("CSIT") was established in February 2000 and is now a wholly-owned subsidiary of Cathay Financial Holdings. We have paid-in capital of US$46 million, 265 employees and a business network composed of our Taipei Head Office and Hsinchu, Taichung and Kaohsiung Branches. We also entered into a joint venture, CDBS Cathay Asset Management, in China with China Development Bank Securities, a subsidiary of China Development Bank. As of the end of 2016, total assets under management of Cathay SITE was US$14.54 billion, the highest in the domestic SITE industry. In light of the growth of the ETF market and consistent with our effort to provide products that meet the requirements of both long and short trading operations, since 2015 Cathay SITE has launched a series of ETF products and had issued 10 ETFs as of the end of We track the index performance of the Japanese, Chinese, U.S., and Taiwan markets, and also provide ETF options, including traditional, leveraged, and inverse ETFs. In addition to long-term investments, different types of strategic trading can be performed in response to short-term changes in the financial market. Cathay SITE s ETF products have been popularized among investors since they were launched, and this has contributed to the increased comprehensiveness of Cathay SITE s product lines and assets under management in We have a team of 82 research professionals, including portfolio managers, with an average of 13 years of investment researchrelated experience. We have won more than 40 domestic and foreign fund awards since Cathay SITE has always held onto the business philosophy of "striving toward positive development and solid foundation" adopting the most prudent, responsible attitude to render excellent services with utmost sincerity. In the future, we will continue to remain committed to robust management to serve our investors. No. of employees Average age Average years of service Cathay Financial Holdings Cathay life Insurance Cathay United Bank Cathay century Cathay Securities Cathay Securities Insurance Corporation Investment Trust Cathay Venture Cathay SITE holds the ceremony celebrating the launch of the Cathay FTSE Japan ETF Fund Press conference for the Cathay TAIEX Daily Leveraged 2X ETF and Cathay TAIEX Daily Inversed ETF 31

34 2016 Cathay Financial Holdings Annual Report Cathay Securities Investment Trust Co., Ltd. Board of Directors, Supervisors, and Key Managers Directors Name Jeff Chang Woody E. Bradford Bo Kratz Andy Chang Peter Chiang Solon Huang Yi-Tsung Wang Education & Experience M.S., National Cheng Kung University, Chairman, Cathay Securities Investment Trust Worcester Polytechnic Institute, Harvard Business School, Chairman and Chief Executive Officer, Conning MBA, Warwick Business School, England, Chief Executive Officer, Asia Pacific, Conning M.B.A., National Central University, President, Cathay Securities Investment Trust B.A., National Chung Hsing University, Senior Executive Vice President, Cathay Securities Investment Trust M.B.A., National Taiwan University, Senior Executive Vice President, Cathay Securities Investment Trust M.B.A., Massachusetts Institute of Technology, USA, Senior Executive Vice President, Cathay Life Insurance Name Education & Experience Supervisors Rui-Hong Hong B.A. Soochow University, Manager of Accounting Department, Financial Division, Cathay Financial Holdings Executive Officer Position Name Education Chairman Jeff Chang M.S., National Cheng Kung University Title Name Education President Andy Chang M.B.A., National Central University Senior Executive Vice President Peter Chiang B.A., National Chung Hsing University Senior Executive Vice President Solon Huang M.B.A., National Taiwan University Senior Vice President Y. H. Chang B.A., Tunghai University Key Managers Senior Vice President Naiyun Yin M.A., University of Oregon Department of Economics Senior Vice President Cheng-Hong Wang M.A., Texas A&M University Senior Vice President Jessica Yueh M.B.A., University of South Australia, Australia Senior Vice President Doris Yang Ph.D., Tianjin Nankai University Institute of Business Management Senior Vice President Hui-Chung Wu EMBA, National Chengchi University Senior Vice President Lee-Ping Chen M.B.A., Oregon State University, U.S.A. Senior Vice President Chien-Jen Chiu M.B.A., Carnegie Mellon University As of April 10, 2017 Business Scope 1. Securities investment trust business. 2. Discretionary investment business. 3. Securities investment consultant business. 4. Futures trust business. 5. Other business approved by the Financial Supervisory Commission. 32

35 2017 Business Plan 1. Develop new products and investment strategies to provide customers with the best products and meet their needs. 2. Seek long-term, stable and outstanding performance in fund management and for discretionary account customers. 3. Integrate group resources to actively develop related businesses. Cathay Financial Holdings Cathay life Insurance 2017 Operational Targets Primary Item Targets Assets US$ billion (NTD/USD: 32.4/1) CSIT holds the press conference for the Cathay Global High Dividend Fund Cathay SITE holds the 2017 Economic Prospect Forum Cathay SITE holds the press conference for Cathay TAIEX Daily ETF leveraged and reversed ETF Cathay United Bank Cathay century Cathay Securities Cathay Securities Insurance Corporation Investment Trust Cathay Venture Cathay SITE holds the press conference for the Cathay Dow Jones 2X and Inversed ETF Cathay SITE establishes the FUN Happiness Club, which recruits employees to participate in volunteer works 33

36 2016 Cathay Financial Holdings Annual Report Overview of Subsidiaries Cathay Venture Inc. Company Profile The Company's main businesses are investing in unlisted companies with growth potential, and assisting in the development of those companies for the purpose of maximizing return on investment. Business Scope Venture capital business. Board of Directors and Supervisors Position Name Education & Experience Chairman Jen-Ho Chang M.Sc., Warwick University, UK, Chairman, Symphox Information, Chairman, Ally Logistic Property Director Director Shan-Chi Liu Joseph Wang M.A., National Taiwan University, Chief of Project Planning Div., Cathay FHC, Senior Executive Vice President, Cathay Life Insurance M.B.A., Massachusetts Institute of Technology, USA, Senior Executive Vice President, Cathay Life Insurance Director Yi-Fang Tsai M.B.A., University of Illinois, Senior Vice President, Cathay Life Insurance Director Shih-Chiao Lin M.A., National Taiwan University, Senior Vice President, Cathay Life Insurance Supervisor Shun-Yu Chuang M.B.A., Massachusetts Institute of Technology, USA, President, Cathay Securities Corporation Chief Executive Officer and Key Managers Position Name Education Chairman Jen-Ho Chang M.Sc., Warwick University, UK President Chuan-Yen Hu M.B.A., University of Wisconsin, USA As of April 10,

37 Cathay Financial Holdings 2016 Revenue Breakdown Thousand USD Item Amount % of Total Income from sale of financial assets 5, % Income from sale of financial assets 70.95% Investment income 26.19% Interest and other income 2.86% Cathay life Insurance Investment income 1, % Interest and other income % Total 7, % (NTD/USD: 32.4/1) Investment themes in Invest in Fintech startups. 2. Expand biotech and healthcare investments. 3. Continue to develop excellent projects. Cathay United Bank Cathay century Cathay Securities Cathay Securities Insurance Corporation Investment Trust Cathay Venture 35

38 Overseas Branches and Offices Cathay Life Insurance Cathay Lujiazui Life Insurance Co., Ltd. (Shanghai Headquarters) Address: 19F, Building B, Oriental Financial Square, 1168 Century Boulevard, Pudong New Area, Shanghai, PRC ZIP: Tel: (main line) Fax: Website: Cathay Lujiazui Life Insurance Co., Ltd., Jiangsu Branch Address: 5F, Yinlun International, 177 Guang Zhou Rd., Gulou Dist., Nanjing City, Jiangsu Province, PRC ZIP: Tel: (main line) Fax: Cathay Lujiazui Life Insurance Co., Ltd., Zhejiang Branch Address: 10F, Sanxin Yinzuo, No. 72, Chiu Tao No. Road, Jiang Gang District, Hangzhou, Zhejiang, PRC ZIP: Tel: (main line) Fax: Cathay Lujiazui Life Insurance Co., Ltd., Fujian Branch Address: Room 01, Floor 10, Dong Ta Building of Lijia Square, No. 8 of Yangqiao East Road, Guxi Street, Gulou District, Fuzhou City ZIP: Tel: (main line) Fax: Cathay Lujiazui Life Insurance Co., Ltd., Beijing Branch Address: 4F, Jiahe Guoxing Building, No. 15, Baiqiao Boulevard, Dongcheng District, Beijing, PRC ZIP: Tel: (main line) Fax: Cathay Lujiazui Life Insurance Co., Ltd. Shandong Branch Address: 6F SK Modern City, No. 29, Luoyuan Street, Lower District, Chinan, Shandong Province, PRC ZIP: Tel: (main line) Fax: Cathay Lujiazui Life Insurance Co., Ltd. Guangdong Branch Address: 5F No. 233, Dongfeng Xi Road, Yuexiu District, Guangzhou City, Guangdong Province, PRC (Qianshu Panfu Building) ZIP: Tel: (main line) Fax: Cathay Lujiazui Life Insurance Co., Ltd. Liaoning Branch Address: 22-1 and 22-2, Block D, Fortune Center, No.57, North Station Road, Shenhe District, Shenyang, Liaoning Province, PRC ZIP: Tel: (main line) Fax: Cathay Lujiazui Life Insurance Co., Ltd. Tianjin Branch Address: 11F, Building B1, Jun Lung Square at No. 85, Nanjing Road, Hoping District, Tianjin, PRC ZIP: Tel: Fax: Cathay Lujiazui Life Insurance Co., Ltd. Xiamen Branch Address: 16F, Building A, Sinotrans Operation Center, No. 1032, Xia He Road, Si Ming District, Xiamen, Fujian, PRC ZIP: Tel: Fax: Cathay Lujiazui Life Insurance Co., Ltd. Sichuan Branch Address: Room , Bai Yang Building, No.18 Dong Yu Jie, LuoMaShi, Jinjiang Qu, Chengdu Shi, Sichuan Sheng, China ZIP: Tel: Beijing Representative Office Address: Unit 02, 6F, Building B, Parkview Green Building, No. 9, Dongdaqiao Road, Chaoyang District, Beijing, PRC ZIP: Tel: Fax: Hong Kong Representative Office Address: 20F, LHT Tower, 31 Queen s Road Central, Central, Hong Kong Tel: ext123 Fax: Tokyo Office Address: Kosumo Shinjyukugyoen Bldg. 7F, 1-1-7, Shinjuku, Shinjuku-ku, Tokyo, , Japan Tel: Fax: Cathay Life Insurance (Vietnam) Co., Ltd. (Ho Chi Minh City Head Office) Address: The World Center Building 9th floor, Pham Hong Thai Street, District 1, Ho Chi Minh City, Vietnam Tel: Fax: Website: Cathay Life Insurance (Vietnam) Co., Ltd. Hanoi Branch Address: 167 Bui Thi Xuan, Hai Ba Trung Dist., Ha Noi City Tel: Fax: Cathay Life Insurance (Vietnam) Co., Ltd. Da Nang Branch Address: 6th floor, Sacombank Building, Bach Dang Street, Hai Chau District, Da Nang City Tel: Fax: Cathay Life Insurance (Vietnam) Co., Ltd. Can Tho Branch Address: 6th floor, STS Building, 11B Hoa Binh Blv, Ninh Kieu District, Can Tho City Tel: Fax: Cathay Life Insurance (Vietnam) Co., Ltd. Dong Nai branch Address: 42C Nguyen Ai Quoc, Tan Tien Ward, Bien Hoa, Dong Nai City Tel: Fax: Cathay Life Insurance (Vietnam) Co., Ltd. Hai Phong branch Address: 4th floor Sacombank Building, Ton Duc Thang Street, Le Chan District, Hai Phong City Tel: Fax:

39 Cathay United Bank Cathay Century Insurance Labuan Branch Address: Level 3(C), Main Office Tower, Financial Park Labuan Complex, Jalan Merdeka, 87000, Labuan F. T., Malaysia Tel: Fax: Hong Kong Branch Address: 20F, LHT Tower, 31 Queen s Road Central, Central, Hong Kong Tel: Fax: Singapore Branch Address: 8 Marina Boulevard #13-03 Marina Bay Financial Centre Tower 1 Singapore Tel: Fax: Chu Lai Branch Address: No. 123, Tran Quy Cap, Tam Ky City, Quang Nam Province, Vietnam Tel: ~42 Fax: ~44 Shanghai Branch Address: Room & 2508, Azia Center, No. 1233, Lujiazui Ring Road, Pudong New Area, Shanghai, China Tel: Fax: Shanghai Minhang Sub-Branch Address: Suite 101, 1F, Nikos Building, No.528 Hongxu Rd., Minhang Dist., Shanghai, China Tel: Fax: Shanghai Pilot Free Trade Zone Sub- Branch Address: Suite 713, No. 26, Jiafeng Rd., Pudong New Dist., Shanghai, China Tel: Fax: Shanghai Jiading Sub-Branch Address: No Hexuan Rd., Wanda Plaza Jiangqiao Town, Jiading Dist., Shanghai, China Tel: Fax: Qingdao Branch Address: Suite , 23F, No. 26, Hong Kong Middle Road, Shinan Dist., Qingdao, Shandong, China Tel: Fax: Shenzhen Branch Address: Room2501,Tower A, East Pacific International Center, 7888, Shennan Boulevard, Futian District, Shenzhen, China Tel: Fax: Vientiane Capital Branch Address: No. 40, Tut Mai Rd., Hatsady Village, Chanthabouly District, Vientiane Capital, Lao PDR Tel: Fax: Manila Branch Address: Unit 1, 15/F Tower 6789, No.6789 Ayala Avenue, Makati City, Metro Manila, Philippines, Tel: Fax: Kuala Lumpur Marketing Office Address: Lot 13A, 13th Floor, UBN Tower, 10, Jalan P. Ramlee, 50250, Kuala Lumpur, Malaysia Tel: Fax: Bangkok Representative Office Address: 13 Fl. Sathorn City Tower 175, South Sathorn Rd. Tungmahamek, Sathorn Bangkok 10120, Thailand Tel: ~7 Fax: Hanoi Representative Office Address: 7F, 88 Hai Ba Trung Street, Hoan Kiem District, Hanoi, Vietnam Tel: Fax: HCMC Representative Office Address: 5F, Pham Hong Thai Street, District 1, HCMC, Vietnam Tel: ~63 Fax: Yangon Representative Office Address: #503, Strand Square, Level 5, No. 53, Strand Road, Pabedan Township, Yangon, Republic of the Union of Myanmar Tel: Fax: Jakarta Representative Office Address: Mayapada Tower Jl. Jend. Sudirman Kav.28 Jakarta Tel: Fax: Cathay United Bank (Cambodia) Corporation Limited Address: No. 68 Samdech Pan Street (St. 214) Khan Daun Penh, Phnom Penh, Kingdom of Cambodia Tel: Fax: Cathay Insurance Co., Ltd. (Ho Chi Minh City Headquarters, Vietnam) Address: 6F, Pham Hong Thai Str., District 1, Ho Chi Minh City, Vietnam Tel: Fax: Cathay Insurance Co., Ltd. (Vietnam) Hanoi Branch Address: 6F, 167 Bui Thi Xuan Str., Hai Ba Trung Dist., Ha Noi City, Vietnam Tel: Fax:

40 The Year in Review 2016 January Cathay Century Insurance held its 2016 January sales executive meeting. Cathay Life Insurance held its 2016 Sales Summit. March Cathay Securities launches the first and only Institutional Investors App. Cathay United Bank was approved to conduct personal insurance agency business and add property insurance agency business. Cathay United Bank cooperated with ipass Corporation to introduce new functions to the KOKO banking platform. For example, cardholders can register their cards, link their cards to their account or student ID number, and use the app to inquire into transaction history. In response to the growth of global green finance, Cathay United Bank was the first bank in Taiwan to adopt the Equator Principles, build related systems that comply with the Equator Principles, and complete Taiwan's first-ever Equator Principles compliant financing transaction. Cathay FHC cooperated with the Graduate institute of Technology & Innovation Management (TIM) of the National Chengchi University to promote Fintech. April Cathay United Bank, Bank Mayapada and the Jakarta Taiwan Entrepreneur Association jointly hosted the 2016 "Focus on Indonesia and Embrace ASEA" investment forum in Jakarta of Indonesia. Cathay SITE held a press conference to launch the Cathay FTSE Japan ETF Fund. Cathay Securities held the 2016 Corporate Fund and Upgrade Response Strategy Forum in Shanghai. Cathay Securities hosted the Electric Hybrid Forum in Kuala Lumpur, Singapore, and Hong Kong. May Cathay Life Insurance held the 2016 Sydney Australia Sales Summit. Cathay Century Insurance hosted the "Cathay Century Insurance Loss Prevention Forum" to discuss issues on "Prevention of Earthquake Disasters." The "2016 Cathay Customers Children's Scholarship Program" lot drawing ceremony was held. Cathay United Bank Foundation held the scholarship donation ceremony for the "Elevated Tree Program", donating NT$5 million in scholarships. Cathay Securities hosted the Overseas Investment Forum in Bangkok. June Cathay SITE held a press conference to launch the Cathay TAIEX Daily ETF Leveraged and Inverse ETF. Cathay Century Insurance was the first property insurance company to sell a three-year personal accident and health insurance product. Cathay Financial Holdings held its 105th General Shareholders' Meeting. Cathay Securities held the Taiwan Capital Market Exchange Banquet in Jakarta, Indonesia. Cathay Securities established the Cloud Subscription Center to provide a cross-platform cloud-based stock self-selection function. Cathay Securities launched the first and only Stock Lottery App. Cathay FHC hosted the 2016 Cathay s Dream Camp Jeremy Lin Basketball Training Camp. July Lord Jeffrey Mountevans, Lord Mayor of London, visited Cathay United Bank s KOKO Store. Cathay SITE celebrated the launch of the Taiwan ETF Umbrella Fund. Cathay SITE held a press conference to launch the Global High Dividend Fund. Cathay Life and Yokohama Hakkeijima Sea Paradise held a contract signing press conference for the development of a multinational aquarium The "2016 Cathay Customers Children's Scholarship Program" lot drawing ceremony. Cathay United Bank held a blood donation event 38

41 Cathay Life fostered Certified Financial Planner (CFP), winning the Best Financial Plan Proposal The 2016 Cathay Happiness Program provides scholarship for innovative, outstanding scholars in various fields Cathay FHC and NTU College of Law held an international conference on Transparency and Insurance Regulation: Global Perspectives 2016 Cathay Employees Fun Contest Final was held. Cathay United Bank hosted the handover ceremony of the incoming and outgoing president, during which Chairman Tsu-Pei Chen acted as the supervisor, supervising the handover from Chang-Ken Lee to Wei-Cheng Lee Cathay NBA Youth Madness 3-on-3 national basketball final was held. August Press conference for Formosa co-branded credit card. Cathay Century Insurance was the first property insurance company to have completed an application for selling insurance policies denominated in foreign currencies. September Opening ceremony of Cathay Life's service counter at Songshan Airport Terminal 1. Cathay SITE held a press conference to launch the Cathay Dow Jones 2X and Inverse ETF. Cathay United Bank announced the signing of the PX 4.0 memorandum of understanding with PX Mart, Chunghwa Telecom, BenQ, and Fu Jen Catholic University. Press conference for Eva Air co-branded credit card was held. October Cathay Financial Holdings announced its cooperation with National Taiwan University to collectively foster FinTech talent and invest in related research. Cathay Financial Holdings was also the first financial institution to sign a memorandum of understanding with the College of Electrical Engineering and Computer Science, National Taiwan University. Cathay Lujiazui Life Insurance Co., Ltd. officially opened its 10th provincial branch in Sichuan. November Cathay Life's 2016 Employee Singing and Cheerleading Contest Finals Cathay United Bank Shenzhen Branch commenced operation. Cathay Securities hosted the Taiwan CEO Day in Singapore and Hong Kong. Cathay Century Insurance sold its first agricultural insurance - Mango Crop Insurance. Cathay Charity Foundation held the 2016 International Conference on Multinational Cultural Experience Teaching Practice. Cathay Life Insurance and Yokohama Hakkeijima Sea Paradise cooperated to build an ocean kingdom near the Toayuan HSR Station. Cathay Life Insurance is the first life insurance company in Taiwan to cooperate with the entertainment industry to develop an educational aquarium. Cathay Financial Holdings Chairman Hong-Tu Tsai hosted the Indonesia Taiwan Corporate Conference which was attended by Indonesian industry experts, governmental officers, and scholars and meant to promote cooperation and exchange. Cathay Securities held the "2017 Global Trends Visionary Forum." December Cathay United Bank completed the arrangement of a syndicated loan for the Bank for Investment and Development of Vietnam (BIDV). Cathay Charity Foundation held the award ceremony for its First Cathay Happiness Program. Cathay Securities became the first domestic security broker to provide Shenzhen-Hong Kong Stock Connect service. Cathay Securities held the "2016 Employees of the Year" award ceremony. Cathay Financial Holdings hosted the Wei-Yin Chen Baseball Camp. Credit Ratings Company Moody s S & P Taiwan Cathay Financial Holdings Baa2 BBB+ TwAA Cathay Life Insurance Baa1 A- TwAA+ Cathay United Bank A2 A- TwAA+ Cathay Century Insurance A3 A- TwAA+ Cathay Securities TwAA- Cathay United Bank introduced the Cathay Eva Air co-branded credit card Credit rating information was up to date as of December 31,

42 2016 Honors and Accolades Cathay Life received the Best Institution in Taiwan by AsianInvestor February Cathay Financial Holdings won first place in the 2015 Financial Holding Company Overall Business Performance Evaluation, which was held by Taiwan Financial Management Association and Business Today Weekly. March Cathay United Bank was rated as the Best Trade Finance Bank Taiwan 2016 by Global Banking & Finance. Cathay Century Insurance received the Accident and Liability Insurance - Insurance Group Bronze Award and the Best Creativity Award in the Action Micro-Insurance Competition from the Insurance Development Fund Management Committee. Cathay United Bank received the Best Wealth Management Bank and the Best Popularity Award in 2016 from Wealth Magazine. The Risk Management, Insurance and Finance Foundation announced the result of the 2016 Nationwide Financial Insurance Graduate Career Intention Survey and held the "Insurance Dragon and Phoenix Awards" during which Cathay Financial Holdings and its subsidiaries received outstanding award recognition in the "financial holding company" category, "life insurance company sales channel" category, "life insurance company administration" category and "non-life insurance company" category. Cathay SITE received the Taiwan Fund Company Award - Greater China Stock Outstanding Performance Award from Benchmark and was rated as the Best Institutional House by AAM. The Cathay Mandarin Fund won the Thomson Reuters Lipper Taiwan Fund Award, and the 19th TTF-Bloomberg Best Fund Award. The Cathay Global Infrastructure Fund received the Smart Taiwan Fund Award. The Cathay NZD Principal Protected Fund received the Best Performing Fund Award in the Principal Protected Fund category from Benchmark. April Cathay Century Insurance received the 2016 Celent Model Insurer Asia Award - Digital and Omnichannel Technologies, organized by Celent, a global research and advisory firm focused on financial services. Cathay Securities received the 17th Golden Peak Award - Top Outstanding Enterprises of the Year and Top Ten Outstanding Products. Cathay Women s Basketball Team won the WSBL championship for the 23rd consecutive time. Cathay Securities was the only security broker in Taiwan to win the Best Organizational Innovation - Silver Award at the 2016 Future Commerce Award hosted by Digital Times. May For the seventh consecutive year, Cathay Life Insurance was rated by young generations as the "Most Favorable Brand" and the "Most Wanted Brand" in the insurance categories. Cathay Financial Holdings continued to rank No. 1 among financial institutions in Taiwan in the "Top 1,000 Companies in Greater China" survey conducted by Business Today Weekly in CommonWealth Magazine's 2016 Top 2,000 Survey Cathay FHC generated the highest net revenue in the Financial Holdings Industry. Of the Top 100 in the financial sector, Cathay Life Insurance ranked No. 1. Of the financial sector by industry, Cathay Life Insurance was again ranked No. 1 in the life insurance category. Cathay United Bank received recognition from the Taipei City Government Bureau of Labor, becoming the one and only financial institution to receive the "2016 Taipei City Labor Safety Award - Excellent Healthy Workplace Management Unit." June Cathay United Bank won the 2016 Top Solar System Award-Top Solar Financier from the Ministry of Economic Affairs, Bureau of Energy. Cathay United Bank was rated as the Best Bank in Taiwan at the 2016 Country Award by Euromoney. Cathay United Bank was recognized by Global Finance as the Best Foreign Exchange Provider, Taiwan In the Reader's Digest Reputable Brand survey, Cathay Life Insurance received a Gold Award in the Life Insurance Category, and Cathay United Bank once again received three Gold Awards in the Bank category, Credit Card category, and Wealth Management category. Cathay United Bank was recognized as the Taiwan Domestic Cash Management Bank of the Year and Taiwan Domestic Trade Finance Bank of the Year by Asian Banking & Finance. Cathay Securities won first place in the "Taiwan Stock Rise Award" at the 2016 Security Brokerage ETF Trading Competition held by the Taiwan Stock Exchange. July Cathay United Bank obtained the Gold Medal for the Best Service in Taiwan from the Commercial Times. Institutional Investor Magazine hosted the 2016 All-Asia Executive Team, naming Cathay Financial Holdings as one of the Most Honored Company, the only financial institution in Taiwan to receive the award. Cathay Financial Holdings won Best CEO, Best IR Professional, Best Investor Relations Program, and Best Analyst Day. Cathay United Bank received the Best Wealth Management Bank, Most Recommended by Customers Award, and Best Digital Innovation Award by Business Today for August Cathay United Bank received the Euromoney - Real Estate Award. Cathay United Bank rated as the Best Trade Finance Bank Taiwan 2016 by Global Business Outlook. Cathay United Bank was recognized as the Best Corporate Bank, Taiwan 2016 by International Finance Magazine. Cathay United Bank was rated as the Best Private Bank, Taiwan by The Asset. Cathay Financial Holdings received the Green Purchasing Unit Award for the sixth consecutive year as the No. 1 company in the financial industry with a green purchasing amount of up to NT$204 million in Cathay Financial Holdings received the Corporate Citizenship Award from Commonwealth Magazine for the fourth consecutive year. September Cathay United Bank was awarded the Asian Banker Deposit Product of the Year. In addition, KOKO won the Best Network Integration Initiative in the Asian Banker Retail Financial Service Excellence Award program. Cathay United Bank received the Financial Holding Company - Best Brand Image Award for the second consecutive year in the Excellence and Best Rating Survey hosted by the Excellence magazine. For eight years in a row, Cathay Life Insurance received three honors at "The Sports Contribution Award", including gold medals in the sponsorship and promotional efforts categories as well as the long term sponsorship award. 40

43 Cathay won the Insurance Quality Award Cathay United Bank was rated as the Best Cash Management Bank by Asiamoney. Cathay United Bank was named the 2016 Best Cash Manager in Taiwan by Euromoney. Cathay United Bank was rated as the Best Structured Products House, Taiwan by The Asset. Cathay United Bank was rated as the Best Distributor, Taiwan by SRP, a professional financial information company in the United Kingdom. October In the Second Futures Diamond Award hosted by Taiwan Stock Exchange, Cathay Life Insurance took first place in the Insurance Transaction Diamond Award and Insurance Transaction Growth Diamond Award. Included as a recipient for the first time, Cathay Securities took first place in the Securities Transaction Growth Diamond Award. In the Sports Enterprise Certification held for the first time by the Sports Administration of the Ministry of Education, Cathay Financial Holdings and its subsidiaries, Cathay Life Insurance, Cathay United Bank, and Cathay Century Insurance received the Sports Enterprise Certification and is the first financial institution to receive such certification. Cathay Century Insurance received the 13th Annual National Brand Yushan Award for "Outstanding Enterprise Category" and "Best Product Category" from the Republic of China National Enterprise Competitiveness Development Association. Cathay United Bank was rated by VISA as having achieved global excellence in service quality according to the Authorization Approval Rate and E-commerce Efficiency. In the winner list of 2016 Seventh Financial Information Award published by Wealth Magazine Biweekly, Cathay Financial Holdings again won seven awards : Cathay Financial Holdings again won the Award of Excellence in Financial Holdings Corporate Social Responsibility. Cathay Life Insurance received the Best Life Insurance Brand Image- Gold Award and the Best Life Insurance Services - Gold Award; and the Best Life Insurance Services - Premium Award. Cathay United Bank received the Best Domestic Bank Image - Premium Award and the Best Bank Product - Premium Award. Cathay Securities received the Best Digital Security Broker - Premium Award. CommonWealth Magazine announced the result of the "Most Admired Company in Taiwan" survey, with Cathay Life Insurance achieving first place in the insurance category for the ninth time and for the third consecutive year in a row, while Cathay Securities received 5th place in the securities category. November In Next Media Magazine's 13th Top Service Award, Cathay Life Insurance, Cathay United Bank, and Cathay General Hospital were named No. 1 in their respective categories, attaining once again leading performance in the service industry. Cathay United Bank took first place under the Financial Bank Category at the 2016 Global Views Five-Star Service Awards. The Bank of Lao Syndication Loan lead and managed by Cathay United Bank was rated as the 2016 Best Syndicated Loan (Laos) by The Asset. Cathay United Bank received the 9th Taiwan Corporate Sustainability Award - Social Inclusion Award for the Best Corporate Single Item Performance by Taiwan Institute for Sustainable Energy. Cathay United Bank was conferred with Best System Operation Award, "Award of Excellence in Innovation," and "Best Business Development Award" in the 2016 Annual Meeting of Financial Information Systems of FISC. Cathay Financial Holdings won the Most Prestigious Sustainability Awards- Top Ten Domestic Corporate for the third consecutive year, as well as Creative Communication Award, Social Inclusion Award, Talent Development Award, and Taiwan Top 50 Corporate Sustainability Report Award - Gold Award. President Chang-Ken Lee was also honored with the Outstanding Character in Corporate Sustainability Award. The Outstanding Enterprise Manager Association ROC announced the winners of the Golden Torch Award: Cathay Century Insurance - Annual Top 10 Outstanding Enterprise and Annual Top 10 Best-Performing Products. Cathay Securities - Annual Top 10 Outstanding Enterprise The Risk Management, Insurance and Finance Magazine announced results of the 2016 Insurance Quality Awards: Cathay Life Insurance won four excellence awards in the categories of "Best Recognized", "Best Salesperson", "Best Claim Service", and "Best Recommended." Cathay Century Insurance won the excellence award in the categories of Best Image and three awards in the categories of Best Recommended, Best After-Sales Service, and Best Salesperson. Cathay Life Insurance was the only institution in Taiwan to receive the Best Institution in Taiwan in the Third Institutional Excellence Awards held by AsianInvestor. Cathay Securities' Stock Lottery App was patented by the Ministry of Economic Affairs Intellectual Property Office and received the Digital Content Product Award - Internet Service Category by the Industrial Bureau of the Ministry of Economic Affairs. December Cathay Life Insurance won first place for the 18th consecutive year in the Consumer Brand Survey conducted by Management Magazine. Cathay United Bank was ranked No. 1 in the 9th Best Brand Awards of Business Today Weekly based on its professional, innovative services and excellent brand reputation. Cathay Financial Holdings and Ant Financial Services Group collaborated to provide IoT-based property insurance services, which achieved the MAPECT Taiwan M&A Award. Cathay United Bank won 2016 TABF awards - The 8th Taiwan Banking And Finance Best Practice Awards, include "Best Corporate Banking" Award, "Best Trust Finance Award", and "Best Risk Management Award". Cathay United Bank was conferred with the Best Card Issuance of the Year 2016 and the Greatest Contribution of the Year 2016 by Mastercard organization. Cathay United Bank received first place in the Outstanding Team Performance Award under the Large Workplace Group in the Taipei City Health Body Weight Management competition hosted by the Taipei City Government. Cathay Securities received the Financial Holding Company - Best Brand Image Award in the 2016 Excellence and Best Rating Survey hosted by Excellence magazine. Cathay Securities was the first in the financial industry to receive the 2016 National Talent Development Award held by the Workforce Development Agency of the Ministry of Labor. Cathay Securities received first place by the Taipei Exchange in 2016 to have helped the highest number of companies to list in the market. Cathay Securities was ranked top three in ten of the rated items in the securities selection competition held by Asiamoney: No. 1 in the Best Salesperson and the Best Sales Trader; No. 2 in the Best Improved Brokerage Over the Last 12 Months and the Best Analyst Days, and Best for Roadshows; and No. 3 in the Best Business Service, Best Trading Service, and Best Independent Research Brokerage Team. Cathay Securities received the 2016 Warrant Issuer and Consigned Trading Securities Dealer-Excellent Warrant Issuer Award 41

44 2016 Financial Report Index Independent Auditors Audit Report...43 Consolidated Balance Sheets...46 Consolidated Statements of Comprehensive Income...47 Consolidated Statements of Changes in Equity...48 Consolidated Statements of Cash Flows...49 Notes to Consolidated Financial Statements

45 Independent Auditors Report English Translation of a Report Originally Issued in Chinese To Cathay Financial Holding Co., Ltd. Opinion We have audited the accompanying consolidated balance sheets of Cathay Financial Holding Co., Ltd. (the Company ) and its subsidiaries as of 31 December 2016 and 2015, and the related consolidated statements of comprehensive income, changes in equity and cash flows for the years ended 31 December 2016 and 2015, and notes to the consolidated financial statements, including the summary of significant accounting policies (together the consolidated financial statements ). In our opinion, based on our audits, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company and its subsidiaries as of 31 December 2016 and 2015, and their consolidated financial performance and cash flows for the years ended 31 December 2016 and 2015, in conformity with the requirements of the Regulations Governing the Preparation of Financial Reports by Financial Holding Companies, Regulation Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards, International Accounting Standards, Interpretations developed by the International Financial Reporting Interpretations Committee as endorsed by 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 Statement by Certified Public Accountants and auditing standards generally accepted in 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 Cathay Financial Holding Co., Ltd. and its subsidiaries in accordance with the Norm of Professional Ethics for Certified Public Accountant of the Republic of China (the Norm ), and we have fulfilled our other ethical responsibilities in accordance with the Norm. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of 2016 consolidated financial statements. 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. Valuation of financial instruments - financial instrument investments for which no active market exists Where the fair value of financial instrument investments for which no active market exists cannot be derived from an active market or a quoted price, it is determined using a valuation technique. The Company and its subsidiaries partially use internal model valuation for fair value, and the assumptions used in the valuation will impact the fair value of the reported financial instruments. Thus we conclude that the valuation of financial instruments- debt instrument investments for which no active market exists is a key audit matter of our audit. Our audit procedures include but not limited to assessing and testing the effectiveness of internal controls related to financial instruments valuation, including how management decides and approves the valuation model and its assumptions, the controls related to the valuation model and change of assumptions, and how management reviews the valuation. We use internal valuation experts on a sampling basis to assist in reviewing the valuation techniques adopted by the Company and its subsidiaries, understanding and assessing the rationality of key valuation assumptions, performing independent valuation calculation, and determining whether the valuation differences are acceptable. Meanwhile, we review the disclosures of financial instruments valuations, including the fair value hierarchy of assets, to determine whether they complied with the related regulatory and accounting standards requirements. Please refer to Notes 4, 5. (2) and 38. (2) for information about the Company and its subsidiaries financial instruments valuation. Measurement of insurance liabilities The measurement of the Company and its subsidiaries insurance liabilities is dependent on the calculations based on assumptions of current period or the assumptions established in the contracts to reflect the best estimates at that time. Nevertheless, these assumptions were set based on the relevant regulations and the professional judgements of internal specialists. With the high complexity, changes in assumptions adopted by the Company may affect the results when measuring the insurance liabilities. Therefore, we considered this a key audit matter. Our audit procedures included, but not limited to, evaluating and testing the effectiveness of internal controls around insurance liabilities, including management s decision and approval of the methods and assumptions used in setting aside various reserves and controls for changing the methods and assumptions; examining the data of calculating insurance liabilities; assessing the reasonableness of the Company and its subsidiaries actuarial judgements and actuarial assumptions used in the model with the assistance of our internal specialist performing audit procedures for insurance liabilities. We also considered whether the Company s disclosures in the financial statements in relation to insurance liabilities are compliant with the relevant regulations and principles. Please refer to Notes 4, 5. (2) and 22 for details of the Company and its subsidiaries insurance liabilities. 43

46 2016 Financial Report Investment properties measured at fair value The Company and its subsidiaries investment properties are measured at fair value. Due to inaccessible market prices, the Company and its subsidiaries evaluate the fair value of investment properties based on external real estate appraisers firm s valuation reports, which highly relied on the valuation approach chosen (including but not limited to income approach and market approach) and the assumptions. The approach chosen and the changes to the assumptions will impact the result of the investment properties valuation. Therefore, we determined investment properties measured at fair value as a key audit matter. We conducted audit procedures for investment properties valuation, including but not limited to the following: evaluating the independence and qualification of external real estate appraisers, and enlisting the internal valuation specialist s assistance to evaluate the external real estate appraisers firm s valuation reports to understand the valuation approach adopted and ensure the reasonableness in the valuation approach adopted and key valuation assumptions so that we could verify whether the difference between the internal valuation specialist s work and external valuation reports is acceptable. Please refer to Notes 4, 5. (2) and 14 for information about the Company and its subsidiaries investment properties measured at fair value. The Provision of Allowance for Loans In accordance with IAS 39 Financial Instruments: Recognition and Measurement and Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non-performing/Non-accrual Loans of the ROC, the Company and its subsidiaries developed their own systems to perform both individual and collective assessments of impairment loss on loans and receivables. The systems assess the amount of an impairment loss based on parameters from historical experience or future cash flows on a case-by-case basis. The estimates of discount factors, including effective interest rate, incidence of impairment and recoverable rates, and the classification to assess whether there is any objective evidence that a loan is impaired, require professional judgment and uses of estimates and assumptions. Moreover, net of discounts and loans as of 31 December 2016 have a significant impact on the Company s financial statements. Consequently, we regard this as key audit matters. We assessed and tested the effectiveness of internal control relating to calculations of impairment, including the underlying data and systems with respect to impairment calculation. For loan loss provisions calculated on an individual basis, we tested the assumptions which were used to identify and quantify the impairments, including estimates of future cash flows, valuation of guarantee and estimates of recovery on default. For loan loss provisions calculated on a collective basis, we reviewed whether the models of impairment were approved by management and relied on our specialists to verify the effectiveness of those models. We also tested the appropriateness and accuracy of the inputs used in those models, such as recovery rates and historical loss rates. We reviewed whether management of the Company and its subsidiaries complied with the Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non-performing/Non-accrual Loans of the ROC, including assessing appropriateness of the classification of loans and testing accuracy of impairment calculations. Please refer to Notes 4, 5. (2) and 10 for information about the Company and its subsidiaries the provision of allowance for loans. Assessment of goodwill impairment IAS 36 requires entities to perform an impairment test annually. However the calculation made by management of the Company and its subsidiaries is complex and involves major subjective judgments and assumptions. Thus we conclude that assessment of goodwill impairment is a key audit matter of our audit. Our audit procedures included but not limited to assessing the rationality of the Company and its subsidiaries financial forecasts and using internal experts to assist in assessing the rationality of the assumptions made by the Company and its subsidiaries management. Please refer to Notes 4, 5. (2) and 16 for information about the Company and its subsidiaries goodwill impairment assessment. Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the requirements of the Regulations Governing the Preparation of Financial Reports by Financial Holding Companies, Regulation Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards, International Accounting Standards, Interpretations developed by the International Financial Reporting Interpretations Committee as endorsed by 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 ability to continue as a going concern of the Company and its subsidiaries, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company and its subsidiaries or to cease operations, or has no realistic alternative but to do so. Those charged with governance, including audit committee or supervisors, are responsible for overseeing the financial reporting process of the Company and its subsidiaries. 44

47 Auditor s Responsibilities for the Audit of the Consolidated Financial Statements 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 auditor s 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 auditing standards generally accepted in 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 consolidated financial statements. As part of an audit in accordance with auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: 1. Identify and assess the risks of material misstatement of the consolidated 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 internal control of the Company and its subsidiaries. 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 ability to continue as a going concern of the Company and its subsidiaries. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor s 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 auditor s report. However, future events or conditions may cause the Company 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 accompanying notes, 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 Company and its subsidiaries to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group 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 2016 consolidated financial statements and are therefore the key audit matters. We describe these matters in our auditor s 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. Ernst & Young Taipei, Taiwan The Republic of China 8 March 2017 Notice to Readers The accompanying consolidated financial statements are intended only to present the consolidated financial position, results of operations and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdiction. The standards, procedures and practices to audit such consolidated financial statements are those generally accepted and applied in the Republic of China. 45

48 2016 Financial Report Cathay Financial Holding Co., Ltd. and Subsidiaries Consolidated Balance Sheets As of 31 December 2016 and 31 December Expressed in thousands of Dollars NT $ US $ NT $ US $ Assets Cash and cash equivalents $196,549,185 $6,066,333 $191,780,120 $5,848,738 Due from the Central Bank and call loans to banks 71,940,935 2,220, ,169,436 3,054,878 Financial assets at fair value through profit or loss 244,529,264 7,547, ,117,926 9,030,739 Available-for-sale financial assets - net 1,591,359,657 49,116,039 1,486,393,125 45,330,684 Derivative financial assets for hedging 232,269 7, ,326 13,642 Securities purchased under agreements to resell 49,524,682 1,528,540 55,880,471 1,704,192 Receivables - net 154,212,060 4,759, ,649,869 4,319,910 Current income tax assets 4,215, ,103 4,339, ,329 Loans - net 2,045,532,795 63,133,728 1,766,476,353 53,872,411 Reinsurance assets - net 8,767, ,612 7,000, ,504 Held-to-maturity financial assets - net 81,826,739 2,525,517 81,708,446 2,491,871 Investments accounted for using the equity method - net 35,209,790 1,086,722 25,500, ,691 Other financial assets - net 3,036,381,213 93,715,470 2,790,400,892 85,099,143 Investment properties - net 311,014,127 9,599, ,149,809 11,623,965 Property and equipment - net 164,114,231 5,065,254 97,488,736 2,973,124 Intangible assets - net 58,597,243 1,808,557 56,943,768 1,736,620 Deferred tax assets - net 14,729, ,629 14,425, ,942 Other assets - net 66,400,120 2,049,386 71,102,715 2,168,427 Total assets $8,135,137,467 $251,084,490 $7,568,975,033 $230,831,810 Liabilities & equity Liabilities Due to the Central Bank and call loans from banks $77,493,795 $2,391,784 $41,226,909 $1,257,301 Financial liabilities at fair value through profit or loss 115,014,826 3,549, ,471,418 4,192,480 Securities sold under agreements to repurchase 59,139,059 1,825,280 55,523,982 1,693,321 Commercial paper payable - net 41,578,838 1,283,297 35,677,634 1,088,064 Payables 55,295,781 1,706,660 43,402,650 1,323,655 Current income tax liabilities 3,512, ,406 1,641,020 50,047 Deposits 1,999,943,172 61,726,641 1,854,495,831 56,556,750 Bonds payable 51,900,000 1,601,852 71,800,000 2,189,692 Provisions 4,596,525, ,868,058 4,262,002, ,978,729 Other financial liabilities 561,224,829 17,321, ,564,053 16,760,111 Deferred tax liabilities 26,362, ,656 34,775,271 1,060,545 Other liabilities 17,323, ,669 20,331, ,053 Total liabilities 7,605,313, ,731,897 7,107,912, ,770,748 Equity attributable to owners of parent Capital stock Common stock 125,632,102 3,877, ,632,102 3,831,415 Preferred stock 8,333, , Capital surplus 130,448,697 4,026,194 88,781,174 2,707,569 Retained earnings Legal reserve 30,577, ,757 24,820, ,941 Special reserve 149,108,336 4,602, ,185,120 4,275,240 Undistributed earnings 73,001,761 2,253,140 65,190,213 1,988,114 Other equity 6,222, ,067 10,448, ,642 Non-controlling interests 6,499, ,601 6,005, ,141 Total equity 529,824,021 16,352, ,062,202 14,061,062 Total liabilities and equity $8,135,137,467 $251,084,490 $7,568,975,033 $230,831,810 46

49 Expressed in thousands of Dollars, except earnings per share ~ ~ NT $ US $ NT $ US $ Interest income $168,883,110 $5,212,442 $157,079,850 $4,790,481 Less: Interest expenses (15,405,207) (475,469) (17,081,656) (520,941) Net interest income 153,477,903 4,736, ,998,194 4,269,540 Net income other than interest Net commission and handling fee (7,912,706) (244,219) (4,479,828) (136,622) Net premiums from insurance business 314,219,387 9,698, ,753,764 6,915,333 Gains (losses) on financial assets and liabilities at fair value through profit or loss 19,582, ,392 (61,256,966) (1,868,160) Gains from investment properties 12,964, ,135 19,914, ,342 Realized gains on available-for-sale financial assets 48,169,789 1,486,722 55,126,954 1,681,212 Realized gains (losses) gain on held-to-maturity financial assets 57,608 1,778 (46,383) (1,415) (Losses) gains on foreign exchange (42,817,155) (1,321,517) 50,027,860 1,525,705 Impairment losses on assets (175,164) (5,406) (32,160) (981) Share of profit of associates and joint ventures accounted for using the equity method 1,202,103 37,102 1,107,708 33,782 Net other non-interest gains 40,511,744 1,250,362 14,151, ,569 Total income 539,280,184 16,644, ,265,039 13,457,305 Bad debt expenses and provision for premiums reserve (5,231,640) (161,470) (2,467,452) (75,250) Changes in insurance liabilities and provisions (408,613,955) (12,611,542) (306,598,275) (9,350,359) Operating expenses Cathay Financial Holding Co., Ltd. and Subsidiaries Consolidated Statements of Comprehensive Income For the years ended 31 December 2016 and 2015 Employee benefits expenses (46,194,777) (1,425,765) (39,148,233) (1,193,908) Depreciation and amortizations expenses (5,189,148) (160,159) (3,641,309) (111,049) Other general and administration expenses (23,866,159) (736,610) (22,277,568) (679,401) Subtotal (75,250,084) (2,322,534) (65,067,110) (1,984,358) Profit before income tax from continuing operations 50,184,505 1,548,905 67,132,202 2,047,338 Income tax expense (2,145,305) (66,214) (9,249,831) (282,093) Net income 48,039,200 1,482,691 57,882,371 1,765,245 Other comprehensive income Not to be reclassified to profit or loss in subsequent periods : Remeasurements of defined benefit plans 753,518 23,257 (2,824,773) (86,147) Revaluation surplus ,744 2,828 Share of other comprehensive income of associates and joint ventures accounted for using the equity method - not to be reclassified to profit or loss in subsequent periods (9,343) (289) (164,196) (5,007) Changes of designated financial liabilities at fair value through profit or loss resulting from credit risk 44,408 1,371 42,544 1,297 Income tax relating to the components not to be reclassified to profit or loss in subsequent periods (133,885) (4,132) 499,804 15,243 To be reclassified to profit or loss in subsequent periods : Exchange differences resulting from translating the financial statements of a foreign operation (8,920,171) (275,314) 1,488,694 45,401 Unrealized gain (loss) from available-for-sale financial assets 985,063 30,403 (47,035,243) (1,434,439) (Loss) gain on cash flow hedges (216,856) (6,693) 230,973 7,044 Share of other comprehensive income of associates and joint ventures accounted for using the equity method - to be reclassified to profit or loss in subsequent periods (722,914) (22,312) 346,975 10,581 Income tax relating to the components to be reclassified to profit or loss in subsequent periods 3,567, ,117 1,964,114 59,900 Other comprehensive income, net of tax (4,652,382) (143,592) (45,358,364) (1,383,299) Total comprehensive income $43,386,818 $1,339,099 $12,524,007 $381,946 Net income attributable to: Owners of parent $47,618,813 $1,469,716 $57,513,572 $1,753,998 Non-controlling interests 420,387 12, ,799 11,247 Subtotal $48,039,200 $1,482,691 $57,882,371 $1,765,245 Total comprehensive income attributable to: Owners of parent $43,393,475 $1,339,305 $11,939,628 $364,125 Non-controlling interests (6,657) (206) 584,379 17,821 Subtotal $43,386,818 $1,339,099 $12,524,007 $381,946 Earnings per share (expressed in dollars) : Basic earnings per share: Net income $3.79 $0.12 $4.58 $

50 2016 Financial Report Cathay Financial Holding Co., Ltd. and Subsidiaries Consolidated Statements of Changes in Equity For the years ended 31 December 2016 and 2015 Expressed in thousands of Dollars Equity attributable to owners of parent Capital stock Capital surplus Common stock Preferred stock Legal reserve Special reserve Retained earnings Other equity Undistributed earnings Exchange differences resulting from translating the financial statements of a foreign operation Unrealized gains (losses) from available-for-sale financial assets Gains (losses) on cash flow hedges Changes of designated financial liabilities at fair value through profit or loss resulting from credit risk Remeasurements of defined benefit plans Revaluaiton Surplus Others Total Non-controlling interests Total equity Balance on 1 January 2015 $125,632,102 $3,831,415 $- $- $88,782,304 $2,707,603 $19,784,401 $603,367 $82,305,614 $2,510,083 $60,939,777 $1,858,487 $601,786 $18,353 $44,257,646 $1,349,730 $180,453 $5,503 $48,151 $1,468 $918,332 $28,006 $10,030,820 $305,911 $(781) $(24) $433,480,605 $13,219,902 $5,639,845 $171,999 $439,120,450 $13,391,901 Appropriations and distribution for 2014 Legal reserve 5,035, ,574 (5,035,694) (153,574) Special reserve 23,148, ,977 (23,148,991) (705,977) Cash dividends (25,126,420) (766,283) (25,126,420) (766,283) (25,126,420) (766,283) Reversal of special reserve (33,796) (1,031) 33,796 1, Other additional paid-in capital Share of changes in net assets of associates and joint ventures accounted for using the equity method (1,130) (34) (1,130) (34) (1,130) (34) Net income for the year ended 31 December 2015 (Note 1) 57,513,572 1,753,998 57,513,572 1,753, ,799 11,247 57,882,371 1,765,245 Other comprehensive income for the year ended 31 December ,263,580 38,536 (44,674,719) (1,362,450) 191,071 5,827 35,311 1,077 (2,481,087) (75,666) 92,136 2,810 (236) (7) (45,573,944) (1,389,873) 215,580 6,574 (45,358,364) (1,383,299) Comprehensive income for the year ended 31 December ,513,572 1,753,998 1,263,580 38,536 (44,674,719) (1,362,450) 191,071 5,827 35,311 1,077 (2,481,087) (75,666) 92,136 2,810 (236) (7) 11,939, , ,379 17,821 12,524, ,946 Decrease in non-controlling interests - (219,016) (6,679) (219,016) (6,679) Others 34,764,311 1,060,211 14, (14,173) (432) 34,764,311 1,060,211 34,764,311 1,060,211 Balance on 31 December 2015 $125,632,102 $3,831,415 $- $- $88,781,174 $2,707,569 $24,820,095 $756,941 $140,185,120 $4,275,240 $65,190,213 $1,988,114 $1,865,366 $56,889 $(417,073) $(12,720) $371,524 $11,330 $83,462 $2,545 $(1,562,755) $(47,660) $10,108,783 $308,289 $(1,017) $(31) $455,056,994 $13,877,921 $6,005,208 $183,141 $461,062,202 $14,061,062 Balance on 1 January 2016 $125,632,102 $3,877,534 $- $- $88,781,174 $2,740,160 $24,820,095 $766,052 $140,185,120 $4,326,701 $65,190,213 $2,012,044 $1,865,366 $57,573 $(417,073) $(12,873) $371,524 $11,467 $83,462 $2,576 $(1,562,755) $(48,233) $10,108,783 $311,999 $(1,017) $(31) $455,056,994 $14,044,969 $6,005,208 $185,346 $461,062,202 $14,230,315 Appropriations and distribution for 2015 Legal reserve 5,757, ,705 (5,757,629) (177,705) Special reserve 8,923, ,408 (8,923,216) (275,408) Cash dividends (25,126,420) (775,507) (25,126,420) (775,507) (25,126,420) (775,507) Other additional paid-in capital Share of changes in net assets of associates and joint ventures accounted for using the equity method 2, , , Net income for the year ended 31 December 2016 (Note 2) 47,618,813 1,469,716 47,618,813 1,469, ,387 12,975 48,039,200 1,482,691 Other comprehensive income for the year ended 31 December 2016 (9,140,278) (282,107) 4,440, ,044 (179,990) (5,555) 36,859 1, ,822 19, , (4,225,338) (130,411) (427,044) (13,181) (4,652,382) (143,592) Comprehensive income for the year ended 31 December ,618,813 1,469,716 (9,140,278) (282,107) 4,440, ,044 (179,990) (5,555) 36,859 1, ,822 19, , ,393,475 1,339,305 (6,657) (206) 43,386,818 1,339,099 Issue of preferred stock 8,333, ,191 41,665,000 1,285,956 49,998,000 1,543,147 49,998,000 1,543,147 Increase in non-controlling interests 500,898 15, ,898 15,461 Balance on 31 December 2016 $125,632,102 $3,877,534 $8,333,000 $257,191 $130,448,697 $4,026,194 $30,577,724 $943,757 $149,108,336 $4,602,109 $73,001,761 $2,253,140 $(7,274,912) $(224,534) $4,023,159 $124,171 $191,534 $5,912 $120,321 $3,714 $(945,933) $(29,195) $10,108,783 $311,999 $- $- $523,324,572 $16,151,992 $6,499,449 $200,601 $529,824,021 $16,352,593 Note1: For the year ended 2015, the remuneration to directors and supervisors in the amount of $2,100 (US$64) thousand and employees' compensation in the amount of $5,903 (US$180) thousand have been deducted from the Statement of Comprehensive Income. Note2: For the year ended 2016, the remuneration to directors and supervisors in the amount of $1,800 (US$56) thousand and employees' compensation in the amount of $4,920 (US$152) thousand have been deducted from the Statement of Comprehensive Income. 48

51 Cathay Financial Holding Co., Ltd. and Subsidiaries Consolidated Statements of Cash Flows For the years ended 31 December 2016 and 2015 Expressed in thousands of Dollars ~ ~ ~ ~ Cash flows from operating activities Cash generated from operations (203,067,048) (6,267,501) (369,271,962) (11,261,725) Profit before income tax from continuing operations $50,184,505 $1,548,905 $67,132,202 $2,047,338 Interest received 164,523,945 5,077, ,683,427 4,625,905 Adjustments : Dividends received 24,352, ,627 21,713, ,203 Income and other adjustments with no cash flow effects Interest paid (15,141,591) (467,334) (13,698,505) (417,765) Depreciation expenses 2,295,745 70,856 2,184,189 66,611 Income taxes (paid) received (2,735,091) (84,416) 597,697 18,229 Amortizations expenses 2,893,403 89,303 1,457,120 44,438 Net cash flows used in operating activities (32,067,073) (989,724) (208,975,723) (6,373,153) Bad debt expense 5,231, ,470 2,467,452 75,250 Cash flows from investing activities Net (gains) losses on financial assets and liabilities at fair value through profit or loss (15,117,537) (466,591) 64,467,092 1,966,060 Acquisition of financial assets at fair value through profit or loss (1,523,051) (47,008) (4,137,871) (126,193) Interest expenses 15,405, ,469 17,081, ,941 Disposal of financial assets at fair value through profit or loss 3,019,067 93,181 3,940, ,164 Interest revenue (168,883,110) (5,212,442) (157,079,850) (4,790,480) Acquisition of financial assets available for sale (1,389,511) (42,887) (1,795,459) (54,756) Dividend income (23,847,539) (736,035) (21,327,538) (650,428) Disposal of financial assets available for sale 843,738 26,041 1,500,642 45,765 Net changes in insurance liabilities and provisions 347,690,617 10,731, ,637,365 10,205,470 Acquisition of financial assets carried at cost (5,745) (177) - - Net changes of other liabilities and provisions (6,154,971) (189,968) (1,068,276) (32,579) Acquisition of investments accounted for using the equity method (6,670,889) (205,892) (20,147,622) (614,444) Share of gains of associates and joint ventures accounted for using the equity method (Gains) losses on disposal or scrapping of property and equipment (Gains) losses on disposal of investment properties (1,028,782) (31,753) 137,004 4,178 (1,202,103) (37,102) (1,107,708) (33,782) Acquisition of subsidiary (4,708,708) (145,330) (6,994,994) (213,327) (225,342) (6,955) 9, Disposal of subsidiaries (4,609,822) (142,278) - - Cash returned by capital deduction from investments accounted for using equity method 70,299 2,170 86,501 2,638 Losses on disposal of intangible assets ,492 1,082 Acquisition of property and equipment (4,325,933) (133,516) (1,287,488) (39,265) Gains on disposal of investments (48,017,674) (1,482,027) (43,408,125) (1,323,822) Disposal of property and equipment 319,802 9,870 16, Impairment losses on financial assets 117,002 3,611 32, Increase in clearing and settlement funds (4,458) (138) (2,703) (82) Impairment losses on non-financial assets 58,162 1, Decrease in clearing and settlement funds 15, Unrealized foreign exchange (gains) losses (71,422) (2,204) 48,609 1,482 Increase in guarantee deposits paid (1,126) (35) (2,348) (72) Revaluation gains on investment properties (1,847,034) (57,007) (11,236,452) (342,679) Decrease in guarantee deposits paid 23, Others (2,730,769) (84,283) (8,346) (255) Acquisition of intangible assets (415,279) (12,817) (350,822) (10,699) Subtotal 104,565,884 3,227, ,321,329 5,712,757 Generalized foreclosed collects net cash from other company ,157, ,747 Changes in operating assets and liabilities Generalized foreclosed collects compensation from other company ,300, ,062 Changes in operating assets Acquisition of investment properties (3,254,915) (100,460) (34,643,780) (1,056,535) Increase in due from the Central Bank and call loans to banks (2,636,468) (81,372) (4,996,676) (152,384) Disposal of investment properties 2,146,998 66, ,927 8,903 Decrease (increase) in financial assets at fair value through profit or loss 150,814,074 4,654,755 (24,811,830) (756,689) Increase in other assets (134,176) (4,141) (22,035,719) (672,026) Increase in available-for-sale financial assets (83,009,152) (2,562,011) (87,477,240) (2,667,802) Decrease in other assets 7,135, ,245 80,373 2,451 (Increase) decrease in derivative financial assets for hedging (1,798) (55) 449,037 13,694 Dividends received 96,607 2,982 73,692 2,247 Increase in accounts receivable (11,544,098) (356,299) (1,386,901) (42,296) Net cash used in investing activities (13,372,255) (412,724) (38,952,292) (1,187,933) (Increase) decrease in loans (283,277,168) (8,743,122) 55,380,486 1,688,944 Cash flows from financing activities Increase in reinsurance contract assets (2,322,525) (71,683) (502,663) (15,330) Increase (decrease) in short-term borrowings 87,229 2,692 (900,000) (27,447) Decrease in financial assets held to maturity 283,195 8,741 7, Decrease in funds borrowed from Central Bank and banks - - (1,585,900) (48,365) Increase in other financial assets (200,653,210) (6,193,000) (573,530,812) (17,491,028) Increase in commercial paper payable 5,900, ,099 8,890, ,119 Increase in other assets (4,785,493) (147,700) (23,256,988) (709,271) Decrease in bonds payable (20,000,000) (617,284) (20,000,000) (609,942) Subtotal (437,132,643) (13,491,746) (660,126,255) (20,131,938) Decrease in bank debentures - - (15,713,949) (479,230) Changes in operating liabilities Decrease in securities sold under agreements to repurchase (14,660) (452) (171,511) (5,231) Increase (decrease) in due to the Central Bank and call loans from banks 36,402,468 1,123,533 (17,797,575) (542,774) Increase in other liabilities 1,108,978 34,228 1,516,069 46,236 Decrease in financial liabilities at fair value through profit or loss (107,752,312) (3,325,689) (68,995,003) (2,104,148) Payment of cash dividend (25,223,449) (778,502) (25,659,094) (782,528) Increase (decrease) in securities sold under agreements to repurchase 3,629, ,029 (6,326,428) (192,938) Increase in cash capital 49,998,000 1,543, Increase (decrease) in payables 10,152, ,346 (13,185,305) (402,114) Net cash flows from (used in) financing activities 11,856, ,929 (53,624,385) (1,635,388) Increase in deposits 146,256,116 4,514, ,147,103 4,609,549 Effects of exchange rate changes on cash and cash equivalents 1,245,500 38,441 1,479,269 45,113 (Decrease) increase in provisions for the liabilities of employee benefits (3,415,115) (105,405) 3, Decrease in cash and cash equivalents (32,337,730) (998,078) (300,073,131) (9,151,361) Decrease in reserves for the operations and liabilities (136,830) (4,223) (16,427) (501) Cash and cash equivalents at the beginning of periods 296,935,688 9,164, ,008,819 18,207,039 Decrease in other financial liabilities (5,660,297) (174,701) (12,615,246) (384,728) Cash and cash equivalents at the end of periods $264,597,958 $8,166,604 $296,935,688 $9,055,678 (Decrease) increase in other liabilities (160,965) (4,968) 4,186, ,677 Subtotal 79,315,206 2,448,000 36,400,762 1,110,118 The components of cash and cash equivalents Subtotal of Changes in operating assets and liabilities (357,817,437) (11,043,746) (623,725,493) (19,021,820) Cash and cash equivalents presented in balance sheet $196,549,185 $6,066,333 $191,780,120 $5,848,738 Subtotal of Adjustment (253,251,553) (7,816,406) (436,404,164) (13,309,063) Due from the Central Bank and call loans to banks satisfied the definition of cash and cash equivalents under IAS No.7 18,524, ,731 49,275,097 1,502,748 Securities purchased under agreements to resell satisfied the definition of cash and cash equivalents under IAS No.7 49,524,682 1,528,540 55,880,471 1,704,192 Cash and cash equivalents at the end of periods $264,597,958 $8,166,604 $296,935,688 $9,055,678 49

52 2016 Financial Report Cathay Financial Holding Co., Ltd. Balance Sheet As of 31 December 2016 and 31 December 2015 Expressed in thousands of Dollars NT $ US $ NT $ US $ Assets Cash and cash equivalents $14,822,959 $457,499 $4,143,951 $126,378 Available-for-sale financial assets - net 85,689 2,645 79,451 2,423 Securities purchased under agreements to resell 79,968 2, ,422 15,231 Receivables - net 537,085 16, ,620 25,088 Current income tax assets 4,215, ,102 4,323, ,857 Held-to-maturity financial assets 41,000,000 1,265,432 16,000, ,954 Investments accounted for using the equity method - net 507,608,375 15,666, ,136,590 14,856,255 Other financial assets - net 430,111 13, Property and equipment - net 7, , Intangible assets - net 11, , Deferred tax assets - net 482,657 14, ,454 26,699 Other assets - net 10, , Total assets $569,292,832 $17,570,766 $513,913,951 $15,672,887 Liabilities & Equity Liabilities Commercial paper payable $35,980,000 $1,110,494 $28,820,000 $878,926 Payables 5,625, ,617 8,278, ,481 Current income tax liabilities 3,031,746 93, ,549 28,867 Bonds payable ,000, ,942 Provisions 918,764 28, ,597 22,159 Deferred tax liabilities 226,707 6,997 2, Other liabilities 185,865 5,737 82,051 2,502 Total liabilities 45,968,260 1,418,774 58,856,957 1,794,966 Equity Capital stock Common stock 125,632,102 3,877, ,632,102 3,831,415 Perferred stock 8,333, , Capital surplus 130,448,697 4,026,194 88,781,174 2,707,569 Retained earnings Legal reserve 30,577, ,757 24,820, ,941 Special reserve 149,108,336 4,602, ,185,120 4,275,240 Undistributed earnings 73,001,761 2,253,140 65,190,213 1,988,114 Other equity 6,222, ,067 10,448, ,642 Total equity 523,324,572 16,151, ,056,994 13,877,921 Total liabilities and equity $569,292,832 $17,570,766 $513,913,951 $15,672,887 50

53 Cathay Financial Holding Co., Ltd. Statements of Comprehensive Income For the years ended 31 December 2016 and 2015 Expressed in thousands of Dollars, except earning per share Item ~ ~ NT$ US $ NT$ US $ Income Gains on investment - equity method $48,764,631 $1,505,081 $59,789,114 $1,823,395 Other operating income 1,800,203 55,562 1,206,780 36,803 50,564,834 1,560,643 60,995,894 1,860,198 Expenses and loss Operating expenses (772,271) (23,836) (648,992) (19,792) Other expenses and losses (599,464) (18,502) (1,328,856) (40,526) (1,371,735) (42,338) (1,977,848) (60,318) Profit before income tax from continuing operations 49,193,099 1,518,305 59,018,046 1,799,880 Income tax expense (1,574,286) (48,589) (1,504,474) (45,882) Profit after income tax from continuing operations 47,618,813 1,469,716 57,513,572 1,753,998 Net Income 47,618,813 1,469,716 57,513,572 1,753,998 Other comprehensive income Not to be reclassified to profit or loss in subsequent periods: Remeasurements of defined benefit plans (8,793) (271) (10,334) (315) Share of other comprehensive income of associates and joint ventures accounted for using the equity method - not to be reclassified to profit or loss 661,996 20,432 (2,345,300) (71,525) in subsequent periods Income tax relating to the components not to be reclassified to profit or loss in subsequent periods 1, , To be reclassified to profit or loss in subsequent periods: Unrealized gains (losses) from available-for-sale financial assets 6, (141,335) (4,310) Share of other comprehensive income of associates and joint ventures accounted for using the equity method - to be reclassified to profit or loss in (4,886,274) (150,811) (43,102,881) (1,314,513) subsequent periods Income tax relating to the components to be reclassified to profit or loss in subsequent periods , Other comprehensive income, net of tax (4,225,338) (130,411) (45,573,944) (1,389,873) Total comprehensive income $43,393,475 $1,339,305 $11,939,628 $364,125 Earnings per share (expressed in dollars) Basic earnings per share: Net income $3.79 $0.12 $4.58 $

54 2016 Financial Report Cathay Financial Holding Co., Ltd. Statements of Changes in Equity 52 For the years ended 31 December 2016 and 2015 Expressed in thousands of Dollars Equity attributable to owners of parent Retained earnings Other equity Capital stock Total Changes of designated financial liabilities at fair value through profit or loss resulting from credit risk Unrealized gains (losses) from available-for-sale financial assets Exchange differences resulting from translating the financial statements of a foreign operation Undistributed earnings Capital surplus Common stock Preferred stock Legal reserve Special reserve Revaluaiton Surplus Others Remeasurements of defined benefit plans Gains (losses) on cash flow hedges Balance on 1 January 2015 $125,632,102 $3,831,415 $- $- $88,782,304 $2,707,603 $19,784,401 $603,367 $82,305,614 $2,510,083 $60,939,777 $1,858,487 $601,786 $18,353 $44,257,646 $1,349,730 $180,453 $5,503 $48,151 $1,468 $918,332 $28,006 $10,030,820 $305,911 $(781) $(24) $433,480,605 $13,219,902 Appropriations and distribution for 2014 Legal reserve 5,035, ,574 (5,035,694) (153,574) - - Cash dividends 23,148, ,977 (23,148,991) (705,977) - - Stock dividends (25,126,420) (766,283) (25,126,420) (766,283) Reversal of special reserve (33,796) (1,031) 33,796 1, Other additional paid-in capital (1,130) (34) (1,130) (34) Share of changes in net assets of associates and joint ventures accounted for using the equity method Net income for the year ended 31 December 2015 (Note 1) 57,513,572 1,753,998 57,513,572 1,753,998 Other comprehensive income for the year ended 31 Dectember ,263,580 38,536 (44,674,719) (1,362,450) 191,071 5,827 35,311 1,077 (2,481,087) (75,666) 92,136 2,810 (236) (7) (45,573,944) (1,389,873) Comprehensive income for the year ended 31 December ,513,572 1,753,998 1,263,580 38,536 (44,674,719) (1,362,450) 191,071 5,827 35,311 1,077 (2,481,087) (75,666) 92,136 2,810 (236) (7) 11,939, ,125 Others 34,764,311 1,060,211 14, (14,173) (432) 34,764,311 1,060,211 Balance on 31 December 2015 $125,632,102 $3,831,415 $- $- $88,781,174 $2,707,569 $24,820,095 $756,941 $140,185,120 $4,275,240 $65,190,213 $1,988,114 $1,865,366 $56,889 $(417,073) $(12,720) $371,524 $11,330 $83,462 $2,545 $(1,562,755) $(47,660) $10,108,783 $308,289 $(1,017) $(31) $455,056,994 $13,877,921 Balance on 1 January 2016 $125,632,102 $3,877,534 $- $- $88,781,174 $2,740,160 $24,820,095 $766,052 $140,185,120 $4,326,701 $65,190,213 $2,012,044 $1,865,366 $57,573 $(417,073) $(12,873) $371,524 $11,467 $83,462 $2,576 $(1,562,755) $(48,233) $10,108,783 $311,999 $(1,017) $(31) $455,056,994 $14,044,969 Appropriations and distribution for 2015 Legal reserve 5,757, ,705 (5,757,629) (177,705) - - Special reserve 8,923, ,408 (8,923,216) (275,408) - - Cash dividends (25,126,420) (775,507) (25,126,420) (775,507) Other additional paid-in capital 2, , Share of changes in net assets of associates and joint ventures accounted for using the equity method Net income for the year ended 31 December 2016 (Note 2) 47,618,813 1,469,716 47,618,813 1,469,716 Other comprehensive income for the year ended 31 December 2016 (9,140,278) (282,107) 4,440, ,044 (179,990) (5,555) 36,859 1, ,822 19, , (4,225,338) (130,411) Comprehensive income for the year ended 31 December ,618,813 1,469,716 (9,140,278) (282,107) 4,440, ,044 (179,990) (5,555) 36,859 1, ,822 19, , ,393,475 1,339,305 Issue of preferred stock 8,333, ,191 41,665,000 1,285,956 49,998,000 1,543,147 Balance on 31 December 2016 $125,632,102 $3,877,534 $8,333,000 $257,191 $130,448,697 $4,026,194 $30,577,724 $943,757 $149,108,336 $4,602,109 $73,001,761 $2,253,140 $(7,274,912) $(224,534) $4,023,159 $124,171 $191,534 $5,912 $120,321 $3,714 $(945,933) $(29,195) $10,108,783 $311,999 $- $- $523,324,572 $16,151,992 Note1: For the year ended 2015, the remuneration to directors and supervisors in the amount of $2,100 (US$64) thousand and employees' compensation in the amount of $5,903 (US$180) thousand have been deducted from the Statement of Comprehensive Income. Note2: For the year ended 2016, the remuneration to directors and supervisors in the amount of $1,800 (US$56) thousand and employees' compensation in the amount of $4,920 (US$152) thousand have been deducted from the Statement of Comprehensive Income.

55 Cathay Financial Holding Co., Ltd. Statements of Cash Flows For the years ended 31 December 2016 and 2015 Expressed in thousands of Dollars ~ ~ Cash flows from operating activities Profit before income tax from continuing operations $49,193,099 $1,518,305 $59,018,046 $1,799,880 Adjustments : Income and other adjustments with no cash flow effects Depreciation 1, , Amortization 5, , Interest expenses 544,652 16,810 1,286,390 39,231 Interest income (424,407) (13,099) (944,072) (28,791) Share of profit of associates and joint ventures accounted for using the equity method (48,764,631) (1,505,081) (59,789,114) (1,823,395) Losses on disposal of property and equipment Gains on disposal of investments - - (220,298) (6,719) Unrealized foreign exchange losses (gains) 20, (8,748) (267) Others (1,325,222) (40,901) (8,346) (255) Changes in operating assets and liabilities Decrease in available-for-sale financial assets ,548 21,517 Decrease (increase) in accounts receivable 62,527 1,930 (198,585) (6,056) Decrease in held-to-maturity financial assets 10,000, ,642 15,000, ,457 Increase in held-to-maturity financial assets (35,000,000) (1,080,247) - - Increase in other financial assets (430,111) (13,275) - - (Increase) decrease in other assets (2,658) (82) 137,793 4,202 Decrease in payables (2,530,242) (78,094) (2,556,772) (77,974) Increase (decrease) in provisions 183,374 5,660 (1,792) (55) Increase in other liabilities 103,814 3,204 72,511 2,211 Cash generated from operations Interest received 647,415 19,982 4,946, ,859 Interest paid (668,076) (20,620) (1,299,979) (39,646) Income taxes received 1,237,259 38,187 2,719,431 82,935 Net cash flows (used in) from operating activities (27,145,938) (837,837) 18,865, ,353 Cash flows from investing activities Acquisition of property and equipment (2,227) (69) (2,366) (72) Dividends received 25,953, ,040 18,505, ,371 Net cash from investing activities 25,951, ,971 18,503, ,299 Cash flows from financing activities Increase in commercial paper payable 7,160, ,988 8,470, ,310 Decrease in bonds payable (20,000,000) (617,284) (20,000,000) (609,942) Dividends paid (25,126,420) (775,507) (25,126,420) (766,283) Increase in cash capital 49,998,000 1,543, Acquisition of subsidiary (557,375) (17,203) - - Net cash flows from (used in) financing activities 11,474, ,142 (36,656,420) (1,117,915) Effects of exchange rate changes on cash and cash equivalents (20,173) (623) 8, Increase in cash and cash equivalents 10,259, , ,535 22,004 Cash and cash equivalents at the beginning of periods 4,643, ,314 3,921, ,605 Cash and cash equivalents at the end of periods $14,902,927 $459,967 $4,643,373 $141,609 The components of cash and cash equivalents Cash and cash equivalents presented in balance sheet $14,822,959 $457,499 $4,143,951 $126,378 Securities purchased under agreements to resell satisfied the definition of cash and cash equivalents under IAS No.7 79,968 2, ,422 15,231 Cash and cash equivalents at the end of periods $14,902,927 $459,967 $4,643,373 $141,609 53

56 2016 Financial Report Cathay Life Insurance Co., Ltd. Condensed Balance Sheet As of 31 December 2016 and 31 December 2015 Expressed in thousands of Dollars Assets Cash and cash equivalents $140,831,329 $4,346,646 $137,148,959 $4,182,646 Receivables 67,241,645 2,075,359 57,251,695 1,746,011 Financial asset at fair value through profit or loss 38,630,178 1,192,289 34,963,052 1,066,272 Available-for-sale financial assets 1,412,651,333 43,600,350 1,332,387,023 40,633,944 Derivative financial assets for hedging 232,269 7, ,326 13,642 Investments accounted for using the equity method 84,609,212 2,611,395 72,786,479 2,219,777 Investment in debt securities with no active market 2,116,583,614 65,326,655 1,836,032,459 55,993,671 Held-to-maturity financial assets 26,551, ,483 23,478, ,036 Other financial assets 7,661, ,463 18,000, ,948 Investment property 415,029,800 12,809, ,265,270 12,542,399 Loans 621,186,946 19,172, ,130,382 19,979,578 Reinsurance contract assets 703,844 21, ,818 19,482 Property and equipment 27,983, ,700 25,684, ,305 Intangible assets 37,657,462 1,162,267 39,684,351 1,210,258 Deferred tax assets 11,140, ,858 11,519, ,322 Other assets 28,031, ,182 25,529, ,569 Separate account product assets 497,855,802 15,365, ,366,122 14,649,775 Total assets $5,534,582,859 $170,820,459 $5,162,314,479 $157,435,635 Liabilities Payables $21,434,245 $661,551 $17,906,669 $546,102 Financial liability at fair value through profit or loss 26,982, ,784 38,859,128 1,185,091 Bonds payable 35,000,000 1,080, Preferred stock liability 5,000, ,321 15,000, ,456 Insurance liability 4,539,152, ,097,286 4,151,262, ,601,481 Reserve for insurance contract with feature of financial instruments 4,392, ,579 49,123,102 1,498,112 Foreign exchange volatility reserve 9,871, ,675 16,026, ,760 Liability reserve 56,245 1,736 4,350, ,688 Deferred tax liability 27,254, ,203 36,235,508 1,105,078 Other liability 6,287, ,071 7,277, ,928 Separate account product liabilities 497,855,802 15,365, ,366,122 14,649,775 Total liabilities 5,173,287, ,669,373 4,816,407, ,886,471 Stockholders' equity Capital stock 53,065,274 1,637,817 53,065,274 1,618,337 Capital surplus 13,768, ,953 13,028, ,317 Retained earnings 298,348,294 9,208, ,470,744 8,645,036 Others (3,886,875) (119,965) (3,656,933) (111,526) Total stockholders' equity 361,295,161 11,151, ,907,097 10,549,164 Total liabilities and stockholders' equity $5,534,582,859 $170,820,459 $5,162,314,479 $157,435,635 Cathay Life Insurance Co., Ltd. Condensed Statement of Comprehensive Income For the years ended 31 December 2016 and 2015 Expressed in thousands of Dollars, except earnings per share ~ ~ Operating income $836,502,388 $25,817,975 $719,744,096 $21,950,110 Operating costs (786,309,932) (24,268,825) (656,926,461) (20,034,354) Operating expenses (24,154,280) (745,502) (20,380,952) (621,560) Operating profit 26,038, ,648 42,436,683 1,294,196 Non-operating income and expenses 1,955,342 60,350 1,284,333 39,168 Profit from continuing operations before income tax 27,993, ,998 43,721,016 1,333,364 Income tax profit (expense) 2,135,142 65,899 (5,478,377) (167,074) Profit from continuing operations after income tax 30,128, ,897 38,242,639 1,166,290 Net income 30,128, ,897 38,242,639 1,166,290 Other comprehensive loss (229,942) (7,097) (45,386,605) (1,384,160) Total comprehensive income (loss) $29,898,718 $922,800 $(7,143,966) $(217,870) Primary earnings per share $5.68 $0.18 $7.21 $

57 Cathay Century Insurance Co., Ltd. Condensed Balance Sheet As of 31 December 2016 and 31 December 2015 Expressed in thousands of Dollars Assets Cash and cash equivalents $6,795,981 $209,752 $7,501,128 $228,763 Receivables 1,946,466 60,076 2,417,043 73,713 Financial asset at fair value through profit or loss 875,543 27,023 1,408,854 42,966 Available-for-sale financial assets 9,201, ,010 7,228, ,442 Investments accounted for using the equity method 1,893,711 58, ,299 28,005 Investment in debt securities with no active market 2,468,267 76,181 3,369, ,750 Held-to-maturity financial assets 5,682, ,376 4,035, ,078 Loans 354,812 10, ,255 11,170 Reinsurance contract assets 7,777, ,034 5,325, ,406 Property and equipment 90,794 2, ,877 3,808 Intangible assets 32, , Deferred tax assets 132,374 4,086 93,269 2,844 Other assets 642,153 19, ,876 20,185 Total assets $37,893,396 $1,169,549 $33,471,564 $1,020,786 Liabilities Payables $2,636,465 $81,372 $2,701,827 $82,398 Financial liability at fair value through profit or loss 54,590 1, ,554 5,872 Preferred stock liability 1,000,000 30,864 1,000,000 30,497 Insurance liability 23,993, ,543 21,475, ,940 Liability reserve 380,158 11, ,016 11,620 Deferred tax liability 260,485 8,040 35,991 1,098 Other liability 352,115 10, ,994 24,123 Total liabilities 28,677, ,105 26,577, ,548 Stockholders' equity Capital stock 2,889,552 89,184 2,802,202 85,459 Retained earnings 6,849, ,409 4,466, ,216 Others (523,227) (16,149) (375,022) (11,437) Total stockholders' equity 9,215, ,444 6,893, ,238 Total liabilities and stockholders' equity $37,893,396 $1,169,549 $33,471,564 $1,020,786 Cathay Century Insurance Co., Ltd. Condensed Statement of Comprehensive Income For the years ended 31 December 2016 and 2015 Expressed in thousands of Dollars, except earnings per share ~ ~ Operating income $17,678,368 $545,629 $15,291,494 $466,346 Operating costs (9,646,130) (297,720) (8,939,052) (272,615) Operating expenses (5,063,048) (156,267) (4,880,894) (148,853) Operating profit 2,969,190 91,642 1,471,548 44,878 Non-operating income and expenses (7,151) (221) (2,867) (87) Profit from continuing operations before income tax 2,962,039 91,421 1,468,681 44,791 Income tax expense (491,568) (15,172) (287,144) (8,758) Profit from continuing operations after income tax 2,470,471 76,249 1,181,537 36,033 Net income 2,470,471 76,249 1,181,537 36,033 Other comprehensive loss (148,205) (4,574) (411,580) (12,552) Total comprehensive income $2,322,266 $71,675 $769,957 $23,481 Primary earnings per share $8.55 $0.26 $4.09 $

58 2016 Financial Report Cathay Lujiazui Life Insurance Co., Ltd. Condensed Balance Sheet As of 31 December 2016 and 31 December 2015 Expressed in thousands of Dollars Assets Cash and cash equivalents $2,260,384 $69,765 $887,809 $27,076 Receivables 633,632 19, ,282 12,268 Financial asset at fair value through profit or loss 371,693 11, ,191 28,704 Available-for-sale financial assets 2,807,016 86,636 4,202, ,164 Investment in debt securities with no active market 9,396, ,030 6,723, ,058 Held-to-maturity financial assets 881,767 27,215 1,248,771 38,084 Loans 102,607 3,167 75,069 2,289 Reinsurance contract assets 34,935 1,078 25, Property and equipment 64,909 2, ,697 3,437 Intangible assets 28, ,980 1,463 Other assets 1,574,840 48,606 1,688,828 51,504 Separate account product assets 158,408 4, ,239 6,168 Total assets $18,315,198 $565,284 $16,558,467 $504,985 Liabilities Short-term debt $46,444 $1,434 $61,104 $1,863 Payables 1,381,443 42, ,955 26,531 Reserve for insurance contract with feature of financial instruments 5,927, ,963 4,879, ,822 Insurance liability 6,794, ,706 6,032, ,983 Other liability 27, , Separate account product liabilities 158,408 4, ,239 6,168 Total liabilities 14,336, ,488 12,070, ,102 Stockholders' equity Capital stock 7,067, ,142 7,067, ,547 Retained earnings (3,330,427) (102,791) (3,448,140) (105,158) Others 241,220 7, ,755 26,494 Total stockholders' equity 3,978, ,796 4,488, ,883 Total liabilities and stockholders' equity $18,315,198 $565,284 $16,558,467 $504,985 Cathay Lujiazui Life Insurance Co., Ltd. Condensed Statement of Comprehensive Income For the years ended 31 December 2016 and 2015 Expressed in thousands of Dollars, except earnings per share ~ ~ Operating income $5,477,738 $169,066 $4,596,219 $140,171 Operating costs (3,891,114) (120,096) (2,961,995) (90,332) Operating expenses (1,467,901) (45,306) (1,209,613) (36,890) Operating profit 118,723 3, ,611 12,949 Non-operating income and expenses (1,010) (31) (24,227) (739) Profit from continuing operations before income tax 117,713 3, ,384 12,210 Income tax expense Profit from continuing operations after income tax 117,713 3, ,384 12,210 Net income 117,713 3, ,384 12,210 Other comprehensive (loss) income (627,535) (19,368) 154,960 4,726 Total comprehensive (loss) income $(509,822) $(15,735) $555,344 $16,936 Primary earnings per share Note Note Note Note Note: Cathay Lujiazui Life is a limited company; there is no information about earning per share. 56

59 Cathay Life Insurance Company (Vietnam) Condensed Balance Sheet As of 31 December 2016 and 31 December 2015 Expressed in thousands of Dollars Assets Cash and cash equivalents $262,961 $8,116 $119,309 $3,639 Receivables 373,027 11, ,289 7,389 Available-for-sale financial assets 6,158, ,064 3,774, ,106 Investment in debt securities with no active market 198,520 6, ,634 6,119 Loans 22, , Property and equipment 14, , Intangible assets Other assets 43,477 1,342 41,299 1,259 Total assets $7,073,916 $218,331 $4,410,860 $134,518 Liabilities Payables $56,232 $1,736 $41,066 $1,253 Current income tax liability 8, , Insurance liability 1,185,667 36, ,620 24,173 Other liability Total liabilities 1,250,632 38, ,752 25,519 Stockholders' equity Capital stock 5,410, ,006 3,424, ,450 Retained earnings 398,269 12, ,054 6,467 Others 14, (62,876) (1,918) Total stockholders' equity 5,823, ,731 3,574, ,999 Total liabilities and stockholders' equity $7,073,916 $218,331 $4,410,860 $134,518 Cathay Life Insurance Company (Vietnam) Condensed Statement of Comprehensive Income For the years ended 31 December 2016 and 2015 Expressed in thousands of Dollars, except earnings per share ~ ~ Operating income $1,032,372 $31,863 $637,259 $19,435 Operating costs (511,133) (15,776) (424,757) (12,954) Operating expenses (292,840) (9,038) (202,286) (6,169) Operating profit 228,399 7,049 10, Non-operating income and expenses 1, , Profit from continuing operations before income tax 230,329 7,109 15, Income tax expense (44,114) (1,362) (2,554) (78) Profit from continuing operations after income tax 186,215 5,747 12, Net income 186,215 5,747 12, Other comprehensive income (loss) 76,901 2,374 (104,943) (3,201) Total comprehensive income (loss) $263,116 $8,121 $(92,430) $(2,819) Primary earnings per share Note Note Note Note Note: Cathay Life Insurance Company (Vietnam) is a limited company; there is no information about earning per share. 57

60 2016 Financial Report Lin Yuan (Shanghai) Real Estate Co., Ltd. Condensed Balance Sheet As of 31 December 2016 and 31 December 2015 Expressed in thousands of Dollars Assets Current assets $654,653 $20,205 $482,681 $14,721 Investment property 6,623, ,431 6,854, ,057 Property and equipment 574,700 17, ,670 19,813 Total assets $7,852,927 $242,374 $7,987,336 $243,591 Liabilities Current liability $1,617 $50 $312 $9 Deferred tax liability 267,939 8, ,527 4,408 Other liability 91,823 2,834 91,579 2,793 Total liabilities 361,379 11, ,418 7,210 Stockholders' equity Capital stock 7,223, ,945 7,223, ,294 Retained earnings 481,748 14,869 40,289 1,229 Others (213,635) (6,594) 487,194 14,858 Total stockholders' equity 7,491, ,220 7,750, ,381 Total liabilities and stockholders' equity $7,852,927 $242,374 $7,987,336 $243,591 Lin Yuan (Shanghai) Real Estate Co., Ltd. Condensed Statement of Comprehensive Income For the years ended 31 December 2016 and 2015 Expressed in thousands of Dollars, except earnings per share ~ ~ Operating income $649,152 $20,036 $282,668 $8,621 Operating expenses (65,118) (2,010) (81,032) (2,471) Operating profit 584,034 18, ,636 6,150 Non-operating income and expenses (18) (1) 8, Profit from continuing operations before income tax 584,016 18, ,723 6,397 Income tax expense (142,557) (4,400) (47,897) (1,461) Profit from continuing operations after income tax 441,459 13, ,826 4,936 Net income 441,459 13, ,826 4,936 Other comprehensive loss (700,829) (21,630) (31,402) (958) Total comprehensive (loss) income $(259,370) $(8,005) $130,424 $3,978 Primary earnings per share Note Note Note Note Note: Lin Yuan (Shanghai) Real Estate Co. Ltd. is a limited company; there is no information about earnings per share. 58

61 Cathay Woolgate Exchange Holding 1 Limited Condensed Balance Sheet As of 31 December 2016 and 31 December 2015 Expressed in thousands of Dollars Assets Current assets $1,773,667 $54,743 $1,938,494 $59,118 Investment property 12,696, ,879 15,152, ,119 Total assets $14,470,566 $446,622 $17,091,368 $521,237 Liabilities Current liability $92,333 $2,850 $223,331 $6,811 Total liabilities 92,333 2, ,331 6,811 Stockholders' equity Capital stock 16,654, ,013 16,654, ,899 Retained earnings 1,653,963 51, ,375 25,751 Others (3,929,743) (121,289) (630,351) (19,224) Total stockholders' equity 14,378, ,772 16,868, ,426 Total liabilities and stockholders' equity $14,470,566 $446,622 $17,091,368 $521,237 Cathay Woolgate Exchange Holding 1 Limited Condensed Statement of Comprehensive Income For the years ended 31 December 2016 and 2015 Expressed in thousands of Dollars, except earnings per share ~ ~ Operating income $1,222,268 $37,724 $875,555 $26,702 Operating expenses (889) (27) (584) (18) Operating profit 1,221,379 37, ,971 26,684 Profit from continuing operations before income tax 1,221,379 37, ,971 26,684 Income tax expense (39,003) (1,204) (162,183) (4,946) Profit from continuing operations after income tax 1,182,376 36, ,788 21,738 Net income 1,182,376 36, ,788 21,738 Other comprehensive loss (3,299,392) (101,833) (100,854) (3,076) Total comprehensive (loss) income $(2,117,016) $(65,340) $611,934 $18,662 Primary earnings per share Note Note Note Note Note: Cathay Woolgate Exchange Holding 1 Limited is a limited company; there is no information about earnings per share. 59

62 2016 Financial Report Cathay Woolgate Exchange Holding 2 Limited Condensed Balance Sheet As of 31 December 2016 and 31 December 2015 Expressed in thousands of Dollars Assets Current assets $18,075 $558 $18,458 $563 Investment property 128,251 3, ,059 4,668 Total assets $146,326 $4,516 $171,517 $5,231 Liabilities Current liability $842 $26 $2,256 $69 Total liabilities , Stockholders' equity Capital stock 168,222 5, ,222 5,130 Retained earnings 16, , Others (39,730) (1,226) (6,361) (194) Total stockholders' equity 145,484 4, ,261 5,162 Total liabilities and stockholders' equity $146,326 $4,516 $171,517 $5,231 Cathay Woolgate Exchange Holding 2 Limited Condensed Statement of Comprehensive Income For the years ended 31 December 2016 and 2015 Expressed in thousands of Dollars, except earnings per share ~ ~ Operating income $12,342 $381 $8,840 $270 Operating expenses (830) (26) (677) (21) Operating profit 11, , Profit from continuing operations before income tax 11, , Income tax expense (143) (4) (1,639) (50) Profit from continuing operations after income tax 11, , Net income 11, , Other comprehensive loss (33,369) (1,030) (1,019) (31) Total comprehensive (loss) income $(22,000) $(679) $5,505 $168 Primary earnings per share Note Note Note Note Note: Cathay Woolgate Exchange Holding 2 Limited is a limited company; there is no information about earnings per share. 60

63 Cathay Walbrook Holding 1 Limited Condensed Balance Sheet As of 31 December 2016 and 31 December 2015 Expressed in thousands of Dollars Assets Current assets $668,335 $20,628 $860,770 $26,251 Investment property 21,561, ,476 25,368, ,678 Other non-current assets 6, ,808 2,099 Total assets $22,236,577 $686,314 $26,298,484 $802,028 Liabilities Current liability $69,664 $2,150 $65,009 $1,983 Other non-current liability 12,982, ,680 16,074, ,211 Total liabilities 13,051, ,830 16,139, ,194 Stockholders' equity Capital stock 10,189, ,478 10,189, ,738 Retained earnings 761,707 23,509 (321,891) (9,817) Others (1,765,930) (54,504) 292,269 8,913 Total stockholders' equity 9,184, ,484 10,159, ,834 Total liabilities and stockholders' equity $22,236,577 $686,314 $26,298,484 $802,028 Cathay Walbrook Holding 1 Limited Condensed Statement of Comprehensive Income For the years ended 31 December 2016 and 2015 and for the nine-month periods ended 31 December 2015 Expressed in thousands of Dollars, except earnings per share ~ ~ Operating income $1,604,078 $49,509 $231,771 $7,068 Operating cost (498,330) (15,381) (347,830) (10,608) Operating expense (2,178) (67) (159,667) (4,869) Operating profit (loss) 1,103,570 34,061 (275,726) (8,409) Profit (loss) from continuing operations before income tax 1,103,570 34,061 (275,726) (8,409) Income tax expense (19,972) (616) (46,165) (1,408) Profit (loss) from continuing operations after income tax 1,083,598 33,445 (321,891) (9,817) Net income (loss) 1,083,598 33,445 (321,891) (9,817) Other comprehensive (loss) income (2,058,199) (63,525) 292,269 8,914 Total comprehensive loss $(974,601) $(30,080) $(29,622) $(903) Primary earnings per share Note 1 Note 1 Note 1 Note 1 Note 1: Cathay Walbrook Holding 1 Limited is a limited company; there is no information about earnings per share. Note 2: Cathay Walbrook Holding 1 Limited was incorporated to the consolidated financial statements on 31 March

64 2016 Financial Report Cathay Walbrook Holding 2 Limited Condensed Balance Sheet As of 31 December 2016 and 31 December 2015 Expressed in thousands of Dollars Assets Current assets $33,652 $1,039 $44,670 $1,362 Investment property 1,134,812 35,025 1,335,206 40,720 Other non-current assets , Total assets $1,168,823 $36,075 $1,383,498 $42,193 Liabilities Current liability $3,667 $113 $3,422 $104 Other non-current liability 683,265 21, ,000 25,801 Total liabilities 686,932 21, ,422 25,905 Stockholders' equity Capital stock 536,268 16, ,268 16,355 Retained earnings 38,341 1,183 (17,572) (536) Others (92,718) (2,862) 15, Total stockholders' equity 481,891 14, ,076 16,288 Total liabilities and stockholders' equity $1,168,823 $36,075 $1,383,498 $42,193 Cathay Walbrook Holding 2 Limited Condensed Statement of Comprehensive Income For the years ended 31 December 2016 and 2015 and for the nine-month periods ended 31 December 2015 Expressed in thousands of Dollars, except earnings per share ~ ~ Operating income $84,425 $2,606 $12,199 $372 Operating cost (26,228) (810) (18,307) (558) Operating expense (1,234) (38) (9,034) (276) Operating profit (loss) 56,963 1,758 (15,142) (462) Profit (loss) from continuing operations before income tax 56,963 1,758 (15,142) (462) Income tax expense (1,050) (32) (2,430) (74) Profit (loss) from continuing operations after income tax 55,913 1,726 (17,572) (536) Net income (loss) 55,913 1,726 (17,572) (536) Other comprehensive (loss) income (108,098) (3,337) 15, Total comprehensive loss $(52,185) $(1,611) $(2,192) $(67) Primary earnings per share Note 1 Note 1 Note 1 Note 1 Note 1: Cathay Walbrook Holding 2 Limited is a limited company; there is no information about earnings per share. Note 2: Cathay Walbrook Holding 2 Limited was incorporated to the consolidated financial statements on 31 March

65 Cathay Insurance Co., Ltd (Vietnam) Condensed Balance Sheet As of 31 December 2016 and 31 December 2015 Expressed in thousands of Dollars Assets Cash and cash equivalents $165,874 $5,120 $54,030 $1,648 Receivables 36,843 1,137 67,574 2,061 Investment in debt securities with no active market 52,466 1, ,805 3,471 Held-to-maturity financial assets 430,276 13, ,370 13,003 Reinsurance contract assets 251,967 7, ,500 10,262 Property and equipment Intangible assets 2, , Deferred tax assets Other assets 30, , Total assets $970,346 $29,949 $1,029,770 $31,405 Liabilities Payables $27,903 $861 $31,123 $949 Liability reserve 323,426 9, ,045 12,261 Deferred tax liability Other liability 6, , Total liabilities 357,675 11, ,854 13,323 Stockholders' equity Capital stock 845,585 26, ,585 25,788 Retained earnings (139,183) (4,296) (153,945) (4,695) Others (93,731) (2,893) (98,724) (3,011) Total stockholders' equity 612,671 18, ,916 18,082 Total liabilities and stockholders' equity $970,346 $29,949 $1,029,770 $31,405 Cathay Insurance Co., Ltd (Vietnam) Condensed Statement of Comprehensive Income For the years ended 31 December 2016 and 2015 Expressed in thousands of Dollars, except earnings per share ~ ~ Operating income $183,870 $5,675 $121,703 $3,712 Operating costs (62,696) (1,935) (35,299) (1,077) Operating expenses (106,618) (3,291) (87,985) (2,683) Operating profit (loss) 14, (1,581) (48) Non-operating income and expenses Profit (loss) from continuing operations before income tax 14, (1,577) (48) Income tax profit (expense) 48 2 (5) - Profit (loss) from continuing operations after income tax 14, (1,582) (48) Net income (loss) 14, (1,582) (48) Other comprehensive income (loss) 4, (12,104) (369) Total comprehensive income (loss) $19,755 $610 $(13,686) $(417) Primary earnings per share Note Note Note Note Note: Cathay Century (Vietnam) is a limited company; there is no information about earnings per share. 63

66 2016 Financial Report Conning Holdings Limited Condensed Balance Sheet As of 31 December 2016 and 31 December 2015 Expressed in thousands of Dollars Assets Current assets $4,785,821 $147,711 $1,813,701 $55,313 Financial asset at fair value through profit or loss 80,102 2, Investment in debt securities with no active market 3, , Held-to-maturity financial assets 342,391 10, Property and equipment 199,970 6, ,459 4,101 Intangible assets 11,359, ,613 7,873, ,116 Deferred tax assets 1,499,196 46, Other non-current assets 224,632 6, ,222 7,204 Total assets $18,495,238 $570,841 $10,061,116 $306,835 Liabilities Current liability $1,652,779 $51,012 $984,287 $30,018 Liability reserve 367,981 11,358 48,607 1,482 Deferred tax liability 1,335,556 41, ,373 18,310 Other non-current liability 387,097 11, ,147 10,099 Total liabilities 3,743, ,538 1,964,414 59,909 Stockholders' equity Capital stock 90,113 2, Capital surplus 14,417, ,993 7,839, ,078 Retained earnings (58,528) (1,806) (71,440) (2,179) Others (396,992) (12,253) 245,014 7,472 Non-controlling interest 699,465 21,588 83,452 2,545 Total stockholders' equity 14,751, ,303 8,096, ,926 Total liabilities and stockholders' equity $18,495,238 $570,841 $10,061,116 $306,835 Conning Holdings Limited Condensed Statement of Comprehensive Income For the years ended 31 December 2016 and from 18 September 2015 to 31 December 2015 Expressed in thousands of Dollars, except earnings per share ~ ~ Operating income $5,625,559 $173,628 $1,084,564 $33,076 Operating costs (739,117) (22,812) (196,010) (5,978) Operating expenses (4,789,513) (147,824) (986,846) (30,096) Operating profit (loss) 96,929 2,992 (98,292) (2,998) Profit (loss) from continuing operations before income tax 96,929 2,992 (98,292) (2,998) Income tax (expense) profit (36,912) (1,139) 31, Profit (loss) from continuing operations after income tax 60,017 1,853 (66,891) (2,040) Net income (loss) 60,017 1,853 (66,891) (2,040) Other comprehensive (loss) income (671,025) (20,711) 245,995 7,502 Total comprehensive (loss) income $(611,008) $(18,858) $179,104 $5,462 Primary earnings per share Note Note Note Note Note: Conning Holdings Limited is a limited company; there is no information about earnings per share. 64

67 Cathay United Bank Co., Ltd. Condensed Balance Sheet As of 31 December 2016 and 31 December 2015 Expressed in thousands of Dollars Assets Cash and cash equivalents $56,011,450 $1,728,748 $61,271,514 $1,868,604 Due from the Central Bank and call loans to banks 68,782,302 2,122,911 91,643,190 2,794,852 Financial assets at fair value through profit or loss 196,166,871 6,054, ,226,830 7,753,182 Securities purchased under agreements to resell 36,466,540 1,125,511 44,508,936 1,357,394 Receivables 79,273,844 2,446,724 81,027,553 2,471,106 Discounts and loans 1,403,835,506 43,328,256 1,101,512,688 33,592,946 Available-for-sale financial assets 151,932,723 4,689, ,557,629 3,981,629 Held-to-maturity financial assets 42,894,957 1,323,918 49,612,107 1,513,025 Investments accounted for using the equity method 7,877, ,147 7,783, ,371 Other financial assets 3, , Investment in debt securities with no active market 397,475,008 12,267, ,764,138 13,503,023 Property and equipment 24,208, ,170 24,485, ,738 Investment property 1,554,600 47,981 1,635,249 49,870 Intangible assets 7,413, ,809 7,161, ,413 Deferred tax assets 1,410,010 43,519 1,864,066 56,849 Other assets 36,538,491 1,127,731 42,545,783 1,297,523 Total assets $2,511,845,343 $77,526,091 $2,342,601,732 $71,442,566 Liabilities Due to the Central Bank and call loans from banks $67,298,569 $2,077,116 $38,639,771 $1,178,401 Financial liabilities at fair value through profit or loss 88,060,416 2,717, ,397,997 3,061,848 Securities sold under agreements to repurchase 56,752,751 1,751,628 54,037,877 1,647,999 Payables 22,183, ,683 17,848, ,312 Current income tax liabilities 269,766 8, ,211 12,663 Deposits and remittances 1,993,999,765 61,543,203 1,847,919,684 56,356,196 Financial debentures payable 51,900,000 1,601,852 51,900,000 1,582,800 Other financial liabilities 61,566,809 1,900,210 67,227,106 2,050,232 Liability reserve 3,053,964 94,258 3,199,030 97,561 Deferred tax liability 1,552,030 47,902 1,919,645 58,544 Other liability 9,116, ,382 6,089, ,712 Total liabilities 2,355,754,564 72,708,474 2,189,593,838 66,776,268 Stockholders' equity Capital stock 72,099,815 2,225,303 69,479,605 2,118,927 Capital surplus 23,969, ,797 23,969, ,998 Retained earnings 59,763,752 1,844,560 55,594,202 1,695,462 Others 257,800 7,957 3,964, ,911 Total stockholders' equity 156,090,779 4,817, ,007,894 4,666,298 Total liabilities and stockholders' equity $2,511,845,343 $77,526,091 $2,342,601,732 $71,442,566 Cathay United Bank Co., Ltd. Condensed Statement of Comprehensive Income For the years ended 31 December 2016 and 2015 Expressed in thousands of Dollars, except earnings per share ~ ~ Interest income $37,666,600 $1,162,550 $40,186,848 $1,225,583 Interest expenses (13,558,911) (418,485) (14,743,422) (449,632) Operating profit 24,107, ,065 25,443, ,951 Non-interest income 25,395, ,804 21,306, ,790 Total income 49,502,949 1,527,869 46,750,054 1,425,741 Bad debt expense and reserve for loss on guarantees (4,069,204) (125,593) (1,656,210) (50,510) Operating expenses (26,166,045) (807,594) (24,079,250) (734,347) Profit from continuing operations before income tax 19,267, ,682 21,014, ,884 Income tax expense (2,056,000) (63,457) (2,416,300) (73,690) Profit from continuing operations after income tax 17,211, ,225 18,598, ,194 Net income 17,211, ,225 18,598, ,194 Other comprehensive (loss) income (3,706,875) (114,409) 532,284 16,233 Total comprehensive income $13,504,825 $416,816 $19,130,578 $583,427 Primary earnings per share $2.39 $0.07 $2.58 $

68 2016 Financial Report Indovina Bank Limited Condensed Balance Sheet As of 31 December 2016 and 31 December 2015 Expressed in thousands of Dollars Assets Cash and cash equivalents $6,623,200 $204,420 $1,228,870 $37,477 Due from the Central Bank and call loans to banks 6,881, ,400 9,508, ,974 Financial assets at fair value through profit or loss 3,150,720 97, ,421 21,361 Securities purchased under agreements to resell 1,673,379 51, Available-for-sale financial assets 4,220, ,260 3,464, ,658 Receivables 874,067 26, ,457 29,535 Discounts and loans 27,240, ,757 21,495, ,543 Held-to-maturity financial assets 5,043, ,676 2,906,670 88,645 Property and equipment 434,134 13, ,415 14,560 Intangible assets 17, , Other assets 635,766 19, ,880 15,275 Total assets $56,794,960 $1,752,931 $41,274,357 $1,258,748 Liabilities Due to the Central Bank and call loans from banks $14,872,722 $459,035 $4,669,522 $142,407 Financial liabilities at fair value through profit or loss 76,569 2, Payables 1,685,991 52, ,873 10,670 Current income tax liabilities 2, Deposits and remittances 32,230, ,760 28,533, ,204 Deferred tax liability 51,566 1,591 17, Other liability 121,538 3, ,004 5,550 Total liabilities 49,040,647 1,513,600 33,752,555 1,029,355 Stockholders' equity Capital stock 6,094, ,115 6,094, ,877 Retained earnings 1,494,205 46,117 1,089,144 33,216 Others 165,197 5, ,747 10,300 Total stockholders' equity 7,754, ,331 7,521, ,393 Total liabilities and stockholders' equity $56,794,960 $1,752,931 $41,274,357 $1,258,748 Indovina Bank Limited Condensed Statement of Comprehensive Income For the years ended 31 December 2016 and 2015 Expressed in thousands of Dollars, except earnings per share ~ ~ Interest income $2,568,961 $79,289 $1,979,310 $60,363 Interest expenses (1,169,298) (36,089) (944,970) (28,819) Net interest income 1,399,663 43,200 1,034,340 31,544 Non-interest income 160,968 4, ,760 6,031 Total income 1,560,631 48,168 1,232,100 37,575 Bad debt expense and reserve for loss on guarantees (269,072) (8,305) (239,579) (7,306) Operating expenses (546,923) (16,880) (572,294) (17,453) Profit from continuing operations before income tax 744,636 22, ,227 12,816 Income tax expense (145,517) (4,491) (83,018) (2,532) Profit from continuing operations after income tax 599,119 18, ,209 10,284 Net income 599,119 18, ,209 10,284 Other comprehensive (loss) income (172,550) (5,326) 270,116 8,238 Total comprehensive income $426,569 $13,166 $607,325 $18,522 Primary earnings per share Note Note Note Note Note: Indovina Bank is a limited company; there is no information about earnings per share. 66

69 Cathay United Bank (Cambodia) Corporation Limited Condensed Balance Sheet As of 31 December 2016 and 31 December Expressed in thousands of Dollars Assets Cash and cash equivalents $840,466 $25,940 $1,077,849 $32,871 Due from the Central Bank and call loans to banks 1,828,862 56,446 1,332,617 40,641 Available-for-sale financial assets Receivables 120,494 3,719 24, Discounts and loans 6,454, ,225 4,799, ,361 Property and equipment 165,991 5, ,363 5,074 Intangible assets 49,287 1,521 44,752 1,365 Other assets 48,555 1,499 91,255 2,783 Total assets $9,509,374 $293,499 $7,537,642 $229,876 Liabilities Due to the Central Bank and call loans from banks $1,065,207 $32,877 $335,929 $10,245 Payables 132,120 4, ,356 3,518 Current income tax liabilities 22, , Deposits and remittances 6,369, ,599 5,203, ,693 Deferred tax liability 7, Other liability 50,568 1,561 23, Total liabilities 7,648, ,053 5,680, ,224 Stockholders' equity Capital stock 1,786,169 55,129 1,786,169 54,473 Retained earnings (56,169) (1,734) (104,528) (3,188) Others 131,266 4, ,974 5,367 Total stockholders' equity 1,861,266 57,446 1,857,615 56,652 Total liabilities and stockholders' equity $9,509,374 $293,499 $7,537,642 $229,876 Cathay United Bank (Cambodia) Corporation Limited Condensed Statement of Comprehensive Income For the years ended 31 December 2016 and 2015 Expressed in thousands of Dollars, except earnings per share ~ ~ Interest income $525,542 $16,221 $320,711 $9,781 Interest expenses (122,854) (3,792) (69,909) (2,132) Net interest income 402,688 12, ,802 7,649 Non-interest income 35,772 1,104 86,332 2,633 Total income 438,460 13, ,134 10,282 Bad debt expense and reserve for loss on guarantees (117,085) (3,614) (25,722) (784) Operating expenses (245,774) (7,585) (199,263) (6,077) Profit from continuing operations before income tax 75,601 2, ,149 3,421 Income tax expense (27,242) (841) (13,264) (405) Profit from continuing operations after income tax 48,359 1,493 98,885 3,016 Net profit 48,359 1,493 98,885 3,016 Other comprehensive (loss) income (44,708) (1,380) 71,938 2,194 Total comprehensive income $3,651 $113 $170,823 $5,210 Primary earnings per share $0.77 $0.02 $1.65 $

70 2016 Financial Report Cathay Securities Corporation Condensed Balance Sheet As of 31 December 2016 and 31 December 2015 Expressed in thousands of Dollars Assets Current assets $19,343,177 $597,012 $18,130,690 $552,933 Available-for-sale financial assets Investments accounted for using the equity method 1,589,073 49,045 1,230,114 37,515 Property and equipment 157,703 4, ,632 5,234 Intangible assets 44,151 1,363 53,420 1,629 Deferred tax assets 4, , Other non-current assets 497,032 15, ,117 13,087 Total assets $21,636,102 $667,781 $20,044,015 $611,284 Liabilities Current liability $14,613,294 $451,028 $13,181,818 $402,007 Deferred tax liability 24, , Other non-current liability 19, , Total liabilities 14,657, ,390 13,205, ,722 Stockholders' equity Capital stock 5,330, ,506 4,950, ,961 Capital surplus 491,766 15, ,766 14,998 Retained earnings 914,989 28,240 1,037,424 31,638 Others 241,931 7, ,552 10,965 Total stockholders' equity 6,978, ,391 6,838, ,562 Total liabilities and stockholders' equity $21,636,102 $667,781 $20,044,015 $611,284 Cathay Securities Corporation Condensed Statement of Comprehensive Income For the years ended 31 December 2016 and 2015 Expressed in thousands of Dollars, except earnings per share ~ ~ Revenues $2,146,465 $66,249 $2,408,971 $73,467 Serivce fee expenses (74,747) (2,307) (81,544) (2,487) Employee benefit expenses (846,513) (26,127) (835,868) (25,492) Share of the profit of associates and joint ventures accounted for using the equity method (14,418) (445) (11,209) (342) Operating expneses (891,170) (27,505) (910,788) (27,776) Non-oprating income and expenses 6, , Profit from continuing operations before income tax 326,224 10, ,274 18,154 Income tax expense (68,659) (2,119) (58,335) (1,779) Profit from continuing operations after income tax 257,565 7, ,939 16,375 Net income 257,565 7, ,939 16,375 Other comprehensive (loss) income (117,621) (3,631) 146,541 4,469 Total comprehensive income $139,944 $4,319 $683,480 $20,844 Primary earnings per share $0.48 $0.01 $1.01 $

71 Cathay Securities (Hong Kong) Limited Condensed Balance Sheet As of 31 December 2016 and 31 December 2015 Expressed in thousands of Dollars Assets Current assets $688,463 $21,249 $304,760 $9,294 Property and equipment 21, , Intangible assets 2, , Other non-current assets 77,774 2,401 7, Total assets $789,421 $24,365 $335,745 $10,239 Liabilities Current liability $354,690 $10,947 $217,565 $6,635 Total liabilities 354,690 10, ,565 6,635 Stockholders' equity Capital stock 728,544 22, ,069 10,981 Retained earnings (273,500) (8,441) (241,880) (7,377) Others (20,313) (627) (9) - Total stockholders' equity 434,731 13, ,180 3,604 Total liabilities and stockholders' equity $789,421 $24,365 $335,745 $10,239 Cathay Securities (Hong Kong) Limited Condensed Statement of Comprehensive Income For the years ended 31 December 2016 and from 4 September 2015 to 31 December 2015 Expressed in thousands of Dollars, except earnings per share ~ ~ Revenues $88,961 $2,746 $1,273 $39 Serivce fee expenses (2,033) (63) (58) (2) Employee benefit expenses (42,509) (1,312) (10,413) (318) Operating expneses (75,274) (2,323) (18,150) (553) Non-oprating income and expenses (765) (24) (381) (12) Loss from continuing operations before income tax (31,620) (976) (27,729) (846) Income tax expense Loss from continuing operations after income tax (31,620) (976) (27,729) (846) Net loss (31,620) (976) (27,729) (846) Other comprehensive loss (20,304) (627) (9) - Total comprehensive loss $(51,924) $(1,603) $(27,738) $(846) Primary earnings per share Note 1 Note 1 Note 1 Note 1 Note 1: Cathay Securities (Hong Kong) Limited is a limited company; there is no information about earnings per share. Note 2: Cathay Securities (Hong Kong) Limited was incorporated to the consolidated financial statements on 4 September

72 2016 Financial Report Cathay Venture Inc. Condensed Balance Sheet As of 31 December 2016 and 31 December 2015 Expressed in thousands of Dollars Assets Current assets $683,197 $21,086 $344,458 $10,505 Available-for-sale financial assets 2,775,518 85,664 2,304,204 70,272 Investments accounted for using the equity method 271,764 8, ,485 8,889 Property and equipment 3, Deferred tax assets 5, Other non-current assets 1, Total assets $3,741,652 $115,483 $2,942,000 $89,722 Liabilities Current liability $8,548 $264 $11,065 $338 Deferred tax liability - - 2, Other non-current liability 4, , Total liabilities 12, , Stockholders' equity Capital stock 3,000,000 92,593 2,403,000 73,285 Capital surplus 128,625 3, Retained earnings 304,538 9, ,305 8,548 Others 295,643 9, ,519 7,335 Total stockholders' equity 3,728, ,087 2,923,824 89,168 Total liabilities and stockholders' equity $3,741,652 $115,483 $2,942,000 $89,722 Cathay Venture Inc. Condensed Statement of Comprehensive Income For the years ended 31 December 2016 and 2015 Expressed in thousands of Dollars, except earnings per share ~ ~ Operating income $240,197 $7,413 $250,401 $7,637 Operating expenses (30,331) (936) (25,793) (787) Operating gross profit (17,378) (536) (16,315) (498) Non-operating income and expenses (1,185) (37) - - Profit from continuing operations before income tax 191,303 5, ,293 6,352 Income tax profit (expense) 1, (21,347) (651) Profit from continuing operations after income tax 192,483 5, ,946 5,701 Net income 192,483 5, ,946 5,701 Other comprehensive loss 55,124 1,701 (297,646) (9,077) Total comprehensive income $247,607 $7,642 $(110,700) $(3,376) Primary earnings per share $0.70 $0.02 $0.73 $

73 Cathay Securities Investment Trust Co., Ltd. Condensed Balance Sheet As of 31 December 2016 and 31 December 2015 Expressed in thousands of Dollars Assets Current assets $1,896,666 $58,539 $1,888,759 $57,602 Available-for-sale financial assets 74,695 2,306 60,746 1,853 Financial assets carried at cost 5, Investments accounted for using the equity method 263,243 8, ,178 8,880 Property and equipment 66,975 2,067 84,179 2,567 Intangible assets 9, , Deferred tax assets 14, , Other non-current assets 257,859 7, ,027 8,997 Total assets $2,589,398 $79,920 $2,647,119 $80,729 Liabilities Current liability $302,534 $9,338 $319,000 $9,729 Other non-current liability 144,938 4, ,458 5,381 Total liabilities 447,472 13, ,458 15,110 Stockholders' equity Capital stock 1,500,000 46,296 1,500,000 45,746 Capital surplus 13, , Retained earnings 655,353 20, ,227 19,494 Others (27,335) (843) (1,474) (45) Total stockholders' equity 2,141,926 66,109 2,151,661 65,619 Total liabilities and stockholders' equity $2,589,398 $79,920 $2,647,119 $80,729 Cathay Securities Investment Trust Co., Ltd. Condensed Statement of Comprehensive Income For the years ended 31 December 2016 and 2015 Expressed in thousands of Dollars, except earnings per share ~ ~ Operating income $1,506,682 $46,502 $1,405,507 $42,864 Operating expenses (1,135,175) (35,036) (1,075,974) (32,814) Operating gross profit 371,507 11, ,533 10,050 Non-operating income and expenses (14,305) (442) 44,068 1,344 Profit from continuing operations before income tax 357,202 11, ,601 11,394 Income tax expense (60,440) (1,865) (59,598) (1,818) Profit from continuing operations after income tax 296,762 9, ,003 9,576 Net income 296,762 9, ,003 9,576 Other comprehensive loss (25,861) (798) (25,358) (773) Total comprehensive income $270,901 $8,361 $288,645 $8,803 Primary earnings per share $1.98 $0.06 $2.09 $

74 2016 Financial Report Cathay Futures Co., Ltd. Condensed Balance Sheet As of 31 December 2016 and 31 December 2015 Expressed in thousands of Dollars Assets Current assets $4,122,394 $127,234 $4,060,732 $123,841 Available-for-sale financial asseets 305,516 9, ,087 8,481 Property and equipment 75,032 2,316 67,328 2,053 Investment property 290,341 8, ,253 8,730 Intangible assets 29, , Other non-current assets 147,337 4, ,047 4,484 Total assets $4,970,395 $153,407 $4,849,456 $147,894 Liabilities Current liability $3,832,279 $118,280 $3,763,808 $114,785 Deferred tax liability 6, , Other non-current liability 1, , Total liabilities 3,840, ,537 3,772, ,036 Stockholders' equity Capital stock 667,000 20, ,000 19,823 Retained earnings 187,646 5, ,397 5,471 Others 275,146 8, ,017 7,564 Total stockholders' equity 1,129,792 34,870 1,077,414 32,858 Total liabilities and stockholders' equity $4,970,395 $153,407 $4,849,456 $147,894 Cathay Futures Co., Ltd. Condensed Statement of Comprehensive Income For the years ended 31 December 2016 and 2015 Expressed in thousands of Dollars, except earnings per share ~ ~ Operating income $208,758 $6,443 $175,913 $5,365 Operating expenses (239,394) (7,389) (186,070) (5,675) Operating loss (30,636) (946) (10,157) (310) Non-operating income and expenses 60,407 1,865 40,244 1,228 Profit from continuing operations before income tax 29, , Income tax expense (4,522) (140) (4,760) (145) Profit from continuing operations after income tax 25, , Net income 25, , Other comprehensive income 27, ,963 1,005 Total comprehensive income $52,378 $1,617 $58,290 $1,778 Primary earnings per share $0.38 $0.01 $0.38 $0.01 This publication is for reference only and is in no way intended to offer financial advice for specific clients or investors. Investors should consult professional advisers for risk assessment and are responsible for the outcomes of their investment decisions. Any reprint or quote from this publication requires prior written consent of the Company. 72

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