Stock No: 2812 Taichung Commercial Bank Co., Ltd. and subsidiaries Consolidated Financial Statements and Independent Auditor s Report First Quarter, 2017 and 2016 Address: No. 87, Min Chuan Road, West District, Taichung Tel. No.: (04) 22236021-1 -
Index Item Page Notes to financial statements No. 1. Cover page 1-2. Index 2-3. Auditor s Report 3-4. Consolidated Balance Sheet 4-5. Consolidated Income Statement 5~7-6. Consolidated Statements of Changes in 8 - Shareholders Equity 7. Consolidated Statements of Cash Flow 9~11-8. Consolidated Notes to financial statements (1) Organization and operations 12 1 (2) Financial reporting date and procedures 12 2 (3) Application of new and revised standards 12~15 3 and interpretation (4) Summary of significant accounting 15~16 4 policies (5) Main source of significant accounting 16 5 judgment, estimates and assumptions uncertainty (6) Summary of significant accounting titles 17~47 6~33 (7) Related party transactions 47~51 34 (8) Pledged assets 51 35 (9) Significant contingent liabilities and 52~57 36 unrecognized contractual commitments (10) Others 57~88 37~42 (11) Segment information 89~90 43 (12) Notes of disclosure 1. Information about important transactions 91 44 2. Information regarding investees 91~94 44 3. Information regarding investment in 91, 95 44 the territory of mainland china 4. Business relationship and significant transactions between Parent Company and Subsidiaries 91, 96 44-2 -
Auditor s Report To: Taichung Commercial Bank Co., Ltd. We have audited the accompanying consolidated balance sheet of Taichung Commercial Bank Co., Ltd. and subsidiary as of March 31, 2017 and 2016, and the related consolidated statement of income, consolidated statement of changes in shareholders equity and consolidated statement of cash flows for the years then ended. Said consolidated financial statement is the responsibility of the management. Our responsibility is to express an opinion on the consolidated financial statement based on our audits. We designed and reviewed the consolidated financial statements in accordance with the Statement of Auditing Standard No. 36 The Review of Financial Statements. We only conducted analysis, comparison and inquiry of the financial statements, and did not conduct any audit in accordance with the principles of auditing generally accepted in the Republic of China; we therefore cannot express an audit opinion on the aforementioned consolidated financial statements. In our opinion, based on our audit, the consolidated financial statements as referred to in the first paragraph, present fairly, in all material aspects, conformity to the Regulations Governing the Preparation of Financial Reports by Public Banks, Regulations Governing the Preparation of Financial Reports by Security Firms, and IAS No. 34- Interim Financial Reporting recognized by the Financial Supervisory Commission to come into full force. Deloitte & Touche Kuan-Chung Lai, CPA Wen-Ya Hsu, CPA Securities and Futures Bureau Approval Document No. Tai-Cai-Zheng (6) Zi No. 0920123784 Securities and Futures Bureau Approval Document No. Tai-Cai-Zheng (6) Zi No. 0920123784 Date: May 4, 2017-3 -
Taichung Commercial Bank Co., Ltd. and subsidiaries Consolidated Balance Sheet March 31, 2017 and December 31, March 31, 2016 Unit: NTD thousand March 31, 2017 (Reviewed) December 31, 2016 (Audited) March 31, 2016 (Reviewed) Code Assets Amount % Amount % Amount % 11000 Cash and cash equivalents (Note 6) $ 11,519,897 2 $ 14,105,611 2 $ 8,330,785 2 11500 Due from the Central Bank and lend to banks (Note 7) 27,743,063 4 86,216,971 14 87,728,647 15 12000 Financial assets at fair value through profit and loss (Note 8) 31,407,277 5 22,383,134 4 26,947,456 5 12500 Bonds and securities sold under repurchase agreements (Note 9) 7,281,602 1 3,627,189 1 6,361,524 1 13000 Receivables - net (Notes 10, 11 and 35) 10,369,024 2 9,802,310 2 7,935,766 1 13200 Current income tax asset (Note 4) 6,323-6,313-5,941-13500 Discounts and loans net (Notes 11 and 34) 427,799,008 67 425,166,259 68 392,186,311 67 14000 Available-for-sale financial assets net (Note 12) 35,862,346 6 37,455,220 6 37,516,346 6 14500 Held-to-maturity financial assets net (Notes 13 and 35) 73,870,463 12 14,276,270 2 7,645,560 1 15000 Investment by equity method net (Note 14) 129,689-130,935-134,680-15100 Restricted assets net (Notes 15 and 35) 266,892-285,234-334,642-15500 Other financial assets, net (Note 16) 1,128,443-1,171,178-1,093,581-18500 Property, plant, and equipment net (Note 17) 9,430,920 1 9,436,524 1 9,341,455 2 18700 Invest in investment property net (Note 18) 78,208-78,268 - - - 19000 Intangible assets net (Note 19) 150,894-166,769-187,287-19300 Deferred income tax assets (Note 4) 688,156-713,301-668,671-19500 Other assets (Notes 20 and 35) 2,198,565-2,081,215-1,701,093-10000 Total assets $ 639,930,770 100 $ 627,102,701 100 $ 588,119,745 100 Code Liabilities and equity 21000 Due to Central Bank and other banks (Note 21) $ 14,136,635 2 $ 11,617,728 2 $ 11,420,996 2 21500 Funds borrowed from Central Bank and other banks (Notes 22 and 35) 4,316,272 1 4,199,858 1 3,106,169-22000 Financial liabilities at fair value through profit and loss (Note 8) 378,963-162,792-352,923-22500 Bills and bonds sold under repurchase agreements (Note 23) 3,682,635 1 4,222,258 1 4,021,629 1 23000 Payables (Note 24) 7,166,319 1 9,805,707 1 4,880,457 1 23200 Current income tax liabilities (Note 4) 223,843-60,890-401,213-23500 Deposits and remittances (Notes 25 and 34) 551,305,782 86 539,809,008 86 505,142,104 86 24000 Financial bonds payable (Note 26) 13,400,000 2 13,000,000 2 15,700,000 3 25500 Other financial liabilities (Note 27) 1,147,167-807,967-554,717-25600 Liability reserve (Note 28) 1,296,684-1,307,838-1,105,449-29300 Deferred income tax liabilities (Note 4) 111,021-111,021-111,064-29500 Other liabilities (Note 29) 641,126-615,599-450,716-20000 Total liabilities 597,806,447 93 585,720,666 93 547,247,437 93 Equity of the parent company (Note 30) 31101 Common stock capital 32,381,307 5 32,381,307 5 31,840,027 6 31500 Capital surplus 684,156-684,156-684,156 - Retained earnings 32001 Legal reserve 4,881,792 1 4,881,792 1 3,959,058 1 32003 Special reserve 38,685-38,685-38,685-32011 Undistributed earnings 4,260,053 1 3,382,461 1 3,865,549-32500 Other equity ( 121,670 ) - 13,634-484,833-31000 Total shareholder s equity in the parent company 42,124,323 7 41,382,035 7 40,872,308 7 30000 Total equity 42,124,323 7 41,382,035 7 40,872,308 7 Total Liabilities and Equity $ 639,930,770 100 $ 627,102,701 100 $ 588,119,745 100 The notes attached shall constitute an integral part of this Consolidated financial statement. Chairman: Chun-Sheng Lee Manager: Chin-Yuan Lai Chief accountant: Chin-Min Liao - 4 -
Taichung Commercial Bank Co., Ltd. and subsidiaries Consolidated Income Statement 31, 2017 and 2016 (Reviewed only, not audited in accordance with the auditing principles generally accepted in the ROC) Unit: NTD thousands, except Earnings Per Share (NTD) 31, 2017 31, 2016 Code Amount % Amount % 41000 Interest revenues (Notes 31 and 34) $ 2,958,100 114 $ 2,861,320 119 51000 Interest expenses (Notes 31 and 34) ( 936,036 ) ( 36 ) ( 988,386 ) ( 41 ) 49010 Net interest income 2,022,064 78 1,872,934 78 Net income (loss) other than interest income 49100 Net income from service fees (Notes 31 and 34) 565,497 22 432,057 18 49200 Gain (loss) on financial assets and liabilities at fair value through profit and loss (Note 31) 266,341 10 ( 8,827 ) ( 1 ) 49600 Exchange gain (loss) ( 263,961 ) ( 10 ) 90,891 4 49700 Net gain (loss) on reversal of assets impairment (Notes 16 and 31) 8,424-24,509 1 49750 Profit or loss of affiliated companies and joint ventures under the equity method (Note 14) ( 1,246 ) - ( 1,932 ) - 49800 Net income other than interest income (Notes 28 and 31) 5,930-3,847-4xxxx Net revenue 2,603,049 100 2,413,479 100 58200 Bad debt expense and guaranty reserve (Notes 11 and 28) ( 88,872 ) ( 3 ) ( 108,083 ) ( 5 ) (Continued on next page) - 5 -
(Continued from previous page) 31, 2017 31, 2016 Code Amount % Amount % Operating expenses 58500 Employee benefits expenses (Notes 4 and 31) ( $ 794,537 ) ( 31 ) ( $ 772,668 ) ( 32 ) 59000 Depreciation and amortization expenses (Note 31) ( 84,139 ) ( 3 ) ( 60,059 ) ( 2 ) 59500 Business and administrative expenses (Notes 31 and 34) ( 550,082 ) ( 21 ) ( 552,174 ) ( 23 ) 58400 Total operating expenses ( 1,428,758 ) ( 55 ) ( 1,384,901 ) ( 57 ) 61001 Income before tax from continuing operations 1,085,419 42 920,495 38 61003 Income tax expenses (Notes 4 and 32) ( 207,827 ) ( 8 ) ( 130,724 ) ( 5 ) 64000 Current year net income after tax 877,592 34 789,771 33 Other comprehensive profit or loss Titles that could be reclassified as profits (loss) accounts in the future 65301 Exchange differences from the translation of financial statements of foreign operations ( 33,380 ) ( 1 ) ( 19,610 ) ( 1 ) 65302 Available-for-sale financial assets unrealized valuation gains (losses) ( 100,581 ) ( 4 ) 155,259 6 65320 Income tax related to titles that could be reclassified (Notes 4 and 32) ( 1,343 ) - 899-65300 The total of the titles that could be reclassified as profits (loss) accounts in the future (after taxation) ( 135,304 ) ( 5 ) 136,548 5 65000 Other comprehensive net income (after tax) ( 135,304 ) ( 5 ) 136,548 5 66000 Current period other comprehensive income (after tax) $ 742,288 29 $ 926,319 38 (Continued on next page) - 6 -
(Continued from previous page) 31, 2017 31, 2016 Code Amount % Amount % Consolidated EPS (Note 33) Business units in continuing operation 67501 Basic $ 0.27 $ 0.24 67701 Diluted $ 0.27 $ 0.24 The notes attached shall constitute an integral part of this Consolidated financial statement. Chairman: Chun-Sheng Lee Manager: Chin-Yuan Lai Chief accountant: Chin-Min Liao - 7 -
Taichung Commercial Bank Co., Ltd. and subsidiaries Consolidated Statements of Changes in Shareholders Equity 31, 2017 and 2016 (Reviewed only, not audited in accordance with the auditing principles generally accepted in the ROC) Unit: NTD thousand Equity of the company Capital stock Retained earnings Other equity Exchange differences from Code Common stock Capital surplus Legal reserve Special reserve Undistributed earnings the translation of financial statements of foreign operations Unrealized gain on available-for-sale financial instruments Total equity A1 Balance as of January 1, 2016 $ 31,840,027 $ 684,156 $ 3,959,058 $ 38,685 $ 3,075,778 $ 51,153 $ 297,132 $ 39,945,989 D1 Net profit in 31, 2016 - - - - 789,771 - - 789,771 D3 D5 Other comprehensive profit or loss in 31, 2016 - - - - - ( 19,610 ) 156,158 136,548 Total comprehensive profit or loss in 31, 2016 - - - - 789,771 ( 19,610 ) 156,158 926,319 Z1 Balance as of March 31, 2016 $ 31,840,027 $ 684,156 $ 3,959,058 $ 38,685 $ 3,865,549 $ 31,543 $ 453,290 $ 40,872,308 A1 Balance as of January 1, 2017 $ 32,381,307 $ 684,156 $ 4,881,792 $ 38,685 $ 3,382,461 ( $ 23,183 ) $ 36,817 $ 41,382,035 D1 Net profit in 31, 2017 - - - - 877,592 - - 877,592 D3 D5 Other comprehensive profit or loss in 31, 2017 - - - - - ( 33,380 ) ( 101,924 ) ( 135,304 ) Total comprehensive profit or loss in 31, 2017 - - - - 877,592 ( 33,380 ) ( 101,924 ) 742,288 Z1 Balance as of March 31, 2017 $ 32,381,307 $ 684,156 $ 4,881,792 $ 38,685 $ 4,260,053 ( $ 56,563 ) ( $ 65,107 ) $ 42,124,323 The notes attached shall constitute an integral part of this consolidated financial statement. Chairman: Chun-Sheng Lee Manager: Chin-Yuan Lai Chief accountant: Chin-Min Liao - 8 -
Taichung Commercial Bank Co., Ltd. and subsidiaries Consolidated Statements of Cash Flow 31, 2017 and 2016 (Reviewed only, not audited in accordance with the auditing principles generally accepted in the ROC) January 1 to March 31, 2017 Unit: NTD thousand January 1 to March 31, 2016 Code Cash flow from operating activities A10000 Current year net profit before taxation $ 1,085,419 $ 920,495 Revenue, expense and loss that do not affect the cash flows A20100 Depreciation expenses 54,845 45,551 A20200 Amortization expenses 29,294 14,508 A20300 A20400 Bad debt expense and reserve for guarantee liability 88,872 108,083 Loss (gain) on financial assets and liabilities at fair value through profit and loss ( 266,341 ) 8,827 A22500 Disposal and obsolescence loss (gain) of property and equipment 519 ( 53 ) A20900 Interest expenses 936,036 988,386 A21200 Interest revenue ( 2,958,100 ) ( 2,861,320 ) A21800 Net change in other provisions for liabilities - 100 A22300 Loss of the affiliated company under the equity method 1,246 1,932 A23600 Financial assets impairment loss (reversal gain) ( 8,424 ) ( 24,509 ) A24100 Unrealized foreign currency exchange loss 770,888 36,295 A20010 Total income, expense and loss ( 1,351,165 ) ( 1,682,200 ) Changes in operating activities related assets/liabilities A41110 A41120 Due from Central Bank and lend to Banks ( 388,312 ) 777,401 Financial assets at fair value through profit and loss ( 8,287,030 ) 4,972,238 A41150 Accounts receivable ( 485,396 ) ( 1,155,441 ) A41160 Discounts and loans ( 2,663,324 ) ( 1,153,918 ) A41190 Other financial assets ( 19,968 ) 7,798 A41990 Other assets ( 107,980 ) 88,002 A42110 Due to Central Bank and other banks 2,518,907 7,556,892 A42120 (Continued on next page) Financial liabilities at fair value through profit and loss ( 254,601 ) ( 61,430 ) - 9 -
(Continued from previous page) Code A42140 31, 2017 31, 2016 Bills and bonds sold under repurchase agreements ( $ 539,623 ) $ 3,748,317 A42150 Payables ( 2,831,439 ) ( 462,003 ) A42160 Customer deposits and remittances 11,496,774 278,125 A42170 Other financial liabilities ( 30,557 ) ( 63 ) A42180 Employee benefit liabilities reserve ( 10,722 ) ( 5,030 ) A42990 Other liabilities 25,527 32,925 A40000 Total changes in operating activities related assets/liabilities ( 1,577,744 ) 14,623,813 A33000 Cash inflow from operating activities ( 1,843,490 ) 13,862,108 A33100 Interest received 2,926,448 2,713,822 A33300 Interest payment ( 743,985 ) ( 827,152 ) A33500 Income tax payment ( 21,082 ) ( 24,350 ) AAAA Net cash inflow from operating activities 317,891 15,724,428 Cash flow from investing activities B00300 Acquisition of available-for-sale financial assets ( 44,697 ) ( 13,895,675 ) B00400 Disposition of available-for-sale financial assets 1,500,000 289,710 B00900 Acquisition of held-to-maturity financial assets ( 199,307,662 ) ( 2,355,375 ) B01100 Return of capital from held-to-maturity 138,950,240 244,272 B02700 Acquisition of Property, plant, and equipment ( 50,404 ) ( 115,619 ) B02800 Disposal of Property, plant, and equipment 20 357 B03700 Decrease (increase) in refundable deposits 962 ( 25,257 ) B04500 Acquisition of Intangible assets ( 12,662 ) ( 17,802 ) BBBB Net cash outflow from investing activities ( 58,964,203 ) ( 15,875,389 ) Cash flow from financing activities C00300 Increase (decrease) in Funds borrowed from Central Bank and other banks 116,414 ( 26,285 ) C00700 Increase in commercial papers payable 369,757 275,766 C01400 Issuance of financial bonds 1,000,000 - C01500 Repayment of financial bonds ( 600,000 ) ( 200,000 ) CCCC Net cash inflow from financing activities 886,171 49,481 DDDD Impact of changes in exchange rate on cash and cash equivalents ( 33,380 ) ( 19,610 ) EEEE Current cash and cash equivalents decrease ( 57,793,521 ) ( 121,090 ) E00100 Balance of cash and cash equivalents, beginning of period 88,021,445 86,730,074 E00200 Balance of cash and cash equivalent, end of period $ 30,227,924 $ 86,608,984 (Continued on next page) - 10 -
(Continued from previous page) Ending cash and cash equivalents adjustment Code March 31, 2017 March 31, 2016 E00210 Cash and cash equivalents on the balance sheet $ 11,519,897 $ 8,330,785 E00220 E00230 E00200 The Due from Central Bank and Banks in compliance with the definition of cash and cash equivalents under IAS 7 11,426,425 71,916,675 The bonds and securities sold under repurchase agreements that meet the definitions of cash and cash equivalents under IAS 7 7,281,602 6,361,524 Balance of cash and cash equivalent, end of period $ 30,227,924 $ 86,608,984 The notes attached shall constitute an integral part of this consolidated financial statement. Chairman: Chun-Sheng Lee Manager: Chin-Yuan Lai Chief accountant: Chin-Min Liao - 11 -
Taichung Commercial Bank Co., Ltd. and subsidiaries Consolidated Notes to financial statements 31, 2017 and 2016 (Reviewed only, not audited in accordance with the auditing principles generally accepted in the ROC) (In Thousands of New Taiwan Dollars, unless otherwise specified) 1. Organization and operations Formerly a cooperative savings company in central Taiwan (known as Central Taiwan Cooperative Company established on September 27, 1952, Taichung Commercial Bank Co., Ltd. (hereinafter, the Bank or Taichung Bank ) was approved to establish in April 1953 as a commercial bank and started its operation since August of the same year. The amended Banking Act was promulgated in July, 1975 on which Central Taiwan Cooperative Company was approved to reorganize as Taichung Small and Medium Business Bank Co., Ltd. (hereinafter, Taichung business bank ) on January 1, 1978. On May 15, 1984, the Bank was approved to list its stocks in TWSE. In order to cope with national financial policy, provide the pubic with financial services and support economic construction and develop industrial and commercial business, the Taichung Small and Medium Business Bank Company Limited was renamed Taichung Commercial Bank Co., Ltd. in December 1998. As of March 31, 2017, it had established a Business Department, Trust Department, International Banking Department and 79 local branches, and an International Banking Branch. It is engaged mainly in financial operations regulated by Banking Law, trust business, offshore banking business and others approved by the competent authority. The Taichung Bank s capital was NTD 500 thousand when the Bank was incorporated. In order to found its capital structure and comply with the Government Apparatus's order and decree, the Bank has increased/reduced its capital over the past years. As of March 31, 2017, its paid-in capital was NTD 32,381,307 thousand. This consolidated financial statement is denominated in the functional currency of Taichung Bank, which is NTD. 2. Financial reporting date and procedures The consolidated financial statements were approved for publication by the board of directors on May 4, 2017. 3. Application of new and revised standards and interpretation (1) The first use of the Regulations Governing the Preparation of Financial Reports by Public Banks after amendment and the IFRS, IAS, IFRIC, and SIC (hereinafter collectively known as IFRSs ) recognized by the Financial Supervisory Commission for coming into full force. The adoption of the amended Regulations Governing the Preparation of Financial Reports by Public Banks and the IFRS recognized by the Financial Supervisory Commission to come into full force will not cause significant change in the accounting policies of the consolidated company. (2) IFRSs released by IASB pending on the approval of FSC - 12 -
The IFRSs announced by IASB pending on the recognition of the Financial Supervisory Commission shall not be applicable to the consolidated company. FSC did not announce the effective date of any other standards beyond IFRS 9 and IFRS 15, which will be applicable in 2018, as of the date this consolidated financial statements was released. The new / amended / revised standards or IASB publication effective interpretation date (Note 1) The annual improvement plan for the periods of Note 2 2014-2016 Amendment to the IFRS 2 on share-based payment- January 1, 2018 classification and measurement. IFRS 9 Financial Instruments January 1, 2018 Amendments to the IFRS 9 and IFRS 7 Mandatory January 1, 2018 Effective Date and Transitional Disclosures Amendment to the IFRS 10 and IAS 28 Undefined Consolidated Financial Statements and Investment in Associates. IFRS 15, Revenue from Contracts with Customers January 1, 2018 Amendment to the IFRS 15 The interpretation of January 1, 2018 IFRS 15. IFRS 16 Leases January 1, 2019 Amendments to the IAS 7 Disclosure Initiative January 1, 2017 Amendments to the IAS 12 Recognition of January 1, 2017 unrealized loss as deferred income tax assets Amendments to the IAS 40, Investment Property January 1, 2018 IFRIC 22 Foreign Currency Transactions and January 1, 2018 Advance Note 1: Unless otherwise stated, the aforementioned new / amended / revised standards or interpretation are effective in the years after the respective date. Note 2: The revision of IFRS 12 is applicable to the period from January 1, 2017 in retrospect. The revision of IAS 28 is applicable to the period from January 1, 2018 in retrospect. 1. IFRS 9 Financial Instruments Recognition and measurement of financial assets In terms of financial assets, the subsequent measurement of financial assets within the scope of the IAS 39 Financial Instruments: Recognition and Measurement is measured at cost after amortization or fair value. The requirement of IFRS 9 on the classification of financial assets is shown below. The debt instruments in invested by the companies in the consolidated financial statements are classified and measured as follows if the contract cash flows are fully for the settlement of principal and the interests of the outstanding amount of principal: (1) The holding of financial assets is for purpose of collecting the contract cash flow volume shall be measured amortized cost of the financial assets. - 13 -
This category of financial assets shall be recognized as profit or loss on the interest calculated under the effective interest rate with continued assessment of impairment. Any gains or loss from impairment shall also be recognized as profits or loss. (2) The holding of financial assets is for purpose of collecting the contract cash flow volume and for selling the financial assets shall be measured at fair value through consolidated income statements. This category of financial assets shall be recognized as profit or loss on the interest calculated under the effective interest rate with continued assessment of impairment. Any gains or loss from impairment or exchange shall also be recognized as profits or loss. The change in fair value shall be recognized through consolidated income statement. For removal of the financial assets from book listing or reclassification, the change in fair value previously accumulated in the consolidated financial statement shall be reclassified as profits or loss. For the investment of financial assets by the companies in the consolidated financial statements beyond the aforementioned terms and conditions, they shall be measured at fair value and the change in fair value shall be recognized through profit and loss. If the companies in the consolidated financial statements are discrete in initial recognition, the equity investment not available for sales shall be measured at fair value through consolidated financial statement. With the exception of dividend income, which shall be recognized as profit or loss, any other related benefits and profit or loss from this category of financial assets shall be recognized as other comprehensive income without being assessed for impairment, and accumulated as change in fair value of other comprehensive income and not classified as profit or loss. Impairment of financial assets IFRS 9 adopts the expected credit losses model in the recognition of the impairment of financial assets. Financial assets based on cost after amortization, financial assets at fair value through consolidated income state under compulsion, receivable rents, assets from contracts under IFRS 15, Revenue from Contracts of Customers, or commitment of financing and financial guarantee contracts shall be recognized as provision for credit loss. If the credit risk of the aforementioned financial assets has no significant deterioration after initial recognition, the provision for credit loss shall be measured based on the expected credit loss in the 12 months ahead. If the credit risk of the aforementioned financial assets turned severe after the initial recognition and credit risk is not low, the provision for credit loss shall be measured based on the expected credit loss before the maturity of the assets. However, this does not include account receivables that contain material financial components, which shall be subject to assessment for the provision of expected credit loss before the perpetuity of the account receivables. For financial assets already showed credit impairment at the initial recognition, the companies in the consolidated financial statements shall consider the expected credit loss at the time of initial recognition and the effective interest rate after adjustment. Subsequent provision for credit loss shall be recognized based on accumulated changes of expected credit loss. - 14 -
Transitional provisions IFRS 9 will not be applicable to the items already removed on the day of first use after coming into effect. Classification, measurement, and impairment of financial assets shall be applicable in retrospect. Since the consolidated company is not required to recompile the statements for comparison, the accumulated effect of the first use of the system is recognized as of the day of first use. The use of general hedge accounting is deferred, but the profit and loss of options for hedge shall be recognized retroactively. 2. IFRS 16 Leases IFRS 16 governs the accounting of leasing and will replace IAS 17 Leasing and related interpretations. Under IFRS 16, where applicable, and if the consolidated company is the Lessee, only short-term and low price subject of lease could adopt IAS 17 Leases in accounting while all others leases shall be recognized as assets-right of use and liabilities-lease on the balance sheet. The comprehensive income statement shall present the interest expenses incurred from the depreciations of the utilization of equity assets and leasehold liability under effective interest method. The principal amount of rent payment liability shall be recognized as financing while the interest payment shall be recognized as operation in the statement of cash flows. No anticipated significant influence from the accounting where the company contained in the consolidated financial statement is the lessor. Company contained in the consolidated financial statements may, at the time IFRS 16 becomes effective, apply the standard to the period of comparison retroactively, or recognize the accumulated effect of first use as of the day of first use. Further to the aforementioned influence, the companies in the consolidated financial statements will continue to evaluate the effect of the amendment to other IFRSs on the financial positions and performance of the companies in the consolidated financial statements to the date this parent company only financial statement approved and released, and will make appropriate disclosure after the evaluation. 4. Summary of significant accounting policies (1) Compliance Statement This consolidated financial statement was compiled in conformity to the Regulations Governing the Preparation of Financial Reports by Public Banks, Regulations Governing the Preparation of Financial Reports by Security Firms and IAS 34 Interim Financial Reporting recognized by the Financial Supervisory Commission. This consolidated financial statement does not cover the IFRSs disclosure as required by the whole annual financial reporting. (2) Basis of consolidation 1. Principle of consolidated financial statements preparation This consolidated financial statement contains the information of the financial statements of the Bank and its controlled entities (subsidiaries). - 15 -
The subsidiaries financial statements have been properly adjusted to make the accounting policies consistent with the accounting policies of the consolidated company. In preparing these consolidated financial statements, the transactions, account balances, incomes and loss and expenses among the individual entities are written off in full amount. 2. Subsidiaries included in the consolidated financial statements The business entities of the consolidated financial statements are as follows: Investor Subsidiary name Nature of the operation Taichung Commercial Bank Co. Taichung Commercial Bank Co. Taichung Commercial Bank Co. Taichung Commercial Bank Lease Enterprise TCCBL Co., Ltd. Taichung Commercial Bank Insurance Broker Co., Ltd. Taichung Commercial Bank Lease Enterprise Taichung Commercial Bank Securities Co., Ltd. TCCBL Co., Ltd. Taichung Commercial Bank Leasing (Suzhou) Ltd. Percentage of shareholdings March 31, December March 31, 2017 31, 2016 2016 Insurance brokerage 100 100 100 Leasing 100 100 100 Securities Brokerage 100 100 100 Financing, leasing and investments. Financing Leasing and investments 100 100 100 100 100 100 3. The subsidiaries not included in the consolidated financial statements: None (3) Other major accounting policy Further to the elaboration specified hereunder, refer to the notes to major accounting policy of the consolidated financial statements for FY2016. 1. Fringe benefits after resignation under determined welfare plan The pension cost in the interim period is based on the pension cost rate of as of the last day of the previous period under actuarial calculation and from the beginning to the ending of the period in the calculation. Adjustment is made if there is wide fluctuation in market, major revision of the plan, settlement or other one-time materiality. 2. Income tax Income tax expense is the sum of the current income tax and deferred income tax. The income tax in the interim period is estimated based on the whole period and at the tax rate applicable to the total earnings expected in the period for the interim earnings before taxation. 5. Main source of significant accounting judgment, estimates and assumptions uncertainty The major accounting judgment, estimation, and assumption of uncertainty adopted in the consolidated financial statement share the same sources as the consolidated financial statements of FY2016. - 16 -
6. Cash and cash equivalents March 31, 2017 December 31, 2016 March 31, 2016 Cash on hand $ 3,670,657 $ 3,925,239 $ 3,221,348 Notes and checks for clearing 2,572,588 5,136,729 864,434 Due to Central Bank and other banks 5,276,652 5,043,643 4,245,003 $ 11,519,897 $ 14,105,611 $ 8,330,785 The cash and cash equivalent balance on the Consolidated Statement of Cash Flow as of March 31, 2017 and December 31, March 31, 2016, and the related adjustments of the consolidated balance sheet are as follows: March 31, 2017 December 31, 2016 March 31, 2016 Cash and cash equivalents on the consolidated balance sheet $ 11,519,897 $ 14,105,611 $ 8,330,785 The Due from Central Bank and other banks that meet the definitions of IAS 7 Definition of Cash and cash equivalents approved by the FSC. 11,426,425 70,288,645 71,916,675 The Bonds and securities sold under re-purchase agreements comply with the IAS 7 Definition of Cash and cash equivalents approved by the FSC. 7,281,602 3,627,189 6,361,524 Cash and cash equivalents on the Consolidated Statement of Cash Flow $ 30,227,924 $ 88,021,445 $ 86,608,984 As of March 31, 2017 and December 31, March 31, 2016, the time deposit of the business combination at other banks as performance bond of TCB Securities amounting to NTD 210,000 thousand, and converted to refundable security deposit. Please refer to Note 20. 7. Due from Central Bank and lend to Banks March 31, 2017 December 31, 2016 March 31, 2016 Reserve for deposits Reserve for deposits checking account $ 9,131,326 $ 14,600,055 $ 10,872,908 Reserve for deposits demand account 16,178,498 15,590,016 15,351,898 Financial Information Service Co., Ltd. liquidated account 992,953 1,010,848 667,416 Reserve for deposits in foreign currency 45,492 48,383 48,285 Certificate of deposit of the Central Bank - 54,500,000 56,900,000 Call loans to banks 1,344,794 417,669 3,838,140 Reserve for trust funds compensation 50,000 50,000 50,000 $ 27,743,063 $ 86,216,971 $ 87,728,647-17 -
(1) The deposit reserves in the Central Bank are calculated by multiplying the average monthly balances of all deposit accounts by the legally required ratio. The demand account reserve can be used only for the monthly adjustment of the deposit reserve. (2) The consolidated company reserve of the for trust funds compensation by Government bonds held to maturity on March 31, 2017 and December 31, March 31, 2016 is stated at the par value of NTD 50,000 thousand. Please refer to Note 35 for details. 8. Financial instruments measured at fair value through profit or loss March 31, 2017 December 31, 2016 March 31, 2016 Held-for-sale financial assets Commercial papers $28,622,343 $19,831,335 $24,050,519 Listed stocks domestic and emerging stock 780,080 696,980 838,756 Beneficiary certificate 587,013 614,880 1,220,458 Corporate bond 64,704 67,493 48,055 Assets swap agreement 887,828 756,942 499,489 Foreign exchange contracts 219,964 206,620 75,995 Forward contracts 98,232 186,806 169,836 FX options contracts 146,527 20,770 44,348 Interest rate derivatives 586 1,308 - $31,407,277 $22,383,134 $26,947,456 Held-for-sale financial liabilities Foreign exchange contracts $ 189,098 $ 78,515 $ 139,201 Forward contracts 40,659 60,084 168,370 FX options contracts 148,620 22,885 45,352 Interest rate derivatives 586 1,308 - $ 378,963 $ 162,792 $ 352,923 (1) The consolidated company financial derivative contract related to a foreign exchange rate is a non-trading operation performed for the purpose of providing customers with a hedging tool for the foreign exchange position generated from import/export and foreign exchange and hedging the risk from business and meeting the need for foreign exchange funds. - 18 -
(2) The consolidated company foreign exchange contracts which have not yet matured before March 31, 2017 and December 31, March 31, 2016 are specified as follows: March 31, 2017 December 31, 2016 March 31, 2016 Contract amount Contract amount Contract amount (NTD 1,000) Date of maturity (NTD 1,000) Date of maturity (NTD 1,000) Date of maturity Sold USD 19,963 2017/04/05-2018/03/27 Sold CNY 577,098 2017/02/09-2017/12/01 Sold AUD 11,078 2016/04/08-2016/04/12 CNY 543,927 2017/04/26-2018/01/26 HKD 221,017 2017/01/06-2017/02/09 CNY 367,103 2016/04/08-2016/12/02 JPY 1,387424 2017/04/10-2017/10/04 JPY 499,470 2017/09/29-2017/10/04 HKD 292,738 2016/04/08-2016/05/09 HKD 197,734 2017/04/06-2017/05/08 USD 232,279 2017/01/03-2017/03/06 JPY 2,589,792 2016/04/01-2016/04/18 EUR 10,500 2017/04/07-2017/04/13 Bought AUD 28,000 2017/01/05-2017/01/12 USD 1,246 2016/04/13-2016/06/13 GBP 3,500 2017/04/10-2017/04/11 CAD 8,661 2017/01/18 EUR 20,000 2016/04/08-2016/04/21 Bought USD 130,372 2017/04/06-2018/01/26 EUR 10,000 2017/03/06 Bought CAD 7,767 2016/04/12 CNY 5,200 2018/03/27 GBP 3,000 2017/02/03 CNY 798 2016/06/13 NZD 6,000 2017/04/10 JPY 3,514,964 2017/03/03 EUR 1,000 2016/04/13-2016/04/21 CAD 9,055 2017/04/11 NZD 6,000 2017/01/24 SGD 832 2016/04/12 GBP 1,729 2017/04/10 USD 117,100 2017/01/06-2017/12/01 USD 208,690 2016/04/01-2016/12/02 AUD 5,500 2017/04/06 ZAR 170,429 2017/01/06 GBP 1,300 2016/04/08 (3) The consolidated company forward contracts which have not yet matured before March 31, 2017 and December 31and March 31, 2016 are specified as follows: Currency Date of maturity Contract amount (NTD 1,000) March 31, 2017 Forward exchange sold USD translated into NTD 2017/04/05-2018/03/23 USD91,731/NTD2,837,725 Forward exchange sold EUR translated into NTD 2017/06/06-2017/06/30 EUR1,691/NTD57,374 Forward exchange sold RMB translated into NTD 2017/06/12 CNY800/NTD3,597 Forward exchange sold JPY translated into NTD 2017/06/20-2018/03/23 JPY78,111/NTD21,341 Forward exchange bought NTD translated into USD 2017/04/13-2017/10/06 NTD808,081/USD26,000 Forward exchange bought NTD translated into JPY 2017/06/20-2017/09/01 NTD7,629/JPY28,000 Forward exchange bought EUR translated into USD 2017/04/07-2017/09/08 EUR11,250/USD12,088 Forward exchange bought RMB translated into USD 2017/07/13-2018/03/27 CNY20,200/USD2,853 Forward exchange bought GBP translated into USD 2017/05/08-2017/06/28 GBP3,000/USD3,776 Forward exchange bought JPY translated into USD 2017/04/07-2017/10/02 JPY2,334,978/USD21,207 Forward exchange bought USD translated into GBP 2017/06/30-2017/09/28 USD7,742/GBP6,200 Forward exchange bought USD translated into EUR 2017/04/05-2017/09/29 USD13,695/EUR12,750 Forward exchange bought USD translated into RMB 2017/04/25-2017/06/14 USD1,729/CNY12,000 Forward exchange bought USD translated into JPY 2017/04/05-2017/09/29 JPY3,631,840/USD32,150 December 31, 2016 Forward exchange sold USD translated into NTD 2017/01/03-2017/12/11 USD58,395/NTD1,847,270 Forward exchange sold RMB translated into NTD 2017/06/12 CNY800/NTD3,597 Forward exchange sold EUR translated into JPY 2017/01/12-2017/06/30 EUR1,741/NTD59,883 Forward exchange sold JPY translated into NTD 2017/01/26-2017/02/21 JPY174,996/NTD51,793 Forward exchange bought NTD translated into USD 2017/01/10-2017/03/21 NTD313,038/USD10,000 Forward exchange bought EUR translated into USD 2017/01/11-2017/12/15 EUR23,950/USD26,089 Forward exchange bought GBP translated into USD 2017/01/04-2017/03/27 GBP5,250/USD6,771 Forward exchange bought JPY translated into USD 2017/01/10-2017/09/29 JPY5,420,607/USD50,700 Forward exchange bought USD translated into RMB 2017/01/18-2017/03/14 USD2,712/CNY19,000 Forward exchange bought USD translated into EUR 2017/02/02-2017/07/03 USD8,875/EUR8,300 Forward exchange bought USD translated into GBP 2017/03/03-2017/05/22 USD7,452/GBP6,000 Forward exchange bought USD translated into JPY 2017/03/30-2017/09/29 USD14,500/JPY1,662,751 (Continued on next page) - 19 -
(Continued from previous page) Currency Date of maturity Contract amount (NTD 1,000) March 31, 2016 Forward exchange sold USD translated into NTD 2016/04/01-2016/11/21 USD51,136/NTD1,675,481 Forward exchange sold EUR translated into NTD 2016/06/06 EUR100/NTD3,616 Forward exchange sold RMB translated into NTD 2016/04/01-2016/06/13 CNY12,199/NTD62,046 Forward exchange bought USD translated into JPY 2016/04/25-2016/09/23 USD4,000/JPY457,665 Forward exchange bought JPY translated into USD 2016/04/12-2016/10/03 JPY800,280/USD7,100 Forward exchange bought EUR translated into USD 2016/04/13-2016/09/19 EUR7,000/USD7,720 Forward exchange bought USD translated into EUR 2016/05/16-2016/09/06 USD2,089/EUR1,900 Forward exchange bought AUD translated into USD 2016/04/28 AUD4,000/USD2,826 (4) As of March 31, 2017 and December 31, March 31, 2016, the consolidated Company undertook assets swap contracts amounting to NTD 886,800 thousand, NTD 756,200 thousand and NTD 499,000 thousand respectively, at interest range of 1.00%~1.40%, 1.00%~1.40% and 1.20%~1.70%. (5) The foreign currency option contracts underwritten by the consolidated company amounted to NTD 486,326 thousand (USD 16,036 thousand), NTD 330,100 thousand (USD 10,234 thousand) and NTD 691,157 thousand (USD 21,471 thousand) as of March 31, 2017 and December 31, March 31, 2016, respectively. (6) As of March 31, 2017 and December 31, 2016, the Company undertook structured products totaled NTD 42,883 thousand and NTD 73,377 thousand respectively, with interest rate ranging from 6.50%~6.60%. 9. Bonds and securities sold under repurchase agreements As of March 31, 2017 and December 31, March 31, 2016, the consolidated company s bonds securing RP were NTD 7,281,602 thousand, NTD 3,627,189 thousand, and NTD 6,361,524 thousand, respectively. The redemption price as agreed were NTD 7,282,890 thousand, NTD 3,627,654 thousand, and NTD 6,362,366 thousand, respectively. 10. Receivable- net March 31, 2017 December 31, 2016 March 31, 2016 Notes receivable $ 3,134,091 $ 3,326,719 $ 3,159,890 Accounts receivable 903,180 768,144 679,858 Acceptances receivable 669,434 771,318 391,782 Interests receivable 1,089,762 991,212 906,497 (Continued on next page) - 20 -
(Continued from previous page) March 31, 2017 December 31, 2016 March 31, 2016 Receivable spot exchange settlement payment $ 1,487,661 $ 1,494,328 $ 1,430,375 Rent receivables 2,561,885 2,385,327 1,021,913 Receivable out-of-pocket expenses for attorney fees and cost of action 38,905 41,631 22,505 Other receivables 948,771 535,077 800,541 10,833,689 10,313,756 8,413,361 Less: Unrealized interest income ( 280,226 ) ( 311,829 ) ( 241,553 ) Less: allowance for bad debt (Note 11) ( 184,439 ) ( 199,617 ) ( 236,042 ) $10,369,024 $ 9,802,310 $ 7,935,766 (1) The consolidated company classifies receivables based on credit risk features of products as follows: With individual objective evidence of impairment Without individual objective evidence of impairment Item Individual evaluation of impairment Portfolio evaluation of impairment Portfolio evaluation of impairment Total receivables Allowance for bad Allowance for bad Allowance for bad Total receivables Total receivables debt debt debt March 31, 2017 March 31, 2017 December 31, 2016 December 31, 2016 March 31, 2016 March 31, 2016 Corporate banking $ 33,046 $ 3,253 $ 27,839 $ 3,394 $ 37,603 $ 4,556 Consumer banking 9,075 249 8,660 259 4,345 157 Others 401,820 81,578 361,112 103,367 1,025,481 146,212 Corporate banking 10,932 2,631 9,514 2,035 7,571 1,646 Consumer banking 44,809 26,201 40,125 19,213 28,491 11,351 Corporate banking 1,078,006 13,609 1,034,686 13,824 621,611 7,940 Consumer banking 901,460 6,862 928,789 5,882 837,605 5,192 Others 48,796,471 46,520 102,897,494 46,281 103,968,354 31,108 Total 51,275,619 180,903 105,308,219 194,255 106,531,061 208,162 The aforementioned receivables of the Bank as of March 31, 2017 and December 31, March 31, 2016 covered due from banks, due from the Central Bank and call loans to banks, bonds and securities sold under repurchase agreements, note receivables, credit card proceeds receivables, interest receivables, acceptance receivables, non-loan recognized as accounts for collection, and refundable security deposits. The aforementioned provision for bad debts is disclosed is calculated by the specific feature of the risk pursuant to IAS 39. The Bank has recognized provision for bad debts for Category 1 loan assets of more than 1% in accordance with the Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non-performing/Non-accrual Loans and Letter Chin-Kuan-Yin-Fa-Zi No. 10010006830 as of March 31, 2017 and December 31, March 31, 2016, with the additional amount of recognition by NTD 25,816 thousand, NTD 17,754 thousand and NTD 41,633 thousand, respectively. (2) Please refer to Note 35 for the notes receivable used as collateral of interbank financing. - 21 -
11. Discounts and loans, net March 31, 2017 December 31, 2016 March 31, 2016 Bills negotiated and discounts $ 301,585 $ 616,797 $ 766,727 Overdraft 1,235 1,182 891 Secured overdraft 38,739 29,812 28,091 Accounts receivable financing 41,729 84,669 52,810 Securities receivable financing 1,489,135 1,265,656 1,030,993 Short-term loan 46,925,088 46,495,818 36,283,046 Short-term secured loans 87,140,345 86,823,379 76,833,645 Mid-term loans 40,442,973 39,579,761 40,266,698 Mid-term secured loans 113,478,826 112,660,384 106,872,857 Long-term loans 4,400,804 4,290,507 3,800,918 Long-term secured loans 138,209,998 137,239,847 130,907,244 Delinquent loans 1,531,207 2,250,091 1,014,245 434,001,664 431,337,903 397,858,165 Add: Adjustment of premium/discount 53,823 55,043 88,815 Less: allowance for bad debt ( 6,256,479 ) ( 6,226,687 ) ( 5,760,669 ) $ 427,799,008 $ 425,166,259 $ 392,186,311 (1) The balances of loans and other loans on which no interest has accrued by the Taichung Bank on March 31, 2017 and December 31, March 31, 2016 were NTD 1,512,200 thousand, NTD 2,226,189 thousand and NTD 1,000,740 thousand, respectively. The interest receivable on which no interest has accrued internally were NTD 10,533 thousand, NTD 37,696 thousand and NTD 7,894 thousand, respectively. (2) There was no credit loan written off without pursuit in 31, 2017 and 2016. (3) The consolidated company classifies discounts and loans based on credit risk features of products as follows: Discounts and loans With individual objective evidence of impairment Without individual objective evidence of impairment Item Individual evaluation of impairment Portfolio evaluation of impairment Portfolio evaluation of impairment Corporate banking Consumer banking Corporate banking Consumer banking Corporate banking Consumer banking Allowance for bad Allowance for bad Allowance for bad Total amount Total amount Total amount debt debt debt March 31, 2017 March 31, 2017 December 31, 2016 December 31, 2016 March 31, 2016 March 31, 2016 $ 6,949,961 $ 1,499,152 $ 7,197,008 $ 1,294,757 $ 4,768,257 $ 1,083,264 1,961,494 202,364 1,798,103 157,085 1,290,324 108,421 974,330 308,953 935,133 274,044 856,288 223,124 1,893,550 240,102 1,848,381 199,529 1,767,850 197,467 223,845,027 1,595,185 225,277,425 1,582,056 209,878,912 1,438,015 198,377,302 201,570 194,281,853 170,626 179,296,534 144,414 Total 434,001,664 4,047,326 431,337,903 3,678,097 397,858,165 3,194,705 The aforementioned provision for bad debts is disclosed pursuant to IAS 39 and based on the characteristics of the risk. TC Bank has recognized more than 1% as provision for bad debts for Class I loan assets in accordance with the Regulations Governing the Estimation of Provision for Loss, Overdue Loans and Non-Performing Loans of Bank Assets and Letter Chin-Kuan-Yin-Fa-Zi No. 10010006830 and complied with the requirements set forth in Letter Chin-Kuan-Yin-Kuo-Zi No. - 22 -
10300329440 whereby provision for non-performing realty loans shall be no less than 1.5% since December 31, 2014. As of March 31, 2017 and December 31, March 31, 2016, the accumulated provision for bad debts amounted to NTD 2,209,153 thousand, NTD 2,548,590 thousand and NTD 2,565,964 thousand, respectively. (4) Details and changes of allowance for bad debts for receivables and discounts and loans for 31, 2017 and 2016 are summarized as follows: 31, 2017 Accounts receivable Discounts and loans Total Balance, beginning $ 212,009 $ 6,226,687 $ 6,438,696 Provided in the current period 28,840 60,032 88,872 Write-off of non-performing loans ( 37,271 ) ( 119,171 ) ( 156,442 ) Collection of written off bad debt 4,861 118,388 123,249 Exchange effects ( 1,720 ) ( 29,457 ) ( 31,177 ) Balance, ending $ 206,719 $ 6,256,479 $ 6,463,198 31, 2016 Accounts receivable Discounts and loans Total Balance, beginning $ 246,104 $ 6,265,316 $ 6,511,420 Provided in the current period 31,728 76,355 108,083 Write-off of non-performing loans ( 33,284 ) ( 625,353 ) ( 658,637 ) Collection of written off bad debt 4,497 69,517 74,014 Exchange effects ( 250 ) ( 9,166 ) ( 9,416 ) Reclassification 1,000 ( 16,000 ) ( 15,000 ) Balance, ending $ 249,795 $ 5,760,669 $ 6,010,464 Allowance for bad debts for above-mentioned receivables includes allowance for bad debts for delinquent loans other than loans transferred from loans. Please refer to Note 16 for details. 12. Available-for-Sale Financial Assets March 31, 2017 December 31, 2016 March 31, 2016 Corporate bond $26,856,821 $28,373,933 $31,569,466 Government bonds 8,702,889 8,839,124 5,725,658 Listed stocks - overseas 123,690 117,793 111,765 Listed stocks - domestic 178,946 124,370 109,457 Bonds and depository receipts - - - $35,862,346 $37,455,220 $37,516,346-23 -
(1) Foreign bonds, listed stocks and depository receipts are valued in foreign currencies as follows: March 31, 2017 December 31, 2016 March 31, 2016 USD $ 4,078 $ 3,652 $ 3,472 (2) As of March 31, 2017 and December 31, March 31, 2016, the amount of government bonds available for sale of the business combination availed as the condition for R/P amounted to NTD 1,900,000 thousand, NTD 2,740,000 thousand and NTD 2,939,100 thousand, respectively. (3) As of March 31, 2017 and December 31, March 31, 2016, bonds and depository receipts of the companies in the consolidated financial statements available for sale are recognized as impairment loss in full amount after evaluation. 13. Held to maturity investments, net March 31, 2017 December 31, 2016 March 31, 2016 Overseas bond $14,188,798 $13,243,533 $ 6,442,528 Government bonds 4,681,665 532,737 1,203,032 Negotiable certificate of deposits issued by Central Bank 55,000,000 500,000 - $73,870,463 $14,276,270 $ 7,645,560 (1) Foreign bonds are valued in foreign currencies as follows: March 31, 2017 December 31, 2016 March 31, 2016 USD $ 319,962 $ 263,962 $ 129,000 RMB 805,000 815,000 444,750 AUD 34,000 34,000 - (2) As of March 31, 2017 and December 31, March 31, 2016, the book values of the held-to-maturity government bonds securing RP were NTD 706,000 thousand, NTD 319,000 thousand and NTD 1,050,000 thousand, respectively. The book values of the held-to-maturity overseas bonds securing RP were NTD 1,122,136 thousand (USD 37,000 thousand), NTD 1,193,435 thousand (USD 37,000 thousand), and NTD 0 thousand, respectively. (3) As of March 31, 2017 and December 31, March 31, 2016, the book value of held-to-maturity overseas bonds securing the funds borrowed from banks was NTD 0 thousand, NTD 0 thousand and NTD 160,950 thousand (USD 5,000 thousand). Please refer to Note 35 for details. 14. Investment under the equity method March 31, 2017 December 31, 2016 March 31, 2016 Amount Shareholding Amount Shareholding Amount Shareholding Individual non-dominant associates Reliance Securities Investment Trust Co., Ltd. $ 129,689 38.46 $ 130,935 38.46 $ 134,680 38.46-24 -
The 31, 2017 and 2016 investment loss of the consolidated company in the affiliated company recognized under the equity method is as follows: 31, 2017 31, 2016 Investee Reliance Securities Investment Trust Co., Ltd. ( $ 1,246 ) ( $ 1,932 ) The consolidated financial information of the affiliated company of the consolidated company is as follows: March 31, 2017 December 31, 2016 March 31, 2016 Total assets $ 344,410 $ 351,645 $ 357,460 Total Liabilities $ 7,218 $ 11,213 $ 7,295 31, 2017 31, 2016 Operating income - current $ 8,305 $ 9,093 Net loss ( $ 3,239 ) ( $ 5,024 ) Current period other comprehensive loss ( $ 3,239 ) ( $ 5,024 ) The 31, 2017 and 2016 profit or loss and other comprehensive profit or loss of the affiliated company under the equity method was recognized in accordance with the reviewed financial statements during the same period of the affiliated company. 15. Restricted assets March 31, 2017 December 31, 2016 March 31, 2016 Restricted assets bank deposits $ 265,442 $ 284,118 $ 334,642 Underwriting money collected 800 1,046 - Pending settlement payments 650 70 - $ 266,892 $ 285,234 $ 334,642 The consolidated company s restricted bank deposit as the collateral for the interbank financing of the consolidated company. Please refer to Note 35. 16. Other financial assets - net March 31, 2017 December 31, 2016 March 31, 2016 Financial assets at cost $ 145,684 $ 145,684 $ 145,684 Other financial assets - others 977,197 1,022,835 937,786 Other Delinquent loans, net 5,562 2,659 10,111 $ 1,128,443 $ 1,171,178 $ 1,093,581-25 -