Integrity Creativity · Equator Principles compliant offshore wind power financing project...

Integrity ● Accountability ● Creativity

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 .....................................................07

2017 Business Plan ....................................................08

Overview of Subsidiaries

Cathay Life Insurance Co., Ltd.

Message from the President .................................10

Company Profile .........................................................11

Business Scope ...........................................................13

2017 Business Plan and Operational Targets ..................................................14

Cathay United Bank Co., Ltd.Message from the Chairman .................................16

Company Profile ........................................................17

Business Scope ...........................................................19


Cathay Century Insurance Co., Ltd.Message from the Chairman .................................22

Company Profile ........................................................23

Business Scope ...........................................................24

2017 Business Plan and

Operational Targets ..................................................25

CONTENTS

Cathay Securities CorporationMessage from the Chairman .................................26

Company Profile ........................................................27

Business Scope ...........................................................28


Cathay Securities Investment Trust Co., Ltd.Message from the Chairman .................................30

Company Profile ........................................................31

Business Scope ...........................................................32


Cathay Venture Inc.Company Profile .........................................................34

Business Scope ...........................................................34

2017 Business Plan ....................................................35

Overseas Branches and O�ces ...........36

The Year in Review 2016 ...........................38

Honors and Accolades ................................40

Financial Report ................................................42

• 2015.12.31 NTD/USD Exchange Rate: 32.79:1

• 2016.12.31 NTD/USD Exchange Rate: 32.4:1

Letter to ShareholdersIn keeping with our commitment as Taiwan’s largest financial

holding company to continually improving our business, Cathay Financial Holdings accumulated US$251.08 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

2016 Cathay Financial Holdings Annual Report

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

Assets

Net income

Number of branches and sales o�ces

Number of customers

Number of employees

US$251.1 billion

US$1.48 billion

881

Approximately 12,960,000

Approximately 51,000

Overview of Cathay Financial Holding Co., Ltd.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 trustwor thy and reliable financial holding company and to be a leading financial institution in the Asia-Pacific region.

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.

Chairman Hong-Tu Tsai

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.

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,

5

Cathay FinancialH

oldingsCathay life Insurance

Cathay United Bank

Cathay SecuritiesInvestm

ent TrustCathay century

InsuranceCathay Securities

CorporationCathay Venture

Cathay United Bank (Cambodia) Corporation Limited

(Ratio of shareholding: 100%)

Cathay Securities Investment Trust Co., Ltd.


Cathay Venture Inc.(Ratio of shareholding: 100%)

Corporate Sustainability Committee

Service Quality Committee

Risk Management Committee

Personal Data Management Committee

Audit Committee

Remuneration Committee

Strategic Management

Operations Management

AuditingDiv.

Shareholders

Board of Directors

President

Chairman

Administration Div.

FinanceDiv.

RiskManagement

Div.

Project PlanningDiv.

InformationDiv.

EconomicResearch Div.

MarketingPlanning Div.

Strategic Planning Dept.

Investors Relations Dep

t.

Public Relations D

ept.

Com

pliance D

ept

Integrated Marketing D

ept.

Direct M

arketing Planning Dep

t.

Digital D

ata and Technology

Accounting D

ept.

Financial Planning

Strategic Investment D

ept.

Investment M

anagement D

ept.

Adm

inistration Dep

t.

Legal Dep

t.

Cathay Financial Holding Co., Ltd.

Cathay United Bank Co., Ltd.


Cathay Century Insurance Co., Ltd.




Cathay Securities Corporation


Indovina Bank Limited (Note 1)(Ratio of shareholding: 50%)

Seaward Card Co., Ltd.(Ratio of shareholding: 100%)

Cathay Lujiazui Life Insurance Company Limited (Note 1)


Cathay Life Insurance (Vietnam) Co., Ltd.


Lin Yuan (Shanghai) Real Estate Co., Ltd.


Cathay Securities Investment Consulting Co., Ltd.


Cathay Insurance (Bermuda) Co., Ltd.


Conning Holdings Limited (Note 2)


Cathay Futures Co., Ltd.(Ratio of shareholding: 99.99%)

Cathay Investment Consulting (Shanghai) Co., Ltd.


Cathay Securities (Hong Kong) Limited


Cathay Woolgate Exchange Holding 2 Limited


Cathay Walbrook Holding 2 Limited


Cathay Walbrook Holding 1 Limited


Cathay Woolgate Exchange Holding 1 Limited


Cathay Insurance (Vietnam) Co., Ltd.


Note 1: A subsidiary other than those referred to in Article 4 of the Financial Holding Company Act.

Note 2: Re�ects the merger entity.

Organizational Chart

Group A�liates

Overview of Cathay Financial Holding Co., Ltd.

6


Name Education & Experience

Board of Directors

Hong-Tu Tsai J.D., Southern Methodist University, USA, Chairman, Cathay Life Insurance

Cheng-Ta Tsai B.A., Chinese Culture University, Managing Director, Cathay Life Insurance

Cheng-Chiu Tsai M.A., Keio University, Japan, Chairman, Cathay Century Insurance

Peter V. KwokPh.D., UC Berkeley, USA, Chairman and Chief Executive Officer, CITIC KA WAH Bank Limited, Chairman, CITIC Resources Holdings Limited

Chi-Wei JoongB.A., Kean College of New Jersey, USA, Chairman, ModernTimes China Co. Ltd., President, CMB Credit Card Center

Tsu-Pei Chen B.A., National Chengchi University, Chairman, Cathay United Bank

Tiao-Kuei Huang M.S., National Tsing Hua University, Vice Chairman, Cathay Life Insurance

Chang-Ken Lee M.B.A., University of Pennsylvania, USA, President, Cathay Financial Holdings

Ming-Ho Hsiung M.S., University of Iowa, USA, President, Cathay Life Insurance


Independent Directors

Min-Houng HongPh.D., Michigan State University, USA, Chairman, SinoPac Financial Holdings, Chairman, Panasonic Taiwan Co., Ltd.

Feng-Chiang MiauM.B.A., Santa Clara University, USA, B.A., UC Berkeley, USA, Chairman, MiTAC Holdings Corporation

Tsing-Yuan HwangPh.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

Executive Officer

Chairman Hong-Tu Tsai J.D., Southern Methodist University, USA

Title Name Education

Key Managers

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 ChangPh.D., Weatherhead School of Management at Case Western Reserve University, USA

Senior ExecutiveVP Jian -Hsing Wu M.S., Tamkang University

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

Chief Compliance Officer/Executive VP Judie HsuLLM, University of London, School of Oriental and African Studies

Capital and Shares

Board of Directors, Independent Directors and Key Managers

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

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Cathay FinancialH


Cathay United Bank





Overview of Cathay Financial Holding Co., Ltd.

Cathay FHC won the Most Prestigious Sustainability Awards-Top Ten Domestic Corporate

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.

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.

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.

2017 Business Plan

Cathay FHC teaming up with the National Taiwan University to foster the future star of Fintech!

8


Capital Allocation Plan

Cathay Financial Holdings 2016 on-campus recruitment activity

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

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 FHC sponsors the Jeremy Lin Basketball Training Camp

Cathay FHC invites hundreds of suppliers to build a sustainable garden together

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.

9

Cathay FinancialH


Cathay United Bank





Cathay Life Insurance Co., Ltd.O ver view of Subsidiar ies

President Ming-Ho Hsiung

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 2016. 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.

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

Message from the President

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.

10


Cathay Life Insurance Co., Ltd. was founded in October 1962 and listed on Taiwan Stock Exchange in November 1964. In 2016, we recorded US$20.68 billion in total premium income and US$170.82 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

Company Profile

No. of employees

Average age

Average years of service

30,700

43.5

11.9

Cathay Life 2016 Overseas Summit Meeting

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.

11

Cathay FinancialH


Cathay United Bank






Board of Directors, Independent Directors, Supervisors and Key Managers


Directors

Hong-Tu Tsai J.D., Southern Methodist University, USA, Chairman, Cathay Financial Holdings

Cheng-Ta Tsai B.A., Chinese Culture University, Managing Director, Cathay Life Insurance


Tiao-Kuei Huang M.S., National Tsing Hua University, Vice Chairman, Cathay Life Insurance

Ming-Ho Hsiung M.S., University of Iowa, USA, President, Cathay Life Insurance

Fa-Te Chang B.S., National Chung Hsing University, Chief Representative for Greater China, Cathay Life Insurance

Tzung-Han Tsai J.D., Georgetown University, USA, Vice Chairman, Cathay United Bank

Chung-Yan Tsai M.A., San Francisco State University, USA, Executive Vice President, Cathay Real Estate Development

John Chung-Chang Chu M.B.A., York University, Canada, Chairman, May Foong Woolen & Worsted Textile Mill. Ltd.

Wei-Ming Lu Kainan High School of Commerce & lndustry, Chairman, Seng Hong Enterprise Co., Ltd.

Chao-Ting Lin M.S., National Taiwan University ; Senior Executive Vice President, Cathay Life Insurance

Yi-Tsung Wang M.B.A., Massachusetts Institute of Technology, USA, Senior Executive Vice President, Cathay Life Insurance




Feng-Chiang Miau M.B.A., Santa Clara University, USA ; B.A., UC Berkeley, USA ; Chairman, MiTAC Holdings Corporation



Supervisors

Wan-Teh Tsai Nisho Gakusha University, Japan, Chairman, An Teh Development Co., Ltd.

Kai-Mo Chen National Taiwan University, Vice Chairman, Cathay General Hospital

Chih-Ming Lin National Taiwan University, Superintendent, Cathay General Hospital


Executive Officer

Chairman Hong-Tu Tsai J.D., Southern Methodist University, USA


Key Managers

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


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Business ScopeLife insurance and related businesses.

(NTD/USD: 32.4/1)

Unit: Million USD

2016 Revenue Breakdown

2016 Revenue Amount % of Total

Retained earned premium income 18,534.46 71.79%

Other income 182.25 0.71%

Net investment gain (loss) 5,879.09 22.77%

Insurance gain from unit-linked products 1,222.18 4.73%

Total income 25,817.97 100.00%

Retained earned premium income

71.79%

Other income

0.71%

Net investment gain (loss)

22.77%

Insurance gain from unit-linked products

4.73%

Cathay Life's 2016 Business Meeting

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Cathay FinancialH


Cathay United Bank





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 one-stop 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

1. Strengthen mobile digital financial services by integrating digital and mobile technologies to increase service quality and efficiency.

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 O�ce Support

1. Education and training:

(1) Refine dif ferent 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.

2017 Business Plan


Opening of Cathay Life's service counter at Songshan Airport Terminal 1

Cathay Employees Fun Contest—the Final

14


2017 Operational Targets

(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 plat forms that boost operational efficiency and encourage the sharing and exchange of knowledge.

Cathay Life Microfilm Award Ceremony for "My Elevated Tree Era"

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

Cathay Life 2016 Employee Singing and Cheerleading Contest Finals

(NTD/USD: 32.4/1)

Unit: Million USD

Primary Item Targets Total premium income 21,998

First-year premium equivalent 2,818

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Cathay FinancialH


Cathay United Bank





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.

Cathay United Bank Co., Ltd.O ver view of Subsidiar ies

Message from the Chairman

Chairman Tsu-Pei Chen

16


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 wholly-

owned 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

Company Profile

Cathay United Bank receives the 8th Taiwan Outstanding Financial Business Elite Award

Handover ceremony of Cathay United Bank's incoming and outgoing president

Cathay United Bank introduces the Formosa co-branded credit card

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

Average age


10,051

36.19

8.15

17

Cathay FinancialH


Cathay United Bank








Directors

Tsu-Pei Chen B.A., National Chengchi University, Chairman, Cathay United Bank

Tzung-Han Tsai J.D., Georgetown University, USA, Vice Chairman, Cathay United Bank

Alan Lee M.B.A., National Taiwan University, President, Cathay United Bank

Chun-Wei Yang B.A., National Chengchi University, Senior Executive Vice President, Cathay United Bank


Chuan-Chuan Hsieh M.B.A., National Taiwan University, Executive Vice President, Bank of Taiwan

Chi-Wei JoongB.A., Kean College of New Jersey, USA, Chairman, ModernTimes China Co. Ltd., President, CMB Credit Card Center

Chung-Yi Teng M.B.A., Massachusetts Institute of Technology, USA, Senior Executive Vice President, Cathay United Bank

Po-Tsang Hsieh B.A., Chinese Culture University, Senior Executive Vice President, Cathay United Bank

Tsung-Hsien Tsai M.S., Harvard University, USA, Executive Vice President, Cathay Financial Holdings

Shan-Chi Liu E.M.B.A., National Taiwan University, Senior Executive Vice President, Cathay Life Insurance

Jian-Hsing Wu M.S., Tamkang University, Senior Executive Vice President, Cathay United Bank




Feng-Chiang Miau M.B.A., Santa Clara University, USA ; B.A., UC Berkeley, USA ; Chairman, MiTAC Holdings Corporation



SupervisorsPeggy Wang B.A., National Taiwan University, Chairman, Cathay Futures Co.,Ltd.

Shu-Chen LanB.A., National Taiwan University, Member of Strategic Planning Committee, Acting Chief Secretary, Chunghwa Post Co., Ltd.


Executive Officer

Chairman Tsu-Pei Chen B.A., National Chengchi University


KeyManagers

President Alan Lee M.B.A., National Taiwan University

Senior Executive Vice President Chun-Wei Yang B.A., National Chengchi University

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


18


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

Business Scope

19

Cathay FinancialH


Cathay United Bank





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 transfersCreate 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 ServiceEndeavor 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 d ig i ta l channe ls to co l lec t and in tegrate customer digita l behavior so that suitable products and services can be provided in a timely manner.

SME Credit ServiceAdequately 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 ServiceSegment 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 ServiceSeize opportunities to develop mobile payment markets and

promote Apple Pay applications; establish strategic alliances to develop innovative financial services and diverse payment models on

2016 Income Statement

Item Amount % of Total

Net interest income 744 49%

Net fee income 481 32%

Financial asset or financial liability at fair value through profit 99 6%

Realized gain on available-for-sale financial assets 114 7%

Share of gain (loss) from affiliates and joint ventures recognized by equity method

14 1%

Gain on foreign currency exchange, net 37 2%

Other non-interest income, net 39 3%

Net Operating income 1,528 100%

2017 Business Plan


(NTD/USD: 32.4/1)

Unit: Million USD

3%

49%

2%

1%

6%

32%

7%

Net interest income

Net fee income

Financial asset or �nancial liability at fair value through pro�t

Realized gain on available-for-sale �nancial assets

Share of gain (loss) from a�liates and joint ventures recognized by equity method

Gain on foreign currency exchange, net

Other non-interest income, net

20


ATMIntegrate 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 marketingBuild 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 bankingExpand 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 of fice, and integrate f inancial group resources to meet the comprehensive needs of individual customers or family businesses.

Overseas operationsIntegrate 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.


Primary Item Targets

Deposits 64,403

Loans (including revolving credit) 43,996

Credit cards 6,030,000 cards

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 ManagementBased on the strategic objective of "activate assets and customer-

focused 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 ServiceTo 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 ExchangeStrengthen 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 bankingAdopt customer-centric business models to manage digital

customers, create a premium customer user experience, and become a comprehensive channel that customers can rely on.

Cathay United Bank Foundation Elevated Tree Program Donation Ceremony Cathay United Bank arranges syndicated loan for Bank for Investment and Development of Vietnam (BIDV)

(NTD/USD: 32.4/1)

Unit: Million USD

21

Cathay FinancialH


Cathay United Bank





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 2016 - 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.

Cathay Century Insurance Co., Ltd.O ver view of Subsidiar ies


Chairman Cheng-Chiu Tsai

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 industry-leading "Green Vehicle Insurance" project in 2013 and the first-ever "Bicycle Insurance Project" in 2014. 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.

22


Cathay Century Insurance was established in 1993 and became a member of Cathay Financial Holdings in 2002. 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 2007. 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

Company Profile

Cathay Century Insurance held the business unit executives meeting

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


2,049

38.2

8.58

23

Cathay FinancialH


Cathay United Bank





Business ScopeAll types of non-life insurance (including motor, fire, marine, engineering, health, accident, and other liability and property) and related business.



Directors


J.H. Hsu M.B.A., National Chengchi University, Vice Chairman, Cathay Insurance Co., Ltd (China)

K.C. Tsai College, Chairman, Central Construction Co., Ltd.

Chu-Yao Lu BA, Shih Hsin University, President, Wen Yi Investment Co., Ltd.

Tsung-Hsien Tsai M.S., Harvard University, USA, Director, Cathay United Bank

Chih-I Yu National Taiwan University, Consultant, Cathay Century Insurance




Matthew Miau Santa Clara University, EMBA, Chairman, MiTAC Holdings Corporation


SupervisorsJinn-Shing Leou M.A., University of Iowa, USA, Director, Cathay Securities Corporation

Zuo-Xing Hsu M.A., Southern Methodist University, USA, Supervisor, Cathay Hospitality Management


Executive Officer

Chairman Cheng-Chiu Tsai M.A., Keio University, Japan


KeyManagers

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

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

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

Cathay Century Insurance Co., Ltd.


24


2017 Business Plan


Business Plans1. 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 Plans1. 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 Plans1. 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.

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

10.23%

0.23%2.46%

87.08%

Retained earned premium income

Reinsurance commission income

Fees income

Net investment gain (loss)


Premium income US$651 million

(NTD/USD: 32.4/1)

(NTD/USD: 32.4/1)

Unit: Million USD



Retained earned premium income 475.13 87.08

Reinsurance commission income 13.42 2.46

Fees income 1.24 0.23

Net investment gain (loss) 55.84 10.23

Total income 545.63 100.00

25

Cathay FinancialH


Cathay United Bank





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 2016. 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

Cathay Securities CorporationO ver view of Subsidiar ies


Chairman Shih-Ting Chu

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.

26


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

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

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 cross-selling 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


633

40

4.4

27

Cathay FinancialH


Cathay United Bank





Business Scope01. 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



Directors

Shih-Ting Chu M.A., National Taiwan University, Chairman, Cathay Securities Corporation

Shun-Yu Chuang M.B.A., Massachusetts Institute of Technology, USA, President, Cathay Securities Corporation

Hung-Huei Liao M.A., National Taiwan University, Senior Executive Vice President, Cathay Securities Corporation


Jinn-Shing Leou M.A., University of Iowa, USA, Director, Cathay Securities Corporation



Tsing-Yuan HwangPh.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.

Tina PanPhD in Political Science, National Taiwan Normal University, Chairman, Modern Women's Foundation, Taiwan


SupervisorsWan-Chie Ma M.A., Tamkang University, Supervisor, Cathay Securities

Chi-Chang Huang M.A., Columbia University, USA, Senior Vice President, Cathay United Bank


Executive Officer

Chairman Shih-Ting Chu M.A., National Taiwan University


KeyManagers

President Shun-Yu Chuang M.B.A., Massachusetts Institute of Technology, USA

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

Cathay Securities Corporation


28


2017 Operational Targets2017 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 sub-brokerage 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.


Market share of brokerage business 2.01%

Number of lead underwriting cases 15

Number of warrants issued 1,080

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

Cathay Securities receives the 17th Golden Peak Award - Top Outstanding Enterprises of the Year and Top Ten Outstanding Products

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

Cathay FinancialH


Cathay United Bank





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.

Cathay Securities Investment Trust Co., Ltd.O ver view of Subsidiar ies


Chairman Jeff Chang

2017 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.

30


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

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 2016. 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 2016.

We have a team of 82 research professionals, including portfolio managers, with an average of 13 years of investment research-related experience. We have won more than 40 domestic and foreign fund awards since 2005.

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


266

40.8

6.7

31

Cathay FinancialH


Cathay United Bank






Board of Directors, Supervisors, and Key Managers


Directors

Jeff Chang M.S., National Cheng Kung University, Chairman, Cathay Securities Investment Trust

Woody E. Bradford Worcester Polytechnic Institute, Harvard Business School, Chairman and Chief Executive Officer, Conning

Bo Kratz MBA, Warwick Business School, England, Chief Executive Officer, Asia Pacific, Conning

Andy Chang M.B.A., National Central University, President, Cathay Securities Investment Trust

Peter Chiang B.A., National Chung Hsing University, Senior Executive Vice President, Cathay Securities Investment Trust

Solon Huang M.B.A., National Taiwan University, Senior Executive Vice President, Cathay Securities Investment Trust

Yi-Tsung Wang M.B.A., Massachusetts Institute of Technology, USA, Senior Executive Vice President, Cathay Life Insurance


Supervisors Rui-Hong Hong B.A. Soochow University, Manager of Accounting Department, Financial Division, Cathay Financial Holdings


Executive Officer

Chairman Jeff Chang M.S., National Cheng Kung University


KeyManagers

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

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

Business Scope1. 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.

Cathay Securities Investment Trust Co., Ltd.


32


Cathay SITE holds the 2017 Economic Prospect Forum

Cathay SITE holds the press conference for the Cathay Dow Jones 2X and Inversed ETF

Cathay SITE holds the press conference for Cathay TAIEX Daily ETF leveraged and reversed ETF

Cathay SITE establishes the FUN Happiness Club, which recruits employees to participate in volunteer works

CSIT holds the press conference for the Cathay Global High Dividend Fund

2017 Business Plan1. 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.


Assets US$15. 23 billion


(NTD/USD: 32.4/1)

33

Cathay FinancialH


Cathay United Bank






Business ScopeVenture 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 Shan-Chi LiuM.A., National Taiwan University, Chief of Project Planning Div., Cathay FHC, Senior Executive Vice President, Cathay Life Insurance

Director Joseph WangM.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


Chairman Jen-Ho Chang M.Sc., Warwick University, UK

President Chuan-Yen Hu M.B.A., University of Wisconsin, USA

Chief Executive Officer and Key Managers


Cathay Venture Inc.O ver view of Subsidiar ies

Company ProfileThe 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.

34


Investment themes in 20171. Invest in Fintech startups.

2. Expand biotech and healthcare investments.

3. Continue to develop excellent projects.



Income from sale of financial assets 5,260 70.95%

Investment income 1,942 26.19%

Interest and other income 212 2.86%

Total 7,414 100.00%

2.86%

26.19%

70.95%

Income from sale of �nancial assets

Investment income

Interest and other income

(NTD/USD: 32.4/1)

Thousand USD

35

Cathay FinancialH


Cathay United Bank





Cathay Lujiazui Life Insurance Co., Ltd. (Shanghai Headquarters)Address: 19F, Building B, Oriental Financial Square, 1168 Century Boulevard, Pudong New Area, Shanghai, PRCZIP: 200122Tel: 86-021-61006168 (main line)Fax: 86-021-61001682Website: www.cathaylife.cn

Cathay Lujiazui Life Insurance Co., Ltd., Jiangsu BranchAddress: 5F, Yinlun International, 177 Guang Zhou Rd., Gulou Dist., Nanjing City, Jiangsu Province, PRC ZIP: 210024Tel: 86-025-83718688 (main line)Fax: 86-025-83197171

Cathay Lujiazui Life Insurance Co., Ltd., Zhejiang BranchAddress: 10F, Sanxin Yinzuo, No. 72, Chiu Tao No. Road, Jiang Gang District, Hangzhou, Zhejiang, PRCZIP: 310020Tel: 86-0571-28039899 (main line)Fax: 86-0571-28033189

Cathay Lujiazui Life Insurance Co., Ltd., Fujian BranchAddress: Room 01, Floor 10, Dong

Ta Building of Lijia Square, No. 8 of

Yangqiao East Road, Guxi Street, Gulou

District, Fuzhou City

ZIP: 350003

Tel: 86-0591-87401668 (main line)

Fax: 86-0591-87824373

Cathay Lujiazui Life Insurance Co., Ltd., Beijing BranchAddress: 4F, Jiahe Guoxing Building, No. 15, Baiqiao Boulevard, Dongcheng District, Beijing, PRCZIP: 100062Tel: 86-010-59620678 (main line)Fax: 86-010-59620988

Cathay Lujiazui Life Insurance Co., Ltd. Shandong BranchAddress: 6F SK Modern City, No. 29,

Luoyuan Street, Lower District, Chinan,

Shandong Province, PRC

ZIP: 250014

Tel: 86-0531-86931688 (main line)

Fax: 86-0531-81671168

Cathay Lujiazui Life Insurance Co., Ltd. Guangdong BranchAddress: 5F No. 233, Dongfeng Xi Road, Yuexiu District, Guangzhou City, Guangdong Province, PRC (Qianshu Panfu Building)ZIP: 510180Tel: 86-020-83545288 (main line)Fax: 86-020-83553571

Cathay Lujiazui Life Insurance Co., Ltd. Liaoning BranchAddress: 22-1 and 22-2, Block D, Fortune Center, No.57, North Station Road, Shenhe District, Shenyang, Liaoning Province, PRCZIP: 110013Tel: 86-024-22566866 (main line)Fax: 86-024-22566766

Cathay Lujiazui Life Insurance Co., Ltd. Tianjin BranchAddress: 11F, Building B1, Jun Lung Square at No. 85, Nanjing Road, Hoping District, Tianjin, PRCZIP: 300040Tel: 86-022-58366900Fax: 86-022-58366909

Cathay Lujiazui Life Insurance Co., Ltd. Xiamen BranchAddress: 16F, Building A, Sinotrans Operation Center, No. 1032, Xia He Road, Si Ming District, Xiamen, Fujian, PRCZIP: 361001Tel: 86-0592-2276136Fax: 86-0592-2276135

Cathay Lujiazui Life Insurance Co., Ltd. Sichuan BranchAddress: Room 1201-1203, Bai Yang Building, No.18 Dong Yu Jie, LuoMaShi, Jinjiang Qu, Chengdu Shi, Sichuan Sheng, ChinaZIP: 610020Tel: 86-028-84726251

Beijing Representative OfficeAddress: Unit 02, 6F, Building B, Parkview Green Building, No. 9, Dongdaqiao Road, Chaoyang District, Beijing, PRCZIP: 100020Tel: 86-010-83913425Fax: 86-010-83913427

Hong Kong Representative OfficeAddress: 20F, LHT Tower, 31 Queen’s Road Central, Central, Hong KongTel: 852-2877-5488 ext123Fax: 852-2527-0966

Tokyo OfficeAddress: Kosumo Shinjyukugyoen Bldg. 7F, 1-1-7, Shinjuku, Shinjuku-ku, Tokyo, 160-0022, JapanTel: 81-3-5357-7711Fax: 81-3-6709-8898

Cathay Life Insurance (Vietnam) Co., Ltd. (Ho Chi Minh City Head Office)Address: The World Center Building9th floor, 46-48-50 Pham Hong Thai Street, District 1, Ho Chi Minh City, VietnamTel: 84-8-6255 6699Fax: 84-8-6255 6399Website: www.cathaylife.com.vn

Cathay Life Insurance (Vietnam) Co., Ltd. Hanoi BranchAddress: 167 Bui Thi Xuan, Hai Ba Trung Dist., Ha Noi CityTel: 84–4–6278 7888Fax: 84–4–6278 7887

Cathay Life Insurance (Vietnam) Co., Ltd. Da Nang BranchAddress: 6th floor, Sacombank Building, 130-132 Bach Dang Street, Hai Chau District, Da Nang CityTel: 84-511-6252 888Fax: 84-511-6253 288

Cathay Life Insurance (Vietnam) Co., Ltd. Can Tho BranchAddress: 6th floor, STS Building, 11B Hoa Binh Blv, Ninh Kieu District, Can Tho CityTel: 84-710-625 1999Fax: 84-710-620 0160

Cathay Life Insurance (Vietnam) Co., Ltd. Dong Nai branchAddress: 42C Nguyen Ai Quoc, Tan Tien Ward, Bien Hoa, Dong Nai CityTel: 84-61-629 3558Fax: 84-61-629 2575

Cathay Life Insurance (Vietnam) Co., Ltd. Hai Phong branchAddress: 4th floor Sacombank Building, 62- 64 Ton Duc Thang Street, Le Chan District, Hai Phong CityTel: 84-31-625 5160Fax: 84-31-625 5150

Cathay Life Insurance

Overseas Branches and Offices

36

Labuan BranchAddress: Level 3(C), Main Office Tower, Financial Park Labuan Complex, Jalan Merdeka, 87000, Labuan F. T., MalaysiaTel: 60-87-452168Fax: 60-87-453678

Hong Kong BranchAddress: 20F, LHT Tower, 31 Queen’s

Road Central, Central, Hong Kong

Tel: 852-2877-5488

Fax: 852-2527-0966

Singapore BranchAddress: 8 Marina Boulevard #13-03

Marina Bay Financial Centre Tower 1

Singapore 018981

Tel: 65-6593-9280

Fax: 65-6509-8172

Chu Lai BranchAddress: No. 123, Tran Quy Cap, Tam Ky City, Quang Nam Province, VietnamTel: 84-235-3813035~42Fax: 84-235-3813043~44

Shanghai BranchAddress: Room2501-2504 & 2508, Azia Center, No. 1233, Lujiazui Ring Road, Pudong New Area, Shanghai, ChinaTel: 86-21-6886-3785Fax: 86-21-6886-3787

Shanghai Minhang Sub-BranchAddress: Suite 101, 1F, Nikos Building, No.528 Hongxu Rd., Minhang Dist., Shanghai, ChinaTel: 86-21-6491-9929Fax: 86-21-5434-0590

Shanghai Pilot Free Trade Zone Sub- BranchAddress: Suite 713, No. 26, Jiafeng Rd., Pudong New Dist., Shanghai, ChinaTel: 86-21-5036-2929Fax: 86-21-5867-9976

Shanghai Jiading Sub-BranchAddress: No.36-38 Hexuan Rd., Wanda Plaza Jiangqiao Town, Jiading Dist., Shanghai, ChinaTel: 86-21-6040-6939Fax: 86-21-6040-2160

Qingdao BranchAddress: Suite 2305-2307, 23F, No. 26, Hong Kong Middle Road, Shinan Dist., Qingdao, Shandong, ChinaTel: 86-532-5576-9888Fax: 86-532-5578-5898

Shenzhen BranchAddress: Room2501,Tower A, East Pacific International Center, 7888, Shennan Boulevard, Futian District, Shenzhen, ChinaTel: 86-755-8866-3939Fax: 86-755-8866-3737

Vientiane Capital BranchAddress: No. 40, Tut Mai Rd., Hatsady Village, Chanthabouly District, Vientiane Capital, Lao PDRTel: 856-21-255688Fax: 856-21-255686

Manila BranchAddress: Unit 1, 15/F Tower 6789, No.6789 Ayala Avenue, Makati City, Metro Manila, Philippines, 1226.Tel: 63-2-751-1161Fax: 63-2-751-1163

Kuala Lumpur Marketing OfficeAddress: Lot 13A, 13th Floor, UBN Tower, 10, Jalan P. Ramlee, 50250, Kuala Lumpur, MalaysiaTel: 60-3-2070-6729Fax: 60-3-2078-9057

Bangkok Representative OfficeAddress: 13 Fl. Sathorn City Tower 175, South Sathorn Rd. Tungmahamek, Sathorn Bangkok 10120, ThailandTel: 66-2-679-5316~7Fax: 66-2-679-5318

Hanoi Representative OfficeAddress: 7F, 88 Hai Ba Trung Street, Hoan Kiem District, Hanoi, VietnamTel: 84-24-3936-6566Fax: 84-24-3936-6568

HCMC Representative OfficeAddress: 5F, 46-48 Pham Hong Thai Street, District 1, HCMC, VietnamTel: 84-28-3825-8761~63Fax: 84-28-3825-8700

Yangon Representative OfficeAddress: #503, Strand Square, Level 5, No. 53, Strand Road, Pabedan Township, Yangon, Republic of the Union of MyanmarTel: 95-1-230-7397Fax: 95-1-230-7370

Jakarta Representative OfficeAddress: Mayapada Tower 08-03 Jl. Jend. Sudirman Kav.28 Jakarta 12920Tel: 62-21-2951-8572Fax: 62-21-2951-8573

Cathay United Bank (Cambodia) Corporation LimitedAddress: No. 68 Samdech Pan Street (St. 214) Khan Daun Penh, Phnom Penh, Kingdom of CambodiaTel: 855-23-211211Fax: 855-23-212121

Cathay Insurance Co., Ltd. (Ho Chi Minh City Headquarters, Vietnam) Address: 6F, 46-48-50 Pham Hong Thai Str., District 1, Ho Chi Minh City, Vietnam

Tel: 84-8-62888385Fax: 84-8-62909890

Cathay Insurance Co., Ltd. (Vietnam) Hanoi BranchAddress: 6F, 167 Bui Thi Xuan Str., Hai Ba Trung Dist., Ha Noi City, VietnamTel: 84-4-63252333Fax: 84-4-62782922

Cathay United Bank Cathay Century Insurance

37

The Year in Review 2016

The "2016 Cathay Customers Children's Scholarship Program" lot drawing ceremony.

Cathay United Bank held a blood donation eventCathay Life and Yokohama Hakkeijima Sea Paradise held a contract signing press conference for the development of a multinational aquarium

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.

38

Cathay United Bank introduced the Cathay Eva Air co-branded credit card

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.

●2016 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 rating information was up to date as of December 31, 2016

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-

39

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 2016.

●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 2016.

● 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 2016.

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 2015.

●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.

2016 Honors and Accolades

40

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

2016 Financial Report

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 ..............................50-72

Index

To Cathay Financial Holding Co., Ltd.

Independent Auditors’ ReportEnglish Translation of a Report Originally Issued in Chinese

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

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


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 & YoungTaipei, TaiwanThe Republic of China8 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

Expressed in thousands of Dollars

2016.12.31 2015.12.31

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 2,220,399 100,169,436 3,054,878

Financial assets at fair value through profit or loss 244,529,264 7,547,200 296,117,926 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 7,169 447,326 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 4,759,631 141,649,869 4,319,910

Current income tax assets 4,215,323 130,103 4,339,061 132,329

Loans - net 2,045,532,795 63,133,728 1,766,476,353 53,872,411

Reinsurance assets - net 8,767,841 270,612 7,000,785 213,504

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 25,500,488 777,691

Other financial assets - net 3,036,381,213 93,715,470 2,790,400,892 85,099,143

Investment properties - net 311,014,127 9,599,201 381,149,809 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 14,729,993 454,629 14,425,707 439,942

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 & equityLiabilities

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 3,549,840 137,471,418 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 3,512,350 108,406 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 4,596,525,084 141,868,058 4,262,002,527 129,978,729

Other financial liabilities 561,224,829 17,321,754 549,564,053 16,760,111

Deferred tax liabilities 26,362,443 813,656 34,775,271 1,060,545

Other liabilities 17,323,269 534,669 20,331,536 620,053

Total liabilities 7,605,313,446 234,731,897 7,107,912,831 216,770,748

Equity attributable to owners of parent

Capital stock

Common stock 125,632,102 3,877,534 125,632,102 3,831,415

Preferred stock 8,333,000 257,191 - -

Capital surplus 130,448,697 4,026,194 88,781,174 2,707,569

Retained earnings

Legal reserve 30,577,724 943,757 24,820,095 756,941

Special reserve 149,108,336 4,602,109 140,185,120 4,275,240

Undistributed earnings 73,001,761 2,253,140 65,190,213 1,988,114

Other equity 6,222,952 192,067 10,448,290 318,642

Non-controlling interests 6,499,449 200,601 6,005,208 183,141

Total equity 529,824,021 16,352,593 461,062,202 14,061,062

Total liabilities and equity $8,135,137,467 $251,084,490 $7,568,975,033 $230,831,810

Cathay Financial Holding Co., Ltd. and SubsidiariesConsolidated Balance Sheets

As of 31 December 2016 and 31 December 2015

46


Expressed in thousands of Dollars, except earnings per share

Items2016.1.1~2016.12.31 2015.1.1~2015.12.31

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 4,736,973 139,998,194 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 9,698,129 226,753,764 6,915,333 Gains (losses) on financial assets and liabilities at fair value through profit or loss 19,582,308 604,392 (61,256,966) (1,868,160)Gains from investment properties 12,964,367 400,135 19,914,745 607,342 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 14,151,151 431,569

Total income 539,280,184 16,644,451 441,265,039 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

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 - - 92,744 2,828Share 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 1,297Income tax relating to the components not to be reclassified

(133,885) (4,132) 499,804 15,243 to profit or loss in subsequent periods

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 45,401Unrealized 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 7,044Share 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 10,581Income tax relating to the components to be reclassified to profit or loss in subsequent periods 3,567,798 110,117 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 $1,753,998Non-controlling interests 420,387 12,975 368,799 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 $364,125Non-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 $0.14

Cathay Financial Holding Co., Ltd. and SubsidiariesConsolidated Statements of Comprehensive Income

For the years ended 31 December 2016 and 2015

47

Items

Equit

y attr

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Reme

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NT$

US$

NT$

US$

NT$

US$

NT$

US$

NT$

US$

NT$

US$

NT$

US$

NT$

US$

NT$

US$

NT$

US$

NT$

US$

NT$

US$

NT$

US$

NT$

US$

NT$

US$

NT$

US$

Balan

ce on

1 Jan

uary

2015

$125,63

2,102

$3,831,4

15 $

- $-

$88,782

,304

$2,707,6

03 $19

,784,401

$603,36

7 $82

,305,614

$2,5

10,083

$60,939

,777

$1,858,4

87 $60

1,786

$18,353

$44

,257,646

$1,3

49,730

$180,45

3 $5,5

03 $48

,151

$1,468

$918,33

2 $28

,006

$10,030

,820

$305,91

1 $(7

81)$(2

4)$43

3,480,60

5 $13

,219,902

$5,6

39,845

$171,99

9 $43

9,120,45

0 $13

,391,901

Appro

priat

ions a

nd di

stribu

tion f

or 20

14

Lega

l reser

ve5,03

5,694

153,574

(5,0

35,694)

(153,57

4)-

- -

-

Speci

al res

erve

23,148,9

91705

,977

(23,148

,991)

(705,97

7)-

- -

-

Cash

divid

ends

(25,126

,420)

(766,28

3)(25

,126,420

)(76

6,283)

(25,126

,420)

(766,28

3)

Rever

sal of

speci

al res

erve

(33,796

)(1,0

31)33,7

96 1,03

1 -

- -

-

Othe

r add

itiona

l paid

-in ca

pital

Share

of ch

ange

s in ne

t asse

ts of

assoc

iates

and j

oint v

entur

es acc

ounte

d for

using

the e

quity

meth

od(1,1

30)(34

)(1,1

30)(34

)(1,1

30)(34

)

Net in

come

for t

he ye

ar en

ded 3

1 Dece

mber

2015

(Note

1)57,5

13,572

1,753,99

8 57,5

13,572

1,753,99

8 368

,799

11,247

57,882,3

71 1,76

5,245

Othe

r com

prehe

nsive

inco

me fo

r the

year

ende

d 31 D

ecemb

er 20

151,26

3,580

38,536

(44,674

,719)

(1,362,4

50)191

,071

5,827

35,311

1,077

(2,481,0

87)(75

,666)

92,136

2,810

(236)

(7)(45

,573,944

)(1,3

89,873)

215,580

6,57

4 (45

,358,364

)(1,3

83,299)

Comp

rehen

sive i

ncom

e for

the ye

ar en

ded 3

1 De

cembe

r 201

5 -

- -

- -

- -

- -

- 57,

513,572

1,75

3,998

1,263,58

0 38,5

36 (44

,674,719

)(1,3

62,450)

191,071

5,82

7 35,3

11 1,07

7 (2,4

81,087)

(75,666

) 92,

136

2,810

(236)

(7)11,9

39,628

364,125

584

,379

17,821

12,524,0

07 381

,946

Decre

ase in

non-

contr

olling

inter

ests

-(21

9,016)

(6,679)

(219,01

6)(6,6

79)

Othe

rs34,7

64,311

1,060,21

1 14,1

73 432

(14

,173)

(432)

34,764,3

11 1,06

0,211

34,764,3

11 1,06

0,211

Balan

ce on

31 D

ecemb

er 20

15$12

5,632,10

2 $3,8

31,415

$-

$- $88

,781,174

$2,7

07,569

$24,820

,095

$756,94

1 $14

0,185,12

0 $4,2

75,240

$65,190

,213

$1,988,1

14 $1,8

65,366

$56,889

$(4

17,073)

$(12,72

0)$37

1,524

$11,330

$83

,462

$2,545

$(1,562

,755)

$(47,66

0)$10

,108,783

$30

8,289

$(1,017

)$(3

1)$45

5,056,99

4 $13

,877,921

$6,0

05,208

$183,14

1 $46

1,062,20

2 $14

,061,062

Balan

ce on

1 Ja

nuar

y 201

6$12

5,632,10

2 $3,8

77,534

$- $-

$88,781

,174

$2,740,1

60 $24

,820,095

$76

6,052

$140,18

5,120

$4,326,7

01 $65

,190,213

$2,0

12,044

$1,865,3

66 $57

,573

$(417,0

73)

$(12,87

3)$37

1,524

$11,467

$83

,462

$2,576

$(1,562

,755)

$(48,23

3)$10

,108,783

$31

1,999

$(1,017

)$(3

1)$45

5,056,99

4 $14

,044,969

$6,0

05,208

$185,34

6 $46

1,062,20

2 $14

,230,315

Appro

priat

ions a

nd di

stribu

tion f

or 20

15

Lega

l reser

ve5,75

7,629

177,705

(5,7

57,629)

(177,70

5)-

- -

-

Speci

al res

erve

8,923,21

6 275

,408

(8,923,2

16)(27

5,408)

--

- -

Cash

divid

ends

(25,126

,420)

(775,50

7)(25

,126,420

)(77

5,507)

(25,126

,420)

(775,50

7)

Othe

r add

itiona

l paid

-in ca

pital

Share

of ch

ange

s in n

et ass

ets of

asso

ciates

and j

oint v

entur

es acc

ounte

d for

using

the e

quity

meth

od2,52

3 78

2,523

78 2,5

23 78

Net in

come

for t

he ye

ar en

ded 3

1 Dece

mber

2016

(Note

2)47,6

18,813

1,469,71

6 47,6

18,813

1,469,71

6 420

,387

12,975

48,039

,200

1,482,69

1

Othe

r com

prehe

nsive

inco

me fo

r the

year

ende

d 31 D

ecemb

er 20

16(9,1

40,278)

(282,10

7)4,44

0,232

137,044

(17

9,990)

(5,555)

36,859

1,138

616,822

19,0

38 -

- 1,01

7 31

(4,225,3

38)(13

0,411)

(427,04

4)(13

,181)

(4,652

,382)

(143,59

2)

Comp

rehen

sive i

ncom

e for

the ye

ar en

ded 3

1 Dece

mber

2016

- -

- -

- -

- -

- -

47,618,8

13 1,46

9,716

(9,140,2

78)(28

2,107)

4,440,23

2 137

,044

(179,99

0)(5,5

55)36,8

59 1,13

8 616

,822

19,038

- -

1,017

31 43,3

93,475

1,339,30

5 (6,6

57)(20

6) 43,

386,818

1,33

9,099

Issue

of pr

eferre

d stoc

k8,33

3,000

257,191

41,6

65,000

1,285,95

6 49,9

98,000

1,543,14

7 49,

998,000

1,54

3,147

Increa

se in

non-

contr

olling

inter

ests

500,898

15,4

61 500

,898

15,461

Balan

ce on

31 D

ecemb

er 20

16$12

5,632,10

2 $3,8

77,534

$8,333,0

00 $25

7,191

$130,44

8,697

$4,026,1

94 $30

,577,724

$94

3,757

$149,10

8,336

$4,602,1

09 $73

,001,761

$2,2

53,140

$(7,274

,912)

$(224,5

34)$4,0

23,159

$124,17

1 $19

1,534

$5,912

$120,32

1 $3,7

14 $(9

45,933)

$(29,19

5)$10

,108,783

$31

1,999

$-

$- $52

3,324,57

2$16

,151,992

$6,4

99,449

$200,60

1 $52

9,824,02

1 $16

,352,593

Expr

esse

d in

thou

sand

s of D

olla

rs

Cat

hay

Fina

ncia

l Hol

ding

Co.

, Ltd

. and

Sub

sidi

arie

sC

onso

lidat

ed S

tate

men

ts o

f Cha

nges

in E

quity

For t

he y

ears

end

ed 3

1 D

ecem

ber 2

016

and

2015

Note

1: F

or th

e yea

r end

ed 20

15, t

he re

mun

erat

ion

to d

irect

ors a

nd su

perv

isors

in th

e am

ount

of $2

,100

(US$

64) t

hous

and

and

empl

oyee

s' co

mpe

nsat

ion

in th

e am

ount

of $5

,903

(US$

180)

thou

sand

hav

e bee

n de

duct

ed fr

om th

e Sta

tem

ent o

f Com

preh

ensiv

e Inc

ome.

Note

2: F

or th

e yea

r end

ed 20

16, t

he re

mun

erat

ion

to d

irect

ors a

nd su

perv

isors

in th

e am

ount

of $1

,800

(US$

56) t

hous

and

and

empl

oyee

s' co

mpe

nsat

ion

in th

e am

ount

of $4

,920

(US$

152)

thou

sand

hav

e bee

n de

duct

ed fr

om th

e Sta

tem

ent o

f Com

preh

ensiv

e Inc

ome.

48



Items2016.1.1~2016.12.31 2015.1.1~2015.12.31

Items2016.1.1~2016.12.31 2015.1.1~2015.12.31

NT$ US$ NT$ US$ NT$ US$ NT$ US$

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 5,077,900 151,683,427 4,625,905

Adjustments : Dividends received 24,352,712 751,627 21,713,620 662,203

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 5,231,640 161,470 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 15,405,207 475,469 17,081,656 520,941 Disposal of financial assets at fair value through profit or loss 3,019,067 93,181 3,940,176 120,164

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 10,731,191 334,637,365 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 (1,202,103) (37,102) (1,107,708) (33,782) Acquisition of subsidiary (4,708,708) (145,330) (6,994,994) (213,327)

(Gains) losses on disposal or scrapping of property and equipment (225,342) (6,955) 9,485 289 Disposal of subsidiaries (4,609,822) (142,278) - -

(Gains) losses on disposal of investment properties (1,028,782) (31,753) 137,004 4,178 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 391 12 35,492 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 16,017 489

Impairment losses on financial assets 117,002 3,611 32,160 981 Increase in clearing and settlement funds (4,458) (138) (2,703) (82)

Impairment losses on non-financial assets 58,162 1,795 - - Decrease in clearing and settlement funds 15,884 490 - -

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 23,030 711 - -

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 3,227,340 187,321,329 5,712,757 Generalized foreclosed collects net cash from other company - - 16,157,186 492,747

Changes in operating assets and liabilities Generalized foreclosed collects compensation from other company - - 30,300,000 924,062

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 66,265 291,927 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 7,135,933 220,245 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 7,332 224 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 5,900,000 182,099 8,890,000 271,119

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 3,629,737 112,029 (6,326,428) (192,938) Increase in cash capital 49,998,000 1,543,148 - -

Increase (decrease) in payables 10,152,404 313,346 (13,185,305) (402,114) Net cash flows from (used in) financing activities 11,856,098 365,929 (53,624,385) (1,635,388)

Increase in deposits 146,256,116 4,514,078 151,147,103 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) 3,105 95 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 9,164,682 597,008,819 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) 4,186,538 127,677

Subtotal 79,315,206 2,448,000 36,400,762 1,110,118 The components of cash and cash equivalentsSubtotal 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 18,524,091 571,731 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

Cathay Financial Holding Co., Ltd. and SubsidiariesConsolidated Statements of Cash Flows


49


2016.12.31 2015.12.31

NT $ US $ NT $ US $

AssetsCash 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 2,468 499,422 15,231

Receivables - net 537,085 16,577 822,620 25,088

Current income tax assets 4,215,323 130,102 4,323,586 131,857

Held-to-maturity financial assets 41,000,000 1,265,432 16,000,000 487,954

Investments accounted for using the equity method - net 507,608,375 15,666,925 487,136,590 14,856,255

Other financial assets - net 430,111 13,275 - -

Property and equipment - net 7,699 238 7,249 221

Intangible assets - net 11,968 369 17,288 527

Deferred tax assets - net 482,657 14,897 875,454 26,699

Other assets - net 10,998 339 8,340 254

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 5,625,178 173,617 8,278,845 252,481

Current income tax liabilities 3,031,746 93,572 946,549 28,867

Bonds payable - - 20,000,000 609,942

Provisions 918,764 28,357 726,597 22,159

Deferred tax liabilities 226,707 6,997 2,915 89

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 3,877,534 125,632,102 3,831,415

Perferred stock 8,333,000 257,191 - -

Capital surplus 130,448,697 4,026,194 88,781,174 2,707,569

Retained earnings

Legal reserve 30,577,724 943,757 24,820,095 756,941

Special reserve 149,108,336 4,602,109 140,185,120 4,275,240

Undistributed earnings 73,001,761 2,253,140 65,190,213 1,988,114

Other equity 6,222,952 192,067 10,448,290 318,642

Total equity 523,324,572 16,151,992 455,056,994 13,877,921

Total liabilities and equity $569,292,832 $17,570,766 $513,913,951 $15,672,887

Cathay Financial Holding Co., Ltd.Balance Sheet


50


Expressed in thousands of Dollars , except earning per share

Item2016.1.1~2016.12.31 2015.1.1~2015.12.31

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 in subsequent periods

661,996 20,432 (2,345,300) (71,525)

Income tax relating to the components not to be reclassified to profit or loss in subsequent periods 1,495 46 1,757 54

To be reclassified to profit or loss in subsequent periods:

Unrealized gains (losses) from available-for-sale financial assets 6,238 193 (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 subsequent periods

(4,886,274) (150,811) (43,102,881) (1,314,513)

Income tax relating to the components to be reclassified to profit or loss in subsequent periods - - 24,149 736

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 $0.14

Cathay Financial Holding Co., Ltd.Statements of Comprehensive Income


51

Items

Equit

y attr

ibutab

le to

owne

rs of

paren

t

Capit

al sto

ck

Capit

al su

rplus

Retai

ned e

arning

sOt

her e

quity

Total

Comm

on st

ock

Prefe

rred s

tock

Lega

l reser

veSp

ecial

reserv

eUn

distri

buted

ea

rning

s

Exch

ange

diffe

rences

resu

lting

from

trans

lating

the fi

nanc

ial

statem

ents

of a f

oreign

op

eratio

n

Unrea

lized

gains

(losse

s) fro

m av

ailab

le-for

-sale

finan

cial

assets

Gains

(losse

s) on

cash

flow

hedg

es

Chan

ges o

f desi

gnate

d fin

ancia

l liab

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at fa

ir va

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ulting

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cred

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Reme

asurem

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of de

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bene

fit pla

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valua

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NT$

US$

NT$

US$

NT$

US$

NT$

US$

NT$

US$

NT$

US$

NT$

US$

NT$

US$

NT$

US$

NT$

US$

NT$

US$

NT$

US$

NT$

US$

NT$

US$

Balan

ce on

1 Jan

uary

2015

$125,63

2,102

$3,831,4

15 $

- $

- $88

,782,304

$2,7

07,603

$19,784

,401

$603,36

7 $82

,305,614

$2,5

10,083

$60,939

,777

$1,858,4

87 $60

1,786

$18,353

$44

,257,646

$1,3

49,730

$180,45

3 $5,5

03 $48

,151

$1,468

$918,33

2 $28

,006

$10,030

,820

$305,91

1 $(7

81)$(2

4)$43

3,480,60

5 $13

,219,902

Appro

priat

ions a

nd di

stribu

tion f

or 20

14

Lega

l reser

ve5,03

5,694

153,574

(5,0

35,694)

(153,57

4)-

-

Cash

divid

ends

23,148,9

91 705

,977

(23,148

,991)

(705,97

7)-

-

Stock

divid

ends

(25,126

,420)

(766,28

3)(25

,126,420

)(76

6,283)

Rever

sal of

speci

al res

erve

(33,796

)(1,0

31)33,7

96 1,03

1 -

-

Othe

r add

itiona

l paid

-in ca

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Share

of ch

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net a

ssets

of ass

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d join

t ven

tures

acc

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using

the e

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meth

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)

Net in

come

for t

he ye

ar en

ded 3

1 Dece

mber

2015

(Note

1)57,5

13,572

1,753,99

8 57,5

13,572

1,753,99

8

Othe

r com

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nsive

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me fo

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year

ende

d 31 D

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1,263,58

0 38,5

36 (44

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62,450)

191,071

5,82

7 35,3

11 1,07

7 (2,4

81,087)

(75,666

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36 2,81

0 (23

6)(7)

(45,573

,944)

(1,389,8

73)

Comp

rehen

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ncom

e for

the ye

ar en

ded 3

1 Dece

mber

2015

- -

- -

- -

- -

- -

57,513,5

72 1,75

3,998

1,263,58

0 38,5

36 (44

,674,719

)(1,3

62,450)

191,071

5,82

7 35,3

11 1,07

7 (2,4

81,087)

(75,666

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36 2,81

0 (23

6)(7)

11,939,6

28 364

,125

Othe

rs34,7

64,311

1,060,21

1 14,1

73 432

(14

,173)

(432)

34,764,3

11 1,06

0,211

Balan

ce on

31 D

ecemb

er 20

15$12

5,632,10

2 $3,8

31,415

$-

$-

$88,781

,174

$2,707,5

69 $24

,820,095

$75

6,941

$140,18

5,120

$4,275,2

40 $65

,190,213

$1,9

88,114

$1,865,3

66 $56

,889

$(417,0

73)$(1

2,720)

$371,52

4 $11

,330

$83,462

$2,5

45 $(1

,562,755

)$(4

7,660)

$10,108

,783

$308,28

9 $(1

,017)

$(31)

$455,05

6,994

$13,877

,921

Balan

ce on

1 Jan

uary

2016

$125,63

2,102

$3,877,5

34 $-

$- $88

,781,174

$2,7

40,160

$24,820

,095

$766,05

2 $14

0,185,12

0 $4,3

26,701

$65,190

,213

$2,012,0

44 $1,8

65,366

$57,573

$(4

17,073)

$(12,87

3)$37

1,524

$11,467

$83

,462

$2,576

$(1,562

,755)

$(48,23

3)$10

,108,783

$31

1,999

$(1,017

)$(3

1)$45

5,056,99

4 $14

,044,969

Appro

priat

ions a

nd di

stribu

tion f

or 20

15

Lega

l reser

ve5,75

7,629

177,705

(5,7

57,629)

(177,70

5)-

-

Speci

al res

erve

8,923,21

6 275

,408

(8,923,2

16)(27

5,408)

- -

Cash

divid

ends

(25,126

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(775,50

7)(25

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Share

of ch

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ssets

of ass

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t ven

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the e

quity

meth

od2,52

3 78

2,523

78

Net in

come

for t

he ye

ar en

ded 3

1 Dece

mber

2016

(Note

2)47,6

18,813

1,469,71

6 47,6

18,813

1,469,71

6

Othe

r com

prehe

nsive

inco

me fo

r the

year

ende

d 31 D

ecemb

er 20

16(9,1

40,278)

(282,10

7)4,44

0,232

137,044

(17

9,990)

(5,555)

36,859

1,138

616,822

19,0

38 -

- 1,01

7 31

(4,225,3

38)(13

0,411)

Comp

rehen

sive i

ncom

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the ye

ar en

ded 3

1 Dece

mber

2016

- -

- -

- -

- -

- -

47,618,8

13 1,46

9,716

(9,140,2

78)(28

2,107)

4,440,23

2 137

,044

(179,99

0)(5,5

55)36,8

59 1,13

8 616

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19,038

- -

1,017

31 43,3

93,475

1,339,30

5

Issue

of pr

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d stoc

k8,33

3,000

257,191

41,6

65,000

1,285,95

6 49,9

98,000

1,543,14

7

Balan

ce on

31 D

ecemb

er 20

16$12

5,632,10

2 $3,8

77,534

$8,333,0

00 $25

7,191

$130,44

8,697

$4,026,1

94 $30

,577,724

$94

3,757

$149,10

8,336

$4,602,1

09 $73

,001,761

$2,2

53,140

$(7,274

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$(224,5

34)$4,0

23,159

$124,17

1 $19

1,534

$5,912

$120,32

1 $3,7

14 $(9

45,933)

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5)$10

,108,783

$31

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$- $-

$523,32

4,572

$16,151

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Note

1: F

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to d

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perv

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in th

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52



Items2016.1.1~2016.12.31 2015.1.1~2015.12.31

NT$ US$ NT$ US$

Cash flows from operating activitiesProfit 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 1,777 55 1,561 48 Amortization 5,319 164 5,319 162 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 - - 285 9 Gains on disposal of investments - - (220,298) (6,719)Unrealized foreign exchange losses (gains) 20,173 623 (8,748) (267)Others (1,325,222) (40,901) (8,346) (255)

Changes in operating assets and liabilitiesDecrease in available-for-sale financial assets - - 705,548 21,517 Decrease (increase) in accounts receivable 62,527 1,930 (198,585) (6,056)Decrease in held-to-maturity financial assets 10,000,000 308,642 15,000,000 457,457 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 4,946,663 150,859 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) 18,865,841 575,353 Cash flows from investing activities

Acquisition of property and equipment (2,227) (69) (2,366) (72)Dividends received 25,953,687 801,040 18,505,732 564,371

Net cash from investing activities 25,951,460 800,971 18,503,366 564,299 Cash flows from financing activities

Increase in commercial paper payable 7,160,000 220,988 8,470,000 258,310 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 1,543,148 - - Acquisition of subsidiary (557,375) (17,203) - -

Net cash flows from (used in) financing activities 11,474,205 354,142 (36,656,420) (1,117,915)Effects of exchange rate changes on cash and cash equivalents (20,173) (623) 8,748 267 Increase in cash and cash equivalents 10,259,554 316,653 721,535 22,004 Cash and cash equivalents at the beginning of periods 4,643,373 143,314 3,921,838 119,605 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 2,468 499,422 15,231

Cash and cash equivalents at the end of periods $14,902,927 $459,967 $4,643,373 $141,609

Cathay Financial Holding Co., Ltd.Statements of Cash Flows


53


Items2016.12.31 2015.12.31

NT$ US$ NT$ US$

AssetsCash 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 7,169 447,326 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 26,551,251 819,483 23,478,810 716,036 Other financial assets 7,661,395 236,463 18,000,000 548,948 Investment property 415,029,800 12,809,562 411,265,270 12,542,399 Loans 621,186,946 19,172,437 655,130,382 19,979,578 Reinsurance contract assets 703,844 21,724 638,818 19,482 Property and equipment 27,983,884 863,700 25,684,589 783,305 Intangible assets 37,657,462 1,162,267 39,684,351 1,210,258 Deferred tax assets 11,140,995 343,858 11,519,847 351,322 Other assets 28,031,900 865,182 25,529,297 778,569 Separate account product assets 497,855,802 15,365,920 480,366,122 14,649,775

Total assets $5,534,582,859 $170,820,459 $5,162,314,479 $157,435,635

LiabilitiesPayables $21,434,245 $661,551 $17,906,669 $546,102 Financial liability at fair value through profit or loss 26,982,208 832,784 38,859,128 1,185,091 Bonds payable 35,000,000 1,080,247 - - Preferred stock liability 5,000,000 154,321 15,000,000 457,456 Insurance liability 4,539,152,066 140,097,286 4,151,262,555 126,601,481 Reserve for insurance contract with feature of financial instruments 4,392,757 135,579 49,123,102 1,498,112 Foreign exchange volatility reserve 9,871,478 304,675 16,026,449 488,760 Liability reserve 56,245 1,736 4,350,842 132,688 Deferred tax liability 27,254,976 841,203 36,235,508 1,105,078 Other liability 6,287,921 194,071 7,277,007 221,928 Separate account product liabilities 497,855,802 15,365,920 480,366,122 14,649,775


Stockholders' equityCapital stock 53,065,274 1,637,817 53,065,274 1,618,337 Capital surplus 13,768,468 424,953 13,028,012 397,317 Retained earnings 298,348,294 9,208,281 283,470,744 8,645,036 Others (3,886,875) (119,965) (3,656,933) (111,526)

Total stockholders' equity 361,295,161 11,151,086 345,907,097 10,549,164 Total liabilities and stockholders' equity $5,534,582,859 $170,820,459 $5,162,314,479 $157,435,635


Items2016.1.1~2016.12.31 2015.1.1~2015.12.31

NT$ US$ NT$ US$

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 26,038,176 803,648 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 27,993,518 863,998 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 30,128,660 929,897 38,242,639 1,166,290 Net income 30,128,660 929,897 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 $0.22

Cathay Life Insurance Co., Ltd.Condensed Balance Sheet


Cathay Life Insurance Co., Ltd.Condensed Statement of Comprehensive Income


54



Items2016.12.31 2015.12.31

NT$ US$ NT$ US$

AssetsCash 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 9,201,915 284,010 7,228,280 220,442 Investments accounted for using the equity method 1,893,711 58,448 918,299 28,005 Investment in debt securities with no active market 2,468,267 76,181 3,369,173 102,750 Held-to-maturity financial assets 5,682,189 175,376 4,035,718 123,078 Loans 354,812 10,951 366,255 11,170 Reinsurance contract assets 7,777,095 240,034 5,325,295 162,406 Property and equipment 90,794 2,802 124,877 3,808 Intangible assets 32,096 991 21,497 656 Deferred tax assets 132,374 4,086 93,269 2,844 Other assets 642,153 19,819 661,876 20,185

Total assets $37,893,396 $1,169,549 $33,471,564 $1,020,786

LiabilitiesPayables $2,636,465 $81,372 $2,701,827 $82,398 Financial liability at fair value through profit or loss 54,590 1,685 192,554 5,872 Preferred stock liability 1,000,000 30,864 1,000,000 30,497 Insurance liability 23,993,602 740,543 21,475,467 654,940 Liability reserve 380,158 11,733 381,016 11,620 Deferred tax liability 260,485 8,040 35,991 1,098 Other liability 352,115 10,868 790,994 24,123

Total liabilities 28,677,415 885,105 26,577,849 810,548

Stockholders' equityCapital stock 2,889,552 89,184 2,802,202 85,459 Retained earnings 6,849,656 211,409 4,466,535 136,216 Others (523,227) (16,149) (375,022) (11,437)

Total stockholders' equity 9,215,981 284,444 6,893,715 210,238 Total liabilities and stockholders' equity $37,893,396 $1,169,549 $33,471,564 $1,020,786


Items2016.1.1~2016.12.31 2015.1.1~2015.12.31

NT$ US$ NT$ US$

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


Cathay Century Insurance Co., Ltd.Condensed Balance Sheet


Cathay Century Insurance Co., Ltd.Condensed Statement of Comprehensive Income


55


Items2016.12.31 2015.12.31

NT$ US$ NT$ US$

AssetsCash and cash equivalents $2,260,384 $69,765 $887,809 $27,076 Receivables 633,632 19,557 402,282 12,268 Financial asset at fair value through profit or loss 371,693 11,472 941,191 28,704 Available-for-sale financial assets 2,807,016 86,636 4,202,509 128,164 Investment in debt securities with no active market 9,396,965 290,030 6,723,855 205,058 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 25,237 770 Property and equipment 64,909 2,003 112,697 3,437 Intangible assets 28,042 866 47,980 1,463 Other assets 1,574,840 48,606 1,688,828 51,504 Separate account product assets 158,408 4,889 202,239 6,168 Total assets $18,315,198 $565,284 $16,558,467 $504,985

LiabilitiesShort-term debt $46,444 $1,434 $61,104 $1,863 Payables 1,381,443 42,637 869,955 26,531 Reserve for insurance contract with feature of financial instruments 5,927,993 182,963 4,879,862 148,822 Insurance liability 6,794,489 209,706 6,032,812 183,983 Other liability 27,833 859 24,085 735 Separate account product liabilities 158,408 4,889 202,239 6,168


Stockholders' equityCapital stock 7,067,795 218,142 7,067,795 215,547 Retained earnings (3,330,427) (102,791) (3,448,140) (105,158)Others 241,220 7,445 868,755 26,494

Total stockholders' equity 3,978,588 122,796 4,488,410 136,883 Total liabilities and stockholders' equity $18,315,198 $565,284 $16,558,467 $504,985


Items2016.1.1~2016.12.31 2015.1.1~2015.12.31

NT$ US$ NT$ US$

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 3,664 424,611 12,949 Non-operating income and expenses (1,010) (31) (24,227) (739)Profit from continuing operations before income tax 117,713 3,633 400,384 12,210 Income tax expense - - - - Profit from continuing operations after income tax 117,713 3,633 400,384 12,210 Net income 117,713 3,633 400,384 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

Cathay Lujiazui Life Insurance Co., Ltd.Condensed Balance Sheet


Cathay Lujiazui Life Insurance Co., Ltd.Condensed Statement of Comprehensive Income


Note: Cathay Lujiazui Life is a limited company; there is no information about earning per share.

56



Items2016.12.31 2015.12.31

NT$ US$ NT$ US$

AssetsCash and cash equivalents $262,961 $8,116 $119,309 $3,639 Receivables 373,027 11,513 242,289 7,389 Available-for-sale financial assets 6,158,060 190,064 3,774,324 115,106 Investment in debt securities with no active market 198,520 6,127 200,634 6,119 Loans 22,820 705 17,524 534 Property and equipment 14,877 459 15,239 465 Intangible assets 174 5 242 7 Other assets 43,477 1,342 41,299 1,259

Total assets $7,073,916 $218,331 $4,410,860 $134,518

LiabilitiesPayables $56,232 $1,736 $41,066 $1,253 Current income tax liability 8,308 256 2,567 78 Insurance liability 1,185,667 36,595 792,620 24,173 Other liability 425 13 499 15

Total liabilities 1,250,632 38,600 836,752 25,519

Stockholders' equityCapital stock 5,410,990 167,006 3,424,930 104,450 Retained earnings 398,269 12,292 212,054 6,467 Others 14,025 433 (62,876) (1,918)



Items2016.1.1~2016.12.31 2015.1.1~2015.12.31

NT$ US$ NT$ US$

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 10,216 312 Non-operating income and expenses 1,930 60 4,851 148 Profit from continuing operations before income tax 230,329 7,109 15,067 460 Income tax expense (44,114) (1,362) (2,554) (78)Profit from continuing operations after income tax 186,215 5,747 12,513 382 Net income 186,215 5,747 12,513 382 Other comprehensive income (loss) 76,901 2,374 (104,943) (3,201)Total comprehensive income (loss) $263,116 $8,121 $(92,430) $(2,819)


Cathay Life Insurance Company (Vietnam)Condensed Balance Sheet


Cathay Life Insurance Company (Vietnam) Condensed Statement of Comprehensive Income


Note: Cathay Life Insurance Company (Vietnam) is a limited company; there is no information about earning per share.

57


Items2016.12.31 2015.12.31

NT$ US$ NT$ US$

AssetsCurrent assets $654,653 $20,205 $482,681 $14,721 Investment property 6,623,574 204,431 6,854,985 209,057 Property and equipment 574,700 17,738 649,670 19,813

Total assets $7,852,927 $242,374 $7,987,336 $243,591

LiabilitiesCurrent liability $1,617 $50 $312 $9 Deferred tax liability 267,939 8,270 144,527 4,408 Other liability 91,823 2,834 91,579 2,793

Total liabilities 361,379 11,154 236,418 7,210

Stockholders' equityCapital stock 7,223,435 222,945 7,223,435 220,294 Retained earnings 481,748 14,869 40,289 1,229 Others (213,635) (6,594) 487,194 14,858



Items2016.1.1~2016.12.31 2015.1.1~2015.12.31

NT$ US$ NT$ US$

Operating income $649,152 $20,036 $282,668 $8,621 Operating expenses (65,118) (2,010) (81,032) (2,471)Operating profit 584,034 18,026 201,636 6,150 Non-operating income and expenses (18) (1) 8,087 247 Profit from continuing operations before income tax 584,016 18,025 209,723 6,397 Income tax expense (142,557) (4,400) (47,897) (1,461)Profit from continuing operations after income tax 441,459 13,625 161,826 4,936 Net income 441,459 13,625 161,826 4,936 Other comprehensive loss (700,829) (21,630) (31,402) (958)Total comprehensive (loss) income $(259,370) $(8,005) $130,424 $3,978


Lin Yuan (Shanghai) Real Estate Co., Ltd.Condensed Balance Sheet


Lin Yuan (Shanghai) Real Estate Co., Ltd.Condensed Statement of Comprehensive Income


Note: Lin Yuan (Shanghai) Real Estate Co. Ltd. is a limited company; there is no information about earnings per share.

58



Items2016.12.31 2015.12.31

NT$ US$ NT$ US$

AssetsCurrent assets $1,773,667 $54,743 $1,938,494 $59,118 Investment property 12,696,899 391,879 15,152,874 462,119

Total assets $14,470,566 $446,622 $17,091,368 $521,237

LiabilitiesCurrent liability $92,333 $2,850 $223,331 $6,811


Stockholders' equityCapital stock 16,654,013 514,013 16,654,013 507,899 Retained earnings 1,653,963 51,048 844,375 25,751 Others (3,929,743) (121,289) (630,351) (19,224)



Items2016.1.1~2016.12.31 2015.1.1~2015.12.31

NT$ US$ NT$ US$

Operating income $1,222,268 $37,724 $875,555 $26,702 Operating expenses (889) (27) (584) (18)Operating profit 1,221,379 37,697 874,971 26,684 Profit from continuing operations before income tax 1,221,379 37,697 874,971 26,684 Income tax expense (39,003) (1,204) (162,183) (4,946)Profit from continuing operations after income tax 1,182,376 36,493 712,788 21,738 Net income 1,182,376 36,493 712,788 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


Cathay Woolgate Exchange Holding 1 LimitedCondensed Balance Sheet


Cathay Woolgate Exchange Holding 1 LimitedCondensed Statement of Comprehensive Income


Note: Cathay Woolgate Exchange Holding 1 Limited is a limited company; there is no information about earnings per share.

59


Items2016.12.31 2015.12.31

NT$ US$ NT$ US$

AssetsCurrent assets $18,075 $558 $18,458 $563 Investment property 128,251 3,958 153,059 4,668

Total assets $146,326 $4,516 $171,517 $5,231

LiabilitiesCurrent liability $842 $26 $2,256 $69

Total liabilities 842 26 2,256 69

Stockholders' equityCapital stock 168,222 5,192 168,222 5,130 Retained earnings 16,992 524 7,400 226 Others (39,730) (1,226) (6,361) (194)

Total stockholders' equity 145,484 4,490 169,261 5,162 Total liabilities and stockholders' equity $146,326 $4,516 $171,517 $5,231


Items2016.1.1~2016.12.31 2015.1.1~2015.12.31

NT$ US$ NT$ US$

Operating income $12,342 $381 $8,840 $270 Operating expenses (830) (26) (677) (21)Operating profit 11,512 355 8,163 249 Profit from continuing operations before income tax 11,512 355 8,163 249 Income tax expense (143) (4) (1,639) (50)Profit from continuing operations after income tax 11,369 351 6,524 199 Net income 11,369 351 6,524 199 Other comprehensive loss (33,369) (1,030) (1,019) (31)Total comprehensive (loss) income $(22,000) $(679) $5,505 $168


Cathay Woolgate Exchange Holding 2 LimitedCondensed Balance Sheet


Cathay Woolgate Exchange Holding 2 LimitedCondensed Statement of Comprehensive Income


Note: Cathay Woolgate Exchange Holding 2 Limited is a limited company; there is no information about earnings per share.

60



Items2016.12.31 2015.12.31

NT$ US$ NT$ US$

AssetsCurrent assets $668,335 $20,628 $860,770 $26,251 Investment property 21,561,429 665,476 25,368,906 773,678 Other non-current assets 6,813 210 68,808 2,099

Total assets $22,236,577 $686,314 $26,298,484 $802,028

LiabilitiesCurrent liability $69,664 $2,150 $65,009 $1,983 Other non-current liability 12,982,046 400,680 16,074,007 490,211


Stockholders' equityCapital stock 10,189,090 314,478 10,189,090 310,738 Retained earnings 761,707 23,509 (321,891) (9,817)Others (1,765,930) (54,504) 292,269 8,913



Items2016.1.1~2016.12.31 2015.4.1~2015.12.31

NT$ US$ NT$ US$

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

Cathay Walbrook Holding 1 LimitedCondensed Balance Sheet


Cathay Walbrook Holding 1 LimitedCondensed Statement of Comprehensive Income

For the years ended 31 December 2016 and 2015and for the nine-month periods ended 31 December 2015

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 2015.

61


Items2016.12.31 2015.12.31

NT$ US$ NT$ US$

AssetsCurrent 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 359 11 3,622 111

Total assets $1,168,823 $36,075 $1,383,498 $42,193

LiabilitiesCurrent liability $3,667 $113 $3,422 $104 Other non-current liability 683,265 21,089 846,000 25,801


Stockholders' equityCapital stock 536,268 16,552 536,268 16,355 Retained earnings 38,341 1,183 (17,572) (536)Others (92,718) (2,862) 15,380 469

Total stockholders' equity 481,891 14,873 534,076 16,288 Total liabilities and stockholders' equity $1,168,823 $36,075 $1,383,498 $42,193


Items2016.1.1~2016.12.31 2015.4.1~2015.12.31

NT$ US$ NT$ US$

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) 15,380 469 Total comprehensive loss $(52,185) $(1,611) $(2,192) $(67)


Cathay Walbrook Holding 2 LimitedCondensed Balance Sheet


Cathay Walbrook Holding 2 LimitedCondensed Statement of Comprehensive Income

For the years ended 31 December 2016 and 2015and for the nine-month periods ended 31 December 2015

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 2015.

62



Items2016.12.31 2015.12.31

NT$ US$ NT$ US$

AssetsCash 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 1,619 113,805 3,471 Held-to-maturity financial assets 430,276 13,280 426,370 13,003 Reinsurance contract assets 251,967 7,777 336,500 10,262 Property and equipment 468 14 954 29 Intangible assets 2,328 72 1,696 52 Deferred tax assets 2 - - - Other assets 30,122 930 28,841 879

Total assets $970,346 $29,949 $1,029,770 $31,405

LiabilitiesPayables $27,903 $861 $31,123 $949 Liability reserve 323,426 9,982 402,045 12,261 Deferred tax liability - - 44 2 Other liability 6,346 196 3,642 111


Stockholders' equityCapital stock 845,585 26,099 845,585 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 18,910 592,916 18,082 Total liabilities and stockholders' equity $970,346 $29,949 $1,029,770 $31,405


Items2016.1.1~2016.12.31 2015.1.1~2015.12.31

NT$ US$ NT$ US$

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) 14,556 449 (1,581) (48)Non-operating income and expenses 158 5 4 - Profit (loss) from continuing operations before income tax 14,714 454 (1,577) (48)Income tax profit (expense) 48 2 (5) - Profit (loss) from continuing operations after income tax 14,762 456 (1,582) (48)Net income (loss) 14,762 456 (1,582) (48)Other comprehensive income (loss) 4,993 154 (12,104) (369)Total comprehensive income (loss) $19,755 $610 $(13,686) $(417)


Cathay Insurance Co., Ltd (Vietnam)Condensed Balance Sheet


Cathay Insurance Co., Ltd (Vietnam)Condensed Statement of Comprehensive Income


Note: Cathay Century (Vietnam) is a limited company; there is no information about earnings per share.

63


Items2016.12.31 2015.12.31

NT$ US$ NT$ US$

AssetsCurrent assets $4,785,821 $147,711 $1,813,701 $55,313 Financial asset at fair value through profit or loss 80,102 2,472 - - Investment in debt securities with no active market 3,250 100 3,330 101 Held-to-maturity financial assets 342,391 10,568 - - Property and equipment 199,970 6,172 134,459 4,101 Intangible assets 11,359,876 350,613 7,873,404 240,116 Deferred tax assets 1,499,196 46,272 - - Other non-current assets 224,632 6,933 236,222 7,204

Total assets $18,495,238 $570,841 $10,061,116 $306,835

LiabilitiesCurrent 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 41,221 600,373 18,310 Other non-current liability 387,097 11,947 331,147 10,099


Stockholders' equityCapital stock 90,113 2,781 326 10 Capital surplus 14,417,767 444,993 7,839,350 239,078 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



Items2016.1.1~2016.12.31 2015.9.18~2015.12.31

NT$ US$ NT$ US$

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) 31,401 958 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


Conning Holdings LimitedCondensed Balance Sheet


Conning Holdings LimitedCondensed Statement of Comprehensive Income

For the years ended 31 December 2016 and from 18 September 2015 to 31 December 2015

Note: Conning Holdings Limited is a limited company; there is no information about earnings per share.

64



Items2016.12.31 2015.12.31

NT$ US$ NT$ US$

AssetsCash 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 6,054,533 254,226,830 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 4,689,282 130,557,629 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 7,877,956 243,147 7,783,391 237,371 Other financial assets 3,373 104 1,350 41 Investment in debt securities with no active market 397,475,008 12,267,747 442,764,138 13,503,023 Property and equipment 24,208,305 747,170 24,485,549 746,738 Investment property 1,554,600 47,981 1,635,249 49,870 Intangible assets 7,413,407 228,809 7,161,759 218,413 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

LiabilitiesDue 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 2,717,914 100,397,997 3,061,848 Securities sold under agreements to repurchase 56,752,751 1,751,628 54,037,877 1,647,999 Payables 22,183,733 684,683 17,848,009 544,312 Current income tax liabilities 269,766 8,326 415,211 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 9,116,761 281,382 6,089,508 185,712


Stockholders' equityCapital stock 72,099,815 2,225,303 69,479,605 2,118,927 Capital surplus 23,969,412 739,797 23,969,412 730,998 Retained earnings 59,763,752 1,844,560 55,594,202 1,695,462 Others 257,800 7,957 3,964,675 120,911

Total stockholders' equity 156,090,779 4,817,617 153,007,894 4,666,298 Total liabilities and stockholders' equity $2,511,845,343 $77,526,091 $2,342,601,732 $71,442,566


Items2016.1.1~2016.12.31 2015.1.1~2015.12.31

NT$ US$ NT$ US$

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 24,107,689 744,065 25,443,426 775,951 Non-interest income 25,395,260 783,804 21,306,628 649,790 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 19,267,700 594,682 21,014,594 640,884 Income tax expense (2,056,000) (63,457) (2,416,300) (73,690)Profit from continuing operations after income tax 17,211,700 531,225 18,598,294 567,194 Net income 17,211,700 531,225 18,598,294 567,194 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


Cathay United Bank Co., Ltd.Condensed Balance Sheet


Cathay United Bank Co., Ltd.Condensed Statement of Comprehensive Income


65


Items2016.12.31 2015.12.31

NT$ US$ NT$ US$

AssetsCash and cash equivalents $6,623,200 $204,420 $1,228,870 $37,477 Due from the Central Bank and call loans to banks 6,881,758 212,400 9,508,249 289,974 Financial assets at fair value through profit or loss 3,150,720 97,244 700,421 21,361 Securities purchased under agreements to resell 1,673,379 51,648 - - Available-for-sale financial assets 4,220,410 130,260 3,464,546 105,658 Receivables 874,067 26,977 968,457 29,535 Discounts and loans 27,240,509 840,757 21,495,243 655,543 Held-to-maturity financial assets 5,043,907 155,676 2,906,670 88,645 Property and equipment 434,134 13,399 477,415 14,560 Intangible assets 17,110 528 23,606 720 Other assets 635,766 19,622 500,880 15,275

Total assets $56,794,960 $1,752,931 $41,274,357 $1,258,748

LiabilitiesDue 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 2,363 - - Payables 1,685,991 52,037 349,873 10,670 Current income tax liabilities 2,041 63 - - Deposits and remittances 32,230,220 994,760 28,533,979 870,204 Deferred tax liability 51,566 1,591 17,177 524 Other liability 121,538 3,751 182,004 5,550

Total liabilities 49,040,647 1,513,600 33,752,555 1,029,355

Stockholders' equityCapital stock 6,094,911 188,115 6,094,911 185,877 Retained earnings 1,494,205 46,117 1,089,144 33,216 Others 165,197 5,099 337,747 10,300

Total stockholders' equity 7,754,313 239,331 7,521,802 229,393 Total liabilities and stockholders' equity $56,794,960 $1,752,931 $41,274,357 $1,258,748


Items2016.1.1~2016.12.31 2015.1.1~2015.12.31

NT$ US$ NT$ US$

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 4,968 197,760 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 22,983 420,227 12,816 Income tax expense (145,517) (4,491) (83,018) (2,532)Profit from continuing operations after income tax 599,119 18,492 337,209 10,284 Net income 599,119 18,492 337,209 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


Indovina Bank LimitedCondensed Balance Sheet


Indovina Bank LimitedCondensed Statement of Comprehensive Income


Note: Indovina Bank is a limited company; there is no information about earnings per share.

66



Items2016.12.31 2015.12.31

NT$ US$ NT$ US$

AssetsCash 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 826 26 846 26 Receivables 120,494 3,719 24,765 755 Discounts and loans 6,454,893 199,225 4,799,195 146,361 Property and equipment 165,991 5,123 166,363 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

LiabilitiesDue to the Central Bank and call loans from banks $1,065,207 $32,877 $335,929 $10,245 Payables 132,120 4,078 115,356 3,518 Current income tax liabilities 22,795 703 1,577 48 Deposits and remittances 6,369,803 196,599 5,203,546 158,693 Deferred tax liability 7,615 235 - - Other liability 50,568 1,561 23,619 720


Stockholders' equityCapital stock 1,786,169 55,129 1,786,169 54,473 Retained earnings (56,169) (1,734) (104,528) (3,188)Others 131,266 4,051 175,974 5,367



Items2016.1.1~2016.12.31 2015.1.1~2015.12.31

NT$ US$ NT$ US$

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 12,429 250,802 7,649 Non-interest income 35,772 1,104 86,332 2,633 Total income 438,460 13,533 337,134 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 2,334 112,149 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


Cathay United Bank (Cambodia) Corporation LimitedCondensed Balance Sheet


Cathay United Bank (Cambodia) Corporation LimitedCondensed Statement of Comprehensive Income


67


Items2016.12.31 2015.12.31

NT$ US$ NT$ US$

AssetsCurrent assets $19,343,177 $597,012 $18,130,690 $552,933 Available-for-sale financial assets 18 1 18 1 Investments accounted for using the equity method 1,589,073 49,045 1,230,114 37,515 Property and equipment 157,703 4,867 171,632 5,234 Intangible assets 44,151 1,363 53,420 1,629 Deferred tax assets 4,948 153 29,024 885 Other non-current assets 497,032 15,340 429,117 13,087

Total assets $21,636,102 $667,781 $20,044,015 $611,284

LiabilitiesCurrent liability $14,613,294 $451,028 $13,181,818 $402,007 Deferred tax liability 24,947 770 1,392 42 Other non-current liability 19,175 592 22,063 673


Stockholders' equityCapital stock 5,330,000 164,506 4,950,000 150,961 Capital surplus 491,766 15,178 491,766 14,998 Retained earnings 914,989 28,240 1,037,424 31,638 Others 241,931 7,467 359,552 10,965



Items2016.1.1~2016.12.31 2015.1.1~2015.12.31

NT$ US$ NT$ US$

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 6,607 204 25,712 784 Profit from continuing operations before income tax 326,224 10,069 595,274 18,154 Income tax expense (68,659) (2,119) (58,335) (1,779)Profit from continuing operations after income tax 257,565 7,950 536,939 16,375 Net income 257,565 7,950 536,939 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


Cathay Securities CorporationCondensed Balance Sheet


Cathay Securities CorporationCondensed Statement of Comprehensive Income


68



Items2016.12.31 2015.12.31

NT$ US$ NT$ US$

AssetsCurrent assets $688,463 $21,249 $304,760 $9,294 Property and equipment 21,129 652 21,531 657 Intangible assets 2,055 63 2,108 64 Other non-current assets 77,774 2,401 7,346 224

Total assets $789,421 $24,365 $335,745 $10,239

LiabilitiesCurrent liability $354,690 $10,947 $217,565 $6,635


Stockholders' equityCapital stock 728,544 22,486 360,069 10,981 Retained earnings (273,500) (8,441) (241,880) (7,377)Others (20,313) (627) (9) -

Total stockholders' equity 434,731 13,418 118,180 3,604 Total liabilities and stockholders' equity $789,421 $24,365 $335,745 $10,239


Items2016.1.1~2016.12.31 2015.9.4~2015.12.31

NT$ US$ NT$ US$

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)


Cathay Securities (Hong Kong) LimitedCondensed Balance Sheet


Cathay Securities (Hong Kong) LimitedCondensed Statement of Comprehensive IncomeFor the years ended 31 December 2016 and from 4 September 2015 to 31 December 2015

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 2015.

69


Items2016.12.31 2015.12.31

NT$ US$ NT$ US$

AssetsCurrent 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 8,388 291,485 8,889 Property and equipment 3,414 105 211 6 Deferred tax assets 5,797 179 805 25 Other non-current assets 1,962 61 837 25

Total assets $3,741,652 $115,483 $2,942,000 $89,722

LiabilitiesCurrent liability $8,548 $264 $11,065 $338 Deferred tax liability - - 2,375 72 Other non-current liability 4,298 132 4,736 144

Total liabilities 12,846 396 18,176 554

Stockholders' equityCapital stock 3,000,000 92,593 2,403,000 73,285 Capital surplus 128,625 3,970 - - Retained earnings 304,538 9,399 280,305 8,548 Others 295,643 9,125 240,519 7,335



Items2016.1.1~2016.12.31 2015.1.1~2015.12.31

NT$ US$ NT$ US$

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 5,904 208,293 6,352 Income tax profit (expense) 1,180 37 (21,347) (651)Profit from continuing operations after income tax 192,483 5,941 186,946 5,701 Net income 192,483 5,941 186,946 5,701 Other comprehensive loss 55,124 1,701 (297,646) (9,077)Total comprehensive income $247,607 $7,642 $(110,700) $(3,376)


Cathay Venture Inc.Condensed Balance Sheet


Cathay Venture Inc.Condensed Statement of Comprehensive Income


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Items2016.12.31 2015.12.31

NT$ US$ NT$ US$

AssetsCurrent 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 5,745 177 - - Investments accounted for using the equity method 263,243 8,125 291,178 8,880 Property and equipment 66,975 2,067 84,179 2,567 Intangible assets 9,493 293 13,808 421 Deferred tax assets 14,722 454 13,422 409 Other non-current assets 257,859 7,959 295,027 8,997

Total assets $2,589,398 $79,920 $2,647,119 $80,729

LiabilitiesCurrent liability $302,534 $9,338 $319,000 $9,729 Other non-current liability 144,938 4,473 176,458 5,381


Stockholders' equityCapital stock 1,500,000 46,296 1,500,000 45,746 Capital surplus 13,908 429 13,908 424 Retained earnings 655,353 20,227 639,227 19,494 Others (27,335) (843) (1,474) (45)



Items2016.1.1~2016.12.31 2015.1.1~2015.12.31

NT$ US$ NT$ US$

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 11,466 329,533 10,050 Non-operating income and expenses (14,305) (442) 44,068 1,344 Profit from continuing operations before income tax 357,202 11,024 373,601 11,394 Income tax expense (60,440) (1,865) (59,598) (1,818)Profit from continuing operations after income tax 296,762 9,159 314,003 9,576 Net income 296,762 9,159 314,003 9,576 Other comprehensive loss (25,861) (798) (25,358) (773)Total comprehensive income $270,901 $8,361 $288,645 $8,803


Cathay Securities Investment Trust Co., Ltd.Condensed Balance Sheet


Cathay Securities Investment Trust Co., Ltd.Condensed Statement of Comprehensive Income


71


Items2016.12.31 2015.12.31

NT$ US$ NT$ US$Assets

Current assets $4,122,394 $127,234 $4,060,732 $123,841 Available-for-sale financial asseets 305,516 9,430 278,087 8,481 Property and equipment 75,032 2,316 67,328 2,053 Investment property 290,341 8,961 286,253 8,730 Intangible assets 29,775 919 10,009 305 Other non-current assets 147,337 4,547 147,047 4,484

Total assets $4,970,395 $153,407 $4,849,456 $147,894

LiabilitiesCurrent liability $3,832,279 $118,280 $3,763,808 $114,785 Deferred tax liability 6,869 212 6,788 207 Other non-current liability 1,455 45 1,446 44


Stockholders' equityCapital stock 667,000 20,586 650,000 19,823 Retained earnings 187,646 5,792 179,397 5,471 Others 275,146 8,492 248,017 7,564



Items2016.1.1~2016.12.31 2015.1.1~2015.12.31

NT$ US$ NT$ US$

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 29,771 919 30,087 918 Income tax expense (4,522) (140) (4,760) (145)Profit from continuing operations after income tax 25,249 779 25,327 773 Net income 25,249 779 25,327 773 Other comprehensive income 27,129 838 32,963 1,005 Total comprehensive income $52,378 $1,617 $58,290 $1,778


Cathay Futures Co., Ltd.Condensed Balance Sheet


Cathay Futures Co., Ltd.Condensed Statement of Comprehensive Income


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.


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