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LAN
D BA
NK of TA
IWA
N A
nnual Report 2011
Website：http://newmops.tse.com.tw
The Bank Website：http://www.landbank.com.tw
Time of Publication︰June 2012
Stock code：5857ISSN：1997-9053（Print） ISSN：1997-9061 （Online）
LAND BANK of TAIWAN Annual Report
Spokesman：Mr. Chen,Toong-Ming
Title : Executive Vice PresidentTel : (886)2-2348-3678
E-mail：[email protected]
First Substitute spokesman：Mr. Huang,Chung-Min
Title : Executive Vice PresidentTel : (886)2-2348-3366
E-mail：[email protected]
Second Substitute spokesman：Mr.Kao,Ming-HsienTitle : Executive Vice PresidentTel : (886)2-2348-3566E-mail：[email protected]
Address & Tel of the Bank's Head Office and Branches (Please refer to "Directory of LBOT's offices")
Credit rating agencies
Name : Moody's Investors ServiceAddress : 24/F One Pacific Place 88 Queensway
Admiralty, Hong KongTel : (852)37581330 Fax : (852)37581631
Web Site：http://www.moodys.com
Name：Standard & Poor's Corp.Address：The landmark, Edinburgh Tower 15 Queens
Road Central,Suite 3003, Hong KongTel：(852)25333500 Fax：(852)25333566
Web Site：http://www.standardandpoors.com
Name：Taiwan Ratings CorporationAddress：49Fl., No.7, Sec. 5, Xinyi Rd., Xinyi Dist.,
Taipei City 11049, Taiwan (R.O.C.)Tel：(886)2-8722-5800 Fax：(886)2-8722-5879
Web Site：http://www.taiwanratings.com
Stock transfer agencyName：Secretariat, Land Bank of Taiwan Co., Ltd.Address：3F., No.53, Huaining St., Zhongzheng Dist.,
Taipei City 10046, Taiwan (R.O.C.)Tel：(886)2-2348-3456 Fax：(886)2-2375-7023Web Site：http://www.landbank.com.tw
Certified Public Accountants of financial statements for the past year
Name of attesting CPAs：Andrew Fuh ,Daniel HsuName of Accounting Firm ：Ernst & YoungAddress：9F., No.333, Sec. 1, Keelung Rd., Xinyi Dist.,
Taipei City 11012, Taiwan (R.O.C.)Tel : (886)2-2720-4000 Fax：(886)2-2757-6050Web Site：http://www.ey.com/taiwan
The Bank's Website：http://www.landbank.com.tw
Published by : Land Bank of Taiwan Co., Ltd
Time of Publication : June 2012
Land Bank of Taiwan Annual Report 2011Publisher : Land Bank of Taiwan Co., Ltd.
Address : No.46, Guanqian Rd., Taipei City
10047, Taiwan (R.O.C.)
Tel : (886) 2-2348-3456
Website : http://www.landbank.com.tw
Time of publication : June 2012
Time of first publication : June 1964
E-publication : This Annual Report is available
on the Bank website
Price：NT $600
GPN：2005300018
ISSN：1997-9053（Print）
1997-9061（Online）
Upon Taiwan’s centennial, we put on heart and soul,
With a perfect lineup, offering integrated banking service in full scale.
Upholding “abundance, harmony, sincerity, innovation” as core principles,
We stand in Taiwan, deploy over Asia, and aim for the World.
Land Bank deserves your upmost approval!
FINANCIAL HIGHLIGHTS
BUSINESS REPORTS
BANK PROFILE
DIRECTORS, SUPERVISORS AND OFFICERS
STATUS OF CORPORATE GOVERNANCE PRACTICE
OPERATING OVERVIE
FINANCIAL STATUS AND RISK MANAGEMENT
FINANCIAL STATEMENTS
DIRECTORY OF LBOT’S OFFICES
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10
18
21
24
34
40
56
64
Contents
70
80
60
50
40
30
20
10
0
Unit : NT$ 1 billion
Net Income
0.03
24
63
24
43
6459
56
73
89
Financial Highlights
Assets and Net Worth 2002~2011Net Income 2002~2011
Unit : NT$ 1 billion
500
1000
1500
2000
2500
0
Net WorthAssets
1,544
80 77 79 90 96 98 99 100 98 102
1,696 1,782 1,792 1,848 1,914
2,0482,103 2,167
2,286
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Unit: NTD in millions;%
2011 2010 2009 (2011/2010) (2010/2009)
NT$ US$ NT$ US$ NT$ US$ % %
Assets 2,286,226 75,515 2,167,349 71,589 2,103,003 69,463 105.48 103.06
Deposits 1,887,025 62,329 1,802,815 59,548 1,713,400 56,595 104.67 105.22
Loans and Discounts 1,789,808 59,118 1,685,372 55,669 1,576,185 52,062 106.20 106.93
Investments 200,973 6,638 239,555 7,913 267,974 8,851 83.89 89.39
Net Worth 101,568 3,355 98,379 3,250 99,618 3,290 103.24 98.76
Interest Income 38,305 1,265 32,551 1,075 32,526 1,074 117.68 100.08
Interest Expenses 16,989 561 12,920 427 16,196 535 131.49 79.77
Net Income 8,880 293 7,314 242 5,573 184 121.41 131.24
ROA 0.40% 0.34% 0.27%
ROE 8.88% 7.39% 5.61%
NPL Ratio 0.29% 0.43% 0.79%
Capi ta l Adequacy Ratio 11.20% 10.79% 10.54%
Remarks : 1. ROA=Net Income/ Average assets
2. ROE=Net income/ Average net worth
3. US dollar amounts are converted solely for convience at NT$30.275=US$1.00, the Central Bank's closing exchange rate as of December 30, 2011.
Soar on WingsAdvance to Excellence
Business ReportsBusiness Review for 2011
Brief Business Plan for 2012
Future Development Strategies
Credit Ratings
1010
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A sophisticated professional.Perfect presentation.
Applying specialty niches, cultivating core businesses, Land Bank performs entrepreneurial spirit.
During 2011, in the second quarter the 311 Japan Earthquake and the European Sovereign Debt Crisis
occurred in a row, in July the U.S. national debt problem surfaced, and in August the U.S. credit rating
was downgraded, which all led to lagging global stock markets. Moreover, emerging market countries
gradually tighten money supply to ease the inflationary pressure, making economic expansion slow down,
and the European Debt Crisis encounters unsolvable fundamental problems, so the international economic
situation has actually entered a pattern of short-term adjustment, or even business cycle contraction.
Because major economies and emerging market economies have yet seen the first light of morning in the
short term, the overall economic forecast for 2012 tends to be conservative.
In recent years Taiwan's house prices kept skyrocketing and loans of financial institutions concentrated
on real estate financing, which led to increasing operating risk of banks. The government continuously
promoted measures of house price stabilization and credit risk control, including levying luxury tax and
advancing actual price registration for real estate transactions, so the growth in housing and construction
loans undertaken by banks gradually slowed down. As a real estate loan specialty bank, the Bank
certainly sustained impacts on related loan business, while the crisis was also an opportunity for the Bank
to disperse the risk and diversify business development.
Thanks to excellent leadership of its management team and dedicated efforts made by its staff, the
Bank was able to respond to the market situation, flexibly adjust its operating strategies, and sustain
steady growth in sales volume. Its business review for 2011 and business plan for 2012 can be outlined
below:
I. Business Review for 20111. Domestic and Overseas Economic and Financial Landscape
(1) Economic situation
During the first half of 2011, the 311 Japan Earthquake impacted the global production and supply
Business Reports10
chain; since the second half of 2011, business demand has been weak along with the worsening
European/American debt problem, fiscal restraint, and delaying improvement in the employment
situation; earlier on emerging countries gradually contracted money supply to cope with the
inflationary pressure, making economic expansion worldwide slow down substantially. Based on
data provided by Global Insight Inc., the global economic growth rate for 2011 was 3.0%, while
the projected rate for 2012 will decline to 2.7%.
Taiwan's economy was affected by the global business cycle, where export demand withered,
capacity utilization rates of companies went down, and corporate investment tended to be more
conservative; moreover, given an unstable financial market and the no-pay leave implemented by
certain companies, people´s wealth and consumer confidence were accordingly affected, which
led to weaker overall economic growth dynamics. According to statistics from the Directorate-
General of Budget, Accounting and Statistics of the Executive Yuan, the full-year economic growth
rate for 2011 was 4.04%, and the projected economic growth rate for 2012 is 3.85%.
(2) Financial situation
The European Debt Crisis seriously hit financial markets worldwide, where the alarm has yet
been solved. Earlier on nations gradually contracted money supply to cope with the inflationary
pressure, but because in the third quarter the prices of international raw materials fell from the
period high and price inflation pressure was eased, currency policies of certain countries turned to
be looser. The domestic financial industry benefited by the Central Bank's prior and continuous
interest raise, for its effects have gradually surfaced. Interest rate margins of local banks reached
a new three-year high, loan and wealth management businesses continued to grow, and interest
income and administrative fee income obviously picked up, along with steady asset quality and
consequential growth in profits, so that at year end 2011 the overall return on equity (ROE) of
Taiwan banks reached 9.33%.
Wang, Yao-ShingChairperson of the Board
11
Business R
eports
2. Organizational Change of the Bank
(1) The Bank opened its New York Branch On January 11, 2011, to expand its operating
scale in foreign exchange and deepen its overseas deployment.
(2) The Bank strengthened horizontal and vertical communication among departments of the
head office, and actively integrated marketing operations in light of characteristics of its
channels and customer groups, to advance the operating performance.
(3) With the broadened cross-business operations of banking, securities, insurance, and
investment trust, the Bank has been actively planning to set up the state-run “Land Bank
Urban Renewal Investment Trust Co., Ltd.＂ and “Land Bank Insurance Brokerage
Co., Ltd.,＂ and adapted to the fittest organization development style to fully exercise
organizational efficiency.
3. Practice Achievements of Business Plan and Operating Strategies
Su, Ler- MingPersident
12
Unit: NTD in millions; USD in millions (foreign exchange); %
YearMajor Operation Category
2011 2010 Growth Rate Compared to Preceding Year
Deposits 1,935,018 1,860,418 +4.01
Loans 1,732,242 1,624,973 +6.60
Foreign Exchange 41,197 38,287 +7.60
Scale of Trust Property 290,316 282,001 +2.95
Guaranty 62,858 56,815 +10.64
Securities Brokerage 164,309 193,220 (Note)-14.96
Note: Influenced by a slowing international business cycle, investors in the local securities market turned conservative in their dealings, and the composite trading volume was reduced, so that the volume of securities operations decreased compared to the preceding year.
4. Status of Budget Execution
In the year of 2011, the total accumulated average deposit amounted to NT$1,935 billion,
reaching 115.18% of the budget goal; the accumulated average loan outstanding amounted to
NT$1,732.2 billion, reaching 120.71% of the budget goal; the accumulated volume of foreign
exchange transactions undertaken amounted to US$41.197 billion, reaching 164.79% of the
budget goal; and the before-tax net income amounted to NT$10.533 billion, reaching 131.66% of
the budget goal.
13
Business R
eports
Unit: NTD in millions; %
Category Year 2011 Year 2010 Increase/Decrease Comparison (%)
Net Interest Income 21,316 19,631 8.58
Net Non-Interest Income 3,214 4,342 -25.97
Total Net Income 24,530 23,973 2.32
NPL Expense 1,598 2,031 -21.32
Operating Expense 12,399 12,592 -1.54
Before-Tax Net Income 10,533 9,350 12.66
Net Profit for the Period 8,880 7,314 21.41
Return on Assets
Before-Tax 0.47 0.44 0.03
After-Tax 0.40 0.34 0.06
Return on EquityBefore-Tax 10.54 9.44 1.10
After-Tax 8.88 7.39 1.49
Net Income Ratio 36.20 30.51 5.69
Before-Tax Earnings Per Share (NT$1) 2.11 1.87 12.83
Remarks: 1. Before-tax net income for 2011 increased when compared to 2010, mainly because of enlarged interest spread that led to increase in net interest income.
2. Net non-interest income decreased when compared to 2010, mainly because of decrease in realized gain from available-for-sale financial assets.
5. Income, Expense and Profitability Analysis
After audit and attestation by the CPAs, main categories of increase and decrease in income,
expense and profitability for year 2011, as compared to final accounts for the preceding year (2010)
restated by the CPAs, are analyzed below:
6. Status in Research and Development
The Bank had a unit specially designated to periodically and non-periodically work on analysis of
economic and financial situations, study of industry development and trends, special topic research
in banking business, etc. Important R&D achievements for the year of 2011 included: 18 R&D
reports, domestic and foreign economic and financial situation reports (weekly and monthly),
industry reports (monthly and quarterly), hi-tech industry development status reports (bi-monthly),
8 special economic and financial topic research reports, and 12 domestic real estate market status
survey reports for business reference.
II. Brief Business Plan for 20121. Operating Guidelines and Major Operating Policies
(1) Continuously promote organizational reengineering, exercise organizational efficiency, and
increase the value of branches as channels for integrated marketing.
(2) Combine Information Technology to conduct internal process reengineering, build a sound
risk management mechanism and a healthy accounting system connecting to the world, and
improve asset quality.
(3) Continue to broaden the operating scope in accordance with financial policies, develop multi-
core niche businesses, and consolidate the market leader position in real estate loans.
(4) Accelerate training in marketing expertise of professional talents and bank staff, reinforce field
activities, and build a customer-oriented marketing culture.
14
Chairperson President
Rating Company Rating DateRating Results Financial
Strength OutlookLong-Term Rating Short-Term Rating
Taiwan Ratings Corporation May 11, 2011 twAA twA-1+ Stable
Standard & Poor's Ratings Services May 11, 2011 A- A-2 Stable
Moody's Investors Service November 22, 2011 Aa3 P-1 D Stable
(5) Promote entrepreneurial operation, strengthen the operating physique, consolidate the capital
structure, increase profitability, and expand the operating territory.
2. Projected Operating Goals
(1) Average deposit: NT$1,695 billion
(2) Average loan outstanding: NT$1,485 billion
(3) Foreign exchange undertaken: US$26 billion
(4) Before-tax net income: NT$8.2 billion
III. Future Development Strategies1. Continue to broaden the operating scope using its advantage in real estate specialty, and conduct
integrated marketing for core niche businesses like consumer banking, corporate banking, trust and
wealth management, in order to increase profitability.
2. Expand various electronic financial service platforms and channels, and advance the efficiency of
electronic money flow service.
3. Continuously improve integrated risk management systems and risk management systems,
implement information disclosure of qualitative and quantitative risks, and align with the New Basel
Capital Accord, in order to reach the risk management level of international banks.
4. Reinforce banking exchange and alliance in accordance with opening of cross-strait financial
markets, actively plan on establishing branches in the Mainland area, expand the operating scope
in Mainland China, expedite construction of a financial service platform for Taiwanese enterprises,
and advance operating efficiency of overseas branches, in order to strengthen international
competitiveness.
5. Expedite the marketing ability training for professional talents and bank staff in accordance
with diversified business development; direct the operations of business units by performance
evaluation, strive for balanced development among the business structure, risks and profits, and
build a customer-oriented marketing culture.
6. Continue to strengthen the operating physique and the capital structure in accordance with relaxed
financial policies, laws and regulations, advance operating capacity, enlarge the scale and exercise
synergy, to develop towards the visionary goal of becoming a financial institution of excellence.
IV. Credit Ratings
15
Business R
eports
Bank ProfileHistory
Land Bank of Taiwan Organization Chart
Employees
Capital Structure
Directors, Supervisors and OfficersDirectors and Supervisors
Officers
Status of Corporate Governance PracticeStatus of the Bank's Corporate Governance Practice, Its Deviations from the Corporate Governance Best-Practice Principles for Banks, and Respective Reasons
Status of Social Responsibility Performance
18
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20
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A state-run brand. Stable and reliable.
Enhancing the capital structure, integrating banking service, Land Bank earns diverse competitiveness.
18
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24
I. History
The history of the Land Bank of Taiwan dates from 1945, when the government decided to
promote land policies such as land-rights equalization and the land-to-the-tiller program in Taiwan,
and thus the national treasury appropriated 60 million dollars as capital to establish the “Land
Bank of Taiwan＂ pursuant to R.O.C. law on 1st September, 1946 utilizing the five branches
of the Nippon Kangyo Bank which had been set up in Taipei, Hsinchu, Taichung, Tainan, and
Kaohsiung during the Japanese occupation. In May, 1985, the Land Bank of Taiwan became
qualified as a juristic person pursuant to Article 52 of the Banking Act; on 21st December, 1998,
it became a state-run business organization upon implementation of the Province Simplification
Statute; on 1st July, 2003, it was re-organized as the “Land Bank of Taiwan Co., Ltd.;＂ further
on 21st May, 2004, it was transformed into a public company.
Bank Profile18
Board of Directors Chairperson
Panel of SupervisorsResident Supervisor
PresidentExecutive
Vice-President
General Auditor Department of Auditing
Department of Corporate Banking
Department of International Banking
Department of Electronic BankingDepartment of Business
Domestic Branches
(148)
Overseas Branches
and Offices (6)
Offshore Banking Branch
Department of Treasury
Department of Consumer Banking
Department of Trusts
Department of Wealth Management
Department of Securities
Department of Planning
Department of Business Management
Department of Information Management
Department of Accounting
Department of Human Resources
Department of Credit Management
Department of Loan Management
Department of Risk Management
Department of Credit Analysis and Research
Department of Property Management
Secretariat
Department of General Affairs
Department of Legal Affairs
Department of Ethics
Six Regional Centers
II. Land Bank of Taiwan Organization Chart
Note: denotes task force.
19
Bank Profile
III. EmployeesYear 2010 2011
Number of Employees
Staff 5,109 5,159
Technicians 623 618
Total 5,732 5,777
Average Age 43.92 44.4
Average Service Seniority 16.00 16.45
Distribution of Education Levels (%)
Doctor of Philosophy 0.03 0.03
Master 8.90 10.42
College 76.66 75.87
High School 12.25 11.34
Below High School 2.16 2.34
Month& Year
Issue Price
Registered Capital Paid-in Capital Remarks
No. of Shares Amount No. of Shares Amount Capital Source Others
Dec. 2011 NT$10 5 billion NT$50 billion 5 billion NT$50 billionAppropriation from national
treasury
IV. Capital Structure
20
I. Directors and Supervisors
II. Officers
Directors, Supervisors and Officers
Title Name Appointment Date Term Duration Institution Represented
Chairperson of the Board Wang, Yao-Shing 12/20/2011 12/19/2014 Ministry of Finance
Managing Director Su, Ler-Ming 12/20/2011 12/19/2014 Ministry of Finance
Managing Director Ko, Wu-Po 12/20/2011 12/19/2014 Ministry of Finance
Managing Director Lee,Wen-Siung 12/20/2011 12/19/2014 Ministry of Finance
Managing Director Lee, Tsung-Pei 12/20/2011 12/19/2014 (Independent Director)
Director Hsu, Huoo-Ming 12/20/2011 12/19/2014 (Independent Director)
Director Yang,Mzng-Feng 01/03/2012 12/19/2014 Ministry of Finance
Director Lee, Jih-Shyan 12/20/2011 12/19/2014 Ministry of Finance
Director Chang, Chin-Oh 12/20/2011 12/19/2014 Ministry of Finance
Director Hwang, Jen-Te 12/20/2011 12/19/2014 Ministry of Finance
Director Chen,Chih-Yuan 12/20/2011 12/19/2014 (Independent Director)
Director Yang, Song-Ling 12/20/2011 12/19/2014 Ministry of Finance
Director Hsu, Shu-Jung 12/20/2011 12/19/2014 (Labor Director)
Director Tsai,Kuei-Hua 12/20/2011 12/19/2014 (Labor Director)
Resident Supervisor Chen, Jui-Min 12/20/2011 12/19/2014 Ministry of Finance
Supervisor Cheng, Jyh-Hung 12/20/2011 12/19/2014 Ministry of Finance
Supervisor Cheng, Yu-Po 12/20/2011 12/19/2014 Ministry of Finance
Supervisor Chang,Pei-Chih 12/20/2011 12/19/2014 Ministry of Finance
Supervisor Chang,Chuang-Chang 12/20/2011 12/19/2014 Ministry of Finance
Title Name Appointment Date
President Su, Ler-Ming 01/05/2009
Executive Vice President Chen, Toong-Min 12/28/2007
Executive Vice President Kao, Ming-Hsien 02/01/2010
Executive Vice President Chu,Yu-Feng 01/16/2011
Executive Vice President Huang, Chung-Min 07/16/2011
Executive Vice President Huang,Cheng-Ching 09/19/2011
General Auditor Lee, Jenn-Ming 07/16/2011
March 1, 2012
March 1, 2012
21
Directors, Supervisors and O
fficers
Directors and Supervisors
1. Resident Supervisor / Chen, Jui-Min
2. Managing Director / Lee, Tsung-Pei
3. Managing Director / Ko, Wu-Po
4. Managing Director / Lee,Wen-Siung
13 42
22
Management Team
1. Chairperson of the Board / Wang, Yao-Shing
2. President / Su, Ler-Ming
3. Executive Vice President / Chen, Toong-Min
4. Executive Vice President / Kao, Ming-Hsien
5. Executive Vice President / Chu,Yu-Feng�
6. Executive Vice President / Huang, Chung-Min
7. Executive Vice President / Huang,Cheng-Ching
8. General Auditor / Lee, Jenn-Ming
常駐監察人 / 陳瑞敏14 3 6 857 2
23
Directors, Supervisors and O
fficers
I. Status of the Bank’s Corporate Governance Practice, Its Deviations from the Corporate Governance Best-Practice Principles for Banks, and Respective Reasons
Status of Corporate Governance Practice
Category Status of Practice
Deviations from the Corporate Governance Best-Practice Principles for Banks
and Respective Reasons
1. Bank ownership structure and shareholders' equity
(1) Way of the Bank handling shareholder suggestions or disputes
(1) There was spec i f ica l ly -ass igned personne l hand l ing s tock a f fa i rs , keeping the channel for communication unhindered.
No deviation.
(2) Status of the Bank being fully informed of the major shareholders that actually control the Bank, and their ultimate controllers
(2) The ROC Government was the sole shareholder of the Bank, and the Bank specifically assigned personnel to handle stock affairs, so it was actually informed of its major shareholder and its ultimate controller.
No deviation.
(3) Status of the Bank building the risk control mechanism and firewall with affiliated enterprises
(3) To reinforce control over its subsidiaries, t h e B a n k h a s e s t a b l i s h e d t h e “Land Bank of Taiwan Subsidiaries Management Guideline＂ and the “Land Bank of Taiwan Management Guideline for Appointing Personnel to Serve as Directors and Supervisors of Reinvested B u s i n e s s e s a n d S u b s i d i a r i e s ,＂ to imp lement i t s superv is ion and management mechanism.
No deviation.
2. Composition and duties of the Board of Directors(1) Status of the Bank retaining
Independent Directors(1) The Bank has established the “Rules
Governing the Scope of Dut ies of Independent Directors,＂ and retained 3 Independent Directors at the time.
No deviation.
(2) Status of periodically reviewing the attesting CPA's independence
(2) The Bank retained its attesting CPA in accordance with the Government Procurement Act, and has reached with the accounting firm provisions regarding annual review, contract termination and contract cancellation.
No deviation.
3. Status of establishing communication channels with stakeholders
The Bank established a toll-free customer complaint hot l ine, and had executive mailbox, customer complaint and e-mail box on the opinion exchange section of the Bank's website, where specifically-assigned personnel handled suggestions or disputes of customers and stakeholders.
No deviation.
24
Category Status of Practice
Deviations from the Corporate Governance Best-Practice Principles for Banks
and Respective Reasons
4. Information disclosure
(1) Status of the Bank setting up a website to disclose information about finance, business, and the Bank's corporate governance
(1) The Bank has set up a website and disclosed information like important f inancial and business affairs and corporate governance every quarter in accordance with pertinent regulations.
No deviation.
(2) Other means adopted by the Bank to disclose information (such as setting up an English website, specifically assigning personnel to collect and disclose bank information, implementing the spokesperson mechanism, and posting taped investor conferences on the Bank website)
(2) The Bank has set up an English website and specifically assigned personnel to periodically collect important financial and business information, and disclosed related information on the website. To implement the spokesperson mechanism, the Bank established the “Notice for News Release and Contact,＂ where the President appointed one Executive Vice-President as the news spokesperson, and separately appointed another Executive Vice-President as the deputy spokesperson, to exclusively make public comments on major policies and business measures adopted by the Bank. On the other hand, the Secretariat's Public Relations Section was in charge of collection of related information and news release; i t also posted taped investor conferences on the Bank website, although the Ministry of Finance as an institution was the sole investor of the Bank, of which the stock was not yet publicly listed.
No deviation.
5. Operating status of the Bank establishing the Nomination Committee, the Remuneration Committee or other functional committees
Not yet established. All shares of the Bank were held by the ROC Government, and all Directors were approved and appointed by the Ministry of Finance, where major decisions of the Bank were submitted to the Board of Directors for discussion and approval, further monitored by the Supervisors.
6. Status of the Bank's corporate governance practice and its deviations from the “Corporate Governance Best-Practice Principles for Banks＂ and respective reasons: See the above columns for details.
7. Other important information that enhances understanding of the Bank's corporate governance practice (such as Directors and Supervisors continuing education, status of Directors' attending and Supervisors' observing the Board of Directors meeting, status of executing risk management policies and risk measurement standards, status of executing the consumer protection or customer policy, status of executing Directors' avoiding proposals with conflict of interests, duties of managers, status of the Bank purchasing liability insurance for Directors and Supervisors, etc.):
(1) Directors and Supervisors continuing education: All the Bank's Directors and Supervisor took training courses on administrative neutrality and corporate governance according to pertinent regulations, and on December 20, 2011 the Bank held the “(Independent) Directors and Supervisors Advanced Practice Seminar＂ to discuss the Personal Information Protection Act.
(2) Status of Directors' attending and Supervisors'observing the Board of Directors meeting: Details for holding Board meetings of the Bank were all included in the Bank's Articles of Incorporation and Board of Directors Meeting Rules, where Supervisors were invited to the meetings for observance.
25
公司治理報告
Status of Corporate G
overnance Practice
(3) Status of executing risk management policies and risk measurement standards:
a. The Bank's “Risk Management Committee＂ convened 6 meetings during the year, reviewed the whole bank's risk monitoring reports and risk control proposals, and continued to have the Department of Risk Management handle measuring, monitoring and reporting of the whole bank's credit, market, operational and other risks.
b. On February 24, 2011 and July 7, 2011 the Bank consecutively issued letters to revise the “Land Bank of Taiwan Table of Limits for the Market Value-at-Risk,＂ to consolidate market risk management of the Bank.
c. On May 19, 2011 the Bank issued a letter to announce Land Bank of Taiwan's “Liquidity Risk Management Guideline＂ and “Interest Rate Risk Management Guideline.＂
d. On June 30, 2011 the Bank submitted to the Financial Supervisory Commission the “Land Bank of Taiwan Operating Plan for 2011,＂ the “Land Bank of Taiwan Capital Adequacy Assessment Result for 2010＂ and the “Land Bank of Taiwan Statement of Self-Assessment on Various Risk Indicators for 2010.＂
e. To work with the Financial Examination Bureau of the Financial Supervisory Commission on regular business examination on the Bank, on June 7, 2011 the Bank completed and submitted the examination form for the operating status of its management of overall risk, credit risk, market risk, operational risk, liquidity risk and banking book interest rate risk.
(4) Status of executing the consumer protection or customer policy:
a. To protect consumer rights and interests, on January 10, 2011 the Bank issued a letter to every operating unit, reinstating that each unit shall fully abide by pertinent regulations in handling businesses related to Article 12-1 of the Banking Act.
b. To protect consumer rights and interests as well as maintain fair market competition, on March 25, 2011 the Bank sent a copy of its “Fee Schedule for Credit Card Related Services,＂ asking each unit to post it on an obvious place of the lobby.
c. On March 31, 2011 the Bank wrote to ask every operating unit to claim the poster of “Never Borrow Via An Agent＂ to be posted on obvious places at its operating premises (including the automated equipment service area), to help inform the public of the correct financial consumption concept.
d. To protect consumer rights and interests, on April 22, 2011 the Bank issued a letter to every operating unit, reinstating that each unit shall proceed fully in accordance with Article 7 of the “Directions for Members of the Bankers Association of the Republic of China Executing Article 12-1 of the Banking Act＂ established by the Bankers Association of the Republic of China with respect to collateralizing guaranteed loans.
e. On May 9, 2011 the Bank forwarded a letter relayed by the Bankers Association for the Financial Supervisory Commission, stating that “to prevent loan application in another person's name and affecting financial order, all financial institutions shall fully implement credit analysis and credit extension review, and financial examination will reinforce the inspection on borrower credit analysis, use of fund and source of repayment,＂ and the Bank required its operating units to proceed accordingly pursuant to pertinent regulations of the Bank regarding credit analysis and extension.
f. On June 3, 2011 the Bank forwarded a letter relayed by the Bankers Association for the Financial Supervisory Commission regarding the Legislator's suggestion that financial institutions shall not incur the unreasonable situation of “age discrimination＂ when handling the loan against collateral.
g. On July 18, 2011 the Bank issued a letter to every operating unit, mandating that, when handling credit extension, each unit shall initiate explanation with the borrower about ways of searching repayment details, and that the unit shall not reject the borrower's request for repayment details, in order to protect the borrower's rights and interests and avoid disputes.
h. On August 2, 2011 the Bank forwarded a reply letter relayed by the Bankers Association for the Financial Supervisory Commission, mandating full implementation of the rule that “the figure of a debtor's total unsecured debt balance (including credit card, debit card and credit loan) at all financial institutions divided by his/her average monthly income should not exceed 22.＂
i. To build excellent customer relations management for subsequent business transactions and convenient operations, on August 22, 2011 the Bank issued a letter to every operating unit, mandating that each unit shall favorably consider a credit card application should the applicant's domicile, mailing address or working location indicate community relation with the handling unit.
j. To protect consumer data, rights and interests, on October 21, 2011 the Bank issued a letter to every operating unit, reinstating that when a customer rejected telephone or e-mail marketing from a sales representative of the Bank, the representative could ask the customer to call the customer service center, where the service personnel would first confirm customer identification and then proceed with online computer registration, connecting to the “Customer Relations Management (CRM)＂ database to make a note on its “customer marketing list management＂ section.
k. On November 3, 2011 the Bank forwarded a letter relayed by the Bankers Association for the Financial Supervisory Commission regarding pertinent regulations on handling the vehicle loan business, and thus the Bank updated its car loan related forms; besides, to protect customer rights and interests, customer data retrieved from the Joint Credit Information Center were used for the Bank's internal credit analysis only, not for use of car dealers.
l. To improve the Bank's housing loan series products, and provide consumers with more diverse financial services, on November 16, 2011 the Bank issued a letter to every operating unit to introduce the “Land Bank of Taiwan Measures for the Happy Life Special Housing Loan Program.＂
26
m. To consolidate bank operations and protect people's rights and interests, on November 22, 2011 the Bank forwarded a letter of the Financial Supervisory Commission, mandating that each unit, when requesting guarantors and related data in the lending process, shall meet pertinent regulations like the Civil Code, the Credit Analysis and Extension Guideline, and the Implementation Rules of Internal Audit and Internal Control System of Financial Holding Companies and Banking Industries, and thus fully implement the credit extension and identity verification procedure and conduct review, to preclude dummy guarantors or improperly requesting minors to act as guarantors.
n. To implement amended (supplemental) provisions of Article 12-1 and Article 12-2 of the Banking Act, and to avoid disputes upon actual execution, the Bank organized each operating unit's questions and answers to execution of the amendment (supplement), and on November 30, 2011 issued a letter to every operating unit stating “The Bank's Guideline for Observing Articles 20-1 and 20-2 of the Banking Act in Consumer Loan Credit Extension＂ for the reference of practice.
o. On December 28, 2011 the Bank relayed the “Directions for Members of the Bankers Association of the Republic of China Handling Deferred Principal Payment and Extended Repayment Deadline for Residential Housing Loans of Involuntarily-Unemployed Laborers＂ established by the Bankers Association, as well as related operating rules and matters to be accordingly handled.
(5) Status of implementing Directors' avoiding proposals with conflict of interests: Pursuant to the Bank's Articles of Incorporation and Board of Directors Meeting Rules, Directors shall immediately avoid proposals with conflict of interests.
(6) Duties of managers: As provided by Article 35 and Article 36 of Chapter 7 (Managers) of the Bank's Articles of Incorporation.
(7) Status of the Bank purchasing liability insurance for Directors and Supervisors: No liability insurance policy was made at the time.
8. Where there is a corporate governance self-assessment report or a corporate governance assessment report made by another contracting professional institution, please clearly state the results of the self-assessment (or contracting assessment), the major defects (or suggestions), and the status of improvement:
(1) In 2011 the Bank retained a professional institution, Feng Chia University Corporate Governance Research Center, to conduct corporate governance assessment, for which the general opinions are summarized below:
a. The Company promptly announced related information on its annual report and website according to law, and established facebook and blog platforms for complete disclosure of public issues, indicating great information transparency.
b. The management practiced good legal compliance, fully implemented business risk management, and engaged in normal business conduct.
c. All Directors and Supervisors followed pertinent corporate ethics rules, and the Labor Director actually participated in making major decisions of the Company.
d. The Company coordinated with each stakeholder, worked with the corporate labor union to periodically hold the Labor-Management Meeting, and set up an employee section in its internal network as the labor-management communication channel, which further indicated the Company's well-functioning personnel management. Besides, the Company conducted public interest activities to fulfill social responsibility, and worked with the government to conduct various policy-oriented loans.
e. Suggestions to the Bank: During the ROC Centennial, the Company gave an excellent operating performance. However, facing the economic environment after the European Debt Crisis and signing of cross-strait MOU and ECFA, the Company is advised to further strengthen its innovation and marketing management strategies, to advance competitiveness and profitability.
(2) Review and improvement:
It has been an inevitable trend for financial institutions to develop towards business professionalization and operation internationalization, and future competition is going to turn white-hot. To improve operating efficiency, the Bank actively adopted the following measures:
a. Utilize the “creative reform proposal＂ measure to encourage responsible operating units of the head office to continuously weed through the old to bring forth the new in products and services.
b. Actively collect market updates and information about fellow financial institutions promoting business, for the reference of product design and marketing.
c. Expand diverse electronic channels like online and mobile banking, and increase administrative fee income sources, in order to generate more revenues.
d. Conduct integrated marketing for multi-core niche businesses, consolidate the core niches of consumer banking, corporate banking, trust and wealth management, strengthen electronic money flow channels and service, expand the operating scale for banking, securities, insurance and investment trust, nurture cross-industry professional talents and techniques, broaden the business scope and reinforce overseas deployment, to continuously increase competitiveness.
27
公司治理報告
Status of Corporate G
overnance Practice
II. Status of Social Responsibility Performance
Category Status of Practice
1. Implementing promotion of corporate governance
(1) Status of the Bank establishing the corporate social responsibility policy or system and reviewing implementation achievements.
The Bank is a state-run enterprise 100% owned by the government, and for years the Bank followed the government policy to conduct various special loans and promoted national economic development; under the idea of “What is taken from society is used on society,＂ the Bank spared no efforts to sponsor community care, environment protection and underrepresented groups, and did not separately establish a corporate social responsibility policy or system.
(2) Operating status of the Bank establishing a specially-set (adjunct) unit to promote corporate social responsibility.
The Bank did not establish any specially-set (adjunct) unit to promote corporate social responsibility.
(3) Status of the Bank periodically holding corporate ethics training sessions and promotion campaignsfor Directors, Supervisors and employees, and combining it with the employee performance evaluation system to establish a clear and effective reward and punishment mechanism.
a. The Bank's Directors and Supervisor all took training courses on administrative neutrality and corporate governance according to pertinent regulations, and the Bank unperiodically arranged promotion courses like Introduction to the Civil Servants Service Act or the Personal Information Protection Act, to build up a consensus on civil service.
b. In the year the Bank arranged various professional and orientation training programs to offer corporate ethics education courses, promoted related laws like civil servants anti-corruption ethics regulations and professional responsibility, and drafted related advertising materials, delivering the idea of knowing the law and obeying the law.
c. Pursuant to the “Directions for General Evaluation of Civil Servants of the Executive Yuan and Affiliated Agencies＂ and the “Directions for Evaluation of Personnel of State-Run Financial and Insurance Business Organizations Under the Ministry of Finance,＂ the Bank included employee work competency, service attitude, character, integrity, organizational goal fulfillment, and implementation of customer orientation as the items for employee general evaluation and annual evaluation, where proper rewards (punishments) would be issued for superior (inferior) performances.
2. Developing a sustainable environment(1) Status of the Bank striving for
improving usage efficiency of various resources, as well as using recycled materials of low environment load and impact.
a. To celebrate the ROC Centennial, promote healthful exercises, and advocate the idea of environment protection, on September 25, 2011 the Bank held “Finance Cup United Fun Athletic Meeting＂ and “Cherish Land Charity Fair＂ at the NTU Sports Center, before which during the preparation period the Bank launched a resource recycling campaign, raising totally 1,820 kilograms of recyclable resources like scrap batteries, CDs and cell phones to be given to Yu-Cheng Social Welfare Foundation after the competition; besides, the Bank offered 300 osmanthus saplings and 1,500 small pot plants for participants' adoption, building the concept of environmental sustainability in everyone's heart.
b. Every year the Bank conducted 4 hours of environment education sessions, in order to advance employee environmental ethics and responsibilities, maintain ecological balance, uphold respect for life, and fulfill sustainable development.
c. The Bank promoted using both sides of copy paper, and procured recycled paper; it also advanced green procurement, purchasing much more environment-friendly products with Energy Label, Water Saving Label, and Green Building Label.
(2) Status of the Bank establishing a proper environment management system according to characteristics of its sector.
The Bank periodically cleaned and waxed its working premises, cleared up waste , renewed flowers, trees and pot plants, beautified the working environment, and regularly sent patrol personnel to reinforce environment management.
(3) Status of the Bank establishing the specially-designated environment management unit or personnel for environment preservation.
The Bank had the Labor Safety Section under the Department of General Affairs, which was responsible for promoting environment education, maintaining a clean environment, etc.
28
Category Status of Practice
(4) Status of the Bank paying attention to influence of climate change on operating activities, as well as setting up its policy on energy saving, carbon reduction and greenhouse gas emission reduction.
a. The Bank set an annual goal of saving more than 2% of water, electricity and fuel expenditure, and every year replaced 10% of high electricity-consuming appliances with energy-saving equipment.
b. The Bank continued to implement garbage sorting, garbage reduction, and resource recycling.
3. Safeguarding social interest
(1) Status of the Bank observing pertinent labor laws and regulations, protecting legal rights and interests of employees, and establishing proper management manners and procedures.
a. In accordance with the business nature and Article 70 of the Labor Standards Act, the Bank established work rules on the following matters, and reported to the governing authority, Department of Labor of the Taipei City Government, for reference before they were publicly announced:
(a) Work hours, time off, leave of absence, national holidays, special leave of absence, and methods for arranging shifts for doing continuous work.
(b) Wage rates, calculation method and pay days.
(c) Overtime work.
(d) Allowances and bonuses.
(e) Disciplinary policy.
( f ) Attendance, leave taking, commending or demerits, and promotion and transfer.
(g) Recruitment, discharge, separation, withdrawal of service, and retirement.
(h) Compensation and pension for injury or disease caused by occupational accidents.
( i ) Welfare measures.
( j ) Safety and health regulations to be observed by the laborers and the employer.
(k) Methods for promoting communication and cooperation between the laborers and the employer.
( l ) Others.
b. The Bank held the “Labor-Management Meeting＂ in accordance with Article 83 of the Labor Standards Act and the Labor-Management Meeting Implementation Regulations:
(a) The Bank held at least one periodical Labor-Management Meeting every three months.
(b) Besides the aforesaid periodical meeting, the Bank also held the Interim Labor-Management Meeting when necessary.
(c) The Bank's Executive Vice-President in charge of human resources and the labor union's Chairperson took turns serving as the chair of the Labor-Management Meeting, to maintain equity and impartiality of the meeting.
(d) The Bank sent the meeting notice 7 days before the Labor-Management Meeting was held; when there was a proposal, the meeting staff delivered it to Labor-Management Meeting representatives 3 days before the meeting was held; and then the Labor-Management Meeting was held at the time and location stated on the meeting notice.
(e) More than one half of the representatives from each side of the laborers and the management had to attend the meeting, and a resolution was adopted after a consensus had been reached by negotiation; if a consensus could not be reached by negotiation, a resolution would be adopted by consent of at least three fourths of present representatives.
( f ) The essence of a meeting resolution lies on its execution, so both sides actively participated in execution and promotion of every resolution, did the best to coordinate with related units, and had items under the resolution timely completed.
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公司治理報告
Status of Corporate G
overnance Practice
Category Status of Practice
(2) Status of the Bank offering employees with a safe and healthful work environment, and periodically providing employees with safety and health education.
a. The Bank established the “Working Directions for Labor Safety and Health＂ pursuant to Article 25 of the Labor Safety and Health Act, which shall be strictly followed by all employees, to jointly prevent various incidents from happening.
b. The Bank established the “Labor Safety and Health Management Notice＂ pursuant to Article 12-1 of the Labor Safety and Health Organization Management and Automatic Inspection Regulations, to fully implement which the Bank further established the “Labor Safety and Health Management Plan,＂ to increase the sense of safety and health of all employees, and safeguard their safety and health.
c. Every 3 years the Bank held a 3-hour on-job safety and health training session for employees.
(3) Status of the Bank establishing and announcing its consumer rights policy, as well as providing a transparent and effective consumer complaint procedure for its products and service.
a. When the Bank reached pertinent contracts with customers, clauses or words relating to the review period and personal information protection were always included, and the complaint hotline, fax and website also provided.
b. Every quarter the customer service center produced the Statistical Table by Category and the Detailed List of Cases Processed of phone calls and complaints received, for perusal of the management, as well as for continuous follow-up till improvement.
c. On its website the Bank set up the three channels of executive mailbox, customer complaint and e-mail to communicate with the public, where customer requirements and suggestions would be timely processed by responsible units according to their functions and duties.
(4) Status of the Bank working with suppliers to jointly strive for advancing corporate social responsibility.
On May 29, 2011 the Bank, Franklin Templeton Investments and National Taiwan Museum jointly held the fair of “Colorful LOHAS and Public Charity-Land Bank doubles your love,＂ where the Bank's honorable guests and the general public, totaling 1,000 people, were invited to participate. The event received very positive feedback and great advertising results.
(5) Status of the Bank participating in activities of community development and public charity groups via commercial events, commoditydonation, corporate volunteer service or other free professional services.
a. On January 24, 2011 the Bank and Chinese Calligraphy Association jointly held the Chinese New Year writing and rewarding event of “Culture in Every House, Good Year for Everyone＂ at the doorway of the Department of Business.
b. During the year the Bank supported and promoted sports activities to help take deeper roots, separately held teenager badminton and tennis summer camps in central Taiwan and northern Taiwan, and sponsored school sports teams competing abroad, which have earned great compliments of society.
c. The Bank continued to care for underrepresented groups and actively returned favor of society by actual practice, such as responding to the 2011 “United Way One-Day Donation Campaign＂ held by United Way of Taiwan, raising over NT$1,400,000 in total; the Bank also participated in the event of “22nd Year-End Party for the Homeless and Elderly Living Alone＂ held by Genesis Social Welfare Foundation in 2011, where the Bank was the first to donate NT$300,000 and called for response of kind people; to fulfill the spirit of “all for one, one for all,＂ the Bank donated NT$1,000,000 to the Social Welfare Department of the New Taipei City Government to support underrepresented families that incurred emergency, which greatly presented the Bank's public-spirited image.
d. To celebrate the ROC Centennial, given a vision of greeting the bright future hand in hand, on November 5 at South North Square in front of the Office of the President, the Bank held the event of “Glorious 100: ROC Centennial Finance Carnival,＂ where it transferred all cash and Uniform Invoices donated by people to 6 public interest groups like Genesis Social Welfare Foundation.
e. The Bank granted totally NT$2,090,000 in scholarship to sponsor students of 27 public and privates schools.
30
Category Status of Practice
f. The Bank retained Small and Medium Enterprises Joint Consultation Center to produce the Tax Health Check DIY CD for companies, and helped small and medium enterprises understand management problems and promptly adopt responsive measures, reaching the goal of win-win between the Bank and borrowers.
g. Financial consultants of the Bank were invited to serve as lecturers for the 2011 “Walk in Campus and Community: Financial Knowledge Promotion Campaign＂ sponsored by the Financial Supervisory Commission of the Executive Yuan, assisting the government in making financial education popular and take deeper roots, as well as promoting sound consumption and financial planning concepts.
4. Enhancing information disclosure
(1) Way of the Bank disclosing relevant and reliable corporate social responsibility information.
Information of the Bank relating to corporate social responsibility was disclosed on “Corporate Governance Section＂ of the Bank website.
(2) Status of the Bank drafting the corporate social responsibility report and disclosing promotion of corporate social responsibility.
None.
5. If the Bank establishes its own corporate social responsibility guideline pursuant to the “Corporate Social Responsibility Best-Practice Principles for Listed Companies,＂ the Bank is to clearly state any operating deviation from the guideline: None.
6. Other important information that enhances understanding of the Bank's corporate social responsibility practice (such as the system and measures adopted by the Bank and their performance status for environment protection, community participation, social contribution, social service, public interest, consumer rights and interests, human rights, safety and health, and other social responsibility activities):
The ROC Government was the sole shareholder of the Bank, and the Bank not only followed the government policy to promote various special and relief loans, but also paid attention to fulfillment of its social responsibility as a corporate citizen; under the idea of “What is taken from society is used on society,＂ the Bank spared no efforts to continuously sponsor, encourage and support care for community environment protection, public interest activities, academics and culture, underrepresented groups, and the others, with actual operations detailed as the above-mentioned points.
7. Where the Bank's product or corporate social responsibility report passes a related examination institution's inspection standards, it shall be clearly stated: None.
31
公司治理報告
Status of Corporate G
overnance Practice
Operating OverviewDeposits
Loans
Trusts
Wealth Management
Foreign Exchange and International Banking
Electronic Banking
Financial Planning and Investment
Securities
34
34
36
36
36
37
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A humble friend. Faithful and kind.
Listening carefully, serving with heart, Land Bank wins public praise.
37
37
Operating OverviewI. Deposits
As of year end 2011, total deposits of the Bank stood at NT$1,982.7 billion, an increase of
NT$80.4 billion or 4.23% compared to year end 2010, within which demand deposits increased
by 6.10%.
II. LoansAs of year end 2011, New Taiwan Dollar loans out of the Bank's own funds stood at NT$1,811.7
billion, with a market share that ranked No. 3 in the domestic lending market of banks.
Demand Deposits
Demand DepositsDecember 31, 2011
December 31, 2011 Total：1,982,707
December 31, 2010 Total：1,902,320
December 31, 2010
9.3% 8.25%
64.0% 65.52%
26.7% 26.23%
Unit : % Unit : NTD in millions
Demand Deposits
Time Deposits
Time Deposits
Time Deposits
Public Treasury Deposits
Public Treasury Deposits
0 200,000
529,304
184,396
1,269,007
1,246,436
498,874
157,010
400,000 600,000 800,000 1,000,000 1,200,000 1,400,000
Public Treasury Deposits
Comparison of Deposit Structures Between 2011 and 2010
December 31, 2011
December 31, 2011 Total：1,982,707
December 31, 2010 Total：1,902,320
December 31, 2010
Unit : % Unit : NTD in millions
State-Run Businesses
Private Enterprises
Individuals
Government Agencies
Financial Institutions
Non-Profit Organizations
Others
State-Run Businesses
Private Enterprises
Individuals
Government Agencies
Financial Institutions
Non-Profit Organizations
Others
0 200,000
301,649
28,424
244,315
345,374
841,542
192,646
28,757
813,378
188,823
20,936
302,668
31,153
219,790
325,572
400,000 600,000 800,000 1,000,000
Comparison of Depositor Structures Between 2011 and 2010
15.21% 15.91%
9.72% 9.93%42.45% 42.76%
12.32% 11.55%
17.42% 17.11%
1.43% 1.64%
1.45% 1.10%State-Run
Businesses
Private Enterprises
Individuals
Government Agencies
Financial Institutions
Non-Profit Organizations
Others
34
1. Corporate bankingAs of year end 2011, corporate banking loans reached NT$962.9 billion, within which small and
medium enterprises loans amounted to NT$288.1 billion, and construction industry loans amounted
to NT$295.7 billion and had the largest market share in construction industry loans of Taiwan.
To enhance the diversification of its corporate banking business, and avoid excessive
concentration on real estate loans in order to diversify risk, the Bank not only assisted the
government in promoting policy-oriented businesses, but also actively promoted the urban
renewal loan business, and strove to expand its syndicated credit facility business. According to
syndicated loan statistics for 2011 published by the two magazines of Basis Point and Bloomberg,
the Bank was ranked by both of them as the No. 1 domestic mandated arranger for syndicated
loans, which was the second time the Bank claimed this title that it had first won in 2009.
2. Consumer banking
As of year end 2011, consumer banking loans reached NT$714.3 billion, within which housing
loans amounted to NT$628.7 billion, and consumer loans amounted to NT$44 billion.
Consumer banking in the Bank mainly included housing loans, consumer loans and credit
card business, where “Elite Housing Loan,＂ “Quality Housing Loan,＂ “Decreasing Term
Housing Loan,＂ “Policy-Oriented Housing Loan,＂ “Comprehensive Consumer Loan＂ and
“Platinum Business Card＂ served as its feature products. Based on data published by the
Financial Supervisory Commission of the Executive Yuan, the Bank steadily led the market of
housing loans with a market share of 10.86%, and also outperformed all competitors in agency/
organization employee consumer loans with a market share of 31.80%. In addition, coping
with the government policy, the Bank actively conducted various policy-oriented housing loans,
agricultural loans and labor hardship loans, achieving excellent performance.
December 31, 2011
December 31, 2011 Total：1,811,710
December 31, 2011 Total：1,700,392
December 31, 2010
Unit : % Unit : NTD in millions
0 200,000
567,316
48,710
222,660
285
889,983
690
82,066
863,806
100
59,925
504,324
46,497
224,907
833
400,000 600,000 800,000 1,000,000
Comparison of Borrower Structures Between 2011 and 2010
31.31%
2.73%49.12% 50.8%
4.53%
29.66%
12.29% 13.23%
0.04%
0.02%
2.69%
3.52%0.05%
0.01%
State-Run Businesses
Private Enterprises
Individuals
Government Agencies
Financial Institutions
Non-Profit Organizations
Others
State-Run Businesses
Private Enterprises
Individuals
Government Agencies
Financial Institutions
Non-Profit Organizations
Others
State-Run Businesses
Private Enterprises
Individuals
Government Agencies
Financial Institutions
Non-Profit Organizations
Others
35
Operating O
verview
III. TrustsAs of year end 2011, the Bank handled trust investment in negotiable securities to promote 1,107
offshore funds in 27 series under investment consulting firms like Invesco and Fidelity, as well as 530
securities investment trust funds under Prudential and other 32 investment trust companies, with a trust
property of NT$47.023 billion; the Bank had also handled 902 real estate trusts, with a trust property of
NT$92.725 billion. Furthermore, the Bank acted mainly as a trustee institution in its asset securitization
business, which was divided into the two categories of real estate securitization and financial asset
securitization, where as of year end 2011, 5 cases of real estate securitization were undertaken and
operating, with a trust property of NT$53.464 billion; there were 13 cases of financial asset securitization,
with a trust property of NT$47.131 billion; the Bank remained the industry leader both as an asset
securitization trustee institution and in the real estate trust business.
To cope with the Ministry of the Interiors' including the “Contract Performance Guarantee Mechanism
for Pre-Sale Houses＂ in the standardized sample contract for pre-sale houses that took effect on May
1, 2011, the Bank added the business of “Pre-Sale House Payment Trust,＂ which covered both risk
control and customer needs, expanding its business scope.
IV. Wealth ManagementAs of year end 2011, transaction fee income from the wealth management business stood at NT$552
million, an increase of 3.88% compared to 2010.
To respond to the public's development trend in financial and investment planning, the Bank introduced
diverse and innovative products according to needs of different customer groups, and offered high
net worth customer groups with services like financial planning or asset allocation. In 2011, the Bank
launched 6 traditional insurance products, 1 investment-oriented insurance product, 7 foreign-currency-
denominated insurance products and 1 travel insurance product, as well as continued to introduce
products like variable rate pension and U.S.-dollar-denominated foreign currency insurance policy,
providing tailor-made financial planning programs.
V. Foreign Exchange and International BankingAs of year end 2011, foreign exchange transactions undertaken by the Bank stood at US$41.197 billion,
within which export transactions reached US$6.199 billion or 15.05%, import transactions reached
Unit: NTD in millions
December 31, 2011 Total：1,811,710
December 31, 2010 Total：1,700,392
1,600,0001,200,000800,000400,000200,0000
Domestic Loans
1,719,1761,674,040
92,53426,352
Overseas Loans
2,000,000
Unit：%
December 31, 2011
Domestic LoansOverseas Loans
Comparison of Loan Structures Between 2011 and 2010
94.89
5.11December 31, 2010
Domestic LoansOverseas Loans
98.45
1.55
Unit：%
36
US$6.272 billion or 15.22%, and exchange transactions reached US$28.726 billion or 69.73%. The
Bank had 55 authorized foreign exchange business units, 75 branches handling purchase/sale of
foreign currencies and traveler´s checks, 6 overseas branches and representative offices, and as
many as 2,718 overseas correspondent banks that spread across major financial centers over five
continents of the world.
VI. Electronic BankingTo provide customers with convenient and fast service, the Bank continued to promote electronic
banking service by setting up 796 automated service machines like automated teller machines,
cash deposit machines and deposit/withdrawal machines. The Bank also continuously promoted
new financial products like e-billing/e-collection for enterprises, labor protection card, chip debit
card's issuance, receipt and payment, money deduction and transnational withdrawal, UnionPay
Card receipt in Taiwan's ATMs, chip debit card's personal online service, and Hong Kong e-bank
system.
VII. Financial Planning and InvestmentThe Bank not only reinvested in state-run and private enterprises to generate revenues in
accordance with the government policy, but also invested in stocks and depositary receipts of
publicly listed companies in consideration of domestic and overseas financial landscapes and
industry development factors, to increase investment efficiency. The Bank further made a most
efficient overall plan on various uses of New Taiwan Dollar and foreign currency funds, flexibly
managed and arranged the funds, paid close attention to market trends of interest rates, and
actively promoted the business of bonds and notes, in order to generate more earnings.
VIII. SecuritiesAs of year end 2011, the Bank's securities brokerage transaction volume stood at NT$164.3
billion, underwriting 42 cases. In the future, the Bank will strengthen the integrated use of cross-
departmental resources and exercise its strengths in channels and customer base, to actively
promote the securities brokerage business; it will better utilize its corporate banking resources to
actively participate in domestic fund raising projects like cash capitalization and TDR issuance for
publicly listed companies; the Bank will further develop and increase the underwriting business
volume of corporate banking customers, lower the operating cost and multiply the revenues.
Export Transactions
Import Transactions
Exchange Transactions
Export Transactions
Export Transactions
December 31, 2011 Total：41,197December 31, 2010 Total：38,287
15.05% 12.42%
69.73% 73.87%
15.22% 13.71%
Unit：% Unit : USD in millions
Import Transactions
Import Transactions
Exchange Transactions
Exchange Transactions
0
6,199
6,272
28,726
28,282
4,757
5,248
10,000 20,000 30,000 40,000
Comparison of Foreign Exchange Structures Between 2011 and 2010
Export Transactions
Import Transactions
Exchange Transactions
December 31, 2011 December 31, 2010
37
Operating O
verview
Financial Status and Risk ManagementCondensed Consolidated Balance Sheets and Income Statements for the Last Five Years
Financial Analysis for the Last Five Years
Risk Management
Financial Statements
40
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41
45
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An active planner. Precise execution.Pushing organizational reengineering, building a culture of marketing, Land Bank fulfills its social responsibility.
I. Condensed Consolidated Balance Sheets and Income Statements for the Last Five Years1. Condensed Consolidated Balance Sheets
Unit: NTD in thousands
Year
Accounting Title
Financial Data for the Last Five Years (Note)
2011 2010 2009 2008 2007
Cash and cash equivalents, due from the Central Bank and call loans to banks 233,821,304 181,917,747 194,453,481 186,938,624 187,382,232
Financial assets at fair value through profit or loss 1,400,956 2,919,008 3,020,240 3,285,619 6,863,035
Securities purchased under agreements to resell - 499,430 - - 2,236,065
Available-for-sale financial assets 189,326,452 223,476,691 251,968,642 230,108,579 185,038,157
Discounts and loans 1,789,807,842 1,685,371,797 1,576,185,471 1,548,387,015 1,435,707,088
Receivables 6,938,720 7,567,639 7,830,707 10,067,924 21,589,373
Held-to-maturity financial assets 267,910 171,395 171,833 147,883 134,354
Investments accounted for using equity method 0 22,602 13,614 34,773 31,000
Fixed assets 24,605,185 22,632,803 22,871,560 23,069,693 45,993,181
Intangible assets 768,006 736,872 415,752 420,123 479,520
Other financial assets 7,027,839 9,608,504 10,230,942 10,378,720 9,730,462
Other assets 32,261,302 32,424,716 35,840,272 35,624,414 18,696,235
Total assets 2,286,225,516 2,167,349,204 2,103,002,514 2,048,463,367 1,913,880,702
Due to the Central Bank and call loans from banks 180,258,561 169,920,408 201,042,483 194,273,644 197,537,417
Deposits and remittances 1,887,146,816 1,802,896,136 1,713,478,871 1,649,490,649 1,528,114,558
Financial liabilities at fair value through profit or loss 178,503 273,392 132,684 318,834 162,965
Securities sold under agreements to repurchase 10,897,378 9,060,064 8,368,393 16,970,645 8,399,459
Borrowed from the Central Bank and other banks, financial debentures payable 58,315,953 43,213,146 31,995,149 32,069,833 20,496,576
Accrued pension liabilities 12,603,291 12,465,899 12,002,393 11,558,465 11,117,561
Other financial liabilities 205,455 234,089 253,942 281,048 314,847
Other liabilities 35,051,787 30,906,979 36,110,742 44,488,342 49,969,882
Total liabilitiesBefore distribution 2,179,266,829 2,061,470,113 1,995,884,657 1,946,523,979 1,812,920,505
After distribution 2,184,657,744 2,068,970,113 2,003,384,657 1,949,451,460 1,816,113,265
Capital stock 50,000,000 50,000,000 50,000,000 25,000,000 25,000,000
Capital reserve 21,748,869 21,748,869 21,748,869 46,748,869 46,748,869
Retained
earnings
Before distribution 24,901,120 23,323,865 23,509,687 20,864,025 18,201,824
After distribution 19,510,205 15,823,865 16,009,687 17,936,545 15,009,064
Unrealized gain or loss from financial instrument 2,526,463 4,742,866 5,565,804 2,932,254 4,387,273
Cumulative translation adjustments -88,544 -191,431 22,048 44,397 17,493
Other items in shareholders' equity 7,870,779 6,254,922 6,271,449 6,349,842 6,604,738
Total shareholders' equity
Before distribution 106,958,687 105,879,091 107,117,857 101,939,388 100,960,197
After distribution 101,567,772 98,379,091 99,617,857 99,011,907 97,767,437
Note: Figures for the period from 2007 to 2010 have been restated by the CPAs based on the audit result of the Ministry of Audit; figures for 2011 have been audited and attested by the CPAs.
Financial Status and Risk Management40
2. Condensed Consolidated Income StatementsUnit: NTD in thousands
Year Accounting Title
Financial Data for the Last Five Years (Notes)
2011 2010 2009 2008 2007
Net interest income 21,315,803 19,630,805 16,329,911 18,708,307 17,006,876
Net non-interest income 3,214,257 4,342,053 5,676,611 5,655,608 7,947,092
Net operating income 24,530,060 23,972,858 22,006,522 24,363,915 24,953,968
Provision for loan losses 1,597,975 2,030,859 1,665,363 3,822,472 4,181,626
Operating expenses 12,398,686 12,592,340 12,167,781 13,001,123 13,119,186
Income before income tax 10,533,399 9,349,659 8,173,378 7,540,320 7,653,156
Income tax expense (or benefit) 1,653,315 2,035,481 2,600,236 1,685,359 1,267,636
Net income 8,880,084 7,314,178 5,573,142 5,854,961 6,385,520
Earnings per share 1.78 1.46 1.11 1.17 1.28
Notes: 1. Figures for the period from 2007 to 2010 have been restated by the CPAs based on the audit result of the Ministry of Audit; figures for 2011 have been audited and attested by the CPAs.
2. No interest capitalization occurred in the above years.
II. Financial Analysis for the Last Five YearsUnit: NTD in thousands；%
YearAccounting Title Analyzed
Financial Analysis for the Last Five Years
2011 2010 2009 2008 2007
Operating capability
Ratio of deposits to loans (%) 96.25 94.68 93.01 94.82 94.87
Non-performing loan ratio (%) 0.29 0.43 0.79 1.00 1.15
Ratio of interest expenses to annual average deposits (%) -0.88 -0.69 0.90 2.16 2.05
Ratio of interest revenues to annual average loans (%) 2.21 2.00 2.12 3.71 3.66
Total assets turnover (times) 0.01 0.01 0.01 0.01 0.01
Average operating income per
employee (NTD in thousands)4,246.16 4,182.29 3,694.23 4,191.28 4,315.80
Average profit per employee (NTD in
thousands)1,537.14 1,276.03 935.56 1,007.22 1,104.38
Profitability
Return on Tier I capital (%) 12.31 11.11 9.61 8.95 9.12
Return on assets (%) 0.40 0.34 0.27 0.30 0.34
Return on shareholders´ equity (%) 8.88 7.39 5.61 5.95 6.58
Net income ratio (%) 36.20 30.51 25.32 24.03 25.59
Earnings per share (NTD) 1.78 1.46 1.11 2.34 2.55
Financial structureRatio of liabilities to assets (%) 95.56 95.46 95.26 95.17 94.89
Ratio of fixed assets to shareholders´ equity (%) 24.23 23.01 22.96 23.30 23.47
Growth rateAsset growth rate (%) 5.48 3.06 2.66 7.03 3.56
Profit growth rate (%) 12.66 14.39 8.40 -1.47 65.18
Cash flows
Cash flow ratio (%) 21.87 13.46 -8.11 44.00 -2.18
Cash flow adequacy ratio (%) 179.14 147.74 363.42 954.53 1,323.31
Cash flow sufficiency ratio (%) -16.57 -13.88 10.80 -17.07 3.11
Liquid reserve ratio (%) 15.33 16.87 18.33 15.50 16.72
41
Financial Status and Risk M
anagement
YearAccounting Title Analyzed
Financial Analysis for the Last Five Years
2011 2010 2009 2008 2007
Total secured loans to related parties (NTD in thousands) 10,844,335 9,236,856 9,350,965 8,920,344 9,930,819
Ratio of total secured loans to related parties to total loans (%)
0.63 0.56 0.61 0.59 0.71
Operating scale
Market share of assets (%) 4.53 4.59 4.68 4.85 4.83
Market share of net worth (%) 2.81 2.78 2.59 2.75 2.56
Market share of deposits (%) 6.13 6.13 6.12 6.27 6.26
Market share of loans (%) 8.19 8.11 8.05 7.92 7.55
Analysis of changes in financial ratios for the past two years (increase/decrease over 20%):
1. The cash flow ratio for 2011 increased when compared to 2010, mainly because securities sold under agreements to repurchase increased, so as to result in increasing net cash inflows from operating activities.
2. The cash flow adequacy ratio for 2011 increased when compared to 2010, mainly because in 2011 net cash flow operating activities for the past 5 years increased when compared to 2010, which caused the ratio to increase.
3. The cash flow sufficiency ratio for 2011 decreased when compared to 2010, mainly because in 2011 net cash flow from investing activities increased when compared to 2010 which caused the ratio to drop.
Note 1: Figures for the period from 2007 to 2010 have been restated by the CPAs based on the audit result of the Ministry of Audit; figures for 2011
have been audited and attested by the CPAs.
Note 2: In coordination with implementation of SFAS No. 34 and No. 36, starting from 2006 the analyzed title of “average operating revenues per
employee＂ has been changed to “average operating income per employee.＂
Note 3: Equations for calculation of various ratios:
1. Operating capability
(1) Ratio of loans to deposits = Average total loans outstanding／Average total deposits
(2) Non-performing loan ratio = Total non-performing loans／Total loans
(3) Ratio of interest expenses to annual average deposits = Total interest expenses／Annual average deposits
(4) Ratio of interest revenues to annual average loans = Total interest revenues／Annual average loans
(5) Total assets turnover = Net operating income／Total assets
(6) Average operating revenues per employee = Operating revenues／Number of employees
(7) Average operating income per employee = Net operating income／Number of employees
(8) Average profit per employee = Net income／Number of employees
2. Profitability
(1) Return on Tier I capital = Income before income tax／Average total Tier I capital
(2) Return on assets = Net income／Average total assets
(3) Return on shareholders´ equity = Net income／Average net shareholders' equity
(4) Net income ratio = Net income／Net operating income
(5) Earnings per share = (Net income ﹣preferred stock dividends)／Weighted average number of shares issued
3. Financial structure
(1) Ratio of liabilities to assets = Total liabilities／Total assets
(2) Ratio of fixed assets to net worth = Net fixed assets／Net shareholders' equity
4. Growth rate
(1) Asset growth rate = (Total assets in the current year ﹣Total assets in the preceding year)／Total assets in the preceding year
(2) Profit growth rate = (Income before income tax in the current year ﹣Income before income tax in the preceding year)／Income before
income tax in the preceding year
5. Cash flows
(1) Cash flows ratio = Net cash flows from operating activities／(Interbank loans and overdrafts ﹢Commercial papers payable ﹢Financial
liabilities at fair value through profit or loss ﹢Securities sold under agreements to repurchase ﹢Payables with due date within one
year）
(2) Net cash flow adequacy ratio = Net cash flows from operating activities for the last five years／(Capital expenditure ﹢Cash dividends)
for the last five years
(3) Cash flow sufficiency ratio = Net cash flows from operating activities／Net cash flows from investment activities
6. Liquid reserve ratio = Current assets required by the Central Bank／Various liabilities requiring liquid reserve
7. Operating scale
(1) Market share of assets = Total assets／Total assets of all financial institutions handling deposits and loans
(2) Market share of net worth = Net worth／Total net worth of all financial institutions handling deposits and loans
(3) Market share of deposits = Total deposits／Total deposits of all financial institutions handling deposits and loans
(4) Market share of loans = Total loans／Total loans of all financial institutions handling deposits and loans
Financial institutions handling deposits and loans include domestic banks, branches of foreign banks in Taiwan, credit cooperatives, credit
departments of farmers' and fishermen's associations, and investment trust companies.
42
Unit: NTD in thousands；%
Year
Accounting Title Analyzed
Capital Adequacy Ratios for the Last Five Years
2011 2010 2009 2008 2007
Owner's
capital
Tier I
capital
Common stock 50,000,000 50,000,000 50,000,000 25,000,000 25,000,000
Perpetual noncumulative preferred stock
Perpetual noncumulative subordinate debentures
Capital collected in advance
Additional paid-in capital (excluding fixed assets increments reserve) 21,748,869 21,748,869 21,748,868 46,748,869 46,748,869
Legal reserve 14,806,058 12,157,973 10,014,426 8,373,313 6,524,374
Special reserve 4,655,020 2,890,048 5,975,641 9,676,565 8,443,939
Accumulated profit or loss 0 730,724 143,522 0 0
Minority interest
Other titles in shareholders' equity -1,039,005 -571,183 -534,202 -1,854,668 -1,071,171
Less: Goodwill
Less: Unamortized loss for sale of non-performing loans
Less: Titles of capital deducted 2,971,709 3,000,471 2,961,457 2,177,694 2,952,344
Total Tier I capital 87,199,233 83,955,960 84,386,798 85,766,385 82,693,667
Tier II capital
Perpetual cumulative preferred stock
Perpetual cumulative subordinate debentures
Fixed assets increments reserve 7,870,779 6,254,922 6,271,449 6,349,842 6,604,738
45% of unrealized gain from available-for-sale financial assets 1,565,631 2,300,887 2,750,624 2,169,821 2,394,971
Convertible bonds
Operating reserve and allowance for uncollectible accounts 13,406,337 8,442,392 5,274,293 5,782,773 5,362,798
Long-term subordinate debentures 43,320,000 32,820,000 23,600,000 25,400,000 16,000,000
Nonperpetual preferred stock
Total of perpetual noncumulative preferred stock and perpetual noncumulative subordinate debentures that exceeds 15% of total Tier I capital
Less: Titles of capital deducted 2,971,709 3,000,471 2,961,457 2,177,694 2,952,344
Total Tier II capital 63,191,039 46,817,730 34,934,909 37,524,742 27,410,163
Tier III capital
Short-term subordinate debentures
Nonperpetual preferred stock
Total Tier III capital 0 0 0 0 0
Owner's capital 150,390,271 130,773,690 119,321,708 123,291,127 110,103,830
Capital Adequacy
43
Financial Status and Risk M
anagement
Unit: NTD in thousands；%
Year
Accounting Title Analyzed
Capital Adequacy Ratios for the Last Five Years
2011 2010 2009 2008 2007
Risk-
weighted
assets
Credit risk
Standardized approach 1,277,367,539 1,143,853,222 1,064,315,414 1,066,170,657 982,106,840
Internal ratings-based approach
Securitization 0 0 0 1,077 14,634
Operational
risk
Basic indicator approach 43,836,034 43,061,667 43,289,631 41,769,519 40,376,578
Standardized approach /
Alternative standardized
approach
Advanced measurement
Market riskStandardized approach 21,102,948 24,914,382 24,886,608 32,428,260 29,234,117
Internal models approach
Total risk-weighted assets 1,342,306,521 1,211,829,271 1,132,491,653 1,140,369,513 1,051,732,168
Capital adequacy ratio (%) 11.20 10.79 10.54 10.81 10.47
Ratio of Tier I capital to risk assets (%) 6.50 6.93 7.45 7.52 7.86
Ratio of Tier II capital to risk assets (%) 4.71 3.86 3.09 3.29 2.61
Ratio of Tier III capital to risk assets (%) 0 0 0 0 0
Ratio of common stock to total assets (%) 2.18 2.31 2.38 1.22 1.31
Note 1: Figures for the period from 2007 to 2010 have been audited by the CPAs; figures for the first quarter of 2011 have been self-assessed.
Note 2: Equations for calculation of various ratios or values:
1. Owner's capital = Tier I capital＋Tier II capital＋Tier III capital
2. Total risk-weighted assets = Credit-risk-weighted assets＋Total risk charge (operational risk＋market risk)×12.5
3. Capital adequacy ratio = Owner's capital／Total risk-weighted assets
4. Ratio of Tier I capital to risk assets = Tier I capital／Total risk-weighted assets
5. Ratio of Tier II capital to risk assets = Tier II capital／Total risk-weighted assets
6. Ratio of Tier III capital to risk assets = Tier III capital／Total risk-weighted assets
7. Ratio of common stock to total assets = Common stock／Total assets
44
III. Risk Management1. Qualitative and Quantitative Information About Various Risks
(1) Credit Risk Management System and Accrued Capital
Credit Risk Management System 2011
Category of Disclosure Description
1. Credit risk strategies, goal, policies and process
1. Credit risk management goals:The Bank's goal in conducting credit risk management was to maintain adequate capital and maximize risk-adjusted return within an acceptable credit risk range; for credit risk management, the Bank not only took into account the credit risk for individual transactions, but also paid attention to the credit risk for the overall loan portfolio and investment business.
2. Credit risk management strategies:To effectively utilize and allocate its funds, the Bank's management strategies for various credit risk businesses would first consider the general economic situation, its operating strategies, content and quality of the overall loan portfolio, and risk cost and return, and then the Bank would determine and use the credit risk mitigation tools, including collateral provision, balance sheet netting and third party guarantee, to lower or transfer credit risk.
3. Credit risk management policies:(1) In accordance with the risk management strategies and operating guidelines of the Bank's Risk
Management Policy and Procedure, Directions for Credit Risk Management and Credit and Investment Policy approved by its Board of Directors, and under the New Basel Capital Accord and pertinent regulations stipulated by governing authorities, the Bank expressly set various operating rules of credit risk management for compliance in operations.
(2) To effectively utilize the Bank's funds, all credit risk strategies and operating rules took into consideration factors like the overall economic situation, the Bank's operating strategies, and risk cost and return, and were established pursuant to the New Basel Capital Accord and pertinent regulations stipulated by governing authorities. Those strategies and rules would also be reviewed and adjusted periodically, and put into practice after being formally submitted to and approved by the Bank's Board of Directors/top management.
4. Credit risk management process:Responsible departments at the head office, regional centers and operating units would identify, measure, monitor, report, assess and review all potential credit risks in line with every loan and investment business, to facilitate credit risk management of the whole bank.
2. Credit risk management organization and structure
The Bank established a credit risk management organization and structure with three lines of defense that included the Board of Directors, the Risk Management Committee, the Department of Risk Management, responsible business units, operating units, and the Department of Auditing under the Board of Directors: 1. First line of defense (risk-causing or risk-assuming units):
(1) Each operating unit was required to carry out credit risk control for transactions undertaken in accordance with pertinent rules prescribed by the head office, and report management information related to credit risk to the head office.
(2) Each responsible business unit at the head office was required to identify, assess and control the risks of its responsible business transactions, and establish pertinent credit risk management rules for compliance of operating units in operations.
2. Second line of defense (risk control unit):The Department of Risk Management played an independent and dedicated role in charge of assessment, monitoring, control, review and reporting of the whole bank's credit risks.
3. Third line of defense (internal auditing unit):The Department of Auditing was responsible for checking the design and implementation of credit risk management systems, providing independent assessment, and inspecting the construction process of credit risk management models and the feasibility, reliability and legal compliance of credit risk management information systems.
45
Financial Status and Risk M
anagement
Category of Disclosure Description
3. Scope and feature of credit risk report and credit risk measurement system
1. Credit risk report:(1) Scope: The scope of the Bank's credit risk monitoring report periodically submitted to top
management encompassed the status of risk exposures for asset quality, various countries, industry sectors, conglomerates, major borrowers and types of collaterals.
(2) Feature: The Bank conducted credit risk dynamic monitoring at all time, where major changes or exceeded limits were accordingly relayed to responsible business units and then submitted to executive officers, in order to effectively control credit risk.
2. Credit risk measurement system: (1) Scope: Currently the Bank adopted the credit risk standardized approach in calculating
accrued capital, where the risk management system produced various statements each month, based on which the monitoring statements were compiled to be reported to executive officers, the Risk Management Committee and the Board of Directors. In addition, to measure credit risk by a more advanced approach, the Bank also introduced internal credit rating models, where the default models of corporate banking model, housing loan application scoreboard, housing loan scoreboard, consumer loan scoreboard and credit card scoreboard were already used for risk segmentation of borrowers; the Bank expected to continuously plan on establishment of credit rating models for other businesses, to enhance its credit risk management capability.
(2) Feature: The Bank built a bank-wide credit risk data mart that was able to connect to related information systems (such as credit rating system, credit analysis/extension operation management system, etc.), to facilitate control of various credit risk limits, and conduct risk segmentation based on the customer default level, for the purpose of strengthening the Bank´s credit risk management mechanism.
4. Credit risk hedge or mitigation policies, and strategy and process for continued effectiveness of tools monitoring, hedging and mitigating risks
1. Credit risk hedge or mitigation policies: (1) To prevent the Bank's losses caused by defaults of borrowers or counterparties, the Bank
levied collaterals, demanded guarantors, or transferred cases to credit guarantee institutions for guaranty depending on the risk status of loan transactions, in order to effectively mitigate risk.
(2) Pursuant to the New Basel Capital Accord and regulations stipulated by governing authorities, the Bank included the operational manners eligible for credit risk mitigation (such as qualified collateral, guarantee institution, etc.) into related information systems, in order to accurately calculate the Bank's credit risk mitigation effects.
2. Strategy and process for continued effectiveness of tools monitoring, hedging and mitigating credit risks:(1) Through a post-lending management and review mechanism, the Bank periodically inspected
the operating status of the borrower, the current status of collateral, the credit status of the guarantor, and whether the case to be transferred for credit guarantee met pertinent rules of the Bank and the guarantee institution, to ensure the effectiveness of risk mitigation effects.
(2) The Bank built a collateral management system to periodically reassess its housing loan collaterals, in order to enhance risk control of collaterals.
5. Method adopted for legal capital accrual
Credit risk standardized approach
Risk Exposure and Accrued Capital After Risk MitigationUnder Credit Risk Standardized Approach
December 31, 2011 Unit: NTD in thousands
Type of Risk Exposure Risk Exposure After Risk Mitigation Accrued Capita
Sovereign countries 417,986,394 29,789
Public agencies not under central government 93,339,842 1,493,437
Banks (including multilateral development banks)
55,463,997 1,285,832
Enterprises (including securities and insurance companies)
655,377,412 46,922,448
Retail creditor's rights 315,989,521 22,447,884
Residential property 625,804,871 24,849,054
Equities securities investment 2,473,379 791,481
Other assets 76,765,033 4,369,477
Total 2,243,200,449 102,189,402
46
Asset Securitization Risk Management System 2011
(2) Asset Securitization Risk Management System, Risk Exposure and Accrued Capital
Category of Disclosure Description
1. Asset securitization management strategy and process
1. Asset securitization management strategy: The Bank expressly set regulations on investing in beneficiary securities, asset-backed securities (non-originating bank), or acting as the underwriting institution for asset-backed commercial papers (originating bank) and other businesses pursuant to the Directions for Investment in Beneficiary Securities and Asset-Backed Securities and the Directions for Business of Short-Term Transactions Instruments approved by the Board of Directors, for the compliance in operations.
2. Asset securitization management process:(1) Pursuant to its Directions for Investment in Beneficiary Securities and Asset-Backed
Securities and Directions for Business of Short-term Transactions Instruments, the Bank expressly mandated that investment targets for investing in beneficiary securities and asset-backed securities (non-originating bank) and for acting as the underwriting institution for asset-backed commercial papers (originating bank) achieve a certain class in credit rating. If the investment amount exceeded the authorized limit of the responsible department manager, the investment should be reviewed and adopted by the Bank's “Task Force of Investment in TWSE-Listed and GTSM-Listed Stocks, Beneficiary Certificates and Other Negotiable Securities,＂ and submitted to the President for approval before further proceeding.
(2) In accordance with the table of authorized credit limits for the Bank's various levels of executive officers, the Bank expressly mandated that the liquidity facilities business (originating bank) should be conducted following the precedent of the ordinary credit review procedure under the credit management organization and structure with clear hierarchy and duties.
2. Asset securitization management organization and structure
The Bank established a credit risk management organization and structure with three lines of defense that included the Board of Directors, the Risk Management Committee, the Department of Risk Management, responsible business units, operating (trading) units, and the Department of Auditing under the Board of Directors: 1. First line of defense (risk-causing or risk-assuming units):
(1) Each operating (trading) unit was required to carry out risk control for asset securitization transactions undertaken in accordance with pertinent rules prescribed by the head office, and report related risk management information to the head office.
(2) Each responsible business unit at the head office was required to identify, assess and control the risks of its responsible business transactions, and establish pertinent business regulations, for compliance of operating (trading) units in operations.
2. Second line of defense (risk control unit):The Department of Risk Management played an independent and dedicated role in charge of assessment, monitoring, control, review and reporting of the whole bank's asset securitization business.
3. Third line of defense (internal auditing unit):The Department of Auditing was responsible for checking the design and implementation of the asset securitization process, providing independent assessment, and inspecting its feasibility, reliability and legal compliance.
47
Financial Status and Risk M
anagement
Category of Disclosure Description
3. Scope and feature of asset securitization risk report and asset securitization measurement system
1. Asset securitization risk report: (1) Scope:The scope of the Bank's asset securitization product investment assessment report
periodically submitted to top management encompassed investment type, amount, credit rating and evaluation.
(2) Feature:The Bank set loss control standards and related responsive measures for all its investment in products like real estate investment trust (REIT) beneficiary securities, domestic beneficiary securities, asset-backed beneficiary securities and foreign currency asset securitization, in order to control the risk.
2. Asset securitization measurement system: (1) Scope: Pursuant to its Directions for Investment in Beneficiary Securities and Asset-Backed
Securities and other pertinent operating regulations, the Bank manually and periodically monitored the risk exposure status of target securitization assets (such as credit rating, contract performance status, and market trade information), and accordingly proceeded with capital accrual.
(2) Feature:The monitoring results reached pursuant to the above-mentioned regulations were compiled and periodically included in the risk monitoring report to be submitted to the Bank's Board of Directors/Risk Management Committee. In case of material abnormality, the responsible business unit further reported it to executive officers so as to prepare responsive measures.
4. Asset securitization risk hedge or mitigation policy, and strategy and process for continued effectiveness of tools monitoring, hedging and mitigating risks
1. Asset securitization risk hedge or mitigation policy:Pursuant to the New Basel Capital Accord and regulations stipulated by governing authorities, the Bank took into consideration the credit risk mitigation tools that can be used as asset securitization risk exposures (such as credit enhancement, risk transfer, etc.), to accurately calculate the mitigation effects of the Bank´s asset securitization credit risk.
2. Strategy and process for continued effectiveness of tools monitoring, hedging and mitigating asset securitization risks:Via periodical and non-periodical monitoring of credit ratings and asset pool change of beneficiary securities and asset-backed securities that the Bank invested in, the Bank timely executed the stop loss mechanism when necessary, and reported to executive officers in accordance with the procedure, to effectively control asset securitization risk.
5. Method adopted for legal capital accrual
Asset securitization standardized approach
48
Asset Securitization Activity: None
Asset Securitization Risk Exposure and Accrued Capital
Information About Securitization Products
December 31, 2011 Unit: NTD in thousands
Type of Risk Exposure
Non-Originating Bank Originating Bank
Purchased or Held
Securitization Risk Exposure
Accrued Capital
Risk ExposureRisk Exposure
Accrued Capital Before Securitization
Non-Asset-Backed Commercial Papers
Asset-Backed
Commercial Papers
Traditional Combination
Retained Position
Without Retained Position
Retained Position
Without Retained Position
Beneficiary securities
Asset-backed securities 0 0
Liquidity facilities 0 0
Total 0 0 0 0
Note 1: The asset pool risk exposure types of asset-backed securities include various kinds of bonds. Note 2: The asset pool risk exposure type of liquidity facilities is accounts receivable.
A. Summary of Securitization Product Information: None.
B. (a) Any person investing more than NT$300 million as original cost in a single transaction of a
securitization product (excluding that held by the Bank acting as the originator for the purpose of
credit enhancement) shall disclose the following information: None.
(b) Any position held by the Bank acting as a securitization originator for the purpose of credit
enhancement: None.
(c) Any bank acting as the credit-impaired asset purchasing institution or the settling purchasing
institution of a securitization product shall disclose the following information: None.
C. Any bank acting as a securitization product guarantee institution or providing liquidity facilities shall
disclose the following information: None.
49
Financial Status and Risk M
anagement
Category of Disclosure Description
1. Operational risk management
strategy and process
1. Operational risk management strategy:
To effectively contain the frequency of occurrences and the severity of loss amounts for its
operational risk within the risk tolerance, the Bank actively identified, measured and monitored
businesses and operating processes of the whole bank, and continued to develop and establish
various operational risk management tools.
2. Operational risk management process:
(1) The Bank established its business regulations, internal control system and standard
operational processes with respect to all products and operating activities, for full compliance
of its operating units, and controlled operational risk by the mechanisms of risk identifying,
measuring, monitoring, reporting, assessing and reviewing.
(2) The Bank established the pertinent emergency response and restoration plan (business
continuation plan), to ensure that every business was able to operate continuously should
any severe natural or man-made incident occur, and established regulations relating to
outsourced operations of the Bank.
2. Operational risk management
organization and structure
The organizational structure for the Bank's operational risk management included the Board of
Directors, the Risk Management Committee, the Department of Auditing, the Department of Risk
Management, responsible business units at the head office, and various operating units.
The Bank adopted the method of three lines of defense to define duties of the units in operational
risk management:
1. First line of defense (operating units and responsible business units at the head office):
(1) Each operating unit of the Bank was responsible for implementing control of various
operational risks pursuant to related laws and regulations stipulated by governing authorities,
rules of the Bank, operational risk management tools and characteristics of various
businesses, where the unit was also required by rule to report management information
related to operational risk to responsible business units at the head office.
(2) Each responsible business unit at the head office shall identify, measure, assess and monitor
operational risks related to the businesses, core products, operating activities, operational
processes and information systems under its command. The unit was also responsible
for establishing policies, guidelines, procedures and the internal control mechanism for its
business and operating activities, and responsible for training and informing employees at all
levels to help them fully understand their mission to cooperate in implementing operational
risk management and their duties within the scope of their job description.
2. Second line of defense (Department of Risk Management):
The Department of Risk Management played an independent and dedicated role to be in charge
of assessment, monitoring, control, review and reporting of the whole bank's operational risks.
3. Third line of defense (Department of Auditing):
The Department of Auditing was responsible for examining operational risk management results
achieved by units of the whole bank, periodically inspecting the execution status of operational
risk management systems and process control, and reviewing correction of the whole bank's
operational risk control defects or follow-up of their improvement.
(3) Operational Risk Management System and Accrued Capital
Operational Risk Management System 2011
50
Category of Disclosure Description
3. Scope and features of operational
risk report and operational risk
measurement system
1. Operational risk report:
(1) Scope:The scope of the operational risk monitoring report periodically submitted to top
management encompassed business type of operational risk loss, operational risk exposure
status, Key Risk Indicators (KRI) established by and among responsible business units, early
warning or recommendations, and trend analysis.
(2) Features:For major operational risk issues, the Bank non-periodically produced related dynamic
risk monitoring reports; when change in the external or internal environment of the Bank altered
pertinent risk exposure and control assessment, it was also disclosed in the operational risk
monitoring report.
2. Operational risk measurement system:
(1) Scope:Pursuant to the New Basel Capital Accord, the regulations stipulated by governing
authorities and Land Bank's business needs, the Bank collected internal loss data, built an
operational risk loss database, and gradually introduced the advanced risk measurement
methodology in line with the Bank's operational risk measurement methods and construction
schedule for the operational risk management information system.
(2) Features:For quantifiable risks, the Bank introduced KRIs and set warning limits, to help identify
operational risks involved in the Bank's major products and operating activities. For qualitative
risks, the Bank introduced Risk Control Self Assessment (RCSA), where every unit of the whole
bank assessed the control of operational risks in major operating activities.
4. Operational risk hedge or
mitigation policies, and strategy
and process for continued
effectiveness of tools monitoring,
hedging and mitigating risks
1. Operational risk hedge or mitigation policies:
(1) The Bank analyzed the occurrence frequency of operational risk loss incidents and the severity
of loss amounts to determine the risk response strategies for its businesses and operating
activities, including risk hedge, risk transfer or mitigation, risk reduction or control, risk
assumption and other strategies as follows:
a. For incidents with low loss occurrence frequency but high loss amount, it was required to
adopt prevention and mitigation measures like limit control, business transfer or business
continuation plan.
b. For incidents with high loss occurrence frequency but low loss amount, it was required to
adopt internal control, insurance policy, outsourcing operations, know your customer, legal
compliance management, ethics regulation management, and enhanced education and
training.
c. For incidents with high loss occurrence frequency and high loss amount, it was required to
adopt avoidance measures to escape from various operating activities that might induce risk.
d. For incidents with low loss occurrence frequency and low loss amount, it was allowed to
accept the risk.
(2) Operations outsourced by the Bank to others (such as data processing, credit card operation,
cash transit and refill, and internal audit operation) were all conducted pursuant to the Directions
for Outsourcing Operations of the Land Bank of Taiwan and the Directions for Information
Processing Outsourcing Operations of the Land Bank of Taiwan, in order to prevent operational
risk caused by outsourcing, which was another policy of operational risk mitigation.
(3) The Bank mitigated risks resulting from operations by purchasing the following insurance
policies as operational risk mitigation tools: fidelity bond insurance, money insurance, banking
safe deposit box liability insurance, burglary insurance, public liability insurance, fire insurance,
electronic equipment insurance, etc.
2. Strategy and process for continued effectiveness of tools monitoring, hedging and mitigating
operational risks:
(1) Each responsible business unit periodically inspected rules and standard operating processes
relating to the businesses undertaken, and via RCSA discovered any risk not identified or any
control point not effectively implemented.
(2) The Department of Risk Management periodically inspected the status of the whole bank's
operational risk control and related operational risk issues, promptly provided suggestions, and
continued to monitor and track any deficiencies in risk control, in order to reduce operational
risk.
(3) Each insurance applicant unit periodically inspected the business categories insured, to ensure
continuous validity of the insurance policies.
5. Method adopted for legal capital
accrualOperational risk basic indicator approach
51
Financial Status and Risk M
anagement
Category of Disclosure Description
1. Market risk management strategies and process
1. Market risk management strategies:
In handling businesses related to market risk, before or after each transaction or upon major change in the economic environment, the Bank assessed the severity of losses that might occur, and applied the solutions of risk avoidance, risk mitigation or transfer, risk control and risk assumption, such as actively avoiding highly-leveraged, highly-volatile and high-loss-potential financial products, or adopted the strategies of closing, selling or avoidance. In accordance with regulations on limit management, stop loss mechanism, over-the-limit handling and risk assumption status, the Bank effectively controlled the market risk, and mastered the overall risk exposure position and risk measurement results, to ensure the continued effectiveness.
2. Market risk management process:
(1) Basic principles covered various product standards, new product/business approval standards, and standards and operational processes for market risk identification, measurement, assessment, monitoring and reporting.
(2) Market risk identification: Financial trading units and related risk management personnel fully understood and verified market risk factors specially associated with each type of financial instrument. Risk management personnel did their best to identify all risk factors that might result in market risk, and ensured the accuracy and applicability of the inancial instrument assessment formulae.
(3) Market risk measurement: The Bank developed quantifiable models to measure the market risk, and integrated them into daily risk limit management.
(4) Market risk assessment: The Bank assessed the prices of all financial products it held by the market price method, model assessment, external sources or independent market price verification.
(5) Market risk monitoring: Based on the various limits, financial trading units undertook real-time and comprehensive monitoring of the trading status during routine operating activities, to keep every type of transaction executed within the range of authorization and limits. The monitoring ensured that the transaction type, transaction target, transaction process, position and profit/loss variation for every financial product would conform to regulations and proceed within the range of limits and authorization. The Department of Risk Management monitored and analyzed data produced by risk measurement models every day; should any major risk exposure jeopardizing the Bank's finance, business or legal compliance be found, it would be immediately reported to the President and the Board of Directors.
(6) Market risk reporting: The Department of Risk Management periodically submitted the whole bank's market risk management statements or report to the Risk Management Committee, including the Banks' market risk exposure position, risk exposure status, profit/loss status, use of limits, and compliance with pertinent market risk management regulations. Furthermore, in compliance with the principle of public disclosure, the Bank periodically disclosed to the public its market risk management information pursuant to rules prescribed by governing authorities.
Operational Risk Accrued Capital
Market Risk Management System 2011
(4) Market Risk Management System and Accrued Capital
December 31, 2011 Unit: NTD in thousands
Year Operating Gross Profit Accrued Capital
2009 21,921,103
2010 23,413,579
2011 24,802,972
Total 70,137,654 3,506,883
52
Category of Disclosure Description
2. Market risk management organization and structure
The Bank established a market risk management organization and structure with three lines of defense that included the Board of Directors, the Risk Management Committee, the Department of Risk Management, responsible business units, operating units, and the Department of Auditing:
1. First line of defense (risk-causing or risk-assuming units):
Each financial trading unit was required to comply with pertinent rules of the Bank on market risk management, accordingly establish pertinent regulations to conduct market risk control and position management, actively monitor various limits, and report related management information to responsible business units or the Department of Risk Management. Each responsible business unit was required to be responsible for monitoring and controlling market risks caused by businesses undertaken in accordance with the Bank's risk management policy, directions, and pertinent risk management regulations.
2. Second line of defense (risk control unit):
The Department of Risk Management was the independent and dedicated unit for market risk management of the whole bank, which played the role of a centralized platform, in charge of planning and building the market risk management structure and procedure approved by the Board of Directors. The Department also compiled and disclosed the Bank's market risk information and implementation status, periodically submitted reports and recommendations to the Risk Management Committee and the Board of Directors, and served as the dispatch center for market risk management knowledge and culture.
3. Third line of defense (internal auditing unit):
The Department of Auditing was responsible for checking the design and implementation of market risk management systems, providing independent assessment, and inspecting the construction process of market risk management models and the feasibility, reliability and legal compliance of market risk management information systems.
3. Scope and features of market risk report and market risk measurement system
1. Market risk report:
(1) Scope:The scope of the market risk monitoring report periodically submitted to top management encompassed equity securities risk, fixed income securities interest rate risk, exchange rate risk, financial derivative risk, overseas negotiable securities risk, foreign currency fund liquidity risk, interest rate risk, and investment limit monitoring.
(2) Features:The market risk report showed recent market risks of the whole bank's NTD and foreign currency financial assets using methods like Value at Risk, β value, DVO1, Delta, duration, gap analysis, and scenario simulation. The report not only reflected the status of market risk exposures, but also provided top management with information on various profits and losses, use of limits, investment performance, overall view of market trends, etc., as the basis for top management to adjust the market risk management policy, procedures and various limits.
2. Market risk measurement system:
(1) Scope:The scope of financial product measurement under the VaR assessment system encompassed calculation and measurement of single VaR, market risk factor VaR and overall VaR of the whole bank's stocks, funds, bonds, bills and foreign exchange positions.
(2) Features:The VaR assessment system adopted statistical methodology to assess the maximum loss occurring in a given period based on specific probability, to reasonably estimate market risk exposures for stocks, funds, bonds, bills, foreign exchange positions and the whole bank. The system also separately showed the Bank's VaR based on the factors of interest rate, exchange rate, and securities, in order to measure the market risk for each factor and provide the basis for top management to adjust market investment strategies and risk tolerances.
53
Financial Status and Risk M
anagement
Market Risk Accrued Capital
(5) Liquidity Risk Disclosure
a. Analysis of Term Structures of NTD Maturity Dates:
December 31, 2011 Unit: NTD in thousands
TotalAmount Outstanding in Remaining Time to Maturity
1-30 days 31-90 days 91-180 days 181 days-1 year Over 1 yearInflow of major matured funds
2,125,368,708 308,752,275 154,233,885 172,594,603 158,404,771 1,331,383,174
Outflow of major matured funds
2,272,598,457 312,979,800 385,453,499 420,283,692 548,742,877 605,138,589
Duration gap -147,229,749 -4,227,525 -231,219,614 -247,689,089 -390,338,106 726,244,585
Note: This table only includes amounts of NTD (excluding foreign currency) of the head office and domestic and overseas branches.
Unit: NTD in thousands
Reference Date December 31, 2011
Type of Risk Accrued Capital
Interest rate risk 1,157,396
Equity securities risk 438,811
Foreign exchange risk 92,029
Commodity risk 0
Total 1,688,236
Category of Disclosure Description
4. Market risk hedge or mitigation policies, and strategy and process for continued effectiveness of tools monitoring, hedging and mitigating risks
1. Market risk hedge or mitigation policies:
(1) Pursuant to related rules of the Bank, it implemented transaction limits, risk limits, duration limits, and the stop loss mechanism for various financial products, as well as conducted risk-hedging derivative product transactions, in order to hedge market risk.
(2) Most foreign currency negotiable securities with fixed interest rates undertook interest rate swap to avoid interest rate risk, so the Bank designed various warning standards before the loss control standard was reached, where e-mail was instantly sent to notify the relevant unit when any warning standard was reached, in order to effectively control and hedge market risk. In addition, the main purpose of forward foreign currency transactions was to square the customer position in response to customer's risk-hedging needs in international trade payment or financial arrangements, and the swap transactions carried out by the Bank also focused on squaring the customer swap or forward exchange position, where they both served the main purpose of risk-hedging, so the Bank was able to limit its market risk within a certain range.
2. Strategy and process for continued effectiveness of tools monitoring, hedging and mitigating market risks: The Bank periodically and non-periodically reviewed the whole bank's VaR, notional principal, stop loss limits, trading strategies, etc. In case of emergency or limit exceeding, the trading unit was required to immediately carry out the contingency plan, lower the position, stop loss and withdraw, or proceed with hedging, in order to prevent further loss.
5. Method adopted for legal capital accrual
Market risk standardized approach
54
b. Analysis of Term Structures of USD Maturity Dates:
December 31, 2011 Unit: USD in thousands
TotalAmount Outstanding in Remaining Time to Maturity
1-30 days 31-90 days 91-180 days 181 days-1 year Over 1 year
Inflow of major matured funds
4,696,582 1,395,059 953,385 347,520 72,066 1,928,552
Outflow of major matured funds
4,669,573 1,743,259 1,464,872 364,286 167,498 929,658
Duration gap 27,009 -348,200 -511,487 -16,766 -95,432 998,894
Notes: 1.This table reports total U.S. Dollar amounts of the head office, domestic branches and the offshore banking branch; unless otherwise stated, the book value shall be filled in and reported, except for entries unaccounted for (such as planned issuance of negotiable certificates of deposit, bonds or stocks).
2.Where overseas assets reach 10% of the whole bank's total assets, supplemental disclosure information shall be separately provided.
55
Financial Status and Risk M
anagement
Financial Statements
Supervisors' Report
Board of Directors:
The Company's business report and financial statements for the year of 2011 (including the balance
sheets, the statements of income, the statements of changes in shareholders' equity, and the statements
of cash flows), audited and attested by CPAs Andrew Fuh, and Daniel Hsu of Ernst & Young, have been
reviewed by the 4th-term Supervisors´ 2nd meeting held on March 27, 2012, in which we have found
no discrepancies. Please be advised.
Resident Supervisor:
Chen, Jui-Min
Supervisors:
Cheng, Jyh-Hung
Cheng, Yu-Po
Chang,Pei-chih
Chang,Chuang-chang
March 27, 2012
56
English Translation of Report Originally Issued in Chinese
INDEPENDENT AUDITORS' REPORT
The Board of Directors Land Bank of Taiwan Co., Ltd.
We have audited the accompanying balance sheets of Land Bank of Taiwan Co., Ltd. (The Bank) as of December 31, 2011 and 2010 and the related statements of income, changes in shareholders' equity and cash flows for the years then end. These financial statements are the responsibility of the Bank's management. Our responsibility is to express an opinion on these financial statements based on our audit. We did not audit partial overseas branches, whose statements reflect total assets of NT$41,712,020 thousand and NT$34,254,923 thousand as of December 31, 2011 and 2010, respectively, and net income of NT$74,844 thousand and NT$277,111 thousand for the years then end, respectively. Those statements were audited by other auditors whose report have been furnished to us, and our opinion, in so far as it relates to data included for such overseas branches, is based solely on the report of the other auditors.
We conducted our audit in accordance with "Guidelines for Certified Public Accountants' Examination and Reporting on Financial Statements of Financial Institutions" and the auditing standards generally accepted in the Republic of China ("R.O.C."). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit and the report of other auditors provide a reasonable basis for our opinion.
As discussed in Note Ⅳ.31 to the financial statements, the Bank, a wholly-owned government bank, has restated its 2010 financial statements as required by the Ministry of Audit, Control Yuan of R.O.C.
In our opinion, based on our audit and the report of other auditors, the financial statements referred in the first paragraph present fairly, in all material respects, the financial position of Land Bank of Taiwan Co., Ltd. as of December 31, 2011 and 2010, and the results of its operations and its cash flows for the years ended December 31, 2011 and 2010, are in conformity with "Business Entity Accounting Act", "Regulation on Business Entity Accounting Handling" with respect to financial accounting standard, "Regulations Governing the Preparation of Financial Reports by Public Banks", "Regulations Governing the Preparation of Financial Reports by Securities Firms", "Guidelines Governing the Preparation of Financial Reports by Securities Issuers", and accounting principles generally accepted in the Republic of China.
As described in Note 3 to the financial statements, effective from January 1, 2011, the Bank has adopted the third revision of the Statement of Financial Accounting Standards (“SFAS＂) No. 34, “Financial Instruments: Recognition and Measurement＂, and the newly issued SFAS No. 41, “Operating Segments＂.
Ernst & YoungMarch 23, 2012Taipei, TaiwanRepublic of China
Notice to ReadersThe accompanying financial statements are intended only to present the financial position and 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 jurisdictions. The standards, procedures and practice to audit such financial statements are those generally accepted and applied in the Republic of China.
57
Financial Statements
BALANCE SHEETSDecember 31, 2011 and 2010 (Restated)
(Expressed in New Taiwan Thousand Dollars)
ASSETS NotesDecember 31,2011
December 31,2010
LIABILITIES AND SHAREHOLDERS' EQUITY NotesDecember 31,2011
December 31,2010
Cash and cash equivalents II,IV.1 $25,474,163 $19,340,179 Due to the Central Bank and call loans
from banks IV.14 $180,258,561 $169,920,408
Due from the Central Bank and call loans to banks
IV.2 208,347,141 162,254,449 Funds borrowed from the Central Bank and other banks 2,718,656 2,714,024
Financial assets at fair value through profit or loss-net
II,IV.3 1,400,956 2,919,008 Financial liabilities at fair value through profit or loss II,IV.15 178,503 273,392
Securities purchased under agreements to resell
II,IV.4 - 499,430 Securities sold under agreements to repurchase II,IV.16 10,897,378 9,060,064
Receivables-net II,III,IV.5,V 6,938,720 7,567,639 Payables IV.17 26,054,457 22,162,520
Deposits and remittances IV.18,V 1,887,146,816 1,802,896,136
Financial debentures IV.19 55,597,297 40,499,122
Bills and loans-net II,III,IV.6,V 1,789,807,842 1,685,371,797 Accrued pension liability II, IV.20 12,603,291 12,465,899
Available-for-sale financial assets-net II,IV.7,VI 189,326,452 223,476,691 Other financial liabilities II, IV.21 205,455 234,089
Other liabilities II,III,IV.22 8,997,330 8,744,459
TOTAL LIABILITIES 2,184,657,744 2,068,970,113
Held-to-maturity financial assets- net II,IV.8,VI 267,910 171,395 Capital stock IV.23 50,000,000 50,000,000
Investments accounted for using equity method- net
II,IV.9 - 22,602 Capital reserve IV.24 21,748,869 21,748,869
Other financial assets- net II,IV.10 7,027,839 9,608,504 Retained earnings
Premises and equipment-net II,IV.11 24,605,185 22,632,803 Legal reserve IV.25 14,835,534 12,171,509
Intangibles assets II,IV.12 768,006 736,872 Special reserve IV.26 4,674,671 3,652,356
Other assets-net II,IV.1328,075,696 28,967,889 Other items in
shareholders' equity
Reserve for assets revaluation II 7,870,779 6,254,922
Cumulative translation adjustments II (88,544) (191,431)
Deferred income tax assets-net II,III,IV.28 4,185,606 3,456,827 Unrealized gains or losses on
available-for-sale financial assets II 2,526,463 4,742,866
TOTAL SHAREHOLDERS' EQUITY 101,567,772 98,379,091
TOTAL ASSETS $2,286,225,516 $2,167,349,204 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $2,286,225,516 $2,167,349,204
58
STATEMENTS OF INCOMEFor the years ended December 31, 2011 and 2010 (Restated)
(Expressed in New Taiwan Thousand Dollars , except Per Share Amounts)
Items Notes 2011 2010
INTEREST INCOME II $38,305,208 $32,551,020
INTEREST EXPENSES (16,989,405) (12,920,215)
NET INTEREST INCOME 21,315,803 19,630,805
NONINTEREST INCOME
Net fee income II,V 2,791,488 2,842,777
Gains (losses) on financial assets or liabilities at fair value through profit or loss II (110,214) 178,140
Realized gains on available-for-sale financial assets II 504,493 1,852,556
Investment income (losses) recognized under the equity method II,IV.9 (9,478) 17,460
Foreign exchange gains II 279,527 37,858
Impairment loss of assets II (5,865) (5,865)
Gain on disposal of assets IV.11 23,809 87,938
Others V (259,503) (668,811)
NET NONINTEREST INCOME 3,214,257 4,342,053
NET OPERATING INCOME 24,530,060 23,972,858
PROVISION FOR LOAN LOSSES AND CREDIT RELATED LOSSES IV.6 (1,597,975) (2,030,859)
OPERATING EXPENSES
Personnel IV.30 (7,938,431) (8,317,294)
Depreciation and amortization IV.30 (898,911) (841,295)
Other general and administrative expenses (3,561,344) (3,433,751)
TOTAL OPERATING EXPENSES (12,398,686) (12,592,340)
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 10,533,399 9,349,659
INCOME TAX EXPENSES II,IV.28 (1,653,315) (2,035,481)
NET INCOME $8,880,084 $7,314,178
EARNING PER SHARE (IN DOLLARS)
NET INCOME II,IV.28 $1.78 $1.46
59
Financial Statements
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITYFor the years ended December 31, 2011 and 2010 (Restated)
(Expressed in New Taiwan Thousand Dollars)
ItemsCapital
stock
Capital
Reserve
Retained Earnings Other Items In Shareholders' Equity
TotalLegal
ReserveSpecial Reserve
Unappropriated Earnings
Reserve forAssets
Revaluation
CumulativeTranslation
Adjustments
Unrealized Gains or Losses on
Available-for-sale financial assets
Balance, January 1, 2010(Restated) $50,000,000 $21,748,869 $9,977,256 $6,032,431 $- $6,271,449 $22,048 $5,565,804 $99,617,857
Special reserve transferred to retained earnings - - - (3,842,911) 3,842,911 - - - -
Write-off asset revaluation from disposed of land - - - - - (16,527) - - (16,527)
Cumulative translation adjustments - - - - - - (213,479) - (213,479)
Net income for the year ended December 31, 2010(Restated) - - - - 7,314,178 - - - 7,314,178
Legal reserve - - 2,194,253 - (2,194,253) - - - -
Special reserve - - - 1,462,836 (1,462,836) - - - -
Dividends - - - - (7,500,000) - - - (7,500,000)
Unrealized gains or losses on available-for-sale financial assets - - - - - - - (822,938) (822,938)
Balance, December 31, 2010(Restated) 50,000,000 21,748,869 12,171,509 3,652,356 - 6,254,922 (191,431) 4,742,866 98,379,091
Special reserve transferred to retained earnings - - - (1,000,000) 1,000,000 - - - -
Write-off asset revaluation from disposed of land - - - - - (6,728) - - (6,728)
Adjusted for increment of land revaluation - - - - - 1,622,585 - - 1,622,585
Cumulative translation adjustments - - - - - - 102,887 - 102,887
Net income for the year ended December 31, 2011 - - - - 8,880,084 - - - 8,880,084
Legal reserve - - 2,664,025 - (2,664,025) - - - -
Special reserve - - - 1,776,017 (1,776,017) - - - -
Dividends - - - - (5,440,042) - - - (5,440,042)
Reserve for default losses and losses on trading securities transferred to special reserve - - - 246,298 - - - - 246,298
Unrealized gains or losses on available-for-sale financial assets - - - - - - - (2,216,403) (2,216,403)
Balance,December 31, 2011 $50,000,000 $21,748,869 $14,835,534 $4,674,671 $- $7,870,779 $(88,544) $2,526,463 $101,567,772
60
STATEMENTS OF CASH FLOWSFor the years ended December 31, 2011 and 2010 (Restated)
(Expressed in New Taiwan Thousand Dollars)
Items 2011 2010 Items 2011 2010
CASH FLOWS FROM OPERATING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES
Net income $8,880,084 $7,314,178 Increase in bills and loans (106,003,597) (111,155,386)
Adjustments to reconcile net income to net cash Decrease (increase) in due from the Central Bank and call loans to banks (46,092,692) 12,858,853
provided by (used in) operating activities: Decrease in available-for-sale financial assets 31,933,836 27,669,013
Depreciation and amortization 898,911 841,295 Decrease (increase) in held-to-maturity financial assets (96,515) 438
Gain on disposal of assets (23,809) (87,938) Decrease in investments accounted for using equity method 3,313 -
Loss on obsolete premises and equipment 15,686 16,999 Increase in investments in real estate (4,910) (95,545)
Impairment loss of assets 5,865 5,865 Acquisition of premises and equipment (400,026) (540,503)
Other 7,621 (2) Proceeds from disposal of premises and equipment 52,974 110,766
Cash dividends received from the investee under equity method 5,303 8,472 Decrease in other financial assets 2,403,870 503,902
Investment (income) losses recognized under the equity method 9,478 (17,460) Increase in intangibles assets (211,052) (428,777)
Reserve for possible losses 2,624 12,987 Decrease (increase) in other assets 284,377 (323,578)
Provision for loan losses and credit related losses 1,597,975 2,030,859 Net cash used in investing activities (118,130,422) (71,400,817)
Decrease in financial assets at fair value through profit or loss 1,518,052 101,232
Decrease (increase) in securities purchased under agreements to resell 499,430 (499,430) CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in receivables 633,427 263,068 Increase (decrease) in due to the Central Bank and call loans from banks 10,338,153 (31,122,075)
Decrease in other financial assets 176,795 118,536 Increase in deposits and remittances 84,250,680 89,417,265
Decrease (increase) in deferred income tax assets (779,392) 1,481,978 Increase (decrease) in funds borrowed from the Central Bank and other banks 4,632 (281,297)
Decrease in other assets 567,402 2,319,004 Increase in financial debenture 15,098,175 11,499,294
Increase (decrease) in payables 3,891,937 (5,259,843) Decrease in other financial liabilities (28,634) (19,853)
Increase (decrease) in financial liabilities at fair value through profit or loss
(94,889) 140,708 Increase in other liabilities 42,035 33,634
Increase in securities sold under agreements to repurchase
1,837,314 691,671 Dividends(5,440,042) (7,500,000)
Increase in accrued pension liabilities 137,392 463,506 Net cash provided by financing activities 104,264,999 62,026,968
Decrease in other liabilities (215,001) (32,902) EFFECT OF CHANGES IN EXCHANGE RATE 104,083 (215,815)
Net cash provided by operating activities 19,572,205 9,912,783 NET INCREASE IN CASH AND CASH EQUIVALENTS 5,810,865 323,119
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 19,663,298 19,340,179
CASH AND CASH EQUIVALENTS, END OF PERIOD $25,474,163 $19,663,298
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION：
Interest expenses paid $16,250,773 $12,971,728
Income tax paid $1,435,067 $1,043,557
INVESTING AND FINANCING ACTIVITIES NOT AFFECTING CASH FLOWS:
Reserve for land value increment tax and assets revaluation transferred to gain on disposal of assets
$10,309 $32,202
Transfer of non-operating assets from premises and equipment $- $27,198
61
Financial Statements
Directory of LBOT’S Offices64
An efficient innovator. Non-stop success.
Seizing every developing opportunity, broadening business territory, Land Bank sustains all-around operations.
HEAD OFFICE
Department of SecuritiesNo.81, Yanping S. Rd., Zhongzheng District, Taipei City 10043, Taiwan (R.O.C.)TEL:(02)23483962 FAX:(02)23891864
Department of Trusts4F, No.53, Huaining St., Zhongzheng District, Taipei City 10046, Taiwan (R.O.C.)TEL:(02)23483456 FAX:(02)23754092
Department of International BankingNo.46, Guanqian Rd., Zhongzheng District, Taipei City 10047, Taiwan (R.O.C.)TEL:(02)23483456 FAX:(02)23317322SWIFT:LBOTTWTP088
Department of Business No.46, Guanqian Rd., Zhongzheng District, Taipei City 10047, Taiwan (R.O.C.)TEL:(02)23483456 FAX:(02)23752716SWIFT:LBOTTWTP041
DOMESTIC BRANCHES
Taipei City
Offshore Banking Branch6F, No.53, Huaining St., Zhongzheng District, Taipei City 10046, Taiwan (R.O.C.)TEL:(02)23483456 FAX:(02)23711359SWIFT:LBOTTWTP092
Taipei BranchNo.72, Bo-ai Rd., Zhongzheng District, Taipei City 10043, Taiwan (R.O.C.)TEL:(02)23713241 FAX:(02)23752122SWIFT:LBOTTWTP005
Nanmen Branch1F., No.4, Sec. 1, Roosevelt Rd., Zhongzheng District, Taipei City 10013, Taiwan (R.O.C.)TEL:(02)23958144 FAX:(02)23912361
Dongmen BranchNo.165, Sec.2,Jinshan S.Rd, Da- an District, Taipei City 10644, Taiwan (R.O.C.)TEL:(02)23911811 FAX:(02)23960209
Chengtung BranchNo.46-2, Sec. 2, Zhongshan N. Rd., Zhongshan District, Taipei City 10448, Taiwan (R.O.C.)TEL:(02)25676268 FAX:(02)25217239
Minquan BranchNo.26, Minquan W. Rd., Zhongshan District, Taipei City 10449, Taiwan (R.O.C.)TEL:(02)25629801 FAX:(02)25616053SWIFT:LBOTTWTP006
Changan BranchNo.52, Sec. 2, Chang-an E. Rd., Zhongshan District, Taipei City 10456, Taiwan (R.O.C.)TEL:(02)25238166 FAX:(02)25434262SWIFT:LBOTTWTP008
Changchuen BranchNo.156, Changchun Rd., Zhongshan District, Taipei City 10459, Taiwan (R.O.C.)TEL:(02)25681988 FAX:(02)25683261
Sungshan BranchNo.1, Sec. 1, Dunhua S. Rd., Songshan District, Taipei City 10557, Taiwan (R.O.C.)TEL:(02)25774558 FAX:(02)25780590SWIFT:LBOTTWTP063
Chunglun BranchNo.26, Dongxing Rd., Songshan District, Taipei City 10565, Taiwan (R.O.C.)TEL:(02)27477070 FAX:(02)27471762SWIFT:LBOTTWTP106
Fuhsin BranchNo.132, Sec. 3, Minsheng E. Rd., Songshan District, Taipei City 10596, Taiwan (R.O.C.)TEL:(02)27199989 FAX:(02)25451215SWIFT:LBOTTWTP090
Kuting BranchNo.125, Sec. 3, Roosevelt Rd., Da´an District, Taipei City 10647, Taiwan (R.O.C.)TEL:(02)23634747 FAX:(02)23632118SWIFT:LBOTTWTP007
Jenai BranchNo.29, Sec. 3, Ren-ai Rd., Da´an District, Taipei City 10651, Taiwan (R.O.C.)TEL:(02)27728282 FAX:(02)27110884SWIFT:LBOTTWTP057
Chunghsiao BranchNo.129, Sec. 1, Fuxing S. Rd., Da´an District, Taipei City 10666, Taiwan (R.O.C.)TEL:(02)27312393 FAX:(02)27313649SWIFT:LBOTTWTP058
Dah An BranchNo.37, Sec. 2, Da-an Rd., Da´an District, Taipei City 10667, Taiwan (R.O.C.)TEL:(02)23256266 FAX:(02)23259819
Hoping BranchNo.15, Sec. 3, Heping E. Rd., Da´an District, Taipei City 10670, Taiwan (R.O.C.)TEL:(02)27057505 FAX:(02)27015459SWIFT:LBOTTWTP045
Tunhua BranchNo.76, Sec. 2, Dunhua S. Rd., Da-an District, Taipei City 10683, Taiwan (R.O.C.)TEL:(02)27071234 FAX:(02)27066470SWIFT:LBOTTWTP074
Wanhua BranchNo.205, Sec. 2, Xiyuan Rd., Wanhua District, Taipei City 10864, Taiwan (R.O.C.)TEL:(02)23322778 FAX:(02)23323391
Hinyi BranchNo.436, Sec. 1, Keelung Rd., Xinyi District, Taipei City 11051, Taiwan (R.O.C.)TEL:(02)27585667 FAX:(02)27582282SWIFT:LBOTTWTP079
Tungtaipei BranchNo.107, Songde Rd., Xinyi District, Taipei City 11075, Taiwan (R.O.C.)TEL:(02)27272588 FAX:(02)27285721SWIFT:LBOTTWTP099
Sungnan BranchNo.130, Songshan Rd., Xinyi District, Taipei City 11090, Taiwan (R.O.C.)TEL:(02)27631111 FAX:(02)27669933
Shihlin BranchNo.689, Sec. 5, Zhongshan N. Rd., Shilin District, Taipei City 11145, Taiwan (R.O.C.)TEL:(02)28341361 FAX:(02)28313863SWIFT:LBOTTWTP009
Tienmu BranchNo.122, Sec. 2, Zhongzheng Rd., Shilin District, Taipei City 11148, Taiwan (R.O.C.)TEL:(02)28767287 FAX:(02)28767257SWIFT:LBOTTWTP133
Shipai BranchNo.116, Wunlin N. Rd., Beitou District., Taipei City 11287, Taiwan (R.O.C.)TEL:(02)28277557 FAX:(02)28276322
Neihu BranchNo.156, Sec. 6, Minquan E. Rd., Neihu District, Taipei City 11490, Taiwan (R.O.C.)TEL:(02)27963800 FAX:(02)27963961SWIFT:LBOTTWTP064
Donghu BranchNo.460, Sec. 5, Chenggong Rd., Neihu District., Taipei City 11490, Taiwan (R.O.C.)TEL:(02)26317890 FAX:(02)26329056
Shihu BranchNo.185, Gangqian Rd., Neihu District, Taipei City 11448, Taiwan (R.O.C.)TEL:(02)26599888 FAX:(02)26593659SWIFT:LBOTTWTP120
Nankang Branch No.364 Sec. 1, Nangang Rd., Nangang District, Taipei City 11579, Taiwan (R.O.C.)TEL:(02)27834161 FAX:(02)27820454SWIFT:LBOTTWTP004
Wenshan BranchNo.206, Jingxing Rd., Wenshan District, Taipei City 11669, Taiwan (R.O.C.)TEL:(02)29336222 FAX:(02)29335279
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New Taipei City
Huachiang BranchNo.2, Alley 1, Lane 182, Sec. 2, Wunhua Rd., Banqiao District ,New Taipei City 22044, Taiwan (R.O.C.)TEL:(02)22518599 FAX:(02)22517665SWIFT:LBOTTWTP107
Panchiao BranchNo.143, Sec. 1, Wunhua Rd., Banqiao District., New Taipei City 22050, Taiwan (R.O.C.)TEL:(02)29689111 FAX:(02)29667278SWIFT:LBOTTWTP050
Tungpanchiao BranchNo.212, Minzu Rd., Banqiao District, New Taipei City 22007, Taiwan (R.O.C.)TEL:(02)29633939 FAX:(02)29633931
Kuangfu BranchNo.148, Sec. 2, Sanmin Rd.,Banqiao District, New Taipei City,,22069 Taiwan,R.O.C.TEL:(02)89522345 FAX:(02)89522395SWIFT:LBOTTWTP129
Hsichih BranchNo.306-3, Sec. 1, Datong Rd., Xizhi District, New Taipei City 22146, Taiwan (R.O.C.)TEL:(02)26498577 FAX:(02)26498666SWIFT:LBOTTWTP115
Hsintien BranchNo.309, Sec. 1, Beixin Rd., Xindian District ,New Taipei City 23147, Taiwan (R.O.C.)TEL:(02)29151234 FAX:(02)29178333SWIFT:LBOTTWTP061
Yungho BranchNo.33, Zhulin Rd., Yonghe District ,New Taipei City 23441, Taiwan (R.O.C.)TEL:(02)89268168 FAX:(02)89268181
Yuantong BranchNo.192, Liancheng Rd., Zhonghe District ,New Taipei City 23553, Taiwan (R.O.C.)TEL:(02)22497071 FAX:(02)22497701SWIFT:LBOTTWTP158
Shuangho BranchNo.120, Sec. 2, Zhongshan Rd., Zhonghe District ,NewTaipei City 23555, Taiwan (R.O.C.)TEL:(02)22425300 FAX:(02)22425495
Chungho BranchNo.323, Jingping Rd., Zhonghe District ,New Taipei City 23577, Taiwan (R.O.C.)TEL:(02)29461123 FAX:(02)29440419SWIFT:LBOTTWTP003
Tucheng BranchNo.127, Sec. 1, Zhongyang Rd., Tucheng District, New Taipei City 23664, Taiwan (R.O.C.)TEL:(02)22651000 FAX:(02)22667858SWIFT:LBOTTWTP080
Sanshia BranchNo.83, Minsheng St., Sanxia District, New Taipei City 23741, Taiwan (R.O.C.)TEL:(02)86711010 FAX:(02)86711033
Shulin BranchNo.82, Bao-an 2nd St., Shulin District ,New Taipei City 23860, Taiwan (R.O.C.)TEL:(02)26845116 FAX:(02)26845115
Beisanchong BranchNo.95-99, Sec. 4 , Chongyang Rd. , Sanchong District ,New Taipei City 24145, Taiwan (R.O.C.)TEL:(02)89821919 FAX:(02)89819492
Sanchung BranchNo.1-8, Sec. 2, Chongxin Rd., Sanchong District,New Taipei City 24147, Taiwan (R.O.C.)TEL:(02)89712222 FAX:(02)29848053SWIFT:LBOTTWTP010
Hsisanchung BranchNo.81, Sec. 1, Chongyang Rd., Sanchong District, New Taipei City 24161, Taiwan (R.O.C.)TEL:(02)29846969 FAX:(02)29859842
Hsinchuang BranchNo.221, Siyuan Rd., Xinzhuang District , NewTaipei City 24250, Taiwan (R.O.C.)TEL:(02)29973321 FAX:(02)29973320
Nanhsinchuang BranchNo.288-23, Xinshu. Rd., Xinzhuang District, New Taipei City 24262, Taiwan (R.O.C.)TEL:(02)22066080 FAX:(02)22066372
Taishan BranchNo.168, Sec. 3, Mingzhi Rd., Taishan District, New Taipei 24354, Taiwan (R.O.C.)TEL:(02)29018899 FAX:(02)29014176
Luchou BranchNo.100, Zhongshan 1st Rd., Luzhou District, New Taipei City 24748, Taiwan (R.O.C.)TEL:(02)22859100 FAX:(02)22858983
Tanshui BranchNo.42, Sec. 1, Zhongshan N. Rd., Danshui District, New Taipei City 25157, Taiwan (R.O.C.)TEL:(02)26219691 FAX:(02)26219695
Keelung City
Keelung BranchNo.18, Yi 1st Rd., Zhongzheng District, Keelung City 20241, Taiwan (R.O.C.)TEL:(02)24210200 FAX:(02)24224407
Chengping Branch No.652, Zhongzheng Rd., Zhongzheng District, Keelung City 20248, Taiwan (R.O.C.)TEL:(02)24621111 FAX:(02)24627214
Taoyuan County
Chungli BranchNo.190, Zhongshan Rd., Zhongli City, Taoyuan County 32041, Taiwan (R.O.C.)TEL:(03)4253140 FAX:(03)4253674SWIFT:LBOTTWTP014
Peichungli BranchNo.400, Huanbei Rd. , Zhongl i Ci ty , Taoyuan County 32070, Taiwan (R.O.C.)TEL:(03)4250011 FAX:(03)4223230
Neili BranchNo.33, Huanzhong E. Rd., Zhongli City, Taoyuan County 32071, Taiwan (R.O.C.)TEL:(03)4612666 FAX:(03)4613868
Pingchen BranchNo.98, Nanfeng Rd., Pingzhen City, Taoyuan County 32459, Taiwan (R.O.C.)TEL:(03)4699111 FAX:(03)4699119
Shihmen BranchNo.49, Beilong Rd., Longtan Township, Taoyuan County 32552, Taiwan (R.O.C.)TEL:(03)4792101 FAX:(03)4708934SWIFT:LBOTTWTP015
Yangmei BranchNo.116, Daping St., Yangmei Ciyt, Taoyuan County 32643, Taiwan (R.O.C.)TEL:(03)4881215 FAX:(03)4881217
Taoyuan BranchNo.75, Zhongzheng Rd., Taoyuan City, Taoyuan County 33041, Taiwan (R.O.C.)TEL:(03)3379911 FAX:(03)3379976SWIFT:LBOTTWTP013
Peitaoyuan BranchNo.1071, Zhongzheng Rd., Taoyuan City, Taoyuan County 33045, Taiwan (R.O.C.)TEL:(03)3566199 FAX:(03)3565406SWIFT:LBOTTWTP131
Nantaoyuan BranchNo.835, Zhongshan Rd., Taoyuan City, Taoyuan County 33059, Taiwan (R.O.C.)TEL:(03)3786969 FAX:(03)3786984
Linkou BranchNo.109, Wunhua 2nd Rd. , Guishan Township, Taoyuan County 33377, Taiwan (R.O.C.)TEL:(03)3182128 FAX:(03)3183719
Bade BranchNo.702, Sec. 1, Jieshou Rd., Bade City, Taoyuan County 33450, Taiwan (R.O.C.)TEL:(03)3667966 FAX:(03)3669900
Dayuan BranchNo.55, Zhongzheng E. Rd., Dayuan Township, Taoyuan County 33756, Taiwan (R.O.C.)TEL:(03)3850805 FAX:(03)3856625
Nanknag BranchNo.16, Luoyang St., Luzhu Township, Taoyuan County 33845, Taiwan (R.O.C.)TEL:(03)3526556 FAX:(03)3527099SWIFT:LBOTTWTP096
Hsinchu City
Hsinchu BranchNo.1, Zhongyang Rd., Hsinchu City 30041, Taiwan (R.O.C.)TEL:(03)5213211 FAX:(03)5233693SWIFT:LBOTTWTP016
Tunghsinchu BranchNo.22, Beida Rd., East District, Hsinchu City 30044, Taiwan (R.O.C.)TEL:(03)5353998 FAX:(03)5353923SWIFT:LBOTTWTP103
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Hsinchu County
Chupei BranchNo.130, Xianzheng 9th Rd., Zhubei City, Hsinchu County 30251, Taiwan (R.O.C.)TEL:(03)5532231 FAX:(03)5532308SWIFT:LBOTTWTP108
Hukou BranchNo.102, Sec. 1, Zhongzheng Rd., Hukou Township, Hsinchu County 30342, Taiwan (R.O.C.)TEL:(03)5996111 FAX:(03)5901987
Hsingong BranchNo.76, Zhonghua Rd., Hukou Township, Hsinchu County 30353, Taiwan (R.O.C.)TEL:(03)5981969 FAX:(03)5985373SWIFT:LBOTTWTP118
ITRI BranchNo.195, Sec. 4, Zhongxing Rd., Zhudong Township, Hsinchu County 31040, Taiwan (R.O.C.)TEL:(03)5910188 FAX:(03)5910199
Chutung Branch No.10, Donglin Rd., Zhudong Township, Hsinchu County 31047, Taiwan (R.O.C.)TEL:(03)5961171 FAX:(03)5961175SWIFT:LBOTTWTP017
Miaoli County
Chunan BranchNo.62, Zhongzheng Rd., Zhunan Township, Miaoli County 35047, Taiwan (R.O.C.)TEL:(037)551022 FAX:(037)551090
Toufen BranchNo.932, Zhonghua Rd., Toufen Township, Miaoli County 35159, Taiwan (R.O.C.)TEL:(037)667185 FAX:(037)667188
Tunghsiao BranchNo.85 , Zhongzheng Rd. , Tongx iao Township, Miaoli County 35741, Taiwan (R.O.C.)TEL:(037)756010 FAX:(037)756014
Miaoli BranchNo.402, Zhongzheng Rd., Miaoli City, Miaoli County 36043, Taiwan (R.O.C.)TEL:(037)320531 FAX:(037)329215
Taichung City
Taichung BranchNo.1, Sec. 2, Ziyou Rd., Central District, Taichung City 40045, Taiwan (R.O.C.)TEL:(04)22235021 FAX:(04)22204961SWIFT:LBOTTWTP024
Nantaichung BranchNo.81, Guoguang Rd., South District, Taichung City 40254, Taiwan (R.O.C.)TEL:(04)22240323 FAX:(04)22201390
Hsitaichung BranchNo.2-4, Wuquan Rd., West Distr ic t , Taichung City 40355, Taiwan (R.O.C.)TEL:(04)22289151 FAX:(04)22276621SWIFT:LBOTTWTP055
Peitaichung BranchNo.45, Daya Rd., North District, Taichung City 40458, Taiwan (R.O.C.)TEL:(04)22016902 FAX:(04)22014766
Beituen BranchNo.232, Sec. 4, Wenxin Rd., North District, Taichung City 40462, Taiwan (R.O.C.)TEL:(04)22915678 FAX:(04)22913636
Chungkang BranchNo.598, Sec.2, Wenxin Rd., Xitun District, Taichung City 40758, Taiwan (R.O.C.)TEL:(04)23288800 FAX:(04)23287958SWIFT:LBOTTWTP094
Situn BranchNo.122-20, Sec. 2, Taichung Port Rd., Xitun District, Taichung City 40757, Taiwan (R.O.C.)TEL:(04)27087759 FAX:(04)27086359
Nantun BranchNo.65, Wenxin S. Rd., Nantun District, Taichung City 40854, Taiwan (R.O.C.)TEL:(04)24723568 FAX:(04)24727911
Taiping BranchNo.131, Sec. 3, Zhongshan Rd., Taiping District, Taichung City 41169, Taiwan (R.O.C.)TEL:(04)22780788 FAX:(04)22783488
Dali BranchNo.405, Sec. 2, Guoguang Rd., Dali District, Taichung City 41266, Taiwan (R.O.C.)TEL:(04)24061679 FAX:(04)24061579
Wujih BranchNo.328, X inx ing Rd. , Wur i D is t r ic t , Taichung City 41457, Taiwan (R.O.C.)TEL:(04)23360311 FAX:(04)23360321
Fengyuan BranchNo.508, Zhongshan Rd., Fengyuan District, Taichung City 42044, Taiwan (R.O.C.)TEL:(04)25242191 FAX:(04)25283716SWIFT:LBOTTWTP022
Fengnung BranchNo.127, Zhongzheng Rd., Fengyuan District, Taichung City 42056, Taiwan (R.O.C.)TEL:(04)25157388 FAX:(04)25157386
Jhongke Branch2 F . - 1 , N o . 6 , Z h o n g k e R d . , D a y a District,Taichung City 42881, Taiwan (R.O.C.)TEL:(04)25658228 FAX:(04)25658255SWIFT:LBOTTWTP135
Shalu BranchN o . 4 0 7 , Z h o n g s h a n R d . , S h a l u District,Taichung City 43350, Taiwan (R.O.C.)TEL:(04)26651717 FAX:(04)26651256SWIFT:LBOTTWTP113
Tachia BranchNo.40, Zhenzheng Rd., Dajia District, Taichung City 43746, Taiwan (R.O.C.)TEL:(04)26877181 FAX:(04)26860142SWIFT:LBOTTWTP023
Nantou County
Nantou BranchNo.202, Zhongshan St., Nantou City, Nantou County 54057, Taiwan (R.O.C.)TEL:(049)2222143 FAX:(049)2221833SWIFT:LBOTTWTP025
Tsaotun BranchNo.601-7, Zhongzheng Rd., Caotun Township, Nantou County 54241, Taiwan (R.O.C.)TEL:(049)2330573 FAX:(049)2353647
Changhua County
Changhua BranchNo.98, Guangfu Rd., Changhua City, Changhua County 50045, Taiwan (R.O.C.)TEL:(04)7230777 FAX:(04)7242934SWIFT:LBOTTWTP047
Fuhsing BranchNo.399, Sec. 7, Zhanglu Rd., Fuxing Township, Changhua County 50661, Taiwan (R.O.C.)TEL:(04)7785566 FAX:(04)7789933
Yuanlin BranchNo.100, Sec. 2, Zhongshan Rd., Yuanlin Township, Changhua County 51052 Taiwan (R.O.C.)TEL:(04)8323171 FAX:(04)8330634SWIFT:LBOTTWTP026
Yunlin County
Huwei BranchNo.490, Sec. 1, Linsen Rd., Huwei Township, Yunlin County 63243, Taiwan (R.O.C.)TEL:(05)6327373 FAX:(05)6320297
Touliu BranchNo.72, Jhongshan Rd., Douliu City, Yunlin County 64051, Taiwan (R.O.C.)TEL:(05)5323901 FAX:(05)5334295
Peikang BranchNo.90, Minzhu Rd., Beigang Township, Yunlin County 65142, Taiwan (R.O.C.)TEL:(05)7836111 FAX:(05)7835525
Chiayi City
Chiayi BranchNo.309, Zhongshan Rd., Chiayi City 60041, Taiwan (R.O.C.)TEL:(05)2241150 FAX:(05)2250426SWIFT:LBOTTWTP029
Chiasing BranchNo.28, Ziyou Rd., Chiayi City 60093, Taiwan (R.O.C.)TEL:(05)2810866 FAX:(05)2810882
Chiayi County
Minhsiung BranchNo.126, Sec. 3, Jianguo Rd., Minxiong Township, Chiayi County 62157, Taiwan (R.O.C.)TEL:(05)2200180 FAX:(05)2214643
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Directory of LB
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Tainan City
Tainan BranchNo.28, Zhongzheng Rd., West District, Tainan City 70048, Taiwan (R.O.C.)TEL:(06)2265211 FAX:(06)2240057SWIFT:LBOTTWTP032
Tungtainan BranchNo.261, Sec. 3, Dongmen Rd., East District, Tainan City 70172, Taiwan (R.O.C.)TEL:(06)2906183 FAX:(06)2906946
Peitainan BranchNo.128-7, Gongyuan Rd., North District, Tainan City 70448, Taiwan (R.O.C.)TEL:(06)2210071 FAX:(06)2256036
Anping BranchNo.23, Sec. 2, Zhonghua W. Rd., Anping District, Tainan City 70844, Taiwan (R.O.C.)TEL:(06)2933555 FAX:(06)2933666
Annan BranchNo.47, Sec. 3, Haidian Rd., Annan District, Tainan City 70966, Taiwan (R.O.C.)TEL:(06)2568669 FAX:(06)2569778
Yungkang BranchNo.20, Zhongshan S. Rd., Yongkang District, Tainan City, 71075, Taiwan (R.O.C.)TEL:(06)2321171 FAX:(06)2324144SWIFT:LBOTTWTP031
Dawan BranchNo.1062, Sec. 2, Yongda Rd., Yongkang District,Tainan City,71080, Taiwan (R.O.C.)TEL:(06)2071200 FAX:(06)2071250
Hsuehchia BranchNo.303, Zhongzheng Rd., Xuejia District, Tainan City 72641, Taiwan (R.O.C.)TEL:(06)7832166 FAX:(06)7836743
Hsinying BranchN o . 7 9 , Z h o n g s h a n R d . , X i n y i n g Distr ic t ,Tainan Ci ty, 73045, Taiwan (R.O.C.)TEL:(06)6322441 FAX:(06)6322270
Paiho BranchNo.395, Sanmin Rd., Baihe District, Tainan City 73242, Taiwan (R.O.C.)TEL:(06)6855301 FAX:(06)6852545
Hsinshih BranchNo.10, Fusing Rd., Xinshi District,Tainan City 74444, Taiwan (R.O.C.)TEL:(06)5997373 FAX:(06)5990799SWIFT:LBOTTWTP104
Kaohsiung City
Chungcheng BranchNo.158, Zhongzheng 3rd Rd., Xinxing District, Kaohsiung City 80052, Taiwan (R.O.C.)TEL:(07)2352156 FAX:(07)2352140SWIFT:LBOTTWTP059
Hsinhsing BranchNo.480, Qixian 1st Rd., Xinxing District, Kaohsiung City 80053, Taiwan (R.O.C.)TEL:(07)2355111 FAX:(07)2355118
Chungshan BranchNo.87, Wufu 3rd Rd., Qianjin District, Kaohsiung City 80148, Taiwan (R.O.C.)TEL:(07)2519406 FAX:(07)2518154SWIFT:LBOTTWTP048
Lingya BranchNo.18, Zhongxiao 2nd Rd., Lingya District, Kaohsiung City 80241, Taiwan (R.O.C.)TEL:(07)3328477 FAX:(07)3356471
Kaohsiung BranchNo.131, Dayong Rd., Yancheng District, Kaohsiung City 80343, Taiwan (R.O.C.)TEL:(07)5515231 FAX:(07)5510428 SWIFT:LBOTTWTP033
Chiencheng BranchNo.241, Yixin 1st Rd., Qianzhen District, Kaohsiung City 80606, Taiwan (R.O.C.)TEL:(07)3329755 FAX:(07)3313296SWIFT:LBOTTWTP069
Poai BranchNo.300, Bo-ai 1st Rd., Sanmin District, Kaohsiung City 80757, Taiwan (R.O.C.)TEL:(07)3150301 FAX:(07)3226961
Chienkuo BranchNo.458, Jianguo 1st Rd., Sanmin District, Kaohsiung City 80760, Taiwan (R.O.C.)TEL:(07)2250011 FAX:(07)2250077
Shanming BranchNo.657, Jiangong Rd., Sanmin District, Kaohsiung City 80778, Taiwan (R.O.C.)TEL:(07)3861301 FAX:(07)3891941
Shiaokang BranchNo.336, Hongping Rd., Xiaogang District, Kaohsiung City 81268, Taiwan (R.O.C.)TEL:(07)8065606 FAX:(07)8018837SWIFT:LBOTTWTP117
Zuoying BranchNo.368, Bo-ai 2nd Rd., Zuoying District, Kaohsiung City 81358, Taiwan (R.O.C.)TEL:(07)5577898 FAX:(07)5567960
Tashe BranchNo.369, Zhongshan Rd., Dashe District, Kaohsiung City 81547, Taiwan (R.O.C.)TEL:(07)3520779 FAX:(07)3529804
Kangshan BranchNo.285, Gangshan Rd., Gangshan District, Kaohsiung City 82041, Taiwan (R.O.C.)TEL:(07)6216102 FAX:(07)6213119SWIFT:LBOTTWTP034
Luchu BranchNo.750, Zhongshan Rd., Luzhu District, Kaohsiung City 82146, Taiwan (R.O.C.)TEL:(07)6972131 FAX:(07)6973834
Cingnian BranchNo.281, Sec. 2, Qingnian Rd., Fengshan District, Kaohsiung City 83048, Taiwan (R.O.C.)TEL:(07)7808700 FAX:(07)7805166
Fengshan BranchN o . 1 5 , C a o g o n g R d . , F e n g s h a n District,Kaohsiung City 83064, Taiwan (R.O.C.)TEL:(07)7460121 FAX:(07)7436569SWIFT:LBOTTWTP051
Wuchia BranchNo.256, Wujia 2nd Rd., Fengshan District, Kaohsiung City,83083, Taiwan (R.O.C.)TEL:(07)7715176 FAX:(07)7715170
Dafa BranchNo.272, Fonglin 4th Rd., Daliao District, Kaohsiung City 83150, Taiwan (R.O.C.)TEL:(07)7869169 FAX:(07)7869189
Tashu BranchNo.373-377, Zhongzheng 1st Rd., Dashu District, Kaohsiung City 84047, Taiwan (R.O.C.)TEL:(07)6523662 FAX:(07)6524258 (07)6523850
Meinung BranchNo.65, Sec. 1, Zhongshan Rd., Meinong District, Kaohsiung City 84348, Taiwan (R.O.C.)TEL:(07)6813211 FAX:(07)6813111
Pingtung County
Pingtung BranchNo.78, Fongjia Rd., Pingtung City, Pingtung County 90075, Taiwan (R.O.C.)TEL:(08)7325131 FAX:(08)7322236
Kaoshu BranchNo.99, Nanxing Rd., Gaoshu Township, Pingtung County 90641, Taiwan (R.O.C.)TEL:(08)7963399 FAX:(08)7966333
Chaojung BranchNo.117, Zhongshan Rd., Chaozhou Township, Pingtung County 92045, Taiwan (R.O.C.)TEL:(08)7898787 FAX:(08)7880600
Chaochou BranchNo.12, Xinsheng Rd., Chaozhou Township, Pingtung County 92046, Taiwan (R.O.C.)TEL:(08)7884111 FAX:(08)7881972
Donggang BranchNo.27, Sec. 2, Guangfu Rd., Donggang Township,Pingtung County 92847, Taiwan (R.O.C.)TEL:(08)8332255 FAX:(08)8325399
Fangliao BranchNo.111, Longshan Rd., Fangliao Township, Pingtung County 94049, Taiwan (R.O.C.)TEL:(08)8781533 FAX:(08)8786282
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Yilan County
Ilan BranchNo.43, Guangfu Rd., Yilan City, Yilan County 26043, Taiwan (R.O.C.)TEL:(03)9361101 FAX:(03)9323692
Lotung BranchNo .158 , Gongzheng Rd . , Luodong Township, Yilan County 26550, Taiwan (R.O.C.)TEL:(03)9571111 FAX:(03)9571117
Suao BranchNo.17, Taiping Rd., Su´ao Township, Yilan County 27048, Taiwan (R.O.C.)TEL:(03)9961100 FAX:(03)9965334
Hualien County
Hualien BranchNo.356, Zhongshan Rd., Hualien City, Hualien County 97050, Taiwan (R.O.C.)TEL:(03)8312601 FAX:(03)8320482
Yuli BranchNo.51, Sec.2, Zhongshan Rd. , Yul i Township, Hualien County 98142, Taiwan (R.O.C.)TEL:(03)8886181 FAX:(03)8882320
Taitung County
Taitung BranchNo.357, Sec. 1, Zhonghua Rd., Taitung City, Taitung County 95046, Taiwan (R.O.C.)TEL:(089)310111 FAX:(089)310100
Penghu County
Penghu BranchNo.20, Sanmin Rd., Magong City, Penghu County 88050, Taiwan (R.O.C.)TEL:(06)9262141 FAX:(06)9278371
Kinmen County
Kinmen BranchNo.34, Minsheng Rd., Jincheng Township, Kinmen County 89345, Taiwan (R.O.C.)TEL:(082)327300 FAX:(082)327305SWIFT:LBOTTWTP039
Kincheng BranchNo.6, Minsheng Rd., Jincheng Township, Kinmen County 89345, Taiwan (R.O.C.)TEL:(082)311981 FAX:(082)311986
OVERSEAS BRANCH & REPRESENTATIVE OFFICEHEAD
Los Angeles BranchSuite 1900, 811 Wilshire Boulevard Los Angeles, California 90017 U.S.A.TEL:(1-213)5323789 FAX:(1-213)5323766SWIFT:LBOTUS66
Hong Kong BranchUnit 3101-6 & 12,Tower 1, The Gateway, 25 Canton Road, Tsimshatsui, Kowloon., H.K.TEL:(852)25810788 FAX:(852)25810777SWIFT:LBOTHKHH
Singapore Branch80,Raff les Place,#34-01 UOB Plaza 1,Singapore 048624TEL:(65)63494555 FAX:(65)63494545SWIFT:LBOTSGSG
Shanghai BranchUnit1203-04, 12F,Aurora Plaza,99 Fu Cheng Road,Pudong Shanghai, China 200120TEL:(86-21)50372495 FAX:(86-21)50372497
New York Branch100 Wal l Street ,14F New York,New York10005 U S ATEL：(1-917)5420222 FAX：(1-917)5420288
Ho Chih Minh City Representative OfficeUnit 7, 7th Floor 5B Ton Duc Thang Street, District 1, Ho Chi Minh City, VietnamTEL: (84-8)38230178 FAX: (84-8)38225974
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Chairperson
