Meeting Minutes of FEIB 2019 Shareholders’ meeting

Remarks of Chairperson Ho

      Good morning, shareholders, ladies and gentlemen!

      Welcome and thanks for taking time to attend FEIB 2019 general shareholders meeting today. I deeply appreciate for your all-time supporting of FEIB. I’ll report FEIB performance of 2018 and FEIB business strategies of 2019, to which your comment are most welcome.

      Reviewing the overall economic environment of 2018, the global economy continued recovering in the first half of the year, which boosted the growth of Taiwan's economy. In the second half of the year, although the global economy was abrupt by the US-China trade war and volatility in the international financial market, Taiwan's GDP growth rate was still sustained at 2.63%. Last year, FEIB’s performance was quite good; profit has double-digit growth and the growth rate was the highest in eight years. Income before tax (IBT) reached NT$4.07 billion, which increased 23% from last year. Earnings per share (EPS) was NT$1.08, increased 24% from last year. Total assets exceeded NT$600 billion to NT$627.4Bn on YE’18, or grew by 74% in past decade. FEIB not only had outstanding earning performance, but also had above-standard asset quality. The NPL ratio fell to 0.237%, and the NPL coverage ratio increased to 574%, both of which were better than industry. The excellent performance of FEIB also attracted financial media reporters and released lots of positive news.

      The US-China trade war is still ongoing. As China and the United States are major trading partners of Taiwan, the struggles of these two countries will be impact on economy, trading, and industry in Taiwan. Taiwan's GDP is expected to be lower than last year. However, the growth momentum of FEIB will be continued from last year. In the first quarter of 2019, FEIB’s profit remained double-digit growth under strong revenue and well cost management. IBT reached NT$1.37 billion, increased 77% YoY. The annualized pre-tax Return on Assets (ROA) was 0.88%, and annualized pre-tax Return on Equity (ROE) was 12.12%, both of which were higher than industry average. FEIB has gradually established branding for lead mandate of cross-border syndicated loans. In the first half of this year, FEIB successfully led two major syndications, with amount of US$410 million. The setup of Singapore and Ho Chi Minh City offices are awaiting approval by local government. The overseas assets are expected to expand, which accounted for 40% of Bank’s profit in last year. The management team of FEIB strives to fulfill their commitment to the Board of Directors and the shareholders and maintains the long-term steady growth. The scale and profit of FEIB continued growing, and were reflected by return in the investment market. FEIB’s share price is increasing and reached NT$12.25 (as at June 10), which is the highest price in the past five years. The international credit rating agency, Fitch Ratings, also upgraded FEIB’s rating in May, for Foreign Currency LT IDR to BBB from BBB- and National LT Rating to A+ (twn) from A(twn). Long-term outlook is maintained stable. The above shows that FEIB is on upward track and moving in good and healthy direction. We are pride of that.

      FEIB is also, via combining social resources, engaged in public welfare activities and practices corporate social responsibility. FEIB sponsors Eden Social Welfare Foundation through the public welfare platform every year, supports hiring of intellectual disabilities or visually impaired, and donates money to assist post-disaster reconstruction. The corporate social responsibility report was published and won the Silver Award in Taiwan Sustainable Report and the Outstanding Perpetual Award of the British Standards Institution. FEIB was selected as one of the constituent companies of "Taiwan RAFI EMP 99 Index" and the "Taiwan HC 100 Index” for several years. FEIB is the only bank who’s been rewarded of training subsidy by Ministry of Labor for 16 consecutive years in recognition of focusing on employee welfare, talent cultivation and the human capital accumulation.

      We all know that one time growth is easy. Yet, it is not easy to maintain long-term and steady growth trajectory, especially in this technology- fast- changing world. FEIB must show organizational flexibility, timely strategy and risk management implementation to sustain long-term stable growth momentum and to strive for mutual benefits of shareholders, customers, society and employees. We look forward to continuous support and encouragement from all of shareholders. Thank you.

      Next, we’ll brief FEIB business presentation for major achievement in 2018 and strategic actions in 2019. Your comment and support is much appreciated. Thank you.

Remarks of President Chou

      Good morning, shareholders, ladies and gentlemen!

      From Chairperson Ho’s remark and the business presentation just now, FEIB’s performance and strategies were illustrated in details. I’ll then brief to you a few supplementary notes.

      FEIB adheres to the business philosophy of long-term and steady growth, in order to achieve sustainability. Please note these words "long-term, steady, and growth", which In fact, are not easy business strategies. FEIB’s operation cores are: Build up group synergy, Steady growth, Niche markets, Portfolio improvement, and New initiatives.

      In 2018, FEIB profitability was above industry average; that is industry’s averaged Income before tax (IBT) increased 9.3%, and FEIB’s IBT increased 24.5%.

      For the first quarter of 2019, the industry’s average IBT increased 12.8%, and FEIB’s IBT grew by 74.8% driven by strong revenue momentum.

      Fitch Rating also recognizes FEIB's "long-term and steady growth” strategy. So, in May’19, rating of FEIB was upgraded, with Foreign Currency LT IDR upgraded to BBB and National LT Rating upgraded to A+ (twn). These upgrades reflected the following:

(1) Disciplined growth in both offshore and domestic assets: Fitch Ratings uses “disciplined growth” to express prudent growth of FEIB.

(2) Increasingly diversified business model: As mentioned in the business presentation, FEIB has balanced development in each businesses unit such as Consumer Banking, Individual Banking, Financial Market, Corporate Banking and etc. to expand customer base and disperse risks.

(3) Good asset quality: As of May this year, FEIB’s NPL ratio has dropped to 0.217%.

(4) Stable Profitability: Fitch Rating described that FEIB's profitability remained stable, but actually it increased substantially.

      How does the market think about FEIB? By supreme growth ability, FEIB’s stock value and market cap have increased year by year. In May 2019, FEIB’s P/E and P/B multiples were significantly higher than those in previous years. The P/E multiple increased from 7.8x in 2015 to 10x, and P/B multiple rose from 0.78x to 0.85x. It shows shareholder’s affirmation of FEIB.

      The above concluded my report. Thank shareholders for continuous support to FEIB.

Remarks of Vice Chairperson Hsu

      Good morning, shareholders, friends, ladies and gentlemen!

      The Chairperson and President just reported FEIB's operation and financials to everyone in detail. As I know, there are 75,000 shareholders of FEIB in total, which is a quite large number. And it is 5% higher than last year. That means shareholders have positive prospective of FEIB. And FEIB is growing faster than industry average under conscientious management of the Chairperson, President and the management team. We should thank them.

      Just a side note. A familiar trade war has minor breakthrough last night, and US stock market rose. That might be a plus for our shareholders’ meeting today.

      Everyone is expecting that only positive news is announced on shareholders’ meeting. Nevertheless, the world is changing and unpredictable; we have to be well prepared for challenging and volatile markets. FEIB now has the ability to face these changes under Chairperson and President’s leadership, and will have balanced growth with sustainability. But while holding on steady growth, FEIB still needs to strengthen speedy Fintech applications like other peers. As mentioned before, the off-counter rate of customer transactions at FEIB is 89% now, that’s a good thing. Now we need to further extend our functions, to collaborate with relative business, and to move toward more digitalization.

      Today, we all see the well result of investing in FEIB. Congratulations to all of us. Thank you!

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● Content of the Meeting：

Important Resolutions of 2019 FEIB Shareholders’ Meeting