Cathay Financial Holding Co., Ltd. GENERAL ......Cathay Financial Holding Co., Ltd. GENERAL SHAREHOLDERS MEETING 2017 Meeting Minutes Time: 09:00 AM, 16 June 2017 (Friday) Place: 1F,

Cathay Financial Holding Co., Ltd.

GENERAL SHAREHOLDERS MEETING 2017

Meeting Minutes

Time: 09:00 AM, 16 June 2017 (Friday)

Place: 1F, No. 9, Songren Road, Taipei, Taiwan, R.O.C.

Cathay Financial Conference Hall

Attendance: The shareholders and proxies of shareholders present in the

meeting represented 10,248,458,801 shares (including

9,267,229,896 shares represented by shareholders participating in

the meeting through electronic means). The presence of the

shareholders and proxies of shareholders accounted for 76.5% of

the total of 13,396,510,128 shares entitled to attend the meeting.

Attendance list of the Board of Directors：Hong-Tu Tsai, Chairman of the Board

of Directors、Director Cheng-Chiu Tsai、Director Chi-Wei Joong、

Director Tsu-Pei Chen、Director Tiao-Kuei Huang、Director Chang-

Ken Lee、Director Ming-Ho Hsiung

Attendance list of Audit Committee：Independent Director Tsing-Yuan Hwang

Observers: Joseph C.S.Fu, Attorney-at-Law from Baker & McKenzie, Taipei

Bob Chang, CPA and Andrew Fuh, CPA, from Ernst & Young Global

Limited, Taiwan

Chairperson: Hong-Tu Tsai, Chairman of the Board of Directors

Minutes taken down by Chu-Chun Ou-Yang

Ⅰ.Announcement for the meeting in session:

The Company has 13,396,510,128 outstanding shares and shareholders

representing the 13,396,510,128 shares. As of 09:00 AM, the meeting was

attended by 10,234,037,467 shares (including 9,267,229,896 shares

represented by shareholders participating in the meeting through electronic

means), which constituted 76.39% of the shares entitled to the meeting,

which qualified for a quorum. The chairman hereby announced this meeting

is in session.

The Chairman elects to revise the mode of balloting pursuant to Article 10 of

the General Meeting Procedure:

All points of matters for acknowledgement, matters for discussion and

election shall be subject to discussion one by one and balloting would be held

at the same time after the discussion and election.

Ⅱ. The opening address of the chairman: (skipped)

Ⅲ. Matters for report

1. Business Report for 2016. (Refer to the General Meeting Agenda

Handbook)

2. Annual Statements Report audited by the Audit Committee for 2016.

(Refer to the General Meeting Agenda Handbook)

3. 2016 report on compensation to Employees and Directors of the

Company. (Refer to the General Meeting Agenda Handbook)

Shareholder Account No. 1126631 requested the explanation about the

economic and politic effect produced by the recent drastic revaluation of NTD

and Panama Diplomatic Break to the Company. The Chairperson and

designated officer provided the explanation later.

IV.Matters for acknowledgement

Agenda 1：Acknowledgement of Business Operations Report and Financial

Statements for 2016

Proposed by the Board of Directors

Explanation：

(1) The 2016 financial statements of the Company were completed by the

Board of Directors and audited by Bob Chang, CPA, and James Wang,

CPA, both of Ernst & Young.

(2) The aforementioned financial statements and the business report were

ex-amended by the audit committee. (Refer to Appendix I for financial

statements)

RESOLVED：

The result of balloting indicated that votes representing 8,641,034,471 rights

were cast in favor of the motion (of which 7,689,573,740 rights were exercised

through electronic balloting), while votes representing 955,706 rights were cast

in objection to the motion (of which 947,706 rights were exercised through

electronic balloting),while votes representing 1,261,662,504 rights were

abstention votes/no votes to the motion (of which 1,246,805,407 rights were

exercised through electronic balloting).The votes in favor of the motion

accounted for 87.25% of the total votes and favorable action has been taken in

favor of the motion.

Agenda 2：Acknowledgement of earnings distribution for 2016(Refer to

Appendix II)


Explanation：

(1) The paid-in capital of the Company is NT$133,965,101,280, divided into

13,396,510,128 shares. Among all shares, there are 12,563,210,128

common stocks and 833,300,000 preferred stocks. After distributing

NT$124,585,180 in dividends for preferred stocks, we plan to distribute

NT$2 of dividends, all in cash, for common stocks, and the total amount

is NT$25,126,420,256.

(2) If, after the proposed dividend has been approved, there is a change in

the number of shares outstanding on the dividend record date as a

result of any buyback, transfer, conversion, or cancellation by the

Company in accordance with Article 28-2 of the Securities and

Exchange Act, any issuance of global depository receipts, or other

causes to issue new shares, the payout ratios for the cash dividends will

be adjusted by the actual

number of shares outstanding on the dividend record date.

(3) Once the proposal is approved at the shareholders meeting, the Board

and/ or the Chairman will be authorized to determine the ex-dividend

date and adjust the payout ratio based on actual conditions. We hereby

propose for acknowledgement.

RESOLVED：



through electronic balloting), while votes representing 1,277,606 rights were cast

in objection to the motion (of which 1,269,606 rights were exercised through


abstention votes/no votes to/Invalid votes the motion (of which 1,222,250,212

rights were exercised through electronic balloting). The votes in favor of the

motion accounted for 87.5% of the total votes and favorable action has been

taken in favor of the motion.

V. Matters for Discussion and Election

Agenda1：Discussion on the amendments to the Company’s Procedures for the

Acquisition or Disposal of Assets


Explanation：

(1) In response to the amendments made to the Regulations Governing the

Acquisition and Disposal of Assets by Public Companies by the

competent authority, we propose to amend the corresponding articles to

the Company’s Procedures for the Acquisition or Disposal of Assets.

(2) The contents of the amendment in comparison with the contents before

amendment are provided as Appendix III .

RESOLVED：




in objection to the motion (of which 4,146,336 rights were exercised through



exercised through electronic balloting). The votes in favor of the motion



Agenda 2：Discussion on the Corporation’s proposal to raise long-term capital


Explanation：

(1) In response to the future capital needs for the Company's long-term

strategic development and business growth (including but not limited to

increasing working capital, raising capital adequacy ratio, repaying

loans or one or more purposes for the development of long-term

strategies) as well as the large variety of capital-raising avenues with

global characteristics, we ask that the shareholders' meeting authorize

the Board of Directors to raise the Company's long-term capital by

Domestic cash capital increase for issuance of common shares or

preferred shares; cash capital increase for issuance of common shares

in participation of Global Depositary Receipts (choose one or more than

two for combination), at an appropriate time in accordance with the

Company's Articles of Incorporation and relevant laws and regulations

(hereinafter collectively referred to as the "cash capital increase

proposal").

(2) This cash capital increase proposal authorizes the raising of up to

NT$50 billion in long-term capital. The number of common shares and

preferred shares issued by cash capital increase (including common

shares from GDR ) will be limited to a maximum of 100Mn shares.

(3) We ask that shareholders' meeting authorize the Board of Directors

and/or the Chairman of the Board to consider the content of the cash

capital increase proposal (including but not limited to the actual issue

price, offering terms, project items, amount of capital raised, schedule of

completion, expected benefits and other matters relevant to the

proposal), make all necessary adjustments based on market conditions

and regulatory requirements, work out the final details and implement

the proposal. If the cash capital increase proposal must be changed as

ordered by the regulatory authority or required by the circumstances, we

also ask that the Board of Directors and/or the Chairman be given full

authorization to carry out the corresponding changes.

(4) Please discuss the related details of the long-term fund raising proposal

as Appendix IV.

RESOLVED：

All of the shareholders of common stock and Class-A preferred stock are entitled

to vote for the Motion.The result of balloting indicated that votes representing

8,974,081,419 rights were cast in favor of the motion (of which 8,015,536,098

rights were exercised through electronic balloting), while votes representing

4,390,017 rights were cast in objection to the motion (of which 4,390,017 rights

were exercised through electronic balloting),while votes representing

1,268,847,737 rights were abstention votes/no votes to the motion (of which

1,247,303,781 rights were exercised through electronic balloting). The votes in

favor of the motion accounted for 87.57% of the total votes and favorable action

has been taken in favor of the motion.

Agenda 3：The by-election for the independent director of the 6th-term of the

Company.


Explanation：

(1) When an independent director is dismissed for any reason, resulting in a

number of independent directors lower than 3, a by-election for independent

director shall be held at the next following shareholders meeting in

accordance with Paragraph 5, Article 14-2 of the Securities and Exchange

Act and the Articles of Incorporation of the Company. The election for

independent directors adopts candidate nomination system.

(2) Mr. Min-Houng Hong, the independent director of the 6th term of the

Company, resigned on February 23, 2017, and the resignation took effect on

June 16, 2017. To maintain the effective operation of the corporate

governance system, we hereby propose to the regular shareholders’

meeting for a by-election of an independent director. The term of service

shall begin from the elected date until the expiration of the term of the

independent directors of the 6th term (from June 16, 2017 to June 7, 2019).

(3) The Company would like to call for the by-election of the 6th Term

Independent Director. The candidate list has been reviewed by Board of

Directors and documented. For candidate’s information, The candidate's

information is as follows.We hereby propose for the election.

Election results:

The by-election electoral list: of the 6th-term independent director :

Shareholder or ID No. Elected Directors Shares in Favor

A10214＊＊＊＊ EDWARD YUNG DO WAY 7,058,620,225

Agenda 4： Discussion on the relief of certain directors from their non-

competition obligations


Explanation：

(1) In accordance with Article 209 of the Company Act, a director who does

anything for him/herself or on behalf of another person that is within the

scope of the company’s business shall secure permission from the

shareholders’ meeting.

(2) After the release of the prohibition on the participation in competitive

business by the regular shareholders’ meeting on June 8, 2016, Mr.

CHANG-KEN LEE and Mr. MATTHEW MIAU, the directors of the 6th term

of the Company, have newly participated in other companies with the

same or similar business scope of the Company. In addition, Mr.

EDWARD YUNG DO WAY, the candidate for re-election as an

independent director for a 6th term may have the act of participating in the

corporate operation that is as the same or similar to the business scope of

the Company. Therefore, we hereby propose to approve the releasing of

the prohibition on directors from participation in competitive business

(details are provided in table below) to the shareholders’ meeting in

accordance with Article 209 of the Company Act, and we also propose to

release the prohibition on the earnings of such act not being regarded as

earnings of the Company.

Director Company Concurrent

Post

CHANG-KEN LEE The Bankers Association of Taipei Supervisor

MATTHEW MIAU

Harbinger II Venture Capital Corp.

Harbinger V Venture Capital Corp.

Harbinger Venture Management Company, Ltd.

Union Venture Capital Corp.

Mei-Feng Investments Corporation

Chairman

Chairman

Chairman

Chairman

Chairman

EDWARD YUNG

DO WAY

YCSY Co., Ltd.

MiTAC Holdings Corp. Chairman

Director

RESOLVED：




in objection to the motion (of which7,346,176 rights were exercised through



exercised through electronic balloting). The votes in favor of the motion



VI. Provisional motions

Shareholder Account No. 1126631 showed his concerns about the capital

adequacy ratio and investment issues.

Shareholder Account No. 1463 recognized the management team’s work.

Shareholder Account No. 580612 proposed his suggestions about preservation

of the Corporate Group’s building in the old town (formerly known as the office

premises of Cathay United Bank, Taiwan Branch).

Shareholder Account No. 1139764 showed his concerns about the ETF product

series of the subsidiary, Cathay Securities Investment Trust, and proposed his

suggestions about the business lines of Cathay Life Insurance.

Shareholder Account No. 310309 showed his concerns about the Company’s

development and layout of Fintech.

After responding to each suggestion/comment, and seeing no other provisional

motions, the Chairman announced that the meeting be adjourned.

VII. Meeting adjourned (at about 10:30 AM the same day.)

Chairperson: Hong-Tu Tsai, Chairman of the Board of Directors

Minutes taken down by Chu-Chun Ou-Yang

According to article 183 paragraph IV in Company Act that the Meeting Minutes

shall record a summary of the essential points of the proceedings and the results

of the meeting；In which the meeting’s content, procedures and shareholders'

speech were recorded the video conferences.

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

To Cathay Financial Holding Co., Ltd. Opinion We have audited the accompanying consolidated balance sheets of Cathay Financial Holding Co., Ltd. (the “Company”) and its subsidiaries as of 31 December 2016 and 2015, and the related consolidated statements of comprehensive income, changes in equity and cash flows for the years ended 31 December 2016 and 2015, and notes to the consolidated financial statements, including the summary of significant accounting policies (together “the consolidated financial statements”). In our opinion, based on our audits, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company and its subsidiaries as of 31 December 2016 and 2015, and their consolidated financial performance and cash flows for the years ended 31 December 2016 and 2015, in conformity with the requirements of the “Regulations Governing the Preparation of Financial Reports by Financial Holding Companies”, “Regulation Governing the Preparation of Financial Reports by Securities Issuers” and “International Financial Reporting Standards”, “International Accounting Standards”, “Interpretations developed by the International Financial Reporting Interpretations Committee” as endorsed by Financial Supervisory Commission of the Republic of China.

Basis for Opinion We conducted our audits in accordance with the “Regulations Governing Auditing and Attestation of Financial Statement by Certified Public Accountants” and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of Cathay Financial Holding Co., Ltd. and its subsidiaries in accordance with the Norm of Professional Ethics for Certified Public Accountant of the Republic of China (the “Norm”), and we have fulfilled our other ethical responsibilities in accordance with the Norm. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of 2016 consolidated financial statements. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Valuation of financial instruments - financial instrument investments for which no active market exists

Where the fair value of financial instrument investments for which no active market exists cannot be derived from an active market or a quoted price, it is determined using a valuation technique. The Company and its subsidiaries partially use internal model valuation for fair value, and the assumptions used in the valuation will impact the fair value of the reported financial instruments. Thus we conclude that the valuation of financial instruments- debt instrument investments for which no active market exists is a key audit matter of our audit. Our audit procedures include but not limited to assessing and testing the effectiveness of internal controls related to financial instruments valuation, including how management decides and approves the valuation model and its assumptions, the controls related to the valuation model and change of assumptions, and how management reviews the valuation. We use internal valuation experts on a sampling basis to assist in reviewing the valuation techniques adopted by the Company and its subsidiaries, understanding and assessing the rationality of key valuation assumptions, performing independent valuation calculation, and determining whether the valuation differences are acceptable. Meanwhile, we review the disclosures of financial instruments valuations, including the fair value hierarchy of assets, to determine whether they complied with the related regulatory and accounting standards requirements. Please refer to Notes 4, 5. (2) and 38. (2) for information about the Company and its subsidiaries’ financial instruments valuation. Measurement of insurance liabilities The measurement of the Company and its subsidiaries’ insurance liabilities is dependent on the calculations based on assumptions of current period or the assumptions established in the contracts to reflect the best estimates at that time. Nevertheless, these assumptions were set based on the relevant regulations and the professional judgements of internal specialists. With the high complexity, changes in assumptions adopted by the Company may affect the results when measuring the insurance liabilities. Therefore, we considered this a key audit matter. Our audit procedures included, but not limited to, evaluating and testing the effectiveness of internal controls around insurance liabilities, including management’s decision and approval of the methods and assumptions used in setting aside various reserves and controls for changing the methods and assumptions; examining the data of calculating insurance liabilities; assessing the reasonableness of the Company and its subsidiaries’ actuarial judgements and actuarial assumptions used in the model with the assistance of our internal specialist performing audit procedures for insurance liabilities. We also considered whether the Company’s disclosures in the financial statements in relation to insurance liabilities are compliant with the relevant regulations and principles. Please refer to Notes 4, 5. (2) and 22 for details of the Company and its subsidiaries’ insurance liabilities. Investment properties measured at fair value The Company and its subsidiaries’ investment properties are measured at fair value. Due to inaccessible market prices, the Company and its subsidiaries evaluate the fair value of investment properties based on external real estate appraisers firm’s valuation reports,

which highly relied on the valuation approach chosen (including but not limited to income approach and market approach) and the assumptions. The approach chosen and the changes to the assumptions will impact the result of the investment properties valuation. Therefore, we determined investment properties measured at fair value as a key audit matter. We conducted audit procedures for investment properties valuation, including but not limited to the following: evaluating the independence and qualification of external real estate appraisers, and enlisting the internal valuation specialist’s assistance to evaluate the external real estate appraisers firm’s valuation reports to understand the valuation approach adopted and ensure the reasonableness in the valuation approach adopted and key valuation assumptions so that we could verify whether the difference between the internal valuation specialist’s work and external valuation reports is acceptable. Please refer to Notes 4, 5. (2) and 14 for information about the Company and its subsidiaries’ investment properties measured at fair value. The Provision of Allowance for Loans In accordance with IAS 39 “Financial Instruments: Recognition and Measurement” and “Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non-performing/Non-accrual Loans” of the ROC, the Company and its subsidiaries developed their own systems to perform both individual and collective assessments of impairment loss on loans and receivables . The systems assess the amount of an impairment loss based on parameters from historical experience or future cash flows on a case-by-case basis. The estimates of discount factors, including effective interest rate, incidence of impairment and recoverable rates, and the classification to assess whether there is any objective evidence that a loan is impaired, require professional judgment and uses of estimates and assumptions. Moreover, net of discounts and loans as of 31 December 2016 have a significant impact on the Company’s financial statements. Consequently, we regard this as key audit matters. We assessed and tested the effectiveness of internal control relating to calculations of impairment, including the underlying data and systems with respect to impairment calculation. For loan loss provisions calculated on an individual basis, we tested the assumptions which were used to identify and quantify the impairments, including estimates of future cash flows, valuation of guarantee and estimates of recovery on default. For loan loss provisions calculated on a collective basis, we reviewed whether the models of impairment were approved by management and relied on our specialists to verify the effectiveness of those models. We also tested the appropriateness and accuracy of the inputs used in those models, such as recovery rates and historical loss rates. We reviewed whether management of the Company and its subsidiaries complied with the “Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non-performing/Non-accrual Loans” of the ROC, including assessing appropriateness of the classification of loans and testing accuracy of impairment calculations. Please refer to Notes 4, 5. (2) and 10 for information about the Company and its subsidiaries’ the provision of allowance for loans. Assessment of goodwill impairment

IAS 36 requires entities to perform an impairment test annually. However the calculation made by management of the Company and its subsidiaries is complex and involves major subjective judgments and assumptions. Thus we conclude that assessment of goodwill impairment is a key audit matter of our audit. Our audit procedures included but not limited to assessing the rationality of the Company and its subsidiaries’ financial forecasts and using internal experts to assist in assessing the rationality of the assumptions made by the Company and its subsidiaries’ management. Please refer to Notes 4, 5. (2) and 16 for information about the Company and its subsidiaries’ goodwill impairment assessment. Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the requirements of the “Regulations Governing the Preparation of Financial Reports by Financial Holding Companies”, “Regulation Governing the Preparation of Financial Reports by Securities Issuers” and “International Financial Reporting Standards”, “International Accounting Standards”, “Interpretations developed by the International Financial Reporting Interpretations Committee” as endorsed by Financial Supervisory Commission of the Republic of China and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, management is responsible for assessing the ability to continue as a going concern of the Company and its subsidiaries, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company and its subsidiaries or to cease operations, or has no realistic alternative but to do so. Those charged with governance, including audit committee or supervisors, are responsible for overseeing the financial reporting process of the Company and its subsidiaries. Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. As part of an audit in accordance with auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

1. Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

2. Obtain an understanding of internal control relevant to the audit in order to design audit

procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control of the Company and its subsidiaries.

3. Evaluate the appropriateness of accounting policies used and the reasonableness of

accounting estimates and related disclosures made by management. 4. Conclude on the appropriateness of management’s use of the going concern basis of

accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability to continue as a going concern of the Company and its subsidiaries. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company and its subsidiaries to cease to continue as a going concern.

5. Evaluate the overall presentation, structure and content of the consolidated financial

statements, including the accompanying notes, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

6. Obtain sufficient appropriate audit evidence regarding the financial information of the

entities or business activities within the Company and its subsidiaries to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of 2016 consolidated financial statements and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or

when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Ernst & Young Taipei, Taiwan The Republic of China 8 March 2017

Notice to Readers

The accompanying consolidated financial statements are intended only to present the consolidated financial position, results of operations and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdiction. The standards, procedures and practices to audit such consolidated financial statements are those generally accepted and applied in the Republic of China.

(About the Notes in the Independent Auditors’Report, please refer to 2016 Annual Report Appendix 1：2016

Consolidated Financial Statement)

2016.12.31 2015.12.31

Assets

Cash and cash equivalents $196,549,185 $191,780,120

Due from the Central Bank and call loans to banks 71,940,935 100,169,436

Financial assets at fair value through profit or loss 244,529,264 296,117,926

Available-for-sale financial assets - net 1,591,359,657 1,486,393,125

Derivative financial assets for hedging 232,269 447,326

Securities purchased under agreements to resell 49,524,682 55,880,471

Receivables - net 154,212,060 141,649,869

Current income tax assets 4,215,323 4,339,061

Loans - net 2,045,532,795 1,766,476,353

Reinsurance assets - net 8,767,841 7,000,785

Held-to-maturity financial assets - net 81,826,739 81,708,446

Investments accounted for using the equity method - net 35,209,790 25,500,488

Other financial assets - net 3,036,381,213 2,790,400,892

Investment properties - net 311,014,127 381,149,809

Property and equipment - net 164,114,231 97,488,736

Intangible assets - net 58,597,243 56,943,768

Deferred tax assets - net 14,729,993 14,425,707

Other assets - net 66,400,120 71,102,715

Total assets $8,135,137,467 $7,568,975,033

English Translation of Financial Statements Originally Issued in Chinese

Cathay Financial Holding Co., Ltd. and Subsidiaries

Consolidated Balance Sheets

As of 31 December 2016 and 31 December 2015

(Expressed in thousands of New Taiwan Dollars)

Liabilities & equity 2016.12.31 2015.12.31

Liabilities

Due to the Central Bank and call loans from banks $77,493,795 $41,226,909

Financial liabilities at fair value through profit or loss 115,014,826 137,471,418

Securities sold under agreements to repurchase 59,139,059 55,523,982

Commercial paper payable - net 41,578,838 35,677,634

Payables 55,295,781 43,402,650

Current income tax liabilities 3,512,350 1,641,020

Deposits 1,999,943,172 1,854,495,831

Bonds payable 51,900,000 71,800,000

Provisions 4,596,525,084 4,262,002,527

Other financial liabilities 561,224,829 549,564,053

Deferred tax liabilities 26,362,443 34,775,271

Other liabilities 17,323,269 20,331,536

Total liabilities 7,605,313,446 7,107,912,831

Equity attributable to owners of parent

Capital stock

Common stock 125,632,102 125,632,102

Preferred stock 8,333,000 -

Capital surplus 130,448,697 88,781,174

Retained earnings

Legal reserve 30,577,724 24,820,095

Special reserve 149,108,336 140,185,120

Undistributed earnings 73,001,761 65,190,213

Other equity 6,222,952 10,448,290

Non-controlling interests 6,499,449 6,005,208

Total equity 529,824,021 461,062,202

Total liabilities and equity $8,135,137,467 $7,568,975,033


Consolidated Balance Sheets - (continued)

As of 31 December 2016 and 31 December 2015



2016.1.1~2016.12.31 2015.1.1~2015.12.31

Interest income $168,883,110 $157,079,850

Less: Interest expenses (15,405,207) (17,081,656)

Net interest income 153,477,903 139,998,194

Net income other than interest

Net commission and handling fee (7,912,706) (4,479,828)

Net premiums from insurance business 314,219,387 226,753,764

Gains (losses) on financial assets and liabilities at fair value through profit or loss 19,582,308 (61,256,966)

Gains from investment properties 12,964,367 19,914,745

Realized gains on available-for-sale financial assets 48,169,789 55,126,954

Realized gains (losses) on held-to-maturity financial assets 57,608 (46,383)

(Losses) gains on foreign exchange (42,817,155) 50,027,860

Impairment losses on assets (175,164) (32,160)

Share of profit of associates and joint ventures accounted for using the equity method 1,202,103 1,107,708

Net other non-interest gains 40,511,744 14,151,151

Total income 539,280,184 441,265,039

Bad debt expenses and provision for premiums reserve (5,231,640) (2,467,452)

Changes in insurance liabilities and provisions (408,613,955) (306,598,275)

Operating expenses

Employee benefits expenses (46,194,777) (39,148,233)

Depreciation and amortizations expenses (5,189,148) (3,641,309)

Other general and administration expenses (23,866,159) (22,277,568)

Subtotal (75,250,084) (65,067,110)

Profit before income tax from continuing operations 50,184,505 67,132,202

Income tax expense (2,145,305) (9,249,831)

Net income 48,039,200 57,882,371

Other comprehensive income

Not to be reclassified to profit or loss in subsequent periods:

Remeasurements of defined benefit plans 753,518 (2,824,773)

Revaluation surplus - 92,744

Share of other comprehensive income of associates and joint ventures

accounted for using the equity method - not to be reclassified

to profit or loss in subsequent periods (9,343) (164,196)

Changes of designated financial liabilities

at fair value through profit or loss resulting from credit risk 44,408 42,544

Income tax relating to the components not to be reclassified

to profit or loss in subsequent periods (133,885) 499,804

To be reclassified to profit or loss in subsequent periods:

Exchange differences resulting from translating the financial statements

of a foreign operation (8,920,171) 1,488,694

Unrealized gain (loss) from available-for-sale financial assets 985,063 (47,035,243)

(Loss) gain on cash flow hedges (216,856) 230,973


accounted for using the equity method - to be reclassified

to profit or loss in subsequent periods (722,914) 346,975

Income tax relating to the components to be reclassified

to profit or loss in subsequent periods 3,567,798 1,964,114

Other comprehensive income, net of tax (4,652,382) (45,358,364)

Total comprehensive income $43,386,818 $12,524,007

Net income attributable to:

Owners of parent $47,618,813 $57,513,572

Non-controlling interests 420,387 368,799

Subtotal $48,039,200 $57,882,371

Total comprehensive income attributable to:

Owners of parent $43,393,475 $11,939,628

Non-controlling interests (6,657) 584,379

Subtotal $43,386,818 $12,524,007

Earnings per share (expressed in dollars) :

Basic earnings per share:

Net income $3.79 $4.58



Consolidated Statements of Comprehensive Income

For the years ended 31 December 2016 and 2015

(Expressed in thousands of New Taiwan Dollars, except earnings per share)

Balance on 1 January 2015 $125,632,102 $- $88,782,304 $19,784,401 $82,305,614 $60,939,777 $601,786 $44,257,646 $180,453 $48,151 $918,332 $10,030,820 $(781) $433,480,605 $5,639,845 $439,120,450

Appropriations and distribution for 2014

Legal reserve 5,035,694 (5,035,694) - -

Special reserve 23,148,991 (23,148,991) - -

Cash dividends (25,126,420) (25,126,420) (25,126,420)

Reversal of special reserve (33,796) 33,796 - -

Other additional paid-in capital

Share of changes in net assets of associates and joint ventures accounted

for using the equity method (1,130) (1,130) (1,130)

Net income for the year ended 31 December 2015 (Note 1) 57,513,572 57,513,572 368,799 57,882,371

Other comprehensive income for the year ended 31 December 2015 1,263,580 (44,674,719) 191,071 35,311 (2,481,087) 92,136 (236) (45,573,944) 215,580 (45,358,364)

Comprehensive income for the year ended 31 December 2015 - - - - - 57,513,572 1,263,580 (44,674,719) 191,071 35,311 (2,481,087) 92,136 (236) 11,939,628 584,379 12,524,007

Decrease in non-controlling interests (219,016) (219,016)

Others 34,764,311 14,173 (14,173) 34,764,311 34,764,311

Balance on 31 December 2015 $125,632,102 $- $88,781,174 $24,820,095 $140,185,120 $65,190,213 $1,865,366 $(417,073) $371,524 $83,462 $(1,562,755) $10,108,783 $(1,017) $455,056,994 $6,005,208 $461,062,202

Appropriations and distribution for 2015

Legal reserve 5,757,629 (5,757,629) - -

Special reserve 8,923,216 (8,923,216) - -

Cash dividends (25,126,420) (25,126,420) (25,126,420)

Reversal of special reserve


Share of changes in net assets of associates and joint ventures accounted

for using the equity method 2,523 2,523 2,523

Net income for the year ended 31 December 2016 (Note 2) 47,618,813 47,618,813 420,387 48,039,200

Other comprehensive income for the year ended 31 December 2016 (9,140,278) 4,440,232 (179,990) 36,859 616,822 - 1,017 (4,225,338) (427,044) (4,652,382)

Comprehensive income for the year ended 31 December 2016 - - - - - 47,618,813 (9,140,278) 4,440,232 (179,990) 36,859 616,822 - 1,017 43,393,475 (6,657) 43,386,818

Issue of preferred stock 8,333,000 41,665,000 49,998,000 49,998,000

Increase in non-controlling interests 500,898 500,898

Balance on 31 December 2016 $125,632,102 $8,333,000 $130,448,697 $30,577,724 $149,108,336 $73,001,761 $(7,274,912) $4,023,159 $191,534 $120,321 $(945,933) $10,108,783 $- $523,324,572 $6,499,449 $529,824,021

Equity attributable to owners of parent

Note1: For the year ended 2015, the remuneration to directors and supervisors in the amount of $2,100 thousand and employees' compensation in the amount of $5,903 thousand have been deducted from the Statement of Comprehensive Income.


Retained earnings

Exchange

differences

resulting from

translating the

financial

statements of a

foreign operation

Unrealized gains

(losses) from

available-for-sale

financial assets

Other equity

Legal reserve OthersSpecial reserveItems Common stock Capital surplusPreferred stock

Remeasurements

of defined benefit

plans

TotalNon-controlling

interestsTotal equity

Undistributed

earnings

Capital stock

Gains (losses) on

cash flow hedges

Revaluaiton

Surplus

Changes of

designated

financial liabilities

at fair value

through profit or

loss resulting from

credit risk



Consolidated Statements of Changes in Equity





Consolidated Statements of Cash Flows



2016.1.1~2016.12.31 2015.1.1~2015.12.31 2016.1.1~2016.12.31 2015.1.1~2015.12.31Cash flows from operating activities Cash generated from operations (203,067,048) (369,271,962)

Profit before income tax from continuing operations $50,184,505 $67,132,202 Interest received 164,523,945 151,683,427

Adjustments : Dividends received 24,352,712 21,713,620

Income and other adjustments with no cash flow effects Interest paid (15,141,591) (13,698,505)

Depreciation expenses 2,295,745 2,184,189 Income taxes (paid) received (2,735,091) 597,697

Amortizations expenses 2,893,403 1,457,120 Net cash flows used in operating activities (32,067,073) (208,975,723) Bad debt expense 5,231,640 2,467,452

Net (gains) losses on financial assets and liabilities at fair value through profit or loss (15,117,537) 64,467,092 Cash flows from investing activities

Interest expenses 15,405,207 17,081,656 Acquisition of financial assets at fair value through profit or loss (1,523,051) (4,137,871)

Interest revenue (168,883,110) (157,079,850) Disposal of financial assets at fair value through profit or loss 3,019,067 3,940,176

Dividend income (23,847,539) (21,327,538) Acquisition of financial assets available for sale (1,389,511) (1,795,459)

Net changes in insurance liabilities and provisions 347,690,617 334,637,365 Disposal of financial assets available for sale 843,738 1,500,642

Net changes of other liabilities and provisions (6,154,971) (1,068,276) Acquisition of financial assets carried at cost (5,745) -

Share of gains of associates and joint ventures accounted for using the equity method (1,202,103) (1,107,708) Acquisition of investments accounted for using the equity method (6,670,889) (20,147,622)

(Gains) losses on disposal or scrapping of property and equipment (225,342) 9,485 Acquisition of subsidiary (4,708,708) (6,994,994)

(Gains) losses on disposal of investment properties (1,028,782) 137,004 Disposal of subsidiaries (4,609,822)

Losses on disposal of intangible assets 391 35,492 Cash returned by capital deduction from investments accounted for using equity method 70,299 86,501

Gains on disposal of investments (48,017,674) (43,408,125) Acquisition of property and equipment (4,325,933) (1,287,488)

Impairment losses on financial assets 117,002 32,160 Disposal of property and equipment 319,802 16,017

Impairment losses on non-financial assets 58,162 - Increase in clearing and settlement funds (4,458) (2,703)

Unrealized foreign exchange (gains) losses (71,422) 48,609 Decrease in clearing and settlement funds 15,884 -

Revaluation gains on investment properties (1,847,034) (11,236,452) Increase in guarantee deposits paid (1,126) (2,348)

Others (2,730,769) (8,346) Decrease in guarantee deposits paid 23,030 -

Subtotal 104,565,884 187,321,329 Acquisition of intangible assets (415,279) (350,822)

Changes in operating assets and liabilities Generalized foreclosed collects net cash from other company - 16,157,186

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

Increase in due from the Central Bank and call loans to banks (2,636,468) (4,996,676) Acquisition of investment properties (3,254,915) (34,643,780)

Decrease (increase) in financial assets at fair value through profit or loss 150,814,074 (24,811,830) Disposal of investment properties 2,146,998 291,927

Increase in available-for-sale financial assets (83,009,152) (87,477,240) Increase in other assets (134,176) (22,035,719)

(Increase) decrease in derivative financial assets for hedging (1,798) 449,037 Decrease in other assets 7,135,933 80,373

Increase in accounts receivable (11,544,098) (1,386,901) Dividends received 96,607 73,692

(Increase) decrease in loans (283,277,168) 55,380,486 Net cash used in investing activities (13,372,255) (38,952,292)

Increase in reinsurance contract assets (2,322,525) (502,663) Cash flows from financing activities

Decrease in financial assets held to maturity 283,195 7,332 Increase (decrease) in short-term borrowings 87,229 (900,000)

Increase in other financial assets (200,653,210) (573,530,812) Decrease in funds borrowed from Central Bank and banks - (1,585,900)

Increase in other assets (4,785,493) (23,256,988) Increase in commercial paper payable 5,900,000 8,890,000

Subtotal (437,132,643) (660,126,255) Decrease in bonds payable (20,000,000) (20,000,000)

Changes in operating liabilities Decrease in bank debentures - (15,713,949)

Increase (decrease) in due to the Central Bank and call loans from banks 36,402,468 (17,797,575) Decrease in securities sold under agreements to repurchase (14,660) (171,511)

Decrease in financial liabilities at fair value through profit or loss (107,752,312) (68,995,003) Increase in other liabilities 1,108,978 1,516,069

Increase (decrease) in securities sold under agreements to repurchase 3,629,737 (6,326,428) Payment of cash dividend (25,223,449) (25,659,094)

Increase (decrease) in payables 10,152,404 (13,185,305) Increase in cash capital 49,998,000 -

Increase in deposits 146,256,116 151,147,103 Net cash flows from (used in) financing activities 11,856,098 (53,624,385)

(Decrease) increase in provisions for the liabilities of employee benefits (3,415,115) 3,105 Effects of exchange rate changes on cash and cash equivalents 1,245,500 1,479,269

Decrease in reserves for the operations and liabilities (136,830) (16,427) Decrease in cash and cash equivalents (32,337,730) (300,073,131)

Decrease in other financial liabilities (5,660,297) (12,615,246) Cash and cash equivalents at the beginning of periods 296,935,688 597,008,819

(Decrease) increase in other liabilities (160,965) 4,186,538 Cash and cash equivalents at the end of periods $264,597,958 $296,935,688

Subtotal 79,315,206 36,400,762

Subtotal of Changes in operating assets and liabilities (357,817,437) (623,725,493) The components of cash and cash equivalents

Subtotal of Adjustment (253,251,553) (436,404,164) Cash and cash equivalents presented in balance sheet $196,549,185 $191,780,120

Due from the Central Bank and call loans to banks satisfied the definition of cash and

cash equivalents under IAS No.7 18,524,091 49,275,097

Bills sold under agreements to resell satisfied the definition of cash and cash equivalents Securities purchased under agreements to resell satisfied the definition of cash and

under IAS No.7 cash equivalents under IAS No.7 49,524,682 55,880,471

Cash and cash equivalents at the end of periods $264,597,958 $296,935,688

ItemsItems

2016.12.31 2015.12.31Assets Cash and cash equivalents $14,822,959 $4,143,951 Available-for-sale financial assets - net 85,689 79,451 Securities purchased under agreements to resell 79,968 499,422 Receivables - net 537,085 822,620 Current income tax assets 4,215,323 4,323,586 Held-to-maturity financial assets 41,000,000 16,000,000 Investments accounted for using the equity method - net 507,608,375 487,136,590 Other financial assets - net 430,111 - Property and equipment - net 7,699 7,249 Intangible assets - net 11,968 17,288 Deferred tax assets - net 482,657 875,454 Other assets - net 10,998 8,340 Total assets $569,292,832 $513,913,951

Liabilities & EquityLiabilities Commercial paper payable $35,980,000 $28,820,000 Payables 5,625,178 8,278,845 Current income tax liabilities 3,031,746 946,549 Bonds payable - 20,000,000 Provisions 918,764 726,597 Deferred tax liabilities 226,707 2,915 Other liabilities 185,865 82,051Total liabilities 45,968,260 58,856,957

Equity Capital stock Common stock 125,632,102 125,632,102 Perferred stock 8,333,000 - Capital surplus 130,448,697 88,781,174 Retained earnings Legal reserve 30,577,724 24,820,095 Special reserve 149,108,336 140,185,120 Undistributed earnings 73,001,761 65,190,213 Other equity 6,222,952 10,448,290Total equity 523,324,572 455,056,994Total liabilities and equity $569,292,832 $513,913,951

English Translation of Financial Statements Originally Issued in ChineseCathay Financial Holding Co., Ltd.

Balance sheetAs of 31 December 2016 and 31 December 2015


2016.1.1~2016.12.31 2015.1.1~2015.12.31

Income

Gains on investment - equity method $48,764,631 $59,789,114

Other operating income 1,800,203 1,206,780

50,564,834 60,995,894

Expenses and loss

Operating expenses (772,271) (648,992)

Other expenses and losses (599,464) (1,328,856)

(1,371,735) (1,977,848)

Profit before income tax from continuing operations 49,193,099 59,018,046

Income tax expense (1,574,286) (1,504,474)

Profit after income tax from continuing operations 47,618,813 57,513,572

Net Income 47,618,813 57,513,572

Other comprehensive income

Not to be reclassified to profit or loss in subsequent periods: Remeasurements of defined benefit plans (8,793) (10,334)


accounted for using the equity method - not to be reclassified

to profit or loss in subsequent periods 661,996 (2,345,300)

Income tax relating to the components not to be reclassified

to profit or loss in subsequent periods 1,495 1,757

To be reclassified to profit or loss in subsequent periods:

Unrealized gains (losses) from available-for-sale financial assets 6,238 (141,335)


accounted for using the equity method - to be reclassified

to profit or loss in subsequent periods (4,886,274) (43,102,881)

Income tax relating to the components to be reclassified

to profit or loss in subsequent periods - 24,149

Other comprehensive income, net of tax (4,225,338) (45,573,944)

Total comprehensive income $43,393,475 $11,939,628

Earnings per share (expressed in dollars)

Basic earnings per share:

Net income $3.79 $4.58



Statements of Comprehensive Income


(Expressed in thousands of New Taiwan Dollars , except earning per share)

Items

Balance on 1 January 2015 $125,632,102 $- $88,782,304 $19,784,401 $82,305,614 $60,939,777 $601,786 $44,257,646 $180,453 $48,151 $918,332 $10,030,820 $(781) $433,480,605

Appropriations and distribution for 2014 Legal reserve 5,035,694 (5,035,694) - Cash dividends 23,148,991 (23,148,991) - Stock dividends (25,126,420) (25,126,420) Reversal of special reserve (33,796) 33,796 -


Share of changes in net assets of associates and joint ventures accounted for using the equity method (1,130) (1,130)

Net income for the year ended 31 December 2015 (Note 1) 57,513,572 57,513,572Other comprehensive income for the year ended 31 Dectember 2015 1,263,580 (44,674,719) 191,071 35,311 (2,481,087) 92,136 (236) (45,573,944)Comprehensive income for the year ended 31 December 2015 - - - - - 57,513,572 1,263,580 (44,674,719) 191,071 35,311 (2,481,087) 92,136 (236) 11,939,628

Others 34,764,311 14,173 (14,173) 34,764,311Balance on 31 December 2015 $125,632,102 $- $88,781,174 $24,820,095 $140,185,120 $65,190,213 $1,865,366 $(417,073) $371,524 $83,462 $(1,562,755) $10,108,783 $(1,017) $455,056,994

Appropriations and distribution for 2015 Legal reserve 5,757,629 (5,757,629) - Special reserve 8,923,216 (8,923,216) - Cash dividends (25,126,420) (25,126,420)

Other additional paid-in capital Share of changes in net assets of associates and joint ventures accounted for using the equity method 2,523 2,523

Net income for the year ended 31 December 2016 (Note 2) 47,618,813 47,618,813Other comprehensive income for the year ended 31 December 2016 (9,140,278) 4,440,232 (179,990) 36,859 616,822 - 1,017 (4,225,338)Comprehensive income for the year ended 31 December 2016 - - - - - 47,618,813 (9,140,278) 4,440,232 (179,990) 36,859 616,822 - 1,017 43,393,475

Issue of preferred stock 8,333,000 41,665,000 49,998,000 Balance on 31 December 2016 $125,632,102 $8,333,000 $130,448,697 $30,577,724 $149,108,336 $73,001,761 $(7,274,912) $4,023,159 $191,534 $120,321 $(945,933) $10,108,783 $- $523,324,572


Changes ofdesignatedfinancial

liabilities atfair value

through profitor loss

resulting fromcredit risk

Remeasurements ofdefined benefit plans

RevaluaitonSurplus Others Total


Preferred stock

Retained earnings Other equity

Common stock Capital Surplus Legal reserve Special reserve Undistributedearnings

Exchangedifferences

resulting fromtranslating the

financialstatements of a

foreignoperation

Unrealizedgains (losses)

fromavailable-for-sale financial

assets

Gains (losses)on cash flow

hedges

Capital stockEquity attributable to owners of parent


Statements of Changes in EquityFor the years ended 31 December 2016 and 2015(Expressed in thousands of New Taiwan Dollars)

Items 2016.1.1~2016.12.31 2015.1.1~2015.12.31Cash flows from operating activities Profit before income tax from continuing operations $49,193,099 $59,018,046 Adjustments : Income and other adjustments with no cash flow effects Depreciation 1,777 1,561 Amortization 5,319 5,319 Interest expenses 544,652 1,286,390 Interest income (424,407) (944,072) Share of profit of associates and joint ventures accounted for using the equity method (48,764,631) (59,789,114) Losses on disposal of property and equipment - 285 Gains on disposal of investments - (220,298) Unrealized foreign exchange losses (gains) 20,173 (8,748) Others (1,325,222) (8,346) Changes in operating assets and liabilities Decrease in available-for-sale financial assets - 705,548 Decrease (increase) in accounts receivable 62,527 (198,585) Decrease in held-to-maturity financial assets 10,000,000 15,000,000 Increase in held-to-maturity financial assets (35,000,000) - Increase in other financial assets (430,111) - (Increase) decrease in other assets (2,658) 137,793 Decrease in payables (2,530,242) (2,556,772) Increase (decrease) in provisions 183,374 (1,792)

Increase in other liabilities 103,814 72,511 Cash generated from operations Interest received 647,415 4,946,663 Interest paid (668,076) (1,299,979) Income taxes received 1,237,259 2,719,431Net cash flows (used in) from operating activities (27,145,938) 18,865,841Cash flows from investing activities Acquisition of property and equipment (2,227) (2,366) Dividends received 25,953,687 18,505,732Net cash from investing activities 25,951,460 18,503,366Cash flows from financing activities Increase in commercial paper payable 7,160,000 8,470,000 Decrease in bonds payable (20,000,000) (20,000,000) Dividends paid (25,126,420) (25,126,420) Increase in cash capital 49,998,000 Acquisition of subsidiary (557,375) -

11,474,205 (36,656,420)(20,173) 8,748

10,259,554 721,5354,643,373 3,921,838

Net cash flows from (used in) financing activitiesEffects of exchange rate changes on cash and cash equivalents Increase in cash and cash equivalentsCash and cash equivalents at the beginning of periodsCash and cash equivalents at the end of periods $14,902,927 $4,643,373

The components of cash and cash equivalents Cash and cash equivalents presented in balance sheet $14,822,959 $4,143,951 Securities purchased under agreements to resell satisfied the definition of cash and cash equivalents under IAS No.7 79,968 499,422Cash and cash equivalents at the end of periods $14,902,927 $4,643,373


Statements of Cash FlowsFor the years ended 31 December 2016 and 2015(Expressed in thousands of New Taiwan Dollars)

-


Earnings Distribution Plan of the year 2016

Unit：NT Dollar

Item Amount

(I) Net income 47,618,813,972

Add: Undistributed retained earnings 25,382,947,082

Add: Reversal of fair value for the disposal of investment

real estate(Note 1) 1,364,813

(II) Distributable earnings 73,003,125,867

Less: Legal reserves (4,762,117,276)

Less: Cash Dividends on Preferred dividends (124,585,180)

Less: Cash Dividends on Common Stock (25,126,420,256)

Balance 42,990,003,155

Note1: Pursuant to Banking Bureau, Financial Supervisory Commission Letter No. 10310000140;

Securities & Futures Bureau, Financial Supervisory Commission Letter No.1030006415, if a

company uses the fair value model to value investment real estate, the company should

appropriate a special reserve on the increase in retained earnings generated in such a way.

Subsequently, when the fair value of the investment real estate declines, or when the

investment real estate is disposed of, the company may reverse the increase.

The disposition of investment real estate in 2016 may be reversed to special reserve with

the amount of NT$1,364,813 in accordance with the provision.

Note2: The cash dividend is calculated to the nearest NT dollar based on the distribution ratio. The

remainder is rounded up. The difference is paid as an expense of the company.

【Appendix II】

Cathay Financial Holdings

Comparison Table of the Amendments to the Company’s

Procedures for the Acquisition or Disposal of Assets

Amended Articles Current Articles Reason for Amendment

Article 7

In acquiring or disposing of real

property or equipment, unless

transacting with a government

organization, engaging others to

build on its own land, engaging

others to build on rented land, or

acquiring or disposing of

equipment for business use,

(omitted)

Article 7

In acquiring or disposing of real

property or equipment, unless

transacting with a government

agency, engaging others to build on

its own land, engaging others to

build on rented land, or acquiring or

disposing of equipment for business

use, (omitted)

Relevant provisions are amended in accordance with Ordinance No. 10600012965 issued by Financial Supervisory Commission on February 9, 2017

Article 9

Where the Company acquires or

disposes of memberships or

intangible assets and the

transaction amount reaches 20

percent or more of paid-in capital or

NT$300 million or more, except in

transactions with a government

organization, (omitted)

Article 9

Where the Company acquires or

disposes of memberships or

intangible assets and the transaction

amount reaches 20 percent or more

of paid-in capital or NT$300 million

or more, except in transactions with

a government agency, (omitted)

Article 13

When the Company intends to

acquire or dispose of real property

from or to a related party, or when it

intends to acquire or dispose of

assets other than real property

from or to a related party and the


percent or more of paid-in capital,

10 percent or more of the

company’s total assets, or NT$300

million or more, except in the

trading of government bonds or

bonds under repurchase and

resale agreements, or subscription

or redemption of money market

funds issued by domestic securities

investment trust firms, the company

may not proceed to enter into a

transaction contract or make a

Article 13

When the Company intends to

acquire or dispose of real property

from or to a related party, or when it

intends to acquire or dispose of

assets other than real property from

or to a related party and the


percent or more of paid-in capital, 10

percent or more of the company’s

total assets, or NT$300 million or

more, except in the trading of

government bonds or bonds under

repurchase and resale agreements,

or subscription or redemption of

domestic money market funds, the

company may not proceed to enter

into a transaction contract or make a

payment until the following matters

have been approved by the board of

【Appendix III】


payment until the following matters

have been approved by the board

of directors and recognized by the

supervisors:

(omitted)

directors and recognized by the

supervisors:

(omitted)

Article 25

Where the company conducts a

merger, demerger, acquisition, or

transfer of shares, prior to

convening the board of directors to

resolve the matter, the Company

shall engage a CPA, attorney, or

securities underwriter to give an

opinion on the reasonableness of

the share exchange ratio,

acquisition price, or distribution of

cash or other property to

shareholders, and submit it to the

board of directors for deliberation

and passage. However, if a public

company conducts a merger

against a subsidiary of 100%

directly or indirectly owned equities

or total capital, or conducts a

merger between two subsidiaries

of 100% directly or indirectly

owned equities or total capital, the

public company is not required to

engage the aforesaid professionals

to give an opinion on the

reasonableness.

Article 25

Where the company conducts a

merger, demerger, acquisition, or

transfer of shares, prior to

convening the board of directors to

resolve the matter, the Company

shall engage a CPA, attorney, or

securities underwriter to give an

opinion on the reasonableness of

the share exchange ratio,

acquisition price, or distribution of

cash or other property to

shareholders, and submit it to the

board of directors for deliberation

and passage.

Article 33

Under any of the following

circumstances, the company

acquiring or disposing of assets

shall publicly announce and

report the relevant information

on the website designated by

the competent authority in the

appropriate format as prescribed

by regulations within two days

commencing immediately from

the date of occurrence of the

event:

1. Acquisition or disposal of

real property from or to a

Article 33

Under any of the following

circumstances, the company

acquiring or disposing of assets

shall publicly announce and report

the relevant information on the

website designated by the

competent authority in the

appropriate format as prescribed

by regulations within two days

commencing immediately from the

date of occurrence of the event:

1. Acquisition or disposal of

real property from or to a

related party, or acquisition

Relevant provisions are amended in accordance with Ordinance No. 10600012965 issued by Financial Supervisory Commission on February 9, 2017


related party, or acquisition

or disposal of assets other

than real property from or

to a related party where

the transaction amount

reaches 20 percent or

more of paid-in capital, 10

percent or more of the

company’s total assets, or

NT$300 million or more,

provided this shall not

apply to trading of

government bonds or

bonds under repurchase

and resale agreements, or

subscription or redemption

of money market funds

issued by domestic

securities investment trust

firms.

2. Merger, demerger,

acquisition, or transfer of

shares.

3. Losses from derivatives

trading reaching the limits

on aggregate losses or

losses on individual

contracts set out in the

procedures adopted by the

company.

4. Where the type of asset

acquired or disposed is

equipment/machinery for

business use, the trading

counterparty is not a

related party, and the

transaction amount

reaches one of the

following:

(1) A public company

with the paid-in

capital less than

NT$10 billion, and

the transaction

amount reaches

NT$500 million or

or disposal of assets other

than real property from or to

a related party where the

transaction amount reaches

20 percent or more of paid-

in capital, 10 percent or

more of the company’s total

assets, or NT$300 million or

more, provided this shall not

apply to trading of

government bonds or bonds

under repurchase and resale

agreements, or subscription

or redemption of domestic

money market funds.

2. Merger, demerger,

acquisition, or transfer of

shares.

3. Losses from derivatives

trading reaching the limits on

aggregate losses or losses

on individual contracts set

out in the procedures

adopted by the company.

4. Where an asset transaction

other than any of those

referred to in the preceding

three subparagraphs, a

disposal of receivables by a

financial institution, or an

investment in the mainland

China area reaches 20

percent or more of paid-in

capital or NT$300 million,

provided this shall not apply

to the following

circumstances:

(1) Trading of government

bonds.

(2) Securities trading by

investment

professionals on

foreign or domestic

securities exchanges

or over-the-counter

markets.


more.

(2) A public company

with the paid-in

capital more than

NT$10 billion, and

the transaction

amount reaches

NT$1 billion or more.

5. Where land is acquired

under an arrangement on

engaging others to build on

the company's own land,

engaging others to build on

rented land, joint

construction and allocation

of housing units, joint

construction and allocation

of ownership percentages,

or joint construction and

separate sale, and the

amount the company

expects to invest in the

transaction is more than

NT$500 million.

6. Where an asset

transaction other than any

of those referred to in the

preceding five

subparagraphs, a disposal

of receivables by a

financial institution, or an

investment in the mainland

China area reaches 20

percent or more of paid-in

capital or NT$300 million,

provided this shall not

apply to the following

circumstances:

(1) Trading of

government bonds.

(2) Securities trading by

investment

professionals on

foreign or domestic

securities exchanges

or over-the-counter

(3) Trading of government

bonds or bonds under

repurchase and resale

agreements, or

subscription or

redemption of

domestic money

market funds.

(4) Where the type of

asset acquired or

disposed is

equipment/machinery

for business use, the

trading counterparty is

not a related party,

and the transaction

amount does not

reach NT$500 million.

(5) Where land is

acquired under an

arrangement on

engaging others to

build on the

company’s own land,

engaging others to

build on rented land,

joint construction and

allocation of housing

units, joint

construction and

allocation of

ownership

percentages, or joint

construction and

separate sale, and the

amount the company

expects to invest in

the transaction is less

than NT$500 million.

The amount of transactions above

shall be calculated as follows:

1. The amount of any individual

transaction.

2. The cumulative transaction

amount of acquisitions and

disposal of the same type of


markets, or ordinary

shares, corporate

bonds, and general

bank debentures not

involved in equities

that are subscribed,

raised and issued in

the primary market.

(3) Trading of

government bonds or

bonds under

repurchase and

resale agreements,

or subscription or

redemption of money

market funds issued

by domestic

securities investment

trust firms.

The amount of transactions

above shall be calculated as

follows:

1. The amount of any

individual transaction.



disposals of the same type

of underlying asset with the

same trading counterparty

within the preceding year.


amount of real property

acquisitions and disposals

(cumulative acquisitions and

disposals, respectively)

within the same

development project within

the preceding year.



disposals (cumulative

acquisitions and disposals,

respectively) of the same

security within the preceding

year.

“Within the preceding year” as

underlying asset with the

same trading counterparty

within the preceding year.


amount of real property

acquisitions and disposal

(cumulative acquisitions and

disposals, respectively)

within the same

development project within

the preceding year.



disposals (cumulative

acquisitions and disposals,

respectively) of the same

security within the preceding

year.

“Within the preceding year” as

used in the preceding paragraph

refers to the year preceding the

date of occurrence of the current

transaction. Items duly announced

in accordance with these

Procedures need not be counted

toward the transaction amount.

The company shall compile

monthly reports on the status of

derivatives trading engaged in up

to the end of the preceding month

by itself and any subsidiaries and

enter the information in the

prescribed format into the

information reporting website

designated by the competent

authority by the 10th day of each

month.

When the company makes an

error or omission in an item

required by regulations to be

publicly announced at the time of

public announcement and so is

required to correct it, all the items

shall be publicly announced again

and reported in their entirety.

The company acquiring or


used in the preceding paragraph

refers to the year preceding the

date of occurrence of the current

transaction. Items duly

announced in accordance with

these Procedures need not be

counted toward the transaction

amount.

The company shall compile

monthly reports on the status of

derivatives trading engaged in

up to the end of the preceding

month by itself and any

subsidiaries and enter the

information in the prescribed

format into the information

reporting website designated by

the competent authority by the

10th day of each month.

When the company makes an

error or omission in an item

required by regulations to be

publicly announced at the time

of public announcement and so

is required to correct it, all the

items shall be publicly

announced again and reported

in their entirety within two days

commencing immediately from

the date of the event.

The company acquiring or

disposing of assets shall keep

all relevant contracts, meeting

minutes, log books, appraisal

reports and CPA, attorney, and

securities underwriter opinions

at the company headquarters,

where they shall be retained for

5 years except where another

act provides otherwise.

disposing of assets shall keep all

relevant contracts, meeting

minutes, log books, appraisal

reports and CPA, attorney, and

securities underwriter opinions at

the company headquarters, where

they shall be retained for 5 years

except where another act provides

otherwise.

Description of the long-term fund raising proposal

I. Issuance of common shares and preferred shares via domestic cash capital increase

A. In this cash capital increase proposal, we plan to issue common shares and preferred

shares either through book building or public subscription.

B. Via book building

1. If book building is adopted, apart from reserving 10% to 15% of the total number of

newly issued shares for subscription by the Company's employees (including

employees of the subsidiaries specified by Article 30 of the Financial Holding Company

Act), as required by Article 267 of the Company Act, the remaining shares shall be

offered publicly via book building with existing shareholders abstaining from exercising

their priority subscription rights with respect to the new shares in accordance with Article

28-1 of the Securities and Exchange Act. The Chairman is authorized to place any

portion of the new issued shares not subscribed to by the Company's employees for

subscription in the full quantity by designated individuals at the issue price.

2. According to provision of law, the issue price of common shares shall be no less than

90% of the simple arithmetic average closing price of the common shares of the

Company for either one, three or five consecutive business days before pricing date,

after adjustment for any distribution of stock dividends, cash dividends or capital

reduction. (If changes in the laws, should be coordinate the pricing adjustments.). The

Board of Directors and/or Chairman of the Board shall determine the actual issue price

based on the pricing principles set out in the paragraphs above, the status of the book

building in consultation with the underwriter, as well as on the conditions of the market

where the securities are issued and regulatory requirements.

3. The determination of issuance price of preferred shares shall be within the variation

scope of 10% of theoretical price pursuant to Article 12 of “Self-Regulation Rules

Governing Underwriter Members of Taiwan Securities Association Guiding Issuance

Companies to Offer and Issue Securities.” The board of directors and/or the chairman is

authorized to determine the price with the underwriter after taking into consideration

book building consolidation, the situation of the issuance market, and the relevant laws

and regulations.

4. Since the preferred shares issued this time may not be transformed into ordinary shares,

if it is conducted by issuing preferred shares, there will be no effect of diluting the equity

of shareholders. If it is conducted by issuing ordinary shares, it will account for 7.96% of

current outstanding shares of the Company calculated with the ordinary issuance limit

of 1Bn shares. Although the equity of shareholders will be partially diluted, it is expected

to enhance the competitiveness and improve the operational efficiency of the Company.

This is because the estimated fund will meet one or more purpose of enhancing the

financial structure of the Company, increasing capital adequacy ratio of the Company,

repaying loans, and coping with the long-term development strategy. It will not cause

【Appendix IV】

significant impacts on the ordinary equity of shareholders.

C. Via public offering

1. If public offering and distribution is adopted, apart from reserving 10% to 15% of the

total number of newly issued shares for subscription by the Company's employees

(including employees of the subsidiaries specified by Article 30 of the Financial Holding

Company Act) and also allocating 10% for subscription by the general public in

accordance with Article 28-1 of the Securities and Exchange Act, the remaining shares

shall be available for subscription by existing shareholders based on their respective

percentages of shareholding in the Company on the subscription reference date. The

Chairman is authorized to place any portion of the newly issued shares not subscribed

to by the Company's employees or existing shareholders for subscription in the full

quantity by designated individuals at the issue price.

2. According to provision of law, the issue price of common shares shall be no less than

70% of the simple arithmetic average closing price of the common shares of the

Company for either one, three or five consecutive business days before pricing date,

after adjustment for any distribution of stock dividends, cash dividends or capital

reduction. (If changes in the laws, should be coordinate the pricing adjustments.). The

Board of Directors is authorized to assign the ex-dividend date as the valuation

reference date.

3. The determination of issuance price of preferred shares shall be within the variation

scope of 10% of theoretical price pursuant to Article 12 of “Self-Regulation Rules

Governing Underwriter Members of Taiwan Securities Association Guiding Issuance

Companies to Offer and Issue Securities.” The board of directors and/or the chairman is

authorized to determine the price with the underwriter after taking into consideration the

situation of the issuance market and the relevant laws and regulations.

D. The capital raised in this cash capital increase plan is expected to be used for the

following: strengthening the Company's financial structure, enhancing the Company's capital

adequacy ratio, repaying loans or one or more purposes for the development of the

Company's long-term strategies. The capital raised is expected to enhance the Company's

competitiveness and improve our operational efficiency, and it will have a positive impact on

shareholders' equity.

E. We ask that shareholders' meeting authorize the Board of Directors and/or the Chairman of

the Board to consider the content of the cash capital increase proposal (including but not

limited to the actual issue price, offering terms, project items, amount of capital raised,

schedule of completion, expected benefits and other matters relevant to the proposal),

make all necessary adjustments based on market conditions and regulatory requirements,

work out the final details and implement the proposal. If the cash capital increase proposal

must be changed as ordered by the regulatory authority or required by the circumstances,

we also ask that the Board of Directors and/or the Chairman be given full authorization to

carry out the corresponding changes.

F. For matters not covered herein, the Board of Directors and/or the Chairman shall proceed

with full authorization and in accordance with relevant laws and regulations.

II. Cash capital increase by issuing common shares and participation in the issuance of GDR

A. If participation in the issuance of GDR is adopted for the cash capital increase and issuance

of common shares, apart from reserving 10% to 15% of the total number of newly issued

shares for subscription by the Company's employees (including employees of the

subsidiaries specified by Article 30 of the Financial Holding Company Act), as required by

Article 267 of the Company Act, the remaining of the newly issued shares shall be allocated

for participation in the issuance of GDR with existing shareholders abstaining from

exercising their priority subscription rights with respect to the new shares in accordance

with Article 28-1 of the Securities and Exchange Act. The Chairman is authorized to place

any portion of the newly issued shares not subscribed to by the Company's employees for

subscription in the full quantity by designated individuals at the issue price, or reallocated it

to the original securities that are participating in the issuance of GDR.

B. Pursuant to relevant domestic laws and regulations, the issue price for the common shares

that are participating in the issuance of GDR for cash capital increase shall be no less than

90% of the simple arithmetic average closing price of the common shares of the Company

for either one, three or five consecutive business days before pricing date, after adjustment

for any distribution of stock dividends, cash dividends or capital reduction. However, in the

event of changes in domestic regulations, corresponding changes to the above formula

shall also be made.

C. The Chairman or a designated person by the Chairman shall be authorized by the Board of

Directors to determine the actual issue price based on actual market conditions, domestic

laws and regulations and common practices in the market where the securities are issued,

as well as in consultation with the underwriter.

D. The above pricing methods are compliant with relevant domestic laws, regulations and

common practices in the market where the securities are issued, and the basis on which

pricing is determined should be reasonable.

E. The issue price for the common shares that are participating in the issuance of GDR for

cash capital increase is determined based on the market price of the Company's common

shares traded in domestic stock exchange market. It remains that the original shareholders

may purchase the Company's common shares in domestic stock exchange market at a

price close to the GDR issuance price. Since the original shareholders don’t bear any

exchange rate or liquidity risk, this arrangement is not expected to have any negative

impact on the interests of the original shareholders. The capital raised in this cash capital

increase plan is expected to be used for the following: strengthening the Company's

financial structure, enhancing the Company's capital adequacy ratio, repaying loans or one

or more purposes for the development of the Company's long-term strategies. The capital

raised is expected to enhance the Company's competitiveness and improve our operational

efficiency, and it will have a positive impact on shareholders' equity.

F. We ask that shareholders' meeting authorize the Board of Directors and/or the Chairman of

the Board to consider the content of the cash capital increase proposal (including but not

limited to the actual issue price, offering terms, project items, amount of capital raised,

schedule of completion, expected benefits and other matters relevant to the proposal),

make all necessary adjustments based on market conditions and regulatory requirements,

work out the final details and implement the proposal. If the cash capital increase proposal

must be changed as ordered by the regulatory authority or required by the circumstances,

we also ask that the Board of Directors and/or the Chairman be given full authorization to

carry out the corresponding changes.

G. In conjunction with the issuance of common shares for capital increase in cash and

participation in GDR issuance, we request that the Board of Directors authorize the

Chairman or a designated people by the Chairman to represent the Company in signing all

documents related to the participation in the issuance of GDR as well as in handling all

required matters related to the participation in the issuance of GDR.

H. For matters not covered herein, the Board of Directors and/or the Chairman shall proceed

with full authorization and in accordance with relevant laws and regulations.

Documents

Cathay Financial Holding Co., Ltd. GENERAL ......Cathay Financial Holding Co., Ltd. GENERAL SHAREHOLDERS MEETING 2017 Meeting Minutes Time: 09:00 AM, 16 June 2017 (Friday) Place: 1F,