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Product Responsibility

Yuanta Financial Holdings brings together its channel resources, subsidiaries' operations, and data analysis to create a customer-centric experience designed to meet one-stop shopping needs and provide complete, efficient, and value-added financial services.

The Group attaches importance to sustainable financial development and is in line with the international trend of formulating sustainable financial standards. It gradually incorporates ESG considerations in credit granting, investment and development of financial products and services, and combines the business expertise of each subsidiary to provide diversified financial services to support the development of enterprises with sustainable concepts. We use our influence as a provider and manager of capital to channel capital to sustainable industries and expand the impact of sustainable finance.

Furthermore, we are also committed to strengthening the inclusiveness of financial services. Integrating the core concept of “Make your Biggest Dream Come True", the Company provides diverse financial services that are accessible and affordable for underprivileged groups and micro-enterprises. Through effectively promoting local financial development and expanding the accessibility our financial services, we include disadvantaged groups in our service scope through services such as micro-insurance, public trusts and accessible financial services, so that the disadvantaged groups can also enjoy equal rights to use financial services.

Responsible Finance

In 2019, the Company established “Sustainable Finance Guidelines"to establish a green policy for investment and financing at the financial holding company level. Through a principled framework and guidelines, the Company incorporated ESG factors into its daily operations and decision making, established a list of industries to be actively supported, standardized the list of companies to be avoided, strengthened due diligence and prudent evaluation of ESG high-risk targets, and guided companies to pay attention to governance, environmental, and social risks and to fulfill their responsibilities as global citizens.

The Sustainable Finance Guidelines is used as a standard for our subsidiaries to implement criteria for sustainable lending and investment. We follow the rules to implement sustainability into our business planning and operations. This year, all subsidiaries have completed the review and revision of relevant regulations, extending the spirit of sustainability to products and leading customers to develop sustainable benefits.

Sustainable Finance Guidelines Industry-specific Environmental and Social Risk Management Rules
1.Corporate Finance Business
(1) Responsible Financing

In the spirit of “Sustainable Finance Guidelines", Yuanta Bank adjusts its business practices and internal processes to implement the spirit of Responsible Financing into credit business planning, manage potential environmental and social risks in credit cases, and support enterprises that promote sustainable social development.

In response to Taiwan government's “Five plus Two"Innovative Industry Policy, Yuanta Bank has lent to these seven industries, including green energy technology and circular economy, to assist these key industries in raising capital. The Group has also begun financing industries with sustainable models such as solar cell manufacturing and the renewable energy power generation industry, providing the funds needed to assist the development of Taiwan's low-carbon industry. In the area of social development, we also provide healthcare and education-related financing programs to support the transformation of the sustainable economy.

Unit:NT$ thousand
Areas of Credit 2019 2020
Loan Amount
(Note)
Total Credit Amount Proportion of Total Credit
(%)
Loan Amount
(Note)
Total Credit Amount Proportion of Total Credit
(%)
“Five plus Two" Innovative Industry Policy $155,480,209 $383,455,276 40.55 $137,984,148 $373,896,093 36.90
Sustainability-related Industry Financing $1,014,842 0.26 $962,418 0.26
Mass Transit $4,929,888 1.29 $3,987,356 1.07
Education and Healthcare Financing $3,965,500 1.03 $3,874,680 1.04
Total $165,390,439 43.13 $146,808,601 39.26

Note: Total Amount of Credit equals the total balance amount of corporate finance loans for the entire bank.

(2) Project Financing

In addition to credit risk auditing, credit operation also includes the reviewing the items stipulated in the Sustainable Finance Guidelines to examine the potential ESG risks of creditors, and in accordance with the regulations of “management points for handling project financing", the Company follows the due diligence process, conducts feasibility and risk assessment on the financial, legal, insurance and technical aspects of the project, implements the post-loan management mechanism, tracks the progress of the implementation of each project plan, and enhances review operation.

In 2020, there were 3 project financing cases, 1 of which was rejected because of the long credit period and higher risk. The other 2 cases which were approved for financing are listed as follows:

Project Name Risk Rating Project Description Country Project Financing Scale Independent Third Party Review
A Low Civil construction financing Taiwan NT$6 billion Yes
B Low Acquisition of shares Vietnam US$16,668,000 Yes


(3) Equator Principles

In October 2020, Yuanta Bank signed the Equator Principles and became a member bank of the Equator Principles Association. In November of the same year, Yuanta Bank completed the formulation of the “Guidelines for Managing Equator Principles Financing Cases" and related operational procedures. The “Task Force on Environmental and Social Risk" was established to evaluate, review, and monitor the environmental and social risks of credit cases, to appropriately reduce the environmental and social impacts of potential cases, and to encourage customers to pay attention to environmental protection and social responsibility.

When providing customer credit or related financial advisory services, business units are required to confirm whether the Equator Principles are applied in their dealings. If applicable conditions are met and the case is evaluated as a medium to high environmental and social risk case, the grantor shall be required to commission an independent third party to perform the environmental and social risk assessment and issue an assessment report as a reference basis for the environmental and social risk assessment of the case. If post-loan monitoring conditions are included in the evaluation report, borrowers are to be required to regularly commission independent third-party organizations to perform environmental and social risk monitoring and issue reports. If the borrowers are found to be unable to meet the post-loan monitoring criteria for environmental and social risks, we will propose that they provide an environmental and social risk-related improvement plan to ensure compliance with the Equator Principles and to raise the awareness of environmental protection and social responsibility among our customers.

Yuanta Bank's Guidelines for Managing Equator Principles Financing Cases

(4) Green Bonds

Issuing of Green Bonds: Based on the policy of socially responsible investment and promoting sustainable development, Yuanta Bank issued green bonds on April 29, 2021.

Underwriting Green Bonds: In 2020, Yuanta Securities assisted in the underwriting of green bonds, participating in eight green bonds of Taipower, Wolsu and TSMC and one Sustainable Development Bond of Far Eastern New Century, totaling NT$8.07 billion.

2.Personal Finance- Sustainable Goods and Services
(1) Investment Products
Unit:NT$ thousand
Product Type 2019 2020
Asset Size Total Assets Proportion of Total Assets
(%)
Asset Size Total Assets Proportion of Total Assets
(%)
Yuanta Global Utility Fund $706,607 $677,618,653 0.10 $1,137,421 $776,716,783 0.15
ESG Funds $5,872,160 0.87 $237,259,282 30.55
Healthcare, Communications, Infrastructure Fund $16,044,742 2.37 $16,521,785 2.13
Green Energy Sustainable Warrants $39,846 0.01 $85,716 0.01
Other Sustainable Investment Products $372,785 0.06 $599,579 0.08
Total $23,036,140 3.40 $255,603,783 32.91

(2) Mutual Fund Products

In response to the trend of sustainable investment, Morningstar launched a new sustainable investment index with five ratings using the number of globes as the rating icon. Achieving Five Globe means being in the top 10% of Morningstar's global group for sustainable investment performance. This year, Yuanta Funds had 14 funds with the highest rating of 5 globes, including Yuanta Taiwan High Dividend Quality Leader Fund, Yuanta/P-shares Taiwan Top 50 ETF, Yuanta/P-shares Taiwan Dividend Plus ETF, and Yuanta FTSE4Good TIP Taiwan ESG ETF.

This year, the Yuanta/P-shares Taiwan Top 50 ETF reached NT$115.895 billion, the Yuanta/P-shares Taiwan Dividend Plus ETF reached $69.308 billion, and the Yuanta FTSE4Good TIP Taiwan ESG ETF reached NT$7.836 billion. The rapid growth in size indicates that the concept of sustainable investment is gradually drawing attention in the market, bringing together investors, financial institutions and corporations to promote sustainable and inclusive economic growth.

(3) Warrant Products

In recent years, the markets have gradually shifted their attention to sustainability issues. Yuanta Securities has responded to this demand by issuing warrants linked to green energy. For the three consecutive years from 2018 to 2020, Yuanta Securities had the highest market share in green energy warrants, at 21.4%, 22.3%, and 21.7%, respectively.

Numbers of green power related warrants

(4) Responsible Investment

The Group actively invests in sustainability-related enterprises. rough the ESG screening mechanism, resources are directed towards domestic and overseas enterprises committed to sustainable development. is year, the Group's investments in sustainability-related assets grew by 16.93% as a percentage of all investments over 2019.

Unit:NT$ thousand
Type of Investment 2019 2020
Amount Invested Total Investments Proportion of the Total
(%)
Amount Invested Total Investments Proportion of the Total
(%)
“Five plus Two" Innovative Industry Investment $6,620,251 $1,206,574,618 0.55 $4,205,431 $1,388,695,817 0.30
Green Bonds $19,293,655 1.60 $41,755,900 3.01
Green Energy Sustainable Warrants $39,846 0.00 $85,716 0.01
Investment in ESG performers $4,445,107 0.37 $2,193,690 0.16
Sustainability-Related Mutual Funds $22,261,700 1.85 $253,423,320 0.01
ESG related products - - $101,523 18.25
Total $52,660,559 4.36 $301,765,579 21.73
Financial Inclusion

Yuanta Financial Holdings is also committed to strengthening the inclusiveness of financial services. Integrating the core concept of “Make your Biggest Dream Come True", the Company provides diverse financial services that are accessible and affordable for underprivileged groups and micro-enterprises. Through effectively promoting local financial development and expanding the accessibility our financial services, we include disadvantaged groups in our service scope through services such as micro-insurance, public trusts and accessible financial services, so that the disadvantaged groups can also enjoy equal rights to use financial services.

(1) Charitable Trusts

As the end of this year, Yuanta Bank has handled five charitable trusts valued at nearly NT$133 million and include “Mountains Fund", “Huangwu Social Welfare Fund", “ Taian Social Welfare Fund", “Shanlin International Charity Trust"and “Cheng Shin Maxxis Social Welfare Fund". This year, the proportion of overall Group business made up by charitable trusts rose by 13.7% over 2019.

(2) SME Financing

This year, Yuanta Bank gave loans to 7,496 small and medium-sized enterprises. Loan applicants are classified as SMEs based on the Executive Yuan's Standards for Identifying Small and Medium-sized Enterprises or are Small and Medium Enterprise Credit Guarantee Fund of Taiwan guarantee recipients. We hope to provide funding to assist SMEs with cash ow and maintaining working capital. As of the end of this year, of the following loans to small and medium-sized enterprises, the balance of loans to 4,507 small and new SMEs was NT$110.1 billion and the balance of loans to 1,348 micro enterprises was NT$620 million. This was done to support the growth of micro enterprises and promote economic development.

(3) Long-Term Care Insurance, Low-Cost Elderly Insurance, and Microinsurance

Yuanta Bank's financially inclusive insurance products are primarily long-term care insurance, low-cost elderly insurance, and microinsurance, which provide the public with affordable protection to prepare for life's risks. This year, the Bank sold 206 financially inclusive insurance products with total premiums of NT$4.4 million.

(4) Microinsurance and Group Annuity

To advance the basic insurance coverage for the economically disadvantaged and other specified groups, Yuanta Life introduced “Yuanta Life Accident Microinsurance (MC)"in 2014. This year, “Yuanta Life Group Accident Microinsurance"was again offered to provide easy-to-understand accident coverage for the economically disadvantaged and specific groups.

To help underprivileged groups build savings, plan for retirement, reduce financial pressure on the government from the public pension system, and improve the retirement planning of the young working class, in January 2017, Yuanta Life introduced Interest Sensitive Group Annuities Type A and Type B. As of the end of December this year, 12 groups are insured under these group annuities, which contribute a total of approximately NT$40 million in premiums.

(5) Warrants

Warrants are a financial product that provide a lower cost means to participate in the stock market. They can effectively reduce the threshold for entering the capital market through affordable transactions and are a wealth management tool suitable for various groups.

Yuanta Securities is a leading domestic issuer of warrants. In order to encourage more investors, especially those with limited funds, to get to know and trade in warrants to achieve their financial goals, we have listened to market demand over the years to provide warrant products that meet the conditions of the market and the needs of investors.

(6) Regular Shares Savings Plans

Beginning in January 2018, Yuanta Securities lowered the minimum investment amount from NT$3,000 to NT$1,000, lowering the threshold to investment and enabling small investors to conveniently invest in local stocks. Regular shares savings program customers are primarily young, low-budget investors, meeting government financial inclusion policy goals. Of RSSP customers, 51% are below the age of 40 and monthly contributions below NT$3,000 make up 47% of total contracts. This year, the total investment amount for single transactions under NT$3,000 was NT$690 million.