CATHAY INSURANCE .Vietnam

Letter to ShareholdersLooking back on 2010, amid the gradual recovery of the global economy Taiwan’s economy saw stellar growth, boostedin part by the increasingly close economic ties with China. The positive momentum is expected to continue in the comingyears with the signing of the Economic Cooperation Framework Agreement (ECFA) with China.Based on the efforts of our employees, our company turned in a strong performance in 2010. Cathay United Bankgenerated pre-tax earnings of US$420 million in 2010, the best performance in the past six years. Cathay United Bankalso continued to maintain excellent asset quality with an non-performing loan (NPL) ratio of 0.28% in 2010, rankingin the top tier among domestic banks in terms of asset quality. Cathay Life generated US$11.33 billion and US$19.27billion in first-year premium income and total premium income, respectively in 2010, both hitting record highs. CathayLife’s first-year premium equivalent, which better reflects policy value, amounted to US$2.7 billion in 2010, growing48% from the previous year and making it a solid industry leader. In addition, the net worth of Cathay Life continued torise, reaching US$3.9 billion. Its unrealized gain on valuation reached US$410 million, surpassing the level at the end of2009. Cathay Century Insurance also saw stable premium income in 2010 and ranked second among non-life insurancecompanies in the market. Cathay Securities had strong performance in cross-selling and its 2010 after-tax profit reached arecord high.Along with the opening of the financial service market between Taiwan and China, we have also made strong headwayin China. Cathay United Bank’s Shanghai Branch opened for business on December 23, 2010, the first Taiwan bankto open a branch in China. The Shanghai Branch will seek to achieve qualification to engage in RMB business in theshortest time possible, and in the longer term will evaluate the potential to establish a bank subsidiary bank. Our lifeand non-life insurance subsidiaries are also steadily yet prudently expanding their reach in China. As of year-end 2010,Cathay Life has 9 offices (head office and branches) and 37 sales and service offices across China. Cathay CenturyInsurance established a head office in Shanghai, and as of the end of March 2011, had 6 branches in Jiangsu, Fujian,Guangdong, Jejiang, Shangdong (under preparation) and Beijing (under preparation), and 2 sales and service offices inXiamen and Kunshan, thus having a presence in nine major cities with large concentrations of Taiwanese companies.With the establishment of Cathay United Bank’s Shanghai Branch, Cathay Financial Holding’s dual-engine strategy of“Insurance + Banking” in China is complete and able to provide high quality, diverse and innovative financial services tomeet the needs of clients in Taiwan, China and Hong Kong.With respect to our expansion in Vietnam, Cathay Life Insurance Vietnam opened for business in July 2008 andhad offices set up in five major municipalities by the end of 2010. Cathay United Bank also continues to expand inthe Vietnamese market. As of year-end 2010, Cathay United Bank and its subsidiary Indovina Bank had 38 officesin Vietnam. Indovina Bank also received the 2007 ~ 2009 Excellence Award in Banking from Vietnam’s PresidentialOffice. It is the only foreign bank that received such an honor, reflecting its excellent performance in the country. CathayInsurance Vietnam launched its business in December 2010. Headquartered in Ho Chi Minh City, Cathay InsuranceVietnam will seek to serve Taiwanese companies in Vietnam and the local Vietnam market. We are confident that we willcontinue to lead our peers in extending our success in Taiwan to other parts of the world as we aspire to become the bestfinancial institution serving Chinese communities.Looking ahead to 2011, with ECFA becoming effective as of January 1, 2011, the economic and trade cooperationbetween Taiwan and China will enter a new era and is expected to drive growth in the domestic economy. Further,increasing private consumption and business investment will also bring a new wave of opportunities for the domesticfinancial industry. Under the guiding principle of “innovative service and pursuit of excellence,” CathayFinancial Holdings will continue to take advantage of all opportunities and seek to continue to generatesteady growth in each of its core businesses and maintain its market leader status as we strive to createmaximum value for all our shareholders..ChairmanHong-Tu Tsai02

Overview of Cathay Financial Holding Co., Ltd.Company ProfileReflecting the diversification and globalization of financial markets, and toprovide more comprehensive services to our customers, Cathay FinancialHolding Co., Ltd. was established on December 31, 2001 and has registeredcapital of US$4.12 billion. Our primary subsidiaries include CathayLife Insurance, Cathay United Bank, Cathay Century Insurance, CathaySecurities, and Cathay Venture, serving collectively close to 12 millioncustomers through nearly 800 business offices around Taiwan.Looking into the future, we will continue to seek suitable partners to furtherstrengthen our operations. With a corporate culture that stresses integrityand trustworthiness, we will continue to integrate our products and servicesand leverage our extensive network of business locations and professionalsales forces to provide our customers with convenient “one-stop shopping”and differentiated services. Based on our core principle of “managing forthe long-term,” we aspire to be the most trustworthy and reliable financialholding company and the best financial institution serving Chinesecommunities.AssetsNet incomeNumber of branches and sale officesNumber of customers: Approx.Number of employeesUS$160.91 billionUS$148 million79011,700,00043,000OrganizationalShareholdersBoard of DirectorsChairmanVice ChairmanAudit CommitteeStrategic Management CommitteeOperations CommitteePresidentAuditing Div.CorporateFinancial Div. Risk Mgnt. Div. Planning Div. Information Div.EconomicResearch Div.AdministrationDiv.Legal Dept.Administration Dept.Public Relations Dept.Strategic Planning Dept.Investor Relations Dept.Integrated Marketing Dept.Financial Planning Dept.Accounting Dept.04

Overview of Cathay Financial Holdings Co., Ltd.Cathay Financial Holdings published “Taiwan Monthly GDPand Economic Climate Forecast.”Cathay Financial Holdings, Cathay Life, and Cathay CenturyInsurance were chosen No. 1 Ideal Brand by consumers in 2010.Board of Directors, Independent Directors, Supervisors and Key ManagersBoard of DirectorsNameEducationExperienceHong-Tu TsaiJ.D., Southern Methodist UniversityChairman, Cathay Life InsuranceCheng-Ta TsaiB.A., Chinese Culture UniversityManaging Director, Cathay Life InsuranceCheng-Chiu TsaiM.A., Keio UniversityChairman, Cathay Century InsuranceGregory K.H. WangB.A., Tamkang UniversityVice Chairman, Cathay Financial Holdings,Chairman, Cathay United BankTsu-Pei ChenB.A., National Chengchi UniversityVice Chairman, Cathay United BankChang-Ken LeeM.B.A., University of PennsylvaniaPresident, Cathay United BankMing-Ho HsiungM.A., University of IowaPresident, Cathay Life InsuranceFa-Te ChangB.A., National Chung Hsing UniversityChairman, Cathay Insurance (China)J.H. HsuM.B.A., National Chengchi UniversityPresident, Cathay Century InsuranceDavid P. SunM.B.A., Harvard UniversityChairman, Cathay Securities CorporationIndependent DirectorsNameEducationExperienceMin-Houng HongPh.D. Michigan State UniversityChairman, Panasonic Taiwan Co., Ltd.Tsing-Yuan HuangPh.D. Business Graduate School, NihonUniversity, JapanSupervisor, Hon Hai Precision Industry Co., Ltd.Andrew Ming-Jian KuoM.B.A., Baruch College, City University of New YorkVice Chairman, The Blackstone Group (HK) Limited.Chief Executive OfficerPositionNameEducationChairman Hong-Tu Tsai J.D., Southern Methodist UniversityKey ManagersPositionNameEducationPresidentChang-Ken LeeM.B.A., University of PennsylvaniaExective Vice PresidentTzung-Han TsaiJ.D., Georgetown UniversityChief AuditorJ. H. ChenB.A., Fu Jen Catholic UniversityChief Financial OfficerGrace ChenM.B.A., National Chengchi UniversityDivision HeadDavid P. SunM.B.A., Harvard UniversityExective Vice PresidentAlan LeeM.B.A., National Taiwan UniversityDivision HeadHsin-Hsun ChenB.A., Feng Chia UniversityDivision HeadShun-Yu ChuangM.B.A., Massachusetts Institute of TechnologyCapital and SharesType of stockCommon stockNo. of shares10,154,421 thousands of sharesAmountUS$3,484,702 thousands of dollars06

Cathay Financial HoldingsAnnual ReportCompany ProfileCathay Life Insurance Co., Ltd. was founded in August 1962 and became listed on Taiwan Stock Exchange in November 1964. In2001, we recorded US$19.27 billion in premium income and US$104.62 billion in assets. We rank number one in the industry bymarket share and assets. With more than 7,500,000 customers, we are not only a premium brand in the minds of consumers, wehave also won the unanimous recognition of professional institutions at home and abroad. In Fortune Magazine’s Global 500 2010,we made it to the top 10 list of insurance companies, the only financial institution in Taiwan on the list. We have received creditrating of “twAA+” from Taiwan Ratings, “A-“ from S&P, and “A3” from Moody’s, making us a top rated insurance company. Inthe “Third Taiwan Insurance Excellence Award”, the highest honor in Taiwan’s insurance industry, we received the highest numberof awards.In the efforts of developing overseas markets, we have established a subsidiary in China and Vietnam in 2005 and 2007respectively, becoming the first Taiwan insurer with a presence in those two markets, and plan to continue our overseas expansionefforts. Looking into the future, we will continue to seek growth and steady profits, and offer proactive services to enhancecustomer satisfaction as we move towards to the goal of becoming the best financial institution serving Chinese speakingcommunities.Workforce No. of employees / 31,075 Average age / 41.4 Average years of services / 10.109

Cathay Financial HoldingsAnnual ReportBusiness ScopeLife insurance and related businesses.2010 Revenue Breakdown2010 Revenue AmountPremium income17,682Recovered premium reserves8,334Insurance gain from unit-linked products4,706Interest income2,655Gain on valuation of financial assets/liabilities 1,811Revenue from real estate investment202Other income1,970Total37,360(million USD)% of Total47.33%22.31%12.59%7.11%4.85%0.54%5.27%100%2011 Business TargetsBusinessNew life insurance policy coverageIn-force life insurance policy coverageTotal premium incomeTarget10,636.4287,053.517,062.0(million USD)Cathay Life’s 2010 JapanHakone Summit.11

Cathay Life Insurance Co., Ltd.2011 Business PlanBusiness Development1. Step up the cultivation of first line managers and replenish the sources of corporate officers to drive the organizational growth andimprove organizational productivity.2. Bolster business development, create business-oriented topics in the market, and initiate contact with customers to boost businessactivities and increase the opportunities of additional purchase and business referral.3. Leverage the extensive sales network and improve profit margin while maintaining the market leader position.4. Integrate resources under Cathay Financial Holdings to develop prospective clients and offer one-stop financial services to improvethe operating efficiency of Cathay Group.5. Continue to seek growth in China and Vietnam markets with an emphasis on local strategies and overseas market expansion whilekeep working toward being the best financial institution serving Chinese speaking communities.Product Development1. Through group integration and cross-industry alliance, promote proprietary products in line with popular market topics and economiccondition to elicit consumer demands.2. Develop products tailored to specific customer attributes and undertake market segmentation to attract more business.Cathay Life’s 2010 Innovative Record Award.Cathay Life launched VIP service.Cathay Life received the “Yahoo! Taiwan Brand” award.12

Overview of Subsidiary CompaniesCathay United Bank Co., Ltd.Message from the ChairmanAs the global economy recovered from the impact of financial crisis and gradually warmed up in 2010, Cathay United Bank alsoturned out brilliant performance in the year in sales, financial structure, asset quality, capital intensity and earnings on the strength of asolid foundation and the core value of honesty and integrity as well as the concerted efforts of all colleagues. As a member of CathayFinancial Holdings, the benefits of resources integration among the Bank and other subsidiaries become all the more apparent.The Bank now has 162 branches in Taiwan, which is the highest among privately-owned banks in the market and provides aneffective sales channel. With respect to overseas offices, the Bank now has six branches and four representative offices in Shanghai,Hong Kong, Vietnam, Singapore, Malaysia, Philippines, Thailand and the U.S. (Los Angeles). The Shanghai Branch opened forbusiness in December 2010, making the Bank the first Taiwan bank to establish a branch in China, and will allow the Bank to providebetter and more financial services to customers in Greater China Area. Indovina Bank, a joint venture of the Bank in Vietnam currentlyhas 35 offices and branches in Vietnam, which is the highest among Taiwan-funded banks. It is also the only Taiwan-funded bank thatoffers ATM and inter-bank services in Vietnam. As the subsidiaries under Cathay Financial Holdings have extended their reach in Chinaand Vietnam markets, the Bank is poised to provide Taiwanese companies with better and more convenient services.In addition to branch expansion, the Bank also showed strong growth in various performance indicators in 2010. We hadUS$54.12 billion in total assets at the end of 2010, up 4% from the end of 2009. Our deposit balance was US$46.52 billion, a 2%increase, while our loan balance reached US$31.02 billion, a 9% increase. The number of credit cards in circulation totaled 3.04million, up 3% from the previous year. Boosted by increase in the demand deposit ratio and a falling cost of deposits in combinationwith rising fee income, our profits recorded sustained growth. Our pre-tax profit amounted to US$425 million, up 12% from theprevious year and after-tax net profit was US$389 million, which is translated into an EPS of US$0.07. With significantly improvedasset quality, our NPL dropped to 0.28%, while our coverage ratio increased sharply to 277.15%.While creating value and seeking profit growth, the Bank, as a corporate citizen believing in giving back to the society, has beena supporter of public interest, charity, art and cultural activities and the Bank’s efforts in those domains are widely recognized by thepublic. Under the Bank’s Big Tree Project, more than US$2.4 million have been donated to help pay for tuition and school expensesof more than 40,000 children living in remote areas. The Project also raised children’s books and sponsored writing competitions toprovide underprivileged children with equal learning opportunity and help them develop reading habits and writing skills. In addition,the Project has sponsored large-scale parenting workshops taught by experts in parent-child relationship to bring child developmenteducation into homes. Our longstanding efforts in promoting art and cultural activities help us win the “Tenth Arts and BusinessAward” from the Council for Cultural Affairs in 2010. We have also won many awards in other areas in 2010. To name a few, we wereselected “Outstanding Enterprise in Self-Management of Workplace Safety and Health” by the Labor Standards Inspection Office ofTaipei City Government, the only bank in the domestic banking industry to win this special honor, and won the 5th Taiwan FinancialElite Award: honorable mention in Best Risk Management from Taiwan Academy of Banking and Finance, 2010 Job ContributionAward from the Ministry of Economic Affairs and Council of Labor Affairs, second place in Financial XML System Stability Awardfrom Banking Association, fifth place in 2010 Smart Pay Issuers – Outstanding Trading Volume Award, third place in Acquiring Bank– Outstanding Online Store Award, and Special Contribution in Business Promotion Award. All those awards are public recognitions ofour performance.Looking into the new year, we will continue to strengthen our financial structure and asset quality and seek balanced developmentof our commercial banking, retail banking, credit card and wealth management businesses based on the beliefs ofcustomer first, pursuit of excellence and service innovation. We will follow the dual core model of CathayFinancial Holdings and integrate our operations with other subsidiary companies to offer a full range of productsand services for one-stop shopping. We will also vigorously develop the overseas markets as we continue towork towards the goal of being the “best financial institution in Chinese speaking communities.”ChairmanGregory K.H. Wang14

Cathay Financial HoldingsAnnual ReportCompany ProfileCathay United Bank was created from a merger of United World Chinese Commercial Bank and Cathay Bank on October 27,2003, which was followed by acquisitions of Lucky Bank and China United Trust and Investment Corporation on January 1 andDecember 29, 2007 respectively. As of the end of 2010, Cathay United Bank has 162 branches in Taiwan. Our representativeoffice in Shanghai has been upgraded to a branch on December 23, 2010, which together with overseas branches in LosAngeles, Chu Lai (Vietnam), Labuan (Malaysia), Singapore and Hong Kong build a Asian financial platform to provide Chinesearound the world financial services including commercial banking, retail banking, credit cards, and wealth management. Wehave around 1,800 multifunction ATMs as well as electronic banking access offering a variety of convenient banking servicesanytime, anywhere. In terms of credit ratings, the long-term and short-term rating of Cathay United Bank in 2010 were twAA+and twA-1+ as rated by Taiwan Ratings; A2 and P-1 as rated by Moody’s Investors Service; and A- and A-2 as rated byStandard & Poor’s, with stable outlook.WorkforceNo. of employees / 6,062 Average age / 35.13 Average years of services / 8.4615

Cathay United Bank Co., Ltd.Board of Directors, Independent Directors, Supervisors and Key ManagersBoard of Directors Name Education ExperienceGregory K.H. WangTsu-Pei ChenGrace ChenAlan LeeWilliam C.W. HuangIrene LeeBenjamin ChingChan Boon TeongMing-Ho HsiungDavid P. SunAllen PengMonica ChiouB.A., Tamkang UniversityB.A., National Chengchi UniversityM.B.A., National Chengchi UniversityM.B.A., National Taiwan UniversityM.A., University of Washington, USAB.A., University of California, Berkeley, USAB.A., Ateneo de Manila University, the PhilippinesM.A., Polytechnic University of New York City, USAM.A., University of IowaM.B.A., Harvard UniversityM.B.A., New Mexico Highlands University, USAB.A., National Taiwan UniversityVice Chairman, Cathay Financial HoldingsVice Chairman, Cathay United BankPresident, Cathay Financial HoldingsSenior Executive Vice President, Cathay United BankSenior Executive Vice President, Cathay United BankChairman, TaiLong Industrial Co., Ltd.President & CEO, Japan HI GroupPresident & CEO, LA Suerte Cigar & Cigarette FactoryChairman, Coastal Realty Group LimitedPresident, Cathay Life InsuranceChairman, Cathay Securities CorporationSenior Executive Vice President, Cathay United BankSenior Vice President & General Manager, Departmentof Credit Management, Bank of TaiwanIndependent DirectorsName Education ExperienceTsing-Yuan Huang Ph.D. Candidate, Business Graduate School, Supervisor, Hon Hai Precision Industry Co., Ltd.Nihon University, JapanMin-Houng Hong Ph.D. in EE of Michigan State UniversityChairman, Panasonic Taiwan Co., Ltd.Andrew Ming-Jian Kuo M.B.A., Baruch College, City University of New York Vice Chairman, The Blackstone Group (HK) Ltd.SupervisorsName Education ExperiencePeggy WangJ.Y. YehKuo-Hsim YehB.A., National Taiwan UniversityB.A., National Chung Hsing UniversityB.A., National Taiwan UniversityChairman, Cathay Futures Corp.Chief Secretary, Chunghwa Post Co., Ltd.Chairman, United National BankChief Executive Officer Position Name EducationChairman Gregory K.H. Wang B.A., Tamkang UniversityKey Managers Position Name EducationPresidentChief AuditorVice PresidentVice PresidentVice PresidentChang-Ken LeeJ. H. ChenGrace ChenAlan LeeAllen PengM.B.A., University of PennsylvaniaB.A., Fu Jen Catholic UniversityM.B.A., National Chengchi UniversityM.B.A., National Taiwan UniversityM.B.A., University of New Mexico16

Cathay Financial HoldingsAnnual ReportBusiness Scope1. All types of deposits2. Loans and credits3. Cheque discounting4. Securities investment5. Domestic remittances6. Commercial draft acceptance7. Issuance of domestic letters of credit8. Corporate guarantee bonds9. Domestic guarantee services10. Payment settlement11. Sales of government bonds/bills and corporate bonds/stocks12. Securities underwriting13. Securities dealing14. Custody and Warehousing services15. Rental of safe deposit boxes16. Agency services covered by the business scope specified onbusiness license or approved by competent authorities17. Credit card services18. Brokered sales of gold bars/coins and silver coins19. Purchases and sales of gold bars/coins and silver coins20. Import and export foreign exchange transactions, inbound/outbound wire transfer, and foreign currency deposits,loans, and payment guarantee21. General foreign exchange transactions, inbound/outboundwire transfer; foreign currency deposits22. Dealing foreign currency cash and travelers cheques23. Financial derivative commodities approved by competentauthorities24. Trust business authorized by the Trust Enterprise Act25.Trust business authorized by the Authority to be handledby head office trust department26. Non-discretionary money trust investing on foreign securities27. Dealing of government bonds28. Brokerage and dealing of short-term notes and bills29. Brokerage, dealing, certification, and underwriting of shorttermnotes and bills30. Issuance of cash cards31. Financial consulting for financing related businesses32. Financial consulting for non-financing related businesses33. Dealing of corporate bonds and financial bonds34. Wealth Management35. Money Trust36. Trust of encumbrance and related security interests37. Securities trust38. Movable property trust39. Real estate trust40. Land right trust41. Discretionary investment trust services42. Acting as agents for issuance, transfer, registration andpayment of interests or dividends of securities43. Providing consulting services for securities issuance oroffering44. Acting as attesters for issuance of stock or bond45. Acting as attesters for issuance of securities46. Acting as executor of wills and managing legacies47. Acting as trustees for issuance of bond and providing relatedagent securities48. Custody services49. Acting as custodians of securities investment trust funds50. Providing advisory services for investment, financialmanagement, and real estate development2010 Net Operating Income Breakdown(thousand USD)Income Amount % of TotalNet interest incomeNet fee incomeGain (loss) on financial assets and liabilities at fair value through profit or lossRealized gain on available-for-sale financial assetsInvestment income recognized by the equity methodGain on foreign currency exchange, netOthersNet Operating income505,382224,71918,18580,0869,72522,40272,602933,10154.16%24.08%1.95%8.58%1.04%2.40%7.79%100.00%17

Cathay United Bank Co., Ltd.2011Business Plan1. Overall business directions1.Continue to strengthen the bank structure and incorporatethe culture of corporate governance and risk managementon the basis of stability and reliability to build thecompetitive advantages for sustained operations.2.Focus on core businesses while enhancing the overalloperational efficiency, seeking growth and serviceimprovement to maximize shareholder’s return.3.Optimize resources within the Bank and in other membersof Cathay Group and offer corporate financing and crossborderfinancing channel through an extensive servicenetwork, both real and virtual, and furthermore, makeinroads into personal financial planning and moneyservices to meet the various demands of customers.4.Continue the training programs to enhance the professionalskills and productivity of employees, and possess a stableand multifunctional information system to improve workefficiency and lower operational risk.2. International banking business1.Use Shanghai Branch as the starting point of extensivedeployment in China and leverage the existing locationsand clientele of affiliates to reach the profit goal soon, andfurther integrate the financial services in Greater ChinaArea to meet the financing needs of Taiwanese companieswith establishments in the area.2.Continue to expand overseas niche markets and capitalizeon the advantage of overseas platforms to develop localclientele and boost international competitiveness.3.Continue to cultivate foreign exchange professionalsand offer convenient remittance services to increase thevolume of foreign exchange business and market share.Cathay United Bank’s “Big Tree Project” made donations.3. Corporate banking business1.Continue to develop primary clientele and SME customersand provide them with payroll direct deposits, financing,TMU, group insurance and securities brokerage services,with the goal of becoming their major correspondent bank.2.Bolster customer relationship management to graspcustomer needs, emphasize on quality service insteadof price competition, review business performanceperiodically, and augment business capacity.3.Actively vie for the opportunity to act as the bookrunnerin syndicated loan by putting equal emphasis on qualityand income, and broaden contact with customers throughparticipation in syndicated loans.4.Engage in strategic lending in line with the openingtrends of the overall economic environment by extendingloans to hotels, plants and Taiwanese companies withestablishments in Greater China Area so as to prudentlyincrease total loan balance.Cathay United Bank led the peers in launching “My MobiBank” services.Cathay United Bank hosted the “Eternal Classics Super Star Concert”18

Overview of Subsidiary CompaniesCathay Century Insurance Co., Ltd.Message from the ChairmanIn 2010, the global economy started to show signs of recovery from the financial tsunami. The domestic propertyand casualty (P&C) insurance market also created 3.8% growth in premium income, boosted by closer economic tiesbetween Taiwan and China following the signing of Economic Cooperation Framework Agreement (ECFA), the firstincrease in car sales in four years in the domestic auto market, and the smooth implementation of rate deregulation.However, the hits of natural disasters and some huge fire losses eroded the profits of P&C insurers.Facing a challenging business environment, Cathay Century Insurance sticks to its philosophy of “equal emphasison both quality and quantity, stability and reliability” and continues to seek new opportunities and growth in Taiwanmarket. In terms of sales, we outperformed our major competitors in 2010 by reporting 7.2% growth in premiumincome and achieved a higher market share of 11.6% from 11.2% in 2009. We remained in the second place in theindustry by premium income. With respect to overseas markets, Cathay Insurance (China) has established three firstTiwan branches in Jiangsu, Fujian and Guangdong, and two sales and service agencies in Kunshan and Xiamen. Weare the first P&C insurer in Taiwan that experiences the fastest growth and has the most business locations in China.Cathay Insurance (Vietnam) has also been opened for business in December 2010 as we take another step forward tobe the best financial institution serving Chinese-speaking communities.Our adherence to good corporate governance practices, sound financial structure and outstanding businessperformance in 2010 again won the recognition of international credit rating agencies with a “A-“ rating from S&P,“twAA+” from Taiwan Ratings and “A2” from Moody’s. We are equally recognized by the domestic consumers andagain named the “No. 1 Consumer Ideal Brand” in P&C insurance industry in 2010.Looking forward to 2011, we will strive to make Cathay Century Inaurance “Premium Brand, Taiwan No.1” andposition ourselves as a respected company in the market. We will take actions to strengthen the corporate structurefrom all aspects, and enhance the core competence in “discipline”, “professionalism” and “service” with innovativeideas and outstanding execution. Our goal is to upgrade our administrative efficiency and customer service, and liftour brand value to establish Cathay Century Insurance as the top brand in the market and the most trusted company bycustomers, shareholders, and employees. Lastly, we would like to thank the competent authorities and our customersfor your kind support and encouragement over the years and we will continue to seek improvement, growth andexcellence.ChairmanCheng-Chiu Tsai20

Cathay Financial HoldingsAnnual ReportCompany ProfileSince establishment in 1993, Cathay Century Insurance has upheld the philosophy of stable growth in both quality and quantityand offered all lines of property and casualty insurance products. At the same time, Cathay Century Insurance is keen tomaintain customer relationship and enhance service quality. In 2007, we became the second largest P&C insurer in Taiwan. Inaddition to ISO9001 certification for motor insurance claims and loss prevention services, we received ratings of twAA+ fromTaiwan Ratings, A- from S&P, and A2 from Moody’s. Since becoming a member of Cathay Financial Holdings in 2002, wehave been offering more comprehensive professional services by leveraging group resources. We have also become the best riskmanagement advisor to our clients. We were again No. 1 on Management Magazine’s list of “Ideal Brand” in P&C insuranceindustry published in early 2011. We are not only recognized and trusted by the consumers in Taiwan, we also received theinternationally acclaimed honor of “the General Insurance Company of the Year 2009” in Asia, proving ourselves a first classP&C insurer in Asia.WorkforceNo. of employees / 1,297 Average age / 35.5 Average years of services / 7.9221

Cathay Century Insurance Co., Ltd.Board of Directors, Independent Directors, Supervisors and Key ManagersBoard of Directors Name Education ExperienceCheng-Chiu TsaiM.A., Keio UniversityChairman, Cathay Century InsuranceC.Y. LeeB.A., National Chung Hsing UniversityConsultant, Cathay Century InsuranceJ.H. HsuM.A., National Chengchi UniversityPresident, Cathay Century InsuranceK.C. TsaiCollegeChairman, Central Construction Co., Ltd.Chu-Yao LuB.A., Shih Hsin UniversityPresident, Wen Yi Investment Co., Ltd.T. James YangM.A., UC Irvine, USAVice President, Cathay Century InsuranceMin-Yang WuM.A., Georgia State University, USAVice President, Cathay Century InsuranceIndependent DirectorsNameEducationExperienceAndrew Ming-Jian KuoM.B.A., Baruch College, City University of New YorkVice Chairman, The Blackstone Group (HK) Ltd.Min-Houng HongPh.D. in EE of Michigan State UniversityChairman, Panasonic Taiwan Co., Ltd.SupervisorsNameEducationExperienceR.C. SunTainan Commercial CollegeSupervisor, Cathay Century InsuranceChing-Tien SuNational Taipei Teachers CollegeSupervisor, Cathay Century InsuranceChief Executive Officer Position Name EducationChairman Cheng-Chiu Tsai M.A., Keio UniversityKey Managers Position Name EducationPresidentVice PresidentVice PresidentChief AuditorVice PresidentVice PresidentJ.H. HsuT. James YangMin-Yang WuChih-I YuPin-Yao LinJin-Chou ChenM.A., National Chengchi UniversityM.A., UC Irvine, USAM.A., Georgia State University, USAB.A., National Taiwan UniversityM.A., National Chengchi UniversityB.A., Fu Jen Catholic UniversityBusiness ScopeAll types of non-life insurance (including motor, fire, marine, engineering, health, accident, and other liability and property) andrelated business.Revenue BreakdownItemAmount% of Total(million USD)Premium income433.5456.4%Reserves released234.6430.5%Other income90.5611.8%Interest income10.161.3%Total768.90100.0%22

Cathay Financial HoldingsAnnual Report2011 Business PlanObjective 1: Strengthen corporate organization anddevelop diverse sales channels1. Actively forge partnerships with premium financial institutionsand companies in related industries to develop new sources forbusiness and boost competitiveness.2. Grasp market opportunities by watching closely the trendsof different sales channels and develop different packagedproducts tailored to the attributes of different channels to boostproduct competitiveness.3. Speed up the recruitment of outstanding sales personnel toexpand the sales force and undergo organization restructuringto increase the breadth of sales and improve administrative andservice efficiency.Objective 2: Develop group synergy and enhance brandvalue1. Continue to integrate channel platform, strengthen distributionassistance programs, improve service quality and encouragecross-selling.2. Utilize information technology to expedite underwriting andclaim procedures and enhance administrative efficiency andquality.3. Provide differentiated, refined, professional and thoughtfulservices to establish brand image and continue tobe the most ideal P&C insurer in the minds ofcustomers.Objective 3: Cultivate professional personnel and developoverseas markets1. Improve the quality and quantity of professional personnel,establish a fair employee promotion system, and enhancepersonnel cultivation and utilization.2. Bolster the professional training of employees at all levels andencourage them to obtain professional credentials and licenses.3. Continue to extend the reach of service network and takesteps to become the best financial institution serving Chinesespeaking communities.Objective 4: Allocate capital flexibly and Strengthen riskmanagement1. Step up loss prevention and control techniques and make properreinsurance arrangement to take into account both businessdevelopment and risk management.2. Adopt flexible asset allocation in line with changes in thefinancial market to enhance financial security and profitability.3. Leverage investment resources of Cathay Group to achieveoptimal fund utilization.2011 Operational TargetsPremium Income US$ 467 millionCathay Century Insurance’s Power Kings award ceremony.The Fujian Branch of Cathay Insurance (China) opened for business.Cathay Insurance (Vietnam) opened for business.23

Overview of Subsidiary CompaniesCathay Securities CorporationMessage from the ChairmanLooking back on 2010, stock markets all over the world rebounded strongly as governments launched economicstimulus programs and the global economy continued its recovery. The stock market capitalization of many majorcountries approached their 2008 pre-financial crisis levels, indicating that the global economy is gradually emerging fromthe impact of the financial crisis. Benefiting from the strong economic growth of China and inflows of international funds,Asian countries experienced strong currency appreciation and their stock markets reached new highs. The Indonesianstock market gained 46% in 2010, followed by Korea with 22% growth, and India, Malaysia and Singapore all gainedmore than 10%. Taiwan’s stock market and currency exchange market were driven higher in 2010 in part by improvedcross-strait relations. Foreign investors were bullish on the Taiwan stock market and bought US$9,646 million of shares,pushing the stock index 10% higher to a record high since June 2008. Looking into 2011, if the U.S. and Europe stay onthe track of economic recovery and the trend of hot money flowing into Asia continues as expected, Taiwan’s economyshould grow further with rising exports and strong domestic demand supported by the effects of ECFA. Under thosescenarios, there is a high probability that the domestic stock market will rise further in 2011.In response to the challenges posed by the drastically changing business environment in the aftermath of the financialcrisis, we practiced strict cost control and stepped up business integration. The results of our efforts were beginning toshow in 2010. All business indicators were on the rise and after-tax earnings per share reached US$0.02, a record highsince our inception. An overview of 2010 business is as follows: market share in the brokerage business was 0.7%,representing growth of 23% from the previous year with total trading volume of US$17,594 million, an increase of 20%from the year before. The balance of our margin lending amounted to US$69 million, up 49% from the year before.The number of our securities counters rose from 25 to 29. Furthermore, in order to expand our brokerage business, wecontinued to leverage the distribution strength of Cathay United Bank. Our sales force was organized to work in teams.Marketing events were held from time to time to attract new accounts and encourage existing ones to remain in use.The total number of customer accounts grew from 74,783 in 2009 to 85,638 in 2010, representing growth of 15% andour registered co-selling workforce reached 1,618 persons, clearly reflecting the benefits of integrated marketing. Thenumber of warrants issued by our Financial Products Department reached 358, another record high since our inception.The Underwriting Department was the lead underwriter in 3 secondary public offerings (SPO) and joint underwriter in 11other offerings with a total underwritten amount of US$129 million. We were also the lead advisor for 1 corporate bondissuance and co-advisor for 16 other issuances. The total amount involved in financial advisory was US$386 million,accounting for 2.84% market share and ranking ninth in the industry.Looking forward to the new year, the securities industry is expected to remain fiercely competitive. Aside fromcontinuing with our cost control measures, we will continue to develop our core businesses. With respect to the brokeragebusiness, we hope to continue to build on our current foundation and increase our market share in margin lending andexpand our integrated selling efforts with Cathay United Bank and Cathay Life Insurance. With respect to financialproducts, we will continue to expand warrant issuance and sales and actively employ a variety of trading strategies tolower market risk while seeking to maximize profits. With respect to the underwriting business, we will continue to workwith other members of Cathay Financial Holdings to provide listed companies with more extensive and professionalcapital markets services.Finally, we would like to thank all of our employees for their efforts and express our gratitude to thecompetent authorities and our customers for their guidance and support. We will continue to maintain ourcommitment to stability and reliability, leverage our competitive advantages, expand services and strivefor consistent growth that will contribute to the overall performance of Cathay Financial Holdings.ChairmanDavid P. Sun24

Cathay Financial HoldingsAnnual ReportCompany ProfileCathay Securities Corporation is a member of Cathay Financial Holdings. We have paid-in- capital of US$127 million, 329employees and an operational network composed of a head office, 5 branches, and 29 securities counters. The Company’sbusiness scope encompasses brokerage, proprietary trading, and underwriting as well as the issuance of various financialderivatives such as warrants and structured products.In 2011, we will continue to focus on the following business operations: With respect to retail brokerage, we will collaboratewith distribution channels under the holding company and leverage shared sales forces to offer one-stop financial services; withrespect to institutional brokerages, we will enrich our research reports and expand our base of domestic and foreign institutionalclients. With respect to financial products, we will expand our warrant business and seek steady returns while maintainingstrict risk management, and develop new businesses approved by the regulators in order to develop new sources of profit. Withrespect to underwriting, we will seek to participate in the emerging stock market and expand our fixed-income business. Wewill also seek to strengthen our collaboration with other members of the holding company in order to create maximum valuefor the Cathay Group as a whole.Looking into the future, we will continue to balance financial innovation and disciplined risk management and seek stablereturns and sustainable growth through integrated marketing.WorkforceNo. of employees / 329 Average age / 35.8 Average years of services / 3.225

Cathay Securities CorporationBoard of Directors, Independent Directors, Supervisors and Key ManagersBoard of Directors Name Education ExperienceDavid P. SunM.B.A., Harvard UniversityChairman, Cathay Securities CorporationYao-Cyun, Lai M.A., Tamkang UniversityPresident, Cathay Securities CorporationTsu-Jien Cheng B.A., Hamilton CollegeSenior Vice President, Cathay Securities CorporationJinn-Shing Leou M.A., University of IowaChief Auditor, Cathay Financial HoldingsSu-Jhu LiM.A., University of Central FloridaSenior Vice President, Cathay United BankIndependent DirectorsName Education ExperienceTsing-Yuan Huang Ph.D. Candidate, Business Graduate School, Supervisor, Hon Hai Precision Industry Co., Ltd.Nihon University, JapanAndrew Ming-Jian Kuo M.A., City University of New York, Brooklyn College Vice Chairman, The Blackstone Group (HK) Ltd.SupervisorsName Education ExperienceWan-Chie MaM.A., Tamkang UniversityChairman, Cathay Insurance Co., Ltd (China)Hsin-Hsun Chen Feng Chia UniversitySenior Vice President, Cathay United BankChief Executive Officer Position Name EducationChairman David P. Sun M.B.A., Harvard UniversityKey Managers Position Name EducationPresidentYao-Cyun, LaiM.A., Tamkang UniversitySenior Vice President Tsu-Jien ChengB.A., Hamilton CollegeSongjiang Branch of Cathay Securities opened for business.26

Cathay Financial HoldingsAnnual ReportBusiness Scope1. Securities underwriting2. Dealing of securities on central exchange3. Brokerage trading of securities on central exchange4. Dealing of over-the-counter securities5. Brokerage trading of over-the-counter securities6. Margin financing and stock lending7. Registrar and transfer services8. Introducing futures brokering9. Futures business10. Other securities-related businesses approved by the regulator.2011 Business Plan1.Follow the guiding principle of stable operations in seekingbusiness expansion and integrate and leverage the resources ofCathay Group.2.Conduct business with integrity and honesty and expandbusiness in compliance with Securities and Exchange Act,Regulations Governing Securities Firms and other relevantsecurities rules and regulations.3.Develop and implement internal control and audit systems andstrengthen operations by adopting scientific management.4.Strengthen employee management, including the developmentand training of our employees.5.Strive for efficient cost control to maximize profitability.2011 Operational TargetsNo. of securities accounts: 100,000Cathay Securities upholds the philosophy of “Professional Excellence and Stable Growth.”Cathay Securities participated in the First Taiwan Warrant Contest.27

Overview of Subsidiary CompaniesCathay Venture Inc.Company ProfileThe Company’s main businesses are investing in unlisted companies with growth potential, and assisting in the development ofthose companies for the purpose of maximizing return on investment.Directors, Supervisors, and Key ManagersDirectors and SupervisorsPosition Name EducationChairmanJen-Ho Chang M.Sc., Warwick University (UK)DirectorTzung-Han Tsai J.D., Georgetown UniversityDirectorAlan LeeM.B.A., National Taiwan UniversityDirectorShan-Chi Liu EMBA, National Taiwan UniversityDirectorChuan-Yen Hu M.A., University of Wisconsin, USASupervisors Shun-Yu Chuang M.A., MIT, USAExperienceSenior Vice President, Cathay Life InsuranceExective Vice President, Cathay Financial Holdings,Vice President, Cathay Life InsuranceVice President, Cathay Financial HoldingsVice President, Cathay Life InsurancePresident, Cathay VentureDivision Head, Cathay Financial HoldingsChief Executive Officer and Key ManagersPositionChairmanPresidentNameJen-Ho ChangChuan-Yen HuEducationM.Sc., Warwick University (UK)M.A., University of Wisconsin2010 Revenue Breakdown(thousand USD)ItemManagement consulting feesSecurities sales and investment incomeInterest and other incomeOthersAmount6704,085584,813% of Total13.9384.861.21100.0028

Cathay Financial HoldingsAnnual ReportBusiness ScopeVenture captial.2011 Business Plan1. Investment strategies: discover undervalued companies or companies whichexhibit growth potential by conducting industry research and company visits,nurture invested companies over the long term and realize gain when the time isripe for exit.2. Target stages: Companies mainly in expansion stage or mature stage.3. Target regions: Primarily in the Greater China Area.29

Overseas Branches and OfficesCathay Insurance CompanyCathay Life Insurance Co., Ltd. (China)Shanghai Headquarters11F, No. 88, Jin-Mao Tower, Century Ave., PudongNew Area, Shanghai, PRCZIP: 200121Tel: 86-21-61006168 (mainline)Fax: 86-21-61001682Website: www.cathaylife.cnCathay Life Insurance Co., Ltd.(China)Jiangsu Branch5 F, Huijie Plaza, No. 268, Zhongshan Rd., XuanwiDistrict, Nanjing, Jiangsu, PRCZIP: 210008Tel: 86-25-83718688 (mainline)Fax: 86-25-83197171Cathay Life Insurance Co., Ltd.(China)Zhejiang Branch23 F, Hai Hua Guang Chang, No. 658, Jian GuoNorth Road, Xia Cheng District, Hang Zhou City,Zhejiang Province, PRCZIP: 310004Tel: 86-571-28039899 (mainline)Fax: 86-571-28033189Cathay Life Insurance Co., Ltd.(China)Fujian Branch10F, Guluo Service Center Building, No. 28,Wenquan Garden Rd., Guluo District, Fuzhou,Fujian, PRCZIP: 350003Tel: 86-591-87401668 (mainline)Fax: 86-591-87824373Cathay Life Insurance Co., Ltd.(China)Beijing Branch8F, Joy City, No. A131, Xidan N. St., XichengDistrict, Beijing, PRCZIP: 100032Tel: 86-10-59716818 (mainline)Fax: 86-10-59716001Cathay Life Insurance Co., Ltd.(China)Shandong BranchRoom615, 6F SK Modern City, No. 29,Luoyuan Street, Lower District, Chinan,Shandong Province, PRCZIP: 250014Tel: 86-531-86931688 (mainline)Fax: 86-531-81671169Cathay Life Insurance Co., Ltd.(China)Guangdong Branch5F No. 233, Dongfeng Xi Road, Yuexiu District,Guangzhou City, Guangdong Province, PRC(Qianshu Panfu Building)ZIP: 510180Tel: 86-20-83545288 (mainline)Fax: 86-20-83553405Cathay Life Insurance Co., Ltd.(China)Liaoning Branch14F, N.H.M. International Plaza, No.51, NorthStation Road, Shenhe District, Shenyang, LiaoningProvince, PRCZIP: 110013Tel: 86-24-22566866 (mainline)Fax: 86-24-22566766Cathay Life Insurance Co., Ltd.(China)Tianjin Branch11F, Building B1, Jun Lung Square at No. 85,Nanjing Road, Hoping District, Tianjin, PRCZIP: 300040Tel: 86-22-58366908Fax: 86-22-58366909Beijing Representative OfficeRoom 1008, 10F, No. 88, Capital Times Square,Chang’an W. St., Xicheng District, Beijing, PRCZIP: 100031Tel: 86-10-8391-3425Fax: 86-10-8391-3427Chengdu Representative OfficeRoom 2516, 25 F, Sichuan China ConstructionBank Building, No. 88, Tidu St., Chengdu, SichuanProvince, PRCZIP: 610016Tel: 86-28-86766498Fax: 86-28-86766500Hong Kong Representative OfficeRoom 4706, 47F, Central Plaza, No. 18, HarbourRd., Wanchai, Hong KongTel: 852-2877-5488 ext 123Fax: 852-2527-0966Tokyo Office10F KN Ginza Building, 1-15-6, Ginza, Chou-Ku,TokyoTel: 81-3-3566-3199Fax: 81-3-3566-3099Cathay Life Insurance Co., Ltd.(Ho Chi Minh City Headquarters, Vietnam)The World Center Building9th floor, 46-48-50 Pham Hong Thai Street, District 1,Ho Chi Minh City, VietnamTel: 84-8-6255 6699Fax: 84-8-6255 6399Website: www.cathaylife.com.vne-mail: hotline@cathaylife.com.vnCathay Life Insurance Co., Ltd.Hanoi Branch167 Bui Thi Xuan Street, Hai Ba Trung District,Ha Noi City, VietnamTel: 84-4-6278 7888Fax: 84-4-6278 7887Cathay Life Insurance Co., Ltd.Da Nang Branch6th Floor, Sacombank Building,130-132 Bach DangStreet, Hai Chau District, Da Nang City, VietnamTel: 84-511-6252 888Fax: 84-511-6253 288Cathay Life Insurance Co., Ltd.Can Tho Branch2nd floor, Hanh Phuc Building, Lot 28-33,Pham Ngoc Thach Street, Ninh Kieu District,Can Tho City, VietnamTel: 84-710-625 1999Fax: 84-710-620 0160Cathay Life Insurance Co., Ltd.Dong Nai branch20 Dong Khoi Street, Lot 3, Tam Hoa ward,Bien Hoa, Dong Nai City, VietnamTel: 84-61-629 3558Fax: 84-61-629 2575Cathay Life Insurance Co., Ltd.Hai Phong branch4th floor Sacombank Building, 62- 64Ton Duc Thang Street, Le Chan District,Hai Phong City, VietnamTel: 84-31-625 5160Fax: 84-31-625 5150Hanoi Representative Office167 Bui Thi Xuan Street, Hai Ba Trung District,Ha Noi City, VietnamTel: 84-4-6278 7888Fax: 84-4-6278 788730

Cathay Financial HoldingsAnnual ReportCathay United Bank Co., Ltd.Los Angeles Agency725, S. Figueroa Street, Suite 4150, Los Angeles,CA 90017-5441 U.S.A.Tel: 1-213-2431234Fax: 1-213-627-6817Labuan Branch, MalaysiaLevel 3(C), Main Office Tower,Financial Park Labuan Complex Jalan Merdeka,87000, Labuan F.T, MalaysiaTel: 60-87-452-16860-87-453-168Fax: 60-87-453-678Hong Kong BranchSuite 4706, 47th Floor, Central Plaza,18 Harbour Road,Wanchai Hong KongTel: 852-2877-5488Fax: 852-2527-0966852-2802-8358Chu Lai Branch, VietnamNo. 123, Tran Quy Cap, Tam Ky City,Quang Nam Province, VietnamTel: 845-1038-13035~42Fax: 845-1038-13043~44Singapore Branch6 Raffles Quay, #20-06, Singapore 048580Tel: 65-6593-9280Fax: 65-6324-1959Manila Representative OfficeUnit 5A, 5/F,Citibank Center 8741 Paseo de RoxasMakati City 1200,Metro Manila PhilippinesTel: 63-2-751-1161Fax: 63-2-751-1163Kuala Lumpur Marketing OfficeLot 13A, 13th Floor, UBN Tower 10,Jalan P. Ramlee 50250 Kuala Lumpur MalaysiaTel: 60-3-2070-6729Fax: 60-3-2078-9057Bangkok Representative Office13th Fl, Sathorn City Tower, No. 175 SouthSathorn Road, Tungmahamek Sathorn,Bangkok 10120, ThailandTel: 66-2-679-531666-2-679-5317Fax: 66-2-679-5318Shanghai BranchSuite 1905, BEA Finance Tower,66 Huayuanshiqiao Rd., Shanghai, PRCPostal code: 200120Tel: 86-21-6886-3785Fax: 86-21-6886-3787Hanoi Representative Office7F, 88 Hai Ba Trung Street,Hoan Kiem District, Hanoi, VietnamTel: 844-3936-6566844-3936-6567Fax: 844-3936-6568HCMC Representative Office5F, 46-48 Pham Hong Thai Street,District 1, Ho Chi Minh City, VietnamTel: 848-3825-8761848-3825-8762848-3825-8763Fax: 848-3825-8700Cathay Century InsuranceCathay Insurance Co., Ltd.(China)Shanghai HeadquartersThe Center, 30F, No.989, Chang Le Rd.,Shanghai, PRCZIP: 200031Tel: 86-21-61032288Fax: 86-21-61032289Cathay Insurance Co., Ltd. (China)Jiangsu Branch6 F, Huijie Plaza, No. 268, Zhongshan Rd.,Xuanwi District, Nanjing, Jiangsu, PRCZIP: 210008Tel: 86-25-83715188Fax: 86-25-83199288Cathay Insurance Co., Ltd. (China)Kunshan Sales Office10 F, Chuang Ye Building, No. 180, Qian JinZhong Rd., Kunshan, Jiangsu, PRCZIP: 215300Tel: 86-512-57300300Fax: 86- 512-57302588Cathay Insurance Co., Ltd. (China)Fujian Branch22F, Zhidi Plaza, No.89 Wusi Rd., Gulo District,Fuzhou, Fujian, PRCZIP: 350003Tel: 86-591-87275828Fax: 86-591-87273066Cathay Insurance Co., Ltd. (China)Xiamen Sales Office20F, Zhong Min Tower, No. 72, Hu Bin North Road,Si Ming District, Xiamen, PRCZIP: 361012Tel: 86-592-5370288Fax: 86-592-5066160Cathay Insurance Co., Ltd. (China)Guangdong BranchRoom 1002,10 F, Qianshu Panfu Building,No. 233, Dongfeng Xi Road, Guangzhou City,Guangdong Province, PRCZIP: 510180Tel: 86-20-83960060Fax: 86-20-83543392Cathay Insurance Co., Ltd. (China)Zhejiang BranchWest 1 F, Yong Tong Sin Si plaza No. 147,Huan Cheng North Road, Xia Cheng District,Hang Zhou City, Zhejiang Province, PRCZIP: 310006Tel: 86-571-28072288Fax: 86-571-28172188Cathay Insurance Co., Ltd.(Ho Chi Minh City Headquarters, Vietnam)6F, 46 -48- 50 Pham Hong Thai Str.,Ben Thanh Ward, Dist.1, HCMC, VietnamTel: 84-8-62888385Fax: 84-8-6290983831

Jiangsu Branch of Cathay Insurance (China) opened for business.The Year in Review 2010Tianjin Branch of Cathay Life (China) opened for business.Indovina Bank and The Export-Import Bank of theRepublic China signed a refiinancing agreement.JanuaryJiangsu Branch of Cathay Insurance (China) opened for business.The Export-Import Bank of the Republic of China signed arefinancing agreement with Indovina Bank.FebruaryHong Kong Branch of Cathay United Bank launched RMBservices.Thien Long Transaction Office of Hanai Branch and My DinhTransaction Office of Dong Da Branch, a subsidiary of CathayUnited Bank opened for business.MarchCathay Life launched VIP service with SOS as the first companyin the industry to offer Express Customs Service at China airports.Cathay United Bank and Chinese Professional Baseball Leaguesigned a trust agreement, which makes Cathay United Bank as asale trustee for the Anti-Gambling fund and pension fund of theprofessional baseball players in Taiwan.Ly Thuong Kiet Trancaction office of Tan Binh Branch ofIndovina Bank opened for business.AprilCathay Life held its 2010 Sales Conference and Summit.The Dongnai Branch of Cathay Life (Vietnam) opened forbusiness.Cathay Financial Holdings named Dr. Chung-Ming Kuan ofNational Taiwan University as chief economic advisor.Cathay Financial Holdings and National Taiwan University helda press conference to announce the creation of a macroeconomicindicator- “Monthly GDP.”Cathay United Bank Culture and charity Foundation held thedonation ceremony for 2010 “Big Tree Project”(Ⅰ), offeringfinancial aid for underprivileged students.Cathay United Bank Culture and Charity Foundation hosted 2010“Eternal Classics Super Star Concert”(Ⅰ) for the Plaza 7 seriesactivities.MayCathay United Bank together with Indovina Bank signed asyndicated loan agreement with Tan Cang - Cai Mep InternationalTerminal Company Limited.Fujian Branch of Cathay Insurance (China) opened for business.Cathay Life received the ISO 10002 certification from SGSTaiwan, the first company in Taiwan that passed the certificationon ISO 10002 on complaint management system.Guangdong Branch of Cathay Insurance (China) receivedapproval for establishment.Cathay Insurance (Vietnam) received approval for establishment.Cathay Century Insurance held an “Earthquake Loss PreventionSeminar” in Taoyuan.Duong Hoang Trancaction office of Da Nang Branch of IndovinaBank opened for business.JuneCathay United Bank acted as the leading bank of syndicated loanto Horizon Securities.Cathay United Bank acted as the leading bank of syndicated loanto Mayfull Co.Cathay Financial Holdings held the 2010 shareholders’ meeting.JulyCathay Life held the first “Cathay Walk Day” activity.Cathay Financial Holdings sponsored the charity basketball game“2010 NBA, China and Taiwan Basketball Superstar CharityGame.”Cathay United Bank led its peers in introducing “My MobiBank”services that offers designated account transfer and accountinquiry services.Le Trong Tan Trancaction office of Hanoi Branch and NguyenTri Phuong Trancaction office of Da Nang Branch of IndovinaBank opened for business.32

Cathay Financial HoldingsAnnual ReportCathay United Bank won the honorary mention in the “Best Risk Management”Jiangsu Branch of Cathay Insurance (China) opened for business.Management” category of the Fifth Taiwan Outstanding Financial Elites Award.Cathay United Bank’s “Big Tree Project” made donations.Credit Ratings ★★★CompanyCathay Financial HoldingsCathay LifeCathay United BankCathay Century InsuranceCathay SecuritiesAugustKunshan Sales Office of Cathay Insurance (China) receivedapproval to open for business, and Jejiang Branch receivedapproval for establishment.Cathay Life Insurance won the bid for Taiwan Student GroupInsurance for 2010 School Year, which provides coverageto students from high school down to children in registeredchildcare facilities in Taiwan, the fifth consecutive year CathayLife underwrites the insurance.Cathay Securities participated in the First Taiwan WarrantContest (hosted by Commercial Times).Cathay Century Insurance hosted a “Engineering InsurancePlanning, Purchase and Claims Seminar” at National TaiwanUniversity of Science and Technology.Financial Supervisory Commission approved the application ofCathay United Bank to set up a branch in Shanghai.Trang Bom Tracaction office of Dong Nai of Dongnai Branch ofIndovina Bank, the 35th office in Vietnam opened for business.SeptemberMoody’sBaa1S&PBBB+Taiwan RatingstwAAA3A2/P-1A2N.A.A-A-/A-2A-N.A.twAA+twAA+/twA-1+twAA+twA+★ Up to date as of December 31, 2010Cathay Financial Holdings sponsored the performance of CloudGate Dance Theater in Hangzhou, China.Cathay Financial Holdings donated through Red Cross Taiwan1,000,000 RMB to help the victims of August 8 mudslide inGansu Province, China rebuild their homes. The donationceremony took place on September 11.Cathay United Bank acted as the leading bank of syndicated loanto Alliance International Development Corporation.Cathay United Bank Culture and Charity Foundation hosted“Eternal Classics Super Star Concert”(Ⅱ) for the Plaza 7 seriesactivies.Cathay Financial Holdings sponsored the Shanghai tour ofEvergreen Symphony OrchestraOctoberHai phong Branch of Cathay Life (Vietnam) opened for business.Cathay United Bank acted as the leading bank of syndicated loanto Shinkong Synthetic Fiber Corp.Cathay United Bank received the approval of China BankingRegulatory Commission to set up a branch in Shanghai.Hong Kong Branch of Cathay United Bank offered new RMBservices, including RMB financing and inter-bank transactions.Cathay United Bank continues with the “Big Tree Project inVietnam” and donated $600 million Vietnamese Dongs in Marchand October respectively to help underprivileged students inQuang Nam Province and Ho Chi Minh City.Cathay United Bank Culture and Charity Foundation held thedonation ceremony for 2010 “Big Tree Project(Ⅱ)”, offeringfinancial aid for underprivileged students.Guangdong Branch of Cathay Insurance (China) receivedapproval to open for business.Cathay United Bank won the 2nd Prize of “Excellence inStability of Fund Transfer System with Financial XML Service”in the “Promotion for National Payment Platform and FinancialXML Service” competition held by The Bankers Association ofthe Republic of China (BAROC).NovemberCathay Insurance (Vietnam) received operation permit fromVietnam’s Ministry of Finance.Xiamen Sales Office of Cathay Insurance (China) receivedapproval to open for business.Cathay Century Insurance hosted a “Building Fire SafetySeminar” in Taoyuan.Cathay United Bank launched the first “Mutual Fund InvestmentTrust Platform” in Taiwan that integrates the financial servicesand provide more protection to mutual fund investors.Cathay United Bank received the approval of InvestmentCommission under the Ministry of Economic Affairs to set up abranch in Shanghai.DecemberTianjin Branch of Cathay Life (China) opened for business.Cathay Insurance (Vietnam) opened for business.Guangdong Branch of Cathay Insurance (China) opened forbusiness.The Shanghai Branch of Cathay United Bank received theapproval of China Banking Regulatory Commission to open forbusiness.Cathay United Bank was honored with three awards including“Excellence in Smart Pay Transaction Volume”, “Excellence inSmart Pay Online Store Deal”, and “Special Contribution Awardof Service Promotion” in the competition for “Smart Pay ServicePromotion” held by The Bankers Association of the Republic ofChina(BAROC).33

Honors and AccoladesJanuaryFebruaryMarchAprilMayJuneJulyAugustSeptemberOctoberNovemberDecember■ Cathay Financial Holdings received the IR magazine’s “Taiwan Best Annual Report and Disclosure” Award.■ In the Ideal Brand Survey 2010 by Management Magazine, Cathay Life was the #1 ideal brand for the 11th consecutive year; Cathay Financial Holdingsand Cathay Century Insurance also remained in first place.■ In the “2010 Best Life Insurance Company” survey by Modern Insurance, Health and Wealth Management Magazine, Cathay Life was ranked No. 1 byconsumers as “The Most Recommended”, “The Best Claims Service”, “The Best Sales Agent”, and “The Most Highly Recognized.”■ Cathay Financial Holdings was recognized as the “2010 Organizations with Contribution to Tourism” by the Tourism Bureau, the only organization inthe banking and insurance industry to win this accolade.■ In Global Views Magazine’s “Wealth Management Survey”:◆ Cathay Financial Holdings was No. 1 in “Financial Holding Companies by Image” for the sixth consecutive year(2004~2009).◆ Cathay United Bank was No. 1 in “Most Recommended Bank for Wealth Management by Wealth Management Clients” for the third consecutive year.■ Cathay Financial Holdings Chairman Hong-Tu Tsai was honored by Forbes Asia as “48 Heroes of Philanthropy.”■ Cathay United Bank was named Best Retail Bank in Taiwan in 2008 by the Asian Banker Excellence in Retail Financial Services Award 2009.■ Cathay Charity Foundation was recognized as “Outstanding Organization in Blood Donation” by Taiwan Blood Services Foundation for the ninthconsecutive year.■ Cathay Life received the ISO 10002 certification from SGS Taiwan, the first company in Taiwan that passed the certification on ISO 10002 on complaintmanagement system.■ Cathay Life Insurance ranked #1 in Top 100 Financial Institutions in Taiwan 2010 in Common Wealth Magazine’s Top 1000 Enterprises Survey.■ Cathay Financial Holdings ranked #1 among financial institutions in Taiwan (in terms of total market value) in Top 1000 Companies in Greater China byBusiness Today Weekly.■ Cathay Financial Holdings was on the list of Financial Times Global 500, the only financial service company in Taiwan listed.■ Cathay United Bank was selected “Outstanding Enterprise in Self-Management of Workplace Safety and Health” in the “2010 Labor Safety Awards”of the Labor Standards Inspection Office Taipei City Government two years consecutively, the only bank in the domestic banking industry to win thisspecial honor.■ Cathay Life was named the champion of “Yahoo! Taiwan Brand Awards” in the category of insurance company.■ Cathay Life was again recognized by consumers to win the gold medal in the Trust Brand Survey of Readers Digest published in 2010for the 7th consecutive year.■ The Indovina Bank was recommended by the Central Bank of Vietnam to Vietnam’s Presidential Office for 2007 ~ 2009 ExcellenceAward in Banking.■ Cathay Life ranked No. 281 in Fortune Magazine’s 2010 Global 500 , the only financial company in Taiwan on the list.■ Cathay Financial Holdings was recognized in the “Tenth Arts and Business Award” of the Council for Cultural Affairs:◆ Cathay Financial Holdings and Cathay United Bank won the gold medal; Cathay Life won the gold medal ten times in a row.◆ Cathay Real Estate Development Co. also won a bronze medal.■ Cathay Life was named “Best Insurance Company in Taiwan 2010” by the internationally renowned World Finance.■ Cathay Life received “The Second Sports Contribution Award” in sponsorship and promotional effort categoriesfrom the Sports Affairs Council.■ Cathay Life’s nursery room received “Outstanding Nursery Room Certification” from Taipei CityGovernment.■ Cathay Life won the “Health Excellence Award” in the “2010 Workplace Health Self-AccreditationProgram” of Taipei City Government.■ Cathay Life passed the Taiwan TrainQuali System (TTQS) evaluation of Bureau of Employment andVocational Training, Council of Labor Affairs, the first life insurance company in the country that haspassed the TTQS evaluation.■ Cathay Life was again number one life insurance company in the third “Ideal Brands for BusinessPeople” survey conducted by Taiwan’s Business Today.■ Cathay Bank ranked second among privately-owned banks by loan balance according to the statisticspublished by the Banking Bureau.■ Cathay United Bank won honorable mention in the “Best Risk Management” category of “The FifthTaiwan Banking and Finance Best Practice Awards” conferred by Taiwan Acadmy of Banking and Finance.■ Cathay Life received the double accolades of “Gold Security Award” and “Gold Quality Award” from JointCredit Information Center.■ The Corporate Banking Division of Cathay United Bank won the annual “Golden Eagle Award” for customer loyaltyin the “Banking Service, Capital and Innovative Service” survey of China Productivity Center.■ Cathay United Bank ranked 5th among privately-owned banks in Bloomberg’s “2010 Taiwan’s Syndicated Loan Providers.”34

2010201020102010201020102010Financial Report35

Independent Auditors' Report .................................................................... 37Consolidated Balance Sheets ..................................................................... 38Consolidated Statements of Income ......................................................... 39Consolidated Statements of Changes in Stockholders' Equity ............. 40Consolidated Statements of Cash Flows ................................................. 41Parent company financial statements ................................................. 42-45The major subsidiaries' condensed balance sheets andstatements of income ........................................................................... 46-5636

English Translation of Report Originally Issued in ChineseIndependent Auditors’ ReportTo:Board of DirectorsCathay Financial Holding Co., Ltd.We have audited the accompanying consolidated balance sheets of Cathay Financial Holding Co., Ltd. (the“Company”) and its subsidiaries (“Subsidiaries”) as of December 31, 2009 and 2010, and the related consolidatedstatements of income, changes in stockholders’ equity and cash flows for the years ended. These consolidatedfinancial statements are the responsibility of the Company’s management. Our responsibility is to express an opinionon these consolidated financial statements based on our audits.We conducted our audits in accordance with generally accepted auditing standards in the Republic of China andGuidelines for Certified Public Accountants’ Examination and Reporting on Financial Statements. Those standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether the financial statements arefree of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts anddisclosures in the financial statement. An audit also includes assessing the accounting principles used and significantestimates made by management, as well as evaluating the overall financial statement presentation. We believe thatour audits provide a reasonable basis for our opinion.In our opinion, the consolidated financial statements referred to above present fairly, in all material respects,the financial position of the Company and Subsidiaries as of December 31, 2009 and 2010, and the results of itsoperations and its cash flows for the years ended in conformity with Requirements of the Guidelines Governing thePreparation of Financial Reports by Securities Issuers, Guidelines Governing the Preparation of Financial Reports byFinancial Holding Companies and generally accepted accounting principles in the Republic of China.Ernst & YoungTaipei, TaiwanThe Republic of ChinaMarch 9, 2011Notice to ReadersThe accompanying consolidated financial statements are intended only to present the financial position, results ofoperations and cash flows in accordance with accounting principles and practices generally accepted in the Republicof China and not those of any other jurisdiction. The standards, procedures and practices to audit such consolidatedfinancial statements are those generally accepted and applied in the Republic of China.37

2010Financial Report2010 2010English Translation of Financial Statements Originally Issued in ChineseCathay Financial Holding Co., Ltd. and SubsidiariesConsolidated Balance SheetsAs of December 31, 2009 and 2010(Expressed in thousands of dollars)December 31, 2009 December 31, 2010NT $ US $ NT $ US $AssetsCash and cash equivalents $644,422,576 $20,169,721 $643,534,846 $22,084,243Due from the Central Bank and call loans to banks 79,124,653 2,476,515 99,059,544 3,399,435Financial assets at fair value through profit or loss 143,643,937 4,495,898 170,120,430 5,838,038Securities purchased under agreements to resell 43,401,815 1,358,429 48,984,493 1,681,005Receivables -net 99,153,661 3,103,401 128,356,622 4,404,826Loans -net 1,328,382,255 41,576,909 1,383,494,210 47,477,495Available-for-sale financial assets -net 553,416,933 17,321,344 661,992,457 22,717,655Held-to-maturity financial assets -net 672,357,520 21,044,054 631,827,811 21,682,492Investments under equity method 2,505,287 78,413 2,500,997 85,827Other financial assets -net 67,685,776 2,118,491 52,307,393 1,795,037Investments in debt securities with no active market 177,544,458 5,556,947 371,297,943 12,741,865Separate account products assets 274,311,184 8,585,639 269,250,514 9,239,894Investments in real estate 117,426,032 3,675,306 126,428,907 4,338,672Property and equipment -net 39,657,723 1,241,243 37,940,551 1,302,009Goodwill and intangible assets -net 8,227,881 257,524 8,390,821 287,949Other assets -net 44,274,330 1,385,738 53,449,920 1,834,246Total assets $4,295,536,021 $134,445,572 $4,688,937,459 $160,910,688Liabilities & stockholders' equityLiabilitiesDue to the Central Bank and call loans from banks $45,571,009 $1,426,323 $45,351,211 $1,556,321Bankers acceptances and funds borrowed 1,601,500 50,125 1,456,500 49,983Commercial paper payable 1,170,000 36,620 1,450,000 49,760Financial liabilities at fair value through profit or loss 26,703,247 835,782 23,795,837 816,604Securities sold under agreements to repurchase 8,745,465 273,723 22,139,556 759,765Payables 38,143,397 1,193,847 81,645,082 2,801,822Deposits 1,288,413,420 40,325,929 1,337,174,083 45,887,923Bonds payable 56,437,209 1,766,423 58,654,684 2,012,858Other borrowings 300,000 9,390 - -Other financial liabilities 269,216 8,426 191,601 6,575Separate account products liabilities 274,311,184 8,585,639 269,250,514 9,239,894Reserve for operations and liabilities 2,328,637,481 72,883,802 2,613,983,437 89,704,305Other liabilities 9,809,725 307,034 11,370,278 390,195Total liabilities 4,080,112,853 127,703,063 4,466,462,783 153,276,005Stockholders' Equity attributable to equity holders of the parentStockCommon stock 96,708,774 3,026,879 101,544,213 3,484,702Capital surplus 78,240,933 2,448,855 78,508,148 2,694,171Retained earningsLegal reserve 12,540,295 392,498 13,645,400 468,270Special reserve 7,107,732 222,464 - -Unappropriated retained earnings 11,051,057 345,886 11,716,176 402,065Other stockholders' equityLand revaluation increment 1,461 46 1,461 50Cumulative conversion adjustments 4,444 139 (893,051) (30,647)Unrealized gains or losses on financial instruments 6,547,332 204,924 14,672,596 503,521Net loss not yet recognized as net pension cost (6,791) (213) (650,993) (22,340)Total stockholder's equity attributable to equity holders of the parent 212,195,237 6,641,478 218,543,950 7,499,792Minority interest 3,227,931 101,031 3,930,726 134,891Total stockholders' equity 215,423,168 6,742,509 222,474,676 7,634,683Total liabilities and stockholders' equity $4,295,536,021 $134,445,572 $4,688,937,459 $160,910,688(The exchange rates provided by the Federal Reserve Bank of New York on December 31, 2009 and 2010 were NT$31.95 and NT$29.14 to US$1.00,respectively)38

Cathay Financial HoldingsAnnual ReportEnglish Translation of Financial Statements Originally Issued in ChineseCathay Financial Holding Co., Ltd. and SubsidiariesConsolidated Statements of IncomeFor the years ended December 31, 2009 and 2010(Expressed in thousands of dollars, except earnings per share)2009 2010NT $ US $ NT $ US $Interest income $99,534,032 $3,115,306 $102,405,387 $3,514,255Less: Interest expenses (11,604,601) (363,211) (9,670,068) (331,849)Net interest income 87,929,431 2,752,095 92,735,319 3,182,406Net income other than interestNet commission and handling fee 1,870,210 58,536 184,742 6,340Net premiums from insurance business 223,192,764 6,985,689 236,595,977 8,119,285Gains on financial assets and liabilities at fair value20,557,813 643,437 61,944,679 2,125,761through profit or lossRealized gains on available-for-sale financial assets 3,286,871 102,875 26,174,834 898,244Realized gains (losses) on held-to-maturity financial assets 1,900,726 59,491 (444,960) (15,270)Gains on investments under equity method 311,837 9,760 195,548 6,711Gains on investments in real estate 6,253,074 195,714 5,482,035 188,127Losses on foreign exchange (18,701,596) (585,339) (83,640,690) (2,870,305)Impairment losses (971,525) (30,408) (75,107) (2,577)Net other non-interest (losses) gains (2,825,547) (88,437) 4,840,053 166,097Total income 322,804,058 10,103,413 343,992,430 11,804,819Bad debt expenses (3,451) (108) - -Provision for premiums reserve (252,371,298) (7,898,945) (284,463,658) (9,761,965)Operating expensesPersonnel expenses (39,339,997) (1,231,299) (41,291,104) (1,416,990)Depreciation and amortizations expenses (4,110,485) (128,653) (4,145,218) (142,252)Other general and administration expenses (10,679,280) (334,250) (11,501,448) (394,696)Income from continuing operations before income taxes 16,299,547 510,158 2,591,002 88,916Income taxes (expense) benefit (5,467,666) (171,132) 1,717,242 58,931Income from continuing operations after income taxes 10,831,881 339,026 4,308,244 147,847Consolidated net income $10,831,881 $339,026 $4,308,244 $147,847Include:Parent company $11,051,057 $345,886 $4,600,585 $157,879Minority interest (219,176) (6,860) (292,341) (10,032)Consolidated net income $10,831,881 $339,026 $4,308,244 $147,847Earnings per share (expressed in dollars) :Primary earnings per share:Before taxes After taxes Before taxes After taxes Before taxes After taxes Before taxes After taxesIncome from continuing operations $1.61 $1.07 $0.05 $0.03 $0.26 $0.42 $0.01 $0.01Consolidated net income $1.61 $1.07 $0.05 $0.03 $0.26 $0.42 $0.01 $0.01(The exchange rates provided by the Federal Reserve Bank of New York on December 31, 2009 and 2010 were NT$31.95 and NT$29.14 to US$1.00,respectively)39

2010 2010 2010Financial ReportCathay Financial HoldingsAnnual ReportEnglish Translation of Financial Statements Originally Issued in ChineseCathay Financial Holding Co., Ltd. and SubsidiariesConsolidated Statements of Changes in Stockholders' EquityFor the years ended December 31, 2009 and 2010(Expressed in thousands of dollars)Stock Retained earnings Other stockholders' equitySummaryCommon stock Capital surplus Legal reserve Special reserveUnappropriatedretained earningsLand revaluationincrementCumulative conversionadjustmentsUnrealized gains or losses onfinancial instrumentsTreasury stockNet loss not yet recognizedas net pension costMinority interestTotalNT $ US $ NT $ US $ NT $ US $ NT $ US $ NT $ US $ NT $ US $ NT $ US $ NT $ US $ NT $ US $ NT $ US $ NT $ US $ NT $ US $Balance on January 1, 2009 $97,375,372 $3,047,743 $81,971,213 $2,565,609 $12,320,672 $385,624 $- $- $7,060,140 $220,974 $2,106 $66 $344,257 $10,775 ($52,309,533) ($1,637,231) $(4,140,047) $(129,579) $(270,687) $(8,472) $3,145,462 $98,450 $145,498,955 $4,553,959Minority interest 301,645 9,441 301,645 9,441Appropriations and distribution for 2008Legal reserve 219,623 6,874 (219,623) (6,874) - -Special reserve (267,215) (8,364) 7,107,732 222,464 (6,840,517) (214,100) - -Land revaluation increment (645) (20) (645) (20)Capital surplus 386 12 386 12Cumulative conversion adjustments (339,813) (10,636) (339,813) (10,636)Unrealized gains or losses of financial instruments 58,856,865 1,842,155 58,856,865 1,842,155Cancellation of treasury stock (666,598) (20,864) (3,473,449) (108,715) 4,140,047 129,579 - -Net loss not yet recognized as net pension cost 263,896 8,259 263,896 8,259Other capital surplus 9,998 313 9,998 313Consolidated net income (loss) for the yearended December 31, 200911,051,057 345,886 (219,176) (6,860) 10,831,881 339,026Balance on December 31, 2009 $96,708,774 $3,026,879 $78,240,933 $2,448,855 $12,540,295 $392,498 $7,107,732 $222,464 $11,051,057 $345,886 $1,461 $46 $4,444 $139 $6,547,332 $204,924 $- $- $(6,791) $(213) $3,227,931 $101,031 $215,423,168 $6,742,509Balance on January 1, 2010 $96,708,774 $3,318,764 $78,240,933 $2,685,001 $12,540,295 $430,346 $7,107,732 $243,917 $11,051,057 $379,239 $1,461 $50 $4,444 $153 $6,547,332 $224,685 $- $- $(6,791) $(233) $3,227,931 $110,773 $215,423,168 $7,392,695Minority interest 995,136 34,150 995,136 34,150Appropriations and distribution for 2009Legal reserve 1,105,105 37,924 (1,105,105) (37,924) - -Special reserve 267,215 9,170 (7,107,732) (243,917) 6,840,517 234,747 - -Cash dividend (4,835,439) (165,938) (4,835,439) (165,938)Stock dividend 4,835,439 165,938 (4,835,439) (165,938) - -Cumulative conversion adjustments (897,495) (30,800) (897,495) (30,800)Unrealized gains or losses of financial instruments 8,125,264 278,836 8,125,264 278,836Net loss not yet recognized as net pension cost (644,202) (22,107) (644,202) (22,107)Consolidated net income (loss) for the yearended December 31, 20104,600,585 157,879 (292,341) (10,032) 4,308,244 147,847Balance on December 31, 2010 $101,544,213 $3,484,702 $78,508,148 $2,694,171 $13,645,400 $468,270 $- $- $11,716,176 $402,065 $1,461 $50 $(893,051) $(30,647) $14,672,596 $503,521 $- $- $(650,993) $(22,340) $3,930,726 $134,891 $222,474,676 $7,634,683Note: The remuneration of directors and supervisors NT $5,400 (US$169) thousands, employee bonusNT $968 (US$30) thousands were recorded as operating cost and expense in 2009.(The exchange rates provided by the Federal Reserve Bank of New York on December 31, 2009 and 2010 were NT$31.95 and NT$29.14 to US$1.00,respectively)40

Cathay Financial HoldingsAnnual ReportEnglish Translation of Financial Statements Originally Issued in ChineseCathay Financial Holding Co., Ltd. and SubsidiariesConsolidated Statements of Cash FlowsFor the years ended December 31, 2009 and 2010(Expressed in thousands of dollars)2009 2010NT $ US $ NT $ US $Cash flows from operating activitiesConsolidated net income $10,831,881 $339,026 $4,308,244 $147,847Adjustments:Income and other adjustments with no cash flow effectsDepreciation and amortization expenses 4,110,485 128,653 4,145,218 142,252Investment income recognized by equity method (more) less than(35,162) (1,100) 147,160 5,050cash dividends receivedBad debt expenses 3,451 108 - -Provision for premiums reserve from insurance business 252,371,298 7,898,945 284,463,658 9,761,965Gain on disposal of property and equipment (999,961) (31,298) (1,198,961) (41,145)Impairment loss 971,525 30,408 75,107 2,577Other adjustments (559,680) (17,517) (824,579) (28,297)Decrease (increase) on operating assets and liabilitiesIncrease in receivables (6,449,192) (201,852) (29,180,152) (1,001,378)Decrease(increase) in deferred income tax assets 2,988,739 93,544 (2,671,653) (91,683)Increase in financial assets at fair value through profit or loss (16,714,728) (523,153) (26,732,035) (917,366)Increase in other financial assets (3,437,815) (107,600) (3,838,057) (131,711)(Increase) decrease in other assets (6,189,697) (193,731) 976,519 33,511Increase in payables 3,095,426 96,884 43,218,252 1,483,125Decrease in financial liabilities at fair value through profit or loss (46,481,527) (1,454,821) (2,896,426) (99,397)Increase (decrease) in deferred income tax liabilities 1,144,167 35,811 (1,270,728) (43,608)Decrease in other financial liabilities (123,254) (3,858) (55,892) (1,918)Increase in other liabilities 1,029,728 32,230 3,350,233 114,970Net cash provided by operating activities 195,555,684 6,120,679 272,015,908 9,334,794Cash flows from investing activitiesDecrease in restricted assets 83,000 2,598 - -Decrease (increase) in loans 34,838,822 1,090,417 (56,737,397) (1,947,063)Increase in due from the Central Bank and call loans to banks (31,517,238) (986,455) (21,152,810) (725,903)Increase in available-for-sale financial assets (7,564,968) (236,775) (101,280,765) (3,475,661)(Increase) decrease in held-to-maturity financial assets (19,030,527) (595,635) 40,224,262 1,380,380Decrease in investments under equity method 430,142 13,463 62,937 2,160Increase investments in real estate (8,834,105) (276,498) (10,568,012) (362,664)(Acquisition) disposal of property and equipment (1,292,650) (40,459) 1,541,762 52,909Increase in securities purchased under agreements to resell (31,653,568) (990,722) (5,582,678) (191,581)Increase in other financial assets (77,082,740) (2,412,605) (182,015,315) (6,246,236)Decrease (increase) in other assets 1,336,252 41,823 (148,030) (5,080)Net cash used in investing activities (140,287,580) (4,390,848) (335,656,046) (11,518,739)Cash flows from financing activitiesDecrease in due to the Central Bank and call loans from banks (17,740,144) (555,247) (5,506,625) (188,971)Increase in deposits 198,363,169 6,208,550 50,294,577 1,725,964(Decrease) increase in securities sold under agreements to repurchase (11,555,174) (361,664) 13,394,091 459,646Increase in banker's acceptances and funds borrowed 417,948 13,081 5,753,200 197,433Increase in bonds payable 17,571,231 549,960 2,457,084 84,320Increase (decrease) in other financial liabilities 1,035,449 32,409 (80,098) (2,749)Increase in other liabilities 257,889 8,072 530,969 18,222Cash dividends (170,601) (5,340) (4,978,300) (170,841)Increase in minority stockholders 229,954 7,197 1,536,589 52,731Net cash provided by financing activities 188,409,721 5,897,018 63,401,487 2,175,755Effects of exchange rate changes (300,833) (9,416) (649,079) (22,275)Effects on merger of subsidiaries 58,782 1,840 - -Increase (decrease) in cash and cash equivalents 243,435,774 7,619,273 (887,730) (30,465)Cash and cash equivalents at the beginning of period 400,986,802 12,550,448 644,422,576 22,114,708Cash and cash equivalents at the end of period $644,422,576 $20,169,721 $643,534,846 $22,084,243Supplemental disclosure of cash flows informationInterest paid during the period (excluding capitalized interest) $13,284,478 $415,790 $8,814,069 $302,473Income tax paid $2,291,530 $71,722 $1,796,408 $61,647Investing and financing activities with no cash flow effectsReclassification of property and equipment to other assets $- $- $107,377 $3,685(The exchange rates provided by the Federal Reserve Bank of New York on December 31, 2009 and 2010 were NT$31.95 and NT$29.14 to US$1.00, respectively)41

Cathay Financial HoldingsAnnual ReportEnglish Translation of Financial Statements Originally Issued in ChineseCathay Financial Holding Co., Ltd.Audited Statements of IncomeFor the years ended December 31, 2009 and 2010(Expressed in thousands of dollars, except earnings per share)2009 2010NT $ US $ NT $ US $IncomeGain on investment-equity method $12,184,272 $381,355 $5,331,619 $182,966Gain on foreign exchange 8 - - -Other operating income 61,095 1,912 59,358 2,037Total income 12,245,375 383,267 5,390,977 185,003Expenses and lossInterest income 553,282 17,317 868,994 29,821Less: interest expenses (751,896) (23,534) (1,154,629) (39,623)Net interest income (198,614) (6,217) (285,635) (9,802)Losses on foreign exchange - - (128) (4)Operating expenses (318,836) (9,979) (328,544) (11,275)Income from continuing operations before income taxes 11,727,925 367,071 4,776,670 163,922Income taxes expense (676,868) (21,185) (176,085) (6,043)Net income $11,051,057 $345,886 $4,600,585 $157,879Earnings per share (expressed in dollars)Primary earnings per share: Before taxes After taxes Before taxes After taxes Before taxes After taxes Before taxes After taxesNet income $1.15 $1.09 $0.04 $0.03 $0.47 $0.45 $0.02 $0.0243

Cathay Financial HoldingsAnnual ReportEnglish Translation of Financial Statements Originally Issued in ChineseCathay Financial Holding Co., Ltd.Auited Statements of Cash FlowsFor the years ended December 31, 2009 and 2010(Expressed in thousands of dollars)2009 2010NT $ US $ NT $ US $Cash flows from operating activitiesNet income $11,051,057 $345,886 $4,600,585 $157,879Adjustments:Income and other adjustments with no cash flow effectsAmortizations 533 17 62 2Depreciation 1,003 31 972 33Losses on disposal of property and equipment 205 6 382 13Investment income recognized by equity method(more)less than cash dividends received (12,132,072) (379,721) 4,071,720 139,730Effects of exchange rate changes (8) - 128 4Changes in operating assets and liabilitiesIncrease in accounts receivable (2,605,528) (81,550) (999,900) (34,313)(Increase) decrease in deferred income tax assets (70,616) (2,210) 326,098 11,191(Increase) decrease in other assets (117) (4) 65 2Increase (decrease) in accounts payable 2,657,150 83,166 (161,893) (5,556)Increase in income tax payable - - 740,665 25,417Decrease in deferred income tax liabilities (3) - (3) -Increase in other liabilities 4,211 132 7,969 274Net cash(used in) provided by operating activities (1,094,185) (34,247) 8,586,850 294,676Cash flows from investing activitiesAcquisition of held-to-maturity financial assets (10,000,000) (312,989) - -Acquisition of property and equipment (764) (24) (1,677) (58)Acquisition of intangible assets - - (185) (6)Increase in refundable deposit (24) (1) (123) (4)Net cash used in investing activities (10,000,788) (313,014) (1,985) (68)Cash flows from financing activitiesIncrease in bonds payable 20,000,000 625,978 - -Cash received from capital reduction in long-term stock investment 533,300 16,692 - -Long-term stock investment (925,246) (28,959) - -Cash dividends - - (4,835,439) (165,938)Net cash provided by (used in) financing activities 19,608,054 613,711 (4,835,439) (165,938)Effects of exchange rate changes 8 - (128) (5)Increase in cash and cash equivalents 8,513,089 266,450 3,749,298 128,665Cash and cash equivalents at the beginning of year 2,299,386 71,969 10,812,475 371,053Cash and cash equivalents at the end of year $10,812,475 $338,419 $14,561,773 $499,718Supplemental disclosure of cash flows informationInterest paid during the period $629,320 $19,697 $1,154,629 $39,624Income tax paid $293,909 $9,199 $6,465 $22245

2010Financial Report2010 2010English Translation of Financial Statements Originally Issued in ChineseCathay Life Insurance Co., Ltd.Condensed Balance SheetsAs of December 31, 2009 and 2010(Expressed in thousands of dollars)December 31, 2009 December 31, 2010Items NT $ US $ NT $ US $AssetsCurrent assets $701,947,793 $21,970,197 $817,635,594 $28,058,874Loans 506,130,108 15,841,318 481,605,977 16,527,316Funds and investments 1,229,316,465 38,476,259 1,450,401,024 49,773,542Property and equipment 12,504,702 391,383 11,894,833 408,196Intangible assets 560,518 17,544 386,920 13,278Other assets 292,410,357 9,152,124 285,727,077 9,805,322Total assets $2,742,869,943 $85,848,825 $3,047,651,425 $104,586,528LiabilitiesCurrent liabilities $19,752,642 $618,236 $44,292,901 $1,520,004Long-term liabilities 26,441,827 827,600 26,287,494 902,110Other liabilities 2,583,545,777 80,862,153 2,863,305,784 98,260,322Total liabilities 2,629,740,246 82,307,989 2,933,886,179 100,682,436Stockholders' equityCapital stock 52,686,158 1,649,019 53,065,274 1,821,046Capital surplus 13,009,649 407,188 13,009,649 446,453Retained earnings 43,393,520 1,358,169 36,033,075 1,236,550Others 4,040,370 126,460 11,657,248 400,043Total stockholders' equity 113,129,697 3,540,836 113,765,246 3,904,092Total liabilities and stockholders' equity $2,742,869,943 $85,848,825 $3,047,651,425 $104,586,528Cathay Life Insurance Co., Ltd.Condensed Statements of IncomeFor the years ended December 31, 2009 and 2010(Expressed in thousands of dollars, except earnings per share)2009 2010Items NT $ US $ NT $ US $Operating revenues $929,473,158 $29,091,492 $1,088,289,018 $37,346,912Operating costs (913,744,207) (28,599,193) (1,086,808,553) (37,296,107)Operating gross profit 15,728,951 492,299 1,480,465 50,805Operating expenses (11,323,451) (354,412) (12,338,680) (423,427)Non-operating revenues 1,570,558 49,157 2,070,256 71,045Non-operating expenses (1,343,531) (42,051) (822,209) (28,216)Income (loss) from continuing operations before income taxes $4,632,527 $144,993 $(9,610,168) $(329,793)Net income (loss) $2,662,301 $83,327 $(6,515,586) $(223,596)Earnings per share (in dollars)Income (loss) from continuing operations before income taxes $0.87 $0.03 $(1.81) $(0.06)Net income (loss) $0.50 $0.02 $(1.23) $(0.04)46

Cathay Financial HoldingsAnnual ReportEnglish Translation of Financial Statements Originally Issued in ChineseCathay Century Insurance Co., Ltd.Condensed Balance SheetsAs of December 31, 2009 and 2010(Expressed in thousands of dollars)December 31, 2009 December 31, 2010Items NT $ US $ NT $ US $AssetsCurrent assets $14,638,565 $458,171 $15,917,534 $546,243Loans 1,144,564 35,823 705,214 24,201Funds and investments 4,190,557 131,160 4,102,430 140,784Property and equipment 116,339 3,641 101,842 3,495Intangible assets 14,177 444 24,802 851Other assets 708,444 22,174 896,912 30,779Total assets $20,812,646 $651,413 $21,748,734 $746,353LiabilitiesCurrent liabilities $1,822,864 $57,054 $1,689,157 $57,967Long-term liabilities 17,590 551 57,548 1,975Other liabilities 14,672,157 459,222 16,530,353 567,273Total liabilities 16,512,611 516,827 18,277,058 627,215Stockholders' equityCapital stock 2,317,006 72,520 2,317,006 79,513Capital surplus 1,929 60 1,929 66Retained earnings 1,785,198 55,874 1,075,361 36,903Others 195,902 6,132 77,380 2,656Total stockholders' equity 4,300,035 134,586 3,471,676 119,138Total liabilities and stockholders' equity $20,812,646 $651,413 $21,748,734 $746,353Cathay Century Insurance Co., Ltd.Condensed Statements of IncomeFor the years ended December 31, 2009 and 2010(Expressed in thousands of dollars, except earnings per share)2009 2010Items NT $ US $ NT $ US $Operating revenues $20,767,354 $649,995 $22,469,299 $771,081Operating costs (17,025,809) (532,889) (19,102,591) (655,545)Operating gross profit 3,741,545 117,106 3,366,708 115,536Operating expenses (2,690,464) (84,209) (3,041,366) (104,371)Non-operating revenues 3,052 95 16,319 560Non-operating expenses (78) (2) (157) (5)Income from continuing operations before income taxes $1,054,055 $32,990 $341,504 $11,720Net income $785,247 $24,577 $301,148 $10,335Earnings per share (in dollars)Income from continuing operations before income taxes $4.55 $0.14 $1.47 $0.05Net income $3.39 $0.11 $1.30 $0.0447

2010Financial Report2010 2010English Translation of Financial Statements Originally Issued in ChineseCathay Life Insurance Company(China)Condensed Balance SheetsAs of December 31, 2009 and 2010(Expressed in thousands of dollars)December 31, 2009 December 31, 2010Items NT $ US $ NT $ US $AssetsCurrent assets $4,605,504 $144,147 $5,558,075 $190,737Loans 15,392 482 18,853 647Funds and investments 5,041,993 157,809 4,794,680 164,539Property and equipment 224,158 7,016 176,754 6,066Intangible assets 143,279 4,485 119,939 4,116Other assets 1,304,015 40,814 1,612,614 55,340Total assets $11,334,341 $354,753 $12,280,915 $421,445LiabilitiesCurrent liabilities $417,315 $13,062 $420,724 $14,438Other liabilities 9,085,498 284,366 9,485,024 325,498Total liabilities 9,502,813 297,428 9,905,748 339,936Stockholders' equityCapital stock 3,257,376 101,952 5,134,155 176,189Retained earnings (2,166,817) (67,819) (3,160,401) (108,456)Others 740,969 23,192 401,413 13,776Total stockholders' equity 1,831,528 57,325 2,375,167 81,509Total liabilities and stockholders' equity $11,334,341 $354,753 $12,280,915 $421,445Cathay Life Insurance Company(China)Condensed Statements of IncomeFor the years ended December 31, 2009 and 2010(Expressed in thousands of dollars, except earnings per share)2009 2010Items NT $ US $ NT $ US $Operating revenues $4,252,958 $133,113 $5,368,713 $184,239Operating costs (3,942,382) (123,392) (4,960,956) (170,246)Operating gross profit 310,576 9,721 407,757 13,993Operating expenses (1,099,512) (34,414) (1,421,009) (48,765)Non-operating revenues 10,890 341 6,608 227Non-operating expenses (1,059) (33) (315) (11)Loss from continuing operations before income taxes $(779,105) $(24,385) $(1,006,959) $(34,556)Net loss $(717,847) $(22,468) $(993,584) $(34,097)Earnings per share (in dollars)Loss from continuing operations before income taxes Note Note Note NoteNet loss Note Note Note NoteNote: Cathay Life(China) is a limited company, there is no information about earnings per share.48

Cathay Financial HoldingsAnnual ReportEnglish Translation of Financial Statements Originally Issued in ChineseCathay Life Insurance Co., Ltd. (Vietnam)Condensed Balance SheetsAs of December 31, 2009 and 2010(Expressed in thousands of dollars)December 31, 2009 December 31, 2010Items NT $ US $ NT $ US $AssetsCurrent assets $447,073 $13,993 $409,051 $14,037Loans 18 1 1,084 37Funds and investments 1,391,750 43,560 1,181,275 40,538Property and equipment 37,720 1,181 37,291 1,280Intangible assets 31,005 970 20,109 690Other assets 53,777 1,683 49,560 1,701Total assets $1,961,343 $61,388 $1,698,370 $58,283LiabilitiesCurrent liabilities $24,115 $755 $29,003 $995Other liabilities 63,293 1,981 123,022 4,222Total liabilities 87,408 2,736 152,025 5,217Stockholders' equityCapital stock 1,940,080 60,722 1,940,080 66,578Retained earnings 44,208 1,384 16,754 575Others (110,353) (3,454) (410,489) (14,087)Total stockholders' equity 1,873,935 58,652 1,546,345 53,066Total liabilities and stockholders' equity $1,961,343 $61,388 $1,698,370 $58,283Cathay Life Insurance Co., Ltd.(Vietnam)Condensed Statements of IncomeFor the years ended December 31, 2009 and 2010(Expressed in thousands of dollars, except earnings per share)2009 2010Items NT $ US $ NT $ US $Operating revenues $335,248 $10,493 $368,229 $12,637Operating costs (85,442) (2,674) (127,072) (4,361)Operating gross profit 249,806 7,819 241,157 8,276Operating expenses (264,920) (8,292) (274,893) (9,433)Non-operating revenues 1,342 42 70 2Loss from continuing operations before income taxes $(13,772) $(431) $(33,666) $(1,155)Net loss $(8,288) $(259) $(27,454) $(942)Earnings per share (in dollars)Loss from continuing operations before income taxes Note Note Note NoteNet loss Note Note Note NoteNote: Cathay Life (Vietnam) is a limited company, there is no information about earnings per share.49

2010Financial Report2010 2010English Translation of Financial Statements Originally Issued in ChineseCathay Insurance Company Limited (China)Condensed Balance SheetsAs of December 31, 2009 and 2010(Expressed in thousands of dollars)December 31, 2009 December 31, 2010Items NT $ US $ NT $ US $AssetsCurrent assets $1,540,676 $48,222 $1,385,396 $47,543Property and equipment 48,597 1,521 38,417 1,319Intangible assets - - 763 26Other assets 384,944 12,048 375,011 12,869Total assets $1,974,217 $61,791 $1,799,587 $61,757LiabilitiesCurrent liabilities $56,675 $1,774 $80,364 $2,758Other liabilities 210,245 6,580 320,851 11,011Total liabilities 266,920 8,354 401,215 13,769Stockholders' equityCapital stock 1,745,942 54,646 1,745,942 59,916Retained earnings (173,576) (5,432) (394,134) (13,526)Others 134,931 4,223 46,564 1,598Total stockholders' equity 1,707,297 53,437 1,398,372 47,988Total liabilities and stockholders' equity $1,974,217 $61,791 $1,799,587 $61,757Cathay Insurance Company Limited(China)Condensed Statements of IncomeFor the years ended December 31, 2009 and 2010(Expressed in thousands of dollars, except earnings per share)2009 2010Items NT $ US $ NT $ US $Operating revenues $324,887 $10,169 $644,838 $22,129Operating costs (268,621) (8,408) (613,253) (21,045)Operating gross profit 56,266 1,761 31,585 1,084Operating expenses (152,674) (4,778) (264,923) (9,091)Non-operating revenues 13,940 436 12,801 439Non-operating expenses - - (22) (1)Loss from continuing operations before income taxes $(82,468) $(2,581) $(220,559) $(7,569)Net loss $(82,468) $(2,581) $(220,559) $(7,569)Earnings per share (in dollars)Loss from continuing operations before income taxes Note Note Note NoteNet loss Note Note Note NoteNote: Cathay Century (China) is a limited company, there is no information about earnings per share.50

Cathay Financial HoldingsAnnual ReportEnglish Translation of Financial Statements Originally Issued in ChineseCathay Insurance Co., Ltd. (Vietnam)Condensed Balance SheetsAs of December 31, 2010(Expressed in thousands of dollars)December 31, 2010Items NT $ US $AssetsCurrent assets $434,356 $14,906Property and equipment 53,339 1,830Intangible assets 14,313 491Other assets 27,737 952Total assets $529,745 $18,179LiabilitiesCurrent liabilities $91,264 $3,132Other liabilities 70 2Total liabilities 91,334 3,134Stockholders' equityCapital stock 517,502 17,759Retained earnings (2,271) (78)Others (76,820) (2,636)Total stockholders' equity 438,411 15,045Total liabilities and stockholders' equity $529,745 $18,179Cathay Insurance Co., Ltd. (Vietnam)Condensed Statements of IncomeFrom November 2 to December 31, 2010(Expressed in thousands of dollars, except earnings per share)Items NT $ US $2010Operating revenues $232 $8Operating costs (73) (3)Operating gross profit 159 5Operating expenses (3,850) (132)Non-operating revenues 1,420 49Loss from continuing operations before income taxes $(2,271) $(78)Net loss $(2,271) $(78)Earnings per share (in dollars)Loss from continuing operations before income taxes Note NoteNet loss Note NoteNote1: Cathay Century(Vietnam) is a limited company, there is no information about earnings per share.Note2: Cathay Century(Vietnam) was incorporate on November 2, 2010, thus there was no information about 2009.51

2010Financial Report2010 2010English Translation of Financial Statements Originally Issued in ChineseCathay United Bank Co., Ltd.Condensed Balance SheetsAs of December 31, 2009 and 2010(Expressed in thousands of dollars)December 31, 2009 December 31, 2010Items NT $ US $ NT $ US $AssetsCash and cash equivalents $19,378,285 $606,519 $22,770,606 $781,421Due from the Central Bank and call loans to banks 78,836,983 2,467,511 100,094,188 3,434,941Financial assets at fair value through profit or loss 41,430,963 1,296,744 65,975,661 2,264,093Securities purchased under agreements to resell 1,736,000 54,335 18,926,393 649,499Receivables-net 44,816,287 1,402,701 58,314,517 2,001,185Discounts and loans-net 804,171,890 25,169,699 880,450,829 30,214,510Available-for-sale financial assets -net 97,991,344 3,067,022 75,699,236 2,597,777Held-to-maturity financial assets-net 4,089,081 127,984 4,964,381 170,363Investments under equity method-net 3,892,029 121,816 4,320,844 148,279Other financial assets-net 4,919,872 153,986 4,716,102 161,843Investments in debt securities with no active market 369,671,743 11,570,321 302,776,432 10,390,406Property and equipment-net 26,250,655 821,617 25,282,185 867,611Intangible assets-net 7,072,206 221,352 7,457,296 255,913Other assets-net 5,924,651 185,435 4,867,696 167,045Total assets $1,510,181,989 $47,267,042 $1,576,616,366 $54,104,886LiabilitiesDue to the Central Bank and call loans from banks $45,350,827 $1,419,431 $39,898,632 $1,369,205Funds borrowed from the Central and other banks 1,601,500 50,125 1,456,500 49,983Financial liabilities at fair value through profit or loss 24,996,981 782,378 29,315,431 1,006,020Securities sold under agreements to repurchase 8,745,465 273,724 21,679,556 743,979Payables 21,089,973 660,093 35,843,439 1,230,043Deposits and remittances 1,296,636,382 40,583,298 1,334,092,471 45,782,171Financial debentures payable 16,437,209 514,467 15,764,495 540,992Other financial liabilities 240,494 7,527 180,396 6,191Other liabilities 2,047,292 64,078 3,187,069 109,371Total liabilities 1,417,146,123 44,355,121 1,481,417,989 50,837,955Shareholders' equityCapital stock 52,277,026 1,636,214 52,277,026 1,793,995Capital surplus 15,213,292 476,159 15,213,292 522,076Retained earnings 23,319,476 729,874 26,831,582 920,782Others 2,226,072 69,674 876,477 30,078Total shareholders' equity 93,035,866 2,911,921 95,198,377 3,266,931Total liabilities and shareholders' equity $1,510,181,989 $47,267,042 $1,576,616,366 $54,104,886Cathay United Bank Co., Ltd.Condensed Statements of IncomeFor the years ended December 31, 2009 and 2010(Expressed in thousands of dollars, except earnings per share)2009 2010Items NT $ US $ NT $ US $Net interest income $13,796,484 $431,816 $14,726,817 $505,382Non-interest income 11,655,077 364,791 12,463,742 427,719Net operating income 25,451,561 796,607 27,190,559 933,101Operating expenses (14,400,411) (450,717) (14,805,813) (508,092)Income from continuing operations before income taxes $11,051,150 $345,890 $12,384,746 $425,009Net income $8,617,150 $269,708 $11,331,746 $388,873Earnings per share (in dollars)Income from continuing operations before income taxes $2.11 $0.07 $2.37 $0.08Net income $1.65 $0.05 $2.17 $0.0852

Cathay Financial HoldingsAnnual ReportEnglish Translation of Financial Statements Originally Issued in ChineseIndovina Bank LimitedCondensed Balance SheetsAs of December 31, 2009 and 2010(Expressed in thousands of dollars)December 31, 2009 December 31, 2010Items NT $ US $ NT $ US $AssetsCash and cash equivalents $1,453,651 $45,498 $8,315,566 $285,366Due from the Central Bank and call loans to banks 675,800 21,152 713,156 24,473Financial assets at fair value through profit or loss 187,449 5,867 152,416 5,230Available-for-sale financial assets-net 490,140 15,341 298,993 10,261Held-to-maturity financial assets - - 1,146,305 39,338Receivables-net 221,103 6,920 239,764 8,228Discounts and loans-net 16,759,762 524,562 20,544,314 705,021Property and equipment-net 179,765 5,627 178,217 6,116Intangible assets-net 400,153 12,524 360,955 12,387Other assets-net 16,111 504 4,624 159Total assets $20,383,934 $637,995 $31,954,310 $1,096,579LiabilitiesDue to the Central Bank and call loans from banks $616,973 $19,311 $7,261,767 $249,203Payables 381,772 11,949 509,999 17,501Deposits and remittances 14,760,994 462,003 15,806,210 542,423Bonds payables - - 2,890,189 99,183Total liabilities 15,759,739 493,263 26,468,165 908,310Shareholders' equityCapital stock 4,017,093 125,730 5,269,493 180,834Retained earnings 654,139 20,474 777,315 26,675Others (47,037) (1,472) (560,663) (19,240)Total shareholders' equity 4,624,195 144,732 5,486,145 188,269Total liabilities and shareholders' equity $20,383,934 $637,995 $31,954,310 $1,096,579Indovina Bank LimitedCondensed Statements of IncomeFor the years ended December 31, 2009 and 2010(Expressed in thousands of dollars, except earnings per share)2009 2010Items NT $ US $ NT $ US $Net interest income $589,497 $18,451 $737,031 $25,293Non-interest income 287,372 8,994 177,549 6,093Net operating revenue 876,869 27,445 914,580 31,386Provision for loan losses (71,449) (2,236) - -Operating expenses (342,509) (10,720) (387,656) (13,304)Income from continuing operations before income taxes $462,911 $14,489 $526,924 $18,082Net income $371,200 $11,618 $408,899 $14,032Earnings per share (in dollars)Income from continuing operations before income taxes Note Note Note NoteNet income Note Note Note NoteNote: Indovina Bank is a subsidiary of foreign bank, there is no information about earnings per share.53

2010Financial Report2010 2010English Translation of Financial Statements Originally Issued in ChineseCathay Securities CorporationCondensed Balance SheetsAs of December 31, 2009 and 2010(Expressed in thousands of dollars)December 31, 2009 December 31, 2010Items NT $ US $ NT $ US $AssetsCurrent assets $5,611,672 $175,639 $6,049,349 $207,596Funds and investments 730,589 22,867 738,694 25,350Property and equipment 38,830 1,215 34,195 1,173Intangible assets 6,969 218 7,692 264Other assets 378,590 11,850 341,947 11,735Total assets $6,766,650 $211,789 $7,171,877 $246,118LiabilitiesCurrent liabilities $2,500,246 $78,255 $2,828,700 $97,073Long-term liabilities 1,096 34 681 23Other liabilities 54,695 1,712 78,725 2,702Total liabilities 2,556,037 80,001 2,908,106 99,798Stockholders' equityCapital stock 3,700,000 115,806 3,700,000 126,973Capital surplus 258,434 8,089 258,434 8,869Retained earnings 183,509 5,744 298,468 10,242Others 68,670 2,149 6,869 236Total shareholders' equity 4,210,613 131,788 4,263,771 146,320Total liabilities and shareholders' equity $6,766,650 $211,789 $7,171,877 $246,118Cathay Securities CorporationCondensed Statements of IncomeFor the years ended December 31, 2009 and 2010(Expressed in thousands of dollars, except for earnings per share)2009 2010Items NT $ US $ NT $ US $Revenue $1,141,880 $35,740 $1,148,666 $39,419Expenses (893,506) (27,966) (927,667) (31,835)income from continuing operations before income taxes $248,374 $7,774 $220,999 $7,584Net income $168,371 $5,270 $221,930 $7,616Earnings per share (in dollars)income from continuing operations before income taxes $0.67 $0.02 $0.60 $0.02Net income $0.46 $0.01 $0.60 $0.0254

Cathay Financial HoldingsAnnual ReportEnglish Translation of Financial Statements Originally Issued in ChineseCathay Futures Corp.Condensed Balance SheetsAs of December 31, 2009 and 2010(Expressed in thousands of dollars)December 31, 2009 December 31, 2010Items NT $ US $ NT $ US $AssetsCurrent assets $1,433,668 $44,872 $1,374,125 $47,156Funds and investments 30,500 955 30,500 1,047Property and equipment 166,632 5,215 56,310 1,932Intangible assets 4,745 149 2,633 90Other assets 285,128 8,924 393,022 13,488Total assets $1,920,673 $60,115 $1,856,590 $63,713LiabilitiesCurrent liabilities $1,179,872 $36,929 $1,104,211 $37,893Other liabilities 10,162 318 13,634 468Total liabilities 1,190,034 37,247 1,117,845 38,361Stockholders' equityCapital stock 650,000 20,344 650,000 22,306Retained earnings 80,639 2,524 88,745 3,046Total stockholders' equity 730,639 22,868 738,745 25,352Total liabilities and stockholders' equity $1,920,673 $60,115 $1,856,590 $63,713Cathay Futures Corp.Condensed Statements of IncomeFor the years ended December 31, 2009 and 2010(Expressed in thousands of dollars, expect earnings per share)2009 2010Item NT $ US $ NT $ US $Operating revenues $118,432 $3,707 $101,035 $3,467Operating costs (69,563) (2,177) (58,128) (1,995)Operating gross profit 48,869 1,530 42,907 1,472Operating expenses (62,166) (1,946) (49,967) (1,715)Non-operating revenues 22,137 693 23,297 799Non-operating expenses (1,067) (34) (1,655) (56)Income from continuing operations before income taxes $7,773 $243 $14,582 $500Net income $6,104 $191 $12,379 $425Earnings per share (in dollars)Income from continuing operations before income taxes $0.12 $- $0.22 $0.01Net income $0.09 $- $0.19 $0.0157

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Financial HoldingsNo.296,Jen-Ai Road,Sec.4,Taipei,10633 Taiwan TEL:02-2708 7698 FAX:02-2325 2488 http://www.cathayholdings.com.tw