Mega Bank Annual Report 2017

81 Annual Report 2017 -81- (C) Relevant financial information on effect of the Bank’s and subsidiaries’ assets exposed to credit risk, net settlement master netting arrangements and other credit improvements is as follows: Unit: In NT Thousand Dollars December 31, 2017 Collateral Net settlement master netting arrangements Other credit improvements Total On-Balance-Sheet Items Financial assets at fair value through profit or loss - debt instrument $ - $ - $ 8,404,988 $ 8,404,988 - derivative instrument 944,738 365,186 - 1,309,924 Bills and bonds purchased under resale agreements 1,697,586 - - 1,697,586 Bills discounted and loans 1,145,290,237 - 52,161,524 1,197,451,761 Available-for-sale financial assets - debt instrument - - 32,001,024 32,001,024 Held-to-maturity financial assets - debt instrument - - 2,824,775 2,824,775 Off-Balance-Sheet Items Irrevocable commitments 84,307,140 - 1,030,909 85,338,049 Guarantees and letters of credit 48,168,107 - 1,559,811 49,727,918 Unit: In US Thousand Dollars December 31, 2017 Collateral Net settlement master netting arrangements Other credit improvements Total On-Balance-Sheet Items Financial assets at fair value through profit or loss - debt instrument $ - $ - $ 283,493 $ 283,493 - derivative instrument 31,865 12,317 - 44,182 Bills and bonds purchased under resale agreements 57,258 - - 57,258 Bills discounted and loans 38,629,595 - 1,759,361 40,388,956 Available-for-sale financial assets - debt instrument - - 1,079,365 1,079,365 Held-to-maturity financial assets - debt instrument - - 95,277 95,277 Off-Balance-Sheet Items Irrevocable commitments 2,843,603 - 34,772 2,878,375 Guarantees and letters of credit 1,624,666 - 52,611 1,677,277 Unit: In NT Thousand Dollars December 31, 2016 Collateral Net settlement master netting arrangements Other credit improvements Total On-Balance-Sheet Items Financial assets at fair value through profit or loss - debt instrument $ - $ - $ 12,237,232 $ 12,237,232 - derivative instrument 908,272 1,140,092 - 2,048,364 Bills and bonds purchased under resale agreements 4,091,532 - - 4,091,532 Bills discounted and loans 1,107,932,816 - 54,229,707 1,162,162,523 Available-for-sale financial assets - debt instrument - - 16,630,445 16,630,445 Held-to-maturity financial assets - debt instrument - - 3,652,812 3,652,812 Off-Balance-Sheet Items Irrevocable commitments 82,161,825 - 1,206,122 83,367,947 Guarantees and letters of credit 50,000,626 - 1,852,236 51,852,862 Note 1: Collaterals include property, movable property, certification of authorization, securities, certificates of deposits, letter of credit and rights in property. (1)Value of collaterals pledged for assets that arise from lending is the lower of collateral value/ market value and maximum exposure amount. If the collateral value cannot be obtained, value of collaterals must be assessed. (2)Value of collaterals pledged for assets that do not arise from lending is the lower of market value and maximum exposure amount. Note 2: Details of improvement to net settlement master netting arrangements and other credits are provided in Note 8(3) C. (C) and C. (D). E. Credit risk concentration Extreme credit risk concentration will enhance risk degree, such as large amount of risk exposure concentrated on one credit product, one client, or minor clients, or a group of clients in the same industry or with similar business or in the same area or with the same risk characteristics. When adverse economic changes occur, a financial institution may incur a significant loss. To avoid extreme credit risk concentration, the Bank and subsidiaries have regulated credit limit and management rules for single client, single business group and large amount of risk exposure. The Bank and subsidiaries have to monitor and control the credit risk concentration within the limit. Status of credit risk concentration must be shown in the regular risk report by industry, area/country, collateral and other forms.