Equator Principles

To accelerate international integration and promote sustainable finance development, as well as guide companies to prioritize environmental protection and social responsibility, KTB officially joined the Equator Principles Association on December 1, 2022. Additionally, in 2023, KTB issued the "KTB Equator Principles Financing Guidelines." When KTB processes corporate financing applications, we evaluate the applicability of the Equator Principles based on the amount and purpose of each case. If the case falls under the Equator Principles, it undergoes further classification into "Category A, High Risk B, B, C" using the Equator Principles Risk Classification Checklist. Depending on the classification, relevant documents are requested, and a dedicated unit conducts a review of environmental and social risks to ensure the completeness of risk classification and related documentation. After the case is approved, a routine review will be conducted in accordance with regulations to monitor its environmental and social performance.

In 2024, there were a total of seven cases under review. Out of these, one case required examination according to the Equator Principles. In total, one case was approved, fulfilling the disclosure requirement for the EP (Financial Close) status. The details are as follows

Support Small- and Medium-Sized Enterprises (SMEs)

KTB recognizes that small and medium-sized enterprises (SMEs) are not only a vital foundation of Taiwan’s economy but also a key driving force for sustainable transformation. Compared to large corporations, which have more resources and professional support, SMEs often face higher technical barriers, difficulties in obtaining funding, and significant information gaps in their journey toward low-carbon transition and sustainable management.

Therefore, they require proactive support and strategic guidance from banks. Leveraging its branch network primarily located in central and southern Taiwan, KTB deeply understands its customers and industries. With a flat organizational structure and flexible operational strategies, KTB not only provides diversified financial products tailored to SMEs but also integrates professional assessment and design to launch sustainable financing solutions suitable for SMEs. This approach supports stable operations while guiding them toward more resilient and future-oriented business models. As of the end of 2024, SME loan balances accounted for 62.50% of KTB’s total loan, with small enterprises representing 11.06%. Among these, loans related to sustainability totaled NT$13.273 billion, representing a 38.36% increase compared to 2023, and accounting for 8.73% of the total SME loan balances.

Responsible Investment

Besides undertaking credit businesses to support sustainable development, KTB also lays great emphasis on the investees' actions in the aspects of environment, society, and corporate governance, when investing in shares or credits. Thus, the "Stewardship Principles" was formulated, and approved by the Board of Directors, specifying the principles, such as the due diligence policy, with the aim to facilitate the improvement of investees' corporate governance quality, through caring for, communication, and interaction with the investees, thereby promoting an overall positive development in the industry, economy, and society as a whole. The "Stewardship Principles," "Compliance Statement of the Code of Due Diligence Governance for Institutional Investors," and "Stewardship Report" are available for download from KTB's official website.

Specific Achievements of Responsible Investment

KTB not only conducts due diligence and engagement on investment targets in its investment decision-making process to fulfill its responsibilities to investors, but also recognizes that investment can encourage businesses to adopt more sustainable business models, thereby leveraging its investment influence. Therefore, we refer to various external ESG rating results during the investment process to obtain a more objective evaluation of the sustainability performance of our investment targets. As of the end of 2024, approximately 19.42% of KTB's securities were ranked in the top 10% of industries in the DJSI, and 21% were classified as "low risk" according to Sustainalytics standards. These figures demonstrate our commitment not only to balancing risk and return in investments, but also to actively considering the ESG performance of investment targets.