Dear ladies and gentlemen:

　　Looking back at year 2007, credit tightened and confidence broke down on a worldwide scale following the sub-prime crisis of the USA; chaos ruled in international financial markets and on top of that, there were also uncertainties relating to foreign political issues, which contributed to the stagnant growth of the global economy. Fortunately strong domestic demand from emerging countries led by China and India recovered some of the shortfalls created by the contraction of the US economy; as a result International Monetary Fund (IMF) merely adjusted its estimation of the 2007 global economic growth from 5.5% forecasted a year ago to 5.2%, which was still much higher than the ten-year average of 4.4%. Looking ahead to 2008, as the US economy continues to contract due to an unsatisfactory real estate market performance, the slowdown in imports is expected to hit exporting activities in Europe, Asia, and China. IMF forecasted that the 2008 global economic growth will drop from last year's 5.2% to 4.8%.

　　 As for the domestic economy, Directorate-General of Budget, Accounting, and Statistics of the Executive Yuan estimated that Taiwan's economic growth has reached an outstanding 5.5% in 2007; this was mainly due to a major increase in net exports contribution to 3%. The growth in domestic demand was below expectations as manufacturers preferred to invest abroad and the general wage increment was insufficient to cover inflation and the surge in raw material prices; the consumption willingness was depressed. On the other hand, non-economic factors such as political expectations built up as elections drew near; with stimulating policies in place, the government should provide positive incentives to the domestic economy.

　　 Looking to the future, the domestic unemployment rate is expected to be maintained around 4%; as the labor market and inflation stabilize, consumer spending should gradually improve. However due to the declining global economy, contribution from net exports is not expected to be as strong as it was in the previous year. In general, the Directorate-General of Budget, Accounting, and Statistics forecasted a lower economic growth of 4.5% for year 2008; Taiwan is expected to change from an export-driven economy in the previous year to a domestic-driven economy.

　　In 2007, the company accumulated net interest revenues of NT$5.459 billion and non-interest revenues of NT$7.562 billion to total revenue of NT$13.021 billion. After deducting NT$7.944 billion operating expenses, NT$4.945 billion bad debts and NT$590 million income taxes, consolidated net profit after taxes came to NT$730 million, earnings per share was NT$0.03. The main contributor was the subsidiary Jih Sun Securities, who delivered a remarkable net profit of NT$2.663 billion for the year; however, subsidiary Jih Sun International Commercial Bank was still under the credit improvement stage and made additional bad debt provisions that resulted in a net loss of NT$2.392 billion and affected group profitability. The current status and future strategies of our four major business groups are explained below:

1. Individual Financial Services Group

　　Mortgage loan in 2007 were challenging due to a slowdown in the real estate market and restraints imposed by the government; the consumers banking business registered a marginal growth of only 1.2%. Although asset quality deteriorated following the cash and credit cards crisis in 2006, our collection departments have since implemented stringent risk control procedures and asset quality continues to improve. We have adjusted our credit card business strategy to focus on cardholders' benefits and consumption per card increased against all odds. The overall business plans for consumer banking in 2008 are as follows:

2. Corporate Financial Services Group

　　The development of globalization and cross-strait commercial activities in recent years has accelerated the migration of small and medium enterprises; Taiwan's financial market has shrunk ever since. On top of that, the abundance of funds supplied by an excessive number of banks is driving down profit margins of corporate lending. In response to the changing financial environment and an attempt to diversify business risk, we intend to increase our fee income by providing more non-lending services, lower our reliance on loan to achieve higher returns on equity for our shareholders.

　　In the corporate financial services group, Jih Sun targets medium and small capitalization customers for the sale of OBU non-lending businesses and the capital market services such as factoring, hedging and investments, cash management, trade financing, IPO, SPO, financial consultancy and other related products. They are means to satisfy corporate customers' diverse needs for financial planning and management as well as rich sources of fee income. Further more, Jih-Sun also enhances cross-selling through stronger customer relationships. A customer relationship management system was established to systematically manage marketing activities to achieve a better understanding of customers' needs and improve customer satisfaction. As for risk management, Jih-Sun is collaborating with FITCH for the development of an advanced Basel II credit risk management system in an attempt to balance business growth with risk management, and achieve higher risk-adjusted returns. The overall business plans for the corporate finance segment in 2008 are as follows:

3. Wealth Management Group

　　From the product side, we continued to offer marketable products and services that meet customers' needs, improved the productivity of our sales force and achieved the 2007 profit target. At the customer end, we strengthened customer relationships by raising satisfaction through product innovation and quality service. Within our operations, we improved our internal procedures while actively introducing new products and systematic services. As for talent development, we have effectively raised the efficiency and productivity of our staffs through solid on-the-job training. Our major achievements are as follows:

The overall business plans for wealth management in 2008 are as follow:

4. Investment and Proprietary Trading Group

　　In 2007, our investment and proprietary trading group focused on the balance between risk and return, execution of efficient trades, accurate forecasts and active portfolio management to achieve the highest return within limited risk while raising our competitiveness among market participants. The focus of our banking segment was to satisfy the needs of customers operating across different industries, increase the contribution of each customer, collaborate in intra-bank funding, maintain sufficient liquidity and active uses of funds while participating in financial market transactions for the best interests of the bank. Our securities segment focuses on identifying profitable opportunities and maintaining earnings stability, hedging the risk of investment losses through short selling, interest rate swaps, long and short strategies etc. The overall business plans for this group in 2008 are as follow:

As for our credit ratings, Fitch Ratings reviewed the credit ratings of Jih Sun Financial Holding and its subsidiaries on Oct 17, 2007; the results are as follows:

　　In the future, Jih Sun Financial Holding will continue serving its target customers with the utmost innovative and proactive spirits, expanding its business scale while dedicating towards the maximization of shareholders' value. The business strategies of Jih Sun Financial Holding for the coming year are as follows: