Hua Nan Financial : Title2023Q1 HNFHC Consolidated Financial Report

Hua Nan Financial Holdings Co., Ltd. and Subsidiaries

Consolidated Financial Statements for the

Three Months Ended March 31, 2023 and 2022 and Independent Auditors' Review Report

Conclusion

Based on our reviews, nothing has come to our attention that caused us to believe that the accompanying consolidated financial statements do not present fairly, in all material respects, the consolidated financial position of the Company and its subsidiaries as of March 31, 2023 and 2022, and of its consolidated financial performance and its consolidated cash flows for the three months then ended March 31, 2023 and 2022 in accordance with the Regulations Governing the Preparation of Financial Reports by Financial Holding Companies, Regulations Governing the Preparation of Financial Reports by Securities Issuers, Regulations Governing the Preparation of Financial Reports by Public Banks, Regulations Governing the Preparation of Financial Reports by Securities Firms, Regulations Governing the Preparation of Financial Reports by Futures Commission Merchants, Regulations Governing the Preparation of Financial Reports by Insurance Companies, the guidelines issued by the authority, and International Accounting Standard 34 "Interim Financial Reporting" endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

The engagement partners on the reviews resulting in this independent auditors' review report are Yi-Chun Wu and Han-Ni Fang.

Deloitte & Touche

Taipei, Taiwan

Republic of China

May 25, 2023

Notice to Readers

The accompanying consolidated financial statements are intended only to present the consolidated financial position, financial performance and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such consolidated financial statements are those generally applied in the Republic of China.

For the convenience of readers, the independent auditors' review report and the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors' review report and consolidated financial statements shall prevail.

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HUA NAN FINANCIAL HOLDINGS CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (In Thousands of New Taiwan Dollars)

			March 31, 2023						December 31, 2022						March 31, 2022
			(Reviewed)						(Audited)						(Reviewed)
ASSETS			Amount	%					Amount	%					Amount	%
CASH AND CASH EQUIVALENTS (Notes 6 and 46)	$	30,112,222		1	$	57,466,418	2	$	33,258,791	1
DUE FROM THE CENTRAL BANK AND CALL LOANS TO OTHER BANKS (Notes 6, 7 and 46)			245,147,663		7				238,125,369	7				241,065,756	7
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (Note 8)			102,672,589		3				92,345,662	3				103,146,875	3
FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME (Notes 9, 11
and 49)			361,804,242		10				358,704,522	10				382,279,834	11
INVESTMENTS IN DEBT INSTRUMENTS AT AMORTIZED COST, NET (Notes 10, 11 and 49)			724,924,691		20				716,234,166	20				611,695,527	17
SECURITIES PURCHASED UNDER RESELL AGREEMENTS (Note 12)			2,249,207		-					1,999,158		-				2,683,348	-
RECEIVABLES, NET (Notes 13 and 46)			51,272,746		1				47,020,578	1				56,403,678	2
CURRENT TAX ASSETS			232,491		-					169,667	-				302,295	-
DISCOUNTS AND LOANS, NET (Notes 5, 14 and 46)			2,076,637,728		57				2,037,419,759	56				2,036,902,685	57
REINSURANCE CONTRACTS ASSETS, NET			6,837,322		-					6,404,284		-				6,549,108	-
INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD, NET (Note 15)			349,180		-					359,584	-				355,989	-
OTHER FINANCIAL ASSETS, NET (Note 16)			17,276,812		-					17,573,908	-				19,065,759	1
INVESTMENT PROPERTIES, NET (Notes 19 and 49)			12,563,362		-					12,627,100	-				12,224,204	-
PROPERTY AND EQUIPMENT, NET (Notes 17, 46 and 49)			32,740,223		1				32,656,522	1				32,342,616	1
RIGHT-OF-USE ASSETS (Notes 18 and 46)			2,107,581		-					2,021,323		-				2,199,985	-
INTANGIBLE ASSETS, NET (Note 20)			1,002,097		-					968,134	-				950,871	-
DEFERRED TAX ASSETS (Notes 4 and 44)			3,877,354		-					4,018,272		-				3,468,885	-
OTHER ASSETS, NET (Notes 21, 46 and 49)			5,116,292		-					4,047,302		-				4,948,518	-
TOTAL		$	3,676,923,802		100			$	3,630,161,728	100	$	3,549,844,724	100
LIABILITIES AND EQUITY
DEPOSITS FROM THE CENTRAL BANK AND OTHER BANKS (Notes 22 and 46)	$	206,267,197		6	$	182,391,496	5	$	169,942,540	5
FUNDS BORROWED FROM THE CENTRAL BANK AND OTHER BANKS (Notes 23 and 48)			-		-					-	-				36,628,960	1
FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS (Note 8)			4,516,535		-					6,233,545		-				5,779,982	-
SECURITIES SOLD UNDER REPURCHASE AGREEMENTS (Notes 8, 9, 10 and 25)			81,651,640	2				53,361,205	2				50,848,568	1
COMMERCIAL PAPER PAYABLE, NET (Notes 24 and 48)			24,687,336		1				19,879,471	1				22,702,911	1
PAYABLES (Note 26)			41,152,148	1				37,923,753	1				38,488,212	1
CURRENT TAX LIABILITIES			4,450,662		-					3,599,175		-				3,166,774	-
DEPOSITS AND REMITTANCES (Notes 27 and 46)			2,931,070,420	80				2,943,462,133	81				2,856,879,046	80
BONDS PAYABLE (Notes 28 and 48)			79,585,214		2				86,584,626	2				65,091,976	2
OTHER BORROWINGS (Notes 29 and 48)			1,625,000		-					1,856,000		-				1,485,000	-
PROVISIONS (Notes 30 and 31)			24,400,601		1				23,891,682	1				24,651,728	1
OTHER FINANCIAL LIABILITIES (Notes 32 and 46)			69,593,417		2				64,876,567	2				57,109,690	2
LEASE LIABILITIES (Notes 18, 46 and 48)			2,138,974		-					2,075,114	-				2,215,650	-
DEFERRED TAX LIABILITIES (Notes 4 and 44)			6,119,324		-					6,126,380		-				6,090,442	-
OTHER LIABILITIES (Note 33)			6,672,469		-					13,073,475	-				10,643,091	-
Total liabilities			3,483,930,937		95				3,445,334,622	95				3,351,724,570	94
EQUITY ATTRIBUTABLE TO OWNER OF THE PARENT (Note 34)
Share capital
Ordinary shares			136,427,459		4				136,427,459	4				131,941,450	4
Capital surplus			17,758,986		-					17,758,986	-				17,758,986	1
Retained earnings
Legal reserve			20,380,779		-					20,380,779	-				18,593,434	-
Special reserve			6,471,594		-					6,471,594		-				6,471,594	-
Unappropriated earnings			27,080,359		1				22,023,668	1				23,578,480	1
Total retained earnings			53,932,732		1				48,876,041	1				48,643,508	1
Other equity
Exchange differences on translating the financial statements of foreign operations			(409,849)	-					(292,639)	-				(2,220,638)	-
Unrealized gain on investments in equity instruments at fair value through other comprehensive income			8,126,798	-					8,570,902		-				14,362,186	-
Unrealized loss on investments in debt instruments at fair value through other comprehensive income			(22,848,481)	-					(26,224,250)	-				(12,616,693)	-
Unrealized gain (loss) on other comprehensive income reclassified by overlay approach			3,014		-					(291,568)	-				249,233	-
Total other equity			(15,128,518)	-					(18,237,555)	-				(225,912)	-
Total equity attributable to owner of the parent			192,990,659		5				184,824,931	5				198,118,032	6
NON-CONTROLLING INTERESTS			2,206		-					2,175	-				2,122	-
Total equity			192,992,865		5				184,827,106	5				198,120,154	6
TOTAL		$	3,676,923,802		100			$	3,630,161,728	100	$	3,549,844,724	100

The accompanying notes are an integral part of the consolidated financial statements.

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HUA NAN FINANCIAL HOLDINGS CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share) (Reviewed, Not Audited)

		For the Three Months Ended March 31
	2023				2022
		Amount	%				Amount	%
INTEREST REVENUE (Notes 35 and 46)	$ 19,776,108		139		$ 9,903,238	79
INTEREST EXPENSES (Notes 35 and 46)	(12,226,042)	(86)	(2,272,653)	(18)
NET INTEREST	7,550,066		53		7,630,585	61
NET REVENUES OTHER THAN INTEREST
Commission and service fee revenues, net (Notes 36
and 46)	2,506,310		18		2,707,534	22
Income from insurance premiums, net (Notes 37
and 46)	1,346,116		9		1,232,348	10
Gain on financial assets and liabilities at fair value
through profit or loss, net (Notes 8, 38 and 46)	779,621		5		4,952,628	40
Gain on investment properties, net (Note 19)	150,580		1		97,899	1
Realized gain on financial assets at fair value
through other comprehensive income (Note 39)	91,892		1		471,524	4
(Gain) loss on derecognition of financial assets at
amortized cost	(2,365)	-		7,500	-
Foreign exchange gain (loss), net (Note 40)	2,155,676		15		(4,731,830)	(38)
Impairment loss on assets (Note 11)	(2,474)	-		(7,071)	-
Share of (loss) profit associates accounted for using
the equity method (Note 15)	(1,773)	-		757	-
(Loss) gain on reclassification of overlay approach
(Note 8)	(298,024)	(2)	69,160	-
Other non-interest (loss) income, net (Note 46)		(5,647)	-		43,229	-
Total net revenues other than interest		6,719,912		47			4,843,678	39
TOTAL NET REVENUE		14,269,978		100			12,474,263	100
ALLOWANCE FOR DOUBTFUL ACCOUNTS,
COMMITMENT, AND GUARANTEES (Notes 13,
14 and 30)	(396,955)	(3)	(389,251)	(3)
CHANGE IN PROVISIONS FOR INSURANCE
LIABILITIES, NET (Note 30)	(451,034)	(3)	(691,309)	(6)
OPERATING EXPENSES (Notes 31, 41, 42, 43
and 46)
Employee benefits	(4,657,457)	(33)	(4,405,060)	(35)
Depreciation and amortization	(513,000)	(4)	(507,952)	(4)
Others	(2,184,818)	(15)	(1,920,041)	(16)
Total operating expenses	(7,355,275)	(52)	(6,833,053)	(55)
								(Continued)
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