Hua Nan Financial Holdings Co., Ltd.TWSE: 2880

Title2024Q1 HNFHC Consolidated Financial Report

· Issued by Hua Nan Financial Holdings Co., Ltd.

Hua Nan Financial Holdings Co., Ltd. and Subsidiaries

Consolidated Financial Statements for the

Three Months Ended March 31, 2024 and 2023 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, 2024 and 2023, and of its consolidated financial performance and its consolidated cash flows for the three months then ended March 31, 2024 and 2023 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 27, 2024

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.

- 2 -

HUA NAN FINANCIAL HOLDINGS CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (In Thousands of New Taiwan Dollars)

March 31, 2024

December 31, 2023

March 31, 2023

ASSETS

Amount

%

Amount

%

Amount

%

CASH AND CASH EQUIVALENTS (Notes 4, 6 and 45)

$

53,796,307

1

$

39,596,420

1

$

30,112,222

1

DUE FROM THE CENTRAL BANK AND CALL LOANS TO OTHER BANKS (Notes 4, 7, 45 and 48)

255,815,808

6

245,757,463

6

245,147,663

7

FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (Notes 4, 8 and 45)

154,913,805

4

118,793,903

3

102,672,589

3

FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME (Notes 4, 5, 9, 11

and 48)

406,199,701

10

379,784,939

10

361,804,242

10

INVESTMENTS IN DEBT INSTRUMENTS AT AMORTIZED COST, NET (Notes 4, 5, 10, 11 and 48)

842,499,484

20

686,891,136

18

724,924,691

20

SECURITIES PURCHASED UNDER RESELL AGREEMENTS (Notes 4, 5, 10, 11 and 48)

3,081,453

-

2,481,443

-

2,249,207

-

RECEIVABLES, NET (Notes 4, 5, 13 and 45)

74,973,986

2

67,252,591

2

51,272,746

1

CURRENT TAX ASSETS (Notes 4, 43 and 45)

375,936

-

398,393

-

232,491

-

DISCOUNTS AND LOANS, NET (Notes 4, 5, 14 and 45)

2,276,344,530

55

2,243,451,690

58

2,076,637,728

57

REINSURANCE CONTRACTS ASSETS, NET (Notes 4 and 21)

6,402,262

-

6,917,297

-

6,837,322

-

INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD, NET (Notes 4 and 15)

349,705

-

351,351

-

349,180

-

OTHER FINANCIAL ASSETS, NET (Notes 4, 5, 16 and 45)

18,367,947

1

19,050,712

1

17,276,812

-

INVESTMENT PROPERTIES, NET (Notes 4, 19 and 48)

13,594,182

-

14,863,175

-

12,563,362

-

PROPERTY AND EQUIPMENT, NET (Notes 4, 17, 45 and 48)

33,678,200

1

31,978,737

1

32,811,149

1

RIGHT-OF-USE ASSETS (Notes 3, 4, 18 and 45)

2,248,246

-

2,268,659

-

2,107,581

-

INTANGIBLE ASSETS, NET (Notes 4 and 20)

897,814

-

919,111

-

1,002,097

-

DEFERRED TAX ASSETS (Notes 4 and 43)

3,921,912

-

3,850,295

-

3,877,354

-

OTHER ASSETS, NET (Notes 4, 22, 45 and 48)

4,666,447

-

4,594,464

-

5,045,366

-

TOTAL

$

4,152,127,725

100

$

3,869,201,779

100

$

3,676,923,802

100

LIABILITIES AND EQUITY

DEPOSITS FROM THE CENTRAL BANK AND OTHER BANKS (Notes 23 and 45)

$

191,027,725

5

$

190,550,622

5

$

206,267,197

6

FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS (Notes 4 and 8)

4,927,351

-

8,651,418

-

4,516,535

-

SECURITIES SOLD UNDER REPURCHASE AGREEMENTS (Notes 4, 8, 9, 10 and 25)

95,332,438

2

109,103,919

3

81,651,640

2

COMMERCIAL PAPER PAYABLE, NET (Notes 24 and 47)

39,600,059

1

36,316,177

1

24,687,336

1

PAYABLES (Note 26)

54,118,509

1

48,200,920

2

41,152,148

1

CURRENT TAX LIABILITIES (Notes 4, 43 and 45)

4,684,763

-

3,640,732

-

4,450,662

-

DEPOSITS AND REMITTANCES (Notes 27 and 45)

3,341,587,212

81

3,065,364,627

79

2,931,070,420

80

BONDS PAYABLE (Notes 28 and 47)

76,287,482

2

80,586,915

2

79,585,214

2

OTHER BORROWINGS (Notes 29 and 47)

4,515,000

-

3,412,328

-

1,625,000

-

PROVISIONS (Notes 4, 30 and 31)

24,122,987

1

23,659,550

1

24,400,601

1

OTHER FINANCIAL LIABILITIES (Notes 32 and 47)

80,189,952

2

76,978,878

2

69,593,417

2

LEASE LIABILITIES (Notes 3, 4, 18, 45 and 47)

2,276,906

-

2,325,107

-

2,138,974

-

DEFERRED TAX LIABILITIES (Notes 4 and 45)

6,170,458

-

6,139,717

-

6,119,324

-

OTHER LIABILITIES (Notes 4, 33 and 45)

9,830,163

-

6,458,533

-

6,672,469

-

Total liabilities

3,934,671,005

95

3,661,389,443

95

3,483,930,937

95

EQUITY ATTRIBUTABLE TO OWNER OF THE PARENT (Note 4 and 34)

Share capital

Ordinary shares

136,427,459

3

136,427,459

3

136,427,459

4

Capital surplus

17,761,804

-

17,761,804

-

17,758,986

-

Retained earnings

Legal reserve

22,273,772

1

22,273,772

1

20,380,779

-

Special reserve

18,503,358

-

18,503,358

-

6,471,594

-

Unappropriated earnings

28,825,499

1

23,117,999

1

27,080,359

1

Total retained earnings

69,602,629

2

63,895,129

2

53,932,732

1

Other equity

Exchange differences on translating the financial statements of foreign operations

917,198

-

(619,865)

-

(409,849)

-

Unrealized gain on investments in equity instruments at fair value through other comprehensive income

14,299,422

-

10,697,410

-

8,126,798

-

Unrealized loss on investments in debt instruments at fair value through other comprehensive income

(22,013,081)

-

(20,563,285)

-

(22,848,481)

-

Unrealized gain (loss) on other comprehensive income reclassified by overlay approach

458,983

-

211,430

-

3,014

-

Total other equity

(6,337,478)

-

(10,274,310)

-

(15,128,518)

-

Total equity attributable to owner of the parent

217,454,414

5

207,810,082

5

192,990,659

5

NON-CONTROLLING INTERESTS

2,306

-

2,254

-

2,206

-

Total equity

217,456,720

5

207,812,336

5

192,992,865

5

TOTAL

$

4,152,127,725

100

$

3,869,201,779

100

$

3,676,923,802

100

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

- 3 -

HUA NAN FINANCIAL HOLDINGS CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

For the Three Months Ended March 31

2024

2023

Amount

%

Amount

%

INTEREST REVENUE (Notes 4, 35 and 45)

$ 24,124,817

148

$ 19,776,108

139

INTEREST EXPENSES (Notes 4, 35 and 45)

(17,919,479)

(110)

(12,277,572)

(86)

NET INTEREST

6,205,338

38

7,498,536

53

NET REVENUES OTHER THAN INTEREST

Commission and service fee revenues, net (Notes 4,

36 and 45)

3,818,347

23

2,506,310

18

Income from insurance premiums, net (Notes 4

and 37)

1,576,478

10

1,346,116

9

Gain on financial assets and liabilities at fair value

through profit or loss, net (Notes 4, 8, 38 and 45)

16,064,798

98

779,621

5

Gain on investment properties, net (Note 19)

120,137

1

150,580

1

Realized gain on financial assets at fair value

through other comprehensive income (Notes 4

and 39)

161,130

1

91,892

1

Loss on derecognition of financial assets at

amortized cost (Note 4)

(6,141)

-

(2,365)

-

Foreign exchange (loss) gain, net (Notes 4 and 38)

(11,399,827)

(70)

2,155,676

15

Impairment loss on assets (Notes 4 and 11)

(7,554)

-

(2,474)

-

Share of loss associates accounted for using the

equity method (Notes 4 and 15)

(1,646)

-

(1,773)

-

Loss on reclassification of overlay approach

(Notes 4, 8 and 11)

(266,259)

(2)

(298,024)

(2)

Other non-interest income, net (Notes 4 and 45)

63,947

1

45,883

-

Total net revenues other than interest

10,123,410

62

6,771,442

47

TOTAL NET REVENUE

16,328,748

100

14,269,978

100

ALLOWANCE FOR DOUBTFUL ACCOUNTS,

COMMITMENT, AND GUARANTEES (Notes 4,

13 and 14)

(739,449)

(5)

(396,955)

(3)

CHANGE IN PROVISIONS FOR INSURANCE

LIABILITIES, NET (Notes 4 and 30)

(496,398)

(3)

(451,034)

(3)

OPERATING EXPENSES (Notes 31, 40, 41, 42

and 45)

Employee benefits

(4,990,824)

(31)

(4,657,457)

(33)

Depreciation and amortization

(527,055)

(3)

(513,000)

(4)

Others

(2,530,181)

(15)

(2,184,818)

(15)

Total operating expenses

(8,048,060)

(49)

(7,355,275)

(52)

(Continued)

- 4 -

HUA NAN FINANCIAL HOLDINGS CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

For the Three Months Ended March 31

2024

2023

Amount

%

Amount

%

NET PROFIT BEFORE INCOME TAX

$

7,044,841

43

$

6,066,714

42

INCOME TAX EXPENSE (Notes 4 and 43)

(1,415,893)

(9)

(1,066,643)

(7)

NET PROFIT FOR THE PERIOD

5,628,948

34

5,000,071

35

OTHER COMPREHENSIVE INCOME (LOSS)

(Notes 4, 8, 34 and 43)

Items that will not be reclassified subsequently to

profit or loss:

Gain (loss) on investments in equity instruments at

fair value through other comprehensive income

3,680,616

23

(387,453)

(3)

Items that may be reclassified subsequently to profit

or loss:

Exchange differences on translating the financial

statements of foreign operations

1,537,063

9

(117,210)

(1)

(Loss) gain on investments in debt instruments at

fair value through other comprehensive income

(1,455,578)

(9)

3,390,924

24

Gain on other comprehensive income reclassified

by overlay approach

266,259

2

298,024

2

Income tax relating to items that may be

reclassified subsequently to profit or loss

(12,924)

-

(18,597)

-

Other comprehensive income for the period

4,015,436

25

3,165,688

22

TOTAL COMPREHENSIVE INCOME FOR THE

PERIOD

$

9,644,384

59

$

8,165,759

57

NET PROFIT ATTRIBUTABLE TO:

Owner of the parent

$

5,628,913

34

$

5,000,054

35

Non-controlling interests

35

-

17

-

$

5,628,948

34

$

5,000,071

35

COMPREHENSIVE INCOME ATTRIBUTABLE TO:

Owner of the parent

$

9,644,332

59

$

8,165,728

57

Non-controlling interests

52

-

31

-

$

9,644,384

59

$

8,165,759

57

EARNINGS PER SHARE (Note 44)

Basic and diluted

$ 0.41

$ 0.37

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

(Concluded)

- 5 -

HUA NAN FINANCIAL HOLDINGS CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (In Thousands of New Taiwan Dollars)

Other Equity

Unrealized Gain

(Loss) on

Unrealized Gain

Exchange

Investment in

(Loss) on

Differences on

Equity

Investment in

Unrealized Gain

Translating the

Instruments at

Debt Instruments

(Loss) on Other

Financial

Fair Value

at Fair Value

Comprehensive

Retained Earnings

Statements of

Through Other

Through Other

Income

Share Capital

Capital Surplus

Unappropriated

Foreign

Comprehensive

Comprehensive

Reclassified by

Non-controlling

Ordinary Shares

Share Premium

Treasury Stock

Donated Assets

Others

Total

Legal Reserve

Special Reserve

Earnings

Total

Operations

Income

Income

Overlay Approach

Interests

Total Equity

BALANCE AT JANUARY 1, 2023

$

136,427,459

$

17,702,376

$

52,349

$

2,936

$

1,325

$

17,758,986

$

20,380,779

$

6,471,594

$

22,023,668

$

48,876,041

$

(292,639 )

$

8,570,902

$

(26,224,250 )

$

(291,568 )

$

2,175

$

184,827,106

Net profit for the three months ended March 31, 2023

-

-

-

-

-

-

-

-

5,000,054

5,000,054

-

-

-

-

17

5,000,071

Other comprehensive (loss) for the three months ended March 31, 2023

-

-

-

-

-

-

-

-

-

-

(117,210 )

(387,467 )

3,375,769

294,582

14

3,165,688

Total comprehensive income (loss) for the three months ended March 31,

2023

-

-

-

-

-

-

-

-

5,000,054

5,000,054

(117,210 )

(387,467 )

3,375,769

294,582

31

8,165,759

Disposal of equity instruments at fair value through other comprehensive

income

-

-

-

-

-

-

-

-

56,637

56,637

-

(56,637 )

-

-

-

-

BALANCE AT MARCH 31, 2023

$

136,427,459

$

17,702,376

$

52,349

$

2,936

$

1,325

$

17,758,986

$

20,380,779

$

6,471,594

$

27,080,359

$

53,932,732

$

(409,849 )

$

8,126,798

$

(22,848,481)

$

3,014

$

2,206

$

192,992,865

BALANCE AT JANUARY 1, 2024

$

136,427,459

$

17,702,376

$

52,349

$

2,936

$

4,143

$

17,761,804

$

22,273,772

$

18,503,358

$

23,117,999

$

63,895,129

$

(619,865 )

$

10,697,410

$

(20,563,285 )

$

211,430

$

2,254

$

207,812,336

Net profit for the three months ended March 31, 2024

-

-

-

-

-

-

-

-

5,628,913

5,628,913

-

-

-

-

35

5,628,948

Other comprehensive income (loss) income for the three months ended

March 31, 2024

-

-

-

-

-

-

-

-

-

-

1,537,063

3,680,599

(1,449,796 )

247,553

17

4,015,436

Total comprehensive income (loss) income for the three months ended

March 31, 2024

-

-

-

-

-

-

-

-

5,628,913

5,628,913

1,537,063

3,680,599

(1,449,796 )

247,553

52

9,644,384

Disposal of equity instruments at fair value through other comprehensive

income

-

-

-

-

-

-

-

-

78,587

78,587

-

(78,587 )

-

-

-

-

BALANCE AT MARCH 31, 2024

$

136,427,459

$

17,702,376

$

52,349

$

2,936

$

4,143

$

17,761,804

$

22,273,772

$

18,503,358

$

28,825,499

$

69,602,629

$

917,198

$

14,299,422

$

(22,013,081)

$

458,983

$

2,306

$

217,456,720

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

- 6 -

HUA NAN FINANCIAL HOLDINGS CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars)

For the Three Months Ended

March 31

2024

2023

CASH FLOWS FROM OPERATING ACTIVITIES

Net profit before income tax

$ 7,044,841

$ 6,066,714

Adjustments for:

Depreciation expenses

439,222

419,006

Amortization expenses

87,833

93,994

Allowance for doubtful accounts, commitments, and guarantees

739,449

396,955

Interest expenses

17,919,479

12,277,572

Net gain on derecognition of financial assets at amortized cost

6,141

2,365

Interest income

(24,124,817)

(19,776,108)

Dividend income

(136,554)

(45,768)

Change in provisions for insurance liabilities, net

496,398

451,034

Share of loss of associates accounted for using the equity method

1,646

1,773

Loss on profit or loss reclassified by overlay approach

266,259

298,024

(Gain) loss on disposal of property and equipment

(7)

148

Gain on disposal of investment properties

(3,537)

(50,295)

Impairment loss recognized on financial assets

7,554

2,474

Others

(4,759)

(46)

Changes in operating assets and liabilities

(Increase) decrease in due from the Central Bank and call loans to

other banks

(10,530,277)

428,686

Increase in financial assets at fair value through profit or loss

(36,081,393)

(10,344,128)

Increase in financial assets at fair value through other

comprehensive income

(24,068,722)

(129,826)

Increase in investment in debt instruments at amortized cost

(155,569,116)

(8,691,409)

Increase in receivables

(7,270,455)

(3,611,414)

Increase in discounts and loans

(33,635,084)

(39,641,056)

Decrease (increase) in assets under reinsurance contracts

648,175

(359,923)

Increase in other assets

(2,347)

(1,106,213)

Decrease in other financial assets

614,805

272,885

Increase in deposits from the Central Bank and other banks

477,103

23,875,701

Decrease in financial liabilities at fair value through profit or loss

(3,724,067)

(1,717,010)

(Decrease) increase in securities sold under repurchase agreements

(13,771,481)

28,290,435

Increase (decrease) in payables

4,053,658

(750,338)

Increase (decrease) in deposits and remittances

276,222,585

(12,391,713)

Decrease in provisions

(165,445)

(6,395)

Increase in other financial liabilities

3,211,074

4,716,850

Increase (decrease) in other liabilities

2,887,821

(5,931,309)

Cash generated from (used in) operations

6,035,982

(26,958,335)

Interest received

23,658,220

19,255,181

Dividend received

44,978

27,153

Interest paid

(15,342,022)

(8,419,056)

Income tax paid

(632,397)

(496,592)

Net cash generated from (used in) operating activities

13,764,761

(16,591,649)

(Continued)

- 7 -

HUA NAN FINANCIAL HOLDINGS CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars)

For the Three Months Ended

March 31

2024

2023

CASH FLOWS FROM INVESTING ACTIVITIES

Acquisition of property and equipment

$

(636,155)

$

(349,645)

Proceeds from disposal of property and equipment

12

268

Acquisition of intangible assets

(47,454)

(61,580)

Acquisition of investment properties

(73,754)

(60,969)

Proceeds from disposal of investments properties

11,221

170,700

Net cash used in investing activities

(746,130)

(301,226)

CASH FLOWS FROM FINANCING ACTIVITIES

Increase in short-term borrowings

1,240,000

-

Decrease in short-term borrowings

(157,000)

(241,000)

Increase in commercial paper payables

3,284,193

4,801,976

Repayment of corporate bonds

-

(7,000,000)

Repayment of bank debentures

(4,300,000)

-

Proceeds from long-term borrowings

24,000

10,000

Repayment of long-term borrowings

(4,328)

-

Repayment of the principal portion of lease liabilities

(213,357)

(210,767)

Net cash used in financing activities

(126,492)

(2,639,791)

EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE

OF CASH HELD IN FOREIGN CURRENCIES

1,437,091

(111,252)

NET INCREASE (DECREASE) IN CASH AND CASH

EQUIVALENTS

14,329,230

(19,643,918)

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE

PERIOD

165,833,899

186,822,057

CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD

$

180,163,129

$

167,178,139

(Continued)

- 8 -

HUA NAN FINANCIAL HOLDINGS CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars)

Reconciliation of the amounts in the consolidated statements of cash flows with the equivalent items reported in the consolidated balance sheets as of March 31, 2024 and 2023:

March 31

2024

2023

Cash and cash equivalents in consolidated balance sheets

$

53,796,307

$

30,112,222

Due from the Central Bank and other banks that meet the definition of

cash and cash equivalents in IAS 7

123,285,369

134,816,710

Securities purchased under resell agreements that meet the definition of

cash and cash equivalents in IAS 7

3,081,453

2,249,207

Cash and cash equivalents in consolidated statements of cash flows

$

180,163,129

$

167,178,139

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

(Concluded)

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