Hua Nan Financial : Title2022Q3 HNFHC Consolidated Financial Report

Hua Nan Financial Holdings Co., Ltd. and Subsidiaries

Consolidated Financial Statements for the

Nine Months Ended September 30, 2022 and 2021 and Independent Auditors' Review Report

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

November 24, 2022

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)

	September 30, 2022 (Reviewed)		December 31, 2021 (Audited)		September 30, 2021 (Reviewed)
ASSETS			Amount	%					Amount	%					Amount	%
CASH AND CASH EQUIVALENTS (Notes 6 and 46)	$	39,175,888		1	$	42,752,408	1	$	33,817,530	1
DUE FROM THE CENTRAL BANK AND CALL LOANS TO OTHER BANKS (Notes 6, 7 and 46)			237,906,375		7				237,798,118	7				256,162,419	8
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (Notes 8 and 46)			97,771,173		3				111,925,660	3				132,989,768	4
FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME (Notes 5, 9, 11
and 48)			368,439,839		10				327,146,365	10				302,678,480	9
INVESTMENTS IN DEBT INSTRUMENTS AT AMORTIZED COST, NET (Notes 5, 10, 11 and 48)			728,604,748		20				609,544,831	18				587,907,964	17
SECURITIES PURCHASED UNDER RESELL AGREEMENTS (Note 12)			1,949,350		-					2,449,190		-				1,596,140	-
RECEIVABLES, NET (Notes 5, 13 and 46)			51,240,432		1				60,275,356	2				60,947,363	2
CURRENT TAX ASSETS (Notes 44 and 46)			167,190		-					222,141	-				347,881	-
DISCOUNTS AND LOANS, NET (Notes 5, 14 and 46)			2,012,538,749		56				1,985,934,147	57				1,940,098,480	57
REINSURANCE CONTRACTS ASSETS, NET			6,814,776		-					5,381,961		-				5,852,263	-
INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD, NET (Note 15)			359,216		-					360,138	-				354,626	-
OTHER FINANCIAL ASSETS, NET (Notes 5 and 16)			16,177,005		1				21,025,010	1				20,649,701	1
INVESTMENT PROPERTIES, NET (Notes 19 and 48)			12,182,614		-					12,117,002	-				11,799,156	-
PROPERTY AND EQUIPMENT, NET (Notes 17, 46 and 48)			32,693,833		1				32,390,449	1				31,747,319	1
RIGHT-OF-USE ASSETS (Notes 18 and 46)			2,132,752		-					1,960,405		-				1,985,179	-
INTANGIBLE ASSETS, NET (Note 20)			937,271		-					942,413	-				898,206	-
DEFERRED TAX ASSETS (Notes 4 and 44)			4,183,566		-					3,571,080		-				3,402,369	-
OTHER ASSETS, NET (Notes 21, 46 and 48)			5,655,078		-					5,157,244		-				3,724,037	-
TOTAL		$	3,618,929,855		100			$	3,460,953,918	100	$	3,396,958,881	100
LIABILITIES AND EQUITY
DEPOSITS FROM THE CENTRAL BANK AND OTHER BANKS (Notes 22 and 46)	$	232,416,325		6	$	121,391,552	3	$	139,625,499	4
FUNDS BORROWED FROM THE CENTRAL BANK AND OTHER BANKS (Notes 23 and 48)			-		-					34,478,600	1				29,452,510	1
FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS (Note 8)			8,566,147		-					3,427,549	-				2,404,433	-
SECURITIES SOLD UNDER REPURCHASE AGREEMENTS (Notes 8, 9, 10 and 25)			65,869,383		2				26,305,596	1				38,414,625	1
COMMERCIAL PAPER PAYABLE, NET (Notes 24 and 47)			20,736,649		-					19,305,630	1				16,579,726	-
PAYABLES (Note 26)			58,442,279		2				44,198,933	1				58,291,613	2
CURRENT TAX LIABILITIES (Notes 44 and 46)			2,888,833		-					2,517,810		-				1,948,389	-
DEPOSITS AND REMITTANCES (Notes 27 and 46)			2,850,493,141		79				2,835,359,989	82				2,743,039,371	81
BONDS PAYABLE (Notes 28 and 47)			81,093,184		2				67,891,382	2				68,790,781	2
OTHER BORROWINGS (Notes 29 and 47)			2,382,000		-					2,340,340		-				1,634,340	-
PROVISIONS (Notes 4, 30 and 31)			25,121,973		1				22,986,431	1				23,167,920	1
OTHER FINANCIAL LIABILITIES (Notes 32 and 46)			61,338,546		2				56,902,334	2				61,218,319	2
LEASE LIABILITIES (Notes 18, 46 and 47)			2,189,791		-					1,984,400	-				1,961,041	-
DEFERRED TAX LIABILITIES (Notes 4 and 44)			6,147,821		-					6,100,474		-				6,096,694	-
OTHER LIABILITIES (Notes 33 and 46)			23,419,029		1				15,056,091	-				6,559,797	-
Total liabilities			3,441,105,101		95				3,260,247,111	94				3,199,185,058	94
EQUITY ATTRIBUTABLE TO OWNER OF THE PARENT (Note 34)
Share capital
Ordinary shares			136,427,459		4				131,941,450	4				131,941,450	4
Capital surplus			17,758,986		1				17,758,986	1				17,758,986	1
Retained earnings
Legal reserve			20,380,779		1				18,593,434	-				18,593,434	1
Special reserve			6,471,594		-					6,471,594		-				6,471,594	-
Unappropriated earnings			18,234,128		-					19,658,539	1				16,595,270	-
Total retained earnings			45,086,501		1				44,723,567	1				41,660,298	1
Other equity
Exchange differences on translating the financial statements of foreign operations			367,824		-					(3,691,240)	-				(3,566,460)	-
Unrealized gain on investments in equity instruments at fair value through other comprehensive income			7,480,153		-					12,337,960	-				10,665,590	-
Unrealized loss on investments in debt instruments at fair value through other comprehensive income			(29,000,353)	(1)				(2,676,360)	-				(857,844)	-
Unrealized gain (loss) on other comprehensive income reclassified by overlay approach			(297,944)	-					310,358	-				169,746	-
Total other equity			(21,450,320)	(1)				6,280,718		-				6,411,032	-
Total equity attributable to owner of the parent			177,822,626		5				200,704,721	6				197,771,766	6
NON-CONTROLLING INTERESTS			2,128		-					2,086	-				2,057	-
Total equity			177,824,754		5				200,706,807	6				197,773,823	6
TOTAL		$	3,618,929,855		100			$	3,460,953,918	100	$	3,396,958,881	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) (Reviewed, Not Audited)

		For the Three Months Ended September 30					For the Nine Months Ended September 30
	2022			2021				2022			2021
		Amount	%				Amount	%				Amount	%				Amount	%
INTEREST REVENUE (Notes 35
and 46)	$ 14,918,173	93	$ 9,190,379			66	$ 37,170,826	89	$ 27,095,084	69
INTEREST EXPENSES
(Notes 35 and 46)	(6,297,100)	(39)	(2,107,423)		(15)	(12,272,560)	(29)	(6,437,345)	(16)
NET INTEREST	8,621,073		54	7,082,956		51	24,898,266	60	20,657,739	53
NET REVENUES OTHER
THAN INTEREST
Commission and fee revenue,
net (Notes 36 and 46)	2,351,312		15	3,202,456			23	7,550,474	18	9,322,550	23
Income from insurance
premiums, net (Note 37)	875,915	5	977,534		7	3,213,185	8	3,041,493	8
Gain or loss on financial assets
and liabilities at fair value
through profit or loss, net
(Notes 8, 38 and 46)	14,956,582	93	(88,285)		(1)	24,669,239	59	(803,342)	(2)
Gain on investment properties,
net (Note 19)	140,877	1	92,552		1	344,525	1	425,947	1
Realized gain or loss on
financial assets at fair value
through other comprehensive
income (Note 39)	1,596,892		10	1,928,860			14	2,478,268	6	3,484,791	9
Net gain or loss on
derecognition of financial
assets at amortized cost
(Note 10)	-	-		2,543		-	7,500	-	8,374	-
Foreign exchange gain or loss,
net (Note 40)	(12,708,133)	(79)	586,868		4	(22,031,524)	(53)	2,812,610	7
Impairment (loss) reversal gain
on assets (Note 11)	(16,684)	-		(3,880)		-	(21,005)	-	32,827	-
Share of associates accounted
for using the equity method
(Note 15)	4,571	-		2,504		-	8,454	-	6,908	-
Gain or loss on profit or loss
reclassified by overlay
approach (Note 8)	189,167	1	144,562		1	624,775	1	19,955	-
Other non-interest income, net
(Note 46)	16,428	-		71,426		-	100,452	-	298,458	1
Total net revenues other
than interest		7,406,927		46	6,917,140			49	16,944,343	40	18,650,571	47
TOTAL NET REVENUE		16,028,000	100		14,000,096		100	41,842,609	100	39,308,310	100
ALLOWANCE FOR
DOUBTFUL ACCOUNTS,
COMMITMENT, AND
GUARANTEES (Notes 13
and 14)	(1,658,362)	(10)	(1,555,376)		(11)	(2,813,815)	(7)	(1,808,577)	(5)
CHANGE IN PROVISIONS FOR
INSURANCE LIABILITIES,
NET (Note 30)	(120,423)	(1)	(112,826)		(1)	(1,094,454)	(3)	(658,394)	(2)
OPERATING EXPENSES
(Notes 31, 41, 42, 43 and 46)
Employee benefits	(4,774,950)	(30)	(4,518,346)		(32)	(13,812,850)	(33)	(13,916,539)	(35)
Depreciation and amortization	(521,270)	(3)	(524,059)		(4)	(1,558,099)	(4)	(1,613,140)	(4)
Others	(2,126,125)	(13)	(1,852,488)		(13)	(6,014,525)	(14)	(5,459,079)	(14)
Total operating expenses	(7,422,345)	(46)	(6,894,893)		(49)	(21,385,474)	(51)	(20,988,758)	(53)
																					(Continued)

- 4 -