Annual Report of 2013

Transcription

2013 ANNUAL REPORT
2013 ANNUAL REPORT
HONESTY. EFFICIENCY. ACTIVENESS. RESPONSIBILITY.TEAMWORK
C NTENTS
Annual Report 2013
HIGHLIGHT
002
MESSAGE TO THE SHAREHOLDERS
003
HISTORY AND ORGANIZATION
012
HISTORY AND ORGANIZATION OF OUR BANK
012
ORGANIZATION CHART FOR HUA NAN BANK
014
BOARD OF DIRECTORS AND SUPERVISORS
015
TOP MANAGEMENT AND DEPARTMENT MANAGERS IN HEAD OFFICE
017
HUA NAN FINANCIAL HOLDINGS GROUP ORGANIZATION
018
MANAGEMENT OF THE HNFHC GROUP
019
REVIEW OF OPERATIONS FOR 2013
020
BUSINESS PLAN FOR 2014
023
MARKET ANALYSIS
025
RISK MANAGEMENT AFFAIRE
027
FINANCIAL STATEMENT
035
HUA NAN COMMERRCIAL BANK 2013 FINANCIAL STATEMENTS
035
HUA NAN FINANCIAL HOLDINGS AND SUBSIDIARIES 2013
CONSOLIDATED FINANCIAL STATEMENTS
136
APPOINTED OFFICES HANDLING INTERNATIONAL BUSINESS
142
DISTRIBUTION OF CORRESPONDENT BANKS AND
OVERSEAS OFFICES
150
HIGHLIGHT
The Bank and Subsidiaries
Dec.31,2012
CAPITAL ADEQUACY RATIO (%)
Dec.31,2013
13.04
Dec.31,2013
12.72
Millions of U.S.
Dollar
Millions of N.T. Dollar
Dec.31,2012
Dec.31,2013
Dec.31,2013
Total Assets
2,023,364
2,117,674
71,111
Deposits and Remittances
1,665,093
1,739,937
58,426
Discounts and loans, net
1,374,043
1,406,613
47,233
122,774
130,694
4,389
21,805
22,787
765
7,848
8,406
282
10,177
11,214
377
8,724
9,571
321
FINANCIAL ITEMS:
BALANCE SHEET ITEMS:
Equity
CHAIRMAN
Ming-Cheng Lin
STATEMENT OF COMPREHENSIVE INCOME ITEMS:
Net Interest
Net revenues other than interest
Net profit before Income Tax from
Continuing Operations
Net profit
N.T. Dollar
U.S. Dollar
1. Operating Report for 2013
PROFITABILITY:
Earnings Per Share
1.43
1.52
0.05
(1)Domestic and overseas financial and economic conditions in 2013
At the beginning of 2013, the U.S. fiscal cliff was averted. Coupled with alleviation of the European sovereign
ADDITIONAL DATA:
7,109
7,196
debt crisis and the Abe administration’s stimulus package, Taiwan’s private investment sustained a major pickup
185
186
as international prospects turned increasingly promising. Nevertheless, China’s slower growth took its toll on
Offshore Banking Unit
1
1
Taiwan’s trade performance. Aggravated by relatively sluggish domestic consumption, Taiwan saw its GDP grow
Overseas Branches
9
10
a mere 1.44% in the first quarter. Thanks to a further improvement in the U.S. economy that fueled a moderate
Overseas Representative Offices
1
1
global recovery, Taiwan’s second-quarter trade surplus doubled from that of the three previous months and
Employees
Domestic Branches
Note：The Exchange Rate as of December 31, 2013 was NT$29.78 to US$1.
raised the June quarter’s GDP growth rate to 2.69%. The country’s monitoring indicator for June gave a “green
light” reading that points to economic health, a departure from previous months’ “yellow-blue light” signs
warning of an impending contraction.
Improving prospects for the U.S. economy prompted the Fed to signal readiness for QE tapering. As a result, the
stock and currency markets of the more vulnerable emerging economies took quite a beating in the second
half of the year. Against still tepid growth in private consumption, Taiwan’s export performance and private
investment were both adversely affected. GDP growth slowed to 1.31% in the third quarter. As the Fed did its
best to assuage market jitters and kept QE in place, the world economy headed for a gradual pickup in the
002
HIGHLIGHT
2013 ANNUAL REPORT
003
HONESTY ● EFFICIENCY ● ACTIVENESS ● RESPONSIBILITY ● TEAMWORK
fourth quarter—traditionally a seasonal peak for Taiwan’s exports. Combined, a quarter-on-quarter
jump in external trade, stability across the spheres of production, finance and employment, and a slight
improvement in consumer confidence, fourth-quarter GDP regained some momentum and rose 2.95%,
a quarterly high for the year. In 2013, the Taiwanese economy expanded 2.11%, up from 1.48% a year
earlier.
While monetary easing remained the norm across major economies around the world in 2013, Taiwan’s
central bank kept its benchmark discount rate on hold as the local economy recovered slowly and
inflation was largely kept in check. On foreign exchange markets, Abenomics pushed down most Asian
currencies. With the Fed’s May hint of its readiness for QE tapering dealing an extra blow, the Taiwan
dollar weakened in the first half of the year, from 29.03 to the dollar at the beginning of the year to 30.35
at the end of June. The U.S. factor continued to weigh on its fluctuations in the second half, leading to an
average of 29.77 to the greenback for the full year.
(2)Overview of organizational changes
As far as its organizational structure is concerned, the Bank had four major business groups, as set forth
PRESIDENT
Li-Yen Yang
in its organization regulations, as of the end of 2013: 1) Corporate Banking Group, which comprises the
Corporate Banking Department and International Banking Department; 2) Consumer Banking Group,
which includes the Consumer Banking Department, Trust Department and Wealth Management
Department; 3) Financial Markets Group, which includes the Financial Trading Department and
Treasury Marketing Department; and 4) Business Management Group, which comprises the Business
Management Department, Electronic Banking Department and Customer Service Department. Hua
Nan’s headquarters maintains three back-end management groups: 1) Risk Management Group,
which comprises the Risk Management Department, Credit Checking & Industrial/Economic Research
Department, Overdue Loan Management Department, Corporate Credit Department and Consumer
Credit Department; 2) Information Technology Group, which includes the IT Planning & Development
Department and IT Operations & Service Department; and 3) General Administration Group, which
comprises the General Administration Department, Finance & Accounting Department, Human
Resource Department, Planning Department and Legal Compliance Department as well as five Channel
Management Centers.
(3)Results from implementing business plan and operating strategy
1)Supervised the expansion of deposits by relevant units in order to maintain the highest demand
deposits ratio and lowest capital costs among Taiwan’s “Big 3” commercial banks.
2)Launched “Super-Value Preferential Deposits (I),” giving a boost to relevant units in securing quality
deposits.
3)Launched the “e-help for all” platform for online collection services.
5)Launched online banking services at the Macau Branch.
6) Launched online yuan services at the Bank’s DBU, OBU, and Hong Kong and Shenzhen branches.
7)Launched yuan cash withdrawals at ATMs.
8)Installed an exclusive section designed specifically for the sake of consumer protection that places
emphasis on the interchange, application and proliferation of relevant information.
9)Introduced a preferential financing program to help small and medium-sized enterprises (SMEs) procure
energy-saving equipment, thereby enhancing their operational efficiency at a lower cost.
10)Modified the Bank’s regulations governing preferential loans for the cultural and creative industry, giving
relevant operators easier access to funding in line with government policy.
11)Introduced “Preferential Loans for Stimulating Conventional Industries (IV)” to facilitate the government
push for such industries to restructure themselves and enhance competitiveness.
12)Launched the “Financing Project for Promoting Investment by Taiwanese Companies” as an incentive for
firms operating abroad to return home. As it made available project financing to such companies, the
Bank also aimed to help promote local industrial and commercial development, increase employment
and drive the national economy.
4)Launched “Web access for all” services.
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13)Launched yuan-related import/export, deposit/remittance and foreign exchange services at the
Bank’s DBU in tandem with the cross-strait memorandum on currency settlement.
14)Along with the launch of yuan services and to accommodate a growing number of China-bound
visitors for tourism, business or official duties, the Bank made it possible for local people to withdraw
yuan banknotes at the ATMs of 10 branches.
15) Launched a foreign currency settlement platform in line with central bank policy and won the
Distinction in Promotion Award and Excellence in Innovation Award.
16)Completed replacing the Bank’s overseas foreign exchange operating system, both streamlining
workflows and reducing maintenance costs.
17)Diversified Hua Nan services by giving customers the option of purchasing foreign currency
banknotes and traveler’s checks on its online (including mobile) banking platform.
18)Strengthened the interface and function of the Bank’s online banking platform, giving customers
the option of booking foreign exchange transactions involving fixed amounts and taking place in
regular intervals.
19)Expedited the Bank’s service offerings by giving DBU customers with foreign currency demand
deposit accounts the option of booking transactions involving fixed amounts and taking place in
regular intervals.
20)Organized a presentation for Taiwanese companies in Greater China to help business units promote
their business, in particular services in relation to trade across the Taiwan Strait.
21)The Shenzhen Branch launched across-the-board yuan services on March 29, 2013, ranking Hua
Nan among the first batch of Taiwanese banks to do so.
22)Continued expanding outlets in China: The Baoan Subbranch in Shenzhen became operational on
December 10, 2013; preparations for the Shanghai and Fuzhou branches are now under way.
23)Further upgraded the Bank’s personal banking package by integrating debt and wealth
management services:
(a)Deepened relations with mortgage clients by providing them with products linked to wealth
management, thereby meeting customer needs and cementing the loyalty of quality clients.
(b)Continued to target customers with the potential to buy their first homes or other properties for
residential purposes; launched the Weaving Dreams for Youth campaign to usher in a younger
generation of customers who can afford mortgage payments.
(c)Continued promoting insurance-linked mortgages and offered preferential life insurance
schemes to further expand the clientele and grow fee income.
(d)Broadened the client base for credit loans while paying due attention to risk control; sought
(e)Crafted credit card offerings with a double appeal of both cash and bonus rewards; gave priority to
the Gourmet Card that feature bonus rewards for gourmet cardholders, Signature Card that imposes
no ceiling on cash rewards, and co-branded EasyCard in order to win over more new cardholders and
thus increase market share.
(f) Sought more partners for co-branded and affinity credit cards to usher in new customers who have yet
to initiate deposit or loan dealings with the Bank.
24)Built on the Comprehensive Financial Services Platform to further strengthen segment marketing, entice
quality clients, increase the weighting of quality assets and boost earnings:
(a)Set up a well-rounded system under which every employee is to be involved in marketing, thereby
stimulating the sale of personal finance products throughout the branches.
(b)Singled out quality customers with low leverage and a low outstanding balance on their mortgages to
promote revolving mortgages; offered additional incentives to encourage them to tap into available
credit lines, thereby boosting their contribution to the Bank’s earnings.
(c)Continued promoting the “Love” co-branded card of the Bank and EasyCard Corp., available in red
and black, that is intended to cater specifically to the younger generation. As such, emphasis is placed
on offering bargains in recreational activities to entice even more young cardholders.
(d)Launched the Gourmet Card that feature special bargains for gourmet cardholders, the first of its kind
in the local market. By drawing on resources made available by international credit card organizations,
the Bank is keen to appeal to different segments of cardholders and highlight its brand image by
adopting an unconventional marketing strategy.
(e)Assisted the Bank’s corporate banking account officers in promoting the Traveler’s Diamond Signature
Card by organizing presentations for employees of corporate clients so as to consolidate customer
loyalty and maximize synergies.
(f) Joined forces with the wealth management team to persuade high net-worth customers to become
members of the Bank’s Prestige Club; launched acquiring services for spending by China UnionPay
cardholders to boost competitiveness in the acquiring sector and increase income.
(g)Bolstered cross-sector cooperation to better cater to cardholders—speeding up the development of
daily products appealing to them and expanding the network of contracted vendors willing to offer
preferential deals—and thus increase the value and usage rate of Hua Nan cards.
25)Placed equal emphasis on mutual funds and insurance policies; optimized the allocation of customers’
core assets by taking on board multicurrency funds and dividend-inclusive balanced funds; retrained
wealth management consultants with regard to the need for weighing both turnover and stockpile in
order to adapt to market changes; strengthened salespeople training to highlight the scheme of paying
for insurance in installments as an option for customers to build their core assets.
customers who can afford higher interest rates and promoted credit loans among employees
of quality companies; strengthened alliances with auto loan providers to expand lending on this
front.
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2013 ANNUAL REPORT
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26)Fine-tuned management of different segments of customers and adopted marketing strategies
of financial assets measured at cost of NT$225.95 million; foreign exchange losses of NT$1.19 billion; and
accordingly; continued to develop and maintain customer relations by organizing activities to show
other non-interest net income of NT$729.42 million. Bad debt expenses and guarantee liability provisions
concern for clients, hosting thematic presentations, devising customer reward programs, and introducing
amounted to NT$3.79 billion, and operating expense was NT$15.93 billion (employee welfare expense
events of culture and the arts.
was NT$10.63 billion, depreciation and amortization was NT$741.53 million, and other business and
27)Strengthened management of quality customers by providing premium clients with one-on-one services
rendered by senior financial counselors. Financial health assessment is offered regularly to demonstrate
management expense was NT$4.56 billion). Pretax profit amounted to NT$11.17 billion while income tax
expense came in at NT$1.60 billion. Net profit amounted to NT$9.57 billion, or NT$1.52 per share.
(6)Status of R&D
the Bank’s concern over the performance of customers’ investment portfolios.
28)To grow fee income from trust services, increase the diversity of trust offerings and facilitate yuan
investments, the Bank introduced foreign currency-denominated onshore mutual funds in March 2013.
Hua Nan promotes R&D by encouraging all employees to get involved on this front. In 2013, employees
presented a total of 481 R&D proposals, with the Bank adopting 79 of them.
29)To provide investors with a greater variety of products, the Bank began accepting investor subscriptions
2. Summary of Business Plan for 2014
to ETFs that track domestic stock indices in June 2013.
30)Met customer needs for hedging and other financial exercises by providing them with a wide variety of
financial markets offerings. Currently the DBU offers the following financial derivatives with the yuan as
In 2014, the Bank aims to reduce its reliance on interest income; focus on expansion of wealth management,
credit card and electronic banking (third-party payment) services as well as cross-selling within the financial
holding company to create sustainable fee income; continue optimizing the asset-liability mix to widen
the underlying commodity:
the interest spread and increase net interest income; make inroads into overseas markets and capitalize
(a)Foreign currency/yuan swaps
on opportunities presented by the Cross-Strait Agreement on Trade in Services by setting up more outlets
(b)Foreign currency/yuan options
in China and strengthening financial services there, thereby expanding the Bank’s business scope and
(c)Yuan interest rate swaps
earnings sources.
(d)Yuan interest rate options
3. Development Strategies for the Future
(e) Structured products centering on foreign currency/yuan options
(1) Diversify earnings sources and enhance the weighting of non-interest income.
(f) New Taiwan dollar/yuan swaps
(2) Optimize the Bank’s asset-liability mix to widen the interest spread and increase net interest income.
(g)New Taiwan dollar/yuan options
(3) Build a well-rounded presence in the Asia Pacific by making inroads into the Greater China market.
(4)Budget Implementation
Item
Actual Figure for
2013
Budgeted Figure for
2013
Ratio of Attainment
16,747
99.93%
Year-on-Year Change Year-on-Year Change
(Amount)
(Percentage)
average outstanding
balance of deposits
(excluding interbank
deposits)
16,735
average outstanding
balance of loans
13,755
13,910
98.89%
412
3.09%
9,570,913
9,422,668
101.57%
847,285
9.71%
Net Profit
705
4.40%
(4) Bolster the Bank’s management structure to consolidate its competitive edge.
4. Impact of the Macroeconomic, Regulatory and Competitive Environments
(1) The Macroeconomic and Competitive Environments
Note: The average outstanding balances of deposits and loans are expressed in NT$100 million terms while net profit, NT$1,000.
In 2014, developed economies including the U.S., the U.K., Germany and Japan appear poised to keep
up their recovery while developing economies led by China should be able to hold up reasonably well
despite the challenge of structural transformation. As such, a largely upbeat global economic outlook
is set to stimulate Taiwan’s exports. On the other hand, Taiwan should be able to draw on its abundant
foreign exchange reserves and favorable current account balance for cushioning the impact of the
(5)Income, Expenditures and Profitability
Fed’s QE tapering. Moreover, Taiwan has not attracted as many capital inflows, relatively speaking, as
In 2013, Hua Nan recorded total net income of NT$30.89 billion. Of this, net interest income accounted for
most other emerging economies. All in all, QE tapering is not expected to produce a major impact on
73.70% (interest income stood at NT$34.57 billion, while interest expense was NT$11.81 billion). Non-interest
Taiwan’s stock and foreign exchange markets and its overall economic performance. In January 2014,
net income accounted for 26.30% (including net fee income of NT$4.80 billion; asset and collateral disposal
major research institutions projected that the Taiwan economy is expected to grow by 2.82%-3.17%
gains of NT$2.99 billion; realized gains from the sale of financial assets of NT$565.31 million; revaluation gains
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2013 ANNUAL REPORT
009
this year, a showing superior to that of the year before. Nevertheless, cross-strait economic and trade
3)Both the quantity and variety of banking operations in China are expanding by the day. There is every need
relations have become increasingly competitive as China has sought to foster self-sufficient supply chains
to learn more about China’s laws and regulations as well as legal practices in order to control and manage
in recent years. What’s worse, QE tapering does not bode well for ASEAN countries that account for
the legal risk involved in promoting business there.
20% of Taiwan’s exports. Under such circumstances, Taiwan’s banking industry needs to retain a prudent
4)In Taiwan, other laws and regulations closely related to the banking sector, such as the Banking Act and
approach toward assessing the macroeconomic environment of 2014.
labor-related statutes, have also been revised. Banks need to set or modify internal guidelines to ensure
According to statistics compiled by the Financial Supervisory Commission’s Banking Bureau, a total of
compliance.
39 domestic banks and 31 foreign banks (including branches of Chinese banks) operated in Taiwan as
of the end of 2013. This sheer number of market participants readily translates into heated competition.
Given limited earnings prospects at home, banks have no choice but to look to the Greater China
market. Massive as the mainland Chinese financial services market may seem, Chinese banks tend to
5. Credit-rating Results
Rating Institution
(Time of Rating)
focus their corporate banking services on bigger companies while adopting a more conservative stance
Taiwan Ratings Co.
(June 2013)
on lending to SMEs. As such, Taiwanese businesses operating on the mainland naturally need provision
Moody’s
(January 2014)
Long-Term Rating
Short-Term Rating
Outlook
twAA
twA-1+
Stable
A3
P2
Stable
of funds by Taiwanese banks. What can thus be expected is a win-win situation as Taiwanese banks are
accorded a new potential target of corporate financing. On the other hand, China’s investment climate
is changing in a direction unfavorable to export-oriented businesses, prompting some to relocate to
Southeast Asia. While emerging economies continue to hold great promise and their demand for capital
is set to grow further, Taiwanese banks are also speeding up their development in other promising Asia
Pacific areas, in particular Southeast Asia. Of course, banks are accelerating their push into Southeast
Asia mainly to diversify earnings sources.
(2)The Regulatory Environment
1)Now that such laws and regulations as the Financial Consumer Protection Act and Personal
Information Protection Act have been put in place, banks are supposed to keep customers informed
of the risks associated with their products and of key terms and conditions in relevant contracts. They
should also set up exclusive entities and implement measures for protection of personal information in
order to ensure compliance with the said laws and regulations.
Chairman
President
Ming-Cheng Lin
Li-Yen Yang
2)With the Foreign Account Tax Compliance Act (FATCA) and Dodd-Frank Act now in effect, local
banks must take seriously whether to adopt an accommodative stance toward taxing U.S. citizens by
the American government. They also have to better regulate derivatives trading and make plans to
readjust their U.S. branches accordingly. Given a major impact only to be expected, banks need to
keep track of relevant developments so as to keep to a minimum their risk of noncompliance.
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HISTORY AND ORGANIZATION OF OUR BANK
Hua Nan Bank was founded in 1919 with capital of 10 million yen. Founders included the prominent local entrepreneur,
Mr. Lin Hsiung-cheng, and several Southeast Asian overseas Chinese investors. The founding ceremony was held on
January 29, 1919 and Mr. Lin Hsiung-cheng served as Chairman. The Bank was established for the purpose of promoting
both domestic and international investment, and maintained a head office in Taipei. The Bank started business in March
The Shareholders’ Meeting serves as the highest decision-making body of the important matters in the Bank’s
organizational structure. All matters including appointment of directors and supervisors, establishment and amendment
of internal rules and regulations, increase of capital, appropriation of earnings and dividends, and other matters, are
decided upon during Shareholders’ Meetings. The duties of the shareholder’s meeting are carried out by the Board of
Directors due to HNFHC is the sole shareholder of the Bank.
1919. Subsequently, the Bank set up branches in Canton, Haiphong, Saigon, Rangoon, Singapore, Tokyo and other cities
The Board of Directors and Board of Supervisors serve to formulate strategy, carry out bank policies, and execute
throughout Asia, helping to contribute to the development of trade between Taiwan and Southeast Asia. Private banks
and supervise business activities. The Directors, who number fifteen at least and twenty-one at most (including four
in Taiwan ran into operational difficulties during the 1930’s Depression, and the government engineered some to merge.
independent directors), and Supervisors, who number five, are separately appointed by HNFHC.
Thanks to the efforts of Mr. Lin Hsiung-cheng and his partners, the Bank avoided being merged. Mr. Lin Hsiung-cheng
The Directors among themselves elect five Managing Directors (including one independent director), who elect a
served as Chairman from 1919 to 1944. In 1944, Bank of Taiwan used its majority ownership in the bank to reassign Mr.
Chairman one another. Internally, the Chairman is the head of the Shareholders’ Meeting, Board of Directors and Board
Akekula as Chairman, and Mr. Lin Hsiung-cheng became Chairman Emeritus.
of Managing Directors, while, externally, the Chairman represents the Bank.
Following the retrocession of Taiwan to China on October 25, 1945, Mr. Lin Hsiung-cheng, as Chairman of the
A Board of Directors meeting is held once every three months. In case of emergency or if more than half of the Directors
Commercial Association of Taiwan, was selected as Taiwan Province representative to participate in the ceremony that
so request, an Extraordinary Meeting may be held. When the Board of Directors is not in session, the Managing Directors
reinstated the R.O.C. capital. He also carried out the important mission of seeking support from the R.O.C. authorities to
shall perform the functions of the Board of Directors by way of a meeting convened and presided by the Chairman of
ensure the continued viability of Hua Nan Commercial Bank. He passed away on November 27, 1946. On February 22,
the Board at any time. Under the Board of Directors, we established the Auditing Department with Chief Auditing Officer
1947, the Bank held a shareholders’ meeting, during which Mr. Liu Chi-kuang was nominated by the board to become
being the department head responsible for all auditing related business.
Chairman. Upon its inception, the Bank mainly focused on business activities within Taiwan Province, serving with other
The Board of Supervisors is formed by five Supervisors, who elect a Standing Supervisor one another. The Standing
banks to help finance the construction of a new Taiwan. On May 3, 1947, the Bank merged with Taiwan Trust Company,
Supervisor is resident in the Bank, where he or she is charged with execution of supervisory duties.
the latter becoming the Bank’s newly-formed Trust Department, and increased capital to 25 million Old Taiwan dollars
to enlarge the Bank’s scope of business and build a solid capital base. By June 1948 more than 60 branches staffed with
high caliber employees had been established throughout Taiwan. Hua Nan Commercial Bank thus became well-known
and highly regarded as a sound and solid financial institution.
The Bank was established as a company limited by shares in accordance with the regulations set forth in the Banking
Laws. The head office is located in Taipei City. In terms of management, the Bank has one president who is responsible
for all business activities and who acts in accordance with resolutions passed at the Board of Directors meetings. Six
Executive Vice Presidents are appointed to assist the President. As of December 2013, in accordance with internal
In 1948 when Taiwan’s economy began to be seriously impacted by the economic slump in mainland China, the
regulations governing organizational structure, the Bank maintained seven groups, twenty-two departments and
Bank revised its business focus, reducing low yield business while promoting more profitable business. During this time,
five regional centers at the head office: Corporate Banking Group composed of Corporate Banking Department
the Bank again increased capital to 1 billion Old Taiwan dollars. In the period since monetary reform on June 15, 1949
and International Banking Department; Consumer Banking Group composed of Consumer Banking Department,
through May 27, 2013, the Bank increased capital a number of times to reach the present amount of NT$63,089,000,000,
Trust Department and Wealth Management Department ; Financial Markets Group composed of Financial Trading
positioning it as one of the soundest and largest banks in Taiwan.
Department and Treasury Marketing Department; Business Management Group composed of Business Management
A large number of government-owned shares was released on January 22, 1998, enabling the Bank to complete
Department, Electronic Banking Department and Customer Service Department; Risk Management Group composed
privatization and embark upon a new era. The Bank made a reinvestment and set up HNCB Insurance Agency Co., Ltd.
of Risk Management Department, Credit Checking & Industrial/Economic Research Department, Overdue Loan
on January 31, 2001. In order to adapt to government financial reforms and changes in the financial environment, to
Management Department, Corporate Credit Department and Consumer Credit Department; Information Technology
achieve synergy through diversification, and to meet long-term development needs, the Bank and Entrust Securities Co.
Group composed of IT Planning & Development Department and IT Operation & Service Department; General
each convened extraordinary shareholders’ meetings on November 14, 2001 and passed a proposal to establish Hua
Administration Group composed of General Administration Department, Finance & Accounting Department, Human
Nan Financial Holdings Co., Ltd. (HNFHC) via a 100% stock conversion. Mr. Lin Ming-cheng was elected as the Chairman
Resource Department, Planning Department and Legal & Compliance Department. The Bank further maintains 186
of the board. On December 19, 2001 HNFHC started business and its shares listed on the Taiwan Stock Exchange.
domestic branches and one Offshore Banking Branch within Taiwan. Overseas branches are located in Los Angeles,
HNFHC, with registered capital of NT $100 billion, maintains its head office in Taipei. The Bank accordingly became a
New York, Hong Kong, Singapore, London, Ho Chi Minh City, Sydney, Macau, Shenzhen and Shenzhen Baoan Sub-
subsidiary of HNFHC. For the purpose of elevating business efficiency and reducing costs, the Bank merged with Hua
Branch, with one representative office in Hanoi. As of December 31, 2013, the Bank’s manpower resources totaled 7,121
Nan Bills Corp. on May 23, 2008. To facilitate business diversification and presence in Greater China, the Bank set up Hua
personnel.
Nan International Leasing Co., Ltd. on July 13, 2012.
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2013 ANNUAL REPORT
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ORGANIZATION CHART FOR HUA NAN BANK
BOARD OF DIRECTORS AND SUPERVISORS
Dec.31.2013
Shareholders’ Meeting
NAME
Board of Supervisors
CURRENT POSITION
EXPERIENCE
EDUCATION
Board of Directors
Standing Supervisor
Chairman of the Board
Supervisors
Managing Directors of
the Board
Chief Auditing
Officer
Ming-cheng Lin
Chairman, Hua Nan Commercial Bank, Ltd.
Vice Chairman , Hua Nan Financial Holdings
Co., Ltd.
Director, The Central Bank of China.
Chairman , Hua Nan Financial Holdings Co., Ltd.
Vice Chairman, Hua Nan Commercial Bank, Ltd.
Master of Laws, Keio
University, Japan.
Bruce, L.Y. Yang
Managing Director & President, Hua Nan
Commercial Bank, Ltd.
Director, Hua Nan Financial Holdings Co., Ltd.
Supervisor, Hua Nan Commercial Bank, Ltd.
Executive Vice President, Bank of Taiwan.
S.V.P&General Manager, International Banking
Dept.,
Vice President & General Manager,
Business Administration Dept,
National Taiwan
University.
Mao-Shyan Liu
Director & President,Hua Nan Financial Holdings Executive Vice President, Hua Nan Financial
CO.,Ltd.,
Holdings Co.,Ltd.
Managing Director, Hua Nan Commercial
Bank, Ltd.
M.A. in Department of
Economics,Chinese
Culture University.
Rung-Fu Hsieh
Managing Director, Hua Nan Commercial
Bank, Ltd.
President, The Great Taipei Gas Corp.
General Manager, Shin Hai Gas Gorp.
Managing Director, Industrial Bank of Taiwan.
Business Dept.,
National Open University.
Wai-Cho Tsui
Independent & Managing Director, Hua Nan
Commercial Bank, Ltd.
Professor, Dept. of Accounting Chinese Culture
Univ.
Professor, Dept. of Public Finance,
National Cheng Chi Univ.
Ph.D. (Economics),
Southern Illinois University at
Carbondale.
Teng-Lung Hsieh
Director,Hua Nan Commercial Bank,Ltd.
Managing Director, Hua Nan Commercial Bank,
Ltd.
General Auditor of Bank of Taiwan.
Department of Credit Management SVP and
General Manager of Bank of Taiwan.
Dept. of Banking and
lnsurance,National Taichung
Institute of Commerce
Chien-Chung Nieh
Director, Hua Nan Commercial Bank,Ltd.
Professor of Dept.of Banking and Finance,
Tamkang University
Chairman of Dept. of Banking and Finance,
Tamkang University.
Ph.D. of Economics,
Rutgers Univ., (SUNJ) U.S.A.
Shin-hsin Huang
Director, Hua Nan Commercial Bank, Ltd
Professor Dr., Department of Public Finance,
National Taipei University.
Supervisor,Public Television Service Foundation.
Dr. der Wirtschafts- u.
Sozialwissenschaften
Christian-Albrechts-Uni. zu
Kiel
Germany.
Wei-Ling Yen Director, Hua Nan Commercial Bank, Ltd.
Director & President, Wellin Investment Co., Ltd.
Director & President, Dade Construct Ltd. Co.,
Director & President, Wushin mental health
foundation
Director,China Electric Co.,Ltd.
TOKAI University, JAPAN
Tom Lin
Director, Hua Nan Commercial Bank, Ltd.
Fund Manager, Mercury Asset Management Co., J.D., Univ. of California Los
Ltd.
Angeles, U.S.A.
An-Lan Hsu Chen
Chairman, Hua Nan Securities Co., Ltd.
Chairman, Yuan Ding Investment Co., Ltd
Chairman, En Trust Securities Co., Ltd.
Western Culture & Literature,
Tung Hai University
Michael, Yuan- Jen Hsu
Director, Hua Nan Securities Co., Ltd.
VP of Brokerage Management Dept.
Hua Nan Securities Co., Ltd.
Avp of Chairman’s Office Hua Nan Securities
Co.,Ltd.
MBA The Wharton school
University of Pennsylvania.
Auditing Department
Corporate Banking Department
Corporate Banking
Group
Directors of the Board
International Banking Department
Consumer Banking Department
Consumer Banking
Group
Trust Department
Wealth Management Department
Head Office
President
Executive Vice
President
Financial Trading Department
Financial Markets
Group
Treasury Marketing Department
Business Management Department
Business
Management Group
Electronic Banking Department
Branches
Customer Service Department
Risk Management Department
Credit Checking & Industrial/Economic
Research Department
Risk Management
Group
Overdue Loan Management Department
Corporate Credit Department
Consumer Credit Department
IT Planning & Development Department
Information
Technology Group
IT Operation & Service Department
General Administration Department
General
Administration Group
Finance & Accounting Department
Human Resource Department
Planning Department
Legal & Compliance Department
Regional Centers
014
2013 ANNUAL REPORT
015
NAME
CURRENT POSITION
Chia- Chun Chiang
EXPERIENCE
Pricewater House Co.Opers.
EDUCATION
Director,Hua Nan Financial Holdings Co., Ltd.
Workers’ Union.
Senior Manager,IT Operation & Service Hua
Nan Commercial Bank, Ltd.
Security information management, Hua Nan
Commercial Bank, Ltd
National Taiwan University of
Science & Technology
Neng-Ching Lo
Takming University of Science and Technoligy
Dean,College of Finance, Secretariat Professor
National Taipei Colege of Business Professor,
assistant director
Takming University of Science and Technoligy
Dean,College of Finance, Professor
Master of Public Financial,
National ChengChi University
Director,Hua Nan Commercial Bank,Ltd.
Department of Planning SVP and General
Manager of Central Trust of China
Executive Vice President of Central Trust of China
Dept. Of International Trades
Tamkang University
Independent Director, Hua Nan Commercial
Bank, Ltd.
President of Kainan University
Advisor of City Affairs, Taipei City Government
President of Association for China Economic
Studies
Director, Taiwan Financial Holdings Co., Ltd.
Member of the board of directors, Waterland
Financial Holdings Co., Ltd.
Professor of Dept. of Economics, National
Chengchi University.
Dean of College of Social Sciences, National
Chengchi University.
President of Asian Consumer and Family
Economics Association (ACFEA).
Ph.D, University of
Massachusetts in Resources
Economics
Independent Director, Hua Nan Financial
Holdings Co., Ltd.
Bank, Ltd
Professor of Accounting,
National Cheng Chi University.
CPA, Professor in Accounting
Ph.D. in Accounting,
The University of Memphis,
U.S.A.
Independent Director, Hua Nan Financial
Holdings Co., Ltd.
Bank, Ltd.
Attorney of Law of Lexpert Law Firm.
Attorney of Law, Lecturer of University
An-Pang Kao
Chung-Yuan Hsu
Chun-Pin Chen
Wen-Ping Kung
Master of Law,
National Taiwan University.
Standing Supervisor , Hua Nan Commercial
Bank, Ltd.
Lecturer,Chung Hua University
Consultant , Agricultural Bank of Taiwan
General Manager, Agricultural Credit
Guarantee Fund
Director , National Agricultural nd financial
Information Centre
Master of Chinese Culture
Univerity Deparment of
Law
Wen-yuh Tsai
Chairman of Sin-Jang CPAS office.
CPA, Audit, Tax- Planning, Business
Management etc.
Instructor of University.
M.B.A. Cheng Chi National
University.
Hui-Chung Yen
Chairman, Te- Ho Co., Ltd.
Supervisor,Tai-Shin Bill Co.,Ltd
University of Chinese
Culture
Kuo-Ping Chen
Yeh-Cheng Yang
016
Senior Manager, Investment Dept.,
Yong-Sheng Investment Co., Ltd.
Senior Manager, Investment Dept., Ta-Yung
Hsing Yeh Co.,Ltd
Dept., of Business
Administration, National
Taiwan University
Professor,Department of Accounting,
Soochow University
A member of petition and appreals committee,
MOF
Doctor of Public Finance,
National Cheng Chi
University HISTORY AND ORGANIZATION
June.16.2014
Fu Jen Catholic University.
Kuei-Yang Liu
Shih-Tien Chiang
TOP MANAGEMENT AND DEPARTMENT MANAGERS IN HEAD OFFICE
Bruce, L.Y. Yang
President
Ting-Yao Kuo
Senior Vice President & General Manager of
Legal & Compliance Dept.
Yun-Peng Chang
Executive Vice President
Thomson, N.T. Lin
Trust Dept.
Jung-Cheng Kao
Tzu-Chiang Sun
Electronic Banking Dept.
Donald, W.H. Hsu
Ruey-Der Wang
Overdue Loan Management Dept.
Tony Jang
Tien-Li Cheng
Financial Trading Dept.
Ming-Yow Lai
Tsung-Hsien Li
Consumer Banking Dept.
Hsin-Tien Ting
Judy, J.D. Wang
Wealth Management Dept.
Meng-Hsiung Chung
Chief Auditing Officer
Ming-Chu Liao
Consumer Credit Dept.
Jonathan Huang
Senior Vice President & Chief Secretary
Board of Directors
Robert Li
Risk Management Dept.
Nelson Chen
General Administration Dept.
Chy-Her Shih
Corporate Credit Dept.
Alice Liang
Business Management Dept.
Crystal, P.C. Yu
Treasury Marketing Dept.
Jonathan, Z.D. Liu
Corporate Banking Dept.
Autumn C.C. Kung
Customer Service Dept.
Pau-Chu Lo
Senior Vice President & General Manager of Auditing
Dept.
Gen-Shun Chen
Regional Center North I
King-Huo Lu
Finance & Accounting Dept.
Joe Chiou
Regional Center North II
Tsao-Sin Liu
Senior Vice President & General Manager of Human Resource Dept.
Joyce Liu
Regional Center North III
Chi-Chun Lin
Senior Vice President & General Manager of Credit
Checking & Industrial/Economic Research Dept.
Wei-Chih Chen
Regional Center Central
Wen-Tzong Duh
IT Planning & Development Dept.
Buh-Chwang Hu
Regional Center South
Wen-Sheng Huang
IT Operation & Service Dept.
Tsung-Lung Liu
International Banking Dept.
2013 ANNUAL REPORT
017
MANAGEMENT OF THE HNFHC GROUP
HUA NAN FINANCIAL HOLDINGS GROUP ORGANIZATION
As of Dec. 31. 2013
Group Organization
Hua Nan
Commercial Bank
100%
Hua Nan
International
Leasing
Corporation
100%
Hua Nan
International
Leasing
Co., Ltd.(CN)
100%
Hua Nan
Securities
100%
South China
(P&C) Insurance
100%
Hua Nan
Securities(H.K.)
100%
Hua Nan
Financial Holdings
Co., Ltd
Hua Nan
Investment Trust
100%
Hua Nan
Venture Capital
100%
Hua Nan
(BVI)Holdings
100%
Vice Chairman
Teng-Cheng Liu
Ming-Cheng Lin
Directors
HNCB
Insurance
Agency
100%
Hua Nan
Securities
Management
99.95%
Chairman
Hua Nan
Futures
99.8%
Hua Nan
Asset
Management
(Cayman)
100%
Mao-Shyan Liu
Hui-Jan Yen
En-Shiang Tai
Tom Lin
Teng-Lung Hsieh
An-Lan Hsu Chen
A-Wang,Huang
Shih-Tien,Chiang
Ai Wei
Chia-Ying, Shen
Yun Lin
Ching-hsiou Chen
Ming-Jui Hsieh
Chung-Yuan Hsu
Rung-Fu Hsieh
Chun-Pin Chen
Executive officers
Hua Nan
Assets
Management
100%
Divided by Line of Business
Commercial Banking
Securities / Investment Banking
Insurance
Assets Management
018
Mao-Shyan Liu
President
Chin-Nan Ku
E.V.P. & Chief Auditor Excutive
David Y.C. Cheng
Tony Jang
G.M. of Marketing Department
James H. J. Liu
Executive Vice President & G.M. of Risk
Management Department
King-Huo Lu
G.M. of Finance Department
Michael Duh
G.M. of Information Technology
2013 ANNUAL REPORT
019
1. Deposits
institutions, while NT$546.1 billion, or 38.52%, were provided to individuals. Of the institutional loans, private enterprises
As of December 31, 2013, the Bank’s outstanding balance of deposits stood at NT$1.7581 trillion, an increase of
accounted for 38.20%, or NT$541.6 billion. Government organizations and state-run enterprises took 6.60%, or NT$93.6
NT$85.23 billion, or 5.09%, from a year earlier. After deducting deposits by other financial institutions, the balance
billion.
came in at NT$1.7400 trillion, up 4.48%, or NT$74.61 billion, from the year-earlier figure.
The outstanding balance of loans at the end of 2013 increased 2.65%, or NT$36.6 billion, from the year before.
In a breakdown by category, demand deposits amounted to NT$1.0598 trillion, an increase of NT$47.45 billion, or
Domestically extended loans were down 0.03%, or NT$400 million, while loans extended by overseas branches and
4.69%. Time deposits increased by 4.16%, or NT$27.16 billion, to NT$680.26 billion, while deposits by other financial
the OBU rose 27.57%, or NT$37 billion. Of the domestically extended loans, those denominated in the local currency
institutions rose by 141.15%, or NT$10.62 billion, to NT$18.14 billion.
decreased 0.27%, or NT$3.2 billion. By contrast, foreign currency loans rose 4.48%, or NT$2.8 billion. Of the NT dollar-
In percentage terms, demand deposits accounted for 60.28% of total deposits, time deposits 38.69%, and interbank
denominated loans, those to institutions were down 3.89%, or NT$25.7 billion, while those to individuals expanded
deposits 1.03%.
4.30%, or NT$22.5 billion. Loans to private companies contracted NT$5.2 billion, or 0.95%, while those extended to
government organizations and state-run enterprises decreased NT$20.5 billion, or 17.97%.
2. Agency Business
Hua Nan serves as an agent in a number of areas:
(1)Agent for public treasuries;
(2)Agent for collection and payment of the following: insurance premiums, taxes, telecommunications fees,
electricity fees, tap water fees, gas fees, tuition-related expenses, labor insurance fees, national health insurance
fees, funds for subscription to stock offerings, principal and interest on bonds, cash dividends, and winnings in the
local welfare lottery;
(3)Agent for bidding for government bonds;
(4)Agent for the sale of gold and silver coins and lottery tickets.
6. Foreign Exchange and International Banking
In 2013, Hua Nan’s domestic and overseas units handled 2,654,578 foreign exchange transactions, up 202,933
trades, or 8.28%, from a year earlier. These transactions involved a total amount of US$264.32 billion, up 0.25%,
or US$672.29 million. A further breakdown was as follows: 1) the Bank handled 56,224 import letters of credit and
collections, which was a year-on-year decrease of 1,834 cases, or 3.16%. Their collective amount of US$10.48 billion
fell 5.59%, 0r US$620.31 million; 2) the Bank handled 58,802 export negotiations and collections, a decrease of 6.33%,
or 3,971 cases. The amount of these cases was valued at US$13.76 billion, down 4.55%, or US$655.50 million; 3) Hua
Nan also handled 2,539,552 foreign exchange remittances (including inward and outward remittances), up 8.96%,
or 208,738 remittances. The amount of this business stood at US$240.08 billion, a year-on-year increase of 0.82%, or
US$948.10 million.
3. Electronic Banking
(1)State of Operations:
In 2013, Hua Nan’s OBU and nine overseas branches generated pretax profit of US$110.32 million, rising US$13.20
million from 2012. Their outstanding balance of deposits as of the end of 2013 came in at US$3.92 billion, an increase
In 2013, Hua Nan registered a total of 83.24 million electronic banking transactions, an increase of 3.99%, or some
of US$45.93 million, or 1.18%, from the previous year. The number of letters of credit and collections handled during
3.19 million trades, from the previous year. Meanwhile, the value of the transactions rose 6.50%, or NT$699.5 billion,
the year was 5,838, down 186, or 3.09%. In value terms, the business amounted to US$899.49 million, a decrease
to NT$11.4688 trillion.
of US$70.11 million, or 7.23%. The number of export negotiations and collections handled in 2013 stood at 10,998,
(2)Awards Received:
(a) At the 2013 Banking Information System Annual Meeting of Financial Information Service Co., Ltd., Hua Nan
was accorded the Award for Distinguished Contribution to Electronic Cash Flow Services.
(b) With regard to the 2013 Awards for Promoting XML Operations accorded by the Bankers Association, Hua
Nan won the following:
an increase of 486, or 4.62%.Nevertheless, the amount of business handled fell 0.46%, or US$6.25 million, to US$1.35
billion. Meanwhile, Hua Nan handled 519,397 foreign currency transactions (inward and outward remittances,
foreign currency purchases, and collections of checks), down 17,472 cases, or 3.25%. The volume of this business
stood at US$40.17 billion, a decrease of 0.20%, or US$79.10 million.
7. Personal Banking
● XML Interbank Payments by Number of Trades (No. 1)
As of the end of 2013, the Bank’s outstanding balance of credit extended to individuals stood at NT$546.1 billion, an
● Progress & Promotion Awards: XML Interbank Trades by Number of Trades (No. 1)
increase of 4.30%, or about NT$22.5 billion, from the NT$523.6 billion a year earlier.
● Progress & Promotion Awards: XML Interbank Payments by Number of Trades (No rankings)
8. Wealth Management
4. Domestic Remittances
In 2013, Hua Nan processed NT$5.3320 trillion of outward remittances, up 0.40%, or NT$21.3 billion, from the previous
year. Meanwhile, the Bank collected 8,164,578 checks, a decrease of 0.92%, or 75,497 checks, from 2012.
In 2013, Hua Nan’s wealth management operations generated fee income of NT$2.60 billion, attaining 102.63%
of the Bank’s internal target of NT$2.54 billion and increasing by NT$397.88 million, or 18.04%, from a year earlier. A
further breakdown of the 2013 performance was as follows: 1) fee income from trust funds (including those handled
by overseas branches) was NT$1.67 billion, taking 64.19% of the Bank’s wealth management fee income in 2013 and
increasing 23.73%, or NT$320.53 million, from 2012; 2) fee income from personal insurance stood at NT$932.43 million,
5.Loans
As of December 31, 2013, Hua Nan’s outstanding balance of loans stood at NT$1.4178 trillion (including bills
which accounted for 35.81% of 2013’s wealth management fee income and rose 9.05%, or NT$77.35 million, from
purchased and import/export negotiations). Of this, 87.93%, or NT$1.2466 trillion, was loaned domestically. Loans by
2012.
the Bank’s overseas branches and OBU accounted for NT$171.2 billion, or 12.07%. Of the domestically extended
As of the end of 2013, Hua Nan employed 318 wealth management consultants throughout its 186 branches. During
loans, 88.32%, or NT$1.1813 trillion, was denominated in the NT dollar; some 4.61%, or NT$65.3 billion, was accounted
the year, Hua Nan offered many education and training courses to enhance their expertise, service quality and
for by foreign currency loans. Of the NT dollar-denominated loans, 44.80%, or NT$635.2 billion, were extended to
compliance with pertinent laws and regulations.
020
2013 ANNUAL REPORT
021
(1) Boost competitiveness and enhance market share for gold passbook services by giving investors more options for
9.Trust
(1)Investment in Local and Foreign Securities by Specific Pecuniary Trusts:
a. Foreign Currency Trust Funds: As of the end of 2013, the outstanding balance of foreign currency trust funds stood at US$1.26
billion.
b. NT Dollar Trust Funds: As of the end of 2013, the outstanding balance of trust funds under management stood at NT$138.16
billion.
c. Fee income from these services in 2013 amounted to NT$1.43 billion.
(2)Custody Services
a. As of the end of 2013, Hua Nan provided custody services for 51 trust funds, 62 discretional investment accounts and seven
foreign institutional investors. The amount under custody totaled NT$178.9 billion.
b. Fee income from custody services in 2013 was NT$161.31 million.
(3)Securities Certification:
a. In 2013, Hua Han handled 340 certifications of equities and bonds, with the amount certified totaling NT$40.6 billion.
b. Fee income from certification services in 2013 amounted to NT$3.73 million.
(4)Property Trust:
a. As of the end of 2013, the outstanding balance of assets under trust (excluding collective investment accounts) amounted to
NT$33.77 billion.
b. As of the end of 2013, the combined net asset value of three collective investment accounts operated by Hua Nan was
NT$853.92 million.
c. Fee income from property trust (including collective investment accounts) in 2013 stood at NT$77.78 million.
10.Financial Trading
Hua Nan’s financial trading operations comprise NT dollar and foreign currency capital operations, adjustments in reserves,
foreign exchange trading, bills operations, investment in fixed income securities, and investment in equities. In 2013, net
profit from these operations came to NT$2.081 billion, up a marginal 0.29% from NT$2.075 billion in 2012.
11.TMU (Treasury Marketing Unit) Operations
On top of trading finance and banking products with customers, the Bank is engaged in the design of new offerings before
automatic deductions from their accounts.
(2) Continue strengthening the management of deposits both in quality and quantity, thereby keeping Hua Nan’s
ranking among Taiwan’s top three banks in the demand deposits sector.
(3) Continue promoting cross-selling of securities brokerage, property insurance and investment trust services to
increase market share and fee income.
(4) Keep track of the government’s homeland planning as well as the shifting of commercial hubs in local counties and
cities while undertaking operational analysis of branches; readjust the Bank’s network of outlets wherever warranted
to effectively enhance operational efficiency.
(5) Prepare the launch of cross-border collection and payment services to capitalize on the burgeoning cross-strait
online shopping market; prepare for the launch of ATM cards that can be used both in Taiwan and on the mainland
in line with government policy.
(6) Launch new overseas branches coming with an online platform that can readily provide electronic banking
services.
(7) Bolster the Bank’s mobile banking capability to expand its clientele and deepen customer relations; continue
expanding Hua Nan’s electronic banking network to grow earnings and reduce operating costs.
(8) Plan and implement a customer service network marketing program (telemarketing included) to boost the volume
of sales generated by joint marketing and bolster customer loyalty and contribution.
(9) Introduce a variety of preferential loans to support the government policy that fosters creative ventures, SME
innovation and the corporate community’s going international.
(10)Strengthen SME services by drawing on the Small and Medium Enterprise Credit Guarantee Fund and bolster the
Bank’s corporate lending structure while expanding the business; continue promoting factoring and electronic
financing services to bolster the self-liquidating financing business and vie for opportunities to offer supply chain
financing.
(11)Vie for opportunities to serve as lead arranger of syndicated loans and partner with industry peers in international
projects, thereby enhancing Hua Nan’s reputation and competitiveness in the syndicated loans market.
seeking regulatory approval. High on the list of products are NTD/foreign currency structured investment products; foreign
(12)Capitalize on financial deregulation across the Taiwan Strait by promoting cross-border financial services that meet
exchange spot and forward transactions; forex swaps; currency options; NTD/foreign currency interest rate swaps; and cross
customer needs. In the Pearl River Delta, the Shenzhen, Hong Kong and Macau branches have accumulated long
currency swaps. In 2013, Hua Nan’s trading of financial derivatives with clients amounted to US$15.6 billion.
years of experience serving Taiwanese companies. They will soon be joined by the Shanghai and Fuzhou branches
that are ready to provide customers operating in the Yangzi River Delta and Haixi region with well-rounded financing
12.Operational Performance
solutions.
In 2013, Hua Nan recorded net profit of NT$9.57 billion, or 101.57% of the original internal target. The Bank’s total net income
(13)Diversify online banking services by installing an English interface for forex services on the online banking platform.
for 2013 came in at NT$30.89 billion. Of this, net interest income accounted for 73.70% (interest income stood at NT$34.57
(14)Broaden and deepen the Bank’s presence across the Greater China market. Following the establishment of its
billion, while interest expense was NT$11.81 billion). Non-interest net income accounted for 26.30% (including net fee income
Baoan Subbranch in Shenzhen, Hua Nan is currently following up on application procedures for setting up the
of NT$4.80 billion; asset and collateral disposal gains of NT$2.99 billion; realized gains from the sale of financial assets of
Fuzhou and Shanghai branches, to which Taiwan’s Financial Supervisory Commission and the China Banking
NT$565.31 million; revaluation gains of financial assets measured at cost of NT$225.95 million; foreign exchange losses of
Regulatory Commission have given their nods respectively, to further expand the Bank’s presence in Greater China.
NT$1.19 billion; and other non-interest net income of NT$729.42 million). Bad debt expenses and guarantee liability provisions
(15)To date, Hua Nan has signed MOUs on bilateral cooperation with Fujian Haixia Bank, Bank of China, Bank
amounted to NT$3.79 billion, and operating expense was NT$15.93 billion (employee welfare expense was NT$10.63 billion,
of Communications, China Merchants Bank, China Guangfa Bank and China Construction Bank. Concrete
depreciation and amortization was NT$741.53 million, and other business and management expense was NT$4.56 billion).
cooperation will be promoted in the days ahead to help the Bank grow earnings.
While income tax expense came in at NT$1.60 billion, earnings per share amounted to NT$1.52 per share.
(16)To take advantage of the burgeoning ASEAN economy, Hua Nan is currently in the process of applying to upgrade
its representative office in Hanoi to branch status. It will also study the viability of setting up outposts in other ASEAN
countries to serve Taiwanese companies and share in their economic growth, thereby enhancing overall earnings.
022
2013 ANNUAL REPORT
023
(17)Introduce a “Going Beyond Mortgage” scheme that combines mortgages with other products and services to
maximize customer contribution. Target those who enjoy reliable economic means and are accustomed to making
investments for mortgages linked to wealth management services. Draw on the Small and Medium Enterprise Credit
Guarantee Fund to attract potential financing customers who are starting their own business or joining a franchise.
(18)Introduce the Combo Life (Signature-class) and Yoho (Titanium-class) credit cards; seek partners with a recognized
competitive edge or a solid network of retail outlets from other industries for the issuance of co-branded cards,
thereby enticing new customers, expanding cardholder spending and boosting the market share of Hua Nan
cards.
(19)Take full advantage of the Bank’s retail network and integrated marketing mechanism, and seek partnerships with
nonfinancial businesses and online vendors to maximize sales. Stick to segment marketing and deepen relations
with quality customers, thereby strengthening customer loyalty and growing earnings.
MARKET ANALYSIS
1. Geographic Scope of Operations
Hua Nan deals in banking operations mainly in the domestic market. As of the end of 2013, it operated 186
domestic branches and one offshore banking unit. In terms of overseas operations, it has to date established nine
branches (Hong Kong, Singapore, London, New York, Los Angeles, Ho Chi Minh City, Shenzhen, Sydney and Macau)
and one subbranch (Baoan, Shenzhen) as well as one representative office (Hanoi). In the days ahead, the Bank is
set to build on what has been accomplished so far as it seeks to enhance earnings and diversify revenue sources.
2. Future Supply and Demand in the Marketplace and Growth Prospects
Supply Side:
According to statistics compiled by the Financial Supervisory Commission’s Banking Bureau, a total of 39 domestic
(20)Continue seeking premium products and introducing from domestic investment trust companies multicurrency trust
banks and 31 foreign banks (including branches of Chinese banks) operated in Taiwan as of the end of 2013. This
funds, ETFs, foreign bonds, fiduciary investment account services, and offerings meant specifically for specialized
sheer number of market participants readily translates into heated competition. Given limited earnings prospects at
investors; continue promoting the Bank’s forex derivatives.
home, banks have no choice but to look to the Greater China market and consider building a larger presence in
(21)Establish a well-rounded process of after-sale services and provide major trust fund subscribers with financial health
other parts of the Asia Pacific that hold promise, such as Southeast Asia, to expand earnings sources. On the other
assessment services. Hua Nan’s financial counselors are supposed to review their holdings and present timely
hand, Taiwan’s banks are now allowed to set up shop on the Chinese mainland amid ongoing deregulation across
proposals with a view to optimizing customer assets and enhancing investment returns.
the Taiwan Strait. Vast as China’s financial market may seem, banks from Taiwan remain latecomers that must brace
(22)Adopt a customized approach toward serving high-contribution customers; provide interested and promising
customers with such meticulously organized events as briefings on mutual funds and insurance products to expand
the Bank’s wealth management clientele.
(23)Expand the Bank’s lineup of products in tandem with statutory changes and introduce a greater variety of trust
offerings with a niche.
for any number of difficulties and challenges.
Demand Side:
In 2014, capital demand among businesses is expected to pick up as the world economy heads for a gradual
recovery after hitting bottom. Moreover, Taiwan’s Financial Supervisory Commission gave the go-ahead in 2013 for
the DBUs of local banks to launch into yuan deposits, loans and remittances. Yuan remittances are now permitted
(24)Employ innovative investment models in devising new services that feature exclusive management.
both onshore and offshore. Given the considerably wider interest spread made possible by yuan loans, it will be a
(25)Build on standardized products and consolidate Hua Nan’s strength in retail outlets to promote trust offerings and
matter of course for Taiwanese banks to promote such lending aggressively, a phenomenon that promises to prove
grow business at large.
a highlight this year. In the meantime, rosier economic prospects should be able to push capital markets and stock
(26)Readjust the allocation of excess New Taiwan dollar liquidity whenever warranted to increase returns.
indices higher. The wealth management sector is poised to benefit from such a favorable climate as well.
(27)Strengthen equities purchases and sales in accordance with changes across international financial markets to
As far as the mainland Chinese market is concerned, rapid economic growth has certainly nurtured a vast financial
expand capital gains and dividend income.
services market there. But Chinese banks tend to focus their corporate banking services on bigger companies
(28)Adopt a flexible approach toward conducting forex swaps to grow earnings.
while adopting a more conservative stance on lending to SMEs. As such, Taiwanese businesses operating on the
(29)Respond to Taiwan’s opening yuan services to domestic banking units (DBUs) of local banks by developing yuan-
mainland naturally need provision of funds by Taiwanese banks. What can thus be expected is a win-win situation
denominated derivatives or increasing offerings in relation to the Chinese currency or the mainland market.
as Taiwanese banks are accorded a new potential target of corporate financing. On the other hand, China’s
(30)Continue promoting TMU (Treasury Marketing Unit) businesses—primarily hedging businesses and secondly financial
investment climate is changing in a direction unfavorable to export-oriented businesses, prompting some to
operations—among larger clients that pose virtually zero risk; promote yuan-denominated financial derivatives to
relocate to Southeast Asia. Taking note of this shift, local banks are also speeding up their development in this part
meet customer needs and boost Hua Nan earnings.
of the world as emerging economies there hold great promise and demand for capital is set to grow further.
3. Competitive Niche, Positive and Negative Factors for Future Development, and
Measures in Response
(1)Competitive Niche
1)Hua Nan owns an extensive service network and a broad customer base throughout Taiwan. This is a great
advantage for the development of various banking operations.
024
2013 ANNUAL REPORT
025
2)As one of Taiwan’s most established banks, Hua Nan has nurtured an exemplary corporate culture and enjoys
high regard in the community.
3) The Bank never stops enhancing its risk management system in order to maintain solid asset quality.
1. Risk Management Affairs
(1)Information on the Nature and Amount of All Types of Risk
1.Credit Risk Management System and Capital Charges:
4)Always staying abreast of financial deregulation across the Taiwan Strait, Hua Nan is keen to further expand its
Credit Risk Management System
operations in Greater China and link them to other outposts across the Asia Pacific.
(2)Positive Factors
2013
Item
1)The Taiwanese economy is expected to do better in 2014 than the year before. The prospect, in turn, should
Credit Risk
Strategies Goals,
Policies and
Procedures
1. Hua Nan has set forth policies governing corporate banking credit risk and consumer banking credit risk to ensure the
Bank’s health and maintain a consistent credit risk management culture. These guidelines serve to govern the Bank’s
credit risk-related affairs, and all units must comply with the content of these policies.
2. The ultimate goal of the Bank’s credit risk management is to establish the best capital allocation policies, and gradually
adopt the internal ratings-based approach in measuring assets with credit risk for internal management. Hua Nan aims
to conform to internationally recognized best credit risk management practices, pursuing the maximum profits within a
specific amount of acceptable risk.
3. Hua Nan’s credit risk management procedures can be divided into credit checking, appraisal of collateral, credit
rating, application, analysis and screening, obtaining deeds, registration of loan amount, disbursement of loan, credit
monitoring and early warning, credit re-screening and other post-disbursement management measures that make use
of information systems and related reports. This enables Hua Nan to always be aware of the actual counterparty risk,
thereby achieving its risk management objective.
Credit Risk
Management
Organization
and Framework
Hua Nan’s credit risk management organization and framework is as follows:
1. Board of Directors:
This is the Bank’s highest decision-making unit in terms of credit risk. The Board is responsible for reviewing all of the Bank’s
credit risk management-related policies and affairs.
2. Risk Management-related Committees:
(1)Risk Management Committee:
This committee reviews credit risk-related issues and is responsible for establishing a comprehensive credit risk
management system and culture.
(2)Credit Review Committee:
This committee is charged with evaluating the credit risk of large-sized loans in order to ensure the Bank’s rights as
creditor.
(3)Overdue Loans Screening Committee:
This committee is responsible for mapping out means to recover large and complicated cases of overdue loans
and making decisions on writing off specific loans. This unit also maximizes the Bank’s capability in collecting loans in
arrears.
3. Credit Checking & Industrial/Economic Research Department:
This department is responsible for drafting credit checking policies and carrying out industrial & economic research.
4. Corporate Credit Department:
This department is charged with screening, planning, management of corporate loans, and early warning, re-screening
of loans already extended.
5. Consumer Credit Department:
This department is responsible for screening & planning, as well as management of consumer loans.
6. Overdue Loan Management Department:
This department is responsible for collection and cleaning up of overdue loans (including bad debt), and analysis of
asset risk associated with nonperforming loans.
7. Risk Management Department:
This department is charged with planning and management of credit risk.
Scope and
Features of
Credit Risk
Reporting and
Measurement
Systems
1. Risk management-related units provide different styles of reports and with different frequency to persons or units within
the Bank. Reports include asset portfolio risk assessments, credit grading reports, reports on industrial topics and loan
losses, and reports to be screening by regulatory agencies.
2. Hua Nan has adopted initiatives to measure customer credit risk and assess expected losses. It has established internal
credit rating models to effectively measure customer probability of default. This is effective in setting limits on the amount
of credit extended to a customer, managing asset portfolios, allocating economic capital, and pricing loan products.
The Bank also utilizes a wide range of computerized data to measure loss given default and exposure at default.
3. Hua Nan has established a Bank “Equity and Risk Assets Capital Charge System.” In compliance with rules set forth by
regulators, Hua Nan calculates weighted risk-based assets and statutory capital on a regular basis. The results, along with
other data, are used for reference in carrying out internal management.
Credit Risk
Avoidance
or Mitigation
Polices, and
Monitoring the
Continued
Effectiveness of
Risk Avoidance
and Mitigation
Tools
1. Hua Nan takes measures to effectively reduce credit risk or potential credit risk. The Bank seeks collateral or third party
guarantees in accordance with guidelines set forth by the Bank or regulations of credit guarantee organizations, to
avoid losses caused by the default of a borrower or trading counterparty.
2. The Bank complies with the following regulations to ensure the continued effectiveness of risk mitigation tools:
(1)Hua Nan has rules governing the management of collateral and guidelines for the appraisal and re-appraisal of
collateral it has obtained. Should the collateral depreciate in value or if there are concerns of a possible depreciation
in value, the Bank will immediately seek an increase in collateral or recover a portion of the disbursed loan.
(2)Bank credit risk management regulations set forth qualifications for a guarantor and monitoring of the status of that
guarantor. Should the economic or credit status of the guarantor deteriorate, making that person unsuited to act as a
guarantor, the Bank will seek to have the guarantor replaced with a more appropriate person.
(3)The Bank’s related credit risk management regulations are forwarded to credit guarantee organizations. Guarantee
operations, loan disbursement and post-disbursement screening are carried out to ensure the effectiveness of the
guarantee and that guarantees comply with regulations set forth by the Bank and credit guarantee organizations.
drive corporate demand for capital and improve investor sentiment, thereby giving a boost to banks’ lending
operations and wealth management services.
2)The Financial Supervisory Commission has given the green light for local banks to undertake yuan services.
While it is impossible for local banks to substantially increase the number of their branches on the mainland
anytime soon, enabling their current branches to deal in yuan operations is tantamount to opening a new
path for them.
3)The government has gradually relaxed restrictions over local banks’ expanding operations in mainland China.
This is enabling banks to move faster than they ever could in the past.
(3)Negative Factors
1)Taiwan’s excessive number of banks points to overbanking that tends to trigger a price war.
2)The government’s recent string of restrictive measures to curb the property market is hardly conducive to
banks’ mortgage business.
3)In 2014, local banks are set to continue adding provisions in order to conform to the Financial Supervisory
Commission’s requirement over a provisions coverage ratio of at least 1% for Tier 1 lending. This does not bode
well for their earnings this year.
4)Local banks are aggressively vying for business opportunities that arise from financial deregulation across the
Taiwan Strait. This relaxation, however, also extends to the establishment of outposts by mainland banks in
Taiwan. This will only further intensify already fierce competition in the domestic market.
(4)Measures in Response
1)To counteract excessively low lending rates, Hua Nan will formulate a more rational strategy for pricing loans.
2)To prevent default risk early on, the Bank will bolster its lending policy, boost collateral, and strengthen the
training of lending officers.
3)Hua Nan will continue to bolster its risk management capabilities and strengthen asset and liability
management.
4)With Taiwan as its home base, Hua Nan will take full advantage of the increasing financial deregulation across
the Taiwan Strait as the Bank hastens its expansion in mainland China and Southeast Asia.
Approach
Adopted
for Statutory
Capital Charges
026
MARKET ANALYSIS
Content
Hua Nan adopts the credit risk Standardized Approach in making capital charges.
2013 ANNUAL REPORT
027
Exposure after Risk Mitigation and Capital Charges via Credit Risk Standardized Approach
Securitization Risk Exposure and Capital Charges
December 31, 2013 (Note)
December 31, 2013 (Note) Unit: NT$1,000
Unit: NT$1,000
Type of Exposure
Exposure After Risk Mitigation
Portfolio Style
Traditional Style
Capital Charge
Exposure
Sovereign States
457,764,693
Non-central Government Public Sector
Banks (including multilateral development banks)
16,775
73,881,196
1,744,576
140,909,318
4,600,235
Exposure
Type
Bank Role
Asset
Type
772,533,381
56,127,782
Retail Claims
167,169,743
9,010,106
Residential Real Estate
462,669,386
22,823,427
Subtotal
2,208,076
Banking
Book
None
7,935,475
Trading
Book
None
Equities Investment
Founding
Bank
Other Assets
41,221,491
3,704,412
2,124,084,684
100,235,389
Providing
Liquidity
Facility
Exposure
Providing Credit
Enhancement
Subtotal
(1)
Capital
Charge
(2)
Existing or
Purchased
Securitized
Product (3)
Capital
Charge
(4)
Capital
Exposure Capital Charge
Charges Pre(5)=(1)+(3)
(6)=(2)+(4)
Securitization
Book
Corporates (including securities and insurance
companies)
Nonfounding
Bank
Existing or
Purchased
Securitized
Product
Total
Banking
Book
None
Trading
Book
None
Subtotal
Total
Total
None
Note: Data is for the financial period closest to the printing of this annual report.
Information on Securitized Products
2. Securitization Risk Management System, Exposure and Capital Charges:
December 31, 2013
Securitization Risk Management System
A.Table of Securitized Products Held by Hua Nan
2013
Unit: NT$1,000
Item
Content
Item (Note 1)
Securitization Management Strategies
and Procedures
1.Hua Nan only invests in securities. It has not been a founding bank for any securities products.
2.Investment in securities products, management strategies and procedures are made based on the
Bank’s regulations regarding such.
Securitization Management
Organization and Framework
Hua Nan does not act as a founding bank in this line of business. Possible risks associated with
investment in securities (credit risk, liquidity risk and interest rate risk) are managed in accordance with
the Bank’s credit risk- and market risk-related organization and framework.
Scope and Features of Securitization
Risk Reporting and Measurement
Systems
Hua Nan re-screens and carries out risk assessments on a regular basis with regards to the purchase and
sale of securities products.
Securitization Risk Hedging or Mitigation
Policies, and Monitoring the Continued
Effectiveness of Risk Avoidance and
Mitigation Tools
Hua Nan does not act as a founding bank in this line of business. Risk hedging and assessment
associated with investment in securities are carried out in line with related regulations set forth by the
Bank.
Approach Adopted for Statutory
Capital Charges
Standardized Approach
State of Securitization
December 31, 2013 (Note)
Type of Security
Issued Amount
Amount in Circulation
Accounting Category
Original Cost
Total Fair
Value Profit/
Loss
Total Impairment
Book Value
None
Note 1: This table includes domestic and overseas securitized products, with the types of securities and category in which these items are listed in the
ledger:
(1) Mortgage-based Securities (MBS): Includes residential mortgage-backed securitized beneficiary certificates or RMBS, commercial
mortgage-backed securitized beneficiary certificates or CMBS, collateralized mortgage obligations, and other real estate collateralized
securities.
(2) Beneficiary certificates or asset-backed securities (ABS): Includes corporate loan-backed securitized beneficiary certificates or CLO,
collateralized bond obligation securitized beneficiary securities or CBO, credit card obligation securitized beneficiary securities or assetbacked securities, auto loan obligation securitized beneficiary certificates or asset-backed securities, consumer loan/cash card obligation
securitized beneficiary securities or asset-backed securities, lease obligation securitized beneficiary certificates or asset-backed securities,
and other securitized beneficiary certificates or asset-backed securities.
(3) Short-term beneficiary securities or asset-backed commercial paper (ABCP).
(4) Collateralized Debt Obligations (CDO).
(5) Real estate securitization refers to real estate asset trust beneficiary certificates (REAT).
(6) Bills and bonds issued as structured investment vehicles.
(7) Other securitized products.
Note 2: The table details Hua Nan as a founding bank, as well as the beneficiary securities and asset-backed securities held by the Bank.
Amount Re-purchased
None
028
2013 ANNUAL REPORT
029
B.(a) Disclosure of Investments in Securitized Products with an Original Value Over NT$300 Million (excluding those
3.Operational Risk Management System and Capital Charges:
Operational Risk Management System
held by the Bank in the capacity as the founding institution with a view to strengthened credit):
2013
Unit: NT$1,000
Name of
Security
(Note 2)
Accounting
Category
Issuer and
Location
Currency
Date of
Purchase
Date of
Maturity
Coupon
Credit
Rating
(Note3)
Method
of Interest
Payment
& Principal
Repayment
Original
Cost
Total Fair
Total
Value
Impairment
Profit/Loss
Attachment
Point
(Note 4)
Face
Value
Disclosed Item
Content of
Asset Pool
(Note 5)
Operational Risk
Management Strategies
and Procedures
1. Operational Risk Management Strategies:
Strategic development with regards to operational risk management centers on creating an appropriate
operational risk management environment that minimizes related risks. The Board of Directors and senior
management are actively involved in establishing an operational risk management framework and mechanism.
With this operational risk management mechanism, which is employed in everyday operations, the Bank is able
to identify, assess, monitor, and control operational risks, and reduce the probability of operational risk occurring
and the level of operational losses.
2. Operational Risk Management Procedures:
(1)According to the levels of operational risk, the Bank schedules all units in headquarters for executing
operational risk management tools. Thereafter, relevant action plans are developed, monitored, and
reported to the Risk Management Committee on a quarterly basis.
(2)For branch operations, the Bank designs and executes the Full Rollout Risk Self-Assessment System. The
headquarters and branches jointly engage in assessing the likelihood and impact of risk. The results are used
as reference in developing action plans.
(3)Hua Nan has established key risk indicators in order to monitor the trend of risk development. Risk mitigation
actions are immediately implemented whenever indicators exceed thresholds.
Operational Risk
Management
Organization and
Framework
Hua Nan’s organizational framework of operational risk management includes the Board of Directors, Risk
Management Committee, Headquarters Business Group and Management Group, Headquarters Risk Management
Department, and the Auditing Department. The Auditing Department under the Board is responsible for carrying out
independent audits.
1. Board of Directors: The Board screen the operational risk management framework and bears the highest
responsibility for carrying out operational risk management.
2. Risk Management Committee: The committee examines the Bank’s operational risk management guidelines and
regulations, discusses operational risk-related topics, monitors the operational risk management framework and
its implementation. The committee also provides suggestions on how to adjust and improve related frameworks
and mechanisms.
3. The headquarters’ Risk Management Department sets forth operational risk management regulations, as well
as designs and implements operational risk management projects, mechanisms, and tools. It also carries out
training programs to boost the awareness of risk management and ability to monitor operational risk throughout
the Bank. The department reports to the Board of Directors and Risk Management Committee on a regular basis.
Scope and Features
of Operational
Risk Reporting and
Measurement Systems
1. Scope:
(1)Hua Nan employs an operational risk loss database to serve as the basis of risk reporting and measurement.
Any operational risk-related losses should be reported to loss database after it occurred.
(2)Reviews will be carried out regularly on loss events and their current controls. Thereafter, reports will be
submitted to the Risk Management Committee.
2. Features: The way to declare operational risk-related loss accompanied by education and training, helps to
boost risk awareness. Any action plans initiated for loss events also could strengthen the quality of and ability to
manage operational risk.
Operational Risk Hedging
or Risk Mitigation Policies,
and Monitoring the
Continued Effectiveness
of Risk Hedging and
Mitigation Tools
1. Operational Risk Hedging or Mitigation Policies:
Hua Nan analyzes loss events according to their level of impact and likelihood. After considering risk mitigation
benefits and costs, it will adopt measures to avoid, transfer, control or bear risk.
2. Monitoring the Effectiveness of Risk Hedging and Mitigation Tools:
Hua Nan implements some management mechanisms and tools to avoid or mitigate risk. Any risk mitigating
plan will be closely implementing, following and monitoring, to ensure all plans be carried out effectively and
efficiently.
None
Note 1:This table includes domestic and overseas securitized products.
Note 2:Different offerings of the same securities product are listed separately.
Note 3:The latest credit rating is used.
Note 4:The attachment point means the percentage accounted for by the total issued value of the subordinate securities of which the priority of
claim is second only to those held by the bank over the total issued value of the securitized commodity. For example: The bank holds through
purchase security A of certain CDO. That CDO has two subordinate securities, security BBB and a sub-beneficiary security, of which the priority
of claim is second to security A. The sum of the issued dollar amount of these two subordinate securities accounts for 12% of the total issued
value of the CDO so the attachment point of security A will be 12%.
Note 5:Asset pool refers to the pool of the tranches of assets which the founding institution trusts to the trustee institution or assigned to a specialpurpose company. Please include such particulars as the type (and the respective priority), breakdown, book value accounted for in the
original currency and lots of each asset tranche.
(b)Disclosure of Information on the Positions Held by the Bank in the Capacity as the Founding Bank with a View
to Strengthened Credit:
Unit: NT$1,000
Name of
Security
(Note)
Accounting
Date of
Currency
Category
Purchase
Date of
Maturity
Coupon
Credit
Rating
Method
of Interest
Payment
& Principal
Repayment
Total Fair
Original
Total
Value Profit/
Cost
Impairment
Loss
Face
Value
Attachment Content of
Point(Note 4) Asset Pool
None
Note: The definitions of the columns for this table are the same as the above table.
(c) Disclosure of Information of the Discredited or Liquidated Securitized Commodities Held by the Bank in the
Capacity as the Buyer Institution:
Unit: NT$1,000
Name of Security
Currency
None
Founding Institution
Maturity Date
Content of Contract
State of Contract Implementation (Note)
Approach Adopted
for Regulatory Capital
Charges
Note: The Bank lists the cost of the asset as the purchase price.
Content
Hua Nan received approval from regulators to adopt the Standardized Approach starting from fiscal 2008.
C.Disclosure of Hua Nan Serving as Guaranteeing Institution or Liquidity Provider for Securitized Product, and
Amount:
Operational Risk Capital Charges
Unit: NT$1,000
Name of
Security
Currency
Founding
Institution
Maturity
Date
Coupon
Credit
Rating
Role (Note 1)
Amount
(Note 2)
Attachment
Point
Content of
Asset Pool
None
Note 1:Designate “guaranteeing institution” if serving as the guaranteeing institution of the securitized product; designate “liquidity provider” if
providing liquidity financing.
Note 2:If serving as the guaranteeing institution, designate the amount of guaranty; if providing liquidity financing, designate the amount.
Note 3:The definitions of the columns of this table are the same as the above table.
030
December 31, 2013 (Unit: NT$1,000)
Year
Gross Income
Capital Charges
2011
25,944,479
2012
27,914,275
2013
29,713,373
Total
83,572,127
3,866,935
2013 ANNUAL REPORT
031
4.Market Risk Management System and Capital Charges:
5. Liquidity Risk
Market Risk Management System
Liquidity Risk Management System
2013
Item
2013
Content
Item
1. Management Strategies:
(1)Hua Nan has a comprehensive financial product pre-trade management and post-trade risk
monitoring mechanism to effectively utilize and manage capital. This ensures that market risk
exposure is maintained with levels acceptable to the Bank, ensuring that the Bank reaches its profit
target.
(2)Hua Nan establishes and implements risk management in accordance with market risk regulations,
including market risk framework 、market risk stop loss limit、new product approval process、
after-hours & off-premises trading management、stress test(scenario analysis)、back test、model
validation、marketable securities holding period management、trading book management and
procedure、financial instrument evaluation and market data resources, which set forth by Board of
Directors, and Risk Management Committee, to optimize market risk management.
2. Management Procedures:
Hua Nan carries out market risk management procedures in accordance with related standards and
regulations, including mechanisms and tools to recognize, measure, control and disclose market risk.
In addition, the Risk Management Department regularly submits reports to the Risk Management
Committee. High-level managers will supervise risk and issue guidance. The Bank will assess trading
performance to ensure that it conforms to operational strategies and that market risk exposure is
maintained within acceptable limits.
Market Risk Management
Strategies and Procedures
Market Risk Management
Hua Nan’s market risk management organization and framework includes:
Board of Directors approves market risk limits, management-related policies and frameworks, and
reviews risk management reports.
2. Risk Management Committee
(1)The Committee screens market risk management policies, market risk management-related
guidelines, and related procedures.
(2)The Committee coordinates and confirms all risk countermeasures and provides suggestions to the
Board.
3. The Risk Management Department remains abreast of market risk planning and management:
(1) Designs market risk management standards.
(2) Plans and implements market risk-related control mechanisms.
(3) Establishes market risk management-related systems.
(4) Submits Bank-wide financial transaction market risk exposure data and related issues to the Risk
Management Committee.
Scope and Features of Market
Risk Reporting and Measurement
Systems
1. The objective of market risk measurement is to set forth clear standards to define and measure the
market risk of the Bank’s trading book and to employ a standardized framework to measure market risk
exposure. This enables the ability to make effective comparisons, monitor risk and analyze all activities
that exhibit market risk.
2. Scope of Market Risk Reports: Reports carry out risk exposure measurement and analysis on all market risk
factors, such as interest rates, foreign exchange rates, and equities associated with financial transactions
made by the Bank. These reports are compiled regularly to disclose Bank-wide market risk information
and provide high-ranking managers with data for reference in their decision-making.
3. Features:
(1)The Bank sets market risk limits on each financial product according to the nature of the product
and the ability to tolerate risk. It implements a Bank-wide risk limits framework and management
mechanism.
(2)Hua Nan has established a “Bank Equity and Risk Assets Capital Charge System” and in accordance
with rules set forth by regulatory agencies regularly calculates market risk weighted risk assets and
statutory capital. It uses related data to carry out internal management.
Market Risk Hedging or Mitigation
Policies, and Monitoring the
Continued Effectiveness of Risk
Hedging and Mitigation Tools
Approach Adopted for Statutory
Capital Charges
Content
Liquidity Risk Management
Strategies and Procedures
1. Management of liquidity risk is aimed at preventing losses due to insufficient liquidity and impacting
present or future profits or interests of shareholders. The aim of management in this regard is mainly to
achieve a balance between minimizing funding costs and maximizing assets returns, while at the same
time maintaining appropriate liquidity in the event of a crisis.
2. Hua Nan sets forth liquidity risk management regulations to recognize, measure, control and disclose
liquidity risk, and implements mechanisms of supervision of risk limitation. In addition, the Risk Management
Department submits reports to the Asset and Liability Committee and the Board of Directors periodically.
Liquidity Risk Management
Board of Directors is the highest ruling authority on liquidity risk management and takes key responsibilities
for approving policies and frameworks of liquidity risk management, and reviewing risk reports.
2. Asset and Liability Committee(ALCO):
Authorized by Board of Directors to set up the risk management mechanisms and supervise to execute,
including approving risk management procedures, reviewing level of exposures periodically and screening
related risk strategies.
3. Risk Management Department and the funding units:
Risk Management Department drafts risk management-related regulations and submits the risk reports
periodically. The funding units maintain adequate short-term liquidity positions to meet the requirement for
daily operations.
Scope, Features and
Frequency of Liquidity Risk
Reporting and Measurement
Systems
1. Risk assessment is carried out on two levels, namely on a business as usual basis and stress testing. The
main tools used in examining risk in this regard are liquidity ratio and cash flow gaps, as well as analyzing
changes in the degree to which funding sources are diversified and stress tests. In addition, the Bank
formulates and complies with contingency funding plans to provide liquidity in the event of a crisis.
2. Prepare the risk reports, disclosing major risk information and the compliance of risk limitation. And the
reports will be submitted to the ALCO and the Board monthly and quarterly respectively.
Liquidity Risk Hedging or
Mitigation Policies, and
Monitoring the Continued
Effectiveness of Risk Hedging
and Mitigation Tools
1. Hua Nan has established market risk-related limits and management mechanisms.
2. At times when it is anticipated that approved limits will be breached, business units are to apply for
additional limits or temporary limits, or adopt risk mitigation measures.
3. The Bank manages the period that it holds underwritten positions in the primary market and trading
positions in the secondary market in order to reduce the number of positions in holdings that exhibit
insufficient liquidity.
To properly manage risk exposures and timely response,Hua Nan has established management mechanisms
of liquidity risk and the risk indicators are monitored periodically. In the case of breach of the limitations , the
authorities concerned are responsible for making the corresponding proposals and submitting to the ALCO
for approval.
A.Structural Analysis of the Maturity of NT Dollars
December 31, 2013
Unit: NT$1,000
Amount for the Remaining Period Prior to the Maturity Date
Total
0-10Days
11-30 Days
31-90 Days
91-180 Days
181 Days
to 1 Year
Over 1 Year
Primary Inflow
upon Maturity
1,783,825,935
213,289,572
250,154,264
164,248,656
133,280,437
94,278,774
928,574,232
Primary Outflow
upon Maturity
2,371,796,702
103,151,353
146,953,714
258,189,648
264,551,870
508,652,619
1,090,297,498
-587,970,767
110,138,219
103,200,550
-93,940,992
-131,271,433
-414,373,845
-161,723,266
Gap
Note: This table only includes the NT dollar portion of the bank.
B.Structural Analysis of the Maturity of US Dollars
Hua Nan adopts the Standardized Approach in capital charges for market risk.
December 31, 2013
Unit: US$1,000
Market Risk Capital Charges
Amount for the Remaining Period Prior to the Maturity Date
December 31, 2013(Note)
Category of Risk
Interest Rate Risk
Equity Risk
Total
Unit: NT$1,000
Commodity Risk
Option Risk
269,802
409,537
0
2,395
Total
31-90 Days
181 Days
to 1 Year
91-180 Days
Capital Charges
68,687
Foreign Exchange Risk
0-30 Days
Over 1 Year
Primary Inflow
upon Maturity
14,919,148
5,133,096
3,506,549
1,562,512
775,234
3,941,757
Primary Outflow
upon Maturity
15,613,640
5,778,928
3,013,560
1,419,465
1,250,323
4,151,364
-694,492
-645,832
492,989
143,047
-475,089
-209,607
Gap
Note：This table exhibits the total US currency held by the bank.
750,421
032
2013 ANNUAL REPORT
033
FINANCIAL STATEMENT
(2)Risks Derived from Concentration of Operations, and Countermeasures:
1. Concentration of Operations:
FIVE-YEARS FINANCIAL SUMMARY
As of the end of 2013, consumer financing accounted for 36.07% of Hua Nan’s loan portfolio, while corporate
1. IFRSs
In thousands of NT $
financing comprised 63.93%. The Bank’s corporate clients are spread across all industries. Loans disbursed to
the manufacturing sector of NT$355.8 billion accounted for the highest proportion of total loan assets. Hua
Nan carefully examines the business of its commercial customers and the products that they trade, and it has
not overly concentrated loans with regards to any specific product. Hua Nan’s lending does not exhibit the
risk of being overly concentrated.
2. Concentration of Exposure in Specific Areas:
According to data compiled by the Bank on Hua Nan’s exposure to various nations or areas(not including
Taiwan), exposure to Asia, the Americas, Europe and other areas accounts for 55%, 25%, 14%, and 6% of total
The Bank and Subsidiaries
Date
Item
31.12.2012
31.12.2013
31.12.2012
31.12.2013
Statements of Comprehensive Income
Net interest
21,804,711
22,786,504
21,799,337
22,767,742
Net revenue other than interest
7,848,183
8,406,291
7,685,512
8,123,310
Allowance for doubtful accounts and guarantees
3,251,006
3,799,503
3,251,006
3,793,651
Operating expenses
16,224,483
16,179,493
16,085,063
15,930,365
Net profit before income tax from continuing operations
10,177,405
11,213,799
10,148,780
11,167,036
Net profit from continuing operations
8,723,628
9,570,913
8,723,628
9,570,913
overseas exposure, respectively. This does not indicate over-concentration in any specific area. Hua Nan will
Net profit
8,723,628
9,570,913
8,723,628
9,570,913
stress stable operations and select investment grade or above, low risk nations as areas where it will expand
Other comprehensive income
1,398,080
369,704
1,398,080
369,704
Total comprehensive income
10,121,708
9,940,617
10,121,708
9,940,617
1.43
1.52
1.43
1.52
158,886,211
170,228,684
158,875,946
170,216,109
operations. Presently, sovereign risk exposure in each area is within acceptable limits.
3. Concentration of Exposure to Conglomerates:
Earning per share (by NT Dollar)
Balance Sheets
Hua Nan seeks to diversify credit risk associated with the Bank’s lending to any one business grouping. At the
Cash and cash equivalents, Due from the Central Bank and
other banks
end of 2013, Hua Nan had exposure of over NT$1.5 billion to a total of 58 conglomerate customers. It has
Financial assets at fair value through profit or loss
40,125,581
40,288,320
40,125,581
40,288,320
adopted a mechanism to regularly monitor and review lending to these groups. Should any fiscal irregularity
Derivative financial assets for hedging
-
6,132
-
6,132
Securities purchased under agreements to resell
-
-
-
-
Receivables, net
38,915,430
33,313,427
38,914,966
32,884,268
Current tax assets
1,891,389
1,773,331
1,891,389
1,772,773
1,406,612,677
arise within a conglomerate, Hua Nan will immediately implement necessary measures to protect its interests
and ensure its rights as a creditor. Currently, Hua Nan’s exposure to each conglomerate is within acceptable
limits.
4. Hua Nan has drafted, implemented and carried out comprehensive controls with respect to exposure limits
for specific industries, areas (nations), and business conglomerates. These controls and mechanisms will be
adjusted accordingly based on the economic and financial environment.
1,374,043,429
1,406,612,677
1,374,043,429
Available-for-sale financial assets, net
64,997,009
80,367,723
64,997,009
80,367,723
Held-to-maturity financial assets, net
283,007,275
310,881,004
283,007,275
310,881,004
Investments accounted for by the equity method, net
81,050
75,532
1,327,605
1,420,459
Other financial assets, net
23,556,884
35,115,925
23,535,884
35,013,074
Property and equipment, net
29,452,205
28,674,054
29,444,169
28,559,760
5,703,640
6,873,100
5,703,640
6,979,602
328,774
320,600
322,510
315,417
1,423,573
2,035,220
1,422,971
2,033,464
Investment properities, net
Intangible assets
Deferred tax assets
Other assets, net
951,893
1,108,524
938,108
1,099,237
2,023,364,343
2,117,674,253
2,024,550,482
2,118,450,019
Deposits from the Central Bank and banks
89,799,416
131,875,899
89,799,416
131,875,899
Financial liabilities at fair value through profit or loss
23,217,504
20,656,004
23,217,504
20,656,004
113,294
86,820
113,294
86,820
Securities sold under agreements to repurchase
22,099,286
18,183,206
22,169,286
18,253,206
Payables
35,493,749
20,806,659
35,454,918
20,729,911
333,543
1,387,296
309,918
1,354,667
1,665,093,068
1,739,937,046
1,666,270,311
1,740,828,793
Bank debentures
38,650,000
31,650,000
38,650,000
31,650,000
Other financial liabilities
10,746,743
7,482,047
10,746,743
7,452,058
Provisions
6,064,942
5,907,404
6,066,294
5,909,186
Deferred tax liabilities
6,021,653
6,022,050
6,021,653
6,021,653
Other liabilities
2,956,906
2,985,917
2,956,906
2,937,917
Share capital
57,379,000
63,089,000
57,379,000
63,089,000
Capital surplus
24,694,777
24,694,777
24,694,777
24,694,777
Retained earnings
43,370,748
45,337,234
43,370,748
Total assets
Derivative financial liabilities for hedging
Current tax liabilities
Deposits and remittances
Other equity
Total liabilities and equity
034
The Bank
(
2,670,286)
2,023,364,343
(
2,427,106)
2,117,674,253
(
2,670,286)
45,337,234
(
2,024,550,482
2013 ANNUAL REPORT
2,427,106)
2,118,450,019
035
INDEPENDENT AUDITORS’ REPORT
2. ROC GAAP
In thousands of NT $
The Bank
Date
Item
31.12.2009
31.12.2010
31.12.2011
31.12.2012
The Board of Directors and the Stockholder
Statements of Income
Interest income, net
15,897,798
16,880,076
19,574,630
21,165,409
Net income excluding interest income
12,539,376
10,611,579
10,459,868
9,798,737
Bad-debt expenses
10,644,117
6,559,251
4,760,831
5,467,323
Operating expenses
14,164,407
14,399,439
15,251,385
15,425,466
Income before income tax from continuing
operations
3,628,650
6,532,965
10,022,282
10,071,357
Income after income tax from continuing
operations
3,978,796
5,949,838
8,385,429
8,661,219
Net income
3,978,796
5,949,838
8,385,429
8,661,219
0.72
1.08
1.52
1.42
Cash and cash equivalents, Due from the
Central Bank and other banks
177,451,110
123,780,159
141,835,135
161,045,928
Financial assets at fair value through profit or
loss, net
26,294,415
25,387,124
33,925,915
40,224,363
Bonds and bills purchased under resale
agreements
3,935,604
1,773,814
349,905
29,411,308
28,254,316
43,493,032
40,723,487
1,104,726,331
1,245,812,985
1,309,023,543
1,374,043,429
Available-for-sale financial assets, net
70,132,532
61,402,251
65,908,870
64,997,009
Held-to-maturity financial assets, net
322,968,471
304,206,987
288,324,506
283,007,275
215,845
254,634
271,865
1,325,964
7,219,858
10,044,891
17,342,436
21,267,120
23,106,476
25,914,017
28,011,623
29,444,169
Earning per share (by NT Dollar)
Balance Sheets
Receivables, net
Investments accounted for by the equity
method
- Intangible assets
456,525
559,868
417,574
322,510
Other assets, net
10,378,022
9,965,998
7,557,767
7,540,163
Total assets
Hua Nan Commercial Bank, Ltd.
We have audited the accompanying consolidated balance sheets of Hua Nan Commercial Bank, Ltd. (the
“Company”) and its subsidiaries as of December 31, 2013, December 31, 2012 and January 1, 2012, and
the related consolidated statements of comprehensive income, changes in equity and cash flows for the
years ended December 31, 2013 and 2012. These consolidated financial statements are the responsibility
of the Company’s management. Our responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with the Rules Governing the Audit of Financial Statements of
Financial Institutions by Certified Public Accountants and auditing standards generally accepted in the
Republic of China. Those rules and standards require that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated
financial statements. An audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall consolidated financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects,
the consolidated financial position of the Company and its subsidiaries as of December 31, 2013, December
31, 2012 and January 1, 2012 and their consolidated financial performance and their cash flows for the
years ended December 31, 2013 and 2012, in conformity with the Regulations Governing the Preparation of
Financial Reports by Public Banks, the guidelines issued by the authority, and International Financial Reporting
Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations
(SIC) endorsed by the Financial Supervisory Commission of the Republic of China.
We have also audited the parent company only financial statements of the Company as of and for the years
ended December 31, 2013 and 2012 on which we have issued an unqualified report.
1,776,296,497
1,837,357,044
1,936,462,171
2,023,941,417
Due to the Central Bank and other banks
48,621,314
43,638,222
82,357,240
89,799,416
Financial liabilities at fair value through profit
or loss
41,999,203
37,659,552
27,790,094
23,217,504
Bonds and bills sold under repurchase
agreements
18,188,348
20,125,671
20,719,589
22,169,286
Payables
36,208,428
33,819,533
39,809,157
35,764,836
1,512,713,803
1,564,252,346
1,617,655,576
1,666,270,311
26,300,000
31,300,000
33,650,000
38,650,000
Notice to Readers
1,489,927
1,710,898
1,889,730
2,261,048
690,156
7,864,112
9,476,095
10,860,037
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.
Financing from Central Bank and other
banks, Bank debentures payable
Accrued pension liability
Other liabilities
6,790,420
6,977,161
7,531,450
9,210,719
Share capital
37,809,000
43,107,000
47,671,000
57,379,000
Capital surplus
12,618,085
12,618,085
12,694,777
24,694,777
Retained earnings
28,925,064
28,576,902
31,067,394
37,166,979
3,942,749
5,707,562
4,150,069
6,497,504
1,776,296,497
1,837,357,044
1,936,462,171
2,023,941,417
Other equity
Total liabilities and shareholders' equity
March 24, 2014
For the convenience of readers, the independent auditors’ 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’ report
and consolidated financial statements shall prevail.
036
FINANCIAL STATEMENT
2013 ANNUAL REPORT
037
HUA NAN COMMERCIAL BANK, LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands of New Taiwan Dollars)
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In Thousands of New Taiwan Dollars, Except Per Share Amounts)
December 31, 2013
ASSETS
Amount
December 31, 2012
%
CASH AND CASH EQUIVALENTS (Notes 4, 6 and 40)
$
48,142,931
DUE FROM THE CENTRAL BANK AND OTHER BANKS
(Notes 4, 6, 7 and 40)
122,085,753
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR
LOSS (Notes 4, 8 and 40)
40,288,320
DERIVATIVE FINANCIAL ASSETS FOR HEDGING (Note 4)
SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL
(Notes 4, 6, 9 and 40)
RECEIVABLES, NET (Notes 4, 5 and 10)
Amount
January 1, 2012
%
2
$
31,266,244
6
127,619,967
2
40,125,581
6,132
-
-
-
33,313,427
CURRENT TAX ASSETS (Notes 29 and 40)
DISCOUNTS AND LOANS, NET (Notes 4, 5, 11 and 40)
1,406,612,677
AVAILABLE-FOR-SALE FINANCIAL ASSETS, NET (Notes 4,
12 and 42)
80,367,723
HELD-TO-MATURITY FINANCIAL ASSETS, NET (Notes 4, 5,
13 and 42)
310,881,004
%
2
$
35,856,421
6
105,296,645
2
33,841,598
-
-
-
-
-
-
349,905
-
2
38,915,430
2
40,942,757
1,773,331
-
1,891,389
-
2,548,945
-
66
1,374,043,429
68
1,309,023,543
68
4
64,997,009
3
65,908,870
15
283,007,275
14
288,324,506
5
6
INTEREST EXPENSE (Notes 4, 31 and 40)
(
11,798,052) ( 38) (
10,967,530) (37) 8
NET INTEREST
22,786,504 73 21,804,711 74 5
Commission and fee revenues, net (Notes 4, 32 and 40)
5,299,890 17 Gain (loss) on financial assets and liabilities at fair value through profit or loss
(Notes 4 and 33)
2,991,501 Realized gain on available-for-sale financial assets (Notes 4 and 34)
15
Foreign exchange (loss) gain, net (Note 4)
(
-
Share of loss of associate (Notes 4 and 14)
(
Gain on financial assets carried at cost, net
225,954 1 222,106 Other noninterest net revenues(Notes 4, 35 and 40)
527,085 2 312,874 1 Total net revenues other than interest
8,406,291 27 TOTAL NET REVENUES
31,192,795 100 29,652,894 100 ALLOWANCE FOR DOUBTFUL ACCOUNTS AND GUARANTEES (Notes 4, 10, 11, 15
and 26)
(
3,799,503) (12) (
3,251,006) (11) 17
3
75,532
-
81,050
-
85,359
35,115,925
2
23,556,884
1
18,118,856
1
PROPERTY AND EQUIPMENT, NET (Notes 4, 16 and 41)
28,674,054
1
29,452,205
2
29,334,527
2
INVESTMENT PROPERTIES, NET (Notes 4, 17 and 41)
6,873,100
-
5,703,640
-
5,683,750
INTANGIBLE ASSETS (Notes 4, 18 and 41)
320,600
-
328,774
-
417,574
-
DEFERRED TAX ASSETS (Notes 4, 5 and 29)
2,035,220
-
1,423,573
-
1,419,288
-
OTHER ASSETS, NET (Notes 4, 19 and 42)
1,108,524
-
951,893
-
1,066,370
-
$
2,023,364,343
100
$
1,938,218,914
%
32,772,241 111 100
Amount
34,584,556 111 $
2,117,674,253
%
$
2
2012
Amount
INTEREST REVENUE (Notes 4, 31 and 40)
2
OTHER FINANCIAL ASSETS, NET (Notes 4 and 15)
$
2013
2
INVESTMENTS ACCOUNTED FOR USING EQUITY
METHOD, NET (Notes 4 and 14)
TOTAL
Percentage
Increase
(Decrease)
%
For the Years Ended December 31
Amount
-
100
LIABILITIES AND EQUITY
NET REVENUES OTHER THAN INTEREST
9 (
565,309 2 1,197,930) (4) 5,518) - (
4,677,308 16 13
1,252,278) (4) 339
389,535 1 45
3,502,947 12 (134)
4,309) 7,848,183 - (
28)
- 2
68
26 7
5
OPERATING EXPENSES (Notes 36, 37, 38 and 40)
DEPOSITS FROM THE CENTRAL BANK AND BANKS (Notes
20 and 40)
$
131,875,899
FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT
OR LOSS (Notes 4, 8 and 40)
20,656,004
DERIVATIVE FINANCIAL LIABILITIES FOR HEDGING (Note 4)
86,820
SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
(Notes 4, 8, 12, 13, 15, 21and 40)
PAYABLES (Note 22)
CURRENT TAX LIABILITIES (Notes 29 and 40)
6
$
89,799,416
1
23,217,504
-
113,294
18,183,206
1
22,099,286
20,806,659
1
35,493,749
1,387,296
-
333,543
DEPOSITS AND REMITTANCES (Notes 23 and 40)
1,739,937,046
82
1,665,093,068
BANK DEBENTURES (Note 24)
31,650,000
2
38,650,000
OTHER FINANCIAL LIABILITIES (Note 25)
7,482,047
1
10,746,743
PROVISIONS (Notes 4, 5, 26 and 27)
5,907,404
6,064,942
-
5
$
82,357,240
4
Employee benefits
(
10,716,956) (34) (
1
27,790,094
1
Depreciation and amortization
(
752,932) (3) (
862,825) (3) (13)
144,124
Others
(
4,709,605) ( 15) (
4,609,674) ( 16) 2
1
20,649,589
1
Total operating expenses
(
16,179,493) ( 52) (
2
38,293,160
2
-
1,531,911
-
NET PROFIT BEFORE INCOME TAX
11,213,799 36 10,177,405 34 10
82
1,617,525,532
84
INCOME TAX EXPENSE (Notes 4 and 29)
(
1,642,886) (
5) (
1,453,777) (
5) 13
2
33,650,000
2
NET PROFIT FOR THE YEAR
8,723,628 29 10
1
9,331,971
1
5,631,626
-
-
-
-
OTHER COMPREHENSIVE INCOME (Notes 4, 27 and 29)
Exchange differences on translating foreign operations
Unrealized gain on available-for-sale financial assets
41,365 - Actuarial gain (loss) arising from defined benefit plans
152,439 - (
Income tax relating to the components of other comprehensive income
(
25,915) - 25,410 - (202)
Other comprehensive income for the year
369,704 1 1,398,080 5 (74)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
$
9,940,617 32 $
6,022,050
-
6,021,653
-
6,021,653
-
OTHER LIABILITIES (Note 28)
2,985,917
-
2,956,906
-
1,785,849
-
Total liabilities
1,986,980,348
94
1,900,590,104
94
1,844,712,749
95
EQUITY (Notes 4 and 30)
Share capital
Ordinary shares
63,089,000
3
57,379,000
3
47,671,000
2
Capital surplus
24,694,777
1
24,694,777
1
12,694,777
1
Legal reserve
25,141,742
1
22,543,375
1
20,027,746
1
Special reserve
8,795,268
-
10,463,319
1
7,154,423
Unappropriated earnings
11,400,224
1
10,364,054
-
10,150,647
1
Total retained earnings
2
43,370,748
2
37,332,816
2
Retained earnings
45,337,234
16,224,483) ( 55) -
-
DEFERRED TAX LIABILITIES (Notes 4 and 29)
9,570,913 31 10,751,984) ( 36) -
201,815 1 (
145,909) - 238
1,668,051 6 (
98)
149,472) (1) 202
10,121,708 34 (2)
EARNINGS PER SHARE (Note 39)
Basic
$
1.52
$
1.43
The accompanying notes are an integral part of the consolidated financial statements.
Other equity
Exchange differences on translating foreign
operations
4,017
-
(
Unrealized loss on available-for-sale financial
assets
197,798)
-
(
51,889)
-
(2,431,123)
-
(
2,472,488)
-
(
4,140,539)
Total other equity
(
2,427,106)
-
(
2,670,286)
-
(
4,192,428)
-
Total equity
130,693,905
6
122,774,239
6
93,506,165
5
TOTAL
$
1,938,218,914
100
2,117,674,253
100
$
2,023,364,343
100
$
038
FINANCIAL STATEMENT
2013 ANNUAL REPORT
039
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Retained Earnings
Capital Surplus
Capital Stock
Share Premium
BALANCE AT JANUARY 1, 2012
$
47,671,000 $
Others
12,693,452 $
Legal Reserve
Total
1,325 $
12,694,777
Unappropriated Earnings
Special Reserve
$
20,027,746 $
Other Equity
Exchange
Differences on
TranslatingForeign
Operations
Total
Unrealized Gain
(Loss) on Availablefor-sale Financial
Assets
Total
7,154,423 $10,150,647 $37,332,816 ($51,889) ($4,140,539) $93,506,165
Appropriation of 2011 earnings (Note)
Legal reserve
- - - -
2,515,629 - (
2,515,629) - - - -
Special reserve
- - - -
- 3,308,896 (
3,308,896) - - - -
Cash dividends
- - - -
- - (
853,634) (
853,634) - - (
Share dividends
1,708,000 - - -
- - (
1,708,000) (
1,708,000) - - -
Net profit for the year ended December 31, 2012
- - - -
- - 8,723,628 8,723,628 - - 8,723,628
Other comprehensive income (loss) for the year ended December 31,
2012
- - - -
- - (
124,062) (
145,909) 1,668,051 1,398,080
Total comprehensive income (loss) for the year ended December 31,
2012
- - - -
- - 8,599,566 8,599,566 (
145,909) 1,668,051 10,121,708
Issue of ordinary shares for cash
- 12,000,000
- - - BALANCE AT DECEMBER 31, 2012
57,379,000 24,693,452 1,325 24,694,777
22,543,375 10,463,319 10,364,054 Legal reserve
- - - -
2,598,367 Special reserve
- - - -
- (
Cash dividends
- - - -
- - (
Share dividends
5,710,000 - - -
- Net profit for the year ended December 31, 2013
- - - -
Other comprehensive income for the year ended December 31, 2013 - - - -
Total comprehensive income for the year ended December 31, 2013
- - - -
BALANCE AT DECEMBER 31, 2013
$
8,000,000 12,000,000 124,062) (
- 43,370,748 (
- 197,798) (
853,634)
- 20,000,000
2,472,488) 122,774,239
63,089,000 $
24,693,452 $
1,325 $
24,694,777
2,598,367) - - - -
1,668,051 - - - -
2,020,951) (
2,020,951) - - (
- (
5,710,000) (
5,710,000) - - -
- - 9,570,913 9,570,913 - - 9,570,913
- - 126,524 126,524 201,815 41,365 369,704
- - 9,697,437 9,697,437 201,815 41,365 9,940,617
11,400,224 $
45,337,234 $
$
25,141,742 $
- (
1,668,051) 8,795,268 $
4,017 ($
2,431,123) $
2,020,951)
130,693,905
Note: Employees bonus amounting to $618,472 and $204,872 had been charged against earnings of 2012 and 2013, respectively.
040
FINANCIAL STATEMENT
2013 ANNUAL REPORT
041
CONSOLIDATED STATEMENTS OF CASH FLOWS
2013
2012
2013
CASH FLOWS FROM OPERATING ACTIVITIES
Net profit before income tax
CASH FLOWS FROM INVESTING ACTIVITIES
$
11,213,799 $
10,177,405
Adjustments for:
(
727,101
Acquisition of intangible assets
Amortization expenses
137,401
161,146
Proceeds from disposal of colaterals assumed
3,799,503
3,251,006
Acquisition of investment properties
(
13,343,922
12,874,335
(Increase) decrease in other assets
(
Interest expense
Interest revenue
(
35,830,042) (
Gain on disposal of collaterals assumed
(
23,547)
-
5,518
4,309
12
Share of loss of associate
(Gain) loss on disposal of property and equipment
(
870)
Reversal of impairment loss on non-financial assets
(
8,134) Subtotal
(
17,928,436) (
34,045,118)
17,027,209)
Changes in operating assets and liabilities
Decrease (increase) in due from the Central Bank and other banks
1,842,338 (
13,469,368)
6,283,983)
Increase in financial assets at fair value through profit or loss
(
162,739) (
Increase in derivative financial assets for hedging
(
6,132)
-
5,655,751
2,177,802
Decrease in receivables
Increase in discounts and loans
(
36,232,320) (
(Increase) decrease in available-for-sale financial assets
(
15,329,349)
2,579,912
(Increase) decrease in held-to-maturity financial assets
(
27,847,176)
5,317,231
Increase in other financial assets
(
11,709,872) (
Increase in deposits from the Central Bank and banks
42,076,483
68,100,347)
5,555,008)
7,442,176
Decrease in financial liabilities at fair value through profit or loss
(
2,561,500) (
Decrease in derivative financial liabilities for hedging
(
26,474)
(30,830)
(Decrease) increase in securities sold under agreements to repurchase
(
3,916,080)
1,449,697
Decrease in payables
(
Increase in deposits and remittances
(Decrease) increase in other financial liabilities
(
Decrease in provisions
(412,334) (
Increase in other liabilities
Cash generated from operations
3,264,696)
29,011 2,311,754 (
Interest received
35,754,752
47,567,536
1,414,772
14,975
(47,110) (
66,771)
31,681
(
-
2,870) (
22,831)
156,631) 114,477
1,286,409) (
824,364)
CASH FLOWS FROM FINANCING ACTIVITIES
Bank debentures issued
- 5,000,000
Repayment of bank debentures on maturity
(7,000,000) -
Cash dividend
(
Interest paid
(
2,021,686) (
Net cash (used in) provided by financing activities
(
854,032)
- 20,000,000
640,368) (
582,987)
9,662,054) 23,562,981
EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH HELD IN FOREIGN
CURRENCIES
NET INCREASE IN CASH AND CASH EQUIVALENTS
13,184,811 3,913,872
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR
87,527,864 83,613,992
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR
$
100,712,675 $
87,527,864
206,763 (201,101)
Reconciliation of the amounts in the consolidated statements of cash flows with the equivalent items reported in
the consolidated balance sheets at December 31, 2013 and 2012:
December 31
4,572,590)
13,952,498) (1,312,137)
74,843,978
Net cash used in investing activities
864,214)
1,774
647,813
2013
2012
Cash and cash equivalents in consolidated balance sheets
$
48,142,931 $
31,266,244
Due from the Central Bank and other banks that meet the definition of cash and cash
equivalents in IAS 7
52,569,744 56,261,620
Cash and cash equivalents in consolidated statements of cash flows
$
100,712,675 $
87,527,864
439,457)
1,171,057
37,493,341)
33,898,879
Interest paid
(
13,041,478) (
12,377,150)
Income tax paid
(
1,098,517) (
2,652,032)
23,926,511 (
18,623,644)
FINANCIAL STATEMENT
1,113,253) (
Proceeds from disposal of property and equipment
042
Acquisition of property and equipment
Depreciation expenses
Net cash provided by (used in) operating activities
2012
2013 ANNUAL REPORT
043
HUA NAN COMMERCIAL BANK, LTD.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2013 AND 2012
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)
1.ORGANIZATION
Hua Nan Commercial Bank, Ltd. (the “Company”) was established on March 1, 1947 through the restructuring of the
Hua Nan Bank, which was founded in 1919. The Company engages in (a) all commercial banking operations allowed
by the Banking Act; (b) offshore banking business; (c) overseas branch operations authorized by the respective foreign
governments; and (d) other operations as authorized by the central competent authorities.
The Company maintains its head office in Taipei. As of December 31, 2013, the Company had Banking, Financial Trading,
International Banking and Trust Departments as well as 186 domestic branches, an offshore banking unit (OBU), 9 overseas
branches, 1 overseas subbranch, and 1 overseas representative office.
The operations of the Company’s Trust Department are (1) trust business planning, managing and operating and (2)
custody of nondiscretionary trust funds in domestic and overseas securities and mutual funds. These operations are
regulated under the Banking Act and the Trust Enterprise Act.
Under the Financial Holding Company Act, the Company and EnTrust Securities Co., Ltd. (“EnTrust”) established Hua Nan
Financial Holdings Co., Ltd. (HNFH), a financial holding company, through stock conversion agreement on November 14,
2001. The parties established the holding company to maximize the benefit of their combined capital, pool their business
channels, and fully harness the synergy of the diversified business operations. The Company and EnTrust exchanged
issued shares with HNFH at ratios of 1:1 and 1.2821:1 (“1” refers to HNFH), respectively, and the stockholders approved this
share swap on November 14, 2001. The board of directors resolved the effective date of stock conversion agreement as
December 19, 2001. Thus, the shares of the Company became delisted on the Taiwan Stock Exchange Corporation (TSEC)
on December 19, 2001. EnTrust was renamed Hua Nan Securities Co., Ltd. (HNSC) in June 2003. The Company and HNSC
became wholly owned subsidiaries of HNFH.
HNCB Insurance Agency Co., Ltd. (HNCB Insurance Agency) was incorporated in accordance with the Company Law
on March 21, 2001 and mainly engages in the life insurance agency business. The Company holds 100% ordinary shares of
HNCB Insurance Agency.
Hua Nan International Leasing Co., Ltd. (HNILC) was incorporated in accordance with the Company Law on July 13, 2012
and mainly engages in financing leasing business. The Company holds 100% ordinary shares of HNILC.
Hua Nan International Leasing Corporation (HNILC Shenzhen) was established on October 25, 2012 and mainly engages in
financing leasing business. HNILC holds 100% ordinary shares of HNILC Shenzhen.
For the purposes of integrating resources, maximizing operating effectiveness, strengthening the capital structure and for
long-term development, the Company acquired Hua Nan Bills Finance Corporation (HNBF) upon approval of both board
of directors (acting on stockholders’ behalf). The acquisition was carried out by absorption treatment. The Company was
the surviving company while HNBF was the dissolved company. The reference date of acquisition was on May 23, 2008. The
Company purchased the rest of the outstanding stocks with $10 per share in cash. This acquisition was approved by the
Financial Supervisory Commission on April 21, 2008.
The Company’s ultimate parent is HNFH, which holds 100% ordinary shares of the Company.
The functional currency of the Company is New Taiwan dollars, and the consolidated financial statements are presented in
New Taiwan dollars.
As of December 31, 2013, December 31, 2012 and January 1, 2012, the Company and its subsidiaries had 7,196, 7,109 and
7,163 employees, respectively.
2. APPROVAL OF FINANCIAL STATEMENTS
by the FSC (the 2010 IFRSs version) currently applied by companies with shares listed on the Taiwan Stock Exchange
or traded on the Taiwan GreTai Securities Market or Emerging Stock Market or financial instruments governed by the
FSC will be replaced by the updated IFRSs without IFRS 9 (the 2013 IFRSs version). However, as of the date that the
consolidated financial statements were authorized for issue, the FSC has not endorsed the following new, amended
and revised standards and interpretations issued by the IASB (the “New IFRSs”) included in the 2013 IFRSs version.
Furthermore, the FSC has not announced the effective date for the following New IFRSs that are not included in the
2013 IFRSs version.
The New IFRSs Included in the
2013 IFRSs Version Not Yet Endorsed by the FSC
Effective Date
Announced by IASB (Note 1)
Improvements to IFRSs (2009) - amendment to IAS 39
January 1, 2009 and January 1, 2010, as appropriate
Amendment to IAS 39 “Embedded Derivatives”
Effective for annual periods ending on or after June 30, 2009
Improvements to IFRSs (2010)
July 1, 2010 and January 1, 2011, as appropriate
Annual Improvements to IFRSs 2009-2011 Cycle
January 1, 2013
Amendment to IFRS 1 “Limited Exemption from Comparative IFRS 7
Disclosures for First-time Adopters”
July 1, 2010
Amendment to IFRS 1 “Severe Hyperinflation and Removal of Fixed Dates
for First-time Adopters”
July 1, 2011
Amendment to IFRS 1 “Government Loans”
January 1, 2013
Amendment to IFRS 7 “Disclosure - Offsetting Financial Assets and
Financial Liabilities”
January 1, 2013
Amendment to IFRS 7 “Disclosure - Transfer of Financial Assets”
July 1, 2011
IFRS 10 “Consolidated Financial Statements”
January 1, 2013
IFRS 11 “Joint Arrangements”
January 1, 2013
IFRS 12 “Disclosure of Interests in Other Entities”
January 1, 2013
The New IFRSs Included in the
2013 IFRSs Version Not Yet Endorsed by the FSC
Effective Date
Amendments to IFRS 10, IFRS 11 and IFRS 12 “Consolidated Financial Statements, Joint
Arrangements and Disclosure of Interests in Other Entities: Transition Guidance”
January 1, 2013
Amendments to IFRS 10 and IFRS 12 and IAS 27 “Investment Entities”
January 1, 2014
IFRS 13 “Fair Value Measurement”
January 1, 2013
Amendment to IAS 1 “Presentation of Other Comprehensive Income”
July 1, 2012
Amendment to IAS 12 “Deferred Tax: Recovery of Underlying Assets”
January 1, 2012
IAS 19 (Revised 2011) “Employee Benefits”
January 1, 2013
IAS 27 (Revised 2011) “Separate Financial Statements”
January 1, 2013
IAS 28 (Revised 2011) “Investments in Associates and Joint Ventures”
January 1, 2013
Amendment to IAS 32 “Offsetting Financial Assets and Financial Liabilities”
January 1, 2014
IFRIC 20 “Stripping Costs in Production Phase of a Surface Mine”
January 1, 2013
The consolidated financial statements were approved by the board of directors on March 24, 2014.
3. APPLICATION OF NEW AND REVISED STANDARDS, AMENDMENTS AND INTERPRETATIONS
a. New, amended and revised standards and interpretations (the “New IFRSs”) in issue but not yet effective
The Company and its subsidiaries have not applied the following International Financial Reporting Standards (IFRS),
International Accounting Standards (IAS), Interpretations of IFRS (IFRIC), and Interpretations of IAS (SIC) issued by the
IASB. On January 28, 2014, the Financial Supervisory Commission (FSC) announced the framework for the adoption of
updated IFRSs version in the ROC. Under this framework, starting January 1, 2015, the previous version of IFRSs endorsed
044
FINANCIAL STATEMENT
The New IFRSs Not Included in the 2013 IFRSs Version
Effective Date
July 1, 2014 (Note 2)
July 1, 2014
IFRS 9 “Financial Instruments”
Note 3
2013 ANNUAL REPORT
045
The New IFRSs Not Included in the 2013 IFRSs Version
Effective Date
Amendments to IFRS 9 and IFRS 7 “Mandatory Effective Date of IFRS 9 and Transition Disclosures”
Note 3
IFRS 14 “Regulatory Deferral Account”
January 1, 2016
the investee; ii) exposure, or rights, to variable returns from its involvement with the investee and iii) the ability to use its
power over the investee to affect the amount of its returns. Additional guidance has been included in IFRS 10 to explain
when an investor has control over an investee.
b) IFRS 12 “Disclosure of Interests in Other Entities”
IFRS 12 is a new disclosure standard and is applicable to entities that have interests in subsidiaries, joint arrangements,
associates and/or unconsolidated structured entities. In general, the disclosure requirements in IFRS 12 are more extensive
Amendment to IAS 19 “Defined Benefit Plans: Employee Contributions”
July 1, 2014
Amendment to IAS 36 “Impairment of Assets: Recoverable Amount Disclosures for Non-financial
Assets”
January 1, 2014
Amendment to IAS 39 “Novation of Derivatives and Continuation of Hedge Accounting”
January 1, 2014
Revised IAS 28 requires when a portion of an investment in an associate meets the criteria to be classified as held for sale,
IFRIC 21 “Levies”
January 1, 2014
for using the equity method. Under current IAS 28, when a portion of an investment in associates meets the criteria to be
than in the current standards.
c) Revision to IAS 28 “Investments in Associates and Joint Ventures”
that portion is classified as held for sale. Any retained portion that has not been classified as held for sale is accounted
Note 1: Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on or after the respective effective dates.
Note 2: The amendment to IFRS 2 applies to share-based payment transactions for which the grant date is on or after July 1, 2014; the amendment to IFRS 3 applies to
business combinations for which the acquisition date is on or after July 1, 2014; the amendment to IFRS 13 is effective immediately; the remaining amendments are
effective for annual periods beginning on or after July 1, 2014.
Note 3: IASB tentatively decided that an entity should apply IFRS 9 for annual periods beginning on or after January 1, 2018.
b. Significant impending changes in accounting policy resulted from New IFRSs in issue but not yet effective
Under revised IAS 28, when a portion of an investment in an associate is held by, or is held indirectly through, an entity
that is a venture capital organization, the Group elects to measure the investment at fair value through profit or loss. Any
remaining portion of its investment in that associate that is not held through a venture capital organization is accounted
for using the equity method. Under current IAS 28, the entire investment in the associate is accounted for using equity
Except for the following, the initial application of the above New IFRSs has not had any material impact on the
method regardless of whether the investments are held by, or are held indirectly through, an entity that is a venture
Company and its subsidiaries’ accounting policies:
capital organization.
1)IFRS 9 “Financial Instruments”
Recognition and measurement of financial assets
With regards to financial assets, all recognized financial assets that are within the scope of IAS 39 “Financial
Instruments: Recognition and Measurement” are subsequently measured at amortized cost or fair value. Specifically,
financial assets that are held within a business model whose objective is to collect the contractual cash flows, and
that have contractual cash flows that are solely payments of principal and interest on the principal outstanding are
generally measured at amortized cost at the end of subsequent accounting periods. All other financial assets are
measured at their fair values at the end of reporting period. However, the Company and its subsidiaries may make
an irrevocable election to present subsequent changes in the fair value of an equity investment (that is not held for
trading) in other comprehensive income, with only dividend income generally recognized in profit or loss.
Recognition and measurement of financial liabilities
As for financial liabilities, the main changes in the classification and measurement relate to the subsequent
3)IFRS 13 “Fair Value Measurement”
IFRS 13 establishes a single source of guidance for fair value measurements. It defines fair value, establishes a framework for
measuring fair value, and requires disclosures about fair value measurements. The disclosure requirements in IFRS 13 are more
extensive than those required in the current standards. For example, quantitative and qualitative disclosures based on the
three-level fair value hierarchy currently required for financial instruments only will be extended by IFRS 13 to cover all assets
and liabilities within its scope.
4)Amendment to IAS 1 “Presentation of Items of Other Comprehensive Income”
The amendment to IAS 1 requires items of other comprehensive income to be grouped into those that (1) will not be
reclassified subsequently to profit or loss; and (2) will be reclassified subsequently to profit or loss when specific conditions are
met. Income taxes on related items of other comprehensive income are grouped on the same basis. Under current IAS 1,
there were no such requirements.
5)Revision to IAS 19 “Employee Benefits”
measurement of financial liabilities designated as at fair value through profit or loss. The amount of change in the
Revision in 2011
fair value of such financial liability attributable to changes in the credit risk of that liability is presented in other
Revised IAS 19 requires the recognition of changes in defined benefit obligations and in the fair value of plan assets when
comprehensive income and the remaining amount of change in the fair value of that liability is presented in profit or
they occur, and hence eliminate the “corridor approach” permitted under current IAS 19 and accelerate the recognition
loss, unless the recognition of the effects of changes in the liability’s credit risk in other comprehensive income would
of past service costs. The revision requires all actuarial gains and losses to be recognized immediately through other
create or enlarge an accounting mismatch in profit or loss. Changes in fair value attributable to a financial liability’s
comprehensive income in order for the net pension asset or liability to reflect the full value of the plan deficit or surplus.
credit risk are not subsequently reclassified to profit or loss. If the above accounting treatment would create or
Furthermore, the interest cost and expected return on plan assets used in current IAS 19 are replaced with a “net interest”
enlarge an accounting mismatch in profit or loss, the Company and its subsidiaries presents all gains or losses on that
amount, which is calculated by applying the discount rate to the net defined benefit liability or asset.
liability in profit or loss.
6)Amendment to IAS 36 “Recoverable Amount Disclosures for Non-Financial Assets”
Hedge accounting
In issuing IFRS 13 “Fair Value Measurement”, the IASB made consequential amendment to the disclosure requirements in IAS
The main changes in hedge accounting amended the application requirements for hedge accounting to better
36 “Impairment of Assets”, introducing a requirement to disclose in every reporting period the recoverable amount of an
reflect the entity’s risk management activities. Compared with IAS 39, the main changes include: (1) enhancing
asset or each cash-generating unit. The amendment clarifies that such disclosure of recoverable amounts is required only
types of transactions eligible for hedge accounting, specifically broadening the risk eligible for hedge accounting
when an impairment loss has been recognized or reversed during the period. Furthermore, the Company and its subsidiaries
of non-financial items; (2) changing the way hedging derivative instruments are accounted for to reduce profit or
is required to disclose the discount rate used in measurements of the recoverable amount based on fair value less costs of
loss volatility; and (3) replacing retrospective effectiveness assessment with the principle of economic relationship
disposal measured using a present value technique.
between the hedging instrument and the hedged item.
7)Annual Improvements to IFRSs: 2010-2012 Cycle
Effective date
Several standards including IFRS 2 “Share-Based Payment”, IFRS 3 “Business Combinations” and IFRS 8 “Operating Segments”
The mandatory effective date of IFRS 9, which was previously set at January 1, 2015, was removed and will
were amended in this annual improvement.
be reconsidered once the standard is complete with a new impairment model and finalization of any limited
The amended IFRS 2 changes the definitions of ‘vesting condition’ and ‘market condition’ and adds definitions for
amendments to classification and measurement.
‘performance condition’ and ‘service condition’. The amendment clarifies that a performance target can be based on
2)New and revised standards on consolidation and associates and disclosure
a) IFRS 10 “Consolidated Financial Statements”
046
classified as held for sale, the entire investment is classified as held for sale and ceases to apply the equity method.
the operations (i.e. a non-market condition) of the Company and its subsidiaries or another entity in the same group or the
market price of the equity instruments of the Company and its subsidiaries or another entity in the same group (i.e. a market
condition); that a performance target can relate either to the performance of the Company and its subsidiaries as a whole
IFRS 10 replaces IAS 27 “Consolidated and Separate Financial Statements” and SIC 12 “Consolidation - Special
or to some part of it (e.g. a division); and that the period for achieving a performance condition must not extend beyond
Purpose Entities”. The Company and its subsidiaries consider whether it has control over other entities for
the end of the related service period. In addition, a share market index target is not a performance condition because it not
consolidation. The Company and its subsidiaries have control over an investee if and only if it has i) power over
only reflects the performance of the Group, but also of other entities outside the Company and its subsidiaries.
FINANCIAL STATEMENT
2013 ANNUAL REPORT
047
IFRS 3 was amended to clarify that contingent consideration should be measured at fair value, irrespective of whether
the contingent consideration is a financial instrument within the scope of IFRS 9 or IAS 39. Changes in fair value should be
recognized in profit or loss.
The amended IFRS 8 requires an entity to disclose the judgments made by management in applying the aggregation
criteria to operating segments, including a description of the operating segments aggregated and the economic
indicators assessed in determining whether the operating segments have ‘similar economic characteristics’. The
amendment also clarifies that a reconciliation of the total of the reportable segments’ assets to the entity’s assets should
only be provided if the segments’ assets are regularly provided to the chief operating decision-maker.
IFRS 13 was amended to clarify that the issuance of IFRS 13 did not remove the ability to measure short-term receivables
and payables with no stated interest rate at their invoice amounts without discounting, if the effect of not discounting is
immaterial.
IAS 24 was amended to clarify that a management entity providing key management personnel services to the Group
is a related party of the Group. Consequently, the Company and its subsidiaries is required to disclose as related party
transactions the amounts incurred for the service paid or payable to the management entity for the provision of key
management personnel services. However, disclosure of the components of such compensation is not required.
8)Annual Improvements to IFRSs: 2011-2013 Cycle
Several standards including IFRS 3, IFRS 13 and IAS 40 “Investment Property” were amended in this annual improvement.
IFRS 3 was amended to clarify that IFRS 3 does not apply to the accounting for the formation of all types of joint
arrangements in the financial statements of the joint arrangement itself.
The scope in IFRS 13 of the portfolio exception for measuring the fair value of a group of financial assets and financial
liabilities on a net basis was amended to clarify that it includes all contracts that are within the scope of, and accounted
for in accordance with, IAS 39 or IFRS 9, even if those contracts do not meet the definitions of financial assets or financial
liabilities within IAS 32.
IAS 40 was amended to clarify that IAS 40 and IFRS 3 are not mutually exclusive and application of both standards may be
required to determine whether the investment property acquired is acquisition of an asset or a business combination.
c. Significant impending changes in accounting policy resulted from the amendments to the Regulations Governing the
Preparation of Financial Reports by Public Banks in issue but not yet effective
On January 9, 2014 the FSC announced the amendments to the Regulations Governing the Preparation of Financial Reports
by Public Banks. One of the main amendments is to permit fair value model for subsequent measurement of investment
properties. This amendment is effective for annual periods beginning on or after January 1, 2014.
The amendment requires that the fair value of an investment property be measured using the income approach, except
for undeveloped lands in respect of which are measured using a Land Development Analysis. If the investment property
is measured using the income approach, the cash flows are determined by reference to any existing lease, local rents, or
market rents for similar comparable subjects, adjusted to exclude those extreme lease subjects, plus the present value of
property value at the end of the analysis period, if any. For those investment properties with an indefinite income-generating
period, the analysis period should be less than 10 years. For those investment properties with a finite income-generating
period, the analysis period is based on the estimated remaining period. The discount rate is determined by applying a risk
premium approach, and is to be no less than the floating rate for the 2-year time savings deposits of Chunghwa Post Co., Ltd
plus 0.75% and any asset-specific risk premium. The amendment requires disclosures in addition to those required by IAS 40,
including significant lease terms, cash flows, discount rate, etc.
d. The impact of the application of New IFRSs and the Regulations Governing the Preparation of Financial Reports by Public
Banks in issue but not yet effective on the Company and its subsidiaries’ consolidated financial statements is as follows:
As of the date the consolidated financial statements were authorized for issue, the Company and its subsidiaries is
continuingly assessing the possible impact that the application of the above New IFRSs will have on the Company and its
subsidiaries’ financial position and operating result, and will disclose the relevant impact when the assessment is complete.
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICY
On May 14, 2009, the FSC announced the “Framework for the Adoption of IFRSs by the Companies in the ROC.” In this
framework, which took effect in 2013, companies with shares listed on the Taiwan Stock Exchange or traded on the Taiwan
GreTai Securities Market or Emerging Stock Market or financial instruments governed by the FSC should prepare their
consolidated financial statements in accordance IFRS, IAS, IFRIC, and SIC (“IFRSs”) endorsed by the FSC.
The Company and its subsidiaries’ consolidated financial statements for the year ended December 31, 2013 is its first IFRS
consolidated financial statements. The date of transition to IFRSs was January 1, 2012. Refer to Note 53 for the impact of IFRSs
conversion on the Company and its subsidiaries’ consolidated financial statements.
Statement of Compliance
The consolidated financial statements have been prepared in accordance with Regulations Governing the Preparation of
Financial Reports by Public Banks, the guidelines issued by the authority, and IFRS endorsed by the FSC.
048
FINANCIAL STATEMENT
Basis of Preparation
The consolidated financial statements have been prepared on the historical cost basis except for financial instruments measured
at fair values. Historical cost is generally based on the fair value of the consideration given in exchange for assets.
The opening consolidated balance sheets as of the date of transition to IFRSs were prepared in accordance with IFRS 1 “Firsttime Adoption of International Financial Reporting Standards”. The applicable IFRSs have been applied retrospectively by
the Company and its subsidiaries except for some aspects where IFRSs prohibit retrospective application or grants optional
exemptions to this general principle. For the exemptions that the Company and its subsidiaries elected, refer to Note 53.
Since the operating cycle in the banking industry cannot be reasonably identified, the accounts included in the Company
and its subsidiaries financial statements were not classified as current or noncurrent. Nevertheless, accounts were properly
categorized in accordance with the nature of each account and sequenced by their liquidity. Please refer to Note 45 for the
maturity analysis of assets and liabilities.
The significant accounting policies are set out as below.
Principles for Preparing Consolidated Financial Statements
The consolidated financial statements incorporate the financial statements of the Company and the entities controlled by the
Company (i.e. its subsidiaries).
When necessary, adjustments are made to the financial statements of its subsidiaries to bring its accounting policies into line with
those used by the Company.
All intra-group transactions, balances, income and expenses are eliminated in full upon consolidation.
The consolidated entities as of December 31, 2013, December 31, 2012 and January 1, 2012 were as follows:
% of Ownership
Investor
Hua Nan Commercial
Bank Ltd.
Hua Nan International
Leasing Co., Ltd.
Investee
Main Business
December 31, December 31,
2013
2012
January 1,
2012
Remark
HNCB Insurance Agency Co., Ltd.
Life insurance
agency
100
100
100
Hua Nan International Leasing Co., Ltd.
Financial leasing
100
100
-
Note 1
Hua Nan International Leasing
Corporation
Financial leasing
100
100
-
Note 2
Note 1:Hua Nan International Leasing Co., Ltd. was incorporated on July 13, 2012.
Note 2:Hua Nan International Leasing Corporation was incorporated on October 25, 2012
Foreign Currencies
In preparing the financial statements of each individual group entity, transactions in currencies other than the entity’s functional
currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions.
At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing
at that date.
Non-monetary items measured at fair value that are denominated in foreign currencies are retranslated at the rates prevailing
at the date when the fair value was determined. Non-monetary items that are measured at historical cost in a foreign currency
are not retranslated. Exchange differences on monetary items arise from settlement or translation are recognized in profit or loss
in the period in which they arise.
Exchange differences arising on the retranslation of nonmonetary assets (such as equity instruments) or liabilities measured at
fair value are included in profit or loss for the period at the rates prevailing at the end of reporting period except for exchange
differences arising on the retranslation of nonmonetary items in respect of which gains and losses are recognized directly in
other comprehensive income, in which case, the exchange differences are also recognized directly in other comprehensive
income.
For the purposes of presenting consolidated financial statements, the assets and liabilities of the Company and its subsidiaries’
foreign operations are translated into New Taiwan dollars using exchange rates prevailing at the end of each reporting period.
Income and expense items are translated at the average exchange rates for the period. Unless exchange rates fluctuate
significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange
differences arising are recognized in other comprehensive income and accumulated in equity.
Cash and Cash Equivalents
Cash and Cash equivalents include cash on hand, demand deposits, time deposits that can be readily terminated without
deduction of principal, and highly liquid investments that are readily convertible to known amounts of cash and which are
subject to an insignificant risk of changes in value. For consolidated statement of cash flows, cash and cash equivalents include
cash and cash equivalents in consolidated balance sheets, and those amounts of due from the Central Bank and other banks
and securities purchased under agreements to resell that meet the definition of cash and cash equivalents in IAS 7, etc.
Investment in Associates
An associate is an entity over which the Company and its subsidiaries have significant influence and that is neither a subsidiary
nor an interest in a joint venture.
The results and assets and liabilities of associates are incorporated in these consolidated financial statements using the equity
method of accounting. Under the equity method, an investment in an associate is initially recognized at cost and adjusted
2013 ANNUAL REPORT
049
thereafter to recognize the Company and its subsidiaries’ share of the profit or loss and other comprehensive income of the
associate. The Company and its subsidiaries also recognize the changes in the Company and its subsidiaries’ share of equity of
associates.
The additional impairment loss of an associate was measured and recognized by using IAS 39 “Financial Investments:
Recognition and Measurement”.
The entire carrying amount of the investment is tested for impairment as a single asset by comparing its recoverable amount with
its carrying amount (the higher of fair value less costs to sell and value in use) with its carrying amount under IAS 36 “Impairment
of Assets”. Any impairment loss recognized forms part of the carrying amount of the investment. Any reversal of that impairment
loss is recognized to the extent that the recoverable amount of the investment subsequently increases under IAS 36 “Impairment
of Assets”.
Financial Instruments
Financial assets and financial liabilities are recognized when the Company and its subsidiaries become a party to the
contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to
the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value
through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate,
on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value
through profit or loss are recognized immediately in profit or loss.
Financial assets
All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis. Trade date basis
means that when financial assets are purchased or sold, the delivery date was within the period prescribed by regulation or
market practice.
a. Measurement category
Financial assets are classified into the following specified categories: Financial assets at fair value through profit or loss, heldto-maturity investments, available-for-sale financial assets and loans and receivables.
1)Financial assets at fair value through profit or loss
Financial assets are classified as at fair value through profit or loss when the financial asset is either held for trading or it is
designated as at fair value through profit or loss.
A financial asset is classified as held for trading if:
a) The main purpose to obtain those financial assets is to sell in a short term;
b) The financial assets recognized initially are part of the identified financial instruments combined for management and
were held for short-term profit; or
c) Derivative financial instruments (except for financial guarantee contracts and derivative financial instruments
designated for hedge).
A financial asset may be designated as at fair value through profit or loss upon initial recognition if:
a) Such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise
arise; or
b) The financial asset forms part of a group of financial assets or financial liabilities or both, which is managed in
accordance with the Company and its subsidiaries’ documented risk management or investment strategy, and
evaluated on a fair value basis, and information about the grouping is provided internally on that basis.
Furthermore, the contract contains one or more embedded derivatives so that the entire hybrid (combined) contract can
be designated as at fair value through profit or loss.
Fair values of financial assets and financial liabilities at the balance sheet date are determined as follows: Publicly
traded stocks - at closing prices; open-end mutual funds - at net asset values; domestic bonds - at prices quoted by the
Taiwan GreTai Securities Market; overseas bonds - at prices quoted by the Bloomberg, the Reuters or the counterparty in
transactions and financial assets and financial liabilities without quoted prices in an active market - at values determined
using valuation techniques.
Financial assets at fair value through profit or loss are stated at fair value, with any gains or losses arising on remeasurement
recognized in profit or loss. The net gain or loss recognized in profit or loss incorporates any dividend or interest earned on
the financial asset.
Fair values of financial assets and financial liabilities at the balance sheet date are determined as follows: Publicly
traded stocks - at closing prices; open-end mutual funds - at net asset values; domestic bonds - at prices quoted by the
Taiwan GreTai Securities Market; overseas bonds - at prices quoted by the Bloomberg, the Reuters or the counterparty in
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FINANCIAL STATEMENT
transactions and financial assets and financial liabilities without quoted prices in an active market - at values determined
using valuation techniques.
2)Held-to-maturity financial assets
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturity
dates that the Company and its subsidiaries have the positive intent and ability to hold to maturity other than those that
the Company and its subsidiaries upon initial recognition designate as at fair value through profit or loss, or designate as
available for sale, or meet the definition of loans and receivables.
Subsequent to initial recognition, held-to-maturity investments are measured at amortized cost using the effective interest
method less any impairment.
The effective interest method is a method of calculating the amortized cost of a debt instrument and of allocating interest
income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts
(including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and
other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to
the net carrying amount on initial recognition.
3)Available-for-sale financial assets
Available-for-sale financial assets are non-derivatives that are either designated as available-for-sale or are not classified
as loans and receivables, held-to-maturity investments or financial assets at fair value through profit or loss.
Available-for-sale financial assets are measured at fair value. Changes in the carrying amount of available-for-sale
monetary financial assets relating to changes in foreign currency exchange rates, interest income calculated using
the effective interest method and dividends on available-for-sale equity investments are recognized in profit or loss.
Other changes in the carrying amount of available-for-sale financial assets are recognized in other comprehensive
income. When the investment is disposed of or is determined to be impaired, the cumulative gain or loss that previously
accumulated in the investments revaluation reserve is reclassified to profit or loss.
Dividends on available-for-sale equity instruments are recognized in profit or loss when the Company and its subsidiaries’
rights to receive the dividends are established.
Available-for-sale equity investments that do not have a quoted market price in an active market and whose fair value
cannot be reliably measured and derivatives that are linked to and must be settled by delivery of such unquoted
equity investments are measured at cost less any identified impairment loss at the end of each reporting period and
are recognized in a separate line item as financial assets carried at cost. If, in a subsequent period, the fair value of the
financial assets cannot be reliably measured, the financial assets are remeasured at fair value. The difference between
carrying amount and fair value is recognized in other comprehensive income on financial assets and recognized in profit
or loss when impairment loss is identified.
4)Loans and receivables
Loans and receivables are non-derivatives with fixed or determinable payments that do not have a quoted market price
in an active market.
Loans and receivables are measured at amortized cost using the effective interest method, less any impairment. Interest
income is recognized by applying the effective interest rate, except for short-term receivables when the effect of
discounting is immaterial.
b. Impairment of financial assets
Financial assets, other than those at fair value through profit or loss, are assessed for indicators of impairment at the end of
each reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a result of
one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the
investment have been affected.
In determining the allowance for credit losses and provision for losses on guarantees, the Company and its subsidiaries assess
the collectability of discounts and loans, receivables, and other financial assets (remittance purchased and nonperforming
loans transferred from other than loans), as well as guarantees and acceptances as of the balance sheet date.
Loans and receivables are assessed for impairment at the end of each reporting period and considered to be impaired
when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the
foregoing discounts and loans, receivables, and other financial assets, the estimated future cash flows of the asset have
been affected. Objective evidence of impairment could include:
• Overdue loans;
• Loans reclassified as nonperforming loans;
• Debt consultation/debt clearance/individual consultation; or
• The poverty-relief household handled the renewal of matured loans, repayment deferral, and negotiation of repayment
plan under “The Bankers Association of the Republic of China (BAROC) Member Self-Discipline System for Negotiation with
Debtors”.
2013 ANNUAL REPORT
051
Discounts and loans, receivables, and other financial assets that are assessed as not impaired individually are further assessed
A financial liability may be designated as at fair value through profit or loss upon initial recognition when doing so results in
for impairment on a collective basis. Objective evidence of impairment for a portfolio of discounts and loans, receivables,
more relevant information and if:
and other financial assets could include the Company and its subsidiaries’ past experience of collecting payments and an
increase in the number of delayed payments, as well as observable changes in national or local economic conditions that
correlate with defaults on loans and receivables.
1)Such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise
arise; or
The amount of the impairment loss recognized is the difference between the asset carrying amount and the present value
2)The financial liability forms part of a group of financial assets or financial liabilities or both, which is managed in
of estimated future cash flows, after taking into account the related collaterals and guarantees, discounted at the original
accordance with the Company and its subsidiaries’ documented risk management or investment strategy and is
effective interest rates. The carrying amount of the discounts and loans, receivables, and other financial assets is reduced
evaluated on a fair value basis and information about the grouping is provided internally on that basis.
through the use of an allowance account.
Furthermore, the contract contains one or more embedded derivatives so that the entire combined contract (asset or
Under the “Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Nonperforming/
liability) can be designated as at fair value through profit or loss.
Nonaccrual Loans” (the “Regulations”), the Company and its subsidiaries evaluates credit losses on the basis of the
Financial liabilities at fair value through profit or loss are stated at fair value with any gains or losses arising on remeasurement
estimated collectability. In accordance with the Regulations, credit assets are classified as normal assets, assets that require
recognized in profit or loss. The net gain or loss recognized in profit or loss incorporates any dividends paid on the financial
special mentioned, assets with substandard, assets with doubtful collectability, and assets on which there is loss.
liability.
Based on the above Regulations, the minimum allowance for credit losses and provision for losses on guarantees for the
normal assets, assets that require special mentioned, assets that are substandard, assets with doubtful collectability, and
assets on which there is loss should be 0.5%, 2%, 10%, 50% and 100% of outstanding, respectively.
The Company and its subsidiaries recognized allowance for loans and receivables in accordance with ”Regulations of
the Procedures for Banking Institutions to Evaluate Assets and Deal with Past - Due/Non-Performing Loans” and the test of
impairment for financial assets. The larger amounts will be set as the standard of recognizing the allowance for doubtful
accounts.
The Company and its subsidiaries wrote off bad loans based on the possibilities of recovering overdue receivables as well as
non-performing loans and the values of collateral after the revaluation was approved by the board of directors.
When an available-for-sale financial asset is considered to be impaired, cumulative gains or losses previously recognized in
other comprehensive income are reclassified to profit or loss in the period.
In respect of available-for-sale equity securities, impairment loss previously recognized in profit or loss are not reversed
through profit or loss. Any increase in fair value subsequent to an impairment loss is recognized in other comprehensive
income and accumulated under the heading of investments revaluation reserve. In respect of available-for-sale debt
b. Derecognition of financial liabilities
The difference between the carrying amount of the financial liability derecognized and the consideration paid, including
any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.
Derivative Financial Instruments
Derivatives are initially recognized at fair value at the date the derivative contracts are entered into and are subsequently
remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognized in profit or loss
immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the
recognition in profit or loss depends on the nature of the hedge relationship. When the fair value of derivative financial
instruments is positive, the derivative is recognized as a financial asset; when the fair value of derivative financial instruments is
negative, the derivative is recognized as a financial liability.
Derivatives embedded in non-derivative host contracts are treated as separate derivatives when they meet the definition
of a derivative, their risks and characteristics are not closely related to those of the host contracts and the contracts are not
measured at fair value through profit or loss.
securities, impairment loss are subsequently reversed through profit or loss if an increase in the fair value of the investment
Hedge Accounting
can be objectively related to an event occurring after the recognition of the impairment loss.
Hedge accounting is as follows:
For financial assets that are carried at cost, the amount of the impairment loss is measured as the difference between the
asset’s carrying amount and the present value of the estimated future cash flows discounted at the current market rate of
return for a similar financial asset. Such impairment loss will not be reversed in subsequent periods.
The carrying amount of the financial asset is reduced through the book value except for discounts and loans which is
reduced through the use of allowance account. When those discounts and loans are considered uncollectible, they are
written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the
allowance account. Changes in the carrying amount of the allowance account are recognized in profit or loss.
c. Derecognition of financial assets
The Company and its subsidiaries derecognize a financial asset only when the contractual rights to the cash flows from the
a. Fair value hedges
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recognized in profit or loss
immediately, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged
risk. The change in the fair value of the hedging instrument and the change in the hedged item attributable to the hedged
risk are recognized in profit or loss in the line item relating to the hedged item.
Hedge accounting is discontinued prospectively when the Company and its subsidiaries revokes the designated hedging
relationship, or when the hedging instrument expires or is sold, terminated, or exercised, or when it no longer meets the
criteria for hedge accounting. The fair value adjustment to the carrying amount of the hedged instrument arising from the
hedged risk for which the effective interest method is used is amortized to profit or loss from the date of hedge accounting is
asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to
discontinued. The adjustment is based on a recalculated effective interest rate at the date amortization begins and will be
another party.
amortized fully by maturity of the financial instrument.
On derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the sum of the
consideration received and receivable and the cumulative gain or loss that had been recognized in other comprehensive
income and accumulated in equity is recognized in profit or loss.
Financial liabilities
a. Measurement and recognition
Except the following situation, all the financial liabilities are measured at amortized cost using the effective interest method:
Financial liabilities are classified as at fair value through profit or loss when the financial liability is either held for trading or it is
designated as at fair value through profit or loss.
A financial liability is classified as held for trading if:
1)The main purpose is to repurchase in a short term;
2)The financial liabilities recognized initially are part of the identified financial instruments combined for management and
were held for short-term profit; or
3)Derivative financial instruments (except for financial guarantee contracts and derivative financial instruments designated
for hedge).
052
FINANCIAL STATEMENT
b. Cash flow hedges
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is
recognized in other comprehensive income. The gain or loss relating to the ineffective portion is recognized immediately in
profit or loss.
c. Hedges of net investments in foreign operations
Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Any gain or loss on the
hedging instrument relating to the effective portion of the hedge is recognized in other comprehensive income and
accumulated under the heading of foreign currency translation reserve. The gain or loss relating to the ineffective portion is
recognized immediately in profit or loss.
Gains and losses on the hedging instrument relating to the effective portion of the hedge accumulated in the foreign
currency translation reserve are reclassified to profit or loss on the disposal or partial disposal of the foreign operation.
Fair value hedges undertaken by the Company and its subsidiaries are mainly designated to hedge the risk of the change
in fair value of the interest earning assets or interest bearing liabilities with fixed interest rate, which is attributable to the
fluctuations in interest rates or foreign exchange rates.
At the inception of the hedge relationship, Company and its subsidiaries document the relationship between the hedging
instrument and the hedged item, along with their risk management objectives and their strategy for undertaking various
hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, Company and its subsidiaries
2013 ANNUAL REPORT
053
document whether the hedging instrument is highly effective in offsetting the exposure of changes in fair values or cash flows
Impairment of Tangible and Intangible Assets
of the hedged item attributable to the hedged risk.
At the end of each reporting period, the Company and its subsidiaries review the carrying amounts of its tangible and intangible
When the hedge items recognized in profit or loss, the associated gains or losses that were recognized in other comprehensive
assets to determine whether there is any indication that those assets have incurred an impairment loss. If any such indication
income are reclassified to profit or loss as a reclassification adjustment in the line item relating to the hedged item in the
exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. When it is not
subsequently results in the recognition of a non-financial asset or a non-financial liability, the associated gains and losses that
possible to estimate the recoverable amount of an individual asset, the Company and its subsidiaries estimate the recoverable
were recognized in other comprehensive income are removed from equity and are included in the initial cost of the non-
amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be
financial asset or non-financial liability.
identified, corporate assets are also allocated to the individual cash-generating units; otherwise they are allocated to the smallest
Hedge accounting is discontinued prospectively when the Company and its subsidiaries revoke the designated hedging
group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
relationship, or when the hedging instrument expires or is sold, terminated, or exercised, or when it no longer meets the
Recoverable amount is the higher of fair value less costs to sell and value in use. In evaluating the value in use, the estimated
criteria for hedge accounting. The cumulative gain or loss on the hedging instrument that has been previously recognized in
future cash flows are discounted by pre-tax discount rate, the rate that reflects the market’s revaluation on time value of money
other comprehensive income from the period when the hedge was effective remains separately in equity until the forecast
and unadjusted future cash flows of specific asset risks.
transaction occurs. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in equity is
recognized immediately in profit or loss.
Overdue Loans
If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying
amount of the asset or cash-generating unit is reduced to its recoverable amount.
When an impairment loss is reversed subsequently, the carrying amount of the asset or cash-generating unit is increased to the
revised estimate of its recoverable amount, but only to the extent of the carrying amount that would have been determined
Under “Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non-performing/Non-
had no impairment loss (less amortization or depreciation) been recognized for the asset or cash-generating unit in prior years. A
accrual Loans,” nonperforming loans should be reclassified as overdue loans within performing period of 6 months. However the
reversal of an impairment loss is recognized immediately in profit or loss.
non-performing loans paid by installments after negotiation are exempted from the aforementioned rules.
Overdue loans transferred from loans should be recorded under discounts and loans. For other loans transferred from accounts
other than loans, such as guarantees, acceptances, receivables factoring and credit card receivables should be recorded under
other financial assets.
Repurchase and Reverse Repurchase Transactions
Securities purchased under agreements to resell (reverse repurchase) agreements and securities sold under agreements to
repurchase are generally treated as collateralized financing transactions. Interest earned on reverse repurchase agreements or
interest incurred on repurchase agreements is recognized as interest income or interest expense over the life of each agreement.
Collaterals Assumed
Collaterals assumed are recorded at cost. Impairment losses shall be recognized in profit or loss by the difference between the
original cost and the fair value evaluated on the balance sheet date.
Provisions
The Company and its subsidiaries recognized provisions when the Company and its subsidiaries have a present obligation arising
from past events (legal or constructive obligation) and the amounts of obligation can be estimated reliably and can be settled.
Provisions are measured at the best estimate of the consideration required to settle the present obligation at the end of the
reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using
Property and Equipment
the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (where the
Property and equipment are hold for offering labor service, leasing to others or management purpose and can be used for a
effect of the time value of money is material).
period. Property and equipment are stated at cost, less subsequent accumulated depreciation and subsequent accumulated
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a
impairment loss when it is probable that future economic benefits associated with the item will flow to the Company and its
receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable
subsidiaries and the cost of the item can be measured reliably.
can be measured reliably.
Depreciation of property and equipment is recognized so as to write off the cost of assets less their residual values over their
estimated useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation method are
reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis
under IAS 8 “Accounting Policies Changes in Accounting Estimates and Errors”
Property and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the
continued use of the asset. Any gain or loss arising on the disposal or retirement of property and equipment is determined as the
difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss.
Investment Properties
Investment properties are properties held to earn rentals and/or for capital appreciation. Additionally, investment properties
whose future usage is currently undecided and thus deemed held for capital appreciation.
Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment
properties are measured at cost less accumulated depreciation and accumulated impairment loss.
Investment properties are derecognized upon disposal or when no future economic benefits are expected to arise from the
continued use of the asset. Any gain or loss arising on the disposal or retirement of investment properties is determined as the
difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss.
Depreciation is recognized so as to write off the cost of assets less their residual values over their useful lives, using the straight-line
method.
Employee Benefits
Payments to defined contribution retirement benefit plans are recognized as an expense when employees have rendered service
entitling them to the contributions.
For defined benefit retirement benefit plans, the cost of providing benefits is determined using the Projected Unit Credit Method.
Any actuarial gains and losses generated from retirement benefit obligation are recognized in other comprehensive income.
Past service cost is recognized immediately to the extent that the benefits are already vested, and otherwise is amortized on a
straight-line basis over the average period until the benefits become vested.
The retirement benefit obligation recognized in the consolidated balance sheets represents the present value of the defined
benefit obligation as adjusted for unrecognized past service cost, and as reduced by the fair value of plan assets. Any asset
resulting from this calculation is limited to the unrecognized past service cost, plus the present value of available refunds and
reductions in future contributions to the plan.
Curtailment or settlement gains or losses on the defined benefit plan are recognized when the curtailment or settlement occurs.
Pension cost in the middle period was recognized by the actuarial pension cost rate of previous year, and was adjusted for
significant reductions, settlement or other material condition.
The Company and its subsidiaries offered preferential interest rate to its current employees and retired employees for their deposits
within a prescribed amount. The preferential interest rate in excess of market interest rate is considered employee benefits.
Under Article 28 of the Criteria Governing the Preparation of Financial Reports by Public Bank, if the Bank’s preferential deposit
interest rate for as stated in the employment contract exceeds the market interest rate, the excess will be subject to IAS 19
Intangible Assets
“Employee Benefits” upon the employee’s retirement. The actuarial valuation assumptions and parameters are based on those
Intangible assets with finite useful lives that are acquired separately are initially measured at cost and subsequently measured at
announced by authority, if any.
cost less accumulated amortization and accumulated impairment loss. Amortization is recognized on a straight-line basis. The
estimated useful life, residual value, and amortization method are reviewed at the end of each reporting period, with the effect
of any changes in estimate being accounted for on a prospective basis under IAS 8 “Accounting Policies Changes in Accounting
Estimates and Errors”.
Income Tax
Income tax expense represents the sum of the current tax and deferred tax.
a. Current tax
Intangible assets are derecognized upon disposal or when no future economic benefits are expected to arise from the continued
According to the Income Tax Act, an additional tax at 10% of unappropriated earnings is provided for as income tax in the
use of the asset. Any gain or loss arising on the disposal or retirement of intangible assets is determined as the difference between
year the shareholders approve to retain the earnings.
the sales proceeds and the carrying amount of the asset and is recognized in profit or loss.
Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.
054
FINANCIAL STATEMENT
2013 ANNUAL REPORT
055
b. Deferred tax
Stock-based Compensation
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the
Stock-based compensation, 15% cash capital increase was reserved for employees provided by the parent company,
consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax
HNFH pursuant to Article 267 of Company Act and Article 30 of Financial Holding Company Act. The service received
liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for
should be measured by reference to the fair value of the equity instruments granted, the Company and its subsidiaries shall
all deductible temporary differences and unused loss carry forward that it is probable that taxable profits will be available
measure the fair value of equity instruments granted at the grant date, based on market prices, and account for those
against which those deductible temporary differences can be utilized.
amounts as payroll expense during the vesting period (or the grant date if vesting period not available).
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent
Contingencies
that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
A contingent liability is a possible obligation depending on whether some uncertain future event occurs, or a present
A previously unrecognized deferred tax asset is also reviewed at the end of each reporting period and recognized to the
obligation but payment is not probable or the amount cannot be measured reliably. A contingent liability is not recognized
extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.
but disclosed in certain circumstances.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability
A contingent asset is a possible asset that arises from past event and whose existence will be confirmed only by the
is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the
occurrence or non-occurrence of one or more uncertain future events not wholly with in the control of the Company and
end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would
its subsidiaries. A contingent asset is not recognized but disclosed only when the economic benefit probably.
follow from the manner in which the Company and its subsidiaries expects, at the end of the reporting period, to recover or
settle the carrying amount of its assets and liabilities.
c. Current and deferred tax for the period
Current and deferred tax are recognized in profit or loss, except when they relate to items that are recognized in other
comprehensive income or directly in equity, in which case, the current and deferred tax are also recognized in other
comprehensive income or directly in equity respectively. Where current tax or deferred tax arises from the initial accounting
for a business combination, the tax effect is included in the accounting for the business combination
d. Linked-tax system
The Company, HNFH, and HNFH’s subsidiaries chose to adopt the linked-tax system income tax returns filling. Under
Interpretation 2003-240 issued by Accounting Research and Development Foundation (ARDF), the linked-tax system requires
a reasonable and systematic method for tax allocation. The tax allocation is recorded as receivables or payables.
Recognition of Interest Revenue and Interest Expense
The transaction costs of acquisition of loans and receivables or additional service fee on generation or acquision of the loans
and receivables are served to adjust the book value of loans and receivables and thereby revise the effective interest rate.
Interest revenue generated from discounts and loans are recognized based on accrual basis. When the loans become past
due and are considered uncollectible, the principal and interest receivable are transferred to nonperforming loan accounts,
and the accrual of interest revenue is ceased. Interest revenue will be recognized when the interest of the nonperforming
loan is collected. According to the regulations issued by Ministry of Finance, if the repayment of loan is extended under an
agreement, the related interest should be recognized as deferred revenue and recognized as revenue when collected.
Recognition of Commission Fee Revenue and Commission Fee Expense
Commission fee revenue and expense are recognized when loans or other services are provided. Service fees on significant
projects are recognized when the project has been completed, for instance, loan syndication fees are recognized as revenue
when the syndication has been completed. If fee revenue and expense are related to provide service on loans, fee revenue
and expense are either recognized over the period that service is performed or as an adjustment to the effective interest rate
on the loans and receivables, mainly depend on their materiality.
Leasing
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of
ownership to the lessee. All other leases are classified as operating leases.
a. The Company and its subsidiaries as lessor
5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
In the application of the Company and its subsidiaries’ accounting policies, which are described in Note 4, management
is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not
readily apparent from other sources. The estimates and associated assumptions are based on historical experience and
other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the
revision and future periods if the revision affects both current and future periods.
a. Held-to-maturity financial assets
Management has reviewed the Company and its subsidiaries’ held-to-maturity financial assets in light of their capital
maintenance and liquidity requirements and has confirmed the Company and its subsidiaries’ positive intention and
ability to hold those assets to maturity. Please refer to Note 13 for related information on held-to-maturity financial assets.
b. Income tax
As of December 31, 2013, December 31, 2012 and January 1, 2012, the carrying amount of deferred tax assets please
refer to Note 29. The realizability of the deferred tax asset mainly depends on whether sufficient future profits or taxable
temporary differences will be available in the future. In cases where the actual future profits generated are less than
expected, a material reversal of deferred tax assets may arise, which would be recognized in profit or loss for the period
in which such reversal takes place.
c. Impairment loss of receivables
The Company and its subsidiaries consider the estimation of future cash flows when there is observable data indicating
that an impairment loss occurs. The amount of impairment loss measured is the difference between the assets carrying
amount and the present value of estimated future cash flows (excluding the future credit loss that might arise),
discounted at the financial asset’ original effective interest rate.
When the actual future cash flows are less than expected, a material impairment loss may arise. The book value of
receivables and its allowance for credit losses please refer to Note 10.
d. Impairment loss of discounts and loans
The Company and its subsidiaries review loan portfolios to assess impairment periodically. In determining whether an
impairment loss should be recorded, the Company and its subsidiaries make judgments as to whether there is any
observable data indicating that impairment is occurred. This evidence may include observable data indicating that
Rental income from operating leases is recognized on a straight-line basis over the term of the relevant lease unless another
there has been an adverse change in the payment status of borrowers (e.g. payment delinquency or default), or
systematic basis is representative of the time pattern of the lessee’s benefit from the use of the leased asset.
economic conditions that correlate with defaults on assets. For the purpose of assessing impairment, the management
Lease incentives included in the operating lease are recognized as an asset. The aggregate cost of incentives is recognized
uses estimates based on historical loss experience for assets with credit risk characteristics and objective evidence
as a reduction of rental income on a straight-line basis over the lease term unless another systematic basis is more
of impairment similar to those in the portfolio when estimating expected future cash flows. The methodology and
representative of the time pattern over which the benefit of the leased asset is diminished.
assumptions used for estimating both the amount and timing of future cash flows are reviewed regularly in order to
b. The Company and its subsidiaries as lessee
Operating lease payments are recognized as an expense on a straight-line basis over the lease term, except where another
systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
decrease the difference between estimated loss and actual loss. Discounts and loans with allowance for credit losses,
please refer to Note 11.
e. Fair value of derivative and other financial instruments
In the event that lease incentives are received to enter into operating leases, such incentives are recognized as a liability.
The Company and its subsidiaries’ management use its judgment in selecting an appropriate valuation technique for
The aggregate benefit of incentives is recognized as a reduction of rental expense on a straight-line basis, except where
financial instruments that do not have quoted market price in an active market. Valuation techniques commonly used
another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are
by market practitioners are applied. For derivative financial instruments, assumptions were based on quoted market
consumed.
rates adjusted for specific features of the instruments. Other financial instruments were valued using a discounted cash
056
FINANCIAL STATEMENT
2013 ANNUAL REPORT
057
flow analysis that includes assumptions based on quoted market prices or rates (if available). The measurement for the
fair value of unlisted equity investments includes assumptions not based on observable market prices or rates. Note 44
provides detail information about the key assumptions used in the determination of the fair value of financial instrument.
The Company and its subsidiaries’ management believe that the chosen valuation techniques and assumption used
are appropriate in determining the fair value of financial instruments.
f. Employee benefit obligation provision
The present value of defined benefit obligation and preferential interest on employees’ deposits are based on several
actuarial assumptions. Any changes on these assumptions will influence the fair value of the employee benefit
obligations. Employee benefit obligation provision please refer to Note 27.
6. CASH AND CASH EQUIVALENTS
December 31, 2013
Cash on hand
$
December 31, 2012
9,503,113 $
January 1, 2012
9,591,081 $
9,244,008
Foreign currencies
1,401,015 929,301 953,328
Due from other banks
31,755,764 5,063,209 10,545,621
Notes and checks for clearing
5,337,692 15,583,871 15,029,147
Excess margin of future
145,347 98,782 84,317
$
48,142,931 $
December 31,2013
31,266,244 $
December 31, 2012
35,856,421
8. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS
December 31, 2013
December 31, 2012
January 1, 2012
Held-for-trading financial assets
Investments in bill
$
Currency swap contracts
Interest swap contracts
Treasury bills
Listed stocks
20,046,559 $
19,060,466 $
14,847,312
995,559 1,100,822 1,068,527
649,999 937,782 1,167,705
497,357 2,482,383 992,114
429,294 130,944 224,166
Options
328,809 231,503 628,163
Bank debentures
318,736 358,210 344,273
Forward contracts
159,230 117,056 Government bonds
-
448,271
-
Corporate bonds
-
115,659
267,774
Others
42,563
13,712
85,972
23,468,106
24,996,808
19,731,687
Bank debentures
10,359,058
8,907,967
7,863,523
Corporate bonds
6,005,304
5,754,136
5,750,269
Government bonds
455,852
466,670
496,119
16,820,214
15,128,773
14,109,911
$
40,288,320
$
40,125,581
$
33,841,598
2,583,832
105,681
Financial assets designated as at fair value through profit or loss
January 1,2012
Held-for-trading financial liabilities
Due from the Central Bank and other banks that meet the
definition of cash and cash equivalents in IAS 7
Securities purchased under agreements to resell that meet
the definition of cash and cash equivalents in IAS 7
Cash and cash equivalents in consolidated statement of
cash flows
$
48,142,931 $
52,569,744 $
31,266,244 $
56,261,620 - 100,712,675 $
- 87,527,864 $
35,856,421
47,407,666
349,905
83,613,992
$
400,984
$
$
85,221
Options
328,613
231,511
628,165
326,448
497,110
568,568
Forward contracts
95,300
44,797
114,505
Others
22,683
40,261
43,983
1,174,028
3,397,511
1,440,442
19,481,976
19,819,993
26,349,652
$
20,656,004
$
23,217,504
$
27,790,094
Financial liabilities designated as at fair value through profit or loss
Bank debentures
7. DUE FROM THE CENTRAL BANK AND OTHER BANKS
December 31, 2013
December 31, 2012
January 1, 2012
Call loans to banks
$
51,891,612 $
54,773,742 $
36,753,703
Reserve - checking accounts
21,910,053 23,230,672 19,532,960
Reserve - demand accounts
45,429,743 43,253,375 43,373,024
Reserve - foreign-currency deposit
Due from the Central Bank
65,634 66,086 97,353
Interbank settlement funds
2,500,999 6,049,082 5,305,312
$
122,085,753 $
127,619,967 $
287,712 247,010 234,293
Financial liabilities designated as at fair value through profit or loss were influenced by interest paid by financial liabilities,
fluctuation of market interest rate and credit spread. As of December 31, 2013, December 31, 2012 and January 1, 2012,
accumulated fair value changes were $631,976, $996,993 and $1,199,652, respectively. For the years ended December 31,
2013 and 2012, fair value changes due to credit spread risk were $98,131 and $96,792, respectively.
The Company and its subsidiaries entered into derivative contracts during the years ended December 31, 2013 and 2012
to manage exposures due to exchange rate and interest rate fluctuations. The financial risk management objective of the
Company and its subsidiaries is to minimize risks due to changes in fair value or cash flows.
The nominal principal of outstanding derivative contracts as of December 31, 2013, December 31, 2012 and January 1,
2012 were as follows:
December 31, 2013
Under the relevant regulations, the Company maintains a certain amount of deposit in the reserve - demand accounts at
a prescribed percentage of the daily average of the Company’s deposits. The reserve is subject to withdrawal restrictions
and adjusted monthly. The reserve - demand accounts yields interest at a rate announced by the Central Bank.
Reserve - checking accounts and reserve - foreign-currency deposit are not interest bearing and may be withdrawn
anytime.
058
FINANCIAL STATEMENT
December 31, 2012
January 1, 2012
105,296,645
Forward contracts and currency swap contracts
$
148,949,774
$
263,677,919
$
100,063,276
Options
86,538,989
68,755,000
67,583,196
36,935,634
32,768,511
46,792,200
Cross-currency swap contracts
6,295,492
6,101,879
3,088,050
Asset swap contracts
1,520,660
2,153,241
1,725,675
2013 ANNUAL REPORT
059
The principal of bill investments amounting to $6,630,000, $10,545,000 and $9,269,800 as of December 31, 2013, December
31, 2012 and January 1, 2012, respectively, had been sold under repurchase agreements.
9. SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL
December 31, 2013
Investments in bill
$
December 31, 2012
- $
January 1, 2012
- $
349,905
Securities purchased under agreements to resell as of January 1, 2012 was expired on January 2012 and the amount
agreed to resell was $349,928.
10. RECEIVABLES, NET
December 31, 2013
December 31, 2012
$
16,460,443 $
21,482,777 $
23,590,617
Receivables from PEM Group incident (Note 48)
5,888,957 5,536,048 5,510,231
Acceptances
5,080,996 6,063,408 5,903,387
Interest receivables
3,900,706 3,825,417 3,679,177
Credit card receivables
3,419,954 2,777,153 2,546,628
Account receivables
1,671,041 1,644,690 2,381,027
Others
855,885 1,555,544 1,665,275
37,277,982 42,885,037 45,276,342
(
3,964,555) (
3,969,607) (
4,333,585)
$
Net amount
33,313,427 $
38,915,430 $
40,942,757
December 31, 2012
January 1, 2012
Medium-term loans
281,406,158 270,142,745 200,605,228
Secured medium-term loans
106,520,305 113,948,392 122,689,630
Long-term loans
20,526,759 18,744,565 19,220,785
Secured long-term loans
615,095,329 581,760,006 546,059,692
Nonperforming loans transferred from loans
5,877,318 6,142,310 6,424,238
1,423,718,995 1,387,359,572 1,321,969,964
Allowance for credit losses
(
Adjustment of premium or discount
January 1, 2012
Receivables factoring - without recourse
December 31, 2013
17,294,135) (
13,498,660) (
187,817 $
13,162,115)
182,517 1,406,612,677 $
215,694
1,374,043,429 $
1,309,023,543
The unrecognized interest revenue on nonperforming loans transferred from loans amounted to $168,942 and $215,059 for
the years ended December 31, 2013 and 2012, respectively.
Except for the Los Angeles branch which wrote off specific credits to comply with local authority, the Company and its
subsidiaries wrote off credits only after completing the required legal procedures for the year ended December 31, 2013.
For the year ended December 31, 2012, the Company and its subsidiaries wrote off credits only after completing the
required legal procedures.
The changes in the allowances for credit losses were as follows:
2013
Specific Risk
2012
General Risk
Total
Specific Risk
General Risk
Total
Balance, beginning of the year
$
4,839,754 $
8,658,906 $
13,498,660 $
6,962,538 $
6,199,577 $
13,162,115
Provision
1,285,628 2,331,628 3,617,256 604,319 2,544,933 3,149,252
Write-off
(
1,626,575) Reclassification
- 11,567 11,567 Recovery of write-off credits
1,762,495 - 1,762,495 - (
1,626,575) (
4,933,584) - (
4,933,584)
51,074) (
51,074)
The changes in the allowances for credit losses were as follows:
For the Year Ended December 31
2013
2012
Balance, beginning of year
$
3,969,607 $
Provision
29,683 Write-off
(
22,515) (
Reclassification
(
17,718) Effect of exchange rate changes
Balance, end of year
$
4,333,585
5,204
2,821
5,498 (
12,261)
3,964,555 $
3,969,607
11. DISCOUNTS AND LOANS, NET
December 31, 2012
$
Discounts and unsecured overdraft
99,440 55,170 56,131
Secured overdraft
96,025 80,351 94,850
Short-term loans
214,656,732 224,329,986 273,614,149
Receivables financing
231,982 360,750 480,325
Secured short-term loans
169,854,207 162,711,093 143,492,486
FINANCIAL STATEMENT
9,084,204 $
January 1, 2012
Import and export bill negotiation
060
9,354,740 $
$
6,272,615 $
19,419 30,732 (
11,021,520 $
17,294,135 $
2,216,317 - 2,216,317
9,836) (
34,530) (
44,366)
4,839,754 $
8,658,906 $
13,498,660
359,742)
Please refer to Note 45 for information relating to impairment loss analysis of receivables as of December 31, 2013,
December 31, 2012 and January 1, 2012.
December 31, 2013
Effect of exchange rate changes 11,313 - (
9,232,450
Please refer to Note 45 for information relating to impairment loss analysis of discounts and loans as of December 31, 2013,
December 31, 2012 and January 1, 2012.
12. AVAILABLE-FOR-SALE FINANCIAL ASSETS, NET
December 31, 2013
December 31, 2012
January 1, 2012
Government bonds
$
31,467,739 $
18,447,269 $
11,121,418
Bank debentures
20,340,822 21,006,775 27,707,478
Corporate bonds
15,904,583 14,313,294 8,703,115
Listed stocks
9,851,013 9,673,733 8,854,316
Negotiable certificates of deposits
1,630,440 725,798 151,375
Beneficiary certificates
1,173,126 830,140 678,237
Treasury bills
- - 8,692,931
$
80,367,723 $
64,997,009 $
2013 ANNUAL REPORT
65,908,870
061
The principal of bond investments amounting to $3,920,900, $7,329,300 and $6,006,100 as of December 31, 2013, December
31, 2012 and January 1, 2012, respectively, as well as bill investments amounting to $0, $0 and $2,123,000 as of December
31, 2013, December 31, 2012 and January 1, 2012, respectively had been sold under repurchase agreements.
The amounts of the available-for-sale financial assets pledged as of December 31, 2013, December 31, 2012 and January 1,
2012 are disclosed in Note 42.
13. HELD-TO-MATURITY FINANCIAL ASSETS, NET
December 31, 2013
December 31, 2012
January 1, 2012
December 31, 2013
December 31, 2012
January 1, 2012
Bond invstments with no active market
$
25,133,873 $
16,988,580 $
13,147,014
Time deposits not qualified for cash equivalents
6,400,658 2,289,764 776,420
Financial assets carried at cost
3,422,045 3,955,247 3,964,351
Nonperforming loans transferred from other than loans
210,983 330,701 145,265
Long-term financial lease receivables
82,677 - -
$
287,800,000 $
273,775,000 $
Government bonds
16,790,063 3,959,907 3,257,951
Remittance purchased
32,664 Corporate bonds
4,120,531 2,509,741 2,654,866
Short-term advancement
180 91,845 162,562
Bank debentures
2,170,410 2,762,627 3,111,689
35,283,080 23,680,792 18,216,919
$
310,881,004 $
279,300,000
15. OTHER FINANCIAL ASSETS, NET
283,007,275 $
288,324,506
The principal of bond investments amounting to $3,922,000, $994,600 and $0 as of December 31, 2013, December 31, 2012
and January 1, 2012, respectively, had been sold under repurchase agreements.
The amounts of the held-to-maturity financial assets pledged as of December 31, 2013, December 31, 2012 and January 1,
2012 are disclosed in Note 42.
14. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD, NET
Chung-Hua Real Estate Management Co., Ltd.
$
December 31, 2013
December 31, 2012
Amount
Amount
%
75,532 30.00 $
January 1, 2012
%
Amount
81,050 30.00 $
%
85,359 30.00
The summarized financial information in respect of the Company and its subsidiaries’ associate was set out below:
December 31, 2013
December 31, 2012
January 1, 2012
Total assets
$
254,587 $
273,080 $
287,186
Total liabilities
$
2,813 $
2,912 $
2,656
2013
2012
Revenue
$
16,033 $
17,682
Profit for the year
($
18,393) ($
14,363)
$
- $
-
The Company and its subsidiaries’ share of loss and other comprehensive income of associate for the years ended
December 31, 2013 and 2012 were based on the associate’s financial statements audited by the auditors for the same
years.
062
FINANCIAL STATEMENT
24,655 21,307
(
167,155) (
123,908) (
98,063)
Net amount
$
35,115,925 $
23,556,884 $
18,118,856
The changes in the allowances for credit losses of other financial assets were as follows:
2013
2012
$
123,908 $
98,063
Provision
152,276 95,703
Write-off
(
107,584) (
91,135)
Reclassification
(
Effect of exchange rate changes
$
1,445) 21,604
- (327)
167,155 $
123,908
Management believed that the above unlisted equity investments (included in financial assets carried at cost) held by
the Company and its subsidiaries, whose fair value cannot be reliably measured due to the range of reasonable fair value
estimates was so significant; therefore they were measured at cost less impairment at the end of reporting period.
The principal of bond investments amounting to $2,725,000, $2,273,800 and $2,508,200 as of December 31, 2013, December
31, 2012 and January 1, 2012, respectively, had been sold under repurchase agreements.
16. PROPERTY AND EQUIPMENT, NET
December 31, 2013
December 31, 2012
January 1, 2012
Land
$
18,205,908 $
19,157,294 $
19,157,357
Buildings
6,900,293 7,365,238 7,652,722
Office equipment
495,918 605,626 699,991
Transportation equipment
79,467 86,183 99,670
Other equipment
251,604 237,960 239,006
Lease improvements
82,036 112,843 118,985
Construction in progress and prepayment for equipment, land and
buildings
2,658,828 1,887,061 1,366,796
$
28,674,054 $
29,452,205 $
29,334,527
2013 ANNUAL REPORT
063
The movements of property and equipment were as follows:
a. Depreciation expense $3,068 was included in the account of employees’ training expense for both the years ended
December 31, 2013 and 2012. Apportionment of depreciation expense for HNFH and its subsidiaries was $3,790 and $1,110
for the years ended December 31, 2013 and 2012, respectively. Apportionment of deprecation expense for landlord
was $301 for the year ended December 31, 2013.
For the Year Ended December 31, 2013
Land
Office
Equipment
Buildings
Transportation
Equipment
Construction in
Progress and
Lease
Prepayment
Improvements for Equipment,
Land and
Buildings
Other
Equipment
Total
b. No property and equipment had been pledged as collateral as of December 31, 2013, December 31, 2012 and
January 1, 2012.
c. The above items of property and equipment were depreciated on straight line basis over the estimated useful life of the
asset:
Cost
Balance, beginning of
$ 19,157,294 $ 12,612,352 $ 4,786,889 $
year
Additions
- Decrease
- Reclassification
(
11,556 892,017 $ 2,178,482 $
94,706 21,303 - (
951,386) (410,010) 191,572) (
45,477) (
2,350 1,311 254,975 $
53,507 10,080 34,953) (
52,912) 39,789 1,879 (
923,310 1,114,462
- (
324,914)
151,543) (
1,467,610)
Buildings
6-56 years
Office equipment
4-6 years
4-9 years
Other equipment
4-16 years
Lease improvements
Effect of exchange rate
changes
- - 2,169 18,205,908 12,213,898 4,694,542 869,380 2,237,559 Balance, beginning of
year
- 5,247,114 4,181,263 805,834 Depreciation
- 266,011 207,278 29,152 78,848 46,733 Decrease
- 191,572) (
45,357) (
34,169) (
52,912) Reclassification
- (
1,887,061 $ 41,769,070
226 734 4,609 - 7,738
218,631 2,658,828 41,098,746
1,940,522 142,132 - 12,316,865
- 628,022
d. The Company and its subsidiaries elected to use ROC GAAP revaluations of the landholdings as deemed cost on the
transition date of IFRSs.
Accumulated
depreciation
- (
199,520) - - - - Effect of exchange rate
changes
- - 1,655 284 754 642 Balance, end of year
- 5,313,605 4,198,624 789,913 1,985,955 136,595 Net amount
$ 18,205,908 $
6,900,293 $
495,918 $
79,467 $
251,604 $
82,036 $
- (324,010)
- (
199,520)
- 3,335
- 12,424,692
The shorter of 5 year or lease period
17. INVESTMENT PROPERTIES, NET
December 31, 2013
December 31, 2012
Land
$
6,227,120 $
Buildings
645,980 427,906 $
6,873,100 $
5,703,640 $
January 1, 2012
5,275,734 $
5,253,442
430,308
5,683,750
The movements of investment properties were as follows:
2,658,828 $ 28,674,054
2013
Land
Office
Equipment
Buildings
Transportation
Equipment
Other
Equipment
Construction
in Progress
and
Lease
Prepayment
Improvements
for Equipment,
Land and
Buildings
Cost
Total
$
6,133,758 $
6,087,677
Additions
2,870 22,831
Reclassification
1,385,901 23,250
7,522,529 6,133,758
430,118 403,927
Depreciation
19,791 17,796
Reclassification
199,520 8,395
649,429 430,118
$
6,873,100 $
Accumulated depreciation
Cost
Balance, beginning
of year
$ 19,157,357 $ 12,623,694 $
Additions
Decrease
(
Reclassification
- (
Effect of exchange
rate changes
- Balance, end of year
19,157,294 12,612,352 4,786,889 892,017 2,178,482 254,975 1,887,061 41,769,070
- 4,970,972 4,262,208 812,816 1,886,574 150,413 - 12,082,983
Depreciation
- 284,537 257,120 33,083 81,096 53,469 - 709,305
Decrease
- 336,003) (
39,729) (
26,179) (
60,823) - (
462,734)
Reclassification
- (
- - (
8,395)
Effect of exchange
rate changes
- 927) - (
4,294)
- Net amount
$ 19,157,294 $
Accumulated
depreciation
Balance, beginning
of year
064
2012
- 4,962,199 $
5,338 147,212 63) - (
16,680) - (
- (
8,395) - (
5,247,114 7,365,238 $
FINANCIAL STATEMENT
340,677) (
20,671 2,516) (
- 2,062) (
4,181,263 605,626 $
912,486 $
2,125,580 $
269,398 $
21,514 71,655 24,725 41,451) (
27,779) (
67,751) - 10,166 29,875 (
532) (1,140) (1,272) - 336) (
805,834 86,183 $
- 969) (
1,940,522 142,132 237,960 $
112,843 $
1,366,796 $ 41,417,510
593,855 864,299
- (477,721)
73,590) (
29,558)
- (
5,460)
-
12,316,865
1,887,061 $ 29,452,205
5,703,640
a. The investment properties held by the Company and its subsidiaries were depreciated over 5-56 years, using the
straight-line method.
b. The fair value of the Company and its subsidiaries’ investment properties as of December 31, 2013, December 31, 2012
and January 1, 2012 was $19,047,889, $17,787,503 and $16,843,758, respectively. The fair value was not performed by
independent qualified professional valuers. Management of the Company and its subsidiaries used the valuation model
that market participants would use in determining the fair value, or used the valuation by reference to market evidence
of transaction prices for similar properties and estimated by the Indices of Urban Land Price.
c. For the years ended December 31, 2013 and 2012, the rental income from investment properties was $261,414 and
$249,591, respectively. For the years ended December 31, 2013 and 2012, the direct operating expense were $68,956
and $64,589, respectively.
d. The Company and its subsidiaries elected to use ROC GAAP to revaluations of the landholdings as deemed cost on the
transition date of IFRSs.
2013 ANNUAL REPORT
065
18. INTANGIBLE ASSETS
19. OTHER ASSETS, NET
December 31, 2013
Computer software
$
Others
$
December 31, 2012
319,800 $
January 1, 2012
327,974 $
800 416,774
800 320,600 $
December 31, 2013
800
328,774 $
417,574
December 31, 2012
January 1, 2012
Temporary payment and suspense accounts
$
668,674 $
537,010 $
29,030
Prepayments
236,528 232,922 854,377
Others
203,322 181,961 182,963
$
951,893 $
1,108,524 $
1,066,370
Computer Software
Others
20. DEPOSITS FROM THE CENTRAL BANK AND BANKS
Total
Cost
December 31, 2013
1,844,858 $
800 $
January 1,2012
$
Additions
47,110 - 47,110
Decrease
(
- (
Reclassification
81,709 - 81,709
(
7,353) - (
7,353)
1,783,972 800 1,784,772
1,516,884 - 1,516,884
Amortization
137,401 - 137,401
Decrease
(
182,352) - (
182,352)
Government bonds
$
9,594,337 $
10,000,409 $
8,028,300
Reclassification
(
7,761) - (
7,761)
Commercial papers
6,114,597 8,796,202 9,206,676
Corporate bonds
1,363,224 45,067 1,050,000
Bank debentures
611,048 1,537,752 212,950
Treasury bills
500,000 1,719,856 2,151,663
22,099,286 $
20,649,589
182,352) 1,845,658
December 31, 2012
182,352)
Call loans from banks
$
123,083,091 $
80,123,885 $
69,941,190
Overdraft
4,593,317 4,502,363 5,794,455
Deposits from banks
171,651 337,320 636,148
Deposits from the Central Bank
62,760 64,998 82,045
Deposits from Chunghwa Post Co., Ltd.
3,965,080 4,770,850 5,903,402
$
131,875,899 $
89,799,416 $
82,357,240
Accumulated amortization
1,464,172 - 1,464,172
$
319,800 $
800 $
320,600
21. SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
December 31, 2013
$
18,183,206 $
December 31, 2012
January 1,2012
Computer Software
Others
As of December 31, 2013, December 31, 2012 and January 1, 2012, the maturity date of securities sold under agreements
to repurchase held by the Company and its subsidiaries was December 2014, November 2013 and November 2012,
respectively and the agreed repurchase price was $18,199,489, $22,115,442 and $20,663,633, respectively.
Total
Cost
$
1,774,150 $
Additions
66,771 - 66,771
Reclassification
6,308 - 6,308
(2,371) Balance, end of year
1,844,858 800 $
1,774,950
- (2,371)
800 1,845,658
Accumulated amortization
1,357,376 - 1,357,376
Amortization
161,146 - 161,146
(
$
1,638) 1,516,884 327,974 $
- (
- 800 $
1,638)
1,516,884
328,774
Apportionment of amortization expense for HNFH and its subsidiaries was $5,332 and $2,653 for the years ended December
31, 2013 and 2012, respectively.
The computer software held by the Company and its subsidiaries was amortized over 3 to 5 years using the straight-line
method.
066
FINANCIAL STATEMENT
22.PAYABLES
December 31, 2013
December 31, 2012
January 1, 2012
Notes and checks in clearing
$
5,333,125 $
15,583,472 $
15,028,592
Acceptances
5,232,217 6,238,753 6,119,839
Accrued expenses
2,427,687 2,335,265 2,584,463
Interest payables
2,142,729 2,478,788 2,566,167
Accounts payables
1,068,715 1,594,734 2,388,730
Collections for others
1,007,558 1,175,401 972,566
Dividend payables
843,749 919,634 504,012
Payables - factoring
722,628 2,420,726 4,314,429
Collections of checks for others
179,294 26,476 1,025,535
Others
1,848,957 2,720,500 2,788,827
$
20,806,659 $
35,493,749 $
38,293,160
2013 ANNUAL REPORT
067
23. DEPOSITS AND REMITTANCES
26.PROVISIONS
December 31, 2013
December 31, 2012
Checking account deposits
$
Demand deposits
454,228,393 Time deposits
December 31, 2012
January 1, 2012
Provisions for employee benefits
$
5,673,665 $
5,832,782 $
435,269,704 418,234,838
Reserve for losses on guarantees
217,996 217,626 216,916
308,849,245 288,280,412 291,103,072
Others
15,743 14,534 14,449
3,637,800 4,600,600 4,317,600
Savings deposits
918,048,239 881,160,652 847,099,195
Remittances
797,080 849,855 965,632
1,739,937,046 $
54,931,845 $
December 31, 2013
55,805,195
$
54,376,289 $
January 1, 2012
1,665,093,068 $
December 31, 2012
January 1, 2012
95-2A term eight-year subordinated debenture; floating rate;
maturity on September 15, 2014
$
1,000,000 $
1,000,000 $
1,000,000
95-3 term twelve-year subordinated debenture; 2.6% fixed rate;
1,050,000 1,050,000 1,050,000
95-4 term seven-year subordinated debenture; floating rate;
maturity on November 3, 2013
- 5,000,000 5,000,000
95-5 term ten-year subordinated debenture; 2.45% fixed rate;
1,700,000 1,700,000 1,700,000
maturity on December 14, 2013
96-2 term subordinated debenture without maturity dates; floating
rate; redeemable after September 20, 2014
1,200,000 1,200,000 1,200,000
maturity on May 9, 2015
1,700,000 1,700,000 1,700,000
98-3 term subordinated debenture without maturity dates; from
the first year to the tenth year: 3.3%; after the tenth year: 4.3%;
redeemable after December 9, 2019
3,000,000 3,000,000 3,000,000
99-1 term ten-year subordinated debenture; 1.65% fixed rate;
5,000,000 5,000,000 5,000,000
100-1 term seven-year subordinated debenture; 1.63% fixed rate;
5,000,000 5,000,000 5,000,000
101-1A term seven-year subordinated debenture; 1.43% fixed rate;
1,300,000 1,300,000 -
101-1B term ten-year subordinated debenture; 1.55% fixed rate;
3,700,000 3,700,000 -
- 2,000,000 2,000,000
4,500,000 2,500,000 31,650,000 $
4,500,000 2,500,000 38,650,000 $
4,500,000
2,500,000
33,650,000
25. OTHER FINANCIAL LIABILITIES
December 31, 2013
December 31, 2012
January 1, 2012
Principal of structured products
$
7,224,259 $
Appropriated loan funds
227,799 307,159 395,871
Commercial paper payables
29,989 - -
$
FINANCIAL STATEMENT
6,064,942 $
5,631,626
The changes of reserve for losses on guarantees were as follows:
2013
$
Provision
$
2012
217,626 $
216,916
288 847
82 (137)
217,996 $
217,626
27. PROVISIONS FOR EMPLOYEE BENEFITS
$
068
5,907,404 $
1,617,525,532
24. BANK DEBENTURES
December 31, 2013
$
5,400,261
7,482,047 $
10,439,584 $
10,746,743 $
8,936,100
9,331,971
December 31, 2013
December 31, 2012
January 1, 2012
Recognized in consolidated balance sheet
Defined benefit plans
$
4,737,726 $
4,897,305 $
Preferential interest on employees’ deposits
935,939 935,477 $
5,673,665 $
5,832,782 $
4,468,878
931,383
5,400,261
a. Defined contribution plans
The Company and its subsidiaries adopted a pension plan under the Labor Pension Act (the “LPA”), which is a statemanaged defined contribution plan. Under the LPA, the Company and its subsidiaries make monthly contributions to
employees’ individual pension accounts at 6% of monthly salaries and wages.
The total expenses of defined contribution plans recognized in profit or loss for the years ended December 31, 2013 and
2012 was $111,598 and $107,920, respectively, represents contributions payable to these plans by the Company and its
subsidiaries at rates specified in the rules of the plans.
b. Defined benefit plans
The Company and its subsidiaries adopted the defined benefit plan under the Labor Standard Law, pension benefits
are calculated on the basis of the length of service and average monthly salaries of the six months before retirement.
The Company and its subsidiaries contributes amounts equal to 12% or 10% of total monthly salaries and wages to a
pension fund administered by the pension fund monitoring committee. Pension contributions are deposited in the Bank
of Taiwan in the committee’s name.
The total expenses of defined benefit plans recognized in profit or loss for the years ended December 31, 2013 and 2012
were $402,261 and $687,571, respectively.
The latest actuarial valuations of plan assets and the present value of the defined benefit obligation were carried out
by qualifying actuaries (Ms. Huang, Pei-fen and Mr. Ye, Chong-Chi). Present value of defined benefit obligation, current
and prior service cost are measured using the Projected Unit Credit Method. The principal assumptions used for the
purposes of the actuarial valuations were as follows:
Valuation at
December 31, 2013
Discount rate
December 31, 2012
January 1, 2012
1.75%
1.50%-1.625%
1.60%-2.00%
Expected return on plan assets
1.75%-2.00%
1.50%-1.875%
1.60%-2.00%
Expected rate of salary increase
2.00%-2.75%
2.00%-2.75%
2.00%-2.75%
2013 ANNUAL REPORT
069
Amounts recognized in profit or loss in respect of these defined benefit plans are as follows:
The major categories of plan assets at the end of the reporting period for each category were disclosed based on the
information announced by Bureau of Labor Funds, Ministry of Labor:
2013
December 31, 2013
2012
December 31, 2012
January 1, 2012
Current service cost
$
331,946 $
619,435
Equity instruments
36%
37%
47%
Interest cost
143,814 143,498
Debt instruments
39%
36%
32%
(
73,499) (
75,362)
Others
25%
27%
21%
$
402,261 $
687,571
100%
100%
100%
The pension expenses were included in employee benefits expenses.
Actuarial gains and losses recognized in other comprehensive income for the years ended December 31, 2013 and 2012
was gain of $126,524 and loss of $124,062, respectively. The cumulative amount of actuarial gains and losses recognized in
other comprehensive income as of December 31, 2013 and 2012 was gain of $2,462 and loss of $124,062, respectively.
The amount included in consolidated balance sheets arising from the Company and its subsidiaries obligation in respect of
their defined benefit plans were as follows:
December 31, 2013
December 31, 2012
January 1, 2012
December 31, 2013
Present value of defined benefit obligation
$
9,679,540 $
9,701,929 $
9,070,664
Fair value of plan assets
(
4,941,814) (
4,804,624) (
4,601,910)
Deficit
4,737,726 4,897,305 4,468,754
Others
- The provision of defined benefit plans
$
- 124
4,737,726 $
4,897,305 $
4,468,878
2013
2012
$
9,701,929 $
Current service cost
331,946 619,435
Interest cost
143,814 143,498
Actuarial (gains) losses
(
164,833) 120,102
Benefits paid
(
336,972) (
Others
Closing defined benefit obligation
$
255,950)
4,180
9,679,540 $
January 1, 2012
$
9,679,540 $
9,701,929 $
9,070,664
$
4,941,814 $
4,804,624 $
4,601,910
Deficit
$
4,737,726 $
4,897,305 $
4,468,754
Experience adjustments on plan liabilities
($
135,969) $
3,909 $
-
Experience adjustments on plan assets
($
30,625) $
-
12,394) ($
Valuation at
9,070,664
3,656 December 31, 2012
c. Preferential interest on employees’ deposits
The Company and its subsidiaries offers preferential interest on employees’ deposits to both current and retired
employees.
The principal assumptions used for the purposes of the actuarial valuations were as follows:
The movements in the present value of the defined benefit obligations were as follows:
Opening defined benefit obligation
The overall expected return rate on plan assets was based on historical return trends and actuaries’ predictions of the
market for the asset over the life of the related obligation, with reference to the use of the Labor Pension Fund by Labor
Pension Fund Supervision Committee, taking into consideration the return generated by employees’ pension contribution
should not be below the interest rate for a 2-year time deposit with local banks.
The Company and its subsidiaries chose to disclose the history of experience adjustments as the amounts determined for
each accounting period prospectively from the date of transition to IFRSs:
9,701,929
December 31, 2013
December 31, 2012
January 1, 2012
Discount rate
4.00%
4.00%
4.00%
Expected return on employees’ deposits
2.00%
2.00%
2.00%
Account decline rate
1.00%
1.00%
1.00%
50.00%
50.00%
50.00%
The probability of preferential interest on employees’ deposits
changed
Amounts recognized in profit or loss in respect of these employee’s preferential deposits were as follows:
The movements in the fair value of the plan assets were as follows:
2013
2013
2012
Opening fair value of plan assets
$
73,499 75,362
Actuarial losses
(
12,394) (
30,625)
Contributions from the employer
412,635 413,927
Benefits paid
(
336,550) (
255,950)
Closing fair value of plan assets
$
4,941,814 $
4,804,624
070
FINANCIAL STATEMENT
4,804,624 $
4,601,910
2012
Interest cost
$
35,228 $
Actuarial losses
181,318 192,078
$
216,546 $
227,190
2013 ANNUAL REPORT
35,112
071
The amount included in consolidated balance sheets arising from the Company and its subsidiaries’ obligations in
respect of their preferential deposits were as follows:
December 31, 2013
$
The provision of defined benefit plans
$
December 31, 2012
935,939 $
- For the Year Ended December 31
January 1, 2012
935,477 $
2013
931,383
- 935,939 $
A reconciliation of accounting profit and income tax expenses is as follows:
-
935,477 $
931,383
The movements in the present value of the obligation of the preferential interest on employees’ deposits were as follows:
2012
Opening obligation of preferential interest on
employees’ deposits
$
935,477 $
931,383
Interest cost
35,228 35,112
Actuarial losses
181,318 192,078
Benefits paid
(
216,084) (
223,096)
Closing obligation of preferential interest on
employees’ deposits
$
935,939 $
935,477
1,906,346 $
1,730,159
Permanent differences
Tax-exempt income
(317,172) (333,223)
Valuation gains of financial instruments
(
8,372) (2,301)
(
316,630) (
251,150)
Temporary differences
636,317 (
27,376)
Income tax of overseas branches
429,939 304,687
Adjustments for prior years’ tax
(
50,377) 11,856
Current tax
2,280,051 1,432,652
Deferred tax
(
637,165) 21,125
Income tax expenses recognized in profit or loss
$
1,642,886 $
1,453,777
As the status of 2014 appropriations of earnings is uncertain, the potential income tax consequences of 2013
unappropriated earnings are not reliably determinable.
28. OTHER LIABILITIES
December 31, 2013
December 31, 2012
b. Income tax recognized in other comprehensive income
January 1, 2012
Advance receipts
$
1,222,939 $
Temporary receipt and suspense accounts
963,403 1,444,180 276,703
Guarantee deposits received
792,309 697,861 816,849
Others
7,266 14,467 31,736
$
800,398 $
2,985,917 $
660,561
2,956,906 $
1,785,849
29. INCOME TAX
2013
2012
Deferred tax
In respect of the current year
Actuarial gains and losses on defined benefit plan
($
25,915) $
25,410
c. Current tax assets and liabilities
Under a Ministry of Finance directive, a financial holding company and its domestic subsidiaries in which over 90% of issued
shares was held by the financial holding company for 12 months within the same taxation year may adopt the linked-tax
system for income tax filing. In 2002, HNFH and its qualified subsidiaries, including the Company, adopted the linked-tax
system for income tax filings.
The principle adopted by the Company, HNFH, HNSC, South China Insurance Co., Ltd. (SCIC), Hua Nan Investment Trust
Corporation (HNIT), Hua Nan Venture Capital Co., Ltd. (HNVC), Hua Nan Asset Management Corp. (HNAMC), and Hua
Nan Management & Consulting Co., Ltd. (HNMC) (collectively, the “Group”) under the linked-tax system is to reduce the
income tax liabilities of the Group reasonably and to consider the fairness of the tax borne by all the companies in order to
maximize the synergy of the Group.
a. Income tax recognized in profit or loss
The major components of tax expense were as follows:
December 31, 2013
December 31, 2012
January 1, 2012
Current tax assets
Tax refund receivables
$
Others
1,726,398 $
46,933 1,808,521 $
2,548,945
82,868 -
$
1,773,331 $
1,891,389 $
2,548,945
$
1,387,296 $
333,543 $
1,531,911
Income tax payable
d. Deferred tax assets and liabilities
The components of deferred tax assets and liabilities were as follows:
2013
December 31, 2013
2012
December 31, 2012
January 1, 2012
Deferred tax assets
Current tax
$
1,900,489 $
In respect of prior periods
(
50,377) 11,856
Income tax of overseas branches
429,939 304,687
2,280,051
1,116,109
Provisions for bad debts and losses on guarantees
$
over limitation
1,206,148 $
567,738 $
647,950
Employee benefit plan
810,670 837,826 765,166
Others
18,402 18,009 6,172
1,432,652
Deferred tax
$
2,035,220 $
1,423,573 $
1,419,288
Land value increment tax
$
6,021,653 $
6,021,653 $
6,021,653
Others
Income tax expenses recognized through profit or loss
(
637,165) $
1,642,886 $
21,125
1,453,777
$
072
$
Tax effect of adjusting items:
Others
2013
Income tax expenses calculated at the statutory rate (17%)
2012
FINANCIAL STATEMENT
397 6,022,050 $
- 6,021,653 $
2013 ANNUAL REPORT
6,021,653
073
The movements of deferred tax assets and deferred tax liabilities were as follows:
For the year ended December 31, 2013
Opening Balance
Recognized in Profit or
Loss
HNCB Insurance Agency
December 31, 2013
Recognized in Other
Comprehensive
Income
Closing Balance
Imputation credit accounts
Deferred tax assets
Provisions for bad debts and losses on
guarantees over limitation
$
567,738 $
638,410 $
Employee d benefit plan
837,826 (1,241) (
Others
18,009 $
1,423,573 $
$
6,021,653 $
Others
- $
25,915) 810,670
- 18,402
393 637,562 ($
1,206,148
25,915) $
2,035,220
- $
6,021,653
- $
- $
6,021,653 $
397 - 397 $
- $
397
6,022,050
$
December 31, 2012
16,682 $
10,947 $
The Actual Creditable Tax Ratio Generated in
2012
20.48%
20.48%
Creditable tax ratio
HNILC
Due to deficit, the HNILC do not have unappropriated earnings generated as of December 31, 2013 and 2012, and the
balance of imputation credit accounts are zero. The creditable tax ratio would be calculated when the unappropriated
earnings were generated and distributed.
According to legal interpretation No. 10204562810 announced by the Taxation Administration of the Ministry of Finance,
when calculating imputation credits in the year of first-time adoption of IFRSs, the cumulative retained earnings include
the net increase or net decrease in retained earnings arising from first-time adoption of IFRSs.
f. The information on the unappropriated earnings was as follows:
The Company
December 31, 2013
Opening Balance
Recognized in Other
Comprehensive Income
Closing Balance
10,405
The Excepted Creditable Tax Ratio Generated in
2013
For the year ended December 31, 2012
Recognized in Profit or
Loss
January 1, 2012
Unappropriated earnings generated on and after January
1, 1998
$
11,400,224 $
December 31, 2012
January 1, 2012
10,364,054 $
10,150,647
Deferred tax assets
Provisions for bad debts and losses on
guarantees over limitation
$
647,950 ($
Employee benefit plan
765,166 47,250 25,410 837,826
Others
6,172 11,837 - 18,009
$
1,419,288 ($
$
6,021,653 $
80,212) $
- $
21,125) $
25,410 $
1,423,573
- $
- $
6,021,653
The unused loss carryforwards of HNILC as of December 31, 2013 were as follows:
The Last Year of Claiming Deductible Loss
$
523
2022
9,146
2023
e. The information on the integrated income tax system was as follows:
The information on the imputation credit accounts of the Company was as follows:
Imputation credit accounts
$
December 31, 2012
65,868 $
January 1, 2012
76,826 $
113,795
The Company’s estimated creditable tax ratio for distribution of earnings of 2013 was 0.58%, and actual creditable tax
ratio for cash dividend and stock dividend in 2012 were 0.93% and 1.77%.
The actual imputation credits allocated to shareholders of the Company was based on the balance of the Imputation
Credit Accounts as of the date of dividend distribution. Therefore, the expected creditable ratio for the 2013 earnings
may differ from the actual creditable ratio to be used in allocating imputation credits to the shareholders.
074
FINANCIAL STATEMENT
Unappropriated earnings generated on and after January
1, 1998
$
234,428 $
December 31, 2012
January 1, 2012
143,477 $
91,405
g. As of December 31, 2013 income tax returns through 2007 have been assessed by the tax authorities. The amortization
of bond premiums of 2003, 2004, 2005, 2006 and 2007 were adjusted to decrease $31,628, $334,313, $1,080,446, $704,010
and $421,929 by the tax authorities. The Company disagreed with above assessments and had applied for a reexamination. In case the Company lose the lawsuit, the Company still can use loss carryforwards of 2002. Income tax
return of the HNCB Insurance Agency through 2011 had been assessed by the tax authorities. Income tax returns of the
HNILC through 2012 had been assessed by the tax authorities.
30.EQUITY
Amount
December 31, 2013
December 31, 2013
567,738
Capital Stock
On February 29, 2012, the Company’s board of directors resolved to raise capital through a private placement of 800,000
thousand shares and on March 26, 2012, the Company’s board of directors set NT$25 as the issue price and March 29, 2012
as the effective issue date.
On May 28, 2012, the Company’s board of directors, exercising the power and the authority of stockholder’s meeting,
resolved to capitalize $1,708,000 of retained earnings and to issue 170,800 thousand shares. After the issuance, the
Company’s authorized capital stock increased to $57,379,000. The registration of the capitalization with the Securities and
Futures Bureau was effective. The Company set August 7, 2012 as the effective date of capitalization.
On May 27, 2013, the Company’s board of directors, exercising the power and the authority of stockholder’s meeting,
resolved to capitalize $5,710,000 of retained earnings and to issue 571,000 thousand shares. After the issuance, the
Company’s authorized capital stock increased to $63,089,000. The registration of the capitalization with the Securities and
Futures Bureau was effective. The Company set August 7, 2013 as the effective date of capitalization.
Capital Surplus
The capital surplus from the issuance of new shares at a premium (additional paid-in capital from issuance of common
shares, conversion of bonds and treasury stock transactions) and endowments received by the Company may be used to
offset a deficit; in addition, when the Company has no deficit, such capital surplus may be distributed as cash dividend or
transferred to capital (limited to a certain percentage of the Company’s paid-in capital every year).
2013 ANNUAL REPORT
075
The capital surplus from long-term equity investments under equity method may not be used for any purpose.
The components of the Company’s capital surplus were as follows:
December 31, 2013
$
Stock-based compensation
Stock-based compensation accounted for by the equity
method
234 234 234
Others
76,458 1,325 24,694,777 $
24,616,760 $
For Year 2012
12,616,760
76,458 76,458
1,325 24,694,777 $
12,694,777
Special Reserve
Under Financial Supervisory Commission (FSC) guidelines No. 10010000440, the securities default reserve and trading loss
reserve set up as of December 31, 2010 are transferred to special reserve. The special reserve may be used to offset a
deficit and may be appropriated when legal reserve reaches 50% of the Company’s paid-in capital.
Under Rule No. 1010012865 issued by the FSC on April 6, 2012 and the directive titled “Questions and Answers for Special
Reserves Appropriated Following Adoption of IFRSs”, on the first-time adoption of IFRSs, a company should appropriate to
a special reserve of an amount that was the same as these of unrealized revaluation increment and cumulative translation
differences (gains) transferred to retained earnings as a result of the Company’s use of exemptions under IFRS 1. However,
at the date of transitions to IFRSs, if the increase in retained earnings that resulted from all IFRSs adjustments is not enough
for this appropriation, only the increase in retained earnings that resulted from all IFRSs adjustments will be appropriated
to special reserve. The special reserve appropriated as above may be reversed to retained earnings in proportion to the
usage, disposal or reclassification of the related assets and thereafter distributed. The special reserve appropriated on the
first-time adoption of IFRSs may be used to offset deficits in subsequent years. No appropriation of earnings shall be made
until any shortage of the aforementioned special reserve is appropriated in subsequent years if the Company has earnings
and the original need to appropriate a special reserve is not limited. Please refer to section Special Reserve Appropriated
Following First - time Adoption of IFRSs.
Dividend Policy and Appropriation of Retained Earnings
The Articles of Incorporation stipulates that from annual net income net of any accumulated deficit, 30% should be
appropriated as legal reserve until the reserve equals the Company’s paid-in capital. A special reserve based on business
needs may then be appropriated. Any remainder should be appropriated as follows:
Under the Financial Holding Company Act, the board of directors is empowered to execute the authority of the
stockholders’ meeting, which is under no jurisdiction in the related regulations in the Company Act.
a. 1% to 8% as bonuses to employees. The board of directors (BOD) is authorized to resolve the bonus percentage.
b. Dividends. The BOD is authorized to appropriate dividends according to the economic environment and the
Company’s development needs. The cash dividend should be at least one third of total dividends and approved by
the stockholder.
For the years ended December 31, 2013 and 2012, the bonus to employees was $539,280 and $618,472, respectively.
The bonus to employees were within 8% of net income (net of the bonus) minus appropriation of legal and special
reserve for the years ended December 31, 2013 and 2012, respectively. If the actual amounts subsequently resolved by
the shareholders differ from the proposed amounts, the differences are recorded in the year of shareholders’ resolution
as a change in accounting estimate.
The board of directors which executes the rights and functions of the stockholder resolved the appropriation of earnings
for 2012 and 2011 on May 27, 2013 and May 28, 2012, respectively. The appropriations and dividends per share were as
follows:
FINANCIAL STATEMENT
For Year 2013
For Year 2012
For Year 2013
Legal reserve
$
Special reserve
Cash dividends
Stock dividends
2,598,367 $
2,515,629 $
- $
-
- 3,308,896 - -
2,020,951 853,634 0.35 0.15
5,710,000 1,708,000 1.00 0.31
1,325
The above stock-based compensation, 15% cash capital increase was reserved for employees provided by the parent
company, HNFH pursuant to Article 267 of Company Act and Article 30 of Financial Holding Company Act.
076
Dividends Per Share (NT$)
January 1, 2012
Share premium
$
24,616,760 $
December 31, 2012
Appropriation of Earnings
The bonus to employees of $618,472 and $204,872 for 2012 and 2011 were approved by the BOD on behalf of the
stockholders’ meeting on May 27, 2013 and May 28, 2012. The bonus to employees was all cash bonus. There is no
difference between the approved amounts of the bonus to employees and the accrual amounts reflected in the
financial statement for the years.
Information of earnings appropriation which had been approved by the BOD and the stockholders can be accessed
online through the MOPS website of the Taiwan Stock Exchange.
Legal reserve shall be appropriated until it has reached the Company’s paid-in capital. This reserve may be used to
offset a deficit. If the Company had no deficit, and when the legal reserve has exceeded 25% of the Company’s paidin capital, the excess may be transferred to capital or distributed in cash. In addition, the Banking Act provides that,
before the balance of legal reserve reaches the aggregate par value of the outstanding capital stock, annual cash
dividends should not exceed 15% of aggregate par value of the outstanding capital stock of the Company.
Under Article 50-2 of the Banking Law revised on April 30, 2012, when legal reserve meet the total capital reserve or
well financial position and setting aside, legal reserve under company law is not limited to the restriction of setting
aside 30% of remaining earnings as legal reserve, and the appropriation of the remainder and retained earnings from
previous year was limited to 15% of total capital reserve when legal reserve has not meet the total capital reserve. The
requirements for financial position of banks to be established in accordance with this Act shall be as prescribed by the
Financial Supervisory Commission, Executive Yuan, ROC.
According to Rule No. 0950000507 issued by the Financial Supervisory Commission, Executive Yuan, an amount equal
to the net debit balance of unrealized loss on valuation of available-for-sale financial assets shall be appropriated as
a special reserve. Any special reserve appropriated may be reversed to the extent of the decrease in the net debit
balance.
Except for non-ROC resident stockholders, all stockholders receiving the dividends are allowed a tax credit equal to
their proportionate share of the income tax paid by the Company.
Special Reserves Appropriated Following First-time Adoption of IFRSs
The Company’s special reserves appropriated following first-time adoption of IFRSs were as follows:
December 31, 2013
Special reserve
$
December 31, 2012
6,265,422 $
January 1, 2012
6,265,422 $
6,265,422
The increase in retained earnings that resulted from all IFRSs adjustments was not enough for this appropriation; therefore,
the Company appropriated for special reserve an amount of $6,265,422, the increase in retained earnings that resulted
from all IFRSs adjustments on transitions to IFRSs.
Unrealized Gain or Loss on Available-for-sale Financial Assets
2013
($
Unrealized gain arising on revaluation of available-for-sale
financial assets
2012
2,472,488) ($
4,140,539)
402,526 1,852,312
Cumulative gain reclassified to profit or loss on impairment of
available-for-sale financial assets
(
361,161) (
184,261)
($
2,431,123) ($
2013 ANNUAL REPORT
2,472,488)
077
31. INTEREST REVENUE, NET
2013
2012
2013
Interest income
2012
Unrealized gain or loss on financial assets at fair value through profit or loss
Discounts and loans
$
27,895,862 $
26,922,996
2,077,734 (
Securities investments
3,959,351 3,928,317
Issuance of bank debentures
338,017 Others
2,729,343 1,920,928
Bank debentures
(
138,711) Interest rate swap contracts
(
96,670) (
185,327)
Corporate bonds
(
60,654) 107,602
Others
42,720 (
34,584,556 32,772,241
Interest expense
2,465,535)
229,659
294,051
Deposits
9,945,698 9,355,090
Due to the Central Bank and banks
597,259 669,718
Others
1,255,095 942,722
Dividend income on financial assets at fair value through profit or loss
8,809 6,374
11,798,052 10,967,530
Interest revenue on financial asset at fair value through profit or loss
1,245,486 1,272,877
$
22,786,504 $
21,804,711
Interest expense on financial liabilities at fair value through profit or loss
(
1,166,129) (
1,158,889)
$
32. COMMISSION AND FEE REVENUE, NET
2,991,501 ($
1,252,278)
2012
34. REALIZED GAINS ON AVAILABLE-FOR-SALE FINANCIAL ASSETS
Commission and fee revenue
Insurance commission
2,045,119)
When the Company and its subsidiaries designated financial instruments measure at fair value through profit or loss, fair
value change in derivate instruments is also listed in “financial assets and liabilities at fair value through profit or loss”.
2013
25,569)
2,162,436 (
$
1,642,882 $
1,302,938
2013
2012
Trust business
1,619,519 1,315,267
Remittance business
690,422 708,436
Dividend income
Credit card business
531,344 585,273
Gain from disposal
Loan business
325,828 287,503
Stocks
404,102 45,869
Foreign exchange and import/export business
294,477 323,124
Government bonds
73,314 97,037
Guarantee business
276,554 290,972
Beneficiary certificates
53,842 21,590
Others
701,933 672,337
Bank debentures
23,824 23,168
6,082,959 5,485,850
9,470 55,613
Commission and fee expense
$
204,148 $
205,274
Corporate bonds
Beneficiary securities
Others
- 4,250
564,552 269,827
49,143)
- 22,300
262,830 313,366
Business promotion expense
158,988 139,173
Trust business
73,250 57,572
Credit investigating expense
57,114 59,124
Stocks
(
128,260) (
Remittance business
48,981 47,778
Government bonds
(
53,502) (
1,956)
Others
181,906 191,529
Corporate bonds
- (
33,689)
808,542
Others
(
21,629) (
778)
(
203,391) (
85,566)
$
565,309 $
389,535
783,069 $
5,299,890 $
Loss from disposal
4,677,308
33.GAINS (LOSS) ON FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR
LOSS
35. OTHER NON INTEREST NET REVENUES
2013
2013
2012
Rental income of investment properties
Realized gain or loss on financial assets at fair value through profit or loss
$
321,820 $
313,338
2012
$
261,414 $
Reversal income due to unpaid payables
206,386 Gain on hedging instruments
249,591
-
36,380 30,702
Cross-currency swap contracts
215,917 (
230,580)
Direct operating expense of investment properties
(
68,956) (
Foreign exchange options
193,000 218,813
Loss on hedged items
(
42,383) (
17,505)
Forward contracts
6,823 352,872
Others
134,244 114,675
Future contracts
(
42,250) 14,763
$
527,085 $
312,874
Others
078
FINANCIAL STATEMENT
64,589)
45,589 3,273
740,899 672,479
2013 ANNUAL REPORT
079
36. EMPLOYEE BENEFITS EXPENSE
The earnings and weighted average number of ordinary shares outstanding in the computation of earnings per share from
continuing operations were as follows:
2013
Net Profit for the Year
2012
Salaries and wages
$
5,721,237 $
5,615,869
Incentives and bonus
2,894,097 2,806,471
Labor insurance and national health insurance
571,156 519,919
Pension and compensation
535,574 820,584
Others
994,892 989,141
$
10,716,956 $
2013
Profit for the year attributable to owner of the Company
$
2012
9,570,913 $
8,723,628
Shares
10,751,984
2013
Weighted average number of ordinary shares in computation of basic earnings per share
2012
6,308,900 6,116,550
37. DEPRECIATION AND AMORTIZATION EXPENSE
The weighted average number of shares outstanding used for earnings per share calculation has been retroactively
adjusted for the issuance of bonus shares. This adjustment caused the basic earnings per share for the year ended
December 31, 2012 to decrease from $1.57 to $1.43.
2013
2012
Depreciation expense
Buildings
$
262,943 $
281,469
Office equipment
203,488 256,010
29,152 33,083
Other equipment
78,848 81,096
Lease improvements
46,432 53,469
620,863 705,127
132,069 $
752,932 $
a. Name and relationship with related parties were as follows:
Related Party
Relationship with the Company
Hua Nan Financial Holdings Co., Ltd. (HNFH)
Parent company
157,698
Bank of Taiwan Co., Ltd. (BOT)
Majority stockholder of parent company
862,825
Bank Taiwan Life Insurance Co., Ltd. (BTLI)
Majority stockholder of parent company (the related information and
proportionate share in investees with BOT).
South China Insurance Co., Ltd. (SCIC)
Subsidiary of the Parent Company
Hua Nan Investment Trust Corporation (HNIT)
Hua Nan Securities Corp. (HNSC)
Hua Nan Venture Capital Co., Ltd. (HNVC)
Subsidiary of the Parent Company (Note 1)
Hua Nan Management & Consulting Co., Ltd. (HNMC)
Subsidiary of the Parent Company (Note 1)
Hua Nan Asset Management Corp. (HNAMC)
Hua-Yu Construction company (Hua-Yu Construction)
Hua Nan Futures Co., Ltd. (HNFC)
38. OTHER OPERATING EXPENSE
2013
40. RELATED PARTY TRANSACTIONS
2012
Taxation and government fee
$
1,186,755 $
1,141,338
Rent
898,986 858,077
Insurance
467,765 489,818
Membership fee
415,428 408,401
Maintenance
266,846 259,295
Postage fee
221,349 223,852
Hua Nan Securities (HK) Limited (“Hua Nan Securities HK”)
Advertisement
211,201 217,057
Hua Nan Holdings Corp.
Professional services
186,019 196,051
Hua Nan Asset Management Corp.
Others
855,256 815,785
Hua Nan Investment Management Co., Ltd. (HNIM)
$
4,709,605 $
Hua Nan Global Henry Fund
Managed by subsidiary of the Parent Company (HNIM)
National Credit Card Center of R.O.C. (NCCC)
The chairman of the parent company is its chairman (Notes 2 and 3)
Yuan-Ding Investment Co., Ltd. (Yuan-Ding Investment)
The Company’s director is its chairman
Yung-Cheong Investment Co., Ltd. (Yung-Cheong Investment)
The Company’s director is its chairman
Yung-Chi Asset Management Corp. (Yung-Chi AMC)
The director of the parent Company is its chairman (Note 2)
Shiun-You Co., Ltd. (Shiun-You)
The director of the parent Company is its chairman (Note 2)
The Company’s associate
Others
Directors, supervisors, managers, their relatives, companies under their
control, and other related parties in substance
4,609,674
39. EARNINGS PER SHARE
Basic earnings per share is calculated by earnings on the Company’s stockholders divide by weighted average number of
ordinary shares outstanding.
2013
2012
Basic earnings per share
From continuing operations
$
1.52 $
1.43
Note 1:HNVC and HNMC had merged on December 25, 2013. HNVC was the surviving company while HNMC was the dissolved company.
Note 2:The parent company (HNFH) of the Company and its subsidiaries elected directors in June 2013, and this company’s chairman was not the directors or chairman
of HNFH. Consequently, this company is not the related party after July 1, 2013.
Note 3:The chairman of the HNFH took over the chairman of this company in November 2013. Consequently, this company remain the related party with the Company
and its subsidiaries after November 2013.
080
FINANCIAL STATEMENT
2013 ANNUAL REPORT
081
b. Substantial transactions with related parties were as follows:
6)Deposits
December 31
1)Due from other banks
December 31, 2013
Amount
BOT
$
December 31, 2012
%
Amount
388,945 1.22 $
2013
January 1, 2012
%
273,144 Amount
5.39 $
Ending Balance
%
733,374 6.95
2)Deposits from banks
December 31, 2013
Amount
BOT
$
December 31, 2012
%
6,745 Amount
3.93 $
January 1, 2012
%
30,217 Amount
8.96 $
%
23,301 3.66
3)Call loans to banks
Highest
Balance
BOT
$
Ending
Balance
Interest
Income
11,453,725 $
Interest Rate
(%)
- $
505
0.26-2.70
Highest
Balance
BOT
$
Ending
Balance
6,574,565 $
Interest
Income
Interest Rate
(%)
391,973 $
739
$
837,882
0-1.345 $
SCIC
503,887
HNFC
HNFH
Ending Balance
Interest Expense
0.17-1.345 $
1,579
0-1.345 2,737 321,716
0.01-1.345 2,249
356,194
0-1.345 793 290,315
0.17-1.345 912
253,734
0-0.17 3,418 24,534
0-0.17 6,175
HNVC
208,328
0.05-1.345 NCCC
201,677
0-0.32 Hua Nan Securities HK
141,542
HNAMC
26,276
0-0.17 35 24,356
0-0.88 35
HNIM
25,971
0.17-1.345 326 26,279
0.17-1.345 325
Hua Nan Holding Corp.
22,768
0.17-1.00 172 22,154
0.17-1.00 239
HNIT
4,108
0.17 16 9,699
0.17 26
Hua Nan Asset Management
Corp.
876
0.17 - 970
0.17 -
HNMC
-
- - 35,777
1.09-1.345 353
Hua-Yu Construction
-
- - -
0.17 530
Others
12,769,454
0-13 60,713 13,250,779
0-13 85,468
$
15,352,697
71,403 $
14,753,767
0.15-0.75
1,704 $
Interest Rate (%)
425,201
822 32,072
0.17 111
544 98,928
0-0.32 441
0.17 123 190,987
0.17 27
$
$
98,470
7)Loans
Highest
Balance
$
Ending
Balance
21,751,792 $
Interest
Expense
2,229,060 $
Interest Rate
(%)
24,919
Highest
Balance
$
Ending
Balance
10,863,955 $
Interest
Expense
871,050 $
Interest Rate
(%)
13,739
Type
0.05-1.30
BOT
Interest Expense
HNSC
4)Call loans from banks
BOT
2012
Interest Rate (%)
0.10-1.28
Account Volume
or Name of
Related Party
Highest
Balance
Consuming loan
5
$
Households
mortgages
20
Others
Payment Status
Ending Balance
2,886 $
Overdue
Yes
185,454 - Real estate
Yes
Yuan-Ding
Investment
24,000 24,000 24,000 - Real estate
Yes
Others
Yung-Cheong
Investment
50,000 50,000 50,000 - Listed stocks
Yes
Others
Others
49,053 40,675 40,675 -
185,454 1,315 $
Is the Transaction
at Arm’s Length
Commercial Term
- No
223,015 1,315 $
Normal
Type of Collaterals
Real estate and
time deposits
Yes
Type of Collaterals
Is the Transaction
at Arm’s Length
Commercial Term
5)Excess margin of futures
December 31, 2013
HNFC
082
$
FINANCIAL STATEMENT
56,007 $
December 31, 2012
98,782 $
January 1, 2012
84,317
Type
Account Volume
or Name of
Related Party
Highest
Balance
Payment Status
Ending Balance
Normal
- No
Yes
238,612 227,171 227,171 - Real estate
Yes
Yuan-Ding
Investment
24,000 24,000 24,000 - Real estate
Yes
Others
Yung-Cheong
Investment
- Listed stocks
Yes
Others
Yung-Chi AMC
1,470,000 1,441,000 1,441,000 - Real estate
Yes
Others
Others
72,016 - Real estate
Yes
Consuming loan
6
$
Households
mortgages
24
Others
4,298 $
50,000 73,015 2,982 $
50,000 72,016 2,982 $
Overdue
50,000 2013 ANNUAL REPORT
083
8)Sales or purchases of bills and bonds
The Company had leased office space to HNAMC, with rentals received monthly under an operating lease
agreement expiring in July 2014. Both rental expenses amounted to $6,684 for the years ended December 31, 2013
and 2012.
Bills and Bonds
Purchased from
Related Parties
HNSC
$
Bills and Bonds
Purchased Under
Resale Agreement
from Related Parties
(Ending Balance)
Bills and Bonds Sold
to Related Parties
844,040 $
598,141 $
Under Repurchase
Agreement from
Related Parties
(Ending Balance)
11)Commission and fee expenses
Interest Expense
2013
- $
- $
-
Bills and Bonds
Purchased from
Related Parties
HNSC
$
Bills and Bonds
Purchased Under
Resale Agreement
from Related Parties
(Ending Balance)
to Related Parties
1,303,719 $
549,725 $
Under Repurchase
Agreement from
Related Parties
(Ending Balance)
- $
Interest Expense
%
$
HNSC
710 SCIC
277 0.04 HNFC
19,143 2.44 $
26 23,192 2.87
676 0.08
183 0.02
- 30 20,156
$
-
24,081
12)Other non-interest net revenue - others
2013
Amount
2012
%
Amount
2013
%
2012
Amount
SCIC
$
51,941 0.85 $
HNSC
23,068 0.38 23,332 0.43
HNIT
18,018 0.30 21,931 0.40
BTLI
2,359 0.04 5,882 0.11
HNVC
324 0.01 299 0.01
HNAMC
266 - 479 0.01
Shiun-You
73 - 181 -
- - -
$
28 96,077
$
51,929 %
Amount
%
0.95
HNAMC
31,332 5.94 $
- -
2013
2012
Amount
HNSC
$
HNFC
104,033
10)Lease
The Company had leased office space to HNSC, with rentals received monthly under an operating lease agreement
expiring in November 2015. Rentals income amounted to $21,518 and $23,866 for the years ended December 31,
2013 and 2012, respectively.
The Company had leased office space from Yung-Chi AMC, with rentals paid monthly under an operating lease
agreement expiring in April 2017. Both rental expenses amounted to $1,946 for the years ended December 31, 2013
and 2012.
The Company had leased office space and dormitory to HNFH, with rentals received monthly under an operating
lease agreement expiring in September 2014 and August 2016, respectively. Rentals income amounted to $8,012 and
$7,772 for the years ended December 31, 2013 and 2012, respectively.
The Company had leased office space to HNIT, with rentals received monthly under an operating lease agreement
expiring in May 2015. Both rental expenses amounted to $623 for the years ended December 31, 2013 and 2012.
The Company had leased office space to SCIC, with rentals received monthly under an operating lease agreement
expiring in December 2015. Both rental expenses amounted to $2,972 for the years ended December 31, 2013 and
2012.
$
13)Other operating expenses - apportionment of other expense
%
75,993 Amount
1.61 $
76,937
%
78,848 1.71
944 0.02 $
Preceding commission and fee revenue are the rewards from SCIC, HNSC, HNIT, HNVC and HNAMC under the
collaborative marketing agreement, the rewards from Shiun-You under the credit card business, the rewards from
Chung-Hua Real Estate Management Co., Ltd. under commission revenue, the rewards from BTLI to HNCB Insurance
Agency under commission revenue.
There is no similar kind of transaction that can be compared with.
FINANCIAL STATEMENT
0.09 %
The commission and fee expenses are fees paid to NCCC for credit card business and the rewards paid to HNSC,
SCIC and HNFC under the collaborative marketing agreement. There is no similar kind of transaction that can be
compared with.
6
9)Commission and fee revenue
084
Amount
NCCC
$
- $
2012
Amount
2,053 0.04
$
80,901
Preceding expense is paid by the Company and its subsidiaries for using operating space and facilities of HNSC and
HNFC. The related expense is recorded as other general and operating expenses - distribution of other expense.
14)Other operating expenses - insurance expense
2013
2012
Amount
SCIC
$
%
27,344 Amount
0.58 $
%
33,527 0.73
15)Other operating expenses - investigation expense
2013
Amount
HNIM
$
2012
%
7,560 Amount
0.16 $
%
7,560 2013 ANNUAL REPORT
0.16
085
16)Other operating expenses - outsourcing fee
January 1, 2012
2013
$
HNAMC
Contract Term
2012
Amount
%
Amount
10,491 0.22 $
%
28,203 0.61
17)Other operating expenses - consulting fee
BOT
Currency swap contract
$
%
9,075 Amount
0.19 $
%
2,245 Account
Balance
Balance Sheet Accounts
$
605,500 $
35,160 Adjustment for the change in
value of financial assets at
fair value through profit or
loss
$
35,160
2011.08.102012.02.13
$
605,500 $
loss
$
27,724
2011.09.062012.03.08
$
605,500 $
loss
$
25,582
2011.11.162012.02.21
$
302,750 $
loss
$
1,008
2012
Amount
HNSC
Gains on
Valuation
2011.05.312012.02.02
2013
Contract
(Nominal)
Amounts
0.05
18)Derivative financial instruments
December 31, 2013
Contract
(Nominal)
Amounts
Contract Term
Gains (Losses) on
Valuation
Account
Balance
19)Receivable (payable) to related party for allocation under the linked-tax system
December 31, 2013
BOT
2013.12.302014.02.05
$
2013.12.302014.02.05
$
595,600 ($
1,042,300 ($
2,819) Adjustment for the change in $
value of financial liabilities
at fair value through profit or
loss
2,819
loss
4,794
Tax receivable (payable) to the
parent company
2013.02.192014.02.21
$
297,800 $
2,674 Adjustment for the change in $
loss
2,674
2013.02.212014.02.25
$
297,800 $
loss
2,268
loss
1,055
2013.10.242014.02.27
$
73,588 $
Contract
(Nominal)
Amounts
Losses on
Valuation
Account
Balance
BOT
2012.05.292013.02.27
$
871,050 ($
loss
10,408
2012.05.292013.05.31
$
580,700 ($
loss
5,868
2012.11.022013.01.30
$
268) Adjustment for the change in $
loss
268
Mutual funds managed by HNIT
Hua Nan Global Henry Fund Currency swap contract
086
FINANCIAL STATEMENT
59,787 ($
969,634) Amount
69.89 $
January 1, 2012
%
Amount
82,681 4.37 ($
%
1,175,412) 76.73
2013
2012
Salaries and other short - term employee benefits
$
75,868 $
70,474
Post - employment benefits
3,692 5,425
$
79,560 $
75,899
21)Others
In compliance with Banking Act, credits, except for customer loans and government loans, credits extended to any
related party should be 100% secured, and terms of the preceding credits should be no better than those extended
to third parties.
The terms of transactions with related parties, except for preferential interest rate for employees with limited amounts,
were similar to those with third parties.
December 31, 2012
Contract Term
($
December 31, 2012
%
20)Compensation of key management personnel
Mutual funds managed by HNIT
Hua Nan Global Henry Fund Currency swap contract
Amount
41. NON-CASH TRANSACTION
For the years ended December 31, 2013 and 2012, the Company and its subsidiaries entered into the following non-cash
investing and financing activities which were not reflected in the consolidated statement of cash flows:
2013
2012
Property and equipment transferred into intangible assets
$
81,709 $
6,308
Property and equipment transferred into investment properties
$
1,186,381 $
14,855
2013 ANNUAL REPORT
087
42. PLEDGED ASSETS
b. HNCB Insurance Agency engaged in insurance agent contracts with insurance companies, and the content of the
contracts was as follows:
The pledged assets as of December 31, 2013, December 31, 2012 and January 1, 2012 were as follows:
December 31, 2013
December 31, 2012
January 1, 2012
Held-to-maturity financial assets - negotiable certificates of deposits
$
39,000,000 $
38,000,000 $
40,000,000
Available-for-sale financial assets - bonds investment- par value
1,418,738 1,362,374 1,880,078
Held-to-maturity financial assets - bonds investment - par value
733,000 650,600 657,700
Other assets - bonds investment- par value
7,500 7,500 7,500
Others
- 66,000 154,800
$
41,159,238 $
40,086,474 $
December 31, 2012
1,161,400 $
January 1, 2012
Reserve for loans
$
Guarantee deposit for provisional seizure of collaterals due to loan
defaults and others
Guarantee deposit for trust business compensation reserve
230,000 230,000 230,000
Guarantee deposit for clearing reserve
90,000 90,000 90,000
Guarantee deposit for securities trading operations
50,000 50,000 50,000
Guarantee deposits for bills trading operations
50,000 50,000 50,000
Others
72,638 71,074 73,678
$
1,191,200 $
475,400 434,000 2,159,238 $
2,086,474 $
1,816,500
Undrawn loan commitment (Note)
$
143,383,428 $
165,447,076 $
January 1, 2012
Undrawn credit card commitment
69,293,887 66,088,617 63,039,350
29,820,861 30,465,057 31,616,679
Guarantees issued
36,587,399 37,054,954 40,799,008
Collections for customers
116,515,439 118,349,021 124,967,836
Agency loans payable
138,689 222,914 238,889
Travelers’ checks consigned-in
342,440 320,961 338,737
Guarantee notes payable
41,151,738 40,078,974 42,692,578
Trust assets
381,034,708 367,249,433 363,896,505
Marketable securities under custody
9,086,960 7,491,926 6,983,371
Agent for book-entry government bonds
89,842,700 57,585,600 41,551,000
Agent for short-term bills under custody
81,493,330 49,926,998 56,180,034
Note: Only disclose irrevocable undrawn loan commitment.
088
FINANCIAL STATEMENT
Based on regulations of the
contract
The contract is annual contract (for January 1 to
December 31). 1 month before the expiration date
without disagreements between both sides, the
contract extends a year automatically.
Allianz Insurance
2001.07.10
(The contract extends
automatically)
contract
The effective date is the contract date, one year
period. 1 month before the expiration date without
disagreements between both sides, the contract
extends a year automatically.
Taiwan Life Insurance
2002.03.26
automatically)
contract
period. 30 days before the expiration date without
Cathay Life Insurance
2002.04.12
automatically)
contract
Hon Tai Life Insurance
2002.10.24
automatically)
contract
Chaoyang Life Insurance (formerly
known as: Sinon Life Insurance
before 2010.09.01
2002.11.25
automatically)
contract
Fubon Life Insurance
2004.07.27
automatically)
contract
TransGlobe Life Insurance
2005.03.21
automatically)
contract
Cardif Assurance Vie
2006.09.25
automatically)
contract
Nan Shan Life Insurance
2006.10.01
automatically)
contract
Farglory Life Insurance
2007.06.06
automatically)
contract
Mass Mutual Mercuries Life
Insurance
2007.10.26
automatically)
contract
New York Life Insurance
2008.04.09
automatically)
contract
Bank Taiwan Life Insurance
2008.10.09
automatically)
contract
Manulife Life Insurance
2009.04.10
automatically)
contract
CTBC Life Insurance (formerly
known as: Metlife Insurance
before 2012.01.01)
2009.07.16
contract
CIGNA Life Insurance (formerly
known as: New Zealand CIGNA
Life Insurance, Taiwan Branch
before 2011.12.31)
2009.09.30
contract
ACE Life Insurance
2010.09.27
contract
Prudential Life Insurance
2011.05.06
contract
China Life Insurance
2012.01.13
contract
157,736,042
Standby letters of credit
Period
2001.03.16
automatically)
2,700,078
a. As of December 31, 2013, December 31, 2012 and January 1, 2012, the Company and its subsidiaries had commitments
as follows:
December 31, 2012
Calculation of Commission
Sing Kong Life Insurance
389,900
43. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS
December 31, 2013
Contract Date
42,700,078
As of December 31, 2013, December 31, 2012 and January 1, 2012, negotiable certificates of deposits which was pledged
had been served as reserves to comply with Central Bank’s clearing system of real-time gross settlement and provided as
collateral for due to the Central Banks in foreign currencies.
Information on pledged bonds as of December 31, 2013, December 31, 2012 and January 1, 2012 as was follows:
December 31, 2013
Insurance Company
2013 ANNUAL REPORT
089
c. HNCB Insurance Agency authorized HNSC’s business units to collect insurance fees and signed the contract of rewards
on collection. The commission was paid under the agreement and was recognized as consulting fees under operating
expenses. The content of the contract was as follows:
Company Name
Contract Date
HNSC
2012.06.13
Calculation of Commission
After the deduction for
operation tax and stamp
tax, 80% of the remaining
commission in the beginning of
the year was paid to HNSC.
Period
If there is any modification of the rule that
influences the rights or obligations, the
counterparty should be informed in written form in
2 months before the modification to avoid the loss
between the counterparty.
44. DISCLOSURES OF FINANCIAL INSTRUMENTS
a. Fair value of financial instruments
December 31, 2013
Carrying Amount
Carrying Amount
Fair Value
$
89,799,416 $
89,799,416
23,217,504 23,217,504
113,294 113,294
22,099,286 22,099,286
Payables
35,493,749 35,493,749
1,665,093,068 1,665,093,068
Bank debentures
38,650,000 39,561,333
10,746,743 10,746,743
Other liabilities - guarantee deposits received
697,861 697,861
Fair Value
Financial assets
January 1, 2012
Cash and cash equivalents
$
48,142,931 $
48,142,931
Due from the Central Bank and other banks
122,085,753 122,085,753
40,288,320 40,288,320
6,132 6,132
Receivables
33,313,427 33,313,427
1,406,612,677
Carrying Amount
Fair Value
Financial assets
$
105,296,645 35,856,421 $
105,296,645
35,856,421
Discounts and loans
1,406,612,677 Available-for-sale financial assets
80,367,723 80,367,723
33,841,598 33,841,598
Held-to-maturity financial assets
310,881,004 311,091,253
Securities purchased under agreements to resell
349,905 349,905
Investments accounted for using equity method
75,532 75,532
Other financial assets - bond investment with no active market
25,133,873 25,109,938
Receivables
40,942,757 40,942,757
Discounts and loans
1,309,023,543 1,309,023,543
Available-for-sale financial assets
65,908,870 65,908,870
288,324,506 288,329,291
85,359 85,359
13,147,014 13,258,887
Other financial assets - financial assets carried at cost
3,964,351 -
Other financial assets - others
1,007,491 1,007,491
Other assets - refundable deposits
176,384 176,384
3,422,045 -
6,560,007 6,560,007
203,316 203,316
131,875,899 131,875,899
20,656,004 20,656,004
86,820 86,820
18,183,206 18,183,206
Payables
20,806,659 20,806,659
1,739,937,046 1,739,937,046
Bank debentures
31,650,000 32,001,614
7,482,047 7,482,047
Other liabilities - guarantee deposits reserved
792,309 792,309
December 31, 2012
Carrying Amount
Fair Value
Financial assets
$
127,619,967 127,619,967
40,125,581 40,125,581
Receivables
38,915,430 38,915,430
Discounts and loans
1,374,043,429 1,374,043,429
64,997,009 64,997,009
283,007,275 283,051,588
81,050 81,050
16,988,580 17,045,264
3,955,247 -
2,613,057 2,613,057
178,012 178,012
090
FINANCIAL STATEMENT
31,266,244 $
31,266,244
$
82,357,240 $
82,357,240
27,790,094 27,790,094
144,124 144,124
20,649,589 20,649,589
Payables
38,293,160 38,293,160
1,617,525,532 1,617,525,532
Bank debentures
33,650,000 34,706,329
9,331,971 9,331,971
Other liabilities - guarantee deposits received
816,849 816,849
b. Fair value of financial instruments not carried at fair value
The Company and its subsidiaries apply the following methods and assumptions to determine the fair values of financial
instruments not carried at fair value:
1)The carrying amounts of the following short-term financial instruments approximate to their fair values because of their
short -term maturities: Cash and cash equivalents, due from the Central Bank and other banks, securities purchased
under agreements to resell, receivables, refundable deposits, deposits from the Central Bank and banks, securities
sold under agreements to repurchase, payables, guarantee deposits received.
2)Discounts and loans (include nonperforming loans): The interest rate of the Company and its subsidiaries’ loan are
determined by the base rate and the added/deducted margin, i.e. the floating rate which can reflect market rate.
2013 ANNUAL REPORT
091
Thus it’s reasonable to estimate the fair value using the carrying amount with the consideration to the possibility of the
collection.
The fair value of the fixed rate mid-term and long-term loans should be determined by the discounted present value of the
future cash flows. However, the mid-term and long-term loans is not significant in this item; thus, it’s reasonable to estimate
the fair value using the carrying amount with the consideration to the possibility of collection.
the characteristics and trading rules. The fair value valuation in this circumstance may make some adjustment due
to time lags, trading rule’s differences, related parties’ prices, and the correlation of price between itself and the
similar goods.
ii. Quoted prices for identical or similar financial instruments in inactive markets.
iii.When marking-to-model, the input of model in this level should be observable (such as interest rates, yield
curves and volatilities). The observable inputs mean that they can be attained from market and can reflect the
expectation of market participants.
iv.Inputs which can be derived from other observable prices or whose correlation can be verified through other
observable market data.
3)Held-to-maturity financial assets: Held-to-maturity financial assets with quoted price in an active market are using market
price as fair value; held-to-maturity financial assets with no quoted price in an active market are estimated by valuation
methods or counterparties’ price.
4)Deposits and remittances: Considering banking industry’s characteristic, since deposits have one year maturity and
measured by market rate (market value), using carrying value to assess fair value is reasonable. Because deposits with
three years maturity are measured by discounted cash flow, using carrying value to assess fair value is reasonable.
c) Level three
The fair prices of the products in this level are based on the inputs other than the direct market data. For example,
historical volatility used in valuing options is an unobservable input, because it cannot represent the entire market
participants’ expectation for future volatility.
5)Bank debenture: The fair value of bank debenture are determined at their expected future cash flow discounted at
borrowing rate of debt instruments with equivalent term. The discount rates adopted by the Company and its subsidiaries
were from 1.023% to 3.30%.
6)Other financial assets - bond investment with no active market: The fair value of bond investment with no active market is
determined by the discounted cash flow approach. The discount rates of the Company and its subsidiaries are identical to
the return of financial instruments with the same terms and properties.
The terms and the properties include the credits condition of the debtor, the fixed interest bearing period, the remaining
period of the principle and the currency of the payments, etc. The discount rates of the Company and its subsidiaries
range from 0.9098% to 1.7377%.
7)Other financial assets - financial assets carried at cost: The fair value of unquoted equity investments cannot be reliably
measured because it has no quoted price in an active market, the variability interval of fair value measurements is
significant or the probability of the estimations in the variability interval cannot be reasonably assessed. Hence, the fair
value is not disclosed.
c. Financial instruments measured at fair value
Financial instruments at fair value, available-for-sale financial assets and derivative financial instruments for hedging with
quoted price in an active market are using market price as fair value; financial instruments above with no quoted price in an
active market are estimated by valuation methods. The estimation and assumption of valuation method the Company and
its subsidiaries used is the same as market participants’. The Company and its subsidiaries can obtain this information.
The basis of fair value estimation used by the Company and its subsidiaries is shown as follows.
Fair values of financial assets and financial liabilities at the balance sheet date are determined as follows: Publicly traded
stocks - at closing prices; open-end mutual funds - at net asset values; domestic bonds - at prices quoted by the Taiwan
GreTai Securities Market; overseas bonds - at prices quoted by the Bloomberg, the Reuters or the counterparty in transactions
and financial assets and financial liabilities without quoted prices in an active market - at values determined using valuation
techniques.
In case of no active market price for derivatives, except from part of derivatives estimated by the quotation from
counterparties, others are determined at the foreign exchange rate (the closing rates published by BOT), market yield curve
and volatility curve by the Reuters. The fair value of forward and interest swap contracts are determined at discounted cash
flow, option contracts are determined at Black-Scholes model, binomial model, Monte Carlo Method.
d. Hierarchy information of fair value of financial instruments
1)The definition of the hierarchy is listed below:
a) Level one
Level 1 financial instruments are traded in active market and have the identical price for the same financial instruments.
“Active market” should fit the following characteristics:
i. All financial instruments in the market are homogeneous;
ii. Willing buyers and sellers exist in the market all the time;
iii.The public can access the price information easily.
b) Level two
The products categorized in this level have the prices that can be inferred from either direct or indirect observable
inputs other than the active market’s prices. Examples of these inputs are:
i. Quoted prices from the similar products in the active market. This means the fair value can be derived from the
current trading prices of similar products. It is also noted that whether they are similar products should be judged by
092
FINANCIAL STATEMENT
2)The fair value hierarchy of the Company and its subsidiaries’ financial instruments was as follows:
December 31, 2013
Total
Level 1
Level 2
Level 3
Non-derivative financial instruments
Assets
Held for trading financial assets
Investment in stocks
$
429,294 $
Investment in bonds
318,736 - 318,736 -
Others
Financial assets designated as at fair value through
profit or loss
Investment in bonds
20,543,916 - 20,543,916 -
16,820,214 716,797 16,103,417 -
429,294 $
- $
-
9,851,013 9,851,013 - -
Investment in bonds
67,713,144 23,530,070 44,183,074 -
Others
2,803,566 1,173,126 1,630,440 -
19,481,976 - 19,481,976 -
2,176,160 - 2,175,978 182
6,132 - 6,132 -
1,174,028 - 1,174,028 -
86,820 - 86,820 -
Liabilities
Derivative financial instruments
Assets
Liabilities
December 31, 2012
Total
Level 1
Level 2
Level 3
Assets
$
130,944
$
130,944
$
$
-
Investment in bonds
922,140
448,271
473,869
-
-
Others
21,544,340
-
21,544,340
-
2013 ANNUAL REPORT
093
3)Reconciliation of Level 3 items of financial assets
December 31, 2012
Total
Level 1
Level 2
Level 3
Gains (Losses) on Valuation
profit or loss
Investment in bonds
15,128,773
490,433
14,638,340
-
Beginning
Balance
Name
Profit and Loss
9,673,733
9,673,733
-
-
Assets
Investment in bonds
53,767,338
12,200,676
41,566,662
-
Others
1,555,938
830,140
725,798
-
Financial assets at fair value
through profit or loss
-
Financial assets
designated as at fair
value through profit or
loss
Liabilities
19,819,993
-
19,819,993
Assets swap
$
- ($
Increase
Other
Comprehensive
Income
9) $
Purchase/
Issued
- $
Decrease
Transfer to
Level 3
191 $
Disposed/
Sold
- $
Transfer Out
of Level 3
- $
Ending
Balance
- $
182
Assets
As of December 31, 2013, the valuation gain included in profit and loss for assets still held were $182.
2,399,384
-
2,399,384
-
3,397,511
-
3,397,511
-
113,294
-
113,294
-
4)Sensitivity analysis of Level 3 fair value if reasonably possible alternative assumptions used.
The Company and its subsidiaries evaluate the fair value of financial instruments reasonably. Nevertheless, the
outcome of the evaluation may vary because of the adoption of different valuation models and parameters. For the
Level 3 financial instruments, if the parameters (e.g. interest rate) increase or decrease by 1 percent, the influence of
the current net income or other comprehensive income was as follows:
Liabilities
Items
January 1, 2012
Total
Level 1
Level 2
Favorable
Level 3
Assets
Assets
$
Investment in bonds
224,166
$
224,166
$
612,047
-
15,839,426
-
14,109,911
713,571
-
$
-
612,047
-
15,839,426
-
13,396,340
-
8,854,316
8,854,316
-
-
Investment in bonds
47,532,011
4,427,688
43,104,323
-
Others
9,522,543
678,237
8,844,306
-
26,349,652
-
26,349,652
-
3,056,048
-
3,056,048
-
1,440,442
-
1,440,442
-
144,124
-
144,124
-
Liabilities
Assets
The Change in Fair Value Influence Other
Comprehensive Income
Unfavorable
Favorable
Unfavorable
December 31, 2013
Others
profit or loss
Investment in bonds
The Change in
Fair Value Influence Current Net Income
Liabilities
The NTD government bonds held by the Company and its subsidiaries are classified as bond investment in inactive
market. Therefore, parts of the bonds are transferred from Level 1 to Level 2.
Financial asset designated as at fair value through
profit or loss
Assets swap
$
12 ($
12) $
- $
-
Favorable or unfavorable changes of the Company and its subsidiaries refer to the fluctuation of fair value, which is
calculated by different unobserved parameters.
If the fair value of financial instruments are affected by more than one parameter, the preceding table only takes a
single parameter into account.
45. FINANCIAL RISK MANAGEMENT
a. Overview
The major risks confronted by the Company and its subsidiaries include credit risk, market risk, liquidity risk, and
operational risk regarding to on-balance and off-balance business.
To improve and reinforce the ability as well as the culture of risk management, the Company and its subsidiaries have
established related risk management policies approved by the board of directors and developed risk measurement
instruments which can identify, estimate, monitor and control all types of risk reasonably.
b. Risk management framework
The board of directors is the top risk supervisor of the Company and its subsidiaries and is responsible for the review of
related policies and the approval of risk report etc.
After authorized by the board of directors, senior and related managers set up various committee including risk
management, business loan audit, overdue loan review and asset management committee to establish mechanisms
for risk managing and supervise the execution of risks management policies.
Audit division takes charge of inspecting and evaluating the feasibility as well as the effectiveness of internal control.
c. Credit risk
1)Sources and definitions of credit risk
Credit risk is the risk of default loss if a customer or counterparty fails to meet the contract because of the
deterioration of their financial condition.
094
FINANCIAL STATEMENT
2013 ANNUAL REPORT
095
2)Policies and strategies
b) Credit risk limits and credit risk concentration control
To ensure the sound development and establish the consistent credit management culture, the Company and its subsidiaries
The Company and its subsidiaries have set the limitation on credit exposure to single counterparty, related parties
have stipulated “Hua Nan Commercial Bank Corporate Finance Risk Management Policy”, “Hua Nan Commercial Bank
groups, corporations industries and nations respectively. The limitation on credit exposures includes loan and other
Personal Finance Risk Management Policy”, “Hua Nan International Leasing Co., Ltd. Risk Management Policy” and “Hua Nan
credit-risk-relate businesses. To achieve decentralization of risk, the Company supervise and review the feasibilities
International Leasing Corporation Risk Management Policy” as the basis of credit risk regulations.
periodically.
Credit risk management procedures and measurements are as follows:
To avoid over-concentration of risk, the subsidiaries’ guidelines of risk supervision set the maximum credit limit
a) Loan business (includes loan commitment and guarantee)
toward the same institution, related party or related corporation to control the degree of risk concentration.
Loan business classification and credit quality level are shown as follows:
c) Agreement of net settlement
The Company and its subsidiaries often make gross settlement on transactions, sign net settlement contract with
Classification
The Company and its subsidiaries’ loans are classified into 5 classes. Except for normal credits classified as the Class 1, the
other counterparties or cancel every transactions and make net settlement when default occurs to mitigate
remaining unsound credit assets are classified as Class 2 “Assets that require special mention”, Class 3 “Assets that are
credit risk.
substandard”, Class 4 “Assets that are doubtful and Class 5 “Assets for which there is loss” based on the status on collaterals
4)The maximum credit exposure of the financial instruments
and the length of time overdue. To manage the problematic loans, the Company set up “Evaluation of Asset Classification
Maximum credit exposures of assets on consolidated balance sheet (excluding collaterals and other credit
Guidelines”, “Overdue Loans, Non-performing Loans and Bad Debt Management Guidelines” and the subsidiaries established
enhancement instruments) are almost equivalent to its carrying amount. The Company and its subsidiaries’ maximum
“Overdue Receivables, Non-performing Receivables and Bad Debt Management Guidelines”. All regulations are the basis to
credit exposures (excluding collaterals) off balance sheet are shown as follows:
manage the problematic and overdue debts.
The Maximum Credit Exposure
Off-Balance Sheet Items
Credit quality level
December 31, 2013
In order to measure clients’ credit risks, the Company and its subsidiaries established credit rating model and the personal
December 31, 2012
January 1, 2012
finance scorecard on the basis of the statistic method and judgement of the professionals.
Undrawn loan commitment
$
143,383,428 $
165,447,076 $
157,736,042
According to internal credit ratings, scorecard, and the possibility of long-term default on individual asset groups, the Company
69,293,887 66,088,617 63,039,350
and its subsidiaries classified the credit quality of the undue and unimpaired loans as well as receivables into 4 level. Level 1 has
29,820,861 30,465,057 31,616,679
the lowest credit risk and the level 4 has the highest one.
Guarantees issued
36,587,399 37,054,954 40,799,008
Total
$
279,085,575 $
299,055,704 $
293,191,079
Based on the actual occurrence of default, the model and scorecard are examined and revised, if necessary, to ensure the
effectiveness of the related risk measurement.
b) Due from the Central Bank and others banks
Because the payments of these loan business and financial instruments won’t be disbursed before maturity, therefore,
The Company and its subsidiaries will evaluate the counterparties’ credit status and refer to the information issued by
the amounts of these contracts do not represent future outflows, namely that the demand of future cash is lower than
credit agencies. The Company and its subsidiaries will set different credit limits based on different ratings.
the amounts stated in contract.
c) Debt investment and derivative financial instruments
If the credit line is reached and the collateral is of little value, the credit risk equals the contract amounts, the greatest
The Company and its subsidiaries manage and identify credit risks of debt investment through credit ratings by external
possible losses.
institution, credit quality of the debt, regional conditions and counterparties’ risks.
5)Credit risk concentration of the Company and its subsidiaries
The Company and its subsidiaries categorized the credit quality of debt investment instruments into 3 groups as follows:
To manage credit assets portfolio, enhance the assets quality as well as the efficiency of utility of capital, and thereby
“The instruments beyond certain ratings assigned by authorized credit agencies”;
prevent material effect from negative credit events, the Company and its subsidiaries stipulate various credit limits
“The instruments below the certain ratings assigned by authorized credit agencies” and,
“The instruments without ratings assigned by authorized credit agencies ”.
and monitor the appropriateness periodically.
The Company and its subsidiaries set the related regulations on the qualification of the counterparties and the credit
a) By industry
exposures. The related regulations are as follows:
the derivative instruments business.
ii: The financial institutions with long-term credit ratings assigned by authorized credit agency’s are granted the credit limit.
iii:The derivative transactions between the Company and its subsidiaries and the Central bank as well as the transactions
in the stock exchange market are exempted from the aforementioned regulations.
3)Credit risk hedging or mitigation policies
a) Collateral
To reduce the loss of credit risk, the Company and its subsidiaries have set up several mechanisms, such as collateral
valuation, the use of credit guarantee fund, the supervision of valuation method and after-loans management, to ensure
that the Company and its subsidiaries are able to dispose the collateral and mitigate the credit risk effectively.
Through the build of the system and the management mechanism, the Company monitors the fluctuation in price of the
December 31, 2013
Industries
i: The clients’ credit limit should be approved within the limitation on credit risk according to the regulation on conducting
Amount
December 31, 2012
%
Amount
January 1, 2012
%
Amount
%
Private enterprise
$
607,286,078 43 $
609,381,324 44 $
586,247,447 Nature person
544,984,607 522,975,931 492,847,085 37
171,253,547 12 38 38 134,253,217 10 Foreign institution
Government agency
78,578,597 6 94,098,966 7 47,767,614 4
Public enterprise
15,052,750 1 19,952,750 1 52,852,750 4
Non-profit organization
686,098 - 555,074 - Social insurance and
pension fund
- - - - Total
$
1,417,841,677 100 $
1,381,217,262 100 $
110,049,722 45
781,108 8
-
25,000,000 2
1,315,545,726 100
collateral to ensure the effectiveness.
Additionally, the Company stated related agreements on debt preservation and the rule of setting off etc. to ensure the
enforcement of debt preservation and thereby reduce the credit risk.
096
b) By region
According to the country risk statistics of transnational debt rights (excluding Taiwan), the proportions of total
The subsidiaries established the guidelines on loan business, loan examination and loan review to ensure the qualities of
oversea exposure in Asia, America, Europe and Others are 55%, 25%, 14% and 6%, respectively. Europe has
assets and thereby reduce the credit risk. To take credit risk into consideration, the subsidiaries are entitled to require the
relatively low proportion because of asset allocation responding to European debt crisis. In compliance with the
clients to provide collateral. In terms of managing the assessment of collateral. The subsidiaries established the guiding
conservatism principles, the Company and its subsidiaries invest in subject above the investment grade with lower
principles of classification of assets that can served as collateral, collateral management, to ensure the enforcement of
country risk as the guideline of expanding business. Currently, the country risk exposure in all region is under the
debt preservation.
tolerance of the Company and its subsidiaries.
FINANCIAL STATEMENT
2013 ANNUAL REPORT
097
c) By collateral
Neither Past Due Nor Impaired
December 31, 2013
Collateral
December 31, 2012
Amount
%
Amount
January 1, 2012
%
Amount
%
Good
Acceptable
Past Due Not
Impaired (B)
Subtotal (A)
Impaired
(C)
Total
(A)+(B)+(C)
With No
Objective
Evidence of
Impairment
With Objective
Evidence of
Impairment
Net Total
(A)+(B)+(C)-(D)
$
454,402,482 31 $
Secured
Stocks
18,216,865 1 24,919,641 2 21,981,340 1
Liabilities
26,580,807 2 29,092,661 2 25,253,276 2
Real estate
Movables
49,400,379 3 64,373,157 4 51,375,485 4
Receivables
10,601,870 1 10,280,166 1 10,297,120 1
Guarantees
48,230,218 3 42,252,936 3 39,250,932 3
Mortgage
$
Others
25,597,048 2 24,459,921 2 24,777,797 2
Cash card
- - - Consumer loans
1,862,124 9,310,113 - - 11,172,237
Others
5,807,138 38,839,017 - - 44,646,155
Corporate banking
416,786,453 384,386,384 25,462,459 46,867,692 873,502,988
Total
$
853,353,081 $
481,779,948 $
34,259,270 $
48,141,683 $
Receivables
Others
832,509,762 $
453,540,669 33
Excellent
Credit
Total
445,023,177 31 $
January 1,
2012
Loss Recognized (D)
57 790,341,714 1,465,539,431 100 $
55 741,555,919 1,430,743,373 100 $
6)Credit quality and impairment assessment of financial assets
Some financial assets such as cash and cash equivalents, due from Central Bank and other banks, financial assets at fair
value through profit or loss, securities purchased under agreement to resell and refundable deposits are regarded as very
low credit risk owing to the good credit rating of counterparties. Except for the analysis mentioned above, other analyses of
financial assets are summarized as follows:
139,231 $
Level 1
Level 2
Level 3
Subtotal
(A)
Level 4
Impaired
(C)
Total
(A)+(B)+(C)
With Objective With No Objective
Evidence of
Evidence of
Impairment
Impairment
Net Total
(A)+(B)+(C)-(D)
Receivables
Credit card
business
Discounts and
loans
$ 2,610,912 $
853,353,081
497,303 $
481,779,948
65,575 $
34,259,270
133,103 $
48,141,683
3,306,893 $
9,086 $
1,417,533,982
93,584
113,861 $
3,429,840 $
29,668,571
1,447,296,137
Impaired
(C)
Total
(A)+(B)+(C)
13,512,056
December 31,
2012
Level 1
Level 2
Level 3
41,629 $
Subtotal
(A)
Level 4
With Objective
Evidence of
Impairment
Level 1
10,881 $
3,782,079
3,377,330
1,430,002,002
$ 1,512,591
747,412,854
$
937,074
551,080,322
$
75,505
45,417,437
$
128,611
44,390,066
$
2,653,781
1,388,300,679
$
8,406
2,034,202
$
128,648
27,004,807
$
2,790,835
1,417,339,688
$
45,714
$
9,161,583
December 31,
2013
Excellent
Good
Acceptable
Subtotal (A)
Past Due Not
Impaired (B)
Impaired
(C)
Total
(A)+(B)+(C)
18,244
4,337,077
$
Mortgage
$
Cash card
$
188,694,235 $
176,581 $
488,857 $ 189,359,673 $
- $
Loss Recognized (D)
With No
With Objective
Objective
Evidence of
Evidence of
Impairment
Impairment
6,128,493 $ 195,488,166 $
Level 3
Level 4
Total
428,897,366 $
49,244,434 $
8,796,811 $
1,223,978 $
488,162,589
50,013 50,013
1,417,533,982
Level 2
Level 3
Level 4
Total
323,342,298 $
133,335,072 $
- 7,405,473 $
- 1,103,688 $
- 465,186,531
77,522 77,522
Consumer loans
2,319,364 8,132,810 - - 10,452,174
Others
4,879,701 42,319,164 - - 47,198,865
Corporate banking
416,871,491 367,293,276 38,011,964 43,208,856 Total
$
747,412,854 $
551,080,322 $
45,417,437 $
44,390,066 $
865,385,587
1,388,300,679
2,726,877
1,403,841,028
Net Total
(A)+(B)+(C)-(D)
Receivables
Others
Level 2
Level 1
Net Total
(A)+(B)+(C)-(D)
Note: Neither past due nor impaired were ordered by credit risk. Level 1 had the lowest risk while level 4 had the highest risk.
134,370,172
c) Credit quality analysis for marketable securities
With No Objective
Evidence of
Impairment
Receivables
Discounts and
loans
457 $
December 31, 2012
December 31, 2013
Credit card
business
4,024,017 $
Consumer banking
Loss Recognized (D)
Past Due Not
Impaired (B)
6,268,971 $ 138,394,646 $
Consumer banking
Loss Recognized (D)
Past Due Not
Impaired (B)
- $
December 31, 2013
a) Discounts, loans and receivables
December 31,
2013
21,647 $ 132,125,675 $
b) Credit quality analysis for neither past due nor impaired discounts and loans by client type are as follows:
54
1,368,032,538 100
$ 131,964,797 $
3,729,846 $
4 $
191,758,316
The Instruments
The Instruments
Below Certain
Beyond Certain
Ratings Assigned by Ratings Assigned
by Authorized
Authorized Credit
Credit Agencies
Agencies (Note)
The Instruments
Without Certain
Ratings Assigned
by Authorized
Credit Agencies
Subtotal
(A)
Past Due Not
Impaired (B)
Impaired
(C)
Total
(A)+(B)+(C)
Loss Recognized
(D)
Net Total
(A)+(B)+(C)-(D)
Available-for-sale
financial assets
Investment in bonds
$
67,199,613 $
67,713,144 $
- $
- $
67,713,144 $
- $
67,713,144
7,364,295 2,486,718 - $
513,531 $
- 9,851,013 - - 9,851,013 - 9,851,013
Others
1,630,440 - 1,173,126 2,803,566 - - 2,803,566 - 2,803,566
Negotiable
certificates of
deposits
287,800,000 - - 287,800,000 - - 287,800,000 - 287,800,000
Investment in bonds
22,854,941 - 226,063 23,081,004 - - 23,081,004 - 23,081,004
- 3,422,045 3,422,045 - - 3,422,045 - 3,422,045
- 2,000,000 25,133,873 - - 25,133,873 - 25,133,873
Held-to-maturity
financial assets
Other financial assets
December 31,
2012
Excellent
Good
Acceptable
Loss Recognized (D)
Subtotal (A)
Past Due Not
Impaired (B)
Impaired
(C)
Total
(A)+(B)+(C)
With Objective
Evidence of
Impairment
With No
Objective
Evidence of
Impairment
Net Total
(A)+(B)+(C)-(D)
- Investment in bonds
23,133,873 Receivables
Others
098
$
152,718,500 $
147,866 $
FINANCIAL STATEMENT
43,390 $ 152,909,756 $
- $
5,864,514 $ 158,774,270 $
3,701,421 $
138 $
155,072,711
2013 ANNUAL REPORT
099
December 31, 2012
December 31,
2012
The Instruments
The Instruments Beyond
Below Certain
Certain Ratings
Ratings Assigned by
Assigned by Authorized
Authorized Credit
Credit Agencies (Note)
Agencies
The Instruments
Without Certain
Ratings Assigned by
Authorized Credit
Agencies
Subtotal
(A)
Past Due Not
Impaired (B)
Impaired
(C)
Loss
Recognized
(D)
Total
(A)+(B)+(C)
Items
Net Total
(A)+(B)+(C)-(D)
Overdue One
to Two Month
Overdue Two
to Three Months
Overdue Above
Three Months
Total
Receivables
Available-for-sale
financial assets
$
5,730 $
2,676 $
- $
8,406
Discounts and loans
Investment in bonds
$
Others
53,243,955 $
141,201 $
382,182 $ 53,767,338 $
- $
- $ 53,767,338 $ -
$
53,767,338
Mortgage
619,669 409,524 - 7,064,520
-
2,609,213
9,673,733
-
-
9,673,733
-
9,673,733
Consumer loans
6,400 1,490 - 7,890
725,798
-
830,140
1,555,938
-
-
1,555,938
-
1,555,938
Cash card
790 561 - 1,351
Others
59,546 5,989 - 65,535
526,741 403,491 - 930,232
Corporate banking
Negotiable certificates
of deposits
273,775,000
-
-
273,775,000
-
-
273,775,000
-
273,775,000
8,100,544
-
1,131,731
9,232,275
-
-
9,232,275
-
9,232,275
-
-
3,955,247
3,955,247
-
-
3,955,247
-
3,955,247
Investment in bonds
14,988,580
-
2,000,000
16,988,580
-
-
16,988,580
-
16,988,580
Investment in bonds
The Instruments
The Instruments Beyond
Below Certain
Certain Ratings
Ratings Assigned by
Assigned by Authorized
Authorized Credit
Credit Agencies (Note)
Agencies
Note 1:“Overdue but not yet impaired” with no objective evidence of impairment and overdue reasonable period was evaluated by IAS 39 “impairment loss of loans and
receivables”.
Note 2:“Overdue reasonable period” refer to loans whose repayment of principal or interest have been overdue less than one month.
a)Overdue one to two months refer to loans whose repayment of principal or interest have been overdue one to two months.
b)Overdue two to three months refer to loans whose repayment of principal or interest have been overdue two to three months.
c)Overdue above three months refer to loans whose repayment of principal or interest have been overdue exceeding three months.
The Instruments
Without Certain
Ratings Assigned by
Authorized Credit
Agencies
Subtotal
(A)
Past Due Not
Impaired (B)
Impaired
(C)
Loss
Recognized
(D)
Total
(A)+(B)+(C)
Discounts and Loans
Net Total
(A)+(B)+(C)-(D)
Items
Individual
assessment
Available-for-sale
financial assets
Treasury bills
$
8,692,931 $
- $
- $
8,692,931 $
- $
- $
8,692,931 $
- $
8,692,931
Investment in bonds
46,377,863 715,070 439,078 47,532,011 - - 47,532,011 - 47,532,011
6,519,690 - 2,334,626 8,854,316 - - 8,854,316 - 8,854,316
Others
337,085 - 492,527 829,612 - - 829,612 - 829,612
Held-to-maturity
financial assets
Negotiable certificates
of deposits
Investment in bonds
279,300,000 - 6,569,294 - - - 1,029,193
8)Analysis of impairment for financial assets of the Company and its subsidiaries
Analysis of impairment for discounts and loans and receivables was summarized as follows:
January 1, 2012
Consumer banking
- 279,300,000
- 9,024,506 - 9,024,506
- 3,964,351 - 3,964,351
- -
2,455,212 9,024,506 - 3,964,351 3,964,351 - 279,300,000
-
279,300,000
With objective evidence
of impairment
Combined
assessment
With no objective
evidence of impairment
Combined
assessment
Allowance for Credit Losses
December 31, 2013 December 31, 2012
January 1, 2012
January 1, 2012
Corporate
banking
$
Consumer
banking
-
-
-
-
-
-
Corporate
banking
5,592,690
4,345,251
3,480,199
1,575,554
1,551,548
1,657,770
Consumer
banking
3,519,966
1,379,702
1,886,388
522,973
311,433
452,675
Corporate
banking
873,594,293
866,315,820
841,207,864
3,501,608
3,959,745
4,221,582
Consumer
banking
547,349,252
526,681,247
496,106,756
291,352
395,576
329,965
20,669,777
$
21,408,502
$
13,378,510
$
4,235,908
$
3,044,968
$
4,906,028
Investment in bonds
11,147,014 - 2,000,000 13,147,014 - - 13,147,014 Individual
assessment
With objective evidence
of impairment
7)Aging analysis for overdue but not yet impaired financial assets of the Company and its subsidiaries
Delayed procedures by borrowers and other administrative reasons could result in financial assets overdue but not yet
impaired. According to the Company and its subsidiaries’ internal risk management policies, financial assets overdue within
90 days are not considered impairment loss unless other evidences provided.
Aging analysis for overdue but not yet impaired financial assets was as follows:
December 31, 2013
Overdue One
to Two Month
Overdue Two
to Three Months
Overdue Above
Three Months
Combined
assessment
With no objective
evidence of impairment
Total
Combined
assessment
Allowance for Credit Losses
- 13,147,014
Note:The Banking Act provides that investments beyond certain rating assigned by authorized credit agency have one of the following characteristics:
1.By Standard & Poor’s, short-term credit ratings reach at least A-3 level or long-term credit ratings reach at least BBB-.
2.By Moody’s Investors Service, short-term credit ratings reach at least P-3 level or long-term credit ratings reach at least Baa3.
3.By Fitch, Inc. short-term credit ratings reach at least F3 level or long-term credit ratings reach at least BBB-.
4.By Taiwan Ratings, short-term credit ratings reach at least twA-3 level or long-term credit ratings reach at least twBBB-.
5.By Fitch Ratings Taiwan, short-term credit ratings reach at least F3(twn) level or long-term credit ratings reach at least BBB-(twn).
6.By Moody’s Ratings, short-term credit ratings reach at least TW-3 level or long-term credit ratings reach at least Baa3.tw.
Items
Receivables
Items
January 1, 2012
January 1, 2012
Corporate
banking
$
Consumer
banking
5,982,957
5,630,048
5,604,231
3,505,463
3,512,234
3,512,930
Collectively
assessed
by business
nature
3,304
4,355
19,553
1,866
2,920
19,553
Assessed
by aging
921
928
878
863
888
838
Zero risk
163,140,875
135,345,035
118,447,557
-
-
-
Lower risk
evaluated
by general
agency
25,729,941
17,521,331
13,684,093
-
-
213
Assessed
by aging
489,305
135,235
184,209
4
138
244
140,862
$
137,338
$
454,125
$
101,691
$
92,257
$
381,943
Receivables
$
6,330 $
2,756 $
- $
9,086
Discounts and loans
Consumer banking
Mortgage
1 Consumer loans
- - Cash card
525
Others
-
34,702
Corporate banking
100
178 162 214 FINANCIAL STATEMENT
179
376
523
-
1,048
674
-
674
56,605
-
91,307
d. Liquidity risk
1)Source and definition of liquidity risk
Liquidity risk means the Company and its subsidiaries cannot provide sufficient funding acquired on a reasonable
price for obligations and then cause earnings or capital losses. Sources of liquidity risk include unexpected changes or
decrement of funds and the indiscretion or incapacity of handling the changes the market, resulting in the condition
that can not liquidate assets promptly.
2013 ANNUAL REPORT
101
2)Strategies of the Company and its subsidiaries’ liquidity risk management
Liquidity risk management is to maintain stability of liquidity under the premise that the cost of capital and return of
assets would be both considered.
The Company and its subsidiaries have stipulated rules consisting of identification measurement and supervision of
risk, etc. To control the extent of exposure, the Company and its subsidiaries establish suspension mechanism and set
liquidity ratio or cash flow for reference of estimation on liquidity cushion. Besides, the rule should be set to handle
urgent liquidity crisis.
The information about liquidity risk management will be reported to “Asset and Liabilities Committee” and boards of
directors periodically. And the information will be independently reviewed by internal auditor.
3)Maturity analysis of non-derivative financial liabilities
Cash outflow analyses of the Company and its subsidiaries’ non-derivative financial assets and liabilities are
summarized as follows. Because short-term holding period of non-derivative financial assets and liabilities in financial
assets and liabilities at fair value through profit or loss, they are categorized into the shortest term group. The amounts
disclosed in the following table are based on undiscounted contract cash flow; hence, parts of disclosed amounts of
some items will not match the related items in consolidated balance sheet.
December 31, 2013
0-30 Days
31-90 Days
181 Days
to 1 Year
91-180 Days
Over 1 Year
Total
December 31, 2012
0-30 Days
31-90 Days
181 Days
to 1 Year
91-180 Days
Over 1 Year
Total
Other capital inflow
2,551,377 610,697 440,513 153,211 Subtotal
495,034,880 222,029,599 137,190,474 119,928,698 Deposits from the Central Bank and
banks short-term borrowings
33,764,584 51,744,752 2,893,769 1,396,311 - 89,799,416
Financial liabilities at fair values
- - - - 18,850,000 18,850,000
Deposits
190,603,535 180,418,562 165,610,982 277,559,074 Securities sold under agreements to
repurchase
14,249,006 5,988,615 1,811,665 50,000 - 22,099,286
Bank debentures
- - - 7,000,000 31,650,000 38,650,000
Other capital outflow
11,093,609 885,196 619,527 527,209 273,801 13,399,342
Subtotal
249,710,734 239,037,125 170,935,943 286,532,594 Gap
$
245,324,146 ($
17,007,526) ($
33,745,469) ($ 166,603,896) $
21,204,382 24,960,180
977,346,233 1,951,529,884
Main capital outflow on maturity
850,051,060 1,664,243,213
900,824,861 1,847,041,257
76,521,372 $
104,488,627
Main capital inflow on maturity
January 1, 2012
$
68,200,148 $
- $
- $
- $
Due from the Central Bank and other
banks
112,992,756 45,451,417 11,505,236 8,533,523 24,494,355 202,977,287
Financial assets at fair value through
profit or loss
21,086,610 314,842 1,234,150 1,675,660 13,124,899 37,436,161
Loans (excluding nonperforming loans)
169,312,045 157,248,720 134,381,457 95,938,690 Available-for-sale financial assets
1,425,967 891,663 3,741,691 3,319,216 Held-to-maturity financial assets
224,648,953 30,798,363 23,152,700 Other capital inflow
2,431,894 769,665 397,331 Subtotal
600,098,373 235,474,670 174,412,565 - $
159,462,141 60,600,324 5,560,247 28,568,424 39,380,100 6,128,219 7,677,025 23,542,877 105,296,645
Financial assets at fair value through
profit or loss
15,113,894 336,042 302,750 386,195 12,874,170 29,013,051
Loans (excluding nonperforming loans)
169,080,601 147,340,376 137,336,291 83,525,990 Securities purchased under agreements
to resell
349,905 - - - - Available-for-sale financial assets
1,135,036 1,612,912 10,556,945 7,477,383 48,861,637 69,643,913
131,500,000 89,000,000 27,322,750 32,539,850 7,817,046 288,179,646
Other capital inflow
2,336,130 745,610 517,874 497,205 17,315,600 21,412,419
Subtotal
383,940,411 278,415,040 182,164,829 132,103,648 Deposits from the Central Bank and
banks
30,656,710 45,642,350 3,596,478 2,461,702 - 82,357,240
Financial liabilities at fair values through
profit or loss
3,300,000 3,000,000 - - 18,850,000 25,150,000
916,045,907 2,045,490,162
Deposits
181,070,903 185,872,646 158,139,029 267,933,737 107,466,863 $
Securities sold under agreements to
repurchase
14,208,608 4,561,422 1,827,559 52,000 - 20,649,589
Bank debentures
- - - - 33,650,000 33,650,000
6,439,479 1,123,383 2,289,771 1,504,696 719,309 12,076,638
Subtotal
235,675,700 240,199,801 165,852,837 271,952,135 Gap
$
148,264,711 $
860,993,176 1,417,874,088
82,263,180
9,075,000 23,200,000 310,875,016
28,815,697 32,921,147
119,048,649 1,023,512,770 2,152,547,027
1,083,852 - 226,706,564
- - 500,000 Deposits
191,319,903 190,785,583 177,640,035 305,826,385 Securities sold under agreements to
repurchase
9,986,342 5,903,630 2,246,008 117,226 - 18,253,206
Bank debentures
- - - 9,200,000 22,450,000 31,650,000
6,034,151 1,810,159 916,608 451,661 786,097 9,998,676
Subtotal
366,802,537 259,099,696 186,362,898 317,179,124 December 31, 2012
0-30 Days
23,625,026) ($
31-90 Days
11,950,333) ($ 198,130,475) $
181 Days
to 1 Year
91-180 Days
18,350,000 18,850,000
Over 1 Year
107,056,865
Total
$
31,266,244 $
banks
35,326,482 Financial assets at fair value through
profit or loss
22,494,255 Loans (excluding nonperforming loans)
187,203,868 146,787,123 102,710,153 105,715,015 Available-for-sale financial assets
192,654 2,379,972 1,791,355 3,060,696 59,403,156 66,827,833
216,000,000 26,480,759 24,684,307 8,406,000 7,381,875 282,952,941
102
FINANCIAL STATEMENT
45,771,048 - $
- $
- $
- $
- $
- $
35,856,421
777,542,210 1,314,825,468
349,905
887,953,540 1,864,577,468
874,459,810 1,740,031,716
- $
35,856,421 $
- 233,295,836 ($
Total
$
$
Over 1 Year
banks
Financial liabilities at fair values through
profit or loss
Gap
181 Days
to 1 Year
91-180 Days
Deposits from the Central Bank and
banks
31-90 Days
68,200,148
72,884,643 506,560 0-30 Days
- $
31,266,244
7,244,046 1,998,307 37,280,084 127,619,967
- 320,100 595,469 13,275,633 36,685,457
838,801,103 1,381,217,262
38,215,239 $
16,311,992 ($ 139,848,487) $
823,543,585 1,616,559,900
876,762,894 1,790,443,367
11,190,646 $
74,134,101
Demand deposit included in deposits on the table was allocated to each time zone according to historical
experience of the Company and its subsidiaries.
4)Maturity analysis of derivative financial assets and liabilities
Derivative instruments consist of forward contracts, currency swap contracts, non-deliverable forward contracts,
exchange rate option, interest rate swap contracts, cross-currency swap contracts, and interest rate option.
The amounts of forward contracts, currency swap contracts and cross-currency swap contracts are based on
contractual cash flow, and the others are based on fair value.
2013 ANNUAL REPORT
103
Maturity analysis of derivative financial assets and liabilities was as follows:
December 31, 2013
0-30 Days
31-90 Days
January 1, 2012
181 Days
to 1 Year
91-180 Days
Over 1 Year
Cash inflow
$
70,751,007 $
56,296,094 $
19,734,925 $
7,695,282 $
$
6,914,220 14,402,076 302,804 $
154,780,112
6,352,604 17,197,965 Guarantee issued
4,954,034 4,141,699 Total
$
18,220,858 $
36,503,750 $
71,188,179 56,566,435 19,772,890 7,684,533 663,572 155,875,609
Cash outflow
- 1,257 5,027 3,058 581,042 590,384
Cash inflow
- 506,132 Total cash outflow
$
70,751,007 $
56,297,351 $
19,739,952 $
7,698,340 $
883,846 $
155,370,496
Total cash inflow
$
71,188,179 $
56,566,435 $
19,772,890 $
7,684,533 $
1,169,704 $
156,381,741
Derivative instrument for hedging
December 31, 2012
0-30 Days
- 31-90 Days
- 91-180 Days
181 Days
to 1 Year
181 Days
to 1 Year
91-180 Days
- 31-90 Days
Total
Derivative financial liabilities at fair
value through profit or loss
Cash outflow
0-30 Days
Over 1 Year
506,132
762,010 $
2,173,928 $
4,511,405 $
Total
55,592,007 $
63,039,350
70,346,568 157,736,042
3,964,643 2,030,733 2,070,734 31,616,679
5,502,407 7,351,639 18,849,229 40,799,008
33,879,722 $
57,728,211 $
146,858,538 $
293,191,079
22,238,744 43,834,434 6)Maturity analysis of lease commitments
The lease commitments of the Company and its subsidiaries are operating lease commitments.
Operating lease commitment is the minimum lease payment when the Company and its subsidiaries are lessee or
lessor with non-cancelling condition.
Maturity analysis of operating lease commitments is summarized as follows:
Total
- $
Over 1 Year
December 31, 2013
Less Than 1 Year
1-5 Years
Over 5 Years
Total
Operating lease commitments
Cash outflow
$
105,879,295 $
93,439,493 $
38,658,189 $
33,259,952 $
- $
271,236,929
Operating lease expense (lessee)
$
541,355
$
Cash inflow
105,777,409 93,139,811 38,421,726 33,019,625 - 270,358,571
Operating lease income (lessor)
220,874
Total
$
320,481
$
Cash outflow
- - 8,677 - 113,439 122,116
Total cash outflow
$
105,879,295 $
93,439,493 $
38,666,866 $
33,259,952 $
113,439 $
271,359,045
Total cash inflow
$
105,777,409 $
93,139,811 $
38,421,726 $
33,019,625 $
- $
270,358,571
December 31, 2012
Less Than 1 Year
1,266,867
$
145,233
291,720
1,121,634
-
$
1-5 Years
291,720
$
2,099,942
366,107
$
1,733,835
Over 5 Years
Total
January 1, 2012
0-30 Days
31-90 Days
91-180 Days
181 Days
to 1 Year
Over 1 Year
Total
Cash outflow
$
31,853,942 $
44,697,739 $
17,756,033 $
7,824,523 $
25,127 $
102,157,364
Cash inflow
32,852,297 45,269,318 17,842,275 7,891,052 25,720 103,880,662
Cash outflow
- - 3,184 - 150,349 153,533
Total cash outflow
$
31,853,942 $
44,697,739 $
17,759,217 $
7,824,523 $
175,476 $
102,310,897
Total cash inflow
$
32,852,297 $
45,269,318 $
17,842,275 $
7,891,052 $
25,720 $
103,880,662
$
553,772
$
200,824
Total
$
352,948
$
January 1, 2012
0-30 Days
31-90 Days
$
- $
6,322,809 12,618,912 Standby letters of credit
7,409,699 Guarantee issued
2,474,442 Total
$
16,206,950 $
1,313,915 $
91-180 Days
1,287,501 $
181 Days
to 1 Year
Over 1 Year
190,476
1,066,687
$
270,576
-
$
1-5 Years
270,576
$
2,081,511
391,300
$
1,690,211
Over 5 Years
Total
$
495,573
$
198,694
268,135
Total
$
296,879
$
804,427
$
5)The maturity analysis of off-balance sheet items
The maturity analysis of off-balance sheet items shows irrevocable undrawn credit card commitment, undrawn
loan commitment, standby letters of credit and guarantee issued amounts. The amounts in the table below were
prepared on contractual cash flow basis; therefore, some disclosed amounts will not match with the consolidated
balance sheet.
December 31, 2013
Less Than 1 Year
1,257,163
1,072,562
$
215,689
215,689
$
1,783,824
466,829
$
1,316,995
7)Disclosures prepared in conformity with Regulations Governing the Preparation of Financial Reports by Public Banks
a) Maturity analysis of assets and liabilities of the Company (New Taiwan dollars)
December 31, 2013
Total
Total
0-10 Days
11-30 Days
31-90 Days
91-180 Days
181 Days
to 1 Year
Over 1 Year
Main capital inflow
$ 1,783,825,935 $
on maturity
213,289,572 $
250,154,264 $
164,248,656 $
133,280,437 $
29,820,861
Main capital
outflow on
maturity
103,151,353 146,953,714 258,189,648 264,551,870 19,073,068 36,587,399
Gap
($ 587,970,767) $
110,138,219 $
103,200,550 ($
93,940,992) ($ 131,271,433) ($ 414,373,845) ($ 161,723,266)
130,093,688 $
279,085,575
20,960,718 $
45,731,753 $
69,293,887
20,702,760 38,717,495 65,021,452 143,383,428
18,892,774 2,562,380 688,593 267,415 3,422,609 4,031,984 7,585,296 36,248,210 $
28,584,625 $
67,952,102 $
2,371,796,702 94,278,774 $
928,574,232
508,652,619 1,090,297,498
December 31, 2012
December 31, 2012
0-30 Days
31-90 Days
941,920 $
4,434,243 $
Over 1 Year
Total
Total
$
7,621,717 15,110,392 24,978,625 Standby letters of credit
7,996,199 18,829,452 2,114,413 Guarantee issued
4,105,912 4,366,826 3,274,839 8,476,370 16,831,007 37,054,954
Total
$
19,723,828 $
39,469,475 $
31,309,797 $
59,983,820 $
148,568,784 $
299,055,704
FINANCIAL STATEMENT
1,162,805 $
181 Days
to 1 Year
104
- $
91-180 Days
59,549,649 $
66,088,617
45,980,202 71,756,140 165,447,076
1,093,005 431,988 30,465,057
Main capital inflow
$ 1,786,007,469 $
on maturity
Main capital
outflow on
maturity
Gap
($ 599,643,956) $
2,385,651,425 0-10 Days
11-30 Days
31-90 Days
91-180 Days
181 Days
to 1 Year
Over 1 Year
214,467,159 $
285,080,137 $
181,615,428 $
107,701,957 $
114,514,638 $
96,540,139 157,928,701 266,592,004 286,236,405 530,710,187 127,151,436 ($
84,976,576) ($ 178,534,448) ($ 416,195,549) ($ 165,015,839)
117,927,020 $
2013 ANNUAL REPORT
882,628,150
1,047,643,989
105
January 1, 2012
Total
0-10 Days
Main capital inflow
$ 1,659,230,843 $
on maturity
Main capital
outflow on
maturity
Gap
($ 598,980,995) $
11-30 Days
31-90 Days
181 Days
to 1 Year
91-180 Days
Over 1 Year
164,012,672 $
185,766,012 $
217,537,794 $
147,993,979 $
122,277,232 $
80,118,555 148,099,326 248,627,710 260,400,951 485,771,137 2,258,211,838 83,894,117 $
37,666,686 ($
821,643,154
3)Market risk management
To manage market risk, the Company and its subsidiaries set up limits on holding positions, losses of all financial
instruments and value at risk (VaR) based on current year’s budget. The Company and its subsidiaries has insignificant
market risk since gain or loss on change of market interest rate or foreign exchange rate are offset by those of
hedged items or other assets or liabilities.
a) Value at risk
The Company and its subsidiaries employ VaR to measure the investment portfolio of trading book and banking
book. Banking book comprises available-for-sale financial assets and financial assets at fair value through profit or
loss.
VaR is the statistics of potential losses on holding positions arising from unfavorable market condition changes.
Within a 99% confidence interval, VaR refers to the greatest potential loss in one day namely that there is one
percent chance to incur the losses greater than VaR. VaR model assumes that the Company and its subsidiaries
hold the positions at least one days (one month) before the positions can be settled and that the market
fluctuation in one day is similar to that in the past.
The Company and its subsidiaries calculated VaR of their positions using historical simulation method. Based on the
data in the past year to assess historical market fluctuations, the outcome will be used to monitor and examine
the correctness of the assumptions and parameters. The aforementioned method can’t prevent the loss resulted
from significant market fluctuations.
VaR information of trading book is shown below:
1,035,194,159
31,089,916) ($ 112,406,972) ($ 363,493,905) ($ 213,551,005)
Note: The amounts listed above represent the funds denominated in New Taiwan Dollars only, i.e. excluding foreign currencies, for both head office and domestic
branches.
b) Maturity analysis of assets and liabilities of the Company (U.S. dollars)
(In Thousands of USD)
December 31, 2013
Total
11-30 Days
31-90 Days
91-180 Days
Main capital inflow on
$
maturity
14,919,148 $
5,133,096 $
3,506,549 $
1,562,512 $
Main capital outflow
on maturity
15,613,640 5,778,928 3,013,560 1,419,465 Gap
($
694,492) ($
645,832) $
492,989 $
143,047 ($
181 Days to 1 Year
Over 1 Year
775,234 $
1,250,323 3,941,757
4,151,364
475,089) ($
209,607)
December 31, 2012
Total
11-30 Days
31-90 Days
91-180 Days
181 Days
to 1 Year
Over 1 Year
$
maturity
12,015,753 $
4,011,601 $
3,314,444 $
2,030,167 $
1,318,422 $
1,341,119
on maturity
12,166,213 5,210,481 2,619,024 968,989 973,604 2,394,115
Gap
($
150,460) ($
1,198,880) $
695,420 $
1,061,178 $
344,818 ($
1,052,996)
January 1, 2012
Total
11-30 Days
31-90 Days
91-180 Days
181 Days
to 1 Year
Over 1 Year
$
maturity
9,330,270 $
3,976,603 $
2,581,943 $
1,416,909 $
273,334 $
1,081,481
on maturity
9,451,698 4,322,166 1,821,452 770,958 711,150 1,825,972
437,816) ($
744,491)
($
Gap
121,428) ($
345,563) $
760,491 $
645,951 ($
e. Market risk
1)Source and definition of market risk
Market risk is the risk of potential decrease in values of trading position due to changes in market risk factors, such as
interest rate, foreign exchange rate, price of equity securities, fluctuation or other factors.
2)Management structure and plan of market risk
To manage the market risk of the financial instrument transactions, the Company and its subsidiaries implement
market risk limit control scheme and regularly conduct the measurement, analysis, reporting and disclosure of the
exposure amounts of the market risk factors faced by the Company’s financial instrument transactions. Besides, the
Company and its subsidiaries implemented mechanism for control of market risk to manage financial market risk
appropriately.
106
FINANCIAL STATEMENT
2013
Trading Book
Portfolio
Average
2012
Highest
Lowest
Average
Exchange rate risk
$
6,780 $
38,930 $
1,219 $
Interest rate risk
4,562 10,831 1,037 Equity risk
7,639 15,120 2,615 Diversified risk
10,977 37,475 5,074 Highest
Lowest
12,149 $
63,322 $
2,473
12,189 19,452 5,159
7,963 22,403 1,151
21,536 66,207 11,412
VaR information of banking book is shown below:
2013
Banking Book
Portfolio
Average
Highest
2012
Lowest
Average
Exchange rate risk
$
441,306 $
550,227 $
6,348 $
347,416 $
Interest rate risk
453,564 698,183 107,210 Equity risk
669,729 746,632 551,733 Diversified risk
869,962 1,013,140 711,107 1,084,500 Highest
Lowest
494,458 $
36,684
206,445 316,953 120,512
1,076,901 1,246,070 625,559
1,396,476 696,738
Limitation of VaR:
i. Historical data may not be the best estimates of future risk factors, and cannot capture the extremely
unfavorable market trend.
ii. VaR cannot capture the market risk position that can not be convertible or be hedged.
iii.The loss calculated by using 99% confidence level can’t reflect the part over 99% confidence level. To take
trading book for example, trading book can neither assure that the loss of financial instruments would not
surpass VaR, nor confirm that the loss in each 99 day would not surpass VaR.
b) Stress testing is used to measure the greatest potential losses of the portfolio of risk assets under the worst scenario.
The Company and its subsidiaries perform stress testing assuming the situation in which changes in interest
rate + 200 bps, decrease in securities 40%, changes in exchange rate of USD or EUR + 10%, and changes in
exchange rate of other currency + 10% and then report the outcome to the management and Risk Management
Committee.
2013 ANNUAL REPORT
107
4)Information of exchange rate risks
December 31, 2013
Foreign Currencies
December 31, 2012
Exchange Rate
New Taiwan Dollars
Foreign Currencies
Financial assets
Exchange Rate
New Taiwan Dollars
Currency items
Currency items
AUD
$
367,376
26.5850
$
9,766,681
AUD
339,184
30.1250
10,217,912
CAD
93,309
27.9800
2,610,786
CAD
61,126
29.1900
1,784,267
CNY
7,993,562
4.9130
39,272,369
CNY
1,676,153
4.6580
7,807,520
EUR
327,983
41.1200
13,486,662
EUR
357,096
38.4500
13,730,350
GBP
65,797
49.1400
3,233,281
GBP
39,323
46.7800
1,839,542
HKD
4,289,870
3.8400
16,473,101
HKD
3,481,224
3.7460
13,040,665
JPY
35,091,338
0.2840
9,965,940
JPY
45,785,816
0.3360
15,384,034
NZD
51,598
24.5000
1,264,155
NZD
68,693
23.8100
1,635,571
SGD
74,856
23.5200
1,760,624
SGD
27,443
23.7400
651,491
USD
9,671,621
29.7800
288,020,885
USD
10,838,118
29.0350
314,684,758
VND
565,081,347
0.0014
800,009
VND
443,311,308
0.0014
617,963
ZAR
1,848,832
2.8600
5,287,660
ZAR
1,609,174
3.4300
5,519,465
8,795
29.7800
261,913
25,445
29.0350
738,809
418,765
26.5850
11,132,879
Noncurrency item
USD
Noncurrency item
USD
Currency items
AUD
CAD
92,882
CNY
EUR
GBP
HKD
JPY
January 1, 2012
Foreign Currencies
27.9800
2,598,828
7,779,691
4.9130
38,221,622
Financial assets
301,193
41.1200
12,385,054
Currency items
60,056
49.1400
2,951,151
AUD
$
4,161,698
3.8400
15,980,919
CAD
28,417,866
0.2840
8,070,674
CNY
NZD
51,099
24.5000
1,251,931
SGD
21,282
23.5200
USD
11,386,877
29.7800
VND
563,569,548
0.0014
ZAR
1,846,217
2.8600
18,585
29.7800
30.7450
$
9,950,541
36,808
29.6700
1,092,082
1,412,749
4.7970
6,776,958
EUR
314,341
39.2200
12,328,446
500,544
GBP
38,107
46.6800
1,778,852
339,101,196
HKD
3,672,109
3.8970
14,310,208
797,869
JPY
35,473,847
0.3897
13,824,158
5,280,180
NZD
95,679
23.4100
2,239,834
SGD
65,573
23.3000
1,527,841
USD
7,898,618
30.2750
239,130,673
VND
607,892,889
0.0015
883,572
ZAR
1,207,008
3.7100
4,477,998
19,544
30.2750
591,699
12,032,336
553,455
December 31, 2012
Foreign Currencies
New Taiwan Dollars
323,647
Noncurrency item
USD
Exchange Rate
Noncurrency item
Exchange Rate
New Taiwan Dollars
USD
Financial assets
Currency items
Currency items
AUD
$
361,811
30.1250
$
10,899,564
AUD
391,359
30.7450
CAD
61,987
29.1900
1,809,407
CAD
37,109
29.6700
1,101,023
CNY
1,911,579
4.6580
8,904,135
CNY
1,372,949
4.7970
6,586,035
EUR
325,512
38.4500
12,515,926
EUR
365,886
39.2200
14,350,061
GBP
27,337
46.7800
1,278,820
GBP
74,208
46.6800
3,464,023
HKD
3,837,753
3.7460
14,376,224
HKD
3,474,048
3.8970
13,538,367
JPY
39,559,762
0.3360
13,292,080
JPY
33,119,078
0.3897
12,906,505
NZD
69,645
23.8100
1,658,243
NZD
95,000
23.4100
2,223,959
SGD
85,754
23.7400
2,035,792
SGD
20,856
23.3000
485,949
USD
8,947,785
29.0350
259,798,937
USD
9,559,367
30.2750
289,409,825
VND
440,654,497
0.0014
614,259
VND
639,909,781
0.0015
930,196
ZAR
1,513,215
3.4300
5,190,329
ZAR
1,312,793
3.7100
4,870,463
7,272
29.0350
39,465
30.2750
1,194,805
Noncurrency item
USD
108
Noncurrency item
FINANCIAL STATEMENT
211,132
USD
2013 ANNUAL REPORT
109
5)Disclosures prepared in conformity with Regulations Governing the Preparation of Financial Reports by Public Banks
a) Interest rate sensitivity information (New Taiwan dollars)
December 31, 2012
December 31, 2013
1 to 90 Days
(Included)
Items
Interest -sensitive assets
91 to 180 Days
(Included)
181 Days
to One Year
(Included)
$
1,359,805,816 $
71,640,027 $
85,551,743 $
Interest -sensitive liabilities
1,382,515,377 68,771,253 Interest -sensitive gap
(
Over One Year
1 to 90 Days
(Included)
Items
Total
181 Days
to One Year
(Included)
91 to 180 Days
(Included)
Over One Year
Total
172,172,551 $
1,689,170,137
89,283,990 46,149,480 1,586,720,100
2,868,774 (3,732,247) 126,023,071 102,450,037
Net assets
119,663,115
Net assets
277,039
Ratio of interest - sensitive assets to liabilities (%)
106.46%
98.03%
Ratio of interest - sensitive gap to net assets (%)
85.62%
(107.42%)
22,709,561) Interest -sensitive assets
$
11,310,890 $
2,194,697 $
13,218,909 908,485 Interest -sensitive gap
(
1,908,019) 1,286,212 1 to 90 Days
(Included)
91 to 180 Days
(Included)
181 Days
to One Year
(Included)
Over One Year
$
1,366,001,514 $
54,872,954 $
104,999,985 $
150,018,249 $
1,675,892,702
1,328,878,742 72,157,755 116,395,557 59,990,861 1,577,422,915
Interest -sensitive gap
37,122,772 (
17,284,801) (
11,395,572) 90,027,388 98,469,787
Net assets
115,810,794
106.24%
85.03%
January 1, 2012
1 to 90 Days
(Included)
91 to 180 Days
(Included)
181 Days
to One Year
(Included)
Over One Year
Total
$
1,251,600,724 $
96,925,770 $
111,228,325 $
114,410,517 $
1,574,165,336
1,317,699,242 51,040,247 79,942,763 43,514,270 1,492,196,522
(
66,098,518) 45,885,523 31,285,562 70,896,247 81,968,814
Net assets
94,187,591
105.49%
b) Interest rate sensitivity information (U.S. dollars)
December 31, 2013
1 to 90 Days
(Included)
91 to 180 Days
(Included)
181 Days
to One Year
(Included)
Over One Year
9,466,175 $
1,523,236 $
10,340,210 806,530 (
716,706 (
874,035) 534,586 417,020 15,079,000
297,599)
$
12,266,608 $
1,526,758 $
219,062 $
214,515 $
14,226,943
12,165,487 989,919 684,408 399,200 14,239,014
101,121 536,839 (
465,346) (
Over One Year
Total
248,811 $
189,372 $
11,427,594
461,698 389,719 11,998,157
212,887) (200,347) (
570,563)
Net assets
41,419
95.24%
(
1,377.54%)
Note 1:The above amounts include only USD held by head office, domestic branches, OBU and overseas branches of the Company and exclude contingent assets and
contingent liabilities.
Note 2:Interest sensitive assets and liabilities refer to interest-earning assets and interest-bearing liabilities whose revenues or costs are affected by interest rate changes.
Note 3:Interest sensitive gap = Interest sensitive assets - Interest sensitive liabilities.
Note 4:Ratio of interest sensitive assets to liabilities = Interest sensitive assets/Interest sensitive liabilities (in U.S. dollars)
f. Reclassification information
On July 1, 2008, the Company and its subsidiaries reclassified their financial assets. The fair values at the reclassification
date were as follows:
Before
Reclassification
Financial assets at fair value through profit or loss - held for trading
$
After
Reclassification
6,418,826 $
-
- $
6,418,826
6,418,826 $
6,418,826
In view of the Company’s intention of not selling the abovementioned financial assets held for trading within a short
period of time as a result of the economic instability and deterioration of the world’s financial markets that occurred in
the third quarter of 2008, the Company reclassified these held for trading financial assets to available-for-sale financial
assets.
As of December 31, 2013, December 31, 2012 and January 1, 2012, the carrying amounts and fair values of the
reclassified financial assets were as follows:
December 31, 2013
Carrying
Value
Available-for-sale financial
assets
$
4,897,201 $
Fair
Value
4,897,201 $
December 31, 2012
Carrying
Value
4,346,170 $
January 1, 2012
Fair
Value
4,346,170 $
Carrying
Value
4,130,601 $
Fair
Value
4,130,601
184,685) (12,071)
Net assets
329,117
99.92%
(
3.67%)
FINANCIAL STATEMENT
14,781,401
527,479 (203,271) (
181 Days to One Year
(Included)
Total
110
$
91 to 180 Days
(Included)
87.03%
Note 1:The above amounts include only New Taiwan dollars held by head office and domestic branches of the Company and exclude contingent assets and contingent
liabilities.
Note 2:Interest sensitive assets and liabilities refer to interest-earning assets and interest-bearing liabilities whose revenues or costs are affected by interest rate changes.
Note 3:Interest sensitivity gap = Interest sensitive assets - Interest sensitive liabilities.
Note 4:Ratio of interest sensitive assets to liabilities = Interest sensitive assets/Interest sensitive liabilities (in New Taiwan dollars).
Items
1 to 90 Days
(Included)
Items
Total
Items
213,749 $
January 1, 2012
December 31, 2012
Items
1,062,065 $
2013 ANNUAL REPORT
111
The gain or loss recorded for the reclassified financial assets (excluding those that had been derecognized before
December 31, 2013, December 31, 2012 and January 1, 2012, respectively) for the years ended December 31, 2013 and
2012 and the pro forma gain or loss assuming no reclassifications had been made were as follows:
2013
Pro Forma Information
Assuming No
Reclassifications
Recognized in Profit
and Loss
$
- $
Pro Forma Information
Assuming No
Reclassifications
Recognized in Profit
and Loss
551,031 $
Overdue Amounts
Items
2012
- $
Fair Value
December 31, 2012
2,786,734
0.10% 63,958
2,201.65%
Receivable factoring-without recourse (Note 7) - 21,482,777
- 142,096
-
January 1, 2012
Overdue Amounts
(Note 1)
Items
Corporate
banking
Consumer
banking
January 1, 2012
($
80,688) ($
113,294) ($
144,124)
December 31, 2013
Overdue Amounts
(Note 1)
Items
Corporate
banking
Consumer
banking
Total Loans
Overdue Ratio
(Note 2)
Allowance
Amounts
Coverage Ratio
(Note 3)
Secured
$
3,332,790 $
365,773,441
0.91% $
5,555,826
166.70%
Unsecured
1,819,145 510,355,431
0.36% 5,887,766
323.66%
Mortgage (Note 4)
522,233 478,338,502
0.11% 4,946,966
947.27%
Cash card
Small amount of credit
loans (Note 5)
Secured
Others
(Note 6)
Unsecured
54 174,455
0.03% 89,520
165,777.78%
84,560 11,310,815
0.75% 185,119
218.92%
65,164 51,251,747
0.13% 532,618
817.35%
91,266 6,514,604
1.40% 96,320
105.54%
5,915,212 1,423,718,995
0.42% 17,294,135
292.37%
Total
Overdue Amounts
Items
Credit card
Receivables
Balance
2,983 3,428,204
Receivable factoring-without recourse
(Note 7)
- 16,460,443
Allowance
Amounts
Overdue Ratio
0.09% 1,655,526 $
337,395,281
0.49% $
2,905,903
175.53%
3,204,051 489,154,427
0.66% 5,898,714
184.10%
Mortgage (Note 4)
939,326 430,052,783
0.22% 3,536,583
376.50%
Cash card
316 390,279
0.08% 128,157
40,556.01%
Small amount of credit
loans (Note 5)
135,328 8,775,671
1.54% 164,498
121.56%
Secured
174,895 47,618,503
0.37% 403,305
230.60%
Unsecured
124,955 8,583,020
1.46% 124,955
100.00%
6,234,397 1,321,969,964
0.47% Overdue Amounts
1,250 2,556,728
Receivable factoring-without recourse
(Note 7)
- 23,590,617
- 124,221
-
December 31, 2012
Items
Corporate
banking
Consumer
banking
Overdue
Loans That Are
Exempted from
Being Reported
as Past-due
Items
Allowance
Amounts
Coverage Ratio
(Note 3)
Amount that are exempted
from being reported after
negotiations (Note 1)
$
Secured
$
2,984,964 $
355,266,362
0.84% $
4,191,228
140.41%
Unsecured
2,179,710 506,826,860
0.43% 4,710,129
216.09%
Amount that are exempted from
being reported according to the
law of consumer liquidate
(Note 2)
Mortgage (Note 4)
673,238 458,045,912
0.15% 3,834,970
569.63%
Total
Cash card
1 248,104
- 101,630
10,163,000.00%
97,187 10,578,583
0.92% 160,442
165.09%
155,432 48,823,995
0.32% 416,727
268.11%
Small amount of credit loans
(Note 5)
Others
(Note 6)
Secured
Unsecured
82,961 7,569,756
1.10% 83,534
100.69%
6,173,493 1,387,359,572
0.44% 13,498,660
218.66%
Total
112
Total Loans
Overdue Ratio
(Note 2)
FINANCIAL STATEMENT
211.12%
Overdue Ratio
0.05% Coverage
Ratio
82,000
6,560.00%
- 123,200
-
2)Overdue loans and accounts receivable that are exempted from being reported as past-due items
December 31, 2013
1,760.31%
13,162,115
Allowance
Amounts
Note 1:The amounts recognized as overdue amounts are in compliance with the “Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and
Deal with Non-performing/Non-accrual Loans”. The amounts included in overdue amounts for credit cards are in compliance with the Banking Bureau (4) Letter
No. 0944000378 dated July 6, 2005.
Note 2:Overdue ratio = Overdue amounts/Total loans. Overdue ratio of credit cards = Overdue amounts of credit cards/balance of accounts receivable.
Note 3:Coverage ratio for loans = Allowance amounts of loans/Overdue loans. Coverage ratio for accounts receivable of credit cards = Allowance amounts for accounts
receivable of credit cards/Overdue amounts of credit cards.
Note 4:For mortgage loans, the borrower provides his/her (or spouse’s or minor child’s) house as collateral in full and mortgages it to the financial institution for the purpose
of obtaining funds to purchase or add improvements to own house.
Note 5:Small amount of credit loans apply to the norms of the Banking Bureau (4) Letter No. 09440010950 dated December 19, 2005, excluding credit card and cash card
services.
Note 6:Other consumer loan is specified as secured or unsecured consumer loans other than mortgage loans, cash card services and small amount of credit loans, and
excluding credit card services.
Note 7:Pursuant to the Banking Bureau (5) Letter No. 094000494 dated July 19, 2005, the amount of receivable factoring-without recourse will be recognized as overdue
amounts within three months after the factor or insurance company resolves not to compensate the loss.
Items
Overdue Amounts
(Note 1)
Receivables
Balance
Credit card
Coverage
Ratio
52,510
Coverage Ratio
(Note 3)
$
Items
1)The Company asset quality of overdue loans and receivables.
Allowance
Amounts
Unsecured
Total
h. Asset quality
Disclosures prepared in conformity with Regulations Governing the Preparation of Financial Reports by Public Banks
Overdue Ratio
(Note 2)
Total Loans
Secured
Others
(Note 6)
Investment in foreign bonds
Interest rate swap contracts
Coverage
Ratio
2,905 Designated as a Hedge Tool
December 31, 2013
Allowance
Amounts
Overdue Ratio
Credit card
215,569
g. Fair value hedge
The investment in foreign bonds could bear the risk of the changes in interest rate as a result of movements or
fluctuations in the fair value. The Company and its subsidiaries assessed the risk that could be significant and therefore
signed interest rate swap contracts designated as fair value to hedge.
The Hedged Item
Receivables
Balance
$
December 31, 2012
Account
Receivable That
Are Exempted
from Being
Reported as
Past-due Items
Overdue
Loans That Are
Exempted from
Being Reported
as Past-due
Items
January 1, 2012
Account
Receivable That
Are Exempted
from Being
Reported as
Past-due Items
Overdue
Loans That Are
Exempted from
Being Reported
as Past-due
Items
Account
Receivable That
Are Exempted
from Being
Reported as
Past-due Items
39,938 $
37,643 $
56,737 $
50,873 $
81,214 $
70,492
43,281 57,391 44,718 55,468 53,841 51,345
83,219 $
95,034 $
101,455 $
106,341 $
135,055 $
121,837
Note 1:The disclosure of exempted NPLs and exempted overdue receivables resulting from debt consultation and loan agreements is based on the Banking Bureau letter
dated April 25, 2006 (Ref. No. 09510001270).
Note 2:The disclosure of exempted NPLs and exempted overdue receivables resulting from consumer debt clearance is based on the Banking Bureau letter dated
September 15, 2008 (Ref. No. 09700318940).
2013 ANNUAL REPORT
113
46. CAPITAL MANAGEMENT
3)Concentration of credit extensions
Year
December 31, 2013
Rank
(Note 1)
Total Amount of Credit,
Endorsement or Other
Transactions (Note 3)
Industry of the Corporation or Group (Note 2)
Percentage
of the Company’s
Equity (%)
1
A Group of petroleum and coal products manufacturing
$
31,123,917
23.81
2
B Company of railway transportation
25,461,026
19.48
3
C Group of retail sale in general merchandise stores
16,657,160
12.75
4
D Group of aviation transportation
14,753,339
11.29
5
E Group of other financial intermediation
12,878,290
9.85
6
F Group of real estate development
10,245,600
7.84
7
G Group of liquid crystal panel and components manufacturing
9,802,148
7.50
8
H Group of building completion and finishing
8,604,999
6.58
9
I Group of automobile wholesaling
8,059,914
6.17
10
J Group of smelting and refining of iron and steel
7,758,412
5.94
a. Principle of capital management
In compliance with “Regulation Goverrning the Capital Adequacy and Capital Category of Banks”, the Company
and its subsidiaries calculate eligible capital and risk-weighted assets ratio, disclose relating information and report to
the authorities. Under “Regulations Governing the Capital Adequacy and Capital Category of Banks’, eligible capital
are categorized into two tiers as follows: Tier 1 Capital, common equity and other tier 1 capital, and Tier 2 Capital. Riskweighted assets are calculated using standardized approach stated in “Methods for Calculating Bank’s Regulatory
Capital and Risk-Weighted Assets ”.
To maintain sufficient eligible capital and withstand the possible losses, the Company and its subsidiaries not only
meet the minimum requirements set by the authorities but assess the extent of capital adequacy through advanced
simulation as well as subsequent supervision and analysis, given the business scheme, risk status and composition of
eligible assets, thus, the Company and its subsidiaries are capable of developing countermeasures in a timely manner.
b. Eligible capital and risk-weighted assets.
The Company and its subsidiaries’ information on eligible capital and risk-weighted assets were presented in the
following table. All figures meet the authorities-regulation of minimum capital adequacy rate.
(In Thousands of New Taiwan Dollars, %)
Year
Year
December 31, 2012
Rank (Note 1)
Percentage
of the Company’s
Equity (%)
1
$
38,061,290
31.00
2
B Company of railway transportation
25,688,110
20.92
3
C Group of retail sale in general merchandise stores
17,341,590
14.12
4
D Group of other financial intermediation
13,070,350
10.65
5
E Group of liquid crystal panel and components manufacturing
11,084,550
9.03
Eligible capital
Common equity
$
Other Tier 1 capital
Tier 2 capital
48,453,891
Eligible capital
166,935,228
Standardized approach
1,254,044,882
Internal rating - based approach
-
Securitization
-
Basic indicator approach
-
Standardized approach/alternative
standardized approach
48,691,938
Credit risk
6
F Group of aviation transportation
10,392,600
8.46
7
G Group of building completion and finishing
9,319,330
7.59
8
H Group of private financing
8,258,310
6.73
9
I Group of liquid crystal panel and components manufacturing
6,753,920
5.50
Market risk
10
J Group of smelting and refining of iron and steel
6,680,440
5.44
Total risk-weighted assets
Year
Rank
(Note 1)
1
January 1, 2012
December 31, 2013
Analysis
$
30,398,030
Percentage
of the Company’s
Equity (%)
32.51
2
B Group of retail sale in general merchandise stores
16,553,260
17.70
3
C Group of liquid crystal panel and components manufacturing
12,619,620
13.50
4
D Group of liquid crystal panel and components manufacturing
8,956,860
9.58
5
E Group of real estate development
8,409,840
8.99
6
F Group of aviation transportation
8,303,040
8.88
7
G Group of wire and cable manufacturing
7,581,320
8.11
8
H Group of other financial intermediation
7,552,000
8.08
9
I Group of iron and steel smelting
6,825,690
7.30
10
J Group of private financing
6,736,780
7.20
Risk-weighted assets
Operational risk
117,888,157
593,180
Advanced measurement approach
-
9,380,262
Internal models approach
-
1,312,117,082
Capital adequacy rate
12.72%
Common equity - based capital ratio
8.98%
Tier 1 risk-based capital ratio
9.03%
Leverage ratio
3.74%
Note 1:The above table was prepared in accordance with the “Regulations Governing the Capital Adequacy Ratio of Banks” and related calculation tables.
Note 2:The annual reports disclose capital adequacy rate in the current and prior year. The interim financial statements are required to disclose the capital adequacy
ratio in the end of the prior year in addition to the disclosed in current and prior years.
Note 3:The formula:
1)Eligible capital = Common equity + Other Tier 1 capital + Tier 2 capital.
2)Total risk-weighted asset = Risk-weighted assets for credit risk + (Capital requirements for operational risk + Capital requirement for market risk) × 12.5.
3)Ratio of capital adequacy = Eligible capital/Total risk-weighted assets.
4)Common equity-based capital ratio = Common equity/Total risk-weighted assets.
5)T ier 1 risk-based capital ratio = (Common equity + Other Tier 1 capital)/Total risk-weighted assets.
6)Leverage ratio = Tier 1 capital/Total exposure.
Note 1:The list shows rankings by total amount of credit, endorsement or other transactions but excludes government-owned or state-run enterprises. If the borrower is a
member of a group enterprise, the total amount of credit, endorsement or other transactions of the entire group enterprise must be listed and disclosed by code
and line of industry. The industry of the group enterprise should be presented as the industry of the member firm with the highest risk exposure. The lines of industry
should be described in accordance with the Standard Industrial Classification System of the Republic of China published by the Directorate-General of Budget,
Accounting and Statistics under the Executive Yuan.
Note 2:Group enterprise refers to a group of corporate entities as defined by Article 6 of “Supplementary Provisions to the Taiwan Stock Exchange Corporation Rules for
Review of Securities Listings.”
Note 3:Total loans balances are the sum of balances of all types of loans (including import negotiation, export negotiation, bills discounted, overdraft, short-term
unsecured loan, short-term secured loan, margin loans receivable, medium-term unsecured loans, medium-term secured loan, long-term unsecured loan, longterm secured loan and overdue loan), purchases in remittances, receivable factoring-without recourse, acceptance receivable and guarantees.
114
FINANCIAL STATEMENT
2013 ANNUAL REPORT
115
(In Thousands of New Taiwan Dollars, %)
Year
December 31, 2012
Analysis
Eligible capital
Tier 1 capital
$
114,022,571
Tier 2 capital
44,925,612
Tier 3 capital
-
Eligible capital
158,948,183
1,162,860,344
Internal rating - based approach
-
Securitization
-
Basic indicator approach
-
Standardized approach/alternative
standardized approach
44,649,888
Advanced measurement approach
-
11,034,936
Internal models approach
-
1,218,545,168
Credit risk
Risk-weighted assets
Operational risk
Market risk
Total risk-weighted assets
Capital adequacy rate
13.04
9.36
3.68
-
Ratios of common stockholders’ equity to total assets
2.84
Leverage ratio
5.78
Note 1:The data as of December 31, 2012 was prepared in accordance with the Base1 II.
Note 2:The above table was prepared in accordance with the “Regulations Governing the Capital Adequacy Ratio of Banks” and related calculation tables.
Note 3:The formula:
1)Eligible capital = Tier 1 capital + Tier 2 capital + Tier 3 capital.
2)Total risk-weighted asset = Risk-weighted assets for credit risk + (Capital requirements for operational risk + Capital requirement for market risk) × 12.5.
3)Ratio of capital adequacy = Eligible capital/Total risk-weighted assets.
4)T ier 1 risk-based capital ratio = Tier 1 capital/Total risk-weighted assets.
7)Ratios of common stockholder’s equity to total assets = Common stock/Total assets.
8)Leverage ratio = Tier 1 capital/Adjusted average assets (Average assets minus goodwill, unamortized losses on sale of nonperforming loans and the amount
deducted from Tier 1 capital according to “Regulations Governing the Capital Adequacy Ratio of Banks”).
December 31, 2013
December 31, 2012
January 1, 2012
Collective investment trust fund account
853,915 1,521,317 1,561,937
Accumulated deficit
(
677,118) (
1,159,706) (
1,833,371)
Net income
1,309,607 1,390,739 2,140,208
Total trust liabilities
$
381,034,708 $
367,249,433 $
363,896,505
Note:Trust account including OBU’s foreign currency mutual funds that invested in foreign securities amounted to $1,941,239 as of December 31, 2013. Additionally, foreign
currency mutual funds that invested in domestic securities amounted to $345 as of December 31, 2013.
Trust account including OBU’s foreign currency mutual funds that invested in foreign securities amounted to $1,494,013 as of December 31, 2012.
Trust account including OBU’s foreign currency mutual funds that invested in foreign securities amounted to $1,291,109 as of January 1, 2012.
Trust Properties of Trust Accounts
December 31, 2013
December 31, 2012
January 1, 2012
Investment portfolio
Bank deposits
$
7,580,914 $
Bonds
1,182,730 1,473,721 6,241,315 $
4,227,228
Stocks
15,897,975 Mutual funds
174,473,176 179,024,192 174,964,513
Credit right trust
2,982,840 2,334,022 2,095,931
Land
6,226,566 5,165,432 4,637,321
Building
15,215 14,001 16,437
Construction in progress
38,445 38,445 60,313
Custodial securities
171,782,932 159,640,252 160,902,803
Collective investment trust fund account net assets
853,915 1,521,317 1,561,937
2,418,591
11,796,736 13,011,431
Real estate, net
$
381,034,708 $
367,249,433 $
363,896,505
Trust Income Statement
2013
2012
Trust income
47. INFORMATION REGARDING THE TRUST BUSINESS UNDER THE TRUST LAW
The balance sheets, income statement and trust properties of trust accounts were as follows:
Balance Sheet of Trust Accounts
December 31, 2013
December 31, 2012
January 1, 2012
Trust assets
Bank deposits
$
7,580,914 $
Bonds
Stocks
15,897,975 6,241,315 $
1,182,730 1,473,721 4,227,228
2,418,591
11,796,736 13,011,431
Mutual funds
174,473,176 Real estate
6,280,226 Credit right trust
Custodial securities
171,782,932 159,640,252 160,902,803
Collective investment trust fund account net assets
853,915 1,521,317 1,561,937
Total trust assets
$
179,024,192 2,982,840 2,334,022 381,034,708 $
174,964,513
5,217,878 4,714,071
367,249,433 $
2,095,931
363,896,505
Trust liabilities
Other liabilities
$
Custodial securities payable
220 $
171,782,932 217 $
159,640,252 203
160,902,803
Trust capital
Monetary trust
186,232,090 188,175,908 183,370,747
Securities trust
14,357,554 10,762,191 12,182,791
Real estate trust
7,175,508 6,918,515 5,571,187
116
FINANCIAL STATEMENT
Interest income
$
Rental income
Realized investment income - bonds
77,034 $
956 72,685
5,657
14,608 10,227
Capital surplus transferred to cash dividends
85 -
Cash dividends
411,908 436,363
Realized investment income - stocks
862 904
Gains from asset trading
878 -
Other income
857,881 902,633
Realized investment income - mutual funds
1,772 666
Income apportion from beneficiary certificate
855 964
Total trust income
1,366,839 1,430,099
Trust administrative expenses
29,164 28,145
Inspection expense
365 365
Custodial fees
Insurance expenses
3 3
Tax expenses
Interest expenses
3 2
Trust expense
46 41
5,973 6,074 6,095
Health insurance fees
Realized investment loss - stocks
2 277
Realized investment loss - bonds
4,516 Income tax expense
1,927 1,373
Other expense
8,269 Realized investment loss - mutual funds
890 892
Total trust expense
57,232 39,360
Net income before income tax
$
1,309,607 $
2013 ANNUAL REPORT
2,167
1,390,739
117
48. SIGNIFICANT LITIGATION
According to the report of the Wall Street Journal on April 27, 2009 and the indictment presented by U.S. Securities and
Exchange Commission (SEC) to United States Court, the properties under the names of Danny Pang, Private Equity
Management Group, Inc. and Private Equity Management Group LLC had been frozen by United States Court. PEM Group
is the parent group of GVEC Resource II Inc., which issued the structured products that the Company and its subsidiaries
manages the investment. The Company and its subsidiaries had sold five structured notes issued by GVEC Resource II
Inc. subordinate to PEM Group from July 2007 to February 2008. Those financial instruments mentioned above amounted
to US$205,800 thousand. On May 8, 2009, the Company and its subsidiaries determined to buy back those financial
instruments from investors and claimed for damage to protect the reputation of the Company and its subsidiaries and
the rights of clients. On December 27, 2010 the board of directors resolved to comply with the court’s appointment of the
PEM Group receiver to take insurance policy at the price of approximately US$39,469 thousand. As of December 31, 2013,
the Company and its subsidiaries recognized allowance for expected loss amounting to NT$3,541,455. The Company and
its subsidiary has submitted the follow-up scheme to the authorities on January 3, 2011. The Company and its subsidiaries
has established the Trustee with other financial institution to take the insurance policy transferred from the receiver, and
prolonged the insurance premium payment to keep the validity of insurance policy.
49. COLLABORATIVE MARKETING
The Company and its subsidiaries, HNSC, SCIC, HNIT, HNVC, HNAMC, HNMC and HNFC signed an agreement and the term
of the agreement was from January 2012 to December 2012. (Based on agreement regulation 9, the term stated that the
agreement would extend a year automatically). The scope of the collaboration includes sharing their workplace, human
resource and business information. The calculation of related proportionate expense and remuneration was based on “The
Instruction of the Distribution pm Collaboration Marketing Fees Between HNFH’s Subsidiaries” and “The Instruction of the
Distribution on Commission Service Expense and Related Fees.”
In addition, the Company and its subsidiaries also signed into a commission agreement with SCIC in March 2005. The
calculation of related commission and remuneration was stated in the agreements
In July 2005, the Company and its subsidiaries, HNFH, HNSC, SCIC, HNIT, HNVC, HNAMC, HNMC signed a agreement to the
use of information equipment, including system planning, development, management, and expense allocation.
Income and expense under the above agreement are disclosed in Note 40.
7)Securitized instruments and related information which are approved in accordance with the Statute for financial
assets securitization and the statute for real estate securitization: None
8)Related parties significant transactions: Table 5.
9)Other significant transactions which may affect decisions of the users of the financial statements: None
b. Information on the Company’s investees
1)Financing provided, endorsements/guarantees provided, acquisition and disposal of marketable securities over
NT$300 million or 10% of the issued capital, and derivative transactions: None
2)Marketable securities held by investees: Table 2
c. The related information and proportionate share in investees: Table 1
d. Information on investment in Mainland China: Table 4
52. SEGMENT INFORMATION
Segments information is rendered to the chief operating decision marker for assets allocation and segment performance
evaluation. The aforementioned accounting standards and polices in Note 4 apply to all operating segment. The
Company and its subsidiary are required to disclose the segments as follows:
Domestic New Taiwan Dollar Business (DNTDB): Offers New Taiwan Dollar credit and deposit service, marketing, and
management business in the country.
Domestic Foreign Currency Business (DFCB): Offers planning, marketing, and management of domestic and oversea
foreign currencies business.
Financial Trading Business: Offers capital allocation, planning, investment, as well as the development and implementation
of financial products.
Trust Business: Offers planning, management and marketing of trust business.
Overseas and OBU Business: Deal with credit and deposits business, foreign exchange trading, and investments worldwide.
a. Segment revenue and operating outcomes
Revenue and the outcome of segments are reported as follows:
2013
50.PROFITABILITY
DNTDB
Items
Return on total assets
Return on equity
December 31
2013
2012
Before income tax
0.54%
0.51%
After income tax
0.46%
0.44%
Before income tax
8.85%
9.41%
After income tax
7.55%
8.07%
30.68%
29.42%
Profit margin
Note 1:Return on total assets = Income before (after) income tax/Average total assets.
Note 2:Return on equity = Income before (after) income tax/Average equity.
Note 3:Profit margin = Income after income tax/Total net revenues.
Note 4:Income before (after) income tax represents income for the years ended December 31, 2013 and 2012.
Net interest
$
Commission and fee
revenues, net
DFCB
17,099,294 $
1,085,587 $
1,084,526 756,185 Financial
Trading
Overseas and
OBU
Trust
1,026,689 $
18,417 Other noninterest
net revenue
815,422 1,487,398 Net revenue
18,999,242 3,329,170 1,642,162 Allowance for
doubtful
accounts and
guarantees
(
3,171,653) (
151,749) - Operating expenses
(
11,814,329) (
2,199,416) (
Net profit before
income tax
$
4,013,260 $
978,005 $
- $
2,485,201 597,056 (
293) 2,484,908 3,556,172 $
Others
18,762 $
Total
22,786,504
459,402 496,159 5,299,890
419,996 (
213,178) 3,106,401
4,435,570 301,743 31,192,795
- (
470,249) (
5,852) (
3,799,503)
175,652) (
1,070,372) (
670,596) (
249,128) (
16,179,493)
1,466,510 $
1,414,536 $
3,294,725 $
46,763 $
11,213,799
51. DISCLOSURES UNDER STATUTORY REQUIREMENTS
2012
a. Significant transactions
1)Accumulated acquisition and disposal of same investee’s marketable security over NT$300 million or 10% of the issued
capital: None
2)Acquisition of individual real estate over NT$300 million or 10% of the issued capital: None
DNTDB
Net interest
$
DFCB
Overseas and
OBU
Trust
17,287,166 $
1,034,784 $
766,984 $
1,007,826 794,737 12,970 2,112,418 767,100 6 3)Disposal of individual real estate over NT$300 million or 10% of the issued capital: None
Commission and fee
revenue, net
4)Allowance for service fee to related parties over NT$5 million: Table 3
Other noninterest
net revenue
213,170 1,456,894 Net revenue
3,286,415 5)Receivables from related parties over NT$300 million or 10% of the issued capital: None
Financial
Trading
18,508,162 - $
1,547,054 2,112,424 2,710,403 $
Others
5,374 $
Total
21,804,711
441,095 308,262 4,677,308
879,296 (
145,591) 3,170,875
168,045 29,652,894
4,030,794 6)Sale of nonperforming loans: None
118
FINANCIAL STATEMENT
2013 ANNUAL REPORT
119
1)Reconciliation of consolidated balance sheet as of January 1, 2012
2012
DNTDB
Allowance for
doubtful
accounts and
guarantees
(
Operating expenses
(12,678,116) (
Net profit before
income tax
$
2,649,761) (
3,180,285 $
Financial
Trading
DFCB
57,035) Trust
- - (
1,942,652) (174,111) (
1,286,728 $
Overseas and
OBU
1,372,943 $
Others
Effects after Converting to IFRSs
Account
544,210) - (
3,251,006)
665,500) (
624,684) (
139,420) (
16,224,483)
1,446,924 $
2,861,900 $
28,625 $
10,177,405
b. Geographical information
The Company and its subsidiaries’ net revenues from external customer presented by geographical location are as
follows:
2013
ROC GAAP
Total
2012
Taiwan
$
28,345,972 $
27,196,317
Other
2,846,823 2,456,577
$
31,192,795 $
29,652,894
c. Information about major customers: There is no revenue from any external customer exceeded 10% of the Company
and its subsidiaries’ revenue.
53. FIRST-TIME ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS
a. Basis of the preparation for financial information under IFRSs
The Company and its subsidiaries’ consolidated financial statements for the year ended December 31, 2013 were the
first IFRS financial statements. The Company and its subsidiaries not only follow the significant accounting policies stated
in Note 4 but also comply the requirements under IFRS 1 “First-time Adoption of IFRS” approved by the FSC as the basis
for the preparation.
b. Effects on transition to IFRSs
After transition to IFRSs, the effect on the Company and its subsidiaries’ consolidated balance sheets and consolidated
statements of comprehensive income is stated as follows:
Recognized
Difference
Amount
IFRSs
Expressed
Difference
Amount
Assets
Due from the Central Bank and
other banks
through profit or loss, net
Securities purchased under
agreements to resell
$
36,548,524
$
-
($
692,103)
$
35,856,421
f)
Due from the Central Bank and
other banks
Securities purchased under
agreements to resell
f)
105,296,645
-
-
105,296,645
33,925,915
-
(
84,317)
33,841,598
349,905
-
-
349,905
43,491,702
-
(
2,548,945)
40,942,757
Receivables, net
f)
-
-
2,548,945
2,548,945
Current tax assets
f)
1,309,023,543
-
-
1,309,023,543
65,908,870
-
-
65,908,870
288,324,506
-
-
288,324,506
85,359
-
-
85,359
17,342,436
-
776,420
18,118,856
f)
28,014,950
1,319,577
-
29,334,527
c), f)
Non-operating assets, net
5,683,750
-
-
5,683,750
Investment properties, net
f)
Intangible assets, net
417,574
-
-
417,574
Receivables, net
Available-for-sale financial assets,
net
Held-to-maturity financial assets,
net
Investments accounted for by the
equity method
assets, net
Held-to-maturity financial
assets, net
Investments accounted for
using equity method, net
Deferred income tax assets
822,596
596,692
-
1,419,288
Deferred tax assets
Other assets, net
1,066,370
-
-
1,066,370
Other assets, net
Total
$
1,936,302,645
$
1,916,269
$
-
$
1,938,218,914
a), b)
$
82,357,240
$
-
$
-
$
82,357,240
27,790,094
-
-
27,790,094
144,124
-
-
144,124
20,649,589
-
-
20,649,589
39,849,021
-
(
1,555,861)
38,293,160
-
-
1,531,911
1,531,911
1,617,525,532
-
-
1,617,525,532
Bank debentures
33,650,000
-
-
33,650,000
9,331,971
-
-
9,331,971
1,890,305
3,509,956
231,365
5,631,626
Provisions
Reserve of land value increment
tax
5,538,265
483,388
-
6,021,653
c)
Other liabilities
1,993,264
-
(
207,415)
1,785,849
Other liabilities
f)
Total liabilities
1,840,719,405
3,993,344
-
1,844,712,749
Common stock
47,671,000
-
-
47,671,000
Share capital
Capital surplus
12,694,777
-
-
12,694,777
Capital surplus
Retained earnings
31,067,394
6,265,422
-
37,332,816
Retained earnings
Unrealized revaluation
increments
8,342,497
(
8,342,497)
-
Cumulative translation
adjustments
(
51,889)
-
-
(
51,889)
Unrealized losses on financial
instruments
(
4,140,539)
-
-
(
4,140,539)
Total stockholders’ equity
95,583,240
(
2,077,075)
-
93,506,165
1,936,302,645
$
1,916,269
$
-
$
Total
Liabilities
and banks
Financial liabilities at fair value
Derivative financial liabilities for
hedging
Securities sold under agreements
to repurchase
Stockholders’ equity
Total
FINANCIAL STATEMENT
Payables
120
Note
Account
and banks
Derivative financial liabilities for
hedging
Securities sold under
agreements to repurchase
Payables
f)
f)
Bank debentures
a), b), f)
Total liabilities
Equity
$
-
1,938,218,914
a)-e)
d)
Exchange differences
on translating foreign
operations
Unrealized losses on
available-for-sale
financial assets
Total equity
Total
2013 ANNUAL REPORT
121
Reconciliation of transition to IFRSs:
a) As of January 1, 2012, the Company and its subsidiaries recognized the unamortized actuarial
losses of pension, resulting in increments of provisions amounting to $2,578,573, increments of
deferred tax asset amounting to $438,357, and decrements of retained earnings amounting to
$2,140,216.
b) As of January 1, 2012, the Company and its subsidiaries applied actuarial valuation to
preferential interest on retired employees’ deposits, resulting in increments of provisions
amounting to $931,383, increments of deferred tax assets amounting to $158,335, and
decrements of retained earnings amounting to $773,048.
c) As of January 1, 2012, the Company and its subsidiaries revalued landholdings on present value,
resulting in increments of property and equipment amounting to $1,319,577, increments of
deferred tax liabilities amounting to $483,388, and increments of retained earnings amounting
to $836,189.
d) The Company and its subsidiaries reclassified unrealized revaluation increment on land as
retained earnings amounting to $8,342,497.
e) Under Rule No. 1010012865 issued by the FSC on April 6, 2012, the first-time adoption of IFRSs, the
Company and its subsidiaries should appropriate the special surplus amounts to the balances
of the unrealized revaluation increment and cumulative translation adjustments (gains) under
the stockholders’ equity, which are transferred to retained earnings for adopting the optional
exemptions of IFRS 1.
The Company and its subsidiaries could only appropriate the amount of the retained earnings
recognized at the date of transition if which is less than which should be reserved, and revise
the reversed in the proportion of appropriating to the retained earnings for distributing the
dividends, while using, disposing or reclassification of the related assets.
f) Related accounts have been disclosed as corresponding IFRSs’ items.
g) The Company and its subsidiaries revalued landholdings in 2011, resulting in increments of equity
amounting to $1,659,140. After considering the effects of revaluation increment, the equity
decrease by $417,935 in accordance with IFRS on January 1, 2012.
2)Reconciliation of consolidated balance sheet as of December 31, 2012
ROC GAAP
Account
and other banks
through profit or loss, net
Receivables, net
assets, net
assets, net
Investments accounted for by
the equity method, net
Amount
IFRSs
Expressed
Difference
Amount
Note
Account
$
33,457,226
$
-
($
127,619,967
-
2,190,982)
$
31,266,244
-
127,619,967
40,224,363
-
40,723,951
1,374,043,429
-
(
98,782)
40,125,581
(
1,808,521)
1,891,389
-
64,997,009
-
-
64,997,009
283,007,275
-
-
283,007,275
81,050
-
-
81,050
38,915,430
1,891,389
1,374,043,429
21,267,120
-
2,289,764
23,556,884
29,452,205
-
-
29,452,205
Non-operating assets, net
Deferred tax assets
Other assets, net
5,703,640
328,774
816,485
1,034,761
607,088
-
(
82,868)
5,703,640
328,774
1,423,573
951,893
Total
$
2,022,757,255
$
607,088
$
-
$ 2,023,364,343
Due to the Central Bank and
banks
$
89,799,416
$
-
$
-
$
89,799,416
23,217,504
-
-
23,217,504
Derivative financial liabilities
for hedging
113,294
-
-
113,294
agreements to repurchase
22,099,286
-
-
22,099,286
Bank debentures
35,827,292
1,665,093,068
38,650,000
10,746,743
-
(
333,543)
333,543
-
2,261,673
3,571,109
6,021,653
-
3,189,066
1,897,018,995
3,571,109
(
232,160)
-
and other banks
Receivables, net
Current tax assets
assets, net
assets, net
Investments accounted for
using equity method, net
Property and equipment,
net
Investment properties, net
Deferred tax assets
Other assets, net
g)
g)
g)
g)
g)
g)
g)
a), b), d), e)
g)
Total
Liabilities
Reserve of land value
increment tax
Other liabilities
Total liabilities
Stockholders’ equity
Common stock
Capital surplus
Retained earnings
Unrealized revaluation
increments
35,493,749
333,543
1,665,093,068
38,650,000
10,746,743
Due to the Central Bank
and other banks
Financial liabilities at fair
value through profit or
loss
Derivative financial liabilities
for hedging
agreements to
repurchase
Payables
Bank debentures
232,160
6,064,942
Provisions
-
6,021,653
2,956,906
1,900,590,104
Other liabilities
Total liabilities
Equity
Share capital
Capital surplus
Retained earnings
$
57,379,000
24,694,777
37,166,979
$
6,203,769
$
-
$
9,167,790
(
9,167,790)
-
57,379,000
24,694,777
43,370,748
-
Cumulative translation
adjustments
(
197,798)
-
-
(
197,798)
financial instruments
(
2,472,488)
-
-
(
2,472,488)
Total stockholders’ equity
-
$
-
$ 2,023,364,343
Total
FINANCIAL STATEMENT
Recognized
Difference
Assets
Payables
122
Effects After Converting to IFRSs
$
125,738,260
(
2,964,021)
2,022,757,255
$
607,088
122,774,239
g)
g)
a), b), d), e),
g)
g)
a)-f)
c)
Exchange differences
on translating foreign
operations
available-for-sale
financial assets
Total equity
Total
2013 ANNUAL REPORT
123
a) As of January 1, 2012, the Company and its subsidiaries recognized the unamortized actuarial
losses of pension, resulting in increments of provisions amounting to $2,578,573, increments of
deferred tax asset amounting to $438,357, and decrements of retained earnings amounting to
$2,140,216.
b) As of January 1, 2012, the Company and its subsidiaries applied actuarial valuation to
preferential interest on retired employees’ deposits, resulting in increments of provisions
amounting to $931,383, increments of deferred tax assets amounting to $158,335, and
decrements of retained earnings amounting to $773,048.
c) The Company and its subsidiaries reclassified unrealized revaluation increment on land as
retained earnings amounting to $9,167,790.
d) Preferential interest on retired employees’ deposits and amortized balance of actuarial losses in
pension expense have deducted provision for employee under IFRSs, resulting in decrements of
provisions amounting to $88,319, decrements of deferred tax assets amounting to $15,014, and
increments of retained earnings amounting to $73,305.
e) The Company and its subsidiaries recognized the actuarial losses of pension in 2012, resulting in
increments of provisions amounting to $149,472, increments of deferred tax asset amounting to
$25,410, and decrements of retained earnings amounting to $124,062.
ROC GAAP
Effects After Converting to IFRSs
Account
Interest revenue, net
Interest revenue
Interest expense
Total interest revenue, net
Net income excluding interest
income
Commission and fee revenues
Loss on financial assets and
liabilities at fair value through
profit or loss
Realized gain on available- forsale financial assets
Foreign exchange gain, net
Losses from investments
accounted for by the equity
method
Gain on financial assets carried at
cost
Recovered bad debts and
overdue accounts
Other noninterest income, net
Total net income excluding
interest income
Net revenues
Recognized
Difference
Amount
$
(
34,045,118
12,874,335)
21,170,783
$
IFRSs
Expressed
Difference
-
($
Amount
1,272,877)
1,906,805
633,928
$
(
32,772,241
10,967,530)
21,804,711
4,677,308
-
-
4,677,308
(
1,366,266)
-
113,988
(
1,252,278)
389,535
-
-
389,535
3,502,947
-
-
3,502,947
(
4,309)
-
-
(
4,309)
222,106
-
-
222,106
2,216,317
-
(
2,216,317)
-
(
10,896)
-
312,874
9,961,408
(
10,896)
(
2,102,329)
7,848,183
31,132,191
(
10,896)
(
1,468,401)
29,652,894
(
5,467,323)
-
2,216,317
(
3,251,006)
(
(
10,092,387)
862,825)
88,319
-
(
747,916)
-
(
(
10,751,984)
862,825)
(
4,609,674)
-
-
(
4,609,674)
(
(
$
15,564,886)
10,099,982
1,438,763)
8,661,219
747,916)
-
(
(
16,224,483)
10,177,405
1,453,777)
8,723,628
g) Related accounts have been disclosed as corresponding IFRSs’ items.
(
145,909)
h) The Company and its subsidiaries revalued landholdings in 2011 and 2012, resulting in increments
of equity amounting to $2,495,329. After considering the effects of revaluation increment, the
equity decrease by $468,692 in accordance with IFRS for the year ended December 31, 2012.
1,668,051
(
149,472)
3)Reconciliation of consolidated statement of comprehensive income for the year ended December 31,
2012
25,410
1,398,080
$
10,121,708
The Company and its subsidiaries could only appropriate the amount of the retained earnings
recognized at the date of transition if which is less than which should be reserved, and revise
the reversed in the proportion of appropriating to the retained earnings for distributing the
dividends, while using, disposing or reclassification of the related assets.
Bad-debt expenses
Operating expenses
Personnel
Other general and administrative
expenses
Income before income tax
Income tax expense
Net income
Net interest
Interest revenue
Interest expense
Net interest
b)
b), c)
Net revenues other than interest
323,770
f) Under Rule No. 1010012865 issued by the FSC on April 6, 2012, the first-time adoption of IFRSs, the
Company and its subsidiaries should appropriate the special surplus amounts to the balances
of the unrealized revaluation increment and cumulative translation adjustments (gains) under
the stockholders’ equity, which are transferred to retained earnings for adopting the optional
exemptions of IFRS 1.
Note
Account
88,319
77,423
(
15,014)
$
62,409
(
$
Commission and fee revenues,
net
Loss on financial assets and
liabilities at fair value through
profit or loss
Realized gain on available-forsale financial assets
Foreign exchange gain, net
b)
Share of loss of associate
Gain on financial assets carried
at cost
d)
Other noninterest revenue
Total net revenues other than
interest
Net revenues
Allowance for doubtful
accounts and guarantees
Operating expenses
Employee benefits
a)
d)
a), c)
Others
Income tax expense
Net profit for the year
Exchange differences on
translating foreign operations
Unrealized gain on availablefor-sale financial assets
Actuarial loss arising from
defined benefit plans
Income tax relating to the
components of other
comprehensive income
for the year
Total comprehensive income for
the year
a)
e)
e)
e)
e)
a) Preferential interest on retired employees’ deposits and amortized balance of actuarial losses in pension expense
have deducted provision for employee under IFRSs, resulting in decrements of employee benefits expense
amounting to $88,319, and increments of income tax expense amounting to $15,014. Under IFRSs, the Company
and its subsidiaries retrospectively adjusted impairment reversal gain to retained earnings for the beginning
period, resulted in decrements of other noninterest net revenue amounting to $10,896.
b) The Company and its subsidiaries reclassified interest revenue of financial assets at fair value through profit or loss
and interest expense of financial liabilities at fair value through profit or loss to gain or loss on financial assets and
liabilities at fair value through profit or loss amounting to $1,272,877 and $1,158,889, respectively.
c) The Company and its subsidiaries reclassified interest expense of employees’ deposit to employment benefit
expense amounting to $747,916 for the year ended December 31, 2012.
124
FINANCIAL STATEMENT
2013 ANNUAL REPORT
125
d) The Company and its subsidiaries reclassified recovery of bad debts to bad debt expense amounting to $2,216,317.
TABLE 1
INFORMATION AND PROPORTIONATE SHARE IN INVESTEES
FOR THE YEAR ENDED DECEMBER 31, 2013
(In Thousands of New Taiwan Dollars, Unless Otherwise Specified)
e) Related accounts have been disclosed as corresponding IFRSs’ items.
4)IFRS 1 optional exemptions
IFRS 1, “First-time Adoption of International Financial Reporting Standards,” establishes the procedures for the
Company and its subsidiaries’ first consolidated financial statements prepared in accordance with IFRSs. According
to IFRS 1, the Company and its subsidiaries’ are required to determine the accounting policies under IFRSs and
retrospectively apply those accounting policies in its opening balance sheet at the date of transition to IFRSs (January
Investee Company
Location
Percentage of
Main Businesses and Products
Ownership (%)
Chung-Hua Real Estate
Management Co., Ltd.
Taipei
Construction plan review
and consulting
Co., Ltd.
Taipei
Insurance agency
100.00 Hua Nan International
Leasing Corporation
Ltd.
Taipei
Leasing
Chang Hwa Bank
Taichung
Tang Eng Iron Works Co.,
Ltd.
Investment
Gain (Loss)
(Note 2)
Shares
Note
7,670,160 - 7,670,160
30.00
Note 1
353,486 231,656 4,994,000 - 4,994,000
100.00
Note 1
100.00 991,441 (
25,950) 100,000,000 - 100,000,000
100.00
Note 1
Commercial bank
0.90 1,279,703 - 69,738,603 - 69,738,603
0.90
-
Kaohsiung
Iron and steel
4.59 450,086 - 16,074,512 - 16,074,512
4.59
-
Taiwan Power Co., Ltd.
Taipei
Power generation
0.45 1,184,504 - 148,281,465 - 148,281,465
0.45
-
Taiwan Stock Exchange
Corp.
Taipei
Trading market
3.00 72,000 22,994 18,855,264 - 18,855,264
3.00
-
Taiwan Sugar Corp.
Tainan
Sugar manufacturing
0.14 35,236 8,006,499 - 8,006,499
0.14
-
Taipei Foreign Exchange
Inc.
Taipei
Foreign exchange trade
3.53 7,000 2,240 700,000 - 700,000
3.53
-
Lian An Services Co., Ltd.
Taipei
ATM repairing, trading,
leasing, and installing
service and surveillance
equipment leasing service
5.00 1,250 125 125,000 - 125,000
5.00
-
CDIB & Partners
Investment Holding
Corp.
Taipei
Investment business
4.95 500,000 16,200 54,000,000 - 54,000,000
4.95
-
Financial Information
Service Co., Ltd.
Taipei
Planning and developing
the information system of
across banking institution
and managing the
information web system
1.15 46,358 13,499 5,191,875 - 5,191,875
1.15
-
Fuyu Venture Capital
Investment Corp.
Taipei
Venture capital investment
4.44 6,667 941 666,666 - 666,666
4.44
-
Taiwan Futures Exchange
Taipei
Futures exchange and
settlement
1.00 20,000 5,433 5,589,393 - 5,589,393
1.97
-
Taiwan Asset
Management
Corporation
Taipei
Evaluating, auctioning, and
managing for financial
institutions’ loan
- 150,000,000
11.35
-
Taiwan Financial Asset
Service Corporation
Taipei
rather than for investment or other purpose IAS 7 further states that an investment held for short-term, i.e. maturity
Financial eSolution Corp.
of three months or less from the date of acquisition, qualifies for classification as a cash equivalent. Therefore, the
Sunny Asset
Management Corp.
application provided under IFRS 1. The main optional exemptions the Company and its subsidiaries’ adopted are
summarized as follows:
a) The Company and its subsidiaries elected related retrospective application of IAS 21 “The Effects of Changes in
Foreign Exchange Rates” for cumulative translation adjustment on the transition date of IFRSs.
b) Business combinations. The Company elected not to apply IFRS 3, “Business Combinations,” retrospectively to
business combinations occurred before the date of transition. Therefore, in the opening balance sheet, the
amount of goodwill generated from past business combinations remains the same compared with the one under
R.O.C. GAAP as of January 1, 2012.
c) Deemed cost of fixed assets. For certain fixed assets, the Company and its subsidiaries elected to use the R.O.C.
GAAP revalued amount at the date of transition to IFRSs as their deemed cost under IFRSs. And the Company and
its subisidiaries elected related retrospective application IAS 16 “Property, Plant and Equipment”, IAS 40 “Investment
Property” and IAS 38 “Intangible Assets” for other fixed assets.
d) Employee benefits. The Company and its subsidiaries elected to apply the exemption disclosure requirement
provided by IFRS 1, in which the amounts of present value of defined benefit obligations, the fair value of plan
assets, the surplus or deficit in the plan and the experience adjustments are determined for each accounting
period prospectively from the date of transition.
e) Share-based payment. The Company and its subsidiaries elected to take the optional exemption from applying
IFRS 2, “Share-based Payment,” retrospectively for the shared-based payment transactions granted and vested
before the date of transition.
5)Explanations of significant adjustments in the statement of cash flows
According to ROC GAAP, the certificate deposits that the entity may withdraw and the negotiable certificate of
deposits that the entity may sell at any time without penalties are classified as cash and equivalents. Under IAS 7
“Statements of Cash Flow”, cash equivalents are held for the purpose of meeting short-term cash commitments
Company and its subsidiaries’ certificate deposits for the year ended December 31, 2013 and January 1, 2012
amounted to $2,289,764 and $776,420, respectively are disqualified as cash and equivalent.
According to ROC GAAP, interest and tax paid and received and dividends received are classified as operating
75,532 ($
Consolidated Investment
Total
Imitated
Percentage of
Shares
Shares
Ownership (%)
5,518) 1, 2012; the date of transition); except for optional exemptions and mandatory exceptions to such retrospective
30.00 $
Carrying
Amount
26,569 11.35 1,500,000 135,132 150,000,000 Auction
2.94 50,000 500 5,000,000 - 5,000,000
2.94
-
Taipei
Financial system integration
and consulting
2.30 7,000 - 792,027 - 792,027
2.30
-
Taipei
Purchasing for financial
institutions’ loan assets
1.16 91 69,740 - 69,740
1.16
-
697 Note 1:Investment gain (loss) was based on the investee’s audited financial statements for the year ended December 31, 2013
Note 2:Investment gain (loss) refers to the share of gain (loss) of associate and the net gain of financial assets carried at cost. The net gain of financial assets carried at cost needs
to add the loss of Qun Wei Capital Venture Management Corp’s reduction of capital, amounting to $6,437.
activities while dividends paid are classified as financing activities. Additional disclosure is required for interest and tax
paid. However, under IAS 7” Statement of Cash Flow”, cash flows from interest, tax and dividends received and paid
TABLE 2
MARKETABLE SECURITIES HELD BY INVESTEES
DECEMBER 31, 2013
shall each be disclosed separately. Each shall be classified in a consistent manner from period to period as operating,
investing or financing activities. Therefore, for the year ended December 31, 2012, interest received of $33,898,879,
interest paid of $12,377,150 and income tax paid of $2,652,032 were presented as operating activities. Except for
the above differences, there are no other significant differences between ROC GAAP and IFRSs in the consolidated
statements of cash flows.
Holding Company
Name
HNCB Insurance
Agency Co., Ltd.
Marketable Securities Type
and Name
Government Construction
Bond 89-7
Relationship with the
Company
-
Financial
Statement
Account
Refundable
deposits
December 31, 2013
Shares
Carrying Amount
7,500 $
Percentage of
Ownership
7,943
Market Value
or Net Equity
(Note)
- $
Note
9,608
Note:The market values of bonds are based on the reference prices of the over-the-counter securities exchange as of December 31, 2013.
126
FINANCIAL STATEMENT
2013 ANNUAL REPORT
127
TABLE 3
TABLE 5
ALLOWANCE FOR SERVICE FEE TO RELATED PARTIES OVER NT$5 MILLION
Company Name
Account
Hua Nan Securities Corp.
RELATED PARTIES TRANSACTIONS
Amount
Allowance of brokerage commission fee
$
Note
Description of Transactions
No.
(Note 1)
5,794
TABLE 4
0
INFORMATION ON INVESTMENT IN MAINLAND CHINA
DECEMBER 31, 2013
(In Thousands of New Taiwan Dollars, and US Dollars)
Transaction
Company
Hua Nan
Commercial
Bank
Hua Nan
Commercial
Bank
Shenzhen
Branch
Main
Businesses
and
Products
Total
Amount
of Paid-in
Capital
Investment
Type
Investment Flows
Accumulated
Outflow of
Investment
from Taiwan as
of
January 1,
2013
Deposits,
$ 2,308,769
loans,
$ 2,308,769
Direct
(Note 1)
foreign
(US$ 76,990) investments (US$
76,990)
exchange
Outflow
$
Inflow
- $
-
Accumulated
Outflow of
Investment
from Taiwan
as of
December
31, 2013
Investee’s
Net
Income
$ 2,308,769
(Note 1)
(US$ 76,990)
$ 129,682
(US$4,355)
%
Ownership Investment
of Direct
Gain
or Indirect
Investment
100
Accumulated
Inward
Remittance of
Earnings as of
December 31,
2013
Carrying
Amount as
of
December
31, 2013
$ 129,682 $ 2,511,513 $
(US$ 4,355) (US$ 84,335)
Accumulated Investment in Mainland China as of
December 31, 2013
Investment Amounts Authorized by Investment
Commission, MOEA
Upper Limit on Investment
$2,308,769
(US$76,990)
$2,308,769
(US$76,990)
$78,416,343
-
1
HNCB
Insurance
Agency Co.,
Ltd.
2. The information about Hua Nan International Leasing Corporation, Ltd. investing Hua Nan International Leasing
Corporation is as follows:
Investee
Company
Name
Accumulated
Main
Amount Investment
Outflow of
Businesses Total
of
Paid-in
Investment
from
and
Type
Capital
Taiwan
as of
Products
January 1, 2013
Hua Nan
International Leasing
Leasing
Corporation
$ 291,000
$ 590,100
Direct
(Note 2)
(US$ 20,000) investments (US$
10,000)
Investment Flows
Outflow
Accumulated
Outflow of
Investment
from Taiwan as Investee’s
Net Loss
of
December 31,
2013
Inflow
$ 299,100 $
(US$ 10,000)
-
$
590,100
(Note 2)
(US$ 20,000)
($ 21,721)
%
Ownership Investment
of Direct
Loss
or Indirect
Investment
100
($ 21,721)
Accumulated
Inward
Remittance of
Earnings as of
December 31,
2013
Carrying
Value as of
December
31, 2013
$ 589,134
$
Accumulated Investment in Mainland China as of
December 31, 2013
Investment Amounts Authorized by Investment
Commission, MOEA
Upper Limit on Investment
$590,100
(US$20,000)
$598,300
(US$20,000)
$594,864
128
FINANCIAL STATEMENT
a
HNCB Insurance
Agency Co., Ltd.
a
HNCB Insurance
Agency Co., Ltd.
a
2
3
Hua Nan
International
Leasing
Corporation
Ltd
Hua Nan
International
Leasing
Corporation
Transaction
Term
Percentage of
Consolidated
Revenue/Assets
(Note 3)
1,146,723
Note 5
3.68
340,875
Note 5
0.02
70,000
Note 5
-
Transaction
Amount
(Note 4)
Financial Statement
Account
Commission and fee
revenues
Deposits and
remittances
agreements to
repurchase
$
a
Interest expense
1,258
Note 5
-
a
Lease income
4,152
Note 5
0.01
a
Deposits and
remittances
34,472
Note 5
-
a
Interest expense
2,129
Note 5
0.01
a
Lease income
1,822
Note 5
0.01
a
Deposits and
remittances
516,400
Note 5
0.02
a
Interest expense
4,115
Note 5
0.01
Hua Nan Commercial
Bank
b
Other operating
expenses
1,146,723
Note 5
3.68
Hua Nan Commercial
Bank
b
Note 5
0.02
Hua Nan Commercial
Bank
b
Note 5
-
Hua Nan Commercial
Bank
Hua Nan Commercial
Bank
-
Note 1:According to the Investment Commission of the Ministry of Economic Affairs October 11, 2010 audited (Ref. No. 09900349890) approved investment amount (CNY300
million) and the Investment Commission of the Ministry of Economic Affairs March 31, 2012 audited (Ref. No. 10100014380) approved investment amount (CNY200 million),
by the remittance date of announcement of the Peoples Bank of China reference exchange rates, the working capital for the establishment of registration branch is
US$76,990 thousand.
Note 2:According to the Investment Commission of the Ministry of Economic Affairs August 13, 2012 audited (Ref. No. 10100314860) approved investment amount (US$20 million).
HNCB Insurance
Agency Co., Ltd.
HNCB Insurance
Agency Co., Ltd.
HNCB Insurance
Agency Co., Ltd.
Leasing
Corporation Ltd
Leasing
Corporation Ltd
Leasing
Corporation Ltd
Leasing
Corporation
Leasing
Corporation
1. The information about the Company investing the Shenzhen Branch is as follows:
Investee
Company
Name
Counter-party
Nature of
Relationship
(Note 2)
Cash and cash
340,875
equivalents
Securities purchased
under agreements 70,000
to resell
b
Interest revenue
1,258
Note 5
-
b
Lease expenses
4,152
Note 5
0.01
b
Cash and cash
equivalents
34,472
Note 5
-
b
Interest revenue
2,129
Note 5
0.01
b
Lease expenses
1,822
Note 5
0.01
Hua Nan Commercial
Bank
b
Cash and cash
equivalents
516,400
Note 5
0.02
Hua Nan Commercial
Bank
b
Interest revenue
4,115
Note 5
0.01
Hua Nan Commercial
Bank
Hua Nan Commercial
Bank
Hua Nan Commercial
Bank
Note 1:Transactions between parent company and subsidiaries should be distinguished as follows:
a. Parent company: 0.
b. Subsidiaries are numbered in sequence from 1.
Note 2:Types of transactions with related parties were classified as follows:
a. Parent company to subsidiaries.
b. Subsidiaries to parent company.
c. Subsidiaries to subsidiaries.
Note 3:In the computation of percentage of consolidated revenue/assets, if the amount is the ending balance of assets or liabilities, the accounts percentage will be
calculated by dividing the consolidated assets or liabilities; if the amount is the amount of income or expense, the accounts percentage will be cumulated by
dividing the consolidated revenues in the same period.
Note 4:For the transactions between the Bank and its subsidiaries, the amounts will be eliminated when the reports were prepared.
Note 5:For the transactions between the Bank and related parties, the terms are similar to those transacted with unrelated parties.
2013 ANNUAL REPORT
129
BALANCE SHEETS
STATEMENTS OF COMPREHENSIVE INCOME
(In Thousands of New Taiwan Dollars, Except Per Share Amounts)
December 31, 2013
ASSETS
Amount
December 31, 2012
%
CASH AND CASH EQUIVALENTS
$
48,130,356
122,085,753
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR
LOSS
40,288,320
Amount
January 1, 2012
%
2
$
31,255,979
6
127,619,967
2
40,125,581
2013
%
2
$
35,849,387
6
105,296,645
2
33,841,598
5
INTEREST REVENUE
$
2
INTEREST EXPENSE
(
NET INTEREST
6,132
-
-
-
-
-
-
-
-
-
349,905
-
RECEIVABLES, NET
32,884,268
2
38,914,966
2
40,944,087
2
CURRENT TAX ASSETS
1,772,773
-
1,891,389
-
2,548,945
-
DISCOUNTS AND LOANS, NET
1,406,612,677
66
1,374,043,429
68
1,309,023,543
68
AVAILABLE-FOR-SALE FINANCIAL ASSETS, NET
80,367,723
4
64,997,009
3
65,908,870
HELD-TO-MATURITY FINANCIAL ASSETS, NET
310,881,004
15
283,007,275
14
288,324,506
15
INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD,
NET
1,420,459
-
1,327,605
-
273,506
-
2
23,535,884
1
18,115,856
35,013,074
3
-
322,510
-
417,574
-
DEFERRED TAX ASSETS
2,033,464
-
1,422,971
-
1,419,511
-
OTHER ASSETS, NET
1,099,237
-
938,108
-
1,051,534
-
TOTAL
$
2,118,450,019
$
131,875,899
100
$
1,938,380,417
100
89,799,416
$
82,357,240
4
23,217,504
1
27,790,094
1
113,294
144,124
-
18,253,206
1
22,169,286
1
20,719,589
1
PAYABLES
20,729,911
1
35,454,918
2
38,253,296
2
CURRENT TAX LIABILITIES
1,354,667
-
309,918
-
1,531,911
-
84
DEPOSITS AND REMITTANCES
1,740,828,793
82
1,666,270,311
82
1,617,655,576
BANK DEBENTURES
31,650,000
2
38,650,000
2
33,650,000
2
OTHER FINANCIAL LIABILITIES
7,452,058
1
10,746,743
1
9,331,971
1
PROVISIONS
5,909,186
-
6,066,294
-
5,633,028
-
DEFERRED TAX LIABILITIES
15,930,365) (
52) (
16,085,063) (
55) (1)
11,167,036 36 10,148,780 34 10
INCOME TAX EXPENSE
(
1,596,123) (
5) (
1,425,152) (
5) 12
8,723,628 29 10
147,936) - 223
-
6,021,653
-
OTHER COMPREHENSIVE INCOME
-
1,785,770
-
Total liabilities
1,987,756,114
94
1,901,776,243
94
1,844,874,252
95
operations
Unrealized gain on available-for-sale financial
assets
Actuarial gain (loss) arising from defined benefit
plans
Share of other comprehensive income of
subsidiaries and associates
Income tax relating to the components of other
comprehensive income
Capital surplus
24,694,777
1
24,694,777
1
12,694,777
1
Legal reserve
25,141,742
1
22,543,375
1
20,027,746
1
Special reserve
8,795,268
-
10,463,319
1
7,154,423
11,400,224
1
10,364,054
10,150,647
1
37,332,816
2
Retained earnings
45,337,234
2
43,370,748
2
-
Other equity
4,017
-
(
197,798)
-
(
51,889)
-
Unrealized loss on available-for-sale financial
assets
(2,431,123)
-
(
2,472,488)
-
(
4,140,539)
-
Total other equity
(
2,427,106)
-
(
2,670,286)
-
(
4,192,428)
-
Total equity
130,693,905
6
122,774,239
6
93,506,165
5
TOTAL
$
130
FINANCIAL STATEMENT
2,118,450,019
100
$
2,024,550,482
100
$
1,938,380,417
10,629,631) (
35) (
741,533) (2) (
9,570,913 31 181,679 1 (
41,365 - 151,076 - (
21,499 (
25,915) Other comprehensive income for the year
10,691,514) (
36) (1)
861,580) (3) (14)
1,668,051 6 (
98)
149,472) (1) 201
- 2,027 - 961
- 25,410 - (202)
369,704 1 1,398,080 5 (74)
$
9,940,617 32 $
10,121,708 34 (2)
EARNINGS PER SHARE
Basic
operations
3,251,006) (11) 17
(
2,956,906
2
3,793,651) (12) (
6,021,653
47,671,000
5
16) 1
29,484,849 100 4,531,969) (
3
30,891,052 100 15) (
-
57,379,000
6
4,559,201) (
-
26 (
3
7,685,512 65
Others
63,089,000
222,106 1 2
(
2,937,917
50
6,021,653
Ordinary shares
- (
Share capital
26 133,809 Employee benefits
EQUITY (Notes 4 and 30)
8,123,310 - 3,502,947 12 (134)
OPERATING EXPENSES
OTHER LIABILITIES (Note 28)
45
(
315,417
1,192,604) (4) 389,535 1 -
565,309 2 339
ALLOWANCE FOR DOUBTFUL ACCOUNTS AND
GUARANTEES
INTANGIBLE ASSETS
-
1,252,278) (4) TOTAL NET REVENUES
-
-
2,991,501 10 (
15 10
4,369,046 Total net revenues other than interest
5,683,750
86,820
15 529,231 2 320,347 1 4,803,731 29,331,200
-
DERIVATIVE FINANCIAL LIABILITIES FOR HEDGING
Other non interest net revenues
1
Commission and fee revenues, net
Gain (loss) on financial assets and liabilities at fair
Realized gain on available-for-sale financial
assets
225,954 1 2
5,703,640
20,656,004
29,444,169
FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT
OR LOSS
21,799,337 74 4
Gain on financial assets carried at cost, net
-
5
8
2
1
$
22,767,742 74 10,972,303) (37) 200,188 6,979,602
6
38) (
5
28,559,760
11,805,494) (
32,771,640 111 Share of profit of subsidiaries and associates
DEPOSITS FROM THE CENTRAL BANK AND BANKS
34,573,236 112 $
%
1
2,024,550,482
Amount
(
PROPERTY AND EQUIPMENT, NET
$
%
Foreign exchange (loss) gain, net
INVESTMENT PROPERTIES, NET
100
2012
Amount
2
DERIVATIVE FINANCIAL ASSETS FOR HEDGING
OTHER FINANCIAL ASSETS, NET
Percentage
Increase
(Decrease)
%
Amount
$
1.52
$
1.43
100
2013 ANNUAL REPORT
131
STATEMENTS OF CHANGES IN EQUITY
Retained Earnings
Capital Surplus
Capital Stock
Share Premium
$
47,671,000 $
Others
12,693,452 $
Total
1,325 $
Legal Reserve
12,694,777
Unappropriated
Earnings
Special Reserve
$
20,027,746 $
Other Equity
7,154,423 $
Exchange
Differences on
Translating
Foreign
Operations
Total
10,150,647 $
37,332,816 ($
Unrealized Gain
(Loss) on
Available-forsale Financial
Assets
51,889)
($
Total
4,140,539)
$
93,506,165
Legal reserve
- - - -
2,515,629 - (
2,515,629) - - - -
Special reserve
- - - -
- 3,308,896 (
3,308,896) - - - -
Cash dividends
- - - -
- - (
853,634) (
853,634) - - (
Share dividends
1,708,000 - - -
- - (
1,708,000) (
1,708,000) - - -
Net profit for the year ended December 31, 2012
- - - -
- - 8,723,628 8,723,628 - - 8,723,628
Other comprehensive income (loss) for the year ended
December 31, 2012
- - - -
- - (
124,062) (
145,909) 1,668,051 1,398,080
Total comprehensive income (loss) for the year ended
December 31, 2012
- - - -
- - 8,599,566 8,599,566 (
145,909) 1,668,051 10,121,708
- 12,000,000
- - - 10,463,319 10,364,054 Issue of ordinary shares for cash
8,000,000 12,000,000 BALANCE AT DECEMBER 31, 2012
57,379,000 24,693,452 1,325 24,694,777
22,543,375 Legal reserve
- - - -
2,598,367 Special reserve
- - - -
- (
Cash dividends
- - - -
- - (
Share dividends
5,710,000 - - -
- Net profit for the year ended December 31, 2013
- - - -
Other comprehensive income for the year ended December
31, 2013
- - - -
Total comprehensive income for the year ended December
31, 2013
- - - -
124,062) (
- 43,370,748 (
- 197,798) (
853,634)
- 20,000,000
2,472,488) 122,774,239
$
63,089,000 $
24,693,452 $
1,325 $
24,694,777
2,598,367) - - - -
1,668,051 - - - -
2,020,951) (
2,020,951) - - (
- (
5,710,000) (
5,710,000) - - -
- - 9,570,913 9,570,913 - - 9,570,913
- - 126,524 126,524 201,815 41,365 369,704
- - 9,697,437 9,697,437 201,815 41,365 9,940,617
11,400,224 $
45,337,234 $
$
25,141,742 $
- (
1,668,051) 8,795,268 $
4,017 ($
2,431,123) $
2,020,951)
130,693,905
Note: Employees bonus amounting to $618,472 and $204,872 had been charged against earnings of 2012 and 2013, respectively.
132
FINANCIAL STATEMENT
2013 ANNUAL REPORT
133
STATEMENTS OF CASH FLOWS
For the Years Ended
December 31
2013
For the Years Ended
December 31
2013
2012
$
11,167,036 $
10,148,780
Adjustments for:
642,736 726,230
134,897 160,772
3,793,651 3,251,006
Interest expense
13,351,365 12,879,108
Interest income
(
35,818,722) (
34,044,517)
(
23,547) Share of loss of subsidiaries and associates
(
200,188) (
(Gain) loss on disposal of property and equipment
(
Reversal of impairment loss on non-financial assets
(
Subtotal
(
(
45,687) (
Proceeds from disposal of collaterals assumed
31,681 Acquisition of investment properties
(
2,870) (
(Increase) decrease in other assets
(
161,129) 113,426
Cash dividends received from subsidiaries and associates
128,602 81,737
-
(
-
18,128,812) (
17,161,198)
Decrease (increase) in due from the Central Banks and other banks
1,842,338 (
13,469,368)
(
162,739) (
6,283,983)
(
6,132) -
6,088,570 2,179,597
- 5,000,000
(7,000,000) -
Cash dividend
(
Interest paid
(
68,100,347)
2,579,912
(
27,847,176) 5,317,231
(
11,627,195) (
5,537,008)
EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH HELD
IN FOREIGN CURRENCIES
42,076,483 7,442,176
(
2,561,500) (
4,572,590)
(
(
3,916,080) 1,449,697
Decrease in payables
(
13,986,107) (
1,324,917)
74,558,482 48,614,735
(
3,294,685) 1,414,772
30,830)
(
413,035) (
439,507)
(Decrease) increase in other liabilities
(
18,989) 1,171,136
Interest received
35,744,358 33,898,277
Interest paid
(
13,049,417) (
12,381,428)
Income tax paid
(
1,063,255) (
2,632,889)
36,601,712)
17,717,752)
640,368) (
582,987)
9,662,054) 23,562,981
191,017 (
13,182,501 87,517,599 $
203,128)
3,910,641
83,606,958
100,700,100 $
87,517,599
Reconciliation of the amounts in the statements of cash flows with the equivalent items reported in the balance
sheets at December 31, 2013 and 2012:
For the Years Ended
December 31
2013
Cash and cash equivalents in balance sheets
23,814,002 (
854,032)
- 20,000,000
(
36,232,320) (
2,021,686) (
15,329,349) 1,731,460)
(
Net cash provided by (used in) operating activities
1,160,464) (
(
22,831)
2,182,316 (
-
26,474) (
61,811)
133,809)
870) 12
8,134) 2012
$
Due from the central bank and other banks that meet the definition of cash and
cash equivalents in IAS 7
Cash and cash equivalents in statements of cash flows
$
2012
48,130,356 $
31,255,979
52,569,744 56,261,620
100,700,100 $
87,517,599
Acquisition of investments accounted for using equity method
(
1,774 134
FINANCIAL STATEMENT
- (1,000,000)
1,112,835) (
856,956)
14,975
2013 ANNUAL REPORT
135
HUA NAN FINANCIAL HOLDINGS CO., LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands of New Taiwan Dollar)
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)
December 31, 2013
ASSETS
Amount
December 31, 2012
%
CASH AND CASH EQUIVALENTS
$
49,164,202
122,085,753
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
AVAILABLE-FOR-SALE FINANCIAL ASSETS
DERIVATIVE FINANCIAL ASSETS FOR HEDGING
RECEIVABLES, NET
CURRENT TAX ASSETS
DISCOUNTS AND LOANS, NET
Amount
January 1, 2012
%
2
$
33,194,211
6
127,619,967
44,612,847
2
86,877,259
4
6,132
-
610,822
48,505,696
Amount
2
$
37,423,984
6
105,296,645
42,244,349
2
35,750,610
2
70,816,750
3
70,643,572
-
-
-
-
632,486
2
52,260,362
2,022,777
-
1,406,686,928
65
REINSURANCE CONTRACTS ASSETS, NET
2,563,184
-
2,707,162
HELD-TO-MATURITY FINANCIAL ASSETS, NET 310,957,337
15
283,161,524
INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD, NET
75,532
-
81,050
2013
2
Percentage
Increase
(Decrease)
%
%
2012
Amount
5
%
INTEREST REVENUE
$
35,315,843
4
INTEREST EXPENSE
12,083,476
-
NET INTEREST
23,232,367
-
Amount
99
%
$
33,510,583
99
5
34
11,184,325
33
8
65
22,326,258
4
66
-
964,902
3
54,694,199
2,035,360
-
3,012,035
-
Commission and fee revenues, net
6,353,628
18
5,830,667
17
9
1,374,118,631
66
1,309,124,120
66
Income from insurance premiums, net
2,194,319
6
2,096,670
6
5
-
2,511,503
-
14
288,449,565
15
Gain (loss) on financial assets and liabilities at fair value through
profit or loss
3,260,079
9
(
1,186,875)
(4)
375
-
85,359
-
Gain on investment properties, net
251,663
186,873
1
35
51
3
1
OTHER FINANCIAL ASSETS, NET
44,373,098
2
32,511,313
2
26,279,912
1
Realized gain on available-for-sale financial assets
661,570
2
436,771
1
PROPERTY AND EQUIPMENT, NET
32,173,716
2
32,295,842
2
32,234,042
2
Foreign exchange (loss) gain, net
(
1,183,886)
(3)
3,474,327
10
(134)
INVESTMENT PROPERTIES, NET
7,517,333
-
6,569,603
-
6,315,390
-
Impairment loss on assets
(
106,315)
-
(
118,620)
-
(10)
INTANGIBLE ASSETS, NET
403,916
-
432,660
-
510,395
-
DEFERRED TAX ASSETS
2,347,229
-
1,733,315
-
1,702,192
-
Share of loss of associates
(
5,518)
-
(
4,309)
-
-
Other non interest net revenues
843,785
100
Total net revenues other than interest
OTHER ASSETS, NET
TOTAL
$
3,744,810
2,164,728,571
-
100
4,234,710
$
100
2,066,649,295
-
$
4,260,750
1,979,259,175
DEPOSITS FROM THE CENTRAL BANK AND BANKS
$
131,875,899
FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS
20,794,876
DERIVATIVE FINANCIAL LIABILITIES FOR HEDGING
86,820
24,494,364
COMMERCIAL PAPER PAYABLE, NET
5,456,332
PAYABLES
29,717,876
CURRENT TAX LIABILITIES
DEPOSITS AND REMITTANCES
$
89,799,416
1
23,318,866
-
113,294
1
26,310,065
6
-
5,965,865
2
43,799,190
2,194,257
-
1,737,742,713
80
5
35
11,579,552
34
6
35,501,692
100
33,905,810
100
5
ALLOWANCE FOR DOUBTFUL ACCOUNTS AND GUARANTEES
(
3,874,858)
(11)
(
3,483,299)
(10)
11
(117,470)
(1)
(
259,748)
(1)
(
(
(
27,907,823
2
CHANGE IN PROVISIONS FOR INSURANCE LIABILITIES, NET
144,124
OPERATING EXPENSES
1
-
2,659,514
2
44,762,281
954,314
-
1,663,974,327
81
2
43,350,000
1,733,000
-
Employee benefits
(
12,958,111)
(
912,532)
(
12,912,042)
(
1,025,305)
(3)
(11)
(17)
1
(
Others
(
5,753,584)
(
16)
(
5,687,231)
-
(
55)
1,595,488,062
81
2
38,350,000
-
3,826,000
2
(
19,624,227)
(
19,624,578)
11,885,137
33
10,538,185
31
13
NET PROFIT INCOME TAX EXPENSE
(
1,833,875)
(
5)
(
1,597,659)
(
5)
10,051,262
28
8,940,526
26
12
41,541,653
938,000
PROVISIONS
15,560,087
1
15,831,433
1
14,794,248
1
OTHER FINANCIAL LIABILITIES
8,664,716
1
11,751,499
1
10,346,858
1
OTHER COMPREHENSIVE INCOME
-
DEFERRED TAX LIABILITIES
6,101,863
-
6,098,183
-
6,098,183
-
OTHER LIABILITIES
3,898,365
-
4,037,341
-
2,944,370
-
Total liabilities
2,029,067,821
94
94
1,855,976,586
94
EQUITY ATTRIBUTABLE TO OWNER OF THE PARENT
Share capital
58)
-
BONDS PAYABLE
1,937,036,793
36)
2,381,899
38)
55)
(3)
2
OTHER BORROWINGS
-
(2)
12,269,325
1
23,915,984
3
4
1
864,048
82,357,240
-
28
TOTAL NET REVENUES
$
-
2
-
15
209,774
1
(
157,832)
-
233
Unrealized gain on available-for-sale financial assets
1,694
-
1,836,754
6
(100)
Actuarial gain (loss) arising from defined benefit plans
119,352
-
(
215,799)
(1)
155
Ordinary shares
90,562,816
4
86,250,301
4
82,143,144
4
Income tax relating to the components of other comprehensive
income
(
21,290)
-
33,454
-
(
164)
Capital surplus
17,758,986
1
17,758,993
1
17,758,993
1
Other comprehensive income for the year
309,530
1
1,496,577
5
(
79)
8,523,548
7,636,447
6,782,026
29
$
10,437,103
$
Retained earnings
Legal reserve
-
-
6,492,108
-
$
10,360,792
10,051,213
28
49
-
$
10,051,262
10,360,743
49
-
10,360,792
29
Special reserve
6,492,093
-
6,492,108
14,467,312
1
13,829,936
1
14,137,300
1
Owner of the parent
$
29,482,953
1
27,958,491
1
27,411,434
1
Non-controlling interests
Other equity
(
20,632)
-
(
230,406)
-
(
72,574)
-
Unrealized losses on available-for-sale financial assets
(
2,124,839)
-
(
2,126,305)
-
(
3,959,827)
-
Total other equity
(
2,145,471)
-
(
2,356,711)
-
(4,032,401)
-
Total equity attributable to owner of the parent
135,659,284
6
129,611,074
6
123,281,170
6
NON-CONTROLLING INTERESTS
1,466
-
1,428
-
1,419
-
Total equity
135,660,750
6
129,612,502
6
123,282,589
6
TOTAL
$
136
FINANCIAL STATEMENT
2,164,728,571
100
$
2,066,649,295
100
$
1,979,259,175
100
31
(1)
NET PROFIT ATTRIBUTABLE TO:
8,940,484
26
12
42
-
17
28
$
8,940,526
26
12
29
$
10,437,061
31
(1)
42
-
17
$
31
(1)
COMPREHENSIVE INCOME ATTRIBUTABLE TO:
Owner of the parent
$
Non-controlling interests
$
10,437,103
EARNINGS PER SHARE
Basic
$
1.11
$
0.99
2013 ANNUAL REPORT
137
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Capital Surplus
Capital Stock
$
82,143,144
Share Premiun
Treasury Stock
Donated Assets
Received
$
$
$
17,702,383
52,349
2,936
Retained Earnings
Others
$
1,325
$
Total
Legal Reserve
Special Reserve
Unappropriated
Earnings
17,758,993
$
$
6,492,108
$
14,137,300
6,782,026
Total
$
27,411,434
Exchange
Differences on
Translating
Foreign
Operations
Unrealized Gain
(Loss) on
Available-forsale Financial
Assets
Non-controlling
Interests
($
($
$
72,574)
3,959,827)
1,419
Total Equity
$ 123,282,589
Appropriation of 2011 earnings
(Note)
Legal reserve
-
-
-
-
-
-
854,421
-
(
854,421)
Cash dividends
-
-
-
-
-
-
-
-
(
4,107,157)
Share dividends
4,107,157
-
-
-
-
-
-
-
(
-
-
-
-
-
-
-
-
(loss) for the year ended
December 31, 2012
-
-
-
-
-
-
-
Total comprehensive income
(loss) for the year ended
December 31, 2012
-
-
-
-
-
-
-
86,250,301
17,702,383
52,349
2,936
1,325
17,758,993
Legal reserve
-
-
-
-
-
-
Cash dividends
-
-
-
-
-
Stock dividends
4,312,515
-
-
-
-
Net profit for the year ended
December 31, 2013
-
-
-
-
Other comprehensive
income for the year ended
December 31, 2013
-
-
-
-
Total comprehensive
income for the year ended
December 31, 2013
-
-
-
Equity adjustments on
investments accounted for
using the equity method
-
(7)
-
$
$
$
Net profit for the year ended
December 31, 2012
-
-
-
-
(
4,107,157)
-
-
(33)
(
4,107,157)
(
4,107,157)
-
-
-
-
8,940,484
8,940,484
-
-
42
8,940,526
-
(
179,113)
(
179,113)
(
157,832)
1,833,522
1,496,577
-
8,761,371
8,761,371
(
157,832)
1,833,522
42
7,636,447
6,492,108
13,829,936
27,958,491
(
230,406)
(
2,126,305)
1,428
887,101
-
(
887,101)
-
-
-
-
-
-
-
(
4,312,515)
(
4,312,515)
-
-
(
-
-
-
(
4,312,515)
(
4,312,515)
-
-
-
-
-
-
-
-
10,051,213
10,051,213
-
-
49
10,051,262
-
-
-
-
98,290
98,290
209,774
1,466
-
309,530
-
-
-
-
-
10,149,503
10,149,503
209,774
1,466
49
10,360,792
-
-
(7)
-
(
15)
4
(11)
-
-
18
-
$
$
8,523,548
$
6,492,093
$
$
($
-
4,107,190)
10,437,103
129,612,502
Appropriation of 2012 earnings
(Note)
90,562,816
17,702,376
52,349
$
2,936
$
1,325
17,758,986
14,467,312
29,482,953
20,632)
($
2,124,839)
$
29)
1,466
(
4,312,544)
$ 135,660,750
Note: The remuneration to directors and supervisors amounting to $79,839 and $76,898 and employees bonus amounting to $6,387 and $6,412
had been charged against earnings of 2012 and 2011, respectively.
138
FINANCIAL STATEMENT
2013 ANNUAL REPORT
139
CONSOLIDATED STATEMENTS OF CASH FLOWS
2013
2013
2012
Net cash provided by operating activities
$
11,885,137
$
10,538,185
751,623
(
Proceeds from disposal of collaterals assumed
Acquisition of collaterals assumed
Acquisition of investment properties
193,787
218,306
3,874,858
3,483,299
76,109)
(
84,310)
Interest expense
13,629,346
13,102,953
Interest revenue
(
36,650,093)
(
34,850,602)
Dividend income
(
106,321)
(
106,749)
Change in provisions for insurance liabilities, net
117,470
259,748
Share of loss of associates
5,518
4,309
Loss (gain) on disposal of property and equipment
1,888
(
396)
Gain on disposal of investment properties
(
58,569)
Gain on disposal of other assets
(
81,059)
(
Impairment loss on financial assets
97,745
Impairment loss on non-financial assets
(
8,570
20,305)
(
(
17,251)
6,742)
118,620
49,379)
Decrease (increase) in due from the Central Bank and other banks
1,147,305)
(
(
20,968,650
Gain on financial assets and liabilities at fair value through profit or loss
3,363,764
(
917,129)
839,825
Adjustments for:
2012
2,452
16,084
57,345)
(
88,918)
53,371
169,005
(
7,484)
(
10,611)
(
33,166)
(
23,657)
Proceeds from disposal of investments properties
203,855
Increase in other assets
(
470,541)
(
163,267)
(
1,456,163)
(
954,782)
Decrease in short-term borrowings
(
795,000)
(
2,093,000)
(Decrease) increase in commercial paper payables
(
509,533)
3,306,351
-
63,711
Corporate bonds issued
9,891,653
Repayment of corporate bonds on maturity
(4,700,000)
-
-
5,000,000
(7,000,000)
Cash dividends
(
4,336,602)
(
4,135,116)
(
7,449,482)
2,078,235
(
195,452)
-
1,842,338
(
13,469,368)
(
2,267,711)
(
6,442,520)
(
16,104,291)
1,681,724
(
6,132)
-
(
(Increase) decrease in assets under reinsurance contracts
(
99,462)
100,457
(
27,767,454)
5,286,083
(
11,803,499)
(
6,796,540)
42,076,483
7,442,176
(
2,552,719)
(
4,579,422)
(
26,474)
(
30,830)
(
1,815,701)
2,394,081
$
49,164,202
$
33,194,211
(Decrease) increase in payables
(
14,258,044)
2,120,126
52,569,744
56,261,620
73,768,386
68,486,265
Due from the Central Bank and other banks that meet the definition of cash and cash
(
434,857)
Securities purchased under agreements to resell that meet the definition of cash and cash
610,822
632,486
(
(Decrease) increase in other liabilities
(
Cash and cash equivalents in consolidated statements of cash flows
$
4,768,677
36,231,364)
1,031,442
(
68,074,844)
(
454,148)
3,185,565)
1,419,106
127,359)
1,095,728
651,262)
(
Interest received
Dividend received
Interest paid
(
13,905,297)
(
13,189,959)
Income tax paid
(
1,230,346)
(
2,974,289)
140
FINANCIAL STATEMENT
(
15,340,668)
36,597,476
34,719,660
158,079
EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH HELD IN FOREIGN
CURRENCIES
193,446
12,256,451
4,291,765
90,088,317
85,796,552
$
102,344,768
$
90,088,317
Reconciliation of the amounts in the consolidated statements of cash flows with the equivalent items reported in
the consolidated balance sheets at December 31, 2013 and 2012:
December 31
2013
2012
102,344,768
$
90,088,317
149,020
2013 ANNUAL REPORT
141
Branch
Code
Branch Name
Address
TEL/FAX
Country Code:886
SWIFT CODE
Branch
Code
Branch Name
Address
TEL/FAX
Country Code:886
SWIFT CODE
101
CHUXU BRANCH
160, Sec. 2, Nanjing E. Rd., Taipei, Taiwan, R.O.C
Tel ：(02)25076131
Fax：(02)25072810
HNBKTWTP101
125
DA AN BRANCH
458, Kuang Fu S. Rd., Sec.4, Taipei, Taiwan,
R.O.C.
Tel ：(02)27039851
Fax：(02)27088441
HNBKTWTP125
102
I N T E R N AT I O N A L B A N K I N G
DEPARTMENT
38 Sec.1,Chung-King S. Rd., Taipei, Taiwan,
R.O.C.
Tel ：(02)23713111
Fax：(02)23881194
HNBKTWTP
126
MING SHEN BRANCH
54, Sec. 4, Ming Shen East Rd., Taipei, Taiwan,
R.O.C.
Tel ：(02)27155011
Fax：(02)27121484
HNBKTWTP126
103
CHEN NEI BRANCH
93, Boai Rd., Taipei, Taiwan, R.O.C.
Tel ：(02)23818780
Fax：(02)23613028
HNBKTWTP103
127
FUSHING BRANCH
337, Fushing North Rd., Taipei, Taiwan, R.O.C.
Tel ：(02)27171781
Fax：(02)27184582
HNBKTWTP127
104
TATAOCHEN BRANCH
96, Sec.2,Yen-Ping N. Rd., Taipei, Taiwan, R.O.C.
Tel ：(02)25556280
Fax：(02)25591573
HNBKTWTP104
128
LUNGCHIANG BRANCH
180, Sec.2, Ming Shen East Rd., Taipei, Taiwan,
R.O.C.
Tel ：(02)25045341
Fax：(02)25044487
HNBKTWTP128
105
CHIENCHEN BRANCH
228. Nanking West Rd., Taipei, Taiwan, R.O.C.
Tel ：(02)25563110
Fax：(02)25584245
HNBKTWTP105
129
YONGJI BRANCH
800, Sec. 5, Zhongxiao E. Rd., Taipei, Taiwan,
R.O.C.
Tel ：(02)27593111
Fax：(02)27595757
HNBKTWTP129
106
CHUNGSHAN BRANCH
18, Sec.1,Chang An East Rd., Taipei, Taiwan,
R.O.C.
Tel ：(02)25611121
Fax：(02)25232072
HNBKTWTP106
130
TUNHUA BRANCH
2, Sec.2, Tunhua S. Rd., Taipei, Taiwan, R.O.C.
Tel ：(02)27557467
Fax：(02)27066043
HNBKTWTP130
107
YUAN SHAN BRANCH
112, Chungshan North Rd., Sec.2, Taipei,
Taiwan, R.O.C.
Tel ：(02)25619588
Fax：(02)25418154
HNBKTWTP107
131
CHUNGHSING BRANCH
137, Sec.1, Fushing S. Rd., Taipei, Taiwan, R.O.C.
Tel ：(02)27774552
Fax：(02)27118486
HNBKTWTP131
108
CHENG TUNG BRANCH
146, Sung Chiang Rd., Taipei, Taiwan, R.O.C.
Tel ：(02)25512111
Fax：(02)25362764
HNBKTWTP108
132
DAZHI BRANCH
56, Lequn 3rd Rd., Zhongshan Dist., Taipei
,Taiwan, R.O.C.
Tel ：(02)85020818
Fax：(02)85026101
HNBKTWTP132
109
HSIMEN BRANCH
173, Hsi Ning South Rd., Taipei, Taiwan, R.O.C.
Tel ：(02)23149978
Fax：(02)23832866
HNBKTWTP109
133
TUNHO BRANCH
107, Sec.2, Tun Hua S. Rd., Taipei, Taiwan,
R.O.C.
Tel ：(02)27010900
Fax：(02)27042811
HNBKTWTP133
110
NAN SUNG SHAN BRANCH
293, Sec.5, Chung-hsiao East Rd., Taipei,
Taiwan, R.O.C.
Tel ：(02)27695957
Fax：(02)27688428
HNBKTWTP110
134
DONGHU BRANCH
456, Sec. 5, Chenggong Rd., Neihu Dist., Taipei,
Taiwan, R.O.C.
Tel ：(02)26315550
Fax：(02)26328296
HNBKTWTP134
111
JEN AI ROAD BRANCH
25, Jen Ai Rd., Sec.4, Taipei, Taiwan, R.O.C.
Tel ：(02)27722090
Fax：(02)27110276
HNBKTWTP111
136
DONGXING BRANCH
239, Sec.5, Nanjing E. Rd., Taipei, Taiwan, R.O.C.
Tel ：(02)25289567
Fax：(02)25288359
HNBKTWTP136
112
NANKING EAST ROAD BRANCH
217, Nanking East Rd., Sec.3, Taipei, Taiwan,
R.O.C.
Tel ：(02)27155111
Fax：(02)27129350
HNBKTWTP112
137
PEINANKANG BRANCH
2F-10,No.3, Yuancyu St., Nangang District,
Taipei, Taiwan, R.O.C.
Tel ：(02)26558788
Fax：(02)26558778
HNBKTWTP137
113
HSINSHENG BRANCH
48, Hsinsheng South Rd., Sec.1, Taipei, Taiwan,
R.O.C.
Tel ：(02)23934211
Fax：(02)23211338
HNBKTWTP113
138
MUZHA BRANCH
4, Sec.3, Muzha Rd.,Wenshan Dist., Taipei,
Taiwan, R.O.C.
Tel ：(02)29361769
Fax：(02)29361759
HNBKTWTP138
114
TATUNG BRANCH
276, Sec.3, Chung-King N. Rd., Taipei, Taiwan,
R.O.C
Tel ：(02)25917767
Fax：(02)25912924
HNBKTWTP114
143
NAN-NEIHU BRANCH
130, Xingai Rd., Neihu Dist., Taipei, Taiwan,
R.O.C
Tel ：(02)27968288
Fax：(02)27968299
HNBKTWTP143
115
SUNGSHAN BRANCH
654, Pateh Rd., Sec.4, Taipei, Taiwan, R.O.C.
Tel ：(02)27652132
Fax：(02)27614818
HNBKTWTP115
145
CHANG AN BRANCH
205, Sec.2, Pateh Rd., Taipei, Taiwan, R.O.C.
Tel ：(02)87722778
Fax：(02)87722775
HNBKTWTP145
116
CHUNG LUN BRANCH
145, Pateh Rd., Sec.3, Taipei, Taiwan, R.O.C.
Tel ：(02)25780377
Fax：(02)25783902
HNBKTWTP116
147
HUAI SHENG BRANCH
No.247, Sec.3, Chung-Hsiao E. Rd., Taipei,
Taiwan, R.O.C.
Tel ：(02)27727211
Fax：(02)27318743
HNBKTWTP147
117
NANMEN BRANCH
11, Roosevelt Rd., Sec.2, Taipei, Taiwan, R.O.C.
Tel ：(02)23217111
Fax：(02)23510410
HNBKTWTP117
148
ZHONG HUA ROAD BRANCH
59, Sec.2, Zhonghua Rd., Taipei, Taiwan, R.O.C.
Tel ：(02)23822078
Fax：(02)23318355
HNBKTWTP148
118
GONGGUAN BRANCH
216, Roosevelt Rd., Sec.3, Taipei, Taiwan, R.O.C.
Tel ：(02)23622141
Fax：(02)23623500
HNBKTWTP118
149
HSIN WEI BRANCH
2F., No.6, Sec.4, Hsin yi Rd., Taipei, Taiwan,
R.O.C.
Tel ：(02)27015123
Fax：(02)23258122
HNBKTWTP149
119
SIN YI BRANCH
183, Sec. 2, Xinyi Rd., Taipei , Taiwan, R.O.C.
Tel ：(02)23943141
Fax：(02)23937089
HNBKTWTP119
151
PU CHIEN BRANCH
37, Sec.2, San Min Rd., Banqiao District, New
Taipei City, Taiwan, R.O.C.
Tel ：(02)29646911
Fax：(02)29570930
HNBKTWTP151
120
CHUNGSHIAO EAST ROAD
BRANCH
212, Chung Hsiao East Rd., Sec.4, Taipei,
Taiwan, R.O.C.
Tel ：(02)27733577
Fax：(02)27410336
HNBKTWTP120
152
SHIH PAI BRANCH
78, Sec.1, Shipai Rd., Beitou District ,Taipei,
Taiwan, R.O.C.
Tel ：(02)28223822
Fax：(02)28216268
HNBKTWTP152
121
HO PING BRANCH
93, Ho Ping-East Rd., Sec.2, Taipei, Taiwan,
R.O.C.
Tel ：(02)27002405
Fax：(02)27099230
HNBKTWTP121
153
JUI HSIANG BRANCH
145, Sec.5, Ming Shen East Rd., Taipei, Taiwan,
R.O.C.
Tel ：(02)27641407
Fax：(02)27619254
HNBKTWTP153
122
SHUANGYUAN BRANCH
127, Xizang Rd., Taipei, Taiwan, R.O.C.
Tel ：(02)23071122
Fax：(02)23055954
HNBKTWTP122
154
TAITA BRANCH
1, Sec.4, Roosevelt Rd., Taipei, Taiwan, R.O.C.
Tel ：(02)23631478
Fax：(02)23639657
HNBKTWTP154
123
SHIHLIN BRANCH
246, Sec.4, Chen Teh Rd., Taipei, Taiwan, R.O.C.
Tel ：(02)28819500
Fax：(02)28827737
HNBKTWTP123
156
SHIH MAO BRANCH
458, Sec.4, Hsin Yi Rd.,Taipei, Taiwan, R.O.C.
Tel ：(02)27581392
Fax：(02)27581389
HNBKTWTP156
124
TUNG-TAIPEI BRANCH
50, Nanking East Rd., Sec.4, Taipei, Taiwan,
R.O.C.
Tel ：(02)25794141
Fax：(02)25788352
HNBKTWTP124
157
WAN HUA BRANCH
149, Kangding Rd., Wanhua District, Taipei,
Taiwan, R.O.C.
Tel ：(02)23812922
Fax：(02)23817634
HNBKTWTP157
142
2013 ANNUAL REPORT
143
Branch
Code
Branch Name
Address
TEL/FAX
Country Code:886
SWIFT CODE
Branch
Code
Branch Name
Address
TEL/FAX
Country Code:886
SWIFT CODE
158
NAN KANG BRANCH
52, Sec.3, Nankang Rd., Taipei, Taiwan, R.O.C.
Tel ：(02)27885966
Fax：(02)27885725
HNBKTWTP158
184
PEI LUZHOU BRANCH
213, Changrong Rd., Luzhou District, New Taipei
City, Taiwan , R.O.C.
Tel ：(02)28470606
Fax：(02)28471052
HNBKTWTP184
159
HUA JIANG BRANCH
80, Sec. 2, Wenhua Rd., Banqiao District, New
Taipei City, Taiwan, R.O.C
Tel ：(02)22512581
Fax：(02)22524900
HNBKTWTP159
185
LU ZHOU BRANCH
161, Zhongshan 1st Rd., Luzhou District, New
Tel ：(02)22886888
Fax：(02)22830959
HNBKTWTP185
160
PANCHIAO BRANCH
73, Chung Hsiao Rd., Banqiao District, New
Taipei City, Taiwan, R.O.C
Tel ：(02)29511101
Fax：(02)29615496
HNBKTWTP160
186
TU CHENG BRANCH
15,Qiansui Rd., Tucheng Dist., New Taipei City,
Taiwan, R.O.C.
Tel ：(02)22672345
Fax：(02)22694219
HNBKTWTP186
161
SANCHUNG BRANCH
5-1, Sec. 2, Chongxin Rd., Sanchong District,
New Taipei City, Taiwan, R.O.C
Tel ：(02)29824101
Fax：(02)29713685
HNBKTWTP161
187
PEI HSIN BRANCH
129,Min Chuan Rd., Xindian District, New Taipei
City, Taiwan, R.O.C.
Tel ：(02)22180111
Fax：(02)22188883
HNBKTWTP187
162
PEI SAN CHUNG BRANCH
1, Lung Men Rd., Sanchung District, New Taipei
City, Taiwan, R.O.C
Tel ：(02)29880011
Fax：(02)29717564
HNBKTWTP162
189
TIANMU BRANCH
109, Sec 1, Zhongcheng Rd., Taipei, Taiwan,
R.O.C.
Tel ：(02)28380777
Fax：(02)28355410
HNBKTWTP189
163
HSIN CHUANG BRANCH
100,Chung Cheng Rd., Xinzhuang District, New
Tel ：(02)29944761
Fax：(02)29975920
HNBKTWTP163
190
NEI HU BRANCH
157, Sec.4, Cheng Gung Rd., Taipei, Taiwan,
R.O.C.
Tel ：(02)27961266
Fax：(02)27935380
HNBKTWTP190
164
YUNG HO BRANCH
147, Sec.2, Yung-ho Rd., Yonghe District, New
Tel ：(02)29214111
Fax：(02)29275188
HNBKTWTP164
191
SHULIN BRANCH
189, Sec.1, Chung Shan Rd., Shulin District, New
Tel ：(02)26870656
Fax：(02)26870659
HNBKTWTP191
165
CHUNGHO BRANCH
257, Jungshan Rd., Sec.2, Zhonghe District,
New Taipei City, Taiwan, R.O.C.
Tel ：(02)22495555
Fax：(02)22498520
HNBKTWTP165
192
CHANG SHU WAN BRANCH
Tel ：(02)26472611
Fax：(02)26472656
HNBKTWTP192
166
HSIN TIEN BRANCH
108, Sec.2, Pei Hsin Rd., Xindian District, New
Tel ：(02)29136661
Fax：(02)29155547
HNBKTWTP166
193
TAISHAN BRANCH
99, Sec. 2, Ming zhi Rd., Taishan District, New
Tel ：(02)22968388
Fax：(02)22968343
HNBKTWTP193
167
DANSHUI BRANCH
28, Zhongzheng Rd., Danshui District, New
Tel ：(02)26219680
Fax：(02)26232275
HNBKTWTP167
194
SAN HSIA BRANCH
65,Heping St.,Sanshia Dist.,New Taipei City,
Taiwan, R.O.C
Tel ：(02)26747711
Fax：(02)26747171
HNBKTWTP194
168
XIZHI BRANCH
101, Zhongzheng Rd., Xizhi District, New Taipei
Tel ：(02)26416411
Fax：(02)26420866
HNBKTWTP168
195
WENSHAN BRANCH
52, Sec. 1, Muzha Rd., Wenshan Dist., Taipei,
Taiwan, R.O.C.
Tel ：(02)22360288
Fax:(02)22365655
HNBKTWTP195
169
NAN YUNGHO BRANCH
220, Chung Cheng Rd., Yonghe District, New
Tel ：(02)89423288
Fax：(02)89423289
HNBKTWTP169
196
YINGGE BRANCH
101, Guoqing St., Yingge Dist., New Taipei City,
Taiwan, R.O.C.
Tel ：(02)26777711
Fax：(02)26775511
HNBKTWTP196
170
SHI-SANCHUNG BRANCH
237, Sec. 4, Sanhe Rd., Sanchong District, New
Tel ：(02)28575211
Fax：(02)28575228
HNBKTWTP170
197
NORTH HSIN CHUANG BRANCH
211, Sec.2, Zhonghua Rd.,
Xinzhuang Dist., New Taipei City, Taiwan, R.O.C.
Tel ：(02)66371688
Fax：(02)66371066
HNBKTWTP197
171
NAN -SANCHUNG BRANCH
37, Zhongshan Rd., Sanchong District, New
Tel ：(02)29888001
Fax：(02)29831367
HNBKTWTP171
198
PEI TUCHENG BRANCH
149,Yumin Rd., Tucheng Dist., New Taipei City,
Taiwan, R.O.C.
Tel ：(02)22635656
Fax：(02)22635916
HNBKTWTP198
172
SHUANGHO BRANCH
320, Junghe Rd., Junghe Dist., New Taipei City,
Taiwan, R.O.C.
Tel ：(02)29261771
Fax：(02)29293971
HNBKTWTP172
199
LINKOU STATION BRANCH
331, Sec. 1, Wenhua 3rd Rd., Linkou District,
Tel ：(02)26098399
Fax：(02)26006811
HNBKTWTP199
173
HSINTAI BRANCH
887-16, Zhongzheng Rd., Xinzhuang Dist., New
Tel ：(02)29071181
Fax：(02)29071190
HNBKTWTP173
200
KEELUNG BRANCH
305, Ren 1st Rd., Keelung City, Taiwan, R.O.C.
Tel ：(02)24222192
Fax：(02)24272114
HNBKTWTP200
174
ERH CHUNG BRANCH
88, Sec.1, Kuang-Fu Rd., Sanchung District,
Tel ：(02)29991166
Fax：(02)29991678
HNBKTWTP174
201
KEELUNG KANGKO BRANCH
46, Zhong 2nd Rd., Keelung City, Taiwan, R.O.C.
Tel ：(02)24282121
Fax：(02)24289665
HNBKTWTP201
175
PAN HSIN BRANCH
30, Quyun Rd., Banqiao District, New Taipei
Tel ：(02)29631777
Fax：(02)29631797
HNBKTWTP175
211
QIDU BRANCH
81, Mingde 1st Rd., Qidu Dist., Keelung City,
Taiwan, R.O.C.
Tel ：(02)24567101
Fax：(02)24562215
HNBKTWTP211
176
WU KU BRANCH
69, Sec.1, Chung Shan Rd., Xinzhuang District,
Tel ：(02)85218788
Fax：(02)85216649
HNBKTWTP176
220
LOTUNG BRANCH
85,Gongzheng Rd., Luodong Township,Yilan
County, Taiwan, R.O.C.
Tel ：(03)9543611
Fax：(03)9566050
HNBKTWTP220
178
BEITOU BRANCH
13, Sec.2, Beitou Rd., Beitou Dist., Taipei,
Taiwan, R.O.C
Tel ：(02)28934166
Fax：(02)28960184
HNBKTWTP178
221
YILAN BRANCH
140, Sec. 3, Zhongshan Rd., Yilan City, Yilan
County , Taiwan, R.O.C.
Tel ：(03)9354911
Fax：(03)9326056
HNBKTWTP221
179
HSI HU BRANCH
392, Sec.1, Nei-Hu Rd., Taipei, Taiwan, R.O.C.
Tel ：(02)27977189
Fax：(02)27979169
HNBKTWTP179
240
TAOYUAN BRANCH
79, Nan-Hua St., Taoyuan City, Taoyuan
Tel ：(03)3321121
Fax：(03)3354999
HNBKTWTP240
180
CHI SUI BRANCH
562, Jungshan Rd., Sec.2, Zhonghe District,
Tel ：(02)22220603
Fax：(02)22214405
HNBKTWTP180
241
CHUNGLI BRANCH
35, Minchu Rd., Chungli City, Taoyuan County ,
Taiwan, R.O.C.
Tel ：(03)4936999
Fax：(03)4939853
HNBKTWTP241
182
FUHE BRANCH
158,Fuhe Rd.,Yonghe Dist., New Taipei
City,Taiwan, R.O.C
Tel ：(02)89280491
Fax：(02)89266004
HNBKTWTP182
242
YANG MEI BRANCH
95, Dancheng Rd., Yangmei City, Taoyuan
Tel ：(03)4755131
Fax：(03)4752439
HNBKTWTP242
NAN SHIH CHIAO BRANCH
342, Jingxin St., Zhonghe Dist., New Taipei City,
Taiwan, R.O.C.
Tel ：(02)29421722
Fax：(02)29415816
HNBKTWTP183
243
LI-CHANG BRANCH
175, Zhongzheng Rd., Zhongli City, Taoyuan
Tel ：(03)4253151
Fax：(03)4252201
HNBKTWTP243
183
144
276, Tatung Rd., Sec.1, Xizhi District, New Taipei
2013 ANNUAL REPORT
145
Branch
Code
Branch Name
Address
TEL/FAX
Country Code:886
SWIFT CODE
Branch
Code
Branch Name
Address
TEL/FAX
Country Code:886
SWIFT CODE
244
PEI-TAOYUAN BRANCH
94, Sec. 2, Daxing W. Rd., Taoyuan City,
Taoyuan County, Taiwan, R.O.C.
Tel ：(03)3011234
Fax：(03)3025555
HNBKTWTP244
420
TAICHUNG BRANCH
174, Minchuan Rd., Taichung City, Taiwan,
R.O.C.
Tel ：(04)22261111
Fax：(04)22275063
HNBKTWTP420
245
NAN KAN BRANCH
99, Sec. 1, Nankan Rd., Luzhu Township,
Tel ：(03)3521212
Fax：(03)3526969
HNBKTWTP245
422
NAN TAICHUNG BRANCH
53, Sec. 4, Fuxing Rd., Taichung City, Taiwan,
R.O.C
Tel ：(04)22294471
Fax：(04)22283866
HNBKTWTP422
246
PINGZHEN BRANCH
265,Sec.2,Huannan Rd., Pingzhen City, Taoyuan
Tel ：(03)4689688
Fax：(03)4683368
HNBKTWTP246
423
PEI-TAICHUNG BRANCH
338, Wuchyuan Rd., Taichung City, Taiwan,
R.O.C.
Tel ：(04)22025131
Fax：(04)22015755
HNBKTWTP423
247
PA TEH BRANCH
307, Sec. 2, Jieshou Rd., Bade City, Taoyuan
County , Taiwan, R.O.C.
Tel ：(03)3679911
Fax：(03)3676367
HNBKTWTP247
424
TAICHUNGKANG ROAD
BRANCH
9, Sec.2, Taichungkang Rd., Taichung City,
Taiwan, R.O.C.
Tel ：(04)23266555
Fax：(04)23267241
HNBKTWTP424
248
GUEISHAN BRANCH
1227, Sec. 2, Wanshou Rd., Guishan Township,
Tel ：(03)3505822
Fax：(03)3198195
HNBKTWTP248
425
DALI BRANCH
37, Dongrong Rd., Dali District, Taichung City,
Taiwan, R.O.C.
Tel ：(04)24835151
Fax：(04)24835393
HNBKTWTP425
249
LONGTAN BRANCH
8, Zhongzheng Rd., Longtan Township, Taoyuan
Tel ：(03)4090666
Fax：(03)4090667
HNBKTWTP249
426
SHUI NAN BRANCH
81, Sec.4, Wenhsin Rd., Taichung City, Taiwan,
R.O.C.
Tel ：(04)22924456
Fax：(04)22924121
HNBKTWTP426
250
DAXI BRANCH
87,Cihu Rd., Daxi Township, Taoyuan County,
Taiwan, R.O.C.
Tel ：(03)3878833
Fax：(03)3879922
HNBKTWTP250
427
WU CHYUAN BRANCH
270, Jung Ming South Rd., Taichung City,
Taiwan, R.O.C.
Tel ：(04)23755981
Fax：(04)23760420
HNBKTWTP427
251
NEI LI BRANCH
260,Huanzhong E.Rd.,Zhongli City, Taoyuan
Tel ：(03)4626969
Fax：(03)4629797
HNBKTWTP251
429
TA CHIA BRANCH
6, Hsincheng Rd., Tajia District, Taichung City,
Taiwan, R.O.C.
Tel ：(04)26805111
Fax：(04)26805122
HNBKTWTP429
252
LINKOU BRANCH
38-11、12, Wenhua 2nd Rd., Guishan Township,
Tel ：(03)3183456
Fax：(03)3182345
HNBKTWTP252
430
TAIPING BRANCH
58, Zhongxing E. Rd., Taiping District, Taichung
Tel ：(04)22771919
Fax：(04)22770707
HNBKTWTP430
260
GUANYIN BRANCH
780, Sec. 2, Zhongshan Rd., Guanyin Township,
Tel ：(03)4081731
Fax：(03)2824612
HNBKTWTP260
431
ZHONGKE BRANCH
16, Gongyequ 1st Rd., Xitun Dist., Taichung City,
Taiwan, R.O.C.
Tel ：(04)23591778
Fax：(04)23594800
HNBKTWTP431
262
DAYUAN BRANCH
108, Zhongzheng E. Rd., Dayuan Township,
Taoyuan County , Taiwan, R.O.C.
Tel ：(03)3867272
Fax：(03)3857373
HNBKTWTP262
451
SHALU BRANCH
112, Shatian Rd., Shalu District, Taichung City,
Taiwan, R.O.C.
Tel ：(04)26629951
Fax：(04)26622248
HNBKTWTP451
300
HSINCHU BRANCH
131, Tung Men St., Hsinchu City, Taiwan, R.O.C.
Tel ：(03)5217111
Fax：(03)5233445
HNBKTWTP300
500
CAOTUN BRANCH
317, Sec 2, Taiping Rd., Caotun Township,
Nantou County, Taiwan, R.O.C
Tel ：(049)2323881
Fax：(049)2367949
HNBKTWTP500
301
ZHUDONG BRANCH
9, Chaoyang Rd., Zhudong Township, Hsinchu
County,Taiwan, R.O.C.
Tel ：(03)5969372
Fax：(03)5969379
HNBKTWTP301
501
NANTOU BRANCH
236, Fu Hsing Rd., Nantou City, Nantou County,
Taiwan, R.O.C.
Tel ：(049)2222701
Fax：(049)2231593
HNBKTWTP501
302
CHU KO BRANCH
495, Kwang Fu Rd., Sec.1, Hsinchu City, Taiwan,
R.O.C.
Tel ：(03)6687888
Fax：(03)6687066
HNBKTWTP302
520
CHANGHUA BRANCH
152, Kuang Fu Rd., Chunghua City, Taiwan,
R.O.C.
Tel ：(04)7242151
Fax：(04)7223146
HNBKTWTP520
310
HSIN FENG BRANCH
155-16, Sec. 1, Jiansing Rd., Sinfong Township,
Hsinchu County , Taiwan, R.O.C.
Tel ：(03)5592130
Fax：(03)5592237
HNBKTWTP310
521
HEMEI BRANCH
300, Sec. 5, Zhangmei Rd., Hemei Township,
Changhua County, Taiwan, R.O.C.
Tel ：(04)7556101
Fax：(04)7552383
HNBKTWTP521
313
LIOUJIA BRANCH
6,Ziqiang S. Rd., Zhubei City,
Hsinchu County, Taiwan, R.O.C.
Tel ：(03)6673289
Fax：(03)6676025
HNBKTWTP313
522
YUANLIN BRANCH
753, Sec. 1, Chung Shan Rd., YuanLin,
Changhua County Taiwan, R.O.C.
Tel ：(04)8358161
Fax：(04)8358044
HNBKTWTP522
320
CHUNAN BRANCH
10, Boai St., Zhunan Township, Miaoli County,
Taiwan, R.O.C.
Tel ：(037)472651
Fax：(037)472374
HNBKTWTP320
523
LUGANG BRANCH
279, Minquan Rd., Lugang Township,
Changhua County, Taiwan, R.O.C.
Tel ：(04)7745988
Fax：(04)7745995
HNBKTWTP523
321
TOUFEN BRANCH
922, Zhonghua Rd., Toufen Township, Miaoli
Tel ：(037)663577
Fax：(037)673447
HNBKTWTP321
524
XIHU BRANCH
250, Xihuan Rd., Xihu Township, Changhua
Tel ：(04)8821811
Fax：(04)8821222
HNBKTWTP524
322
MIAOLI BRANCH
686,Zhongzheng Rd.,Miaoli City, Miaoli
County,Taiwan, R.O.C.
Tel ：(037)353711
Fax：(037)353722
HNBKTWTP322
540
DOULIU BRANCH
45, Datong Rd., Douliu City, Yunlin County,
Taiwan, R.O.C
Tel ：(05)5339711
Fax：(05)5326741
HNBKTWTP540
323
CHUPEI BRANCH
159, Sian Jheng 9th Rd., Chupei City, Hsinchu
Tel ：(03)5542277
Fax：(03)5542727
HNBKTWTP323
541
HUWEI BRANCH
50, Zhongzheng Rd., Huwei Township, Yunlin
County, Taiwan, R.O.C
Tel ：(05)6334901
Fax：(05)6334907
HNBKTWTP541
351
TACHUNG BRANCH
118, Shida Rd., East Dist., Hsinchu City, Taiwan,R.
O.C.
Tel ：(03)5212191
Fax：(03)5267348
HNBKTWTP351
542
XILUO BRANCH
239,Guangfu W.Rd.,Xiluo Township,Yunlin
County,Taiwan
Tel ：(05)5882868
Fax：(05)5882874
HNBKTWTP542
400
FENG YUAN BRANCH
95, Hsin Yi St., Fengyuan Dist., Taichung City,
Taiwan, R.O.C.
Tel ：(04)25273180
Fax：(04)25270214
HNBKTWTP400
543
BEIGANG BRANCH
252,Datong Rd.,Beigang Township,
Yunlin County,Taiwan, R.O.C.
Tel ：(05)7730280
Fax：(05)7730252
HNBKTWTP543
401
TUNGSHIH BRANCH
282, Sanmin St., Dongshi Dist., Taichung City,
Taiwan, R.O.C.
Tel ：(04)25871180
Fax：(04)25875611
HNBKTWTP401
600
CHIAYI BRANCH
320, Chung Shan Rd., Chiayi, Taiwan, R.O.C.
Tel ：(05)2232050
Fax：(05)2248860
HNBKTWTP600
402
CHINGSHUI BRANCH
241, Zhongshan Rd., Qingshui District, Taichung
Tel ：(04)26237171
Fax：(04)26227581
HNBKTWTP402
601
CHIA NAN BRANCH
469, Lanjing St., West District, Chiayi City,
Taiwan, R.O.C.
Tel ：(05)2236321
Fax：(05)2230712
HNBKTWTP601
403
SHI-FENGYUAN BRANCH
225, Yuanhuan S. Rd., Fengyuan District,
Taichung City, Taiwan, R.O.C.
Tel ：(04)25275123
Fax：(04)25270744
HNBKTWTP403
602
PUZI BRANCH
No.2,Wenhua S.Rd., Puzi City, Chiayi County,
Taiwan, R.O.C.
Tel ：(05)3701133
Fax：(05)3705111
HNBKTWTP602
146
2013 ANNUAL REPORT
147
Branch
Code
Branch Name
Address
TEL/FAX
Country Code:886
SWIFT CODE
Branch
Code
Branch Name
Address
TEL/FAX
Country Code:886
SWIFT CODE
620
XINYING BRANCH
109, Sec. 2, Xinjin Rd., Xinying Dist.,Tainan City,
Taiwan,R.O.C.
Tel ：(06)6322295
Fax：(06)6323276
HNBKTWTP620
719
GANGSHAN BRANCH
331, Gangshan Rd., Gangshan Dist., Kaohsiung
City, Taiwan, R.O.C
Tel ：(07)6211091
Fax：(07)6215435
HNBKTWTP719
621
MADOU BRANCH
36, Zhongshan Rd., Madou Dist.,Tainan
City,Taiwan, R.O.C.
Tel ：(06)5727241
Fax：(06)5721647
HNBKTWTP621
720
FENGSHAN BRANCH
145, Zhongshan Rd., Fengshan Dist., Kaohsiung
City, Taiwan, R.O.C
Tel ：(07)7472121
Fax：(07)7425282
HNBKTWTP720
622
YUNG KANG BRANCH
800, Zhonghua Rd., Yongkang Dist.,Tainan
City,Taiwan, R.O.C.
Tel ：(06)2015531
Fax：(06)2338644
HNBKTWTP622
721
LUCHU BRANCH
90-2,Dashe Rd.,Luzhu Dist., Kaohsiung City,
Taiwan, R.O.C
Tel ：(07)6072233
Fax：(07)6072299
HNBKTWTP721
640
TAINAN BRANCH
154, Sec.2, Yong-fu Rd., West Central District,
Tainan City, Taiwan, R.O.C.
Tel ：(06)2222111
Fax：(06)2252134
HNBKTWTP640
722
RENWU BRANCH
41,Zhongzheng Rd., Renwu Dist., Kaohsiung
City, Taiwan, R.O.C
Tel ：(07)3711101
Fax：(07)3712638
HNBKTWTP722
642
TUNG-TAINAN BRANCH
90, Sec.2, Linsen Rd., Tainan City, Taiwan, R.O.C.
Tel ：(06)2747027
Fax：(06)2747175
HNBKTWTP642
751
LI TSU NEI BRANCH
132, Banchao Rd., Qianzhen Dist., Kaohsiung
City, Taiwan, R.O.C
Tel ：(07)7112366
Fax：(07)7611267
HNBKTWTP751
643
SHI-TAINAN BRANCH
156, Kangle St., Tainan City, Taiwan, R.O.C.
Tel ：(06)2211622
Fax：(06)2243620
HNBKTWTP643
752
WU CHIA BRANCH
642, Wujia 2nd Rd., Fengshan Dist., Kaohsiung
City, Taiwan, R.O.C
Tel ：(07)8414495
Fax：(07)8110602
HNBKTWTP752
644
PEI-TAINAN BRANCH
294, Chenggong Rd., Tainan City, Taiwan,
R.O.C.
Tel ：(06)2221171
Fax：(06)2221170
HNBKTWTP644
753
KUANG HUA BRANCH
148-19, Guanghua 1st Rd., Lingya Dist.,
Kaohsiung City, Taiwan, R.O.C
Tel ：(07)7161601
Fax：(07)7161323
HNBKTWTP753
645
NANDU BRANCH
203, Sec. 1, Changrong Rd., Tainan City,
Taiwan, R.O.C.
Tel ：(06)2360789
Fax：(06)2756169
HNBKTWTP645
760
XIAOGANG BRANCH
180, Erling Rd., Xiaogang Dist., Kaohsiung City,
Taiwan, R.O.C
Tel ：(07)8013993
Fax：(07)8062293
HNBKTWTP760
646
ANNAN BRANCH
467-1, Sec. 4, Anhe Rd., Annan District, Tainan
Tel ：(06)3567272
Fax：(06)3564122
HNBKTWTP646
765
KAOHSIUNG GUILIN BRANCH
44,Guiyang Rd., Xiaogang Dist., Kaohsiung
City, Taiwan, R.O.C
Tel ：(07)7913916
Fax：(07)7915898
HNBKTWTP765
647
JEN DER BRANCH
511, Jungshan Rd., Rende Dist., Tainan City,
Taiwan, R.O.C.
Tel ：(06)2490651
Fax：(06)2490621
HNBKTWTP647
800
PINGTUNG BRANCH
36, Fuxing Rd., Pingtung City, Pingtung County,
Taiwan, R.O.C
Tel ：(08)7323831
Fax：(08)7325474
HNBKTWTP800
648
HSIN SHIH BRANCH
232-1, Chung Cheng Rd., Xinshi District, Tainan
Tel ：(06)5893535
Fax：(06)5895242
HNBKTWTP648
801
NEI PU BRANCH
187, Guangji Rd., Neipu Township, Pingtung
Tel ：(08)7799911
Fax：(08)7790944
HNBKTWTP801
681
JINHUA BRANCH
172, Sec. 2, Jinhua Rd., South Dist., Tainan City ,
Taiwan, R.O.C.
Tel ：(06)2911835
Fax：(06)2632694
HNBKTWTP681
802
CHAOZHOU BRANCH
71,Xinsheng Rd., Chaozhou Township, Pingtung
Tel ：(08)7883001
Fax：(08)7892002
HNBKTWTP802
700
KAOHSIUNG BRANCH
178, Wu-Fu 4th Rd., Kaohsiung City, Taiwan,
R.O.C.
Tel ：(07)5611241
Fax：(07)5517832
HNBKTWTP700
813
JIADONG BRANCH
155,Jiachang Rd., Jiadong Township,Pingtung
Tel ：(08)8662811
Fax：(08)8664970
HNBKTWTP813
701
TUNG LING BRANCH
120, Jungjeng 1st Rd., Lingya Dist., Kaohsiung
Tel ：(07)7130701
Fax：(07)7130673
HNBKTWTP701
820
HUALIEN BRANCH
78, Zhongshan Rd.,Hualien City, Hualien
Tel ：(038)323181
Fax：(038)355105
HNBKTWTP820
702
HSINSHING BRANCH
117, Zhongshan 1st Rd., Xinxing District,
Kaohsiung City, Taiwan, R.O.C.
Tel ：(07)2864191
Fax：(07)2867641
HNBKTWTP702
830
TAITUNG BRANCH
347, Sec. 1, Zhonghua Rd., Taitung City, Taitung
County Taiwan, R.O.C
Tel ：(089)310121
Fax：(089)327050
HNBKTWTP830
703
KAOHSIUNG SANMIN BRANCH
189, Qixian 2nd Rd., Qianjin District, Kaohsiung
Tel ：(07)2859161
Fax：(07)2859157
HNBKTWTP703
704
LINGYA BRANCH
489, Zhongshan 2nd Rd., Lingya District,
Kaohsiung City, Taiwan, R.O.C.
Tel ：(07)3353141
Fax：(07)3353149
HNBKTWTP704
705
QIANZHEN BRANCH
33, Yixin 2nd Rd., Qianzhen Dist., Kaohsiung
Tel ：(07)3358231
Fax：(07)3358229
HNBKTWTP705
706
KAOHSIUNG PO-AI BRANCH
150, Jiuru 2nd Rd.,Sanmin Dist., Kaohsiung City,
Taiwan, R.O.C.
Tel ：(07)3113531
Fax：(07)3117297
HNBKTWTP706
707
NAN-KAOHSIUNG BRANCH
153, Sanduo 3rd Rd., Qianzhen Dist., Kaohsiung
Tel ：(07)3368101
Fax：(07)3319473
HNBKTWTP707
708
TUNG-KAOHSIUNG BRANCH
78, Liu Ho 1st Rd., Kaohsiung City, Taiwan,
R.O.C.
Tel ：(07)2385901
Fax：(07)2369016
HNBKTWTP708
709
DA CHANG BRANCH
57, Dachang 2nd Rd., Sanmin Dist., Kaohsiung
City, Taiwan, R.O.C
Tel ：(07)3806150
Fax：(07)3805050
HNBKTWTP709
710
PEI-KAOHSIUNG BRANCH
Boai 3rd Rd., Zuoying Dist., Kaohsiung City,
Taiwan, R.O.C.
Tel ：(07)3464601
Fax：(07)3459682
HNBKTWTP710
711
NANZI BRANCH
336, Xingnan Rd., Nanzi Dist., Kaohsiung City,
Taiwan, R.O.C.
Tel ：(07)3513299
Fax：(07)3512511
HNBKTWTP711
712
ZUOYING BRANCH
160,Boai 4th Rd.,Zuoying Dist., Kaohsiung
City,Taiwan, R.O.C
Tel ：(07)3438911
Fax：(07)3431617
HNBKTWTP712
148
2013 ANNUAL REPORT
149
DISTRIBUTION OF CORRESPONDENT BANKS
AND OVERSEAS OFFICES
LONDON BRANCH
NEW YORK AGENCY
General Manager：Jack C. C. Huang
Address：5th Floor, 32 Lombard Street, London EC3V 9BQ, U.K.
Tel：44-207-2207979
Fax：44-207-6261515
General Manager：Sophia, S.F. Lin
Address： 330 Madison Ave., 38th Floor, New York, NY
10017, U.S.A.
Tel ： 1-212-2861999
Fax：1-212-2861212
Canada（26）
London
U.S.A.（202）
Europe（802）
New York
Korea（42）
Middle East（98）
China（157）
South Asia（51） Shen Zhen
SHENZHEN BRANCH
General Manager：Jheng-Hua Huang
Address：Room 03-04, 18 Floor, Tower One,
R.O.C.(Taipei)（78）
Hanoi
Africa（42）
South East Asia（266）
Los Angeles
Japan（136）
Hong Kong（125）
Macau
Ho Chi Minh City
Singapore
LOS ANGELES BRANCH
General Manager：Eric D. Chen
Address：707, Wilshire Blvd., Suite 3100,
Los Angeles, CA 90017, U.S.A.
Tel ： 1-213-3626666
Fax：1-213-3626617
SYDNEY BRANCH
General Manage：Rudy Chang
Address：Suite 603 Level 6,60 Carrington Street,
Kerry Plaza, 1 Zhongxinsi Road, Futian
District, Shenzhen, China
Tel ： 86-755-25832208
Fax：86-755-25832398
Oceania（73）
Latin America（97）
Sydney NSW 2000, Australia
Tel ： 61-2-82960100
Fax：61-2-82960188
Sydney
SHENZHEN BAOAN SUB-BRANCH
General Manager： San-Lang Luoh
Address： Unit 1901A.B.C, Block D, Wealth
Harbour Building, Baoyuan Road,
Xoxoang Street, Baoan District,
Shenzhen, China 518101
Tel ： 86-755-23007117
Fax：86-755-23007127
HO CHI MINH CITY BRANCH
HONG KONG BRANCH
General Manager： Rong-Sheng Lin
Address：10th Floor, Royal Tower, 235 Nguyen Van Cu
Street, District 1, Ho Chi Minh City, Vietnam
General Manager：Albert Tsai
Address：Suite 5601-05, 56th Floor, Central Plaza, 18
Tel ： 84-8-38371888
Fax：84-8-38371999
MACAU BRANCH
General Manager：Chen-Nan Chang
Address：Avenida Doutor Mario Soares, Finance and IT
Center of Macau, 17th Floor B,C, Macau
Tel ： 853-28757136
Fax：853-28755915
Harbour Road, Wanchai, Hong Kong
Tel ： 852-28240288
Fax：852-28242515
SINGAPORE BRANCH
General Manager：Loong Lin
Address：80 Robinson Road, #14-03, Singapore 068898
Tel ： 65-63242566
Fax：65-63242155
HANOI REPRESENTATIVE OFFICE
Note. Head Office Overseas Branches
Overseas Representative Offices
Chief Representative：Wen-Tang Wang
Address： Suite 303, DMC Tower, 535 Kim Ma Street, Ba Dinh,
Hanoi, Vietnam
Tel ： 84-4-22203168
Fax：84-4-22203169
150
DISTRIBUTION OF CORRESPONDENT BANKS AND OVERSEAS OFFICES
2013 ANNUAL REPORT
151
LOS ANGELES BRANCH
LONDON BRANCH
NEW YORK BRANCH
SINGAPORE BRANCH
SYDNEY BRANCH
HONG KONG BRANCH
SHEN ZHEN BRANCH
HO CHI MINH CITY BRANCH
MACAU BRANCH
152
DISTRIBUTION OF CORRESPONDENT BANKS AND OVERSEAS OFFICES

Annual Report of 2013

Transcription

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