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01/10 15:44
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call shows stable financial performance with solid interest income and improved noninterest income. The company is focused on strengthening competitiveness and managing capital efficiently. While there are some uncertainties, such as unclear management responses and increased credit costs, the overall sentiment is positive due to strategic growth plans, strong capital ratios, and shareholder return initiatives. The market is likely to react positively, especially with the optimistic guidance and focus on cost efficiency and revenue stability.
Net Income (Year-to-Date) KRW 2,796.4 billion, up 5.1% year-over-year. The increase was driven by balanced growth between interest and noninterest income, contributions from the insurance acquisition, asset rebalancing, and optimized funding and investments.
Net Income (Third Quarter) KRW 1,244.4 billion, a quarter-on-quarter increase of KRW 300 billion. This was attributed to stronger marketing capabilities, record fee income, and contributions from the newly acquired insurance business.
Capital Ratios (CET1 Ratio) 12.92% as of September 2025, a 12 basis point increase quarter-over-quarter and an 80 basis point increase from the end of last year. Despite a 7 basis point decline due to a weaker won, the ratio improved due to risk-weighted asset management and selective asset growth.
Net Operating Revenue (Year-to-Date) KRW 8,173.4 billion, up 2.3% year-over-year. This was supported by margin improvements, selective growth, and contributions from the insurance business.
Net Operating Revenue (Third Quarter) KRW 2,773.3 billion, similar to the previous quarter. Solid interest income and better noninterest income contributed to this stability.
Net Interest Margin (NIM) 1.48% for Woori Bank in the third quarter, a 3 basis point increase quarter-over-quarter and an 8 basis point increase from the end of last year. This improvement was due to funding cost savings and asset rebalancing.
Loan Book (Third Quarter) KRW 331 trillion, with corporate loans flat at KRW 178 trillion and retail loans growing 1.5% quarter-over-quarter to KRW 150 trillion. Growth strategies focused on high-quality corporates and selective loan origination.
Noninterest Income (Year-to-Date) KRW 1,441.5 billion, up 4.6% year-over-year. Quarterly noninterest income rose 5.3% to KRW 555.2 billion, driven by robust fee income and the inclusion of insurance subsidiaries' performance.
SG&A Expense (Year-to-Date) KRW 3,690.3 billion. Third quarter SG&A expense was KRW 1,211.2 billion, a 3.2% increase from the previous quarter. Cost-to-income ratio stood at 43.1%.
Credit Cost (Year-to-Date) KRW 1,517.6 billion. Third quarter credit costs were KRW 574.3 billion, a 13.1% increase from the previous quarter. This included KRW 150 billion in one-off items and provisions for completion-guarantee projects.
Insurance Acquisition: The newly acquired insurance business contributed to diversifying the group's profit structure and increasing noninterest income. Bancassurance sales from Tongyang Life and ABL grew from 9.8% to 22.5% in just three months.
Market Expansion through Insurance Acquisition: The acquisition of Tongyang and ABL insurance businesses has strengthened the group's position as a comprehensive financial services group, enabling synergies between banking, securities, and insurance operations.
Net Income Growth: Year-to-date net income increased by 5.1% YoY to KRW 2,796.4 billion, with a significant Q3 increase of KRW 300 billion QoQ.
NIM Improvement: Net Interest Margin (NIM) improved for the third consecutive quarter, reaching 1.48% in Q3, driven by asset rebalancing and funding cost savings.
Noninterest Income Growth: Noninterest income rose 4.6% YoY and 5.3% QoQ, supported by fee income and insurance business contributions.
Cost Management: SG&A expenses increased slightly by 3.2% QoQ, with a cost-to-income ratio of 43.1%. The group is leveraging AI and optimizing operations to enhance efficiency.
Capital Adequacy: The CET1 ratio improved to 12.92%, surpassing the 2025 target of 12.5%, despite challenges like exchange rate volatility and insurance acquisition.
Future Co-Growth Project: The group is focusing on supporting new growth and strategic industries through corporate finance expertise, aligning with government policies.
Exchange rate volatility: The weaker won against the U.S. dollar led to a decline in the CET1 ratio by 7 basis points, impacting capital adequacy.
Completion-guarantee projects: KRW 98 billion in provisions were recognized for completion-guarantee projects, with additional provisioning of KRW 200 billion for the year, indicating potential risks in this area.
Collateral value decreases: Preemptive provisioning of KRW 54 billion was made due to decreases in collateral values, reflecting potential risks in asset quality.
KIKO litigation: KRW 32 billion additional provision was set aside due to losses in KIKO litigation, highlighting legal and financial risks.
Goodwill impairment losses: KRW 39 billion in goodwill impairment losses were recognized, indicating challenges in asset valuation.
Economic uncertainties: Concerns over exchange rate volatility, trade negotiations, and a potential slowdown in the real economy pose risks to financial stability and growth.
Credit costs: Credit costs increased by 13.1% from the previous quarter, with a cumulative credit cost of KRW 1,517.6 billion, reflecting higher risk in loan portfolios.
Regulatory and policy risks: Potential regulatory fines and alignment with government policies on household loan growth could impact strategic flexibility.
Capital Management: The group aims to achieve a CET1 ratio of 13% ahead of schedule in 2026, exceeding the 2025 target of 12.5%. This will involve proactive capital management and maintaining a stable capital adequacy ratio despite external uncertainties.
Business Synergies: Woori Financial Group plans to maximize synergies between its banking, brokerage, and insurance businesses to strengthen its position as a comprehensive financial services group. This includes leveraging the insurance acquisition to expand bancassurance sales and integrating operations across group companies.
Noninterest Income Growth: The group will focus on expanding its retail customer base, particularly in the insurance business, and enhancing collaboration between banking and securities IB segments to increase noninterest income and achieve balanced growth.
Loan Growth and Risk Management: The group will manage household loan growth in line with government policies while focusing on corporate finance in new growth areas. Risk management will be strengthened across all processes to ensure sustainable growth without impacting capital ratios and asset quality.
Net Interest Margin (NIM) Stability: The bank plans to maintain a stable NIM of 1.5% for the year by expanding its core deposit base and systematically managing ALM, even if base rates are cut further.
Sustainable Growth Initiatives: Through the Future Co-Growth Project, the group will support the real economy by focusing on new growth and advanced strategic industries, establishing a foundation for long-term growth.
Quarterly Cash Dividend: The Board of Directors of Woori Financial Group approved a quarterly cash dividend of KRW 200 per share with a record date set for November 10.
The earnings call shows stable financial performance with solid interest income and improved noninterest income. The company is focused on strengthening competitiveness and managing capital efficiently. While there are some uncertainties, such as unclear management responses and increased credit costs, the overall sentiment is positive due to strategic growth plans, strong capital ratios, and shareholder return initiatives. The market is likely to react positively, especially with the optimistic guidance and focus on cost efficiency and revenue stability.
The earnings call shows mixed signals. Positive elements include increased dividends, share buybacks, and strong noninterest income growth. However, net income missed expectations, and SG&A expenses rose significantly. The Q&A revealed uncertainties in strategic decisions and unclear management responses, particularly concerning the insurance arm and CET1 ratio target. These factors suggest a neutral market reaction, as positive shareholder returns and growth in noninterest income may offset concerns about missed earnings and rising expenses.
The earnings call highlights several negative factors: increased credit costs, SG&A expenses, and asset quality concerns due to economic uncertainties. Despite some positive aspects like increased dividends and share buybacks, the overall sentiment remains negative due to regulatory challenges, high exchange rates, and unclear management responses in the Q&A section. The lack of strong guidance and the impact of U.S. tariffs further contribute to a negative outlook. The stock price is likely to decline by 2% to 8% over the next two weeks.
The earnings call highlights strong financial performance, with net income and non-interest income showing significant growth. The shareholder return plan, including dividend approval, is a positive indicator. Despite some uncertainties in market conditions and supply chain challenges, the group maintains a stable CET1 ratio and targets further improvements. The Q&A section reveals confidence in achieving financial targets, though some responses lacked clarity. Overall, the positive financial metrics and shareholder return announcements outweigh concerns, suggesting a positive stock price movement in the short term.
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