Woori Financial (WF)2025-04-25 18:12Financial Data and Key Metrics Changes - In Q1 2025, Woori Financial Group's net income was KRW 615.6 billion, which was below market expectations due to conservative provisioning and one-off costs [3][4] - The group's net operating revenue increased by 2.4% year-over-year and 6.6% quarter-over-quarter to KRW 2,609.5 billion [5] - The return on equity (ROE) stood at 9.5% [4] - The credit cost was KRW 435.5 billion, representing an 18.8% year-over-year increase [6] - The preliminary CET1 ratio improved by 30 basis points to 12.42% [8][23] Business Line Data and Key Metrics Changes - Interest income remained stable at KRW 252 billion, while net interest income increased by 2% year-over-year to KRW 357.5 billion [10][14] - Core fee income reached KRW 511.4 billion, driven by growth in wealth management efforts [15] - The bank's loan portfolio totaled KRW 330 trillion, showing a slight 1% decrease from the end of the previous year [12] - Retail loans remained stable at KRW 144 trillion, in line with government policies on household debt management [13] Market Data and Key Metrics Changes - The bank's net interest margin (NIM) was 1.44%, with the group's NIM, including credit card business, at 1.70%, reflecting a 4 basis point increase from the previous quarter [10] - The economic environment remains challenging, with higher delinquency and non-performing loan (NPL) ratios due to uncertainties in the Korean economy [7] Company Strategy and Development Direction - The company aims to achieve a CET1 ratio of 12.5% within the year, focusing on asset rebalancing and risk management [9][23] - Woori Financial Group is actively managing high-risk and distressed assets to stabilize credit costs [7] - The group is diversifying revenue sources and strengthening noninterest businesses to enhance profitability [5][15] - Plans to enter the insurance business are underway, with expectations of annual profit increases of KRW 300 billion to KRW 400 billion post-acquisition [30] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging internal and external business environment, emphasizing the need for proactive risk management [4][21] - The company is prepared for potential impacts from prolonged high exchange rates and U.S. tariff policies [21][28] - Future growth is expected to be cautious, with a focus on maintaining asset soundness and capital adequacy [14][32] Other Important Information - The Board of Directors approved a Q1 dividend of KRW 200 per share, an 11% increase year-over-year [9][24] - The group is executing a share buyback program totaling KRW 150 billion [24] Q&A Session Summary Question: Concerns about capital policy and RWA allocation - Management acknowledged the need for balanced growth between bank and nonbank sectors and emphasized focusing on high-growth potential companies to improve capital ratios [35][38] Question: Performance of digital investments and targets - The company reported an MAU of 8.5 million for its super app, aiming to increase it to 9 million by year-end [44][45] Question: Impact of life insurance acquisition on capital ratio - Management stated that while the impact of the acquisition is still being assessed, they do not expect a significant negative effect on capital ratios [48][51] Question: Credit cost ratio awareness and improvement plans - Management acknowledged the higher credit cost ratio compared to peers and indicated that active measures are being taken to manage and improve it [56][61] Question: NIM trends and expectations - The company expects NIM to remain stable despite potential rate cuts, with a focus on increasing core assets [78][80] Question: Budget Telecom service expectations - The new service aims to attract younger customers and enhance existing customer activation through bundled offerings [82][84]