Business Context and Reporting Period
This Form 6-K filing by Woori Financial Group Inc. (WFG), dated March 6, 2023, serves as a convocation notice for the Annual General Meeting of Shareholders (AGM) scheduled for March 24, 2023. The filing summarizes the company's record performance for the fiscal year ended December 31, 2022, and proposes amendments to the Articles of Incorporation to facilitate quarterly dividends and enhance internal controls following recent governance concerns.
Key Financial Metrics (FY 2022)
Based on the unaudited consolidated financial statements provided in Appendix A:
- Net Income: 3.32 trillion won (attributable to owners: 3.14 trillion won), representing a 21.4% year-over-year increase.
- Revenue Components: Net interest income was 8.70 trillion won; Net fees and commissions income was 1.71 trillion won.
- Asset Quality: Non-Performing Loan (NPL) ratio of 0.31% with a coverage ratio of 214.2%.
- Total Assets: 480.47 trillion won (up from 447.18 trillion won in 2021).
- Dividends: Total dividend of 1,130 won per share for FY 2022 (including 150 won interim), a 25.6% increase from the prior year.
- Cash Flow: Net cash inflow from operating activities was 18.62 trillion won.
- Debt and Liquidity: Total deposits due to customers were 342.11 trillion won. Borrowings totaled 28.43 trillion won, and debentures were 44.20 trillion won.
Material Changes Versus Prior Period
- Profitability: Net income grew significantly by 21.4% compared to 2021, driven by higher net interest income (up 24.5%) and net fee income (up 16.3%).
- Balance Sheet Expansion: Total assets increased by approximately 33.29 trillion won, primarily due to growth in loans and other financial assets at amortized cost (up 6.88 trillion won) and cash equivalents (up 13.61 trillion won).
- Impairment Losses: Impairment losses due to credit loss increased to 885.27 billion won from 536.84 billion won in 2021.
- Equity: Total equity increased to 31.63 trillion won from 28.85 trillion won, aided by retained earnings growth and the issuance of hybrid securities.
Guidance, Outlook, and Governance Changes
Dividend Policy: Management proposes amending the Articles of Incorporation to allow for quarterly dividends (March, June, September) to improve predictability for shareholders. The record date procedure for fiscal year-end dividends will also be modified.
Governance and Internal Controls: In response to incidents of mis-selling and employee embezzlement, the Board proposes:
- Integrating the Internal Control Management Committee into the Audit Committee to strengthen oversight.
- Appointing an additional director with prior internal control experience to the Audit Committee.
- Enhancing consumer protection systems and internal control frameworks.
Board Elections: The AGM will vote on the appointment of Executive Director Jong-Yong Yim and Independent Directors Su-Young Yun and Sung-Bae Ji, alongside the re-election of Chan-Hyoung Chung. The Board emphasizes the candidates' expertise in finance, securities, and asset management.
Risks: The filing acknowledges recent operational risks related to employee conduct and mis-selling, which prompted the proposed governance restructuring.
Investor Verification Checklist
- Verify the final audited financial statements, as the figures in this filing are unaudited and subject to change.
- Confirm the outcome of the AGM vote on the Articles of Incorporation amendments regarding quarterly dividends.
- Monitor the implementation of the new internal control structure and the integration of the Internal Control Management Committee into the Audit Committee.
- Review the specific details of the performance-linked stock-based compensation system for directors, which is separate from the compensation limit and payable in 2027.
- Assess the impact of rising impairment losses (885 billion won) on future asset quality trends.