Woori Financial Group Inc. - Form 6-K Summary
Business Context and Reporting Period
This Form 6-K filing by Woori Financial Group Inc. (a Korean financial holding company) covers the first half of 2020 (January 1 to June 30, 2020). The report was filed on August 14, 2020. The company operates through a diversified group including Woori Bank, Woori Card, Woori Investment Bank, and various asset management and trust subsidiaries. Financial statements are prepared in accordance with Korean IFRS.
Key Financial Metrics
| Metric | 2020 1H (Consolidated) | Unit |
|---|---|---|
| Operating Income | 1,172,598 | Millions KRW |
| Net Income | 774,033 | Millions KRW |
| Net Income Attributable to Owners | 660,564 | Millions KRW |
| Net Income Per Share (Basic/Diluted) | 887 | KRW |
| Total Assets | 380,077,376 | Millions KRW |
| Total Liabilities | 354,325,688 | Millions KRW |
| Total Equity | 25,751,688 | Millions KRW |
| Return on Assets (ROA) | 0.41% | Annualized |
| Return on Equity (ROE) | 7.08% | Annualized |
| BIS Capital Adequacy Ratio | 12.73% | Group |
| Non-Performing Loan (NPL) Ratio | 0.40% | Group |
| Liquidity Coverage Ratio (Woori Bank) | 104.45% | 2020 2Q Avg |
Material Changes vs. Prior Period
- Profitability Decline: Net income attributable to owners decreased significantly to 660.6 billion KRW in 2020 1H, compared to 1,179.7 billion KRW in 2019 1H. Operating income also fell from 1,710.4 billion KRW to 1,172.6 billion KRW.
- Increased Credit Costs: Impairment losses due to credit loss rose sharply to 446.7 billion KRW in 2020 1H, compared to 136.5 billion KRW in 2019 1H, reflecting the economic impact of the COVID-19 pandemic.
- Asset Growth: Total assets increased to 380.1 trillion KRW from 362.0 trillion KRW at the end of 2019. Loans and other financial assets at amortized cost grew to 306.4 trillion KRW.
- Capital Strength: The Group BIS Capital Adequacy Ratio improved to 12.73% from 11.89% in 2019. However, Woori Bank's capital adequacy ratio decreased slightly to 14.80% from 15.40%.
- Stock Performance: The stock price experienced volatility in early 2020, with the low in March 2020 reaching 6,560 KRW (Domestic) and 15.60 USD (ADS), recovering to 10,350 KRW by June 2020.
Outlook, Risks, and Management Commentary
- COVID-19 Impact: The filing notes the significant increase in impairment losses and the challenging economic environment. The company is subject to temporary easing of financial regulations regarding liquidity coverage ratios (reduced to 85% until September 2020) due to the pandemic.
- Liquidity Position: The Group maintains strong liquidity. Woori Bank's Liquidity Coverage Ratio (LCR) stood at 104.45%, well above the temporary regulatory minimum of 85%. Foreign currency LCR was 115.02%.
- Asset Quality: While the NPL ratio remained stable at 0.40%, the coverage ratio for substandard and below loans improved to 142.4% from 133.6% in 2019, indicating increased provisioning.
- Dividends: There were no board resolutions regarding dividends during the first half of 2020.
Key Facts for Investor Verification
- Credit Loss Provisions: Verify the sustainability of the 446.7 billion KRW impairment loss and the adequacy of future loan loss reserves given the ongoing economic uncertainty.
- Capital Adequacy: Monitor the Group's BIS ratio (12.73%) and Woori Bank's ratio (14.80%) to ensure they remain comfortably above regulatory requirements as risk-weighted assets fluctuate.
- Revenue Mix: Analyze the shift in revenue sources, noting that net interest income remained relatively flat (2,940.8 billion KRW vs 2,931.1 billion KRW in 2019 1H) while non-interest income components like gains on financial instruments at FVTPL increased significantly (401.6 billion KRW vs 80.1 billion KRW).
- Shareholder Structure: The Korea Deposit Insurance Corporation (KDIC) remains the largest shareholder with 17.25% ownership.
- Accounting Standards: Note that financials are prepared under Korean IFRS, which may differ from US GAAP in specific areas.