Woori Financial Group Inc. (Woori Bank) - Form 6-K Summary
Business Context and Reporting Period
This Form 6-K, filed on April 2, 2018, provides a summary of Woori Bank's 2017 Business Report. The filing covers the fiscal year ended December 31, 2017. Woori Bank is a major South Korean financial institution operating under Korean IFRS. The bank completed its privatization process in 2016 and 2017, significantly reducing the ownership stake of the Korea Deposit Insurance Corporation (KDIC).
Key Financial Metrics (Fiscal Year 2017)
| Metric | 2017 Value | Unit |
|---|---|---|
| Operating Income | 2,156,742 | Millions KRW |
| Net Income (Consolidated) | 1,530,088 | Millions KRW |
| Net Income Attributable to Owners | 1,512,148 | Millions KRW |
| Earnings Per Share (Basic) | 1,999 | KRW |
| Total Assets | 316,295,461 | Millions KRW |
| Total Deposits | 234,695,084 | Millions KRW |
| Total Loans | 267,106,204 | Millions KRW |
| Capital Adequacy Ratio (BIS) | 15.40 | % |
| Liquidity Coverage Ratio | 101.23 | % |
| Sub-standard and Below Loan Ratio | 0.83 | % |
Material Changes vs. Prior Period
- Profitability Growth: Net income attributable to owners increased by approximately 19.9% year-over-year, rising from 1.26 trillion KRW in 2016 to 1.51 trillion KRW in 2017. Operating income grew by 37% to 2.16 trillion KRW.
- Asset Expansion: Total assets increased by 1.8% to 316.3 trillion KRW. Total loans grew by 3.4% to 267.1 trillion KRW, while deposits increased by 6.2% to 234.7 trillion KRW.
- Asset Quality Improvement: The sub-standard and below loan ratio improved significantly, dropping from 0.98% in 2016 to 0.83% in 2017. The delinquency ratio also decreased from 0.46% to 0.34%.
- Shareholder Structure: The KDIC reduced its ownership stake from 23.37% at the beginning of 2017 to 18.43% at year-end through a series of sales to private investors and employee stock ownership associations.
Guidance, Outlook, and Risks
The filing does not contain specific forward-looking financial guidance or numerical targets for 2018. Management commentary highlights the successful completion of privatization and the inauguration of a new President and CEO, Tae-Seung Sohn, in December 2017. The bank continues to expand its global network, exceeding 300 global networks by the end of 2017.
Risks and Contingencies:
- Accounting Standards: Financial information is prepared under Korean IFRS, which differs in certain respects from U.S. GAAP.
- Related Party Transactions: Significant credit extensions exist to major shareholders and affiliates, including loans totaling 750 billion KRW to the KDIC and 250 billion KRW to Woori Card.
- Market Exposure: The bank maintains significant exposure to foreign currency loans and deposits, subject to exchange rate fluctuations.
Investor Verification Checklist
- Verify the impact of the KDIC's continued divestiture on future governance and strategic direction.
- Review the detailed breakdown of "Other net operating income (expenses)" which showed a significant improvement from a loss of 367 billion KRW in 2016 to a loss of 31 billion KRW in 2017.
- Confirm the sustainability of the improved asset quality metrics (NPL ratios) in the context of the broader Korean economic environment.
- Assess the implications of the 1.8% decline in the Liquidity Coverage Ratio (from 109.61% to 101.23%) relative to regulatory requirements.
- Examine the specific terms and risk profiles of the related party loans to the KDIC and Woori Card.