Woori Financial Group Inc. (Woori Bank) - 2015 Q3 Business Report Summary
Business Context and Reporting Period
This Form 6-K filing covers the third quarter of 2015, with financial data presented as of September 30, 2015. The report details the consolidated and separate financial performance of Woori Bank, a major South Korean financial institution. The filing notes that the Bank merged with its holding company, Woori Finance Holdings, on November 1, 2014, to facilitate privatization. Financial statements are prepared in accordance with Korean IFRS (K-IFRS).
Key Financial Metrics
| Metric | 3Q 2015 (Consolidated) | 3Q 2014 (Consolidated) | Unit |
|---|---|---|---|
| Net Income | 853,894 | 1,359,902 | Millions of Won |
| Net Income Attributable to Owners | 840,150 | 1,376,987 | Millions of Won |
| Operating Income | 968,573 | 966,259 | Millions of Won |
| Total Assets | 297,114,536 | 270,157,219 | Millions of Won |
| Total Deposits | 204,601,751 | 188,516,465 | Millions of Won |
| Total Loans | 247,296,307 | 223,370,135 | Millions of Won |
| Capital Adequacy Ratio (Basel III) | 13.38% | 14.25% | Percentage |
| Liquidity Coverage Ratio | 96.88% | 123.10% | Percentage |
| Earnings Per Share (Basic) | 1,048 | 1,848 | Won |
Material Changes vs. Prior Period
- Profitability Decline: Net income attributable to owners decreased significantly by approximately 39% year-over-year (from 1.38 trillion Won in 3Q 2014 to 840 billion Won in 3Q 2015). This decline is largely attributed to the absence of "Net income from discontinued operations" in 3Q 2015, which contributed 661.8 billion Won in 3Q 2014.
- Asset Growth: Total assets increased by roughly 10% to 297.1 trillion Won, driven by growth in loans and receivables and financial assets.
- Impairment Losses: Impairment losses due to credit loss increased to 925.7 billion Won in 3Q 2015, compared to 637.3 billion Won in 3Q 2014.
- Capital Ratios: The Capital Adequacy Ratio decreased from 14.25% to 13.38%, though it remains well above regulatory requirements. The Liquidity Coverage Ratio dropped to 96.88% from 123.10%.
- Dividends: The cash dividend payout ratio for 3Q 2015 was 20.0%, down from 27.7% in the prior year. Cash dividends per share were 250 Won.
Outlook, Risks, and Management Commentary
- Strategic Developments: The Bank completed the merger with Woori Finance Holdings in November 2014. In 2015, the Bank launched "WiBee Bank," a mobile-only bank, and the "Woori-Samsung Pay Service."
- Asset Quality: The sub-standard and below loan ratio improved to 1.65% in 3Q 2015 from 2.10% in 2014. The delinquency ratio (seasonally adjusted) was 0.83%.
- Shareholder Structure: The Korea Deposit Insurance Corporation (KDIC) remains the largest shareholder with a 51.04% stake as of September 30, 2015, following the sale of a portion of its stake in late 2014.
- Risks: The filing highlights exposure to credit risk through loan portfolios and market risk through financial instruments. The Bank maintains a diversified funding source mix, with local currency deposits comprising 64.69% of funding sources.
Key Facts for Investor Verification
- Discontinued Operations Impact: Verify the extent to which the year-over-year profit decline is due to the one-time gain from discontinued operations in 2014 versus ongoing operational performance.
- Liquidity Position: Monitor the Liquidity Coverage Ratio, which fell below 100% (96.88%) in 3Q 2015, compared to over 120% in the prior year.
- Impairment Trends: Assess the rising trend in impairment losses (up 45% YoY) and its potential impact on future net interest margins.
- Capital Adequacy: Confirm the Bank's ability to maintain its Capital Adequacy Ratio above 13% amidst asset growth and potential regulatory changes.
- Dividend Policy: Note the reduction in the cash dividend payout ratio to 20% and the specific interim dividend amount of 250 Won per share.