Business Context and Reporting Period
This Form 6-K, filed on April 1, 2013, by Woori Finance Holdings Co., Ltd. (Woori Financial Group), summarizes the company's 2012 Business Report and includes audit reports for the fiscal year ended December 31, 2012. Woori Finance Holdings operates as a financial holding company under the Korean Financial Holding Company Act. Its primary business scope involves the acquisition and ownership of shares in financial service companies, corporate management of subsidiaries, and funding support for affiliates. The group's operations span banking, securities, insurance, asset management, consumer finance, and financial IT services.
Key Financial Metrics (Fiscal Year 2012)
Financial data is presented in millions of Won (KRW) unless otherwise noted. The consolidated figures reflect the group's performance, while separate figures reflect the holding company.
| Metric | Consolidated (2012) | Separate (2012) |
|---|---|---|
| Total Assets | 325,705,933 | 18,446,604 |
| Net Income | 1,797,875 | 396,898 |
| Net Income Attributable to Owners | 1,583,580 | N/A |
| Operating Income | 2,228,571 | 397,980 |
| Total Equity | 23,002,713 | 14,571,676 |
| Total Liabilities | 302,703,220 | 3,874,928 |
| Debt Ratio (Separate) | 26.59% | 26.59% |
| BIS Ratio (Consolidated) | 12.83% | N/A |
| Earnings Per Share (Consolidated) | 1,931 Won | 459 Won (Separate) |
Dividend Information (2012): The company paid a cash dividend of 250 Won per share, resulting in a total cash payout of 201,503 million Won and a payout ratio of 12.72%.
Material Changes vs. Prior Period
- Profitability: Consolidated Net Income decreased by approximately 26% from 2,433,280 million Won in 2011 to 1,797,875 million Won in 2012. Net Income Attributable to Owners fell from 2,136,828 million Won to 1,583,580 million Won.
- Asset Growth: Total Consolidated Assets increased by 4.1% to 325.7 trillion Won, driven by growth in Loans and Receivables (up to 250.1 trillion Won) and Financial Assets at Fair Value.
- Impairment Losses: Impairment losses on credit losses remained significant at 2,121,102 million Won in 2012, compared to 2,268,927 million Won in 2011.
- Capital Structure: Hybrid Securities increased from 309,010 million Won in 2011 to 498,407 million Won in 2012.
- Subsidiary Expansion: The group expanded its footprint through the acquisition of assets from Solomon Savings Bank by Woori FG Savings Bank in September 2012 and the establishment of the Woori Finance Research Institute in December 2012.
Outlook, Risks, and Management Commentary
Management Strategy: The company aims to build a competitive savings bank through synergy between subsidiaries and the reduction of non-performing assets. Woori FG Savings Bank is positioned to support government policies for financial services for the lower-income class. The newly established Woori Finance Research Institute serves as a "think tank" to enhance operational efficiency and research capacity.
Credit Quality: The filing details the 20 largest loan exposures classified as sub-standard or below, totaling 11,694 hundred million Won (approx. 1.17 trillion Won) with loan loss reserves of 2,906 hundred million Won. Major exposures include manufacturing, real estate, and construction sectors.
Risks and Contingencies:
- Accounting Standards: Financial information is prepared under Korean IFRS, which differs in certain respects from US GAAP.
- Concentration Risk: Significant credit exposure exists with major Korean corporations and government-related entities (e.g., Korea Land & Housing Corporation, Hyundai Heavy Industries).
- Market Volatility: The group holds significant financial assets at fair value through profit or loss, subjecting earnings to market fluctuations.
Guidance: The filing does not provide specific forward-looking financial guidance or earnings forecasts for 2013.
Key Facts for Investor Verification
- Ownership Structure: The Korea Deposit Insurance Corporation (KDIC) is the largest shareholder, holding 56.97% of common stock as of December 31, 2012.
- Subsidiary Performance: Verify the individual performance of key subsidiaries, particularly Woori Bank (Total Assets: 237.9 trillion Won in 2011) and Woori Investment & Securities, as the holding company's income is primarily derived from dividends.
- Non-Performing Loans (NPLs): Review the specific details of the 20 largest sub-standard loan exposures to assess credit risk concentration in the manufacturing and construction sectors.
- Regulatory Capital: Confirm the adequacy of the BIS Ratio (12.83%) against regulatory requirements and peer benchmarks.
- Dividend Policy: Note the consistent cash dividend of 250 Won per share over the past three years (2010-2012) despite fluctuating net income.