Business Context and Reporting Period
This Form 6-K, filed on March 7, 2022, serves as a convocation notice for the Annual General Meeting (AGM) of Woori Financial Group Inc. (Woori Financial Group) to be held on March 25, 2022. The filing includes unaudited consolidated and separate financial statements for the fiscal year ended December 31, 2021, and proposes amendments to the Articles of Incorporation and the appointment of directors.
Key Financial Metrics (Fiscal Year 2021)
Revenue and Profit (Consolidated):
- Net Interest Income: KRW 6,985,721 million (up from KRW 5,998,512 million in 2020).
- Net Fees and Commissions Income: KRW 1,470,775 million (up from KRW 1,014,039 million in 2020).
- Operating Income: KRW 3,659,749 million (up from KRW 2,080,394 million in 2020).
- Net Income: KRW 2,807,371 million (up from KRW 1,515,249 million in 2020).
- Earnings Per Share (Basic & Diluted): KRW 3,481 (up from KRW 1,742 in 2020).
Balance Sheet and Liquidity (Consolidated as of Dec 31, 2021):
- Total Assets: KRW 447,183,871 million (up from KRW 399,081,017 million in 2020).
- Total Liabilities: KRW 418,333,676 million (up from KRW 372,355,172 million in 2020).
- Total Equity: KRW 28,850,195 million (up from KRW 26,725,845 million in 2020).
- Cash and Cash Equivalents: KRW 7,565,818 million (down from KRW 9,990,983 million in 2020).
- Deposits due to customers: KRW 317,899,871 million.
- Loans and other financial assets at amortized cost: KRW 361,932,872 million.
Cash Flow (Consolidated):
- Net Cash Inflow from Operating Activities: Outflow of KRW 1,800,967 million (compared to inflow of KRW 3,605,975 million in 2020), primarily driven by a net increase in loans and other financial assets.
- Net Cash Outflow from Investing Activities: KRW 10,666,859 million.
- Net Cash Inflow from Financing Activities: KRW 9,075,701 million.
Material Changes Versus Prior Period
- Profitability Surge: Net income increased by approximately 85% year-over-year, driven by higher net interest income and net fees/commissions income.
- Asset Growth: Total assets grew by roughly 12%, with significant increases in loans (up ~13%) and financial assets at fair value through other comprehensive income (FVTOCI) (up ~30%).
- Impairment Reduction: Impairment losses due to credit loss decreased significantly from KRW 784,371 million in 2020 to KRW 536,838 million in 2021.
- Cash Flow Shift: Operating cash flow turned negative in 2021 due to substantial loan growth (KRW 38 billion outflow), whereas 2020 showed a positive operating cash flow.
Guidance, Outlook, and Governance Matters
AGM Agenda and Governance:
- Director Appointments: The AGM will vote on the appointment of four outside directors (Soo-Young Song, Sung-Tae Ro, Sang-Yong Park, Dong-Woo Chang) and one non-standing director (Won-Duk Lee). Won-Duk Lee was internally appointed as President and CEO of Woori Bank in February 2022.
- Audit Committee: Chan-Hyoung Chung is proposed for re-appointment as an outside director serving on the Audit Committee. Sung-Tae Ro and Dong-Woo Chang are also proposed as Audit Committee members.
- Compensation: The total compensation limit for directors is proposed at KRW 3.2 billion for 2022. A performance-linked stock-based compensation system is in place, with payouts finalized in 2026 based on long-term indicators (ROE, net profit, NPL ratio, relative shareholder returns).
- Articles of Incorporation Amendment: A proposed amendment clarifies the interim dividend record date to June 30.
Risks and Contingencies:
- The financial statements included in this filing are unaudited and subject to change. Audited reports will be filed in a future Form 6-K.
- Standard banking risks apply, including credit risk (NPL ratio is a performance metric for compensation) and market risk (foreign currency translation gains/losses impacted comprehensive income).
Investor Verification Checklist
- Verify the final audited financial statements for FY2021 once filed in a subsequent Form 6-K, as current figures are unaudited.
- Monitor the outcome of the AGM on March 25, 2022, regarding the election of new directors and the amendment to the Articles of Incorporation.
- Review the upcoming audited reports for details on the Non-Performing Loan (NPL) ratio, a key metric for executive compensation.
- Assess the impact of the negative operating cash flow in 2021 on future liquidity management, given the heavy investment in loan assets.
- Track the performance of the new CEO of Woori Bank, Won-Duk Lee, and his strategic direction for the group.