Business Context and Reporting Period
This Form 6-K filing by Woori Financial Group Inc. covers the third quarter of 2019, with financial data as of September 30, 2019. The company was established on January 11, 2019, via a comprehensive stock transfer of Woori Bank and five other subsidiaries, and listed on the Korea Exchange (KRX) on February 13, 2019. During the quarter, the group integrated Woori Card and Woori Investment Bank as first-tier subsidiaries and acquired additional asset management firms. Financial statements are prepared under Korean IFRS (K-IFRS).
Key Financial Metrics
| Metric | Value (KRW) | Notes |
|---|---|---|
| Total Assets | 370.58 trillion | Consolidated |
| Total Liabilities | 346.30 trillion | Consolidated |
| Total Equity | 24.28 trillion | Consolidated |
| Operating Income | 2.37 trillion | Q3 2019 |
| Net Income | 1.81 trillion | Q3 2019 |
| Net Income (Controlling Interest) | 1.67 trillion | Q3 2019 |
| Net Interest Income | 4.42 trillion | Q3 2019 |
| Impairment Losses (Credit) | 323.76 billion | Q3 2019 |
| BIS Capital Adequacy Ratio | 11.44% | Group Level |
| Non-Performing Loan (NPL) Ratio | 0.42% | Group Level |
| Return on Assets (ROA) | 0.67% | Annualized, incl. non-controlling |
| Return on Equity (ROE) | 12.22% | Annualized, incl. non-controlling |
Material Changes and Trends
- Revenue and Profit: Operating income for Q3 2019 was 2.37 trillion KRW. The filing does not provide a direct comparable Q3 2018 figure for the consolidated group due to the company's establishment in January 2019; however, net income attributable to owners was 1.67 trillion KRW.
- Asset Growth: Total assets increased to 370.58 trillion KRW from 340.45 trillion KRW in 2018 (pre-combination baseline). Loans and other financial assets at amortized cost grew to 300.16 trillion KRW.
- Capital Structure: On September 10, 2019, the company issued 42.1 million new common shares via a stock exchange with Woori Card. The Korea Deposit Insurance Corporation (KDIC) remains the largest shareholder with 17.25% ownership.
- Asset Quality: The NPL ratio improved to 0.42% from 0.43% in the prior year for Woori Bank. The substandard and below coverage ratio stands at 136.5%.
- Liquidity: The Liquidity Coverage Ratio (LCR) for Woori Bank was 105.56%, exceeding the regulatory minimum. Won liquidity ratio for the group was 4,634.99%.
Outlook, Risks, and Management Commentary
Management Commentary: The filing highlights the successful integration of Woori Card and Woori Investment Bank as first-tier subsidiaries, expanding the group's financial services ecosystem. The group continues to maintain strong capital adequacy ratios across all major subsidiaries, with Woori Bank at 15.17% and Woori Investment Bank at 12.94%.
Risks and Contingencies:
- Credit Risk: Impairment losses due to credit loss were 323.76 billion KRW in Q3 2019, a significant increase compared to 55.42 billion KRW in Q3 2018 (subsidiary level data).
- Regulatory Compliance: Capital adequacy ratios are subject to change as figures are preliminary. The group adheres to Basel III standards.
- Market Risk: The filing notes exposure to foreign currency liquidity, with Woori Investment Bank maintaining a foreign currency liquidity ratio of 115.1%.
Dividends: No dividends have been declared for any period up to Q3 2019 since the company's establishment.
Investor Verification Checklist
- Capital Adequacy: Verify the final BIS capital adequacy ratio for the group and subsidiaries, as Q3 2019 figures are marked as preliminary.
- Credit Loss Provisions: Investigate the drivers behind the sharp increase in impairment losses (323.76 billion KRW) compared to the prior year.
- Integration Progress: Assess the operational and financial impact of integrating Woori Card and Woori Investment Bank as first-tier subsidiaries.
- Shareholder Structure: Confirm the stability of the KDIC's 17.25% stake and any potential changes in voting rights restrictions.
- Liquidity Position: Monitor the Liquidity Coverage Ratio (LCR) trends to ensure continued compliance with regulatory minimums (80% for foreign currency).