WF

Woori Financial Group Inc. (Woori Bank) - Form 6-K Summary

Business Context and Reporting Period

This Form 6-K, filed on August 14, 2017, reports the consolidated financial results and business overview for Woori Bank for the first half of 2017 (January 1 to June 30, 2017). The financial statements are prepared in accordance with Korean International Financial Reporting Standards (K-IFRS). The Bank operates as a major financial institution in South Korea with a global network, having recently completed the privatization process initiated by the Korea Deposit Insurance Corporation (KDIC).

Key Financial Metrics

Material Changes vs. Prior Period

• Profitability Surge: Net income attributable to owners increased by approximately 46% year-over-year (from KRW 750.3 billion in 1H 2016 to KRW 1,098.4 billion in 1H 2017). This was driven by a significant reduction in impairment losses due to credit loss (decreased from KRW 430.7 billion to KRW 283.8 billion) and higher net interest income.
• Asset Quality Improvement: The sub-standard and below loan ratio improved to 0.82% in 1H 2017, down from 0.98% in 1H 2016 and 1.47% in 2015. The delinquency ratio also declined to 0.42%.
• Balance Sheet Growth: Total assets grew by 1.7% to KRW 316.1 trillion. Deposits increased by 2.3% to KRW 226.2 trillion, while loans grew by 0.9% to KRW 211.1 trillion.
• Dividend Policy: The cash dividend payout ratio for 1H 2017 was 6.13%, significantly lower than the 21.35% recorded in 2016. The interim cash dividend per share was KRW 100.

Outlook, Risks, and Management Commentary

• Capital Strength: The Bank maintains a robust capital position with a Capital Adequacy Ratio of 15.29% under Basel III standards. The Liquidity Coverage Ratio (LCR) stands at 121.33%, well above the regulatory requirement.
• Privatization Progress: The KDIC, formerly the largest shareholder, continued to reduce its stake. As of June 30, 2017, KDIC held 18.96% of shares, down from 23.37% at the beginning of the period. The Bank is actively managing the transition to a fully privatized structure.
• Strategic Initiatives: The Bank launched "SORi," the first voice recognition AI banking service in Korea, and expanded its overseas network with new branches in India and Poland. It also launched a mobile-only bank, WiBee Bank, which exceeded 3 million users.
• Risks: The filing notes that financial information is prepared under K-IFRS, which differs from US GAAP. The Bank faces standard banking risks including credit risk, market risk, and liquidity risk, though asset quality metrics indicate a stabilizing environment.

Investor Verification Checklist

• Accounting Standards: Verify the impact of K-IFRS vs. US GAAP differences on reported earnings and capital ratios.
• Impairment Trends: Monitor the sustainability of the reduction in credit loss provisions, as this was a primary driver of the 1H 2017 profit increase.
• Shareholder Structure: Track the ongoing reduction of KDIC's stake and the entry of new private investors (e.g., IMM PE, Tongyang Life Insurance) to assess governance stability.
• Dividend Yield: Note the low interim dividend payout (6.13%) compared to historical levels; verify management's guidance on full-year dividend policy.
• Foreign Currency LCR: Review the new Foreign Currency Liquidity Coverage Ratio (94.15%) introduced in 2017 to ensure compliance with evolving regulatory thresholds.