Woori Financial Group Inc. (Woori Bank) - Form 6-K Summary
Business Context and Reporting Period
This Form 6-K, filed on March 31, 2017, provides a summary of the 2016 Business Report for Woori Bank (the "Bank"), a foreign private issuer headquartered in Seoul, Korea. The financial data presented is based on Korean International Financial Reporting Standards (K-IFRS) consolidated statements for the fiscal year ended December 31, 2016. The Bank operates as a universal bank with a significant international presence, including subsidiaries in China, Russia, Indonesia, Brazil, and the Philippines.
Key Financial Metrics (Fiscal Year 2016)
| Metric | 2016 Value | Unit |
|---|---|---|
| Net Income | 1,277,533 | Millions of Won |
| Operating Income | 1,574,206 | Millions of Won |
| Total Assets | 310,682,727 | Millions of Won |
| Total Deposits | 221,020,411 | Millions of Won |
| Total Loans | 209,190,547 | Millions of Won |
| Capital Adequacy Ratio (Basel III) | 15.29 | % |
| Liquidity Coverage Ratio | 109.61 | % |
| Earnings Per Share (Basic) | 1,567 | Won |
| Cash Dividend Payout Ratio | 21.35 | % |
Material Changes vs. Prior Period
- Profitability Growth: Net income increased by approximately 18.8% year-over-year, rising from KRW 1,075,392 million in 2015 to KRW 1,277,533 million in 2016. Operating income grew by 16.5% to KRW 1,574,206 million.
- Asset Expansion: Total assets grew by 6.5% to KRW 310.7 trillion, driven by increases in loans and receivables and financial assets.
- Improved Asset Quality: The sub-standard and below loan ratio improved significantly, dropping from 1.47% in 2015 to 0.98% in 2016. The delinquency ratio (seasonally adjusted) also decreased from 0.82% to 0.46%.
- Capital Strength: The Capital Adequacy Ratio increased from 13.66% in 2015 to 15.29% in 2016, reflecting a stronger capital base relative to risk-weighted assets.
- Dividend Policy: The cash dividend payout ratio decreased to 21.35% in 2016 from 31.80% in 2015, with a cash dividend per share of KRW 400 (down from KRW 500).
Outlook, Risks, and Contingencies
- Privatization Progress: A major strategic development in 2016 was the successful privatization efforts by the Korea Deposit Insurance Corporation (KDIC). The KDIC sold a combined 29.7% ownership interest to seven financial companies, reducing its stake from a controlling interest to approximately 23.37% (as of Dec 31, 2016), further decreasing to 21.37% by January 31, 2017.
- Digital Transformation: The Bank continues to expand its digital footprint, with the WiBee platform (including WiBee Talk and WiBee Members) exceeding 3 million users by the end of 2016. The Bank also launched offshore Won-Yuan clearing services.
- Regulatory Compliance: The Bank maintains compliance with Basel III standards. The filing notes that financial statements are prepared under K-IFRS, which differs in certain respects from U.S. GAAP.
- Related Party Transactions: The Bank maintains credit extensions to major shareholders and affiliates, including loans and bonds to the KDIC and loans to subsidiaries like Woori Card and Woori Investment Bank.
Key Facts for Investor Verification
- Accounting Standards: Verify the impact of K-IFRS vs. U.S. GAAP differences on reported earnings and asset valuations.
- KDIC Stake Reduction: Confirm the final ownership percentage of the KDIC and the identity of the new major shareholders following the privatization sales.
- Asset Quality Exclusions: Note that the reported sub-standard loan ratio of 0.98% excludes four major shipbuilders; verify the exposure to these specific entities if included.
- Dividend Yield: The cash dividend yield was 3.01% in 2016, a decrease from 5.50% in 2015; assess the sustainability of the payout ratio given the retained earnings growth.
- Merger Integration: Review the integration status of the 2014 merger with Woori Finance Holdings, which consolidated the group structure.