Woori Financial Group Inc. (Woori Bank) - 1Q 2016 Summary
Business Context and Reporting Period
This Form 6-K filing covers the first quarter of 2016 (ended March 31, 2016) for Woori Bank, a major South Korean financial institution. The report includes consolidated and separate financial statements prepared in accordance with Korean IFRS. The bank operates a diversified business group including subsidiaries in credit cards, investment banking, and international banking (China, Indonesia, Russia, Brazil, etc.). The Korea Deposit Insurance Corporation (KDIC) remains the largest shareholder with a 51.06% stake.
Key Financial Metrics
| Metric | 1Q 2016 | 1Q 2015 | 2015 Full Year |
|---|---|---|---|
| Net Income (Consolidated) | KRW 446.5 billion | KRW 300.0 billion | KRW 1,075.4 billion |
| Net Income (Attributable to Owners) | KRW 443.3 billion | KRW 290.8 billion | KRW 1,059.2 billion |
| Operating Income | KRW 556.3 billion | KRW 297.3 billion | KRW 1,351.6 billion |
| Net Interest Income | KRW 1,243.7 billion | KRW 1,136.8 billion | KRW 4,761.9 billion |
| Total Assets | KRW 308.9 trillion | KRW 291.9 trillion | KRW 270.2 trillion |
| Total Deposits | KRW 218.0 trillion | KRW 209.1 trillion | KRW 188.5 trillion |
| Total Loans | KRW 206.2 trillion | KRW 203.1 trillion | KRW 184.3 trillion |
| Capital Adequacy Ratio (Basel III) | 13.55% | 13.66% | 14.25% |
| Liquidity Coverage Ratio | 114.92% | 106.67% | 123.10% |
| Sub-standard Loan Ratio | 1.38% | 1.47% | 2.10% |
| Earnings Per Share (Basic) | KRW 584 | KRW 373 | KRW 1,301 |
Material Changes vs. Prior Period
- Profitability Surge: Net income attributable to owners increased by approximately 52.8% year-over-year (from KRW 290.8 billion to KRW 443.3 billion). This was driven by a significant reduction in impairment losses due to credit loss (KRW 180.2 billion in 1Q 2016 vs. KRW 299.3 billion in 1Q 2015) and higher net interest income.
- Asset Growth: Total assets grew by 5.8% to KRW 308.9 trillion, supported by increases in loans and receivables and deposits.
- Asset Quality Improvement: The sub-standard and below loan ratio improved to 1.38% from 1.47% in the prior year. The delinquency ratio also decreased to 0.70% from 0.82%.
- Capital Structure: The bank maintains a strong capital position with a Capital Adequacy Ratio of 13.55%. The filing notes that excluding five newly included subsidiaries post-merger, the ratio would be 15.05%.
Outlook, Risks, and Management Commentary
- Strategic Developments: The bank continues to expand its digital presence, having launched "WiBee Bank" (mobile-only) and "WibeeTalk" (messenger service) in early 2016. It also expanded overseas with services in Cambodia.
- Dividends: No cash dividends were declared for 1Q 2016. The last cash dividend was paid in 2015 (KRW 500 per share).
- Risks and Contingencies: The bank faces standard banking risks including credit risk, market risk, and liquidity risk. The filing highlights specific exposure to major shipbuilders and construction firms (Sambu Construction, Landmark), noting that excluding these entities, the sub-standard loan ratio would be lower (1.03%).
- Related Party Transactions: Significant credit extensions exist to the largest shareholder, KDIC (KRW 1.2 trillion in loans and bonds), and subsidiaries like Woori Card and Woori Investment Bank.
Key Facts for Investor Verification
- Shareholder Structure: Verify the stability of the KDIC's 51.06% ownership and any potential future privatization plans mentioned in the context of the 2014 merger.
- Credit Quality Concentration: Assess the specific exposure to the shipbuilding and construction sectors, as the sub-standard loan ratio is sensitive to these specific borrowers.
- Dividend Policy: Confirm the timeline for the next dividend declaration, as none were paid in 1Q 2016 despite strong earnings.
- Regulatory Compliance: Note that financial statements are prepared under Korean IFRS, which may differ from US GAAP in specific areas.
- Subsidiary Integration: Review the impact of the five subsidiaries newly included in the consolidation post-merger on the reported capital adequacy ratios.