Woori Finance Holdings Co., Ltd. - Form 6-K Summary
Business Context and Reporting Period
This Form 6-K, filed on August 14, 2013, reports the first-half (1H) 2013 business and financial results for Woori Finance Holdings Co., Ltd., a South Korean financial holding company. The company operates a diversified financial group including banking (Woori Bank, Kwangju Bank, Kyongnam Bank), securities (Woori Investment & Securities), insurance (Woori Aviva Life Insurance), and consumer finance. The reporting period covers January 1, 2013, through June 30, 2013. Financial statements are prepared in accordance with Korean IFRS.
Key Financial Metrics (Consolidated)
- Net Income: KRW 444,389 million (1H 2013) vs. KRW 1,093,590 million (1H 2012). Net income attributable to owners was KRW 358,346 million.
- Operating Income: KRW 635,444 million (1H 2013) vs. KRW 1,395,248 million (1H 2012).
- Total Assets: KRW 336,665,684 million as of June 30, 2013, an increase from KRW 327,101,814 million at year-end 2012.
- Loans and Receivables: KRW 264,762,827 million, representing the largest asset category.
- Deposits: KRW 206,654,332 million.
- Capital Adequacy (BIS Ratio): 12.65% (preliminary) as of June 30, 2013, compared to 12.83% for the full year 2012.
- Earnings Per Share (EPS): KRW 426 (1H 2013) vs. KRW 1,185 (1H 2012).
Material Changes vs. Prior Period
- Profitability Decline: Net income and operating income decreased significantly compared to 1H 2012. This was primarily driven by a substantial increase in impairment losses on credit losses (KRW 1,123,366 million in 1H 2013 vs. KRW 1,358,656 million in 1H 2012, though the net impact on income was negative due to other factors) and a reduction in gains on available-for-sale financial assets.
- Asset Growth: Total assets grew by approximately 2.9% year-over-year, driven by an increase in loans and receivables.
- Structural Changes:
- Woori Card Spin-off: In April 2013, the credit card business was spun off from Woori Bank to become a wholly-owned subsidiary (Woori Card).
- Kumho Investment Bank Acquisition: In June 2013, the company acquired a 41.64% equity stake in Kumho Investment Bank, making it a first-tier subsidiary.
- Accounting Reclassifications: Beginning in 1H 2013, the company reclassified special reserves for principal guaranteed trusts from liabilities to equity and moved certain credit card commissions from interest income to fees income. Prior period figures have been restated.
Outlook, Risks, and Management Commentary
- Management Strategy: The company aims to build a competitive savings bank through synergy between subsidiaries and the reduction of non-performing assets. Woori FG Savings Bank is focused on serving the lower-income class.
- Research Function: Woori Finance Research Institute was established in December 2012 to serve as a "think tank" for the group.
- Risk Exposure: The top 30 largest credit exposures include major entities such as Korea Land & Housing Corporation, Hyundai Heavy Industries, and Samsung Electronics. The top 20 sub-standard or below loan exposures are concentrated in the shipbuilding and construction sectors.
- Dividends: The company has maintained a cash dividend of KRW 250 per share for the years 2010, 2011, and 2012.
Key Facts for Investor Verification
- Major Shareholder: The Korea Deposit Insurance Corporation (KDIC) holds 56.97% of the common stock.
- Subsidiary Performance: Verify the specific contribution of Woori Bank (the largest subsidiary by assets) to the consolidated results, as the holding company's income is largely derived from dividends.
- Non-Performing Loans (NPLs): Review the detailed breakdown of the KRW 29,618 million in sub-standard or below loans, particularly the exposure to the shipbuilding industry.
- Accounting Adjustments: Confirm the impact of the reclassification of credit card commissions and principal guaranteed trust reserves on year-over-year comparability.
- Integration of New Subsidiaries: Monitor the integration progress and financial impact of the newly acquired Kumho Investment Bank and the spun-off Woori Card.