Woori Finance Holdings Co., Ltd. - Form 6-K Summary
Business Context and Reporting Period
This Form 6-K, filed on May 30, 2012, summarizes the First Quarter (1Q) 2012 business report for Woori Finance Holdings Co., Ltd. (Woori Finance Holdings). The company operates as a financial holding company under the Financial Holding Company Act, with primary income derived from dividends paid by its subsidiaries. Its portfolio includes banking (Woori Bank, Kwangju Bank, Kyongnam Bank), securities (Woori Investment & Securities), insurance (Woori Aviva Life Insurance), asset management, consumer finance, and IT services. The financial statements are prepared in accordance with Korean IFRS.
Key Financial Metrics (1Q 2012)
| Metric | Consolidated (Millions KRW) | Separate (Millions KRW) |
|---|---|---|
| Total Assets | 319,046,646 | 18,876,690 |
| Total Liabilities | 296,463,165 | 4,178,392 |
| Total Equity | 22,583,481 | 14,698,298 |
| Net Income (Consolidated) | 714,364 | 501,448 (Separate) |
| Net Income Attributable to Owners | 645,024 | - |
| Earnings Per Share (Won) | 794 | 616 (Separate) |
| Dividend Income (Separate) | - | 544,924 |
| Net Interest Income (Consolidated) | 1,862,073 | (46,538) (Separate) |
| Impairment Losses (Consolidated) | 433,726 | - |
Liquidity and Capital: The consolidated BIS Ratio stands at 12.66%. The separate debt ratio is 28.43%. Cash and cash equivalents on a consolidated basis were 5,858,444 million KRW.
Material Changes vs. Prior Period
- Profitability: Consolidated Net Income attributable to owners for 1Q 2012 was 645,024 million KRW, compared to 2,136,828 million KRW for the full year 2011. On a quarterly basis, 1Q 2012 EPS (794 Won) represents a significant increase from 1Q 2011 (375 Won) on a separate basis.
- Asset Growth: Consolidated total assets increased to 319.0 trillion KRW in 1Q 2012 from 312.8 trillion KRW in 2011.
- Impairment: Consolidated impairment losses for loans and receivables were 433,726 million KRW in 1Q 2012, a decrease from 2,268,927 million KRW in the full year 2011.
- Capital Structure: Hybrid securities increased to 498,407 million KRW in 1Q 2012 from 309,010 million KRW in 2011.
Outlook, Risks, and Management Commentary
- Strategic Expansion: The company established Woori FG Savings Bank Co., Ltd. as a wholly-owned subsidiary to target the lower-income financial services market and diversify its portfolio. This involved purchasing assets and assuming liabilities from Samhwa Mutual Savings Bank.
- Corporate Governance: Following the March 30, 2012 shareholders' meeting, the Board of Directors was reconstituted with new appointments, including Yong-Man Rhee and John Ji Whan Park. The board maintains various committees including Risk Management, Audit, and Ethics.
- Credit Quality: The filing details the 20 largest loan exposures classified as sub-standard or below, totaling 16,339 million KRW in exposure with 9,346 million KRW in loan loss reserves. Major exposures include construction and manufacturing sectors.
- Ratings: The company maintains a AAA credit rating for its debentures from major Korean rating agencies (Korea Ratings, NICE, KIS) as of early 2012.
Investor Verification Checklist
- Dividend Dependency: Verify the sustainability of the holding company's income, which relies heavily on dividend distributions from subsidiaries (544,924 million KRW in 1Q 2012).
- Subsidiary Performance: Review the specific performance of Woori Bank (the largest asset holder) and Woori Investment & Securities, as their results drive the consolidated figures.
- Non-Performing Loans: Assess the concentration of sub-standard loans in the construction and manufacturing sectors and the adequacy of the 9,346 million KRW loan loss reserve.
- Accounting Standards: Note that financial data is prepared under Korean IFRS, which may differ from US GAAP in significant respects.
- Shareholder Structure: Confirm the controlling interest of the Korea Deposit Insurance Corporation (KDIC), which holds 56.97% of the common stock.