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Business Context and Reporting Period

This Form 6-K filing by Woori Finance Holdings Co., Ltd. (Woori) reports the results of the Annual General Meeting of Shareholders held on March 26, 2008, and includes the audited consolidated financial statements for the fiscal years ended December 31, 2007, and 2006. Woori is a financial holding company managing a group of subsidiaries including Woori Bank, Kyongnam Bank, Kwangju Bank, and Woori Investment Securities. The filing confirms the ratification of the 2007 financial statements and the appointment of directors.

Key Financial Metrics (Fiscal Year 2007)

Note: Cash flow from operating activities was negative (KRW 23.1 trillion used) in 2007 compared to KRW 38.6 trillion used in 2006, primarily due to significant increases in loans and trading securities.

Material Changes vs. Prior Period

• Revenue Growth: Operating revenue increased by approximately 34% to KRW 26.65 trillion, driven largely by gains on derivatives (KRW 6.35 trillion) and foreign exchange gains (KRW 2.90 trillion).
• Expense Increase: Operating expenses rose by 38% to KRW 23.61 trillion. This was significantly impacted by losses on derivative transactions (KRW 6.43 trillion) and foreign exchange losses (KRW 2.63 trillion), which offset the gains.
• Asset Expansion: Total assets grew by 17.7% to KRW 249.6 trillion. Loans increased by KRW 26.8 trillion, and trading securities increased by KRW 3.4 trillion.
• Dividend Reduction: The dividend per share was reduced from 600 KRW in 2006 to 250 KRW in 2007, representing a payout ratio of 9.92% compared to 23.83% in the prior year.
• Impairment Charges: The company recognized a significant loss on impairment of available-for-sale securities of KRW 453.5 billion in 2007, compared to KRW 2.6 billion in 2006. This was largely attributed to investments in Collateralized Debt Obligations (CDOs) linked to the U.S. subprime market.

Guidance, Outlook, Risks, and Unusual Items

• Subprime Exposure: The filing explicitly details exposure to U.S. subprime credit markets. Woori Bank recognized a loss of KRW 454.7 billion in 2007 related to CDOs. Management expects conditions in the U.S. residential real estate and credit markets to remain uncertain, noting that future fair value estimates could differ significantly.
• Derivative Volatility: The income statement shows massive volatility in derivative gains and losses. While gains on valuation of derivatives were KRW 2.26 trillion, losses on valuation were KRW 2.33 trillion, indicating high sensitivity to market movements.
• Subsequent Event: On January 30, 2008, the Board approved the acquisition of 51% of LIG Life Insurance Co., Ltd. for KRW 76.3 billion to expand into the insurance business.
• Management Improvement Plan: The company remains subject to agreements with the Korea Deposit Insurance Corporation (KDIC) to meet specific financial ratio targets (BIS capital ratio, ROA, NPL rate). Failure to meet these could result in capital adjustments or business restrictions.

Key Facts for Investor Verification

• CDO Exposure: Verify the current fair value and potential further impairment of the CDO portfolio (USD 1.09 billion face value) given the ongoing global financial instability.
• Derivative Hedging Effectiveness: Assess the net impact of derivative positions, as gross gains and losses are substantial and nearly offset each other, masking underlying risk.
• Dividend Policy: Confirm the rationale for the significant reduction in dividend payout (from 12% to 5% of par value) and its impact on shareholder returns.
• Loan Quality: Review the classification of loans, noting that while the allowance ratio decreased slightly to 1.38%, the absolute provision for loan losses increased to KRW 647 billion.
• Acquisition Integration: Monitor the integration and financial impact of the newly acquired Woori Financial Co., Ltd. (formerly Hanmi Capital) and the planned LIG Life Insurance acquisition.