Woori Financial Group Inc. - 2021 Third Quarter Summary (Form 6-K)
Business Context and Reporting Period
This Form 6-K filing covers the third quarter of 2021 (ended September 30, 2021) for Woori Financial Group Inc., a Korean financial holding company. The financial statements are prepared in accordance with Korean IFRS. The group consists of 140 consolidated subsidiaries, including Woori Bank, Woori Card, Woori Investment Bank, and Woori Savings Bank. Notable corporate developments in the period included the full integration of Woori Financial Capital as a wholly-owned subsidiary via stock exchange in August 2021 and the receipt of regulatory approval to use the Internal Rating Based (IRB) approach for capital adequacy calculations.
Key Financial Metrics
| Metric | 2021 3Q (Consolidated) | Unit |
|---|---|---|
| Net Income | 2,362 | Billion KRW |
| Net Income (Attributable to Owners) | 2,198 | Billion KRW |
| Operating Income | 3,076 | Billion KRW |
| Total Assets | 438,185 | Billion KRW |
| Total Equity | 28,315 | Billion KRW |
| Return on Assets (ROA) | 0.75% | Annualized |
| Return on Equity (ROE) | 13.06% | Annualized |
| BIS Capital Adequacy Ratio | 14.83% | Group |
| Non-Performing Loan (NPL) Ratio | 0.28% | Group |
| Liquidity Coverage Ratio (Woori Bank) | 88.33% | Ratio |
Material Changes vs. Prior Period
- Profitability Surge: Net income attributable to owners increased significantly to KRW 2.198 trillion in 2021 3Q, compared to KRW 1.307 trillion in the full year 2020 and KRW 1.872 trillion in 2019. Operating income rose to KRW 3.076 trillion.
- Asset Growth: Total assets grew to KRW 438.2 trillion, an increase from KRW 399.1 trillion in 2020. Loans and other financial assets at amortized cost increased to KRW 353.9 trillion.
- Asset Quality Improvement: The Group's NPL ratio improved to 0.28% (down from 0.38% in 2020), and the substandard and below ratio decreased to 0.31% (from 0.42%). Coverage ratios for substandard loans increased to 177.5%.
- Capital Strength: The Group BIS Capital Adequacy Ratio improved to 14.83% (from 13.84% in 2020), driven by the adoption of the IRB approach and equity growth.
- Dividend Policy: The company paid an interim dividend of KRW 150 per share in 2021, the first interim dividend since its establishment, with a total cash dividend payout of KRW 108.3 billion.
Outlook, Risks, and Management Commentary
- Dividend Strategy: Management plans to gradually increase the dividend payout ratio to around 30% in the mid-to-long term, contingent on net income improvements and capital adequacy. Future policies will be reviewed once the COVID-19 situation stabilizes.
- ESG Initiatives: The company joined the Science Based Targets initiative (SBTi) in October 2021 and established a Board ESG Management Committee in March 2021 to support carbon neutrality goals.
- Liquidity Environment: The Liquidity Coverage Ratio for Woori Bank stood at 88.33%, which is above the temporarily eased regulatory requirement of 85% (reduced from 100% due to COVID-19 measures) valid until March 2022.
- Shareholder Structure: The Korea Deposit Insurance Corporation (KDIC) remains the largest shareholder with a 15.13% stake as of September 30, 2021, following the sale of a portion of its holdings in April 2021.
Key Facts for Investor Verification
- Accounting Standards: Verify the impact of Korean IFRS differences on US GAAP comparability, particularly regarding financial asset classifications and impairment losses.
- Capital Adequacy Methodology: Confirm the transition to the full IRB approach for 2021 3Q figures, which are noted as estimates subject to change.
- Interim Dividend Sustainability: Assess the feasibility of the stated goal to reach a 30% payout ratio given the current 4.93% payout for the 2021 3Q period.
- Regulatory Compliance: Monitor the Liquidity Coverage Ratio against the temporary regulatory easing (85% threshold) and its reversion to 100% post-March 2022.
- Subsidiary Integration: Review the financial impact of the August 2021 comprehensive stock exchange integrating Woori Financial Capital as a wholly-owned subsidiary.