Woori Financial Group Inc (WF) 2023 Q3 法說會逐字稿

Good afternoon. This is Han Hong Sung, Head of the IR department at Woori Financial Group. I would like to express my sincere gratitude to you all for taking the time to join Woori Financial Group's earnings call today despite your busy schedules.

午安.我是韓洪成 (Han Hong Sung)，友利金融集團 IR 部門主管。我謹向大家在百忙之中抽空參加今天友利金融集團的財報電話會議表示誠摯的謝意。

In today's conference call, we have with us the Group CFO, Mr. Lee Song-Wook; CTO, Mr. Oak Il-Jin; CRO, Mr. Park Jang-Geun; Head of M&A and Business Portfolio, Mr. Kim Gun-Ho; and Woori Bank's Head of the Global Business, Mr. [Yoon Sang-Mo].

在今天的電話會議中，我們有集團財務長 Lee Song-Wook 先生；首席技術長 Oak Il-Jin 先生； CRO，Park Jang-Geun 先生；併購及業務組合主管 Kim Gun-Ho 先生；以及友利銀行全球業務主管 [Yoon Sang-Mo] 先生。

Today's call will begin with the presentation by the Group CFO, Mr. Lee Song-Wook, followed by a question-and-answer session. Additionally, I would like to inform you that simultaneous interpretation is available for our international investors. Let us now begin Woori Financial Group's third-quarter 2023 earnings presentation.

今天的電話會議首先由集團財務長 Lee Song-Wook 先生進行演講，然後進行問答環節。此外，我想告訴您，我們的國際投資者可以使用同聲傳譯。現在讓我們開始友利金融集團 2023 年第三季財報。

Good afternoon. I am Lee Song-Wook, CFO and Head of the Financial Division at Woori Financial Group. I will provide an overview of Woori Financial Group's performance for the third quarter of 2023. Please refer to page 3 of the third-quarter management performance material available on our website.

午安.我是友利金融集團財務長兼金融部門負責人李松旭。我將概述友利金融集團 2023 年第三季的表現。請參閱我們網站上提供的第三季管理績效資料的第 3 頁。

First, let me elaborate on the group's net income. Woori Financial Group's cumulative net income as of third quarter of 2023 decreased 8.4% year over year to KRW2.4383 trillion. While the group maintained strong earnings performance, this decrease can be attributed to preemptive expenses such as additional provisions in the second quarter. Meanwhile, third-quarter net income increased by 43.9% quarter on quarter, reaching KRW899.4 billion, which is in line with the performance year on year. This Q3 performance demonstrates Woori Financial Group's solid revenue generation and stable risk management capabilities that have once again proven to the market.

首先，讓我詳細介紹一下該集團的淨利潤。友利金融集團截至2023年第三季的累計淨利年減8.4%至24,383億韓元。儘管該集團保持強勁的獲利表現，但這一下降可歸因於第二季額外撥備等先發支出。同時，第三季淨利較上季成長43.9%，達到8,994億韓元，與去年同期表現一致。第三季的業績再次向市場證明了友利金融集團穩健的創收能力和穩定的風險管理能力。

Let me now move on to costs including SG&A expense and credit costs. The group's accumulated SG&A expense amounted to KRW3.0484 trillion of 3.8% year on year. However, cost-to-income ratio remained stable at 40.6%. Despite ongoing global instability and resulting inflationary pressures, the group continues its efforts to enhance management efficiency. The group's credit cost as of third quarter recorded KRW1.0786 trillion, with credit cost ratio of 0.41%. While large-scale preemptive provisioning led to a temporary but significant increase in credit costs in the second quarter, third-quarter credit cost stands at KRW260.8 billion, managed in a stable fashion within the expected range of current credit costs.

現在讓我談談成本，包括 SG&A 費用和信貸成本。集團累計SG&A費用達30,484億韓元，較去年成長3.8%。然而，成本收入比仍穩定在40.6%。儘管全球局勢持續不穩定並帶來通膨壓力，該集團仍繼續努力提高管理效率。截至第三季度，該集團的信貸成本為10,786億韓元，信貸成本率為0.41%。雖然大規模的先發制人撥備導致第二季信貸成本出現暫時但顯著的上升，但第三季信貸成本為2,608億韓元，穩定管理在當前信貸成本的預期範圍內。

As economic uncertainty is increasing, some preemptive provisioning took place in the third quarter. However, with improved performance of managed companies led to write-backs or reversals and provisioning, placing the group's key quality indicators well within manageable limits.

隨著經濟不確定性的增加，第三季進行了一些預先撥備。然而，隨著管理公司績效的改善，導致了回寫或沖銷和撥備，使集團的關鍵品質指標完全處於可管理的範圍內。

Next is on the capital ratio and shareholder return policy. As of the end of September 2023, the group's common stock ratio or CET1 ratio is expected to slightly exceed 12% despite increased macroeconomic volatility, including exchange rate and asset growth, solid earnings, and active risk-weighted asset management efforts have resulted in capital adequacy ratio being managed at stable levels.

接下來是資本比率和股東回報政策。截至2023年9月底，儘管宏觀經濟波動加劇（包括匯率和資產增長），但集團的普通股比率或CET1比率預計將略高於12%，穩健的盈利以及積極的風險加權資產管理努力已導致資本充足率控制在穩定水準。

Meanwhile, Woori Financial Group confirmed and announced today a quarterly dividend of KRW181 per share the same as the second quarter. Furthermore, the company plans to retire or cancel on October 30 approximately KRW100 billion worth of treasury shares acquired from the second quarter, and to prevent any overhang risk, the group plans to buy back Woori Financial Group shares owned by Korea Deposit Insurance Corporation by 2024. This is in line with the shareholder return policy mentioned earlier this year, demonstrating the group's ongoing commitment to enhancing shareholder value in the future as well.

同時，友利金融集團今天確認並宣布季度股息為每股 181 韓元，與第二季相同。此外，該公司計劃於10 月30 日退休或註銷第二季度以來收購的價值約1,000 億韓元的庫存股，並為防止任何懸而未決的風險，該集團計劃在2024 年之前回購韓國存款保險公司持有的友利金融集團股票這與今年稍早提到的股東回報政策一致，也顯示了集團對未來提升股東價值的持續承諾。

Allow me to delve into the group's performance by division in more detail, please refer to page 4 for more details.

請容許我更詳細地研究一下各部門的小組表現，請參閱第4頁以了解更多詳情。

Let me go over our interest income and net interest margin, or NIM. The group's net interest income as of Q3 of 2023 was up 4% year on year, recording KRW600 billion. In Q3, the bank's NIM was 1.55%, while the group's NIM, including the credit card business, stood at 1.81%, both showing a 40 basis point decrease quarter on quarter. This decrease is attributed to the ongoing funding side repricing continuing on into Q3 and the impacts coming from the withdrawal of [Iran-related] deposits. However, recent upward movements in market interest rates and taking into account that funding side repricing has entered its final stages. Margin decline in the fourth quarter is expected to decrease compared to Q3. Meanwhile, despite the decline in NIM, Woori Financial's third-quarter net interest income remained similar to the previous quarter, recording KRW2.187 trillion, maintaining solid generation.

讓我回顧一下我們的利息收入和淨利差（NIM）。截至2023年第三季度，該集團淨利息收入年增4%，達到6,000億韓元。第三季度，該行的淨利差為1.55%，而包括信用卡業務在內的集團淨利差為1.81%，均較上季下降40個基點。這一下降歸因於第三季度持續的融資方面重新定價以及[伊朗相關]存款提取的影響。不過，近期市場利率上行並考慮到資金面重新定價已進入最後階段。預計第四季的利潤率降幅將較第三季縮小。同時，儘管淨利差下降，友利金融第三季淨利息收入仍與上一季持平，錄得2.187兆韓元，維持穩健的發電能力。

And now I'd like to discuss our asset growth and loan status. As of September end 2023, the bank's total loans stood at KRW304 trillion, showing a 2.8% increase compared to June and corporate loans primarily focused on prime assets continued their robust growth, recording KRW168 trillion, which is a 4.6% increase compared to June end. Leveraging over a century of financial expertise, Woori Financial Group actively explores loan demand and emerging growth industries and high-quality enterprises contributing to sustained growth in the corporate finance sector. Given the ongoing uncertainty in both domestic and international markets, we prioritized asset soundness and capital adequacy to minimize potential risks associated with asset growth, and we are committed to managing the group's asset growth level effectively. As for retail loans increased by 1.1% over the quarter to KRW133 trillion with a focus on real demand-driven housing related loans.

現在我想討論一下我們的資產成長和貸款狀況。截至2023年9月末，該行貸款總額為304兆韓元，較6月成長2.8%，主要集中於優質資產的企業貸款持續強勁成長，達到168兆韓元，較6月成長4.6% 。友利金融集團憑藉著百年的金融專業知識，積極探索貸款需求和新興成長產業和優質企業，為企業金融領域的持續成長做出貢獻。鑑於國內外市場持續存在的不確定性，我們優先考慮資產穩健性和資本充足性，以最大程度地降低資產成長的潛在風險，並致力於有效管理集團的資產成長水準。至於零售貸款，本季成長 1.1%，達到 133 兆韓元，重點是實際需求驅動的房屋相關貸款。

Next, let's discuss the group's noninterest income. The group's noninterest income YTD reached KRW897.8 billion. Although there was a slight decrease in capital market related income due to higher exchange rate and interest rate volatility during Q3, the core fee income continued to grow each quarter, maintaining a steady trend in our business operations.

接下來，讓我們來討論一下該集團的非利息收入。該集團年初至今的非利息收入達到 8,978 億韓元。儘管第三季因匯率、利率波動較大，資本市場相關收入略有下降，但核心手續費收入各季持續成長，業務經營維持平穩態勢。

Additionally, Woori Financial Group is focusing on enhancing competitiveness in the nonbanking sector. We plan to improve revenue generation, primarily through core fee income by expanding synergy within the group and exploring new business opportunities, even in the face of macroeconomic volatility.

此外，友利金融集團也致力於增強非銀行領域的競爭力。即使面對宏觀經濟波動，我們計劃主要透過擴大集團內部的綜效和探索新的商機來提高收入，主要透過核心費用收入。

Moving on to cost and capital adequacy on page 5. The group's SG&A YTD amounted to KRW3.0484 trillion, showing a 3.8% increase YoY. However, in Q3 alone, the SG&A was KRW990.5 billion, a 3% decrease QoQ. This is the result of groupwide efforts to improve overall cost efficiency and the cost-to-income ratio remains stable at 40.6%, well within the group's annual target goals at 45%. As inflationary pressures persist, we plan to continue strengthen our cost efficiency efforts proactively.

轉到第 5 頁的成本和資本充足率。該集團年初至今的銷售及行政管理 (SG&A) 達 3.0484 兆韓元，年增 3.8%。然而，僅第三季度，SG&A 為 9,905 億韓元，季減 3%。這是集團努力提高整體成本效率的結果，成本收入比穩定在40.6%，完全符合集團45%的年度目標。由於通膨壓力持續存在，我們計劃繼續主動加強成本效率工作。

Let me now address a credit cost. The group's credit cost YTD amounted to KRW1.0786 trillion, which includes KRW263 billion in preemptive provisions made during the second quarter. The group's Q3 credit cost recorded KRW260.8 billion, which resulted from the write-back of provisions related to Kumho Tire and adjustments made in the LGD for credit loans. Excluding one-time factors such as preemptive provisions, the credit-cost ratio YTD remained stable at around 33, or 34 basis points. Looking at the recent market conditions, it is expected that high interest rates will persist for a considerable period.

現在讓我談談信用成本。該集團年初至今的信貸成本達 1.0786 兆韓元，其中包括第二季提列的 2,630 億韓元的優先撥備。該集團第三季​​信貸成本錄得2,608億韓元，這是由於與錦湖輪胎相關的撥備撥回以及信貸貸款違約損失率的調整所致。排除優先撥備等一次性因素，年初至今信貸成本比率穩定在 33 或 34 個基點左右。從近期市場情況來看，高利率預計將持續相當長一段時間。

Therefore, Woori Financial Group is reevaluating the group's risk factors and committed to ongoing risk management ensuring that high-risk groups, distressed loans such as real estate, PF, and marginal borrowers do not spread to other areas.

因此，友利金融集團正在重新評估集團的風險因素，並致力於持續的風險管理，確保高風險群體、房地產、PF等不良貸款和邊際借款人不會擴散到其他領域。

Next, I will explain the capital adequacy indicators and the shareholder return policy. As of September end, the group CET1 ratio is stably managed at around 12%. Woori Financial Group, mindful of economic conditions such as interest rate and exchange rate is strengthening loss absorption capacity through proactive RWA management and robust profit growth.

下面我就資本充足率指標和股東回報政策進行說明。截至9月底，集團CET1比率穩定管理在12%左右。友利金融集團關注利率和匯率等經濟狀況，透過積極的風險加權資產管理和強勁的利潤成長，增強損失吸收能力。

Additionally, as mentioned earlier this year, we are striving to enhance shareholder value. In addition to the previously mentioned KRW100 billion worth of treasury stock retirement, we're increasing the predictability of dividend payments through quarterly dividends.

此外，正如今年稍早提到的，我們正在努力提高股東價值。除了前面提到的價值 1000 億韓元的庫存股退休之外，我們還透過季度股息提高股息支付的可預測性。

On October 5, we signed a basic agreement on stock transfer with the KDIC to purchase approximately 1.2% of Woori Financial shares held by KDIC as treasury stock in the future. This effectively resolve concerns regarding overhang risks related to KDIC. Going forward, Woori Financial Group will continue to manage it capital adequacy indicators and pursue various measures to enhance shareholder value.

10月5日，我們與KDIC簽署了股權轉讓基本協議，未來將購買KDIC持有的友利金融股份約1.2%作為庫存股。這有效地解決了有關 KDIC 相關風險的擔憂。展望未來，友利金融集團將持續管理資本充足率指標，並採取各種措施提升股東價值。

And these will be my concluding words. In this quarter, we achieved a quarterly net income of approximately KRW900 billion, demonstrating a stable profit level, even in the face of challenging conditions. This reaffirms our strong capacity for revenue generation and effective risk management. Based on these fundamentals, we will focus on diversifying our portfolio to create a new growth foundation, all while continuing our shareholder value investment policy, as previously communicated.

這就是我的結束語。本季度，我們實現了約 9,000 億韓元的季度淨利潤，即使面對充滿挑戰的情況，也展現了穩定的利潤水準。這再次證明了我們強大的創收能力和有效的風險管理能力。基於這些基本面，我們將專注於使我們的投資組合多樣化，以創造新的成長基礎，同時繼續我們先前傳達的股東價值投資政策。

This concludes the Woori Financial Group's earnings presentation for Q3 2023. Thank you very much.

友利金融集團 2023 年第三季的財報到此結束。非常感謝。