Woori Financial Group Inc. Q1 FY2026 earnings call

• The group CFO discussed the Q1 2026 earnings, noting net income was flat year over year with factors like ERP, one-off provisioning, FX loss affecting income. • The CET1 ratio rewrote historical record at 13.6% due to group-wide capital management efforts. • A quarterly dividend of 221 per share was announced, a 10% increase year-over-year and non-taxable. There's a plan for additional share buyback and cancellation in the second half. • Non-bank competitiveness is building with income from non-bank subsidiaries up. URI investment in securities had a 1 trillion won capital increase, and Tongyang Life will be made a fully-owned subsidiary. • Net operating revenue was up due to diversified sources, NIM improved, details of the loan book, growth in non-interest income, SG&A expense details, credit cost and asset quality info, and capital adequacy and shareholder return policy were covered.

Net income was 603.8 billion won, flat year over year. The June 2026 preliminary CET1 ratio for the group was 13.6%, increasing 71 basis points year-to-date and 115 basis points from last year. Q1 2026 net operating revenue was 2,757,700,000,000 won, up 5.6% year-over-year. Interest income was 2,303.2 billion won, up 2.3% year-over-year. Non-interest income jumped 26.7% to 454.6 billion won. Bank loan totaled around 338 trillion won, up 1.2% year-to-date. Corporate loan expanded 2% to 184 trillion won. Household loans were flat at 151 trillion won. Non-bank subsidiaries' income was up 185% year-on-year, contributing 25% to profit.

• It's expected that the group's running basis income will recover once market indicators stabilize. • The group will continue to expand the core deposit base and actively manage ALMs to sustain a steady margin trend. • There's an expectation of a 20% reduction of credit costs against the previous year and a credit cost ratio around 40 basis points. • The plan is to maintain the high dividend payout ratio and continue with share buyback and cancellation in the second half. The securities company expects top-line increase and to become a mega investment bank with the capital injection. The insurance business expects efficiency and earnings increase with Tongyang Life as a wholly-owned subsidiary.

• Geopolitical risks in the Middle East leading to higher oil prices and exchange rates raise concerns about the real economy slowing. • Factors like ERP at the bank, one-off provisioning, FX loss, and market rate changes impacted income. • Volatilities in the financial market temporarily affected the bottom line. • There's a need for asset quality management due to economic concerns.

Q: About turning Tongyang Life into a wholly owned subsidiary and the SG&A mismatch.

A: Lee Jong-soo said the key is to strengthen the insurance business and it provides flexibility in management. The SG&A increase was due to ERP, insurance, education tax, IT investment, and new hires.

Q: About the annual NIM guideline and securities capital injection.

A: Kwak Sung-min said the NIM trend will continue, with downside factors in the second half, and expects to maintain or improve it. The securities capital injection will make it 11th in capital base and help it become a mega investment bank.

Q: Impact of capital injection on the CET1 ratio and insurance integration.

A: The impact of the capital injection on the CET1 ratio will be offset by profit increase in 3-4 years. The insurance integration's impact on the CET1 ratio is minimal, and there's a need for asset revaluation.

Q: CET1 ratio, shareholder return policy, and KBank.

A: The CET1 ratio will be maintained, the shareholder return policy will continue with a 10% dividend per share, and there's a plan to increase treasury stock. Disposal of KBank shares will be discussed.

Q: Appraisal rights expense and securities RORWA.

A: The impact of appraisal rights expense is minimal. The securities' RORWA will be on par with the bank and higher in the retail business.

Q: Group RORWA and insurance merger.

A: The securities company's RWA growth is higher, and the insurance merger is for efficiency and a stable KICS ratio, with no confirmed additional capital injection yet.