Woori Financial's H1 Net Profit 660.5 Billion Won... "Proactively Reflecting Provisions to Prepare for Uncertainty"

44%↓ YoY
"Similar to last year excluding one-time costs"

[Asia Economy Reporter Kim Hyo-jin] Woori Financial Group's net profit for the first half of this year has decreased to nearly half of that in the first half of last year.

Woori Financial announced on the 27th that its net profit for the first half reached 660.5 billion KRW, down 44% compared to the same period last year.

Woori Financial explained that this was the result of proactively reflecting costs in preparation for uncertainties such as the impact of the novel coronavirus disease (COVID-19) and restrictions on private equity fund operations, and that excluding these one-time costs, the level is similar to last year.

The net operating income, composed of interest income and non-interest income, achieved 3.4087 trillion KRW, a 3.8% decrease compared to the same period last year. Interest income recorded 2.9407 trillion KRW, up 0.3% year-on-year, as a result of efforts to improve the revenue structure such as asset growth focused on corporate loans and an increase in core deposits, despite two base rate cuts during the first half.

Fee income, a core part of non-interest income, was 498.4 billion KRW, down 11.1% compared to the same period last year. Woori Financial analyzed that this was due to difficulties in face-to-face sales caused by social distancing measures amid COVID-19.

In terms of asset soundness (banking standards), despite large provisions set aside in preparation for future uncertainties, the non-performing loan (NPL) ratio was 0.38%, the delinquency ratio was 0.31%, the high-quality asset ratio was 85.4%, and the NPL coverage ratio was 136.4%, indicating relatively stable management. It is expected that stable soundness trends will be maintained in the second half due to recent years’ efforts to improve the asset portfolio and a risk management-focused business culture.

Additionally, subsidiaries incorporated after the holding company transition, such as Woori Asset Trust, contributed more than approximately 22 billion KRW to the group’s profit and loss. Woori Financial expects that as synergies among subsidiaries begin in earnest and the portfolio expands, the scale and proportion of profits and losses will gradually increase.

A Woori Financial official stated, "It is true that the domestic financial industry is facing significant challenges due to the historically low base interest rates and the prolonged COVID-19 pandemic. With the recent enhancement of future loss absorption capacity, the possibility of additional one-time costs in the second half has greatly decreased. We will overcome the current market environment through the recovery of business capabilities based on the group-level 'turnaround' strategy and improved capital ratios following the supervisory authority’s approval of the internal ratings-based approach."

The official also added, "In addition to contributing to the stability of the financial system by supporting companies affected by COVID-19, we aim to strengthen the group’s digital capabilities to actively respond to the rapidly changing financial environment, such as the spread of non-face-to-face services, and focus on providing enhanced services tailored to customer needs."

Meanwhile, Woori Financial’s return on equity (ROE) for the first half was 6.04%, and return on assets (ROA) was 0.41%. Looking at the performance by subsidiaries, Woori Bank recorded a net profit of 677.9 billion KRW, and Woori Card recorded a net profit of 79.6 billion KRW.

This content was produced with the assistance of AI translation services.