[Click eStock] "Woori Financial Group, ROE Improvement Expected... Target Price Raised to 18,000 Won"

On the 7th, Korea Investment & Securities announced that it expects a mid- to long-term improvement in return on equity (ROE) for Woori Financial Group due to an expansion in shareholder returns, and raised the target stock price from 16,000 KRW to 18,000 KRW. The investment rating was maintained at "Buy."

Baek Doosan, a researcher at Korea Investment & Securities, explained the reason for the target price increase, stating, "Although the fourth-quarter earnings were weak, a significant buffer related to asset soundness has been established, and mid- to long-term ROE improvement and capital cost reduction are expected due to the expansion of shareholder returns."

In particular, considering that the allowance coverage ratio has greatly improved to 229%, net income attributable to controlling interests is expected to increase by 18% year-on-year to 3.0 trillion KRW this year despite a decline in net interest margin (NIM). The improvement in the shareholder return ratio was also positively evaluated, with last year's shareholder return ratio rising by 7.5 percentage points year-on-year to 33.7%.

Woori Financial Group's controlling net income for the fourth quarter of last year was 78.5 billion KRW, falling short of Korea Investment & Securities' estimate by 64% and the consensus by 72%. This was due to the setting aside of additional allowances amounting to 525 billion KRW related to future economic outlook, real estate project financing (PF), and vulnerable non-bank sectors, exceeding the initially planned additional allowance of around 200 billion KRW. Meanwhile, costs related to livelihood finance were recorded at 169.4 billion KRW.

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