Woori Bank Q3 2026 Earnings Call Transcript

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Provided by Quartr
October 23, 2026

Key Takeaways

  • Positive Sentiment: Quarterly net income exceeded KRW 1 trillion for the second consecutive quarter, reaching KRW 1.049 trillion, up 4.4% quarter over quarter. Excluding prior-year acquisition-related bargain purchase gains, year-to-date net income increased 19% year over year, while ROE improved to 9.9%.
  • Positive Sentiment: Capital strength and shareholder returns continued to improve, with preliminary CET1 at 13.8%, up roughly 90 basis points year to date. The board approved a KRW 221 per-share third-quarter dividend and an additional KRW 150 billion buyback, with management indicating that 2026 total shareholder returns could reach the mid-40% range and that nominal returns may exceed 50% in 2027.
  • Negative Sentiment: Bank NIM fell 7 basis points quarter over quarter to 1.43%, primarily due to sharply higher long-term funding costs, reduced core deposits and the bank’s large exposure to CD-linked loans. Management expects stabilization in the fourth quarter and potential improvement from asset repricing in 2027, but near-term margin pressure remains.
  • Positive Sentiment: Credit costs declined 28.5% quarter over quarter and 15.7% year to date, bringing the credit cost ratio to 42 basis points. Management expects to meet its full-year target of reducing credit costs by 15% while maintaining sound asset quality and a low-40-basis-point ratio.
  • Neutral Sentiment: Non-interest income reached a record KRW 1.644 trillion for the first nine months, supported by stronger securities IB activity, insurance earnings and group synergies, although third-quarter non-interest income fell 7.6% sequentially because of securities valuation losses and weaker capital-market fees. The planned integration of Tongyang Life and ABL Life is on schedule, with management targeting cost synergies and no additional holding-company capital injection.
AI Generated. May Contain Errors.
Earnings Conference Call
Woori Bank Q3 2026
00:00 / 00:00

Transcript Sections

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Sung Han Hong
Head of Investor Relations at Woori Financial Group

Good afternoon. My name is Hong Sung Han, Head of IR at Woori Financial Group. Thank you for joining today for Q3 2026 Woori Financial Group's Earning Results. We will begin with the presentation delivered by our Group CFO, Kwak Seong-Min, followed by a Q&A session. Also be advised that for today's call, we are providing simultaneous interpretation for overseas investors. With that, let us begin Woori Financial Group's Q3 2026 earnings presentation.

Seong-Min Kwak
Group CFO at Woori Financial Group

Good afternoon. I am Kwak Seong-Min, Woori Financial Group's CFO. I will go over the group's earnings results for Q3 2026. Please refer to page two of the earnings presentation documents available on our website. First, our net income. For Q3 2026, Woori Financial Group recorded net income of KRW 1,049,200,000,000 up 4.4% QoQ, exceeding KRW 1 trillion for the second consecutive quarter.

Seong-Min Kwak
Group CFO at Woori Financial Group

The group's quarterly earnings capacity has stabilized around KRW 1 trillion. As a result, YTD net income through Q3 reached KRW 2,658,100,000,000. This is an improvement from the same period last year, when we recognized about KRW 550 billion in bargain purchase gains from the acquisitions of Tongyang Life and ABL Life. Excluding this one-off factor, it's an increase of 19% YoY. Supported by this enhanced earnings capacity, the group's common equity ROE stood at 9.9%, continuing its clear improvement. This reflects our progress over the past several years through disciplined management of RWAs and strategic capital initiatives, including asset reevaluation. We have strengthened our capital position and deployed this into productive finance and high growth non-banking subsidiaries, laying the foundation for the group's medium to long-term earnings growth.

Seong-Min Kwak
Group CFO at Woori Financial Group

As a result, both interest income and non-interest income reached record highs, with non-interest income accounting for nearly 20% of total income. At the same time, group-wide cost efficiency initiatives helped stabilize cost to income ratio and credit cost ratio at progressively lower levels. With revenue growth and cost stabilization, YTD operating profit increased by nearly KRW 570 billion YoY, further enhancing our sustainable earnings generation capacity. Next, capital adequacy and shareholder returns. As of September end 2026, our preliminary CET1 ratio stood at 13.8%, maintaining the industry-leading position. This is a meaningful improvement, nearly 90 bps this year alone, and 170 bps over the past two years. This year, as part of productive finance, we significantly expanded corporate lending guarantees and capital markets investments.

Seong-Min Kwak
Group CFO at Woori Financial Group

However, our capital capacity against external uncertainties has strengthened further, supported by solid fundamentals, disciplined asset rebalancing, and the impact of a decline in exchange rates. Based on this, our BOD today approved a Q3 dividend of KRW 221 per share, fully non-taxable. The record date is November 10th, and the payment is scheduled for November 30th. With this, our quarterly dividends for the year have been completed, leaving only the year-end dividend. For us, the year-end dividend accounts for more than 50% of the total annual dividend. The current dividend yield stands at about 2.2%, but given our dividend structure and the non-taxable benefits, shareholders' effective annual dividend yield for 2026 should be significantly higher. With the additional KRW 150 billion share buyback approved in July for the second half, we are confident that our total shareholder return for 2026 will be significantly higher than last year.

Seong-Min Kwak
Group CFO at Woori Financial Group

In addition, the board resolved to cancel 57,369 shares we acquired and held for specific purposes, including comprehensive share exchanges in accordance with the amended Commercial Act. Now let me go over the group's financial performance by business segment in page three. First, net operating revenue and NIM. YTD net operating revenue through Q3 came in at a record KRW 8,680,300,000,000, up 6.2% YoY, on the back of balanced growth in both interest and non-interest income. YTD interest income reached KRW 7,035,900,000,000, up 4.5% YoY, maintaining solid growth. The main drivers were 25% increase YoY in large corporate lending, as well as the improvements in group's NIM compared with the same period last year. However, the bank's NIM for Q3 stood at 1.43%, down 7 bps QoQ.

Seong-Min Kwak
Group CFO at Woori Financial Group

Market rates increased more sharply than lending rates and our proactive efforts to secure funding ahead of additional rate hikes placed pressure on funding costs. We expect NIM to recover as asset and liability reprice over time and the impact of higher funding costs gradually subsides. We will work to accelerate margin improvement by expanding high-quality new customer base, attracting low-cost deposits, and maintaining a profitability-focused loan book. Next, let me discuss the bank's loan portfolio. As of September end 2026, the bank's total KRW loans stood at KRW 313 trillion, up 1.52% from the end of June. Corporate loans increased by 1.42% QoQ to KRW 156 trillion due to the acceleration of productive finance. In particular, lending under the productive finance reached roughly KRW 27 trillion, 1.5 times our full-year target, which we achieved ahead of schedule.

Seong-Min Kwak
Group CFO at Woori Financial Group

Retail loans stood at KRW 154 trillion, up 1.4% QoQ, following the government's easing of household lending limits in August. Building on our strong competitive position in corporate banking, we will continue to pursue loan growth focused on high-quality assets. We will further enhance risk management by integrating AI across the entire lending process, from credit assessment to post-monitoring. By doing so, we will create a foundation for sustainable growth without compromising asset quality. Let me now turn to the group's non-interest income. Non-interest income for the first nine months reached a record KRW 1.6444 trillion. Core fee income rose 18.8% YoY to KRW 1.898 trillion, driving earnings growth. Our non-bank subsidiaries increased their earnings contributions by strengthening group synergies and enhancing the competitiveness of their core businesses. In particular, our securities subsidiary has expanded its IB business since its capital increase in May.

Seong-Min Kwak
Group CFO at Woori Financial Group

Collaboration with the bank has also continued to grow with the two jointly arranging deals. As a result, underwriting and advisory fees for the first nine months rose to 2.4 times the level recorded a year earlier, reaching KRW 151.4 billion. The securities subsidiary accounted for half of this total. Our insurance subsidiaries also contributed significantly to non-interest income growth, with insurance earnings increasing by approximately KRW 100 billion YoY. Stronger synergies with the bank helped increase the group's bancassurance earnings by approximately 10% from a year earlier. As a result, the non-bank share of non-interest income rose from 45% a year earlier to approximately 60% this year. Meanwhile, the group's Q3 non-interest income declined 7.6% QoQ to KRW 581.4 billion. This reflected higher securities valuation losses amid rising interest rates and stock market volatility, together with a sharp decline in capital market fees.

Seong-Min Kwak
Group CFO at Woori Financial Group

However, higher foreign exchange earnings as exchange rates stabilize, along a recovery in insurance earnings to first quarter levels, helped contain the decline. Woori Financial Group will continue to pursue business opportunities by harnessing synergies across its banking, securities, insurance, and capital market subsidiaries. By steadily increasing the contribution from non-interest businesses, we will move towards a more balanced earnings mix. We will turn to costs. Please refer to page four. This shows the group's SG&A expenses. Group SG&A expenses for the first nine months totaled KRW 3.8575 trillion. Q3 expenses stood at KRW 1.2246 trillion, broadly unchanged from the previous quarter. The group's cost-to-income ratio remains stable at 42.3%, in line with our full-year target. We will proactively make essential investments to strengthen the group's future competitiveness, including expanding infrastructure for our insurance and securities businesses and upgrading IT security systems to guard against cyberattacks.

Seong-Min Kwak
Group CFO at Woori Financial Group

At the same time, we will continue to improve cost efficiency across the group by optimizing our distribution channels and workforce and using AI to streamline operations. Next, credit costs and asset quality. Credit costs for the first nine months of 2026 totaled KRW 1.28 trillion, down sharply by 15.7% YoY. Q3 credit costs stood at KRW 314 billion, a substantial decline of 28.5% QoQ. The quality of our loan portfolio has improved as we have expanded lending to high-quality corporate borrowers and steadily rebalanced our assets over the past two years. As a result, our credit cost ratio for the first nine months declined to 42 basis points. Woori Financial Group will remain focused through year-end on achieving our full-year targets of reducing credit costs by 15% and bringing the credit cost ratio to the low 40 basis points range.

Seong-Min Kwak
Group CFO at Woori Financial Group

Our asset quality indicators also remain sound as of end of Q3. As of end September, high-quality loans continued to account for around 85% of the corporate loan portfolio. The NPL ratio also edged down QoQ, supported by a decline in new NPL formation, reflecting our rigorous asset quality management. To prepare for rising interest rates and macroeconomic volatility, we will further strengthen monitoring of vulnerable borrowers and proactively pursue NPL sales and write-offs to maintain sound asset quality across the group.

Seong-Min Kwak
Group CFO at Woori Financial Group

In closing, the key transformation underway at Woori Financial Group is this: having strengthened our capital position, we are now entering a new phase of growth using that solid capital base to secure future growth opportunities, strengthen our earnings capacity, and increase shareholder returns. Our bank is reinforcing its earnings base by strengthening core businesses, including corporate banking and wealth management, while improving cost efficiency. Following the acquisition of full ownership of Tongyang Life in August, we are now moving forward with the integration of our two life insurers. Once completed, this integration will deliver cost synergies and economies of scale. Our securities subsidiary is steadily building its track record in IB. Obtaining the derivatives license currently being pursued will further strengthen the foundation for earnings growth.

Seong-Min Kwak
Group CFO at Woori Financial Group

Our credit card, capital finance, asset management, and key subsidiaries are also increasing their earnings contributions by enhancing their core competitiveness and group synergies. By delivering KRW 1 trillion in quarterly net profit for two consecutive quarters, we have demonstrated that the group's earnings capacity has reached a new level. Looking ahead, we will further strengthen the group's fundamentals through sustainable improvements in ROE and share the benefits with shareholders through differentiated capital returns, reinforcing our competitiveness as a comprehensive financial group. This concludes Woori Financial Group's Q3 2026 earnings presentation. Thank you.

Sung Han Hong
Head of Investor Relations at Woori Financial Group

Thank you. Now, we are going to begin our Q&A session. If you would like to submit your question, please press star and one. If you wish to cancel your submission, please press star and two. We are going to wait until the question comes. The first question comes from IB Securities, [audio distortion]. Please go ahead and ask your question.

Analyst at IB Securities

Hello. Thank you for giving me the opportunity to ask questions. I have two questions. First of all, for the margin side, there was a slight significant decline this quarter. What was the impact on the asset management as well as the funding side? Also, starting from July, we have some impact that reflect in some extent, related to fixed margin payout. The second question is for the Tongyang Life. I understand that you ran it quite strongly.

Analyst at IB Securities

Was the purpose of your merger to secure liquidity, or did you think that it was more profitable than the authorities were concerned about? I would like to ask you what you did. If possible, at the time of our return rate reached 10%, I would appreciate if you could explain what level of the hedging you are using.

Seong-Min Kwak
Group CFO at Woori Financial Group

Yes. We got the two questions. Could you repeat your second question again?

Analyst at IB Securities

I have a question about the Tongyang Life. In September, it looks like you did a 700 release quite strongly. Was it because to obtain the liquidity, or did you think that it was okay for your profitability? Also the 100% reversal timing, when do you expect that that will be? Please give us a moment as we prepare our response.

Seong-Min Kwak
Group CFO at Woori Financial Group

My name is Kwak Seong-Min, CFO.

Seong-Min Kwak
Group CFO at Woori Financial Group

For the first question, it was about our margin. YTD basis, the margin is about 1.3 bps, so it is quite high YoY. I think what you are asking is based on QoQ basis, because on this quarter, there is a decline about 7 bps, and you probably want to know why. I would like to further explain about that. I think that I covered this before once, but Q3 this year, I think that there was a burden with the funding cost for all banks, and that was the same for us as well. There was an increase in the funding cost because of the increase in funding rate. But for Woori Bank, we have a CD-linked loan which accounts for 70%, which is quite high.

Seong-Min Kwak
Group CFO at Woori Financial Group

For Woori Bank, compared to our competitors, we had to endure the increase in funding rate, but we also had a bigger gap between long and short-term. To further explain on that, as you know, the market rate, the CD rate, as well as the funding rate. The CD rate, it went up about 41 bps by end of September. For one year, the funding, the bond, it actually increased about 132 bps. There was a difference between long- and short-term interest rate, and because of that spread, we had an impact on our Q3 earnings. From September and early October, the long-term rate actually increased more sharply than the short-term. There is the gap between long and short interest rates that had impact on our bank because the CD-linked loan that accounts for 70% of our total loans.

Seong-Min Kwak
Group CFO at Woori Financial Group

That had impact in Q3. By early next year, we have an expectation that the BOK will continue to increase the rate, but we do think that the rate might decrease afterwards. I think that over time, this risk or this factor will actually start to fade. To be more specific, there was a decline in core deposits, which actually led to 2 bps impact. The long and short interest rate spread that I just covered, that actually had about 5 bps impact. In Q2, we had a decline about 7 bps. For this quarter, we had a decline of about 7 bps. If you look at just the Q3 only, there is a decline of 7 bps as I covered. That may look like a significant drop.

Seong-Min Kwak
Group CFO at Woori Financial Group

If you look at the first half of this year compared to the end of last year, during the first half of this year, Woori Bank had a YTD of 1.46%, and the first quarter to second quarter, it was 1.51% respectively. YTD compared to the end of last year, it is an increase of 5 bps for NIM. You can compare the figures yourself. It was a slightly increase in NIMs compared to our competitors for the first half of this year. I think that you could also consider that fact, and as you know, we will also cover the loan growth later. The Korean won loan increased about KRW 12 trillion YTD, but KRW 8 trillion came from the corporate lending, and we also covered it in IR. Corporate lending growth is supported by our principle or the strategy, which is all-in margin.

Seong-Min Kwak
Group CFO at Woori Financial Group

We actually focused on the productive finance, and we increased the large corporation corporate lending. We not only looked at the rate, but we also tried to increase the non-interest income from those transactions. As we increased the corporate lending, we also tried to increase the fee or the FX-related fee income. The IB fee income went up significantly because of that. As you know, the IB, we mostly focus on large corporations. In this process, we have an opportunity to source the IB deal, which could increase the IB-related fee income. Under that strategy, we tried to capture not just the interest income, but also the non-interest income. That was our all-in margin strategy. However, there was a slight burden on the NIM for this quarter.

Seong-Min Kwak
Group CFO at Woori Financial Group

Overall, we increased the corporate lending to increase both interest and non-interest income, and that was part of our strategy. Starting from Q4, I believe that this downward trend will no longer be there. Q4, we will at least remain or have a slight increase. Starting from 2027, we are going to start the asset refreshing, which will improve the NIM. That is the answer for the first question about the NIM. For the second question, insurance-related question, you mentioned Tongyang Life. I think that it covers both Tongyang Life and ABL Life because we ended the insurance as of September. I am not sure if I am able to share the reason why here. As I know from the regulators, we were told to stop to sell this life insurance.

Seong-Min Kwak
Group CFO at Woori Financial Group

I think that this not only applies to us, but it also applies to other insurers as well. The whole life insurance that we stopped selling, it was more from the ABL Life rather than the Tongyang Life. There could be an impact for ABL Life. This started back in September. We had an internal meeting with our insurers, but this is coming from the regulators, so we need to obviously comply with this. We decided to create an alternative product which can replace this, and we will try to launch this as soon as possible within October. For us, it is a product mostly sold by ABL Life, so not so much impact for the Tongyang Life, but bigger impact for ABL Life.

Seong-Min Kwak
Group CFO at Woori Financial Group

The alternative products or other solutions, we are currently working on it to make sure that we do not lose the deposit.

Sung Han Hong
Head of Investor Relations at Woori Financial Group

Okay. From NH, we have [audio distortion], who has the next question. You have the floor.

Analyst at NH

Yes, sir. Hello, everyone. My name is [audio distortion] from NH Securities. Thank you for giving me the opportunity to ask a question. I will ask two questions. First, about the CET1 ratio. Of course, it went up, but not dramatically. Maybe because of the previous reason, and I do not know how to interpret this figure. Why did it go down? You talked about the bond and also the interest rate. Were those the sole causes or also because of securities? Also, going forward, if interest rate hike continues, and if the market continues to slow down, what is your expectations in terms of the outlook? Do you have a long-term plan? That is my question as well.

Analyst at NH

I have a question about the insurance. It was delisted, so it will be consolidated, and perhaps more contribution is underway. What would be the next plan? Do you have anything in mind? If we were to do this by next year, do you have any plans for further increase of capital or contribution?

Seong-Min Kwak
Group CFO at Woori Financial Group

Yes, sir. Thank you very much. We will now prepare for your question and entertain your question. Thank you very much for that question. The first one was about CET1 ratio change, and number two was about the insurance integration plan and anything that we have in mind in terms of contribution. About the CET1 ratio, as you can find it from the IR document, it was 12 point-ish to 13. So about 8 bps went up. As you can see from the material, we wanted to improve the operations risk. So 13 bps went up as the expenses went down by about KRW 202 billion. You may think that actually the increase is not that high. With that in context, I will give you my answer.

Seong-Min Kwak
Group CFO at Woori Financial Group

It was KRW 12.6 trillion, and the group, when it comes to recurring asset growth, it is about KRW 8 trillion in terms of the growth. As you know, we have FX, and 183 went down in Q2, so KRW 7.4 trillion declined. We had the FX impact as well as the asset impact as well. In terms of net asset growth, it was about KRW 600 billion, and that is equivalent to a decline of 3 bps. As I have mentioned, we want to increase the risk of operation, and 13 bps went up. So we had, in total, 10 bps impact. We can see that as a contribution. Then we have a 7 bps and then 4 bps in dividends and so on. We also had the FX effects. FX fluctuation also had an impact.

Seong-Min Kwak
Group CFO at Woori Financial Group

It actually had an impact on RWA as well as the assets. The RWA impact is also factored in. When it comes to other bond loss, for us, unlike other companies, the impact is not that high. Based on what I have mentioned, when RWA was concluded on track

Seong-Min Kwak
Group CFO at Woori Financial Group

It would be about 13.9, but now we have 15 bps difference because of a specific reason. I cannot specify this company's name, but you have to look at the semiconductor. We have some vendors that we work with, and end of September is the month of corporate tax submission or payment. This is quite technical, but it actually had an impact on the RWA in the payment process. It is about KRW 900 billion. It was not cash. Corporate tax actually increased the amount by KRW 4 trillion, but RWA-wise, it was only KRW 900 billion, but this is temporary. The asset grew because of that corporate tax issue. We plan to resolve that in October. This was temporary, once again. About the overseas, we have some businesses without control.

Seong-Min Kwak
Group CFO at Woori Financial Group

They actually took out some loan, and we had that loan in end of September and early October it was repaid. This was something unexpected. As of end of September, about KRW 600 billion was the amount. As of end of September, we had some temporary factors. We had some transactions with businesses, and RWA actually went up by KRW 1 trillion, and it impacted 15 bps. As of end of September, it is down 15 bps. If you look at effective number, we have almost resolved the issue as of October. End of September, it is about 13.95. As we sustain this and maintain this by Q4, 50% will be the year-end dividend out of all dividends, and we plan to use the capital ratio that will go up in that manner. About Q1, that is my answer to your question.

Seong-Min Kwak
Group CFO at Woori Financial Group

Also about your second question about the integration of the insurers, and any concerns about the additional contribution. This is my answer to you. As I have been saying, the integration of the two companies has been officially announced, and we are now on track. Integration of the two insurers requires a lot of tasks and works. Not just finance consolidation, but HR and IT integration. Three tracks mainly. In terms of IT integration, we need more than that. We need to integrate the financial system and also HR at the end of the day. We have the schedule in place, and we are now on track. We believe that October 1st is the deadline for integration, and so far we are progressing on track. We are on schedule.

Seong-Min Kwak
Group CFO at Woori Financial Group

As I have mentioned, now the life insurance, in that community, we plan to become number five. As of integration period, we are focusing on cost synergy. We wanted to maximize cost synergy towards that destination. Now the integrated entity, we want it to be financially most effective, and that is how we are working on this. How are we going to maximize CSM and also K-ICS view, how are we going to work on that number is something that we are looking at. We are working to maximize the numbers. To talk about the technical ideas, it is about how we are going to work with the subsidiaries or the underwriting companies. Based on that, we want to integrate and relieve your concerns.

Seong-Min Kwak
Group CFO at Woori Financial Group

What we can say for now is that after integration, while we do not want the holding company to actually inject capital to this insurance because of financial issues, that is something that we want to refrain from. We have not only legal integration, but also HR integration that we have in mind, and we will do our best to stay on track. With the integration, the IT investment shift for the insurers, that also includes investment for AI. Be it sales or the entire business process, especially underwriting. End-to-end value chain will be monitored. We plan to embed AI to the legacy system, and that is what we are doing right now as we work for IT integration. Once we complete the process, we will be efficient and

Seong-Min Kwak
Group CFO at Woori Financial Group

The entity, the integrated entity will be effective, so no further capital injection.

Sung Han Hong
Head of Investor Relations at Woori Financial Group

Thank you. Next question is from UBS Securities. Please go ahead and ask your question.

Analyst at UBS Securities

Hello, good afternoon. My name is [audio distortion] from UBS Securities. I do have a question about the asset quality. The card delinquency rate increased a lot in this quarter, so I want to know the reason behind that. Also, the group, the CCR, it is maintained at a very low level. After the Q4, how do you actually foresee the asset quality, including the CCR?

Seong-Min Kwak
Group CFO at Woori Financial Group

Thank you for your question. Let us go ahead and answer that question. My name is Kwak Seong-Min, the CFO. For the card, I think you have a question about the soundness of the Woori Card. The delinquency rate, yes, it went up, as you can see in the figures.

Seong-Min Kwak
Group CFO at Woori Financial Group

There are no specific reasons behind this, though. Compared to first and second quarter, the disposal as the write-off fee cost went up. That is why the NPL went up and the delinquency also went up. As you know, we are right now in the higher rate cycle. The card, the investment banks, these are the subsidiaries that are more accessible by the vulnerable customers. We continue to monitor these transactions and loans to make sure that we do not see higher increase for delinquency rate. As I covered, the disposal, the size actually went up from last quarter. That is why we are seeing this change. In Q4, we are going to actually stabilize at the same level as our competitors. Delinquency rate and NPL ratio in Q4 for card will go down.

Seong-Min Kwak
Group CFO at Woori Financial Group

For the credit cost, I think you had a question about the outlook. In Q3, the NPL rate, it all went down. Because the NPL for banks and other subsidiaries actually went down significantly, and that has been reflected. We have been managing the risks proactively to make sure that we do not have any new NPLs. I think that our effort actually was reflected in this decline in the figures. As you know, the one-off items such as the ones that we had in Q1 and Q2, we do not have that anymore. We increased the corporate lending, which also helped reducing the new NPLs. Q4 and 2027, we are going to continue this effort. As for asset quality compared to our competitors, we are going to continue our leading position, and we are going to maintain that position going forward.

Seong-Min Kwak
Group CFO at Woori Financial Group

The 2026 CCR, I think it will stay well within the early 40 bps range. We also promised that we are going to actually decrease by 15%, and this is a goal we believe that we can achieve this year. Before we had a real estate trust and the investment banking, we actually eliminated those in 2025, so we do not have any risks associated with that anymore. Going forward, the credit cost, the CCR management, I think we can actually maintain the same level. Thank you.

Sung Han Hong
Head of Investor Relations at Woori Financial Group

Next question. From HSBC, we have Mr. Won Je-Yong, who has this question. You have the floor.

Analyst at HSBC

Okay, thank you very much for the opportunity to ask questions. I will ask two. First, about insurance. Number two, about shareholder returns. Two weeks ago, there was this article that came out, and ABL Yeouido Tower sell-off is accelerating. That is what the news is saying, and according to the news, it is about KRW 300 billion. The price could change and Woori has been selected as a preferred bidder. I believe that the process is faster than expected. When do you think the earnings will be reflected, and what about GT One? When will this be reflected? Can I have a rough number? Number two, about shareholder returns. In fact, when it comes to shareholder capital, you are managing this quite well. From October, it is about 13.9, and that is what you mentioned before.

Analyst at HSBC

ABL Tower, once it is sold, then CET1 will also go up and improve. As for shareholder returns, it will be much higher than last year, and that is thanks to your dedication. According to the estimate, your target is about mid-40 bps, and that is my expectation. This is my question, it is about the following year, because CET1 is improving and then earnings go up, then other companies, they are exceeding 50%. Exceeding 50% maybe should be our next goal or target. What about next year's shareholder returns? Do you have any plans for that or any ideas? Do you have any plans to introduce new frameworks for next year? That is my question.

Seong-Min Kwak
Group CFO at Woori Financial Group

Okay. About the insurance, the asset sales, and also shareholder returns. Two questions. Yes, we will now give you the answers in a moment.

Seong-Min Kwak
Group CFO at Woori Financial Group

Okay, about the first question about the property sales. ABL Life, yes, you said that you saw the news and it is out. While most of the data and information is correct, I cannot represent it fully. Yes, the building is up for sale, and I believe that you want to know the timeline. What we have for now and what the newspaper is saying, while we are actually talking with a preferred buyer, and if everything goes as scheduled, then the ABL Tower, we believe, for now, will be sold by the end of this year. If we were to look at the schedule-wise, we are now on track to complete it by the end of this year.

Seong-Min Kwak
Group CFO at Woori Financial Group

The price, well, it's the preferred buyer, and once it's selected, it will be a real estate agent and not M&A, but still, we have to do auditing. That will determine the price. I am being prudent here. I do not want to disclose any specific numbers today because we have the counterpart, and maybe we are not in a position to disclose the numbers for now. What I can say for sure is that the negotiation, if it goes as planned, then by the end of this year, it is highly likely that the sales will be completed. So that's how much I can tell you. As you know, now insurers, well, let's say that if it was a bank's property, it's RWA 100%, so it does help.

Seong-Min Kwak
Group CFO at Woori Financial Group

But then for insurers, it's a CET1 ratio, and the calculation is different from that of the bank. Given that into account, CET1 ratio should be looked at differently because you have property out and then cash in. So it will not impact the net asset, but the CET1 calculation of the insurers, well, you know better than us how to calculate the number. So it's not bad, but then once we reach sales profit, then it will be retained, and it will be contributing to CET1. That's how much I can tell you for now because it is now in progress. Also, moving on to your second question about CET1 ratio and also shareholder returns, you wanted to know some outlook or expectations. As I've mentioned in Q3, it's about 13.8. That was an estimate.

Seong-Min Kwak
Group CFO at Woori Financial Group

We have some specific factors with the companies that we are working on, and there was an asset increase because of that. Now the precondition is that we resolve all of that. In Q3, it will go above 13.9. But then year-end dividend accounts for 50% of total dividend payout. So now once we decide on the year-end dividend, we will actually reflect that towards the end of the year. I cannot disclose the number now, but then it will be a great contributor. So it will cause some decline. As for capital ratio, yes, so we are at the level of our peers as well. So now there were at times, last Q4, where we had to stop in terms of capital ratio, but then that's no longer the case this next quarter.

Seong-Min Kwak
Group CFO at Woori Financial Group

Given that growth potential, then we believe that CET1, we will maintain 13.6-13.7 range. So that's what I can tell you. With that as an assumption, as you've mentioned, now our total shareholder return, or TSR, could be mid-40 range. We believe this is very possible. Then 50%, well, if it was tax-exempt, and if we were to reflect that, then TSR 18.4% is added. So tax-exempt wise, it's above 50%. Please keep that in mind. Next year, as you've mentioned, now the nominal TSR, of course, we will have to look at the financial statements of next year. But now, as CFO, we want to relook at the TSR. Nominal wise, yes, my idea is that it has to exceed 50%, but then as we plan for the next year's financial statement, we need to work on the details.

Seong-Min Kwak
Group CFO at Woori Financial Group

And as we make it more concrete, as you have mentioned, we have this Value-Up Plan, and there are some elements that we plan to upgrade. With that, as we discuss that within the board and reach a decision, then at the end of the year, when we do earnings presentation, perhaps we could discuss the number. What is certain is that the capital ratio went up, and we want to make sure that it contributes to growth and shareholder returns. So capital ratio goes up, and from 2027, we want to fully take advantage of that. Now the plan is to kick that off starting 2027. That is what I want the market to understand it as well. Thank you.

Sung Han Hong
Head of Investor Relations at Woori Financial Group

There are no more questions.

Sung Han Hong
Head of Investor Relations at Woori Financial Group

Out of the questions that we addressed today, we also had questions that came in in advance through our website. They were mostly from retail investors. Most of questions was about the dividend for 2027 and how long we are going to do the non-taxable dividend. We were not able to cover that today during the Q&A session, so we will ask CFO to answer that.

Seong-Min Kwak
Group CFO at Woori Financial Group

For dividend, for DPS, as of now, based on our Value-Up Plan, our aim is to continue to increase this on an annual basis more than 10%, and we are going to continue with this going forward. As we do the shares buyback, we are going to continue to increase DPS, and of course, ROE will have to be improved.

Seong-Min Kwak
Group CFO at Woori Financial Group

Through the increasing ROE from the non-banking sector, we can also increase the net income, and we can downsize the outstanding shares, thereby maintain the 10% level for DDPS. So we are going to continue to achieve this goal. As you know, the non-taxable dividend, we are the very first one to do this, and we are the only financial holding company who are giving the non-taxable dividend. For the non-taxable, the total amount is KRW 6,300,000,000,000. After Q3 dividends, the remaining amount will be KRW 5.2 trillion. So we are going to maintain our quarterly dividend principle, which will cover at least three or four years going forward. About the dividend, maybe not right away. It is not something that we can decide either this year or next year.

Seong-Min Kwak
Group CFO at Woori Financial Group

But in long-term basis, because we do have enough funds to cover three or four years, I think about 2028, maybe, we can have another discussion, and we can reassess the amount that we can pay the non-taxable dividend. So maybe we can secure the amount additionally for non-taxable dividend that time. This is something more we have to look at in the long term basis. Before we use all the amount, we will review whether we can secure additional funds for non-taxable dividend. But this is a midterm target. Maybe it may be too early for me to comment on this, but this is a possibility, and this is something that we are reviewing right now. That is all.

Sung Han Hong
Head of Investor Relations at Woori Financial Group

Thank you. I think that is all the questions for today, and we are going to conclude today's presentation today.

Sung Han Hong
Head of Investor Relations at Woori Financial Group

Again, thank you for joining the Woori Financial Group earnings conference call for Q3. Thank you.

Analysts
    • Sung Han Hong
      Head of Investor Relations at Woori Financial Group
    • Seong-Min Kwak
      Group CFO at Woori Financial Group
    • Analyst at IB Securities
    • Analyst at NH
    • Analyst at UBS Securities
    • Analyst at HSBC
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