Woori Bank Q3 Earnings Call Highlights

Key Points

• Third-quarter net income rose 4.4% sequentially to KRW 1.0492 trillion, marking Woori Financial’s second straight quarter above KRW 1 trillion. Excluding prior-year acquisition-related gains, nine-month profit increased 19% year over year.
• Revenue growth was driven by a 25% increase in large-corporate lending and stronger fee income, while non-interest income reached a record KRW 1.6444 trillion through September. However, net interest margin fell 7 basis points to 1.43% because funding costs rose faster than lending rates.
• Credit costs declined and capital strengthened: nine-month credit costs fell 15.7% year over year, while the preliminary common equity tier 1 ratio rose to 13.8%. Management also approved a KRW 221-per-share dividend and signaled potential increases in shareholder returns through 2026 and 2027.

Woori Financial Group said third-quarter net income rose 4.4% from the prior quarter to KRW 1.0492 trillion, marking its second consecutive quarter above KRW 1 trillion as the company reported record interest and non-interest income.

Year-to-date net income through September reached KRW 2.6581 trillion. Chief Financial Officer Seong-Min Kwak said that, excluding approximately KRW 550 billion in bargain-purchase gains recorded in the prior-year period from the Tongyang Life and ABL Life acquisitions, nine-month profit increased 19% year over year.

The group’s common equity return on equity was 9.9%, while year-to-date operating profit increased by nearly KRW 570 billion from a year earlier, Kwak said. He attributed the results to growth in revenue, cost-efficiency measures and lower credit costs.

Revenue Growth Led by Corporate Lending and Fees

Year-to-date net operating revenue rose 6.2% year over year to a record KRW 8.6803 trillion. Interest income increased 4.5% to KRW 7.0359 trillion, supported in part by a 25% increase in large-corporate lending, according to the company.

Woori Bank NYSE: WF reported a third-quarter net interest margin of 1.43%, down 7 basis points from the previous quarter. Kwak said funding costs rose as market rates increased more sharply than lending rates, while the bank also moved to secure funding in advance of further anticipated rate increases.

During the question-and-answer session, Kwak said a decline in core deposits accounted for roughly 2 basis points of the quarterly margin decline, while the widening spread between long- and short-term rates accounted for about 5 basis points. He said the bank’s relatively high concentration of CD-linked loans, representing about 70% of its loans, made it more exposed to the divergence in short- and long-term rates.

Kwak said management expects margin pressure to ease as assets and liabilities reprice and higher funding costs subside. The company expects its margin to stabilize or rise slightly in the fourth quarter, with further improvement anticipated in 2027 as assets are repriced.

Total won-denominated loans stood at KRW 313 trillion at the end of September, up 1.52% from the end of June. Corporate loans rose 1.42% sequentially to KRW 156 trillion, while retail loans increased 1.4% to KRW 154 trillion following an August easing of household-lending limits.

Lending classified as productive finance reached about KRW 27 trillion, or 1.5 times the group’s full-year target, according to Kwak. The group said it plans to prioritize high-quality lending and integrate artificial intelligence across its lending process, from credit assessment through post-loan monitoring.

Non-Interest Businesses Expand Contribution

Non-interest income for the first nine months reached a record KRW 1.6444 trillion. Core fee income increased 18.8% from a year earlier to KRW 1.898 trillion.

The company said its securities, insurance and other non-bank subsidiaries made a larger contribution to results. Underwriting and advisory fees rose to KRW 151.4 billion, or 2.4 times the prior-year level, with the securities business accounting for about half of the total. Insurance earnings increased by approximately KRW 100 billion year over year, while bancassurance earnings rose about 10%.

As a result, non-bank businesses accounted for approximately 60% of non-interest income, compared with 45% a year earlier. Third-quarter non-interest income, however, fell 7.6% sequentially to KRW 581.4 billion, reflecting securities valuation losses tied to rising rates and stock-market volatility, along with lower capital-markets fees.

Woori Financial said it acquired full ownership of Tongyang Life in August and is proceeding with the integration of Tongyang Life and ABL Life. Kwak said the integration is expected to generate cost synergies and economies of scale, with the combined life insurer targeted to become the fifth-largest participant in its market.

He said the group is seeking to avoid an additional capital injection from the holding company following the integration. The company is also working to replace an insurance product that regulators instructed it to stop selling, an action Kwak said would have a larger effect on ABL Life than on Tongyang Life.

Costs, Credit Expenses and Capital

Group selling, general and administrative expenses totaled KRW 3.8575 trillion in the first nine months, while third-quarter expenses were broadly unchanged sequentially at KRW 1.2246 trillion. The cost-to-income ratio was 42.3%, in line with the company’s full-year target.

Credit costs fell 15.7% from a year earlier to KRW 1.28 trillion through the first nine months. Third-quarter credit costs declined 28.5% from the second quarter to KRW 314 billion, and the nine-month credit-cost ratio was 42 basis points.

Kwak said Woori Financial remains focused on reducing full-year credit costs by 15% and keeping its credit-cost ratio in the low-40-basis-point range. He said the group’s nonperforming loan ratio edged lower in the third quarter, supported by lower new NPL formation and a loan portfolio weighted toward higher-quality corporate borrowers.

The CFO acknowledged that delinquency at the card business increased during the quarter, attributing the movement primarily to increased disposals and write-offs. He said the company expects card delinquency and NPL ratios to decline in the fourth quarter.

Woori Financial reported a preliminary common equity tier 1 ratio of 13.8% at the end of September, up nearly 90 basis points since the start of the year and 170 basis points over two years. Kwak said temporary factors affecting risk-weighted assets at the end of September were largely resolved in October, placing the adjusted ratio above 13.9% before the effect of the year-end dividend.

Dividends and Shareholder Returns

The board approved a third-quarter dividend of KRW 221 per share, which the company said will be fully non-taxable. The record date is Nov. 10, with payment scheduled for Nov. 30.

Kwak said the year-end dividend generally represents more than half of Woori Financial’s annual dividend. The group also has a KRW 150 billion share repurchase program approved for the second half of the year and canceled 57,369 treasury shares held for specific purposes.

The CFO said management expects total shareholder return in 2026 to be higher than last year and said a mid-40% total shareholder return is possible based on its capital position. Looking to 2027, he said his view is that nominal shareholder return should exceed 50%, though the company will determine details after reviewing next year’s financial plan and discussing the matter with its board.

Woori Financial also said it intends to target annual dividend-per-share growth of more than 10% under its Value-Up Plan. Kwak said the group has KRW 5.2 trillion remaining for non-taxable dividends after the third-quarter payment, an amount he said could support quarterly non-taxable dividends for at least three to four years.

About Woori Bank (NYSE:WF)

Woori Bank is a South Korean commercial bank that provides financial services to individuals, businesses and institutional customers. Its offerings include deposit accounts, consumer and commercial lending, payment and card services, foreign-exchange services, wealth management and other banking products.

The bank serves customers through a network of branches, digital banking platforms and other distribution channels in South Korea. It also supports Korean companies and individuals conducting business internationally through overseas branches, subsidiaries and representative offices in selected markets.

Woori Bank traces its origins to Daehan Cheon-il Bank, established in 1899, and is regarded as one of South Korea's oldest banking institutions.

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