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Woori Financial Group Inc. (NYSE:WF) Q1 2023 Earnings Call Transcript February 6, 2024
Woori Financial Group Inc. isn't one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Han Hong Sung: Good afternoon. I am Han Hong Sung, Head of IR at Woori Financial Group. Let me first begin by thanking everyone for taking time to participate on this Earnings Call for Woori Financial Group. On today’s call, we have Group’s CFO, Lee Sung-Wook; Group CRO, Park Jang-Geun; and Group CDO, Ouk Il-Jin, participating. For today’s call, the CFO, Lee Sung-Wook, will present the earnings performance and Woori Financial Group’s capital management plan, after which the CRO, Park Jang-Geun, will walk you through an overview of the Group’s risk management efforts; and at the end, we will have a Q&A session. In addition, please note that today’s call is being interpreted simultaneously for our overseas investors. Now, let us start the presentation of Woori Financial Group 2023 business performance.
Lee Sung-Wook: Good afternoon. I am Lee Sung-Wook, CFO of Woori Financial Group. Let me dive into the 2023 performance of our group. Based on the presentation, which is available on our website, please turn to Page 3. First, let me discuss the Group’s 2023 profit and losses. In 2023, Woori Financial Group’s net income was KRW2,516.7 billion, representing a 19.9% decrease year-over-year. The decline in net income was due to mainly one-off factors such as preemptive provisions by changing the credit cost calculation components, strengthening the loss absorption capabilities of vulnerable areas within the non-bank subsidiaries, and expenses related to corporate and finance programs. Following the steep rise in interest rates, the higher for longer environment has led to increasing concerns by the market on the quality of high risk assets such as real estate project finance and loans to vulnerable borrowers.
We have been focusing on our efforts in the fourth quarter to ensure we preemptively address these market concerns. On the bank side, we adjusted the assumptions that go into our credit cost, such as the LGD and PD values to reflect the future economic outlook. In addition, in the non-bank side, we conducted a comprehensive examination on vulnerable areas to actively set aside provisions, and during the fourth quarter, these activities led to approximately KRW525 billion in additional one-off credit. In addition to actively participate in extending cooperative finance, we approximately KRW170 billion in other operating expenses were recognized in the fourth quarter. When excluding these one-off factors, the Group continues to maintain solid profit generating capabilities.