Woori Financial Group posted first-half net profit in the 1.6 trillion won range this year, supported by higher fee income in its capital markets business and the effects of incorporating an insurer. The profit contribution from its non-bank affiliates rose to 22.3%, and second-quarter net profit topped 1 trillion won.

Woori Financial said on Thursday first-half net profit attributable to owners of the parent was 1.609 trillion won, up 3.7% from a year earlier. Second-quarter net profit was 1.005 trillion won, up 66.4% from the previous quarter and 7.5% from a year earlier.

First-half return on common equity (ROE) was 9%, and ROE excluding one-off costs was tallied at 10.3%. Non-bank affiliates accounted for 22.3% of group net profit, up 15.4 percentage points from 6.9% in the first half of last year.

Non-interest income tops 1 trillion won

First-half net operating profit was 5.723 trillion won, up 6% from a year earlier. Net interest income rose 3.2% to 4.66 trillion won, while non-interest income increased 20% to 1.063 trillion won.

Fee income rose 23.7% from a year earlier to 1.279 trillion won. Growth in trust, beneficiary certificates, and underwriting, advisory and arranging fees drove overall non-interest income growth. Second-quarter fee income was 702.0 billion won, up 21.7% from the previous quarter, topping 700.0 billion won on a quarterly basis.

The bank's net interest margin (NIM) in the second quarter was 1.51%, unchanged from the previous quarter. NIM for the first half was 1.51%, up 0.07 percentage points from a year earlier.

First-half selling and administrative expenses were 2.633 trillion won, up 6.2% from a year earlier. The cost-to-income ratio (CIR) was 42.8%, and it was 42% excluding the impact of the education tax.

Impairment losses on credit losses were 966.0 billion won, up 2.4% from a year earlier. The credit cost ratio fell 0.01 percentage points to 0.48%, and it was 0.39% excluding one-off factors.

Woori Bank net profit falls 11.9%

Woori Bank's first-half net profit attributable to owners of the parent was 1.373 trillion won, down 11.9% from a year earlier.

Net interest income rose 6.9% to 4.117 trillion won, but non-interest income fell 40.5% to 393.0 billion won. Impairment losses on credit losses also rose 23.6% to 612.0 billion won, affecting the drop in net profit.

Second-quarter net profit, however, rose 58.6% from the previous quarter to 842.0 billion won. Quarterly profitability improved on lower selling and administrative expenses and reduced credit costs.

As of end-June, Woori Bank's loans totaled 344.383 trillion won, up 3.1% from end-December. Corporate loans rose 4.8% to 189.184 trillion won and household loans increased 1% to 151.933 trillion won.

Loans to large companies rose 15.7% to 63.994 trillion won, while loans to small and medium-sized firms increased 0.1%. Among SME loans, lending to self-employed borrowers fell 2.6%.

Non-bank contribution at 22.3%

Among the non-bank affiliates, net profit increased at Tongyang Life, Woori Card, Woori Financial Capital and Woori Investment Securities.

Tongyang Life's first-half net profit was 92.0 billion won, up 12.2% from a year earlier. Insurance profit rose 38.6% to 97.0 billion won, but investment profit fell 30% to 21.0 billion won. As of end-June, its contractual service margin (CSM) was 2.646 trillion won and its solvency ratio (K-ICS) was a provisional 205%.

Woori Card posted net profit of 94.5 billion won, up 22.1%, and Woori Financial Capital recorded 76.9 billion won, up 14.9%. Woori Investment Securities' net profit rose 47.1% to 24.7 billion won. Non-interest income at Woori Investment Securities rose 110% as IB-related fees and gains related to securities increased.

NPL rises despite improved credit cost ratio

As of end-June, the group's non-performing loan (NPL) ratio was 0.73%, up 0.10 percentage points from end-December. The ratio of precautionary loans was 0.78%, down 0.10 percentage points, and the NPL coverage ratio was 112.9%, down 17 percentage points from end-December.

Woori Bank's delinquency ratio was 0.43% and its NPL ratio was 0.39%. Its NPL coverage ratio was tallied at 132.9%.

The group's estimated common equity tier 1 (CET1) ratio as of end-June was 13.71%, up 0.11 percentage points from the previous quarter. The BIS capital ratio was 16.5% and the tier 1 capital ratio was 15.5%.

Woori Financial decided to pay a cash dividend of 220 won per share for the second quarter. That is 10% higher than a year earlier. After completing the retirement of treasury shares worth 200.0 billion won in June, it will additionally buy back and retire treasury shares worth 150.0 billion won in the second half.

As a result, the scale of treasury share buybacks and retirements this year will total 350.0 billion won, up 133.3% from last year. Woori Financial said it will raise the shareholder return ratio band under its value-up plan if it expects its year-end CET1 ratio to exceed 13%.