Woori Financial Group Inc. (WF) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call presents a mixed picture: strong financial metrics with record-high revenue and increased dividends, but weak guidance with a slight weakening in NIM and unclear management responses. The 5% growth in total assets and 20% growth in noninterest income are positive, but concerns about SG&A expenses and nonoperating losses persist. The Q&A section reveals some uncertainties, particularly regarding capital increases and CET1 ratio targets. Overall, the neutral sentiment reflects these mixed signals, with no strong catalysts for significant stock price movement.
Key Financial Performance
Net Income KRW 3,141.3 billion, representing a Y-o-Y increase of 1.8%. The increase was due to balanced top-line growth and the insurance acquisition, which enabled record-high net operating revenue and stable profits.
ROE 9.1%, similar to last year. Balanced top-line growth and the insurance acquisition contributed to maintaining this level.
CET1 Ratio 12.9%, up 77 basis points versus 2024. Improvement was achieved despite macro volatility, insurance acquisition, and higher year-end dividends, through asset rebalancing and strong capital management.
Net Operating Revenue KRW 10,957.4 billion, a 5% year-over-year increase. This was driven by stable profit generation from diversified revenue sources and the inclusion of the insurance business.
Interest Income KRW 9,030.8 billion. Top-line growth was moderate, but NIM improved quarter-over-quarter, leading to better asset quality and growth.
Noninterest Income KRW 1,926.6 billion, a 24% year-over-year increase. Growth was driven by record fee income and balanced growth across securities, FX trading, and insurance income.
NIM (Woori Bank) 1.46%, an increase of 2 basis points. Growth was supported by asset origination focused on profitability and funding cost efficiencies.
NIM (Group) 1.73%, an increase of 3 basis points. Similar reasons as Woori Bank's NIM growth.
Bank Loans KRW 334 trillion, flat year-over-year and up 1% quarter-over-quarter. Corporate loans slightly declined due to reduced SME exposures, while retail loans grew 4% year-over-year driven by policy mortgages.
SG&A Expenses KRW 5,180.5 billion, a 10.8% year-over-year increase (excluding ERP and insurance business). The increase was due to investments in securities infrastructure, insurance acquisition, and ordinary wage costs.
Credit Cost KRW 2,086.2 billion, with a credit cost ratio of 0.53%. One-off credit costs of KRW 430 billion were recognized for preemptive provisioning, but excluding these, the ratio was 0.42%.
Annual Dividend Per Share (DPS) KRW 1,361, a 13.3% year-over-year increase. The year-end dividend of KRW 760 is nontaxable, and the total shareholder return ratio is 39.8%.
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Operating Highlights
Insurance acquisition: Completed acquisition without negative impact on capital ratios, enabling growth in securities business and launching MTS Group.
AI-based management system: Planned large-scale transformation into AI-based systems for corporate loans, wealth management, and customer consultations to improve productivity.
Market expansion in advanced strategic industries: Signed financial support agreement with Hanwha Group for building an advanced strategic industry ecosystem, focusing on AI, semiconductors, and defense.
Nonbank portfolio completion: Completed insurance acquisition and launched securities companies, enhancing competitiveness in wealth management, investment banking, and asset management.
Capital adequacy improvement: Achieved CET1 ratio of 12.9%, exceeding the 2025 target of 12.5%, through asset rebalancing and reduction in FX-sensitive assets.
Cost management: Engaged in cost-saving efforts like leveraging AI-based efficiencies to lower costs and targeting a CI ratio below 40%.
Shareholder return enhancement: Introduced nontaxable dividends and increased share buybacks and cancellations, with a total shareholder return ratio of 39.8%.
Future co-growth project: Planned KRW 80 trillion in financial support over 5 years for productive and inclusive finance, focusing on advanced strategic industries.
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Risk or Challenges
Financial Market Uncertainties: Uncertainties in the financial market regarding interest rates and FX rates, along with concerns about an economic slowdown, pose risks to stable profit generation and asset quality.
Funding Environment Challenges: Rising market rates and recent equity market movements are creating a more challenging funding environment, which could impact the group's ability to secure stable margins.
Credit Costs and Asset Quality: High credit costs, including one-off provisioning related to completion guarantee of trust company projects, and ongoing concerns about a slower economy could strain the group's financials. Despite preemptive measures, uncertainties persist, requiring continued focus on asset quality management.
SME Sector Exposure: Efforts to decrease SME sector business exposures may limit growth opportunities in this segment, potentially impacting overall loan portfolio diversification.
Operational Costs: Increased SG&A expenses, including costs for portfolio expansion and ordinary wage labor costs, could pressure profitability. While these are considered one-off expenses, they still pose a short-term challenge.
Regulatory and Capital Management Risks: The need to comply with capital regulation rationalization policies and manage CET1 ratios while executing large-scale financial support projects could strain capital adequacy.
Synergy Realization Risks: Challenges in generating expected synergies from the newly acquired insurance and securities businesses could delay the group's strategic objectives of boosting nonbank profit contributions.
Economic and Market Volatility: Persistent macroeconomic volatility, including high market rates and FX fluctuations, could impact the group's financial stability and growth plans.
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Guidance & Outlook
Capital Adequacy: The group plans to achieve a CET1 ratio of 13% ahead of schedule in 2026 and maintain it stably at around 13.2% or higher. This will be achieved through asset rebalancing, quarterly RWA management, and selective resource allocation. Idle real estate will be disposed of to reduce RWA, and diverse methods will be deployed to efficiently manage and use real estate to enhance capital ratios.
Future Co-Growth Project: The group plans to provide approximately KRW 80 trillion of productive and inclusive financial support over 5 years, with KRW 17 trillion allocated to investments in areas like AI, semiconductors, and defense. This initiative is expected to impact capital ratios by about 40 bps annually, which will be managed through strengthened RWA management and quality enhancement of investment and loan portfolios.
Non-Bank Profit Contribution: The group aims to boost non-bank profit contribution to about 20% by leveraging synergies among its subsidiaries, including securities and insurance. This includes cross-selling, client referrals, and joint underwriting in CIB.
AI-Based Management System: The group plans to implement an AI-based management system to enhance productivity in corporate loans, wealth management, customer consultations, and internal control, thereby structurally improving ROE and achieving quality growth.
Shareholder Returns: The group will introduce non-taxable dividends starting from year-end 2025, boosting dividend payout by around 6 percentage points. Share buyback and cancellation will increase to about 10% of profits, with a KRW 200 billion buyback announced for 2026. Additional buybacks may occur if the CET1 ratio exceeds 13%.
Sustainable ROE Enhancement: The group will focus on cementing the competitiveness of its subsidiaries and generating synergies among its bank, securities, and insurance pillars. It aims to transform into a productive finance model centered on advanced strategic industries, moving beyond traditional interest income-driven profit structures.
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Shareholder Return Plan
Year-end dividend: KRW 760 per share
Full year total dividend per share: KRW 1,361, a 13.3% increase year-over-year
Dividend payout ratio: 35%, considered top-notch in the industry
Nontaxable dividend: Introduced for the first time, boosting dividend payout by 6 percentage points
Dividend yield: Positioned as a high dividend stock
Future dividend growth: EPS to increase by at least 10% annually
Share buyback and cancellation: KRW 200 billion, a 33.3% increase year-over-year
Future share buyback plans: Additional buyback and cancellation planned if CET1 ratio exceeds 13% in 2026
Long-term buyback strategy: Balanced buyback and cancellation program twice a year if CET1 ratio stabilizes above 13.2%
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Key Q&A
Q:What is the guidance for 2026 in terms of margin, profit growth, and dividend policy?
A:The CFO, Seong-Min Kwak, stated that for 2026, the business plan includes a 5% Y-o-Y growth in total assets, a slight weakening in NIM on a Y-o-Y basis, and a 20% growth in noninterest income. The company aims to maintain a CI ratio of 40% and a normalized CCR of around 40%. Regarding dividends, the target is a 10% increase in DPS, with quarterly dividends distributed equally and year-end dividends determined based on the CET1 ratio.
Q:How did the size of nontaxable dividend resources increase to KRW 6.3 trillion?
A:The CFO explained that KRW 3 trillion of capital surplus was transferred to retained earnings in March 2025, and KRW 4 trillion was transferred in 2021. After using KRW 700 billion, KRW 3.3 trillion remained from the 2021 transfer. Combined with the 2025 transfer, the total available resources for nontaxable dividends reached KRW 6.3 trillion.
Q:What is the breakdown of the KRW 189 billion nonoperating loss and the outlook for the nonbanking business?
A:The nonoperating loss includes a KRW 50 billion contribution to a bad bank and a KRW 52 billion LTV fine, which is fully provisioned. The company plans to grow its securities business to become a mega IB, with gradual capital increases. The nonbanking business is expected to contribute significantly to top-line growth over the midterm horizon.
Q:What is the guidance for the CET1 ratio and share buyback program in 2026?
A:The CET1 ratio was 12.9% at the end of 2025 and is expected to exceed 13% in the first half of 2026. The company plans to complete a KRW 200 billion share buyback program by June 2026 and may consider additional buybacks in the second half if the CET1 ratio exceeds 13%.
Q:What is the impact of securities business capital increases and insurance core capital ratio requirements on the CET1 ratio?
A:The CFO clarified that capital increases in the securities business would not directly impact the CET1 ratio at the holding company level. The insurance core capital ratio requirement, effective from 2027, is not expected to negatively impact the company as its insurance businesses are already above the required ratio.
Q:Review of Unclear Management Responses
A:Management avoided directly addressing the specific timing and size of capital increases for the securities business, stating that it is under review and will be communicated once decided. Additionally, they did not provide detailed plans for achieving the CET1 ratio target beyond general statements about internal efforts and government support.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI
BOD today
CFO Kwak
Group CFO
KRW addition
Kwak Seong
Seong Min
Woori Bank
addition Woori
asset rebalancing
base
buyback cancellation
demand
detail
end dividend
enhancement plan
environment group
group CET
group portfolio
income contribution
insurance acquisition
insurance income
investment banking
movement
nonbank
project
rate FX
rate concern
ratio asset
record
reduction
share KRW
share buyback
support
trust
value enhancement
wage
wealth
WF Transcript
Woori Financial Group Inc. (WF) Q4 2025 Earnings Call Transcript
Unknown2-6
The earnings call presents a mixed picture: strong financial metrics with record-high revenue and increased dividends, but weak guidance with a slight weakening in NIM and unclear management responses. The 5% growth in total assets and 20% growth in noninterest income are positive, but concerns about SG&A expenses and nonoperating losses persist. The Q&A section reveals some uncertainties, particularly regarding capital increases and CET1 ratio targets. Overall, the neutral sentiment reflects these mixed signals, with no strong catalysts for significant stock price movement.
Woori Financial Group Inc. (WF) Q3 2025 Earnings Call Transcript
Positive10-29
The earnings call shows stable financial performance with solid interest income and improved noninterest income. The company is focused on strengthening competitiveness and managing capital efficiently. While there are some uncertainties, such as unclear management responses and increased credit costs, the overall sentiment is positive due to strategic growth plans, strong capital ratios, and shareholder return initiatives. The market is likely to react positively, especially with the optimistic guidance and focus on cost efficiency and revenue stability.
Woori Financial Group Inc. (WF) Q2 2025 Earnings Call Transcript
Unknown7-25
The earnings call shows mixed signals. Positive elements include increased dividends, share buybacks, and strong noninterest income growth. However, net income missed expectations, and SG&A expenses rose significantly. The Q&A revealed uncertainties in strategic decisions and unclear management responses, particularly concerning the insurance arm and CET1 ratio target. These factors suggest a neutral market reaction, as positive shareholder returns and growth in noninterest income may offset concerns about missed earnings and rising expenses.
Woori Financial Group Inc. (WF) Q1 2025 Earnings Call Transcript
Unknown4-25
The earnings call highlights several negative factors: increased credit costs, SG&A expenses, and asset quality concerns due to economic uncertainties. Despite some positive aspects like increased dividends and share buybacks, the overall sentiment remains negative due to regulatory challenges, high exchange rates, and unclear management responses in the Q&A section. The lack of strong guidance and the impact of U.S. tariffs further contribute to a negative outlook. The stock price is likely to decline by 2% to 8% over the next two weeks.
WF Report
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