Woori Finance ((WF)) has held its Q1 earnings call. Read on for the main highlights of the call.
Woori Financial Group’s recent earnings call presented a mixed sentiment, highlighting both achievements and challenges. The company reported stable revenue growth and improved capital ratios, reflecting successful business diversification. However, increased credit costs, net income falling below expectations, and higher SG&A expenses posed significant challenges. The company is actively focusing on asset rebalancing and risk management to navigate these economic uncertainties.
Stable Net Operating Revenue Growth
Woori Financial Group reported a commendable increase in net operating revenue, which rose by 2.4% year-over-year and 6.6% quarter-over-quarter, reaching KRW 2,609.5 billion. This growth underscores the company’s robust revenue-generating capabilities despite the challenging economic environment.
Improved Capital Ratios
The group’s preliminary Common Equity Tier 1 (CET1) ratio improved to 12.42%, marking a 30 basis point increase from the end of last year. This improvement highlights Woori’s strong capital management and its commitment to maintaining a solid financial foundation.
Increased Quarterly Dividends
Woori Financial Group’s Board approved a Q1 dividend of KRW 200 per share, representing an 11% increase year-over-year. This decision reflects the company’s confidence in its financial stability and commitment to returning value to shareholders.
Successful Business Diversification
The company made significant strides in business diversification, with Woori Investment Securities obtaining its official brokerage license and launching its MTS platform. These developments indicate progress in expanding its business operations and revenue streams.
Net Interest Income Growth
Net interest income saw a modest increase of 2% year-over-year, reaching KRW 357.5 billion. Additionally, core fee income surpassed KRW 500 billion, showcasing the company’s ability to generate income from diverse sources.
Higher Credit Costs
Credit costs rose to KRW 435.5 billion, an 18.8% year-over-year increase, primarily due to challenging economic conditions and higher delinquency and non-performing loan ratios. This increase highlights the economic pressures facing the company.
Net Income Below Expectations
Despite strong revenue growth, Woori Financial Group’s net income of KRW 615.6 billion fell short of market expectations. This shortfall was attributed to conservative provisioning and non-regular costs, indicating areas for potential improvement.
Significant SG&A Increase
SG&A expenses increased by 26.6% year-over-year, driven by one-off factors such as costs related to early retirement programs and investments in digital and IT. This rise in expenses reflects the company’s strategic investments in future growth.
Retail Loan Portfolio Pressure
The company’s retail loan portfolio showed no growth, remaining at KRW 144 trillion. This stagnation was largely due to the government’s household debt management policy, which has impacted loan growth.
Forward-Looking Guidance
Looking ahead, Woori Financial Group aims to achieve a CET1 ratio of 12.5% within 2025, focusing on strengthening its digital and non-interest business segments. The company is committed to improving asset quality and risk management amid ongoing economic challenges. Additionally, a quarterly dividend increase reflects the group’s confidence in its future performance.
In conclusion, Woori Financial Group’s earnings call revealed a balanced mix of positive growth and challenging hurdles. While the company demonstrated strong revenue growth and capital management, it faces pressures from increased credit costs and SG&A expenses. The forward-looking guidance suggests a strategic focus on diversification and risk management to sustain growth in the face of economic uncertainties.