Woori Financial Effect... Last Year, 10 Financial Holding Companies' Net Profit Increased by 31%

Net Profit of 10 Financial Holding Companies Reaches 15.2338 Trillion Won Last Year
Up 31% YoY... 15% Increase Excluding Woori Financial Group

[Asia Economy Reporter Kim Hyo-jin] Last year, the net income of domestic financial holding companies increased by more than 30% compared to 2018, influenced by the launch of Woori Financial Group.

According to the '2019 Financial Holding Companies Management Performance (Consolidated)' report released by the Financial Supervisory Service (FSS) on the 6th, the net income of 10 financial holding companies including Shinhan, KB, NongHyup, Hana, Woori, BNK, DGB, JB, Korea Investment & Securities (Hantoo), and Meritz reached KRW 15.2338 trillion last year, an increase of KRW 3.5928 trillion (30.9%) compared to the previous year (KRW 11.641 trillion).

By subsidiary sector, the net profit of banks increased by KRW 2.6153 trillion (29.4% year-on-year), influenced by Woori Bank within Woori Financial Group, which was launched early last year.

Financial investment also increased by KRW 567.6 billion (22.6% year-on-year) due to gains related to funds such as equity-linked funds. Insurance net income rose by KRW 492.3 billion (96.2% year-on-year) due to the inclusion of Orange Life as a subsidiary of Shinhan Financial Group.

Excluding Woori Financial Group, net income was KRW 13.3616 trillion, an increase of KRW 1.7206 trillion (14.8%) compared to the previous year.

Provided by the Financial Supervisory Service

At the end of last year, the total assets of financial holding companies recorded KRW 2,628.6 trillion. This is an increase of KRW 560.6 trillion (27.1%) compared to the end of the previous year (KRW 2,068 trillion).

The increase in banks was KRW 457.6 trillion (30%). Insurance increased by KRW 39.8 trillion (21.9%), financial investment by KRW 27.6 trillion (12.1%), and credit finance companies and others by KRW 27 trillion (22.8%).

By subsidiary sector, banks accounted for the largest asset share at 75.4%. Financial investment accounted for 9.7%, insurance 8.4%, and credit finance companies and others 5.5%.

Excluding Woori Financial Group, total assets were KRW 2,266.6 trillion, an increase of KRW 198.6 trillion (9.6%) compared to the previous year.

At the end of last year, the total capital, core capital, and common equity tier 1 capital ratios of bank holding companies were 13.54%, 12.10%, and 11.10%, respectively, decreasing by 0.84 percentage points, 0.90 percentage points, and 1.19 percentage points compared to the previous year.

This is due to the risk-weighted assets growth rate (34.3%) exceeding the total capital growth rate (26.5%) and common equity capital growth rate (21.3%).

At the end of last year, the non-performing loan ratio of financial holding companies was 0.58%, down 0.16 percentage points from 0.74% at the end of the previous year due to write-offs and sales of bad loans.

The loan loss provision coverage ratio rose by 6.52 percentage points from 116.77% at the end of the previous year to 123.29%, due to a decrease in non-performing loans and an increase in loan loss provisions.

Provided by the Financial Supervisory Service

The FSS evaluated that all sectors under the holding companies, including banks, financial investment companies, and insurers, showed stable growth with increases in assets and profits.

However, the FSS pointed out that this year's performance could deteriorate due to real and financial sector shocks caused by the novel coronavirus disease (COVID-19).

An FSS official stated, "We will encourage financial holding companies to maintain an appropriate level of capital to strengthen their loss absorption capacity in times of crisis."

Accordingly, the FSS plans to continuously recommend financial holding companies to refrain from excessive cash dividends, share buybacks, and excessive performance bonuses for management.

The FSS official also said, "We will strengthen internal controls within financial holding groups to promote substantive financial consumer protection."