Despite COVID-19 and Low Interest Rates, Net Operating Income Increased by 5.0% Quarter-on-Quarter
Strengthening Non-Bank Sector and Accelerating Synergy through Acquisition of Ajou Capital
[Asia Economy Reporter Kangwook Cho] Woori Financial Group announced on the 26th that it recorded a net profit of 480 billion KRW in the third quarter of this year. This is more than double the amount compared to the previous quarter. Woori Financial explained that this result was due to improved financial environment responsiveness through efforts to improve the revenue structure and manage soundness, combined with the outcomes of mergers and acquisitions (M&A) conducted after transitioning to a holding company.
The net operating income, composed of interest income and non-interest income, reached 1.7141 trillion KRW, a 5.0% increase from the previous quarter. Despite concerns over profitability decline due to two base rate cuts in the first half of the year, interest income recorded 1.4874 trillion KRW, a 0.6% increase from the previous quarter. The consolidated net profit by major subsidiaries for the third quarter was 480.7 billion KRW for Woori Bank, 27.8 billion KRW for Woori Card, and 18.7 billion KRW for Woori Comprehensive Financial.
Woori Financial explained that this was the result of revenue structure improvement achieved through continuous loan growth centered on small and medium-sized enterprises and an increase in core low-cost deposits. Additionally, non-interest income reached 226.7 billion KRW, recovering business capabilities despite the elevation of social distancing to level 2.5 during the third quarter, with increases in foreign exchange/derivatives-related profits.
In terms of asset soundness, the non-performing loan (NPL) ratio was maintained at 0.40%, and the delinquency ratio at 0.32%, achieving industry-leading soundness indicators even amid the COVID-19 crisis.
In particular, the high-quality asset ratio of 86.9% and the NPL coverage ratio of 152.7% were also stably maintained. Considering the provisions accumulated in the first half of the year to strengthen future economic resilience, Woori Financial's future soundness trend is expected to remain stable.
The Basel III capital adequacy ratio also improved to around 14% by early adoption of the Basel III final accord following the supervisory authority’s approval of the internal ratings-based approach in June, enhancing the capacity to cope with uncertain financial environments.
On the 23rd, Woori Financial Group held a board meeting and resolved to acquire management rights of Aju Capital. Upon acquisition, Aju Savings Bank, a 100% subsidiary of Aju Capital, will be incorporated as a grandchild subsidiary.
With the subsidiaries newly incorporated last year, the business portfolio lineup is further strengthened, and Woori Financial expects that the contribution of non-bank sectors to the group’s profit and loss will expand through synergy among subsidiaries within the group. Furthermore, through portfolio expansion, it is anticipated that the social role of finance will also be enhanced by providing broad financial services such as loans to small businesses and vulnerable low-income groups, in addition to financial performance.
A Woori Financial official stated, "Considering the ongoing uncertainty in the domestic financial environment due to COVID-19, we will focus on upgrading solid fundamentals and strengthening synergy among the group’s business portfolios to solidify the group’s internal capabilities."
He added, "With the sense of crisis that 'digital innovation is a matter of survival for the group,' and with Chairman Sohn Tae-seung directly overseeing the group’s digital division, Woori Financial’s digital innovation will be promoted with even greater speed going forward."
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