NongHyup Financial Posts Record High H1 Net Profit of 1.3 Trillion Won... Fierce Competition with Woori Financial (Comprehensive)

Q2 Net Profit 677.5 Billion KRW... Up 19% YoY
Woori Financial Narrowly Loses '4th Place in Financial Holding Companies'

Son Byung-hwan, Chairman of NH Nonghyup Financial Group, is presiding over the second half management strategy meeting held via video conference on the 22nd at the NH Nonghyup Financial Group headquarters meeting room in Jung-gu, Seoul.

[Asia Economy Reporter Kiho Sung] NH Nonghyup Financial Group achieved a record high net profit of 1.2819 trillion KRW in the first half of this year. However, it narrowly lost the title of 'Top 4 Financial Groups' to Woori Financial Group. Woori Financial Group posted 1.4197 trillion KRW in the first half of this year, surpassing its full-year performance from last year. Nevertheless, excluding agricultural support expenses, Nonghyup Financial's net profit leads Woori Financial, drawing attention to who will secure the 4th place among financial groups for the full year.

On the 23rd, Nonghyup Financial announced that its Q2 net profit reached 677.5 billion KRW, a 12.1% increase from the previous quarter, and that it achieved a first-half net profit of 1.2819 trillion KRW this year. The first-half net profit increased by 371.7 billion KRW year-on-year, driven by continuous growth in interest and non-interest income and a decrease in loan loss provisions.

The group's core interest income recorded 4.1652 trillion KRW, up 6.3% (245.1 billion KRW) compared to the same period last year. Non-interest income also rose 81.6% year-on-year to 1.178 trillion KRW. Fee income increased 28.5% year-on-year to 983.7 billion KRW, supported by a net increase in securities brokerage commissions. Gains from securities and foreign exchange derivatives also surged 114.7% to 898.1 billion KRW as a result of strategic asset management.

Asset quality indicators also improved. Nonghyup Financial's non-performing loan ratio stood at 0.43% as of the end of June, easing by 0.04 percentage points from 0.47% at the end of March. Nonghyup Bank's ratio improved by 0.05 percentage points to 0.36%. The bank's delinquency ratio also decreased by 0.03 percentage points to 0.23% during the same period.

The core subsidiary NH Nonghyup Bank posted a net profit of 856.3 billion KRW, up 17.8% (129.5 billion KRW) year-on-year. NH Investment & Securities recorded a net profit of 527.9 billion KRW, a 101.7% increase year-on-year, driving Nonghyup Financial's profit growth. Non-bank affiliates such as NH Nonghyup Life Insurance (98.2 billion KRW), NH Nonghyup Property & Casualty Insurance (57.3 billion KRW), and NH Nonghyup Capital (58.3 billion KRW) also maintained growth, increasing their contribution to earnings.

Although Nonghyup Financial posted strong first-half results, other financial groups also broke their record highs, resulting in Nonghyup Financial failing to maintain its position as the 4th largest financial group.

Excluding agricultural support expenses, Nonghyup Financial's first-half net profit was 1.4376 trillion KRW, slightly higher than Woori Financial. According to the Nonghyup Act, subsidiaries excluding the holding company pay contributions to the Nonghyup Central Association every quarter to support farmers, agriculture, and rural areas, which is Nonghyup's unique purpose business. Nonghyup Financial spent a total of 223 billion KRW on this in the first half of this year.

In the domestic financial group rankings, KB Financial Group and Shinhan Financial Group are competing for first place, with Hana Financial Group trailing behind. Nonghyup Financial has traditionally held the 4th position, but competition has intensified since Woori Financial converted to a holding company in 2019.

Woori Financial rose to 4th place in the year it converted to a financial holding company by posting a net profit of 1.872 trillion KRW. However, from Q2 last year, Nonghyup Financial regained 4th place. This first half, Woori Bank also posted strong results, narrowly leading, but excluding agricultural support expenses, Nonghyup Financial is ahead. Therefore, fierce competition is expected over the full-year performance.

Meanwhile, around the time of the first-half earnings announcement, on the 22nd, Chairman Son Byung-hwan, executives from the holding company and affiliates, and key department heads totaling about 40 people attended the 2021 second-half management strategy meeting. The meeting was held via video conference considering social distancing due to the spread of COVID-19.

At the meeting, focused discussions were held on strategic directions and key strategic tasks for the new decade as Nonghyup Financial Group marks its 10th anniversary.

To this end, Nonghyup Financial set "Building a Future Foundation for the New Decade" as the strategic goal for the second half and selected seven key initiatives including three major areas: "Securing Core Competitiveness, Strengthening Business Competitiveness, and Solidifying Management Foundations," and "Implementing All-Digital Customer Experience and Establishing a Trusted ESG (Environment, Social, Governance) Management System," mobilizing company-wide efforts for implementation.

Nonghyup Financial transitioned to a financial holding company system on March 2, 2012, and will mark its 10th anniversary next March. It is known that Nonghyup Financial is preparing a new vision and management principles for the next decade accordingly.

Chairman Son concluded the meeting by emphasizing, "We must not be complacent with the growth and achievements of the past 10 years. In this unprecedentedly fast-changing management environment and amid various crises, thorough preparation and detailed strategy formulation for survival are necessary." He urged, "Through change and innovation, we will enhance market competitiveness, faithfully fulfill Nonghyup Financial's original role, and become a new decade that contributes to the people, agriculture, and rural communities."

Prior to the meeting, Chairman Son awarded performance excellence prizes to seven subsidiaries including Nonghyup Bank, Nonghyup Life Insurance, Nonghyup Property & Casualty Insurance, NH Investment & Securities, Nonghyup Capital, NH Savings Bank, and 10 offices, commending their efforts for the first-half achievements.