[Click eStock] "Woori Financial Group, Overhang Concerns Offset by Stock Price Rise Expectations"

IBK Investment & Securities Report
Target Price Up 6.3%

[Asia Economy Reporter Minji Lee] On the 26th, IBK Investment & Securities maintained a buy rating on Woori Financial Group and raised the target price by 6.3% from the previous level to 17,000 KRW.

Woori Financial Group's consolidated net profit for the third quarter was 778.6 billion KRW, a 62.3% increase compared to the same period last year. The third quarter consolidated net profit increased by 3.3% compared to the second quarter, which was the highest quarterly figure ever. Compared to the second quarter, which included reversal factors, provision costs increased while both interest income and non-interest income also rose.

Kim Eun-gap, a researcher at IBK Investment & Securities, explained, "The performance, which was sluggish last year, has not only normalized but also confirmed a level-up in ordinary profit, leading to a rise in stock price. The significant improvement in the bank's performance combined with the effect of newly included subsidiaries, Savings Banks and Capital, contributed to this." The cumulative bank net profit for the third quarter increased by 71% compared to a year ago, with the card sector growing by 64%, capital by 44%, and Woori Financial Investment by 33%.

The third quarter net interest margin (NIM) for the group was 1.61%, maintaining the level of the previous quarter. The loan loss cost ratio remained low at 0.13%, showing significant improvement compared to last year. Selling and administrative expenses decreased by 0.1% compared to the previous quarter. Excluding the impact of newly included subsidiaries, Savings Banks and Capital, expenses increased by 0.7%, indicating effective cost management.

Accordingly, the consolidated net profit forecast for Woori Financial Group has been revised upward by 4.3% for this year and 5.4% for 2022. The sale of a 10% stake held by the Korea Deposit Insurance Corporation is underway, and considering the competitive bidding situation, it is likely to be absorbed without a block sale. Researcher Kim Eun-gap said, "Concerns about overhang could turn into expectations for privatization," adding, "The possibility of forming M&A expectations such as securities firm acquisitions and the price-to-book ratio (PBR) of 0.37, the lowest among major banks, increase the investment attractiveness."