Woori Financial Group's net profit for last year shrank by about 20% compared to the previous year. This was the largest decline among the four major competing financial holding companies (KB, Shinhan, Hana, and Woori). Industry insiders cite the weak non-bank portfolio, lacking notable securities and insurance companies, as the main cause. Recently, Woori Financial appears to be considering the acquisition of a small securities firm, keeping in mind expansion in the non-bank sector.
According to the financial sector on the 11th, Woori Financial Group's net profit attributable to controlling shareholders last year was 2.5167 trillion won, down 19.89% (625 billion won) from the previous year. Compared to competitors such as KB Financial Group (11.5% increase), Shinhan Financial Group (6.4% decrease), and Hana Financial Group (3.3% decrease), the decline is relatively large.
The decline in Woori Financial's performance is due to one-time expenses such as banking sector support for livelihood finance and a large provision of about 1.8 trillion won set aside due to increased financial market uncertainty. However, since livelihood finance support and provision setting were similarly carried out by other financial holding companies, there is a view that this alone is not the problem. Hana Financial also spent 355.7 billion won on livelihood finance support last year and set aside about 1.7 trillion won in provisions.
Industry insiders also point to Woori Financial's weak non-bank portfolio as a cause. Looking at the performance by Woori Financial subsidiaries, Woori Bank's net profit reached 2.5159 trillion won, accounting for about 99% of the total net profit (2.5167 trillion won), but other subsidiaries did not contribute significantly to net profit. Only Woori Capital (127.8 billion won) and Woori Card (111 billion won) performed reasonably well, while other subsidiaries such as Woori Comprehensive Financial (-53.4 billion won) and Woori Savings Bank (-49.1 billion won) either shrank or posted minimal net profits.
In contrast, looking at KB Financial's subsidiary performance, in addition to KB Kookmin Bank (3.2615 trillion won), non-bank subsidiaries such as KB Securities (389.6 billion won), KB Insurance (752.9 billion won), KB Kookmin Card (351.1 billion won), KB Life Insurance (256.2 billion won), and KB Capital (186.5 billion won) showed balanced performance. KB Financial's non-bank ratio slightly decreased last year due to the high interest rate environment but still maintained the 30% range at 34%.
Accordingly, Woori Financial has also started diversifying its business centered on securities firm acquisitions since last year. However, no significant large-scale deals have emerged, so there has been little progress so far. Instead, Woori Financial has strengthened its capacity by increasing capital by 500 billion won in Woori Comprehensive Financial, which is similar to a securities firm.
Recently, it is also considering acquiring a small securities firm called 'Korea Force Securities.' Since there are no notable securities firm deals currently in the M&A market, the financial sector cautiously speculates that Woori Financial might acquire this small securities firm and merge it with Woori Comprehensive Financial to actively nurture its securities business.
Woori Financial is currently reviewing this possibility. In an IR held on the 6th, when asked about this, Woori Financial stated, "We are keeping various possibilities open. All potential deals, regardless of size, including the securities firms mentioned in the market, are under consideration," adding, "Nothing has been specifically decided yet."
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