[Click eStock] Woori Financial "Prolonged Uncertainty"

The uncertainty surrounding Woori Financial Group's stock price momentum, driven by the acquisition and merger (M&A) of Dongyang and ABL Life, is prolonging as the performance falls short of expectations.

On the 10th, Hana Securities analyzed, "Woori Financial Group's Q4 net profit announced on the 7th fell short of expectations," adding, "While the acquisition of Dongyang and ABL Life could be a definite momentum factor, the uncertainty is prolonging."

Woori Financial Group's Q4 net profit recorded 426.1 billion KRW, a 443% increase compared to the same period last year. However, this was due to the deferral of approximately 170 billion KRW in severance costs to Q1 of this year, and excluding this, the recurring net profit is around 305 billion KRW.

The bank's net interest margin (NIM) remained at 1.40%, the same level as the previous quarter, but won-denominated loans decreased by about 2.5%. Despite a decrease in loan loss provisions in the banking sector, an additional provision of about 95 billion KRW was made due to the evaluation of project financing (PF) business viability in the non-banking sector.

Woori Financial Group signed a stock purchase agreement (SPA) for Dongyang and ABL Life in August last year. The acquisition of the insurers was expected to improve group profits and enhance return on equity (ROE). However, there has been no progress since then. Past improper loans amounting to around 200 billion KRW are hindering the process. If the Financial Supervisory Service downgrades Woori Financial Group's management evaluation rating from the current level 2 to level 3 or below, acquiring the two life insurance companies could become difficult.

Analyst Choi Jung-wook stated, "It is necessary to observe whether the Financial Supervisory Service will downgrade the management evaluation rating and how Woori Financial Group will respond thereafter," maintaining a buy rating and a target price of 25,000 KRW.