[Click eStock] Woori Financial Group's Capital Ratio Improving Rapidly... Target Price Raised

Target Price Raised from 25,000 Won to 28,500 Won

On July 28, Shinhan Investment Corp. reported that Woori Financial Group's capital ratio is improving rapidly and raised its target price from 25,000 won to 28,500 won. The investment opinion was maintained as 'Buy'.

Eun Kyungwan, a researcher at Shinhan Investment Corp., stated, "We raised the target price to reflect the recent decline in the valuation discount rate for the banking sector, improvements in the capital ratio, and expectations for expanded shareholder return policies." He added, "Although the total shareholder return ratio for 2025 is expected to be around 35%, which is still lacking compared to competitor banks, Woori Financial Group is flexibly overcoming this through strengthening its non-banking subsidiaries and implementing tax-free dividend policies. The current price-to-book ratio (PBR) is 0.56 times, and we expect a stock price increase as the valuation gap narrows."

Woori Financial Group recorded strong results in the second quarter of this year, exceeding market expectations. Researcher Eun explained, "Woori Financial Group's second-quarter net income attributable to controlling shareholders increased by 0.3% year-on-year to 934.6 billion won, surpassing the consensus (the average forecast by securities firms) by 12.6%." He added, "Efforts such as reducing funding costs and asset rebalancing were effective, despite a decline in market interest rates."

In the second quarter, Korean won-denominated loans increased by 0.7%, mainly driven by household loans. Researcher Eun analyzed, "While net interest income remained at the same level as the previous quarter, non-interest income also continued a favorable trend." He attributed this to "an increase in key fee income such as in the wealth management sector and approximately 65 billion won in non-monetary translation gains."

The credit cost ratio rose to the low 50 basis points (1bp = 0.01 percentage point) range due to an increase in normal provisions and the recognition of approximately 86 billion won in one-off provisions related to responsibility-completed trusts. In addition, as a quarterly special factor, about 47 billion won in equity method gains from Woori Venture Partners Fund were recognized.

The group's common equity tier 1 (CET1) capital ratio improved by 31 basis points from the previous quarter to 12.76%. Researcher Eun commented, "This was the result of strong second-quarter performance and a decline in exchange rates, and the group is expected to achieve its 2025 management target of 12.5% ahead of schedule." He also noted, "Despite the significant increase in the capital ratio, there was no additional announcement of treasury stock purchases, considering the possibility of capital fluctuations due to insurance company acquisitions."