Woori Financial Group's Q2 2025: Navigating Contradictions in Capital Adequacy, Credit Costs, and Digital Growth Strategies

Capital Adequacy Targets and Shareholder Returns, Credit Cost Trends and Expectations, Real Estate PS Exposure and Provisions, Insurance Acquisition Strategy, and Digital Transformation and Nonbank Business Growth are the key contradictions discussed in Woori Financial Group's latest 2025Q2 earnings call.



Capital Ratio Improvement:
- Woori Financial Group's preliminary CET1 ratio was 12.76% as of June 2025, showing around 60 basis points increase from the end of last year and exceeding 12.5% for the first time.
- The improvement was due to solid earnings growth, asset rebalancing, risk-weighted asset management, and favorable external conditions like a weaker exchange rate.

Earnings Performance and Cost Control:
- The group's net income for the first half of 2025 was KRW 1,551.3 billion, a Y-o-Y decrease of 11.6%. However, excluding one-off expenses, it was similar to last year.
- Earnings growth was driven by stable interest income, increased core fee income from the Wealth Management business, and noninterest income from capital market activities, despite cost increases in conservative loan loss management and SG&A expansion.

Insurance Company Acquisition and Strategy:
- Woori Financial Group completed the acquisition of Tongyang Life and ABL Life in August 2024, making them affiliates as of July 1, 2025.
- The strategy focuses on sound capital management, reevaluating assets and liabilities at fair value, and prioritizing stable business fundamentals, with the aim of maximizing synergies within the group.

Loan Portfolio and Asset Quality:
- As of the end of June 2025, bank loans totaled KRW 329 trillion, with corporate loans at KRW 179 trillion and retail loans at KRW 148 trillion.
- The group is managing household loans due to government debt management policies and focusing on supporting future growth industries, maintaining the proportion of prime corporate loans at around 85%.

Noninterest Income and Asset Growth:
- The group's noninterest income for the first half of the year was KRW 886.3 billion, with a 47% increase quarter-over-quarter to KRW 527.3 billion.
- The increase was due to core fee income growth in Wealth Management and gains from securities and FX valuation, although partially offset by a decline in gains from loan receivables.