Good afternoon. I am Han Hong Sung, the Head of IR at Woori Financial Group. Let me first begin by thanking everyone for taking time to participate in this earnings call for Woori Financial Group. On today's call, we have the group CFO, Lee Sung-Wook; Group CDO, Ouk Il-Jin; and Group CRO, Park Jang-Geun. Before starting, let me walk you through today's agenda. Woori Financial Group had a general shareholders meeting on March 24, during which there was a significant change in our management team. Thus, we would like to take this opportunity to have the newly appointed Chairman and CEO, Yim Jong-Yong to say some introductory remarks and go over the future management direction of the group. After his remarks, we will present the financial performance and then go into Q&A. Please note that the Chairman will not be available during the Q&A session as he has other external commitments. And now let me pass it over to Chairman Yim Jong-Yong for his introduction.

Good afternoon. I am Woori Financial Group Chairman, Yim Jong-Yong. I feel very happy and honored to have this opportunity to introduce myself to the stakeholders who have shown unwavering support and confidence in Woori Financial group. The financial markets in Korea and globally are experiencing an increasing volatility on concerns about global economic recession, uncertainties that make it challenging to predict even the near future continue. In addition, the regulatory environment in the financial sector is changing and we need to be prepared to operate in a business environment different from the past, including increasing demand for larger social role by financial institutions. I would like to take today's call as an opportunity to share the key focus areas that Woori Financial Group would like to pursue in this quickly evolving environment. First, we are planning to reshape our corporate culture to dramatically improve our group fundamentals. In particular, we will continue bold innovation to create a new corporate culture such as in the area of internal control and corporate governance to ensure we become the most trusted financial group in the market. It will be the starting point of our long-term efforts to become the most trusted financial group. Second, we will continue to strengthen the competitiveness of the group's nonbank business. We will quickly expand our nonbank portfolio, such as securities and insurance, and diversify our business structure to create a more balanced profit structure for the group. By identifying the opportunities amid a crisis, we will accelerate the competition of our nonbank portfolio. Third, we will continue to enhance our risk management framework to ensure we identify a wide variety of risks in advance and address them appropriately. Due to the recent rate hikes, there has been concern about asset quality with focus on the non-bank…

Next, our Group CFO, Lee Sung-Wook, will give you a presentation on the recent earnings performance.

Good afternoon. I am Lee Sung-Wook, CFO of Woori Financial Group. Now let me dive into the first quarter 2023 performance of our group. Please turn to Page 4 of the presentation, which is available on our website. Let me first begin by going over our net income. For the first quarter of 2023, Woori Financial Group's net income was KRW 911 billion. This is an 8.6% increase year-over-year. Even though market rates showed more volatility, we were able to post this performance due to stable profitability management and continuous efforts to increase cost efficiency such as our cost-to-income ratio. In addition, our group net operating revenue was up by 7.6% Y-o-Y to post KRW 2,551 billion, maintaining healthy profit generation capabilities. Next, let me move on to expenses such as SG&A and our credit cost. In the first quarter of 2023, the group SG&A was KRW 1,037 billion, representing an increase of 6.1% Y-o-Y, but the cost-to-income ratio was 40.4%, which is a 0.8% point decrease versus the previous year. In addition, first quarter 2023 group credit cost was KRW 261 billion, and the credit cost ratio was 0.31%. Next, let me touch upon details on share buyback and cancellations. As the Chairman aforementioned, on the 21st, Woori Financial Group's Board of Directors confirmed and announced a share buyback and cancellation plan worth KRW 100 billion, equivalent to 3.2% of the annual profit in 2022. Meanwhile, as of the end of March 2023, the group's CET1 ratio is expected to reach 12.1%, placing the ratio in excess of 12% for the first time in the group. Such result was driven by solid net income growth and all around risk management efforts that have been pursued thus far leading to improvements in market risk as well as credit risk. Let…

[Operator Instructions] So the first question will come from Hanwha Securities, Kim Do Ha.

Yes. I have 2 questions that I would like to ask you. One of the things that the Chairman mentioned and also was mentioned during your presentation was not on the nonbanking side. Right now, since you now have a new Chairman in place, I do believe that in terms of capital allocation, I do think that there is also valid that you will continue to focus on M&A in terms of your priorities. In addition, even within the nonbank sector, if you look at securities as number one, and then in the last, I think that the last priority was on the insurance side, but does this still stand valid under the new leadership? The second is that you also changed your articles of incorporation to allow quarterly dividends. Does that mean that from the second quarter of this year, you will start to pay out quarterly dividends as a result of that?

Yes. Thank you for your question. If you could give us a couple of seconds while we wait and prepare your answer. Thank you.

Yes. This is the CFO, Lee Sung-Wook, and maybe I can address first your question about M&A. On the M&A side, the basic principle that we have is that by maintaining an adequate capital adequacy ratio, we want to make sure that we improve our ROE, increase synergies and also have an appropriate level of shareholder return. So as a result of that, the securities side would be an area that we are interested in. In terms of securities firms that are available in terms of target, we do need to look at targets that would enable us to have more balance with our existing business areas and also would be of a mid- to larger size. On the insurance side, because IFRS 17 has been adopted, the accounting standards have changed. And as a result of that, we want to wait and see what is the impact of that and then look at strong insurance companies in which the overall capital impact would be low. So as a result of that, on our overall view, the first priority would be on the securities firm side, the second would be on the insurance side, and I think that this priority has not changed. Secondly, in terms of the quarterly dividends that you have asked about, for quarterly dividends, I think I can say that the articles of incorporation did take place during the General Shareholders Meeting in March, and that has been completed. However, in terms of the actual dividends, it is something that will have to be discussed at the BoD level. Internally, we have reviewed that maybe that we will start talking about this in the second quarter and somewhat after the second quarter, it will start to take place and then we will disclose such accordingly. Thank you.

The next question is from NH Investment & Securities, Jung Jun-Sup.

I'm Jung from NH Investment & Securities. I have a question with regard to shareholder return. I have 2 questions basically. So you did recall the quarterly dividend. So in terms of the KRW 100 billion of share backed buyback and cancellation, if this is included in 2022, I do believe that there may be another plan for share buyback and cancellation going forward? And if so, would that be within this year, or would it be sometime this time around next year? So if there's a specific guideline or plan with regard to future share buyback and cancellations, please do let us know. And you mentioned about the interim dividend payout. So with regard to TSR, I do remember in the previous call, TSR at 30%. So I would like to ask, are there any changes to this plan of TSR 30%?

Yes. Thank you for your question. And if you could give us a couple of minutes to prepare and then answer. Thank you.

Yes. This is the CFO, Lee Sung-Wook, and I think that we did have a resolution to do a share buyback and cancellation, and that was of KRW 100 billion on April 21, and this is something that we announced to the market so that -- in February, we did announce that the TSR would be 30%, including dividends and share buybacks. So for this 30%, this is what we wanted to maintain, to maintain our confidence. And this year, it's KRW 100 billion, whether this is FY 2022 or '23. This is an overall calculation issue. So as a result of that, I think it's on the border line between this year and next year. And as a result of that, going forward -- whether it will be the second half of this year or the first half of this year, I do think that this is something that we will have to review. But as a result of that, maintaining a 30% TSR is something that we will continue to maintain. And in addition to that, in February, another thing that we announced was that in terms of our shareholder return policy, of course, we will up and maintain and honor that overall commitment that we have announced.

Yes. So the next question will be from Yuanta Securities. It will be Jeong Tae Joon.

I would like to ask about your credit cost. So risk management is something that you have continued to emphasize on. And in terms of the overall SCR, which would be the maximum amount of that? And in addition to that, if you look at your recent numbers, I do think that in terms of the performance, the overall reserve ratios that you have included into your overall capital ratios, what would that be in terms of the numbers for specific buckets?

This is the CRO, Jang-Geun Park, and maybe I can address your question. First, at the group level, if we look at the credit cost ratio, as of the first quarter, it's 0.31%. However, in 2023, because interest rates continued to rise, and there is concern about recession, so on the nonbank side, we do expect that the credit cost will increase. However, that have been said, we are going to maintain our growth at appropriate levels and also ensure that we continue to manage our high-risk PF assets. So we do believe that as a result of that, we can maintain a credit cost ratio in the low 0.3%. So in terms of the provisions, of course, the regulatory body is asking that we provision appropriately, and at the group level, we have taken adequate action. So if we look at the reserves that we have set aside right now, on an independent basis, on a nonconsolidated basis, we have done advance provisioning to the necessary levels. So in the second half of the year, from the financial supervisory body, there might be some changes in the RC ratio. So as a result of that, as those changes take place, we will take action accordingly.

The next question is from DS Investment & Securities, [ Nam In-Ok ].

I'm [ Nam In-Ok ] from DS Investment & Securities. I do have 1 question. So in the first quarter, if you look at the group loans growth, it was quite limited, but in the second quarter, in terms of retail and corporate loans. Is there a specific forecast you have internally? And could you share that with us?

Yes. Thank you. Please bear with us for just a moment as we prepare to answer your questions.

I'm Lee Sung-Wook, CFO. As of the end of March, the total assets stood at KRW 478 trillion, which was a drop by KRW 2.6 trillion. And this is based on the risk management measures of the group. So banks and primary subsidiaries have seen a moderate decrease in assets. And especially with regard to won denominated loans due to increased funding rates, we've seen an increase of corporate loans by KRW 1 trillion, KRW 1.1 trillion. However, we've seen a drop of KRW 3 trillion in retail loans. So in the future, economic sluggishness and other volatility in the financial market would have to impact our management. And that's why we really want to focus on stable management. Starting from July of last year, overall, we've been taking into consideration any recession related factors and have been focused on stable management. So in the second quarter, we do believe that it will be challenging as well. So until the first half of the second quarter, we do believe that support for essential corporate loans would take place. However, all in all, we will be focused on risk management in the loan portfolio. And in the second half, we'll be seeing some moderate growth. On an annual basis, there is a target of 4% that we have set forth. So on an annual basis, it's at 4% and we'll manage at such levels. And overall, in 2023, it would be about a growth of 4%, but we will be focused on risk management. So when it comes to capital ratio and risk factors, these are the items that we would be focusing our capabilities on.

Yes. Thank you. For the next question, it will be from Goldman Sachs. It will be Park Sinyoung from Goldman Sachs.

There are 2 questions that I would like to ask you. The first question is that recently from the financial authorities, to strengthen loss absorption, there is discussion about introducing a stress buffer in addition. So if we look at what has been shared in February, you said that the total shareholder return would be maintained if your CET1 ratio, which is 12%. So for this 12% of CET1, is there a possibility that you would uplift or increase this 12% benchmark that you have? The second question also is on the retail side. I do believe that there continues to be pressure to lower pricing levels. So as a result of that, there was also the mutual beneficiary plans that you announced in March, and also there continues to be a downward level of pricing in terms of your mortgage loans and also retail products. So could you talk about your outlook for the full year in terms of your pricing levels on your loan products?

So thank you for your question. And while we prepare the answer, if you could just wait for a short period. Thank you.

Yes. This is the CFO, Lee Sung-Wook. Last time around, when we said that as of the first quarter, our CET1 exceeded 12%, and we also said that if our CET1 reached 12%, that we would actually revamp our total shareholder return policy, and we looked and we visited. So in terms of that stance in itself, there is no large change. However, what has changed is, as you have mentioned, that from the authorities, the stress test capital buffers and also the countercyclical capital buffers and other measures are also being right now discussed to strengthen capital adequacy. So of course, we will maintain our existing stance. However, according to whether or not stress capital buffers are adopted or not. These factors, of course, do need to be taken into consideration. So if, for example, these new measures are adapted, whether it's 1% or 2%, factors such as that. And also for the countercyclical buffer, it's 2.5% max, maybe it could increase by 0.5% to 2.5%. So if that does take place, then we would have to look at the overall situation and then come to a conclusion at that point of time. And also in terms of transit loans and also in terms of mortgage loans that we have and also the overall mutual beneficial financing packages that we have released, we do think that around 1/3 of our assets would be subject to some changes. So because of the lowering in mortgage pricing, this is not something that only our bank has been doing, but all of the banks within Korea are currently engaging upon. So I do think that there will be a small impact from that. So as a result of -- according to the trends that exist, we do think that 1 to 2 basis points may be the impact for this year. And as a result of that, for transit loans, we do think that there will be around KRW 500 billion originated at around 2%. So the overall impact would be only around KRW 10 billion. So it would not be a very large amount. So around 2 basis points would be the overall impact that we are assuming.

Next question is by Baek Doosan from Korea Investment & Securities.

I am Baek Doosan from Korea Investment & Securities. I have a question with regard to the prospects for NIM. In the first quarter, NIM was dropped 3 bp Q-o-Q. And I would like to understand some of the factors behind this decrease. And of course, it probably would have to do with the reduction of core deposits that probably had the greatest impact. So with regard to core deposits or low-cost deposits, the balance in NIM, what would be the prospects of how that would impact NIM second quarter onwards?

Yes. Thank you very much for your question. Yes, let us get ready to answer your questions, please bear with us for just a moment.

So NIM for first quarter dropped by 3 bps from (sic) [ to ] 1.65%. And as you have mentioned, it's true that the greatest impact had to do with the movement in core deposits. So that was the greatest factor that impacted the drop, and if you look at the loan interest rates for first quarter -- or it will probably be reflected from second quarter and onwards. But if you look at the core deposits, last year, until December, we did see a significant reduction. And in February, we've seen a KRW 4 trillion to KRW 5 trillion decrease from last December. And then we've seen a rebound of KRW 2 trillion to KRW 3 trillion in March. And right now, it's maintained at such levels. And our forecast is that going forward, we will be seeing an increase in core deposits rather than a decrease, because long-term market rates are decreasing. We're seeing a change there. And we're witnessing a pullback of rate hike. So we believe that the impact from the decrease of core deposits on NIM is dwindling, and it's coming to an end. So all in all, my response would be that in the second half -- right now, it's 1.65% NIM, due to some further impact in the third to fourth quarter, it's probably to drop to 1.6% -- early 1.6% levels. That's the forecast that we have in place. So on an annual basis, it will be 1.6% -- on the earlier end of 1.6% -- earlier to the mid-range of 1.6%. That's our outlook. But the financial environment is quite volatile. So that will also have to be taken into account in the future. So what we're trying to do is maintain such levels. Thank you.

Yes, the next question will be by Daishin Securities, Park Hye-jin.

I am Park Hye-jin from Daishin Securities. I also would like to ask about credit cost. So as mentioned before, with regards to the PF side, you said that, that was why you were keeping your provisions robust. And if you look at the recent trends in the nonbanking sector right now, I do think that there is some more losses that have been generated there. So as of the end of the first half, what is the outstanding project finance balance as of the end of the first quarter? And for your outlook going forward, if we were to break it down between the bank side and the nonbank side, would you be able to share the outlook that you have for the future?

Yes. Thank you for your question. And if you let us prepare for a couple of seconds, please wait for a minute.

Yes, this is the CRO, Park Jang-Geun. And on the real estate PF, on the overall exposure, maybe just to break it out in more detail. So we have KRW 2.9 trillion at the HKO, as we had, and we have issued hub guarantees that are excluded. And if we exclude that, it's around KRW 1.6 trillion. And if we include bridge loans, bridge loans would be around KRW 480 billion. So if we were to add the KRW 2.9 billion to around KRW 480 billion, then that would be KRW 3.4 trillion in total. And if we exclude the KRW 1.3 trillion that have guarantee certificates, then that would reach KRW 2.1 trillion in terms of the balance. And in terms of the credit cost outlook going forward, I would have to say that on the bank side right now, the delinquency rate on the bank side and on other areas continues to rise. However, from a big picture level, if we look at the bank side, it's actually at an absolutely very low level. So as a result of that, the group as a whole, in terms of its delinquency, won't see a significant increase. So for the delinquency, we actually look at the 3-month delinquency rate, in which there would be a change in the asset quality categorization. And if we look at the increase there, in most cases, it's backed by a guarantee certificate. And there's also a lot that is backed by real estate. So as a result of that, even though there is a slight increase in the delinquency, we don't believe that, that will lead to an increase in credit costs. So on the bank side, we don't believe that our provisioning will increase. However, on the nonbank side, we do think that the biggest issue would be on the real estate project finance side. To see how that plays out will probably be the most important issue. But as I have mentioned in more detail in the beginning, in the nonbank side, with our affiliates, if we look at the project finance side there, from the group level on a relative basis, it's not a very large amount. So as a result of that, we do believe that the provisioning that will be increased would be limited because of that reason.

Thank you very much. We have 1 last question of the day from HSBC Securities, Won Jaewoong.

Yes. In a very challenging environment, despite the environment, thank very much for the good performance. I have 2 questions. The first question has to do with CET1 12% -- now in excess of 12%. So the impact of Basel III and foreign exchange, I think that there may be some impact. So please break that down for us, that would be great. And then the second question, this is a question that was already posed, but it has to do with the shareholder return policy. And when you were mentioning that policy in this February, you mentioned about a TSR of 30%. But if we look at share cancellation, if it includes 2022, if it actually be fit to 30%, would that be that going forward, you'll always be matching a TSR of 30%? Would that be your target going forward?

Yes, thank you for your question. And if you give us a couple of seconds, we will prepare the answer and then address it.

Yes. First, to answer your second question about the shareholder buyback and cancellation. As we have promised in February, if we do reach a CET1 of 12% and maintain it, then 30% of the TSR is something that we will maintain. So as a result of that, including interim dividends or maybe quarterly dividends, year-end dividends, all in all, and also the share buyback will also be calculated, then we will be able to see on a full year basis that we will be able to reach 30% on a total basis consistently. So at the end of the year, if we are able to reach 12% on the CET1 ratio, then taking into consideration regulatory changes like the stress capital buffer, of course, we will revisit this situation. And also, if we look into the factors driving the increase in the CET1 ratio as of the end of first quarter, the first was that on the net income side. There was around KRW 900 billion. So 1 basis point -- 5 basis points leads to around a 45 basis point increase. In addition to that, we have the FVOCI, Korean won loan valuation losses, which were less, which also drive it. And also at the same time, there was the final Basel III plans. And as a result of that, our risk-weighted assets decreased by around KRW 2 trillion. And as a result of that, there was a 0.1 basis points increase in our overall market and also operating risks. So as a result of that, at the end of the day, our risk-weighted assets decreased by KRW 2 trillion, and our overall assets increased by 0.1%. And also, there was the acquisition of Venture Partners, which increased our risk-weighted assets. So at the end of the year, there was an improvement of around 50 basis points versus the end of last year as a result of that.

So thank you for your questions. All in all, thank you for the Q&A. If you have any additional questions, please do not hesitate to answer and ask our IR team. Thank you again for your participation in today's call. [Statements in English on this transcript were spoken by an interpreter present on the live call.]