Hello. Good afternoon. I am Han Hong Sung, Head of the IR Department 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 Group CFO, Lee Sung-Wook; Group CDO, Oak Il-Jin; and Group CRO, Park Jang-Geun, participating. For today's call, the CFO, Lee Sung-Wook, will present the earnings performance for the group. And then after that, we will have a Q&A session. In addition, please note that today's call is being interpreted simultaneously for our overseas investors. Now let us start with the presentation on Woori Financial Group's 2024 Q1 business performance.

Good afternoon. I am Lee Sung-Wook, CFO of Woori Financial Group. Let me dive into the 2024 Q1 performance of our group. Please turn to Page 3 of the presentation, which is available on our website. First, let me touch upon the net income of the group. In the first quarter of 2024, Woori Financial Group's net income was KRW 824.5 billion. Amid a higher for longer interest rate environment and high inflation, the group utilized its strong profit generation capabilities and stable cost management to achieve a group ROE of 10.3%, which is better than the end of last year. In addition, the group's net operating revenue increased 9% Q-o-Q to KRW 2,548.8 billion. Against continuous [ uncertainties ] in Korea and abroad, this performance was the result of a balanced growth in interest income generated from the growth in high-quality corporate loans and also noninterest income focused on core fees. Next, let me move on to expenses, such as SG&A and credit costs. The Q1 group SG&A was KRW 1,032 billion, a decline of 0.5% year-over-year. The cost-income ratio was 40.6%, and it is being maintained at a stable level. In addition, if we look at the Q1 group credit cost, it was KRW 357.6 billion. And as local and global uncertainties continue, credit cost is being managed within the range set in the group's financial plan. Next, let me discuss our capital ratios and quarterly dividends. As of the end of March 2024, the group CET1 ratio is expected to be around 12%. Even though the Korean won weakened significantly during the quarter, the group was able to maintain it's CET ratio at the same level as last year due to solid performance and active risk-weighted asset management. In addition, today, the group's BoD decided to pay…

Yes. Now we will start the Q&A session. [Operator Instructions] So the first question will come from Hyundai Motor Securities, Mr. Lee Hong Jae. So please go ahead with your question.

Yes. Thank you very much. Thank you for the opportunity to ask questions. If you look at the situation recently, I would like to ask you about some news reports. So for Lotte Insurance, there is a mention about a possible acquisition. And so I do understand that it's still probably in a stage of where you are looking at the opportunity, but even in a broad sense, what I would like to know is that even if I look at various standards in terms of the purchase price, how much RWA increase would you actually experience by the different ranges? So for example, for every KRW 500 billion, how much risk-weighted assets increase would that represent? So if you have had any sensitivity about that, that would be appreciated. And then secondly, based upon the P&L business in itself for insurance, if you continue to expand into, is there any separate budget that you have for M&A even on a theoretical basis? If so, how much would that represent? If you could give us a broad picture about that, that would be appreciated.

Yes, Thank you for your question. And as we prepare the answer, if you could just wait a bit, we would appreciate that. Thank you.

Yes, this is the CFO, Lee Sung-Wook. In the news recently, there have been reports about a possible Lotte Insurance acquisition. Maybe I can address the first question. At the group level, because we do want to strengthen our non-bank competitiveness and we also believe that there is a need to review the possibility of entering to areas in which we don't have a presence, such as insurance, so as a result of that, we are looking at the Lotte Insurance opportunity right now, but nothing has been decided yet. So even if we were to pursue an opportunity, the basic principle is that we will not pay an excess of price. . So as the market may be concerned in terms of the price issue, the overall burden on our capital adequacy ratio is something that we are well aware of. So as a result of that, in terms of the prices that are being into the [ news ] being portrayed right now are not something that we are considering. So we do not believe that the market should be concerned about such a situation. In addition, in terms of every KRW 500 billion, what the risk-weighted asset impact would be. So if you look at that in detail, I would have to say that for an insurance company, the way that you measure the capital adequacy is different from a bank. So according to Ba3, under insurance, if you look at the CET1, in actuality around 10% of that would have a 250% risk weight. And if it goes above 10% in terms of the overall Tier 1 ratio, then you actually exceed the whole situation. And in terms of risk assets, it goes to 250% up until 10%. So as a result of that, as of…

The next question is from Jung Jun-Sup of NH Securities.

I am Jung Jun-Sup from NH Securities. I have 2 questions. The first question is a follow-up to the first question. As far as we know, we know that the securities candidate would probably be more of a preferred target for you in the M&A. So I would like to understand whether there is a change in your strategy? And also with regard to the acquisition of POS Securities, I know that this is underway. So I would like to understand what's the progress rate of this deal? And can you give us an update on that? And the second question that I have has to do with dividend. As I already mentioned, the quarterly dividend of KRW 181 has been decided. But I want to understand the logic behind the quarterly dividends. As far as I know, it seems a bit higher than what I have anticipated in terms of the calculations. So I would like to understand, is there a change in the calculation or is that change -- any changes in the guidelines? And during the earnings call in June, I do recall the TSR, and I believe -- and I would like to understand whether there are any changes to the total shareholder return that you have indicated in the previous earnings call?

Thank you very much for the question. Please bear with us for just a moment as we prepare to answer your question.

Yes. First, with regard to Korea POS Securities, in order to increase our profitability in the non-bank center, we have been looking into utilizing Woori Investment Bank and working into the securities field. And at year-end, we have actually added a KRW 500 billion capital increase in [ investment bank ] to increase the assets to KRW 1 trillion. And the Woori Investment Bank is also to be relocated to Yeouido. So as mentioned, in terms of Korea POS Securities, it's underway. And I do want to say that it's -- would be a bit difficult to flesh out the details at this current time. And in terms of our M&A direction, I did mention in my response -- but in terms of the priority, when it comes to security terms in insurance firms, there's no change in the priority. But in the market, because we do have a weak nonbank portfolio, if there are any candidates out in the market [indiscernible] out in the market, there are, of course, we would be reviewing. And there was also a Sangsangin Savings Bank that we have looked into where we decided to give up on that option year-end. So as you can see, that's how we would be approaching the M&A going forward. And also with regard to dividend and the logic behind this, last time around, we did indicate our principle behind the quarterly dividends, and there are no changes since then. So in the case of -- based on the previous -- last year's dividend will be 50% and it would be an equal dividend payoff -- equal pay out for every quarter for March, June and September, and we'll be taking into consideration the policy as well as market conditions. And the quarterly dividend is currently set at…

Yes. Thank you. I think that the next question will be from SK Securities. It will be Seol Yong Jin. So please go ahead with your question.

Yes. Thank you for the opportunity to ask questions. And I would like to ask a question about your credit cost. So the credit cost has been around 0.4%, which is higher. And if -- last year, if you look at the overall situation, taking into consideration that there were additional provisionals, do we have to see that the current level is the recurring or normalized ratio? Or do you think that there are factors that we need to take into consideration and so forth for full year? At what level do you want to manage your credit cost?

Yes, thank you for your question.

Yes. My name is Park Jang-Geun, and I am the CRO. So in terms of credit cost situation right now, it's around 40 basis points. And if we look at Q1, there were actually no one-off factors. However, that have been said, we did actually had a couple of very large size delinquencies that had arrived. And though these loans are blocked by collateral, in actuality, we don't think that it will be a drag on our overall credit costs. In addition to that, going forward, we don't expect there to be any one-off factors. So on a quarterly basis and for the full year, we actually believe that we can manage it at 40 basis points or under.

Yes. So we'd now like to receive the following question. We have Mr. Baek Doosan from Korea Investment & Securities. Please go ahead with your question.

Good day. I am Baek Doosan from Korea Investment & Securities. I do have a question with regard to the digital business. I know that it's a bit early on. But early in the year, I know that there was some reform in the IT governance scheme. So I would like to understand how you assess the achievement from that? And with -- I do know that soon enough, we'll be seeing the launch of the [ new WON ] banking. So in terms of the MAU or sales strategy, so surrounding that app, there may be a specific strategy. So could you elaborate on that, please?

Thank you very much for that question. Please wait while we prepare to answer your question.

Yes, I'm Oak Il-Jin, CDO. Yes, with regard to the IT governance reform, it took place for about 3 months, we're into this in 3 months. And based on our internal survey, there are about 10 departments where we have put together IT business together. So in the case of these platform departments, we can see that there were improvements in the pace of development and also the satisfaction of IT that's felt by the units. The satisfaction of our enhanced personnel was about 70% positive. And of course, in various areas, when it comes to quality management, we're continuing on to have full grip on the situation. So within this year, we believe that there will be some visible results that are to come from this reform. And with regard to [ new WON ], it is to open at the end of November. So it's proceeding as planned. And what we want to do is utilize this as a universal banking app for the group. And therefore, once it's open, the overall traffic of the group will be focused and concentrated via the [ new WON ] app. And the group companies and the banks will be able to provide seamless connected services for our customers. And in addition to that, AI banker and MyData-based services and products are items that we want to have it loaded on the platform. In the case of the price affordable [ phone ], this also would be linked to the [ new WON ] platform.

So the next question will be by DB Securities. It will be Jung Kwang Myung.

I am Jung Kwang Myung from DB Securities. And I have one question that I would like to ask you. If you look at the CET1 ratio, it's actually flat on a quarter-on-quarter basis. If you look at the FX impact or any one-off impacts, that would have an impact on the CET1. And in terms of the CET1 target for the end of the year, if you could share that with us, that would be appreciated.

Yes. Thank you for your question. And maybe we can address your question.

Yes. This is the CFO, Lee Sung-Wook. So if we look at the end of the Q1, it's 12% flat to that of the end of last year. So if we look at asset growth, again, as you can see, in terms of capital adequacy management, in terms of the risk-weighted assets, this is something that we have been very active on. And so therefore, if you look at the factors that drove it in the first quarter, Q1 overall net income was 0.8%, so that's around 40 basis points. And then in terms of the share buyback and cancellation, which also took place, there is also the dividends. And that would be around a negative 10 basis points. And then the FX rate went up by 61. And as a result of that, at the group level, that was around 20 basis points deflating our capital adequacy. And then there are other factors, the growth in the [indiscernible] risk-weighted assets increased. So there was around a 10% -- 10 basis points negative impact. So as a result of that, it ended up to be flat. So if there was no FX impact, then in actuality, it could reach 12.2%. So that's a bit unfortunate. But at the end of this year, in terms of the CET1 targets based upon the current FX rate, we do think that in terms of asset growth or if we look at the risk-weighted assets, this is something that we also are going to actively manage. So as of the end of June, we do think that we will exceed 12%. And at the end of the year, of course, we will have to see what the year-end dividends are like. But taking that into consideration, we do believe that we can be well above 12%. Thank you very much.

We will now move on to the next question from HSBC Securities, Mr. Won Jaewoong.

Thank you very much for the opportunity. So yes, the TSR based on the capital ratio. It was concerning, but thank you very much for the planned adjustments. And the question, you are focusing on expanding the nonbank business. But in the case of, let's say, overseas. We haven't been seeing any press coverage on any contacting, let's say, overseas candidates. So I do know that you are interested in overseas markets as well. However, I do want to understand whether you do have specific candidates in mind abroad. You may not be able to go into specifics, but if there are specific countries that you are not interested in, please do. And the second question is because if there isn't the right candidate in Korea, it's very difficult to pursue the M&A strategy. So do you have any plans to expand out the boundary to maybe invest in fintech, for instance, to find a way to diversify the nonbank business? Or is it the case that you're actually pursuing these routes as well?

Yes. Thank you very much for the question. Please wait as we prepare to answer your questions.

Yes, I'm CFO, Lee Sung-Wook. Yes. First, regarding the first question on our interest in Global. So we're particularly focused on Southeast Asia and India, especially countries that have high growth potential. And we're looking into financial companies in these markets. And there isn't anything visible right now, but it's true that in order to expand our global business, where, of course, we're reviewing these markets, and it was in April when we did disclose this information where Cambodia, Vietnam and Indonesia, we have a planned capital increase of about KRW 500 million, and we've already engaged the capital increase in Vietnam for our overseas subsidiaries. So you can see that in the Southeast Asian market, we're looking into our global expansion. And then moving on to the FinTech question, I would like to give the floor to CDO, Oak Il-Jin.

Yes. I am CDO, Oak Il-Jin. Regarding fintech, there's governance-related acts and there are some limitations. Therefore, in terms of our investments, it may not be in the form of an M&A, but it's about strategic alliance between bank and nonbank, and we can maybe engage in an equity stake in order to create synergy between the bank and nonbanking business. So real estate, mobility and e-commerce or some of these industries are where we're looking into strategic ventures or alliances and when necessary, an equity holding can also be an option for us.

Yes. Right now, there are no questions that are queuing, so maybe we will just wait to see if anyone has any questions. Yes, the next question will be by Daishin Securities. It will be Park Hye-jin. So please go ahead with your question.

I have a very simple question that I would like to ask you. So in the case of FX sensitivity, if you could talk about that, that would be appreciated. So for example, for every KRW 10 change in the exchange rate, what is the impact on your P&L?

Yes. Thank you for your question. And if you can wait, we can actually answer that.

Yes. Maybe I can address that. So if we look at the noncash asset and liabilities, that would be around USD 400 million. So on a month-to-month basis, it's actually changing. So for every KRW 10, there would be a change of around KRW 40. And in particular, for the [indiscernible], it would be around 3 basis points impact, according to the change in the FX. Yes, thank you.

Yes, for questions, I think that there were already a lot of questions that were asked, and as of now because there's no other questions that have been requested for the Q&A session, maybe we can wrap it up here. If you do have any further questions, please do not hesitate to contact our IR team, and we will make sure to get back to you. And with this, we will close the Q&A session and also wrap up the Q1 2024 earnings conference call for Woori Financial Group. Thank you for your attention. [Statements in English on this transcript were spoken by an interpreter present on the live call.]