[Edaily Reporter Kim Hyung-il ] Yuanta Securities Korea assessed that WooriFinancialGroup(316140)posted earnings that exceeded market expectations, driven by a decrease in third-quarter loan loss provisions, and projected that shareholder returns would continue to expand as the Common Equity Tier 1 (CET1) ratio is managed stably. Accordingly, the firm maintained its “Buy” rating and target price of 44,500 won.

On the 29th, Woo Do-hyung, an analyst at Yuanta Securities Korea, analyzed that WooriFinancialGroup’s third-quarter net income attributable to controlling shareholders was 1.0492 trillion won, exceeding the market consensus by 8.2%. The improvement in earnings was driven by a decrease in provisioning. Provisioning fell 28.5% quarter-over-quarter due to the base effect from the 44 billion won provision related to the Jungang Group—which was reflected in the second quarter—and sound risk management.

The group’s interest income increased by 1.7% compared to the previous quarter. Although the bank’s net interest margin (NIM) fell by 0.07 percentage points due to higher funding costs resulting from proactive funding, growth in the bank’s won-denominated loans by 1.5% supported the increase in interest income.

Non-interest income decreased by 7.6% compared to the previous quarter but showed a relatively favorable trend. This was due to a base effect resulting from the recognition of a 20 billion won foreign exchange loss in the second quarter and a 43 billion won cost associated with changes in actuarial assumptions at the insurance subsidiary. In the third quarter, a foreign exchange gain of 141 billion won was recorded due to a decline in the exchange rate. Selling, general, and administrative expenses (SG&A) increased by 1.2% compared to the previous quarter, driven in part by investments in securities business infrastructure.

Capital adequacy ratios also improved. The CET1 ratio at the end of the third quarter stood at 13.80%, up 0.08 percentage points from the previous quarter. While net income contributed to a 0.43 percentage point improvement, factors such as an increase in risk-weighted assets (RWA), shareholder returns, and fluctuations in OCI also had an impact. In particular, while the decline in the exchange rate and asset growth resulted in a 0.03 percentage point decrease in RWA, the mitigation of operational risk led to a 0.13 percentage point improvement.

Although there were factors causing a temporary increase in RWA during the third quarter, these were resolved in October. According to Yuanta Securities Korea’s analysis, when this impact is factored in, the actual CET1 ratio stands at 13.95%.

Shareholder returns are also expected to continue expanding. WooriFinancialGroup announced a third-quarter dividend per share (DPS) of 220 won. In line with its corporate value enhancement plan, the annual DPS is projected to increase by 10% each year. Yuanta Securities Korea estimated this year’s total shareholder return ratio at 44.4%. It projected the total shareholder return rate—combining a 5% dividend yield and a 1.6% return on share buybacks—to be 6.6%. Additionally, it anticipated that the effective total shareholder return ratio, including the effect of tax-exempt dividends, would reach approximately 50.5%.

Analyst Woo stated, “Even excluding the 0.6 percentage point effect from asset revaluation in the first quarter, WooriFinancialGroup’s CET1 ratio is being stably maintained at over 13%,” adding, “We expect the shareholder return ratio, which was relatively low in the past, to improve rapidly.”