Woori Financial Group Inc - ADR

Strong earnings momentum (and “stable” ~KRW 1tr quarterly run-rate): Q3’26 net income was KRW 1,049.2bn (+4.4% QoQ), exceeding KRW 1tn for the 2nd straight quarter; YTD net income through Q3 was KRW 2,658.1bn. Management noted YTD improvement was helped by last year’s bargain purchase gains (~KRW 550bn) from life-insurer acquisitions, but excluding that one-off, earnings were +19% YoY. Common equity ROE improved to 9.9%; operating profit YTD increased by ~KRW 570bn YoY alongside revenue growth and cost stability.

Revenue mix improving but NIM dipped this quarter (key near-term headwind): YTD net operating revenue reached a record KRW 8,680.3bn (+6.2% YoY) with interest income KRW 7,035.9bn (+4.5% YoY) and noninterest income making up ~20% of total income (goal is “more balanced” mix). However, bank Q3 NIM fell 7 bps QoQ to 1.43% due to funding-cost pressure and long/short rate spread widening, especially because the bank has CD-linked loans ~70% of its loans. Management expects NIM to recover as repricing plays out and said starting Q4 the downward trend should stop and potentially stabilize/slightly improve, with asset refreshing from 2027 to further lift NIM.

Growth strategy: “productive finance” and nonbank synergies driving fees and profitability: Loan growth remains active—bank total loans were ~KRW 313tn (+1.52% QoQ). Corporate loans rose +1.42% QoQ to KRW 156tn, and productive finance lending reached ~KRW 27tn (1.5x full-year target, achieved early). Noninterest income leadership continues: YTD noninterest income was a record, and core fee income rose +18.8% YoY to KRW 1.898tn; securities IB contributed meaningfully (underwriting/advisory fees ~2.4x YoY to KRW 151.4bn, securities ~half). Q3 noninterest income declined -7.6% QoQ due to higher securities valuation losses (rate/stock volatility) and lower capital market fees, partially offset by FX and insurance recovery.