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DATE

Friday, July 24, 2026 at 2:00 a.m. ET

CALL PARTICIPANTS

  • Head of IR - Hong Sung Han
  • Group CFO - Kwak Seong-Min
  • Group CTO - Oak Il-Jin
  • Group CRO - Park Jang-Geun
  • Head of Business Growth Support - Byung-Gyu Kim

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TAKEAWAYS

  • Net Income -- KRW 1.0046 trillion for Q2 2026, representing a 66% increase from the previous quarter.
  • Half-Year Net Income -- KRW 1.609 trillion, reflecting a 3.7% increase year over year.
  • Common Equity ROE -- 9.0% for the period, or 10.3% when excluding one-off items such as changes in actuarial assumptions at insurance subsidiaries.
  • CET1 Ratio -- 13.71% as of June 30, 2026, an increase of 11 basis points from the previous quarter despite exchange rate pressures.
  • Net Operating Revenue -- KRW 5,722.7 billion for the first half of 2026, up 6.0% year over year.
  • Non-Interest Income -- KRW 1,063 billion for the first half, increasing 20% year over year and reaching a record 18.6% of total net operating revenue.
  • Fee Income -- KRW 702 billion in Q2 2026, rising 22% from the previous quarter and surpassing the KRW 700 billion quarterly threshold for the first time.
  • Non-Bank Contribution -- 22.3% of group net income in the first half, increasing from 6.9% in the same period last year.
  • Shareholder Returns -- Management approved a KRW 150 billion share buyback for the second half, bringing the 2026 total to KRW 350 billion.
  • Cash Dividend -- KRW 220 per share for Q2 2026, designated as fully non-taxable.
  • Bank NIM -- 1.51% for Q2 2026, remaining flat from the previous quarter but up 7 basis points year over year.
  • Loan Growth -- Total bank loans reached KRW 344 trillion, up 1.9% from the previous quarter, driven by a 2.8% increase in corporate loans.
  • Credit Cost Ratio -- 39 basis points on a recurring basis for the first half, with a full-year target to reduce total credit costs by 15%.
  • SG&A Expenses -- KRW 2,632.8 billion for the first half, resulting in a cost-to-income ratio of 42.8%.
  • Future Co-Growth Project -- Management committed an additional KRW 10 trillion to this initiative, bringing the 5-year total target to KRW 90 trillion.
  • Securities Capital Injection -- KRW 1 trillion was injected into the securities subsidiary in May 2026 to support investment banking and sales and trading operations.
  • Prime Corporate Loans -- 85% of the corporate loan portfolio consisted of prime-rated borrowers as of June 30, 2026.
  • Loss Reserves -- The ratio of loan loss and regulatory reserves to total loans stood at approximately 1.5% at the end of the second quarter.
  • Tongyang Group Exposure -- Management reported KRW 130 billion in exposure to six companies undergoing workouts, leading to KRW 44 billion in specific provisioning.
  • Alternative Exchange Timeline -- The company indicated it will push for a derivatives license in 2027 to enhance its securities and trading capabilities.

SUMMARY

Management reported that Woori Financial Group achieved record net operating revenue and a return to quarterly net income exceeding KRW 1 trillion during the second quarter of 2026. The company emphasized a strategic shift toward a more balanced earnings structure, noting that the contribution from non-bank subsidiaries more than tripled year over year. Capital adequacy remained a focal point, with the CET1 ratio reaching 13.71%, enabling the Board to approve expanded share buybacks and the transition of Tongyang Life into a wholly owned subsidiary. Operational efforts focused on expanding productive finance for advanced strategic industries while managing household debt within government target ranges and optimizing the net interest margin through disciplined asset rebalancing.

  • CFO Kwak stated that the company expects "non-bank businesses to become a new growth engine" as the group diversifies away from its traditional banking-centered earnings portfolio.
  • Management confirmed the approval of a comprehensive share exchange to make Tongyang Life a wholly owned subsidiary, with completion expected in August 2026 to improve operating efficiency.
  • The company is preparing for digital asset legislation by forming a consortium to work on stablecoin technology, having already completed real-time settlement tests for a Won-denominated stablecoin.
  • CFO Kwak indicated that the total shareholder return for 2026, when including the impact of non-taxable dividends, is expected to be "in excess of 50%."
  • CTO Oak noted that the group is monitoring digital asset exchange regulations and maintains a network with major exchanges to determine the "optimum point to enter" the market.
  • Management is targeting a medium- to long-term cost-to-income ratio in the low 40% range through AI-driven management systems and optimizing workforce and channel operations.

INDUSTRY GLOSSARY

  • Bancassurance: The partnership between a bank and an insurance company that allows the bank to sell insurance products to its client base.
  • CET1 Ratio (Common Equity Tier 1): A capital adequacy ratio that measures a bank's core equity capital compared with its total risk-weighted assets.
  • CI Ratio (Cost-to-Income Ratio): A financial metric that shows a company's costs in relation to its income, used to measure operational efficiency.
  • K-ICS (Korea-Insurance Capital Standard): The regulatory capital requirement for insurance companies in South Korea, similar to Solvency II.
  • NIM (Net Interest Margin): The difference between the interest income earned by a bank and the interest paid out to its lenders and depositors, relative to its interest-earning assets.
  • Productive Finance: Loans or investments directed toward sectors that support the real economy and industrial growth, such as manufacturing and strategic technology.
  • RWA (Risk-Weighted Assets): A bank's assets or off-balance-sheet exposures, weighted according to risk.
  • TSR (Total Shareholder Return): The total return to shareholders, including share price appreciation and dividends.

Full Conference Call Transcript

Hong Sung Han: Good afternoon. This is Han Hong Sung, Head of IR at Woori Financial Group. Thank you for attending today's earnings call for Woori Financial Group despite your busy schedules. Joining us today on the call are Group CFO, Kwak Seong-Min; Group CTO, Oak Il-Jin; Group CRO, Park Jang-Geun; and Head of Business Growth Support, Byung-Gyu Kim. We will begin with the Group CFO's presentation, which will be followed by a Q&A session. Please note that the session is being simultaneously interpreted for the benefit of overseas investors. With that, we will now hear from the CFO, the earnings result presentation of Woori Financial Group's First Half 2026.

Seong-Min Kwak: Good afternoon. This is Kwak Seong-Min, Woori Financial Group CFO. Let me go over the group's earnings results for first half 2026. Please refer to Page 2 of our earnings results material available on the website. First, the group's net income. Woori Financial Group's net income for Q2 2026 outperformed market expectations coming in at KRW 1.0046 trillion, up 66% Q-o-Q. It has thus regained the quarterly net income of KRW 1 trillion level. This brings the half year net income YTD to KRW 1.609 trillion, up 3.7% Y-o-Y. Our common equity ROE was 9.0%. Excluding one-off items, including the impact of changes in actuarial assumptions at our insurance subsidiaries, ROE was 10.3%.

Our Q2 results demonstrate that the group has the foundation to take its recurring earnings capacity to the next level, potentially generating quarterly earnings of more than KRW 1 trillion. This was driven by our strengthened capital position, which improved by 80 bps year-to-date, enabling us to focus on asset growth and productive finance, strengthening the core competitiveness of our subsidiaries, enhancing cost efficiency and risk management. The group posted record high net operating revenue in the first half, while the CI ratio and credit cost ratio stabilized at lower levels, leading to the group's profitability improvement. During the first half, the benefits of our long-standing efforts to diversify the group's earnings structure began to materialize.

Despite a challenging operating environment with the sharp rise in exchange rates and market interest rates as well as the impact of changes in actuarial assumptions and insurance, the group's non-interest income increased by 20% Y-o-Y, driven by stronger capital market performance, becoming the primary driver of earnings growth. Fee income exceeded KRW 700 billion for the first time on a quarterly basis, supported by solid growth in core fee businesses such as wealth management and CIB. In the first half, the non-bank contribution to group net income more than tripled Y-o-Y from 6.9% to 22.3%, indicating the start of tangible results with the setup of a comprehensive financial group.

Looking ahead, we expect our non-bank businesses to become a new growth engine, further strengthening the group's earnings generation capacity. Now shareholder returns. Today, the BOD approved an additional KRW 150 billion share buyback and cancellation for the second half of the year, a first since the establishment of the holding company. The total amount of share buybacks and cancellations for 2026 will reach KRW 350 billion, representing the largest program in our history and more than twice the KRW 150 billion executed last year. This reflects the firm determination behind cost and shareholder return policy as well as to minimize shareholder dilution due to the acquisition of full ownership of Tongyang Life and to protect shareholder value.

Woori Financial Group approved a second quarter cash dividend of KRW 220 per share, all non-taxable, further reinforcing our position as a leading dividend-paying financial stock. Just as we have consistently delivered on the commitments we have made, we'll continue to faithfully execute our corporate value-up program and strengthen investor confidence. A more detailed review on the group's financial performance by business segment on Page 3. First, I will discuss net operating revenue and NIM. For the first half of 2026, the group's net operating revenue increased 6.0% Y-o-Y to a record KRW 5,722.7 billion.

This was driven by balanced growth in both interest and non-interest income, each reaching an all-time high, demonstrating that the group's stable earnings generation capability has reached a new level. Q2 net operating revenue also increased 7.5% Q-o-Q to KRW 2.965 trillion. The group maintained solid growth in interest income in the first half up 3.2% Y-o-Y. This was supported by the full-scale expansion of productive finance with corporate finance growing at a high 4% as well as continued optimization in ALM, which lifted the bank's NIM by 7 bps Y-o-Y. Second quarter NIM remained at the same level from the previous quarter at 1.51%.

Although funding cost pressures increased amid higher market interest rates, we minimized the downward pressure on NIM by expanding our core deposit base and continuing disciplined asset rebalancing. Going forward, as we enter a period of rising interest rates, Woori will continue to broaden its customer base, further expand core deposits through strategic partnerships and improve margins through profitability-focused loan portfolio management. Next, let me discuss the bank's loan book. As of June end 2026, the bank's total loans grew 1.9% Q-o-Q to KRW 344 trillion. The growth is mainly due to corporate loans growing 2.8% Q-o-Q, primarily driven by large corporates and high-quality SMEs, supported by expanded productive finance for advanced strategic industries.

To prepare for ongoing domestic and global uncertainties, we'll continue rebalancing low margin and negative spread assets. In line with the government's household debt management policy, household loans will continue to be managed within our target range. Meanwhile, in June, the group expanded its commitment to productive and inclusive finance by an additional KRW 10 trillion, increasing the size of future share growth project on a total of KRW 90 trillion over the next 5 years. Through the initiative, we'll broaden our support beyond advanced strategic industries to include industry leaders, exporters, innovative companies and start-ups, thereby strengthening the flow of capital into productive sectors while establishing a more resilient foundation for the group's long-term growth.

Next, let me move on to the group's non-interest income. The group's non-interest income amounted to KRW 1,063 billion for the first half and KRW 628.9 billion for the second quarter, marking record high results on both half year and quarterly basis. Accordingly, the proportion of non-interest income to total net operating revenue increased to 18.6%, supported by greater group synergies and stronger business performance across our subsidiaries, both the banking business and the non-bank businesses, including insurance, securities and investment banking asset management delivered balanced earnings growth, offsetting factors that reduced earnings, including trading and valuation losses resulting from the high exchange rate and high interest rates as well as changes in actuarial assumptions in the insurance business.

In particular, the group's fees and commissions amounted to KRW 1,278.8 billion, supported by the bank's WM business and growth in the securities and investment banking on back -- on the back of strong capital market conditions increasing 23.7% Y-o-Y, second quarter fee income amounted to KRW 702 billion, up 22% from the previous quarter, surpassing KRW 700 billion for the first time on a quarterly basis, and this also reflects our strategic efforts over the past several years to expand fee-based earnings.

Meanwhile, to drive growth in the group's non-bank business so that each subsidiary can strengthen its core competitiveness and take the next step forward in its business, the group completed a KRW 1 trillion capital injection into our securities subsidiary's last May. And today, the making of Tongyang Life a wholly owned subsidiary has also been approved. Going forward, leveraging our diversified group portfolio, we will continue to increase the earnings contribution from our non-bank businesses, thereby further improving quality of the group's earnings mix. And I'll now move on to the group's expenses. Please refer to Page 4. I will now move on to the group's SG&A expenses in the first half of 2026.

The group's SG&A expenses amounted to KRW 2,632.8 billion, and the cost-to-income ratio was 42.8%. This year, despite structural cost increases, including the consolidation of the insurance business, the build-out of our security subsidiaries infrastructure and the higher education tax rate, we maintained the cost-to-income ratio at the same level as the same period of the previous year through company-wide cost efficiency efforts. Meanwhile, SG&A expenses for the second quarter amounted to KRW 1.210 trillion down 15% from the previous quarter. Even excluding one-off voluntary retirement expenses, SG&A expenses declined 2.4% from the previous quarter, continuing on the downward trend.

Going forward, while continuing to invest in future growth, including AI transformation and the build-out of our security subsidiaries infrastructure, we will further enhance productivity in our core operations through the transformation to an AI-driven management system and optimize our workforce and channel operations. Through these cost efficiency efforts, we will do our utmost to achieve our medium- to long-term CI ratio target of the low 40% range. Next, I will cover the group's credit costs. Group credit costs for the first half of 2026 amounted to KRW 966 billion, up slightly year-over-year. However, in the second quarter, credit costs amounted to KRW 439.2 billion, down 16.7% Q-o-Q, continuing on a downward trend.

In addition, excluding large one-off factors in the first half, the group's recurring credit cost ratio was 39 bps and has been managed stably at a level lower than last year. By maintaining this trend, we will achieve our full year target announced at the beginning of the year of reducing credit cost by 15% and bringing the credit cost ratio to the low 40 bps range. Meanwhile, despite strong loan growth this year through a selective asset origination strategy focused on asset quality, the proportion of prime corporate loans remained at around 85% as of the end of June.

In addition, the ratio of loan loss reserves and regulatory reserves to total loans also remained at around 1.5%, providing sufficient loss absorbing capacity against potential credit losses. However, as the importance of risk management has increased further following the July policy rate hike, we will further strengthen monitoring of vulnerable borrowers and focus on proactive risk management to further strengthen the group's asset quality. Next, let me move on to capital adequacy and shareholder return. Please refer to Page 5. As of the end of June 2026, the group's preliminary CET1 ratio stood at 13.71%, up 11 bps from the previous quarter.

Despite the continued KRW 1,500 plus exchange rate during the second quarter and continued strong loan growth in support of productive finance, we achieved one of the highest CET1 ratios in the industry, supported by our disciplined capital allocation and risk-weighted asset management capabilities. Based on our strengthened capital position today, the Board of Directors of the group approved a second quarter dividend of KRW 220 per share, which is fully non-taxable. The record date is August 10, and the payment date is scheduled for August 31.

In addition, for the first time since the establishment of the holding company, we approved an additional KRW 150 billion share buyback and cancellation for the second half of the year, increasing the year's total share buyback to KRW 350 billion across 2 rounds. As a result, we have fulfilled both commitments we made through our corporate value plan announced last February, first to additionally consider share repurchase and cancellation in the second half once our CET1 ratio exceeds 13% and the second, to increase shares to more than 10% within a short period of time.

Going forward, we will also consider making share buyback and cancellation of regular semiannual program and continue to faithfully execute our corporate value enhancement plan while consistently delivering on our commitments to the market. Finally, today, the Board of Directors of Woori Financial Group approved the comprehensive share exchange to make Tongyang Life a wholly owned subsidiary. Once the share exchange process is completed in August, we expect to further accelerate our efforts to strengthen the competitiveness of our insurance business through enhanced operating efficiency, improved capital adequacy and greater group-wide synergies. In the second half, we will also accelerate our efforts to drive and improve sustainable group ROE.

In the banking business, we will strengthen our core business drivers, including core deposits, corporate banking and wealth management while enhancing cost competitiveness to build a stable earnings base. In the nonbank businesses, we will further strengthen the core competitiveness and market position of each subsidiary, thereby transforming our earnings structure from one centered on the banking business to a more balanced earnings portfolio. Through these efforts, we will gradually strengthen the group's earnings power to more than KRW 1 trillion per quarter while further strengthening the group's stable and sustainable earnings base. In addition, we will place even greater focus on expanding productive finance and inclusive finance.

As you know, Woori Financial Group has a long-standing legacy in corporate banking, which remains one of our core strengths and key source of competitive advantage. As we have already committed to provide an additional KRW 10 trillion through the future co-growth project, including KRW 9.4 trillion for productive finance and KRW 600 billion for inclusive finance, we will execute these funds more swiftly, thereby supporting the real economy, fulfilling the fundamental role of finance by growing together with the market and steadily securing the group's future growth drivers. This concludes Woori Financial Group's 2026 First Half Earnings Presentation. Thank you very much.

Operator: Thank you very much. And now we will begin the Q&A. The first question from DB Securities, Na Min Wook.

Min Wook Na: Congratulations on the good performance. I have 2 questions on the securities. Compared to the other competitors, their sales network or they are getting better performance. And in retail, the network and the products are differentiated. So in the mid- to long-term, what are the ways to enhance your brokerage? And secondly, KRW 1 trillion capital increase was done. So it's used in your IB business. And what are your future plans for capital usage? And when do you think you will reach KRW 3 trillion?

Seong-Min Kwak: Thank you very much. I'd like to address those 2 questions. Yes. This is Kwak Seong-Min, the CFO. The first question about the securities, retail, wealth management, the plans going forward. We were established in August 2024. And as for the network and the retail base is absent, we started out from a 0 base. And so recently, looking at the large players and the competitors' securities arms, they have suffered large losses, but we have an absolutely smaller size in the market. I did mention the P&L for the securities. But in retail, our income was KRW 11 billion, and it was KRW 15 billion, so KRW 26.6 billion of net revenue.

And so it was KRW 10 billion increase Y-o-Y. Of course, compared to the others, we don't have the retail and the sales network that much. But in Gangnam area, Yeouido and in Gwangju, there will be complex branches, and there will be the fourth one. And continuously, we will open up these complex branches and stores. So with the network, we'll work on the number of customers and more AUM, and there is a need. So through this network, we will increase our sales and retail base with higher number of customers and assets. And as for the (derivatives ) we have not gotten the license yet, and we will be pushing for that license in 2027.

So as for the pending licenses, we will try to get that. And through collaboration with retail, I hope that we can get synergy, and we will try to get the license as soon as possible. And with these elements ready, S&T and other businesses, we will be able to have more synergy effect coming in. And as for retail, there will be continuous expansion. And in IT, the retail, so there will be complete environment so that we can enhance more profit in retail. And as for the capital increase, as was mentioned in May, we had an increase of KRW 1 trillion. Basically, for a holding company, the principle is it has to help in terms of ROE.

That's the basic principle. And so I did mention it in last quarter's earnings call to be designated as CFIB, we will do the capital injection. And so for securities, ROE needs to be improved. So we will move toward that direction. And the group as a whole will lend support and there will be concentrated effort. So we will nurture the securities business. That will be our priority. And we will also improve the profitability, and we will continue with the capital increase phase by phase. And as for getting the additional license, we will take that into consideration and make the due decision for the amount and the timing.

And as for the KRW 1 trillion capital increase, it is for IB, S&T retail, it will -- it has been allocated accordingly. And as you're well aware, in retail, the limit for credit sharing has increased to KRW 800 billion. And so there has been capital allocation. And in IB, there has been internally capital allocated. So for IB, in securities, the profitability improvement is the highest. And we have earned KRW 45 billion in operating revenue, which has increased by KRW 38 billion. And so IB is enjoying the biggest and the quickest benefit from the capital increase.

Operator: Next, Seol Yong Jin from IM Securities.

Yong Jin Seol: I do have a question with regards to the credit side. So I know that we have around KRW 250 billion in terms of substandard. And I think that there were some large corporate-related issues. So I would like to understand the impact. So I would like to understand whether how this was actually reflected in the books. And next year or in the second half, I would like to understand what would be your target CCR?

Park Jang-Geun: Yes. Thank you very much. Let me respond to the question. Yes, with regard to the increase in the NPL of the group and also with regard to the write-back of the provisions and also the question with regard to the credit cost ratio, CCR, let me respond to that question. So with regard to the increase in NPL, as was mentioned, with regard to the Tongyang Group exposure regarding workout and there were a total of 6 companies that have applied for a workout. And there was a KRW 130 billion of exposures, which has led to an increase in NPL. And I know that it's similar for other banks.

But with regard to the Tongyang Group's exposure at our group, it's mostly in the form of real estate guarantee, especially for the bank, it's a first lien collateral. And as is indicated in the IR materials in the second quarter, we have actually provisioned a total of KRW 44 billion. And with regard to the increase of NPL, as was mentioned, it has to do with the Tongyang Group's exposure. That was the major reason behind the increase of NPLs. And with regard to the write-back, it's indicated in the IR information. And in the second quarter, there wasn't any additional factors with regard to the write-back on the provisioning.

But rather, if you refer to the IR presentation materials, you can see that with regard to Tongyang Group, we've actually added to the provisioning. So just add provisions. But with regard to this quarter, there was no any write-back related. It's the reversal of the provisioning. And with regard to the credit cost ratio, as was briefly mentioned in the presentation, in the Q-o-Q, credit cost it was a minus -- it was a reduction of KRW 88 billion to a total of KRW 439 billion and 48 bps, which is a minus 5 bps Q-o-Q.

And if we exclude one-off items Q-o-Q, it's actually minus 1 bps, and it's a total of 39 bps based on a recurring ratio. But as you're very well aware, in the future, the economic prospects in the policy rate hike, there are some vulnerable borrowers-related issues that may arise and emerge. But as was mentioned, we will be managing our risks stringently in a proactive fashion. And also with regard to productive finance, most of the loans will be focused on that. And through this corporate growth, we want to focus on increasing the loans mindful of asset quality. So with the increase of loans, increase of credit cost ratio would not be that significant.

You can see that most of the loans are focused on productive finance and more of the strategic advanced industries. So as was already mentioned, in 2026, we have set forth a target of being in the low 40 bps -- 40% range -- 40 bps range. So we will continue on to make sure to maintain this within this range with stringent risk management. And as was already mentioned, the size of the credit cost for Y-o-Y, we are going to reduce this by 15%. So in the second half as well, we will be very proactive in that endeavor to meet this target of reducing our credit cost by 15%.

So that would be a top priority for us on the bottom line. So once again, we will make sure to achieve this target on credit cost.

Operator: The next question is from Park Hye-jin Daishin Securities.

Hye-jin Park: I have also 2 questions. First, about the margin. Looking at the loan growth, it's focused on corporate and especially the large corporate, the market rates are rising and NIM looks stable, but I want to know the reason behind that. And the reason why I ask this question is whether it's productive finance or inclusive finance, you seem to be most active. So are there no concerns about the profitability? What do you see as the prospect? And the second question is I was wondering what you have in preparation for digital assets?

Seong-Min Kwak: Yes, we will address those 2 questions. Yes. This is the CFO. I'd like to talk about NIM. As was mentioned, it was 1.15%, (sic) [ 1.44% ] and it rose 7 bps. And quarterly, it rose. It was the same as 1.5% Q-o-Q. And the reasons -- the market rise 3 bps and the core deposits have increased and that effect also had 2 bps. So Y-o-Y, the NIM has increased, but Q-o-Q was the same. And so the reason it was steady at 1.51% Q-o-Q was -- from Q2, the market rates have risen and the BOK has given signs that it will increase policy rates.

So considering all that, especially in May, April, we have funded with longer-term deposits, and we increased those deposits in April and May because assuming that the market rates will rise, the longer deposits should increase so that when the BOK increases policy rates, the funding rate could be reduced with such preemptive moves. So the longer-term deposits were sourced in April, May. And toward the end of the year, we are going to increase the amount of shorter-term deposits. So we have done the ALM optimization. When the interest rates go up, this is going to have a positive effect on our NIM.

More longer deposits and that is going to delay the speed of an increase in the funding cost. And from 3 to 6 months, the shorter-term deposits, we have reduced that by KRW 15 trillion, and this is also going to help us in the long-term. And compared to June last year, the variable interest cost was increased by KRW 34 trillion. And when -- assuming that the interest rates will rise, according to the portfolio, we have more of them on floating rate. And so by proportion, 15% and 4% each in corporate and household loans. So we have more of these in CD rates.

So when the market rates go up, we'll be able to suppress funding rates and CD rate-linked loans take up a lot of share, and this is going to be a plus factor for our loans. So in Q3, Q4 and early next year, we have the right structure and the CD rate-linked loans take up a large share. So the NIM was flat in Q1 and Q2 at 1.51%. But when the interest rates rise, this is going to serve as a platform for the NIM to rise.

Oak Il-Jin: Yes, I'm the CTO. As for the alternative exchange, I understand it to be the digital asset exchange and the financial authorities have the policy of one exchange, one bank, and we are reviewing the regulations. And we will be nimble so that we can address this, and we are communicating with the major exchanges and maintain a close network. And we are going to have collaboration that is strategic and multifaceted, and we are reviewing expanding business models. We'll monitor the situation closely, looking at the regulations, and we will decide on the optimum point to enter. And as for stablecoin, we are expecting the legislation in the second half of the year or early next year.

And before that, we need -- we are thinking of forming a consortium. So even before the legislation through working group, we are going to work on stablecoin. And by each category of payment settlement, we are going to secure the right technology. So in issuance and retail, the wallet development, payments, the POC has already been done. And on the retail platforms, Won stablecoin ( Won-denominated )real-time settlement test has been completed. And we are also doing a lot of POCs in many different scenarios.

Seong-Min Kwak: And I think you were asking about some of the concerns in productive finance and inclusive finance. And I want to make it clear that in expanding the productive finance, there may be interest rate competition amongst the competitors, and that is a valid concern. But Woori Financial Group in implementing productive finance, we are not just going to increase low interest assets, but looking at the productive finance, the way we approach it is, as I mentioned before, the mortgage loans and the existing assets are now redeploying it and rebalancing it to more advanced industries. And so we are looking at credit cost, capital and interest rates. So we are looking at different facets.

And productive finance, we have guarantee from the policy institutions. So losses and capital burden can be lowered. So it's not simply expanding the size of low interest rate assets. So we are converting the existing assets to the advanced industries. So it does not cause that much of a concern. And ultimately, productive finance is in the nature of corporate lending. We have the know-how of corporate lending. So we have underwriting or acquisition financing, and we can produce synergy with the other businesses, and we can secure profitability in many regards. So we believe that we have the know-how of managing profitability in a comprehensive manner. In the long-term, credit cost reduction, non-interest income expansion, portfolio rebalancing.

In those regards, I think productive finance can work in that regard. And by the same token, inclusive finance may incur cost in the short term, but in the longer term, it will contribute to reducing the credit cost. So at a very optimal level, we will pursue with inclusive finance as well.

Operator: The next question is by -- would be by Kim Do Ha from Hanwha Investment & Securities.

Do Ha Kim: I like to ask about total shareholder return. So with exceeding 13%, I know that you now have the platform of meeting your target to 50%. But I know that 50% would not be met this year, but I do know that there are questions with regard to this, is it 50% starting from this year. So I do know that there is such understanding. So I do know that it's going to be a gradual type of slope moving on to 50%. But I would like to understand what would be the trajectory? What would be the time line as to reaching that target?

And if you would actually clarify that communication, I think that you can lift any misunderstanding. So can you give us some more information and indication on how that would be done?

Seong-Min Kwak: Yes. Thank you very much for that question. Let us respond to the question. As with regard to TSR, total shareholder return, I believe that, that was the question. So let me respond in that context. So as was mentioned, this year, our quarterly dividend based on our policy of equal dividends, it will be KRW 220 for the first quarter and KRW 220 for the second quarter. So there was an equal distribution of the dividend. With regard to the cash dividends, last year, we've indicated the total dividend of EPS would be increased to 10% plus. And we are going to meet this commitment this year as well.

So with regard to the cash dividends, I think that there is some anticipation as to what -- how much that would be. So share buyback early this year, we've engaged in KRW 200 billion of that buyback. And as was mentioned in the second half, there will be a KRW 150 billion additional share buyback, which would be a total of KRW 350 billion. And the context behind the share buyback, as was mentioned, of course, there are a number of factors that came into play, but we want to increase the share buyback based on our value-up plan.

So this means that as quickly as possible, we're going to increase the share buyback cancellation to 10% plus as quickly as possible. And as was mentioned, this year, our buyback cancellation of shares of 10%. I can say that with KRW 350 billion, with an added KRW 150 billion, we believe that we will be in excess of 10% with this additional KRW 150 billion, bringing this to KRW 350 billion in total. So with that in mind, the TSR last year, it was 31.8%. The share buyback was 4.8%. The total TSR was 36.6% -- and this 36.6%, if we take into consideration the non-taxable dividend, it's actually a TSR basically of close to 40%.

This was the indication that we did mention last time around. And this year, the TSR of 50%, whether we're going to meet that, the face value of 50% we think that we'll have to go into the fourth quarter to take into consideration our net income as well as our trend of CET1. Because if you look at the CET1 ratio, of course, we're putting in our best efforts to improve and to stabilize the number. However, once again, as mentioned, we have high exchange rates and there are changes and fluctuations in the stock market and the Middle East conflict leading to inflationary pressure. So there are many external risk factors.

So the CET1 as to what that would be in the year-end is something that we would have to observe. And then we will be setting forth the cash dividends. But what I can see for sure is that this year, you can see that we're the only one with a non-taxable dividend amongst our peer. So based on the non-taxable dividend context, we can say that at a minimum, as you've mentioned, the actual TSR we think, will be in excess of 50%. So that is our current expectation at this time. But of course, we cannot say for sure or guarantee the number.

However, the quarterly dividend, as mentioned, will be equally distributed and our share buyback cancellation, the targets that we have already mentioned and what was executed. So based on a non-taxable dividend context, we believe that our target of a minimum of 50% will probably be satisfied. So that is a very cautious, let's say, outlook of what we have or anticipation. So we believe that in October, when we come with the third quarter earnings, we think that we will be able to provide you with some -- with better visibility on the number.

And when that time comes, we can provide you with a clear anticipation, that will be the point where we will be providing a more clear communication with the market.

Operator: Yes, from HSBC, Won Jaewoong.

Jaewoong Won: 2 questions. First, I have a question about NIM. Connected to the earlier question. In your answer, you talked about how strategically in the second half, you are preemptively being ready for the higher rates in the second half. Traditionally, Woori Bank had a higher sensitivity to NIM. When the policy rates increase in the second half, what do you think is your expectation for your NIM in the second half? And the second question is about SG&A. ERP was recognized in Q1. So in our future anticipation, the seasonal Q4 ERP will go away and it will be recognized in Q1. Should that be our future understanding? I hope I can hear your opinion on this.

Seong-Min Kwak: Thank you for the 2 questions. The questions were about NIM and SG&A. Yes. This is the CFO. As to the NIM question, we did talk about the status. And so you are asking a general question about when the market rates rise by 20 bps, how much will it go up in our NIM? So what are the simulation results? So according to our internal simulations, when the 25 bps of market rates KRW 160 billion of interest income, so 4 bps of a rise in NIM.

And at the IR event, we talked about KRW 140 billion and 3 bp increase for 25 bps in higher interest rates, but the CD rate loans are higher for Woori Bank and CD loans are increasing. So when the market rates go up, the net interest income and NIM slightly goes up according to our simulation results. And that is the benefit of Woori Bank. And so moving on to the second question about the timing of ERP. Yes. As you pointed out, for the last 2 years, in 2025, it was in January. And this year also, the ERP was in January. Going forward, we could have more ERP or how many years more, how we can continue?

There are many variables because the government may change the policy of the retirement age. There could be some change at the government level, and we are in the process of reducing the number of stores and there is downsizing in our headcount. So we have to think about the store closure that will determine the size of ERP. As for the timing, we believe that if there is future ERP, it will probably take place in Q1. And we are not going to suddenly change that to December as of now. And as for the size of the early retirement, well, in the second half of this year, we will be establishing the mid- to long-term.

And according to the mid- to long-term vision and plan, the number of stores and headcount is going to be important. So depending on that plan, we will devise how much and when and how often we will go ahead with the early retirements. And this may be more flexible. But let's say, next year, there's another round of early retirements, then it is likely that it will be in January. But for early retirement from 2028 and onward, it will be under the mid- to long-term plan, and it is up to further decision. As for the timing in the shorter term, it will not change probably.

But in the longer term, due to changes in the retirement age and different in different -- and changes in our store plan and branch plan, it may change. And we will share with you at the earliest moment possible to the range that is available.

Operator: We have one last person in the queue. So Kim Jiwon from DAOL Securities.

Jiwon Kim: I have 2 questions. So first, we talked about productive finance, which has to do with increasing the supply of corporate loans. So if that is the case, I think that we will have to manage the RWA. So starting from last quarter, our CET1 has been brought up to 13%. So then with increase in productive finance and CET1 13%, defending that 13% in terms of a balance, what is the RWA target that the group has, if any? And the second question is I know that Tongyang Life will be a wholly owned subsidiary, based on your disclosure. So we have acquired these life insurers. And I would like to understand what would be the role?

Would it be WM or the bancassurance business? Or would it be in the IB side to actually engage in the role of an LP. So I would like to understand what kind of the roles or what kind of -- yes, what kind of role you would want your life insurance arm to play in the future?

Seong-Min Kwak: Yes. Thank you very much for the question. So there was a question on productive finance and a question on Tongyang Life. On productive finance in the process of expanding our productive finance, the impact on CET1 and RWA is, I think, the gist of your question. So if I may respond, as I did mention, productive finance, I want to say is not about increasing the loans of a particular category. It's about the existing loans switching to productive finance. It's asset rebalancing basically. So that I would like to once again make clear.

And what happens is in the case of semiconductors, AI and defense aerospace, these advanced strategic industries, we have large corporates in these sectors who will be our customers. And already, they are our existing corporate customers. And it's that the loan, the direction will be in the form of productive finance. So I want to mention that with productive finance, it doesn't mean that we will be adding on RWA in our loan portfolio. It doesn't mean that we need RWA, there will be an increase of RWA. But of course, in investments and in the case of venture capital securities, in supply of these securities, of course, that can have an impact on RWA.

However, as you know, our current securities business and most of the RWA is actually being consumed via the IB arm and some of that is actually being done through the productive finance scheme. So if we take all of this into consideration, bank securities and investment banking, already RWA has been well allocated amongst these businesses. And one key area of usage, as was already mentioned in the press, is that the government has been introducing rationalization of policies and legislation, especially when it comes to the adjustments of risk weighting. So there I know is active review on this and some has already been reflected in the policies, and there are more to come in the future.

So of course, the supply capacity coming from changes in amendments to the legislation, we think will help us lower the impact on the CET1 -- and we, of course, will continue on in the short term, make sure that it is maintained at 13%, 13.6% levels. But if we utilize this actively in productive finance, we think that in the long -- mid- to long-term, there will be no issues in making sure that it's within the 13% mid to higher range.

Byung-Gyu Kim: Yes, I'm Byung-Gyu Kim in the business development department. So on the insurance arm, so would it be bancassurance or IB role that Tongyang will be playing? So on the group level, utilizing bancassurance and contributing to the IB capabilities, we think can be a synergy that we can reap. But basically, it's important to enhance the profitability of the life insurance business, the core business so that it contributes to the group net income. So that would be the top priority of its role that it will have to play going forward.

And last July, after it was integrated into the insurance business, we've engaged in an internal review, due diligence, and we have identified some tasks, and we're actually engaging in the improvements. So basically, it's on the K-ICS. It's about ensuring that we do have a robust capital adequacy, the K-ICS. And in addition to that, it's about putting in place the right channels, appropriate channels and exclusive channels in place. And based on these improvements, starting from next year, we're going to enhance sales, enhance the profitability of the business, and that is the road map that we have for the life insurance arm.

Operator: I believe that there are no more questions. And with that, we would like to conclude the Q&A session. Thank you very much for joining us at this earnings call. Thank you very much for your participation.