Woori Financial Group, whose Common Equity Tier 1 (CET1) ratio excluding temporary transaction impacts has surpassed 13.9%, is pushing to expand shareholder returns based on its increased capital capacity. Kwak Seong-min, Chief Financial Officer (CFO) of Woori Financial, stated his view that the nominal total shareholder return rate for next year must be at least 50%. The group will maintain its policy of increasing dividends per share by more than 10% each year and is also considering securing additional funds to sustain tax-exempt dividends.
Kwak Seong-min, CFO of Woori Financial, said in an earnings announcement conference call on the 23rd, "I believe we will comfortably achieve a total shareholder return rate in the mid-40% range this year," adding, "Considering the factor of tax-exempt dividends, it will exceed 50% this year." He further stated, "It is my personal opinion that the nominal total shareholder return rate should be at least 50% next year."
The provisional CET1 ratio at the end of September was 13.80%, up 0.08 percentage points (p) from the previous quarter. However, CFO Kwak explained that risk-weighted assets temporarily increased at the end of the quarter due to corporate tax payments by trading counterparties and short-term loans, lowering the CET1 ratio by approximately 0.15%p. The relevant transactions were resolved in early October, and he noted that the recurring CET1 ratio excluding these factors is at a level of 13.93% to 13.95%. He projected that even reflecting year-end settlement dividends and asset growth, the ratio will be maintained at 13.6% to 13.7% by the end of the year.
The policy of expanding dividends per share by more than 10% annually was also reaffirmed. On this day, the board of directors decided on a third-quarter dividend per share of 220 won, a 10% increase from the same period last year. In line with this year's total share buyback and cancellation plan worth 350 billion won, purchases worth 150 billion won are also underway in the second half of the year.
The tax-exempt dividend, which is uniquely implemented among domestic bank holding companies, will also continue. The dividend funds secured by reducing capital reserves amount to approximately 520 trillion won after reflecting the third-quarter dividend, and can be utilized for at least the next three to four years, according to the explanation. Woori Financial is considering a plan to secure additional funds around 2028 in preparation for the depletion of these resources. Tax-exempt dividends have the effect of increasing the net amount received by domestic individual shareholders because they are not subject to the 15.4% withholding tax applied to ordinary dividends.
CFO Kwak said, "I believe we will be able to announce two or three upgraded items from our value-up program when we release annual results in February next year," adding, "To expand share buybacks and increase DPS (dividends per share), it is essential to improve the return on equity (ROE), and increasing net income for the period can be achieved by improving ROE in the non-bank sector."
The tax-exempt dividend, which is uniquely implemented among domestic bank holding companies, will also continue. Woori Financial previously transferred 630 trillion won of retained earnings as a source for dividends. The remaining funds after reflecting the third-quarter dividend amount to approximately 520 trillion won, a scale that can be utilized for at least the next three to four years. Tax-exempt dividends have the effect of increasing the net amount received by domestic individual shareholders because they are not subject to the 15.4% withholding tax applied to ordinary dividends. CFO Kwak explained, "Around 2028, we will convert the possible scale of funds related to tax-exempt dividends once again to secure additional capital."
The company drew a line against additional capital burdens arising from insurance company integration. CFO Kwak stated, "We are pushing for the integration of Dongyang Life and ABL Life with a target date of October 1 next year," emphasizing, "We are preparing on the premise that there will be no additional capital injection by the holding company due to financial ratios after the integration." Additionally, he revealed that the sale of ABL Life's Yeouido headquarters building is highly likely to be completed within the year if negotiations conclude smoothly.
Meanwhile, Woori Financial's net income attributable to owners of the parent for the third quarter this year was 1 trillion 49.2 billion won, a 4.4% increase from the previous quarter, marking the first time since the group's launch that it exceeded 1 trillion won for two consecutive quarters. It decreased by 15.7% compared to the same period last year due to the base effect of one-time profits related to insurance company acquisitions last year. Cumulative net income for the third quarter was 2 trillion 658.1 billion won, a 4.9% decrease from the same period last year, but the company explained that it increased by 18.7% if the effects of last year's insurance company acquisitions are excluded.
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