In its earning report released on April 28, Lee Pal-sung, chairman of Woori Financial Group, announced that the group posted 540.7 billion won in net income for the first quarter of 2011 as a first result of adopting International Financial Reporting Standards (IFRS) for its accounting practices. The group’s operating profit is expected to further jump in the future as the figure included all doubtful accounts of financially troubled construction companies and shipping companies and there was no one-time profit source.
Total assets amounted to 346 trillion won, up 20 trillion won from the end of last year, and remaining the highest in the industry. The BIS ratio and basic equity-to-asset ratio recorded 14.1% (E) and 10.6% (E) for the bank and 12.0% (E) and 8.6% (E) for the group, respectively.
In terms of profits, the group’s NIM in the first quarter stood at 2.53%, rising from 2.18% in third quarter of 2010 on the basis of K-GAAP. The financial troubles of some builders and the acquisition of a savings bank resulted in the group’s substandard & below ratio and delinquency ratio to stand at 3.5% and 1.15%, respectively.
The group is planning to significantly improve asset soundness by pushing forward with plans to remove all bad assets. The group is expected to earn huge profits (nearly one trillion won) this year as it is planning to sell off shares of Hyundai Engineering & Construction and improve profitability indicators such as NIM.
“When uncertainties related to the corporate governance are removed, our current stock price is underperforming remarkably compared to 20,441won, BPS at the end of 1Q 2011, will rise to its proper level,” said a spokesperson for Woori Financial Group.
“We will put our utmost efforts into securing more profit sources and improving profitability, in addition to enhancing our non-banking sector’s capabilities and global competitiveness,” the spokesperson added, going on to say, “Furthermore, we will actively pursue management innovation and the ‘OneDo’ goal, which is a strategic cost reduction program.”
Woori Bank chalked up 1.48 trillion won in operating revenue and 507.5 billion won in net income in the first quarter of this year. ROA and NIM in the first quarter stood at 0.87% and 2.44%, respectively, rising 0.54%p and 0.15%p, respectively, compared to the end of last year.
In addition, the substandard & below ratio increased 0.08%p from the end of last year to 3.42% as of the end of March 2011. The net incomes of major affiliates of the group in the first quarter of 2011 were as follows -- Kwangju Bank (28.7 billion won), Kyongnam Bank (41.6 billion), Woori Investment & Securities (60.4 billion won) and Woori F&I (18.6 billion won).
Meanwhile, the group held an inaugural ceremony for Lee Soon-woo, the new president of Woori Bank, with approximately 600 employees, including chairman Lee Pal-sung, participating in the main building of Woori Bank in Seoul on May 24.
President Lee added, “We will achieve the vision of becoming ‘the best bank in Korea’ and a leading bank in Asia”, Lee said during the ceremony. “As the 112 years of Woori Bank show, we will realize successful privatization and grow into a leading global bank through change and innovation.”
“To achieve this goal, we need to first change our attitude,” President Lee continued, suggesting five management keywords – Enhancing Customer Value, Practical Management, Ethical Business Practice, Globalization, and Better Risk and Asset Management. “One of the biggest problems of Woori Bank is weak morale and low pride among employees. Therefore, let us create a happy workplace together,” Lee concluded.