Woori Financial (US:WF)2023-04-21 10:19Financial Position and Capital Adequacy - As of December 31, 2022, the total amount of assets provided as collateral for secured borrowings was ₩21,748 billion[103]. - Approximately 95.3% of customer deposits had maturities of one year or less or were payable on demand as of December 31, 2022[109]. - The total book value of debt securities held in the trading and investment securities portfolio was ₩9,631 billion as of December 31, 2022[112]. - The common equity Tier I capital adequacy ratio was 11.57% as of December 31, 2022, exceeding the minimum requirement of 8.0%[113]. - The Tier I capital adequacy ratio was 13.62% as of December 31, 2022, above the required minimum of 9.5%[113]. - The combined Tier I and Tier II capital adequacy ratio was 15.30% as of December 31, 2022, surpassing the minimum requirement of 11.5%[113]. - Korean banks are required to maintain a minimum common equity Tier I capital ratio of 4.5% and Tier I capital ratio of 6.0% as of January 1, 2015, with additional capital conservation and counter-cyclical buffers[115]. - The company and Woori Bank are designated as domestic systemically important banks, subjecting them to an additional capital requirement of 1.0% for 2022 and 2023[115]. Regulatory and Compliance Issues - An investigation by the Financial Supervisory Service was launched in April 2022 due to an employee embezzling approximately ₩70.8 billion[102]. - The Financial Consumer Protection Act, effective March 25, 2021, imposes stricter distribution guidelines and increased liability for customer losses[141]. - The company is subject to various regulations that may limit operational flexibility and increase compliance costs due to heightened consumer protection laws[140]. - The Financial Services Commission may impose burdensome measures if the company is deemed financially unsound, potentially harming business operations[145]. - The company is cooperating with ongoing investigations related to compliance with U.S. sanctions, which may affect its business and reputation[126]. - The company reported employee embezzlements totaling approximately ₩70.8 billion, with ₩3.4 billion recovered as of December 31, 2022[136]. Economic and Market Conditions - The Korean economy showed signs of recovery in 2021 but faced high inflation and interest rates in 2022, impacting future growth prospects[147]. - The unemployment rate in Korea decreased from 4.0% in 2020 to 2.9% in 2022, indicating an improvement in the labor market[156]. - North Korea conducted over 60 ballistic missile tests in 2022, including 8 intercontinental ballistic missiles, raising geopolitical tensions[155]. - The KOSPI index was at 2,575.9 on April 17, 2023, reflecting the volatility of the Korean securities market[171]. - The company is exposed to risks from global economic conditions, including the impact of geopolitical tensions and fluctuations in commodity prices[148]. - The company reported that adverse developments in the financial markets could negatively affect its results of operations and financial condition[150]. Cybersecurity and Data Protection - The company has made substantial investments in cybersecurity, obtaining certifications such as ISMS-P, ISO27001, and ISO27701 to validate its data protection protocols[132]. - South Korea's Defense Ministry raised the Cyber Protection Condition level from 4 to 3 in March 2022, prompting the company to enhance its cybersecurity measures[131]. - The company continues to face evolving cybersecurity risks, which could lead to potential financial losses and reputational damage[133]. - The company may face significant penalties for data breaches under the Personal Information Protection Act, including quintuple damages for information leakage[140]. Shareholder and Ownership Dynamics - Major shareholders include IMM Private Equity, Inc. with 5.57% and BlackRock Fund Advisors with 5.07% of outstanding common stock[158]. - The market price of common stock may be adversely affected by potential future sales by major shareholders[157]. - The Financial Holding Company Act restricts single shareholders from owning more than 10.0% of voting stock, affecting ownership dynamics[162]. - Non-Korean holders may face adverse tax consequences if the KDIC sells shares received in the stock transfer[159]. Corporate History and Structure - Woori Finance Holdings was established in March 2001 as a new financial holding company, acquiring shares in several banks, including Hanvit Bank, Kyongnam Bank, and Kwangju Bank[184]. - In December 2000, the Korean government injected public funds totaling ₩2,764 billion into Hanvit Bank as part of a recapitalization effort[182]. - Woori Finance Holdings sold its 52.0% ownership interest in Woori Financial for ₩280 billion in March 2014[191]. - The merger of Woori Finance Holdings with Woori Bank was completed on November 1, 2014, with shareholders receiving one share of Woori Bank for each share of Woori Finance Holdings[193]. - Following the merger, Woori Bank's overall business operations became substantially identical to those of Woori Finance Holdings prior to the merger[194]. - Woori Bank acquired a 51% equity interest in Wealth Development Bank in the Philippines in October 2016[190]. - Woori Bank established a local subsidiary in Vietnam, Woori Bank Vietnam, which commenced operations in January 2017[190]. - Woori Bank obtained a commercial banking license in Cambodia in November 2021, allowing it to operate nationwide as Woori Bank (Cambodia) PLC[190]. - The privatization plan for Woori Finance Holdings was announced in June 2013, aiming to dispose of the Korean government's interest in the company[188]. - KDIC sold 40,143,022 shares of Woori Bank's common stock in December 2014, representing 5.9% of its outstanding common stock[196]. - In total, KDIC sold 200,685,395 shares of Woori Bank's common stock between December 2016 and January 2017, representing 29.7% of its outstanding common stock[196]. - As of April 2021, KDIC owned 1.3% of Woori Bank's outstanding common stock after multiple sales[198]. - Woori Financial Group was established on January 11, 2019, through a comprehensive stock transfer, with shareholders receiving one share of the new company for each share of Woori Bank[200]. - Woori Bank's common stock was de-listed from the KRX KOSPI Market on February 13, 2019, coinciding with the new listing of Woori Financial Group[203]. - In August 2019, Woori Financial Group acquired a 73% equity interest in Woori Asset Management Corp.[205]. - Woori Financial Group conducted a stock exchange with Woori Bank in September 2019, resulting in Woori Bank receiving 42,103,377 shares of Woori Financial Group's common stock and ₩598 billion in cash[205]. - Woori Financial Group acquired a 59.83% equity interest in Woori Investment Bank for ₩393 billion in September 2019[205]. - As of March 31, 2023, Woori Financial Group completed additional acquisitions to own a total of 72.3% equity interest in Woori Asset Trust Co., Ltd.[206].