Woori Financial Group Inc.

and performance materials available on our website. First, let me elaborate on the group net income. Woody Financial Group's cumulative net income as of the third quarter of 2021 was $2,190,001 of the highest performance ever recorded on an annual basis. Despite uncertain local and global circumstances, the group achieved an increase of 92.8% year over year, which resulted from stronger profit generation capabilities, stable asset quality, and continued sound cost management. A company's net income for the third quarter of 2021 was 770 billion won, and while approximately 60 billion won was booked as losses due to the private fund's delayed redemption, net income surpassed the quarterly high of the second quarter and to again set a new quarterly record. Ever since the first quarter, we have been replacing the record high every quarter, continuing on with our earnings turnaround trend. Next is the group's net operating revenue. The accumulated group net operating revenue for the third quarter was 6,181,000,000,000 won, up 20.6% year over year. Interest income was 5,089,000,000,000 won, and non-interest income was 1,092,000,000,000 won. Although margin improvements were stagnant in the third quarter, thanks to solid growth centered on loans to SMEs, the group's interest income as of the third quarter reached 5 trillion 89 billion won. As of the third quarter, the group's non-interest income amounted to 1 trillion 92 billion won, up 57.2% YOY, driving the improvement in business performance. Our efforts to break away from the profit structure centered on interest income have paid off, and the group's non-interest income has now grown stronger in terms of composition as well as absolute size. Meanwhile, the company's third quarter net operating revenue exceeded 2 trillion won following the second quarter, staging 2 trillion 137 billion won. This is An increase of 3.9% QQ and 24.7% higher YOY. Let me now move on to the cost side, including SG&E and credit costs. The group's cumulative SG&E expenses as of the third quarter stood at $2,793,000,000,000, increasing 3.9% YOY. This was mainly due to the effects of the newly included Capital Company and Savings Bank, and when excluding this impact, the increase was only approximately 0.7% YOY. As for a third quarter SG&A expense, thanks to group-wide cost improvement efforts, it recorded a slight decrease compared to the previous quarter. The group's cumulative SG&A cost income ratio as of the third quarter was 45.2%, an improvement of 7.3 percentage points YOY. Meanwhile, as of the third quarter, the group's credit cost was 312 billion won and credit cost ratio was 0.13%, an improvement by 0.16 percentage points YOY. The group's key asset soundness indicators are, as before, being stably managed at historical lows. Next, I will elaborate on the group's business performance in more detail by division. Please refer to page four of the presentation material. First, let me go over interest income and NIMS. As of the third quarter, the group's net interest income totaled $5,089,001. During the third quarter, NIM in the banking business decreased slightly by 0.01 percentage points QQ to 1.36%, but the group's NIM or NIM, including the credit card business, was 1.61% maintaining previous quarter levels. Meanwhile, in terms of third quarter interest income, despite the temporary stagnant NIM improvements in 3Q, The main factors contributing to the sluggish NIM improvements in third quarter were the decline in market rates, including government bonds, and the loan repricing effect coming to an end. However, with the rate hike at the end of August and efforts to increase Low-cost deposits, stronger NIM improvements are expected to continue again in the fourth quarter. Next, let me go into asset growth and our loan portfolio. Bank loans, as of the end of September, totaled $286.1 trillion, up 8.0%, or $21.1 trillion versus previous year end. Corporate loans stood at $148.1 trillion, a growth of 12.1% versus last year end, centered on SME loans. In particular, as for SME loans, due to the increase in demand as of third quarter, it increased by 13.5% versus previous year and to 109 trillion won. Household loans amounted to 136 trillion won and driven by real demand loans such as Jeonse loans, it increased 4% versus the end of last year. In the meantime, while SME loans continue to grow at double digits this year as in the previous year, Woody Bank's prime asset ratio as of the end of September recorded 89.2% nevertheless. This is a level consistently exceeding the management target of 85% plus and is the result of our efforts to maintain a growth policy centered on prime assets. Next is on the group's non-interest income. As of the third quarter, the group's non-interest income stood at 1 trillion 92 billion won, up by 57.2% YOY, This is attributable to an even growth of all sectors, including not only growth in core fees and commissions, but also returns from securities. In particular, the focus of the Group's CIB capabilities from the very beginning of the establishment of the holding company bore fruit, and the profitability related to the IB sector increased significantly. In addition, as business is booming in the credit card and capital business and synergies with other subsidiaries such as banks are in full swing, related non-interest income is also on the rise. Thanks to these efforts, the group's third quarter non-interest income recorded 371 billion won, exceeding 350 billion won for three consecutive quarters. Next, let me move on to expense and capital adequacy. Please refer to page 5.

Next is group SG&A expense. Group SG&A expense from Q1 to Q3 recorded 2.793 billion Korean won, an increase of 3.9% year-on-year. This is mainly attributable to the acquisition of new subsidiaries, including the capital and savings bank businesses. If the acquisition effect is removed, however, the increase is minimal, only around 2.7% year-on-year. Thanks to the group's efforts to contain CI ratio, Q3 SG&A stayed at a similar level to that of Q2. The group CI ratio recorded 45.2% managed at a stable level of the group's annual target of around 50%. Next is credit cost. Group credit cost, TOQ3, recorded 312 billion KRW, declining 46.8% compared to the same period last year when a large-scale provision was done in line with future economic outlook. CCR also decreased by 0.16%. Percentage point year-on-year and improved to 0.13%. Group credit cost in Q3 came in at 107 billion KRW, increasing around 38 billion won quarter-on-quarter due to A-B, so they're coming from right-backs in Q2. But aside from this, Q3 ordinary credit cost is similar to that of Q2. A risk-centric business culture has cascaded down to all groups of subsidiaries. Thanks to this, a global credit rating agency, Fitch, raised Udi Bank's credit rating last July 30th following S&P's upgrade. The latest upward adjustment is a testament to the group's sound risk management and lending portfolio stability. VCR and other soundness indicators are at their historic low. As of end of September this year, CCR stands at 0.13%, and NPL and delinquency ratios came in at 0.31% and 0.24%, respectively, displaying continued improvement. Despite such a feat, we will further beef up our efforts for asset quality management to brace for future base rate hikes. Next, I will brief on capital adequacy and dividend policy. As of late September, the group's CET-1 ratio recorded 10.1% and projected to increase 0.2 percentage points year-on-year. Despite a surge in lending, this is thanks to a modest rise in income and proactive management of risk-weighted assets. We are currently working to obtain additional approval on internal ratings-based approach and hopeful that there will be positive results soon. Despite our stronger shareholder return policy, we have paid out $151 per share as interim dividend on July 23rd following first half account settlement. As we have shared via our business report disclosure and first half earnings call, we are reviewing to adopt an active shareholder return policy within the bounds of securing macro prudence against COVID-19 and optimal capital adequacy ratio. The plan is to raise the dividend payout ratio to the level of 30% mid to long term. Before concluding the presentation, I would like to offer an update on one-off events in Q3 and also issues pertaining to privatization. First is on KBAC, an internet-only bank. The group has invested in KBAC via Woody Bank and as of end of September holds 12.7% shares. Last July, KBank successfully concluded capital increase at a premium issue price compared to the face value in recognition of its high value by investors home and abroad. Following its successful rights offerings, we've also incorporated into our Q3 results the gains using equity method worth around $70 billion. Also, KBank is now removed from the group's subsidiary list due to Woody Bank's decree to The group has set aside a provision of 60 billion won before tax in Q3 against funds with deferred payments. The total amount of funds with suspended payment post-maturity is around 198 billion won, and Woolley Bank's BOG decided last 22nd to make 50% advance payments to protect consumers and restore customer trust. The group has set aside an allowance of around 60 billion won against potential losses from some other funds and preemptively cleared future uncertainties. This provisioning is aimed at eliminating any remaining uncertainties associated with Gen 2 partners and other private funds. With the latest provisioning, we believe there will be little possibility for additional private fund-related provisioning going forward. Next, I will brief on KDIC's disposal of its remaining shares in Woody Financial Group. As you would have probably learned through media reports, KDIC is in the process of offloading 10% stake out of the remaining 15.13% stake in the group. Letters of intent were received until October 8th, and many prospective investors from Homin Abroad allegedly have shown interest in the upcoming sale. The bid will close on November 18th and winners will be announced on November 22nd and final agreements will be executed sometime in December. Furthermore, a buyer of more than a 4% stake will be granted the right to recommend a non-executive director of Woody Financial Group and thus we expect the number of outside directors will increase. The new additions will bring diversity to the board makeup and help stabilize and improve the group's governance. Once the sale is successfully concluded, we expect overhang risks will be significantly reduced, which were often cited as a major factor depressing Woody Financial Group's stock prices. During Q1 earnings call, so I would like to ask for your continued interest and support so that we can successfully conclude the sales. During Q1 earnings call, I explained to the investors and market participants of Woori Financial Group's three key financial undertakings for 2021. They were, first, to turn around the top line through stronger business activities. Second, to actively manage CI ratio. Third, to improve capital ratio. Till Q3, the officers and employees of the group made sincere efforts to deliver on these commitments. As a result, we were able to achieve turnaround in our earnings in each quarter. Furthermore, CI and capital ratios have improved and are kept at stable levels. Woody Financial Group is committed to fulfill its key targets and market promises. With that, I would like to conclude Woody Financial Group's business report for Q3. Thank you for your attention.

Thank you very much. We'll now begin The Q&A session. If you have any questions, please press star and number one. To cancel your question, please press star and number two. For a smooth proceeding of the session, we will receive only one question per person. And in lieu of time, we may not be able to offer opportunities to ask questions to every participant today. So then, the first question is by Hyundai Auto, Kim Jin-Sung. Your question, please. Hello. Thank you very much for that excellent performance. And I do have a question with regard to the expenses. I do see that it's being managed well, and it seems quite exceptional in terms of your cost management. So if you look at non-bank domains, including securities, we've seen bonuses, and we're seeing a bullish market. So in terms of expense, I think that it would be okay till year-end, but it would be very difficult to control the cost going forward after year-end, especially going into next year. So I would like to understand, how are you going to differentiate yourself in terms of cost management going forward and especially for next year in terms of increase in CIR ratio. And also in terms of CIR, I think that you may have a particular target for next year. So if you may share that with us, we would appreciate it. Thank you. Yes, Mr. Kim Jin-Sang of Hyundai Motor Security, thank you very much for your question. And as you've mentioned, you've asked the question with regard to our cost-to-income ratio, how it was so successful, and also in terms of the To 2022, what our direction would be. So as we prepare for the question, please bear with us for just a moment. Yes, I'm Lee Seong-Muk, CFO. Let me answer that question. So when we were setting the plan last year for the bank, it was to remain as usual. And we've decided to increase the non-banks in accordance with their performance, and we've engaged in rationalization of personnel costs and other costs. So with regard to cost management for this year, it's going to be on track as planned and as mentioned in terms of the composition. So we will continue on to engage in rationalization of the personnel and the banks. So the bank business is about 70% to 80% of expenses. So we're going to rationalize personnel in the banks to manage the costs. But of course, we are going to utilize our digital channels. The costs there will be executed in an aggressive fashion. And in the case of non-banks, this is an area of M&A. So we do need active investments. But in terms of the scale, it's not as big. So it will not have a significant impact. But what we want to do is, in terms of non-bank investments, it's going to be in line with operating revenue. So the banking sector, that has a significant impact. We are going to actively rationalize and manage the cost for personnel to maintain our CI ratio in the mid to long run. We want to make sure to achieve the 45% target rate as quickly as possible. Thank you.