Woori Bank

The stable outlook reflects our view that Woori Bank will maintain adequate capitalization over the next 18-24 months, despite the group's potential nonbanking business acquisition. We expect the bank's moderate loan growth and improving profitability to support its adequate capital buffer. The outlook also reflects our view that Woori Bank will sustain its strengthened risk management over the same period, such that its asset quality and credit costs remain comparable with that of major commercial bank peers. We believe the bank will maintain its strong market position and stable funding and liquidity profiles. We could downgrade Woori Bank if its capitalization weakens significantly, pushing the risk-adjusted capital (RAC) ratio to below 7%. The bank's RAC ratio could fall below 7%

...We anticipate Woori Bank's enhanced credit risk management will underpin its sound asset quality. This is amid a gradual recovery in the Korean economy, backed by a rebound in global demand and the government's timely fiscal stimulus measures. The bank's asset quality metrics and credit costs will likely stay at levels comparable with that of major domestic commercial bank peers, in our view. The bank's regulatory substandard-and-below loan ratio steadily improved to about 0.3% as of June 30, 2021, from about 1.5% as of end-2015. Woori Bank will likely sustain adequate capitalization despite the group's potential nonbanking business acquisition. We expect the parent group is unlikely to seek excessive inorganic growth over the next two years given its focus on maintaining sufficient regulatory capital buffers under Basel III capital requirements. In our opinion, the bank's moderate loan growth and improving profitability will likely support its capitalization. Woori bank is the dominant...

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