Woori Bank

The stable outlook reflects our view that Woori Bank will maintain adequate capitalization over the next 18-24 months. This is despite the group's potential nonbanking business acquisitions. We expect Woori Bank's improving profitability and moderate loan growth to support its adequate capital buffer. The stable 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 those of major 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 its risk-adjusted capital (RAC) ratio below 7%. The bank's RAC ratio could fall below 7%

...Woori Bank's enhanced credit risk management will underpin its sound asset quality over the next 18-24 months, in our view. The bank will likely continue to focus on small and midsize enterprise (SME) loans, backed by collateral or guarantees. This is after it reduced the portion of risky large corporate loans. The bank has also strengthened its underwriting standards on the ratio of debt servicing to income for household borrowers, to align with regulatory guidelines. Asset-quality metrics and credit costs will thus likely stay low, comparable with those of major domestic commercial banking peers. Woori Bank will likely sustain adequate capitalization despite the group's potential nonbanking acquisitions. The parent group is unlikely to seek excessive growth via mergers and acquisitions over the next two years, in our opinion. This is given the group's focus on maintaining sufficient regulatory capital buffers under Basel III capital requirements. Woori Bank's improving profitability and...

Full Report