Good afternoon. I am Park Guen-hoon, Head of IR at Hana Financial Group. Thank you very much for joining the earnings conference call of Hana Financial Group, despite your very busy schedules. From this quarter onwards, we will conduct the earnings presentation via online video streaming for better accessibility and more effective communication, versus simply presenting over the audio line. I ask for your continued support. Now, let me introduce our participants. We have with us Group CFO, Park Jong-moo. Group CRO, Kang Jae-shin. Group CSO, Yang Jae-hyuk. And next, Hana Bank CFO, Kim Yong-ho. Hana Bank CRO, Pae Chang-wook. Last but not least, Hana Securities CFO, Kim Jung-ki. Today, we will start with a presentation on the business performance of the group, and then go into the Q&A. I will invite CFO Park Jong-moo to present on Hana Financial Group's 2023 business performance.
Hello, as introduced, I'm Park Jong-moo, CFO of Hana Financial Group. Today, we're presenting the earnings result via the online platform for the first time, meeting the audience via the screen. I would like to extend my gratitude to all of you for joining 2023 annual earnings presentation of Hana Financial Group. Before we go into the earnings highlights, I will first talk about the shareholder return for 2023, as resolved and decided by today's BOD meeting. Please refer to page 3 of the deck. Cash dividend as of end of 2023 was decided at 1,600 KRW per share. In March AGM, if March AGM approves the BOD resolution, DPS for 2023, including 1,800 KRW per share quarterly dividend paid out, will total 3,400 KRW, up versus last year.
Payout ratio is 28.4%, and including KRW 150 billion of share buyback and cancellation, total shareholder return will stand at 32.7%. Compared to last year's 27.4%, it is up by 5.3 percentage points. On top of the payout, today, the BOD decided on KRW 300 billion of share buyback and cancellation. When converted based on 2023 net income, it equates to around 8.7% shareholder return rate, and based on share price as of yesterday's market closing, the size is 2.2% of the market cap or 6.5 million shares. Group's PBR is 0.3 times, while per PER is 3.6 times, which means compared to the fundamentals, group's share price continues to be significantly undervalued.
Therefore, there were many shareholders requesting for expanding shareholder buyback and cancellation in order to secure appropriate level of valuation. The management of the company and the BOD fully agrees with such feedback, and to deal with undervalued share price and to enhance shareholder value, we have expanded the size of buyback and cancellation versus last year. Also, to continue on the tradition of making industry top-level cash dividend payout, and to enhance visibility into shareholder return policy, despite decline in annual net profit, we've increased DPS, dividend per share. We plan on gradually increasing DPS in order to secure stability and visibility of dividend payout going forward, taking into account business results of the company. Hana Financial Group is committed to staying true to its role as a financial institution, and will be a financial partner growing together with all of the stakeholders, including our customers and shareholders.
To that end, we will faithfully carry on with the social contribution program announced in December of 2023, while at the same time, we'll exert our efforts to enhance shareholder value. If you turn to page 26, we will see that we will see the asset growth in 2024 will be around 4%-5%, which is within the range of nominal GDP growth rate of the country. We will do our best to reach CET1 ratio of 13.5%, as well as increase total shareholder return. With that said, I will now move on to the group's 2023 annual business results. First, key performance highlights. We are on page 4. Hana Financial Group's net income for 2023 was down 3.3% year-over-year to KRW 3,451.6 billion.
Group's general operating income was up 6.9% ye ar-over-year basis. ... we were able to defend interest income to levels seen last year, while fee income and disposition and valuation gain drove non-interest income growth of around 65.3% year-over-year, which attests to improved capacity versus last year in terms of generating recurring profit. However, due to preemptive provisioning to bolster loss absorption capacity and Hana Securities losses related to domestic PF financing and CRE exposure, and the bank's social contributions in line with its social responsibilities, leading to one-off expenses, net income of the group declined marginally on a year-over-year basis. Also, such cost drivers were mainly concentrated in the fourth quarter of 2023, driving Q4 net income down, both Q-on-Q and YoY, reporting KRW 473.7 billion.
But as preemptive provisioning, which were used to alleviate uncertainties, has been completed by the fourth quarter, we expect to see better business performance in the year 2024. Next is group's G&A expense, which is up 3.6% year-over-year, reporting KRW 4,408.9 billion. We had Hana Bank's ERP done in December of 2023, ahead of the typical January timeline, which led to KRW 45 billion of additional one-off expenses. But despite two ERPs booked both in January and December of 2023, group CI ratio sustained its eight consecutive years of improvement, thanks to stable management of its running costs, with CI ratio reporting 40.6%. Group's ROE and ROA, if you refer to the bottom left of the slide, came in at 9.03% and 0.59% respectively.
Please now turn to page five. 2023 Q4 group NIM posted 1.76%, a 3 BP drop QoQ, and Hana Bank NIM went down approximately 4 BP QoQ. This was mostly on the back of the portfolio change effect, following the time deposit funding proportion increase, amid a certain level of continued upward trend of funding costs that was mentioned during the Q3 earnings release. Accordingly, on an annual basis, group NIM went down 1 BP YoY, and bank NIM went down 3 BP YoY. However, looking at the monthly NIM trend, it hit the lowest point until November, and showed a rebound in December. It seems like it will seek for an additional rebound until the first half of 2024, and it will be affected if the key rate cut in the second half is realized.
On the other hand, the group's annual interest income posted KRW 8,953.2 billion, with the Korean won loan growth trend offsetting the NIM decline effect. Let me now walk you through the non-interest income. Group's Q4 fee income went down 11.2% QoQ, with the drop in brokerage fees and others caused by stock market transaction amount contraction. On the other hand, regarding group's Q4 disposition and valuation gains, despite the KRW 267 billion of valuation loss recognition through conservative revaluation of Hana Securities' overseas CRE exposure, with improvement in trading performance and of FX translation gains, it went up 104.8% QoQ. On the other hand, group's 2023 annual non-interest income posted a sound improvement trend YoY, and drove the group's profit generation capability.
In the case of the group fee income, through strengthening the competitiveness of primary business, we were able to expand the cumulative fee basis, including operating lease, trust, and ERP, and achieved KRW 1,796.1 billion, a 5.4% increase YoY. In addition, regarding the group's disposition and valuation gains, with the contraction of the annual increase in one dollar exchange rate, leading to the YoY decrease of the FX translation losses, on the back of factors including Hana Bank's trading desks, fixed income-related profit increase utilizing financial market volatility, posted KRW 863.1 billion, a great improvement YoY. Now let's go to page six.
Group's NPL ratio as of end 2023 posted 0.49%, a 3 BP increase QoQ, due to factors including asset quality deterioration related to Hana Securities' domestic real estate development finance. In addition, it went up 15 BP compared to the end of the previous year, and showed overall increase of non-viable asset size following the prolonged high interest rate regime. Next, the group's delinquency ratio posted 0.45%, a 1 BP drop QoQ. A major reason was Hana Bank's delinquency rate decreased through NPL resolution through write-offs and sell-offs. However, when compared to last year-end, it went up 15 BP. On the other hand, the group's Q4 cumulative credit cost ratio posted 0.39% and went down 3 BP QoQ.
Despite the KRW 82.2 billion of provisioning following Taeyoung E&C's application for a workout program, and KRW 120.4 billion of provisioning for Hana Securities IB assets, there was partial provisioning write-back at Hana Bank, and the credit cost ratio decreased. On an annual basis, the group's credit cost ratio went up eight basis points compared to 2022. But excluding a total of KRW 370.9 billion of preemptive provisioning to prepare for the possibility of economic downturn, the normalized credit cost ratio posted 0.3%, and was managed within the management plan level. For your reference, the size of Hana Bank's social contribution program to support the vulnerable is approximately KRW 355.7 billion.
Among this, KRW 204.1 billion of interest cash back was recognized as additional provisions in Q4 of 2023, and around KRW 150 billion of the remaining amount will be executed as interest refund, or through other voluntary programs in stages in 2024. On the other hand, Group CET1 ratio as of end 2023 posted 13.22%, and we expect a 47 BP increase compared to the end of the previous quarter, and a 6 BP increase compared to the end of the previous year. With the stabilization of the USD exchange rate in Q4, thanks to the group's active RWA management efforts, we were able to achieve the level of CET1 ratio that was planned.
In 2024 as well, we will stably manage the capital ratio so that we can work to maintain our loss absorption capacity and shareholder return capabilities. Lastly, let's go to page 11, subsidiaries profitability. Group's major subsidiary, Hana Bank's 2023 net income realized solid growth trends in all top line categories, including core profits and disposition and valuation gains, and achieved KRW 3,476.6 billion, a 12.3% increase YOY. On the other hand, Hana Securities posted a total of KRW 270.8 billion of net losses for the year. A major reason was the preemptive recognition of KRW 640 billion of impairment losses, and preemptive provisioning when investment assets were conservatively reevaluated to minimize performance uncertainty for the year.
Since the non-recurring losses, which was accumulated since 2022, posted a total of KRW 1 trillion, we believe that there is a limited possibility that an additional sizable incurring of extraordinary expenses will take place. We believe that Hana Securities' management performance can turn around in 2024. Please refer to the performance of other subsidiaries in the deck. With this, I will conclude the earnings release for 2023 annual Hana Financial Group earnings release. Thank you very much.
Thank you very much. Next, we will have a Q&A session. Regarding how to ask questions, if you would like to ask a question, please press the Raise Hand button in the bottom center of the page. We will provide consecutive interpretation in the case of questions asked in English. Please hold, and we will take the first question. We will take the first question from HSBC, Won Jae-w oong. Please go ahead with your question.
Hello?
Yes, good afternoon.
Can you hear me okay?
Yes, we hear you fine.
I would like to first thank you for controlling your CET1 ratio despite difficult operational backdrop, and also I would like to thank you for your shareholder-friendly policies. I have two questions: You've increased EPS and also increased the size of share buyback and cancellation. As we go into year 2024, can we continue to expect such a progressive trend in terms of your dividend policy? My second question is, in terms of the buyback and cancellation, you've increased the size from KRW 150 billion to KRW 300 billion. Depending on potentially the market situation in 2024, can we look forward to a greater share buyback and cancellation?
Or at the beginning of the year, when you give us these numbers, should we consider them to be the appropriate level of buyback that we could expect for that year?
Thank you for that question. Just bear with us one moment.
Thank you for your question. I think, the two questions that you've raised are interrelated, so I, as a CFO of the group, will respond to those questions. As you know, February of, last year, we've mentioned that-
...On a CET basis, we've put 13% as the baseline, and we've mentioned that if there's an excess amount of CET1 above that rate, that we will continuously expand our shareholder return. As you know, in the first half of last year, there was Basel III adoption and also the FX impact. So there was a temporary dip in the capital ratio, so we really focused also on the asset growth in the first half of the year. So I understand that the shareholders would have had, and the market in general, had some concerns over the shareholder return by the group. In the second half of the year, we've seen the FX rate turn more positively, and market started to show certain signals of being more positive.
But as you know, at the same time, we were also able to control the corporate-wide RWA, and hence we were able to reach that 13% of our target. So at this point, for us to further enhance shareholder value and also to secure appropriate level of valuation for the company's shares, we felt the management, as well as the members of the BOD, have come to the decision that those would be, should be the priority. So we were able to announce this dividend payout plan for the year. Linking that to the second question, regarding whether the share buyback and cancellation is going to become something of a regular thing as we go forward.
Now, at the end, we base our calculation based on the year-end capital ratios, but going forward, in terms of the timing of the buyback and cancellation, we will be mindful of the profitability, the share price, and the capital buffers, and overall market backdrop in terms of market interest rate and other items, and we will be very flexible in making that final decision. We understand that our share prices are extremely undervalued compared to the fundamental of the group, and for us to secure appropriate level of valuation, we've been receiving last year a lot of feedback from many of the shareholders for the need for us to expand on buyback and cancellation. I emphasize once again, that the management team at the group, as well as the BOD, are fully in agreement with the feedback that we've received from the shareholders.
Another aspect that I would like to mention is dividend per share. Of course, total shareholder return is an important indicator, but also in terms of the sustainability, which we consider to be very important, we believe that in light of the payout ratio, DPS should continuously and gradually will will have to show an upward trend. This may not be a just a one simple answer, but I can tell you that in 2024, we are going to grow our asset growth within the level of the nominal GDP growth, and we will do our best to achieve the CET1 ratio of 13.5%, and at the same time, improve on the total shareholder return rate. Thank you.
Thank you very much for the detailed answer. We will take the next question. The next question is coming in from Hanwha Investment Securities, from Kim Doha. You're on the line.
Thank you very much for the opportunity. I am Kim Do-ha. You mentioned IB assets in securities, and you mentioned provisioning and others. And for different subsidiaries, including the bank and others, can you tell us about your PF exposure and any HUG securitized ratio, and the provisioning that you have accumulated so far? And can you give us a breakdown of the different provisionings?
Thank you very much, Kim Do-ha, and we will soon answer your question. So please hold.
Thank you very much for the insightful questions. I would like to answer the question. Currently, for our group, for our real estate PF, you can see that it's KRW 7.9 trillion, and you can see that there are both major PFs and bridge loans. And for these PFs, you can see it's 5%, and for bridge loan, it's about 6% that's being provisioned. And according to the amount of the degree of deterioration, we are doing the appropriate provisioning, and this year, we have been hearing about the different at-risk sites. And regarding the provisioning for the different sites, we have so a very stringent reviews, and we are going to be very conservative in our provisioning. Thank you very much.
Thank you for the answer.
We are waiting for another question to come through, so please give us one moment. Next question is from NH Investment Securities, Jung Jun-su p. You're on the line. Please go ahead.
Yes, thank you. I am from NH Investment Securities. I am Jung Jun-su p. I have a question relating to your Hana Securities business. As can be seen, the performance in Q4 was extremely sluggish. There's been some valuation losses regarding your IB investment. And can you share with us as to specifically what were the items that you provisioned for? And then in 2024, what is your business outlook for Hana Securities and securities business in general? Will there be other additional provisioning that we need to be mindful of? So in terms of your investment exposure, as well as the percent of provisioning that you have set aside so far, if you could share that with us, that would be helpful. And also, what is your performance or earnings outlook for the securities business in 2024?
Thank you very much for the question. Just give us one moment.
I am Kim Jung-ki. I am the CFO of Hana Securities. I will respond to your question. In 2023, if you look at the key items that contributed to the loss, it's actually 2 main drivers. First, has to do with IV investment valuation loss, and with the asset prices going down, there's been a valuation loss. And the second is CFD and fund compensation. So these were all one-off, non-recurring items that contributed to the loss. In terms of the IV investment assets and valuation losses, in 2022, it was about KRW 250 billion in size, and out of that, valuation loss is KRW 150 billion, and provision is KRW 100 billion won. In 2023, we took on a more conservative approach, so it was around KRW 650 billion of both provisioning and valuation loss.
Provisioning was about KRW 250 billion, and the remaining KRW 400 billion was valuation loss. So we took on a very conservative approach since 2022 to 2023, so there has been a preemptive booking of KRW 1 trillion in loss in advance. Yeah, so even if the market deteriorates from where we are, we do not believe that there will be any significant amount that we will need to book as loss. Second, which is CFD and fund, in 2023, that whole provisioning was around KRW 100 billion. So when it comes to CFD and compensating for the funds, these are non-recurring items, one-off items, and so at this point, we've made some stringent review of our internal control process, and we've made improvements. So last year, we were quite conservative in making a preemptive response in booking and accounting for the potential losses.
So for this year, even if we consider for a difficult market factor, we think that we will be on a smooth sail to turning around to profit. And in 2023, the one-offs and valuation losses and fund and CFD-related one-off expenses, if you were to carve that out, we believe that our capacity of profit is about KRW 200-250 billion. This is on a normalized basis. So since we've booked for significant loss in 2023, we are very certain, and we believe that we will be able to turn around in 2024, and we will do our best to make that happen. Thank you.
We will take the next question. The next question is from Korea Investment Securities, Baek Doos an, you're on the line.
Thank you very much. I'm Baek Doosa n from Korea Investment Securities. I have two questions. First question is related to the social contribution program and related to the interest cash back, about KRW 200 billion. You mentioned that it's not in the non-interest income, but in other provisions, so is that correct? I would like to just confirm, and also I'm curious about the different individual programs that will be reflected in this year's earnings. And I would also like to know more about your capital requirement, the capital ratio. Regarding the stress buffer, I am sure that you are making preparations, and can you tell us about to what degree it has been completed? And I am curious about the countercyclical or other buffers that will be reflected for this year.
It is included in your deck, and it seems that it's about 2.5% for the macro buffer, so it's quite conservative, and I think that you have been conservatively managing your capital ratio. So can you tell us more about that?
Thank you very much for your questions. Please hold, and we will get right back to you.
I am the group CFO, and thank you very much for the two questions. I would like to answer the other question at first, and I would like to answer the second question about the stress test and capital requirement. Regarding the stress buffer introduction, and I would like to actually flesh out our capital requirement. I'm sure that you know the details, and in February of 2023, we had actually made clear that in our capital requirements, that for the countercyclical buffer 2.5%, and there's also macro buffer 2.5%, to prepare for the risks going forward. And in the stress test, in a worse scenario, there is the capital requirement that may be needed, so we took that into consideration.
Regarding the calculation for this capital, there was the Asian financial crisis in 1997, and in 2008, there was the global financial crisis. So we had made some assumptions based on those types of events, and we saw that in a worse scenario, then there would be a requirement for about 2% of capital requirement. So that is why we wanted to add some additional buffer, so that is why we had actually reflected 2.5%. We also have regular stress tests in the first and second half of each year to prepare for risks going forward. So as was mentioned, our management target is not just for the requirement, minimum requirement, but also we are preemptively taking into consideration risk regarding the economic deterioration and changes in the foreign exchange rate.
So taking all of that, these factors into account, regarding the capital policy that we set last year, we believe that it is, it still holds, and we have our goal of 13.5% that is still standing. We do understand your concerns, because for the capital require, capital ratio, you feel that-- you might feel that it will deteriorate rate, but regarding asset quality or loss absorption capacity or capital ratio, we will do our utmost. Thank you very much. Thank you very much. And, the bank CFO, I'm the bank CFO, and I would like to answer your question. And I think that you have asked two large questions about the additional provisioning for the, social contribution program, and you are correct in that.
The amount is set, but it hasn't been exacted yet, so that is an additional provisioning. In 2023, there was Haetsal loan or other cash backs for other small businesses, and for those, we had given them out each month. So that is why they were in the additional or other operating income. For the voluntary program that you've mentioned, well, for that, we have it to support the vulnerable small businesses, and we have some plans to give some contributions to nonprofit programs. We had KRW 30 billion that was already executed for energy and others, and we believe that we will have execution plans concretely for Q1, in Q1, and then we will actually execute them throughout the year. Thank you very much.
We will move on to the next question from DS Securities, Nam Inuk. You're on the line. Please go ahead.
Yes, thank you. I am Nam Inuk from DS Investment. Thank you for taking my question. I just have one question. Quite simply, I have some question relating to this year's business plan. We're expecting interest rate cuts, and I believe that the credit costs may start to creep up. So the environment doesn't seem to be all that favorable, but there's a beta effect, base effect from 2023. So on a YoY basis, the numbers may start to improve. So in terms of credit cost, in terms of other overall business plan and the guidances on your business metrics, can you share with us, a little more color on that? Thank you.
Yes, I am Park Jong-moo, the group CFO. Your question related to the guidances for year 2024? As mentioned briefly during the presentation, on the general operating profit side, we have been able to secure some solid basis for profitability, but despite that, if you look at our net income, we recorded a year-over-year decline. Looking at the drivers behind that, it's due to the preemptive provisioning, as well as Hana Securities and non-bank subsidiaries' sluggish performance, as well as, the social contribution program that's been implemented in line with the social responsibility. So those factors impacted, on a nominal basis, our net profit, so we've seen a downward trend. So when it comes to net profit for 2024, and in terms of our projection, we are looking forward to and expecting a double-digit improvement.
Now, the rationale for saying this is because last year there was a base effect of these one-off factors, and we believe that Hana Securities is going to show a turnaround, which is going to work as an engine behind the improvement. Now, on the asset side, high quality corporate loan is going to be our key growth strategy that we will continue to implement. On the fee income side, in terms of strengthening our asset management capabilities and expanding the basis, we want to be able to further drive our operating profit. On the cost side, I'm sure you will want to know the credit cost projection. There is the recurring versus non-recurring basis. Our normalized basis credit cost objective is in the mid-thirty basis point, so that basically is the target that we are controlling against.
One of the key strength of the group, which is our CIR, cost income ratio, our plan is to maintain the cost income ratio at around 40% level. So as you have mentioned, there's a interest rate cut- ... and is expected, and also the PF exposure is still uncertain. So in light of these factors, we cannot be overly optimistic about the market for 2024. However, if we think of the base effect from last year and the growth of our non-bank subsidiary, and as we are committed to bringing a turnaround in those businesses, we're going to really exert our utmost efforts to make sure that we do bring that improvement. Thank you.
We will take the next question. The next question is from JP Morgan, C ho Jih yun, you're on the line.
Thank you very much for the opportunity. You mentioned the guidance, and you gave us a lot of the kernels, but I'm curious about your NIM guidance. If you can give us some more concrete numbers, and I'm also curious about the interest rate assumption you had in giving us those assumptions, those numbers for NIM. And for some undervalued stocks, the government and KRX, there are some capital efficiency strengthening strategies that may be required. And it seems that compared to the capital expenses, how you are going to improve the situation for some other banks may be on the horizon. So can you tell us about any plans you have to increase or improve your ROE?
Last but not least, recently, there was some refinancing platforms that emerged, so credit loans or other types of loans are leading to, I think, some interest rate competition. So it seems that for interest internet banks or for household loans, there could be some more heated interest rate competition. So can you tell us about your strategies? And you mentioned that your growth is centered on very sturdy companies, solid companies, and you mentioned that for household loans, what is your volume policy going forward? Thank you very much.
Thank you very much. Please hold, and we will soon answer your questions.
Thank you very much for the three important questions you asked. Regarding NIM, there was the first question, and your third question will be answered by the Bank CFO, the first and third questions, and I will answer the second question. I believe that there has been some news in the media, and there has been some press releases, but I think that we will need to find out more about the details. I'm sure that you are much more knowledgeable compared to us, but as we mentioned, for PBR, 0.3x, and going up to 0.3 for a bit, and for Japan, PBR, it's near 1 or even surpasses 1, to my knowledge.
Against that backdrop, it seems that not only for financial companies, but also listed companies that have less than one PBR, it seems that there may need to be some programs to increase the corporate value. Well, if this becomes more concrete, we will let you know our plans going forward. Regarding how to improve our ROE, well, this is a very important task for us to achieve. We are well aware that our shareholders are asking us if we have the same level of earnings or profit, then we can have probably shareholder or share buyback cancellation that we have been doing so far. If we, I think that we may need to make more efforts to link our RWA with our profits.
One of our directors mentioned RORWA, and based on that, maybe some decisions can be made, so maybe we can have that kind of system. That was also another opinion. In actually managing our profit, we will do our best so that we can manage it more solidly based on RORWA. Thank you. Thank you, and I am the bank's CFO, and I will answer the first and third questions. First question related to NIM. Well, maybe we can do a year-to-year comparison. In 2022, well, compared to 2023, 3 BP decline occurred for NIM. As you probably know, we have a high ratio of floating rates, and we have more less core deposits, more time deposits, and that had HF and other policies in the second half of the year.
So it seems that we had some assumptions in Q3, but it has been delayed, and in some cases, for the proportion of CDs are high in the corporations. So from Q2, there was some NIM declines. Also, last year we had given some support for interest for those solid companies, so it wasn't not in the interest income, but KRW 6.4 trillion in the pension annuities, and we are actually maintaining a high level as well in these. So going forward, we had given some support for interest payment. For this year, we expect that for the U.K.-U.S. and BOK, there will be the about 2 rounds of rate changes in the second half of the year.
For the bank, it seems that 20, if it's 25 bps, then there will be about KRW 100 billion of interest income that will go down. So as I have mentioned, the CD proportion, well, we may have to change it to six months or others, and we will need to time-decrease our time deposits and adjust our core deposits. So I believe that we will show you a great improvement in our performance going forward. And I would like to answer the second question regarding retail. Yes, as you mentioned, it's true. So it is true that we have the credit loans and the mortgage loans, and we have these loans that are opening up.
Last year, when for these credit loans, we made our own custom product, and externally, we had a very bold cooperation with outside platforms, which led to good results. You mentioned internet banks, and it seems that they have the mid-price interest issues, so it seems that they were not very active. But for the mortgage loans, well, for the interest, internet banks, it seems that they have more capacity for LDRs. So it seems that for Kakao Bank and others, well, for mortgage loans, they had actually made entry using the interest rate environment. So in order for us to maintain our main customers, well, we will need to. Well, we may not actually follow or be Kakao Bank in the interest rate, but we will do our best to actually adjust.
And in particular, new customers are important, but what's also important is to maintain our Jeonse loan and other mortgage loan customers. So we are also considering preemptive interest rate cuts for those customers. So we might be looking forward to that. And for this year, the increase of household loans, well, last year, we had plans to KRW 1.5 trillion of increase, and there might be about KRW 500 billion, ±. So KRW 1-2 trillion might be the ballpark figure. Thank you very much.
Thank you for the answer. Next question is from our foreign participant from White Oak Capital, Shane Matthews. Please go ahead with your question.
... Opportunity, and congrats on the result. One question from my end on credit costs. So I'm looking at slide 8, and I'm seeing that the normalized provisions have been, let's say, going up the past three, four years, 16 bps in 2020, and it's currently 30 bps. And delinquencies, NPLs, et cetera, have been going up as well over the past few quarters. Can you give a bit more insight on segments? Where are you seeing, I say, quality pressures from, and what is the, let's say, normalized recurring provision cost, which you expect to see in the coming three, four years? Thank you.
Yeah.[Foreign Language]
Thank you very much. This is the Group CRO. I will respond to your question. The delinquency ratio and credit cost that went up last year has to do with the property, PF, and also alternative investment. And with regards to the retail segment, in the non-bank segment, overall unsecured loans and household loans, we've seen increases in delinquencies. Now, this level has not yet alleviated to this date, so we think that for this year's outlook, if you look at delinquency ratio and NPL ratio below substandard, we expect these numbers to creep up slightly on a year-over-year basis. But if you look at provisioning cost, we were quite preemptive in setting aside the provision. So if you think about the already accumulated buffer, this year, the provisioning is going to be lower compared to the last year.
Last year, it was 0.39, which is the credit cost as we closed last year. This year, our objective is mid 0.3, so about 0.35 or 0.36. So basically, that is the objective that we are working against. And basically, in light of the already accumulated or set-aside provision, we think that we will sufficiently be able to achieve that target. Thank you.
... It has been about 15 minutes since we started our earnings release. We will be able to accommodate one more question before we conclude from Hanwha Investment Securities, Kim Do-ha, you're on the line.
Thank you very much for the opportunity once again. I have two additional questions. Well, you can give us very short answers. First, CET1 level went up and RWA was left out in some, went down, so can you give us some foreign exchange rate proportion in that? And for the NPL ratio, can you give us a group breakdown for the different overall breakdown? And if you can share with us these more detailed numbers, it will be greatly appreciated.
Thank you very much for your questions. Please hold until we answer your question.
I am the Group CRO, and I would like to answer your questions. Last year, after Q3, in Q4 and Q1, we had an increase in our CET ratio and in assets. We had a goal to increase a certain percentage, and because the exchange rate was very amicable to in the market, there was a rising effect. For FX rate, well, there was 13 BP effect on CET1 ratio, and it led to CET1 going up. For the NPL coverage ratio, for the NPL coverage ratio, for the group overall, it slightly decreased. However, looking at the absolute proportion, it's quite high, and it seems that looking at the economic environment now, NPL, it seems that it will slightly inch up. However, in our case, for the NPL assets, they're mostly covered with collateral.
So it seems that our NPL doesn't go hand in hand with our assets, or provisioning, so we expect NPL to be affected a bit, but we believe that our coverage will be about 160% or so. And even if it slightly drops, we believe that regarding the size of our provisioning, we will provision appropriately according to the situation, so we will be quite safe, and we will be maintaining the credit cost ratio that will be quite appropriate. Thank you very much.
I hope we were able to entertain all the questions that you had. This brings us to the end of the 2023 annual earnings presentation by Hana Financial Group. If you have any unanswered questions, please feel free to contact the IR team, and we'll do our best to provide you with the information. Thank you very much.