Earnings Call: Q3 2025

Oct 28, 2025

Slides

Greetings, everyone. I am GH Park, Head of IR at Hana Financial Group. I express my deepest gratitude to all market participants who are participating in today's business results presentation despite your busy schedules. We will now begin twenty twenty five Q3 business results presentation. I would like to introduce our executives from our group and major subsidiaries who are here for today's business results presentation. Group CFO, Jung Mo Park, is here with us. Group CRO, JEE SHIN Kang, is with us here today. Hana Bank CFO, Yong Seok Cheong is here with us. Hana Bank CRO, Chang Koo Bae, is with us today. Last but not least, Hana Security CFO, Dongshik Kim, is here with us. Today, we will first have a business results presentation and then have a Q and A session. Please note that the earnings presentation materials are available for download on our website and that the forward looking statements regarding the results discussed today may differ materially from actual business results depending on changes in macroeconomic and market conditions. I will now invite our group CFO, Jung Woo Park, to walk us through twenty twenty five Q3 business results. Greetings, everyone. I am Hana Financial Group CFO, Kyungmoo Park. Thank you to all shareholders, investors and analysts and all interested parties for taking part in today's Hana Financial Group business results presentation. Before I explain about our group's business results, I would like to first walk you through the contents of our Q3 shareholder return. Please refer to page one. Today, at our BOD meeting, there was a resolution for KRW921 per share of cash dividends and KRW150 billion of share buyback and cancellation. Twenty twenty five total share buyback amount, including the KRW653.1 billion of shares bought YTD, stands at KRW803.1 billion. Addition, the annual shareholder return amount, including the total cash dividend of KRW 1,000,000,000,000 scheduled for this year, recorded KRW 1,803,100,000,000.0, a 28% increase Y o Y. Accordingly, group's twenty twenty five total shareholder return ratio is expected to increase significantly compared to the previous year. This outcome reflects the firm commitment of the group's BOD and management to enhance corporate value. And going forward, we will safely implement the key objectives of Hana Financial Group's corporate value enhancement plan: expand shareholder return, maintain a stable capital ratio and improve profitability to recover our undervaluation of our stock and to further enhance shareholder value. We will work tirelessly. I will now elaborate on twenty twenty five Q3 group business results. Hana Financial Group's twenty twenty five Q3 net income posted KRW 1,132,400,000,000.0. And on a Q3 YTD basis, recorded KRW 3,433,400,000,000.0, a 6.5% increase Y o Y, achieving solid results that exceeded market expectations. On the back of balance growth for both interest income and non interest income, group's general operating income increased by 5.1% Y o Y. And with G and A expenses and credit costs also being effectively managed, both group's top line and bottom line were able to achieve solid improvements. As a result, the group's Q3 cumulative ROE recorded 10.6. And next, I will provide further details on the group's business results. Please refer to Page two of the materials. First, I will cover group and the bank's NIM and net interest income. Group's Q3 NIM rose by one bp Q o Q, recording 1.74%, And Hana Bank's Q3 NIM increased by two bp Q o Q, posting 1.5%. The main driver of bank NIM improvement was profitability focused portfolio management. We were able to defend against downward loan pricing through the expansion of fixed rate loans and through efforts to improve funding portfolio, including core low cost deposits. We were able to significantly reduce funding costs. As a result, despite Hana Card NIM decline caused by partial refund of merchant fees, group's NIM was also able to slightly increase Q o Q. Next, group's Q3 interest income increased 3.4 Q o Q, recording KRW 2,291,200,000,000,000.0. And on a Q3 YTD basis, it increased 3.1% Y o Y, posting KRW 6,780,300,000,000,000.0. Based on robust loan asset growth and NIM improvement, Hana Bank's interest income on a Q3 YTD basis increased 2.7% Y o Y and drove group's interest income growth. Next, bank loans in won increased 2.6% compared to the end of the previous quarter and posted KRW318 trillion. While maintaining our ORWA centered loan asset growth trend, corporate lending was expanded to support companies affected by tariffs and to promote productive financing. As a result, Hana Bank's corporate loan increased 3.3% compared to the end of the previous quarter. Household loans increased 1.7% versus end of Q2, driven by the mortgage loans that went out for housing purchase contracts signed by June. YTD loan growth by Q3 was 5.1%, which is already above our full year loan growth target, which is around the nominal GDP growth rate. While household loan growth trend is gradually leveling off, corporate loan support is expected to continue even in Q4 to a certain extent, which is aligned with the shift to productive finance. That said, profitability and capital efficiency remains the focus of our asset growth strategy, and preemptive risk management will be emphasized to make opportunity for us to secure high quality assets and stronger earnings base and ensure smooth implementation of the group's value up plan. Next is a look at our group noninterest income. Group's Q3 fee income was KRW $570,000,000,000, which is a 2% Q o Q increase, driven by increase in bank's trust fee income from product diversification. The group's YTD fee income by Q3 was trillion, which is a 6.7% Y o Y increase. Improved market conditions and Hana Securities enhanced core competitiveness boost the M and A advisory fee income on a Y o Y basis. Also, increased cumulative fee base, including the operating lease and improved asset management related fees such as brokerage supported solid growth of the group's fee income. Next is a look at our disposition and valuation gains. Q3 group disposition and valuation gain was KRW 293,100,000,000.0, which is a 34.7% decrease Q o Q due to factors including the FX translation loss caused by the weaker Korean won. On basis, disposition and valuation gain was KRW 1,119,500,000,000.0, which is up 19.5% on a Y o Y basis, mainly attributed to Hana Bank's disposition valuation gain increasing 53.5% Y o Y, driven by FX translation gain and trading gains. Please turn to page three. Group's Q3 YTD G and A expense was KRW 3,413,200,000,000.0, which is up 3.1% Y o Y. Q3 YTD Group's income ratio was 38.8%, which is down 0.7 percentage points on a Y o Y basis. Despite increase in the retirement benefits tied to the ERP expense recognized in Q1 and also the increased amortization and depreciation tied to greater investments into new growth businesses, we were able to remain committed to cost efficiency, including revisiting various fixed budget items while increasing spending directly tied to earnings. And we were able to maintain the group's normalized expenses at a stable level. In terms of YTD Q3 group credit costs, the credit cost ratio was 28 bp, which is a two bp fall from Q2. Thanks to early selection and preemptive management of high risk borrowers and proactive management of nonperforming assets, the nonbank subsidiaries' provisioning fell on a Q o Q basis, which helped keep group CCR in line with our annual target. Recently, the leading economic indicators have rebounded and the Korean economy is showing signs of recovery. That said, given the remaining uncertainties, including sluggish construction investments and possible export softness triggered by U. S. Tariffs, we will remain vigilant in managing the group's asset soundness stably in Q4 and onwards. Last is a look at our group capital ratios. As of end of Q3, group's CET1 is expected to be 13.3, which is a nine bp drop from Q2. The Korean won depreciation during Q3 posed downward pressure on CET1, but thanks to our thorough RWA and RORWA management, we were able to maintain CET1 ratio within a fair range. The other slides in the presentation have been provided for your reference. And this completes my presentation on Hana Financial Group's twenty twenty five Q3 earnings. Thank you. You. Now we will start the Q and A session. Now to ask questions, you may use the hand button, which is on the bottom center of your page. You will be able to then queue for questions. If the question is in English, the questions will be translated consecutively. Now we will wait for questions. Question is from Korea Investment Securities. We have Baek Do san on the line. Hello, sir. Thank you very much for the opportunity. I'm from KIS. Thank you for the opportunity once again. Regarding the economic growth plan task force that you announced, I would like to ask you a few questions because in the mid- long term, for productive finance, you mentioned that you're going to have KRW 84,000,000,000,000, and there's national growth funds and other of your own investments, which is quite sizable. So related to these plans, can you tell us about profitability and the direction of the group and what effect they will have on your capital ratio? So if you have plans, can you share them with us? Thank you very much. Thank you very much for your question, and we will soon answer your question. Thank you very much. I am the CFO of the group, and I would like to answer your question. Thank you very much for the As great you probably well know, we have our economic growth, PFT, and we have the Hana to All Grow Together growth plan that we announced last week. There is KRW 100,000,000,000,000 in total, and there is the National Growth Fund, 10,000,000,000,000. And then there is our own investment, 10,000,000,000,000, and to provide loans, KRW 64,000,000,000,000. And for inclusive growth, we have about KRW16 trillion. So this will be throughout five years, and we will actively participate in this effort. Also, I think you're probably curious about our loan growth and about our corporate financing, how it will affect our group's RWA. You probably want to know about its effect, and I would like to give you some color about our direction going forward. Each year, there is about KRW 20,000,000,000,000 of capital. And if we make this injection, then our overall RWA would be per annum KRW 12,000,000,000,000 growth. So we have done some simulations, and this was how it grew and KRW 12,000,000,000,000 increase. So for CET1 ratio, there will be about 50 bp influence on this and CET1 ratio. And for each year, through loan growth, there is corporate loan and household loans that we're providing. So I think if we reflect the offsetting effect, it will be about 20 bps more or less CET1 decrease or downward effect they will have. So regarding how we're going to make up for this effect, well, that is a challenge we have to undertake. Going forward, regarding our RORWA, it seems that its importance is growing. It's because providing loans well, with our existing RWA basis, is similar. But for funds and securities, we are if we have more investment in that, our RWA will increase naturally, then we will need to exert more efforts in managing our ORWA. So that is our direction going forward. And regarding the importance of investment will also grow, and we believe we need to be preemptive in preparing. So ultimately, we plan to actively participate in this inclusive finance, productive finance, and it will not actually hurt finances. And regarding our RWA growth and its impact on downward impact on our CET1 growth, we believe that we can cover this fully through profit generation. Thank you very much. Thank you very much for those answer, and we will take the next question. Next question comes from NH Securities. Please go ahead. Can you hear me? Yes, we can hear you, Mr. Dong. Well, thank you very much. My question is well, actually, I have two questions. First question is related with the another financial group that had its earnings call about an hour ago. I had the same question about the separation of dividend separate taxation of dividends. What is your position? Also, have announced that you'll do an additional share buyback of 150,000,000,000 yen Is that until January, the buyback, if I understood you correctly? But then you included that $450,000,000,000 yen in the total shareholder return of 1,803,000,000.000 yen So can you clarify whether that 150,000,000,000 yen buyback will be completed before year end or whether it will extend until next year? Yes. Please give us a moment to prepare an answer for your questions. Yes. This is the group CFO, Jung Woo Park. I'll take your second question first about the deadline for the 150,000,000,000 yen share buyback. It does say January 2026, but that is the deadline on paper in practice. We are planning to complete the JPY 150,000,000,000 buyback within the year. If you refer to last year, last year, we did some buybacks at Q4, but there were FX rates and domestic political situation. If you recall, at the end of last year, there was a lot of political uncertainty. So we had to push it be to this year. But in principle, the billion buyback will be completed before the end of the calendar year. About the separation the separate taxation for dividend, I think the government's tax reform and bill revisions, the direction is somewhat clearer now. And we think that this will be a wonderful way of inviting more retail investors into our stock and that will then widen the demand base. And therefore, it will be overall a positive for enhancing our enterprise value. And that's why this will also impact our dividend policy next year in order to qualify for the separate taxation of dividends. In order to qualify, we would have to increase our cash dividends somewhat. We will look into the details so that we will be ready to qualify for that separate taxation for dividends. About the capital reduction dividend, this is also going to increase the effective dividend income of retail investors and therefore pull in more retail investor demand. We've done some simulations and I believe we already have a sufficient size of funds available for capital reduction dividend if it becomes possible. Of course, we can bring this up during the shareholder meeting next year. So we will have everything in line and prepared, but we would also have to look at some external factors, including the government's position. But this all ties into overall shareholder return. We are in a direction to increasing dividends and increasing shareholder return, and this will be discussed fully with our management team and the BOD to be announced next year. Thank you very much. We will take the next question. The next question is from HSBC Securities, Won Jaeung Jaeung Won, you're on the line. Thank you very much and congratulations on your earnings in the challenging environment. I have two questions. The first question is about this year, profit driver. Non banking growth is something that you've already elaborated upon and the market had some expectations. But looking at Q3 of this year, for a non bank, it seems that it is still sluggish and most of your profitability was generated from your banking sector. It seems that it is still lagging behind for nonbanking. So can you tell us the reason why? And next year, do you think there will be some changes in this trend? If you can give more color, we would greatly appreciate it. And my second question is about the fluctuations of FX, which is getting bigger and bigger. And we know that you are more sensitive to FX compared to your peers. So I am a little bit concerned about its impact on CET1. And I know that you have done well, and I know you will do well. And I know that 13.3%. So I think that you can meet the number for Q4. But regarding the quarterly 13% that you've mentioned that you're going to work hard to maintain no matter what, do you still hold that? I just wanted to know what your take was at this point. Thank you very much for your question, and we will soon answer your question. Thank you. I am the CFO of the group, Jung Woo Park. You asked two questions, and they are a little bit of maybe hard questions for us to answer. And for nonbanking, on a Q3 YTB basis, well, it was 16%. So it is still a little bit not as much as we had expected. But looking at the wording, looking at the top line, it is actually improving. However, looking at securities and capital, it seems that our investment losses have been recognized. So that leads to our lagging bottom line. So that is why it is not as improved as However, we would have you can see that insurance that we were a little bit weak at, but we had about KRW 200,000,000,000 of capital paid in increase. So we think that this cannot be recovered in one go. So we will need to actually strengthen our fundamentals and make continuous efforts, and we are sure that with time passing by, we will have normalization in nonbanking. And we believe that we will have a turnaround we expect by 2027. And the CET ratio about our plans to maintain this, of course, we will need to maintain this. We believe that it is very important. And in the last Q4, there were great fluctuations of the $1.150 And there have been very high FX rates recently as well, fourteen oh one and higher. So in this situation, to maintain CET1 ratio is quite important because we need to be conservative. So we are going to work with our CRO and look at the asset situation so that we will be able to maintain the 13% or a better ratio that we had promised. We'll take the next question. Next question comes from Haejin Securities, Haejin Park. This is Hyunjin Park of Daesin Securities. I also have two questions. First question is about the refinancing or leverage buyout. I think the banks are also doing large deals. If I look at the lead table, Hana Bank was at the top. And if you look at Page eight of the presentation, your M and A advisory fee increased quite a lot on a Y o Y basis. I think going forward, there will be more demand for these acquisition financing. And this could also tie in with your corporate loans. What is the posture posture of the financial group? Are you forward leaning in acquisition finance and your market tie outlook? Second is related with the ELS. With the Financial Consumer Act being revised, the bottom was actually lowered. And related with that, what is your outlook REPRESENTATIVE:] on the ELS? Thank you very much for your questions. We will prepare answers if you give us a minute. Well, thank you very much. This is Jong Woo Park again, the group CFO. About the refinancing of acquisition finance, I think our Hana Bank, Mr. Young Seok Cheung, will answer. About the ELS, it's we sold around 2,000,000,000,000 yen And the statutory limit is 50% is the max, but then there is the adjustments that are made within that 50% range. Nothing has been finalized yet, But we think that, as you know, we've already settled with the customers for 97% of the amount. And so we are hopeful that we will get a very positive and favorable adjustment. That does have some impact on our operational risk. And so once the amount is finalized, we could reflect that. But tied to the support for productive productive finance. The government is also very aware of the need to reduce the capital burden. And so we actually are looking forward to positive, more lenient position by the government and regulatory authorities. So we think that in addition to having a favorable decision on the fines, we may also get some easing of our capital regulations. And this is Young Seok Jung, the Bank's CFO. I would like to answer your first question. As you know, we, for the bank, IB related fee income is less advisory, more arranging, loan arrangement fees. So if you look at Q3 this year versus last year, there isn't a large difference. It's mostly arranging fee income for refinancing. What differs is that real estate is taking up less of a share, and this year, we're seeing an increase of acquisition finance loans. And these there are some equity investments that Hana Bank had made as a way of stimulating the deal, and that's where we deferred from other banks. We have made some equity investments, and that is a way of us getting the loan arranging business. But we don't expect there to be a significant uptick. This year, we're expecting a moderate growth versus last year. We do have a trend of increasing our acquisition finance related loan business. We will have the next question from Hanwha Investment Securities, Dohwa Kim. I have two questions. First question is related to what was just before mentioned regarding the government stance from next year. There will be for new mortgage loans, RWB plusminus adjustment. And currently, when there is this adjustment regarding its impact on CET1, if you have any simulations, please share them with us. And my second question is about asset quality because it was commented upon previously. Looking at nonbank, it seems that provisioning well, it seems that it is the lowest since 2022. So for next year, can you give us some guidance? I know it's a little bit early, but I would like to know about your provisioning trend. So when do you think this will be actually changed according to the trend? Thank you very much for your questions, and we will soon answer them. Thank you very much. I am the group CFO, Jung Woo Park. Regarding your first question, I will quickly answer that. And then regarding the second question regarding provisioning, our CRO will answer that question. Regarding the mortgage loan, the lower limit, 5% has increased. So regarding its impact on RWA, it is true that for a home mortgage loans, we have KRW 80,000,000,000,000 and RWA 5%, which is KRW 4,000,000,000,000. And we will not have it actually all coming back at once. So it will be KRW 1,000,000,000,000 of RWA increase per annum. So it seems that it will have about 16 bp influence. Then, conversely speaking, looking at the weight on the securities, it will actually be lower. So there will be a offsetting. So the overall simulation due to these home mortgage loans, RWA increase effect, and then we will have the lowering impact of securities weight. So I think there will be an offsetting. So overall, there will not be a big influence. I am the group CRO, Jae Sin Kang. And regarding our provisioning that on a Q o Q basis, it has been lowered. It is because in Q3, for nonbanking subsidiaries, overall delinquency net increase decreased. So for a credit card, it is maybe due to the livelihood vouchers. So we had seen some delinquency shrinkage Q o Q. And for savings and capital, in the first half, there was a lot of the NPLs that was recognized, which actually went down in Q3. So on the whole, we had provisioning going down, which led to lowering of our credit cost ratio. However, well, we will need to look at Q4 because there is the real estate and other delays that are going on. So if that is reflected, then we believe that in Q4, probably compared to Q3, it will not have an improvement trend. I think we will have some credit costs inching up. So for next year, regarding delinquencies or NPLs, the growth, we expect this to actually continue. So I think it will be a little bit difficult for this to improve. But for these delinquencies and before it goes to substandard and low, well, looking at the asset size, it's true that the provisioning burden is lower. So I think that is So characteristic of these we will have disposition and sales for next year so that the current capital adequacy level will be continued. Thank you very much. We'll take the next question is from JPMorgan, Yes. I also had a question about delinquencies at group level, but I think that's already been addressed. Maybe I can follow-up on that. The group delinquencies delinquencies is coming down. Bank delinquencies are flat. But it sounds based on your answer that after Q4, you are expecting or is there some room that delinquencies may go back up? Well, because on the other hand, with the economic support programs, we actually think that your asset quality may be entering a recovery cycle. But you're hinting that there's a possibility of delinquencies ticking back up in Q4. You're expecting the things that brought down your delinquencies in Q3 may not be working in Q4. Is that a correct read? If so, when do you think the asset quality would start to improve next year? Can you just repeat also your guidance of credit costs for this year, assuming delinquencies will go up in Q4? About the credit card fees, it is on an increasing trend. But on a Q o Q basis, I think it declined your credit card fees. It's not just for Hana card. That seems to be an industry trend. There was, of course, in Q2 this refund. Is that due to the one off, the fall we're seeing on a Q o Q basis? Or can you give us more of an outlook on the credit card fee income? The NIM, I do notice, is being managed very well. The interest rate fall is happening slower than expected. Also, the market rate is falling It's slowing down. Do you think this NIM improvement will is going to stay? Do you actually see some upside on your NIM and interest income? What about Q4? Do you think that there will be additional funding cost reduction room in Q4? What is your outlook of NIM for next year? Yes. UNIDENTIFIED This is group CRO, Jiexin Kang. I will follow-up on the delinquencies, which was your first question. The third quarter delinquencies and credit costs was also a bit different from what we had expected because in Q3, our group delinquencies were better, which we think is too early for us to say that there's a trend change according to the data that we're reading. So it's too early to say this is a declining trend. Also, what you see is after write offs. But if you look at the growth that is before the write offs and sales, the delinquencies are increasing and the volume is significantly higher than what you saw prior to 2022. So it is lower than Q2. But still, if you compare the absolute amount of these delinquencies forming versus 'twenty two, it is larger. Also, there were various nonperforming assets that we disposed or written off earlier than what we usually do. There were some real estate project finance related issues that we may have to take care of in Q4. And with all of that in mind, we are expecting credit costs and delinquencies to go up in Q4 on a Q o Q basis. So Q3, yes, delinquencies have come down, but it's not significant to indicate a trend change. We think that this trend will continue until next year. And our goal for next year is to keep our credit quality or asset quality at level similar to this year. About the credit card fee income, I think I can comment on that briefly. On a Q o Q basis, there was a 19,000,000,000 yen decrease. And some of that was refund, which is around 7,200,000,000.0 yen The other was the support for brand companies. So this is Master There and Visa paying us were some seasonality there. And so there was seasonality and also one offs combined. About the NIM, this is Hana Bank, and I will answer your NIM question. So YTD Q3, our NIM was managed very well. In terms of the funding side, our deposits, savings deposits have increased in share. Time deposits and CD share has decreased. And our current deposits increased mainly attributed to our business increasing with public and government agencies. Also in terms of household and Zoho, so overall, on the retail side, we have been signing on a lot of the settlement related funds such as deposits. And so that has increased our low cost deposits and funding. Also, we have been saving some of the reissuing prices, which helped our NIM. This trend, we think, will continue on Q4 because we will keep the public institution money, but the impact incremental impact will decrease. And then we, in Q4, will have to may seasonally have some increase in funding cost. There are also some upside and downside factors. So it's difficult at this point to predict what our funding cost will be in Q4, but we will do our best to defend our funding cost in Q4. It seems that we have no further questions in the queue, and I think it was a very productive This Q and A concludes Hana Financial Group's twenty twenty five Q3 earnings call. For those who are unable to watch today's presentation or who wish to review it again, a recording of the earnings presentation will be uploaded to our group website this evening. If you have any other questions, please contact our IR team and we will sincerely respond to your questions. Thank you for your attention.