—Yoo Jin, and Group CRO Park Jang-Keun, and Compliance Officer Jung Kyu-hang on the call today. Let me discuss the agenda for today's call. First, on today's call, the Group CFO Lee Sung-wook will give a presentation on the earnings performance, and then we will move on to the corporate value enhancement plan review report. Then finally, we will have a Q&A session. Please note that the earnings call is being conducted with simultaneous interpretation for our overseas investors. Now, let us start our presentation on Woori Financial Group's earnings for the full year of 2024.
Good afternoon. This is Lee Sung-wook, the CFO of Woori Financial Group. Let me go over the 2024 full-year performance of our business. Please turn to page three of the presentation material that has been disclosed on our website. First, let me discuss our net income.
In 2024, Woori Financial Group's net income was KRW 3 trillion, 86 billion, which is a 23.1% increase year-over-year. Amid an uncertain environment in Korea and abroad, the group was able to improve its profit-generating capabilities and engage in active cost management to boost a yearly net income exceeding KRW 3 trillion again. As a result of efforts to improve the group-wide capital allocation efficiency, the group ROE has increased 1 percentage point year-over-year. In terms of the cost-income ratio, due to efforts to improve cost efficiency, the cost-income ratio has continuously improved and posted 42.8%. Next, let me discuss the net operating revenue. The net operating revenue in 2024 grew 6.1% versus the previous year to record KRW 10 trillion, 440.5 billion.
Though margins were falling due to the decline in market rates, we were able to rebalance our assets and drive solid loan growth, focusing on high-quality corporates to achieve sound interest income. In addition, based on stronger marketing capabilities and synergy generation across group affiliates, our non-interest income, mostly driven by core fee income, also posted significant growth. Next, let me go over the group's credit cost. Credit cost in 2024 was KRW 1 trillion, 716.3 billion, representing a year-over-year decrease of 9.4%. In the fourth quarter, it was KRW 462.5 billion, posting a decline of 3.1% versus the previous quarter. Uncertainties in Korea and abroad led to downside economic risk and rates remaining higher for longer, but the company was still able to maintain the credit cost ratio at 0.45% through stable loan loss management.
When excluding one-off factors such as preemptive reserves set aside for real estate project finance and assumption changes for loan losses, the credit cost ratio is 0.41%. Across the past two -three years, the company has been very conservatively provisioning and engaged in active risk management, which has further strengthened our loan loss capabilities. The group and bank's NPL coverage ratio has been 153% and 247%, respectively, representing the highest levels in the industry. Next, let me discuss capital ratios and dividends. As of the end of 2024, the group's preliminary CET1 ratio is 12.08%, which is a 13 basis points increase quarter-over-quarter. The Korean won rose around 151 against the US dollar in the fourth quarter alone, which led to a 40 basis point decrease in the CET1 ratio.
Based on solid profits and risk weight asset management, including asset rebalancing, we achieved a slight improvement in our capital ratio. In addition to improving our capital ratio, the group is also strengthening efforts to enhance shareholder return. At the BOD today for Woori Financial Group, the board reviewed the group's financial performance and plans to enhance corporate value and decided on a KRW 661 per share year-end dividend. When including the quarterly dividends of KRW 541, total dividends for the year was KRW 1,201, which represents a 20% DPS year-over-year. For your information, the cut-off date for 2024 dividends will be February 28, 2025. Next, let me delve into more detail about our earnings by specific area, and please turn to page four of the presentation. First, let me go over net operating revenue and our NIM.
The group's full-year 2024 net operating revenue was KRW 10 trillion, 440.5 billion, up by 6.1% year-over-year. Interest income was similar to that of last year at KRW 8 trillion, 886.3 billion. The bank's 2024 full-year NIM was 1.44%, and the group NIM, including the credit card business, was 1.70%, which represents a decline of 12 basis points versus last year. The two rate cuts by the Bank of Korea last year and the decline in trend in market rates has reflected in asset repricing, thus leading to weaker margins. But in the fourth quarter, we engaged in more targeted loan execution based on asset rebalancing and actively managed our funding cost to maintain NIM at levels matching the third quarter.
In 2025, uncertainties in Korea and abroad are leading to concerns about a weak recovery and domestic demand and slowdown in exports, which is expected to lead to larger rate cuts from the BOK. The group is planning to engage in active growth management in line with the changes in financial conditions, such as the weakening won, and continue efforts to rebalance the portfolio, focusing on prime assets while lowering funding costs, ultimately defending our margins. Next, let me discuss our asset growth and our loan portfolio. As of the end of 2024, Woori Bank's loans totaled KRW 333 trillion, representing a 7.2% increase year-over-year but a decrease of 2.1% quarter-over-quarter. For corporate loans, large corporate continues to have strong demand for credit, and high-quality SME loan growth continued, leading to a total corporate book of KRW 186 trillion, or 9.0% higher year-over-year.
However, in the fourth quarter, specifically, the bank focused on risk asset management and asset rebalancing rather than growth, which led to a modest decrease versus the previous quarter. On the retail loan side, mortgage loans, including policy mortgages, increased significantly, leading to a YTD growth of 6.5% in the third quarter. But in the fourth quarter, efforts to strengthen management on household loans led to a slowdown in asset growth, resulting in 5.9% growth or KRW 144 trillion in retail assets for the year as a whole. This year, the group will be focusing on supplying liquidity to new growth and advancing industries in line with the economic situation. However, there are still many uncertainties, and we are planning to target profitable growth, putting top priority on asset soundness and capital adequacy. Next is the group's non-interest income.
Non-interest income in 2024 for the group was KRW 1 trillion 554 billion, a significant increase of 41.9% versus last year. As market rates fell during the year, marketable security-related gains increased. In particular, core fee income drove the growth by increasing 21.3% versus last year, enabling the group to reach KRW 2 trillion per annum for the first time since establishing the financial holding company. This is the result of the group-wide synergies, including stronger asset management fees on the bank side, coupled with active marketing for investment banking and trading by the HQ, and efforts for the non-banking business, including credit cards and capital. In 2025, uncertainty about financial conditions are expected to increase, which may make it challenging to grow non-interest income like this year.
However, in line with the full-fledged operations of our securities brokerage arm, we will increase CIB cooperation between the bank and the securities arm while also strengthening our wealth management marketing by increasing channels and product lineup. This type of diversified marketing across the group should maintain our non-interest income growth momentum. Next, let me move to our expenses, and please look at page five. This is the group's SG&A, and if you look at the SG&A in 2024, it was KRW 4 trillion 459 billion, down by 0.6% year-over-year. The cost-income ratio was 42.8%. Due to the group-wide efforts to rationalize costs, the ratio has continued to decline during the past few years. This year, we launched the securities company and increased investments in digital IT, which drove expenses up, but we were still able to moderate by optimizing channels and engaging in cost savings.
Going forward, the group will continue to invest in strengthening its brand value and strengthening its digital competitiveness but will freeze any general costs not related to future core businesses and continue to rationalize channels and personnel as a means to continue our cost management efforts.
Next is credit cost and asset quality. In 2024, the group's credit cost amounted to KRW 1 trillion 716.3 billion, marking a 9.4% decrease compared to the previous year. On a quarterly basis, credit cost recorded KRW 462.5 billion, down 3.1% from the previous quarter. Due to factors such as the economic slowdown and real estate PF restructuring, credit cost slightly increased, particularly in the non-banking business, but the base effect from the large-scale provisioning in 2023 executed to enhance future economic resilience did have a partial impact. In this quarter, the group set aside KRW 59 billion related to real estate project financing and the completion guarantee land trust business and KRW 26 billion due to adjustments in loan loss calculation factors reflecting future economic outlook, bringing the total of additional provisions to KRW 95 billion.
This and the KRW 210 billion in one-off provisions accumulated for 2024 has further strengthened the group's loss-absorbing capacity. While the group's credit cost ratio is 0.45%, when excluding the aforementioned one-off factors, the normalized credit cost ratio is being stably managed at around 0.41%. Regarding asset quality, the group continues to demonstrate top-tier management capabilities within the industry. NPL coverage ratio stands at 153% and 247% , respectively, for the group and the bank, while the percentage of loan loss provisions and reserves to total loans is at 1.5%, ensuring sufficient buffer against risks. Also, exposure to real estate PF, excluding the HUG or HF guaranteed loans, stands at 0.5% of total loans, and through proactive management, the need for additional provisioning remains limited.
Given the continued uncertainty in markets both home and abroad and ongoing financial market volatility expected in 2025, Woori Financial Group will enhance its market monitoring efforts and systematically reassess risk factors across the group to further strengthen its risk management capabilities. Next, I will elaborate on capital adequacy and shareholder return policies. Please refer to page six on the presentation materials. As of the end of 2024, the group's common equity tier one, or CET1, ratio is expected to be 12.08%. Despite a sharp KRW 151 increase in the US dollar, Korean won exchange rate during Q4, which led to a 40 basis point decline in the CET1 ratio, strong profit growth and proactive risk-weighted asset management through asset rebalancing resulted in an increase of nine basis points versus previous year and 13 basis points compared to the previous quarter.
Excluding the impact of the exchange rate increase in Q4, the company's CET1 ratio would have been in the mid-12% range. Woori Financial Group has repeatedly communicated its goal of achieving a 12.5% CET1 ratio ahead of schedule by 2025. Despite an uncertain business environment, including increased financial market volatility, economic slowdown, and regulatory tightening, the group remains committed to reaching this target of CET1 uplift. This year, the group will focus its efforts on improving the capital ratio as way of taking a conservative approach to managing foreign currency assets and high-risk assets such as PI and equity investments, given their sensitivity to exchange rate fluctuations, and to instill a RWA-centric operational culture across all business units, including the sales field and divisions. The group has refined its systems and improved key performance indicators.
Meanwhile, the board of Woori Financial Group, fully taking into account the group's 2024 financial performance and shareholder return policy, decided on a year-end dividend of KRW 660 per share and a share buyback and cancellation program worth KRW 150 billion . Woori Financial Group, in order to review the progress made and share the 2025 roadmap of its corporate value enhancement plan, first announced last year as the industry's first banking holding company initiative, has released a disclosure on the progress of its corporate value enhancement plan. Allow me to go into the progress of the financial performance indicators on page four of the presentation materials. Woori Financial Group achieved a 23.1% increase in net income in 2024, resulting in an ROE of 9.3%, up 1 percentage point from the previous year.
The group, to achieve a mid- to long-term ROE of and over 10%, remains committed to efficiently utilizing its limited capital. My apologies. As of the end of 2024, the group's provisional CET1 ratio is up nine basis points versus previous year to 12.08%. In July, during the announcement of the corporate value enhancement plan, the group set an interim target of achieving a 12.2% CET1 ratio by year-end, assuming a KRW 1,300 exchange rate. However, due to rapidly changing internal and external conditions, the exchange rate surged by KRW 151 in Q4 and by approximately KRW 181 over the year, causing a 50 basis point drop in the CET1 ratio. Nevertheless, due to robust profitability and meticulous risk-weighted asset management, the group's CET1 ratio increased slightly year-over-year.
Based on the 2024 financial performance and capital ratio, the group has decided on a total dividend of KRW 1,200 per share for 2024, marking a 20% increase versus the previous year and the highest dividend payout to date. The expected dividend yield is in the upper 7% range, anticipated to be the highest level in the industry. Regarding share buybacks and cancellations, after the initial KRW 100 billion share buyback in 2023, the first since the group's establishment, the group, as part of its full privatization process, bought back and canceled KRW 136.7 billion worth of treasury shares corresponding to the residual shares of KDIC, bringing up the scale and size of this program by 37%.
With the board's recent announcement of an additional KRW 150 billion share buyback and cancellation plan for 2025, the group continues to gradually expand its share buyback program annually. Next is on the progress of non-financial performance indicators. Please refer to page five of the presentation materials. In August of last year, Woori Investment Bank and Korea Foss Securities merged, leading to the launch of Woori Investment & Securities, making Woori Financial Group's return to the securities industry after a decade. Woori Investment & Securities underwent a thorough preparation process last year and plans to fully commence business operations starting this year. Also, Woori Financial Group has signed an SPA with Dongyang Life Insurance and ABL Life Insurance, laying the groundwork for its entry into the insurance business, and is currently undergoing the necessary procedures to incorporate the entities as subsidiaries.
As mentioned in the corporate value enhancement plan announcement in July, we have made every effort to pursue M&As without compromising our capital ratio. In fact, the impact of these two cases on the group's overall capital ratio is minimal. Going forward, we will continue to strengthen our non-banking business to diversify revenue source and maximize synergies within the group. This year, Woori Financial Group has prioritized climate risk management across the group while strengthening ESG management in various areas. As a result, the group achieved a triple-A rating in the MSCI ESG assessment for the second consecutive year.
My apologies, I do have a cold, and I do apologize for the coughing. Once again, securing a global top-tier ESG rating and earning recognition in the market as a sustainable global enterprise. Regarding corporate governance enhancements, we have also made several significant improvements, such as establishing an ethics management office and submitting the group's responsibilities map in advance.
In terms of IR initiatives, we have worked to diversify IR channels of communication for various investors and expand the IR base by providing broader content that covers both financial and non-financial aspects. We will continue these efforts to enhance our communication with the market going forward. Finally, I would like to present Woori Financial's corporate value enhancement plan for 2025. Please refer to page six of the presentation materials. Woori Financial has designated 2025 as the inaugural year for capital ratio improvement and plans to focus the group's capabilities on achieving a Common Equity Tier 1 , or CET1 ratio, of 12.5%. Despite a challenging business environment expected due to prolonged high exchange rates and a low growth trend caused by uncertainties both home and abroad, we aim to manage risk-weighted assets growth, or RWA growth, within the nominal economic growth rate.
Through systematic RWA management, quarterly growth allocation, proactive asset rebalancing centered on high-quality assets and promising future industries, along with the expansion of a RWA-oriented business culture, we are committed to achieving our capital ratio target. Next, we plan to introduce non-taxable dividends to expand tangible shareholder returns. At the upcoming general shareholders meeting, we intend to transfer a portion of capital surplus to retained earnings. If dividends are paid out from this fund in the future, individual shareholders will not be subject to the 15.4% dividend income withholding tax, effectively increasing their dividend income by 18.2% compared to the previous system. Furthermore, these dividends will also be exempt from comprehensive taxation on financial income. In addition, Woori Financial Group plans to gradually increase the scale of share buybacks and cancellations each year.
In accordance with the amendment of the Capital Market Act at the end of last year, and to enable investors make more rational investment decisions, we will improve the quality dividend process at the upcoming general shareholders meeting so that the dividend amount is determined first before setting the dividend record date. Woori Financial Group has set its 2025 management goal as a trusted Woori Financial by ensuring that all subsidiaries across the group drive substantial performance by establishing competitiveness in their core businesses based on trust, which is the fundamental essence of finance. We aim to take a significant leap forward as an integrated financial group. We will ensure that all sales and business operations and tasks are carried out within a sound corporate culture and an effective internal control framework.
Even amidst uncertainties both home and abroad and a rapidly changing financial environment, we will continue to strengthen our exceptional risk management capabilities. From a financial perspective, our top priority is fulfilling our commitment to improving our capital ratio, thereby laying the foundation for the group's sustainable growth. Additionally, we will actively engage in cooperative finance programs, such as supporting small business owners and assisting vulnerable groups, and also embrace marginalized communities to practice the value of coexistence. Through these efforts, we will strive to become a financial institution trusted by customers, the market, and society as a whole. This concludes Woori Financial Group's 2024 annual earnings presentation. Thank you very much.
Thank you very much for the presentation. Before we begin the Q&A session, I would like to make a brief announcement. As part of the group's corporate value enhancement plan, we have reinforced market communication by pre-scheduling the 2025 earnings release dates in advance. The schedule was disclosed to investors via public announcement on our website on the 4th of this month. Furthermore, starting from the first quarter of 2025 earnings release, we plan to encourage participation from all investors, including retail investors. Through the group's website, investors will be able to submit inquiries regarding financial performance and key issues. We will address major concerns during the earnings conference calls. Further details will be provided through a follow-up public disclosure.
Now, we will begin the Q&A session regarding Woori Financial Group's 2025 annual earnings results. We will now begin the session. If you have any questions, please press star and number one. To cancel your question, please press star and number two. We will now await the questions. Yes, for the first question, it will come from Daishin Securities. Park Hye-jin from Daishin Securities will be for the first question. Please go ahead.
Yes, hello. I am Park Hye-jin from Daishin Securities. Right now it's a very challenging environment, but you have showed very strong performance. I also believe that there's also been a lot of very good and solid management. So I have one question that I would like to ask you. At the end of last year, and since then, some of the majority shareholders within the market have actually showed signs of selling some of their stake. So related to that, in terms of any overhang issues, or is there any concern that we should have about such a situation? If you could please elaborate about that would be appreciated.
Thank you for your question. I think if you could give us a few moments to prepare, we will answer your question.
Yes, this is the CFO, Lee Sung-wook. Sorry for the coughing, but I would like to address your question. If you look at the March situation of last year, there was around 2.4% that we had from the KDIC. If we look at the acquisition of that, and then we did a retirement of that, so on the KDIC side, the overhanging issue has been solved. However, if we look at last year, in the case of IMM PE, there were some shares that they had sold. So they initially had a 6% ownership, but as of January 2024, the remaining stake that they have, as of the end of last year, they sold around 0.14%. I think that they have completely sold out of their position.
So in the case of IMM PE, I don't think that there will be any additional sales that will be coming from that party. The reason for the sale that they have actually had is that for IMM PE, the fund in itself was coming to an end, and they had hold the ownership for a very long period of time. Because they were closing their fund, I understand that was the reason for it. If you look at the other controlling shareholders that we have, we do not foresee any or expect any additional sales from them. As a result of that, we believe that any overhang issues with regard to our share have completely been addressed. Therefore, we don't believe that any overhang issues should be impacting our equity price going forward. Thank you.
Yes. The next question is from Hanwha Investment & Securities, Kim Doha. Please go ahead with your question.
Yes. Thank you very much for the presentation on the talent policies. I'm currently referring to page six on the Corporate Value Enhancement Plan , and it has to do with the dividends. I can see that you haven't yet to transfer the capital surplus, but it's to take place in March. Within this year, you will be transferring a portion of the surplus. I can see that starting from the year-end dividend of 2025, that would be applicable, but I want to understand, would the quarterly dividend also be applicable? Also, I do believe that you had also mentioned about an equal dividend payout for the three quarters, but would the fourth quarter not be applicable.
Also with regard to M&A, you did provide some information on any impact on the capital ratio with the merger or the acquisition of the insurance arm. So I would like to ask for you to elaborate further. In the case of the two candidates, the insurance firms, I do know that if you apply the related guidelines and regulations, I believe that we do need some sort of defense line in order to push this ahead. So I would like to understand, are there any specific plans in place?
Thank you. Yes. Thank you very much. I can see that there were basically two questions, and please bear with us for just a moment as we prepare to answer your question.
Yes. Let me respond to the questions in the order that you have posed. As was announced, with regard to retained earnings and the transfer, it has to be approved at the general shareholders meeting in March, and only then can we proceed with this. Once it's approved at the AGM, then we can utilize this as the funding for dividends. Based on the Commercial Act, the amount will be set forth before the record date. Based on the Commercial Act, it would be on the dividend for the next year. The legal review also indicated that this will be possible starting for the dividend payout of 2026. Therefore, with regard to the transfers that would take place, it would start off with the year-end dividend of 2025 and onwards. Next was on quarterly dividends. Some financial groups do provide an equal dividend payout every quarter.
However, our quarterly dividend policy, as was mentioned last time around, it is about 50% of the typical dividend payout, and we will be providing the dividend equally up to 50%. We will look into the market condition and the situations, and it will be the same level as what was announced in the past. Depending on the situation and the group situation, the dividend policy may differ. But in terms of how it would be paid out, rather than this being important, it is basically about increasing the annual DPS. We believe that that is the critical aspect here. Therefore, the quarterly dividend policy right now would be 50% of the previous year's dividend so that we can enhance the predictability of dividend payout. Also, we will review any additional equal quarterly dividends payout, like any of the financial groups in the future.
Lastly, with regards to the insurance side that you asked, first of all, what I can say is that something that we have continuously said is that recently, there are some changes that are taking place. Maybe we can add on to that when we talk about. When we acquire the insurance companies, of course, there will be some impact in terms of our capital equity. However, if we look at the profitability, we do think that it will be helpful in terms of rebalancing our portfolio, being too focused on the bank side. We also believe that we can enhance our overall shareholder value. For Woori Financial Group right now, we have around 90% contribution coming in from our bank side. But once we acquire the insurance arms, then we can decrease that contribution to 85%.
We do believe that it will diversify our profit portfolio, and we do believe it is the best way to do so. As a result of that follow, we believe that this is a situation on how we can actually address this issue, and it is a very large issue in itself. In addition to that, it does not hurt our group's capital adequacy. We do believe it will enhance the portfolio going forward.
Right now, even if we acquire Dongyang and ABL, since the overall price that we were able to negotiate was sufficiently low, we do believe that the effects on the application on our risk rate of 250% of the group's limit on key investments and the benefits of the low price will offset each other, so that if you compare the group CET1 ratio as of the end of 2025, there will be no difference between the ratio before and after the acquisition. The reason for that is because when we talked about this last time, we mentioned eight basis points, but if you look at it as of the end of September, it is actually softened to around six basis points. Since the end of the fourth quarter, our CET1 ratio has continued to improve.
So as a result of that, because this continues to increase, if we look at the actual recognition of capital out of our overall capital acquisition gains, that is why at the end of the day, because of the total effect, there will be no impact as of 2025. Lastly, in terms of the question, I do believe that as we acquire these entities, what is the plan for their capital management going forward? So to address that question, I think that if you look at the recent trends in terms of interest rates going down or insurance regulations being strengthened, there is a lot of attention given to insurance soundness that we are well aware of. So if these companies actually are included in Woori Financial, then we will have a very conservative business plan and focus on capital ratios and also the solvency ratio.
Following the acquisition, we are planning to put a priority on financial soundness, including the K-ICS ratio for our business targets to ensure we establish a stable business profile. The two companies, in light of current rate cuts and changes to the insurance liability regulations going forward, are adjusting the payability of a lower K-ICS ratio currently by issuing hybrid securities or sub-debt and also ceding co-insurance to strengthen their K-ICS ratio. Following the acquisition, of course, the highest priority will be on strengthening capital and securing long-term profitability to improve the fundamentals of the business. So we will engage in asset rebalancing to decrease the risk-weighted assets, optimize the duration gap, and dispose of real estate assets to ensure we can maintain the K-ICS ratio at an appropriate level without any capital increases by the group. So this is something that we will put our best efforts against.
Thank you.
We will now receive the next question. The next question is from KIS, Mr. Baek Du-san. Go ahead.
I am Baek Du-san from Korea Investment & Securities. I would like to ask a question with regards to the completion guarantee land trust. You have mentioned that within the fourth quarter, you have provision KRW 69 billion. As of Q4, if we include all of the trust accounts, what will be the exposure? Also in terms of asset quality, how are you classifying these businesses? Recently, if you refer to the press release by FSS, you can see that the bank financial holding companies with regard to such land trust has actually recognized or underestimated the recognition of their RWAs. So I would like to understand whether this can actually impact the capital ratio and bring it downwards.
Thank you very much for that question. Yes, let me respond. I am Park Jang-Keun, the CRO. If I may respond. With regard to the completion guarantee land trust businesses, we only have 18 remaining. Versus the previous quarter, you can see that we've actually got rid of seven. For the sites that have yet to complete construction, it's only five. With regard to this completed guarantee trust businesses, it's going down, so it's being well managed. Also with regard to the trust account as well as the provisioning, if you look at the gap, it's about 50%. It's around KRW 210 billion at the end of December that has been provisioned. We do have sufficient provisioning with regard to these assets. Next year, if we do well manage and prudently manage these assets and the businesses, we do not believe additional provisioning will be required.
We will make sure to prudently manage these businesses. Also in terms of the matters pointed out by the FSS, if you look at the real estate companies with regard to this completed guarantee trust businesses, and this will guarantee basically is about extending credit. It's about having an off-balance account on this where the risk-weighted assets would have to be applied here as well. For us, in June, we've engaged in the calculation, and at the end of December, there are only seven cases that are applicable right now to what was pointed out by the FSS. It's basically brought down in terms of the numbers. In December, it has been all completed in terms of the construction. For those that would have to go off-balance, would be quite minimal.
Therefore, I want to mention that the number has been brought down to a minimum. At the end of December, we have applied and calculated the RWA accordingly. Thank you.
If I may just add some additional details to the response. The last question had to do with the completed guarantee trust and whether that would impact the capital ratio. The FSS, their examination, well, there are, of course, some certain recommendations, not only on this trust, but in other assets. With regard to this type of business or asset at the end of September and at the end of December, when we were putting together the capital, calculating the capital ratio, it is already reflected. We believe that there will basically be no negative impact to the ratio. As was already mentioned, the 12.5% CET1 ratio, that uplift is something that we will really push ahead with, and we will make sure to achieve that in the year. Thank you.
Yes, the next question will be coming from NH Securities, Jung Joonsup . Please go ahead with your question.
Yes, thank you. This is Jung Joonsup from NH Securities, and thank you for the opportunity to ask questions. There are two questions that I would like to ask you. The first would be that if we look at the CET1 ratio right now, 12.5% would be the overall target that you want to achieve as early as possible. However, if we look at this year in terms of this target, if we do have one on a quarterly basis, what do you think the pace would be to reach this 12.5%? If you do have a timeline for that, if you could share with us, that would be very useful. The second is with regards to the non-taxable dividends.
This policy in itself, I do believe, is a very good direction for the group. However, in terms of how much you can actually convert into this form is probably limited. Right now, as of now, how much are you actually thinking of converting?
Yes, thank you for your question. If you could just give us a couple of minutes, we would appreciate that.
Yes. If I could ask, in terms of our quarterly targets that we would have on the CET1 for this year, on a per-quarter basis, in terms of our risk-weighted assets for the full year, of course, we do want to balance out the growth quarter-over-quarter. As mentioned before, on a total basis, we do want to be within the nominal growth rate.
That would be, right now, nominal growth rate we see to be around 4% because the growth rate is now at a lower level. So within 4% would be the RWA growth that we want to see, and we do on a per-quarter basis, have a balanced growth taking place. As a result of that, we also believe that our capital ratio will, on a per quarter basis, probably equally increase. That would probably be the best assumption. In terms of the retained earnings and transfer to that, we do have a bit more room. However, what we are thinking of as of the current time would be, is to do around maybe KRW 3 trillion in total. This is on the February 28th; we would have a BOD resolution on this, and then at the GSM, we would have to have final approval.
The overall process would go accordingly. In terms of the total amount, it would probably be around KRW 3 trillion. If we do have KRW 3 trillion, then that means that for the next three, four years, we would have sufficient room to dividend. Thank you.
Next question is by Kang Seung-kon from KB Securities. Please go ahead with your question.
Thank you very much for the opportunity. My first question, it has to do with shareholder return. The 12.5% early achievement, and if you look at early in the year and now, it seems that we will see how this will unfold in the latter part of the year. The shareholder return policy that was announced, if it's below , say, 12.5%, for instance—then the TSR would be below 35%. In 2025 year-end, if you do achieve 12.5%, then in the year-end dividend, there could be some changes or adjustments made. Would we be able to expect that? I would like to understand the shareholder return rate, what would that be? Could you give us some guidance on that on the TSR?
Within the CET1, we do have an impact of excluding the foreign currency denominated from the RWA. I would like to understand what the impact was, what the magnitude was of the impact. In 2025, the NIM, CCR, loan growth, any guidelines that you can share for 2025?
Yes, thank you very much for the question. Please bear with us for just a moment as we prepare to answer your question.
With regard to the shareholder return policy, last time around, we mentioned that if it's +12.5% , it would be more than 35%-40%. That was the range that we have set forth for Woori Financial. The shareholder return policy and our will to expand that has been reflected in the numbers.
12.5% at year-end, of course, if we do achieve, and which we will achieve, that would mean that the TSR would be 35%. KRW 150 billion of share buyback and cancellation was done for that purpose. Once again, our aspiration and our will is to be +35% . Also with regard to the structural positioning, this is something that has to be approved by the FSS. At the banks, the January end, we had to submit a pre-approval application, and we're awaiting their approval. With regard to the structural positioning, we have non-hedged overseas entities liabilities, and we believe that the size and scale may be different depending on what is approved by FSS. The last question had to do with the growth rate, NIM, CCR, basically three. If I may just provide you with a brief update.
So in the case of the growth rate, as was mentioned, it would be within the nominal economic growth rate. If you look at the overall structure and organization, our ROE, if it is 9%, then the growth rate would be within 4%, and then the capital ratio would increase by about 30 to 40 basis points. There is an impact. So internally, it is about managing this within 4%. This year's business plan is also well-aligned with that. In the case of NIM, excluding this year's growth, there is an overall rebalancing of not just banks, but for all affiliates and subsidiaries, so we will be focusing on rebalancing to achieve profitability. Therefore, with regard to NIM, if we do see further rate cuts two to three times, it has to actually go down by three to four basis points further.
Through rebalancing, what we want to do is defend NIM as much as possible. Then it would be in the upper range of 1.3%-1.4%. That is the prospect that we have in terms of how that will be managed. Last but not least, on credit cost ratio, or CCR. This year, CCR was quite high. The normalized CCR was a bit high. We had the provisioning for the non-banking business, and also the banks have added provisioning, and that is why that has led to a credit cost ratio of mid- 0.4% and for normalized 0.4%. For this year, we believe that it can be managed within 0.4%. Thank you.
Yes, the next question would be from BNK Securities, Kim In. Please go ahead with your question.
Yes. Can you hear me well?
Yes, we can hear you very well.
Yes. Thank you. Thank you for your good performance amidst a difficult, challenging environment. I think that they have a lot of questions that I have had been asked. But if you look into next year, one of the things that I do believe is challenging is because I think that some of the early retirement expenses have been transferred or pushed over to the first quarter. So I do think that that would have an impact on our cost-income ratio, and maybe you need to do cost savings by cost savings on other areas.
I think that if we look at the weaker NIM and also the higher credit cost ratio, for this year, I think that we have covered it by higher growth. But next year, I think that if we are at the nominal growth rate, are we going to be able to grow NIM is something that I would think about. Secondly, is that on the non-bank side, we are a bit weak. If the interest income continues to go down, then on the non-bank side for the non-interest income, can you make up for this? Because our non-bank business is weaker. How much of an increase do you think you can see? In addition to that, if you look at the overall credit cost in 2025, I would also believe that there continues to be talking about provisioning and the need for it to do so.
I don't think that it's going to decline a lot versus 2024. For 2024, your profitability increased a lot. However, in 2025, I think that across the board, there are very many challenges that you have. From the senior management side, what is your view about such a situation is something that I would like to ask. Thank you.
Yes. Thank you for your question, and if you could give us some time to reorganize, that would be appreciated.
Yes. As you have just mentioned, I think that in 2025, if we look at the overall growth rate, we do think that it's going to go from 2% this year to 1% for next year. In addition to that, other challenges also are in the market. I think that overall, if the base rate does go down, then of course our NIM also, even slightly, will go down. Also on the bank side, our interest income may decrease, but if we look at the non-bank side, of course, the overall funding cost will decrease on that side. As a result of that, in terms of the overall interest income, we do foresee it to be stronger. Though it will not be a large increase, we do think that it will be better.
On the non-interest income side, we do think that 2024 was actually a very strong year. Because we have had a high base, we think that next year it would be difficult to achieve and repeat this. We think that the current growth that we are seeing will continue.
As a result, on the security side, we launched this in August, and we think that by the end of this year, it will be in a position to start to contribute to the group as a whole. In addition to that, as you have just mentioned, on the credit cost side, for the group as a whole, on a year-over-year basis, it did not go down a lot. However, if we look at the overall picture on credit cost, we do think that for next year, it is an area that we actually foresee a decline to take place, especially on the bank side. This year, we did see a slight decrease versus 2023. But we think that on the bank side for 2025, it will go down again. Then on the non-bank side, continuously, there was a very conservative provisioning that we did.
We did also around KRW 200 billion cleaning up and KRW 100 billion this year again. On the non-bank side, we do think that the credit cost will actually also go down going forward. All in all, we think that in 2025, as you have just mentioned, though it will be a challenging environment, we do think on a year-over-year basis, there are various areas in which we can improve ourselves, and we will continue to focus on that from the business perspective. Thank you.
Yes. Next question would be by Won Jae-woong from HSBC Securities. Please go ahead.
In a very difficult environment, thank you very much for that sound performance regardless. Thank you also for your efforts for shareholder return. The question was already posed, but I do want to mention, in terms of the change in OCI and the capital ratio, I would like to ask how that works. My understanding is that last December, FSS has indicated that for the overseas branches, for instance, in terms of the RWA transition, those entities were exempt. Even if that was correct or that was right, it is true that the improvement was quite extensive versus other banks. I would like to understand the improvements. Is there a reason why Woori was able to improve up to that extent? Is there a special reason behind that?
Also with regard to asset rebalancing, there was an improvement of 33 basis points. What kind of measures have enabled that as well? If you can give us a breakdown, that would be great.
Those were the questions. Please hold for just a moment.
Regarding the asset rebalancing and OCI. With regard to asset rebalancing, the group would look into, let us say, low margin, reverse margin, or low-quality assets. In Q4, there was replacement reduction of such assets, and we minimized the scale. In the non-banking business, there were specific assets that were managed, but there were adjustments made to lower-risk assets. You can see that if you look at Korean won-denominated loans, there was a decrease of around KRW 8 trillion QoQ. All in all, the group has been focused on reducing risk assets and basically rebalancing the risks and assets.
As mentioned, for assets with high-risk weightage, there was that replacement or shift to move on to lower-risk assets. That was done in the fourth quarter of last year, and there was an impact of around 0.33%. In terms of the OCI, if you look at other consolidated profitability with the exchange rate soaring, this of course, leads to increased risky assets. In addition to that, you can see that in terms of the translations to overseas assets, there was an increase by around KRW 300 billion. That was the impact. There were some other factors that did impact, which has led to an increase of 0.21%.
Yes. Thank you. I do think that there has been a lot of questions that were asked and answered, and it was a very fruitful discussion. Right now, there is no one that is asking for a question. I would like to wrap up the Q&A session here. For those of you, if you have any additional questions, please do not hesitate to contact our IR team. With this, we would like to wrap up the Q&A session and also the earnings conference call for the full year of 2024. Thank you for your attendance.