Woori Financial Group Stock

Woori Financial Group Inc., through its subsidiaries, engages in a broad range of businesses, including corporate banking, consumer banking, credit card operations, investment banking, capital markets activities, international banking, asset management, bancassurance and other businesses in Korea.

The company provides a wide range of products and services to its customers, which mainly comprise small- and medium-sized enterprises and individuals, as well as some of Korea’s largest corporations.

Strategy

The key elements of the company’s strategy are to provide comprehensive financial services and maximize synergies among its subsidiaries through its financial holding company structure; further improve its asset quality and strengthen its risk management practices; enhance customer profitability through optimization of channel usage, products and services for each customer segment; accelerate digital innovation; expand presence in the global market; and develop and increase productivity of its professional workforce.

The company generally segments its retail customers into four groups: high net worth; mass affluent; middle class; and mass market. The company continually and vigorously reviews its portfolio of large corporate and small- and medium-sized enterprise customers to refine its database of core accounts and industries in terms of profitability potential. The company seeks to expand its relationship beyond a pure lending relationship by promoting its foreign exchange, factoring, trade finance and investment banking services to its core small- and medium-sized enterprise customers and cross-selling its investment banking services, derivatives and other risk hedging products, as well as employee retirement products, to its core large corporate customers.

Corporate Banking

The company provides commercial banking services to large corporate customers (including government-owned enterprises) and small- and medium-sized enterprises in Korea. The company’s corporate banking operations consist mainly of lending to and taking deposits from its corporate customers. The company also provides ancillary services on a fee basis, such as inter-account transfers, transfers of funds from branches and agencies of a company to its headquarters and transfers of funds from a company’s customer accounts to its main account. The company provides its corporate banking services predominantly through Woori Bank.

Corporate loans the company provides consist principally of the following:

working capital loans, which are loans used for general working capital purposes, typically with a maturity of one year or less, including notes discounted and trade finance; and

facilities loans, which are loans to finance the purchase of materials, equipment and facilities, typically with a maturity of three years or more.

On the deposit-taking side, the company offers its corporate customers several types of corporate deposit products. These products can be divided into two general categories: demand deposits that have no restrictions on deposits or withdrawals, but which offer a relatively low interest rate; and time deposits from which withdrawals are restricted for a period of time, but offer higher interest rates. The company also offers installment deposits, certificates of deposit and repurchase instruments. The company offers varying interest rates on its deposit products depending upon the rate of return on its income-earning assets, average funding costs and interest rates offered by other nationwide commercial banks.

Small- and Medium-Sized Enterprise Banking

The company uses the term small- and medium-sized enterprises as defined in the Framework Act on Small and Medium Enterprises of Korea and related regulations. Under the Framework Act on Small and Medium Enterprises of Korea and related regulations, in order to qualify as a small- and medium-sized enterprise, the enterprise’s total assets at the end of the immediately preceding fiscal year must be less than won 500 billion, the enterprise must meet the average or annual sales revenue standards prescribed by the Enforcement Decree of the Framework Act on Small and Medium Enterprises that are applicable to the enterprise’s primary business, and the enterprise must meet the standards of substantial management independence from ownership as prescribed by the Enforcement Decree of the Framework Act on Small and Medium Enterprises.

The company services its small- and medium-sized enterprise customers primarily through Woori Bank’s network of branches and small- and medium-sized enterprise relationship managers. As of December 31, 2022, Woori Bank had a total of 774 small- and medium-sized enterprise relationship managers stationed at its branches (as well as 500 non-stationed employees who serve as relationship managers as needed).

In addition to increasing its dedicated staffing and branches, the company’s strategy for this banking segment is to identify promising industry sectors and to develop and market products and services targeted towards customers in these sectors. The company has also developed in-house industry specialists who can help it identify leading small- and medium-sized enterprises in, and develop products and marketing strategies for, these targeted industries. In addition, the company operates customer loyalty programs at Woori Bank for its most profitable small- and- medium-sized enterprise customers and provides them with benefits and services, such as preferential rates, free seminars and workshops and complementary invitations to cultural events.

Lending Activities: The company provides both working capital loans and facilities loans to its small- and medium-sized enterprise customers. As of December 31, 2022, the company had 424,062 small- and medium-sized enterprise borrowers.

When evaluating the extension of working capital loans and facilities loans, the company reviews the creditworthiness and capability to generate cash of the small- and medium-sized enterprise customer. Furthermore, the company takes corporate guarantees and credit guarantee letters from other financial institutions and use deposits that the borrower has with it or securities pledged to it as collateral.

The value of any collateral is defined using a formula that takes into account the appraised value of the property, any prior liens or other claims against the property and an adjustment factor based on a number of considerations including, with respect to property, the value of any nearby property sold in a court-supervised auction during the previous five years. The company generally revalues any collateral on a periodic basis (every year for real estate (with apartments being revalued every month, subject to the availability of certain specified market value information), every year for equipment, every month for deposits and every week for stocks listed on a major Korean stock exchange) or if a trigger event occurs with respect to the loan in question.

Large Corporate Banking

The company’s large corporate customers consist of companies that are not small- and medium-size enterprises as defined in the Framework Act on Small and Medium Enterprises of Korea and related regulations, and typically include companies that have assets of won 12 billion or more and are therefore subject to external audit under the Act on External Audit of Stock Companies. As a result of its history and development, particularly the history of Woori Bank, the company remains the main creditor bank to many of Korea’s largest corporate borrowers.

The company services its large corporate customers primarily through Woori Bank’s network of dedicated corporate banking centers and general managers. Woori Bank operates 10 dedicated corporate banking centers, all of which are located in the Seoul metropolitan area. Each center is staffed with one or more general managers, and certain centers are headed by a senior general manager. Depending on the center, each such manager is responsible for large corporate customers that either are affiliates of a particular chaebol or operate in a particular industry or region. As of December 31, 2022, Woori Bank had a total of 86 general managers who focus on marketing to and managing the accounts of large corporate customers.

The company’s strategy for the large corporate banking segment is to develop new products and cross-sell its existing products and services to its core base of large corporate customers. In particular, the company continues to focus on marketing fee-based products and services, such as foreign exchange and trade finance services, derivatives and other risk hedging products, investment banking services and advisory services. The company has also been reviewing the credit and risk profiles of its existing customers, as well as those of its competitors, with a view to identifying a target group of high-quality customers on whom it can concentrate its marketing efforts. In addition, the company is seeking to continue to increase the chaebol-, region- and industry-based specialization of the managers at its dedicated corporate banking centers, including through the operation of a knowledge management database that allows greater sharing of marketing techniques and skills.

Lending Activities: The company provides both working capital loans and facilities loans to its large corporate customers.

The company evaluates creditworthiness and collateral for its loans to large corporate customers in essentially the same way as it does for loans to small- and medium-sized enterprise customers.

Consumer Banking

The company provides retail banking services to consumers in Korea. The company’s consumer banking operations consist mainly of lending to and taking deposits from its retail customers. The company also provides ancillary services on a fee basis, such as wire transfers. While the company has historically attracted and held large amounts of consumer deposits through its extensive branch network, its substantial consumer lending growth occurred principally in recent years, in line with the increase in the overall level of consumer debt in Korea. The company provides its consumer banking services primarily through Woori Bank.

The company classifies its consumer banking customers based on their individual net worth and contribution to its consumer banking operations into four groups: high net worth; mass affluent; middle class; and mass market. The company differentiates its products, services and service delivery channels with respect to these segments and target its marketing and cross-selling efforts based on this segmentation. With respect to the high net worth and mass affluent segments, the company has established private banking operations to better service customers in these segments. With respect to the middle class segment, the company seeks to use its branch-level sales staff to maximize the overall volume of products and services it provides.

Lending Activities

The company offers a variety of consumer loan products to households and individuals. The company differentiates its product offerings based on a number of factors, including the customer’s age group, the purpose for which the loan is used, collateral requirements and maturity.

The company’s consumer loans consist of:

general purpose household loans, which are loans made to customers for any purpose (other than mortgage and home equity loans), and include overdraft loans, which are loans extended to customers to cover insufficient funds when they withdraw funds from their demand deposit accounts with it in excess of the amount in such accounts up to a limit established by it; and

mortgage loans, which are loans made to customers to finance home purchases, construction, improvements or rentals, and home equity loans, which are loans made to customers secured by their homes to ensure loan repayment.

For secured loans, including mortgage and home equity loans, the company generally lends up to 70% of the collateral value (except in certain regulated areas designated by the government where it generally limits its lending to 50% of the appraised value of collateral, and for first-time homebuyers, it may lend up to 80% of the appraised value of collateral) minus the value of any lien or other security interest that is prior to its security interest. In calculating the collateral value for real estate for such secured consumer loans (which principally consists of residential properties), the company generally uses the fair value of the collateral as appraised by KB Land, the Korea Real Estate Board or other external appraisal experts, which is collated in its Credit Wizard system. The company generally revalues collateral on a periodic basis. As of December 31, 2022, the revaluation frequency was every year for real estate (with apartments being revalued every month, subject to the availability of certain specified market value information), every year for equipment, every month for deposits and every week for stocks listed on a major Korean stock exchange.

A borrower’s eligibility for general purpose household loans is primarily determined by such borrower’s creditworthiness. In reviewing a potential borrower’s loan application, the company also considers the suitability of the borrower’s proposed use of funds, as well as the borrower’s ability to provide a first-priority mortgage. A borrower’s eligibility for a home equity loan is primarily determined by such borrower’s creditworthiness (including as determined by its internal credit scoring protocols) and the value of the collateral property, as well as any third party guarantees of the borrowed amounts.

The company also offers a variety of collective housing loans, including loans to purchase property or finance the construction of housing units, loans to contractors to be used for working capital purposes, and loans to educational institutions and non-profit entities to finance the construction of dormitories. Collective housing loans subject the company to the risk that the housing units will not be sold. As a result, the company reviews the probability of the sale of the housing unit when evaluating the extension of a loan. The company also reviews the borrower’s creditworthiness and the suitability of the borrower’s proposed use of funds. Furthermore, the company takes a lien on the land on which the housing unit is to be constructed as collateral. If the collateral is not sufficient to cover the loan, it also takes a guarantee from the Housing Finance Credit Guarantee Fund as security.

General Purpose Household Loans

The company’s general purpose household loans may be secured by real estate (other than homes), deposits or securities. Overdraft loans are primarily unsecured and typically have a maturity between one and three years.

Mortgage and Home Equity Lending

The company provides customers with a number of mortgage and home equity loan products that have flexible features, including terms, repayment schedules, amounts and eligibility for loans. The maximum term of the company’s mortgage and home equity loans is typically 40 years. Most of its mortgage and home equity loans provided prior to January 2016 have an interest-only payment period of 10 years or less. However, the Korea Federation of Banks’ implementation of its Guidelines on Banks’ Mortgage Loan Screening changed the default interest-only payment period to one year or less, which applies to loans that were originated subsequent to the effective date of the Guidelines in January 2016. With respect to mortgage and home equity loans, the company determines the eligibility of borrowers based on the borrower’s personal information, transaction history and credit history using its Credit Wizard system.

Private Banking Operations

The company’s private banking operations within Woori Bank aim to service its high net worth and mass affluent retail customers. As of December 31, 2022, the company had 268.118 customers who qualified for private banking services, representing 1.1% of its total retail customer base.

Through its private bankers, the company provides financial and real estate advisory services to its high net worth and mass affluent customers. The company also markets differentiated investment and banking products and services to these segments, including beneficiary certificates, overseas mutual fund products, specialized bank accounts and credit cards. In addition, the company has developed a customer loyalty program for its private banking customers that provides preferential rate and fee benefits and awards. The company has also segmented its private banking operations by introducing exclusive private client services for high net worth customers who individually maintain a deposit balance of at least won 100 million.

Woori Bank has branches that offer private banking services. These branches are staffed by 650 private bankers, and almost all of the branches are located in metropolitan areas, including Seoul.

Woori Bank also operates an advisory center in Seoul for its private banking clients, which employs 21 specialists advising on matters of law, tax, real estate, risk assessment and investments.

Deposit-Taking Activities

The company is one of the largest deposit holders among Korean banks, in large part due to its nationwide branch network. The company offers diversified deposit products that target different customers with different needs and characteristics. These deposit products fall into five general categories:

demand deposits, which either do not accrue interest or accrue interest at a lower rate than time, installment or savings deposits. The customer may deposit and withdraw funds at any time and, if the deposits are interest-bearing, they accrue interest at a fixed or variable rate depending on the period and/or amount of deposit;

time deposits, which generally require a customer to maintain a deposit for a fixed term during which interest accrues at a fixed or floating rate. Early withdrawals require penalty payments. The term for time deposits typically ranges from one month to five years;

savings deposits, which allow the customer to deposit and withdraw funds at any time and accrue interest at a fixed rate set by the company depending upon the period and amount of deposit;

certificates of deposit, the maturities of which range from 30 days to five years, with a required minimum deposit of won 10 million. Interest rates on certificates of deposit vary with the length of deposit and prevailing market rates. Certificates of deposit may be sold at face value or at a discount with the face amount payable at maturity; and

other deposits, which consist mainly of deposits for notes payable, trust accounts, deposits for cash management accounts, housing installments and mutual installments.

The company offers varying interest rates on its deposit products depending on market interest rates as reflected in average funding costs, the rate of return on its interest-earning assets and the interest rates offered by other commercial banks. Generally, the interest payable is the highest on certificate of deposit accounts and decreases with other deposits and time deposits and savings deposit accounts receiving relatively less interest, and demand deposits accruing little or no interest.

The company also offers deposits in foreign currencies and a specialized deposit product, the apartment application comprehensive deposit, which is a monthly installment comprehensive savings program providing the holder with a preferential right to subscribe for new national housing units constructed under the Housing Act or new privately constructed housing units.

The Monetary Policy Board of the Bank of Korea imposes a reserve requirement on Won currency deposits of commercial banks based generally on the type of deposit instrument. The minimum reserve requirement ratio for certain types of deposit instruments, such as time deposits, periodic deposits and certificates of deposit, is 2% of the average balance of Won currency demand deposits outstanding while the minimum reserve requirement ratio for other types of deposit instrument is 7% of the average balance of Won currency demand deposits outstanding.

The Depositor Protection Act provides for a deposit insurance system where the KDIC guarantees to depositors the repayment of their eligible bank deposits. The KDIC insures a maximum of won 50 million per individual for deposits and interest in a single financial institution, regardless of when the deposits were made or the size of the deposits.

Branch Network and Other Distribution Channels

The company actively promotes the use of alternative service delivery channels in order to provide convenient service to customers. The company also benefits from customers’ increasing use of these channels, as they allow it to maximize the marketing and sales functions at the branch level, reduce employee costs and improve profitability.

Most of the company’s electronic banking transactions do not generate fee income as many of those transactions are free of charge, such as balance inquiries, consultations with customer representatives or transfers of money. This is particularly true for telephone banking services, where a majority of the transactions are balance inquiries or consultations with customer representatives, although other services, such as money transfers are also available.

The company’s automated telephone banking system offers a variety of services, including inter-account fund transfers, balance and transaction inquiries and customer service inquiries. The company also operates a call center that handles calls from customers, engages in telemarketing and assists in its collection efforts.

The company’s Internet banking services include balance and transaction inquiries, money transfers, loan applications, bill payment and foreign exchange transactions. The company seeks to maintain and increase its Internet banking customer base by focusing largely on its younger customers and those that are able to access the Internet easily (such as office workers), as well as by developing additional Internet-based financial services and products. The company also develops new products to target different types of customers with respect to its Internet banking services, and have developed a service that enables private banking customers to access their accounts on a website that provides specialized investment advice. The company also offers online escrow services.

In addition, the company provides mobile banking services to its customers, which is available to all its Internet-registered users. These services allow the company’s customers to complete selected banking transactions through major Korean telecommunications networks using their smart phones or other mobile devices. The company provides general mobile banking services through its Woori WON Banking mobile application and are expanding its mobile banking services to Southeast Asia.

The company also offers its Win-CMS service to corporate customers of Woori Bank, which provides an integrated electronic cash management system and in-house banking platform for such customers.

Credit Cards

The company offers credit card products and services mainly to consumers and corporate customers in Korea. In April 2013, as a part of its strategy to enhance its credit card operations and increase its synergies with its other businesses, Woori Bank effected a horizontal spin-off of its credit card business, and the former credit card business of Woori Bank was operated by its wholly-owned subsidiary, Woori Card, until September 2019, when the company conducted a comprehensive stock exchange under Korean law with Woori Bank, pursuant to which Woori Card became its direct and wholly-owned subsidiary.

The company’s credit card operations benefit from Woori Card’s ownership of a 7.65% equity stake in BC Card. BC Card is co-owned by KT Corporation, which is one of Korea’s largest telecommunications companies, and other Korean financial institutions, and operates the second largest merchant payment network in Korea as measured by transaction volume. This ownership stake allows the company to outsource production and delivery of new credit cards, the preparation of monthly statements, management of merchants and other ancillary services to BC Card for its credit card operations. In addition, in October 2019, Woori Bank acquired a 20% equity interest in Lotte Card Co., Ltd., which was the fifth largest credit card issuer in Korea at the time of acquisition, according to the Financial Statistics Information System, which is maintained by the Financial Supervisory Service.

Products and Services

The company has the following principal brands of credit cards outstanding, such as Woori brand; a BC Card brand; and a Visa brand.

The company issues Visa brand cards under a non-exclusive license agreement with Visa International Service Association and also issue MasterCard, JCB, Union Pay, and Diners Club brand cards under a non-exclusive, co-branding agreement with BC Card. The company offers a number of different services to holders of its credit cards. Generally, these services include:credit purchase services, which allow cardholders to purchase merchandise or services on credit and repay such credit on a lump-sum or installment basis; cash advance services from ATMs and bank branches; and credit card loans, which are loans that cardholders can obtain based on streamlined application procedures.

Unlike in the United States and many other countries, where most credit cards are revolving cards that allow outstanding balances to be rolled over from month to month so long as a required minimum percentage is repaid, cardholders in Korea are generally required to pay for their non-installment purchases as well as cash advances within approximately 15 to 60 days of purchase or advance, depending on their payment cycle.

The company offers a diverse range of credit card products within its various brands. Factors that determine which type of card a particular cardholder may receive include net worth, age, location, income level and the particular programs or services that may be associated with a particular card. Targeted products that it offers include:

cards that offer additional benefits, such as frequent flyer miles and award program points that can be redeemed for services, products or cash;

gold cards, platinum cards and other preferential members’ cards that have higher credit limits and provide additional services;

corporate and affinity cards that are issued to employees or members of particular companies or organizations; and

revolving credit cards and cards that offer travel services and insurance.

Payments and Charges

Revenues from the company’s credit card operations consist principally of cash advance charges, merchant fees, interest income from credit card loans, interest on late and deferred payments, and annual membership fees paid by cardholders.

Each cardholder is allocated an aggregate credit limit in respect of all cards issued under his or her account and each month. The company advises each cardholder of the credit limit relating to the cards in his or her monthly billing statement. Credit limits in respect of card loans are established separately. The company conducts ongoing monitoring of all cardholders and accounts, and may reduce the credit limit or cancel an existing cardholder’s card based on conditions, receipt of new negative credit data from third party sources or the cardholder’s score under the credit risk management systems it uses to monitor their behavior, even if the cardholder continues to make timely payments in respect of his or her cards. The company considers an account delinquent if the payment due is not received on the first monthly payment date on which such payment was due, and late fees are immediately applied. Late fee charges and computation of the delinquency period are based on each outstanding unpaid transaction or installment, as applicable.

Payments on amounts outstanding on then company’s credit cards must be made (at the cardholder’s election at the time of purchase) either in full on each monthly payment date, in the case of lump-sum purchases, or in equal monthly installments over a fixed term from two months to 36 months, in the case of installment purchases. Cardholders may prepay installment purchases at any time without penalty. Payment for cash advances must be made on a lump sum basis.

No interest is charged on lump-sum purchases that are paid in full by the monthly payment date. For installment purchases, the company charges a fixed rate of interest on the outstanding balance of the transaction amount, based on the installment period selected at the time of purchase. For a new cardholder, the company applies an interest rate between approximately 9.5% and 19.9% per annum as determined by the cardholder’s application system score.

For cash advances, finance charges start accruing immediately following the cash withdrawal. The company charges a periodic finance charge on the outstanding balance of cash advance of approximately 5.9% to 19.9% per annum. The periodic finance charge assessed on such balances is calculated by multiplying the daily installment balances for each day during the billing cycle by the applicable periodic finance charge rate, and aggregating the results for each day in the billing period.

The company also generally charges a basic annual membership fee up to won 1,000,000 for its credit cards, which is determined based on various factors ,including the type of card, and whether affiliation options are selected by the cardholder. For certain cards, such as the Nu Biz, the company will waive membership fees if customers charge above a certain amount.

The company outsources the management of merchants to BC Card. The company charges merchant fees to merchants for processing transactions. Merchant fees vary depending on the type of merchant and the total transaction amounts generated by the merchant. As of December 31, 2022, the company charged merchants an average of 1.23% of their respective total transaction amounts. In addition to merchant fees, it receive nominal interchange fees for international card transactions.

Capital Markets Activities

The company engages in capital markets activities for its own account and for its customers. The company’s capital markets activities include securities investment and trading, derivatives trading, asset securitization services and investment banking.

Securities Investment and Trading

The company invests in and trades securities for its own account, in order to maintain adequate sources of liquidity and to generate interest and dividend income and capital gains. The company’s trading and investment portfolios consist primarily of Korean treasury securities and debt securities issued by Korean government agencies, local governments or government-invested enterprises, and debt securities issued by financial institutions.

From time to time, the company also purchases and sells equity securities for its securities portfolios. The company’s equity securities consist primarily of equities listed on the KRX KOSPI Market or the KRX KOSDAQ Market.

Derivatives Trading

The company offers derivatives products and engage in derivatives trading, mostly for its corporate customers. The company provides and trades a number of derivatives products principally through sales or brokerage accounts for its customers, including: interest rate swaps, options and futures, relating principally to Won interest rate risks; index futures and options, relating to stock market fluctuations; cross currency swaps, relating to foreign exchange risks, largely for Won against U.S. dollars; and foreign exchange forwards, swaps, options and futures, relating to foreign exchange risks.

The company’s derivatives operations focus on addressing the needs of its corporate clients to hedge their risk exposure and on hedging its risk exposure resulting from such client contracts. The company also auto in derivatives trading activities to hedge the interest rate and foreign currency risk exposure that arises from its own assets and liability positions. In addition, the company engages in proprietary trading of derivatives, such as index options and futures within its regulated open position limits, for the purpose of generating capital gains.

Asset Securitization Services

The company is active in the Korean asset-backed securities market. Through Woori Bank, the company participates in asset securitization transactions in Korea by acting as arranger, trustee or liquidity provider.

Investment Banking

Through Woori Bank and Woori Investment Bank, the company engages in investment banking activities in Korea. In addition, the company provides project finance and financial advisory services, in the area of social overhead capital projects, such as highway, port, power and water and sewage projects, as well as structured finance, leveraged buy-out financing, equity and venture financing and mergers and acquisitions financing services.

International Banking

Through Woori Bank, the company engages in various international banking activities, including foreign exchange services and dealing, import and export-related services, offshore lending, syndicated loans and foreign currency securities investment. These services are provided primarily to the company’s domestic customers and overseas subsidiaries and affiliates of Korean corporations and, to a limited extent, to local companies and individuals. The company also raises foreign currency funding through its international banking operations. In addition, the company provides commercial banking services to retail and corporate customers in select overseas markets.

The principal activities of the overseas branches and subsidiaries of Woori Bank are providing trade financing and local currency funding for Korean companies and Korean nationals operating in overseas markets as well as servicing local customers and providing foreign exchange services in conjunction with its headquarters. On a limited basis, such overseas branches and subsidiaries also engage in the investment and trading of securities of foreign issuers.

Woori America Bank operates over 25 branches in states including New York, New Jersey, Maryland, Virginia, Pennsylvania and California and provides retail and corporate banking services targeted towards the Korean-American community.

In November 2007, Woori Bank established a local subsidiary in China, Woori Bank China Limited, which has branches in Beijing, Shanghai, Shenzhen, Suzhou, Tianjin, Dalian, Chengdu, Weihai, Chongqing and Shenyang. Woori Bank also established a local subsidiary in Russia, AO Woori Bank, in January 2008 to provide general banking services and it has branches in Moscow and St. Petersburg and a representative office in Vladivostok. As of December 31, 2022, AO Woori Bank had total assets of US$620 million and total liability of US$558 million, and its operating revenue was US$62 million in 2022.

In January 2014, Woori Bank completed the purchase of an additional 27% equity interest (in addition to the 6% equity interest it previously acquired through its subsidiary PT. Bank Woori Indonesia) in PT. Bank Himpunan Saudara 1906 Tbk, an Indonesian commercial bank with a network of over 100 branches and offices throughout Indonesia. In December 2014, PT. Bank Woori Indonesia merged with and into PT. Bank Himpunan Saudara 1906 Tbk. The merged entity, in which Woori Bank holds an 84.2% equity interest, was renamed PT Bank Woori Saudara Indonesia 1906 Tbk and became Woori Bank’s consolidated subsidiary. As of December 31, 2022, PT Bank Woori Saudara Indonesia 1906 Tbk had total assets of US$3,330 million and shareholders’ equity of US$624 million.

Woori Bank is also expanding its network of branches in South and Southeast Asia through its other local subsidiaries, including PT Bank Woori Saudara Indonesia 1906, Tbk, Woori Finance Myanmar and Wealth Development Bank. In June 2018, Woori Bank acquired VisionFund (Cambodia) Ltd., a microfinance deposit-taking institution in Cambodia, and renamed it WB Finance Co., Ltd. In February 2020, WB Finance Co., Ltd. merged with Woori Finance (Cambodia) Plc., a Cambodian microfinance institution, and in November 2021, it obtained a commercial banking license from the Cambodian financial authorities and began its nationwide operations as Woori Bank (Cambodia) PLC.

In November 2018, Woori Bank established a German subsidiary, Woori Bank Europe Gmbh, which is headquartered in Frankfurt and conducts its European operations.

Asset Management

Trust Management Services

Money Trusts: Through Woori Bank, the company offers money trust products to its customers and manage the funds they invest in money trusts. The money trusts the company manages are generally trusts with a fixed life that allow investors to share in the investment performance of the trust in proportion to the amount of their investment in the trust. The company principally offers the following types of money trust products:

retirement trusts, which invest funds received from corporations or organizations and manage these funds until they are withdrawn to pay retirement funds to a corporation’s officers or employees or an organization’s members;

pension trusts, which invest funds received until pension benefits are due to be disbursed to a pension beneficiary; and

specified money trusts, which invest cash received as trust property at the direction of the trustors and, once the trust matures, disburse the principal and any gains to the trust beneficiaries.

The company also offers other types of money trusts that have a variety of differing characteristics with respect to, for example, maturities and tax treatment.

Under Korean law, the assets of its money trusts are segregated from its assets and are not available to satisfy the claims of its creditors. The company is, permitted to maintain deposits of surplus funds generated by trust assets in certain circumstances as set forth under the Financial Investment Services and Capital Markets Act and the regulations thereunder. Except for specified money trusts, the company has investment discretion over all money trusts, which are pooled and managed jointly for each type of trust. Specified money trusts are established on behalf of individual customers, typically corporations, which direct its investment of trust assets.

The company receives fees for its trust management services that are generally based upon a percentage, ranging between 0.01% and 1.2%, of the net asset value of the assets under management. The company also receives penalty payments when customers terminate their trust deposit prior to the original contract maturity. Fees that the company eceived for trust management services (including those fees related to property trust management services, described below, but excluding those fees relating to guaranteed trusts.

For some of the money trusts the company manages, it have guaranteed the principal amount of an investor’s investment ,as well as a fixed rate of interest. The trust assets the company manages consist principally of investment securities, loans made from the trusts and amounts due from banks. The investment securities consist of government-related debt securities, corporate debt securities, including bonds and commercial paper, equity securities and other securities.

The company’s money trusts also invest, to a lesser extent, in equity securities, including beneficiary certificates issued by investment trust management companies. Loans made by its money trusts are similar in type to the loans made by its banking operations.

Investment Trust Management

Through Woori Asset Management Corp., Woori Global Asset Management Co. and Woori Private Equity Asset Management Co. Ltd., the company offers investment trust products to its customers and manage the assets invested by them in investment trusts. The investment trust products the company offers generally take the form of beneficiary certificates evidencing an ownership interest in a particular investment trust. The company offers various different types of investment trust products, including:

securities funds, where securities (excluding certain securities relating to, among others, real estate, ship investment companies, social infrastructure and overseas resource development) consist of more than 50% of their assets;

real estate funds, where real estate (including investments in, among others, derivatives based on underlying assets consisting of real estate and loans to corporations relating to real estate development) consist of more than 50% of their assets;

special asset funds, where assets other than securities and real estate consist of more than 50% of their assets;

mixed asset funds, which do not have the restrictions that apply to securities funds, real estate funds and special asset funds; and

money market funds, which invest in short-term financial products, such as call loans, commercial paper, certificates of deposit and short-term treasury notes and corporate bonds.

The investment trusts the company manages are generally trusts that allow investors to share in the investment performance of the trust in proportion to the amount of their investment in the trust. The company has investment discretion over all investment trusts. Investment trusts calculate the value of their assets as often as required by the relevant laws and regulations, and any change in the overall valuation of their assets will be reflected in the price of their beneficiary certificates. The trust will disburse principal and any return on investment based on the price of their beneficiary certificates at maturity or upon the receipt of a redemption request, as applicable. In addition to investment trust products, the company provides its institutional clients with various investment advisory and discretionary asset investment services.

The company receives fees for its investment trust management services consisting of management fees in connection with establishing, operating and managing the investment trust, asset management fees and related advisory fees.

Although the company’s customer base consists mainly of institutional investors, it has been seeking to market its investment trust products to retail customers through its consumer banking network.

Trustee and Custodian Services Relating to Securities Investment Trusts

Through Woori Bank, as of December 31, 2022, the company acted as a trustee for 4,420 securities investment trusts, mutual funds and other investment funds. The company receives a fee for acting as a trustee and generally perform the following functions:

receiving payments made in respect of such securities;

executing trades in respect of such securities on behalf of the investment fund, based on instructions from the relevant investment fund management company; and

in certain cases, authenticating beneficiary certificates issued by investment trust management companies and handling settlements in respect of such beneficiary certificates.

Other Businesses

Management of National Housing and Urban Fund

In April 2008, through Woori Bank, the company were selected to be the lead manager of the National Housing and Urban Fund. The National Housing and Urban Fund provides financial support to low-income households in Korea by providing mortgage financing and construction loans for projects to build small- and medium-sized housing. The activities of the National Housing and Urban Fund are funded primarily by the issuance of national housing bonds, which must be purchased by persons and legal entities wishing to make real estate-related registrations and filings, and by subscription savings deposits held at the National Housing and Urban Fund.

In return for managing the operations of the National Housing and Urban Fund, the company receives a monthly fee. This fee consists of a fund raising fee and a loan origination fee. The fund raising fee is based on the number of National Housing and Urban Fund subscription savings deposit accounts opened and the level of activity for existing accounts and the number of National Housing and Urban Fund bonds issued or redeemed. The loan origination fee is based on the number of new National Housing and Urban Fund loans and the number of National Housing and Urban Fund mortgage loans to contractors constructing housing units that are assumed by the individual buyers of housing units and the level of activity for existing loans during each month. The company received total fees .

Bancassurance

Through Woori Bank, the company markets a wide range of bancassurance products. The company will be able to continue to develop an important new source of fee-based revenues by expanding its offering of these products. The company has entered into bancassurance marketing arrangements with 30 insurance companies, including TongYang Life Insurance, Hanwha Life Insurance, Samsung Life Insurance, Samsung Fire and Marine Insurance, Hyundai Fire and Marine Insurance and American International Assurance, and plan to enter into additional insurance product marketing arrangements with other leading insurance companies whose names and reputation are likely to be familiar to the company’s customer base.

Private Equity

In 2016, Woori Private Equity Co., Ltd., which was established in 2005, registered as a specialized private placement collective investment business under the Financial Investment Services and Capital Markets Act and changed its name to Woori Private Equity Asset Management Co., Ltd., or Woori PEAM. Such registration enabled it to manage specialized private placement collective investment vehicles (which include hedge funds) targeting professional investors, in addition to its existing business of making long-term and strategic investments in buyout target companies and actively involving itself in their management.

Securities Investment Portfolio

The company invests in and trades Won-denominated securities and, to a lesser extent, foreign currency-denominated securities for its own account to: maintain asset stability and diversification; maintain adequate sources of back-up liquidity to match funding requirements; an supplement income from core lending activities.

In making securities investments, the company takes into account a number of factors, including external broker analyses and internal assessments of macroeconomic trends, industry analysis, credit evaluation, maturity and trading history in determining whether to make a particular investment.

The company’s investments in debt securities include primarily bonds issued by government-related entities, as well as corporate bonds that have been guaranteed by banks (other than merchant banks), government-related funds or privately capitalized funds that it considers to have a low credit risk.

The company’s securities investments are subject to various regulations, including limitations prescribed under the Financial Holding Company Act and the Bank Act. Under these regulations, a financial holding company may not own more than 5% of the total issued and outstanding shares of another finance-related company, (ii) any shares of its affiliates, other than its direct or indirect subsidiaries, or) any shares of a non-finance-related company. In addition, a bank must limit its investments in equity securities and bonds with a maturity in excess of three years (other than monetary stabilization bonds issued by the Bank of Korea and Korean government bonds) to 100% of the sum of its total Tier I and Tier II capital amount (less any capital deductions). A bank is also generally prohibited from acquiring more than 15% of the shares with voting rights issued by any other corporation, subject to certain exceptions.

Supervision and Regulation

The company’s securities investments are subject to various regulations, including limitations prescribed under the Financial Holding Company Act and the Bank Act.

History

The company was founded in 1899. It was formerly known as Woori Bank Co., Ltd. and changed its name to Woori Financial Group Inc.