Woori narrowing earnings gap with Hana

From left are the headquarters of Woori Financial Group and Hana Financial Group. Yonhap

By Lee Min-hyung

Woori Financial Group is on track to narrow its earnings gap with Hana Financial Group, as the solid growth in its interest margin has made up for its lack of a securities affiliate.

Hana Financial Group is the nation's third-largest financial holding company by net profit and market capitalization. Woori came in fourth by a narrow margin during the first quarter.

This was not the case last year when Hana widened its lead over Woori on a booming stock market. Hana operates a stock brokerage arm, while Woori does not have one. Hana Financial Investment generated a net profit of 506.6 billion won in 2021, up 23.3 percent from a year earlier, helping drive its record annual profit that year.

However, its lead is forecast to shrink this year, as stock markets here and abroad appear to have lost steam for additional growth due to the U.S. Federal Reserve's rate hikes.

This bodes well for Woori in its race to become the nation's third-largest financial holding firm.

Hana generated a net profit of 902.2 billion won during the January-March period, up 8 percent from the previous year. But Woori achieved a whopping growth of more than 32 percent during the same period and reaped a net profit of 883.2 billion won.

Woori's rapid rise was driven by the robust growth of its banking arm. Woori Bank surpassed Hana Bank in the first-quarter net profit. Yet, Hana was able to narrowly defeat Woori in group-wide earnings thanks to its diverse non-banking business portfolio which includes securities and insurance units.

It remains to be seen whether Woori will be able to gain the title as the third-most-profitable financial firm of 2022 due to its limited revenue area.

Reflecting on this, Woori Financial Group reiterated its willingness to acquire non-banking affiliates this year.

“Woori will be able to generate the biggest group-wide synergy through the possible acquisition of a securities firm, and we also leave open the possibility of taking over a venture capital company,” Lee Sung-wook, chief financial officer at Woori Financial Group, said in a recent conference call.