Woori Bank to focus on improving asset quality: head

Woori Bank, Korea's second-largest lender, will beef up efforts to improve the quality of its assets as challenging economic conditions are expected to weigh on earnings growth, its president said Friday.

"We will focus on sharply enhancing the soundness of assets," President Lee Soon-woo said in an interview with Yonhap News Agency. "Due to worsening management conditions, this year's profit will be lower than last year's."

Woori, the flagship of the state-controlled bank holding company Woori Finance Holdings Co., is estimated to have raked in a record net profit of over 2 trillion won ($1.73 billion) in 2011.

Woori's emphasis on asset quality and conservative earnings outlook comes amid escalating concern over South Korea's high household debts and the negative impact of Europe's debt crisis and other external uncertainties on the local economy.

Local exporters are feared to post reduced sales in advanced countries, while mounting domestic household debts are feared to curb consumer spending, which could put the brakes on economic growth.

In particular, if slowing economic growth dents household income, household debts are feared to hurt local lenders. This could force borrowers to default on their loans. Household credit, which includes loans and credit purchases, stood at 892.5 trillion won as of the end of September.

Taking such adverse economic situations into account, Woori aims to increase its assets by 7 percent in 2012 from last year, Lee added, a more conservative target than in 2011.

Woori, which is yet to release its fourth-quarter earnings, registered around 259 trillion won in assets as of last September, up around 8 percent from the end of 2010. (Yonhap)