Hana Financial Stock

Good afternoon. This is G.H. Park, Head of IR at Hana Financial Group. Thank you very much for joining us for our first half earnings call despite your busy schedules. Now we will start the 2026 first half earnings call of Hana Financial Group.

For today's earnings call, we have key executives of Hana Financial Group and key subsidiaries. First, we have Group CFO, Jong Moo Park; Group CRO, Jae Shin Kang; Group CSO, Ho Sik Nam. We also have from Hana Bank CFO, Young Seok Jeong; Hana Bank CRO, Chang Wook Pae. And also, we have from Hana Securities, CFO, Dong Sik Kim.

Today, we would like to take you through the newly announced 2026 Value Up Plan of Hana Financial Group before we go into our first half results and then take your questions and answers. Please also note that there are some forward-looking statements that are mentioned today that could change depending on macroeconomic and market situations, and there could be material differences from our actual business results.

Now our CFO, Jong Moo Park, will take the presentation.

Good afternoon. This is Jong Moo Park, CFO of Hana Financial Group. Thank you, shareholders, investors and analysts for joining today's earnings call despite your busy schedules. We truly appreciate your attention. Before going into our first half results, I would like to highlight the key points of the 2026 Value Up plan that has been approved by our Board of Directors earlier today.

Please turn to Page 1. Hana Financial Group first announced its value-up plan back in 2024, setting clear targets for the 3 key metrics of TSR, CET1 and ROE, which we have followed through consistently since. The group's TSR shareholder return ratio increased to 47% in 2025, and we're on track to reaching the 50% target ahead of schedule. Hana Financial Group's PBR, which was only 0.4x at the end of 2024 has increased to around 0.7x as of end of June this year. That said, during the same period, the PBR of major global peers have also increased, placing our valuation still at a relative low.

Under the lead of the Board of Directors, we conducted an as is diagnostic and have explored various ways of driving continuous enterprise value enhancement, leading to the new value of plan with new targets for the key metrics, which we have announced today. This page shows you the 3 key points of the new value plan. First, the ROE target has been revised up to 12% from the previous 10% or above. This will be achieved by structurally stepping up the group's ROE by significantly expanding Hana Bank's already healthy core competitive edge and by strengthening the core business competitiveness of our nonbank subsidiaries. Also, the strategic partnership with the multi-digital asset platform, Dunamu, will be leveraged to preempt this evolution to digital asset-based future financial services and to add new growth engines for the group to achieve an ROE of 12%.

Next is the shareholder return target, which has been revised to 50% or more based on a framework that links better ROE and lower RWA growth rates to higher shareholder returns. This improves the predictability of shareholder return and at the same time, establishes capital allocation principles that links improved profitability with greater shareholder return. Also, Hana Financial Group aims to become one of the leading dividend shares in Korea by actively increasing dividend going forward. We plan to increase total cash dividend by at least 10% or more each year until reaching a payout ratio of 40%, which is to satisfy the high dividend company requirement under the act on restriction of special cases on taxation.

With the share buyback and cancellation running in parallel, we will continue to gradually reduce the number of outstanding shares and dividend per share would increase by more than 10% each year. On top of this, with the separation tax -- separate taxation on dividends effective from this year and tax-free dividend from next year, shareholders are expected to experience an even more elastic improvement in dividend yield.

Lastly, CET1 target has been revised to 13% or more. And accordingly, we plan to maintain CET1 sustainably around 13% or above while supporting predictable shareholder return based on the framework. As you will have noticed, the new value of plan is not merely an update of target numbers, but a meaningful new design that formalizes and institutionalizes a virtuous feedback cycle between increased shareholder return and enterprise value enhancement.

Hana Financial Group will remain focused on accelerating enterprise value enhancement based on differentiated earning power and predictable shareholder return. Also, we will faithfully execute the value of plan announced today that translates the group's sustainable growth to greater shareholder value and deliver real-term performance in response to the trust and expectations we receive from the market. For the details of the value of plan, please refer to the materials that we have disclosed today.

And now I will go into the first half 2026 group business results. First, the key highlights are on Page 4 or 2. Hana Financial Group's 2026 first half net income was KRW 2,402.9 billion, which is a 4.4% increase Y-o-Y and the highest half year net income in group history. Despite the KRW 109.8 billion in FX translation loss in the first half due to higher exchange rates and increased tax-related expenses caused by changes in tax regulations, including corporate income tax, our first half earnings was solid, thanks to solid growth of core earnings, both interest and noninterest income.

Hana Bank's healthy NIM improvement and Korean won loan growth drove group's interest income by 7.1% Y-o-Y and the bullish stock market helped asset management-related fee income growth, including brokerage fees, driving group's fee income up by 37.7% Y-o-Y. First half core earnings increased 13% Y-o-Y, driving our net income growth of the group in the first half. Group's Q2 net income was KRW 1,192.8 billion, which is a 1.4% Q-o-Q decrease. Insurance profit decreased temporarily due to the actuarial assumption improvement regulations in effect and provisioning expense was incurred due to a large business group filing for corporate rehabilitation, but general operating profit, including our core income and disposition and valuation gains increased 7.9% Q-o-Q, delivering good quarterly results despite the one-offs. Accordingly, our first half group ROE was 10.62%.

Next, we expect first half and group CET1 ratio to post 13.21%, a 2 bp decline Q-o-Q. Despite continued downward pressure on the CET1 ratio from the depreciation of the Korean won on the back of RoRWA-focused asset growth strategy and disciplined RWA management, the group maintained its CET1 ratio at a stable level as of the end of the first half.

Next, I will cover shareholder return. At today's BOD meeting, KRW 250 billion of share buyback and cancellation was approved, and we plan to complete the purchase within 3 months. Including the KRW 250 billion approved today, our cumulative share buyback and cancellation for 2026 as of now amounts to a total of KRW 700 billion.

Next, Q2 dividend per share posted KRW 1,155, a 26.5% increase Y-o-Y. As a result, we will pay around KRW 600 billion of cash dividends in the first half of the year. And assuming that we pay the same amount in cash dividends in the second half, total cash dividends for 2026 will amount to around KRW 1.2 trillion, an increase of 10% Y-o-Y. As outlined previously in our corporate value of plan, we will continue to enhance shareholder value by actively increasing dividends while concurrently pursuing share buyback and cancellations.

Let me now walk you through the details of our group's financial performance. Please refer to Page 5 of the presentation materials. Group's 2026 first half interest income posted KRW 4,808.2 billion, a 7.1% increase Y-o-Y. First, looking at the NIM. Hana Bank's Q2 NIM recorded 1.61%. And on the back of profitability-focused loan asset growth and portfolio optimization efforts, it increased 3 bp Q-o-Q. Group's Q2 NIM posted 1.88%, a 6 bp increase Q-o-Q, and this was on the back of Hana Bank NIM improvement as well as Hana Card NIM growth, thanks to factors, including credit card purchase volume increase.

Next, 2026 Q2 bank loans in won grew 2.0% compared to the previous quarter end. Of this, household loans increased as mortgage lending to real end users expanded and with the increase in outstanding balances on unsecured credit lines. As a result, it grew 1.2% compared to previous quarter end. For corporate loans, we provided funding and liquidity support centering on high-quality companies and industries experiencing increasing financing demand such as defense and semiconductors, and it grew 2.6% compared to previous quarter end.

Next is the group's noninterest income. Let's go to Page 6. Group's 2026 first half fee income posted KRW 1,487.4 billion and increased 37.7% Y-o-Y. As I aforementioned, asset management related to fees drove the improvement trend of fee income improvement in the first half. First of all, Hana Securities on the back of increase of stock market transaction volume saw a 208.5% increase of brokerage fees Y-o-Y. And as a result of strategically strengthening wrap account products, and wrap and operation fees increased 634.9% Y-o-Y.

In addition, there was a great increase of ETF sales at Hana Bank and trust fee income grew 61.4% Y-o-Y. In addition, group's IB-related fees also delivered solid results through enhancing competitiveness through the group's IB platform as a result of strengthening the portfolio centering on high-quality senior assets, first half M&A and advisory fees increased 73.9% Y-o-Y.

Next, group's first half disposition and valuation gains posted KRW 660.2 billion, a 20.1% decrease Y-o-Y. This was mostly due to the base effect since KRW 133.9 billion of FX translation gains occurred in the same quarter of the previous year and the recognition of KRW 109.8 billion of FX translation losses with the continued won depreciation trend in the first half of this year. However, since the Korean won began strengthening in July of this year, the exchange rate has declined to the upper KRW 1,400 range. If the exchange rate remains at its current level through the end of September, we expect a substantial portion of the FX translation losses recognized in the first half to be reversed in the third quarter.

Next, let's go to the next page, and I will cover group's G&A expenses. 2026 first half group's G&A expenses due to the increase of labor and salary and benefits and taxes and depreciation posted KRW 2,489 billion, a 9.8% increase Y-o-Y and group C/I ratio posted 38.8% and is being managed favorably compared to our business plan.

Next, I will cover group's asset quality. Please go to Page 8. Group's first half provisioning posted KRW 663 billion and increased 4.5% Y-o-Y. The main reason was due to KRW 74.9 billion of one-off provisioning costs in Q2 following a large corporate group's filing for corporate rehabilitation proceedings and the first half cumulative credit cost ratio recorded 0.29% and is being managed stably within our business plan target.

Now let's go to Page 9. Group's Q2 and NPL ratio posted 0.93%, a 13 bp increase Q-o-Q, and the NPL coverage ratio posted 86.4%, a 9.2 percentage point decrease Q-o-Q. With the aforementioned large core filing for corporate rehabilitation, around KRW 420 billion of newly classified NPL increased at once and NPL-related indicators showed relatively significant changes compared to the previous quarter. If we exclude the effect regarding corporate rehabilitation filing, group's Q2 end NPL ratio posted 0.85%, a 5 bp increase compared to previous quarter end and NPL coverage ratio recorded a 92.6% level, a 3 percentage point decrease compared to previous quarter end.

The group's NPL coverage ratio remains below 100% due to the characteristics of its portfolio with secured loans accounting for approximately 90% of Hana Bank's delinquent assets. For secured loans, even when they are classified as nonperforming loans, loan loss provisions are calculated after taking into account the recoverable value of the collateral. And as a result, the NPL coverage ratio is relatively lower than that of unsecured loans.

Accordingly, the group's loss absorption capacity is being managed at a solid level considering both the coverage ratio and collateral value. But since high interest rate and high inflation environment is expected to continue until the end of this year, we plan to expand the write-off and sale of nonperforming assets in the second half so that our NPL coverage ratio will be increased to over 100%. On the other hand, group delinquency ratio despite the higher debt servicing burdens from elevated market interest rate maintained a 0.59% level, similar to the previous year on the back of efforts, including aggressive efforts to reduce delinquent assets and improved 2 bp Q-o-Q. Please refer to the posted materials for more information.

With this, I will conclude my presentation for Hana Financial Group's 2026 first half business results. Thank you for your attention.

Thank you very much. Next, we will have a Q&A session.

[Operator Instructions] The first question is from Hanwha Investment & Securities, Do Ha Kim.

This is Do Ha Kim of Hanwha Securities. I have a few questions about interest income. Interest income actually decreased, but your interest-bearing assets grew and your NIM is also positive. But versus the spread widening, and so even though your liabilities have increased, I don't think your margins have decreased as much. But your interest expenses increased double digit Q-o-Q, suppressing your interest profit income. Can you explain the technicals behind that?

Second question is about your shareholder return formula. When we compare you to that to your peers, their formula has the target ROE in the denominator, but you have put in your actual ROE in the denominator. What if your ROE is lower than expected, your shareholder return will decrease and you would sort of have a reverse effect of reducing your equity to improve your shareholder return. I'm sure you have run that during your considerations. And so what would be your response to that?

Well, thank you very much for those questions. Please give us some time to prepare the answers.

Yes, this is Jong Moo Park. I'm the Group CFO. Thank you very much for those wonderful questions. To answer your first question is about our interest income not increasing as much. There is a bit of a distortion effect. And that is related with the variable insurance. You probably heard that effect from other financial groups, too. There is the interest expense being replaced, and that has the impact of around KRW 290 billion.

And then your second question was about the ROE in the formula of shareholder return. If it's actual ROE that's below our expectations, wouldn't that have a negative effect? Well, up till now, our shareholder return has been 47% up until last year, and we have unveiled our new value plan. And today -- and our goal is to hit at least 50% shareholder return during this year, 2026. That is our initial goal. And we weren't able to expressly put this in the table, but we do expect to hit 50% shareholder return this year, which then means we would have to aim for higher than 50%. That is, I think, the assumption that we will continue to exert our efforts to keep our shareholder return above 50% going forward.

We will take the next question. The next question is from NH Securities. We have Jun-Sup Jung on the line.

I also have a question related to the corporate Value Up plan that you announced today. I have 2 questions. The first question is regarding in order to increase TSR, you have ROE target of 12% that's going to be very important for you to meet. And I would like to know your concrete plans to meet that. I know that it's mid- to long-term target, but when do you think you will accomplish the target? And in order to uplift the ROE, I think the bank and also nonbanks profitability will be quite important. So for your core subsidiaries, well, their trajectory for ROE, any targets, if you have them in mind, I would like to hear some explanations.

My second question is for increasing the retail investors' contribution. And from next year, there's going to be tax exemption dividend. So I think that there's going to be some room for that. But if you have any more plans to attract more retail investors, it would be greatly appreciated. It's because for tax-exempt dividends, well, that will actually probably be applied to other banks as well. So can you tell us about any differentiated plan to increase your number of retail investors?

Thank you very much for your questions. Please hold and we will soon answer your questions.

I am the CFO of the Group, Jong Moo Park, once again. And thank you very much for your questions, Mr. Jung. I think you actually had some answers in your questions. So it might be easy for me to reply. Regarding the 12% of ROE that we're going to aim for to give you a target time line was your question, and you also asked about ROE targets for our subsidiaries. On our presentation materials, it says mid- to long term. But until last year, we had our ROE target of 10% or higher as our ROE target, and it was near that number, but it wasn't actually achieved.

However, we -- when we review our details internally, it seems that our recurring fundamentals actually translate that of not only 10%, but even 12%. So we believe that in order for us to achieve 12%, as you just mentioned in your question, well, we will need to strengthen the bank competitiveness, and we also will need to normalize our nonbanking operations and also through the new businesses that we are pursuing, if we gain new growth drivers, we believe that we will have more opportunities to generate profits. Also for nonbanking, regarding the ROE targets, we basically believe that for the capital costs, at least 10% will be our target. So I hope that answers your question.

And regarding your second question, regarding the tax exemption dividends or separate taxation of dividend income, yes, it is similar to other peers. But at Hana Securities, there was Futu Securities that we had an MOU with. So we have been actually making a lot of these relationships, and we have had offline meetings for retail investors as well. So we have been explaining about the tax-related benefits, and we have actually been listening to the market more so that we can have more retail investors.

The next question comes from IM, Yong Jin Seol.

I also have 2 questions. When we look at your margins, the group margin is higher than bank. And was there any one-off explaining that difference? And what's your outlook on your second half, your margins and income? What do you expect in the second half? Credit cost, if we set aside the one-off, there does seem to be higher credit cost than before. Can you also give us your CCR guidance going forward? Second question is about your nonbank businesses. That's a major part of improving your profitability. If you had to compare organic versus inorganic, which will be the stronger priority for you?

Thank you very much for your questions. Please give us a moment to prepare the answers.

Yes. Thank you very much for your questions. During the presentation, looking through our earnings, the group NIM, there was the effect of the credit card NIM in Q2, their volume increase that helped upward. Also in Q2, there was some reversal of some merchant fees that happened. And that's why the group NIM expanded or group NIM became higher than the bank NIM. So that explains that difference.

About -- you've also asked about our asset quality guidance, and our CRO will answer that question.

This is Jae Shin Kang, CRO. In Q2 versus Q1, our credit cost did increase a bit. In Q1, I think we had some reversals, one-off reversals. That's why it was unusually low. Q2 actually is the expected normalized level. The increase on Q-o-Q basis can be explained by some large companies filing for rehabilitation. Now towards the second half, assuming that there will not be these unexpected one-offs, we think that we will be able to keep it around the low 30 bp range, which is actually the level that we had assumed when we planned the business plan for this year.

And this is Ho-Sik Nam, the CSO. Your second question was about the nonbank businesses and improving our profitability on nonbank is the top priority. You've asked about organic versus inorganic, if we had to choose one. We really don't have a direction towards one or the other. We're looking at all. At least we are going to focus on enhancing the competitiveness of each subsidiary's core business capabilities and competencies.

And this is Young Seok Jeong of the Hana Bank. You've asked about the second half bank NIM. First half NIM was 1.60%, assuming our neutral outlook in the second half, we expect our NIM to stay flat around 1.60%. There are some upsides and downsides. As you know, market rates are expected to be raised by 2x and the loan cycle is becoming shorter. It's around -- concentrated around 3 months or 6 months.

So we actually think that there will be an upside for better interest income because we have shorter duration loans. But then we have also been focusing more on our funding from public sector and SMEs. But then there are some payments from retail individual side increasing. And then there is the new regulation that will prohibit us from adding the insurance, the credit insurance premium on our loan interest rates that could be a negative. But overall, offsetting, we are going to target a neutral NIM in the second half.

We will take the next question. The next question, seems that it's a follow-on question from Do Ha Kim from Hanwha Securities.

Yes. I just wanted to clarify something in the answer you gave. You mentioned that interest income went down related to variable insurance. But for some of your peers for investment service gains and losses, it's in the disposition and valuation. But in this case, does your insurance-related gains or profit come from another category?

So yes. So for other operating income and interest income, there are different banks using different methods. And for other operating income, it is probably -- sorry, for -- it's a plus for disposition and valuation gains, but we had the account that was affected for interest income because of that.

We will take the next question from HSBC Securities. We have Jaewoong Won on the line.

Regarding today's earnings release, you gave a presentation on the value of framework. And thank you very much for giving us those results that I'm sure that you have pondered upon. RWA growth and ROE seems to be very important factors. And in the first half, ROE, I think, was 10.21%. And in Q4 and in other quarters, we need to think about profitability. And for Q4, there is seasonality we need to consider. And for Q3, I don't think we know for sure that there's going to be more transactions like Q2.

So if we say ROE is going to negatively affected, then the share buyback and cancellation that you've mentioned will come from RWA growth, but it grew 6.5% and loans grew 2.9%. So in the second half, if loans go down greatly and RWA also goes down greatly, can we understand it like that? I'm curious about the RWA growth prospects and ROE growth prospects that you have in mind. And if you can let us know about the concept you have, I think that we can understand better the framework so that we can predict the TSR in a better way.

Thank you very much for your questions. We will soon answer them. Please hold.

Thank you very much for your insightful questions. As you mentioned in your question, regarding the next quarter or our results for the year-end, it would be best if we could accurately predict them. But as you know, in the first half for fee income and others, well, I think that it was relevant to our peers as well that we all outperformed. So I think that is why we are considering these factors that are variable. And for JoongAng Group or other corporate rehabilitation filings, well, that can be some one-offs.

So I think it will be quite difficult to make an accurate prediction. I don't know if this can answer your question accurately. But as was mentioned in another of your colleagues' questions, regarding our TSR, well, 50% or higher is our goal. And by doing so, we want to gradually lift this up. So that is the goal that we are trying to pursue. I guess that can be my answer.

Next question is from Goldman Sachs, Sinyoung Park. Please go ahead.

Yes. Can you hear us? This is Sinyoung Park from Goldman Sachs. I have a question about shareholder return. And there is the share buyback versus dividend split. If we look at the appendix, there is 40% of goal for the mid- to long-term dividend. But you also said your cash dividend will be increased 10% each year, but it's going to take a long time to hit that. And especially even if we think of it as full year even out, it will be KRW 1.2 trillion full year. But then are you going to put more focus on year-end dividends or share buyback because I think each financial group has a different priority when it comes to choosing share buyback versus dividend at the end of the year.

Please give us a moment to prepare our answers.

Yes. Actually, that's a question I've actually tried to find the answer to. So I'm prepared to answer that question. Until we reach that 40% payout ratio, we will be increasing our cash dividends -- total cash dividends 10% each year. That is a default mechanism that we will be following through. So even if we have more profits than expected, it would first be used for share buy back. So that is what I would assume because we have this formula of increasing cash dividend 10% each year.

We will take the next question. The next question is from Samsung Securities, Jaewoo Kim.

I have a question related to shareholder return as well. 12% of ROE, if you achieve that, then as you mentioned, then according to RWA, I think it would be -- have a great influence on TSR and 12% ROE and RWA growth of 5% would mean that maximum of TSR would be 58%, but if it goes down to 4%, then TSR would go to 67% and 67% seems great and 58% may be a little bit low than expected. So how can we understand this gap? And regarding the speed, regarding the growth of RWA, how are you going to actually manage the speed because if you're going to grow the securities, then the first half RWA growth speed or pace, well, it can be greatly affected by other variables such as the FX rate. So can you tell us about the goal of managing RWA? Any goals you have to do that? So that is my first question.

And you also -- when increasing the ROE of subsidiaries, I know securities had good performance this first half. And I think ROE had come up to 8%. But can you tell us about what is the appropriate ROE level you think will be your goal going forward or appropriate?

Thank you very much for your questions. We will soon answer them. Please hold.

I am the group CFO, Jong-Moo Park. Thank you very much for your questions. As you just mentioned, regarding RWA volatility that it can actually greatly affect the TSR, you are a little bit concerned. And I believe that within the next 2 to 3 years, in uplifting our TSR, it's not going to be a big burden for us because of that. And the reason behind that is regarding our basic ROE of having a little bit of movement from 10% to 12%, a little bit back and forth that will exist. But we put the ROE growth rate as the basic as the nominal growth rate. So it means that the economic growth rate, if it actually gets better, then actually in tandem, our ROE can also be increased.

So when you understand this concept, please understand that going forward in the future, our target is TSR of 50% or higher. And for our shareholder return framework, it is as you had understood. So it is a mix of ROE and RWA growth. And we believe that there will not really be a lot of fluctuations. So I think that can be my answer. And related to your other questions, I think I can answer them later. And I think for securities, we're going to hear from Dong Sik Kim from Hana Securities for securities prospects.

Yes, I am the CFO of Hana Securities, Dong Sik Kim. For 2026 first half, securities companies had great results, not really because of structural improvement because of the stock price increase and the transaction volume that went up. And Hana Securities also was positively affected, and we were able to achieve 9% of ROE for the first half of this year. So we can't really say that it was because of our fundamentals. But in the second half as well, through recovering IB and by market expansion in WM, we're going to achieve 10% ROE. And within 3 years, we want to achieve 12% of ROE, and we believe that it will be achievable. And we will do our best so that we can actually achieve that at minimum.

Currently, we have no questions in queue. I assume that, that was a very sufficient Q&A session. And with that, we will end the 2026 first half earnings call of Hana Financial Group. You can also watch this video on our website, which we will be uploading tonight. Also, if you have any further questions, please forward them to our IR team. We'll be more than happy to answer them. Thank you very much for staying until the end.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

Greetings, I am GH Park, the Head of IR at Hana Financial Group. I express my deepest gratitude to all market participants who are participating in today's business results presentation despite your busy schedules. We will now begin our 2026 Q1 business results presentation.

I would first like to introduce the group and subsidiary management who are here with us attending today's earnings presentation. Group CFO, Jong Moo Park is here with us. Group CRO, Jae Shin Kang, is also here with us. We have here with us, Group CSO, Ho Sik Nam; and also Hana Bank CFO, Young Seok Jeong; Hana Bank CRO, Chang Wook Pae, as well as Hana Securities CFO, Dong Sik Kim is here with us.

Today's session will begin with a presentation on 2026 Q1 group performance, followed by a Q&A session. Please note that the forward-looking statements regarding the group's performance discussed today may differ materially from actual business results depending on changes in macroeconomic and market conditions.

I would like to invite our CFO, Jong-Moo Park to walk us through Hana Financial Group's 2026 Q1 business results.

Greetings, everyone. I am Hana Financial Group CFO, Jong-Moo Park. I would like to extend my sincere appreciation to all stakeholders, including our shareholders, investors and analysts for attending Hana Financial Group's earnings presentation.

I will now walk you through 2026 Q1 group business results. First, the key highlights of our group's business performance. Please refer to Page 1 of the presentation materials. Hana Financial Group's 2026 Q1 net income increased by 7.3% Y-o-Y and posted KRW 1,210 billion, delivering results that exceeded market expectations. The key driver behind the group's solid performance in Q1 was the growth in core earnings, which combined interest income and fee income. On the back of Hana Bank's expanded profit base and enhanced profitability as well as strength in core business competitiveness of major nonbank subsidiaries, such as Hana Securities, group's interest income and fee income both increased Y-o-Y. As a result, the group's Q1 core profit expanded 13.6% Y-o-Y.

As the Group's overall earnings capacity improved, Q1 group's ROE increased by 29 basis points Y-o-Y and posted 10.91%. We believe that in order to enhance Hana Financial Group's sustainable corporate value, improving our group's ROE is our utmost priority. Going forward, by continuing to strengthen the fundamentals of our nonbanking business, we will do our best to continuously improve the group's profitability and capital efficiency.

Next, the group's CET1 ratio at the end of Q1 in 2026 is expected to decline by 29 basis points from the end of the previous year to 13.09%. The introduction of Basel III transitional arrangements and the weak Korean won resulted in downward pressure of approximately 33 basis points based on the CET1 ratio. However, leveraging the group's accumulated capabilities in managing risk-weighted assets over the recent years, we were able to maintain the group CET1 ratio at above 13% as of the end of Q1.

Next, I would like to cover shareholder return. At today's BOD meeting, we approved the share buyback and cancellation of KRW 200 billion, along with a quarterly cash dividend of KRW 1,145 per share. Starting with treasury shares, out of the KRW 400 billion of share buyback and cancellation plan for the first half of the year announced earlier this year, KRW 200 billion of repurchase has already been completed by April and the additional KRW 200 billion of repurchase approved today is expected to be completed by July.

Next, Q1 dividend per share is KRW 1,145, including the last year's Q4 cash dividends to meet the high dividend company requirement, it increased around 11.6% compared to 2025 average DPS. And when compared to Q1 of the previous year, the DPS went up around 26.4% (sic) [ 24.6% ] from KRW 906 to KRW 1,145. Keeping in step with the implementation of the high dividend separate taxation regime and to flexibly enhance shareholders after-tax dividend yield, we have decided to increase the cash dividend for Q1 compared to the previous year.

Let me briefly outline our dividend plan for this year as well. Hana Financial Group has met the requirements for a high dividend company as of 2025. Accordingly, including the 2025 Q4 dividend, which is already paid regarding the cash dividend for the first, second and third quarters of 2026, it will be eligible for separate taxation treatment benefits on dividend income.

In addition, at the shareholders' meeting -- the General Shareholders Meeting held in March, KRW 7.4 trillion of capital reserves was transferred to retained earnings to secure resources for implementing tax exempt dividends and the application of tax exempt dividends will begin with the year-end dividend for this year. Accordingly, starting from the cash dividend for Q4 of 2026 to be paid early next year, we plan to implement tax exempt dividends under which no dividend income tax will be imposed. We expect this to further enhance the effective shareholder return that our shareholders can experience firsthand.

Hana Financial Group under the objective of enhancing corporate value is committed to pursuing the most effective shareholder return strategy. Going forward, we will do our best to proactively and flexibly respond to changes in the regulatory and capital market environment to maximize shareholder value.

Let me now move on to the detailed review of our group's business performance. Please refer to Page 4 of the presentation materials. Group's 2026 Q1 interest income was KRW 2,505 billion, which is a 10.2% Y-o-Y growth. Based on our profitability focused growth strategy, NIM and asset size, both increase delivering solid interest income growth for the group.

Q1 Hana Bank NIM was 1.58%, which is 6 bp Q-o-Q improvement driven by loan portfolio rebalancing, focused on RORWA enhancement. NIM improved 10 bp Y-o-Y, thanks to better funding cost efficiency. Group's Q1 NIM was 1.82%, which is a 4 bp Q-o-Q improvement and 13 bp improvement Y-o-Y.

Next is Hana Bank's Q1 Korean won loan, which increased by 0.9% YTD, household loans decreased 0.3% YTD due to decrease in new household loans rather than -- other than policy mortgage products as the mortgage market shifted to home buyers purchasing homes to live in rather than as investments. But corporate loans increased 1.8% YTD as we supplied corporate loans to high-quality borrowers in response to increased corporate loan demand to fund their investments.

Next is group noninterest income, which is on Page 5. 2026 Q1 group fee income was KRW 667.8 billion, which is a 28% Y-o-Y increase and a historic record high. The major drivers of strong fee income performance in Q1 was asset management-related fees. With the bullish Korean stock market continuing, Hana securities sales channel enhancement efforts has led to 203.9% increase Y-o-Y of brokerage fee income. And the wrap and operation fee income increased 167.6% Y-o-Y, thanks to a strong inflow into equity wrap accounts.

Hana Bank's trust fee income also increased 45.6% Y-o-Y as the ETF focus sales strategy proved effective. Overall, Group's asset management-related fee income increased 87.3% Y-o-Y. On the group's M&A and advisory fee also increased 36.2% Y-o-Y. Hana Security successfully strengthened its IB portfolio around high quality priority deals leading to healthy profit growth. Group's disposition and valuation gain in Q1 was KRW 123.9 billion, which is a 67.2% Y-o-Y decrease, mainly attributed to the KRW 82.3 billion in FX translation loss due to the surge in exchange rate in Q1 as well as rise in market interest rates, driven by inflation concerns, which led to weaker bond performance.

Page 6 looks at group's G&A expense. Group's Q1 G&A expense was KRW 1,198.4 billion. C/I ratio was 38.8%. Despite expense increasing factors such as higher education tax rate and increased depreciation tied to our IT investments, we successfully controlled group's CI ratio at last year's level by minimizing recurring labor and nonlabor expense increases through efficient labor and budget management.

Next is a look at group's asset quality on Page 7. Group's Q1 loss provisioning expense was KRW 231.6 billion, which is a 23.1% decrease Y-o-Y. Credit cost ratio was 0.21%, which is a 8 bp fall Y-o-Y. Hana Bank saw decrease in stressed assets, leading to KRW 38.5 billion in reversal of provisioning and a significant improvement Y-o-Y in group's loss provisioning expense and credit cost ratio.

Next is Page 8. Group's NPL coverage ratio was 95.6% as of end of Q1, which is a 19.6 percentage point drop Y-o-Y. Even though the group delinquency ratio and NPL ratio increased somewhat on a Y-o-Y basis because most of the newly forms of standard and below assets are covered with collateral, incremental provisioning was limited. NPL coverage ratio has temporarily fallen as a result below 100%, but is expected to recover 100% or above in Q2 with increased write-off sales and cleanup of stressed assets.

Recently, macro uncertainties, including interest rate, FX rate and oil prices are continuing and an extended Middle East situation is likely to cause downward pressure on the Korean economy. Accordingly, we will focus on preemptive response against potential risk and reduction of stressed assets to ensure that the group's asset quality metrics, including NPL coverage ratio is managed within this year's business plan targets.

The other slides have been provided for your reference. And this completes my presentation on Hana Financial Group's Q1 results.

[Operator Instructions]. The first question is from Mirae Asset Securities, we have Tae Joon Jeong.

I am Tae Joon Jeong from Mirae Asset Securities. And thank you for the great results. I have two questions. The first question is about your NIM that actually had a huge uplift and I believe that it will keep on going up. So can you give us some margin guidelines for this year. Is there an update?

Second question is about the CET1 ratio. It went down somewhat, but you are maintaining above 13%, and the government is also easing its regulation. So I think this is a very advantageous environment for you. So can you give us maybe a new -- your new share related policies -- share return policies, maybe if they're updated, if you can share them with us.

Thank you very much for the insightful questions. I am Jong Moo Park, the CFO, and I will answer your questions. In Q1, we had actually better-than-expected NIM uplift. And some reasons behind them is that our pricing for the spread has gone off. So I think it is because of the market rate changes, and we had portfolio rebalancing. So due to that I think we had a better profitability from one operations. And then for our FX, I think we had more efficiency, so we were able to have greater results.

And in the second half of the year, there will -- there has been some factors such as productive finance investment and changes in the banking-related laws, then I believe that maybe there we will have some limitations in growth. But when we first drew up plans for 2026, it seems that the numbers actually could get better than we had planned for. So it seems that maybe it will not be a big uplift like Q1, but we believe that even after Q2, we believe that the upward trajectory will be better than we had enjoyed in the previous year.

And regarding the CET1 ratio, regarding additional shareholder return plans, I think you asked those questions. And regarding our shareholder return plans, I think that you will have additional questions. In Q1, during this earnings presentation regarding our value of plans, well, we were planning to give you a more clearer picture. However, we believe that for a more sustainable and realistic plan going forward, we believe that -- as we had mentioned in the previous business results presentation, in Q1, our nonbanking results, although that they are not as high as we want, but they have been much improved.

So I think we will need to look at our earnings trend until Q2. And then I think we will see much more clarity, and then we will have ROE targets or other indicators that we can review with everyone, including the management and can share with you. So it seems that we will be able to share it with you for our first half earnings presentation in the future.

We'll take the next question which comes from KIS.

This is Doosan Baek of KIS. Congratulations on your good results. I have some questions about credit cost. I think during the presentation, as you mentioned, the Hana Bank -- the trust asset decreased, and there was reversal of provisioning. But even if that's taken into account your credit costs or loan loss ratios look low. Do you have plans of adjusting that versus your business plan? So what is your outlook about credit cost ratio? Your NPL ratio has gone up. Your delinquencies have gone up. So what are your plans about responding to that?

Yes. Thank you for that question. Please give us some time as we prepare the answer.

Yes, this is Jae Shin Kang, Group CRO. You've asked about the provisioning. There was around KRW 38 billion of reversal of provisioning at Hana Bank and some other reversals at overseas subsidiaries. So actually, there was about a 5 bp effect in increase of our credit cost from this reversal. Now this will not occur in Q2 because it was a one-off in Q1. So actually, you should read in about 5 bp to our credit costs to make it -- normalize it.

And then usually, when we call -- talk about credit cost, it is alternative investments or real estate project financing, we had less of that recognized in Q1, which was a positive factor in credit cost in Q1. We do see that they could return to an increasing trend in Q2. So our plan until end of this year is mid-30 bp credit cost ratio. That's our guidance. We will try to keep it below maybe -- but still it may go up to the high 20s bp credit cost ratio. That is what we are assuming in our business plan.

We will take the next question. The next question is from HSBC Securities from Jaewoong Won.

Despite a challenging environment, thank you very much for your stellar results. I would like to ask a question about nonbanking. As the CEO mentioned, and we do know and we put importance -- you put -- that you put importance on nonbanking profitability improvement. And it seems that your securities profitability needs the greatest uplift. So promissory note issuance or NPL cleaning up, I think it has been mentioned frequently in the market.

However, when I look at the picture, it seems that your own capital compared to other bank subsidiaries, it's a KRW 6 trillion, and your brokerage market share, I think, is less than 2%. But for other competitors, it's about 5% to 6%. So I think your brokerage MS needs to go up or your ROE uplift will not be easy. So are there any efforts that you're making to make this happen? It's because I believe that is a must for ROE to go up. So if you have any plans in mind, please share them with us.

Yes. Thank you very much for your question. We will answer that question.

And from Hana Securities, I am the CFO, Dong Sik Kim. For your insightful questions. It is true that we have about KRW 6 trillion of our shareholder equity, and we had the license for promissory notes. So we were able to have KRW 700 billion coming in. So we had invested in productive finance and for other efforts as well. And in order to strengthen competitiveness for WM in May, we will have a new MTS that will be launched and with the launching along with our large branch in Gangnam area, we will have it enlarged and have more channel utilization.

And on a fee basis, the MS is about 3%, but we believe that there is room for MS to grow and MTS and digital channel strengthening will lead to Hana's WM strengthening, and we believe that Hana Securities competitiveness will grow, and we will become a firm access of Hana Financial Group. Thank you very much.

And we'll take the next question from Hanwha Investment & Securities, Do Ha Kim.

Even though we had fewer business days in Q1, we are seeing a Q-o-Q increase in your business results, which is very encouraging. First question is about CET1. You are more sensitive for external environment, your CET1. What were the factors in RWA increase, for example, FX and the Basel III transitional measures? Can you break that down a little bit in terms of RWA increase or CET1 ratio impact? I think breaking that down will help us track your sensitivity better.

Second question is, you said that this year's dividends will be separately taxed and next year will be nontax. But then does that mean that in terms of total shareholder return, will dividends take up a larger share of total shareholder return? Or will next year will you focus more on buybacks, given that on post-tax real terms, the same amount of dividends would be worth more?

Yes. Thank you very much for those questions. We will prepare answers if you give us a moment. Thank you very much for those wonderful questions. Yes, about our CET1, I think our CRO will answer the detailed breakdown. And then second question is about shareholder return and the portion of dividends. I think I can answer that question for you.

Yes, this is Jae Shin Kang, the CRO about the CET1. Recently, in Q1, there was KRW 78 increase of exchange rate, which means that there was a 25 bp impact on our CET1 because of the exchange rate. And then the Basel III transition measures from start of year, equity weights were supposed to be raised and that was KRW 1.8 trillion, which brings down it by 8 bp. Combining the two, there was a 33 bp impact on our CET1 ratio on a negative downward direction due to regulation changes.

And then this year, cash dividends, as we mentioned during the presentation, on a Y-o-Y basis, we will be increasing it by around 10% on a Y-o-Y basis, cash on cash basis. When you look at 2025, we have a TSR of 47%. This year 50%, which was supposed to be met in '27. We think we'll be able to reach that earlier this year. I think this is a consensus. And so given that consensus, even though our PBR is still below 1, we are around 0.78. Given our PBR, we do see the need to gradually increase the portion of cash dividends. So already, that's why last year, we satisfied the high dividend payout qualification requirements. Also, the Annual General Meeting of Shareholders have approved that transfer from capital to retained earnings.

We will be able to provide our shareholders stable cash flow, increase real-term dividend yield, have stable shareholder base. We will be able to pull in new retail investors and long-term investors. So those are all of the best benefits. Our retail investor base is still low at around 5%. We want to increase that to 20%, 30% in the long term. We think that this separate taxation program will be a trigger to increasing our retail investor base.

We are still working on the final -- fine points of our new value plan, but key points will be, up till now, we've been focusing more on share buybacks, but we will be looking more -- leaning toward more to increasing cash dividend payouts.

The next question is from Goldman Sachs. We have center head, Sinyoung Park.

Yes, I am Sinyoung Park from Goldman Sachs. There was a question about securities profitability. And I also have a similar question. Regarding fee income for this quarter, I think there was a great increase. But looking at the absolute ROE level, it is less than 7%. So I think compared to other company security subsidiaries, it is still low. That is why, as was mentioned, the initiatives that you have aforementioned, in 2027, if we say that earnings are going to be normalized in 2027, regarding the recurring ROE level, can you tell us about what it is? And I think there was some valuation loss that was quite sizable. And can we understand it to be terminating in this year?

Thank you very much for your question, and we will soon answer your questions.

Thank you very much for your questions. I'm CFO and regarding when things will be normalized. Well, maybe I can answer the question in the beginning. And then our securities CFO can answer your additional questions regarding our group from 2023, there were sizable recurring losses that were incurred -- a nonrecurring losses that occurred, and we had some that reached maturity and we needed to structuralize some of the assets. So that is why some were recognized as valuation losses and some were recognized in other ways. So that has been -- what has been ongoing. So it seems that in our 2026 business plan, it has been reflected.

And looking at things from a group-wide perspective from 2026, it seems that we will have more accelerated pace toward normalization. That is, I think, what we can predict. And regarding if -- it will be completed by 2026, we do have some assets that have maturities that are remaining. So we cannot give you an absolute answer, but we believe that we will have a turnaround, and we believe that the valuation losses will visibly be reduced.

Yes, I am the CFO of Hana Securities. I would like to answer your question in Q1. Hana Securities ROE was about 7% compared to other securities companies, well, Hana Securities in brokerage, I think, had more than threefold fee income increase. And with the Middle East situation, in March, we had about 50 bp increase for the interest rate. So it seems that in bonds we did see some losses. However, in April, that was recovered completely. And because they're included in some Q1 business results it may seem that we are a little bit lagging behind. But if we say that everything -- if everything becomes normalized, our recurring ROE will be about 10%.

Next question comes from NH Securities, Jun-Sup Jung.

This is Jun-Sup Jung of NH Securities. Thank you very much for giving me this opportunity. About CET1, I have another question follow-up. I think it was some time ago, the authority said that they will encourage productive finance by reading the capital requirements for banks. And that has a positive impact. Does it have a positive impact on your capital ratio? And if so, how -- are these new ease regulation reflected. If they are reflected, will your CET1 range -- target range change? Also, with the new capital regulations, would your sensitivity to FX fluctuation also change?

Yes, please give us a moment while we prepare your answer.

Yes. This is Jae-Shin Kang, Group CRO. First of all, in the start of this year, the equity weights were eased and that had a 7 bp increase in factor. Recently, you've seen in the media about the structural FX positions that has not been finalized yet. We're still talking with the authorities about that. But according to what we have -- we think that we can expect an 11 bp upward effect due to that. So today, our CET1 was 13.09%, and then if you add 11%, it will be 13.2% would be our closing Q1 number. And then there is the operating risk related regulation, which will be a larger impact.

We're talking with the authorities about recognizing operational risk losses, that does though require more steps. We need to prove that these were operational risk one-offs. So it's difficult to quantify in terms of CET1 impact yet. But that said, when we look at Q2 CET1, we think that Q2 CET1 will be far more stable than what we saw in Q1.

The next question is from DB Securities. We have Min Wook Na.

I have two questions related to securities. First is regarding promissory note issuance. Well, for the subsidiary securities from banks, it seems that it's quite conservative in your funding. So can you tell us about the balance of promissory note issuance that you have as guidance for this year? And regarding RWA, I think you need to see things from a holding group perspective. So can you tell us about whether any difficulties in the supply funding? And another is overseas investments. So can you tell us about when it will be normalized? When do you think it will get into a more normal pace?

Yes, please wait until we give you the answers.

I am the CFO of Hana Securities. Regarding promissory note issuance, well there are seven securities companies that have received a license. KB, Shinhan and Hana are the subsidiaries of banks or holdings groups. So we are regulated under RWA. So compared to our own shareholders' equity, we can issue up to 2x, but for this year, we believe at least KRW 2 trillion to at most KRW 3 trillion of issuance. In 2027 and 2028, we believe that it can go up to KRW 6 trillion. And regarding overseas alternative investment in 2026, I think a lot has been completed, and it is well managed. So I believe in 2027, it will be completely managed, and it will be done. Thank you very much.

We currently have no one waiting in queue for questions. I think we've had sufficient Q&A. And so if there's no other questions, we will end the earnings conference call of Hana Financial Group for First Quarter 2026. If you have missed the call, we will be uploading this video to our Group website tonight. Of course, if you have any remaining questions, please forward them to the IR team, and we will be more than happy to answer. Thank you very much for staying with us till the end.

Greetings, I am GH Park, the Head of IR at Hana Financial Group. We will now begin our 2025 full year business results presentation. Today, our group CEO and Chairman, Young-Joo Ham, has attended a person to extend greetings to our market participants. Accordingly, we will first hear opening remarks from Chairman Young-Joo Ham, and then our group CFO, will present our business results. After the presentation, we will have a Q&A session.

I would like to invite our Chairman and CEO, Young-Joo Ham.

Greetings, everyone. I am Hana Financial Group CEO and Chairman, Young-Joo Ham. I would like to extend my sincere appreciation to all stakeholders, including our shareholders, investors, analysts, for joining us today for the presentation of Hana Financial Group's 2025 annual business results presentation despite your very busy schedules. It has now been 4 years since I assumed the role of Hana Financial Group CEO.

Over the past 4 years, I have focused on strengthening our group's fundamentals through a profitability-focused growth strategy. As a result, although there were some areas of disappointment, I believe overall that the fact that our group's profitability and per share indicators improved at a faster pace than the average of the industry represents a meaningful achievement.

As our Holdings Group CFO will explain in detail shortly thereafter, as a result of our efforts over the past year to strengthen the core business competitiveness of each subsidiary, our group's earnings capacity increased. And in year 2025, we posted for the first time a KRW 4 trillion level of net income.

In addition, since announcing our corporate value enhancement plan in October of 2024, through systematic risk-weighted asset management, we have consistently maintained the group CET1 ratio within our target range for 6 consecutive quarters. And based on this, we have continuously expanded our shareholder returns. In particular, we implemented an increased year-end dividend to meet the required for separate taxation of dividend income with the aim of improving after-tax returns or yield for our individual shareholders.

As a result, we believe that more individual investors will invest in our shares and that the resulting diversification of our shareholder base will lay the foundation for sustainable enhancement of our corporate value, including this year-end dividend, the group's annual total shareholder return ratio for 2025 is 47%. This represents an increase of 9 percentage points Y-o-Y and brings us closer to our target level of 50%.

To maintain and sustain these efforts to enhance corporate value, we plan to carry out share buybacks and cancellation totaling KRW 400 billion in the first half of 2026, and we will continue to pursue a wide range of policies aimed at increasing shareholder value. Among these efforts, we believe that strengthening our group's ROE is currently the most important policy priority. This is because expanded shareholder returns are ultimately sustainable only on the basis of solid profitability.

First, our group's core subsidiary, Hana Bank currently is demonstrating industry-leading profitability as risk management capabilities. However, we will not be complacent at this stage, and we plan to further strengthen Hana Bank's unique competitive advantage and expand its foundation for sustainable growth so that it can continue to deliver consistent improvements in performance.

Next, nonbanking business will be a key driver of improvement in our group's ROE. It's because as a full-scale recovery in profitability takes place, we expect it to contribute to a meaningful and flexible increase in our group's ROE.

If major nonbank subsidiaries, including Hana Securities, Hana Capital are able to generate sufficient returns relative to invested capital, then I believe that our group ROE can, in fact, exceed the target level of 10% going on to reach 11% or even 12%. Accordingly, starting in 2025, strengthening the underlying fundamentals of the nonbank sector has been established as our top priority.

Although in 2025, we were not able to observe visible results just yet in terms of net profit, still we have laid the groundwork for improving asset quality and for normalizing our profit and loss structure to become more robust. As such, we expect the performance of the group's nonbank subsidiaries to begin normalization at full scale starting from 2026.

In order to enhance and raise the group's ROE, it is necessary to make efforts to secure new drivers of growth. And I believe that stablecoins presents a very promising source of new growth.

Once the Digital Asset Framework Act, which is currently under discussion, is passed into law, stablecoin will be fully institutionalized into our financial system, presenting a significant change that could potentially transform the paradigm of finance.

That being said, really preparing for issuance of coins in itself will not be enough to create new found opportunities. I believe that we must establish new rules amid prevailing change and lead the market while fostering an overall broad environment in which stablecoins can be naturally used and circulated in our everyday lives.

Therefore, we are planning to work in collaboration with various partners to secure practical real-world use cases for stablecoins and to build a complete ecosystem that encompasses point issuance, distribution, usage and circulation with end-to-end coverage. Toward this end, we have formed a stablecoin consortium with multiple financial institutions, and we plan to further build cooperative relations with platform and infrastructure operators to further enhance scalability.

Already, we have put into place technological readiness to build this ecosystem. So once the legal framework is finalized and put in place, we are very confident that we can step up and meet the market smoothly. In addition, we are meticulously preparing and positioning ourselves for the innovation that AI will likely bring to the financial industry.

Hana Financial Group is the only domestic financial group to operate a dedicated in-house AI research and development organization called the Hana Institute of Technology. The biggest advantage of having our own AI research organization is that it gives us the ability to listen most closely to the voices of our frontline employees and customers to conduct research based on those insights while developing and applying AI technologies that can provide tangible and real support to our business and operations.

In practice, cases have been increasing where AI is used not only in customer consultation, but used widely across the group across asset allocation, credit assessments, exchange rate forecasting and export, import screening to drive operational efficiency and also generate profit. Going forward, as we prepare for AI transformation, we are planning to complete our talent development to drive data monetization and infrastructure build-out. We will also establish an open collaboration framework with external institutions such as academia and industry.

By leveraging AI, not merely as a technology, but as a core growth driver for the group, we aim to leap forward as a leading AI-enabled financial group for Korea. At this time of major transition towards digital finance, I am committed to fulfilling my responsibilities so that Hana Financial Group can secure future growth engines by leveraging the internal capabilities and technological strengths needed to lead the market.

Going forward, during my remaining term, I kindly ask and beyond, of course, I kindly ask for your continued support and interest. And I promise that all of our executives and employees, myself included, will do our utmost to meet market expectations and to maximize shareholder value. Thank you.

Thank you very much. Chairman Ham will now be leaving to attend to his next engagement. We kindly ask for your understanding.

Now moving on to Hana Financial Group's 2025 business results. Group CFO, Jong Moo Park, will now present the business results.

Greetings, everyone. I am Hana Financial Group CFO, Jong Moo Park. I will cover our 2025 group business results. Please refer to Page 1 of the materials.

First, highlights of our group's business results. Hana Financial Group's 2025 full year net income posted KRW 4,002.9 billion, a 7.1% increase Y-o-Y. With the group's interest income and noninterest income recording balance growth through our group-wide cost efficiency efforts, our CI ratio decreased Y-o-Y. As credit costs are and have been stably managed within the scope of our management plan, our group's annual business performance showed a solid improvement, not only in the scale of profits, but also in the quality.

As a result, group's ROE recorded 9.9%, a 7 bp increase Y-o-Y, group's Q4 net income posted KRW 569.4 billion, with the recognition of various one-off costs, including contributions to the new lead fund and provisions for fines related to ELS and LTV, it decreased 49.7% Q-Q. But compared to the same period in the previous year on the back of interest income and fee income increase, it went up 11%.

Now group's 2025 and CET1 ratio is expected to post 13.37%. With the Q4 $1 FX rate increase, there has been increasing downward pressure on CET1 ratio, but supported by our systematically established risk-weighted asset management process through efforts to rebalance our portfolio focused on RORWA, we were able to improve our year-end CET1 ratio by 15 bp compared to the end of the previous year.

Next, I will walk you through shareholder returns. First of all, 2025 year-end cash dividend was resolved KRW 1,366 per share. If this is comfortness resolved in the general shareholders meeting, 2025 annual cash dividend per share will be a total of KRW 4,105 including KRW 2,739 of the previously paid quarterly dividends, which is a level of KRW 505 or around 14% higher than the previous year.

In addition, the total annual cash dividend amount will increase to KRW 1.18 billion, a 10% increase Y-o-Y. And when converted to a dividend payout ratio, it is around 27.9%, thereby fully meeting all the requirements for classification of as a high dividend company eligible for a separate taxation of dividend income under the revised restriction of Special Taxation Act.

As a result of increasing the annual cash dividend amount compared to the previous year, Hana Financial Group's 2025 annual shareholder return ratio, including KRW 754.1 billion of treasury shares that were fully repurchased in 2025, it recorded 46.8%, a 9 percentage point increase Y-o-Y. Through the diligent implementation of our corporate value enhancement plan, 2025 group share price recorded a solid growth trend, but our group PBR is still remaining below 1. Accordingly, going forward, Hana Financial Group will continue with our corporate value enhancement plans, including shareholder returns.

As of beginning, we plan to carry out share buyback and cancellation totaling KRW 400 billion in the first half of 2026, of which KRW 200 billion will be executed in Q1 and the remaining KRW 200 billion will be executed in Q2.

Now I will move on to explain the details of our group's business performance. Please refer to Page 4 of the presentation materials. Group's Q4 interest income based on the sound improvement trend of our group NIM posted KRW 2,383.1 billion a 4% growth Q-o-Q. In the case of Q4 bank NIM, driven by our profitability-focused asset growth efforts and reductions in funding costs resulting from the rollover of maturing high interest time deposits increased by 2 bp Q-o-Q and the group's NIM also increased for bp Q-o-Q with card NIM improvement. On the other hand, Q4 bank loans in 1 maintained the level of the previous quarter. Household loans rose by 0.8% Q-o-Q as real demand for mortgage loans centered on policy-based products remain solid and demand increase for credit loans driven by improved equity market conditions. However, a decline in corporate loans driven by year-end loan repayments by large corps offset the growth in household lending.

On an annual basis, the group's net interest income posted KRW 9,163.4 billion, a 4.6% increase Y-o-Y. This was achieved despite the 2 policy rate cuts in the first half of the year, supported by profitability focused portfolio management, including expansion of fixed rate loans and an increase in core low-cost deposits, which led to increases in the group and the bank's NIM by 9 basis points and 6 basis points, respectively, compared to the end of the previous year. This was also a result of the bank's loan assets based on RORWA focused growth strategy, which contributed to the stable achievement of the nominal GDP growth rate level targeted at the beginning of the year.

Next, I will move on to group's noninterest income. Please refer to Page 5 of the presentation materials.

First of all, looking at Q4 fee income for the group, we recorded KRW 576 billion, up 1.1% Q-on-Q. Main factors were credit card fees, which increased by 18.5% Q-on-Q, coming off of a low base in Q3 from merchant fee refunds. Meanwhile, brokerage fees increased by 25.3% Q-on-Q, driven by favorable market conditions.

The group's full year fee income was KRW 2,226.4 billion, up 7.6% year-on-year. Although the growth rate fell somewhat short of the 10% target set at the beginning of the year, overall performance was solid with our fee income mix recording broadly balanced growth when excluding the bank's loan-related fees, which declined year-on-year from reduced early repayment fees.

In particular, at Hana Capital, operating lease fees increased from an expansion in lease assets going up 14.7% year-on-year. Credit card fees also rose by 9.4% year-on-year despite reduced merchant fees, supported by improved performance from higher domestic and overseas transaction volume. As a result, fee income continued upside trends across the group's major nonbank subsidiaries.

Next, on to group disposition and valuation gains, which declined Q-on-Q due to FX-related translation losses in Q4 among some of our nonbank subsidiaries. On a full year basis, however, the group's disposition and value each and gain increased by 48.5% year-on-year, recording KRW 1,058.2 billion supported by improved bank trading performance, taking advantage of swings in market indicators, such as interest rates and exchange rates.

Next, I will take you through G&A on Page 6. The group's general and administrative expenses in the fourth quarter increased by 11.2% quarter-on-quarter driven by seasonal cost factors such as advertising spend. However, on a full year basis, the group's G&A expenses rose by just 3.5% year-on-year, resulting in an improved CI ratio of 41.2% compared with the previous year.

To break out G&A into more detailed line items, the group's salary and benefits increased by 2.8% year-on-year due to normal wage increases. This, however, was offset by efficiency gains across subsidiaries to reduce unnecessary costs, which led to a 4.5% year-on-year decline in administrative expenses.

Next, retirement benefit expenses increased by a relatively large margin year-on-year. This can be explained as a low base effect, however, as the bank's special retirement costs for 2024 were preemptively recognized at the end of 2023. Depreciation and amortization expenses have been increasing each year in line with the expansion of group investments into digital infrastructure. However, such investments are continuously managed to ensure that they remain within a certain level relative to operating revenue.

As a result, the group achieved an improvement in cost efficiency in 2025, compared with the previous year. Going forward, we plan to continue strengthening our digital competitiveness, including AI and information security to enhance operational efficiency while maintaining stable control over recurring costs through disciplined budget execution mostly linked to revenue generation.

Lastly, I will explain the group's credit cost. Please refer to Page 7.

The gross provision for credit losses in the fourth quarter of 2025 increased 29% quarter-on-quarter, recording KRW 372.1 billion. On a full year basis, provisions increased by 7.5% year-on-year to KRW 1,295.1 billion.

While provisions wrote at some nonbank subsidiaries in Q4 recurring credit cost expenses remained stable. As a result, the group's annual credit cost ratio was maintained at 29 basis points, broadly in line with the level at the end of the previous year.

In response to both domestic and external uncertainties that emerged in 2025, including sluggish domestic economic conditions, U.S. tariffs and heightened volatility in the exchange rate, the group implemented proactive asset quality management at the group level. Consequently, the group's credit cost is managed soundly within the range set out in our management plan.

Looking ahead to 2026, we plan to continue proactively managing against risk factors and to respond thoroughly to ensure sufficient loss-absorbing capacity. Please refer to the published deck for remaining details.

With that, this concludes Hana Financial Group's presentation of full year 2025 financial results. Thank you very much for your attention.

Thank you very much. Now we will have a Q&A session. I will explain briefly about the Q&A session method. [Operator Instructions] In the center of the lower part of the page, for your reference, there will be consecutive interpretation if the question is asked in English. Now we will wait for questions to come in.

We have the first question from NH Securities. We have Jun-Sup Jung.

In 2025, despite a challenging environment, congratulations on good earnings and good shareholder return. And I have a question -- well, two questions related to shareholder return. The first question is regarding 2025 shareholder return ratio. You mentioned that it is a bit shy of 50%, it's 47%.

And going forward, are you going to actually have a higher target? Or are you going to have some changes to your capital policy going forward? Second question about shareholder return. is in 2026, what is going to be your dividend and share buyback and cancellation ratio because it seems that you're going to have some changes. But can you tell us about changes, including tax exemption dividends going forward and the ratio of the 2?

Thank you very much. Please hold until we prepare for your answer. Thank you very much.

Thank you very much for your question. I am the CFO of the group. And thank you very much for your insightful question. For 2023 -- well, from 2023, 33%. And then we had 38% in 2024. And in 2025, we had about 47%. So for shareholder return, we steeply had an increase in shareholder returns. And not only for shareholder returns, but we also had value of plan implementation plan that was disclosed, CET1 ratio, our target, which is being very stably managed.

And although it's shy of 10%, our ROE is also in the 9% range. So I think for the past few years, we have been working very hard to uplift our shareholder return. And for PBR as well, when we first started, it was 0.3. It went up now to, I believe, 0.7. And regarding shareholder return -- well for this year, until 2027, we mentioned that we're going to achieve 50%. But in 2025, we already went to 47% level. So it seems that we could reach it earlier than we had expected. We believe, although we're a bit cautious to be very confident. And regarding reports and analysis and future plans, at the end of February, we're going to have some in-depth meetings with our directors, and we will let you know as soon as they are confirmed.

And for 2026, for our shareholder return plans, well, first of all, I believe that as was mentioned in the presentation regarding the separation of dividend income taxation, well, you probably know about our plans. And you also asked about our preparations for after-tax dividend yields. And we believe that in end of -- we're going to have it in the agenda for GSM. And in 2026, we believe that -- as was mentioned in the beginning, that we had been very busy trying to reach our target of 50% of total shareholder return.

Well, we are always thinking of how we're going to have sustainable growth and having enhancement of corporate value. So in 2026, we believe that we are going to do our best so that we have the dividend income separation taxation and the after-tax dividend yield. So we are going to actually do our best to meet those criteria.

Thank you very much. We will take the next question.

From Mirae Asset Securities, Mr. Tae Joon Jeong.

This is Jeong from Mirae Asset Securities. So you mentioned about your shareholder return policy. Now regarding tax exempt dividends, I did have a question. The dividend amount may be maintained and you may want to focus on share buybacks until PBR multiple rises to the multiple level. Is that the plan?

And then regarding non-life, there is some talk that you might be in the market to make an acquisition of non-life insurance company. So in terms of expected contribution from that kind of business, assuming that you do go ahead with the acquisition, could you elaborate and provide more color?

Yes, please wait momentarily as we prepare the answer.

Yes. This is the group CFO. Let me answer the first question. And then regarding MG P&C our CSO, from the group will answer your question.

In terms of the capital reduction dividend, we do have enough funding for the tax-exempt dividends. But as to what extent, we will make a transfer into retained earnings from our capital reserves.

Again, this is subject to discussions with the BOD, and so we will do that to determine the final size of the transfer. And so like we said, until you mentioned that threshold of PBR 1, initially, we were thinking that above 0.8 PBR, we may actually revisit the mix between dividends versus shareholder share buybacks. We mentioned that we would look in depth at the mix. At present, in terms of meeting the requirement for separate taxation for dividend income or tax-exempt dividends, I think that it gives us more room to focus more on share buybacks and cancellations over dividends.

And so this is the CSO of the financial group. So there has been, I think, an article recently, Hana Financial Group actually is always looking to strengthen the long-term drivers of growth. Long term -- and so we have been studying the market in the long term. And so -- and nonbinding expression of interest has been submitted, but nothing is finalized yet, it is just an LOI at the moment, the letter intent only.

So for our group in terms of possible synergies with our portfolio, its stand-alone dependence, the sustainability of its business model, only when everything falls into place in coherent will we actually examine it further. So we're always based on this principle and disciplined in our approach.

The next question is for from Korea Investment Securities. We have like Bae Seung Jun on the line.

I am Bae Seung Jun from Korea Investment Securities. I have a question related to money move. Recently, from real estate to securities and from banking sector to the securities companies. It seems that there is a lot of media coverage regarding the so-called money move. And looking at the situation, do you have any visible indicators that attest to this? And regarding this money move phenomenon for financial investment or brokerage, how are you going to respond?

Thank you very much for your question. We will soon answer your question.

Please hold. I am the bank's CFO, Jeong Young Seok. So more we move from the bank to the securities companies so you're asking if we have seen any visible trends, for example, bank deposits going to securities.

So you probably know that the stock market was very good from the end of last year. So for retail time deposits, well, it seems that we had believed a little bit went down, maybe because of going to securities, but because of ILM and because of the banknote issuance, IMA and banknote issuance, it seems that we did not really see a lot of visible trends. So we have had a lot of the corporate deposits, well, in its relations to IMA.

So it seems that for the corporate deposits, we did not see much changes. But regarding the attrition of retail deposits, well, we are always keeping an eye on this. And linked to the index, we are seeing the time deposit products like ELT that we are actually selling quite well.

And regarding the money move, well, regarding retirement pension from last year, so transition to securities houses or companies, well, we are actually trying to keep a very close eye on the situation, but we haven't seen any real numbers that attest to this yet.

From Hana Securities, I am CFO. I would like to answer your question. As you have mentioned, regarding the money move, it seems that a lot of our securities-related customers and assets has actually went up about 30% in 2025 end compared to 2024 end. And for securities, we have a new banknote product and we have about KRW 300 billion of products that were sold, and we have a lot of the family office customers that are looking for new products.

So that is why we are responding very well to this demand. And in 2026, first half, when we have the MPS revision, we believe that brokerage income will increase. So through this, we have the WM competitiveness strengthening that we are targeting. So we are sure that we can have better brokerage results and have good results that meet our expectations.

From HSBC Securities, Mr. Jaewoong Won, you are online.

Yes. Congratulations for delivering good performance despite the challenging market conditions. I would like to ask about the nonbanking side and also the issue regarding the fines. First, for nonbanking, I think the Chairman emphasized in his comments that you will be working on improving ROE as a priority.

So I have to ask for Hana Securities in the fourth quarter, it seems that your fee income actually has grown. But still overall, earnings have not improved. So what is the reason for that? Is it because of overseas asset impairment? What is the cause of that softness?

And for Hana Securities and Hana Capital, starting this year. So do you expect your overseas loss to dissipate? And if so, how much of an improvement do you think is likely to materialize this year? If you could provide some color?

And regarding the fine, so KRW 113.7 billion in one-off. Is this just for ELS? Or does it also cover the fines for LTV as well? And on the 29th, I think there was a second sanctions review meeting. So is this amount finalized? In terms of provisioning or write-back, do you expect some kind of write-back in the future or an adjustment to the provision?

Yes, thank you for your questions. Please bear with us as we prepare the answer.

Thank you for the question. I'm the CFO of Hana Securities. So as you are aware, in the fourth quarter, overall, for all security companies, brokerage fees actually probably were expanded in large part for us as well, although our market share is not very big, we did see an expansion in brokerage fee income.

That said, so in terms of alternative assets overseas, on average, annually, we are recording a certain loss. And so I think since that is weighing -- well, that actually weighed on our earnings for the fourth quarter. But for full year, if you look at 2024 and 2025, we are maintaining robust earnings at around KRW 250 billion. We are expecting comparable levels this year as well.

So this is the group CFO. Allow me to answer more on the nonbanking side, just a little bit. For securities as a expansion as CFO mentioned, Mr. Kim, in the fourth quarter, there was some valuation loss on alternative assets overseas. And for Hana Capital also had a knock-on effect. so earnings actually declined year-on-year as a consequence. But then what is expected going forward?

For securities, of course, assets upon reaching maturity, it's a matter of how the assets will be rebalanced. So we cannot say it is fluid right now. But I think certainly, we are past the bottom at the low point. From our capital as well. I think this year, we are looking to achieve the level that we saw in 2025 as we are seeing a rapid normalization as things are getting back on track.

This is Jeong Young Seok, the bank CFO. I would like to answer your question regarding provisioning for the fine. So KRW 137 billion includes ELS and LTV exposure both. LTV, the KFTC had the first full scope hearing. So it's based on that official number. going forward, if possible, we are considering launching an administrative lawsuits. And so we have set aside a certain provision amount for LTV. And for ELS, the amount actually is tentative that we have received through notice. It is not a finalized number yet.

There is a likelihood that there might be a reduction of the amount and so we are seeking advice from the legal law firms and setting up certain provisions.

The second theory at the meeting, yesterday was inconclusive. And so there will be an extension to a 1/3 sanctions review meeting on February 12.

We will take the next question. Hanwha Investment Securities, Do Ha Kim.

I have two questions. The first question is about 2026 guidance, if you can provide it to us, margin growth and credit cost. Well, for margin in Q4, it seems that the market interest rate moved greatly. So I think that maybe we can look at margin with a rosier picture. But regarding the bi move to securities, well, I believe maybe it's a bit exaggerated by the media, but I think maybe the direction is inevitable. So there is funding cost pressure.

And for the productive finance implementation, it seems that there will be some competition for loan interest. So I am curious about your outlook for the margin. So if you can answer from that perspective, it will be greatly appreciated. And looking at growth, it seems that for growth, investors are -- some investors are saying that they have a weaker view for growth. So if you have those perspectives in your mind, while you answer my question, it will be greatly appreciated.

And regarding my second question, well, I think it was mentioned several times that I think for Q4, there were some losses for securities in Q4 that led to lower performance, but it seems that this is an industry that can see the best earnings. So can you tell us about what kind of strategy you have for Hana Securities for 2026? It will be greatly appreciated if you can share it with us.

Thank you very much for your questions. And please hold and we will soon answer your questions. Thank you.

Thank you very much for your insightful questions. I am the CFO of the group. For 2026 overall, looking at our margin, it seems that regarding our asset expansion in Q3 end of 2024, it seemed that it hit the bottom. And then we had seen the margin repricing improvement that is ongoing. And as a result, last year, regarding our loans, we had loan rebalancing and we had the funding cost that was actually reduced. So the bank NIM was able to be lifted up.

Also in 2026. regarding our outlook, it seems that for now, with the rate cut, Well, it seems that the outlook is unclear and regarding the policy rate cut, it doesn't happen, then in 2026, well, compared to 2025, maybe there will be a very slight margin growth that may be possible. So we have some expectations for that.

And regarding productive finance, well, you got some concerns that the margin may slim down because of overcompetition. But for productive finance, it seems that regarding this, going forward, for loans and investments, it seems that it might not have any immediate impact for now. But regarding 3 to 4 years in the future, well, we could have our own investment or loan support that we had provided now that can provide some different results 3 to 4 years in the future. So we have a task force team for productive finance.

So this is not just for loans. We have the projects for our own investments. So through our platforms, we're going to implement different projects. So what is important is, as was mentioned, we have the credit review officers, and we have the sophistication of our processes that will make us very well prepared for the group growth, which also will link to profitability uplift. Thank you very much.

Also, I mentioned the loan part, but I think I should also mention the fee part. in 2024 and 2025, we have seen fee income growth that was very consistent. And in 2026, our target is quite enthusiastic. It seems that -- well, high 1-digit single-digit rate, maybe that is an expectation that we have.

And regarding our valuation and disposition gains, well, it seems that in Q3, there was the market rate that went up. So it seems that our profits were not as high as the previous quarters. But in Q4, there were some fundamentals that we had accumulated. So in 2026, we believe that we will be able to have growth that exceeds the level of 2025.

Also regarding our costs, to cover our outlook, well, I know that it's probably similar for other financial groups. So G&A is impacted by the educational taxation rate change. And for Hana Financial Group, we have Jung HQ headquarter relocation costs.

So some of that needs to be reflected. So taking all of those factors into consideration, it seems that the 40% -- early 40% CI ratio that we're targeting is something that we are always trying to meet. And for the credit cost ratio as well, it seems that although economy doesn't seem to be recovering very quickly or strongly, and it seems that the interest rate is also at a little bit of a stand still, we have a conservative outlook. However, despite that, we believe that we will have CCR of about mid-30 bp a that we will target and manage. Thank you very much.

Now I will answer the question for Hana Securities. I think at Hana Securities, we have 3 areas for our earnings generation WMIB and SMT. So for wealth management, in Q4, in [indiscernible], there are mega center was open.

And through this, we were able to have high net worth individuals needs that were actually recognized, and we believe that a lot of profit generation is being possible because of that in 2026, we're going to expand our mega center and have our digital competitiveness expanded so that our digital competitiveness will meet the trend of the times.

And for IB part regarding -- because we are a bank subsidiary, we have RWA issue, but we're going to have maximization of capital and we believe that we can expand our IB business based on productive finance. And in the OTC business, we have SMT business that is very strong. So we are going to have global expansion, so we are preparing for 2026.

Along with this, we have a fourth engine commercial paper that we have actually been preparing for. So we have new SMT and IB customers that will be expanded. So we believe that we will clearly have a larger number of customers compared to the past.

Mr. Jaewoo Kim from Samsung Securities.

I also -- so a lot of my questions are already covered by the previous analyst, but I just have two questions. First of all, I think corporate loans may grow more than household loans given the productive finance emphasis may require some investment. So risk-weighted assets wise, the risk weightings, so compared to the past, will they be more manageable?

So perhaps higher weightings for investments. So I don't know if that might be a concern. So regarding RWA growth, what would be a fair expectation in terms of RWA growth? And what kind of management measures do you have? And then as you mentioned, you want to grow your nonbanking side of the business.

Now the issue of notes or the CP of the security firms has to be backed by capital. And for your trust business, also, there might be more capital required to expand into certain lines of business. So in terms of building your nonbanking business, how -- what are you thinking in terms of reallocation of your capital across nonbanking?

Yes. Thank you very much. Please wait as we prepare the answer.

This is Jae-shin Kang, the Group CRO. In terms of productive finance, risk-weighted assets, how we need to manage that, let me address that bar. So as you said, rather than corporate loans, investments tend to have higher risk weight. So it is now a more added level of complexity. So our CET1 target is between 13.0% to 13.5%. So we're going to manage our risk-weighted assets within that band. In terms of investments into productive finance, we actually are managing it divided into different growth segments.

So for equities, the risk weighting for productive equities, the financial authorities have not finalized their policy measures yet. But once that is confirmed, I think, if anything, the risk meeting may become alleviated in part, and so to the extent that we are able to manage our CET1 within our band, we will direct towards productive finance.

And then the risk-weighted asset management practice in terms of regular practice, well, real estate or lease or rental business. So these are not related to productive finance. So there, we will be more conservative as we manage the total size of aggregate assets to keep RWA growth comparable to last year levels so that we can maintain our CET1. Thank you.

Yes, I'm the group CFO. Let me also address your question on the nonbanking side. For nonbanking, the COO also mentioned how we want to focus on growing nonbanking. It's not so much growing the nonbanking side, but closer to normalization. I think that would be a more accurate word because for nonbanking, in terms of the capital, it's about KRW 14.5 trillion or above. So as a percentage of the total group, assets is about 12% as of 2025. So quite low.

So in terms of capital share, it actually -- it's about 30% split between banking versus nonbanking. Nonbank is 30%. So actually, 30% will be the contribution in earnings from the nonbank side. So this is not achieved yet. And you have seen in the results of our security firms, capital and insurance arms relative to the capital that is committed, the performance has been sluggish. So it's about normalization that we are continuously working on. And as the CEO mentioned, in 2026 and '27, we expect the normalization to become more visible and firm.

In terms of capital allocation, I think you asked about our plans. For capital, new businesses, for example, the rental car business, B2C sales will be expanded in scope to B2B to become more competitive. So that's just an example. So for the last 10 years or 5 years or so, the nonbanking side, we actually invested a lot of capital to drive organic growth.

Going forward, we cannot say that there will not be that kind of capital support. But given where things stand now, for the insurance arm, we're thinking injecting capital just at a level required to meet the regulatory threshold. That's pretty much it. Otherwise, we will focus more on driving organic growth.

So there are no more questions pending. I think that we have had a sufficient Q&A session thus far. We will now conclude Hana Financial Group's 2025 Full Year Business Results Presentation and Q&A session.

For those who haven't been able to attend, we are going to upload this video on our website tonight in Korean time. So please revisit it if you need to. And please direct any questions you have to our IR team. We will do our best to answer them. Thank you very much.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

Greetings, everyone. I am G.H. Park, Head of IR at Hana Financial Group.

I express my deepest gratitude to all market participants who are participating in today's business results presentation despite your busy schedules. We will now begin 2025 Q3 business results presentation.

I would like to introduce our executives from our group and major subsidiaries who are here for today's business results presentation. Group CFO, Jong Moo Park, is here with us. Group CRO, Jae Shin Kang, is with us here today. Hana Bank CFO, Young Seok Jeong, is here with us. Hana Bank CRO, Chang Wook Pae, is with us today. Last but not least, Hana Securities CFO, Dong Sik Kim, is here with us.

Today, we will first have a business results presentation and then have a Q&A session.

Please note that the earnings presentation materials are available for download on our website, and that the forward-looking statements regarding the results discussed today may differ materially from actual business results depending on changes in macroeconomic and market conditions.

I will now invite our group CFO, Jong Moo Park, to walk us through 2025 Q3 business results.

Greetings, everyone. I am Hana Financial Group's CFO, Jong Moo Park. Thank you to all shareholders, investors and analysts and all interested parties for taking part in today's Hana Financial Group Business Results Presentation.

Before I explain about our group's business results, I would like to first walk you through the contents of our Q3 shareholder return. Please refer to Page 1.

Today, at our BOD meeting, there was a resolution for KRW 920 per share of cash dividend and KRW 150 billion of share buyback and cancellation. 2025 total share buyback amount, including the KRW 653.1 billion of shares bought YTD stands at KRW 803.1 billion.

In addition, the annual shareholder return amount, including the total cash dividend of KRW 1 trillion scheduled for this year recorded KRW 1,803.1 billion, a 28% increase Y-o-Y. Accordingly, group's 2025 total shareholder return ratio is expected to increase significantly compared to the previous year.

This outcome reflects a firm commitment of the group's BOD management to enhance corporate value. And going forward, we will basically implement the key objectives of Hana Financial Group's corporate value enhancement plan, expand shareholder return, maintain a stable capital ratio and improve profitability to recover our undervaluation of our stock and to further enhance shareholder value. We will work tirelessly.

I will now elaborate on 2025 Q3 group business results. Hana Financial Group's 2025 Q3 net income posted KRW 1,132.4 billion. And on a Q3 YTD basis, recorded KRW 3,433.4 billion, a 6.5% increase Y-o-Y, achieving solid results that exceeded market expectations. On the back of balanced growth for both interest income and noninterest income, group's general operating income increased by 5.1% Y-o-Y. And with G&A expenses and credit costs also being effectively managed, both group's top line and bottom line were able to achieve solid improvements. As a result, the group's Q3 cumulative ROE reported 10.6%.

And next, I will provide further details on the group's business results. Please refer to Page 2 of the materials. First, I will cover group and the bank's NIM and net interest income. Group's Q3 NIM rose by 1 bp Q-o-Q, recording 1.74%, and Hana Bank's Q3 NIM increased by 2 bp Q-o-Q, posted -- posting 1.50%. The main driver of bank NIM improvement was profitability-focused portfolio management.

We were able to defend against downward loan pricing through the expansion of fixed rate loans and through efforts to improve funding portfolio, including core low-cost deposits. We were able to significantly reduce funding costs. As a result, despite Hana Card NIM decline caused by partial refund of merchant fees, group's NIM was also able to slightly increase Q-o-Q.

Next, group's Q3 interest income increased 3.4% Q-o-Q, recording KRW 2,291.2 billion. And on a Q3 YTD basis, it increased 3.1% Y-o-Y, posting KRW 6,780.3 billion. Based on robust loan asset growth and NIM improvement, Hana Bank's interest income on a Q3 YTD basis increased 2.7% Y-o-Y and drove group's interest income growth.

Next, bank's loans in won increased 2.6% compared to the end of the previous quarter and posted KRW 318 trillion. While maintaining RWA-centered loan asset growth trend, corporate lending was expanded to support companies affected by tariffs and to promote productive financing. As a result, Hana Bank's corporate loan increased 3.3% compared to the end of the previous quarter.

Household loans increased 1.7% versus end of Q2, driven by the mortgage loans that went out for housing purchase contracts signed by end of June. YTD loan growth by Q3 was 5.1%, which is already above our full year loan growth target, which is around the nominal GDP growth rate.

While household loan growth trend is gradually leveling off, corporate loan support is expected to continue even in Q4 to a certain extent, which is aligned with the shift to productive finance. That said, profitability and capital efficiency remains the focus of our asset growth strategy, and preemptive risk management will be emphasized to make this an opportunity for us to secure high-quality assets and stronger earnings base and ensure smooth implementation of the group's value-up plan.

Next is a look at our group noninterest income. Group's Q3 fee income was KRW 570 billion, which is a 2.0% Q-o-Q increase, driven by increase in bank's trust fee income from product diversification.

The group's YTD fee income by Q3 was KRW 1.65 trillion, which is a 6.7% Y-o-Y increase. Improved market conditions and Hana Securities enhanced core competitiveness boost the M&A advisory fee income on a Y-o-Y basis. Also, increased cumulative fee base, including the operating lease and improved asset management-related fees such as brokerage, supported solid growth of the group's fee income.

Next is a look at our disposition and valuation gains. Q3 group disposition and valuation gain was KRW 293.1 billion, which is a 34.7% decrease Q-o-Q due to factors including the FX translation loss caused by the weaker Korean won. On a YTD basis, disposition and valuation gain was KRW 1,119.5 billion, which is up 19.5% on a Y-o-Y basis, mainly attributed to Hana Bank's disposition and valuation gain increasing 53.5% Y-o-Y, driven by FX translation gain and trading gains.

Please turn to Page 3. Group's Q3 YTD G&A expense was KRW 3,413.2 billion, which is up 3.1% Y-o-Y. Q3 YTD group's cost/income ratio was 38.8%, which is down 0.7 percentage points on a Y-o-Y basis.

Despite increase in the retirement benefits tied to the ERP expense recognized in Q1 and also the increased amortization and depreciation tied to greater investments into new growth businesses, we were able to remain committed to cost efficiency, including revisiting various fixed budget items while increasing spending directly tied to earnings. And we were able to maintain the group's normalized expenses at a stable level.

In terms of YTD Q3 group credit cost, the credit cost ratio was 28 bp, which is a 2 bp fall from Q2. Thanks to early selection and preemptive management of high-risk borrowers and proactive management of nonperforming assets, the nonbank subsidiaries provisioning fell on a Q-o-Q basis, which helped keep group CCR in line with our annual target.

Recently, the leading economic indicators have rebounded, and the Korean economy is showing signs of recovery. That said, given the remaining uncertainties, including sluggish construction investments and possible export softness triggered by U.S. tariffs, we will remain vigilant in managing the group's asset soundness stably in Q4 and onwards.

Last is a look at our group capital ratios. As of end of Q3, group's CET1 is expected to be 13.30%, which is a 9 bp drop from Q2. The Korean won depreciation during Q3 post downward pressure on CET1, but thanks to our thorough RWA and RORWA management, we were able to maintain CET1 ratio within a fair range.

The other slides in the presentation have been provided for your reference. And this completes my presentation on Hana Financial Group's 2025 Q3 earnings. Thank you.

Thank you. Now we will start the Q&A session. [Operator Instructions] We have the first question. The first question is from Korea Investment Securities. We have Baek Doosan on the line.

I am from KIS. Regarding the economic growth plan task force that you announced, I would like to ask a few questions. Because in the mid- to long term, for productive finance, you mentioned that you're going to have KRW 84 trillion, and there's national growth fund and other of your own investments, which is quite sizable. So related to these plans, can you tell us about profitability and the direction of the group? And what effect it will have on your capital ratio? So if you have plans, can you share them with us?

Thank you very much for your question, and we will soon answer your question. Thank you very much.

I am the CFO of the group, and I would like to answer your question. Thank you very much for the great question. As you probably well know, we have our economic growth, TFT, and we have the Hana All Growth together growth plan that we announced last week. There is KRW 100 trillion in total, and there is the national growth fund, KRW 10 trillion, and then there is our own investment, KRW 10 trillion. And to provide loans, KRW 64 trillion. And for inclusive growth, we have about KRW 16 trillion. So this will be throughout 5 years, and we will actively participate in this effort.

Also, I think you're probably curious about our loan growth and about our corporate financing, how it will affect our group's RWA. You probably want to know about its effect. And I would like to give you some color about our direction going forward.

Each year, there is about KRW 20 trillion of capital. And if we make this injection, then our overall RWA would be per annum KRW 12 trillion growth. So we have done some simulations, and this was how it grew, KRW 12 trillion increase. So for CET1 ratio, there will be about 50 bp influence on this -- and CET1 ratio. And for each year through a loan growth, there is corporate loan on -- and household loans that we're providing. So I think if we reflect the offsetting effect, it will be about 20 bps more or less CET1 decrease or downward effect they will have. So regarding how we're going to make up for this in effect, well, that is a challenge we have to undertake.

Going forward, regarding our RORWA, it seems that its importance is growing. It's because providing loans -- well, with our existing RORWA basis, it is similar. But for funds and securities, we are -- if we have more investment in that, RORWA will increase naturally, then we will need to exert more efforts in managing our RORWA. So that is our direction going forward.

And regarding the importance of investment will also grow, and we believe we need to be preemptive in preparing. So ultimately, we plan to actively participate in this inclusive finance, productive finance, and it will not actually hurt of our finances.

And regarding our RWA growth and its impact on the downward impact on our CET1 growth, we believe that we can cover this fully through profit generation. Thank you very much.

Thank you very much for those answer, and we will take the next question. Next question comes from NH Securities, Jun-Sup Jung.

Can you hear me?

Yes, we can hear Mr. Jung.

My question is -- well, actually, I have two questions. First question is related with another financial group that had its earnings call about an hour ago. I had the same question about the separation of dividends -- separate taxation of dividends. What is your position?

Also, you have announced that you'll do an additional share buyback of KRW 150 billion. Is that until end of January, the buyback, if I understood you correctly? But then you included that full KRW 150 billion in the total shareholder return of KRW 1,803 billion. So can you clarify whether that KRW 150 billion buyback will be completed before year-end or whether it will extend until next year?

Yes, please give us a moment to prepare an answer for your questions.

Yes, this is the group CFO, Jong Moo Park. I'll take your second question first about the deadline for the KRW 150 billion share buyback. It does say end of January 2026, but that is the deadline on paper in practice. We are planning to complete the KRW 150 billion buyback within the year.

If you refer to last year, last year, we did some buybacks at Q4, but there were FX rates and domestic political situation. If you recall, at the end of last year, there was a lot of political uncertainties. So we had to push it to this year. But in principle, the KRW 150 billion buyback will be completed before the end of the calendar year.

About the separate taxation for dividend, I think the government's tax reform and bill revisions, the direction is somewhat clearer now. And we think that this will be a wonderful way of inviting more retail investors into our stock, and that will then widen the demand base. And therefore, it will be overall a positive for enhancing our enterprise value.

And that's why -- this will also impact our dividend policy next year in order to qualify for this separate taxation of dividends. In order to qualify, we would have to increase our cash dividend somewhat. We will look into the details so that we will be ready to qualify for that separate taxation for dividends.

About the capital reduction dividend, this is also going to increase the effective dividend income of retail investors and therefore, pull in more retail investor demand. We've done some simulations, and I believe we already have sufficient size of funds available for capital reduction dividend if it becomes possible. Of course, we could bring this up joining the shareholder meeting next year. So we will have everything in line and prepared, but we would also have to look at some external factors, including the government's position.

But this all ties into overall shareholder return. We are in a direction to increasing dividends and increasing shareholder return, and this will be discussed fully with our management team and the BOD to be announced next year.

Thank you very much. We will take the next question. The next question is from HSBC Securities, Won Jaewoong. Jaewoong Won, you're on the line.

Congratulations on your earnings in the challenging environment. I have two questions. The first question is about this year profit driver, nonbanking growth is something that you've already elaborated upon and the market had some expectations. But looking at Q3 of this year for nonbank, it seems that it is still sluggish. And most of your profitability was generated from your banking sector. It seems that it is still lagging behind for nonbanking. So can you tell us the reason why? And next year, do you think there will be some changes in this trend. If you can give more color, we would greatly appreciate it.

And my second question is about the fluctuations of FX, which is getting bigger and bigger. And we know that you are more sensitive to FX compared to your peers. So I am a little bit concerned about its impact on CET1. And I know that you have done well, and I know you will do well. And I know that 13.3%. So I think that you can meet the number for Q4. But regarding the quarterly 13% that you've mentioned that you're going to work hard to maintain no matter what, do you still hold that? I just wanted to know what your take was at this point.

Thank you very much for your question. And we will soon answer your question. Thank you.

I am the CFO of the group, Jong Moo Park. You asked two questions, and they are a little bit of maybe hard questions for us to answer. And for nonbanking, on a Q3 YTD basis, well, it was 16%, so it is still a little bit not as much as we had expected. But looking at the wording, looking at the top line, it is actually improving. However, looking at securities and capital, it seems that our investment losses have been recognized. So that leads to our lagging bottom line. So that is why it is not as improved as we would have liked.

However, you can see that insurance that we were a little bit weak at, but we had about KRW 200 billion of capital paid an increase. So we think that this cannot be recovered in one go. So we will need to actually strengthen our fundamentals and make continuous efforts, and we are sure that with time passing by, we will have normalization in nonbanking. And we believe that we will have a turnaround we expect by 2027.

And the CET ratio about our plans to maintain this. Of course, we will need to maintain this. We believe that it is very important. And in the last Q4, there were great fluctuations of the [ $1,150. ] And there have been very high FX rates recently as well, $1,401 and higher. So in this situation to maintain CET1 ratio is quite important because we need to be conservative. So we are going to work with our CRO and look at the asset situation so that we will be able to maintain the 13% or a better ratio than we had promised.

We'll take the next question. Next question comes from Daishin Securities, Hye-jin Park.

Yes, this is Hye-jin Park of Daishin Securities. I also have two questions. First question is about the refinancing or leverage buyout. I think the banks are also doing large deals. If I look at the lead table, Hana Bank was at the top. And if you look at Page 8 of the presentation, your M&A advisory fee increased quite a lot on a Y-o-Y basis. I think going forward, there will be more demand for these acquisition financing. And this could also tie in with your corporate loans. What is the posture of the financial group? Are you forwarding leaning in acquisition finance and your market outlook?

Second is related with the ELS with the financial consumer act being revised, the bottom was actually lowered. And related with that, what is your outlook on the ELS?

Thank you very much for your questions. We will prepare answers if you give us a minute.

Well, thank you very much. This is Jong Moo Park again, the group CFO.

About the refinancing of acquisition finance, I think our Hana Bank, Mr. Young Seok Jeong, will answer. About the ELS, it's, we sold around KRW 2 trillion. And the statutory limit is 50% is the max, but then there is the adjustments that are made within that 50% range.

Nothing has been finalized yet, but we think that, as you know, we've already settled with the customers were 97% of the amount. And so we are hopeful that we will get a very positive and favorable adjustments that does have the impact on our operation risk. And so once the amount is finalized, we could reflect that.

But tied to the support for productive finance, the government is also very aware of the need to reduce the capital burden. And so we actually are looking forward to a positive more lenient position by the government and regulatory authorities. So we think that in addition to having a favorable decision on the fines, we may also get some easing of our capital regulations.

And this is Young Seok Jeong, the bank's CFO. I would like to answer your first question. As you know, we -- for the bank, IB-related fee income is less advisory, more arranging loan arrangement fees. So if you look at Q3 this year versus last year, there isn't a large difference. It's mostly arranging fee income for refinancing.

What differs is that real estate is taking up less of a share. And this year, we're seeing an increase of acquisition finance loan. And these -- there are some equity investments that Hana Bank had made as a way of stimulating the deal. And that's where we differ from other banks. We have made some equity investments, and that is a way of us getting the loan arranging business. But we don't expect there to be a significant uptick. This year, we're expecting a moderate growth versus last year. We do have a trend of increasing our acquisition finance-related loan business.

We will have the next question from Hanwha Investment Securities. Do Ha Kim, you're on the line.

I have two questions. First question is related to what was just before mentioned regarding the government stance from next year, there will be for new mortgage loans, RWB plus/minus adjustment. And currently, when there is this adjustment regarding its impact on CET1, if you have any simulations, please share them with us.

And my second question is about asset quality because it was commented upon previously. Looking at nonbank, it seems that provisioning will -- it seems that it is the lowest since Q4 of 2022. So for next year, can you give us guidance? I know it's a little bit early, but I would like to know about your provisioning trends. So when do you think this will be actually changed according to the trends?

Thank you very much for your questions, and we will soon answer them. Thank you very much.

I am the group CFO of Jong Moo Park. Regarding your first question, I will quickly answer that. And then regarding the second question regarding provisioning, our CRO will answer that question.

Regarding the mortgage loan, the lower limit, 5% has increased. So regarding its impact on RWA, it is true that for home mortgage loans, we have KRW 80 trillion and RWA 5%, which is KRW 4 trillion. And we will not have it actually all coming back at once. So it will be KRW 1 trillion RWA increase per annum. So it seems that it will have about 16 bp influence.

Then conversely speaking, looking at the weight on the securities, it will actually be lower. So there will be offsetting. So the overall simulation due to these home mortgage loans, RWA increase effect, and then we will have the lowering impact of securities weight. So I think there will be an offsetting. So overall, there will not be a big influence.

I am the Group CRO, Jae Shin Kang. And regarding our provisioning that on a Q-o-Q basis, it has been lowered. It is because in Q3 for nonbanking subsidiaries, overall delinquency, net increase decreased. So for credit card, it is maybe due to the livelihood vouchers. So we had seen some delinquency shrinkage Q-o-Q.

And for savings and capital in the first half, there was a lot of the NPLs that was recognized, which actually went down in Q3. So on the whole, we had provisioning going down, which led to lowering of our credit cost ratio. However -- well, we will need to look at Q4 because there is the real estate PF and other delays that are going on. So if that is reflected, then we believe that in Q4, probably compared to Q3, it will not have an improvement trend. I think we will have some credit costs inching up.

So for next year, regarding delinquencies or NPLs, the growth, we expect this to actually continue. So I think it will be a little bit difficult for this to improve. But for these delinquencies and before it goes to substandard and low, we're looking at the asset size, it's true that the provisioning burden is lower. So I think that is characteristic of these assets. So we will have this position and sales for next year so that the current capital adequacy level will be continued. Thank you very much.

We'll take the next question. Next question is from JPMorgan, Jihyun Cho.

I also had a question about delinquencies at group level, but I think that's already been addressed. Maybe I can follow up on that. The group delinquencies is coming down. Bank delinquencies are flat. But it sounds based on your answer that after Q4, you are expecting or there is some room that delinquencies may go back up?

Well, because on the other hand, with the economic support programs, we actually think that your asset quality may be entering a recovery cycle, but you're hinting that there's a possibility of delinquencies ticking back up in Q4. You're expecting the things that brought down your delinquencies in Q3 may not be working in Q4. Is that a correct read? If so, when do you think the asset would start to improve next year? Can you just repeat also your guidance of credit cost for this year, assuming delinquencies will go up in Q4?

About the credit card fees, it is on an increasing trend. But on a Q-o-Q basis, I think it declined your credit card fees. It's not just for Hana Card. That seems to be an industry trend. There was, of course, in Q2, this refund. Is that due to the one-off, the fall we're seeing on a Q-o-Q basis? Or can you give us more of an outlook on the credit card fee income?

The NIM, I do notice is being managed very well. The interest rate fall is happening slower than expected. Also, the market rate is falling actually slower. It's slowing down. Do you think this NIM improvement will -- is going to stay? Do you actually see some upside on your NIM and interest income?

What about Q4? Do you think that there will be additional funding cost reduction room in Q4? What is your outlook of NIM for next year?

Well, thank you very much, Ms. Cho, for those questions. Please give us a moment to prepare our answers.

Yes, this is Group CRO, Jae Shin Kang. I will follow up on the delinquencies, which was your first question. The third quarter delinquencies and credit cost was also a bit different from what we had expected because in Q3, our group delinquencies were better, which we think is too early for us to say that there's a trend change according to the data that we're reading. So it's too early to say this is a declining trend.

Also, what you see is after write-offs. But if you look at the growth before the write-offs and sales, the delinquencies are increasing, and the volume is significantly higher than what you saw prior to 2022. So it is lower than Q2. But still, if you compare the absolute amount of these delinquencies forming versus '22, it is larger.

Also, there were various nonperforming assets that we disposed or written off earlier than what we usually do. There were some real estate project finance-related issues that we may have to take care of in Q4. And with all of that in mind, we are expecting credit costs and delinquencies to go up in Q4 on a Q-o-Q basis.

So Q3, yes, delinquencies have come down, but it's not significant to indicate a trend change. We think that this trend will continue until next year. And our goal for next year is to keep our credit quality or asset quality at levels similar to this year.

About the credit card fee income, I think I can comment on that briefly. On a Q-o-Q basis, there was a KRW 19 billion decrease, and some of that was refund, which is around KRW 7.2 billion. The other was the support for a brand company. So this is Master and Visa paying us in. There were some seasonality there. And so there was seasonality and also one-offs, combined.

About the NIM, this is Hana Bank, and I will answer your NIM question. So YTD Q3, our NIM was managed very well.

In terms of the funding side, our deposits, savings deposits have increased in share. Time deposits and CD share has decreased. And our current deposits increased, mainly attributed to our business, increasing with public and government agencies.

Also, in terms of household and SOHO. So overall, on the retail side, we have been signing on a lot of the settlement related funds such as deposits, and so that has increased our low-cost deposits and funding.

Also, we have been saving some of the reissuing prices, which helped our NIM. This trend, we think, will continue on Q4 because we will keep the public institution money. But the impact -- the incremental impact will decrease. And then we -- in Q4, will have to -- may seasonally have some increase in funding costs. There are also some upside and downside factors. So it's difficult at this point to predict what our funding costs will be in Q4, but we will do our best to defend our funding cost in Q4.

It seems that we have no further questions in the queue, and I think it was a very productive Q&A session. This concludes Hana Financial Group's 2025 Q3 earnings call.

For those who are unable to watch today's presentation or who wish to review it again, a recording of the earnings presentation will be uploaded to our group website this evening.

If you have any other questions, please contact our IR team, and we will sincerely respond to your questions. Thank you for your attention.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]