Yurui Financial Holdings, due to poor performance, stock price plummeted 5%... The securities industry analyzes it as a "one-time expense"

Woori Financial Group’s stock price fell more than 5% during trading on the 27th. This was driven by first-quarter earnings coming in far below market expectations, prompting investors to unload shares in disappointment.

On the 27th, in the securities market, Woori Financial Group’s stock traded at 33,250 won as of 2:30 PM, down 5.14% from the previous trading day. After initially slipping 0.14% at the open, the decline widened, at one point falling as low as 33,100 won during the day, a drop of 5.56%. A financial holding company’s stock price is typically sensitive to performance, capital adequacy ratios, and shareholder return policies, and this time the market’s first reaction was to the smaller-than-expected profit scale.

On the 24th, Woori Financial Group announced that its net profit for the first quarter of this year was 603.8 billion won, down 2.1% year on year. This was far below the market expectation of 815.0 billion won. On a consolidated basis, operating profit was only 808.2 billion won, down 7% year on year and 21.5% below market expectations. In particular, among the five major financial holding companies—KB, Shinhan, Hana, NH NongHyup, and Woori—Woori Financial Group was the only one whose net profit declined, which was interpreted as further dampening investor sentiment.

However, some in the securities industry also said it is still too early to judge the company’s value based solely on disappointing headline results. Kim Jae-woo, a researcher at Samsung Securities, said the large drop in profit was largely affected by one-off items. In fact, interest income—which reflects core earning power—increased 2.3% year on year, while non-interest income, including fees, rose 26.6%. This suggests that excluding the impact of one-off items, the stream of recurring profit generated by its core business is not bad.

Capital strength also received a positive evaluation. Woori Financial Group’s common equity Tier 1 capital adequacy ratio (CET1)—the core capital ratio that can absorb losses in a crisis—for the first quarter was 13.6%. The higher this figure, the more room there is to implement shareholder return policies such as dividends or stock buybacks. Based on this, Samsung Securities raised its expected shareholder return rate for this year from 41% to 45%, and increased its target stock price from 44,000 won to 45,000 won, upgrading its investment view to “Buy.” Roh Min-sook, a researcher at DB Securities, also maintained a target stock price of 48,000 won and a “Buy” rating, saying that although current performance is disappointing, the higher capital ratio and growth potential are positive.

Ultimately, while the market responded in the short term to earnings coming in below expectations, in the medium to long term it also reflects an atmosphere of considering the possibility of capital adequacy and an expansion of shareholder returns at the same time. This trend suggests that in the future, as Woori Financial Group quickly removes the impact of one-off items and turns its improved capital strength into dividends and stock buyback policies in a concrete way, the direction of its stock price could change again accordingly.