Cheap bank, harder credit test
- Woori hit a 13.71% CET1 core capital ratio in the first half of 2026, unlocking a ₩150 billion share buyback.
- Non-bank subsidiaries contributed 22.3% of group net income in the first half of 2026, up from 6.9% a year ago.
- SME loan charge-offs more than doubled to ₩762 billion in 2025, showing stress in the core lending book.
- The net interest margin stabilized at 1.51% in the second quarter of 2026, easing some margin compression fears.
- Finn scores the stock high on valuation but low on financial health due to rising credit and currency risks.
Value plan meets bad loans
The bull case is simple. Woori is trying to turn from a mostly bank story into a broader financial group. Cards, capital, securities, and insurance now matter more. Management said non-bank subsidiaries tripled their contribution to 22.3% of group net income in the first half of 2026.
Capital is the other part of the story. The group ended the first half of 2026 with a 13.71% CET1 ratio, well above its 13% target. CET1 is the main bank safety buffer. Beating this goal allowed management to announce a ₩150 billion share buyback and cancellation for the second half of the year.
The bear case is about whether credit losses eat the plan first. SME loan charge-offs more than doubled to ₩762 billion in 2025 from ₩342 billion in 2024. That is worse because the SME portfolio was shrinking, so the loss signal is loud. Margin compression is another ongoing threat, though the net interest margin did stabilize at 1.51% in the second quarter of 2026.
The stock screens cheap, which fits Finn's high valuation score. But the low financial health score also fits the facts. Lower rates, a weaker Won, and rising SME losses can slow capital build even if the corporate value plan is working.
Bank spread plus new fees
Woori makes most of its money the normal bank way. It takes deposits, lends to companies and households, and earns the spread between loan income and funding cost. The best version of this model is prime corporate lending, where losses are lower and capital use is cleaner.
Management is pushing profit per unit of risk, not just loan growth. It calls this RORWA-based growth, which means return on risk-weighted assets. Risk-weighted assets are loans and investments adjusted for how risky regulators think they are. The firm wants to keep a cost-to-income ratio below 40% while expanding returns.
The non-bank push gives Woori more ways to earn fees and insurance income. Woori Investment Securities received its brokerage license in March 2025 and launched its mobile trading platform. Meanwhile, making Tongyang Life a wholly owned subsidiary was approved in early 2026.
The model breaks if credit costs rise faster than income. It also breaks if lower interest rates squeeze the net interest margin, which is the profit spread on lending. Funding cost pressures remain a major watch item.
What Woori sells
Woori Bank corporate and SME loans
This is the core engine. It brings interest income, but SME credit is now the biggest visible stress point.
Retail banking and housing-related assets
These products add scale and deposits. They also tie Woori to Korean household credit and housing conditions.
Woori Card and Woori Financial Capital
These units add non-bank earnings and fee income. Management says the cleanup of some non-bank real estate project finance assets is largely complete.
Woori Investment Securities
The securities arm received its official brokerage license in March 2025 and launched its mobile trading system. This gives Woori a bigger role in trading, investment products, and capital markets fees.
Tongyang Life and ABL Life
These insurers are central to the non-bank earnings push. Tongyang Life was approved as a wholly owned subsidiary in early 2026.
Budget Telecom
This is a customer acquisition tool for digital channels. The goal is to bring in younger users and later convert them into financial customers.
Still bank-led
Mix uses management's first half 2026 comment that non-bank subsidiaries contributed 22.3% of group net income. This is an earnings mix, not a revenue mix, and Woori Bank still drives most of the group.
What can go wrong
SME credit losses keep rising
High impact · High oddsWoori's Won-denominated SME charge-offs rose from ₩342 billion in 2024 to ₩762 billion in 2025. That happened while the SME loan balance decreased, which points to worse credit quality, not just a bigger book. If this continues, capital returns may get delayed.
Funding costs squeeze lending margin
High impact · Medium oddsThe net interest margin stabilized at 1.51% in the second quarter of 2026. However, funding cost pressures remain high due to market interest rates and deposit competition. Woori needs fee income and cost control to offset this pressure.
Won weakness hits capital
High impact · Medium oddsA weaker Won can raise foreign currency debt servicing costs and slow capital build. Management previously flagged severe foreign exchange volatility as an ongoing headwind to capital accumulation.
Insurance merger friction
Medium impact · Medium oddsTongyang Life is now approved as a wholly owned subsidiary. That helps diversification, but insurance brings different capital rules, systems, and sales cultures. Integration frictions could emerge as the company is fully absorbed.
Real estate project finance returns
Medium impact · Low oddsManagement says the cleanup of non-bank real estate project finance assets is largely complete. That lowers near-term risk, but it does not remove it. A weak property market could bring new provisions.
In one breath
Is Woori Financial Group mostly a bank?
Yes. Woori Bank is still the main driver, but the group is adding more non-bank earnings. By the first half of 2026, management said non-bank subsidiaries contributed 22.3% of group net income.
Why does the 13% CET1 ratio matter for Woori?
CET1 is a key measure of bank capital strength. Beating this 13% target allowed the company to announce an additional ₩150 billion share buyback for the second half of 2026.
What is the biggest risk for Woori right now?
The clearest risk is SME credit quality. SME charge-offs more than doubled in 2025, which could reduce earnings and slow capital growth.
Why is Woori adding insurance and securities?
The goal is to depend less on bank lending spreads. Securities, cards, capital, and insurance can add fees and more stable non-bank earnings if integration goes well.
