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CET1 ratio likely to exceed 13% throughout 2026

Maintain Buy and raise TP to W34,000

We raise our target price for Woori Financial Group to W34,000 (from W31,000), which we derived by applying a P/B of 0.65x (unchanged) to our 2026F BPS. We kept our target multiple unchanged because we expect the group to exceed its CET1 ratio target of 13% throughout 2026, paving the way for meaningful shareholder return ratio improvement. With our target price implying 33.9% upside, we reiterate our Buy rating.

3Q25 earnings beat consensus

For 3Q25, Woori Financial Group reported net profit attributable to owners of the parent of W1.24tr, exceeding both our estimate (W962.7bn) and the consensus (W975.8bn). The earnings beat was mainly driven by one-off bargain purchase gains of W580bn (well above our previous estimate of W200bn) from the acquisitions of Tongyang Life Insurance and ABL Life Insurance; even accounting for provisions set aside in connection with these gains, we estimate the net after-tax profit contribution was roughly W360bn. Meanwhile, despite the consolidation of the two insurers, net operating revenue was broadly in line with expectations, weighed down by weak securities-related valuation gains.

Shareholder return yield likely to reach 6.8% in 2026

In 2026, we forecast net profit attributable to owners of the parent to edge down 0.4% YoY due to the absence of one-off gains recorded in 2025. Nevertheless, we expect underlying earnings fundamentals to improve with net interest income and non-interest income growing 3.1% and 13.2% YoY, respectively, and the credit cost ratio declining 6bps YoY. We expect the CET1 ratio to remain above 13% throughout 2026, driven by disciplined risk-weighted asset management. Accordingly, we forecast the shareholder return ratio (dividends + buybacks/cancellations) at 37.2% (+2.4%p YoY), implying a shareholder return yield of 6.8%.