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Banks (Finance)

Moody's Affirms Woori Bank's Ratings with Stable Outlook

Strategic Insights

— 2 min read

Moody's Investors Service has announced the affirmation of Woori Bank's A1 foreign currency bank deposits and senior unsecured debt ratings, with the stable outlooks maintained on the ratings. This decision reflects the bank's stable credit profile, supported by its good capital buffers, sound funding, and liquidity. Woori Bank's A1 bank deposit and senior unsecured ratings incorporate the bank's baa1 BCA and Adjusted BCA, as well as a three-notch uplift reflecting a very high level of support from the Government of Korea (Aa2 stable).

Woori Bank's problem loans are expected to rise to around 0.6% over the next 12 to 18 months, primarily due to increasing delinquencies in loans to small- and medium-sized enterprises (SMEs) in the construction and US (Aa1 stable) tariff-impacted manufacturing sectors. However, the increase in problem loans is likely to be modest, as these sectors account for around 5% of the bank's total loans. The bank's good capitalization, with its tangible common equity (TCE) to risk-weighted assets (RWA) at the mid-14% level over the next 12 to 18 months, is expected to support its stability.

The bank's parent company, Woori Financial Group Inc., had the lowest double leverage ratio among Korean financial groups, at 98.4% as of 31 March 2025. Woori Bank's profitability, measured as net income to tangible assets, is expected to decline from 0.63% in the first half 2025 over the next 12 to 18 months, primarily due to a decline in net interest margin and an increase in credit costs.

Woori Bank's funding and liquidity profile is expected to remain largely stable, with its market funds to tangible banking assets sustained at around 10% and its liquid banking assets to tangible banking assets at around 20%. The bank's liquidity coverage ratio was 108.6% in the first quarter of 2025.

Key Takeaways:

  • Woori Bank's ratings have been affirmed with stable outlooks, reflecting its stable credit profile and good capital buffers.
  • Problem loans are expected to rise to around 0.6% over the next 12 to 18 months, primarily due to increasing delinquencies in loans to small- and medium-sized enterprises (SMEs).
  • The bank's capitalization is expected to remain stable, with its tangible common equity (TCE) to risk-weighted assets (RWA) at the mid-14% level.
  • Woori Bank's profitability is expected to decline from 0.63% in the first half 2025 over the next 12 to 18 months, primarily due to a decline in net interest margin and an increase in credit costs.
  • The bank's funding and liquidity profile is expected to remain largely stable, with its market funds to tangible banking assets sustained at around 10% and its liquid banking assets to tangible banking assets at around 20%.
  • Woori Bank's parent company, Woori Financial Group Inc., had the lowest double leverage ratio among Korean financial groups, at 98.4% as of 31 March 2025.

Statistics:

  • Problem loans: 0.6% over the next 12 to 18 months.
  • Tangible common equity (TCE) to risk-weighted assets (RWA): mid-14% over the next 12 to 18 months.
  • Net interest margin: expected to decline.
  • Credit costs: expected to increase to around mid-to-high 20's basis points.
  • Market funds to tangible banking assets: sustained at around 10%.
  • Liquid banking assets to tangible banking assets: sustained at around 20%.
  • Liquidity coverage ratio: 108.6% in the first quarter of 2025.

Sources:

  • Moody's Investors Service, [Moody's Ratings](Moody's) Affirms Woori Bank's Ratings with Stable Outlook, Published: 2025 (exact date not provided).
  • Rating Methodologies, Banks, Published: November 2024, Available at [https://ratings.moodys.com/rmc-documents/432741](https://ratings.moodys.com/rmc-documents/432741).
  • Woori Bank, Headquartered in Seoul, Korea, Consolidated Asset Size: KRW487.3 trillion ($330.9 billion) as of 31 March 2025.

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