Woori Bank Earnings 2014-12-31

Balance Sheet	Income Statement	Cash Flow

20-F 1 d912796d20f.htm FORM 20-F Form 20-F

As filed with the Securities and Exchange Commission on April 30, 2015

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

(Mark One)

¨	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2014

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

¨	SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report

For the transition period from to

Commission file number 001-31811

Woori Bank

(Exact name of Registrant as specified in its charter)

Woori Bank

(Translation of Registrant’s name into English)

The Republic of Korea

(Jurisdiction of incorporation or organization)

51, Sogong-ro, Jung-gu, Seoul 100-792, Korea

(Address of principal executive offices)

Kwansic Lee

51, Sogong-ro, Jung-gu, Seoul 100-792, Korea

Telephone No.: +82-2-2125-2136

Facsimile No.: +82-2-0505001-2136

(Name, telephone, e-mail and/or facsimile number and address of company contact person)

Securities registered or to be registered pursuant to Section 12(b) of the Act.


Title of each class		Name of each exchange on which registered
American Depositary Shares, each representing three shares of Common Stock		New York Stock Exchange
Common Stock, par value ￦5,000 per share		New York Stock Exchange*

Securities registered or to be registered pursuant to Section 12(g) of the Act.

None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

673,271,227 shares of Common Stock, par value ￦5,000 per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. x Yes ¨ No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. ¨ Yes x No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically and posted on its Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ¨ Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):


x Large accelerated filer		¨ Accelerated Filer		¨ Non-accelerated filer

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:


¨ U.S. GAAP		x International Financial Reporting Standards as issued by the International Accounting Standards Board		¨ Other

If “other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. ¨ Item 17 ¨ Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨ Yes x No

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. ¨ Yes ¨ No

* Not for trading, but only in connection with the registration of the American Depositary Shares.

TABLE OF CONTENTS


			Page
Explanatory Note				1
Presentation of Financial and Other Information				2
Forward-Looking Statements				4
Item 1.	Identity of Directors, Senior Management and Advisers			5
Item 2.	Offer Statistics and Expected Timetable			5
Item 3.	Key Information			5
	Item 3A.	Selected Financial Data		5
	Item 3B.	Capitalization and Indebtedness		13
	Item 3C.	Reasons for the Offer and Use of Proceeds		13
	Item 3D.	Risk Factors		13
Item 4.	Information on the Company			37
	Item 4A.	History and Development of the Company		37
	Item 4B.	Business Overview		44
	Item 4C.	Organizational Structure		111
	Item 4D.	Property, Plants and Equipment		112
Item 4.A.	Unresolved Staff Comments			112
Item 5.	Operating and Financial Review and Prospects			112
	Item 5A.	Operating Results		112
	Item 5B.	Liquidity and Capital Resources		143
	Item 5C.	Research and Development, Patents and Licenses, etc.		148
	Item 5D.	Trend Information		149
	Item 5E.	Off-Balance Sheet Arrangements		149
	Item 5F.	Tabular Disclosure of Contractual Obligations		149
	Item 5G.	Safe Harbor		149
Item 6.	Directors, Senior Management and Employees			149
	Item 6A.	Directors and Senior Management		149
	Item 6B.	Compensation		152
	Item 6C.	Board Practices		152
	Item 6D.	Employees		154
	Item 6E.	Share Ownership		156
Item 7.	Major Shareholders and Related Party Transactions			156
	Item 7A.	Major Shareholders		156
	Item 7B.	Related Party Transactions		157
	Item 7C.	Interest of Experts and Counsel		157
Item 8.	Financial Information			157
	Item 8A.	Consolidated Statements and Other Financial Information		157
	Item 8B.	Significant Changes		158
Item 9.	The Offer and Listing			158
	Item 9A.	Offering and Listing Details		158
	Item 9B.	Plan of Distribution		159
	Item 9C.	Markets		159
	Item 9D.	Selling Shareholders		166
	Item 9E.	Dilution		166
	Item 9F.	Expenses of the Issuer		166
Item 10.	Additional Information			166
	Item 10A.	Share Capital		167
	Item 10B.	Memorandum and Articles of Association		167
	Item 10C.	Material Contracts		173
	Item 10D.	Exchange Controls		173


			Page
	Item 10E.	Taxation		174
	Item 10F.	Dividends and Paying Agents		179
	Item 10G.	Statements by Experts		179
	Item 10H.	Documents on Display		179
	Item 10I.	Subsidiary Information		179
Item 11.	Quantitative and Qualitative Disclosures about Market Risk			179
Item 12.	Description of Securities Other Than Equity Securities			203
Item 13.	Defaults, Dividend Arrearages and Delinquencies			204
Item 14.	Material Modifications to the Rights of Security Holders and Use of Proceeds			204
Item 15.	Controls and Procedures			204
Item 16.	Reserved			205
	Item 16A.	Audit Committee Financial Expert		205
	Item 16B.	Code of Ethics		205
	Item 16C.	Principal Accountant Fees and Services		205
	Item 16D.	Exemptions from the Listing Standards for Audit Committees		206
	Item 16E.	Purchase of Equity Securities by the Issuer and Affiliated Purchasers		206
	Item 16F.	Change in Registrant’s Certifying Accountant		207
	Item 16G.	Corporate Governance		207
	Item 16H.	Mine Safety Disclosure		208
Item 17.	Financial Statements			208
Item 18.	Financial Statements			208
Item 19.	Exhibits			209

EXPLANATORY NOTE

Prior to November 1, 2014, we, Woori Bank, were a wholly-owned subsidiary of Woori Finance Holdings Co., Ltd. On November 1, 2014, Woori Finance Holdings merged with and into us, such that we remained as the surviving entity, and Woori Finance Holdings ceased to exist, after the merger. In connection with the merger, shareholders of Woori Finance Holdings recorded in its shareholder register as of November 1, 2014 received one share of our common stock for each share of common stock of Woori Finance Holdings they held.

As a result of the merger, the other former subsidiaries of Woori Finance Holdings, including Woori Card Co., Ltd., Woori Private Equity Co., Ltd., Woori FIS Co., Ltd., Woori Investment Bank, Ltd. and Woori Finance Research Institute Co., Ltd., became our subsidiaries. Accordingly, our overall business and operations after the merger, on a consolidated basis, are substantially identical to those of Woori Finance Holdings on a consolidated basis prior to the merger. See “Item 4A. History and Development of the Company—Privatization Plan—Merger with Woori Finance Holdings.”

The merger constituted a succession for purposes of Rule 12g-3(a) under the Securities Exchange Act of 1934, as amended, such that our common stock was deemed registered under Section 12(b) of the Exchange Act by operation of Rule 12g-3(a). Following the merger, we file reports under the Exchange Act as the successor issuer to Woori Finance Holdings.

The merger qualified as a business combination under common control for accounting purposes. Accordingly, we recognized the transferred assets and liabilities of Woori Finance Holdings at their book value and did not recognize any goodwill in connection with the merger. The consolidated financial statements included in this annual report are, as of dates and for periods prior to the date of the merger, for Woori Finance Holdings and its subsidiaries (including us) and, as of dates and for periods from and after the date of the merger, for us and our subsidiaries. For further information regarding the accounting treatment of the merger, see Note 50 of the notes to our consolidated financial statements.

Unless otherwise indicated or required by the context, “we,” “us,” “our” and similar terms used in this annual report refer to Woori Bank and its subsidiaries and, for periods prior to the merger, refer to Woori Finance Holdings and its subsidiaries for such periods (including Woori Bank), but excluding those accounted for as discontinued operations.

PRESENTATION OF FINANCIAL AND OTHER INFORMATION

The financial statements included in this annual report are prepared in accordance with International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, or IASB. Unless indicated otherwise, the financial information in this annual report has been prepared in accordance with IFRS as issued by the IASB, which is not comparable to information prepared in accordance with generally accepted accounting principles in the United States, or U.S. GAAP.

Unless expressly stated otherwise, all financial data included in this annual report are presented on a consolidated basis.

Dispositions and other transactions that we have effected in recent years may affect the direct comparability of the historical financial information included in this annual report as of and for different dates and periods. The Korean government, which currently owns 51.04% of our outstanding common stock through the Korea Deposit Insurance Corporation, or the KDIC, has been implementing a privatization plan with respect to Woori Finance Holdings and its former subsidiaries, including us. Pursuant to such plan, in May 2014, Woori Finance Holdings established KJB Financial Group Co., Ltd. and KNB Financial Group Co., Ltd. through a spin-off of its businesses related to the holding of the shares and thereby controlling the business operations of Kwangju Bank and Kyongnam Bank, respectively. As a result of such spin-off, KJB Financial Group became the owner of the shares of Kwangju Bank previously held by Woori Finance Holdings, and KNB Financial Group became the owner of the shares of Kyongnam Bank previously held by Woori Finance Holdings. Woori Finance Holdings no longer owned any shares of Kwangju Bank or Kyongnam Bank, and neither they nor their new holding companies were its subsidiaries, after the spin-off. Following such spin-off, each of these banks was merged with its holding company, and in October 2014, the KDIC sold its 56.97% ownership interest in Kwangju Bank and Kyongnam Bank to JB Financial Group and BS Financial Group, respectively. In addition, in March 2014, Woori Finance Holdings sold its 52.0% ownership interest in Woori Financial Co., Ltd. to KB Financial Group Inc. In May 2014, Woori Finance Holdings also sold its 100.0% ownership interest in Woori Asset Management Co., Ltd. to Kiwoom Securities Co., Ltd. and sold its 100.0% ownership interest in Woori F&I to Daishin Securities Co., Ltd. In June 2014, Woori Finance Holdings sold its 37.9% ownership interest in Woori Investment & Securities Co., Ltd., its 51.6% ownership interest in Woori Aviva Life Insurance Co., Ltd. and its 100.0% ownership interest in Woori FG Savings Bank to NongHyup Financial Group Inc. in a collective sale. As a result of such sales, Woori Investment & Securities, Woori Asset Management, Woori Aviva Life Insurance, Woori FG Savings Bank, Woori F&I and Woori Financial were no longer subsidiaries of Woori Finance Holdings, and it no longer owned any shares in such former subsidiaries. See “Item 4A. History and Development of the Company—Privatization Plan.”

In light of such dispositions during 2014, Kwangju Bank, Kyongnam Bank, Woori Investment & Securities, Woori Aviva Life Insurance, Woori Asset Management, Woori Financial, Woori FG Savings Bank and Woori F&I were classified as a disposal group held for distribution or sale, and their operations were accounted for as discontinued operations, in our consolidated statements of financial position and comprehensive income as of and for the year ended December 31, 2013, as well as in our consolidated statement of comprehensive income for the year ended December 31, 2014, included in this annual report. Similarly, our consolidated statement of comprehensive income for the year ended December 31, 2012 included in this annual report was restated to account for such entities as discontinued operations. However, our consolidated statement of financial position as of December 31, 2012 included in this annual report was not so restated. Accordingly, in general, our financial information as of December 31, 2013 and 2014 and for the years ended December 31, 2010, 2011, 2012, 2013 and 2014 appearing in this annual report does not include financial data with respect to such discontinued operations, while our financial information as of December 31, 2010, 2011 and 2012 appearing in this annual report includes financial data with respect to such discontinued operations. As a result, our financial information as of December 31, 2010, 2011 and 2012 may not be directly comparable to our financial information as of and for other dates and periods.

In this annual report:

•

references to “Korea” are to the Republic of Korea;

•

references to the “government” are to the government of the Republic of Korea;

•

references to “Won” or “￦” are to the currency of Korea; and

•

references to “U.S. dollars,” “$” or “US$” are to United States dollars.

Discrepancies between totals and the sums of the amounts contained in any table may be a result of rounding.

For your convenience, this annual report contains conversions of Won amounts into U.S. dollars at the noon buying rate of the Federal Reserve Bank of New York for Won in effect on December 31, 2014, which was ￦1,090.9 = US$1.00.

FORWARD-LOOKING STATEMENTS

The U.S. Securities and Exchange Commission encourages companies to disclose forward-looking information so that investors can better understand a company’s future prospects and make informed investment decisions. This annual report contains forward-looking statements.

Words and phrases such as “aim,” “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “estimate,” “expect,” “future,” “goal,” “intend,” “may,” “objective,” “plan,” “positioned,” “predict,” “project,” “risk,” “seek to,” “shall,” “should,” “will likely result,” “will pursue” and words and terms of similar substance used in connection with any discussion of future operating or financial performance or our expectations, plans, projections or business prospects identify forward-looking statements. In particular, the statements under the headings “Item 3D. Risk Factors,” “Item 4B. Business Overview” and “Item 5. Operating and Financial Review and Prospects” regarding our financial condition and other future events or prospects are forward-looking statements. All forward-looking statements are management’s present expectations of future events and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements.

In addition to the risks related to our business discussed under “Item 3D. Risk Factors,” other factors could cause actual results to differ materially from those described in the forward-looking statements. These factors include, but are not limited to:

•

a change or delay in, or cancellation of, the Korean government’s privatization plan with respect to us;

•

our ability to successfully implement our strategy;

•

future levels of non-performing loans;

•

our growth and expansion;

•

the adequacy of allowances for credit and other losses;

•

technological changes;

•

interest rates;

•

investment income;

•

availability of funding and liquidity;

•

our exposure to market risks; and

•

adverse market and regulatory conditions.

By their nature, certain disclosures relating to these and other risks are only estimates and could be materially different from what actually occurs in the future. As a result, actual future gains, losses or impact on our income or results of operations could materially differ from those that have been estimated. For example, revenues could decrease, costs could increase, capital costs could increase, capital investment could be delayed and anticipated improvements in performance might not be fully realized.

In addition, other factors that could cause actual results to differ materially from those estimated by the forward-looking statements contained in this annual report could include, but are not limited to:

•

general economic and political conditions in Korea or other countries that have an impact on our business activities or investments;

•

the monetary and interest rate policies of Korea;

•

inflation or deflation;

•

unanticipated volatility in interest rates;

•

foreign exchange rates;

•

prices and yields of equity and debt securities;

•

the performance of the financial markets in Korea and globally;

•

changes in domestic and foreign laws, regulations and taxes;

•

changes in competition and the pricing environment in Korea; and

•

regional or general changes in asset valuations.

For further discussion of the factors that could cause actual results to differ, see the discussion under “Item 3D. Risk Factors” contained in this annual report. We caution you not to place undue reliance on the forward-looking statements, which speak only as of the date of this annual report. Except as required by law, we are not under any obligation, and expressly disclaim any obligation, to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise.

All subsequent forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this annual report.

Item 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not Applicable

Item 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not Applicable

Item 3. KEY INFORMATION

Item 3A. Selected Financial Data

The selected consolidated financial and operating data set forth below as of and for the years ended December 31, 2010, 2011, 2012, 2013 and 2014 have been derived from our audited consolidated financial statements, which have been prepared in accordance with IFRS as issued by the IASB. Our consolidated financial statements as of and for the years ended December 31, 2010, 2011, 2012, 2013 and 2014 have been audited by Deloitte Anjin LLC, an independent registered public accounting firm.

The Korean government, which currently owns 51.04% of our outstanding common stock through the KDIC, has been implementing a privatization plan with respect to Woori Finance Holdings and its former subsidiaries, including us. As a result of the dispositions of Woori Finance Holdings’ ownership interests in Kwangju Bank, Kyongnam Bank, Woori Investment & Securities, Woori Aviva Life Insurance, Woori Asset Management, Woori Financial, Woori FG Savings Bank and Woori F&I in 2014, these former subsidiaries of Woori Finance Holdings were classified as a disposal group held for distribution or sale in our consolidated statement of financial position as of December 31, 2013 (but not as of prior dates) and have been accounted for as discontinued operations in our consolidated statements of comprehensive income for the years ended December 31, 2010, 2011, 2012, 2013 and 2014. See “Item 4A. History and Development of the Company—Privatization Plan.”

You should read the following data together with the more detailed information contained in “Item 5. Operating and Financial Review and Prospects” and our consolidated financial statements included elsewhere in this annual report. Historical results do not necessarily predict future results.

Consolidated Statement of Comprehensive Income Data


	Year ended December 31,
	2010⁽¹⁾			2011⁽¹⁾⁽²⁾			2012^(1)(2)(3)			2013^(1)(2)(3)			2014^(1)(2)(3)			2014^(1)(2)(3)(4)
	(in billions of Won except per share data)															(in millions of US$ except per share data)
Interest income	￦	10,442		￦	11,095		￦	10,891		￦	9,493		￦	9,211		US$	8,444
Interest expense		(6,255	)		(6,206	)		(6,043	)		(5,001	)		(4,718	)		(4,325	)

Net interest income		4,187			4,889			4,848			4,492			4,493			4,119
Fees and commissions income		1,576			1,625			1,687			1,565			1,598			1,465
Fees and commissions expense		(420	)		(444	)		(498	)		(639	)		(681	)		(624	)

Net fees and commissions income		1,156			1,181			1,189			926			917			841
Dividend income		140			143			101			88			97			89
Net gain (loss) on financial assets at fair value through profit or loss		22			137			(365	)		124			190			174
Net gain (loss) on available-for-sale financial assets		976			1,027			533			(85	)		(69	)		(63	)
Impairment losses on credit loss		(2,506	)		(1,923	)		(1,799	)		(2,277	)		(1,097	)		(1,006	)
Other net operating expenses⁽⁵⁾		(2,676	)		(3,163	)		(2,958	)		(3,028	)		(3,633	)		(3,331	)

Operating income		1,299			2,291			1,549			240			898			823
Share of gain (loss) of joint ventures and associates		33			(39	)		45			(1	)		(68	)		(62	)
Other non-operating income (expense)		(68	)		90			44			49			4			4

Non-operating income (loss)		(35	)		51			89			48			(64	)		(58	)
Net income before income tax expense		1,264			2,342			1,638			288			834			765
Income tax expense		313			559			357			35			288			264

Net income from continuing operations		951			1,783			1,281			253			546			501
Net income (loss) from discontinued operations		650			668			566			(966	)		662			606
Net income (loss)	￦	1,601		￦	2,451		￦	1,847		￦	(713	)	￦	1,208		US$	1,107

Remeasurement of the net defined benefit liability		—			(18	)		(51	)		9			(52	)		(47	)

Items that will not be reclassified to profit or loss		—			(18	)		(51	)		9			(52	)		(47	)
Loss on available-for-sale financial assets		(205	)		(375	)		(349	)		(51	)		(75	)		(69	)
Share of other comprehensive income (loss) of joint ventures and associates		(21	)		(38	)		57			(6	)		(2	)		(1	)
Gain (loss) on foreign currency translation of foreign operations		(19	)		25			(108	)		(60	)		48			44
Gain (loss) on valuation of cash flow hedge		9			3			13			(2	)		(27	)		(25	)

Items that may be reclassified to profit or loss		(236	)		(385	)		(387	)		(119	)		(56	)		(51	)
Other comprehensive loss, net of tax		(236	)		(403	)		(438	)		(110	)		(108	)		(98	)

Total comprehensive income (loss)	￦	1,365		￦	2,048		￦	1,409		￦	(823	)	￦	1,100		US$	1,009

Net income (loss) attributable to owners	￦	1,289		￦	2,154		￦	1,633		￦	(538	)	￦	1,214		US$	1,113
Income from continuing operations		794			1,636			1,164			162			435			399
Income (loss) from discontinued operations		495			518			469			(700	)		779			714
Net income (loss) attributable to non-controlling interests	￦	312		￦	297		￦	214		￦	(175	)	￦	(6	)	US$	(6	)
Income from continuing operations		157			147			117			91			111			102
Income (loss) from discontinued operations		155			150			97			(266	)		(117	)		(108	)
Comprehensive income (loss) attributable to owners		1,052			1,729			1,177			(623	)		1,192			1,093
Comprehensive income (loss) attributable to non-controlling interests		313			319			232			(200	)		(92	)		(84	)
Basic and diluted earnings (loss) from continuing and discontinued operations per share	￦	1,599		￦	2,670		￦	1,993		￦	(704	)	￦	1,621		US$	1.49
Basic and diluted earnings from continuing operations per share		985			2,027			1,411			165			536			0.49
Per common share data:
Net income (loss) per share—basic	￦	1,599		￦	2,670		￦	1,993		￦	(704	)	￦	1,621		US$	1.49
Weighted average common shares outstanding—basic (in thousands)		806,013			806,013			806,013			806,013			718,265			718,265
Net income (loss) per share—diluted	￦	1,599		￦	2,670		￦	1,993		￦	(704	)	￦	1,621		US$	1.49
Weighted average common shares outstanding—diluted (in thousands)		806,013			806,013			806,013			806,013			718,265			718,265
Cash dividends paid per share	￦	250		￦	250		￦	250		￦	—		￦	500		US$	0.46

⁽¹⁾	The amounts for 2010, 2011, 2012, 2013 and 2014 reflect the classification of certain former subsidiaries as discontinued operations.

⁽²⁾

The amounts for 2013 and 2014 reflect a change in our accounting policies pursuant to an amendment to International Accounting Standards, or IAS 19, Employee Benefits, which became effective beginning in 2013. Corresponding amounts for 2012 and 2011 (but not for 2010) were restated to retroactively apply such change.

⁽³⁾

The amounts for 2013 and 2014 reflect a change in our accounting policies pursuant to the adoption of IFRS 10, Consolidated Financial Statements, which became effective beginning in 2013. Pursuant to IFRS 10, corresponding amounts for 2012 (but not for 2011 or 2010) were restated to retroactively apply such change.

⁽⁴⁾	Won amounts are expressed in U.S. dollars at the rate of ￦1,090.9 to US$1.00, the noon buying rate in effect on December 31, 2014 as quoted by the Federal Reserve Bank of New York in the United States.

⁽⁵⁾	For a description of “other net operating expenses,” see Note 40 of the notes to our consolidated financial statements.

Consolidated Statement of Financial Position Data


	As of December 31,
	2010		2011⁽¹⁾		2012⁽¹⁾⁽²⁾		2013^(1)(2)(3)			2014⁽¹⁾⁽²⁾			2014^(1)(2)(4)
	(in billions of Won)												(in millions of US$)
Assets
Cash and cash equivalents	￦	4,871	￦	6,417	￦	5,778	￦	5,478		￦	5,963		US$	5,466
Financial assets at fair value through profit or loss		22,184		25,600		27,352		4,806			4,554			4,175
Available-for-sale financial assets		21,998		19,672		18,889		17,085			18,811			17,243
Held-to-maturity financial assets		19,886		20,036		18,685		12,039			13,044			11,958
Loans and receivables		216,792		235,160		250,276		211,912			223,370			204,758
Investments in joint ventures and associates		745		928		1,038		618			648			594
Investment properties		643		499		492		341			358			328
Premises and equipment		3,097		3,134		3,186		2,536			2,501			2,293
Intangible assets and goodwill		295		448		433		269			296			271
Assets held for sale		88		56		83		1			8			7
Current tax assets		9		57		39		143			5			4
Deferred tax assets		59		80		155		155			258			236
Derivative assets		131		327		281		131			196			180
Other assets⁽⁵⁾		379		377		415		179			145			133
Disposal group held for sale		—		—		—		34,685			—			—
Disposal group held for distribution to owners		—		—		—		50,312			—			—

Total assets	￦	291,177	￦	312,791	￦	327,102	￦	340,690		￦	270,157		US$	247,646

Liabilities
Financial liabilities at fair value through profit or loss	￦	8,838	￦	9,622	￦	10,986	￦	2,507		￦	2,675		US$	2,453
Deposits due to customers		185,428		195,930		204,210		175,324			188,516			172,808
Borrowings		34,266		34,667		33,480		18,232			17,708			16,232
Debentures		29,111		29,266		27,960		21,678			24,796			22,730
Provisions		761		892		864		685			692			634
Net defined benefit liability		70		120		166		72			75			69
Current tax liabilities		174		274		179		10			299			274
Deferred tax liabilities		213		260		134		49			22			20
Derivative liabilities		5		33		38		2			—			—
Other financial liabilities⁽⁶⁾		11,648		19,084		25,544		19,914			16,890			15,482
Other liabilities⁽⁷⁾		399		570		508		410			391			358
Liabilities directly associated with disposal group held for sale		—		—		—		32,048			—			—
Liabilities directly associated with disposal group held for distribution to owners		—		—		—		46,882			—			—

Total liabilities	￦	270,913	￦	290,718	￦	304,069	￦	317,813		￦	252,064		US$	231,060

Equity
Owners’ equity
Capital stock	￦	4,030	￦	4,030	￦	4,030	￦	4,030		￦	3,381		US$	3,100
Hybrid securities		—		309		498		498			2,539			2,327
Capital surplus		180		176		174		177			291			267
Other equity⁽⁸⁾		1,002		563		112		(35	)		(2,393	)		(2,194	)
Retained earnings		10,489		12,446		13,881		13,113			14,165			12,985
Equity directly associated with disposal group held for sale		—		—		—		30			—			—
Equity directly associated with disposal group held for distribution to owners		—		—		—		36			—			—
Non-controlling interests		4,563		4,549		4,338		5,028			110			101

Total equity	￦	20,264	￦	22,073	￦	23,033	￦	22,877		￦	18,093		US$	16,586

Total liabilities and equity	￦	291,177	￦	312,791	￦	327,102	￦	340,690		￦	270,157		US$	247,646

⁽¹⁾

The amounts as of December 31, 2013 and 2014 reflect a change in our accounting policies pursuant to an amendment to IAS 19, Employee Benefits, which became effective beginning in 2013. Corresponding amounts as of December 31, 2012 and 2011 (but not as of December 31, 2010) were restated to retroactively apply such change.

⁽²⁾

The amounts as of December 31, 2013 and 2014 reflect a change in our accounting policies pursuant to the adoption of IFRS 10, Consolidated Financial Statements, which became effective beginning in 2013. Pursuant to IFRS 10, corresponding amounts as of December 31, 2012 (but not as of December 31, 2011 or 2010) were restated to retroactively apply such change.

⁽³⁾	The amounts as of December 31, 2013 reflect the classification of certain former subsidiaries as a disposal group held for distribution or sale.

⁽⁴⁾	Won amounts are expressed in U.S. dollars at the rate of ￦1,090.9 to US$1.00, the noon buying rate in effect on December 31, 2014 as quoted by the Federal Reserve Bank of New York in the United States.

⁽⁵⁾	For a description of “other assets,” see Note 19 of the notes to our consolidated financial statements.

⁽⁶⁾	For a description of “other financial liabilities,” see Note 25 of the notes to our consolidated financial statements.

⁽⁷⁾	For a description of “other liabilities,” see Note 25 of the notes to our consolidated financial statements.

⁽⁸⁾	For a description of “other equity,” see Note 30 of the notes to our consolidated financial statements.

Profitability Ratios and Other Data


	Year ended December 31,
	2010⁽¹⁾			2011⁽¹⁾			2012⁽¹⁾⁽²⁾			2013⁽¹⁾⁽²⁾			2014⁽¹⁾⁽²⁾
	(in billions of Won except percentages)
Return on average assets⁽³⁾		0.55	%		0.90	%		0.67	%		(0.22	)%		0.47	%
Return on average equity⁽⁴⁾		9.19			14.20			10.46			(3.45	)		6.74
Net interest spread⁽⁵⁾		1.75			2.01			1.94			1.83			1.72
Net interest margin⁽⁶⁾		1.87			2.14			2.07			1.94			1.82
Cost-to-income ratio⁽⁷⁾		44.86			46.12			50.79			59.30			68.38
Average equity as a percentage of average total assets		6.01			6.36			6.39			6.50			7.03
Total revenue⁽⁸⁾	￦	13,156		￦	14,027		￦	12,847		￦	11,185		￦	11,027
Operating expense⁽⁹⁾		9,351			9,813			9,499			8,668			9,032
Operating margin⁽¹⁰⁾		3,805			4,214			3,348			2,517			1,995
Operating margin as a percentage of total revenue		28.92	%		30.04	%		26.06	%		22.50	%		18.09	%

⁽¹⁾	The amounts for 2010, 2011, 2012, 2013 and 2014 exclude certain former subsidiaries classified as discontinued operations.

⁽²⁾

⁽³⁾	Represents net income attributable to owners as a percentage of average total assets. Average balances are based on daily balances for us and on quarterly balances for all of our subsidiaries and our structured companies.

⁽⁴⁾	Represents net income attributable to owners as a percentage of average equity. Average balances are based on daily balances for us and on quarterly balances for all of our subsidiaries and our structured companies.

⁽⁵⁾	Represents the difference between the yield on average interest-earning assets and cost of average interest-bearing liabilities.

⁽⁶⁾	Represents the ratio of net interest income to average interest-earning assets.

⁽⁷⁾	Represents the ratio of non-interest expense (excluding impairment losses on credit loss) to the sum of net interest income and non-interest income.

⁽⁸⁾	Represents the sum of interest income, dividend income, fees and commissions income, net gain (loss) on financial assets at fair value through profit or loss and net gain (loss) on available-for-sale financial assets.

The following table shows how total revenue is calculated:


	Year ended December 31,
	2010^(a)		2011^(a)		2012^(a)(b)			2013^(a)(b)			2014^(a)(b)
	(in billions of Won)
Interest income	￦	10,442	￦	11,095	￦	10,891		￦	9,493		￦	9,211
Fees and commissions income		1,576		1,625		1,687			1,565			1,598
Dividend income		140		143		101			88			97
Net gain (loss) on financial assets at fair value through profit or loss		22		137		(365	)		124			190
Net gain (loss) on available-for-sale financial assets		976		1,027		533			(85	)		(69	)

Total revenue	￦	13,156	￦	14,027	￦	12,847		￦	11,185		￦	11,027

^(a)

The amounts for 2010, 2011, 2012, 2013 and 2014 exclude certain former subsidiaries classified as discontinued operations.

^(b)

⁽⁹⁾	Represents interest expense, fees and commissions expense and other net operating expense, excluding impairment losses on credit loss of ￦2,506 billion, ￦1,923 billion, ￦1,799 billion, ￦2,277 billion and ￦1,097 billion for 2010, 2011, 2012, 2013 and 2014, respectively.

The following table shows how operating expense is calculated:


	Year ended December 31,
	2010^(a)		2011^(a)		2012^(a)(b)		2013^(a)(b)		2014^(a)(b)
	(in billions of Won)
Interest expense	￦	6,255	￦	6,206	￦	6,043	￦	5,001	￦	4,718
Fees and commissions expense		420		444		498		639		681
Other net operating expenses^(c)		2,676		3,163		2,958		3,028		3,633

Operating expense	￦	9,351	￦	9,813	￦	9,499	￦	8,668	￦	9,032

^(a)

The amounts for 2010, 2011, 2012, 2013 and 2014 exclude certain former subsidiaries classified as discontinued operations.

^(b)

^(c)

The amounts for 2013 and 2014 reflect a change in our accounting policies pursuant to an amendment to IAS 19, Employee Benefits, which became effective beginning in 2013. Corresponding amounts for 2012 and 2011 (but not for 2010) were restated to retroactively apply such change.

⁽¹⁰⁾	Represents total revenue less operating expense.

Asset Quality Data


				As of December 31,
	2010			2011			2012⁽¹⁾			2013⁽¹⁾⁽²⁾			2014⁽¹⁾
	(in billions of Won, except percentages)
Total loans⁽³⁾	￦	201,235		￦	212,492		￦	221,028		￦	193,766		￦	207,077
Total non-performing loans⁽⁴⁾		6,550			3,780			3,766			4,996			3,818
Other impaired loans not included in non-performing loans⁽⁵⁾		475			238			698			690			692
Total non-performing loans and other impaired loans⁽⁵⁾		7,025			4,018			4,464			5,685			4,510
Total allowance for credit losses		4,718			3,759			3,565			3,337			2,609
Non-performing loans as a percentage of total loans		3.25	%		1.78	%		1.70	%		2.58	%		1.84	%
Non-performing loans as a percentage of total assets		2.25			1.21			1.15			1.47			1.41
Total non-performing loans and other impaired loans as a percentage of total loans		3.49			1.89			2.02			2.93			2.18
Allowance for credit losses as a percentage of total loans		2.34			1.77			1.61			1.72			1.26

⁽¹⁾

⁽²⁾	The amounts as of December 31, 2013 exclude certain former subsidiaries classified as a disposal group held for distribution or sale.

⁽³⁾	Not including due from banks and other receivables, and prior to deducting allowance for credit losses and present value discount or reflecting deferred origination costs.

⁽⁴⁾	Defined as those loans that are past due by 90 days or more or classified as substandard or below based on the Financial Services Commission’s asset classification criteria. See “Item 4B. Business Overview—Assets and Liabilities—Asset Quality of Loans—Loan Classifications.”

⁽⁵⁾

Other impaired loans as of December 31, 2010, 2011 and 2012 exclude securitized loans purchased from third parties and held by Woori F&I, a former wholly-owned subsidiary, in the aggregate amount of ￦664 billion, ￦980 billion and ￦1,207 billion, respectively. While such securitized loans qualify as other impaired loans under IFRS and are accounted for as such in our consolidated financial statements, the expected losses on such securitized loans were reflected in the determination of their fair value at initial recognition. Accordingly, we believe that the exclusion of such securitized loans from other impaired loans eliminates the potential distorting effect they might have on the ratio of total non-performing loans and other impaired loans to total loans as of such dates presented in the above table. Other impaired loans as of December 31, 2013 exclude such securitized loans that were held by Woori F&I as of such date, which were classified as part of a disposal group held for sale. Woori F&I was sold in April 2014. See “Item 4A. History and Development of the Company—Privatization Plan.”

Selected Financial Information

Average Balances and Related Interest

The following tables show our average balances and interest rates for the past three years (excluding discontinued operations):


	Year ended December 31,
	2012							2013							2014
	Average Balance⁽¹⁾		Interest Income⁽²⁾		Average Yield			Average Balance⁽¹⁾		Interest Income⁽²⁾		Average Yield			Average Balance⁽¹⁾		Interest Income⁽²⁾		Average Yield
	(in billions of Won, except percentages)
Assets
Interest-earning assets
Due from banks	￦	7,781	￦	109		1.40	%	￦	9,088	￦	120		1.32	%	￦	11,710	￦	104		0.89	%
Loans⁽³⁾
Commercial and industrial		80,377		4,582		5.70			82,875		4,062		4.90			89,030		3,992		4.48
Trade financing		12,935		296		2.29			12,386		220		1.78			12,371		188		1.52
Other commercial		11,030		449		4.07			9,584		351		3.66			8,997		294		3.27
General purpose household⁽⁴⁾		60,840		3,198		5.26			58,770		2,694		4.58			57,720		2,396		4.15
Mortgage		10,296		520		5.05			15,979		686		4.29			23,970		917		3.83
Credit cards⁽²⁾		4,310		318		7.38			4,197		337		8.03			4,678		397		8.49

Total loans		179,788		9,363		5.21			183,791		8,350		4.54			196,766		8,184		4.16
Securities
Trading		9,221		326		3.54			3,753		109		2.90			2,639		71		2.69
Investment⁽⁵⁾		26,973		1,013		3.76			26,349		860		3.26			28,076		802		2.86

Total securities		36,194		1,339		3.70			30,102		969		3.22			30,715		873		2.84
Other		10,893		80		0.73			8,548		54		0.63			7,954		50		0.63

Total average interest earning assets		234,656		10,891		4.64			231,529		9,493		4.10			247,145		9,211		3.73

Total average non-interest earning assets		9,789		—		—			8,595		—		—			9,148		—		—

Total average assets	￦	244,445	￦	10,891		4.46	%	￦	240,124	￦	9,493		3.95	%	￦	256,293	￦	9,211		3.59	%



	Year ended December 31,
	2012							2013							2014
	Average Balance⁽¹⁾		Interest Expense		Average Cost			Average Balance⁽¹⁾		Interest Expense		Average Cost			Average Balance⁽¹⁾		Interest Expense		Average Cost
	(in billions of Won, except percentages)
Liabilities
Interest-bearing liabilities
Deposits due to customers
Demand deposits	￦	9,641	￦	27		0.28	%	￦	9,397	￦	38		0.40	%	￦	9,312	￦	42		0.45	%
Time and savings deposits		138,660		4,119		2.97			140,981		3,369		2.39			153,789		3,190		2.07
Certificates of deposit		694		24		3.46			2,316		65		2.81			1,984		54		2.72
Other deposits		18,131		336		1.85			14,243		178		1.25			14,386		165		1.15

Total deposits		167,126		4,506		2.70			166,937		3,650		2.19			179,471		3,451		1.92
Borrowings		17,830		315		1.77			15,678		254		1.62			16,341		252		1.54
Debentures		22,721		1,112		4.89			21,994		961		4.37			23,218		885		3.81
Other		16,438		110		0.67			16,026		136		0.85			15,382		130		0.85

Total average interest- bearing liabilities		224,115		6,043		2.70			220,635		5,001		2.27			234,412		4,718		2.01

Total average non-interest-bearing liabilities		4,722		—		—			3,879		—		—			3,861		—		—

Total average liabilities		228,837		6,043		2.64			224,514		5,001		2.23			238,273		4,718		1.98

Total average equity		15,608		—		—			15,610		—		—			18,020		—		—

Total average liabilities and equity	￦	244,445	￦	6,043		2.47	%	￦	240,124	￦	5,001		2.08	%	￦	256,293	￦	4,718		1.84	%

⁽¹⁾	Average balances are based on daily balances for us and on quarterly balances for all of our subsidiaries and our structured companies.

⁽²⁾	Interest income from credit cards is derived from interest on credit card loans and credit card installment purchases.

⁽³⁾	Not including other receivables, and prior to deducting allowance for credit losses and present value discount or reflecting deferred origination costs.

⁽⁴⁾	Includes home equity loans.

⁽⁵⁾	Includes available-for-sale financial assets and held-to-maturity financial assets.

Analysis of Changes in Net Interest Income—Volume and Rate Analysis

The following table provides an analysis of changes in interest income, interest expense and net interest income (in each case excluding discontinued operations) based on changes in volume and changes in rate for 2013 compared to 2012 and 2014 compared to 2013. Information is provided with respect to: (1) effects attributable to changes in volume (changes in volume multiplied by prior rate) and (2) effects attributable to changes in rate (changes in rate multiplied by prior volume). Changes attributable to the combined impact of changes in rate and volume have been allocated proportionately to the changes due to volume changes and changes due to rate changes.


	2013 vs. 2012 Increase/(decrease) due to changes in									2014 vs. 2013 Increase/(decrease) due to changes in
	Volume			Rate			Total			Volume			Rate			Total
	(in billions of Won)
Interest-earning assets
Due from banks	￦	18		￦	(7	)	￦	11		￦	35		￦	(51	)	￦	(16	)
Loans⁽¹⁾
Commercial and industrial		142			(662	)		(520	)		302			(372	)		(70	)
Trade financing		(13	)		(63	)		(76	)		—			(32	)		(32	)
Other commercial		(59	)		(39	)		(98	)		(21	)		(36	)		(57	)
General purpose household⁽²⁾		(109	)		(395	)		(504	)		(48	)		(250	)		(298	)
Mortgage		287			(121	)		166			343			(112	)		231
Credit cards		(8	)		27			19			39			21			60
Securities
Trading		(193	)		(24	)		(217	)		(32	)		(6	)		(38	)
Investment⁽³⁾		(23	)		(130	)		(153	)		56			(114	)		(58	)
Other		(17	)		(9	)		(26	)		(4	)		—			(4	)

Total interest income	￦	25		￦	(1,423	)	￦	(1,398	)	￦	670		￦	(952	)	￦	(282	)

Interest-bearing liabilities
Deposits due to customers
Demand deposits	￦	(1	)	￦	12		￦	11		￦	—		￦	4		￦	4
Time and savings deposits		69			(819	)		(750	)		306			(485	)		(179	)
Certificate of deposit		56			(15	)		41			(9	)		(2	)		(11	)
Other deposits		(72	)		(86	)		(158	)		2			(15	)		(13	)
Borrowings		(38	)		(23	)		(61	)		11			(13	)		(2	)
Debentures		(36	)		(115	)		(151	)		53			(129	)		(76	)
Other		(3	)		29			26			(5	)		(1	)		(6	)

Total interest expense	￦	(25	)	￦	(1,017	)	￦	(1,042	)	￦	358		￦	(641	)	￦	(283	)

Net interest income	￦	50		￦	(406	)	￦	(356	)	￦	312		￦	(311	)	￦	1

⁽¹⁾	Not including other receivables and prior to deducting allowance for credit losses and present value discount or reflecting deferred origination costs.

⁽²⁾	Includes home equity loans.

⁽³⁾	Includes available-for-sale financial assets and held-to-maturity financial assets.

Exchange Rates

The table below sets forth, for the periods and dates indicated, information concerning the noon buying rate for Won, expressed in Won per one U.S. dollar. The “noon buying rate” is the rate in New York City for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York. Unless otherwise stated, translations of Won amounts into U.S. dollars in this annual report were made at the noon buying rate in effect on December 31, 2014, which was ￦1,090.9 to US$1.00. We do not intend to imply that the Won or U.S. dollar amounts referred to herein could have been or could be converted into U.S. dollars or Won, as the case may be, at any particular rate, or at all. On April 20, 2015, the noon buying rate was ￦1,081.3 = US$1.00.


	Won per U.S. dollar (noon buying rate)
	Low		High		Average⁽¹⁾		Period-End
2009		1,149.0		1,570.1		1,274.6		1,163.7
2010		1,104.0		1,253.2		1,155.7		1,130.6
2011		1,049.2		1,197.5		1,106.9		1,158.5
2012		1,063.2		1,185.0		1,126.2		1,063.2
2013		1,050.1		1,161.3		1,094.7		1,055.3
2014		1,008.9		1,117.7		1,052.3		1,090.9
October		1,043.9		1,074.4		1,060.3		1,073.1
November		1,077.0		1,114.7		1,097.9		1,112.1
December		1,080.8

20-F	2019-12-31	Filed 2020-04-29
20-F	2018-12-31	Filed 2019-04-30
20-F	2017-12-31	Filed 2018-04-30
20-F	2016-12-31	Filed 2017-04-27
20-F	2015-12-31	Filed 2016-04-29
20-F	2014-12-31	Filed 2015-04-30
20-F	2013-12-31	Filed 2014-04-30
20-F	2012-12-31	Filed 2013-04-30
20-F	2011-12-31	Filed 2012-04-30
20-F	2010-12-31	Filed 2011-06-27
20-F	2009-12-31	Filed 2010-06-25

EX-2.1	d912796dex21.htm
EX-11.1	d912796dex111.htm
EX-12.1	d912796dex121.htm
EX-13.1	d912796dex131.htm

WF 20F Annual Report

Woori Bank Earnings 2014-12-31

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