Woori back to profit to $752mn in second quarter

The company posted a $674.61mn gain from selling 8.3 million shares in Hyundai Engineering & Construction last April.

Woori Finance Holdings Co., the owner of South Korea’s second-largest bank, turned to a profit as provision expenses fell, loan margins widened and it booked a gain from selling Hyundai Engineering & Construction Co. shares.

Seoul-based Woori Finance posted a second-quarter profit of 791.3 billion won ($752 million), compared with a restated loss of 338.5 billion won ($318.69 million) a year earlier, it said in a regulatory filing on Tuesday.

The lender joins KB Financial Group Inc. and Hana Financial Group Inc. in expanding profit last quarter as provisions against bad loans declined and lending income was boosted by the Bank of Korea’s policy rate increase aimed at tackling inflation. Chairman Lee Pal Seung this year aims to halve Woori’s non- performing loan ratio, which stood at 3.2 percent as of December.

“Woori’s bad-loan ratio has been higher than those of its rivals and that’s been its biggest weakness,” said Sohn Joon Beum, an analyst at LIG Investment & Securities Co. “Cleaning up bad assets with rising profit will strengthen Woori’s earnings power going forward.”

Woori shares fell 2.1 percent to close at 13,950 won ($13.13) in Seoul before the earnings announcement. The stock has lost 10 percent this year, compared with the benchmark Kospi index (KOSPI)’s 3.4 percent advance.

The company posted a gain of about 720 billion won ($674.61 million) from selling 8.3 million shares in Hyundai Engineering & Construction in April, Woori said. Woori Bank, together with eight other financial companies, sold their combined 35 percent stake in the nation’s largest builder for 4.96 trillion won ($4.64 billion) in April to Hyundai Motor Group.

View the full story in Bloomberg.