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Published: 2022-05-16 06:22:19 ET

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Form 20-F

Table of Contents

As filed with the Securities and Exchange Commission on May 16, 2022

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

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

For the fiscal year ended December 31, 2021

☐	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

Commission file number

001-31811

Woori Financial Group Inc.

(Exact name of Registrant as specified in its charter)

Woori Financial Group Inc.

(Translation of Registrant’s name into English)

The Republic of Korea

(Jurisdiction of incorporation or organization)

51,

Sogong-ro,

Jung-gu

Seoul

04632

, Korea

(Address of principal executive offices)

Jeong Soo Lee

51,

Sogong-ro,

Jung-gu

Seoul 04632, Korea

Telephone No.:

+82-2-2125-2050

Facsimile No.:

+82-0505001-0451

(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	Trading symbol	Name of each exchange on which registered
American Depositary Shares, each representing three shares of Common Stock	WF	New York Stock Exchange
Common Stock, par value ￦ 5,000 per share	WF	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.

728,058,225

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. ☒ 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 ☒ 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. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). ☒

Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a

non-accelerated

filer, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule

12b-2

of the Exchange Act.


☒ Large accelerated filer		☐ Accelerated Filer		☐ Non-accelerated filer		☐ Emerging growth company

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒ Yes ☐ No

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


☐ U.S. GAAP		☒ International Financial Reporting Standards as issued by the International Accounting Standards Board		☐ Other


Auditor Name: Samil PricewaterhouseCoopers		Auditor Location: Seoul, Korea		Auditor Firm ID: 1103

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

☒ 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

TABLE OF CONTENTS


			Page
Presentation of Financial and Other Information				1
Forward-Looking Statements				2
Item 1.	Identity of Directors, Senior Management and Advisers			3
Item 2.	Offer Statistics and Expected Timetable			3
Item 3.	Key Information			3
	Item 3.A.	[Reserved]		3
	Item 3.B.	Capitalization and Indebtedness		3
	Item 3.C.	Reasons for the Offer and Use of Proceeds		3
	Item 3.D.	Risk Factors		3
Item 4.	Information on the Company			32
	Item 4.A.	History and Development of the Company		32
	Item 4.B.	Business Overview		39
	Item 4.C.	Organizational Structure		112
	Item 4.D.	Property, Plants and Equipment		113
Item 4A.	Unresolved Staff Comments			113
Item 5.	Operating and Financial Review and Prospects			113
	Item 5.A.	Operating Results		113
	Item 5.B.	Liquidity and Capital Resources		138
	Item 5.C.	Research and Development, Patents and Licenses, etc.		143
	Item 5.D.	Trend Information		143
	Item 5.E.	Critical Accounting Estimates		143
Item 6.	Directors, Senior Management and Employees			144
	Item 6.A.	Directors and Senior Management		144
	Item 6.B.	Compensation		147
	Item 6.C.	Board Practices		148
	Item 6.D.	Employees		150
	Item 6.E.	Share Ownership		151
Item 7.	Major Shareholders and Related Party Transactions			152
	Item 7.A.	Major Shareholders		152
	Item 7.B.	Related Party Transactions		153
	Item 7.C.	Interest of Experts and Counsel		153
Item 8.	Financial Information			153
	Item 8.A.	Consolidated Statements and Other Financial Information		153
	Item 8.B.	Significant Changes		159
Item 9.	The Offer and Listing			160
	Item 9.A.	Offering and Listing Details		160
	Item 9.B.	Plan of Distribution		162
	Item 9.C.	Markets		162
	Item 9.D.	Selling Shareholders		163
	Item 9.E.	Dilution		163
	Item 9.F.	Expenses of the Issuer		163
Item 10.	Additional Information			163
	Item 10.A.	Share Capital		163
	Item 10.B.	Memorandum and Articles of Association		163
	Item 10.C.	Material Contracts		169
	Item 10.D.	Exchange Controls		169
	Item 10.E.	Taxation		170
	Item 10.F.	Dividends and Paying Agents		176
	Item 10.G.	Statements by Experts		176

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			Page
	Item 10.H.	Documents on Display		176
	Item 10.I.	Subsidiary Information		176
Item 11.	Quantitative and Qualitative Disclosures about Market Risk			177
Item 12.	Description of Securities Other Than Equity Securities			199
Item 13.	Defaults, Dividend Arrearages and Delinquencies			200
Item 14.	Material Modifications to the Rights of Security Holders and Use of Proceeds			200
Item 15.	Controls and Procedures			200
Item 16.	Reserved			201
Item 16A.	Audit Committee Financial Expert			201
Item 16B.	Code of Ethics			201
Item 16C.	Principal Accountant Fees and Services			201
Item 16D.	Exemptions from the Listing Standards for Audit Committees			202
Item 16E.	Purchase of Equity Securities by the Issuer and Affiliated Purchasers			202
Item 16F.	Change in Registrant’s Certifying Accountant			202
Item 16G.	Corporate Governance			203
Item 16H.	Mine Safety Disclosure			204
Item 16I.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections			204
Item 17.	Financial Statements			204
Item 18.	Financial Statements			204
Item 19.	Exhibits			204

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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 the IASB.

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

We were established on January 11, 2019 pursuant to a “comprehensive stock transfer” under Korean law, whereby holders of the common stock of Woori Bank and certain of its subsidiaries transferred all of their shares to us, a new financial holding company, and in return received shares of our common stock. As a result of the stock transfer, Woori Bank and certain of its former wholly-owned subsidiaries, Woori FIS Co., Ltd., Woori Finance Research Institute Co., Ltd., Woori Credit Information Co., Ltd., Woori Fund Service Co., Ltd. and Woori Private Equity Asset Management Co., Ltd., became our direct and wholly-owned subsidiaries. Accordingly, our overall business and operations after the stock transfer, on a consolidated basis, are identical to those of Woori Bank on a consolidated basis immediately prior to the stock transfer. See “Item 4.A. History and Development of the Company—Establishment of Woori Financial Group.”

The stock transfer constituted a succession for purposes of Rule

12g-3(a)

under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), 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 stock transfer, we file reports under the Exchange Act as the successor issuer to Woori Bank.

In our consolidated financial statements for financial reporting periods beginning on or after January 1, 2019, the stock transfer is accounted for as a transaction among entities under common control applying the pooling of interests method of accounting (book value accounting). We initially recognized the transferred assets and liabilities at their book value as of the date of the stock transfer in such consolidated financial statements, and no goodwill was recognized in connection with the transaction.

The consolidated financial statements included in this annual report as of dates and for periods prior to the date of our establishment in January 2019 pursuant to the stock transfer were prepared based on the consolidated financial statements for Woori Bank and its subsidiaries, except that Woori FIS Co., Ltd., Woori Finance Research Institute Co., Ltd., Woori Credit Information Co., Ltd., Woori Fund Service Co., Ltd. and Woori Private Equity Asset Management Co., Ltd. were consolidated on a

line-by-line

basis instead of being presented as assets and liabilities held for sale. Unless expressly stated otherwise, historical financial data included in this annual report as of dates and for periods prior to our establishment are for Woori Bank and its subsidiaries, on a consolidated basis, with the foregoing modification. For further information regarding the accounting treatment of the stock transfer, see Note 1 of the notes to our consolidated financial statements included elsewhere in this annual report.

Unless otherwise indicated or required by the context, “we,” “us,” “our” and similar terms used in this annual report refer to Woori Financial Group and its subsidiaries (including Woori Bank) and, for periods prior to our establishment, refer to Woori Bank and its subsidiaries.

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;

•

references to “U.S. dollars,” “$” or “US$” are to the currency of the United States; and

•

references to “Euros” or “EUR” are to the currency of the European Economic and Monetary Union.

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 30, 2021, which was ￦1,188.6= US$1.00.

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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 3.D. Risk Factors,” “Item 4.B. 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 3.D. 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:

•

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;

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•

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 3.D. 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 3.A.

[Reserved]

Item 3.B.

Capitalization and Indebtedness

Not Applicable

Item 3.C.

Reasons for the Offer and Use of Proceeds

Not Applicable

Item 3.D.

Risk Factors

Risks relating to our corporate credit portfolio

The largest portion of our exposure is to small- and

medium-sized

enterprises, and financial difficulties experienced by companies in this segment may result in a deterioration of our asset quality and have an adverse impact on us.

Our loans to small- and

medium-sized

enterprises amounted to ￦97,476 billion, or 32.1% as of December 31, 2020 and ￦112,696 billion, or 33.4% of our total loans, as of December 31, 2021. As of December 31, 2021,

Won-denominated

loans to small- and

medium-sized

enterprises that were classified as substandard or below were ￦374 billion, representing 0.3% of such loans to those enterprises.

See “Item 4.B. Business Overview—Corporate Banking—Small and

Medium-Sized

Enterprise Banking.” We recorded charge-offs of ￦158 billion in respect of our

Won-denominated

loans to small- and

medium-sized

enterprises in 2021, compared to charge-offs of ￦219 billion in 2020 and ￦185 billion in 2019. According to data compiled by the Financial Supervisory Service, the industry-wide delinquency ratios for

Won-denominated

loans to small- and

medium-sized

enterprises decreased in 2020 and in 2021. The delinquency ratio for small- and

medium-sized

enterprises is calculated as the ratio of (1) the outstanding balance of such loans in respect of which either principal or interest payments are overdue by one month or more to (2) the aggregate outstanding balance of such loans. Our delinquency ratio for such loans denominated in Won was 0.3% as of December 31, 2020 and 0.3% as of December 31, 2021.

Our delinquency ratio may increase in 2022 as a result of, among other things, adverse changes in economic conditions in Korea and globally. See “—Other risks relating to our business—Unfavorable changes in the global financial markets could adversely affect our results of operations and financial condition.” Accordingly, we may be required to take measures to decrease our exposures to these customers.

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In light of the deteriorating financial condition and liquidity position of small- and

medium-sized

enterprises in Korea as a result of the global financial crisis commencing in the second half of 2008, the Korean government introduced measures intended to encourage Korean banks to provide financial support to small- and

medium-sized

enterprise borrowers. For example, the Korean government requested Korean banks, including Woori Bank, to establish a “fast track” program to provide liquidity assistance to small- and

medium-sized

enterprises on an expedited basis. Under the “fast track” program established by Woori Bank, liquidity assistance is provided to small- and

medium-sized

enterprise borrowers applying for such assistance, in the form of new short-term loans or maturity extensions or interest rate adjustments with respect to existing loans, after expedited credit review and approval. The aggregate amount of outstanding small- and

medium-sized

enterprise loans made by us under the “fast track” program was ￦81.5 billion as of December 31, 2021, which represented 0.08% of our total small- and

medium-sized

enterprise loan portfolio as of such date.

Furthermore, loans made by us under the “fast track” program are partially guaranteed by the Korean government’s public financial institutions, including the Korea Credit Guarantee Fund and the Korea Technology Finance Corporation. The overall prospects for the Korean economy in 2022 and beyond remain uncertain, especially in light of the

COVID-19

pandemic affecting many countries worldwide, including Korea, and the Korean government may extend or renew existing or past policies and initiatives or introduce new policies or initiatives to encourage Korean banks to provide financial support to small- and

medium-sized

enterprises. See “—Other risks relating to our business—The

COVID-19

pandemic has adversely affected and may continue to adversely affect our business, financial condition or results of operations.” For example, the Financial Services Commission requested 15 Korean banks, including Woori Bank, to extend special

low-rate

loans to small merchants affected by the

COVID-19

pandemic beginning in April 2020. Such Korean banks, including Woori Bank, ceased providing new loans under such program starting from January 3, 2022, and as of December 31, 2021, the aggregate amount of such loans extended by the Korean banks was ￦13.5 trillion, of which ￦1.5 trillion was provided by Woori Bank. In addition, Korean financial regulatory authorities, including the Financial Services Commission and the Financial Supervisory Service, adopted guidelines for Korean banks to extend loan terms and defer interest payments with respect to small- and medium sized enterprises and small merchants affected by the

COVID-19

pandemic from April 2020, and such measures are expected to continue until September 2022. As of December 31, 2021, the aggregate amount of loans affected by such measures provided by the four major commercial Korean banks, including Woori Bank, Kookmin Bank, KEB Hana Bank and Shinhan Bank, was ￦116.7 trillion, of which ￦29.8 trillion was provided by Woori Bank. We believe that, to date, our participation in such

government-led

initiatives has not caused us to extend a material amount of credit that we would not have otherwise extended nor materially impacted our results of operations and financial condition in general. However, there can be no assurance that our future participation in such

government-led

initiatives would not lead us to extend credit to small- and

medium-sized

enterprise borrowers that we would not otherwise extend, or offer terms for such credit that we would not otherwise offer, in the absence of such initiatives. Furthermore, there is no guarantee that the financial condition and liquidity position of our small- and

medium-sized

enterprise borrowers benefiting from such initiatives will improve sufficiently for them to service their debt on a timely basis, or at all. Accordingly, increases in our exposure to small- and

medium-sized

enterprises resulting from such

government-led

initiatives may have a material adverse effect on our results of operations and financial condition.

Many small- and

medium-sized

enterprises represent sole proprietorships or very small businesses dependent on a relatively limited number of suppliers or customers and tend to be affected by fluctuations in the Korean and global economy to a greater extent than large corporate borrowers. In addition, small- and

medium-sized

enterprises often maintain less sophisticated financial records than large corporate borrowers. Therefore, it is generally more difficult for us to judge the level of risk inherent in lending to these enterprises, as compared to large corporations. However, in light of the

COVID-19

pandemic, the Bank of Korea early implemented the Basel III final reforms in September 2020, which lowered the average risk weight of loans extended to small- and

medium-sized

enterprises.

In addition, many small- and

medium-sized

enterprises have close business relationships with large corporations in Korea, primarily as suppliers. Any difficulties encountered by those large

corporations would

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likely hurt the liquidity and financial condition of related small- and

medium-sized

enterprises, including those to which we have exposure, also resulting in an impairment of their ability to repay loans.

Financial difficulties experienced by small- and

medium-sized

enterprises as a result of, among other things, adverse changes in domestic and global economic conditions, could have an adverse impact on the ability of small- and

medium-sized

enterprises to make payments on their loans. For example, the

COVID-19

pandemic has had a significant adverse impact on the Korean and global economy, including disruptions in the supply chains, declines in the sales and deterioration in the financial conditions of small- and

medium-sized

enterprises. See “—Other risks relating to our business—The

COVID-19

pandemic has adversely affected and may continue to adversely affect our business, financial condition or results of operations.” In addition, aggressive marketing and competition among banks to lend to this segment may lead to a deterioration in the asset quality of our loans to this segment in the future. Any such deterioration would result in increased charge-offs, higher provisioning and reduced interest and fee income from this segment, which would have an adverse impact on our financial condition and results of operations.

We have exposure to companies in certain troubled industries, and financial difficulties of these companies may adversely impact us.

As of December 31, 2021, the total amount of loans provided by us to construction, shipbuilding and shipping companies in Korea amounted to ￦5,581 billion, ￦416 billion and ￦356 billion, or 1.7%, 0.1% and 0.1% of our total loans, respectively. We also have other exposures to Korean construction, shipbuilding and shipping companies, including in the form of guarantees extended for the benefit of such companies and debt and equity securities of such companies held by us. In the case of construction companies, we have potential exposure in the form of guarantees provided to us by general contractors with respect to financing extended by us for residential and commercial real estate development projects, as well as commitments to purchase asset-backed securities secured by the assets of companies in the construction industry and other commitments we enter into relating to project financing for such real estate projects which may effectively function as guarantees. In the case of shipbuilding companies, such exposures include refund guarantees extended by us on behalf of shipbuilding companies to cover their obligation to return a portion of the ship order contract amount to customers in the event of performance delays or defaults under shipbuilding contracts.

Although the construction industry in Korea has shown signs of recovery since 2015, excessive investment in residential property development projects, the strengthening of mortgage and other lending regulations by the Korean government, stagnation of real property prices and reduced demand for residential property in areas outside of the Seoul metropolitan area, are expected to continue to negatively impact the construction industry. The shipbuilding industry in Korea has experienced a severe downturn in recent years reflecting a significant decrease in ship orders, primarily due to adverse conditions in the global economy and the resulting slowdown in global trade. In the case of shipping companies in Korea, reduced shipping rates and high chartering costs, together with the slowdown in global trade, have contributed to the deterioration of their financial condition, requiring some of them to file for bankruptcy or pursue voluntary restructuring of their debt.

In response to the deteriorating financial condition and liquidity position of borrowers in the Korean construction, shipbuilding and shipping industries, which were disproportionately impacted by adverse domestic and global economic developments, the Korean government implemented a program in 2009 to promote expedited restructuring of such borrowers by their Korean creditor financial institutions, under the supervision of major commercial banks. In accordance with such program, 24 construction companies and five shipbuilding companies became subject to workout in 2009, following review by their creditor financial institutions (including us) and the Korean government. Each year since 2009, the Financial Services Commission and the Financial Supervisory Service have announced the results of subsequent credit risk evaluations conducted by creditor financial institutions (including us) of certain companies in Korea, pursuant to which a number of companies were selected by such financial institutions for restructuring in the form of workout, liquidation or court receivership. However, there is no assurance that these measures will be successful in stabilizing the Korean construction, shipbuilding and shipping industries.

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In addition, we have significant exposures to companies in the hotel, leisure and transportation industries, which have been adversely impacted by the

COVID-19

pandemic. As of December 31, 2021, the total amount of loans provided by us to companies in the hotel, leisure and transportation industries amounted to an aggregate ￦10,548 billion, or 3.1% of our total loans. While the business activities, results of operations and financial condition of companies in such industries may recover as the impact of the pandemic decreases, the timeline for such recovery remains uncertain, and we may be required to record substantial additional allowances relating to such companies.

The allowance for credit losses that we have established against our credit exposures to companies in the Korean construction, shipbuilding and shipping industries as well as the hotel, leisure and transportation industries may not be sufficient to cover all future losses arising from these and other exposures. If the credit quality of our exposures to such companies declines further, we may incur substantial additional provisions for credit loss, which could adversely impact our results of operations and financial condition. Furthermore, although a portion of our loans to companies in the construction, shipbuilding and shipping industries as well as the hotel, leisure and transportation industries are secured by collateral, such collateral may not be sufficient to cover uncollectible amounts in respect of such loans.

A large portion of our exposure is concentrated in a relatively small number of large corporate borrowers, which increases the risk of our corporate credit portfolio.

As of December 31, 2021, our 20 largest exposures to corporate borrowers (including loans, debt and equity securities, credit-related commitments and other exposures) totaled ￦64,683 billion, which represented 12.2% of our total exposures. As of that date, our single largest corporate exposure was to Korea Development Bank, to which we had outstanding credits in the form of debt securities of ￦12,078 billion and loans in Won of ￦36 billion, representing 2.3% of our total exposures in the aggregate. Aside from exposure to the Korean government and government-related agencies, our next largest exposure was to Mirae Asset Securities Co., Ltd., to which we had outstanding exposure of ￦4,048 billion representing 0.8% of our total exposures.

Any deterioration in the financial condition of our large corporate borrowers, including those in industries particularly affected by the

COVID-19

pandemic to which we have significant exposures such as the hotel, leisure and transportation industries, the retail and wholesale industries and the manufacturing industry, may require us to record substantial additional allowances and may have a material adverse impact on our results of operations and financial condition.

We have exposure to the largest Korean commercial conglomerates, known as “chaebols,” and, as a result, financial difficulties of chaebols may have an adverse impact on us.

Of our 20 largest corporate exposures as of December 31, 2021, 7 were to companies that were members of the 34 largest

chaebols

in Korea. As of that date, the total amount of our exposures to the 34 largest

chaebols

was ￦27,209 billion, or 5.1% of our total exposures.

If the credit quality of our exposures to

chaebols

declines as a result of financial difficulties they experience or for other reasons, we could incur additional provisions for credit loss, which would hurt our results of operations and financial condition. See “Item 4.B. Business Overview—Assets and Liabilities—Loan Portfolio—Exposure to Chaebols.”

The allowances we have established against these exposures may not be sufficient to cover all future losses arising from these exposures. In addition, in the case of companies that are in or in the future enter into workout, restructuring, reorganization or liquidation proceedings, our recoveries from those companies may be limited. We may, therefore, experience future losses with respect to these exposures.

We have exposure to companies that are currently or may in the future be put in restructuring and may suffer losses as a result of additional provisions for credit loss required or the adoption of restructuring plans with which we do not agree.

As of December 31, 2021, our credit exposures to companies that were in workout or corporate restructuring amounted to ￦233 billion or 0.04% of our total credit exposures, of which ￦221 billion or 94.8% was classified

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as substandard or below and substantially all of which was classified as impaired. As of the same date, our allowance for credit losses on these credit exposures amounted to ￦69 billion, or 29.6% of these exposures.

These allowances may not be sufficient to cover all future losses arising from our credit exposure to these companies. Furthermore, we have other exposure to such companies in the form of debt and equity securities of such companies held by us (including equity securities we acquired as a result of

debt-to-equity

conversions). Including such securities, our exposures as of December 31, 2021 to companies in workout or restructuring amounted to ￦233 billion, or 0.04% of our total exposures. Our exposures to such companies may also increase in the future, including as a result of adverse conditions in the Korean economy. In addition, in the case of borrowers that are or become subject to workout, we may be forced to restructure our credits pursuant to restructuring plans approved by other creditor financial institutions of the borrower, or to dispose of our credits to other creditors on unfavorable terms, which may adversely affect our results of operations and financial condition.

Risks relating to our consumer credit portfolio

We may experience increases in delinquencies in our consumer loan and credit card portfolios.

In recent years, consumer debt has increased rapidly in Korea. Our portfolio of consumer loans amounted to ￦138,119 billion as of December 31, 2020 and ￦148,361 billion as of December 31, 2021. Our credit card portfolio amounted to ￦8,543 billion as of December 31, 2020 and ￦9,757 billion as of December 31, 2021.

As of December 31, 2021, our consumer loans and credit card receivables represented 43.9% and 2.9%

of our total lending, respectively. See “Item 4.B. Business Overview—Consumer Banking—Lending Activities” and “Item 4.B. Business Overview—Credit Cards—Products and Services.”

The growth in our consumer loan portfolio in recent years, together with adverse changes in economic conditions in Korea and globally, may lead to increasing delinquencies and a deterioration in asset quality. The amount of our consumer loans classified as substandard or below was ￦295 billion (or 0.2% of our consumer loan portfolio) as of December 31, 2020 and ￦354 billion as of December 31, 2021 (or 0.2% of our consumer loan portfolio). We charged off consumer loans amounting to ￦173 billion in 2021, as compared to ￦182 billion in 2020 and ￦217 billion in 2019, and recorded provisions for credit loss in respect of consumer loans of ￦168 billion in 2021, as compared to ￦131 billion in 2020 and ￦163 billion in 2019. Within our consumer loan portfolio, the outstanding balance of general purpose household loans, which, unlike mortgage or home equity loans, are often unsecured and therefore tend to carry a higher credit risk, amounted to ￦35,211 billion, or 25.5% of our total outstanding consumer loans, as of December 31, 2020 and ￦32,003 billion, or 21.6% of our total outstanding consumer loans, as of December 31, 2021.

In our credit card segment, outstanding balances overdue by more than one month amounted to ￦88 billion, or 1.0% of our credit card receivables, as of December 31, 2020 and ￦79 billion, or 0.8% of our credit card receivables, as of December 31, 2021. In line with industry practice, we have restructured a portion of our delinquent credit card account balances as loans. As of December 31, 2021, these restructured loans amounted to ￦87 billion, or 0.9% of our credit card balances. Because these restructured loans are not initially recorded as being delinquent, our delinquency ratios do not fully reflect all delinquent amounts relating to our credit card balances. Including all restructured loans, outstanding balances overdue by more than one month accounted for 1.7% of our credit card balances as of December 31, 2021.

We charged off credit card balances amounting to ￦220 billion in 2021, as compared to ￦246 billion in 2020 and ￦281 billion in 2019, and recorded

provisions for credit loss in respect of credit card balances of ￦177 billion in 2021, as compared to ￦188 billion in 2020 and ￦236 billion in 2019. Delinquencies may increase in the future as a result of, among other things, adverse economic conditions in Korea, additional government regulation or the inability of Korean consumers to manage increased household debt.

A deterioration of the asset quality of our consumer loan and credit card portfolios would require us to record increased provisions for credit loss and charge-offs and adversely affect our financial condition and results of operations. In addition, our large exposure to consumer loans means that we are exposed to changes in economic conditions affecting Korean consumers. Accordingly, economic difficulties in Korea that hurt those

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consumers could result in further deterioration in the credit quality of our consumer loan and credit card portfolios. For example, the severe impact of the

COVID-19

pandemic on Korea’s economy may disrupt the business, activities and operations of our consumers, which in turn could result in a significant decrease in the number of financial transactions or the inability of our consumers to meet existing payment or other obligations to us. In addition, a rise in unemployment or an increase in interest rates in Korea could adversely affect the ability of consumers to make payments and increase the likelihood of potential defaults. See “Risks relating to Korea—Unfavorable financial and economic developments in Korea may have an adverse effect on us.”

In addition, we are exposed to changes in regulations and policies on consumer lending by the Korean government, which may adopt measures to restrict consumer lending or encourage financial institutions to provide financial support to certain types of retail borrowers. In 2014 and 2015, the Korean government implemented several measures to encourage consumer spending and revive the housing market in Korea, including loosening regulations on mortgage lending, which contributed to an increase in our portfolio of consumer loans. However, the Korean government introduced various measures from the second half of 2016 to 2021 to tighten regulations on mortgage and other lending and housing subscription in response to the rapid growth in consumer debt and concerns over speculative investments in real estate in certain areas. A decrease in housing prices as a result of the implementation of such measures, together with the high level of consumer debt and rising interest rate levels, could result in declines in consumer spending and reduced economic growth, which may lead to increases in delinquency levels of our consumer loan and credit card portfolios.

Under a

pre-workout

program established by Korean banks for retail borrowers with outstanding short-term debt, including Woori Bank, which has been in operation since April 2009, maturity extensions and/or interest reductions are provided to retail borrowers with total loans of ￦1.5 billion or less (consisting of no more than ￦500 million of unsecured loans and ￦1 billion of secured loans) who are in arrears on their payments for more than 30 days but less than 90 days or for retail borrowers with an annual income of ￦40 million or less who have been in arrears on their payments for 30 days or more on an aggregate basis for the 12 months prior to their application, among others. The aggregate amount of consumer credit (including credit card receivables) we provided which became subject to the

pre-workout

program in 2021 was ￦50 billion. While we believe that our

operation of the

pre-workout

program has not had a material impact on the overall credit quality of our consumer loan and credit card portfolios to date, our participation in such

government-led

initiatives to provide financial support to retail borrowers may lead us to offer credit terms for such borrowers that we would not otherwise offer in the absence of such initiatives, which may have an adverse effect on our results of operations and financial condition.

A decline in the value of the collateral securing our consumer loans and our inability to realize full collateral value may adversely affect our consumer credit portfolio.

A substantial portion of our consumer loans is secured by real estate, the values of which have fluctuated significantly in recent years. Although it is our general policy to lend up to 70% of the appraised value of collateral (except in areas of high speculation designated by the government where we generally limit our lending to 40% of the appraised value of collateral)

and to periodically

re-appraise

our collateral, a downturn in the real estate markets in Korea may result in a decline in the value of the collateral securing our mortgage and home equity loans. If collateral values decline in the future, they may not be sufficient to cover uncollectible amounts in respect of our secured loans. Any declines in the value of the real estate or other collateral securing our consumer loans, or our inability to obtain additional collateral in the event of such declines, could result in a deterioration in our asset quality and may require us to record additional allowances for credit losses.

In Korea, foreclosure on collateral generally requires a written petition to a court. An application, when made, may be subject to delays and administrative requirements that may decrease the value of such collateral. We cannot guarantee that we will be able to realize the full value on our collateral as a result of, among other factors, delays in foreclosure proceedings and defects in the perfection of our security interest in collateral. Our failure to recover the expected value of collateral could expose us to potential losses.

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Risks relating to our financial holding company structure and strategy

We may not succeed in implementing our strategy to take advantage of, or fail to realize the anticipated benefits of, our financial holding company structure.

We were established as a new financial holding company in January 2019 pursuant to a “comprehensive stock transfer” under Korean law, following the completion of which Woori Bank, Woori FIS Co., Ltd., Woori Finance Research Institute Co., Ltd., Woori Credit Information Co., Ltd., Woori Fund Service Co., Ltd. and Woori Private Equity Asset Management Co., Ltd. became our wholly-owned subsidiaries. See “Item 4A. History and Development of the Company—Establishment of Woori Financial Group.”

One of our principal strategies is to take advantage of our financial holding company structure to become a comprehensive financial services provider capable of developing and cross-selling a diverse range of products and services to our large existing base of retail and corporate banking customers. An intended benefit of our financial holding company structure is that it enhances our ability to engage in mergers and acquisitions which we may decide to pursue as part of our strategy. Accordingly, we may consider acquiring or merging with other financial institutions, particularly in the

non-banking

sector, to achieve more balanced growth and further diversify our revenue base. We may also continue to seek opportunities to expand our operations in markets outside Korea. See “Item 4.B. Business Overview—Strategy” and “—We may not be able to successfully execute our overseas expansion strategy.”

The integration of companies we may acquire or merge with in the future under our financial holding company structure could require a significant amount of time, financial resources and management attention. Moreover, that process could place a burden on our operations (including our risk management operations) or information technology systems, reduce employee morale, produce unintended inconsistencies in our standards, controls, procedures or policies, and affect our relationships with customers and our ability to retain key personnel. The realization of the anticipated benefits of our financial holding company structure may be blocked, delayed or reduced as a result of many factors, some of which may be outside our control. These factors include:

•

competition from other financial institutions, as well as private equity firms and other potential acquirers, in Korea and elsewhere in terms of identifying and winning bids for attractive merger and acquisition targets in the financial industry, including the

non-banking

sector, which may make it challenging for us to successfully acquire, or which may require us to pay a high acquisition price for, such targets;

•

difficulties in integrating the diverse activities and operations of our subsidiaries or any companies we may acquire, including risk management operations and information technology systems, personnel, policies and procedures;

•

difficulties in reorganizing or reducing overlapping personnel, branches, networks and administrative functions;

•

restrictions under the Financial Holding Company Act and other regulations on transactions between a financial holding company and, or among, its subsidiaries;

•

failure to leverage our financial holding company structure to realize operational efficiencies and to cross-sell multiple products and services;

•

unforeseen contingent risks, including lack of required capital resources, increased tax liabilities or restrictions in our overseas operations, relating to our financial holding company structure;

•

unexpected business disruptions;

•

failure to attract, develop and retain personnel with necessary expertise;

•

loss of customers; and

•

labor unrest.

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Accordingly, we may not be able to realize the anticipated benefits of our financial holding company structure, and our business, results of operations and financial condition may suffer as a result.

We depend on limited forms of funding to fund our operations at the holding company level.

We are a financial holding company with no significant assets other than the shares of our subsidiaries. Our primary sources of funding and liquidity are dividends from our subsidiaries, sales of interests in our subsidiaries and direct borrowings and issuances of equity or debt securities at the holding company level. In addition, as a financial holding company, we are required to meet certain minimum financial ratios under Korean law, including with respect to liquidity and capital adequacy. Our ability to meet our obligations to our direct creditors and employees and our other liquidity needs and regulatory requirements at the holding company level depends on timely and adequate distributions from our subsidiaries and our ability to sell our securities or obtain credit from our lenders.

The ability of our subsidiaries to pay dividends to us depends on their financial condition and operating results. In the future, our subsidiaries may enter into agreements, such as credit agreements with lenders or indentures relating to high-yield or subordinated debt instruments, that impose restrictions on their ability to make distributions to us, and the terms of future obligations and the operation of Korean law could prevent our subsidiaries from making sufficient distributions to us to allow us to make payments on our outstanding obligations. See “—As a financial holding company, we largely depend on receiving dividends from our subsidiaries to pay dividends on our common stock.” Any delay in receipt of or shortfall in payments to us from our subsidiaries could result in our inability to meet our liquidity needs and regulatory requirements, including minimum liquidity and capital adequacy ratios, which may disrupt our operations at the holding company level.

In addition, our creditors will generally not be able to assert claims on the assets of our subsidiaries. Furthermore, our inability to sell our securities or obtain funds from our lenders on favorable terms, or at all, could also result in our inability to meet our liquidity needs and regulatory requirements and may disrupt our operations at the holding company level.

As a financial holding company, we largely depend on receiving dividends from our subsidiaries to pay dividends on our common stock.

Since our principal assets at the holding company level are the shares of our subsidiaries, our ability to pay dividends on our common stock largely depends on dividend payments from those subsidiaries. Those dividend payments are subject to the Korean Commercial Code, the Bank Act and regulatory limitations, generally based on capital levels and retained earnings, imposed by the various regulatory agencies with authority over those entities. The ability of our subsidiaries to pay dividends may be subject to regulatory restrictions to the extent that paying dividends would impair their respective

non-consolidated

profitability, financial condition or other cash flow needs. For example:

•

under the Korean Commercial Code, dividends may only be paid out of distributable income, an amount which is calculated by subtracting the aggregate amount of a company’s

paid-in

capital and certain mandatory legal reserves as well as certain unrealized profits from its net assets, in each case as of the end of the prior fiscal period;

•

under the Bank Act, a bank also must credit at least 10% of its net profit to a legal reserve each time it pays dividends on distributable income until that reserve equals the amount of its total

paid-in

capital; and

•

under the Bank Act and the requirements of the Financial Services Commission, if a bank fails to meet its required capital adequacy ratio or otherwise becomes subject to management improvement measures imposed by the Financial Services Commission, then the Financial Services Commission may restrict the declaration and payment of dividends by that bank.

Our subsidiaries may not continue to meet the applicable legal and regulatory requirements for the payment of dividends in the future. If they fail to do so, they may stop paying or reduce the amount of the dividends they pay to us, which would have an adverse effect on our ability to pay dividends on our common stock.

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The implementation of the Korean government’s privatization plan may have an adverse effect on us and your interests as a shareholder.

In June 2013, the Korean government, through the Public Funds Oversight Committee of the Financial Services Commission, announced an updated plan to privatize Woori Finance Holdings, Woori Bank’s former parent company, and its former subsidiaries. The privatization plan provided for the segregation of such entities into three groups and the disposal of the Korean government’s interest in these entities held through the Korea Deposit Insurance Corporation, or the KDIC, in a series of transactions, many of which have been completed. Such transactions included the following:

•

Kwangju Bank and Kyongnam Bank.

In May 2014, Woori Finance Holdings established KJB Financial Group and KNB Financial Group 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.

•

Woori Investment

& Securities and Other Subsidiaries.

In March 2014, Woori Finance Holdings sold its 52.0% ownership interest in Woori Financial to KB Financial Group. In May 2014, Woori Finance Holdings sold its 100.0% ownership interest in Woori Asset Management to Kiwoom Securities and sold its 100.0% ownership interest in Woori F&I to Daishin Securities. In June 2014, Woori Finance Holdings sold its 37.9% ownership interest in Woori Investment & Securities, its 51.6% ownership interest in Woori Aviva Life Insurance and its 100.0% ownership interest in Woori FG Savings Bank to NongHyup Financial Group 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.

•

Woori Bank.

In November 2014, Woori Finance Holdings merged with and into Woori Bank. As a result of the merger, the other former subsidiaries of Woori Finance Holdings, including Woori Card, Woori Private Equity, Woori FIS, Woori Investment Bank and Woori Finance Research Institute, became Woori Bank’s subsidiaries. In December 2014, the KDIC sold 40,143,022 shares of Woori Bank’s common stock (representing 5.9% of its outstanding common stock) through a bidding process in Korea. In addition, in December 2016 and January 2017, the KDIC sold an aggregate of 200,685,395 shares of Woori Bank’s common stock (representing 29.7% of its outstanding common stock) in stakes ranging from 3.7% to 6.0% to seven financial companies through a bidding process. In 2017, pursuant to a series of transactions related to call options previously granted in connection with the KDIC’s sale of Woori Bank’s common stock in December 2014, the KDIC sold an aggregate of 19,852,364 shares of Woori Bank’s common stock (representing 2.9% of its outstanding common stock). As a result of such transactions, the KDIC’s ownership interest in Woori Bank was reduced to 18.4%.

•

Woori Financial Group

. In connection with our establishment in January 2019 as a new financial holding company pursuant to a “comprehensive stock transfer” under Korean law, the KDIC received 124,604,797 shares of our outstanding common stock in exchange for the common stock of Woori Bank it owned. In June 2019, the Financial Services Commission approved the KDIC’s plan to sell all such common stock in multiple transactions by 2022. In April 2021, pursuant to this plan, the KDIC sold an aggregate of 14,445,354 shares of our common stock (representing 2.0% of our outstanding common stock) in a block trade. In December 2021, the KDIC sold an aggregate 9.3% of our outstanding common stock in stakes ranging from 1.0% to 4.0% to four companies and 1.0% to our employee stock ownership association, and in February 2022, the KDIC sold an aggregate of 15,860,000 shares of our

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common stock (representing 2.2% of our outstanding common stock) in a block trade. As a result of such transactions, the KDIC currently owns 3.6% of our outstanding common stock.

See “Item 4.A. History and Development of the Company—Privatization Plan.”

The implementation of the Korean government’s privatization plan, including the expected sale of the KDIC’s remaining ownership interest in us to third parties, is likely to have an impact on us. Although the KDIC has already disposed of most of the ownership interest in us that it used to hold, the KDIC’s sale of its remaining interest in us to a small number of third parties may affect our business, management, strategy, capital structure and assets and liabilities and lead to diversion of management attention, a loss of customers and labor unrest. There is also no guarantee that such sale will not result in unintended adverse tax consequences for us and our subsidiaries, as well as our shareholders. See “—Risks relating to our common stock and ADSs—Future sales by the KDIC of the shares of our common stock it owns may result in adverse Korean tax consequences for you.” Accordingly, the implementation of the privatization plan may have a material adverse effect on the trading price of our common stock and American depositary shares, or ADSs, and your interests as a shareholder.

We may not be able to successfully execute our overseas expansion strategy.

As part of our business strategy, we have been seeking opportunities to expand our operations in markets outside Korea, including through the opening of additional overseas branches and offices as well as strategic acquisitions and investments, particularly in South and Southeast Asia. For example, Woori Bank expanded its network of branches to India, where it established branches in Chennai, Gurgaon and Mumbai from 2012 to 2017. In October 2016, Woori Bank acquired a 51% equity interest in Wealth Development Bank Corp., a thrift bank in the Philippines. In November 2016, Woori Bank obtained a banking license to establish a local subsidiary in Vietnam, Woori Bank Vietnam, which commenced operations in January 2017 and currently operates 16 branches throughout the country. In June 2018, Woori Bank acquired VisionFund (Cambodia) Ltd., a microfinance deposit-taking institution in Cambodia, and renamed it WB Finance Co., Ltd. In February 2020, WB Finance Co., Ltd. merged with Woori Finance (Cambodia) Plc., a Cambodian microfinance institution, and in November 2021, it obtained a commercial banking license from the Cambodian financial authorities and began its nationwide operations as Woori Bank (Cambodia) PLC. Notwithstanding the foregoing, the expansion of our operations abroad may be difficult due to the presence of established competitors in the relevant local markets. In addition, overseas expansion and the management of international operations may require significant financial expenditures as well as management attention, and will subject us to the challenges of operating in an unfamiliar business environment with different regulatory, legal and taxation systems and political, economic and social risks. Accordingly, there is no guarantee that we will be successful in executing our overseas expansion strategy. The failure of our overseas expansion strategy could have an adverse impact on our business, results of operations and financial condition.

We may not generate sufficient additional fees to achieve our revenue diversification strategy.

An important element of our overall strategy is increasing our fee income in order to diversify our revenue base in anticipation of greater competition. Historically, our primary source of revenues has been net interest income from our banking operations at Woori Bank. To date, except for fees collected in connection with certain of our services including investment banking, asset management and currency transfers (including foreign exchange-related commissions), we have not generated substantial fee income. We intend to develop new sources of fee income as part of our business strategy, including through our current investment banking and asset management businesses and mergers and acquisitions of

non-banking

businesses which we may decide to pursue through our financial holding company structure. See “Item 4.B. Business Overview—Strategy.” Although we, like many other Korean financial institutions, have begun to charge fees to our customers more regularly, customers may prove unwilling to pay additional fees, even in exchange for more attractive value-added services, and their reluctance to do so would adversely affect the implementation of our strategy to increase our fee income. Furthermore, the fees that we charge to customers are subject to regulation by Korean financial regulatory authorities, which may seek to implement regulations or measures that may have an adverse impact on our ability to achieve this aspect of our strategy.

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Risks relating to competition

Competition in the Korean financial industry is intense, and we may lose market share and experience declining margins as a result.

Competition in the Korean financial market has been and is likely to remain intense. Some of the financial institutions that we compete with are larger in terms of asset size and customer base and have longer operating histories as financial holding companies, greater financial resources or more specialized capabilities than us and our subsidiaries. In addition, in the area of our core banking operations, most Korean banks have been focusing on retail customers and small- and

medium-sized

enterprises in recent years, although they have begun to generally increase their exposure to large corporate borrowers, and have been focusing on developing fee income businesses as increasingly important sources of revenue. In the area of credit cards, increased competition in the payments market and the resulting increase in our marketing activities, as well as the general trend towards lower merchant fees, are adversely affecting profits in the segment. In our new capital segment, our profitability may be adversely affected by increasing competition in the automobile finance and lease finance markets. The competition and market saturation resulting from this common focus may make it more difficult for us to secure retail, small- and

medium-sized

enterprise and large corporate customers with the credit quality and on credit terms necessary to maintain or increase our income and profitability.

In addition, the introduction of Internet-only banks in Korea is expected to increase competition in the Korean banking industry. Internet-only banks generally operate without branches and conduct most of their operations through electronic means, which enable them to minimize costs and offer customers higher interest rates on deposits or lower lending rates. In April 2017, K bank, the first Internet-only bank in Korea, in which Woori Bank owns 12.7% of the equity with voting rights as of December 31, 2021, commenced operations. Kakao Bank and Toss Bank, both mobile-only banks, commenced operations in July 2017 and October 2021, respectively.

Furthermore, the following general regulatory reforms in the Korean financial industry have increased competition among banks and other financial institutions in Korea:

•

In the second half of 2015, the Korean government implemented measures to facilitate bank account portability of retail customers by requiring commercial banks to establish systems that allow retail customers to easily switch their bank accounts at one commercial bank to another and automatically transfer the automatic payment settings of their former accounts to the new ones.

•

In March 2016, the Financial Services Commission introduced an individual savings account scheme in Korea, which enables individuals to efficiently manage a wide range of retail investment vehicles, including cash deposits, investment funds and securities investment products, from a single integrated account with one financial institution and offers tax benefits on investment returns. Since the scheme backed by the Korean government allows only one individual savings account per person, financial institutions have been competing to retain existing customers and attract new customers since the launch of the individual savings account scheme. Over 30 financial institutions, including banks, securities companies and insurance companies, have registered with the Financial Services Commission to sell their individual savings account products, and we expect fierce competition among these institutions.

•

In April 2019, the Financial Services Commission approved and is currently conducting test procedures for a financial regulatory sandbox, a framework set up to allow financial service providers to test new business models in a less regulated environment, as part of its efforts to work closely with the fintech sector and provide support to facilitate its development. A variety of financial services have been similarly approved for such testing under the financial regulatory sandbox.

•

In December 2019, the Financial Services Commission launched an “open banking” system, which allows customers to view banking account information and make wire transfers, regardless of institution, through a single mobile application. Such integrated system is expected to allow fintech firms to share payment networks with banks, thereby lowering transaction fees and encouraging the development of new payment services.

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•

In August 2020, amendments to the Credit Information Use and Protection Act established the framework for MyData services in Korea, which allow the collection of customers’ personal credit information from credit information providers/users or public institutions upon the customer’s request and subject to compliance requirements, so that customers may access such collected personal credit information in whole or in part. In January 2021, the Financial Services Commission granted licenses to 28 companies to operate as MyData service providers, 14 of which were fintech firms, and competition between traditional financial institutions and fintech firms is expected to intensify, particularly with respect to asset management services. MyData services are currently offered through Woori WON Banking, Woori Bank’s main mobile banking application, as well as through Woori Card’s mobile application.

Overall, such measures may not only intensify competition among traditional financial institutions in Korea, but also allow new market participants such as fintech firms to potentially gain market share in certain areas in which we operate.

Moreover, the Korean financial industry is undergoing significant consolidation through which the number of nationwide commercial banks in Korea has significantly decreased since the financial crisis in Korea in the late 1990s. A number of significant mergers and acquisitions in the financial industry have also taken place in Korea in recent years, including the merger of Hana Bank into Korea Exchange Bank in 2015, KB Financial Group’s acquisition of Hyundai Securities Co., Ltd. in 2016 and the subsequent merger of Hyundai Securities with and into KB Investment & Securities Co., Ltd. in 2016. In 2016, Mirae Asset Securities Co., Ltd. acquired a 43% interest in KDB Daewoo Securities Co., Ltd., which subsequently merged with and into Mirae Asset Securities. In 2014, pursuant to the implementation of the Korean government’s privatization plan with respect to Woori Finance Holdings and its former subsidiaries, Woori Financial, Woori Asset Management and Woori F&I were acquired by KB Financial Group, Kiwoom Securities and Daishin Securities, respectively, and Woori Investment & Securities, Woori Aviva Life Insurance and Woori FG Savings Bank were acquired by NongHyup Financial Group. In addition, in October 2014, the KDIC’s ownership interest in Kwangju Bank and Kyongnam Bank were acquired by JB Financial Group and BS Financial Group, respectively. See “Item 4.A. History and Development of the Company—Privatization Plan.” Orange Life Insurance, Ltd. (formerly known as ING Life Insurance Korea, Ltd.) became a wholly-owned subsidiary of Shinhan Financial Group following the acquisition of equity interests by Shinhan Financial Group in February 2019 and January 2020, which subsequently merged with and into Shinhan Life Insurance Co., Ltd. in July 2021. Furthermore, in 2020, Hana Financial Group acquired

The-K

Non-Life

Insurance Co., Ltd. to form Hana Insurance Co., Ltd., KB Financial Group acquired The Prudential Life Insurance Company of Korea Ltd., and Shinhan Financial Group acquired the venture capital firm Neoplux.

We expect that consolidation in the Korean financial industry will continue. Other financial institutions may seek to acquire or merge with other entities, and the financial institutions resulting from such consolidation may, by virtue of their increased size and business scope, provide significantly greater competition for us. We also believe that foreign financial institutions, many of which have greater experience and resources than we do, may seek to compete with us in providing financial products and services either by themselves or in partnership with existing Korean financial institutions. Increased competition and continuing consolidation may lead to decreased margins, resulting in a material adverse impact on our future profitability. Accordingly, our results of operations and financial condition may suffer as a result of increasing competition in the Korean financial industry.

Competition for customer deposits may increase, resulting in a loss of our deposit customers or an increase in our funding costs.

In recent years, we have faced increasing pricing pressure on deposit products from our competitors. If we do not continue to offer competitive interest rates to our deposit customers, we may lose their business. In addition, even if we are able to match our competitors’ pricing, doing so may result in an increase in our funding costs, which may have an adverse impact on our results of operations.

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Other risks relating to our business

The

COVID-19

pandemic has adversely affected and may continue to adversely affect our business, financial condition or results of operations.

COVID-19,

an infectious disease caused by severe acute respiratory syndrome coronavirus 2, has spread globally and was declared a “pandemic” by the World Health Organization in March 2020. The global outbreak of

COVID-19

has led to global economic and financial disruptions and has adversely affected our business operations. We have been subjected to and remain subject to a number of related risks, including but not limited to:

•

an increase in defaults on loan payments from our customers who may not be able to meet payment obligations, which may lead to an increase in delinquency ratios and a deterioration in asset quality, resulting in increased charge-offs, higher provisioning and reduced interest and fee income;

•

decreases or increases in interest rates worldwide (see “—An increase in interest rates would decrease the value of our debt securities portfolio and raise our funding costs while reducing loan demand and the repayment ability of our borrowers, which could adversely affect us”);

•

depreciation of the Won against major foreign currencies, which may increase our costs in servicing foreign currency-denominated debt and result in foreign exchange losses (see “—Unfavorable changes in the global financial markets could adversely affect our results of operations and financial condition”);

•

impairments in the fair value of our investments in companies that may be adversely affected by the pandemic;

•

disruption in the normal operations of our business resulting from the contraction of the disease by our employees or customers, which may necessitate our employees to be quarantined and/or our offices or branches to be temporarily shut down; and

•

disruption resulting from the necessity for social distancing, including, for example, temporary arrangements for employees to work remotely, which may lead to a reduction in labor productivity.

Such risks have had a negative impact on our results of operations in 2021 and may continue to do so in the future, but it is not possible to predict the duration or the full magnitude of the overall harm that may result from the

COVID-19

outbreak in the long term.

In addition, in response to the outbreak, Korean financial regulatory authorities, including the Financial Services Commission and the Financial Supervisory Service, have adopted policies for Korean banks to provide relief or assistance to customers. For example, the Korean government has implemented policies to extend loan terms and defer payments on interest and principal with respect to certain borrowers. In particular, in April 2020, the Korean government established the

“COVID-19

SME and Small Merchant Financial Support Program” for small- and

medium-sized

enterprises and small merchants that are in good standing and have been negatively impacted by the

COVID-19

pandemic (which excludes consumer loans and loans relating to the sale or leasing of real estate). As of December 31, 2021, our total loans (including payment guarantees) subject to such program amounted to ￦2,596 billion. Although the program was originally scheduled to expire in September 2021, it has been extended four times and is currently expected to end in September 2022. However, the Korean government has signaled that the program’s expected termination date is subject to change based on discussions with affected financial institutions after on a comprehensive review of the following factors at the time: (i) the current state of the pandemic, (ii) the conditions of the Korean economy and (iii) the stability of the financial industry. For further information regarding our exposure to such loan deferment program, see Note 3 of the notes to our consolidated financial statements included elsewhere in this annual report.

We and our subsidiaries have also implemented additional measures, both financial, such as offering discounts on the interest rates of certain loans and waiving ATM transaction fees in certain areas in Korea affected by

COVID-19,

and

non-financial,

such as installing acrylic transparent barriers in our branches and distributing masks to protect our customers and workforce. We have also established a group emergency

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management committee to accurately assess the relevant risks, proactively develop countermeasures and enhance reporting and communication systems on a group-wide basis. Notwithstanding such efforts, in the event that

COVID-19

or other types of widespread infectious diseases cannot be effectively and timely contained, our business, financial condition, results of operations and cash flows may continue to be adversely affected.

Unfavorable changes in the global financial markets could adversely affect our results of operations and financial condition.

The overall prospects for the Korean and global economy in 2022 and beyond remain uncertain. In recent years, the global financial markets have experienced significant volatility as a result of, among other things:

•

the occurrence of severe health epidemics, such as the

COVID-19

pandemic;

•

hostilities, political or social tensions involving Russia (including the invasion of Ukraine by Russia and ensuing actions that the United States and other countries have taken or may take in the future) and the resulting adverse effects on the global supply of oil and other natural resources and the global financial markets;

•

interest rate fluctuations as well as changes in policy rates by the U.S. Federal Reserve and other central banks;

•

financial and social difficulties affecting many countries worldwide, in particular in Latin America and Europe;

•

a deterioration in economic and trade relations between the United States and its major trading partners, including China;

•

escalations in trade protectionism globally and geopolitical tensions in East Asia and the Middle East;

•

the slowdown of economic growth in China and other major emerging market economies;

•

increased uncertainties resulting from the United Kingdom’s exit from the European Union; and

•

political and social instability in various countries in the Middle East, including Syria, Iraq and Egypt.

In light of the high level of interdependence of the global economy, unfavorable changes in the global financial markets, including as a result of any of the foregoing developments, could have a material adverse effect on the Korean economy and financial markets, and in turn on our business, financial condition and results of operations.

We are also exposed to adverse changes and volatility in the global and Korean financial markets as a result of our liabilities and assets denominated in foreign currencies and our holdings of trading and investment securities, including structured products. The value of the Won relative to major foreign currencies in general and the U.S. dollar in particular has fluctuated widely in recent years and has been subject to significant volatility as a result of the

COVID-19

pandemic and, more recently, the invasion of Ukraine by Russia and the ensuing sanctions against Russia. A depreciation of the Won will increase our cost of servicing our foreign currency-denominated debt, while continued exchange rate volatility may also result in foreign exchange losses for us. Furthermore, as a result of the deterioration in global and Korean economic conditions, there has been downward pressure on securities prices, including the stock prices of Korean and foreign companies in which we hold an interest. Notwithstanding the Korean government’s efforts to stabilize such volatility through aggressive fiscal and financial policies, including through the execution of a bilateral currency swap agreement with the U.S. Federal Reserve for the provision of US$60 billion in exchange for

Won-denominated

treasury bonds in March 2020, such developments have resulted in and may lead to further trading and valuation losses on our trading and investment securities portfolio as well as impairment losses on our investments in joint ventures and associates. See “—An increase in interest rates would decrease the value of our debt securities portfolio and raise our funding costs while reducing loan demand and the repayment ability of our borrowers, which could adversely affect us.”

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Our risk management system may not be effective in mitigating risk and loss.

We seek to monitor and manage our risk exposure through a standardized risk management system, encompassing a multi-tiered risk management governance structure under our Board Risk Management Committee, our centralized credit risk management system called the Credit Wizard system, reporting and monitoring systems, early warning systems and other risk management infrastructure, using a variety of risk management strategies and techniques. See “Item 11. Quantitative and Qualitative Disclosures about Market Risk.” However, such risk management strategies and techniques employed by us and the judgments that accompany their application cannot anticipate the economic and financial outcome in all market environments, and many of our risk management strategies and techniques have a basis in historical market behavior that may limit the effectiveness of such strategies and techniques in times of significant market stress or other unforeseen circumstances. Furthermore, our risk management strategies may not be effective in a difficult or less liquid market environment, as other market participants may be attempting to use the same or similar strategies as us to deal with such market conditions. In such circumstances, it may be difficult for us to reduce our risk positions due to the activity of such other market participants.

We have provided certain assets as collateral in connection with our secured borrowings and could be required to make payments and realize losses in the future relating to those assets.

We have provided certain assets as collateral for our secured borrowings in recent years. As of December 31, 2021, the aggregate amount of assets we had provided as collateral for our secured borrowings was ￦17,305 billion. These secured borrowings may take the form of asset securitization transactions, where we nominally sell our assets to a securitization vehicle that issues securities backed by those assets, although the assets remain on our statements of financial position. These secured borrowings are intended to be fully repaid through recoveries on collateral. Some of these nominal asset sales were with recourse, which means that if delinquencies arise with respect to such assets, we will be required to either repay a proportionate amount of the related secured borrowing (by reversing the nominal sale and repurchasing such assets) or compensate the securitization vehicle for any net shortfalls in its recoveries on such assets. If we are required to make payments on such assets, or to repay our secured borrowings on those assets and are unable to make sufficient recoveries on them, we may realize further losses on these assets.

An increase in interest rates would decrease the value of our debt securities portfolio and raise our funding costs while reducing loan demand and the repayment ability of our borrowers, which could adversely affect us.

Interest rates in Korea have been subject to significant fluctuations in the past. The Bank of Korea reduced its policy rate to 2.00% through a series of reductions from 2012 to 2014 to support Korea’s economy in light of the slowdown in Korea’s growth and uncertain global economic prospects. The Bank of Korea further reduced its policy rate to 1.50% in 2015 and again to 1.25% in June 2016 amid deflationary concerns and interest rate cuts by central banks around the world. While the Bank of Korea increased its policy rate to 1.50% in November 2017 and 1.75% in November 2018 in light of improved growth prospects in Korea and rising interest rate levels globally, it again reduced its policy rate to 1.50% in June 2019 and 1.25% in October 2019 to address the sluggishness of the global and domestic economies. The Bank of Korea further reduced its policy rate to 0.75% in March 2020 and 0.50% in May 2020 amid rising concerns of a potential global recession as a result of the

COVID-19

pandemic. More recently, the Bank of Korea raised its policy rate to 0.75% in August 2021, 1.00% in November 2021, 1.25% in January 2022 and 1.50% in April 2022 in response to rising levels of household debt and inflation. All else being equal, increases in interest rates in the future could lead to a decline in the value of our portfolio of debt securities, which generally pay interest based on a fixed rate. A sustained increase in interest rates will also raise our funding costs, while reducing loan demand, especially among consumers. Rising interest rates may therefore require us to

re-balance

our asset portfolio and our liabilities in order to minimize the risk of potential mismatches and maintain our profitability. See “Item 11. Quantitative and Qualitative Disclosures about Market Risk.” In addition, rising interest rate levels may adversely affect the Korean economy and the financial condition of our corporate and consumer borrowers, including holders of our credit cards, which in turn may lead

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to a deterioration in our credit portfolio. In particular, since most of our consumer and corporate loans bear interest at rates that adjust periodically based on prevailing market rates, a sustained increase in interest rates would increase the interest costs of our consumer and corporate borrowers and will adversely affect their ability to make payments on their outstanding loans.

Uncertainties regarding the transition away from the London Interbank Offered Rate, or LIBOR, or any other interest rate benchmark could have adverse consequences for market participants, including us.

In March 2021, the U.K. Financial Conduct Authority, or the FCA, which has regulatory authority with respect to LIBOR, announced that all LIBOR settings will either cease to be provided by any administrator or no longer be representative (i) after December 31, 2021 in the case of all sterling, euro, Swiss franc and Japanese yen settings and the

one-week

and

two-month

U.S. dollar settings and (ii) after June 30, 2023 in the case of the remaining U.S. dollar settings. While the ICE Benchmark Administration, the administrator of LIBOR, may publish certain LIBOR settings on the basis of a synthetic methodology for “tough legacy” contracts, there is no guarantee that such rates will be determined and published after the announced deadlines nor confirmed to be representative by the FCA.

Given the extensive use of LIBOR across financial markets, the transition away from LIBOR presents various risks and challenges to financial markets and institutions, including us, and in particular, Woori Bank. We issue, trade, hold or otherwise use various products and securities that reference LIBOR, including, among others, loans, securities, deposits, borrowings, derivatives and debentures, and have adopted specific measures for its cessation. See “Item 5.A. Operating Results—Overview—Cessation of LIBOR.”

If not sufficiently planned for, the discontinuation of LIBOR or any other interest rate benchmark could result in increased financial, operational, legal, reputational and/or compliance risks. For example, a significant challenge will be managing the impact of the LIBOR transition on the contractual mechanics of LIBOR-based financial instruments and contracts that mature after the announced deadlines. Certain of these instruments and contracts may not provide for alternative reference rates. Even if such instruments and contracts provide for alternative reference rates, such alternative reference rates are likely to differ from the prior benchmark rates and may require us to pay interest at higher rates on the related obligations, which could adversely impact our interest expenses, results of operations and cash flows. For example, the Secured Overnight Financing Rate, or SOFR, has been identified by the Alternative Reference Rates Committee convened by the Board of Governors of the U.S. Federal Reserve System and the Federal Reserve Bank of New York as the preferred alternative benchmark reference rate for LIBOR and differs from LIBOR in many respects, including its basis on actual observed transactions in the U.S. Treasury market as opposed to LIBOR’s usage of estimations of borrowing rates. While there are a number of international working groups focused on transition plans and the provision of fallback contract language that seek to minimize market disruption, replacement of LIBOR or any other benchmark with a new benchmark rate, such as SOFR, could adversely impact the value of and return on existing instruments and contracts. Moreover, replacement of LIBOR or other benchmark rates could result in market dislocations and have other adverse consequences for market participants, including the potential for increased costs, and litigation risks, including the potential for disputes with counterparties regarding the interpretation and enforceability of fallback contract language in LIBOR-based financial instruments and contracts.

Our funding is highly dependent on short-term deposits, which dependence may adversely affect our operations.

We meet a significant amount of our funding requirements through short-term funding sources, which consist primarily of customer deposits. As of December 31, 2021, approximately 96.6% of these deposits had maturities of one year or less or were payable on demand. In the past, a substantial proportion of these customer deposits have been rolled over upon maturity. We cannot guarantee, however, that depositors will continue to roll over their deposits in the future. In the event that a substantial number of these short-term deposit customers withdraw their funds or fail to roll over their deposits as higher-yielding investment opportunities emerge, our liquidity position could be adversely affected. We may also be required to seek more expensive sources of short-

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term and long-term funding to finance our operations. See “Item 5.B. Liquidity and Capital Resources—Financial Condition—Liquidity.”

Labor union unrest may disrupt our operations and hinder our ability to continue to reorganize our operations.

Most financial institutions in Korea have experienced periods of labor unrest. In recent years, we have transferred or merged some of the business operations of our subsidiaries and affiliates into one or more entities and implemented other forms of corporate and operational restructuring, including in connection with the Korean government’s privatization plan with respect to Woori Finance Holdings and its former subsidiaries. See “—Risks relating to our structure and strategy—The implementation of the Korean government’s privatization plan may have an adverse effect on us and your interests as a shareholder.” We may also decide to implement other organizational or operational changes, as well as acquisitions or dispositions, in the future. Such efforts have in the past been met with significant opposition from labor unions in Korea. Actual or threatened labor disputes may in the future disrupt the reorganization process and our business operations, which in turn may hurt our financial condition and results of operations.

The secondary market for corporate bonds in Korea is not fully developed, and, as a result, we may not be able to realize the full

“marked-to-market”

value of debt securities we hold when we sell any of those securities.

As of December 31, 2021, we held debt securities issued by Korean companies and financial institutions (other than those issued by government-owned or -controlled enterprises or financial institutions, which include the Bank of Korea, the Korea Development Bank, the Korea Housing Finance Corporation and the Industrial Bank of Korea, among others) with a total book value of ￦9,100 billion in our trading and investment securities portfolio. The market value of these securities could decline significantly due to various factors, including future increases in interest rates or a deterioration in the financial and economic condition of any particular issuer or of Korea in general. Any of these factors individually or a combination of these factors would require us to write down the fair value of these debt securities, resulting in impairment losses. Because the secondary market for corporate bonds in Korea is not fully developed, the market value of many of these securities as reflected on our consolidated statements of financial position is determined by references to suggested prices posted by Korean rating agencies, which measure prices based on observable market data. These valuations, however, may differ significantly from the actual value that we could realize in the event we elect to sell these securities. As a result, we may not be able to realize the full

“marked-to-market”

value at the time of any such sale of these securities and thus may incur additional losses.

We may be required to raise additional capital if our capital adequacy ratios deteriorate or the applicable capital requirements change in the future, but we may not be able to do so on favorable terms or at all.

Under the capital adequacy requirements of the Financial Services Commission, as of December 31, 2021, we as a bank holding company were required to maintain a total minimum common equity Tier I capital adequacy ratio of 8.0%, Tier I capital adequacy ratio of 9.5% and combined Tier I and Tier II capital adequacy ratio of 11.5%, on a consolidated basis (including applicable additional capital buffers and requirements as described below), and Woori Bank as a bank was required to maintain a total minimum common equity Tier I capital adequacy ratio of 8.0%, Tier I capital adequacy ratio of 9.5% and combined Tier I and Tier II capital adequacy ratio of 11.5%, on a consolidated basis (including applicable additional capital buffers and requirements as described below). As of December 31, 2021, our common equity Tier I capital, Tier I capital and combined Tier I and Tier II capital adequacy ratios were 11.40%, 13.27% and 15.03%, respectively, and Woori Bank’s common equity Tier I capital, Tier I capital and combined Tier I and Tier II capital adequacy ratios were 12.90%, 14.19% and 16.14%, respectively, all of which exceeded the minimum levels required by the Financial Services Commission. However, our capital base and capital adequacy ratios may deteriorate in the future if our results of operations or financial condition deteriorates for any reason, or if we are not able to deploy our funding into suitably low-risk assets.

The current capital adequacy requirements of the Financial Services Commission are derived from a set of bank capital measures, referred to as Basel III, which the Basel Committee on Banking Supervision initially

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introduced in 2009 and began phasing in starting from 2013. Commencing in July 2013, the Financial Services Commission promulgated a series of amended regulations implementing Basel III, pursuant to which Korean banks and bank holding companies were required to maintain a minimum ratio of common equity Tier I capital (which principally includes equity capital, capital surplus and retained earnings) to risk-weighted assets of 3.5% and Tier I capital to risk-weighted assets of 4.5% from December 1, 2013, which minimum ratios were increased to 4.0% and 5.5%, respectively, from January 1, 2014 and increased further to 4.5% and 6.0%, respectively, from January 1, 2015. Such requirements are in addition to the

pre-existing

requirement for a minimum ratio of Tier I and Tier II capital (less any capital deductions) to risk-weighted assets of 8.0%, which remains unchanged. The amended regulations also require an additional capital conservation buffer of 2.5% in 2021 and 2022, as well as a potential counter-cyclical capital buffer of up to 2.5%, which is determined on a quarterly basis by the Financial Services Commission. Furthermore, we and Woori Bank were each designated as a domestic systemically important bank holding company and a domestic systematically important bank for 2021 by the Financial Services Commission and was subject to an additional capital requirement of 1.0% in 2021. In July 2021, we and Woori Bank were again each designated as a domestic systemically important bank holding company and a domestic systemically important bank, respectively, for 2022, which subjects us and Woori Bank to the additional capital requirement of 1.0% in 2022. The implementation of Basel III in Korea may have a significant effect on the capital requirements of Korean financial institutions, including us. See “Item 4.B. Business Overview—Supervision and Regulation—Principal Regulations Applicable to Financial Holding Companies—Capital Adequacy” and “Item 4.B. Business Overview—Supervision and Regulation—Principal Regulations Applicable to Banks—Capital Adequacy.”

We may be required to obtain additional capital in the future in order to remain in compliance with the applicable capital adequacy and other regulatory requirements. However, we may not be able to obtain additional capital on favorable terms, or at all. Our ability to obtain additional capital at any time may be constrained to the extent that banks, bank holding companies or other financial institutions in Korea or from other countries are seeking to raise capital at the same time. To the extent that we fail to comply with applicable capital adequacy or other regulatory requirements in the future, Korean regulatory authorities may impose penalties on us ranging from a warning to suspension or revocation of our banking license.

We engage in limited activities relating to Iran and Russia, which may result in regulatory or enforcement actions under relevant laws and regulations of the United States and other jurisdictions as a result of such activities, which may adversely affect our business and reputation.

The U.S. Department of the Treasury’s Office of Foreign Assets Control, or OFAC, administers and enforces certain laws and regulations (which we refer to as OFAC sanctions) that impose restrictions upon activities or transactions within U.S. jurisdiction with certain countries, governments, entities and individuals that are the subject of OFAC sanctions, including Iran.

Non-U.S.

persons generally are not automatically bound by OFAC sanctions, but to the extent they engage in transactions completed in part in the United States or through U.S. persons (such as, for example, wiring an international payment that clears through a bank branch in New York), they are required to comply with U.S. sanctions. The European Union also enforces certain laws and regulations that impose restrictions upon nationals and entities of, and business conducted in, member states with respect to activities or transactions with certain countries, governments, entities and individuals that are the subject of such laws and regulations, including with respect to targeted entities in Iran. The United Nations Security Council and other governmental entities (including Korea) also impose similar sanctions.

The United States also maintains indirect sanctions, which we refer to collectively as U.S. secondary sanctions, which provide authority for the imposition of U.S. sanctions on

non-U.S.

persons that engage in targeted transactions with no connection to U.S. jurisdiction. Secondary sanctions are implemented under a wide and growing range of statutes and Executive Orders, and the standard language of most Executive Orders provides authority to impose sanctions on

non-U.S.

persons providing material support to parties subject to OFAC sanctions. Secondary sanctions have been of increasing importance in recent years, particularly (but not only) with respect to Iran, Russia, and North Korea. Iran has also been designated as a “jurisdiction of primary money laundering concern” under Section 311 of the USA PATRIOT Act, potentially subjecting banks dealing with Iranian financial institutions to increased regulatory scrutiny.

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Violations of OFAC sanctions via transactions with a U.S. jurisdictional nexus can result in substantial civil or criminal penalties. U.S. secondary sanctions apply even when no such jurisdictional nexus exists, and parties that engage in targeted activities under secondary sanctions may themselves become the target of OFAC sanctions, including, among other things, the blocking of any property subject to U.S. jurisdiction in which the sanctioned party has an interest, which would include a prohibition on transactions or dealings within U.S. jurisdiction involving securities of the sanctioned party. Financial institutions engaging in targeted activity could in some instances be sanctioned by termination or restriction of their ability to maintain correspondent accounts in the United States. The imposition of sanctions against foreign financial institutions pursuant to U.S. secondary sanctions is highly discretionary and not automatic, requiring affirmative action by the U.S. administration.

Previously, Korea benefited from a “significant reduction” exception, or SRE, that exempted Korean companies from many U.S. secondary sanctions in connection with purchases of crude oil and natural gas from Iran that met a series of conditions, including restrictions on the currencies involved and stringent limits on the use of proceeds of oil and gas purchases. The U.S. Department of State announced that as of May 2, 2019, it would discontinue the exemption.

In 2021, we engaged in the following activities relating to Iran:

•

We operate certain accounts for the Central Bank of Iran, or the CBI, which were opened by the CBI pursuant to a service agreement entered into by us and the CBI in September 2010, as amended from time to time, to facilitate trade between Korea and Iran. In light of the discontinuation of the SRE, from July 8, 2019 to September 20, 2019, we limited activity in the existing CBI accounts to processing payments for exports of humanitarian goods to Iran, and due to the imposition of additional sanctions against the CBI on September 20, 2019, we ceased all activity in the existing CBI accounts until July 12, 2020. Starting July 13, 2020, at the request of the Korean government, we resumed processing payments for exports of certain humanitarian goods to Iran, such as those permitted under OFAC General License No. 8A, which authorizes certain humanitarian trades involving the CBI. In resuming the transactions involving the CBI account for humanitarian trade, we consulted with the Korean government, which, in turn, received confirmation from OFAC that these transactions are currently permitted under the U.S. sanctions laws. In addition, we have been conducting extensive Know Your Customer (KYC) and enhanced due diligence (EDD) reviews to ensure that all humanitarian trade transactions involving Iran and the CBI are undertaken in accordance with OFAC sanctions. Furthermore, the U.S. Department of State issued a waiver on March 12, 2021 to allow the use of the CBI accounts to make payments to certain Korean exporters that delivered

non-sanctionable

goods or services to Iran prior to the

re-imposition

of the Iranian sanctions by the U.S. government. Pursuant to this waiver, the Korean government consulted with OFAC and OFAC specifically authorized these payments and reviewed all the transaction-related information, including the parties, total amount to be paid and description of the export items, to ensure that the transactions were consistent with U.S. sanctions at the time the exports had occurred. Upon OFAC’s approval and the Korean government’s request, we made total payments of approximately ￦64 billion to those Korean exporters in June and October 2021. In 2021, our total fee revenue from such activities amounted to approximately ￦2.3 million, and as there were no expenses directly applicable to such activities under our internal management accounts, we estimate that our net income before tax from such activities also amounted to approximately ￦2.3 million.

•

In the past, we also provided fund transfer and financing services to Korean exporters and importers in connection with their trade transactions with Iranian parties that were permitted under the relevant Korean sanctions regime. We have discontinued all trade financing activities relating to export and import trades involving the CBI accounts since November 5, 2018. Since 2019, all such exports and imports were settled through telegraphic transfer and did not involve our financing services, including all transactions involving the CBI. However, we continue to honor our obligations on a limited basis under previously-issued bank guarantees to the extent that such activities do not violate OFAC sanctions or implicate U.S. secondary sanctions. In 2021, our total fee revenue from the relevant telegraphic transfer services amounted to approximately ￦0.65 million. As there were no expenses directly

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applicable to such activities under our internal management accounts, we estimate that our net income before tax from such activities also amounted to approximately ￦0.65 million.

•

We also maintain a limited number of deposit accounts in Korea for an Iranian financial institution subject to OFAC sanctions that were opened prior to it becoming subject to OFAC sanctions. The relevant accounts have since been restricted, and no transactions are currently allowed through these accounts. Accordingly, there were no fee revenues from maintaining such deposit accounts, and there were no expenses directly applicable to such activities under our internal management accounts, in 2021.

Unless stated otherwise, we intend to continue the above activities to the extent permitted under applicable laws and regulations and not prohibited by any applicable sanctions laws.

While we do not believe that our past activities relating to Iran violated OFAC sanctions or are sanctionable under applicable U.S. secondary sanctions, U.S. authorities are afforded wide discretion and there is no guarantee that such activities will not be found to have violated OFAC sanctions or involved sanctionable activity under U.S. secondary sanctions, or that any other government will not determine that our activities violated applicable sanctions of other countries. Sanctions against Iran continue to evolve rapidly, and future changes in law could also adversely affect us.

Our business and reputation could be adversely affected if the U.S. government were to determine that our past or ongoing activities relating to Iran violated OFAC sanctions or involved sanctionable activity under U.S. secondary sanctions, or if any other government were to determine that such activities violated applicable sanctions of other countries. For example, any prohibition or conditions placed on our use of U.S. correspondent accounts could effectively eliminate our access to the U.S. financial system, including U.S. dollar clearing transactions, which would adversely affect our business, and any other sanctions or civil or criminal penalties imposed could also adversely affect our business. We intend to take all necessary measures to the extent possible to ensure that such prohibitions or conditions are not placed on us.

Furthermore, there is no guarantee that other countries (including Korea) that had provided sanctions relief to Iran in conjunction with the 2015 Joint Comprehensive Plan of Action (JCPOA) will not decide to

re-impose

sanctions relating to Iran, especially if there are further negative political developments relating to the Middle East. It is also possible that the United States, Korea or other countries might seek to expand their sanctions relating to Iran in the future beyond those existing currently. Such governmental actions and policies may also increase the risk of our violating certain sanctions or becoming a target of sanctions as a result of our past or future activities relating to Iran.

We have been cooperating with an investigation relating to compliance with U.S. sanctions and other U.S. laws led by the U.S. Attorney’s Office for the Southern District of New York and the New York State Office of the Attorney General on certain of our transactions involving sanctioned countries. We have provided the investigating authorities with information and documents pursuant to the applicable laws and regulations. We voluntarily reported the relevant transactions to OFAC, including a limited number of previous transactions that may have involved Iran, Sudan, Syria and Cuba, and shared such information with banking regulators including the Federal Reserve Bank of New York and the New York Department of Financial Services, or DFS. On December 3, 2020, OFAC concluded its investigation with a cautionary letter as its final enforcement action, and DFS also informed our counsel on February 2, 2022 that it would close its investigation without any enforcement action. However, the investigations by other U.S. government authorities have not been formally concluded and may continue to require our cooperation, although such investigations have been dormant for a number of years to our knowledge. It is not possible to predict the outcome of such investigations at this time, and there can be no assurance that such investigations will not result in an unfavorable outcome or adversely affect our business or reputation.

Furthermore, some of our U.S. investors may be required to divest their investments in us or forego the purchase of our securities under the laws of certain U.S. states relating to investments by state-owned entities or under internal investment policies relating to companies (or their affiliates) doing business with Iran, or investors may decide for reputational reasons to divest or forego such investments. We are aware of initiatives by U.S.

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governmental entities and U.S. institutional investors, such as pension funds, to adopt or consider adopting laws, regulations or policies prohibiting transactions with or investment in, or requiring divestment from, entities doing business with countries identified as state sponsors of terrorism, such as Iran. There can be no assurance that the foregoing will not occur or that such occurrence will not have a material adverse effect on the value of our common stock and ADSs.

Following Russia’s invasion of Ukraine in February 2022, various countries, including the United States, have imposed sanctions on a number of Russian individuals and entities. We have a Russia-based subsidiary, which represents approximately 0.1% of our total assets and 0.2% of our revenue. The Russian subsidiary is engaged in certain activities that involve sanctioned Russian entities as counterparties. Where necessary or appropriate, we have taken actions to negotiate repayment terms in Rubles to promote compliance with applicable sanctions and have prepared response plans in the event of additional sanctions. While we do not believe that such activities violated OFAC sanctions or are sanctionable under applicable U.S. secondary sanctions, U.S. authorities are afforded wide discretion and there is no guarantee that such activities will not be found to have violated OFAC sanctions or involved sanctionable activity under U.S. secondary sanctions, or that any other government will not determine that our activities violated applicable sanctions of other countries. Our business and reputation could be adversely affected if the U.S. government, or any other government, were to determine that our past or ongoing activities relating to Russia violated any of the applicable sanctions. Sanctions against Russia continue to evolve rapidly, and future changes in law could also adversely affect us. The further expansion of sanctions against Russia and the Russian financial sector by the United States or other countries (including Korea), as well as Russian countermeasures against foreign-owned companies, may adversely affect our business and reputation.

Our operations may be subject to increasing and continually evolving cybersecurity and other technological risks.

With the proliferation of new technologies and the increasing use of the Internet and mobile devices to conduct financial transactions, our operations as a financial institution have been, and will continue to be, subject to an increasing risk of cyber incidents relating to these activities, the nature of which is continually evolving. Our computer systems, software and networks are subject to cyber incidents, such as disruptions, delays or other difficulties affecting our information technology systems, computer viruses or other malicious codes, loss or destruction of data (including confidential client information), unauthorized access, account takeover attempts and cyber attacks. A significant portion of our daily operations relies on our information technology systems, including customer service, billing, the secure processing, storage and transmission of confidential and other information as well as the timely monitoring of a large number of complex transactions. Although we have made substantial and continual investments to build systems and defenses to address cybersecurity and other technological risks, there is no guarantee that such measures or any other measures can provide adequate security and stability. In addition, because methods used to cause cyber attacks change frequently or, in some cases, are not recognized until launched, we may be unable to implement effective preventive measures or proactively address these methods. Furthermore, these cyber threats may arise from human error, accidental technological failure and third parties with whom we do business. If we were to be subject to a system failure or other cyber incident, it could result in the disclosure of confidential client information, damage to our reputation with our customers and in the market, customer dissatisfaction, additional costs to us, regulatory penalties, exposure to litigation and other financial losses to both us and our customers, which could have an adverse effect on our business and results of operations.

Our business may be adversely affected by legal claims and regulatory actions against us.

We are subject to the risk of legal claims and regulatory actions, which may expose us to monetary damages and legal costs, injunctive relief, criminal and civil penalties, sanctions against our management and employees and regulatory restrictions on our operations, as well as reputational harm. See “Item 8.A. Consolidated Statements and Other Financial Information—Legal Proceedings and Regulatory Actions.”

We are unable to predict the outcome of many of the legal claims and regulatory actions in which we are involved, and the scope of the claims or actions or the total amount in dispute in such matters may increase.

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Furthermore, adverse decisions, findings or resolutions in such matters could encourage other parties, including governmental authorities in other jurisdictions, to bring similar claims and actions against us. Accordingly, the outcome of current and future legal claims and regulatory actions, particularly those for which it is difficult to assess the maximum potential exposure or the ultimate adverse impact with any degree of certainty, may materially and adversely impact our business, reputation, results of operations and financial condition.

We may suffer losses due to employee misconduct.

Our businesses are exposed to risk from potential non-compliance by our employees with policies or regulations, employee misconduct or negligence and fraud, which could result in civil, regulatory or criminal investigations, litigations and charges, regulatory sanctions and reputational or financial harm. On April 27, 2022, we discovered that an employee of Woori Bank had misappropriated an aggregate of Won 61.4 billion in 2012, 2015 and 2018. We have reported such incident to the relevant government authorities and are cooperating with their investigations. It is not always possible to deter or fully prevent employee misconduct and the precautions we take to prevent and detect such activity may not always be fully effective. Accordingly, there can be no assurance that employee misconduct will not occur again in the future.

We are generally subject to Korean corporate governance and disclosure standards, which differ in significant respects from those in other countries.

Companies in Korea, including us, are subject to corporate governance standards applicable to Korean public companies which differ in many respects from standards applicable in other countries, including the United States. As a reporting company registered with the U.S. Securities and Exchange Commission and listed on the New York Stock Exchange, we are subject to certain corporate governance standards as mandated by the Sarbanes-Oxley Act of 2002. However, foreign private issuers, including us, are exempt from certain corporate governance requirements under the Sarbanes-Oxley Act or under the rules of the New York Stock Exchange. There may also be less publicly available information about Korean companies, such as us, than is regularly made available by public or

non-public

companies in other countries. Such differences in corporate governance standards and less public information could result in less than satisfactory corporate governance practices or disclosure to investors in certain countries.

Risks relating to government regulation and policy

Strengthening of consumer protection laws applicable to financial institutions could adversely affect our operations.

As a financial service provider, we are subject to a variety of regulations in Korea that are designed to protect financial consumers. In recent years, in light of heightened public concern regarding privacy issues, the Korean government has placed greater emphasis on protection of personal information by financial institutions and has implemented a number of measures to enhance consumer protection. Under the Personal Information Protection Act, financial institutions, as personal information managers, may not collect, store, maintain, utilize or provide resident registration numbers of their customers, unless other laws or regulations specifically require or permit the management of resident registration numbers. In addition, under the Use and Protection of Credit Information Act, a financial institution has a higher duty to protect all information that it collects from its customers and is required to treat such information as credit information. A financial institution’s ability to transfer or provide the information to its affiliates or holding company is considerably restricted. Quintuple damages may be imposed on a financial institution for leakage of such information. Furthermore, under the Electronic Financial Transaction Act, a financial institution is primarily responsible for compensating its customers harmed by a cyber security breach affecting the financial institution even if the breach is not directly attributable to the financial institution.

The Financial Consumer Protection Act became effective as of March 25, 2021. Under the Act, we as a financial instrument distributor are subject to heightened investor protection measures, including stricter distribution guidelines, improved financial dispute resolution procedures, increased liability for customer losses and newly imposed penalty surcharges. The Financial Services Commission has also recently implemented and

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expanded upon measures to strengthen consumer protection in borrowing, including the application of a debt-service-ratio for individual borrowers and the imposition of upper limits on consumer loans.

These and other measures that may be implemented by the Korean government to strengthen consumer protection laws applicable to financial institutions may limit our operational flexibility and cause us to incur significant additional compliance costs, as well as subject us to increased potential liability to our customers, which could adversely affect our business and performance.

The Korean government may promote lending and financial support by the Korean financial industry to certain types of borrowers as a matter of policy, which financial institutions, including us, may decide to follow.

Through its policy guidelines and recommendations, the Korean government has promoted and, as a matter of policy, may continue to attempt to promote lending by the Korean financial industry to particular types of borrowers. For example, the Korean government has in the past announced policy guidelines requesting financial institutions to participate in remedial programs for troubled corporate borrowers, as well as policies aimed at promoting certain sectors of the economy, including measures such as making low interest funding available to financial institutions that lend to these sectors. We expect that all loans or credits made pursuant to such government policies will be reviewed in accordance with our credit approval procedures. However, these or any future government policies may influence us to lend to certain sectors or in a manner in which we otherwise would not in the absence of such policies.

In the past, the Korean government has also announced policies under which financial institutions in Korea are encouraged to provide financial support to particular sectors. For example, in light of the deteriorating financial condition and liquidity position of small- and

medium-sized

enterprises in Korea and adverse conditions in the Korean economy affecting such enterprises, the Korean government introduced measures intended to encourage Korean banks to provide financial support to small- and

medium-sized

enterprise borrowers, including guidelines for Korean banks to extend loan terms and defer interest payments with respect to small- and medium sized enterprises and small merchants affected by the

COVID-19

pandemic. See “—Risks relating to our corporate credit portfolio—The largest portion of our exposure is to small- and

medium-sized

enterprises, and financial difficulties experienced by companies in this segment may result in a deterioration of our asset quality and have an adverse impact on us.” In addition, in September 2019, in response to increasing levels of consumer debt and amid concerns over the debt-servicing capacity of retail borrowers if interest rates were to rise, the Korean government requested Korean banks to participate in a mortgage loan refinancing program for

low-income

individuals with low repayment ability aimed at reducing the payment burden on outstanding mortgage loans.

The Korean government may in the future request financial institutions in Korea, including us, to make investments in or provide other forms of financial support to particular sectors of the Korean economy as a matter of policy, which financial institutions, including us, may decide to accept. We may incur costs or losses as a result of providing such financial support.

The Financial Services Commission may impose burdensome measures on us if it deems us or one of our subsidiaries to be financially unsound.

If the Financial Services Commission deems our financial condition or the financial condition of our subsidiaries to be unsound, or if we or our subsidiaries fail to meet applicable regulatory standards, such as minimum capital adequacy and liquidity ratios, the Financial Services Commission may order or recommend, among other things:

•

admonitions or warnings with respect to our officers;

•

capital increases or reductions;

•

assignments of contractual rights and obligations relating to financial transactions;

•

a suspension of performance by our officers of their duties and the appointment of receivers;

•

disposals of property holdings or closures of subsidiaries or branch offices or downsizing;

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•

stock cancellations or consolidations;

•

suspension of performance of duties of officers and appointment of managers;

•

transfer of all or part of a business;

•

mergers with other financial institutions;

•

acquisition of us by a third party; and

•

suspensions of a part or all of our business operations (not more than six months, in the case of a suspension of all business operations).

If any of these measures are imposed on us by the Financial Services Commission, they could hurt our business, results of operations and financial condition. In addition, if the Financial Services Commission orders us to partially or completely reduce our capital, you may lose part or all of your investment.

Risks relating to Korea

Unfavorable financial and economic developments in Korea may have an adverse effect on us.

We are incorporated in Korea, and a substantial majority of our operations are located in Korea. As a result, we are subject to political, economic, legal and regulatory risks specific to Korea, and our performance and successful fulfillment of our operational strategies are dependent to a large extent on the overall Korean economy. The economic indicators in Korea in recent years have shown mixed signs of growth and uncertainty, and starting in 2020, the overall Korean economy and the economies of Korea’s major trading partners have shown signs of deterioration due to the debilitating effects of the

COVID-19

pandemic. See “—Other risks relating to our business—The

COVID-19

pandemic has adversely affected and may continue to adversely affect our business, financial condition or results of operations.” As a result, future growth of the Korean economy is subject to many factors beyond our control, including developments in the global economy.

In recent years, adverse conditions and volatility in the worldwide financial markets, fluctuations in oil and commodity prices and the increasing weakness of the global economy, mainly due to the

COVID-19

pandemic and more recently due to Russia’s invasion of Ukraine and ensuing sanctions against Russia, have contributed to the uncertainty of global economic prospects in general and have adversely affected, and may continue to adversely affect, the Korean economy. See “—Other risks relating to our business—Unfavorable changes in the global financial markets could adversely affect our results of operations and financial condition.” The value of the Won relative to major foreign currencies has fluctuated significantly and, as a result of deteriorating global and Korean economic conditions, there has been significant volatility in the stock prices of Korean companies recently. Further declines in the Korea Composite Stock Price Index, or the KOSPI, and large amounts of sales of Korean securities by foreign investors and subsequent repatriation of the proceeds of such sales may adversely affect the value of the Won, the foreign currency reserves held by financial institutions in Korea, and the ability of Korean companies to raise capital. Any future deterioration of the Korean or global economy could adversely affect our business, financial condition and results of operations.

Developments that could have an adverse impact on the Korean economy include:

•

declines in consumer confidence and a slowdown in consumer spending;

•

the occurrence of severe health epidemics in Korea or other parts of the world, such as the

COVID-19

pandemic;

•

adverse conditions or developments in the economies of countries and regions that are important export markets for Korea, such as China, the United States, Europe and Japan, or in emerging market economies in Asia or elsewhere, including as a result of deteriorating economic and trade relations between the United States and China and increased uncertainties resulting from the United Kingdom’s exit from the European Union;

•

adverse changes or volatility in foreign currency reserve levels, commodity prices (including oil prices), exchange rates (including fluctuation of the U.S. dollar, the euro or the Japanese yen exchange rates or revaluation of the Chinese renminbi), interest rates, inflation rates or stock markets;

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•

deterioration in economic or diplomatic relations between Korea and its trading partners or allies, including deterioration resulting from territorial or trade disputes or disagreements in foreign policy (such as the ongoing trade disputes with Japan);

•

increased sovereign default risks in select countries and the resulting adverse effects on the global financial markets;

•

a deterioration in the financial condition or performance of small- and

medium-sized

enterprises and other companies in Korea due to the Korean government’s policies to increase minimum wages and limit working hours of employees;

•

investigations of

chaebols

and their senior management for possible misconduct;

•

a continuing rise in the level of household debt and increasing delinquencies and credit defaults by consumer and

small-

and

medium-sized

enterprise borrowers in Korea;

•

social and labor unrest;

•

substantial changes in the market prices of Korean real estate;

•

the economic impact of any pending or future free trade agreements or of any changes to existing free trade agreements;

•

a substantial decrease in tax revenues and a substantial increase in the Korean government’s expenditures for fiscal stimulus measures, unemployment compensation and other economic and social programs, in particular in light of the Korean government’s ongoing efforts to provide emergency relief payments to households and emergency loans to corporations in need of funding due to

COVID-19,

which, together, would likely lead to an increase in the Korean government’s debt and a national budget deficit;

•

financial problems or lack of progress in the restructuring of

chaebols

, other large troubled companies (including those in the construction, shipbuilding and shipping sectors as well as the hotel, leisure and transportation sectors) and their suppliers;

•

loss of investor confidence arising from corporate accounting irregularities or corporate governance issues concerning certain

chaebols

;

•

increases in social expenditures to support an aging population in Korea or decreases in economic productivity due to the declining population size in Korea;

•

geo-political

uncertainty and risk of further attacks by terrorist groups around the world;

•

natural or

man-made

disasters that have a significant adverse economic or other impact on Korea or its major trading partners;

•

political uncertainty or increasing strife among or within political parties in Korea;

•

hostilities or political or social tensions involving

oil-producing

countries in the Middle East (including a potential escalation of hostilities between the United States and Iran) and Northern Africa and any material disruption in the global supply of oil or sudden increase in the price of oil;

•

increased reliance on exports to service foreign currency debts, which could cause friction with Korea’s trading partners;

•

political or social tensions involving Russia and any resulting adverse effects on the supply of oil or the global financial markets;

•

an increase in the level of tensions or an outbreak of hostilities between North Korea and Korea or the United States; and

•

changes in financial regulations in Korea.

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Escalations in tensions with North Korea could have an adverse effect on us and the market price of our ADSs.

Relations between Korea and North Korea have been tense throughout Korea’s modern history. The level of tension between the two Koreas has fluctuated and may increase abruptly as a result of current and future events. In particular, there have been heightened security concerns in recent years stemming from North Korea’s nuclear weapon and ballistic missile programs as well as its hostile military actions against Korea. Some of the significant incidents in recent years include the following:

•

North Korea renounced its obligations under the Nuclear

Non-Proliferation

Treaty in January 2003 and conducted six rounds of nuclear tests since October 2006, including claimed detonations of hydrogen bombs, and warheads that can be mounted on ballistic missiles. Over the years, North Korea has also conducted a series of ballistic missile tests, including missiles launched from submarines and intercontinental ballistic missiles that it claims can reach the United States mainland. In response, the Korean government has repeatedly condemned the provocations and flagrant violations of relevant United Nations Security Council resolutions. In February 2016, the government also closed the inter-Korea Gaeseong Industrial Complex in response to North Korea’s fourth nuclear test in January 2016. Internationally, the United Nations Security Council has passed a series of resolutions condemning North Korea’s actions and significantly expanding the scope of sanctions applicable to North Korea, most recently in December 2017, in response to North Korea’s intercontinental ballistic missile test in November 2017. Over the years, the United States and the European Union have also expanded their sanctions applicable to North Korea.

•

In March 2010, a Korean naval vessel was destroyed by an underwater explosion, killing many of the crewmen on board. The Korean government formally accused North Korea of causing the sinking, while North Korea denied responsibility. Moreover, in November 2010, North Korea fired more than one hundred artillery shells that hit Korea’s Yeonpyeong Island near the Northern Limit Line, which acts as the de facto maritime boundary between Korea and North Korea on the west coast of the Korean peninsula, causing casualties and significant property damage. The Korean government condemned North Korea for the attack and vowed stern retaliation should there be further provocation.

North Korea’s economy also faces severe challenges, which may further aggravate social and political pressures within North Korea. Although bilateral summit meetings between the two Koreas were held in April 2018, May 2018 and September 2018 and between the United States and North Korea in June 2018, February 2019 and June 2019, there can be no assurance that the level of tensions affecting the Korean peninsula will not escalate in the future. Any further increase in tensions, which may occur, for example, if North Korea experiences a leadership crisis, high-level contacts between Korea and North Korea break down or military hostilities occur, could have a material adverse effect on the Korean economy and on our business, financial condition and results of operations and the market value of our common stock and ADSs.

Labor unrest in Korea may adversely affect our operations.

Economic difficulties in Korea or increases in corporate reorganizations and bankruptcies could result in layoffs and higher unemployment. Such developments could lead to social unrest and substantially increase government expenditures for unemployment compensation and other costs for social programs. According to statistics from the Korea National Statistical Office, the unemployment rate increased from 3.8% in 2018 and 2019 to 4.5% in 2020 and 3.7% in 2021. Further increases in unemployment and any resulting labor unrest in the future could adversely affect our operations, as well as the operations of many of our customers and their ability to repay their loans, and could adversely affect the financial condition of Korean companies in general, depressing the price of their securities. Any of these developments may have an adverse effect on our financial condition and results of operations.

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Risks relating to our common stock and ADSs

We or our major shareholders may sell shares of our common stock in the future, and such sales may adversely affect the market price of our common stock and ADSs and may dilute your investment and relative ownership interest in us.

We have no current plans for any public offerings of our common stock, ADSs or securities exchangeable for or convertible into such securities. However, it is possible that we may decide to offer or sell such securities in the future.

In addition, the KDIC currently owns 26,357,960 shares, or 3.6%, of our outstanding common stock, and IMM Private Equity, Inc., through its special purpose company Nobis1, Inc., currently owns 40,560,000 shares, or 5.6%, of our outstanding common stock. See “Item 7.A. Major Shareholders.” In the future, such major shareholders or any other shareholder that owns a large number of shares of our outstanding common stock may choose to sell large blocks of our common stock in a public offering or privately to a strategic or financial investor, including a sale by the KDIC for the purpose of recovering the public funds it injected into us. For example, in accordance with the Korean government’s privatization plan, the KDIC sold 40,143,022 shares of Woori Bank’s common stock (representing 5.9% of its outstanding common stock) through a bidding process in Korea in December 2014 and an aggregate of 200,685,395 shares of Woori Bank’s common stock (representing 29.7% of its outstanding common stock) in stakes ranging from 3.7% to 6.0% to seven financial companies through a bidding process in December 2016 and January 2017. In 2017, pursuant to a series of transactions related to call options previously granted in connection with the KDIC’s sale of Woori Bank’s common stock in December 2014, the KDIC sold an aggregate of 19,852,364 shares of Woori Bank’s common stock (representing 2.9% of its outstanding common stock). After our establishment, in April 2021, pursuant to its plan to sell all of our common stock it owned by 2022 that was approved by the Financial Services Commission, the KDIC sold an aggregate of 14,445,354 shares of our common stock (representing 2.0% of our outstanding common stock) in a block trade. In December 2021, the KDIC sold an aggregate 9.3% of our outstanding common stock in stakes ranging from 1.0% to 4.0% to four companies and 1.0% to our employee stock ownership association, and in February 2022, the KDIC sold an aggregate of 15,860,000 shares of our common stock (representing 2.2% of our outstanding common stock) in a block trade. The KDIC currently owns 3.6% of our outstanding common stock. See “—Risks relating to our structure and strategy—The implementation of the Korean government’s privatization plan may have an adverse effect on us and your interests as a shareholder.” We expect the KDIC to sell all or a portion of the shares of our common stock it owns to one or more purchasers in the future.

Any future offerings or sales by us of our common stock or ADSs or securities exchangeable for or convertible into such securities, significant sales of our common stock by a major shareholder, or the public perception that such an offering or sale may occur, could have an adverse effect on the market price of our common stock and ADSs. Furthermore, any offerings by us in the future of any such securities could have a dilutive impact on your investment and relative ownership interest in us.

Prior sales by the KDIC of the shares of our common stock it owned may result in adverse Korean tax consequences for you.

Under applicable Korean tax laws, a

non-Korean

holder who held Woori Bank’s common stock or ADSs prior to our establishment as a new financial holding company in January 2019 pursuant to a “comprehensive stock transfer” under Korean law will be able to defer taxation on any capital gains arising from the stock transfer, by virtue of the Special Tax Treatment Control Law of Korea, or the STTCL, until such holder’s sale of our common stock or ADSs received in the stock transfer, at which time the tax basis of such common stock or ADSs will be the acquisition price at which such holder acquired such Woori Bank common stock or ADSs. However,

non-Korean

holders that are corporations may not defer such portion of tax on capital gains arising from the stock transfer that is attributable to the amount by which the market price of our common stock or ADSs (as calculated in accordance with applicable Korean laws and regulations) is in excess of the market price of Woori Bank’s common stock or ADSs. Any such

non-Korean

holder of our common stock or ADS, including a

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corporation, which seeks to defer taxation on capital gains arising from the stock transfer will be required to submit a tax deferral application in prescribed form to the Korean tax authorities when filing its tax return for the 2019 tax year. Notwithstanding the foregoing, if the KDIC disposed of 50% or more of the shares of our common stock it received in the stock transfer between the end of 2019 and the end of 2021, the deferral of taxation on capital gains will not be available, and a

non-Korean

holder who received our common stock or ADSs in the stock transfer will generally be subject to Korean tax on capital gains in an amount equal to the lower of (i) 11.0% (inclusive of local income tax) of the gross realization proceeds (i.e., the value of our common stock or ADSs such holder received in the stock transfer) or (ii) 22.0% (inclusive of local income tax) of the net realized gain. However, such capital gains tax may not apply, or may apply at a reduced rate, if such holder establishes its entitlement to an exemption or rate reduction under an applicable tax treaty or Korean tax law. See “Item 10.E. Taxation—Korean Taxation—Tax Treaties” for information regarding tax treaty benefits.

While the KDIC received a tax ruling from the National Tax Service of Korea in June 2019 that the sale of the shares of our common stock it received in the stock transfer will be treated as a sale of shares due to an unavoidable reason (i.e., a disposal of shares in order to fulfil a legally imposed obligation) and that the deferral of taxation on capital gains will continue to apply even if the sale occurred within two years from the end of 2019, there is no assurance that such tax ruling will be followed. Accordingly, if you received our common stock or ADSs in the stock transfer, prior sales by the KDIC of the shares of our common stock it owned may result in adverse Korean tax consequences for you.

Ownership of our common stock is restricted under Korean law.

Under the Financial Holding Company Act, a single shareholder, together with its affiliates, is generally prohibited from owning more than 10.0% of the issued and outstanding shares of voting stock of a bank holding company such as us that controls a nationwide bank, with the exception of certain shareholders that are

non-financial

business group companies, whose applicable limit was reduced from 9.0% to 4.0% pursuant to an amendment of the Financial Holding Company Act which became effective in February 2014. To the extent that the total number of shares of our common stock (including those represented by ADSs) that you and your affiliates own together exceeds the applicable limits, you will not be entitled to exercise the voting rights for the excess shares, and the Financial Services Commission may order you to dispose of the excess shares within a period of up to six months. Failure to comply with such an order would result in an administrative fine of up to 0.03% of the book value of such shares per day until the date of disposal.

Non-financial

business group companies can no longer acquire more than 4.0% of the issued and outstanding shares of voting stock of a bank holding company pursuant to the amended Financial Holding Company Act, which grants an exception for

non-financial

business group companies which, at the time of the enactment of the amended provisions, held more than 4.0% of the shares thereof with the approval of the Financial Services Commission before the amendment. See “Item 4.B. Business Overview—Supervision and Regulation—Principal Regulations Applicable to Financial Holding Companies—Restrictions on Ownership of a Financial Holding Company.”

You will not be able to exercise dissent and appraisal rights unless you have withdrawn the underlying shares of our common stock and become our direct shareholder.

In some limited circumstances, including the transfer of the whole or any significant part of our business and the merger or consolidation of us with another company, dissenting shareholders have the right to require us to purchase their shares under Korean law. However, if you hold our ADSs, you will not be able to exercise such dissent and appraisal rights if the depositary refuses to do so on your behalf. Our deposit agreement does not require the depositary to take any action in respect of exercising dissent and appraisal rights. In such a situation, holders of our ADSs must withdraw the underlying common stock from the ADS facility (and incur charges relating to that withdrawal) and become our direct shareholder prior to the record date of the shareholders’ meeting at which the relevant transaction is to be approved, in order to exercise dissent and appraisal rights.

You may be limited in your ability to deposit or withdraw common stock.

Under the terms of our deposit agreement, holders of common stock may deposit such stock with the depositary’s custodian in Korea and obtain ADSs, and holders of ADSs may surrender ADSs to the depositary

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and receive common stock. However, to the extent that a deposit of common stock exceeds any limit that we may specify from time to time, that common stock will not be accepted for deposit unless our consent with respect to such deposit has been obtained. We currently have not set any such limit; however, we have the right to do so at any time. Under the terms of the deposit agreement, no consent would be required if the shares of common stock were to be obtained through a dividend, free distribution, rights offering or reclassification of such stock. We have consented, under the terms of the deposit agreement, to any deposit unless the deposit would be prohibited by applicable laws or violate our articles of incorporation. If we choose to impose a limit on deposits in the future, however, we might not consent to the deposit of any additional common stock. In that circumstance, if you surrender ADSs and withdraw common stock, you may not be able to deposit the stock again to obtain ADSs. See “Item 4.B. Business Overview—Supervision and Regulation—Restrictions Applicable to Shares” and “Item 10.D. Exchange Controls—Restrictions Applicable to Shares.”

You will not have preemptive rights in some circumstances.

The Korean Commercial Code, as amended, and our articles of incorporation require us, with some exceptions, to offer shareholders the right to subscribe for new shares of our common stock in proportion to their existing shareholding ratio whenever new shares are issued. If we offer any rights to subscribe for additional shares of our common stock or any rights of any other nature, the depositary, after consultation with us, may make the rights available to holders of our ADSs or use commercially feasible efforts to dispose of the rights on behalf of such holders, in a riskless principal capacity, and make the net proceeds available to such holders. The depositary will make rights available to holders of our ADSs only if:

•

we have requested in a timely manner that those rights be made available to such holders;

•

the depositary has received the documents that are required to be delivered under the terms of the deposit agreement, which may include confirmation that a registration statement filed by us under the U.S. Securities Act of 1933, as amended, or the Securities Act, is in effect with respect to those shares or that the offering and sale of those shares is exempt from or is not subject to the registration requirements of the Securities Act; and

•

the depositary determines, after consulting with us, that the distribution of rights is lawful and commercially feasible.

Holders of our common stock located in the United States may not exercise any rights they receive absent registration or an exemption from the registration requirements under the Securities Act.

We are under no obligation to file any registration statement with the U.S. Securities and Exchange Commission or to endeavor to cause such a registration statement to be declared effective. Moreover, we may not be able to establish an exemption from registration under the Securities Act. Accordingly, you may be unable to participate in our rights offerings and may experience dilution in your holdings. If a registration statement is required for you to exercise preemptive rights but is not filed by us or is not declared effective, you will not be able to exercise your preemptive rights for additional ADSs and you will suffer dilution of your equity interest in us. If the depositary is unable to sell rights that are not exercised or not distributed or if the sale is not lawful or feasible, it will allow the rights to lapse, in which case you will receive no value for these rights.

Your dividend payments and the amount you may realize upon a sale of your ADSs will be affected by fluctuations in the exchange rate between the U.S. dollar and the Won.

Our common stock is listed on the KRX KOSPI Market of the Korea Exchange and quoted and traded in Won. Cash dividends, if any, in respect of the shares represented by the ADSs will be paid to the depositary in Won and then converted by the depositary into U.S. dollars, subject to certain conditions. Accordingly, fluctuations in the exchange rate between the Won and the U.S. dollar will affect, among other things, the amounts you will receive from the depositary in respect of dividends, the U.S. dollar value of the proceeds that you would receive upon a sale in Korea of the shares of our common stock obtained upon surrender of ADSs and the secondary market price of ADSs. Such fluctuations will also affect the U.S. dollar value of dividends and sales proceeds received by holders of our common stock.

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The market value of your investment may fluctuate due to the volatility of, and government intervention in, the Korean securities market.

Our common stock is listed on the KRX KOSPI Market, which has a smaller market capitalization and is more volatile than the securities markets in the United States and many European countries. The market value of ADSs may fluctuate in response to the fluctuation of the trading price of shares of our common stock on the KRX KOSPI Market. The KRX KOSPI Market has experienced substantial fluctuations in the prices and volumes of sales of listed securities and the KRX KOSPI Market has prescribed a fixed range in which share prices are permitted to move on a daily basis. The KOSPI was

2,550.1 on May 12,

2022. There is no guarantee that the stock prices of Korean companies will not decline again in the future. Like other securities markets, including those in developed markets, the Korean securities market has experienced problems including market manipulation, insider trading and settlement failures. The recurrence of these or similar problems could have a material adverse effect on the market price and liquidity of the securities of Korean companies, including our common stock and ADSs, in both the domestic and the international markets.

The Korean government has the potential ability to exert substantial influence over many aspects of the private sector business community, and in the past has exerted that influence from time to time. For example, the Korean government has induced mergers to reduce what it considers excess capacity in a particular industry and has also induced private companies to publicly offer their securities. Similar actions in the future could have the effect of depressing or boosting the Korean securities market, whether or not intended to do so. Accordingly, actions by the government, or the perception that such actions are taking place, may take place or has ceased, may cause sudden movements in the market prices of the securities of Korean companies in the future, which may affect the market price and liquidity of our common stock and ADSs.

If the Korean government deems that emergency circumstances are likely to occur, it may restrict you and the depositary from converting and remitting dividends and other amounts in U.S. dollars.

If the Korean government deems that certain emergency circumstances, including, but not limited to, severe and sudden changes in domestic or overseas economic circumstances, extreme difficulty in stabilizing the balance of payments or implementing currency, exchange rate and other macroeconomic policies, have occurred or are likely to occur, it may impose certain restrictions provided for under the Foreign Exchange Transaction Law, including the suspension of payments or requiring prior approval from governmental authorities for any transaction. See “Item 10.D. Exchange Controls—General.”

Other Risks

You may not be able to enforce a judgment of a foreign court against us.

We are a corporation with limited liability organized under the laws of Korea. A majority of our directors and officers and other persons named in this annual report reside in Korea, and a significant portion of the assets of our directors and officers and other persons named in this annual report and a substantial majority of our assets are located in Korea. As a result, it may not be possible for you to effect service of process within the United States, or to enforce against them or us in the United States judgments obtained in United States courts based on the civil liability provisions of the federal securities laws of the United States. There is doubt as to the enforceability in Korea, either in original actions or in actions for enforcement of judgments of United States courts, of civil liabilities predicated on the United States federal securities laws.

Item 4.

INFORMATION ON THE COMPANY

For certain of the information required by subpart 1400 of Regulation

S-K

not included in this Item 4, see “Item 8.A. Consolidated Statements and Other Financial Information.”

Item 4.A.

History and Development of the Company

Overview

We are a financial holding company that was newly established on January 11, 2019 pursuant to a “comprehensive stock transfer” under Korean law, whereby holders of the common stock of Woori Bank and

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certain of its subsidiaries transferred all of their shares to us and in return received shares of our common stock. We were established under the Financial Holding Company Act of Korea, which, together with associated regulations and a related Enforcement Decree, enables banks and other financial institutions, including insurance companies, invest trust companies, credit card companies and securities companies, to be organized and managed under the auspices of a single financial holding company. As a result of the stock transfer, Woori Bank and certain of its former wholly-owned subsidiaries, Woori FIS Co., Ltd., Woori Finance Research Institute Co., Ltd., Woori Credit Information Co., Ltd., Woori Fund Service Co., Ltd. and Woori Private Equity Asset Management Co., Ltd., became our direct and wholly-owned subsidiaries. Accordingly, our overall business and operations after the stock transfer, on a consolidated basis, are identical to those of Woori Bank on a consolidated basis immediately prior to the stock transfer.

The stock transfer 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 stock transfer, we file reports under the Exchange Act as the successor issuer to Woori Bank.

Our legal and commercial name is Woori Financial Group Inc. Our registered office and corporate headquarters are located at 51,

Sogong-ro,

Jung-gu,

Seoul, Korea. Our telephone number is

822-2125-2000.

Our website address is

http://www.woorifg.com.

The U.S. Securities and Exchange Commission, or the SEC, maintains a website (

http://www.sec.gov

), which contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC.

History

Establishment of Woori Bank

The predecessor of Woori Bank was originally established in 1899 and operated as the Commercial Bank of Korea until 1998, when it was acquired by the KDIC and merged with another commercial bank, Hanil Bank, which had been established in 1932. The surviving entity in the merger was renamed Hanvit Bank, which name was changed to Woori Bank in May 2002.

Establishment of Woori Finance Holdings

In response to a financial and economic downturn in Korea beginning in late 1997, the Korean government announced and implemented a series of comprehensive policy packages to address structural weaknesses in the Korean economy and the financial sector. As part of these measures, in October 1998, the KDIC purchased 95.0% of the outstanding shares of the Commercial Bank of Korea and 95.6% of the outstanding shares of Hanil Bank, and subsequently merged Hanil Bank into the Commercial Bank of Korea (which was renamed Hanvit Bank). These banks had suffered significant losses in 1997 and 1998. The Korean government took

pre-emptive

measures to ensure the survival of these and other banks as it believed that bank failures would have a substantial negative impact on the Korean economy.

In December 2000, the Korean government wrote down the capital of Hanvit Bank, as well as Kyongnam Bank, Kwangju Bank and Peace Bank of Korea, to zero through a Financial Services Commission capital reduction order pursuant to its regulatory authority. The Korean government immediately recapitalized these banks by injecting public funds through the KDIC. In December 2000, the KDIC made initial capital injections to Hanvit Bank (￦2,764 billion), Kyongnam Bank (￦259 billion), Kwangju Bank (￦170 billion) and Peace Bank of Korea (￦273 billion), in return for new shares of those banks. The KDIC also agreed to make additional capital contributions, not involving the issuance of new shares, in the future, which were made in September 2001 to Hanvit Bank (￦1,877 billion), Kyongnam Bank (￦94 billion), Kwangju Bank (￦273 billion) and Peace Bank of Korea (￦339 billion).

In addition, in November 2000, the KDIC established Hanaro Merchant Bank to restructure substantially all of the assets and liabilities of four failed merchant banks (Yeungnam Merchant Banking Corporation, Central Banking Corporation, Korea Merchant Banking Corporation and H&S Investment Bank) that were transferred to it.

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In March 2001, the KDIC established Woori Finance Holdings as a new financial holding company and transferred all of the shares in each of Hanvit Bank, Kyongnam Bank, Kwangju Bank, Peace Bank of Korea and Hanaro Merchant Bank held by the KDIC to Woori Finance Holdings in exchange for its newly issued shares. Accordingly, Woori Finance Holdings became the sole owner of those entities. Woori Finance Holdings subsequently listed its common stock on the KRX KOSPI Market in June 2002 and listed ADSs representing its common stock on the New York Stock Exchange in September 2003.

Reorganization and Expansion of Woori Finance Holdings and Woori Bank

Following its establishment and its acquisition of its subsidiaries, Woori Finance Holdings developed a reorganization and integration plan designed to reorganize the corporate structure of some of its subsidiaries and integrate its operations under a single management structure. As part of this plan:

•

From December 2001 through February 2002, Peace Bank of Korea was restructured by:

•

splitting off its commercial banking operations and merging them into Woori Bank;

•

changing the name of Peace Bank of Korea to Woori Credit Card; and

•

transferring the credit card operations of Woori Bank to Woori Credit Card.

•

In March 2003, the credit card operations of Kwangju Bank were transferred to Woori Credit Card.

•

In August 2003, Woori Investment Bank (formerly named Hanaro Merchant Bank) was merged with Woori Bank.

In succeeding years, Woori Finance Holdings and Woori Bank further reorganized and expanded their operations, including through mergers, acquisitions and investments. For example:

•

In March 2004, Woori Credit Card was merged with Woori Bank.

•

In October and December 2004, Woori Finance Holdings acquired an aggregate 27.3% voting interest in LG Investment & Securities Co., Ltd., which was subsequently renamed Woori Investment & Securities.

•

In May 2005, Woori Finance Holdings acquired a 90.0% interest in LG Investment Trust Management Co., Ltd., which was subsequently renamed Woori Asset Management.

•

In October 2005, Woori Bank established Woori Private Equity as a consolidated subsidiary.

•

In April 2008, Woori Finance Holdings acquired a 51.0% interest in LIG Life Insurance Co., Ltd., which was subsequently renamed Woori Aviva Life Insurance.

•

In March 2011, Woori Finance Holdings acquired certain assets and assumed certain liabilities of Samhwa Mutual Savings Bank through a newly established subsidiary, Woori FG Savings Bank.

•

In September 2012, Woori FG Savings Bank acquired certain assets and assumed certain liabilities of Solomon Mutual Savings Bank.

•

In October 2012, Woori Finance Holdings established Woori Finance Research Institute, which engages in economic and finance research, management consulting, and management and sales of intellectual property rights.

•

In April 2013, Woori Bank effected a

spin-off

of its credit card business into a newly established wholly-owned subsidiary of Woori Finance Holdings, Woori Card.

•

In June 2013, through an internal reorganization, Kumho Investment Bank (previously a subsidiary of Woori Private Equity and subsequently renamed Woori Investment Bank), in which Woori Finance Holdings held a 41.6% interest, became its consolidated subsidiary, and ￦70 billion of new capital was injected into such entity.

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•

In January 2014, Woori Bank completed the purchase of an additional 27% equity interest (in addition to the 6% equity interest it previously acquired through its subsidiary PT. Bank Woori Indonesia) in PT. Bank Himpunan Saudara 1906 Tbk, an Indonesian commercial bank with a network of over 100 branches and offices throughout Indonesia. In December 2014, PT. Bank Woori Indonesia merged with and into PT. Bank Himpunan Saudara 1906 Tbk. The merged entity, in which Woori Bank currently holds an 84.2% equity interest, was renamed PT Bank Woori Saudara Indonesia 1906 Tbk and became its consolidated subsidiary.

•

In October 2016, Woori Bank acquired a 51% equity interest in Wealth Development Bank a thrift bank in the Philippines with a network of 16 branches and approximately 300 employees.

•

In November 2016, Woori Bank obtained a banking license to establish a local subsidiary in Vietnam, Woori Bank Vietnam, which commenced operations in January 2017.

•

In June 2018, Woori Bank acquired VisionFund (Cambodia) Ltd., a microfinance deposit-taking institution in Cambodia, and renamed it WB Finance Co., Ltd. In February 2020, WB Finance Co., Ltd. merged with Woori Finance (Cambodia) Plc., a Cambodian microfinance institution, and in November 2021, it obtained a commercial banking license from the Cambodian financial authorities and began its nationwide operations as Woori Bank (Cambodia) PLC.

•

In November 2018, Woori Bank established a German subsidiary, Woori Bank Europe, which is headquartered in Frankfurt.

Privatization Plan

In June 2013, the Korean government, through the Public Funds Oversight Committee of the Financial Services Commission, announced an updated plan to privatize Woori Finance Holdings and its former subsidiaries, including Woori Bank. The privatization plan provided for the segregation of such entities into three groups and the disposal of the Korean government’s interest in these entities held through the KDIC in a series of transactions, many of which have been completed.

Spin-off

of Kwangju Bank and Kyongnam Bank

In August 2013, the board of directors of Woori Finance Holdings approved a plan to establish two new companies, KJB Financial Group and KNB Financial Group (which we refer to as the New Holdcos), 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. The

spin-off

was approved at an extraordinary general meeting of the shareholders of Woori Finance Holdings held in January 2014 and was effected in May 2014. After the

spin-off,

KJB Financial Group owned the shares of Kwangju Bank previously held by Woori Finance Holdings, and KNB Financial Group owned 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 the New Holdcos were its subsidiaries, after the

spin-off.

Following the

spin-off,

each of these banks was merged with the relevant New Holdco.

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.

Disposal of Woori Financial, Woori Asset Management, Woori F&I, Woori Investment & Securities, Woori Aviva Life Insurance and Woori FG Savings Bank

In March 2014, Woori Finance Holdings sold its 52.0% ownership interest in Woori Financial to KB Financial Group for the sale price of ￦280 billion.

In May 2014, Woori Finance Holdings sold its 100.0% ownership interest in Woori Asset Management to Kiwoom Securities for the sale price of ￦76 billion.

In June 2014, Woori Finance Holdings sold its 100.0% ownership interest in Woori F&I to Daishin Securities for the sale price of ￦368 billion.

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In June 2014, Woori Finance Holdings also sold its 37.9% ownership interest in Woori Investment & Securities, its 51.6% ownership interest in Woori Aviva Life Insurance and its 100.0% ownership interest in Woori FG Savings Bank to NongHyup Financial Group Inc. for the sale price of ￦1,039 billion in a collective sale.

Merger of Woori Bank and Woori Finance Holdings

In July 2014, Woori Bank entered into a merger agreement with Woori Finance Holdings, providing for the merger of Woori Finance Holdings with and into Woori Bank. The merger agreement was approved by the shareholders of Woori Finance Holdings at an extraordinary general meeting held on October 10, 2014. Pursuant to the merger agreement, Woori Finance Holdings merged with and into Woori Bank on November 1, 2014, such that Woori Bank 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 Woori Bank’s common stock for each share of common stock of Woori Finance Holdings they held.

As a result of the merger, the other remaining subsidiaries of Woori Finance Holdings, including Woori Card, Woori Private Equity, Woori FIS, Woori Investment Bank and Woori Finance Research Institute, became Woori Bank’s subsidiaries. Accordingly, Woori Bank’s overall business and operations after the merger, on a consolidated basis, were substantially identical to those of Woori Finance Holdings on a consolidated basis prior to the merger.

Woori Bank was an unlisted corporation prior to the merger, while Woori Finance Holdings had its common stock listed on the KRX KOSPI Market and its ADSs listed on the New York Stock Exchange. Following the merger, Woori Bank became newly listed on the KRX KOSPI Market and succeeded to Woori Finance Holdings’ listing on the New York Stock Exchange.

Sales of the KDIC’s Ownership Interest

Pursuant to the Korean government’s privatization plan, in December 2014, the KDIC sold 40,143,022 shares of Woori Bank’s common stock (representing 5.9% of its outstanding common stock) through a bidding process in Korea. In addition, in December 2016 and January 2017, the KDIC sold an aggregate of 200,685,395 shares of Woori Bank’s common stock (representing 29.7% of its outstanding common stock) in stakes ranging from 3.7% to 6.0% to seven financial companies through a bidding process. In 2017, pursuant to a series of transactions related to call options previously granted in connection with the KDIC’s sale of Woori Bank’s common stock in December 2014, the KDIC sold an aggregate of 19,852,364 shares of Woori Bank’s common stock (representing 2.9% of its outstanding common stock). As a result of such transactions, the KDIC’s ownership interest in Woori Bank was reduced to 18.4%. In connection with our establishment in January 2019 as a new financial holding company pursuant to a “comprehensive stock transfer” under Korean law, the KDIC received 124,604,797 shares of our outstanding common stock in exchange for the common stock of Woori Bank it owned. In June 2019, the Financial Services Commission approved the KDIC’s plan to sell all such common stock in multiple transactions by 2022. In April 2021, pursuant to such plan, the KDIC sold 14,445,354 shares of our common stock (representing 2.0% of our outstanding common stock) in a block trade. In December 2021, the KDIC sold an aggregate 9.3% of our outstanding common stock in stakes ranging from 1.0% to 4.0% to four companies and 1.0% to our employee stock ownership association, and in February 2022, the KDIC sold an aggregate of 15,860,000 shares of our common stock (representing 2.2% of our outstanding common stock) in a block trade. The KDIC currently owns 3.6% of our outstanding common stock.

In December 2016, in connection with the KDIC’s sale of shares of Woori Bank’s common stock, Woori Bank entered into an agreement with the KDIC, pursuant to which Woori Bank was required to use its best efforts to cause an employee of the KDIC nominated by it to be appointed as Woori Bank’s

non-standing

director, so long as the KDIC either (x) owned 10% or more of Woori Bank’s total issued shares with voting rights or (y) owned more than 4% but less than 10% of Woori Bank’s total issued shares with voting rights and remained its largest shareholder (other than the National Pension Service of Korea). After such agreement with

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Woori Bank expired, we entered into an agreement with the KDIC with similar terms in July 2019, which has since been terminated as the KDIC’s ownership interest in us has been reduced to less than 4.0%.

Establishment of Woori Financial Group

We were established as a new financial holding company on January 11, 2019 pursuant to a “comprehensive stock transfer” under Korean law, whereby holders of the common stock of Woori Bank and certain of its subsidiaries transferred all of their shares to us and in return received shares of our common stock. The stock transfer was approved by the shareholders of Woori Bank at an extraordinary general meeting held on December 28, 2018. In the stock transfer, each holder of one share of Woori Bank’s common stock recorded in its shareholder register as of November 15, 2018 received one share of our common stock. In addition, we issued our common stock to Woori Bank in exchange for the outstanding common stock of certain of Woori Bank’s wholly-owned subsidiaries that became our wholly-owned direct subsidiaries. Specifically, in connection with the stock transfer, Woori Bank transferred all shares of common stock held by it of Woori FIS Co., Ltd., Woori Finance Research Institute Co., Ltd., Woori Credit Information Co., Ltd., Woori Fund Service Co., Ltd. and Woori Private Equity Asset Management Co., Ltd., all of which were Woori Bank’s wholly-owned subsidiaries, to us and, as consideration for such transferred shares, received shares of our common stock in accordance with the specified stock transfer ratio applicable to each such subsidiary. Following the completion of the stock transfer, Woori Bank, Woori FIS Co., Ltd., Woori Finance Research Institute Co., Ltd., Woori Credit Information Co., Ltd., Woori Fund Service Co., Ltd. and Woori Private Equity Asset Management Co., Ltd. became our direct and wholly-owned subsidiaries.

The following chart illustrates the organizational structure of Woori Bank prior to the completion of the stock transfer:

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The following chart illustrates our organizational structure after the completion of the stock transfer:

In connection with the stock transfer, Woori Bank’s common stock was suspended from trading from January 9, 2019 and was

de-listed

from the KRX KOSPI Market on February 13, 2019. Following the stock transfer, our common stock was newly listed on the KRX KOSPI Market on February 13, 2019, and our ADSs succeeded to the listing of Woori Bank’s ADSs on the New York Stock Exchange on January 11, 2019.

The shareholders of Woori Bank were entitled to exercise appraisal rights with respect to its common stock held by them at a purchase price of ￦16,079 per share, in accordance with Korean law. The period for exercise of appraisal rights started on December 28, 2018 and ended on January 7, 2019, during which shareholders exercised appraisal rights with respect to an aggregate of 11,453,702 shares of common stock of Woori Bank. The payment of the purchase price for such common stock held by the exercising shareholders was made on January 9, 2019, in the aggregate amount of ￦184 billion. As a result of the exchange for our common stock of such treasury shares obtained by Woori Bank pursuant to the exercise of appraisal rights by its shareholders and other treasury shares it held, as well as the transfer by Woori Bank of the shares it held in its relevant subsidiaries to us, Woori Bank received 18,346,782 shares of our common stock in the stock transfer, which constituted our treasury shares and represented 2.7% of our total issued common stock as of January 11, 2019. In March 2019, Woori Bank sold all such shares to institutional investors in a block trade.

Reorganization and Expansion of Woori Financial Group

After our establishment, we have further reorganized and expanded our operations, including through mergers, acquisitions and investments. For example:

•

In August 2019, we acquired a 73% equity interest in Woori Asset Management Corp. (formerly known as Tongyang Asset Management Corp.) from Tongyang Life Insurance Co., Ltd., which became our consolidated subsidiary.

•

In September 2019, we conducted a “comprehensive stock exchange” under Korean law with Woori Bank, the former parent company of Woori Card, whereby Woori Bank transferred all of its Woori Card

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shares to us and in return received a combination of 42,103,377 shares of our common stock and ￦598 billion in cash, based on an exchange ratio of 0.4697442 shares of our common stock for each Woori Card share. As a result of the stock exchange, Woori Card ceased to be Woori Bank’s subsidiary and became our direct and wholly-owned subsidiary. Pursuant to applicable Korean law, Woori Bank was required to dispose of the 42,103,377 shares of our common stock it received in the stock exchange within six months of its consummation and sold 28,890,707 of such shares to Fubon Life Insurance Co., Ltd. in September 2019 for ￦358 billion and 13,212,670 of such shares in block trades in November 2019.

•

In September 2019, we acquired a 59.83% equity interest in Woori Investment Bank from Woori Bank, its former parent company, for a purchase price of ￦393 billion. As a result of the purchase, Woori Investment Bank ceased to be Woori Bank’s subsidiary and became our direct consolidated subsidiary. Woori Investment Bank’s common stock is listed on the KRX KOSPI Market.

•

In October 2019, Woori Bank acquired a 20% equity interest in Lotte Card Co., Ltd., which was the sixth largest credit card issuer in Korea at the time of acquisition, according to the Financial Statistics Information System, which is maintained by the Financial Supervisory Service. See “Item 4.B. Business Overview—Credit Cards.”

•

In December 2019, we acquired Woori Global Asset Management Co. (formerly known as ABL Global Asset Management Co.) from Anbang Asset Management (Hong Kong) Co., Limited, which became our consolidated subsidiary.

•

In December 2019, we acquired an aggregate 51% equity interest in Woori Asset Trust Co., Ltd. (formerly known as Kukje Asset Trust Ltd.), consisting of (i) 44.46% from its majority shareholders, including former chairman

Jae-Eun

Yoo, and (ii) 6.54% from Woori Bank. As part of the share purchase agreement with the former majority shareholders, we have agreed to additionally acquire a 21.27% equity interest in the future, subject to certain conditions, at which point we will own an aggregate 72.3% equity interest in Woori Asset Trust Co., Ltd., which is currently our consolidated subsidiary.

•

In December 2020, we acquired a 74.0% equity interest in Woori Financial Capital Co., Ltd. (formerly known as Aju Capital Co., Ltd.) from Well to Sea Investment for a purchase price of ￦572 billion. Notwithstanding the foregoing, for accounting purposes, Woori Financial Capital Co., Ltd. became our consolidated subsidiary in October 2020. In March 2021, we acquired Woori Savings Bank (formerly known as Aju Savings Bank) from Woori Financial Capital Co., Ltd., our consolidated subsidiary, and as a result, Woori Savings Bank ceased to be the subsidiary of Woori Financial Capital Co., Ltd. and became our direct consolidated subsidiary. We acquired additional equity interests in Woori Financial Capital Co., Ltd. of 12.9% and 3.6% from Aju Corporation in April 2021 and May 2021, respectively, as a result of which our aggregate equity interest in Woori Financial Capital Co., Ltd. became 90.5%. In August 2021, we acquired the remaining shares of Woori Financial Capital Co., Ltd. and integrated Woori Financial Capital Co., Ltd. as our wholly-owned subsidiary through a “comprehensive stock exchange” under Korean law. As a result of such transaction, the total number of our outstanding shares of common stock increased to 728,058,225.

•

In January 2022, we established Woori Financial F&I Inc. as a wholly-owned subsidiary to invest in

non-performing

loans and restructuring companies.

Item 4.B.

Business Overview

We are one of the largest financial holding companies in Korea, in terms of consolidated total assets, and our operations include Woori Bank, one of the largest commercial banks in Korea. Our subsidiaries collectively engage in a broad range of businesses, including corporate banking, consumer banking, credit card operations, investment banking, capital markets activities and other businesses. We provide a wide range of products and services to our customers, which mainly comprise small- and

medium-sized

enterprises and individuals, as well

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as some of Korea’s largest corporations. As of December 31, 2021, we had, on a consolidated basis, total assets of ￦447,184 billion, total liabilities of ￦418,379 billion and total equity of ￦28,805 billion.

As one of the leading financial services groups in Korea, we believe our core competitive strengths include the following:

Strong and long standing relationships with corporate customers.

Historically our operations concentrated on large corporate customers. As a result, we believe that we have strong relationships with many of Korea’s leading corporate groups, and we are the main creditor bank to 9 of the 32 largest Korean corporate borrowers. Further enhancing our corporate loan portfolio is our ability to lend to small- and

medium-sized

enterprise customers. As of December 31, 2021, we had 409,249 small- and

medium-sized

enterprise borrowers.

Large and loyal retail customer base.

With respect to our consumer banking operations, we have the third-largest deposit base among Korean commercial banks, and over 24.2 million retail customers, representing about half of the Korean adult population. Of these customers, over 10.0 million are active customers, meaning that they have a deposit account with us with a balance of at least ￦300,000 or have a loan account with us.

Extensive distribution and marketing network.

We serve our customers primarily through one of the largest banking networks in Korea, comprising 768 branches and 4,296 ATMs and cash dispensers as of December 31, 2021. Through Woori Bank, we also operate 10 dedicated corporate banking centers and 89 general managers for our large corporate customers and 829 relationship managers stationed at 652 branches (as well as 492 additional

non-stationed

employees who serve as relationship managers as needed) for our small- and

medium-sized

enterprise customers as of December 31, 2021. In addition, we have Internet and mobile banking platforms to enhance customer convenience, reduce service delivery costs and allow our branch staff to focus on marketing and sales.

Strong capital base

. As of December 31, 2021, our consolidated equity totaled ￦29 trillion, and our total capital adequacy ratio was 15.03%. Our management team at the holding company carefully coordinates the capital and dividend plans of each of our subsidiaries and for the consolidated group to ensure that we optimize our capital position. We believe our strong capital base and coordinated capital management enable us to support growth of our core businesses and to pursue franchise-enhancing initiatives such as selective investments and acquisitions.

Strong and experienced management team.

benefit from our management team’s extensive experience accumulated with our subsidiaries and their predecessors. In January 2019,

Tae-Seung

Son assumed the role of our representative director, president and chief executive officer, which we believe enhanced the quality of our management team and our corporate governance. We also believe that the extensive experience of many members of our management team in the financial sector will help us to continue to strengthen our operations.

Strategy

We aim to continue to build our position as a comprehensive financial services provider in Korea, with a view to having our business platform and operating structure on par with those of leading global financial institutions. The key elements of our strategy are as follows:

Provide comprehensive financial services and maximize synergies among our subsidiaries through our financial holding company structure.

We plan to become a comprehensive financial services provider capable of developing and cross-selling a diverse range of products and services to our large existing base of retail and corporate banking customers, so that we can more effectively compete with leading domestic and international financial institutions. We believe that the adoption of a financial holding company structure will continue to help us increase customer satisfaction, generate synergies and maximize profitability, by creating an integrated system among our affiliated companies and allowing us to effectively provide various financial services, including comprehensive

one-stop

asset management services customized for clients, based on active expansion of

non-banking

and global business operations. One of the intended benefits of our financial holding company structure is that it enhances our ability to engage in mergers and acquisitions which we may decide to pursue as part of our strategy. For example, in an effort to expand our asset management services, we acquired equity

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interests in Woori Asset Management Corp., Woori Global Asset Management Co. and Woori Asset Trust Co., Ltd. in 2019 and Woori Financial Capital Co., Ltd. in 2020, which became our consolidated subsidiaries. We also established Woori Financial F&I Inc. as our direct consolidated subsidiary in January 2022. We may consider additionally acquiring or merging with other financial institutions, particularly in the

non-banking

sector, to achieve more balanced growth and further diversify our revenue base.

In addition, we believe our financial holding company structure gives us a competitive advantage over stand-alone banks and other financial institutions by:

•

allowing us to offer a more extensive range of financial products and services;

•

enabling us to share customer information, which is not permitted outside a financial holding company structure, thereby enhancing our risk management and cross-selling capabilities;

•

enhancing our ability to reduce costs in areas such as back-office processing and procurement;

•

enabling us to raise and manage capital on a centralized basis.

We aim to maximize the synergies from our diverse financial product and service offerings by cross developing and selling products and encouraging collaboration of operations among our subsidiaries. In particular, we promote collaborative projects across our investment banking, digital, wealth management and global operations.

Further improve our asset quality and strengthen our risk management practices.

Woori Bank was one of the earliest and most aggressive banks in Korea to actively reduce

non-performing

loans through charge-offs and sales to third parties has taken various measures to facilitate the disposal of its substandard or below loans. As a result of these and other initiatives, our ratio of

non-performing

loans to total loans has been declining and was 0.27% as of December 31, 2021.

One of our highest priorities is to maintain our strong asset quality and enhance our risk management practices on an ongoing basis. We have created a centralized group-wide risk management organization, installed a comprehensive warning and monitoring system, adopted uniform loan loss provisioning policies across all subsidiaries and implemented an advanced credit evaluation system at Woori Bank. We plan to undertake a series of group-wide reviews of our credit risk management procedures, as well as our risk management infrastructure, in order to develop and implement various measures to further standardize and improve our risk management procedures and systems.

We intend to vigorously maintain a manageable risk profile and balance that risk profile with adequate returns. We believe that our continual focus on upgrading our risk management systems and practices will enable us to maintain our strong asset quality, improve our financial performance and enhance our competitiveness.

Enhance customer profitability through optimization of channel usage, products and services for each customer segment.

Our extensive distribution network and wide range of quality products and services has enabled us to serve our customers effectively. However, we intend to further enhance the value proposition to our customers by differentiating products and delivery channels based on the distinct needs of different customer segments.

Retail customers

. We generally segment our retail customers into four groups: high net worth; mass affluent; middle class; and mass market. We believe we are relatively competitive in our core customer base, which includes mass affluent and middle class customers, and we serve these customers through our branches by selling customized higher margin services and products, such as investment advice, mutual funds, insurance and personal loans. For our mass market customers, we offer simple,

easy-to-understand

and relatively more standardized products such as basic deposit and lending products, including mortgage loans, and we encourage the use of alternative distribution channels such as the Internet, mobile banking and ATMs by our mass market customers such that we can serve them in a cost-efficient manner. We serve our high net worth individuals via branches and dedicated private banking centers staffed with experienced private bankers who offer sophisticated tailored financial services. In addition to serving retail customers based on segment, we also offer products and services based on customers’ life cycles to optimize our financial solutions for such customers.

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Corporate customers.

We continually and vigorously review our portfolio of large corporate and small- and

medium-sized

enterprise customers to refine our database of core accounts and industries in terms of profitability potential. We seek to expand our relationship beyond a pure lending relationship by promoting our foreign exchange, factoring, trade finance and investment banking services to our core small- and

medium-sized

enterprise customers and cross-selling our investment banking services, derivatives and other risk hedging products, as well as employee retirement products, to our core large corporate customers.

In addition to our customer segment-based marketing strategy, we aim to improve customer loyalty by strengthening customer retention and implementing a customer-focused sales culture and thereby develop a system pursuant to which our growth is facilitated by the growth of our customers.

Diversify our revenue base with a view to reducing our exposure to interest rate cycles and increasing profitability

. Currently, in line with the Korean banking industry, we derive a substantial majority of our revenues from our loan and other credit products. To reduce our traditional reliance on lending as a source of revenue and to increase our profitability, we have been seeking to further diversify our earnings base, in particular by focusing on

fee-based

services, such as foreign exchange, trade finance and derivatives products, investment banking and advisory investment trust services for our corporate customers and asset management and mutual funds, investment trust products and beneficiary certificates, and life and

non-life

insurance products for our retail customers.

In addition, we intend to carefully consider potential acquisitions or other strategic investments that fit within our overall strategy. When considering acquisitions, we will focus on opportunities that supplement the range of products and services we offer and strengthen our existing customer base, enable us to maintain our standard for asset quality and profitability and provide us with a reasonable return on our investment. We may also consider acquiring or merging with other financial institutions, particularly in the

non-banking

sector, to achieve more balanced growth and further diversify our revenue base.

Accelerate digital innovation

. The digital finance market has recently seen major growth due to the entry of fintech firms and the rapid digital transformations of our competitors, and the recent social distancing trends resulting from the

COVID-19

pandemic have only accelerated the digitalization of finance. We have actively engaged in such trends through the adoption of innovative initiatives and aim to become a leader in digitization. As part of such efforts, in May 2015, Woori Bank established a mobile financial service platform through the launch of the first mobile-only banking service in Korea called WiBee Bank, and in April 2017, K bank, formed by a consortium with KT Corporation and 20 other companies, in which we, through Woori Bank, own 12.7% of the equity with voting rights as of December 31, 2021, launched its services to become the first Internet-only bank in Korea.

We have also strengthened our alliances with information technology companies to provide innovative electronic payment methods, including Woori Samsung Pay with Samsung Electronics, which is a cardless ATM withdrawal system that utilizes smartphones. Through such partnership with Samsung Electronics, we introduced additional services that allow customers to open checking accounts and apply for debit cards from April 2019, and utilize currency exchange services using the Samsung Pay mobile application from May 2019.

In August 2016, we also launched a program to discover and provide support to innovative fintech startup companies in Korea, currently known as Digital Innovation Lab, or DinnoLab. In October 2019, DinnoLab established an office in Vietnam to support the overseas expansion of such startup companies. In June 2019, we introduced a robotic process automation system to improve our operations, minimize human error, support business activities and increase efficiency and productivity. In August 2019, we launched Woori WON Banking, our main mobile banking application, to provide enhanced digital platform services to our customers.

In May 2020, we launched our “Digital First, Change Everything” campaign and established the Digital Innovation Committee, which comprises certain executive officers, to focus on such group-wide digital strategies. In August 2020, we entered into a memorandum of understanding with KT Corporation to form a joint venture to collaborate on data-based financial services, including a business utilizing MyData, a government initiative for the pooling of customers’ data for the provision of financial services, and in January 2021, the

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Financial Services Commission granted MyData business licenses to Woori Bank and Woori Card. In addition, in 2021, we established the following four “Digital First” strategies to promote digital innovation by emphasizing the diffusion of digitalization over a medium- to long-term and creating visible results:

•

enhance our competitive strengths in mobile banking;

•

digitalize our channels and business;

•

establish competitive advantages in new markets and technologies; and

•

reorganize our digital foundation.

In 2021, pursuant to such strategies, we enhanced our mobile applications and established

one-on-one

channels that provide customized customer services, including “WON Concierge,” “WON Concierge PB” and “AI Consulting Bot,” an

AI-based

customer consultation service. We also established a second office of DinnoLab in October 2021 to enhance cooperation with startup companies and successfully launched MyData services in December 2021. Finally, we expanded our DevOps organization to provide the relevant personnel with additional autonomy and budget usage.

Expand presence in the global market

. We continually expand our global network mainly through Woori Bank and Woori Card and aim to strengthen our overseas operations to diversify our profit base, which is currently concentrated in Korea. We currently maintain, in aggregate, over 470 branches in over 20 countries and have made major strides in our overseas operations since our establishment of the first overseas branch of a Korean commercial bank in Tokyo, Japan in 1968. In December 2014, Woori Bank became the first Korean bank to be involved in a merger with a listed overseas bank when its subsidiary PT. Bank Woori Indonesia merged with and into PT. Bank Himpunan Saudara 1906 Tbk, which was renamed PT Bank Woori Saudara Indonesia 1906, Tbk. In October 2016, Woori Bank acquired a 51% equity interest in Wealth Development Bank, a thrift bank in the Philippines, and partnered with Vicsal Development Corporation, an operator of department stores and supermarkets in the Philippines and another major shareholder of Wealth Development Bank, to actively expand its base of local customers. In addition, in November 2016, Woori Bank obtained a banking license to establish a local subsidiary in Vietnam, Woori Bank Vietnam, which commenced operations in January 2017 and manages the local operations of Woori Bank’s branches in Vietnam. Furthermore, Woori Bank has expanded the scope of its operations in Myanmar, Indonesia, Cambodia and the Philippines in order to capitalize on the potential for high growth and profitability in Southeast Asia and established a representative office in Poland as well as additional branches in India. In June 2018, Woori Bank acquired VisionFund (Cambodia) Ltd., a microfinance deposit-taking institution in Cambodia, and renamed it WB Finance Co., Ltd, and in November 2018, Woori Bank established a German subsidiary, Woori Bank Europe, which is headquartered in Frankfurt. In February 2020, WB Finance Co., Ltd. merged with Woori Finance (Cambodia) Plc., a Cambodian microfinance institution, and in November 2021, it obtained a commercial banking license from the Cambodian financial authorities and began its nationwide operations as Woori Bank (Cambodia) PLC. Woori Bank has a presence in over 20 countries with over 470 branches and offices outside Korea. In 2016, Woori Card expanded overseas by establishing TuTu

Finance-WCI

Myanmar Co., Ltd., microfinance firm, in Myanmar.

Develop and increase productivity of our professional workforce

. We aim to retain the most qualified and highly-trained professionals in the market, and we intend to continue to focus on the development and training of our core professionals. In order to boost employee morale and productivity, we aim to create an environment that nurtures development and growth and accordingly have implemented performance-based incentive programs to recognize high performers on both an individual and business group level. In addition, a rigorous ethics management program and related measures have been instituted to reduce operational risk and help ensure compliance with our internal standards and policies.

Corporate Banking

We provide commercial banking services to large corporate customers (including government-owned enterprises) and small- and

medium-sized

enterprises in Korea. Currently, our corporate banking operations consist mainly of lending to and taking deposits from our corporate customers. We also provide ancillary

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services on a fee basis, such as inter-account transfers, transfers of funds from branches and agencies of a company to its headquarters and transfers of funds from a company’s customer accounts to the company’s main account. We provide our corporate banking services predominantly through Woori Bank.

The following table sets forth the balances and percentages of our total lending and total deposits represented by our large corporate and small- and

medium-sized

enterprise customer loans and deposits, respectively, and the number of such customers as of the dates indicated:


	As of December 31,
	2020					2021
	Amount		% of Total			Amount		% of Total

	(in billions of Won, except percentages)
Loans (1) :
Small- and medium-sized enterprise (2)	￦	97,476		32.1	%	￦	112,696		33.4	%
Large corporate (3)		35,994		11.8			37,268		11.0
Others (4)		23,833		7.8			29,753		8.8

Total	￦	157,303		51.8	%	￦	179,717		53.2	%

Deposits:
Small- and medium-sized enterprise	￦	56,809		19.5	%	￦	65,975		20.8	%
Large corporate		91,972		31.6			103,846		32.7

Total	￦	148,781		51.0	%	￦	169,821		53.4	%

Number of borrowers:
Small- and medium-sized enterprise		374,973					409,249
Large corporate		6,620					8,477

(1)	Not including due from banks, other financial assets and outstanding credit card balances, and prior to deducting allowance for credit losses and present value discount or reflecting deferred origination costs.

(2)	Loans to “small- and medium-sized enterprises” as defined in the Framework Act on Small and Medium Enterprises of Korea and related regulations (and including project finance loans to such enterprises). See “—Small- and Medium-Sized Enterprise Banking.”

(3)

Loans to companies that are not “small- and

medium-size

enterprises” as defined in the Framework Act on Small and Medium Enterprises of Korea and related regulations, and typically including companies that have assets of ￦12 billion or more and are therefore subject to external audit under the Act on External Audits of Stock Companies. See “—Large Corporate Banking.”

(4)	Includes loans to governmental agencies, foreign loans and other corporate loans.

Corporate loans we provide consist principally of the following:

•

working capital loans

, which are loans used for general working capital purposes, typically with a maturity of one year or less, including notes discounted and trade finance; and

•

facilities loans

, which are loans to finance the purchase of materials, equipment and facilities, typically with a maturity of three years or more.

On the deposit-taking side, we currently offer our corporate customers several types of corporate deposit products. These products can be divided into two general categories: demand deposits that have no restrictions on deposits or withdrawals, but which offer a relatively low interest rate; and time deposits from which withdrawals are restricted for a period of time, but offer higher interest rates. We also offer installment deposits, certificates of deposit and repurchase instruments. We offer varying interest rates on our deposit products depending upon the rate of return on our income-earning assets, average funding costs and interest rates offered by other nationwide commercial banks.

Small- and

Medium-Sized

Enterprise Banking

We use the term “small- and

medium-sized

enterprises” as defined in the Framework Act on Small and Medium Enterprises of Korea and related regulations. Under the Framework Act on Small and Medium Enterprises of Korea and related regulations, in order to qualify as a small- and

medium-sized

enterprise, (i) the

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enterprise’s total assets at the end of the immediately preceding fiscal year must be less than ￦500 billion, (ii) the enterprise must meet the average or annual sales revenue standards prescribed by the Enforcement Decree of the Framework Act on Small and Medium Enterprises that are applicable to the enterprise’s primary business, and (iii) the enterprise must meet the standards of substantial management independence from ownership as prescribed by the Enforcement Decree of the Framework Act on Small and Medium Enterprises. However, pursuant to an amendment to the Enforcement Decree of the Framework Act on Small and Medium Enterprises, which became effective in June 2020, an enterprise that qualifies as a small- and

medium-sized

enterprise pursuant to the above definition shall no longer be considered a small- and

medium-sized

enterprise if it is incorporated into, or is deemed to be incorporated into, a business group subject to certain disclosure requirements under the Monopoly Regulation and Fair Trade Act. Furthermore, certified social enterprises (as defined in the Social Enterprise Promotion Act of Korea), cooperatives, federations of cooperatives, social cooperatives and federations of social cooperatives, federations of heterogeneous cooperatives that consist of small- and

medium-sized

enterprises under the Framework Act on Small and Medium Enterprises (as defined in the Framework Act on Cooperatives), cooperatives, federations and national federations (as defined in the Consumer Cooperatives Act), as well as cooperatives, business cooperatives and federations of cooperatives (as defined in the Small and Medium Enterprise Cooperatives Act) that satisfy the requirements prescribed by the Framework Act on Small and Medium Enterprises, may also qualify as small- and

medium-sized

enterprises. The small- and

medium-sized

enterprise segment of the corporate banking market has grown significantly in recent years, including as a result of government measures to encourage lending to these enterprises. As of December 31, 2021, 20.5% of our small- and

medium-sized

enterprise loans were extended to borrowers in the manufacturing industry, 16.7% were extended to borrowers in the retail and wholesale industries, and 7.5% were extended to borrowers in the hotel, leisure and transportation industries.

We service our small- and

medium-sized

enterprise customers primarily

through Woori Bank’s network of branches and small- and

medium-sized

enterprise relationship managers. As of December 31, 2021, Woori Bank had stationed one or more relationship managers at 480 branches, of which 601 were located in the Seoul metropolitan area. The relationship managers specialize in servicing the banking needs of small- and

medium-sized

enterprise customers and concentrate their marketing efforts on developing new customers in this segment. As of December 31, 2021, Woori Bank had a total of 829 small- and

medium-sized

enterprise relationship managers stationed at its branches (as well as 492

non-stationed

employees who serve as relationship managers as needed).

In addition to increasing our dedicated staffing and branches, our strategy for this banking segment is to identify promising industry sectors and to develop and market products and services targeted towards customers in these sectors. We have also developed

in-house

industry specialists who can help us identify leading small- and

medium-sized

enterprises in, and develop products and marketing strategies for, these targeted industries. In addition, we operate customer loyalty programs at Woori Bank for our most profitable small-

and-

medium-sized

enterprise customers and provide them with benefits and services such as preferential rates, free seminars and workshops and complementary invitations to cultural events.

Lending Activities.

We provide both working capital loans and facilities loans to our small- and

medium-sized

enterprise customers. As of December 31, 2021, working capital loans and facilities loans accounted for 43.1% and 53.6% respectively, of our total small- and

medium-sized

enterprise loans. As of December 31, 2021, we had 409,249 small- and

medium-sized

enterprise borrowers.

As of December 31, 2021, secured loans and loans guaranteed by a third party accounted for 79.1% and 6.3%, respectively, of our small- and

medium-sized

enterprise loans. As of December 31, 2021, approximately 74.9% of the secured loans were secured by real estate and 0.6% were secured by deposits. Working capital loans generally have a maturity of one year, but may be extended on an annual basis for an aggregate term of three to five years. Facilities loans have a maximum maturity of 15 years.

When evaluating the extension of working capital loans and facilities loans, we review the creditworthiness and capability to generate cash of the small- and

medium-sized

enterprise customer. Furthermore, we take corporate guarantees and credit guarantee letters from other financial institutions and use deposits that the borrower has with us or securities pledged to us as collateral.

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The value of any collateral is defined using a formula that takes into account the appraised value of the property, any prior liens or other claims against the property and an adjustment factor based on a number of considerations including, with respect to property, the value of any nearby property sold in a court-supervised auction during the previous five years. We generally revalue any collateral on a periodic basis (every year for real estate (with apartments being revalued every month, subject to the availability of certain specified market value information), every year for equipment, every month for deposits and every week for stocks listed on a major Korean stock exchange) or if a trigger event occurs with respect to the loan in question.

Pricing.

We establish the pricing for our small- and

medium-sized

enterprise loan products based principally on transaction risk, our cost of funding and market considerations. Our lending rates are generally determined using our Credit Wizard system. We use our Credit Wizard system to manage our lending activities, and input data gathered from loan application forms, credit scores of borrowers and the appraisal value of collateral provided by external valuation experts into the Credit Wizard system and update such information periodically to reflect changes in such information. See “Item 11. Quantitative and Qualitative Disclosures about Market Risk—Credit Risk Management—Credit Evaluation and Approval.” We measure transaction risk using factors such as the credit rating assigned to a particular borrower and the value and type of collateral. Our system also takes into account cost factors such as the current market interest rate, opportunity cost and cost of capital, as well as a spread calculated to achieve a target rate of return. Depending on the price and other terms set by competing banks for similar borrowers, we may reduce the interest rate we charge to compete more effectively with other banks. Loan officers have limited discretion in deciding what interest rates to offer, and significant variations require review at higher levels. As of December 31, 2021, approximately 70.6% of our small- and

medium-sized

enterprise loans had interest rates that varied with reference to current market interest rates.

Large Corporate Banking

Our large corporate customers consist of companies that are not “small- and

medium-size

enterprises” as defined in the Framework Act on Small and Medium Enterprises of Korea and related regulations, and typically include companies that have assets of ￦12 billion or more and are therefore subject to external audit under the Act on External Audits of Stock Companies. As a result of our history and development, particularly the history of Woori Bank, we remain the main creditor bank to many of Korea’s largest corporate borrowers.

In terms of our outstanding loan balance, as of December 31, 2021, 39.1% of our large corporate loans were extended to borrowers in the finance and insurance industries, 35.0% were extended to borrowers in the manufacturing industry, and 7.9% were extended to borrowers in the retail and wholesale industries.

We service our large corporate customers primarily through Woori Bank’s network of dedicated corporate banking centers and general managers. Woori Bank operates 10 dedicated corporate banking centers, all of which are located in the Seoul metropolitan area. Each center is staffed with one or more general managers, and certain centers are headed by a senior general manager. Depending on the center, each such manager is responsible for large corporate customers that either are affiliates of a particular

chaebol

or operate in a particular industry or region. As of December 31, 2021, Woori Bank had a total of 89 general

managers who focus on marketing to and managing the accounts of large corporate customers.

Our strategy for the large corporate banking segment is to develop new products and cross-sell our existing products and services to our core base of large corporate customers. In particular, we continue to focus on marketing

fee-based

products and services such as foreign exchange and trade finance services, derivatives and other risk hedging products, investment banking services and advisory services. We have also been reviewing the credit and risk profiles of our existing customers as well as those of our competitors, with a view to identifying a target group of high-quality customers on whom we can concentrate our marketing efforts. In addition, we are seeking to continue to increase the

chaebol

-, region- and industry-based specialization of the managers at our dedicated corporate banking centers, including through the operation of a knowledge management database that allows greater sharing of marketing techniques and skills.

Lending Activities

. We provide both working capital loans and facilities loans to our large corporate customers. As of December 31, 2021, working capital loans (including domestic usance, bills bought and

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securities sold under repurchase agreements) and facilities loans accounted for 70.1% and 16.0% respectively, of our total large corporate loans.

Loans to large corporate customers may be secured by real estate or deposits or be unsecured. As of December 31, 2021, secured loans and loans guaranteed by a third party accounted for 17.3% and 4.3% respectively, of our large corporate loans. Since a relatively low percentage of our large corporate loan portfolio is secured by collateral, we may be required to establish larger allowances for credit losses with respect to any such loans that become

non-performing

or impaired. See “—Assets and Liabilities—Asset Quality of Loans—Loan Loss Provisioning Policy.” As of December 31, 2021, approximately 66.6% of the secured loans were secured by real estate and approximately 3.7% were secured by deposits. Working capital loans generally have a maturity of one year but may be extended on an annual basis for an aggregate term of three to five years. Facilities loans have a maximum maturity of 15 years.

We evaluate creditworthiness and collateral for our loans to large corporate customers in essentially the same way as we do for loans to small- and

medium-sized

enterprise customers. See “—Small- and

Medium-Sized

Enterprise Banking—Lending Activities.”

Pricing.

We determine the pricing of our loans to large corporate customers in the same way that we determine the pricing of our loans to small- and

medium-sized

enterprise customers. See “—Small- and

Medium-Sized

Enterprise Banking—Pricing.” As of December 31, 2021, approximately 84.0% of these loans had interest rates that varied with reference to current market interest rates.

Consumer Banking

We provide retail banking services to consumers in Korea. Our consumer banking operations consist mainly of lending to and taking deposits from our retail customers. We also provide ancillary services on a fee basis, such as wire transfers. While we have historically attracted and held large amounts of consumer deposits through our extensive branch network, our substantial consumer lending growth occurred principally in recent years, in line with the increase in the overall level of consumer debt in Korea. We provide our consumer banking services primarily through Woori Bank. See “—Branch Network and Other Distribution Channels.”

We classify our consumer banking customers based on their individual net worth and contribution to our consumer banking operations into four groups: high net worth; mass affluent; middle class; and mass market. We differentiate our products, services and service delivery channels with respect to these segments and target our marketing and cross-selling efforts based on this segmentation. With respect to the high net worth and mass affluent segments, we have established private banking operations to better service customers in these segments. See “—Private Banking Operations.” With respect to the middle class segment, we seek to use our branch-level sales staff to maximize the overall volume of products and services we provide. With respect to the mass market segment, we have focused on increasing our operating efficiency by encouraging customers to migrate to

low-cost

alternative service delivery channels, such as the Internet, call centers, mobile banking and ATMs.

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Lending Activities

We offer a variety of consumer loan products to households and individuals. We differentiate our product offerings based on a number of factors, including the customer’s age group, the purpose for which the loan is used, collateral requirements and maturity. The following table sets forth the balances and percentage of our total lending represented by our consumer loans as of the dates indicated:


	As of December 31,
	2020					2021
	Amount (1)		% of Total Loans (2)			Amount (1)		% of Total Loans (2)

	(in billions of Won, except percentage)
General purpose household loans	￦	43,850		14.4	%	￦	46,584		13.8	%
Mortgage loans		62,274		20.5			69,902		20.7
Home equity loans		31,995		10.5			31,875		9.4

Total	￦	138,119		45.4	%	￦	148,361		43.9	%

(1)	Not including outstanding credit card balances, and prior to deducting allowance for credit losses and present value discount or reflecting deferred origination costs.

(2)	Total loans do not include other financial assets and are before the deduction of allowance for credit losses and present value discount and the reflection of deferred origination costs.

Our consumer loans consist of:

•

general purpose household loans,

which are loans made to customers for any purpose (other than mortgage and home equity loans), and include overdraft loans, which are loans extended to customers to cover insufficient funds when they withdraw funds from their demand deposit accounts with us in excess of the amount in such accounts up to a limit established by us; and

•

mortgage loans,

which are loans made to customers to finance home purchases, construction, improvements or rentals, and

home equity loans

, which are loans made to customers secured by their homes to ensure loan repayment.

For secured loans, including mortgage and home equity loans, we generally lend up to 70% of the collateral value (except in areas of high speculation designated by the government where we generally limit our lending to 40% of the appraised value of collateral) minus the value of any lien or other security interest that is prior to our security interest. In calculating the collateral value for real estate for such secured consumer loans (which principally consists of residential properties), we generally use the fair value of the collateral as appraised by KB Land, the Korea Real Estate Board or other external appraisal experts, which is collated in our Credit Wizard system. We generally revalue collateral on a periodic basis. As of December 31, 2021, the revaluation frequency was every year for real estate (with apartments being revalued every month, subject to the availability of certain specified market value information), every year for equipment, every month for deposits and every week for stocks listed on a major Korean stock exchange.

A borrower’s eligibility for general purpose household loans is primarily determined by such borrower’s creditworthiness. In reviewing a potential borrower’s loan application, we also consider the suitability of the borrower’s proposed use of funds, as well as the borrower’s ability to provide a first-priority mortgage. A borrower’s eligibility for a home equity loan is primarily determined by such borrower’s creditworthiness (including as determined by our internal credit scoring protocols) and the value of the collateral property, as well as any third party guarantees of the borrowed amounts.

We also offer a variety of collective housing loans, including loans to purchase property or finance the construction of housing units, loans to contractors to be used for working capital purposes, and loans to educational institutions and

non-profit

entities to finance the construction of dormitories. Collective housing loans subject us to the risk that the housing units will not be sold. As a result, we review the probability of the sale of the housing unit when evaluating the extension of a loan. We also review the borrower’s creditworthiness and the suitability of the borrower’s proposed use of funds. Furthermore, we take a lien on the land on which the

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housing unit is to be constructed as collateral. If the collateral is not sufficient to cover the loan, we also take a guarantee from the Housing Finance Credit Guarantee Fund as security.

General Purpose Household Loans

Our general purpose household loans may be secured by real estate (other than homes), deposits or securities. As of December 31, 2021, approximately ￦29,118 billion, or 62.5%, of our general purpose household loans were unsecured, although some of these loans were guaranteed by a third party. Overdraft loans are primarily unsecured and typically have a maturity between one and three years.

Pricing

. The interest rates on our general purpose household loans are either a periodic floating rate (which is based on a base rate determined for three-month,

six-month

or twelve-month periods, further adjusted to account for the borrower’s credit score and our opportunity cost) or a fixed rate that reflects our internal cost of funding and similar adjustments, but taking into account interest rate risks.

Our interest rates also incorporate a margin based on, among other things, the type of collateral (if any), priority with respect to any security, our target

loan-to-value

ratio and loan durat

on. We also can adjust the applicable rate based on current or expected profit contribution of the customer. Our lending rates are generally determined by our Credit Wizard system. The applicable interest rate is determined at the time of the drawdown of the loan. We also charge a termination fee in the event a borrower repays the loan prior to maturity. As of December 31, 2021, approximately 64.1% of our general purpose household loans had floating interest rates.

Mortgage and Home Equity Lending

We provide customers with a number of mortgage and home equity loan products that have flexible features, including terms, repayment schedules, amounts and eligibility for loans. The maximum term of our mortgage and home equity loans is typically 35 years. Most of our mortgage and home equity loans provided prior to January 2016 have an interest-only payment period of 10 years or less. However, the Korea Federation of Banks’ implementation of its Guidelines on Banks’ Mortgage Loan Screening changed the default interest-only payment period to one year or less, which applies to loans that were originated subsequent to the effective date of the Guidelines in January 2016. With respect to mortgage and home equity loans, we determine the eligibility of borrowers based on the borrower’s personal information, transaction history and credit history using our Credit Wizard system. See “Item 11. Quantitative and Qualitative Disclosures about Market Risk—Credit Risk Management—Credit Evaluation and Approval.” The eligibility of a borrower that is participating in a housing lottery will depend on proof that it has paid a deposit or can obtain a guarantee from a Korean government-related housing fund.

As of December 31, 2021, approximately 61.4% of our mortgage and home equity loans were secured by residential or other property, 27.3% of our mortgage and home equity loans were guaranteed by Korean government-related housing funds and 2.8% of our mortgage and home equity loans, contrary to general practices in the United States, were unsecured (although the use of proceeds from mortgage and home equity loans is restricted for the purpose of financing home purchases and some of these loans were guaranteed by a third party). One reason that a portion of our mortgage and home equity loans are unsecured is that we, along with other Korean banks, provide advance loans to borrowers for the down payment of new housing (particularly apartments) that is in the process of being built. Once construction is completed, which may take several years, these mortgage and home equity loans become secured by the new housing purchased by these borrowers. As of December 31, 2021, we had issued unsecured construction loans relating to housing where construction was not completed in the amount of ￦2,885 billion. For the year ended December 31, 2021, the average initial

loan-to-value

ratio of our mortgage loans

and home equity loans was approximately 53.8% and 32.4% respectively, compared to 54.8% and 39.2% for the year ended December 31, 2020. The average

loan-to-value

ratio of our mortgage loans and home equity loans as of December 31, 2021 was approximately 41.7% and 33.1% respectively, compared to 48.2% and 40.7% as of December 31, 2020.

Pricing.

The interest rates for our mortgage and home equity loans are determined on essentially the same basis as our general purpose household loans, except that for mortgage and home equity loans we place

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significantly greater weight on the value of any collateral that is being provided to secure the loan. The base rate we use in determining the interest rate for our mortgage and home equity loans is identical to the base rate we use to determine pricing for our general purpose household loans. As of December 31, 2021, approximately 65.4% of our outstanding mortgage and home equity loans had floating interest rates.

Private Banking Operations

Our private banking operations within Woori Bank aim to service our high net worth and mass affluent retail customers. As of December 31, 2021, we had 241,952 customers who qualified for private banking services, representing 1.0% of our total retail customer base. Of the total deposits of our retail unit of ￦109.8 trillion as of December 31, 2021, high net worth and mass affluent customers accounted for 66.7%.

Through our private bankers, we provide financial and real estate advisory services to our high net worth and mass affluent customers. We also market differentiated investment and banking products and services to these segments, including beneficiary certificates, overseas mutual fund products, specialized bank accounts and credit cards. In addition, we have developed a customer loyalty program for our private banking customers that provides preferential rate and fee benefits and awards. We have also segmented our private banking operations by introducing exclusive private client services for high net worth customers who individually maintain a deposit balance of at least ￦100 million. We believe that our private banking operations will allow us to increase our revenues from our existing high net worth and mass affluent customers, as well as attract new customers in these segments.

Woori Bank has 652 branches that offer private banking services. These branches are staffed by 682 private bankers, and almost all of the branches are located in metropolitan areas, including Seoul.

Woori Bank also operates an advisory center in Seoul for its private banking clients, which employs 18 specialists advising on matters of law, tax, real estate, risk assessment and investments.

Deposit-Taking Activities

We are one of the largest deposit holders among Korean banks, in large part due to our nationwide branch network. The balance of our deposits from retail customers was ￦115,835 billion as of December 31, 2020 and ￦120,520 billion as of December 31, 2021, which constituted 39.7% and 37.9% respectively, of the balance of our total deposits.

We offer diversified deposit products that target different customers with different needs and characteristics. These deposit products fall into five general categories:

•

demand deposits,

which either do not accrue interest or accrue interest at a lower rate than time, installment or savings deposits. The customer may deposit and withdraw funds at any time and, if the deposits are interest-bearing, they accrue interest at a fixed or variable rate depending on the period and/or amount of deposit;

•

time deposits,

which generally require a customer to maintain a deposit for a fixed term during which interest accrues at a fixed or floating rate. Early withdrawals require penalty payments. The term for time deposits typically ranges from one month to five years;

•

savings deposits

, which allow the customer to deposit and withdraw funds at any time and accrue interest at a fixed rate set by us depending upon the period and amount of deposit;

•

certificates of deposit

, the maturities of which range from 30 days to five years, with a required minimum deposit of ￦10 million. Interest rates on certificates of deposit vary with the length of deposit and prevailing market rates. Certificates of deposit may be sold at face value or at a discount with the face amount payable at maturity; and

•

other deposits

, which consist mainly of deposits for notes payable, trust accounts, deposits for cash management accounts, housing installments and mutual installments.

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The following table sets forth the percentage of our total retail and corporate deposits represented by each deposit product category as of December 31, 2021:


Demand Deposits	Time Deposits	Savings Deposits	Certificates of Deposit	Other Deposits
12.85%	43.98%	40.67%	1.13%	1.37%

We offer varying interest rates on our deposit products depending on market interest rates as reflected in average funding costs, the rate of return on our interest-earning assets and the interest rates offered by other commercial banks. Generally, the interest payable is the highest on certificate of deposit accounts and decreases with other deposits and time deposits and savings deposit accounts receiving relatively less interest, and demand deposits accruing little or no interest.

We also offer deposits in foreign currencies and a specialized deposit product, the apartment application comprehensive deposit, which is a monthly installment comprehensive savings program providing the holder with a preferential right to subscribe for new national housing units constructed under the Housing Act or new privately constructed housing units. This deposit product requires monthly installments of ￦20,000 to ￦500,000, terminates when the holder is selected as a subscriber for a housing unit and accrues interest at variable rates depending on the term.

The Monetary Policy Committee of the Bank of Korea imposes a reserve requirement on Won currency deposits of commercial banks based generally on the type of deposit instrument. The minimum reserve requirement ratio is 7% of the average balance of Won currency demand deposits outstanding. See “—Supervision and Regulation—Principal Regulations Applicable to Banks—Liquidity.” Ongoing regulatory reforms have removed all controls on lending rates and deposit rates (except for the prohibition on interest payments on current account deposits).

The Depositor Protection Act provides for a deposit insurance system where the KDIC guarantees to depositors the repayment of their eligible bank deposits. The KDIC insures a maximum of ￦50 million per individual for deposits and interest in a single financial institution, regardless of when the deposits were made or the size of the deposits. See “—Supervision and Regulation—Principal Regulations Applicable to Banks—Deposit Insurance System.” We pay a quarterly premium of 0.02% of our average deposits and a quarterly special contribution of 0.025% of our average deposits, in each case for the relevant quarter. For the year ended December 31, 2021, we paid an aggregate of ￦406 billion of such premiums and contributions.

Branch Network and Other Distribution Channels

Woori Bank had a total of 768 banking branches in Korea as of December 31, 2021, which was one of the most extensive networks of branches among Korean commercial banks. In recent years, demand in Korea for mutual funds and other asset management products as well as bancassurance products has been rising. These products require an extensive sales force and customer interaction to sell, further emphasizing the need for a large branch network. As a result, an extensive branch network is important to attracting and maintaining retail customers, as they generally conduct a significant portion of their financial transactions through bank branches. We believe that our extensive branch network in Korea helps us to maintain our retail customer base, which in turn provides us with a stable and relatively low cost funding source.

The following table presents the geographical distribution of Woori Bank’s banking branch network in Korea as of December 31, 2021:


	Total
	Number		% of Total

Area
Seoul		343		44.7	%
Six largest cities (other than Seoul)		136		17.7
Other		289		37.6

Total		768		100.0	%

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In order to maximize access to our products and services, we have established an extensive network of ATMs and cash dispensers, which are located in branches as well as unmanned outlets. Woori Bank had 4,296 ATMs and cash dispensers as of December 31, 2021.

We actively promote the use of alternative service delivery channels in order to provide convenient service to customers. We also benefit from customers’ increasing use of these channels, as they allow us to maximize the marketing and sales functions at the branch level, reduce employee costs and improve profitability. The following tables set forth information, for the periods indicated, relating to the number of transactions and the fee revenue of our alternative service delivery channels with respect to Woori Bank.


	For the year ended December 31,
	2019		2020		2021
ATMs (1) :
Number of transactions (millions)		272		213		182
Fee income (billions of Won)	￦	32	￦	25	￦	22
Telephone banking:
Number of users		6,336,310		6,315,007		6,298,041
Number of transactions (millions)		143		126		108
Fee income (billions of Won)	￦	1.5	￦	0.9	￦	0.9
Internet banking:
Number of users		17,975,675		18,545,393		19,187,033
Number of transactions (millions)		10,116		17,082		19,047
Fee income (billions of Won)	￦	199	￦	191	￦	210

(1)	Includes cash dispensers.

Most of our electronic banking transactions do not generate fee income as many of those transactions are free of charge, such as balance inquiries, consultations with customer representatives or transfers of money. This is particularly true for telephone banking services, where a majority of the transactions are balance inquiries or consultations with customer representatives, although other services such as money transfers are also available.

Our automated telephone banking system offers a variety of services, including inter-account fund transfers, balance and transaction inquiries and customer service inquiries. We also operate a call center that handles calls from customers, engages in telemarketing and assists in our collection efforts.

Our Internet banking services include balance and transaction inquiries, money transfers, loan applications, bill payment and foreign exchange transactions. We seek to maintain and increase our Internet banking customer base by focusing largely on our younger customers and those that are able to access the Internet easily (such as office workers) as well as by developing additional Internet-based financial services and products. We also develop new products to target different types of customers with respect to our Internet banking services, and have developed a service that enables private banking customers to access their accounts on a website that provides specialized investment advice. We also offer online escrow services.

In addition, we provide mobile banking services to our customers, which is available to all our Internet-registered users. These services allow our customers to complete selected banking transactions through major Korean telecommunications networks using their smart phones or other mobile devices. We provide general mobile banking services through our Woori WON Banking mobile application and are expanding our mobile banking services to Southeast Asia.

We also offer our

“Win-CMS”

service to corporate customers of Woori Bank, which provides an integrated electronic cash management system and

in-house

banking platform for such customers.

Credit Cards

We offer credit card products and services mainly to consumers and corporate customers in Korea. In April 2013, as a part of our strategy to enhance our credit card operations and increase its synergies with our other businesses, Woori Bank effected a horizontal

spin-off

of its credit card business, and the former credit card

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business of Woori Bank was operated by its wholly-owned subsidiary, Woori Card, until September 2019, when we conducted a “comprehensive stock exchange” under Korean law with Woori Bank, pursuant to which Woori Card became our direct and wholly-owned subsidiary. See “Item 4.A. History and Development of the Company—Establishment of Woori Financial Group—Reorganization and Expansion of Woori Financial Group.”

As of December 31, 2021, Woori Card’s market share based on transaction volume was approximately 9.2%, which ranked Woori Card as the sixth largest credit card issuer in Korea, according to the Financial Statistics Information System, which is maintained by the Financial Supervisory Service.

Our credit card operations benefit from Woori Card’s ownership of a 7.65% equity stake in BC Card. BC Card is

co-owned

by KT Corporation, which is one of Korea’s largest telecommunications companies, and other Korean financial institutions, and operates the largest merchant payment network in Korea as measured by transaction volume. This ownership stake allows us to outsource production and delivery of new credit cards, the preparation of monthly statements, management of merchants and other ancillary services to BC Card for our credit card operations. In addition, in October 2019, Woori Bank acquired a 20% equity interest in Lotte Card Co., Ltd., which was the sixth largest credit card issuer in Korea at the time of acquisition, according to the Financial Statistics Information System, which is maintained by the Financial Supervisory Service.

Products and Services

We currently have the following principal brands of credit cards outstanding:

•

a “Woori” brand;

•

a “BC Card” brand; and

•

a “Visa” brand.

We issue “Visa” brand cards under a

non-exclusive

license agreement with Visa International Service Association and also issue “MasterCard,” “JCB” and “Union Pay” brand cards under a

non-exclusive,

co-branding

agreement with BC Card.

We offer a number of different services to holders of our credit cards. Generally, these services include:

•

credit purchase services, which allow cardholders to purchase merchandise or services on credit and repay such credit on a

lump-sum

or installment basis;

•

cash advance services from ATMs and bank branches; and

•

credit card loans, which are loans that cardholders can obtain based on streamlined application procedures.

Unlike in the United States and many other countries, where most credit cards are revolving cards that allow outstanding balances to be rolled over from month to month so long as a required minimum percentage is repaid, cardholders in Korea are generally required to pay for their

non-installment

purchases as well as cash advances within approximately 15 to 60 days of purchase or advance, depending on their payment cycle.

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The following tables set forth certain data relating to the credit card operations of Woori Card (including BC Cards and Visa Cards issued through the BC Card consortium) as of the dates or for the periods indicated:


	As of or for the year ended December 31,
	2019			2020			2021

	(in billions of Won, unless indicated otherwise)
Number of credit card holders (at year end) (thousands of holders)
General accounts		13,000			13,157			12,400
Corporate accounts		555			563			549

Total		13,555			13,720			12,949

Active ratio (1)		55.00	%		56.53	%		61.18	%
Credit card interest and fees
Installment and cash advance interest	￦	243		￦	226		￦	225
Annual membership fees		86			90			92
Merchant fees		918			888			958
Other fees		640			644			711

Total	￦	1,885		￦	1,848		￦	1,986

Charge volumes
General purchase	￦	64,762		￦	60,228		￦	65,517
Installment purchase		7,912			10,225			11,765
Cash advance		4,862			4,314			4,884
Card loan		3,664			4,610			4,104

Total	￦	81,200		￦	79,377		￦	86,270

Outstanding balances (at year end)
General purchase	￦	3,243		￦	3,060		￦	3,550
Installment purchase		1,969			2,022			2,589
Cash advance		585			483			674
Card loan		2,611			2,997			2,964

Total	￦	8,408		￦	8,562		￦	9,776

Average outstanding balances
General purchase	￦	3,292		￦	3,199		￦	3,439
Installment purchase		2,046			1,934			2,303
Cash advance		591			523			552
Card loan		2,567			2,861			3,272

Total	￦	8,496		￦	8,517		￦	9,567

Delinquency ratios (2)
Less than 1 month		1.19	%		0.85	%		0.74	%
From 1 month to 3 months		0.65			0.51			0.49
From 3 months to 6 months		0.65			0.51			0.32
Over 6 months		0.00			0.00			0.00

Total		2.49	%		1.88	%		1.55	%

Non-performing loan ratio (3)		0.87	%		0.71	%		0.49	%
Gross charge-offs	￦	281		￦	246		￦	220
Recoveries		60			65			65

Net charge-offs	￦	221		￦	181		￦	155

Gross charge-off ratio (4)		3.31	%		2.89	%		2.30	%
Net charge-off ratio (5)		2.61	%		2.13	%		1.62	%

(1)	Represents the ratio of accounts used at least once within the past month to total accounts as of the end of the relevant year.

(2)

Our delinquency ratios may not fully reflect all delinquent amounts relating to our outstanding balances since a certain portion of delinquent credit card balances (defined as balances one day or more past due) were restructured into loans and were not treated as being delinquent at the time of conversion or for a period of time thereafter. Including all restructured loans, outstanding balances overdue by more than one month accounted for 1.7% of our credit card balances as of December 31, 2021.

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(3)

Represents the ratio of balances that are more than three months overdue to total outstanding balances as of the end of the relevant year. These ratios do not include the following amounts of previously delinquent credit card balances restructured into loans that were classified as normal or precautionary as of December 31, 2019, 2020 and 2021:


	As of December 31,
	2019		2020		2021

	(in billions of Won)
Restructured loans	￦	154	￦	123	￦	82

(4)

Represents the ratio of gross charge-offs for the year to average outstanding balances for the year. Our

charge-off

policy is to charge off balances which are more than six months past due (including previously delinquent credit card balances restructured into loans that are more than six months overdue from the point at which the relevant balances were so restructured), except for those balances with a reasonable probability of recovery.

(5)	Represents the ratio of net charge-offs for the year to average outstanding balances for the year.

We offer a diverse range of credit card products within our various brands. Factors that determine which type of card a particular cardholder may receive include net worth, age, location, income level and the particular programs or services that may be associated with a particular card. Targeted products that we offer include:

•

cards that offer additional benefits, such as frequent flyer miles and award program points that can be redeemed for services, products or cash;

•

gold cards, platinum cards and other preferential members’ cards that have higher credit limits and provide additional services;

•

corporate and affinity cards that are issued to employees or members of particular companies or organizations; and

•

revolving credit cards and cards that offer travel services and insurance.

In recent years, credit card issuers in Korea have agreed with selected cardholders to restructure their delinquent credit card account balances as loans that have more gradual repayment terms, in order to retain fundamentally sound customers who are experiencing temporary financial difficulties and to increase the likelihood of eventual recovery on those balances. In line with industry practice, we have restructured a portion of our delinquent credit card account balances as loans. The general qualifications to restructure delinquent credit card balances as loans are that the delinquent amount be more than one month overdue and in excess of ￦1 million. The terms of the restructured loans usually require the payment of approximately 10% to 20% of the outstanding balance as a down payment and that they be guaranteed by a third party and carry higher interest rates than prevailing market rates. These loans are usually required to be repaid by the borrower in installments over terms ranging from three months to 60 months. As of December 31, 2021, the total amount of our restructured loans was ￦87 billion. Because restructured loans are not initially recorded as being delinquent, our delinquency ratios do not fully reflect all delinquent amounts relating to our outstanding credit card balances.

Payments and Charges

Revenues from our credit card operations consist principally of cash advance charges, merchant fees, interest income from credit card loans, interest on late and deferred payments, and annual membership fees paid by cardholders.

Each cardholder is allocated an aggregate credit limit in respect of all cards issued under his or her account and each month. We advise each cardholder of the credit limit relating to the cards in his or her monthly billing statement. Credit limits in respect of card loans are established separately. We conduct ongoing monitoring of all cardholders and accounts, and may reduce the credit limit or cancel an existing cardholder’s card based on current economic conditions, receipt of new negative credit data from third party sources or the cardholder’s score under the credit risk management systems we use to monitor their behavior, even if the cardholder continues to make timely payments in respect of his or her cards. We consider an account delinquent if the payment due is not received on the first monthly payment date on which such payment was due, and late fees are immediately applied. Late fee charges and computation of the delinquency period are based on each outstanding

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unpaid transaction or installment, as applicable. See “Item 11. Quantitative and Qualitative Disclosures about Market Risk—Credit Risk Management—Credit Review and Monitoring.”

Payments on amounts outstanding on our credit cards must be made (at the cardholder’s election at the time of purchase) either in full on each monthly payment date, in the case of

lump-sum

purchases, or in equal monthly installments over a fixed term from two months to 36 months, in the case of installment purchases. Cardholders may prepay installment purchases at any time without penalty. Payment for cash advances must be made on a lump sum basis. Payments for card loans must be made on an equal principal installment basis over a fixed term from three months up to a maximum of 60 months, up to a maximum loan amount of ￦50 million.

No interest is charged on

lump-sum

purchases that are paid in full by the monthly payment date. For installment purchases, we charge a fixed rate of interest on the outstanding balance of the transaction amount, based on the installment period selected at the time of purchase. For a new cardholder, we currently apply an interest rate between approximately 9.5% and 19.9% per annum as determined by the cardholder’s application system score. See “Item 11. Quantitative and Qualitative Disclosures about Market Risk—Credit Risk Management—Credit Evaluation and Approval—Credit Card Approval Process” and “—Credit Review and Monitoring—Credit Card Review and Monitoring.”

For cash advances, finance charges start accruing immediately following the cash withdrawal. We currently charge a periodic finance charge on the outstanding balance of cash advance of approximately 6.4% to 19.9% per annum. The periodic finance charge assessed on such balances is calculated by multiplying the daily installment balances for each day during the billing cycle by the applicable periodic finance charge rate, and aggregating the results for each day in the billing period. In addition to finance charges, cardholders using cash advance networks operated by companies that are not financial institutions (such as Hannet and NICE) are charged a minimum commission of ￦700 and a maximum of ￦1,000 per withdrawal.

We also generally charge a basic annual membership fee up to ￦1,000,000 for our credit cards, which is determined based on various factors including the type of card, and whether affiliation options are selected by the cardholder. For certain cards, such as the Card Standard-Setter Biz, we will waive membership fees if customers charge above a certain amount.

We outsource the management of merchants to BC Card. We charge merchant fees to merchants for processing transactions. Merchant fees vary depending on the type of merchant and the total transaction amounts generated by the merchant. As of December 31, 2021, we charged merchants an average of 1.35% of their respective total transaction amounts. In addition to merchant fees, we receive nominal interchange fees for international card transactions.

Capital Markets Activities

We engage in capital markets activities for our own account and for our customers. Our capital markets activities include securities investment and trading, derivatives trading, asset securitization services and investment banking.

Securities Investment and Trading

We invest in and trade securities for our own account, in order to maintain adequate sources of liquidity and to generate interest and dividend income and capital gains. As of December 31, 2021, our investment portfolio, which consists of financial assets at fair value through other comprehensive income and securities at amortized cost, and our trading portfolio, which consists of financial assets at fair value through profit or loss (excluding deposits, derivative assets and loans), had a combined total book value of ￦64,166 billion and represented 14.3% of our total assets.

Our trading and investment portfolios consist primarily of Korean treasury securities and debt securities issued by Korean government agencies, local governments or government-invested enterprises, and debt

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securities issued by financial institutions. As of December 31, 2021, we held debt securities with a total book value of ￦62,749 billion, of which:

•

debt securities at amortized cost accounted for ￦17,086 billion, or 27.2%;

•

debt securities at fair value through other comprehensive income accounted for ￦38,127 billion, or 60.8%; and

•

debt securities at fair value through profit or loss accounted for ￦7,536 billion, or less than 12.0%.

Of these amounts, as of December 31, 2021, debt securities issued by the Korean government amounted to ￦8,880 billion, or 52.0% of our debt securities at amortized cost, ￦4,728 billion, or 12.4% of our debt securities at fair value through other comprehensive income, and ￦996 billion, or 13.2% of our debt securities at fair value through profit or loss.

From time to time, we also purchase and sell equity securities for our securities portfolios. Our equity securities consist primarily of equities listed on the KRX KOSPI Market or the KRX KOSDAQ Market. As of December 31, 2021:

•

equity securities at fair value through other comprehensive income had a book value of ￦993 billion, or 2.5% of our securities at fair value through other comprehensive income portfolio; and

•

equity securities at fair value through profit or loss accounted for ￦425 billion, or 5.3% of our securities at fair value through profit or loss portfolio.

Funds that are not used for lending activities are used for investment and liquidity management purposes, including investment and trading in securities. See “—Assets and Liabilities—Securities Investment Portfolio.”

For a discussion of our risk management policies with respect to our securities trading activities, see “Item 11. Quantitative and Qualitative Disclosures about Market Risk—Market Risk Management—Market Risk Management for Trading Activities.”

Derivatives Trading

We offer derivatives products and engage in derivatives trading, mostly for our corporate customers. Our trading volume was ￦371,500 billion in 2019, ￦353,659 billion in 2020 and ￦390,720 billion in 2021. Our aggregate net trading gain (loss) from derivatives for the years ended December 31 2019, 2020 and 2021 was ￦(12) billion, ￦320 billion and ￦323 billion respectively.

We provide and trade a number of derivatives products principally through sales or brokerage accounts for our customers, including:

•

interest rate swaps, options and futures, relating principally to Won interest rate risks;

•

index futures and options, relating to stock market fluctuations;

•

cross currency swaps, relating to foreign exchange risks, largely for Won against U.S. dollars;

•

foreign exchange forwards, swaps, options and futures, relating to foreign exchange risks;

•

commodity derivatives, which we provide to customers that wish to hedge their commodities exposure; and

•

credit derivatives, which we provide to financial institutions that wish to hedge existing credit exposures or take on credit exposure to generate revenue.

Our derivatives operations focus on addressing the needs of our corporate clients to hedge their risk exposure and on hedging our risk exposure resulting from such client contracts. We also engage in derivatives trading activities to hedge the interest rate and foreign currency risk exposure that arises from our own assets and liability positions. In addition, we engage in proprietary trading of derivatives, such as index options and futures within our regulated open position limits, for the purpose of generating capital gains.

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The following shows the estimated fair value of derivatives we held or had issued for trading purposes as of the dates indicated:


	As of December 31,
	2020				2021
	Estimated Fair Value of Assets		Estimated Fair Value of Liabilities		Estimated Fair Value of Assets		Estimated Fair Value of Liabilities

	(in billions of Won)
Currency derivatives	￦	5,926	￦	5,288	￦	3,922	￦	3,348
Interest rate derivatives		325		530		157		314
Equity derivatives		651		642		724		905

Total	￦	6,902	￦	6,460	￦	4,803	￦	4,567

For a discussion of our risk management policies with respect to our derivatives trading activities, see “Item 11. Quantitative and Qualitative Disclosures about Market Risk—Market Risk Management—Market Risk Management for Trading Activities.”

Asset Securitization Services

We are active in the Korean asset-backed securities market. Through Woori Bank, we participate in asset securitization transactions in Korea by acting as arranger, trustee or liquidity provider. In 2021, we were involved in asset securitization transactions with an initial aggregate issue amount of ￦1,298 billion and generated total fee income of approximately ￦1.2 billion in connection with such transactions. The securities issued in asset securitization transactions are sold mainly to institutional investors buying through Korean securities firms.

Investment Banking

Through Woori Bank and Woori Investment Bank, we engage in investment banking activities in Korea. In addition, we provide project finance and financial advisory services, in the area of social overhead capital projects such as highway, port, power and water and sewage projects, as well as structured finance, leveraged

buy-out

financing, equity and venture financing and mergers and acquisitions financing services. In 2021, the net

non-interest

income from Woori Bank’s investment banking activities (including its Hong Kong subsidiary’s investment banking activities) was approximately ￦427.1 billion, while the net

non-interest

income from Woori Investment Bank’s investment banking activities was approximately ￦58.9 billion.

We believe that significant opportunities exist for us to leverage our existing base of large corporate and small- and

medium-sized

banking customers to cross-sell investment banking services. We intend to expand our investment banking operations to take advantage of these opportunities, with a view to increasing our fee income and further diversifying our revenue base.

International Banking

Through Woori Bank, we engage in various international banking activities, including foreign exchange services and dealing, import and export-related services, offshore lending, syndicated loans and foreign currency securities investment. These services are provided primarily to our domestic customers and overseas subsidiaries and affiliates of Korean corporations and, to a limited extent, to local companies and individuals. We also raise foreign currency funding through our international banking operations. In addition, we provide commercial banking services to retail and corporate customers in select overseas markets.

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The table below sets forth certain information regarding our foreign currency assets and borrowings:


	As of December 31,
	2020		2021

	(in millions of US$)
Total foreign currency assets	US$	46,150	US$	51,680
Foreign currency borrowings
Call money		383		268
Long-term borrowings		3,858		4,234
Short-term borrowings		7,681		6,965

Total foreign currency borrowings	US$	11,922	US$	11,467

The table below sets forth the overseas subsidiaries and direct branches of Woori Bank in operation as of December 31, 2021:


Business Unit (1)		Location
Subsidiaries:
Woori America Bank		United States
Woori Bank China Limited		China
PT Bank Woori Saudara Indonesia 1906 Tbk		Indonesia
AO Woori Bank		Russia
Banco Woori Bank do Brasil S.A.		Brazil
Woori Global Markets Asia Limited		China (Hong Kong)
Woori Bank Vietnam Limited		Vietnam
Wealth Development Bank		Philippines
Woori Finance Myanmar Co., Ltd.		Myanmar
Woori Bank (Cambodia) PLC (2)		Cambodia
Woori Bank Europe		Germany
Branches, Agencies and Representative Offices:
London Branch		United Kingdom
Tokyo Branch		Japan
Singapore Branch		Singapore
Hong Kong Branch		China (Hong Kong)
Bahrain Branch		Bahrain
Dhaka Branch		Bangladesh
Gaeseong Branch (3)		Korea
New York Agency		United States
Los Angeles Branch		United States
Chennai Branch		India
Sydney Branch		Australia
Dubai Branch		United Arab Emirates
Gurgaon Branch		India
Mumbai Branch		India
Kuala Lumpur Representative Office		Malaysia
Yangon Representative Office		Myanmar
Iran Representative Office (4)		Iran
Katowice Representative Office		Poland

(1)	Does not include subsidiaries and branches in liquidation or dissolution.

(2)

In November 2021, with the approval of the Cambodian financial authorities, WB Finance Co., Ltd. obtained a commercial banking license and was renamed as Woori Bank (Cambodia) PLC. See “Item 4.A. History and Development of the Company—Establishment of Woori Financial Group—Reorganization and Expansion of Woori Finance Holdings and Woori Bank.”

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(3)	Due to the shutdown of the Gaeseong Industrial Complex in February 2016, the Gaeseong Branch is currently located at our corporate headquarters in Seoul.

(4)	No longer operational (i.e., no employees or office space) since December 2018 following the re-imposition of sanctions.

The principal activities of the overseas branches and subsidiaries of Woori Bank are providing trade financing and local currency funding for Korean companies and Korean nationals operating in overseas markets as well as servicing local customers and providing foreign exchange services in conjunction with our headquarters. On a limited basis, such overseas branches and subsidiaries also engage in the investment and trading of securities of foreign issuers.

Woori America Bank currently operates over 25 branches in states including New York, New Jersey, Maryland, Virginia, Pennsylvania and California and provides retail and corporate banking services targeted towards the Korean-American community. As of December 31, 2021, Woori America Bank had total assets of US$3,008 million and shareholders’ equity of US$421 million.

In November 2007, Woori Bank established a local subsidiary in China, Woori Bank (China) Limited, which currently has branches in Beijing, Shanghai, Shenzhen, Suzhou, Tianjin, Dalian, Chengdu, Weihai, Chongqing and Shenyang. Woori Bank also established a local subsidiary in Russia, AO Woori Bank, in January 2008 and it currently has branches in Moscow and St. Petersburg and a representative office in Vladivostok.

In October 2016, Woori Bank acquired a 51% equity interest in Wealth Development Bank, a thrift bank in the Philippines with a network of 25 branches and over 429 employees as of December 31, 2021.

In November 2016, Woori Bank obtained a banking license to establish a local subsidiary in Vietnam, Woori Bank Vietnam, which commenced operations in January 2017 and currently operates 16 branches throughout the country.

Woori Bank is also expanding its network of branches in South and Southeast Asia through our other local subsidiaries, including PT Bank Woori Saudara Indonesia 1906 Tbk, Woori Finance Myanmar and Wealth Development Bank. In June 2018, Woori Bank acquired VisionFund (Cambodia) Ltd., a microfinance deposit-taking institution in Cambodia, and renamed it WB Finance Co., Ltd. In February 2020, WB Finance Co., Ltd. merged with Woori Finance (Cambodia) Plc., a Cambodian microfinance institution, and in November 2021, it obtained a commercial banking license from the Cambodian financial authorities and began its nationwide operations as Woori Bank (Cambodia) PLC. As of December 31, 2021, Woori Bank (Cambodia) PLC had total assets of US$1,169 million and shareholders’ equity of US$272 million.

In November 2018, Woori Bank established a German subsidiary, Woori Bank Europe, which is headquartered in Frankfurt and conducts our European operations. As of December 31, 2021, Woori Bank Europe had total assets of US$357 million and shareholders’ equity of US$95 million.

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Asset Management

Trust Management Services

Money Trusts.

Through Woori Bank, we offer money trust products to our customers and manage the funds they invest in money trusts. The money trusts we manage are generally trusts with a fixed life that allow investors to share in the investment performance of the trust in proportion to the amount of their investment in the trust. We principally offer the following types of money trust products:

•

retirement trusts

, which invest funds received from corporations or organizations and manage these funds until they are withdrawn to pay retirement funds to a corporation’s officers or employees or an organization’s members;

•

pension trusts

, which invest funds received until pension benefits are due to be disbursed to a pension beneficiary; and

•

specified money trusts

, which invest cash received as trust property at the direction of the trustors and, once the trust matures, disburse the principal and any gains to the trust beneficiaries.

We also offer other types of money trusts that have a variety of differing characteristics with respect to, for example, maturities and tax treatment.

Under Korean law, the assets of our money trusts are segregated from our assets and are not available to satisfy the claims of our creditors. We are, however, permitted to maintain deposits of surplus funds generated by trust assets in certain circumstances as set forth under the Financial Investment Services and Capital Markets Act and the regulations thereunder. Except for specified money trusts, we have investment discretion over all money trusts, which are pooled and managed jointly for each type of trust. Specified money trusts are established on behalf of individual customers, typically corporations, which direct our investment of trust assets.

We receive fees for our trust management services that are generally based upon a percentage, ranging between 0.01% and 1.2%, of the net asset value of the assets under management. We also receive penalty payments when customers terminate their trust deposit prior to the original contract maturity. Fees that we received for trust management services (including those fees related to property trust management services, described below, but excluding those fees relating to guaranteed trusts, which are eliminated in consolidation) amounted to ￦171 billion in 2019, ￦86 billion in 2020 and ￦117 billion in 2021.

For some of the money trusts we manage, we have guaranteed the principal amount of an investor’s investment as well as a fixed rate of interest. We no longer offer new money trust products where we guarantee both the principal amount and a fixed rate of interest. We continue to offer pension-type money trusts that provide a guarantee of the principal amount of an investor’s investment.

The following table shows the balances of our money trusts by type as of the dates indicated. We consolidate within our financial statements trust accounts for which we guarantee both the repayment of the principal amount and a fixed rate of interest and trust accounts for which we guarantee only the repayment of the principal amount, while we do not consolidate performance trusts on which we do not guarantee principal or interest:


	As of December 31,
	2020		2021

	(in billions of Won)
Principal and interest guaranteed trusts	￦	—	￦	—
Principal guaranteed trusts		1,361		1,275
Performance trusts		37,315		42,249

Total	￦	38,676	￦	43,524

The trust assets we manage consist principally of investment securities, loans made from the trusts and amounts due from banks. The investment securities consist of government-related debt securities, corporate debt securities, including bonds and commercial paper, equity securities and other securities. As of December 31,

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2021, our money trusts had invested in securities with an aggregate book value of ￦11,645 billion, which accounted for approximately 26.2% of our money trust assets. Debt securities accounted for ￦6,561 billion of this amount.

Our money trusts also invest, to a lesser extent, in equity securities, including beneficiary certificates issued by investment trust management companies. As of December 31, 2021, equity securities held by our money trusts amounted to ￦5,084 billion, which accounted for approximately 11.4% of our money trust assets. Of this amount, ￦18 billion was from money trusts over which we had investment discretion and the remainder was from specified money trusts.

Loans made by our money trusts are similar in type to the loans made by our banking operations. As of December 31, 2021, our money trusts had made loans in the aggregate principal amount of ￦9,955 billion (excluding loans to our banking operations of ￦1,811 billion), which accounted for approximately 22.4% of our money trust assets.

The amounts due from banks consist of local currency and foreign currencies. As of December 31, 2021, such amounts due from banks totaled ￦20,447 billion, which accounted for approximately 46.0% of our money trust assets.

If the income from a money trust for which we provide a guarantee is less than the amount of the payments we have guaranteed, we will need to pay the amount of the shortfall with funds from special reserves maintained in our trust accounts, followed by basic fees from that money trust and funds from our banking operations. We net any payments we make as a result of these shortfalls against any gains we receive from other money trusts. No material payments of any such shortfall amounts were made in 2021.

Property Trusts.

Through Woori Bank and Woori Asset Trust Co., Ltd., we also offer property trust management services, where we manage

non-cash

assets in return for a fee.

Non-cash

assets include mostly receivables (including those securing asset-backed securities), real property and securities, but can also include movable property such as artwork. Under these arrangements, we render escrow or custodial services for the property in question and collect fees in return.

In 2021, our property trust fees generally ranged from 0.003% to 5.00% of total assets under management, depending on the type of trust account product.

As of December 31, 2021, the balance of our property trusts totaled ￦69,529 billion.

Property trusts are not consolidated within our financial statements.

Investment Trust Management

Through Woori Asset Management Corp., Woori Global Asset Management Co. and Woori Private Equity Asset Management Co. Ltd., we offer investment trust products to our customers and manage the assets invested by them in investment trusts. The investment trust products we offer generally take the form of beneficiary certificates evidencing an ownership interest in a particular investment trust. We currently offer various different types of investment trust products, including:

•

securities funds

, where securities (excluding certain securities relating to, among others, real estate, ship investment companies, social infrastructure and overseas resource development) consist of more than 50% of their assets;

•

real estate funds

, where real estate (including investments in, among others, derivatives based on underlying assets consisting of real estate and loans to corporations relating to real estate development) consist of more than 50% of their assets;

•

special asset funds

, where assets other than securities and real estate consist of more than 50% of their assets;

•

mixed asset funds

, which do not have the restrictions that apply to securities funds, real estate funds and special asset funds; and

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•

money market funds

, which invest in short-term financial products, such as call loans, commercial paper, certificates of deposit and short-term treasury notes and corporate bonds.

The investment trusts we manage are generally trusts that allow investors to share in the investment performance of the trust in proportion to the amount of their investment in the trust. We have investment discretion over all investment trusts. Investment trusts calculate the value of their assets as often as required by the relevant laws and regulations, and any change in the overall valuation of their assets will be reflected in the price of their beneficiary certificates. The trust will disburse principal and any return on investment based on the price of their beneficiary certificates at maturity or upon the receipt of a redemption request, as applicable. In addition to investment trust products, we provide our institutional clients with various investment advisory and discretionary asset investment services.

The following table shows the balances of our investment trusts by type as of December 31, 2021. Under IFRS, we do not consolidate investment trusts due to the fact that the assets invested are not our assets but customer assets:


	As of December 31,
	2021 (1)

	(in billions of Won)
Securities funds	￦	24,860
Real estate funds		997
Special asset funds		1,955
Mixed asset funds		323
Money market funds		8,208

Total	￦	36,342

(1)	Includes assets under management by Woori Private Equity Asset Management Co., Ltd. See “—Other Businesses—Private Equity.”

We receive fees for our investment trust management services consisting of management fees in connection with establishing, operating and managing the investment trust, asset management fees and related advisory fees. These fees are calculated by multiplying the daily net asset value of the trust by a percentage provided in the trust documentation. Fees accrue on a daily basis and are paid out as expenses periodically. Fees from our investment trust management services amounted to ￦18 billion in 2021.

Although our current customer base consists mainly of institutional investors, we have been seeking to market our investment trust products to retail customers through our consumer banking network. We believe that significant opportunities exist for us to leverage our existing base of consumer banking customers to cross-sell our investment trust products. We intend to focus on the development of new products tailored to particular customer segments and the enhancement of sales and distribution capabilities through each of our marketing channels to meet our customers’ needs.

Trustee and Custodian Services Relating to Securities Investment Trusts

Through Woori Bank, as of December 31, 2021, we acted as a trustee for 4,210 securities investment trusts, mutual funds and other investment funds. We receive a fee for acting as a trustee and generally perform the following functions:

•

receiving payments made in respect of such securities;

•

executing trades in respect of such securities on behalf of the investment fund, based on instructions from the relevant investment fund management company; and

•

in certain cases, authenticating beneficiary certificates issued by investment trust management companies and handling settlements in respect of such beneficiary certificates.

For the year ended December 31, 2021, our fee income from such services was ￦21 billion.

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Other Businesses

Management of National Housing and Urban Fund

In April 2008, through Woori Bank, we were selected to be the lead manager of the National Housing and Urban Fund. The National Housing and Urban Fund provides financial support to

low-income

households in Korea by providing mortgage financing and construction loans for projects to build small- and

medium-sized

housing. As of December 31, 2021, outstanding housing loans from the National Housing and Urban Fund amounted to approximately ￦133.3 trillion, of which we originated approximately ￦75.7 trillion. The activities of the National Housing and Urban Fund are funded primarily by the issuance of national housing bonds, which must be purchased by persons and legal entities wishing to make real estate-related registrations and filings, and by subscription savings deposits held at the National Housing and Urban Fund.

In return for managing the operations of the National Housing and Urban Fund, we receive a monthly fee. This fee consists of a fund raising fee and a loan origination fee. The fund raising fee is based on the number of National Housing and Urban Fund subscription savings deposit accounts opened and the level of activity for existing accounts and the number of National Housing and Urban Fund bonds issued or redeemed. The loan origination fee is based on the number of new National Housing and Urban Fund loans and the number of National Housing and Urban Fund mortgage loans to contractors constructing housing units that are assumed by the individual buyers of housing units and the level of activity for existing loans during each month. We received total fees of approximately ￦47.8 billion for managing the National Housing and Urban Fund in 2021.

Bancassurance

The term “bancassurance” refers to the marketing and sale by commercial banks of insurance products manufactured within a group of affiliated companies or by third-party insurance companies. Through Woori Bank, we market a wide range of bancassurance products. In 2021, we generated fee income of approximately ￦95.1 billion through the marketing of bancassurance products. We believe that we will be able to continue to develop an important new source of

fee-based

revenues by expanding our offering of these products. We have entered into bancassurance marketing arrangements with 30 insurance companies, including TongYang Life Insurance, Hanwha Life Insurance, Samsung Life Insurance, Samsung Fire and Marine Insurance, Hyundai Fire and Marine Insurance and American International Assurance, and plan to enter into additional insurance product marketing arrangements with other leading insurance companies whose names and reputation are likely to be familiar to our customer base.

Private Equity

In 2016, Woori Private Equity Co., Ltd., which was established in October 2005, registered as a specialized private placement collective investment business under the Financial Investment Services and Capital Markets Act and changed its name to Woori Private Equity Asset Management Co., Ltd., or Woori PEAM. Such registration enabled it to manage specialized private placement collective investment vehicles (which include hedge funds) targeting professional investors, in addition to its existing business of making long-term and strategic investments in buyout target companies and actively involving itself in their management. From 2018 to 2021, Woori PEAM launched four private equity funds for which it acted as general partner, Woori-Hanwha Eureka Private Equity Fund, the size of which was approximately ￦43.5 billion, Woori-Shinyoung

Growth-Cap

Private Equity Fund I, the size of which was approximately ￦163 billion,

Woori-Q

Corporate Restructuring Private Equity Fund, the size of which was approximately ￦155 billion and Arden Woori Apparel 1st Private Equity Fund, the size of which was approximately ￦21 billion. As of December 31, 2021, Woori PEAM managed a total of 14 alternative investment funds (other than the four private equity funds mentioned above) with total investments of ￦1.2 trillion and total managed assets of ￦605 billion. We expect that Woori PEAM will continue to provide us with investment opportunities, through identifying potential investees suffering from inefficient management and effecting financial restructuring and strategic reorientation in those investees so as to enhance their enterprise value, as well as serve as a source of business for other segments by managing specialized private placement collective investment vehicles for professional investors.

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Competition

We compete with other financial institutions in Korea, including principally nationwide and regional Korean commercial banks and branches of foreign banks operating in Korea. In addition, in particular segments such as credit cards, securities and insurance, we compete with specialized financial institutions focusing on such segments. Some of the financial institutions we compete with are larger in terms of asset size and customer base and have greater financial resources or more specialized capabilities than us or our subsidiaries.

Competition in the Korean financial market has been and is likely to remain intense. In particular, in the area of our core banking operations, most Korean banks have been focusing on retail customers and small- and

medium-sized

enterprises in recent years, although they have begun to increase their exposure to large corporate borrowers, and have been focusing on developing fee income businesses as increasingly important sources of revenue. In the area of credit cards, increased competition in the payments market and the resulting increase in our marketing activities, as well as the general trend towards lower merchant fees, are adversely affecting profits in the segment. In our new capital segment, our profitability may be adversely affected by increasing competition in the automobile finance and lease finance markets.

Furthermore, the following general regulatory reforms in the Korean financial industry have increased competition among banks and other financial institutions in Korea:

•

In August 2020, amendments to the Credit Information Use and Protection Act established the framework for MyData services in Korea, which allow the collection of customers’ personal credit

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information from credit information providers/users or public institutions upon the customer’s request and subject to compliance requirements, so that customers may access such collected personal credit information in whole or in part. In January 2021, the Financial Services Commission granted licenses to 28 companies to operate as MyData service providers, 14 of which were fintech firms, and competition between traditional financial institutions and fintech firms is expected to intensify, particularly with respect to asset management services. MyData services are currently offered through Woori WON Banking, Woori Bank’s main mobile banking application, as well as through Woori Card’s mobile application.

The-K

Non-Life

We expect that consolidation in the Korean financial industry will continue. Other financial institutions may seek to acquire or merge with other entities, and the financial institutions resulting from this consolidation may, by virtue of their increased size and business scope, provide significantly greater competition for us. We also believe that foreign financial institutions, many of which have greater experience and resources than we do, may seek to compete with us in providing financial products and services either by themselves or in partnership with existing Korean financial institutions. See “Item 3.D. Risk Factors—Risks relating to competition.”

Assets and Liabilities

The tables below and accompanying discussions provide selected financial highlights regarding our assets and liabilities on a consolidated basis.

Certain information with respect to our loan portfolio and the asset quality of our loans is presented below on a basis consistent with certain requirements of the Financial Services Commission applicable to Korean financial institutions, which differs (as described below where applicable) from the presentation of such information in our financial statements prepared in accordance with IFRS, as we believe that such alternative presentation allows us to provide additional details regarding our loan portfolio and the asset quality of our loans which would be helpful to our investors.

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Loan Portfolio

As of December 31, 2021, the balance of our total loan portfolio was ￦337,835 billion. As of December 31, 2021, 89.0% of our total loans were

Won-denominated

loans and 11.0% of our total loans were denominated in other currencies.

Of the ￦37,279 billion of foreign currency-denominated loans as of that date, approximately 71.7% represented “foreign” loans provided by Woori Bank to offshore entities and individuals. Woori Bank extends such foreign loans primarily through its overseas branches to affiliates of large Korean manufacturing companies for trade financing and working capital.

Except where we specify otherwise, all loan amounts stated below do not include amounts due from banks and other receivables and are prior to deducting allowance for credit losses and present value discount or reflecting deferred origination costs, and all corporate loan amounts stated below include loans made to the Korean government and government-owned agencies and banks.

Loan Types

The following table presents loans by type as of the dates indicated. Total loans reflect our loan portfolio, including past due amounts.


	As of December 31,
	2020			2021

	(in billions of Won)
Domestic:
Corporate (1) :
Commercial and industrial	￦	114,525		￦	131,695
Lease financing		858			1,743
Trade financing		7,293			8,341
Other commercial		15,931			16,443

Total corporate		138,607			158,222
Consumer:
General purpose household		40,210			42,164
Mortgage		62,274			69,902
Home equity		31,995			31,875

Total consumer		134,479			143,941
Credit cards		8,543			9,757

Total domestic		281,629			311,920
Foreign:
Corporate (2) :
Commercial and industrial		16,384			18,926
Trade financing		1,482			1,270
Other commercial		829			1,299

Total corporate		18,695			21,495
Consumer		3,641			4,420

Total foreign		22,336			25,915

Total loans (3)	￦	303,965		￦	337,835

Less: present value discount		(7	)		(7	)
Less: deferred origination costs (fees)		744			858
Less: allowance for credit losses		(1,909	)		(1,887	)

Total loans, net	￦	302,793		￦	336,799

(1)	Including loans made to banks and the Korean government and government-owned agencies.

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(2)	Including loans made to banks.

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

Loan Concentrations

On a consolidated basis, our exposure to any single borrower or any single

chaebol

is limited by law to 20% and 25%, respectively, of our “net aggregate equity capital,” as defined under the Enforcement Decree of the Financial Holding Company Act. See “—Supervision and Regulation—Principal Regulations Applicable to Financial Holding Companies—Financial Exposure to Any Individual Customer and Major Investor.” In addition, Woori Bank’s exposure to any single borrower or any single

chaebol

is limited by the Bank Act to 20% and 25%, respectively, of its total Tier I and Tier II capital.

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20 Largest Exposures by Borrower

As of December 31, 2021, our exposures to our 20 largest borrowers or issuers totaled ￦64,683 billion and accounted for 12.2% of our total exposures. The following table sets forth our total exposures to those borrowers or issuers as of that date:


	Loans								Guarantees and acceptances						Amounts classified as substandard or below (3)
Company (Credit Rating) (1)	Won currency		Foreign currency		Equity securities		Debt securities		Guarantees and acceptances		Total exposures		Collateral (2)		Amounts classified as substandard or below (3)

	(in billions of Won)
Korean Government (4)	￦	—	￦	—	￦	—	￦	14,101	￦	—	￦	14,101	￦	—	￦	—
Korea Development Bank (AAA)		—		36		—		12,078		—		12,114		—		—
Korea Housing Finance Corporation (AAA)		—		—		—		8,242		—		8,242		—		—
Industrial Bank of Korea (AAA)		73		—		—		7,027		—		7,100		7		—
The Bank of Korea (4)		790		—		—		5,121		—		5,911		—		—
MIRAE ASSET SECURITIES.CO., LTD. (AA)		4,028		—		—		20		—		4,048		—		—
Export-Import Bank of Korea (AAA)		—		415		—		1,888		—		2,303		—		—
MERITZ SECURITIES CO.,LTD (AA-)		1,704		—		—		—		—		1,704		—		—
KIWOOM Securities Co., Ltd. (AA-)		1,361		—		10		1		—		1,372		—		—
KOREA INVESTMENT & SECURITIES CO,LTD. (AA)		960		—		—		—		—		960		—		—
SAMSUNG ELECTRONICS CO,.LTD (AAA)		250		627		11		—		—		888		—		—
Samsung Heavy Industries Co., Ltd. (BBB+)		—		121		—		63		686		870		—		—
Korea SMEs and Startups Agency (AAA)		—		—		—		846		—		846		—		—
SHINHAN BANK (AAA)		641		36		—		106		5		788		445		—
Nonghyup Bank (AAA)		228		156		—		236		—		620		215		—
Hana Financial Investment Co., Ltd. (AA)		610		—		—		—		—		610		—		—
Doosan Heavy Industries & Construction (BBB-)		195		23		—		—		358		576		50		—
HYUNDAI MOTOR COMPANY (AA+)		17		495		1		—		38		551		—		—
Hyundai Heavy Industries Co., Ltd. (A-)		—		40		—		44		458		542		—		—
POSCO INTERNATIONAL (AA-)		—		338		—		—		199		537		2		—

Total	￦	10,857	￦	2,287	￦	22	￦	49,773	￦	1,744	￦	64,683	￦	719	￦	—

(1)	Credit ratings are from a domestic credit rating agency, including Korea Ratings Corporation, NICE Investors Service Co. and Korea Investors Services Inc., as of December 31, 2021. If multiple ratings were available, the lowest one is indicated.

(2)	The value of collateral is appraised based on future cash flow and observable market price.

(3)	Classification is based on the Financial Services Commission’s asset classification criteria.

(4)	Credit rating is unavailable.

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As of December 31, 2021, 7 of these top 20 borrowers or issuers were companies belonging to the 34 largest

chaebols

in Korea. See “Item 3.D. Risk Factors—Risks relating to our corporate credit portfolio—We have exposure to the largest Korean commercial conglomerates, known as “

chaebols

,” and, as a result, financial difficulties of

chaebols

may have an adverse impact on us.”

Exposure to Chaebols

As of December 31, 2021, 5.1% of our total exposure was to the 34 largest

chaebols

in Korea. The following table shows, as of December 31, 2021, our total exposures to the 10

chaebols

to which we have the largest exposure:


	Loans								Guarantees and acceptances						Amounts Classified as substandard or below (2)
Chaebol	Won currency		Foreign currency		Equity securities		Debt securities		Guarantees and acceptances		Total exposures		Collateral (1)		Amounts Classified as substandard or below (2)

	(in billions of Won)
Mirae Asset	￦	4,075	￦	—	￦	—	￦	252	￦	—	￦	4,327	￦	300	￦	—
Hyundai Motors		1,306		1,329		1		10		678		3,324		—		—
Samsung		570		1,457		13		137		1,028		3,205		80		—
GS		102		1,915		1		62		553		2,613		2,488		—
LG		1,018		302		—		10		182		1,512		—		—
Hyundai Heavy Industries		382		118		—		—		970		1,470		—		—
SK		882		265		3		37		253		1,440		125		—
Hanhwa		804		203		—		23		74		1,104		380		—
Korea Investment		960		—		—		—		—		960		—		—
Lotte		496		178		—		164		65		903		—		—

Total	￦	10,595	￦	5,767	￦	18	￦	695	￦	3,783	￦	20,858	￦	3,374	￦	—

(1)	The value of collateral is appraised based on future cash flow and observable market price.

(2)	Classification is based on the Financial Services Commission’s asset classification criteria.

Loan Concentration by Industry

The following table shows, as of December 31, 2021, the aggregate balance of our domestic and foreign corporate loans by industry concentration and as a percentage of our total corporate lending:


	Aggregate corporate loan balance		Percentage of total corporate loan balance

	(in billions of Won)
Industry
Manufacturing	￦	42,159		23.4	%
Construction		24,015		13.4
Financial and insurance		22,985		12.8
Hotel, leisure and transportation		10,548		5.9
Retail and wholesale		5,953		3.3
Government and government agencies		422		0.2
Other		73,635		41.0

Total	￦	179,717		100.0	%

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Maturity Analysis

The following table sets out, as of December 31, 2021, the scheduled maturities (time remaining until maturity) of our loan portfolio:


	1 year or less		Over 1 year but not more than 5 years		Over 5 years but not more than 15 years		Over 15 years		Total

	(in billions of Won)
Loans in local currency	￦	123,774	￦	81,011	￦	10,705	￦	57,794	￦	273,284
Loans in foreign currencies		9,906		9,665		3,491		1,447		24,509
Domestic banker’s usance		3,401		2		—		—		3,403
Credit card accounts		7,908		1,759		41		49		9,757
Bills bought in foreign currencies		5,310		—		—		—		5,310
Bills bought in local currency		265		—		—		—		265
Factoring receivables		10		7		—		—		17
Advances for customers on guarantees		23		4		—		—		27
Private placement bonds		194		281		24		20		519
Securitized loans		10		2,797		67		—		2,874
Call loans		3,481		—		—		—		3,481
Bonds purchased under resale agreements		10,317		16		—		—		10,333
Financial lease receivables		30		1,144		—		—		1,174
Installment financial bonds		50		2,339		493		—		2,882
Others		—		—		—		—		—

Total loans	￦	164,679	￦	99,025	￦	14,821	￦	59,310	￦	337,835

A significant portion of our loans with maturities of one year is renewed annually. We typically roll over our working capital loans and consumer loans (other than those payable in installments) after we conduct our normal loan review in accordance with our loan review procedures. Under our internal guidelines, we may generally extend working capital loans on an annual basis for an aggregate term of five years. Those guidelines also allow us to generally extend consumer loans other than home equity loans for another term on an annual basis for an aggregate term of up to five years (and home equity loans for an aggregate term of up to 10 years).

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Interest Rates

The following table shows, as of December 31, 2021, the total amount of our loans due after one year that have fixed interest rates and variable or adjustable interest rates:


	Fixed Rate (1)		Variable or adjustable rates (2)		Total

	(in billions of Won)
Loans in local currency	￦	53,838	￦	95,671	￦	149,509
Loans in foreign currencies		4,782		9,821		14,603
Domestic banker’s usance		—		2		2
Credit card accounts		1,849		—		1,849
Bills bought in foreign currencies		—		—		—
Bills bought in local currency		—		—		—
Factoring receivables		7		—		7
Advances for customers on guarantees		4		—		4
Private placement bonds		289		36		325
Securitized loans		2,351		514		2,865
Call loans		—		—		—
Bonds purchased under resale agreements		16		—		16
Financial lease receivables		1,144		—		1,144
Installment financial bonds		2,832		—		2,832
Others		—		—		—

Total loans	￦	67,112	￦	106,044	￦	173,156

(1)	Fixed rate loans are loans for which the interest rate is fixed for the entire term.

(2)	Variable or adjustable rate loans are loans for which the interest rate is not fixed for the entire term.

For additional information regarding our management of interest rate risk, see “Item 11. Quantitative and Qualitative Disclosures about Market Risk—Market Risk Management—Asset and Liability Management.”

Asset Quality of Loans

Loan Classifications

The Financial Services Commission generally requires Korean financial institutions to analyze and classify their assets by quality into one of five categories for reporting purposes. In making these classifications, we take into account a number of factors, including the financial position, profitability and transaction history of the borrower, and the value of any collateral or guarantee taken as security for the extension of credit. This classification method, and our related provisioning policy, is intended to fully reflect the borrower’s capacity to repay.

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The following is a summary of the asset classification criteria we apply for corporate and consumer loans, based on the asset classification guidelines of the Financial Services Commission. Credit card receivables are subject to classification based on the number of days past due, as required by the Financial Services Commission. We also apply different criteria for other types of credits such as loans to the Korean government or to government-related or controlled entities, certain bills of exchange and certain receivables.


Asset Classification		Characteristics
Normal		Credits extended to customers that, based on our consideration of their business, financial position and future cash flows, do not raise concerns regarding their ability to repay the credits.

Precautionary		Credits extended to customers that: • based on our consideration of their business, financial position and future cash flows, show potential risks with respect to their ability to repay the credits, although showing no immediate default risk; or • are in arrears for one month or more but less than three months.

Substandard		Either: • credits extended to customers that, based on our consideration of their business, financial position and future cash flows, are judged to have incurred considerable default risks as their ability to repay has deteriorated; or • the portion that we expect to collect of total loans (1) extended to customers that have been in arrears for three months or more, (2) extended to customers that have incurred serious default risks due to the occurrence of, among other things, final refusal to pay their debt instruments, entry into liquidation or bankruptcy proceedings, or closure of their businesses, or (3) extended to customers who have outstanding loans that are classified as “doubtful” or “estimated loss.”

Doubtful		Credits exceeding the amount we expect to collect of total credits to customers that: • based on our consideration of their business, financial position and future cash flows, have incurred serious default risks due to noticeable deterioration in their ability to repay; or • have been in arrears for three months or more but less than 12 months.

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Asset Classification		Characteristics

Estimated Loss		Credits exceeding the amount we expect to collect of total credits to customers that: • based on our consideration of their business, financial position and future cash flows, are judged to have to be accounted as a loss as the inability to repay became certain due to serious deterioration in their ability to repay; • have been in arrears for 12 months or more; or • have incurred serious risks of default in repayment due to the occurrence of, among other things, final refusal to pay their debt instruments, liquidation or bankruptcy proceedings or closure of their business.

Loan Loss Provisioning Policy

Under IFRS 9

Financial Instruments

, or IFRS 9, we establish allowances for credit losses based on expected credit losses instead of incurred losses by assessing changes in expected credit losses and recognizing such changes as impairment loss (or reversal of impairment loss) in profit or loss. Under IFRS 9, the allowance required to be established with respect to a loan or financial asset is the amount of the expected

12-month

credit loss or the expected lifetime credit loss for the applicable loan or financial asset, according to three stages of credit risk deterioration since initial recognition.

If additions or changes to the allowance for credit losses are required, then we record provisions for credit loss, which are included in impairment losses due to credit loss and treated as charges against current income. Credit exposures that we deem to be uncollectible, including actual loan losses, net of recoveries of previously

charged-off

amounts, are charged directly against the allowance for credit losses. See “Item 5.A. Operating Results—Critical Accounting Policies—Impairment of Loans and Allowance for Credit Losses.”

We conclude that a loan is impaired when it is under one of the following conditions:

•

when the principal is past due by 90 days or more due to significant deterioration in credit;

•

for loans overdue for less than 90 days, when it is determined that not even a portion of the loan will be recovered unless a claim action, such as disposal of collateral, is taken; or

•

when other objective indicators of impairment have been noted for the loan.

In addition, if our allowance for credit losses is deemed insufficient for regulatory purposes, we compensate for the difference by recording a planned regulatory reserve for credit loss, which is segregated within our retained earnings. The level of planned regulatory reserve for credit loss required to be recorded is equal to the amount by which our allowance for credit losses under IFRS is less than the greater of (x) the amount of expected loss calculated using the internal ratings-based approach under Basel II and as approved by the Financial Supervisory Service and (y) the required amount of credit loss reserve calculated based on guidelines prescribed by the Financial Services Commission. The following table sets forth the Financial Services Commission’s guidelines applicable to our subsidiary Woori Bank for the minimum percentages of the outstanding principal amount of the relevant loans or balances that the credit loss reserve must cover:


Loan classifications	Corporate (1)	Consumer	Credit card receivables (2)	Credit card loans (3)
Normal	0.85% or above	1% or above	1.1% or above	2.5% or above
Precautionary	7% or above	10% or above	40% or above	50% or above
Substandard	20% or above	20% or above	60% or above	65% or above
Doubtful	50% or above	55% or above	75% or above	75% or above
Estimated loss	100%	100%	100%	100%

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(1)	Subject to certain exceptions pursuant to the Banking Industry Supervision Regulations of Korea.

(2)	Applicable for credit card receivables for general purchases of products or services.

(3)	Applicable for cash advances, card loans and revolving loan receivables.

The process to determine the allowances for

off-balance

sheet positions under IFRS is similar to the methodology used for loans. Any loss amounts are recognized as a provision in the consolidated statements of financial position within liabilities and charged to the consolidated statement of income as a component of the impairment losses due to credit loss.

The actual amount of credit losses we incur may differ from our loss estimates as a result of changing economic conditions, changes in industry or geographic concentrations, or other factors. We monitor the differences between our estimated and actual incurred credit losses, and we undertake detailed periodic assessments of both individual loans and credit portfolios, the models we use to estimate incurred credit losses in those portfolios and the adequacy of our overall allowances.

Loan Aging Schedule

The following table shows our loan aging schedule (excluding accrued interest) as of the dates indicated. In line with industry practice, we have restructured a portion of our delinquent credit card balances as loans.


	As of December 31, 2021
	Normal					Past due by 1 month or less					Past due by 1-3 months					Past due by 3-6 months					Past due by more than 6 months					Total

	(in billions of Won, except percentages)
	Amount		%			Amount past due		%			Amount past due		%			Amount past due		%			Amount past due		%			Amount		%

Domestic
Corporate (1)
Commercial and industrial	￦	131,286		38.9	%	￦	126		0.0	%	￦	89		0.0	%	￦	61		0.0	%	￦	133		0.0	%	￦	131,695		39.0	%
Lease financing		1,735		0.5			4		0.0			1		0.0			1		0.0			2		0.0			1,743		0.5
Trade financing		8,332		2.5			1		0.0			2		0.0			1		0.0			5		0.0			8,341		2.5
Other commercial		16,424		4.9			5		0.0			2		0.0			1		0.0			11		0.0			16,443		4.9

Total corporate		157,777		46.7			136		0.0			94		0.0			64		0.0			151		0.0			158,222		46.8
Consumer
General purpose household		41,835		12.4			147		0.0			64		0.0			43		0.0			75		0.0			42,164		12.5
Mortgages		69,621		20.6			185		0.1			37		0.0			24		0.0			34		0.0			69,901		20.7
Home equity		31,756		9.4			72		0.0			23		0.0			14		0.0			11		0.0			31,876		9.4

Total consumer		143,212		42.4			404		0.1			124		0.0			81		0.0			120		0.0			143,941		42.6
Credit cards		9,606		2.8			72		0.0			48		0.0			31		0.0			—		0.0			9,757		2.9

Total domestic		310,595		91.9			612		0.2			266		0.1			176		0.1			271		0.1			311,920		92.3
Foreign
Corporate (2)
Commercial and industrial		18,782		5.6			13		0.0			10		0.0			14		0.0			107		0.0			18,926		5.6
Lease financing		—		0.0			—		0.0			—		0.0			—		0.0			—		0.0			—		0.0
Trade financing		1,270		0.4			—		0.0			—		0.0			—		0.0			—		0.0			1,270		0.4
Other commercial		1,299		0.4			—		0.0			—		0.0			—		0.0			—		0.0			1,299		0.4

Total corporate		21,351		6.4			13		0.0			10		0.0			14		0.0			107		0.0			21,495		6.4
Consumer		4,308		1.3			21		0.0			18		0.0			11		0.0			62		0.0			4,420		1.3

Total foreign		25,659		7.6			34		0.0			28		0.0			25		0.0			169		0.1			25,915		7.7

Total loans (3)	￦	336,254		99.5	%	￦	646		0.2	%	￦	294		0.1	%	￦	201		0.1	%	￦	440		0.1	%	￦	337,835		100.0	%

(1)	Including loans made to banks and the Korean government and government-owned agencies.

(2)	Including loans made to banks.

(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.

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	As of December 31, 2020
	Normal					Past due by 1 month or less					Past due by 1-3 months					Past due by 3-6 months					Past due by more than 6 months					Total

	(in billions of Won, except percentages)
	Amount		%			Amount past due		%			Amount past due		%			Amount past due		%			Amount past due		%			Amount		%

Domestic
Corporate (1)
Commercial and industrial	￦	113,988		37.6	%	￦	219		0.1	%	￦	90		0.0	%	￦	106		0.0	%	￦	122		0.0	%	￦	114,525		37.7	%
Lease financing		849		0.3			4		0.0			1		0.0			1		0.0			3		0.0			858		0.3
Trade financing		7,276		2.4			1		0.0			8		0.0			6		0.0			2		0.0			7,293		2.4
Other commercial		15,887		5.2			7		0.0			3		0.0			5		0.0			29		0.0			15,931		5.2

Total corporate		138,000		45.5			231		0.1			102		0.0			118		0.0			156		0.0			138,607		45.6
Consumer
General purpose household		39,852		13.1			158		0.1			64		0.0			51		0.0			85		0.0			40,210		13.2
Mortgages		61,938		20.4			206		0.1			42		0.0			30		0.0			58		0.0			62,274		20.5
Home equity		31,845		10.5			90		0.0			23		0.0			17		0.0			20		0.0			31,995		10.5

Total consumer		133,635		44.0			454		0.2			129		0.0			98		0.0			163		0.0			134,479		44.2
Credit cards		8,382		2.8			73		0.0			44		0.0			44		0.0			—		0.0			8,543		2.8

Total domestic		280,017		92.3			758		0.3			275		0.0			260		0.0			319		0.0			281,629		92.6
Foreign
Corporate (2)
Commercial and industrial		16,265		5.4			6		0.0			—		0.0			15		0.0			98		0.0			16,384		5.4
Trade financing		1,482		0.5			—		0.0			—		0.0			—		0.0			—		0.0			1,482		0.5
Other commercial		829		0.3			—		0.0			—		0.0			—		0.0			—		0.0			829		0.3

Total corporate		18,576		6.2			6		0.0			—		0.0			15		0.0			98		0.0			18,695		6.2
Consumer		3,530		1.2			17		0.0			11		0.0			10		0.0			73		0.0			3,641		1.2

Total foreign		22,106		7.4			23		0.0			11		0.0			25		0.0			171		0.0			22,336		7.4

Total loans (3)	￦	302,123		99.7	%	￦	781		0.3	%	￦	286		0.0	%	￦	285		0.0	%	￦	490		0.0	%	￦	303,965		100.0	%

(1)	Including loans made to banks and the Korean government and government-owned agencies.

(2)	Including loans made to banks.

(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.

Credit Exposures to Companies in Workout, Restructuring or Rehabilitation

Workout is a voluntary procedure through which we, together with the borrower and other creditors, seek to restore the borrower’s financial stability and viability. Previously, workouts were regulated under a series of Corporate Restructuring Promotion Acts, which last expired on June 30, 2018. In September 2018, the National Assembly of Korea adopted a new Corporate Restructuring Promotion Act, which became effective on October 16, 2018 and is scheduled to expire on October 15, 2023. Under the new Corporate Restructuring Promotion Act, creditors of a financially troubled borrower may participate in a creditors’ committee, which is authorized to prohibit such creditors from exercising their rights against the borrower, commence workout procedures and approve or make revisions to a reorganization plan prepared by the lead creditor bank, the borrower and external experts. The composition of the creditors’ committee is determined at the initial meeting of the committee by the approval of creditors holding not less than 75% of the borrower’s total outstanding debt held by creditors who were notified of the initial meeting of the committee. Although creditors that are not financial institutions or hold less than 1% of the total outstanding debt of the borrower need not be notified of the initial meeting of the creditors’ committee, if such creditors wish to participate, they may not be excluded. Any decision of the creditors’ committee requires the approval of creditors holding not less than 75% of the total outstanding debt of the borrower. However, if a single creditor holds 75% or more of the borrower’s total outstanding debt held by the creditors comprising the creditors’ committee, any decision of the creditors’ committee requires the approval of not less than 40% of the total number of creditors (including such single creditor) comprising the committee. An additional approval of creditors holding not less than 75% of the secured debt is required with respect to the borrower’s debt restructuring. Once approved, any decision made by the creditors’ committee is binding on all creditors of the borrower, with the exception of those creditors that were

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excluded by a resolution of the committee at its initial meeting and those who exercised their right to request that their claims be purchased. Creditors that voted against commencement of workout, approval or revision of the reorganization plan, debt restructuring, granting of new credit, extension of the joint management process or other resolutions of the committee have the right to request the creditors that voted in favor of such matters to purchase their claims at a mutually agreed price within seven days from the resolution of the committee. In the event that the parties are not able to agree on the terms of purchase, a coordination committee consisting of experts would determine the terms. The creditors that oppose a decision made by the coordination committee may request a court to change such decision.

Korean law also provides for corporate rehabilitation proceedings, which are court-supervised procedures to rehabilitate an insolvent company. Under these procedures, a restructuring plan is adopted at a meeting of interested parties, including creditors of the company. That restructuring plan is subject to court approval.

A portion of our loans to and debt securities of corporate customers are currently in workout, restructuring or rehabilitation. As of December 31, 2021, ￦177 billion, or 0.04%, of our total loans and debt securities were in workout, restructuring or rehabilitation. This included ￦30 billion of loans to and debt securities of large corporate borrowers in workout, restructuring or rehabilitation and ￦126 billion of loans to and debt securities of small- and

medium-sized

enterprises in workout, restructuring or rehabilitation, which represented 0.01% and 0.03% of our total loans and debt securities, respectively. At Woori Bank, the Corporate Restoration Department manages its workout, restructured and rehabilitated loans. Upon approval of a workout, restructuring or rehabilitation plan, a credit exposure is initially classified as precautionary or lower and thereafter cannot be classified higher than precautionary with limited exceptions. If a corporate borrower is in workout, restructuring or rehabilitation, we take the status of the borrower into account in assessing our loans to and collateral from that borrower for purposes of establishing our allowance for credit losses.

The following table shows, as of December 31, 2021, our 10 largest exposures that were in workout, restructuring or rehabilitation:


	Loans								Guarantees and Acceptances						Amounts Classified as Substandard or Below (2)		Allowance for Credit Loss
Company	Won Currency		Foreign Currency		Equity Securities		Debt Securities		Guarantees and Acceptances		Total Exposures		Collateral (1)		Amounts Classified as Substandard or Below (2)		Allowance for Credit Loss

	(in billions of Won)
Orient Shipyard	￦	4	￦	—	￦	—	￦	—	￦	53	￦	57	￦	—	￦	57	￦	3
Ssangyong Motor Company		25		—		—		—		—		25		25		25		1
CREA		16		—		—		—		—		16		9		16		6
PT Delta Dunia Tekstil		—		10		—		—		—		10		—		10		4
Vehiclesystem		9		—		—		—		—		9		6		9		4
Crea Gunsan		6		—		—		—		—		6		5		4		2
Chew Young Roo		6		—		—		—		—		6		2		6		6
Sejin FND		6		—		—		—		—		6		4		6		3
Yangheedong		6		—		—		—		—		6		6		6		1
Skono Korea		5		—		—		—		—		5		2		4		2

Total	￦	83	￦	10	￦	—	￦	—	￦	53	￦	146	￦	59	￦	143	￦	32

(1)	The value of collateral is appraised based on future cash flow and observable market price.

(2)	Classification is based on the Financial Services Commission’s asset classification criteria.

Non-Performing

Loans

Non-performing

loans include commercial and consumer loans which are past due by 90 days or more. In addition,

non-performing

loans include those loans that, even if they are not past due, are classified as “substandard,” “doubtful” or “estimated loss” based on the Financial Services Commission’s asset classification criteria. Moreover, when a consumer loan borrower has any loans that are classified as “substandard,” “doubtful” or “estimated loss” under such criteria, all loans to such borrower are classified as

non-performing

loans. See

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“—Loan Classifications” above. The following table shows, as of the dates indicated, certain details of our total

non-performing

loan portfolio:


	As of December 31,
	2020			2021

	(in billions of Won, except percentages)
Total non-performing loans	￦	1,236	(1)	￦	927	(2)
As a percentage of total loans		0.41	%		0.27	%

(1)	Excludes ￦123 billion of previously delinquent credit card balances restructured into loans that were classified as normal or precautionary.

(2)	Excludes ￦82 billion of previously delinquent credit card balances restructured into loans that were classified as normal or precautionary.

The above amounts do not include loans classified as substandard or below that we sold to third parties. See “—Sales of

Non-Performing

Loans.”

We have also issued securities backed by

non-performing

loans and other assets. Some of these transactions involved transfers of loans through securitizations where control of the loans has not been surrendered and, therefore, are not treated as sale transactions. Instead, the assets remain on our balance sheet with the securitization proceeds treated as part of borrowings. These assets are included in the table above.

The following table sets forth, as of the dates indicated, our total

non-performing

loans by type of loan:


	As of December 31,
	2020					2021
	Amount		%			Amount		%

	(in billions of Won, except percentages)
Domestic
Corporate:
Commercial and industrial	￦	534		43.2	%	￦	353		38.10	%
Lease financing		10		0.8			5		0.50
Trade financing		38		3.1			16		1.70
Other commercial		81		6.6			48		5.20

Total corporate		663		53.7			422		45.50
Consumer:
General purpose household (1)		202		16.3			173		18.70
Mortgage		113		9.1			88		9.50

Total consumer		315		25.4			261		28.20
Credit cards		61		4.9			49		5.30

Total domestic		1,039		84.0			732		79.00
Foreign
Corporate:
Commercial and industrial		117		0.0			96		10.40
Lease financing		—		0.0			—		0.00
Trade financing		—		0.0			—		0.00
Other commercial		—		9.5			—		0.00

Total corporate		117		9.5			96		10.40
Consumer		80		6.5			99		10.70

Total foreign		197		16.0			195		21.10

Total non-performing loans	￦	1,236		100.0	%	￦	927		100.0	%

(1)	Includes home equity loans.

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The following table presents an analysis of the changes in our

non-performing

loans for each of the years indicated:


	Year ended December 31,
	2020			2021

	(in billions of Won)
Balance at the beginning of the year	￦	1,157		￦	1,236
Additions to non-performing loans
Loans transferred into non-performing loans		1,522			1,300
Reductions in non-performing loans
Loans sold		(271	)		(375	)
Loans modified and returned to performing loans		(254	)		(232	)
Loans paid down or paid off		(256	)		(380	)
Loans charged-off		(662	)		(622	)
Other		—			—

Total net reductions to non-performing loans		79			(309	)

Balance at the end of the year	￦	1,236		￦	927

Top 20

Non-Performing

Loans

. As of December 31, 2021, our 20 largest

non-performing

loans accounted for 28.1% of our total

non-performing

loan portfolio. The following table shows, as of that date, certain information regarding those loans:


	Gross principal outstanding		Allowance for credit losses		Collateral (1)		Industry

	(in billions of Won)
Borrower A	￦	36	￦	—	￦	—	Other
Borrower B		31		7		—	Construction
Borrower C		25		1		25	Manufacturing
Borrower D		24		24		—	Manufacturing
Borrower E		16		6		9	Manufacturing
Borrower F		16		16		—	Other
Borrower G		13		—		11	Real estate
Borrower H		11		11		—	Other
Borrower I		10		4		—	Manufacturing
Borrower J		9		3		7	Retail and wholesale
Borrower K		9		4		6	Manufacturing
Borrower L		9		5		5	Other
Borrower M		7		4		2	Other
Borrower N		7		2		—	Financial and insurance
Borrower O		7		2		—	Financial and insurance
Borrower P		6		2		6	Manufacturing
Borrower Q		6		6		2	Manufacturing
Borrower R		6		3		4	Manufacturing
Borrower S		6		6		—	Real estate
Borrower T		6		1		6	Other

Total	￦	260	￦	107	￦	83

(1)	The value of collateral is appraised based on future cash flow and observable market price.

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Non-Performing

Loans and Impaired Loans

The term

“non-performing

loan” is used for our asset quality management in accordance with the Banking Industry Supervision Regulations of Korea, whereas the term “impaired loan” is used for financial reporting purposes based on our internal accounting policies in accordance with IFRS 9.

Major differences between

non-performing

loans and impaired loans are as follows:


Item	Non-performing loans	Impaired loans
Relevant regulation or accounting principle	Banking Industry Supervision Regulations of Korea (loans classified as “substandard,” “doubtful” or “estimated loss”)	Our internal policy based on IFRS 9

Scope	Loans	Loans (not including due from banks and other financial assets) under IFRS 9

Purchased impaired loans	Not included	Included

Loans classified as “precautionary” based on the Financial Services Commission’s asset classification criteria	Not included	Loans classified as “precautionary,” for which the borrower has a capital deficit or its auditor’s opinion on its financial statements is modified or qualified, are included

The following table shows, as of the dates indicated, the amounts of impaired loans and

non-performing

loans:


	As of December 31,
	2020		2021
	(in billions of Won)

Impaired loans	￦	1,435	￦	1,158
Non-performing loans		1,236		927

Non-Performing

Loan Strategy

One of our goals is to improve our asset quality, in part by reducing our

non-performing

loans. We have standardized the credit risk management systems of our subsidiaries to reduce our risks relating to future

non-performing

loans. Our credit rating systems are designed to prevent our subsidiaries from extending new loans to high-risk borrowers as determined by their credit rating. Woori Bank’s credit monitoring system also brings to its attention any sudden increase in a borrower’s credit risk, enabling close monitoring of such loans. See “Item 11. Quantitative and Qualitative Disclosures about Market Risk—Credit Risk Management.”

Each of our subsidiaries has one or more units that are responsible for managing

non-performing

loans. At Woori Bank, for example, the Credit Management and Collection Department and the Corporate Restoration Department generally oversee the process for resolving

non-performing

loans transferred to them by other Woori Bank business units. We believe that by centralizing the management of our

non-performing

loans within each subsidiary, we can become more effective in dealing with the issues relating to these loans by pooling institutional knowledge and creating a more specialized workforce.

When a loan becomes

non-performing,

we will begin a due diligence review of the borrower’s assets, send a notice demanding payment or stating that we will take legal action, and prepare for legal action. At the same time, we initiate our

non-performing

loan management process, which begins with:

•

identifying loans subject to a proposed sale by assessing the estimated losses from such sale based on the estimated recovery value of collateral, if any, for such

non-performing

loans;

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•

identifying loans subject to

charge-off

based on the estimated recovery value of collateral, if any, for such

non-performing

loans and the estimated rate of recovery of unsecured loans; and

•

on a limited basis, identifying corporate loans subject to normalization efforts based on the cash-flow situation of the borrower.

Once we have confirmed the details of a

non-performing

loan, we make efforts to recover amounts owed to us. Methods for resolving

non-performing

loans include the following:

•

commencing collection proceedings;

•

commencing legal actions to seize collateral;

•

writing off these amounts, transferring them to specific subsidiaries in charge of collections and authorizing those subsidiaries to recover what they can with respect to these amounts or to sell these loans to third parties; and

•

with respect to large corporations, commencing or participating in voluntary workouts or restructurings mandated by Korean courts.

In addition to making efforts to collect on our

non-performing

loans, we also undertake measures to reduce the overall level of our

non-performing

loans. These measures include:

•

selling our

non-performing

loans to structured companies established in connection with our joint ventures with several financial institutions; and

•

selling our

non-performing

loans to third parties.

See “—Sales of

Non-Performing

Loans.” We generally expect to suffer a partial loss on loans that we sell or securitize, to the extent such sales and securitizations are recognized as such under IFRS.

Foreclosure and Collateral.

We generally foreclose on mortgages or exercise our security interests in respect of other collateral if a collateralized obligation becomes overdue for more than three months. At that time, we will petition a court to foreclose on collateral and to sell that collateral through a court-supervised auction. Under Korean law, that petition must be filed with a court that has jurisdiction over the mortgaged property, and must be filed together with a copy of the mortgage agreement and an extract of the court registry regarding the subject property. The court will then issue an order to commence the foreclosure auction, which will be registered in the court registry of the subject property. If no bidder bids at least the minimum amount set by the court on the first auction date, the court will set another date for a subsequent auction approximately one month later. Each time a new auction date is set, the minimum auction price will be lowered by approximately 20%. Unlike laws relating to foreclosure in the United States, Korean law does not provide for

non-judicial

foreclosure. During 2019, 2020 and 2021, we held collateral with respect to loan balances overdue for more than three months representing approximately 0.1%, 0.1% and 0.1%, respectively, of our interest-bearing loan balances in each of those periods.

Korean financial institutions, including us, maintain general policies to assess a potential customer’s eligibility for loans based on that entity’s credit quality, rather than requiring a particular level of collateral, especially in the case of large corporate borrowers. As a result, the ratio of our collateral to

non-performing

corporate loans is relatively low when compared with our total exposures. For secured consumer loans, however, we generally impose limits on loan amounts based on the collateral we receive. See “—Consumer Banking—Lending Activities.”

We reflect this collateral level when we estimate the future cash flow for our loans, which we calculate using a discounted cash flow method. With respect to loans to borrowers that we do not believe will be going concerns in the future, the lower collateral ratio has a direct effect on cash flow estimates and results in a higher level of allowances. With respect to loans to borrowers that we expect to be going concerns, the lower collateral ratio has an effect on cash flow estimates but we also consider other factors, including future operating income and future asset disposals and restructuring, in determining allowance levels. Accordingly, for these latter borrowers, the effect of lower collateral levels on allowances is mitigated by other characteristics of the borrower, and that lower collateral level will not necessarily result in a higher level of allowances.

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Sales of

Non-Performing

Loans

The overall asset quality of our loan portfolio is affected by sales of

non-performing

loans. These sales have been made primarily to third parties. The following table sets forth information regarding our sales of loans for the periods indicated:


	Year Ended December 31,
	2019						2020						2021

Purchaser	Net Carrying Amount (1)		Sale Price		Gain (Loss)		Net Carrying Amount (1)		Sale Price		Gain (Loss)		Net Carrying Amount (1)		Sale Price		Gain (Loss)

	(in billions of Won)
KAMCO	￦	95	￦	101	￦	6	￦	14	￦	14	￦	—	￦	—	￦	—	￦	—
Structured companies		55		60		4		60		67		7		61		76		15
UAMCO (2)		40		47		7		87		98		11		90		105		15
Others (3)		—		15		15		29		54		25		36		114		78

Total	￦	190	￦	223	￦	32	￦	190	￦	233	￦	43	￦	187	￦	295	￦	108

(1)	Net carrying amount represents the net value of non-performing loans after deduction of allowance for credit losses on such basis.

(2)	Woori Bank holds a 14% equity interest in UAMCO.

(3)	Includes ￦28 billion of sales to D&CM Corporation in 2021, which may be subject to repurchase by us.

Allocation and Analysis of Allowances for Credit Losses

The following table presents, as of the dates indicated, the allocation of our allowances for credit losses by loan type:


	As of December 31,
	2020				2021

	(in billions of Won, except percentages)
Domestic
Corporate:
Commercial and industrial	￦	917	48.0	%	￦	897	47.5	%
Lease financing		10	0.5			19	1.0
Trade financing		95	5.0			87	4.6
Other commercial		89	4.7			60	3.2

Total corporate		1,111	58.2			1,063	56.3
Consumer:
General purpose household (1)		368	19.3			389	20.6
Mortgage		14	0.7			13	0.7

Total consumer		382	20.0			402	21.3
Credit cards		259	13.6			255	13.5

Total domestic		1,752	91.8			1,720	91.1
Foreign
Corporate:
Commercial and industrial		122	6.4			123	6.5
Trade financing		1	0.1			1	0.1
Other commercial		4	0.2			4	0.2

Total corporate		127	6.7			128	6.8
Consumer		30	1.6			39	2.1

Total foreign		157	8.3			167	8.9

Total allowance for credit losses (2)	￦	1,909	100.0	%	￦	1,887	100.0	%

(1)	Includes home equity loans.

(2)	Not including due from banks and other financial assets.

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The following table presents an analysis of the changes in our allowances for credit losses for each of the years indicated:


	Year ended December 31,
	2019			2020			2021

	(in billions of Won)
Balance at the beginning of the year (1)	￦	1,778		￦	1,575		￦	1,909
Bad debt expenses for the period		380			787			555
Changes due to business combination		—			175			28
Increase on repurchases of non-performing loans		—			—			—
Gross charge-offs:
Domestic:
Corporate:
Commercial and industrial		(179	)		(171	)		(157	)
Lease financing		—			—			(2	)
Trade financing		(14	)		(23	)		(12	)
Other commercial		(5	)		(6	)		(3	)

Total corporate		(198	)		(200	)		(174	)
Consumer:
General purpose household (1)		(214	)		(178	)		(173	)
Mortgage		(3	)		(4	)		—

Total consumer		(217	)		(182	)		(173	)
Credit cards		(281	)		(246	)		(220	)
Total domestic		(696	)		(628	)		(567	)
Foreign		(24	)		(43	)		(61	)

Total gross charge-offs		(720	)		(671	)		(628	)
Recoveries:
Domestic:
Corporate:
Commercial and industrial		54			54			47
Lease financing		—			—			—
Trade financing		3			4			3
Other commercial		6			8			5

Total corporate		63			66			55
Consumer:
General purpose household (1)		35			39			41
Mortgage		27			32			34

Total consumer		62			71			75
Credit cards		60			66			66

Total domestic		185			203			196
Foreign:		3			—			—

Total recoveries		188			203			196

Net charge-offs		(532	)		(468	)		(432	)
Disposal		(45	)		(76	)		(105	)
Foreign exchange translation effects		2			(3	)		6
Others (2)		(13	)		(81	)		(75	)
Adjustment from discontinuing operations		5			—			—

Balance at the end of the year		￦1,575			￦1,909			￦1,886

Ratio of net charge-offs during the period to average loans outstanding during the period		0.2	%		0.2	%		0.2	%

(1)	Includes home equity loans.

(2)	Includes unwinding of discount.

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Loan Charge-Offs

The credit approval process we have implemented includes assessing credit risk before extending loans and monitoring outstanding loans, in order to minimize loans that must be charged off. To the extent charge-offs are required, we follow

charge-off

policies aimed at maximizing accounting transparency, minimizing any waste of resources in managing loans which have a low probability of being collected and reducing our

non-performing

loan ratio.

Loans To Be Charged Off

. We charge off loans that are deemed to be uncollectible by virtue of their falling under any of the following categories:

•

loans for which collection is not foreseeable due to insolvency, bankruptcy, compulsory execution, disorganization, dissolution or the shutting down of the business of the debtor;

•

loans for which collection is not foreseeable due to the death or disappearance of the debtor;

•

loans for which expenses of collection exceed the collectable amount;

•

loans on which collection is not possible through legal or any other means;

•

payments in arrears in respect of credit cards (excluding credit card loans) that are overdue for more than six months;

•

payments outstanding on corporate and consumer loans that are overdue for more than 12 months; or

•

the portion of loans classified as estimated loss, net of any recovery from collateral, which is deemed to be uncollectible.

Procedure for

Charge-off

Approval

. In order to charge off corporate loans, in the case of Woori Bank, an application for a

charge-off

must be submitted by a branch to the Credit Management and Collection Department promptly and, in any event, within one month after the corporate loan is classified as estimated loss. The department evaluates and approves the application. Then, Woori Bank must seek an approval from the Financial Supervisory Service for its charge-offs, which is typically granted. At the same time, Woori Bank refers the approval of the

charge-off

by the Credit Management and Collection Department to its Audit Committee for review to ensure compliance with its internal procedures for charge-offs, which include consultations with the branch submitting the

charge-off

application. Once Woori Bank receives approval from the Financial Supervisory Service, Woori Bank must also obtain approval from its senior management to charge off those loans.

With respect to consumer loans and credit card balances, we follow a different process to determine which consumer loans and credit card balances should be charged off, based on the length of time those loans or balances are past due. We charge off consumer loans which are 12 months overdue and credit card balances which are six months overdue and have been classified as estimated loss.

Treatment of Loans Charged Off

. Once loans are charged off, we classify them as

charged-off

loans. In the case of Woori Bank, these loans are then transferred to our wholly-owned subsidiary, Woori Credit Information, which is in charge of collections. It will attempt to recover amounts owed or to sell these loans to third parties.

In the case of collateralized loans, our general policy is to petition a court to foreclose and sell the collateral through a court-supervised auction if a collateralized loan becomes overdue for more than three months. If a debtor still fails to repay and the court grants its approval for foreclosure, we will sell the collateral and recover the principal amount and interest accrued up to the amount of the proceeds from such sale, net of expenses incurred for the sale.

Credit Rehabilitation Programs for Delinquent Consumer Borrowers

In light of the rapid increase in delinquencies in credit card and other consumer credit in recent years, and concerns regarding potential social issues posed by the growing number of individuals with bad credit, the Korean government has implemented a number of measures intended to support the rehabilitation of the credit of

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delinquent consumer borrowers. These measures may affect the amount and timing of our collections and recoveries on our delinquent consumer credits.

In 2002, the Financial Services Commission established the Credit Counseling and Recovery Service based upon an agreement among approximately 160 financial institutions in Korea. Upon application to the Credit Counseling and Recovery Service and approval by creditor financial institutions representing a majority of the outstanding unsecured debt and

two-thirds

of the outstanding secured debt, a qualified “credit delinquent person” with outstanding debts to two or more financial institutions in an aggregate amount not exceeding ￦500 million may participate in an individual

work-out

program designed to restructure such person’s debt and rehabilitate such person’s credit. The aggregate amount of loans of Woori Bank which became subject to such individual

work-out

programs in 2021 was ￦124 billion. In 2021, Woori Bank recovered approximately ￦11 billion with respect to its loans subject to such individual

work-out

programs.

Under the Korean Debtor Recovery and Bankruptcy Law, a qualified individual debtor with outstanding debts in an aggregate amount not exceeding threshold amounts of ￦1 billion of unsecured debt and/or ￦1.5 billion of secured debt may restructure his or her debts through a court-supervised debt restructuring that is binding on creditors. The aggregate amount of loans of Woori Bank which became subject to such court-supervised debt restructuring in 2021 was ￦344 billion. In 2021, Woori Bank recovered ￦51 billion with respect to its loans subject to such court-supervised debt restructuring

In September 2008, to support consumer borrowers with low credit scores, the Financial Services Commission established the Credit Rehabilitation Fund to purchase from creditors the loans of such borrowers that are in default and to provide guarantees so that such loans may be refinanced at lower rates. The Credit Rehabilitation Fund provides support to (i) individuals with low credit scores who are in default on loans not exceeding ￦50 million in principal amount in the aggregate (which requirement will be waived for individuals who are “basic living welfare recipients”) for a period of three months or more and (ii) individuals with low credit scores ranging from category 6 to 10

who are in default on loans not exceeding ￦30 million in principal amount in the aggregate (which requirement will be waived for individuals who are basic living welfare recipients) and the interest rate of which is 30% or more.

In March 2009, the Financial Services Commission requested Korean banks, including Woori Bank, to establish a

“pre-workout

program,” including a credit counseling and recovery service, for retail borrowers with outstanding short-term debt. Under the pre-workout program, which has been in operation since April 2009, maturity extensions and/or interest rate adjustments are provided to retail borrowers with total loans of ￦1.5 billion or less (consisting of no more than ￦500 million of unsecured loans and ￦1 billion of secured loans) who are in arrears on their payments for more than 30 days but less than 90 days or for retail borrowers with an annual income of ￦40 million or less who have been in arrears on their payments for 30 days or more on an aggregate basis for the 12 months prior to their application, among others. The aggregate amount of consumer credit Woori Bank provided which became subject to the

pre-workout

program in 2021 was ￦50 billion. See “Item 3.D. Risk Factors—Risks relating to our consumer credit portfolio—We may experience increases in delinquencies in our consumer loan and credit card portfolios.”

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Net Charge-Offs

. The following table presents information regarding our ratios of net charge-offs to average loans outstanding for each of the years indicated:


	Year ended December 31,
	2019							2020							2021

	Average loans		Net charge-offs		Net charge- offs/Average loans			Average loans		Net charge-offs		Net charge- offs/Average loans			Average loans		Net charge-offs		Net charge- offs/Average loans

	(in billions of Won)
Loans in local currency	￦	218,385	￦	282		0.13	%	￦	233,362	￦	238		0.10	%	￦	262,345	￦	224		0.09	%
Loans in foreign currencies		17,449		20		0.11			19,977		31		0.16			22,194		44		0.20
Domestic banker’s usance		3,272		—		0.00			2,855		—		0.00			3,013		—		0.00
Credit card accounts		7,358		221		3.00			8,215		180		2.19			9,203		155		1.68
Bills bought in foreign currencies		6,655		—		0.00			6,304		—		0.00			5,878		—		0.00
Bills bought in local currency		30		—		0.00			121		—		0.00			158		—		0.00
Factoring receivables		48		—		0.00			33		—		0.00			26		—		0.00
Advances for customers on guarantees		15		7		53.33			18		13		72.22			28		5		17.86
Private placement bonds		311		—		0.00			294		5		1.70			504		—		0.00
Securitized loans		1,876		—		0.00			2,269		—		0.00			2,673		—		0.00
Call loans		3,285		—		0.00			2,618		—		0.00			2,185		—		0.00
Bonds purchased under resale agreements		3,200		—		0.00			2,666		—		0.00			3,244		—		0.00
Financial lease receivables		174		—		0.00			373		—		0.00			909		—		0.00
Installment financial bonds		809		2		0.25			1,076		1		0.09			2,378		4		0.17
Others		1		—		0.00			—		—		0.00			—		—		0.00

Total net charge-offs	￦	262,868	￦	532		0.20	%	￦	280,181	￦	468		0.17	%	￦	314,738	￦	432		0.14	%

Securities Investment Portfolio

Investment Policy

We invest in and trade

Won-denominated

securities and, to a lesser extent, foreign currency-denominated securities for our own account to:

•

maintain asset stability and diversification;

•

maintain adequate sources of

back-up

liquidity to match funding requirements; and

•

supplement income from core lending activities.

In making securities investments, we take into account a number of factors, including external broker analyses and internal assessments of macroeconomic trends, industry analysis, credit evaluation, maturity and trading history in determining whether to make a particular investment.

Our investments in debt securities include primarily bonds issued by government-related entities, as well as corporate bonds that have been guaranteed by banks (other than merchant banks), government-related funds or privately capitalized funds that we consider to have a low credit risk.

Our securities investments are subject to various regulations, including limitations prescribed under the Financial Holding Company Act and the Bank Act. Under these regulations, a financial holding company may not own (i) more than 5% of the total issued and outstanding shares of another finance-related company, (ii) any shares of its affiliates, other than its direct or indirect subsidiaries, or (iii) any shares of a

non-finance-related

company. In addition, a bank must limit its investments in equity securities and bonds with a maturity in excess of three years (other than monetary stabilization bonds issued by the Bank of Korea and Korean government bonds) to 100% of the sum of its total Tier I and Tier II capital amount (less any capital deductions). A bank is also generally prohibited from acquiring more than 15% of the shares with voting rights issued by any other corporation, subject to certain exceptions. Pursuant to the Bank Act, a bank and its trust accounts are prohibited from acquiring the shares of a major shareholder (for the definition of “major shareholder,” see “—Supervision

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and Regulation—Principal Regulations Applicable to Banks—Financial Exposure to Any Individual Customer or Major Shareholder”) of that bank in excess of an amount equal to 1% of the sum of the bank’s Tier I and Tier II capital (less any capital deductions). Further information on the regulatory environment governing our investment activities is set out in “—Supervision and Regulation—Principal Regulations Applicable to Financial Holding Companies—Liquidity,” “—Supervision and Regulation—Principal Regulations Applicable to Financial Holding Companies—Restrictions on Shareholdings in Other Companies,” “—Supervision and Regulation—Principal Regulations Applicable to Banks—Liquidity” and “—Supervision and Regulation—Principal Regulations Applicable to Banks—Restrictions on Shareholdings in Other Companies.”

Our investments in foreign currencies are subject to certain limits and restrictions specified in our internal guidelines relating to country exposure, a single issuer and type of security exposure, and total investments by individual business groups.

Maturity Analysis

The following table categorizes our debt securities by maturity and weighted average yield as of December 31, 2021:


	As of December 31, 2021
	Within 1 year					Over 1 but Within 5 years					Over 5 but Within 10 years					Over 10 years					Total

	(in billions of Won, except percentages)
	Amount		Weighted Average Yield (1)			Amount		Weighted Average Yield (1)			Amount		Weighted Average Yield (1)			Amount		Weighted Average Yield (1)			Amount		Weighted Average Yield (1)

Financial assets at fair value through other comprehensive income:
Korean treasury and government agencies	￦	350		1.88	%	￦	4,053		1.31	%	￦	325		1.54	%	￦	—		—	%	￦	4,728		1.36	%
Financial institutions		11,964		1.15			10,946		1.40			—		—			—		—			22,910		1.27
Corporate		1,548		1.39			3,416		1.57			127		2.25			—		—			5,091		1.53
Foreign currency bonds		2,771		1.27			2,311		1.76			113		4.95			105		1.31			5,300		1.56
Securities loaned		—		—			98		0.89			—		—			—		—			98		0.89

Total	￦	16,633		1.20	%	￦	20,824		1.45	%	￦	565		2.38	%	￦	105		1.31	%	￦	38,127		1.36	%

Financial assets at amortized cost:
Korean treasury and government agencies	￦	1,616		1.94	%	￦	7,178		1.49	%	￦	86		1.90	%	￦	—		—	%	￦	8,880		1.57	%
Financial institutions		1,191		1.87			620		1.82			25		3.45			—		—			1,836		1.88
Corporate		694		2.43			3,281		1.96			1,679		2.19			162		2.18			5,816		2.09
Foreign currency bonds		151		2.36			367		3.34			31		3.60			5		2.33			554		3.08

Total	￦	3,652		2.03	%	￦	11,446		1.70	%	￦	1,821		2.22	%	￦	167		2.19	%	￦	17,086		1.83	%

(1)

The weighted average yield for the portfolio represents the yield to maturity for each individual security, weighted using its book value (which is the amortized cost in the case of financial assets at amortized cost and the fair value in the case of financial assets at fair value through other comprehensive income).

Funding

We fund our lending and other activities using various sources, both domestic and foreign. Our primary funding strategy is to maintain stable and

low-cost

funding. We have in the past achieved this in part by

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increasing the average balances of

low-cost

customer deposits, in particular demand deposits and savings deposits.

Customer deposits are our principal funding source. Customer deposits accounted for 82.2% of our total funding as of December 31, 2020 and 80.9% of our total funding as of December 31, 2021.

We also acquire funding through the following sources:

•

long-term debt, including the issuance of senior and subordinated debentures and borrowings from government-affiliated funds and entities and other financial institutions;

•

short-term borrowings, including borrowings from our trust accounts and from the Bank of Korea, and call money; and

•

the issuance of hybrid securities, including bond-type hybrid securities.

As of December 31, 2021, 86.9% of our total funding was denominated in Won.

Deposits

Although the majority of our deposits are short-term, it has been our experience that the majority of our depositors generally roll over their deposits at maturity, providing us with a stable source of funding. See “Item 3.D. Risk Factors—Other risks relating to our business—Our funding is highly dependent on short-term deposits, which dependence may adversely affect our operations.” The following table shows the average balances of our deposits and the average costs of our deposits for the periods indicated:


	For the year ended December 31,
	2019					2020					2021

	Average Balance (1)		Average Cost			Average Balance (1)		Average Cost			Average Balance (1)		Average Cost

	(in billions of Won, except percentages)
Demand deposits	￦	8,213		0.43	%	￦	10,110		0.48	%	￦	14,634		0.72	%
Time deposits and savings deposits (2)		211,732		1.33			225,563		0.91			243,708		0.61
Certificates of deposit		4,760		2.21			1,677		1.31			2,858		0.94
Other deposits (3)		28,930		1.63			34,861		1.03			38,374		0.73

Average total deposits	￦	253,635		1.35	%	￦	272,211		0.91	%	￦	299,574		0.64	%

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

(2)	Savings deposits are deposits that allow the customers to deposit and withdraw funds at any time and accrue interest at a fixed rate set by us depending upon the period and amount of deposit.

(3)

Mutual installment deposits are interest-bearing deposits offered by us, which enable customers to become eligible to apply for loans secured by such deposits while they maintain an account with us. In order to qualify to apply for such a loan, a customer must make required periodic deposits to the mutual installment account for a contracted term of less than five years. Any such loan will be secured in an amount up to the holder’s mutual installment deposit and will be subject to the same loan underwriting policy we apply for other secured loans. For the portion of the loan, if any, that is not secured, we apply the same loan underwriting policy as we would for other unsecured loans.

For a description of our retail deposit products, see “—Business—Consumer Banking—Lending Activities—Mortgage and Home Equity Lending” and “—Business—Consumer Banking—Deposit-Taking Activities.”

The Depositor Protection Act provides insurance for certain deposits of banks in Korea through a deposit insurance system. See “—Supervision and Regulation—Principal Regulations Applicable to Banks—Deposit Insurance System.” The KDIC insures a maximum of ￦50 million per individual for deposits and interest in a single financial institution, regardless of when the deposits were made or the size of the deposits. In addition to the insured deposits applicable in Korea, the insured status for deposits in our foreign subsidiaries are determined based on the individual insurance limits enacted within local regulations, and are thus subject to differing national deposit insurance regimes. Our total uninsured deposits across all jurisdictions amounted to ￦248,587 billion as of December 31, 2021 and ￦223,327 billion as of December 31, 2020.

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Uninsured Time Deposits

Our uninsured time deposits refer to our uninsured deposits that have a fixed maturity, including time deposits and installment savings deposits. The following table presents, as of December 31, 2021, the remaining maturities of our uninsured time deposits:


	As of December 31, 2021

	(in billions of Won)
Maturing within three months	￦	49,357
After three but within six months		27,834
After six but within 12 months		39,058
After 12 months		4,922

Total	￦	121,171

Supervision and Regulation

Principal Regulations Applicable to Financial Holding Companies

General

The Financial Holding Company Act, last amended on April 20, 2021, regulates Korean financial holding companies and their subsidiaries. The entities that regulate and supervise Korean financial holding companies and their subsidiaries are the Financial Services Commission and the Financial Supervisory Service.

The Financial Services Commission exerts direct control over financial holding companies pursuant to the Financial Holding Company Act. Among other things, the Financial Services Commission approves the establishment of financial holding companies, issues regulations on the capital adequacy of financial holding companies and their subsidiaries, and drafts regulations relating to the supervision of financial holding companies.

Following the instructions and directives of the Financial Services Commission, the Financial Supervisory Service supervises and examines financial holding companies and their subsidiaries. In particular, the Financial Supervisory Service sets requirements relating to Korean financial holding companies’ liquidity and capital adequacy ratios and establishes reporting requirements within the authority delegated under the Financial Services Commission regulations. Financial holding companies must submit quarterly reports to the Financial Supervisory Service discussing business performance, financial status and other matters identified in the Enforcement Decree of the Financial Holding Company Act.

Under the Financial Holding Company Act, a financial holding company is a company which primarily engages in controlling its subsidiaries by holding equity stakes in them equal in aggregate to at least 50% of the financial holding company’s aggregate assets based on its balance sheet as of the end of the immediately preceding fiscal year. A company is required to obtain approval from the Financial Services Commission to become a financial holding company.

A financial holding company may engage only in controlling the management of its subsidiaries, as well as certain ancillary activities including:

•

financially supporting its direct and indirect subsidiaries;

•

raising capital necessary for investment in its subsidiaries or providing financial support to its direct and indirect subsidiaries;

•

supporting the business of its direct and indirect subsidiaries, including the development and marketing of financial products;

•

providing data processing, legal, accounting and other resources and services that have been commissioned by its direct and indirect subsidiaries so as to support their operations; and

•

any other businesses exempted from authorization, permission or approval under the applicable laws and regulations.

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The Financial Holding Company Act requires every financial holding company (other than a financial holding company that is controlled by another financial holding company) and its subsidiaries to obtain prior approval from the Financial Services Commission before acquiring control of another company or to file a report with the Financial Services Commission within 30 days thereafter in certain cases (including acquiring control of another company whose assets are less than ￦100 billion as of the end of the immediately preceding fiscal year). In addition, the Financial Services Commission must grant permission to liquidate or to merge with any other company before the liquidation or merger. A financial holding company must report to the Financial Services Commission when certain events, including the following, occur:

•

when the largest shareholder changes;

•

in the case of a bank holding company, when a major investor changes;

•

when the shareholding of the controlling shareholder (i.e., the “largest shareholder” or a “principal shareholder,” each as defined in the Financial Holding Company Act) or a person who has a “special relationship” with such controlling shareholder (as defined in the Enforcement Decree of the Financial Holding Company Act) changes by 1% or more of the total issued and outstanding voting shares of the financial holding company;

•

when it changes its corporate name;

•

when there is a cause for its dissolution; and

•

when it or its subsidiaries cease to control any of their respective direct or indirect subsidiaries by disposing of their shares of such direct or indirect subsidiary.

Capital Adequacy

The Financial Holding Company Act does not provide for a minimum

paid-in

capital requirement related to financial holding companies. However, all financial holding companies are required to maintain a specified level of solvency. In addition, with respect to the allocation of net profit earned in a fiscal term, a financial holding company must set aside in its legal reserve an amount equal to at least 10% of its net income after tax each time it pays dividends on its net profits earned until its legal reserve reaches at least the aggregate amount of its

paid-in

capital.

A bank holding company, which is a financial holding company controlling banks or other financial institutions conducting banking business as prescribed in the Financial Holding Company Act, is required to maintain a total minimum consolidated capital adequacy ratio of 11.5% (including applicable additional capital buffers and requirements as described below). “Consolidated capital adequacy ratio” is defined as the ratio of equity capital as a percentage of

risk-weighted

assets on a consolidated basis, determined in accordance with the Financial Services Commission requirements that have been formulated based on Bank of International Settlements, or BIS, standards. “Equity capital,” as applicable to bank holding companies, is defined as the sum of common equity Tier I capital, additional Tier I capital and Tier II capital less any deductible items, each as defined under the Regulation on the Supervision of Financial Holding Companies.

“Risk-weighted

assets” is defined as the sum of credit

risk-weighted

assets, market

risk-weighted

assets and operational risk-weighted assets.

Pursuant to regulations promulgated by the Financial Services Commission commencing in 2013 to implement Basel III, Korean bank holding companies were required to maintain a minimum ratio of common equity Tier I capital to

risk-weighted

assets of 3.5% and Tier I capital to

risk-weighted

assets of 4.5% from December 1, 2013, which minimum ratios were increased to 4.0% and 5.5%, respectively, from January 1, 2014 and increased further to 4.5% and 6.0%, respectively, from January 1, 2015. Such requirements are in addition to the

pre-existing

requirement for a minimum ratio of Tier I and Tier II capital (less any capital deductions) to

risk-weighted

assets of 8.0%, which remains unchanged. The amended regulations also require an additional capital conservation buffer of 2.5%, as well as a potential counter-cyclical capital buffer of up to 2.5%, which is determined on a quarterly basis by the Financial Services Commission. Furthermore, bank holding companies designated as domestic systemically important banks for 2022 by the Financial Services Commission are subject to an additional capital requirement of 1.0%.

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Liquidity

All financial holding companies are required to match the maturities of their assets and liabilities on a

non-consolidated

basis in accordance with the Financial Holding Company Act in order to ensure liquidity. Financial holding companies must:

•

maintain a Won liquidity ratio (defined as Won assets due within one month, including marketable securities, divided by Won liabilities due within one month) of not less than 100% on a

non-consolidated

basis;

•

maintain a foreign currency liquidity ratio (defined as foreign currency liquid assets due within three months divided by foreign currency liabilities due within three months) of not less than 80% on a

non-consolidated

basis (except that such requirement is not applicable to a financial holding company whose foreign currency liabilities constitute less than 1% of its total assets);

•

maintain a ratio of foreign currency liquid assets due within seven days less foreign currency liabilities due within seven days as a percentage of total foreign currency assets of not less than 0% on a

non-consolidated

basis (except that such requirement is not applicable to a financial holding company whose foreign currency liabilities constitute less than 1% of its total assets);

•

maintain a ratio of foreign currency liquid assets due within a month less foreign currency liabilities due within a month as a percentage of total foreign currency assets of not less than negative 10% on a

non-consolidated

basis (except that such requirement is not applicable to a financial holding company whose foreign currency liabilities constitute less than 1% of its total assets); and

•

make quarterly reports regarding their Won liquidity and foreign currency liquidity to the Financial Supervisory Service.

Financial Exposure to Any Individual Customer and Major Investor

Subject to certain exceptions, the aggregate credit (as defined in the Financial Holding Company Act, the Bank Act, the Financial Investment Services and Capital Markets Act, the Insurance Business Act, the Mutual Savings Bank Act and the Specialized Credit Financial Business Act, respectively) of a financial holding company and its direct and indirect subsidiaries that are banks, merchant banks, financial investment companies, insurance companies, savings banks or specialized credit financial business companies (which we refer to as “Financial Holding Company Total Credit”) to a single group of companies that belong to the same conglomerate as defined in the Monopoly Regulations and Fair Trade Act will not be permitted to exceed 25% of net aggregate equity capital (as defined below).

“Net aggregate equity capital” is defined under the Enforcement Decree of the Financial Holding Company Act as the sum of:

(1)

in case of a financial holding company, the capital amount as defined in Article

24-3(7),

Item 2 of the Enforcement Decree of the Financial Holding Company Act;

(2)

in case of a bank, the capital amount as defined in Article 2(1), Item 5 of the Bank Act;

(3)

in case of a merchant bank, the capital amount as defined in Article 342(1) of the Financial Investment Services and Capital Markets Act;

(4)

in case of a financial investment company, the capital amount as defined in Article 37(3) of the Enforcement Decree of the Financial Investment Services and Capital Markets Act;

(5)

in case of an insurance company, the capital amount as defined in Article 2, Item 15 of the Insurance Business Act;

(6)

in case of a savings bank, the capital amount as defined in Article 2, Item 4 of the Mutual Savings Bank Act; and

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(7)

in case of a specialized credit financial business company, the capital amount as defined in Article 2, Item 19 of the Specialized Credit Financial Business Act;

less the sum of:

(1)

the amount of shares of direct and indirect subsidiaries held by the financial holding company;

(2)

the amount of shares that are

cross-held

by each direct and indirect subsidiary that is a bank, merchant bank, financial investment company, insurance company, savings bank or specialized credit financial business company; and

(3)

the amount of shares of a financial holding company held by such direct and indirect subsidiaries that are banks, merchant banks, financial investment companies, insurance companies, savings banks or specialized credit financial business companies.

The Financial Holding Company Total Credit to a single individual or judicial person may not exceed 20% of the net aggregate equity capital. In addition, the Financial Holding Company Total Credit to a shareholder holding (together with the persons who have a “special relationship” with the shareholder, as defined in the Enforcement Decree of the Financial Holding Company Act) in aggregate more than 10% of the total issued and outstanding voting shares of a financial holding company generally may not exceed the lesser of (x) 25% of the net aggregate equity capital and (y) the amount of the equity capital of the financial holding company multiplied by the shareholding ratio of the shareholder (together with the persons who have a special relationship with the shareholder).

Further, the total sum of credits (as defined in the Financial Holding Company Act, the Bank Act, the Financial Investment Services and Capital Markets Act, the Insurance Business Act, the Mutual Savings Bank Act and the Specialized Credit Financial Business Act, respectively) of a bank holding company and its direct and indirect subsidiaries that are banks, merchant banks, financial investment companies, insurance companies, savings banks or specialized credit financial business companies as applicable (which we refer to as “Bank Holding Company Total Credit”) extended to a “major investor” (as defined below) (together with the persons who have a special relationship with that major investor) will not be permitted to exceed the lesser of (x) 25% of the net aggregate equity capital and (y) the amount of the equity capital of the bank holding company multiplied by the shareholding ratio of the major investor, except for certain cases.

“Major investor” is defined as:

•

a shareholder holding (together with persons who have a special relationship with that shareholder) in excess of 10% (or in the case of a bank holding company controlling regional banks only, 15%) in the aggregate of the bank holding company’s total issued and outstanding voting shares; or

•

a shareholder holding (together with persons who have a special relationship with that shareholder) more than 4% in the aggregate of the total issued and outstanding voting shares of the bank holding company controlling nationwide banks, where the shareholder is the largest shareholder or has actual control over the major business affairs of the bank holding company through, for example, appointment and dismissal of the officers pursuant to the Enforcement Decree of the Financial Holding Company Act.

In addition, the total sum of the Bank Holding Company Total Credit granted to all of a bank holding company’s major investor must not exceed 25% of the bank holding company’s net aggregate equity capital. Furthermore, any bank holding company that, together with its direct and indirect subsidiaries, intends to extend credit to the bank holding company’s major investor in an amount equal to or exceeding the lesser of (x) the amount equivalent to 0.1% of the net aggregate equity capital and (y) ￦5 billion, in any single transaction, must obtain prior unanimous board resolutions and then, immediately after providing the credit, must file a report to the Financial Services Commission and publicly disclose the filing of the report.

Restrictions on Transactions Among Direct and Indirect Subsidiaries and Financial Holding Company

Generally, a direct or indirect subsidiary of a financial holding company may not extend credits (excluding the amount of corporate credit card payments issued by a direct or indirect subsidiary of a financial holding

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company that is engaged in the banking business) to that financial holding company. In addition, a direct or indirect subsidiary of a financial holding company may not extend credits (excluding the amount of corporate credit card payments issued by a direct or indirect subsidiary of a financial holding company that is engaged in the banking business) to other direct or indirect subsidiaries of the financial holding company in excess of 10% of its capital amount on an individual basis or to those subsidiaries in excess of 20% of its capital amount on an aggregate basis. The subsidiary extending the credit must also obtain an adequate level of collateral depending on the type of such collateral from the other subsidiaries unless the credit is otherwise approved by the Financial Services Commission. The adequate level of collateral for each type of collateral is as follows:

(1)

for deposits and installment savings, obligations of the Korean government or the Bank of Korea, obligations guaranteed by the Korean government or the Bank of Korea, obligations secured by securities issued or guaranteed by the Korean government or the Bank of Korea, 100% of the credit extended;

(2)

for obligations of municipal governments under the Local Autonomy Act, local public enterprise under the Local Public Enterprises Act and investment institutions and other

quasi-investment

institutions under the Basic Act on the Management of

Government-Invested

Institution or for obligations guaranteed by, or secured by the securities issued or guaranteed by, the aforementioned entities pursuant to the relevant regulations, 110% of the credit extended; and

(3)

for any property other than those set forth in paragraphs (1) and (2) above, 130% of the credit extended.

Subject to certain exceptions, a direct or indirect subsidiary of a financial holding company is prohibited from owning the shares of any other direct or indirect subsidiaries (other than those directly controlled by that direct or indirect subsidiary) under the common control of the financial holding company.

Subject to certain exceptions, a direct or indirect subsidiary of a financial holding company is also prohibited from owning the shares of the financial holding company controlling that direct or indirect subsidiary. The transfer of certain assets classified as precautionary or below between a financial holding company and its direct or indirect subsidiary or between the direct and indirect subsidiaries of a financial holding company is prohibited except for:

(1)

transfers to a special purpose company, or entrustment with a trust company, for an

asset-backed

securitization transaction under the

Asset-Backed

Securitization Act;

(2)

transfers to a

mortgage-backed

securities issuance company for a mortgage securitization transaction;

(3)

transfers or

in-kind

contributions to a corporate restructuring vehicle under the Corporate Restructuring Investment Companies Act; and

(4)

transfers to a corporate restructuring company under the Industry Promotion Act.

Disclosure of Management Performance

For the purpose of protecting the depositors and investors in the subsidiaries of financial holding companies, the Financial Services Commission requires financial holding companies to disclose certain material matters including:

(1)

financial condition and profit and loss of the financial holding company and its direct and indirect subsidiaries;

(2)

fund-raising

by the financial holding company and its direct and indirect subsidiaries and the appropriation of such funds;

(3)

any sanctions levied on the financial holding company and its direct and indirect subsidiaries under the Financial Holding Company Act or any corrective measures or sanctions under the Act on the Structural Improvement of the Financial Industry; and

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(4)

occurrence of any

non-performing

assets or financial incident that may have a material adverse effect, or any other event as prescribed in the applicable regulations.

Restrictions on Shareholdings in Other Companies

Generally, a financial holding company may not own (i) more than 5% of the total issued and outstanding shares of another

finance-related

company, (ii) any shares of its affiliates, other than its direct or indirect subsidiaries or (iii) any shares of a

non-finance-related

company.

Restrictions on Shareholdings by Direct and Indirect Subsidiaries

Generally, a direct subsidiary of a financial holding company may not control any other company other than, as an indirect subsidiary of the financial holding company:

•

financial institutions established in foreign jurisdictions;

•

certain financial institutions which are engaged in any business that the direct subsidiary may conduct without any licenses or permits;

•

certain financial institutions whose business is related to the business of the direct subsidiary as described by the Enforcement Decree of the Financial Holding Company Act (for example, a bank subsidiary may control only credit information companies, debt collection companies, credit card companies and financial investment companies with a dealing, brokerage, collective investment, investment advice, discretionary investment management and/or trust license);

•

certain financial institutions whose business is related to the financial business as prescribed by the regulations of the Ministry of Economy and Finance; and

•

certain companies which are not financial institutions but whose business is related to the financial business of the financial holding company as prescribed by the Enforcement Decree of the Financial Holding Company Act (for example, a

finance-related

research company or a

finance-related

information technology company).

Acquisition of such indirect subsidiaries by direct subsidiaries of a financial holding company requires prior permission from the Financial Services Commission or the submission of a report to the Financial Services Commission, depending on the types of the indirect subsidiaries and the amount of total assets of the indirect subsidiaries.

Subject to certain exceptions, an indirect subsidiary of a financial holding company may not control any other company. If an indirect subsidiary of a financial holding company had control over another company at the time it became such an indirect subsidiary, the indirect subsidiary is required to dispose of its interest in the other company within two years from such time.

Restrictions on Transactions between a Bank Holding Company and its Major Investor

A bank holding company and its direct and indirect subsidiaries may not acquire (including through their respective trust accounts) shares issued by the bank holding company’s major investor in excess of 1% of the net aggregate equity capital (as defined above). In addition, if those entities intend to acquire shares issued by that major investor in any single transaction equal to or exceeding the lesser of (x) the amount equivalent to 0.1% of the net aggregate equity capital and (y) ￦5 billion, that entity must obtain prior unanimous board resolutions and then, immediately after the acquisition, file a report to the Financial Services Commission and publicly disclose the filing of the report.

Restrictions on Ownership of a Financial Holding Company

Under the Financial Holding Company Act, a financial institution generally may not control a financial holding company. In addition, any single shareholder and persons who have a special relationship with that

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shareholder may acquire beneficial ownership of up to 10% of the total issued and outstanding shares with voting rights of a bank holding company that controls nationwide banks or 15% of the total issued and outstanding shares with voting rights of a bank holding company that controls only regional banks, subject to certain exceptions. Among others, the Korean government and the Korea Deposit Insurance Corporation are not subject to this limit.

“Non-financial

business group companies” (as defined below), however, may not acquire the beneficial ownership of shares of a bank holding company controlling nationwide banks in excess of 4% of that bank holding company’s outstanding voting shares unless they obtain the approval of the Financial Services Commission and agree not to exercise voting rights in respect of shares in excess of the 4% limit, in which case they may acquire beneficial ownership of up to 10%. Any other person (whether a Korean national or a foreign investor) may acquire no more than 10% of total voting shares issued and outstanding of a bank holding company controlling nationwide banks unless they obtain approval from the Financial Services Commission in each instance where the total holding will exceed 10% (or 15% in the case of a bank holding company controlling only regional banks), 25% or 33% of the total voting shares issued and outstanding of that bank holding company controlling nationwide banks.

Furthermore, in the case where a person (including Korean and foreign investors, but excluding certain persons prescribed under the Enforcement Decree of the Financial Holding Company Act) (i) acquires in excess of 4% of the total issued and outstanding voting shares of any bank holding company (other than a bank holding company controlling only regional banks), (ii) becomes the largest shareholder of such bank holding company in which such person has acquired in excess of 4% of the total issued and outstanding voting shares, (iii) changes its shareholding in such bank holding company, in which it has acquired in excess of 4% of the total issued and outstanding voting shares, by 1% or more of the total issued and outstanding voting shares of such bank holding company or (iv) is a private equity fund or an investment purpose company holding in excess of 4% of the total outstanding voting shares of a bank holding company and changes its members or shareholders, such person must file a report on such change with the Financial Services Commission (x) in case of (i) and (iii), by the last day of the month following the month in which such change occurred, or (y) in case of (ii) and (iv), within ten days after the end of the month in which such change occurred.

“Non-financial

business group companies” as defined under the Financial Holding Company Act include:

(1)

any same shareholder group where the aggregate net assets of all

non-financial

business companies belonging to that group equals or exceeds 25% of the aggregate net assets of all members of that group;

(2)

any same shareholder group where the aggregate assets of all

non-financial

business companies belonging to that group equals or exceeds ￦2 trillion;

(3)

any mutual fund where a same shareholder group identified in (1) or (2) above beneficially owns and/or exercises the voting rights of more than 4% of the total issued and outstanding voting shares of that mutual fund;

(4)

any private equity fund (a) where a person falling under any of items (1) through (3) above is a limited partner holding not less than 10% of the total amount of contributions to the private equity fund, or (b) where a person falling under any of items (1) through (3) above is a general partner, or (c) where the total equity of the private equity fund acquired by each affiliate belonging to several enterprise groups subject to the limitation on mutual investment is 30% or more of the total amount of contributions to the private equity fund; or

(5)

the investment purpose company concerned, where a private equity fund falling under item (4) above acquires or holds stocks in excess of 4% of the stock or equity of such company or exercises de facto control over significant managerial matters of such company through appointment or dismissal of executives or in any other manner.

Sharing of Customer Information among Financial Holding Company and its Subsidiaries

Under the Act on Use and Protection of Credit Information, any individual customer’s credit information must be disclosed or otherwise used by financial institutions only to determine, establish or maintain existing

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commercial transactions with them and only after obtaining written consent to use that information. In addition, under the Act on Real Name Financial Transactions and Confidentiality, an individual working at a financial institution may not provide or reveal information or data concerning the contents of financial transactions to other persons unless such individual receives a request or consent in writing from the holder of a title deed, except under certain exceptions stipulated in the Act. Under the Financial Holding Company Act, a financial holding company and its direct and indirect subsidiaries, however, may share certain credit information of individual customers among themselves for internal management purposes outlined in the Enforcement Decree of the Financial Holding Company Act (such as credit risk management, internal control and customer analysis), without the customers’ written consent, subject to the methods and procedures for provision of such information set forth therein. A subsidiary financial investment company with a dealing and/or brokerage license of a financial holding company may provide that financial holding company and its other direct and indirect subsidiaries information relating to the aggregate amount of cash or securities that a customer of the financial investment company with a dealing and/or brokerage license has deposited, for internal management purposes outlined in the Enforcement Decree of the Financial Holding Company Act, subject to the methods and procedures for provision of such information set forth therein. Recent amendments to the Financial Holding Company Act, which became effective on November 29, 2014, limit the scope of credit information that may be shared without the customers’ prior consent and require certain procedures for provision of customer information as prescribed by the Financial Services Commission. Beginning in November 29, 2014, notice must be given to customers at least once a year regarding (i) the provider of customer information, (ii) the recipient of customer information, (iii) the purpose of providing the information and (iv) the categories of the information provided.

Principal Regulations Applicable to Banks

The banking system in Korea is governed by the Bank Act and the Bank of Korea Act of 1950, as amended. In addition, Korean banks are subject to the regulations and supervision of the Bank of Korea, the Monetary Policy Committee of the Bank of Korea, the Financial Services Commission and its executive body, the Financial Supervisory Service.

The Bank of Korea, established in June 1950 under the Bank of Korea Act, performs the customary functions of a central bank. It seeks to contribute to the sound development of the national economy by price stabilization through establishing and implementing efficient monetary and credit policies with a focus on financial stability. The Bank of Korea acts under instructions of the Monetary Policy Committee, the supreme policy-making body of the Bank of Korea.

Under the Bank of Korea Act, the Monetary Policy Committee’s primary responsibilities are to formulate monetary and credit policies and to determine the operations, management and administration of the Bank of Korea.

The Financial Services Commission, established in April 1998, regulates commercial banks pursuant to the Bank Act, including establishing guidelines on capital adequacy of commercial banks, and promulgates regulations relating to supervision of banks. Furthermore, the Financial Services Commission regulates market entry into the banking business.

The Financial Supervisory Service, established in January 1999, is subject to the instructions and directives of the Financial Services Commission and carries out supervision and examination of commercial banks. In particular, the Financial Supervisory Service sets requirements both for the prudent control of liquidity and for capital adequacy and establishes reporting requirements pursuant to the authority delegated to it under the Financial Services Commission regulations, pursuant to which banks are required to submit annual reports on financial performance and shareholdings, regular reports on management strategy and

non-performing

loans, including write-offs, and management of problem companies and plans for the settlement of bad loans.

Under the Bank Act, approval to commence a commercial banking business or a long-term financing business must be obtained from the Financial Services Commission. Commercial banking business is defined as the lending of funds acquired predominantly from the acceptance of demand deposits for a period not exceeding one year or subject to the limitation established by the Financial Services Commission, for a period between one

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year and three years. Long-term financing business is defined as the lending, for periods in excess of one year, of funds acquired predominantly from

paid-in

capital, reserves or other retained earnings, the acceptance of time deposits with maturities of at least one year, or the issuance of debentures or other bonds. A bank wishing to enter into any business other than commercial banking and long-term financing businesses, such as a trust business, must file a report to the Financial Services Commission. Approval to merge with any other banking institution, to liquidate, spin off, or close a banking business or to transfer all or a part of a business must also be obtained from the Financial Services Commission.

If the Financial Services Commission deems a bank’s financial condition to be unsound or if a bank fails to meet the applicable capital adequacy ratio set forth under Korean law, the Financial Services Commission may order:

•

admonitions or warnings with respect to its officers;

•

capital increases or reductions;

•

assignments of contractual rights and obligations relating to financial transactions;

•

a suspension of performance by its officers of their duties and the appointment of receivers;

•

disposals of property holdings or closures of subsidiaries or branch offices or downsizing;

•

stock cancellations or consolidations;

•

suspension of performance of duties of officers and appointment of managers;

•

transfer of all or part of a business;

•

mergers with other financial institutions;

•

acquisition of such bank by a third party; and/or

•

suspensions of a part or all of its business operations (not more than six months, in the case of a suspension of all business operations).

Capital Adequacy

The Bank Act requires nationwide banks, such as us, to maintain a minimum

paid-in

capital of ￦100 billion and regional banks to maintain a minimum

paid-in

capital of ￦25 billion. All banks, including foreign bank branches in Korea, are also required to maintain a prescribed solvency position. A bank must also set aside in its legal reserve an amount equal to at least 10% of the net income after tax each time it pays dividends on net profits earned until its legal reserve reaches at least the aggregate amount of its

paid-in

capital.

Under the Detailed Regulation on the Supervision of the Banking Business, the capital of a bank is divided into two categories, Tier I and Tier II capital. Tier I capital (core capital) consists of (i) common equity Tier I capital, including

paid-in

capital, capital surplus and retained earnings related to common equity and accumulated other comprehensive gains and losses, and (ii) additional Tier I capital, including

paid-in

capital and capital surplus related to hybrid Tier I capital instruments that, among other things, qualify as contingent capital and are subordinated to subordinated debt. Tier II capital (supplementary capital) consists of, among other things, capital and capital surplus from the issuance of Tier II capital instruments, allowances for loan losses on loans classified as “normal” or “precautionary,” subordinated debt and other capital securities which meet the standards prescribed by the governor of the Financial Supervisory Service under Article 26(2) of the Regulation on the Supervision of the Banking Business.

All banks must meet minimum ratios of Tier I and Tier II capital (less any capital deductions) to risk-weighted assets, determined in accordance with Financial Services Commission requirements that have been formulated based on BIS standards. These requirements were adopted and became effective in 1996, and were amended effective January 1, 2008 upon the implementation by the Financial Supervisory Service of Basel II. Under such requirements, all domestic banks and foreign bank branches are required to meet a minimum ratio of

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Tier I and Tier II capital (less any capital deductions) to risk-weighted assets of 8.0%. Commencing in July 2013, the Financial Services Commission promulgated a series of amended regulations implementing Basel III, pursuant to which Korean banks and bank holding companies were required to maintain a minimum ratio of common equity Tier I capital to risk-weighted assets of 3.5% and Tier I capital to risk-weighted assets of 4.5% from December 1, 2013, which minimum ratios were increased to 4.0% and 5.5%, respectively, from January 1, 2014 and increased further to 4.5% and 6.0%, respectively, from January 1, 2015. Such requirements are in addition to the pre-existing requirement for a minimum ratio of Tier I and Tier II capital (less any capital deductions) to risk-weighted assets of 8.0%, which remains unchanged. The amended regulations also require an additional capital conservation buffer of 2.5% in 2021 and 2022, as well as a potential counter-cyclical capital buffer of up to 2.5%, which is determined on a quarterly basis by the Financial Services Commission. Furthermore, we and Woori Bank were each designated as a domestic systemically important bank holding company and a domestic systematically important bank for 2021 by the Financial Services Commission and was subject to an additional capital requirement of 1.0% in 2021. In July 2021, we and Woori Bank were again each designated as a domestic systemically important bank holding company and a domestic systemically important bank, respectively, for 2022, which subjects us and Woori Bank to the additional capital requirement of 1.0% in 2022.

Under the Detailed Regulation on the Supervision of the Banking Business, the following risk-weight ratios must be applied by Korean banks in respect of home mortgage loans:

(1)

for those banks which adopted a standardized approach for calculating credit risk capital requirements, a risk-weight ratio between 20% and 150% depending on the borrower’s source of funding and position in the

loan-to-value

bracket and whether the loan is considered a high-risk home mortgage loan; and

(2)

for those banks which adopted an internal ratings-based approach for calculating credit risk capital requirements, a risk-weight ratio calculated with reference to the probability of default, loss given default and exposure at default, each as defined under the Detailed Regulation on the Supervision of the Banking Business.

Liquidity

All banks are required to ensure adequate liquidity by matching the maturities of their assets and liabilities in accordance with the Regulation on the Supervision of the Banking Business. Banks may not invest an amount exceeding 100% of their Tier I and Tier II capital (less any capital deductions) in equity securities and certain other securities with a redemption period of over three years. This stipulation does not apply to Korean government bonds, Monetary Stabilization Bonds issued by the Bank of Korea or debentures and stocks referred to in items 1 and 2, respectively, of paragraph (6) of Article 11 of the Act on the Structural Improvement of the Financial Industry. The Financial Services Commission uses the liquidity coverage ratio as the principal liquidity risk management measure, and currently requires each Korean bank to:

•

maintain a liquidity coverage ratio of not less than 100% (temporarily reduced to 85% until June 2022, to 90% until September 2022, to 92.5% until December 2022, to 95% until March 2023 and to 97.5% until June 2023 in response to the

COVID-19

pandemic);

•

maintain a foreign currency liquidity coverage ratio of not less than 80% (temporarily reduced to 70% until June 2022 for purposes of increasing foreign currency liquidity in the Korean financial markets); and

•

submit monthly reports with respect to the maintenance of these ratios.

In April 2020, in order to encourage financial institutions to provide financial support to companies adversely affected by

COVID-19,

the Financial Services Commission announced that it would temporarily lower the required liquidity coverage ratio to 85% and the required foreign currency liquidity coverage ratio to 70%. Following a series of extensions by the Financial Services Commission, the temporary deregulation measures for the foreign currency liquidity coverage ratio are currently scheduled to expire at the end of June 2022, while the

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temporary deregulation measures for the liquidity coverage ratio will incrementally return to normal until its final expiration in June 2023.

The Monetary Policy Committee of the Bank of Korea is empowered to fix and alter minimum reserve requirements that banks must maintain against their deposit liabilities. The current minimum reserve ratios are:

•

7% of average balances for Won currency demand deposits outstanding;

•

0% of average balances for Won currency employee asset establishment savings deposits, employee long-term savings deposits, employee house purchase savings deposits, long-term house purchase savings deposits, household long-term savings deposits and employee preferential savings deposits outstanding (with respect to employee-related deposits and long-term household savings deposits, only if such deposits were made prior to February 28, 2013); and

•

2% of average balances for Won currency time deposits, installment savings deposits, mutual installments, housing installments and certificates of deposit outstanding.

For foreign currency deposit liabilities, a 2% minimum reserve ratio is applied to time deposits with a maturity of one month or longer, certificates of deposit with a maturity of 30 days or longer and savings deposits with a maturity of six months or longer and a 7% minimum reserve ratio is applied to other deposits. A 1% minimum reserve ratio applies to deposits in offshore accounts, immigrant accounts and resident accounts opened by financial institutions (excluding bank holding companies) and the Export-Import Bank of Korea as well as foreign currency certificates of deposit held by account holders of such offshore accounts, immigrant accounts and resident accounts opened by financial institutions (excluding bank holding companies) and the Export-Import Bank of Korea.

Furthermore, under the Regulation on the Supervision of the Banking Business, Woori Bank is required to maintain a minimum

“mid-

to long-term foreign exchange funding ratio” of 100%.

“Mid-to

long term foreign exchange funding ratio” refers to the ratio of (1) the total outstanding amount of foreign exchange borrowing with a maturity of more than one year to (2) the total outstanding amount of foreign exchange lending with a maturity of one year or more.

Net Stable Funding Ratio and Leverage Ratio Requirements

The Financial Services Commission has implemented the Regulation on Supervision of the Banking Business, which imposes certain liquidity- and leverage-related ratio requirements on banks in Korea, in accordance with Basel III. Pursuant to such Regulation, each Korean bank is required to:

•

maintain a net stable funding ratio (defined as the ratio of the available amount of stable funding to the required amount of stable funding) of not less than 100%, where (i) the available amount of stable funding generally refers to the portion of liabilities and capital expected to be reliable over a

one-year

time horizon and (ii) the required amount of stable funding generally refers to the amount of stable funding that is required to be maintained based on the liquidity characteristics, residual maturities and

off-balance

sheet exposures of the bank’s assets, each as calculated in accordance with the Detailed Regulation on Supervision of the Banking Business;

•

maintain a leverage ratio (defined as the ratio of core capital to total exposures) of not less than 3%, where (i) core capital includes

paid-in

capital, capital surplus, retained earnings and hybrid Tier I capital instruments and (ii) total exposures include

on-balance

sheet exposures, derivative exposures, securities financing transaction exposures and

off-balance

sheet exposures, each as calculated in accordance with the Detailed Regulation on Supervision of the Banking Business; and

•

submit monthly reports with respect to the maintenance of these ratios.

Financial Exposure to Any Individual Customer or Major Shareholder

Under the Bank Act, subject to certain exceptions, the sum of large exposures by a bank—in other words, the total sum of its credits to single individuals, juridical persons or business groups that exceed 10% of the sum

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of Tier I and Tier II capital (less any capital deductions)—generally must not exceed five times the sum of Tier I and Tier II capital (less any capital deductions). In addition, subject to certain exceptions, banks generally may not extend credit (including loans, guarantees, purchases of securities (limited to those extended for financial support) and any other transactions that directly or indirectly create credit risk) in excess of 20% of the sum of Tier I and Tier II capital (less any capital deductions) to a single individual or juridical person, or grant credit in excess of 25% of the sum of Tier I and Tier II capital (less any capital deductions) to a single group of companies as defined in the Monopoly Regulations and Fair Trade Act.

The Bank Act also provides for certain restrictions on extending credits to a major shareholder. A “major shareholder” is defined as:

•

a shareholder holding (together with persons who have a special relationship with that shareholder) in excess of 10%; (or 15% in the case of regional banks) in the aggregate of the bank’s total issued and outstanding voting shares; or

•

a shareholder holding (together with persons who have a special relationship with such shareholder) in excess of 4% in the aggregate of the bank’s (excluding regional banks) total issued and outstanding voting shares of a bank (excluding shares subject to the shareholding restrictions on

“non-financial

business group companies” as described below), where such shareholder is the largest shareholder or has actual control over the major business affairs of the bank through, for example, appointment and dismissal of the officers pursuant to the Enforcement Decree of the Bank Act.

Non-financial

business group companies primarily consist of: (i) any single shareholding group whose

non-financial

company assets comprise no less than 25% of its aggregate net assets; (ii) any single shareholding group whose

non-financial

company assets comprise no less than ￦2 trillion in aggregate; or (iii) any investment company under the Financial Investment Services and Capital Markets Act of which any single shareholding group identified in (i) or (ii) above, owns more than 4% of the total issued and outstanding shares.

Under these restrictions, banks may not extend credits to a major shareholder (together with persons who have a special relationship with that shareholder) in an amount greater than the lesser of (x) 25% of the sum of the bank’s Tier I and Tier II capital (less any capital deductions) and (y) the relevant major shareholder’s shareholding ratio multiplied by the sum of the bank’s Tier I and Tier II capital (less any capital deductions). In addition, the total sum of credits granted to all major shareholders must not exceed 25% of the bank’s Tier I and Tier II capital (less any capital deductions).

Interest Rates

Korean banks generally depend on deposits as their primary funding source. Under the Act on Registration of Credit Business, Etc. and Protection of Finance Users and the regulations thereunder, interest rates on loans made by registered banks in Korea to individuals or small corporations, as defined under the Framework Act on Small and Medium Enterprises, currently may not exceed 24% per annum. An amendment to regulations on loans that reduces the maximum interest rate that may be charged from 24% to 20% is expected to become effective in July 2021. Historically, interest rates on deposits and lending were regulated by the Monetary Policy Committee. There are no controls on deposit interest rates in Korea, except for the prohibition on interest payments on current account deposits.

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Lending to Small- and

Medium-Sized

Enterprises

In order to obtain funding from the Bank of Korea at concessionary rates for their small- and

medium-sized

enterprise loans, banks are required to allocate a certain minimum percentage of any quarterly increase in their Won currency lending to small- and

medium-sized

enterprises. Currently, this minimum percentage is 45% in the case of nationwide banks and 60% in the case of regional banks. If a bank does not comply with this requirement, the Bank of Korea may:

•

require the bank to prepay all or a portion of funds provided to that bank in support of loans to small- and

medium-sized

enterprises; or

•

lower the bank’s credit limit.

Disclosure of Management Performance

For the purpose of protecting depositors and investors in commercial banks, the Financial Services Commission requires commercial banks to publicly disclose certain material matters, including:

•

financial condition and profit and loss of the bank and its subsidiaries;

•

fund raising by the bank and the appropriation of such funds;

•

any sanctions levied on the bank under the Bank Act or any corrective measures or sanctions under the Act on the Structural Improvement of the Financial Industry; and

•

except as may otherwise have been disclosed by a bank or its financial holding company listed on the KRX KOSPI Market in accordance with the Financial Investment Services and Capital Markets Act, occurrence of any of the following events or any other event as prescribed by the applicable regulations that have damaged or are likely to damage the soundness of the bank’s management:

(i)

loans bearing no profit made to a single business group in an amount exceeding 10% of the sum of the bank’s Tier I and Tier II capital (less any capital deductions) as of the end of the previous month (where the loan exposure to that borrower is calculated pursuant to the criteria under the Detailed Regulation on the Supervision of the Banking Business), unless the loan exposure to that group is not more than ￦4 billion; and

(ii)

any loss due to court judgments or similar decisions in civil proceedings in an amount exceeding 1% of the sum of the bank’s Tier I and Tier II capital (less any capital deductions) as of the end of the previous month, unless the loss is not more than ￦1 billion.

Restrictions on Lending

Pursuant to the Bank Act and its

sub-regulations,

commercial banks may not provide:

•

loans directly or indirectly secured by a pledge of a bank’s own shares;

•

loans directly or indirectly to enable a natural or juridical person to buy the bank’s own shares;

•

loans to any of the bank’s officers or employees, other than

de minimis

loans of up to (i) ￦20 million in the case of a general loan, (ii) ￦50 million in the case of a general loan plus a housing loan or (iii) ￦60 million in the aggregate for general loans, housing loans and loans to pay damages arising from wrongful acts of employees in financial transactions;

•

credit (including loans) secured by a pledge of shares of a subsidiary corporation of the bank or to enable a natural or juridical person to buy shares of a subsidiary corporation of the bank; or

•

loans to any officers or employees of a subsidiary corporation of the bank, other than general loans of up to ￦20 million or general and housing loans of up to ￦50 million in the aggregate.

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Regulations Relating to Retail Household Loans

The Financial Services Commission has implemented a number of changes in recent years to the regulations relating to retail household lending by banks. Under the currently applicable regulations:

•

as to any new loans secured by housing (including apartments) located nationwide, the

loan-to-value

ratio (the aggregate principal amount of loans secured by such collateral over the appraised value of the collateral) should not exceed 70%;

•

as to any new loans secured by housing (including apartments) located in areas of excessive investment or housing (including apartments) located in areas of high speculation, in each case as designated by the government, where the price does not exceed ￦900 million, the

loan-to-value

ratio should not exceed 40%, except that such maximum

loan-to-value

ratio should be 50% for

low-income

households that (i) have an annual income of less than ￦80 million (or ￦90 million for first-home buyers), (ii) do not currently own any housing and (iii) are using the loan to purchase

low-price

housing valued at ￦600 million or less;

•

as to any new loans secured by high-priced housing (including apartments) located in areas of excessive investment or high speculation, in each case, as designated by the government, where the price exceeds ￦900 million (based on the data of a certified rating institution, for which the detailed standards shall be as determined by the director of the Financial Supervisory Service), the

loan-to-value

ratio should not exceed 40% for the portion of the price not exceeding ￦900 million, and should not exceed 20% for the amount of such price exceeding ￦900 million, and no new loans shall be made available for any high-priced housing (including apartments) located in areas of excessive investment or high speculation, where the price exceeds ￦1.5 billion;

•

as to any new loans secured by housing to be extended to a household that already owns one or more houses, the maximum

loan-to-value

ratio is 10% lower than the applicable

loan-to-value

ratio described above;

•

any new loans secured by housing (including apartments) located in areas of excessive investment or high speculation, in each case, as designated by the government, are not permitted for households that already own one or more houses unless otherwise specified by the applicable regulations;

•

any new loans secured by high-priced housing (including apartments) located in areas of excessive investment or high speculation, in each case, as designated by the government, where the price exceeds ￦900 million (based on the data of a certified rating institution, for which the detailed standards shall be as determined by the director of the Financial Supervisory Service), are generally prohibited;

•

as to any new loans secured by housing (including apartments) located in areas of excessive investment or high speculation, in each case, as designated by the government, the borrower’s

debt-to-income

ratio (calculated as (1) the aggregate annual total payment amount of (x) the principal of and interest on loans secured by such housing and other housing and (y) the interest on other debts of the borrower over (2) the borrower’s annual income) should not exceed 40%, except that such maximum

debt-to-income

ratio is 50% for

low-income

households that (i) have an annual income of less than ￦80 million (or ￦90 million for first-home buyers), (ii) do not currently own any housing and (iii) are using the loan to purchase

low-price

housing valued at ￦600 million or less;

•

as to any new loans secured by apartments located in an unregulated Seoul metropolitan area to be extended to a household that already owns one or more houses, the maximum

debt-to-income

ratio is 10% lower than the applicable

debt-to-income

ratio described above; and

•

as to any new loans extended to a household that has already obtained a loan secured by housing (including apartments) located in areas of excessive investment, high speculation or adjustment target, in each case as designated by the government, where the price exceeds ￦600 million (based on the data of a certified rating institution, for which the detailed standards shall be as determined by the director of the Financial Supervisory Service), the borrower’s debt-service-ratio (calculated as (1) the aggregate annual

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total payment amount of the principal of and interest on financial liabilities, including the loans secured by such high-priced housing, divided by (2) the borrower’s annual income) should not exceed 40% unless otherwise specified by the applicable regulations.

Restrictions on Investments in Property

A bank may not invest in securities set forth below in excess of 100% of the sum of the bank’s Tier I and Tier II capital (less any capital deductions):

•

debt securities (within the meaning of paragraph (3) of Article 4 of the Financial Investment Services and Capital Markets Act) the maturity of which exceeds three years, but excluding government bonds, monetary stabilization bonds issued by the Bank of Korea and bonds within the meaning of item 2, paragraph (6) of Article 11 of the Act on the Structural Improvement of the Financial Industry;

•

equity securities, but excluding securities within the meaning of item 1, paragraph (6) of Article 11 of the Act on the Structural Improvement of the Financial Industry;

•

derivatives linked securities (within the meaning of paragraph (7) of Article 4 of the Financial Investment Services and Capital Markets Act) the maturity of which exceeds three years; and

•

beneficiary certificates, investment contracts and depositary receipts (within the meaning of paragraph (2) of Article 4 of the Financial Investment Services and Capital Markets Act) the maturity of which exceeds three years.

A bank may possess real estate property only to the extent necessary for the conduct of its business. The aggregate value of such property may not exceed 60% of the sum of the bank’s Tier I and Tier II capital (less any capital deductions). Any property that a bank acquires by exercising its rights as a secured party, or which a bank is prohibited from acquiring under the Bank Act, must be disposed of within three years, unless specified otherwise by the regulations thereunder.

Restrictions on Shareholdings in Other Companies

Under the Bank Act, a bank may not own more than 15% of shares outstanding with voting rights of another corporation, except where, among other reasons:

•

that corporation engages in a category of financial businesses set forth by the Financial Services Commission; or

•

the acquisition of shares by the bank is necessary for the corporate restructuring of such corporation and is approved by the Financial Services Commission.

In the above exceptional cases, the total investment in corporations in which the bank owns more than 15% of the outstanding shares with voting rights may not exceed (i) 20% of the sum of Tier I and Tier II capital (less any capital deductions) or (ii) 30% of the sum of Tier I and Tier II capital (less any capital deductions) where the acquisition satisfies the requirements determined by the Financial Services Commission.

The Bank Act provides that a bank using its bank accounts and its trust accounts is not permitted to acquire the shares issued by the major shareholder of such bank in excess of an amount equal to 1% of the sum of Tier I and Tier II capital (less any capital deductions).

Restrictions on Bank Ownership

Under the Bank Act, a single shareholder and persons who have a special relationship with that shareholder generally may acquire beneficial ownership of no more than 10% of a nationwide bank’s total issued and outstanding shares with voting rights and no more than 15% of a regional bank’s total issued and outstanding shares with voting rights. The Korean government, the KDIC and bank holding companies qualifying under the Financial Holding Company Act are not subject to this limit. Pursuant to the Bank Act,

non-financial

business group companies may not acquire beneficial ownership of shares of a nationwide bank in excess of 4% (or 15%

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in the case of a regional bank) of that bank’s outstanding voting shares, unless they satisfy certain requirements set forth by the Enforcement Decree of the Bank Act, obtain the approval of the Financial Services Commission and agree not to exercise voting rights in respect of shares in excess of the 4% limit (or the 15% limit in the case of a regional bank), in which case they may acquire beneficial ownership of up to 10% of a nationwide bank’s outstanding voting shares. The Bank Act grants an exception for

non-financial

business group companies which, at the time of the enactment of the amended provisions, held more than 4% of the shares of a bank.

In addition, if a foreign investor, as defined in the Foreign Investment Promotion Act, owns in excess of 4% of a nationwide bank’s outstanding voting shares,

non-financial

business group companies may acquire beneficial ownership of up to 10% (or 15% in the case of a regional bank) of that bank’s outstanding voting shares, and in excess of 10% (or 15% in the case of a regional bank), 25% or 33% of that bank’s outstanding voting shares with the approval of the Financial Services Commission, in each instance, up to the number of shares owned by the foreign investor. Any other person (whether a Korean national or a foreign investor), with the exception of

non-financial

business group companies described above, may acquire no more than 10% of a nationwide bank’s total voting shares issued and outstanding, unless they obtain approval from the Financial Services Commission in each instance where the total holding will exceed 10% (or 15% in the case of regional banks), 25% or 33% of the bank’s total voting shares issued and outstanding provided that, in addition to the foregoing threshold shareholding ratios, the Financial Services Commission may, at its discretion, designate a separate and additional threshold shareholding ratio.

Deposit Insurance System

The Depositor Protection Act provides insurance for certain deposits of banks in Korea through a deposit insurance system. Under the Depositor Protection Act, all banks governed by the Bank Act are required to pay an insurance premium to the KDIC on a quarterly basis, and the rate is determined under the Enforcement Decree to the Depositor Protection Act. If the KDIC makes a payment on an insured amount, it will acquire the depositors’ claims with respect to that payment amount. The KDIC insures a maximum of ￦50 million per individual for deposits and interest in a single financial institution, regardless of when the deposits were made or the size of the deposits.

Restrictions on Foreign Exchange Position

Under the Korean Foreign Exchange Transaction Law, each of a bank’s net overpurchased and oversold positions may not exceed 50% of its shareholder’s equity as of the end of the prior month.

Laws and Regulations Governing Other Business Activities

A bank must register with the Ministry of Economy and Finance to enter the foreign exchange business, which is governed by the Foreign Exchange Transaction Act of Korea. A bank must obtain the permission of the Financial Services Commission to enter the securities business, which is governed by regulations under the Financial Investment Services and Capital Markets Act. Under these laws, a bank may engage in the foreign exchange business, securities repurchase business, governmental/public bond underwriting business and governmental bond dealing business.

Regulations on Trust Business

A bank must obtain approval from the Financial Services Commission to engage in trust businesses. The Trust Act and the Financial Investment Services and Capital Markets Act govern the trust activities of banks, and they are subject to various legal and accounting procedures and requirements, including the following:

•

under the Trust Act, assets accepted in trust by a bank in Korea must be segregated from other assets in the accounts of that bank; and

•

depositors and other general creditors cannot obtain or assert claims against the assets comprising the trust accounts in the event the bank is liquidated or

wound-up.

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The bank must make a special reserve of 25% or more of fees from each unspecified money trust account for which a bank guarantees the principal amount and a fixed rate of interest until the total reserve for that account equals 5% of the trust amount.

Under the Financial Investment Services and Capital Markets Act, which became effective in February 2009, a bank with a trust business license (such as Woori Bank) is permitted to offer both specified money trust account products and unspecified money trust account products. However, pursuant to guidelines from regulatory authorities that discourage the sale of unspecified money trust account products, sales of such products have generally been suspended.

Regulations on Credit Card Business

General

In order to enter the credit card business, a company must obtain a license from the Financial Services Commission. Credit card businesses are governed by the Specialized Credit Financial Business Act, which sets forth specific requirements with respect to the credit card business as well as generally prohibiting unsound business practices relating to the credit card business which may infringe on the rights of credit card holders or negatively affect the soundness of the credit card industry. Credit card companies, including our wholly-owned subsidiary, Woori Card, are regulated by the Financial Services Commission and the Financial Supervisory Service.

Disclosure and Reports

Under the Specialized Credit Financial Business Act and the regulations thereunder, a credit card company is required to disclose on a periodic and

on-going

basis certain material matters and events. In addition, a credit card company must submit periodic reports with respect to its results of operations to the Governor of the Financial Supervisory Service, in accordance with the guidelines of the Financial Supervisory Service.

Restrictions on Funding

Under the Specialized Credit Financial Business Act and the regulations thereunder, a credit card company must ensure that its total assets do not exceed an amount equal to eight times its equity capital and that the ratio of its adjusted equity capital to its adjusted total assets is not less than 8.0%. However, if a credit card company is unable to comply with such limit upon the occurrence of unavoidable events, such as drastic changes in the domestic and global financial markets, such limit may be adjusted through a resolution of the Financial Services Commission.

Risk of Loss Due to Lost, Stolen, Forged or Altered Credit Cards

Under the Specialized Credit Financial Business Act, a credit card company is liable for any loss arising from the unauthorized use of credit cards or debit cards after it has received notice from the holder of the loss or theft of the card. A credit card company is also responsible for any losses resulting from the use of forged or altered credit cards, debit cards and

pre-paid

cards. A credit card company may, however, transfer all or part of this latter risk of loss to holders of credit card in the event of willful misconduct or gross negligence by holders of credit card if the terms and conditions of the agreement entered between the credit card company and members of such cards specifically provide for that transfer.

For these purposes, disclosure of a customer’s password that is made intentionally or through gross negligence, or the transfer of or giving as collateral of the credit card or debit card, is considered willful misconduct or gross negligence. However, a disclosure of a cardholder’s password that is made under irresistible force or threat to cardholder or his/her relatives’ life or health will not be deemed as willful misconduct or negligence of the cardholder.

Each credit card company must institute appropriate measures to fulfill these obligations, such as establishing provisions, purchasing insurance or joining a cooperative association.

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Pursuant to the Specialized Credit Financial Business Act and its Enforcement Decree, a credit card company will be liable for any losses arising from loss or theft of a credit card (which was not from the holder’s willful misconduct or negligence) during the period beginning 60 days before the notice by the holder to the credit card company.

Pursuant to the Specialized Credit Financial Business Act, the Financial Services Commission may either restrict the limit or take other necessary measures against the credit card company with respect to such matters as the maximum limits on the amount per credit card, details of credit card terms and conditions, management of credit card merchants and collection of claims, including the following:

•

maximum limits for cash advances on credit cards;

•

use restrictions on debit cards with respect to per day or per transaction usage;

•

aggregate issuance limits and maximum limits on the amount per card on

pre-paid

cards; and

•

other matters prescribed by the Enforcement Decree to the Specialized Credit Financial Business Act.

Lending Ratio in Ancillary Business

Pursuant to the Enforcement Decree to the Specialized Credit Financial Business Act, a credit card company must maintain an aggregate quarterly average outstanding lending balance to credit cardholders (including cash advances and credit card loans, but excluding restructured loans) no greater than the sum of (i) its aggregate quarterly average outstanding credit card balance arising from the purchase of goods and services and (ii) the aggregate quarterly debit card transaction volume.

Issuance of New Cards and Solicitation of New Cardholders

The Specialized Credit Financial Business Act and its Enforcement Decree establish the conditions under which a credit card company may issue new cards and solicit new members. New credit cards may be issued only to the following persons:

•

persons who are at least 19 years old when they apply for a credit card;

•

persons whose capability to pay bills as they come due has been verified using standards established by the credit card company; and

•

in the case of minors who are 18 years old, persons who submit documents evidencing employment as of the date of the credit card application, such as an employment certificate, or persons for whom the issuance of a credit card is necessitated by governmental policies, such as financial aid.

In addition, a credit card company may not solicit credit card members by:

•

providing economic benefits or promising to provide economic benefits in excess of 10% of the annual credit card fee (in the case of credit cards with annual fees that are less than the average of the annual fees charged by major credit cards in Korea, the annual fee will be deemed to be equal to such average annual fee) in connection with issuing a credit card; provided, however, that providing economic benefits to or promising to provide economic benefits not exceeding the amount of the annual credit card fee to an applicant that becomes a credit card member through an online platform is permissible;

•

soliciting applicants on roads, public places or along corridors used by the general public;

•

soliciting applicants through visits, except those visits made upon prior consent and visits to a business area;

•

soliciting applicants through the Internet, without verifying whether the applicant is who he or she purports to be using a digital signature under the Digital Signature Act which is capable of verifying his or her real name; and

•

soliciting applicants through pyramid sales methods.

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Compliance Rules on Collection of Receivable Claims

Pursuant to Supervisory Regulation on the Specialized Credit Financial Business, a credit card company may not, when collecting receivable claims:

•

exert violence or threaten violence;

•

inform a related party (a guarantor of the debtor, blood relative or fiancé(e) of the debtor, a person living in the same household as the debtor or a person working in the same workplace as the debtor) of the debtor’s obligations without just cause;

•

provide false information relating to the debtor’s obligation to the debtor or his or her related parties;

•

threaten to sue or sue the debtor for fraud despite lack of affirmative evidence to establish that the debtor has submitted forged or false documentation with respect to his or her ability to make payment;

•

visit or telephone the debtor during late evening hours (between the hours of 9:00 p.m. and 8:00 a.m.); and

•

utilize other uncustomary methods to collect the receivables that interfere with the privacy or the peace in the workplace of the debtor or his or her related parties.

Regulations on Class Actions Regarding Securities

The Law on Class Actions Regarding Securities was enacted as of January 20, 2004 and last amended on May 28, 2013. The Law on Class Actions Regarding Securities governs class actions suits instituted by one or more representative plaintiff(s) on behalf of 50 or more persons who claim to have been damaged in a capital markets transaction involving securities issued by a listed company in Korea.

Applicable causes of action with respect to such suits include:

•

claims for damages caused by misleading information contained in a securities statement;

•

claims for damages caused by the filing of a misleading business report, semi-annual report, or quarterly report;

•

claims for damages caused by insider trading or market manipulation; and

•

claims instituted against auditors for damages caused by accounting irregularities.

Any such class action may be instituted upon approval from the presiding court and the outcome of such class action will have a binding effect on all potential plaintiffs who have not joined the action, with the exception of those who have filed an opt out notice with such court.

Regulations on Financial Investment Business

General

The Financial Investment Services and Capital Markets Act, which became effective in February 2009, regulates and governs the financial investment business in Korea. The entities that regulate and supervise financial investment companies are the Financial Services Commission, the Financial Supervisory Service and the Securities and Futures Commission.

Under the Financial Investment Services and Capital Markets Act, a company must obtain a license from the Financial Services Commission to commence a financial investment business such as a brokerage business, a dealing business or an underwriting business, or register with the Financial Services Commission to commence a financial investment business such as an investment advisory business or a discretionary investment management business. A bank is permitted to engage in certain types of financial investment business as specified under the Enforcement Decree of the Bank Act. Prior to commencing a financial investment business, a bank must file a report with the Financial Services Commission and apply for a license pursuant to the Financial Investment Services and Capital Markets Act.

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Consolidation of Capital Markets-Related Laws

Prior to the effectiveness of the Financial Investment Services and Capital Markets Act, there were separate laws regulating various types of financial institutions depending on the type of financial institution (e.g., securities companies, futures companies, trust business companies and asset management companies) and subjecting financial institutions to different licensing and ongoing regulatory requirements (e.g., the Korean Securities Exchange Act, the Futures Business Act and the Indirect Investment Asset Management Business Act). By applying one uniform set of rules to the same financial business having the same economic function, the Financial Investment Services and Capital Markets Act attempts to improve and address issues caused by the previous regulatory system under which the same economic function relating to capital markets-related businesses are governed by multiple regulations. To this end, the Financial Investment Services and Capital Markets Act categorizes capital markets-related businesses into six different functions, as follows:

•

dealing, trading and underwriting of “financial investment products” (as defined below);

•

brokerage of financial investment products;

•

establishment of collective investment schemes and the management thereof;

•

investment advice;

•

discretionary investment management; and

•

trusts (together with the five businesses set forth above, the “Financial Investment Businesses”).

Accordingly, all financial businesses relating to financial investment products have been reclassified as one or more of the Financial Investment Businesses described above, and financial institutions are subject to the regulations applicable to their relevant Financial Investment Businesses, regardless of the type of the financial institution. For example, under the Financial Investment Services and Capital Markets Act, derivative businesses conducted by former securities companies and future companies will be subject to the same regulations.

Banking and insurance businesses are not subject to the Financial Investment Services and Capital Markets Act and will continue to be regulated under separate laws. However, they may become subject to the Financial Investment Services and Capital Markets Act if their activities involve any financial investment businesses requiring a license pursuant to the Financial Investment Services and Capital Markets Act.

Comprehensive Definition of Financial Investment Products

In an effort to encompass the various types of securities and derivative products available in the capital markets, the Financial Investment Services and Capital Markets Act sets forth a comprehensive term “financial investment products,” defined to mean all financial products with a risk of loss in the invested amount (in contrast to “deposits,” which are financial products for which the invested amount is protected or preserved). Financial investment products are classified into two major categories: (i) “securities” (financial investment products in which the risk of loss is limited to the invested amount) and (ii) “derivatives” (financial investment products in which the risk of loss may exceed the invested amount). As a result of the general and broad definition of financial investment products, a variety of financial products may be defined as a financial investment product, which would enable Financial Investment Companies (defined below) to handle a broader range of financial products. Under the Financial Investment Services and Capital Markets Act, entities formerly licensed as securities companies, asset management companies, futures companies and other entities engaging in any Financial Investment Business are classified as “Financial Investment Companies.”

New License System and the Conversion of Existing Licenses

Under the Financial Investment Services and Capital Markets Act, Financial Investment Companies are able to choose the type of Financial Investment Business in which to engage (through a “check the box” method set forth in the relevant license application), by specifying the desired (i) Financial Investment Business, (ii) financial investment product and (iii) target customers to which financial investment products may be sold or

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distributed (that is, general investors or professional investors). Licenses will be issued under the specific business

sub-categories

described in the foregoing sentence. For example, it would be possible for a Financial Investment Company to obtain a license to engage in the Financial Investment Business of (i) dealing (ii) over the counter derivatives products (iii) only with sophisticated investors.

Financial institutions that engage in business activities constituting a Financial Investment Business are required to take certain steps, such as renewal of their license or registration, in order to continue engaging in such business activities. Financial institutions that are not licensed Financial Investment Companies are not permitted to engage in any Financial Investment Business, subject to the following exceptions: (i) banks and insurance companies are permitted to engage in certain categories of Financial Investment Businesses for a period not exceeding six months commencing on the effective date of the Financial Investment Services and Capital Markets Act; and (ii) other financial institutions that engaged in any Financial Investment Business prior to the effective date of the Financial Investment Services and Capital Markets Act (whether in the form of a concurrent business or an incidental business) are permitted to continue such Financial Investment Business for a period not exceeding six months commencing on the effective date of the Financial Investment Services and Capital Markets Act.

Expanded Business Scope of Financial Investment Companies

Under the previous regulatory regime in Korea, it was difficult for a financial institution to explore a new line of business or expand upon its existing line of business. For example, previously a financial institution licensed as a securities company generally was not permitted to engage in the asset management business. In contrast, under the Financial Investment Services and Capital Markets Act, pursuant to the integration of its current businesses involving financial investment products into a single Financial Investment Business, a licensed Financial Investment Company is permitted to engage in all types of Financial Investment Businesses, subject to satisfying relevant regulations (for example, maintaining an adequate “Chinese Wall,” to the extent required). As to incidental businesses (that is, a financial related business which is not a Financial Investment Business), the Financial Investment Services and Capital Markets Act generally allows a Financial Investment Company to freely engage in such incidental businesses by shifting away from the previous positive-list system towards a more comprehensive system. In addition, a Financial Investment Company is permitted to (i) outsource marketing activities by contracting “introducing brokers” that are individuals but not employees of the Financial Investment Company, (ii) engage in foreign exchange businesses related to their Financial Investment Business and (iii) participate in the settlement network, pursuant to an agreement among the settlement network participants.

Improvement in Investor Protection Mechanism

While the Financial Investment Services and Capital Markets Act widens the scope of financial businesses in which financial institutions are permitted to engage, a more rigorous investor-protection mechanism is also imposed upon Financial Investment Companies dealing in financial investment products. The Financial Investment Services and Capital Markets Act distinguishes general investors from sophisticated investors and provides new or enhanced protections to general investors. For instance, the Financial Investment Services and Capital Markets Act expressly provides for a strict know-your-customer rule for general investors and imposes an obligation that Financial Investment Companies should market financial investment products suitable to each general investor, using written explanatory materials. Under the Financial Investment Services and Capital Markets Act, a Financial Investment Company could be liable if a general investor proves (i) damage or losses relating to such general investor’s investment in financial investment products solicited by such Financial Investment Company and (ii) the absence of the requisite written explanatory materials, without having to prove fault or causation. With respect to conflicts of interest between Financial Investment Companies and investors, the Financial Investment Services and Capital Markets Act expressly requires (i) disclosure of any conflict of interest to investors and (ii) mitigation of conflicts of interest to a comfortable level or abstention from the relevant transaction.

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Other Changes to Securities / Fund Regulations

The Financial Investment Services and Capital Markets Act changed various securities regulations including those relating to public disclosure, insider trading and proxy contests, which were previously governed by the Korean Securities Exchange Act. For example, the 5% and 10% reporting obligations under the Korean Securities Exchange Act have become more stringent. The Indirect Investment and Asset Management Business Act strictly limited the kind of vehicles that could be utilized under a collective investment scheme, restricting the range of potential vehicles to trusts and corporations, and the type of funds that can be used for investments. However, under the Financial Investment Services and Capital Markets Act, these restrictions have been significantly liberalized, permitting all vehicles that may be created under Korean law, such as limited liability companies or partnerships, to be used for the purpose of collective investments and allowing investment funds to be more flexible as to their investments.

Act on the Corporate Governance of Financial Companies

The Act on the Corporate Governance of Financial Companies, which became effective on August 1, 2016, was enacted to address the need for strengthened regulations on corporate governance of financial institutions and to serve as a uniform set of regulations on corporate governance matters applicable to financial institutions across a variety of industry sectors. It contains several key measures, including (i) eligibility requirements for officers of financial institutions and standards for determining whether officers of financial institutions may hold concurrent positions in other companies, (ii) standards for composition and operation of the board of directors of financial institutions, (iii) standards for establishment, composition and operation of various committees of the board of directors of financial institutions, (iv) regulations on internal control and risk management, (v) requirements and procedures for the approval of a change of major shareholders and (vi) special regulations to protect the rights of minority shareholders of financial institutions.

The Financial Consumer Protection Act

The Financial Consumer Protection Act became effective in March 2021 (certain provisions relating to internal control under such Act became effective in September 2021). The Financial Consumer Protection Act aims to protect financial consumers and establish a sound market order in the financial product sales and advisory businesses. The Financial Consumer Protection Act consolidates existing regulations relating to the sale of financial products and consumer protection, such as the FSCMA, the Banking Act and the Insurance Business Act, and applies to the financial industry on a cross-sectoral basis.

Application of the Financial Consumer Protection Act

All financial products that are classified as (i) deposits, (ii) loans, (iii) investment products or (iv) insurance products are subject to the Financial Consumer Protection Act. These four types of products encompass most of the products covered by the Bank Act, the FSCMA and the Insurance Business Act.

Six Principles Regulating Selling Activities

The Financial Consumer Protection Act consolidates existing regulations relating to financial business operations into standards that cover the following six principles: (i) suitability, (ii) appropriateness, (iii) duty to explain, (iv) prohibition of unfair sales practices, (v) prohibition of improper solicitation and (vi) advertisements. Among these six principles, suitability, appropriateness and duty to explain apply only to “general financial consumers,” although certain “professional financial consumers” may elect to be treated as “general financial consumers,” in which case all six principles would apply to them.

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Internal Control Requirements for Consumer Protection

The Financial Consumer Protection Act requires sellers of financial products to have adequate internal control standards to protect consumers. The Enforcement Decree to the Financial Consumer Protection Act sets forth details of certain of such internal control standards as follows:

•

Establishment of the authority and responsibilities of the decision maker, such as the representative director or a director, in the implementation of internal control measures;

•

Development of an organizational structure and designation of personnel responsible for consumer protection matters, including the establishment of a financial consumer protection committee;

•

Implementation of (i) inter-departmental consultation procedures for the development and sale of financial products, (ii) processes for internal deliberations and the incorporation of opinions from independent third-party advisers, (iii) standards for vetting advertisements, (iv) mandatory training requirements for officers and employees and qualification requirements, (v) standards for the prevention of conflicts of interest, (vi) proper management of confidential information, and (vii) disclosure obligations when potential harm to consumers arises; and

•

Establishment of standards for performance-based compensation of the officers and employees in charge of sales of financial products.

Right to Withdraw Subscriptions and Right to Terminate Contracts

Under the Financial Consumer Protection Act, consumers will have the right to withdraw subscriptions, allowing them to receive a refund during a statutory

cooling-off

period following the execution of the relevant subscription agreement. This right generally applies to all types of financial products with the exception of deposits; although in the case of investment products, the right to withdraw applies only to highly complex funds and trusts. Consumers also have the right to terminate a contract if the sellers violate the Financial Consumer Protection Act in relation to the sales process. The right to terminate contracts applies to long-term contracts, but such right must be exercised within a shorter period of (i) one year from the time that the customer becomes aware that the financial product was sold in violation of the regulatory requirements or (ii) five years from the date on which the relevant contract was made.

Punitive Penalty Surcharges

In the case of a violation of the principles regarding the duty to explain, prohibition of unfair sales practices, prohibition of improper solicitation and advertisements, sellers will now be subject to a punitive penalty of up to half the “amount that is the purpose of the contract” (which would be the deposit amount in the case of deposit products, the loan amount in the case of loan products, the investment amount in the case of investment products, and the insurance premium in the case of insurance products), depending on the severity of the violation of the Financial Consumer Protection Act.

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Item 4.C

Organizational Structure

The following chart provides an overview of our structure, including our significant subsidiaries and our ownership of such subsidiaries as of March 31, 2022:

The following table provides summary information for our subsidiaries (other than structured companies) that are consolidated in our consolidated financial statements as of and for the year ended December 31, 2021:


Subsidiary (1)	Percentage of Ownership			Total Assets		Shareholders’ Equity		Operating Revenue		Net Income

	(in millions of Won, except percentages)
Woori Bank		100.0	%	￦	415,976,627	￦	24,616,427	￦	24,311,964	￦	2,330,433
Woori Card Co., Ltd.		100.0			14,116,832		2,258,767		1,528,680		200,726
Woori Financial Capital Co., Ltd.		100.0			10,259,868		1,186,764		997,655		140,579
Woori Investment Bank Co., Ltd.		58.7			5,159,742		599,886		303,253		79,924
Woori Asset Trust Co., Ltd.		51.0	(2)		254,773		168,355		94,228		40,300
Woori Savings Bank.		100.0			1,444,508		221,620		85,813		15,315
Woori Asset Management Corp.		73.0			151,651		121,507		33,343		8,244
Woori Credit Information Co., Ltd.		100.0			40,510		31,978		37,507		1,563
Woori Fund Service Co., Ltd.		100.0			22,168		19,586		15,618		3,570
Woori Private Equity Asset Management Co., Ltd.		100.0			42,790		38,138		4,230		2,209
Woori Global Asset Management Co., Ltd		100.0			35,265		27,686		11,785		(441	)
Woori FIS Co., Ltd.		100.0			105,138		45,913		270,393		1,587
Woori Finance Research Institute Co., Ltd.		100.0			5,864		3,607		6,812		57

(1)	In January 2022, we established Woori Financial F&I Inc. as a wholly-owned subsidiary to invest in non-performing loans and restructuring companies.

(2)	Including treasury stocks (our ownership interest is 67.2% excluding such treasury stocks).

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Item 4.D.

Property, Plants and Equipment

Our registered office and corporate headquarters, with a total area of approximately 97,222 square meters, are located at 51,

Sogong-ro,

Jung-gu, Seoul, Korea. Information regarding certain of our properties in Korea as of December 31, 2021 is presented in the following table:


Type of Facility/Building	Location	Area
		(square meters)
Woori Bank registered office and corporate headquarters	51, Sogong-ro, Jung-gu, Seoul, Korea 04632		97,222
Woori Bank Sangam Tower	17, World Cup buk-ro 60-gil, Mapo-gu, Seoul, Korea 03921		81,475
Woori Bank Digital Tower	48,Sogong-ro, Jung.gu, Seoul, Korea 04631		33,022

As of December 31, 2021, we had a network of 768 banking branches in Korea, 211 of which are housed in buildings owned by us, while the remaining branches are leased properties. Lease terms are generally from two to three years and seldom exceed five years. We also have subsidiaries in the United States, China, Hong Kong, Russia, Indonesia, Cambodia, Brazil, Myanmar, the Philippines, Vietnam and Germany and branches, agencies and representative offices across the world.

See “Item 4.B. Business Overview—Capital Markets Activities—International Banking.” We do not own any material properties outside of Korea.

As of December 31, 2021, the net book value of the properties owned by us and our

right-of-use

assets was ￦2,789 billion and ￦386 billion, respectively. As of the same date, our lease liabilities amounted to ￦343 billion.

Item 4A.

UNRESOLVED STAFF COMMENTS

We do not have any unresolved comments from the U.S. Securities and Exchange Commission staff regarding our periodic reports under the Exchange Act.

Item 5.

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

Item 5.A.

Operating Results

Overview

The following discussion is based on our consolidated financial statements, which have been prepared in accordance with IFRS as issued by the IASB. The consolidated financial statements include the accounts of subsidiaries over which substantive control is exercised through either majority ownership of voting stock and/or other means. Investments in joint ventures and associates (which are companies over which we have the ability to exercise significant influence) are accounted for by the equity method of accounting and are reported in investments in joint ventures and associates.

Trends in the Korean Economy

Our financial position and results of operations have been and will continue to be significantly affected by financial and economic conditions in Korea. Substantial growth in lending in Korea to

small-

and

medium-sized

enterprises in recent years, and financial difficulties experienced by such enterprises as a result of, among other things, adverse changes in economic conditions in Korea and globally (such as the

COVID-19

pandemic continuing to affect many countries worldwide, including Korea), may lead to increasing delinquencies and a deterioration in overall asset quality in the credit exposures of Korean banks to

small-

and

medium-sized

enterprises. Our loans to

small-

and

medium-sized

enterprises increased from ￦97,476 billion as of December 31, 2020 to ￦112,696 billion as of December 31, 2021. In 2021, we recorded

charge-offs

of ￦158 billion in respect of our

Won-denominated

loans to

small-

and

medium-sized

enterprises, compared to

charge-offs

of ￦219 billion in 2020. See “Item 3.D. Risk Factors—Risks relating to our corporate credit portfolio—The largest portion of our exposure is to

small-

and

medium-sized

enterprises, and financial

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difficulties experienced by companies in this segment may result in a deterioration of our asset quality and have an adverse impact on us.”

In recent years, commercial banks, consumer finance companies and other financial institutions in Korea have also made significant investments and engaged in aggressive marketing in consumer lending (including mortgage and home equity loans), leading to substantially increased competition in this segment. From the second half of 2016 to 2021, the Korean government introduced various measures to tighten regulations on mortgage and other lending and housing subscription in response to the rapid growth in consumer debt and concerns over speculative investments in real estate in certain areas. Notwithstanding such measures, demand for residential property in certain areas, including Seoul, continued to increase through the end of 2021, and accompanied by an increase in the prices of such property, our consumer loan portfolio increased from ￦138,119 billion as of December 31, 2020 to ￦148,361 billion as of December 31, 2021. Nevertheless, a decrease in housing prices as a result of the implementation of such measures, together with the high level of consumer debt and deteriorating domestic and global economic conditions, could result in declines in consumer spending and reduced economic growth, which may lead to increasing delinquencies and a deterioration in asset quality. In 2021, we recorded

charge-offs

of ￦173 billion and provisions for credit losses of ￦168 billion in respect of our consumer loan portfolio,

compared to

charge-offs

of ￦182 billion and provisions for credit losses of ￦131 billion in 2020. See “Item 3.D. Risk Factors—Risks relating to our consumer credit portfolio.”

The Korean economy is closely tied to, and is affected by developments in, the global economy. The overall prospects for the Korean and global economy in 2021 and beyond remain uncertain. In recent years, the global financial markets have experienced significant volatility as a result of, among other things:

•

the occurrence of severe health epidemics, such as the

COVID-19

pandemic;

•

interest rate fluctuations as well as changes in policy rates by the U.S. Federal Reserve and other central banks;

•

financial and social difficulties affecting many countries worldwide, in particular in Latin America and Europe;

•

a deterioration in economic and trade relations between the United States and its major trading partners, including China;

•

escalations in trade protectionism globally and geopolitical tensions in East Asia and the Middle East;

•

the slowdown of economic growth in China and other major emerging market economies;

•

increased uncertainties resulting from the United Kingdom’s exit from the European Union; and

•

political and social instability in various countries in the Middle East, including Syria, Iraq and Egypt.

In particular, the global outbreak of

COVID-19,

which was declared a “pandemic” by The World Health Organization in March 2020, has led to global economic and financial disruptions, including impact on international trade and business activities, sharp declines and significant volatility in the financial markets as well as decreases in interest rates worldwide. See “Item 3.D. Risk Factors—Other risks relating to our business—The

COVID-19

pandemic has adversely affected and may continue to adversely affect our business, financial condition or results of operations” and “Item 3.D. Risk Factors—Other risks relating to our business—An increase in interest rates would decrease the value of our debt securities portfolio and raise our funding costs while reducing loan demand and the repayment ability of our borrowers, which could adversely affect us.”

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In addition, the interest rates on our interest-earning assets and interest-bearing liabilities, and therefore our net interest income, are affected by The Bank of Korea’s policy rates. The Bank of Korea lowered its policy rate to 1.5% from 1.75% on July 18, 2019 and to 1.25% from 1.5% on October 16, 2019 to address the sluggishness of the global and domestic economy. On March 16, 2020, The Bank of Korea further lowered its policy rate to 0.75% from 1.25%, which was further lowered to 0.5% on May 28, 2020, in response to deteriorating economic conditions resulting from the

COVID-19

pandemic. The Bank of Korea raised its policy rate from 0.50% to 0.75% on August 26, 2021, to 1.00% on November 25, 2021, to 1.25% on January 14, 2022 and to 1.50% on April 14, 2022, in response to rising levels of household debt and inflationary pressures.

COVID-19

pandemic, and more recently, by the invasion of Ukraine by Russia. A depreciation of the Won will increase our cost of servicing our foreign

currency-denominated

debt, while continued exchange rate volatility may also result in foreign exchange losses for us. Furthermore, as a result of changes in global and Korean economic, social and political conditions, there has been volatility in securities prices, including the stock prices of Korean and foreign companies in which we hold an interest. Such volatility has resulted in and may lead to further trading and valuation losses on our trading and investment securities portfolio as well as impairment losses on our investments in joint ventures and associates.

As a result of volatile conditions in the Korean and global economies and financial markets, as well as factors such as fluctuations in oil and commodity prices, interest and exchange rate fluctuations, higher unemployment, lower consumer confidence, stock market volatility, changes in fiscal and monetary policies and continued tensions with North Korea, the economic outlook for the financial services sector in Korea in 2022 and for the foreseeable future remains highly uncertain.

Cessation of LIBOR

In March 2021, the FCA announced that all LIBOR settings will either cease to be provided by any administrator or no longer be representative (i) after December 31, 2021 in the case of all sterling, euro, Swiss franc and Japanese yen settings and the

one-week

and

two-month

U.S. dollar settings and (ii) after June 30, 2023 in the case of the remaining U.S. dollar settings. Given the extensive use of LIBOR across financial markets, the transition away from LIBOR presents various risks and challenges to financial markets and institutions, including us, and in particular, Woori Bank. We issue, trade, hold or otherwise use various products and securities that reference LIBOR, including, among others, loans, securities, deposits, borrowings, derivatives and debentures, and have adopted specific measures for its cessation. For example, in January 2020, the Korea Federation of Banks, together with the Korean regulatory authorities and banks, established a joint taskforce to identify the impact of the cessation of LIBOR. Woori Bank has also organized an internal LIBOR cessation steering committee and a working-level taskforce team to assess, identify, monitor and manage risks that may arise from the potential discontinuation of LIBOR. As of the date of this annual report, we are continuing to transition to alternative reference rates in order to gradually reduce its exposure to LIBOR. We expect to minimize any negative impact that the cessation of LIBOR may have on our results of operations by adjusting our interest rates and deciding upon appropriate interest rate benchmarks.

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Changes in Securities Values, Exchange Rates and Interest Rates

Fluctuations of exchange rates, interest rates and stock prices affect, among other things, the demand for our products and services, the value of and rate of return on our assets, the availability and cost of funding and the financial condition of our customers. The following table shows, for the dates indicated, the stock price index of all equities listed on the KRX KOSPI Market as published in the KOSPI, the Won to U.S. dollar exchange rates and benchmark Won borrowing interest rates.


	June 30, 2017			Dec. 31, 2017			June 30, 2018			Dec. 31, 2018			June 30, 2019			Dec. 31, 2019			June 30, 2020			Dec. 31, 2020			June 30, 2021			Dec. 31, 2021

KOSPI		2,391.79			2,467.49			2,326.13			2,041.04			2,130.62			2,197.67			2,108.33			2,873.47			3,296.68			2,977.65
￦/US$ exchange rates (1)	￦	1,143.75		￦	1,067.42		￦	1,111.79		￦	1,112.85		￦	1,154.58		￦	1,155.46		￦	1,200.50		￦	1,086.11		￦	1,130.42		￦	1,188.59
Corporate bond rates (2)		2.8	%		3.1	%		2.9	%		2.6	%		2.0	%		2.0	%		1.8	%		1.7	%		2.0	%		2.5	%
Treasury bond rates (3)		1.7	%		2.1	%		2.1	%		1.8	%		1.5	%		1.4	%		0.8	%		1.0	%		1.5	%		1.8	%

(1)	Represents the noon buying rate on the dates indicated.

(2)	Measured by the yield on three-year Korean corporate bonds rated as A+ by the Korean credit rating agencies.

(3)	Measured by the yield on three-year treasury bonds issued by the Ministry of Economy and Finance of Korea.

Results of Operations

Net Interest Income

The following table shows, for the years indicated, the principal components of our interest income:


	Year ended December 31,									Percentage change
	2019			2020			2021			2020/2019			2021/2020

	(in billions of Won)									(%)
Interest income
Financial assets at fair value through profit or loss	￦	51		￦	49		￦	46			(3.9	)%		(6.1	)%
Financial assets at fair value through other comprehensive income		475			437			381			(8.0	)		(12.8	)
Financial assets at amortized cost:
Securities at amortized cost		436			383			325			(12.2	)		(15.1	)
Loans and other financial assets at amortized cost:
Interest on due from banks		141			54			47			(61.7	)		(13.0	)
Interest on loans		9,444			8,570			9,065			(9.3	)		5.8
Interest on other receivables		30			31			31			3.3			0.0

Subtotal		10,051			9,038			9,468			(10.1	)		4.8

Total interest income		10,577			9,524			9,895			(10.0	)		3.9

Interest expense
Deposits		3,425			2,487			1,907			(27.4	)		(23.3	)
Borrowings		383			270			220			(29.5	)		(18.5	)
Debentures		777			723			727			(6.9	)		0.6
Others		89			37			48			(58.4	)		29.7
Lease liabilities		9			9			7			0.0			(22.2	)

Total interest expense		4,683			3,526			2,909			(24.7	)		(17.5	)

Net interest income	￦	5,894		￦	5,998		￦	6,986			1.8	%		16.5	%

Net interest margin (1)		1.74	%		1.65	%		1.74	%

(1)	The ratio of net interest income to average interest-earning assets.

Comparison of 2021 to 2020

Interest Income.

Interest income increased 3.9% from ￦9,524 billion in 2020 to ￦9,895 billion in 2021, primarily due to a 5.8% increase in interest on loans, which was offset in part by a 15.1% decrease in interest on

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securities at amortized cost and a 12.8% decrease in interest on financial assets at fair value through other comprehensive income. The average balance of interest-earning assets increased 10.5% from ￦363,234 billion in 2020 to ￦401,368 billion in 2021, principally due to the growth of our loan portfolio. The effect of this increase was partially offset by a 15 basis point decrease in the average yield on interest-earning assets from 2.62% in 2020 to 2.47% in 2021, which reflected the lower overall level of interest rates prevailing in Korea in 2021 compared to 2020, as discussed above in “—Overview—Trends in the Korean Economy.”

The 5.8% increase in interest on loans from ￦8,570 billion in 2020 to ￦9,065 billion in 2021 was principally due to:

•

a 13.9% increase in the average volume of commercial and industrial loans from ￦119,251 billion in 2020 to ￦135,776 billion in 2021, which was partially offset by a 13 basis point decrease in the average yield on such loans from 2.70% in 2020 to 2.57% in 2021;

•

a 7.8% increase in the average volume of general purpose household loans (including home equity loans) from ￦74,123 billion in 2020 to ￦79,923 billion in 2021, which was partially offset by a 14 basis point decrease in the average yield on such loans from 3.65% in 2020 to 3.51% in 2021; and

•

a 127.0% increase in the average volume of lease financing loans from ￦1,448 billion in 2020 to ￦3,287 billion in 2021, which was enhanced by a 31 basis point increase in the average yield on such loans from 3.31% in 2020 to 3.62% in 2021.

The average volumes of commercial and industrial loans, general purpose household loans and lease financing loans increased primarily due to increased demand from borrowers in need of financing in light of the

COVID-19

pandemic as well as increases in home purchases in the case of general purpose household loans, which include home equity loans and loans for large-scale home lease deposits. The average yields on commercial and industrial loans, general purpose household loans and lease financing loans decreased mainly due to the lower overall level of interest rates prevailing in Korea in 2021 compared to 2020. Overall, the average volume of loans increased 12.3% from ￦280,181 billion in 2020 to ￦314,738 billion in 2021, while the average yield on loans decreased by 18 basis points from 3.06% in 2020 to 2.88% in 2021.

The 15.1% decrease in interest on securities at amortized cost from ￦383 billion in 2020 to ￦325 billion in 2021 was principally due to a 12.9% decrease in the average volume of securities at amortized cost from ￦18,945 billion in 2020 to ￦16,503 billion in 2021, which was principally due to a decrease in

Won-denominated

debt securities from financial institutions. Such decrease was enhanced by a 5 basis point decrease in the average yield on such assets from 2.02% in 2020 to 1.97% in 2021, which reflected the lower overall level of interest rates prevailing in Korea in 2021 compared to 2020.

The 12.8% decrease in interest on financial assets at fair value through other comprehensive income from ￦437 billion in 2020 to ￦381 billion in 2021 was principally due to a 33 basis point decrease in the average yield on financial assets at fair value through other comprehensive income from 1.57% in 2020 to 1.24% in 2021, which was principally due to the lower overall level of interest rates prevailing in Korea in 2021 compared to 2020. Such decrease was partially offset by a 10.2% increase in the average volume of such assets from ￦27,868 billion in 2020 to ￦30,724 billion in 2021, which was principally due to increases in

Won-denominated

debt securities from financial institutions and

Won-denominated

treasury bonds.

Interest Expense.

Interest expense decreased 17.5% from ￦3,526 billion in 2020 to ￦2,909 billion in 2021, primarily due to a 23.3% decrease in interest expense on deposits, which was enhanced by an 18.5% decrease in interest expense on borrowings. The average cost of interest-bearing liabilities decreased by 26 basis points from 1.02% in 2020 to 0.76% in 2021, which mainly reflected the lower overall level of interest rates prevailing in Korea in 2021 compared to 2020, as well as an overall increase of loans that typically have lower interest rates. The effect of this decrease was partially offset by a 10.8% increase in the average balance of interest-bearing liabilities from ￦347,004 billion in 2020 to ￦384,650 billion in 2021, which was principally due to increases in the average balances of deposits, debentures and borrowings.

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The 23.3% decrease in interest expense on deposits from ￦2,487 billion in 2020 to ￦1,907 billion in 2021 resulted mainly from:

•

a 30 basis point decrease in the average cost of

Won-denominated

time and savings deposits from 0.91% in 2020 to 0.61% in 2021, which was partially offset by an 8.0% increase in the average balance of such deposits from ￦225,563 billion in 2020 to ￦243,708 billion in 2021; and

•

a 30 basis point decrease in the average cost of other deposits (other than

Won-denominated

demand deposits, time and savings deposits and certificates of deposit) from 1.03% in 2020 to 0.73% in 2021, which was partially offset by a 10.1% increase in the average balance of such deposits from ￦34,861 billion in 2020 to ￦38,374 billion in 2021.

The decreases in the average cost of

Won-denominated

time and savings deposits and other deposits were primarily attributable to the lower overall level of interest rates prevailing in Korea in 2021 compared to 2020, while the increases in the average volume of

Won-denominated

time and savings deposits and other deposits mainly reflected customers’ continuing preference for

low-risk

products and institutions in Korea in light of the continuing uncertainty in financial markets in 2021 resulting from the

COVID-19

pandemic.

Overall, the average cost of deposits decreased by 27 basis points from 0.91% in 2020 to 0.64% in 2021, while the average volume of deposits increased 10.1% from ￦272,211 billion in 2020 to ￦299,574 billion in 2021.

The 18.5% decrease in interest expense on borrowings from ￦270 billion in 2020 to ￦220 billion in 2021 was primarily due to a 31 basis point decrease in the average cost of borrowings from 1.26% in 2020 to 0.95% in 2021, which mainly reflected the lower overall level of interest rates prevailing in Korea in 2021 compared to 2020. Such decrease was partially offset by an 8.6% increase in the average balance of borrowings from ￦21,368 billion in 2020 to ￦23,216 billion in 2021, which was mainly attributable to our increased use of borrowings to meet our funding needs in light of the lower interest rate environment in Korea.

The 0.6% increase in interest expense on debentures from ￦723 billion in 2020 to ￦727 billion in 2021 was primarily due to a 26.7% increase in the average balance of debentures from ￦32,315 billion in 2020 to ￦40,935 billion in 2021, which was mostly offset by a 46 basis point decrease in the average cost of debentures from 2.24% in 2020 to 1.78% in 2021. The increase in the average balance of debentures mainly reflected additional debentures attributable to the addition of Woori Financial Capital as a consolidated subsidiary starting on October 20, 2020, while the decrease in the average cost of debentures was mainly due to the lower overall level of interest rates prevailing in Korea in 2021 compared to 2020.

Net Interest Margin.

Net interest margin represents the ratio of net interest income to average interest-earning assets. Our overall net interest margin increased from 1.65% in 2020 to 1.74% in 2021, as a 16.5% increase in our net interest income from ￦5,998 billion in 2020 to ￦6,986 billion in 2021 outpaced a 10.5% increase in the average balance of our interest-earning assets from ￦363,234 billion in 2020 to ￦401,368 billion in 2021. The increase in interest income was enhanced by a decrease in interest expense, resulting in the increase in net interest income. The growth in average interest-earning assets was mostly offset by an increase in average interest-bearing liabilities from ￦347,004 billion in 2020 to ￦384,650 billion in 2021. The increase in net interest margin was driven mainly by an increase in our net interest spread, which represents the difference between the average yield on our interest-earning assets and the average cost of our interest-bearing liabilities, from 1.60% in 2020 to 1.71% in 2021. The increase in our net interest spread reflected a larger decrease in the average cost of interest-bearing liabilities compared to the decrease in the yield on interest-earning assets between the two periods, primarily due to the earlier adjustment of interest rates on interest-earning assets compared to interest rates on interest-bearing liabilities in the context of a lower interest rate environment in 2021 compared to 2020.

Comparison of 2020 to 2019

Interest Income.

Interest income decreased 10.0% from ￦10,577 billion in 2019 to ￦9,524 billion in 2020, primarily due to a 9.3% decrease in interest on loans. The average yield on interest-earning assets decreased by

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49 basis points from 3.11% in 2019 to 2.62% in 2020, which reflected an overall decrease in the general level of interest rates in Korea in 2020 compared to 2019. The effect of this decrease was partially offset by a 6.9% increase in average balance of interest-earning assets from ￦339,698 billion in 2019 to ￦363,234 billion in 2020, principally due to the growth of our loan portfolio.

The 9.3% decrease in interest on loans from ￦9,444 billion in 2019 to ￦8,570 billion in 2020 was principally due to:

•

a 58 basis point decrease in the average yield on commercial and industrial loans from 3.28% in 2019 to 2.70% in 2020, which was partially offset by an 8.4% increase in the average volume of such loans from ￦110,033 billion in 2019 to ￦119,251 billion in 2020;

•

a 45 basis point decrease in the average yield on general purpose household loans (including home equity loans) from 4.10% in 2019 to 3.65% in 2020, which was partially offset by a 3.8% increase in the average volume of such loans from ￦71,414 billion in 2019 to ￦74,123 billion in 2020;

•

a 116 basis point decrease in the average yield on trade financing loans from 2.65% in 2019 to 1.49% in 2020, which was enhanced by a 7.7% decrease in the average volume of such loans from ￦11,112 billion in 2019 to ￦10,253 billion in 2020; and

•

a 43 basis point decrease in the average yield on mortgage loans from 3.22% in 2019 to 2.79% in 2020, which was partially offset by a 7.2% increase in the average volume of such loans from ￦53,296 billion in 2019 to ￦57,123 billion in 2020.

The average yields on commercial and industrial loans, general purpose household loans, trade financing loans and mortgage loans decreased mainly due to the overall decrease in the general level of interest rates in Korea in 2020 compared to 2019. The average volumes of commercial and industrial loans, general purpose household loans and mortgage loans increased primarily due to increased demand from borrowers in need of financing in light of the

COVID-19

pandemic as well as an increase in home purchases in the case of general purpose household loans and mortgage loans. The average volume of trade financing loans decreased mainly as a result of lower demand for such loans due to decreases in exports and imports due to the

COVID-19

pandemic.

Overall, the average yield on loans decreased by 53 basis points from 3.59% in 2019 to 3.06% in 2020, while the average volume of loans increased 6.6% from ￦262,868 billion in 2019 to ￦280,181 billion in 2020.

Interest Expense.

Interest expense decreased 24.7% from ￦4,683 billion in 2019 to ￦3,526 billion in 2020, primarily due to a 27.4% decrease in interest expense on deposits, which was enhanced by a 29.5% decrease in interest expense on borrowings. The average cost of interest-bearing liabilities decreased by 43 basis points from 1.45% in 2019 to 1.02% in 2020, which mainly reflected the overall decrease in the general level of interest rates in Korea in 2020 compared to 2019. The effect of this decrease was partially offset by a 7.1% increase in the average balance of interest-bearing liabilities from ￦323,855 billion in 2019 to ￦347,004 billion in 2020, which was principally due to increases in the average balances of deposits, debentures and borrowings.

The 27.4% decrease in interest expense on deposits from ￦3,425 billion in 2019 to ￦2,487 billion in 2020 resulted mainly from:

•

a 42 basis point decrease in the average cost of

Won-denominated

time and savings deposits from 1.33% in 2019 to 0.91% in 2020, which was partially offset by a 6.5% increase in the average balance of such deposits from ￦211,732 billion in 2019 to ￦225,563 billion in 2020;

•

a 60 basis point decrease in the average cost of other deposits (other than

Won-denominated

demand deposits, time and savings deposits and certificates of deposit) from 1.63% in 2019 to 1.03% in 2020, which was partially offset by a 20.5% increase in the average balance of such deposits from ￦28,930 billion in 2019 to ￦34,861 billion in 2020; and

•

a 64.8% decrease in the average balance of certificates of deposits from ￦4,760 billion in 2019 to ￦1,677 billion in 2020, which was enhanced by a 90 basis point decrease in the average cost of certificates of deposits from 2.21% in 2019 to 1.31% in 2020.

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The decreases in the average cost of

Won-denominated

time and savings deposits, other deposits and certificates of deposits were primarily attributable to the overall decrease in the general level of interest rates in Korea in 2020 compared to 2019, while the increases in the average volume of

Won-denominated

time and savings deposits and other deposits mainly reflected customers’ continuing preference for

low-risk

products and institutions in Korea in light of the continuing uncertainty in financial markets in 2020 resulting from the

COVID-19

pandemic. The decrease in the average balance of certificates of deposit was principally the result of lower sales of such products due to our decreased need for such sales in light of capital requirements.

Overall, the average cost of deposits decreased by 44 basis points from 1.35% in 2019 to 0.91% in 2020, while the average volume of deposits increased 7.3% from ￦253,635 billion in 2019 to ￦272,211 billion in 2020.

The 29.5% decrease in interest expense on borrowings from ￦383 billion in 2019 to ￦270 billion in 2020 was primarily due to a 73 basis point decrease in the average cost of borrowings from 1.99% in 2019 to 1.26% in 2020, which mainly reflected the overall decrease in the general level of interest rates in Korea in 2020 compared to 2019. Such decrease was partially offset by an 11.0% increase in the average balance of borrowings from ￦19,258 billion in 2019 to ￦21,368 billion in 2020, which was mainly attributable to our increased use of borrowings to meet our funding needs in light of the lower interest rate environment in Korea.

The 6.9% decrease in interest expense on debentures from ￦777 billion in 2019 to ￦723 billion in 2020 was primarily due to a 39 basis point decrease in the average cost of debentures from 2.63% in 2019 to 2.24% in 2020, which mainly reflected the overall decrease in the general level of interest rates in Korea in 2020 compared to 2019. Such decrease was partially offset by a 9.4% increase in the average balance of debentures from ￦29,536 billion in 2019 to ￦32,315 billion in 2020, which was mainly due to additional debentures attributable to the addition of Woori Financial Capital as a consolidated subsidiary starting on October 20, 2020.

Net Interest Margin.

Our overall net interest margin decreased from 1.74% in 2019 to 1.65% in 2020, as a 6.9% increase in the average balance of our interest-earning assets from ￦339,698 billion in 2019 to ￦363,234 billion in 2020 outpaced a 1.8% increase in our net interest income from ￦5,894 billion in 2019 to ￦5,998 billion in 2020. The growth in average interest-earning assets was slightly outpaced by a 7.1% increase in average interest-bearing liabilities from ￦323,855 billion in 2019 to ￦347,004 billion in 2020. The decrease in interest income was also outpaced by the decrease in interest expense, resulting in the increase in net interest income. The decrease in net interest margin was driven mainly by a decrease in our net interest spread from 1.66% in 2019 to 1.60% in 2020. The decrease in our net interest spread reflected a larger decrease in the average yield on interest-earning assets compared to the decrease in the average cost of interest-bearing liabilities between the two periods, primarily due to the earlier adjustment of interest rates on interest-earning assets compared to interest rates on interest-bearing liabilities in the context of a lower interest rate environment in 2020 compared to 2019.

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Impairment Losses Due to Credit Loss

The following table shows, for the years indicated, the components of our impairment losses due to credit loss.


	Year ended December 31,									Percentage change
	2019			2020			2021			2020/2019			2021/2020

	(in billions of Won)									(%)
Impairment loss due to credit loss on financial assets measured at fair value through other comprehensive income	￦	(3	)	￦	(2	)	￦	(5	)		(33.3	)%		150.0	%
Reversal of (provision for) impairment loss due to credit loss on securities at amortized cost		1			1			(1	)		(0.0	)		N/M	(1)
Provisions for credit loss on loans and other financial assets at amortized cost		(385	)		(791	)		(552	)		105.5			(30.2	)
Reversal of provisions on guarantees		4			18			11			350.0			(38.9	)
Reversal of provisions on (provisions for) unused loan commitments		9			(10	)		10			N/M	(1)		N/M	(1)

Total impairment losses due to credit loss	￦	(374	)	￦	(784	)	￦	(537	)		109.6	%		(31.5	)%

(1)	N/M = not meaningful.

Comparison of 2021 to 2020

Our impairment losses due to credit loss decreased 31.5% from ￦784 billion in 2020 to ￦537 billion in 2021, primarily due to a 30.2% decrease in provisions for credit loss on loans and other financial assets at amortized cost from ￦791 billion in 2020 to ￦552 billion in 2021. Such decrease in provisions for credit loss on loans and other financial assets at amortized cost was primarily due to increases in provision for loan losses in respect of our corporate and consumer loan portfolios in 2020, which were not repeated in 2021. Such increases in 2020 were mainly attributable to our preemptive measures to account for a potential increase in expected credit loss that could result from a deterioration in the overall asset quality of our corporate and consumer loan portfolios due to the

COVID-19

pandemic.

Comparison of 2020 to 2019

Our impairment losses due to credit loss increased 109.6% from ￦374 billion in 2019 to ￦784 billion in 2020, primarily due to a 105.2% increase in provisions for credit loss on loans and other financial assets at amortized cost. Such increase in provisions for credit loss on loans and other financial assets at amortized cost from ￦385 billion in 2019 to ￦791 billion in 2020 was primarily due to an increase in provision for loan losses in respect of our loan portfolio, which was mainly attributable to an expected deterioration in the overall asset quality of our loan portfolio due to the

COVID-19

pandemic.

Allowance for Credit Losses

For information on our allowance for credit losses, see “Item 4.B. Business Overview—Assets and Liabilities—Loan Portfolio—Allocation and Analysis of Allowances for Credit Losses.”

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Corporate Loans

The following table shows, for the years indicated, certain information regarding our impaired corporate loans (including government loans and bank loans):


	As of December 31,
	2019			2020			2021

Impaired corporate loans as a percentage of total corporate loans		0.5	%		0.5	%		0.3	%
Allowance for credit losses for corporate loans as a percentage of total corporate loans		0.7			0.8			0.7
Allowance for credit losses for corporate loans as a percentage of impaired corporate loans		136.4			172.4			219.7
Net charge-offs of corporate loans as a percentage of total corporate loans		0.1			0.1			0.1

During 2021, impaired corporate loans and allowance for credit losses for corporate loans, each as a percentage of total corporate loans, decreased primarily due to an increase in the total amount of our corporate loans from ￦157,303 billion as of December 31, 2020 to ￦179,717 billion as of December 31, 2021. However, allowance for credit losses for corporate loans as a percentage of impaired corporate loans increased during 2021, as a 3.8% decrease in allowance for credit losses for corporate loans from ￦1,238 billion as of December 31, 2020 to ￦1,191 billion as of December 31, 2021 was outpaced by a 24.5% decrease in impaired corporate loans from ￦718 billion as of December 31, 2020 to ￦542 billion as of December 31, 2021. The decrease in our impaired corporate loans was mainly attributable to the improvement of the overall asset quality of our corporate loan portfolio following a recovery from the

COVID-19

pandemic. The decrease in our allowance for credit losses for corporate loans was mainly attributable to our preemptive measures to account for a potential increase in expected credit loss that could result from a deterioration in the overall asset quality of our corporate loan portfolio due to the

COVID-19

pandemic in 2020, which was not repeated in 2021. Net charge-offs of corporate loans as a percentage of total corporate loans remained stable at 0.1% as of December 31, 2020 and 2021.

During 2020, impaired corporate loans and net charge-offs, each as a percentage of total corporate loans, remained stable at 0.5% and 0.1% respectively. However, allowance for credit losses for corporate loans as a percentage of total corporate loans and as a percentage of impaired corporate loans increased, as a 22.7% increase in allowance for credit losses for corporate loans from ￦1,009 billion as of December 31, 2019 to ￦1,238 billion as of December 31, 2020 outpaced a 12.7% increase in total corporate loans from ￦139,592 billion as of December 31, 2019 to ￦157,303 billion as of December 31, 2020, and was enhanced by a 3.0% decrease in impaired corporate loans from ￦740 billion as of December 31, 2019 to ￦718 billion as of December 31, 2020. The decrease in impaired corporate loans was mainly attributable to our active efforts to charge off impaired corporate loans to improve the overall quality of our corporate loan portfolio, while the increase in allowance for credit losses for corporate loans was mainly attributable to an expected deterioration in the overall asset quality of our corporate loan portfolio due to the

COVID-19

pandemic.

Consumer Loans and Credit Card Balances

The following table shows, for the years indicated, certain information regarding our impaired loans to the consumer sector, excluding credit card balances:


	As of December 31,
	2019			2020			2021

Impaired consumer loans as a percentage of total consumer loans		0.3	%		0.4	%		0.3	%
Allowance for credit losses for consumer loans as a percentage of total consumer loans		0.2			0.3			0.3
Allowance for credit losses for consumer loans as a percentage of impaired consumer loans		69.6			76.7			88.0
Net charge-offs of consumer loans as a percentage of total consumer loans		0.1			0.1			0.1

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During 2021, allowance for credit losses and net charge-offs, each as a percentage of total consumer loans, remained stable at 0.3% and 0.1% respectively. Impaired consumer loans as a percentage of total consumer loans decreased as a 6.9% decrease in impaired consumer loans from ￦537 billion as of December 31, 2020 to ￦500 billion as of December 31, 2021 was enhanced by an 8.0% increase in total consumer loans from ￦138,119 billion as of December 31, 2020 to ￦148,361 billion as of December 31, 2021. However, allowance for credit losses for consumer loans as a percentage of impaired consumer loans increased, as a 6.8% increase in allowance for credit losses for consumer loans from ￦412 billion as of December 31, 2020 to ￦440 billion as of December 31, 2021 was enhanced by the decrease in impaired consumer loans. The decrease in impaired consumer loans was mainly attributable to our active efforts to charge off impaired consumer loans to improve the overall quality of our consumer loan portfolio, while the increase in allowance for credit losses for consumer loans was mainly attributable to the increase in our total consumer loans.

During 2020, impaired consumer loans and allowance for credit losses for consumer loans, each as a percentage of total consumer loans, increased as an 11.4% increase in total consumer loans from ￦124,003 billion as of December 31, 2019 to ￦138,119 billion as of December 31, 2020 was outpaced by both a 28.5% increase in impaired consumer loans from ￦418 billion as of December 31, 2019 to ￦537 billion as of December 31, 2020 and a 41.6% increase in allowance for credit losses for consumer loans from ￦291 billion as of December 31, 2019 to ￦412 billion as of December 31, 2020. Allowance for credit losses for consumer loans as a percentage of impaired consumer loans also increased, as the increase in allowance for credit losses for consumer loans outpaced the increase in impaired consumer loans due to an expected deterioration in the overall asset quality of our consumer loan portfolio due to the

COVID-19

pandemic. Net charge-offs of consumer loans as a percentage of total corporate loans remained stable at 0.1% as of December 31, 2019 and 2020.

The following table shows, for the years indicated, certain information regarding our impaired credit card balances:


	As of December 31,
	2019			2020			2021

Impaired credit card balances as a percentage of total credit card balances (1)		2.7	%		2.1	%		1.2	%
Allowance for credit losses for credit card balances as a percentage of total credit card balances (1)		3.3			3.0			2.6
Allowance for credit losses for credit card balances as a percentage of impaired credit card balances (1)		120.2			143.9			219.8
Net charge-offs of credit card balances as a percentage of total credit card balances (1)		2.6			2.1			1.6

(1)	Includes corporate credit card balances.

During 2021, impaired credit card balances and allowance for credit losses for credit card balances, each as a percentage of total credit card balances, decreased mainly due to a decrease in delinquency rates due to heightened credit review standards, as well as a 14.2% increase in total credit card balances from ￦8,543 billion as of December 31, 2020 to ￦9,757 billion as of December 31, 2021. However, allowance for credit losses for credit card balances as a percentage of impaired credit card balances increased, as a 1.5% decrease in our allowance for credit losses for credit card balances from ￦259 billion as of December 31, 2020 to ￦255 billion as of December 31, 2021 was outpaced by a 35.6% decrease in impaired credit card balances from ￦180 billion as of December 31, 2020 to ￦116 billion as of December 31, 2021. Net charge-offs of credit card balances as a percentage of total credit card balances decreased mainly as a result of a 13.9% decrease in net charge-offs of credit card balances from ￦180 billion as of December 31, 2020 to ￦155 billion as of December 31, 2021, primarily due to the decrease in delinquency rates due to heightened credit review standards, as well as the decrease in total credit card balances.

During 2020, impaired credit card balances and allowance for credit losses for credit card balances, each as a percentage of total credit card balances, decreased mainly due to a decrease in delinquency rates due to heightened credit review standards. However, allowance for credit losses for credit card balances as a percentage of impaired credit card balances increased, as a 5.5% decrease in our allowance for credit losses for credit card

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balances from ￦274 billion as of December 31, 2019 to ￦259 billion as of December 31, 2020 was outpaced by a 21.1% decrease in impaired credit card balances from ￦228 billion as of December 31, 2019 to ￦180 billion as of December 31, 2020. Net charge-offs of credit card balances as a percentage of total credit card balances decreased mainly as a result of an 18.6% decrease in net charge-offs of credit card balances from ￦221 billion as of December 31, 2019 to ￦180 billion as of December 31, 2020, primarily due to the decrease in delinquency rates due to heightened credit review standards.

Net Fees and Commissions Income

The following table shows, for the years indicated, the components of our net fees and commissions income:


	Year ended December 31,									Percentage change
	2019			2020			2021			2020/2019			2021/2020

	(in billions of Won)									(%)
Fees and commissions income	￦	1,709		￦	1,694		￦	2,172			(0.9	)%		28.2	%
Fees and commissions expense		(606	)		(680	)		(701	)		12.2			3.1

Total fees and commissions income, net	￦	1,103		￦	1,014		￦	1,471			(8.1	)%		45.1	%

Comparison of 2021 to 2020

Our net fees and commissions income increased 45.1% from ￦1,014 billion in 2020 to ￦1,471 billion in 2021, mainly due to a 28.2% increase in fees and commissions income from ￦1,694 billion in 2020 to ￦2,172 billion in 2021, which was partially offset by a 3.1% increase in fees and commissions expense from ￦680 billion in 2020 to ￦701 billion in 2021.

The 28.2% increase in fees and commissions income was primarily due to a 346.4% increase in fees and commissions related to leases from ￦84 billion in 2020 to ￦375 billion in 2021, a 12.8% increase in fees and commissions received on credit cards from ￦508 billion in 2020 to ￦573 billion in 2021 and a 34.2% increase in fees and commissions from trust management from ￦161 billion in 2020 to ￦216 billion in 2021. The increase in fees and commissions related to leases was mainly due to the additional fees and commissions received related to leases attributable to the addition of Woori Financial Capital as a consolidated subsidiary starting on October 20, 2020, the increase in fees and commissions received on credit cards was mainly attributable to an increase in credit card transactions primarily due to the

COVID-19

social distancing requirements and the increase in fees and commissions from trust management was primarily attributable to an increase in sales of our ELT and ETF products and increased overall activity by Woori Asset Trust.

The 3.1% increase in fees and commissions expense was primarily due to a 6.1% increase in fees and commissions paid from ￦247 billion in 2020 to ￦262 billion in 2021. The increase in fees and commissions paid was primarily attributable to the addition of Woori Financial Capital as a consolidated subsidiary starting on October 20, 2020.

Comparison of 2020 to 2019

Our net fees and commissions income decreased 8.1% from ￦1,103 billion in 2019 to ￦1,014 billion in 2020, mainly due to a 12.2% increase in fees and commissions expense from ￦606 billion in 2019 to ￦680 billion in 2020, which was enhanced by a 0.9% decrease in fees and commissions income from ￦1,709 billion in 2019 to ￦1,694 billion in 2020.

The 12.2% increase in fees and commissions expense was primarily due to a 30.0% increase in fees and commissions paid from ￦190 billion in 2019 to ￦247 billion in 2020 and a 3.9% increase in credit card commissions from ￦408 billion in 2019 to ￦424 billion in 2020. The increase in fees and commissions paid was primarily attributable to increases in the fees and commissions paid with respect to loans and payments in foreign currencies. The increase in credit card commissions was mainly due to an increase in the overall credit card commission rate as well as an increase in commissions related to credit card benefits.

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The 0.9% decrease in fees and commissions income was primarily due to a 7.5% decrease in fees and commissions received on credit cards from ￦549 billion in 2019 to ￦508 billion in 2020, a 29.2% decrease in fees and commissions received on securities business from ￦113 billion in 2019 to ￦80 billion in 2020, a 25.0% decrease in fees and commissions received on foreign exchange from ￦92 billion in 2019 to ￦69 billion in 2020 and a 10.6% decrease in fees and commissions from trust management from ￦180 billion in 2019 to ￦161 billion in 2020, which were offset in part by a significant increase in fees and commissions received related to leases from ￦5 billion in 2019 to ￦84 billion in 2020 and a 17.7% increase in other fees from ￦141 billion in 2019 to ￦166 billion in 2020. The decrease in fees and commissions received on credit cards was mainly due to a decrease in rates on credit card commissions received from merchants in accordance with Korean government policy, and the decrease in fees and commissions received on securities business and trust management was primarily attributable to the FSC’s restrictions on the sale of certain products included in such operations, including equity-linked trust products, from March 2020. The decrease in fees and commissions received on foreign exchange was primarily attributable to a general decrease across foreign currency transactions due to the

COVID-19

pandemic, including foreign exchange, international wire transfers and foreign trade. The increase in fees and commissions received related to leases was primarily due to the additional fees and commissions received related to leases attributable to the addition of Woori Financial Capital as a consolidated subsidiary starting on October 20, 2020.

For further information regarding our net fees and commissions income, see Note 31 of the notes to our consolidated financial statements included elsewhere in this annual report.

Net Gain on Financial Instruments

The following table shows, for the years indicated, the components of our net gain on financial instruments:


	Year ended December 31,						Percentage change
	2019		2020		2021		2020/2019			2021/2020

	(in billions of Won)						(%)
Net gain on financial instruments at fair value through profit or loss	￦	26	￦	422	￦	326		N/M	(1)		(22.7	)%
Net gain on financial assets at fair value through other comprehensive income		11		24		33		118.2	%		37.5
Net gain arising on disposals of financial assets at amortized cost		102		44		107		(56.9	)		143.2

Total net gain on financial instruments	￦	139	￦	490	￦	466		252.5	%		(4.9	)%

(1)	N/M = not meaningful.

Comparison of 2021 to 2020

Our net gain on financial instruments decreased 4.9% from ￦490 billion in 2020 to ￦466 billion in 2021. This decrease was primarily attributable to a 22.7% decrease in net gain on financial instruments at fair value through profit or loss from ￦422 billion in 2020 to ￦326 billion in 2021, which was partially offset by a 143.2% increase in net gain arising on disposals of financial assets at amortized cost from ￦44 billion in 2020 to ￦107 billion in 2021.

The 22.7% decrease in net gain on financial instruments at fair value through profit or loss resulted mainly from a change from a net gain on the transaction and valuation of currency derivatives of ￦656 billion in 2020 to a net loss on the transaction and valuation of currency derivatives of ￦29 billion in 2021. This was offset in significant part by a change from a net loss on the transaction and valuation of interest rate derivatives of ￦271 billion in 2020 to a net gain on the transaction and valuation of interest rate derivatives of ￦273 billion in 2021.

The 143.2% increase in net gain arising on disposals of financial assets at amortized cost was primarily attributable to gains realized on sales of certain of our

non-performing

card loans and project finance loans in 2021, which did not occur in 2020.

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Comparison of 2020 to 2019

Our net gain on financial instruments increased 252.5% from ￦139 billion in 2019 to ￦490 billion in 2020. This increase was primarily attributable to a significant increase in net gain on financial instruments at fair value through profit or loss from ￦26 billion in 2019 to ￦422 billion in 2020, which was partially offset by a 56.9% decrease in net gain arising on disposals of financial assets at amortized cost from ￦102 billion in 2019 to ￦44 billion in 2020.

The significant increase in net gain on financial instruments at fair value through profit or loss resulted mainly from a significant increase in net gain on the transaction and valuation of currency derivatives from ￦17 billion in 2019 to ￦656 billion in 2020, which was offset in part by a 148.6% increase in net loss on the transaction and valuation of interest rate derivatives from ￦109 billion in 2019 to ￦271 billion in 2020.

The 56.9% decrease in net gain arising on disposals of financial assets at amortized cost was primarily attributable to gains realized on sales of certain

non-performing

project finance loans held by us in 2019, which were not repeated in 2020.

For further information regarding our net gain on financial instruments, see Notes 33 and 34 of the notes to our consolidated financial statements included elsewhere in this annual report.

General and Administrative Expenses

The following table shows, for the years indicated, the components of our general and administrative expenses:


	Year ended December 31,						Percentage change
	2019		2020		2021		2020/2019			2021/2020

	(in billions of Won)						(%)
Employee benefits	￦	2,391	￦	2,533	￦	2,701		5.9	%		6.6	%
Depreciation and amortization		481		521		524		8.3			0.6
Other general and administrative expenses		894		902		922		0.9			2.2

General and administrative expenses	￦	3,766	￦	3,956	￦	4,147		5.0	%		4.8	%

Comparison of 2021 to 2020

Our general and administrative expenses increased 4.8% from ￦3,956 billion in 2020 to ￦4,147 billion in 2021, primarily as a result of a 6.6% increase in employee benefits from ￦2,533 billion in 2020 to ￦2,701 billion in 2021, which was enhanced by a 2.2% increase in other general and administrative expenses from ￦902 billion in 2020 to ￦922 billion in 2021.

The 6.6% increase in employee benefits was primarily due to an 8.3% increase in short-term employee benefits, which include salaries and other employee benefits, from ￦2,144 billion in 2020 to ￦2,321 billion in 2021. Such increase was partially offset by a 10.4% decrease in termination benefits from ￦202 billion in 2020 to ￦181 billion in 2021. The increase in short-term employee benefits was principally due to an increase in employee salaries due to an increase in average wages as well as the number of employees primarily attributable to the addition of Woori Financial Capital as a consolidated subsidiary on October 20, 2020. The decrease in termination benefits was due to a decrease in payments through our early retirement program.

The 2.2% increase in other general and administrative expenses was principally due to increases in telephone and communication expenses, advertising expenses and building maintenance expenses.

Comparison of 2020 to 2019

Our general and administrative expenses increased 5.0% from ￦3,766 billion in 2019 to ￦3,956 billion in 2020, primarily as a result of a 5.9% increase in employee benefits from ￦2,391 billion in 2019 to ￦2,533 billion in 2020, which was enhanced by an 8.3% increase in depreciation and amortization expenses from ￦481 billion in 2019 to ￦521 billion in 2020.

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The 5.9% increase in employee benefits was primarily due to a 4.1% increase in short-term employee benefits, which include salaries and other employee benefits, from ￦2,060 billion in 2019 to ￦2,144 billion in 2020. Such increase was enhanced by a 29.5% increase in termination benefits from ￦156 billion in 2019 to ￦202 billion in 2020. The increase in short-term employee benefits was principally due to an increase in employee salaries mainly due to an increase in average wages as well as an increase in the number of employees primarily attributable to the addition of Woori Financial Capital as a consolidated subsidiary on October 20, 2020, and the increase in termination benefits was mainly attributable to our implementation of an early retirement program in the fourth quarter of 2020.

The 8.3% increase in depreciation and amortization expenses was principally due to

one-off

depreciation expenses relating to our IT system and certain facilities of our headquarters.

For further information regarding our general and administrative expenses, see

Note 36-(1)

of the notes to our consolidated financial statements included elsewhere in this annual report.

Other Net Operating Expenses

The following table shows, for the years indicated, the components of our other net operating expenses:


	Year ended December 31,									Percentage change
	2019			2020			2021			2020/2019			2021/2020

	(in billions of Won)									(%)
Other operating income	￦	775		￦	899		￦	903			16.0	%		0.4	%
Other operating expenses		(1,078	)		(1,719	)		(1,790	)		59.5			4.1

Total other net operating expenses	￦	(303	)	￦	(820	)	￦	(887	)		170.6	%		8.2	%

Comparison of 2021 to 2020

Our other net operating expenses increased 8.2% from ￦820 billion in 2020 to ￦887 billion in 2021, as a 4.1% increase in other operating expenses from ￦1,719 billion in 2020 to ￦1,790 billion in 2021 was in small part offset by a 0.4% increase in other operating income from ￦899 billion in 2020 to ￦903 billion in 2021.

Other operating expenses include principally losses on transaction of foreign exchange, KDIC deposit insurance premiums, contributions to miscellaneous funds, losses related to derivatives designated for hedging, losses on fair value hedged items and miscellaneous other operating expenses. The 4.1% increase in other operating expenses was primarily the result of a 147.4% increase in miscellaneous other operating expenses, which was in significant part offset by a 33.6% decrease in loss on transactions of foreign exchange from ￦679 billion in 2020 to ￦451 billion in 2021. The increase in miscellaneous other operating expenses was primarily due to an increase in lease depreciation costs from ￦53 billion in 2020 to ￦251 billion in 2021 resulting from the addition of Woori Financial Capital as a consolidated subsidiary on October 20, 2020. The decrease in losses on transaction of foreign exchange, which was principally due to lower exchange rate volatility in 2021 compared to 2020, was mostly offset by a 25.7% decrease in gains on transaction of foreign exchange from ￦758 billion in 2020 to ￦563 billion in 2021, which is recorded as part of other operating income. On a net basis, net gain on transaction of foreign exchange increased 41.8% from ￦79 billion in 2020 to ￦112 billion in 2021.

Other operating income includes principally gains on transactions of foreign exchange, gains related to derivatives designated for hedging, gains on fair value hedged items and miscellaneous other operating income. The 0.4% increase in other operating income was mainly attributable to a 168.8% increase in miscellaneous other operating income from ￦64 billion in 2020 to ￦172 billion in 2021 and a significant increase in gains on fair value hedged items from ￦10 billion in 2020 to ￦106 billion in 2021, which was mostly offset by a 25.7% decrease in gains on transaction of foreign exchange from ￦758 billion in 2020 to ￦563 billion in 2021. The increase in miscellaneous other operating income was primarily due to an increase in our gains from disposals of lease assets resulting from the addition of Woori Financial Capital as a consolidated subsidiary on October 20, 2020. The decrease in gains on transactions of foreign exchange, which was principally due to lower exchange

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rate volatility in 2021 compared to 2020, was more than offset by a greater decrease in losses on transactions of foreign exchange, which is recorded as part of other operating expenses as discussed above.

Comparison of 2020 to 2019

Our other net operating expenses increased 170.6% from ￦303 billion in 2019 to ￦820 billion in 2020, as a 59.5% increase in other operating expenses from ￦1,078 billion in 2019 to ￦1,719 billion in 2020 was partially offset by a 16.0% increase in other operating income from ￦775 billion in 2019 to ￦899 billion in 2020.

The 59.7% increase in other operating expenses was primarily the result of a 253.6% increase in losses on transactions of foreign exchange from ￦192 billion in 2019 to ￦679 billion in 2020, which was enhanced by a significant increase in losses related to derivatives designated for hedging from ￦4 billion in 2019 to ￦83 billion in 2020. The increase in losses on transaction of foreign exchange, which was principally due to higher exchange rate volatility in 2020 compared to 2019, was partially offset by a 25.9% increase in gains on transaction of foreign exchange from ￦602 billion in 2019 to ￦758 billion in 2020, which is recorded as part of other operating income. On a net basis, net gain on transaction of foreign exchange decreased 80.7% from ￦410 billion in 2019 to ￦79 billion in 2020. The increase in losses related to derivatives designated for hedging, which was primarily driven by higher volatility in the financial markets in 2020 compared to 2019, was enhanced by a 47.2% decrease in gains related to derivatives designated for hedging from ￦127 billion in 2019 to ￦67 billion in 2020, which is recorded as part of other operating income. On a net basis, net gain (loss) related to derivatives designated for hedging changed from a net gain of ￦123 billion in 2019 to a net loss of ￦16 billion in 2020.

The 16.0% increase in other operating income was mainly attributable to a 25.9% increase in gains on transactions of foreign exchange from ￦602 billion in 2019 to ￦758 billion in 2020, which was offset in part by a 47.2% decrease in gains related to derivatives designated for hedging from ￦127 billion in 2019 to ￦67 billion in 2020. The increase in gains on transactions of foreign exchange, which was principally due to higher exchange rate volatility in 2020 compared to 2019, was more than offset by a greater increase in losses on transactions of foreign exchange, which is recorded as part of other operating expenses as discussed above. The decrease in gains related to derivatives designated for hedging, which was primarily driven by higher volatility in the financial markets in 2020 compared to 2019, was enhanced by an increase in losses related to derivatives designated for hedging, as discussed above.

For further information regarding our other net operating expenses, see

Notes 36-(2)

and (3) of the notes to our consolidated financial statements included elsewhere in this annual report.

Net Other

Non-operating

Expenses

The following table shows, for the years indicated, the components of our net other

non-operating

expenses:


	Year ended December 31,									Percentage change
	2019			2020			2021			2020/2019			2021/2020

	(in billions of Won)									(%)
Other non-operating income	￦	68		￦	133		￦	188			95.6	%		41.4	%
Other non-operating expenses		(229	)		(313	)		(223	)		36.7			(28.8	)

Total net other non-operating income (expenses)	￦	(161	)	￦	(180	)	￦	(35	)		11.8	%		(80.6	)%

Comparison of 2021 to 2020

Our net other

non-operating

expenses decreased 80.6% from ￦180 billion in 2020 to ￦35 billion in 2021, as a 28.8% decrease in other

non-operating

expenses from ￦313 billion in 2020 to ￦223 billion in 2021 was enhanced by a 41.4% increase in other

non-operating

income from ￦133 billion in 2020 to ￦188 billion in 2021.

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Other non-operating expenses include principally depreciation on investment properties, operating expenses on investment properties, losses on disposal of premises and equipment, intangible assets and other assets, impairment losses on premises and equipment, intangible assets and other assets, donations and miscellaneous other

non-operating

expenses. The 28.8% decrease in other

non-operating

expenses was mainly attributable to a 55.5% decrease in miscellaneous other

non-operating

expenses from ￦254 billion in 2020 to ￦113 billion in 2021, which was primarily due to provisions relating to the estimated reimbursements and other payments in connection with Woori Bank’s sale of trade finance funds managed by Lime Asset Management Co. as well as derivative-linked fund and securities products tied to yields on treasury bonds of Germany and the United Kingdom. See “Item 8.A. Consolidated Statements and Other Financial Information—Legal Proceedings and Regulatory Actions.” Such decrease was partially offset by provisions relating to the misappropriation of funds from Woori Bank by one of its employees in 2012, 2015 and 2018, which was discovered in April 2022 and recorded as a non-operating expense for 2021.

Other

non-operating

income includes principally rental fee income, gain on disposal of investment in joint ventures and associates, gain on disposal of premises and equipment, intangible assets and other assets, reversal of impairment loss on premises and equipment, intangible assets and other assets and miscellaneous other

non-operating

income. The 41.4% increase in other

non-operating

income was primarily attributable to a significant increase in gains on disposal of investment in joint ventures and associates from ￦3 billion in 2020 to ￦71 billion in 2021 and a 410.0% increase in gains on disposal of premises and equipment, intangible assets and other assets from ￦10 billion in 2020 to ￦51 billion in 2021, which was partially offset by a 51.4% decrease in miscellaneous other

non-operating

income from ￦105 billion in 2020 to ￦51 billion in 2021. The increase in gains on disposal of investment in joint ventures and associates was mainly attributable to our

non-participation

in the capital increase of Kbank, in accordance with the decrease in our share of ownership interest in Kbank, and the increase in gains on disposal of premises and equipment, intangible assets and other assets was primarily due to our sale of equity assets obtained from debt-equity swaps. The decrease in miscellaneous other

non-operating

income was principally due to additional income of ￦67 billion in 2020 from the liquidation of funds and bargain purchases resulting from the addition of Woori Financial Capital as a consolidated subsidiary on October 20, 2020, that was not repeated in 2021.

Comparison of 2020 to 2019

Our net other

non-operating

expenses increased 11.8% from ￦161 billion in 2019 to ￦180 billion in 2020, as a 36.7% increase in other

non-operating

expenses from ￦229 billion in 2019 to ￦313 billion in 2020 was partially offset by a 95.6% increase in other

non-operating

income from ￦68 billion in 2019 to ￦133 billion in 2020.

The 36.7% increase in other

non-operating

expenses was mainly attributable to a 92.4% increase in miscellaneous other

non-operating

expenses from ￦132 billion in 2019 to ￦254 billion in 2020, which was partially offset by a 67.9% decrease in impairment losses on premises, equipment, intangible assets and other assets from ￦28 billion in 2019 to ￦9 billion in 2020 and a 28.6% decrease in donations from ￦63 billion in 2019 to ￦45 billion in 2020. The increase in miscellaneous other

non-operating

expenses was principally due to increases in provisions relating to the estimated reimbursements and other payments in connection with Woori Bank’s sale of trade finance funds managed by Lime Asset Management Co. as well as derivative-linked fund and securities products tied to yields on treasury bonds of Germany and the United Kingdom. See “Item 8.A. Consolidated Statements and Other Financial Information—Legal Proceedings and Regulatory Actions—Woori Bank” and Notes

23-(5)-2)

and 3) of the notes to our consolidated financial statements included elsewhere in this annual report.

The 95.6% increase in other

non-operating

income was primarily attributable to an 84.2% increase in miscellaneous other

non-operating

income from ￦57 billion in 2019 to ￦105 billion in 2020, which was mainly due to additional income from the liquidation of funds and bargain purchases resulting from the addition of Woori Financial Capital as a consolidated subsidiary on October 20, 2020.

For further information regarding our net other

non-operating

income (expenses), see Notes

37-(3)

and (4) of the notes to our consolidated financial statements included elsewhere in this annual report.

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Share of Gain (Loss) on Joint Ventures and Associates

Comparison of 2021 to 2020

Our share of gain on joint ventures and associates decreased 38.6% from ￦101 billion 2020 to ￦62 billion in 2021. Such decrease was primarily due to a 36.5% decrease in our gains on valuation of investments in joint ventures and associates from ￦126 billion in 2020 to ￦80 billion in 2021, resulting mainly from the liquidation of our Well to Sea No.3 Private Equity Fund in 2020.

Comparison of 2020 to 2019

Our share of gain on joint ventures and associates increased 20.2% from ￦84 billion 2019 to ￦101 billion in 2020. Such increase was primarily due to a 21.2% increase in our gains on valuation of investments in joint ventures and associates from ￦104 billion in 2019 to ￦126 billion in 2020, resulting mainly from an increase in the share of profits from Well to Sea No.3 Private Equity Fund.

For further information regarding our investments in joint ventures and associates, see Note 13 of the notes to our consolidated financial statements included elsewhere in this annual report.

Income Tax Expense

Our income tax expense is calculated by adding or subtracting changes in deferred income tax liabilities and assets to income tax amounts payable for the period. Deferred tax assets are recognized for deductible temporary differences, including operating losses and tax credit

carry-forwards,

while deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are those between the carrying values of assets and liabilities for financial reporting purposes and their tax bases. Deferred tax assets, including the

carry-forwards

of unused tax losses, are recognized to the extent it is probable that the deferred tax assets will be realized.

Comparison of 2021 to 2020

Income tax expense increased 90.3% from ￦486 billion in 2020 to ￦925 billion in 2021, mainly as a result of an 87.4% increase in our net income before income tax expense from ￦2,001 billion in 2020 to ￦3,749 billion in 2021. Our effective tax rate was 24.3% in 2020 and 25.1% in 2021.

Comparison of 2020 to 2019

Income tax expense decreased 29.1% from ￦685 billion in 2019 to ￦486 billion in 2020, mainly as a result of a 26.5% decrease in our net income before income tax expense from ￦2,723 billion in 2019 to ￦2,001 billion in 2020. Our effective tax rate was 25.2% in 2019 and 24.3% in 2020.

For further information regarding our income tax expense, see Note 38 of the notes to our consolidated financial statements included elsewhere in this annual report.

Net Income

Comparison of 2021 to 2020

Due to the factors described above, our net income increased by 82.3% from ￦1,515 billion in 2020 to ￦2,762 billion in 2021.

Comparison of 2020 to 2019

Due to the factors described above, our net income decreased by 25.7% from ￦2,038 billion in 2019 to ￦1,515 billion in 2020.

Results by Principal Business Segment

We compile and analyze financial information for our business segments based upon segment information used by our management for the purposes of resource allocation and performance evaluation. We currently have

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five operational business segments: banking, credit card, capital, investment banking and other operations. We have added capital as a new business segment following our acquisition of Woori Financial Capital Co., Ltd. (formerly known as Aju Capital Co., Ltd.) in December 2020.

The following table shows, for the years indicated, our results of operations by segment:


	Net income Year ended December 31,						Net operating income (1) Year ended December 31,
	2019		2020		2021		2019		2020		2021

	(in billions of Won)
Banking	￦	1,862	￦	1,417	￦	2,340	￦	2,629	￦	1,911	￦	3,073
Credit card		114		120		201		136		165		281
Capital		—		—		141		—		—		190
Investment banking		53		63		80		56		70		104
Others		634		652		667		636		681		681

Total (2)	￦	2,663	￦	2,252	￦	3,429	￦	3,457	￦	2,827	￦	4,329

(1)	Comprises net interest income and net non-interest income after administrative expenses and impairment losses due to credit losses.

(2)	Before adjustments for consolidation, inter-segment transactions and certain differences in classification under our management reporting system.

Banking

This segment primarily consists of the banking operations of Woori Bank and its overseas subsidiaries. Woori Bank provides a wide range of banking and other financial services to large corporations, small- and

medium-sized

enterprises and individuals in Korea. The following table shows, for the years indicated, our income statement data for this segment:


	Year ended December 31,									Percentage change
	2019			2020			2021			2020/2019			2021/2020

	(in billions of Won)									(%)
Income statement data
Net interest income	￦	4,583		￦	4,545		￦	5,158			(0.8	)%		13.5	%
Non-interest income		1,557			1,423			1,662			(8.6	)		16.8
Provision for impairment losses due to credit loss and others		(33	)		(512	)		(140	)		N/M	(1)		(72.7	)
General administrative expenses		(3,478	)		(3,545	)		(3,607	)		1.9			1.7

Net operating income		2,629			1,911			3,073			(27.3	)		60.8
Non-operating income (expense)		(151	)		(57	)		40			(62.3	)		N/M	(1)

Net income before tax		2,478			1,854			3,113			(25.2	)		67.9
Tax expense		(616	)		(437	)		(773	)		(29.1	)		76.9

Net income	￦	1,862		￦	1,417		￦	2,340			(23.9	)%		65.1	%

(1)	N/M = not meaningful.

Comparison of 2021 to 2020

Our net income before tax for this segment increased 67.9% from ￦1,854 billion in 2020 to ￦3,113 billion in 2021. Net income after tax also increased 65.1% from ￦1,417 billion in 2020 to ￦2,340 billion in 2021.

Net interest income for this segment increased 13.5% from ￦4,545 billion in 2020 to ￦5,158 billion in 2021, primarily reflecting the increase in the average balance of loans, which was offset in part by the increase in the average balance of deposits, mainly reflecting the increased demand for such products from customers as discussed above. The impact of such increase was partially offset by decreases in the average yield on loans and

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the average cost of deposits, respectively, principally as a result of the lower overall level of interest rates prevailing in Korea in 2021 compared to 2020.

Non-interest

income attributable to this segment increased 16.8% from ￦1,423 billion in 2020 to ￦1,662 billion in 2021, primarily due to an increase in net fees and commissions income, which was mainly due to increases in fees and commissions from trust management, an increase in dividend income, which was mainly attributable to increases in dividends from stock and equity capital, and an increase in gains from our sales of trade receivables.

Impairment losses due to credit loss and others for this segment decreased by 72.7% from ￦512 billion in 2020 to ￦140 billion in 2021, primarily due to increases in provision for loan losses in respect of our corporate and consumer loan portfolios in 2020 which significantly decreased in 2021. Such increases in 2020 were mainly attributable to our preemptive measures to account for a potential increase in expected credit loss that could result from a deterioration in the overall asset quality of our corporate and consumer loan portfolios due to the

COVID-19

pandemic.

General administrative expenses attributable to this segment increased 1.7% from ￦3,545 billion in 2020 to ￦3,607 billion in 2021, mainly due to increases in salaries and computer and

IT-related

expenses.

Non-operating

income (expense) for this segment changed from net expense of ￦57 billion in 2020 to net income of ￦40 billion in 2021, primarily due to provisions relating to the estimated reimbursements and other payments in connection with Woori Bank’s sale of trade finance funds managed by Lime Asset Management Co. as well as derivative-linked fund and securities products tied to yields on treasury bonds of Germany and the United Kingdom that were incurred in 2020 but not repeated in 2021. Such change was partially offset by provisions relating to the misappropriation of funds from Woori Bank by one of its employees in 2012, 2015 and 2018, which was discovered in April 2022 and recorded as a non-operating expense for 2021.

Comparison of 2020 to 2019

Our net income before tax for this segment decreased 25.2% from ￦2,478 billion in 2019 to ￦1,854 billion in 2020. Net income after tax also decreased 23.9% from ￦1,862 billion in 2019 to ￦1,417 billion in 2020.

Net interest income for this segment decreased 0.8% from ￦4,583 billion in 2019 to ￦4,545 billion in 2020, primarily reflecting the decrease in the average yield on loans, which was offset in part by the decrease in the average cost of deposits, mainly reflecting the overall decrease in the general level of interest rates in Korea in 2020 compared to 2019. The impact of such decrease was partially offset by increases in the average balances of loans and deposits, respectively, principally as a result of increased demand for such products from customers as discussed above.

Non-interest

income attributable to this segment decreased 8.6% from ￦1,557 billion in 2019 to ￦1,423 billion in 2020, primarily due to a decrease in sales of financial products through bank branches as well as decreases in fees and commissions received on foreign exchange derivatives.

Impairment losses due to credit loss and others for this segment increased significantly from ￦33 billion in 2019 to ￦512 billion in 2020, primarily as a result of an increase in provision for loan losses in respect of Woori Bank’s loan portfolio, which was mainly attributable to an expected deterioration in the overall asset quality of such loan portfolio due to the

COVID-19

pandemic.

General administrative expenses attributable to this segment increased 1.9% from ￦3,478 billion in 2019 to ￦3,545 billion in 2020, mainly due to increases in salaries and termination benefits and depreciation expenses relating to IT systems.

Non-operating

expense for this segment decreased 62.3% from ￦151 billion in 2019 to ￦57 billion in 2020, primarily due to profits from the liquidation of the Well to Sea No.3 Private Equity Fund, which were partially offset by the increase in provisions relating to the estimated reimbursements and other payments in connection with Woori Bank’s sale of trade finance funds managed by Lime Asset Management Co. as well as derivative-linked fund and securities products tied to yields on treasury bonds of Germany and the United Kingdom.

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Credit Card

This segment consists of the credit card operations of Woori Card. Woori Card offers credit card products and services mainly to consumers and corporate customers in Korea. The following table shows, for the years indicated, our income statement data for this segment:


	Year ended December 31,									Percentage change
	2019			2020			2021			2020/2019			2021/2020

	(in billions of Won)									(%)
Income statement data
Net interest income	￦	554		￦	564		￦	606			1.8	%		7.4	%
Non-interest income		32			4			64			(87.5	)		N/M	(1)
Provision for impairment losses due to credit loss and others		(260	)		(196	)		(164	)		(24.6	)		(16.3	)
General administrative expenses		(190	)		(207	)		(225	)		8.9			8.7

Net operating income		136			165			281			21.3			70.3
Non-operating income (expense)		14			(6	)		(8	)		N/M	(1)		33.3

Net income before tax		150			159			273			6.0			71.7
Tax expense		(36	)		(39	)		(72	)		8.3			84.6

Net income	￦	114		￦	120		￦	201			5.3	%		67.5	%

(1)	N/M = not meaningful.

Comparison of 2021 to 2020

Our net income before tax for this segment increased 71.7% from ￦159 billion in 2020 to ￦273 billion in 2021. Net income after tax also increased 67.5% from ￦120 billion in 2020 to ￦201 billion in 2021.

Net interest income for this segment increased 7.4% from ￦564 billion in 2020 to ￦606 billion in 2021, primarily due to an increase in the average volume of credit card receivables, including cash advances and credit card loans, which was offset in part by a decrease in the average yield on such receivables.

Non-interest

income attributable to this segment increased significantly from ￦4 billion in 2020 to ￦64 billion in 2021, mainly due to an increase in fees and commissions received on credit cards resulting from increased consumer spending following a recovery from the

COVID-19

pandemic.

Impairment losses due to credit loss and others for this segment decreased 16.3% from ￦196 billion in 2020 to ￦164 billion in 2021, primarily as a result of a decrease in delinquency rates due to heightened credit review standards.

General administrative expenses attributable to this segment increased 8.7% from ￦207 billion in 2020 to ￦225 billion in 2021, mainly due to increases in salaries.

Non-operating

expense for this segment increased from ￦6 billion in 2020 to ￦8 billion in 2021, mainly as a result of an increase in miscellaneous fees and commissions paid.

Comparison of 2020 to 2019

Our net income before tax for this segment increased 6.0% from ￦150 billion in 2019 to ￦159 billion in 2020. Net income after tax also increased 5.3% from ￦114 billion in 2019 to ￦120 billion in 2020.

Net interest income for this segment increased 1.8% from ￦554 billion in 2019 to ￦564 billion in 2020, primarily due to an increase in the average volume of credit card receivables, including cash advances and credit card loans, which was offset in part by a decrease in the average yield on such receivables.

Non-interest

income attributable to this segment decreased 87.5% from ￦32 billion in 2019 to ￦4 billion in 2020, mainly due to a decrease in fees and commissions received on credit cards resulting from reduced

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consumer spending due to the

COVID-19

pandemic and an increase in commissions paid related to credit card benefits.

Impairment losses due to credit loss and others for this segment decreased 24.6% from ￦260 billion in 2019 to ￦196 billion in 2020, primarily as a result of a decrease in delinquency rates due to heightened credit review standards.

General administrative expenses attributable to this segment increased 8.9% from ￦190 billion in 2019 to ￦207 billion in 2020, mainly due to an increase in salaries paid resulting from an increase in the number of employees in this segment.

Non-operating

income for this segment changed from net income of ￦14 billion in 2019 to a net expense of ￦6 billion in 2020, mainly as a result of a net reversal of provisions related to litigation in this segment due to judgments in our favor in 2019, which was not repeated in 2020.

Capital

This segment consists of the capital operations of Woori Financial Capital, and was newly established beginning in 2021 following our acquisition of Woori Financial Capital Co., Ltd. (formerly known as Aju Capital Co., Ltd.). Woori Financial Capital mainly provides installment finance services and loan services including lease financing. The following table shows, for the year indicated, our income statement data for this segment:


	Year ended December 31, 2021

	(in billions of Won)
Income statement data
Net interest income	￦	316
Non-interest income		95
Provision for impairment losses due to credit loss and others		(122	)
General administrative expenses		(99	)

Net operating income		190
Non-operating expense		(16	)

Net income before tax		174
Tax expense		(33	)

Net income	￦	141

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Investment Banking

This segment consists of the investment banking operations of Woori Investment Bank. Woori Investment Bank mainly provides project finance, structured finance, merger and acquisition financing and financial advisory services. The following table shows, for the years indicated, our income statement data for this segment:


	Year ended December 31,									Percentage change
	2019			2020			2021			2020/2019			2021/2020

	(in billions of Won)									(%)
Income statement data
Net interest income	￦	54		￦	78		￦	108			44.4	%		38.5	%
Non-interest income		34			34			49			0.0			44.1
Provision for impairment losses due to credit loss and others		(1	)		(4	)		(2	)		300.0			(50.0	)
General administrative expenses		(31	)		(38	)		(51	)		22.6			34.2

Net operating income		56			70			104			25.0			48.6

Non-operating expense		(4	)		(1	)		—			(75.0	)		(100.0	)

Net income before tax		52			69			104			32.7			50.7
Tax income (expense)		1			(6	)		(24	)		N/M	(1)		300.0

Net income	￦	53		￦	63		￦	80			18.9	%		27.0	%

(1)	N/M = not meaningful.

Comparison of 2021 to 2020

Our net income before tax for this segment increased 50.7% from ￦69 billion in 2020 to ￦104 billion in 2021. Net income after tax also increased 27.0% from ￦63 billion in 2020 to ￦80 billion in 2021.

Net interest income for this segment, which consists mainly of interest income from financing provided to corporations, increased 38.5% from ￦78 billion in 2020 to ￦108 billion in 2021, primarily reflecting an increase in the average balance of such financing provided to corporate customers.

Non-interest

income attributable to this segment increased 44.1% from ￦34 billion in 2020 to ￦49 billion in 2021, mainly due to an increase in fees received from our investment banking activities.

Impairment losses due to credit loss and others for this segment decreased 50.0% from ￦4 billion in 2020 to ￦2 billion in 2021, primarily as a result of an expected improvement in the overall asset quality of loans in this segment following a recovery from the

COVID-19

pandemic.

General administrative expenses attributable to this segment increased 34.2% from ￦38 billion in 2020 to ￦51 billion in 2021, mainly due to an increase in salaries resulting from an increase in the number of our employees due to the expansion of our investment banking business.

Comparison of 2020 to 2019

Our net income before tax for this segment increased 32.7% from ￦52 billion in 2019 to ￦69 billion in 2020. Net income after tax also increased 18.9% from ￦53 billion in 2019 to ￦63 billion in 2020.

Net interest income for this segment, which consists mainly of interest income from financing provided to corporations, increased 44.4% from ￦54 billion in 2019 to ￦78 billion in 2020, primarily reflecting an increase in the average balance of such financing provided to corporate customers.

Non-interest

income attributable to this segment remained stable at ￦34 billion in 2019 and 2020.

Impairment losses due to credit loss and others for this segment increased 300.0% from ￦1 billion in 2019 to ￦4 billion in 2020, primarily as a result of an expected deterioration in the overall asset quality of loans in this segment due to the

COVID-19

pandemic.

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General administrative expenses attributable to this segment increased 22.6% from ￦31 billion in 2019 to ￦38 billion in 2020, mainly due to an increase in salaries paid resulting from an increase in the number of employees in this segment.

Others

Other operations include the operations of Woori Financial Group and all of our subsidiaries (other than Woori Bank, Woori Card, Woori Financial Capital and Woori Investment Bank), including Woori Asset Trust, Woori Asset Management, Woori Credit Information, Woori Fund Service, Woori Private Equity Asset Management, Woori Global Asset Management, Woori FIS and Woori Finance Research. The following table shows, for the years indicated, our income statement data for this segment:


	Year ended December 31,									Percentage change
	2019			2020			2021			2020/2019			2021/2020

	(in billions of Won)									(%)
Income statement data
Net interest income	￦	2		￦	69		￦	30			N/M	(1)		(56.5	)%
Non-interest income		958			1,072			1,111			11.9	%		3.6
Provision for impairment losses due to credit loss and others		(1	)		(44	)		(20	)		N/M	(1)		(54.5	)
General administrative expenses		(323	)		(416	)		(440	)		28.8			5.8

Net operating income		636			681			681			7.1			0.0
Non-operating income (expense)		(1	)		1			3			N/M	(1)		200.0

Net income before tax		635			682			684			7.4			0.3
Tax expense		(1	)		(30	)		(17	)		N/M	(1)		(43.3	)

Net income	￦	634		￦	652		￦	667			2.8	%		2.3	%

(1)	N/M = not meaningful.

Comparison of 2021 to 2020

Our net income before tax for this segment increased 0.3% from ￦682 billion in 2020 to ￦684 billion in 2021. Net income after tax increased 2.3% from ￦652 billion in 2020 to ￦667 billion in 2021.

Net interest income for this segment decreased 56.5% from ￦69 billion in 2020 to ￦30 billion in 2021, primarily due to the loss of net interest income of Woori Financial Capital as a result of the recognition of capital as a separate segment beginning in 2021.

Non-interest

income attributable to this segment increased 3.6% from ￦1,072 billion in 2020 to ￦1,111 billion in 2021, primarily as a result of increases in trust fees and management fees, which more than offset the impact of the recognition of capital as a separate segment beginning in 2021.

Impairment losses due to credit loss and others for this segment decreased 54.5% from ￦44 billion in 2020 to ￦20 billion in 2021, primarily as a result of an expected improvement in the overall asset quality of the loans included in this segment due to recovery from the

COVID-19

pandemic, as well as the recognition of capital as a separate segment beginning in 2021.

General administrative expenses attributable to this segment increased 5.8% from ￦416 billion in 2020 to ￦440 billion in 2021, mainly due to increases in salaries resulting from an increase in the number of our employees.

Comparison of 2020 to 2019

Our net income before tax for this segment increased 7.4% from ￦635 billion in 2019 to ￦682 billion in 2020. Net income after tax increased 2.8% from ￦634 billion in 2019 to ￦652 billion in 2020.

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Net interest income for this segment increased significantly from ￦2 billion in 2019 to ￦69 billion in 2020, primarily due to the additional interest income attributable to the addition of Woori Financial Capital as a consolidated subsidiary starting on October 20, 2020.

Non-interest

income attributable to this segment increased 11.9% from ￦958 billion in 2019 to ￦1,072 billion in 2020, primarily as a result of the additional

non-interest

income attributable to the addition of Woori Financial Capital as a consolidated subsidiary starting on October 20, 2020.

Impairment losses due to credit loss and others for this segment increased significantly from ￦1 billion in 2019 to ￦44 billion in 2020, primarily as a result of an expected deterioration in the overall asset quality of the loans included in this segment due to the

COVID-19

pandemic, as well as the additional impairment losses attributable to the addition of Woori Financial Capital as a consolidated subsidiary starting on October 20, 2020.

General administrative expenses attributable to this segment increased 28.8% from ￦323 billion in 2019 to ￦416 billion in 2020, mainly due to an increase in salaries and other employee benefits paid to our employees in this segment and an increase in termination benefits resulting mainly from our implementation of an early retirement program in the fourth quarter of 2020, as well as the additional expenses attributable to the addition of Woori Financial Capital as a consolidated subsidiary starting on October 20, 2020.

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Item 5.B.

Liquidity and Capital Resources

Financial Condition

Assets

The following table sets forth, as of the dates indicated, the principal components of our assets:


	As of December 31,						Percentage change
	2020			2021			2021/2020

	(in billions of Won)						(%)
Cash and cash equivalents	￦	9,991		￦	7,566			(24.3	)%
Financial assets at fair value through profit or loss		14,763			13,497			(8.6	)
Financial assets at fair value through other comprehensive income		30,029			39,120			30.3
Securities at amortized cost		17,021			17,086			0.4
Loans and other financial assets at amortized cost:		320,106			361,933			13.1
Due from banks (2)		9,863			15,914			61.4
Loans (2)		302,794			336,800			11.2
Loans in local currency		249,265			273,284			9.6
Loans in foreign currencies		20,025			24,508			22.4
Domestic banker’s usance		2,241			3,403			51.9
Credit card accounts		8,543			9,757			14.2
Bills bought in foreign currencies		5,764			5,310			(7.9	)
Bills bought in local currency		134			265			97.8
Factoring receivables		38			18			(52.6	)
Advances for customers on guarantees		31			27			(12.9	)
Privately placed bonds		354			519			46.6
Securitized loans		2,562			2,875			12.2
Call loans		2,352			3,481			48.0
Bonds purchased under resale agreements		10,146			10,333			1.8
Financial lease receivables		586			1,174			100.3
Installment financial bonds		1,925			2,882			49.7
Others		—			—			N/A	(1)
Loan origination costs and fees		744			858			15.3
Discounted present value		(7	)		(7	)		0.0
Loss allowance		(1,909	)		(1,887	)		(1.2	)
Other financial assets (other receivables) (2)		7,449			9,219			23.8
Investments in joint ventures and associates		993			1,335			34.4
Investment properties		387			389			0.5
Premises and equipment		3,287			3,175			(3.4	)
Other assets (3)		2,503			3,083			23.2

Total assets	￦	399,081		￦	447,184			12.1	%

(1)	N/A = not applicable.

(2)	Net of allowance for credit losses.

(3)	Includes intangible assets and goodwill, assets held for distribution (sale), net defined benefit assets, current tax assets, deferred tax assets, derivative assets designated for hedging and other assets.

For further information on our assets, see “Item 4.B. Business Overview—Assets and Liabilities.”

Our total assets increased 12.1% from ￦399,081 billion as of December 31, 2020 to ￦447,184 billion as of December 31, 2021, principally due to an 11.2% increase in loans from ￦302,794 billion as of December 31, 2020 to ￦336,800 billion as of December 31, 2021, which was enhanced by a 30.3% increase in financial assets

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at fair value through other comprehensive income from ￦30,029 billion as of December 31, 2020 to ￦39,120 billion as of December 31, 2021.

The increase in loans was primarily attributable to a 9.6% increase in loans in local currency from ￦249,265 billion as of December 31, 2020 to ￦273,284 billion as of December 31, 2021, which was enhanced by a 22.4% increase in loans in foreign currencies from ￦20,025 billion as of December 31, 2020 to ￦24,508 billion as of December 31, 2021, a 14.2% increase in credit card accounts from ￦8,543 billion as of December 31, 2020 to ￦9,757 billion as of December 31, 2021, a 51.9% increase in domestic banker’s letters of credit from ￦2,241 billion as of December 31, 2020 to ￦3,403 billion as of December 31, 2021 and a 48.0% increase in call loans from ￦2,352 billion as of December 31, 2020 to ￦3,481 billion as of December 31, 2021.

The increase in financial assets at fair value through other comprehensive income was primarily attributable to a 31.7% increase in debt securities from ￦28,948 billion as of December 31, 2020 to ￦38,127 billion as of December 31, 2021. Such increase in debt securities was principally due to an increase in debt securities from financial institutions.

Liabilities and Equity

The following table sets forth, as of the dates indicated, the principal components of our liabilities and our equity:


	As of December 31,						Percentage change
	2020			2021			2021/2020

	(in billions of Won)						(%)
Liabilities:
Financial liabilities at fair value through profit or loss	￦	6,814		￦	4,873			(28.5	)%
Deposits due to customers		291,477			317,900			9.1
Borrowings		20,745			24,755			19.3
Debentures		37,479			44,654			19.1
Provisions		502			576			14.7
Other financial liabilities		14,216			24,233			70.5
Other liabilities (2)		1,122			1,388			23.7

Total liabilities		372,355			418,379			12.4

Equity:
Owner’s equity:
Capital stock		3,611			3,640			0.8
Hybrid securities		1,895			2,294			21.1
Capital surplus		626			682			8.9
Other equity		(2,346	)		(2,167	)		(7.6	)
Retained earnings (3)		19,268			21,348			10.8
		23,054			25,797			11.9
Non-controlling interests		3,672			3,008			(18.1	)

Total equity		26,726			28,805			7.8

Total liabilities and equity	￦	399,081		￦	447,184			12.1	%

(1)	N/A = not applicable.

(2)	Includes net defined benefit liability, current tax liabilities, deferred tax liabilities, derivative liabilities designated for hedging and other liabilities.

(3)	Includes regulatory reserve for credit loss of ￦2,548 billion as of December 31, 2020 and ￦2,568 billion as of December 31, 2021.

For further information on our liabilities, see “Item 4.B. Business Overview—Assets and Liabilities.”

Our total liabilities increased 12.4% from ￦372,355 billion as of December 31, 2020 to ￦418,379 billion as of December 31, 2021, principally as a result of a 9.1% increase in deposits due to customers from

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￦291,477 billion as of December 31, 2020 to ￦317,900 billion as of December 31, 2021, which was enhanced by a 70.5% increase in other financial liabilities from ￦14,216 billion as of December 31, 2020 to ￦24,233 billion as of December 31, 2021 and a 19.1% increase in debentures from ￦37,479 billion as of December 31, 2020 to ￦44,654 billion as of December 31, 2021. The increase in deposits due to customers was primarily due to a 4.9% increase in time deposits from ￦242,398 billion as of December 31, 2020 to ￦254,319 billion as of December 31, 2021, which was enhanced by a 23.8% increase in deposits in foreign currencies from ￦30,409 billion as of December 31, 2020 to ￦37,644 billion as of December 31, 2021 and a 44.8% increase in demand deposits from ￦12,454 billion as of December 31, 2020 to ￦18,029 billion as of December 31, 2021.

Our total equity increased 7.8% from ￦26,726 billion as of December 31, 2020 to ￦28,805 billion as of December 31, 2021. Such increase mainly reflected an 10.8% increase in retained earnings from ￦19,268 billion as of December 31, 2020 to ￦21,348 billion as of December 31, 2021 and a 21.1% increase in hybrid securities from ￦1,895 billion as of December 31, 2020 to ￦2,294 billion as of December 31, 2021. The increase in retained earnings was attributable mainly to the net income we generated in 2021. The increase in hybrid securities was due to the issuances of local currency-denominated hybrid securities in April and October 2021.

Liquidity

Our primary source of funding has historically been and continues to be customer deposits, particularly

lower-cost

retail deposits. Customer deposits amounted to ￦291,477 billion and ￦317,900 billion as of December 31, 2020 and 2021, which represented approximately 82.2% and 80.9% of our total funding, respectively. We have historically been able to use customer deposits to finance our operations generally, including meeting a portion of our liquidity requirements. Although the majority of deposits are short term, it has been our experience that the majority of our depositors generally roll over their deposits at maturity, thus providing us with a stable source of funding. However, in the event that a substantial number of our depositors do not roll over their deposits or otherwise decide to withdraw their deposited funds, we would need to place increased reliance on alternative sources of funding, some of which may be more expensive than customer deposits, in order to finance our operations. See “Item 3.D. Risk Factors—Other risks relating to our business—Our funding is highly dependent on

short-term

deposits, which dependence may adversely affect our operations.” In particular, we may increase our utilization of alternative funding sources such as

short-term

borrowings and cash and cash equivalents (including funds from maturing loans), as well as liquidating our positions in trading and investment securities and using the proceeds to fund parts of our operations, as necessary.

We also obtain funding through borrowings and issuances of debentures to meet our liquidity needs. Borrowings represented 6.7% and 7.1% of our total funding as of December 31, 2020 and 2021, respectively. Debentures represented 10.6% and 11.4% of our total funding as of December 31, 2020 and 2021, respectively. For further information on our sources of funding, see “Item 4.B. Business Overview—Assets and Liabilities—Funding.”

Our liquidity risks arise from withdrawals of deposits and maturities of our borrowings and debentures, as well as our need to fund our lending, trading and investment activities and to manage our trading positions. Our goal in managing our liquidity is to be able, even under adverse conditions, to meet all of our liability repayments on time and to fund all investment opportunities. For a discussion of how we manage our liquidity risk, see “Item 11. Quantitative and Qualitative Disclosures about Market Risk—Liquidity Risk Management.”

The Financial Services Commission requires each Korean financial holding company and each Korean bank to maintain specific Won and foreign currency liquidity ratios. These ratios require us to keep our ratio of liquid assets to liquid liabilities above certain minimum levels. For a description of these requirements, see “Item 4.B. Business Overview—Supervision and Regulation—Principal Regulations Applicable to Financial Holding Companies—Liquidity” and “—Principal Regulations Applicable to Banks—Liquidity.” We are currently in compliance with all such requirements. In addition, notwithstanding any global economic and financial disruption resulting from the

COVID-19

pandemic, we do not expect to experience issues relating to foreign currency liquidity due to the low likelihood of large withdrawals of foreign currency and our access to existing lines of credit in foreign currency.

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We are a financial holding company, and substantially all of our operations are in our subsidiaries. Accordingly, we rely on distributions from our subsidiaries, direct borrowings and issuances of debt and equity securities to fund our liquidity obligations at the holding company level. See “Item 3.D. Risk Factors—Risks relating to our financial holding company structure and strategy.”

Contractual Obligations and

Off-Balance

Sheet Arrangements

The following table sets forth our contractual obligations as of December 31, 2021:


	Payments due by period
	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years

	(in billions of Won)
Contractual obligations
Borrowing obligations (1)	￦	24,996	￦	18,754	￦	4,708	￦	1,093	￦	441
Debenture obligations (1)		46,283		17,959		21,400		3,582		3,342
Deposits (2)(3)		320,329		309,500		8,299		915		1,615
Lease obligations		345		151		107		49		38
Purchase obligations		53		17		16		13		7
Employee severance plan obligations		3,245		14		113		179		2,939

Total	￦	395,251	￦	346,395	￦	34,643	￦	5,831	￦	8,382

(1)

Includes estimated future interest payments, which have been estimated using contractual interest rates and scheduled contractual maturities of the outstanding borrowings and debentures as of December 31, 2021. In order to calculate future interest payments on debts with floating rates, we used contractual interest rates as of December 31, 2021.

(2)	Comprising certificates of deposit, other time deposits and installment deposits.

(3)	Includes estimated future interest payments, which have been estimated using weighted average interest rates paid in 2021 for each deposit product category and their scheduled contractual maturities.

We utilize

credit-related

financial instruments with

off-balance

sheet risk in our normal course of business. The primary purpose of those instruments is to generate fee income for us, in return for making credit support and funds available to our customers as required. Such instruments consist primarily of guarantees, commercial letters of credit and unused lines of credit. Guarantees include guarantees for loans, debentures, trade financing arrangements and guarantees for other financings. Contingent liabilities for which guaranteed amounts are not finalized appear as

off-balance

sheet items in the notes to the financial statements.

We also enter into transactions with certain structured entities, including through the purchase of their subordinated debt and the provision of credit facilities to them. For further information, see Notes

1-(5)

and

1-(6)

of the notes to our consolidated financial statements included elsewhere in this annual report.

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The following table sets forth our

off-balance

sheet guarantees and commitments as of the dates indicated:


	As of December 31,
	2020		2021

	(in billions of Won)
Confirmed guarantees	￦	7,275	￦	7,988
Guarantees for loans		103		39
Acceptances		602		623
Guarantees in acceptances of imported goods		78		111
Other confirmed guarantees		6,492		7,215
Unconfirmed guarantees		3,617		4,208
Local letter of credit		187		243
Letters of credit		3,026		3,187
Other unconfirmed guarantees		404		778
Commercial paper purchase commitments and others		917		792
Loan commitments and others:
Loans		112,089		114,414
Others		7,828		5,653

We analyze our

off-balance

sheet legally binding

credit-related

commitments for possible losses associated with such commitments. We review the ability of the counterparties of the underlying

credit-related

commitments to perform their obligations under the commitments and, if we determine that a loss is probable and estimable, we establish allowances for possible losses in a manner similar to allowances that we would establish with respect to a loan granted under the terms of the applicable commitment. These allowances are reflected as provisions in our statement of financial position. As of December 31, 2021, we had established provisions for possible losses of ￦187 billion with respect to our guarantees and loan commitments.

Capital Adequacy

We are subject to the capital adequacy requirements of the Financial Services Commission. The requirements applicable commencing in December 2013 pursuant to amended Financial Services Commission regulations promulgated in July 2013 were formulated based on Basel III, which was first introduced by the Basel Committee on Banking Supervision, Bank for International Settlements in December 2009. Under the amended Financial Services Commission regulations, all financial holding companies and banks in Korea are required to maintain certain minimum ratios of Tier I common equity capital, total Tier I capital and total Tier I and Tier II capital to

risk-weighted

assets. See “Item 4.B. Business Overview—Supervision and Regulation—Principal Regulations Applicable to Financial Holding Companies Capital Adequacy” and “—Principal Regulations Applicable to Banks—Capital Adequacy.”

If a financial holding company or a bank fails to maintain its capital adequacy ratios, the Korean regulatory authorities may impose penalties on such financial holding company or bank ranging from a warning to suspension or revocation of its license. See “Item 3.D. Risk Factors—Other risks relating to our business—We may be required to raise additional capital if our capital adequacy ratios deteriorate or the applicable capital requirements change in the future, but we may not be able to do so on favorable terms or at all.”

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The following table sets forth a summary of our capital and capital adequacy ratios as of December 31, 2020 and 2021 based on IFRS and applicable regulatory reporting standards:


	As of December 31,
	2020			2021

	(in billions of Won, except percentages)
Tier I capital
Tier I common equity capital
Capital stock	￦	3,611		￦	3,640
Capital surplus		626			682
Retained earnings		19,268			21,348
Non-controlling interests in consolidated subsidiaries		16			16
Others		(3,693	)		(3,737	)

Additional Tier I capital
Hybrid securities		1,895			2,294
Other equity		1,639			1,299

Total Tier I capital	￦	23,362		￦	25,542

Tier II capital
Allowance for credit losses (1)	￦	1,018		￦	425
Others		3,068			2,974

Total Tier II capital	￦	4,086		￦	3,399

Total Tier I and Tier II capital	￦	27,448		￦	28,941

Risk-weighted assets
Credit risk-weighted assets	￦	178,115		￦	171,200
Market risk-weighted assets		6,087			6,388
Operational risk-weighted assets		14,067			14,915

Total	￦	198,269		￦	192,503

Tier I common equity capital ratio		10.00	%		11.40	%
Total Tier I capital ratio		11.78			13.27
Tier II capital ratio		2.06			1.76
Total Tier I and Tier II capital ratio		13.84			15.03

(1)	Allowance for credit losses in respect of credits classified as normal or precautionary is used to calculate Tier II capital only to the extent such allowances represent up to 1.25% of risk-weighted assets.

Recent Accounting Pronouncements

See Note

2-(1)-2)

of the notes to our consolidated financial statements for a description of other recent accounting pronouncements under IFRS as issued by the IASB that have been issued but are not yet effective.

Item 5.C.

Research and Development, Patents and Licenses, etc.

Not Applicable

Item 5.D.

Trend Information

These matters are discussed under Item 5.A and Item 5.B above where relevant.

Item 5.E.

Critical Accounting Estimates

Our financial statements are prepared in accordance with IFRS as issued by IASB. See Notes 2 and 3 of the notes to our financial statements for a discussion of our critical accounting estimates.

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Item 6.

DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

Item 6.A.

Directors and Senior Management

Board of Directors

Our board of directors has the ultimate responsibility for managing our affairs. The board currently comprises one standing director, one

non-standing

director and seven outside directors. Standing directors are directors who are our full-time executive officers, while

non-standing

directors and outside directors are directors who are not full-time executive officers. Outside directors represent a cross-section of respected and experienced members of the academic, financial, corporate and other fields in Korea and elsewhere, and must also satisfy certain requirements under Korean law and our articles of incorporation to evidence their independence from us.

Our articles of incorporation provide that the board can have no more than 15 directors. There must be at least three outside directors and they must comprise a majority of the directors. Each director may be elected for a term of office not exceeding three years and may be

re-elected,

provided that each outside director may be elected for a term of office not exceeding two years and may be

re-elected

on an annual basis but may not serve in such office for more than a total of six years. In addition, with respect to all directors, such term of office will be extended until the close of the annual general meeting of shareholders convened in respect of the last fiscal year of the director’s term of office. These terms are subject to the Korean Commercial Code, the Financial Holding Company Act and related regulations.

Our board of directors meets regularly on a quarterly basis to discuss and resolve various corporate matters. The board may also convene for additional extraordinary meetings at the request of the president or chairman of the board. A director (other than the president or chairman of the board) may request the president or chairman of the board to convene an extraordinary meeting. In the event that the president or chairman of the board rejects such request without justifiable reason, another director may convene the extraordinary meeting.

The names and positions of our directors are set forth below. The business address of all of the directors is our registered office at 51,

Sogong-ro,

Jung-gu,

Seoul, Korea.

Standing Directors

Our standing directors are as follows:

Name

Date of Birth

Position

Director Since

Year Term
Ends

(1)

Tae-Seung

Son

May 16, 1959

President and Chief Executive Officer

December 22, 2017

(2)

2023

(1)	The date on which the term will end will be the date of the general shareholders’ meeting in the relevant year.

(2)	Prior to January 11, 2019, served as a director of Woori Bank.

Tae-Seung

Son

is our president and chief executive officer and also served as the president and chief executive officer of Woori Bank from December 2017 to March 2020. Previously, he served as a deputy president of the global business unit of Woori Bank. Mr. Son holds a Bachelor of Laws from Sungkyunkwan University, a Master of Laws from Seoul National University and a Master of Business Administration from the Helsinki School of Economics.

Such directors are not involved in any significant business activities outside us and our subsidiaries.

Non-Standing Director

Our non-standing director is as follows:


Name	Date of Birth	Position	Director Since	Year Term Ends
Won-Duk Lee	January 15, 1962	Non-Standing Director	March 25, 2022	2023 (1)

(1)	The term will end on December 31, 2023.

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Won-Duk

Lee

was elected as a

non-standing

director in March 2022. He became the president and chief executive officer of Woori Bank in March 2022, upon which he resigned his position as our standing director and was newly elected as a

non-standing

director. He holds a Bachelor of Science in Agriculture and a Master of Arts in Economics from Seoul National University.

Outside Directors

We currently have seven outside directors. Two of our former outside directors, Zhiping Tian and Dennis Chan, resigned for personal reasons in August 2021 and September 2021, respectively. Following such resignations, we elected

In-Sub

Yoon and

Yo-Hwan

Shin as outside directors through an extraordinary general meeting of shareholders in January 2022. In March 2022, we newly elected

Soo-Young

Song as our outside director to enhance our professional expertise and to increase our gender diversity. Our current outside directors are as follows:


Name	Date of Birth	Position	Director Since	Year Term Ends (1)
Sung-Tae Ro	September 1946	Outside Director	December 30, 2016 (2)		2023
Sang-Yong Park	February 1951	Outside Director	December 30, 2016 (2)		2023
Chan-Hyoung Chung	February 1956	Outside Director	December 28, 2018 (2)		2023
Dong-Woo Chang	January 1967	Outside Director	December 30, 2016 (2)		2023
In-Sub Yoon	January 1956	Outside Director	January 27, 2022		2024
Yo-Hwan Shin	December 1962	Outside Director	January 27, 2022		2024
Soo-Young Song	October 1980	Outside Director	March 25, 2022		2024

(1)	The date on which the term will end will be the date of the general shareholders’ meeting in the relevant year.

(2)	Prior to January 11, 2019, served as a director of Woori Bank.

Sung-Tae

was elected as an outside director in December 2018 and was previously and is currently an outside director of Woori Bank. He currently serves as chairman of Samsung Dream Scholarship Foundation. He holds a Bachelor of Arts in Economics from Seoul National University and a Master of Arts and a Doctor of Philosophy in Economics from Harvard University.

Sang-Yong Park

was elected as an outside director in December 2018 and was previously and is currently an outside director of Woori Bank.

He also currently serves as professor emeritus at the School of Business at Yonsei University. He holds a Bachelor of Arts in Business Administration from Yonsei University and a Master of Business Administration and a Doctor of Philosophy in Business Administration from New York University.

Chan-Hyoung Chung

was elected as an outside director in December 2018 and is currently an outside director of Woori Bank. He holds a Bachelor of Arts in Business Administration and a Master of Business Administration from Korea University.

Dong-Woo

Chang

was elected as an outside director in December 2018 and was previously an outside director of Woori Bank. He is currently the chief executive officer and representative director of IMM Investment Corp. He holds a Bachelor of Laws from Hanyang University.

In-Sub

Yoon

was elected as an outside director in January 2022 and was previously the chairman of the board of directors of Fubon Hyundai Life Insurance and the chief executive officer of Korea Ratings. He holds a Bachelor of Arts in Business Administration from Korea University and a Master of Science in Finance from the University of Illinois at Urbana-Champaign.

Yo-Hwan

Shin

was elected as an outside director in January 2022 and was previously the CEO of Shinyoung Securities Co., Ltd. He is currently an advisor of Shinyoung Securities Co., Ltd. He holds a Bachelor of Science in Applied Statistics and a Master of Science in Accounting from Yonsei University.

Soo-Young

Song

was elected as an outside director in March 2022. She is currently a partner at Shin & Kim LLC. She holds a Bachelor of Arts in Business Administration, a Bachelor of Arts in French Language and Literature, a Bachelor of Legislative Law and an Executive Master of Business Administration, each from Seoul National University, and completed the 39

Judicial Training Institute Program.

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If any director wishes to enter into a transaction with us in his or her personal capacity, he or she must obtain the prior approval of our board of directors (which shall be granted by

two-thirds

or more of the total number of the directors, and the relevant transaction shall be fair in terms of its particulars and procedures). The director with an interest in the transaction may not vote at the meeting during which the board approves the transaction.

Executive Officers

In addition to the standing directors who are also our executive officers, we currently have the following 12 executive officers.


Name	Date of Birth	Position
Hwa-Jae Park	November 10, 1961	President
Sang-Wook Chun	June 25, 1966	President
Min-Cheol Shin	June 10, 1963	Senior Deputy President
Jin-Ho Noh	February 2, 1964	Deputy President
Kyu-Mok Hwang	February 12, 1963	Deputy President
Seok-Young Chung	December 21, 1964	Deputy President
Jong-il Park	September 28, 1964	Deputy President
Byoung-Kwon Woo	November 28, 1964	Deputy President and Compliance Officer
Sung-Wook Lee	November 13, 1965	Deputy President
Jong-Keun Lee	November 21, 1964	Senior Managing Director
Il-Jin Ouk	May 3, 1974	Managing Director
Tae-Jeong Song	August 14, 1966	Managing Director

Hwa-Jae

Park

serves as the president of our business support group. Previously, he served as an executive vice president, a deputy executive vice president and a managing director of the credit support group of Woori Bank. He holds a Bachelor of Arts in Business Administration from Korea Cyber University and a Master of Arts in Real Estate from Dongguk University.

Sang-Wook Chun

serves as the president of our next core competencies group. Previously, he served as a deputy executive vice president and a managing director of the risk management group of Woori Bank. He holds a Bachelor of Arts in Economics from Seoul National University and a Master of Arts in Financial Engineering from the Korea Advanced Institute of Science and Technology.

Min-Cheol

Shin

serves as a senior deputy president of our audit unit. Previously, he served as a deputy president of our audit unit, a senior advisor at PricewaterhouseCoopers Consulting, a vice minister at the Board of Audit and Inspection of Korea and the director general of the Bureau of Social and Welfare Audit at the Board of Audit and Inspection of Korea. He holds a Bachelor of Arts in Political Science, a Master of Arts in Public Administration from Seoul National University and a Master of Arts in Business Administration from the University of Chicago.

Jin-Ho

Noh

serves as a deputy president of our IT unit. Previously, he served as a deputy president of our digital and IT unit, a senior managing director of our ICT planning division and as a representative director of Hancom Inc. He holds a Bachelor of Arts in Business Administration from Korea University and a Master of Arts in Management Science from Lancaster University.

Kyu-Mok

Hwang

serves as a deputy president of our brand unit. Previously, he served as a senior managing director of our public relations and brand unit, a managing director and the compliance officer, and also as a senior general manager of the future strategy division of Woori Bank. He holds a Bachelor of Arts in Public Administration from Inha University and a Master of Arts in Public Administration from Yonsei University.

Seok-Young Chung

serves as a deputy president of our risk management unit. Previously, he served as a senior managing director and a managing director of our risk management unit, and also as a senior general manager of the future strategy division of Woori Bank. He holds a Bachelor of Arts in Business Administration and a Master of Arts in Economics from Yonsei University.

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Jong-il

Park

serves as a deputy president of our strategy planning unit. Previously, he served as a senior managing director of our strategy planning unit, a managing director of our strategy planning division and also as a senior general manager of the strategy and planning department of Woori Bank. He holds a Bachelor of Laws from Hankuk University of Foreign Studies.

Byoung-Kwon Woo

serves as a deputy president and the compliance officer. Previously, he served as a senior managing director and managing director of our compliance department and a senior general manager of our management support department. He holds a Bachelor of Arts in English Language and Literature from Sungkyunkwan University.

Sung-Wook Lee

serves as a deputy president of our finance planning unit. Previously, he served as a senior managing director of our finance planning unit, a managing director of our finance planning division and a senior general manager of our finance and management department. He holds a Bachelor of Arts in Business Administration from Yonsei University.

Jong-Keun Lee

serves as a senior managing director of our management support unit. Previously, he served as a managing director of our management support division, a senior general manager of our management support department and a senior general manager of the human resources department of Woori Bank. He holds a Bachelor of Arts in Public Administration from Korea University and a Master of Arts in Business Administration from the University of Birmingham.

Il-Jin Ouk

serves as a managing director of our digital unit. Previously, he served as a deputy president of the financial group of Kearney Strategy Consulting, a leader of the strategy unit of E&Y and a principal of BCG. He holds a Bachelor of Business Administration from Seoul National University and a Master of Arts in Business Administration from the University of Chicago.

Tae-Jeong

Song

serves as a managing director of our brand strategy department. Previously, he served as a senior general manager of our brand strategy department, and also as a general manager of the strategy planning department of Woori Bank. He holds a Bachelor of Sociology from Korea University and a Master of Arts in Economics from Korea University and a Doctor of Arts in Economics from Korea University.

None of the executive officers is involved in any significant business activities outside us and our subsidiaries.

Item 6.B.

Compensation

The aggregate remuneration and

benefits-in-kind

we paid in 2021 to our directors and our other executive officers, including the compliance officer and managing directors, was ￦5,651 million, which includes ￦227 million in provisions for allowances for severance and retirement benefits for such directors and officers. We do not have service contracts with any of these directors or officers that provide for benefits if employment with us is terminated.

The compensation of our director who received total annual compensation exceeding ￦500 million in 2021 was as follows:


Name	Position	Total Compensation in 2021 (in millions of Won)
Tae-Seung Son	President and Chief Executive Officer	￦	1,112	(1)

(1)

Such compensation does not include a maximum 29,397 shares of our common stock that may be granted in connection with long-term performance from 2021 to 2024. The final number of shares granted will be determined at the time of payment based on the market price of our common stock and other factors.

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Item 6.C.

Board Practices

See “Item 6.A. Directors and Senior Management—Board of Directors” and “Item 6.B. Compensation” for information concerning the terms of office and contractual employment arrangements with our directors and executive officers.

Committees of the Board of Directors

We currently have seven committees that serve under the board:

•

the Audit Committee;

•

the Board Risk Management Committee;

•

the Compensation Committee;

•

the Committee for Recommending Executive Officer Candidates;

•

the Committee for Recommending Subsidiary Representative Director Candidates;

•

the Committee for Internal Control Management; and

•

the Board ESG Management Committee.

The board appoints each member of these committees except for members of the Audit Committee, who are elected by our shareholders at the annual general meeting.

Audit Committee

This committee consists of three outside directors:

Sung-Tae

Ro, Chan-Hyoung Chung and

Dong-Woo

Chang. The chairman is Chan-Hyoung Chung. It reviews all audit and compliance-related matters and makes recommendations to our board. The Audit Committee, whose members must meet certain qualifications as experts under the committee charter, is also responsible for the following:

•

formulating, executing, evaluating and managing internal audit plans (including the financial and operational audits);

•

approving the appointment and dismissal of the head of the audit team;

•

approving the appointment of external auditors and evaluating the activities carried out by external auditors;

•

formulating appropriate measures to correct problems identified from internal audits;

•

overseeing the reporting systems within our financial holding company structure in light of relevant disclosure rules and requirements to ensure compliance with applicable regulations; and

•

examining internal procedures or making decisions on material matters that are related to audits as determined by the regulatory authorities, our board or other committees.

This committee also makes recommendations on regulatory issues to the Financial Supervisory Service, if and when deemed necessary. In addition, in connection with general meetings of shareholders, the committee examines the agenda for, and financial statements and other reports to be submitted by the board of directors, to each general meeting of shareholders. The internal and external auditors report directly to the Audit Committee chairman. Our external auditor is invited to attend meetings of this committee when needed or when matters pertaining to the audit are discussed.

This committee holds regular meetings every quarter or as necessary.

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Board Risk Management Committee

This committee consists of four outside directors:

In-Sub

Yoon, Sang-Yong Park,

Yo-Hwan

Shin and

Soo-Young

Song. The chairman is

In-Sub

Yoon. It comprehensively detects, measures, oversees and controls the relevant risks in the management of our subsidiaries and makes determinations on all significant issues relating to our risk management system. The major roles of the Board Risk Management Committee include:

•

determining and amending risk management policies, guidelines and limits in conformity with the strategy established by the board of directors;

•

determining the appropriate level of risks that we should be willing to undertake, including in connection with key business activities such as acquisitions, investments or entering into new business areas, prior to a decision by the board of directors on such matters;

•

allocating risk capital and approving the risk limit requests of our subsidiaries;

•

reviewing our risk profile, including the level of risks we are exposed to and the status of our risk management operations; and

•

monitoring compliance with our risk policies.

This committee regularly receives reports from the Group Risk Management Council as well as the Group Risk Management Department, which in turn receives reports from subsidiary level risk management committees and groups. See “Item 11. Quantitative and Qualitative Disclosures about Market Risk.” This committee holds regular meetings every quarter.

Compensation Committee

This committee consists of five outside directors:

Yo-Hwan

Shin,

Sung-Tae

Ro, Sang-Yong Park,

In-Sub

Yoon and Chan-Hyoung Chung. The chairman is

Yo-Hwan

Shin. It is responsible for all matters relating to the following:

•

evaluating management’s performance in developing our business;

•

setting goals and targets with respect to executive performance; and

•

fixing executive compensation, including incentives and bonuses.

This committee holds regular meetings every quarter.

Committee for Recommending Executive Officer Candidates

This committee consists of all seven of our outside directors:

Dong-Woo

Chang,

Sung-Tae

Ro, Sang-Yong Park, Chan-Hyoung Chung,

In-Sub

Yoon,

Yo-hwan

Shin and

Soo-Young

Song.

The chairman is

Dong-Woo

Chang. The committee oversees the selection of candidates for the president and chief executive officer, outside directors and Audit Committee members, among others. This committee holds meetings when such persons need to be appointed.

Committee for Recommending Subsidiary Representative Director Candidates

This committee consists of one standing director,

Tae-Seung

Son, and all seven of our outside directors:

Sung-Tae

Ro, Sang-Yong Park, Chan-Hyoung Chung,

Dong-Woo

Chang,

In-Sub

Yoon,

Yo-hwan

Shin and

Soo-Young

Song. The chairman is

Tae-Seung

Son. The committee oversees the selection of candidates for the representative directors of our subsidiaries. This committee holds meetings when such persons need to be appointed.

Committee for Internal Control Management

This committee consists of one standing director,

Tae-Seung

Son, and three outside directors: Sang-Yong Park,

Yo-Hwan

Shin and

Soo-Young

Son. The chairman is Sang-Yong Park. The committee oversees the

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operation of our internal control management systems, including those of our subsidiaries, through the inspection and review thereof. Through such process, the committee continues to develop new standards for effective control. This committee holds regular meetings every six months.

Board ESG Management Committee

This committee consists of all nine of our directors:

Tae-Seung

Son,

Won-Duk

Lee,

Sung-Tae

Ro, Sang-Yong Park,

In-Sub

Yoon, Chan-Hyoung Chung,

Yo-hwan

Shin,

Dong-Woo

Chang, and

Soo-Young

Song. The chairman is

Soo-Young

Song. The committee oversees the direction of ESG management strategies and the establishment of such policies. This committee holds regular meetings every six months.

Item 6.D.

Employees

As of December 31, 2021, we had a total of 113 full-time employees at our financial holding company, excluding 23 employees that hold concurrent positions at our subsidiaries. The following table sets forth information regarding our employees, on a

non-consolidated

basis and including employees holding concurrent positions at our subsidiaries, as of the dates indicated:


		As of December 31,
		2020		2021
Woori Financial Group	Full-time employees		143		136
	Contractual employees		46		46
Woori Bank	Full-time employees		13,715		13,298
	Contractual employees		989		907

At the holding company level, our employees do not currently have a labor union and none of such employees are members of an outside labor union. Woori Bank has a labor union, and approximately 66.1% of its employees as of December 31, 2021 were members of the Korea Financial Industry Union. Neither we nor Woori Bank has experienced any significant labor disputes in recent years, although we have made certain concessions to our labor unions. See “Item 3.D. Risk Factors—Other risks relating to our business—Labor union unrest may disrupt our operations and hinder our ability to continue to reorganize our operations.” We have placed a high priority on our relationship with our employees and on maintaining an atmosphere of trust and cooperation between our labor and management.

At the holding company level, our employees’ compensation comprises an individual base salary and bonus, which are determined based on the work productivity and performance of each employee and the relevant business unit. We believe that the salaries we pay to our employees and management are similar to those of other large financial companies in Korea. We evaluate employees twice a year (usually in March and September), based on our business performance and evaluations provided by

co-workers

and superiors. With respect to our compensation program, we do not provide housing leases or loans to our employees.

At Woori Bank, employee compensation is generally based on a combination of the agreed-upon base salary and bonuses. In addition, Woori Bank operates a “salary peak” system, under which an employee’s salary reaches a certain peak and then is gradually reduced as the employee reaches retirement age. Woori Bank’s bonus system is generally based on individual performance and business unit performance. We believe that Woori Bank’s compensation package is similar to that of institutions in the same industry. Woori Bank also provides a wide range of benefits to its employees, including medical insurance, employment insurance, workers compensation, accident insurance, financial aid for children’s tuition and retirement pension plans.

We have an employee stock ownership association, which purchases our shares at the request of our employees using their own funds and financial support by us depending on the amount of purchase by employee. The association is entitled to certain

pre-emptive

rights. See “Item 10B. Memorandum and Articles of

Association—Pre-emptive

Rights and Issuances of Additional Shares.”

In accordance with the National Pension Act, we contribute an amount equal to 4.5% of employee wages, and each employee contributes 4.5% of his or her wages, into each employee’s personal pension account. In

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addition, in accordance with the Guarantee of Worker’s Retirement Benefits Act, we have adopted a retirement pension plan for our employees. Contributions under the retirement pension plan are deposited annually into a financial institution, and an employee may elect to receive a monthly pension or a

lump-sum

amount upon retirement. Our retirement pension plans are provided in the form of a defined benefit plan and a defined contribution plan. The defined benefit plan guarantees a certain payout at retirement, according to a fixed formula based on the employee’s average wages and the number of years for which the employee has been a plan member. The defined contribution plan, in which the employer’s contribution is determined in advance based on

one-twelfth

of an employee’s total annual pay, is managed directly by the employees. Under Korean law, we may not terminate the employment of full-time employees except under certain limited circumstances.

Item 6.E.

Share Ownership

Common Stock

As of May 12, 2022,

the persons who are currently our directors or executive officers, in the aggregate, held 283,068 shares of our common stock. None of these persons individually held more than 1% of our outstanding common stock as of such date. The following table presents information regarding our directors and executive officers who beneficially owned our shares as of May 12, 2022.


Name of Executive Officer or Director	Number of Shares of Common Stock
Tae-Seung Son		108,127
Won-Duk Lee		24,500
Sung-Tae Ro		5,000
Sang-Yong Park		1,000
Chan-Hyoung Chung		10,532
Hwa-Jae Park		8,000
Sang-Wook Chun		6,600
Min-Cheol Shin		25,000
Jin-Ho Noh		8,000
Kyu-Mok Hwang		17,239
Seok-Young Chung		22,951
Jong-il Park		16,619
Byoung-Kwon Woo		8,500
Sung-Wook Lee		14,000
Jong-Keun Lee		4,000
Il-Jin Ouk		2,000
Tae-Jeong Song		1,000

Total		283,068

Share-based Payments

Under the Korean Commercial Code and our articles of incorporation, we may, by special resolution of our shareholders, grant to our officers and employees (including the officers and employees of our subsidiaries) who have contributed or are expected to contribute to our establishment, management, technological innovation, etc. options to purchase up to an aggregate of 15.0% of the total number of our then issued shares. We may grant such options to purchase up to 1.0% of the total number of our then issued shares by a resolution of our board of directors.

We have granted cash-settled stock options to certain executive officers. See Note

36-(4)

of the notes to our consolidated financial statements. As of the date of this annual report, none of such cash-settled stock options have vested.

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Item 7.

MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

Item 7.A.

Major Shareholders

The following table presents information regarding the beneficial ownership of our common stock at May 12, 2022 (unless otherwise indicated) by each person or entity known to us to own beneficially more than 5% of the outstanding shares of our common stock.

Except as otherwise indicated, each shareholder identified by name has:

•

sole voting and investment power with respect to its shares; and

•

record and beneficial ownership with respect to its shares.


Beneficial Owner	Number of Shares of Common Stock		Percentage of Total Shares of Common Stock			Percentage of Total Shares on a Fully Diluted Basis
Employee Stock Ownership Association (1)		71,490,298		9.82	%		9.82	%
National Pension Service (2)		64,656,092		8.88			8.88
Nobis1, Inc. (3)		40,560,000		5.57			5.57

(1)	As of December 31, 2021.

(2)	As of January 25, 2022.

(3)

Nobis1, Inc., which is an affiliate of IMM Private Equity, acquired 27,040,000 shares of Woori Bank’s common stock, or 4.00% of its outstanding common stock, in December 2016. In accordance with the Bank Act, Nobis1, Inc. received approval from the Financial Services Commission for the acquisition of an additional 13,520,000 shares of Woori Bank’s common stock, or 2.00% of its outstanding common stock, in January 2017, pursuant to an agreement not to exercise the voting rights with respect to such share

Such shares were exchanged for shares of our common stock in January 2019 in the stock transfer.

Pursuant to the Korean government’s privatization plan, in December 2014, the KDIC sold 40,143,022 shares of Woori Bank’s common stock (representing 5.9% of its outstanding common stock) through a bidding process in Korea. In addition, in December 2016 and January 2017, the KDIC sold an aggregate of 200,685,395 shares of Woori Bank’s common stock (representing 29.7% of its outstanding common stock) in stakes ranging from 3.7% to 6.0% to seven financial companies through a bidding process. Pursuant to a commitment made by the KDIC in connection with such bidding process, five persons, each nominated by one of the winning bidders were elected as new outside directors at an extraordinary general meeting of Woori Bank’s shareholders held in December 2016. In December 2018, such five persons were elected to serve as our outside directors pursuant to the stock transfer plan approved during our establishment as a holding company. In March 2020, pursuant to a commitment made by Woori Bank in connection with its disposal of 42,103,377 shares of our common stock in 2019, one person nominated by Fubon Life Insurance Co., Ltd. was elected to serve as our outside director at our annual general meeting of shareholders. In March 2021, the five directors elected pursuant to the stock transfer plan were reappointed as our outside directors at our annual generating meeting of shareholders. In December 2021, through KDIC’s sale of an aggregate of 9.3% of our common stock to five winning bidders, Eugene Private Equity Co., Ltd. became our new major shareholder and thereby nominated one person as an outside director who was subsequently elected at an extraordinary general meeting of shareholders in January 2022.

In 2017, pursuant to a series of transactions related to call options previously granted in connection with the KDIC’s sale of Woori Bank’s common stock in December 2014, the KDIC sold an aggregate of 19,852,364 shares of Woori Bank’s common stock (representing 2.9% of its outstanding common stock). As a result of such transactions, the KDIC’s ownership interest in Woori Bank was reduced to 18.4%. In connection with our establishment in January 2019 as a new financial holding company pursuant to a “comprehensive stock transfer” under Korean law, the KDIC received 124,604,797 shares of our outstanding common stock in exchange for the common stock of Woori Bank it owned. In June 2019, the Financial Services Commission approved the KDIC’s plan to sell all such common stock in multiple transactions by 2022. In April 2021, pursuant to such plan, the KDIC sold 14,445,354 shares of our common stock (representing 2.0% of our outstanding common stock) in a block trade. In December 2021, the KDIC sold an aggregate 9.3% of our outstanding common stock in stakes ranging from 1.0% to 4.0% to four companies and 1.0% to our employee stock ownership association, and in February 2022, the KDIC sold an aggregate of 15,860,000 shares of our common stock (representing 2.2% of our

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outstanding common stock) in a block trade. As a result of such transactions, the KDIC currently owns 3.6% of our outstanding common stock.

As of May 12, 2022, our chief executive officer owned 108,127 shares of our common stock. Our executive officers (excluding our chief executive officer) collectively owned 133,909 shares of our common stock. Our outside directors and

non-standing

director collectively owned 41,032 shares of our common stock.

Other than as set forth above, no other person or entity known by us to be acting in concert, directly or indirectly, jointly or separately, owned 5.0% or more of the outstanding shares of our common stock or exercised control or could exercise control over us as of May 12, 2022. None of our major shareholders has different voting rights from our other shareholders.

As of the close of our shareholders’ register on December 31, 2021, approximately 70% of its issued shares were held in Korea by approximately 109,904 shareholders.

Item 7.B.

Related Party Transactions

We regularly engage in transactions with entities affiliated with the government, which currently owns 3.6% of our shares through the KDIC. Generally, these transactions include the extension of loans, the purchase of debt securities and other ordinary course activities relating to our banking business. For a description of such transactions, see “Item 4.B. Business Overview—Assets and Liabilities.”

As of December 31, 2021, we also had an aggregate amount of ￦3,821 million in outstanding assets, including loans, from transactions with our key management personnel, which includes our executive officers and directors, as well as the executive officers and directors of our major subsidiaries and the chief executive officers of our other subsidiaries.

All of these loans were made in the ordinary course of business, on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons and did not involve more than the normal risk of collectability or present other unfavorable features.

None of our directors or officers has or had any interest in any transactions effected by us that are or were unusual in their nature or conditions or significant to our business which were effected during the current or immediately preceding year or were effected during an earlier year and remain in any respect outstanding or unperformed.

Item 7.C.

Interest of Experts and Counsel

Not Applicable

Item 8.

FINANCIAL INFORMATION

Item 8.A.

Consolidated Statements and Other Financial Information

See “Item 18. Financial Statements” and pages

F-1

through F-190.

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.

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Profitability Ratios and Other Data


	Year ended December 31,
	2019			2020			2021

	(percentages)
Net income as a percentage of:
Total average assets (1)		0.57	%		0.40	%		0.66	%
Total average equity (1)		8.37			5.79			9.81
Dividend payout ratio (2)		27.03			19.89			21.10
Net interest spread (3)		1.66			1.60			1.71
Net interest margin (4)		1.74			1.65			1.74
Efficiency ratio (5)		54.27			58.01			49.70
Equity–to-average asset ratio (6)		6.86			6.90			6.71
Cost-to-average assets ratio (7)		1.06			1.04			0.99

(1)	Total average assets (including average interest-earning assets) and total average equity are based on daily balances for Woori Bank and on quarterly balances for all of our other subsidiaries and our structured companies.

(2)	Represents the ratio of total dividends declared on common stock as a percentage of net income attributable to owners.

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

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

(5)

Represents the ratio of general and administrative expenses to the sum of net interest income, net fees and commissions income, dividend income, net gain on financial instruments at fair value through profit or loss, net gain on financial assets at fair value through other comprehensive income, net gain arising on financial assets at amortized cost and other net operating expenses.

(6)	Represents the ratio of total average equity to total average assets.

(7)	Represents the ratio of general and administrative expenses to total average assets.

Asset Quality Data


	As of December 31,
	2020			2021

	(in billions of Won, except percentages)
Total loans (1)	￦	303,965		￦	337,835
Total non-performing loans (2)		1,236			927
Other impaired loans not included in non-performing loans		199			231
Total non-performing loans and other impaired loans		1,435			1,158
Total allowance for credit losses		1,909			1,887
Non-performing loans as a percentage of total loans		0.41	%		0.27	%
Non-performing loans as a percentage of total assets		0.31	%		0.21	%
Total non-performing loans and other impaired loans as a percentage of total loans		0.47	%		0.34	%
Allowance for credit losses as a percentage of total loans		0.63	%		0.56	%

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

(2)	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 4.B. Business Overview—Assets and Liabilities—Asset Quality of Loans—Loan Classifications.”

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Selected Financial Information

Average Balances and Related Interest

The following tables show our average balances and interest rates for the past three years:


	Year ended December 31,
	2019							2020							2021
	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	￦	16,045	￦	141		0.88	%	￦	18,966	￦	54		0.28	%	￦	21,442	￦	47		0.22	%
Financial assets at fair value through profit or loss		4,345		51		1.17			4,859		49		1.01			7,271		46		0.63
Financial assets at fair value through other comprehensive income		22,959		475		2.07			27,868		437		1.57			30,724		381		1.24
Securities at amortized cost		20,672		436		2.11			18,945		383		2.02			16,503		325		1.97
Loans (3) :
Commercial and industrial		110,033		3,604		3.28			119,251		3,219		2.70			135,776		3,496		2.57
Trade financing		11,112		295		2.65			10,253		153		1.49			9,866		95		0.96
Lease financing (4)		191		2		3.92			1,448		48		3.31			3,287		119		3.62
Other commercial		6,263		184		2.94			7,102		172		2.42			7,786		175		2.25
Securities purchased with agreements to resell		3,201		59		1.84			2,666		30		1.13			3,244		33		1.02
General purpose household (5)		71,414		2,928		4.10			74,123		2,705		3.65			79,923		2,809		3.51
Mortgage		53,296		1,717		3.22			57,123		1,592		2.79			65,653		1,653		2.52
Credit cards (2)		7,358		655		8.90			8,215		651		7.92			9,203		685		7.44

Total loans		262,868		9,444		3.59			280,181		8,570		3.06			314,738		9,065		2.88
Other		12,809		30		0.23			12,415		31		0.25			10,690		31		0.29

Total average interest earning assets		339,698		10,577		3.11			363,234		9,524		2.62			401,368		9,895		2.47

Total average non-interest earning assets		15,364		—		—			16,257		—		—			18,174		—		—

Total average assets	￦	355,062	￦	10,577		2.98	%	￦	379,491	￦	9,524		2.51	%	￦	419,542	￦	9,895		2.36	%

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	Year ended December 31,
	2019							2020							2021
	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	￦	8,213	￦	35		0.43	%	￦	10,110	￦	49		0.48	%	￦	14,634	￦	106		0.72	%
Time and savings deposits		211,732		2,814		1.33			225,563		2,056		0.91			243,708		1,495		0.61
Certificates of deposit		4,760		105		2.21			1,677		22		1.31			2,858		27		0.94
Other deposits		28,930		471		1.63			34,861		360		1.03			38,374		279		0.73

Total deposits		253,635		3,425		1.35			272,211		2,487		0.91			299,574		1,907		0.64
Borrowings:
Borrowings		17,104		335		1.96			18,451		217		1.18			19,845		157		0.79
Securities sold with agreements to resell		289		3		1.04			750		5		0.67			819		5		0.61
Commercial paper		1,865		45		2.41			2,167		48		2.22			2,552		58		2.27

Total borrowings		19,258		383		1.99			21,368		270		1.26			23,216		220		0.95
Debentures		29,536		777		2.63			32,315		723		2.24			40,935		727		1.78
Other		21,426		98		0.46			21,110		46		0.22			20,925		55		0.26

Total average interest-bearing liabilities		323,855		4,683		1.45			347,004		3,526		1.02			384,650		2,909		0.76

Total average non-interest-bearing liabilities		6,855		—		—			6,300		—		—			6,727		—		—

Total average liabilities		330,710		4,683		1.42			353,304		3,526		1.00			391,377		2,909		0.74

Total average equity		24,352		—		—			26,187		—		—			28,165		—		—

Total average liabilities and equity	￦	355,062	￦	4,683		1.32	%	￦	379,491	￦	3,526		0.93	%	￦	419,542	￦	2,909		0.69	%

(1)	Average balances are based on daily balances for Woori Bank and on quarterly balances for all of our other 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 financial assets, and prior to deducting allowance for credit losses and present value discount or reflecting deferred origination costs.

(4)	Includes automobile lease financing to consumer borrowers.

(5)	Includes home equity loans.

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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 based on changes in volume and changes in rate for 2020 compared to 2019 and 2021 compared to 2020. 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.


	2020 vs. 2019 Increase/(decrease) due to changes in									2021 vs. 2020 Increase/(decrease) due to changes in
	Volume			Rate			Total			Volume			Rate			Total

	(in billions of Won)
Interest-earning assets
Due from banks	￦	26		￦	(113	)	￦	(87	)	￦	7		￦	(14	)	￦	(7	)
Financial assets at fair value through profit or loss		6			(8	)		(2	)		24			(27	)		(3	)
Financial assets at fair value through other comprehensive income		102			(140	)		(38	)		45			(101	)		(56	)
Securities at amortized cost		(36	)		(17	)		(53	)		(49	)		(9	)		(58	)
Loans (1) :
Commercial and industrial		302			(687	)		(385	)		446			(169	)		277
Trade financing		(23	)		(119	)		(142	)		(6	)		(52	)		(58	)
Lease financing (2)		49			(3	)		46			61			10			71
Other commercial		25			(37	)		(12	)		17			(14	)		3
Securities purchased with agreements to resell		(10	)		(19	)		(29	)		7			(4	)		3
General purpose household (3)		111			(334	)		(223	)		212			(108	)		104
Mortgage		123			(248	)		(125	)		238			(177	)		61
Credit cards		76			(80	)		(4	)		78			(44	)		34
Other		(1	)		2			1			(4	)		4			—

Total interest income	￦	750		￦	(1,803	)	￦	(1,053	)	￦	1,076		￦	(705	)	￦	371

Interest-bearing liabilities
Deposits due to customers:
Demand deposits	￦	8		￦	6		￦	14		￦	22		￦	35		￦	57
Time and savings deposits		184			(942	)		(758	)		165			(726	)		(561	)
Certificates of deposit		(68	)		(15	)		(83	)		15			(10	)		5
Other deposits		97			(208	)		(111	)		36			(117	)		(81	)
Borrowings:
Borrowings		26			(144	)		(118	)		16			(76	)		(60	)
Securities sold with agreements to resell		5			(3	)		2			—			—			—
Commercial paper		7			(4	)		3			9			1			10
Debentures		73			(127	)		(54	)		193			(189	)		4
Other		(1	)		(51	)		(52	)		—			9			9

Total interest expense	￦	331		￦	(1,488	)	￦	(1,157	)	￦	456		￦	(1,073	)	￦	(617	)

Net interest income	￦	419		￦	(315	)	￦	104		￦	620		￦	368		￦	988

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

(2)	Includes automobile lease financing to consumer borrowers.

(3)	Includes home equity loans.

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Legal Proceedings and Regulatory Actions

As a financial institution with diverse operations, we are subject to legal proceedings and regulatory actions in the ordinary course of our business.

Woori Bank

In August 2019, the Financial Supervisory Service commenced an investigation into past sales by Woori Bank and other banks in Korea of derivative-linked fund and securities products tied to yields on treasury bonds of Germany, the United Kingdom and the United States, which may have resulted in significant losses to certain customers who purchased such products. In December 2019, the dispute settlement committee of the Financial Supervisory Service recommended (i) the reimbursement of 40 to 80% of the related losses to certain customers by the banks involved in the sale of such products, including Woori Bank, and (ii) individual settlements with other customers who were not subject to the 40 to 80% reimbursement recommendation. Accordingly, as of December 31, 2021, Woori Bank reimbursed 1,250 out of the 1,258 customers that agreed to accept the recommendation, which compose a vast majority of the customers with such claims. In March 2020, the Financial Services Commission imposed on Woori Bank a fine of ￦19.7 billion and a

six-month

ban on sales of new private equity funds and confirmed the Financial Supervisory Service’s decision to impose a warning of reprimand on our chief executive officer. Immediately following such decision, our chief executive officer, in his individual capacity, filed a request to nullify the warning of reprimand as well as an injunction request to suspend the decision against him in the Seoul Administrative Court. On March 20, 2020, the injunction request was granted and was affirmed by the Seoul High Court on appeal. Such decision was finally confirmed on September 2, 2020, and the warning of reprimand was revoked on August 27, 2021, which was appealed by the Financial Supervisory Service in the Seoul High Court, where the case is currently pending. In addition, Woori Bank filed a formal objection to the Financial Services Commission’s imposition of the fine on May 22, 2020 in the Seoul Central District Court, where the case is currently pending. There can be no assurance that such decisions by the Financial Services Commission and the Financial Supervisory Service (as well as any similar investigations by other government authorities, and private claims by customers, to which we may become subject) will not adversely affect our results of operations, cash flows and reputation.

In February 2020, the Seoul Southern District Prosecutors’ Office commenced an investigation into the management of certain fund products by Lime Asset Management Co. which may have resulted in significant losses to certain customers who purchased such products from banks and securities companies in Korea, including Woori Bank. Such products of Lime Asset Management Co. included trade finance funds with investments in certain funds managed by International Investment Group, which had its license revoked by the Securities and Exchange Commission in November 2018 for concealing losses and selling fraudulent loan assets, triggering suspension of the redemption of such trade finance funds, as well as other fund products. In July 2020, the dispute settlement committee of the Financial Supervisory Service declared that the sale of the trade finance funds was voidable for fraud and misrepresentation by Lime Asset Management Co., and recommended that all sellers of such funds, including Woori Bank, refund the customers in full. Accordingly, Woori Bank refunded an aggregate amount of ￦64.7 billion to 288 customers that had purchased the trade finance funds from Woori Bank. In January 2022, Woori Bank filed a lawsuit in the Seoul Southern District Court against Lime Asset Management Co. and Shinhan Investment Corp., which had entered into a total return swap contract with Lime Asset Management Co. in connection with such trade finance funds, to recover the full amount that it had refunded, the outcome of which remains uncertain. In addition, the dispute settlement committee recommended that the banks involved in the sales of fund products managed by Lime Asset Management Co. other than the trade finance funds reimburse 40% to 80% of the losses to its customers. Accordingly, as of December 31, 2021, Woori Bank reimbursed an aggregate amount of ￦136.2 billion to 1,156 customers with losses relating to such fund products, including the amounts that had previously been paid out prior to such recommendation, and is continuing to negotiate a settlement with such customers. Woori Bank is fully cooperating with all relevant investigations by government authorities, including investigations by the Seoul Southern District Prosecutors’ Office and the Financial Services Commission, but it is not possible to predict the final outcome of such investigations at this time. There can be no assurance that such investigations (as well as any private claims by

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customers, to which we may become subject) will not result in an unfavorable outcome, including the imposition of monetary damages, fines and other penalties against us, which, if significant, may adversely affect our results of operations, cash flows and reputation.

In April 2020, the Korea Financial Intelligence Unit imposed a penalty of ￦16.5 billion on Woori Bank for its failure to file with the Korea Financial Intelligence Unit certain currency transaction reports, which resulted from errors and malfunctions relating to Woori Bank’s computer systems that failed to detect the relevant transactions. In May 2020, Woori Bank filed an administrative action appealing such monetary penalty and is currently pursuing summary judgment.

Other than the legal proceedings discussed above, we and our subsidiaries are not a party to any legal or administrative proceedings, and no proceedings are known by us to be contemplated by governmental authorities or third parties, which, if adversely determined, may have a material adverse effect on our consolidated financial condition or results of operations.

Dividends

We declare our dividend annually at the annual general meeting of shareholders. We generally hold this meeting within three months after the end of each fiscal year. We must pay the annual dividend to the shareholders of record as of the end of the preceding fiscal year within one month after that meeting. We can distribute the annual dividend either in cash or in stock. Cash dividends may be paid out of retained earnings that have not been appropriated to statutory reserves. Specifically, we may pay dividends up to the value of the net assets stated on the balance sheet after deducting the sum of capital, the capital reserve and the earned surplus reserve accumulated until the pertinent period for the settlement of our accounts, the amount to be accumulated for the pertinent period for the settlement of our accounts and unrealized profits. In addition, we may declare, and distribute interim dividends once a year to shareholders registered in our registry as of June 30 pursuant to a board resolution.

The table below sets forth the dividend per share of common stock and the total amount of dividends declared by us in respect of the years ended December 31, 2019 and 2020 and 2021. Except as otherwise noted, the dividends set forth below with respect to each year were declared, paid and recorded in the following year.


Fiscal year	Dividends Per Share of Common Stock		Total Amount Of Cash Dividends Paid

	(in Won)		(in millions of Won)
2019		700		505,587
2020		360		260,016
2021 (1)		900		654,384

(1)	Includes interim dividends of Won 108,340 million (Won 150 per share of common stock) declared and paid in 2021.

Future dividends will depend upon our revenues, cash flow, financial condition and other factors. As an owner of ADSs, you will be entitled to receive dividends payable in respect of the shares of common stock represented by such ADSs.

For a description of the tax consequences of dividends paid to our shareholders, see “Item 10.E. Taxation—United States Taxation—Dividends” and “—Korean Taxation—Taxation of Dividends on Common Shares or ADSs.”

Item 8.B.

Significant Changes

Not Applicable

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Item 9.

THE OFFER AND LISTING

Item 9.A.

Offering and Listing Details

Principal Markets

The principal trading market for our common stock is the KRX KOSPI Market. Our common stock has been listed on the KRX KOSPI Market under the identifying code 316140 since February 13, 2019, and the ADSs have been listed on the New York Stock Exchange under the symbol “WF” since January 11, 2019. The ADSs are identified by the CUSIP number 981064108.

Woori Finance Holdings’ common stock was listed on the KRX KOSPI Market on June 24, 2002, and was suspended from trading from October 30, 2014 and

de-listed

on November 18, 2014 following the merger of Woori Finance Holdings with Woori Bank. Woori Finance Holdings’ ADSs were listed on the New York Stock Exchange since September 29, 2003 and were traded under the CUSIP number 981063100. Following the merger, Woori Bank’s common stock was newly listed on the KRX KOSPI Market on November 19, 2014, and Woori Bank’s ADSs succeeded to the listing of Woori Finance Holdings’ ADSs on the New York Stock Exchange on November 1, 2014. Woori Bank’s ADSs were traded under the CUSIP number 98105T104.

In connection with our establishment in January 2019 as a new financial company pursuant to a “comprehensive stock transfer” under Korean law, Woori Bank’s common stock was suspended from trading from January 9, 2019 and was

de-listed

As of the date of this annual report, we have 728,058,225 shares of common stock outstanding.

Restrictions Applicable to ADSs

An investor does not need Korean governmental approval to sell or purchase our ADSs in the secondary market outside Korea or to withdraw shares of our common stock from our ADS deposit facility or deliver those withdrawn shares in Korea. However, a foreign investor who intends to acquire shares must obtain an investment registration card from the Financial Supervisory Service as described below. Either the foreign investor or its standing proxy in Korea must immediately report its acquisition of the shares to the governor of the Financial Supervisory Service.

Persons who acquire shares of our common stock by withdrawing those shares from our ADS deposit facility may exercise their preemptive rights for new shares, participate in free distributions and receive dividends on shares without any further Korean governmental approval.

Restrictions Applicable to Shares

As a result of amendments to the Foreign Exchange Transaction Laws and Financial Services Commission regulations (which we refer to collectively as the “Investment Rules”), including the Regulations on Financial Investment Business, adopted since January 1992 in connection with the opening and operation of Korea’s stock market, foreign investors may generally invest, with limited exceptions and subject to procedural requirements, in all shares of Korean companies, whether listed on the KRX KOSPI Market or registered on the KRX KOSDAQ Market. Foreign investors may trade shares listed on the KRX KOSPI Market or registered on the KRX KOSDAQ Market only through the KRX KOSPI Market or the KRX KOSDAQ Market, except in limited circumstances. These circumstances include:

•

odd-lot

share trading;

•

acquiring shares (which we refer to as “Converted Shares”) by exercising warrants, conversion rights or exchange rights under bonds with warrants, convertible bonds or exchangeable bonds or withdrawal rights under depositary receipts issued outside of Korea by a Korean company;

•

acquiring shares through inheritance, donation, bequest or exercise of shareholders’ rights, including

pre-emptive

rights or rights to participate in free distributions and receive dividends;

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•

subject to certain exceptions,

over-the-counter

transactions between foreign investors of a class of shares for which the limit on aggregate acquisition by foreign investors, as explained below, has been reached or exceeded; and

•

sale and purchase of shares at fair value between foreigners who are part of an investor group comprised of foreign companies investing under the control of a common investment manager pursuant to applicable laws or contract.

For

over-the-counter

transactions between foreign investors outside the KRX KOSPI Market or the KRX KOSDAQ Market involving a class of shares for which the limit on aggregate acquisition by foreign investors has been reached or exceeded, a financial investment company with a brokerage license in Korea must act as an intermediary.

Odd-lot

trading of shares outside the KRX KOSPI Market or the KRX KOSDAQ Market must involve a financial investment company with a dealing license in Korea as the other party. Foreign investors may not engage in margin transactions by borrowing shares from financial investment companies with a dealing and/or brokerage license with respect to shares that are subject to a foreign ownership limit.

The Investment Rules require a foreign investor who wishes to invest in shares on the KRX KOSPI Market or the KRX KOSDAQ Market (including Converted Shares and shares being issued for initial listing on the KRX KOSPI Market or registration on the KRX KOSDAQ Market) to register with the Financial Supervisory Service before making an investment. This registration requirement does not apply to foreign investors who acquire Converted Shares with the intention of selling the Converted Shares within three months from the acquisition date. The Financial Supervisory Service will issue an investment registration card to each registering foreign investor. This card must be presented each time the foreign investor opens a brokerage account with a financial investment company with a brokerage license. Foreign investors eligible to obtain an investment registration card include:

•

foreign nationals who have not been residing in Korea for a consecutive period of six months or more;

•

foreign governments;

•

foreign municipal authorities;

•

foreign public institutions;

•

international financial institutions or similar international organizations;

•

corporations incorporated under foreign laws; and

•

any person in any additional category designated under the Enforcement Decree of the Financial Investment Services and Capital Markets Act.

All Korean offices of a foreign corporation (as a group) are treated as a separate foreign investor from the offices of the corporation outside Korea for these purposes. However, a foreign corporation or depositary issuing depositary receipts may obtain one or more investment registration cards in its name in certain circumstances identified in the relevant regulations.

When a foreign investor purchases shares through the KRX KOSPI Market or the KRX KOSDAQ Market, it need not make a separate report because the investment registration card system is designed to control and oversee foreign investment through a computer system. If, however, a foreign investor acquires or sells shares outside the KRX KOSPI Market or the KRX KOSDAQ Market, that investor or its standing proxy must report that transaction to the governor of the Financial Supervisory Service at that time. In addition, if a foreign investor acquires or sells its shares in connection with a tender offer,

odd-lot

trading of shares or trades of a class of shares for which the aggregate foreign ownership limit has been reached or exceeded, that investor or its standing proxy must ensure that the financial investment company engaged to facilitate the transaction reports the transaction to the governor of the Financial Supervisory Service. Also, sale and purchase of shares at fair value between foreigners who are part of an investor group comprised of foreign companies investing under the common control of a common investment manager pursuant to applicable laws or contract are required to be reported to the governor of the Financial Supervisory Service. A foreign investor may appoint a standing proxy

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to exercise shareholders’ rights or perform any matters related to the foregoing activities if that investor does not perform these activities itself. A foreign investor may be exempted from complying with the standing proxy rules with the approval of the governor of the Financial Supervisory Service in cases deemed unavoidable by reason of conflict between laws of Korea and the home country of the foreign investor.

The shares of a listed Korean company owned by a foreign investor must be electronically registered in accordance with the Act on Electronic Registration of Stocks, Bonds, Etc. through an eligible custodian in Korea. The same entities eligible to act as a standing proxy are eligible to act as a custodian of shares for a

non-resident

or foreign investor. A foreign investor may be exempted from complying with the above requirement if it (i) acquires shares publicly offered or sold outside Korea for the purpose of listing on an overseas stock exchange or (ii) acquires or disposes of shares through an overseas stock exchange if such shares are simultaneously listed on the Korea Exchange and such overseas stock exchange.

Under the Investment Rules, with certain limitations, foreign investors may acquire shares of a Korean company without being subject to any foreign investment limit. Under one of these limitations, foreign investors may acquire no more than 40% of the outstanding share capital of designated public corporations. In addition, designated public corporations may set a limit on the acquisition of shares by a single person in their articles of incorporation. If a foreign investor acquires 10% or more of the outstanding shares with voting rights of a Korean company and the investment amount is at least ￦100 million, that investment constitutes a “foreign direct investment” under the Foreign Investment Promotion Act of Korea. Generally, a foreign direct investment must be reported to the Ministry of Trade, Industry and Energy of Korea. The acquisition of a Korean company’s shares by a foreign investor may be subject to certain foreign or other shareholding restrictions in the event that the restrictions are prescribed in a specific law that regulates the business of the Korean company. For a description of the restrictions applicable to Korean banks, see “—Principal Regulations Applicable to Banks.”

Under the Foreign Exchange Transaction Laws, a foreign investor who intends to acquire shares must designate a foreign exchange bank at which he must open a foreign currency account and a Won account exclusively for stock investments. Approval is not required for remittance into Korea and deposit of foreign currency funds in the foreign currency account. Foreign currency funds may be transferred from the foreign currency account at the time required to place a deposit for, or settle the purchase price of, a stock purchase transaction to a Won account opened at a financial investment company with a dealing and/or brokerage license. Funds in the foreign currency account may be remitted abroad without any Korean governmental approval.

Dividends on shares of Korean companies are paid in Won. Korean governmental approval is not required for foreign investors to receive dividends on, or the Won proceeds from the sale of, any shares to be paid, received and retained in Korea. Dividends paid on, and the Won proceeds of the sale of, any shares held by a

non-resident

of Korea must be deposited either in a Won account with the investor’s financial investment company with a dealing and/or brokerage license or in its own Won account. Funds in a foreign investor’s Won account may be transferred to its foreign currency account or withdrawn for local living expenses up to certain limits. These funds may also be used to make future investments in shares or to pay the subscription price of new shares obtained through the exercise of

pre-emptive

rights.

Financial investment companies with a dealing or brokerage license may open foreign currency accounts with foreign exchange banks exclusively to accommodate foreign investors’ stock investments in Korea. Through these accounts, financial investment companies with a dealing or brokerage license may enter into limited foreign exchange transactions, such as converting foreign currency funds and Won funds, either as a counterparty to or on behalf of foreign investors, without the investors having to open their own accounts with foreign exchange banks.

Item 9.B.

Plan of Distribution

Not Applicable

Item 9.C.

Markets

See “Item 9.A. Offering and Listing Details.”

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Item 9.D.

Selling Shareholders

Not Applicable

Item 9.E.

Dilution

Not Applicable

Item 9.F.

Expenses of the Issuer

Not Applicable

Item 10.

ADDITIONAL INFORMATION

Item 10.A.

Share Capital

Not Applicable

Item 10.B.

Memorandum and Articles of Association

Description of Capital Stock

We have set forth below information relating to our capital stock, including brief summaries of some of the provisions of our articles of incorporation, the Korean Commercial Code, Financial Investment Services and Capital Markets Act, and other related laws of Korea. These summaries do not purport to be complete and are subject to our articles of incorporation, and the applicable provisions of the Financial Investment Services and Capital Markets Act, the Korean Commercial Code and those related laws.

Our authorized share capital is 4,000,000,000 shares. Our articles of incorporation authorize us to issue:

•

shares of common stock, par value ￦5,000 per share;

•

“class shares,” par value ￦5,000 per share.

Subject to applicable laws and regulations, our articles of incorporation authorize us to issue a number of “class shares” equal to as much as

one-half

of all of the issued and outstanding shares.

As of the date of this annual report, 728,060,549 shares of common stock were issued and 728,058,225 shares of common stock were outstanding. Pursuant to our articles of incorporation, which became effective upon our establishment on January 11, 2019, we are authorized to issue various types of “class shares,” which include shares of voting and

non-voting

preferred stock, convertible stock, redeemable preferred stock and hybrid securities comprising one or more elements of the foregoing types of shares. There are no class shares currently outstanding. All of the issued and outstanding shares are fully paid and

non-assessable

and are in registered form. As of the date of this annual report, our authorized but unissued share capital was 3,271,939,451 shares. We may issue the unissued shares without further shareholder approval, but these issuances are subject to a board resolution as provided in the articles of incorporation. See

“—Pre-emptive

Rights and Issuances of Additional Shares” and “—Dividends and Other Distributions—Distribution of Free Shares.” For a discussion of the history of our share capital, see Note 28 of the notes to our consolidated financial statements and “Item 4.A. History and Development of the Company—History—Establishment of Woori Finance Holdings,” “—Merger of Woori Bank and Woori Finance Holdings” and “—Establishment of Woori Financial Group.”

Our articles of incorporation allow our shareholders, by special resolution adopted by the affirmative votes of at least

two-thirds

of the voting rights of the shareholders present at a general meeting of shareholders and at least

one-third

of the total number of issued and outstanding shares, to grant to our officers, directors and employees stock options exercisable for up to 15% of the total number of our issued and outstanding shares. Our board of directors may also grant stock options exercisable for up to 1% of our issued and outstanding shares. However, any grant by our board of directors must be approved by our shareholders at their next general meeting convened immediately after the grant date. As of the date of this annual report, our officers, directors and employees do not hold any options to purchase shares of common stock. See “Item 6.E. Share Ownership.”

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Our articles of incorporation reflect the adoption of the electronic securities system pursuant to the Act on Electronic Registration of Stocks, Bonds, Etc. Accordingly, in lieu of issuing share certificates, we electronically register the rights to be indicated on our share certificates on the electronic registry of the electronic registration agency.

Organization

We are a financial holding company established under the Financial Holding Company Act. We are registered with the commercial registry office of Seoul District Court.

Interests of Directors

Our articles of incorporation provide that any director who has a material interest in the subject matter of a resolution to be taken by the board of directors cannot vote on such resolution. Our articles of incorporation also provide that the remuneration of our directors is to be determined by the resolution of the general meeting of shareholders.

Our articles of incorporation do not contain any special provisions with respect to the borrowing powers exercisable by directors, their retirement age or a requirement to hold any shares of our capital stock.

See “Item 6.C. Board Practices” for more information on our directors.

Limitation on Liability of Directors

Our articles of incorporation provide that we may, upon the resolution of the general meeting of shareholders, limit the liability of our directors (in their capacity as such) to an amount not less than six times (or three times in case of outside directors) the aggregate amount of the remuneration we paid to such directors during the most recent

one-year

period, provided that such limitation shall not apply with regard to any liability arising from such directors’ gross negligence, willful misconduct or violation of their duties regarding self-dealing or corporate opportunity.

Dividends and Other Distributions

Dividends.

We distribute dividends to shareholders in proportion to the number of shares of the relevant class of capital stock they own. Subject to the requirements of the Korean Commercial Code and other applicable laws and regulations, we expect to pay full annual dividends on newly issued stock for the year in which it is issued. Specifically, we may pay dividends up to the value of the net assets stated on the statement of financial position after deducting the sum of capital, the capital reserve and the earned surplus reserve accumulated until the pertinent period for the settlement of our accounts, the amount to be accumulated for the pertinent period for the settlement of our accounts and unrealized profits.

one-half

of the total annual dividend (including dividends in shares) or (iii) other forms of consideration. In addition, we may declare, and distribute interim dividends once a year to shareholders registered in our registry as of June 30 pursuant to a board resolution.

Under the Korean Commercial Code and our articles of incorporation, we do not have an obligation to pay any annual or interim dividend unclaimed for five years from the payment date.

The Financial Holding Company Act and related regulations require that each time a Korean financial holding company pays an annual dividend, it must set aside in its legal reserve to stated capital an amount equal to at least

one-tenth

of its net income after tax until the amount set aside reaches at least the aggregate amount of its stated capital. Unless it sets aside this amount, a Korean financial holding company may not pay an annual dividend. We intend to set aside allowances for loan losses and reserves for severance pay in addition to this legal reserve.

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For information regarding taxation of dividends, see “Item 10.E. Taxation—United States Taxation—Dividends” and “—Korean Taxation—Taxation of Dividends on Common Shares or ADSs.”

Distribution of Free Shares.

The Korean Commercial Code permits us to pay dividends in the form of shares out of retained or current earnings. It also permits us to distribute to our shareholders, in the form of free shares, an amount transferred from the capital surplus or legal reserve by a resolution of the board of directors. We would be required to distribute those free shares pro rata to all shareholders.

Pre-emptive

Rights and Issuances of Additional Shares

We may issue authorized but unissued shares as our board of directors may determine, unless otherwise provided in the Korean Commercial Code. We must, however, offer any new shares on uniform terms to all shareholders who have preemptive rights and are listed on our shareholders’ register as of the applicable record date. Those shareholders are entitled to subscribe for any newly issued shares in proportion to their existing shareholdings. Our articles of incorporation provide, however, that we may issue new shares to persons other than existing shareholders if those shares are:

•

publicly offered pursuant to Article

165-6

of the Financial Investment Services and Capital Markets Act (where the number of shares so offered may not exceed 50% of our total number of issued shares);

•

issued to directors or employees as a result of the exercise of stock options we granted to them pursuant to Article

542-3

of the Korean Commercial Code (where the number of shares so offered may not exceed 15% of our total number of issued shares);

•

issued to the members of our employee stock ownership association pursuant to Article

165-7

of the Financial Investment Services and Capital Markets Act;

•

issued to specified foreign investors, foreign or domestic financial institutions, institutional investors or private equity funds for managerial purposes, such as obtaining new technology or improving our financial condition (where the number of shares so offered may not exceed 50% of our total number of issued shares); or

•

issued to a depositary for the purpose of issuing depositary receipts pursuant to Financial Investment Services and Capital Markets Act (where the number of shares so offered may not exceed 50% of our total number of issued shares).

We must give public notice of

pre-emptive

rights for new shares and their transferability not less than two weeks before the record date (excluding the period during which the shareholders’ register is closed). We will notify the shareholders who are entitled to subscribe for newly issued shares of the deadline for subscription at least two weeks prior to the deadline. If a shareholder fails to subscribe on or before the deadline, its

pre-emptive

rights will lapse. Our board of directors may determine how to distribute shares in respect of which preemptive rights have not been exercised or where fractions of shares occur.

Under the Financial Investment Services and Capital Markets Act, each member of our employee stock ownership association, whether or not they are shareholders, has a preemptive right, subject to certain exceptions, to subscribe for up to 20% of any shares we publicly offer. This right is exercisable only so long as the total number of shares so acquired and held by the member does not exceed 20% of the total number of shares that have been issued or are newly issued. As of December 31, 2021, our employees owned 9.82% of our common stock through the employee stock ownership association.

In addition, our articles of incorporation permit us to issue convertible bonds or bonds with warrants, each up to an aggregate principal amount of ￦2 trillion, to persons other than existing shareholders. Under the Korean Commercial Code, we are permitted to distribute convertible bonds or bonds with warrants to persons other than existing shareholders only when we deem that this distribution is necessary for managerial purposes, such as obtaining new technology or improving our financial condition. In addition, pursuant to our articles of incorporation and the Act on Electronic Registration of Stocks, Bonds, Etc., in lieu of issuing certificates for bonds, share-related bonds (e.g., convertible bonds and bonds with warrants) and contingent capital securities, we

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electronically register rights to be indicated on such certificates on the electronic registry of the electronic registration agency. As of the date of this annual report, we have no convertible bonds or bonds with warrants outstanding.

Voting Rights

Each outstanding share of our common stock is entitled to one vote per share. However, voting rights with respect to shares of common stock that we hold or any of our subsidiaries holds may not be exercised. Unless stated otherwise in a company’s articles of incorporation, the Korean Commercial Code permits holders of an aggregate of 1% or more of the issued and outstanding shares with voting rights to request cumulative voting when electing two or more directors. Our articles of incorporation do not prohibit cumulative voting.

The Korean Commercial Code and our articles of incorporation provide that an ordinary resolution may be adopted if approval is obtained from the holders of at least a majority of those shares of common stock present or represented at a meeting and such majority also represents at least

one-fourth

of the total of our issued and outstanding voting shares. Holders of

non-voting

shares (other than enfranchised

non-voting

shares) will not be entitled to vote on any resolution or to receive notice of any general meeting of shareholders, unless the agenda of the meeting includes consideration of a resolution on which such holders are entitled to vote. The Korean Commercial Code provides that a company’s articles of incorporation may prescribe conditions for the enfranchisement of

non-voting

shares. For example, if our annual general shareholders’ meeting resolves not to pay to holders of

non-voting

shares with preferred dividend the annual dividend as determined by the board of directors at the time of issuance of such shares, the holders of

non-voting

shares with preferred dividend will be entitled to exercise voting rights from the general shareholders’ meeting following the meeting adopting such resolution to the end of a meeting to declare to pay such dividend with respect to the

non-voting

shares with preferred dividend. Holders of such enfranchised

non-voting

shares with preferred dividend will have the same rights as holders of common stock to request, receive notice of, attend and vote at a general meeting of shareholders.

The Korean Commercial Code provides that to amend the articles of incorporation, which is also required for any change to the authorized share capital of a company, and in certain other instances, including removal of a director of a company, dissolution, merger or consolidation of a company, transfer of the whole or a significant part of the business of a company, acquisition of all of the business of any other company, acquisition of a part of the business of any other company having a material effect on the business of the company or issuance of new shares at a price lower than their par value, a special resolution must be adopted by the approval of the holders of at

least two-thirds of

those shares present or represented at a meeting and such special majority must represent at

least one-third of

the total issued and outstanding shares with voting rights of the company.

In addition, in the case of amendments to the articles of incorporation or any merger or consolidation of a company or in certain other cases, where the rights or interest of the holders of class shares are adversely affected, a resolution must be adopted by a separate meeting of holders of class shares. Such a resolution may be adopted if the approval is obtained from shareholders of at least

two-thirds

of the class shares present or represented at such meeting and such shares also represent at least

one-third

of the total issued and outstanding class shares.

A shareholder may exercise his voting rights by proxy given to another person. The proxy must present the power of attorney prior to the start of a meeting of shareholders.

Liquidation Rights

If we are liquidated, the assets remaining after the payment of all our debts, liquidation expenses and taxes will be distributed to the shareholders in proportion to the number of shares held by them. Holders of class shares, none of which are issued or outstanding as of the date of this report, have no preferences in liquidation.

General Meetings of Shareholders

There are two types of general meetings of shareholders: (1) annual general meetings and (2) extraordinary general meetings. We are required to convene our annual general meeting within three months after the end of

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each fiscal year. Subject to a board resolution or court approval, an extraordinary general meeting of shareholders may be held when necessary or at the request of the holders of an aggregate of 3% or more of our outstanding shares, or the holders of an aggregate of 0.75% or more of our outstanding stock with voting rights, who have held those shares for at least six months, under the Act on the Corporate Governance of Financial Companies and

its sub-regulations.

Under the Korean Commercial Code, an extraordinary general meeting of shareholders may also be convened at the request of our audit committee, subject to a board resolution or court approval. Holders

of non-voting shares

may be entitled to request a general meeting of shareholders only to the extent

the non-voting shares

have become enfranchised as described under the section entitled “—Voting Rights” above, hereinafter referred to as

“enfranchised non-voting shares.”

Meeting agendas will be determined by the board of directors or proposed by holders of an aggregate of 3% or more of the outstanding shares with voting rights or by holders of an aggregate of 0.1% or more of our issued and outstanding shares with voting rights, who have held those shares for at least six months, by way of a written proposal to the board of directors at least six weeks prior to the meeting, under the Act on the Corporate Governance of Financial Companies and its

sub-regulations. Written

notices

or e-mail notices

stating the date, place and agenda of the meeting must be given to the shareholders at least two weeks prior to the date of the general meeting of shareholders. Notice may, however, be given to holders of 1% or less of the total number of issued and outstanding shares which are entitled to vote, either by placing at least two public notices at least two weeks in advance of the meeting in at least two daily newspapers or by placing a notice through the electronic disclosure system operated by the Financial Supervisory Service or the Korea Exchange. Shareholders who are not on the shareholders’ register as of the record date will not be entitled to receive notice of the general meeting of shareholders, and they will not be entitled to attend or vote at such meeting. Holders of

enfranchised non-voting shares

who are on the shareholders’ register as of the record date will be entitled to receive notice of the general meeting of shareholders and they will be entitled to attend and vote at such meeting. Otherwise, holders

of non-voting shares

will not be entitled to receive notice of or vote at general meetings of shareholders.

The general meeting of shareholders will be held at our head office, which is our registered head office, or, if necessary, may be held anywhere in the vicinity of our head office.

Rights of Dissenting Shareholders

Pursuant to the Financial Investment Services and Capital Markets Act and the Act on the Structural Improvement of the Financial Industry, in certain limited circumstances (including, without limitation, if we transfer all or any significant part of our business, if we acquire a part of the business of any other company and such acquisition has a material effect on our business, or if we merge or consolidate with another company), dissenting holders of shares of our common stock and our stock with preferred dividends will have the right to require us to purchase their shares. To exercise such a right, shareholders must submit to us a written notice of their dissent by the day prior to the general meeting of shareholders. Within 20 days (10 days in the case of a stock transfer or exchange to establish a financial holding company or to own all issued shares of a subsidiary under the Financial Holding Company Act) after the date on which the relevant resolution is passed at such meeting, such dissenting shareholders must request in writing that we purchase their shares. We are obligated to purchase the shares from dissenting shareholders within one month after the end of such request period at a price to be determined by negotiation between us and the shareholder. If we cannot agree on a price with the shareholder through such negotiations, the purchase price will be the arithmetic mean of (x) the weighted average of the closing share prices on the KRX KOSPI Market for

the two-month period

prior to the date of the adoption of the relevant board of directors’ resolution, (y) the weighted average of the closing share prices on the KRX KOSPI Market for

the one-month period

prior to the date of the adoption of the relevant board of directors’ resolution and (z) the weighted average of the closing share prices on the KRX KOSPI Market for

the one-week period

prior to the date of the adoption of the relevant board of directors’ resolution. However, any dissenting shareholder who wishes to contest the purchase price may bring a claim in court.

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Required Disclosure of Ownership

Any person who directly or beneficially owns shares of our common stock that have voting rights, whether in the form of shares, ADSs, certificates representing the rights to subscribe for shares or equity-related debt securities (including convertible bonds and bonds with warrants) (which we refer to collectively as “Equity Securities”) that, when taken together with the Equity Securities beneficially owned by specified related persons or by any person acting in concert with that person, account for 5% or more of our total issued and outstanding shares on a fully diluted basis must report that holding to the Financial Services Commission and the KRX KOSPI Market no more than five business days after reaching 5%. That person must also report any subsequent change in the ownership interest of 1% or more of our total issued and outstanding shares on a fully diluted basis to the same entities no more than five business days after the change.

Anyone violating these reporting requirements may suffer criminal sanctions, including fines, imprisonment, an administrative fine of up to (i) 0.001% of the aggregate market value of total issued and outstanding stock or (ii) ￦500 million, whichever is lower, and/or a loss of voting rights with respect to the ownership of Equity Securities exceeding 5% of the total issued and outstanding Equity Securities with respect to which the reporting requirements were violated. Furthermore, the Financial Services Commission may order that person to dispose of the unreported Equity Securities.

In addition to the reporting requirements described above, any person whose direct or beneficial ownership of our stock accounts for 10% or more of the total issued and outstanding stock (which we refer to as a “major shareholder”) must report the status of its shareholding to the Korea Securities Futures Commission and the KRX KOSPI Market within five days after becoming a major shareholder. Also, the major shareholder must report any subsequent change in its ownership interest to those same entities within five days of the occurrence of the change, unless the change in the number of shares is less than 1,000 shares and the amount involved in such change is less than ￦10 million. A major shareholder that violates these reporting requirements may suffer criminal sanctions, including fines or imprisonment.

Other Provisions

Record Date.

The record date for annual dividends is December 31. For the purpose of determining the holders of shares entitled to annual dividends, the register of shareholders will be closed for the period beginning from January 1 and ending on January 15. Further, the Korean Commercial Code and our articles of incorporation permit us, upon at least two weeks’ public notice, to set a record date and/or close the register of shareholders for not more than three months for the purpose of determining the shareholders entitled to certain rights pertaining to the shares. However, in the event that the register of shareholders is closed for the period beginning from January 1 and ending on January 15 for the purpose of determining the holders of shares entitled to attend the annual general meeting of shareholders, the Korean Commercial Code waives the requirement to provide at least two weeks’ public notice. The trading of shares and the electronic registration in respect thereof may continue while the register of shareholders is closed.

Annual and Interim Reports.

At least one week before the annual general meeting of shareholders, we must make our annual report and audited financial statements available for inspection at our head office and at all of our branch offices. Copies of this report, the audited financial statements and any resolutions adopted at the general meeting of shareholders are available to our shareholders.

Under the Financial Investment Services and Capital Markets Act, we must file with the Financial Services Commission and the KRX KOSPI Market an annual business report within 90 days after the end of each fiscal year, a half-year business report within 45 days after the end of the first six months of each fiscal year and quarterly business reports within 45 days after the end of the first three months and nine months of each fiscal year. Copies of such business reports will be available for public inspection at the Financial Services Commission and the KRX KOSPI Market.

Transfer of Shares.

Under the Korean Commercial Code, the transfer of shares is effected by the delivery of share certificates. The Act on Electronic Registration of Stocks, Bonds, Etc. provides, however, that in the case

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of a company listed on the KRX KOSPI Market such as us, share transfers can be effected by the electronic registration of the transfer on the electronic registry of the electronic registration agency. In order to assert shareholders’ rights against us, the transferee must have his name and address registered on the register of shareholders. For this purpose, the electronic registration agency issues a statement of the shareholders (or

soyuja-myeong-se

) upon request of the company, whereby the company updates its register of shareholders in accordance with the Act on Electronic Registration of Stocks, Bonds, Etc..

Under current Korean regulations, the Korea Securities Depository, internationally recognized foreign custodians, financial investment companies with a dealing license (including domestic branches of foreign financial investment companies with such license), financial investment companies with a brokerage license (including domestic branches of foreign financial investment companies with such license), foreign exchange banks (including domestic branches of foreign banks) and financial investment companies with a collective investment license (including domestic branches of foreign financial investment companies with such license) may act as agents and provide related services for foreign shareholders.

In addition, foreign shareholders may appoint a standing proxy among the foregoing and generally may not allow any person other than the standing proxy to exercise rights to the acquired shares or perform any tasks related thereto on their behalf. Certain foreign exchange controls and securities regulations apply to the transfer of shares

by non-residents or non-Koreans. See

“Item 9.A. Offering and Listing Details” and “Item 10.D. Exchange Controls.” Except as provided in the Financial Holding Company Act, the ceiling on the aggregate shareholdings of a single shareholder and persons who stand in a special relationship with such shareholder is 10% of our issued and outstanding voting shares. See “Item 4.B. Business Overview—Supervision and Regulation—Principal Regulations Applicable to Financial Holding Companies—Restrictions on Ownership of a Financial Holding Company.”

Our Acquisition of Our Shares.

Under the Korean Commercial Code, we may acquire our own shares upon a resolution of a general meeting of shareholders by either (i) purchasing them on a stock exchange or (ii) purchasing a number of shares, other than redeemable shares as set forth in Article 345, Paragraph (1) of the Korean Commercial Code, from each shareholder in proportion to their existing shareholding ratio through the methods set forth in the Presidential Decree, provided that the total purchase price does not exceed the amount of our profit that may be distributed as dividends in respect of the immediately preceding fiscal year.

Additionally, pursuant to the Financial Investment Services and Capital Markets Act and regulations under the Financial Holding Company Act and after submission of certain reports to the Financial Services Commission, we may purchase our own shares on the KRX KOSPI Market or through a tender offer, subject to the restrictions that (i) the aggregate purchase price of such shares may not exceed the total amount available for distribution of dividends at the end of the preceding fiscal year; and (ii) the purchase of such shares shall meet the risk-weighted capital adequacy ratio requirements prescribed in the regulations under the Financial Holding Company Act based on Bank for International Settlements standards.

Subject to certain limited exceptions, our subsidiaries will not be permitted to acquire our shares pursuant to the Financial Holding Company Act.

Item 10.C.

Material Contracts

None.

Item 10.D.

Exchange Controls

General

The Foreign Exchange Transaction Act of Korea and the Enforcement Decree and regulations under that Act regulate investment in Korean securities by

non-residents

and issuance of securities outside Korea by Korean companies. We collectively refer to these laws and regulations as the “Foreign Exchange Transaction Laws.”

Non-residents

may invest in Korean securities only to the extent specifically allowed by the Foreign Exchange Transaction Laws or otherwise permitted by the Ministry of Economy and Finance. The Financial Services

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Commission has also adopted regulations that restrict foreign investment in Korean securities and regulate the issuance of securities outside Korea by Korean companies, pursuant to its authority under the Financial Investment Services and Capital Markets Act.

Under the Foreign Exchange Transaction Laws, if the Korean government deems that:

•

the need to do so is inevitable due to the outbreak of natural calamities, wars, conflict of arms or grave and sudden changes in domestic or foreign economic circumstances or other similar situations, the Ministry of Economy and Finance may temporarily suspend payment, receipt or the whole or part of transactions to which the Foreign Exchange Transaction Laws apply, or impose an obligation to safe-keep, deposit or sell means of payment in or to certain Korean governmental agencies or financial institutions; and

•

international balance of payments and international finance are confronted or are likely to be confronted with serious difficulty or the movement of capital between Korea and abroad brings or is likely to bring about serious obstacles in carrying out its currency policies, exchange rate policies and other macroeconomic policies, the Ministry of Economy and Finance may take measures to require any person who intends to perform capital transactions to obtain permission or to require any person who performs capital transactions to deposit part of the payments received in these transactions at certain Korean governmental agencies or financial institutions.

Both of these actions are subject to limitations specified by the Foreign Exchange Transaction Laws.

Restrictions Applicable to Shares

Under the Foreign Exchange Transaction Laws, a foreign investor who intends to acquire shares must designate a foreign exchange bank at which he or she must open a foreign currency account and a Won account exclusively for stock investments. Approval is not required for remittance into Korea and deposit of foreign currency funds in the foreign currency account. Foreign currency funds may be transferred from the foreign currency account at the time required to place a deposit for, or settle the purchase price of, a stock purchase transaction to a Won account opened at a financial investment company with a dealing and/or brokerage license. Funds in the foreign currency account may be remitted abroad without any Korean governmental approval.

non-resident

pre-emptive

rights.

Financial investment companies with a dealing and/or brokerage license may open foreign currency accounts with foreign exchange banks exclusively to accommodate foreign investors’ stock investments in Korea. Through these accounts, such financial investment companies may enter into limited foreign exchange transactions, such as converting foreign currency funds and Won funds, either as a counterparty to or on behalf of foreign investors, without the investors having to open their own accounts with foreign exchange banks.

Item 10.E.

Taxation

The following summary is based upon tax laws, regulations, rulings, decrees, income tax conventions (treaties), administrative practice and judicial decisions of Korea and the United States as of the date of this annual report, and is subject to any change in the laws of Korea or the United States that may come into effect after such date.

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United States Taxation

This summary describes certain material U.S. federal income tax consequences for a U.S. holder (as defined below) of acquiring, owning, and disposing of common shares or ADSs. This summary applies to you only if you hold the common shares or ADSs as capital assets for tax purposes. This summary does not apply to you if you are a member of a class of holders subject to special rules, such as:

•

a dealer in securities or currencies;

•

a trader in securities that elects to use a

mark-to-market

method of accounting for securities holdings;

•

a bank or financial institution;

•

a life insurance company;

•

tax-exempt

organization;

•

an entity treated as a partnership or other passthrough entity (or investors therein) for U.S. federal income tax purposes;

•

a person that holds common shares or ADSs that are a hedge or that are hedged against interest rate or currency risks;

•

a person that holds common shares or ADSs as part of a straddle or conversion transaction for tax purposes;

•

a person whose functional currency for tax purposes is not the U.S. dollar; or

•

a person that owns or is deemed to own 10% or more of our stock, measured by voting power or value.

In addition, this summary does not discuss the application of the U.S. federal estate and gift taxes, the Medicare net investment income tax or the alternative minimum tax, or any state, local or other tax consequences of purchasing, owning, and disposing of common shares or ADSs. You should consult your own tax advisers concerning the U.S. federal, state, local, and other tax consequences of purchasing, owning, and disposing of common shares or ADSs in your particular circumstances.

This summary is based on the Internal Revenue Code of 1986, as amended, its legislative history, existing and proposed regulations promulgated thereunder, and published rulings and court decisions, all as currently in effect. These laws are subject to change, possibly on a retroactive basis.

For purposes of this summary, you are a “U.S. holder” if you are the beneficial owner of a common share or an ADS and are:

•

a citizen or resident of the United States;

•

a U.S. domestic corporation; or

•

otherwise subject to U.S. federal income tax on a net income basis with respect to income from the common share or ADS.

In general, if you are the beneficial owner of ADSs, you will be treated as the beneficial owner of the common shares represented by those ADSs for U.S. federal income tax purposes, and no gain or loss will be recognized if you exchange an ADS for the common share represented by that ADS.

Dividends

The gross amount of cash dividends that you receive (prior to deduction of Korean taxes) generally will be subject to U.S. federal income taxation as foreign source dividend income and will not be eligible for the dividends received deduction. Dividends paid in Won will be included in your income in a U.S. dollar amount calculated by reference to the exchange rate in effect on the date that you receive the dividend (or the depositary receives the dividend, in the case of ADSs), regardless of whether the payment is in fact converted into U.S. dollars. If such a dividend is converted into U.S. dollars on the date of receipt, you generally should not be required to recognize foreign currency gain or loss in respect of the dividend income.

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Subject to certain exceptions for short-term and hedged positions, the U.S. dollar amount of dividends received by an individual with respect to our common shares or ADSs will be subject to taxation at reduced rates if the dividends are “qualified dividends.” Dividends paid on the common shares or ADSs will be treated as qualified dividends if (i) the common shares or ADSs are readily tradable on an established securities market in the United States or we are eligible for the benefits of a comprehensive tax treaty with the United States that the U.S. Treasury determines is satisfactory for purposes of this provision and that includes an exchange of information program; and (ii) we were not, in the year prior to the year in which the dividend was paid, and are not, in the year in which the dividend is paid, a passive foreign investment company as defined for U.S. federal income tax purposes, which we refer to as a PFIC. The ADSs are listed on the New York Stock Exchange, and will qualify as readily tradable on an established securities market in the United States so long as they are so listed. In addition, the U.S. Treasury has determined that the Korea-United States income tax treaty (the “Treaty”) meets the requirements for reduced rates of taxation, and we believe we are eligible for the benefits of that treaty. Based on our audited financial statements, we believe that we were not a PFIC in our 2020 and 2021 taxable years. In addition, based on our current expectations regarding our income, assets and activities, we do not anticipate becoming a PFIC for our 2022 taxable year. Therefore, we believe that dividends received by U.S. holders with respect to either common shares or ADSs will be “qualified dividends.” Holders should consult their own tax advisers regarding the availability of the reduced dividend tax rate in light of their own particular circumstances.

Distributions of additional shares in respect of common shares or ADSs that are made as part of a

pro-rata

distribution to all of our shareholders generally will not be subject to U.S. federal income tax.

Sale or Other Disposition

For U.S. federal income tax purposes, gain or loss you realize on a sale or other disposition of common shares or ADSs generally will be treated as U.S. source capital gain or loss, and will be long-term capital gain or loss if the common shares or ADSs were held for more than one year. Your ability to offset capital losses against ordinary income is limited. Long-term capital gain recognized by an individual U.S. holder generally is subject to taxation at reduced rates.

If a U.S. holder sells or otherwise disposes of our common shares or ADSs in exchange for currency other than U.S. dollars, the amount realized generally will be the U.S. dollar value of the currency received at the spot rate on the date of sale or other disposition (or, if the shares are traded on an established securities market at such time, in the case of cash basis and electing accrual basis U.S. holders, the settlement date). An accrual basis U.S. holder that does not elect to determine the amount realized using the spot exchange rate on the settlement date will recognize foreign currency gain or loss equal to the difference between the U.S. dollar value of the amount received based on the spot exchange rates in effect on the date of the sale or other disposition and the settlement date. If an accrual basis U.S. holder makes the election described in the first sentence of this paragraph, it must be applied consistently from year to year and cannot be revoked without the consent of the Internal Revenue Service , or the IRS. A U.S. holder should consult its own tax advisors regarding the treatment of any foreign currency gain or loss realized with respect to any currency received in a sale or other disposition of the common shares or ADSs.

Foreign Tax Credit Considerations

Dividends on the common shares or ADSs will constitute income from sources without the United States for U.S. foreign tax credit purposes. As a result of recent changes to the U.S. foreign tax credit rules, for taxable years beginning after December 28, 2021, Korean tax generally will need to satisfy certain additional requirements in order to be considered a creditable tax for a U.S. holder, except in the case of a U.S. holder that is eligible for, and properly claims, the benefits of the Treaty. We have not determined whether these requirements have been met, and, accordingly, no assurance can be given that any Korean tax will be creditable for U.S. holders. Alternatively, a U.S. holder may elect to deduct Korean withholding taxes in computing such U.S. holder’s taxable income (provided that the U.S. holder elects to deduct, rather than credit, all foreign income taxes paid or accrued for the relevant taxable year), subject to generally applicable limitations under U.S. tax law.

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Any Korean securities transaction tax or agriculture and fishery special surtax that you pay will not be creditable for foreign tax credit purposes.

Similarly, a U.S. holder will not be able to claim a foreign tax credit against its U.S. federal income tax liability for any Korean inheritance or gift tax imposed in respect of the common shares or ADSs.

Foreign tax credits will not be allowed for withholding taxes imposed in respect of certain short-term or hedged positions in securities and may not be allowed in respect of arrangements in which a U.S. holder’s expected economic profit is insubstantial.

The calculation of foreign tax credits and, in the case of a U.S. holder that elects to deduct foreign taxes, the availability of deductions involve the application of complex rules that depend on a U.S. holder’s particular circumstances. You should consult your own tax advisers regarding the creditability or deductibility of such taxes.

Specified Foreign Financial Assets

Certain U.S. holders that own “specified foreign financial assets” with an aggregate value in excess of US$50,000 on the last day of the taxable year or US$75,000 at any time during the taxable year are generally required to file an information statement along with their tax returns, currently on IRS Form 8938, with respect to such assets. “Specified foreign financial assets” include any financial accounts held at a

non-U.S.

financial institution, as well as securities issued by a

non-U.S.

issuer (which would include the common shares and ADSs) that are not held in accounts maintained by financial institutions. Higher reporting thresholds apply to certain individuals living abroad and to certain married individuals. Regulations extend this reporting requirement to certain entities that are treated as formed or availed of to hold direct or indirect interests in specified foreign financial assets based on certain objective criteria. U.S. holders who fail to report the required information could be subject to substantial penalties. In addition, the statute of limitations for assessment of tax would be suspended, in whole or part. Prospective investors should consult their own tax advisors concerning the application of these rules to their investment in the common shares or ADSs, including the application of the rules to their particular circumstances.

U.S. Information Reporting and Backup Withholding Rules

Payments of dividends and sales proceeds that are made within the United States or through certain U.S.-related financial intermediaries are subject to information reporting and may be subject to backup withholding unless the holder provides an accurate taxpayer identification number and makes any other required certification or otherwise establishes an exemption. Backup withholding is not an additional tax. The amount of any backup withholding from a payment to a U.S. holder will be allowed as a refund or credit against the U.S. holder’s U.S. federal income tax liability, provided the required information is furnished to the IRS in a timely manner.

Korean Taxation

The following summary of Korean tax considerations applies to you so long as you are not:

•

a resident of Korea;

•

a corporation with its head office, principal place of business or place of effective management in Korea; or

•

engaged in a trade or business in Korea through a permanent establishment or a fixed base to which the relevant income is attributable or with which the relevant income is effectively connected.

Please consult your own tax advisers as to the Korean, state, local and other tax consequences of the purchase, ownership and disposition of common shares or ADSs.

Taxation of Dividends on Common Shares or ADSs

We will deduct Korean withholding tax from dividends paid to you (whether payable in cash or in shares) at a rate of 22.0% (inclusive of local income tax). If you are a qualified resident and a beneficial owner of the

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dividends in a country that has entered into a tax treaty with Korea, you may qualify for a reduced rate of Korean withholding tax. See “—Tax Treaties” below for a discussion on treaty benefits. If we distribute to you free shares representing a transfer of earning surplus or certain capital reserves into

paid-in

capital, that distribution may be subject to Korean withholding tax.

Taxation of Capital Gains from Transfer of Common Shares or ADSs

As a general rule, capital gains earned by

non-residents

upon transfer of our common shares or ADSs are subject to Korean withholding tax at the lower of (1) 11.0% (inclusive of local income tax) of the gross proceeds realized or (2) subject to the production of satisfactory evidence of acquisition costs and certain direct transaction costs of the common shares or ADSs, 22.0% (inclusive of local income tax) of the net realized gain, unless exempt from Korean income taxation under the applicable Korean tax treaty with the

non-resident’s

country of tax residence. See “—Tax Treaties” below for a discussion on treaty benefits. Even if you do not qualify for an exemption under a tax treaty, you will not be subject to the foregoing withholding tax on capital gains if you qualify under the relevant Korean domestic tax law exemptions discussed in the following paragraphs.

In regard to the transfer of our common shares through the Korea Exchange, you will not be subject to the withholding tax on capital gains (as described in the preceding paragraph) if you (1) have no permanent establishment in Korea and (2) did not own or have not owned (together with any shares owned by any person with which you have a certain special relationship) 25% or more of the total issued and outstanding shares, which may include the common shares represented by the ADSs, at any time during the calendar year in which the sale occurs and during the five consecutive calendar years prior to the calendar year in which the sale occurs.

Under Korean tax law, ADSs are viewed as shares of common stock for capital gains tax purposes. Accordingly, capital gains from the sale or disposition of ADSs are taxed (if such sale or disposition constitutes a taxable event) as if such gains are from the sale or disposition of the underlying common shares. Capital gains that you earn (regardless of whether you have a permanent establishment in Korea) from a transfer of ADSs outside of Korea will generally be exempt from Korean income taxation by virtue of the Special Tax Treatment Control Law of Korea, or the STTCL, provided that the issuance of the ADSs is deemed to be an overseas issuance under the STTCL. However, if you transfer ADSs after having converted the underlying common shares, such exemption under the STTCL will not apply and you will be required to file a transfer income tax return or a corporate income tax return and pay tax in Korea with respect to any capital gains derived from such transfer unless the purchaser or a financial investment company with a brokerage license, as applicable, withholds and pays such tax.

If you are subject to tax on capital gains with respect to the sale of ADSs, or of our common shares you acquired as a result of a withdrawal, the purchaser or, in the case of the sale of the common shares on the Korea Exchange or through a financial investment company with a brokerage license in Korea, such financial investment company, is required to withhold Korean tax on capital gains from the sales price in an amount equal to the lower of (1) 11.0% (inclusive of local income tax) of the gross realization proceeds or (2) subject to the production of satisfactory evidence of acquisition costs and certain direct transaction costs of the common shares or ADSs, 22.0% (inclusive of local income tax) of the net realized gain, and to make payment of these amounts to the Korean tax authority, unless you establish your entitlement to an exemption under an applicable tax treaty or domestic tax law. See “—Tax Treaties” below for a discussion on claiming treaty benefits.

Tax Treaties

Korea has entered into a number of income tax treaties with other countries (including the United States), which would reduce or exempt Korean withholding tax on dividends on, and capital gains on transfer of, the common shares or ADSs. For example, under the Korea-United States income tax treaty, reduced rates of Korean withholding tax of 16.5% or 11.0% (depending on your shareholding ratio and inclusive of local income tax) on dividends and an exemption from Korean withholding tax on capital gains are available to residents of the United States that are beneficial owners of the relevant dividend income or capital gains, subject to certain exceptions. However, under Article 17 (Investment or Holding Companies) of the Korea-United States income tax treaty,

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such reduced rates and exemption do not apply if (i) you are a United States corporation, (ii) by reason of any special measures, the tax imposed on you by the United States with respect to such dividend income or capital gains is substantially less than the tax generally imposed by the United States on corporate profits and (iii) 25% or more of your capital is held of record or is otherwise determined, after consultation between competent authorities of the United States and Korea, to be owned directly or indirectly by one or more persons who are not individual residents of the United States. Also, under Article 16 (Capital Gains) of the Korea-United States income tax treaty, the exemption on capital gains does not apply if (a) you have a permanent establishment in Korea and any shares of common stock in which you hold an interest and which give rise to capital gains are effectively connected to such permanent establishment, (b) you are an individual and you maintain a fixed base in Korea for an aggregate of 183 days or more during a given taxable year and your ADSs or common shares giving rise to capital gains are effectively connected with such fixed base or (c) you are an individual and you are present in Korea for an aggregate of 183 days or more during a given taxable year.

You should inquire for yourself whether you are entitled to the benefit of a tax treaty between Korea and the country where you are a resident. It is the responsibility of the party claiming the benefits of an income tax treaty in respect of dividend payments or capital gains to submit to us, the purchaser or the financial investment company, as applicable, a certificate as to his tax residence. In the absence of sufficient proof, we, the purchaser or the financial investment company, as applicable, must withhold tax at the normal rates. Furthermore, in order for you to claim the benefit of a tax rate reduction or tax exemption on certain Korean source income (such as dividends or capital gains) under an applicable tax treaty, Korean tax law requires you (or your agent) to submit an application (for a reduced withholding tax rate, the “application for entitlement to a reduced tax rate,” and in the case of exemptions from withholding tax, the “application for tax exemption” along with a certificate of your tax residency issued by a competent authority of your country of tax residence, subject to certain exceptions) as the beneficial owner of such Korean source income, or a BO application. For example, a U.S. resident would be required to provide a Form 6166 as a certificate of tax residency together with the application for entitlement to reduced tax rate or the application for tax exemption. Such application should be submitted to the withholding agent prior to the payment date of the relevant income. Subject to certain exceptions, where the relevant income is paid to an overseas investment vehicle (which is not the beneficial owner of such income), or an OIV, a beneficial owner claiming the benefit of an applicable tax treaty with respect to such income must submit its BO application to such OIV, which must submit an OIV report and a schedule of beneficial owners (as well as the BO applications collected from each beneficial owner, if such beneficial owner is applying for a tax exemption) to the withholding agent prior to the payment date of such income. Effective January 1, 2020, an OIV that was not established for the purpose of unjustifiably reducing income tax liabilities in Korea and bears tax liabilities in the country of its residence is deemed to be a beneficial owner of Korean source income for income tax purposes. Starting from January 1, 2022, an OIV is deemed to be a beneficial owner of the Korean source income if (i) under the applicable tax treaty, the OIV bears tax liabilities in the country in which it is established or the OIV is deemed to be the beneficial owner of the Korean source income, and (ii) the Korean source income is eligible for the treaty benefits under the tax treaty. The benefits under a tax treaty between Korea and the country of such OIV’s residence will apply with respect to the relevant income paid to such OIV, subject to certain application requirements as prescribed by the Corporate Income Tax or Individual Income Tax Law. In the case of a tax exemption application, the withholding agent is required to submit such application (together with the applicable OIV report in the case of income paid to an OIV) to the relevant district tax office by the ninth day of the month following the date of the payment of such income.

Inheritance Tax and Gift Tax

If you die while holding an ADS or donate an ADS, it is unclear whether, for Korean inheritance tax and gift tax purposes, you will be treated as the owner of the common shares underlying the ADSs. If the tax authority interprets depositary receipts as the underlying share certificates, you may be treated as the owner of the common shares and your heir or the donee (or in certain circumstances, you as the donor) will be subject to Korean inheritance tax or gift tax presently at the rate of 10% to 50%, provided that the value of the ADSs or common shares is greater than a specified amount.

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If you die while holding a common share or donate a common share, your heir or donee (or in certain circumstances, you as the donor) will be subject to Korean inheritance tax or gift tax at the same rate as indicated above.

At present, Korea has not entered into any tax treaty relating to inheritance or gift taxes.

Securities Transaction Tax

If you transfer our common shares on the Korea Exchange, you will be subject to securities transaction tax at the rate of 0.08% (if the transfer is made in 2022) or 0% (if the transfer is made in 2023 and thereafter) and an agriculture and fishery special surtax at the rate of 0.15% of the sale price of the common shares. If your transfer of the common shares is not made on the Korea Exchange, subject to certain exceptions, you will be subject to securities transaction tax at the rate of 0.43% (if the transfer is made in 2022) or 0.35% (if the transfer is made in 2023 and thereafter) and will not be subject to an agriculture and fishery special surtax.

Under the Securities Transaction Tax Law, depositary receipts (such as American depositary receipts) constitute share certificates subject to the securities transaction tax. However, the transfer of depositary receipts listed on the New York Stock Exchange, the Nasdaq Global Market, or other qualified foreign exchanges is exempt from the securities transaction tax.

In principle, the securities transaction tax, if applicable, must be paid by the transferor of the common shares or ADSs. When the transfer is effected through a securities settlement company in Korea, such settlement company is generally required to withhold and pay the tax to the tax authorities. When such transfer is made through a financial investment company only, such financial investment company is required to withhold and pay the tax. Where the transfer is effected by a

non-resident

without a permanent establishment in Korea, other than through a securities settlement company or a financial investment company, the transferee is required to withhold the securities transaction tax.

Non-reporting

or under-reporting of securities transaction tax will generally result in penalties equal to 20% to 60% of the

non-reported

tax amount or 10% to 60% of under-reported tax amount. Also, a failure to timely pay securities transaction tax will result in a penalty equal to 9.125% (or 8.03% starting from February 2022) per annum of the due but unpaid tax amount. The penalties are imposed on the party responsible for paying the securities transaction tax or, if such tax is required to be withheld, on the party that has the obligation to withhold.

Item 10.F.

Dividends and Paying Agents

Not Applicable

Item 10.G.

Statements by Experts

Not Applicable

Item 10.H.

Documents on Display

We are subject to the information requirements of the Exchange Act, and, in accordance therewith, are required to file reports, including annual reports on Form

20-F,

and other information with the U.S. Securities and Exchange Commission. These materials, including this annual report and the exhibits thereto, may be inspected and copied at the Commission’s public reference rooms in Washington, D.C., New York, New York and Chicago, Illinois. Please call the Commission at

1-800-SEC-0330

for further information on the public reference rooms. We are also required to make filings with the Commission by electronic means. Any filings we make electronically will be available to the public over the Internet at the Commission’s web site at

http://www.sec.gov

Item 10.I.

Subsidiary Information

Not Applicable

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Item 11.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Overview

As a financial services provider, we are exposed to various risks related to our lending and trading businesses, our funding activities and our operating environment, principally through Woori Bank, our banking subsidiary. Our goal in risk management is to ensure that we identify, measure, monitor and control the various risks that arise, and that our organization adheres strictly to the policies and procedures which we establish to address these risks. We seek to take a conservative approach to risk management in order to better insulate our operations from adverse events. Risks we face include:

•

credit risk;

•

market risk (primarily interest rate risk, equity risk, foreign exchange risk and commodity risk);

•

liquidity risk; and

•

operational and business risk (including legal risk).

We operate a standardized risk management system which enhances our risk management capabilities by enabling us to exchange information among our and our subsidiaries’ risk management operations. Woori Bank, our banking subsidiary, has further strengthened its risk management systems by (i) using Tier I capital as “available capital” for purposes of our risk capital allocation to fulfill Basel III requirements, and (ii) including “stressed VaR” to our market risk capital calculations in accordance with the guidance of the Financial Supervisory Service. We use our risk management systems to manage our risks within acceptable limits and to otherwise ensure the soundness of our assets and the stability of our operations.

We allocate our total risk capital in accordance with the guidelines set by our Board Risk Management Committee. As described in more detail below, the committee allocates risk capital and approves the risk limit requests of our subsidiaries. Through our standardized risk management system, we allocate our risk capital:

•

with respect to our credit risk on the basis of a standardized approach as well as other portfolio credit models;

•

with respect to our market risk for trading activities based on the VaR method (including the stressed VaR method) for Woori Bank, and a standardized model for our other subsidiaries;

•

with respect to our interest rate risk based on the IRRBB standard method (ΔEVE) on a group-wide basis, replacing the previous historical simulation and standardized methods; and

•

with respect to our operational risk through an advanced measurement approach for Woori Bank and a standardized approach for our other subsidiaries, in accordance with Basel III.

Organization

We have a multi-tiered risk management governance structure. Our Board Risk Management Committee is ultimately responsible for group-wide risk management, and directs the various subordinate risk management entities. The Group Risk Management Council answers to the Board Risk Management Committee and, together with the Group Risk Management Department, coordinates the execution of its directives with each Subsidiary Risk Management Department. Each Subsidiary Risk Management Committee, based on the Board Risk Management Committee’s directives, determines risk management strategies and implements risk management policies and guidelines for the relevant subsidiary, sets the subsidiary’s operational and business risk management policies and guidelines and directs the applicable Subsidiary Risk Management Department with support from the applicable Subsidiary Risk Management Council, but must keep within the risk guidelines of the Board Risk Management Committee. The Subsidiary Risk Management Committees generally receive input from their respective Subsidiary Risk Management Councils and Subsidiary Risk Management Departments.

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The following chart sets out our risk management governance structure as of the date of this annual report:

We operate a “double report” system with respect to our risk management procedures. Each of our Subsidiary Risk Management Departments is required to submit risk management reports directly to the Group Risk Management Department. Through this internal reporting system, we are able to better ascertain and strengthen the monitoring of our subsidiaries’ risk management and are able to quickly address any deviation from our group-wide risk policies. We have further supplemented our double report system by strengthening the role and independence of chief risk officers in our subsidiaries and expanding the role of Subsidiary Risk Management Departments. Each Subsidiary Risk Management Department is required to report directly to such subsidiary’s chief risk officer on all material risk management issues as well as following the procedures under the double report system.

The Board Risk Management Committee, the Group Risk Management Council, the Subsidiary Risk Management Committees and the Subsidiary Risk Management Councils are responsible for managing risks relating to credit, markets, asset and liability management and liquidity. Each Subsidiary Risk Management Department is generally responsible for managing operational risks at the relevant subsidiary, while the Audit Department coordinates the execution of our operational and business risk management policy, particularly with regard to internal subsidiary practices, and the Legal and Compliance Department monitors compliance risk and makes suggestions regarding regulatory issues to the Financial Supervisory Service.

Board Risk Management Committee

The Board Risk Management Committee is our highest decision-making body with respect to our risk management operations. Our board of directors has delegated to it the authority to oversee and make determinations on all significant issues relating to our risk management system. It comprehensively manages and

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controls our risks as well as those of our subsidiaries, so that it may detect, measure, monitor and control the potential risks that may arise during management. The committee’s major activities include:

•

determining and amending risk management policies, guidelines and limits in conformity with the strategy established by the board of directors;

•

allocating risk capital to each subsidiary and approving the risk limits of our subsidiaries;

•

reviewing our group-wide risk profile, including the level of risks we are exposed to and the status of our risk management operations; and

•

monitoring our subsidiaries’ compliance with our risk policies.

The Board Risk Management Committee is composed of four outside directors. It operates independently from all business groups and individual board members, and reports directly to our board of directors. We require the chairperson of the Board Risk Management Committee to be chosen from among the outside directors in order to enhance the independence and experience level of such chairperson. Our Board Risk Management Committee convenes at least quarterly, and makes decisions by a majority vote of the attending members. At least a majority of the committee members must attend to constitute a quorum.

Group Risk Management Council

Our Group Risk Management Council is responsible for coordinating with the Subsidiary Risk Management Departments to ensure that they execute the policies, guidelines and limits established by the Board Risk Management Committee. The Group Risk Management Council’s major activities include:

•

analyzing our risk status using information provided by the Subsidiary Risk Management Departments;

•

adjusting the integrated risk-adjusted capital allocation plan and risk limits for each of our subsidiaries;

•

reviewing the key decisions of each Subsidiary Risk Management Committee and discussing and resolving any risk management issues raised by those committees;

•

coordinating issues relating to the integration of our risk management functions; and

•

performing any other duties delegated by the Board Risk Management Committee.

The Group Risk Management Council consists of eleven members, including our chief risk officer and the chief risk officers of our subsidiaries. It operates independently from all business groups, and reports directly to the Board Risk Management Committee. The Group Risk Management Council convenes on a quarterly basis.

Our subsidiaries, in most cases through their respective Subsidiary Risk Management Departments, provide a variety of information to the Group Risk Management Council, including:

•

reports regarding the status of overall risk management, the status of limit compliance, and analysis and results of stress testing and back testing; and

•

reports regarding asset and liability management matters, including changes in risk-weighted assets and the status of our credit portfolio on a periodic basis.

Subsidiary Risk Management Committees

Each of our subsidiaries’ operating businesses that require risk management delegates risk management authority to its Subsidiary Risk Management Committee. Each Subsidiary Risk Management Committee measures and monitors the various risks faced by the relevant subsidiary and reports to that subsidiary’s board of directors regarding decisions that it makes on risk management issues. It also makes strategic decisions regarding

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the operations of the relevant subsidiary, such as allocating credit risk limits, setting total exposure limits and market risk-related limits and determining which market risk derivatives instruments the subsidiary can trade. The major activities of each Subsidiary Risk Management Committee include:

•

determining and monitoring risk policies, guidelines, limits and tolerance levels and the level of subsidiary risk in accordance with group policy, with the support of the relevant Subsidiary Risk Management Council;

•

reviewing and analyzing the subsidiary’s risk profile;

•

setting limits for and adjusting the risk-adjusted capital allocation plan and risk levels for each business group within the subsidiary; and

•

monitoring compliance with our group-wide risk management policies and practices at the business group and subsidiary level.

Subsidiary Risk Management Council

Each of our relevant subsidiaries has a Subsidiary Risk Management Council, which is responsible for supporting the relevant Subsidiary Risk Management Committee in the implementation of its risk management policies and guidelines for such subsidiary, including by reviewing and reporting on agenda items to be discussed at meetings of the relevant Subsidiary Risk Management Committee, reviewing reports from the relevant Subsidiary Risk Management Department and performing any other duties delegated by the relevant Subsidiary Risk Management Committee.

Each Subsidiary Risk Management Council is generally comprised of the subsidiary’s chief risk management officer, the head of its Subsidiary Risk Management Department and other executive officers responsible for such subsidiary’s risk management-related functions. It operates independently from all business units, and reports directly to the Subsidiary Risk Management Committee.

Credit Risk Management

Our credit risk management policy objectives are to improve our asset quality, reduce our

non-performing

loans and minimize our concentration risk through a diversified and balanced risk-weighted loan portfolio. We manage credit risk and continually monitor and improve our credit risk-related policies and guidelines to reflect changing risks in our business and the industries and sectors in which our customers operate. For example, we have recently strengthened our monitoring of asset quality and analysis of risk indicators by focusing on industries and sectors that are impacted by the

COVID-19

pandemic and will continue to do so by reflecting any additional volatility or long-term effects thereof.

We believe that an essential part of achieving our credit risk management objectives is utilizing a standardized risk management system so that we can identify and manage the risks generated by our businesses using a consistent approach. Woori Bank is currently using a centralized credit risk management system called the Credit Wizard system. Credit Wizard is a credit risk management system which combines credit risk management and the credit approval process on a transactional level with respect to individual borrowers and approval with respect to each individual loan or credit. The system quantifies credit risk with respect to corporate borrowers using a

“mark-to-market”

methodology, which reflects both the likelihood of a default by a borrower as well as the likelihood of a change in such borrower’s credit rating, and quantifies credit risk with respect to retail borrowers using a “default mode” methodology, which reflects the likelihood of a default by a borrower. We believe that our Credit Wizard system is a systematic and efficient credit evaluation system and that Woori Bank has expedited its loan review process and improved its ability to monitor and evaluate its overall risk profile by using this system. The main characteristics of our Credit Wizard system are as follows:

•

automation of credit risk management system

, which allows us to centralize and automate many tasks relating to our credit risk management system;

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•

automatic recognition and processing of different forms of credit

, which allows us to process and approve different types of credit, such as new applicants, renewing applicants and changes in the condition of the loan or credit approved;

•

incorporation of credit risk management prior to approval of credit

, which allows us to consider individualized characteristics of a borrower and enables us to calculate a more accurate price with respect to the loan or credit approved;

•

automatic credit risk monitoring after approval of credit

, which allows us to evaluate and

re-rate

the loan or credit on a real-time basis as a result of any change in the characteristics of the borrower (including the condition of the underlying collateral, change in borrowing limit and early warning characteristics); and

•

automatic verification of internal procedures and regulations with respect to approval of credit

, which reduces our operational risk and ensures that there are no material deviations from our loan and credit policies.

We also impose a credit risk limit for Woori Bank with respect to “large exposures.” We aim to avoid concentrations of exposure with respect to any single corporate borrower or affiliated group of corporate borrowers. Accordingly, we have established aggregate exposure limits based on capital adequacy levels of Woori Bank and, with respect to individual corporate borrowers, established limits by dividing the “expected loss” with respect to companies affiliated with such corporate borrower with the “unexpected loss” (a measurement of credit risk) of such borrower and converting that into an exposure amount. We use this as the basis for our “large exposure” limits with respect to such corporate borrower.

We impose a “principal investment” limit for investment activities that our subsidiaries undertake as a principal (as opposed to as an agent). The principal investment limit for each subsidiary is set as a certain percentage of the capitalization of such subsidiary.

We use our credit risk management systems to measure and control credit risk, to evaluate and approve new credit and to review and monitor outstanding credit. We conduct various quantitative and qualitative analyses to establish acceptable risk levels that provide what we believe are appropriate levels of return on investments. The credit risk management systems that we use to do this integrate various data, including customers’ financial and economic condition, limits on loans and guarantee amounts, cash flow evaluations, collateral levels, our desired profit margin and the likelihood of unexpected loan losses.

Each relevant subsidiary monitors its level of risk, determines how that level compares to our target optimized level of risk on a monthly basis and produces risk analysis reports and optimization reports on a monthly basis and stress test reports on an ad hoc basis. These reports are sent to the respective Subsidiary Risk Management Committees and to the Board Risk Management Committee and provide a basis to set risk limits for, and allocate capital to, a subsidiary’s business groups.

Credit Evaluation and Approval

Our subsidiaries evaluate the credit of every loan applicant and guarantor before approving any loans, except for:

•

loans guaranteed by letters of guarantee issued by the Korea Credit Guarantee Fund, the Korea Technology Finance Corporation or certain other specified Korean government-controlled funds;

•

loans guaranteed by highly-rated banks;

•

loans fully secured by deposits with us; and

•

loans against commercial promissory notes issued by creditworthy companies at a discount to the face value of the note determined by the issuer’s creditworthiness.

The evaluation and approval process differs depending on whether the loan is a corporate loan, a general household consumer loan, or a mortgage or home equity loan, and there is a separate process for credit card

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applications. For example, Woori Bank has in recent years implemented a standardized “expected loss” and “unexpected loss” credit risk system which we believe enables us to better allocate risk capital by evaluating “unexpected loss” (a measurement of credit risk), “VaR” (a measurement of market risk) and “earnings at risk” (a measurement of whether our assets and liabilities are mismatched).

Woori Bank has also undertaken a number of initiatives to develop credit evaluation and loan approval procedures that are more systematic and efficient. We prefer to use credit rating systems in our credit evaluation and loan approval process because they:

•

yield a uniform result regardless of the user;

•

can be used effectively by employees who do not have extensive experience in credit evaluation;

•

can be updated to reflect changing market conditions by changing how factors are weighted;

•

significantly limit the scope of employee discretion in the loan assessment and approval process; and

•

improve loan processing times while generally resulting in declines in delinquencies among new borrowers.

Woori Bank operates a Credit Wizard credit evaluation system for corporate loans (including small- and

medium-sized

enterprise loans) and a consumer credit evaluation system for consumer loans.

Customers apply for loans by submitting a loan application through one of Woori Bank’s branches. These applications are initially reviewed using the appropriate credit evaluation system and, in the case of applications for a small amount or involving applicants with little or no credit risk, are approved by the branch manager or a relationship manager acting in concert with a credit officer based on the credit risk rating they receive under that system. Applications for larger loans and loans which are determined to involve greater credit risk are approved by bodies with greater authority, depending on where those loans fall in a matrix of size, collateral and credit risk. These loan applications will be referred to a credit officer committee at an office located near the customer, which may or may not be at Woori Bank’s headquarters. Every credit officer committee is made up of credit officers from headquarters and has the same level of authority. Applications that cannot be approved by a credit officer committee are referred to a senior credit officer committee or the Loan Committee of Woori Bank, depending on loan size, collateral and credit risk. The following table sets forth the various Woori Bank committees and personnel involved in its credit evaluation and loan approval process:


Committee	Members	Approval Process
Headquarters Approval
Loan Committee	Head of the credit support group, head of the risk management group, head of the investment banking business group, head of the corporate banking business group, head of the financial market business group, head of the large corporate credit analysis and approval department and head of SME credit analysis and approval department	2/3 required for approval; 2/3 required to participate
Headquarters/Regional Approval
Senior Credit Officer Committee	One head senior credit officer and four to six other senior credit officers (five to seven persons)	2/3 required for approval; 2/3 required to participate
Credit Officer Committee	At least one senior credit officer and two other credit officers (at least three persons)	2/3 required for approval; 2/3 required to participate

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Committee	Members	Approval Process
Individual Approval
Loan Officer	Individual	Approval of the individual
Branch Manager	Individual	Approval of the individual
Head of Team	Individual	Approval of the individual

Different individuals or committees review and approve loan applications depending on various factors, including:

•

the size and type of the loan;

•

the level of credit risk established by the credit rating system;

•

whether the loan is secured by collateral; and

•

if the loan is secured, an assessment of the collateral.

Loan applications are generally reviewed only by the highest-level committee required to approve the loan, although multiple reviews, including separate reviews at the branch, regional and headquarters level, may occur depending on the size and terms of any particular loan or a borrower’s credit risk.

Corporate Loan Approval Process

Woori Bank’s branches review corporate loan applications using a credit evaluation system for corporate borrowers. Each corporate credit evaluation system measures various quantitative and qualitative factors. The model used by the credit evaluation system to review an application depends, however, on certain characteristics of the potential borrower. Woori Bank’s credit risk management unit, together with its large corporate loan department and small- and

medium-sized

enterprise loan department, has developed separate credit evaluation models for large corporate borrowers that are subject to external audit under the Act on External Audits of Stock Companies, large corporate borrowers that are not subject to external audit,

medium-sized

enterprises and SOHO borrowers that either have outstanding loans, or are applying for a loan, in excess of ￦1 billion. In general, each model uses scores from both a computerized evaluation of quantitative financial factors, such as cash flow, income and other representative financial information, and more qualitative factors which are scored using judgments by the credit officer or officers reviewing the application to produce an overall credit risk rating. These credit evaluation systems provide Woori Bank with tools to make consistent credit decisions and assist it in making risk-based pricing decisions. Woori Bank’s Credit Wizard system, depending on whether the borrower is audited by independent auditors and its size, produces two separate scores based on one of five principal rating models: one for quantitative current financial factors, which is weighted 60 to 70% in determining the Credit Wizard credit risk rating, and another for the more qualitative factors that the judgment of credit officers plays a significant part in determining, which is weighted 30 to 40%. The Credit Wizard credit risk rating estimates the probability that Woori Bank will recover extended credits and the likelihood that borrowers will default. Qualitative factors included in the Credit Wizard system include:

•

its industry situation;

•

a customer’s future financial condition;

•

its competitive position in the industry;

•

the quality of its management; and

•

its operations.

Other indirect factors included in the credit risk rating include:

•

its technological merits;

•

the nature and the location of any collateral; and

•

Woori Bank’s level of priority in that collateral to estimate

non-recovery

risks.

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These qualitative factors are input into the Credit Wizard system by the credit officer, and are rated based on his or her historical experience and that of the bank.

The Credit Wizard system produces separate credit risk ratings for each borrower. Woori Bank’s credit analysis and approval center evaluates and approves corporate loan applications based on these credit risk ratings. The Credit Wizard system assigns each borrower and facility one of the following 14 credit risk rating grades from AAA to D, which are classified as follows: AAA (extremely strong), AA (very strong), A+ (strong), A– (good), BBB+ (more adequate), BBB (adequate), BBB– (less adequate), BB+ (less susceptible), BB (susceptible), BB– (more susceptible), B+ (slightly weak), B– (weak), C (very weak) and D (default). Certain loans are subject to review by the Loan Committee depending on the size of the loan and the determined credit risk rating. Examples of this include loan applications for secured loans in excess of ￦80 billion for a borrower or facility with a credit risk rating of

A-

and above, and, at the other extreme for unsecured loans, loan applications in excess of ￦4 billion for a borrower or facility with a credit risk rating of BB– to C. Applications from borrowers with loans on a watch list (see “—Credit Review and Monitoring” below) are also closely monitored.

Woori Bank has adopted a separate and simpler credit evaluation system for SOHOs (such as pharmacies, clinics and restaurants) that either have outstanding loans, or are applying for a loan, of ￦1 billion or less. The system uses simpler credit evaluation models and resembles Woori Bank’s application scoring system for new retail customers. It assigns a credit grade ranging from one to ten to each application based on its evaluation of various factors. Applications are classified as “automatically approved,” “automatically rejected” or “subject to further evaluation,” which is the same as the consumer loan approval process, based on a combination of the internal credit scoring system and the external credit score. For existing borrowings (such as roll-overs of outstanding amounts), such SOHO credit evaluation system is supplemented with a behavioral scoring system. The behavioral scoring system enhances the SOHO credit evaluation system by enabling the consideration of factors such as the customer’s spending history and credit behavior.

With respect to the evaluation of any collateral to which a commercial loan application relates (which principally consists of land, buildings and equipment), the fair value of such underlying collateral for commercial loans is appraised by external valuation experts and such appraisals are collated in Woori Bank’s Credit Wizard system. Woori Bank uses its Credit Wizard system to manage its lending activities, and inputs data gathered from loan application forms, credit scores of borrowers and the appraisal value of collateral provided by external valuation experts into the Credit Wizard system and updates such information periodically to reflect changes in such information (such as any changes in credit scores of borrowers or the appraisal value of collateral). In addition, to validate the appropriateness of the appraisal values provided by such external valuation experts, Woori Bank reviews the qualification of the external valuation experts (including a review of whether such experts are legitimately registered with the Korea Association of Property Appraisers) and evaluates the assumptions and valuation model used by such experts as well as the appropriateness of variables by reference to market data and comparisons to actual transaction prices in similar regions.

We have set credit limits for our corporate customers. Some of these limits, particularly those imposed by Korean banking regulations, are aimed at preventing loan concentrations relating to any single customer. See “Item 4.B. Business Overview—Supervision and Regulation—Principal Regulations Applicable to Banks—Financial Exposure to Any Individual Customer or Major Shareholder.” In certain cases, we have introduced and implemented internally-developed large exposure limits that are stricter than the applicable Financial Services Commission requirements.

In evaluating applications, credit officers or the Loan Committee will often, in addition to reviewing ratings from these credit evaluation models, also refer to corporate information gathered or ratings assigned by external credit rating agencies, including NICE Investors Service, Korea Investors Service and Korea Ratings, among others. They review the information we obtain from these sources and compare it to the information we have developed internally with respect to our customers to improve the accuracy of our internal credit ratings.

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Consumer Loan Approval Process

The consumer loan department of Woori Bank evaluates and approves consumer loan applications using a dedicated consumer credit evaluation system. Woori Bank’s consumer credit evaluation system assigns a credit score to each application based on its evaluation of various factors. These factors include any loan and guarantee limits Woori Bank has set for particular borrowers or groups of borrowers and our evaluation of their cash flows and credit profiles. The system gives each customer’s loan application a grade ranging from one to ten. Woori Bank also uses another score based on the external ratings provided by the Korea Credit Bureau and NICE Information Service Inc. Applications are classified as “automatically approved,” “automatically rejected” and “subject to further evaluation” based on a combination of the scores of these two systems. Woori Bank uses these systems to evaluate all new consumer loan applications, except for:

•

loans fully secured by deposits with Woori Bank;

•

collective mortgage loans; and

•

National Housing and Urban Fund mortgage loans.

Woori Bank augments its consumer credit evaluation system with a behavioral scoring system. The behavioral scoring system enhances the consumer credit evaluation system by enabling the consideration of factors such as the customer’s spending history and credit behavior. By the nature of the information it analyzes, however, the behavioral scoring system can only be used for applications of persons who are existing borrowers, generally consisting of roll-overs of outstanding amounts.

We also evaluate any collateral to which a consumer loan application relates (which principally consists of residential properties) using the fair value of the underlying collateral appraised by KB Land, the Korea Real Estate Board or external appraisal experts as part of our loan approval process. Such appraisals are collated in the Credit Wizard system used by Woori Bank, and such information is updated periodically to reflect changes (such as any changes in credit scores of borrowers or the appraisal value of collateral). For example, Woori Bank automatically obtains

re-evaluations

for the underlying collateral for secured consumer loans and mortgages every month with respect to apartments. If the value of the collateral declines, we may have the ability to require that the borrower provide more collateral or to change the payment terms of the relevant loan.

Credit Card Approval Process

We have worked to ensure that risk management and credit extension policies with respect to our credit card operations through our direct subsidiary, Woori Card, reflect our group-wide risk management policies and guidelines.

Woori Card reviews each new card application for completeness, accuracy and creditworthiness. It bases this review on various factors that assess the applicant’s ability to repay borrowed amounts. The review process involves three stages:

•

Initial Application Process.

Woori Card verifies basic information by requesting certain documents from the applicant, generally contacts the applicant directly (usually by telephone, although there are personal visits to some applicants) and statistically analyzes the applicant’s personal credit history together with financial and default information gathered from third-party sources and its internal database. The analysis considers various factors including employment, default status and historical relationships with Woori Bank and any delinquency history with other credit card companies. Woori Card also reviews information about an applicant obtained from external databases maintained by the Korea Federation of Banks and Nice Information Service Inc.

•

Application Scoring System Process.

The application scoring system at Woori Card is a standardized evaluation tool used to determine the probability of a credit card applicant defaulting during the

one-year

period following issuance. The application scoring system, using a statistical model, assigns risks to factors that indicate a probability of

non-payment.

The model analyzes credit history, occupation and income data to develop a combined risk score. The applicant’s eligibility to receive a credit card and credit limit is determined by its anticipated delinquency ratio over 90 days within one year.

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•

Credit Assessment.

If the application is approved, then the application scoring system assessment is used to determine the applicant’s credit limit. The aggregate credit limit for a new applicant who is an individual rarely exceeds ￦20 million. There is a separate but similar system for determining the credit limit available to corporate card applicants, which will generally be higher than limits available to individual applicants but will not provide for the ability to obtain cash advances.

The entire approval process generally takes two to three days and the applicant receives the new card within one week after making an application. Woori Card evaluates and updates the application scoring system on a monthly basis (or more frequently as required) to incorporate new data or adjust the importance placed on existing data or market conditions.

Credit Review and Monitoring

Our credit review and monitoring procedures are designed to reduce the risks of deterioration in our asset quality and to maintain acceptable levels of portfolio risk. These procedures include:

•

confirming a borrower’s credit rating or score;

•

ensuring the accuracy of the credit analysis done by our credit officers; and

•

ensuring compliance with internal policies relating to loan approval.

We believe that these procedures enable us to identify potential

non-performing

loans as soon as possible and minimize the possibility of approving in advance loans that will become

non-performing.

These procedures also enable us to manage credit risk more effectively and set interest rates to more accurately reach our targeted level of return.

Loan Review and Monitoring

Woori Bank monitors credit risk with respect to its borrowers using its loan review system. Woori Bank has a loan review unit that oversees its review and monitoring efforts. After a loan has been approved, the relevant materials or the results generated by Woori Bank’s credit evaluation system, together with any supporting data, are reviewed by an officer in that unit. There are three types of reviews that Woori Bank’s loan review unit undertakes:

•

Desk review.

Desk reviews are the most common and are generally done within five days after a loan has been approved. Although the process is similar, different loans are automatically reviewed by Woori Bank based on the size of the loan. The loan review unit will initiate a desk review of loans approved by a credit officer committee or the Loan Committee, for any corporate loan over ￦5 billion, any consumer loan over ￦1 billion, any loan to a housing applicant group over ￦5 billion or any loan where the loan terms were adjusted. For loans originating from a branch, the loan review unit will randomly initiate a desk review for new domestic loans. For overseas loans, desk reviews are conducted for new loans (including credit limit increases) over US$300,000. Ex post desk reviews are also conducted on consumer and corporate loans approved by a domestic branch manager for borrowers with aggregate unsecured loans over ￦50 million or aggregate secured loans over ￦300 million, and new consumer and corporate loans (including credit limit increases) over US$30,000 approved by overseas branch managers.

•

Periodic review.

Periodic reviews are done on a quarterly, semi-annual or annual basis with respect to loans that are current and over ￦10 billion or with respect to borrowers who are on a “watch list” with respect to possible insolvency. Quarterly periodic reviews are done for certain corporate borrowers, depending on their size and the borrower’s industry.

•

Ad hoc review.

Ad hoc reviews can be done at any time. The head of Woori Bank’s Risk Management Department or the chief executive officer or chief financial officer of Woori Bank can initiate ad hoc reviews. Loan review officers who are responsible for desk and periodic reviews also conduct ad hoc reviews.

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Following a review, Woori Bank’s sales office may hold additional meetings with the borrower and adjust the loan amount or the borrower’s credit rating. The loan review unit may also direct sales office personnel to institute early collections or to adjust a borrower’s credit rating, total exposure and asset portfolio without consulting the borrower. The loan review officer may request that the credit officer adjust a borrower’s credit ratings based on various factors, including asset quality, credit limits, applied interest rates and our credit policies. We also continually review other factors, such as industries in which borrowers operate and their domestic and overseas assets and operations, to ensure that our ratings are appropriate.

Woori Bank monitors and manages its exposures to and credit limits for corporations and

chaebols

on a daily basis. Woori Bank uses its Total Exposure Management System to make real-time inquiries regarding its exposures, either by company or by

chaebol

, and to manage the credit limits for all kinds of business transactions. Woori Bank monitors and analyzes these exposures on a monthly basis. Corporate borrowers on Woori Bank’s “watch list” are monitored more closely and with respect to additional aspects of their relationships with us. Woori Bank places borrowers on its watch list when it believes that any impediment on a borrower’s ability to meet its financial obligations exists or is pending. Woori Bank may also monitor newly extended credits or any additional credits extended to a previous borrower more frequently if it believes additional monitoring is necessary after reviewing the loan approval process. Credits outstanding to a particular industry or region that Woori Bank believes are higher risk are monitored even more frequently. Based on the results of such monitoring, the loan review unit of Woori Bank provides monthly reports to its chief executive officer and its Risk Management Committee.

Woori Bank has the ability to conduct daily surveillance on the status of its retail borrowers through an online system established by the Korea Federation of Banks. This system, which tracks consumer loans at all major Korean banks and

non-banking

institutions, permits us to track all loan defaults by any borrower. Woori Bank evaluates the need to monitor consumer loans by using its consumer credit evaluation system, including its behavioral scoring system, and makes adjustments to the credit scoring formula based on the results of that process.

Woori Bank’s loan review unit in its Risk Management Department is required to submit monthly loan review reports and quarterly deficiency reports to the chief executive officer and the head of the Risk Management Department of Woori Bank. The chief executive officer then provides feedback to the relevant sales offices of Woori Bank’s branches through its auditing team or relevant business group. Based on these reports, we may, for example, stop lending to particular borrowers, change credit limits or modify our loan approval procedures. We do not monitor loans to certain borrowers, such as loans to government entities.

Credit Card Review and Monitoring

Woori Card monitors its risk exposure to individual accounts on a regular basis. It monitors each customer’s card usage trends and negative credit data such as delinquency information through both its own credit risk management system (which was developed with the assistance of an outside consultant) and BC Card’s similar system (which BC Card maintains for its member institutions). These systems monitor the behavior of users of Woori Card’s credit cards, using both internally generated information and information from external sources. Woori Card statistically analyzes this information to estimate each customer’s creditworthiness on a monthly basis. The credit risk management system is an integral part of the credit practices at Woori Card and is used to determine increases or decreases in credit limits, reset interest rates, set fee levels, authorize special transactions and approve card loans using criteria such as:

•

how much credit each customer has incurred in the past (i.e., frequency and amount of payments);

•

whether a customer uses his card to make credit card purchases or to get cash advances;

•

internal credit scores; and

•

whether the customer has been delinquent in making payments.

After assigning appropriate weightings to each factor, the system computes a behavior score and uses that score to classify each cardholder. Each customer’s credit limit is subject to adjustment in accordance with the

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monthly updated score. Woori Card uses these results and the results of its application scoring system to evaluate its credit risk management system and make adjustments to its credit scoring formula based on the results of that process.

Woori Card’s credit risk management system has also been able to run various simulations in connection with monitoring its operations, including:

•

new product simulations

, which predict a customer’s likely spending pattern when using a new credit card product and analyzes that pattern to predict the new product’s costs, delinquencies and profitability; and

•

credit use limit simulations

, which test whether a customer’s credit limit has been properly set by simulating an increase or decrease of that limit.

Woori Card’s credit administration team manages customer credit risk for users of its credit cards. It reviews and updates its underwriting, credit evaluation, collection, servicing and

write-off

procedures, and the terms and conditions of card agreements, from time to time in accordance with its business practices, applicable law and guidelines issued by regulatory authorities.

Early Warning Systems

Woori Bank and Woori Card have developed separate early warning systems that monitor the status of both commercial and retail borrowers and evaluate all of a customer’s outstanding credits. These systems monitor various factors, including the financial status, financial transaction status, industry rating and management status of borrowers. They enable our subsidiaries to find defaults and signs of potential delinquency in advance, monitor these problematic credits properly before any default or delayed payment occurs and keep track of information on the credit status of borrowers. Updated information is input as it becomes available, either automatically from internal and external sources or manually. This information includes data relating to:

•

credit evaluation and monitoring system results, which determine if a borrower should be put on a watch list;

•

loan transactions, such as a borrower’s remaining line of credit and whether it has any dishonored notes, overdue loans or setoffs with respect to collateral deposits which have not matured;

•

deposit transactions, such as any decrease in a borrower’s average deposit balance, requests for large volumes of promissory notes or checks, or the inability to pay immediately available funds owed when due;

•

foreign exchange transactions, such as unpaid amounts of a borrower’s purchased export bills that have exceeded the maturity date; and

•

other information, such as a borrower’s management and employees, business operations, production operations, financial affairs and accounting operations and bank transactions.

We also monitor borrowers’ credits through online credit reports that are provided by Korea Information Service and National Information & Credit Evaluation, Inc., which are Korean credit reporting agencies.

After gathering this information, for example at Woori Bank, the early warning system reviews such information to monitor any changes that could affect the credit rating of the borrower, approval conditions with respect to the loan or credit, underlying collateral or assigned credit limit of the borrower. Depending on the likelihood of the change, the system automatically sends a signal to the responsible credit officer. The officer then evaluates the information and formulates an action plan, which could result in an adjustment in the borrower’s credit rating or loan pricing, a

re-evaluation

of the loan or the taking of other preventative measures.

Credit Remediation

We believe that by centralizing the management of our

non-performing

credits within each subsidiary, we can implement uniform policies for

non-performing

credit resolution, pool institutional knowledge and create a

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more specialized (and therefore more efficient) work force. To the extent relevant to its business, each of our subsidiaries has one or more units that are responsible for managing

non-performing

loans. At Woori Bank, for example, the Credit Management and Collection Department and the Corporate Restoration Department generally oversee the process for resolving

non-performing

loans transferred to them by Woori Bank’s other business groups. When a loan becomes

non-performing,

the Credit Management and Collection Department and the Corporate Restoration Department will begin a due diligence review of the borrower’s financial condition, send a notice demanding payment or stating that the group will take legal action, and prepare for legal action. At the same time, Woori Bank initiates its

non-performing

loan management process. Once Woori Bank has confirmed the details of a

non-performing

loan, it makes efforts to recover amounts owed to it. Methods for resolving

non-performing

loans include commencing collection proceedings or legal actions and writing off such loans, transferring them to affiliates in charge of collection and authorizing those subsidiaries to recover what they can. We have also disposed of a number of

non-performing

credits to UAMCO and various structured companies. See “Item 4.B. Business Overview—Assets and Liabilities—Asset Quality of

Loans—Non-Performing

Loan Strategy.”

Market Risk Management

The principal market risks to which we are exposed are interest rate risk, foreign exchange risk and, to a lesser extent, equity risk and commodity risk. We divide market risk into risks arising from trading activities and risks relating to management of our assets and liabilities.

Our Board Risk Management Committee establishes risk capital allocation for our trading activities. Our Group Risk Management Department and our Subsidiary Risk Management Departments, in turn, manage more specific risk limits and loss limits and regularly report the results to our Board Risk Management Committee and the relevant Subsidiary Risk Management Committees. We use the standardized method and the internal model method to measure and analyze the market risk from our trading activities.

Market Risk Management for Trading Activities

We measure market risk from trading activities to monitor and control the risk of our business groups and teams that perform those activities. Our trading activities consist of:

•

trading activities for our own account to realize short-term trading profits in debt (primarily

Won-denominated),

equity and foreign exchange markets based on our forecasts of changes in market situation and customer demand; and

•

trading activities involving derivatives transactions, including interest rate and foreign exchange swaps, forwards, futures and options and, to a lesser extent, commodity derivatives, primarily to sell derivatives products to our customers and to hedge our own market risk.

Market risk arising from our trading activities can be subdivided into interest rate risk, foreign exchange risk and equity risk:

•

Interest rate risk is a significant risk to which our trading activities are exposed. This risk arises primarily from our debt securities (which are primarily held by Woori Bank). We set different risk limits for our interest rate risk for our trading and

non-trading

debt portfolios.

•

Foreign exchange risk arises from foreign currency-denominated assets and liabilities in both our trading and

non-trading

accounts and financial derivatives involving foreign currencies, which are not controlled separately on a trading and asset/liability management basis.

•

Equity risk arises from price and volatility fluctuations in equity securities and derivatives.

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The following table shows the volume and types of Woori Bank’s trading positions (including trust accounts) subject to market risk as of the dates indicated:


	As of December 31,
	2020		2021

	(in millions of Won)
Debt securities	￦	1,299,687	￦	1,492,053
Equity securities		53,086		23,270
Spot exchanges (1)		1,434,417		1,635,226
Derivatives (2)		14,141,105		10,440,258

Total	￦	16,928,295	￦	13,590,806

(1)	Represents the overall net open currency position in each currency, which is the greater of (i) the sum of the absolute values of all short positions and (ii) the sum of the absolute values of all long positions.

(2)	For over-the-counter derivatives, represents the absolute value of over-the-counter derivatives measured at fair value at the end of the relevant year. For exchange-traded derivatives, includes the amount of deposits and the collateral posted for such derivatives.

The Board Risk Management Committee monitors market risk both for the group and for each relevant subsidiary individually. See “—Overview.” The Board Risk Management Committee has established a maximum “risk appetite” for each relevant subsidiary, which is defined as the risk capital of such subsidiary divided by its available capital. “Risk capital” is a benchmark figure that determines the market risk limits, accumulated loss limits (for trading portfolios) and present value of a basis point (or PVBP) limits (for

non-trading

debt securities) for each subsidiary. Available capital generally consists of shareholder’s equity. Using this benchmark, as of December 31, 2021, we have established market risk limits with respect to Woori Bank as shown in the following table:


Trading Portfolio			Non-Trading Portfolio
VaR Limit	Accumulated Loss Limit		PVBP Limit
VaR Limit	Quarter	Annual	PVBP Limit
(in billions of Won)
￦ 19.2	￦ 117.4	￦ 234.8	￦ 8.7

Each of our relevant subsidiaries generally manages its market risk at the portfolio level. To control its exposure, each such subsidiary takes into consideration the market risk limits, accumulated loss limits and PVBP limits set by the Board Risk Management Committee in determining its internal allocation of risk among its various portfolios. Each relevant subsidiary also sets its own stop loss limits with respect to particular types of transactions. Woori Bank uses an integrated market risk management system to manage market risks for trading operations, which enables Woori Bank to generate consistent VaR numbers for all of its trading activities.

In addition, Woori Bank has implemented internal processes which include a number of key controls designed to ensure that fair value is measured appropriately, particularly where a fair value model is internally developed and used to price a significant product. See “Item 5.A. Operating Results—Critical Accounting Policies—Valuation of Financial Assets and Liabilities” and Notes

2-(9)-5),

3-(3)

and 11 of the notes to our consolidated financial statements. Woori Bank’s Risk Management Department reviews the existing pricing and valuation models on a regular basis, with a focus on their underlying modeling assumptions and restrictions, to assess the appropriateness of their continued use. In consultation with its Trading Department, Woori Bank’s Risk Management Department recommends potential valuation models to its Fair Value Evaluation Committee. Upon approval by Woori Bank’s Fair Value Evaluation Committee, the selected valuation models are reported to its Risk Management Committee.

Value at Risk analysis.

Woori Bank uses daily VaR to measure market risk. Daily VaR is a statistically estimated maximum amount of loss that can occur for a day. Woori Bank uses a 99% confidence level to measure its daily VaR, which means the actual amount of loss may exceed the VaR, on average, once out of 100 business days. Woori Bank uses the “historical simulation method” which takes into account the diversification effects among different risk factors.

Although VaR is a commonly used market risk management technique, it has some inadequacies. Since it is a statistical approach, VaR estimates possible losses over a certain period at a particular confidence level using

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past market movement data. Past market movements, however, are not necessarily a good indicator of future events. Another problem with VaR is that the time periods used for the model, generally one or 10 days, are assumed to be a sufficient holding period before liquidating the relevant underlying positions. If these holding periods are not sufficient, or too long, VaR may understate or overstate the potential loss. VaR is most appropriate as a risk measure for trading positions in liquid financial markets and will understate the risk associated with severe events, such as a period of extreme liquidity.

The following table shows Woori Bank’s daily VaR as of the dates indicated at a 99% confidence level for a

one-day

holding period, for interest rate risk, equity risk, foreign exchange risk and commodity risk relating to its trading activities.


	Interest Rate Risk		Foreign Exchange Risk		Equity Risk		Commodity Risk		Less: Diversification		VaR for Overall Trading Activities

	(in millions of Won)
As of December 31, 2020		6,815		11,160		2,283		0		11,087		9,171
As of December 31, 2021		4,177		5,904		2,972		0		6,072		6,981

In 2019, 2020 and 2021, the average, high, low and ending amounts of Woori Bank’s daily VaR relating to its trading activities (at a 99% confidence level for a

one-day

holding period) were as follows:


	As of December 31, 2019			For the year ended December 31, 2019									As of December 31, 2020			For the year ended December 31, 2020									As of December 31, 2021			For the year ended December 31, 2021
	As of December 31, 2019			Average			Maximum			Minimum			As of December 31, 2020			Average			Maximum			Minimum			As of December 31, 2021			Average			Maximum			Minimum

Interest risk	￦	5,052		￦	3,406		￦	5,725		￦	1,176		￦	6,815		￦	7,959		￦	15,065		￦	2,427		￦	4,177		￦	4,681		￦	14,017		￦	2,405
Foreign exchange risk		5,028			5,033			6,469			4,395			11,160			8,814			11,233			4,613			5,904			6,745			13,144			4,747
Equity risk		3,730			3,203			5,935			1,146			2,283			5,783			14,394			1,982			2,972			3,637			6,676			1,609
Commodity risk		0			1			32			0			0			0			0			0			0			0			0			0
Diversification		(6,233	)		(5,127	)		(9,229	)		(2,339	)		(11,087	)		(11,175	)		(18,796	)		(3,452	)		(6,072	)		(7,300	)		(20,007	)		(3,628	)

Total risk	￦	7,577		￦	6,516		￦	8,932		￦	4,378		￦	9,171		￦	11,381		￦	21,896		￦	5,570		￦	6,981		￦	7,763		￦	13,831		￦	5,134

The graph of Woori Bank’s daily 99% VaR relating to its trading activities in 2021 is as follows:

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Standardized Method.

The standardized method is used to measure the market risk of the positions for which the Financial Supervisory Service has not approved the use of the VaR method. The following table shows Woori Bank’s market risk capital charges measured using the standardized method as of the dates indicated:


	As of December 31,
	2020		2021

	(in millions of Won)
Risk categories
Interest risk	￦	7,775	￦	20,511
Equity risk		7,345		8,569
Foreign exchanges risk		37,026		50,899
Commodity risk		0		0

Total	￦	52,146	￦	79,979

Back-testing.

Woori Bank conducts back testing on a daily basis to validate the adequacy of its market risk management. Back testing compares both the actual and hypothetical profit and loss with VaR calculations and analyzes any results that fall outside a predetermined confidence interval of 99%. The number of times the actual changes in Woori Bank’s profit and loss exceeded the VaR amounts in 2019, 2020 and 2021 was 3.

Stress test.

In addition to VaR, Woori Bank performs stress testing to measure market risk. As VaR assumes normal market situations, Woori Bank assesses its market risk exposure to abnormal market fluctuations through stress testing. Stress testing is an important way of supporting VaR since VaR is a statistical expression of possible loss under a given confidence level and holding period. It does not cover potential loss if the market moves in a manner that is outside normal expectations. Stress testing projects the anticipated change in value of holding positions under certain scenarios assuming that no action is taken during a stress event to change the risk profile of a portfolio. The following table shows, for Woori Bank, the loss that would have occurred in its trading portfolio as of December 31, 2021 for assumed short-term extreme changes of a

+/-20%

change in the equity market and a

+/-60

basis point change from interest rates prevailing in the market on that date, under an abnormal stress environment.


	(in billions of Won, except percentages)
Equity Market Chart Market fluctuation amount		(20	)%		(10	)%		(5	)%		5	%		10	%		20	%

	￦	(167.9	)	￦	(45.4	)	￦	(14.6	)	￦	(1.4	)	￦	(15.5	)	￦	(47.7	)

(in billions of Won, except basis points)

Interest Rate Chart Basis point fluctuation amount

(60) basis

points

(40) basis

points

(20) basis

points

20 basis

points

40 basis

points

60 basis

points

￦

28.0

￦

19.3

￦

10.0

￦

(10.2

)

￦

(20.3

)

￦

(30.4

)

Interest Rate Risk

Interest rate risk from trading activities arises mainly from our trading of

Won-denominated

debt securities. Our general trading strategy is to benefit from short-term movements in the prices of debt securities arising from changes in interest rates. As Woori Bank’s trading accounts are

marked-to-market

daily, Woori Bank manages its interest rate risk related to trading accounts using market value-based tools such as VaR. See “—Asset and Liability Management—Interest Rate Risk.”

Foreign Exchange Risk

Foreign exchange risk arises because we have assets, liabilities and

off-balance

sheet items such as foreign exchange forwards and currency swaps that are denominated in

non-Won

currencies. The difference between each of our relevant subsidiaries’ foreign currency assets and liabilities is offset against forward foreign

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exchange positions to obtain its net foreign currency open position. Woori Bank determines its maximum foreign exchange exposure for both trading and asset and liability management purposes by establishing a limit for this net foreign currency open position. Woori Bank’s Risk Management Committee also establishes VaR limits for its foreign exchange business.

Assets and liabilities denominated in U.S. dollars account for the majority of our foreign currency assets and liabilities. Those denominated in Japanese yen and the euro account for most of the remainder, the majority of which have been swapped into U.S. dollars.

Each of our relevant subsidiaries monitors changes in, and matches of, foreign-currency assets and liabilities in order to reduce exposure to currency fluctuations. Most of our foreign exchange risk arises in connection with the operations of Woori Bank. Our relevant subsidiaries also manage risks relating to exchange rate fluctuations through foreign exchange dealing, including by their overseas branches. However, we conduct foreign exchange dealings primarily on behalf of our customers. Our counterparties are generally domestic and foreign financial institutions and banks. The following table sets forth information concerning Woori Bank’s limits on proprietary foreign exchange dealings as of December 31, 2021:


	Won/U.S. Dollar Dealing				Dealings in other currencies
	Headquarters				Headquarters				Overseas Branches
	Total		Individual		Total		Individual		Total		Individual

	(in millions of US$)
Open position
Daily maximum limit	US$	1,000	US$	200	US$	200	US$	50	US$	60	US$	15
Daily closing limit		200		50		100		20		30		6
Stop loss:
Daily		2		0.5		0.8		0.15		0.24		0.045
Monthly		3		0.8		2		0.5		0.6		0.15

The following table shows the

non-consolidated

net open positions of Woori Bank as of the dates indicated. Positive amounts represent long exposures and negative amounts represent short exposures.


	As of December 31,
	2020			2021

	(in millions of US$)
Currency
U.S. dollar	US$	(307.4	)	US$	(57.0	)
Japanese yen		(80.1	)		(60.7	)
Euro		(642.3	)		(623.2	)
Others		303.7			254.0

Total	US$	(726.1	)	US$	(487.0	)

Equity Risk

Equity price risk and equity volatility risk arise primarily from Woori Bank’s equity portfolio, which consists mainly of futures contracts and options and

Won-denominated

equity securities, as a result our imposition of strict VaR limits, accumulated loss limits and stress test limits. Equity risk arises in the context of trading activities for our own accounts to realize short-term trading profits with respect to equity securities and trading activities involving certain derivatives transactions.

Derivatives-Related Market Risk

The Foreign Exchange Transaction Regulations of Korea provide that a foreign exchange bank (such as Woori Bank) may generally enter into derivatives transactions without restriction so long as those transactions are not linked with credit risks of a party to the transaction or any third party. If they are, the bank must report the transaction to the Bank of Korea.

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Most of the derivatives products that our subsidiaries trade are on behalf of their customers or to hedge their own positions. Our derivatives activities include interest rate and cross-currency swaps, foreign exchange forwards, stock index and interest rate futures, forward rate agreements and currency and

over-the-counter

equity options.

Asset and Liability Management

Our principal market risk with respect to managing our assets and liabilities is interest rate risk. Interest rate risk arises due to mismatches in the maturities or

re-pricing

periods of rate-sensitive assets and liabilities, such as loans and deposits. Any imbalance of the maturity of our interest rate-sensitive assets and liabilities and the gap resulting from that imbalance may cause net interest income to be affected by changes in the prevailing level of interest rates. Our principal asset and liability management objectives are to generate stable net interest revenues and protect our asset value against interest rate fluctuations.

Woori Bank uses a standardized asset and liability management system for its

Won-

and foreign currency-denominated assets and liabilities. In addition, Woori Bank’s system also allows it to manage the assets and liabilities in its trust accounts. Its system uses the historical scenario method to determine interest rate ΔEVE (change in economic value of equity), supplemented by modules to calculate and monitor our liquidity coverage ratio and net stable funding ratio.

Interest Rate Risk

We manage interest rate risk based on rational interest rate forecasts, using gap analysis to measure the difference between interest-sensitive assets and interest-sensitive liabilities, and using simulations to calculate the effect of changing interest rates on income. We principally manage this risk by managing maturity and duration gaps between our interest-earning assets and interest-bearing liabilities.

We measure interest rate risk for Won and foreign currency assets and liabilities, including derivatives and principal guaranteed trust accounts. Most of our interest-earning assets and interest-bearing liabilities are denominated in Won and our foreign currency-denominated assets and liabilities are mostly denominated in U.S. dollars. We believe, however, that our interest rate sensitivity is limited with respect to our

Won-denominated

assets. Deposits in Won generally bear fixed rates of interest for fixed time periods (other than deposits payable on demand which constituted approximately 54.2% of our total deposits in Won as of December 31, 2021). We generally adjust the interest rates on these deposits when they are rolled over. In addition, as of December 31, 2021, 97.7% of those deposits had current maturities of one year or less. As of December 31, 2021, approximately 70.4% of our

Won-denominated

loans bore floating rates of interest, and 57.3% of those loans had current maturities of one year or less.

Interest rate gap analysis measures expected changes in net interest revenues by calculating the difference in the amounts of interest-earning assets and interest-bearing liabilities at each maturity and interest resetting date. Woori Bank performs interest rate gap analysis for Won and foreign currency-denominated assets on a monthly basis.

Interest Rate Gap Analysis.

For interest rate gap analysis we use or assume the following maturities for different assets and liabilities:

•

With respect to maturities of assets, for prime rate-linked loans, we apply the actual maturities of each loan; furthermore, we assume the reserves with the Bank of Korea and loans and securities classified as substandard or below to have maximum remaining maturities.

•

With respect to maturities of liabilities, for demand deposits with no fixed maturities, a portion of the demand deposits are recognized to have maturities of less than three months as calculated in accordance with Financial Services Commission guidelines.

Our Board Risk Management Committee’s interest rate risk limit for Woori Bank generally requires that its earnings at risk for

Won-denominated

accounts be within 10% of its estimated net interest income for a

one-year

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period. We calculate ΔEVE through our standardized asset and liability management system, which uses the historical scenario method to simulate the current portfolio’s net asset value for a

one-year

holding period at a 99.9% confidence level.

The following tables show, for Woori Bank, on a

non-consolidated

basis pursuant to the guidelines of the Financial Supervisory Service, the interest rate gap for

Won-denominated

accounts and foreign currency-denominated accounts as of December 31, 2021:


	As of December 31, 2021
	0-3 Months			3-6 Months			6-12 Months			1-3 Years			Over 3 Years			Total

	(in billions of Won, except percentages)
Won-denominated accounts:
Interest rate-sensitive assets
Free interest rate	￦	18,037		￦	16,757		￦	10,672		￦	19,697		￦	11,619		￦	76,782
Market interest rate		147,301			38,531			17,460			28,657			17,690			249,639
Interest rate pegged to customer deposit		76			92			124			43			15			350

Total	￦	165,414		￦	55,380		￦	28,256		￦	48,397		￦	29,324		￦	326,771

Interest rate-sensitive liabilities
Free interest rate	￦	36,314		￦	5,556		￦	9,961		￦	32,138		￦	33,128		￦	117,097
Market interest rate		88,612			28,943			44,781			13,004			2,916			178,256

Total	￦	124,926		￦	34,499		￦	54,742		￦	45,142		￦	36,044		￦	295,353

Sensitivity gap		40,488			20,881			(26,486	)		3,255			(6,720	)		31,418
Cumulative gap		40,488			61,369			34,883			38,138			31,418			31,418
% of total assets (1)		11.47	%		17.39	%		9.89	%		10.81	%		8.90	%		8.90	%
Total assets in Won																￦	352,862

	As of December 31, 2021
	0-3 Months			3-6 Months			6-12 Months			1-3 Years			Over 3 Years			Total

	(in millions of US$, except percentages)
Foreign currency-denominated accounts:
Interest rate-sensitive assets
Free interest rate	US$	0		US$	0		US$	0		US$	0		US$	0		US$	0
Market interest rate		18,350			2,470			1,718			560			561			23,659
Interest rate pegged to customer deposit		0			0			0			0			0			0

Total	US$	18,350		US$	2,470		US$	1,718		US$	560		US$	561		US$	23,659

Interest rate-sensitive liabilities
Free interest rate	US$	0		US$	0		US$	0		US$	0		US$	19		US$	19
Market interest rate		7,598			2,917			2,678			2,944			897			17,034

Total	US$	7,598		US$	2,917		US$	2,678		US$	2,944		US$	916		US$	17,053

Sensitivity gap		10,752			(447	)		(960	)		(2,384	)		(355	)		6,606
Cumulative gap		10,752			10,305			9,345			6,961			6,606			6,606
% of total assets (1)		28.65	%		27.45	%		24.90	%		18.54	%		17.60	%		17.60	%
Total assets in US$																US$	37,533

(1)	Represents the cumulative gap as a percentage of total assets.

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Duration Gap Analysis.

Woori Bank also performs a duration gap analysis to measure and manage its interest rate risk. Duration gap analysis is a more long-term risk indicator than interest rate gap analysis, as interest rate gap analysis focuses only on accounting income and not on the market value of the assets and liabilities. We emphasize duration gap analysis because, in the long run, our principal concern with respect to interest rate fluctuations is the net asset value rather than net interest revenue changes.

For duration gap analysis, we use or assume the same maturities for different assets and liabilities that we use or assume for our interest rate gap analysis.

The following table shows, for Woori Bank, with respect to

Won-denominated

assets and liabilities, duration gaps and net asset value changes when the interest rate increases by one percentage point as of the specified dates:


Date	Interest-bearing asset duration		Interest-bearing liability duration		Total asset/liability duration gap			Net asset value change
	(in years)		(in years)		(in years)			(in billions of Won)
June 30, 2020		1.02		0.92		0.18			507
December 31, 2020		0.94		0.93		0.07			213
June 30, 2021		0.95		0.97		(0.01	)		49
December 31, 2021		0.91		0.95		0.00			24

We set interest rate risk limits using the historical simulation method, which uses actual historical price, volatility and yield changes in comparison with the current position to generate hypothetical portfolios and calculate a distribution of position and portfolio market value changes. The following table shows Woori Bank’s interest rate ΔEVE with respect to its

Won-denominated

assets and liabilities for each of the quarters since the fourth quarter of 2020:


	Fourth Quarter 2020	First Quarter 2021	Second Quarter 2021	Third Quarter 2021	Fourth Quarter 2021

	(in billions of Won)
Interest rate Δ EVE	￦136.5	￦208.9	￦67.1	￦110.7	￦200.6

The Board Risk Management Committee reviews gap analysis reports, duration gap analysis reports and interest rate limit compliance reports prepared by the Risk Management Department on a quarterly basis.

Foreign Exchange Risk

We manage foreign exchange rate risk arising in connection with the management of our assets and liabilities together with such risks arising from our trading operations. See “—Market Risk Management for Trading Activities—Foreign Exchange Risk” above.

Liquidity Risk Management

Liquidity risk is the risk of insolvency or loss due to disparity between inflow and outflow of funds such as maturity mismatch, including having to obtain funds at a high price or to dispose of securities at an unfavorable price due to lack of available funds. We manage our liquidity in order to meet our financial liabilities from withdrawals of deposits, redemption of matured debentures and repayments at maturity of borrowed funds. We also require sufficient liquidity to fund loans and extend other forms of credits, as well as to make investments in securities. Each of the Subsidiary Risk Management Committees establishes liquidity policies for the respective subsidiary and monitors liquidity on an

on-going

basis. Our relevant subsidiaries make constant adjustments to take into account variables affecting their liquidity levels. The Subsidiary Risk Management Departments review the uses and sources of funds on a daily basis, taking into consideration the various goals of their respective business groups.

Our liquidity management goal is to be able, even under adverse conditions, to meet all our liability repayments on time and fund all investment opportunities even under adverse conditions.

We maintain diverse sources of liquidity to facilitate flexibility in meeting our funding requirements. We fund our operations principally by accepting deposits from retail and corporate depositors, accessing the call loan

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market (a short-term market for loans with maturities of less than one month), issuing debentures and borrowing from the Bank of Korea. We use the majority of funds raised by us to extend loans or purchase securities. Generally, deposits are of shorter average maturity than loans or investments.

In managing liquidity risk, each of our relevant subsidiaries currently determines gap limits, implements those limits and monitors maturity gaps using its asset and liability management system. We also establish gap limits for liquidity management purposes. Each relevant subsidiary has set a total limit in order to manage liquidity risk. For example, Woori Bank’s three-month accumulated gap limits for banking and trust accounts are between (10)% and 10%. In the foreign currency account, the limit for a

one-week

gap has been set as (3)% or higher and as (10)% or higher for a

one-month

gap.

Liquidity is maintained by holding sufficient quantities of assets that can be liquidated to meet actual or potential demands for funds from depositors and others. Liquidity is also managed by ensuring that the excess of maturing liabilities over maturing assets in any period is kept to manageable levels relative to the amount of funds we believe we can raise when required. We seek to minimize our liquidity costs by managing our liquidity position on a daily basis and by limiting the amount of cash at any time that is not invested in interest-earning assets or securities.

The Financial Services Commission uses the liquidity coverage ratio, defined as the ratio of highly liquid assets to total net cash outflows over a

30-day

period, as the principal liquidity risk management measure and currently requires Korean banks, including Woori Bank, to:

•

COVID-19

pandemic);

•

submit monthly reports with respect to the maintenance of these ratios.

In April 2020, in order to encourage financial institutions to provide financial support to companies adversely affected by

COVID-19,

As of December 31, 2021, Woori Bank’s

30-day

liquidity coverage ratio was 89.8%, above the Financial Services Commission’s standard of 85%.

The following table shows the liquidity status, on a cumulative basis, and limits for foreign currency accounts of Woori Bank on a

non-consolidated

basis as of December 31, 2021 in accordance with the Financial Services Commission’s regulations:


	7 days or less			8 days – 1 month			3 months or less

	(in millions of US$, except percentages)
Foreign currency accounts:
Foreign currency assets	US$	20,544		US$	13,417		US$	16,024
Foreign currency liabilities		12,470			13,965			16,161
Maturity gap		8,074			(548	)		(137	)
Cumulative gap (A)		8,074			7,526			7,389
Total assets (B)		155,633			155,633			155,633
Liquidity gap ratio (A/B)		5.19	%		4.84	%		117.35	% (1)
Limits		(3	)%		(10	)%		85	%

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(1)	Liquidity ratio, calculated as foreign currency assets as a percentage of foreign currency liabilities.

The Subsidiary Risk Management Committees receive reports from the relevant subsidiaries regarding their respective liquidity ratios and liquidity gap ratios on a monthly basis. Based on those reports, each Subsidiary Risk Management Department reports these results to the Board Risk Management Committee on a quarterly basis.

Operational Risk Management

Operational risk is difficult to quantify and subject to different definitions. We define our operational risk as the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. This definition includes legal risk, but excludes strategic and reputational risk.

To monitor and control operational risks, we maintain a system of comprehensive policies and have put in place a control framework designed to provide a stable and well-managed operational environment throughout our organization. Several bodies are responsible for managing our operational risk, including our Audit and Legal and Compliance Departments and the Subsidiary Risk Management Committees and their respective Subsidiary Risk Management Departments. For example, Woori Bank has implemented a multi-step operational risk management process consisting of engaging in risk self-assessment, establishing key risk indicators, operating an early warning system, managing loss data, measuring operational risk capital, monitoring and reporting risks, promoting a strong risk management culture and developing action plans. Woori Bank has also established policies to change operational risk profiling, select permitted levels of risk, develop action plans and manage results. We are also implementing a group-wide operational risk management system to comply with the operational risk requirements of the final Basel III standards, which will become effective in 2023.

We consider legal risk as a part of our operational risk. The uncertainty of the enforceability of the obligations of our customers and counterparties, including foreclosure on collateral, creates legal risk. Legal risk is higher in new areas of business where the law is often untested in the courts although such risk can also increase in our traditional business to the extent that the legal and regulatory landscape in Korea is changing and many new laws and regulations governing the banking industry remain untested. Our relevant subsidiaries’ legal departments seek to minimize legal risk by using stringent legal documentation, employing procedures designed to ensure that transactions are properly authorized and consulting legal advisers. Each of our relevant subsidiaries’ internal auditors also review loan documentation to ensure that these are correctly drawn up to withstand scrutiny in court should such scrutiny occur.

In connection with our disaster recovery capabilities, Woori Bank has measures in place to recover data and resume core operations within three hours of any business interruption.

The majority of our information technology systems are operated by our subsidiary, Woori FIS. We currently have a “mirror site” in operation with respect to Woori Bank which backs up transaction information on a real-time basis. We also have a

“back-up

site” in operation with respect to Woori Bank, which backs up transaction information on a daily basis. See “Item 3.D. Risk Factors—Other risks relating to our business—Our operations may be subject to increasing and continually evolving

cybersecurity and other technological risks.”

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Item 12.

DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Fees and Charges

Under the terms of the deposit agreement, as a holder of our ADSs, you are required to pay the following service fees to the depositary:


Services		Fees
Issuance of ADSs		Up to $0.05 per ADS issued

Cancellation of ADSs		Up to $0.05 per ADS cancelled

Distribution of cash dividends or other cash distributions		Up to $0.05 per ADS held

Distribution of ADSs pursuant to (i) stock dividends or other free stock distributions, or (ii) exercise of the rights to purchase additional ADSs		Up to $0.05 per ADS held

Distribution of securities other than ADSs or rights to purchase additional ADSs		Up to $0.05 per ADS held

ADS services		Up to $0.05 per ADS held on the applicable record date established by the depositary

As a holder of our ADSs, you are also responsible for paying certain fees and expenses such as:

•

taxes (including applicable interest and penalties) and other governmental charges;

•

fees for the transfer and registration of shares charged by the registrar and transfer agent for the shares in Korea (

i.e.

, upon deposit and withdrawal of shares)

•

cable, telex and facsimile transmission and delivery expenses;

•

expenses and charges incurred in the conversion of foreign currency;

•

fees and expenses incurred in connection with compliance with exchange control regulations and other applicable regulatory requirements; and

•

fees and expenses incurred in connection with the delivery or servicing of shares on deposit.

Depositary fees payable upon the issuance and cancellation of ADSs are typically paid to the depositary by the brokers (on behalf of their clients) receiving the newly issued ADSs from the depositary and by the brokers (on behalf of their clients) delivering the ADSs to the depositary for cancellation. The brokers in turn charge these fees to their clients. Depositary fees payable in connection with distributions of cash or securities to ADS holders and the depositary services fee are charged by the depositary to the holders of record of ADSs as of the applicable ADS record date.

The depositary fees payable for cash distributions are generally deducted from the cash being distributed. In the case of distributions other than cash (i.e., stock dividend, rights), the depositary charges the applicable fee to the ADS record date holders concurrent with the distribution. In the case of ADSs registered in the name of the investor (whether certificated or uncertificated in direct registration), the depositary sends invoices to the applicable record date ADS holders. In the case of ADSs held in brokerage and custodian accounts (via the Depository Trust Company, or DTC), the depositary generally collects its fees through the systems provided by DTC (whose nominee is the registered holder of the ADSs held in DTC) from the brokers and custodians holding ADSs in their DTC accounts. The brokers and custodians who hold their clients’ ADSs in DTC accounts in turn charge their clients’ accounts the amount of the fees paid to the depositary.

In the event of refusal to pay the depositary fees, the depositary may, under the terms of the deposit agreement, refuse the requested service until payment is received or may set off the amount of the depositary fees from any distribution to be made to such holder of ADSs.

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Note that the fees and charges you may be required to pay may vary over time and may be changed by us and by the depositary. You will receive prior notice of such changes.

Fees and Payments from the Depositary to Us

In 2021, pursuant to an agreement with us, the depositary waived, or made payments to third parties of, approximately $23,003 (net of applicable taxes) in the aggregate in connection with proxy process expenses (including printing, postage and distribution expenses), contributions towards investor relations efforts (including investor relations agency fees) and other standard

out-of-pocket

maintenance costs relating to our ADS facility that were payable by us.

In addition, as part of its service to us, the depositary waives its fees for the standard costs and operating expenses associated with the administration of the ADS facility.

Item 13.

DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

Not Applicable

Item 14.

MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

Not Applicable

Item 15.

CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We have evaluated, with the participation of our chief executive officer and principal financial officer, the effectiveness of our disclosure controls and procedures, as such term is defined in Rules

13a-15(e)

and

15d-15(e)

under the Exchange Act, as of December 31, 2021. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon our evaluation, our chief executive officer and principal financial officer concluded that our disclosure controls and procedures as of December 31, 2021 were effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the applicable rules and forms, and that it is accumulated and communicated to our management, including our chief executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Management’s Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control system was designed to provide reasonable assurance to our management and board of directors regarding the reliability of financial reporting and the preparation and fair presentation of published financial statements in accordance with IFRS as issued by the IASB. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation and may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management maintains a comprehensive system of controls intended to ensure that transactions are executed in accordance with management’s authorization, assets are safeguarded, and financial records are reliable. Our management also takes steps to ensure that information and communication flows are effective and to monitor performance, including performance of internal control procedures.

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Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2021 based on the criteria established in the Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission in May 2013.

Based on this assessment, management believes that, as of December 31, 2021, our internal control over financial reporting is effective.

The effectiveness of our internal control over financial reporting as of December 31, 2021 has been audited by Samil PricewaterhouseCoopers, an independent registered public accounting firm, as stated in its report included herein which expressed an unqualified opinion on the effectiveness of our internal control over financial reporting as of December 31, 2021.

Changes in Internal Control Over Financial Reporting

There has been no change in our internal control over financial reporting during 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 16.

RESERVED

Item 16A.

AUDIT COMMITTEE FINANCIAL EXPERT

Our board of directors has determined that each of

Dong-Woo

Chang, Chan-Hyoung Chung and

Sung-Tae

Ro, our outside directors and members of our Audit Committee, qualifies as an “audit committee financial expert” and is independent within the meaning of this Item 16A.

Item 16B.

CODE OF ETHICS

We have adopted a code of ethics, as defined in Item 16B of Form

20-F

under the Exchange Act. Our code of ethics applies to our chief executive officer, principal financial officer and persons performing similar functions as well as to our outside directors and other officers and employees. We also recommend compliance with the code of ethics to our business counterparts. Our code of ethics is available on our website at

https://www.woorifg.com

. If we amend or delete any provision of this code of ethics, we will disclose such amendment on our website at the same address.

Item 16C.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following table sets forth the fees billed to us by our independent registered public accountants, Samil PricewaterhouseCoopers, and other firms in the PricewaterhouseCoopers network (which we refer to collectively as PwC), for the fiscal years ended December 31, 2020 and 2021:


	Year ended December 31,
	2020		2021

	(in millions of Won)
Audit fees	￦	7,445	￦	8,574
Audit-related fees		50		167
Tax fees		237		437
All other fees		1,701		180

Total fees	￦	9,433	￦	9,358

Audit fees in the above table are the aggregate fees billed or expected to be billed by PwC, in connection with the audit of our annual financial statements, the review of our interim financial statements, the review of filings with the U.S. Securities and Exchange Commission and audit of the effectiveness of our internal control over financial reporting.

Audit-related fees in the above table are the aggregate fees billed or expected to be billed by PwC for agreed-upon procedures related to the issuance of comfort letters in connection with the issuance of debt securities.

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Tax fees in the above table are the aggregate fees billed or expected to be billed by PwC for assistance in the preparation of certain tax returns and other tax advice.

All other fees in the above table are the aggregate fees billed in each of the fiscal years by PwC for all other services which are not part of the three categories above.

Audit Committee

Pre-Approval

Policies and Procedures

Our Audit Committee

pre-approves

all audit services to be provided by our independent auditors. Our Audit Committee’s policy regarding the

pre-approval

non-audit

services to be provided to us by our independent auditors is that all such services shall be

pre-approved

by our Audit Committee.

Non-audit

services that are prohibited to be provided to us by our independent auditors under the rules of the SEC and applicable law may not be

pre-approved.

In addition, prior to the granting of any

pre-approval,

our Audit Committee must be satisfied that the performance of the services in question will not compromise the independence of our independent auditors. Our Audit Committee also

pre-approves

the selection or replacement of the independent auditors of our subsidiaries.

Our Audit Committee did not approve any

non-audit

services under the

de minimis

exception of

Rule 2-01(c)(7)(i)(C)

of Regulation

S-X

as promulgated by the U.S. Securities and Exchange Commission.

Item 16D.

EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

Not Applicable

Item 16E.

PURCHASE OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

Except as described below, neither we nor any “affiliated purchaser,” as defined in Rule

10b-18(a)(3)

of the Exchange Act, purchased any of our equity securities during the period covered by this annual report.

In August 2021, certain shareholders of Woori Financial Capital Co., Ltd. exercised their appraisal rights in connection with the “comprehensive stock exchange” under Korean law, pursuant to which Woori Financial Capital Co., Ltd. became our wholly-owned subsidiary. See “Item 4.A. History and Development of the Comp—Establishment of Woori Financial Group—Reorganization and Expansion of Woori Financial Group.” Woori Financial Capital Co., Ltd. purchased 323,322 of its shares for ￦3.7 billion and subsequently exchanged such shares for 341,667 shares of our common stock, based on an exchange ratio of 1:1.0567393.

Item 16F.

CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT

Not Applicable

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Item 16G.

CORPORATE GOVERNANCE

Differences in Corporate Governance Practices

Pursuant to the rules of the New York Stock Exchange applicable to foreign private issuers like us that are listed on the New York Stock Exchange, we are required to disclose significant differences between the New York Stock Exchange’s corporate governance standards and those that we follow under Korean law. The following is a summary of such significant differences.


NYSE Corporate Governance Standards		Woori Financial Group

Director Independence
Listed companies must have a majority of independent directors.		The majority of our board of directors is independent (as defined in accordance with the New York Stock Exchange’s standards), as seven of our nine directors are outside directors.

Executive Session
Non-management directors must meet in regularly scheduled executive sessions without management. Independent directors should meet alone in an executive session at least once a year.		Our outside directors hold quarterly meetings, which coincide with the quarterly Audit Committee meetings, to discuss matters relating to management issues. The Audit Committee consists of three outside directors.

Nomination/Corporate Governance Committee
A nomination/corporate governance committee of independent directors is required. The committee must have a charter that addresses the purpose, responsibilities (including development of corporate governance guidelines) and annual performance evaluation of the committee.		We have established a Committee for Recommending Executive Officer Candidates, which consists of seven outside directors.

Compensation Committee
A compensation committee of independent directors is required. The committee must have a charter that addresses the purpose, responsibilities and annual performance evaluation of the committee. The charter must be made available on the company’s website. In addition, in accordance with the SEC rules adopted pursuant to Section 952 of the Dodd-Frank Act, NYSE listing standards were amended to expand the factors relevant in determining whether a committee member has a relationship to the company that will materially affect that member’s duties to the compensation committee. Additionally, the committee may obtain or retain the advice of a compensation adviser only after taking into consideration all factors relevant to determining that adviser’s independence from management.		We have established a Compensation Committee consisting of five outside directors.

Audit Committee
Listed companies must have an audit committee that satisfies the independence and other requirements of Rule 10A-3 under the Exchange Act. All members must be independent. The committee must have a charter addressing the committee’s purpose, an annual performance evaluation of the committee, and the duties and responsibilities of the committee. The charter must be made available on the company’s website.		We have established an Audit Committee consisting of three outside directors, all of whom are independent. Accordingly, we are in compliance with Rule 10A-3 under the Exchange Act.

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Audit Committee Additional Requirements
Listed companies must have an audit committee that is composed of at least three directors.		Our Audit Committee has three members, as described above.

Shareholder Approval of Equity Compensation Plan
Listed companies must allow its shareholders to exercise their voting rights with respect to any material revision to the company’s equity compensation plan.		We currently have one equity compensation plan, providing for performance-linked stock-based compensation to officers and directors.

		All material matters related to the granting of stock options are provided in our articles of incorporation, and any amendments to the articles of incorporation are subject to shareholders’ approval.

Corporate Governance Guidelines
Listed companies must adopt and disclose corporate governance guidelines.		We have adopted corporate governance standards, the Korean-language version of which is available on our website.

Code of Business Conduct and Ethics
Listed companies must adopt and disclose a code of business conduct and ethics for directors, officers and employees, and promptly disclose any waivers of the code for directors or executive officers.		We have adopted a Code of Ethics and Business Conduct for Directors, Officers and Employees, the Korean-language version of which is available on our website.

Item 16H.

MINE SAFETY DISCLOSURE

Not Applicable

Item 16I.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not Applicable

Item 17.

FINANCIAL STATEMENTS

Not Applicable

Item 18.

FINANCIAL STATEMENTS

Reference is made to Item 19(a) for a list of all financial statements filed as part of this annual report.

Item 19.

EXHIBITS

(a)

List of financial statements:


	Page
Audited consolidated financial statements of Woori Financial Group Inc. and subsidiaries prepared in accordance with IFRS as issued by the IASB
Report of Independent Registered Public Accounting Firm		F-1
Report of Independent Registered Public Accounting Firm		F-4
Consolidated Statements of Financial Position as of December 31, 2020 and 2021		F-5
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2019, 2020 and 2021		F-6
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2019, 2020 and 2021		F-8
Consolidated Statements of Cash Flows for the Years Ended December 31, 2019, 2020 and 2021		F-11
Notes to Consolidated Financial Statements		F-14

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(b)

Exhibits

Pursuant to the rules and regulations of the U.S. Securities and Exchange Commission, we have filed certain agreements as exhibits to this Annual Report on Form

20-F.

These agreements may contain representations and warranties made by the parties. These representations and warranties have been made solely for the benefit of the other party or parties to such agreements and (i) may be intended not as statements of fact, but rather as a way of allocating the risk to one of the parties to such agreements if those statements turn out to be inaccurate, (ii) may have been qualified by disclosures that were made to such other party or parties and that either have been reflected in the company’s filings or are not required to be disclosed in those filings, (iii) may apply materiality standards different from what may be viewed as material to investors and (iv) were made only as of the date of such agreements or such other date(s) as may be specified in such agreements and are subject to more recent developments. Accordingly, these representations and warranties may not describe our actual state of affairs at the date of this annual report.


Number		Description
1.1		Articles of Incorporation of Woori Financial Group (translation in English).

2.1*		Form of Stock Certificate of Woori Financial Group’s common stock, par value ￦5,000 per share (translation in English).

2.2**		Form of the Second Amended and Restated Deposit Agreement by and among Woori Financial Group, Citibank, N.A., as depositary, and all holders and beneficial owners from time to time of American depositary shares issued thereunder, including the form of American depositary receipt.

2.3***		Description of Woori Financial Group’s Capital Stock.

2.4****		Description of Woori Financial Group’s American Depositary Shares.

8.1*****		List of subsidiaries of Woori Financial Group.

11.1******		Code of Ethics (translation in English).

12.1		Section 302 certifications.

13.1		Section 906 certifications.

101.INS		Inline XBRL Instance Document

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (Embedded within Inline XBRL Instance Document).

*	Incorporated by reference to exhibit 2.1 to the Annual Report on Form 20-F (File No. 001-31811), filed on April 30, 2019.

**	Incorporated by reference to exhibit (a)(1) to the Registration Statement on Form F-6 (File No. 333-229197), filed on January 11, 2019.

***	See Item 10.B. Memorandum and Articles of Association .

****	Incorporated by reference to exhibit 2.4 to the Annual Report on Form 20-F (File No. 001-31811), filed on April 29, 2020.

*****

See Note 1 of the notes to the consolidated financial statements of the registrant included in this Annual Report.

******

Incorporated by reference to exhibit 11.1 to the Annual Report on Form 20-F (File No. 001-31811), filed on April 30, 2021.

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SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form

20-F

and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

Woori Financial Group Inc.

(Registrant)

/s/

Tae-Seung

Son

(Signature)

Tae-Seung

Son

Chief Executive Officer

(Name/Title)

Date: May 16, 2022

Table of Contents

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of

Woori Financial Group Inc.:

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated statements of financial position of Woori Financial Group Inc. and its subsidiaries (the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for each of the two years in the period ended December 31, 2021, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in

Internal Control—Integrated Framework

(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2021 in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in

Internal Control—Integrated Framework

(2013) issued by the COSO.

Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the Management’s Annual Report on Internal Control over Financial Reporting appearing under Item 15. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

F-1

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Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Allowances for Credit Losses

As described in Note 4 and 10 to the consolidated financial statements, as of 31 December 2021, the allowances for expected credit losses were ￦1,886,710 million on total loans at amortized cost of ￦338,686,220 million. The Group recognizes allowances for expected credit losses on loans measured at amortized cost under both individual and collective assessments. For collectively assessed loans, allowances are determined based on assumptions and inputs in the models used for estimating expected credit loss. Significant judgment is applied in management’s estimation including qualitative factors affecting credit ratings of corporate borrowers, complexities involved in the criteria for determining forward-looking models, qualitative adjustments to incorporate forward-looking macroeconomic information, and the effect of

government-led

loan deferment. Allowances for expected credit losses for individually assessed loans are determined based on the estimation of the expected future cash flows.

The principal considerations for our determination that performing procedures relating to the allowances for expected credit losses is a critical audit matter are (i) there was significant judgment by management in determining the allowances, which in turn led to a high degree of auditor subjectivity in performing procedures related to the expected credit loss models, key assumptions, such as credit ratings of corporate borrowers, determination of the forward-looking models, qualitative adjustments and the expected future cash flow estimation related to individually assessed exposures, (ii) there was significant judgment and effort in evaluating audit evidence related to these models, judgments and assumptions used to determine the allowances and (iii) the audit effort involved the use of professionals with specialized skills and knowledge.

F-2

Table of Contents

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the estimation process, which included controls over the data, models and assumptions used in determining the allowances for expected credit losses. These procedures also included, among others, testing management’s process in estimating the allowances for expected credit losses, including (i) evaluating the reasonableness of credit ratings of certain corporate borrowers, (ii) evaluating the reasonableness of management’s development and selection of forward-looking models and adjustments on forward-looking information, (iii) evaluating the reasonableness of significant assumptions used in the adjustments due to the

government-led

loan deferment and (iv) evaluating the reasonableness of expected future cash flows related to individually assessed exposures. The procedures also included the involvement of professionals with specialized skills and knowledge to assist in evaluating the reasonableness of forward-looking models and adjustments on the forward looking information and the adjustments due to the

government-led

loan deferment.

/s/ Samil PricewaterhouseCoopers

Seoul, Korea

May 16, 2022

We have served as the Company’s auditor since 2020.

F-3

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of Woori Financial Group Inc.:

Opinion on the Financial Statements

We have audited the consolidated statement of comprehensive income, changes in equity, and cash flows of Woori Financial Group Inc. and subsidiaries (the “Group”) for the year ended December 31, 2019 (all expressed in Korean Won), and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the results of the Group’s operations and its cash flows for the year ended December 31, 2019, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Basis for Opinion

These financial statements are the responsibility of the Group’s management. Our responsibility is to express an opinion on the Group’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Group in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ DELOITTE ANJIN LLC

Seoul, Korea

April 29, 2020

We have served as the Group’s auditor from 2002. In 2020 we became the predecessor auditor.

F-4

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WOORI FINANCIAL GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

AS OF DECEMBER 31, 2020 AND 2021


	Korean Won						U.S. Dollars
	December 31, 2020			December 31, 2021			December 31, 2021

	(in millions)						(in thousands)
ASSETS


Cash and cash equivalents (Note 6)		9,990,983			7,565,818			6,365,319
Financial assets at fair value through profit or loss (“FVTPL”) (Notes 4, 7, 11, 12, 18 and 26)		14,762,941			13,497,234			11,355,573
Financial assets at fair value through other comprehensive income (“FVTOCI”) (Notes 4, 8, 11, 12, and 18)		30,028,929			39,119,789			32,912,493
Securities at amortized cost (Notes 4, 9, 11, 12 and 18)		17,020,839			17,086,274			14,375,125
Loans and other financial assets at amortized cost (Notes 4, 10, 11, 12, 18 and 41)		320,106,078			361,932,872			304,503,510
Investments in joint ventures and associates (Note 13)		993,291			1,335,167			1,123,311
Investment properties (Notes 14 and 18)		387,464			389,495			327,692
Premises and equipment (Notes 15 and 18)		3,287,198			3,174,720			2,670,974
Intangible assets (Note 16)		792,077			785,386			660,766
Assets held for sale (Note 17)		60,002			26,327			22,150
Net defined benefit asset (Note 24)		5,658			21,346			17,959
Current tax assets (Note 38)		75,655			22,598			19,012
Deferred tax assets (Note 38)		46,088			31,131			26,191
Derivative assets (Designated for hedging) (Notes 4,11,12 and 26)		174,820			106,764			89,823
Other assets (Notes 19 and 41)		1,348,994			2,088,950			1,757,488

Total assets		399,081,017			447,183,871			376,227,386

LIABILITIES
Financial liabilities at fair value through profit or loss (“FVTPL”) (Notes 4, 11, 12, 20 and 26)		6,813,822			4,873,458			4,100,167
Deposits due to customers (Notes 4,11,21 and 41)		291,477,279			317,899,871			267,457,405
Borrowings (Notes 4, 6, 11, 12 and 22)		20,745,466			24,755,459			20,827,410
Debentures (Notes 4, 6, 11 and 22)		37,479,358			44,653,864			37,568,454
Provisions (Notes 23, 40 and 41)		501,643			576,134			484,716
Net defined benefit liability (Note 24)		52,237			47,986			40,372
Current tax liabilities (Note 38)		370,718			584,491			491,747
Deferred tax liabilities (Note 38)		160,250			169,842			142,892
Derivative liabilities (Designated for hedging) (Notes 4,11,12 and 26)		64,769			27,584			23,207
Other financial liabilities (Notes 4, 6, 11, 12, 25 and 41)		14,215,817			24,233,226			20,388,041
Other liabilities (Notes 6, 25 and 41)		473,813			556,853			468,495

Total liabilities		372,355,172			418,378,768			351,992,906

EQUITY
Owners’ equity (Note 28)		23,053,608			25,796,927			21,703,624
Capital stock		3,611,338			3,640,303			3,062,681
Hybrid securities		1,895,366			2,294,381			1,930,322
Capital surplus		626,111			682,385			574,108
Other equity		(2,347,472	)		(2,167,614	)		(1,823,669	)
Retained earnings		19,268,265			21,347,472			17,960,182
Non-controlling interests		3,672,237			3,008,176			2,530,856

Total equity		26,725,845			28,805,103			24,234,480

Total liabilities and equity		399,081,017			447,183,871			376,227,386

The above consolidated financial statements should be read in conjunction with the accompanying notes.

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WOORI FINANCIAL GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2019, 2020 AND 2021


	Korean Won									U.S. Dollars
	2019			2020			2021			2021

	(in millions, except for per share data)									(in thousands, except per share data) (Note 2)
Interest income		10,576,770			9,523,853			9,894,749			8,324,709
Financial assets at FVTPL		50,619			48,612			45,803			38,535
Financial assets at FVTOCI		474,751			437,527			381,814			321,230
Financial assets at amortized cost		10,051,400			9,037,714			9,467,132			7,964,944
Interest expense		(4,683,064	)		(3,525,341	)		(2,909,028	)		(2,447,441	)

Net interest income (Notes 11, 30 and 41)		5,893,706			5,998,512			6,985,721			5,877,268
Fees and commissions income		1,709,326			1,694,016			2,171,705			1,827,112
Fees and commissions expense		(606,698	)		(679,977	)		(700,930	)		(589,711	)

Net fees and commissions income (Notes 11, 31 and 41)		1,102,628			1,014,039			1,470,775			1,237,401
Dividend income (Notes 11, 32 and 41)		107,959			138,543			309,211			260,147
Net gain on financial instruments at FVTPL (Notes 11, 33 and 41)		25,455			421,709			325,751			274,063
Net gain on financial assets at FVTOCI (Notes 11 and 34)		11,015			24,138			32,624			27,447
Net gain arising on financial assets at amortized cost (Note 11)		102,115			44,443			107,317			90,289
Impairment losses due to credit loss (Notes 35 and 41)		(374,244	)		(784,371	)		(536,838	)		(451,656	)
General and administrative expenses (Notes 36 and 41)		(3,766,077	)		(3,956,181	)		(4,147,411	)		(3,489,324	)
Other net operating expense (Notes 11, 26, 36 and 41)		(302,581	)		(820,438	)		(887,401	)		(746,593	)

Operating income		2,799,976			2,080,394			3,659,749			3,079,042
Share of gain of joint ventures and associates (Note 13)		83,997			101,077			62,196			52,327
Other non-operating expenses		(160,924	)		(180,220	)		(34,900	)		(29,362	)

Non-operating income (expense) (Note 37)		(76,927	)		(79,143	)		27,296			22,965
Net income before income tax expense		2,723,049			2,001,251			3,687,045			3,102,007
Income tax expense (Note 38)		(685,453	)		(486,002	)		(924,766	)		(778,030	)
Net income		2,037,596			1,515,249			2,762,279			2,323,977

(Continued)

F-

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WOORI FINANCIAL GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME—(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2019, 2020 AND 2021


	Korean Won									U.S. Dollars
	2019			2020			2021			2021

	(in millions, except for per share data)									(in thousands, except per share data) (Note 2)

Net gain (loss) on valuation of equity securities at FVTOCI		(58,129	)		47,246			34,069			28,663
Changes in capital due to equity method		—			(2,065	)		(2,607	)		(2,193	)
Remeasurement gain (loss) related to defined benefit plan		(34,648	)		9,783			65,067			54,743

Items that will not be reclassified to profit or loss		(92,777	)		54,964			96,529			81,213
Net gain (loss) on valuation of debt securities at FVTOCI		43,988			12,114			(184,396	)		(155,137	)
Changes in capital due to equity method		613			(233	)		4,133			3,477
Net gain (loss) on foreign currency translation of foreign operations		101,781			(153,472	)		246,808			207,646
Net gain (loss) on valuation of cash flow hedge		(1,823	)		4,420			7,107			5,979

Items that may be reclassified to profit or loss		144,559			(137,171	)		73,652			61,965
Other comprehensive income (loss), net of tax		51,782			(82,207	)		170,181			143,178
Total comprehensive income		2,089,378			1,433,042			2,932,460			2,467,155

Net income attributable to:
Net income attributable to owners		1,872,207			1,307,266			2,542,844			2,139,361
Net income attributable to non-controlling interests		165,389			207,983			219,435			184,616
Total comprehensive income attributable to:
Comprehensive income attributable to owners		1,914,393			1,233,097			2,700,672			2,272,145
Comprehensive income attributable to non-controlling interests		174,985			199,945			231,788			195,010
Earnings per share (Note 39)
Basic and diluted earnings per share (Unit: In Korean Won and U.S. Dollar)		2,727			1,742			3,419			2.876

The above consolidated financial statements should be read in conjunction with the accompanying notes.

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WOORI FINANCIAL GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2019, 2020 AND 2021


	Capital Stock		Hybrid securities			Capital surplus			Other equity			Retained earnings			Owners’ equity in total			Non-controlling interests			Total equity

	(Korean Won in millions)
January 1, 2019		3,381,392		3,161,963			285,889			(2,213,970	)		17,124,657			21,739,931			213,113			21,953,044
Total comprehensive income
Net income		—		—			—			—			1,872,207			1,872,207			165,389			2,037,596
Net loss on valuation of financial instruments at FVTOCI		—		—			—			(14,101	)		—			(14,101	)		(40	)		(14,141	)
Net gain (loss) due to disposal of equity securities at FVTOCI		—		—			—			29,368			(29,368	)		—			—			—
Changes in capital due to equity method		—		—			1,153			613			—			1,766			—			1,766
Gain on foreign currency translation of foreign operations		—		—			—			91,748			—			91,748			10,033			101,781
Loss on valuation of cash flow hedge		—		—			—			(1,823	)		—			(1,823	)		—			(1,823	)
Remeasurement loss related to defined benefit plan		—		—			—			(34,251	)		—			(34,251	)		(397	)		(34,648	)
Transactions with owners and others
Dividends to common stocks		—		—			—			—			(437,626	)		(437,626	)		(2,014	)		(439,640	)
Acquisition of subsidiaries		229,946		—			351,663			—			—			581,609			69,534			651,143
New stocks issue cost		—		—			(12,848	)		—			—			(12,848	)		—			(12,848	)
Net increase of treasury stocks		—		—			—			4,245			—			4,245			—			4,245
Issuance of hybrid securities		—		997,544			—			—			—			997,544			658,470			1,656,014
Dividends to hybrid securities		—		—			—			—			(4,362	)		(4,362	)		(134,421	)		(138,783	)
Redemption of hybrid securities		—		—			—			(277	)		—			(277	)		(159,618	)		(159,895	)
Exchange of non-controlling interests in hybrid securities		—		(3,161,963	)		—			—			—			(3,161,963	)		3,161,963			—
Changes in subsidiaries’ capital		—		—			438			—			—			438			(50	)		388
Appropriation of retained earnings		—		—			—			368			(368	)		—			—			—
Other changes in consolidated capital		—		—			—			(111,242	)		(625	)		(111,867	)		—			(111,867	)

December 31, 2019		3,611,338		997,544			626,295			(2,249,322	)		18,524,515			21,510,370			3,981,962			25,492,332

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WOORI FINANCIAL GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY—(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2019, 2020 AND 2021


	Capital Stock		Hybrid securities		Capital surplus			Other equity			Retained earnings			Owners’ equity in total			Non-controlling interests			Total equity

	(Korean Won in millions)
January 1, 2020		3,611,338		997,544		626,295			(2,249,322	)		18,524,515			21,510,370			3,981,962			25,492,332
Total comprehensive income
Net income		—		—		—			—			1,307,266			1,307,266			207,983			1,515,249
Net gain (loss) on valuation of financial instruments at FVTOCI		—		—		—			59,417			—			59,417			(57	)		59,360
Net gain (loss) due to disposal of equity securities at FVTOCI		—		—		—			2,664			(2,664	)		—			—			—
Changes in capital due to equity method		—		—		—			(2,298	)		—			(2,298	)		—			(2,298	)
Loss on foreign currency translation of foreign operations		—		—		—			(145,376	)		—			(145,376	)		(8,096	)		(153,472	)
Gain on valuation of cash flow hedge		—		—		—			4,306			—			4,306			114			4,420
Remeasurement gain related to defined benefit plan		—		—		—			9,782			—			9,782			1			9,783
Transactions with owners and others
Dividends to common stocks		—		—		—			—			(505,587	)		(505,587	)		(2,071	)		(507,658	)
Issuance of hybrid securities		—		897,822		—			—			—			897,822			—			897,822
Dividends to hybrid securities		—		—		—			—			(48,915	)		(48,915	)		(162,362	)		(211,277	)
Redemption of hybrid securities		—		—		—			(31,252	)		—			(31,252	)		(555,744	)		(586,996	)
Changes in subsidiaries’ capital		—		—		(184	)		4,607			(6,350	)		(1,927	)		45,684			43,757
Changes in non-controlling interests related to business combination		—		—		—			—			—			—			164,823			164,823

December 31, 2020		3,611,338		1,895,366		626,111			(2,347,472	)		19,268,265			23,053,608			3,672,237			26,725,845

(Continued)

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Table of Contents

WOORI FINANCIAL GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY—(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2019, 2020 AND 2021


	Capital Stock		Hybrid securities		Capital surplus		Other equity			Retained earnings			Owners’ equity in total			Non-controlling interests			Total equity

	(Korean Won in millions)
January 1, 2021		3,611,338		1,895,366		626,111		(2,347,472	)		19,268,265			23,053,608			3,672,237			26,725,845
Total comprehensive income
Net income		—		—		—		—			2,542,844			2,542,844			219,435			2,762,279
Net gain (loss) on valuation of financial instruments at FVTOCI		—		—		—		(150,470	)		—			(150,470	)		143			(150,327	)
Net gain (loss) due to disposal of equity securities at FVTOCI		—		—		—		(2,220	)		2,220			—			—			—
Changes in capital due to equity method		—		—		—		2,472			(946	)		1,526			—			1,526
Gain on foreign currency translation of foreign operations		—		—		—		234,583			—			234,583			12,225			246,808
Gain on valuation of cash flow hedge		—		—		—		6,938			—			6,938			169			7,107
Capital related to non-current assets held for sale		—		—		—		(947	)		947			—			—			—
Remeasurement gain related to defined benefit plan		—		—		—		65,251			—			65,251			(184	)		65,067
Transactions with owners and others
Comprehensive stock exchange		28,965		—		35,197		—			—			64,162			—			64,162
Dividends to common stocks		—		—		—		—			(368,357	)		(368,357	)		(9,391	)		(377,748	)
Acquisition of treasury stocks		—		—		—		(3,819	)		—			(3,819	)		—			(3,819	)
Issuance of hybrid securities		—		399,015		—		—			—			399,015			—			399,015
Dividends to hybrid securities		—		—		—		—			(66,250	)		(66,250	)		(144,923	)		(211,173	)
Redemption of hybrid securities		—		—		—		(27,365	)		—			(27,365	)		(549,904	)		(577,269	)
Changes in subsidiaries’ capital		—		—		9,382		32,445			(31,251	)		10,576			(11,296	)		(720	)
Others		—		—		11,695		22,990			—			34,685			(180,335	)		(145,650	)

December 31, 2021		3,640,303		2,294,381		682,385		(2,167,614	)		21,347,472			25,796,927			3,008,176			28,805,103


	Capital Stock		Hybrid securities		Capital surplus		Other equity			Retained earnings			Owners’ equity in total			Non-controlling interests			Total equity

	(U.S dollars in thousands) (Note 2)
January 1, 2021		3,038,312		1,594,621		526,763		(1,974,989	)		16,210,891			19,395,598			3,089,548			22,485,146
Total comprehensive income
Net income		—		—		—		—			2,139,361			2,139,361			184,616			2,323,977
Net gain (loss) on valuation of financial instruments at FVTOCI		—		—		—		(126,594	)		—			(126,594	)		120			(126,474	)
Net gain (loss) due to disposal of equity securities at FVTOCI		—		—		—		(1,868	)		1,868			—			—			—
Changes in capital due to equity method		—		—		—		2,080			(796	)		1,284			—			1,284
Gain on foreign currency translation of foreign operations		—		—		—		197,361			—			197,361			10,285			207,646
Gain on valuation of cash flow hedge		—		—		—		5,837			—			5,837			142			5,979
Capital related to non-current assets held for sale		—		—		—		(797	)		797			—			—			—
Remeasurement gain related to defined benefit plan		—		—		—		54,897			—			54,897			(154	)		54,743
Transactions with owners and others
Comprehensive stock exchange		24,369		—		29,612		—			—			53,981			—			53,981
Dividends to common stocks		—		—		—		—			(309,908	)		(309,908	)		(7,901	)		(317,809	)
Acquisition of treasury stocks		—		—		—		(3,213	)		—			(3,213	)		—			(3,213	)
Issuance of hybrid securities		—		335,701		—		—			—			335,701			—			335,701
Dividends to hybrid securities		—		—		—		—			(55,738	)		(55,738	)		(121,927	)		(177,665	)
Redemption of hybrid securities		—		—		—		(23,023	)		—			(23,023	)		(462,648	)		(485,671	)
Changes in subsidiaries’ capital		—		—		7,893		27,298			(26,293	)		8,898			(9,504	)		(606	)
Others		—		—		9,840		19,342			—			29,182			(151,721	)		(122,539	)

December 31, 2021		3,062,681		1,930,322		574,108		(1,823,669	)		17,960,182			21,703,624			2,530,856			24,234,480

The above consolidated financial statements should be read in conjunction with the accompanying notes.

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WOORI FINANCIAL GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2019, 2020 AND 2021


	Korean Won									U.S. Dollars
	2019			2020			2021			2021

	(in millions)									(in thousands) (Note 2)
Cash flows from operating activities:
Net income		2,037,596			1,515,249			2,762,279			2,323,977
Adjustments to net income:
Income tax expense		685,453			486,002			924,766			778,030
Interest income		(10,576,770	)		(9,523,853	)		(9,894,749	)		(8,324,709	)
Interest expense		4,683,064			3,525,341			2,909,028			2,447,441
Dividend income		(107,959	)		(138,543	)		(309,211	)		(260,147	)

		(5,316,212	)		(5,651,053	)		(6,370,166	)		(5,359,385	)

Additions of expenses not involving cash outflows:
Loss on valuation of financial instruments at FVTPL		—			44,863			16,869			14,192
Loss on financial assets at FVTOCI		1,375			787			15,812			13,303
Impairment loss due to credit loss		374,244			784,371			536,838			451,656
Loss on other provisions		129,682			232,680			85,690			72,093
Retirement benefit		165,125			174,628			177,303			149,170
Depreciation and amortization		505,718			535,548			791,896			666,243
Net loss on foreign currency translation		—			191,504			109,668			92,266
Loss on derivatives (designated for hedge)		3,686			82,746			93,084			78,314
Loss on fair value hedge		86,214			68,508			1,947			1,638
Loss on valuation of investments in joint ventures and associates		19,778			24,525			19,816			16,672
Loss on disposal of investments in joint ventures and associates		—			—			174			146
Loss on disposal of premises and equipment, intangible assets and other assets		3,433			2,717			3,354			2,822
Impairment loss on premises and equipment, intangible assets and other assets		28,295			8,763			656			552

		1,317,550			2,151,640			1,853,107			1,559,067

Deductions of income not involving cash inflows:
Gain on valuation of financial instruments at FVTPL		(246,175	)		—			—			—
Gain on financial assets at FVTOCI		(12,390	)		(24,925	)		(48,436	)		(40,750	)
Gain on other provisions		(3,302	)		(2,450	)		(1,591	)		(1,339	)
Gain on derivatives (designated for hedge)		(126,651	)		(67,395	)		(61,271	)		(51,549	)
Gain on fair value hedge		(231	)		(9,646	)		(106,253	)		(89,393	)
Gain on valuation of investments in joint ventures and associates		(103,775	)		(125,602	)		(82,012	)		(68,999	)
Gain on disposal of investments in joint ventures and associates		—			(3,470	)		(70,834	)		(59,594	)
Gain on disposal of premises and equipment, intangible assets and other assets		(1,632	)		(9,715	)		(51,083	)		(42,977	)
Reversal of impairment loss on premises and equipment, intangible assets and other assets		(103	)		(172	)		(166	)		(140	)
Profit from bargain purchase		—			(67,427	)		—			—
Other income		—			(20,600	)		(35,717	)		(30,050	)

		(494,259	)		(331,402	)		(457,363	)		(384,791	)

(Continued)

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Table of Contents

WOORI FINANCIAL GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS—(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2019, 2020 AND 2021


	Korean Won									U.S. Dollars
	2019			2020			2021			2021

	(in millions)									(in thousands) (Note 2)
Changes in operating assets and liabilities:
Financial instruments at FVTPL		(506,772	)		(875,076	)		42,498			35,755
Loans and other financial assets at amortized cost		(11,265,714	)		(22,763,192	)		(38,020,109	)		(31,987,304	)
Other assets		86,237			(89,918	)		(983,680	)		(827,595	)
Deposits due to customers		15,407,222			27,378,173			23,830,469			20,049,191
Provisions		(63,751	)		(184,112	)		(12,278	)		(10,330	)
Net defined benefit liability		(293,008	)		(214,741	)		(109,778	)		(92,359	)
Other financial liabilities		(4,719,399	)		(2,694,701	)		9,518,506			8,008,166
Other liabilities		30,693			(8,150	)		67,802			57,044

		(1,324,492	)		548,283			(5,666,570	)		(4,767,432	)

Cash received (paid) from operating activities:
Interest income received		10,478,357			9,558,119			9,351,055			7,867,285
Interest expense paid		(4,383,916	)		(4,008,001	)		(3,016,841	)		(2,538,146	)
Dividends received		107,940			138,562			309,071			260,029
Income tax paid		(552,215	)		(315,422	)		(565,539	)		(475,803	)

		5,650,166			5,373,258			6,077,746			5,113,365

Net cash inflow (outflow) from operating activities		1,870,349			3,605,975			(1,800,967	)		(1,515,199	)

Cash flows from investing activities:
Cash in-flows from investing activities:
Disposal of financial instruments at FVTPL		11,357,056			6,605,483			10,361,751			8,717,610
Disposal of financial assets at FVTOCI		14,303,197			20,527,695			21,645,907			18,211,263
Redemption of securities at amortized cost		8,709,947			5,661,472			6,425,062			5,405,571
Disposal of investments in joint ventures and associates		30,098			410,940			195,758			164,696
Disposal of investment properties		193			353			—			—
Disposal of premises and equipment		13,343			22,828			2,890			2,431
Disposal of intangible assets		939			634			846			712
Disposal of assets held for sale		—			—			93,756			78,879
Net increase of other assets		—			26,642			66,305			55,785

		34,414,773			33,256,047			38,792,275			32,636,947

Cash out-flows from investing activities:
Net cash out-flows of business combination		(296,813	)		(313,058	)		—			—
Net cash out-flows from obtaining control		—			—			(1,638	)		(1,378	)
Acquisition of financial instruments at FVTPL		(11,823,630	)		(8,082,824	)		(11,840,524	)		(9,961,740	)
Acquisition of financial assets at FVTOCI		(23,775,062	)		(23,044,741	)		(30,522,971	)		(25,679,767	)
Acquisition of securities at amortized cost		(6,092,078	)		(2,380,448	)		(6,435,692	)		(5,414,515	)
Acquisition of investments in joint ventures and associates		(389,096	)		(550,619	)		(400,172	)		(336,675	)
Acquisition of investment properties		(70,346	)		(76,588	)		—			—
Acquisition of premises and equipment		(429,547	)		(149,341	)		(119,255	)		(100,332	)
Acquisition of intangible assets		(126,342	)		(114,854	)		(138,882	)		(116,845	)

		(43,002,914	)		(34,712,473	)		(49,459,134	)		(41,611,252	)

Net cash outflow from investing activities		(8,588,141	)		(1,456,426	)		(10,666,859	)		(8,974,305	)

(Continued)

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Table of Contents

WOORI FINANCIAL GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS—(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2019, 2020 AND 2021


	Korean Won									U.S. Dollars
	2019			2020			2021			2021

	(in millions)									(in thousands) (Note 2)
Cash flows from financing activities:
Cash in-flows from financing activities:
Net cash in-flows from hedging activities		—			—			6,987			5,878
Net increase in borrowings		3,081,757			2,033,851			3,199,712			2,692,002
Issuance of debentures		25,510,713			23,082,798			32,674,966			27,490,296
Net increase of other liabilities		—			3,971			3,489			2,935
Issuance of hybrid securities		1,656,014			897,822			399,015			335,701
Retirement of treasury stocks		760,101			—			—			—
Paid-in capital increase on non-controlling interests		—			45,749			1,623			1,365
Net increase in non-controlling equity liabilities		—			—			10,685			8,990

		31,008,585			26,064,191			36,296,477			30,537,167

Cash out-flows from financing activities:
Net cash out-flows from hedging activities		(5,520	)		(5,409	)		—			—
Redemption of debentures		(23,651,950	)		(22,168,962	)		(25,781,305	)		(21,690,480	)
Redemption of lease liabilities		(217,867	)		(204,794	)		(177,593	)		(149,415	)
New stock issue cost		(17,337	)		—			(140	)		(118	)
Acquisition of treasury stocks		(184,164	)		—			(3,757	)		(3,161	)
Dividends paid		(437,626	)		(505,587	)		(368,357	)		(309,908	)
Redemption of hybrid securities		(160,000	)		(598,850	)		(587,650	)		(494,405	)
Dividends paid to hybrid securities		(161,052	)		(211,277	)		(211,173	)		(177,665	)
Dividends paid to non-controlling interest		(2,014	)		(2,071	)		(9,391	)		(7,901	)
Changes in non-controlling interests		(50	)		—			(81,410	)		(68,492	)

		(24,837,580	)		(23,696,950	)		(27,220,776	)		(22,901,545	)

Net cash inflow from financing activities		6,171,005			2,367,241			9,075,701			7,635,622

Net increase (decrease) in cash and cash equivalents		(546,787	)		4,516,790			(3,392,125	)		(2,853,882	)
Cash and cash equivalents, beginning of the period		6,747,894			6,392,566			9,990,983			8,405,673
Effects of exchange rate changes on cash and cash equivalents		191,459			(918,373	)		966,960			813,528

Cash and cash equivalents, end of the period (Note 6)		6,392,566			9,990,983			7,565,818			6,365,319

The above consolidated financial statements should be read in conjunction with the accompanying notes.

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WOORI FINANCIAL GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020 AND 2021

AND FOR THE YEARS ENDED DECEMBER 31, 2019, 2020 AND 2021

1. GENERAL

(1)	Summary of the Parent company

Woori Financial Group, Inc. (hereinafter referred to the “Parent company”) is primarily aimed at controlling subsidiaries that operate in the financial industry or those that are closely related to the financial industry through the ownership of shares and was established on January 11, 2019 under the Financial Holding Company Act through the comprehensive transfer with shareholders of Woori Bank (hereinafter referred to the “Bank”), Woori FIS Co., Ltd., Woori Finance Research Institute Co., Ltd., Woori Credit Information Co., Ltd., Woori Fund Services Co., Ltd. and Woori Private Equity Asset Management Co. Ltd. The headquarters of the Parent company is located at 51,

Sogong-ro,

Jung-gu,

Seoul, Korea, and the capital is 3,640,303 million Won . The Parent company’s stocks were listed on the Korea Exchange on February 13, 2019, and its American Depository Shares (“ADS”) are also being traded as the underlying common stock on the New York Stock Exchange since the same date.

The details of stock transfer between the Parent company and subsidiaries as of incorporation are as follows (Unit: Number of shares)


Stock transfer company	Total number of issued shares		Exchange ratio per share		Number of Parent company’s stocks
Woori Bank		676,000,000		1.0000000		676,000,000
Woori FIS Co., Ltd.		4,900,000		0.2999708		1,469,857
Woori Finance Research Institute Co., Ltd.		600,000		0.1888165		113,289
Woori Credit Information Co., Ltd.		1,008,000		1.1037292		1,112,559
Woori Fund Service Co., Ltd.		2,000,000		0.4709031		941,806
Woori Private Equity Asset Management Co., Ltd.		6,000,000		0.0877992		526,795

As of August 1, 2019, the Parent company acquired a 73% interest in Tongyang Asset Management Co., Ltd. and changed the name to Woori Asset Management Corp. Also, as of August 1, 2019, the Parent company gained 100% control of ABL Global Asset Management Co., Ltd., added it as a consolidated subsidiary and changed the name to Woori Global Asset Management Co., Ltd. on December 6, 2019.

The Parent company paid 598,391 million Won in cash and 42,103,377 new shares of the Parent company to acquire 100% interest of Woori Card Co., Ltd. from its subsidiary, Woori Bank, on September 10, 2019. On the same date, the Parent company also acquired 59.8% interest of Woori Investment Bank Co., Ltd. from Woori Bank with 392,795 million Won in cash.

As of December 30, 2019, the Parent company acquired a 67.2% interest (excluding treasury stocks, 51% interest including treasury stocks) in Woori Asset Trust Co., Ltd. (formerly Kukje Asset Trust Co., Ltd.) and added it as a consolidated subsidiary at the end of 2019.

The Parent company acquired 76.8% (excluding treasury stocks, 74.0% interest including treasury stocks) interest in Woori Financial Capital Co., Ltd. (formerly Aju Capital Co., Ltd.) on December 10, 2020. In addition, as of April 15, 2021, the Parent company acquired 13.3% interests (excluding treasury stock, 12.9% when including treasury stock) in Woori Financial Capital Co., Ltd., and as of May 24, 2021, the Parent company additionally acquired treasury stock (3.6%) which Woori Financial Capital Co., Ltd. possessed.

The Parent Company paid 113,238 million Won in cash to acquire 100% interest of Woori Savings Bank from its subsidiary, Woori Financial Capital Co., Ltd., on March 12, 2021.

F-1

Table of Contents

As of August 10, 2021, the Parent company paid 5,792,866 new shares of the Parent company to the shareholders of Woori Financial Capital Co., Ltd. (excluding the Parent company) through comprehensive stock exchange and acquired residual interest (9.5%) of Woori Financial Capital Co., Ltd., to make it a wholly owned subsidiary.

(2)	Details of the Parent company and subsidiaries (hereinafter ‘Group’) as of December 31, 2020 and 2021 are as follows:

Main business

Percentage of ownership

(%)

Location

Financial
statements
date of use

Subsidiaries

December 31,
2020

December 31,
2021

Held by Woori Financial Group Inc.

Woori Bank

Bank

100.0

Korea

December 31

Woori Card Co., Ltd.

Finance

100.0

Korea

December 31

Woori Financial Capital Co., Ltd.

Finance

76.8

100.0

Korea

December 31

Woori Investment Bank Co., Ltd.

Other credit finance business

58.7

Korea

December 31

Woori Asset Trust Co., Ltd.

Real estate trust

67.2

Korea

December 31

Woori Asset Management Corp.

Finance

73.0

Korea

December 31

Woori Savings Bank

(*7)

Mutual Savings bank

—

100.0

Korea

December 31

Woori Credit Information Co., Ltd.

Credit information

100.0

Korea

December 31

Woori Fund Service Co., Ltd.

Financial support

service business

100.0

Korea

December 31

Woori Private Equity Asset Management Co., Ltd.

Finance

100.0

Korea

December 31

Woori Global Asset Management Co., Ltd.

Finance

100.0

Korea

December 31

Woori FIS Co., Ltd.

System software
development &
maintenance

100.0

Korea

December 31

Woori Finance Research Institute Co., Ltd.

Other service business

100.0

Korea

December 31

Held by Woori Bank

Woori America Bank

Finance

100.0

America

December 31

Woori Global Markets Asia Limited

Finance

100.0

Hong Kong

December 31

Woori Bank China Limited

Finance

100.0

China

December 31

AO Woori Bank

Finance

100.0

Russia

December 31

PT Bank Woori Saudara Indonesia 1906 Tbk

Finance

79.9

84.2

Indonesia

December 31

Banco Woori Bank do Brasil S.A.

Finance

100.0

Brazil

December 31

Korea BTL Infrastructure Fund

Finance

99.9

Korea

December 31

Woori Finance Myanmar Co., Ltd.

Finance

100.0

Myanmar

December 31

Wealth Development Bank

Finance

51.0

Philippines

December 31

Woori Bank Vietnam Limited

Finance

100.0

Vietnam

December 31

Woori Bank (Cambodia) PLC

(*1)(*9)

Finance

100.0

Cambodia

December 31

Woori Bank Europe

Finance

100.0

Germany

December 31

Kumho Trust First Co., Ltd.

(*2)

Asset securitization

0.0

Korea

December 31

Asiana Saigon Inc.

(*2)

Asset securitization

0.0

Korea

December 31

KAMCO Value Recreation First
Securitization Specialty Co., Ltd.

(*2)

Asset securitization

15.0

Korea

December 31

Hermes STX Co., Ltd.

(*5)

Asset securitization

0.0

—

Korea

—

BWL First Co., LLC

(*5)

Asset securitization

0.0

—

Korea

—

Deogi Dream Fourth Co.,
Ltd.

(*2)

Asset securitization

0.0

Korea

December 31

Jeonju Iwon Ltd.

)

Asset securitization

0.0

Korea

December 31

Wonju I one Inc.

(*2)

Asset securitization

0.0

Korea

December 31

Heitz Third Co., Ltd.

(*2)

Asset securitization

0.0

Korea

December 31

Woorihansoop 1st Co., Ltd.

(*2)

Asset securitization

0.0

Korea

December 31

Woori International First Co.,
Ltd.

(*2)

Asset securitization

0.0

Korea

December 31

Wibihansoop 1st Co., Ltd.

(*2)

Asset securitization

0.0

Korea

December 31

Woori QS 1st Co., Ltd.

(*2)

Asset securitization

0.0

Korea

December 31

Woori Display 1st Co., Ltd.

(*2)

Asset securitization

0.0

Korea

December 31

Tiger Eyes 2nd Co., Ltd.

(*2)

Asset securitization

0.0

Korea

December 31

F-1

Table of Contents

Main business

Percentage of ownership

(%)

Location

Financial
statements
date of use

Subsidiaries

December 31,
2020

December 31,
2021

Woori Display 2nd Co., Ltd.

(*2)

Asset securitization

0.0

Korea

December 31

Woori the Colony Unjung Securitization Specialty Co., Ltd.

(*5)

Asset securitization

0.0

—

Korea

—

Woori Dream 1st Co., Ltd.

(*5)

Asset securitization

0.0

—

Korea

—

Woori Dream 2nd Co., Ltd.

(*2)

Asset securitization

0.0

Korea

December 31

Woori H 1st Co., Ltd.

(*2)

Asset securitization

0.0

Korea

December 31

Woori Sinnonhyeon 1st Inc.

(*5)

Asset securitization

0.0

—

Korea

—

Woori K 1st Co., Ltd.

(*2)

Asset securitization

0.0

Korea

December 31

Woori S 1st Co., Ltd.

(*2)

Asset securitization

0.0

Korea

December 31

Woori Display 3rd Co., Ltd.

(*2)

Asset securitization

0.0

Korea

December 31

TY 1st Co., Ltd.

(*2)

Asset securitization

0.0

Korea

December 31

Woori HJ 2nd Co., Ltd.

(*5)

Asset securitization

0.0

—

Korea

—

Woori-HJ

3rd Co., Ltd.

(*2)

Asset securitization

0.0

Korea

December 31

Woori K 2nd Co., Ltd.

(*2)

Asset securitization

0.0

Korea

December 31

Woori KC No.1 Co., Ltd.

(*2)

Asset securitization

0.0

Korea

December 31

Woori QSell 2nd Co., Ltd.

(*5)

Asset securitization

0.0

—

Korea

—

Quantum Jump the 2nd Co., Ltd.

(*2)

Asset securitization

0.0

Korea

December 31

Quantum Jump the 1st Co.,
Ltd.

(*2)

Asset securitization

0.0

Korea

December

Woori BK the 1st Co., Ltd.

(*2)

Asset securitization

0.0

Korea

December

Woori-HC

1st Co., Ltd.

(*2)

Asset securitization

0.0

Korea

December

Wivi Synergy 1st Co., Ltd.

(*2)

Asset securitization

0.0

Korea

December

ATLANTIC TRANSPORTATION 1
S.A.

(*2)

Asset securitization

0.0

Marshall
islands

December

Woori Gongdeok First Co.,
Ltd.

(*2)

Asset securitization

0.0

Korea

December

HD Project Co., Ltd.

(*2)

Asset securitization

0.0

Korea

December

Woori HW 1st Co., Ltd.

(*2)

Asset securitization

0.0

Korea

December

Woori HC 2nd Co., Ltd.

(*2)

Asset securitization

0.0

Korea

December

Woori Dream 3rd Co., Ltd.

(*2)

Asset securitization

0.0

Korea

December

Woori SJS 1st Co., Ltd.

(*2)

Asset securitization

0.0

Korea

December

Woori Steel 1

Co., Ltd

(*2)

Asset securitization

0.0

Korea

December

SPG the 1

Co., Ltd.

(*2)

Asset securitization

0.0

Korea

December

Woori-HWC

1st Co., Ltd.

(*2)

Asset securitization

0.0

Korea

December

Woori HC 3rd Co., Ltd.

(*2)

Asset securitization

0.0

Korea

December

Woori Park I 1st co., Ltd

(*2)

Asset securitization

0.0

Korea

December

Woori DS 1

co., Ltd

(*2)

Asset securitization

0.0

Korea

December

Woori HC 4th Co., Ltd.

(*2)

Asset securitization

0.0

Korea

December

Woori SKR 1st Co., Ltd.

(*2)

Asset securitization

0.0

Korea

December

Woori Hchemical 1st Co.,
Ltd

(*2)

Asset securitization

—

0.0

Korea

December

HE the 1st Co.,Ltd.

(*2)

Asset securitization

—

0.0

Korea

December

Woori Hub The 1st Co., Ltd.

(*2)

Asset securitization

—

0.0

Korea

December

Woori K The 3rd Co., Ltd.

(*2)

Asset securitization

—

0.0

Korea

December

Woori KF 1st Co., Ltd.

(*2)

Asset securitization

—

0.0

Korea

December

WooriI TS 1st Co., Ltd.

(*2)

Asset securitization

—

0.0

Korea

December

Woori H Square 1st Co., Ltd.

(*2)

Asset securitization

—

0.0

Korea

December

Woori L Yongsan 1st Co.,
Ltd.

(*2)

Asset securitization

—

0.0

Korea

December

Woori HC 5th Co., Ltd.

(*2)

Asset securitization

—

0.0

Korea

December

Woori Ladena 1st Co., Ltd.

(*2)

Asset securitization

—

0.0

Korea

December

Woori HR 1st Co., Ltd.

(*2)

Asset securitization

0.0

—

Korea

December

Woori Lotte Dongtan 1st Co., Ltd.

(*2)

Asset securitization

0.0

—

Korea

December

Woori HC 6th Co., Ltd.

(*2)

Asset securitization

0.0

—

Korea

December

Woori ECO 1st Co., Ltd.

(*2)

Asset securitization

0.0

—

Korea

December

G5 Pro Short-term Bond Investment Fund 13

(*3)

Securities investment and others

100.0

Korea

December

Heungkuk Global Private Placement Investment Trust No. 1(*3)(*11)

Securities investment and others

98.5

98.8

Korea

December

AI Partners UK Water Supply Private Placement Investment
Trust No.2

(*3)(*11)

Securities investment and others

97.3

England

December

Multi Asset Global Real Estate Investment Trust

No. 5-2

(*3)

Securities investment and others

99.0

Korea

December

F-1

Table of Contents

Main business

Percentage of ownership

(%)

Location

Financial
statements
date of use

Subsidiaries

December 31,
2020

December 31,
2021

Igis Australia Investment Trust

No. 209-1

(*3)(*11)

Securities investment and others

99.4

Korea

December 31

INMARK Spain Private Placement Real Estate Investment Trust

No. 26-2

(*3)

Securities investment and others

97.7

Korea

December 31

WooriG Japan General Type Private Real Estate Feeder Investment Trust

No.1-2

(*3)(*11)

Securities investment and others

98.8

Korea

December 31

IGIS Global Private Placement Real Estate Fund

No. 316-1

(*3)

Securities investment and others

99.3

Korea

December 31

Woori G Secondary Private Placement Investment Trust No. 1

(*3)(*11)

Securities investment and others

97.2

98.1

Korea

December 31

WooriG Japan Blind General Type Private Real Estate Feeder Investment Trust No.1

(*3)(*11)

Securities investment and others

—

99.8

Korea

December 31

JBairline Private Placement Investment Trust No.8

(*3)(*11)

Securities investment and others

—

97.0

Korea

December 31

Kiwoom Harmony Private Placement Investment Trust No. 2

(*3)(*11)

Securities investment and others

—

97.1

Korea

December 31

Kiwoom Harmony Private Placement Investment Trust No.1

(*3)(*11)

Securities investment and others

—

96.0

Korea

December 31

Principal Guaranteed Trust

(*4)

Trust

0.0

Korea

December 31

Principal and Interest Guaranteed
Trust

(*4)

Trust

0.0

Korea

December 31

Held by Multi Asset Global Real Estate Investment Trust

No. 5-2

MAGI No.5 LuxCo S.a.r.l.

Asset securitization

54.6

Luxembourg

December 31

Held by MAGI No.5 LuxCo S.a.r.l.
ADP 16 Brussels

(*2)

Asset securitization

0.0

Belgium

December 31

Held by Woori Card Co., Ltd.

TUTU Finance –WCI Myanmar Co., Ltd.

Finance

100.0

Myanmar

December 31

Woori Card one of

2017-2

Securitization Specialty Co.,
Ltd.

(*5)

Asset securitization

0.5

—

Korea

—

Woori Card one of

2018-1

Securitization Specialty Co.,
Ltd.

(*2)

Asset securitization

0.5

Korea

December 31

Woori Card

2019-1

Asset Securitization Specialty Co., Ltd.

(*2)

Asset securitization

0.5

Korea

December 31

Woori Card

2020-1

Asset Securitization Specialty Co., Ltd.

(*2)

Asset securitization

0.5

Korea

December 31

Woori Card

2021-1

Asset Securitization Specialty Co., Ltd.

(*2)

Asset securitization

—

0.5

Korea

December 31

Held by Woori Financial Capital Co., Ltd.

Woori Savings Bank

(*5)

Mutual Savings bank

100.0

—

Korea

—

ACE Auto Invest the 46th Securitization Specialty Co., Ltd.

(*5)

Asset securitization

1.0

—

Korea

—

ACE Auto Invest the 47th Securitization Specialty Co., Ltd.

(*5)

Asset securitization

1.0

—

Korea

—

ACE Auto Invest the 48th Securitization Specialty Co., Ltd.

(*2)

Asset securitization

1.0

Korea

December 31

ACE Auto Invest the 49th Securitization Specialty Co., Ltd.

(*2)

Asset securitization

1.0

Korea

December 31

Specified Money Market Trust

(*5)

Trust

100.0

—

Korea

—

Held by Woori Investment Bank Co., Ltd.

Seari First Securitization Specialty Co., Ltd.

(*2)

Asset securitization

5.0

Korea

December 31

Seari Second Securitization Specialty Co., Ltd.

(*2)

Asset securitization

5.0

Korea

December 31

Namjong 1st Securitization Specialty Co., Ltd.

(*2)

Asset securitization

5.0

Korea

December 31

Bukgeum First Securitization Specialty Co., Ltd.

(*2)

Asset securitization

5.0

Korea

December 31

F-1

Table of Contents

Main business

Percentage of ownership

(%)

Location

Financial
statements
date of use

Subsidiaries

December 31,
2020

December 31,
2021

Bukgeum Second Securitization Specialty Co., Ltd.

(*2)

Asset securitization

5.0

Korea

December 31

WS1909 Securitization Specialty Co., Ltd.

(*2)

Asset securitization

5.0

Korea

December 31

WS2003 Securitization Specialty Co., Ltd.

(*2)

Asset securitization

5.0

Korea

December 31

WS2006 Securitization Specialty Co., Ltd.

(*2)

Asset securitization

5.0

Korea

December 31

WJ2008 Securitization Specialty Co., Ltd.

(*2)

Asset securitization

5.0

Korea

December 31

WH2103 Securitization Specialty Co., Ltd.

(*2)

Asset securitization

—

5.0

Korea

December 31

WN2103 Securitization Specialty Co., Ltd.

(*2)

Asset securitization

—

5.0

Korea

December 31

WH2106 Securitization Specialty Co., Ltd.

(*2)

Asset securitization

—

5.0

Korea

December 31

One Punch Korea the 1st Co., Ltd.

(*2).

Asset securitization

0.0

Korea

December 31

One Punch blue the 1

Co., Ltd.

(*2)

Asset securitization

0.0

Korea

December 31

One Punch red the 1

Co., Ltd.

(*2)

Asset securitization

—

0.0

Korea

December 31

Held by Woori Asset Management Corp.

Woori China Convertible Bond Hedging feeder Investment Trust H (debt-oriented hybrid)

(*3)

Securities investment and others

99.6

93.6

Korea

December 31

Woori China Convertible Bond Master Fund (debt-oriented hybrid)

(*5)(*8)

Securities investment and others

34.5

—

Korea

—

Woori Yellow Chip High Yield Strategic Allocation 1 (FOF)

(*5)

Securities investment and others

89.8

—

Korea

—

Woori Together TDF 2025

(*3)

Securities investment and others

47.6

34.1

Korea

December 31

Woori Together TDF 2030

(*3)

Securities investment and others

47.4

32.3

Korea

December 31

Woori Together TDF 2035

(*3)

Securities investment and others

47.8

56.0

Korea

December 31

Woori Together TDF 2040

(*3)

Securities investment and others

48.8

55.7

Korea

December 31

Woori Together TDF 2045

(*3)

Securities investment and others

47.7

65.2

Korea

December 31

Woori Together TDF 2050

(*3)

Securities investment and others

87.0

63.6

Korea

December 31

Woori Star50 Feeder Fund(H)

(*3)

Securities investment and others

—

44.8

Korea

December 31

Woori BIG2 Plus Securities Investment Trust (Balanced Bond)

(*3)

Securities investment and others

—

40.8

Korea

December 31

Held by Woori Financial Capital Co., Ltd., Woori Private Equity Asset Management Co., Ltd. and Woori Investment Bank Co.,
Ltd.

(*6)

Japanese Hotel Real Estate Private Equity Fund 1

(*3)(*11)

Securities investment and others

100.0

Korea

December 31

Held by Woori Global Asset Management Co., Ltd.

Woori G Global Multi Asset Income Private Placement Investment Trust_Class Cs

(*3)(*11)

Securities investment and others

22.2

37.9

Korea

December 31

Held by Woori Bank, Woori Financial Capital Co., Ltd., Woori Investment Bank Co., Ltd., Woori Savings Bank and Woori Private Equity Asset Management Co., Ltd.

(*6)

Woori Innovative Growth Professional Investment Type Private Investment Trust No.1

(*3)(*11)

Securities investment and others

90.0

Korea

December 31

Held by Woori Bank, Woori Financial Capital Co., Ltd., Woori Investment Bank Co., Ltd. and Woori Private Equity Asset Management Co., Ltd.

(*6)

F-1

Table of Contents

Main business

Percentage of ownership

(%)

Location

Financial
statements
date of use

Subsidiaries

December 31,
2020

December 31,
2021

Woori Innovative Growth Professional Investment Type Private Investment Trust No.2

(*3)(*11)

Securities investment and others

85.0

Korea

December 31

Woori Innovative Growth New Deal Private Investment Trust No.3

(*3)

Securities investment and others

—

94.3

Korea

December 31

Held by Woori Bank, Woori Financial Capital Co., Ltd., and Woori Investment Bank Co., Ltd.

(*6)

WooriG GP Commitment Loan General Type Private Investment Trust No.1

(*3)(*11)

Securities investment and others

50.0

100.0

Korea

December 31

WooriG Equity Bridge Loan General Type Private Investment Trust No.1

(*3)(*11)

Securities investment and others

—

80.0

Korea

December 31

Held by Woori bank and Woori Investment Bank Co., Ltd.

(*6)

Heungkuk Woori Tech Company Private Placement Investment Trust
No. 1

(*3)(*11)

Securities investment and others

100.0

Korea

December 31

Woori Global Development Infrastructure Synergy Company Private Placement Investment Trust No.1

(*3)(*11)

Securities investment and others

100.0

Korea

December 31

Woori G North America Infra Private Placement Investment Trust
No. 1

(*3)(*11)

Securities investment and others

100.0

Korea

December 31

Woori G Infrastructure New Deal Specialized Investment Private Equity Investment Trust No. 1

(*3)(*11)

Securities investment and others

100.0

Korea

December 31

WooriG General Type Private Real Estate Investment Trust
No.2

(*3)(*11)

Securities investment and others

30.1

Korea

December 31

WooriG ESG Infrastructure Development General Type Private Investment Trust No.1

(*3)(*11)

Securities investment and others

—

100.0

Korea

December 31

Held by Woori bank

(*6)

WooriG WooriBank Partners General Type Private Investment Trust No.1

(*3)(*11)

Securities investment and others

92.6

Korea

December 31

WooriG General Type Private Real Estate Investment Trust
No.1

(*3)(*11)

Securities investment and others

80.0

Korea

December 31

WooriG Global

Mid-market

Secondary General Type Private Investment Trust No.1(EUR)

(*3)(*11)

Securities investment and others

80.0

Korea

December 31

Woori G Woori Bank Partners Professional Type Private Investment Trust No. 2

(*3)(*11)

Securities investment and others

—

90.9

Korea

December 31

WooriG General Type Private Real Estate Investment Trust
No.5

(*3)(*11)

Securities investment and others

—

87.0

Korea

December 31

Held by Woori Financial Capital Co., Ltd.

(*6)

Woori G Japan Private Placement Real Estate Feeder Investment Trust

No.1-1

(*3)(*11)

Securities investment and others

63.2

Korea

December 31

Held by Woori G Japan Private Placement Real Estate Feeder Investment Trust

No.1-1

and Woori G Japan Investment Trust

No. 1-2

(*6)

Woori G Japan Private Placement Real Estate Master Investment Trust No.1

(*3)(*11)

Securities investment and others

100.0

Korea

December 31

Held by Woori Financial Capital Co., Ltd. and Woori Investment Bank Co., Ltd.

(*6)

Woori G Japan Private Placement Real Estate Master Investment Trust

No.2-1

(*3)(*11)

Securities investment and others

—

100.0

Korea

December 31

F-1

Table of Contents

Main business

Percentage of ownership

(%)

Location

Financial
statements
date of use

Subsidiaries

December 31,
2020

December 31,
2021

Held by Woori G Japan Private Placement Real Estate Master Investment Trust No.1 and Woori G Japan Private Placement Real Estate Master Investment Trust

No.2-1

(*6)

Woori G Japan Private Placement Real Estate Master Investment Trust No.2

(*3)(*11)

Securities investment and others

—

100.0

Korea

December 31

Held by Woori G Japan Private Placement Real Estate Master Investment Trust No.1

GK OK Chatan

(*3)

Other financial services

99.9

Japan

October 31

(*10)

(*1)	The entity was merged with WB Finance Co., Ltd., which is a second-tier subsidiary, during prior period.

(*2)

The entity is a structured entity for the purpose of asset securitization. Although the Group is not a majority shareholder, the Group 1) has the power over the investee, 2) is exposed to or has rights to variable returns from its involvement with the investee, and 3) has the ability to use its power to affect its returns.

(*3)

The entity is a structured entity for the purpose of investment in securities. Although the Group is not a majority shareholder, the Group 1) has the power over the investee, 2) is exposed to or has rights to variable returns from its involvement with the investee, and 3) has the ability to use its power to affect its returns.

(*4)

The entity is a ‘money trust’ under the Financial Investment Services and Capital Markets Act. Although the Group is not a majority shareholder, the Group 1) has the power over the investee, 2) is exposed to or has rights to variable returns from its involvement with the investee, and 3) has the ability to use its power to affect its returns.

(*5)	Companies are excluded from the consolidation as of December 31, 2021.

(*6)

Determined that the Group controls the investees, considering the Group 1) has the power over the investee, 2) is exposed to or has rights to variable returns from its involvement with the investee, and 3) has the ability to use its power to affect its returns, by two or more subsidiaries’ investment or operation.

(*7)	During March 2021, the Parent company acquired a 100% equity of Woori Financial Savings Bank from the Parent company’s subsidiary Woori Financial Capital Co., Ltd.

(*8)	As a master-feeder fund, the equity interest represent those of the masterfund held by the feeder fund.

(*9)	The Parent company’s subsidiary WB Finance Co., Ltd. has changed the name to WOORI BANK (CAMBODIA) PLC.

(*10)

As financial statements at the end of the reporting period cannot be obtained, the most recent financial statements were used.

(*11)

In accordance with the revision of the Capital Market Act, a specialized investment-type private equity fund has been changed to a general private equity fund.

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(3)	The Group has not consolidated the following entities as of December 31, 2020 and 2021 despite having more than 50% ownership interest:

As of December 31, 2020

Subsidiaries

Location

Main Business

Percentage of
ownership (%)

Mirae Asset Maps Clean Water Private Equity Investment Trust 7th

(*)

Korea

Securities Investment

59.7

Kiwoom Yonsei Private Equity Investment Trust

(*)

Korea

Securities Investment

88.9

IGIS Europe Private Placement Real Estate Fund

No. 163-2

(*)

Korea

Securities Investment

97.9

IGIS Global Private Placement Real Estate Fund

No. 148-1

(*)

Korea

Securities Investment

75.0

IGIS Global Private Placement Real Estate Fund

No. 148-2

(*)

Korea

Securities Investment

75.0

Mirae Asset Seoul Ring Expressway Private Special Asset
Fund No. 1

(*)

Korea

Securities Investment

66.7

Hangkang Sewage Treatment Plant Fund

(*)

Korea

Securities Investment

55.6

Korea Investment Pocheon Hwado Expressway Professional Investment Fund

(*)

Korea

Securities Investment

55.2

Midas Global Private Placement Real Estate Investment Trust

No. 7-2

(*)

Korea

Securities Investment

58.3

Together-Korea Government Private Pool Private Securities Investment Trust No.3

(*)

Korea

Securities Investment

100.0

INMARK France Private Placement Investment Trust

No. 18-1

(*)

Korea

Securities Investment

93.8

Kiwoom Vibrato Private Placement Investment Trust

1-W(EUR)

(*)

Korea

Securities Investment

99.3

(*)	Since the investee is a private equity investment fund, the Group does not have the power over the fund’s activities even though it holds more than 50% of ownership interest.

As of December 31, 2021

Subsidiaries

Location

Main Business

Percentage of
ownership (%)

Mirae Asset Maps Clean Water Private Equity Investment Trust
7th

(*1)

Korea

Securities Investment

59.7

Kiwoom Yonsei Private Equity Investment Trust

(*1)

Korea

Securities Investment

88.9

IGIS Europe Private Placement Real Estate Fund

No. 163-2

(*1)(*2)

Korea

Securities Investment

97.9

IGIS Global Private Placement Real Estate Fund

No. 148-1

(*1)(*2)

Korea

Securities Investment

75.0

IGIS Global Private Placement Real Estate Fund

No. 148-2

(*1)(*2)

Korea

Securities Investment

75.0

Mirae Asset Seoul Ring Expressway Private Special Asset Fund No. 1

(*1)(*2)

Korea

Securities Investment

66.7

Hangkang Sewage Treatment Plant Fund

(*1)(*2)

Korea

Securities Investment

55.6

Korea Investment Pocheon Hwado Expressway Professional Investment Fund

(*1)(*2)

Korea

Securities Investment

55.2

Midas Global Private Placement Real Estate Investment Trust

No. 7-2

(*1)(*2)

Korea

Securities Investment

58.3

Together-Korea Government Private Pool Private Securities Investment Trust No.3

(*1)(*2)

Korea

Securities Investment

100.0

INMARK France Private Placement Investment Trust

No. 18-1

(*1)(*2)

Korea

Securities Investment

93.8

Kiwoom Vibrato Private Placement Investment Trust

1-W(EUR)

(*1)(*2)

Korea

Securities Investment

99.5

KOTAM Global Infrastructure Private Equity Investment Trust

No. 1-4

(*1)(*2)

Korea

Securities Investment

99.7

Hana UBS Class One Private Equity No. 3 C2

(*1)

Korea

Securities Investment

51.0

Consus Gyeongju Green Private Equity Investment Trust No. 1

(*1)

(*2)

Korea

Securities Investment

50.0

Kiwoom Harmony Private Placement Investment Trust No. 3

(*1)(*2)

Korea

Securities Investment

77.4

Consus Solar Energy Private Placement Investment Trust No.1

(*1)

Korea

Securities Investment

50.0

(*1)	Since the investee is a private equity investment fund, the Group does not have the power over the fund’s activities even though it holds more than 50% of ownership interest.

(*2)	In accordance with the revision of the Capital Market Act, a hedge fund has been changed to a private equity fund.

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(4)	The summarized financial information of the major subsidiaries is as follows. The financial information of each subsidiary was prepared on the basis of consolidated financial statements (Unit: Korean Won in millions):


	As of and for the year ended December 31, 2020
Subsidiaries	Assets		Liabilities		Operating revenue		Net income (loss) attributable to owners			Comprehensive income (loss) attributable to owners
Woori Bank		374,310,415		350,790,158		26,838,766		1,363,224			1,295,302
Woori Card Co., Ltd.		11,366,596		9,312,986		1,388,208		120,230			118,109
Woori Financial Capital Co., Ltd. (*)		8,880,117		8,053,840		218,945		(30,349	)		(38,293	)
Woori Investment Bank Co., Ltd.		4,332,474		3,803,594		256,079		62,937			62,275
Woori Asset Trust Co., Ltd.		185,634		56,396		79,426		35,312			35,954
Woori Asset Management Corp.		136,460		23,411		26,158		6,797			6,313
Woori Credit Information Co., Ltd.		40,860		9,830		40,010		1,879			1,600
Woori Fund Service Co., Ltd.		18,957		2,172		13,346		2,563			2,563
Woori Private Equity Asset Management Co., Ltd.		38,035		2,009		4,773		823			768
Woori Global Asset Management Co., Ltd.		37,935		9,807		10,652		(1,449	)		(1,449	)
Woori FIS Co., Ltd.		97,479		59,577		249,169		2,013			1,935
Woori Finance Research Institute Co., Ltd.		7,232		3,689		6,223		105			95

(*)	Net income (loss) attributable to owners of Woori Financial Capital for the year ended December 31, 2020 has been prepared on a cumulative basis since entity was included as the subsidiary.


	As of and for the year ended December 31, 2021
Subsidiaries	Assets		Liabilities		Operating revenue		Net income (loss) attributable to owners			Comprehensive income (loss) attributable to owners
Woori Bank		415,976,627		391,360,200		24,311,964		2,330,433			2,478,754
Woori Card Co., Ltd.		14,116,832		11,858,065		1,528,680		200,726			210,316
Woori Financial Capital Co., Ltd.		10,259,868		9,073,104		997,655		140,579			141,275
Woori Investment Bank Co., Ltd.		5,159,742		4,559,856		303,253		79,924			79,747
Woori Asset Trust Co., Ltd.		254,773		86,418		94,228		40,300			40,263
Woori Asset Management Corp.		151,651		30,144		33,343		8,244			8,458
Woori Savings Bank		1,444,508		1,222,888		85,813		15,315			14,926
Woori Credit Information Co., Ltd.		40,510		8,532		37,507		1,563			1,513
Woori Fund Service Co., Ltd.		22,168		2,582		15,618		3,570			3,570
Woori Private Equity Asset Management Co., Ltd.		42,790		4,652		4,230		2,209			2,113
Woori Global Asset Management Co., Ltd.		35,265		7,579		11,785		(441	)		(441	)
Woori FIS Co., Ltd.		105,138		59,225		270,393		1,587			8,010
Woori Finance Research Institute Co., Ltd.		5,864		2,257		6,812		57			64

(5)	The financial support that the Group provides to consolidated structured entities is as follows:

•

Structured entity for asset securitization

The structured entity which is established for the purpose of securitization of project financing loans, corporate bonds, and other financial assets. The Group is involved with the structured entity through

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provision of credit facility over asset-backed commercial papers issued by the entity, originating loans directly to the structured entity, or purchasing 100% of the subordinated debts issued by the structured entity.

•

Structured entity for the investments in securities

The structured entity is established for the purpose of investments in securities. The Group acquire beneficiary certificates through its contribution of funding to the structured entity by the Group, and it is exposed to the risk that it may not be able to recover its fund depending on the result of investment performance of asset managers of the structured entity.

•

Money trust under the Financial Investment Services and Capital Markets Act

The Group provides with financial guarantee of principal and interest or solely principal to some of its trust products. Due to the financial guarantees, the Group may be obliged when the principal and interest or principal of the trust product sold is short of the guaranteed amount depending on the result of investment performance of the trust product.

As of December 31, 2020 and 2021, the Group provides 2,547,418 million Won and 2,480,131 million Won and of credit facilities, respectively, for the structured entities mentioned above. As of December 31, 2020 and 2021, the purchase commitment amounts

854,231 million Won and 2,263,387 million Won, respectively.

(6)

The Group has entered into various agreements with structured entities such as asset securitization, structured finance, investment fund, and monetary trust. The characteristics and the nature of risks related to unconsolidated structured entities over which the Group does not have control in accordance with IFRS 10 are as follows:

The interests in unconsolidated structured entities that the Group hold are classified into asset securitization vehicles, structured finance, investment fund and real-estate trust, based on the nature and the purpose of each structured entity.

Unconsolidated structured entities classified as ‘asset securitization vehicles’ are entities that issue asset-backed securities, pay the principal and interest or distribute dividends on asset-backed securities through borrowings or profits from the management, operation and sale of securitized assets. The Group has been purchasing commitments of asset-backed securities or issuing asset-backed securities through credit grants, and recognizes related interest or fee revenue. There are entities that provide additional funding and conditional debt acquisition commitments before the Group’s financial support, but the Group is still exposed to losses arising from the purchase of financial assets issued by the structured entities when it fails to renew the securities.

Unconsolidated structured entities classified as ‘structured financing’ include real estate project financing investment vehicle, social overhead capital companies, and special purpose companies for ship (aircraft) financing. Each entity is incorporated as a separate company with a limited purpose in order to efficiently pursue business goals and the fund is raised by equity investment or loans from financial institutions and participating institutions. ‘Structured financing’ is a financing method for large-scale risky business, with investments made based on feasibility of the specific business or project, instead of credit of business owner or physical collaterals. The investors receive profits from the operation of the business. The Group recognizes interest revenue, profit or loss from assessment or transactions of financial instruments, or dividend income. With regard to uncertainties involving structured financing, there are entities that provide financial support such as additional fund, guarantees and prioritized credit grants prior to the Group’s intervention, but the Group is exposed to possible losses due to loss of principal from reduction in investment value or irrecoverable loans arising from failure to collect scheduled cash flows and cessation of projects.

Unconsolidated structured entities classified as ‘investment funds’ include investment trusts and private equity funds. An investment trust orders the investment and operation of funds to the trust manager in accordance

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with trust contract with profits distributed to the investors. Private equity funds finances money required to acquire equity securities to enable direction of management and/or improvement of ownership structure, with profit distributed to the investors. The Group recognizes pro rata amount of valuation gain or loss on investment and dividend income as an investor and may be exposed to losses due to reduction in investment value. Investments in MMF(Money Market Funds) as of December 31, 2020 and 2021 are 427,375 million Won and 853,140 million Won, respectively, and there is no additional commitments for MMF.

‘Real estate trust’ is to be entrusted the underlying property for the purpose of managing, disposing, operating or developing from the consignor who owns the property and distributes the proceeds achieved through the trust to the beneficiary. When the consignee does not fulfill his or her important obligations in the trust contract or it is, in fact, difficult to run the business, the Group may be exposed to the threat of compensating the loss.

The total assets of the unconsolidated structured entity held by the Group, the carrying amount of the items recognized in the consolidated financial statements, the maximum loss exposure, and the losses from the unconsolidated structured entity are as follows. The maximum loss exposure includes the amount of investment recognized in the consolidated financial statements and the amount that is likely to be confirmed in the future when satisfies certain conditions by contracts such as purchase arrangements, credit offerings. As of December 31, 2020 and 2021, the purchase commitment amount is 4,266,319 million Won and 3,033,231 million Won, respectively.


	December 31, 2020
	Asset securitization vehicle		Structured Finance		Investment Funds		Real-estate trust
Total asset of the unconsolidated structured entities		3,900,254		69,010,369		44,629,638		76,772
Assets recognized in the consolidated financial statements related to the unconsolidated structured entities		648,700		4,291,535		3,350,605		22,402
Financial assets at FVTPL		374,231		167,271		2,922,716		—
Financial assets at FVTOCI		163,808		41,378		—		—
Financial assets at amortized cost		109,008		4,072,321		39,955		22,402
Investments in joint ventures and associates		—		5,958		387,902		—
Derivative assets		1,653		4,607		32		—
Liabilities recognized in the consolidated financial statements related to the unconsolidated structured entities		130		963		—		400
Other liabilities (provisions)		130		963		—		400
The maximum exposure to risks		970,628		5,366,037		3,438,924		65,722
Investment assets		648,700		4,291,535		3,350,605		22,402
Credit facilities and others		321,928		1,074,502		88,319		43,320
Loss recognized on unconsolidated structured entities		—		6,079		25,454		2,363

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	December 31, 2021
	Asset securitization vehicle		Structured Finance		Investment Funds		Real-estate trust
Total asset of the unconsolidated structured entities		15,640,521		94,969,317		94,675,732		1,398,508
Assets recognized in the consolidated financial statements related to the unconsolidated structured entities		8,518,101		4,633,475		4,214,747		54,662
Financial assets at FVTPL		374,423		5,021		3,550,532		10,665
Financial assets at FVTOCI		3,878,882		46,478		—		—
Financial assets at amortized cost		4,264,626		4,579,367		71,662		43,997
Investments in joint ventures and associates		—		—		592,553		—
Derivative assets		170		2,609		—		—
Liabilities recognized in the consolidated financial statements related to the unconsolidated structured entities		677		1,536		—		2,964
Derivative liabilities		—		673		—		—
Other liabilities (provisions)		677		863		—		2,964
The maximum exposure to risks		8,739,034		5,728,977		4,221,072		115,212
Investment assets		8,518,101		4,633,475		4,214,747		54,662
Credit facilities and others		220,933		1,095,502		6,325		60,550
Loss recognized on unconsolidated structured entities		183		11,872		71,309		282

(7)	As of December 31, 2020 and 2021, the share of non-controlling interests on the net income and equity of subsidiaries in which non-controlling interests are significant are as follows (Unit: Korean Won in millions):

1) Accumulated

non-controlling

interests at the end of the reporting period


	December 31, 2020		December 31, 2021
Woori Bank (*)		3,105,070		2,555,166
Woori Financial Capital Co., Ltd.		166,369		—
Woori Investment Bank Co., Ltd.		222,289		251,879
Woori Asset Trust Co., Ltd.		49,738		60,726
Woori Asset Management Corp		31,369		33,768
PT Bank Woori Saudara Indonesia 1906 Tbk		79,890		87,741
Wealth Development Bank		19,521		20,835

(*)	Hybrid securities issued by Woori Bank

2) Net income attributable to

non-controlling

interests


	For the years ended December 31
	2019		2020		2021
Woori Bank (*)		134,421		162,362		144,923
Woori Financial Capital Co., Ltd.		—		1,466		17,949
Woori Investment Bank Co., Ltd.		21,588		25,643		33,274
Woori Asset Trust Co., Ltd.		—		9,732		11,366
Woori Asset Management Corp		408		1,699		2,341
PT Bank Woori Saudara Indonesia 1906 Tbk		8,502		6,040		8,619
Wealth Development Bank		427		1,130		928

(*)	Distribution of the hybrid securities issued by Woori Bank

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3) Dividends to

non-controlling

interests


	For the years ended December 31
	2019		2020		2021
Woori Bank (*)		134,421		162,362		144,923
Woori Financial Capital Co., Ltd.		—		—		4,121
Woori Investment Bank Co., Ltd.		—		—		3,610
Woori Asset Trust Co., Ltd.		—		365		365
PT Bank Woori Saudara Indonesia 1906 Tbk		1,981		1,669		1,262

(*)	Distribution of the hybrid securities issued by Woori Bank

2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES

(1) Basis of presentation

The Group’s consolidated financial statements are prepared in accordance with Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).

The Group operates primarily in Korea and its official accounting records are maintained in Korean Won. The United States dollar (“U.S. dollar” or “US$” or “USD”) amounts are provided herein as supplementary information solely for the convenience of readers outside Korea.

Korean Won

amounts are expressed in U.S. Dollars at the rate of 1,188.6 Korean Won to US$1.00, the noon buying exchange rate in effect on December 31, 2021, as quoted by the Federal Reserve Bank of New York in the United States. Such convenience translation into U.S. Dollars should not be construed as representations that Korean Won amounts have been, could have been, or could in the future be, converted at this or any other rate of exchange.

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

The consolidated financial statements, as described in following paragraphs of accounting policy, are prepared at the end of each reporting period in historical cost basis, except for certain

non-current

assets and financial assets that are either revalued or measured in fair value. Historical cost is generally measured at the fair value of consideration given to acquire assets.

Meanwhile, the consolidated financial statements of the Group were initially approved by the Board of Directors on February 9, 2022, and were revised and approved on March 14, 2022, and the final approval was made in the annual general shareholders’ meeting on March 25, 2022.

1) The standards and interpretations that are newly adopted by the Group during the current period, and the changes in accounting policies thereof are as follows:

①

IFRS 9 ‘

Financial Instruments

’, IAS 39 ‘

Financial Instruments: Recognition and Measurement

’, IFRS 7 ‘

Financial Instruments: Disclosures

’, IFRS 4 ‘

Insurance Contracts

’ and IFRS 16 ‘

Leases

’; Interest Rate Benchmark Reform-Phase 2

The amendment indicates that the effective interest rate shall be adjusted rather than the carrying amount when changing the interest rate benchmark for financial instruments measured at amortized cost. In addition, it allows hedge accounting to continue without interruption even when changes to interest rate benchmark occur in the hedging relationship. The amendment does not have a significant impact on the consolidated financial statements.

Since the Group has derivatives, loans, and debentures that are directly affected by interest rate benchmark reform, the Group is working on a project to convert contracts referring to former interest rate benchmark into alternative benchmarks to minimize business disruptions, mitigate operational

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risks, and reduce possible financial losses. In accordance with the transitional provisions, the amendments have been applied retrospectively to hedging relationships and financial instruments. The comparative financial statements have not been restated and there is no effect of the adoption of the amendments on the beginning balance of reserves.

The Group has applied ‘Interest Rate Benchmark Reform-Phase 2’, which is an amendment to IFRS 9, IAS 39, IFRS 7 and IFRS 16, beginning on January 1, 2021. In accordance with the transition provisions, the amendments were applied retrospectively to the hedging relationship and financial instruments. The comparative financial statements have not been restated and there is no effect of the adoption of the amendments on the beginning balance of reserves.

Hedging relationship

The Phase 2 amendments address issues arising from ‘Interest Rate Benchmark Reform-Phase 1’, including when the designation and documentation of hedges should be updated and when alternative rates are permitted as hedged risk.

The Phase 1 amendments include an exceptional regulation that temporarily mitigates the application of specific hedge accounting requirements to hedging relationships directly affected by ‘Interest Rate Benchmark Reform’. Due to this mitigation, ‘Interest Rate Benchmark Reform’ typically does not stop hedge accounting until there is a change of the contract. However, hedge ineffectiveness continues to be recorded in the statement of profit or loss. It also suggests when the application of these exceptions should end, for instance, exceptional regulation should end when uncertainties due to ‘Interest Rate Benchmark Reform’ no longer appear.

For the period beginning January 1, 2021, the Group has applied the following hedge accounting mitigation provisions provided in the Phase 2 amendments:

Designation of a hedging relationship: When the Phase 1 amendments cease to apply, the Group will amend the designation of a hedging relationship to reflect the changes required by the Interest Rate Benchmark Reform when there is a change in one or more of the followings:

•

Designating the alternative benchmark rate (contractually or

non-contractually

specified) as a hedged risk;

•

Amending the description of the hedged item so it refers to the alternative benchmark rate; or

•

Amending the description of the hedging instrument.

The Group will amend the hedging relationship documentation to reflect these amendments by the end of the reporting period during which the changes are made. These amendments do not require the discontinuance of the hedging relationship.

Financial instruments measured at amortized cost

For financial instruments measured at amortized cost (including financial assets at FVTOCI-debt instruments), the Phase 2 amendments do not require the financial instrument to recognize gains or losses from the change because the change in the contractual cash flow basis required by the interest rate reform is reflected by adjusting the effective interest rate.

A similar practical expedient exists for lease liabilities. This practical expedient is applicable only to changes required by interest rate indicator reform. When the changes are necessary as a direct result of Interest Rate Benchmark Reform and the new criteria for determining contractual cash flows are economically equivalent to the previous one, it is considered as a required change due to Interest Rate Benchmark Reform.

If some or all of the changes in the instrument’s contractual cash flow calculation criteria do not meet the above criteria, the Group shall first apply the practical expedient to the changes made under the

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Interest Rate Benchmark Reform and then apply the general financial instrument requirements(In other words, the entity shall determine whether a modification or elimination is made and recognizes immediately in profit or loss any modification on financial instrument which has not been eliminated).

For lease liabilities which basis for determining contractual cash flows is changed, as a practical expedient, the lease liabilities are remeasured at a discount rate that reflects the change in interest rates due to the Interest Rate Benchmark Reform. If an additional lease change is made in addition to the lease changes required by the Interest Rate Benchmark Reform, the general requirements of IFRS 16 apply to the accounting for all simultaneous lease changes, including those required by the Interest Rate Benchmark Reform.

The details of Woori Bank’s financial instruments that have not completed the conversion to interest rates benchmark as of December 31, 2021 are as follows:

Non-derivative

financial instrument is presented at the carrying amount, while the derivative financial instrument and commitments/financial guarantee are presented at the nominal amount. (Unit: Korean Won in millions)


	USD (*1)				EUR		GBP		JPY		CHF		BBSW
	Total amount (*2)		Interest rate substitution clause		EUR		GBP		JPY		CHF		BBSW
Non-derivative financial assets
Financial assets at FVTOCI		662,878		194,084		—		—		—		—		—
Financial assets at amortized cost		5,204,049		2,337,327		24,514		134,369		87,788		—		—

Sub-total		5,866,927		2,531,411		24,514		134,369		87,788		—		—

Non-derivative financial liabilities
Financial liabilities at amortized cost		657,953		574,968		—		—		—		—		—
Derivatives
Interest rate related (for trading)		26,757,719		26,327,929		—		344,854		—		1,297		—
Currency related (for trading)		35,169,303		35,169,303		—		407,264		175,422		—		—
Interest rate related (for hedging)		2,193,175		2,193,175		—		—		—		—		128,834

Sub-total		64,120,197		63,690,407		—		752,118		175,422		1,297		128,834

Commitments and financial guarantees		1,167		—		7,374		—		1,854		—		—

(*1)	Financial instruments related to USD Libor (overnight rate, 1, 3, 6, 12 month rates) that are expired before June 30, 2023 are excluded.

(*2)	For contracts that do not have an interest rate alternative clause, we are in the process of negotiating to add an interest rate alternative clause.

The KRW CD interest rate is planned to be replaced by the Korea Overnight Financing Repo Rate (KOFR) in the long term, but the policy direction to activate the replacement rate or when the CD rate calculation will be discontinued is not clear.

②

Amendments to IFRS 16

Leases

—COVID-19

related rent concession continuously offered after June 30, 2021

As a practical expedient, a lessee may elect not to assess whether a rent concession occurring as a direct consequence of the

COVID-19

pandemic is a lease modification. The scope of the practical expedient has been expanded to reduce lease fees that affect lease payments due on or before June 30, 2022. Lessee should consistently apply practical expedients to contracts with similar characteristics in similar circumstances. Please see Note 42 for the details of the amount recognized in profit or loss during the reporting period to reflect changes in lease payments arising from the rent concession.

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2) The details of IFRSs that have been issued and published as of the date of issue approval of financial statements but have not yet reached the effective date, and which the Group has not applied at an earlier date are as follows:

①

Amendments to

IFRS 3 Business Combination

—Reference to the Conceptual Framework

The amendments update a reference of definition of assets and liabilities qualify for recognition in revised Conceptual Framework for Financial Reporting. However, the amendments add an exception for the recognition of liabilities and contingent liabilities within the scope of IAS 37 Provisions, Contingent Liabilities and Contingent Assets, and IFRIC 21 Levies. The amendments also confirm that contingent assets should not be recognized at the acquisition date. The amendments should be applied for annual periods beginning on or after January 1, 2022, and earlier application is permitted. The Group does not expect that these amendments have a significant impact on the financial statements.

②

Amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets—Onerous Contracts: Cost of Fulfilling a Contract

The amendments clarify that the direct costs of fulfilling a contract include both the incremental costs of fulfilling the contract and an allocation of other costs directly related to fulfilling contracts when assessing whether the contract is onerous. The amendments should be applied for annual periods beginning on or after January 1, 2022, and earlier application is permitted. The Group does not expect that these amendments have a significant impact on the financial statements.

③

Amendments to IAS 16 Property, Plant and Equipment—Proceeds before intended use

The amendments prohibit an entity from deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced while the entity is preparing the asset for its intended use. Instead, the entity will recognize the proceeds from selling such items, and the costs of producing those items, in profit or loss. The amendments should be applied for annual periods beginning on or after January 1, 2022, and earlier application is permitted. The Group does not expect that these amendments have a significant impact on the financial statements.

④

Annual Improvements to IFRSs 2018-2020

Annual improvements of IFRSs 2018-2020 Cycle should be applied for annual periods beginning on or after January 1, 2022, and earlier application is permitted. The Group does not expect that these amendments have a significant impact on the financial statements.

•

IFRS 1 First time Adoption of Korean International Financial Reporting Standards- Subsidiaries that are first-time adopters

•

IFRS 9 Financial Instruments - Fees related to the 10% test for derecognition of financial liabilities

•

IFRS 16 Leases- Lease incentives

•

IAS 41 Agriculture - Measuring fair value

⑤

Amendments to IAS 1 Presentation of Financial Statements—Classification of Liabilities as Current or

Non-current

The amendments clarify that liabilities are classified as either current or

non-current,

depending on the substantive rights that exist at the end of the reporting period. Classification is unaffected by the likelihood that an entity will exercise right to defer settlement of the liability or the expectations of management. Also, the settlement of liability include the transfer of the entity’s own equity instruments, however, it would be excluded if an option to settle them by the entity’s own equity instruments if compound financial instruments is met the definition of equity instruments and recognized separately from the liability. The amendments should be applied for annual periods beginning on or after January 1, 2023, and earlier application is permitted. The Group does not expect that these amendments have a significant impact on the financial statements.

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⑥

Amendments to IAS 1 ‘Presentation of Financial Statements’—Disclosure of ‘Accounting Policy’

To define and disclose material accounting policies, and to provide guidance on how to apply the concept of materiality, ‘Accounting Policy Disclosure’ of the IFRS Practice Statement 2 has been amended. These amendments apply for annual periods beginning on or after January 1,

2023, and early application is permitted. The Group does not expect that these amendments have a significant impact on the financial statements.

⑦

Amendments to IAS 8 ‘Accounting Policies, Changes in Accounting Estimates and Errors’—Definition of ‘Accounting Estimates’

The amendments have defined accounting estimates and clarified how to distinguish them from changes in accounting policies. These amendments apply for annual periods beginning on or after January 1,

2023, and early application is permitted. The Group does not expect that these amendments have a significant impact on the financial statements.

⑧

Amendments to IAS 12 ‘Income Taxes’—deferred tax related to assets and liabilities arising from a single transaction

Additional phrase ‘the temporary difference to be added and the temporary difference to be deducted do not occur in the same amount’ has been added to initial recognition exception for a transaction in which an asset or liability is initially recognized. These amendments apply for annual periods beginning on or after January 1, 2023, and early application is permitted. The Group does not expect that these amendments have a significant impact on the financial statements.

The above enacted or amended standards will not have a significant impact on the Group.

(2) Basis of consolidated financial statement presentation

The consolidated financial statements consist of the financial statements of the Parent company and the entities (including structured entities) controlled by the Parent company (or its subsidiaries, which is the “Group”). Control is achieved where the Group 1) has the power over the investee, 2) is exposed, or has rights, to variable returns from its involvement with the investee, and 3) able to use its power to affect its returns. The Group reassesses whether it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.

When the Group has less than most of the voting rights of an investee, it has power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The Group considers all relevant facts and circumstances in assessing whether the Group’s voting rights in an investee are enough to give it power, including:

•

The relative size of the Group’s holding of voting rights and dispersion of holdings of the other vote holders;

•

Potential voting rights held by the Group, other vote holders or other parties;

•

Rights arising from other contractual arrangements;

•

Any additional facts and circumstances that indicate that the Group has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders’ meetings.

Income and expenses of subsidiaries acquired or disposed of during the year are included in the consolidated statement of comprehensive income from the date the Group gains control until the date when the Group ceases to control the subsidiary. The carrying amount of the

non-controlling

interest after the acquisition is the amount initially recognized plus the amount of proportionate interest of the

non-controlling

interest in the changes in equity since the acquisition. Total comprehensive income of subsidiaries is attributed to the owner of the Group and to the

non-controlling

interests even if this results in the

non-controlling

interests having a negative (-) balance.

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When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies.

All intra-group transactions and, related assets and liabilities, income and expenses are eliminated in full on consolidation.

Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group’s interests and the

non-controlling

interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the

non-controlling

interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to the owner of the parent company.

When the Group loses control of a subsidiary, a gain or loss on disposal is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any

non-controlling

interests. When assets of the subsidiary are carried at revalued amounts or fair values and the related cumulative gain or loss has been recognized in other comprehensive income and accumulated in equity, the amounts previously recognized in other comprehensive income and accumulated in equity are accounted for as if the Group had directly disposed of the relevant assets (i.e. reclassified to profit or loss or transferred directly to retained earnings). The fair value of any investment retained in the former subsidiary at the date when control is lost is recognized as the fair value on initial recognition for subsequent accounting under IFRS 9 Financial Instruments or, when applicable, the cost on initial recognition of an investment in an associate or a joint venture.

(3) Business combinations

Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured as the sum of the acquisition-date fair values of the assets transferred by the Group in exchange for control of the acquiree, liabilities assumed by the Group for the former owners of the acquiree and the equity interests issued by the Group. Acquisition-related costs are generally recognized in profit or loss as incurred.

At the acquisition date, the acquiree’s identifiable acquires assets, liabilities and contingent liabilities are recognized at their fair value, except for the followings:

•

Deferred tax assets or liabilities and assets or liabilities related to employee benefit arrangements are recognized and measured in accordance with IAS 12 Income Taxes and IAS 19 Employee Benefits, respectively;

•

Liabilities or equity instruments related to share-based payment arrangements of the acquiree or share-based payment arrangements of the Group entered into to replace share-based payment arrangements of the acquiree are measured in accordance with IFRS 2 Share-based Payment at the acquisition date; and

•

Non-current

assets (or disposal groups) that are classified as held for sale are measured in accordance with IFRS 5

Non-current

Assets Held for Sale and Discontinued Operations

Any excess of the sum of the consideration transferred, the amount of any

non-controlling

interest in the acquiree and the fair value of the Group’s previously held equity interest (if any) in the acquiree over the net of identifiable assets and liabilities assumed of the acquiree at the acquisition date is recognized as goodwill.

If, after reassessment, the Group’s interest in the fair value of the acquiree’s identifiable net assets exceeds the sum of the consideration transferred, the amount of any

non-controlling

interest in the acquiree and the fair value of the acquirer’s previously held equity interest in the acquiree (if any), the excess is recognized immediately in net income as a bargain purchase gain.

The subsidiary’s

non-controlling

interests are identified separately from the Group’s equity. If the element of the

non-controlling

interest in the acquiree is the current interest at the acquisition date and the holder is

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entitled to a proportional share of the entity’s net assets, the

non-controlling

interest can be measured in 1) fair value or 2) proportionate share of the current equity instrument of the amount recognized for the acquiree’s identifiable net assets at the acquisition date. The selection of these metrics is made for each acquisition transaction. All other

non-controlling

interests are measured at fair value at the acquisition date. The carrying amount of the

non-controlling

interest after acquisition reflects the proportional interest of the

non-controlling

interest in changes in equity after acquisition in the initial recognition amount. Even if the

non-controlling

interest is a negative (-) balance, total comprehensive income is attributed to the

non-controlling

interest.

When the consideration transferred by the Group in a business combination includes assets or liabilities resulting from a contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are adjustments that arise from additional information obtained during the ‘measurement period’ (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date.

The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration other than the above is remeasured at subsequent reporting dates as appropriate, with the corresponding gain or loss being recognized in profit or loss.

When a business combination is achieved in stages, the Group’s previously held equity interest in the acquiree is remeasured at fair value at the acquisition date (i.e., the date when the Group obtains control) and the resulting gain or loss, if any, is recognized in net income (or other comprehensive income, if applicable). Amounts arising from changes in value of interests in the acquiree prior to the acquisition date that have previously been recognized in other comprehensive income are recognized, identical to the treatment assuming interests are sold directly. If the initial accounting for a business combination is not completed by the end of the reporting period in which the business combination occurred, the Group reports in consolidated financial statements the provisional amount of items that have not been accounted for. If there is new information about the facts and circumstances that existed as of the acquisition date during the measurement period (see above), the Group retrospectively adjusts the provisional amounts recognized at the acquisition date or recognizes additional assets and liabilities to reflect the information that would have affected the measurement of the amount recognized at the acquisition date if it had already known at the acquisition date.

(4) Investments in joint ventures and associates

An associate is an entity over which the Group has significant influence, and that is not a subsidiary or a joint venture. Significant influence is the power to participate in making decision on the financial and operating policy of the investee but is not control or joint control over those policies.

A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to net assets relating to the arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.

The net income of current period and the assets and liabilities of the joint ventures and associates are incorporated in these consolidated financial statements using the equity method of accounting, except when the investment is classified as held for sale, in which case it is accounted for in accordance with IFRS 5

Non-current

Assets Held for Sale and Discontinued Operations. Under the equity method, an investment in the joint ventures and associates is initially recognized in the consolidated statements of financial position at cost and adjusted

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thereafter to recognize the Group’s share of the net assets of the joint ventures and associates and any impairment. When the Group’s share of losses of the joint ventures and associates exceeds the Group’s interest in the associate, the Group discontinues recognizing its share of further losses. Additional losses are recognized only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the joint ventures and associates.

Investment in joint ventures and associates are accounted for and applied with the equity method from the time the investee becomes an associate or a joint venture.

Any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities of the joint ventures and associates recognized at the date of acquisition is recognized as goodwill, which is included within the carrying amount of the investment. Any excess of the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition exists after the review, it is recognized immediately in net income.

The requirements of IAS 28—Investments in Associates and Joint Ventures to determine whether there has been a loss event are applied to identify whether it is necessary to recognize any impairment loss with respect to the Group’s investment in the joint ventures and associates. When necessary, the entire carrying amount of the investment (including goodwill) is tested for impairment in accordance with IAS 36—Impairment of Assets as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs to sell) with its carrying amount. Any impairment loss recognized is not allocated to any asset (including goodwill), which forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognized in accordance with IAS 36 to the extent that the recoverable amount of the investment subsequently increases.

The Group ceases to use the equity method from the time it fails meet the definition of an associate or a joint venture. Upon a loss of significant influence over the joint ventures and associates, the Group discontinues the use of the equity method and measures at fair value of any investment that the Group retains in the former joint ventures and associates from the date when the Group loses significant influence. The fair value of the investment is regarded as its fair value on initial recognition as a financial asset in accordance with IFRS 9 Financial Instruments; Recognition and Measurement. The Group recognized differences between the carrying amount and fair value in net income and it is included in determination of the gain or loss on disposal of joint ventures and associates. The Group accounts for all amounts recognized in other comprehensive income in relation to that joint ventures and associates on the same basis as would be required if the joint ventures and associates had directly disposed of the related assets or liabilities. Therefore, if a gain or loss previously recognized in other comprehensive income by an associate or a joint venture would be reclassified to net income on the disposal of the related assets or liabilities, the Group reclassifies the gain or loss from equity to net income as a reclassification adjustment.

When the Group’s ownership of interest in an associate or a joint venture decreases but the Group continues to maintain significant influence over an associate or a joint venture, the Group reclassifies to profit or loss the proportion of the gain or loss that had previously been recognized in other comprehensive income relating to that decrease in ownership interest if the gain or loss would be reclassified to profit or loss on the disposal of the related assets or liabilities. Meanwhile, if interest on associate or joint venture meets the definition of

non-current

asset held for sale, it is accounted for in accordance with IFRS 5.

The Group continues to use the equity method when an investment in an associate becomes an investment in a joint venture or an investment in a joint venture becomes an investment in an associate. There is no remeasurement to fair value upon such changes in ownership interests.

When the Group transacts with an associate or a joint venture of the Group, profits and losses resulting from the transactions with the associate or joint venture are recognized in the Group’s consolidated financial statements only to the extent of interests in the associate or joint venture that are not related to the Group.

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The Group applies IFRS 9 Financial Instruments, including the impairment requirements, to its long-term investment interests in associates and joint ventures that form part of its net investment without applying the equity method. In addition, when applying IFRS 9 to long-term investments, the Group does not consider adjustments to the carrying amount required by IAS 28. Examples of such adjustments include an impairment assessment or an adjustment to the carrying amount of the long-term investment interest resulting from the allocation of losses to the investee in accordance with IAS 28.

(5) Investment in joint operation

A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.

When the Group operates as a joint operator, it recognizes in relation to its interest in a joint operation:

•

its assets, including its share of any assets held jointly;

•

its liabilities, including its share of any liabilities incurred jointly;

•

its revenue from the sale of its share of the output arising from the joint operation;

•

its share of the revenue from the sale of the output by the joint operation;

•

its expenses, including its share of any expenses incurred jointly.

The Group accounts for the assets, liabilities, revenues and expenses that correspond to its interest in a joint operation in accordance with the IFRSs and IASs applicable to the specific assets, liabilities, revenues and expenses.

When the Group enters into a transaction with a joint operation in which it is a joint operator, such as a sale or contribution of assets, it is conducting the transaction with the other parties to the joint operation and, as such, the Group recognizes gains and losses resulting from such a transaction only to the extent of the other parties’ interests in the joint operation.

When the Group enters a transaction with a joint operation in which it is a joint operator, such as a purchase of assets, it does not recognize proportional share of profit or loss until the asset is sold to a third party.

(6) Revenue recognition

IFRS 15 requires the recognition of revenues based on transaction price allocated to the performance obligation when or as the Group performs that obligation to the customer. Revenues other than those from contracts with customers, such as interest revenue and loan origination fee (cost), are recognized through effective interest rate method.

1) Revenues from contracts with customers

The Group recognizes revenue when the Group satisfies a performance obligation by transferring a promised good or service to a customer. When a performance obligation is satisfied, the Group shall recognize as a revenue the amount of the transaction price that is allocated to that performance obligation. The transaction price is the amount of consideration to which the Group expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties.

The Group is recognizing revenue by major sources as shown below:

①

Fees and commission received for brokerage

The fees and commission received for agency are the amount of consideration or fee expected to be entitled to receive in return for providing goods or services to the other parties with the Group acting as

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an agency, such as in the case of sales of bancassurance and beneficiary certificates. Most of these fees and commission received for brokerage are from the business activities relevant to Banking segment.

②

Fees and commission received related to credit

The fees and commission received related to credit mainly include the lending fees received from the loan activity and the fees received in the L/C transactions. Except for the fees and commission accounted for in calculating the effective interest rate, it is generally recognized when the performance obligation has been performed. Most of these fees and commission received related to credit are from the business activities relevant to Banking, Credit card and Investment banking segment.

③

Fees and commission received for electronic finance

The fees and commission received for electronic finance include fees received in return for providing various kinds of electronic financial services through firm-banking and CMS. These fees are recognized as revenue immediately upon the completion of services. Most of these fees and commission received for electronic finance are from the business activities relevant to Banking and Investment banking segment.

④

Fees and commission received on foreign exchange handling

The fees and commission received on foreign exchange handling consist of various fees incurred when transferring foreign currency. The point of processing the customer’s request is the time when performance obligation is satisfied, and revenue is immediately recognized when fees and commission are received after requests are processed. The business activities relevant to these fees and commission received on foreign exchange handling are substantially attributable to Banking segment.

⑤

Fees and commission received on foreign exchange

The fees and commission received on foreign exchange consist of fees related to the issuance of various certificates, such as exchange, import and export performance certificates, purchase certificates, etc. The point of processing the customer’s request is the time when performance obligation is satisfied, and revenue is immediately recognized when fees and commission are received after requests are processed. The business activities relevant to these fees and commission received on foreign exchange are substantially attributable to Banking segment.

⑥

Fees and commission received for guarantee

The fees and commission received for guarantee include the fees received for the various warranties. The activities related to the warranty consist mainly of performance obligations satisfied over time and fees and commission are recognized over the guarantee period. The business activities relevant to these fees and commission received for guarantee are substantially attributable to Banking segment.

⑦

Fees and commission received on credit card

The fees and commission received on credit card consist mainly of merchant account fees and annual fees.

The Group recognizes merchant account fees by multiplying agreed commission rate to the amount paid by using the credit card. The annual fees are performance obligation satisfied over time and are recognized over agreed periods after the annual fees are paid in advance. The business activities relevant to these fees and commission received on credit card are substantially attributable to Credit cards segment.

⑧

Fees and commission received on securities business

The fees and commission received on securities business consist mainly of fees and commission for the sale of beneficiary certificates, and these fees are recognized when the beneficiary certificates are sold to customers. The business activities relevant to these fees and commission received on securities business are substantially attributable to Banking and Investment banking segment.

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⑨

Fees and commission from trust management

The fees and commission from trust management consist of fees and commission received in return for the operation and management services for entrusted assets. These operation and management services are performance obligations satisfied over time, and revenue is recognized over the service period. Among the fees and commission from trust management, variable considerations such as profit commission that are affected by the value of entrusted assets and base return of the future periods are recognized as revenue when limitations to the estimates are lifted. Most of these fees and commission received for brokerage are from the business activities relevant to Banking segment.

⑩

Fees and commission received on credit Information

The fees and commission received on credit Information are composed of the fees and commission received by performing credit investigation and proxy collection services. Credit investigation fees and commission are the amount received in return for verifying the information requested by the customer and are recognized as revenue at the time the verification is completed. Proxy collection service fees are recognized by multiplying the applicable rate to the collected amount at the time when collection services are completed. Most of these fees and commission received for brokerage are from the business activities relevant to other segments.

Other fees

Other fees are usually fees related to remittances, but include fees related to various other services provided to customers by the Group. These fees are recognized when transactions occur at the customers’ request and services are provided, at the same time when commission are received. These other fees occur across all operating segments.

2) Revenues from sources other than contracts with customers

①

Interest income

Interest income on financial assets measured at FVTOCI and financial assets at amortized costs is measured using the effective interest method.

The effective interest method is a method of calculating the amortized cost of a debt instrument and of allocating the interest income over the expected life of the asset. The effective interest rate is the rate that exactly discounts estimated future cash flows to the instrument’s initial unamortized cost over the expected period, or shorter if appropriate. Future cash flows include commissions and cost of reward points (limited to the primary component of effective interest rate) and other premiums or discounts that are paid or received between the contractual parties when calculating the effective interest rate but does not include expected credit losses. All contractual terms of a financial instrument are considered when estimating future cash flows.

For purchased or originated credit-impaired financial assets, interest revenue is recognized by applying the credit-adjusted effective interest rate to the amortized cost of the financial asset from initial recognition. Even if the financial asset is no longer impaired in the subsequent periods due to credit improvement, the basis of interest revenue calculation is not changed from amortized cost to unamortized cost of the financial assets.

②

Loan origination fees and costs

The commission fees earned on loans, which is part of the effective interest of loans, is accounted for as deferred origination fees. Incremental costs related to the origination of loans are accounted for as deferred origination fees and is being added or deducted to/from interest income on loans using effective interest rate method.

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3) Dividend income

Dividend income is recognized when the right to receive dividends as a shareholder is confirmed. Dividend income is recognized as an appropriate item of profit or loss in the statement of comprehensive income according to the classification of financial instruments.

(7) Accounting for foreign currencies

The Group’s consolidated financial statements are presented in Korean Won, which is the functional currency of the Group. At the end of each reporting period, monetary assets and liabilities denominated in foreign currencies are translated to the functional currency at its prevailing exchange rates at the date. The effective portion of the changes in fair value of a derivative that qualifies as a cash flow hedge and the foreign exchange differences on monetary items that form part of net investment in foreign operations are recognized in equity.

Assets and liabilities of the foreign operations subject to consolidation are translated into Korean Won at foreign exchange rates at the end of the reporting period. Except for situations in which it is required to use exchange rates at the date of transaction due to significant changes in exchange rates during the period, items that belong to profit or loss shall be measured by average exchange rate, with foreign exchange differences recognized as other comprehensive income and added to equity (allocated to

non-controlling

interests, if appropriate). When foreign operations are disposed, the controlling interest’s share of accumulated foreign exchange differences related to such foreign operations will be reclassified to profit or loss, while

non-controlling

interest’s corresponding share will not be reclassified.

Adjustments to fair value of identifiable assets and liabilities, and goodwill arising from the acquisition of foreign operations will be treated as assets and liabilities of the corresponding foreign operation and translated using foreign exchange rates at the end of the period. The foreign exchange differences are recognized in other comprehensive income.

(8) Cash and cash equivalents

The Group is classifying cash on hand, demand deposits, interest-earning deposits with original maturities of up to three months on acquisition date, and highly liquid investments that are readily convertible to known amounts of cash and subject to an insignificant risk of changes in value as cash and cash equivalents.

(9) Financial assets and financial liabilities

1) Financial assets

A regular way purchase or sale of financial assets is recognized or derecognized, as applicable, using trade date accounting or settlement date accounting. A regular way purchase or sale is a purchase or sale of a financial asset under a contract whose term requires delivery of the asset within the time frame established generally by regulation or convention in the marketplace concerned.

On initial recognition, financial assets are classified into financial assets at FVTPL, financial assets at FVTOCI, and financial assets at amortized cost according to its business model and contractual cash flows.

a) Business model

The Group evaluates the way business is being managed, and the purpose of the business model for managing a financial asset best reflects the way information is provided to the management at its portfolio level. Such information considers the following:

•

The accounting policies and purpose specified for the portfolio, the actual operation of such policies. This includes strategy of the management focusing on the receipt of contractual interest revenue,

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maintaining a certain level of interest income, matching the duration of financial assets and the duration of corresponding liabilities to obtain the asset, and outflow or realization of expected cash flows from disposal of assets

•

The way the performance of a financial asset held under the business model is evaluated, and the way such evaluation is being reported to the management

•

The risk affecting the performance of the business model (and financial assets held under the business model), and the way such risk is being managed

•

The compensation plan for the management (e.g. whether the management is being compensated based on the fair value of assets or based on contractual cash flows received)

•

Frequency, amount, timing and reason for sale of financial assets in the past and forecast of future sale activities.

b) Contractual cash flows

The principal is defined to be the fair value of a financial assets at initial recognition. Interest is not only composed of consideration for the time value of money, consideration for the credit risk related to remaining principal at a certain period of time, and consideration for other cost (e.g. liquidity risk and cost of operation) and fundamental risk associated with lending, but also profit.

When evaluating whether contractual cash flows are solely payments of principal and interests, the Group considers the contractual terms of the financial instrument. When a financial asset contains contractual conditions that modify the timing and amount of contractual cash flows, it is required to determine whether contractual cash flows that arise during the remaining life of the financial instrument due to such contractual condition are solely payments of principal and interest. The Group considers the following elements when evaluating the above:

•

Conditions that lead to modification of timing or amount of cash flows

•

Contractual terms that adjust contractual nominal interest, including floating rate features

•

Early payment features and maturity extension features

•

Contractual terms that limit the Group’s claim on cash flows arising from certain assets (e.g.

non-recourse

feature)

①

Financial assets at FVTPL

The Group is classifying those financial assets that are not classified as either financial assets at amortized cost or financial assets at FVTOCI, and those designated to be measured at FVTPL, as financial assets at FVTPL. Financial assets at FVTPL are measured at fair value, and related profit or loss is recognized in net income. Transaction costs related to acquisition at initial recognition is recognized in net income immediately upon its occurrence.

It is possible to designate a financial asset as financial asset at FVTPL if at initial recognition: (a) it is possible to remove or significantly reduce recognition or measurement mismatch that may otherwise have occurred if not for its designation as financial asset at FVTPL; (b) the financial asset forms part of the Group’s financial instrument group (a group composed of a combination of financial asset or liability), is measured at fair value and is being evaluated for its performance, and such information is provided internally; and (c) the financial asset is part of a contract that contains one or more of embedded derivatives, and is a hybrid contract in which designation as financial asset at FVTPL is allowed under IFRS 9 Financial Instruments. However, the designation is irrevocable.

②

Financial assets at FVTOCI

When financial assets are held under a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and when contractual cash flows from such financial assets are solely payments of principal and interest, the financial assets are classified as financial assets

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at FVTOCI. Also, for investments in equity instruments that are not held for short-term trade, an irrevocable election is available at initial recognition to present subsequent changes in fair value as other comprehensive income.

At initial recognition, financial assets at FVTOCI are measured at its fair value plus any direct transaction cost, and is subsequently measured in fair value. However, for equity instruments that do not have a quotation in an active market and in which fair value cannot be measured reliably, they are measured at cost. The income tax effects related to the changes in fair value except for profit or loss items such as impairment losses (reversals), interest revenue calculated by using effective interest method, and foreign exchange gain or loss about debt instrument are recognized as other comprehensive income until the asset’s disposal. Upon derecognition, the accumulated other comprehensive income is reclassified from equity to net income for FVTOCI (debt instrument) and reclassified within the equity for FVTOCI (equity instruments).

③

Financial assets at amortized cost

When financial assets are held under a business model whose objective is to hold financial assets in order to collect contractual cash flows, and when contractual cash flows from such financial assets are solely payments of principal and interest, the financial assets are classified as financial assets at amortized cost. At initial recognition, financial assets at amortized cost are recognized at fair value plus any direct transaction cost. Financial assets at amortized cost are presented at amortized cost using effective interest method, less any loss allowance.

2) Financial liabilities

At initial recognition, financial liabilities are classified into either financial liabilities at FVTPL or financial liabilities at amortized cost.

Financial liabilities are usually classified as financial liabilities at FVTPL when they are acquired with a purpose to repurchase them within a short period of time, when they are part of a certain financial instrument portfolio that is actually and recently being managed with a purpose of short-term profit and joint management by the Group at initial recognition, and when they are derivatives that do not qualify as hedging instruments. Financial liabilities at FVTPL are measured at fair value plus direct transaction cost at initial recognition and are subsequently measured at fair value. Profit or loss arising from financial liabilities at FVTPL is recognized in net income when occurred.

It is possible to designate a financial liability as financial liability at FVTPL if at initial recognition: (a) it is possible to remove or significantly reduce recognition or measurement mismatch that may otherwise have occurred if not for its designation as financial liability at FVTPL; (b) the financial asset forms part of the Group’s financial instrument group (a group composed of a combination of financial asset or liability) according to the Group’s documented risk management or investment strategy, is measured at fair value and is being evaluated for its performance, and such information is provided internally; and (c) the financial liability is part of a contract that contains one or more of embedded derivatives, and is a hybrid contract in which designation as financial liability at FVTPL is allowed under IFRS 9 Financial Instruments.

Financial liabilities designated as financial liabilities at FVTPL are initially recognized at fair value, with any direct transaction cost recognized in profit or loss and are subsequently measured at fair value. Any profit or loss from financial liabilities at FVTPL is recognized in profit or loss.

Financial liabilities not classified as financial liabilities at FVTPL are measured at amortized cost.

3) Reclassification

Financial assets are not reclassified after initial recognition unless the Group modifies the business model used to manage financial assets. When the Group modifies the business model used to manage financial assets, all affected financial assets are reclassified on the first day of the first reporting period after the modification.

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4) Derecognition

Financial assets are derecognized when contractual rights to cash flows from the financial assets are expired, or when substantially all of risk and reward for holding financial assets is transferred to another entity as a result of a sale of financial assets. If the Group does not have and does not transfer substantially all of the risk and reward of holding financial assets with control of the transferred financial assets retained, the Group recognizes financial assets to the extent of its continuing involvement. If the Group holds substantially all the risk and reward of holding a financial asset, it continues to recognize that asset and proceeds are accounted for as collateralized borrowings.

When a financial asset is fully derecognized, the difference between the book value and the sum of proceeds and accumulated other comprehensive income is recognized as profit or loss in case of FVTOCI (debt instruments), and as retained earnings for FVTOCI (equity instruments).

In case when a financial asset is not fully derecognized, the Group allocates the book value into amounts retained in the books and removed from the books, based on the relative fair value of each portion at the date of sale, and based on the degree of continuing involvement. For the derecognized portion of the financial assets, the difference between its book value and the sum of proceeds and the portion of accumulated other comprehensive income attributable to that portion will be recognized in profit or loss in case of debt instruments and recognized in retained earnings in case of equity instruments. The accumulated other comprehensive income is distributed to the portion of book value retained in the books, and to the portion of book value removed from the books.

The Group derecognizes financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or have expired. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable is recognized in profit or loss.

When the Group exchanges with the existing lender one debt instrument into another one with the substantially different terms, such exchange is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, the Group accounts for substantial modification of terms of an existing liability or part of it as an extinguishment of the original financial liability and the recognition of a new liability. It is assumed that the terms are substantially different if the discounted present value of the cash flows under the new terms, including any fees paid net of any fees received and discounted using the original effective rate is at least 10 percent different from the discounted present value of the remaining cash flows of the original financial liability.

5) Fair value of financial instruments

Financial assets at FVTPL and financial assets at FVTOCI are measured and presented in consolidated financial statements at their fair values, and all derivatives are also subject to fair value measurement.

Fair value is defined as the price that would be received to exchange an asset or paid to transfer a liability in a recent transaction between independent parties that are reasonable and willing. Fair value is the transaction price of identical financial assets or financial liabilities generated in an active market. An active market is a market where trade volume is sufficient and objective price information is available due to the fact that bid and ask price differences are small.

When trade volume of a financial instrument is low, when transaction prices within the market show large differences among them, or when it cannot be concluded that a financial instrument is being traded within an active market due to disclosures being extremely shallow, fair value is measured using valuation techniques based on alternative market information or using internal valuation techniques based on general and observable information obtained from objective sources. Market information includes maturity and characteristics, duration, similar yield curve, and variability measurement of financial instruments of similar nature. Fair value amount contains unique assumptions on each entity (the Group concluded that it is using assumptions applied in valuing financial instruments in the market, or risk-adjusted assumptions in case marketability does not exist).

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The market approach and income approach, which are valuation techniques used to estimate the fair value of financial instruments, both require significant judgment. Market approach measures fair value using either a recent transaction price that includes the financial instrument, or observable information on comparable firm or assets. Income approach measures fair value through discounting future cash flows with a discount rate reflecting market expectations, and revenue, operating income, depreciation, capital expenditures, income tax, working capital and estimated residual value of financial investments are being considered when deriving future cash flows. Valuation techniques such as the above include estimates based on the financial instruments’ complexity and usefulness of observable information in the market.

The valuation techniques used in the evaluation of financial instruments are explained below.

a)	Financial assets at FVTPL and Financial assets at FVTOCI

The fair value of equity securities included in financial assets at FVTPL and financial assets at FVTOCI category is recognized in the statement of financial position at its available market price. Debt securities traded in the

over-the-counter

market are generally recognized at an amount computed by an independent appraiser. When the Group uses the fair value determined by independent appraisers, the Group usually obtains three values from three different appraisers for each financial instrument and selects the minimum amount without making additional adjustments. For equity securities without marketability, the Group uses the amount determined by the independent appraiser. The Group verifies the prices obtained from appraisers in various ways, including the evaluation of independent appraisers’ competency, indirect verification through comparison between appraisers’ price and other available market information, and reperformed by employees who have knowledge of valuation models and assumptions that appraisers used.

b)	Derivatives

The Group’s transactions involving derivatives such as futures and exchange traded options are measured at market value. For exchange traded derivatives classified as level 2 in the fair value hierarchy, the fair value is estimated using internal valuation techniques. If there are no publicly available market prices because they are traded

over-the-counter,

fair value is measured through internal valuation techniques. When using internal valuation techniques to derive fair value, the types of derivatives, base interest rate or characteristics of prices, or stock market indices are considered. When variables used in the internal valuation techniques are not observable information in the market, such variables may contain significant estimates.

c)	Adjustment of valuation amount

The Group is exposed to credit risk when a counterparty to a derivative contract does not perform its contractual obligation, and the exposure amount is equal to the amount of derivative asset recognized in the statement of financial position. When the Group earns income through valuation of derivatives, such income is recognized as derivative asset in the statement of financial position. Some of the derivatives are traded in the market, but most of the derivatives are measured at estimated fair value derived from internal valuation models that use observable information in the market. As such, in order to estimate the fair value there should be an adjustment made to incorporate counterparty’s credit risk, and credit risk adjustment is being considered when valuing derivative assets such as

over-the

counter derivatives. The amount of financial liabilities is also adjusted by the Group’s own credit risk when valuing them.

The amount of adjustment is derived from counterparty’s probability of default and loss given default. This adjustment considers contractual matters that are designed to reduce the Group’s exposure to each counterparty’s credit risk. When derivatives are under master netting arrangement, the exposure used in the computation of credit risk adjustment is a net amount after adding/deducting cash collateral received (or paid) from loss (or gain) position derivatives with the same counterparty.

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6) Expected credit losses on financial assets

The Group recognizes loss allowance on expected credit losses for the following assets:

•

Financial assets at amortized cost

•

Debt instruments measured at FVTOCI

•

Contract assets as defined by IFRS 15

Expected credit losses are weighted-average value of a range of possible results, considering the time value of money, and are measured by incorporating information on current conditions and forecasts of future economic conditions that are available without undue cost or effort.

The methods to measure expected credit losses are classified into following three categories in accordance with IFRS:

•

General approach: Financial assets that does not belong to below two models and unused loan commitments

•

Simplified approach: When financial assets are either trade receivables, contract assets or lease receivables

•

Credit impairment model: Purchased or originated credit-impaired financial assets

The measurement of loss allowance under general approach is differentiated depending on whether the credit risk has increased significantly after initial recognition. That is, loss allowance is measured based on

12-month

expected credit loss when the credit risk has not increased significantly after initial recognition, while loss allowance is measured at lifetime expected credit loss when credit risk has increased significantly. Lifetime is the expected remaining life of the financial instrument up to the maturity date of the contract.

The measurement of loss allowance under simplified approach is always based on lifetime expected credit loss, and loss allowance under credit impairment model is measured as the cumulative change in lifetime expected credit loss since initial recognition.

a) Measurement of expected credit losses on financial asset at amortized cost

The expected credit losses on financial assets at amortized cost is measured by the difference between the contractual cash flows during the period and the present value of expected cash flows. Expected cash inflows are computed for individually significant financial assets in order to calculate expected credit losses.

When financial assets that are not individually significant, they are included in a group of financial assets with similar credit risk characteristics and expected credit losses of the group are calculated collectively.

Expected credit losses are deducted through allowance for credit losses account, and when the financial asset is determined to be uncollectible, the loss allowance is written off from the books along with the related financial asset.

b) Measurement of expected credit losses on financial asset at FVTOCI (debt securities)

The measurement method of expected credit loss is identical to financial asset at amortized cost, but changes in the loss allowance is recognized in other comprehensive income. When financial assets at FVTOCI is disposed or repaid, the related loss allowance is reclassified from accumulated other comprehensive income to net income.

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(10) Offsetting financial instruments

Financial assets and liabilities are presented as a net amount in the statements of financial position when the Group has an enforceable legal right and an intention to settle on a net basis or to realize an asset and settle the liability simultaneously.

(11) Investment properties

The Group classifies a property held to earn rentals and/or for capital appreciation as an investment property. Investment properties are measured initially at cost, including transaction costs, less subsequent depreciation and impairment.

Subsequent costs are included in the carrying amount of the asset or recognized as a separate asset if it is probable that future economic benefits associated with the assets will flow into the Group and the cost of an asset can be measured reliably, and the book value of a portion of an asset that are replaced by a subsequent expenditure is removed from the books. Routine maintenance and repairs are expensed as incurred.

While land is not depreciated, all other investment properties are depreciated based on the depreciation method and useful lives of premises and equipment. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, and when it is deemed appropriate to change them, the effect of any change is accounted for as a change in accounting estimates.

An investment property is derecognized from the consolidated financial statements on disposal or when it is permanently withdrawn from use and no future economic benefits are expected even from its disposal. The gain or loss on the derecognition of an investment property is calculated as the difference between the net disposal proceeds and the carrying amount of the property and is recognized in profit or loss in the period of the derecognition.

(12) Premises and equipment

Premises and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. The cost of an item of premises and equipment is expenditure directly attributable to their purchase or construction, which includes any cost directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. It also includes the initial estimate of costs of dismantling and removing the item and restoring the site on which it is located.

Subsequent costs are recognized in the carrying amount of an asset or as a separate asset (if appropriate) if it is probable that future economic benefit associated with the assets will flow into the Group and the cost of an asset can be measured reliably. Routine maintenance and repairs are expensed as incurred.

While land is not depreciated, for all other premises and equipment, depreciation is charged to net income on a straight-line basis by applying the following estimated economic useful lives on the amount of cost or revalued amount less residual value.


		Useful life
Buildings used for business purpose		35 to 57 years
Structures in leased office		4 to 5 years
Properties for business purpose		4 to 5 years

The Group reassesses the depreciation method, the estimated useful lives and residual values of premises and equipment at the end of each reporting period. If changes in the estimates are deemed appropriate, the changes are accounted for as a change in an accounting estimate. When there is an indicator of impairment and the carrying amount of a premises and equipment item exceeds the estimated recoverable amount, the carrying amount of such asset is reduced to the recoverable amount.

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(13) Intangible assets and goodwill

The Group recognizes the acquisition cost of an intangible asset as the manufacturing cost or purchase cost plus additional incidental expenses. Development costs are the sum of expenditures incurred after the asset recognition requirements, such as technical feasibility and future economic benefits, are met. After the initial recognition, the carrying value is presented as the accumulated amortization and accumulated impairment losses deducted from the cost.

The Group’s intangible asset are amortized over the following economic lives using the straight-line method. However, for some intangible assets, the period of time that is expected to be available is not predictable, so the useful life of some intangible assets is assessed as indefinite and not depreciated.

The estimated useful life and amortization method of intangible assets with a finite useful life are reviewed at the end of each reporting period. If changes in the estimates are deemed appropriate, the changes are accounted for as a change in an accounting estimate.


		Useful life
Industrial property rights		5 to 10 years
Development costs		5 years
Software and others		1 to 10 years

In addition, when an indicator that intangible assets are impaired is noted, and the carrying amount of the asset exceeds the estimated recoverable amount of the asset, the carrying amount of the asset is reduced to its recoverable amount.

Goodwill acquired in a business combination is included in intangible assets. Goodwill is not amortized but is subject to an impairment test at the cash-generating unit level every year, and whenever there is an indicator that goodwill is impaired.

Goodwill is allocated to each of the Group’s cash-generating unit (or groups of cash-generating units) that is expected to benefit from the synergies of the combination. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit on a pro rata basis based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognized directly in profit or loss. An impairment loss recognized for goodwill is not reversed in subsequent periods.

(14) Impairment of

non-monetary

assets

Intangible assets with indefinite useful lives or intangible assets that are not yet available for use are tested for impairment annually, regardless of whether there is any indication of impairment. All other assets are tested for impairment by estimating the recoverable amount when there is an objective indication that the carrying amount may not be recoverable. Recoverable amount is the higher of value in use or net fair value, less costs to sell. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount and such impairment loss is recognized immediately in net income.

(15) Leases

The Group determines whether the contract is a lease or includes a lease at the time of the contract agreement. In exchange for consideration in a contract, the contract is either a lease or includes a lease if the control over the use of the identified asset is transferred for a period of time. In determining whether a contract transfers control over the use of the asset to which it is identified, the Group uses the definition of lease IFRS 16.

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① The Group as a lessee

The Group recognizes the

right-of-use

asset and the lease liability at the commencement date of the lease. The

right-of-use

asset is measured at cost, which comprises the amount of the initial measurement of the lease liability, lease payments made at or before the commencement date (less any lease incentives received), initial direct costs, and an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located.

The

right-of-use

asset is subsequently depreciated on a straight-line basis from the commencement of the lease to the end of the lease term. However, if the lease transfers ownership of the underlying asset to the lessee by the end of the lease term or if the cost of the

right-of-use

asset reflects that the lessee will exercise a purchase option, the lessee depreciates the

right-of-use

asset same as a fixed asset from the commencement date to the end of the useful life of the underlying asset. The

right-of-use

asset may be reduced by an impairment of the underlying asset or adjusted by remeasurement of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at that date. The lease payments are discounted using the interest rate implicit in the lease, if that cannot be readily determined, the Group uses its incremental borrowing rate. The Group generally uses the incremental borrowing rate.

The Group makes adjustments to reflect the terms of the lease and the characteristics of the lease asset in interest rates obtained from external financial information and calculates the incremental borrowing rate.

The Group calculates the lease term by including the relevant period when it is quite certain that the lessee will exercise the extension option or the termination option. The Group calculates the enforceable period in consideration of the economic disadvantages of terminating the contract if the lessee and the lessor have the right to terminate it without the consent of the other parties.

The lease payments included in the measurement of the lease liability comprise the following:

•

Fixed payments (including

in-substance

fixed payments)

•

Variable lease payments that depend on an index (or a rate), initially measured using the index or rate as at the commencement date

•

Amounts expected to be payable by the lessee under residual value guarantees

•

The exercise price of a purchase option if the lessee is reasonably certain to exercise that option, lease payments of the extended period if the lessee is reasonably certain to exercise extension option, and payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease

The lease liability is subsequently increased be the interest expense recognized for the lease liability and decreased by reflecting the payment of the lease payments. The lease liability is remeasured if the future lease payments change depending on changes in the index (or a rate), changes in the expected amount to be paid under the residual value guarantee, and changes in the assessment of whether the purchase or extension option is reasonably certain to be exercised or not to exercise the terminate option.

When remeasuring a lease liability, the related

right-of-use

asset is adjusted and if the carrying amount of the

right-of-use

asset decreases to zero, the remeasurement amount is recognized in profit or loss.

The Group applies its judgment when determining the lease term for some lease contracts that include the extension option. The assessment of whether the Group is reasonably certain to exercise the option significantly affects the lease term and therefore has a significant impact on the amount of lease liabilities and the

right-of-use

asset.

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Because the Group can replace the asset without significant cost or business discontinuation, the option to extend the lease is not included in the lease liability in most offices and vehicle transport leases.

The Group reevaluates the lease term when the option is exercised (or not exercised) or the Group is liable to exercise (or not exercise) the option. Group will change its judgment only when significant events occur that affect the lessee’s control and the determination of the lease term, or there is a significant change in the circumstances.

Lease liabilities and

right-of-use-asset

increased by 9,076 million Won, reflecting the exercise impact of the extension and termination options during the current term.

In the statement of financial position, the Group classified the

right-of-use

assets that do not meet the definition of investment property as ‘premises and equipment’ and the lease liabilities as ‘other financial liabilities.

The Group has chosen a practical expedient that does not recognize the

right-of-use

asset and lease liabilities for short-term leases with a lease term less than 12 months and leases for which the underlying asset is of low value. The Group recognizes the lease payments associated with those leases as an expense on a straight-line basis over the lease term.

② The Group as a lessor

At the date of the agreement or the effective date of the modification containing the lease element, the Group allocates the consideration of the contract to each lease element based on its relative stand-alone price.

As a lessor, the Group classifies its leases as either a finance lease or an operating lease at the commencement date.

The Group subsequently judges whether the lease transfers substantially all the risks and rewards incidental to ownership of an underlying asset. A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an underlying asset, otherwise a lease is classified as an operating lease.

If the agreement contains both lease and

non-lease

elements, the Group applies IFRS 15 to allocate the consideration of the contract.

The Group applies the derecognition and impairment provisions of IFRS 9 to its net investment in the lease. The Group also carries out regular review of the unguaranteed residual value used to calculate total lease investment.

The Group recognizes lease payments from operating lease as income on a straight-line basis.

The accounting policy that the Group has applied as a lessor is not different from IFRS 16.

(16) Derivative instruments

Derivative instruments are classified as forwards, futures, options and swaps, depending on the types of transactions and are classified at the point of transaction as either trading or hedging based on its purpose.

Derivatives are initially recognized at fair value at the date of contract and are subsequently measured at fair value at the end of each reporting period. The resulting gain or loss is recognized in net income immediately unless the derivative is designated or effective as a hedging instrument. If derivatives have been designated as hedging instruments and if it is effective, the point of recognition of gain or loss depends on the characteristics of hedging relationship.

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Derivatives that have positive (+) fair values are recognized as financial assets and those that have negative (-) fair values are recognized as financial liabilities. Derivatives are not offset in the consolidated financial statements unless they have legally enforceable right to set off or are intended to set off.

1) Embedded derivatives

Embedded derivatives are components of a hybrid financial instrument that includes a

non-derivative

host contract. It has an effect of modifying part of cash flows of the hybrid financial instrument similar to an independent derivative.

Embedded derivatives that are part of a hybrid contract of which the host contract is a financial asset within the scope of IFRS 9 are not separated. The classification is done by considering the hybrid contract as a whole and subsequent measurement is either at amortized cost or fair value.

If embedded derivatives are part of a hybrid contract of which the host contract is not a financial asset within the scope of IFRS 9 (e.g. financial liability), then these are treated as separate derivatives if embedded derivatives meet the definition of a derivative, characteristics & risk of the embedded derivatives are not closely related to that of host contract, and if the host contract is not measured at FVTPL.

2) Hedge accounting

The Group is applying IFRS 9 in regard to hedge accounting. The Group is designating certain derivatives as hedging instrument against fair value changes in relation to the interest rate risk, foreign currency translation and interest rate risk, and foreign currency translation risk.

The Group is documenting the relationship between hedging instruments and hedged items at the commencement of hedging in accordance with their purpose and strategy. Also, the Group documents at the commencement and subsequent dates whether the hedging instrument effectively counters the changes in fair value of hedged items. A hedging instrument is effective only when it meets all the following criteria:

•

When there is an economic relationship between the hedged items and hedging instruments

•

When the effect of credit risk is not stronger than the change in value due to the economic relationship between the hedged items and hedging instruments

•

When the hedge ratio of hedging relationship is equal to the proportion of the number of items that the Group actually hedges and the number of hedging instruments that the Group actually uses to hedge the number of hedged items

When a hedging relationship no longer meets the hedging effectiveness requirements related to hedge ratio, but when the purpose of risk management on designated hedging relationship is still maintained, the hedge ratio of the hedging relationship is adjusted so that hedging relationship may meet the requirements again (Hedge ratio readjustment).

The Group has designated derivatives as hedging instrument except for the portion on foreign currency basis spread. The fair value change due to foreign currency basis spread is recognized in other comprehensive income and is accumulated in equity. If the hedged item is related to transactions, the accumulated other comprehensive income is reclassified to profit or loss when the hedged item affects the profit or loss. However, when

non-monetary

items are subsequently recognized due to hedged items, the accumulated equity is removed from the equity directly and is included in the initial book value of the recognized

non-monetary

items. Such transfers do not affect other comprehensive income. But if part or all of accumulated equity is not expected to be recovered in the future periods, the amount not expected to be recovered is immediately reclassified to profit or loss. If the hedged item is time-related, then the foreign currency basis spread on the day the derivative is designated as a hedging instrument that is related to the hedged item is reclassified to profit or loss over the term of the hedge.

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3) Fair value hedge

Gain or loss arising from valid hedging instrument is recognized in profit or loss. However, when the hedging instrument mitigates risks on equity instruments designated as financial assets at FVTOCI, related gain or loss is recognized in other comprehensive income.

The book value of hedged items that are not measured in fair value is adjusted by the changes in fair value arising from the hedged risk, with resulting gain or loss reflected in net income. In case of debt instruments measured at FVTOCI, book value is an amount that is already adjusted to fair value and thus gain or loss arising from the hedged risk is recognized in profit or loss instead of other comprehensive income without adjustments in book value. When the hedged item is equity instruments measured at FVTOCI, the gain or loss arising from hedged risk is retained at other comprehensive income in order to match the gain or loss with hedging instruments.

When gains or losses arising from the hedged risk are recognized in profit or loss of the current term, they are recognized as items related to the hedged items.

4) Cash flow hedge

The Group recognizes the effective portion of changes in the fair value of derivatives and other valid hedging instruments that are designated and qualified as cash flow hedges in other comprehensive income to the extent of cumulative fair value changes of the hedged item from the starting date of hedge accounting and it is cumulated in the cash flow hedge reserve. The gain or loss relating to the ineffective portion is recognized immediately in net income.

Amounts previously recognized in other comprehensive income and accumulated in equity are reclassified to net income when the hedged item affects net income. However, when

non-monetary

assets or liabilities are subsequently recognized due to expected transactions involving hedged items, the valuation gain or loss accumulated in the equity as other comprehensive income is removed from the equity and included in the initial book value of the recognized

non-monetary

assets or liabilities. Such transfers do not affect other comprehensive income. Also, if the cash flow hedge reserve is loss and accumulated other comprehensive income is a loss and part or all of the losses are not expected to be recovered in the future periods, the said amount is immediately reclassified to profit or loss.

Hedge accounting ceases to apply only when hedging relationship (or part of it) does not meet the requirements of hedge accounting (even after hedging relationship readjustment, if applicable). This treatment holds in case of lapse, disposal, expiry and exercise of hedging instruments, and this cease of treatment applies prospectively. At the point of cessation of cash flow hedge, the valuation gain or loss recognized as accumulated other comprehensive income continues to be recognized as equity, and is reclassified to profit or loss when the expected transaction is ultimately recognized as profit or loss. However, when transactions are no longer expected to occur, the valuation gain or loss of hedging instrument recognized as accumulated other comprehensive income is immediately reclassified to profit or loss.

(17) Assets (or disposal group) held for sale

The Group classifies a

non-current

asset (or disposal group) as held for sale if its carrying amount will be recovered principally through a sale transaction rather than through continuing use.

Non-current

assets (and

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disposal groups) classified as held for sale are measured at the lower of their previous carrying amount and fair value less costs to sell.

(18) Provisions

Provisions are recognized if it has present or contractual obligations as a result of the past event, it is probable that an outflow of resources will be required to settle the obligation and the amount of the obligation is reliably estimated. A provision is not recognized for the future operating losses.

The Group recognizes provisions related to the payment guarantees, loan commitment and litigations. Under the terms of lease agreement, the cost incurred by the Group to recover the leased asset to its original state are recognized as provisions at the commencement of the lease or during a specific period in which the obligation is incurred as a result of the using the asset. The provisions are measured as the best estimate of the expenditure required to recover the asset, which is regularly reviewed and sated to the new situation.

Where there are a number of similar obligations, the probability that an outflow will be required in settlement is determined by considering the obligations as a whole. Although the likelihood of outflow for any one item may be small, if it is probable that some outflow of resources will be needed to settle the obligations as a whole, a provision is recognized.

At the end of each reporting period, the remaining provision balance is reviewed an assessed to determine if the current best estimate is being recognized.

(19) Equity instruments issued by the Group

1) Capital and compound financial instruments

The Group classifies a financial instrument that it issues as a financial liability or an equity instrument in accordance with the substance of the contractual arrangement. A financial liability is a contractual obligation to deliver cash or another financial asset to another entity. An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. The compound financial instruments are financial instruments where it is neither a financial liability nor an equity instrument because it was designed to contain both equity and debt elements.

If the Group reacquires its own equity instruments, the consideration paid including the direct transaction costs (net of tax expense) are presented as a deduction from total equity until such instruments are retired or reissued. When these instruments are reissued, the consideration received (net of direct transaction costs) is included in the shareholder’s equity.

2) Hybrid securities

The Group classifies hybrid securities that have the unconditional right to avoid contractual obligations, such as to deliver cash or other financial assets in relation to financial instruments into equity instruments and presents as part of equity. Meanwhile, hybrid securities issued by subsidiaries of the group are classified as

non-controlling

interests according to the criteria, and the distribution paid is treated as net profit attributable to

non-controlling

interests in the consolidated comprehensive income statement.

(20) Financial guarantee contracts

A financial guarantee contract is a contract where the issuer must pay a certain amount of money in order to compensate losses suffered by the creditor when debtor defaults on a debt instrument in accordance with original or modified contractual terms.

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A financial guarantee is initially measured at fair value and is subsequently measured at the higher of the amounts below unless it is designated to be measured at FVTPL or when it arises from disposal of an asset.

•

Loss allowance in accordance with IFRS 9

•

Initial book value less accumulated profit measured in accordance with IFRS 15

(21) Employee benefits and pensions

The Group recognizes the undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by the employees. Also, the Group recognizes expenses and liabilities in the case of accumulating compensated absences when the employees render services that entitle their right to future compensated absences. Similarly, the Group recognizes expenses and liabilities for customary profit distribution or bonuses when the employees render services, even though the Group does not have legal obligation to do so because it can be construed as constructive obligation.

The Group is operating defined contribution plans and defined benefit plans. Contributions to defined contribution plans are recognized as an expense when employees have rendered services entitling them to receive the benefits. For defined benefit plans, the defined benefit liability is calculated through an actuarial assessment using the projected unit credit method every end of the reporting period, conducted by a professional actuaries. Remeasurement, comprising actuarial gains and losses, the return on plan assets (excluding the amount included in net interest from net defined benefit liability (asset)), and the effect of the changes to the asset ceiling is reflected immediately in the separate statement of financial position with a charge or credit recognized in other comprehensive income in the period in which they occur.

Remeasurement recognized in the consolidated statement of comprehensive income is not reclassified to profit or loss in the subsequent periods. Past service cost is recognized in profit or loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset. Defined benefit costs are composed of service cost (including current service cost and past service cost, as well as gains and losses on settlements), net interest expense (income) and remeasurement.

The Group presents the service cost and net interest expense (income) components in profit or loss, and the remeasurement component in other comprehensive income. Curtailment gains and losses are accounted for as past service costs.

The retirement benefit obligation recognized in the consolidated statement of financial position represents the actual deficit or surplus in the Group’s defined benefit plans. Any surplus resulting from this calculation is recognized as an asset limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans.

Liabilities for termination benefits are recognized at the earlier of either the date when the Group is no longer able to cancel its proposal for termination benefits or the date when the Group has recognized the cost of restructuring that accompanies the payment of termination benefits.

(22) Income taxes

Income tax expense is composed of current tax and deferred tax. That is, income tax expense is composed of taxes payable or refundable during the period and deferred taxes calculated by applying asset-liability method to taxable and deductible temporary differences arising from operating loss and tax credit carryforwards. Temporary differences are the differences between the carrying values of assets and liabilities for financial reporting purposes and their tax bases. Deferred income tax benefit or expense is recognized for the change in deferred tax assets or liabilities. Deferred tax assets and liabilities are measured as of the reporting date using the enacted or substantively enacted tax rates expected to apply in the period in which the liability is settled or asset is realized. Deferred tax assets, including the carryforwards of unused tax losses, are recognized to the extent it is probable that the deferred tax assets will be realized.

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Deferred income tax assets and liabilities are offset if, and only if, the Group has a legally enforceable right to offset current tax assets against current tax liabilities, and the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority or when the entity intends to settle current tax liabilities and assets on a net basis with different taxable entities.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred liabilities are not recognized if the temporary difference arises from the initial recognition of goodwill. Deferred tax assets or liabilities are not recognized if they arise from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Current and deferred taxes are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity or when it arises from business combination.

The tax uncertainty arises from the compensation claim filed by the Group, and refund litigation for the amount of tax levied by the tax authority due to differences in tax law analysis. In response, the Group paid taxes in accordance with IFRIC 23 due to the tax authority’s claim but recognized as a corporate tax asset if it is highly probable of a refund in the future. In addition, the Group appropriately estimates and reflects the amount of corporate tax liabilities based on the analysis of corporate tax laws and the evaluation of many factors, including past experiences.

(23) Criteria of calculating earnings per share (“EPS”)

Basic EPS is a calculation of net income per each common stock. It is calculated by dividing net income attributable to ordinary shareholders by the weighted-average number of common shares outstanding. Diluted EPS is calculated by adjusting the earnings and number of shares for the effects of all dilutive potential common shares.

(24) Share-based payment

For cash-settled share-based payment transactions that provide cash in return for the goods or services received, the Group measures the goods or services received, and the corresponding liability at the fair value and recognizes as employee benefit expenses and liabilities during the vesting period. The fair value of the liability is remeasured at the end of each reporting period and the settlement date until the liability is settled, and changes in fair value are recognized as employee benefits.

3. SIGNIFICANT ACCOUNTING ESTIMATES AND ASSUMPTIONS

Significant accounting estimates and assumptions are continuously evaluated based on a number of factors, including historical experience and expectations of future events that are considered reasonably probable. Accounting estimates calculated based on these definitions may not match actual results. The accounting estimates and assumptions that include a significant risk of materially changing the carrying amounts of assets and liabilities currently recognized in the following accounting period are as follows.

The outbreak of

COVID-19

has had a significant impact on the global economy including Korea. Financial and economic shocks may have negative impacts on the Group’s financial condition and results of operations in various forms both domestically and internationally, however, the Korean government is providing unprecedented financial and economic relief measures such as extension of maturity of loans. Despite the announcement of these various forms of government support policies, the negative impact of the

COVID-19

on the global economy continues, and uncertainties in recovery or deterioration are expected to continue.

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The Group determined that the credit risk of loan affected by the loan deferment has significantly increased and evaluated that the possibility of default is high. The Group will continue to assess the adequacy of

forward-looking

information related to the duration of the impact of COVID-19 on economy and government policies.

Woori Bank’s total loans (loans, payment guarantees) that are subject to loan deferment and interest deferment, total loans that changed its stage from 12-month to lifetime expected credit losses (Stage 2), and the expected credit loss allowances recognized additionally are as follows. (Unit: Korean Won in millions):


		December 31, 2020		December 31, 2021
Total loans (Loans, payment guarantees) that are subject to loan deferment and interest deferment	Corporate		1,697,899		2,428,496
	Retail		122,425		167,146
	Total		1,820,324		2,595,642
Total loans changed its stage from 12-month to lifetime (Stage 2) expected credit losses	Corporate		1,548,805		2,125,492
	Retail		101,721		134,920
	Total		1,650,526		2,260,412
The expected credit loss allowances that are additionally recognized	Corporate		210,173		275,057
	Retail		9,058		9,657
	Total		219,231		284,714

In addition, as of December 31, 2021, the Group applied the overlay when forecasting future economic conditions in consideration of the potential for insolvency due to increase in market interest rate and the increase in economic uncertainty due to the accelerated spread of

COVID-19.

As of December 31, 2021, the monetary effect of the expected credit loss allowance due to the application of the forecast of future economic conditions overlay is as follows (Unit: Korean Won in

millions):


	Increase in expected credit loss allowance
Corporate		48,583
Retail		6,237
Total		54,820

Woori Card Co., Ltd. determined that the credit risk of obligors receiving financial support due to

COVID-19

significantly increased; and transferred the loss allowance at the amount equivalent to lifetime expected credit loss. As of December 31, 2021, financial assets at amortized cost of obligors subject to loan deferment and interest deferment amount to 7,217

million Won, and the cumulative expected credit loss allowance has increased for

170 million Won.

Woori Financial Capital Co., Ltd. determined that the credit risk of obligors receiving financial support due to

COVID-19

significantly increased; and evaluated that the possibility of default is high. As a result, as of December 31, 2021, financial assets at amortized cost of obligors subject to loan deferment and interest deferment amount to 103,974 million

Won and cumulative expected credit loss allowance has increased for

15,916 million Won.

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(1) Income taxes

The Group has recognized current and deferred taxes based on best estimates of expected future income tax effect arising from the Group’s operations until the end of the current reporting period. However, actual tax payment may not be identical to the related assets and/or liabilities already recognized, and these differences may affect current taxes and deferred tax assets/liabilities at the time when income tax effects are finalized. Deferred tax assets relating to tax losses carried forward and deductible temporary differences are recognized only to the extent that it is probable that future taxable profit will be available against which the tax losses carried forward and the deductible temporary differences can be utilized. In this case the Group’s evaluation considers various factors such as estimated future taxable profit based on forecasted operating results, which are based on historical financial performance. The Group is reviewing the book value of deferred tax assets every end of the reporting period and in the event that the possibility of earning future taxable income changes, the deferred tax assets are adjusted up to taxable income sufficient to use deductible temporary differences.

(2) Valuation of financial instruments

Financial assets at FVTPL and FVTOCI are recognized in the consolidated financial statements at fair value. All derivatives are measured at fair value. Valuation techniques are required in order to determine fair values of financial instruments where observable market prices do not exist. Financial instruments that are not actively traded and have low price transparency will have less objective fair value and require broad judgment in liquidity, concentration, uncertainty in market factors and assumption in price determination and other risks.

As described in ‘2. Basis of Preparation and Significant Accounting Policies (9) 5) Fair value of financial instruments’, when valuation techniques are used to determine the fair value of a financial instrument, various general and internally developed techniques are used, and various types of assumptions and variables are incorporated during the process.

(3) Impairment of financial instruments

The accuracy of the provision for credit losses is determined by the estimation of the expected cash flows for each tenant for estimating the individually assessed loan-loss allowance, and the assumptions and variables in the model used for estimating the collectively assessed loan-loss allowance payment, guarantee and unused commitment.

The Group has estimated the allowance for credit losses based on reasonable and supportable information that was available without undue cost or effort at the reporting date about past events, current conditions and forecasts of future economic conditions.

Information on measuring expected credit loss is described in ‘4. Risk Management (1) 2) Measurement of expected credit loss’.

(4) Defined benefit plan

The Group operates a defined benefit pension plan. Defined benefit obligation is calculated at every end of the reporting period by performing actuarial valuation, and estimation of assumptions such as discount rate, expected wage growth rate and mortality rate is required to perform such actuarial valuation. The defined benefit plan, due to its long-term nature, contains significant uncertainties in its estimates.

4. RISK MANAGEMENT

The Group’s operating activity is exposed to various financial risks and the main types of risks are credit risk, market risk, liquidity risk and etc. The risk management department analyzes and assesses the level of complex risks in order to manage the risks and the risk management standards such as policies, regulations, management systems and whether decision-making have been established and operated for sound management of the Group.

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The risk management organization is operated by risk management committee, person in charge of risk management, and risk management department. The Board of Directors operates a risk management committee comprised of outside directors for professional risk management. The risk management committee plays a role as the top decision-making body in risk management by establishing basic policies for risk management that are in line with the Group’s management strategy and determining the risk level that the Group is willing to take.

The risk management office (CRO) assists the risk management committee and operates a group risk management council comprised of risk management managers of subsidiaries to periodically check and improve the risk burden of external environments and the Group. The risk management department is independent and is in charge of risk management of the Group. It also supports reporting and decision-making of key risk-related issues.

(1) Credit risk

Credit risk represents the possibility of financial losses incurred due to the refusal of the transaction or when the counterparty fails to fulfill its contractual obligations. The goal of credit risk management is to maintain the Group’s credit risk exposure to a permissible degree and to optimize its rate of return considering such credit risk.

1) Credit risk management

The Group considers the probability of failure in performing the obligation of its counterparties, credit exposure to the counterparty, the related default risk and the rate of default loss. The Group uses the credit rating model to assess the possibility of counterparty’s default risk; and when assessing the obligor’s credit grade, other than quantitative methods utilizing financial statements and others, and assessor’s judgement, the Group utilizes credit grades derived using statistical methods.

In order to manage credit risk limit, the Group establishes the appropriate credit line per obligor, company or industry by monitoring obligor’s credit line, total exposures and loan portfolios when approving the loan.

The Group mitigates credit risk resulting from the obligor’s credit condition by using financial and physical collateral, guarantees, netting agreements and credit derivatives. The Group has adopted the entrapment method to mitigate its credit risk. Credit risk mitigation is reflected in qualifying financial collateral, trade receivables, guarantees, residential and commercial real estate and other collaterals. The Group regularly performs a revaluation of collateral reflecting such credit risk mitigation.

2) Measurement of expected credit loss

IFRS 9 requires entities to measure allowance for credit losses equal to

12-month

expected credit losses or lifetime expected credit losses after classifying financial assets into one of the three stages, depends on the degree of increase in credit risk since their initial recognition.


Classification	Stage 1	Stage 2	Stage 3
Definition	No significant increase in credit risk after initial recognition (*)	Significant increase in credit risk after initial recognition	Credit-impaired
Allowance for credit losses	12-month expected credit losses:	Lifetime expected credit losses:
Allowance for credit losses	Expected credit losses that result from those default events on the financial instrument that are possible within 12 months after the reporting date	Expected credit losses that result from all possible default events over the life of the financial instrument

(*)	If the financial instrument has low credit risk at the end of the reporting period, the Group may assume that the credit risk has not increased significantly since initial recognition.

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At the end of each reporting period, the Group assesses whether credit risk reflecting forward-looking information has significantly been increased since the date of initial recognition. When assessing whether credit risk has significantly been increased, the changes in the probability of default over the financial instrument’s remaining life is used instead of changes in the amount of expected credit losses.

The Bank performs the above assessment to both corporate and retail exposures, and indicators of significant increase in credit risk are as follows:


Corporate Exposures		Retail Exposures
Asset quality level ‘Precautionary’ or lower		Asset quality level ‘Precautionary’ or lower
More than 30 days past due		More than 30 days past due
‘Warning’ level in early warning system		Significant decrease in credit rating (*)
Debtor experiencing financial difficulties (Capital impairment, Adverse opinion or Disclaimer of opinion by external auditors)		Deferment of repayment of principal and interest
Significant decrease in credit rating (*)		Deferment of interest
Deferment of repayment of principal and interest
Deferment of interest

(*)	The Group has applied the above indicators of significant decrease in credit rating since initial recognition as follows, and the estimation method is regularly being monitored.


	Credit rating	Significant increased indicator of the credit rating
Corporate	AAA ~ A+	More than or equal to 4 steps
	A- ~ BBB	More than or equal to 3 steps
	BBB- ~ BB+	More than or equal to 2 steps
	BB ~ BB-	More than or equal to 1 step
Retail	1 ~ 3	More than or equal to 3 steps
	4 ~ 5	More than or equal to 2 steps
	6 ~ 10	More than or equal to 1 step

The Group sees no significant increase in credit risk after initial recognition for debt securities, etc. with a credit rating of A + or higher, which are deemed to have low credit risk at the end of the reporting period.

The Group concludes that credit is impaired when financial assets are under conditions stated below:

•

When principal of loan is overdue for 90 days or longer due to significant deterioration in credit

•

For loans overdue for less than 90 days, when it is determined that not even a portion of the loan will be recovered unless claim actions such as disposal of collaterals are taken

•

When other objective indicators of impairment have been noted for the financial asset

The Group has estimated the allowance for credit losses using an estimation model that additionally reflects the future economic forward information based on the past experience loss rate data.

Probability of default (PD) and Loss given default (LGD) for each category of financial asset is being calculated by considering factors such as debtor type, credit rating and portfolio. The estimates are regularly being reviewed in order to reduce discrepancies with actual losses.

In measuring the expected credit losses, the Group is also using reasonable and supportable macroeconomic indicators such as economic growth rates, interest rates, market index rates, etc., in order to forecast future economic conditions.

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The Group is conducting the following procedures to estimate and apply future economic forecast information.

•

Development of estimation models by analyzing the correlation between default rates of corporate and retail exposures per year and macroeconomic indicators


Major macroeconomic indicators		Correlation between credit risk and macroeconomic indicators
GDP growth rate		Negative (-) Correlation
Personal consumption expenditures price index rate		Negative (-) Correlation
Consumer price index rate		Negative (-) Correlation

•

Calculation of estimated default rate incorporating future economic forecasts by applying estimated macroeconomic indicators provided by verified institutions such as Bank of Korea and National Assembly Budget Office to the estimation model developed

•

Disclosure of economic variable forecasts

a) Probability weight

As of December 31, 2021, the probability weights applied to the scenarios of the forecasts of macroeconomic variables is as follows (Unit: %):


	Basic Scenario		Upside Scenario		Downside Scenario
Probability weight		55.59		13.37		31.04

b) Economic forecast of each major economic variables by scenario (prospect period: 2022)

As of December 31, 2021, the forecasts of major macroeconomic variables by scenario are as follows (Unit: %)


	Basic Scenario		Upside Scenario		Downside Scenario
GDP growth rate		3.00		3.22		2.60
Personal consumption expenditures price index rate		3.60		4.01		2.85
Consumer price index rate		2.00		2.10		1.82

The results of Woori Bank’s sensitivity analysis on expected credit loss provisions due to changes in macroeconomic indicators as of December 31, 2020 and 2021 are as follows (Unit: Korean Won in millions):


			December 31, 2020
Corporate	GDP growth rate	Increase by 1% point		(86,086	)
Corporate	GDP growth rate	Decrease by 1% point		96,177
Retail	Consumer price index rate	Increase by 1% point		(15,807	)
Retail	Consumer price index rate	Decrease by 1% point		17,119


			December 31, 2021
Corporate	GDP growth rate	Increase by 1% point		(68,140	)
	GDP growth rate	Decrease by 1% point		74,495
	Personal consumption expenditures price index rate	Increase by 1% point		(40,654	)
		Decrease by 1% point		43,028

Retail	GDP growth rate	Increase by 1% point		(8,798	)
Retail	GDP growth rate	Decrease by 1% point		9,163
	Consumer price index rate	Increase by 1% point		(29,469	)
	Consumer price index rate	Decrease by 1% point		34,352

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•

The increase rate between the measured default rate and the predicted default rate is used as a future economic forecast adjustment coefficient and reflected to the applicable estimate for the current year.

3) Maximum exposure to credit risk

The Group’s maximum exposure to credit risk shows the uncertainties related to the maximum possible variation of financial assets’ net value as a result of changes in the specific risk factors, prior to the consideration of collaterals that are recorded at net book value after allowances and other credit enhancements. However, the maximum exposure is the fair value amount (recorded on the books) for derivatives, maximum contractual obligation for payment guarantees and unused amount of commitments for loan commitment.

The maximum exposure to credit risk as of December 31, 2020 and 2021 is as follows (Unit: Korean Won in millions):


		December 31, 2020		December 31, 2021
Loans and other financial assets at amortized cost (*1)	Korean treasury and government agencies		9,725,719		14,934,813
	Banks		19,493,189		24,733,020
	Corporates		114,131,994		131,027,256
	Consumers		176,755,176		191,237,783

	Sub-total		320,106,078		361,932,872

Financial assets at FVTPL (*2)	Deposit		48,796		65,072
	Debt securities		2,887,097		2,743,239
	Loans		676,291		667,467
	Derivative assets		6,901,742		4,803,131
	Others		—		1,518

	Sub-total		10,513,926		8,280,427

Financial assets at FVTOCI	Debt securities		28,948,141		38,126,977
Securities at amortized cost	Debt securities		17,020,839		17,086,274
Derivative assets	Derivative assets (Designated for hedging)		174,820		106,764
Off-balance accounts	Guarantees (*3)		11,809,456		12,987,809
Off-balance accounts	Loan commitments		112,088,680		114,414,462

	Sub-total		123,898,136		127,402,271

	Total		500,661,940		552,935,585

(*1)	Cash and cash equivalents are not included.

(*2)	Puttable financial instruments are not included.

(*3)	As of December 31, 2020 and 2021, the financial guarantee amounts of 4,163,382 million Won and 3,960,383 million Won are included, respectively.

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a) Credit risk exposure by geographical areas

The following tables analyze credit risk exposure by geographical areas (Unit: Korean Won in millions):


	December 31, 2020
	Korea		China		USA		UK		Japan		Others (*)		Total
Loans and other financial assets at amortized cost		296,186,751		4,356,747		3,988,304		1,990,490		1,404,670		12,179,116		320,106,078
Securities at amortized cost		16,749,531		—		110,597		—		—		160,711		17,020,839
Financial assets at FVTPL		6,954,630		13,403		1,083,096		493,285		480,760		1,488,752		10,513,926
Financial assets at FVTOCI		25,966,333		608,893		1,092,636		5		5,460		1,274,814		28,948,141
Derivative assets (Designated for hedging)		—		—		165,458		3,740		—		5,622		174,820
Off-balance accounts		119,699,069		1,393,734		399,678		38,389		41,378		2,325,888		123,898,136

Total		465,556,314		6,372,777		6,839,769		2,525,909		1,932,268		17,434,903		500,661,940

(*)	Others consist of financial assets in Indonesia, Hong Kong, Germany, Australia, and other countries.


	December 31, 2021
	Korea		China		USA		UK		Japan		Others (*)		Total
Loans and other financial assets at amortized cost		338,674,446		5,620,622		3,742,331		212,821		811,030		12,871,622		361,932,872
Securities at amortized cost		16,785,265		92,880		27,018		—		—		181,111		17,086,274
Financial assets at FVTPL		6,150,464		1,330		1,188,358		195,048		61,315		683,912		8,280,427
Financial assets at FVTOCI		34,242,133		808,359		1,713,435		1,755		23,193		1,338,102		38,126,977
Derivative assets (Designated for hedging)		11,678		—		95,086		—		—		—		106,764
Off-balance accounts		123,375,839		1,001,430		375,929		31,116		32,402		2,585,555		127,402,271

Total		519,239,825		7,524,621		7,142,157		440,740		927,940		17,660,302		552,935,585

(*)	Others consist of financial assets in Indonesia, Hong Kong, Germany, Australia, and other countries.

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b) Credit risk exposure by industries

① The following tables analyze credit risk exposure by industries, which are service, manufacturing, finance and insurance, construction, individuals and others in accordance with the Korea Standard Industrial Classification Code as of December 31, 2020 and 2021 (Unit: Korean Won in millions):


	December 31, 2020
	Service		Manufacturing		Finance and insurance		Construction		Individuals		Others		Total
Loans and other financial assets at amortized cost		56,627,927		35,933,953		35,450,774		3,493,000		172,116,780		16,483,644		320,106,078
Securities at amortized cost		492,172		6,691		8,926,909		302,225		—		7,292,842		17,020,839
Financial assets at FVTPL		301,296		234,712		8,520,127		32,240		14,619		1,410,932		10,513,926
Financial assets at FVTOCI		475,881		207,903		23,017,149		142,396		—		5,104,812		28,948,141
Derivative assets (Designated for hedging)		—		—		174,820		—		—		—		174,820
Off-balance accounts		18,828,656		21,460,581		12,086,935		4,060,358		62,477,117		4,984,489		123,898,136

Total		76,725,932		57,843,840		88,176,714		8,030,219		234,608,516		35,276,719		500,661,940


	December 31, 2021
	Service		Manufacturing		Finance and insurance		Construction		Individuals		Others		Total
Loans and other financial assets at amortized cost		67,895,018		37,679,784		45,540,602		4,303,491		185,972,844		20,541,133		361,932,872
Securities at amortized cost		479,291		—		7,061,770		250,607		—		9,294,606		17,086,274
Financial assets at FVTPL		115,346		146,277		6,646,922		13,623		1,836		1,356,423		8,280,427
Financial assets at FVTOCI		376,998		258,866		29,444,989		131,967		—		7,914,157		38,126,977
Derivative assets (Designated for hedging)		—		—		79,369		27,395		—		—		106,764
Off-balance accounts		18,565,570		18,994,662		11,763,667		3,900,766		67,966,826		6,210,780		127,402,271

Total		87,432,223		57,079,589		100,537,319		8,627,849		253,941,506		45,317,099		552,935,585

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② The detailed industries of financial assets and corporate loans that might get affected by the spread of

COVID-19

as of December 31, 2020 and 2021 are as follows and the industries that can be affected may change by future economic conditions (Unit: Korean Won in millions):

< Woori Bank >


			December 31, 2020
			Loans and other financial assets at amortized cost		Financial assets at FVTPL		Financial assets at FVTOCI
Service business	Distribution business	General retail business		1,070,789		11,944		5,461
	Distribution business	General wholesale business		1,407,563		3,573		—
		Sub-total		2,478,352		15,517		5,461
	Accommodation business			1,525,157		9,305		5,471
	Travel business			59,858		—		—
	Art/sports, leisure service			1,467,643		17,739		—
	Food business			1,078,832		2,515		—
	Transportation business			395,873		461		8,752
	Education business			367,701		489		—
	Others			1,286,578		2,691		—

	Sub-total			8,659,994		48,717		19,684

Manufacturing	Textile			2,281,344		6,608		6,559
	Metal			1,390,290		47,903		—
	Non-metal			698,478		8,357		—
	Chemical			1,819,207		19,161		—
	Transportation			3,268,095		2,060		—
	Electronics			1,424,297		19,280		—
	Cosmetics			323,231		217		—
	Others			368,123		277		—
	Sub-total			11,573,065		103,863		6,559

Total				20,233,059		152,580		26,243

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			December 31, 2020
			Off-balance accounts		Total
Service business	Distribution business	General retail business		897,101		1,985,295
	Distribution business	General wholesale business		483,360		1,894,496
		Sub-total		1,380,461		3,879,791
	Accommodation business			152,059		1,691,992
	Travel business			21,350		81,208
	Art/sports, leisure service			114,388		1,599,770
	Food business			135,680		1,217,027
	Transportation business			193,578		598,664
	Education business			48,064		416,254
	Others			318,641		1,607,910
	Sub-total			2,364,221		11,092,616
Manufacturing	Textile			1,064,005		3,358,516
	Metal			1,581,887		3,020,080
	Non-metal			377,506		1,084,341
	Chemical			3,233,405		5,071,773
	Transportation			2,183,616		5,453,771
	Electronics			1,789,605		3,233,182
	Cosmetics			54,518		377,966
	Others			1,483,551		1,851,951
	Sub-total			11,768,093		23,451,580

Total				14,132,314		34,544,196


			December 31, 2021
			Loans and other financial assets at amortized cost		Financial assets at FVTPL		Financial assets at FVTOCI
Service business	Distribution business	General retail business		754,850		274		—
		General wholesale business		809,893		221		—
		Sub-total		1,564,743		495		—
	Accommodation business			1,441,185		625		23,840
	Travel business			53,302		—		—
	Art/sports, leisure service			600,746		503		—
	Food business			1,279,128		216		—
	Transportation business			404,120		77		—
	Others			1,050,229		599		—
	Sub-total			6,393,453		2,515		23,840
Manufacturing	Textile			2,626,493		724		10,718
	Metal			199,877		10		—
	Non-metal			148,471		24		—
	Chemical			904,563		1,994		—
	Electronics			103,510		31		—
	Others			191,865		—		—
	Sub-total			4,174,779		2,783		10,718

Total				10,568,232		5,298		34,558

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			December 31, 2021
			Off-balance accounts		Total
Service business	Distribution business	General retail business		299,064		1,054,188
		General wholesale business		237,678		1,047,792
		Sub-total		536,742		2,101,980
	Accommodation business			181,563		1,647,213
	Travel business			12,455		65,757
	Art/sports, leisure service			63,660		664,909
	Food business			179,799		1,459,143
	Transportation business			167,883		572,080
	Others			191,837		1,242,665
	Sub-total			1,333,939		7,753,747
Manufacturing	Textile			1,012,989		3,650,924
	Metal			9,704		209,591
	Non-metal			48,171		196,666
	Chemical			689,895		1,596,452
	Electronics			33,389		136,930
	Others			87,587		279,452
	Sub-total			1,881,735		6,070,015

Total				3,215,674		13,823,762

< Woori Card Co., Ltd. >


	December 31, 2020
	Loans and other financial assets at amortized cost		Financial assets at FVTPL		Financial assets at FVTOCI		Off-balance accounts		Total
Accommodation business		4,959		—		—		12,315		17,274
Travel business		2,175		—		—		25,367		27,542
Aviation		479		—		—		4,179		4,658
Cosmetics industry		2,462		—		—		13,376		15,838
Distribution business		8,050		—		—		44,354		52,404
Food industry		33,084		—		—		163,711		196,795
Art/sports, leisure service		6,156		—		—		51,962		58,118
Total		57,365		—		—		315,264		372,629


	December 31, 2021
	Loans and other financial assets at amortized cost		Financial assets at FVTPL		Financial assets at FVTOCI		Off-balance accounts		Total
Accommodation business		2,341		—		—		11,472		13,813
Travel business		3,334		—		—		20,056		23,390
Aviation		983		—		—		4,025		5,008
Cosmetics industry		3,187		—		—		10,692		13,879
Distribution business		7,582		—		—		38,741		46,323
Food industry		30,267		—		—		122,793		153,060
Art/sports, leisure service		8,336		—		—		44,286		52,622
Total		56,030		—		—		252,065		308,095

F-

Table of Contents


			December 31, 2020
			Loans and other financial assets at amortized cost		Financial assets at FVTPL		Financial assets at FVTOCI
Service business	Distribution business	General retail business		8,978		—		—
		General wholesale business		57,587		—		—
		Sub-total		66,565		—		—
	Accommodation business			6,292		—		—
	Travel business			1,293		—		—
	Art/sports, leisure service			615		—		—
	Food business			21,774		—		—
	Transportation business			28,270		—		—
	Education business			1,132		—		—
	Others			365,860		27,364		—
	Sub-total			491,801		27,364		—
Manufacturing	Textile			29,415		—		—
	Metal			17,963		—		—
	Non-metal			4,780		—		—
	Chemical			2,501		—		—
	Transportation			52,514		—		—
	Electronics			12,665		—		—
	Others			5,335		—		—
	Sub-total			125,173		—		—
Total COVID-19 vulnerable business				616,974		27,364		—
Other business	Others			6,202,754		225,078		—

Total				6,819,728		252,442		—

F-

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			December 31, 2020
			Off-balance accounts		Total
Service business	Distribution business	General retail business		—		8,978
		General wholesale business		—		57,587
		Sub-total		—		66,565
	Accommodation business			—		6,292
	Travel business			—		1,293
	Art/sports, leisure service			—		615
	Food business			—		21,774
	Transportation business			—		28,270
	Education business			—		1,132
	Others			38,681		431,905
	Sub-total			38,681		557,846
Manufacturing	Textile			—		29,415
	Metal			3,365		21,328
	Non-metal			—		4,780
	Chemical			—		2,501
	Transportation			—		52,514
	Electronics			—		12,665
	Others			—		5,335
	Sub-total			3,365		128,538
Total COVID-19 vulnerable business				42,046		686,384
Other business	Others			333,766		6,761,598

Total				375,812		7,447,982

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Table of Contents


			December 31, 2021
			Loans and other financial assets at amortized cost		Financial assets at FVTPL		Financial assets at FVTOCI
Service business	Distribution business	General retail business		77,841		—		—
		General wholesale business		292,832		—		—
		Sub-total		370,673		—		—
	Accommodation business			7,338		—		—
	Travel business			57		—		—
	Art/sports, leisure service			8,544		—		—
	Food business			125,075		—		—
	Transportation business			598,972		—		—
	Education business			22,118		—		—
	Others			102,787		—		—
	Sub-total			1,235,564		—		—
Manufacturing	Textile			727		—		—
	Metal			2,824		—		—
	Non-metal			698		—		—
	Chemical			172		—		—
	Transportation			438		—		—
	Electronics			3,993		—		—
	Cosmetics			685		—		—
	Others			108,540		—		—
	Sub-total			118,077		—		—
Total COVID-19 vulnerable business				1,353,641		—		—
Other business	Others			6,489,394		28,222		—

Total				7,843,035		28,222		—

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			December 31, 2021
			Off-balance accounts		Total
Service business	Distribution business	General retail business		—		77,841
		General wholesale business		—		292,832
		Sub-total		—		370,673
	Accommodation business			—		7,338
	Travel business			—		57
	Art/sports, leisure service			—		8,544
	Food business			—		125,075
	Transportation business			—		598,972
	Education business			—		22,118
	Others			140,549		243,336
	Sub-total			140,549		1,376,113
Manufacturing	Textile			—		727
	Metal			—		2,824
	Non-metal			—		698
	Chemical			—		172
	Transportation			—		438
	Electronics			—		3,993
	Cosmetics			—		685
	Others			13,432		121,972
	Sub-total			13,432		131,509
Total COVID-19 vulnerable business				153,981		1,507,622
Other business	Others			812,597		7,330,213

Total				966,578		8,837,835

< Woori Investment Bank Co., Ltd. >


	December 31, 2020
	Loans and other financial assets at amortized cost		Financial assets at FVTPL		Financial assets at FVTOCI		Off-balance accounts		Total
Accommodation business		44,900		—		—		—		44,900
Distribution business		15,716		20,000		—		—		35,716
Art/sports, leisure service		28,000		—		—		—		28,000
Total		88,616		20,000		—		—		108,616


	December 31, 2021
	Loans and other financial assets at amortized cost		Financial assets at FVTPL		Financial assets at FVTOCI		Off-balance accounts		Total
Accommodation business		57,142		—		—		—		57,142
Distribution business		12,885		—		—		—		12,885
Art/sports, leisure service		31,772		—		—		—		31,772
Total		101,799		—		—		—		101,799

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4) Credit risk exposure

a) Financial assets

The maximum exposure to credit risk by asset quality, except for financial assets at FVTPL and derivative asset (Designated for hedging) as of December 31, 2020 and 2021 is as follows (Unit: Korean Won in millions):


	December 31, 2020
	Stage 1				Stage 2				Stage 3		Total		Allowance for credit losses			Total, net
	Above appropriate credit rating (*1)		Less than a limited credit rating (*3)		Above appropriate credit rating (*2)		Less than a limited credit rating (*3)		Stage 3		Total		Allowance for credit losses			Total, net
Loans and other financial assets at amortized cost		278,729,012		21,249,885		10,356,251		10,143,839		1,623,276		322,102,263		(1,996,185	)		320,106,078
Korean treasury and government agencies		9,674,891		1,063		52,279		—		—		9,728,233		(2,514	)		9,725,719
Banks		19,301,570		105,890		75,876		—		25,598		19,508,934		(15,745	)		19,493,189
Corporates		93,889,922		14,873,376		1,890,564		3,860,389		839,234		115,353,485		(1,221,491	)		114,131,994
General business		61,082,336		9,013,955		1,349,053		2,585,868		576,078		74,607,290		(869,744	)		73,737,546
Small- and medium-sized enterprise		27,504,992		5,415,312		538,909		1,207,706		227,003		34,893,922		(304,077	)		34,589,845
Project financing and others		5,302,594		444,109		2,602		66,815		36,153		5,852,273		(47,670	)		5,804,603
Consumers		155,862,629		6,269,556		8,337,532		6,283,450		758,444		177,511,611		(756,435	)		176,755,176
Securities at amortized cost		17,025,405		—		—		—		—		17,025,405		(4,566	)		17,020,839
Financial assets at FVTOCI (*3)		28,789,281		158,860		—		—		—		28,948,141		(9,631	)		28,948,141

Total		324,543,698		21,408,745		10,356,251		10,143,839		1,623,276		368,075,809		(2,010,382	)		366,075,058


	December 31, 2020
	Collateral value
	Stage1		Stage2		Stage3		Total
Loans and other financial assets at amortized cost		187,731,443		15,677,871		696,709		204,106,023
Korean treasury and government agencies		19,280		—		—		19,280
Banks		1,003,971		—		—		1,003,971
Corporates		62,817,305		3,963,101		400,340		67,180,746
General business		35,578,470		2,670,480		271,815		38,520,765
Small- and medium-sized enterprise		25,404,002		1,290,941		118,265		26,813,208
Project financing and others		1,834,833		1,680		10,260		1,846,773
Consumers		123,890,887		11,714,770		296,369		135,902,026
Securities at amortized cost		—		—		—		—
Financial assets at FVTOCI (*3)		—		—		—		—

Total		187,731,443		15,677,871		696,709		204,106,023

(*1)	Credit grade of corporates are AAA ~ BBB, and consumers are grades 1 ~ 6.

(*2)	Credit grade of corporates are BBB- ~ C, and consumers are grades 7 ~ 10.

(*3)	Financial assets at FVTOCI has been disclosed as the amount before deducting allowance for credit losses because loss allowance does not reduce the carrying amount.

F-6

Table of Contents


	December 31, 2021
	Stage 1				Stage 2				Stage 3		Total		Allowance for credit losses			Total, net
	Above appropriate credit rating (*1)		Less than a limited credit rating (*2)		Above appropriate credit rating (*1)		Less than a limited credit rating (*2)		Stage 3		Total		Allowance for credit losses			Total, net
Loans and other financial assets at amortized cost		316,364,525		22,734,430		13,270,491		10,190,307		1,332,644		363,892,397		(1,959,525	)		361,932,872
Korean treasury and government agencies		14,938,718		9		9		—		—		14,938,736		(3,923	)		14,934,813
Banks		24,186,246		492,447		46,373		—		23,509		24,748,575		(15,555	)		24,733,020
Corporates		108,917,062		15,952,017		2,698,907		3,963,782		658,923		132,190,691		(1,163,435	)		131,027,256
General business		68,767,641		9,010,115		1,886,740		2,597,136		438,537		82,700,169		(785,908	)		81,914,261
Small- and medium-sized enterprise		33,306,787		6,459,338		790,750		1,353,313		156,440		42,066,628		(322,635	)		41,743,993
Project financing and others		6,842,634		482,564		21,417		13,333		63,946		7,423,894		(54,892	)		7,369,002
Consumers		168,322,499		6,289,957		10,525,202		6,226,525		650,212		192,014,395		(776,612	)		191,237,783
Securities at amortized cost		17,091,509		—		—		—		—		17,091,509		(5,235	)		17,086,274
Financial assets at FVTOCI (*3)		37,917,922		209,055		—		—		—		38,126,977		(12,146	)		38,126,977

Total		371,373,956		22,943,485		13,270,491		10,190,307		1,332,644		419,110,883		(1,976,906	)		417,146,123


	December 31, 2021
	Collateral value
	Stage1		Stage2		Stage3		Total
Loans and other financial assets at amortized cost		208,188,057		18,098,940		643,183		226,930,180
Korean treasury and government agencies		20,679		—		—		20,679
Banks		1,287,055		—		—		1,287,055
Corporates		74,403,502		4,796,510		351,837		79,551,849
General business		40,288,663		3,120,790		220,792		43,630,245
Small- and medium-sized enterprise		30,852,567		1,675,720		80,830		32,609,117
Project financing and others		3,262,272		—		50,215		3,312,487
Consumers		132,476,821		13,302,430		291,346		146,070,597
Securities at amortized cost		—		—		—		—
Financial assets at FVTOCI (*3)		—		—		—		—

Total		208,188,057		18,098,940		643,183		226,930,180

(*1)	Credit grade of corporates are AAA ~ BBB, and consumers are grades 1 ~ 6.

(*2)	Credit grade of corporates are BBB- ~ C, and consumers are grades 7 ~ 10.

(*3)	Financial assets at FVTOCI has been disclosed as the amount before deducting allowance for credit losses because loss allowance does not reduce the carrying amount.

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Table of Contents

b) Guarantees and commitments

The credit quality of the guarantees and loan commitments as of December 31, 2020 and 2021 are as follows (Unit: Korean Won in millions):


	December 31, 2020
Financial assets	Stage 1				Stage 2				Stage3		Total
Financial assets	Above appropriate credit rating (*1)		Less than a limited credit rating (*2)		Above appropriate credit rating (*1)		Less than a limited credit rating (*2)		Stage3		Total
Off-balance accounts:
Guarantees		10,152,900		1,382,592		11,504		191,962		70,498		11,809,456
Loan Commitments		105,108,967		4,045,595		1,951,649		977,185		5,284		112,088,680

Total		115,261,867		5,428,187		1,963,153		1,169,147		75,782		123,898,136

(*1)	Credit grade of corporates are AAA ~ BBB, and consumers are grades 1 ~ 6.

(*2)	Credit grade of corporate are BBB- ~ C, and consumers are grades 7 ~ 10.


	December 31, 2021
Financial assets	Stage 1				Stage 2				Stage3		Total
Financial assets	Above appropriate credit rating (*1)		Less than a limited credit rating (*2)		Above appropriate credit rating (*1)		Less than a limited credit rating (*2)		Stage3		Total
Off-balance accounts:
Guarantees		11,560,908		1,037,142		47,549		275,166		67,044		12,987,809
Loan Commitments		107,916,434		3,591,413		2,072,348		832,173		2,094		114,414,462

Total		119,477,342		4,628,555		2,119,897		1,107,339		69,138		127,402,271

(*1)	Credit grade of corporates are AAA ~ BBB, and consumers are grades 1 ~ 6.

(*2)	Credit grade of corporates are BBB- ~ C, and consumers are grades 7 ~ 10.

5) Collateral and other credit enhancements

For the years ended December 31, 2020 and 2021, there have been no significant changes in the value of collateral or other credit enhancements held by the Group and there have been no significant changes in collateral or other credit enhancements due to changes in the collateral policy of the Group.

6) Among financial assets that measured loss allowance at lifetime expected credit losses, amortized costs before changes in contractual cash flows as of December 31,2020 and 2021 are 265,760 million Won and 145,594 million Won respectively, with net losses recognized along with the changes, 12,786 million Won and 11,734 million Won respectively.

7) The Group determines which loan is subject to

write-off

in accordance with internal guidelines and writes off loan receivables when it is determined that the loans are practically irrecoverable. For example, loans are practically irrecoverable when application is made for rehabilitation under the Debtor Rehabilitation and Bankruptcy Act and loans are confirmed as irrecoverable by the court’s decision to waive debtor’s obligation, or when it is impossible to recover the loan amount through legal means such as auctioning of debtor’s assets or through any other means of recovery available. Notwithstanding the

write-off,

the Group may still exercise its right of collection after the asset has been written off in accordance with its collection policies.

As the Group manages receivables that have not lost the right of claim to the debtor for the grounds of incomplete statute limitation and uncollected receivables under the related laws as receivable charge-offs, the balance as of December 31, 2020 and 2021 are 9,986,186 million Won and 10,107,413 million Won. In addition, the contractual

non-recoverable

amount of financial assets amortized for the year ended December 31, 2021, but still in the process of recovery is 355,039 million Won.

F-6

Table of Contents

(2) Market risk

Market risk is the possible risk of loss arising from trading position and

non-trading

position as a result of the volatility of market factors such as interest rates, stock prices and foreign exchange rates.

1) Market risk management

Market risk management refers to the process of making and implementing decisions for the avoidance, acceptance or mitigation of risks by identifying the underlying source of the risks and measuring its level and evaluating the appropriateness of the level of accepted market risks.

a) Trading activities

The Group uses the standard method and the internally developed model (the Bank) in measuring market risk for trading positions and allocates market risk capital through the Risk Management Committee. Risk management departments of the Group and its subsidiaries manage limits in detail including those on risk and loss with their management result regularly reported to the Risk Management Committee.

Woori Bank, a subsidiary of the Group, uses the internal model approved by the Financial Supervisory Service to measure the VaR using the Historical Simulation Method based on a 99% confidence level and a

10-day

retention period, and calculates the required capital risk for calculating the BIS ratio. For internal management purposes, limit management is performed on a daily basis measuring VaR based on a 99% confidence and 1 day retention period. In addition, Woori Bank perform a daily verification that compares VaR measurement and profit and loss to verify the suitability of the model.

The minimum, maximum and average VaR of the Bank for the year December 31, 2020 and 2021, and the VaR of the Bank as of December 31, 2020 and 2021 are as follows (Unit: Korean Won in millions):


	December 31, 2020			For the year ended December 31, 2020									December 31, 2021			For the year ended December 31, 2021
Risk factor	December 31, 2020			Average			Maximum			Minimum			December 31, 2021			Average			Maximum			Minimum
Interest rate		6,815			7,959			15,065			2,427			4,177			4,681			14,017			2,405
Stock price		2,283			5,783			14,394			1,982			2,972			3,637			6,676			1,609
Foreign currencies		11,160			8,814			11,233			4,613			5,904			6,745			13,144			4,747
Diversification		(11,087	)		(11,175	)		(18,796	)		(3,452	)		(6,072	)		(7,300	)		(20,006	)		(3,627	)

Total VaR (*)		9,171			11,381			21,896			5,570			6,981			7,763			13,831			5,134

(*)	VaR (Value at Risk): Retention period of 1day, Maximum expected losses under 99% level of confidence.

Non-trading

activities

The Bank manages and measures interest risk for

non-trading

activities through ΔNII (Change in Net Interest Income) and ΔEVE (Change in Economic Value of Equity) in accordance with IRRBB (Interest Rate Risk in the Banking Book) introduced at the end of 2019.

ΔNII represents a change in net interest income that may occur over a certain period (e.g. one year) due to changes in net interest income, and ΔEVE indicates the economic value changes in equity capital that could be caused by changes in interest rates affecting the present value of asset, liabilities, and others.

F-

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For assets and liabilities as of December 31, 2020 and 2021 that include bank, consolidated trusts and subsidiaries of the bank, details of ΔEVE and ΔNII calculated based on interest rate risk in banking book (IRRBB) are as follows (Unit: Korean Won in millions):


	December 31, 2020 (*3)				December 31, 2021
	Δ EVE (*1)		Δ NII (*2)		Δ EVE (*1)		Δ NII (*2)
Woori Bank		634,596		66,138		920,290		195,186
Woori Card Co., Ltd.		—		—		126,576		59,114
Woori Financial Capital Co., Ltd.		—		—		58,794		1,384
Woori Investment Bank Co., Ltd.		—		—		17,607		5,556
Woori Asset Trust Co., Ltd.		—		—		820		1,709
Woori Asset Management Corp.		—		—		1,411		504
Woori Savings Bank		—		—		15,175		949
Woori Private Equity Asset Management Co., Ltd.		—		—		32		59
Woori Global Asset Management Co., Ltd.		—		—		246		143

(*1)	ΔEVE: change in Economic Value of Equity

(*2)	ΔNII: change in Net Interest Income

(*3)	As of December 31, 2020, for the remaining subsidiaries except the bank, consolidated trusts, and consolidated subsidiaries of the bank, EVE and NII were not calculated.

For the remaining subsidiaries except the bank, consolidated trusts, and consolidated subsidiaries of the bank as of December 31, 2020, the interest rate EaR and VaR calculated based on the BIS Framework are as follows (Unit: Korean Won in millions):


	December 31, 2020
	EaR (*1)		VaR (*2)
Woori Card Co., Ltd.		106,645		157,085
Woori Financial Capital Co., Ltd.		3,701		12,550
Woori Investment Bank Co., Ltd.		1,479		5,005
Woori Asset Trust Co., Ltd.		3,211		398
Woori Asset Management Corp.		64		493
Woori Private Equity Asset Management Co., Ltd.		193		37
Woori Global Asset Management Co., Ltd.		119		318

(*1)	EaR (Earning at Risk): Change of maximum expected income and expense

(*2)	VaR (Value at Risk): Maximum expected losses

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Table of Contents

The Group estimates and manages risks related to changes in interest rate due to the difference in the maturities of interest-bearing assets and liabilities and discrepancies in the terms of interest rates. Cash flows (both principal and interest), interest bearing assets and liabilities, presented by each

re-pricing

date, are as follows (Unit: Korean Won in millions):


	December 31, 2020
	Within 3 months		4 to 6 months		7 to 9 months		10 to 12 months		1 to 5 years		Over 5 years		Total
Asset:
Loans and other financial assets at amortized cost		177,214,415		54,035,826		12,410,513		11,140,520		64,799,854		5,170,572		324,771,700
Financial assets at FVTPL		609,542		263,510		91,791		94,879		150,148		13,239		1,223,109
Financial assets at FVTOCI		4,344,718		3,339,086		3,751,882		2,915,238		14,648,033		473,124		29,472,081
Securities at amortized cost		1,372,094		1,471,309		933,715		1,869,352		11,080,632		1,018,002		17,745,104

Total		183,540,769		59,109,731		17,187,901		16,019,989		90,678,667		6,674,937		373,211,994

Liability:
Deposits due to customers		127,557,303		46,471,099		35,455,403		29,354,652		52,395,811		50,655		291,284,923
Borrowings		11,223,338		2,832,846		1,126,728		949,892		3,828,384		452,495		20,413,683
Debentures		3,246,233		3,396,427		3,929,346		3,495,915		21,899,788		3,257,026		39,224,735

Total		142,026,874		52,700,372		40,511,477		33,800,459		78,123,983		3,760,176		350,923,341


	December 31, 2021
	Within 3 months		4 to 6 months		7 to 9 months		10 to 12 months		1 to 5 years		Over 5 years		Total
Asset:
Loans and other financial assets at amortized cost		205,915,030		58,661,091		14,461,769		12,840,318		62,337,321		5,204,605		359,420,134
Financial assets at FVTPL		1,725,063		52,361		49,843		17,817		223,107		13,501		2,081,692
Financial assets at FVTOCI		5,489,649		4,741,319		3,915,011		4,139,102		19,962,071		634,111		38,881,263
Securities at amortized cost		1,297,865		847,134		813,405		949,475		11,990,559		2,116,986		18,015,424

Total		214,427,607		64,301,905		19,240,028		17,946,712		94,513,058		7,969,203		418,398,513

Liability:
Deposits due to customers		145,744,829		47,792,440		33,334,918		28,615,157		62,635,705		59,155		318,182,204
Borrowings		11,422,868		4,168,941		1,788,597		1,540,533		5,119,291		428,660		24,468,890
Debentures		8,325,421		3,035,764		3,203,743		3,174,902		25,036,943		3,342,284		46,119,057

Total		165,493,118		54,997,145		38,327,258		33,330,592		92,791,939		3,830,099		388,770,151

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2) Currency risk

Currency risk arises from the financial instruments denominated in foreign currencies other than the functional currency. Therefore, no currency risk arises from

non-monetary

items or financial instruments denominated in the functional currency.

Financial instruments in foreign currencies exposed to currency risk as of December 31, 2020 and 2021 are as follows (Unit: USD in millions, JPY in millions, CNY in millions, EUR in millions, and Korean Won in millions):


	December 31, 2020
	USD				JPY				CNY				EUR				Others		Total
	Foreign currency		Korean Won equivalent		Foreign currency		Korean Won equivalent		Foreign currency		Korean Won equivalent		Foreign currency		Korean Won equivalent		Korean Won equivalent		Korean Won equivalent
Asset
Cash and cash equivalents		5,584		6,074,879		22,832		240,710		4,580		764,686		115		154,154		501,900		7,736,329
Loans and other financial assets at amortized cost		21,687		23,595,957		172,782		1,821,554		24,230		4,045,435		2,001		2,678,382		4,857,438		36,998,766
Financial assets at FVTPL		280		304,146		18,855		198,781		73		11,989		248		332,182		88,745		935,843
Financial assets at FVTOCI		2,741		2,981,832		—		—		2,601		434,258		37		49,789		565,893		4,031,772
Securities at amortized cost		319		347,570		—		—		—		—		34		45,197		115,534		508,301

Total		30,611		33,304,384		214,469		2,261,045		31,484		5,256,368		2,435		3,259,704		6,129,510		50,211,011

Liability
Financial liabilities at FVTPL		426		463,678		14,493		152,792		—		—		158		211,525		115,429		943,424
Deposits due to customers		16,664		18,130,448		220,153		2,320,983		26,733		4,463,300		1,532		2,050,400		3,443,631		30,408,762
Borrowings		5,657		6,154,464		48,446		510,750		—		—		590		789,955		697,234		8,152,403
Debentures		3,973		4,322,800		—		—		—		—		—		—		444,711		4,767,511
Other financial liabilities		2,381		2,590,147		6,705		70,690		1,853		309,319		64		85,553		193,128		3,248,837

Total		29,101		31,661,537		289,797		3,055,215		28,586		4,772,619		2,344		3,137,433		4,894,133		47,520,937

Off-balance accounts		7,441		8,095,297		24,992		263,478		3,007		502,106		533		712,846		556,988		10,130,715

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	December 31, 2021
	USD				JPY				CNY				EUR				Others		Total
	Foreign currency		Korean Won equivalent		Foreign currency		Korean Won equivalent		Foreign currency		Korean Won equivalent		Foreign currency		Korean Won equivalent		Korean Won equivalent		Korean Won equivalent
Asset
Cash and cash equivalents		3,176		3,765,460		15,834		163,131		1,236		230,188		94		125,513		826,870		5,111,162
Loans and other financial assets at amortized cost		28,771		34,108,109		164,976		1,679,982		23,733		4,420,551		2,329		3,126,363		5,749,685		49,084,690
Financial assets at FVTPL		468		556,296		14,618		150,596		—		—		327		438,662		71,369		1,216,923
Financial assets at FVTOCI		3,195		3,787,466		—		—		3,899		726,310		33		44,638		741,348		5,299,762
Securities at amortized cost		240		283,935		—		—		499		92,917		29		39,142		138,422		554,416

Total		35,850		42,501,266		195,428		1,993,709		29,367		5,469,966		2,812		3,774,318		7,527,694		61,266,953

Liability
Financial liabilities at FVTPL		274		324,420		16,384		168,798		—		—		239		321,354		203,523		1,018,095
Deposits due to customers		19,803		23,476,384		219,514		2,261,520		26,342		4,906,441		1,640		2,201,233		4,798,322		37,643,900
Borrowings		5,766		6,835,191		31,601		325,745		—		—		349		469,124		1,395,597		9,025,657
Debentures		3,566		4,228,055		—		—		—		—		—		—		341,621		4,569,676
Other financial liabilities		2,739		3,247,454		10,673		109,958		2,658		495,125		335		449,897		211,392		4,513,826

Total		32,148		38,111,504		278,172		2,866,021		29,000		5,401,566		2,563		3,441,608		6,950,455		56,771,154

Off-balance accounts		8,047		9,540,185		32,777		337,685		2,533		471,852		598		803,357		1,250,186		12,403,265

(3) Liquidity risk

Liquidity risk refers to the risk that the Group may encounter difficulties in meeting obligations from its financial liabilities.

1) Liquidity risk management

Liquidity risk management is to prevent potential cash shortages as a result of mismatching the use of funds (assets) and sources of funds (liabilities) or unexpected cash outflows. The financial liabilities that are relevant to liquidity risk are incorporated within the scope of risk management. Derivatives instruments are excluded from those financial liabilities as they reflect expected cash flows for a

pre-determined

period.

Assets and liabilities are grouped by account under Asset Liability Management (“ALM”) in accordance with the characteristics of the account. The Group manages liquidity risk by identifying the maturity gap and such gap ratio through various cash flows analysis (i.e. based on remaining maturity and contract period, etc.), while maintaining the gap ratio at or below the target limit.

The information on early repayment related to asset securitization is described in NOTE 40. CONTINGENT LIABILITIES AND COMMITMENTS (4) 3).

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2) Maturity analysis of

non-derivative

financial liabilities

a)	Cash flows of principals and interests by remaining contractual maturities of non-derivative financial liabilities as of December 31, 2020 and 2021 are as follows (Unit: Korean Won in millions):


	December 31, 2020
	Within 3 months		4 to 6 months		7 to 9 months		10 to 12 months		1 to 5 years		Over 5 years		Total
Financial liabilities at FVTPL		64,183		135,232		42,418		112,102		—		—		353,935
Deposits due to customers		191,660,253		34,349,298		25,213,410		31,144,452		9,230,904		1,793,143		293,391,460
Borrowings		10,159,819		2,524,572		1,714,490		1,866,810		4,177,634		463,376		20,906,701
Debentures		3,246,233		3,396,427		3,929,346		3,495,915		21,899,788		3,257,228		39,224,937
Lease liabilities		53,429		44,551		40,809		34,761		201,113		34,780		409,443
Other financial liabilities		8,121,978		70,277		10,294		10,897		451,096		2,142,772		10,807,314

Total		213,305,895		40,520,357		30,950,767		36,664,937		35,960,535		7,691,299		365,093,790


	December 31, 2021
	Within 3 months		4 to 6 months		7 to 9 months		10 to 12 months		1 to 5 years		Over 5 years		Total
Financial liabilities at FVTPL		100,976		10,397		91,785		107,230		—		—		310,388
Deposits due to customers		224,881,863		32,559,199		20,290,566		31,768,748		9,213,279		1,615,198		320,328,853
Borrowings		9,477,536		4,366,223		2,415,548		2,494,732		5,800,815		440,506		24,995,360
Debentures		3,068,600		4,201,926		5,316,672		5,371,869		24,982,746		3,342,284		46,284,097
Lease liabilities		41,731		53,245		30,148		25,494		156,228		38,275		345,121
Other financial liabilities		17,614,313		290,584		12,190		11,894		610,514		1,999,198		20,538,693

Total		255,185,019		41,481,574		28,156,909		39,779,967		40,763,582		7,435,461		412,802,512

b)	Cash flows of principals and interests by expected maturities of non-derivative financial liabilities as of December 31, 2020 and 2021 are as follows (Unit: Korean Won in millions):


	December 31, 2020
	Within 3 months		4 to 6 months		7 to 9 months		10 to 12 months		1 to 5 years		Over 5 years		Total
Financial liabilities at FVTPL		68,909		131,496		41,428		112,102		—		—		353,935
Deposits due to customers		199,931,480		35,912,096		23,924,403		25,477,917		7,582,278		105,413		292,933,587
Borrowings		10,159,819		2,524,572		1,714,490		1,866,810		4,177,634		463,376		20,906,701
Debentures		3,246,233		3,396,427		3,929,346		3,495,915		21,899,788		3,257,228		39,224,937
Lease liabilities		53,429		44,894		40,949		35,074		208,125		36,950		419,421
Other financial liabilities		8,121,978		70,277		10,294		10,897		451,096		2,142,772		10,807,314

Total		221,581,848		42,079,762		29,660,910		30,998,715		34,318,921		6,005,739		364,645,895

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	December 31, 2021
	Within 3 months		4 to 6 months		7 to 9 months		10 to 12 months		1 to 5 years		Over 5 years		Total
Financial liabilities at FVTPL		100,976		10,397		91,785		107,230		—		—		310,388
Deposits due to customers		230,823,884		33,705,990		20,107,790		27,331,774		7,871,688		89,643		319,930,769
Borrowings		9,477,536		4,366,223		2,415,548		2,494,732		5,800,815		440,506		24,995,360
Debentures		3,068,600		4,201,926		5,316,672		5,371,869		24,982,746		3,342,284		46,284,097
Lease liabilities		41,716		53,260		30,216		25,653		162,092		41,814		354,751
Other financial liabilities		17,614,313		290,584		12,190		11,894		610,514		1,999,198		20,538,693

Total		261,127,025		42,628,380		27,974,201		35,343,152		39,427,855		5,913,445		412,414,058

3) Maturity analysis of derivative financial liabilities

Derivatives held for trading purpose are not managed in accordance with their contractual maturity, since the Group holds such financial instruments with the purpose of disposing or redemption before their maturity. As such, those derivatives are incorporated as “within 3 months” in the table below. Derivatives designated for hedging purpose are estimated by offsetting cash inflows and cash outflows.

The cash flow by the maturity of derivative financial liabilities as of December 31, 2020 and 2021 is as follows (Unit: Korean Won in millions):


		Remaining maturity
		Within 3 months			4 to 6 months			7 to 9 months			10 to 12 months			1 to 5 years			Over 5 years			Total
December 31, 2020	Cash flow risk hedge		2,655			6,004			515			239			55,744			—			65,157
December 31, 2020	Fair value risk hedge		255			(302	)		233			(287	)		126			—			25
	Trading purpose		6,460,472			—			—			—			—			—			6,460,472
December 31, 2021	Cash flow risk hedge		246			(206	)		(502	)		(717	)		(2,744	)		(4,053	)		(7,976	)
December 31, 2021	Fair value risk hedge		(1,656	)		598			(940	)		1,392			21,552			—			20,946
	Trading purpose		4,566,443			—			—			—			—			—			4,566,443

4) Maturity analysis of

off-balance

accounts (Guarantees and loan commitments and others)

A financial guarantee represents an irrevocable undertaking that the Group should meet a customer’s obligations to third parties if the customer fails to do so. The loan commitment represents the limit if the Group has promised a credit to the customer. Commitments to lend include commercial standby facilities and credit lines, liquidity facilities to commercial paper conduits and utilized overdraft facilities. The maximum limit to be paid by the Group in accordance with guarantees and loan commitment only applies to principal amounts. There are contractual maturities for financial guarantees, such as guarantees for debentures issued or loans, unused loan commitments, and other guarantees, however, under the terms of the guarantees and unused loan commitments, funds should be paid upon demand from the counterparty. Details of

off-balance

accounts are as follows (Unit: Korean Won in millions):


	December 31, 2020		December 31, 2021
Guarantees		11,809,456		12,987,809
Loan commitments		112,088,680		114,414,462
Other commitments		4,933,086		3,427,331

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(4) Operational risk

The Group defines the operational risk that could cause a negative effect on capital resulting from inadequate internal process, labor work and systematic problem or external factors.

1) Operational risk management

The Group has established and operated an operating risk management system to strengthen external competitiveness, reduce risk capital volume, enhance operational risk management capacity and prevent accidents through compliance with Basel II, and has obtained approval from the Financial Supervisory Service for “Advanced Measurement Approaches” (AMA) based on self-compliance verification and independent third-party inspection results.

2) Operational risk measurement

The Group is applying the basic indicator method for the purpose of calculating the regulatory capital of operation risk, and the Bank is applying the advanced measurement method. The Bank applies AMA using internal and external loss data, business environment and internal control factors, and scenario analysis.

(5) Capital management

The Group complies with the standard of capital adequacy provided by financial regulatory authorities. The capital adequacy standard is based on Basel published by Basel III Committee on Banking Supervision in Bank for International Settlement in 2010 and was implemented in Korea in December 2013. The capital adequacy ratio is calculated by dividing own capital by asset (weighted with a risk premium – risk weighted assets) based on the consolidated financial statements of the Group.

According to the above regulations, the Group is required to meet the following new minimum requirements: Tier 1 common capital ratio of 8.0%, a Tier 1 capital ratio of 9.5%, and a minimum total capital ratio of 11.5% as of December 31, 2020 and 2021.

Details of the Group’s capital adequacy ratio as of December 31,2020 and 2021 are as follows (Unit: Korean Won in millions):


Details	December 31, 2020			December 31, 2021
Common Equity Tier 1 capital		19,828,094			21,948,988
Other Tier 1 capital		3,533,648			3,592,591
Tier 2 capital		4,086,035			3,399,065

Total risk-adjusted capital		27,447,777			28,940,644

Risk-weighted assets for credit risk		178,114,590			171,199,840
Risk-weighted assets for market risk		6,086,905			6,388,428
Risk-weighted assets for operational risk		14,067,185			14,914,801

Total risk-weighted assets		198,268,680			192,503,069

Common Equity Tier 1 ratio		10.00	%		11.40	%

Tier 1 capital ratio		11.78	%		13.27	%

Total capital ratio		13.84	%		15.03	%

5. OPERATING SEGMENTS

In evaluating the results of the Group and allocating resources, the Group’s Chief Operation Decision Maker (“CODM”) utilizes the information per type of customers. This financial information of the segments is regularly reviewed by the CODM to make decisions about resources to be allocated to each segment and evaluate its performance.

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(1) Segment by type of organization

The Group’s reporting segments consist of banking, credit card, capital, investment banking and other sectors, and the composition of such reporting segments was divided based on internal report data periodically reviewed by the management to evaluate the performance of the segment and make decisions on the resources to be distributed.


		Operational scope
Banking		Loans/deposits and relevant services for Woori Bank subsidiaries’ customers
Credit card		Credit card, cash services, card loans and accompanying business of Woori Card Co., Ltd.
Capital		Installments, loans including lease financing, and accompanying business of Woori Financial Capital Co., Ltd.
Investment Banking		Securities operation, sale of financial instruments, project financing and other related activities for comprehensive financing of Woori Investment bank Co., Ltd.
Others		Woori Financial Group Inc.,Woori Asset Trust Co., Ltd., Woori Asset Management Corp., Ltd., Woori Savings Bank., Woori Credit Information Co., Ltd., Woori Fund Services Inc., Woori Private Equity Asset Management Co., Ltd., Woori Global Asset Management Co., Ltd., Woori FIS Co., Ltd. and Woori Finance Research Institute,

(2) The composition of each organization’s sectors for the years ended December 31, 2019, 2020 and 2021 are as follows (Unit: Korean Won in

millions):


	For the year ended December 31, 2019
	Banking			Credit card			Investment banking			Others (*1)			Sub-total			Adjustments (*2)			Total
Net Interest income		4,583,386			553,956			54,077			2,290			5,193,709			699,997			5,893,706
Non-interest income (expense)		1,557,247			31,842			33,539			957,880			2,580,508			(1,533,917	)		1,046,591
Impairment losses due to credit loss		(32,621	)		(259,604	)		(572	)		(538	)		(293,335	)		(80,909	)		(374,244	)
General and administrative expense		(3,478,535	)		(190,062	)		(31,183	)		(323,528	)		(4,023,308	)		257,231			(3,766,077	)
Net operating income (expense)		2,629,477			136,132			55,861			636,104			3,457,574			(657,598	)		2,799,976
Share of gain (loss) of associates		(43,102	)		—			—			(301	)		(43,403	)		127,400			83,997
Other non-operating income (expense)		(108,246	)		13,889			(3,501	)		(1,244	)		(99,102	)		(61,822	)		(160,924	)
Non-operating income (expense)		(151,348	)		13,889			(3,501	)		(1,545	)		(142,505	)		65,578			(76,927	)

Net income (expense) before tax		2,478,129			150,021			52,360			634,559			3,315,069			(592,020	)		2,723,049
Tax income (expense)		(616,110	)		(35,825	)		998			(1,294	)		(652,231	)		(33,222	)		(685,453	)

Net income (loss)		1,862,019			114,196			53,358			633,265			2,662,838			(625,242	)		2,037,596


Total assets		347,819,743			10,087,342			3,398,960			21,681,769			382,987,814			(21,007,090	)		361,980,724
Investment in associate		3,161,729			—			775			19,880,642			23,043,146			(22,236,786	)		806,360
Other assets		344,658,014			10,087,342			3,398,185			1,801,127			359,944,668			1,229,696			361,174,364
Total liabilities		323,592,850			8,299,175			3,031,622			1,225,422			336,149,069			339,323			336,488,392

(*1)

Other segments include gains and losses from Woori Financial Group Inc., Woori Asset Management Corp., Woori Credit Information Co., Ltd., Woori Fund Service Inc., Woori Private Equity Asset Management Co., Ltd., Woori Global Asset Management Co., Ltd., Woori FIS Co., Ltd. and Woori Finance Research Co., Ltd.,

(*2)	Adjustments were made for the presentation of profit or loss in accordance with the Accounting Standards from the reporting segments in accordance with the Managerial Accounting Standards.

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	For the year ended December 31, 2020
	Banking (*1)			Credit card			Investment banking			Others (*2)			Sub-total			Adjustments (*3)			Total
Net Interest income		4,545,155			564,461			78,302			69,188			5,257,106			741,406			5,998,512
Non-interest income (expense)		1,423,286			3,648			34,497			1,071,852			2,533,283			(1,710,849	)		822,434
Impairment losses due to credit loss		(512,008	)		(195,816	)		(4,146	)		(43,660	)		(755,630	)		(28,741	)		(784,371	)
General and administrative expense		(3,545,186	)		(207,301	)		(39,039	)		(416,595	)		(4,208,121	)		251,940			(3,956,181	)

Net operating income (expense)		1,911,247			164,992			69,614			680,785			2,826,638			(746,244	)		2,080,394

Share of gain (loss) of associates		(6,895	)		—			170			1,255			(5,470	)		106,547			101,077
Other non-operating expense		(50,132	)		(5,569	)		(945	)		(484	)		(57,130	)		(123,090	)		(180,220	)
Non-operating income (expense)		(57,027	)		(5,569	)		(775	)		771			(62,600	)		(16,543	)		(79,143	)

Net income (expense) before tax		1,854,220			159,423			68,839			681,556			2,764,038			(762,787	)		2,001,251
Tax income (expense)		(437,288	)		(39,193	)		(5,902	)		(29,372	)		(511,755	)		25,753			(486,002	)

Net income (loss)		1,416,932			120,230			62,937			652,184			2,252,283			(737,034	)		1,515,249

Total assets		374,120,064			11,366,596			4,332,474			31,872,690			421,691,824			(22,610,807	)		399,081,017
Investment in associate		3,382,650			—			2,494			21,586,506			24,971,650			(23,978,359	)		993,291
Other assets		370,737,414			11,366,596			4,329,980			10,286,184			396,720,174			1,367,552			398,087,726
Total liabilities		348,706,682			9,312,986			3,803,594			9,606,742			371,430,004			925,168			372,355,172

(*1)	The banking sector includes the Bank and overseas subsidiaries.

(*2)

Other segments include gains and losses from Woori Financial Group Inc., Woori Financial Capital Co., Ltd. (Profit or loss for 3 months after incorporation into subsidiary), Woori Asset Trust Co., Ltd., Woori Asset Management Corp., Woori Credit Information Co., Ltd., Woori Fund Service Inc., Woori Private Equity Asset Management Co., Ltd., Woori Global Asset Management Co., Ltd., Woori FIS Co., Ltd. and Woori Finance Research Co., Ltd.

(*3)	Adjustments were made for the presentation of profit or loss in accordance with the Accounting Standards from the reporting segments in accordance with the Managerial Accounting Standards.

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	For the year ended December 31, 2021
	Banking (*1)			Credit card			Capital			Investment banking			Others (*2)			Sub-total			Adjustments (*3)			Total
Net interest income		5,158,078			606,506			315,600			108,321			29,515			6,218,020			767,701			6,985,721
Non-interest income(expense)		1,661,903			63,839			95,297			49,419			1,111,422			2,981,880			(1,623,603	)		1,358,277
Impairment losses due to credit loss		(140,574	)		(164,097	)		(122,089	)		(1,885	)		(19,601	)		(448,246	)		(88,592	)		(536,838	)
General and administrative expense		(3,606,715	)		(225,175	)		(99,048	)		(51,490	)		(440,601	)		(4,423,029	)		275,618			(4,147,411	)

Net operating income(expense)		3,072,692			281,073			189,760			104,365			680,735			4,328,625			(668,876	)		3,659,749

Share of gain (loss) of associates		60,049			—			1,000			750			4,390			66,189			(3,993	)		62,196
Other non-operating income (expense)		(19,654	)		(7,936	)		(16,943	)		(660	)		(1,071	)		15,932			11,364			(34,900	)
Non-operating income (expense)		40,395			(7,936	)		(15,943	)		90			3,319			82,121			7,371			27,296

Net income (expense) before tax		3,113,087			273,137			173,817			104,455			684,054			4,410,746			(661,505	)		3,687,045
Tax expense		(773,073	)		(72,411	)		(33,238	)		(24,531	)		(16,799	)		(937,156	)		(4,714	)		(924,766	)

Net income (loss)		2,340,014			200,726			140,579			79,924			667,255			3,473,590			(666,219	)		2,762,279

Total assets		415,976,627			14,116,832			10,259,868			5,159,742			25,627,649			471,140,718			(23,956,847	)		447,183,871
Investment in associate		858,706			—			12,403			8,846			22,165,895			23,045,850			(21,710,683	)		1,335,167
Other assets		415,117,921			14,116,832			10,247,465			5,150,896			3,461,754			448,094,868			(2,246,164	)		445,848,704
Total liabilities		391,360,200			11,858,065			9,073,104			4,559,856			3,284,269			420,090,402			(1,756,726	)		418,378,768

(*1)	The banking sector includes the Bank and their consolidated subsidiaries (such as overseas subsidiaries).

(*2)

Other segments include Woori Financial Group Inc., Woori Asset Trust Co., Ltd., Woori Asset Management Corp., Woori Savings Bank, Woori Credit Information Co., Ltd., Woori Fund Service Inc., Woori Private Equity Asset Management Co., Ltd., Woori Global Asset Management Co., Ltd., Woori FIS Co., Ltd. and Woori Finance Research Institute.

(*3)	Adjustments were made for the presentation of profit or loss in accordance with the Accounting Standards from the reporting segments in accordance with the Managerial Accounting Standards.

(3) Operating profit or loss from external customers for the years ended December 31, 2019, 2020 and 2021 are as follows (Unit: Korean Won in millions):


	For the years ended December 31
Details	2019		2020		2021
Domestic		2,500,504		1,869,516		3,288,341
Foreign		299,472		210,878		371,408

Total		2,799,976		2,080,394		3,659,749

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(4) Major

non-current

assets as of December 31, 2020 and 2021 are as follows (Unit: Korean Won in millions):


Details (*)	December 31, 202 0 (*)		December 31, 202 1 (*)
Domestic		5,026,161		5,201,838
Foreign		433,869		482,930

Total		5,460,030		5,684,768

(*)	Major non-current assets included investments in joint ventures and associates, investment properties, property, plant and equipment, and intangible assets.

(5) Information about major customers

The Group does not have any single customer that generates 10% or more of the Group’s total revenue for the years ended December 31, 2020 and 2021.

6. STATEMENTS OF CASH FLOWS

(1) Details of cash and cash equivalents are as follows (Unit: Korean Won in millions):


	December 31, 2020		December 31, 2021
Cash		1,611,282		1,742,449
Foreign currencies		514,565		503,205
Demand deposits		7,314,353		5,161,529
Fixed deposits		550,783		158,635

Total		9,990,983		7,565,818

(2) Significant transactions of investing activities and financing activities not involving cash inflows and outflows are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2019			2020			2021
Changes in other comprehensive income related to valuation of financial assets at FVTOCI		(14,141	)		59,360			(150,327	)
Changes in other comprehensive income related to valuation of investments in joint ventures and associates		613			(2,298	)		1,526
Changes in other comprehensive income related to valuation loss on cash flow hedge		(1,823	)		4,420			7,107
Changes in financial assets at FVTOCI due to debt-for-equity swap		96,527			3,575			79
Changes in the investments in joint ventures and associates due to the transfer of assets held-for-sale		651			(50,411	)		(52	)
Changes in financial assets at FVTPL and assets held-for-sale		—			(2,385	)		—
Transfer from property, plant and equipment to assets held-for-sale		(95	)		—			(12,852	)
Transfer of investment properties and premises and equipment		166,892			30,431			6,095
Changes in account payables related to intangible assets		29,705			(11,639	)		(11,640	)
Changes in right-of-use assets and lease liabilities		692,103			222,587			150,644
Comprehensive stock exchange		581,609			—			64,301
Changes in other comprehensive income related to foreign operation translation		—			(153,472	)		246,808

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(3) Adjustments of liabilities from financing activities in current and prior year are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2020
	Beginning balance		Cash flow			Not involving cash inflows and outflows										Ending balance
	Beginning balance		Cash flow			Foreign Exchange			Variation of gains on valuation of hedged items		Business Combination		Others(*)			Ending balance
Borrowings		18,998,920		2,033,851			(586,215	)		—		298,854		56			20,745,466
Debentures		30,858,055		913,836			(290,041	)		58,861		5,980,746		(42,099	)		37,479,358
Lease liabilities		419,045		(204,794	)		(5,141	)		—		3,751		194,570			407,431

Other liabilities		23,909		3,971			—			—		—		(1,526	)		26,354

Total		50,299,929		2,746,864			(881,397	)		58,861		6,283,351		151,001			58,658,609

(*)	The change in lease liabilities due to the new contract includes 231,325 million Won.


	For the year ended December 31, 2021
	Beginning balance		Cash flow			Not involving cash inflows and outflows								Ending balance
	Beginning balance		Cash flow			Foreign Exchange		Variation of gains on valuation of hedged items			Others (*)			Ending balance
Borrowings		20,745,466		3,199,712			804,649		—			5,632			24,755,459
Debentures		37,479,358		6,893,661			392,077		(104,306	)		(6,926	)		44,653,864
Lease liabilities		407,431		(177,593	)		10,950		—			102,425			343,213
Other liabilities		26,354		14,173			—		—			(13,620	)		26,907

Total		58,658,609		9,929,953			1,207,676		(104,306	)		87,511			69,779,443

(*)	The change in lease liabilities due to the new contract includes 189,660 million Won.

7. FINANCIAL ASSETS AT FVTPL

(1) Details of financial assets at FVTPL as of December 31, 2020 and 2021 are as follows (Unit: Korean Won in millions):


	December 31, 2020		December 31, 2021
Financial assets at fair value through profit or loss measured at fair value		14,762,941		13,497,234

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(2) Financial assets at fair value through profit or loss measured at fair value as of December 31, 2020 and 2021 are as follows (Unit: Korean Won in millions):


	December 31, 2020		December 31, 2021
Deposits:
Gold banking asset		48,796		65,072
Securities:
Debt securities
Korean treasury and government agencies		1,020,418		995,713
Financial institutions		873,031		925,474
Corporates		761,681		751,636
Others		231,967		70,416
Equity securities		485,793		329,864
Capital contributions		865,685		1,287,723
Beneficiary certificates		2,812,558		3,504,547
Others		84,979		94,673

Sub-total		7,136,112		7,960,046

Loans		676,291		667,467
Derivatives assets		6,901,742		4,803,131
Other financial assets		—		1,518

Total		14,762,941		13,497,234

The Group does not have financial assets at fair value through profit or loss designated as upon initial recognition as of December 31, 2020 and 2021.

8.	FINANCIAL ASSETS AT FVTOCI

(1) Details of financial assets at FVTOCI as of December 31, 2020 and 2021 are as follows (Unit: Korean Won in millions):


	December 31, 2020		December 31, 2021
Debt securities:
Korean treasury and government agencies		2,922,671		4,728,085
Financial institutions		17,996,660		22,909,615
Corporates		3,896,744		5,091,035
Bond denominated in foreign currencies		4,031,721		5,299,707
Securities loaned		100,345		98,535

Sub-total		28,948,141		38,126,977

Equity securities		1,080,788		992,812

Total		30,028,929		39,119,789

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(2) Details of equity securities designated as financial assets at FVTOCI as of December 31, 2020 and 2021 are as follows (Unit: Korean Won in millions):


Purpose of acquisition	December 31, 2020		December 31, 2021		Purpose of acquisition
Investment for strategic business partnership purpose		778,657		796,835
Debt-equity swap		302,090		195,971
Others		41		6		Insurance for mutual aid association etc.

Total		1,080,788		992,812

(3) Changes in the allowance for credit losses and gross carrying amount of financial assets at FVTOCI are as follows (Unit: Korean Won in millions):

1) Allowance for credit losses


	For the year ended December 31, 2019
	Stage 1			Stage 2			Stage 3		Total
Beginning balance		(5,939	)		(238	)		—		(6,177	)
Transfer to 12-month expected credit losses		—			—			—		—
Transfer to lifetime expected credit losses		—			—			—		—
Transfer to credit-impaired financial assets		—			—			—		—
Net provision of allowance for credit losses		(3,297	)		—			—		(3,297	)
Disposal		615			238			—		853
Others (*)		52			—			—		52

Ending balance		(8,569	)		—			—		(8,569	)

(*)	Others consist of foreign currencies translation, etc..


	For the year ended December 31, 2020
	Stage 1			Stage 2		Stage 3		Total
Beginning balance		(8,569	)		—		—		(8,569	)
Transfer to 12-month expected credit losses		—			—		—		—
Transfer to lifetime expected credit losses		—			—		—		—
Transfer to credit-impaired financial assets		—			—		—		—
Net provision of allowance for credit losses		(1,529	)		—		—		(1,529	)
Disposal		764			—		—		764
Others (*)		(297	)		—		—		(297	)

Ending balance		(9,631	)		—		—		(9,631	)

(*)	Others consist of foreign currencies translation, etc.


	For the year ended December 31, 2021
	Stage 1			Stage 2		Stage 3		Total
Beginning balance		(9,631	)		—		—		(9,631	)
Transfer to 12-month expected credit losses		—			—		—		—
Transfer to lifetime expected credit losses		—			—		—		—
Transfer to credit-impaired financial assets		—			—		—		—
Net provision of allowance for credit losses		(4,909	)		—		—		(4,909	)
Disposal		2,378			—		—		2,378
Others (*)		16			—		—		16

Ending balance		(12,146	)		—		—		(12,146	)

(*)	Others consist of foreign currencies translation, etc.

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2) Gross carrying amount


	For the year ended December 31, 2019
	Stage 1			Stage 2			Stage 3		Total
Beginning balance		17,087,096			25,153			—		17,112,249
Transfer to 12-month expected credit losses		—			—			—		—
Transfer to lifetime expected credit losses		—			—			—		—
Transfer to credit-impaired financial assets		—			—			—		—
Acquisition		23,774,375			—			—		23,774,375
Disposal / Recovery		(14,224,358	)		(25,000	)		—		(14,249,358	)
Gain (loss) on valuation		48,956			(153	)		—		48,803
Amortization based on effective interest method		14,629			—			—		14,629
Business combination		24,985			—			—		24,985
Others (*)		69,478			—			—		69,478

Ending balance		26,795,161			—			—		26,795,161

(*)	Others consist of foreign currencies translation, etc.


	For the year ended December 31, 2020
	Stage 1			Stage 2		Stage 3		Total
Beginning balance		26,795,161			—		—		26,795,161
Transfer to 12-month expected credit losses		—			—		—		—
Transfer to lifetime expected credit losses		—			—		—		—
Transfer to credit-impaired financial assets		—			—		—		—
Acquisition		22,970,010			—		—		22,970,010
Disposal / Recovery		(20,530,076	)		—		—		(20,530,076	)
Gain (loss) on valuation		17,957			—		—		17,957
Amortization based on effective interest method		(12,545	)		—		—		(12,545	)
Others (*)		(292,366	)		—		—		(292,366	)

Ending balance		28,948,141			—		—		28,948,141

(*)	Others consist of foreign currencies translation, etc.


	For the year ended December 31, 2021
	Stage 1			Stage 2		Stage 3		Total
Beginning balance		28,948,141			—		—		28,948,141
Transfer to 12-month expected credit losses		—			—		—		—
Transfer to lifetime expected credit losses		—			—		—		—
Transfer to credit-impaired financial assets		—			—		—		—
Acquisition		30,522,426			—		—		30,522,426
Disposal / Recovery		(21,533,360	)		—		—		(21,533,360	)
Gain (loss) on valuation		(213,517	)		—		—		(213,517	)
Amortization based on effective interest method		31,641			—		—		31,641
Others (*)		371,646			—		—		371,646

Ending balance		38,126,977			—		—		38,126,977

(*)	Others consist of foreign currencies translation, etc.

(4) During the years ended December 31, 2020 and 2021, the Group sold its equity securities, designated as financial assets at FVTOCI in accordance with decision of disposal by the creditors, and the fair values at disposal dates were 2,848 million Won and 138,511 million Won, respectively and cumulative losses at disposal dates were 3,665 million Won and 3,062 million Won, respectively.

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9. SECURITIES AT AMORTIZED COST

(1) Details of securities at amortized cost as of December 31, 2020 and 2021 are as follows (Unit: Korean Won in millions):


	December 31, 2020			December 31, 2021
Korean treasury and government agencies		6,947,495			8,882,500
Financial institutions		4,843,534			1,835,947
Corporates		4,726,075			5,818,646
Bond denominated in foreign currencies		508,301			554,416
Allowance for credit losses		(4,566	)		(5,235	)

Total		17,020,839			17,086,274

(2) Changes in the allowance for credit losses and gross carrying amount of securities at amortized cost are as follows (Unit: Korean Won in millions):

1) Allowance for credit losses


	For the year ended December 31, 2019
	Stage 1			Stage 2		Stage 3		Total
Beginning balance		(6,924	)		—		—		(6,924	)
Transfer to 12-month expected credit losses		—			—		—		—
Transfer to lifetime expected credit losses		—			—		—		—
Transfer to credit-impaired financial assets		—			—		—		—
Net reversal of allowance for credit losses		1,415			—		—		1,415
Others (*)		(2	)		—		—		(2	)

Ending balance		(5,511	)		—		—		(5,511	)

(*)	Others consist of foreign currencies translation, etc.


	For the year ended December 31, 2020
	Stage 1			Stage 2		Stage 3		Total
Beginning balance		(5,511	)		—		—		(5,511	)
Transfer to 12-month expected credit losses		—			—		—		—
Transfer to lifetime expected credit losses		—			—		—		—
Transfer to credit-impaired financial assets		—			—		—		—
Net reversal of allowance for credit losses		934			—		—		934
Others (*)		11			—		—		11

Ending balance		(4,566	)		—		—		(4,566	)

(*)	Others consist of foreign currencies translation, etc.


	For the year ended December 31, 2021
	Stage 1			Stage 2		Stage 3		Total
Beginning balance		(4,566	)		—		—		(4,566	)
Transfer to 12-month expected credit losses		—			—		—		—
Transfer to lifetime expected credit losses		—			—		—		—
Transfer to credit-impaired financial assets		—			—		—		—
Net provision of allowance for credit losses		(664	)		—		—		(664	)
Others (*)		(5	)		—		—		(5	)

Ending balance		(5,235	)		—		—		(5,235	)

(*)	Others consist of foreign currencies translation, etc.

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2) Gross carrying amount


	For the year ended December 31, 2019
	Stage 1			Stage 2		Stage 3		Total
Beginning balance		22,939,484			—		—		22,939,484
Transfer to 12-month expected credit losses		—			—		—		—
Transfer to lifetime expected credit losses		—			—		—		—
Transfer to credit-impaired financial assets		—			—		—		—
Acquisition		6,092,078			—		—		6,092,078
Disposal / Recovery		(8,709,947	)		—		—		(8,709,947	)
Amortization based on effective interest method		(3,286	)		—		—		(3,286	)
Others (*)		7,721			—		—		7,721

Ending balance		20,326,050			—		—		20,326,050

(*)	Others consist of foreign currencies translation, etc.


	For the year ended December 31, 2020
	Stage 1			Stage 2		Stage 3		Total
Beginning balance		20,326,050			—		—		20,326,050
Transfer to 12-month expected credit losses		—			—		—		—
Transfer to lifetime expected credit losses		—			—		—		—
Transfer to credit-impaired financial assets		—			—		—		—
Acquisition		2,380,448			—		—		2,380,448
Disposal / Recovery		(5,659,365	)		—		—		(5,659,365	)
Amortization based on effective interest method		(396	)		—		—		(396	)
Others (*)		(21,332	)		—		—		(21,332	)

Ending balance		17,025,405			—		—		17,025,405

(*)	Others consist of foreign currencies translation, etc.


	For the year ended December 31, 2021
	Stage 1			Stage 2		Stage 3		Total
Beginning balance		17,025,405			—		—		17,025,405
Transfer to 12-month expected credit losses		—			—		—		—
Transfer to lifetime expected credit losses		—			—		—		—
Transfer to credit-impaired financial assets		—			—		—		—
Acquisition		6,435,692			—		—		6,435,692
Disposal / Recovery		(6,425,408	)		—		—		(6,425,408	)
Amortization based on effective interest method		14,810			—		—		14,810
Others (*)		41,010			—		—		41,010

Ending balance		17,091,509			—		—		17,091,509

(*)	Others consist of foreign currencies translation, etc.

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10.	LOANS AND OTHER FINANCIAL ASSETS AT AMORTIZED COST

(1) Details of loans and other financial assets at amortized cost as of December 31, 2020 and 2021 are as follows (Unit: Korean Won in millions):


	December 31, 2020		December 31, 2021
Due from banks		9,863,160		15,914,139
Loans		302,794,182		336,799,510
Other financial assets		7,448,736		9,219,223

Total		320,106,078		361,932,872

(2)	Details of due from banks are as follows (Unit: Korean Won in millions):


	December 31, 2020			December 31, 2021
Due from banks in local currency:
Due from The Bank of Korea (“BOK”)		6,519,226			10,219,055
Due from depository banks		84,195			159,264
Due from non-depository institutions		266			14,146
Due from the Korea Exchange		227			54
Others		172,914			191,501
Allowance for credit losses		(1,576	)		(2,452	)

Sub-total		6,775,252			10,581,568

Due from banks in foreign currencies:
Due from banks on demand		1,608,126			3,615,983
Due from banks on time		296,489			205,351
Others		1,186,083			1,514,819
Allowance for credit losses		(2,790	)		(3,582	)

Sub-total		3,087,908			5,332,571

Total		9,863,160			15,914,139

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(3)	Details of restricted due from banks are as follows (Unit: Korean Won in millions):


	Counterparty	December 31, 2020		Reason of restriction
Due from banks in local currency:
Due from BOK	The BOK		6,519,226	Reserve deposits under the BOK Act
Due from KSFC	KB Securities Co. Ltd.		227	Futures trading margin
Others	Korea Federation of Savings Banks and others		89,562	Guarantees, mortgage of domestic exchange transactions and others

	Sub-total		6,609,015

Due from banks in foreign currencies:
Due from banks on demand	The BOK and others		1,544,492	Reserve deposits under the BOK Act and others
Due from banks on time	National Bank Cambodia		54	Reserve deposits and others
Others	Korea Investment & Securities and others		1,180,570	Overseas futures and options trade deposits and others

	Sub-total		2,725,116

	Total		9,334,131


	Counterparty	December 31, 2021		Reason of restriction
Due from banks in local currency:
Due from BOK	The BOK		10,219,055	Reserve deposits under the BOK Act
Due from KSFC	KB Securities Co. Ltd.		54	Futures trading margin
Others	Korea Federation of Savings Banks and others		75,897	Guarantees, mortgage of domestic exchange transactions and others

	Sub-total		10,295,006

Due from banks in foreign currencies:
Due from banks on demand	The BOK and others		3,549,695	Reserve deposits under the BOK Act and others
Due from banks on time	National Bank Cambodia		237	Reserve deposits and others
Others	Korea Investment & Securities and others		1,509,471	Overseas futures and options trade deposits and others

	Sub-total		5,059,403

	Total		15,354,409

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(4) Changes in the allowance for credit losses and gross carrying amount of due from banks are as follows (Unit: Korean Won in millions):

1) Allowance for credit losses


	For the year ended December 31, 2019
	Stage 1			Stage 2		Stage 3		Total
Beginning balance		(5,387	)		—		—		(5,387	)
Transfer to 12-month expected credit losses		—			—		—		—
Transfer to lifetime expected credit losses		—			—		—		—
Transfer to credit-impaired financial assets		—			—		—		—
Reversal of allowance for credit losses		544			—		—		544
Others (*)		(17	)		—		—		(17	)

Ending balance		(4,860	)		—		—		(4,860	)

(*)	Others consist of foreign currencies translation, etc.


	For the year ended December 31, 2020
	Stage 1			Stage 2		Stage 3		Total
Beginning balance		(4,860	)		—		—		(4,860	)
Transfer to 12-month expected credit losses		—			—		—		—
Transfer to lifetime expected credit losses		—			—		—		—
Transfer to credit-impaired financial assets		—			—		—		—
Reversal of allowance for credit losses		315			—		—		315
Others (*)		179			—		—		179

Ending balance		(4,366	)		—		—		(4,366	)

(*)	Others consist of foreign currencies translation, etc.


	For the year ended December 31, 2021
	Stage 1			Stage 2		Stage 3		Total
Beginning balance		(4,366	)		—		—		(4,366	)
Transfer to 12-month expected credit losses		—			—		—		—
Transfer to lifetime expected credit losses		—			—		—		—
Transfer to credit-impaired financial assets		—			—		—		—
Provision of allowance for credit losses		(1,477	)		—		—		(1,477	)
Others (*)		(191	)		—		—		(191	)

Ending balance		(6,034	)		—		—		(6,034	)

(*)	Others consist of foreign currencies translation, etc.

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2) Gross carrying amount


	For the year ended December 31, 2019
	Stage 1			Stage 2		Stage 3		Total
Beginning balance		14,156,399			—		—		14,156,399
Transfer to 12-month expected credit losses		—			—		—		—
Transfer to lifetime expected credit losses		—			—		—		—
Transfer to credit-impaired financial assets		—			—		—		—
Net increase		313,991			—		—		313,991
Business combination		35,910			—		—		35,910
Others (*)		(9,217	)		—		—		(9,217	)

Ending balance		14,497,083			—		—		14,497,083

(*)	Others consist of foreign currencies translation, etc.


	For the year ended December 31, 2020
	Stage 1			Stage 2		Stage 3		Total
Beginning balance		14,497,083			—		—		14,497,083
Transfer to 12-month expected credit losses		—			—		—		—
Transfer to lifetime expected credit losses		—			—		—		—
Transfer to credit-impaired financial assets		—			—		—		—
Net decrease		(4,759,053	)		—		—		(4,759,053	)
Business combination		129,825			—		—		129,825
Others (*)		(329	)		—		—		(329	)

Ending balance		9,867,526			—		—		9,867,526

(*)	Others consist of foreign currencies translation, etc.


	For the year ended December 31, 2021
	Stage 1		Stage 2		Stage 3		Total
Beginning balance		9,867,526		—		—		9,867,526
Transfer to 12-month expected credit losses		—		—		—		—
Transfer to lifetime expected credit losses		—		—		—		—
Transfer to credit-impaired financial assets		—		—		—		—
Net increase		5,977,989		—		—		5,977,989
Others (*)		74,658		—		—		74,658

Ending balance		15,920,173		—		—		15,920,173

(*) Others consist of foreign currencies translation, etc.

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(5) Details of loans are as follows (Unit: Korean Won in millions):


	December 31, 2020			December 31, 2021
Loans in local currency		249,264,947			273,283,542
Loans in foreign currencies (*)		20,025,092			24,508,250
Domestic banker’s usance		2,240,830			3,403,021
Credit card accounts		8,542,619			9,757,115
Bills bought in foreign currencies		5,763,427			5,310,080
Bills bought in local currency		133,650			265,275
Factoring receivables		38,017			17,406
Advances for customers on guarantees		31,300			26,766
Private placement bonds		353,585			519,150
Securitized loans		2,561,914			2,874,480
Call loans		2,352,034			3,481,219
Bonds purchased under resale agreements		10,145,749			10,332,858
Financial lease receivables		586,216			1,173,751
Installment financial bond		1,925,493			2,882,396
Others		380			159
Loan origination costs and fees		744,109			858,051
Discounted present value		(6,656	)		(7,299	)
Allowance for credit losses		(1,908,524	)		(1,886,710	)

Total		302,794,182			336,799,510

(*)	It includes 50,088 million Won in collateral assets related to the sale of bonds under repurchase agreements at the end of the previous year.

(6) Changes in the allowance for credit losses of loans are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2019
	Consumers									Corporates
	Stage 1			Stage 2			Stage 3			Stage 1			Stage 2			Stage 3
Beginning balance		(114,509	)		(48,368	)		(129,906	)		(348,311	)		(349,619	)		(527,673	)
Transfer to 12-month expected credit losses		(14,430	)		13,661			769			(58,537	)		49,884			8,653
Transfer to lifetime expected credit losses		14,022			(15,332	)		1,310			8,215			(20,473	)		12,258
Transfer to credit-impaired financial assets		8,603			10,312			(18,915	)		3,308			17,852			(21,160	)
Net reversal (provision) of allowance for credit losses		21,802			(38,203	)		(146,204	)		86,565			6,855			(75,392	)
Recovery		—			—			(61,914	)		—			—			(66,359	)
Charge-off		—			—			217,382			—			—			222,537
Disposal		—			—			2,763			—			1			42,095
Interest income from impaired loans		—			—			9,647			—			—			17,887
Business combination		—			—			—			(9	)		(2,008	)		(3,150	)
Others		(636	)		(32	)		(520	)		(15,489	)		(210	)		259

Ending balance		(85,148	)		(77,962	)		(125,588	)		(324,258	)		(297,718	)		(390,045	)

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	For the year ended December 31, 2019
	Credit card accounts									Total
	Stage 1			Stage 2			Stage 3			Stage 1			Stage 2			Stage 3
Beginning balance		(64,787	)		(78,131	)		(116,772	)		(527,607	)		(476,118	)		(774,351	)
Transfer to 12-month expected credit losses		(15,712	)		15,231			481			(88,679	)		78,776			9,903
Transfer to lifetime expected credit losses		6,031			(6,317	)		286			28,268			(42,122	)		13,854
Transfer to credit-impaired financial assets		98,647			94,116			(192,763	)		110,558			122,280			(232,838	)
Net reversal (provision) of allowance for credit losses		(98,888	)		(96,434	)		(40,343	)		9,479			(127,782	)		(261,939	)
Recovery		—			—			(60,365	)		—			—			(188,638	)
Charge-off		—			—			281,420			—			—			721,339
Disposal		—			—			—			—			1			44,858
Interest income from impaired loans		—			—			—			—			—			27,534
Business combination		—			—			—			(9	)		(2,008	)		(3,150	)
Others		(17	)		2			14			(16,142	)		(240	)		(247	)

Ending balance		(74,726	)		(71,533	)		(128,042	)		(484,132	)		(447,213	)		(643,675	)


	For the year ended December 31, 2020
	Consumers									Corporates
	Stage 1			Stage 2			Stage 3			Stage 1			Stage 2			Stage 3
Beginning balance		(85,148	)		(77,962	)		(125,588	)		(324,258	)		(297,718	)		(390,045	)
Transfer to 12-month expected credit losses		(20,839	)		20,050			789			(29,117	)		25,067			4,050
Transfer to lifetime expected credit losses		9,137			(10,800	)		1,663			19,259			(48,184	)		28,925
Transfer to credit-impaired financial assets		3,549			4,913			(8,462	)		3,607			10,349			(13,956	)
Net reversal (provision) of allowance for credit losses		5,142			(10,042	)		(125,923	)		2,831			(200,024	)		(271,265	)
Recovery		—			—			(71,277	)		—			—			(66,179	)
Charge-off		—			—			181,713			—			—			243,634
Disposal		—			—			5,640			—			13			47,106
Interest income from impaired loans		—			—			10,790			—			—			14,945
Business combination		(31,327	)		(15,129	)		(72,040	)		(13,703	)		(18,164	)		(24,364	)
Others		(2,041	)		4,507			(2,998	)		13,921			6,754			38,405

Ending balance		(121,527	)		(84,463	)		(205,693	)		(327,460	)		(521,907	)		(388,744	)

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	For the year ended December 31, 2020
	Credit card accounts									Total
	Stage 1			Stage 2			Stage 3			Stage 1			Stage 2			Stage 3
Beginning balance		(74,726	)		(71,533	)		(128,042	)		(484,132	)		(447,213	)		(643,675	)
Transfer to 12-month expected credit losses		(14,978	)		14,755			223			(64,934	)		59,872			5,062
Transfer to lifetime expected credit losses		9,341			(9,742	)		401			37,737			(68,726	)		30,989
Transfer to credit-impaired financial assets		627			1,137			(1,764	)		7,783			16,399			(24,182	)
Net reversal (provision) of allowance for credit losses		17,022			(25,098	)		(179,872	)		24,995			(235,164	)		(577,060	)
Recovery		—			—			(66,026	)		—			—			(203,482	)
Charge-off		—			—			245,890			—			—			671,237
Disposal		—			—			23,653			—			13			76,399
Interest income from impaired loans		—			—			—			—			—			25,735
Business combination		—			—			—			(45,030	)		(33,293	)		(96,404	)
Others		2			—			—			11,882			11,261			35,407

Ending balance		(62,712	)		(90,481	)		(105,537	)		(511,699	)		(696,851	)		(699,974	)


	For the year ended December 31, 2021
	Consumers									Corporates
	Stage 1			Stage 2			Stage 3			Stage 1			Stage 2			Stage 3
Beginning balance		(121,527	)		(84,463	)		(205,693	)		(327,460	)		(521,907	)		(388,744	)
Transfer to 12-month expected credit losses		(23,328	)		19,736			3,592			(80,803	)		49,902			30,901
Transfer to lifetime expected credit losses		9,201			(11,466	)		2,265			14,106			(35,706	)		21,600
Transfer to credit-impaired financial assets		2,752			9,918			(12,670	)		1,562			18,741			(20,303	)
Net reversal (provision) of allowance for credit losses		(4,456	)		(32,764	)		(130,424	)		49,562			(91,981	)		(168,323	)
Recovery		—			—			(75,058	)		—			—			(55,108	)
Charge-off		—			—			174,012			—			—			233,507
Disposal		—			—			14,890			—			—			64,078
Interest income from impaired loans		—			—			13,743			—			—			12,672
Others		838			1,435			8,726			(19,733	)		4,211			18,487

Ending balance		(136,520	)		(97,604	)		(206,617	)		(362,766	)		(576,740	)		(251,233	)

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	For the year ended December 31, 2021
	Credit card accounts									Total
	Stage 1			Stage 2			Stage 3			Stage 1			Stage 2			Stage 3
Beginning balance		(62,712	)		(90,481	)		(105,537	)		(511,699	)		(696,851	)		(699,974	)
Transfer to 12-month expected credit losses		(26,846	)		26,581			265			(130,977	)		96,219			34,758
Transfer to lifetime expected credit losses		7,497			(8,151	)		654			30,804			(55,323	)		24,519
Transfer to credit-impaired financial assets		356			925			(1,281	)		4,670			29,584			(34,254	)
Net reversal (provision) of allowance for credit losses		12,894			(44,363	)		(145,336	)		58,000			(169,108	)		(444,083	)
Recovery		—			—			(65,620	)		—			—			(195,786	)
Charge-off		—			—			220,352			—			—			627,871
Disposal		—			—			25,576			—			—			104,544
Interest income from impaired loans		—			—			—			—			—			26,415
Others		(3	)		—			—			(18,898	)		5,646			27,213

Ending balance		(68,814	)		(115,489	)		(70,927	)		(568,100	)		(789,833	)		(528,777	)

(7) Changes in the gross carrying amount of loans are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2019
	Consumers									Corporates
	Stage 1			Stage 2			Stage 3			Stage 1			Stage 2			Stage 3
Beginning balance		110,619,242			6,028,009			391,494			131,453,727			5,031,258			1,020,658
Transfer to 12-month expected credit losses		2,626,998			(2,614,767	)		(12,231	)		1,560,734			(1,550,164	)		(10,570	)
Transfer to lifetime expected credit losses		(8,238,499	)		8,256,600			(18,101	)		(2,306,186	)		2,341,881			(35,695	)
Transfer to credit-impaired financial assets		(152,128	)		(104,129	)		256,257			(252,249	)		(142,902	)		395,151
Charge-off		—			—			(217,382	)		—			—			(222,537	)
Disposal		—			(55	)		(67,924	)		—			(70	)		(161,318	)
Net increase (decrease)		6,397,570			883,149			85,561			3,985,392			(809,566	)		(266,432	)
Business combination		100			—			—			2,561			40,161			21,000

Ending balance		111,253,283			12,448,807			417,674			134,443,979			4,910,598			740,257

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	For the year ended December 31, 2019
	Credit card accounts									Total
	Stage 1			Stage 2			Stage 3			Stage 1			Stage 2			Stage 3
Beginning balance		6,861,844			982,772			208,989			248,934,813			12,042,039			1,621,141
Transfer to 12-month expected credit losses		258,674			(258,166	)		(508	)		4,446,406			(4,423,097	)		(23,309	)
Transfer to lifetime expected credit losses		(307,100	)		307,450			(350	)		(10,851,785	)		10,905,931			(54,146	)
Transfer to credit-impaired financial assets		(124,675	)		(104,712	)		229,387			(529,052	)		(351,743	)		880,795
Charge-off		—			—			(281,420	)		—			—			(721,339	)
Disposal		—			—			—			—			(125	)		(229,242	)
Net increase (decrease)		589,724			(41,512	)		72,269			10,972,686			32,071			(108,602	)
Business combination		—			—			—			2,661			40,161			21,000

Ending balance		7,278,467			885,832			228,367			252,975,729			18,245,237			1,386,298


	For the year ended December 31, 2020
	Consumers									Corporates
	Stage 1			Stage 2			Stage 3			Stage 1			Stage 2			Stage 3
Beginning balance		111,253,283			12,448,807			417,674			134,443,979			4,910,598			740,257
Transfer to 12-month expected credit losses		4,564,471			(4,552,400	)		(12,071	)		1,160,399			(1,146,756	)		(13,643	)
Transfer to lifetime expected credit losses		(5,365,577	)		5,388,064			(22,487	)		(3,983,614	)		4,023,106			(39,492	)
Transfer to credit-impaired financial assets		(96,197	)		(103,016	)		199,213			(357,386	)		(120,491	)		477,877
Charge-off		—			—			(181,713	)		—			—			(243,634	)
Disposal		—			—			(55,349	)		—			(398	)		(163,644	)
Net increase (decrease)		13,326,560			(1,289,910	)		54,503			14,804,391			(696,164	)		(64,490	)
Business combination		2,307,498			125,166			137,336			3,507,163			358,846			24,678

Ending balance		125,990,038			12,016,711			537,106			149,574,932			7,328,741			717,909


	For the year ended December 31, 2020
	Credit card accounts									Total
	Stage 1			Stage 2			Stage 3			Stage 1			Stage 2			Stage 3
Beginning balance		7,278,467			885,832			228,367			252,975,729			18,245,237			1,386,298
Transfer to 12-month expected credit losses		257,399			(257,144	)		(255	)		5,982,269			(5,956,300	)		(25,969	)
Transfer to lifetime expected credit losses		(454,230	)		454,709			(479	)		(9,803,421	)		9,865,879			(62,458	)
Transfer to credit-impaired financial assets		(26,947	)		(10,796	)		37,743			(480,530	)		(234,303	)		714,833
Charge-off		—			—			(245,890	)		—			—			(671,237	)
Disposal		—			—			(43,781	)		—			(398	)		(262,774	)
Net increase (decrease)		224,286			5,619			204,369			28,355,237			(1,980,455	)		194,382
Business combination		—			—			—			5,814,661			484,012			162,014

Ending balance		7,278,975			1,078,220			180,074			282,843,945			20,423,672			1,435,089

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	For the year ended December 31, 2021
	Consumers									Corporates
	Stage 1			Stage 2			Stage 3			Stage 1			Stage 2			Stage 3
Beginning balance		125,990,038			12,016,711			537,106			149,574,932			7,328,741			717,909
Transfer to 12-month expected credit losses		4,377,247			(4,357,347	)		(19,900	)		1,610,541			(1,575,157	)		(35,384	)
Transfer to lifetime expected credit losses		(6,104,417	)		6,127,477			(23,060	)		(3,627,800	)		3,670,808			(43,008	)
Transfer to credit-impaired financial assets		(108,717	)		(79,746	)		188,463			(244,236	)		(132,986	)		377,222
Charge-off		—			—			(174,012	)		—			—			(233,507	)
Disposal		—			—			(48,795	)		—			—			(187,571	)
Net increase (decrease)		10,985,534			(206,312	)		40,167			23,481,818			(833,127	)		(53,929	)

Ending balance		135,139,685			13,500,783			499,969			170,795,255			8,458,279			541,732


	For the year ended December 31, 2021
	Credit card accounts									Total
	Stage 1			Stage 2			Stage 3			Stage 1			Stage 2			Stage 3
Beginning balance		7,278,975			1,078,220			180,074			282,843,945			20,423,672			1,435,089
Transfer to 12-month expected credit losses		359,101			(358,776	)		(325	)		6,346,889			(6,291,280	)		(55,609	)
Transfer to lifetime expected credit losses		(513,635	)		514,369			(734	)		(10,245,852	)		10,312,654			(66,802	)
Transfer to credit-impaired financial assets		(17,416	)		(9,253	)		26,669			(370,369	)		(221,985	)		592,354
Charge-off		—			—			(220,352	)		—			—			(627,871	)
Disposal		—			—			(56,520	)		—			—			(292,886	)
Net increase (decrease)		1,132,278			170,579			187,263			35,599,630			(868,860	)		173,501

Ending balance		8,239,303			1,395,139			116,075			314,174,243			23,354,201			1,157,776

(8) Details of other financial assets are as follows (Unit: Korean Won in millions):


	December 31, 2020			December 31, 2021
Cash Management Account asset (CMA asset)		210,000			140,000
Receivables		3,809,929			6,852,139
Accrued income		864,107			1,049,857
Telex and telephone subscription rights and refundable deposits		936,878			870,707
Domestic exchange settlement debit		1,518,775			82,555
Other assets		192,342			290,746
Allowance for credit losses		(83,295	)		(66,781	)

Total		7,448,736			9,219,223

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(9) Changes in the allowances for credit losses on other financial assets are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2019
	Stage 1			Stage 2			Stage 3			Total
Beginning balance		(3,469	)		(1,971	)		(62,501	)		(67,941	)
Transfer to 12-month expected credit losses		(207	)		198			9			—
Transfer to lifetime expected credit losses		116			(43	)		(73	)		—
Transfer to credit-impaired financial assets		19			159			(178	)		—
Reversal (provision) of allowance for credit losses		802			(9	)		(6,854	)		(6,061	)
Charge-off		—			—			2,506			2,506
Disposal		—			—			1,685			1,685
Business combination		(401	)		—			(7,268	)		(7,669	)
Others		(56	)		—			397			341

Ending balance		(3,196	)		(1,666	)		(72,277	)		(77,139	)


	For the year ended December 31, 2020
	Stage 1			Stage 2			Stage 3			Total
Beginning balance		(3,196	)		(1,666	)		(72,277	)		(77,139	)
Transfer to 12-month expected credit losses		(142	)		129			13			—
Transfer to lifetime expected credit losses		125			(155	)		30			—
Transfer to credit-impaired financial assets		23			64			(87	)		—
Provision of allowance for credit losses		(667	)		(1,589	)		(3,080	)		(5,336	)
Charge-off		—			—			2,151			2,151
Disposal		—			—			1,557			1,557
Business combination		(624	)		(2,235	)		(1,968	)		(4,827	)
Others		815			2			(518	)		299

Ending balance		(3,666	)		(5,450	)		(74,179	)		(83,295	)


	For the year ended December 31, 2021
	Stage 1			Stage 2			Stage 3			Total
Beginning balance		(3,666	)		(5,450	)		(74,179	)		(83,295	)
Transfer to 12-month expected credit losses		(228	)		217			11			—
Transfer to lifetime expected credit losses		147			(174	)		27			—
Transfer to credit-impaired financial assets		167			288			(455	)		—
Reversal (provision) of allowance for credit losses		511			(464	)		4,664			4,711
Charge-off		—			—			9,965			9,965
Disposal		—			—			1,400			1,400
Others		(606	)		3			1,041			438

Ending balance		(3,675	)		(5,580	)		(57,526	)		(66,781	)

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(10) Changes in the gross carrying amount of other financial assets are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2019
	Stage 1			Stage 2			Stage 3			Total
Beginning balance		7,454,390			28,193			72,007			7,554,590
Transfer to 12-month expected credit losses		8,036			(8,019	)		(17	)		—
Transfer to lifetime expected credit losses		(17,678	)		17,740			(62	)		—
Transfer to credit-impaired financial assets		(952	)		(918	)		1,870			—
Charge-off		—			—			(2,506	)		(2,506	)
Disposal		—			—			(2,212	)		(2,212	)
Net increase		606,457			55,651			41,138			703,246
Business combination		9,591			—			7,656			17,247

Ending balance		8,059,844			92,647			117,874			8,270,365


	For the year ended December 31, 2020
	Stage 1			Stage 2			Stage 3			Total
Beginning balance		8,059,844			92,647			117,874			8,270,365
Transfer to 12-month expected credit losses		8,760			(8,737	)		(23	)		—
Transfer to lifetime expected credit losses		(15,305	)		15,334			(29	)		—
Transfer to credit-impaired financial assets		(1,900	)		(701	)		2,601			—
Charge-off		—			—			(2,151	)		(2,151	)
Disposal		—			—			(1,847	)		(1,847	)
Net increase (decrease)		(856,008	)		(26,539	)		69,500			(813,047	)
Business combination		72,035			4,414			2,262			78,711

Ending balance		7,267,426			76,418			188,187			7,532,031


	For the year ended December 31, 2021
	Stage 1			Stage 2			Stage 3			Total
Beginning balance		7,267,426			76,418			188,187			7,532,031
Transfer to 12-month expected credit losses		8,909			(8,894	)		(15	)		—
Transfer to lifetime expected credit losses		(27,369	)		27,399			(30	)		—
Transfer to credit-impaired financial assets		(1,877	)		(1,638	)		3,515			—
Charge-off		—			—			(9,965	)		(9,965	)
Disposal		—			—			(1,716	)		(1,716	)
Net increase (decrease)		1,757,450			13,312			(5,108	)		1,765,654

Ending balance		9,004,539			106,597			174,868			9,286,004

11. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES

(1)	The fair value hierarchy

The fair value hierarchy for financial instruments is determined by the amount of observable market data. The specific financial instruments characteristics and market condition such as the existence of the transactions among market participants and transparency are reflected to the market observable inputs. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities. The Group maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value of its financial assets and financial liabilities. Fair value is measured based on the perspective of a market participant. As such, even when market assumptions are not readily available, the Group’s own assumptions reflect those that market participants would use for measuring the assets or liabilities at the measurement date.

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The fair value measurement is described in the one of the following three levels used to classify fair value measurements:

•

Level 1—fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities. The types of financial assets or liabilities generally included in Level 1 are publicly traded equity securities, derivatives, and debt securities issued by governmental bodies.

•

Level 2—fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. prices) or indirectly (i.e. derived from prices). The types of financial assets or liabilities generally included in Level 2 are debt securities not traded in active markets and derivatives traded in OTC but not required significant judgment.

•

Level 3—fair value measurements are those derived from valuation technique that include inputs for the assets or liabilities that are not based on observable market data (unobservable inputs). The types of financial assets or liabilities generally included in Level 3 are

non-public

securities and derivatives and debt securities of which valuation techniques require significant judgments and subjectivity.

The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Group’s assessment of the significance of a particular input to a fair value measurement in its entirety requires judgment and consideration of inherent factors of the asset or liability.

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(2) Fair value hierarchy of financial assets and liabilities measured at fair value are as follows (Unit: Korean Won in millions):


	December 31, 2020
	Level 1 (*)		Level 2 (*)		Level 3		Total
Financial assets:
Financial assets at FVTPL
Deposits		48,796		—		—		48,796
Debt securities		516,597		2,365,882		4,618		2,887,097
Equity securities		35,422		—		450,371		485,793
Capital contributions		—		—		865,685		865,685
Beneficiary certificates		24,895		869,852		1,917,811		2,812,558
Loans		—		467,229		209,062		676,291
Derivative assets		18,416		6,875,454		7,872		6,901,742
Others		—		—		84,979		84,979

Sub-total		644,126		10,578,417		3,540,398		14,762,941

Financial assets at FVTOCI
Debt securities		3,092,237		25,855,904		—		28,948,141
Equity securities		510,073		—		570,715		1,080,788

Sub-total		3,602,310		25,855,904		570,715		30,028,929

Derivative assets		—		174,820		—		174,820

Total		4,246,436		36,609,141		4,111,113		44,966,690

Financial liabilities:
Financial liabilities at FVTPL
Deposits due to customers		49,279		—		—		49,279
Derivative liabilities		6,024		6,433,727		20,136		6,459,887
Securities sold		285,026		—		—		285,026

Sub-total		340,329		6,433,727		20,136		6,794,192

Financial liabilities at FVTPL designated as upon initial recognition
Equity-linked securities		—		—		19,630		19,630

Derivative liabilities		—		64,769		—		64,769

Total		340,329		6,498,496		39,766		6,878,591

(*)	There were no transfers between Level 1 and Level 2 of financial assets and liabilities measured at fair value. The Group recognizes transfers among levels at the end of reporting period in which events have occurred or conditions have changed.

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	December 31, 2021
	Level 1 (*)		Level 2 (*)		Level 3		Total
Financial assets:
Financial assets at FVTPL
Deposits		65,072		—		—		65,072
Debt securities		817,584		1,923,538		2,117		2,743,239
Equity securities		25,879		—		303,985		329,864
Capital contributions		—		—		1,287,723		1,287,723
Beneficiary certificates		74,271		2,326,202		1,104,074		3,504,547
Loans		—		453,832		213,635		667,467
Derivative assets		10,911		4,762,872		29,348		4,803,131
Others		—		—		96,191		96,191

Sub-total		993,717		9,466,444		3,037,073		13,497,234

Financial assets at FVTOCI
Debt securities		5,578,455		32,548,522		—		38,126,977
Equity securities		411,357		—		581,455		992,812

Sub-total		5,989,812		32,548,522		581,455		39,119,789

Derivative assets		—		106,764		—		106,764

Total		6,983,529		42,121,730		3,618,528		52,723,787

Financial liabilities:
Financial liabilities at FVTPL
Deposits due to customers		65,016		—		—		65,016
Derivative liabilities		10,259		4,552,368		4,641		4,567,268
Securities sold		211,408		29,766		—		241,174

Sub-total		286,683		4,582,134		4,641		4,873,458

Derivative liabilities		—		27,584		—		27,584

Total		286,683		4,609,718		4,641		4,901,042

(*)	There were no transfers between Level 1 and Level 2 of financial assets and liabilities measured at fair value. The Group recognizes transfers among levels at the end of reporting period in which events have occurred or conditions have changed.

Financial assets and liabilities at FVTPL, financial liabilities at FVTPL designated as upon initial recognition, financial assets at FVTOCI, and derivative assets and liabilities are recognized at fair value. Fair value is the amount that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date.

Financial instruments are measured at fair value using a quoted market price in active markets. If there is no active market for a financial instrument, the Group determines the fair value using valuation methods. Valuation methods and input variables for each type of financial instruments are as follows:

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1) Valuation methods and input variables for each type of financial instrument classified into level 2 in December 31, 2020 and 2021 are as follows:


	Valuation methods	Input variables
Debt securities	Fair value is measured by discounting the future cash flows of debt securities applying the risk-free market rate with credit spread.	Risk-free market rate and credit spread

Beneficiary certificates	The beneficiary certificates classified as Level 2 are MMF and are measured at the standard price.	Standard price

Derivatives	Fair value is measured by models such as option model (Closed form), DCF model, FDM and Monte Carlo Simulation.	Discount rate, values of underlying assets such as foreign exchange rate and stock prices, risk-free market rate, forward rate, etc.

Loans	The future cash flows of debt instruments are measured at a discount by applying the market interest rate applied to entities with similar creditworthiness to the debtor.	Risk-free market rate and credit spread

2) Valuation methods and input variables for each type of financial instrument classified into level 3 in December 31, 2020 and 2021 are as follows:


	Valuation methods	Input variables
Loans, bond with options	Fair value is calculated by using the Discounted Cash Flow Model, Binomial Tree, which is a valuation technique commonly used in the market taking into account the price and variability of the underlying asset, and LSMC.	Values of underlying assets, volatility, credit spread, discount rate and terminal growth rate

Debt securities	The Group is measuring fair value with LSMC and the Hull-White model.	Stock volatility, interest rate volatility and discount rate

Equity securities, capital contributions and Beneficiary certificates	Among DCF (Discounted Cash Flow) Model, FCFE (Free Cash Flow to Equity) Model, Comparable Company Analysis, Dividend Discount Model, Risk-adjusted Rate of Return Method, Net Asset Value Method, LSMC, and Binomial Tree, more than one method is used given the characteristic of the subject of fair value measurement.	Risk-free market rate, market risk premium, corporate Beta, stock prices, volatility of underlying asset, net asset of the investment association and discount rate

Derivatives	Fair value is measured by models such as option model (Closed form), DCF model, FDM and Monte Carlo Simulation.	Risk-free market rate, discount rate, values of underlying assets such as foreign exchange rate and stock prices, volatility, etc.

Equity-linked securities	Fair value is measured by models such as option model (Closed form), DCF model, FDM and Monte Carlo Simulation.	Volatility of underlying assets, discount rate, dividends, volatility, correlation coefficient, foreign exchange rate, etc.

Others	Fair value is calculated by using the binominal tree. Least-Squares Monte Carlo simulation (LSMC) and Income approach, which are commonly used valuation techniques in the market taking into account the price and variability of the underlying asset after measuring the fair value of underlying asset using Models including Discounted Cash Flow Model.	Stock prices, volatility of underlying assets, etc.

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Valuation methods of financial assets and liabilities measured at fair value and classified into Level 3 and significant but unobservable inputs are as follows:


	December 31, 2020
	Fair value measurement technique	Type	Input variable	Range	Impact of changes in significant unobservable inputs on fair value measurement
Loans, bond with options, convertible bonds	Binomial Tree		Stock prices, Volatility of underlying asset	19.82~22.84%	Variation of fair value increases as volatility of underlying asset increases.
	LSMC		Stock prices, Volatility of underlying asset	18.99%	Variation of fair value increases as volatility of underlying asset increases.
	DCF model		Discount rate	4.70~16.50%	Fair value increases as discount rate decreases.
			Terminal growth rate	1.00%	Fair value increases as terminal growth rate increases.
			Credit spread	2.30~5.90%	Fair value decreases as credit spread increases.
	Hull-White model		Stock volatility	17.50~27.30%	Fair value increases as volatility increases.
			Interest rate volatility	0.50%	Fair value increases as volatility increases.
			Discount rate	3.10~53.20%	Fair value increases as discount rate decreases.
Derivative assets	Option valuation model and others	Interest rate related	Correlation coefficient	0.90~0.98	Variation of fair value increases as correlation coefficient increases.
	Option valuation model and others	Interest rate related	Volatility of underlying asset	25.46~131.47%	Variation of fair value increases as volatility of underlying assets increases.
		Equity related	Correlation coefficient	0.29~0.75	Variation of fair value increases as correlation coefficient increases.
			Volatility of underlying asset	—	Variation of fair value increases as volatility of underlying assets increases.
	DCF model	Interest rate related	Credit risk adjustment ratio	100.00%	Variation of fair value decreases as credit risk adjustment ratio increases.
Derivative liabilities	Option valuation model and others	Interest rate related	Correlation coefficient	0.90~0.98	Variation of fair value increases as correlation coefficient increases.
	Option valuation model and others		Volatility of underlying asset	25.46~131.47%	Variation of fair value increases as volatility of underlying assets increases.
		Equity related	Correlation coefficient	0.29~0.75	Variation of fair value increases as correlation coefficient increases.
			Volatility of underlying asset	—	Variation of fair value increases as volatility of underlying assets increases.

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	December 31, 2020
	Fair value measurement technique	Type	Input variable	Range	Impact of changes in significant unobservable inputs on fair value measurement
Equity-linked securities	Monte Carlo Simulation and others	Equity related	Correlation coefficient Volatility of underlying asset	0.48~0.60 27.59~49.29%	Fair value of equity-linked securities increases if both historical volatility and correlation coefficient increase. However, when correlation coefficient decreases despite the increase in historical volatility, the fair value variation of equity-linked securities may decrease.
Equity securities, capital contributions, and beneficiary certificates	LSMC		Stock prices, Volatility of underlying asset	18.99~26.45%	Variation of fair value increases as volatility of underlying asset increases.
	DCF model and others		Terminal growth rate	1.00%	Fair value increases as terminal growth rate increases.
			Discount rate	5.83~34.63%	Fair value increases as discount rate decreases.
			Fluctuation rate of real estate sales price	—	Fair value increases as sales price increases
			Liquidation value	—	Variation of liquidation value increases as volatility of underlying assets increases
	Net asset value method		Discount rate	14.30%	Fair value increases as discount rate decreases.
	Binomial Tree		Volatility	39.60%	Fair value increases as volatility increases.
	Binomial Tree		Discount rate	8.50%	Fair value increases as discount rate decreases.
Others	Income approach		Discount rate	12.69%	Fair value increases as discount rate decreases.
	Income approach		Growth rate	1.00%	Fair value increases as growth rate increases.
	LSMC		Stock prices, Volatility of underlying asset	17.61~26.45%	Variation of fair value increases as volatility of underlying asset increases.

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	December 31, 2021
	Fair value measurement technique	Type	Input variable	Range	Impact of changes in significant unobservable inputs on fair value measurement
Loans	Binomial Tree		Stock prices, Volatility of underlying asset	22.62%	Variation of fair value increases as volatility of underlying asset increases.
Loans	LSMC		Stock prices, Volatility of underlying asset	19.48%	Variation of fair value increases as volatility of underlying asset increases.
Derivative assets	Option valuation model and others	Interest rate related	Correlation coefficient	0.90~0.98	Variation of fair value increases as correlation coefficient increases.
	Option valuation model and others	Interest rate related	Volatility of underlying asset	24.84~97.50%	Variation of fair value increases as volatility of underlying assets increases.
		Equity related	Correlation coefficient	0.18~0.76	Variation of fair value increases as correlation coefficient increases.
			Volatility of underlying asset	—	Variation of fair value increases as volatility of underlying assets increases.
	DCF model	Interest rate related	Credit risk adjustment ratio	100.00%	Variation of fair value decreases as credit risk adjustment ratio increases.
Derivative liabilities	Option valuation model and others	Interest rate related	Correlation coefficient	0.90~0.98	Variation of fair value increases as correlation coefficient increases.
Derivative liabilities	Option valuation model and others		Volatility of underlying asset	24.84~97.50%	Variation of fair value increases as volatility of underlying assets increases.
		Equity related	Correlation coefficient	0.18~0.76	Variation of fair value increases as correlation coefficient increases.
			Volatility of underlying asset	—	Variation of fair value increases as volatility of underlying assets increases.
Equity securities, capital contributions, and beneficiary certificates	LSMC		Stock prices, Volatility of underlying asset	0.00%	Variation of fair value increases as volatility of underlying asset increases.
	DCF model and others		Discount rate	0.00~35.92%	Fair value increases as discount rate decreases.
			Terminal growth rate	1.00%	Fair value increases as terminal growth rate increases.
			Liquidation value	0.00%	Variation of liquidation value increases as volatility of underlying assets increases
Others	Income approach		Growth rate	1.00%	Fair value increases as growth rate increases.
Others	LSMC		Stock prices, Volatility of underlying asset	19.48~28.41%	Variation of fair value increases as volatility of underlying asset increases.

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Fair value of financial assets and liabilities classified into Level 3 is measured by the Group using its own valuation methods or using external specialists. Unobservable inputs used in the fair value measurements are produced by the internal system of the Group and the appropriateness of inputs is reviewed regularly.

(3) Changes in financial assets and liabilities measured at fair value classified into Level 3 are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2019
	Beginning balance		Business Combination		Net Income (loss) (*1)			Other comprehensive income		Purchases/ issuances			Disposals/ settlements			Transfer to or out of Level 3 (*2)			Ending balance
Financial assets:
Financial assets at FVTPL
Debt securities		8,389		—		476			—		2,000			(5,039	)		—			5,826
Equity securities		401,860		—		59,537			—		95,511			(28,287	)		—			528,621
Capital contributions		422,614		707		(13,270	)		—		173,064			(67,916	)		—			515,199
Beneficiary certificates		854,299		—		18,450			—		578,228			(183,684	)		8,441			1,275,734
Loans		180,450		—		6,854			—		60,696			(95,371	)		—			152,629
Derivative assets		48,798		—		16,935			—		1,115			(40,343	)		(1,457	)		25,048

Sub-total		1,916,410		707		88,982			—		910,614			(420,640	)		6,984			2,503,057

Financial assets at FVTOCI
Equity securities		468,847		1,408		—			23,063		687			(306	)		(1	)		493,698

Total		2,385,257		2,115		88,982			23,063		911,301			(420,946	)		6,983			2,996,755

Financial liabilities:
Financial liabilities at FVTPL
Derivative liabilities		16,691		—		84,033			—		(11,140	)		(14,817	)		(2,728	)		72,039
Financial liabilities at FVTPL designated as upon initial recognition
Equity-linked securities		164,767		—		33,237			—		1,809			(112,187	)		—			87,626
Derivatives liabilities (designated for hedging)		—		—		—			—		321			—			—			321

Total		181,458		—		117,270			—		(9,010	)		(127,004	)		(2,728	)		159,986

(*1)

For financial liabilities, positive numbers represent losses that increase balance and negative numbers represent gains that decrease balance. The statements of comprehensive income includes gain of 21,809 million Won included in net gain (loss) on financial assets at FVTPL and net gain (loss) on financial assets at FVTOCI pertaining to the assets and liabilities held by the Group at the end of the period.

(*2)	The Group recognizes transfers between levels at the end of reporting period within which events have occurred or conditions have changed.

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	For the year ended December 31, 2020
	Beginning balance		Business combination		Net income (loss) (*1)			Other comprehensive income			Purchases/ issuances		Disposals / settlements			Transfer to or out of Level 3 (*2)			Ending balance
Financial assets:
Financial assets at FVTPL
Debt securities		5,826		—		(632	)		—			2,627		(3,203	)		—			4,618
Equity securities		464,741		3,894		(8,977	)		—			5,088		(14,407	)		32			450,371
Capital contributions		515,199		173,244		39,500			—			194,396		(56,654	)		—			865,685
Beneficiary certificates		1,275,734		166,467		(7,919	)		—			715,437		(231,908	)		—			1,917,811
Loans		152,629		35,854		6,149			—			656,880		(642,450	)		—			209,062
Derivative assets		25,048		—		9,458			—			9,501		(23,911	)		(12,224	)		7,872
Others		63,880		—		3,472			—			17,997		(370	)		—			84,979

Sub-total		2,503,057		379,459		41,051			—			1,601,926		(972,903	)		(12,192	)		3,540,398

Financial assets at FVTOCI
Equity securities		493,698		—		—			(4,920	)		82,227		(2,482	)		2,192			570,715

Total		2,996,755		379,459		41,051			(4,920	)		1,684,153		(975,385	)		(10,000	)		4,111,113

Financial liabilities:
Financial liabilities at FVTPL
Derivative liabilities		72,039		—		30,150			—			2,650		(66,170	)		(18,533	)		20,136
Financial liabilities at FVTPL designated as upon initial recognition
Equity-linked securities		87,626		—		665			—			—		(68,661	)		—			19,630
Derivative liabilities (Designated for hedging)		321		—		—			—			—		(321	)		—			—

Total		159,986		—		30,815			—			2,650		(135,152	)		(18,533	)		39,766

(*1)

For financial liabilities, positive numbers represent losses that increase balance and negative numbers represent gains that decrease balance. The gain amounting to 37,430 million Won for the year ended December 31, 2020, which is from financial assets and liabilities that the Group holds as at the end of the year.

(*2)	There were transfers between levels as the availability of observable market data for these financial instruments changed. The Group recognizes transfers among levels at the end of reporting period in which events have occurred or conditions have changed.

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	For the year ended December 31, 2021
	Beginning balance		Net income (loss) (*1)			Other comprehensive income		Purchases/ issuances			Disposals / settlements			Transfer to or out of Level 3 (*2)			Ending balance
Financial assets:
Financial assets at FVTPL
Debt securities		4,618		(431	)		—		1,000			(4,070	)		1,000			2,117
Equity securities		450,371		(24,501	)		—		33,570			(154,455	)		(1,000	)		303,985
Capital contributions		865,685		82,596			—		575,643			(236,201	)		—			1,287,723
Beneficiary certificates		1,917,811		10,347			—		86,224			(910,308	)		—			1,104,074
Loans		209,062		16,975			—		761,045			(773,447	)		—			213,635
Derivative assets		7,872		22,256			—		5,058			—			(5,838	)		29,348
Others		84,979		12,245			—		14,982			(16,548	)		533			96,191

Sub-total		3,540,398		119,487			—		1,477,522			(2,095,029	)		(5,305	)		3,037,073

Financial assets at FVTOCI
Equity securities		570,715		—			11,362		645			(1,267	)		—			581,455

Total		4,111,113		119,487			11,362		1,478,167			(2,096,296	)		(5,305	)		3,618,528

Financial liabilities:
Financial liabilities at FVTPL
Derivative liabilities		20,136		4,926			—		(3,979	)		(10,188	)		(6,254	)		4,641
Financial liabilities at FVTPL designated as upon initial recognition
Equity-linked securities		19,630		(102	)		—		—			(19,528	)		—			—

Total		39,766		4,824			—		(3,979	)		(29,716	)		(6,254	)		4,641

(*1)

For financial liabilities, positive numbers represent losses that increase balance and negative numbers represent gains that decrease balance. The gain amounting to 2,634 million Won for the year ended December 31, 2021, which is from financial assets and liabilities that the Group holds as at the end of the year.

(*2)	There were transfers between levels as the availability of observable market data for these financial instruments changed. The Group recognizes transfers among levels at the end of reporting period in which events have occurred or conditions have changed.

(4) Sensitivity analysis results on reasonable fluctuation of the significant unobservable input variables for the fair value of Level 3 financial instruments are as follows.

The sensitivity analysis of the financial instruments has been performed by classifying with favorable and unfavorable changes based on how changes in unobservable assumptions would have effects on the fluctuations of financial instruments’ value. When the fair value of a financial instrument is affected by more than one unobservable assumption, the below table reflects the most favorable or the most unfavorable changes which resulted from varying the assumptions individually. The sensitivity analysis was performed for two types of level 3 financial instruments: (1) interest rate related derivatives, currency related derivatives, equity related derivatives, equity-linked securities beneficiary certificates and loans of which fair value changes are recognized as net income; (2) equity securities of which fair value changes are recognized as other comprehensive income.

Meanwhile, among the financial instruments that are classified as Level 3 amounting to and 4,150,878 million Won 3,623,168 million Won as of December 31,2020 and 2021 respectively, equity instruments of 3,052,432 million Won and 3,030,775 million Won whose carrying amount are considered to represent the reasonable approximation of fair value are excluded from the sensitivity analysis.

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The sensitivity on fluctuation of input variables by financial instruments as of December 31, 2019, 2020 and 2021 is as follows (Unit: Korean Won in millions):


	December 31, 2019
	Net income (loss)					Other comprehensive income (loss)
	Favorable		Unfavorable			Favorable		Unfavorable
Financial assets:
Financial assets at FVTPL
Derivative assets (*1)		640		(935	)		—		—
Loans (*2)		152		(128	)		—		—
Debt securities		652		(640	)		—		—
Equity securities (3)(4)		16,104		(10,929	)		—		—
Beneficiary certificates (*4)		1,125		(1,125	)		—		—
Financial assets at FVTOCI
Equity securities (3)(4)		—		—			26,380		(11,981	)

Total		18,673		(13,757	)		26,380		(11,981	)

Financial liabilities:
Financial liabilities at FVTPL
Derivative liabilities (*1)		1,054		(816	)		—		—
Financial liabilities at FVTPL designated as upon initial recognition
Equity-linked securities (*1)		136		(142	)		—		—

Total		1,190		(958	)		—		—

(*1)

Fair value changes of equity related derivatives assets and liabilities and equity-linked securities are calculated by increasing or decreasing historical volatility of the stock price and correlation, which are major unobservable variables, by 10%, respectively. In the case of interest rate related derivative assets and liabilities, fair value changes are calculated by increasing or decreasing the volatility of interest rate, which are major unobservable variables, by 10%.

(*2)	Fair value changes of equity securities are calculated by increasing or decreasing stock prices (-10%~10%) and volatility (-10~10%). The stock prices and volatility are major unobservable variables.

(*3)	Fair value changes of equity securities are calculated by increasing or decreasing terminal growth rate (0~1%) and discount rate or liquidation value (-1~1%). The growth rate, discount rate, and liquidation value are major unobservable variables.

(*4)

Even if the sensitivity analysis of the capital contributions and beneficiary certificates is not possible in practice, fair value changes of beneficiary certificates and other securities whose major unobservable variables are composed of the real estate are calculated by increasing or decreasing price fluctuation rate of real estate which is underlying assets and discount rate by 1%.

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	December 31, 2020
	Net income (loss)					Other comprehensive income (loss)
	Favorable		Unfavorable			Favorable		Unfavorable
Financial assets:
Financial assets at FVTPL
Derivative assets (*1)		110		(257	)		—		—
Loans (*2)		933		(932	)		—		—
Debt securities		13		(10	)		—		—
Equity securities (2)(3)(*4)		8,539		(7,337	)		—		—
Beneficiary certificates (*4)		1,403		(1,537	)		—		—
Others (*2)		640		(547	)		—		—
Financial assets at FVTOCI
Equity securities (3)(4)		—		—			21,587		(16,740	)

Total		11,638		(10,620	)		21,587		(16,740	)

Financial liabilities:
Financial liabilities at FVTPL
Derivative liabilities (*1)		776		(405	)		—		—
Financial liabilities at FVTPL designated as upon initial recognition
Equity-linked securities (*1)		57		(45	)		—		—

Total		833		(450	)		—		—

(*1)

(*2)	Fair value changes of equity securities are calculated by increasing or decreasing stock prices (-10%~10%) and volatility (-10~10%). The stock prices and volatility are major unobservable variables.

(*3)	Fair value changes of equity securities are calculated by increasing or decreasing terminal growth rate (0~1%) and discount rate (-1~1%) or liquidation value (-1~1%). The growth rate, discount rate, and liquidation value are major unobservable variables.

(*4)

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	December 31, 2021
	Net income (loss)					Other comprehensive income (loss)
	Favorable		Unfavorable			Favorable		Unfavorable
Financial assets:
Financial assets at FVTPL
Derivative assets (*1)		1,668		(1,191	)		—		—
Loans (*2)		682		(671	)		—		—
Debt securities		13		(12	)		—		—
Equity securities (2)(3)(*4)		6,348		(5,331	)		—		—
Beneficiary certificates (*4)		1,305		(1,171	)		—		—
Others (*2)		921		(876	)		—		—
Financial assets at FVTOCI
Equity securities (3)(4)		—		—			30,391		(23,865	)

Total		10,937		(9,252	)		30,391		(23,865	)

Financial liabilities:
Financial liabilities at FVTPL
Derivative liabilities (*1)		205		(264	)		—		—

Total		205		(264	)		—		—

(*1)

(*2)	Fair value changes of equity securities are calculated by increasing or decreasing stock prices (-10%~10%) and volatility (-10~10%). The stock prices and volatility are major unobservable variables.

(*3)	Fair value changes of equity securities are calculated by increasing or decreasing terminal growth rate (-0.5%~0.5%) and discount rate (-1~1%) or liquidation value (-1~1%). The growth rate, discount rate, and liquidation value are major unobservable variables.

(*4)

(5) Fair value and carrying amount of financial assets and liabilities that are recorded at amortized cost are as follows (Unit: Korean Won in millions):


	December 31, 2020
	Fair value								Book value
	Level 1		Level 2		Level 3		Total		Book value
Financial assets:
Securities at amortized cost		2,968,875		14,299,748		—		17,268,623		17,020,839
Loans and other financial assets at amortized cost		—		—		318,144,845		318,144,845		320,106,078
Financial liabilities:
Deposits due to customers		—		291,767,282		—		291,767,282		291,477,279
Borrowings		—		20,586,930		176,745		20,763,675		20,745,466
Debentures		—		37,931,989		—		37,931,989		37,479,358
Other financial liabilities		—		13,305,067		286,489		13,591,556		13,808,386

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	December 31, 2021
	Fair value								Book value
	Level 1		Level 2		Level 3		Total		Book value
Financial assets:
Securities at amortized cost		2,122,401		14,921,119		—		17,043,520		17,086,274
Loans and other financial assets at amortized cost		—		3		359,918,500		359,918,503		361,932,872
Financial liabilities:
Deposits due to customers		—		318,070,829		—		318,070,829		317,899,871
Borrowings		—		23,393,520		1,270,305		24,663,825		24,755,459
Debentures		—		44,500,963		—		44,500,963		44,653,864
Other financial liabilities		—		23,216,929		379,534		23,596,463		23,890,017

The fair values of financial instruments are measured using quoted market price in active markets. In case there is no active market for financial instruments, the Group determines the fair value by using valuation methods. Valuation methods and input variables for financial assets and liabilities that are measured at amortized cost are given as follows:


	Valuation methods	Input variables
Securities at amortized cost	The fair value is measured by discounting the projected cash flows of debt securities by applying risk-free market rate with credit spread.	Risk-free market rate and credit spread

Loans and other financial assets at amortized cost	The fair value is measured by discounting the projected cash flows of loan products by applying the market discount rate that has been applied to a proxy company that has similar credit rating to the debtor.	Risk-free market rate, credit spread and prepayment rate

Deposits due to customers, borrowings, debentures and other financial liabilities	The fair value is measured by discounting the projected cash flows of debt products by applying the market discount rate that is reflecting credit rating of the Group.	Risk-free market rate, credit spread and forward rate

(6) Financial instruments by category

Carrying amounts of financial assets and liabilities by each category are as follows (Unit: Korean Won in millions):


	December 31, 2020
Financial assets	Financial asset at FVTPL		Financial assets at FVTOCI		Financial assets at amortized cost		Derivatives assets (Designated for hedging)		Total
Deposits		48,796		—		9,863,160		—		9,911,956
Securities		7,136,112		30,028,929		17,020,839		—		54,185,880
Loans		676,291		—		302,794,182		—		303,470,473
Derivative assets		6,901,742		—		—		174,820		7,076,562
Other financial assets		—		—		7,448,736		—		7,448,736

Total		14,762,941		30,028,929		337,126,917		174,820		382,093,607

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	December 31, 2020
Financial liabilities	Financial liabilities at FVTPL		Financial liabilities designated at FVTPL		Financial liabilities at amortized cost		Derivatives liabilities (Designated for hedging)		Total
Deposits due to customers		49,279		—		291,477,279		—		291,526,558
Borrowings		285,026		19,630		20,745,466		—		21,050,122
Debentures		—		—		37,479,358		—		37,479,358
Derivative liabilities		6,459,887		—		—		64,769		6,524,656
Other financial liabilities		—		—		13,808,386		—		13,808,386

Total		6,794,192		19,630		363,510,489		64,769		370,389,080


	December 31, 2021
Financial assets	Financial asset at FVTPL		Financial assets at FVTOCI		Financial assets at amortized cost		Derivatives assets (Designated for hedging)		Total
Deposits		65,072		—		15,914,139		—		15,979,211
Securities		7,960,046		39,119,789		17,086,274		—		64,166,109
Loans		667,467		—		336,799,510		—		337,466,977
Derivative assets		4,803,131		—		—		106,764		4,909,895
Other financial assets		1,518		—		9,219,223		—		9,220,741

Total		13,497,234		39,119,789		379,019,146		106,764		431,742,933


	December 31, 2021
Financial liabilities	Financial liabilities at FVTPL		Financial liabilities at amortized cost		Derivatives liabilities (Designated for hedging)		Total
Deposits due to customers		65,016		317,899,871		—		317,964,887
Borrowings		241,174		24,755,459		—		24,996,633
Debentures		—		44,653,864		—		44,653,864
Derivative liabilities		4,567,268		—		27,584		4,594,852
Other financial liabilities		—		23,890,017		—		23,890,017

Total		4,873,458		411,199,211		27,584		416,100,253

(7) Income or expense from financial instruments by category

Income or expense from financial assets and liabilities by each category during the years ended December 31, 2019, 2020 and 2021 are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2019
	Interest Income (expense)			Fees and Commissions Income (expense)		Net reversal (provision) of allowance for credit loss			Gain or loss on transactions and valuation		Others		Total
Financial assets at FVTPL		50,277			89,817		—			25,455		86,979		252,528
Financial assets at FVTOCI		474,751			—		(3,297	)		11,015		20,980		503,449
Securities at amortized cost		436,340			—		1,415			—		—		437,755
Loans and other financial assets at amortized cost		9,615,060			296,435		(385,758	)		102,115		—		9,627,852
Financial liabilities at amortized cost		(4,682,722	)		—		—			—		—		(4,682,722	)
Net derivatives (designated for hedging)		—			—		—			36,982		—		36,982

Total		5,893,706			386,252		(387,640	)		175,567		107,959		6,175,844

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	For the year ended December 31, 2020
	Interest Income (expense)			Fees and Commissions Income (expense)		Net reversal (provision) of allowance for credit loss			Gain or loss on transactions and valuation			Dividends, etc.		Total
Financial assets at FVTPL		48,612			—		—			421,709			120,158		590,479
Financial assets at FVTOCI		437,527			311		(1,529	)		24,138			18,385		478,832
Securities at amortized cost		382,988			—		934			—			—		383,922
Loans and other financial assets at amortized cost		8,654,726			376,872		(792,250	)		44,443			—		8,283,791
Financial liabilities at amortized cost		(3,516,023	)		—		—			—			—		(3,516,023	)
Net derivatives (designated for hedging)		—			—		—			(74,213	)		—		(74,213	)

Total		6,007,830			377,183		(792,845	)		416,077			138,543		6,146,788


	For the year ended December 31, 2021
	Interest Income (expense)			Fees and Commissions Income (expense)			Net provision of allowance for credit loss			Gain or loss on transactions and valuation		Dividends, etc.		Total
Financial assets at FVTPL		45,803			(156	)		—			325,751		284,683		656,081
Financial assets at FVTOCI		381,814			1,343			(4,909	)		32,624		24,528		435,400
Securities at amortized cost		324,920			—			(664	)		—		—		324,256
Loans and other financial assets at amortized cost		9,142,212			494,296			(551,957	)		107,317		—		9,191,868
Financial liabilities at amortized cost		(2,901,592	)		2,205			—			—		—		(2,899,387	)
Net derivatives (designated for hedging)		—			—			—			72,493		—		72,493

Total		6,993,157			497,688			(557,530	)		538,185		309,211		7,780,711

12. DERECOGNITION AND OFFSET OF FINANCIAL INSTRUMENTS

(1) Derecognition of financial instruments

Transferred financial assets that do not meet the condition of derecognition in their entirety.

1) Bonds sold under repurchase agreements

The financial instruments that were disposed but the Group agreed to repurchase at the fixed amounts at the same time, so that they did not meet the conditions of derecognition, are as follows (Unit: Korean Won in millions):


		December 31, 2020		December 31, 2021
Assets transferred	Financial assets at FVTPL		410,331		248,009
	Financial assets at FVTOCI		138,315		127,065
	Securities at amortized cost		40,987		38,995
	Loans and other financial assets at amortized cost		50,088		—

	Total		639,721		414,069

Related liabilities	Bonds sold under repurchase agreements		657,823		749,976

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2) Securities loaned

When the Group loans its securities to outside parties, the legal ownerships of the securities are transferred; however, they should be returned at the end of lending period. Therefore, the Group does not derecognize them from the consolidated financial statements as it owns majority of risks and benefits from the securities continuously, regardless of the transfer of legal ownership. The carrying amounts of the securities loaned are as follows (Unit: Korean Won in millions):

December 31,
2020

December 31,
2021

Loaned to

Financial assets at FVTOCI

Korean treasury and government bonds

100,345

98,535

Korea Securities Finance Corporation

Liquidity of financial assets

As of December 31, 2020 and 2021, the consolidated structured companies issued asset-backed securities with loans and corporate bonds held by the Group as liquid assets, and the Group bear related risks through the purchase agreements or credit contributions. The transaction details of the transfer of the financial instrument are as follows:


		December 31, 2020		December 31, 2021
		Book value (*)		Book value (*)
Assets transferred	Financial assets at FVPL		156,900		151,930
Assets transferred	Loans at amortized cost		4,645,170		4,682,882
Related liabilities	Asset-backed borrowings		2,536,219		2,424,080
Related liabilities	Asset-backed bonds		1,289,992		978,274

(*)	The carrying amount is the amount before the allowance for bad debts.

On the other hand, the details of transferred financial assets that have not been removed, such as bonds sold under the repurchase agreement and loan securities, are also described in Note 18. The Group does not have financial instruments that are continuously involved.

(2) The offset of financial assets and liabilities

The Group possesses both the uncollected domestic exchange receivables and the unpaid domestic exchange payable, which satisfy offsetting criteria of IAS 32. Therefore, the total number of uncollected domestic exchange receivables or unpaid domestic exchange payable has been offset with part of unpaid domestic exchange payables or uncollected domestic exchange receivables and has been disclosed in loans at amortized cost and other financial assets and other financial liabilities of the Group’s statements of financial position respectively.

The Group possesses the derivative assets, derivative liabilities, receivable spot exchange and payable spot exchange that do not satisfy the offsetting criteria of IAS 32 but provide the Group under the circumstances of the trading party’s defaults, insolvency or bankruptcy, with the right of offsetting. Items such as cash collateral cannot satisfy the offsetting criteria of IAS 32, but in accordance with the collateral arrangements and under the circumstances of the trading party’s default, insolvency or bankruptcy, the net amount of derivative assets and derivative liabilities, receivable spot exchange and payable spot exchange can be offset.

The Group has entered into a resale and repurchase agreement and accounted it as a collateralized borrowing. The Group has also entered into a resale and purchase agreement and accounted it as a secured loans. The Group under the repurchase agreements has an offsetting right only upon the counterparty’s default, insolvency or bankruptcy; thus, the repurchase agreements are applied by the TBMA/ISMA Global Master

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Repurchase Agreement, which does not satisfy the offsetting criteria of IAS 32. The Group disclosed bonds sold under repurchase agreements as borrowings and bonds purchased under resale agreements as loan at amortized cost and other financial assets.

As of December 31, 2020 and 2021, the financial instruments to be offset and may be covered by master netting agreements and similar agreements are as follows (Unit: Korean Won in millions):


	December 31, 2020
	Gross amounts of recognized financial assets		Gross amounts of recognized financial assets setoff		Net amounts of consolidate financial assets presented		Related amounts not setoff in the consolidated statement of financial position				Net amounts
	Gross amounts of recognized financial assets		Gross amounts of recognized financial assets setoff		Net amounts of consolidate financial assets presented		Netting agreements and others		Cash collateral received and others		Net amounts
Financial assets:
Derivative assets (*1)		6,456,799		—		6,456,799		7,733,997		598,545		1,278,176
Receivable spot exchange (*2)		3,153,919		—		3,153,919		7,733,997		598,545		1,278,176
Bonds purchased under resale agreements (*2)		10,145,749		—		10,145,749		10,145,749		—		—
Domestic exchange settlement debits (2)(6)		34,352,965		32,834,189		1,518,776		—		—		1,518,776

Total		54,109,432		32,834,189		21,275,243		17,879,746		598,545		2,796,952

Financial liabilities:
Derivative liabilities (*1)		5,823,620		—		5,823,620		7,147,683		477,603		1,371,364
Equity-linked securities in short position (*3)		19,630		—		19,630		7,147,683		477,603		1,371,364
Payable spot exchange (*4)		3,153,400		—		3,153,400
Bonds sold under repurchase agreements (*5)		657,823		—		657,823		213,623		444,200		—
Domestic exchange settlement credits (4)(6)		33,014,440		32,834,189		180,251		176,179		—		4,072

Total		42,668,913		32,834,189		9,834,724		7,537,485		921,803		1,375,436

(*1)	The items include derivative assets and liabilities held for trading and designated for hedging.

(*2)	The items are included in loan at amortized cost and other financial assets.

(*3)	The items are equity linked securities related to derivatives and are included in financial liabilities at FVTPL.

(*4)	The items are included in other financial liabilities.

(*5)	The items are included in borrowings.

(*6)	Certain financial assets and liabilities are presented as net amounts.

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	December 31, 2021
	Gross amounts of recognized financial assets		Gross amounts of recognized financial assets setoff		Net amounts of consolidated financial assets presented		Related amounts not setoff in the consolidated statement of financial position				Net amounts
	Gross amounts of recognized financial assets		Gross amounts of recognized financial assets setoff		Net amounts of consolidated financial assets presented		Netting agreements and others		Cash collateral received and others		Net amounts
Financial assets:
Derivative assets (*1)		4,172,737		—		4,172,737		8,260,784		552,071		1,275,186
Receivable spot exchange (*2)		5,915,304		—		5,915,304		8,260,784		552,071		1,275,186
Bonds purchased under resale agreements (*2)		10,332,858		—		10,332,858		10,332,858		—		—
Domestic exchange settlement debits (2)(5)		42,358,138		42,275,583		82,555		—		—		82,555

Total		62,779,037		42,275,583		20,503,454		18,593,642		552,071		1,357,741

Financial liabilities:
Derivative liabilities (*1)		3,708,263		—		3,708,263		8,755,492		114,716		754,855
Payable spot exchange (*3)		5,916,800		—		5,916,800		8,755,492		114,716		754,855
Bonds sold under repurchase agreements (*4)		749,976		—		749,976		749,976		—		—
Domestic exchange settlement credits (3)(5)		48,982,056		42,275,583		6,706,473		3,401,251		—		3,305,222

Total		59,357,095		42,275,583		17,081,512		12,906,719		114,716		4,060,077

(*1)	The items include derivative assets and liabilities held for trading and designated for hedging.

(*2)	The items are included in loan at amortized cost and other financial assets.

(*3)	The items are included in other financial liabilities.

(*4)	The items are included in borrowings.

(*5)	Certain financial assets and liabilities are presented as net amounts.

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13. INVESTMENTS IN JOINT VENTURES AND ASSOCIATES

(1)	Investments in associates accounted for using the equity method of accounting are as follows:


		Percentage of ownership (%)
Joint ventures and associates (*9)	Main business	December 31, 2020		December 31, 2021		Location		Financial statements as of
Woori Bank
W Service Networks Co., Ltd. (*1)	Freight & staffing services		4.9		4.9		Korea		2021.11.30 (*5)
Korea Credit Bureau Co., Ltd. (*2)	Credit information		9.9		9.9		Korea		2021.12.31
Korea Finance Security Co., Ltd. (*1)	Security service		15.0		15.0		Korea		2021.11.30 (*5)
Wongwang Co., Ltd. (*3)	Wholesale and real estate		29.0		29.0		Korea		—
Sejin Construction Co., Ltd. (*3)	Construction		29.6		29.6		Korea		—
ARES-TECH Co., Ltd. (*3)	Electronic component manufacturing		23.4		23.4		Korea		—
Sinseong Trading Co., Ltd. (*4)	Manufacturing		27.9		—		Korea		—
Reading Doctors Co., Ltd. (*3)	Other services		35.4		35.4		Korea		—
Cultizm Korea LTD Co., Ltd. (*3)	Wholesale and retail sales		31.3		31.3		Korea		—
NK Eng Co., Ltd. (*3)	Manufacturing		23.1		23.1		Korea		—
Beomgyo.,Ltd. (*3)	Telecommunication equipment retail sales		23.1		23.1		Korea		—
Woori Growth Partnerships New Technology Private Equity Fund	Other financial services		23.1		23.1		Korea		2021.12.31
2016KIF-IMM Woori Bank Technology Venture Fund	Other financial services		20.0		20.0		Korea		2021.12.31
K BANK Co., Ltd. (2)(8)	Finance		26.2		12.6		Korea		2021.11.30 (*5)
Smart Private Equity Fund No.2 (*10)	Other financial services		20.0		—		Korea		—
Woori Bank-Company K Korea Movie Asset Fund	Other financial services		25.0		25.0		Korea		2021.12.16 (*5)
Well to Sea No. 3 Private Equity Fund (*11)	Finance		50.0		—		Korea		—
Partner One Value Up I Private Equity Fund	Other financial services		23.3		23.3		Korea		2021.12.31
IBK KIP Seongjang Dideemdol 1st Private Investment Limited Partnership	Other financial services		20.0		20.0		Korea		2021.12.31
Crevisse Raim Impact 1st Startup Venture Specialist Private Equity Fund	Other financial services		25.0		25.0		Korea		2021.12.31
LOTTE CARD Co., Ltd.	Credit card and installment financing		20.0		20.0		Korea		2021.9.30 (*5)
Together-Korea Government Private Pool Private Securities Investment Trust No. 3	Other financial services		100.0		100.0		Korea		2021.12.31
Genesis Environmental Energy Company 1st Private Equity Fund	Trust and collective investment		24.8		24.8		Korea		2021.12.31
Union Technology Finance Investment Association	Trust and collective investment		29.7		29.7		Korea		2021.12.31
Dicustody Co., Ltd. (*2)	Other information technology and computer operation related services		—		1.0		Korea		2021.12.31
Woori Bank ( *6)
Japanese Hotel Real Estate Private Equity Fund No.2	Other financial services		19.9		19.9		Korea		2021.12.31
Woori G Clean Energy No.1	Investment trust and discretionary investment business		29.3		—		Korea		—
Woori Goseong Power EBL Private Special Asset Fund	Trust and collective investment		16.7		—		Korea		—
Woori Seoul Beltway Private Special Asset Fund No.1	Trust and collective investment		25.0		25.0		Korea		2021.12.31

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		Percentage of ownership (%)
Joint ventures and associates (*9)	Main business	December 31, 2020		December 31, 2021		Location		Financial statements as of
Woori Multi-Return Securities Investment Trust 3 (Balanced Bond)	Collective investment business		—		20.0		Korea	2021.12.31
Woori Short-term Bond Securities Investment Trust (Bond) ClassC-F	Collective investment business		—		14.5		Korea	2021.12.31
Woori Financial Capital Co., Ltd.
Woori TAERIM 1st Fund	Other financial services		25.6		25.6		Korea	2021.12.31
Portone-Cape Fund No.1	Other financial services		20.0		20.0		Korea	2021.12.31
KIWOOM WOORI Financial 1st Fund (*7)	Other financial services		9.1		9.1		Korea	2021.12.31
DeepDive WOORI 2021-1 Financial Investment Fund (*7)	Other financial services		—		11.9		Korea	2021.12.31
Darwin Green Packaging Private Equity Fund	Other financial services		—		20.4		Korea	2021.12.31
Woori Investment Bank Co., Ltd. (*6)
Woori FirstValue Private Real Estate Fund No.2	Real estate business		12.0		12.0		Korea	2021.12.31
WooriG Real Infrastructure Blind General Type Private Placement Investment Trust	Investment trust and discretionary investment business		—		0.3		Korea	2021.12.31
Woori Asset Management Co. Ltd.
Woori High plus G.B. Securities Feeder Fund1(G.B.)	Collective investment business		21.8		—		Korea	—
Woori Star50 Master Fund ClassC-F	Collective investment business		24.5		—		Korea	—
Woori Private Equity Asset Management Co., Ltd.
Woori Hanhwa Eureka Private Equity Fund (*2)	Other financial services		0.8		0.8		Korea	2021.12.31
Aarden Woori Apparel 1st Private Equity Fund (*2)	Other financial services		—		0.5		Korea	2021.12.31
Japanese Hotel Real Estate Private Equity Fund 1
Godo Kaisha Oceanos 1	Other financial services		47.8		47.8		Japan	2021.10.31 (*5)
Woori G Japan Private Placement Real Estate Master Investment Trust No.2
Woori Zip 1	Other financial services		—		63.9		Japan	2021.9.30 (*5)
Woori Zip 2	Other financial services		—		63.8		Japan	2021.9.30 (*5)
Woori bank and Woori card Co., Ltd. (*6)
Dongwoo C & C Co., Ltd. (*3)	Construction		24.5		24.5		Korea	—
SJCO Co., Ltd. (*3)	Aggregate transportation and wholesale		28.7		29.7		Korea	—
G2 Collection Co., Ltd. (*3)	Wholesale and retail sales		29.2		29.2		Korea	—
The Base Enterprise Co., Ltd. (*3)	Manufacturing		48.4		48.4		Korea	—
Kyesan Engineering Co., Ltd. (*3)	Construction		23.3		23.3		Korea	—
Good Software Lap Co., Ltd. (*3)	Service		29.4		29.4		Korea	—
QTS Shipping Co., Ltd. (*3)	Complex transportation brokerage		49.8		49.8		Korea	—
DAEA SNC Co., Ltd. (*3)	Wholesale and retail sales		25.5		25.5		Korea	—
Force TEC Co., Ltd.	Manufacturing		25.8		24.5		Korea	2021.9.30 (*5)
PREXCO Co., Ltd. (*3)	Manufacturing		28.1		28.1		Korea	—
JiWon Plating Co., Ltd. (*3)	Plating		20.8		20.8		Korea	—
Youngdong Sea Food Co., Ltd. (*3)	Processed sea food manufacturing		24.5		24.5		Korea	—
KUM HWA Co., Ltd.	Telecommunication equipment retail sales		—		20.1		Korea	2021.9.30 (*5)
Jinmyung Plus Co., Ltd	Manufacturing		—		21.3		Korea	2021.12.31

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		Percentage of ownership (%)
Joint ventures and associates (*9)	Main business	December 31, 2020		December 31, 2021		Location		Financial statements as of
W oori bank and Woori Financial Capital Co., Ltd . (*6)
JC Assurance No.2 Private Equity Fund	Other financial services		29.3		24.4		Korea	2021.12.31
Dream Company Growth no.1 PEF	Other financial services		27.8		27.8		Korea	2021.12.31
HMS-Oriens 1st Fund	Other financial services		22.8		22.8		Korea	2021.12.31
Woori G Senior Loan Private Placement Investment Trust No.1	Collective investment business		21.7		21.7		Korea	2021.12.31
Genesis Eco No.1 Private Equity Fund	Other financial services		—		29.0		Korea	2021.12.31
Paratus Woori Material Component Equipment joint venture company	Other financial services		—		29.9		Korea	2021.9.30 (*5)
Midas No. 8 Private Equity Joint Venture Company	Other financial services		—		28.5		Korea	2021.12.31
Woori Bank and Woori Investment Bank Co., Ltd. (*6)
PCC-Woori LP Secondary Fund	Other financial services		38.8		38.8		Korea	2021.12.31
Woori bank and Woori Asset Management Co., Ltd. (*6)
Woori High Plus Short-term High Graded ESG Bond Sec Feeder Inv Trust 1	Collective investment business		23.3		27.5		Korea	2021.12.31
Woori Bank and Woori Private Equity Asset Management Co., Ltd. (*6)
Woori-Q Corporate Restructuring Private Equity Fund	Other financial services		38.4		38.1		Korea	2021.12.31
Woori Bank, Woori Financial Capital Co., Ltd., Woori Investment Bank Co., Ltd. and Woori Private Equity Asset Management Co., Ltd. (*6)
Woori-Shinyoung Growth-Cap Private Equity Fund I	Other financial services		35.0		35.0		Korea	2021.12.31

(*1)	Most of the significant business transactions of associates are with the Group as of December 31, 2020 and 2021.

(*2)	The Group can participate in decision-making body and exercise significant influence over financial policies and operational policies decision making of the associates.

(*3)	There is no investment balance as of December 31, 2020 and 2021.

(*4)	Registration was closed and excluded from associates for the year ended December 31, 2021.

(*5)

The equity method was applied using the most recent financial statements available from the settlement date because no financial statements were available at the end of December and the significant transactions or events that occurred between the end of the reporting period of the associate and the end of the reporting period of the subsidiary were duly reflected.

(*6)	Two or more subsidiaries may invest or operate to exert significant influence on the decision-making process for activities related to the investee.

(*7)	The Group can participate as a co-operator to exert significant influence.

(*8)	Due to the failure of associates to participate in the capital increase with consideration, the percentage of ownership decreased, for the year ended December 31, 2021.

(*9)	WooriG Oncorp Corporate support of Major Industry General Type Private Placement Investment Trust (Type 2) and other 16 joint ventures and associates can exercise significant influence but was classified as an item measured at fair value through profit or loss.

(*10)

Due to loss of significant influence during the year, it has been classified as a financial asset measured at fair value through profit or loss

(*11)

It was fully repaid and excluded from associates for the year ended December 31, 2021.

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(2)	Changes in the carrying value of investments in associates accounted for using the equity method of accounting are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2019
	Acquisition cost		January 1, 2019		Share of profits (losses)			Acquisition		Disposal/ Reclassification			Dividends			Change in capital			December 31, 2019
W Service Networks Co., Ltd.		108		157		31			—		—			(2	)		—			186
Korea Credit Bureau Co., Ltd.		3,313		6,790		190			—		—			(135	)		—			6,845
Korea Finance Security Co., Ltd.		3,267		3,456		(169	)		—		—			—			—			3,287
Chin Hung International Inc.		130,779		44,741		6,426			—		—			—			9			51,176
Saman Corporation		8,521		1,014		(198	)		—		—			—			33			849
Woori Growth Partnerships New Technology Private Equity Fund		18,666		25,091		1,466			309		(7,490	)		(164	)		—			19,212
2016KIF-IMM Woori Bank Technology Venture Fund		12,385		15,300		1,193			—		(2,615	)		—			1,263			15,141
K BANK Co., Ltd.		73,150		43,709		(18,233	)		5,807		—			—			(29	)		31,254
Smart Private Equity Fund No.2		2,915		2,890		(41	)		—		(85	)		—			—			2,764
Woori Bank-Company K Korea Movie Asset Fund		3,000		2,700		623			—		—			—			—			3,323
Well to Sea No.3 Private Equity Fund		101,483		197,393		30,343			—		—			(18,836	)		123			209,023
Partner One Value Up I Private Equity Fund		10,000		9,948		(40	)		—		—			—			—			9,908
IBK KIP Seongjang Dideemdol 1st Private Investment Limited Partnership		4,576		4,426		—			150		—			—			—			4,576
Crevisse Raim Impact 1st Startup Venture Specialist Private Equity Fund		4,375		3,025		—			1,350		—			—			—			4,375
Woori-Shinyoung Growth-Cap Private Equity Fund I		12,665		—		(824	)		12,665		—			—			—			11,841
LOTTE CARD Co.,Ltd		346,000		—		63,444			346,000		—			—			—			409,444
Woori-Q Corporate Restructuring Private Equity Fund		6,129		—		(83	)		6,129		—			—			—			6,046
PCC-Woori LP Secondary Fund		2,525		—		—			2,525		—			—			—			2,525
Nomura-Rifa Private Real Estate Investment Trust No.17		1,000		787		(136	)		—		(651	)		—			—			—
Woori Hanhwa Eureka Private Equity Fund		350		339		3			—		—			—			—			342
Godo Kaisha Oceanos 1		10,870		—		2			10,870		(15	)		(105	)		200			10,952
Japanese Hotel Real Estate Private Equity Fund 2		3,291		—		—			3,291		—			—			—			3,291

		759,368		361,766		83,997			389,096		(10,856	)		(19,242	)		1,599			806,360

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	For the year ended December 31, 2020
	Acquisition cost		January 1, 2020		Share of profits (losses)			Acquisition		Disposal/ Reclassification			Dividends			Business combination		Change in capital			December 31, 2020
W Service Networks Co., Ltd.		108		186		7			—		—			(3	)		—		1			191
Korea Credit Bureau Co., Ltd.		3,313		6,845		1,370			—		—			(90	)		—		—			8,125
Korea Finance Security Co., Ltd.		3,267		3,287		(221	)		—		—			—			—		—			3,066
Chin Hung International Inc.		—		51,176		(742	)		—		(50,411	)		—			—		(23	)		—
Saman Corporation		—		849		(432	)		—		(466	)		—			—		49			—
Woori Growth Partnerships New Technology Private Equity Fund		16,938		19,212		(2,240	)		—		(1,728	)		(212	)		—		—			15,032
2016KIF-IMM Woori Bank Technology Venture Fund		11,893		15,141		1,240			—		(492	)		(1,088	)		—		(1,563	)		13,238
K BANK Co., Ltd.		236,232		31,254		(18,334	)		163,082		—			—			—		(1,905	)		174,097
Smart Private Equity Fund No.2		2,915		2,764		(1,283	)		—		—			—			—		—			1,481
Woori Bank-Company K Korea Movie Asset Fund		2,100		3,323		365			—		(900	)		—			—		—			2,788
Well to Sea No.3 Private Equity Fund		—		209,023		87,180			—		(117,170	)		(178,355	)		—		(678	)		—
Partner One Value Up I Private Equity Fund		10,000		9,908		(75	)		—		—			—			—		(17	)		9,816
IBK KIP Seongjang Dideemdol 1st Private Investment Limited Partnership		9,756		4,576		—			5,720		(540	)		—			—		—			9,756
Crevisse Raim Impact 1st Startup Venture Specialist Private Equity Fund		4,130		4,375		—			75		(321	)		—			—		—			4,129
Woori-Shinyoung Growth-Cap Private Equity Fund I		32,480		11,841		7,366			31,363		(12,124	)		(104	)		—		—			38,342
LOTTE CARD Co.,Ltd		346,810		409,444		19,692			810		—			(5,710	)		—		(1,404	)		422,832
Woori-Q Corporate Restructuring Private Equity Fund		23,146		6,046		(159	)		17,017		—			—			—		—			22,904
PCC-Woori LP Secondary Fund		7,575		2,525		554			5,049		—			—			—		—			8,128
Force TEC Co., Ltd.		—		—		1,542			—		—			—			—		(1,149	)		393
Together-Korea Government Private Pool Private Securities Investment Trust No.3		10,000		—		23			100,000		(90,000	)		—			—		—			10,023
Genesis Environmental Energy Company 1st Private Equity Fund		3,738		—		241			4,084		(346	)		—			—		—			3,979
Union Technology Finance Investment Association		4,500		—		(15	)		4,500		—			—			—		—			4,485
Woori Hanhwa Eureka Private Equity Fund		350		342		61			—		—			—			—		—			403
Godo Kaisha Oceanos 1		10,800		10,952		7			—		—			(850	)		—		84			10,193
Japanese Hotel Real Estate Private Equity Fund No.2		3,291		3,291		283			—		—			(154	)		—		(186	)		3,234
Woori High plus G.B. Securities Feeder Fund1(G.B.)		6,000		—		49			6,141		—			—			—		(114	)		6,076
WooriG Senior Loan General Type Private Investment Trust No.1		51,959		—		343			51,959		—			(257	)		—		—			52,045
Woori G Clean Energy No.1		1,015		—		9			1,015		—			—			—		—			1,024
Woori Goseong Power EBL Private Special Asset Fund		14,915		—		611			14,915		—			(408	)		—		—			15,118
Woori Seoul Beltway Private Special Asset Fund No.1		5,590		—		97			5,591		—			(75	)		—		—			5,613
WOORI TAERIM 1st Fund		1,100		—		(6	)		—		—			—			289		—			283

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	For the year ended December 31, 2020
	Acquisition cost		January 1, 2020		Share of profits (losses)			Acquisition		Disposal/ Reclassification			Dividends			Business combination		Change in capital			December 31, 2020
Portone-Cape Fund No.1		1,000		—		—			—		—			—			960		—			960
KIWOOM WOORI Financial 1st Investment Fund		1,000		—		(6	)		1,000		—			—			—		—			994
Woori FirstValue Private Real Estate Fund No.2		9,000		—		1,184			—		—			—			—		946			2,130
Woori Star50 Master Fund ClassC-F		200		—		(16	)		200		—			—			—		—			184
JC Assurance No.2 Private Equity Fund		29,050		—		—			29,050		—			—			—		—			29,050
Dream Company Growth no.1 PEF		7,705		—		—			7,705		—			—			—		—			7,705
HMS-Oriens 1st Fund		12,000		—		—			12,000		—			—			—		—			12,000
Woori High Plus Short-term High Graded ESG Bond Sec Feeder Inv Trust 1		91,092		—		2,382			91,092		—			—			—		—			93,474

		974,968		806,360		101,077			552,368		(274,498	)		(187,306	)		1,249		(5,959	)		993,291

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	For the year ended December 31, 2021
	Acquisition cost		January 1, 2021		Share of profits (losses) and others			Acquisition		Disposal/ Reclassification			Dividends			Change in capital			December 31, 2021
W Service Networks Co., Ltd.		108		191		(4	)		—		—			(4	)		—			183
Korea Credit Bureau Co., Ltd.		3,313		8,125		1,388			—		—			(90	)		—			9,423
Korea Finance Security Co., Ltd.		3,267		3,066		35			—		—			—			—			3,101
Woori Growth Partnerships New Technology Private Equity Fund		14,991		15,032		(637	)		—		(1,947	)		—			—			12,448
2016KIF-IMM Woori Bank Technology Venture Fund		8,396		13,238		3,520			—		(3,497	)		(631	)		—			12,630
K BANK Co., Ltd. (*1)		236,232		174,097		67,553			—		—			—			(2,157	)		239,493
Smart Private Equity Fund No.2		—		1,481		(797	)		—		(684	)		—			—			—
Woori Bank-Company K Korea Movie Asset Fund		—		2,788		137			—		(2,100	)		(480	)		—			345
Partner One Value Up I Private Equity Fund		5,039		9,816		2,521			—		(4,961	)		(800	)		—			6,576
IBK KIP Seongjang Dideemdol 1st Private Investment Limited Partnership		9,736		9,756		1,417			5,040		(5,060	)		—			—			11,153
Crevisse Raim Impact 1st Startup Venture Specialist Private Equity Fund		4,255		4,129		—			125		—			—			—			4,254
LOTTE CARD Co.,Ltd.		346,810		422,832		39,301			—		—			(10,374	)		6,536			458,295
Together-Korea Government Private Pool Private Securities Investment Trust No. 3		10,000		10,023		47			—		—			—			—			10,070
Genesis Environmental Energy Company 1st Private Equity Fund		3,738		3,979		147			—		—			—			—			4,126
Union Technology Finance Investment Association		12,750		4,485		(347	)		8,250		—			—			—			12,388
Dicustody Co., Ltd.		1		—		—			1		—			—			—			1
Japanese Hotel Real Estate Private Equity Fund No.2		3,291		3,234		237			—		—			(201	)		(74	)		3,196
Woori G Clean Energy No.1		—		1,024		—			1,462		(2,338	)		(148	)		—			—
Woori Goseong Power EBL Private Special Asset Fund		—		15,118		227			—		(15,118	)		(370	)		143			—
Woori Seoul Beltway Private Special Asset Fund No.1		7,513		5,613		124			1,935		—			(121	)		—			7,551
Woori Corporate Private Securities Fund 1 (Bond)		—		—		—			10,000		(10,000	)		—			—			—
Woori G Star Private Placement Investment Trust No.33 [FI]		—		—		—			20,000		(20,000	)		—			—			—
Woori Multi-Return Securities Investment Trust 3 (Balanced Bond)		10,000		—		23			10,000		—			—			—			10,023
Woori Short-term Bond Securities Investment Trust(Bond) ClassC-F		150,000		—		1,822			150,000		—			—			—			151,822
WOORI TAERIM 1st Fund		1,100		283		708			—		—			—			—			991
Portone-Cape Fund No.1		340		960		189			—		(660	)		—			—			489
KIWOOM WOORI Financial 1st Investment Fund		1,000		994		(21	)		—		—			—			—			973
DeepDive WOORI 2021-1 Financial Investment Fund		1,000		—		(7	)		1,000		—			—			—			993
Darwin Green Packaging Private Equity Fund		4,000		—		(43	)		4,000		—			—			—			3,957
Woori FirstValue Private Real Estate Fund No.2		9,000		2,130		(637	)		—		—			(730	)		—			763
WooriG Real Infrastructure Blind General Type Private Placement Investment Trust		100		—		—			100		—			—			—			100
Woori High plus G.B. Securities Feeder Fund1(G.B.)		—		6,076		—			—		(6,076	)		—			—			—
Woori Star50 Master Fund ClassC-F		—		184		(4	)		—		(180	)		—			—			—

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	For the year ended December 31, 2021
	Acquisition cost		January 1, 2021		Share of profits (losses) and others			Acquisition		Disposal/ Reclassification			Dividends			Change in capital			December 31, 2021
Woori Hanhwa Eureka Private Equity Fund		164		403		138			—		(214	)		—			—			327
Aarden Woori Apparel 1st Private Equity Fund		100		—		(1	)		100		—			—			—			99
Godo Kaisha Oceanos 1		10,800		10,193		127			—		—			(370	)		(45	)		9,905
Woori Zip 1		10,143		—		(26	)		16,380		(6,237	)		—			379			10,496
Woori Zip 2		14,254		—		(50	)		22,883		(8,628	)		—			527			14,732
Force TEC Co., Ltd. (*2)		—		393		(393	)		—		—			—			—			—
KUM HWA Co., Ltd. (*2)		—		—		—			—		—			—			—			—
JINMYUNGPLUS CO.,LTD.		—		—		—			—		—			—			—			—
JC Assurance No.2 Private Equity Fund		29,349		29,050		(11,621	)		299		—			—			—			17,728
Dream Company Growth no.1 PEF		7,706		7,705		680			—		—			(471	)		—			7,914
HMS-Oriens 1st Fund		12,000		12,000		7			—		—			—			—			12,007
WooriG Senior Loan General Type Private Investment Trust No.1		87,382		52,045		2,959			38,757		(3,060	)		(2,672	)		—			88,029
Genesis Eco No.1 Private Equity Fund		11,805		—		(685	)		11,805		—			—			—			11,120
Paratus Woori Material Component Equipment joint venture company		17,700		—		(207	)		17,700		—			—			—			17,493
Midas No. 8 Private Equity Joint Venture Company		19,000		—		(32	)		19,000		—			—			—			18,968
PCC-Woori LP Secondary Fund		10,100		8,128		1,697			2,525		—			—			—			12,350
Woori High Plus Short-term High Graded ESG Bond Sec Feeder Inv Trust 1		70,988		93,474		921			20,765		(38,870	)		(2,503	)		—			73,787
Woori-Q Corporate Restructuring Private Equity Fund		45,394		22,904		1,002			25,246		(2,997	)		—			—			46,155
Woori-Shinyoung Growth-Cap Private Equity Fund I		17,218		38,342		20,813			12,799		(32,415	)		(10,826	)		—			28,713

	1,210,083		993,291		132,228			400,172		(165,042		)	(30,791		)	5,309			1,335,167

(*1)	Included 70,120 million Won of deemed gain on disposal in accordance with the decrease in percentage of ownership from disproportionate contribution for the year ended December 31, 2021.

(*2)	As a result of discontinuation of the equity method, related companies’ losses amount not recognized is 797 million Won for Force TEC Co., Ltd. and 2 million Won for KUM HWA Co., Ltd.

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(3)	Summary financial information relating to investments in associates accounted for using the equity method of accounting is as follows (Unit: Korean Won in millions):


	December 31, 2020
	Assets		Liabilities		Operating revenue		Net income (loss)			Other comprehensive income(loss)			Total comprehensive income(loss)
W Service Networks Co., Ltd.		6,305		2,448		18,525		1,197			—			1,197
Korea Credit Bureau Co., Ltd.		117,077		37,599		107,810		13,391			—			13,391
Korea Finance Security Co., Ltd.		36,978		16,536		60,599		(1,985	)		—			(1,985	)
Woori Growth Partnerships New Technology Private Equity Fund		65,390		252		1,589		(9,601	)		—			(9,601	)
2016KIF-IMM Woori Bank Technology Venture Fund		64,109		1,198		7,425		6,201			—			6,201
K BANK Co., Ltd.		4,040,051		3,530,074		68,144		(83,989	)		(1,354	)		(85,343	)
Smart Private Equity Fund No.2		13,667		51		1		(204	)		—			(204	)
Woori Bank-Company K Korea Movie Asset Fund		11,273		119		1,926		1,461			—			1,461
Well to Sea No.3 Private Equity Fund		22,001		3,102		610,535		16,061			3,976			20,037
Partner One Value Up I Private Equity Fund		42,205		—		308		(329	)		—			(329	)
IBK KIP Seongjang Dideemdol 1st Private Investment Limited Partnership		46,542		655		1,024		(411	)		—			(411	)
Crevisse Raim Impact 1st Startup Venture Specialist Private Equity Fund		15,747		—		284		(85	)		—			(85	)
LOTTE CARD Co.,Ltd (*)		14,578,716		12,238,805		1,255,593		78,781			(9,040	)		69,741
Together-Korea Government Private Pool Private Securities Investment Trust No.3		10,025		1		187		23			—			23
Genesis Environmental Energy Company 1st Private Equity Fund		16,192		118		1,400		974			—			974
Union Technology Finance Investment Association		15,151		51		1		(50	)		—			(50	)
Japanese Hotel Real Estate Private Equity Fund No.2		16,293		15		1,359		1,271			(940	)		331
Woori G Clean Energy No.1		3,496		1		33		32			—			32
Woori Goseong Power EBL Private Special Asset Fund		90,728		21		3,060		2,969			—			2,969
Woori Seoul Beltway Private Special Asset Fund No.1		22,452		1		352		323			—			323
WOORI TAERIM 1st Fund		1,192		86		—		(22	)		—			(22	)
Portone-Cape Fund No.1		4,800		—		—		—			—			—
KIWOOM WOORI Financial 1st Investment Fund		10,986		57		—		(71	)		—			(71	)
Woori FirstValue Private Real Estate Fund No.2		20,220		2,467		9		(9	)		—			(9	)
Woori High plus G.B. Securities Feeder Fund1(G.B.)		27,870		—		148		148			—			148
Woori Star50 Master Fund ClassC-F		1,011		246		11		11			—			11
Woori Hanhwa Eureka Private Equity Fund		50,382		235		8,150		7,676			—			7,676
Godo Kaisha Oceanos 1		66,793		45,472		1,425		14			—			14
Force TEC Co., Ltd.		47,077		45,552		25,914		(415	)		(2,745	)		(3,160	)

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	December 31, 2020
	Assets		Liabilities		Operating revenue		Net income (loss)			Other comprehensive income(loss)		Total comprehensive income(loss)
JC Assurance No.2 Private Equity Fund		98,431		13		—		(732	)		—		(732	)
Dream Company Growth no.1 PEF		28,727		43		—		(116	)		—		(116	)
HMS-Oriens 1st Fund		52,685		53		90		20			—		20
WooriG Senior Loan General Type Private Investment Trust No.1		240,414		15		1,721		1,584			—		1,584
PCC-Woori LP Secondary Fund		20,927		4		2,082		1,425			—		1,425
Woori High Plus Short-term High Graded ESG Bond Sec Feeder Inv Trust 1		402,015		—		10,727		10,727			—		10,727
Woori-Q Corporate Restructuring Private Equity Fund		58,355		433		206		(1,590	)		—		(1,590	)
Woori-Shinyoung Growth-Cap Private Equity Fund I		110,452		825		23,875		21,106			—		21,106

(*)	The amount is after reflecting the fair value adjustment that occurred when acquiring the shares and the adjustments that occurred by difference of accounting policies with the Group.


	December 31, 2021
	Assets		Liabilities		Operating revenue		Net income (loss)			Other comprehensive income(loss)			Total comprehensive income(loss)
W Service Networks Co., Ltd.		6,208		2,504		17,019		840			—			840
Korea Credit Bureau Co., Ltd.		113,859		21,284		127,751		20,486			—			20,486
Korea Finance Security Co., Ltd.		34,957		14,286		57,462		249			—			249
Woori Growth Partnerships New Technology Private Equity Fund		54,173		231		3,807		(2,228	)		—			(2,228	)
2016KIF-IMM Woori Bank Technology Venture Fund		63,983		837		23,010		21,119			—			21,119
K BANK Co., Ltd.		14,021,789		12,291,131		250,502		19,348			(32,072	)		(12,724	)
Woori Bank-Company K Korea Movie Asset Fund		1,383		2		1,075		543			—			543
Partner One Value Up I Private Equity Fund		28,273		—		11,972		10,914			—			10,914
IBK KIP Seongjang Dideemdol 1st Private Investment Limited Partnership		56,363		597		11,422		10,077			—			10,077
Crevisse Raim Impact 1st Startup Venture Specialist Private Equity Fund		15,799		5		—		(332	)		—			(332	)
LOTTE CARD Co.,Ltd ( *)		15,980,312		13,460,156		1,499,867		184,919			25,612			210,531
Together-Korea Government Private Pool Private Securities Investment Trust No. 3		10,073		1		41		37			—			37
Genesis Environmental Energy Company 1st Private Equity Fund		20,610		3,941		11,347		694			—			694
Union Technology Finance Investment Association		41,996		290		13		(1,168	)		—			(1,168	)
Dicustody Co., Ltd.		98		—		—		(2	)		—			(2	)
Japanese Hotel Real Estate Private Equity Fund No.2		16,104		14		911		1,196			(373	)		823
Woori Seoul Beltway Private Special Asset Fund No.1		30,206		1		536		500			—			500

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	December 31, 2021
	Assets		Liabilities		Operating revenue			Net income (loss)			Other comprehensive income(loss)		Total comprehensive income(loss)
Woori Multi-Return Securities Investment Trust 3 (Balanced Bond)		101,644		51,530		5			2			—		2
Woori Short-term Bond Securities Investment Trust(Bond) ClassC-F		1,209,228		158,524		89			79			—		79
WOORI TAERIM 1st Fund		4,047		172		—			2,770			—		2,770
Portone-Cape Fund No.1		2,447		—		1,050			947			—		947
KIWOOM WOORI Financial 1st Investment Fund		10,818		111		1			(221	)		—		(221	)
DeepDive WOORI 2021-1 Financial Investment Fund		8,340		—		—			(60	)		—		(60	)
Darwin Green Packaging Private Equity Fund		19,387		—		—			(213	)		—		(213	)
Woori FirstValue Private Real Estate Fund No.2		69,672		63,309		—			(5,303	)		—		(5,303	)
WooriG Real Infrastructure Blind General Type Private Placement Investment Trust		35,796		1		(34	)		(35	)		—		(35	)
Woori Hanhwa Eureka Private Equity Fund		40,817		133		20,193			19,821			—		19,821
Aarden Woori Apparel 1st Private Equity Fund		21,075		89		—			(214	)		—		(214	)
Godo Kaisha Oceanos 1		66,087		45,367		3,141			267			—		267
Woori Zip 1		52,259		35,833		1,106			(26	)		—		(26	)
Woori Zip 2		74,033		50,951		1,536			(50	)		—		(50	)
Force TEC Co., Ltd.		11,904		23,508		20,941			(9,188	)		—		(9,188	)
KUM HWA Co., Ltd.		20		176		58			(10	)		—		(10	)
JINMYUNGPLUS CO.,LTD.		568		445		209			5			—		5
JC Assurance No.2 Private Equity Fund		118,397		—		—			(1,040	)		—		(1,040	)
Dream Company Growth no.1 PEF		28,533		44		—			1,500			—		1,500
HMS-Oriens 1st Fund		52,659		28		2,750			2,179			—		2,179
Woori G Senior Loan Private Placement Investment Trust No.1		406,634		25		14,553			13,669			—		13,669
Genesis Eco No.1 Private Equity Fund		38,369		4		308			(377	)		—		(377	)
Paratus Woori Material Component Equipment joint venture company		58,507		—		7			(693	)		—		(693	)
Midas No. 8 Private Equity Joint Venture Company		66,699		112		1			(113	)		—		(113	)
PCC-Woori LP Secondary Fund		31,585		—		5,720			4,162			—		4,162
Woori High Plus Short-term High Graded ESG Bond Sec Feeder Inv Trust 1		257,891		—		3,239			3,239			—		3,239
Woori-Q Corporate Restructuring Private Equity Fund		121,057		555		327			(1,547	)		—		(1,547	)
Woori-Shinyoung Growth-Cap Private Equity Fund I		82,087		314		83,143			81,550			—		81,550

(*)	The amount is after reflecting the fair value adjustment that occurred when acquiring the shares and the adjustments that occurred by difference of accounting policies with the Group.

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(4)	The entities that the Group has not applied equity method of accounting although the Group’s ownership interest is more than 20% as of December 31, 2020 and 2021 are as follows:


	December 31, 2020
Associate (*)	Number of shares owned		Ownership (%)
Orient Shipyard Co., Ltd. (*)		464,812		21.4
Yuil PESC Co., Ltd. (*)		8,642		24.0
CL Tech Co., Ltd. (*)		13,759		38.6

(*)	Although the Group’s ownership interest of the entity is more than 20%, the Group does not have significant influence over the entity since it is going through work-out process under receivership, thus it is excluded from the investment in joint ventures and associates.


	December 31, 2021
Associate (*)	Number of shares owned		Ownership (%)
Orient Shipyard Co., Ltd. (*)		464,812		21.4
Yuil PESC Co., Ltd. (*)		8,642		24.0
CL Tech Co., Ltd. (*)		13,759		38.6
S.WIN Co., Ltd. (*)		20,301		20.0

(*)	Although the Group’s ownership interest of the entity is more than 20%, the Group does not have significant influence over the entity since it is going through work-out process under receivership, thus it is excluded from the investment in joint ventures and associates.

(5)	As of December 31, 2019, 2020 and 2021, the reconciliations from the net assets of the associates to the book value of the shares of the investment in joint ventures and associates are as follows (Unit: Korean Won in millions except for ownership):


	December 31, 2019
	Total net asset		Ownership (%)		Ownership portion of net assets		Basis difference		Impairment			Intercompany transaction			Book value
W Service Networks Co., Ltd.		3,773		4.9		186		—		—			—			186
Korea Credit Bureau Co., Ltd.		66,566		9.9		6,597		246		—			2			6,845
Korea Finance Security Co., Ltd.		21,914		15.0		3,287		—		—			—			3,287
Chin Hung International Inc. (*1)		105,383		25.3		26,646		24,565		—			(35	)		51,176
Saman Corporation (*2)		26,022		9.2		2,391		5,373		(6,915	)		—			849
Woori Growth Partnerships New Technology Private Equity Fund		83,253		23.1		19,215		—		—			(3	)		19,212
2016KIF-IMM Woori Bank Technology Venture Fund		72,425		20.0		14,485		—		—			656			15,141
K BANK Co., Ltd. (1)(2)		215,800		14.5		31,248		3,634		(3,634	)		6			31,254
Smart Private Equity Fund No.2		13,821		20.0		2,764		—		—			—			2,764
Woori Bank-Company K Korea Movie Asset Fund		13,292		25.0		3,323		—		—			—			3,323
Well to Sea No.3 Private Equity Fund (*1)		418,250		50.0		209,041		—		—			(18	)		209,023
Partner One Value Up 1st Private Equity Fund		42,602		23.3		9,909		—		—			(1	)		9,908
IBK KIP Seongjang Dideemdol 1st Private Investment Limited Partnership		20,517		20.0		4,103		—		—			473			4,576
Crevisse Raim Impact 1st Startup Venture Specialist Private Equity Fund		16,815		25.0		4,204		—		—			171			4,375
Woori-Shinyoung Growth-Cap Private Equity Fund I		37,022		31.9		11,841		—		—			—			11,841
LOTTE CARD Co., Ltd (*1)		2,047,220		20.0		409,444		—		—			—			409,444

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	December 31, 2019
	Total net asset		Ownership (%)		Ownership portion of net assets		Basis difference		Impairment		Intercompany transaction		Book value
Woori-Q Corporate Restructuring Private Equity Fund		15,152		38.4		5,813		—		—		233		6,046
PCC-Woori LP Secondary Fund		6,498		38.8		2,524		—		—		1		2,525
Woori Hanhwa Eureka Private Equity Fund		41,714		0.8		342		—		—		—		342
Godo Kaisha Oceanos 1		22,909		47.8		10,952		—		—		—		10,952
Japanese Hotel Real Estate Private Equity Fund No.2		16,555		19.9		3,291		—		—		—		3,291

(*1)	The net asset equity amount is after the debt-for-equity swap, non-controlling etc.

(*2)	As a result of conducting an impairment test on the investment stocks of the related companies, the recoverable value was less than the carrying amount and thus the impairment loss was recognized.


	December 31, 2020
	Total net asset		Ownership (%)		Ownership portion of net assets		Basis difference		Impairment			Intercompany transaction			Book value
W Service Networks Co., Ltd.		3,857		4.9		191		—		—			—			191
Korea Credit Bureau Co., Ltd.		79,478		9.9		7,876		246		—			3			8,125
Korea Finance Security Co., Ltd.		20,442		15.0		3,066		—		—			—			3,066
Woori Growth Partnerships New Technology Private Equity Fund		65,138		23.1		15,034		—		—			(2	)		15,032
2016KIF-IMM Woori Bank Technology Venture Fund		62,911		20.0		12,582		—		—			656			13,238
K BANK Co., Ltd. (1)(2)		509,978		26.2		133,614		44,117		(3,634	)		—			174,097
Smart Private Equity Fund No.2 (*2)		13,616		20.0		2,723		—		(1,242	)		—			1,481
Woori Bank-Company K Korea Movie Asset Fund		11,154		25.0		2,788		—		—			—			2,788
Well to Sea No.3 Private Equity Fund (*3)		18,899		50.0		—		—		—			—			—
Partner One Value Up Ist Private Equity Fund		42,205		23.3		9,817		—		—			(1	)		9,816
IBK KIP Seongjang Dideemdol 1st Private Investment Limited Partnership		45,888		20.0		9,178		—		—			578			9,756
Crevisse Raim Impact 1st Startup Venture Specialist Private Equity Fund		15,747		25.0		3,937		—		—			192			4,129
Woori-Shinyoung Growth-Cap Private Equity Fund I		109,627		35.0		38,342		—		—			—			38,342
LOTTE CARD Co., Ltd (*1)		2,114,159		20.0		422,832		—		—			—			422,832
Woori-Q Corporate Restructuring Private Equity Fund		57,922		38.4		22,220		—		—			684			22,904
PCC-Woori LP Secondary Fund		20,923		38.8		8,126		—		—			2			8,128
Force TEC		1,526		25.8		393		—		—			—			393
Together-Korea Government Private Pool Private Securities Investment Trust No.3		10,024		100.0		10,024		—		—			(1	)		10,023
Genesis Environmental Energy Company 1st Private Equity Fund		16,074		24.8		3,979		—		—			—			3,979
Union Technology Finance Investment Association		15,100		29.7		4,485		—		—			—			4,485
Woori Hanhwa Eureka Private Equity Fund		50,147		0.8		403		—		—			—			403
Godo Kaisha Oceanos 1		21,321		47.8		10,193		—		—			—			10,193
Japanese Hotel Real Estate Private Equity Fund No.2		16,278		19.9		3,234		—		—			—			3,234
Woori High plus G.B. Securities Feeder Fund1(G.B.)		27,870		21.8		6,076		—		—			—			6,076

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	December 31, 2020
	Total net asset		Ownership (%)		Ownership portion of net assets		Basis difference		Impairment		Intercompany transaction		Book value
Woori G Senior Loan General Type Private Investment Trust No.1		240,399		21.7		52,045		—		—		—		52,045
Woori G Clean Energy No.1		3,495		29.3		1,024		—		—		—		1,024
Woori Goseong Power EBL Private Special Asset Fund		90,707		16.7		15,118		—		—		—		15,118
Woori Seoul Beltway Private Special Asset Fund No.1		22,451		25.0		5,613		—		—		—		5,613
WOORI TAERIM 1st Fund		1,106		25.6		283		—		—		—		283
Portone-Cape Fund No.1		4,800		20.0		960		—		—		—		960
KIWOOM WOORI Financial 1st Investment Fund		10,929		9.1		994		—		—		—		994
Woori FirstValue Private Real Estate Fund No.2		17,753		12.0		2,130		—		—		—		2,130
Woori Star50 Master Fund ClassC-F		765		24.5		184		—		—		—		184
JC Assurance No.2 Private Equity Fund		98,418		29.3		29,050		—		—		—		29,050
Dream Company Growth no.1 PEF		28,684		27.8		7,705		—		—		—		7,705
HMS-Oriens 1st Fund		52,632		22.8		12,000		—		—		—		12,000
Woori High Plus Short-term High Graded ESG Bond Sec Feeder Inv Trust 1		402,015		23.3		93,474		—		—		—		93,474

(*1)	The net asset equity amount is after the debt-for-equity swap, non-controlling etc.

(*2)	As a result of conducting an impairment test on the investment stocks of the related companies, the recoverable value was less than the carrying amount and thus the impairment loss was recognized.

(*3)	The estimated recoverable amount of 15,687 million Won at the time of liquidation was classified as receivable.


	December 31, 2021
	Total net asset		Ownership (%)		Ownership portion of net assets		Basis difference		Impairment		Intercompany transaction		Book value
W Service Networks Co., Ltd.		3,704		4.9		183		—		—		—		183
Korea Credit Bureau Co., Ltd.		92,575		9.9		9,177		246		—		—		9,423
Korea Finance Security Co., Ltd.		20,671		15.0		3,101		—		—		—		3,101
Woori Growth Partnerships New Technology Private Equity Fund		53,942		23.1		12,448		—		—		—		12,448
2016KIF-IMM Woori Bank Technology Venture Fund		63,146		20.0		12,630		—		—		—		12,630
K BANK Co., Ltd. (*)		1,730,307		12.6		217,599		21,894		—		—		239,493
Woori Bank-Company K Korea Movie Asset Fund		1,381		25.0		345		—		—		—		345
Partner One Value Up 1st Private Equity Fund		28,273		23.3		6,576		—		—		—		6,576
IBK KIP Seongjang Dideemdol 1st Private Investment Limited Partnership		55,767		20.0		11,153		—		—		—		11,153
Crevisse Raim Impact 1st Startup Venture Specialist Private Equity Fund		15,794		25.0		3,949		—		—		305		4,254
LOTTE CARD Co., Ltd (*1)		2,291,474		20.0		458,295		—		—		—		458,295
Together-Korea Government Private Pool Private Securities Investment Trust No.3		10,071		100.0		10,070		—		—		—		10,070
Genesis Environmental Energy Company 1st Private Equity Fund		16,669		24.8		4,126		—		—		—		4,126
Union Technology Finance Investment Association		41,706		29.7		12,388		—		—		—		12,388
Dicustody Co., Ltd.		98		1.0		1		—		—		—		1

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	December 31, 2021
	Total net asset			Ownership (%)		Ownership portion of net assets			Basis difference		Impairment			Intercompany transaction			Book value
Japanese Hotel Real Estate Private Equity Fund No.2		16,090			19.9		3,196			—		—			—			3,196
Woori Seoul Beltway Private Special Asset Fund No.1		30,205			25.0		7,551			—		—			—			7,551
Woori Multi Return Private Securities Investment Trust 3(Balanced Bond)		50,114			20.0		10,023			—		—			—			10,023
Woori Short-term Bond Securities Investment Trust (Bond) ClassC-F		1,050,704			14.5		151,822			—		—			—			151,822
WOORI TAERIM 1st Fund		3,875			25.6		991			—		—			—			991
Portone-Cape Fund No.1		2,447			20.0		489			—		—			—			489
KIWOOM WOORI Financial 1st Investment Fund		10,707			9.1		973			—		—			—			973
DeepDive WOORI 2021-1 Financial Investment Fund		8,340			11.9		993			—		—			—			993
Darwin Green Packaging Private Equity Fund		19,387			20.4		3,957			—		—			—			3,957
Woori FirstValue Private Real Estate Fund No.2		6,363			12.0		763			—		—			—			763
WooriG Real Infrastructure Blind General Type Private Placement Investment Trust		35,795			0.3		100			—		—			—			100
Woori Hanhwa Eureka Private Equity Fund		40,684			0.8		327			—		—			—			327
Aarden Woori Apparel 1st Private Equity Fund		20,986			0.5		99			—		—			—			99
Godo Kaisha Oceanos 1		20,720			47.8		9,905			—		—			—			9,905
Woori Zip 1		16,426			63.9		10,496			—		—			—			10,496
Woori Zip 2		23,082			63.8		14,732			—		—			—			14,732
Force TEC		(11,604	)		24.5		(2,843	)		—		—			2,843			—
KUM HWA Co., Ltd.		(156	)		20.1		(31	)		—		—			31			—
JINMYUNGPLUS CO.,LTD.		123			21.3		25			—		—			(25	)		—
JC Assurance No.2 Private Equity Fund		118,397			24.4		29,349			—		(11,621	)		—			17,728
Dream Company Growth no.1 PEF		28,489			27.8		7,914			—		—			—			7,914
HMS-Oriens 1st Fund		52,631			22.8		12,007			—		—			—			12,007
WooriG Senior Loan General Type Private Investment Trust No.1		406,609			21.7		88,029			—		—			—			88,029
Genesis Eco No.1 Private Equity Fund		38,365			29.0		11,120			—		—			—			11,120
Paratus Woori Material Component Equipment joint venture company		58,507			29.9		17,493			—		—			—			17,493
Midas No. 8 Private Equity Joint Venture Company		66,587			28.5		18,968			—		—			—			18,968
PCC-Woori LP Secondary Fund		31,585			38.8		12,350			—		—			—			12,350
Woori High Plus Short-term High Graded ESG Bond Sec Feeder Inv Trust 1		257,891			27.5		73,787			—		—			—			73,787
Woori-Q Corporate Restructuring Private Equity Fund		120,502			38.1		46,155			—		—			—			46,155
Woori-Shinyoung Growth-Cap Private Equity Fund I		81,773			35.0		28,713			—		—			—			28,713

(*)	The net asset equity amount is after the debt-for-equity swap, non-controlling etc.

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14.	INVESTMENT PROPERTIES

(1)	Details of investment properties are as follows (Unit: Korean Won in millions):


	December 31, 2020			December 31, 2021
Acquisition cost		409,702			415,163
Accumulated depreciation		(22,152	)		(25,582	)
Accumulated impairment losses		(86	)		(86	)

Net carrying value		387,464			389,495

(2)	Changes in investment properties are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2019			2020			2021
Beginning balance (*)		178,910			280,239			387,464
Acquisition		70,346			76,588			—
Disposal		(193	)		(353	)		—
Depreciation		(2,225	)		(2,689	)		(2,809	)
Transfer		32,394			30,431			6,095
Foreign currencies translation adjustments		402			267			(1,255	)
Business combination		—			10,557			—
Others		605			(7,576	)		—

Ending balance		280,239			387,464			389,495

(*)	199,286 million Won was deducted from the beginning net carrying amount for the year 2019, as it was reclassified from the investment properties to premises and equipment in the beginning of the period.

(3)

Fair value of investment properties amounted to 750,659 million Won and 665,710 million Won and as of December 31, 2020 and 2021, respectively. The fair value of investment properties has been assessed on the basis of recent similar real estate market price and officially assessed land price in the area of the investment properties, is classified as level 3 on the fair value hierarchy.

(4)

Rental fee earned from investment properties is amounting to 15,190 million Won and 15,056 million Won for the years ended December 31, 2020 and 2021, respectively. Operating expenses directly related to the investment properties where rental fee was earned is amounting to 2,807 million Won and 2,941 million Won.

(5)	The lease payments expected to be received in the future under lease contracts relating to investment properties as of December 31, 2020 and 2021 are as follows (Unit: Korean Won in millions):


	December 31, 2020		December 31, 2021
Lease payments:
Within a year		11,553		13,769
More than 1 year and within 2 years		8,403		10,770
More than 2 years and within 3 years		7,545		7,743
More than 3 years and within 4 years		7,154		5,009
More than 4 years and within 5 years		4,312		2,953
More than 5 years		2,534		2,603

Total		41,501		42,847

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15. PREMISES AND EQUIPMENT

(1)	Details of premises and equipment as of December 31, 2020 and 2021 are as follows (Unit: Korean Won in millions):


	December 31, 2020
	Land		Building		Equipment and vehicles		Leasehold improvement		Construction in progress		Structures		Total
Premises and equipment (owned)		1,726,045		787,040		268,225		50,085		8,246		2		2,839,643
Right-of-use asset		—		435,132		12,423		—		—		—		447,555
Carrying value		1,726,045		1,222,172		280,648		50,085		8,246		2		3,287,198


	December 31, 2021
	Land		Building		Equipment and vehicles		Leasehold improvement		Construction in progress		Structures		Total
Premises and equipment (owned)		1,719,325		756,964		258,361		51,354		3,171		1		2,789,176
Right-of-use asset		—		367,480		18,064		—		—		—		385,544
Carrying value		1,719,325		1,124,444		276,425		51,354		3,171		1		3,174,720

(2)	Details of premises and equipment (owned) as of December 31, 2020 and 2021 are as follows (Unit: Korean Won in millions):


	December 31, 2020
	Land			Building			Equipment and vehicles			Leasehold improvement			Construction in progress		Structures			Total
Acquisition cost		1,726,705			1,076,647			1,142,653			478,290			8,246		20			4,432,561
Accumulated depreciation		—			(289,607	)		(874,428	)		(428,205	)		—		(18	)		(1,592,258	)
Accumulated impairment losses		(660	)		—			—			—			—		—			(660	)

Net carrying value		1,726,045			787,040			268,225			50,085			8,246		2			2,839,643


	December 31, 2021
	Land			Building			Equipment and vehicles			Leasehold improvement			Construction in progress		Structures			Total
Acquisition cost		1,719,985			1,076,091			1,156,479			475,195			3,171		20			4,430,941
Accumulated depreciation		—			(319,127	)		(898,118	)		(423,841	)		—		(19	)		(1,641,105	)
Accumulated impairment losses		(660	)		—			—			—			—		—			(660	)

Net carrying value		1,719,325			756,964			258,361			51,354			3,171		1			2,789,176

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(3)	Details of changes in premises and equipment (owned) are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2019
	Land			Building			Equipment and vehicles			Leasehold improvement			Construction in progress			Structures			Total
Beginning balance		1,481,871			661,912			240,013			57,594			9,099			3			2,450,492
Acquisitions		186,303			87,667			119,474			28,788			7,315			—			429,547
Disposals		(3,015	)		(2,245	)		(1,203	)		(2,738	)		—			—			(9,201	)
Depreciation		—			(30,766	)		(87,453	)		(27,134	)		—			(1	)		(145,354	)
Classified as held-for-sale		(21	)		(74	)		—			—			—			—			(95	)
Transfer		93,956			83,260			3,670			912			(14,886	)		—			166,912
Foreign currencies translation adjustments		880			801			1,459			609			36			—			3,785
Business combination		1,185			74			926			1			—			—			2,186
Others		—			1,670			1,130			(3,193	)		(277	)		—			(670	)

Ending balance		1,761,159			802,299			278,016			54,839			1,287			2			2,897,602


	For the year ended December 31, 2020
	Land			Building			Equipment and vehicles			Leasehold improvement			Construction in progress			Structures		Total
Beginning balance		1,761,159			802,299			278,016			54,839			1,287			2		2,897,602
Acquisitions		3,787			26,972			84,828			26,124			7,751			—		149,462
Disposals		(8,326	)		(1,719	)		(605	)		(688	)		—			—		(11,338	)
Depreciation		—			(34,572	)		(94,388	)		(30,579	)		—			—		(159,539	)
Transfer		(30,847	)		(2,048	)		118			—			(118	)		—		(32,895	)
Foreign currencies translation adjustments		(836	)		(882	)		(1,849	)		(830	)		(82	)		—		(4,479	)
Business combination		1,108			81			2,150			437			—			—		3,776
Others		—			(3,091	)		(45	)		782			(592	)		—		(2,946	)

Ending balance		1,726,045			787,040			268,225			50,085			8,246			2		2,839,643


	For the year ended December 31, 2021
	Land			Building			Equipment and vehicles			Leasehold improvement			Construction in progress			Structures			Total
Beginning balance		1,726,045			787,040			268,225			50,085			8,246			2			2,839,643
Acquisitions		—			15,750			68,069			23,347			11,637			—			118,803
Disposals		—			(1,994	)		(1,663	)		(979	)		—			—			(4,636	)
Depreciation		—			(33,523	)		(93,921	)		(22,293	)		—			(1	)		(149,738	)
Classification of assets held for sale		(7,157	)		(5,695	)		—			—			—			—			(12,852	)
Transfer		(3,649	)		(2,446	)		15,399			—			(15,399	)		—			(6,095	)
Foreign currencies translation adjustments		991			712			2,868			1,580			153			—			6,304
Others		3,095			(2,880	)		(616	)		(386	)		(1,466	)		—			(2,253	)

Ending balance		1,719,325			756,964			258,361			51,354			3,171			1			2,789,176

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(4)	Details of right-of-use assets as of December 31, 2020 and 2021 are as follows (Unit: Korean Won in millions):


	December 31, 2020
	Building			Equipment and vehicles			Total
Acquisition cost		720,417			28,463			748,880
Accumulated depreciation		(285,285	)		(16,040	)		(301,325	)

Net carrying value		435,132			12,423			447,555


	December 31, 2021
	Building			Equipment and vehicles			Total
Acquisition cost		650,906			30,559			681,465
Accumulated depreciation		(283,426	)		(12,495	)		(295,921	)

Net carrying value		367,480			18,064			385,544

(5)	Details of changes in right-of-use assets for the years ended December 31, 2020 and 2021 are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2020
	Building			Equipment and vehicles			Total
Beginning balance		449,878			17,236			467,114
New contracts		224,494			6,831			231,325
Changes in contract		10,729			32			10,761
Termination		(18,925	)		(574	)		(19,499	)
Depreciation		(224,946	)		(11,716	)		(236,662	)
Business combination		3,210			381			3,591
Others		(9,308	)		233			(9,075	)

Ending balance		435,132			12,423			447,555


	For the year ended December 31, 2021
	Building			Equipment and vehicles			Total
Beginning balance		435,132			12,423			447,555
New contracts		172,812			16,848			189,660
Changes in contract		9,064			225			9,289
Termination		(46,563	)		(1,742	)		(48,305	)
Depreciation		(228,403	)		(10,665	)		(239,068	)
Business combination		—			—			—
Others		25,438			975			26,413

Ending balance		367,480			18,064			385,544

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16. INTANGIBLE ASSETS

(1)	Details of intangible assets are as follows (Unit: Korean Won in millions):


	December 31, 2020
	Goodwill		Industrial property rights			Development cost			Other intangible assets			Membership deposit			Construction in progress		Total
Acquisition cost		334,290		1,810			582,998			1,114,615			39,454			6,669		2,079,836
Accumulated amortization		—		(1,101	)		(374,125	)		(875,636	)		—			—		(1,250,862	)
Accumulated impairment losses		—		—			—			(33,534	)		(3,363	)		—		(36,897	)

Net carrying value		334,290		709			208,873			205,445			36,091			6,669		792,077


	December 31, 2021
	Goodwill		Industrial property rights			Development cost			Other intangible assets			Membership deposit			Construction in progress		Total
Acquisition cost		345,449		2,057			661,959			1,174,565			40,955			717		2,225,702
Accumulated amortization		—		(1,334	)		(454,251	)		(947,830	)		—			—		(1,403,415	)
Accumulated impairment losses		—		—			—			(33,553	)		(3,348	)		—		(36,901	)

Net carrying value		345,449		723			207,708			193,182			37,607			717		785,386

(2)	Details of changes in intangible assets are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2019
	Goodwill		Industrial property rights			Development cost			Other intangible assets			Membership deposit			Construction in progress			Total
Beginning balance		153,602		562			240,320			169,024			23,597			10,415			597,520
Acquisitions		—		318			41,373			100,671			4,931			8,754			156,047
Disposal		—		—			—			—			(675	)		—			(675	)
Amortization (*)		—		(188	)		(64,415	)		(63,810	)		—			—			(128,413	)
Impairment losses		—		—			—			(25,858	)		(939	)		—			(26,797	)
Transfer		—		—			7,915			7,188			—			(15,103	)		—
Foreign currencies translation adjustments		10,234		—			—			2,292			60			—			12,586
Business combination		186,846		—			—			44,365			2,143			—			233,354
Others		—		—			—			275			213			—			488

Ending balance		350,682		692			225,193			234,147			29,330			4,066			844,110

(*)	Amortization of other intangible assets amounting to 22,317 million Won is included in other operating expenses.

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	For the year ended December 31, 2020
	Goodwill			Industrial property rights			Development cost			Other intangible assets			Membership deposit			Construction in progress			Total
Beginning balance		350,682			692			225,193			234,147			29,330			4,066			844,110
Acquisitions		—			233			53,273			41,329			5,183			3,197			103,215
Disposal		—			—			—			—			(782	)		—			(782	)
Amortization (*)		—			(216	)		(71,620	)		(64,822	)		—			—			(136,658	)
Impairment losses		—			—			—			(7,692	)		(99	)		—			(7,791	)
Transfer		—			—			428			164			—			(592	)		—
Foreign currencies translation adjustments		(14,802	)		—			—			(2,208	)		(15	)		(2	)		(17,027	)
Business combination		—			—			2,403			4,199			2,079			—			8,681
Others		(1,590	)		—			(804	)		328			395			—			(1,671	)

Ending balance		334,290			709			208,873			205,445			36,091			6,669			792,077

(*)	Amortization of other intangible assets amounting to 11,890 million Won is included in other operating expenses.


	For the year ended December 31, 2021
	Goodwill		Industrial property rights			Development cost			Other intangible assets			Membership deposit			Construction in progress			Total
Beginning balance		334,290		709			208,873			205,445			36,091			6,669			792,077
Acquisitions		—		247			74,444			49,137			2,437			977			127,242
Disposal		—		—			—			—			(347	)		—			(347	)
Amortization (*)		—		(233	)		(80,128	)		(68,950	)		—			—			(149,311	)
Impairment losses		—		—			—			(18	)		(93	)		—			(111	)
Transfer		—		—			4,518			2,946			—			(7,464	)		—
Foreign currencies translation adjustments		11,159		—			—			2,952			232			—			14,343
Others		—		—			1			1,670			(713	)		535			1,493

Ending balance		345,449		723			207,708			193,182			37,607			717			785,386

(*)	Amortization of other intangible assets amounting to 13,963 million Won is included in other operating expenses.

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(3)

Goodwill

1)	Details of allocated goodwill based on each cash-generating unit as of December 31, 2020 and 2021 are as follows (Unit: Korean won in million):


Cash-generating unit (*1)	December 31, 2020		December 31, 2021
Woori Asset Management Corp.		43,036		43,036
Woori Global Asset Management Co., Ltd.		2,030		2,030
Woori Asset Trust Co., Ltd.		141,780		141,780
PT Bank Woori Saudara Indonesia 1906 Tbk (*2)		92,831		99,667
WOORI BANK (CAMBODIA) PLC (*3)		47,924		52,082
Others		6,689		6,854

Total		334,290		345,449

(*1)	Allocated to the cash-generating unit that will benefit from the synergy effect of the business combination, and the cash-generating unit is generally comprised of the operating segment or sub-sectors.

(*2)	The Group has acquired Saudara Bank to expand retail sales in Indonesia and recognized the goodwill as it is expected to strengthen the competitiveness by securing a local sales network in Indonesia.

(*3)	The Group has acquired VisionFund Cambodia to expand Cambodian retail sales, and recognized goodwill based on the economies of scale and acquired customer base.

2)	Impairment test

The recoverable amount of the cash-generating unit is measured at larger amount among the fair value less costs to sell or the value to use.

The net fair value is calculated by deducting costs of disposal from the amount received from the sale of the cash-generating unit in an arm’s length transaction between the parties with reasonable judgment and willingness to negotiate. In case of difficulty in measuring this amount, the sale amount of a similar cash-generating unit in the past market is calculated by reflecting the characteristics of the cash-generating unit. If reliable information related to fair value less costs to sell is not available, value in use is considered as recoverable amount. Value in use is the present value of future cash flows expected to be generated by the cash-generating unit. Future cash flows are estimated based on the latest financial budget approved by the management, with an estimated period of up to five years. The Group applied 0.0%—1.0% growth rate to estimate future cash flow for the period over five years. The main assumptions used to estimate cash flows are about the size of the market and the share of the group. The appropriate discount rate for discounting future cash flows is the

pre-tax

discount rate, including assumptions about risk-free interest rates, market risk premium, and systemic risk of cash-generating units. The impairment test, which compares the carrying amount and recoverable amount of the cash-generating unit to which goodwill has been allocated, is conducted every year and every time an impairment sign occurs.


Category	Woori Asset Trust Co., Ltd.		Woori Asset Management Corp.		Woori Global Asset Management Co., Ltd		PT Bank Woori Saudara Indonesia 1906 Tbk		WOORI BANK (CAMBODIA) PLC
Discount rate (%)		18.72		17.82		17.52		11.96		12.60
Terminal growth rate (%)		1.0		1.0		1.0		0.0		0.0
Recoverable amount		326,205		137,578		41,967		606,626		369,782
Carrying amount		262,116		132,601		29,954		592,136		357,902

As a result of the impairment test on goodwill, it is determined that the carrying amount of the cash-generating unit to which the goodwill has been allocated will not exceed the recoverable amount.

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3)	Sensitivity analysis

The sensitivity of the fair value measurement to changes in significant but unobservable inputs used in measuring fair value is as follows (Unit: Korean Won in millions):


Category		Woori Asset Trust Co., Ltd.			Woori Asset Management Corp.			Woori Global Asset Management Co., Ltd			PT Bank Woori Saudara Indonesia 1906 Tbk			WOORI BANK (CAMBODIA) PLC
Discount rate (%)	Increase by 1.0% point		(29,949	)		(6,638	)		(1,999	)		(62,532	)		(30,603	)
Discount rate (%)	Decrease by 1.0% point		34,863			7,741			2,356			74,238			35,994
Terminal growth rate (%)	Increase by 1.0% point		18,640			4,179			1,318			47,187			20,339
Terminal growth rate (%)	Decrease by 1.0% point (*)		(16,089	)		(3,603	)		(1,123	)		—			—

(*)	In the case of PT Bank Woori Saudara Indonesia 1906 Tbk and and WOORI BANK (CAMBODIA) PLC, declining cases are excluded from the analysis as the permanent growth rate was assumed to be 0%.

17. ASSETS HELD FOR SALE

Assets held for distribution (sale) are as follows (Unit: Korean Won in millions):


Assets (*)	December 31, 2020		December 31, 2021
Premises and equipment		2,130		8,900
Investments of associates		50,411		11,472
Others		7,461		5,955

Total		60,002		26,327

(*)	The Group classifies assets as held for sale that are highly likely to be sold within one year from December 31, 2020 and December 31, 2021.

The Group measured assets held for sale at the lower of their net fair value or carrying amount.

The Group has decided to sell some of the premises and equipment through internal consultation during the current term and classifies the premises as

non-current

assets held for sale. The asset is expected to be sold within 12 months, and the premises and equipment that was scheduled to be sold at the end of the prior year has been sold and removed. In addition, the investment assets of the associates, which are counted as assets held for sale as of the end of the current term, are likely to be sold within one year of the end of the current term according to the management’s decision. On the other hand, other assets that are expected to be sold as of the end of the current term are classified as assets that are expected to be sold within one year due to the possibility of being sold as buildings and land acquired through auction.

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18. ASSETS SUBJECT TO LIEN AND ASSETS ACQUIRED THROUGH FORECLOSURES

(1)	Assets subjected to lien are as follows (Unit: Korean Won in millions):


		December 31, 2020
		Collateral given to	Amount		Reason for collateral
Financial assets at FVTPL	Korean treasury and government bonds and others	Kookmin bank and others		259,835	Related to bonds sold under repurchase agreements(*)
	Korean treasury and government bonds and others	Korea Securities Depository		157,021	Securities borrowing collateral
	Korean treasury and government bonds and others	Shinhan Investment Corp.		42,428	Collateral for futures transaction
	Korean financial institutions’ debt securities and others	Korea Securities Depository		148,961	Securities borrowing collateral
	Korean financial institutions’ debt securities and others	Kookmin bank and others		150,496	Related to bonds sold under repurchase agreements (*)
	Korean financial institutions’ debt securities and others	TIMEFOLIO Co., Ltd.		19,958	Collateral for futures transaction
Financial assets at FVTOCI	Korean treasury and government bonds and others	Korea Securities Depository		473	Related to bonds sold under repurchase agreements(*)
	Korean financial institutions’ debt securities and others	The BOK and others		1,621,941	Settlement risk and others
	Foreign financial institutions’ debt securities	STANDARD BANK LONDON LTD		137,842	Related to bonds sold under repurchase agreements (*)
Securities at amortized cost	Korean treasury and government bonds and others	The BOK and others		8,111,193	Settlement risk and others
	Foreign financial institutions’ debt securities	NATIXIS and others		40,987	Related to bonds sold under repurchase agreements (*)
	Foreign financial institutions’ debt securities	Federal Reserve Bank		14,377	Related to the borrowing limit
Loan at amortized cost and other financial assets	Due from banks in local currency	Daishin AMC Co.,Ltd. and others		1,500	Right of pledge
	Other due from banks in local currency	Samsung Securities Co., Ltd. and others		39,005	Margin deposit for futures or option

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		December 31, 2020
		Collateral given to	Amount		Reason for collateral
	Other due from banks in local currency	Korea Federation of Savings Banks		47,805	Domestic exchange business
	Other due from banks in foreign currencies	JPMORGAN CHASE BANK and others		755,177	Collateral for CSA and others
	Foreign currency loan bonds	Industrial and Commercial Bank of China		50,088	Related to bonds sold under repurchase agreements (*)
	Mortgage loan	Public offering		3,190,889	Related to covered bonds
Investment real estate	Land and building	Credit Counselling & Recovery Service and others		5,676	Right to collateral and others
Premises and equipment	Land and building	Credit Counselling & Recovery Service and others		1,969	Right to collateral and others

		Total		14,797,621

(*)

The Group has the agreements to repurchase the sold assets at the predetermined price or the price that includes the rate of return and to provide the guarantee on the assets. The transferee has the right to sell or to provide as guarantee. Therefore, the Group does not derecognize the assets, but recognizes the relevant amounts as liability (bonds sold under repurchase agreements). The asset is equivalent to a mortgage-backed debt security.


		December 31, 2021
		Collateral given to	Amount		Reason for collateral
Financial assets at FVTPL	Korean treasury and government bonds and others	Nonghyup bank and others		248,009	Related to bonds sold under repurchase agreements (*)
	Korean treasury and government bonds and others	Korea Securities Depository		179,079	Securities borrowing collateral
	Korean treasury and government bonds and others	VI Investment, etc.		3,008	Future trading collateral
	Korean financial institutions’ debt securities and others	Korea Securities Depository		205,783	Securities borrowing collateral
	Korean financial institutions’ debt securities and others	KOREA SECURITIES FINANCE CORPORATION		54,419	Collateral for securities lending purposes
	Korean financial institutions’ debt securities and others	Shinhan Investment Corp.		5,352	Collateral for futures transaction

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		December 31, 2021
		Collateral given to	Amount		Reason for collateral
	Korean corporate bonds and others	Korea Securities Depository		299,161	Securities borrowing collateral
	Korean capital contributions and others	Korea Software Financial Cooperative		101	Bid guarantee, etc.
Financial assets at FVTOCI	Korean bonds	Korea Securities Depository		470	Related to bonds sold under repurchase agreements(*)
	Korean financial institutions’ debt securities and others	The BOK and others		3,666,849	Settlement risk and others
	Foreign financial institutions’ debt securities	STANDARD BANKLONDON LTD		126,595	Related to bonds sold under repurchase agreements(*)
Securities at amortized cost	Korean treasury and government bonds and others	The BOK and others		8,977,748	Settlement risk and others
	Foreign financial institutions’ debt securities	NATIXIS and others		38,995	Related to bonds sold under repurchase agreements(*)
	Foreign financial institutions’ debt securities	FHLB ADVANCE and others		10,375	Related to the borrowing limit
Loan at amortized cost and other financial assets	Due from banks in local currency	Daishin AMC Co.,Ltd. and others		1,500	Right of pledge
	Other due from banks in local currency	Samsung Securities Co., Ltd. and others		25,338	Margin deposit for futures or option
	Other due from banks in foreign currency	Yuanta Securities Korea Co., Ltd., etc.		1,051,006	Overseas futures option deposit, etc.
	Mortgage loan	Public offering		2,494,333	Related to covered bonds
Investment real estate	Land and building	Credit Counselling & Recovery Service and others		1,910	Right to collateral and others
Premises and equipment	Land and building	Credit Counselling & Recovery Service and others		5,520	Right to collateral and others

		Total		17,395,551

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(*)

(2)	As of December 31, 2020 and 2021, assets acquired through foreclosures are as follows (Unit: Korean Won in millions):


	December 31, 2020			December 31, 2021
Investment properties
Land		5,425			2,185
Building		—			181
Sub-total		5,425			2,366
Other assets
Land for non-business use		10,684			21,156
Building for non-business use (*1)		1,966			1,526
Movables for non-business use (*2)		155			120
Real estate assessment provision for non-business use		(670	)		(1,129	)
Sub-total		12,135			21,673
Assets held for sale
Land		5,477			2,980
Building		3,568			2,557
Others		546			418
Sub-total		9,591			5,955

Total		27,151			29,994

(*1)	The cumulative depreciation amount as of December 31, 2020 and 2021 is 566 million Won and 716 million Won, respectively.

(*2)	The cumulative depreciation amount as of December 31, 2020 and 2021 is 854 million Won and 907 million Won, respectively.

(3)	Securities loaned are as follows (Unit: Korean Won in millions):

December 31,

2020

December 31,
2021

Loaned to

Financial assets at FVTOCI

Korean treasury and government bonds

100,345

98,535

Korea Securities Finance Corporation

Securities loaned are lending of specific securities to borrowers who agree to return the same amount of the same security at the end of lending period, and therefore the Group did not derecognize from the consolidated financial statements.

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(4)	Collaterals held that can be disposed and re-subjected to lien regardless of defaults of counterparties

Fair values of collaterals held that can be disposed and

re-subjected

to lien regardless of defaults of counterparties as of December 31, 2020 and 2021 are as follows (Unit: Korean Won in millions):


	December 31, 2020
	Fair values of collaterals	Fair values of collaterals were disposed or re-subjected to lien
Securities	10,573,982	—


	December 31, 2021
	Fair values of collaterals	Fair values of collaterals were disposed or re-subjected to lien
Securities	10,785,412	—

19. OTHER ASSETS

Details of other assets are as follows (Unit: Korean Won in millions):


	December 31, 2020		December 31, 2021
Lease assets		1,116,175		1,782,887
Prepaid expenses		170,820		189,808
Advance payments		28,256		61,042
Assets for non-business use		12,135		16,248
Others		21,608		38,965

Total		1,348,994		2,088,950

20. FINANCIAL LIABILITIES AT FVTPL

(1)	Financial liabilities at FVTPL are as follows (Unit: Korean Won in millions):


	December 31, 2020		December 31, 2021
Financial instruments at fair value through profit or loss measured at fair value		6,794,192		4,873,458
Financial liabilities at fair value through profit or loss designated as upon initial recognition		19,630		—

Total		6,813,822		4,873,458

(2)	Financial liabilities at fair value through profit or loss measured at fair value are as follows (Unit: Korean Won in millions):


	December 31, 2020		December 31, 2021
Deposits
Gold banking liabilities		49,279		65,016
Borrowings
Securities sold		285,026		241,174
Derivative liabilities		6,459,887		4,567,268

Total		6,794,192		4,873,458

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(3)	Financial liabilities at fair value through profit or loss designated as upon initial recognition as of December 31, 2020 and 2021 are as follows (Unit: Korean Won in millions):


	December 31, 2020		December 31, 2021
Equity-linked securities
Equity-linked securities in short position		19,630		—

These contacts are designated as financial liabilities at fair value through profit or loss because these contracts contain one or more embedded derivatives and are hybrid (combined) contracts in accordance with IFRS 9

Financial Instrument

(4)	There are no accumulated changes in credit risk adjustments to financial liabilities at fair value through profit or loss designated as upon initial recognition.

The adjustment to reflect Group’s credit risk is considered in measuring the fair value of equity-linked securities index. The Group’s credit risk is determined by adjusting credit spread observed in credit rating of Group.

(5)	The difference between carrying amount and maturity amount of financial liabilities at fair value through profit or loss designated as upon initial recognition (Financial liabilities designated as at FVTPL) are as follows (Unit: Korean Won in millions):


	December 31, 2020			December 31, 2021
Carrying amount		19,630			—
Nominal amount at maturity		25,780			—

Difference		(6,150	)		—

21. DEPOSITS DUE TO CUSTOMERS

Details of deposits due to customers by type are as follows (Unit: Korean Won in millions):


	December 31, 2020			December 31, 2021
Deposits in local currency:
Deposits on demand		12,454,024			18,029,136
Deposits at termination		242,397,664			254,319,473
Mutual installment		26,319			24,620
Deposits on notes payables		2,647,492			2,954,066
Deposits on CMA		110,413			92,360
Certificate of deposits		2,072,389			3,586,423
Other deposits		1,372,461			1,286,719

Sub-total		261,080,762			280,292,797

Deposits in foreign currencies:
Deposits in foreign currencies		30,408,762			37,643,900

Present value discount		(12,245	)		(36,826	)

Total		291,477,279			317,899,871

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22. BORROWINGS AND DEBENTURES

(1)	Details of borrowings are as follows (Unit: Korean Won in millions):


	December 31, 2020
	Lenders	Interest rate (%)		Amount
Borrowings in local currency:
Borrowings from The BOK	The BOK		0.3		2,678,120
Borrowings from government funds	Small Enterprise And Market Service and others		0.0 ~ 5.0		2,155,129
Others	The Korea Development Bank and others		0.0 ~ 5.5		7,255,938

Sub-total					12,089,187

Borrowings in foreign currencies
Borrowings in foreign currencies	JPMorgan Chase & Co. and others		(0.4) ~ 7.3		7,573,722
Bills sold	Others		0.0 ~ 0.9		8,924
Call money	Bank and others		(0.3) ~ 3.8		416,370
Bonds sold under repurchase agreements	Other financial institutions		(0.5) ~ 10.6		657,823
Present value discount					(560	)

Total					20,745,466


	December 31, 2021
	Lenders	Interest rate (%)		Amount
Borrowings in local currency:
Borrowings from The BOK	The BOK		0.3		3,144,897
Borrowings from government funds	Small Enterprise And Market Service and others		0.0 ~ 2.4		2,053,611
Others	The Korea Development Bank and others		0.0 ~ 3.1		9,984,518

Sub-total					15,183,026

Borrowings in foreign currencies
Borrowings in foreign currencies	JPMorgan Chase & Co. and others		(0.5) ~ 7.3		8,545,077
Bills sold	Others		0.0 ~ 1.3		9,111
Call money	Bank and others		(0.5) ~ 2.6		317,961
Bonds sold under repurchase agreements	Other financial institutions		(0.5) ~ 10.6		749,976
Present value discount					(49,692	)

Total					24,755,459

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(2)	Details of debentures are as follows (Unit: Korean Won in millions):


	December 31, 2020					December 31, 2021
	Interest rate (%)		Amount			Interest rate (%)		Amount
Face value of bond (*) :
Ordinary bonds		0.8 ~ 4.5		29,623,445			0.7 ~ 3.6		37,004,942
Subordinated bonds		1.9 ~ 5.9		6,955,515			1.9 ~ 5.1		6,767,442
Other bonds		0.6 ~ 17.0		925,677			0.8 ~ 17.0		911,190

Sub-total				37,504,637					44,683,574

Discounts on bonds				(25,279	)				(29,710	)

Total				37,479,358					44,653,864

(*)

Included debentures under fair value hedge amounting to and 2,767,208 million Won and 2,366,724 million Won as of December 31, 2020 and 2021 respectively. Also, debentures under cash flow hedge amounting to 857,531 million Won and 819,298 million Won are included as of December 31, 2020 and 2021 respectively.

23. PROVISIONS

(1)	Details of provisions are as follows (Unit: Korean Won in millions):


	December 31, 2020		December 31, 2021
Asset retirement obligation		68,402		80,777
Provisions for guarantees (*1)		89,592		74,866
Provisions for unused loan commitments		122,155		112,296
Other provisions (*2)		221,494		308,195

Total		501,643		576,134

(*1)	Provisions for guarantees includes provision for financial guarantee of 66,232 million Won and 53,321 million Won as of December 31, 2020 and 2021, respectively.

(*2)	Other provisions consist of provision for litigation, loss compensation and others.

(2)	Changes in provisions for guarantees and unused loan commitments are as follows (Unit: Korean Won in millions):

1)	Provisions for guarantees


	For the year ended December 31, 2019
	Stage1			Stage2			Stage3			Total
Beginning balance		44,903			33,760			11,098			89,761
Transfer to 12-month expected credit loss		13,568			(13,568	)		—			—
Transfer to expected credit loss for the entire period		(317	)		532			(215	)		—
Transfer to credit-impaired financial assets		(30	)		(32	)		62			—
Provisions used		(27,711	)		—			—			(27,711	)
Net provision (reversal) of unused amount		(14,400	)		5,611			4,437			(4,352	)
Others (*)		34,788			—			—			34,788

Ending balance		50,801			26,303			15,382			92,486

(*)	Others have occurred as a result of new financial guarantee contract valued at initial fair value.

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	For the year ended December 31, 2020
	Stage1			Stage2			Stage3			Total
Beginning balance		50,801			26,303			15,382			92,486
Transfer to 12-month expected credit loss		81			(60	)		(21	)		—
Transfer to expected credit loss for the entire period		(396	)		1,639			(1,243	)		—
Transfer to credit-impaired financial assets		(12	)		(13	)		25			—
Net provision (reversal) of unused amount		(1,124	)		(11,124	)		(6,100	)		(18,348	)
Business combination		14,501			—			—			14,501
Others (*)		953			—			—			953

Ending balance		64,804			16,745			8,043			89,592

(*)	Includes the impact from change of financial guarantee liability.


	For the year ended December 31, 2021
	Stage1			Stage2			Stage3			Total
Beginning balance		64,804			16,745			8,043			89,592
Transfer to 12-month expected credit loss		2,146			(2,144	)		(2	)		—
Transfer to expected credit loss for the entire period		(162	)		193			(31	)		—
Transfer to credit-impaired financial assets		(3	)		(162	)		165			—
Provisions used		(6,964	)		—			—			(6,964	)
Net provision (reversal) of unused amount		(9,929	)		636			(1,408	)		(10,701	)
Others (*)		2,938			1			—			2,939

Ending balance		52,830			15,269			6,767			74,866

(*)	Includes the impact from change of financial guarantee liability.

2)	Provisions for unused loan commitment


	For the year ended December 31, 2019
	Stage1			Stage2			Stage3			Total
Beginning balance		74,624			45,285			1,626			121,535
Transfer to 12-month expected credit loss		11,771			(11,024	)		(747	)		—
Transfer to expected credit loss for the entire period		(1,813	)		1,945			(132	)		—
Transfer to credit-impaired financial assets		(213	)		(275	)		488			—
Net provision (reversal) of unused amount		(19,394	)		7,233			3,117			(9,044	)
Others		63			—			—			63

Ending balance		65,038			43,164			4,352			112,554


	For the year ended December 31, 2020
	Stage1			Stage2			Stage3			Total
Beginning balance		65,038			43,164			4,352			112,554
Transfer to 12-month expected credit loss		8,006			(7,500	)		(506	)		—
Transfer to expected credit loss for the entire period		(2,704	)		3,299			(595	)		—
Transfer to credit-impaired financial assets		(174	)		(186	)		360			—
Net provision (reversal) of unused amount		(6,653	)		16,949			(422	)		9,874
Business combination		7			—			—			7
Others		(280	)		—			—			(280	)

Ending balance		63,240			55,726			3,189			122,155

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	For the year ended December 31, 2021
	Stage1			Stage2			Stage3			Total
Beginning balance		63,240			55,726			3,189			122,155
Transfer to 12-month expected credit loss		15,522			(14,965	)		(557	)		—
Transfer to expected credit loss for the entire period		(2,338	)		3,129			(791	)		—
Transfer to credit-impaired financial assets		(110	)		(226	)		336			—
Net provision (reversal) of unused amount		(9,005	)		871			(1,857	)		(9,991	)
Others		131			1			—			132

Ending balance		67,440			44,536			320			112,296

(3)	Changes in asset retirement obligation for the years ended December 31, 2019, 2020 and 2021 are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2019			2020			2021
Beginning balance		67,200			66,485			68,402
Provisions provided		2,729			806			3,235
Provisions used		(2,276	)		(2,958	)		(5,066	)
Reversal of provisions unused		(2,926	)		(106	)		(947	)
Unwinding of discount		435			459			495
Business combination		329			219			—
Increase (decrease) of restoration expense, etc.		994			3,497			14,658

Ending balance		66,485			68,402			80,777

The amount of the asset retirement obligation is the present value of the best estimate of future expected expenditure to settle the obligation – arising from leased premises as of December 31, 2021, discounted by appropriate discount rate. The restoration cost is expected to occur by the end of each premise’s lease period, and the Group has used average lease period of each category of leases terminated during the past years in order to rationally estimate the lease period. In addition, the Group used average amount of actual recovery cost for the past 3 years and the inflation rate for last year in order to estimate future recovery cost.

(4)	Changes in other provisions for the years ended December 31, 2019, 2020 and 2021 are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2019			2020			2021
Beginning balance		63,637			172,455			221,494
Provisions provided		109,875			232,629			85,706
Provisions used		(6,123	)		(181,433	)		(10,375	)
Reversal of provisions unused		(171	)		(2,345	)		(718	)
Foreign currencies translation adjustments		1,193			606			11,957
Transfer		—			(344	)		—
Business combination		3,820			—			—
Others		224			(74	)		131

Ending balance		172,455			221,494			308,195

(5)

Others

The Group has been offering Korean won settlement services for trade with Korea and Iran; however, the Group has stopped the services for trade in line with U.S. economic sanctions on September 23,

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2019. The Group resumed the service humanitarian goods trade only since July 13, 2020. In connection with these services, the Group is currently being investigated by the U.S. government agencies including the U.S. prosecutors (United States Attorney’s Office and New York State Attorney General’s Office) and New York State Financial Supervisory Service as to whether the Group has violated United States laws by participating in prohibited transactions involving the following countries: Iran, Sudan, Syria and Cuba, which have been sanctioned by the U.S. In this regard, the Bureau of Foreign Assets Control concluded its investigation in December 2020 without taking any additional sanctions, but the investigation procedures of the U.S. Public Prosecutors’ Office and the New York State Financial Supervisory Service have yet to be completed.

The Group recognized the provision for the estimated compensation amount related to the miss-selling of the Derivative Linked Fund (DLF) incurred during 2019 and a fine expected to be imposed by the Financial Supervisory Service as the best estimate for the expenditure required to meet its obligations at the end of the reporting period.

For the year ended December 31, 2021, the Group recognized the provisions for the required expenditure as the best estimate to fulfill its obligations as of December 31, 2021 due to the expected losses of clients arising from the delay in the redemption of funds by Lime Asset Management and the dispute settlement by the Financial Supervisory Service. As of December 31, 2021, the provision for this case is 114.9 billion Won and the advance payment is 7.2 billion Won.

On October 22, 2021, the Group made a resolution to pay in advance for Platform Asia funds, etc., which are delayed in redemption at the Board of Directors Meeting of Woori Bank, the subsidiary. Provisions for estimated compensation amounts related to the prepayment was recognized as the best estimate of the expenditure. As of December 31, 2021, the sales revenue for Platform Asia, Heritage DLS, and Gen2 DLS sold 85 billion won, 22.3 billion won, and 90.2 billion won, respectively, and provisions is 35.7 billion won, 13.4 billion won, and 10.8 billion won, respectively. In addition, the provision for the expected fine related to incomplete sales of Heritage DLS is 700 million won.

24. NET DEFINED BENEFIT LIABILITY(ASSET)

The Group’s pension plan is based on the defined benefit retirement pension plan. Employees and directors with one or more years of service are entitled to receive a payment upon termination of their employment, based on their length of service and rate of salary at the time of termination. The assets of the plans are measured at their fair value at the end of reporting date. The plan liabilities are measured using the projected unit method, which takes account of projected earnings increases, using actuarial assumptions that give the best estimate of the future cash flows that will arise under the plan liabilities.

The Group is exposed to various risks through defined benefit retirement pension plan, and the most significant risks are as follows:


Volatility of asset		The defined benefit obligation was estimated with an interest rate calculated based on blue chip corporate bonds earnings. A deficit may occur if the rate of return of plan assets falls short of the interest rate.

Decrease in profitability of blue chip bonds		A decrease in profitability of blue chip bonds will be offset by some increase in the value of debt securities that the employee benefit plan owns but will bring an increase in the defined benefit obligation.

Risk of inflation		Defined benefit obligations are related to inflation rate; the higher the inflation rate is, the higher the level of liabilities. Therefore, deficit occurs in the system if an inflation rate increases.

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(1)	Details of net defined benefit liability are as follows (Unit: Korean Won in millions):


	December 31, 2020			December 31, 2021
Present value of defined benefit obligation		1,610,680			1,618,098
Fair value of plan assets		(1,564,101	)		(1,591,458	)

Net defined benefit liabilities (*)		46,579			26,640

(*)	Net defined benefit liability of 46,579 million Won and 26,640 million Won as of December 31, 2020 and 2021 is the subtracted amount of the net defined benefit asset of 5,658 million Won and 21,346 million Won from the net defined benefit liability of 52,237 million Won and 47,986 million Won.

(2)	Changes in the carrying value of defined benefit obligation are as follows (Unit: Korean Won in millions):


		For the years ended December 31
		2019			2020			2021
Beginning balance			1,275,020			1,442,859			1,610,680
Transfer-in / out			93			—			—
Current service cost			163,369			174,509			178,416
Interest cost			32,693			34,653			39,814
Remeasurements	Financial assumption		32,831			(20,838	)		(92,367	)
	Demographic assumptions		49,453			4,161			(251	)
	Experience adjustment		(33,518	)		(4,481	)		(12,155	)
Retirement benefit paid			(79,908	)		(55,864	)		(106,050	)
Foreign currencies translation adjustments			179			(119	)		165
Business combination			4,674			34,001			—
Others			(2,027	)		1,799			(154	)

Ending balance			1,442,859			1,610,680			1,618,098

(3)	Changes in the plan assets are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2019			2020			2021
Beginning balance		1,101,911			1,352,971			1,564,101
Transfer-in / out		93			—			—
Interest income		30,937			34,534			40,927
Remeasurements		125			(7,666	)		(15,022	)
Employer’s contributions		292,095			211,505			103,251
Retirement benefit paid		(76,304	)		(52,627	)		(99,523	)
Business combination		6,369			27,599			—
Others		(2,255	)		(2,215	)		(2,276	)

Ending balance		1,352,971			1,564,101			1,591,458

(4)	Fair value of plan assets as of December 31, 2020 and 2021 are as follows (Unit: Korean Won in millions):


	December 31, 2020		December 31, 2021
Cash and due from banks		1,564,101		1,591,458

Meanwhile, among plan assets, realized returns on plan assets amount to 26,868 million Won and 25,905 million Won for the years ended December 31, 2020 and 2021, respectively. The contribution expected to be paid in the next accounting year amounts to 162,374 million Won.

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(5)	Amounts related to the defined benefit plan that are recognized in the consolidated statements of comprehensive income are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2019		2020			2021
Current service cost		163,369		174,509			178,416
Net interest income (expense)		1,756		119			(1,113	)

Cost recognized in net income		165,125		174,628			177,303

Remeasurements (*)		48,641		(13,492	)		(89,751	)

Cost recognized in total comprehensive income		213,766		161,136			87,552

(*)	Amount before tax

Meanwhile, retirement benefits related to defined contribution plans recognized as expenses are 3,297 million Won, 3,827 million Won and 4,494 million Won for the years ended December 31, 2019, 2020 and 2021, respectively.

(6)	Key actuarial assumptions used in net defined benefit liability measurement are as follows:


	December 31, 2019	December 31, 2020	December 31, 2021
Discount rate	2.18 ~ 2.50%	2.13% ~ 2.97%	2.40% ~ 3.49%
Future wage growth rate	1.89 ~ 6.00%	2.05% ~ 7.00%	2.03% ~ 5.56%
Mortality rate	Issued by Korea Insurance Development Institute	Issued by Korea Insurance Development Institute	Issued by Korea Insurance Development Institute
Retirement rate	Experience rate for each employment classification	Experience rate for each employment classification	Experience rate for each employment classification

The weighted average maturity of defined benefit liability is a minimum of 5.49 to a maximum 11.4 years.

(7)	The sensitivity to actuarial assumptions used in the assessment of defined benefit obligation is as follows (Unit: Korean Won in millions):


		December 31, 2020			December 31, 2021
Discount rate	Increase by 1% point		(165,754	)		(161,428	)
Discount rate	Decrease by 1% point		195,475			189,630
Future wage growth rate	Increase by 1% point		193,149			188,392
Future wage growth rate	Decrease by 1% point		(167,037	)		(163,431	)

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25. OTHER FINANCIAL LIABILITIES AND OTHER LIABILITIES

Other financial liabilities and other liabilities are as follows (Unit: Korean Won in millions):


	December 31, 2020			December 31, 2021
Other financial liabilities:
Accounts payable		4,028,639			7,031,366
Accrued expenses		2,049,401			2,070,639
Borrowings from trust accounts		2,984,031			3,107,456
Agency business revenue		466,485			433,041
Foreign exchange payables		789,189			782,176
Domestic exchange settlement credits		180,251			6,708,220
Lease liabilities		407,431			343,213
Other miscellaneous financial liabilities		3,317,358			3,772,437
Present value discount		(6,968	)		(15,322	)

Sub-total		14,215,817			24,233,226

Other liabilities:
Unearned income		254,702			291,147
Other miscellaneous liabilities		219,111			265,706

Sub-total		473,813			556,853

Total		14,689,630			24,790,079

26. DERIVATIVES

(1)	Derivative assets and derivative liabilities are as follows (Unit: Korean Won in millions):


	December 31, 2020
			Assets						Liabilities
	Nominal amount		For cash flow hedge		For fair value hedge		For trading		For cash flow hedge		For fair value hedge		For trading
Interest rate:
Futures		184,413		—		—		—		—		—		—
Swaps		137,057,240		—		174,820		318,545		1,476		28		524,190
Purchase options		330,000		—		—		6,271		—		—		—
Written options		285,440		—		—		—		—		—		5,419
Currency:
Futures		2,546		—		—		—		—		—		—
Forwards		105,146,634		—		—		2,541,957		—		—		2,848,980
Swaps		87,249,320		—		—		3,325,135		63,265		—		2,415,610
Purchase options		1,147,877		—		—		59,329		—		—		—
Written options		1,632,048		—		—		—		—		—		23,271
Equity:
Futures		123,742		—		—		—		—		—		—
Forwards		11		—		—		—		—		—		—
Swaps		269,039		—		—		—		—		—		12,533
Purchase options		9,863,110		—		—		650,505		—		—		—
Written options		10,369,009		—		—		—		—		—		629,884

Total		353,660,429		—		174,820		6,901,742		64,741		28		6,459,887

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	December 31, 2021
			Assets						Liabilities
	Nominal amount		For cash flow hedge		For fair value hedge		For trading		For cash flow hedge		For fair value hedge		For trading
Interest rate:
Futures		118,423		—		—		—		—		—		—
Forwards		340,000		—		—		16,434		—		—		—
Swaps		134,196,188		351		95,103		136,185		—		20,287		305,443
Purchase options		170,000		—		—		3,959		—		—		—
Written options		340,000		—		—		—		—		—		8,552
Currency:
Futures		7,445		—		—		—		—		—		—
Forwards		114,072,910		—		—		2,466,893		—		—		993,823
Swaps		101,117,559		11,310		—		1,444,634		7,297		—		2,345,735
Purchase options		1,079,610		—		—		10,968		—		—		—
Written options		1,686,787		—		—		—		—		—		8,952
Equity:
Futures		337,916		—		—		—		—		—		—
Forwards		233		—		—		64		—		—		—
Swaps		642,963		—		—		27,031		—		—		3,784
Purchase options		17,503,553		—		—		696,963		—		—		—
Written options		19,106,573		—		—		—		—		—		900,979

Total		390,720,160		11,661		95,103		4,803,131		7,297		20,287		4,567,268

Derivatives held for trading are classified into financial assets at FVTPL (Note 7) and financial liabilities at FVTPL (Note 20), and derivatives designated for hedging are presented as a separate line item in the consolidated statements of financial position.

(2)	Overview of the Group’s hedge accounting

The hedging relationships the entity applies fair value hedge accounting and cash flow hedge accounting to are affected by interest rate which is related with Interest Rate Benchmark Reform. The interest rates to which the hedging relationships are exposed are USD 1M LIBOR, USD 3M LIBOR, AUD 3M BBSW and 3M EURIBOR. The nominal amounts of hedging instruments related to 1M LIBOR, 3M LIBOR, 3M BBSW and 3M EURIBOR in the hedging relationships of the Group are USD 470,000,000, USD 1,850,000,000, AUD 150,000,000 and EUR 26,591,163 respectively. The entity pays close attention to discussions in the market and industry regarding the applicable alternative benchmark interest rates for the exposed interest rate. The entity judges related uncertainty is expected to be no longer present when the exposed interest rates are replaced by the applicable benchmark interest rates.

1) Fair value hedge

As of the December 31, 2021, the Group has applied fair value hedge on fixed interest rate foreign currency denominated debentures amounting to 2,366,724 million Won and foreign currency borrowings amounting to 35,694 million Won. The purpose of the hedging is to avoid fair value volatility risk of fixed interest rate foreign currency denominated debentures derived from fluctuations of market interest rate, and as such the Group entered into interest rate swap agreements designated as hedging instruments.

Pursuant to the interest rate swap agreement, by swapping the calculated difference between the fixed interest rate and floating interest rate applied to the nominal value, the fair value fluctuation risk is hedged as the foreign currency denominated debentures fixed interest rate terms are converted to floating interest rate. Pursuant

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to the interest rate swap agreement, hedge ratio is determined by matching the nominal value of hedging instrument to the face value of the hedged item.

In this hedging relationship, only the market interest rate fluctuation, which is the most significant part of the fair value change of the hedged item, is designated as the hedged risk, and other risk factors including credit risk are not included in the hedged risk. Therefore, the ineffective portion of the hedge could arise from fluctuations in the timing of the cash flow of the hedged item, price margin set by counterparty of hedging instrument, and unilateral change in credit risk of any party of hedging instrument.

The interest rate swap agreements and the hedged items are subject to fluctuations in the underlying market rate of interest and the Group expects the fair value of the interest rate swap contract and the value of the hedged item to generally change in the opposite direction.

The fair value of the interest rate swap at the end of the reporting period is determined by discounting future cash flows estimated by using the yield curve at the end of the reporting period and the credit risk embedded in the contract and the average interest rate is determined based on the outstanding balance at the end of the reporting period. The variable interest rate applied to the interest rate swap is USD Libor 3M plus spread, AUD BBSW 3M plus spread and EURIBOR 3M plus spread. In accordance with the terms of each interest rate swap contract designated as a hedging instrument, the Group receives interest at a fixed interest rate and pays interest at a variable interest rate.

2) Cash Flow Hedge

As of the December 31, 2021, the Group has applied cash flow hedge on local currency denominated debentures amounting to 49,977 million Won, debentures on foreign currency amounting to 769,322 million Won. The Group’s hedging strategies are to ① Mitigate risks of cash flow fluctuation from variable interest rate debentures on local currency due to changes in market interest rate by entering into an interest rate swap contract and thereby designating it as hedging instrument; ② Mitigate the risks of cash flow fluctuation from principal and interest of variable interest rate debentures denominated in foreign currency due to changes in foreign exchange rates and interest rates by entering into a currency swap contract and thereby designating it as hedging instrument; ③ Mitigate the risks of cash flow fluctuation from principal and interest of fixed interest rate debentures denominated in foreign currency due to changes in foreign exchange rates by entering into a currency swap contract and thereby designating it as hedging instrument and ④ Mitigate the risks of cash flow fluctuation in variable interest rate foreign currency borrowings resulting from changes in market interest rates and designate it as a hedging instrument through entering into currency swap contracts and interest rate swap contracts.

This means exchanging a predetermined nominal amount as set forth in the interest rate swap contract adjusted by the differences between the fixed and variable interest rates, which results in the conversion of interest rates of debentures in local currency from variable interest into fixed interest, eliminating the cash flow fluctuation risk.

In addition, this also means a payment of predetermined principal amount as set forth in the currency swap adjusted by fixed interest rate, an exchange of an amount calculated by applying variable interest rate to USD or applying fixed interest rate to SGD, and an exchange of the principal denominated in KRW and principal denominated in foreign currency at maturity eliminating cash flow fluctuation risk on principal and interest.

The hedge ratio is determined by matching the nominal amount of the hedging instrument to the face amount of the hedged item in accordance with interest rate swap and currency swap.

Only interest rate and foreign exchange rate fluctuation risk, which is the most significant factor in the cash flow fluctuation of the hedged item, is addressed in this hedging relationship, and other risk factors such as credit risk are not subject to hedging.

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Thus, there could be hedge ineffectiveness arising from price margin set by the counterparty of hedging instruments and unilateral change in credit risk of any party in the transaction.

The interest rate swap, currency swap contract and the hedged item are all affected by the changes in market interest rate and foreign exchange rates which are basic factors of the derivative. The Group expects that the value of interest rate swap contract, currency swap contract and value of the hedged item will generally fluctuate in opposite direction.

(3)	The nominal amounts of the hedging instrument are as follows (Unit: USD, AUD, EUR, SGD and Korean Won in millions):


	December 31, 2020
	1 year or less		1 year to 5 years		More than 5 years		Total
Fair value hedge
Interest rate risk
Interest rate swap (USD)		1,000,000,000		1,000,000,000		300,000,000		2,300,000,000
Interest rate swap (AUD)		—		150,000,000		—		150,000,000
Cash flow hedge
Interest rate risk
Interest rate swap (KRW)		100,000		50,000		—		150,000
Foreign currencies translation risk and interest rate risk
Currency swap (USD)		130,000,000		470,000,000		—		600,000,000
Foreign currencies translation risk
Currency swap (SGD)		68,000,000		—		—		68,000,000


	December 31, 2021
	1 year or less		1 year to 5 years		More than 5 years		Total
Fair value hedge
Interest rate risk
Interest rate swap (USD)		—		1,550,000,000		300,000,000		1,850,000,000
Interest rate swap (AUD)		—		150,000,000		—		150,000,000
Interest rate swap (EUR)		—		26,591,163		—		26,591,163
Cash flow hedge
Interest rate risk
Interest rate swap (KRW)		—		50,000		—		50,000
Foreign currencies translation risk and interest rate risk
Currency swap (USD)		200,000,000		270,000,000		—		470,000,000
Foreign currencies translation risk
Currency swap (USD)		—		180,000,000		—		180,000,000

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(4)	The average interest rate and average currency rate of the hedging instrument as of December 31, 2020 and 2021 are as follows:


		December 31, 2020
		Average interest rate and average exchange rate
Fair value hedge
Interest rate risk
Interest rate swap (USD)		Fixed 4.22% receipt and Libor 3M+1.71% floating paid Fixed 5.88% receipt and Libor 6M+2.15% floating paid
Interest rate swap (AUD)		Fixed 0.84% receipt and BBSW 3M+0.72% paid
Cash flow hedge
Interest rate risk
Interest rate swap (KRW)		KRW 3Y CMS+0.40% receipt, 2.38% paid KRW CD+0.69% receipt, 2.06% paid KRW CD+0.33% receipt, 1.68% paid
Foreign currencies translation risk and interest rate risk
Currency swap (USD)		USD 3M Libor+0.80% receipt, KRW 1.45% paid, USD/KRW = 1,155 USD 1M Libor+0.67% receipt, KRW 1.14% paid, USD/KRW = 1,190 USD 1M Libor+0.69% receipt, KRW 1.02% paid, USD/KRW = 1,199
Foreign currencies translation risk
Currency swap (SGD)		SGD 1.91% receipt, KRW 1.98% paid, SGD/KRW = 827


		December 31, 2021
		Average interest rate and average exchange rate
Fair value hedge
Interest rate risk
Interest rate swap (USD)		Fixed 3.62% receipt and Libor 3M + 1.45% floating paid
Interest rate swap (AUD)		Fixed 0.84% receipt and BBSW 3M+0.72% paid
Interest rate swap (EUR)		EURIBOR 3M + 0.09% receipt and 1.5% fixed paid
Cash flow hedge
Interest rate risk
Interest rate swap (KRW)		KRW CD+0.33% receipt, 1.68% paid
Foreign currencies translation risk and interest rate risk
Currency swap (USD)		USD 1M Libor+0.70% receipt, KRW 0.93% paid, USD/KRW = 1,206.60
Foreign currencies translation risk
Currency swap (USD)		USD 1.50% receipt, KRW 1.57% paid, USD/KRW = 1,140.50

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(5)	The amounts related to items designated as hedging instruments are as follows (Unit: USD, AUD, EUR, SGD and Korean Won in millions):

December 31, 2020

Nominal amounts of
the hedging
instrument

Carrying amounts of
the hedging instrument

Line item in the statement
of financial position where
the hedging instrument is
located

Changing in fair
value used for
calculating hedge
ineffectiveness

Assets

Liabilities

Fair value hedge

Interest rate risk

Interest rate swap

USD 2,300,000,000

174,820

Derivative assets (designated for hedging)

57,221

Interest rate swap

AUD

150,000,000

Derivative liabilities (designated for hedging)

Cash flow hedge

Interest rate risk

Interest rate swap

KRW 150,000

—

1,476

Derivative liabilities (designated for hedging)

(196

)

Foreign currency translation risk and interest rate risk

Currency swap

USD 600,000,000

—

62,893

Derivative liabilities (designated for hedging)

(69,319

)

Foreign currency translation risk

Currency swap

SGD 68,000,000

—

373

Derivative liabilities (designated for hedging)

(4,699

)

December 31, 2021

Nominal amounts of
the hedging
instrument

Carrying amounts of
the hedging instrument

Line item in the statement
of financial position where
the hedging instrument is
located

Changing in fair
value used for
calculating hedge
ineffectiveness

Assets

Liabilities

Fair value hedge

Interest rate risk

Interest rate swap

USD 1,850,000,000

95,086

20,287

Derivative assets (designated for hedging) Derivative liabilities (designated for hedging)

(83,821

)

Interest rate swap

AUD 150,000,000

Interest rate swap

EUR 26,591,163

—

Cash flow hedge

Interest rate risk

Interest rate swap

KRW 50,000

351

—

Derivative liabilities (designated for hedging)

1,896

Foreign currency translation risk and interest rate risk

Currency swap

USD 470,000,000

3,631

7,297

Derivative liabilities (designated for hedging)

60,564

Foreign currency translation risk

Currency swap

USD 180,000,000

7,679

—

Derivative liabilities (designated for hedging)

8,218

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(6)	Details of carrying amount to hedge and amount due to hedge accounting are as follows (Unit: Korean Won in millions):


	December 31, 2020
	Carrying amounts of the hedged item				Accumulated amount of fair value hedge adjustments on the hedged item included in the carrying amount of the hedged item				Line item in the statement of financial position in which the hedged item is included		Changing in fair value used for calculating hedge ineffectiveness			Cash flow hedge reserve (*)
	Assets		Liabilities		Assets		Liabilities							Cash flow hedge reserve (*)
Fair value hedge
Interest rate risk
Debentures		—		2,767,208		—		144,741		Debentures		(59,073	)		—
Cash flow hedge
Interest rate risk
Debentures		—		149,936		—		—		Debentures		188			(909	)
Foreign currencies translation risk and interest rate risk
Debentures		—		651,704		—		—		Debentures		61,823			(95	)
Foreign currencies translation risk
Debentures		—		55,891		—		—		Debentures		6,564			(268	)

(*)	After tax amount


	December 31, 2021
	Carrying amounts of the hedged item				Accumulated amount of fair value hedge adjustments on the hedged item included in the carrying amount of the hedged item				Line item in the statement of financial position in which the hedged item is included		Changing in fair value used for calculating hedge ineffectiveness			Cash flow hedge reserve (*)
	Assets		Liabilities		Assets		Liabilities							Cash flow hedge reserve (*)
Fair value hedge
Interest rate risk
Debentures		—		2,366,724		—		53,160		Debentures		100,343			—
Foreign currency borrowing		—		35,694		—		—		Foreign currency borrowings		(17	)		(17	)
Cash flow hedge
Interest rate risk
Debentures		—		49,977		—		—		Debentures		(1,760	)		281
Foreign currencies translation risk and interest rate risk
Debentures		—		556,607		—		—		Debentures		(53,832	)		5,859
Foreign currencies translation risk
Debentures		—		212,715		—		—		Debentures		(7,609	)		(305	)

(*)	After tax amount

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(7)	Amounts recognized in profit or loss due to the ineffective portion of fair value hedges during the current period are as follows (Unit: Korean Won in millions):


		For the year ended December 31, 2019
		Hedge ineffectiveness recognized in profit or loss			Line item in the profit or loss that includes hedge ineffectiveness
Fair value hedge	Interest rate risk		4,260		Other net operating income (expense)

		For the year ended December 31, 2020
		Hedge ineffectiveness recognized in profit or loss			Line item in the profit or loss that includes hedge ineffectiveness
Fair value hedge	Interest rate risk		(1,852	)	Other net operating income (expense)

		For the year ended December 31, 2021
		Hedge ineffectiveness recognized in profit or loss			Line item in the profit or loss that includes hedge ineffectiveness
Fair value hedge	Interest rate risk		16,522		Other net operating income (expense)

(8)	Reclassification of profit or loss from other comprehensive income and equity related to cash flow hedges are as follows (Unit: Korean Won in millions):


		For the year ended December 31, 2019
		Changes in the value of hedging instruments recognized in OCI			Hedge ineffectiveness recognized in profit or loss		Changes in the value of foreign basis spread recognized in OCI		Line item recognized in the profit or loss	Amounts reclassified from cash flow hedge reserve to profit or loss			Line item affected in profit or loss due to reclassification
Cash flow hedge	Interest rate risk		(658	)		—		—	Other net operating income (expense)		—		Other net operating income (expense)
	Foreign currencies translation risk and interest rate risk		21,420			944		838	Other net operating income (expense)		(23,541	)	Other net operating income (expense)
	Foreign currencies translation risk		7,638			1,601		560	Other net operating income (expense)		(8,215	)	Other net operating income (expense)

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		For the year ended December 31, 2020
		Changes in the value of hedging instruments recognized in OCI			Hedge ineffectiveness recognized in profit or loss			Changes in the value of foreign basis spread recognized in OCI		Line item recognized in the profit or loss	Amounts reclassified from cash flow hedge reserve to profit or loss		Line item affected in profit or loss due to reclassification
Cash flow hedge	Interest rate risk		(122	)		(74	)		—	Other net operating income (expense)		—	Other net operating income (expense)
	Foreign currencies translation risk and interest rate risk		(68,270	)		(1,049	)		5,893	Other net operating income (expense)		64,762	Other net operating income (expense)
	Foreign currencies translation risk		(3,677	)		(1,022	)		320	Other net operating income (expense)		5,393	Other net operating income (expense)


		For the year ended December 31, 2021
		Changes in the value of hedging instruments recognized in OCI		Hedge ineffectiveness recognized in profit or loss			Changes in the value of foreign basis spread recognized in OCI			Line item recognized in the profit or loss	Amounts reclassified from cash flow hedge reserve to profit or loss			Line item affected in profit or loss due to reclassification
Cash flow hedge	Interest rate risk		1,641		256			—		Other net operating income (expense)		—		Other net operating income (expense)
	Foreign currencies translation risk and interest rate risk		60,394		169			(2,300	)	Other net operating income (expense)		(52,126	)	Other net operating income (expense)
	Foreign currencies translation risk		8,476		(258	)		416		Other net operating income (expense)		(9,045	)	Other net operating income (expense)

27. DEFERRED DAY 1 PROFITS OR LOSSES

Changes in deferred day 1 profits or losses are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2019			2020			2021
Beginning balance		25,463			52,259			6,939
New transactions		53,289			22,901			49,523
Amounts recognized in losses		(26,493	)		(68,221	)		(27,351	)

Ending balance		52,259			6,939			29,111

In case some variables to measure fair values of financial instruments are not observable in the market, valuation techniques are utilized to evaluate such financial instruments. Those financial instruments are recorded

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the transaction price as at the time of acquisition, even though there are difference noted between the transaction price and the fair value, which is deferred and amortized to maturity using the effective interest method and reflected in profit or loss. The table above presents the difference yet to be realized as profit or losses

28. EQUITY

(1)	Details of equity as of December 31, 2020 and 2021 are as follows (Unit: Korean Won in millions):


	December 31, 2020			December 31, 2021
Capital
Common stock capital		3,611,338			3,640,303
Hybrid securities		1,895,366			2,294,381
Capital surplus
Paid in capital in excess of par		608,348			643,544
Others		17,763			38,841

Sub-total		626,111			682,385

Capital adjustments
Treasury stocks		—			(3,819	)
Other adjustments (*1)		(1,775,312	)		(1,747,242	)

Sub-total		(1,775,312	)		(1,751,061	)

Accumulated other comprehensive income
Financial assets at FVTOCI		(9,833	)		(162,522	)
Changes in capital due to equity method		(2,609	)		(138	)
Loss from foreign business translation		(298,363	)		(63,781	)
Remeasurements of defined benefit plan		(261,195	)		(195,944	)
Loss on evaluation of cash flow hedge		(1,386	)		5,553
Capital related to noncurrent assets held for sale		1,226			279

Sub-total		(572,160	)		(416,553	)

Retained earnings (2)(3)		19,268,265			21,347,472
Non-controlling interest (*4)		3,672,237			3,008,176

Total		26,725,845			28,805,103

(*1)	Included 178,060 million Won in capital transaction gains and losses recognized by Woori Bank and (formerly) Woori Financial Group in 2014 and 2,238,228 million Won due to the spin-off of Gyeongnam Bank and Gwangju Bank.

(*2)	The regulatory reserve for credit losses in retained earnings amounted to 2,547,547 million Won and 2,568,367 million Won and as of December 31, 2020 and 2021, respectively in accordance with the relevant article.

(*3)	The earned surplus reserve in retained earnings amounted to 62,830 million Won and 122,370 million Won as of December 31, 2020 and 2021 in accordance with the Article 53 of the Financial Holding Company Act.

(*4)

The hybrid securities issued by Woori Bank amounting to 3,105,070 million Won and 2,555,166 million Won as of December 31, 2020 and 2021, respectively, are recognized as

non-controlling

interests. 162,362 million Won and 144,923 million Won of dividends for the hybrid securities issued by Woori Bank are allocated to net profit and loss of the

non-controlling

interests for the years ended December 31, 2020 and 2021, respectively.

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(2)	The number of authorized shares and others of the Group are as follows:


	December 31, 2020	December 31, 2021
Shares of common stock authorized	4,000,000,000 Shares	4,000,000,000 Shares
Par value	5,000 Won	5,000 Won
Shares of common stock issued	722,267,683 Shares	728,060,549 Shares
Capital stock	3,611,338 million Won	3,640,303 million Won

(3)	The Parent company issued 5,792,866 new shares in the stock exchange process with the shareholders of Woori Financial Capital Co., Ltd., and the total number of issued shares changed from 722,267,683 shares as of December 31, 2020 to 728,060,549 shares as of December 31, 2021.

(4)	Hybrid securities

The bond-type hybrid securities classified as owner’s equity are as follows (Unit: Korean Won in millions):


	Issue date		Maturity		Interest rate (%)		December 31, 2020			December 31, 2021
Securities in local currency		2019-07-18		—		3.49		500,000			500,000
Securities in local currency		2019-10-11		—		3.32		500,000			500,000
Securities in local currency		2020-02-06		—		3.34		400,000			400,000
Securities in local currency		2020-06-12		—		3.23		300,000			300,000
Securities in local currency		2020-10-23		—		3.00		200,000			200,000
Securities in local currency		2021-04-08		—		3.15		—			200,000
Securities in local currency		2021-10-14		—		3.60		—			200,000
Issuance cost								(4,634	)		(5,619	)

Total								1,895,366			2,294,381

The hybrid securities mentioned above do not have maturity date but are redeemable after 5 years from date of issuance.

(5)	Accumulated other comprehensive income

Changes in the accumulated other comprehensive income are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2019
	Beginning balance			Increase (decrease) (*)			Reclassification adjustments		Income tax effect			Ending balance
Net gain (loss) on valuation of financial assets at FVTOCI		(87,182	)		(24,180	)		43,021		(3,573	)		(71,914	)
Changes in capital due to equity method		302			(1,420	)		—		2,033			915
Gain (loss) on foreign currency translation of foreign operations		(244,735	)		96,157			—		(4,409	)		(152,987	)
Remeasurement gain (loss) related to defined benefit plan		(236,726	)		(48,244	)		—		13,993			(270,977	)
Gain (loss) on valuation of derivatives designated as cash flow hedges		(3,869	)		(32,719	)		31,756		(860	)		(5,692	)

Total		(572,210	)		(10,406	)		74,777		7,184			(500,655	)

(*)	The increase and decrease of financial asset valuation profit or loss at fair value through other comprehensive income is a change due to the period evaluation and the reclassification adjustments amounting to 29,368 million Won are due to disposal of equity securities during the period.

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	For the year ended December 31, 2020
	Beginning balance			Increase (decrease) (*)			Reclassification adjustments			Classified as held for sale			Income tax effect			Ending balance
Net gain (loss) on valuation of financial assets at FVTOCI		(71,914	)		115,167			(30,643	)		—			(22,443	)		(9,833	)
Changes in capital due to equity method		915			(3,171	)		—			(1,691	)		1,338			(2,609	)
Gain (loss) on foreign currency translation of foreign operations		(152,987	)		(152,486	)		—			—			7,110			(298,363	)
Remeasurement gain (loss) related to defined benefit plan		(270,977	)		13,492			—			—			(3,710	)		(261,195	)
Gain (loss) on valuation of derivatives designated as cash flow hedges		(5,692	)		4,568			—			—			(262	)		(1,386	)
Capital related to noncurrent assets held for sale		—			—			—			1,691			(465	)		1,226

Total		(500,655	)		(22,430	)		(30,643	)		—			(18,432	)		(572,160	)

(*)	The increase and decrease of financial asset valuation profit or loss at fair value through other comprehensive income is a change due to the period evaluation and the reclassification adjustments amounting to 2,664 million won are due to disposal of equity securities during the period.


	For the year ended December 31, 2021
	Beginning balance			Increase (decrease) (*)			Reclassification adjustments			Income tax effect			Ending balance
Net gain (loss) on valuation of financial assets at FVTOCI		(9,833	)		(174,113	)		(32,624	)		54,048			(162,522	)
Changes in capital due to equity method		(2,609	)		3,885			—			(1,414	)		(138	)
Gain (loss) on foreign currency translation of foreign operations		(298,363	)		239,614			—			(5,032	)		(63,781	)
Remeasurement gain (loss) related to defined benefit plan		(261,195	)		90,337			—			(25,086	)		(195,944	)
Gain (loss) on valuation of derivatives designated as cash flow hedges		(1,386	)		6,416			1,221			(698	)		5,553
Capital related to noncurrent assets held for sale		1,226			(1,306	)		—			359			279

Total		(572,160	)		164,833			(31,403	)		22,177			(416,553	)

(*)

The increase(decrease) of financial asset valuation profit or loss at fair value through other comprehensive income and non-current assets held for sale are changes due to the period evaluation, and the reclassification adjustments amounting to (2,220) million Won, 946 million Won and (947) million Won are due to disposal of equity securities, equity method investments and non-current assets held for sale, respectively during the period.

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(6)	Treasury stock

Details of treasury stocks are as follows (Unit: Shares, Korean Won in millions):


	December 31, 2020				December 31, 2021
	Number of shares		Book value		Number of shares		Book value
Beginning balance		2		—		2		—
Acquisition		—		—		343,989		3,819
Disposal		—		—		—		—

Ending balance		2		—		343,991		3,819

29. DIVIDENDS

(1)	Dividends per share and the total dividends for the fiscal year ending December 31, 2020 were 360 Won and 260,017 million Won, respectively, and the dividends were approved at the regular general shareholders’ meeting held on March 26, 2021 and were paid in April 2021.

(2)	On July 23, 2021, the Board of Directors decided to pay an interim dividend of 150 Won per share (total dividend of 108,340 million Won) with July 30, 2021 as the dividend base date, and were paid in August 2021.

(3)	A dividend in respect of the year ended December 31, 2021, of 750 Won per share, amounting to a total dividend of 546,044 million Won, was approved by shareholders at the annual general meeting on March 25, 2022.

30. NET INTEREST INCOME

(1)	Interest income recognized is as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2019		2020		2021
Financial assets at FVTPL		50,619		48,612		45,803
Financial assets at FVTOCI		474,751		437,527		381,814
Financial assets at amortized cost
Loans and other financial assets at amortized cost
Interest on due from banks		141,330		53,586		46,600
Interest on loans		9,443,740		8,570,173		9,065,074
Interest of other receivables		29,990		30,967		30,538

Sub-total		9,615,060		8,654,726		9,142,212

Securities at amortized cost		436,340		382,988		324,920

Sub-total		10,051,400		9,037,714		9,467,132

Total		10,576,770		9,523,853		9,894,749

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(2)	Details of interest expense recognized are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2019		2020		2021
Interest on deposits due to customers		3,424,441		2,486,523		1,906,858
Interest on borrowings		383,213		269,985		219,994
Interest on debentures		777,322		722,551		727,093
Other interest expense		89,002		36,964		47,647
Interest on lease liabilities		9,086		9,318		7,436

Total		4,683,064		3,525,341		2,909,028

31. NET FEES AND COMMISSIONS INCOME

(1)	Details of fees and commissions income recognized are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2019		2020		2021
Fees and commission received for brokerage		156,578		162,653		182,794
Fees and commission received related to credit		189,597		195,391		197,125
Fees and commission received for electronic finance		137,289		125,107		131,941
Fees and commission received on foreign exchange handling		61,756		55,984		56,210
Fees and commission received on foreign exchange		92,408		69,017		73,894
Fees and commission received for guarantee		71,106		74,647		76,428
Fees and commission received on credit card		548,580		507,852		573,048
Fees and commission received on securities business		113,346		79,606		100,991
Fees and commission from trust management		180,290		160,564		216,203
Fees and commission received on credit information		12,626		13,254		10,220
Fees and commission received related to lease		4,753		84,164		374,900
Other fees		140,997		165,777		177,951

Total		1,709,326		1,694,016		2,171,705

(2)	Details of fees and commissions expense incurred are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2019		2020		2021
Fees and commissions paid		189,789		246,824		261,734
Credit card commission		407,689		424,316		425,796
Brokerage commission		775		551		1,605
Others		8,445		8,286		11,795

Total		606,698		679,977		700,930

32. DIVIDEND INCOME

(1)	Details of dividend income recognized are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2019		2020		2021
Dividend income related to financial assets at FVTPL		86,979		120,158		284,683
Dividend income related to financial assets at FVTOCI		20,980		18,385		24,528

Total		107,959		138,543		309,211

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(2)	Details of dividends related to financial assets at FVTOCI are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2019		2020		2021
Dividend income recognized from assets held:
Equity securities		20,980		18,385		24,528

33. NET GAIN OR LOSS ON FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS MANDATORILY MEASURED AT FAIR VALUE

(1)	Details of gains or losses related to net gain or loss on financial instruments at FVTPL are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2019			2020			2021
Gain on financial instruments at fair value through profit or loss measured at fair value		58,692			422,374			325,649
Gain (loss) on financial instruments at fair value through profit or loss designated as upon initial recognition		(33,237	)		(665	)		102

Total		25,455			421,709			325,751

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(2) Details of net gain or loss on financial instruments at fair value through profit or loss measured at fair value are as follows (Unit: Korean Won in millions):


			For the years ended December 31
			2019			2020			2021
Financial assets at FVTPL	Securities	Gain on transactions and valuation		186,394			142,551			249,803
Financial assets at FVTPL		Loss on transactions and valuation		(80,306	)		(122,506	)		(197,172	)

		Sub-total		106,088			20,045			52,631

	Loans	Gain on transactions and valuation		1,556			15,299			24,674
		Loss on transactions and valuation		(21	)		(8,087	)		(6,770	)

		Sub-total		1,535			7,212			17,904

	Other financial assets	Gain on transactions and valuation		3,963			10,902			17,034
		Loss on transactions and valuation		(3,570	)		(10,257	)		(12,370	)

		Sub-total		393			645			4,664

	Sub-total			108,016			27,902			75,199

Derivatives (Held for trading)	Interest rate derivatives	Gain on transactions and valuation		1,507,254			1,727,585			2,020,004
Derivatives (Held for trading)		Loss on transactions and valuation		(1,615,833	)		(1,998,824	)		(1,746,752	)

		Sub-total		(108,579	)		(271,239	)		273,252

	Currency derivatives	Gain on transactions and valuation		6,872,513			12,562,354			9,685,798
		Loss on transactions and valuation		(6,855,447	)		(11,906,353	)		(9,715,260	)

		Sub-total		17,066			656,001			(29,462	)

	Equity derivatives	Gain on transactions and valuation		839,196			1,835,497			1,754,671
		Loss on transactions and valuation		(796,336	)		(1,825,372	)		(1,744,294	)

		Sub-total		42,860			10,125			10,377

	Other derivatives	Gain on transactions and valuation		695			—			64
		Loss on transactions and valuation		(1,366	)		(415	)		(3,781	)

		Sub-total		(671	)		(415	)		(3,717	)

	Sub-total			(49,324	)		394,472			250,450

	Total			58,692			422,374			325,649

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(3)	Details of net gain (loss) on financial instruments at fair value through profit or loss designated as upon initial recognition are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2019			2020			2021
Gain (loss) on equity-linked securities		(33,237	)		(665	)		102

34. NET GAIN OR LOSS ON FINANCIAL ASSETS AT FVTOCI

Details of net gain or loss on financial assets at FVTOCI recognized are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2019		2020			2021
Gain on redemption of securities		15		(57	)		(23	)
Gain on transaction of securities		11,000		24,195			32,647

Total		11,015		24,138			32,624

35. REVERSAL OF (PROVISION FOR) IMPAIRMENT LOSSES DUE TO CREDIT LOSS

Reversal of (provision for) impairment losses due to credit loss are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2019			2020			2021
Impairment loss due to credit losses on financial assets measured at FVTOCI		(3,297	)		(1,529	)		(4,909	)
Reversal of (provision for) impairment loss due to credit losses on securities at amortized cost		1,415			934			(664	)
Provision for impairment loss due to credit losses on loan and other financial assets at amortized cost		(385,758	)		(792,250	)		(551,957	)
Reversal of provision on guarantee		4,352			18,348			10,701
Reversal of (provision for) unused loan commitment		9,044			(9,874	)		9,991

Total		(374,244	)		(784,371	)		(536,838	)

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36. GENERAL AND ADMINISTRATIVE EXPENSES AND OTHER NET OPERATING INCOME (EXPENSES)

(1)	Details of general and administrative expenses recognized are as follows (Unit: Korean Won in millions):


			For the years ended December 31
			2019		2020		2021
Employee benefits	Short-term employee benefits	Salaries		1,584,791		1,638,341		1,775,018
		Employee fringe benefits		475,238		506,048		545,534
	Share based payment			6,328		7,495		17,774
	Retirement benefit service costs			168,423		178,455		181,797
	Termination			156,441		202,259		180,872

	Sub-total			2,391,221		2,532,598		2,700,995

Depreciation and amortization				481,176		520,969		524,154
Other general and administrative expenses	Rent			85,705		78,707		83,879
	Taxes and public dues			137,137		129,904		135,015
	Service charges			235,117		244,825		231,852
	Computer and IT related			93,573		108,810		117,875
	Telephone and communication			70,220		72,711		79,145
	Operating promotion			45,594		45,891		44,248
	Advertising			85,887		94,880		101,384
	Printing			7,845		6,954		6,449
	Traveling			13,255		7,263		7,449
	Supplies			7,736		12,127		7,642
	Insurance premium			9,668		10,805		10,692
	Reimbursement			23,577		16,500		13,483
	Maintenance			18,495		18,367		20,808
	Water, light and heating			15,272		14,993		14,520
	Vehicle maintenance			10,564		10,225		11,590
	Others			34,035		29,652		36,231

	Sub-total			893,680		902,614		922,262

Total				3,766,077		3,956,181		4,147,411

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(2)	Details of other operating income recognized are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2019		2020		2021
Gain on transactions of foreign exchange		602,115		758,347		562,935
Gain related to derivatives (Designated for hedging)		126,651		67,395		61,271
Gain on fair value hedged items		231		9,646		106,253
Others		45,706		63,702		172,044

Total		774,703		899,090		902,503

(3)	Details of other operating expenses recognized are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2019		2020		2021
Losses on transactions of foreign exchange		192,331		679,350		450,698
KDIC deposit insurance premium		333,600		371,054		406,276
Contribution to miscellaneous funds		317,667		327,911		367,961
Losses related to derivatives (Designated for hedging)		3,686		82,746		93,084
Losses on fair value hedged items		86,214		68,508		1,947
Others ( * )		143,786		189,959		469,938

Total		1,077,284		1,719,528		1,789,904

(*)

Other expense includes 22,317 million Won, 11,890 million Won and 13,963 million Won for intangible asset amortization cost for the years ended December 31, 2019, 2020 and 2021 respectively. In addition, it includes 52,504 million Won and 250,971 million Won for lease depreciation cost for the years ended December 31, 2020 and 2021, respectively.

(4)	Share-based payment

Details of performance condition share-based payment granted to executives as of December 31, 2020 and 2021 are as follows:

1)	Performance condition share-based payment


Subject to		Shares granted for the year 2019
Type of payment		Cash-settled
Vesting period		January 1, 2019 ~ December 31, 2022
Date of payment		2023-01-01
Fair value (*1)		12,527 Won
Valuation method		Black-Scholes Model
Expected dividend rate		4.28%
Expected maturity date		1 year
Number of shares remaining	As of December 31, 2020	602,474 shares
	As of December 31, 2021	602,474 shares
Number of shares granted (*2)	As of December 31, 2020	602,474 shares
	As of December 31, 2021	602,474 shares

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Subject to		Shares granted for the year 2020
Type of payment		Cash-settled
Vesting period		January 1, 2020 ~ December 31, 2023
Date of payment		2024-01-01
Fair value (*1)		12,003 Won
Valuation method		Black-Scholes Model
Expected dividend rate		4.28%
Expected maturity date		2 years
Number of shares remaining	As of December 31, 2020	944,343 shares
	As of December 31, 2021	944,343 shares
Number of shares granted (*2)	As of December 31, 2020	944,343 shares
	As of December 31, 2021	944,343 shares

Subject to		Shares granted for the year 2021
Type of payment		Cash-settled
Vesting period		January 1, 2021 ~ December 31, 2024
Date of payment		2025-01-01
Fair value (*1)		11,501 Won
Valuation method		Black-Scholes Model
Expected dividend rate		4.28%
Expected maturity date		3 years
Number of shares remaining	As of December 31, 2020	—
	As of December 31, 2021	1,105,515 shares
Number of shares granted (*2)	As of December 31, 2020	—
	As of December 31, 2021	1,105,515 shares

(*1)

As the amount of payment varies according to the base price (the arithmetic average of the weighted average stock price of transactions in the past one week, the past one month, and the past two months) at the date of payment, the fair value is calculated to measure the liability according to the Black Scholes model based on the base price at the time of each settlement.

(*2)

It is a system in which the amount of stock payable is determined at the beginning, and the payment rate is determined in accordance with the degree of achievement of the

pre-set

performance target. Performance is evaluated by long-term performance indicators such as relative shareholder return, net profit, return on equity (ROE),

non-performing

loan ratio, and job performance.

The Group accounts for performance condition share-based payments according to the cash-settled method and the fair value of the liabilities is reflected in the compensation costs by

re-measuring

every closing period. As of December 31, 2020 and 2021, the book value of the liabilities related to the performance condition share-based payments recognized by the Group amounts to 13,823 million Won and 31,597 million Won, respectively.

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37.

NON-OPERATING

INCOME (EXPENSES)

(1)	Details of gains or losses on valuation of investments in joint ventures and associates are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2019			2020			2021
Gains on valuation of investments in joint ventures and associates		103,775			125,602			80,268
Reversal of impairment losses of investments in joint ventures and associates		—			—			1,744
Losses on valuation of investments in joint ventures and associates		(16,144	)		(23,283	)		(7,405	)
Impairment losses of investments in joint ventures and associates		(3,634	)		(1,242	)		(12,411	)

Total		83,997			101,077			62,196

(2)	Details of other non-operating income and expenses recognized are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2019			2020			2021
Other non-operating income		68,459			133,195			188,129
Other non-operating expenses		(229,383	)		(313,415	)		(223,029	)

Total		(160,924	)		(180,220	)		(34,900	)

(3)	Details of other non-operating income recognized are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2019		2020		2021
Rental fee income		10,106		15,190		15,056
Gains on disposal of investments in joint ventures and associates		—		3,470		70,834
Gains on disposal of premises and equipment, intangible assets and other assets		1,632		9,715		51,083
Reversal of impairment loss of premises and equipment, intangible assets and other assets		103		172		166
Others (*)		56,618		104,648		50,990

Total		68,459		133,195		188,129

(*)	Included 67,427 million Won of profit from bargain purchase for the year ended December 31, 2020.

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(4)	Details of other non-operating expenses recognized are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2019		2020		2021
Depreciation on investment properties		2,225		2,689		2,809
Operating expenses on investment properties		834		762		1,174
Losses on disposal of investment in joint ventures and associates		—		—		174
Losses on disposal of premises and equipment, intangible assets and other assets		3,433		2,717		3,354
Impairment losses of premises and equipment, intangible assets and other assets		28,295		8,763		656
Donation		62,545		44,504		39,335
Others (* )		132,051		253,980		175,527

Total		229,383		313,415		223,029

(*)	Ot h ers i nclude 224,427 million Won and 138,117 million Won of other extraordinary losses related to other provisions or accounts payable for the years ended December 31, 2020 and 2021.

38. INCOME TAX EXPENSE

(1)	Details of income tax expenses are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2019			2020			2021
Current tax expense
Current tax expense with respect to the current period		612,680			501,223			884,843
Adjustments recognized in the current period in relation to the tax expense of prior periods		(65,227	)		4,914			2,074

Sub-total		547,453			506,137			886,917

Deferred tax expense
Change in deferred tax assets (liabilities) due to temporary differences		130,816			(1,702	)		15,672
Income tax expense (income) directly attributable to equity		7,184			(18,433	)		22,177

Sub-total		138,000			(20,135	)		37,849

Income tax expense		685,453			486,002			924,766

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(2)	Income tax expense reconciled to net income before income tax expense is as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2019			2020			2021
Net income before income tax expense		2,723,049			2,001,251			3,687,045
Tax calculated at statutory tax rate (*)		738,476			514,456			942,991
Adjustments:
Effect of income that is exempt from taxation		(61,730	)		(42,440	)		(41,335	)
Effect of expenses that are not deductible in determining taxable income		31,549			19,451			18,933
Adjustments recognized in the current period in relation to the current tax of prior periods		(65,227	)		4,914			3,078
Others		42,385			(10,379	)		1,099

Sub-total		(53,023	)		(28,454	)		(18,225	)

Income tax expense		685,453			486,002			924,766

Effective tax rate		25.2	%		24.3	%		25.08	%

(*)	The applicable income tax rate: 1) 11% for taxable income below 200 million Won, 2) 22% for above 200 million Won and below 20 billion Won, 3) 24.2% for above 20 billion Won and below 300 billion Won, 4) 27.5% for above 300 billion Won.

(3)	Changes in cumulative temporary differences for the years ended December 31, 2019, 2020 and 2021, are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2019
	Beginning balance			Business combination			Recognized as income (expense)			Recognized as other comprehensive income (expense) (*2)			Ending Balance
Gain (loss) on financial assets		372,346			1,360			(91,781	)		(3,573	)		278,352
Gain (loss) on valuation using the equity method of accounting		28,354			90			(17,648	)		(83	)		10,713
Gain (loss) on valuation of derivatives		(27,507	)		6			(48,217	)		306			(75,412	)
Accrued income		(55,846	)		(52	)		(10,486	)		—			(66,384	)
Provision for loan losses		(52,345	)		—			(366	)		—			(52,711	)
Loan and receivables written off		6,672			—			221			—			6,893
Loan origination costs and fees		(154,431	)		—			(8,011	)		—			(162,442	)
Defined benefit liability		360,087			1,131			21,234			13,850			396,302
Deposits with employee retirement insurance trust		(318,330	)		(1,131	)		(62,458	)		143			(381,776	)
Provision for guarantee		11,374			—			(3,459	)		—			7,915
Other provision		75,194			76			10,958			2,228			88,456
Others (*1)		(204,083	)		(6,927	)		72,013			(5,687	)		(144,684	)

Net deferred tax assets		41,485			(5,447	)		(138,000	)		7,184			(94,778	)

(*1)	Among the deferred tax assets and liabilities classified as ‘Others,’ the deferred tax asset arising from unused tax losses amounts to 21,656 million Won.

(*2)	Includes 2,737 million Won presented on non-controlling interests.

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	For the year ended December 31, 2020
	Beginning balance			Business combination			Recognized as income (expense)			Recognized as other comprehensive income (expense)			Ending Balance
Gain (loss) on financial assets		278,352			2,243			19,121			(23,221	)		276,495
Gain on valuation using the equity method of accounting		10,713			—			21,499			1,385			33,597
Gain (loss) on valuation of derivatives		(75,412	)		675			(67,423	)		(192	)		(142,352	)
Accrued income		(66,384	)		(4,392	)		4,548			—			(66,228	)
Provision for loan losses		(52,711	)		2,201			4,015			—			(46,495	)
Loan and receivables written off		6,893			—			1,328			—			8,221
Loan origination costs and fees		(162,442	)		(14,131	)		6,377			—			(170,196	)
Defined benefit liability		396,302			7,923			41,186			(3,404	)		442,007
Deposits with employee retirement insurance trust		(381,776	)		(6,369	)		(36,858	)		97			(424,906	)
Provision for guarantee		7,915			3,441			(1,871	)		—			9,485
Other provision		88,456			—			(3,283	)		—			85,173
Others ( * )		(144,684	)		(12,678	)		31,494			6,904			(118,964	)

Net deferred tax assets		(94,778	)		(21,087	)		20,133			(18,431	)		(114,163	)

(*)	Among the deferred tax assets and liabilities classified as ‘Others,’ the deferred tax asset arising from unused tax losses amounts to 24,059 million Won.


	For the year ended December 31, 2021
	Beginning balance			Recognized as income (expense)			Recognized as other comprehensive income (expense)			Ending Balance
Gain (loss) on financial assets		276,495			(57,187	)		54,048			273,356
Gain on valuation using the equity method of accounting		33,597			(17,282	)		(1,055	)		15,260
Gain (loss) on valuation of derivatives		(142,352	)		(6,755	)		(698	)		(149,805	)
Accrued income		(66,228	)		(16,254	)		—			(82,482	)
Provision for loan losses		(46,495	)		11,870			—			(34,625	)
Loan and receivables written off		8,221			23			—			8,244
Loan origination costs and fees		(170,196	)		(24,267	)		—			(194,463	)
Defined benefit liability		442,007			32,890			(25,282	)		449,615
Deposits with employee retirement insurance trust		(424,906	)		(7,291	)		196			(432,001	)
Provision for guarantee		9,485			(2,061	)		—			7,424
Other provision		85,173			15,398			—			100,571
Others (*)		(118,964	)		24,193			(5,032	)		(99,803	)

Net deferred tax assets		(114,163	)		(46,723	)		22,177			(138,709	)

(*)	Among the deferred tax assets and liabilities classified as ‘Others,’ the deferred tax asset arising from unused tax losses amounts to 8,838 million Won.

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(4)	Unrealizable temporary differences are as follows (Unit: Korean Won in millions):


	December 31, 2020			December 31, 2021
Deductible temporary differences		327,139			303,067
Tax loss carry forward		97,898			63,908
Taxable temporary differences		(10,409,344	)		(8,025,672	)

Total		(9,984,307	)		(7,658,697	)

No deferred income tax asset has been recognized for the deductible temporary difference of 264,000 million Won associated with investments in subsidiaries as of December 31, 2021, because it is not probable that the temporary differences will be reversed in the foreseeable future. 39,067 million Won associated with others, respectively, as of December 31, 2021, due to the uncertainty that these will be realized in the future.

No deferred income tax liability has been recognized for the taxable temporary difference of 8,025,673 million Won associated with investment in subsidiaries as of December 31, 2021, due to the following reasons:

•

The Group is able to control the timing of the reversal of the temporary difference.

•

It is probable that the temporary difference will not be reversed in the foreseeable future.

As of December 31, 2021, the expected extinctive date of tax loss carry forward that are not recognized as deferred tax assets are as follows (Unit: Korean Won in millions):


	1 year or less		1 –2 years		2 –3 years		More than 3 years
Tax loss carry forward		14,688		33,464		12,199		3,557

(5)	Details of accumulated deferred tax charged directly to other equity are as follows (Unit: Korean Won in millions):


	December 31, 2020		December 31, 2021
Gain on valuation of financial assets at FVTOCI		4,628		58,677
Gain on valuation of equity method investments		3,133		2,078
Gain on foreign currency translation of foreign operations		10,883		5,689
Remeasurements of the net defined benefit liability		101,128		74,790
Gain on derivatives designated as cash flow hedge		556		(843	)

Total		120,328		140,391

(6)	Current tax assets and liabilities are as follows (Unit: Korean Won in millions):


	December 31, 2020		December 31, 2021
Current tax assets		75,655		22,598
Current tax liabilities		370,718		584,491

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39. EARNINGS PER SHARE (“EPS”)

(1)	Basic EPS is calculated by dividing net income attributable to common shareholders by weighted-average number of common shares outstanding (Unit: Korean Won in millions, except for EPS and number of shares):


	For the years ended December 31
	2019			2020			2021
Net income attributable to common shareholders		1,872,207			1,307,266			2,542,844
Dividends to hybrid securities		(4,362	)		(48,915	)		(66,250	)
Net income attributable to common shareholders		1,867,845			1,258,351			2,476,594
Weighted average number of common shares outstanding (Unit: million shares)		685			722			724
Basic EPS (Unit: Korean Won)		2,727			1,742			3,419

(2)	The weighted average number of common shares outstanding is as follows (Unit: number of shares, days):


	For the year ended December 31, 2020
	Period	Number of shares			Dates (Unit: Day)		Accumulated number of shares outstanding during period
Common shares issued at the beginning of the period	2020-01-01 ~ 2020-12-31		722,267,683			366		264,349,971,978
Treasury stock	2020-01-01 ~ 2020-12-31		(2	)		366		(732	)

Sub-total (①)								264,349,971,246

Weighted average number of common shares outstanding (②=(①/366)								722,267,681


	For the year ended December 31, 2021
	Period	Number of shares			Dates (Unit: Day)		Accumulated number of shares outstanding during period
Common shares issued at the beginning of the period	2021-01-01 ~ 2021-12-31		722,267,683			365		263,627,704,295
Treasury stocks	2021-01-01 ~ 2021-12-31		(2	)		365		(730	)
Issuance of new shares (comprehensive share exchange)	2021-08-10 ~ 2021-12-31		5,792,866			144		834,172,704
Acquisition of treasury stocks	2021-08-10 ~ 2021-12-31		(343,989	)		144		(49,534,416	)

Sub-total (①)								264,412,341,853

Weighted average number of common shares outstanding (②=(①/365)								724,417,375

Diluted EPS is equal to basic EPS because there is no dilution effect for the years ended December 31, 2020 and 2021.

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40. CONTINGENT LIABILITIES AND COMMITMENTS

(1)	Details of guarantees are as follows (Unit: Korean Won in millions):


	December 31, 2020		December 31, 2021
Confirmed guarantees
Guarantee for loans		103,229		38,897
Acceptances		602,014		622,758
Guarantees in acceptances of imported goods		78,395		111,195
Other confirmed guarantees		6,491,608		7,215,557

Sub-total		7,275,246		7,988,407

Unconfirmed guarantees
Local letters of credit		187,146		243,072
Letters of credit		3,025,923		3,186,513
Other unconfirmed guarantees		403,652		778,088

Sub-total		3,616,721		4,207,673

Commercial paper purchase commitments and others		917,489		791,729

Total		11,809,456		12,987,809

(*)	Includes financial guarantees of 4,163,382 million Won and 3,960,383 million Won as of December 31, 2020 and December 31, 2021, respectively.

(2)	Details of unused loan commitments and others are as follows (Unit: Korean Won in millions):


	December 31, 2020		December 31, 2021
Loan commitments		112,088,680		114,414,462
Other commitments (*)		7,827,774		5,652,557

(*)	As of December 31, 2020 and 2021, the amount of unsecured bills (purchase note sales) and discounts on electronic short-term bond sales (purchase) are 2,894,688 million Won and 2,225,226 million Won, respectively.

(3)	Litigation case

Litigation case that the key Group is a defendant in a lawsuit pending (excluding fraud lawsuits and those lawsuits that are filed only to extend the statute of limitation, etc.) are 460 cases (litigation value of 413,744 million Won) and 475 cases (litigation value of 578,505 million Won) as of December 31, 2020 and 2021 respectively, and provisions for litigations are 24,873 million Won and 24,823 million Won.

(4)	Other commitments

The Group decided to enter into a stock sales agreement with a major shareholder of Woori Asset Trust Co., Ltd. (formerly, Kukje Asset Trust Co., Ltd.) to acquire 44.5% of interest (58.6% of voting rights) in July, 2019, and to acquire additional 21.3% of interest (28.0% of voting rights) after a certain period. As a result, the Group acquired the interest of the first sales agreement in December 2019 and is planning to acquire the interest of the second sales agreement after a certain period. In regard to this acquisition, the Group recognized 121,420 million Won as other financial liabilities for the second sales agreement.

As of December 31, 2021, Woori Asset Trust Co., Ltd., a subsidiary, has agreed to carry out construction completion obligations for 96 constructions, which includes the construction of residential

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and commercial complexes in Busan

(U-dong,

Haeundae-gu).

Land Trust responsible for Construction and Management is a trust that bears the obligation to fulfill the responsibility of the constructor and to compensate the loan financial institution for damages if the Group fails to fulfill the construction completion obligation. As of December 31, 2021, the total PF loan amount of PF loan institutions invested in the project of the Land Trust responsible for Construction and Management is

3,269,955

million Won. Although additional losses may occur in relation to the construction completion obligations, the financial statements as of December 31, 2021 do not reflect these effects since losses are unlikely and the amount cannot be estimated reliably.

Pursuant to some contracts related to asset securitization, the Group utilizes various prerequisites as triggering events causing early redemption, limiting risks that investors bear due to change in asset quality. Breach of such triggering clause leads to an early redemption of the securitized bonds.

41.	RELATED PARTY TRANSACTIONS

Related parties of the Group as of December 31, 2020 and 2021, and assets and liabilities recognized, guarantees and commitments, major transactions with related parties and compensation to key management for the years ended December 31, 2020 and 2021 are as follows. Please refer to Note 13 for the details of joint ventures and associates.

(1)	Assets and liabilities from transactions with related parties are as follows (Unit: Korean Won in millions):


Related parties		Account title	December 31, 2020			December 31, 2021
Associates	W Service Networks Co., Ltd.	Loans		21			20
		Deposits due to customers		2,183			2,832
		Accrued expenses		6			6
		Other liabilities		459			425
	Korea Credit Bureau Co., Ltd.	Loans		1			2

		Deposits due to customers		2,311			1,557
		Other liabilities		5			—
	Korea Finance Security Co., Ltd.	Loans		3,440			3,425
		Allowance for credit losses		(6	)		(6	)

		Deposits due to customers		1,927			1,887
		Other liabilities		1			2
	Chin Hung International Inc.	Loans		257			—
		Allowance for credit losses		(3	)		—

		Deposits due to customers		8,715			—
		Other liabilities		171			—
	LOTTE CARD Co. Ltd.	Loans		7,500			3,750
		Allowance for credit losses		(77	)		(39	)
		Other assets		12			10

		Deposits due to customers		2,697			13,482
		Other liabilities		113			91
	K BANK Co., Ltd.	Loans		104			99

		Account receivables		26			29
		Other assets		3,835			—
		Other liabilities		808			84,935

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Related parties		Account title	December 31, 2020			December 31, 2021
	Well to Sea No.3 Private Equity Fund	Deposits due to customers		4,997			—

	Others (*1)	Loans		44,036			73,940
		Allowance for credit losses		(126	)		(124	)
		Other assets		651			739
		Deposits due to customers		5,831			1,063
		Other liabilities		5			3

(*1)	Others include IBK KIP Seongjang Dideemdol 1st Private Investment Limited Partnership, Woori Growth Partnerships New Technology Private Equity Fund, Partner One Value Up I Private Equity Fund and etc., as of December 31, 2020 and 2021.

(2)	Gain or loss from transactions with related parties are as follows (Unit: Korean Won in millions):


			For the years ended December 31
Related parties		Account title	2019			2020			2021
Associates	W Service Network Co., Ltd.	Other income		32			32			30
		Interest expenses		20			13			7
		Fees expenses		448			525			612
		Reversal of allowance for credit losses		(3	)		(4	)		—
		Other expenses		1,423			2,174			1,878
	Korea Credit Bureau Co., Ltd.	Interest expenses		29			5			4
		Fees expenses		2,608			3,155			3,503
		Other expenses		—			—			68
	Korea Finance Security Co., Ltd.	Interest income		—			70			80
		Interest expenses		9			3			2
		Provision of allowance for credit losses		8			3			1
		Other expenses		112			100			92
	Chin Hung International Inc.	Interest expenses		35			19			—
		Provision (Reversal) of allowance for credit losses		44			(145	)		—
	LOTTE CARD Co., Ltd.	Interest income		213			311			196
		Fees income		593			2,748			10,248
		Interest expenses		53			68			462
		Provision (Reversal) of allowance for credit losses		30			171			(59	)
	K BANK Co., Ltd.	Fees income		1,468			1,763			1,952
		Fees expenses		—			—			636
	Well to Sea No.3 Private Equity Fund	Interest income		1,774			1,883			—
		Interest expenses		11			5			—
		Reversal of allowance for credit loss		(18	)		(55	)		—
	Others (1)(2)	Interest income		—			—			679
		Fees income		1,281			2,677			5,546
		Dividends income		—			52			—
		Other income		17			16			—
		Interest expenses		55			28			17
		Reversal of allowance for credit loss		(5	)		—			(2	)

(*1)	Others include Saman Corporation, Woori-Shinyoung Growth-Cap Private Equity Fund, Woori Hanhwa Eureka Private Equity Fund, Kyesan Engineering Co., Ltd., DAEA SNC Co., Ltd. and etc, as of December 31, 2019.

(*2)	Others include Woori Growth Partnerships New Technology Private Equity Fund, Partner One Value Up I Private Equity Fund, and etc., as of December 31, 2020 and 2021.

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(3)	Major loan transactions with related parties for the years ended December 31, 2019, 2020 and 2021 are as follows (Unit: Korean Won in millions):


		For the year ended December 31, 2019
Related parties		Beginning balance		Loan		Collection		Ending balance (*)
Associates	W Service Network Co., Ltd.		69		315		361		23
	Korea Credit Bureau Co., Ltd.		7		26		30		3
	Korea Finance Security Co., Ltd.		57		2,426		623		1,860
	Chin Hung International Inc		241		2,338		2,335		244
	LOTTE CARD Co., Ltd.		—		7,500		—		7,500
	K BANK Co., Ltd.		185		2,249		2,293		141
	Well to Sea No. 3 Private Equity Fund		1,857		2,633		—		4,490

(*)	Payments that occurred for business reasons among related parties are excluded and net increase or decrease was used for limited credit loan.


		For the year ended December 31, 2020
Related parties		Beginning balance		Loan		Collection		Ending balance (*)
Associates	W Service Network Co., Ltd.		23		337		339		21
	Korea Credit Bureau Co., Ltd.		3		17		19		1
	Korea Finance Security Co., Ltd.		1,860		2,133		553		3,440
	LOTTE CARD Co., Ltd.		7,500		—		—		7,500
	K BANK Co., Ltd.		141		1,942		1,979		104
	Well to Sea No. 3 Private Equity Fund		4,490		—		4,490		—

(*)	Payments that occurred for business reasons among related parties are excluded and net increase or decrease was used for limited credit loan.


		For the year ended December 31, 2021
Related parties		Beginning balance		Loan		Collection		Others			Ending balance (*)
Associates	W Service Network Co., Ltd.		21		248		249		—			20
	Korea Credit Bureau Co., Ltd.		1		11		10		—			2
	Korea Finance Security Co., Ltd.		3,440		333		348		—			3,425
	LOTTE CARD Co., Ltd.		7,500		—		3,750		—			3,750
	K BANK Co., Ltd.		104		1,769		1,774		—			99
	Godo Kaisha Oceanos 1		44,036		—		—		(1,003	)		43,033
	Woori Zip 1		—		13,121		—		(346	)		12,775
	Woori Zip 2		—		18,624		—		(492	)		18,132

(*)	Payments that occurred for business reasons among related parties are excluded and net increase or decrease was used for limited credit loan.

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(4)	Details of changes in major deposits due to customers with related parties for the year December 31, 2019, 2020 and 2021 are as follows (Unit: Korean Won in millions):


		For the year ended December 31, 2019
Related parties		Beginning balance		Increase		Decrease		Ending balance (*1)
Associates	Saman Corporation (*2)		2,436		86		—		2,522
	W Service Networks Co., Ltd		1,180		1,460		1,460		1,180
	Chin Hung International Inc		765		400		765		400
	Partner One Value Up I Private Equity Fund		1,403		1,617		1,870		1,150
	Korea Credit Bureau Co., Ltd.		6,000		—		6,000		—
	Korea Finance Security Co., Ltd.		535		25		560		—

(*1)	Details of payment between related parties, demand deposit due to customers and etc. are excluded.

(*2)	Excluded from the related parties due to the loss of significant influence for the year ended December 31, 2019.


		For the year ended December 31, 2020
Related parties		Beginning balance		Increase		Decrease		Ending balance (*)
Associates	W Service Networks Co., Ltd		1,180		1,180		1,180		1,180
	Chin Hung International Inc		400		—		400		—
	Partner One Value Up I Private Equity Fund		1,150		1,737		2,024		863
	Korea Credit Bureau Co., Ltd.		—		1,000		—		1,000

(*)	Details of payment between related parties, demand deposit due to customers and etc. are excluded.


		For the year ended December 31, 2021
Related parties		Beginning balance		Increase		Decrease		Ending balance (*)
Associates	W Service Networks Co., Ltd		1,180		1,180		1,180		1,180
	Partner One Value Up I Private Equity Fund		863		637		1,171		329
	Korea Credit Bureau Co., Ltd.		1,000		—		1,000		—

(*)	Details of payment between related parties, demand deposit due to customers and etc. are excluded.

(5)	There are no major borrowing transactions with related parties for the years ended December 31, 2020 and 2021.

(6)	Guarantees provided to the related parties are as follows (Unit: Korean Won in millions):


Warrantee	December 31, 2020		December 31, 2021		Warranty
Korea Finance Security Co., Ltd.		820		835		Unused loan commitment
Korea Credit Bureau Co., Ltd.		34		33		Unused loan commitment
W Service Network Co., Ltd.		179		180		Unused loan commitment
Chin Hung International Inc.		16,167		—		Unused loan commitment
K BANK Co., Ltd.		196		201		Unused loan commitment
LOTTE CARD Co. Ltd.		500,000		500,000		Unused loan commitment

As of December 31, 2020 and 2021, the recognized payment guarantee provisions are 284 million Won and 93 million Won, respectively, in relation to the guarantees provided to the related parties above.

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(7)	Amount of commitments with the related parties


Warrantee	December 31, 2020		December 31, 2021		Warranty
Together-Korea Government Private Pool Private Securities Investment Trust No.3		990,000		—	Securities purchase commitment
IBK KIP Seongjang Dideemdol 1st Private Investment Limited Partnership		9,704		4,664	Securities purchase commitment
WooriG Senior Loan General Type Private Investment Trust No.1		53,041		14,284	Securities purchase commitment
Woori Seoul Beltway Private Special Asset Fund No.1		41,393		39,458	Securities purchase commitment
Woori-Shinyoung Growth-Cap Private Equity Fund I		12,799		—	Securities purchase commitment
Woori-Q Corporate Restructuring Private Equity Fund		36,355		11,109	Securities purchase commitment
Union Technology Finance Investment Association		10,500		2,250	Securities purchase commitment
Genesis Eco No.1 Private Equity Fund		—		195	Securities purchase commitment
Genesis Environmental Energy Company 1st Private Equity Fund		916		916	Securities purchase commitment
JC Assurance No.2 Private Equity Fund		1,650		1,351	Securities purchase commitment
Crevisse Raim Impact 1st Startup Venture Specialist Private Equity Fund		550		425	Securities purchase commitment
PCC-Woori LP Secondary Fund		2,525		—	Securities purchase commitment
WooriG Oncorp Corporate support of Major Industry General Type Private Investment Trust (Type 2)		—		669	Securities purchase commitment

(8)	Major investment and Recovery transactions

The details of major investment and recovery transactions with related parties for the year ended December 31, 2020 and 2021 are as follows (Unit: Korean Won in millions):


	For the year ended December 31, 2020
The same parent company and its associates	Investment and others		Recovery and others
WooriG Public Offering stock 10 securities Investment Trust [Bond mixed] C(F)		1,000		—
WooriG IGIS Securities Investment Trust [Bond] C(F)		1,300		—

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	For the year ended December 31, 2021
The same parent company and its associates	Investment and others (*)		Recovery and others (*)
Woori China Mainland Stock Securities Investment Trust		—		568
Woori Long-term government bond securities Investment Trust No.1		2,000		—
Woori New MMF No.3		—		20,105
Woori Multi-Return Securities Investment Trust 1		8,000		—
Woori Multi-Return Securities Investment Trust 2 (Balanced Bond)		8,000		—
Woori Short term Plus Securities Investment Trust		200		—
Woori Smart New Deal 30 Target Conversion Securities Investment trust No.3		200		—
Woori Smart Balance Securities Investment Trust (Stock)		500		—
Woori ACE Public Offering stock Alpha Securities Investment Trust (Bond Mixed)		200		—
WooriG Oncorp Corporate support of Major Industry General Type Private Investment Trust (Type 2)		831		—
WooriG Public Offering stock 10 securities Investment Trust [Bond mixed] C(F)		—		1,064
WooriG IGIS Securities Investment Trust [Bond] C(F)		—		1,306

(*)	Investment and recovery transactions of associates are described in Note 13.(2)

(9)	Compensation for key management is as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2019		2020		2021
Short-term employee salaries		13,427		22,778		20,742
Retirement benefit service costs		783		910		815
Share-based compensation		2,494		3,519		6,970

Total		16,704		27,207		28,527

Key management includes executives and directors of Woori Financial Group and major subsidiaries, and also includes CEO of other subsidiaries. Outstanding assets from transactions with key management amount to 3,888 million Won and 3,821 million Won, as of December 31, 2020 and 2021 respectively and with respect to the assets, the Group has not recognized any allowance nor related impairment loss due to credit losses. Also, liabilities from transaction with key management amount to 16,915 million Won and 24,861 million Won, respectively, as of December 31, 2020 and 2021.

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42.

LEASES

(1)

Lessor

Finance lease

①

The total investment in finance lease and the present value of the minimum lease payments to be recovered as of December 31, 2020 and 2021 are as follows (Unit: Korean Won in millions):


	December 31, 2020
	Total investment in lease		Net investment in lease
Within one year		24,649		23,957
After one year but within two years		48,781		45,575
After two years but within three years		132,894		120,414
After three years but within four years		171,137		151,756
After four years but within five years		277,282		244,481
After five years		16		12

Total		654,759		586,195


	December 31, 2021
	Total investment in lease		Net investment in lease
Within one year		70,740		69,030
After one year but within two years		133,398		124,904
After two years but within three years		239,895		218,911
After three years but within four years		367,991		331,685
After four years but within five years		486,490		429,034
After five years		2		1

Total		1,298,516		1,173,565

②

The unrealized interest income of the finance lease as of December 31, 2020 and 2021 are as follows (Unit: Korean Won in millions):


	December 31, 2020		December 31, 2021
Total investment in lease		654,759		1,298,516
Net investment in lease		586,195		1,173,565
Present value of minimum lease payments		586,133		1,173,565
Present value of unguaranteed residual value		62		—

Unearned interest income		68,564		124,951

Operating lease

①

The details of operating lease assets as of December 31, 2020 and 2021 are as follows (Unit: Korean Won in millions):


	December 31, 2020			December 31, 2021
Prepaid lease assets		199			4,579
Operating lease assets
Acquisition cost		1,506,957			2,299,968
Accumulated depreciation		(390,981	)		(521,660	)
Net carrying value		1,115,976			1,778,308

Total		1,116,175			1,782,887

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②

The details of changes in operating lease assets as of December 31, 2020 and 2021 are as follows (Unit: Korean Won in millions):


	December 31, 2020			December 31, 2021
Beginning balance		—			1,116,175
Acquisition		118,256			984,093
Disposal		(21,963	)		(93,138	)
Depreciation		(52,504	)		(250,971	)
Business combination		1,071,111			—
Others		1,275			22,149

Ending balance		1,116,175			1,778,308

③

The future lease payments to be received under the lease contracts as of December 31, 2020 and 2021 are as follows (Unit: Korean Won in millions):


	December 31, 2020		December 31, 2021
Within one year		240,005		377,153
After one year but within two years		223,074		347,539
After two years but within three years		156,859		262,176
After three years but within four years		80,174		170,391
After four years but within five years		24,992		79,555

Total		725,104		1,236,814

④

There is no adjusted lease payments recognized as

profit

or loss for the years ended December 31, 2020 and 2021.

(2)

Lessee

The future lease payments under the lease contracts as of December 31, 2020 and 2021 are as follows (Unit: Korean Won in millions):


	December 31, 2020		December 31, 2021
Lease payments
Within one year		173,885		151,259
After one year but within five years		200,844		155,707
After five years		34,787		38,275

Total		409,516		345,241

Total cash outflows from lease as of December 31, 2020 and 2021 are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2020		2021
Total cash outflows from lease		207,305		180,884

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Details of lease payments that are not included in the measurement of lease liabilities due to the fact that they are short-term leases or leases for which the underlying asset is low value as of December 31, 2020 and 2021 are as follows (Unit: Korean Won in millions):


	For the years ended December 31
	2020		2021
Lease payments for short-term leases		1,760		1,598
Lease payments for which the underlying asset is of low value		751		1,488

Total		2,511		3,086

(3)

The Group uses a practical expedient that does not assess whether it is a lease change to the rent discount incurred directly as a result of

COVID-19.

Accordingly, the amount recognized in profit or loss during the reporting period is 35,717 million Won, to reflect changes in lease payments arising from the rent concession.

43.	EVENTS AFTER THE REPORTING PERIOD

(1)	On January 7, 2022, the Parent company established Woori Financial F&I Inc. (100% of ownership, 200 billion Won in stock payments) which is an investment company for non-performing loans (NPL) and restructuring companies and included it as a subsidiary.

(2)

The Russia - Ukraine conflict has been escalated in February 2022, Russia is imposed to the international sanctions. As a result of these sanctions, the lack of liquidity in the foreign exchange market as well as the significant decline in value of the Rubles and the decline in value of Russian companies’ securities are in progress. As a result, the Group may experience situations such as a decrease in value of financial assets or operating assets owned by the Group regarding the conflict, an increase in receivable payment terms, limitation to transfer funds, a decrease in the profit.

As of December 31, 2021, the Group expects such conflict and sanctions would have financial impacts on the business of AO Woori Bank, one of the subsidiaries, in the future. However, the Group cannot reasonably predict the financial impacts because it is very uncertain to estimate the impact on the Group’s financial position and business performance.

(3)

April 2022, the Group became aware of an embezzlement case by an employee of the Bank, one of its subsidiaries. Related to the embezzlement case, the investigation by the relevant institutions is currently in progress. The Group considered the case as the adjusting events after the reporting period and recognized 62.2 billion Won in the financial statements as losses. Such adjustment was recorded as out of period adjustment in 2021 and the impacts on the prior periods are not materia

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