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영상, 음성 플레이어

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Greetings. I am Hana Financial Group IR team leader, Lee Junghoon. Thank you for taking part in Hana Financial Group Business Results Presentation. We express our gratitude to our shareholders, analysts, and other market participants for joining today's earnings release via phone or the Internet.

Then let us now begin the 2015 business presentation. I would now like to introduce our Group's management who are here with us. Hana Financial Group Deputy President and CFO, Kwark Cheol-seung, Hana Financial Group Senior Executive Vice President and CRO, Hwang Hyo-sang are with us. From KEB Hana Bank, Executive Vice President for Planning and Management Group, Lee Seung-Yeol is with us. From Hana Financial Investments, we have Executive Vice President for Management Support Division, Byun Jae-yeon. Last but not least, from Hana Card, we have Executive Vice President and CSO for Management Strategy Division, Song Jong-geun.

We will first deliver the business results presentation and then have a Q&A session via phone. I would now like to invite CFO Kwark Cheol-seung to deliver the 2015 Hana Financial Group business presentation.

Greetings everyone. I'm Kwark Cheol-seung, the CFO of Hana Financial Group. I would like to walk you through the 2015 business results.



Page 5 2015 Financial Highlights (1)

First refer to page five, 2015 Group financial highlights.

Hana Financial Group's 2015 cumulative net income posted KRW 936.8 billion in line with the previous year, Q4 net income reported minus KRW 66.8 billion, a 126.2% drop QoQ, posting quarterly net losses. To elaborate on the breakdown of the 2015 annual business results interest income, thanks to appropriate level of loan growth and stable margin recovery, declined 3.4% YoY.

On the other hand, non-interest income comprised of fee income and disposition valuation gain rose 31% YoY, thanks to increase in asset management fees and gains on disposition of securities. On the other hand, 2015 SG&A rose 15.1% YoY with one-off costs including bank integration costs in the second half of the year and the early retirement program costs in 4Q15. In particular, integration cost and ERP costs were concentrated in 4Q15, leading to net losses on a quarterly basis.

However, most of the integration cost ended in 2015 and with the labor cost cut expected to have impacts from 2016, net income is expected to be normalized from 2016. Despite one-off factors, including 4Q15 large corporation credit evaluation, 2015 cumulative credit-loss provisions was maintained at a stable level of 0.45%.

Page 6 2015 Financial Highlights (2)

Next, please go to page six.

First, NIM. Group's 2015 4Q15 NIM consisting of KEB Hana Bank and Hana Card increased 2bp QoQ, recording 1.82%. With two base rate cuts in 2015, downward pressure on the NIM continued until 4Q15. However, with the improvement in funding structure, including the growth of low-cost core deposits and decrease in time deposits, and the improvement of loan pricing led to 4Q15 NIM rebound.

Since US interest rate hike is expected to be very slow and the domestic base rate is expected to show limited movement, net interest margin growth speed is also expected to be gradual. However, we will continually improve the NIM by managing loan portfolio taking RoRWA into consideration, as well as by improving the portfolio through growing core deposits.

In addition, if you look at the graph on the bottom right, KRW loan growth rates for KEB Hana Bank posted 5.2% YoY and 1.1% QoQ, respectively. In accordance with our loan policy to manage asset quality and to rebalance our loan portfolio to focus on profitability, SME loans and household loans focused asset growth was realized.

Page 7 2015 Financial Highlights (3)

Please go to page seven. As the end of 2015, group’s NPL ratio posted 1.23% and delinquency rate recorded 0.68%.

On the bottom-left, group’s credit cost ratio as the end of 2015 posted 0.45%, a 6 bp decline YoY, but rose slightly by 4 bp QoQ.

With the dissipation of previous quarter's provisioning right back and an additional provisioning of KRW 42.7 billion, as a result of clearing STS O&S exposure, as well as an additional provisioning of KRW 44.7 billion from large corporate credit evaluations, provisioning in 4Q15 increased by KRW 218.9 billion QoQ. However, loan loss provisions were maintained at 4Q15 level and cumulative credit cost ratio was maintained stably within 0.50%.

On the bottom right of the chart, you can see that through the continued RWA management, group’s CET1 ratio, as the end of 2015, is expected to have increased by 63 bp YoY and by 21 bp QoQ, respectively, posting 9.81%.

The CET1 ratio, through group’s aggressive RWA management, has increased by approximately 1% from the level of 8.85% in 1Q14. Group’s goal is to increase the CET1 ratio up to 10.1% by 4Q16, 10.5% by 4Q17 and at least by 11.0% by 4Q18, respectively, with around 1% per annum increase of RWA after 2016.

Moreover, as a pre-emptive preparation against unexpected economic shocks of the future, we have drafted contingency plans including profit improvement through cost cut and liquidation of assets so that we are fully prepared to weather abrupt external shocks.

Page 9 Group Consolidated Earnings

Next, let me go over the business results breakdown into different categories.

First, group’s consolidated earnings on page 9. I will first elaborate on group's general operating income. The interest income in group’s general operating income only declined 3.4% YoY mainly due to portfolio adjustments led by continued SME loan growth and mortgage based household loan growth. It rose 3.2% QoQ thanks to NIM recovery in 4Q15.

With the continuing low interest rate environment, there was growth in fee income, 5.8% YoY, mainly thanks to increase in Hana Financial Investment’s brokerage fees along the capital inflow to equity-related investment. However, on a quarterly basis, the fee income declined 12.4% compared to 3Q15 since some of the bank integration costs were deducted from the fee income and brokerage fees and trust fees declined due to the correction in stock markets.

Valuation and disposition gains grew 84.1% YoY and 1,071% QoQ, respectively. The most notable one-offs in 4Q15 were KRW 54 billion of FX translation gains following the strong won and KRW 38.1 billion of Kumho Corporation share disposition gains, of which are included in around KRW 900 billion quarterly one-off valuation and disposition gains.

Group’s SG&A grew relatively high with 15.1% YoY and 32.1% growth QoQ, respectively. The bank integration cost and the ERP (Early Retirement Program) led to the high growth in SG&A costs.

KRW 149 billion of the integration cost and KRW 239.5 billion of the bank ERP costs summate group’s 4Q15 SG&A costs upto KRW 389 billion. Some of the bank integration cost, approximately KRW 19 billion, were recognized in other fee income category. Including the cost, 4Q15 integration costs and ERP cost totaled around KRW 410 billion. Hana Card and Hana Financial Investment also executed their ERPs and, as a result, KRW 15 billion was reflected in group’s SG&A cost.

Page 10 Business Results of Subsidiaries

Next on page 10, net income by subsidiary.

KEB Hana Bank, group’s key subsidiary, posted cumulative net income of KRW 448.1 billion, up 22.7% YoY. For your information, after formerly Hana Bank was merged with formerly KEB, the merged entity KEB Hana Bank cumulative income for 2015 includes only the income from January 2015 to August 2015 of the formerly KEB and income from September 2015 to December 2015 of the integrated company KEB Hana Bank, therefore making it difficult to make an appropriate QoQ or YoY comparison. As such, the simple sum of formerly KEB and formerly Hana Bank’s separate net incomes are provided for your reference.

In the case of the Hana Financial Investment, as the end of 2015, the cumulative net income went up 34.8% YoY on the back of growth in securities brokerage, fees IB related commissions and increasing gain of valuation dispositions of securities. However, in 4Q15, with the decline in brokerage fees on the back of volatile stock market and ERP, net income fell 34.4% QoQ. For details on other subsidiaries, please refer to the appendix.

Page 11 NIM & Page 12 Non-Int. Income/ SG&A Expenses

Next, page 11 and 12.

Please refer to the details of NIM, non-interest income and SG&A on the relevant pages

Page 14 Group Total Assets/ Total Liabilities & Equity

Next on page 14, group's total assets, liabilities and equity.

As the end of 2015, group’s total assets stand at KRW 326.9 trillion and including group's trust assets of KRW 81.3 trillion, the total asset come to KRW 408.2 trillion. Of the total assets, KEB Hana Bank's total assets including its trust assets amount to KRW 330 trillion. Group's total liabilities come to KRW 303.9 trillion and shareholders' equity KRW 23 trillion.

Page 15 KEB Hana Bank KRW Loan / Deposit

Next on page 15, KEB Hana Bank's loans and deposits in Korean won.

As the end of 2015, KEB Hana Bank's KRW loans grew 5.2% YTD and 1.1% QoQ to reach KRW 171.9 trillion. If we take a look at the breakdown of the loan growth, loans to large corporates fell 22.3% YTD to reach KRW 20 trillion, loans to SMEs grew 10.5% YTD to post KRW 62.4 trillion.

Starting from 2014, we have pursued a strategy to adjust our loan portfolio and as such loans to large corporates declined while SME loans including SOHO showed a steady growth trend.

Household loans posted KRW 87.7 trillion, up 11% YTD on the back of a healthy 18.1% growth YTD in mortgage loans. Deposits are up 3.3% YTD coming to KRW 196.6 trillion. As a result of continued efforts to improve our funding structure, low-cost deposits in Korean won grew 21.6% YTD while time deposits which are high cost funding vehicles dropped 6.7% YTD.

Page 17 Group Asset Quality

Next on page 17, group's asset quality.

As the end of 2015, group's total credit reached KRW 233.1 trillion and NPL amounted KRW 2.86 trillion. Total credit grew 1.0% YTD, while NPLs fell 8.3% YTD. As such, as the end of 2015, group's NPL ratio stood at 1.23%, falling 12 bp YTD.

If you look at the upper right corner, the amount of new NPL, which refers to the total NPL growth before write-offs, sales and debt to equity swaps comes to KRW 427 billion, maintaining a historical quarterly average level.

We will now move on to the next page to look at the bank's asset quality in greater detail.

Page 18 KEB Hana Bank Asset Quality

Next on page 18, KEB Hana Bank asset quality.

KEB Hana Bank's total credit, at the end of 2015, is up 0.4% to reach KRW 209.3 trillion and NPL is down 7.3% YTD to stand at KRW 2.4 trillion.

As such, the NPL ratio fell 10 bp YTD reaching 1.15% and NPL coverage ratio is up 13%p YTD to arrive at 133.1%. As the end of 2015, KEB Hana Bank's delinquency ratio stands at 0.53%, falling 2 bp QoQ showing a stable level.

Page 19 Provision Analysis

Next on page 19, an overview on provisions. As the end of 2015, group's credit cost ratio on a cumulative basis fell 6 bp YTD and rose 4 bp QoQ to reach 0.45%, and KEB Hana Bank's credit cost ratio posted a 0.40%.

Despite the financial difficulties of few large corporates on the back of sluggish economy and our pre-emptive provisioning to cope with the possibility of credit events in corporates like STX O&S, the annual credit cost ratio has been maintained at a stable level. In 2016 as well, we will continue to reduce our exposure to large corporates in low credit quality and high risk sectors, so that with pre-emptive management and control, we can minimize loan loss provisioning.

Page 20 Capital Adequacy

Finally, on page 20, capital adequacy.

As the end of 2015, group's expected BIS and Tier 1 ratio stand at 13.32% and 10.44%, respectively. Group's expected CET1 ratio is 9.81%, up 63 bp YTD and 21 bp QoQ, respectively.

For more details on the subsidiary results and major financial indices, please refer to the appendix.

With this, I will now conclude the Hana Financial Group earnings presentation for the year 2015.

Thank you very much.