Greetings. I am Lee Seung-Iyul, in-charge of Hana Financial Group's Finance. I would like to cover the 2020 Q1 group business results presentation.

P 3. 2020.1Q Financial Highlights (1)

First, the major business highlights of the group. Please refer to Page 3 of the material. Hana Financial Group's 2020 Q1 net income grew 20.3% YoY posting KRW 657 billion. With the spread of COVID-19 domestic and global uncertainty deepened with the rapid expansion of global financial markets volatility and concerns over economic depression. But on the back of our group wide efforts to overcome the crisis, we were able to achieve solid earnings.

This year, we forecast that the domestic economic growth rate will record the lowest level since the Asian financial crisis, and there are also concerns that the financial industry management environment will also greatly worsen following the contraction in the real economy. Hana Financial Group will do our best so that we can maintain sound earnings through internal efforts to more efficiently manage costs and by strengthening risk management and improve our profitability.

Now let me cover our 2020 Q1 major financial highlights. First, Q1 group interest income posted a similar level of YoY. Despite the slight drop in the quarterly NIM, the interest income maintained a similar level mainly due to the aggressive response to domestic company’s pre-emptive funding demand and adequate growth of loan assets on the back of sustained household and SME loan-based growth trend as well as interest income growth of global division, including China and Indonesia.

On the other hand, in the case of fee income it went up YoY on the back of credit card fee income and improvement in loan and foreign currency related fee income. Accordingly, the core earnings comprised of the group's interest income and fee income slightly increased YoY stably maintaining the group's recurring income.

Next, as a result of continued recurring cost rationalization efforts of the group after one-off retirement expenses, including wage peak ERP, which was recognized in Q4, Q1 and group SG&A expenses dropped 12.1% YoY and was stably controlled. Q1 cost to income ratio also greatly dropped YoY improving our cost efficiency.

Overall through pre-emptive expense execution late last year, this year's SG&A growth burden was eased, and we expect that it will contribute to the stabilization of the bottom line in the difficult management environment going forward.

Lastly, through the asset quality centered asset growth strategy that has continued for the past several years. The group's provisioning was stably managed in Q1. In addition, the risk component adjustment which was traditionally done early in the year actually changed to being executed late in the year and also with the completion of additional provisioning in late 2019.

There was an underlying effect of non-recurring items being absent compared to the same period in the previous year. Accordingly the group credit cost ratio as of end 2020, Q1 realized 13 bp, a 12 bp drop YoY and also improved 5 bp QoQ attesting to the stable management of the group's asset quality.

Looking at the bottom left of the page, the group ROE and ROA as of end Q1 2020, posted 9.38% and 0.63% respectively and went up YoY and QoQ. Group's cost to income ratio posted 48.7%.

P 4. 2020.1Q Financial Highlights (2)

Next please refer to Page 4. The group's 2020 Q1 NIM comprised of Hana Bank and Hana Card posted 1.62%, a 6 bp decline QoQ. Hana Bank's NIM recorded 1.39%, a 2 bp drop QoQ. With the BOK rate cut early in March, loan-to-deposit pricing slightly weakened, but the drop was offset by portfolio efficiency through increase in low cost deposits. A major reason for the decline was the absence of underlying effects caused by the sizable collection of overdue interest at the end of the previous quarter.

On the other hand, due to repercussions from COVID-19, card NIM under a situation when the domestic and global credit card settlement profit declined, which led to a decline QoQ since a part of the drop in the fee related expenses was not reflected in the NIM calculation, and this also had an effect on the group NIM. On the other hand, the credit card fee income, which fully reflected the drop in expenses maintained the previous quarter's levels and had only a negligible effect on the group's P&L.

Group's 2020 Q1 interest income despite the NIM drop maintained the previous year's level on the back of loan asset growth. Fee income centering on credit card fees and loan and FX related fees rose 2.0% YoY. Accordingly, the group's Q1 core earnings posted KRW 1,960.6 billion, a slight increase YoY.

On the right side of the material, you can see that the bank's loans in won with overall solid growth of loan assets saw a rapid rise in large corporate loans leading to a 2.0% growth QoQ, marking KRW 222.7 trillion.

P 5. 2020.1Q Financial Highlights (3)

Now, let's go to Page 5. 2020 Q1 and group's NPL ratio recorded 0.47%, a 1 bp drop QoQ and delinquency ratio posted 0.31%, a 1 bp increase QoQ. In addition, the group's credit cost ratio as of end Q1 posted 0.13%, a 5 bp QoQ improvement as aforementioned. Attesting to the stable management of overall asset quality indicators with concerns over spread of COVID-19 in case economic activity normalization is prolonged, economic depression and asset quality worsening possibilities are expected to heighten.

And going forward, we will prepare for diverse scenarios and review risk factors and aggressively respond accordingly. The group's 2020 Q1 and CET1 ratio is forecast to post 11.89%, a 7 bp drop QoQ. A major reason was the RWA increase due to the quarterly spike in the $1 exchange rate. And when the FX rate is stabilized later on, we forecast that along with the realization of a recurring level of quarterly earnings the group's CET1 ratio can gradually be improved.

P 7. Group Consolidated Earnings

I will now cover the group's management performance in more detail by line. First refer to the group's consolidated income statement on Page 7. Group's interest income among the group's 2020 Q1 general operating income posted KRW 1,428 billion, a level similar to the previous quarter and the same period in the previous year.
Q1 fee income posted KRW 532.6 billion, a 5.8% drop QoQ due to the decline of M&A advisory fees, but compared to the previous year as aforementioned, on the back of robust improvement including credit card fee income grew 2.0% YoY. In addition though, with these FX related fees and asset management related fees and other bank income related fees may have some difficulties, but for credit card and for brokerage we will do our best to actually safeguard our assets. In addition, the group's 2020 Q1 disposition valuation gains posted KRW 74.1 billion. With the quarterly rise in the FX rate. KRW 109 billion of non-monetary FX translation losses incurred a drop YoY. And compared to the previous quarter, there was a reverse effect from absence of one-off derivative gains related to BIDV equity investments and greatly fell. However, excluding these one-off items, the recurring level of disposition valuation gains on the whole posted a sound level. Lastly, the group's Q1 SG&A expenses posted KRW 927.9 billion, a 20.7% QoQ and 12.1% drop YoY. This was mainly a result of group wide efforts to continue to manage cost more efficiently and since the wage peak early retirement expenses were preemptively executed completely late last year.

P 8. Business Results of Subsidiaries

Now moving on to Page 8 for business results by subsidiaries. Hana Bank which is of course a major subsidiary of the group recorded net income of KRW 554.6 billion in the first quarter of 2020, up 59.1% QoQ and 15.6% YoY. Although there was significant nonmonetary FX translation loss due to weakening of the won, core profits remained robust, while SG&A and credit cards were well-managed at stable levels resulting in sound earnings performance. Next, Hana Financial Investments Q1 net income decreased by 32.2% QoQ and 25.2% year-on-year respectively, recording KRW 46.7 billion, amid a sharp rise in volatility across the global financial markets, which led to a decline in M&A advisory fee income and SMT performance. Now the Hana Card saw an uptrend in credit card fee income in the first quarter recording KRW 30.3 billion in net income, a significant increase on both a QoQ and YoY basis, thanks in large part to one-off earnings. Please refer to the slide for the business performance of our other subsidiaries.

P 9. NIM, P 10. Non-Int. Income, P 11. SG&A Expenses

And from Pages 9 through 11, please refer to those slides for further details on other metrics such as NIM, non-interest income and SG&A, which I've already mentioned.

P 13. Group Total Assets / Total Liabilities & Equity

Now moving on to a breakdown of total assets, liabilities and equity for the group. As of the end of Q1 2020, group total assets reported KRW 440 trillion or KRW 556 trillion, when including trust assets of KRW 126 trillion. Total assets of Hana Bank, the anchor subsidiary of the group was KRW 451 trillion including trust assets. The group's total liabilities stand at KRW 441 trillion and total equity at KRW 29 trillion.

P 14. Hana Bank KRW Loan / Deposit, P 15. Hana Bank KRW Loan Composition

Moving on to Page 14 for an update on KB Hana Bank's won loans and deposits. As of the end of Q1 2020, Hana Bank's Korean won loans recorded KRW 222.7 trillion, up 2% QoQ from the end of last quarter.
Let's look at a breakdown of the loan growth by segment. Corporate loans increased to KRW 106.9 trillion or 3.1% QoQ. Large corporate loans increased by 14.4% QoQ to KRW 15.6 trillion, and made a surge in funding demand at the end of the quarter, amid widening of financial market volatility. SME loans showed continued growth driven by real funding demand from quality mid-tier SMEs recording KRW 89.4 trillion, which is an increase of 1.7% compared to the fourth quarter. Hana household loans grew 0.9% in the first quarter recording KRW 115.8 trillion on the back of continued demand for Tranche A loans and unsecured credit loans same as in the previous quarter. Deposits in won as of Q1 end rose by 3% QoQ to KRW 237 trillion. Low-cost core deposits increased by 5.8%, MMDA by 13.8% increasing the share of low-cost deposits in the funding mix to 35.1% versus the end of the previous quarter. And for your reference as you can see on the bottom right graph.
Let's look at a breakdown of the loan growth by segment. Corporate loans increased to KRW 106.9 trillion or 3.1% QoQ. Large corporate loans increased by 14.4% QoQ to KRW 15.6 trillion, and made a surge in funding demand at the end of the quarter, amid widening of financial market volatility. SME loans showed continued growth driven by real funding demand from quality mid-tier SMEs recording KRW 89.4 trillion, which is an increase of 1.7% compared to the fourth quarter. Hana household loans grew 0.9% in the first quarter recording KRW 115.8 trillion on the back of continued demand for Tranche A loans and unsecured credit loans same as in the previous quarter. Deposits in won as of Q1 end rose by 3% QoQ to KRW 237 trillion. Low-cost core deposits increased by 5.8%, MMDA by 13.8% increasing the share of low-cost deposits in the funding mix to 35.1% versus the end of the previous quarter. And for your reference as you can see on the bottom right graph. As of the end of the first quarter 2020, the loan deposit ratio stood at 96.8%, and Page 15 provides a breakdown of Hana Bank Loans by types so please do refer to the slide.

P 17 Group Asset Quality, P 18. Hana Bank Asset Quality

Now moving onto asset quality on Page 17. Group's total credit grew 3.1% QoQ reporting KRW 295.4 trillion as of the end of the first quarter, the NPL amount increased 2.6% QoQ to KRW 1.4 trillion. As a result, the group's NPL ratio decreased by 1 basis point QoQ to record 0.47%. If you look at the top right, you can see that the group's new NPL formation prior to write-offs, loan sales and debt-equity swaps in the first quarter was KRW 290.2 billion, an increase versus the end of the previous quarter, following partial regulatory change in the assets down as classification criteria applicable to a non-bank subsidiary. Now I will take you through further details on the bank's asset quality on the next slide. Hana Bank's total credit as of the end of the first quarter rose by 3% QoQ, to KRW 256.6 trillion with the NPL amount recording KRW 1 trillion, which is a decline of 2.2%. Consequently, the NPL coverage ratio increased by 1 percentage point QoQ to record 95.1%. The bank's delinquency ratio as at the end of the first quarter rose by 1 basis points to 0.21% and it's being managed at stable level.

P 19, P 20. Provision Analysis, P 21. Capital Adequacy

Next moving on to provisions on Page 19. The group recorded a credit cost ratio of 0.13% as of the end of Q1 2020, but as you can see on Page 20 KEB Hana Bank's credit cost ratio was 0.06%. And lastly, on to Page 21 for a breakdown of our capital adequacy position, the group's BIS ratio and Tier 1 ratio are estimated at 13.8% and 12.5% respectively and the common equity Tier 1 CET1 ratio is expected at 11.89%. As previously mentioned, the won weakened significantly during the quarter, resulting in an overall drop in our BIS ratio compared to the prior quarter. That being said, our capital adequacy remains well managed with a sufficient buffer, and of course, we will continue to do our best to further enhance our capital efficiency and shareholder value through improved performance. And with that, this brings me to the end of Hana Financial Group's earnings presentation for the first quarter of 2020. Thank you.