P 3. 2020 Financial Highlights (1)

From now on I will run you through the 2020 Group financial highlights. First. I would like to mention the major highlights of the group's business results. Please refer to page 3. Hana Financial Group's 2020 yearly net income posted KRW 2,637.2billion, a 10.3% increase Y-o-Y. Q4 net income posted KRW 532.8billion, a 52% increase Y-o-Y. The recurring quarterly income, taking into account various one-off costs posted KRW 700 billion level and has maintained a robust flow.

Looking back on 2020, on the back of the group's strengthened overall profit generating capability following portfolio and sales channel differentiation and preemptive risk management efforts to respond to potential risk factors, we were able to achieve solid business results amidst the challenging and unprecedented Covid-19 pandemic.

Hana Financial Group in 2021 is also securing sufficient loss-absorbing buffer, so that we can provide funds to overcome Covid-19 and provide the funds to the right place at the right time. To this end, we had reserved around KRW 108.2billion of loan loss provisions in Q4 to respond to the economic situation, and in order to prepare for the global financial market volatility, an additional KRW 112.6billion of private equity fund was recognized. Since we have the uncertainties in and out of Korea that can lead to economic downturn going forward, Hana Financial Group will do our best based on our capabilities to stabilize with that loss and do our best for better performance and shareholder value increase.

Next, I would like to explain about our business results in more detail. 2020 Group's core earnings achieved KRW 8,070billion, a 1.8% increase Y-o-Y and showed steady growth. On the back of non-bank subsidiaries and global divisions' performance, we were able to safeguard our interest income to the level of the previous year. Group's fee income, centering on securities, credit card, capital and other non-banking subsidiaries, recorded market growth. In 2020, there was a negative business environment surrounding our biggest subsidiary, the Bank, and its core profit, including NIM decline following policy rate cut and decline in FX fees due to the global trade contraction. Despite the situation, the non-banking sector was strengthened over the past few years and as a result of our business portfolio differentiation strategy, the group's core profit posted a record high.

On the other hand, we have sufficiently secured group's loss absorption capability in order to prepare for economic downward risk following Covid-19. As was aforementioned, following Q2 of the previous year, there was recognition of a sizable amount of preemptive cost related to private equity fund in Q4 as well. It was at around KRW 220.7billion level on a yearly basis and we were able to secure the resources to pay for any compensation that might incur and minimize the earnings uncertainty. For your reference, we inform you that according to the calculation of the Korean Accounting Standards Board, the accounting item of private equity-related expenses or profits change from other provisions item to non-operating income item.

In addition, in the case of preemptive LLP or loan loss provisions, including KRW 171billion in the second half of the year, a total of KRW 337.7billion was provisioned annually and in particular, there was strict review of overall asset quality in Q4, and through this we not only adjusted FLC (Forward-looking Criteria) but also additionally provisioned based on a conservative basis for the assets that were relatively largely exposed to Covid-19, including aircraft finance. Accordingly, the group's 2020 credit cost ratio posted 0.27% and increased Y-o-Y, but excluding the one-off factors that are aforementioned, it stands at a 0.17% level and the recurring level of credit cost was still stably managed.

Lastly, the group's SG&A was efficiently controlled and is being controlled. According to the labor cost saving derived from the special retirement that took place in late 2019, the group's labor cost even excluding the partial reversal of the bank's performance-linked compensation, which took place in Q2 decreased greatly Y-o-Y. In the case of the annual retirement and benefits, with the underlying effect from the wage peak ERP, it decreased Y-o-Y and the administrative cost also showed a decline on the back of group-wide efforts to save costs. Accordingly, the Group's 2020 yearly SG&A posted KRW 3,917.7 billion, a 4.6% drop Y-o-Y. Despite the around KRW 169.6 billion of ERP cost, which was executed in Q4, it was managed below KRW 4trillion on a nominal basis and the group's yearly C/I ratio posted 45.3% and the cost efficiency greatly increased Y-o-Y.

On the other hand, following the preemptive early retirement or special retirement of 500 employees in late 2020, 2021 SG&A is expected to maintain a stable level as well. Going forward, we will continue our efforts to cut costs, so that we can prepare for many uncertainties of the external business environment and secure our earnings stability. Looking at the bottom left of the page, 2020-end group ROE and ROA posted respectively, 8.96% and 0.61% and improved Y-o-Y.

P 4. 2020 Financial Highlights (2)

Next, please refer to page 4. Group's 2020 Q4 NIM, comprised of Hana Bank and Hana Card, posted 1.54%, a 4bp drop Q-o-Q. Hana Card NIM recorded a similar level Q-o-Q but Hana Bank's NIM posted 1.28%, a 4bp drop Q-o-Q. This was caused mostly by the asset repricing effect following the interest rate cuts and SME loan support following key interest rate dropped in the first half on a monthly basis. But the Bank NIM rebounded in December, confirming the lowest point. We expect the global central banks' low interest rate regime to continue due to Covid-19, but the Bank NIM with the ending of the effects from the policy interest rate cuts and through strategy to increase prime assets based on platform and through making the funding portfolio more efficient, we expect there will be a recovery from January of 2021.

Group's Q4 interest income on the back of contribution from non-bank and global division slightly increased Q-o-Q. In the case of quarterly fee income, with the decrease of other fee income and others, it slightly decreased Q-o-Q but on a yearly basis it achieved robust improvement compared to 2019. Looking at the right side of the page, bank loans and bonds increased 2.0% Q-o-Q and grew 9.5% YTD, posting KRW 239.2trillion.

P 5. 2020 Financial Highlights (3)

Let's go to page 5. 2020-end Group's NPL ratio posted 0.40%, a 8bp drop YTD and 1bp drop Q-o-Q. In addition, the delinquency rate dropped 4bp YTD and 1bp Q-o-Q, posted 0.26%. On the back of group-wide risk management efforts, the overall group asset quality indicators also downwardly stabilized. On the other hand, the group's 2020-end cumulative credit cost ratio, posted 0.27% and increased YTD. As aforementioned, a major reason for this was the sizable preemptive provisioning to respond to the economic situation fluctuations. And excluding this factor, the recurring group cumulative credit cost ratio posted around 0.17%, a sound level.

The Group's 2020-end CET1 ratio is expected to fall by 9bp Q-o-Q posting 12.03% with the year-end dividend. Excluding the dividend-related factors on the back of solid profit realization and stable RWA management, it rose Q-o-Q. In addition, with the early adoption of Basel III credit RWA that will be adopted in March, we believe that the group's capital ratio will improve to a substantial extent. I would like to now go over the Group's business results by item. Please refer to Page 7 for the group's consolidated income statement. Of the general operating income in 2020, Hana Financial Group's interest income slightly grew Y-o-Y to KRW 5,814.3billion. The fee income grew 4.9% Y-o-Y to KRW 2,255.7billion, thanks to improved performance from non-bank side, such as credit card, brokerage and M&A advisory fees. The group's valuation gain on sales grew 47% Y-o-Y to KRW 1,171.8billion. The won exchange rate to the dollar, which began inching down in the second quarter fell heavily in Q4. The Group enjoyed a non-monetary translation gain of KRW 122billion on an annual basis and this was mainly due to an improvement in the group's overall securities management performance and valuation gain. Lastly, despite the ERP, the annual SG&A recorded less than KRW 4trillion on a nominal basis, being effectively managed within the range of the business plan, improving the group's excellent cost control capabilities.

P 8. Business Results of Subsidiaries

Page 8, net income of subsidiaries. The Group's major subsidiary, Hana Bank, recorded a net income of KRW 2,010.1billion in 2020, down 6.1% Y-o-Y. Although we were able to defend the top line and save 10% on SG&A, we had recognized a hefty sum of provisions set aside for potential external shocks.

Hana Financial Investment's net income for the year increased by 46.6% Y-o-Y to KRW 410.9billion. The market was favorable with an increase in stock trades and the overall profit-generating capacity increased, for example, in S&T and IB. Hana Capital had a good year, growing its interest income based on an increase in healthy retail assets, recording a net income of KRW 177.2billion, up 64.5% Y-o-Y. Hana Card's net income in 2020 skyrocketed 174.4% Y-o-Y to KRW 154.5billion, its results showing visible improvement, thanks to an increase in fee income as well as cost management due to subsidiary-wide digital innovation. Please refer to the slide for other subsidiaries' results.

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

Please refer to pages 9 through 11 for the NIM, non-interest income, and SG&A details.

P 13. Group Total Assets / Total Liabilities & Equity

And also please look on page 13 for group's total assets, liabilities and equity..

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

And now moving on to Page 14, Hana Bank's loans and deposits in won. As of 2020 year-end, Hana Bank's loan in won is KRW 239trillion, up 2.0% Q-o-Q and up 9.5% Y-o-Y.
Picking down the loan growth by each item, corporate loans increased to KRW114 trillion, up 0.8% Q-o-Q. Of these, the large corp. loans recorded a downward trend since its spike in Q1, it was down by 8.1% Q-o-Q and up 2.9% Y-o-Y. On the other hand, SME loans posted a growth of 2.3% Q-o-Q and 11.4% Y-o-Y, with the continued supply of funds going into non-independently audited SOHO borrowers. In the household loans, Jeonse loan was the growth driver. And with the demand for prime credit loans concentrating in November, the household loans increased to KRW 125trillion, up 3.1% Q-o-Q.

P 17 Group Asset Quality

And now the group's asset quality on Page 17. The group's total credit grew 9.7% Y-o-Y to KRW 314trillion and the amount of NPL fell 7.4% Y-o-Y to KRW 1.3 trillion. This brought down the group's NPL ratio to 0.4%, down by 8bps Y-o-Y. On the top right, you see the Group's new NPL formation in Q4 was KRW 251.5billion, maintaining a similar level to the previous year.

P 18. Hana Bank Asset Quality

Please look on page 18 for the bank's asset quality. The bank's total credit rose 8.6% Y-o-Y to KRW 270trillion and NPL decreased 6.2% to KRW 0.9 trillion. This lowered the NPL ratio to 0.34%, a 5 bps decrease Y-o-Y, and the NPL coverage ratio at the end of 2020 was up 36 percentage point at 130.1%. The Bank's delinquency ratio as of year-end was 0.19%, down 1bp Q-o-Q. Corporate loan delinquency ratio was at a similar level to the previous quarter, whereas that of the household loan was slightly decreased.

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

Pages 19 and 20 discuss the group's and the Bank's provisions. Please refer to the pages for the numbers. Now lastly on Page 20, capital adequacy. The Group's BIS ratio and Tier 1 ratio are estimated at 14.18% and 13.01% respectively as of year-end. As for CET1 ratio, we expect it to be around 12.03%. Although the capital ratios have come down slightly due to the year-end dividend, capital adequacy indicators are still robust as can be seen from the CET1 ratio that exceeds 12%, without the effect of early Basel III introduction. For your reference, the Hana Financial Group's BOD resolved today that the cash dividend as of the end of 2020 shall be KRW 1,350 per share. If it is passed as is at the General Shareholders Meeting, the fiscal year 2020's total cash dividend per common share is KRW 1,850, including the interim dividend already paid out.

The annual payout ratio is expected to be 20% and the dividend yield ratio approximately 5.4%. Last year, we had provisioned KRW 558.3billion to absorb potential losses and still were able to post a sound growth of 10% Y-o-Y in net income. However, considering the economic recession and market uncertainty in light of the prolonged Covid-19 and taking into consideration the authority's concern and recommendation, we decided to reduce the payout ratio for the year 2020. We assure you that this is only temporary and we sincerely ask for your generous understanding. We will do our best to increase shareholder value going forward by normalizing our shareholder return policy, including interim and year-end dividend through stable business performance improvement in the year 2021.

This brings me to the end of Hana Financial Group's earnings presentation for the year 2020. Thank you.