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Good afternoon. Thank you for participating in Hana Financial Group’s earnings presentation. I’m Guen Hoon Park, new Head of IR. Our IR team will put best effort in expanding contacts with shareholders and analysts to ensure smooth and accurate communication going forward. Now let’s begin the 2022 Q1 earnings presentation.

For today's presentation, we have with us our CFO, Hoo-seung Lee and also other members of the senior management. Today, we will first have the presentation of our business results, followed by a Q&A session via phone. Our CFO, Hoo-seung Lee, will now begin the presentation on the business results of 2022 Q1.

Good afternoon to all the capital market participants, research analysts, and financial news journalists. Thank you for your interest in our Hana Financial Group. As he himself has introduced, GH Park is the new Head of the Hana Financial Group's IR team. His predecessor Jay Lee has over the course of the past 10 years built a very close working relationship with shareholders, investors, as well as market experts. So we also have very high hopes for GH Park as well. GH Park has worked at the Hana Financial Group's IR team for very long time and previously had served as the General Manager of Hana Bank's Amsterdam office, making significant contributions to our global business. I'd like to take this opportunity as the CFO of our Group to ask our shareholders and market experts for your continued support and interest, so that GH Park makes a smooth transition into his position.

So May is just around the corner, the season of new beginnings. Last March, at the General Shareholders Meeting, Young-joo Ham took office as the new CEO of Hana Financial Group. I'm indeed pleased to be announcing healthy business results in keeping with this new and auspicious beginning. I truly hope that all of you will be able to enjoy the beautiful spring weather during the weekend.

P3. 2022 1Q Business Highlights(1)

We will now present the business results of Hana Financial Group for Q1 2022. First is the business highlights of the Group. Please refer to Page 3.

The net income of Hana Financial Group in Q1 of 2022 is up 8% YoY and up 6.8% QoQ to post KRW 902.2 billion. Despite large one-off expense and preemptive provisioning, the Group's top line results have grown in a healthy manner, posting over KRW 900 billion for the quarter and once again demonstrating strong fundamentals.

However, the uncertainties surrounding the domestic and the global macro environment are intensifying. Along with the COVID-19 pandemic, Russia's invasion of Ukraine is aggravating the global supply chain disruptions.

In response to surging inflation, central banks of major countries are seeking to tighten their monetary policies, resulting in a flattening yield curve of the government bonds, which is a key signal of a looming economic recession. In response, Hana Financial Group has continued to preemptively set aside loan loss provisions and has secured more than sufficient buffer to weather any potential risk factors. Going forward, we will strengthen our management of marginal borrowers under different macroeconomic scenarios and at the same time, we will continue to further shore up the company's fundamentals based on thorough risk management, including reviewing the Group's risk response system to ensure prompt countermeasures in a risky environment. Following the trade deficit, fiscal deficits are also being forecasted as the twin deficit situation is increasingly becoming a source of concern, rising inflation, tightening monetary policies, FX volatility and growing household and corporate debt. And even against the possibility of an economic slowdown, we will be thoroughly prepared.

Hana Financial Group with the vision of becoming Asia's top tier financial group will take the year of 2022, the year that CEO Young-joo Ham came on board, as the beginning of going beyond finance. We will pursue our focus on our three key strategies; maximizing our strength and reorganizing the non-banking business, strengthening our position as a global leading financial group, and lastly, innovating digital finance. We also stand at the forefront of realizing the values of ESG under the motto of growing together and sharing happiness through finance.

In addition, today, the BoD of Hana Financial Group resolved to cancel, for the first time after our establishment as a financial holding group, KRW 150 billion worth of treasury shares. I’d like to emphasize that our CEO of the Group, Young-joo Ham and the BoD always prioritize enhancing shareholder value. Even during the tough times caused by the pandemic, we have continued our 15 year tradition of interim dividends payout. To continue this legacy of shareholder return enhancement, as part of our plan to further diversify shareholder return policy, we have decided to cancel our treasury shares. This is our way of showing appreciation to our shareholders who have placed their trust in us as well as demonstrating our commitment towards shareholder return policy. We will continue to move forward with more diverse ways of enhancing shareholder value.

Now let me go into greater details about the Group's business results. First of all, the core earnings of the Group, the core part of our fundamentals, are up 12.9% YoY and up 1.9% QoQ to post KRW 2,473.7 billion in this quarter, continuing the upward trend for the five consecutive quarters.

Key drivers included the rise in NIM and increase in the loan asset, following the BOK rate hike, thus resulting in growth in the interest income of Hana Bank. Also, despite the credit card merchant fee rate cut and weak brokerage fee income, the Group's fee income improved QoQ on the back of increasing IB and FX related fees, resulting in record high core earnings for the Group.

Next, the Group's 2022 Q1 SG&A posted KRW 1,251.8 billion. The main reason was the one-off cost incurred due to the ERP program undertaken by Hana Bank and Hana Card. As such, the C/I ratio increased somewhat YoY and YTD. However, when such one-off cost factors are excluded, the C/I ratio in Q1 posted 42% level. Going forward, while we make investments to improve profit and operational efficiency including digital capacity enhancement, we will also continue to make efforts to reduce recurring cost.

Finally, the Group's Q1 credit cost ratio posted 0.19% and compared to the annual target, a fair level of buffer has been secured. This is due to the fact that in order to cope with any economic uncertainties, we have engaged in preemptive risk management efforts, continuing to set aside the loss provisioning and maintaining a strategy of asset growth based on asset quality.

Because of the continuing rise in prices of key commodities, high rate of inflation is expected to persist for the time being. Last week, on April 14, the Bank of Korea undertook additional rate hikes to respond to high inflation and unstable foreign exchange rates. This was ahead of the timing that had been predicted by the market. The concerns are growing over the so-called three highs: rising prices, interest rates, and foreign exchange rate. We're fully aware of the market's concerns over the deteriorating asset quality of borrowers who are vulnerable to such changes in the economic environment. We will be fully participating in the government support policy for vulnerable groups such as the small business owners while also strengthening our risk management system to maintain sound asset quality.

More specifically, we have already set up and is implementing a management plan for marginal borrowers to effectively manage credit risk. For corporate loans, we have selected borrowers to be monitored through our priority watch list and have reduced the unused credit lines for low credit borrowers. In the case of SOHO and household loans, we are focused on managing our exposure to low credit quality in multiple loan borrowers. If you look at the bottom left of the slide, the Group's ROE and ROA in Q1 of 2022 recorded 10.69% and 0.72%, respectively.

P4. 2022 1Q Business Highlights(2)

Next, please refer to Page 4. The Group's 2022 Q1 NIM, including Hana Bank and Hana Card, posted 1.71%, similar to last quarter. Hana Card's NIM has continued to decrease over the previous quarter, leading to a significant drop in profitability due to merchant fee rate cut, reduction in card loan and other loan assets due to preemptive risk management.

However, the Bank's NIM, which has a substantial impact on the interest income and takes up the lion's share of the Group's interest bearing asset posted 1.50%, up 3 bps in QoQ, continuing the upward trend. Last January, the BOK raised the policy rate and the more hawkish stance of the Fed has led to rising market rates which help improve loan asset pricing. In addition, the efforts to enhance portfolio mix based on profitability began to pay off. Also, on the back of the BOK rate hike in April, we expect additional expansion in NIM.

Next, if you look at the right hand side, the Bank's Korean Won loans grew 1.2% QoQ to post KRW 260 trillion. Sound loan growth based on real demand and bank NIM expansion led the Group's interest income to grow 17.3% YoY and 0.8% QoQ, overcoming the calendar effect in February. The fee income was up 7.6% QoQ, rebounding from the downward trend of the second half of last year. However, the credit card and brokerage fees were down 3.3% YoY.

P5. 2022 1Q Business Highlights(3)

Next is Page 5. As of the end of Q1 of 2022, the Group's NPL ratio posted 0.36%, down 4bps YoY and the total delinquency ratio was down 1 bps YoY to post 0.29%, maintaining a stable trend overall. The Group's Q1 credit cost ratio posted 0.19% as well. During the quarter, additional provisioning for COVID-19 related loans and conservative application of individual assessment have resulted in additional preemptive provisioning of KRW 60.3 billion. However, the credit cost ratio was maintained at a stable level against the annual target.

Finally, the Group CET1 ratio is 13.55%, maintaining a healthy level compared to the regulatory guideline. However, the decline in the ratio over the previous quarter is due to the increase in the RWA on the back of rising exchange rate and asset growth. Going forward, when the exchange rate stabilizes, we expect the Group's CET1 ratio to improve through the stable profit structure of the Group. We will continue to secure sufficient buffer and strategic investment capacity through proactive RWA management and reduction of unused credit lines while maintaining the highest capital ratio in the industry.

P7. Group Consolidated Earnings

Now let me walk you through the Group's business results by item. Please refer to the Group's consolidated earnings on Page 7. Out of the Group's general operating income for Q1, quarterly interest income posted KRW 2,020.3 billion, up 17.3% YoY and 0.8% QoQ.

Due to the decline in asset management-related fees including security brokerage and credit card fees, Q1 fee income fell 3.3% YoY, but on a QoQ basis, it was up by 7.6% to reach KRW 453.5 billion. The Group's Q1 disposition and valuation gain recorded KRW 203.1 billion. The bank recognized FX translation loss of KRW 31.5 billion due to depreciation of Korean Won coupled with weak performance of securities, especially bonds amidst the rapid market rate increase. On the other hand, FX and derivative trading gain increased, and the sizable FX translation loss recorded in Q1 2021 acted as a positive base effect. Non-bank subsidiaries improved their investment performance such as the valuation gain of beneficiary securities and the Group's disposition and valuation gain increased both YoY and QoQ. And lastly, SG&A expense in Q1 increased 22.7% YoY and 19.6% QoQ due to the ERP I had mentioned earlier.

P8. Business Results of Subsidiaries

Moving on to Page 8, here are the business results of our subsidiaries. Hana Bank's net income for Q1 2022 went up 15.9% YoY and up 7% QoQ to KRW 667.1 billion. The highest core earnings in history were achieved on the back of balanced top line growth, enabling a robust growth despite the sizable ERP. Hana Financial Investment's net income in Q1 was KRW 119.3 billion. Although M&A and advisory fees increased YoY, decreased transaction volume in the stock market affected the securities brokerage fees, overall weakening the asset management fee income. Due to the recognition of bonus payment that attributed to higher SG&A expenses, the net income decreased by 12.8% YoY, but increased by 23.5% QoQ.

Hana Capital's net income for Q1 was KRW 91.3 billion. Thanks to the improved general operating income including interest income and disposition and valuation gain, the net income was up 48.1% YoY and up 15.8% QoQ, continuing the upward trend.

Lastly, Hana Card's net income for the quarter was up 6.1% QoQ to KRW 54.6 billion. But due to the merchant fee cut applied since February, reduction of card loan assets in line with risk management, and higher SG&A mainly due to ERP, the net income fell by 24.7% YoY. .

Please refer to the table for the other subsidiaries' performance.

P9. NIM, P10. Non-Int. Income, P11. SG&A Expenses, P13. Group Total Assets/Total Liabilities & Equity

Please refer to Page 9 through 11 for details about NIM, non-interest income, and SG&A expenses explained earlier.

Page 13 discusses the Group's total assets, liabilities, and equity.

P14. Hana Bank KRW Loan/Deposit, P.15. Hana Bank KRW Loan Composition

Page 14 explains Hana Bank's loan and deposit in Korean Won. The Bank's loan in Won as of quarter-end was KRW 260 trillion, up 1.2% QoQ. The asset growth can be broken down as follows. Total corporate loans stood at KRW 129 trillion, growing 2.3% QoQ, and large corporate loan increased 1.4% QoQ. SME loans also grew 3.0% QoQ, driven by continued funding support for the non-audited SMEs and SOHO borrowers. Household loans grew slightly QoQ to KRW 130 trillion. Unsecured loan balance decreased, and demand-driven loans centered on Jeonse loan increased.

As of quarter end, the deposit in Won stood at KRW 278 trillion, up 3.6% QoQ. Reflective of the abundant liquidity in the market, low cost deposit and MMDA balance, each grew 4% and 7.2%, respectively, and time deposit increased 1% from the previous quarter. As a result, the LCF weight in Q1 increased 0.9 percentage point over the quarter. For your reference, the graph on the bottom right shows the LDR at the end of the quarter to be 98.1%.

Please refer to Page 15 for Hana Bank's loan composition.

P17. Group Asset Quality

Page 17 discusses the Group's asset quality. As of Q1, the Group's total credit grew to KRW 355 trillion, up 2.8% from the previous quarter. Loans from the overseas entities that were delinquent in Q4 last year was reclassified as NPL and due to other one-offs, NPL increased 13.9% QoQ to KRW 1,267.6 billion. The top right graph shows that the new NPL formation in Q1 was KRW 295.9 billion, somewhat higher than the previous quarter. However, the Group's NPL ratio was 0.36%, maintaining a lower level on a YoY basis. NPL coverage ratio as of quarter end recorded 160.4%, sustaining a sound level YoY, with the asset quality indicators being well managed. There will be strengthened risk monitoring for the overseas entities and branches as well as enhanced approval and post management process of overseas alternative investment.

P18. Hana Bank Asset Quality

And let me elaborate on the Bank's asset quality on Page 18. Hana Bank's total credit in Q1 grew 1.9% QoQ to KRW 301 trillion and NPL decreased by 5.5% to KRW 715.1 billion. NPL ratio fell by 2 bps QoQ to 0.24% and the NPL coverage ratio as of quarter-end was 179.2%. Hana Bank's delinquency ratio at the end of Q1 was 16 bps, maintaining a similar level as the previous quarter.

P19, P20. Provision Analysis

Please refer to the Group's and Bank's provision on Pages 19 and 20.

P21. Capital Adequacy

Lastly, Page 21 shows capital adequacy of the group. We expect the Group's BIS ratio and Tier 1 ratio to be 16.06% and 14.99%, respectively, and CET1 ratio is expected to be 13.55% at the end of the quarter. As I mentioned earlier, due to weakened Korean Won and increased RWA, the overall capital ratios fell QoQ slightly.

Going forward, we will continue to enhance capital efficiency and shareholder value based on stable business results.

With this, I'd like to conclude the earnings presentation for Hana Financial Group Q1 2022. Thank you.