Good afternoon, everyone. Thank you for participating in Hana Financial Group's Earnings presentation. I am GH Park, Head of IR at the Hana Financial Group. I'd like to thank shareholders, analysts, and other market participants for taking time out of their busy schedule to take part in today's earnings release via phone or the internet. We'll begin 2022 Q3 earnings presentation.

We have with us today Hana Financial Group's CFO, Hoo-Seung Lee, and Senior Management members of the Group and its subsidiaries. Especially for today's earnings release, we have in attendance the Group CRO, Ju-Seong Kim, and the senior management members from the Group's Securities, Capital, Savings Bank, who are responsible for risk management to answer risk-related questions. Today, we'll first give a presentation on the Group's business results and then hold a Q&A session via phone. I'll now invite our CFO, Hoo-seung Lee for the presentation on the 2022 Q3 business results of Hana Financial Group.

Good afternoon, investors, capital market participants, analysts from home and abroad, as well as financial journalists all taking interest in Hana Financial Group. Hello, everyone. I am Lee Hoo-seung, the CFO of the Hana Financial Group. The weather is growing rather chilly in the early morning hours and during the evening as well. I'm greatly pleased to be able to greet you today with sound business results, in keeping with a season of harvest and abundance. The clear blue sky in recent days is indeed lovely. I hope all of you will be able to create fond memories with your family with the autumn in full swing.

And now let me walk you through the 2022 Q3 Hana Financial Group's business results.

P3. Q3 2022 Business Highlights (1)

First, the key financial highlights of the group. Please refer to Page 3.

Hana Financial Group in Q3 of 2022 posted net income of KRW 1,121.9 billion. Now despite the growing volatility of the market which is a source of much concern, the increase in core earnings and efficient cost control resulted in such stable performance. Reflecting this, the accumulative net income for Q3 is up 6.3% Y-o-Y to post KRW 2,849.4 billion. Let me explain in more detail of the business results. First, the Group's accumulative core earnings for Q3, which is one of the fundamentals of the group is up 2.3% Q-o-Q on the back of the policy rate hike, which helped increased in NIM and the growth in interest income from stable loan assets, offsetting the decline in fee income. As such, it is up Y-o-Y on annual accumulative basis as well. Next, the Group posted gains on disposition and valuation losses of KRW136.8 billion in Q3 due to steep rise in the Korean won exchange rate. However, due to the increase in FX transaction gains and base effect from the Q2 AFS securities valuation losses has improved significantly Q-o-Q.

Next is SG&A. Following last quarter, the Group's sound cost control ability was demonstrated. On a quarterly basis, the SG&A was controlled at KRW1 trillion level, and we're focusing on the improvement of the core earnings as I've denoted above, and improved general operating profit contributed to quarterly C/I ratio at 38% level.

On cumulative basis, the SG&A is continuing a stable trend following last quarter and compared to last year, it was improved despite the implementation of the bank's ERP in Q1. In Q4 as well, in order to improve operating efficiency, investment will be made preemptively and at the same time, enterprise-wide cost saving efforts will be made so that effective cost control, which is a key strength of Hana Financial Group, can be sustained going forward.

Next, I will explain about the asset quality improvements this quarter. The Group's credit cost ratio despite the growing macro uncertainties posted 0.21% in Q3 on cumulative basis and has stabilized Q-o-Q as all the key risk management indicators including delinquency ratio were managed at a stable level.

Finally, in Q3 the Group's NPL coverage ratio posted 175.7%, up 11.3 percentage point from Q2. The bank’s coverage posted 207.3%, and this is the highest level since the founding of the holding company in 2005. Also in Q3 the actual NPL coverage ratio that includes KRW2,493.5 billion and KRW2,287.7 billion of the Group and the banks' credit loss provisioning posted 366.9% and 445.7%, respectively, maintaining solid loss-absorbing capacity.

Based on such stable management at the top line and bottom line, if you look at the bottom left side of the page on a cumulative basis in Q3, the Group's ROE and ROA posted 10.90% and 0.71%, respectively, and has improved Q-o-Q.. However, tightening monetary policy globally to fight inflation, and the weakened consumer sentiment, geo-economics factors including rising geopolitical risk, leading to worsening trade environment are fueling concerns of an economic recession.

Hana Financial Group has announced recently, its “all connected in Hana” project in order to stand together with people who are suffering financially from high-interest rates, high prices, and high exchange rate. This project was announced last September. While taking part in the government's policies and programs to stabilize livelihoods of the people, we plan to also provide assistance to help customers desperately asking for financial aid to manage a soft-landing and regain their footing. More specifically, programs such as loan repayment deferral and the interest reduction for the vulnerable borrowers and programs to provide additional financial benefits to the young generation such as the young entrepreneurs, the business startup financial assistance, and the young adult savings account for the future and some of the programs that we have rolled out. In addition, aside from such financial assistance, we tend to fulfill our responsibilities as a leading financial institution, in creating diverse social value, such as revitalizing local economies, job creation for the elderly in order to create a happy finance that will lead to happiness for all.

P4. Q3 2022 Business Highlights (2)

Next, please refer to Page 4. The Group's 2022 Q3 and NIM including Hana Bank and Hana Card is up 2 bps Q-o-Q to post 1.82%. Due to the rise in funding cost, the Hana Card’s NIM is down Q-o-Q, but Hana Bank's NIM is up 3 bps Q-o-Q resulting in the Group's NIM improvement. Recently owing to the growing volatility of the asset market and steep BOK interest rate hikes, time deposits have become much more attractive. However, the asset repricing impact more than offset the rise in overall funding cost; accordingly, the bank's NIM has improved Q-o-Q. Next, if you look at the right-hand side of the slide, the Korean Won denominated Bank loans are up 1.3% Q-o-Q to post KRW268 trillion and realized stable asset growth. As such, the Group's interest income increased both on quarterly and annual cumulative basis. On the other hand, the Group's a fee income is down 12% Q-o-Q. This is driven by weak IB commissions led by a contraction in investment demand, deal delays due to aggravated IB market operating environment, the fall in asset management fees, including brokerage fee, resulting from the global stock market correction, and the decline in credit card fees on the back of merchant fee refund for small-size merchants.

P5. Q3 2022 Business Highlights (3)

Next is Page 5. As of the end of Q3 of 2022, the Group's NPL ratio posted 0.35%, is down 2 bps Q-o-Q. The delinquency rate remained the same to post a 0.32% and was well-maintained at a sound level. Reflecting such a stable asset quality indicators, the cumulative credit cost ratio of the Group in Q3 posted 0.21%, down 1 bps compared to the end of first half.

For your reference, let me explain the Group's risk management plans to respond to further uncertainties in the economy and the financial market. First, we are operating an early warning system to nimbly respond to any extraordinary situation by engaging in a real-time monitoring of the financial market volatility, and we have set up risk responsive system for different scenarios reflecting major changes in key macroeconomic indicators.

In the case of the corporate loans, we are operating an early warning system and in ad hoc inspection system, which is undertaken for those exposures in which deterioration of the sector is expected for the retail loans to respond to a possible default of low credit borrowers of the non-banking financial companies. We are strengthening our monitoring of multiple loan borrowers and for the high-risk segment, loan extension guidelines have been tightened preemptively.

Also to prepare for a possibly greater volatility in the global financial markets, such as rapid rise in foreign exchange rate, Hana Bank is maintaining a higher LCR ratio than the regulatory guideline and Hana securities is maintaining adjusted liquidity ratio at a stable level, focusing on liquidity management and is also closely managing the size of the derivatives linked securities exposure. Other subsidiaries are also securing additional credit lines to prepare for a possible liquidity crunch, and various risk management efforts are being undertaken by each of these subsidiaries.

Finally, to respond to the likelihood of a deteriorating asset quality of the real estate PF market, which is a concern shared by many at the group level, we have conducted periodic risk management of our exposure to real estate PF. Regarding Legoland PF exposure that has recently become an issue in the market, Hana Financial Group and its subsidiaries have no exposure at all to this matter. We have reduced the monitoring cycle of progress rate, the sales rate, construction site inspection for existing loans to engage and strengthen first management and we also have selected high-risk real estate PF areas and tightened our loan extension guidelines. Going forward, we will continue with our asset growth strategy that gives top priority to risk control and we'll maintain sound asset quality.

As of the end of Q3, the Group CET-1 ratio posted 12.73%, being maintained at a level that is fair to the regulatory requirement. However, in this quarter aside from the loan asset growth, the steep weakness of the Korean Won increased the credit RWA, which caused CET-1 ratio to decrease Q-o-Q.. In this quarter, the increased credit RWA resulting from the week Won is approximately KRW7.7 trillion, that contributed to a 36 bps reduction of the Group's CET-1 ratio. The CET-1 ratio that reflects such exchange rate effect on recurring basis is still over 13% and once the FX market stabilizes, the one-off special factors is expected to dissipate. As capital strength continues, we are well aware of the expectations of our shareholders to improve shareholder return policy. To meet such expectations, we are working to increase dividends, but also proactively reviewing the possibility of implementing treasury share buyback and cancellation. The management and the BoD are well aware that the low PBR is not within the normal range. We are looking into various options for capital utilization to expand shareholder return policy and we will do our best our best to announce additional plans in this regard within the year.

P7. Group Consolidated Earnings

Now let me walk you through the group's business results by item. Please refer to Page 7.
Our Group's general operating income in Q3 increased 12.9% Q-o-Q as both core earnings and disposition valuation gain grew. On cumulative basis, the core earnings upward trend played favorably increasing the general operating income 10.7% Y-o-Y. Thanks to group-wide cost-cutting efforts, the Q3 SG&A expenses were maintained at KRW1 trillion level although Hana Bank's ERP cost was recognized within the quarter. On a side note, due to the large scale special retirement package recognized in Q1, the cumulative SG&A expenses increased 7.2% Y-o-Y. Q3 provisions decreased 31.7% Q-o-Q due to the base effect of additional provisioning for bad debt the previous quarter.

P8. Business Results of Subsidiaries

Moving onto Page 8 business results for the subsidiaries.
The group’s key subsidiary, Hana Bank’s net income for Q3 increased 23.2% Q-o-Q to KRW870.2 billion, and grew 15.2% Y-o-Y. Despite the large amount of FX translation loss, core earnings grew and bottom line management was under control, including the SG&A, and credit loss provision, enabling robust growth. Hana Securities’ Q3 net income improved Q-o-Q to KRW146.4 billion due to preemptive risk management and strategic market response, as well as the base effect of the previous quarter's valuation loss related to overseas stock market correction. As high-interest rates and high volatility in the financial market continue, a slowdown in the overall securities industry is expected. Accordingly, we will strengthen product competitiveness by selling tax-saving products and financial products, suitable for the current market environment, while simultaneously promoting risk management and growth such as overall IP asset rebalancing.

Hana Capital's net income grew 25.1% Q-o-Q to KRW89.9 billion, thanks to growth in interest income and disposition and valuation gain. We will strengthen the retail base by expanding new alliances, while preparing for additional interest rate hikes by diversifying funding structure.

Lastly, Hana Card realized net income of KRW46.9 billion down Q-o-Q.. Despite an increase in profit from credit sales, including new card transaction volume, external factors were at play, including increased fee cost and funding cost. Going forward, we will focus on preemptive risk management through managing the unused line of credit and strive to diversify our profit base by increasing auto loans and tapping into the simple payment service market.

And please refer to the data for the other subsidiaries' results.

P9. NIM, P10. Non-Int. Income, P11. SG&A Expenses

Pages 9 through 11 outline the details about NIM, non-interest income and SG&A explained earlier.

P13. Group Total Assets / Total Liabilities & Equity

And also, please refer to Page 13 for the Group's total assets, liabilities, and equity.

P14. Hana Bank KRW Loan / Deposit, P15. Hana Bank KRW Loan Composition

And now on Page 14 Hana Bank's loan and deposit in Korean won.
As of Q3 end 2022, the bank's loans in Won stood at KRW268 trillion, up 1.3% Q-o-Q. The asset growth is broken down as follows, corporate loans grew 2.5% Q-o-Q to KRW138 trillion. As the contraction of the corporate bond market continued, the growth of large corporate loan was maintained at a similar level to the previous quarter at 8.2% and SME loans also grew 1.8%, Q-o-Q, recording a sound growth. As for household loans, demand for pre-registration loan and collective loan increased, slightly raising secure loans Q-o-Q, but with a decrease in unsecured loan balance, it is maintained at a similar level to the previous quarter. As of quarter end, deposits in Won stood at KRW296 trillion, up 5% Q-o-Q. This is because of the increased appetite for time deposits with the multiple interest rate hikes, leading to a huge increase Q-o-Q. This market trend is likely to continue for the time being, as additional rate hikes are expected. Although it may play as a partially negative factor for NIM in terms of funding portfolio composition, it is expected to act as a positive factor for compliance with LCR and NSFR regulatory ratios. As of September end, Hana Bank's LCR and NSFR ratios are 105.4% and 104.6%, respectively, well above the requirements. The graph on the bottom right shows the LDR in Q3 to be 99.1%.

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

P17. Group Asset Quality, P18. Hana Bank Asset Quality

And now moving on to Page 17 Group's asset quality.
As of quarter end, the group's total credit grew 2.4% to Q-o-Q to KRW376 trillion and NPL decreased 3.4% Q-o-Q to KRW1,304.3 billion as new NPL of the bank's corporate loan decreased. This resulted in the Group's NPL ratio to be 0.35% slightly falling from the previous quarter. NPL coverage ratio recorded 175.7%, up 11.3 percentage point Q-o-Q, demonstrating a robust loss absorption capacity.

Let me elaborate on the bank's asset quality on Page 18.
Hana Bank's total credit in Q3 has risen 2.4% Q-o-Q to KRW317 trillion and NPL is down 9.7% Q-o-Q to KRW675.9 billion. NPL ratio fell 3 bps Q-o-Q to 0.21% and the NPL coverage ratio increased Q-o-Q to 207.3%. Hana Bank's delinquency ratio was up 2 bps Q-o-Q due to the rise in SOHO delinquency. However, it is being maintained at a lower level Y-o-Y.

P19, P20. Provision Analysis, P21. Capital Adequacy

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

Lastly, capital adequacy on Page 21.
We expect the Group's BIS ratio and Tier 1 ratio to be 15.22% and 14.13%, respectively and CET-1 ratio is expected to be 12.73%. As mentioned earlier, due to the weakened Korean Won, RWA increased, bringing down the overall capital ratios Q-o-Q. So all in all, due to the uncertainties in the recent financial market such as inflation, higher interest rates, FX rate rise, expressive strong dollar and looming geo-economics risk caused by the U.S., China competition, the financial market is more volatile than ever. As shown in our deep-rooted culture, historically Hana Financial Group has put risk management above all else, and our DNA has proven itself strong in the times of financial crisis. We will do our best to position ourselves as the financial group, noted for profitability and asset quality, whiling delivering sound results, and stringent risk management. This concludes the earnings presentation for Hana Financial Group for Q3 2022. Thank you very much. And now we will take questions.