Good afternoon, this is G.H Park, Head of IR at Hana Financial Group. Thank you very much for joining us for our first half earnings call despite your busy schedules.

Now we will start the 2026 first half earnings call of Hana Financial Group. For today's earnings call, we have key executives of Hana Financial Group and key subsidiaries: first, we have Group CFO, Jong-Moo Park; Group CRO, Jae-Shin Kang; Group CSO, Ho-Sik Nam.

We also have from Hana Bank: CFO, Young-Seok Jeong; Hana Bank CRO, Chang-Uk Paek; and also we have from Hana Securities CFO, Dong-Sik Kim. Today we would like to take you through the newly announced 2026 value-up plan of Hana Financial Group before we go into our first half results, and then take your questions and answers.

Please also note that there are some forward-looking statements that are mentioned today that could change depending on macroeconomic and market situations, and there could be material differences from our actual business results. Now our CFO, Jong-Moo Park, will take the presentation.

Good afternoon, this is Jong-Moo Park, CFO of Hana Financial Group. Thank you, shareholders, investors, and analysts for joining today's earnings call despite your busy schedules.

We truly appreciate your attention. Before going into our first half results, I would like to highlight the key points of the 2026 value-up plan that has been approved by our Board of Directors earlier today.

Please turn to page 1. Hana Financial Group first announced its value-up plan back in 2024, setting clear targets for the three key metrics of TSR, CET1, and ROE, which we have followed through consistently since.

The group's TSR, shareholder return ratio, increased to 47% in 2025, and we're on track to reaching the 50% target ahead of schedule. Hana Financial Group's PBR, which was only 0.4x at the end of 2024, has increased to around 0.7x as of end of June this year.

That said, during the same period, the PBR of major global peers have also increased, placing our valuation still at a relative low. Under the lead of the Board of Directors, we conducted an as-is diagnostic and have explored various ways of driving continuous enterprise value enhancement, leading to the new value-up plan with new targets for the key metrics which we have announced today.

This page shows you the three key points of the new value-up plan. First, the ROE target has been revised up to 12% from the previous 10% or above.

This will be achieved by structurally stepping up the group's ROE by significantly expanding Hana Bank's already healthy core competitive edge and by strengthening the core business competitiveness of our non-bank subsidiaries. Also, the strategic partnership with the multi-digital asset platform Dunamu will be leveraged to preempt this evolution to digital asset-based future financial services and to add new growth engines for the group to achieve an ROE of 12%.

Next is the shareholder return target, which has been revised to 50% or more based on a framework that links better ROE and lower RWA growth rates to higher shareholder returns. This improves the predictability of shareholder return and at the same time establishes capital allocation principles that links improved profitability with greater shareholder return.

Also, Hana Financial Group aims to become one of the leading dividend shares in Korea by actively increasing dividend going forward. We plan to increase total cash dividend by at least 10% or more each year until reaching a payout ratio of 40%, which is to satisfy the high dividend company requirement under the Act on Restriction of Special Cases on Taxation.

With the share buyback and cancellation running in parallel, we will continue to gradually reduce the number of outstanding shares, and dividend per share would increase by more than 10% each year. On top of this, with the separate taxation on dividends effective from this year and tax-free dividend from next year, shareholders are expected to experience an even more elastic improvement in dividend yield.

Lastly, CET1 target has been revised to 13% or more, and according we plan to maintain CET1 sustainably around 13% or above while supporting predictable shareholder return based on the framework. As you will have noticed, the new value-up plan is not merely an update of target numbers, but a meaningful new design that formalizes and institutionalizes a virtuous feedback cycle between increased shareholder return and enterprise value enhancement.

Hana Financial Group will remain focused on accelerating enterprise value enhancement based on differentiated earning power and predictable shareholder return. Also, we will faithfully execute the value-up plan announced today that translates the group's sustainable growth to greater shareholder value and deliver real-term performance in response to the trust and expectations we receive from the market.

For the details of the value-up plan, please refer to the materials that we have disclosed today. Now I will go into the first half 2026 group business results.

First, the key highlights are on page 4 or 2. Hana Financial Group's 2026 first half net income was ₩2,402.9 billion, which is a 4.4% increase YoY and the highest half-year net income in group history.

Despite the ₩109.8 billion in FX translation loss in the first half due to higher exchange rates and increased tax-related expenses caused by changes in tax regulations, including corporate income tax, our first half earnings was solid thanks to solid growth of core earnings, both interest and non-interest income. Hana Bank's healthy NIM improvement and Korean won loan growth drove group's interest income by 7.1% YoY, and the bullish stock market helped asset management-related fee income growth, including brokerage fees driving group's fee income up by 37.7% YoY.

First half core earnings increased 13% YoY, driving our net income growth of the group in the first half. Group's Q2 net income was ₩1,192.8 billion, which is a 1.4% QoQ decrease.

Insurance profit decreased temporarily due to the actuary assumption improvement regulations in effect, and provisioning expense was incurred due to a large business group filing for corporate rehabilitation, but general operating profit, including our core income and disposition and valuation gains, increased 7.9% QoQ, delivering good quarterly results despite the one-offs. Accordingly, our first half group ROE was 10.62%.

Next, we expect first half end group CET1 ratio to post 13.21%, a 2 bp decline QoQ. Despite continued downward pressure on the CET1 ratio from depreciation of the Korean won, on the back of RORWA-focused asset growth strategy and disciplined RWA management, the group maintained its CET1 ratio at a stable level as of the end of the first half.

Next, I will cover shareholder return. At today's BOD meeting, ₩250 billion of share buyback and cancellation was approved, and we plan to complete the purchase within three months.

Including the ₩250 billion approved today, our cumulative share buyback and cancellation for 2026 as of now amounts to a total of ₩700 billion. Next, Q2 dividend per share posted ₩1,155, a 26.5% increase YoY.

As a result, we will pay around ₩600 billion of cash dividends in the first half of the year, and assuming that we pay the same amount in cash dividends in the second half, total cash dividends for 2026 will amount to around ₩1.2 trillion, an increase of 10% YoY. As outlined previously in our corporate value-up plan, we will continue to enhance shareholder value by actively increasing dividends while concurrently pursuing share buyback and cancellations.

Let me now walk you through the details of our group's financial performance. Please refer to page 5 of the presentation materials.

Group's 2026 first half interest income posted ₩4,808.2 billion, a 7.1% increase YoY. First looking at the NIM, Hana Bank's Q2 NIM recorded 1.61%, and on the back of profitability-focused loan asset growth and portfolio optimization efforts, it increased 3 bp QoQ.

Group's Q2 NIM posted 1.88%, a 6 bp increase QoQ, and this was on the back of Hana Bank NIM improvement as well as Hana Card NIM growth thanks to factors including credit card purchase volume increase. Next, 2026 Q2 bank loans in won grew 2.0% compared to the previous quarter end.

Of this, household loans increased as mortgage lending to real end-users expanded and with the increase in outstanding balances on unsecured credit lines; as a result, it grew 1.2% compared to previous quarter end. For corporate loans, we provided funding and liquidity support centering on high-quality companies and industries experiencing increasing financing demand, such as defense and semiconductors, and it grew 2.6% compared to previous quarter end.

Next is the group's non-interest income. Let's go to page 6.

Group's 2026 first half fee income posted ₩1,487.4 billion, an increase 37.7% YoY. As I aforementioned, asset management-related fees drove the improvement trend of fee income improvement in the first half.

Hana Securities, on the back of increase of stock market transaction volume, saw a 208.5% increase of brokerage fees YoY, and as a result of strategically strengthening wrap account products, wrap and operation fees increased 634.9% YoY. In addition, there was a great increase of ETF sales at Hana Bank, and trust fee income grew 61.4% YoY.

In addition, group's IB-related fees also delivered solid results through enhancing competitiveness through the group's IB platform as a result of strengthening the portfolio centering on high-quality senior assets. First half M&A and advisory fees increased 73.9% YoY.

Next, group's first half disposition and valuation gains posted ₩660.2 billion, a 20.1% decrease YoY. This was mostly due to the base effect since ₩133.9 billion of FX translation gains occurred in the same quarter the previous year and the recognition of ₩109.8 billion of FX translation losses with the continued won depreciation trend in the first half of this year.

However, since the Korean won began strengthening in July of this year, the won-dollar exchange rate has declined to the upper ₩1,400 range. If the exchange rate remains at its current level through the end of September, we expect a substantial portion of the FX translation losses recognized in the first half to be reversed in the third quarter.

Next, let's go to the next page, and I will cover group's G&A expenses. 2026 first half group's G&A expenses, due to the increase of labor and salary and benefit and taxes and depreciation, posted ₩2,489 billion, a 9.8% increase YoY, and group's CI ratio posted 38.8% and is being managed favorably compared to our business plan.

Next, I will cover group's asset quality. Please go to page 8.

Group's first half provisioning posted ₩663 billion, an increase 4.5% YoY. The main reason was due to ₩74.9 billion of one-off provisioning costs in Q2 following a large corporate group's filing for corporate rehabilitation proceedings, and the first half cumulative credit cost ratio recorded 0.29% and is being managed stably within our business plan target.

Now let's go to page 9. Group's Q2 NPL ratio posted 0.93%, a 13 bp increase QoQ, and the NPL coverage ratio posted 86.4%, a 9.2 percentage point decrease QoQ.

With the aforementioned large corp filing for corporate rehabilitation, around ₩420 billion of newly classified NPL increased at once, and NPL-related indicators showed relatively significant changes compared to the previous quarter. If we exclude the effect regarding corporate rehabilitation filing, group's Q2 NPL ratio posted 0.85%, a 5 bp increase compared to the previous quarter end, and NPL coverage ratio recorded a 92.6% level, a 3 percentage point decrease compared to previous quarter end.

The group's NPL coverage ratio remains below 100% due to the characteristics of its portfolio, with secured loans accounting for approximately 90% of Hana Bank's delinquent assets. For secured loans, even when they are classified as non-performing loans, loan loss provisions are calculated after taking into account the recoverable value of the collateral, and as a result, the NPL coverage ratio is relatively lower than that of unsecured loans.

Accordingly, the group's loss absorption capacity is being managed at a solid level considering both the coverage ratio and collateral value. Since high interest rate and high inflation environment is expected to continue until the end of this year, we plan to expand the write-off and sale of non-performing assets in the second half so that our NPL coverage ratio will be increased to over 100%.

On the other hand, group delinquency ratio, despite the higher debt servicing burdens from elevated market interest rate, maintained a 0.59% level, similar to the previous year, on the back of efforts including aggressive efforts to reduce delinquent assets and improved 2 bp QoQ. Please refer to the posted materials for more information.

With this, I will conclude my presentation for Hana Financial Group's 2026 first half business results. Thank you for your attention.

Thank you very much. Next, we will have a Q&A session.

Let me first briefly explain how to ask questions. If you have a question, please click the Raise Hand button at the bottom center of the screen.

Please note that consecutive interpretation will be provided for questions asked in English. We will now open the floor for questions.

The first question is from Hanwha Investment & Securities, Do-Ha Kim. Good afternoon.

Yes, good afternoon. This is Do-Ha Kim of Hanwha Securities.

I have a few questions about interest income. Interest income actually decreased, but your interest-bearing assets grew, and your NIM is also positive, but versus the spread widening, and so even though your liabilities have increased, I don't think your margins have decreased as much.

Your interest expenses increased double-digit QoQ, suppressing your interest income. Can you explain the technicals behind that?

Second question is about your shareholder return formula. When we compare you to your peers, their formula has the target ROE in the denominator, but you have put in your actual ROE in the denominator.

What if your ROE is lower than expected? Your shareholder return will decrease, and you would sort of have a reverse effect of reducing your equity to improve your shareholder return.

I'm sure you've run that during your considerations, and so what would be your response to that?

Thank you very much for those questions. Please give us some time to prepare the answers.

Yes, this is Jong-Moo Park, I'm the Group CFO. Thank you very much for those wonderful questions.

To answer your first question is about our interest income not increasing as much, there is a bit of a distortion effect, and that is related with variable insurance. You've probably heard that effect from other financial groups, too.

There is the interest expense being replaced, and that has the impact of around ₩290 billion. Then your second question was about the ROE in the formula of shareholder return.

If it's actual ROE that's below our expectations, wouldn't that have a negative effect? Up till now our shareholder return has been 47% up till last year, and we have unveiled our new value-up plan today, and our goal is to hit at least 50% shareholder return during this year 2026.

That is our initial goal. We weren't able to expressly put this in the table, but we do expect to hit 50% shareholder return this year, which then means we would have to aim for higher than 50%.

That is, I think, the assumption that we will continue to exert our efforts to keep our shareholder return above 50% going forward.

We will take the next question. The next question is from NH Securities.

We have Chung Jun-Seop. You're on the line.

Hello?

Yes, thank you for this opportunity. I also have a question related to the corporate value-up plan that you announced today.

I have two questions. The first question is regarding in order to increase TSR, you have ROE target of 12% that's going to be very important for you to meet, and I would like to know your concrete plans to meet that.

I know that it's mid- to long-term target, but when do you think you will accomplish the target? In order to uplift the ROE, I think the bank and also non-bank's profitability will be quite important.

For your core subsidiaries, well, their trajectory for ROE, any targets if you have them in mind, I would like to hear some explanations. My second question is for increasing the retail investors' contribution, and from next year there's going to be tax-exemption dividends, I think that there's going to be some room for that.

If you have any more plans to attract more retail investors, it would be greatly appreciated. It's because for tax-exempt dividends, well, that will actually probably be applied to other banks as well.

Can you tell us about any differentiation plan to increase your number of retail investors?

Thank you very much for your questions. Please hold, and we will soon answer your questions.

I am the CFO of the group, Jong-Moo Park, once again, and thank you very much for your questions, Mr. Chung.

I think you actually had some answers in your questions, it might be easy for me to reply. Regarding the 12% of ROE that we're going to aim for, to give you a target timeline was your question, and you also asked about ROE targets for our subsidiaries.

On our presentation materials, it says mid- to long-term, but until last year we had our ROE target of 10% or higher as our ROE target, and it was near that number, but it wasn't actually achieved. However, when we review our details internally, it seems that our recurring fundamentals actually translate that of not only 10%, but even 12%.

We believe that in order for us to achieve 12%, as you just mentioned in your question, well, we will need to strengthen the bank competitiveness, and we also will need to normalize our non-banking operations, and also through the new businesses that we're pursuing, if we gain new growth drivers, we believe that we will have more opportunities to generate profits. Also for non-banking, regarding the ROE targets, we basically believe that for the capital cost, at least 10% will be our target.

I hope that answers your question. Regarding your second question regarding the tax-exemption dividends or separate taxation of dividend income, yes, it is similar to other peers, but at Hana Securities there was Futu Securities that we had a MOU with, we have been actually making a lot of these relationships, and we have had off-line meetings for retail investors as well.

We have been explaining about the tax-related benefits, and we have actually been listening to the market more so that we can have more retail investors.

Thank you for those answers. We'll take the next question.

The next question comes from IM, Yong-Jin Seol. Please go ahead.

Yes,

thank you very much for this opportunity. I also have two questions.

When we look at your margins, the group margin is higher than bank, and was there any one-off explaining that difference? What's your outlook on your second half, your margins and income?

What do you expect in the second half? Credit cost, even if we set aside the one-off, there does seem to be a higher credit cost than before.

Can you also give us your CCR guidance going forward? Second question is about your non-bank businesses, that's a major part of improving your profitability.

If you had to compare organic versus inorganic, which would be the stronger or priority for you?

Thank you very much for your questions. Please give us a moment to prepare the answers.

Yes, thank you very much for your questions. During the presentation, looking through our earnings, the group NIM, there was the effect of the credit card NIM in Q2, their volume increase that helped upward.

Also in Q2, there was some reversal of some merchant fees that happened, and that's why the group NIM expanded, or group NIM became higher than the bank NIM. That explains that difference.

You've also asked about our asset quality guidance, and our CRO will answer that question.

This is Jae-Shin Kang, CRO. In Q2 versus Q1, our credit cost did increase a bit.

In Q1, I think we had some one-off reversals, that's why it was unusually low. Q2 actually is the expected normalized level.

The increase on QoQ basis can be explained by some large companies filing for rehabilitation. Now towards the second half, assuming that there will not be these unexpected one-offs, we think that we'll be able to keep it around the low 30 bp range, which is actually the level that we had assumed when we planned the business plan for this year.

This is Ho-Sik Nam, the CSO. Your second question was about the non-bank businesses, and improving our profitability on non-bank is the top priority.

You've asked about organic versus inorganic, if we had to choose one. We really don't have a direction towards one or the other; we're looking at all.

At least we are going to focus on enhancing the competitiveness of each subsidiary's core business capabilities and competences.

This is Young-Seok Jeong of the Hana Bank. You've asked about the second half bank NIM.

First half NIM was 1.60%. Assuming our neutral outlook in the second half, we expect our NIM to stay flat around 1.60%.

There are some upsides and downsides. As market rates are expected to be raised by two times, and the loan cycle is becoming shorter; it's concentrated around three months or six months.

We actually think that that will be an upside for better interest income because we have shorter duration loans. Then we have also been focusing more on our funding from public sector and SMEs, but then there are some payments from retail, individual side increasing.

Then there is the new regulation that will prohibit us from adding the credit insurance premium on our loan interest rates; that could be a negative. Overall offsetting, we are going to target a neutral NIM in the second half.

We will take the next question. The next question, it seems that it's a follow-on question from Do-Ha Kim from Hana Securities.

Yes,

I just wanted to clarify something in the answer you gave. You mentioned that interest income went down related to variable insurance, but for some of your peers for investment service gains and losses, it's in the disposition and valuation.

In this case, does your insurance-related gains or profit come from the other category?

Yes, for other operating income and interest income, there are different banks using different methods, and for other operating income it's a plus for disposition and valuation gains, but we had the account that was affected for interest income because of that.

Thank you very much for your answer. We will take the next question.

From HSBC Securities, we have Won Jung, you're on the line. Yes,

thank you very much for the opportunity. Regarding today's earnings release, you gave a presentation on the value-up framework, and thank you very much for giving us those results that I'm sure that you have pondered upon.

RWA growth and ROE seems to be very important factors, and in the first half ROE I think was 10.62% 61%, and in Q4 and in other quarters we need to think about profitability, and for Q4 there's seasonality we need to consider, and for Q3 I don't think we know for sure that there's going to be more transactions like Q2. If we see ROE is going to negatively be effective, then the share buyback and cancellation that you've mentioned will come from RWA growth, but it grew 6.5% and loans grew 2.9%.

In the second half, if loans go down greatly and RWA also goes down greatly, can we understand it like that? I'm curious about the RWA growth prospects and ROE growth prospects that you have in mind.

If you can let us know about the concept you have, I think that we can understand better the framework so that we can predict the TSR in a better way. Thank you very much.

Thank you very much for your questions. We will soon answer them, please hold.

Thank you very much for your insightful questions. As you mentioned in your question regarding the next quarter or our results for the year end, it would be best if we could accurately predict them, but as in the first half for fee income and others, well, I think that it was relevant to our peers as well that we all outperformed.

I think that is why we are considering these factors that are variable, and for Jung-Ang Group or other corporate rehabilitation filings, well, that can be some one-offs, I think it will be quite difficult to make an accurate prediction. I don't know if this can answer your question accurately, but as was mentioned in another of your colleagues' questions regarding our TSR, well, 50% or higher is our goal, and by doing so, we want to gradually lift this up, so that is the goal that we are trying to pursue.

I guess that can be my answer, thank you.

Thank you very much for that answer. We'll take the next question.

Next question is from Goldman Sachs, Sinyoung Park. Please go ahead.

Yes, good afternoon, can you hear us? Yes, good afternoon, this is Sinyoung Park from Goldman Sachs.

I have a question about shareholder return, and there is the share buyback versus dividend split. If we look at the appendix, there is 40% of goal for the mid- to long-term dividend, but you also said your cash dividend will be increased 10% each year, but it's going to take a long time to hit that.

Especially even if we think of it as full year even out, it will be ₩1.2 trillion full year, but then are you going to put more focus on year-end dividends or share buyback? Because I think each financial group has a different priority when it comes to choosing share buyback versus dividend at the end of the year.

Please give us a moment to prepare our answers.

Yes, actually that's a question I've actually tried to find the answer to, I'm prepared to answer that question. Until we reach that 40% payout ratio, we will be increasing total cash dividends 10% each year.

That is a default mechanism that we'll be following through. Even if we have more profits than expected, it would first be used for share buyback.

That is what I would assume because we have this formula of increasing cash dividend 10% each year.

Thank you very much for the answer. We will take the next question.

The next question is from Samsung Securities, Kim Jae-Woo, you're on the line. Hello?

Thank you very much, and I have a question related to shareholder return as well. 12% of ROE, if you achieve that, then as you mentioned, then according to RWA, I think it would have a great influence on TSR, and 12% ROE and RWA growth of 5% would mean that maximum of TSR would be 58%, but if it goes down to 4%, then TSR would go to 67%, and 67% seems great, and 58% maybe a little bit low than expected, how can we understand this gap?

Regarding the growth of RWA, how are you going to actually manage the speed? Because if you're going to grow the securities, then the first half RWA growth speed or pace, well, it can be greatly affected by other variables such as the FX rate.

Can you tell us about the goal of managing RWA, any goals you have to do that? That is my first question.

When increasing the ROE of subsidiaries, I know securities had good performance this first half, and I think ROE had come up to 8%, but can you tell us about what is the appropriate ROE level you think will be your goal going forward, or appropriate?

Thank you very much for your questions. Thank you very much for your questions.

We will soon answer them, please hold.

I am the Group CFO, Jong-Moo Park. Thank you very much for your questions.

As you just mentioned regarding RWA volatility that it can actually greatly affect the TSR, you were a little bit concerned, and I believe that within the next 2 to 3 years, in uplifting our TSR, it's not going to be a big burden for us because of that, and the reason behind that is regarding our basic ROE of having a little bit of movement from 10% to 12%, a little bit back and forth that will exist, but we put the ROE growth rate as the nominal growth rate, it means that the economic growth rate, if it actually gets better, then actually in tandem, our ROE can also be increased. When you understand this concept, please understand that going forward in the future, our target is TSR of 50% or higher, and for our shareholder return framework, it is as you had understood, it is a mix of ROE and RWA growth, and we believe that there will not really be a lot of fluctuations.

I think that can be my answer, and related to your other questions, I think I can answer them later, and I think for securities we're going to hear from Dong-Sik Kim from Hana Securities for securities prospects.

Yes, I am the CFO of Hana Securities, I'm Dong-Sik Kim. For 2026 first half, securities companies had great results not really because of structural improvement, because of the stock price increase and the transaction volume that went up, and Hana Securities also was positively affected, and we were able to achieve 9% of ROE for the first half of this year.

We can't really say that it was because of our fundamentals, but in the second half as well, through recovering IB and by market expansion in WM, we're going to achieve 10% ROE, and within 3 years, we want to achieve 12% of ROE, and we believe that it will be achievable, and we will do our best so that we can actually achieve that at minimum.

Thank you very much for that answer. Currently we have no questions in queue.

I assume that that was a very sufficient Q&A session, and with that, we will end the 2026 first half earnings call of Hana Financial Group. You can also watch this video on our website, which we will be uploading night.

Also, if you have any further questions, please forward them to our IR team, we'll be more than happy to answer them. Thank you very much for staying with us till the end.