Hana Financial Group Inc. (A086790) Earnings Call Transcript & Summary

[Interpreted] Good afternoon. Thank you for joining us at the Hana Financial earnings presentation. I am [indiscernible] Kim, Head of the Finance and Planning team at Hana Financial Group. I would like to thank shareholders, analysts and other market participants for taking part in today's event via phone or through the internet despite your busy schedules. We will now begin the 2021 full year earnings presentation. Today, we have with us Hana Bank's CFO, Vice President Hoo-Seung and senior management members from the group and subsidiaries responsible for finance, risk, strategy and digital operations. We will first begin with the presentation of our business results and then hold a Q&A session, CFO. We now invite our CFO, Hoo-Seung, for the Hana Financial Group's 2021 full year earnings presentation.

[Interpreted] Good afternoon. I am Hoo-Seung, CFO of Hana Bank. So I am standing instead of the Group CFO, and I will be walking you through the group's 2021 full year business results. First, the financial highlights of the group. Please refer to Page 3. Hana Financial Group posted KRW 3,526.1 billion, up 33.7% Y-o-Y in the full year net income for 2021. In Q3, the group had already exceeded the previous year's yearly net income of KRW 2,637.2 billion, and the net income for Q4 posted KRW 844.4 billion, up 58.5% Y-o-Y. Once again, proving the group's sound capability to generate profit. In 2021, Hana Financial Group saw its profit generation capacity upgrade, achieving record high net income driven strengthened core earnings on the back of diversified business portfolio and stable risk management in response to the continuing volatility in the capital market, owing to the protracted pandemic situation. This year as well, we will make continued efforts to realize stable earnings and implement ESG-focused business practices and enhance shareholder value. Now let me go through the business results in more detail. In 2021, the group's core earnings assisted KRW 9,300.6 billion, up 15.2% Y-o-Y. The NIM improved Y-o-Y, reflecting the rise in market rate on the pack of BOK rate type as well as our internal efforts toward portfolio improvement. In addition, through qualitative growth, focusing on high-quality assets, reflecting the market demand, solid loan growth was maintained, resulting in improved interest income Y-o-Y. At the same time, card fees and asset management-related fees grew, leading to greater contribution from nonbanking subsidiaries and thus, the group's fee income achieved a 2-digit growth Y-o-Y, posting the highest group core earnings in our history. Next, the SG&A, KRW 4,050.5 billion, up 3.4% Y-o-Y. This is mostly due to the base of the one-off recognition of bank's performance pay expenses in Q1 and the increase of general and administrative costs owing to the inclusion of Hana Insurance as group subsidiary. So group-wide efforts to raise cost efficiencies, supplies related expenses declined Y-o-Y and stable SG&A of KRW 4 trillion level was posted. Reflecting this, the group's annual CI ratio is 44%, down 1.3% Y-o-Y. Finally, the group's credit cost ratio posted 15 bp, up slightly over the previous quarter. However, on a Y-o-Y basis, it is down 12 bp, maintaining amortization plus buffers through stable management. This is due mostly to the base effect from setting aside a large amount of countercyclical positions and also due to partial normalization of the shipping industry, there was write-back from a number of individual companies related provisioning. Also, in Q4, loss absorption capacity was further bolstered through the preemptive provisioning and to respond to economic uncertainties in 2022, including the spread of the omicron. Thus we will be continuing to maintain stable asset quality through preemptive risk management against uncertainties both at home and abroad. Next, on Page 4. The group's Q4 NIM, including Hana Bank and Hana Card is up 7 bps Q-o-Q to post 1.71%. In the case of Hana Bank's NIM, it is up 7 bps of Q-o-Q to post 1.47%. The asset repricing effect following BOK's rate hike was positively reflected and the NIM improved significantly. At present, I do believe it is rather premature to elaborate in any detail of the outlook for NIM for this year. But given that last month as well as following last year, additional benchmark rate hikes were made, the asset repricing expected to be maintained until the first half of the year. Also, to respond to the continuing inflationary pressures, the U.S. Fed has shifted gears to more hawkish policy line as the market is expecting multiple rate hikes by the Fed this year and should Central Bank stands to normalize monetary policies be reflected in the market rate, we believe NIM will continue to steadily improve this year. Next, if you look at the right-hand side of the slide, the bank's loans in Korean won is up 0.9% Q-o-Q and 7.3% YTD to post KRW 257 trillion. As such, based on the simultaneous growth of profitability and asset size, the group's interest income posted meaningful improvement both quarterly as well as on a Y-o-Y basis. Meanwhile, in the case of the quarter's fee income was down Q-o-Q due to a decline in the underwriting fees and other fees. However, on a yearly basis, solid improvement has been made YTD. For your information with regards to the fee income, in consideration of maintaining consistency in the group's accounting practices and to allow for peer comparability, some of the fee income of Hana Card has been reclassified into interest income. This is no more than an accounting reclassification between interest income and fee income, and this has no impact on the net income of either the group or the Hana Card. For more details, please refer to Page 28. Next is Page 5. The group's NPL ratio in 2021 posted 0.32%, down 8 bps YTD and 1 bps Q-o-Q. Delinquency ratio following last quarter posted 0.28%. Despite the protracted pandemic situation on the back of group-wide efforts to manage risk, Overall, the NPL ratio was maintained at a stable level. The group's 2021 cumulative credit cost ratio posted 0.15%, down 12 bps to YTD. Even if the COVID-19-related [indiscernible] preemptive provisioning in 2020 is excluded, the recurring credit cost ratio is down 2 bps, thus showing a downward adjustment in the overall asset quality indicators. Going forward, responding to uncertainties, both at home and abroad through enterprise-wide risk management, we will continue to do our best to maintain healthy asset quality. Finally, as of the end of Q4, the group's CET1 ratio was down 28 bps Q-o-Q and expected to post 13.78%. This is due to the payout of the 2021 year-end dividends. And despite the drop in CET1 ratio during the quarter, we have maintained the highest level of adequacy among our peers. Next is the group's business results and by items. First, on Page 7, the group consolidated income statement. Among the general operating income of Hana Financial Group in 2021, interest income grew 15.5% Y-o-Y to post KRW 7,437.2 billion. Thanks to the strong business performance of major nonbank subsidiaries, such as credit card, brokerage, IT-related fees. The annual fee income is up 14.3% Y-o-Y to close KRW 1,863.4 billion. Next, the group's gain on valuation on disposal was down 56.9% Y-o-Y to post KRW 504.7 billion. The main reason for this is the nonmonetary FX transaction losses of KRW 154.6 billion would occur because of the week 1 trend that continued throughout the year. Other regions reasons include market rate rising due to progressive normalization of the economy and inflationary pressures in Korea that has slowed down the AFS performance and gains on valuation. Finally, the yearly SG&A is up 3.4% Y-o-Y to post KRW 4,050.5 billion. Despite the solid earnings trend, the ordinary SG&A was controlled within the target set within the early business plan, and the CI ratio was downward-adjusted to 44%, demonstrating once again the growth capacity control costs. Next, on Page 8, subsidiaries business results. Hana Bank, a major subsidiary of the group posted an annual net income of KRW 2,570.4 billion in 2021, up 27.9% Y-o-Y. This was mainly attributable to solid interest income from NIM improvement. Stable SG&A and the fading of large-scale countercyclical loan loss provisions partially offset the weakened disposition and valuation gain, achieving the highest performance ever. Next, the annual net income of Hana Financial Investment was KRW 506.6 billion up 23.3% Y-o-Y. Improvements in overall earnings fundamentals were positively reflected such as an increase in core earnings fueled by improved asset management fees. Hana Card's annual net income also increased by 62.2% Y-o-Y to reach KRW 250.5 billion, Lastly, Hana Capital's accumulated net income for the year was KRW 272 billion, an increase of 53.5% Y-o-Y, due to the overall increase in general operating profit and a fading of the provisioning effect. For other subsidiaries, please refer to the document. Pages 9 through 11 discuss the details of NIM, noninterest income and SG&A that I mentioned earlier. Page 13 deals with the group's total assets, liabilities and equity. Please refer to the documents at your leisure. Next, on Page 14. I will talk about Hana Bank's loans and deposits in Korean won. As of the end of 2021, Hana Bank's loans in won stood at KRW 257 trillion, an increase of 0.9% Q-o-Q and 7.3% Y-o-Y. Looking at loan growth by sector, corporate loans amounted to KRW 126 trillion, an increase of 3.2% Q-o-Q driving the growth. As the demand for funds from non-audited SMEs and solo borrowers continued, SME loans maintained sound growth with an increase of 2.9% compared to the previous quarter end and large corp loans grew 0.8% Q-o-Q, reflecting raw material price hikes and preemptive financing for additional market interest rate hikes. Financial institution and other loans also increased Q-o-Q due to year-end short-term funding demand from some public companies. In the case of household loans, in order to comply with the household loan cap imposed by the financial authorities, it decreased compared to the end of the previous quarter by temporarily managing the limit of household products during Q4. But on an annual basis, was driven by actual demand centered on [indiscernible] loans and high-quality credit loans, assets increased by about 4% Q-o-Q achieving a good growth rate compared to the target set at the beginning of the year. In addition, as to the growth prospects of loan in won, in 2022, we plan to maintain a balanced loan growth strategy that maintains asset quality and profitability management. By segment, we expect a little more contribution from corporate loans than from household loans. Total loans in won are expected to grow at a level corresponding to the domestic GDP growth rate. As of the end of 2021, deposits in won stood at KRW 268 trillion, an increase of 2.2% Q-o-Q. Term deposits and MMDA decreased slightly due to year-end withdrawal of short-term funds by large corporations and public institutions and low-cost core deposits grew by 2.5% compared to the end of the previous quarter, thanks to abundant market liquidity, enabling a stable funding structure. However, as CD funding increased for the purpose of managing the LCR ratio, the proportion of low-cost deposits remained at the same level as the previous quarter. For your reference, as you can see at the bottom of the graph on the right, the loan-to-deposit ratio as of the end of 2021 is 99.2%. Page 15 shows Hana Bank's loans by sector. Please refer to the material for details. Next, Page 17, group's asset quality. As of the end of 2021, the group's total loans amounted to KRW 345 trillion, an increase of 9.7% Y-o-Y and the amount of NPL loans decreased by 11.9% Y-o-Y to KRW 1,112.6 billion. As a result, the group's NPL ratio was 0.32%, which is 8 bps lower Q-o-Q. If you look at the upper right-hand corner of the page, the amount of new NPL formation in the fourth quarter was KRW 146.4 billion. Even though households and some overseas operations, NPL increased slightly Q-o-Q, it was mostly offset by the decrease in corporate NPL due to decreased amount of new defaults, maintaining the same level as the previous quarter. We will discuss the asset quality of bank in more detail on the next page, Page 18. Hana Bank's total loans at the end of 2021 is KRW 295 trillion, an increase of 9.0% compared to the end of the previous quarter. NPL stood at KRW 757.1 billion. As a result of the NPL ratio was 0.26%, which is an 8 bps decrease compared to the end of the previous year, just like the group's ratio had fallen. As of the end of the year, the NPL coverage ratio is 163.9%. Hana Bank's delinquency ratio at the end of 2021 is 0.16%, down 8 bps from the end of the previous year. Despite the strong increase in loan assets, the corporate delinquency ratio has been stabilizing downward throughout the year, leading to the stabilization of the overall delinquency rate. Pages 19 and 20 cover loan loss provisions of the group and the bank. Please refer to the materials. Lastly, on Page 21, capital adequacy. By the end of 2021, the group's BIS ratio and Tier 1 ratio are expected to be 16.29% and 15.15%, respectively. And the CET1 ratio is expected at 13.78%. Although the capital ratio decreased slightly compared to the end of the previous quarter due to the year-end dividend, the highest capital adequacy of the industry was again demonstrated while maintaining a robust level of CET1 ratio after the early introduction of Basel III. We would like to inform you that at today's BOD meeting, it was resolved that the group's year-end cash dividend for 2021 is KRW 2,400 per common share. And if this is approved at the General Shareholders Meeting, the total cash dividend per common share for fiscal year 2021 will be KRW 3,100, including the paid interim dividend. Accordingly, the annual dividend payout ratio is expected to be at the level of 26%, and the dividend yield based on the closing price in 2021 is approximately 7%. Despite the difficult situation under the pandemic, the dividend payout ratio recovered to the pre-COVID 2019 level due to the improved business performance and recorded the highest dividend yield in the industry. Hana Financial Group will continue to do its best to continuously increase shareholder value based on stable business performance and capital adequacy. This concludes the 2021 Hana Financial Group's annual earnings position. Thank you very much.

[Interpreted] [Operator Instructions] The first question comes from the Hyundai Motor Securities, Mr. Jin-Sang Kim.

[Interpreted] I have two questions. In Q4, the ERP expense, I don't get what's reflected as is gets. I believe it will be reflected in Q1. If it is, then what is the approximate size? And given this amount in Q1, it is expensed in Q1. So I think the performance will be lower than last year. So what do you think about that possibility? And then second, Hana Bank has been the first bank to engage in interim dividend. And so in terms of dividend policy, it was quite proactive. But recently, other peers having quite progressive retiring their treasury stock, et cetera. And so Hana Financial, your capital policy, do you have any plans of diversifying your existing capital policy?

[Interpreted] So thank you very much for those questions, so while we prepare the questions, please wait a few seconds.

[Interpreted], I'm [indiscernible], the CFO of Hana Bank. First of all, with regards to the ERP expenses in Q4 that is not being reflected -- with regards to ERP timing, not only financial considerations, but our reorganization and also HR policy and also discussions with the labor union is all required several different factors are considered. The specific timing is not prefixed. The overall business environment is considered as there was one ERP in 2020. There was one in 2019. So the ERP programs were different for every year. So for this year, well, there wasn't any particular cost for the ERP in Q1 in 2021, the special expenses for Q1 has been already reflected in the business plan. So NIM recovery and also strong higher quality asset based on the policy will be pursued in order to continue to maintain stable top line. So in terms of bottom line as well, we're going to also engage in a strong cost control and expense control. And also for your reference, in Q1 of 2022, the banks with ERP is [ KRW 428 ] and total cost is about KRW 163.7 billion is expected. And KRW 56 billion is expected to be saved because of this. And also the group's proactive dividend policy and shareholder-related policy, let me get that question. As we have already noted, in 2021 compared to previous year, we have paid out KRW 3,100, which was an increase of KRW 1,200. So all yield had also increased from 20% to 26%. So we had recovered the pre-COVID-19 level. So we still have omicron risk and we do find it regretful that we were not able to pay higher dividends this year when COVID-19 is over. And if everything becomes normalized, then the dividend payout ratio also need to be higher than last year. That is our belief. And so the higher dividend payout ratio and with increased profit this year, we would have that in order to increase the dividend paid out. As you're well aware, the group's dividend per share compared to our peers, it's at the highest level and also dividend yield is at the highest as well. And so that shows how undervalued we are. We will place top priority on shareholder return, and we will shift away from this on valuation. And our group dividend payout ratio of -- 30% is our target. Our group's target of 30%, we will continue to move forward toward this target in an orderly and gradual manner. And also, aside from the dividend, there are diversified shareholder return policies. Through such policies, we will transform ourselves into the most to our shareholder-friendly financial company in Korea. What our peers has engaged -- has decided to retire its treasury staff. And in the case of Hana Financial Group, we have 370,000 shares are owned at treasury stocks and KRW 4.3 trillion is held, and so we are able to engage in retirement of our treasury stocks. In the case of treasury stock, they can be used in many ways, including M&A. So there is sufficient value to hold it for future uses. However, in order to enhance shareholder return, and also in consideration of our peers' cases with regards to retired treasury stocks, we will engage in positive consideration buyback of treasury stock as well based on a sufficient loss of [indiscernible] abilities when COVID-19 start to fade. We will engage in close collaboration with consultation with the financial authorities and pursue this better. After our foundation, and in 2009, after the global financial crisis, we were the only financial company that had engaged an interim dividend payout and also the dividend yield has been maintained at the highest level among all our peers. So based on this interim dividend tradition, it is something that differentiates us from other financial companies. And it has been appreciated by our shareholders. And also the peers interim dividend payout and also year-end dividend that they have is something that has been benchmarking ours. And so this year, we will do our best in order to engage in interim dividend payout as well. In the case of quarterly dividend as well, if it helps the shareholder return -- shareholder value, we will give a positive consideration. And yearly dividend will not be spread out. Not only that, our actual shareholder value enhancement will be pursued by looking into diversified solutions.

[Interpreted] We'll take the next question, Mr. Baek, Doosan.

[Interpreted] I have a question about the margin. In Q4, when you look at the NIM, it has risen significantly and it was mentioned earlier in the presentation, but could you be detailed about what factors played and how the NIM was higher than the market expectation and the base rate is rising and the market rate trend looks positive, maybe in Q1 or on an yearly basis. Maybe you could have a big picture about your margin forecast or plans? Could you share that with us?

[Interpreted] Thank you for the question. We will be right back with the answer, please hold.

[Interpreted] In Q4, I'd like to talk about the NIM. The NIM in Q4 was as the base rates were risen twice last year, there was repricing effect and the deferred loans and interest were collected, and it has risen. And looking at the details, relatively speaking, the lending part had an effect and the repricing was improved by 5 bps. And at the year-end, the deposits reached maturity and due to fierce competition between the companies in order to reduce the cost, we had tried to manage the lending cost -- sorry, the funding cost. And as for the deferred interest of KRW 14.7 billion that had an effect of 2 bps and the recurring NIM had risen by 5 bps. So compared to our peers, we had a very positive NIM improvement. And this year, there is expected to be base rate hike again and it will have an effect on the interest income and also on the NIM. What we think is in January this year, BOK had raised the interest rate again, the base rate again. And it had risen back to 1.25% the pre-COVID level. And the BOK Governor had mentioned possibilities of additional rate hike and has turned to a hawkish spend and the end of tapering of the U.S. Fed and announcement of possible 3 more interest hikes by the U.S. We see that there's going to be upward pressure on the policy rate. And so we think that in the latter half of the year, we think there is going to be another BOK rate hike once and the market rates will be bid and the NIM will show a gradual upward trend. And for your reference, according to our ALM structure, when the base rate goes up 25 bps, then it will have a positive effect of our NIM by KRW 100 billion.

[Interpreted] Just to add to that, as for Hana Bank, we have the 77% of our loans that take on the floating exchange rate scheme. And in January this year, there was a rate hike, and that's going to be -- have an effect on Q2. And when there is another rate hike in the second half, we believe that the NIM will be pushed further.

[Interpreted] So next question comes from Tae Joon Jeong from Yuanta Securities.

[Interpreted] Tae Joon Jeong from Yuanta Securities, excellent earnings. So I have a question on the credit cost. So when the suspension on -- when the financial assistance program is terminated, what kind of impact would that have? And also, can you share with us any guidance on the loan loss provisions?

[Interpreted] Thank you very much for those questions. Please wait a few seconds while we prepare the answers.

[Interpreted] I'm Hoo-seung Lee, the group's CFO. Let me answer that question. Because of the spread of COVID-19, the financial authorities had extended the interest suspension program and the financial systems program, a maximum of 1 year of grace period or the repayment can be made in installments over 5 years. As is reported, after the program is terminated, the small business owners and the marginal companies, the NPL can rise or the loan loss provisioning can rise. However, for these people, there are companies suffering from temporary cash shortages. And we have actually extended loans to sustainable companies. So we don't believe that asset quality will deteriorate significantly. We referenced in our group, the suspension program-related amount is about KRW 860 billion, and 85% is covered by collateral. And the only over KRW 130 billion is exposed to unsecured loans for these people 1 month before the program is terminated through SMS messages. So we've provided guidelines. And also, we'll check all the collaterals and also monitor the risk on a regular basis. In the month of January, reflecting such a risk compared to last year, slightly higher credit cost is expected. And so the credit costs that we expect, we believe that we can actually manage the risk with that amount of credit cost levels.

[Interpreted] The next question is from Director Jaewoong Won from HSBC Securities.

[Interpreted] I have 2 questions about NIM and credit cost. You talked about the guidance for this year. So this year, what is the loan growth and SG&A forecast? Could you give us a guidance for reference? And the second question is LDR and LCR regulations could have an effect on NIM. So how do you think that NIM will be affected by the regulations?

[Interpreted] Thank you for the questions. We'll be right back with the answer.

[Interpreted] Hello, I am Hana Bank's CFO, [indiscernible]. As for 2022 loan growth, I'd like to share the outlook with you. In 2022, we want to fit more on the corporate loans instead of household loans. The loan in won will be growing at a rate of 3% to 4%, which is the GDP growth rate. And as for household loans, the financial authorities have put in place regulations to put a cap on it. So we expect a loan growth rate of 2% to 3%. There is a restriction on household loans. So profitability and quality growth will be maintained for the household loans and to cope with the household loan cap, we will be flexible with other measures. And as for the corporate loans, we will focus on the quality growth, focusing on the prime borrowers, and we expect the growth rate to be in the 4% to 5% range. The government is going to implement social distancing and it's going to raise the base rate, and we are mindful of some of the marginal or vulnerable borrowers. And we are going to focus on the loan growth of the SMEs and sound companies. And along with the loan growth, we are going to take on new customers, and we are going to improve our profitability, looking for new revenue sources. And as for the SG&A in 2022, the forecast is as follows: in 2021, the core earnings had risen 15% and there was group-wide cost-cutting and so supplies related cost was reduced. So we were able to manage the SG&A growth by 3% and the CIR ratio was 44%, which is in a downward trend. But there is fast-changing financial environment, digital platform, some investments, IT systems and digital product development requires cost. So including the new businesses and to increase the competitiveness of the nonbank sector, we are now faced with cost management issues. So we would like to focus on cost management to stably manage the CIR. And as for the LCR, a partial withdrawal how that would affect the bank, the financial authority is of the basic stance. It had relaxed by 15% and their plan is to do it phase by phase. And the market expectation is a normalization of 5% by every 6 months. For example, when there is 5% normalization in March, the market confusion could be minimized. And so the BOK would relax the LCR regulation for the collateral, and that would be in the range of 3% to 5%. So immediate LCR withdrawal or if it is done phase by phase, that will not have a huge impact on the bank. And as for LDR, it is -- now relaxed to 105% from 100%, but we -- for the purpose of internal risk management, we are managing the LDR under 100% and so the LDR regulation will not greatly affect our operations. That is our expectation.

[Interpreted] So our next question comes from [indiscernible].

[Interpreted] The first question is a follow-up on the operating expenses. It looks like you are walking away from the KRW 4 trillion guidance that you have been holding for quite a number of years. Is it possible to give us a kind of magnitude, what kind of cost growth that you are looking at for this year? And what would be the incremental spending going into? Is that technology? Or is that people? And then secondly is on the valuation and other revenue line items, the disposition and valuation line items. So last year was a low base because of the FX, as you flagged. So what is a normalized run rate that you are forecasting for that line item for this year, please?

[Interpreted] Thank you so you very much for those questions. Please wait for a few seconds while we prepare the answers.

[Interpreted] With regards to IT and digital expenses, let me answer your question. The operating expense is KRW 4 trillion. We do have -- we do not use it as a guideline actually. When there are investments that's necessary to be made, we do make those investments. And basically, more than KRW 4 trillion of expenses will occur in 2022 in our expectations, especially in the digital and IT sphere. The financial sector's digitization efforts have continued to be made, and we have continued to increase our investments in the IT systems. And so based on these plans, in 2022, to assemble the platform business model of key technology alliances and also in the asset management area through digitization, we're going to increase our contact with our customers. Also with the nonbanking subsidiaries, and now to enhance our competitiveness, the Hana insurance, the IT system will also be subject to proactive investment. So IT-related expense compared to last year, we expect investment that is 40% larger than last year. However, the depreciation IT-related expenses, increased expenses in consideration of that. Aside from these investments, the recurring level of cost that will be -- efficiencies in this area we maximized, so that overall, the group level expenses will be maintained at a very stable level. That's all.

[Interpreted] The next question is from Kim, SooHyun, Shinhan Investments.

[Interpreted] Hello, I am Kim, SooHyun from Shinhan Investments. Good dividend and good results. Starting in Q1, the other financial holding companies will execute and make regular the quarterly dividends, and they will be changing the articles of incorporation. And Hana has been active in shareholder return policies. So starting in Q1 this year, will there be the same change in Hana? And second, maybe you could not tell us right away but for a while, there has not been a huge scale M&A. Do you have any plans for inorganic growth? Are you interested in a certain business area?

[Interpreted] Thank you for the questions. We'll be right back with the answers. Please hold.

[Interpreted] As for the quarterly dividend, it was mentioned in the presentation. As for the quarterly dividend, shareholder value, if it is enhanced, then we will review it positively. And it will not be an installment pay of just yearly dividend, if there is the stock price boosting effect and if there is shareholder value return, then we will review it carefully. Yes. And to answer your question about M&A plans, COVID-19 is now changing from pandemic to endemic. And the financial market is sluggish, and we are now facing risks and the contactless industry is growing, and we see diversified market. Hana Financial Group is interested in settlement. And in the capital markets because we are lagging behind our peers, and we want to strengthen our capacity. And it was a supplier-based M&A in the past, but we are going to watch out for the market changes. And if we think that it helps our business foundation further and enhance our businesses, then we will be looking into areas that will give us some more synergies. And we will be looking at the nonbank candidates and so this is the principle under which we are reviewing our M&A strategies and that will be our inorganic growth plan.

[Interpreted] I think we have had our share of questions and answers. If you have other outstanding questions, please contact the IR team for further information. This concludes the 2021 Hana Financial Group's full year earnings presentation. You can listen to the webcast again on the website and the IR data book will also be uploaded. If you did not have a chance to ask your questions, please contact the IR team, and we'll do our best to answer your questions. Thank you for your participation. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]