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

[Interpreted] Good afternoon, everyone, and welcome to the earnings presentation of Hana Financial Group. I am G.H. Park, Head of IR. I'd like to thank our shareholders, analysts and other market participants for taking part in today's earnings call via phone and the Internet. And despite the busy schedule, we will now begin the 2022 first half earnings presentation. For today's presentation, we have with us the Group CFO, Hoo-seung Lee, and other members of the senior management from the group and the subsidiaries. Lee will first give a presentation on the business results of the group and then proceed to a Q&A via phone. Now we will invite our CFO, Hoo-seung Lee, for the Hana Financial Group's earnings presentation for the first half of 2022.

[Interpreted] Good afternoon, investors and capital market participants, who will have a deep interest in Hana Financial Group, research analysts and financial journalists. I am Hoo-seung Lee, the CFO of Hana Financial Group. So just now, although we had some strong rains in Seoul, so summer is now at its hottest. And I hope all of you have set up some good vacation plans to cool you down from the summer heat. So before walking you through the financial highlights, I'd like to touch upon the interim dividend of Hana Financial Group that has just been disclosed. Today, the BOD of Hana Financial Group has resolved to declare interim dividend of KRW 800 per share, up KRW 100 from the previous year, as we maintain a high level of capital buffer. And given the fact that our fundamentals in terms of profit and capital adequacy is sound, we were able to increase our interim dividend for 2 straight years, following last year. As long there is no unexpected contingencies, we expect to be able to increase the year-end per share dividend as well. You are well aware of the high level of expectations our shareholders have for improved shareholder returns. The senior management of the company as well as the BOD place top priority on enhancing shareholder value going forward, not only increasing the dividend, but treasury buyback and stock cancellation as well as various other means of capital utilization will be considered to continue to enhance shareholder value. Now let me walk you through the 2022 first half Hana Financial Group's business results. First, the key financial highlights of the group, please refer to Page 3 of the presentation material. In the first half of 2022, the net income came to KRW 1,727.4 billion. We posted record high core earnings and maintained sound profitability. However, owing to a number of one-off factors, the net income declined 1.4% on a Y-o-Y basis. The first half net income, when normalized for the one-off factors, comes to KRW 2.1 trillion, demonstrating strong fundamentals and superior capabilities for profit generation. However, as a range of different factors adding to the complex global crisis emerged, economic uncertainties as well as concerns of a possible economic recession are growing both at home and abroad. In order to prepare for the possibility of potential defaults turning into actual defaults, regulators around the world are recommending that financial companies expand their ability to source losses. As such, Hana Financial Group, despite the fact that our key risk-related indicators are being maintained at a healthy level, we are preemptively responding to increasing macro risk and the termination of COVID-19 financial assistance programs through adjusting forward-looking multiples and additional provisioning for our borrowers postponing repayment of debt, that we have set aside greater loan loss provisioning to further strengthen our ability to absorb losses. Also, along with risk management to implement our shared growth policy with our customers through the Hana Financial assistance program, we are either already providing or planning to provide a wide range of assistance to protect the financially vulnerable groups who are suffering under the current high interest rate regime. I'm sure you all remember that Hana Financial Group has a history and a strong tradition of preemptively and nimbly responding to rapidly changing market environment and various macro factors based on our DNA that drives some challenges and innovation. Going forward, we intend to break through the current economic crisis through maximizing the key strengths of the group. Asset management, IB and corporate financing are areas where we have solid customer base and differentiated sales capabilities. Such competitive strength will be reinforced via collaboration among group subsidiaries and through innovation while also seeking to expand our global presence and focusing on Asian high-growth regions to continue to drive to become the leading financial group in Asia. In the digital sphere as well, in pursuit of our goal to become a comprehensive financial platform, we will strengthen the linkages between [ Hana 1Q ] and [ 1Q paying ]. And also in the on- and off-line channels, much more than services and experiences will be provided to our customers through the benefits of the omnichannel. At the same time, in the nonfinancial ecosystem consisting of highly connected and fast-growing communications, mobility, real estate and health care areas, through both investments and partnerships, we seek to enter into these nonfinancial platform business as well. From now on, let me explain in greater detail about the group's business results. First of all, the group's first half core earnings, which underpin the fundamentals of the company, is up 13.6% Y-o-Y to post KRW 5.131 trillion. On a quarterly basis, it is up 7.6% over the first quarter and continues the growth trend for 6 straight quarters. The drivers are the increase of NIM on the back of the BOK rate hike and the growth in interest income driven by the stable increase in loan assets. At the same time, fee income, owing to the growth in FX fees and car fees, contributed to improving core earnings for 2 straight quarters. Next, the group's gains on valuation disposal, due to certain market interest rates, experienced lower investment returns, reflecting the increase in financial market volatility. During the first half, due to the continuing weak won, FX translation losses were also recognized. In addition, due to the sudden correction of the global stock market, nonrecurring one-off factors led to preemptive recognition this quarter of potential valuation losses that may occur in the future. In the second half as well, we expect a high level of market volatility to continue due to the high price levels and major economies' monetary tightening. We anticipate an environment where the effective management of gains on valuation and disposal will be quite challenging. Nonetheless, we will do our best to defend our gains through risk hedging against rate hikes, short-term trading as well as arbitrage trade. Next is SG&A. The group's SG&A for the first half in 2022 is KRW 2,211.2 billion, up 9.7% on a Y-o-Y basis. This is mostly due to the one-off costs that occurred because of the ERP conducted in the first quarter. However, on a quarterly basis, during the second quarter, the SG&A stood at KRW 956 billion, down Q-o-Q and exhibiting a stabilizing trend. Both in terms of amount and C/I ratio, SG&A was the lowest since the second quarter of 2020, demonstrating a sound ability to control costs. Going into the second half as well, we will make an enterprise-wide effort to continue to effectively control costs while reducing as much as possible recurring costs in the course of making investments to enhance our sales efficiencies. Finally, loan loss provisioning. On top of the additional KRW 60.3 billion of loan loss provisions in the first quarter, during this quarter as well, approximately KRW 124.3 billion of loan loss provisions was additionally set aside. Despite this being so, the credit cost ratio of the group in the first half came to 0.23% and is being kept within the yearly target level. Now let me provide you with a bit more detail about our other plans to manage asset quality. We have strengthened loan monitoring through efforts such as DSR simulation for each stage of interest rate hikes and thus is making sure that marginal borrowers with high likelihood to default can achieve a soft landing. In addition to the existing credit rating model through a machine learning-based risk system that leverages big data, a more precise credit rating is possible, resulting in enhanced soundness for the loan portfolio. Also, we have already established plans to monitor borrowers through audits of sectors that are impacted by high oil and commodity prices. And we are also stepping up our liquidity monitoring efforts to respond to positive expansion and the volatility of the financial markets, including FX rate increases. Going forward, we intend to continue to strengthen our preemptive risk management while maintaining the strategy to increase sound assets, thus maintaining our healthy asset quality. Aside from the risk management, we will actively participate in the financial regulators' policies to support small business owners and other vulnerable groups. We will continue to strive to implement the group's vision of sharing growth with all and always being considerate of our customers. If you look at the lower left-hand corner of this slide, you can see the group's ROE and ROA, which posted 10.08% and 0.67%, respectively. Next, please refer to Page 4. Hana Bank and Hana Card included, the group's 2022 second quarter NIM posted 1.80%, up 9 bps Q-o-Q. Hana Bank's NIM was up 9 bps Q-o-Q, driving the group's growth in the NIM. First of all, along with the asset repricing effect following the BOK rate hike, healthy asset growth was also positively reflected. At the same time, there was, before improvements made, including growth in the average balance of core low-cost deposits, internal efforts such as ranking #1 among the domestic banks in the TCB rating, which assessed its funding allocation to innovative SMEs, also contributed to the improving NIM. Next, if you look at the right-hand side of the slide, the Korean won loans of the bank grew 2% QTD to post KRW 265 trillion, achieving stable asset credit. Fee income, like the interest income, continues its growth trend, increasing 7.4% Q-o-Q. Because of the higher volatility in the financial markets due to a correction in the stock market, overall investment sentiment has been dampened and asset management fees are stagnating. However, there has been an improvement in the FX fees and the card fees, leading to fair fee income performance. And now let's go to Page 5. As of Q2 end 2022, the group's NPL ratio was 0.37%, maintaining a similar level Q-o-Q and Y-o-Y. The total delinquency rate increased 3 bps Q-o-Q due to short-term delinquency in overseas loans, but it is fully secured with collateral and the delinquency has already been resolved in July. Next, the group's accumulated credit cost ratio in the first half recorded 0.23%. Although it increased Q-o-Q, this is because of the additional provisioning of Q2 amounting to KRW 124.3 billion, and the ordinary credit cost ratio is at a stable level of 0.12%. Lastly, the group's CET1 ratio is 13.18%, which is maintained at a fair level compared to the regulatory ratio. The Q-o-Q decrease was mainly attributable to the interim dividend and an increase in RWA due to an FX rate rise and an increase in loan assets. And now the following, the group's business results by item. Please refer to Page 7. Although the disposition valuation gain decreased Y-o-Y due to multiple one-offs occurring in the midst of higher volatility in the global financial market, the group's general operating income in the first half increased 6.4% Y-o-Y due to higher interest income and diversified fee income resulting from the group's diversified business portfolio. SG&A in the first half increased 9.7% Y-o-Y with the recognition of one-offs in the first quarter, but on a Q-o-Q basis, it stabilized downward at mid KRW 900 billion in Q2. With the accumulated preemptive credit loss provisioning of KRW 184.6 billion in total, provisions in the first half increased Y-o-Y. And moving on to Page 8, subsidiaries' business results. In the first half of 2022, Hana Bank posted a net income of KRW 1,373.6 billion, up 9.6% Y-o-Y. The solid growth of core earnings delivered such solid performance despite large-scale one-offs such as recognition of ERP and additional loan loss provision. Next, Hana Securities net income for the first half of the year was KRW 139.1 billion. Securities brokerage fees continued to weaken due to a decrease in the trading value of the stock market, and the valuation losses resulting from the global stock market correction all played a part in the decline in Q2. However, in the second half of the year, we will focus on stable trading that minimizes profit and loss volatility. Through the strengthening of core businesses using the expanded capital, we expect earnings to recover. Next, Hana Capital, on the back of improvement in general operating income such as fee income, recorded a high rate of increase Y-o-Y, realizing a net income of KRW 163.1 billion in the first half. In the second half, while preparing for an additional increase in interest rates by diversifying funding, we will strengthen our retail base by expanding new partnerships. Lastly, Hana Card's net income in the first half was KRW 118.7 billion, down Y-o-Y. This is due to the reduction of merchant fees effective from February, preemptive reduction of high-risk loan assets for risk management purposes and ERP leading to a rise in SG&A. However, earnings improved on a quarterly basis as fee income recovered in the second quarter. Please refer to the table for the other subsidiaries' results. Please refer to Pages 9 through 11 for details about NIM, noninterest income and SG&A explained earlier. Also, please refer to Page 13 for the group's total assets, liabilities and equity. Now on Page 14, Hana Bank's loan and deposit in Korean won. As of Q2 end 2022, the bank's loans in won stood at KRW 265 trillion, up 2% Q-o-Q. The asset growth can be broken down as follows: corporate loans increased 4.5% Q-o-Q to KRW 135 trillion. Of these, large corp loans increased 8.3% Q-o-Q as the demand for funding through the banks increased on the back of a shrinking corporate bond market. SME loans increased 3% Q-o-Q with continued funding support to the non-externally audited SMEs and SOHO borrowers. Household loans decreased 0.5% Q-o-Q to KRW 130 trillion due to a decrease in unsecured loan balance. As of quarter end, in Q2, the deposit in won stood at KRW 282 trillion, up 1.3% Q-o-Q. Low-cost deposit decreased 0.7% over March end in terms of end-of-month balance, but increased 1.3% Q-o-Q in terms of average balance with continued inflow of corporate deposit. During the quarter, there was demand for dividend payout by large corporates, thus lowering the MMDA balance Q-o-Q, but the LDR recorded 98.6% with the inflow of time deposit. Please refer to Page 15 for Hana Bank's loan composition. And now moving on to Page 17, group's asset quality. The group's total credit at the end of Q2 2022 was up 3.5% Q-o-Q to KRW 367 trillion. The amount of NPL increased 6.6% Q-o-Q to KRW 1,350.7 billion as the amount to be recovered through collateral disposal decreased. However, new NPL formation has trended downward, decreasing by KRW 51.7 billion Q-o-Q, thanks to the disappearance of the previous quarter's one-offs. The group's quarter-end NPL ratio is maintained stably at 0.37%. The NPL coverage ratio is up 13.4 percentage points Y-o-Y and up 4.2 percentage points Q-o-Q to 164.7%, showing improved capacity for absorbing losses enabled by preemptive provisioning. Let me elaborate on the bank's asset quality on Page 18. Hana Bank's total credit in Q2 has grown 3% Q-o-Q to KRW 310 trillion, and NPL increased 4.6% Q-o-Q to KRW 748.4 billion. The bank's NPL ratio is 0.24%, at a similar level to the previous quarter. And as is the case with the group's NPL coverage ratio, the bank's NPL coverage ratio increased Y-o-Y and Q-o-Q to 188.4%. Hana Bank's delinquency ratio at the end of Q2 was 0.16%, same as the previous quarter, maintaining a stable level. As can be seen from the data, the asset quality indicators of Hana Bank, which accounts for a high portion of the group's total assets, are kept in very good condition. Nevertheless, we preemptively provisioned against the measurable expected loss as conservatively as accounting would allow so much that the amount in excess of last year's annual provision was recognized within the first half of this year. It goes to show how much the loss absorption capacity has been further strengthened. Given that macro risks are accumulating due to the increase in economic volatility, we will continue to strengthen monitoring and risk management going forward. Please refer to the group's and the 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 15.86% and 14.72%, respectively, first half 2022; and CET1 ratio is expected to be 13.18%. As was mentioned before, this is due to an overall decrease in the capital ratios caused by increased RWA due to weaker Korean won and interim dividend. Thank you for taking the time to listen to the earnings presentation today. I fully understand that shareholders might be concerned about the decrease in net income on a Q-o-Q basis. Uncertainty in the economic environment is expected to continue for the rest of the year. However, we have already strengthened our loss absorption capacity to a meaningful level. As the one-off factors disappear in the next quarter, we expect that we'll be able to present you with a performance that reflects the strong fundamentals of Hana Financial Group. In addition, we'll continue to focus not only on business performance, but also an efficient use of capital and take leadership in improving shareholder return policies and, furthermore, continue to work on sustainable management practices that can contribute to the happiness of customers and members of society at large. This concludes the earnings presentation of Hana Financial Group for the first half 2022. Thank you very much.

[Interpreted] Thank you very much. We will now have a Q&A session. [Operator Instructions] We'll take the first question.

[Interpreted] We will receive the first question. The first question comes from Sinyoung Park from Goldman Sachs Securities.

[Interpreted] I'm Sinyoung Park from Goldman Sachs. I have about 2 or 3 questions. First of all, we had nonmonetary losses. And so going forward, is there any room for changing your strategies, including hedging strategies? And also, I think you noted this early on in the year with regards to SG&A this year, you said that you will tolerate a certain amount of increase of the SG&A. Taking into consideration the number of -- increased number of subsidiaries, so -- and also taking into consideration ERP, what will be the increase in the SG&A going forward? Can you give us some guidelines? And thirdly, with regard to dividends, I think it is quite positive that you have been able to increase your dividend. But in the case of KB and Shinhan, this year, they're getting in quarterly dividends and they're enhancing -- they're focused to enhance the visibility of dividend. And so in the case of Hana Financial Group, you haven't engaged in half year dividends for a long time. Do you have any plans to transition to a quarterly dividend? Or if you continue to engage in half year dividends, do you have any plans of increasing significantly the dividends going forward?

[Interpreted] So thank you for those questions. My name is [ Kim Young-in ]. With regards to the first question about the translation loss loan or the translation losses, as of the end of June, in Q2, the amount was about KRW 80 billion. The open position is about $980 million. Starting from last year, we have engaged in hedging [ $600 million ], so 85 million -- or [ $850 million ] of hedging was engaged in. And so we have been able to save significantly. In the case of the second half, with regards to hedging, about [ $950 million ] is the target to be saved. And so new securities and other means of hedging is being considered. So we do believe that the nonmonetary translation losses will be decreasing going forward. With regards to the guidance for the SG&A, so enterprise-wide, cost control measures are being implemented. And as we have noted last time, there will be some amount of increase that will be tolerated, but the market environment is becoming increasingly challenging going forward. So in the second half of the year, we do believe we need to engage more tighter cost control. Especially with regards to the supplies, you need to reduce the cost in order to exhibit more stronger cost controllability. But the digital channel improvement and noncontact banking channels advances and my banking-related investments will continue to be made. In order to -- and also by enhancing efficiency throughout the channels, we are saving costs. So we do believe that there will be significant savings in terms of the recurring costs. And also, about [ early ] 40% rate of C/I ratio is the target going forward. And with regards to dividend, so KRW 800. We started off from KRW 500, and then we raised each year by KRW 100. And then in 2020, we stayed at KRW 500. And we continue to maintain this interim dividend policy over the years. And so the shareholders -- the increase in the shareholder value that you think of and also in terms of continuity of the dividend, we have -- in order to ensure this continuity, we have engaged in interim dividend payout. So in the first quarter, as I've noted, next year in the shareholders' meeting in March, we do believe that we will be able to change our company regulations in order to allow for quarterly dividends. And also our peers, yes, they are engaging quite well in quarterly dividends. And the regulator, they're also -- they also have a positive position with regard to this issue. So we believe that starting from next year, we will be able to, I think, engage in quarterly dividends. So we will discuss this matter with the BOD as well as senior management and the dividend. We do believe that our net income will increase, and so the dividend amount is, we expect, going to go up. And in terms of the dividend payout ratio, well, we will need to give it some more thought. Thank you very much.

[Interpreted] I hope that answers your questions. We will take the next question, it's from HSBC Securities, Director Jaewoong Won.

[Interpreted] Congratulations. You did quite well despite some challenging conditions. I have 2 questions. The earlier question was about dividend. Previously, KB and Shinhan also talked about their shareholder return policies, their dividend payout ratio, the payout ratios and share buyback and cancellation. These measures were mentioned. And could you confirm from Hana's side, can you also engage in these matters? And in the second half, I know there will be some unexpected, but for NIM and loan assets, will you be revising your plans? Could you give us a guidance on your NIM and loan numbers?

[Interpreted] Please hold as we prepare for the answers.

[Interpreted] Director Won, as for the shareholder return policy, ISS has set aside 40% as the minimum -- sorry, 30% as the minimum guideline. And so we do target 30%. That is our guidance and recommended level. So Hana Financial Group has tried to adjust this to 30%. I cannot say for sure that it will be this year or next year, but we will be targeting it. And as for the peers in the industry, share buyback or cancellation, they are meeting the 30% guideline. But we are approaching it in a different way. 30% is our dividend payout ratio, and share buyback and cancellation is another matter. We have done it in Q1. We have some remaining shares to buy back. So in the second half, we will be looking at the right time so that we can boost the stock prices. Thank you for the second part of the question. I'd like to talk about the NIM and loan guidance for the second half. In the first half, the NIM had gone up 9 bps Q-o-Q. There were interest rate hikes, 3x, and 50 bps as a big step. And we have remaining August, October and November, and we believe that the year-end interest rate will be 3%, having risen by 25 bps each. We are hovering above the floating rate. And we do see a potential interest income rise of KRW 100 billion. And the NIM, we expect will reach 1.6%. We will focus on managing profitability. And as for our loan growth, as was mentioned by the CFO, there was an increase of 3.2% in the loan growth in the first half, and that's mostly corporate loan. In the second half, in the rising interest rate, because of some pressure, household loans will not be growing as much, but the households will be intent on paying back. The household loans will be mainly [ changsae ] loans and loans for midterm payments. We will try to increase the amount of household loans on a demand base, but I don't think it will grow as much. In the second half, we will focus more on the SMEs and the SOHO loans, and our strategy will be focusing on those. It may not be as much as first half, but we believe the loan growth to be about 5% in the second half. But there are some limitations, RWA regulations and the CET1 ratios. We will be within the bounds and try to target the 5% loan growth.

[Interpreted] Next question is from Citi Securities, Yafei Tian.

I have a first follow-up question on your earlier net interest margin guidance of 1.6%. If I look at your second quarter, it's pretty much already there. So it looks a little bit conservative. Are you suggesting we are now reaching the end of the margin expansion? So can you give a little bit more clarity on that guidance, please? And then secondly, on that noninterest income, that trading line, quite a lot of volatility over there. And particularly this quarter of losses, you pointed towards equity market volatility. Are you able to give us some sensitivity around that line with the cost fee movement? I understand you already have given some sensitivity around the FX.

[Interpreted] Thank you very much for your questions. Let us get your question. Yes, I have given you an outlook. That was our guidance for the full year. So maybe there was some confusion about that. And it was -- in first Q, it was 1.59% and -- 1.50%; and in the second quarter, it was 1.59%. And because of the BOK trend, interest rate trend is expected to continue. So we believe that in Q3, it will be about 1.59%; and in Q4, it will be about 1.69%. So on a yearly basis, it will be about 1.60%. And last year, it was about 1.41%. So there is still room for expansion about 20 bps. And with regards to the gains of valuation disposition from the bank side, in the case of the gains of valuation disposition of the bank side, it does seem -- or rather, we -- especially marketable securities, the bonds and equity, there has been some losses. The treasury bond yield has risen. So in terms of AFS, there has been some losses that we have incurred. Also in terms of the nonmonetary transaction losses, there has been about KRW 110 billion in losses. But in the second year, the treasury bond yield will -- until it peaks, we will manage the volatile debt maturity. And when the peak is reached, then we will focus on managing the AFS. In the case of the nonmonetary translation losses, it's -- the open position is about KRW 150 million. And through hedging, we intend to lower that level.

[Interpreted] I'm Park Jong-Moo, the CFO of Hana Securities. With regards to the, again, the valuation and disposition from the security side, so again, we can look at it from 2 different perspectives. First is the macro of factors. There is the recurring ordinary decline of the stocks. And in the bond side, compared to last year, there has been interest rate hikes and also the inflation factor. So bond has seen some declines. But compared to other companies, our peers, well, through hedging, because of that, we have been able to sort of reduce the depth of decline. However, regrettable is that in the Vietnam BIDV securities, there has been losses on valuation of our equity holdings in this company, and we recognized that in the first half. And the reason why these losses was incurred was because it was in March 10 that the agreement was signed. But at the end of June, the mark-to-market value was different. And so there were some accounting losses that were recognized. However, in the case of the BIDV equity investment, it was not to see any arbitrage process. So utilizing these branches of this company, we want to expand our profits from this fast-growing region. And also by participating in the management, we wanted to secure a new growth engine. So this is part of our long-term growth plans. And that's the reason why we took out equity holdings in this company. And also the agreement will close at the year-end, December. So at the end of June, although the stock prices have declined, but at the closing date of the agreement, the stock prices are then, depending on the situation, can be recognized as gains. In the case of the Vietnamese securities company's stock prices, their decline is about 50%. However, in the case of our company that we invested in during the same period also, it's about the same level. The stock price decline was about 45%. So this was not anything exceptional. That was what I wanted to note. I hope this provided a sufficient answer.

[Interpreted] We will take the next question, it's from DB Securities, Mr. Lee Byung Gun.

[Interpreted] I just have one question. This is not just limited to Hana, it's a general question for the industry. As we see an increase in the large corporate loans, it's not that they have high possibility of going bad, but the credit rating is in the risky tier. And compared to the small- and medium-sized companies and large companies, there's impact on the credit rating and CET1 ratio came down, and it may be with the FX rate and RWA. So how much do you think it was impacted by each? And compared to the household loans, if the corporate loans are expected to grow in the second half, then I think there will be more capital needed in this sector. So how will you be managing this loan growth?

[Interpreted] Thank you for the question. Please hold.

[Interpreted] Yes. I am Kim Ju-Sung, the CRO of Hana Financial Group. It was not actually one question. To talk about the first part of your question, the corporate bond market is not doing so well. So many companies are now coming to the banks, including Hana Bank, for loans. And even the blue-chip companies came and the risk weight is low in terms of RWA. The CET1 ratio decreased. And did that impact -- was it impacted by the large corporate loans? Not really. And as for the FX rate, we do have some exposure for the overseas loans. And we have some derivatives denominated in foreign currencies. And BIS ratio fall, 1/2 of that was due to the FX rate increase. And in the second half, how will things change? As of now, the portfolio is tilting toward loans in won. And considering the interest rate hike in the second half, we do believe that we will have more corporate loans with low risk weight. And as for the SOHOs and SMEs, the interest payment suspension program will expire in September, but we don't believe that there will be much impact from that. Thank you.

[Interpreted] Thank you very much for that detailed answer. We will receive the next question. Next question is from Kiwoom Securities, Mr. Young-Soo Seo.

[Interpreted] I'm Young-Soo Seo from Kiwoom Securities. So you talked about the performance of the Hana Securities just now. Well, this quarter, the Hana Financial grew. Compared to your peers, I think it was rather poor. And if you look at the factors behind that is I think the performance of the Hana Securities was, I think, had deteriorated from the previous quarter. And the reason for that, I believe, the BIDV securities stayed, and there are losses on valuation disposition and maybe losses from the IB side. So we couldn't look at it in concrete data about this, so can you provide us some more information about these issues?

[Interpreted] Yes. I'm from Hana Securities, the CFO, Park Jong-Moo. So the poor performance of the securities side, yes, it is true that there has been performance decline over the previous quarter. There are 2 reasons for that. As you are well aware, in June, in the second quarter especially, the interest rate on the stock market declined significantly. Especially the short-term interest rate, the volatility has risen by 10 bps more. And so most of the securities company was impacted. There has been losses of valuation for the bond side. In the case of the IB, on a Y-o-Y basis, well, we have been able to defend ourselves well. However, compared to the first quarter and the second quarter, there has been some performance decline, that is true. The main reason behind that is the high interest rate and also the high commodities prices. And so most of the deals that were underway, they were postponed and some of them have been put on hold. And so there has been decline in fees related to those deals. And among the one of factors, BIDV securities, that side has been already explained. And then the lockup period of stocks, there has been some losses on valuation, the stocks that had to be locked up after the IPO. But in the second half, when the stock market recovered, I think that losses can be recovered. In the case of the fundamentals, no, there has been no negative impact on our fundamentals. Because of external one-off factor, there has been temporary decline in the gains. That is all.

[Interpreted] We don't have any more questions on queue. With this, we would like to conclude Hana Financial Group's earnings presentation for the first half 2022. We will upload the webcast on our website, and the IR data will also be uploaded. If you have any outstanding questions, please contact the IR team, and we will answer your questions to the best of our abilities. Thank you. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]