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

Greetings. I am G.H. Park, the head of Hana Financial Group IR. I express my gratitude to all market participants for attending today's earnings presentation despite your busy schedules. And from now on, we will begin our 2024 earnings presentation. I would first like to introduce management from our group and major subsidiaries for attending today's business presentation. Group CFO, Jongmoo Park is here with us. Group CRO, Jae Shin Kang is also here with us. I would like to introduce Group CSO, Ho Sik Nam, who is here with us. Next, from Hana Bank, we have CFO, Young Seok Jeong. Next, Hana Bank CRO, Chang Wook Pae is also here with us. Last but not least, Hana Securities CFO, Dong Sik Kim, is here with us. There will be, first, a presentation regarding 2024, full year business results presentation and then we will engage in a Q&A session. Please note that the future outlook discussed today regarding the company's performance may differ significantly from the actual business results due to changes in macroeconomic conditions and market situations. I would like to invite CFO, Jongmoo Park to walk us through Hana Financial Group's 2024 full year business results.

Greetings. I am Jongmoo Park, CFO of Hana Financial Group. Thank you to all stakeholders, including shareholders, investors and analysts who are participating in our 2024 business results presentation despite your busy schedules. Before I explain about our group's business results, I would like to inform you about the shareholder return resolution passed at today's BoD meeting. Please refer to Page 3. First, the year-end cash dividend for 2024 has been resolved at KRW 1,800 per share. If this becomes confirmed as it was resolved today at the March Shareholders' Meeting in 2024 -- meeting, the 2024 cash dividend per share will be a total of KRW 3,600 including the KRW 1,800 quarterly dividend, which was already paid out, and would increase by KRW 200 Y-o-Y. When you convert this to the payout ratio, this amounts to 27.2% and when you add the KRW 396.9 billion of share buyback, which was executed in 2024, 2024 yearly shareholder return ratio stands at 37.8%, a 4.8% point increase Y-o-Y. In addition, today, the BoD passed the KRW 400 billion share buyback and cancellation resolution, which is the largest scale since Hana Financial Group was established. This corresponds to approximately a 10.7% shareholder return ratio when converted to 2024 net income and is about 2.3% of the group's market cap based on the previous day's closing price, which amounts to 6.75 million shares. As you are well aware, the value of the dollar compared to the won rapidly surged from Q4 of 2024 and downward pressure on the group's CET1 ratio has intensified. Despite this, on the back of group-wide portfolio rebalancing and risk-weighted asset management efforts, we were able to manage our group's year-end CET ratio at our target level. Based on this, as a part of our efforts to achieve 50% shareholder return ratio by 2027, we are announcing the news at the beginning of the year of KRW 400 billion of share buyback cancellation this quarter, which is the total amount equivalent for the full year of 2024. The reason why we increased the 2024 dividend per share compared to the previous year and are announcing the largest scale share buyback and cancellation is because the group's -- since the group's establishment is a testament to the strong determination of Hana Financial Group's management and BoD that despite the internal and external uncertainties, we will [indiscernible] go ahead with our value up based on our strong fundamentals. On the other hand, I will elaborate shortly on the KRW 150 billion share buyback and cancellation plans that were announced in October. Due to the $1 FX surge, which took place late last year in order to defend our year-end CET1 ratio, we temporarily suspended our share buyback. As a result, within the KRW 150 billion limit, the actual amount that was executed in 2024 was KRW 96.9 billion, and the 2024 shareholder return ratio reflected to KRW 96.9 billion which is the actual amount, which was executed in line with the fiscal year. We resumed buyback from early this year for the remaining KRW 53.1 billion, and the acquisition was completed as of January 23 and will be attributed to the shareholder return for 2025. Accordingly, essentially 2025 first half shareholder return started with a total of KRW 453.1 billion of share buyback and cancellation. And reflecting the total cash dividend amount at the level of 2024, we are expecting around KRW 1,453.1 billion of shareholder return on an annual basis. Next, I will briefly walk you through our group shareholder return plans going forward. In order to increase shareholder return policy's predictability and for our corporate value to be recovered to an appropriate level more quickly, Hana Financial Group from this year has decided to adopt a quarterly equal dividend policy and has decided to change our past cash dividend focused policy to a shareholder buyback and cancellation-focused dividend policy. Accordingly, going forward, we will fix the yearly total cash dividend amount fixed to a certain scale, and we plan to use 1/4 of this amount each quarter as resources for cash dividends. In this case, since the numbers of shares will gradually decrease according to share buyback and cancellation, the quarterly DPS will gradually increase and will have an effect of providing stable cash to shareholders each quarter. Likewise, along with fixing the total cash dividend amount, we plan to have additional shareholder return expansion achieved through share buyback and cancellation. After KRW 453.1 billion of share buyback and cancellation is completed in the first half of this year, in the second half, after considering the group's performance and stock prices, we will review additional share buyback and cancellation. Accordingly, the proportion of share buyback and cancellation in total shareholder return will gradually increase, and we expect that the share metrics like EPS and DPS will improve more resiliently. Hana Financial Group, in order to achieve value up and to enhance shareholder value has been faithfully implementing our corporate value enhancement plans that was announced in October. As I aforementioned, enhancing shareholder return is very important, but we believe that the core of value worth is to efficiently utilize limited capital and to establish a sustainable profit structure. It's because if solid profitability is not backed up, we cannot execute shareholder return that meets the market's expectations. Accordingly, Hana Financial Group's management and BoD, in order to enhance our group's profitability, ROE will focus on our group's nonbanking business portfolio, which has been slightly sluggish recently. While restoring the competitiveness of nonbanking subsidiaries on their own through cooperation between our subsidiaries, we will expand synergy and pursue qualitative growth rather than quantitative growth and continuously improve our group's capital efficiency and profitability. From now on, I will cover 2024 Group's full year business results. First of all, let me walk you through the group's business results highlights on Page 4. Hana Financial Group's net income for the year reached its historical high of KRW 3,738.8 billion, up KRW 317.1 billion or 9.3% up Y-o-Y. The group's interest income growth was stalled with the lowered interest rate and with the won depreciating against the dollar, FX translation loss of KRW 211.9 billion was incurred on an annual basis, bringing down the group's gain on disposition and valuation Y-o-Y. But with higher competitiveness gain by bank and nonbank businesses, the group's fee income saw fair growth. And along with the group's stable management of credit costs, the group's annual business performance showed signs of robust improvement. The group's net income for Q4 stood at KRW 513.5 billion, down by 55.6% Q-o-Q. Of the previously mentioned FX translation loss of KRW 211.9 billion, KRW 139.4 billion was concentrated in Q4. On top of that, there was the seasonal increase factor of SG&A, a recognition of some one-offs such as additional provisioning against PS by the nonbank subsidiaries leading to a decrease of the group's quarterly net income Q-o-Q. However, on a Y-o-Y basis, core income, such as interest income and fee income increased and the overall provisioning cost was stably managed, increasing the group's quarterly net income, 15.7%. As of 2024 year-end, the group CET1 ratio is expected at 13.13%, a 4 bps fall from the end of the previous quarter. There was the downward pressure of 64 bps due to the strong dollar in Q4. But thanks to the group's active RWA management efforts, the group's CET1 ratio was stably managed exceeding 13%. Going forward, we will strengthen RORWA-focused asset growth strategies, keep up the quarterly CET1 ratio with the target range and go ahead with the value up plan as scheduled. On the bottom left, you see the group ROE in 2024 improved by 17 bps to 9.12%, and the group's CI ratio for 2024 recorded 42.4%, up 1.8 percentage points Y-o-Y. The major subsidiaries, IT investments, gradually increased slightly raising the group CI ratio. But in 2025, we plan to maintain industry-best cost efficiency for the group by expanding ordinary operating income and improving the cost efficiency throughout the group. Please turn to Page 5. In Q4, the group's NIM increased 6 bps Q-o-Q to 1.69% and Hana Bank's NIM recorded 1.46%, up by 5 bps Q-o-Q. During the quarter, base rates were lowered twice, affecting the profitability of loan assets but funding cost was reduced as the high interest rate time deposits reaching maturity were refinanced at a lower rate. And thanks to efforts made in improving the funding portfolio, the group's and the bank's NIM in Q4 showed a fair rebound. As a result, the fall of the annual NIM was limited at 13 bps and 12 bps for the group and the bank, respectively. If you look to the right, it shows that with the continuation of RORWA-focused asset balance -- rebalancing in Q4, Hana Bank's loans in won decreased 1% compared to the previous quarter. As a result, the annual loan growth in 2024 was 4%, complying with the nominal GDP growth rate, which was one of the business goals. In turn, the group's interest income for the year recorded KRW 8,761 billion, down by 1.3% Y-o-Y. Next, I'd like to explain the group's noninterest income. Please refer to the graph in the middle. The group's annual noninterest income from fees amounted to KRW 2,069.6 billion, marking a 15.2% increase Y-o-Y, demonstrating solid performance. Looking at each item in more detail. First, loan and FX-related fees increased by KRW 135.7 billion Y-o-Y, driving the overall improvement in the group's fee income. This was mainly due to the continued expansion of operating lease fees, which increased by KRW 69.7 billion year-on-year, driven by Hana capital's growing auto lease and rental assets. Additionally, Hana Bank's fee income from its core businesses, including IB and payment guarantees showed growth. Moreover, Hana Card saw an increase in merchant fees supported by rising sales, while cost efficiency efforts such as reduced promotional expenses contributed to a KRW 99.1 billion Y-o-Y increase in credit card fees. Furthermore, the retirement pension business, a key focus for the group recorded the largest net asset growth in the financial sector in 2024. Following its strong performance the previous year, and as a result, related fees increased by KRW 20.6 billion, maintaining a solid growth trajectory. The group's annual gains from disposition and valuation stood at KRW 712.7 billion, declining by 17.4% Y-o-Y due to the aforementioned increase in FX translation losses. However, excluding the impact, the group's normalized disposition and valuation gains increased by approximately 4.8% Y-o-Y. The reduction in IP asset losses at Hana Securities, along with improved securities trading performance at Hana Bank and better FX trading gains at its branches contributed to the group's overall increase in normalized disposition and valuation gains. As a result, the group's annual noninterest income recorded KRW 1,926 billion, down by 2.3% Y-o-Y. Now on to Page 6. As the end of the year 2024, the group's NPL ratio remained stable at 0.62%, the same level as in Q3, while the delinquency ratio decreased by 4 bps Q-o-Q to 0.51%. Compared to the previous year, both indicators rose by 12 bps and 6 bps, respectively. However, thanks to the group's proactive risk management efforts, key asset quality indicators have remained at a stable level. Next, the group's credit cost ratio for the year increased by 4 bps Q-o-Q but decreased by 11 bps Y-o-Y, reaching 0.29%. Taking into account the loan loss provision reversals that occurred during the year, the normalized credit cost ratio stood at approximately 0.33%. The group's credit cost ratio was effectively managed, supported by Hana Bank's high collateral coverage for its loan assets and the impact of substantial preemptive provisioning accumulated through 2023. However, looking ahead to 2025, ongoing domestic and international political uncertainties as well as challenges in predicting the trajectory of key economic indicators such as interest rates and exchange rates are expected to persist. Accordingly, we plan to maintain our 2025 annual credit cost ratio target at the mid-30 bps level and will remain fully committed to proactive risk management to mitigate potential asset quality deterioration. Please refer to the document for the group's capital ratios. And this concludes the presentation on Hana Financial Group's earnings for the full year 2024. Thank you very much.

Thank you very much. And now we will proceed with Q&A. I'd like to explain how we will proceed. [Operator Instructions] The first question is by Hanwha Investment Securities. Kim Do Ha.

I'm from Hanwha Investment Securities. I have two questions. First is about the margin. You mentioned that the repricing effect from funding cost, and it seems that it rebounded better than expected. And as you had explained, I believe that there was a sudden repricing effect. And can you tell us about what you expect the trend to be from Q1? So can you give us outlook regarding that? Second question is, in the case of last year, in the first half of last year, you grew significantly and you had more asset management in the second half of the year. So there was about mid-single growth that you had seen, and there were some swings. And what is your growth strategy for this year? Can you give us your take regarding RWA and loans in won? And any goals and how you're going to allocate them? And I think it will help us understand your strategy going forward.

Thank you very much for your questions. And we will soon answer them. So please hold.

Thank you very much for the opportunity, and I am the CFO, Park Jongmoo. Thank you very much for your insightful questions. Regarding your questions, I would like to elaborate on the growth outlook, that was, I believe, your second question. And for the asset repricing and other questions, we will hear from the bank. In last year and also in 2023 on the whole, we had more of the asset growth in the first half, and we had more of rebalancing in the second half. And we had RWA growth that was controlled in the second half, and we actually managed our CET1 ratio. And from this year, we will -- actually, I believe you'll use some differences according to our plans. And we will have more -- we will try to aim for more uniform or equal growth for each quarter because last year, when we announced our value program, there was a precondition which was that we wanted a smooth shareholder return. And in order to do so, our CET1 ratio, well, for each quarter, when -- if there were many volatilities or big changes between each quarter, there were some concerns by the regulatory authorities or investors. So for asset growth, aligning with RWA growth, we will pursue our growth strategy. And last year, on the whole, our total growth based on won, we had about 4% growth. And this 4% growth, well, we always mention that we will align to the level of nominal GDP growth, so it was in alignment with that. So for this year as well, regarding our RWA growth, rate. As we had mentioned in our value program, it will be managed at the level of nominal growth rate. And as was mentioned for our loans and won growth, it will also keep in pace with that as well.

I would like to answer the first question you posed regarding the NIM management in the funding side. And I am Jeong Young Seok from -- the CFO of the Bank. In 2024, as you had heard, we had interest rate decline and there was heated competition in the low market. So there were many downward pressures on the NIM. However, what was fortunate was that in Q4, we were able to have more than 5 bps of improvement based on quarterly level, and we were able to have 1.47% of NIM from the early part of this year, and for this year as well, 3x of interest rate changes, and there will -- and we had funding side, profitability improvement that we're expecting with 4x rate changes. And it seems that in these 2 aspects, we will have about 40 bps and 66 bps of our profitability improvement based on our balance. And then on a yearly basis, then we will have about 11 bps improvement. Well, there will be some declines in the lending side, but we -- and we will need to consider that. Also, there will be a low interest rate regime and when it enters into that, we will have some natural increase of low-cost deposits, core deposits, and there will be some changes because of sales. But when we had a large amount coming in, we had about 20% of low-cost core deposits or time deposits -- the regular deposits coming in, so we will have a great improvement in our funding side due to that. So for this year, on an annual basis, the NIM that we're targeting is 1.43%.

Thank you. We'll take the next question. It is from HSBC, Won Jaewoong.

Despite the difficult situation, congratulations and also paying great attention to shareholder return. I have two questions. One, about the nonbank portfolio reinforcements that you mentioned and about a qualitative growth instead of quantitative growth that you are going to pursue. So in terms of M&As, I guess you're not thinking about that part. Of your subsidiaries, which subsidiaries profitability or which business growth are you trying to concentrate on more? And the second question is related to RWA. This time, RWA management was done so well, and in FX rate, you were able to rise out of that challenging situation. Of the 55 bps that went up, was there a one-off? Or could you break down how the 55 bps increase was made up of?

Yes. I am Jongmoo Park, the Group CFO. Thank you always for your excellent questions. The first question will be dealt with by me. And the second question, I will toss it to the Group CRO, Mr. Jae Shin Kang. In actuality, in earnings presentations, I did talk about the nonbank portfolio reinforcement, and I think you understood the message very well. The group CEO, when he had meetings with the investors, he talked about the inorganic growth, which we are not considering at the moment. That is the message. Then, how can we reinforce the nonbanking side portfolio? We do have a lot of thoughts from group's total history and looking at the nonbank side in 2021, the nonbank did about KRW 1.3 trillion of net income, and the contribution had gone up to 33%. But in 2023, Hana Securities was in the red and the nonbank side fell to end -- and it felt to 4.7%, and then it rebounded to 16% last year. So when we -- when the investors and the analysts talk about this, could we allocate the capital and use the capital more efficiently that's the order that has given us. So for the low ROE subsidiaries, we need some improvements made and that was the order given to us. So at this point in time, the profitability level of the nonbank, well, we don't have the fundamental strength yet. In order to go back up to the contribution level of the nonbanking side of 2021, we need to focus on enhancing the ROE of the total group, and that will also help. And thankfully, last year, Hana Securities -- last year did recognize the valuation loss of PF and IB, but there was a turnaround, and this trend is expected to continue throughout the year and not only Securities but also Hana Insurance. Well, the profit is very minimal, but the losses are reducing, and it is reinforcing its core business. And Hana Cards business, the profit-making fundamentals have reinforced, has gotten very strong. So in summary, the nonbanking subsidiaries in order to -- by reinforcing the competitiveness of their core businesses, we will be able to create profits that can give us the fundamental strength and that will be where we will be focusing.

Yes, I am Jae Shin Kang, the Group CRO. Let me address the second part of your question. In the first half, when we grow our assets, we focused more on the quantity growth instead of RWA management. And so in -- starting in Q3, we focused on the qualitative growth, and so we are able to concentrate more on the group's growth, more on quality. And so low quality or low-growth assets were put less priority and we were trying to have more selection and do risk management on the RORWA. Even though the assets reduced, ROA or RORWA did not reduce. So that's how we are restructuring our asset portfolio. So we were able to manage accordingly in the second half. And in terms of FX, there was an increase in April, and that led to some capital management. And where we had high FX sensitivity, we try to rebalance the asset portfolio. And in December, there was the won depreciation, and we tightened the management. So in closing the book in December, we believe that this kind of trend will continue in 2025. And according to the value program, by quarter, we are going to manage our CET1 ratio. So by quarterly basis, the available RWA and RORWA will be managed by quarter. And so CET1 ratio management capability will be maintained and managed by quarter. Thank you.

And the next question is from KB Securities, Kang Seung-Gun.

I have a question regarding the RWA-focused and RORWA-focused approach that you have been emphasizing. So this is a question related to that. And looking at 2024, looking at the group for RORWA, 1.33, I believe and for the bank, 1.65, when I calculated this. And in 2025, RWA-focused growth and profitability, I think that was the direction that you have mentioned. And for different subsidiaries regarding the RORWA, I'm curious about the current level. Can you give us an answer to that? And for the group RWA and the bank RORWA, I think, are stated and it doesn't exist for other subsidiaries. So I'm curious about the breakdown of each subsidiary RWA within the group. It's because at the end of the day, the group will need to enhance RORWA from its current state. And in order to do so, there will be capital allocation, reallocation for different subsidiaries and efforts to pull up profitability of different subsidiaries. So I am curious about where you will emphasize and your target RORWA goal for 2025. So if you can share that with us, I would greatly appreciate it.

I am the CRO of the group, Jae Shin Kang. Regarding RORWA management, when we draw up our business plans, there is the net income. And for each subsidiary, according to the characteristics of their assets, we will allocate the RORWA and manage it on a yearly basis. And for the Financial Holdings Group and the bank. For the bank's RORWA, it is high and is driving the numbers. But for securities and savings bank, we have some subsidiaries with lower net income, and they were not able to reach our targeted RORWA, so the group RORWA is 30 bps lower and not for the bank. And for this year, we are targeting a higher RORWA than the previous, and for different subsidiaries, the profit and asset management goals have been allotted. And there will be many variables. We don't know if it can be fully achieved. But currently, for the group, regarding RORWA and CET1 ratio, we have policies to actively manage these numbers to all subsidiaries. And we are reflecting this fully in our business plans. So if everything goes smoothly, then we believe that all subsidiaries will have better RORWA management compared to the past, so we believe that compared to 2024, we will have improvement in RORWA management for the year.

The next question is from Korea Investment Securities, Baek Doosan.

I'm Baek Doosan. I have a question about the fee income. First of all, in Q4, the IB advisory went up by KRW 60 billion. So is there an extraordinary effect? And in 2025, 4-year business outlook, it is centered around fee income, and you do seem to have plans to increase your net income around fee income. So in 2024, you had a very good year. And in 2024, what are your specific plans to increase the fee income even further?

I'm Jongmoo Park, the group CFO. Yes, in Q4, the IB advisory fees had an increase. The IB deals, well, they are seasonal in nature. So in Q4, there were several large deals that were concentrated, so that could be considered a one-off. And then in 2024, we had a large growth in the fee income in 2024 and what will we do to continue this momentum in 2025. And as you can see from our IR materials, we plan to have a double-digit growth in fee income. And how can this be achieved? As for the specifics, basically, as was mentioned, the retirement pension fees in 2024, we did have the increased effect already and for asset management fees, the trading, the securities, we do have a sound base. And we believe if we can outperform above the benchmark, then I think we can have an increase further in the fee income. And as far as we can see, the IB advisory fees from the Hana Securities has not been normalized yet. And so we will reduce the sales for not -- the assets for nonsales and we believe that the fee income from that category can increase. And credit card fees and operating lease fees, we do base these on our customers and our sales capabilities are increasing. So we believe that the fee income from those categories are expected to go up as well. So that was the brief answer to your question.

We will take the next question. The next question is from NH Securities, Jung Jun-Sup.

I would like to ask my question right away. And in Q4 of this year, there were some FX changes, but you were able to defend your capital cost very well. And in January and February of 2025, the won-dollar FX is still not very stable. So what is your FX outlook internally? And recently, regarding your RWA strategy, I think you will have capital reallocation. And in 2025, according to the fluctuation of the FX rate. So I'm curious about the sensitivity management you're going to have for your profits and for the capital as well.

I am Jongmoo Park, the CFO of the group. Thank you very much for your question. And in Q4, we worked very hard to manage the FX. In November -- until November, it was KRW 1,390 range. However, in December, because of many events that occurred, it went up to mid-KRW 1,400 level. So our FX sensitivity -- well, what was assessed in the first half of the year became different. It's because we had some derivative products with longer maturities. And in those cases, according to the FX curve, the sensitivity became very different. So basically, for KRW 10 of FX, RWA about KRW 800 billion moves and is affected. So regarding how we're going to manage the FX rate this year, I mentioned what happened in Q4 of last year, and in the second half of last year, as was mentioned by our CRO, well, group-wide, the Bank CRO, CFO and Securities as well, we worked in concert. Regarding RWA, we made many assessments and analysis together. And this year, of course, well, last year's FX rate actually remained at KRW 1,470 and it went down a bit, but we don't think that it will go down significantly. So taking that amount as a standard, we will actually manage our RWA. And even if it goes up from that amount, regarding our asset management plans or others, if we consider that, we believe that we can fully control that in each quarter. Thank you very much for your question.

We'll go ahead with the next question. It is from Lee Miseon, Citi Securities.

I'm Lee Miseon from Citi Securities. I have two questions and what is the guidance for the income that you're expecting from securities and the plc, the provisioning for -- that you have recognized additionally?

I'm Jongmoo Park, the Group CFO. As for the guidance on securities income, as you can see from the documents, it's around KRW 220 billion. And we believe that there will be about 10% growth. And there was the FX translation loss. It was minus KRW 220 billion. And in Q4 -- yes, well, since this was a simple question, I'll get back to you with the answer through a separate call.

It seems that we don't have any questions in the queue currently. [Operator Instructions] We will take the next question. The next question is from Hanwha Investment Securities Do Ha Kim.

I have maybe an overlapping question, and I'm curious about some details. And regarding the CET1 in Q4, there was a stabilization policy by these authorities in December, and it could affect the overseas subsidiaries, and it could be, I believe, may be a one-off rather than a recurring item, and it could disappear going forward. So can you tell us about how much of a bps impact this will have?

I am Jongmoo Park, CFO of the group. In the 23.13%, there is the FX structuring position that has not been reflected. And the regulatory authorities, when we actually complete discussion with them, I believe that there will be about 6 to 7 bps plus effect.

We'll take the next question. It's from JPMorgan, Cho Jihyun.

I have two. First, about the credit cost ratio. In Q4, credit cost ratio, well, it does have some conservative patterns, but you still managed it well. And in 2024, you're targeting mid-30 bps of credit cost ratio. And was it based on? And what about PF provisioning for the nonbank in 2025? Will that stop? And there were some reversals in 2024. And will there be any reversals in 2025 and the guidance for mid-30 bps credit cost ratio, is this on the rather conservative side? And moving on to the second part of my question, last year, you talked about it, end of the KRW 150 billion share buyback, KRW 50 billion was pushed back, and that's on an accounting basis. But when you did announce the buyback and cancellation, was this made as if it was announced in 2025? Will it be considered as such?

Hello, I am the CFO. I'd like to address your second question first. Yes, I did mention it in my presentation, but the 53.1% will be attributed to 2025, and it has been taken out of 2024 shareholder return. I hope that answered your question. Yes. And as for the credit cost ratio, in the first half 2024, there was a significant reversal and it was 0.29%. And other than that, it is normalized to 0.33% on an annual basis. And in the second half, the bank's -- the savings bank, the household loans and SOHO loans, there was incremental increase in delinquencies and provisioning. So we are targeting 30 bps that I think that can be manageable in 2025. And in relation to the PF provisioning, I think there will be some additional provisioning in 2025. In 2024, the PF provisioning for the some of the sites, there has not been restructuring done, so I think we will have to recognize some losses. So there could be additional provisioning in 2025. And as for the scale, 2024 versus 2025, we believe that the provisioning amount will be similar.

The next question is from Samsung Securities, Kim Jaewoo.

I have two questions. The first question is about the share buyback announcement that you made because your competitors, we are seeing them doing it on a semiannual basis. And I think you -- on a quarterly basis, so is this going to be routine? And you mentioned the background for provisioning. And I have an additional question. For the past 2 years, for nonbanking provisioning, I think the amount was quite sizable. And before 2023, until 2022, I think it was at a very good level. And when the interest rate went down, I think -- goes down, you will see some improvements, and I think that could be expected. And I know that you're being quite conservative. But internally, when this becomes resolved and if interest rate becomes normalized to a certain level, then, can you tell us about what is your outlook about improvement level of nonbanking provisioning?

I am Group CFO, Jongmoo Park. Regarding share buyback cancellation and competitors. Well, as I covered this previously, in the second half, we are going to have additional review of its possibility. And I'm sure that other companies have their own characteristics, but I can -- I don't think I can give you any confirmations at this point. However, for total shareholder return ratio or the amount of net income, well, taking all of that into consideration, I think there will be some room for execution. But regarding performance, it can always be quite variable. So PBR, profitability and others, we will need to take in the total picture and give you our decision about what is going to happen in the second half of this year. Thank you. So regarding the amount of provisioning for nonbanking subsidiaries, well, as you had mentioned, if interest rate goes down, then the amount of provisioning we expect to decline overall. However, as was mentioned in the previous question, the provisioning amount for real estate PF, I think it will be similar to the previous year. So for nonbanking provisioning amount, we are expecting a slight decline Y-o-Y. But in 2022, with the COVID effect, and 2023, I don't think that it will go down to that level. There will be some limitations in its decline. And regarding the bank provisioning, we believe that there will be a slight increase. So the total amount of provisioning for 2024 and this year, I think it will be at a similar level.

We don't have any questions on queue yet. I think we did entertain sufficient questions. With this, we would like to conclude the earnings presentation for the full year 2024 Hana Financial Group. If you were not able to watch the earnings presentation or if you need to review it again, the video will be uploaded on the group website at 9 p.m. And if you have any additional questions, please contact the IR team, and we'll do our best to answer your questions. Thank you very much for your attention.