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

Greetings, I am GH Park, the Head of IR at Hana Financial Group. We will now begin our 2025 full year business results presentation. Today, our group CEO and Chairman, Young-Joo Ham, has attended a person to extend greetings to our market participants. Accordingly, we will first hear opening remarks from Chairman Young-Joo Ham, and then our group CFO, will present our business results. After the presentation, we will have a Q&A session. I would like to invite our Chairman and CEO, Young-Joo Ham.

Greetings, everyone. I am Hana Financial Group CEO and Chairman, Young-Joo Ham. I would like to extend my sincere appreciation to all stakeholders, including our shareholders, investors, analysts, for joining us today for the presentation of Hana Financial Group's 2025 annual business results presentation despite your very busy schedules. It has now been 4 years since I assumed the role of Hana Financial Group CEO. Over the past 4 years, I have focused on strengthening our group's fundamentals through a profitability-focused growth strategy. As a result, although there were some areas of disappointment, I believe overall that the fact that our group's profitability and per share indicators improved at a faster pace than the average of the industry represents a meaningful achievement. As our Holdings Group CFO will explain in detail shortly thereafter, as a result of our efforts over the past year to strengthen the core business competitiveness of each subsidiary, our group's earnings capacity increased. And in year 2025, we posted for the first time a KRW 4 trillion level of net income. In addition, since announcing our corporate value enhancement plan in October of 2024, through systematic risk-weighted asset management, we have consistently maintained the group CET1 ratio within our target range for 6 consecutive quarters. And based on this, we have continuously expanded our shareholder returns. In particular, we implemented an increased year-end dividend to meet the required for separate taxation of dividend income with the aim of improving after-tax returns or yield for our individual shareholders. As a result, we believe that more individual investors will invest in our shares and that the resulting diversification of our shareholder base will lay the foundation for sustainable enhancement of our corporate value, including this year-end dividend, the group's annual total shareholder return ratio for 2025 is 47%. This represents an increase of 9 percentage points Y-o-Y and brings us closer to our target level of 50%. To maintain and sustain these efforts to enhance corporate value, we plan to carry out share buybacks and cancellation totaling KRW 400 billion in the first half of 2026, and we will continue to pursue a wide range of policies aimed at increasing shareholder value. Among these efforts, we believe that strengthening our group's ROE is currently the most important policy priority. This is because expanded shareholder returns are ultimately sustainable only on the basis of solid profitability. First, our group's core subsidiary, Hana Bank currently is demonstrating industry-leading profitability as risk management capabilities. However, we will not be complacent at this stage, and we plan to further strengthen Hana Bank's unique competitive advantage and expand its foundation for sustainable growth so that it can continue to deliver consistent improvements in performance. Next, nonbanking business will be a key driver of improvement in our group's ROE. It's because as a full-scale recovery in profitability takes place, we expect it to contribute to a meaningful and flexible increase in our group's ROE. If major nonbank subsidiaries, including Hana Securities, Hana Capital are able to generate sufficient returns relative to invested capital, then I believe that our group ROE can, in fact, exceed the target level of 10% going on to reach 11% or even 12%. Accordingly, starting in 2025, strengthening the underlying fundamentals of the nonbank sector has been established as our top priority. Although in 2025, we were not able to observe visible results just yet in terms of net profit, still we have laid the groundwork for improving asset quality and for normalizing our profit and loss structure to become more robust. As such, we expect the performance of the group's nonbank subsidiaries to begin normalization at full scale starting from 2026. In order to enhance and raise the group's ROE, it is necessary to make efforts to secure new drivers of growth. And I believe that stablecoins presents a very promising source of new growth. Once the Digital Asset Framework Act, which is currently under discussion, is passed into law, stablecoin will be fully institutionalized into our financial system, presenting a significant change that could potentially transform the paradigm of finance. That being said, really preparing for issuance of coins in itself will not be enough to create new found opportunities. I believe that we must establish new rules amid prevailing change and lead the market while fostering an overall broad environment in which stablecoins can be naturally used and circulated in our everyday lives. Therefore, we are planning to work in collaboration with various partners to secure practical real-world use cases for stablecoins and to build a complete ecosystem that encompasses point issuance, distribution, usage and circulation with end-to-end coverage. Toward this end, we have formed a stablecoin consortium with multiple financial institutions, and we plan to further build cooperative relations with platform and infrastructure operators to further enhance scalability. Already, we have put into place technological readiness to build this ecosystem. So once the legal framework is finalized and put in place, we are very confident that we can step up and meet the market smoothly. In addition, we are meticulously preparing and positioning ourselves for the innovation that AI will likely bring to the financial industry. Hana Financial Group is the only domestic financial group to operate a dedicated in-house AI research and development organization called the Hana Institute of Technology. The biggest advantage of having our own AI research organization is that it gives us the ability to listen most closely to the voices of our frontline employees and customers to conduct research based on those insights while developing and applying AI technologies that can provide tangible and real support to our business and operations. In practice, cases have been increasing where AI is used not only in customer consultation, but used widely across the group across asset allocation, credit assessments, exchange rate forecasting and export, import screening to drive operational efficiency and also generate profit. Going forward, as we prepare for AI transformation, we are planning to complete our talent development to drive data monetization and infrastructure build-out. We will also establish an open collaboration framework with external institutions such as academia and industry. By leveraging AI, not merely as a technology, but as a core growth driver for the group, we aim to leap forward as a leading AI-enabled financial group for Korea. At this time of major transition towards digital finance, I am committed to fulfilling my responsibilities so that Hana Financial Group can secure future growth engines by leveraging the internal capabilities and technological strengths needed to lead the market. Going forward, during my remaining term, I kindly ask and beyond, of course, I kindly ask for your continued support and interest. And I promise that all of our executives and employees, myself included, will do our utmost to meet market expectations and to maximize shareholder value. Thank you.

Thank you very much. Chairman Ham will now be leaving to attend to his next engagement. We kindly ask for your understanding. Now moving on to Hana Financial Group's 2025 business results. Group CFO, Jong Moo Park, will now present the business results.

Greetings, everyone. I am Hana Financial Group CFO, Jong Moo Park. I will cover our 2025 group business results. Please refer to Page 1 of the materials. First, highlights of our group's business results. Hana Financial Group's 2025 full year net income posted KRW 4,002.9 billion, a 7.1% increase Y-o-Y. With the group's interest income and noninterest income recording balance growth through our group-wide cost efficiency efforts, our CI ratio decreased Y-o-Y. As credit costs are and have been stably managed within the scope of our management plan, our group's annual business performance showed a solid improvement, not only in the scale of profits, but also in the quality. As a result, group's ROE recorded 9.9%, a 7 bp increase Y-o-Y, group's Q4 net income posted KRW 569.4 billion, with the recognition of various one-off costs, including contributions to the new lead fund and provisions for fines related to ELS and LTV, it decreased 49.7% Q-Q. But compared to the same period in the previous year on the back of interest income and fee income increase, it went up 11%. Now group's 2025 and CET1 ratio is expected to post 13.37%. With the Q4 $1 FX rate increase, there has been increasing downward pressure on CET1 ratio, but supported by our systematically established risk-weighted asset management process through efforts to rebalance our portfolio focused on RORWA, we were able to improve our year-end CET1 ratio by 15 bp compared to the end of the previous year. Next, I will walk you through shareholder returns. First of all, 2025 year-end cash dividend was resolved KRW 1,366 per share. If this is comfortness resolved in the general shareholders meeting, 2025 annual cash dividend per share will be a total of KRW 4,105 including KRW 2,739 of the previously paid quarterly dividends, which is a level of KRW 505 or around 14% higher than the previous year. In addition, the total annual cash dividend amount will increase to KRW 1.18 billion, a 10% increase Y-o-Y. And when converted to a dividend payout ratio, it is around 27.9%, thereby fully meeting all the requirements for classification of as a high dividend company eligible for a separate taxation of dividend income under the revised restriction of Special Taxation Act. As a result of increasing the annual cash dividend amount compared to the previous year, Hana Financial Group's 2025 annual shareholder return ratio, including KRW 754.1 billion of treasury shares that were fully repurchased in 2025, it recorded 46.8%, a 9 percentage point increase Y-o-Y. Through the diligent implementation of our corporate value enhancement plan, 2025 group share price recorded a solid growth trend, but our group PBR is still remaining below 1. Accordingly, going forward, Hana Financial Group will continue with our corporate value enhancement plans, including shareholder returns. As of beginning, we plan to carry out share buyback and cancellation totaling KRW 400 billion in the first half of 2026, of which KRW 200 billion will be executed in Q1 and the remaining KRW 200 billion will be executed in Q2. Now I will move on to explain the details of our group's business performance. Please refer to Page 4 of the presentation materials. Group's Q4 interest income based on the sound improvement trend of our group NIM posted KRW 2,383.1 billion a 4% growth Q-o-Q. In the case of Q4 bank NIM, driven by our profitability-focused asset growth efforts and reductions in funding costs resulting from the rollover of maturing high interest time deposits increased by 2 bp Q-o-Q and the group's NIM also increased for bp Q-o-Q with card NIM improvement. On the other hand, Q4 bank loans in 1 maintained the level of the previous quarter. Household loans rose by 0.8% Q-o-Q as real demand for mortgage loans centered on policy-based products remain solid and demand increase for credit loans driven by improved equity market conditions. However, a decline in corporate loans driven by year-end loan repayments by large corps offset the growth in household lending. On an annual basis, the group's net interest income posted KRW 9,163.4 billion, a 4.6% increase Y-o-Y. This was achieved despite the 2 policy rate cuts in the first half of the year, supported by profitability focused portfolio management, including expansion of fixed rate loans and an increase in core low-cost deposits, which led to increases in the group and the bank's NIM by 9 basis points and 6 basis points, respectively, compared to the end of the previous year. This was also a result of the bank's loan assets based on RORWA focused growth strategy, which contributed to the stable achievement of the nominal GDP growth rate level targeted at the beginning of the year. Next, I will move on to group's noninterest income. Please refer to Page 5 of the presentation materials. First of all, looking at Q4 fee income for the group, we recorded KRW 576 billion, up 1.1% Q-on-Q. Main factors were credit card fees, which increased by 18.5% Q-on-Q, coming off of a low base in Q3 from merchant fee refunds. Meanwhile, brokerage fees increased by 25.3% Q-on-Q, driven by favorable market conditions. The group's full year fee income was KRW 2,226.4 billion, up 7.6% year-on-year. Although the growth rate fell somewhat short of the 10% target set at the beginning of the year, overall performance was solid with our fee income mix recording broadly balanced growth when excluding the bank's loan-related fees, which declined year-on-year from reduced early repayment fees. In particular, at Hana Capital, operating lease fees increased from an expansion in lease assets going up 14.7% year-on-year. Credit card fees also rose by 9.4% year-on-year despite reduced merchant fees, supported by improved performance from higher domestic and overseas transaction volume. As a result, fee income continued upside trends across the group's major nonbank subsidiaries. Next, on to group disposition and valuation gains, which declined Q-on-Q due to FX-related translation losses in Q4 among some of our nonbank subsidiaries. On a full year basis, however, the group's disposition and value each and gain increased by 48.5% year-on-year, recording KRW 1,058.2 billion supported by improved bank trading performance, taking advantage of swings in market indicators, such as interest rates and exchange rates. Next, I will take you through G&A on Page 6. The group's general and administrative expenses in the fourth quarter increased by 11.2% quarter-on-quarter driven by seasonal cost factors such as advertising spend. However, on a full year basis, the group's G&A expenses rose by just 3.5% year-on-year, resulting in an improved CI ratio of 41.2% compared with the previous year. To break out G&A into more detailed line items, the group's salary and benefits increased by 2.8% year-on-year due to normal wage increases. This, however, was offset by efficiency gains across subsidiaries to reduce unnecessary costs, which led to a 4.5% year-on-year decline in administrative expenses. Next, retirement benefit expenses increased by a relatively large margin year-on-year. This can be explained as a low base effect, however, as the bank's special retirement costs for 2024 were preemptively recognized at the end of 2023. Depreciation and amortization expenses have been increasing each year in line with the expansion of group investments into digital infrastructure. However, such investments are continuously managed to ensure that they remain within a certain level relative to operating revenue. As a result, the group achieved an improvement in cost efficiency in 2025, compared with the previous year. Going forward, we plan to continue strengthening our digital competitiveness, including AI and information security to enhance operational efficiency while maintaining stable control over recurring costs through disciplined budget execution mostly linked to revenue generation. Lastly, I will explain the group's credit cost. Please refer to Page 7. The gross provision for credit losses in the fourth quarter of 2025 increased 29% quarter-on-quarter, recording KRW 372.1 billion. On a full year basis, provisions increased by 7.5% year-on-year to KRW 1,295.1 billion. While provisions wrote at some nonbank subsidiaries in Q4 recurring credit cost expenses remained stable. As a result, the group's annual credit cost ratio was maintained at 29 basis points, broadly in line with the level at the end of the previous year. In response to both domestic and external uncertainties that emerged in 2025, including sluggish domestic economic conditions, U.S. tariffs and heightened volatility in the exchange rate, the group implemented proactive asset quality management at the group level. Consequently, the group's credit cost is managed soundly within the range set out in our management plan. Looking ahead to 2026, we plan to continue proactively managing against risk factors and to respond thoroughly to ensure sufficient loss-absorbing capacity. Please refer to the published deck for remaining details. With that, this concludes Hana Financial Group's presentation of full year 2025 financial results. Thank you very much for your attention.

Thank you very much. Now we will have a Q&A session. I will explain briefly about the Q&A session method. [Operator Instructions] In the center of the lower part of the page, for your reference, there will be consecutive interpretation if the question is asked in English. Now we will wait for questions to come in. We have the first question from NH Securities. We have Jun-Sup Jung.

In 2025, despite a challenging environment, congratulations on good earnings and good shareholder return. And I have a question -- well, two questions related to shareholder return. The first question is regarding 2025 shareholder return ratio. You mentioned that it is a bit shy of 50%, it's 47%. And going forward, are you going to actually have a higher target? Or are you going to have some changes to your capital policy going forward? Second question about shareholder return. is in 2026, what is going to be your dividend and share buyback and cancellation ratio because it seems that you're going to have some changes. But can you tell us about changes, including tax exemption dividends going forward and the ratio of the 2?

Thank you very much. Please hold until we prepare for your answer. Thank you very much.

Thank you very much for your question. I am the CFO of the group. And thank you very much for your insightful question. For 2023 -- well, from 2023, 33%. And then we had 38% in 2024. And in 2025, we had about 47%. So for shareholder return, we steeply had an increase in shareholder returns. And not only for shareholder returns, but we also had value of plan implementation plan that was disclosed, CET1 ratio, our target, which is being very stably managed. And although it's shy of 10%, our ROE is also in the 9% range. So I think for the past few years, we have been working very hard to uplift our shareholder return. And for PBR as well, when we first started, it was 0.3. It went up now to, I believe, 0.7. And regarding shareholder return -- well for this year, until 2027, we mentioned that we're going to achieve 50%. But in 2025, we already went to 47% level. So it seems that we could reach it earlier than we had expected. We believe, although we're a bit cautious to be very confident. And regarding reports and analysis and future plans, at the end of February, we're going to have some in-depth meetings with our directors, and we will let you know as soon as they are confirmed. And for 2026, for our shareholder return plans, well, first of all, I believe that as was mentioned in the presentation regarding the separation of dividend income taxation, well, you probably know about our plans. And you also asked about our preparations for after-tax dividend yields. And we believe that in end of -- we're going to have it in the agenda for GSM. And in 2026, we believe that -- as was mentioned in the beginning, that we had been very busy trying to reach our target of 50% of total shareholder return. Well, we are always thinking of how we're going to have sustainable growth and having enhancement of corporate value. So in 2026, we believe that we are going to do our best so that we have the dividend income separation taxation and the after-tax dividend yield. So we are going to actually do our best to meet those criteria. Thank you very much. We will take the next question.

From Mirae Asset Securities, Mr. Tae Joon Jeong.

This is Jeong from Mirae Asset Securities. So you mentioned about your shareholder return policy. Now regarding tax exempt dividends, I did have a question. The dividend amount may be maintained and you may want to focus on share buybacks until PBR multiple rises to the multiple level. Is that the plan? And then regarding non-life, there is some talk that you might be in the market to make an acquisition of non-life insurance company. So in terms of expected contribution from that kind of business, assuming that you do go ahead with the acquisition, could you elaborate and provide more color?

Yes, please wait momentarily as we prepare the answer.

Yes. This is the group CFO. Let me answer the first question. And then regarding MG P&C our CSO, from the group will answer your question. In terms of the capital reduction dividend, we do have enough funding for the tax-exempt dividends. But as to what extent, we will make a transfer into retained earnings from our capital reserves. Again, this is subject to discussions with the BOD, and so we will do that to determine the final size of the transfer. And so like we said, until you mentioned that threshold of PBR 1, initially, we were thinking that above 0.8 PBR, we may actually revisit the mix between dividends versus shareholder share buybacks. We mentioned that we would look in depth at the mix. At present, in terms of meeting the requirement for separate taxation for dividend income or tax-exempt dividends, I think that it gives us more room to focus more on share buybacks and cancellations over dividends.

And so this is the CSO of the financial group. So there has been, I think, an article recently, Hana Financial Group actually is always looking to strengthen the long-term drivers of growth. Long term -- and so we have been studying the market in the long term. And so -- and nonbinding expression of interest has been submitted, but nothing is finalized yet, it is just an LOI at the moment, the letter intent only. So for our group in terms of possible synergies with our portfolio, its stand-alone dependence, the sustainability of its business model, only when everything falls into place in coherent will we actually examine it further. So we're always based on this principle and disciplined in our approach.

The next question is for from Korea Investment Securities. We have like Bae Seung Jun on the line.

I am Bae Seung Jun from Korea Investment Securities. I have a question related to money move. Recently, from real estate to securities and from banking sector to the securities companies. It seems that there is a lot of media coverage regarding the so-called money move. And looking at the situation, do you have any visible indicators that attest to this? And regarding this money move phenomenon for financial investment or brokerage, how are you going to respond?

Thank you very much for your question. We will soon answer your question.

Please hold. I am the bank's CFO, Jeong Young Seok. So more we move from the bank to the securities companies so you're asking if we have seen any visible trends, for example, bank deposits going to securities. So you probably know that the stock market was very good from the end of last year. So for retail time deposits, well, it seems that we had believed a little bit went down, maybe because of going to securities, but because of ILM and because of the banknote issuance, IMA and banknote issuance, it seems that we did not really see a lot of visible trends. So we have had a lot of the corporate deposits, well, in its relations to IMA. So it seems that for the corporate deposits, we did not see much changes. But regarding the attrition of retail deposits, well, we are always keeping an eye on this. And linked to the index, we are seeing the time deposit products like ELT that we are actually selling quite well. And regarding the money move, well, regarding retirement pension from last year, so transition to securities houses or companies, well, we are actually trying to keep a very close eye on the situation, but we haven't seen any real numbers that attest to this yet.

From Hana Securities, I am CFO. I would like to answer your question. As you have mentioned, regarding the money move, it seems that a lot of our securities-related customers and assets has actually went up about 30% in 2025 end compared to 2024 end. And for securities, we have a new banknote product and we have about KRW 300 billion of products that were sold, and we have a lot of the family office customers that are looking for new products. So that is why we are responding very well to this demand. And in 2026, first half, when we have the MPS revision, we believe that brokerage income will increase. So through this, we have the WM competitiveness strengthening that we are targeting. So we are sure that we can have better brokerage results and have good results that meet our expectations.

From HSBC Securities, Mr. Jaewoong Won, you are online.

Yes. Congratulations for delivering good performance despite the challenging market conditions. I would like to ask about the nonbanking side and also the issue regarding the fines. First, for nonbanking, I think the Chairman emphasized in his comments that you will be working on improving ROE as a priority. So I have to ask for Hana Securities in the fourth quarter, it seems that your fee income actually has grown. But still overall, earnings have not improved. So what is the reason for that? Is it because of overseas asset impairment? What is the cause of that softness? And for Hana Securities and Hana Capital, starting this year. So do you expect your overseas loss to dissipate? And if so, how much of an improvement do you think is likely to materialize this year? If you could provide some color? And regarding the fine, so KRW 113.7 billion in one-off. Is this just for ELS? Or does it also cover the fines for LTV as well? And on the 29th, I think there was a second sanctions review meeting. So is this amount finalized? In terms of provisioning or write-back, do you expect some kind of write-back in the future or an adjustment to the provision?

Yes, thank you for your questions. Please bear with us as we prepare the answer.

Thank you for the question. I'm the CFO of Hana Securities. So as you are aware, in the fourth quarter, overall, for all security companies, brokerage fees actually probably were expanded in large part for us as well, although our market share is not very big, we did see an expansion in brokerage fee income. That said, so in terms of alternative assets overseas, on average, annually, we are recording a certain loss. And so I think since that is weighing -- well, that actually weighed on our earnings for the fourth quarter. But for full year, if you look at 2024 and 2025, we are maintaining robust earnings at around KRW 250 billion. We are expecting comparable levels this year as well.

So this is the group CFO. Allow me to answer more on the nonbanking side, just a little bit. For securities as a expansion as CFO mentioned, Mr. Kim, in the fourth quarter, there was some valuation loss on alternative assets overseas. And for Hana Capital also had a knock-on effect. so earnings actually declined year-on-year as a consequence. But then what is expected going forward? For securities, of course, assets upon reaching maturity, it's a matter of how the assets will be rebalanced. So we cannot say it is fluid right now. But I think certainly, we are past the bottom at the low point. From our capital as well. I think this year, we are looking to achieve the level that we saw in 2025 as we are seeing a rapid normalization as things are getting back on track.

This is Jeong Young Seok, the bank CFO. I would like to answer your question regarding provisioning for the fine. So KRW 137 billion includes ELS and LTV exposure both. LTV, the KFTC had the first full scope hearing. So it's based on that official number. going forward, if possible, we are considering launching an administrative lawsuits. And so we have set aside a certain provision amount for LTV. And for ELS, the amount actually is tentative that we have received through notice. It is not a finalized number yet. There is a likelihood that there might be a reduction of the amount and so we are seeking advice from the legal law firms and setting up certain provisions. The second theory at the meeting, yesterday was inconclusive. And so there will be an extension to a 1/3 sanctions review meeting on February 12.

We will take the next question. Hanwha Investment Securities, Do Ha Kim.

I have two questions. The first question is about 2026 guidance, if you can provide it to us, margin growth and credit cost. Well, for margin in Q4, it seems that the market interest rate moved greatly. So I think that maybe we can look at margin with a rosier picture. But regarding the bi move to securities, well, I believe maybe it's a bit exaggerated by the media, but I think maybe the direction is inevitable. So there is funding cost pressure. And for the productive finance implementation, it seems that there will be some competition for loan interest. So I am curious about your outlook for the margin. So if you can answer from that perspective, it will be greatly appreciated. And looking at growth, it seems that for growth, investors are -- some investors are saying that they have a weaker view for growth. So if you have those perspectives in your mind, while you answer my question, it will be greatly appreciated. And regarding my second question, well, I think it was mentioned several times that I think for Q4, there were some losses for securities in Q4 that led to lower performance, but it seems that this is an industry that can see the best earnings. So can you tell us about what kind of strategy you have for Hana Securities for 2026? It will be greatly appreciated if you can share it with us.

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

Thank you very much for your insightful questions. I am the CFO of the group. For 2026 overall, looking at our margin, it seems that regarding our asset expansion in Q3 end of 2024, it seemed that it hit the bottom. And then we had seen the margin repricing improvement that is ongoing. And as a result, last year, regarding our loans, we had loan rebalancing and we had the funding cost that was actually reduced. So the bank NIM was able to be lifted up. Also in 2026. regarding our outlook, it seems that for now, with the rate cut, Well, it seems that the outlook is unclear and regarding the policy rate cut, it doesn't happen, then in 2026, well, compared to 2025, maybe there will be a very slight margin growth that may be possible. So we have some expectations for that. And regarding productive finance, well, you got some concerns that the margin may slim down because of overcompetition. But for productive finance, it seems that regarding this, going forward, for loans and investments, it seems that it might not have any immediate impact for now. But regarding 3 to 4 years in the future, well, we could have our own investment or loan support that we had provided now that can provide some different results 3 to 4 years in the future. So we have a task force team for productive finance. So this is not just for loans. We have the projects for our own investments. So through our platforms, we're going to implement different projects. So what is important is, as was mentioned, we have the credit review officers, and we have the sophistication of our processes that will make us very well prepared for the group growth, which also will link to profitability uplift. Thank you very much. Also, I mentioned the loan part, but I think I should also mention the fee part. in 2024 and 2025, we have seen fee income growth that was very consistent. And in 2026, our target is quite enthusiastic. It seems that -- well, high 1-digit single-digit rate, maybe that is an expectation that we have. And regarding our valuation and disposition gains, well, it seems that in Q3, there was the market rate that went up. So it seems that our profits were not as high as the previous quarters. But in Q4, there were some fundamentals that we had accumulated. So in 2026, we believe that we will be able to have growth that exceeds the level of 2025. Also regarding our costs, to cover our outlook, well, I know that it's probably similar for other financial groups. So G&A is impacted by the educational taxation rate change. And for Hana Financial Group, we have Jung HQ headquarter relocation costs. So some of that needs to be reflected. So taking all of those factors into consideration, it seems that the 40% -- early 40% CI ratio that we're targeting is something that we are always trying to meet. And for the credit cost ratio as well, it seems that although economy doesn't seem to be recovering very quickly or strongly, and it seems that the interest rate is also at a little bit of a stand still, we have a conservative outlook. However, despite that, we believe that we will have CCR of about mid-30 bp a that we will target and manage. Thank you very much.

Now I will answer the question for Hana Securities. I think at Hana Securities, we have 3 areas for our earnings generation WMIB and SMT. So for wealth management, in Q4, in [indiscernible], there are mega center was open. And through this, we were able to have high net worth individuals needs that were actually recognized, and we believe that a lot of profit generation is being possible because of that in 2026, we're going to expand our mega center and have our digital competitiveness expanded so that our digital competitiveness will meet the trend of the times. And for IB part regarding -- because we are a bank subsidiary, we have RWA issue, but we're going to have maximization of capital and we believe that we can expand our IB business based on productive finance. And in the OTC business, we have SMT business that is very strong. So we are going to have global expansion, so we are preparing for 2026. Along with this, we have a fourth engine commercial paper that we have actually been preparing for. So we have new SMT and IB customers that will be expanded. So we believe that we will clearly have a larger number of customers compared to the past.

Mr. Jaewoo Kim from Samsung Securities.

I also -- so a lot of my questions are already covered by the previous analyst, but I just have two questions. First of all, I think corporate loans may grow more than household loans given the productive finance emphasis may require some investment. So risk-weighted assets wise, the risk weightings, so compared to the past, will they be more manageable? So perhaps higher weightings for investments. So I don't know if that might be a concern. So regarding RWA growth, what would be a fair expectation in terms of RWA growth? And what kind of management measures do you have? And then as you mentioned, you want to grow your nonbanking side of the business. Now the issue of notes or the CP of the security firms has to be backed by capital. And for your trust business, also, there might be more capital required to expand into certain lines of business. So in terms of building your nonbanking business, how -- what are you thinking in terms of reallocation of your capital across nonbanking?

Yes. Thank you very much. Please wait as we prepare the answer.

This is Jae-shin Kang, the Group CRO. In terms of productive finance, risk-weighted assets, how we need to manage that, let me address that bar. So as you said, rather than corporate loans, investments tend to have higher risk weight. So it is now a more added level of complexity. So our CET1 target is between 13.0% to 13.5%. So we're going to manage our risk-weighted assets within that band. In terms of investments into productive finance, we actually are managing it divided into different growth segments. So for equities, the risk weighting for productive equities, the financial authorities have not finalized their policy measures yet. But once that is confirmed, I think, if anything, the risk meeting may become alleviated in part, and so to the extent that we are able to manage our CET1 within our band, we will direct towards productive finance. And then the risk-weighted asset management practice in terms of regular practice, well, real estate or lease or rental business. So these are not related to productive finance. So there, we will be more conservative as we manage the total size of aggregate assets to keep RWA growth comparable to last year levels so that we can maintain our CET1. Thank you.

Yes, I'm the group CFO. Let me also address your question on the nonbanking side. For nonbanking, the COO also mentioned how we want to focus on growing nonbanking. It's not so much growing the nonbanking side, but closer to normalization. I think that would be a more accurate word because for nonbanking, in terms of the capital, it's about KRW 14.5 trillion or above. So as a percentage of the total group, assets is about 12% as of 2025. So quite low. So in terms of capital share, it actually -- it's about 30% split between banking versus nonbanking. Nonbank is 30%. So actually, 30% will be the contribution in earnings from the nonbank side. So this is not achieved yet. And you have seen in the results of our security firms, capital and insurance arms relative to the capital that is committed, the performance has been sluggish. So it's about normalization that we are continuously working on. And as the CEO mentioned, in 2026 and '27, we expect the normalization to become more visible and firm. In terms of capital allocation, I think you asked about our plans. For capital, new businesses, for example, the rental car business, B2C sales will be expanded in scope to B2B to become more competitive. So that's just an example. So for the last 10 years or 5 years or so, the nonbanking side, we actually invested a lot of capital to drive organic growth. Going forward, we cannot say that there will not be that kind of capital support. But given where things stand now, for the insurance arm, we're thinking injecting capital just at a level required to meet the regulatory threshold. That's pretty much it. Otherwise, we will focus more on driving organic growth.

So there are no more questions pending. I think that we have had a sufficient Q&A session thus far. We will now conclude Hana Financial Group's 2025 Full Year Business Results Presentation and Q&A session. For those who haven't been able to attend, we are going to upload this video on our website tonight in Korean time. So please revisit it if you need to. And please direct any questions you have to our IR team. We will do our best to answer them. Thank you very much. [Statements in English on this transcript were spoken by an interpreter present on the live call.]