[Korea] April 27, 2021

Industrial of Korea Buy (024110 KS) (Maintain)

Quarterly earnings hit record high TP: W11,500 Upside: 22.5%

Mirae Asset Securities Co., Ltd. Heather Kang [email protected]

1Q21 review Net profit attributable to owners of the parent of W589.1bn (+18% YoY, +65% QoQ) ó Industrial Bank of Korea’s (IBK) 1Q21 net profit beat consensus estimates by 23-26% and our expectation by 11%. ó Major one-off items in the quarter included: 1) FX-translation losses on non-monetary foreign currency assets (W52bn); 2) employee welfare fund contributions (W30.8bn); and 3) dividend income from KT&G (W45.7bn). Robust core income indicators and record-low NPL ratio and credit cost ratio ó Group net interest income rose to W1.44tr (+2.9% YoY, +2.2% QoQ), with net interest margin (NIM) gaining 1bp QoQ and loans growing 2.9% QoQ. ó The NIM improvement was largely due to lower funding costs. Looking ahead, we forecast NIM to expand 2bps in 2Q21 and 1bp in 3Q21. ó Cost-to-income ratio was 37.8% (-0.4%p YoY, -1.8%p QoQ), remaining one of the lowest levels in the industry. ó The credit cost-to-total asset ratio remained very low, at 21bps (-17bps YoY, -23bps QoQ), aided by healthy asset quality, years of deposit portfolio improvements, and preemptive provisioning in 2020. ó The share of high-quality corporate loans (rated A or higher) was 45.1% in 1Q21, up from 44.1% at end-2020 and 29.9% at end-2013.

Recommendation Maintain Buy and TP of W 11,500 ó We revise up our 2021-23 net profit estimates by 6.7-10.5%, reflecting the stronger-than-expected 1Q21 results. ó IBK announced a share issue to the government to help finance the industrial structure advancement and environmental/safety facility programs ( which are implemented every year), as well as the bond market stabilization fund. ó The bank will issue 5.6mn new shares (0.7% of total shares outstanding) to the government for W49bn at W8,706 per share (5.0% discount to base price). ó Payment will be made on Apr. 30, and the new shares will be listed on May 17. ó The share issue is negative to shareholder value and thus reduces the investment appeal of IBK relative to peers, despite its latest strong earnings. ó That said, the stock offers attractive dividend yields.

Key data

Current price (4/26/21, W) 9,390 Market cap (Wbn) 6,936 180 Industrial Bank of Korea KOSPI NP (21F, Wbn) 1,882 Shares outstanding (mn) 792 160 Consensus NP (21F, Wbn) 1,630 Free float (%) 36.4 140

120 EPS growth (21F, %) 10.3 Foreign ownership (%) 12.3

100 P/E (21F, x) 4.0 Beta (12M) 0.95

80 Market P/E (21F, x) 13.9 52-week low (W) 7,200 4.20 8.20 12.20 4.21 KOSPI 3,217.53 52-week high (W) 9,730

Share performance Earnings and valuation metrics (%) 1M 6M 12M (Dec.) 2018 2019 2020 2021F 2022F 2023F Absolute 4.0 10.2 30.4 Net interest income (Wbn) 5,632 5,752 5,615 6,164 6,588 6,870 Relative -1.7 -19.7 -23.4 Net non -interest income (Wbn) 626 561 615 555 477 503

OP (Wbn) 2,396 2,228 2,126 2,606 2,679 2,697 NP (Wbn) 1,754 1,619 1,536 1,882 1,924 1,937 EPS (W) 2,666 2,425 2,153 2,376 2,413 2,429 EPS growth (%) 16.8 -9.1 -11.2 10.3 1.5 0.7 P/E (x) 3.5 3.9 4.4 4.0 3.9 3.9 P/PPOP (x) 1.8 1.8 1.8 1.6 1.6 1.5 P/B (x) 0.29 0.28 0.30 0.28 0.26 0.24 ROE (%) 8.6 7.4 6.4 7.2 6.9 6.5 Div. yield (%) 7.3 7.1 5.0 6.4 6.7 7.0 Notes: Under consolidated K-IFRS; NP is attributable to owners of the parent Source: Company data, Research estimates Analysts who prepared this report are registered as research analysts in Korea but not in any other jurisdiction, including t he US. PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES AND DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT. April 27, 2021 Industrial Bank of Korea

Table 1. IBK: 1Q21 review YoY chg. QoQ chg. (Wbn) 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 (%, %p) (%,%p) Net interest income 1,446.8 1,428.1 1,403.1 1,422.9 1,376.8 1,412.3 1,443.4 2.9 2.2 Net fee/commission income 112.9 162.7 115.6 138.3 161.1 148.9 154.4 33.6 3.7 Net other income -39.3 -5.1 -16.0 45.1 6.9 14.7 -27.0 RR TTR Total net operating income 1,520.3 1,585.7 1,502.7 1,606.3 1,544.8 1,575.9 1,570.8 4.5 -0.3 SG&A expenses 560.4 615.1 573.4 647.2 585.0 624.4 593.4 3.5 -5.0 PPOP 959.9 970.6 929.3 959.1 959.8 951.5 977.3 5.2 2.7 Provisions 450.2 573.7 268.0 532.4 475.6 398.2 197.0 -26.5 -50.5 OP 509.7 396.9 661.3 426.7 484.2 553.3 780.3 18.0 41.0 Non-operating income 8.9 -24.7 11.9 -7.0 27.3 -70.8 27.0 126.3 TTB Pretax profit 518.6 372.3 673.3 419.7 511.5 482.5 807.3 19.9 67.3 NP 380.7 258.0 500.0 316.6 361.2 357.9 589.1 17.8 64.6

Total assets 311,614 318,111 326,886 344,206 353,168 361,616 370,177 13.2 2.4 Total loans/receivables 230,102 239,321 238,579 244,641 258,409 268,688 267,612 12.2 -0.4 Won-denominated loans (bank) 204,555 206,310 210,751 222,064 229,075 233,766 240,466 14.1 2.9 Total credit 218,399 219,994 224,971 235,659 243,184 246,566 253,716 12.8 2.9 Total deposits 112,112 117,991 120,194 129,712 132,083 140,942 140,473 16.9 -0.3 Total shareholders' equity 22,749 22,777 23,066 24,179 25,066 25,142 25,772 11.7 2.5

(%) NIM (bank) 1.81 1.74 1.69 1.60 1.48 1.46 1.47 -0.22 0.01 Cost-to-income ratio 36.9 38.8 38.2 40.3 37.9 39.6 37.8 -0.4 -1.8 NPL (substandard & below) ratio 1.36 1.28 1.29 1.18 1.11 1.08 1.05 -0.24 -0.04 NPL coverage ratio 166.9 170.1 168.1 177.8 187.5 190.9 197.8 29.7 6.9 ROA 0.12 0.08 0.16 0.09 0.10 0.10 0.16 0.01 0.06 ROE 1.70 1.14 2.19 1.35 1.47 1.43 2.33 0.13 0.89 Credit cost ratio 0.14 0.18 0.08 0.15 0.13 0.11 0.05 -0.03 -0.06 BIS ratio 14.78 14.47 14.26 14.45 14.47 14.82 14.75 0.48 -0.08 Tier 1 ratio 12.19 11.97 12.03 12.31 12.44 12.82 12.99 0.95 0.17 CET1 ratio 10.51 10.30 10.28 10.61 10.80 11.13 11.15 0.88 0.02 Notes: ROA, ROE, and credit cost data are non-annualized. Source: Company data, M irae Asset Securities Research

Table 2. IBK: Earnings forecast revisions

Revised Previous % chg. (Wbn) 2021F 2022F 2023F 2021F 2022F 2023F 2021F 2022F 2023F Net interest income 6,164 6,588 6,870 6,031 6,428 6,722 2.2 2.5 2.2 Net non-interest income 555 477 503 562 526 528 -1.2 -9.3 -4.7 Total net operating income 6,719 7,065 7,373 6,593 6,954 7,249 1.9 1.6 1.7 SG&A expenses 2,505 2,592 2,683 2,507 2,595 2,686 -0.1 -0.1 -0.1 PPOP 4,215 4,473 4,690 4,085 4,359 4,563 3.2 2.6 2.8 Provisions 1,609 1,794 1,994 1,695 1,879 2,037 -5.1 -4.5 -2.1 OP 2,606 2,679 2,697 2,390 2,480 2,527 9.0 8.0 6.7 Non-operating income 1 -5 -5 -24 -5 -5 N/A N/A N/A Pretax profit 2,607 2,674 2,692 2,366 2,475 2,522 10.2 8.0 6.7 NP (owners of the parent) 1,882 1,924 1,937 1,703 1,782 1,816 10.5 7.9 6.7 Source: M irae Asset Securities Research estimates

Mirae Asset Securities Research 2 April 27, 2021 Industrial Bank of Korea

Table 3. IBK: Deposit trends (low-cost core deposits) (Wbn, %, %p) 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 YoY QoQ Core deposits 56,702 61,246 61,991 64,611 68,977 76,191 77,349 81,310 83,166 20.6 2.3 MMDA 10,577 10,327 9,913 10,687 12,069 12,100 12,253 12,550 13,883 15.0 10.6 Other deposits 19,665 19,426 19,660 19,533 19,580 19,480 19,577 19,922 20,670 5.6 3.8 CDs, covered bills, RPs 5,373 4,214 4,220 3,960 3,925 3,242 3,383 3,278 3,675 -6.4 12.1 SMF bonds 106,594 108,240 109,689 115,360 112,601 115,702 120,704 122,079 123,173 9.4 0.9 Total deposits 198,911 203,454 205,473 214,152 217,151 226,715 233,267 239,138 244,566 12.6 2.3 Core deposits as % of total 33.8 35.2 35.0 35.2 37.3 38.9 38.4 39.2 39.7 2.4 0.4 Source: Company data, Mirae Asset Securities Research estimates

Figure 1. IBK: Earnings breakdown by subsidiary in 1Q20 Figure 2. IBK: Earnings breakdown by subsidiary in 1Q21P

(before reflecting consolidation adjustments and other factors) (before reflecting consolidation adjustments and other factors)

IBK SPC/funds/other SPC/funds/other IBK Insurance 0.7% IBK Insurance 4.3% 2.8% 1.7% 2.9%

IBK Securities IBK Securities 1.8% 2.8% IBK Capital IBK Capital 3.4% 6.0%

Banking Banking 82.5% 91.6%

NP Stake NP NP Stake NP (Wbn) (%) (Wbn) (%) (a) (b) (a) x (b) (a) (b) (a) x (b) Banking 498.5 498.5 91.6 Banking 539.8 539.8 82.5 IBK 498.5 100.0 498.5 91.6 IBK 539.8 100.0 539.8 82.5 Non-banking 45.7 45.7 8.4 Non-banking 118.0 114.4 17.5 IBK Capital 18.5 100.0 18.5 3.4 IBK Capital 39.5 100.0 39.5 6.0 IBK Securities 9.8 100.0 9.8 1.8 IBK Securities 22.1 83.9 18.5 2.8 IBK Insurance 15.4 100.0 15.4 2.8 IBK Insurance 19.2 100.0 19.2 2.9 IBK China 3.8 100.0 3.8 0.7 IBK China 5.0 100.0 5.0 0.8 IBK Savings Bank 1.5 100.0 1.5 0.3 IBK Savings Bank 0.6 100.0 0.6 0.1 IBK Asset Mgmt -12.8 100.0 -12.8 -2.4 IBK Asset Mgmt 3.3 100.0 3.3 0.5 SPC/funds/other 9.5 100.0 9.5 1.7 SPC/funds/other 28.3 100.0 28.3 4.3 Total 544.2 544.2 100 Total 657.8 654.2 100

Source: Company data, Mirae Asset Securities Research Source: Company data, Mirae Asset Securities Research

Mirae Asset Securities Research 3 April 27, 2021 Industrial Bank of Korea

Table 4. IBK: Non-interest income (Wbn) 1Q21 4Q20 QoQ (%) 1Q20 YoY (%) Non-interest income 113.7 93.3 21.8 138.5 -17.9 Fee income 175.4 169.8 3.3 167.3 4.8 Won-denominated commissions 86.2 83.9 2.8 80.4 7.3 FX-related fees 30.0 31.5 -4.8 31.8 -5.7 Bancassurance 5.3 5.3 0.8 5.9 -9.4 Credit cards 47.3 43.0 10.1 42.0 12.7 Fund sales 6.4 6.0 7.2 7.1 -9.4 Other non-interest income -61.7 -76.5 RR -28.8 RR Securities-related gains 104.3 37.7 176.5 106.5 -2.1 Gains/losses on loan disposals 43.8 47.4 -7.6 41.4 5.8 Other -238.6 -191.1 RR -204.5 RR Trust income 28.8 29.5 -2.2 27.8 3.7 Source: Company data, Mirae Asset Securities Research estimates

Figure 3. IBK: Bank NIM trend (quarterly) Figure 4. IBK: Bank NIM trend (annual)

(%) (%) 2.9 3.50

2.7 3.00 2.5

2.3 2.50

2.1 2.00 1.9

1.7 1.50 1.5

1.3 1.00 1Q10 4Q11 3Q13 2Q15 1Q17 4Q18 3Q20 2Q22F 2000 2004 2008 2012 2016 2020

Source: Company data, Mirae Asset Securities Research Source: Company data, Mirae Asset Securities Research

Figure 5. IBK: Bank won-denominated loan trend Figure 6. IBK: Bank won-denominated loan breakdown (1Q21)

(Wtr) Large Household Household (mortgage) Household (general) corp./public/other (mortgage) 240 SME Large corp./public/other 3.4% 10.3% Household 210 (general) 6.6% 180

150

120

90

60

30 SME 79.9% 0 1Q 05 1Q 06 1Q 07 1Q 08 1Q 09 1Q 10 1Q 11 1Q 12 1Q 13 1Q 14 1Q 15 1Q 16 1Q 17 1Q 18 1Q 19 1Q 20 1Q 21

Source: Company data, Mirae Asset Securities Research Source: Company data, Mirae Asset Securities Research

Mirae Asset Securities Research 4 April 27, 2021 Industrial Bank of Korea

Figure 7. IBK: Credit costs and credit cost ratio (consolidated, quarterly)

(Wbn) (%) 800 Provisioning expenses (L) % of total assets (R) 0.5

700 0.4 0.4 600 0.3 500 0.3 400 0.2 300 0.2 200 0.1

100 0.1

0 0.0 1Q07 4Q08 3Q10 2Q12 1Q14 4Q15 3Q17 2Q19 1Q21

Source: Company data, Mirae Asset Securities Research estimates

Figure 8. IBK: NPL ratio

(%) 2.0 1.8 1.6 1.4 1.2 1.0 1.05 0.8 0.6 0.4 0.2 0.0

Source: Company data, Mirae Asset Securities Research estimates

Figure 9. IBK: New NPL formation (quarterly)

(Wbn) (%) 1,000 0.9 New NPL formation (L) % of total credit (R) 900 0.8

800 0.7 700 0.6 600 0.5 500 0.4 400 0.3 300 200 0.2 100 0.1 0 0.0 2Q07 3Q08 4Q09 1Q11 2Q12 3Q13 4Q14 1Q16 2Q17 3Q18 4Q19 1Q21

Source: Company data, Mirae Asset Securities Research estimates

Mirae Asset Securities Research 5 April 27, 2021 Industrial Bank of Korea

Figure 10. IBK: SME loan breakdown by purpose Figure 11. IBK: SME loan breakdown by collateral type

17.8%

45.9% 63.0% 54.1% 19.2%

Working capital loans Collateral Guarantee Credit Capex loans

Source: Company data, Mirae Asset Securities Research Source: Company data, Mirae Asset Securities Research

Table 5. IBK: Quarterly earnings

(Wbn) 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21F 3Q21F 4Q21F Net interest income 1,406.6 1,470.5 1,446.8 1,428.1 1,403.1 1,422.9 1,376.8 1,412.3 1,443.4 1,516.3 1,589.4 1,615.3 Net non-interest income 110.5 128.2 112.9 162.7 115.6 138.3 161.1 148.9 154.4 156.8 158.3 130.7 Net other income 91.2 0.2 -39.3 -5.1 -16.0 45.1 6.9 14.7 -27.0 21.7 12.0 -52.0 Total net operating income 1,608.3 1,598.9 1,520.3 1,585.7 1,502.7 1,606.3 1,544.8 1,575.9 1,570.8 1,694.7 1,759.8 1,694.0 SG&A expenses 580.3 653.7 560.4 615.1 573.4 647.2 585.0 624.4 593.4 665.3 601.3 644.4 PPOP 1,028.0 945.2 959.9 970.6 929.3 959.1 959.8 951.5 977.3 1,029.4 1,158.4 1,049.6 Provisions 283.6 368.4 450.2 573.7 268.0 532.4 475.6 398.2 197.0 468.2 469.8 474.1 OP 744.4 576.8 509.7 396.9 661.3 426.7 484.2 553.3 780.3 561.2 688.7 575.5 Non-operating income 13.3 14.9 8.9 -24.7 11.9 -7.0 27.3 -70.8 27.0 -4.0 17.0 -39.0 Pretax profit 757.7 591.7 518.6 372.3 673.3 419.7 511.5 482.5 807.3 557.2 705.7 536.5 NP (owners of the parent) 553.4 427.0 380.7 258.0 500.0 316.6 361.2 357.9 589.1 400.0 506.2 386.5 Source: Company data, Mirae Asset Securities Research estimates

Table 6. IBK: Annual earnings

(Wbn) 2014 2015 2016 2017 2018 2019 2020 2021F 2022F 2023F Net interest income 4,511.0 4,630.9 4,876.2 5,260.0 5,632.3 5,752.0 5,615.1 6,164.3 6,587.8 6,870.1 Net non-interest income 345.9 405.6 375.4 407.2 451.2 514.2 563.8 600.2 567.7 580.0 Net other income -299.2 -277.1 -311.1 -67.7 175.2 47.1 50.7 -45.3 -90.3 -77.0 Total net operating income 4,557.7 4,759.5 4,940.6 5,599.5 6,258.6 6,313.3 6,229.7 6,719.2 7,065.2 7,373.1 SG&A expenses 2,005.5 2,096.7 2,154.6 2,188.5 2,298.7 2,409.5 2,430.0 2,504.5 2,592.2 2,682.9 PPOP 2,552.2 2,662.8 2,786.0 3,411.0 3,959.9 3,903.8 3,799.7 4,214.7 4,473.0 4,690.1 Provisions 1,163.9 1,163.1 1,253.4 1,382.7 1,563.5 1,675.9 1,674.2 1,609.1 1,794.2 1,993.6 OP 1,388.3 1,499.7 1,532.6 2,028.3 2,396.4 2,227.9 2,125.5 2,605.6 2,678.8 2,696.6 Non-operating income -45.0 -30.2 -15.4 -74.7 3.0 12.3 -38.6 1.0 -5.0 -5.0 Pretax profit 1,343.3 1,469.5 1,517.2 1,953.6 2,399.5 2,240.2 2,086.9 2,606.6 2,673.8 2,691.6 NP (owners of the parent) 1,026.6 1,143.0 1,157.5 1,501.4 1,754.2 1,619.1 1,535.7 1,881.8 1,923.9 1,936.8 Source: Company data, Mirae Asset Securities Research estimates

Mirae Asset Securities Research 6 April 27, 2021 Industrial Bank of Korea

Industrial Bank of Korea (024110 KS)

Income statement (summarized) Balance sheet (summarized) (Wbn) 2020 2021F 2022F 2023F (Wbn) 2020 2021F 2022F 2023F Interest income 8,654 8,560 9,072 9,533 Cash & dues 12,838 21,343 21,344 21,830 Interest expenses 3,039 2,395 2,484 2,663 Securities 68,685 74,075 74,077 75,763 Net interest income 5,615 6,164 6,588 6,870 Net loans & receivables 268,688 290,837 308,406 326,960 Net fees & commissions 564 600 568 580 Tangible assets 2,175 2,203 2,232 2,261 Net other non-interest income 51 -45 -90 -77 Other assets 9,230 12,275 12,436 12,599 Total net operating income 6,230 6,719 7,065 7,373 Total assets 361,616 400,733 418,494 439,413 G&A expenses 2,430 2,505 2,592 2,683 Deposits 140,942 146,447 152,372 158,537 PPOP 3,800 4,215 4,473 4,690 Borrowings 38,132 42,434 46,565 51,098 Total provisioning expenses 1,674 1,609 1,794 1,994 Debentures 131,215 140,644 154,335 169,359 OP 2,126 2,606 2,679 2,697 Other liabilities 26,185 44,084 36,159 29,403 Net non-operating income -39 1 -5 -5 Total liabilities 336,474 373,608 389,431 408,398 Pretax profit 2,087 2,607 2,674 2,692 Capital stock 4,183 4,211 4,211 4,211 Income tax 539 710 735 740 Hybrid securities 3,060 3,559 3,559 3,559 NP 1,536 1,882 1,924 1,937 Capital surplus 1,145 1,170 1,170 1,170 NP attributable to owners 1,536 1,882 1,924 1,937 Retained earnings 16,159 17,651 19,590 21,541 Normalized NP 1,536 1,882 1,924 1,937 Capital adj. 0 0 0 0 Other comprehensive income 472 414 414 414 Core income 6,179 6,765 7,156 7,450 Minority interests 124 119 119 119 Core PPOP 3,749 4,260 4,563 4,767 Total shareholders' equity 25,142 27,125 29,064 31,015

DuPont analysis (%) 2020 2021F 2022F 2023F Key ratios/growth metrics (%) 2020 2021F 2022F 2023F Interest income 2.55 2.25 2.22 2.22 Growth (YoY) Interest expenses 0.89 0.63 0.61 0.62 Won-denominated loan growth (bank) 13.3 8.8 6.1 6.1 Net interest income 1.65 1.62 1.61 1.60 Net loan & receivables growth 12.3 8.2 6.0 6.0 Net commission income 0.17 0.16 0.14 0.14 Deposit growth 19.5 3.9 4.0 4.0 Net other non-interest income 0.02 -0.01 -0.02 -0.02 Shareholders' equity growth 10.4 7.9 7.1 6.7 Total net operating income 1.83 1.76 1.73 1.72 Total asset growth 13.7 10.8 4.4 5.0 G&A expenses 0.72 0.66 0.63 0.63 Net interest income growth -2.4 9.8 6.9 4.3 PPOP 1.12 1.11 1.09 1.09 Net commission income growth 9.6 6.5 -5.4 2.2 Total provisioning expenses 0.49 0.42 0.44 0.47 PPOP growth -2.7 10.9 6.1 4.9 Net non-operating income -0.01 0.00 0.00 0.00 OP growth -4.6 22.6 2.8 0.7 Pretax profit 0.61 0.68 0.65 0.63 NP growth -5.2 22.5 2.2 0.7 Income tax 0.16 0.19 0.18 0.17 Profitability NP attributable to minority interests 0.00 0.00 0.00 0.00 NIS (bank) 1.55 1.46 1.47 1.47 ROA 0.45 0.49 0.47 0.45 NIM (bank) 1.55 1.50 1.51 1.51 Leverage (x) 14.3 14.7 14.6 14.3 PPOP margin 1.1 1.1 1.1 1.1 ROE 6.44 7.23 6.88 6.47 ROA 0.5 0.5 0.5 0.5 Asset quality (%) 2020 2021F 2022F 2023F ROE 6.4 7.2 6.9 6.5 NPL ratio 1.09 0.95 0.94 0.93 Liquidity Broad NPL ratio 2.49 2.20 2.14 2.08 Won-denominated LDR ex-CDs (bank) 0.0 0.0 0.0 0.0 NPL coverage ratio 190.9 201.7 204.6 207.5 Loan/assets 74.3 72.6 73.7 74.4 Reserves/total credit 2.0 2.0 2.0 2.0 Capital adequacy Credit costs/total loans 0.62 0.55 0.58 0.61 Total CAR 14.3 14.7 15.1 15.3 Credit costs/total credit 0.68 0.60 0.63 0.66 Tier 1 CAR 12.0 13.0 13.2 13.6 Per share items (W) 2020 2021F 2022F 2023F Tier 2 CAR 2.2 1.8 1.9 1.8 EPS (reported) 2,153 2,376 2,413 2,429 Operating efficiency EPS (normalized) 2,153 2,376 2,413 2,429 Cost-to-income ratio 39.0 37.3 36.7 36.4 BPS 31,597 33,867 36,297 38,745 Cost-to-asset ratio 0.7 0.6 0.6 0.6 DPS (common) 471 600 630 660 Dividends PPOP/share 5,328 5,321 5,609 5,882 Dividend payout ratio 24.3 25.4 26.1 27.2 Source: Company data, Mirae Asset Securities Research estimates

Mirae Asset Securities Research 7 April 27, 2021 Industrial Bank of Korea

Appendix 1

Important disclosures and disclaimers Two-year rating and TP history

Company Date Rating TP (W) (W) Industrial Bank of Korea Industrial Bank of Korea (024110) 04/14/21 Buy 11,500 25,000 12/29/20 Trading Buy 10,500 20,000 10/16/20 Trading Buy 9,500 04/21/20 Buy 10,000 15,000 03/05/20 Buy 11,500 10,000 02/03/20 Buy 14,000 10/22/19 Buy 16,000 5,000

01/22/19 Buy 19,500 0 Apr 19 Apr 20 Apr 21

Stock ratings Sector ratings Buy Expected 12-month performance: +20% or greater Overweight Expected to outperform the market over 12 months Trading Buy Expected 12-month performance: +10% to +20% Neutral Expected to perform in line with the market over 12 months Hold Expected 12-month performance: -10% to +10% Underweight Expected to underperform the market over 12 months Sell Expected 12-month performance: -10% or worse

Rating and TP history: Share price (─), TP (▬), Not Rated ( ■), Buy (▲), Trading Buy (■), Hold (●), Sell ( ◆) * Our investment rating is a guide to the expected return of the stock over the next 12 months. * Outside of the official ratings of Mirae Asset Securities Co., Ltd., analysts may call trading opportunities should technical or short-term material developments arise. * The TP was determined by the research analyst through valuation methods discussed in this report, in part based on estimates of future earnings. * TP achievement may be impeded by risks related to the subject securities and companies, as well as general market and economic conditions.

Ratings distribution and investment banking services Buy Trading Buy Hold Sell Ratings distribution 79.00% 13.00% 7.00% 1.00% Investment banking services 63.16% 31.58% 5.26% 0.00% * Based on recommendations in the last 12-months (as of March 31, 2021)

Disclosures As of the publication date, Mirae Asset Securities Co., Ltd. has acted as a liquidity provider for equity-linked warrants backed by shares of Industrial Bank of Korea as an underlying asset; other than this, Mirae Asset Securities has no other special interests in the covered companies.

Analyst certification The research analysts who prepared this report (the “Analysts”) are registered with the Korea Financial Investment Association and are subject to Korean securities regulations. They are neither registered as research analysts in any other jurisdiction nor subject to the laws or regulations thereof. Each Analyst responsible for the preparation of this report certifies that (i) all views expressed in this report accurately reflect the personal views of the Analyst about any and all of the issuers and securities named in this report and (ii) no part of the compensation of the Analyst was, is, or will be directly or indirectly related to the specific recommendations or views contained in this report. Mirae Asset Securities Co., Ltd. (“Mirae Asset Securities”) policy prohibits its Analysts and members of their households from owning securities of any company in the Analyst’s area of coverage, and the Analysts do not serve as an officer, director, or advisory board member of the subject companies. Except as otherwise specified herein, the Analysts have not received any compensation or any other benefits from the subject companies in the past 12 months and have not been promised the same in connection with this report. Like all employees of Mirae Asset Securities, the Analysts receive compensation that is determined by overall firm profitability, which includes revenues from, among other business units, the institutional equities, investment banking, proprietary trading, and private client divisions. At the time of publication of this report, the Analysts do not know or have reason to know of any actual, material conflict of interest of the Analyst or Mirae Asset Securities except as otherwise stated herein.

Disclaimers This report was prepared by Mirae Asset Securities, a broker-dealer registered in the Republic of Korea and a member of the . Information and opinions contained herein have been compiled in good faith and from sources believed to be reliable, but such information has not been independently verified and Mirae Asset Securities makes no guarantee, representation or warranty, express or implied, as to the fairness, accuracy, completeness, or correctness of the information and opinions contained herein or of any translation into English from the . In case of an English translation of a report prepared in the Korean language, the original Korean language report may have been made available to investors in advance of this report. The intended recipients of this report are sophisticated institutional investors who have substantial knowledge of the local business environment, its common practices, laws, and accounting principles, and no person whose receipt or use of this report would violate any laws or regulations or subject Mirae Asset Securities or any of its affiliates to registration or licensing requirements in any jurisdiction shall receive or make any use hereof. This report is for general information purposes only and is not and shall not be construed as an offer or a solicitation of an offer to effect transactions in any securities or other financial instruments. The report does not constitute investment advice to any person, and such person shall not be treated as a client of Mirae Asset Securities by virtue of receiving this report. This report does not take into account the particular investment objectives, financial situations, or needs of individual clients. The report is not to be relied upon in substitution for the exercise of independent judgment. Information and opinions contained herein are as of the date hereof and are subject to change without notice. The price and value of the investments referred to in this report and the income from them may depreciate or appreciate, and investors may incur losses on investments. Past performance is not a guide to future performance. Future returns are not guaranteed, and a loss of original capital may occur. Mirae Asset Securities, its affiliates, and their directors, officers, employees, and agents

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do not accept any liability for any loss arising out of the use hereof. Mirae Asset Securities may have issued other reports that are inconsistent with, and reach different conclusions from, the opinions presented in this report. The reports may reflect different assumptions, views, and analytical methods of the analysts who prepared them. Mirae Asset Securities may make investment decisions that are inconsistent with the opinions and views expressed in this research report. Mirae Asset Securities, its affiliates, and their directors, officers, employees, and agents may have long or short positions in any of the subject securities at any time and may make a purchase or sale, or offer to make a purchase or sale, of any such securities or other financial instruments from time to time in the open market or otherwise, in each case either as principals or agents. Mirae Asset Securities and its affiliates may have had, or may be expecting to enter into, business relationships with the subject companies to provide investment banking, market-making, or other financial services as are permitted under applicable laws and regulations. No part of this document may be copied or reproduced in any manner or form or redistributed or published, in whole or in part, without the prior written consent of Mirae Asset Securities. For further information regarding company-specific information as it pertains to the representations and disclosures in this Appendix 1, please contact [email protected] or +1 (212) 407-1000.

Distribution : This report is being distributed by Mirae Asset Securities (UK) Ltd. in the United Kingdom only to (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”), and (ii) high net worth companies and other persons to whom it may lawfully be communicated, falling within Article 49(2)(A) to (E) of the Order (all such persons together being referred to as “Relevant Persons”). This report is directed only at Relevant Persons. Any person who is not a Relevant Person should not act or rely on this report or any of its contents. : Mirae Asset Securities is not a registered broker-dealer in the United States and, therefore, is not subject to U.S. rules regarding the preparation of research reports and the independence of research analysts. This report is distributed in the U.S. by Mirae Asset Securities (USA) Inc., a member of FINRA/SIPC, to “major U.S. institutional investors” in reliance on the exemption from registration provided by Rule 15a-6(b)(4) under the U.S. Securities Exchange Act of 1934, as amended. All U.S. persons that receive this document by their acceptance hereof represent and warrant that they are a major U.S. institutional investor and have not received this report under any express or implied understanding that they will direct commission income to Mirae Asset Securities or its affiliates. Any U.S. recipient of this document wishing to effect a transaction in any securities discussed herein should contact and place orders with Mirae Asset Securities (USA) Inc. Mirae Asset Securities (USA) Inc. accepts responsibility for the contents of this report in the U.S., subject to the terms hereof, to the extent that it is delivered to a U.S. person other than a major U.S. institutional investor. Under no circumstances should any recipient of this research report effect any transaction to buy or sell securities or related financial instruments through Mirae Asset Securities. The securities described in this report may not have been registered under the U.S. Securities Act of 1933, as amended, and, in such case, may not be offered or sold in the U.S. or to U.S. persons absent registration or an applicable exemption from the registration requirements. : This report is distributed in Hong Kong by Mirae Asset Securities (HK) Limited, which is regulated by the Hong Kong Securities and Futures Commission. The contents of this report have not been reviewed by any regulatory authority in Hong Kong. This report is for distribution only to professional investors within the meaning of Part I of Schedule 1 to the Securities and Futures Ordinance of Hong Kong (Cap. 571, Laws of Hong Kong) and any rules made thereunder and may not be redistributed in whole or in part in Hong Kong to any person. : This report is being distributed by Mirae Asset Capital Markets (India) Private Limited (“MACM”) in India to the customers based in India and is personal information only for those authorised recipient(s). MACM is inter alia a Securities and Exchange Board of India (“SEBI”) registered Research Analyst in India and is not registered outside India. MACM and Mirae Asset, Korea are group entities. MACM makes no guarantee, representation or warranty, express or implied, as to the fairness, accuracy, completeness or correctness of the information and opinions contained herein. The user assumes the entire risk of any use made of this information. This report has been provided for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision. Recipient must read the entire Appendix 1 to the report carefully for Important Disclosures & Disclaimers. All other jurisdictions: Customers in all other countries who wish to effect a transaction in any securities referenced in this report should contact Mirae Asset Securities or its affiliates only if distribution to or use by such customer of this report would not violate applicable laws and regulations and not subject Mirae Asset Securities and its affiliates to any registration or licensing requirement within such jurisdiction.

Mirae Asset Securities Research 9 April 27, 2021 Industrial Bank of Korea

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