Industrial of Korea (024110 KS ) Public role to become more prominent

Banks Lower TP to W11,500 (from W14,000) Company Report As growth fears intensify and bond yields rapidly decline amid the spread of COVID-19 , the US Fed announced on March 3rd an emergency rate cut of 50bps . Given downside March 6, 2020 risks to growth and expectations of a BOK rate cut, we think bond yields could decline further, increasing the likelihood that bank net interest margins (NIMs) will be weaker than previously expected. Industrial Bank of Korea (IBK) has a lower exposure to non- bank subsidiaries and a higher exposure to interest income than its peers, which we (Maintain) Buy believe makes it more vulnerable to profit pressures from lower interest rates. Furthermore, during times of heightened worries about growth, there tends to be increased awareness of the public role of . As a government-owned bank in ▼ Target Price (12M, W) 11,500 charge of supporting small/mid-sized businesses, IBK has a more public nature than its peers. This often leads to the bank issuing shares to the government, which can Share Price (03/05/20, W) 9,390 lessen its relative investment appeal. We forecast IBK’s NIM to fall 4bps, 4bps, and 3bps QoQ in 1Q20, 2Q20, and 3Q20, Expected Return 22% respectively, before picking up 2bps QoQ in 4Q20 and 1bp QoQ in 1Q21. For 2020 as a whole, we see NIM contracting 17bps YoY to 1.66%. As such, w e are revising down our

2020 and 20 21 net profit estimates by 6.4% and 5.5%, respectively, and reducing our NP (20F, Wbn) 1,512 target price by 17.9% from W14,000 to W11,500. With our target pri ce implying 22% Consensus NP (20F, Wbn) 1,606 upside to the current share price, we maintain our Buy rating.

EPS Growth (20F, %) -9.1 W264bn share issue to the government Market EPS Growth (20F, %) 30.5 On March 4 th , IBK’s board approved the issuance of 29,379,034 new shares (4.4% of P/E (20F, x) 4.3 total shares outstanding) to the government for W264bn at W8,986 per share (5% Market P/E (20F, x) 11.1 discount to base price). Payment will be made on April 22 nd , and the new shares will be th KOSPI 2,085.26 listed on May 11 . IBK stated that the purpose of the share issue is to finance: 1) special programs for innovative growth and small businesses; and 2) the advancement Market Cap (Wbn) 5,420 of industrial structures and the operation of environmental/safety facility funds. The Shares Outstanding (mn) 675 issuance of shares to the government at a discount, which highlights IBK’s public role Free Float (%) 46.6 and has become a yearly occurrence, can hardly be seen a s positive to regular Foreign Ownership (%) 19.1 shareholders. IBK also announced that it was increasing the size of its ultra- Beta (12M) 0.57 low/preferential interest rate loan programs for small and self-employed businesses from W1.7tr to W4.2tr in order to provide financial aid in the wake of the COVID-19 52-Week Low 9,390 outbreak. We think the move could require further funds financed by the government. 52-Week High 14,700 2019 dividend: W670 for regular shareholders (%) 1M 6M 12M th Absolute -11.4 -24.3 -32.9 On March 4 , IBK’s board approved 2019 final dividends of W670 (vs. W690 in 2018) for regular shareholders and W472 (vs. W559 in 2018) for the government (IBK’s largest Relative -8.0 -27.2 -29.9 shareholder). On a consolidated basis, dividend payout was 23.6% (vs. 23.4% in 2018 ).

110 Industrial Bank of Korea For regular shareholders, payout was raised to 28% (vs. 25.7% in 2018). For the KOSPI government, payout was reduced to 19.7% (vs. 20.9% in 2018). 100

90 We forecast dividend yields of 6.4% for 2020, 6.8% for 2021, and 6.9% for 2022. While

80 such levels are certainly attractive, we believe IBK’s peers also offer compelling dividends. As such, we think the relative appeal of IBK , whose dividends were once 70 unrivaled in the sector, has somewhat diminished. 60 3.19 7.19 11.19 3.20

Mirae Asset Daewoo Co., Ltd. Fiscal year-end 12/17 12/18 12/19 12/20F 12/21F 12/22F Net interest inc. (Wbn) 5,260 5,632 5,752 5,583 5,804 6,060 [ Banks/Credit Cards ] Net non-interest inc. (Wbn) 340 626 578 619 673 670 Operating profit (Wbn) 2,028 2,396 2,246 2,088 2,168 2,176 Heather Kang +822 -3774 -1903 Net profit (Wbn) 1,501 1,754 1,618 1,512 1,576 1,587 [email protected] EPS (W) 2,282 2,666 2,423 2,203 2,237 2,253

EPS growth (%) 29.4 16.8 -9.1 -9.1 1.5 0.7 P/E (x) 4.1 3.5 3.9 4.3 4.2 4.2 P/PPOP (x) 1.6 1.4 1.4 1.5 1.4 1.3

P/B (x) 0.31 0.29 0.28 0.27 0.26 0.24 ROE (%) 8.0 8.6 7.4 6.5 6.3 6.0 Dividend yield (%) 6.6 7.3 7.1 6.4 6.8 6.9 Note: All figures are based on consolidated K-IFRS; NP refers to net profit attributable to controlling interests Source: Company data, Mirae Asset Daewoo Research estimates

March 6, 2020 Industrial Bank of Korea

Table 1. IBK: Earnings forecast revisions

Revised Previous % chg. (Wbn) 2020F 2021F 2020F 2021F 2020F 2021F Net interest income 5,583 5,804 5,754 6,035 -3.0 -3.8 Net non-interest income 619 673 592 604 4.6 11.5 Total net operating income 6,202 6,477 6,346 6,639 -2.3 -2.4 SG&A expenses 2,496 2,566 2,532 2,633 -1.4 -2.6 PPOP 3,706 3,912 3,814 4,006 -2.8 -2.3 Provisions 1,618 1,744 1,585 1,712 2.1 1.9 Operating profit 2,088 2,168 2,230 2,294 -6.4 -5.5 Non-operating income 10 19 10 19 0.0 0.0 Pretax profit 2,098 2,186 2,240 2,313 -6.3 -5.5 Net profit 1,512 1,576 1,615 1,668 -6.4 -5.5 Source : Mirae Asset Daewoo Research estimates

Table 2. IBK: TP calculation

Sustainable ROE 5.90% Growth 2.00% Cost of equity 13.60%

Cost of equity 13.60% Risk-free rate 2.50% Beta 1.85 Market premium 6.00%

Fair P/B (x) 0.34 2019F BPS (W) 34,171 TP (W) 11,500 Source: Mirae Asset Daewoo Research estimates

Table 3. IBK: Valuation metrics at TP of W11,500

2017 2018 2019 2020F 2021F 2022F

P/B (x) 0.38 0.36 0.34 0.34 0.32 0.30 P/E (x) 5.0 4.3 4.7 5.2 5.1 5.1 ROE (%) 8.0 8.6 7.4 6.5 6.3 6.0 EPS growth (%) 29.4 16.8 -9.1 -9.1 1.5 0.7 Dividend yield (%) 5.4 6.0 5.8 5.2 5.6 5.7 Source: Company data, Mirae Asset Daewoo Research estimates

Mirae Asset Daewoo Research 2 March 6, 2020 Industrial Bank of Korea

Figure 1. Bank debenture (AAA) rate trends Figure 2. SMIF bond (1Y) yield trends

(%) Bank debentures (AAA, 3M) 2.4 Bank debentures (AAA, 6M) Bank debentures (AAA, 1Y) Bank debentures (AAA, 2Y) 2.2

2.0

1.8

1.6

1.4

1.2

1.0 Mar17 Aug17 Jan18 Jun18 Nov18 Apr19 Sep19 Feb20

Source: KOSCOM, Mirae Asset Daewoo Research Source: KOSCOM, Mirae Asset Daewoo Research

Table 4. IBK: Deposit trends (low-cost core deposits) (Wbn, %, %p) 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 YoY QoQ Core deposits 52,025 51,312 53,650 54,986 56,148 56,702 61,246 61,991 64,611 15.1 4.2 MMDA 9,098 9,953 9,912 10,050 9,584 10,577 10,327 9,913 10,687 11.5 7.8 Other deposits 26,807 25,359 24,747 20,597 20,295 19,665 19,426 19,660 19,533 -3.8 -0.6 CD, covered bills, RPs 5,958 6,122 5,737 5,224 4,509 5,373 4,214 4,220 3,960 -12.2 -6.2 SMF bonds 88,005 89,642 91,581 97,833 103,143 106,594 108,240 109,689 115,360 11.8 5.2 Total deposits 181,894 182,387 185,627 188,689 193,678 198,911 203,454 205,473 214,152 10.6 4.2 Core deposits as % of total 33.6 33.6 34.2 34.5 33.9 33.8 35.2 35.0 35.2 1.2 0.2 Source: Company data, Mirae Asset Daewoo Research

Table 5. IBK: Quarterly NIM (%, %p) 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20F 2Q20F 3Q20F 4Q20F 1Q21F 2Q21F 3Q21F 4Q21F Quarterly NIM 1.94 1.96 1.95 1.95 1.90 1.89 1.81 1.74 1.70 1.66 1.63 1.65 1.66 1.66 1.66 1.66 QoQ 0.01 0.02 -0.01 0.00 -0.05 -0.01 -0.08 -0.07 -0.04 -0.04 -0.03 0.02 0.01 0.00 0.00 0.00 Source: Company data, Mirae Asset Daewoo Research

Table 6. IBK: Annual NIM (%, %p) 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020F 2021F 2022F Annual NIM 2.77 2.58 2.15 1.92 1.95 1.91 1.91 1.94 1.95 1.83 1.66 1.66 1.66 YoY 0.33 -0.19 -0.43 -0.23 0.02 -0.04 0.00 0.03 0.01 -0.12 -0.17 0.00 0.00 Source: Company data, Mirae Asset Daewoo Research

Mirae Asset Daewoo Research 3 March 6, 2020 Industrial Bank of Korea

Table 7. Measures to assist SMEs and small merchants amid the COVID-19 outbreak Financial support measures Fresh loan (roughly W2tr) and preferential interest -rate loan programs, credit guarantees, and Policy loans maturity extensions for import LCs ( up to one year) Microcredit program expansion (W50 bn ‰ W55bn ), ultra -low rate loans (IBK) , emergency funds Small merchants (SEMAS ), guarantee support (Korea Federatio n of Credit Guarantee Foundations ) Fresh and preferential interest -rate loan programs (banks), interest -free installment plans , and Private financial firms deferment of invoice payment s for small merchants (credit card firms) Consulting counters at FSS headquarters and branches of government -affiliated financial Financial consulting institutions Source: FSC , Mirae Asset Daewoo Research

Table 2. IBK to expand loans to small businesses Expansion of low/preferential-interest rate loan program: W1.7tr ‰‰‰ W4.2tr Low-interest rate loans W1.2tr ‰ W3.2tr (+W2tr) Small businesses (including self -employed) Target * No. of employees: Less than 10 (less than five for wholesale/retail, restaurant, and accommodation segment s) Interest rate 1.4% for the first three years (market rates from fourth year) Cut from 1.2% ‰ 0.5% ※ This program reduces interest/guarantee fee burden by around 3%p. Guarantee fee rate" (Interest rate: 3.64% ‰ 1.4% (-2.24%p)) (Guarantee fee rate : 1.2% ‰ 0.5% (-0.7%p )) Other Guarantee ratio: 90% ‰ 100% Underwriting period Two to three business days after guarantee certificate issuance Preferential interest rate loans W500bn ‰ W1tr (+W500bn) Target Small businesses (including self-employed) High -2% level (high -4% level ‰ high -2% leve l (up to 2%p reduction ) Interest rate Interest rates vary depending on credit rating and collateral Underwriting period Five business days after loan application Source: FSC, Mirae Asset Daewoo Research

Figure 3. IBK: Loan trends Figure 4. IBK: Loan portfolio by category (4Q19)

(Wtr) Large corp./ public sector/ Household 210 Household (mortgage) other (mortgage) Household (general) 3.8% 10.2% 180 SME Household Large. corp/public sector/other (general) 150 7.1%

120

90

60

30 SME 78.9% 0 1Q 4Q 3Q 2Q 1Q 4Q 3Q 2Q 1Q 4Q 3Q 2Q 1Q 4Q 3Q 2Q 1Q 4Q 3Q 2Q … … … … … … … … … … … … … … … … … … … …

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

Mirae Asset Daewoo Research 4 March 6, 2020 Industrial Bank of Korea

Table 9. IBK: Quarterly earnings

(Wbn) 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20F 2Q20F 3Q20F 4Q20F Net interest income 1,353.0 1,401.3 1,429.3 1,448.6 1,406.6 1,470.5 1,446.8 1,428.1 1,392.4 1,375.8 1,395.1 1,419.5 Net fee income 109.2 128.0 96.2 117.8 110.5 128.2 112.9 162.7 121.0 123.4 124.7 143.4 Net other income 103.6 36.4 67.8 -32.7 91.2 0.2 -39.3 12.0 60.6 19.6 43.4 -17.0 Total net operating income 1,565.9 1,565.7 1,593.4 1,533.7 1,608.3 1,598.9 1,520.3 1,602.8 1,574.0 1,518.8 1,563.1 1,545.8 SG&A expenses 540.4 623.6 529.7 604.9 580.3 653.7 560.4 614.4 606.4 679.8 582.8 626.6 PPOP 1,025.5 942.1 1,063.6 928.7 1,028.0 945.2 959.9 988.4 967.6 838.9 980.3 919.2 Provisions 327.8 351.9 361.7 522.1 283.6 368.4 450.2 573.7 341.4 389.7 435.3 451.7 Operating profit 697.7 590.2 701.9 406.6 744.4 576.8 509.7 414.7 626.2 449.2 545.1 467.4 Non-operating income 0.6 -2.7 -1.3 6.4 13.3 14.9 8.9 -24.2 14.0 16.9 -12.0 -9.0 Pretax profit 698.3 587.5 700.7 413.0 757.7 591.7 518.6 390.5 640.2 466.1 533.1 458.4 Net profit 510.2 421.6 520.3 302.1 553.4 427.0 380.7 257.2 460.5 336.1 385.2 329.8 Source: Company data, Mirae Asset Daewoo Research estimates

Table 10. IBK: Annual earnings

(Wbn) 2013 2014 2015 2016 2017 2018 2019 2020F 2021F 2022F Net interest income 4,256.5 4,511.0 4,630.9 4,876.2 5,260.0 5,632.3 5,752.0 5,582.7 5,804.1 6,060.3 Net fee income 358.4 345.9 405.6 375.4 407.2 451.2 514.2 512.4 540.4 558.4 Net other income -309.9 -299.2 -277.1 -311.1 -67.7 175.2 64.1 106.6 133.0 111.3 Total net operating income 4,305.0 4,557.7 4,759.5 4,940.6 5,599.5 6,258.6 6,330.3 6,201.7 6,477.4 6,729.9 SG&A expenses 2,012.3 2,005.5 2,096.7 2,154.6 2,188.5 2,298.7 2,408.8 2,495.7 2,565.6 2,655.4 PPOP 2,292.7 2,552.2 2,662.8 2,786.0 3,411.0 3,959.9 3,921.6 3,706.0 3,911.8 4,074.5 Provisions 1,150.3 1,163.9 1,163.1 1,253.4 1,382.7 1,563.5 1,675.9 1,618.1 1,744.3 1,898.5 Operating profit 1,142.4 1,388.3 1,499.7 1,532.6 2,028.3 2,396.4 2,245.7 2,087.9 2,167.5 2,176.1 Non-operating income 36.6 -45.0 -30.2 -15.4 -74.7 3.0 12.8 9.9 19.0 26.1 Pretax profit 1,179.1 1,343.3 1,469.5 1,517.2 1,953.6 2,399.5 2,258.5 2,097.8 2,186.5 2,202.2 Net profit 848.5 1,026.6 1,143.0 1,157.5 1,501.4 1,754.2 1,618.2 1,511.6 1,575.9 1,587.3 Source: Company data, Mirae Asset Daewoo Research estimates

Mirae Asset Daewoo Research 5 March 6, 2020 Industrial Bank of Korea

Industrial Bank of Korea (024110 KS/Buy/TP: W11,500)

Comprehensive Income Statement (Summarized) Statement of Financial Condition (Summarized) Year-end 12 (Wbn) 12/19 12/20F 12/21F 12/22F Year-end 12 (Wbn) 12/19 12/20F 12/21F 12/22F Interest income 9,489 9,022 9,290 9,799 Cash & dues 11,267 12,308 13,558 14,149 Interest expense 3,737 3,439 3,486 3,739 Securities 57,940 63,295 69,726 72,761 Net interest income 5,752 5,583 5,804 6,060 Net loans and receivables 239,322 244,814 259,150 273,475 Net fees and commissions 514 512 540 558 Tangible assets 2,155 2,292 2,438 2,593 Net other non-interest income 64 107 133 111 Other assets 7,436 7,908 8,410 8,944 Total net operating income 6,330 6,202 6,477 6,730 Total assets 318,120 330,618 353,283 371,922 G&A expenses 2,409 2,496 2,566 2,655 Deposits 117,991 122,645 125,727 127,734 PPOP 3,922 3,706 3,912 4,075 Borrowings 30,750 31,333 36,754 40,365 Total provision expenses 1,676 1,618 1,744 1,898 Debentures 123,988 126,342 148,199 162,760 Operating profit 2,246 2,088 2,168 2,176 Other liabilities 22,604 26,109 16,828 13,692 Net non-operating income 13 10 19 26 Total liabilities 295,333 306,429 327,509 344,551 Income before income taxes 2,258 2,098 2,186 2,202 Capital stock 3,376 3,523 3,523 3,523 Income tax expense 631 577 601 606 Hybrid securities 2,730 2,730 2,730 2,730 Net profit 1,618 1,512 1,576 1,587 Capital surplus 688 805 805 805 Net profit (ex. minority interest) 1,618 1,512 1,576 1,587 Retained earnings 15,359 16,498 18,083 19,679 Normalized net profit 1,618 1,512 1,576 1,587 Capital adjustments 0 0 0 0 Other comprehensive income 518 518 518 518 Core income 6,266 6,095 6,344 6,619 Non-controlling interests 116 116 116 116 Core PPOP 3,857 3,599 3,779 3,963 Total shareholders' equity 22,787 24,189 25,774 27,371

DuPont analysis (%) Key ratios (%) Interest income 3.12 2.78 2.72 2.70 Growth (YoY) Interest expense 1.23 1.06 1.02 1.03 W loan growth (Bank) 6.9 6.0 6.0 5.7 Net interest income 1.89 1.72 1.70 1.67 Net loans & receivables growth 11.6 2.3 5.9 5.5 Net commissions income 0.17 0.16 0.16 0.15 Deposit growth 7.7 3.9 2.5 1.6 Net other non-interest income 0.02 0.03 0.04 0.03 Shareholders' equity growth 8.0 6.2 6.6 6.2 Total net operating profit 2.08 1.91 1.89 1.86 Total assets growth 9.9 3.9 6.9 5.3 G&A expenses 0.79 0.77 0.75 0.73 Net interest income growth 2.1 -2.9 4.0 4.4 PPOP 1.29 1.14 1.14 1.12 Net fee income growth 14.0 -0.3 5.5 3.3 Total provision expenses 0.55 0.50 0.51 0.52 PPOP growth -1.0 -5.5 5.6 4.2 Net non-operating income 0.00 0.00 0.01 0.01 Operating profit growth -6.3 -7.0 3.8 0.4 Income before income taxes 0.74 0.65 0.64 0.61 Net profit growth -7.8 -6.6 4.3 0.7 Income tax expense 0.21 0.18 0.18 0.17 Profitability Net profit (non-controlling) 0.00 0.00 0.00 0.00 Net interest spread (Bank) 1.76 1.59 1.59 1.59 ROA 0.53 0.47 0.46 0.44 Net interest margin (Bank) 1.83 1.66 1.66 1.66 Leverage (x) 13.9 13.9 13.8 13.7 PPOP margin 1.3 1.1 1.1 1.1 ROE 7.41 6.47 6.34 6.00 ROA 0.5 0.5 0.5 0.4 Asset quality (%) ROE 7.4 6.5 6.3 6.0 NPL ratio 1.28 1.26 1.26 1.26 Liquidity Broad NPL ratio 2.99 2.82 2.77 2.72 W LDR (excl. CDs) (Bank) N/A N/A N/A N/A NPL coverage ratio 170.1 172.7 175.6 179.4 Loans to assets 75.2 74.0 73.4 73.5 Reserves to total credits 2.1 2.2 2.2 2.2 Capital adequacy Credit cost (% of total loans) 0.70 0.66 0.67 0.69 Total CAR 14.6 15.3 15.3 15.5 Credit cost (% of total credit) 0.76 0.69 0.71 0.73 Tier 1 CAR 12.2 12.6 12.8 13.1 Per share items (W) Tier 2 CAR 2.3 2.7 2.6 2.4 EPS (reported) 2,423 2,203 2,237 2,253 Operating efficiency EPS (normalized) 2,423 2,203 2,237 2,253 Cost to income 38.1 40.2 39.6 39.5 BVPS 33,581 34,171 36,421 38,687 Cost to assets 0.8 0.8 0.7 0.7 DPS (common share) 670 600 640 650 Dividend PPOP/ share 5,873 5,402 5,553 5,784 Payout ratio 23.6 26.0 27.1 27.6 Source: Company data, Mirae Asset Daewoo Research estimates

Mirae Asset Daewoo Research 6 March 6, 2020 Industrial Bank of Korea

APPENDIX 1

Important Disclosures & Disclaimers 2-Year Rating and Target Price History

Company (Code) Date Rating Target Price (W) Industrial Bank of Korea Industrial Bank of Korea (024110) 03/05/2020 Buy 11,500 25,000 02/03/2020 Buy 14,000 20,000 10/22/2019 Buy 16,000 01/22/2019 Buy 19,500 15,000 12/04/2018 Buy 20,500 10,000 07/05/2018 Buy 21,000 02/06/2018 Buy 22,000 5,000

0 Mar 18 Mar 19 Mar 20

Stock Ratings Industry Ratings Buy : Relative performance of 20% or greater Overweight : Fundamentals are favorable or improving Trading Buy : Relative performance of 10% or greater, but with volatility Neutral : Fundamentals are steady without any material changes Hold : Relative performance of -10% and 10% Underweight : Fundamentals are unfavorable or worsening Sell : Relative performance of -10% Ratings and Target Price History (Share price (─), Target price (▬), Not covered ( ■), Buy (▲), Trading Buy (■), Hold (●), Sell ( ◆)) * Our investment rating is a guide to the relative return of the stock versus the market over the next 12 months. * Although it is not part of the official ratings at Mirae Asset Daewoo Co., Ltd., we may call a trading opportunity in case there is a technical or short-term material development. * The target price was determined by the research analyst through valuation methods discussed in this report, in part based on the analyst’s estimate of future earnings. * The achievement of the target price may be impeded by risks related to the subject securities and companies, as well as general market and economic conditions.

Equity Ratings Distribution & Investment Banking Services Buy Trading Buy Hold Sell Equity Ratings Distribution 84.05% 9.82% 6.13% 0.00% Investment Banking Services 76.67% 13.33% 10.00% 0.00% * Based on recommendations in the last 12-months (as of December 31, 2019)

Disclosures As of the publication date, Mirae Asset Daewoo 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 Daewoo 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 Daewoo Co., Ltd. (“Mirae Asset Daewoo”) 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 Daewoo, 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 division. 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 Daewoo except as otherwise stated herein.

Disclaimers This report was prepared by Mirae Asset Daewoo, 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 Daewoo 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 Daewoo 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 it 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 Daewoo by virtue of receiving this report. This report does not take into account the particular investment objectives, financial

Mirae Asset Daewoo Research 7 March 6, 2020 Industrial Bank of Korea

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 Daewoo, its affiliates and their directors, officers, employees and agents do not accept any liability for any loss arising out of the use hereof. Mirae Asset Daewoo 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 Daewoo may make investment decisions that are inconsistent with the opinions and views expressed in this research report. Mirae Asset Daewoo, 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 Daewoo 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 Daewoo.

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Mirae Asset Daewoo Research 8 March 6, 2020 Industrial Bank of Korea

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Mirae Asset Daewoo Research 9