[Korea] Banks February 8, 2021

Hana Financial Group Buy (086790 KS ) (Maintain)

Solid fundamentals and external headwinds baked in ; TP: W47,000 time to buy Upside: 30.0%

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

4Q20 and 2020 review 4Q20 net profit of W532.8bn (+52% YoY, -30% QoQ), another positive surprise ó For 4Q20, Hana Financial Group (HFG) announced net profit attributable to owners of the parent of W532.8bn, beating the consensus (W418.6bn based on FnGuide and W433.5bn based on Bloomberg) by more than 20%. ó Major one-off items in the quarter included: 1 ) W169.6bn in early retirement expenses; 2) W149.3bn in F/X-translation gains on non-monetary foreign currency assets; 3) W108.2bn in additional provisioning related to COVID-19; and 4) W112.6bn in losses related to private equity funds. ó We estimate underlying net profit on a recurring basis was robust, at over W700bn. For 2020 as a whole, net profit expanded for the fifth consecutive year. ó Non-bank operations contributed 34% of 2020 net profit (vs. 21% in 2017, 22% in 2018, and 24% in 2019). ó 2020 group ROE was 9.0% (vs. 8.8% for KB Financial Group, 8.4% for Shinhan Financial Group). ó Group NPL ratio was 0.40% (-7bps YoY), and bank delinquency ratio was 0.19% (-1bp YoY).

Dividends More aggressive shareholder returns (share repurchase s/cancellations, interim dividend distributions) expected after Jun. 2021 ó For 2020, HFG declared a final dividend of W1,350 per share (interim dividend was W500). ó Payout ratio was 20%, down from 23% in 2017 and 26% in 2018-19. ó The group called the payout cut a temporary move in response to regulators’ recommendation that banks have sufficient capital to buffer against losses. ó Given the group’s solid capital position and asset quality, we expect 2021-22 dividend payout to normalize to 26% and 27%, respectively.

Investment points Dividend and valuation appeal; maintain Buy and TP of W 47,000 ; r eiterate as our top pick ó As of end-2020, HFG has a CET1 ratio of 12.03%, which does not yet reflect the early implementation of the new Basel III credit risk framework (which will lead to an increase of around 1.6%p in the capital ratio). We believe the group has enough capital to buffer against future losses and support growth. ó Earnings uncertainties have eased thanks to the group’s visibly improved earnings power, preemptive loss recognition, and cost efficiency enhancements. ó In 2021, we look for a modest rise in bond yields, which should help improve investor sentiment.

Key data

Current price (2/5/21, W) 36,150 Market cap (Wbn) 10,854 160 Hana Financial Group KOSPI 140 NP (20F, Wbn) 2,637 Shares outstanding (mn) 300 120 Consensus NP (20F, Wbn) 2,521 Free float (%) 86.4 100 EPS growth (20F, %) 10.3 Foreign ownership (%) 67.2 80 P/E (20F, x) 4.1 Beta (12M) 1.29 60 40 Market P/E (20F, x) 21.7 52-week low (W) 18,450 2.20 6.20 10.20 KOSPI 3,120.63 52-week high (W) 40,200

Share performance Earnings and valuation metrics (%) 1M 6M 12M (Dec.) 2017 2018 2019 2020 P 2021F 2022F Absolute 6.2 25.5 5.4 Net interest income (Wbn) 5,110 5,637 5,774 5,814 5,999 6,283 Relative 1.7 -7.0 -26.9 Net non -interest income (Wbn) 2,490 1,927 2,437 2,828 2,602 2,638

OP (Wbn) 2,718 3,152 3,259 3,836 3,713 3,941 NP (Wbn) 2,037 2,233 2,392 2,637 2,747 2,921 EPS (W) 6,881 7,478 7,966 8,784 9,151 9,729 EPS growth (%) 53.1 8.7 6.5 10.3 4.2 6.3 P/E (x) 5.3 4.8 4.5 4.1 4.0 3.7 P/PPOP (x) 3.0 3.0 2.7 2.3 2.3 2.2 P/B (x) 0.43 0.40 0.39 0.35 0.32 0.30 ROE (%) 8.6 8.6 8.6 9.0 8.6 8.4 Div. yield (%) 4.3 5.3 5.8 5.1 6.8 7.5 Notes: Under consolidated K-IFRS; NP is attributable to owners of the parent Source: Company data, Mirae Asset Daewoo 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. February 8, 2021 Hana Financial Group

Table 1. HFG: 4Q20 review YoY chg. QoQ chg. (Wbn) 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20P (%, %p) (%,%p) Net interest income 1,460.0 1,458.8 1,428.3 1,428.0 1,433.2 1,469.8 1,483.3 3.9 0.9 Net fee/commission income 541.0 498.5 547.9 505.7 531.5 582.4 540.0 -1.4 -7.3 Net other income 9.3 -75.5 355.8 -33.7 253.2 154.3 294.8 -17.1 91.1 Total net operating income 2,010.2 1,881.7 2,332.0 1,900.1 2,217.9 2,206.5 2,318.2 -0.6 5.1 SG&A expenses 928.9 986.6 1,186.1 927.9 848.2 966.2 1,175.3 -0.9 21.6 PPOP 1,081.4 895.1 1,145.9 972.2 1,369.7 1,240.3 1,142.9 -0.3 -7.9 Provisions 100.6 115.6 396.7 93.1 432.2 172.8 190.6 -52.0 10.3 OP 980.7 779.6 749.2 879.1 937.5 1,067.5 952.3 27.1 -10.8 Non-operating income -63.6 392.1 -191.9 39.7 23.8 15.9 -186.6 RR TTR Pretax profit 917.1 1,171.7 557.3 918.7 961.3 1,083.4 765.7 37.4 -29.3 NP (owners of the parent) 658.4 836.7 350.4 657.0 689.0 758.4 532.8 52.0 -29.7

Total assets 405,616 420,204 421,506 439,689 441,913 444,181 460,313 9.2 3.6 Total loans/receivables 268,107 270,153 282,306 288,541 290,043 293,638 308,792 9.4 5.2 Won-denominated loans (bank) 210,861 214,577 218,385 222,666 226,772 234,513 239,188 9.5 2.0 Total credit 276,709 282,612 286,480 295,079 301,496 311,066 314,340 9.7 1.1 Total deposits 257,400 264,864 272,794 283,058 288,851 286,464 295,510 8.3 3.2 Total shareholders' equity 29,113 29,046 28,985 29,079 30,451 31,451 31,600 9.0 0.5

(%) NIM (bank) 1.54 1.47 1.41 1.39 1.37 1.33 1.28 -0.13 -0.05 Cost-to-income ratio 46.2 52.4 50.9 48.8 38.2 43.8 50.7 -0.2 6.9 NPL (substandard & below) ratio 0.56 0.48 0.48 0.47 0.45 0.41 0.40 -0.07 -0.01 NPL coverage ratio 234.9 261.0 265.0 260.6 280.3 301.0 311.8 46.8 10.8 ROA (based on avg. value) 0.16 0.20 0.08 0.15 0.16 0.17 0.12 0.03 -0.05 ROE (based on avg. value) 2.37 2.97 1.24 2.33 2.38 2.52 1.74 0.49 -0.78 Credit cost ratio 0.04 0.04 0.14 0.03 0.14 0.06 0.06 -0.08 0.01 BIS ratio 14.69 14.13 13.95 13.80 14.07 14.40 14.18 0.23 -0.22 Tier 1 ratio 13.37 12.90 12.67 12.58 12.88 13.18 13.01 0.34 -0.16 NIM (bank) 12.62 12.19 11.96 11.90 12.03 12.12 12.03 0.07 -0.09 Notes: ROA, ROE, and credit cost data are non-annualized. Source: Company data, Mirae Asset Daewoo Research estimates

Table 2. HFG: Earnings forecast revisions

Revised Previous % chg. (Wbn) 2020P 2021F 2022F 2020F 2021F 2022F 2020P 2021F 2022F Net interest income 5,814 5,999 6,283 5,761 5,965 6,287 0.9 0.6 -0.1 Net non-interest income 2,828 2,602 2,638 2,487 2,448 2,484 13.7 6.3 6.2 Total net operating income 8,643 8,601 8,921 8,248 8,413 8,771 4.8 2.2 1.7 SG&A expenses 3,918 3,978 4,008 3,903 3,964 3,994 0.4 0.3 0.3 PPOP 4,725 4,623 4,913 4,345 4,449 4,776 8.7 3.9 2.9 Provisions 889 910 971 999 957 1,021 -11.0 -4.9 -4.8 OP 3,836 3,713 3,941 3,347 3,492 3,756 14.6 6.3 4.9 Non-operating income -107 90 101 42 90 101 -352.7 0.0 0.0 Pretax profit 3,729 3,803 4,042 3,389 3,582 3,856 10.0 6.2 4.8 NP (owners of the parent) 2,637 2,747 2,921 2,407 2,562 2,759 9.5 7.2 5.9 Source: Mirae Asset Daewoo Research estimates

Mirae Asset Daewoo Research 2 February 8, 2021 Hana Financial Group

Figure 1. HFG: 2019 earnings breakdown by subsidiary (before Figure 2. HFG: 2020 earnings breakdown by subsidiary (before reflecting hold co-affiliate consolidation adj. and other factors) reflecting hold co-affiliate consolidation adj. and other factors)

Hana Capital Hana Life Hana Savings Hana Capital KEB Hana 4.0% 0.9% Hana Life Bank 6.2% Card 2.5% 0.9% Hana Savings Bank 2.8% 1.8% KEB Hana Card 4.6% Hana Financial Investment 10.5% Hana Financial Investment 14.5% Banking Banking 80.3% 70.9%

NP Stake NP NP Stake NP (Wbn) (%) (Wbn) (%) (a) (b) (a) x (b) (a) (b) (a) x (b) Banking 2,139.8 2,139.8 80.3 Banking 2,010.1 2,010.1 70.9 KEB Hana Bank 2,139.8 100.0 2,139.8 80.3 KEB Hana Bank 2,010.1 100.0 2,010.1 70.9 Non-banking 533.8 525.4 19.7 Non-banking 850.0 826.8 29.1 Hana Financial Investment 280.3 100.0 280.3 10.5 Hana Financial Investment 410.9 100.0 410.9 14.5 KEB Hana Card 56.3 85.0 47.9 1.8 KEB Hana Card 154.5 85.0 131.3 4.6 Hana Capital 107.8 100.0 107.8 4.0 Hana Capital 177.2 100.0 177.2 6.2 Hana Life 23.7 100.0 23.7 0.9 Hana Life 26.6 100.0 26.6 0.9 Hana Savings Bank 65.7 100.0 65.7 2.5 Hana Savings Bank 80.8 100.0 80.8 2.8 Total 2,673.6 2,665.2 100 Total 2,860.1 2,836.9 100

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

Table 3. HFG: Low-cost deposit trend (Wbn, %, %p) 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 YoY QoQ Total 235,534 236,235 243,990 250,304 257,979 267,380 272,673 269,689 277,937 7.7 3.1 Low-cost deposits 78,274 81,780 83,313 81,841 86,755 93,984 101,830 104,306 108,432 25.0 4.0 Core deposits 52,620 54,474 55,600 56,691 59,620 63,103 69,691 71,360 75,020 25.8 5.1 MMDA 25,655 27,306 27,713 25,150 27,135 30,881 32,139 32,945 33,412 23.1 1.4 Time deposits 119,921 119,261 122,229 129,560 133,367 134,080 130,273 126,585 126,965 -4.8 0.3 Installment deposits 7,422 7,194 7,094 7,338 7,022 7,059 7,641 8,590 9,533 36.0 11.0 Marketable deposits 6,083 5,074 5,689 4,566 2,897 1,888 2,304 769 182 -93.7 -76.3 Deposits in foreign currencies 23,833 22,926 25,665 26,999 27,938 30,369 30,624 29,439 32,824 17.5 11.5 Core deposits as % of total 33.2 34.6 34.1 32.7 33.6 35.1 37.3 38.7 39.0 5.4 0.3 Core deposits as % of won - 37.0 38.3 38.2 36.6 37.7 39.7 42.1 43.4 44.2 6.5 0.8 denominated deposits Source: Company data, Mirae Asset Daewoo Research estimates

Mirae Asset Daewoo Research 3 February 8, 2021 Hana Financial Group

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

(%) (%) 2.10 1.70 2.00 1.97 2.00 1.60 1.57 1.56 1.53 1.55 1.54 1.90 1.48 1.50 1.47 1.80 1.44 1.40 1.41 1.70 1.38 1.40 1.37 1.70 1.33 1.311.31 1.29 1.60 1.56 1.28 1.52 1.30 1.49 1.49 1.50 1.47 1.20 1.39 1.39 1.40 1.34 1.30 1.31 1.10 1.30 1.00 1.20 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21F 2Q21F 3Q21F 4Q21F 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021F 2022F

Note: Figures before merger with KEB are based on Hana Bank data only. Note: Figures before merger with KEB are based on Hana Bank data only. Source: Company data, Mirae Asset Daewoo Research estimates Source: Company data, Mirae Asset Daewoo Research estimates

Figure 6. HFG: Bank won-denominated loan breakdown Figure 5. HFG: Bank won-denominated loan trend (4Q20)

(Wtr) 0.8 (%) 250 Household (general) Household (secured) SME Large corp. Other 5.9 8.5 200

150 41.0 43.9 100

50

0 Household (general) Household (secured) SME Large corp. Other 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20

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

Figure 7. HFG: Net interest income trend Figure 8. HFG: Net fee income trend

(Wbn) (Wbn) 1,600 600

1,500 550 1,400 500 1,300 1,200 450

1,100 400 1,000 350 900 300 800 700 250 1Q1 2 3Q1 2 1Q1 3 3Q1 3 1Q1 4 3Q1 4 1Q1 5 3Q1 5 1Q1 6 3Q1 6 1Q1 7 3Q1 7 1Q1 8 3Q1 8 1Q1 9 3Q1 9 1Q2 0 3Q2 0 1Q21F 3Q21F 1Q 12 3Q 12 1Q 13 3Q 13 1Q 14 3Q 14 1Q 15 3Q 15 1Q 16 3Q 16 1Q 17 3Q 17 1Q 18 3Q 18 1Q 19 3Q 19 1Q 20 3Q 20 1Q21F 3Q21F

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

Mirae Asset Daewoo Research 4 February 8, 2021 Hana Financial Group

Table 4. HFG: Non-interest income 4Q20 4Q19 (Wbn, %) YoY (%) 3Q20 QoQ (%) (accumulated) (accumulated) Fee income 2,255.7 2,150.9 4.9 607.5 -6.6 Credit cards 794.9 685.0 16.0 205.3 2.4 Banking 490.5 537.8 -8.8 116.6 -14.0 Guarantees 78.8 74.3 6.1 19.7 -3.0 Loans/other 186.6 206.2 -9.5 41.1 -31.6 F/X 165.1 199.9 -17.4 41.2 -7.4 Operating leases 60.0 57.4 4.4 14.6 2.2 Asset management 693.5 667.8 3.9 184.6 3.5 Beneficiary cert. sales 112.7 142.8 -21.1 29.4 0.6 Wrap/operations 59.5 45.8 29.7 13.0 65.0 Brokerage 213.1 104.4 104.1 63.8 -4.4 Trusts 275.1 337.3 -18.4 69.5 3.2 Bancassurance 33.2 37.4 -11.4 8.8 -17.5 IB 259.6 210.3 23.4 89.9 -4.4 Other 17.3 50.0 -65.5 11.0 적전 Disposal/valuation gains 1,171.8 797.1 47.0 243.3 108.1 Other operating profit -599.2 -600.2 적지 -114.0 적지 Total 2,828.4 2,347.8 20.5 736.7 13.3 Note: Based on company IR materials (standards for some fee income and disposal/valuation gains differ from those in financial statements) Source: Company data, Mirae Asset Daewoo Research

Figure 9. HFG: Cost-to-income ratio

(%) 70

65 67.7

60 62.3 62.5 61.7 55

50 53.1 52.2 50.8 50.8 45 46.2 45.3 44.9 40

35

30 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021F 2022F

Source: Company data, Mirae Asset Daewoo Research estimates

Mirae Asset Daewoo Research 5 February 8, 2021 Hana Financial Group

Figure 10. HFG: Quarterly credit cost trend

(Wbn) (%) 700 Provisioning (L) % of total credit (R) 0.7

600 0.6

500 0.5

400 0.4

300 0.3

200 0.2

100 0.1

0 0.0

-100 -0.1 1Q06 2Q07 3Q08 4Q09 1Q11 2Q12 3Q13 4Q14 1Q16 2Q17 3Q18 4Q19

Note: Credit cost ratio is non-annualized. Source: Company data, Mirae Asset Daewoo Research estimates

Figure 11. HFG: New NPL formation

(Wbn) 1,000 New NPL formation (L) % of total credit (R) 0.5%

800 0.4%

600 0.3%

400 0.2%

200 0.1%

0 0.0% 4Q 11 2Q 12 4Q 12 2Q 13 4Q 13 2Q 14 4Q 14 2Q 15 4Q 15 2Q 16 4Q 16 2Q 17 4Q 17 2Q 18 4Q 18 2Q 19 4Q 19 2Q 20 4Q 20

-200 -0.1%

-400 -0.2%

Note: New NPL formation as a % of total credit is non-annualized. Source: Company data, Mirae Asset Daewoo Research estimates

Figure 12. HFG: Group-level NPL ratio

(%) 2.0

1.8

1.6

1.4

1.2

1.0

0.8

0.6 0.40% 0.4

0.2 4Q 08 3Q 09 2Q 10 1Q 11 4Q 11 3Q 12 2Q 13 1Q 14 4Q 14 3Q 15 2Q 16 1Q 17 4Q 17 3Q 18 2Q 19 1Q 20 4Q 20

Source: Company data, Mirae Asset Daewoo Research estimates

Mirae Asset Daewoo Research 6 February 8, 2021 Hana Financial Group

Table 5. HFG: Quarterly earnings (Wbn) 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20P 1Q21F 2Q21F 3Q21F Net interest income 1,468.1 1,426.6 1,460.0 1,458.8 1,428.3 1,428.0 1,433.2 1,469.8 1,483.3 1,465.1 1,475.9 1,535.0 Net non-interest income 457.4 509.8 541.0 498.5 547.9 505.7 531.5 582.4 540.0 581.4 567.7 574.3 Net other income -61.8 49.9 9.3 -75.5 355.8 -33.7 253.2 154.3 294.8 69.0 103.0 81.0 Total net operating income 1,863.7 1,986.4 2,010.2 1,881.7 2,332.0 1,900.1 2,217.9 2,206.5 2,318.2 2,115.5 2,146.5 2,190.4 SG&A expenses 1,075.3 1,072.8 928.9 986.6 1,186.1 927.9 848.2 966.2 1,175.3 934.1 920.0 962.2 PPOP 788.4 913.6 1,081.4 895.1 1,145.9 972.2 1,369.7 1,240.3 1,142.9 1,181.4 1,226.5 1,228.1 Provisions 274.5 164.4 100.6 115.6 396.7 93.1 432.2 172.8 190.6 213.0 230.6 197.6 OP 513.9 749.2 980.7 779.6 749.2 879.1 937.5 1,067.5 952.3 968.4 995.9 1,030.5 Non-operating income -43.8 12.9 -63.6 392.1 -191.9 39.7 23.8 15.9 -186.6 46.0 41.0 40.0 Pretax profit 470.0 762.1 917.1 1,171.7 557.3 918.7 961.3 1,083.4 765.7 1,014.4 1,036.9 1,070.5 NP (owners of the parent) 341.2 546.1 658.4 836.7 350.4 657.0 689.0 758.4 532.8 735.1 755.3 774.5 Source: Company data, Mirae Asset Daewoo Research estimates

Table 6. HFG: Annual earnings (Wbn) 2013 2014 2015 2016 2017 2018 2019 2020P 2021F 2022F

Net interest income 4,485.0 4,653.9 4,538.9 4,642.1 5,109.5 5,637.2 5,773.7 5,814.3 5,998.9 6,282.8 Net non-interest income 1,592.8 1,617.8 1,696.4 1,639.9 1,876.6 2,069.0 2,097.1 2,159.8 2,283.1 2,347.2 Net other income 99.3 30.8 454.3 330.3 613.7 -141.8 339.5 668.6 319.0 291.0 Total net operating income 6,177.1 6,302.5 6,689.6 6,612.3 7,599.8 7,564.4 8,210.4 8,642.7 8,600.9 8,921.0 SG&A expenses 3,846.3 3,936.2 4,531.0 4,076.9 4,039.1 3,946.9 4,174.4 3,917.7 3,977.7 4,008.2 PPOP 2,330.8 2,366.3 2,158.6 2,535.4 3,560.7 3,617.6 4,036.0 4,725.0 4,623.2 4,912.7 Provisions 1,165.8 1,122.9 1,148.1 921.3 842.6 465.4 777.3 888.6 909.9 971.3 OP 1,165.0 1,243.4 1,010.5 1,614.1 2,718.1 3,152.2 3,258.7 3,836.4 3,713.4 3,941.4 Non-operating income 105.3 9.1 185.9 205.9 80.5 -2.4 149.5 -107.2 90.0 100.7 Pretax profit 1,270.3 1,252.6 1,196.4 1,820.0 2,798.7 3,149.7 3,408.1 3,729.2 3,803.4 4,042.1 NP (owners of the parent) 933.9 937.7 909.7 1,330.5 2,036.8 2,233.3 2,391.6 2,637.2 2,747.4 2,921.0 Source: Company data, Mirae Asset Daewoo Research estimates

Mirae Asset Daewoo Research 7 February 8, 2021 Hana Financial Group

Hana Financial Group (086790 KS)

Income statement (summarized) Balance sheet (summarized) (Wbn) 2019 2020P 2021F 2022F (Wbn) 2019 2020P 2021F 2022F Interest income 11,118 10,080 9,638 10,003 Cash & dues 23,719 27,530 28,277 28,804 Interest expenses 5,344 4,265 3,639 3,720 Securities 89,742 100,549 102,718 104,286 Net interest income 5,774 5,814 5,999 6,283 Net loans & receivables 282,306 308,792 305,111 318,309 Net fees & commissions 2,097 2,160 2,283 2,347 Tangible assets 4,852 4,204 4,260 4,318 Net other non-interest income 340 669 319 291 Other assets 20,887 19,239 19,511 19,797 Total net operating income 8,210 8,643 8,601 8,921 Total assets 421,506 460,313 459,878 475,514 G&A expenses 4,174 3,918 3,978 4,008 Deposits 272,794 295,510 299,390 308,085 PPOP 4,036 4,725 4,623 4,913 Borrowings 20,699 26,494 27,128 27,802 Total provisioning expenses 777 889 910 971 Debentures 43,661 48,762 49,709 50,715 OP 3,259 3,836 3,713 3,941 Other liabilities 55,366 57,947 49,289 51,616 Net non-operating income 149 -107 90 101 Total liabilities 392,521 428,713 425,516 438,218 Pretax profit 3,408 3,729 3,803 4,042 Capital stock 1,501 1,501 1,501 1,501 Income tax 983 1,044 1,046 1,112 Hybrid securities 1,245 2,008 2,008 2,008 NP 2,143 2,637 2,747 2,921 Capital surplus 10,582 10,580 10,580 10,580 NP attributable to owners 2,392 2,637 2,747 2,921 Retained earnings 15,965 17,942 20,693 23,618 Normalized NP 2,143 2,637 2,747 2,921 Capital adj. -315 -315 -315 -315 Other comprehensive income -854 -1,002 -1,002 -1,002 Core income 7,706 7,871 7,974 8,282 Minority interests 860 887 897 906 Core PPOP 3,759 3,696 4,056 4,304 Total shareholders' equity 28,985 31,600 34,362 37,296

DuPont analysis (%) 2019 2020P 2021F 2022F Key ratios/growth metrics (%) 2019 2020P 2021F 2022F Interest income 2.76 2.29 2.10 2.14 Growth (YoY) Interest expenses 1.33 0.97 0.79 0.80 Won-denominated loan growth (bank) 7.8 9.5 4.6 4.5 Net interest income 1.43 1.32 1.30 1.34 Net loan & receivables growth 8.3 9.4 -1.2 4.3 Net commission income 0.52 0.49 0.50 0.50 Deposit growth 9.8 8.3 1.3 2.9 Net other non-interest income 0.08 0.15 0.07 0.06 Shareholders' equity growth 3.6 9.0 8.7 8.5 Total net operating income 2.04 1.96 1.87 1.91 Total asset growth 9.5 9.2 -0.1 3.4 G&A expenses 1.04 0.89 0.87 0.86 Net interest income growth 2.4 0.7 3.2 4.7 PPOP 1.00 1.07 1.01 1.05 Net commission income growth 1.4 3.0 5.7 2.8 Total provisioning expenses 0.19 0.20 0.20 0.21 PPOP growth 11.6 17.1 -2.2 6.3 Net non-operating income 0.04 -0.02 0.02 0.02 OP growth 3.4 17.7 -3.2 6.1 Pretax profit 0.85 0.85 0.83 0.86 NP growth 7.1 10.3 4.2 6.3 Income tax 0.24 0.24 0.23 0.24 Profitability NP attributable to minority interests 0.01 0.01 0.00 0.00 NIS (bank) 1.44 1.31 1.28 1.29 ROA 0.59 0.60 0.60 0.63 NIM (bank) 1.49 1.34 1.30 1.31 Leverage (x) 14.6 15.0 14.3 13.4 PPOP margin 1.0 1.1 1.0 1.1 ROE 8.63 8.96 8.56 8.36 ROA 0.6 0.6 0.6 0.6 Asset quality (%) 2019 2020P 2021F 2022F ROE 8.6 9.0 8.6 8.4 NPL ratio 0.48 0.40 0.39 0.36 Liquidity Broad NPL ratio 1.32 1.22 1.13 0.98 Won-denominated LDR ex-CDs (bank) 94.4 100.2 99.0 99.0 NPL coverage ratio 265.0 311.8 325.2 330.8 Loan/assets 67.0 67.1 66.3 66.9 Reserves/total credit 1.3 1.3 1.3 1.2 Capital adequacy Credit costs/total loans 0.28 0.29 0.30 0.31 Total CAR 13.9 14.2 15.1 15.5 Credit costs/total credit 0.27 0.28 0.29 0.30 Tier 1 CAR 12.7 13.0 14.1 14.8 Per share items (W) 2019 2020P 2021F 2022F Tier 2 CAR 1.3 1.2 1.0 0.7 EPS (reported) 7,966 8,784 9,151 9,729 Operating efficiency EPS (normalized) 7,139 8,782 9,151 9,729 Cost-to-income ratio 50.8 45.3 46.2 44.9 BPS 93,673 102,296 111,461 121,202 Cost-to-asset ratio 1.0 0.9 0.9 0.8 DPS (common) 2,100 1,850 2,450 2,700 Dividends PPOP/share 13,442 15,737 15,398 16,363 Dividend payout ratio 25.8 20.5 26.0 27.0 Source: Company data, Mirae Asset Daewoo Research estimates

Mirae Asset Daewoo Research 8 February 8, 2021 Hana Financial Group

Appendix 1

Important disclosures and disclaimers Two-year rating and TP history

Company Date Rating TP (W) (W) Hana Financial Group Hana Financial Group (086790) 12/29/20 Buy 47,000 80,000 10/26/20 Buy 42,000 10/13/20 Buy 39,000 60,000 04/21/20 Buy 37,500 03/17/20 Buy 39,000 40,000 01/22/20 Buy 49,000 20,000 10/22/19 Buy 51,000

01/21/19 Buy 58,500 0 Feb 19 Feb 20 Feb 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 Daewoo 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 78.43% 11.76% 8.50% 1.31% Investment banking services 66.67% 22.22% 11.11% 0.00% * Based on recommendations in the last 12 months (as of December 31, 2020)

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 Hana Financial Group 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 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 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 Korea Exchange. 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 Korean language. 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 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 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

Mirae Asset Daewoo Research 9 February 8, 2021 Hana Financial Group

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. 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 United Kingdom: 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. United States: Mirae Asset Daewoo 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 Daewoo 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 Daewoo. 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. Hong Kong: 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. 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 Daewoo 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 Daewoo and its affiliates to any registration or licensing requirement within such jurisdiction.

Mirae Asset Daewoo Research 10 February 8, 2021 Hana Financial Group

Mirae Asset Daewoo International Network

Mirae Asset Daewoo Co., Ltd. (Seoul) Mirae Asset Securities (HK) Ltd. Mirae Asset Securities (UK) Ltd. One-Asia Equity Sales Team Units 8501, 8507-8508, 85/F 41st Floor, Tower 42 Mirae Asset Center 1 Building International Commerce Centre 25 Old Broad Street, 26 Eulji-ro 5-gil, Jung-gu, Seoul 04539 1 Austin Road West London EC2N 1HQ Korea Kowloon United Kingdom Hong Kong Tel: 82-2-3774-2124 Tel: 852-2845-6332 Tel: 44-20-7982-8000

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