Industrial of Korea (024110 KS ) More exposed to low interest rates than peers due to lack of portfolio diversification 4Q19 preview: Above-consensus net profit of W339.3bn Company Report For 4Q19, we project Industrial Bank of Korea (IBK) to post consolidated net profit of February 4, 2020 W339.3bn (+12.3% YoY, -10.9% QoQ), which is 2.5-6.2% above the recently lowered consensus (W319.3bn based on Bloomberg; W330.9bn based on FnGuide). Other than seasonal factors, we do not believe there were any major one-off items. We believe total loans grew 0.8% QoQ (+6.8% YTD), with SME loans likely growing 0.9% (Maintain) Buy QoQ (+7.3% YTD). We estimate net interest margin (NIM) slipped 6bps QoQ to 1.75%, hurt by the sharp decline in market interest rates and ultra-low-rate loan programs for Target Price (12M, W) ▼▼▼ 14,000 self-employed borrowers. We expect net interest income of W1.42tr (-1.9% YoY, -1.8% QoQ) and net commission income of W113.1bn (-4.0% YoY, +0.2% QoQ). Share Price (01/31/20, W) 10,750 For 2020, we forecast loan growth of 6.3% and NIM of 1.74% (-10bps YoY). We expect net interest income to remain flat YoY amid an increase in SG&A and provisioning Expected Return 30% expenses, leading to a 5.0% YoY fall in net profit (to W1.62tr).

We believe IBK is more exposed to the current ultra-low interest rate environment NP (19F, Wbn) 1,700 than its peers, which have more diversified portfolios and are able to defend their Consensus NP (19F, Wbn) 1,681 group-level earnings through the strengths of their non-banking sub sidiaries (solid fundamentals, ownership expansion, M&As, overseas expansion, etc.). EPS Growth (19F, %) -4.5 Market EPS Growth (19F, %) -34.6 Dividends: Once unrivaled, but not anymore P/E (19F, x) 4.2 Based on the current share price, we estimate DPS at W690 in 2019, W700 in 2020, and Market P/E (19F, x) 14.8 W730 in 2021, which translate into dividend yields of 6.4%, 6.5%, and 6.8%, KOSPI 2,119.01 respectively. While still attractive, the yields are not as high as they once were, when Market Cap (Wbn) 6,204 IBK’s dividend yields were unrivaled among peers. Shares Outstanding (mn) 675 Cut TP to W14,000 Free Float (%) 46.6 Foreign Ownership (%) 19.5 We lower our net profit forecasts for 2019, 2020, and 20 21 by 3.5%, 7.20%, and 9.2%, Beta (12M) 0.76 respectively, in light of: 1) the record-low base rate; 2) the sharp decline in market 52-Week Low 10,700 interest rates; and 3) increased SME loan provisioning amid an economic downturn. As 52-Week High 14,700 IBK generates 93% of its core earnings from net interest income, it is more difficult for the bank to defend earnings amid falling interest rates compared to its peers. We also (%) 1M 6M 12M believe the public nature of the bank’s business and the recent equity issue to the Absolute -8.9 -18.3 -24.6 government should be viewed as discount factors. We thus cut our target price from Relative -5.5 -21.9 -21.5 W16,000 (target P/B of 0.47x) to W14,000 (target P/B 0.41x).

110 Industrial Bank of Korea KOSPI 100

90

80

70

60 1.19 5.19 9.19 1.20

Mirae Asset Daewoo Co., Ltd. Fiscal year-end 12/16 12/17 12/18 12/19F 12/20F 12/21F Net interest inc. (Wbn) 4,876 5,260 5,632 5,745 5,754 6,035 [ Banks/Credit Cards ] Net non-interest inc. (Wbn) 64 340 626 544 592 604 Operating profit (Wbn) 1,533 2,028 2,396 2,310 2,230 2,294 Heather Kang +822 -3774 -1903 Net profit (Wbn) 1,158 1,501 1,754 1,700 1,615 1,668 [email protected] EPS (W) 1,763 2,282 2,666 2,546 2,393 2,471

EPS growth (%) 0.7 29.4 16.8 -4.5 -6.0 3.3 P/E (x) 6.1 4.7 4.0 4.2 4.5 4.4 P/PPOP (x) 2.2 1.8 1.6 1.6 1.6 1.5

P/B (x) 0.39 0.36 0.34 0.32 0.30 0.28 ROE (%) 6.6 8.0 8.6 7.7 6.8 6.7 Dividend yield (%) 4.5 5.7 6.4 6.4 6.5 6.8 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

February 4, 2020 Industrial Bank of Korea

4Q19 preview: Above-consensus net profit of W339.3bn We estimate SG&A expenses were well-controlled at W621.3bn (+2.7% YoY, +10.9% QoQ), leading to a cost-to-income ratio of 39.8% (+0.4%p YoY, +2.9%p QoQ). We estimate credit costs at W460.4bn (-11.8% YoY, +2.3% QoQ), or 59bps (annualized; -13bps YoY, +1bp QoQ) of total assets.

Table 1. 4Q19 preview YoY QoQ (Wbn) 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19F (%, %p) (%, %p) Net interest income 1,401.3 1,429.3 1,448.6 1,406.6 1,470.5 1,446.8 1,421.1 -1.9 -1.8 Net fee & commission income 128.0 96.2 117.8 110.5 128.2 112.9 113.1 -4.0 0.2 Net other income 36.4 67.8 -32.7 91.2 0.2 -39.3 27.0 TTB TTB Total net operating income 1,565.7 1,593.4 1,533.7 1,608.3 1,598.9 1,520.3 1,561.2 1.8 2.7 SG&A expenses 623.6 529.7 604.9 580.3 653.7 560.4 621.3 2.7 10.9 PPOP 942.1 1,063.6 928.7 1,028.0 945.2 959.9 939.9 1.2 -2.1 Provisions 351.9 361.7 522.1 283.6 368.4 450.2 460.4 -11.8 2.3 Operating profit 590.2 701.9 406.6 744.4 576.8 509.7 479.5 17.9 -5.9 Non-operating income -2.7 -1.3 6.4 13.3 14.9 8.9 -9.0 TTR TTR Pretax profit 587.5 700.7 413.0 757.7 591.7 518.6 470.5 13.9 -9.3 Net profit 421.6 520.3 302.1 553.4 427.0 380.7 339.3 12.3 -10.9 Total assets 282,923 285,667 289,509 299,229 305,221 311,614 313,328 8.2 0.5 Total loans & receivables 211,318 212,660 214,523 220,723 224,872 230,102 231,137 7.7 0.4 Won-denominated loans (bank) 188,701 192,097 192,989 197,421 201,617 204,555 206,191 6.8 0.8 Total credit 201,859 204,765 206,226 209,972 214,782 218,399 220,146 6.8 0.8 Total deposits 110,275 106,135 109,556 109,611 112,292 112,112 112,448 2.6 0.3 Total shareholders' equity 20,370 20,836 21,094 21,834 22,291 22,749 23,090 9.5 1.5 (%) NIM (bank) 1.96 1.95 1.95 1.90 1.89 1.81 1.75 -0.20 -0.06 Cost-to-income ratio 39.8 33.2 39.4 36.1 40.9 36.9 39.8 0.4 2.9 NPL (sub-standard & below) ratio 1.36 1.34 1.32 1.30 1.26 1.36 1.24 -0.08 -0.12 NPL coverage ratio 166.3 170.2 167.6 169.8 173.8 166.9 174.0 6.4 7.1 RoAE 0.15 0.18 0.11 0.19 0.14 0.12 0.11 0.00 -0.01 RoAA 2.10 2.54 1.45 2.59 1.95 1.70 1.49 0.04 -0.21 Credit cost ratio 0.12 0.13 0.18 0.09 0.12 0.14 0.15 -0.03 0.00 BIS ratio 14.23 14.57 14.50 14.55 14.50 14.77 14.89 0.39 0.11 Tier 1 ratio 11.95 11.96 11.90 12.23 12.23 12.18 12.31 0.41 0.13 Note: ROA, ROE, and credit cost data are non-annualized. Source: Company data, Mirae Asset Daewoo Research estimates

Mirae Asset Daewoo Research 2 February 4, 2020 Industrial Bank of Korea

Table 2. Earnings forecast revisions Revised Previous % chg. (Wbn) 2019F 2020F 2021F 2019F 2020F 2021F 2019F 2020F 2021F Net interest income 5,745 5,754 6,035 5,753 5,788 6,039 -0.1 -0.6 -0.1 Net non-interest income 544 592 604 580 647 662 -6.2 -8.6 -8.7 Total net operating income 6,289 6,346 6,639 6,333 6,436 6,701 -0.7 -1.4 -0.9 SG&A expenses 2,416 2,532 2,633 2,401 2,449 2,498 0.6 3.4 5.4 PPOP 3,873 3,814 4,006 3,932 3,987 4,203 -1.5 -4.3 -4.7 Provisions 1,563 1,585 1,712 1,522 1,597 1,686 2.6 -0.8 1.5 Operating profit 2,310 2,230 2,294 2,410 2,390 2,517 -4.1 -6.7 -8.9 Non-operating income 28 10 19 25 25 32 10.8 -59.5 -41.4 Pretax profit 2,338 2,240 2,313 2,435 2,414 2,549 -4.0 -7.2 -9.3 Net profit 1,700 1,615 1,668 1,763 1,740 1,838 -3.5 -7.2 -9.2 Source: Mirae Asset Daewoo Research estimates

Figure 1. IBK: Core income trend Figure 2. IBK: Core income breakdown

(Wbn) Net fee/commission 7,000 Net interest income income, Net fee/commission income 6,000 7%

5,000

4,000

3,000

2,000 Net interest income, 1,000 93%

0

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

Figure 3. IBK: Dividend payout ratio and DPS Figure 4. IBK: Dividend yield

(%) (W) (%) 45.0 800 Dividend per common share (R) 7.0 6.4 6.4 6.5 Dividend payout ratio (L) 40.0 700 6.0 5.7 5.3 5.4 5.1 35.0 600 5.0 30.0 4.5 500 4.2 3.8 4.0 25.0 4.0 3.7 3.7 400 3.3 3.1 20.0 3.0 300 2.3 2.2 15.0 1.9 2.0 10.0 200 1.0 5.0 100 - - 0 0.0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019F 2020F 2019F 2020F

Notes: IBK’s 2018 dividend payout ratio was 23.4% (25.7% for general shareholders; Note: Based on January 31, 2020 closing price (W10,750) 20.9% for controlling shareholders) Source: Company data, Mirae Asset Daewoo Research Source: Company data, Mirae Asset Daewoo Research

Mirae Asset Daewoo Research 3 February 4, 2020 Industrial Bank of Korea

Table 3. TP calculation

Sustainable ROE 6.60% Growth 2.00% Cost of equity 13.18% Cost of equity 13.18% Risk-free rate 2.50% Beta 1.78 Market premium 6.00% Fair P/B (x) 0.41 2019F BPS (W) 34,033 Target price (W) 14,000 Source: Mirae Asset Daewoo Research estimates

Table 4. Valuation metrics at TP of W14,000 2016 2017 2018 2019F 2020F 2021F P/B (x) 0.51 0.47 0.44 0.41 0.39 0.37 P/E (x) 7.9 6.1 5.3 5.5 5.9 5.7 ROE (%) 6.6 8.0 8.6 7.7 6.9 6.7 EPS growth (%) 0.7 29.4 16.8 (4.5) (6.0) 3.3 Dividend yield (%) 3.4 4.4 4.9 4.9 5.0 5.2 Source: Company data, Mirae Asset Daewoo Research estimates

Table 5. Quarterly earnings (Wbn) 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19F 1Q20F 2Q20F 3Q20F Net interest income 1,363.0 1,353.0 1,401.3 1,429.3 1,448.6 1,406.6 1,470.5 1,446.8 1,421.1 1,406.4 1,419.3 1,457.3 Net fee income 77.2 109.2 128.0 96.2 117.8 110.5 128.2 112.9 113.1 112.0 114.2 115.3 Net other income -77.7 103.6 36.4 67.8 -32.7 91.2 0.2 -39.3 27.0 80.6 27.6 43.4 Total net operating income 1,362.5 1,565.9 1,565.7 1,593.4 1,533.7 1,608.3 1,598.9 1,520.3 1,561.2 1,599.0 1,561.0 1,616.0 SG&A expenses 567.4 540.4 623.6 529.7 604.9 580.3 653.7 560.4 621.3 608.1 685.1 587.3 PPOP 795.1 1,025.5 942.1 1,063.6 928.7 1,028.0 945.2 959.9 939.9 990.8 875.9 1,028.7 Provisions 408.0 327.8 351.9 361.7 522.1 283.6 368.4 450.2 460.4 306.8 387.9 434.6 Operating profit 387.1 697.7 590.2 701.9 406.6 744.4 576.8 509.7 479.5 684.1 488.0 594.1 Non-operating income -61.5 0.6 -2.7 -1.3 6.4 13.3 14.9 8.9 -9.0 14.0 16.9 -12.0 Pretax profit 325.6 698.3 587.5 700.7 413.0 757.7 591.7 518.6 470.5 698.1 505.0 582.1 Net profit 255.8 510.2 421.6 520.3 302.1 553.4 427.0 380.7 339.3 502.4 364.2 420.8 Source: Company data, Mirae Asset Daewoo Research estimates

Table 6. Annual earnings (Wbn) 2012 2013 2014 2015 2016 2017 2018 2019F 2020F 2021F Net interest income 4,468.3 4,256.5 4,511.0 4,630.9 4,876.2 5,260.0 5,632.3 5,745.0 5,754.3 6,034.6 Net fee income 408.7 358.4 345.9 405.6 375.4 407.2 451.2 464.6 457.2 465.9 Net other income -261.4 -309.9 -299.2 -277.1 -311.1 -67.7 175.2 79.1 134.6 138.0 Total net operating income 4,615.6 4,305.0 4,557.7 4,759.5 4,940.6 5,599.5 6,258.6 6,288.8 6,346.1 6,638.5 SG&A expenses 1,859.4 2,012.3 2,005.5 2,096.7 2,154.6 2,188.5 2,298.7 2,415.7 2,531.6 2,632.9 PPOP 2,756.3 2,292.7 2,552.2 2,662.8 2,786.0 3,411.0 3,959.9 3,873.1 3,814.5 4,005.7 Provisions 1,144.0 1,150.3 1,163.9 1,163.1 1,253.4 1,382.7 1,563.5 1,562.6 1,584.8 1,711.8 Operating profit 1,612.3 1,142.4 1,388.3 1,499.7 1,532.6 2,028.3 2,396.4 2,310.5 2,229.6 2,293.9 Non-operating income -62.7 36.6 -45.0 -30.2 -15.4 -74.7 3.0 28.0 9.9 19.0 Pretax profit 1,549.6 1,179.1 1,343.3 1,469.5 1,517.2 1,953.6 2,399.5 2,338.5 2,239.6 2,312.8 Net profit 1,180.3 848.5 1,026.6 1,143.0 1,157.5 1,501.4 1,754.2 1,700.3 1,615.1 1,668.2 Source: Company data, Mirae Asset Daewoo Research estimates

Mirae Asset Daewoo Research 4 February 4, 2020 Industrial Bank of Korea

Industrial Bank of Korea (024110 KS/Buy/TP: W14,000)

Comprehensive Income Statement (Summarized) Statement of Financial Condition (Summarized) Year-end 12 (Wbn) 12/18 12/19F 12/20F 12/21F Year-end 12 (Wbn) 12/18 12/19F 12/20F 12/21F Interest income 9,041 9,486 9,261 9,534 Cash & dues 14,628 12,479 11,401 10,602 Interest expense 3,408 3,741 3,507 3,500 Securities 51,184 58,087 53,072 49,351 Net interest income 5,632 5,745 5,754 6,035 Net loans and receivables 214,523 231,137 245,451 259,852 Net fees and commissions 451 465 457 466 Tangible assets 1,949 2,132 2,168 2,206 Net other non-interest income 175 79 135 138 Other assets 7,226 9,493 9,656 9,822 Total net operating income 6,259 6,289 6,346 6,639 Total assets 289,509 313,328 321,749 331,833 G&A expenses 2,299 2,416 2,532 2,633 Deposits 109,556 112,448 119,567 126,760 PPOP 3,960 3,873 3,814 4,006 Borrowings 28,051 31,809 30,492 29,147 Total provision expenses 1,564 1,563 1,585 1,712 Debentures 109,979 120,254 115,275 110,190 Operating profit 2,396 2,310 2,230 2,294 Other liabilities 20,829 25,726 32,166 39,812 Net non-operating income 3 28 10 19 Total liabilities 268,415 290,237 297,500 305,908 Income before income taxes 2,399 2,338 2,240 2,313 Capital stock 3,290 3,376 3,376 3,376 Income tax expense 635 630 616 636 Hybrid securities 2,381 2,730 2,730 2,730 Net profit 1,764 1,709 1,624 1,677 Capital surplus 551 689 689 689 Net profit (ex. minority interest) 1,754 1,700 1,615 1,668 Retained earnings 14,253 15,469 16,627 18,304 Normalized net profit 1,754 1,700 1,615 1,668 Capital adjustments 0 0 0 0 Other comprehensive income 508 713 713 713 Core income 6,083 6,210 6,211 6,501 Non-controlling interests 111 113 113 113 Core PPOP 3,785 3,794 3,680 3,868 Total shareholders' equity 21,094 23,090 24,248 25,925

DuPont analysis (%) Key ratios (%) Interest income 3.21 3.15 2.92 2.92 Growth (YoY) Interest expense 1.21 1.24 1.10 1.07 W loan growth (Bank) 6.0 6.8 6.3 6.0 Net interest income 2.00 1.91 1.81 1.85 Net loans & receivables growth 5.7 7.7 6.2 5.9 Net commissions income 0.16 0.15 0.14 0.14 Deposit growth -2.7 2.6 6.3 6.0 Net other non-interest income 0.06 0.03 0.04 0.04 Shareholders' equity growth 6.5 9.5 5.0 6.9 Total net operating profit 2.22 2.09 2.00 2.03 Total assets growth 5.6 8.2 2.7 3.1 G&A expenses 0.82 0.80 0.80 0.81 Net interest income growth 7.1 2.0 0.2 4.9 PPOP 1.41 1.29 1.20 1.23 Net fee income growth 10.8 3.0 -1.6 1.9 Total provision expenses 0.56 0.52 0.50 0.52 PPOP growth 16.1 -2.2 -1.5 5.0 Net non-operating income 0.00 0.01 0.00 0.01 Operating profit growth 18.2 -3.6 -3.5 2.9 Income before income taxes 0.85 0.78 0.71 0.71 Net profit growth 16.8 -3.1 -5.0 3.3 Income tax expense 0.23 0.21 0.19 0.20 Profitability Net profit (non-controlling) 0.00 0.00 0.00 0.00 Net interest spread (Bank) 1.89 1.76 1.66 1.66 ROA 0.62 0.56 0.51 0.51 Net interest margin (Bank) 1.95 1.84 1.74 1.74 Leverage (x) 13.9 13.7 13.5 13.1 PPOP margin 1.4 1.3 1.2 1.2 ROE 8.63 7.74 6.86 6.68 ROA 0.6 0.6 0.5 0.5 Asset quality (%) ROE 8.6 7.7 6.9 6.7 NPL ratio 1.32 1.24 1.24 1.24 Liquidity Broad NPL ratio 2.81 2.78 2.73 2.68 W LDR (excl. CDs) (Bank) 0.0 0.0 0.0 0.0 NPL coverage ratio 167.6 174.0 175.6 177.0 Loans to assets 74.1 73.8 76.3 78.3 Reserves to total credits 2.2 2.1 2.2 2.2 Capital adequacy Credit cost (% of total loans) 0.73 0.68 0.65 0.66 Total CAR 14.5 14.6 15.5 15.7 Credit cost (% of total credit) 0.76 0.71 0.68 0.69 Tier 1 CAR 11.9 12.2 12.9 13.1 Per share items (W) Tier 2 CAR 2.6 2.3 2.6 2.6 EPS (reported) 2,666 2,546 2,393 2,471 Operating efficiency EPS (normalized) 2,666 2,546 2,393 2,471 Cost to income 36.7 38.4 39.9 39.7 BVPS 31,891 34,033 35,748 38,232 Cost to assets 0.8 0.8 0.8 0.8 DPS (common share) 690 690 700 730 Dividend PPOP/ share 6,019 5,800 5,651 5,933 Payout ratio 23.4 27.4 29.3 29.5 Source: Company data, Mirae Asset Daewoo Research estimates

Mirae Asset Daewoo Research 5 February 4, 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) 02/03/2020 Buy 14,000 25,000 10/22/2019 Buy 16,000 20,000 01/22/2019 Buy 19,500 12/04/2018 Buy 20,500 15,000 07/05/2018 Buy 21,000 10,000 02/06/2018 Buy 22,000 10/28/2017 Buy 20,000 5,000

0 Feb 18 Feb 19 Feb 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 6 February 4, 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 7 February 4, 2020 Industrial Bank of Korea

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