Hana Financial Group 2018 Business Result

January 2019 Table of Contents section 1 2018 Financial Highlights section 2 Profitability section 3 Total Lending & Funding section 4 Asset Quality & Capital Adequacy section 5 Appendix

1 Section 1 2018 Financial Highlights

2018 Financial Highlights (1) 2018 Financial Highlights (2) 2018 Financial Highlights (3)

2 2018 Financial Highlights (1)

. Group’s FY2018 net income recorded 2.24 trillion, the highest annual earnings since the establishment of the holding company in 2005, on the back of strong core earnings and efficient cost control

. Despite decrease in 4Q earnings due to one-offs in SG&A and provisioning, Group’s normalized quarterly earnings maintained at the mid-500 billion won

. Group’s profitability indicators such as ROE and ROA further improved; C/I ratio continued the downtrend due to 2,240.2 group-wide cost stabilization

668.6 2,036.8 634.1 589.4 538.9 510.0 ROE 11.20% 492.1 495.8 10.69% 10.17% 8.85% 9.11% 8.94% 8.77% 8.89% 348.1 0.76% ROA 0.73% 0.69% 0.60% 0.63% 0.61% 0.60% 0.61% 52.3%

53.1% 1) 51.4% 52.1% 49.6% 50.4% 48.3% 48.7% 45.7%

4Q18 2018 4Q18

3 2018 Financial Highlights (2)

. Group’s NIM increased 5bp YoY (before industry-wide accounting change applied in KEB Hana Card) thanks to 1.99% 1.99% 2.00% improvement on loan/deposit pricing and profit-oriented 1.92% 1.94% 1.95% 1.96% portfolio management 1.86% . Group’s core earnings surged 10.5% YoY with NII up 10.7% and fee income up 9.8% YoY (+11.3% YoY before Industry- 1.86% 1.85% 1.82% 1.85% wide accounting change applied in KEB Hana Card) respectively 4Q18 . Despite a seasonal decrease in large corporation loans, KRW loan in KEB Hana Bank further expanded in 4Q18, reflecting growth in SOHO and household loans 5,637

1,427 1,468 1,191 1,253 1,299 1,348 1,340 1,402

4Q18 2018

2,254 212 200 201 204 203 193 194 196 196 617 2,224 188 187 188 192 590 180 182 183 517 523 526 521 489 496

491

4Q18 2018 4Q18

4 2018 Financial Highlights (3)

. Despite one-offs in provisioning, group’s FY2018 credit cost recorded 18bp, down 15bp YoY, achieving the most stable level since the acquisition of KEB in 2012 thanks to pre-emptive risk management

0.89% . Despite one-offs in provisioning, normalized provisioning in 0.80% 0.78% 0.73% 0.76% 0.71% 4Q18 managed under annual target; asset quality indicators 0.61% 0.59% such as delinquency ratio further improved continuing the downward trend

. Group’s capital adequacy further improved mainly due to 0.53% 0.46% 0.40% 0.39% 0.42% 0.40% 0.40% 0.37% continued increase in earnings and well-managed RWA; FY2018 payout ratio expected to increase by 2.9%p YoY (interim dividend 400 won, year-end dividend 1,500 won, total 1,900 won)

4Q18

14.97% 14.97% 14.66% 14.89% 14.84% 14.85% 14.89% 14.93% 0.72% 13.27% 13.25% 13.29% 13.45% 13.40% 13.49% 13.52% 12.95% 0.42% 0.34% 0.33% 0.15% 0.12% 0.18% 12.73% 12.72% 12.74% 12.92% 12.88% 12.98% 12.86% 0.14% 12.41% 420 233

202 123 90 77 83 63

4Q18 4Q18

5 Accounting Change in Business (IFRS15)

Financial Impact on KEB Hana Card

No impact on net income despite the accounting change

P/L NIM

Income included in NIM calculation

As is: Sales promotion expense subtracted from SG&A, etc. As is: Reward expense included in credit card fee expense (excluded in NIM calculation) To be: Sales promotion expense directly subtracted from To be: Reward expense directly subtracted from merchant merchant fee income fee income (included in NIM calculation) Fee income↓ SG&A↓ No impact on net income Credit Card NIM↓No impact on P/L

6 Section 2 Profitability

Group Consolidated Earnings Business Results of subsidiaries NIM Non-Interest Income / SG&A Expenses

7 Group Consolidated Earnings

7,604

1,903 7,574 2,182 1,924 1,893 1,939 1,873 1,801 1,869 1,873 5,637.2 1,693

2,224.1 4Q18 2018

375.2 3,976 (662.6) ( ) 1,104 3,9473,947 3,946.9 1,254 993 1,039 1,075 879 914 915 918

3,627.0 4Q18 2018

465.3

3,161.7 423 275 465 (2.4) 211 2,240.2 127 82 89 36 66

4Q18 2018

8 Business Results of Subsidiaries

9 NIM

1.99% 1.99% 2.00% 1.92% 1.94% 1.95% 1.96% 1.86%

1.86% 1.85% 1.82% 1.85% 1,468

1,402 1,427 1,299 1,348 1,340 1,191 1,253

4Q18

1.57% 1.57% 1.55% 1.56% 1.52% 1.53% 1.48% 1.44% 1,266 1,212 1,240

4Q18

10 Non-Interest Income

617 521 590 517 523 526 489 496 491

4Q18

464

348

153 66 142 133 64 23

4Q18

11 SG&A Expenses

52.3% 49.6% 51.4% 53.1% 50.4% 45.7% 48.3% 48.7% 52.1%

50.0% 49.0% 50.9% 47.2% 46.0% 46.4% 48.1% 43.4% 49.8%

1,104

1,039 1,075 918

4Q18

12 Section 3 Total Lending & Funding

Group Total Assets / Total Liabilities & Equity KEB Hana Bank KRW Loan / Deposit

13 Group Total Assets / Total Liabilities & Equity

493

486 476

4Q18

388

36 33 6.8% 8 7 5 8 4

KEB Hana KEB Hana Hana Life Hana Hana Bank PT Bank Hana Bank Financial Hana Capital Asset 2) KEB Hana 2) Investment Card Trust

14 KEB Hana Bank KRW Loan / Deposit

(Unit: Wbn) +7.4 +0.3 +6.6 188.2 +0.2

2018

35.3% 35.5% 35.3% 35.8% 35.1% 34.5% 33.4% 33.2%

(Unit: Wbn)

4Q18

1)

98.8% 98.9% 98.4% 98.4% 98.4% 98.5% 97.8% 97.7%

4Q18

15 Section 4 Asset Quality & Capital Adequacy

Group Asset Quality KEB Hana Bank Asset Quality Provision Analysis Capital Adequacy

16 Group Asset Quality

263,891 245,893 352 258 259,788 241,468 188 204 166 2,546 2,512 114 114 765 882 (22) 477 714 4Q18 315 317

1,557 1,913

0.59% 0.78%

2.07% 107.0% 87.4% 1.80% 1.79% 1.80% 1.72% 1.66% 1.75% 1.55%

3,587 3,474

1,666 1,671 0.89% 0.80% 0.78% 0.73% 0.76% 0.71% 0.61% 0.59% 1,921 1,803

4Q18

17 KEB Hana Bank Asset Quality

231,989 217,257 91.5% 91.5% 229,053 214,028 74.3% 78.8% 75.9% 78.3% 77.1% 84.1%

1,718 1,646 0.81% 0.72% 0.66% 0.73% 0.70% 0.66% 690 799 0.55% 0.52%

356 600 4Q18 171 184

1,217 1,583

0.52% 0.73% 0.62% 91.5% 75.9% 0.49% 0.45% 0.42% 0.43% 0.40% 0.39% 2,885 2,842 0.32% 0.41% 0.33% 0.29% 0.25% 1,114 1,202 0.29% 0.29% 0.31% 0.30% 0.18% 0.17% 0.17% 0.17% 0.15% 0.16% 0.16% 0.17% 1,771 1,641

4Q18

18 Provision Analysis

0.71% 0.72% 0.36% 0.26% 0.25% 0.42% 0.05% 0.04% 0.02% 0.07% 0.34% 0.33% 366 0.15% 0.14% 0.18% 0.12% 118 117 49 19 29 16 (10) 4Q18 4Q18

19 Capital Adequacy

(Unit: Wbn)

14.97% 14.97% 14.66% 14.89% 14.84% 14.85% 14.89% 14.93%

13.27% 13.25% 13.29% 13.45% 13.40% 13.49% 13.52% 12.95%

12.73% 12.72% 12.74% 12.92% 12.88% 12.98% 12.41% 12.86%

4Q18

(Unit: Wbn)

16.28% 16.28% 16.40% 16.51% 16.25% 16.11% 15.98% 16.21%

13.99% 14.03% 14.17% 13.90% 13.78% 13.82% 13.72% 13.56%

13.88% 13.92% 14.06% 13.66% 13.71% 13.61% 13.45% 13.79%

-0.27%p

4Q18

20 Section 5 Appendix

Net Income Contribution by Subsidiaries Provision Analysis by Subsidiaries Dividend Major Indices

21 Net Income Contribution by Subsidiaries

22 Provision Analysis by Subsidiaries

+33.1 468.8 +66.4 +0.2

152.6 77.6

152.6 +5.2 74.9

Group 2017

23 Dividend

25.46%(e) 23.36% 21.15% 22.53% 18.55%

12.74% 12.86% 12.40% 11.83% 5.24%(e) 11.77% 6.69% 3.36% 2.75% 3.11% 9.79% 9.18% 1.69% 1.88% 9.02% 1.30% 8.63% 0.91% 7.88% 23,743 21,708 20,437 18,202 17,302 16,213 15,934 1,500 (e) 2) 11,845 1,250

800 300 450 500 250 250 300 300 400 200 150 150 150 250 2018 2018

24 Major Indices

Cumulative (Unit: Won)

Cumulative (Unit: Won)

25 Some of the information in this presentation constitute ‘forward looking statements’ which reflect ’s current intensions, plans, forecasts, and assumption about future events or results, and are subject to risks, uncertainties and other factors. These statements are not guarantees of future results or performance and involve certain risks, uncertainties and assumptions that are difficult to predict and often are beyond the Hana Financial Group’s control. This presentation material is provided for the convenience of investors in advance, prior to being reviewed by external auditors. Therefore, it is subject to change based on final review by external auditors. This English translation is not an official translation. In the event of any conflict or inconsistencies may arouse due to English translation, the original “Korean” version shall prevail. The accuracy, reliability and timeliness of this translation are not guaranteed. Should any error in translation of this presentation occur, Hana Financial Group shall not be liable for the error.

Investor Relations 04538, 66 Eulji-ro, Jung-gu, , Republic of [email protected] www.hanafn.com/ir

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