Woori Finance Posts Loss; Hana Logs Small Profit

South Korea's Woori Finance reported its first quarterly loss in more than four years on Thursday, while smaller rival Hana Financial posted a much smaller-than-expected
profit.

Woori, the country's No. 2 financial services firm by assets, has the largest exposure to U.S. subprime-related assets among South Korean banking groups. It booked 90 percent of its U.S. subprime-related assets such as credit default swaps, or 1 trillion won ($717 million), as losses last year.

The group also suffered from its heavy lending to construction firms and shipbuilders as the economic slump took a heavy toll on manufacturers. Banks started weeding out troubled companies to restructure the weakest last month.

Woori, 73 percent owned by the government, swung to a 664.8 billion won ($478.3 million) net loss in the quarter ended December, from a 111.6 billion won profit in the year-ago period.

It was the group's first shortfall since the first quarter of 2004 when the credit card crisis hammered South Korean lenders, taking its 2008 net profit to 454.5 billion won, a 77 percent slide from the previous year's 1.9 trillion won.

Woori booked 952.8 billion won for loan-loss provisions during the fourth quarter, on top of an additional charge of 400 billion won to cover its exposure to U.S. credit default swaps and collateralised debt obligations, it said in a statement.

The results came a day after sector-leader Kookmin Bank posted its first quarterly loss in four years.

Fourth-ranked Hana Financial Group earned a 12.4 billion won net profit in the December quarter, or less than a tenth of its year-earlier earnings.

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It compared with a 73.3 billion won loss posted in the previous three months, when it had to log losses from its currency options contract with display parts maker Taesan LCD.

In January, Hana and other creditor banks agreed to convert derivatives-related debt owed by Taesan into equity.

Hana, in which Singapore's Temasek Holdings and Goldman Sachs own a combined 17 percent stake, set aside 495.5 billion won in provisions against potential loan losses in the fourth quarter.

Shares in Woori ended 7.5 percent down at the session low of 7,230 won after the results, while Hana shed 5.3 percent to 20,400 won prior to the announcement.

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