JB Financial : IR Letter_2022.01.18

IR Letter (January 18, 2022)

JB Financial Group

Dear Shareholders and investors,

The fourth wave of COVID-19 attributed to the fast spread of the Omicron variant has stabilized to a certain degree due to stronger social-distancing measures but has yet to be effectively controlled. We sincerely hope that the proliferation of COVID-19 driven by the new variant will be successfully contained, helping investors at home and abroad enjoy safer and healthier lives. This updated IR letter is designed to provide information on changes in equity stakes of our large shareholders for 2021 and our new business plans for 2022.

The equity stakes of our major shareholders rose in 2021 for the second year in a row. Specifically, the combined stake of top five shareholders including the largest one significantly jumped from 35.0% at the end of 2019 to 44.4% at the end of 2020. Their equity stake based on the announcement for December 2021 reached 46.8%, up 2.4%p from a year earlier.

The stake of the biggest shareholder Samyang Corporation based on the official announcement made in December 2021 was as high as 14.61%, up 1.47% from the previous year. The stake of the second biggest shareholder OK Savings Bank rose to 10.25%, up 0.88%p from a year earlier while the stake of the third largest shareholder National Pension Service increased to 9.77%, up 0.07% from the end of the preceding year. The combined equity stake of the top three major shareholders swelled 2.42%p from 32.21% at the end of 2020 to 34.63% at the end of 2021.

Next, we would like to share our business plans for 2022 with shareholders and investors. Our business strategies for 2022 consist of: 1) asset portfolio rebalancing focused on risk adjusted return; 2) proactive risk control; 3) channel (branch network) optimization; 4) group synergy maximization and business diversification; and 5) improvement in the competitiveness of digital channels.

More specifically, asset portfolio rebalancing focused on risk adjusted return and proactive risk control are designed to continuously promote sustainable profitability. Also, focusing on proactive risk control, we plan to proactively manage risks in connection with COVID-19, household loan restrictions, and higher interest rates.

Second, we will further enhance the productivity and cost efficiency of business branches via channel optimization in cost control. Moreover, in relation to the redundant labor force caused by branch consolidation and closure, training and relocation will play a key role in increasing efficiency in human resources management. Continued improvement in profitability seen over the past several years has successfully led the cost income ratio to drop. Not being satisfied with such results, we will actively control operating leverage and reduce the cost income ratio to the mid-40% or lower in 2022.

Third, we also plan to concentrate on securing future growth engines via group synergy maximization and business diversification. Although maintaining a two-bank system, we have been maximizing group synergy by appointing a single director responsible not only for risk control and digital business but also for IT and information security and facilitating discussions among subsidiaries and thereby optimizing collaboration via a consultative body by business sector including IB, WM, and ESG. Moreover, in order to overcome our weakness in income structure featuring a low share of non-bank and non-interest sectors in profit, we plan to further diversify our business lines through M&As. However, given that it is not easy to find target companies quickly, we will be in no hurry to acquire businesses and will pursue substantial business development, paying keen attention to growing to become a financial group characterized by a more balanced business portfolio.

Lastly, we plan to improve the competitiveness of digital channels. In other words, we will overcome the fixed idea of the digital business sector acting as a cost center, enabling it to be reborn as a key profit center by producing tangible results in income creation.

For more information or data, please feel free to contact us at any time.

Best regards.

IR Department, JB Financial Group

IR Letter (January 18, 2022)

JB Financial Group

(unit: %, %p)

	Top 5 shareholders' ownership trend				Ownership by top 5 shareholders
(%)					(%)			Samyang Corporation			OK Savings Bank
						National Pension Service		JUBILEE ASIA B.V.
50			46.8		50
	44.4				SINGWAND		5.27
45								5.27
				40
40								6.88	6.88
					5.27
				30
35.0				9.70	9.77
			6.88
35					20
30					6.19	9.37	10.25
					6.04
25					10
				10.60	13.14	14.61
20					0
				2019	2020	2021
2019	2020	2021

Note) 2021 ownership data are based on recent public disclosure information.

Shareholders		2020	Dec. 2021		Change
Samyang Corporation +	13.14	14.61	+1.47
OK Savings Bank +	9.37	10.25	+0.88
National Pension Service	9.70	9.77	+0.07
JUBILEE ASIA B.V.	6.88	6.88	-
SINGWAND	5.27	5.27	-

Note) The representative reporter has changed from Apro Financial to OK Savings Bank due to a block deal between OK Savings Bank and Apro Financial who are specially related parties. (no change in total equity stake attributable to the block deal)