Korean Banks No need to be afraid of weak currency

Research evidence excerpt

Korean Banks No need to be afraid of weak currency

9 June 2026

Korean Banks EquitiesCommercial Banks

No need to be afraid of weak currency Korea

◆ Strong earnings to prop up CET1 ratios. NIM will likely rise, and

strong fee/commission will continue in 2Q26 Jaewoong Won*

Analyst, Korea Financials & Fintech

◆ Easing regulations of FX position RWA and higher securities TheLimited,HongkongSeoul Securitiesand ShanghaiBranchBanking Corporation

RoRWA to support CET1 ratios jaewoong.won@kr.hsbc.com +82 2 3706 8770

◆ Prefer Buy-rated KB FG and Shinhan FG, given higher Chan Park*

Research Associate, Korea Autos & Financials

securities RoRWA in a higher rate cycle The Hongkong and Shanghai Banking Corporation

Limited, Seoul Securities Branch

Strong earnings to offset weak currency impact on CET1 ratio: Despite the weak chan.park@kr.hsbc.com

+822 3706 8713

currency, we expect banks’ CET1 ratios to remain resilient in 2Q26 due to strong

earnings and deregulation of structural FX position RWA. Typically, strong quarterly

* Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is

earnings boost CET1 ratios by 40-50bp q-o-q, while ongoing total shareholder returns not registered/ qualified pursuant to FINRA regulations.

reduce CET1 ratios by 10-20bp q-o-q (Exhibits 2-3). Other RWAs will be affected by

loan growth and FX positions. For every KRW10/USD1 move, CET1 ratios for KB,

Shinhan, Hana and Woori only change by 2bp, 1bp, 2.5bp and 2.5bp, respectively,

according to our analysis. So, we expect its CET1 ratios to remain above 13.5% for

KB FG and above 13% for others (Exhibit 4). Net profit accounts for the largest

portion of CET1 increases, and CET1 naturally increases as net profit grows. In