Issuer Summary: KEB Hana Bank

Report date: 2026-05-15
Issuer: KEB Hana Bank / Hana Bank
Sector: South Korea banking
Primary credit focus: operating-bank senior credit, funding and liquidity, asset quality, regulatory capital, and security-class differentiation

Business Snapshot and Recent Developments

KEB Hana Bank, which is now disclosed primarily as Hana Bank, is the core operating bank of Hana Financial Group. It is a major commercial bank in South Korea, with broad operations in domestic deposits, lending, payments, foreign exchange, trade finance, retail banking, corporate banking, and wealth-management-related services. From an issuer perspective, the relevant entity is not Hana Financial Group, the financial holding company, but the bank itself, which holds the deposit and loan franchise. The group includes non-bank subsidiaries such as securities, card, capital, life insurance, asset trust, and savings-bank businesses. However, the starting point for assessing Hana Bank senior credit is the bank-alone asset quality, capital, deposit base, liquidity, and earnings capacity.

This report principally uses bank-alone consolidated data from the Hana Bank sheet in Hana Financial Group’s 1Q26 IR Databook. Hana Financial Group consolidated data are used only as supplementary information where the discussion refers to the overall group or shareholder-return policy. This distinction is important. Hana Financial Group consolidated figures include the earnings, asset quality, and capital consumption of non-bank subsidiaries such as Hana Securities, Hana Card, and Hana Capital. By contrast, the fundamental repayment capacity for Hana Bank-issued debt depends on the bank’s own loans, deposits, capital, asset quality, and funding. Even where the Hana name is the same, the bank, the holding company, subordinated capital instruments, and overseas-subsidiary-related exposures are not the same risk.

As of end-March 2026, Hana Bank had total assets of approximately KRW 564.4tn, loans receivable of approximately KRW 386.1tn, and deposits of approximately KRW 396.2tn. Bank-alone net income was approximately KRW 3.75tn for full-year 2025 and approximately KRW 1.10tn for 1Q26. The Common Equity Tier 1 ratio was 16.42% at end-2025 and 16.24% at end-March 2026, while the BIS ratio declined modestly from 17.62% to 17.32% over the same period. These figures indicate that Hana Bank is a sufficiently large and well-capitalised bank even within the South Korean banking sector.

The most important recent development is that bank-alone earnings were strong in 1Q26, while asset-quality indicators showed modest deterioration. Hana Bank’s 1Q26 net income was approximately KRW 1.10tn, up 11.2% year on year. Net interest income was approximately KRW 2.18tn, and NIM was 1.58%, improving from 1.49% for full-year 2025. This indicates support from lower funding costs, growth in low-cost deposits, and profitability-conscious loan management. At the same time, the NPL ratio rose from 0.35% at end-2025 to 0.37% at end-March 2026, and the delinquency ratio also increased from 0.32% to 0.39%. The absolute levels remain low, but the possibility that stress in Korean SMEs, SOHO borrowers, households, and construction/property-related sectors is beginning to appear in the bank’s numbers should not be ignored.

It would be superficial to view Hana Bank simply as a “highly rated major Korean bank and therefore safe.” The bank does have high capital ratios, a strong deposit base, core importance within HFG, and international ratings in the A category or above. At the same time, it is exposed to structural issues in the Korean banking sector, including household debt, real-estate collateral, SOHO and SME borrowers, foreign-currency liquidity, market funding, regulatory capital, and the impact of group shareholder returns. The base case for senior credit is therefore strong, but investors should review not only the low NPL ratio but also delinquency ratios, NPL coverage, credit costs, CET1, RWA, low-cost deposits, and foreign-currency funding markets on a quarterly basis.

The main credit developments from 2025 to 1Q26 are as follows. Unless otherwise stated, figures are on a Hana Bank bank-alone consolidated basis, and amounts are in KRW trillion.

Care is needed in reading the data definitions. Balance-sheet “loans receivable” and “deposits” are used to show the overall size of the bank’s balance sheet, while the Loan & Deposit series — “KRW loan,” “total deposits on a bank-accounting basis,” and “low-cost deposits” — is used to assess the composition of KRW-denominated loans and deposit quality. As a result, balance-sheet loans receivable declined quarter on quarter at end-March 2026, while KRW loans increased. In liquidity analysis, the balance-sheet deposit figure is treated as an indicator of the scale of core funding, while the low-cost deposit series is used as a supplementary indicator of deposit quality.

The key point from this table is that Hana Bank’s credit profile is neither improving in a straight line nor shifting into a weak trend. Earnings and capital are strong. NIM improved, and low-cost deposits increased. At the same time, NPLs, delinquencies, and coverage moved in a direction that warrants caution. At this stage, the levels do not undermine the stability of senior credit, but the credit view for 2026 and beyond will depend on whether asset-quality deterioration stops around this level or broadens from SME, SOHO, and property-related exposures.

Industry Position and Franchise Strength

Hana Bank is one of South Korea’s major commercial banks, alongside KB Kookmin Bank, Shinhan Bank, and Woori Bank. The Korean banking market is mature; it is not a market where banks strengthen credit quality by rapidly expanding new lending. The strength of the major banks lies in the depth of customer relationships that combine deposits, payments, payroll accounts, mortgages, corporate transactions, foreign exchange, trade finance, digital touchpoints, and wealth-formation services. Within this market, Hana Bank has a brand derived from foreign-exchange and international operations, customer access as part of HFG’s integrated financial group, and the deposit and loan scale of a major domestic Korean bank.

The first pillar of the franchise is the deposit base. Hana Bank’s deposits at end-March 2026 were approximately KRW 396.2tn on a balance-sheet basis, broadly covering bank-alone loans receivable of approximately KRW 386.1tn. On the bank-accounting basis used in the Loan & Deposit series, total deposits were approximately KRW 391.0tn at end-2025 and approximately KRW 379.4tn at end-March 2026, while low-cost deposits increased from approximately KRW 125.2tn to approximately KRW 133.0tn over the same period. The low-cost deposit ratio rose from 32.0% at end-2025 to 35.0% at end-March 2026. For bank credit, growth in low-cost deposits supports both NIM and deposit quality. Even when deposit costs rise amid rate competition, deposits linked to payroll accounts, corporate settlement, everyday accounts, foreign-exchange transactions, and wealth management are stickier than simple high-rate deposit products.

The second pillar is the lending base across retail and corporate customers. KRW loans at end-March 2026 were approximately KRW 320.7tn, comprising approximately KRW 141.3tn to households and approximately KRW 179.5tn to corporates. Within corporate lending, SME lending was approximately KRW 144.3tn, and SOHO lending was approximately KRW 58.5tn. This shows that Hana Bank is neither purely a large-corporate bank nor purely a mortgage bank. A broad base across households, SMEs, large corporates, SOHO borrowers, and foreign-exchange/trade-related customers diversifies earnings sources and deposit sources. At the same time, it brings sensitivity to domestic Korean demand, household debt, SMEs, and the construction/property cycle.

The third pillar is Hana Financial Group’s global network and the position of foreign-exchange and international operations. HFG’s official Global Network page states that the group has 199 offices across 27 regions. This should not be treated as a direct repayment source or liquidity source for the bank itself, but rather as a supporting factor for customer access, brand, corporate transactions, and foreign-currency/trade finance. Hana Bank has a history of integration with the former Korea Exchange Bank and has a stronger image in foreign exchange and cross-border transactions than some other major Korean banks. At the same time, because foreign-currency operations can transmit stress from US dollar funding markets, KRW depreciation, foreign investors’ risk aversion toward Korea, and overseas-subsidiary asset quality into funding costs, foreign-currency liquidity is a secondary but important monitoring item for issuer credit.

Hana Bank’s franchise is strong, but additional comparison is required before concluding that it is the most conservative bank in the Korean banking sector. KB Kookmin Bank and Shinhan Bank also have large deposit and loan bases, high ratings, and strong capital. Woori Bank is also one of the major banks, although its capital, ratings, and profitability assessments vary depending on the point in time. Within this top-tier bank group, Hana Bank ranks highly in total assets, deposits, loans, capital ratios, and ratings. However, this work has not recalculated official market shares by Korean bank. The report therefore uses terms such as “one of South Korea’s major banks” and “top-tier bank,” while leaving precise ranking as an unverified item.

A common mistake in franchise assessment is to overstate the direct repayment strength of the group’s non-bank diversification for bank senior credit. On an HFG consolidated basis, Hana Securities, Hana Card, and Hana Capital contribute to earnings diversification. Hana Securities, Hana Card, and Hana Capital also reported certain profits in 1Q26. This is positive for the overall group. However, for investors in bank senior bonds, non-bank earnings are not direct collateral or repayment sources; they are indirect factors through group capital policy, brand, and customer touchpoints. In assessing issuer credit, the bank-alone deposits, loans, capital, and asset quality should be placed first, and the overall group’s capital allocation and non-bank risks should then be considered as supplementary factors.

In one phrase, Hana Bank’s franchise can be summarised as “a deposit-led major Korean commercial bank with a foreign-exchange and international-business profile.” The credit support lies in daily customer transactions and a deep deposit base. The constraints are the bank’s exposure to Korea’s household, SME, and property cycles, and its certain sensitivity to foreign-currency funding markets.

Segment Assessment

Hana Bank’s segment assessment requires looking at the loan portfolio within the bank by households, corporates, SMEs, SOHO borrowers, large corporates, and foreign-currency/international operations. HFG’s Databook focuses more on loans, deposits, and asset quality than on a detailed breakdown of bank-alone earnings by business division. This report therefore focuses less on “which division generates earnings” and more on “which assets generate credit risk” and “which deposits support funding.”

The loan composition is centred on the two pillars of household and corporate lending. Of KRW loans of approximately KRW 320.7tn at end-March 2026, approximately KRW 141.3tn was to households and approximately KRW 179.5tn was to corporates. Within household lending, secured loans were approximately KRW 122.9tn, of which mortgages accounted for approximately KRW 111.6tn. Mortgages typically have lower loss severity because they are collateralised, but they are closely linked to Korea’s household debt, housing prices, DSR regulations, employment conditions, and interest burden. The household NPL ratio was 0.27% at end-March 2026, lower than the corporate ratio. However, because balances are large, even a small movement in the household delinquency ratio can affect market sentiment.

Corporate lending is important for both earnings and risk. Corporate KRW loans were approximately KRW 179.5tn at end-March 2026, up from approximately KRW 176.2tn at end-2025. SME loans accounted for approximately KRW 144.3tn of this amount and made up most of corporate lending. SMEs support Hana Bank’s customer base, but they are sensitive to domestic demand, interest rates, construction, real estate, services, and regional economies. The SME delinquency ratio was 0.61% at end-March 2026, up from 0.47% at end-2025. The SOHO delinquency ratio also rose over the same period, from 0.48% to 0.56%. These figures are not crisis levels, but the direction clearly requires attention.

Large-corporate exposure is smaller than SME exposure in balance terms, but individual events can have a large impact. Large-corporate KRW loans were approximately KRW 31.1tn at end-March 2026. The delinquency ratio for large corporates was below 0.02%, and this is not the central issue at present. However, major Korean corporates and exporters are affected by exchange rates, industry cycles in sectors such as semiconductors, chemicals, steel, and autos, global demand, and the trade environment. If a credit event occurs among large corporate borrowers, the number of cases may be small, but the amounts can be large and may affect bank provisioning or market sentiment.

By industry, construction, real estate and leasing-related sectors, accommodation and food services, wholesale and retail, scientific and technical services, and other services are monitoring targets. The Asset Quality_Bank sheet in the HFG Databook shows that, as of end-March 2026, the delinquency ratio for corporate construction was 0.53%, while real estate and leasing-related sectors were 0.57%. Looking only at SMEs, the construction delinquency ratio was 1.44%, and the real estate and leasing-related delinquency ratio was 0.60%. The confirmed facts are these industry-level and SME-level delinquency ratios. In the Korean banking sector overall, real-estate project finance, regional real estate, construction companies, and trust-related projects may become issues, but the current materials do not confirm Hana Bank’s direct PF balance, trust projects, or detailed balances by region and collateral type.

Segment asset quality can be summarised as follows. Amounts are in KRW trillion, and ratios are based on the Databook.

This table shows that Hana Bank’s risk is not concentrated only in household lending. Korean bank risk is often first associated with mortgages and household debt, but the most recent figures show a more noticeable increase in SME, SOHO, and corporate delinquencies. Mortgages are important in stress because balances are large, but as of end-March 2026 they are supported by low NPL ratios and a collateralised structure. By contrast, SMEs and SOHO borrowers are sensitive to domestic demand, construction, real estate, and sole proprietors’ repayment capacity, and credit costs are more likely to emerge there first.

Non-interest income is a secondary stabilising factor. Hana Bank’s fee income was approximately KRW 1.03tn in 2025 and approximately KRW 0.30tn in 1Q26. HFG’s earnings materials explain that the bank’s trust fees increased in 1Q26, supported by sales of ETF-related specified money trusts and other products. This indicates that the bank earns not only lending and deposit income but also wealth-formation, trust, foreign-exchange, guarantee, and loan-related fees. However, the main drivers in bank-alone credit assessment remain net interest income, credit costs, capital, and deposits. Fee income should be treated as a supplementary line that mitigates NIM pressure.

Foreign-currency and international operations are a distinctive feature of Hana Bank, but the current public data do not allow a full analysis. Foreign exchange, trade finance, and overseas offices are franchise strengths. At the same time, foreign-currency liquidity, maturity by currency, foreign-currency funding costs, and overseas-subsidiary asset quality are important for foreign-currency bond investors. This report has not confirmed bank-alone foreign-currency LCR, NSFR, or maturity gaps by currency, so additional confirmation is needed for individual foreign-currency bond investment decisions.

Financial Profile and Analysis

Hana Bank’s financial profile combines strong core earnings, high capital ratios, deposit-led funding, low but rising NPLs, and declining NPL coverage. From a bank senior-bond perspective, current earnings and capital are sufficiently strong. At the same time, the rise in the delinquency ratio in 1Q26 indicates that future asset quality and credit costs need to be checked. The following table extracts key indicators from the Hana Bank sheet in HFG’s 1Q26 IR Databook. Amounts are in KRW trillion, and ratios are shown as percentages based on Databook values.

Earnings capacity is strong. Hana Bank’s net income was approximately KRW 3.48tn in 2023, KRW 3.36tn in 2024, and KRW 3.75tn in 2025, improving in 2025. Net income for 1Q26 was approximately KRW 1.10tn, a strong quarterly level. Net interest income was also approximately KRW 8.07tn in 2025 and approximately KRW 2.18tn in 1Q26, indicating a sufficiently deep earnings base at the bank itself. In bank credit, the key issue is whether earnings can absorb loan-loss increases. Hana Bank currently has that absorption capacity.

NIM was 1.59% in 2023, 1.47% in 2024, 1.49% in 2025, and 1.58% in 1Q26. After declining in 2024, it recovered modestly in 2025 and improved further in 1Q26. HFG’s 1Q26 materials cited profitability-focused asset growth, optimisation of the funding portfolio, and an increase in low-cost funding as drivers of the increase in group and bank NIM. NIM improvement is clearly positive, but credit analysis should not treat it as a permanent improvement. NIM could come under pressure again from a Korean rate-cutting cycle, deposit competition, household-lending regulations, competition with digital banks, or changes in credit-risk premia on SME lending.

Credit costs increased somewhat in 2025 but were held low in 1Q26. Credit loss provisions in the Databook were approximately KRW 0.85tn in 2023, KRW 0.40tn in 2024, KRW 0.54tn in 2025, and KRW 0.08tn in 1Q26. HFG’s 1Q26 materials explain that Hana Bank’s provisions declined year on year, partly due to reversals associated with reductions in stressed exposures. This is positive in the short term. However, if provisions remain low while NPLs and delinquencies rise, collateral, recovery prospects, and provisioning policy need to be checked. Low provisions should not always be treated as good news in themselves.

Asset quality needs to be read by separating absolute levels from direction. An NPL ratio of 0.37% is low for a major Korean bank. At the same time, the direction is upward: 0.26% in 2023, 0.29% in 2024, 0.35% in 2025, and 0.37% in 1Q26. NPL coverage also fell from 205.5% in 2023 to 165.4% in 2024, 136.3% in 2025, and 123.5% in 1Q26. Coverage remaining above 100% is a comfort factor, but the downward trend is clear. HFG explains that provisioning needs were limited because much of the new NPL formation was covered by collateral. This may be a reasonable explanation, but investors should continue to check collateral values, disposal periods, realised recovery rates, and sector-specific stress.

Capital is strong. The CET1 ratio was 16.24% at end-March 2026, the Tier 1 ratio was 16.42%, and the BIS ratio was 17.32%, providing a sufficient buffer for a major Korean bank. RWA increased to approximately KRW 213.8tn in 1Q26, and the CET1 ratio declined modestly from end-2025, but the ratio level itself remains high. For Hana Bank senior credit, capital shortage is not the main issue at present. Rather, the focus should be on how future bank-alone capital is affected by RWA growth, the risk weights of corporate and SME lending, group shareholder returns, dividends, and capital allocation to non-bank subsidiaries.

On funding, deposits and low-cost deposit trends are important. Low-cost deposits were approximately KRW 133.0tn at end-March 2026, and core deposits were approximately KRW 93.8tn, both increasing from end-2025. This directly supports NIM improvement. As market funding, borrowings were approximately KRW 27.9tn and debentures were approximately KRW 35.8tn at end-March 2026. These are small relative to deposits, but market funding, including foreign-currency bonds, affects the issuer’s market access and spreads. Investors in foreign-currency bonds need to check maturity by currency, foreign-currency LCR, foreign-currency bond maturities, hedging, and sensitivity to global market stress, in addition to the strength of the bank’s deposit base.

Overall, Hana Bank’s financial profile is that of “a major bank that can absorb low-level asset deterioration with high capital and strong core earnings,” but it is also “a bank where the direction of NPLs, delinquencies, and coverage cannot be ignored.” A stable credit view can be applied to senior bonds, but for subordinated capital instruments and long-dated foreign-currency bonds, investors should look more carefully at capital ratios, regulatory terms, foreign-currency liquidity, and sequential deterioration in credit costs.

Structural Considerations for Bondholders

The most important structural issue for bondholders is to distinguish between debt issued by Hana Bank, debt issued by Hana Financial Group, subordinated capital instruments of Hana Bank, and overseas-subsidiary-related exposures. Hana Bank is the operating bank, where deposits, loans, payments, foreign exchange, capital, and liquidity directly reside. Hana Financial Group, by contrast, is a holding company and depends on dividends and capital upstreaming from subsidiaries. The credit of bank senior debt is more directly linked to the bank-alone balance sheet than holding-company debt.

Hana Bank is a core subsidiary of HFG. HFG’s official Hana Network page and organisational chart show Hana Bank as the group’s main banking subsidiary. The bank’s earnings contribution is also large. HFG’s consolidated net income was approximately KRW 1.21tn in 1Q26, compared with Hana Bank net income of approximately KRW 1.10tn. This should not be treated as a simple equity contribution ratio, but it does show that the bank is central to the group’s credit, earnings, and capital management. The holding company has a strong incentive to support the bank, but this is separate from a legal debt guarantee.

Government support should also be framed carefully. Hana Bank is a major Korean bank and appears to occupy a systemically important position in the financial system, but this report has not confirmed the formal D-SIB designation, rating-agency support notches, or the full text of government-support assessments. In stress, the bank may be subject to regulatory supervision, liquidity provision, and system-stabilisation measures, but this does not mean individual bonds are explicitly guaranteed by the Korean government. Bank debt should not be treated as a direct obligation of the Korean government.

Liability ranking is also important. Depositors, senior unsecured bondholders, covered-bond holders, subordinated bondholders, Tier 2 investors, and AT1 investors have different ranking, loss-absorption features, and regulatory treatment. Hana Bank’s strong issuer credit is a significant support for senior bonds. By contrast, Tier 2 and AT1 instruments are affected by non-viability, write-down, coupon cancellation, non-call risk, supervisory discretion, and tax or regulatory-change provisions. This report has not reviewed the offering circulars or contractual terms of all individual bonds, so the senior-bond credit view should not be applied mechanically to subordinated capital instruments.

For foreign-currency bond investors, the currency and issuing entity also need to be confirmed. US dollar, euro, and other foreign-currency bonds issued by Hana Bank are affected not only by the size of KRW deposits and loans, but also by foreign-currency liquidity, assets and liabilities by currency, hedging, foreign-currency bond maturity dispersion, and foreign investors’ risk appetite toward Korean banks. Hana Bank is a highly rated major bank with market access, but in the Korean banking sector, spreads tend to move when foreign-currency funding markets tighten. The bank-alone foreign-currency LCR, NSFR, and maturity gaps by currency could not be sufficiently confirmed in this work and remain items for review before investing in individual foreign-currency bonds.

Non-bank risk within the group is also indirectly important. Hana Securities, Hana Card, and Hana Capital contribute to the group’s earnings diversification, but they also introduce securities-market risk, card credit risk, capital-company asset quality, leverage, and funding-environment risk. These are not direct risks for bank senior bonds, but they may affect group capital policy, brand, regulatory perceptions, and shareholder-return capacity. The practical approach is not to ignore non-bank risks because the bank itself is strong, but to distinguish between the bank-alone payment capacity and the overall group’s capital allocation.

Accordingly, Hana Bank bank senior bonds can be positioned as a relatively direct and defensive credit exposure within the HFG group. The bank as issuer is large and supported by deposits, capital, and earnings. At the same time, holding-company debt, subordinated capital instruments, foreign-currency bonds, and overseas-subsidiary-related exposures each carry different risks: structural subordination, loss absorption, currency and liquidity risk, and jurisdictional risk. Investors should not compare bonds only by the Hana brand name; they should confirm the legal issuer, debt ranking, currency, presence or absence of guarantees, and loss-absorption provisions.

Capital Structure, Liquidity and Funding

Hana Bank’s capital structure is a major strength supporting senior credit. At end-March 2026, CET1 capital was approximately KRW 34.7tn, total BIS capital was approximately KRW 37.0tn, and RWA was approximately KRW 213.8tn. The CET1 ratio was 16.24%, the Tier 1 ratio was 16.42%, and the BIS ratio was 17.32%. Although these ratios declined modestly from end-2025, they remain sufficiently thick on a bank-alone basis. The bank has substantial room to absorb normal increases in credit costs or RWA, and short-term capital shortage is not a primary concern.

In assessing capital ratios, the level and direction should be separated. The level is strong. A CET1 ratio in the 16% range is defensive even among major Korean banks and provides comfort to senior bondholders. In terms of direction, however, RWA increased in 1Q26 and the CET1 ratio declined. At the HFG consolidated level, strengthening shareholder returns, maintaining CET1 above 13%, and improving ROE are important management themes. Hana Bank’s standalone capital is thick, but because the group is simultaneously pursuing shareholder returns, non-bank growth, loan growth, and RWA management, the degree to which bank-alone capital is maintained conservatively requires continued monitoring.

Deposits are the centre of funding. At end-March 2026, deposits were approximately KRW 396.2tn, borrowings were approximately KRW 27.9tn, and debentures were approximately KRW 35.8tn. Debentures and borrowings are important, but deposits are overwhelmingly large in the context of the overall bank balance sheet. This is a fundamental support for commercial-bank credit. For finance companies with excessive dependence on market funding, spread widening or a shift in investor sentiment can quickly become liquidity risk. In Hana Bank’s case, deposits support the core funding base, so funding stability is qualitatively high.

Deposit quality is also improving. Low-cost deposits on a bank-accounting basis increased from approximately KRW 114.9tn at end-2023 to KRW 119.5tn at end-2024, KRW 125.2tn at end-2025, and KRW 133.0tn at end-March 2026. Core deposits also increased over the same period, from approximately KRW 79.6tn to KRW 84.3tn, KRW 89.2tn, and KRW 93.8tn. The low-cost deposit ratio was 35.0% at end-March 2026, and the core deposit ratio was 24.7%. This supports NIM improvement and funding stability. Low-cost deposits are not merely cheap funding; they are also an indicator of the stickiness of customer relationships.

There are, however, constraints on liquidity analysis. The English IR Databook used in this work did not provide sufficient confirmation of Hana Bank’s standalone LCR, NSFR, foreign-currency LCR, or maturity gaps by currency. HFG consolidated and Korean regulatory liquidity management naturally exist, but this report does not assert unverified figures. For senior issuer credit, the assessment is limited to the qualitative support from the deposit base, low-cost deposits, capital, market access, and ratings. For investment decisions in foreign-currency bonds, investors should additionally verify foreign-currency LCR, foreign-currency maturities, foreign-currency bond redemptions, dollar funding markets, and hedging costs in a KRW depreciation scenario.

The capital and funding structure can be summarised as follows. Amounts are in KRW trillion.

This table supports the assessment that Hana Bank’s capital and funding are currently strong. Capital ratios are high, deposits are deep, and low-cost deposits are increasing. As a result, an increase in the NPL ratio to 0.37% does not undermine senior-credit stability. At the same time, RWA is increasing, coverage is declining, and the SME delinquency ratio is rising, so investors need to continue monitoring how far the strength in capital and funding can absorb deterioration.

Rating Agency View

Hana Bank’s international ratings are high investment grade. The External Rating sheet in HFG’s 1Q26 IR Databook shows Hana Bank’s long-term ratings as S&P A+, Moody’s Aa3, and Fitch A, and its short-term ratings as S&P A-1, Moody’s P-1, and Fitch F1. The rating levels confirmed in this work are consistent with the franchise, deposit base, capital, earnings capacity, and market access discussed in this report.

Two points should be separated when reading the ratings. First, the bank’s high ratings support market access and investor recognition for bank senior bonds. Second, the extent to which rating agencies incorporate systemic support, and whether there are government-support notches, has not been confirmed from the official IR materials used in this work. Therefore, the high ratings should not be used to treat Hana Bank bonds as equivalent to Korean sovereign bonds or government-guaranteed bonds.

The original detailed rating-agency reports were not sufficiently reviewed in this work. BCA, SACP, government-support notches, and the full upgrade/downgrade triggers therefore remain unverified items. However, the rating levels confirmed in the Databook and on HFG’s official ratings page are sufficient to confirm that Hana Bank is an issuer with high-end credit quality among Asian investment-grade banks. For senior issuer credit assessment, the ratings are consistent with the financial, capital, and asset-quality analysis in this report.

Potential rating pressure factors include sustained deterioration in asset quality, rising delinquencies in SME, SOHO, construction, and real-estate-related exposures, further decline in NPL coverage, higher credit costs, a clear decline in the CET1 ratio, deterioration in foreign-currency liquidity indicators, deterioration in the Korean banking system or sovereign assessment, and an excessively aggressive group capital policy. Conversely, if asset quality stabilises, NIM improvement is maintained, low-cost deposits continue to grow, and the CET1 ratio remains around 16%, the stability of the current ratings should be high.

The caution in using ratings for investment decisions is that ratings indicate issuer credit, not the relative value or price of individual bonds. This report has not checked live bond prices, spreads, CDS, or same-maturity comparisons. Therefore, Hana Bank’s credit quality can be assessed as strong, but no conclusion is drawn that any specific bond is cheap or expensive. Relative-value assessment requires spread comparison among Hana Bank senior bonds, Hana group holding-company debt, subordinated capital instruments, major Korean bank bonds such as KB, Shinhan, and Woori, and A-range bank bonds in other countries.

Credit Positioning

Within Asian investment-grade banks, Hana Bank is one of the important issuers for analysing major Korean commercial-bank risk. It is not a high-growth emerging-market bank, a securities-company-led market-finance issuer, or a government-guaranteed policy financial institution. It is a major commercial bank that funds itself through deposits, lends to households, SMEs, and large corporates, and builds foreign-exchange, payments, trust, and fee income. The credit theme is not rapid growth, but stability supported by a mature banking franchise, deposits, capital, and regulatory supervision.

Its relative position among major Korean banks is top-tier, but additional comparison is needed before calling it the strongest. KB Kookmin Bank and Shinhan Bank are strong peers in terms of total assets, deposits, loans, ratings, and capital. Hana Bank has a combination of approximately KRW 564tn in total assets at end-March 2026, a CET1 ratio of 16.24%, Moody’s Aa3, S&P A+, and Fitch A, which is sufficiently strong for bank senior credit. At the same time, its asset scale is somewhat smaller than the levels confirmed in recent reports for Shinhan Bank and KB Kookmin Bank. In peer comparison, it is therefore more conservative to view Hana Bank as “one of the large top-tier banks.”

Hana Bank’s distinctive features are its foreign-exchange and international-business profile and HFG’s integrated financial capabilities. The bank has a history of integration with the former Korea Exchange Bank and can utilise HFG’s global network and foreign-currency/trade-finance customer access. This is a differentiating factor for the corporate franchise, but it should not be equated with the bank’s direct assets and liquidity. At the same time, the bank has sensitivity to foreign-currency funding markets, so in periods of dollar-funding stress or KRW depreciation, the market may view it more cautiously than a purely domestic deposit bank.

From a senior-bond perspective, Hana Bank can be treated as a defensive Korean bank exposure. Senior debt issued by the bank itself relies more directly on the bank balance sheet than holding-company debt and is supported by deposits, loans, capital, and regulatory supervision. High international ratings, a low NPL ratio, a CET1 ratio in the 16% range, and growth in low-cost deposits are major supports for senior bondholders.

Hana Bank should not, however, be treated as a near-risk-free issuer. As a Korean bank, macro sensitivity is unavoidable. Household debt, housing prices, SMEs, SOHO borrowers, construction and real estate, foreign-currency funding, the KRW exchange rate, and group capital policy all affect the credit view. In particular, the 1Q26 data showed increases in the NPL ratio, delinquency ratio, and SME delinquency ratio, and a decline in NPL coverage. These do not yet materially impair credit quality, but they provide clues as to which indicators may deteriorate first within an otherwise strong bank.

For subordinated capital instruments, the credit positioning changes materially. Even if the bank’s standalone credit quality is strong, Tier 2 and AT1 instruments have loss-absorption features and are exposed to supervisory discretion and non-viability triggers. Hana Bank’s CET1 ratio is thick, and near-term trigger risk does not appear high, but investment decisions in subordinated capital instruments require confirmation of coupons, calls, resets, principal write-downs, ranking, and regulatory treatment. It is risky to transfer the senior-bond credit view directly to subordinated capital.

This report does not draw a conclusion on market relative value. Live bond prices, spreads, CDS, and same-maturity comparisons have not been checked. From a credit standpoint alone, Hana Bank can be assessed as a high-quality issuer within Korean bank senior risk. However, the actual investment decision should be made after confirming whether the spread is adequate relative to rating, liquidity, maturity, currency, issuer hierarchy, and peer comparison.

Key Credit Strengths and Constraints

Hana Bank’s main strengths are: (1) its deposit, lending, payments, and foreign-exchange franchise as a major Korean commercial bank; (2) deposit-led funding, including low-cost deposits; (3) thick capital, with a CET1 ratio of 16.24% at end-March 2026; (4) bank-alone net income of approximately KRW 3.75tn in 2025 and approximately KRW 1.10tn in 1Q26; and (5) long-term ratings of S&P A+, Moody’s Aa3, and Fitch A, and associated market access. These factors strongly support repayment capacity and liquidity for bank senior debt.

The main constraint is asset quality that remains low in absolute terms but is moving in a weaker direction. The NPL ratio rose to 0.37% at end-March 2026, the delinquency ratio rose to 0.39%, and NPL coverage fell to 123.5%. The SME delinquency ratio of 0.61%, SOHO delinquency ratio of 0.56%, and SME construction delinquency ratio of 1.44% may reflect stress in Korea’s domestic demand, construction, real estate, and self-employed borrowers. NIM and low-cost deposits are current supports, but earnings resilience would be tested if rate cuts, deposit competition, lending regulations, and rising credit costs occur together.

Foreign-currency liquidity and group capital policy also remain constraints. Hana Bank has strengths in foreign exchange and international operations, but it is affected by US dollar funding markets, the KRW exchange rate, foreign-currency bond redemptions, and overseas investors’ risk appetite toward Korean banks. HFG’s stronger shareholder returns have a positive aspect for the group assessment, but changes in capital allocation among non-bank subsidiaries, RWA growth, credit costs, dividends, and share buybacks require monitoring, particularly for subordinated capital instruments. Korean household-lending regulations, DSR implementation, policy pressure on loan and deposit rates, and capital-buffer requirements may affect loan growth, NIM, and shareholder-return capacity. High ratings and the scope for institutional support in a crisis are not the same as a government guarantee.

Downside Scenarios and Monitoring Triggers

The most realistic downside scenario is one in which delinquencies in SME, SOHO, construction, and real-estate-related exposures continue for several quarters and migrate into NPLs and credit costs. The overall NPL ratio at end-March 2026 remains low, but investors need to look not only at the overall delinquency ratio but also at segment delinquency ratios for SMEs, SOHO borrowers, construction, real estate and leasing-related sectors, accommodation and food services, wholesale and retail, and similar sectors. If the SME delinquency ratio rises further from the 0.6% range and NPL coverage approaches 100%, provisioning pressure and downside to earnings should be incorporated earlier.

The second downside scenario is one in which NIM decline and higher credit costs occur simultaneously. In 1Q26, NIM improvement coincided with low credit loss provisions. However, if rate cuts, deposit competition, lending regulations, and rising delinquencies overlap, net income and internal capital generation would come under pressure. Third, if the CET1 ratio clearly falls below 16% due to RWA growth or group capital policy and then moves toward the low-15% range, caution would rise first for subordinated capital instruments rather than senior bonds.

Foreign-currency liquidity stress also remains a risk. If US dollar funding-market tension, KRW depreciation, risk aversion toward the Korean financial sector, and a peer credit event occur together, Hana Bank’s foreign-currency funding costs and spreads may rise. High ratings and market access as a major bank are supports, but for foreign-currency bonds investors should verify liquidity by currency, maturity dispersion, foreign-currency LCR, hedging, and peer spreads.

Monitoring triggers include sequential increases in delinquencies in SME, SOHO, construction, and real-estate-related exposures; the NPL ratio settling above the 0.4% range; NPL coverage approaching 100%; increases in credit loss provisions; the CET1 ratio falling below 16%; stagnation in low-cost deposits and renewed NIM decline; deterioration in foreign-currency liquidity indicators; and more cautious rating outlooks or rating-agency commentary. In the base case, these factors do not materially impair senior credit in the near term, but they require quarterly review.

Credit View and Monitoring Focus

Hana Bank’s current credit quality can be assessed as strong investment-grade bank credit even within the Korean banking sector. The direction of senior credit is broadly stable, and bank senior bonds issued by the operating bank can be a high-quality Korean bank exposure from a credit perspective. The basis for this view is deposit-led funding, a CET1 ratio in the 16% range, a low NPL ratio, strong net income, and long-term ratings of S&P A+, Moody’s Aa3, and Fitch A. However, regulatory liquidity ratios, foreign-currency liquidity, and individual bond spreads have not been confirmed and require separate review for investment decisions.

The credit view is not a “set and forget” view. In 1Q26, the NPL ratio, delinquency ratio, and SME/SOHO delinquency ratios rose, while NPL coverage declined. Whether this remains a one-off movement or develops into structural deterioration through SME, SOHO, construction, and real-estate-related exposures is the most important issue ahead. HFG’s stronger shareholder returns and capital needs at non-bank subsidiaries also require more careful review for subordinated capital instruments.

Investors should separately assess Hana Bank operating-bank senior bonds, Hana Financial Group holding-company debt, Tier 2, and AT1 instruments. Holding-company debt may require additional compensation for structural subordination, although whether the actual compensation is sufficient remains an unverified market-level issue. Tier 2 and AT1 instruments should be assessed separately, with loss-absorption terms, calls, coupons, and regulatory triggers as core assumptions.

Short Summary & Conclusion

KEB Hana Bank / Hana Bank is the core bank of Hana Financial Group and a major Korean commercial bank with broad operations in deposits, lending, payments, and foreign exchange. It is assessed as a strong investment-grade bank credit, supported by the bank-alone deposit base, growth in low-cost deposits, a CET1 ratio in the 16% range, and international long-term ratings of Aa3/A+/A. The direction is broadly stable for senior bonds, but rising delinquencies in SME, SOHO, construction, and real-estate-related exposures, together with declining NPL coverage, require continued monitoring. Investors should distinguish between bank senior bonds, holding-company debt, and subordinated capital instruments, and should check asset quality, CET1, foreign-currency liquidity, and group capital policy.

Sources

Key sources confirmed:

• Hana Financial Group, 1Q26 IR Databook, official HFG IR download, accessed 2026-05-15. Used to confirm Hana Bank income statement, balance sheet, NIM, loans and deposits, asset quality, capital ratios, and external ratings.
• Hana Financial Group, 4Q25 IR Databook, official HFG IR download, accessed 2026-05-15. Used to confirm full-year 2025 indicators and historical comparisons.
• Hana Financial Group, 1Q26 HFG Presentation (ENG), official HFG IR download, accessed 2026-05-15. Used to confirm explanations of 1Q26 earnings, NIM, asset quality, capital, shareholder returns, and subsidiary performance.
• Hana Financial Group, 4Q25 HFG Presentation (ENG), official HFG IR download, accessed 2026-05-15. Used to confirm full-year 2025 earnings commentary.
• Hana Financial Group Databook page, accessed 2026-05-15.
  https://www.hanafn.com/en/ir/financial/databookDetail.do
• Hana Financial Group IR Events & Presentations page, accessed 2026-05-15.
  https://www.hanafn.com/en/ir/info/presentationsList.do
• Hana Financial Group Credit Ratings page, accessed 2026-05-15.
  https://www.hanafn.com/en/ir/creditratingList.do
• Hana Financial Group Global Network page, accessed 2026-05-15.
  https://www.hanafn.com/en/info/network/globalNetwork.do
• Hana Financial Group Hana Network page, accessed 2026-05-15.
  https://www.hanafn.com/en/info/network/hanaNetwork.do

The key figures used in the body of this report are, in principle, based on the Hana Bank standalone sheet in HFG’s 1Q26 IR Databook. Where HFG consolidated figures are used, this is explicitly stated in the text. The key figures extracted from official materials were saved as internal structured work data, but the official IR materials listed above should be treated as the source documents for public-source purposes.

Unverified / Pending

• Hana Bank’s standalone audited English annual report for 2025 could not be confirmed from HFG’s official Annual Report page as of 2026-05-15, so the full-year 2025 and 1Q26 analysis mainly used HFG’s 4Q25 and 1Q26 IR materials.
• Sufficient time series for the bank-alone LCR, NSFR, foreign-currency LCR, maturity gap by currency, and foreign-currency funding costs are not included in the body tables. Additional confirmation is needed before investing in foreign-currency bonds.
• Offering circulars, trust deeds, loss-absorption provisions, call provisions, cross-default clauses, and tax provisions for individual foreign-currency bonds, covered bonds, Tier 2, and AT1 instruments have not been confirmed. These need to be checked before investing in individual bonds.
• Live bond prices, spreads, CDS, same-maturity bond comparisons, and market indications have not been checked. Relative-value assessment remains unfinished, and this report is limited to issuer credit assessment.
• The latest full detailed reports from S&P, Moody’s, and Fitch, including BCA/SACP, support notches, and full upgrade/downgrade triggers, have not been confirmed. The rating levels confirmed in the HFG Databook and official ratings page were used.
• Official market share, total-asset ranking, deposit ranking, and loan ranking among major Korean banks have not been strictly recalculated in this report. Hana Bank is treated as one of South Korea’s major banks, while specific ranking is left unverified.
• Detailed balances for real-estate project finance, trust projects, individual large exposures, collateral type, and region could not be sufficiently confirmed from the public materials used in this work. Construction and real-estate-related risks should be further checked in future quarterly disclosures.