While foreign investors have poured into South Korea’s major banking stocks over the past year, Woori Financial Group remains an outlier. Unlike peers KB, Hana and Shinhan— whose foreign ownership ranges from 60 percent to nearly 80 percent — Woori is the only top-tier financial group with less than 50 percent foreign ownership.

As of Tuesday, foreign investors' total stake in Woori stood at 46 percent, compared to KB Financial Group’s 78 percent and Hana’s 67 percent. The gap, despite a broad rally in Korean financial stocks, suggests that global investors may view Woori as less attractive than its peers.

One likely reason for Woori’s relatively low foreign ownership is its unique shareholder structure, a legacy of its privatization.

To recover 12 trillion won ($8.81 billion) in public funds, the government strategically sold Woori shares to private investors in 2016, provided they held a more than 4 percent stake. Unlike its peers, Woori still has significant stakes held by domestic strategic investors.

Currently, Korea Investment & Securities, Kiwoom Securities, Eugene PE and Taiwan's Fubon Life Insurance collectively hold about 14 percent. The Korea Deposit Insurance Corporation, which held 21 percent after the 2016 sales, fully exited last year. Woori’s employee stock ownership association holds another 8.2 percent.

“Most of these major shareholders are domestic. It’s rare for a Korean financial group to have this structure, which effectively keeps foreign ownership low,” said Kim Woo-jin, senior banking analyst at the Korea Institute of Finance. “What matters more than the headline figure is the share of foreign holdings relative to the actual tradable float.”

While the exact figure wasn’t disclosed, a company official noted that Woori’s foreign ownership would be higher if measured against the float — the shares freely traded on the market.

This concentrated ownership not only reduces foreign accessibility but also raises overhang concerns — the risk that major shareholders could offload large amounts of shares.

But after the recent exit of another major shareholder, IMM Private Equity, Woori’s CFO said in a February earnings call that no further divestments by major shareholders are expected, adding, “We believe Woori’s overhang risk has been fully resolved.”

Woori’s limited business diversification also weighs on sentiment. Over 90 percent of its profit comes from banking, compared to 60 percent at KB and 70 percent at Shinhan. Hana, while similarly reliant on banking, is still supported by more developed and balanced non-bank operations.

“Investors favor banks with diversified income and scalable growth beyond lending,” said Rena Kwok, senior credit analyst at Bloomberg Intelligence. “Woori remains more domestically concentrated and may still be viewed as lagging in strategic clarity, particularly in expanding into non-banking businesses.”

Chair and CEO Yim Jong-yong has been trying to change that. Since taking office in March 2023, he has led the integration of Tongyang Life and ABL Life and relaunched Woori’s securities business. Once the insurers are officially incorporated in July, the group expects its reliance on banking to decline to 82 percent.

Woori is also working to improve its financial fundamentals. It remains the only major Korean banking group with a Common Equity Tier 1 ratio below 13 percent, posting 12.42 percent in the first quarter. But it logged the largest CET1 gain among peers and aims to reach 12.5 percent this year and 13 percent by 2027.

Return on equity also trails peers. Woori posted just over 9 percent, excluding one-off expenses, compared to KB’s 13 percent, Shinhan’s 11.3 percent and Hana’s 10.6 percent. The firm expects ROE to improve by up to 1 percentage point after the insurance integration.

“The key for Woori isn’t short-term performance, but strengthening its earnings structure,” said KIF’s Kim. “It’s not about whether non-bank units exist, but whether they generate solid returns. Strong operations, combined with credible leadership, can make Woori more appealing to global investors.”

Kim also noted growing investor confidence in leadership. Since Yim took office, Woori’s stock has climbed 90 percent over three years, with foreign ownership increasing by nearly 10 percentage points.

“Ultimately, investors look at leadership — can the CEO deliver returns?” Kim said. “Even if earnings are still catching up, investor confidence in leadership can drive capital inflows.”

A local market expert, speaking on condition of anonymity, echoed the sentiment, noting that Yim’s combination of bureaucratic experience and successful leadership at NH NongHyup Financial Group has earned him credibility. “If his leadership gains traction, it could send a strong signal to global investors. And with foreign ownership still low, there’s room for additional inflows that could lift the stock.”

Market trust has strengthened notably in recent months, with Woori ranking among the top 10 most purchased Kospi stocks by foreign investors this year. It is also the only one of the four major financial groups to see foreign net buying, totaling 75 billion won.

Kwok pointed to governance as another area in need of improvement. Woori came under legal scrutiny over alleged improper loans tied to its former chairman, resulting in a downgrade of its regulatory management rating and delaying its non-banking expansion.

“Scandals in Korea’s financial sector tend to have repercussions, and Woori’s handling of the fallout has exposed broader governance weaknesses. It evidently needs stronger board independence, better succession planning and tighter internal control systems," she said, adding Woori must also improve transparency in decision-making to align with global standards.