We expect the Bank of Korea to further ease its monetary policy as global economic slowdown threatens the Korean economy. The yield on the Korean Treasury bond (3yr) is expected to decrease to 2.8% in H2 2012, 0.7%p lower than in H2 2011 mainly due to possible policy rate cuts and strengthening of risk-averse sentiment as the global economic recovery has fallen short of expectations. The average KRW/USD exchange rate in 2012 is expected to register 1,135, a little higher than 1,108 in 2011. Upside and downside risks seem to co-exist in the equity market. Growth opportunities of banks are expected to be limited and profitability for domestic banks is also expected to worsen. Credit card companies are expected to experience a decline in the asset growth because of strengthened regulations to curb excessive competition. After the dramatic decrease in the stock market trading volume during Q2, the assets of securities firms are projected to increase modestly in Q3 2012. Although the total assets and premium income of both life and non-life insurance industry are forecasted to maintain the upward trend, the growth rate will be slowed.