NH Investment & Securities noted on the 10th that it is lowering its target price for Shinhan Financial Group to reflect concerns over an economic slowdown. It maintained its investment opinion of 'Buy,' but the target price has been reduced by 3.95% from the previous 76,000 won to 73,000 won. The closing price of Shinhan Financial Group on the previous trading day was 49,500 won.
NH Investment & Securities projected that Shinhan Financial Group's fourth-quarter net income will record 601.3 billion won, a 9.4% increase compared to the same period last year. This figure falls short of market consensus. Seasonal factors, non-market securities valuation losses (decreased non-interest income), and increased expenses from voluntary retirement (increased selling and administrative expenses) are expected to occur.
In response, Jeong Jun-seop, a researcher at NH Investment & Securities, explained that 'the adjustment of earnings estimates considering a conservative economic outlook influenced the lowering of the target price.'
However, it seems unlikely to have a significant impact on shareholder returns. Research Institute Jeong noted, 'Although the fourth-quarter common equity tier 1 (CET1) capital ratio is expected to slightly decrease to 13.0% from 13.1% in the third quarter through active risk-weighted asset management, the fourth-quarter results are expected to fall short of consensus. However, as shareholder returns are more significantly influenced by the capital ratio than by quarterly results, it is not necessary to link this to concerns over shareholder returns.'
He added, 'Based on a solid capital ratio, this year’s dividend per share (DPS) is expected to be 2,220 won (555 won per quarter), with a share buyback and retirement of 1 trillion won (250 billion won per quarter, based on announcement). This represents respective increases of 60 won and 150 billion won compared to last year, and the total shareholder return ratio is also expected to expand to 44.5%, indicating that the trend of enhancing shareholder returns centered on share buybacks will continue.' He also mentioned, 'Shinhan Financial Group is currently buying back 200,000 shares daily, contributing to price stability.'