LS SECURITIES noted that shareholder returns at Hana Financial Group are continuously strengthening. It raised the target stock price from the previous 68,000 won to 75,000 won and upgraded its investment opinion from 'hold' to 'buy.' On the 4th, Hana Financial Group's closing price was 61,500 won.
On the 5th, Jeon Bae-seung, a research institute at LS SECURITIES, said, "Hana Financial Group has announced a buyback of 400 billion won and is continuing to strengthen shareholder return measures, including the introduction of a quarterly equal dividend policy."
Last year, Hana Financial Group's total shareholder return rate was 37.8%. The research institute explained, "Despite the rise in the won-dollar exchange rate, it actively managed risk-weighted assets and maintained a common equity capital ratio target level of over 13%."
LS SECURITIES expects Hana Financial Group to implement an additional buyback of approximately 150 billion won in the second half of this year. Consequently, the total shareholder return rate for this year is projected to reach 42.3%. The research institute stated, "While a stagnation in profitability is anticipated for 2025-2026, the enhanced capital management capabilities and strengthened shareholder return measures are positively evaluated." They also mentioned, "The current stock price, at a price-to-book ratio (PBR) of 0.4 times, is in the undervalued range compared to expected profitability."
Hana Financial Group's net profit for the fourth quarter of last year was 513.5 billion won, aligning with market expectations. Notably, interest income stagnation and a foreign exchange loss of 139.4 billion won led to poor performance in the non-interest income sector. Non-bank sectors saw significant profit reductions compared to the previous quarter due to the accrual of additional provisions for real estate project financing (PF).
The research institute projected, "Similar to last year, this year, the loan growth rate will remain low," adding that "the net interest margin (NIM) is expected to further decline by around 5 basis points (1 basis point = 0.01 percentage point)." They noted that stagnation in interest income is inevitable.
They also stated, "Considering the residual PF loss recognition at non-bank subsidiaries and the upward trend in the bank's ongoing default rate, it is unlikely that the default rate will significantly decrease in 2025." They further remarked, "The deterioration trend in key soundness indicators such as the new non-performing loan (NPL) occurrence rate and the actual delinquency rate continued into the fourth quarter."
To achieve the target return on equity (ROE) of 10%, it is necessary to expand the scale of operating net income to at least 4.5 trillion won. The research institute added, "If we sum the last year's end dividend of 1,800 won and the forecasted per-share dividend of 925 won from the quarterly equal dividend this year, we can expect a dividend yield of about 4.5% between February and April."