NH Investment & Securities analyzed on the 10th that the dividend policy of the Industrial Bank of Korea is expected to strengthen its investment appeal to investors who prefer cash dividends. They also raised the target stock price from the previous 17,000 won to 19,000 won while maintaining their investment opinion of 'buy.' The closing price of the Industrial Bank of Korea on the previous trading day was 15,500 won.
The Industrial Bank of Korea decided on a dividends per share (DPS) of 1,065 won last year, with the dividend policy rising by 2.2 percentage points to 34.7% compared to the previous year. The target shareholder return rate disclosed in the value-up plan at the end of last year is a maximum of 35% with a common equity tier 1 (CET1) ratio of less than 12%. While the CET1 ratio is still only 11.3%, the dividend policy has expanded to the upper level of the shareholder return rate.
Jeong Jun-seop from NH Investment & Securities noted, "Due to the company's nature, shareholder returns are expected to be focused on dividends rather than stock buybacks and cancellations in the future," adding that "though it is difficult to exceed the CET1 ratio of 12% in the short term, the possibility of a decline in the current dividend policy is also limited." The dividend policy is expected to maintain levels around 35% for the next 2 to 3 years before increasing.
NH Investment & Securities expected that the standalone net profit of the Industrial Bank of Korea for this year and next year would reach 2.6 trillion won and 2.7 trillion won, respectively, marking increases of 5.7% and 4.5% compared to the previous year. The expected dividend yield is 6.9% last year, 7.3% this year, and 7.6% next year.
Jeong said, "For investors who prefer cash dividends, it remains an attractive high-dividend bank stock," adding that "from next year, the introduction of quarterly dividends is expected to reduce stock price volatility due to the ex-dividend status."
He added, "Currently, there are some Homeplus receivables secured loans, but the likelihood of them actually leading to defaults is low."