Heungkuk Securities said on the 5th that JB Financial Group's high market share in foreigner credit loans is positive for profitability and that it is delivering the highest level of return on equity (ROE) in the sector. It initiated coverage with a Buy rating and a target price of 32,000 won. The previous trading day's closing price of JB Financial Group was 24,700 won.
Heungkuk Securities forecast JB Financial Group's operating profit next year at 1.056 trillion won and controlling shareholders' net profit at 769.1 billion won. Those figures are up 12% and 9%, respectively, from a year earlier.
Yoo Jun-seok, an analyst at Heungkuk Securities, said JB Financial Group has room to further improve its return on equity and has strong capabilities to secure future profitability. Yoo said, "It is taking proactive steps to develop new business areas, including expanding foreigner credit loans and entering overseas markets."
Yoo said, "JB Financial Group has achieved a 70% market share in foreigner credit loans and more than a 40% share in the foreigner used passenger car loan market," adding, "Given the structural increase in foreign nationals residing in Korea and the potential demand for loans, we expect a steep pace of loan growth to continue."
Yoo said, "JB Financial Group pays dividends quarterly, but because its structure concentrates a higher portion at year-end, we expect the common equity Tier 1 (CET1) ratio in the fourth quarter of this year (October–December) to edge down slightly from the previous quarter."
He added, "While it is somewhat disappointing that an immediate increase in the shareholder return ratio is difficult, considering the steady trend of profit growth, we believe the CET1 ratio can reach 13% by the end of next year."