Heungkuk Securities on the 17th said BNK Financial Group is expected to show a clear trend of earnings improvement ahead along with a high shareholder return rate. It initiated coverage with a "Buy" rating and a target price of 25,000 won. BNK Financial Group's previous trading day closing price was 19,150 won.
Yoo Jun-seok, a researcher at Heungkuk Securities, said of BNK Financial Group, "We judge that a swift multiple (price-to-earnings multiple) re-rating will occur at each juncture where stronger earnings power and expanded shareholder returns are confirmed."
Yoo assessed that BNK Financial Group's interest income will increase this year. Yoo said, "We expect this year's interest income to reach 778.2 billion won, up 5.8% from the same period a year earlier," adding, "Within the loan segment, household and corporations are expected to grow 1.4% and 2%, respectively."
Net interest margin (NIM) was also evaluated to improve. Net interest margin is a key profitability indicator calculated by dividing the remainder—revenue from a financial institution's asset management minus funding costs such as deposit interest—by total operating assets.
Yoo said, "Net interest margin is projected at 1.85%, up 4 basis points quarter over quarter (1 bp = 0.01 percentage point), reflecting the rise in market interest rates and improvements in the loan portfolio."
Improvement in the shareholder return rate was also cited as a key factor for the positive outlook.
Yoo said, "We expect BNK Financial Group's total shareholder return rate this year to be 45.1%," adding, "Along with the first-quarter earnings release, there will be an announcement of a 55 billion won share buyback."
He added, "Including an additional 90 billion won share buyback in the second half, the annual share repurchase and cancellation is projected to reach 145 billion won."