Hanwha Investment & Securities said it expects the return on equity (ROE) of KB Financial to reach its highest level in 15 years on the back of profit growth and expanded shareholder returns. It maintained a Buy rating and raised the target price to 226,000 won from 210,000 won. The previous session's closing price of KB Financial was 164,200 won.
Kim Do-ha, an analyst at Hanwha Investment & Securities, said, "With the biggest boost coming from improvement in banks' net interest margin and revenue growth in the securities segment, KB Financial's adjusted ROE in 2026 is projected to be 11%," adding, "This is the highest level since 2011."
Hanwha Investment & Securities expected KB Financial's adjusted earnings per share (EPS) growth rate in 2026 to be the highest among bank holding companies at 22%. That is because, in addition to a 15% profit growth rate, share repurchases and cancellations are projected to reduce the number of shares outstanding by more than 5%.
It cited an upward revision of the target price-to-book ratio (PBR) due to ROE improvement and an increase in book value per share (BPS) as reasons for the higher target price. Hanwha Investment & Securities applied a target PBR of 1.2 times for KB Financial.
It also projected that stronger profitability would positively affect the capacity for shareholder returns. Kim said, "For KB Financial, the common equity tier 1 (CET1) ratio has meaning beyond a simple soundness indicator, as it becomes a resource for shareholder returns, which underscores the significance of profitability improvement."
Kim added, "If authorities shorten the period for including penalty surcharges related to operational risk, an increase of about 10 basis points in the CET1 ratio in the first half of 2027 is also anticipated," and analyzed, "Shareholder return capacity could increase by about 500 billion won, and the annual payout ratio could rise to the mid-60% range."
Hanwha Investment & Securities also cited KB Financial's business structure as a strength. It explained that, beyond banking, the portfolio of affiliates such as securities and insurance is evenly diversified, enhancing resilience to changes in industry conditions.
Kim said, "Among major financial holding companies, the highest return on risk-weighted assets (RoRWA) and a diversified affiliate mix are the characteristics that best fit the sector outlook," adding, "Beyond the current favorable conditions, if fund inflows into the securities industry continue to expand, the fact that the group can absorb those benefits internally is also positive."