Bank stocks surge, posting returns in the 20% range just this month

[Financial News] Bank stocks that had been relatively overlooked in the domestic stock market have delivered returns in the 20% range in just this month. The rally is seen as being driven by expectations of stable earnings and stronger shareholder returns.
According to the Korea Exchange on the 12th, the KRX Bank Index has surged 22.47% from the beginning of this month through the previous session. This far exceeds the 2.49% gain in the Korea Composite Stock Price Index (KOSPI) over the same period.
Until last month, the banking sector had been relatively sluggish. While the KOSPI jumped 23.97% and the KRX Securities Index soared 42.97% last month, the KRX Bank Index rose only 7.23%.
This month, however, investment has been concentrating in bank stocks that had previously underperformed. All four major financial holding companies have posted double-digit returns. Hana Financial Group has gained 25.67% so far this month, delivering the highest return, followed by Woori Financial Group (25.12%), KB Financial Group (21.67%), and Shinhan Financial Group (19.67%).
Kim Jae-woo, an analyst at Samsung Securities, analyzed, "Optimistic earnings guidance from banks this year, along with stronger shareholder returns over the two years from last year to this year, is driving share prices higher."
Hana Securities has maintained its "overweight" investment rating on the banking sector and raised its target prices for bank stocks by about 15%.
Choi Jung-wook, an analyst at Hana Securities, noted, "The rise in bank share prices is occurring globally, and there are hardly any countries other than Korea where large bank stocks are trading below a Price-to-Book Ratio (P/B Ratio) of 1." He pointed out, "It is only domestic bank stocks that continue to trade at such low valuations."
He went on to say, "If the market turns unstable, bank stocks are likely to serve as a more comfortable investment destination, given their very strong downside rigidity based on low valuations and dividend appeal." He added, "In the near term, we also see potential policy momentum from the Amendment to the Commercial Act, which is expected to benefit low P/B Ratio stocks, and from the Korean won stablecoin bill, where banks are expected to form the core of the consortia. For these reasons, we continue to maintain an overweight view on the banking sector."

jisseo@fnnews.com Seo Min-ji Reporter