Hana Financial Group Inc. Raises Shareholder-Return Expectations on Strong Earnings; Target Price Increased

[Financial News] Shinhan Investment & Securities maintained its 'Buy' rating on Hana Financial Group Inc. on the expectation of shareholder returns driven by strong earnings, while raising its target price from KRW 150,000 to KRW 160,000 on the 2nd.
Eun Kyung-wan, a researcher at Shinhan Investment & Securities, explained, "Hana Financial Group Inc. has high earnings visibility in the second half compared with competing banks, given its relatively limited exposure to alleged collusion involving government bonds and the modest earnings contribution from its securities affiliate. Although the change in our annual earnings estimate is limited, we raised the target price to reflect a change in the valuation reference period and an increase in the shareholder-return ratio."
Hana Financial Group Inc.’s third- and fourth-quarter net income attributable to controlling shareholders is expected to rise 14.9% year on year to KRW 1.3 trillion, exceeding consensus by 5.3%.
Regarding the factors behind the strong earnings, Eun explained, "Although there has recently been upward pressure on funding costs due to increases in corporate deposits and other factors, the trend of improving net interest margins remains valid considering the consecutive domestic policy-rate hikes in July and August. Won-denominated loans are expected to increase by more than 1%, supported by balanced growth in household and corporate lending."
Eun added, "The won-dollar exchange rate fell by more than KRW 160 during the third and fourth quarters, generating approximately KRW 150 billion in foreign-currency translation gains. In addition, some refunds related to penalties involving Hong Kong equity-linked securities may be possible."
The analyst also expected shareholder returns to strengthen on the back of the group’s improved capital position. Eun forecast, "In the fourth quarter, we expect the company to announce additional share buybacks and cancellations worth approximately KRW 300 billion, exceeding market expectations. Including this amount, total annual shareholder returns will reach KRW 2.23 trillion, bringing the total shareholder-return ratio to 51.0%."

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