Record-High Earnings and Expanded Shareholder Returns Drive Shinhan Financial Group Target Price Higher

[Financial News] BNK Securities raised its target price for Shinhan Financial Group from 130,000 won to 140,000 won, positively assessing the company’s record-high earnings this year, expanded shareholder returns and stronger competitiveness among its overseas subsidiaries. The brokerage maintained its “Buy” rating.
Kim In, a researcher at BNK Securities, said on the 29th, "Despite increases in education and corporate taxes this year, Shinhan Financial Group is expected to continue posting record-high earnings, driven by growth in interest and non-interest income and reduced non-operating expenses, including fines. Its strengthened competitiveness through differentiated overseas expansion among domestic banks is also positive."
BNK Securities forecasts Shinhan Financial Group’s net income attributable to controlling shareholders at 5.713 trillion won this year, up 14.9% from the previous year. Net operating revenue is expected to rise 8.4% to 16.741 trillion won, while operating profit is projected to increase 11.1% to 7.8 trillion won.
Third-quarter net income attributable to controlling shareholders is forecast to reach 1.5191 trillion won, up 6.7% from the same period a year earlier. Interest income is expected to increase 6.4% to 3.1365 trillion won, while non-interest income is projected to rise 6.4% to around 1 trillion won.
Kim explained, "Despite rising market interest rates, a decline in the KOSPI Composite Index and the inclusion of overseas losses from the securities business, non-interest income is expected to increase on the back of the base effect from the same period last year and higher fee income. Average daily trading value also rose from 23.6 trillion won in the third quarter of last year to 52.9 trillion won this year."
The growth of the overseas subsidiaries was also viewed positively. Last year, net income after reflecting ownership stakes reached 260 billion won at Shinhan Bank Vietnam, 180 billion won at SBJ Bank in Japan and 57 billion won at Shinhan Kazakhstan. The combined net income of all overseas subsidiaries stood at 610 billion won, indicating that they are building competitiveness primarily in local retail banking.
Shareholder returns are also expected to expand. Shinhan Financial Group’s total shareholder return ratio is projected to rise from 50.2% last year to 52.4% this year. The estimate assumes 1.4 trillion won in cash dividends, 1.4 trillion won in approved share repurchases and cancellations, and an additional 200 billion won.
Kim said, "Shareholder returns will be further maximized with the application of separate taxation on dividend income and the introduction of tax-exempt dividends in 2027. Despite a return on equity (ROE) of 10%, the price-to-book ratio (PBR) is only 0.9 times." He added, "Considering the benefits of interest rate hikes, it is an alternative investment that can deliver stable returns amid heightened market volatility." 

[email protected] Bae Han-geul Reporter