“Hana Financial Group Inc., shareholder return ratio seen reaching 50%; undervaluation to continue easing”

[Financial News] LS Securities Co., Ltd. expects Hana Financial Group Inc. to continue expanding shareholder returns on the back of solid earnings, with its shareholder return ratio forecast to reach around 50% this year. It maintained its “Buy” rating and target price of 165,000 won.
Jeon Bae-seung, an analyst at LS Securities Co., Ltd., said on the 26th, “Despite weak non-interest income, Hana Financial Group Inc. posted net income of 1.22 trillion won in the third quarter, in line with market expectations,” adding, “Record earnings at Bank of Hope and lower costs supported the high level of earnings.”
Hana Financial Group Inc.’s third-quarter net income rose 2.4% from the previous quarter. Total operating income fell 3.5% due to lower fee income and other factors, but the company maintained profitability as selling, general and administrative expenses and credit costs declined. In particular, Bank of Hope’s net income reached a record 1.19 trillion won. However, adjusted net income, excluding one-off factors such as foreign currency translation gains, was estimated at around 1.14 trillion won.
Weak performance at non-bank affiliates was cited as a headwind. Hana Securities’ third-quarter net income was just 10 billion won, while high funding costs and credit burdens were also expected to persist in the card and capital businesses. Analyst Jeon forecast, “As the decline in stock market trading value has continued since October, earnings contributions from non-bank businesses will remain low for the time being.”
By contrast, the possibility of expanding shareholder returns as capital adequacy improves was viewed positively. At the end of last September, Hana Financial Group Inc.’s common equity Tier 1 (CET1) ratio stood at 13.45%, up 0.18 percentage points from the previous quarter. Following the announcement of an additional share buyback and cancellation worth 250 billion won, the shareholder return ratio for this year was forecast to reach around 50%.
Analyst Jeon said, “After the fourth quarter, the effects of rising interest rates may be reflected in lending rates, potentially leading bank net interest margins (NIMs) to rebound,” adding, “Given the improved earnings-generating capacity and the continued push to expand shareholder returns, the trend toward easing the stock’s undervaluation is likely to continue.”

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