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(Photo= Yonhap news) |
[Alpha Biz= Reporter Kim Sangjin] LS Securities has reiterated its "Buy" rating for Hana Financial Group, maintaining a target price of 70,000 KRW. This decision follows Hana Financial Group's Q3 earnings announcement, which highlighted improvements in shareholder return predictability.
LS Securities expects Hana Financial Group’s total shareholder return ratio for this year to be around 38%. Based on the targeted shareholder return ratio, Hana Financial Group is projected to expand share buybacks and cancellations to between 600 billion and 800 billion KRW in 2025–2026. The introduction of quarterly equal dividends and consistent shareholder returns, even without increases in the Common Equity Tier 1 (CET1) ratio—provided it remains within the 13–13.5% range—are also expected to improve predictability.
The securities firm noted that achieving a return on equity (ROE) target of 10% remains challenging given Hana's current capital size of 42 trillion KRW, with a minimum net income of 4.5 trillion KRW needed by 2026–2027.
Key points in Hana Financial’s recently announced value enhancement plan include a gradual increase in the shareholder return ratio to 50% by 2027, quarterly equal dividends, a CET1 ratio target range of 13–13.5%, and a 10% ROE goal. Additional plans include share buybacks and cancellations worth 1.5 trillion KRW, supplementing an existing 3 trillion KRW program.
Hana Financial reported a Q3 net income of 1.16 trillion KRW, exceeding market expectations. Although net interest income declined, fee income surpassed 600 billion KRW, with additional gains from foreign exchange, non-operating income, and a project financing (PF) provision reversal.
While a drop in funding costs may limit the decline in net interest margin (NIM), continued rate cuts next year are expected to impact Hana's topline growth. Future profitability may hinge on how well non-banking subsidiaries, such as card, securities, and capital companies, can offset the slowdown in banking profit growth.
LS Securities positively assessed Hana's more detailed and predictable shareholder return policy but noted that some expectations are likely already reflected in the current stock price. The brokerage firm added that given the rate cut trend and low asset growth, further profitability improvements may be challenging.
Alphabiz Reporter Kim SangJin(letyou@alphabiz.co.kr)
