Hana Financial Group Jumps on Mid-Term Dividends and 2Q Earnings Expectations

17% Increase Since the 10th... Foreign Buying Surge
Q2 Earnings Also Expected to 'Hold Up'... Only Bank Sector Anticipated to Pay Interim Dividends

[Asia Economy Reporter Minwoo Lee] Foreign investors are flocking to buy shares of Hana Financial Group as positive expectations for the bank sector's only interim dividend and optimistic forecasts for second-quarter earnings emerge.

According to the Korea Exchange as of 9:40 a.m. on the 22nd, Hana Financial Group's stock price recorded 30,150 KRW. This is the first time since the 10th of last month that it has surpassed 30,000 KRW. After dropping to 25,750 KRW on the 10th, it has steadily risen by about 17%. Compared to Shinhan Financial Group (6.7%), KB Financial Group (7.1%), and Woori Financial Group (7.4%) during the same period, the increase is noticeably steeper. Foreign investors' buying momentum is also remarkable. From the 14th to the previous day, foreign investors purchased a total of 31.3 billion KRW worth of shares. Among the top 15 stocks with the highest net foreign purchases during this period, Hana Financial Group is the only financial holding company included.

The buying surge is interpreted as a result of expectations for better-than-anticipated second-quarter earnings. According to financial information provider FnGuide, Hana Financial Group is estimated to record a net profit of 616.9 billion KRW this year. This exceeds the existing market consensus of 576.2 billion KRW by more than 7%. Thanks to an increase in corporate loans, the loan growth rate is expected to rise by more than 1.5% compared to the previous quarter. Due to a surge in low-cost deposits and other factors, the net interest margin (NIM) is analyzed to be defensible with a decline of 3 basis points (1bp = 0.01 percentage points) from the previous quarter.

Even considering various provisions, net profit is expected to maintain the 600 billion KRW level. Researcher Suhyun Kim of Shinhan Investment Corp. stated, "Even after accounting for proactive loss provisions of 160 billion KRW related to COVID-19 and 60 billion KRW related to Lime Fund provisions, net profit will exceed 600 billion KRW," adding, "Strong stock market performance and gains from securities trading and the securities subsidiary are also expected."

Expectations for the interim dividend also played a significant role. As the only financial holding company conducting an interim dividend, there is growing anticipation as it provides a gauge for the year-end dividend tendency and scale in the banking sector. Especially since financial authorities have recommended restraint on dividends due to financial market instability and real economy contraction caused by COVID-19, future actions are drawing attention. Hana Financial Group is scheduled to hold a board meeting on the 23rd to decide on the interim dividend.

Researcher Kim explained, "Since interim dividends have been consistently paid, market expectations are already reflected in the stock price," and added, "If dividend policy consistency is not maintained due to external pressure, some long-term investors may withdraw, which could contradict the purpose of the stock market stabilization fund established in April with participation from the banking sector."