[Click eStock] "BNK Financial, Strong Earnings Expected with Rapid Regional Economic Recovery... Target Price Up 11%"

[Asia Economy Reporter Park Jihwan] Yuanta Securities maintained a 'Buy' rating on BNK Financial Group on the 12th, expecting strong earnings due to a rapid regional economic recovery, and raised the target price by about 11% from the previous 7,300 KRW to 8,000 KRW.

Jeong Taejun, a researcher at Yuanta Securities, stated, "First-quarter profits are expected to be 181.5 billion KRW, exceeding the consensus of 165 billion KRW by 10%," and evaluated, "The regional economy is recovering faster than concerns, so net interest margin (NIM) improvement and a larger-than-expected decrease in provision expenses are anticipated." Following a large-scale voluntary retirement program that exceeded expectations last quarter, expense ratios are also expected to improve significantly, contributing to strong earnings.

Bank interest income is expected to increase by 7.7% year-on-year and 4.4% quarter-on-quarter, as NIM is anticipated to improve further following the previous quarter. He explained, "This is due to the repricing effect of deposit interest rates and the rise in loan interest rates caused by additional increases in market interest rates." The repricing of deposit interest rates refers to the phenomenon where the impact of a base rate cut is reflected later in deposit rates than in loan rates.

Researcher Jeong analyzed, "Bank interest income is expected to increase by 12.4% year-on-year and 0.3% quarter-on-quarter," adding, "This is because growth in capital and securities continues."

He also explained, "Non-interest income is expected to increase by 41.3% year-on-year," but "a 2.4% decrease quarter-on-quarter is anticipated due to the disappearance of gains from loan asset sales in the previous quarter, despite growth in non-bank subsidiaries."