[Click eStock] "Korea Financial Group, Solid Earnings Growth... Target Price Up 7%"

[Asia Economy Reporter Minji Lee] On the 20th, KB Securities maintained a buy rating on Korea Financial Group and raised the target price by 7.7% from the previous level to 140,000 KRW.

In the first quarter, Korea Financial Group's consolidated net income attributable to controlling shareholders was 401.8 billion KRW, a 17% increase compared to the previous quarter. The previous quarter included a 115.3 billion KRW gain from the equity method disposal related to KakaoBank, and considering this, it is analyzed that the net income grew by 56% compared to the previous quarter. This is interpreted as a significant improvement in IB (Investment Banking) and trading income.

In the first quarter, the IB division and other fees recorded 170.6 billion KRW, a 27% increase from the previous quarter. This was mainly due to the rise in domestic non-residential real estate PF loans and debt guarantee commitments. Seunggeon Kang, a researcher at KB Securities, explained, "Considering that the quarterly average profit was around 84 billion KRW until 2019 and the first half of last year, the growth trend is restarting," adding, "The IB income is defending the brokerage division, which is experiencing weakening momentum." It is predicted that if the effect of the COVID-19 vaccine expands, performance will significantly increase due to the normalization of overseas deals.

Trading and product profit and loss reached 284.9 billion KRW, a 73.5% growth compared to the previous quarter. The consolidated subsidiary's performance was 56.2 billion KRW, and excluding consolidation adjustments, it is about 100 billion KRW. Researcher Kang said, "By leveraging the strengths of the holding company, efficient allocation of capital is being carried out, maximizing the performance of subsidiaries."

Accordingly, KB Securities raised its annual net income attributable to controlling shareholders by 7.8% from the previous forecast to 1.1175 trillion KRW. Researcher Kang stated, "Reflecting the improvement trend in the IB division's performance, we are revising upward the net income forecast," and added, "All divisions are exceeding expectations, so we maintain it as the top preferred stock in the securities sector."