[Click eStock] "DGB Financial, Annual Net Profit Forecast Raised... Target Price Up"

[Asia Economy Reporter Park Jihwan] IBK Investment & Securities maintained a 'Buy' rating on DGB Financial Group on the 25th, citing record-high net profits in the half-year, quarterly, and non-bank sectors, and raised the target price from 11,500 KRW to 13,000 KRW.

Kim Eungap, a researcher at DGB Financial Group, stated, "Due to balanced performance improvements in both banking and non-banking sectors, the consolidated net profit for Q2 reached 155.3 billion KRW, a 51% increase compared to the previous year," adding, "The cumulative net profit for the first half increased by 46%." Both quarterly and half-year cumulative net profits set all-time records.

Although there was a base effect from the reduction in provision expenses, it was explained that the increase in bank interest income and the expanded improvement in non-bank performance had a significant impact. The non-bank net profit for Q2 reached 81 billion KRW, marking an all-time high, and the cumulative net profit growth rates for the first half were 39% for Daegu Bank, 80% for securities, and 112% for capital, among others. The proportion of non-bank profits rose slightly from 38.1% in Q1 to 41.6% in Q2. The increase in proportions was significant in securities at 26.2% and capital at 11.6%.

It is analyzed that net interest margin (NIM) rose and loan loss cost ratios stabilized downward. Researcher Kim Eungap said, "The bank's NIM in Q2 was 1.94%, up 2 basis points from the previous quarter, showing an upward trend for three consecutive quarters," and added, "Bank interest income increased by 6.6% year-on-year due to an increase in won-denominated bank loans, and group interest income rose by 8.8%." The increase in capital interest income was high at 26%, influenced by the growth of non-bank assets. The group's loan loss cost ratio improved to 0.26%, and the bank's loan loss cost ratio improved to 0.22% compared to Q1. He said, "Although there is an effect from the reduction of COVID-19 provisions, even excluding this, the level is stabilizing at a very low level."

Researcher Kim said, "The consolidated net profit forecast for this year is 474.7 billion KRW, an upward revision of 15.4%," adding, "This is a 42.8% increase compared to the previous year." The clear increase in non-bank performance suggests favorable future results. Considering the return on equity (ROE) forecast of 9.1% in 2021 and 8.5% in 2022, the price-to-book ratio (PBR) of 0.27 times is analyzed as an attractive figure.