Introduction of Quarterly and Interim Dividends Followed by Share Buybacks and Cancellations
[Asia Economy Reporter Minwoo Lee] Banks are strengthening shareholder-friendly policies. They are establishing quarterly and interim dividend systems while simultaneously conducting share buybacks and cancellations.
According to the financial industry on the 27th, quarterly and interim dividends, which began in earnest last year, are becoming regular systems among banks this year through amendments to their articles of incorporation. Last year, Shinhan Financial Group implemented quarterly dividends, followed by KB Financial Group, Hana Financial Group, and Woori Financial Group conducting interim dividends.
First, KB Financial Group announced that the record date for shareholders entitled to the first quarter dividend is set for the 31st of this month. Considering uncertainties related to COVID-19 and financial impacts comprehensively, the decision will be made later by the board of directors, but the possibility of dividends is considered very high. Shinhan Financial Group, which introduced quarterly dividends first, is also expected to pay dividends for the first quarter.
In the case of Woori Financial Group, the articles of incorporation were amended to specify the record date (June 30) for interim dividends, which were previously irregular (only once during the fiscal year on a certain date). This is analyzed as a step toward institutionalizing interim dividends as a regular system. Additionally, Hana Financial Group, which has been paying interim dividends for a long time, is increasingly likely to introduce quarterly dividends in line with other financial groups.
Furthermore, share buybacks and cancellations are being conducted simultaneously. Shinhan Financial Group announced an on-market share buyback and cancellation worth 150 billion KRW. The period is from the 25th of last month to June 2. The cancellation reference price is 39,700 KRW, and the planned number of shares is 3,778,000 shares, equivalent to 0.73% of common shares. KB Financial also canceled shares worth 150 billion KRW (0.83% of common shares) last month.
Although the scale may not seem large compared to market capitalization, the implementation itself is highly praised as a shareholder-friendly policy. Eun-gap Kim, a researcher at IBK Investment & Securities, explained, "Share buybacks and cancellations are expected to contribute to enhancing shareholder value in the long term as they are continuously pursued rather than leading to short-term stock price changes," adding, "It is also encouraging that shareholder-friendly policies such as dividends and share buybacks are being competitively implemented among banks."
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