Alline Partners Pressures Financial Holding Companies "50% of Net Profit Can Be Returned to Shareholders"

Foreign Banks Return 64% of Average Net Profit to Shareholders
Domestic Banks' Total Shareholder Return Rate Is Only 24%

[Asia Economy Reporter Park So-yeon] Align Partners, an activist private equity fund, announced on the 2nd that it has sent open shareholder letters to domestic listed bank holding companies, demanding the adoption of shareholder return policies.

The open shareholder letters were sent to a total of seven companies: KB, Shinhan, Hana, Woori, JB, BNK, and DGB Financial Group. Align Partners requested that they adopt and disclose shareholder return policies by the 9th of next month.

Align Partners pointed out that listed banks are undervalued compared to major overseas banks, explaining that the core reasons for undervaluation are inefficient capital allocation policies and low shareholder returns.

Align Partners stated, "From 2017 to the third quarter of 2022, KB, Shinhan, and Hana Financial Group grew risk-weighted assets by an average of 8.6% annually, whereas overseas banks grew by about 3.1%. While overseas banks returned 64% of their average net income to shareholders in 2021 alone, the total shareholder return rate of domestic banks was only 24%."

They added, "If domestic banks manage loan growth at an appropriate level going forward, they can maintain or improve capital ratios compared to now while enabling shareholder returns of at least 50% of net income annually."

Align Partners plans to submit shareholder proposals regarding shareholder returns at regular general meetings if banks fail to respond or provide responses that shareholders find unsatisfactory.