[Click eStock] "Korea Financial Group, Poor Earnings... Investment Opinion 'Neutral'"

[Asia Economy Reporter Son Sunhee] NH Investment & Securities announced on the 10th that it maintains a 'Neutral (HOLD)' investment rating and a target price of 65,000 KRW for Korea Financial Group. Despite the recent poor performance announcement, the target price and investment rating, which were lowered from 85,000 KRW to 65,000 KRW on November 16 last year, have not been adjusted and remain unchanged.

Korea Financial Group reported a consolidated controlling net profit of 98.5 billion KRW for the fourth quarter of last year through its earnings disclosure the day before. This represents a 67.7% decrease compared to the previous year and falls significantly short of the market expectation of 124.5 billion KRW.

It was also analyzed that one-time gains played a significant role. A one-time reversal amount of approximately 220 billion KRW was reflected due to changes in the corporate tax calculation basis. Initially, the holding company's consolidated pre-tax profit was expected to record a loss of 117.3 billion KRW, but thanks to the one-time gain, a net profit of 98.9 billion KRW was recorded.

Yoon Yudong, a researcher at NH Investment & Securities, said, "The provision and valuation loss for real estate project financing (PF) by the subsidiary securities company in the fourth quarter is estimated to be about 100 billion KRW, and about 300 billion KRW annually." He added, "However, since the group's PF balance remains at around 4.6 trillion KRW (Securities 2.6 trillion KRW + Bank 1 trillion KRW + Capital 1 trillion KRW), it is judged that there is a high possibility of additional provision setting in the first quarter of this year." He further noted, "It seems that a complete improvement in fundamentals will require time."