[Click eStock] Industrial Bank of Korea, Attractive Dividend... Investment Opinion 'Neutral'

Hanwha Investment & Securities expects Industrial Bank of Korea to have the most attractive dividend among large companies. However, the investment opinion was 'neutral' and no target price was presented.

On the 29th, Kim Do-ha, a researcher at Hanwha Investment & Securities, stated, "The first quarter net income attributable to controlling shareholders is expected to be 795.1 billion KRW, a 21% increase compared to the previous year, in line with consensus." Operating profit is expected to increase by 27% compared to last year due to a sharp expansion in the top line (future revenue) despite an increase in ordinary loan losses.

The bank's KRW loans are expected to increase by 1.8% compared to the previous quarter due to simultaneous growth in household and corporate loans.

However, researcher Kim analyzed, "Quarterly net interest margin (NIM) is expected to decrease by 3% compared to the previous quarter," adding, "The outflow of low-cost deposits is appearing belatedly, which is expected to cause a 9bp (1bp=0.01 percentage point) decline." Selling and administrative expenses were assumed at a ratio of 31% without any non-recurring factors, and loan loss provisions were estimated at a cost ratio of 0.59% considering the increase in ordinary expenses.

Kim diagnosed, "Even considering the earlier-than-expected timing of the NIM decline, operating profit in 2023 is expected to increase by 16% compared to last year," and "During the second quarter, the repricing of ultra-low interest loans will occur on a large scale, which is expected to defend the NIM again."

He assumed, "Assuming an annual dividend payout ratio (separate basis) of 32.2%, Industrial Bank of Korea's expected dividend yield is estimated at 11.7%, the highest level within the industry."