[Click eStock] "IBK, Profit Growth and Dividend Income Expected... Target Price Maintained"

On the 17th, Kiwoom Securities maintained its 'Buy' rating and a target price of 15,000 KRW for Industrial Bank of Korea (IBK), stating, "Profit growth is resuming, and the year-end dividend yield forecast is expected to be the highest among bank stocks."

On the same day, Kiwoom Securities researchers Kim Eun-gap and Son Ye-bin said, "IBK's consolidated net profit for Q4 last year is expected to be 488.9 billion KRW, down 35% from the same period last year," adding, "We have revised down our previous forecast by 35% to reflect the win-win finance costs. The Q4 win-win finance costs included 200 billion KRW, and an additional cost of about 50 billion KRW is expected this year." The Q4 win-win finance costs were reflected as a decrease in non-interest income. Additionally, there was an additional provision set aside, and the net interest margin (NIM) is expected to decline by about 0.01 percentage points compared to Q3, but remain favorable.

Researcher Kim said, "As a result of reflecting large-scale costs, last year's consolidated net profit was revised down by 6.3%, showing a 2.5% decrease compared to the previous year," adding, "Although profit growth has seemingly stopped, it is regrettable, but despite the sudden large-scale cost occurrence, the net profit reached near an all-time high. This will be an opportunity to reaffirm the increase in recurring profit scale." Consolidated net profit is expected to increase by 7% this year.

Furthermore, the price-to-book ratio (PBR) of 0.28 times compared to the return on equity (ROE) forecast of 8.5% is an undervalued figure, and "the price-to-earnings ratio (PER) based on this year's consolidated net profit is 3.4 times. The sales volume of equity-linked securities (ELS) linked to the Hong Kong index is very small compared to other large banks, so related uncertainties are low," they assessed.

Researcher Kim emphasized, "Since there were no interim or quarterly dividends last year, the dividend yield from the final dividend is high. The dividend record date is expected to be decided around March this year, and if the dividend per share (DPS) forecast of 1,000 KRW is applied, the yield is 8.4%. If the market consensus DPS of 1,005 KRW is applied, the yield is 8.5%, making the yield from the year-end dividend the highest among bank stocks."

He added, "In the atmosphere of strengthened government tax revenue and shareholder-friendly policies, there was no share buyback and cancellation. The decrease in consolidated net profit was also not significant. Considering this, last year's DPS is likely to increase compared to 2022."