[Click eStock] "Hana Financial Group, Good in Shareholder Returns"

Korea Investment & Securities announced on the 1st that it maintains a target price of 55,000 KRW and a buy rating for Hana Financial Group.

Hana Financial Group's Q4 controlling net profit was 473.7 billion KRW, falling short of our estimate by 20% and the consensus by 13%. Although the provision expenses were better than expected, non-interest income was weak due to an IB valuation loss of 267 billion KRW.

Regarding the target price calculation method, Baek Doosan, a researcher at Korea Investment & Securities, explained, "We applied a target price-to-book ratio (PBR) of 0.44 to the Q4 book value per share (BPS). The implied return on equity (ROE) and cost of capital embedded in the target PBR are 9.6% and 19.1%, respectively. Although Q4 results were weak, we focused on the shareholder return and asset soundness indicators, which were better than expected."

The dividend payout ratio for 2023 improved by 0.9 percentage points year-on-year to 28.4%, and the announcement of a 300 billion KRW share buyback and cancellation, exceeding initial expectations, improved the shareholder return ratio by 5 percentage points compared to the previous year.

Researcher Baek Doosan evaluated, "Due to fluctuations in key financial market indicators and company-wide risk-weighted assets (RWA) management efforts, the common equity tier 1 ratio in Q4 was estimated at 13.2%, up 0.5 percentage points from the previous quarter. This is positive as it enhances the sustainability of the gradual expansion policy of shareholder returns."