[Click eStock] "Korea Financial Group, Strong Profitability... Fair Stock Price 80,000 Won"

Meritz Securities maintained a buy rating and a 12-month target price of 80,000 KRW for Korea Financial Group on the 8th, citing "solid profit resilience."

Korea Financial Group's first-quarter net income attributable to controlling shareholders was 340.4 billion KRW, significantly exceeding consensus. The brokerage and IB (investment banking) divisions of the securities firm performed well.

The brokerage segment saw a 27.3% increase year-on-year based on its securities subsidiary. This was due to an expansion in domestic stock market share and an increase in average daily trading volume.

BK (brokerage) interest stocks decreased by 7.5% year-on-year due to continued strengthening of risk management.

IB income recovered sharply by 115.5% year-on-year. All core businesses performed well, including a recovery in traditional IB division results driven by increased DCM issuance and a rise in new deals in the PF division.

Operating profit declined by only 18.7% year-on-year despite the base effect of large-scale bond operation gains from last year's drop in market interest rates, due to increases in dividends and distributions.

Affiliates showed weak performance, with savings banks posting net income of 8.9 billion KRW and capital companies 18.4 billion KRW. This was attributed to provisioning burdens and a decrease in operating assets.

Jo Ahae, a researcher at Meritz Securities, analyzed, "Although there is a provisioning burden in the second quarter due to financial authorities' real estate PF normalization measures, the company demonstrated strong profit resilience within the industry despite last year's large provisioning burden. The PBR of 0.42 times relative to a high ROE indicates high valuation attractiveness."