[Click eStock] "Hana Financial Group, Fastest Pace of Earnings Normalization... Target Price Up"

Target Price Raised by 8.7% Compared to Previous Level

On the 25th, KB Securities raised the target price of Hana Financial Group from 69,000 KRW to 75,000 KRW, anticipating that its earnings normalization speed will be the fastest among financial holding companies this year. The investment rating was maintained as 'Buy.'

Seunggeon Kang, a researcher at KB Securities, explained, "The reason for maintaining the investment rating is that among commercial bank financial holding companies, it has high valuation attractiveness, and the risks from overseas real estate funds and domestic real estate project financing (PF) are expected to be reflected in earnings after 2023, thereby mitigating potential risks. Therefore, the earnings normalization speed this year is expected to be the fastest." He added, "As the second-quarter earnings are expected to exceed initial expectations, we raised the annual consolidated net income attributable to controlling shareholders forecast to 3.87 trillion KRW, up 1.5% from the previous estimate, reflecting the recovery of profitability in the securities subsidiary and the mitigation of potential risks, which led to the increase in the target price."

Hana Financial Group's second-quarter earnings this year are expected to surpass market expectations. Researcher Kang said, "The second-quarter consolidated net income attributable to controlling shareholders of Hana Financial Group is expected to be 1.0096 trillion KRW, exceeding the consensus (average securities firm forecast) by 6.1%. The second-quarter KRW loans are projected to grow by 4.6% compared to the previous quarter, with corporate loans growing by 6.0%, leading the loan growth."

While demonstrating high growth centered on corporate loans, there are burdens on net interest margin (NIM) and common equity tier 1 capital ratio (CET1). Kang stated, "The second-quarter NIM is expected to decline by 7 basis points (1bp = 0.01 percentage points) compared to the previous quarter, and CET1 is expected to fall by 18 basis points to 12.7% due to high loan growth and exchange rate increases. However, considering the expected decline in corporate loan demand and the plan to reduce risk-weighted assets (RWA) related to securities in the second half of the year during the interest rate decline phase, recovery is anticipated in the second half, and shareholder return policies will also be actively implemented thereafter."