[Click eStock] "Hana Financial Group, Earnings Exceed Expectations and Shareholder Returns... Target Price Up"

Target Price Raised by 6.0% Compared to Previous Level

On the 30th, KB Securities raised the target price for Hana Financial Group from 83,000 KRW to 88,000 KRW, citing the possibility of narrowing the valuation gap due to better-than-expected earnings and shareholder return rates. The investment rating was maintained at 'Buy.'

Seunggeon Kang, a researcher at KB Securities, explained, "The basis for the target price increase is the upward revision of the medium-term shareholder return rate from 45% to 50%, reflecting the value-up disclosure," adding, "Considering the valuation attractiveness, we maintain it as the top preferred stock in the sector."

He expressed a high possibility of narrowing the valuation gap. Researcher Kang analyzed, "Through the value-up disclosure, the company announced a plan to pursue a 50% shareholder return rate by 2027. Although there are weaknesses such as a relatively low profit contribution from non-bank subsidiaries compared to competing commercial bank financial groups and relatively high volatility in the Common Equity Tier 1 (CET1) capital ratio, the target shareholder return rate is at a similar level, indicating a high possibility of narrowing the valuation gap." He added, "The relatively low profit contribution from securities and card subsidiaries may pose a burden on the group's risk-weighted assets (RWA), but since there has been a recovery trend since 2022, the discount factor could be reduced."

Hana Financial Group's third-quarter earnings this year exceeded market expectations. Researcher Kang said, "The third-quarter consolidated net income attributable to controlling shareholders increased by 20.9% year-on-year to 1.1566 trillion KRW, surpassing the consensus (average securities firm forecast) by 13.1%. This was due to non-recurring factors such as a reversal of provisions (68.1 billion KRW) and gains from fixed asset sales (56.1 billion KRW)." Although won-denominated loans decreased by 1.0% compared to the previous quarter and the net interest margin (NIM) fell by 5 basis points (1bp = 0.01 percentage points), causing bank net interest income to decline by 0.7% quarter-on-quarter, the group's net interest income increased by 1.6% due to reduced funding costs in non-bank subsidiaries. Non-interest income rose 63.4% year-on-year, reflecting foreign exchange gains of 56.2 billion KRW and gains from sales.

Hana Financial Group decided to repurchase and retire 150 billion KRW worth of treasury shares. Researcher Kang stated, "The repurchase and retirement of 150 billion KRW in treasury shares is scheduled to take place during the fourth quarter, and the shareholder return rate reflecting this is expected to be 37.8%."