[Click eStock] "KB Geumyung, Stock Price Fallen Enough... Opportunity to Increase Weight"

Hana Securities maintained a buy rating and a target price of 115,000 KRW on KB Financial Group on the 9th, stating that "the stability of the bank's performance is unlikely to be compromised in the short term, making the recent stock price decline an opportunity to increase holdings." The previous day's closing price was 70,500 KRW.

On the same day, Jungwook Choi, a researcher at Hana Securities, said, "The current price-to-book ratio (PBR) has dropped to 0.43 times, increasing its relative price attractiveness within the sector. The expected dividend yield for this year is 4.8%, but the total shareholder return, including treasury shares, approaches around 9%."

Researcher Choi explained, "The stock price has fallen 30.3% from the peak on December 3 last year, just before the martial law issue. Compared to February 5 this year, the date of last year's fourth-quarter earnings announcement, the stock price has also dropped 22.5%. Recently, concerns about a global economic slowdown and the expansion of corporate financial support in response to the trade war have highlighted worries about the public interest role, leading to an increase in foreign selling pressure."

However, he added, "Economic concerns are mainly medium- to long-term emotional issues stemming from uncertainty, and the expansion of corporate financial support is unlikely to significantly harm the fundamental strength," and he predicted, "KB Financial Group's estimated net profit for the first quarter of this year is expected to exceed the market average forecast somewhat, increasing by 56.4% year-on-year to 1.64 trillion KRW."

First-quarter bank won-denominated loans are expected to grow by about 0.9%, staying on track within the annual target. Contrary to concerns, the net interest margin (NIM) is expected to maintain the previous quarter's level, so net interest income is not expected to decline. Researcher Choi said, "Since the exchange rate and market interest rates have not deviated significantly from the end of last year, there are no major issues on the non-interest income side, and expenses such as selling and administrative expenses and loan loss provisions are also expected not to increase significantly."

The group's CET1 (Common Equity Tier 1) ratio for the first quarter is expected to record at least 13.65%, rising by more than 15 basis points (1bp = 0.01 percentage points) compared to the previous quarter. Researcher Choi said, "The CET1 ratio fell by 33 basis points in the fourth quarter of last year, and as a result, the scale of treasury stock purchases in the first half was limited to 520 billion KRW, causing the stock price to show weakness. If the rise in the CET1 ratio in the first quarter is confirmed, expectations for value-up expansion could revive."

If the CET1 ratio reaches 13.7% at the end of the second quarter, an additional treasury stock purchase of about 700 billion KRW would be possible, which could bring the total shareholder return ratio for this year close to 45%.