[Click e-Stock] "Korea Financial Group Expected to Maintain Strong Performance in Second Half"

In the first quarter of this year, Korea Financial Group posted results that significantly exceeded market expectations (consensus). There are forecasts that this strong performance will continue into the second half of the year.

On May 15, Daol Investment & Securities maintained its 'Buy' investment rating on Korea Financial Group and raised its target price by 14.6% to 110,000 won. The closing price the previous day was 89,000 won.

On a consolidated basis, the company recorded an operating profit of 529.6 billion won and a net profit attributable to controlling shareholders of 458.4 billion won in the first quarter of this year. These figures represent increases of 38.8% and 34.7%, respectively, compared to the same period last year. The results were a positive surprise, exceeding market expectations.

In the fee income segment, brokerage (commission trading) revenue increased by 4.0% year-on-year, thanks to a rise in domestic stock trading volume and market share. Although overseas stock trading volume declined, fee income from overseas securities remained solid. Wealth management (WM) income also continued its upward trend, growing by 24.7% compared to the same period last year. This was due to the balance effect from increased bond and note sales, as well as higher fees from the sale of beneficiary certificates.

Investment banking (IB) segment income also rose by 13.2% year-on-year. While equity capital market (ECM) and debt capital market (DCM) underwriting results were evaluated as flat, the company recognized significant fee income from new deals centered on M&A advisory and principal project financing (PF).

In the non-fee income segment, net interest income increased by 27.8%. This was due not only to a rise in credit extension balances but also to continued growth in interest income from securities compared to the previous quarter. A reduction in interest expenses related to borrowings also contributed. Operating and other income benefited from a reduction in foreign exchange losses as the exchange rate declined.

Kim Jiwon, a researcher at Daol Investment & Securities, stated, "Although the assets and net income of subsidiaries such as savings banks and capital companies decreased on a consolidated basis, strong results were achieved mainly in the securities business." Kim added, "With the company's entry as the first operator of a comprehensive investment account (IMA) becoming more visible in the second half of this year and beyond, additional leverage effects are expected."