Four Major Financial Groups Post Record First-Half Profits... Shareholder Returns to Accelerate

Four Major Financial Groups Post Over 10 Trillion Won in First-Half Profits... Up 10.5% Year-on-Year
Shareholder Returns Expected to Accelerate on Stable CET1

(From left) Yang Jonghee, Chairman of KB Financial Group; Jin Okdong, Chairman of Shinhan Financial Group; Ham Youngjoo, Chairman of Hana Financial Group; Im Jongryong, Chairman of Woori Financial Group.

The four major financial holding companies have achieved a record-breaking net profit of over 10 trillion won in the first half of the year for the first time ever. Based on these high profits, there are expectations that shareholder return policies will be further strengthened.

Four Major Financial Groups Exceed 10 Trillion Won in First-Half Profits... Up 10.5% Year-on-Year

According to the financial sector on July 28, the combined net profit of the four major financial holding companies?KB Financial, Shinhan, Hana, and Woori?for the first half of this year reached 10.3254 trillion won. This is a 10.5% increase compared to the first half of last year and represents the largest amount ever recorded for a half-year period. Despite the trend of interest rate cuts, interest income increased by 1.35%, while non-interest income rose by 7.2% due to higher profits from securities and foreign exchange derivatives. Although interest income did not increase significantly, the substantial growth in non-interest income, driven by exchange rate stability and a strong stock market, was the main reason for the improved performance.

By company, KB Financial recorded a net profit of 3.4357 trillion won, Shinhan 3.0374 trillion won, Hana 2.3010 trillion won, and Woori 1.5513 trillion won. KB Financial, Shinhan, and Hana each posted their highest half-year results ever. Woori Financial experienced a temporary decrease in profits due to the launch of Woori Investment & Securities.

Thanks to these record results, the trend of improvement in the Common Equity Tier 1 (CET1) ratio has also continued. CET1, a key indicator of a bank's financial soundness, is calculated by dividing common equity capital by risk-weighted assets (RWA). The Bank for International Settlements (BIS) recommends a ratio of at least 8%, while South Korean financial authorities and financial holding companies aim for a more stable target of at least 13%. Any capital exceeding the 13% CET1 target can be used for more active shareholder returns, such as share buybacks, cancellations, and dividends.

KB Financial’s CET1 ratio for the second quarter stood at 13.74%, maintaining the highest level among domestic financial holding companies. Along with its second-quarter earnings announcement, KB Financial unveiled plans for a cash dividend of 920 won per share and a share buyback and cancellation program worth 850 billion won. The annual scale of shareholder returns is expected to reach 3.01 trillion won. The total shareholder return ratio for this year is projected to reach 53.2%. Na Sang-rok, KB Financial’s Chief Financial Officer (CFO), stated during a conference call, "With this additional share buyback and cancellation decision, this year’s shareholder return will total 3.01 trillion won," adding, "If the separate taxation of dividend income is introduced, we will naturally consider expanding the proportion of cash dividends even more actively."

Shinhan Financial also drew significant attention by announcing a share buyback policy worth 800 billion won, far exceeding market expectations. Through this, the company aims to raise this year’s shareholder return ratio to over 47% and is expected to easily surpass its original 2027 target of 50% as early as next year. The shareholder return yield through dividends and share buybacks and cancellations is projected to be 7.1% this year, the highest among financial holding companies of commercial banks. Chun Sang-young, Shinhan Financial’s CFO, explained, "Based on a stable CET1 ratio, we have resolved to pay a second-quarter cash dividend of 570 won per share and acquire 800 billion won worth of treasury shares," adding, "The policy to strengthen shareholder returns will continue."

Shareholder Returns Expected to Accelerate Based on Stable CET1

Hana Financial resolved to conduct an additional share buyback and cancellation worth 200 billion won and to pay a quarterly cash dividend of 913 won per share. Hana Financial had already completed its previously announced 400 billion won share buyback program early in the first half of the year. Park Jong-moo, Hana Financial’s CFO, stated, "We are pursuing a step-by-step approach to achieve a 50% shareholder return ratio by 2027," but also noted, "Considering recent market trends such as the introduction of separate taxation on dividend income, the timing may change," indicating that the pace of shareholder returns could be faster than initially planned.

Woori Financial decided on a second-quarter dividend of 200 won, the same as the previous quarter. As Woori Financial’s CET1 ratio for the second quarter rose sharply to 12.76% compared to the previous quarter, expectations for increased shareholder returns are likely to grow over time. Lee Sung-wook, Woori Financial’s CFO, stated, "We will accelerate efforts to achieve the market-expected CET1 ratio of 13%," and added, "We will also continue our stable shareholder return policy."