[Click eStock] Shinhan Financial Group: Faster-Than-Expected Shareholder Return Rate Increase... Target Price Up

Target Price Raised by 30% Compared to Previous Level

Yuanta Securities announced on July 30 that it has raised its target price for Shinhan Financial Group from 65,000 won to 84,500 won, citing a faster-than-expected pace of shareholder return increases. The investment opinion remains 'Buy'.

Woo Dohyeong, a researcher at Yuanta Securities, stated, "We have raised our target price by 30% compared to the previous level," explaining that "this is due to the faster-than-expected increase in shareholder return rates, which is viewed positively for investor sentiment."

Shinhan Financial Group’s second-quarter results this year exceeded market expectations. Woo explained, "Shinhan Financial Group’s second-quarter net profit attributable to controlling shareholders was 1.5491 trillion won, surpassing the consensus (the average forecast of securities firms) by 7.2%," adding, "The outperformance relative to consensus is attributable to solid revenue performance. Second-quarter net interest income increased by 0.3% quarter-on-quarter, as KRW-denominated loans grew by 0.4% and the net interest margin (NIM) remained at 1.55%, the same as the previous quarter, due to the high-interest deposit repricing effect." He further added, "Non-interest income increased by 13.8% year-on-year, mainly due to a significant increase in profits related to foreign exchange and derivatives."

The credit cost ratio (CCR) was 0.59%, up 18 basis points (1bp=0.01 percentage points) from the previous quarter. Woo noted, "This reflects 25 billion won related to asset trust litigation and 54.4 billion won in provisions related to real estate project financing (PF)," adding, "The cumulative CCR for the second quarter is around 50 basis points, and the annual CCR is expected to be managed in the high 40 basis point range."

Shinhan Financial Group announced a share buyback of 800 billion won, which includes 600 billion won for the second half of the year and 200 billion won for next year. Woo projected, "Accordingly, the total shareholder return rate for 2025 is expected to reach 46.8%," and added, "Although the group announced a total shareholder return rate of 50% by 2027 as part of its shareholder return policy, considering the overall strong performance in the banking sector, the pace of achieving this target is accelerating, and it is likely that the 50% level will be reached as early as 2026."