[Market Highlight] Korea Financial Group Surges to Record High on Expectations of Continued Strong Q3 Earnings

Korea Financial Group continued its upward trend for the second consecutive day, hitting a new 52-week intraday high.

As of 9:20 a.m. on October 21, Korea Financial Group was trading at 180,400 won on the Korea Exchange, up 4,700 won (2.68%) from the previous day. During the session, the stock rose as high as 183,200 won, setting a new 52-week high.

The recent stock market rally, along with expectations of strong third-quarter earnings this year, appears to be driving the share price higher. On this day, Yuanta Securities raised its target price for Korea Financial Group to 210,000 won, up 16.7% from the previous target, expecting the company to significantly exceed the consensus (the average of brokerage forecasts) in the third quarter, following strong results in the first and second quarters. Woo Dohyeong, a researcher at Yuanta Securities, stated, "Korea Financial Group's net income attributable to controlling shareholders in the third quarter is expected to reach 459.9 billion won, exceeding the consensus by 12.2%." He explained, "This is due to increased operating profit related to issued notes and solid valuation gains at the value asset management subsidiary, driven by the stock market's rise."

The company is also expected to benefit from increased profits related to the Integrated Investment Management Account (IMA). Korea Investment & Securities, a subsidiary of Korea Financial Group, applied for IMA business approval in July. Researcher Woo noted, "While the IMA approval is expected to be decided by the end of this year, it is difficult to estimate the profit size since the product guarantees principal." However, he added, "Korea Investment & Securities plans to rapidly expand its IMA balance, and since the limit is 300% of the issued notes, the IMA funding scale is expected to be around 10 trillion won. Assuming a conservative margin of 100 basis points (1bp = 0.01 percentage point), a profit increase of 100 billion won can be expected."