[Click eStock] "JB Financial Group, Profit Estimates Raised...Buy Rating"

On October 29, Hanwha Investment & Securities raised its investment rating on JB Financial Group from "Hold" to "Buy" and increased its target price from 24,000 won to 26,000 won, stating, "Capital ratio management is expected to enable faster-than-expected shareholder returns."

On this day, Kim Doha, a researcher at Hanwha Investment & Securities, said, "JB Financial Group delivered results that exceeded expectations in its core business areas. Based on the decline in the credit cost ratio (CCR), we are raising our profit estimates." A lower credit cost ratio indicates that both expected and actual loan losses are small, which means asset quality is sound.

In the third quarter, net profit attributable to controlling shareholders was 208.3 billion won, an 8% increase year-on-year, surpassing the market consensus. As net profit estimates for controlling shareholders were revised up by 1% for next year and 4% for 2027, estimates for shareholder return were also raised. Kim explained, "Although securities-related gains, which were expected to remain at the previous quarter's level, fell short of estimates, interest and fee income performed strongly. Selling and administrative expenses and provisions came in below expectations, resulting in solid earnings."

Regarding net interest margin (NIM), Kim noted, "Both the holding company and the bank saw only a 2bp (1bp = 0.01 percentage point) decline compared to the previous quarter, which was better than expected," adding, "This was due to bank lending rates bottoming out during the quarter, while funding costs continued to decline." On asset quality indicators, he stated, "The bank's delinquency rate declined for the second consecutive quarter, and the CCR dropped by 6bp from the previous quarter to 0.77%."

He also emphasized the potential for increased shareholder returns. Kim said, "The company announced an additional 40 billion won share buyback, exceeding previous expectations by 10 billion won. Assuming an annual payout ratio of 28%, the year-end dividend per share (DPS) is expected to be 575 won, resulting in a shareholder return ratio of 45%." He added, "Assuming the annual shareholder return ratio remains at 45% and the payout ratio at 28%, the dividend yield for next year and 2027 is expected to be 5.0% and 5.5%, respectively."

He further commented, "Through portfolio adjustments, the growth rate of risk-weighted assets (RWA) was lower than the growth rate of total assets. As a result, the common equity tier 1 (CET1) ratio rose to 12.7%, providing ample room to increase the shareholder return ratio above the current policy level."