[Click eStock] "Hana Financial Group Resets Value-Up Goals… Target Price Raised"

LS Securities Sets Hana Financial Group Target Price at 160,000 Won

On July 27, LS Securities announced that it had raised the target price for Hana Financial Group to 160,000 won, up from the previous 155,000 won, reflecting the company's new corporate value enhancement (Value-Up) plan, while maintaining a ‘Buy’ investment rating.

Hana Financial Group recently announced its Corporate Value Enhancement Plan 2.0, which is based on three key targets: a return on equity (ROE) of 12%, a shareholder return ratio of 50%, and a common equity Tier 1 (CET1) ratio of over 13%.

In particular, the company introduced a shareholder return framework that links ROE with the growth rate of risk-weighted assets (RWA) [1 - (RWA growth rate/ROE)]. Jaebaeseung Jeon, a researcher at LS Securities, noted, "Last year, the group’s ROE stood at 9.2%, and the ROE of non-bank subsidiaries was below 10%. In addition, despite fluctuations in RWA due to external factors like forex rates, the company’s pledge to use excess capital — CET1 ratio above 13% — for shareholder returns under this formula demonstrates a strong commitment to improving profitability and enhancing shareholder returns."

Jeon added, "In the second half of the year, the company has decided to repurchase and cancel treasury shares worth 250 billion won and set a shareholder return target of 50% for this year. This suggests that in the fourth quarter, we can expect either additional treasury share buybacks exceeding 200 billion won or an increase in year-end dividends, factoring in potential tax-free effects."

Hana Financial Group reported a net profit of 1.19 trillion won in the second quarter, slightly below market expectations. LS Securities attributed this to additional losses totaling about 200 billion won due to corporate loan provisions, changes in insurance reserve assumptions, and the impact of a rising exchange rate. On the other hand, the bank’s net interest margin (NIM) rose by 3 basis points, and net income from securities improved to 170 billion won, leading to an increase in fee income.

Jeon stated, "With a potential increase in the base interest rate and stabilized exchange rates in the second half, the profitability of securities, card, and capital subsidiaries is recovering across the board. Both banking and non-banking operations are expected to continue delivering positive results."

Despite a weaker won and investment in Dunamu shares, efforts to manage RWA limited the CET1 ratio decline to just 2 basis points as of the end of June. The partnership with Dunamu and related digital asset market growth strategy was also highlighted as part of the plan to achieve the 12% ROE target.

Jeon forecast, "We expect the undervaluation phase to continue to resolve itself, driven by improved profitability and increased shareholder returns. For this year, we anticipate a 29% dividend payout and 21% treasury share buybacks, achieving a 50% shareholder return ratio, with a shareholder return yield reaching 6%."

This content was produced with the assistance of AI translation services.