Strong Earnings Driven by Exchange Rate Drop... 51% Shareholder Return Expected for This Bank Stock [Click eStock]

Shinhan Investment Corp. has raised its target price for Hana Financial Group from 150,000 won to 160,000 won. The company maintained its buy recommendation.

On September 3, Eun Kyungwan, research analyst at Shinhan Investment Corp., stated, "Concerns over a peak-out in quarterly earnings are limited, and we are focusing on the valuation appeal with a price-to-book ratio (PBR) of 0.8 times."

He added, "Hana Financial Group's net profit attributable to controlling shareholders for the third quarter of this year is expected to reach 1.3 trillion won, which is 5.3% higher than the consensus estimate. Despite upward pressure on funding costs such as the recent increase in corporate deposits, the improving trend in net interest margin remains valid given the consecutive hikes in domestic benchmark interest rates over the past two months."

Eun continued, "Won-denominated loans are projected to increase by more than 1% thanks to balanced growth in both households and corporations, while fee income is expected to decrease slightly compared to the first half of this year, reflecting expanded volatility in capital markets and macroeconomic indicators." He also explained, "The won-dollar exchange rate fell by more than 160 won in the third quarter of this year, resulting in foreign exchange translation gains of 150 billion won."

Due to strong earnings performance and the effect of exchange rate declines, Hana Financial Group's common equity tier 1 (CET1) ratio is expected to rise from 13.27% in the second quarter of this year to above 13.5%. Eun forecasted, "With the strengthened capital base, an additional share buyback and cancellation announcement of approximately 300 billion won—exceeding market expectations for the fourth quarter of this year—can be expected." He further explained, "Including this, the total annual shareholder return is projected to reach 2.23 trillion won, achieving a total shareholder return ratio of 51.0%."

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