Korea's banks roll out value-up plans following strong Q2 earnings season

Finance

Published: 26 Jul. 2024, 18:30

Korea's banks roll out value-up plans following strong Q2 earnings season

From left to right are office buildings of KB, Shinhan, Hana and Woori financial holding firms. [EACH COMPANY]

In a strong second quarter earnings season driven by high interest rates, Korea’s major financial firms are rolling out plans for value-up initiatives in an effort to ramp up shareholder returns.

Shinhan Financial Group posted a quarterly net profit of 1.43 trillion won ($1.03 billion) for the April-June period, up 15.1 percent from the same period of last year, according to the firm’s regulatory filing on Friday. This brought the half-year net profit to 2.75 trillion won, up 4.6 percent on year.

The figure outperformed the market forecast of 1.3 trillion won compiled by the market tracker FnGuide.

Operating profit rose 6.7 percent on year to 1.85 trillion won. Interest income came to 2.92 trillion won, up 4.7 percent on year, while noninterest income rose 7.6 percent to 1.11 trillion won.

“Despite recognizing a provision for potential losses related to real estate, the firm has achieved the highest quarterly ordinary profit ever,” said a Shinhan Financial Group spokesperson.

Its flagship Shinhan Bank saw a 50.2 percent surge in net profit to 1.12 trillion won. The half-year net profit totaled 2.54 trillion won, an increase of 22.2 percent.

On the back of strong performance in the second quarter, the board of Shinhan Financial Group approved paying a quarterly dividend of 540 won per share on Friday. The financial holding firm also announced its value-up plan that day, with an aim of achieving a shareholder return ratio of 50 percent by 2027. Under the plan, Shinhan will cancel 50 million shares of treasury stock and expand dividend payments every year.

Hana Financial Group also posted its second quarter earnings that day with an expectation-beating net profit of 1.03 trillion won, up 12.6 percent on year, bringing the total net profit for the first half of the year to 2.07 trillion won, up 2.4 percent from the same period of last year. Its quarterly operating profit rose 1.47 percent to 1.36 trillion won.

Hana Bank posted a net profit of 907.7 billion won, up 4.6 percent.

On Friday, its board approved cash dividend payments of 600 won per share. The value-up plan will be announced in the latter half of the year, according to the firm.

Hana announced a plan to acquire treasury stock worth 300 billion won earlier this year and said that the treasury stock will be retired by August.

Woori Financial Group released its value-up plan on Thursday, the first major financial group to do so.

Woori vowed to achieve a shareholder return ratio of more than 50 percent in the long term, up from 33.8 percent from last year, and a return on equity, or ROE, exceeding 10 percent, compared to the average of 9.1 percent during the past five years.

The firm posted a record quarterly net profit of 931.4 billion won that day, up 49 percent from the same period last year, which brought the firm’s half-year net earnings to 1.75 trillion won.

Under its latest value-up plan, Woori vowed to achieve a shareholder return ratio of more than 50 percent in the long term, up from 33.8 percent last year, and a return on equity, or ROE, exceeding 10 percent, compared to the average of 9.1 percent during the past five years.

KB Financial Group logged a net profit of 1.73 trillion won, up 15.57 trillion won on year, according to its regulatory filing on Tuesday. Operating profit came to 2.3 trillion won, up 12.15 percent.

The firm announced its plan to retire treasury stocks worth 400 million won, following its previous acquisition of treasury stock worth 320 billion won in February, and set its dividend at 791 won per share.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]