Hana Securities announced on June 15 that it expects Shinhan Financial Group's non-banking sector profitability to improve rapidly, raising its target price to 135,000 won. The investment recommendation remains a 'buy.'
In a report released that day, analyst Choi Jeong-wook stated, "Dividends are expected to increase by more than 10% annually, and the total shareholder return rate will continue to rise towards 60%."
Choi noted that the selling pressure from other corporations, which had been persistent since the second half of last year until the end of February, appears to have subsided. He suggested that this selling was likely related to the conversion of preferred shares issued in 2019, indicating that concerns over supply and demand have diminished, allowing the stock price to reflect its fundamentals more accurately.
He also projected that the estimated net profit for the second quarter would be approximately 1.72 trillion won, an 11% increase compared to the same period last year, exceeding consensus expectations. He mentioned that the bank's loan growth rate for the second quarter is expected to be 0.5%, slightly lower than the first quarter, and that the net interest margin (NIM) would rise by just 1 basis point from the previous quarter, leading to a modest increase in net interest income. However, he anticipates a significant rise in group commission income, driven by increases in both securities trust fees and fund/trust fees, which could bring total commission income close to 1 trillion won, marking a 5% increase from the previous quarter and a 30% increase year-on-year.
Choi added that while group loan loss provisions are expected to rise slightly due to an increase in delinquency rates and a reassessment of corporate credit risks, they are not anticipated to exceed 550 billion won. He also mentioned that the company is expected to recognize a one-time gain of around 70 to 80 billion won in non-operating items due to a reduction in penalties related to Hong Kong equity-linked securities (ELS).
He concluded by stating that Shinhan Financial Group's estimated annual net profit for this year is expected to reach approximately 5.5 trillion won, reflecting a 10.7% increase, which is projected to be the largest growth among banks this year.
* This article has been translated by AI.
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