Meritz Financial Group's shares fell more than 14% during trading on November 12 after the company reported third-quarter results that fell short of market expectations. The decline is attributed to a significant drop in investment income from its key subsidiary, Meritz Fire & Marine Insurance, and increased uncertainty regarding shareholder returns due to performance volatility.
As of 2:16 PM, Meritz Financial Group's stock was trading at 111,200 won, down 18,300 won (14.13%) from the previous trading day. The sharp decline reflects investor disappointment following the release of the third-quarter earnings report.
On November 11, Meritz Financial Group announced that its consolidated net profit for the third quarter was 490.5 billion won, a 26.6% decrease compared to the same period last year. Operating profit also fell by 39.7% to 519.9 billion won. Notably, net profit attributable to shareholders was 470.7 billion won, which was approximately 25.8% below market expectations of 634.5 billion won.
The poor performance is primarily attributed to a decline in investment income from Meritz Fire & Marine Insurance. The subsidiary reported a standalone net profit of 328.5 billion won for the third quarter, down 29.2% year-on-year. Its operating profit also decreased by 28.9% to 444.1 billion won.
While the profitability of its core insurance operations improved, losses in the investment sector negatively impacted overall results. Meritz Fire & Marine Insurance's insurance profit rose to 404.7 billion won, a 34.9% increase from the previous year, but investment income plummeted by 87.9% to 39.4 billion won. This decline was influenced by increased volatility in the domestic stock market and provisions related to real estate finance.
Analysts suggest that the disappointing results could lead to uncertainty regarding the scale of shareholder returns. Meritz Financial Group has a policy of returning at least 50% of its consolidated net profit to shareholders, meaning that the decline in profits could affect its capacity for dividends and share buybacks.
* This article has been translated by AI.
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