Financial Holding Leaders Step Up to 'Save Stock Prices' Amid COVID-19 Impact

Son Tae-seung, Chairman of Woori Financial Group

[Asia Economy Reporter Kangwook Cho] Heads of domestic financial holding companies are boosting their stock prices by purchasing their own shares. This is to raise undervalued stock prices due to risk concerns from the novel coronavirus disease (COVID-19) crisis. The industry views these actions as efforts by the leaders to demonstrate their commitment to responsible management.

According to the financial sector on the 15th, among the seven financial holding companies listed on the domestic stock market, more than half of the leaders, totaling four, have purchased their own shares this year.

The most active in buying back shares is Sohn Tae-seung, Chairman of Woori Financial Group. Chairman Sohn purchased 5,000 shares through on-market transactions on the 10th. This is his third purchase this year, following 5,000 shares on January 6, the first trading day of the stock market, and another 5,000 shares last month. Including the employee stock ownership association account, Chairman Sohn's total holdings of treasury shares amount to 78,127 shares.

A Woori Financial Group official stated, "Chairman Sohn Tae-seung's recent stock purchase expresses a strong will and confidence to fulfill the social role of finance amid internal and external crises in the second year since the group's launch, while also protecting corporate and shareholder value," adding, "We plan to communicate with domestic and international investors in various ways going forward."

Kim Jung-tae, Chairman of Hana Financial Group, purchased 5,668 shares on the 5th through on-market transactions under an investment discretionary contract. Including the purchase of 2,000 shares on February 5 through on-market transactions, this is his second purchase this year. With this purchase, Chairman Kim's treasury share holdings increased to 65,668 shares.

Kim Ji-wan, Chairman of BNK Financial Group, purchased a total of 66,600 shares over five trading days on the 6th, 19th, 23rd, 24th, and 26th of last month. Since his first purchase in May 2018, his current holdings amount to 101,600 shares. Additionally, BNK Financial Group signed a trust contract worth 7 billion KRW with Korea Investment & Securities for treasury stock acquisition to stabilize stock prices and enhance shareholder value.

Kim Tae-oh, Chairman of DGB Financial Group, purchased 10,000 shares on the 4th of last month through on-market transactions. Since his inauguration, Chairman Kim has purchased treasury shares four times. With this purchase, his total treasury shares increased to 25,000 shares.

Kim Ki-hong, Chairman of JB Financial Group, also purchased 40,000 treasury shares last month. With this purchase, Chairman Kim's total treasury share holdings reached 80,500 shares.

Since March, the COVID-19 pandemic's impact has caused significant volatility in global financial markets such as the U.S. and Europe, leading to a sharp decline in the domestic stock market due to large-scale sell-offs by foreign investors.

The decline was particularly pronounced in financial stocks, which have a high proportion of foreign investors. As of the end of March, the price-to-book ratio (PBR) of domestic financial holding companies averaged about 0.2 times, lower than 0.37 times during the 2008 global financial crisis and 0.28 times during the 1998 IMF foreign exchange crisis.

Concerns dominate that bank profitability will weaken as countries cut benchmark interest rates to cope with the economic shock from COVID-19. Moreover, recent adverse factors such as compensation payments and fines due to incomplete sales of financial products have added to domestic and international challenges.

However, experts point out that even considering all risk factors, the current bank-related stock prices have fallen 'abnormally.'

Choi Jung-wook, a researcher at Hana Financial Investment, said, "Bank stocks have fallen more than twice as much as the KOSPI this year," adding, "There remains skepticism about further KOSPI gains due to the unexpectedly rapid rebound." However, Choi predicted, "As systemic risk decreases, the price attractiveness of bank stocks will continue to be highlighted."

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