Shinhan and Woori Likely to Continue '20% Dividends'... Will Investors File Mass Lawsuits?

Despite 'Surprising Earnings,' Financial Holding Companies Lower Dividend Payout Ratios Following FSC Recommendations Citing 'Fiscal Soundness'

[Asia Economy Reporter Wondara] Financial holding companies such as Shinhan Financial Group and Woori Financial Group are expected to continue dividend payouts around 20%.

According to the financial sector on the 7th, Shinhan Financial Group and Woori Financial Group, which postponed their dividend policies to the board meetings in early March, are also expected to decide on a dividend payout ratio around 20%. Noh Yong-hoon, Vice President (CFO) of Shinhan Financial Group, said, "We will hold a board meeting by early March to decide whether to accept the supervisory authority's recommendation or consider other factors," adding, "Since the supervisory authority's guidelines were issued after stress tests on financial institutions, it seems difficult to challenge them."

Earlier, KB Financial Group (26%→20%) and Hana Financial Group (25.78%→20%) also lowered their dividend payout ratios by 6 percentage points and 5.78 percentage points respectively, following the financial authorities' guidelines. On the 28th of last month, the Financial Services Commission recommended financial holding companies and banks to limit dividends to within 20% of net income, citing financial soundness management as the reason.

Lee Hwan-joo, Vice President (CFO) of KB Financial Group, apologized, saying, "We regret that the dividend did not meet market expectations," and explained, "This is because we agreed with the authorities' recommendation that there is a need to maintain shock absorption capacity in preparation for economic uncertainties." Afterward, Lee Huiseung, Executive Director (CFO) of Hana Financial Group, also said during an earnings conference call, "The dividend reduction is a temporary measure this time, and we ask for shareholders' generous understanding."

Concerns have also been raised in the financial sector about the possibility of lawsuits from investors. The IR (Investor Relations) departments of major financial holding companies have been receiving inquiries from individual and foreign investors regarding the reduction in dividend payout ratios. Some financial holding companies are reportedly conducting internal legal reviews in preparation for potential lawsuits from investors related to dividend cuts or participation in profit-sharing schemes.

Meanwhile, last year, financial holding companies achieved "surprise earnings" due to the effects of "Yeongkkeul" (investing by pulling together all resources) and "Debt Investment" (investing through loans). Interest income for each financial group was ▲ KB Financial Group 5.7% (KRW 9.1968 trillion → KRW 9.7223 trillion) ▲ Shinhan Financial Group 1.9% (KRW 8.01 trillion → KRW 8.155 trillion) ▲ Hana Financial Group 0.7% (KRW 5.774 trillion → KRW 5.814 trillion) ▲ Woori Financial Group 1.8% (KRW 5.894 trillion → KRW 5.999 trillion).

The growth rates of net commission income for securities affiliates of each financial group were also ▲ KB Securities 58% (KRW 580.4 billion → KRW 916.8 billion) ▲ Shinhan Investment Corp. 45.6% (KRW 508.8 billion → KRW 740.6 billion) ▲ Hana Financial Investment 29.7% (KRW 412 billion → KRW 534.5 billion). However, Woori Financial Group, which does not have a securities affiliate, was relatively excluded from the boom in stock trading commissions and was analyzed to have secured 5th place. On the other hand, NongHyup Financial Group, unlike Shinhan and Woori Financial Groups, avoided the "fund incident" and secured 4th place in the industry, and KB Financial Group reclaimed the top spot thanks to Shinhan Financial Group, the industry leader, reflecting losses of KRW 472.5 billion from the fund incident.

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