[Click eStock] Woori Financial Group Achieves Surprise Earnings... "This Year's Dividend Yield 7%"

[Asia Economy Reporter Ji Yeon-jin] Meritz Securities stated on the 22nd that despite sharp profit improvements at Woori Financial Group, overhang risk (15.25% remaining shares held by Korea Deposit Insurance Corporation) and low capital ratio (CET1 10.2%) are weighing on the stock price. However, since the current stock price is below the government's sale break-even point (BEP) of 12,200 KRW, the possibility of additional overhang volume being released is limited. Therefore, they maintain a buy investment opinion and a target price of 15,000 KRW.

Woori Financial Group's controlling shareholder net profit in Q2 was 752.6 billion KRW, a 428% increase compared to the same period last year, exceeding recently raised market expectations by 19.1%. This was due to the occurrence of a one-time gain of 70 billion KRW and improvements in all major indicators. The net interest margin (NIM) rose by 1bp (2bp for banks) as the effect of lower funding costs continued, and won-denominated loans increased by 1.9% quarter-on-quarter, mainly driven by small and medium-sized enterprise loans. The loan loss rate recorded 0.13% due to a reversal of approximately 50 billion KRW in provisions related to shipbuilding and shipping companies. Fee income, which was considered a weakness, also made progress thanks to recovery in business operations and the acquisition effect of Woori Financial Capital.

In Q3, equity-method gains related to K Bank of about 70 billion KRW are expected to be recognized, and reflecting this, the controlling shareholder net profit for this year is estimated to increase by 79.2% year-on-year to 2.3 trillion KRW. Assuming a dividend payout ratio of 25-27%, the expected dividend per share (DPS) is 810-880 KRW, which would result in a dividend yield exceeding 7% based on the current stock price.

Researcher Eun Kyung-hwan of Meritz Securities said, "Compared to competing banks, expectations for interim dividends were low, but on July 2nd, an interim dividend was resolved, reaffirming the commitment to an active shareholder return policy." He added, "We forecast the year-end dividend payout ratio and DPS at 26.0% and 840 KRW, respectively, and expect the interim dividend amount to be 200 KRW."

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