Record-Breaking Performance by Financial Holding Company... Historic Dividend of 3.7 Trillion Won Announced

2019 Dividend Level Recovery Expected
Average Dividend Payout Ratio Forecasted at 25.9%

[Asia Economy Reporter Kiho Sung] It is forecasted that the dividend amounts of financial holding companies expected to achieve record-high performance this year will reach an all-time high. The market estimates that if dividends are paid at the 2019 level, before the COVID-19 pandemic, the total dividend amount this year will be around 3.7 trillion KRW.

According to the financial sector on the 23rd, the four major financial holding companies (KB, Shinhan, Hana, and Woori Financial) have set a policy to restore their dividend payout ratios to the 2019 level this year. According to the Financial Supervisory Service, the average cash dividend payout ratio of financial holding companies steadily increased from 23.8% in 2016 to 24.1%, 24.7%, and 26.2% by 2019. However, as COVID-19 spread last year, financial authorities issued a dividend restraint order, urging expanded support for small business owners and maintaining reserves.

Last year, except for Shinhan Financial Group (23.5%), KB Financial Group (20.2%), Hana Financial Group (20.5%), and Woori Financial Group (20.4%) all lowered their dividend payout ratios to the 20% range recommended by the financial authorities.

However, this year is different. Despite the COVID-19 situation, financial holding companies are expected to achieve record-high earnings due to interest rate hikes and expanded store loans. The dividend restraint order previously recommended by financial authorities has also ended. According to financial information provider FnGuide, the net profit of the four major financial holding companies this year is estimated at 14.9 trillion KRW, a 33.3% increase from last year's 11.2 trillion KRW.

All financial holding companies recently expressed their intention to increase dividends during conference calls. Shinhan Financial set a target dividend payout ratio of 30% this year, while KB Financial and Hana Financial indicated they would restore their dividend payout ratios to the pre-COVID-19 level of around 26%. In 2019, the dividend payout ratios of each financial holding company were 26% for KB Financial, Shinhan Financial, and Hana Financial Group, and 27% for Woori Financial.

Researcher Hyejin Park of Daishin Securities forecasted, "The common stock dividends of the four major financial holding companies this year will approach 3.7 trillion KRW," adding, "This represents a 67.9% increase compared to last year." Park further stated, "The average dividend payout ratio can be expected to be around 25.9%, similar to 2019," and added, "This corresponds to an average dividend yield of 5.9%."

Hana Financial Investment predicted an average dividend yield of about 5.9%, and an average dividend yield of about 4.7% based on final dividends excluding interim dividends. The dividend yields estimated by Hana Financial Investment for this year are 6.6% for Woori Financial, 6.5% for Hana Financial, 5.6% for Shinhan Financial, and 5.2% for KB Financial.

Researcher Jungwook Choi of Hana Financial Investment said, "The policy announced by the authorities around June regarding ‘bank dividend liberalization and reference to pre-COVID-19 dividend payout ratios’ will be maintained," adding, "This year, bank dividend payout ratios are expected to expand from around 22% last year to approximately 25.5?26.0%."

With record-high dividends expected from financial holding companies, shareholders must be listed on the shareholder registry by the last trading day of the stock market this year, December 30, to receive dividends from companies with December fiscal year-ends. However, since it takes two trading days from placing an order to actual settlement, the relevant stocks must be purchased by the 28th.

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