[Click eStock] "Woori Financial Group, Significant Expansion in Net Interest Margin... Top Dividend Appeal"

[Asia Economy Reporter Park Jihwan] Hana Financial Investment evaluated that Woori Financial Group is expected to see a significant improvement in net interest margin (NIM) and has top-tier dividend attractiveness. The investment opinion 'Buy' and target price of 18,000 KRW were maintained.

Choi Jungwook, a researcher at Hana Financial Investment, said, "A significant improvement in net interest margin (NIM) is expected," and "dividend attractiveness is also top-tier." The estimated net profit for Q4 is expected to exceed consensus at 337 billion KRW, a 101.8% increase compared to the same period last year. He explained that the background for the strong performance is that the Q4 NIM improvement exceeds market expectations and, unlike last year, there are almost no additional provisions required.

The Q4 loan growth rate is expected to be about 1.1~1.3%, with the annual total loan growth rate exceeding 9%, and the bank's NIM is forecasted to improve by 6 basis points to 1.42%. In Q4, although more than 20 billion KRW in voluntary retirement costs and approximately 12 to 15 billion KRW in performance bonuses are expected, the provision level is relatively conservative, as evidenced by the highest NPL coverage ratio among banks, so no artificial additional provisions are anticipated.

The estimated annual net profit for this year is about 2.54 trillion KRW, increasing by 94% compared to the previous year, with a return on equity (ROE) exceeding 10%. Additionally, due to the additional approval of internal rating system changes related to credit cards and external audit corporations (large and small enterprises), the common equity tier 1 ratio rose to 11.4% at the end of Q3.

With the highest dividend yield among banks, an improvement in MSCI (Morgan Stanley Capital International) supply and demand is also expected. This year, net profit is nearly doubling compared to the previous year, and the dividend payout ratio is expected to rise from 19.9% in 2020 to 25.8%. The total dividend yield, including interim dividends, is about 7.1%, the highest among banks. Furthermore, as the Korea Deposit Insurance Corporation's shareholding decreases, the increase in floating shares is expected to raise MSCI inclusion weight, which is also a positive factor for supply and demand.

Researcher Choi Jungwook stated, "The loan balance related to Ostem Implant, which has recently become an issue, is estimated to be about 50 billion KRW, most of which is secured by real estate collateral," and added, "Even if problems arise in the future, it is not expected to be a burden."

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