[Into the Stocks] Financial Leader 'KB Geumyung' 5 Trillion Won Market Cap Gap with Shinhan

[Asia Economy Reporter Hwang Junho] Financial stocks are heating up amid the interest rate hike trend. In particular, KB Financial, which has reclaimed its position as the leading financial giant, is showing a remarkable upward trend. The market capitalization gap with its traditional rival Shinhan Financial Group has widened to 5 trillion won.

According to the Korea Exchange on the 10th, as of the 9th, KB Financial's market capitalization reached 26.529 trillion won, ranking 11th overall (excluding Samsung Electronics preferred shares). It was ranked 10th until LG Energy Solution, which rose to 2nd place in market capitalization last month, was listed.

As the pace of monetary policy normalization accelerates in major countries, the stock price, which was 55,000 won per share at the end of last year, rose 16% to 63,800 won on the 9th. The plunge in Kakao Pay's stock price, which had pledged innovative finance last year but lost market trust due to the management's own stock 'eat-and-run' scandal, also had a significant impact. However, Shinhan Financial Group's stock price rose only 10.32% during the same period, further widening the market capitalization gap with KB Financial.

Shinhan's profitability itself has not declined. Looking at the net interest margin (NIM, Daishin Securities), which evaluates profitability, as of the fourth quarter of last year, KB (Group 1.85%, Bank 1.61%) and Shinhan (Group 1.98%, Bank 1.45%) are at similar levels.

However, the Lime Fund incident involving Shinhan Bank and Shinhan Financial Investment, along with financial regulatory dispute mediation and disciplinary procedures against financial companies and management, are holding them back. Shinhan Financial Group reflected a provision liability of 304.7 billion won related to the fund's full investigation as non-operating loss, and depending on the disciplinary results, it is judged that an additional reserve of 90 billion to 200 billion won may be accumulated over three years.

On the other hand, KB Financial, which has been relatively free from private equity fund issues except for KB Securities, has enhanced its investment appeal by strengthening shareholder return policies. KB Financial decided on a year-end dividend of 2,190 won per share, raising last year's dividend payout ratio to 25.4%. It also resolved to retire 150 billion won worth of treasury shares (3.5 million shares, about 0.8% of issued shares).

Choi Jung-wook, a researcher at Hana Financial Investment, said, "Although the scale of this treasury share retirement is only about 13% compared to the previously held treasury shares of approximately 1.1 trillion won (up to 1.6 trillion won), it is judged that the shareholder-friendly intention has been sufficiently imprinted by this second measure following the one in 2019."

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