Record-Breaking Earnings for Financial Holding Companies, Shareholder Returns Also 'Bold'

[Asia Economy Reporter Song Hwajeong] Financial holding companies are actively engaging in shareholder returns as they achieved record-breaking performance last year.

According to the financial sector on the 19th, the total dividend amount, including interim dividends based on the last year's settlement results of the four major financial holding companies KB, Shinhan, Hana, and Woori, reached 3.7505 trillion KRW, marking an all-time high. This is a 64% increase compared to 2020, when dividends were reduced due to COVID-19.

KB decided on a dividend payout ratio of 26%, restoring the level before COVID-19, which had been temporarily reduced due to the pandemic last year. The dividend per share was set at 2,940 KRW, an increase of about 66% compared to the previous year. Along with this, KB decided to cancel treasury shares worth 150 billion KRW to enhance shareholder value.

Shinhan set the dividend per share at 1,960 KRW, including a quarterly dividend of 560 KRW. The payout ratio for common stock including the quarterly dividend was 25.2%, and the total payout ratio including preferred stock was 26%.

Hana resolved a year-end cash dividend of 2,400 KRW per share, making the total cash dividend per common share for the 2021 fiscal year 3,100 KRW, including an interim dividend of 700 KRW. Accordingly, the annual payout ratio is expected to recover to the 2019 pre-COVID-19 level of 26%.

Woori decided on a record-high dividend of 900 KRW per share.

Jung Junseop, a researcher at NH Investment & Securities, said, "Although the treasury shares to be canceled this time are not large in scale, it is significant in that it responded to the market's demand for expanded shareholder returns," adding, "The profits of bank-affiliated financial holding companies including KB Financial are likely to record all-time highs again in 2022 following 2021, and asset soundness is exceptionally good due to proactive reserve accumulation." He continued, "Since the leading bank has practiced expanding shareholder returns, other financial holding companies are expected to show a similar trend."

Jung Taejun, a researcher at Yuanta Securities, said, "The payout ratio of financial holding companies for 2021 was set at the 2019 level," adding, "The combined common equity tier 1 capital ratio of banks reached 12.5%, breaking the all-time high, which is even higher than the 12.1% when the internal ratings-based approach was approved in 2017, so the payout ratio can be raised without difficulty this year."

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