"Financial Holding Companies Expanding Shareholder Returns with Positive Performance Outlook This Year"

Shinhan Financial Group Initiates 150 Billion KRW Treasury Stock Cancellation and Quarterly Equal Dividends

[Asia Economy Reporter Yu Je-hoon] Following last year, a performance 'tailwind' is blowing through major domestic financial holding companies this year as well. Each holding company is also expanding shareholder return policies through measures such as treasury stock cancellation and regularization of quarterly dividends.

According to financial information firm FnGuide on the 25th, the consensus estimate for controlling shareholders' net profit of the four major domestic financial holdings (KB, Shinhan, Woori, Hana) for the first quarter is 4.1513 trillion KRW. This represents a 4.7% increase compared to the same period last year, marking the first time the first quarter net profit consensus has exceeded 4 trillion KRW.

The securities industry analyzes that the background of this tailwind lies in the expansion of the interest rate spread between loans and deposits and the rise in net interest margin (NIM) due to the base interest rate hike. Although the growth of won-denominated loans has significantly slowed due to the interest rate hike and government loan regulations, it is expected that the rise in NIM will offset this.

In a report released yesterday, Daishin Securities forecasted that the NIM of the four major banks in the first quarter will rise by about 2 to 3 basis points (1bp=0.01%) compared to the previous quarter average (1.49%), and predicted that the increase will reach 5bp in the second quarter when the effect of the interest rate hike fully materializes.

Following last year's record-high performance, a tailwind is expected this year as well, and at regular shareholders' meetings, each holding company is strengthening shareholder return policies. Shinhan Financial Group, which concluded its shareholders' meeting first yesterday, held an extraordinary board meeting and approved a plan to purchase treasury stock for cancellation worth 150 billion KRW. Accordingly, Shinhan Financial plans to purchase and cancel a total of 3,778,338 shares through on-market purchases by June 24. Shinhan Financial Group, which conducted the first quarterly dividend in the banking sector last year, plans to pursue equal dividends and regularization starting from the first quarter of this year. Along with this, it aims to raise the dividend payout ratio to 30% in the mid to long term.

Other financial holding companies besides Shinhan are also considering expanding dividends. KB Financial Group announced the closure of the shareholder registry for cash and stock dividends on the 16th. Although the final decision will be made at the board meeting in late next month, this is evaluated as showing a commitment to shareholder returns such as quarterly dividends. Woori Financial Group also revised related regulations by specifically specifying the interim dividend record date (June 30) through amendments to its articles of incorporation at the shareholders' meeting held on the same day.

Since the banking sector's performance is showing a significant improvement trend, the securities industry evaluates that such shareholder return policies are likely to become widespread. Daishin Securities stated, "Quarterly dividends have now become a major trend (in the financial sector)," and "It is expected that such changes will spread across financial holding companies."

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