[Click eStock] Shinhan Financial Group, Temporary Supply-Demand Gap... Fundamentals Remain Strongest

[Asia Economy Reporter Lee Seon-ae] Hana Securities announced on the 23rd that it maintains a buy rating and a target price of 50,000 KRW for Shinhan Financial Group. Since July, the stock price has fallen by 4.3%, showing relative weakness compared to other banks. This is partly because it declined less during the sharp drop in the KOSPI and bank stocks in Q2, but it is also interpreted as a result of a supply-demand gap caused by the end of KT's stock purchases. KT decided in January to purchase approximately 437.5 billion KRW worth of Shinhan Financial Group shares through a specific money trust over one year, and it is estimated that they completed the full acquisition by concentrating purchases from late April to early July. Therefore, although the recent stock price showed weakness due to the sudden disappearance of large-scale institutional demand factors, considering the lower multiples compared to competitors and solid fundamentals, it is judged that the sector's excess upward trend is likely to reoccur.

Choi Jung-wook, a researcher at Hana Securities, stated, "Following Q2, NIM (Net Interest Margin) is expected to rise the most among commercial banks in Q3 as well, and further improvement exceeding competitors is anticipated." He added, "In Q3, interest income, non-interest income, and provisions are all expected to improve, with recurring net profit exceeding 1.4 trillion KRW. Including the post-tax gain of 322 billion KRW from the sale of Shinhan Investment Corp.'s building, the reported net profit is projected to surpass 1.7 trillion KRW."

Meanwhile, the bank's NIM rose by 12 basis points in Q2, overwhelming other banks. Besides the increase in loan interest rates due to rate hikes, the rise in demand deposit accounts helped suppress funding cost increases. This is believed to be significantly influenced by attracting the Seoul city treasury, including the inflow of loss compensation funds from the Small Enterprise and Market Service. The loan-to-deposit ratio was the lowest among commercial banks at 96.9% in Q2, and the LCR (Liquidity Coverage Ratio) rose from 89.6% at the end of last year to 98.1%. Considering competitors' LCR ratios, there is still room for NIM improvement (a low LCR ratio inevitably causes NIM pressure due to securing high liquidity assets). The company's NIM improvement in Q3 is expected to be at least 9 basis points, the highest among commercial banks.

Designated as an innovative financial service, Shinhan Bank's food ordering intermediary platform "Ttaenggeoyo," launched this year, is reported by major media to be showing high growth based on low intermediary fees and fast settlement services. Additionally, the group's non-financial lifestyle platforms such as MyCar, AllThat, JejuJini, and HowFit have a combined MAU (Monthly Active Users) of 2.71 million. Amid growing expectations for the relaxation of the separation of banking and commerce and banks' entry into non-financial businesses, the platform is positively evaluated for playing a significant role as a testbed.

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