[Click eStock] "BNK Geumyung Jiju, Seriously Undervalued"

On the 4th, BNK Investment & Securities stated that BNK Financial Group is severely undervalued with a PBR of 0.2 times and a PER of 2.8 times. The investment opinion 'Buy' and the target price of 8,500 KRW were maintained.

Researcher Kim In of BNK Investment & Securities forecasted, "The controlling shareholder net profit for the second quarter is expected to be 214.1 billion KRW, a 6.4% decrease compared to the previous year."

Researcher Kim analyzed, "A moderate increase in interest income and non-interest income (77.4 billion KRW) is also expected to slightly increase due to the recovery of domestic asset prices and a base effect from significant securities-related losses in the same period last year, despite a decrease in real estate PF-related fee income." For reference, non-interest income increased by 1.0% year-on-year but sharply declined by 28.5% compared to the previous quarter.

However, provisions for loan losses are expected to increase. Operating expenses are at a very favorable level around 80 billion KRW, but adjustments to PD values due to the downward economic outlook and conservative additional provisions for real estate PF are factors. Considering this, second-quarter interest income is expected to increase by 1.4% year-on-year to 736 billion KRW.

The net interest margin (NIM) for the second quarter is expected to decline by 10 basis points compared to the previous quarter due to ongoing funding costs, but healthy KRW loans, mainly housing mortgage and high-quality small and medium-sized enterprise loans, are expected to increase by 2.0% compared to the previous quarter.

The trend of increasing interest income is expected to continue in the second half of the year. Researcher Kim judged, "The increase in provisions for loan losses (+5.6% yoy) is a burden, but since these are provisions made in preparation for potential defaults rather than actual defaults, considering the possibility of future reversals, it is not negative."

He added, "With little fluctuation in profits by division, the highest performance exceeding 800 billion KRW is expected to continue in 2023. Especially considering that the dividend yield in 2022 was high at 9.6% and that shareholder return policies are expected to be strengthened due to capital ratio improvements in 2023, this represents a severe undervaluation."

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