[Click eStock] "Hana Financial Group, Gradual Shareholder Strengthening Expected"

Yuanta Securities maintained a buy rating and a target price of 55,000 KRW for Hana Financial Group on the 1st, anticipating a gradual strengthening of shareholder returns.

Hana Financial Group's controlling shareholder net profit for Q4 last year was 473.7 billion KRW, falling short of the consensus estimate of 554.2 billion KRW. Major one-off factors included IB valuation losses of 267 billion KRW, provision expenses of 229.4 billion KRW, provision reversals of 71.9 billion KRW, win-win finance costs of 204.1 billion KRW, special retirement expenses of 45 billion KRW, and FX translation gains of 77.1 billion KRW. However, the capital ratio stood at 13.2%, exceeding the target level of 13%. Accordingly, the amount for share repurchases was increased to 300 billion KRW.

Yuanta Securities forecast that Hana Financial Group's shareholder return ratio will reach 36.8% this year, with a continued gradual strengthening trend.

Interest income decreased by 7.6% year-on-year and 7.2% quarter-on-quarter, falling short of estimates. The group's net interest margin (NIM) declined by 3bps quarter-on-quarter, and the bank's NIM fell by 5bps quarter-on-quarter, but KRW loans increased by 0.8% quarter-on-quarter.

Non-interest income decreased by 47.6% year-on-year and 35.5% quarter-on-quarter but exceeded estimates. The significant year-on-year decline was mainly attributed to one-off factors such as valuation losses on IB assets and compensation for CFDs and funds.

However, contrary to initial expectations, costs related to win-win finance were recognized as other provisions, leading to results exceeding estimates. Fee income increased by 12.4% year-on-year.

Selling and administrative expenses increased by 4.0% year-on-year and 14.5% quarter-on-quarter, in line with estimates. The expense ratio was 50.5%, up 8.5 percentage points year-on-year and 11.1 percentage points quarter-on-quarter.

Provision expenses decreased by 20.0% year-on-year and increased by 12.6% quarter-on-quarter, meeting estimates. The loan loss cost ratio was 50bps, improving by 17bps year-on-year but rising by 6bps quarter-on-quarter.

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