[Click eStock] "Korea Financial Group, Large-scale Expense Recognition in 4Q... Improvement Expected Next Year"

Ebest Investment & Securities evaluated that Korea Financial Group recorded a loss in the fourth quarter due to large-scale cost recognition, but expects profit improvement next year. The investment rating was maintained as 'Buy.'

Researcher Jeon Bae-seung said, "In the fourth quarter, a net loss of 25.4 billion KRW was recorded, falling short of market expectations. Operating profit and interest income were at the average levels of the first to third quarters, but fee income sharply decreased by 27% compared to the previous quarter, and other operating losses reached 300 billion KRW, resulting in poor performance."

Jeon added, "This was due to large-scale loss recognition of about 400 billion KRW related to real estate project financing (PF) and overseas commercial real estate. The securities' standalone profit and loss showed a deficit of -151.8 billion KRW, with a larger loss, and among other subsidiaries, the savings bank also recorded a loss of -19.2 billion KRW in the fourth quarter, leading to an overall sharp decline in profit."

He continued, "Considering that the group's overall PF exposure remains large, there is room for additional cost recognition. However, overseas commercial real estate has had a certain level of allowance reserves set aside, and cumulative loss recognition has continued since the fourth quarter of 2022. Taking into account the possibility of interest rate cuts in the second half of the year, the risk of additional losses compared to 2022?2023 is expected to be low."

He also stated, "This year, the possibility of business conditions and performance improvement is high. The expected annual net profit for 2024 is 850 billion KRW, which is about a 20% increase compared to 2023, and a return on equity (ROE) recovery of around 10% is expected."

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