[Click eStock] "JB Financial Group, 2Q Delinquency Rate Decline and Capital Cost Adjustment... Target Price Up"

On the 26th, IBK Investment & Securities raised the target price for JB Financial Group to 17,500 KRW, citing an improvement in investment sentiment due to a decline in the delinquency rate in the second quarter. The investment rating was maintained at 'Buy.'

Researcher Woo Do-hyung stated, "The delinquency rate of JB Financial Group in the second quarter recorded 0.94%, down 23 basis points (bp) from the previous quarter," adding, "This is attributed to a significant decrease in new delinquency occurrences."

Researcher Woo added, "The delinquency rate is expected to continue stabilizing in the second half of the year, which is viewed positively for improving investment sentiment," but noted, "A concerning issue is the major shareholder's stake ratio. During this earnings announcement, JB Financial Group announced the purchase of 30 billion KRW worth of treasury shares and the cancellation of 20 billion KRW worth."

He explained, "Currently, Samyangsa is the largest shareholder with a stake close to 15%, and the increase in stake ratio due to treasury share cancellation could cause issues with the separation of banking and commerce," adding, "Non-financial companies cannot hold more than 15% of shares in regional banks, so if Samyangsa sells the excess shares, it could have a negative short-term impact on the stock price."

The second-quarter earnings also marked the largest scale on a quarterly basis. Net income attributable to controlling shareholders increased by 21.0% year-on-year to 196.9 billion KRW, exceeding consensus estimates by 16.1%. On a combined bank basis, KRW loans increased by 1.8% in the second quarter, but net interest margin (NIM) fell by 5 bp from the previous quarter due to a decline in market interest rates, resulting in a 1.4% decrease in interest income quarter-on-quarter. Non-interest income rose 95.5% year-on-year, reflecting gains from securities valuation.

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