[Click eStock] "Shinhan and Woori Financial Group Propose Total Payout Ratio Over 50%"

Daishin Securities analyzed on the 31st that the favorable environment continues with tax law revisions and value-up policies, as the four major financial holding companies posted better-than-expected results in the second quarter. The top preferred stocks in the sector were Shinhan Financial Group and Woori Financial Group, which presented excellent capital policies.

Researcher Park Hye-jin said, "There are two surprising points in the second-quarter earnings announcement. The first is the removal of the implicit hurdle of a Common Equity Tier 1 (CET1) ratio of 13%," and "the second is that the era of a total payout ratio of 50% has begun."

Park said, "Woori Financial Group laid the groundwork by indicating that if it exceeds 11.5%, a total payout ratio of up to 35% is possible, and Shinhan Financial Group made an unprecedented decision to reduce the number of shares by 50 million by 2027."

He added, "Both companies presented a medium-term target of a total payout ratio of 50%, and this decision has the impact to re-rate the valuation of the entire banking sector."

The supply and demand outlook is also not unfavorable. First, financial companies continue to repurchase their own shares steadily. For example, Shinhan Financial Group and KB Financial Group are estimated to be buying stocks worth 4 to 5 billion KRW daily. Among these, a value-up exchange-traded fund (ETF) tracking the KRX Value-Up Index, which includes 'value-up excellent companies' in the fourth quarter, is scheduled to be launched.

Researcher Park explained, "With solid earnings and proactive capital policies, there is nothing better for sentiment improvement," and "the announcement of the KRX Korea Value-Up Index in the third quarter and the launch of the value-up ETF in the fourth quarter are continuously creating a favorable environment in terms of supply and demand."

He also said, "If the dividend income separate taxation, included in the tax law revision announced by the Ministry of Economy and Finance in July, is realized, explosive responses are expected," and "several measures that could serve as a catalyst for undervalued financial stocks, such as raising the limit of Individual Savings Accounts (ISA) and establishing a domestic investment-type ISA, were included." The tax law revision bill is expected to pass the Cabinet meeting on August 27 and be submitted to the regular National Assembly session in September, after which approval or rejection will be decided.

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