IBK, Announces Value-Up Plan... ROE Target 10% - Dividend Payout Ratio Up to 40%

Quarterly Dividends Introduction Also Being Pursued

IBK Industrial Bank of Korea plans to increase its mid- to long-term return on equity (ROE) to over 10% and its dividend payout ratio to over 40% on a separate basis.

On the 5th, IBK disclosed a value enhancement plan that includes these goals. The plan aims to achieve an ROE of over 10% by diversifying profitability, innovating cost management, fostering future growth, and expanding management’s communication with the market.

According to IBK, as of the end of June, its price-to-book ratio (PBR) stood at 0.35 times, which is somewhat lower than the banking sector average of 0.44 times, although the gap has recently narrowed. However, this remains lower compared to global financial companies.

Regarding profitability, IBK’s ROE is 8.8%, surpassing Japan’s 7.4% and the domestic four major financial holding companies’ 8.5%. Its dividend payout ratio is also relatively high at 29.4%, compared to 28.4% for the domestic four major holding companies. Nonetheless, these figures remain lower than those of the United States, where ROE is 10.3% and the dividend payout ratio is 39.1%.

Accordingly, IBK aims to raise its ROE to over 10% in the mid to long term and reduce its cost of equity (COE) to achieve a PBR of 1.0 times. To expand profitability, IBK plans to strengthen its leading bank position in the small and medium-sized enterprise (SME) finance sector with a market share of over 23%, while expanding its customer base to include individuals, small business owners, institutions, and mid-sized companies. It will also increase non-interest income from areas such as cards, pensions, and asset management. Additionally, IBK will actively pursue innovative projects to improve cost management and future growth.

To enhance shareholder returns, IBK will gradually raise its dividend payout ratio to 40% in line with its common equity tier 1 (CET1) capital ratio target of 12.5%. Furthermore, it plans to introduce quarterly dividends, which are expected to improve shareholders’ cash flow and stabilize stock prices by mitigating ex-dividend effects.

IBK will also strengthen communication with shareholders. The bank will hold conference calls attended by management and revitalize domestic and international investor relations (IR) meetings that had been subdued due to COVID-19. In addition, it will expand information accessibility for general investors and diversify IR channels and content.

An IBK official stated, “Based on the capital secured through profitability enhancement, we will strive to expand policy finance and dividend capacity to strengthen support for SMEs and shareholder returns.”

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