[Click eStock] "Shinhan Financial Group, Bold Shareholder Return Plan... Target Price Up 19%"

LS Securities on the 29th raised the target price for Shinhan Financial Group to 62,000 KRW, up 19%, reflecting solid second-quarter earnings and shareholder return policies. The investment rating of 'Buy' was also maintained. The previous closing price of Shinhan Financial Group was 58,000 KRW.

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Jeon Bae-seung, a researcher at LS Securities, stated, "We believe the possibility of a sharp increase in profitability in 2025-2026 is low under the interest rate cut cycle transition and high credit loss burden, and the expectation of expanded shareholder returns is largely reflected in the current stock price."

Shinhan Financial Group recorded a net profit of 1.43 trillion KRW in the second quarter. This represents an 8% increase compared to the previous quarter, slightly exceeding market expectations. Despite stagnant interest income, revenue growth was maintained through expanded fee income and non-interest income related to securities. However, the group’s credit loss ratio rose to 59 basis points (0.59%) due to an additional provision of 271.4 billion KRW related to real estate project financing (PF).

By subsidiary, Shinhan Bank recorded a quarterly net profit exceeding 1 trillion KRW for the first time, achieving its best-ever performance. Shinhan Card, Shinhan Securities, and Shinhan Life also showed positive results with increased profits compared to the first quarter.

Researcher Jeon said, "Shinhan Financial Group recently announced bold plans to enhance corporate value," adding, "They aim for a 10% ROE, a total shareholder return ratio of 50%, and a reduction of 50 million shares by 2027." The group plans to reduce the number of shares to below 500 million by the end of this year and intends to retire treasury shares worth 150 billion KRW in the fourth quarter. As a result, the total shareholder return amount for 2024 is expected to be around 1.7 trillion KRW, combining treasury share retirement of 600 billion KRW and dividends of approximately 1.1 trillion KRW. The total shareholder return ratio is expected to reach 37-38%. From 2025 to 2027, the group plans to retire treasury shares and increase dividends by an average of over 1 trillion KRW annually, with total shareholder return amounts expected to exceed 2 trillion KRW.

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