Despite the record-high performance of financial holdings last year, shareholders’ dissatisfaction is increasing as the dividend payout ratio is tied to 20% in the recommendations of the authorities. Getty Image Bank
#. In the corona 19 crash in the stock market earlier last year, Mr. A was relieved of his sore throat thanks to about 500 stocks of financial holdings. With a dividend of more than 2,000 won per share, he collected’allowance money’ close to 1 million won. In terms of deposits, it is close to 5% annual interest.
However, Mr. A is thinking about whether to dispose of the stock of financial holdings these days. This is because financial holding companies have gradually reduced their dividends this year due to pressure from the financial authorities, and the’high dividend ratio’, which is the most attractive aspect of financial stocks, has become overshadowed.
According to the financial sector on the 7th, the’dividend payout ratio’ of major financial holding companies last year is expected to be mostly set at 20%. Compared to the dividend payout ratio in 2019 (25-27%), it is 5-7% points lower.
Dividend payout ratio is a number that indicates how much a company pays dividends out of its net income. Financial holdings have traditionally attracted shareholders with a high dividend payout ratio. However, in last year’s performance, financial authorities advised financial holding companies to refrain from paying dividends because of Corona 19. This is because, in case of uncertainty, it is necessary to save money until at least the first half of the year.
Yearly dividend payout ratio for major financial holdings. Visuals = Reporter Dongjun Shin
Accordingly, KB Financial, which announced its results first, decided its dividend per share in 2020 at 1,770 won, reducing 20% from the previous year (2,210 won). Hana Financial Group, which paid out more than 2,000 won per share in 2019, also decided this time by lowering the total dividend including the interim dividend to 1,850 won. Considering the fact that both companies recorded the highest performance last year, this is a disappointing result for shareholders.
Shinhan Financial Group and Woori Financial Group postponed the announcement of their dividend payout ratio until March, but it will not be easy for them to ignore the 20% guidelines. In a conference call on the 5th, Noh Yong-hoon, Chief Financial Officer of Shinhan Financial Group (CFO), said, “(Recommended by the authorities) there is no legal binding power, but it can be difficult if you deviate a lot.”
However, what shareholders are betting on is the level of interim dividends since June and annual dividends this year. In recent earnings announcements, financial holdings have promised aggressive shareholder return. Lee Hwan-ju, CFO of KB Financial Group, emphasized, “As the government’s capital management recommendation is until the end of June this year (in the second half of the year), we will quickly improve shareholder return through aggressive capital policies. We will review various measures such as retirement of treasury shares and interim dividends.” . As foreigners and institutions reacted to this, KB Financial Group’s stock price jumped 5.47% on the 5th.
Hana Financial, Shinhan Financial, and Woori Financial are also doing their best to catch disappointed shareholders. An official in the financial sector predicted that “in the mid- to long-term, there will be a lot of carrot books, such as promising a dividend payout ratio of close to 30% or implementing an interim dividend.”
Kwak Joo-hyun reporter [email protected]
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