Dividend per share decreases as financial sector recommends dividend payout ratio within 20%… “It is difficult to ignore the recommendations of the authorities

Although most financial holding companies achieved record-high net profit last year, dividend per share in the financial sector decreased by 16-20% according to the recommendation of the financial authorities to “dividend propensity (shareholder’s dividend ratio of current net income) within 20%”. This is because the Financial Services Commission recommended’dividends within 20% of net profit (within 20% of dividend propensity)’ to financial holdings and banks on the 28th of last month under the name of financial soundness management.

According to the financial sector on the 7th, KB Financial Group at the board of directors on the 4th decided last year’s dividend payout ratio of 20% and dividend per share of 1770 won. The dividend payout ratio fell 6 percentage points from 2019 (26%), and the dividend per share decreased by 20% from 2210 won to 1770 won. Lee Hwan-ju, vice president of KB Financial Group (CFO), said in an earnings conference call, “We regret that the dividends did not meet market expectations. It is because we sympathized with the recommendations of the authorities that it is necessary to have shock absorbing power in preparation for economic uncertainty.” .

The board of directors of Hana Financial Group also held a board meeting on the 5th and decided the dividend payout ratio for 2020 was 20% and the dividend per share was 1350 won (1850 won including interim dividend). The dividend payout ratio fell by about 6 percentage points from a year ago (25.78%), and dividend per share decreased by 16%. Lee Hui-seung, managing director of finance at Hana Financial Group, also said in a conference call, “The dividend (reduction) will be applied temporarily, so we ask for the generous understanding of shareholders.”

Shinhan Financial Group and Woori Financial Group postponed their dividend policy to the board of directors in early March. However, it will not be easy for them to ignore the recommendations of the financial authorities and determine the payout ratio of more than 20%.

An official from the financial sector said, “It is a policy to be decided by the board of directors of financial holding companies, but in fact, it is difficult to object to or ignore the dividend guidelines of the supervisory authority.”