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▲ KB Financial Group, Shinhan Financial Group, Hana Financial Group, and Woori Financial Group. |
[에너지경제신문=나유라 기자] With major domestic financial holding companies limiting their dividend payout ratio to 20% at once in accordance with the recommendations of the financial authorities, attention is focused on whether they will aggressively appease shareholders in the second half. In line with the recommendations of the authorities, the holding companies took a step back in relation to the dividend policy, but since each company has a complicated insider with respect to shareholder value, the stock price, including interim dividends, is more aggressive from the end of June when the capital management recommendation is finished. It is expected to release a stimulus package.
◇ Major financial holding companies marched on’the best performance ever’ even in Corona 19
According to the financial sector on the 7th, major domestic financial holding companies generally achieved record-high performance last year. Shinhan Financial Group posted a net income of 3,4146 billion won last year, an increase of 0.3% from the same period last year. Hana Financial Group’s annual consolidated net income of 2,637.2 billion won last year, up 10.3% from the previous year. Shinhan Financial Group and Hana Financial Group each achieved the highest performance since the establishment of the holdings. KB Financial Group also posted a record high in net profit last year, an increase of 4.3% compared to the previous year, to 3.45 trillion won. They also surpassed the previous year in accumulating provision for bad debt due to the novel coronavirus infection (Corona 19). However, Woori Financial Group, the only one of the four major financial holding companies, that did not have a securities affiliate, recorded a net profit of 1.3 trillion won last year, down 30% from the previous year.
◇ Adjusted dividend payout ratio to 20%…Proclaimed aggressive shareholder return plan after June
Despite such favorable results, financial holding companies simultaneously limited their dividend payout ratio to 20%. KB Finance reduced its dividend per share by 20% from 2210 won in 2019 to 1770 won in 2020. Hana Financial Group also decided to set a dividend per share of 1350 won in 2020. The total dividend, including the interim dividend, was 1850 won, down 12% from the previous year (2100 won/intermediate dividend included). However, Shinhan Financial Group and Woori Financial Group did not announce dividends on this day. As the financial authorities have recommended lowering the dividend payout ratio to within 20% by the end of June this year to expand the capacity to absorb losses due to the aftermath of Corona 19, the plan is to be decided through the board of directors early next month. Noh Yong-hoon, vice president of Shinhan Financial Group (CFO), said in a conference call after the recent announcement of the results, “I respect the recommendations of the supervisory authority, but I think each financial institution can find reasonable reasons to prove and persuade the appropriate dividend level.” I will try to find a reason and agree to it.”
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▲(Note: Including 500 won interim dividend for Hana Financial Group) (Source = each company) |
It is worth noting that financial companies have lowered their dividends, but have announced a more aggressive shareholder return policy since June, when the capital management recommendations to shareholders were finished. In a conference call after the performance announcement, they pledged to review all measures that financial companies can operate, such as treasury stock purchase, treasury stock cancellation, and interim dividends, and implement them at an appropriate time. If the economy does not deteriorate further after the second half of the year, it is interpreted that there is a need to appease angry shareholders by reducing dividends, as it is unlikely that the financial authorities will push for new dividend regulations. An official from a financial company said, “The stock price is very undervalued and the stockholders are also in a situation where there is a contradictory situation that has to reduce dividends despite the strong performance.” “It’s the best I can do in the current situation.”
◇ Shareholders are taken away… Holding companies are complicated within the’shareholder return policy’
The reason why holding companies are expected to go into a war without gunshots over the shareholder return policy after June is because each company currently has a complex interest in enhancing shareholder value. As Shinhan Financial Group increased the number of shares by 7.9% with a paid-in capital increase of about 1.2 trillion won last year, if the dividend payout ratio is limited to 20%, the attractiveness of dividends is expected to decrease further. Shinhan Financial Group plans to increase its dividend payout ratio to 30% in the mid- to long-term, while preparing to change the articles of incorporation so that quarterly dividends can be executed even in the second half of the year.
If other holding companies such as Shinhan Holdings pay interim dividends, Hana Financial Holdings is expected to continue to struggle to implement a stronger shareholder return policy. Even though Hana Financial Group is not a leading finance company, the reason why foreigners have the highest foreign ownership among the four major financial holding companies is that it was the only holding company to pay interim dividends. However, if other holding companies offer interim dividends, Hana Financial Group is expected to lose some of its strength. Accordingly, Hana Financial Group is expected to strengthen its shareholder return policy by raising its dividend per share beyond the interim dividend. Another financial sector official said, “Hana Financial Group made an interim dividend despite the recommendations of the authorities last year, and expressed a strong determination to implement a shareholder return policy under any circumstances.” “If other holding companies also join the interim dividend, the only financial holding company The title of paying an interim dividend may be somewhat faded,” he said.
Experts are also paying attention to the shareholder return policy that the holding companies will introduce in the second half of the year. Young-soo Seo, director of Kiwoom Securities, said, “It is expected that the capital reserved due to dividend regulation will be additionally returned through treasury stock purchases and interim dividends within the year. Taking this into account, KB Financial Group’s annual dividend yield is 7.6%, and if additional dividends are included, 10 It is expected to reach %.”