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[Alpha Biz= Kim Sangjin] NH Investment & Securities revised its target price for Shinhan Financial Group downward by 4%, from 76,000 KRW to 73,000 KRW, citing expectations that Q4 earnings would fall short of market consensus. However, it maintained its "Buy" investment rating.

NH Investment & Securities stated, "Shinhan's Q4 net income attributable to controlling shareholders is expected to be 601.3 billion KRW, up 9.4% year-on-year but below market consensus." The firm attributed this to "seasonal factors, valuation losses on non-marketable securities (reducing non-interest income), and increased voluntary retirement expenses (boosting SG&A costs)."

The report also highlighted that, despite the anticipated earnings shortfall, proactive management of risk-weighted assets (RWA) is expected to limit the decline in the Common Equity Tier 1 (CET1) ratio to a slight dip from 13.1% in Q3 to 13.0% in Q4. "Although Q4 earnings are likely to miss consensus, shareholder returns are more influenced by capital ratios than quarterly earnings, so this should not be linked to concerns over shareholder returns," NH stated.

For 2025, NH forecasted stable shareholder returns based on Shinhan's solid capital ratio. The company plans to implement an annual dividend per share (DPS) of 2,220 KRW (555 KRW quarterly) and a share buyback and cancellation program worth 1 trillion KRW (250 billion KRW per quarter), representing increases of 60 KRW in DPS and 150 billion KRW in share buybacks compared to 2024. Total shareholder return is expected to rise to 44.5%.

NH Investment & Securities added, "The trend of expanding shareholder returns, focused on share buybacks, is expected to continue. Currently, Shinhan is purchasing approximately 200,000 shares daily (with an estimated remaining budget of around 96 billion KRW), which is contributing to stock price stability."

 

 

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