Recently, activist fund Alliance Partners Asset Management launched a campaign to introduce a shareholder return policy for domestic financial holding companies.
Expectations are spreading as some financial holding companies have expressed their willingness to return shareholders.
Expectations are also spreading in the stock market as the low shareholder return rate of domestic financial holding companies has been pointed out as the cause of low valuation compared to bank stocks in major countries.
Alliance Partners Asset Management recently launched a campaign to introduce capital placement policies and mid-term shareholder return policies for all listed bank holding companies in Korea.
Alliance Partners sent an open shareholder letter to listed bank holding companies in Korea and demanded to introduce a capital placement policy and mid-term shareholder return policy through a board resolution by February 9 and to make an official announcement through fair disclosure.
A total of seven banks are subject to the letter, including KB Financial Group, Shinhan Financial Group, Hana Financial Group, Woori Financial Group, JB Financial Group, BNK Financial Group, and DGB Financial Group.
Domestic listed banks have been extremely undervalued compared to major overseas banks, and they explained that shareholder return is natural because they have asset soundness, capital ratio and return on equity capital comparable to major overseas banks.
In fact, domestic bank stocks are currently traded at 0.3 times the PBR on average. This is very low compared to major foreign banks, which are about PBR 1.3 times on average.
In terms of PER, major foreign banks are traded 9.5 times, while Korean banks remain at 3.1 times.
While overseas banks returned an average of 64% of their net profit to shareholders in 2021, the total shareholder return rate of domestic banks stood at only 24%.
Alliance Partners judged that if domestic banks manage loan growth at an appropriate level in the future, shareholders can return at least 50% of their net profit every year while maintaining or improving the capital ratio than it is now.
In fact, since the COVID-19 phase, major bank holding companies have continued to increase their dividend propensity and expand the incineration of treasury stock purchases, but they have yet to reach the level of overseas banks.
AlphaBIZ 김지선(stockmk2020@alphabiz.co.kr)
