Hana Financial to boost corporate value by raising shareholder returns

South Korea’s Hana Financial Group aims to increase corporate value by ramping up shareholder returns based on a sustainable profit structure supported by more earnings from non-banking businesses, its chief executive officer said on Thursday.

Hana CEO Ham Young-joo said the country’s third-largest financial holding company is targeting a price-to-book (P/B) ratio of more than 1.0 times.

The ratio measures the market’s valuation of a company relative to its book value by comparing a company's current stock price to its book value per share. P/B ratios below 1.0 indicate that stocks are undervalued.

“Stocks of domestic financial holding companies are significantly undervalued with their P/B ratios below 1.0 times,” Ham said on the group’s official YouTube channel. “That is mainly because their shareholder returns are lower than (those of) global banking stocks.”

SHAREHOLDER RETURNS

Hana plans to keep increasing shareholder returns to meet its goal unveiled last October of raising total shareholder return (TSR) to 50% by 2027, Ham said.

TSR measures how much investors reap from an investment, particularly in stocks. In 2024, Hana's TSR climbed to 38% from 33% the previous year.

“We will help shareholders secure stable cash flows by setting a total annual cash dividend and paying it evenly each quarter from this year,” Ham said.

He said the group plans to buy back more shares to retire in the second half after repurchasing 400 billion won ($277.1 million) worth of stocks.

NON-BANKING BUSINESSES

Ham said the key to corporate value-up plans is to efficiently utilize limited capital and create a sustainable profit structure.

“We aim to strengthen our non-banking business portfolios to increase their profit contribution to 30%,” he said.

Hana announced plans to manage its common equity tier 1 (CET1) ratio between 13.0% and 13.5% and to maintain its return on equity (ROE) above 10% in October 2024.

The CET1 ratio measures a bank's capital relative to its risk-weighted assets (RWAs). It's a key component of a bank's capital structure and is used to assess its ability to withstand financial difficulties.

“We will make great efforts to achieve the value-up program based on the group’s strong fundamentals,” Ham said.

Write to Jongwoo Cheon at jwcheon@hankyung.com
 
Jennifer Nicholson-Breen edited this article.