[비즈한국] Ham Young-joo, Chairman of Hana Financial Group, has declared that he will raise the group's Price-to-Book Ratio (PBR) to 1x or higher. Financial stocks, which are considered low-PBR assets, were classified as beneficiaries of the corporate value-up program, leading to a significant rise in stock prices last year. Hana Financial, which saw a 30% increase in stock price from 2023 to 2024 (from 43,400 won to 56,800 won), aims to maintain this momentum to boost its PBR. However, given that almost no financial stocks have exceeded a PBR of 1x in the past year and that Hana Financial's PBR growth has been slower than its stock price appreciation, attention is focused on whether Chairman Ham can achieve this goal during his tenure.
Hana Financial released an interview on February 27 regarding Chairman Ham Young-joo's group value-up plan. In the internal interview, Chairman Ham said, "As CEO, the most important thing I have focused on over the past three years is corporate value enhancement (value-up)," adding, "The most important aspect of the value-up plan is qualitative growth. We must build a system that allows for continuous implementation. It is crucial to push forward with the value-up plan regardless of external uncertainties."
Chairman Ham attributed the undervaluation of domestic financial stocks to low shareholder return rates. He noted that while shareholder return rates for overseas banks, such as those in the U.S., reach 70–80%, the rates for domestic banks are significantly lower. Consequently, he announced plans to raise Hana Financial's shareholder return rate, currently at around 38%, to 50% by 2027.
Hana Financial unveiled its corporate value enhancement plan in October 2024 and announced the largest share buyback and cancellation in the group's history—worth 400 billion won—on February 4 of this year. The company plans to further buy back and cancel shares in the second half of the year to achieve a shareholder return rate of over 40% this year. Market expectations are also high. On the day the 400 billion won buyback and cancellation was announced, the stock price rose 3.7% from the previous day, breaking the 60,000 won mark, before falling to 58,000 won on the 7th.
Hana Financial has put forward a shareholder return policy centered on share buybacks, cancellations, and equal dividends. While domestic bank shareholder returns have traditionally focused on cash dividends, the group plans to increase the proportion of buybacks and cancellations, similar to overseas banks. Furthermore, starting in 2025, cash dividends will be fixed at a certain level and paid out in equal quarterly installments. The group explains that as the number of shares decreases due to cancellations, earnings per share will rise, allowing for stable cash distribution to investors every quarter.
Chairman Ham emphasized, "Among major financial groups, Hana Financial has the lowest number of outstanding shares. The effects of share buybacks and cancellations will be tangible," adding, "It is only a matter of time before we recover corporate value and reach a PBR of 1x."
Chairman Ham also stated that he would focus on strengthening the non-banking business portfolio. He noted, "If we secure the independent competitiveness of our non-banking subsidiaries and increase synergies through collaboration with other affiliates to raise their profit contribution to about 30%, achieving a Return on Equity (ROE, a profitability indicator) of 11–12% will be possible." In Hana Financial's 2024 performance, the ROE was 9.12%, and the contribution from the non-banking sector was 15.7%.
Chairman Ham successfully secured reappointment on January 27 of this year and will continue to serve as chairman for three more years. His term lasts until March 2028. During his renewed term, he is expected to strive to achieve value-up goals such as a 50% shareholder return rate, a PBR of 1x or more, an ROE of 10% or more, and maintaining a Common Equity Tier 1 (CET1) capital ratio of 13.0–13.5%.
However, contrary to Hana Financial's "matter of time" aspiration, reaching a PBR of 1x within three years is not expected to be easy. PBR is an indicator of how many times a company's stock trades relative to its net assets; if it is lower than 1x, the market capitalization is smaller than total assets, which is generally considered undervalued. However, since the average PBR varies by industry, undervaluation must be assessed in comparison to peers.
Looking at Hana Financial's PBR trends from 2014 to 2024, the highest record was 0.62x in 2017, and it has not exceeded 0.5x in the seven years since. The 2024 PBR was 0.37x, the highest figure since 2019 (0.38x), but it is still far from 1x.
Low PBR is a problem seen across the financial sector. Looking at the PBR trends of major domestic bank stocks over the past four years (2021–2024), out of 10 stocks (KB Financial105560, Shinhan Financial Group055550, Woori Financial Group, Hana Financial, KakaoBank, Jeju Bank, JB Financial Group, Industrial Bank of Korea, DGB Financial Group, BNK Financial Group), the only one to record a PBR of 1x or higher is the internet-only bank KakaoBank (1.7x as of March 7).
Even KakaoBank has seen its PBR steadily decrease from 5.08x in 2021 to 2.03x in 2022, 2.22x in 2023, and 1.5x in 2024 as the hype from its IPO faded. The same is true even when expanding the comparison group to the securities industry. As of the 7th, out of 38 stocks related to securities firms, only two had a PBR of 1x or higher (Meritz Financial Group at 2.17x and SK Securities Preferred Shares at 1.28x).
However, as Hana Financial has preemptively brought out value-up targets and share cancellation measures among domestic financial holding companies, the securities industry is watching the results closely. Kim Do-ha, an analyst at Hanwha Investment & Securities, analyzed, "In 2024, Hana Financial Group086790 announced a share buyback twice the size of the previous year, becoming the first to materialize value-up for bank stocks," adding, "Strengthening the shareholder return policy in the current environment where risks have risen due to uncertain external conditions is positive." Eun Gyeong-wan, a research fellow at Shinhan Securities, projected, "Expectations for value-up lowered due to political issues in December, which also worsened market sentiment for bank stocks," but added, "The stock price is expected to trend upward with the gradual expansion of shareholder return policies."