Yuanta Securities said on the 22nd that it will maintain its investment opinion "buy"and target stock price of 72,000 won, citing better-than-expected interest income and asset soundness.
"The consolidated profit in the third quarter reached KRW 1.279 trillion, exceeding our estimate of KRW 1.2179 trillion and consensus of KRW 1.208 trillion. As both NIM and loan growth rate have achieved better-than-expected interest gains, contrary to concerns, asset soundness has also been further improved compared to the previous quarter," said Yuanta Securities
"Major factors include the return of bank corporate taxes, about KRW 17 billion in the return of large loan-loss reserves and about KRW 14 billion in other operating profits related to early acquisition of remaining shares of overseas subsidiaries.".
First of all, interest income rose 16.0% year-on-year and 3.5% year-on-quarter, exceeding the estimate of 2.8. Despite the disappearance of the deposit rate repricing effect and concerns over household debt management, the group NIM improved 1 bp QoQ, bank NIM improved 2bps QoQ and won loans increased 3.4% QoQ.
Non-interest income rose 3.3% year-on-year and fell 1.4% QoQ, falling below the estimate. The commission profit grew 15.5% year-on-year and 5.3% compared to the previous quarter, but it is attributed to a sharp drop in other operating gains and losses due to increased foreign exchange losses and Prudential Life Insurance's increase in liability reserves.
Sales and maintenance costs rose 4.0 percent on-year and fell 0.3 percent on-quarter to meet estimates. The third-quarter cost ratio was 46.8%, up 3.9% pt from a year earlier and 1.2% pt from the previous quarter.
Appropriation fund transfers fell 7.1% year-on-year and 10.9% year-on-quarter, showing better performance than estimates.
Reporter Lee Dong-hoon usinvestmentidea2020@gmail.com
