Hana Financial Group (086790) Q3 2024 earnings summary

Executive summary

• Q3 2024 cumulative net income reached KRW 3.225 trillion (3,225.4 Wbn), up 8.3% year-over-year, with quarterly net income at KRW 1.157 trillion, both marking record highs, driven by resilient non-interest income and effective risk management.

• Shareholder returns enhanced with a 450 Wbn cumulative share buyback and cancellation, reflecting strong capital adequacy.

• Group CET1 ratio recovered to 13.17%, up 37 bps sequentially, supported by RWA management and KRW appreciation.

• Strong non-interest income growth, stable credit cost management, and robust fee income drove results above market consensus.

• Asset quality showed some deterioration, but credit cost ratio remained stable due to high collateral and preemptive provisioning.

Financial highlights

• Cumulative fee income for Q3 was KRW 1.501 trillion, up 11.9% year-over-year, led by credit card fees, IB business, and operating leases.

• Non-interest income rose 6.4% year-over-year to KRW 1.805 trillion, with disposition and valuation gains up 18.9% year-over-year.

• Group NIM in Q3 was 1.63%, down 6 bps quarter-on-quarter and from 1.79% a year ago, reflecting market rate pressures.

• SG&A expenses increased 3.5% year-over-year, with a cost-to-income ratio of 39.5% for 3Q24.

• Credit loss provision dropped 32.7% year-over-year, supporting improved profitability.

Outlook and guidance

• NIMs expected to rebound slightly in Q4 as loan balance rates stabilize and funding costs improve.

• CET1 ratio targeted at 13% or above, with Q4 projection at 13.2% or higher, maintaining a conservative asset growth stance.

• Shareholder return ratio to gradually increase, aiming for 50% by 2027.

• Asset rebalancing will continue, focusing on quality and profitability as annual growth targets have already been met.