Meritz Financial (138040) Q2 2024 earnings summary

Executive summary

• Achieved record-high quarterly net profit in 2Q24, up 27.7% year-over-year to KRW736.2bn, driven by strong insurance profit, improved bond investment, and increased FX gains.

• 1H24 consolidated net profit reached KRW1,327.5bn, a 12.5% increase year-over-year, despite real estate PF provisions.

• The group operates as a pure financial holding company, managing subsidiaries in insurance, securities, and specialized credit finance, with a focus on risk management, efficiency, and stable long-term growth.

• Recent years saw major structural changes, including full ownership of key subsidiaries through stock swaps and ongoing capital management via share buybacks and cancellations.

• Total assets rose to KRW104.8tn, with shareholder equity at KRW10.2tn as of 1H24.

Financial highlights

• Insurance revenue for 2Q24 was KRW2,248bn (+4% YoY), with insurance profit at KRW483bn (+28% YoY).

• Net interest income for 1H24 increased 18% YoY to KRW1,015bn.

• Operating profit for 2Q24 was KRW1,006bn (+32% YoY); 1H24 operating profit was KRW1,776bn (+13% YoY).

• EPS for 1H24 was KRW6,894; BPS was KRW51,147.

• Basic EPS for H1 2024: KRW6,916; ROE (insurance): 37.1%; ROA (insurance): 5.0%.

Outlook and guidance

• Forward PER as of June 2024 is 6.6x, with a share buyback yield of 15.1%, supporting continued focus on shareholder returns via buybacks and cancellations.

• 3-year annual average TSR stands at 58%, with cumulative TSR since 2023 at 91%.

• The group aims to maximize shareholder value through aggressive capital return, targeting a 50% payout ratio (dividends + buybacks) of consolidated net income through 2025.

• Ongoing focus on risk management, cost control, and business diversification to maintain industry-leading profitability.