Courtesy of IBK Industrial Bank

Hana Securities estimated on the 11th that the final dividend yield of the Industrial Bank of Korea for 2024 will be about 7.3%, the highest among bank stocks, based on the year-end closing price. As the dividend eligibility date for the Industrial Bank of Korea is expected to be at the end of March, it indicates that the attractiveness of dividend investments may gradually increase.

Research Institute Choi Jeong-wook released an analytical report on the Industrial Bank of Korea on the 11th. According to Choi, the Industrial Bank of Korea recorded a common equity Tier 1 (CET1) ratio of 11.33% in the fourth quarter of last year, and the bank previously announced that it manages its dividend payout ratio within 35% when the CET1 ratio is below 12%. Based on this, Choi estimates the last year's dividend payout ratio to be 34.5% on a standalone net profit basis and estimates the dividend per share (DPS) to be 1,040 won.

Choi said, “While the Industrial Bank of Korea has the disadvantage that as a national policy bank with the government as the major shareholder, it is difficult to buy back or retire its own shares, the estimated year-end dividends of 1,040 won per share indicates a dividend yield of 7.3% based on the year-end closing price.” He noted, “After discussions on dividends with the Ministry of Strategy and Finance on the 25th and 26th, it is expected that a resolution will be made at the board meeting the following day.”

Choi assessed that the liability burden related to the regular wage lawsuit is not greater than concerns. The Supreme Court overturned a lower court's ruling that favored the company in the wage lawsuit filed by the Industrial Bank of Korea's union regarding the inclusion of regular bonuses in the ordinary wage, sending the case back to the High Court. The possibility of the Industrial Bank of Korea ultimately losing has increased.

Choi stated, “The Industrial Bank of Korea’s other provisions related to the regular wage lawsuit accumulated by the end of 2024 are estimated to be around 350 billion won, and it is expected that there won't be any significant additional burden.” He continued, “Considering that the accumulation of other provisions related to this was almost completed last year, the uncertainties and negative impacts on future profits have now been deemed to have disappeared.”

Choi maintained an investment recommendation of 'buy' for the Industrial Bank of Korea and a target price of 18,000 won. This is about 18% higher than the previous day's closing price of 15,260 won.