Hanwha Investment & Securities evaluated on the 9th that even considering the effects of 'separate taxation,' the stock prices of bank stocks have risen sharply, so there is limited potential for further increases. Hanwha Investment & Securities downgraded its investment opinions for KB Financial Group, Shinhan Financial Group, Hana Financial Group, Woori Financial Group, Industrial Bank of Korea, JB Financial Group, BNK Financial Group, and iM Financial Group from buy to 'neutral (hold).' KakaoBank also maintained a neutral opinion.
Kim Do-ha, a researcher at Hanwha Investment & Securities, seen the driving force behind the continuous rise in bank stock prices as the expectation of separate taxation on dividend income. The currently proposed tax amendment includes provisions to exclude the dividend income of listed companies with a dividend payout ratio of more than 35% from comprehensive taxation and apply a separate tax rate.
The researcher Kim noted, 'If dividend income is taxed separately, the investor base could expand compared to before, and since bank holding companies that already have a total shareholder return rate above 35% can meet the proposed law's requirements just by adjusting the ratios of share buybacks and dividends, I believe they are receiving attention.'
Bank holding companies have focused on shareholder returns through share buybacks and retirements. This is because the effect of reducing the number of shares is significant, considering the comparatively low price-to-book ratio (PBR). However, as market expectations have risen for an increase in the dividend payout ratio, researcher Kim explained that there is sufficient likelihood for bank holding companies to increase the proportion of dividends rather than share buybacks and retirements.
Of course, the bill has not yet passed, and the requirements for separate taxation may change, or there may be differences in shareholder return policies by bank holding company. Researcher Kim said that even if considering adjustments to per-share dividends (DPS) and target stock prices by scenario, it is difficult to expect upward potential based on current stock prices.
The KRX bank index has a year-to-date increase rate of over 50%, surpassing the KOSPI index rise rate (30.6%). Looking back over the last two years, the KRX bank index increased by 84.97%, while the KOSPI index rose 18.02%, widening the gap in rise rates.
The researcher Kim stated, 'Since the market believed in (the expansion of dividends), it is possible for this to become a kind of self-fulfilling prophecy,' while also noting, 'Even reflecting those expectations, upward potential is limited at this time.'