NH Investment & Securities analyzed on the 14th that the attractiveness of high dividend stocks is expected to increase as tax benefits may be possible when the shareholder return policy is supplemented for Industrial Bank of Korea. It then raised its target price from the previous 19,000 won to 24,500 won, maintaining an investment opinion of 'buy'. The closing price of Industrial Bank of Korea on the previous trading day was 21,000 won.
NH Investment & Securities forecasted that the controlling net profit of Industrial Bank of Korea for the second quarter this year will increase by 9.9% year-on-year to 66.865 billion won. Although the net interest margin (NIM) will be sluggish due to the drop in the Korea Interbank Offered Rate, the loan sector is expected to grow about 1.5% focused on corporate loans. Additionally, about 100 billion won in exchange valuation gains due to the depreciation of the won against the U.S. dollar is also expected to occur.
Jung Joon-seop, a researcher at NH Investment & Securities, said, "The likelihood of tax benefits for shareholders is significant, and considering the growth of ordinary loans, the dividend payout ratio is expected to maintain 35% for the next 2 to 3 years and then gradually increase."
Industrial Bank of Korea set a separate dividend payout ratio target of up to 35% for the common equity tier 1 (CET1) ratio below 12% in the value-up policy announced at the end of last year. It has already paid dividends up to the upper limit of the 35% payout ratio last year.
However, there is uncertainty regarding the separate taxation due to differences in consolidated and non-consolidated net profits. Researcher Jung noted, "Adjusting the payout ratio by about 3 percentage points would impose almost no financial burden, and there is no need to exclude shareholders' tax benefits due to minor differences."
Jung pointed out that since government policies aim to stimulate the capital market, there is also a necessity to supplement the shareholder return policy. He considered that methods such as changing the dividend payout ratio criteria from separate to consolidated, or raising the upper limit of the target payout ratio could be explored.
Researcher Jung stated, "Adjusting the earnings forecasts and considering the potential benefits of the government's capital market stimuli and the separation tax legislation for dividend income being pursued by the National Assembly, the discount was reduced by 10 percentage points, and the target price was raised compared to before."