Non-bank Subsidiaries Drives Upbeat Results
The author is an analyst of NH Investment & Securities. She can be reached at michelle.cho@nhqv.com. -- Ed.
Maintain Buy rating and TP of W37,000
- Hana Financial Group (HFG) reported consolidated 3Q20 NP of W760bn, ahead of expectations. Similar to that in 2Q20, Hana`s non-bank subsidiaries were one of the key drivers of upbeat results. Brokerage commission went up by 32% q-q, and credit card related fees increased as well. One-time items included the forex gains worth W40bn and investment related gains hovering W10bn.
- Won-based loans grew 3.4% q-q (+7.4% YTD), driven by the household and SME segments. Despite the rate cuts in 1H20, Hana`s net interest income improved by 2.6% q-q in 3Q20 while NIM fell by 4bp q-q. Credit cost came in lower than expected, thanks to sound asset quality amid the COVID-19 crisis. G&A expenses were under control, with its cost-to-income ratio at 43.8%, which is still below the management’s annual CIR target at mid-40% levels.
- Conference call takeaway: 1) NIM is likely to reach the trough levels during 4Q20, 2) investment related gains in 4Q20 could be somewhat lower than those in 2Q20~3Q20, 3) HFG will maintain its conservative stance on provisioning, considering the macro backdrop, and 4) the management team does not think ‘quarterly dividends’ as a likely option for them, given the challenging macro environment concerning the pandemic.