[Edaily Reporter Park Sun-Yeop ] Bank stocks are once again drawing investors’ attention ahead of the second-quarter earnings season. Analysts note that as fatigue over the high volatility in the semiconductor sector grows and the possibility of a benchmark interest rate hike comes into focus, the banking sector—which offers relatively stable earnings and attractive shareholder returns—is emerging as an alternative.
Eun Kyung-wan, an analyst at Shinhan Investment Securities, commented on the banking sector on the 9th, stating, “Although stock prices approaching their previous highs are acting as a psychological resistance level, an upward breakout is possible based on improved return on equity (ROE),” and maintained an “Overweight” investment rating for the sector. He identified KB Financial Group(105560)and HanaFinancialGroupInc.(086790)as his top picks.

Net income attributable to controlling shareholders for the eight banks covered by Shinhan Investment Securities in the second quarter of this year is estimated at 5.5564 trillion won. This represents a 4.1% increase year-over-year and a 7.4% increase quarter-over-quarter, slightly exceeding the market consensus. Korean won-denominated loans, driven primarily by corporate lending, are expected to rise by 1.9% from the previous quarter, and the net interest margin (NIM) is projected to improve by 1.5 basis points due to rising market interest rates.
Non-interest income is also expected to support earnings. This is due to a reduction in losses related to marketable securities and foreign exchange valuation, as well as an expansion of the fee income base driven by favorable conditions in the capital markets. However, the loan loss provision ratio is understood to have deteriorated slightly due to the high-interest-rate environment and the reassessment of corporate credit risk. Additional provisions related to the Joongang Group default are estimated to range from 3 billion to 40 billion won per bank.
Expectations for shareholder returns remain high. Shinhan Investment Securities projected that banks’ common equity tier 1 (CET1) ratios would have risen slightly quarter-over-quarter, driven by strong earnings despite negative factors such as high growth, a weak won, and rising interest rates. In particular, it forecast that KB Financial Group and HanaFinancialGroupInc. are highly likely to announce additional share buybacks and cancellations of at least 700 billion won and 500 billion won, respectively, in the second half of the year.
On a stock-by-stock basis, the firm expects the dominance of large financial holding companies to become even more pronounced. Analyst Eun noted, “Based on their strong capital and earnings power, efforts to enhance the competitiveness of non-banking businesses—led by major banks—are intensifying.” In fact, KB Financial Group injected 1.7 trillion won into its securities subsidiary, while Hana Financial Group invested 1 trillion won in Dunamu. Woori Financial Group also invested 1 trillion won in its securities division, and KakaoBank Corp. is currently pursuing the acquisition of Marston Capital.
This is interpreted as a preemptive allocation of capital in response to structural changes in the financial industry, such as the shift toward productive finance and the boom in the capital markets. The analyst noted that since the shareholder return ratio of major banks has already reached near its upper limit, expanding the non-banking sector will become even more critical going forward to achieve a structural improvement in return on assets (ROA).
KB Financial Group’s net income attributable to controlling shareholders for the second quarter is expected to reach 1.9329 trillion won, an 11.2% increase year-over-year. Analysts estimate that this could mark the first time the company has recorded quarterly net income approaching 2 trillion won. HanaFinancialGroupInc.’s net income is projected to rise 6.0% to 1.2441 trillion won.
An analyst noted, “While KB Financial Group’s market capitalization of around 60 trillion won—corresponding to a PBR of 1—is viewed as the short-term upper limit for its stock price, there is ample room for growth given its ROE exceeding 10%.” The analyst added, “Hana Financial is also expected to see its valuation normalize alongside a recovery in non-banking earnings.”