[Edaily Reporter Kim Se-yeon ] The four major financial groups (KB Financial Group, Shinhan, Hana, and Woori Financial), which posted record-breaking earnings, have resolved to invest 4.1 trillion won this year solely in the repurchase and cancellation of treasury stock, intensifying their competition to return value to shareholders. With about four months remaining in the year, the total value of treasury stock cancellations has already surpassed last year’s annual total. As the “Value-Up” policy aligns with improved earnings, shareholder return strategies—which had previously focused on dividends—are rapidly shifting toward treasury stock cancellations.
According to the financial industry on the 29th, the total amount of treasury stock purchases and cancellations resolved by the four major financial groups this year stands at 4.1 trillion won as of that day. KB Financial Group(105560), which has the largest scale of share buybacks and cancellations, decided to repurchase and cancel shares totaling 1.9 trillion won in three separate rounds: approximately 600 billion won on February 5, approximately 600 billion won on April 23, and 700 billion won on July 23. In addition, ShinhanFinancialGroup Co.,Ltd.(055550)plans to buy back and cancel 1.2 trillion won worth of treasury stock, HanaFinancialGroupInc.(086790)plans to do the same with 650 billion won, and WooriFinancialGroup(316140)plans to do so with 350 billion won.
Although there are still about four months left until the end of the year, the total value of treasury stock repurchases and cancellations by the four major financial groups has already exceeded last year’s annual total of 3.68 trillion won. As of the date of the board resolutions, last year’s treasury stock buyback and cancellation volumes by financial holding company were 1.48 trillion won for KB Financial Group, 1.3 trillion won for ShinhanFinancialGroup Co.,Ltd., 750 billion won for HanaFinancialGroupInc., and 150 billion won for WooriFinancialGroup.
In particular, KB Financial Group has decided to cancel an additional 1.4022 trillion won worth of treasury stock it already holds this year. This follows the implementation of the third amendment to the Commercial Act last March. The third amendment stipulates that existing treasury shares acquired directly prior to the effective date must be canceled within one year and six months of that date. When combined with the cancellation of previously held treasury shares, the total value of KB Financial Group’s treasury shares scheduled for cancellation this year rises to 3.3022 trillion won.
Behind this expansion of shareholder returns are record-breaking earnings. In the first half of this year, the combined net income of the four major financial groups reached 11.3392 trillion won, marking the highest half-year figure on record. Non-interest income—including commissions from securities and wealth management (WM) services, as well as gains on securities—increased significantly, driving up overall earnings. As improved earnings have increased capital capacity, the scale of share buybacks and cancellations is also expanding.
The methods financial holding companies use to return value to shareholders are also changing. While cash dividends were the primary focus in the past, the practice of buying back shares and immediately canceling them has recently become the mainstream approach. Share buybacks and cancellations are considered a key shareholder return tool, as they reduce the number of shares outstanding, thereby increasing earnings per share (EPS) and shareholder value. In particular, since the government’s “Value-Up” policy was introduced, financial holding companies have made expanding shareholder returns a core management strategy, leading to increasingly fierce competition in share buybacks and cancellations.
Kim Dae-jong, a professor in the Department of Business Administration at Sejong University, commented, “Capital capacity has improved significantly as companies have continued to post solid earnings driven by high interest rates and expanded non-interest income.” He added, “Coupled with the spread of the government’s corporate value-up policy, a strategy aimed at boosting earnings per share (EPS) and stabilizing stock prices through share buybacks and cancellations—rather than simply increasing dividends—is taking root across the financial holding sector.”
Experts predict that the scale of share buybacks and cancellations in the financial sector will continue to grow. Kim Yong-jin, a professor in the Department of Business Administration at Sogang University, noted, “The method of shareholder returns in the financial sector is shifting from a focus on cash dividends to a focus on share buybacks and cancellations. The scale of share cancellations will continue to grow,” he said, adding, “An increasing number of financial firms are setting their effective shareholder return rate—the percentage of net income actually returned to shareholders—at 50% or higher. From this perspective, share cancellations are more effective than cash dividends.” Professor Kim Dae-jong also predicted, “As long as earnings and capital soundness are maintained, financial holding companies are highly likely to continue their shareholder return policies that combine dividends and share buybacks.”
The actual number of shares to be retired may differ from the initial estimate at the time of disclosure. This is because most financial holding companies decide on share buybacks based on a fixed amount, so the number of shares that can be purchased for that same amount may vary depending on subsequent stock price movements. Therefore, if the stock price rises, the number of shares to be retired will decrease compared to the initial estimate; conversely, if the stock price falls, the number of shares to be retired may increase.
