[Edaily Reporter Kim Hyung-il ] HANWHA INVESTMENT & SECURITIES lowered its target price for BNK Financial Group Inc.(138930)by 7.8% to 23,500 won, citing a second-quarter earnings shock caused by increased accounting expenses and provisions. However, the firm maintained its “Buy” rating, noting that the shareholder return yield is expected to reach 8.4% next year due to a rise in the return rate.

On the 17th, Kim Do-ha, an analyst at HANWHA INVESTMENT & SECURITIES, stated, “BNK Financial Group Inc.’s second-quarter net income attributable to controlling shareholders was 200.4 billion won, a 35% decrease year-over-year, resulting in an earnings shock that fell approximately 20% short of our estimates and the consensus.”

This weak performance was due to a 44 billion won loss from the settlement of the acquisition of a stake in an office fund—a profitable asset—which was recorded as interest expense. Analyst Kim explained that, excluding this effect, top-line revenue and adjusted operating profit were in line with estimates. He viewed this as a one-time accounting expense, as revenue such as rent from the asset is expected to be recognized in the future.

However, as impairment charges were significantly higher than expected, operating profit—excluding the fund settlement costs—also fell 15% short of estimates. The holding company’s credit cost ratio (CCR) rose 0.2 percentage points from the previous quarter to 0.72%. Excluding a 7.4 billion won reversal of provisions related to real estate project financing (PF), the CCR stands at 0.75%. Analyst Kim stated, “This is primarily attributed to the impact of corporate credit ratings at the end of the half-year,” and raised his future provision estimates from previous projections.

The net interest margin (NIM) fell by 0.05 percentage points quarter-over-quarter on a group basis, while the banking segment—including BNK Busan Bank and BNK Gyeongnam Bank—saw a 0.04 percentage point decline. Combined won-denominated loans at the two banks increased by 3% quarter-over-quarter, driven primarily by household mortgages and loans to large corporations. Household loans rose 5%, while corporate loans increased 2%. Gains and losses on securities rose by 80 billion won compared to the previous quarter, performing better than expected.

BNK Financial Group Inc. plans to announce the scale of its additional share buyback this October. Analyst Kim estimated that the company would have the capacity to repurchase 30 billion won worth of shares, assuming a dividend per share (DPS) that continues to meet the requirements for separate taxation and an annual shareholder return rate in the mid-40% range. Based on current estimates, the dividend yield is expected to be 5% (4.3% after tax) on a fourth-quarter forward basis, while the shareholder return rate—including share buybacks—is projected to be 7.1% for the fourth quarter and 8.4% for next year.





.