[Edaily Reporter kyoungeun kim ] INDUSTRIALBANKOFKOREA posted third-quarter earnings in line with market expectations. This was driven by an improvement in the net interest margin (NIM) and foreign exchange gains. Analysts suggest that the stock’s potential for further gains depends on whether the bank meets the requirements for separate taxation of dividend income.

Seol Yong-jin, an analyst at iM Securities, stated in a report on the 27th, “INDUSTRIALBANKOFKOREA’s third-quarter net income attributable to shareholders was 767.8 billion won, a 2.8% increase year-over-year, meeting consensus estimates.” iM Securities maintained its “Buy” rating and target price of 27,000 won for INDUSTRIALBANKOFKOREA. The stock closed at 19,140 won the previous day.

Although INDUSTRIALBANKOFKOREA recorded a dividend payout ratio of 35% and a dividend yield of approximately 5% on a standalone basis last year, it failed to meet the requirements for separate taxation because its earnings were lackluster, preventing dividends from increasing by more than 10%. Analyst Seol stated, “Considering the current Common Equity Tier 1 (CET1) ratio, the dividend payout ratio is expected to remain at 35% on a standalone basis; therefore, profits must increase by at least 10% year-over-year to meet the requirements for separate taxation,” and “If the bank generates profits of at least 615.4 billion won on a standalone basis in the fourth quarter, it can meet the requirements; whether this target is achieved will determine the potential for further stock price gains,” he analyzed.

He also highlighted the stock’s appeal as a dividend stock. Analyst Seol noted, “Unlike other bank holding companies, it is difficult to pursue share buybacks and cancellations or tax-exempt dividends, so its appeal in terms of shareholder returns is relatively low,” but added, “Since a high proportion of dividends comes from year-end distributions, which aligns most closely with the traditional approach to trading dividend stocks, its seasonal investment appeal could come to the fore.”

He added, “Considering the upward trend in the net interest margin (NIM), the likelihood of meeting these requirements is high.” iM Securities projected this year’s dividend per share (DPS) at 1,153 won (943 won for the year-end dividend). Based on the current stock price, the dividend yield is approximately 6% (4.9% based on the year-end dividend).