The author is an analyst of NH Investment & Securities. He can be reached at junsup@nhqv.com. — Ed.
IBK is forecast to log 2023 NP (excluding minority interests) in excess of W3tn. We expect that the recent anticipation for greater shareholder return for major bank stocks will also be reflected at IBK.
Raise TP to W14,000
We raise our TP on IBK from W13,000 to W14,000. Our TP hike is mainly attributed to an increase in our three-year average ROE assumption from 10.9% to 11.4%. The new TP is calculated by applying a target P/B of 0.4x to 2023E BPS of W34,306.
Too early to be certain, but more shareholder return expected
In early-2023, major bank stocks have shown strong share price momentum on expectations for greater shareholder return. Nevertheless, IBK has largely been ignored in this respect, as long-term shareholder return expansion has not been expected due to the nature of the state-run bank. However, as IBK has been following in the footsteps of other banks in terms of shareholder return, we view that IBK will also follow any trend of shareholder return expansion.
Given that the share prices of other major banks already reflect hopes for increased shareholder return, we view that IBK is now an attractive investment vehicle, noting its 2023E DPS of W1,050 (DY of 10.5%).
4Q22 NP (excl minority interest) of W772.8bn, +29.6% y-y
IBK reported 4Q22 NP (excluding minority interest) of W772.8bn (+29.6% y-y). Credit cost surged to 0.79% (+50bp q-q), affected by additional provisioning of W390.6bn in line with conservative economic assumptions. Without such additional provisioning, normalized credit cost reached 0.22%. NIM arrived at 2.12% (+19bp q-q), showing strong growth on the back of an asset repricing cycle. Loan growth also remained solid at 1.7% q-q.
