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Korea Herald
4 days ago
- Business
- Korea Herald
Bank stocks rally as stronger won boosts capital ratios
Shares of South Korea's largest financial service providers — Hana, Woori, KB, and Shinhan — surged Tuesday, driven by expectations of stronger shareholder returns supported by improved capital adequacy. Hana Financial Group shares rose as high as 70,700 won ($57.57) during intraday trading, marking the highest price since its transition to a holding company in December 2005. The stock later trimmed some gains and closed at 70,100 won. Woori Financial Group also saw its shares hit a record high of 18,310 won during trading, the highest since becoming a holding company in January 2019, before closing daytime trading at 18,290 won. Other major financial service providers posted strong gains in stock prices as well. On Monday, KB Financial Group shares climbed to 102,000 won, approaching its all-time high of 103,900 won recorded on Oct. 25. With this rally, the firm's market capitalization reached 40.13 trillion won, making it the fifth-largest company on the local stock market, outrunning market giants such as Hyundai Motors and Hanwha Aerospace. It was the first time in nearly 15 years for KB to take the No. 5 spot since March 2010. However, as of Tuesday afternoon, KB shares edged down slightly and wrapped up trading at 101,900 won, dropping the company to sixth place in market cap, overtaken by Hanwha Aerospace, which stood at 41.95 trillion won. Shinhan Financial Group shares also posted a strong gain, closing at 56,500 won — a steep climb from 42,500 won on April 9. The stock's previous high stands at 64,600 won logged on Aug. 30. The recent rally in bank stocks is largely attributed to the strengthening of the Korean won. The currency appreciated into the 1,360 won per dollar range this week, recovering more than 100 won from its April low of nearly 1,490 won. On Tuesday, the value of the won was quoted at 1,369.5 per dollar when the daytime trading closed. A stronger won boosts the Common Equity Tier 1 (CET1) ratio, a key indicator of banks' capital adequacy, thereby allowing financial firms greater flexibility in enhancing shareholder returns. The improved capital position comes alongside solid earnings. The four major financial groups recorded a combined net profit of 4.92 trillion won in the first quarter of 2024, the highest Q1 performance on record, surpassing the 4.91 trillion won posted in Q1 2023. According to market tracker FnGuide, the firms are projected to post a combined net profit of 17.64 trillion won this year, up 6.8 percent year-on-year. "Considering the banks' profitability, even with increased treasury share buybacks, the CET1 ratio is still expected to improve," said Choi Jeong-wook, an analyst at Hana Securities. "Share prices of global banks tend to track the scale of their treasury share repurchases."
Korea Herald
08-04-2025
- Business
- Korea Herald
Samsung's Q1 profit beats estimates on Galaxy phones, memory demand
Analysts see steady earnings recovery ahead, but tariff, HBM headwinds remain Samsung Electronics on Tuesday said its earnings for the January–March period are expected to significantly exceed market expectations, driven by strong sales of its flagship artificial intelligence smartphones and better-than-anticipated demand for DRAM chips. In its earnings guidance for the first quarter, the Korean tech giant projected a consolidated operating profit of 6.6 trillion won ($4.48 billion), down 0.15 percent from a year earlier. The figure, however, surpassed the market consensus of 5.15 trillion won, according to financial information provider FnGuide. Samsung also estimated consolidated sales of 79 trillion won, up 9.84 percent year-on-year — marking its highest-ever first-quarter revenue and exceeding analysts' expectations of 77.1 trillion won. There had been concerns that Samsung's Q1 operating profit might dip below 5 trillion won due to delays in supplying its 12-layer HBM3E AI chips to major client Nvidia, as well as intensified competition in core segments like TVs and home appliances. 'The market outlook was bleak just a few weeks ago, but expectations for a rebound have grown, driven by ongoing inventory adjustments and improved supply conditions in the industry,' said Ryu Young-ho, a senior analyst at NH Investment & Securities. While a breakdown by business division has not yet been released, analysts believe the smartphone division led the performance, posting an estimated operating profit of around 4 trillion won. The Galaxy S25 series, launched in February, reached a milestone as the fastest-selling Galaxy lineup in Korea, hitting 1 million units sold in just 21 days. Demand for memory chips also outpaced expectations — particularly in China, where government-backed trade-in programs for home appliances boosted consumer spending. Analysts expect Samsung's semiconductor division to post a preliminary operating profit of around 1 trillion won in Q1. Within that, the memory chip business is projected to earn 3 trillion won, offset by losses from logic chips and foundry operations estimated at around 2 trillion won. Looking ahead to the April–June period, analyst outlooks are mixed amid continued market turbulence and geopolitical uncertainty. Rising global tariff pressures from the US, in particular, remain a key risk. Samsung, currently trailing behind SK hynix in the high-bandwidth memory or HBM chip market, has vowed to strengthen its position in high-value DRAM products. However, uncertainty lingers as semiconductors — so far excluded from Trump's 'reciprocal' tariffs — continue to be discussed as possible targets. In a report, Hana Securities said it expects Samsung's memory division to drive an earnings recovery but has revised down profitability forecasts for its smartphone business from Q2 onward due to potential tariff impacts. 'Starting in Q2, we expect improved supply-demand conditions and rising prices as the memory market enters an upward cycle,' said Kim Dong-won, senior analyst at KB Securities. 'Quarterly earnings are likely to recover steadily from the first-quarter low through to Q4.' However, Song Myung-sub, an analyst at iM Investment & Securities, offered a more cautious view: 'HBM shipments in Q2 are unlikely to see meaningful growth due to the absence of major clients.' While contract prices for DDR5, Samsung's latest DRAM chip in mass production, remain stable, prices of older chips like DDR4 and NAND flash are unlikely to rise due to high inventory levels and weak demand, Song added. Samsung is scheduled to report its full Q1 earnings and hold an earnings call on April 30.
Korea Herald
08-04-2025
- Business
- Korea Herald
Samsung's Q1 profit beats estimates on Galaxy phones, memory demand
Analysts see steady earnings recovery ahead, but tariff, HBM headwinds remain Samsung Electronics on Tuesday said its earnings for the January–March period are expected to significantly exceed market expectations, driven by strong sales of its flagship artificial intelligence smartphones and better-than-anticipated demand for DRAM chips. In its earnings guidance for the first quarter, the Korean tech giant projected a consolidated operating profit of 6.6 trillion won ($4.48 billion), down 0.15 percent from a year earlier. The figure, however, surpassed the market consensus of 5.15 trillion won, according to financial information provider FnGuide. Samsung also estimated consolidated sales of 79 trillion won, up 9.84 percent year-on-year — marking its highest-ever first-quarter revenue and exceeding analysts' expectations of 77.1 trillion won. There had been concerns that Samsung's Q1 operating profit might dip below 5 trillion won due to delays in supplying its 12-layer HBM3E AI chips to major client Nvidia, as well as intensified competition in core segments like TVs and home appliances. 'The market outlook was bleak just a few weeks ago, but expectations for a rebound have grown, driven by ongoing inventory adjustments and improved supply conditions in the industry,' said Ryu Young-ho, a senior analyst at NH Investment & Securities. While a breakdown by business division has not yet been released, analysts believe the smartphone division led the performance, posting an estimated operating profit of around 4 trillion won. The Galaxy S25 series, launched in February, reached a milestone as the fastest-selling Galaxy lineup in Korea, hitting 1 million units sold in just 21 days. Demand for memory chips also outpaced expectations — particularly in China, where government-backed trade-in programs for home appliances boosted consumer spending. Analysts expect Samsung's semiconductor division to post a preliminary operating profit of around 1 trillion won in Q1. Within that, the memory chip business is projected to earn 3 trillion won, offset by losses from logic chips and foundry operations estimated at around 2 trillion won. Looking ahead to the April–June period, analyst outlooks are mixed amid continued market turbulence and geopolitical uncertainty. Rising global tariff pressures from the US, in particular, remain a key risk. Samsung, currently trailing behind SK hynix in the high-bandwidth memory or HBM chip market, has vowed to strengthen its position in high-value DRAM products. However, uncertainty lingers as semiconductors — so far excluded from Trump's 'reciprocal' tariffs — continue to be discussed as possible targets. In a report, Hana Securities said it expects Samsung's memory division to drive an earnings recovery but has revised down profitability forecasts for its smartphone business from Q2 onward due to potential tariff impacts. 'Starting in Q2, we expect improved supply-demand conditions and rising prices as the memory market enters an upward cycle,' said Kim Dong-won, senior analyst at KB Securities. 'Quarterly earnings are likely to recover steadily from the first-quarter low through to Q4.' However, Song Myung-sub, an analyst at iM Investment & Securities, offered a more cautious view: 'HBM shipments in Q2 are unlikely to see meaningful growth due to the absence of major clients.' While contract prices for DDR5, Samsung's latest DRAM chip in mass production, remain stable, prices of older chips like DDR4 and NAND flash are unlikely to rise due to high inventory levels and weak demand, Song added.
Korea Herald
12-02-2025
- Business
- Korea Herald
SKT reports strong 2024 earnings amid AI biz growth
SK Telecom said Wednesday that its annual operating profit surpassed 1.8 trillion won ($1.2 billion) in 2024, marking the fifth consecutive year of growth. The telecom carrier's operating profit rose 4 percent on-year to 1.82 trillion won. Annual revenue increased 1.9 percent to 17.94 trillion won, while net income surged 25.6 percent to 1.44 trillion won. These annual figures fell slightly below the market consensus of 1.84 billion won in operating profit and 18 trillion won in revenue compiled by financial data provider FnGuide. Previously, the company aimed to achieve 17.8 trillion won in revenue for 2024 while expanding its operating profit. In the fourth quarter, SK Telecom recorded an operating profit of 254.1 billion won, down 14.5 percent from 2023. The revenue inched down by 0.3 percent on-year to 4.51 trillion won. However, net income skyrocketed by 138.3 percent on-year to 446.5 billion won, primarily due to increased non-operating income following the merger of AI chip subsidiary Sapeon. SK Telecom is actively expanding its artificial intelligence business under the 'AI Infrastructure Superhighway' initiative. The strategy centers on AI data centers, GPU as a Service and edge AI. To bolster this initiative, the company underwent a major reorganization at the end of 2024, restructuring into seven business divisions focused on telecom and AI. SK Telecom said its AI-related revenue for 2024 grew 19 percent on-year. 'We strengthened our telecom business and laid the foundation for transforming into an AI company last year,' said SK Telecom Chief Financial Officer Kim Yang-seob. 'This year, we aim to pioneer the AI era and further solidify our corporate value." Meanwhile, SK Telecom announced that it would distribute a year-end dividend of 1,050 won per share for fiscal year 2024. The company plans to allocate at least 50 percent of its adjusted consolidated net income annually to shareholder returns from fiscal years 2024 to 2026.
Korea Herald
27-01-2025
- Business
- Korea Herald
Big brokerage firms tipped to have pocketed decent earnings in 2024
South Korea's major brokerage houses are expected to have racked up decent earnings last year on the back of increased trading of overseas stocks, industry sources said Monday. According to the data from market tracker FnGuide, the combined operating income of the country's big five brokerage houses in 2024 is estimated at 5.66 trillion won ($3.94 billion), sharply up from the previous year's 3.37 trillion won. Korea Investment & Securities is expected to have posted the biggest operating income of 1.27 trillion won, followed by Samsung Securities with 1.19 trillion won, Mirae Asset & Securities 1.15 trillion won, Kiwoom Securities 1.23 trillion won and NH Investment & Securities 923 billion won, the data showed. Their stellar performances were partly driven by commission fees from increased trading of overseas stocks by retail investors. The average daily turnover of the local stock market stood at 19.1 trillion won last year, up 2 percent from a year earlier, while that for overseas stocks by Koreans jumped 84 percent on-year to $53.1 billion. Also, local securities firms took less reserve last year than a year earlier against exposure to risky construction development projects, helping jack up their bottom lines. This year, their performances are widely expected to improve further on the back of expected monetary easing cycles and reduced risks against shaky construction projects. (Yonhap)
