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Hana Financial: Scores Well, Is Cheap, but Some Doubts Linger

Hana: Much to Applaud on Asset Quality and OPEX Control

Global Bank Equity Specialist, Creative Portfolios

Paul Hollingworth

Global Bank Equity Specialist

Creative Portfolios

Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/hana-financial-group" target="_blank" data-smartkarma-citation="entities:12843:1" rel="noopener">Hana Financial (086790 KS)</a> PH Score™   9.4Hana dedicates itself to a balanced credit portfolio between corporate and consumer segments, backed by time deposits and wholesale markets.FY20/19 results show positive fundamental momentum and trends with modest improvement in Profitability, in headline Asset Quality, in Liquidity, and in Efficiency while Provisioning was stable. There was a lightweight erosion in NIM (Spread was stable) and in Equity/Assets though other Capitalization ratios were marginally better. Improvements may have been frugal and unexceptional but they were improvements all the same. That is expressive in the current environment. “Core Income” showed so-so growth YoY, supported by reduced Funding Costs from Interest-bearing Liabilities and a moderate increase in Fee Income, while subtle Efficiency gains and especially firm “non-core Income” streams (mainly trading gains) more than offset a sizeable increase in LLPs which exerted a negative impact on Comprehensive Income which expanded by 4.5% YoY.<div class="content-highlight">A FV of 5%, a PBV of 0.42x, a Dividend Yield of 4.47%, an Earnings Yield of 21.1% and a Total Return Ratio of 1.95x are far from unappealing. The bank commands a top quartile PH Score™ (9.4) which captures value-quality trends. This Score may flatter the bank somewhat given the modest nature of improvement. Alternatively, there is a price for stability and for a basically flat performance in such a traumatic period.</div>We note a high RSI and would certainly accumulate this bank on market moves lower.

Hana Financial (086790 KS) PH Score™   9.4Hana dedicates itself to a balanced credit portfolio between corporate and consumer segments, backed by time deposits and wholesale markets.FY20/19 results show positive fundamental momentum and trends with modest improvement in Profitability, in headline Asset Quality, in Liquidity, and in Efficiency while Provisioning was stable. There was a lightweight erosion in NIM (Spread was stable) and in Equity/Assets though other Capitalization ratios were marginally better. Improvements may have been frugal and unexceptional but they were improvements all the same. That is expressive in the current environment. “Core Income” showed so-so growth YoY, supported by reduced Funding Costs from Interest-bearing Liabilities and a moderate increase in Fee Income, while subtle Efficiency gains and especially firm “non-core Income” streams (mainly trading gains) more than offset a sizeable increase in LLPs which exerted a negative impact on Comprehensive Income which expanded by 4.5% YoY.A FV of 5%, a PBV of 0.42x, a Dividend Yield of 4.47%, an Earnings Yield of 21.1% and a Total Return Ratio of 1.95x are far from unappealing. The bank commands a top quartile PH Score™ (9.4) which captures value-quality trends. This Score may flatter the bank somewhat given the modest nature of improvement. Alternatively, there is a price for stability and for a basically flat performance in such a traumatic period.We note a high RSI and would certainly accumulate this bank on market moves lower.

Hana Financial: Stable Results- Value-Quality Standout