Shinhan Financial: Shareholder Return Ratio of 50% to Boost Corporate Value

• Shinhan Financial announced that it plans to increase shareholder return ratio to 50%, improve ROE to 10%, and reduce outstanding shares by 50 million+ by 2027.

• Shinhan Financial Group's new, outstanding shareholder return policy has been one of the most impressive since the roll-out of the Corporate Value Up program in Korea a few weeks ago.

• The improved corporate governance policy is likely to lead to Shinhan Financial Group outperforming other financial stocks in Korea and KOSPI overall in the next 6-12 months.

Photo by Stéphan Valentin on Unsplash

Shinhan Financial (055550 KS) announced an excellent corporate value up program. It announced that it plans to increase shareholder return ratio to 50%, improve ROE to 10%, and reduce outstanding shares by 50 million+ by 2027. These meaningful shareholder return policy helped to push up Shinhan Financial's share price by 4.7% to 60,700 won on 29 July. The company plans to reduce the total number of outstanding shares to fewer than 500 million by the end of 2024 so considering the current number of shares, Shinhan Financial is expected to cancel about 150 billion won worth of shares.

In 2024, the total shareholder return amount of Shinhan Financial is expected to be around 1.7 trillion won, including 600 billion won in treasury shares cancellation and 1.1 trillion won in dividends. The total shareholder return rate is expected to be about 37% to 38%.

From 2025 to 2027, the company plans to cancel more than 1 trillion won in treasury shares on average per year and increase dividends every year which will result in annual shareholder return amount exceeding 2 trillion won. Shinhan Financial currently has a market cap of 30.9 trillion won. Therefore, an annual shareholder return of 2 trillion won would represent 6.5% of its current market cap.