SEOUL, KOREA - Hana Financial Group (HFG)’s exposure to STX Pan Ocean, which recently applied for court receivership, and affiliates is close to W130bn. If this is provisioned in 2Q13, earnings will likely miss the consensus (W370bn).
- While other commercial banks are aiming for 2-3% loan growth in 2013, HFG has an aggressive loan growth goal (Hana Bank 6.5%, KEB 8.9%). Furthermore, HFG has been able to maintain NIM despite the rapid loan growth. 2Q13 NIM should be flat QoQ or increase marginally.
- SG&A surged 81% YoY in 2012 due to the KEB buyout, so cost cutting is crucial in 2013. HFG paid a special bonus (W26bn) to KEB employees in 1Q13, and there are no major one-offs in 2Q13.
- 2Q13 results should be sluggish given STX Pan Ocean provisioning, but recurring credit status excluding STX Pan Ocean appears solid. We maintain BUY and a TP of W50,000.
*Source: Korea Investment & Securities co.