"Reaching a price-to-book ratio of 1 is only a matter of time," Hana Financial Group Chair and CEO Ham Young-joo said Thursday, reaffirming the company's commitment to enhancing corporate value and shareholder returns.

Ham's remarks were featured in a video released online that day, outlining the company’s strategies for value enhancement. His message comes ahead of the regular shareholders and board meetings scheduled for March, where the extension of his term to 2028 will be approved.

When asked about his top priority during his three-year tenure as chair, Ham responded without hesitation: "Value-up."

"I have put significant effort into expanding shareholder returns and enhancing value by leveraging the group's strong fundamentals," he said.

The company's stock surged over 30 percent in 2024, marking its biggest gain in three years. The company attributes this increase to its improved shareholder return payout ratio, which climbed from 26 percent in 2021 — before Ham took office — to 38 percent in 2024.

Ham emphasized that most Korean financial group stocks, including Hana's, remain significantly undervalued, with price-to-book ratios below 1. Hana's PB ratio currently stands at approximately 0.41, while KB Financial Group and Shinhan Financial Group are slightly better at 0.52 and 0.42, respectively.

"The undervaluation is primarily due to a lower shareholder return rate compared to other global bank stocks," Ham stated, adding, "Hana will continue to expand shareholder returns to achieve its goal of raising the total shareholder return rate to 50 percent by 2027."

Ham's words reaffirm the group's value enhancement plan announced last October, which aimed to achieve a 50 percent shareholder return rate through gradual increases in returns and improvements in capital efficiency and stability. The plan also includes a common equity tier 1 ratio of 13 to 13.5 percent and a return on equity ratio of over 10 percent.

To enhance shareholder payouts and improve predictability, the company will implement fixed annual cash dividends and equal quarterly cash dividends starting this year. Additionally, the group is expanding its share buyback and retirement programs to boost corporate value metrics, such as earnings per share, while also increasing dividends per share.

In line with this strategy, the company announced earlier this month a 400 billion won ($277 million) treasury share buyback and retirement, the largest in the group's history. Ham added that the company plans further treasury cancellations in the latter half of this year.

Ham stressed the importance of improved profitability: "The key to value enhancement is utilizing limited capital efficiently and creating a sustainable profit structure." He highlighted the need to strengthen the group's nonbanking business portfolio and aimed to increase the contribution of its nonbanking subsidiaries to 30 percent of overall earnings, up from the current 16 percent.

Meanwhile, Hana Group recorded its highest-ever net profit of 3.74 trillion won in 2024, up nearly 10 percent from the previous year.

As of Thursday morning, the group's stock price was around 61,000 won, up from 56,800 won at the start of the year on Jan. 2 and 42,800 won at the beginning of 2024.

By Choi Ji-won (jwc@heraldcorp.com)