Shares of major Korean financial holding companies have roughly doubled over the past year, driven by record profits and enhanced shareholder returns including dividend increases.
As a result, unrealized gains for financial holding company chairmen and affiliated bank CEOs—who hold between 5,000 and 20,000 treasury shares each—have swelled to as much as several billion won.
Big Four Financial Stocks Up 30-40% Year-to-Date
According to Korea Exchange data, KB, Shinhan, Hana, and Woori Financial Group closed at 165,300 won, 99,900 won, 124,900 won, and 38,950 won respectively on February 26. Compared to year-end 2024 prices, the stocks have risen 32.6%, 29.9%, 32.8%, and 39.8% respectively this year alone. From February 26, 2024, the gains reach 102.8%, 110.2%, 99.8%, and 125.8%—effectively doubling across all four groups within a year.
The rally is attributed to record earnings, expectations of expanded shareholder returns including dividends under the government's Corporate Value-up policy, and previously undervalued stocks with price-to-book ratios below 1.
KB, Shinhan, and Hana Financial posted record net profits of 5.843 trillion won, 4.972 trillion won, and 4.003 trillion won respectively last year. Woori Financial's 3.141 trillion won profit is also considered a de facto record, accounting for the 51.5 billion won penalty provision related to loan-to-value ratio collusion.
Dividend payout ratios for 2024 approached historic highs: Woori at 31.8%, Hana at 27.9%, KB at 27%, and Shinhan at 25.1%. Each group has also emphasized commitment to shareholder returns through treasury stock cancellations.
Valuations remain modest relative to profitability and dividend trends. While KB became the first domestic financial holding company to reach a PBR of 1 on February 11, the other three remain at 0.6 to 0.8. A PBR below 1 indicates shares trade below book value per share.
Executives Reap Rewards from 'Responsible Management'
The stock revaluation has significantly boosted unrealized gains for CEOs and executives who purchased treasury shares under the banner of responsible management.
Hana Financial Group Chairman Ham Young-joo acquired 15,132 shares across four purchases from late 2017 through 2024 at an average price of 43,418 won, totaling approximately 657 million won. Based on the February 26 closing price, his holdings are now worth approximately 1.89 billion won—an unrealized gain of about 1.23 billion won.
Hana Financial Vice Chairman Lee Seung-yeol, who accumulated 7,300 shares since his tenure as Hana Bank CEO, has estimated gains of approximately 464 million won.
Shinhan Financial Group Chairman Jin Ok-dong holds 18,937 treasury shares acquired through three purchases from 2017 to 2023. His 842 million won investment is now valued at approximately 1.89 billion won, representing expected gains of about 1.05 billion won.
KB Financial Group Chairman Yang Jong-hee purchased 451 shares in 2019 and 5,000 shares in 2024 at an average of 74,431 won, totaling approximately 406 million won. Current valuation stands at 901 million won, yielding unrealized gains of approximately 495 million won.
Woori Financial Group Chairman Lim Jong-ryong bought 10,000 shares at 11,880 won per share in September 2023. His holdings have grown from 119 million won to 379 million won—a gain of approximately 260 million won.
Bank CEOs serving as non-executive directors on holding company boards have also recorded gains in the hundreds of millions of won.
Shinhan Bank CEO Chung Sang-hyuk, who acquired 15,551 shares at an average of 39,208 won, has unrealized gains of approximately 944 million won. KB Kookmin Bank CEO Lee Hwan-joo's 3,061 shares show estimated gains of approximately 336 million won.
"CEOs and executives who have demonstrated confidence in management through treasury share purchases are now enjoying the benefits of rising stock prices and increased dividends alongside other shareholders," a financial holding company official said. "This is a desirable outcome from a responsible management perspective."
However, some observers note that recent stock gains are concentrated among high-income earners. The Bank of Korea stated in a recent report: "While the impact of recent stock price increases is concentrated among high-income groups, the marginal propensity to consume from stocks, bonds, and fund assets among high-income earners is 0.8%, below the overall average." This suggests that because wealthy investors are less likely to convert investment gains into consumption, a bullish stock market may have limited effect on boosting consumer spending.