The four major financial holding groups (KB, Shinhan, Hana, and Woori) are consecutively receiving interim dividends from their key subsidiaries ahead of year-end settlements. As this year's shareholder return scale is expected to approach 10 trillion won, the move is interpreted as an effort to proactively secure liquidity.
According to financial industry sources on the 22nd, Shinhan Bank's board of directors resolved the previous day (the 21st) to pay a cash dividend worth 1 trillion won to its parent company, Shinhan Financial Group.
Shinhan Financial has had almost no cases of interim dividends other than Shinhan Life's interim dividend in December 2024. In particular, the last time an interim dividend was paid from a bank was in 2011. At that time, it received interim dividends from its subsidiaries to secure funds for redeeming preferred shares related to the acquisition of LG Card.
Shinhan Financial explained that this interim dividend is part of its capital management plan. It drew a clear line against claims that it was intended to raise funds for the acquisition of Lotte Insurance. A Shinhan Financial official stated, "By aligning the holding company's capital management plan and cash flow through interim dividends from the bank, we aim to conduct our capital policy consistently and stably," adding, "We plan to continue interim dividends in the future."
Interim dividends from banking subsidiaries to financial holding groups have been increasing since the start of this year. While cases were rare other than Hana Bank in the past, changes appeared starting last year. KB Kookmin Bank resumed interim dividends last year after 2020 and has implemented them for two consecutive years through this year. In June, it paid a dividend of 1 trillion 399.1 billion won to the holding company. Hana Bank also conducted an interim dividend of 950 billion won for Hana Financial Group in August.
The background behind financial holding groups increasing interim dividends from subsidiaries is the growing burden of shareholder returns. As they have been expanding not only cash dividends but also share buyback and cancellation scales every year, stable cash flow at the holding company level has become important.
The scale of shareholder returns implemented by the four major financial holding groups in the first half of this year is calculated at 5 trillion 633 billion won. This accounts for 65.7% of last year's annual shareholder returns (8 trillion 577 billion won).
While the scale for the second half is undetermined, the estimated annual shareholder return scale based on each company's conference calls and IR materials is projected to reach 9 trillion 877.1 billion won.
KB Financial and Shinhan Financial presented their annual shareholder return targets for this year at 3 trillion 700 billion won and 2 trillion 800 billion won, respectively. Hana Financial and Woori Financial did not present specific figures. Hana Financial stated it would increase dividends per share by more than 10% compared to the previous year to meet high-dividend company requirements and set its annual share buyback and cancellation scale at 700 billion won. Woori Financial also plans a 10% increase in dividends per share and a total share buyback and cancellation of 350 billion won. Based on this, the estimated annual shareholder return scales for Hana Financial and Woori Financial are approximately 1 trillion 928.8 billion won and 1 trillion 448.3 billion won, respectively.
With the expansion of shareholder returns, a shareholder return ratio of 50% is emerging as a new benchmark. The shareholder return ratios for KB Financial and Shinhan Financial already exceeded 50% last year, and Hana Financial and Woori Financial are also expected to surpass 50% this year.
Consequently, securing stable funding sources for shareholder returns has emerged as an important task. A financial industry official said, "There are many areas where cash needs to be used intermittently, such as share buybacks, cancellations, and quarterly dividends," adding, "This is part of managing funds to prevent mismatches between cash flow and capital."
in FINANCE
