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Hana Financial Group Reports Decline in 2023 Net Profit Due to Brokerage Losses

Record Profits at Hana Bank Offset by Valuation Losses in Hana Securities' Overseas Real Estate Investments
South Korea
h 086790.KO Mid and Small Cap 2000
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South Korea’s Hana Financial Group experienced a slight decline in net profit for 2023, marking its first year-on-year decrease since 2013. The financial conglomerate reported a net profit of 3.45 trillion won ($2.6 billion), down 3.3% from 3.57 trillion won in the previous year. This dip was attributed to substantial valuation losses in its brokerage arm, Hana Securities, particularly from its aggressive overseas real estate investments during the late 2010s.

Hana Bank, the group’s flagship entity, reported a record profit of 3.48 trillion won, buoyed by significant increases in non-interest income, including fee income and investment gains. However, Hana Securities faced a challenging year, incurring shortfalls totaling 270.8 billion won, largely due to a 267 billion won valuation loss on its international real estate portfolio. The decline in property values and difficulties in asset liquidation significantly impacted the brokerage’s financial performance.

Despite the setbacks in its securities division, Hana Financial Group saw a 5.4% year-on-year increase in fee income, totaling 1.8 trillion won. The group’s non-interest income surged by 65.3% to 1.1 trillion won in 2023, with investment gains experiencing a dramatic 453.2% increase to 863.1 billion won. However, the net interest margin dropped by 0.20 percentage points to 1.76% in the fourth quarter compared to the same period the previous year. Other subsidiaries, including credit card and life insurance, also underperformed, with Hana Savings posting a loss.

In response to the financial downturn, Hana Financial Group has announced plans to allocate half of its earnings back to shareholders over the medium to long term, an increase from 33% in 2023. The group also declared a fourth-quarter dividend of 1,600 won per share, resulting in an annual dividend payout of 3,400 won last year, slightly higher than the previous year’s 3,350 won.

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