Meritz Financial Group Inc., the fourth-largest financial holding company in South Korea by market capitalization, is actively exploring acquisition opportunities to achieve economies of scale, according to Chief Executive and Vice Chairman Kim Yong-beom. This strategic move aims to enhance shareholder value, as emphasized during the company’s recent earnings conference call.
Despite a slight downturn in its latest financial reports, with a 2.1% decrease in net profit to 591.3 billion won ($432.1 million) for the first quarter, the group is keen on leveraging mergers and acquisitions as a growth strategy. This comes after a long pause since its last acquisition in 2015 of I’M Investment & Securities Co. High market valuations have previously deterred further acquisitions, as they could potentially erode shareholder value.
Meritz’s securities unit experienced a notable decline, with a 36.7% drop in net profit, contrasting sharply with the stellar performance of its core unit, Meritz Fire & Marine Insurance Co., which saw a 23.8% increase in net profit to a record 490.9 billion won. This divergence highlights the varying dynamics within its operations.
Despite current market challenges, Meritz is committed to maintaining robust financial health and shareholder returns. The company boasts a five-year average return on equity (ROE) of 22.4%, significantly outperforming its peers. Additionally, Meritz has pledged to continue its shareholder-friendly policies, including generous dividends and share buyback programs, ensuring more than 50% of its net profit is returned to shareholders through 2025.
Looking forward, CEO Kim remains optimistic about Meritz Financial’s potential for growth and differentiation from its competitors, citing the group’s agility in adapting its strategies to both macro and microeconomic conditions. As Meritz Financial positions itself for future acquisitions and continued financial success, it reaffirms its commitment to both growth and shareholder value in the ever-evolving financial landscape.
