Contents
Upturn not yet priced in 3
We recommend staying Overweight the Korean banks in view of: 1) the continuing
upcycle in macro leading indicators; 2) the likelihood we see of further upward
revisions to consensus FY10 EPS; and 3) undemanding valuations. We prefer
Shinhan, IBK and Daegu.
Upcycle of macro indicators 14
We expect Korea’s macro indicators will trend up further until 1Q10. Liquidity
expansion-led optimism could weaken, but we believe appreciation of the won, a
steepening yield curve and a narrowing credit spread will improve the market’s risk
appetite.
On upturn track 14
Upward FY10 EPS momentum intact 17
We are strongly optimistic about upward earnings momentum in FY10. Our channel
checks indicate caution over competition is overdone. We expect upward revisions
to FY10 consensus EPS estimates to continue amid widening NIM and falling credit
cost until 1H10.
Strong consensus earnings momentum 17
Company profiles 26
KB Financial Group 27
Shinhan Financial Group 32
Woori Financial Holdings 37
Hana Financial Group 42
Industrial Bank of Korea 47
Korea Exchange Bank 52
Busan Bank 57
Daegu Bank 62