J.P. Morgan: Korea Banks — Share Price Momentum to Strengthen Ahead of Eventful 2Q26 Earnings; Extended Re-rating in Large Financial Groups
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Key Views
Aggregate 2Q26 net profit is forecast at KRW 5.899 trillion, down 2% quarter-on-quarter but up 3% year-on-year. Net interest margins should expand modestly, with large banks benefiting from lower funding costs; Kakao Bank's NIM may rebound sharply by roughly 6 basis points. Loan growth is projected at 1–3% q/q, driven by corporate lending under productive-finance initiatives, while disciplined RWA growth is maintained at 4–5% y/y. Non-interest income strengthens on capital-market-related fees, with KB and Shinhan best positioned.
Outlook
Shareholder returns remain the core catalyst. Following completion of the current buyback round in July, a new large-scale program is expected—particularly from KB and Shinhan. Hana may refresh its value-up plan with a formulaic payout policy. Large financial groups still trade below 1.0x P/B despite a mid-term ROE trajectory of 11–12%, suggesting significant upside. Earnings releases span July 23–August 5. Key risks include persistent KRW weakness and elevated credit costs.
Recommended Securities
- KB FG: Overweight, TP KRW 220,000
- Shinhan FG: Overweight, TP KRW 145,000
- Hana FG: Overweight, TP KRW 180,000
- IBK / BNK FG / iM FG / Kakao Bank: Neutral
Key exhibits
Exhibit 1
Exhibit 2
Exhibit 3
Exhibit 4
