Meritz Financial Group Inc. has reported the best-ever net profit for last year thanks to handsome gains from investments by its insurance and securities arms, further boosting its shares already buoyed nearly 80% in a year.
The South Korean financial holding firm, which climbed to become the country’s third-largest financial holding firm in terms of market value, forecast its net profit to top 3 trillion won ($2.1 billion) on a consolidated basis within three years, Meritz Financial Group Chief Executive and Vice Chairman Kim Yong-beom said after reporting the company’s stellar earnings on Wednesday.
Meritz Financial announced in a regulatory filing that its consolidated net profit hit 2.33 trillion won in 2024, up 9.8% from the prior year.
Its operating profit added 8.7% to 3.19 trillion won in the same period with its total assets swelling 13.1% on-year to 116 trillion won and a return on equity (ROE) of 23.4%, the Korean financial industry’s highest.
On Thursday morning, Meritz Financial’s shares rose 3.4% to trade at 123,500 won apiece, cementing its position as Korea’s third-largest market-cap financial holding stock.
Once an underdog financial group compared to the country’s long-time top-dog peers like KB Financial Group Inc., Meritz Financial triumphantly returned to the main Kospi bourse in 2023 as the country’s No. 4 market-cap financial holding stock, immediately elbowing out Woori Financial Group Inc. to the fifth.
About two years later, its market value ballooned to 2.35 trillion won to become the third-largest market cap among the country’s major financial groups, beating Hana Financial Group Inc.
It even threatens to topple the country’s No. 2 financial holding firm Shinhan Financial Group Co. with a market value of 2.39 trillion won as of Thursday.
FLAGSHIP SECURITIES AND INSURANCE FIRMS FLY
Its upbeat earnings were mainly driven by the robust business performance of its fully-owned two flagship units – Meritz Securities Co. and Meritz Fire & Marine Insurance Co.
The non-life insurer posted 1.71 trillion won in net profit in 2024, up 9.2% from 2023 and marking the fifth consecutive year of record earnings since 2020.
Its upbeat result is largely attributed to a strategic focus on profitability while avoiding cutthroat competition against its rivals.
Notably, returns from its investment jumped 25% on-year to 761.6 billion won last year.
Its lucrative brokerage unit Meritz Securities also had a fantastic year last year, with its operating profit recovering above 1 trillion won in two years on a nearly 20% year-over-year gain.
Its operating profit grew to 1.05 trillion won, while its net profit expanded 18.0% to 696 billion won over the same period.
Its strong results are largely owed to the solid performance of its investment banking business and a rise in gains from its fixed-income investment in a low-interest rate environment.
Its digital platform’s assets under management also surged to more than 5 trillion won from the prior’s 1 trillion won after introducing commission-free online-only accounts last November.
Meritz Securities and Meritz Fire & Marine Insurance were merged under their financial holding parent in early 2023.
SHAREHOLDER FRIENDLY POLICY
Meritz Financial kept its promise to return more than 50% of its net profit to shareholders for two years in a row as its shareholder payout ratio reached 53.1% in 2024, up 1.9 percentage points from 2023.
The company implemented the current shareholder return policy in 2023.
Its total shareholder return (TSR) for last year stood at 78.3%, and the three-year annual average TSR came at 34.8%, outperforming its peers.
In 2024, it repurchased the company shares worth 1 trillion won and paid out 240 billion won worth of dividends, the company said.
By Han-Gyeol Seon
always@hankyung.com
Sookyung Seo edited this article.
