Korean Banks,
Korean Banks,
Korean Banks,
Time to Keep
Your Promise
Time to Keep
Your Promise
Time to Keep
Your Promise
Align Partners'
Bank Campaign Launched in
Early 2023
Align Partners'
Bank Campaign Launched
in Early 2023
For those of you who missed the
2023 Bank Campaign,
For those of you who missed the
2023 Bank Campaign,
you may be wondering
you may be wondering
A serious problem for bank stocks in Korea
is their Chronic Undervaluation
A serious problem for
bank stocks
in Korea is their
Chronic Undervaluation
A serious problem for bank stocks
in Korea is their
Chronic Undervaluation
Korean banks have ROE and
capital ratios comparable to foreign banks,
But the average PBR of Korean banks is 0.34x,
Korean banks have ROE and
capital ratios comparable to
foreign banks,But the average
PBR of Korean banks is 0.34x,
Korean banks have ROE and
capital ratios comparable to foreign banks,
But the average PBR of Korean banks is 0.34x,
while that of foreign banks is 1.31x
while that of
foreign banks is 1.31x
Korean banks earn well,
they are financially healthy…
Korean banks earn well,
they are financially healthy…
Then why are they
undervalued?
Then why are they
undervalued?
The answer lies in
The answer lies in
Inefficient Capital Allocation &
Low Shareholder Return
Inefficient Capital
Allocation & Low
Shareholder Return
Inefficient Capital
Allocation &
Low Shareholder Return
Korean banks spend most of their capital on competitive loan growth
Korean banks spend
most of their capital on
competitive loan growth
Korean banks spend most of their capital on competitive loan growth
This is why the shareholder
return ratio is abnormally low
This is why the
shareholder return ratio is
abnormally low
This is why the shareholder
return ratio is abnormally low
Then, why should we address the
Then, why should we address the
chronic undervaluation of
Korean banks?
chronic undervaluation of
Korean banks?
The reason why it needs to be solved is
The reason why it needs to be solved is
Korea, Korean banks,
and all investors take losses from
undervaluation
Korea, Korean banks,
and all investors take
losses from undervaluation
Loss of National Wealth
Loss of National Wealth
The current share value of bank stocks
owned by Korean individuals is approx.
KRW 32 tn. Considering the average
valuation of foreign banks,
The current share value of
bank stocks owned by
Korean individuals is approx.
KRW 32 tn. Considering
the average
valuation of foreign banks,
Loss of approx.
KRW 96 tn in national wealth
Loss of approx.
KRW 96 tn in
national wealth
Based on current market
capitalization, approx.
Based on current market
capitalization, approx.
KRW 5.7 tn worth of
stake owned by the
National Pension Service is
undervalued
KRW 5.7 tn worth of
stake owned by the
National Pension
Service is undervalued
High debt ratio and risk in the
Korean financial system due to
excessive growth of loans
High debt ratio and risk in
the Korean financial system
due to excessive
growth of loans
Competition from Korean banks for loans has led to a surge in real estate prices
and a deepening of household debt problems. PF issues and macroeconomic
uncertainties are increasing the need for banks to set aside sufficient reserve capital.
Competition from Korean banks for loans has
led to a surge in real estate prices and a
deepening of household debt problems.
PF issues and macroeconomic uncertainties are
increasing the need for banks to set
aside sufficient reserve capital.
Competition from Korean banks for loans has led to
a surge in real estate prices and a deepening of
household debt problems. PF issues and macroeconomic
uncertainties are increasing the need for banks
to set aside sufficient reserve capital.
To solve this problem,
To solve this problem,
Align Partners launched a public
campaign against the
seven largest banks in Korea
in early 2023
Align Partners launched
a public campaign
against the seven
largest banks in Korea
in early 2023
The responses from the banks were
very unexpected and encouraging
The responses from the
banks were very unexpected
and encouraging
The responses from the banks were
very unexpected and encouraging
So, have the banks that announced the
new policy at the beginning of 2023
So, have the banks that announced the
new policy at the beginning of 2023
really kept their promises
throughout the year?
really kept their promises
throughout the year?
Align Partners' assessment of the
seven banks' commitments is as follows
Align Partners'
assessment of the
seven banks'
commitments is as follows
Align Partners' assessment of
the seven banks'
commitments is as follows
In Align Partners’ 2024 Public Bank Campaign…
In Align Partners’
2024 Public Bank Campaign…
Align Partners calls on banks to faithfully
implement the policies announced
in early 2023 through the upcoming
FY23 year-end board meeting in February
Align Partners calls on
banks to faithfully
implement the policies
announced in early 2023
through the upcoming
FY23 year-end board
meeting in February
Align Partners calls on banks to
faithfully implement the policies
announced in early 2023
through the upcoming
FY23 year-end board meeting
in February
And in 2024, Align Partners demand that
And in 2024,
Align Partners demand that
Korean promise once again to faithfully
implementing the capital allocation
and shareholder return policies
Korean promise once again
to faithfully implementing
the capital allocation
and shareholder
return policies
Korean promise once again to
faithfully implementing
the capital allocation
and shareholder return policies
And Two More Things...
And
Two More Things...
Align Partners want
Korean Banks to a leap forward…
Align Partners want
Korean Banks to a
leap forward…
Improving governance and board composition
to keep up with global standards
Improving governance and
board composition to
keep up with
global standards
Improving governance and board
composition to keep up
with global standards
Improving governance and board composition
to keep up with global standards
Improving governance and board
composition to keep up with
global standards
In December 2023, the Financial Supervisory Service (FSS) pointed out the following problems with the composition of the board of directors of Korean banks
In December 2023, the Financial
Supervisory Service (FSS)
pointed out the following
problems with the composition
of the board of directors of
Korean banks
In December 2023, the Financial
Supervisory Service (FSS) pointed
out the following problems with the
composition of the board of
directors of Korean banks
In addition,
In addition,
Korean banks have few directors with
global experience and investment and
capital market expertise,although they have a
high proportion of foreign ownership (30~70%)
Korean banks have few directors
with global experience and
investment and capital market
expertise,although they have a
high proportion of foreign
ownership (30~70%)
Korean banks have few directors
with global experience and
investment and capital market
expertise,although they have a
high proportion of foreign
ownership (30~70%)
Starting from the upcoming 2024 AGM, Align Partners expects banks to align themselves with financial authority guidelines and global standards,
Starting from the upcoming
2024 AGM, Align Partners
expects banks to align
themselves with financial
authority guidelines and
global standards,
Starting from the upcoming
2024 AGM, Align Partners
expects banks to align
themselves with financial
authority guidelines and
global standards,
Therefore, Align Partners propose to
recommend a number of directors with
Therefore, Align Partners
propose to recommend
a number of directors with
Therefore, Align Partners
propose to recommend
a number of directors with
experts who have corporate
backgrounds/industry experience,
in various fields such as IT,
consumer, and ESG,
experts who have corporate
backgrounds/industry experience,
in various fields such as IT,
consumer, and ESG,
experts who have corporate
backgrounds/industry
experience, in various fields
such as IT,
consumer, and ESG,
female directors,
female directors,
and global/capital market
experts to represent shareholders
and improve shareholder returns.
and global/capital market
experts to represent shareholders
and improve shareholder returns.
and global/capital market
experts to represent
shareholders and improve
shareholder returns.
From emphasizing the absolute size of
assets or income, to emphasizing "per share"
metrics such as earnings per share
and book value per share!
From emphasizing the
absolute size of assets
or income, to emphasizing
"per share" metrics such as
earnings per share
and book value per share!
From emphasizing the absolute
size of assets or income,
to emphasizing "per share"
metrics such as earnings per share
and book value per share!
From emphasizing the absolute size of assets or income, to emphasizing
"per share" metrics such as earnings per share and book value per share!
From emphasizing the absolute size of
assets or income, to emphasizing
"per share" metrics such as earnings
per share and book value per share!
Currently, when Korean banks report IR data,
earnings announcements,
and evaluate and reward executives,
Currently, when Korean banks report IR data,
earnings announcements,
and evaluate and reward executives,
they mainly focus on how much
the absolute size of the company,
such as assets and net income,
has grown YoY
they mainly focus on how much
the absolute size of the company,
such as assets and net income,
has grown YoY
they mainly focus on how much
the absolute size of the company,
such as assets and net income,
has grown YoY
But wait,
But wait,
did you know that focusing on “size"
actually does not help increase shareholder value?
did you know that focusing on “size"
actually does not help increase
shareholder value?
did you know that focusing on “size"
actually does not help increase
shareholder value?
This is because,
from a shareholder's point of view,
This is because,
from a shareholder's point of view,
shareholder value is linked to the
growth of the "per share" metrics,
not to the growth of the company's "size"
shareholder value is linked to
the growth of the
"per share" metrics, not to the
growth of the company's "size"
shareholder value is linked to the
growth of the "per share"
metrics, not to the growth of the
company's "size"
Align Partners requests Korean banks to release
IR data and earnings based on
Align Partners requests Korean banks
to release IR data and earnings based on
"per share" metrics such as EPS and BVPS,
like Meritz Financial Group and
Citigroup, as shown below
"per share" metrics such as
EPS and BVPS, like
Meritz Financial Group and
Citigroup, as shown below
"per share" metrics such as
EPS and BVPS, like
Meritz Financial Group and
Citigroup, as shown below
Only through this way can banks
stop competing meaninglessly to
Only through this way can banks
stop competing meaninglessly to
increase size and rather focus on
increasing shareholder value
increase size and rather
focus on increasing
shareholder value
Through compliance with capital allocation/shareholder
return policy and improvement of governance,
the banks will be able to contribute to solving
Through compliance with capital
allocation/shareholder
return policy and improvement of governance,
the banks will be able to contribute to solving
Through compliance with capital
allocation/shareholder
return policy and improvement of governance,
the banks will be able to contribute to solving
the abnormal undervaluation
of Korean bank stocks
and the ‘Korea Discount’
the abnormal undervaluation
of Korean bank stocks
and the ‘Korea Discount’
Korean Banks,
Korean Banks,
Time to keep your promise
Time to keep
your promise
If you want to know more about
Align Partners' bank campaign, please click
VIEW