KOSPIFinance139130

iM Financial Group

₩18,680▲ 1.63%2026-10-02 close

Market Cap

₩3T

Turnover

₩4.1B

Volume

220,000 shares

Shares out.

160M

PER

7.3×

PBR

0.5×

EPS

₩2,466

Dividend Yield

3.86%

PER, EPS, PBR and BPS are calculated in-house from the last 4 quarters (2025Q3–2026Q2) · Dividend yield is based on ₩700 per share · Prices as of the 2026-10-02 close

Report overview

After the PF Cleanup: Payout Policy and Nationwide Expansion on Trial

After earnings rebounded in 2025 from the credit-cost-depressed 2024, first-half 2026 saw group operating income grow while bottom-line profit slipped slightly on costs and provisions, leaving the durability of normalized earnings as the central question.

1
Owner-attributable annual net profit bottomed at KRW 214.9 billion in 2024 and more than doubled to KRW 443.9 billion in 2025, with operating profit rising from KRW 263.4 billion to KRW 583.2 billion.
2
Quarterly owner net profit of KRW 154.5 billion in 1Q26 and KRW 141.1 billion in 2Q26 shows lower volatility, yet first-half profit fell 4.4% year on year and the second quarter dropped 9%.
3
The CET1 ratio rose to a record 12.27% in the first half, and the board approved an additional KRW 30 billion buyback-and-cancellation, taking the cumulative total to KRW 130 billion against a KRW 150 billion plan through 2027 that management aims to complete early.
4
Corporate loans grew 5.9% in the first half and won-denominated loans topped KRW 60 trillion for the first time, but iM Bank net profit fell 4.2% to KRW 245.7 billion, so asset growth did not translate directly into earnings.
5
The Bank of Korea raised its policy rate to 2.75% in July 2026, its first hike since January 2023, marking a turn in the rate cycle that reshapes funding costs, bond valuation results and asset quality dynamics.

Business structure

iM Financial Group is a holding company centered on iM Bank, with iM Securities, iM Capital and iM Life as affiliates, and most of its profit comes from banking. Of the group's KRW 295.6 billion owner-attributable net profit in the first half of 2026, iM Bank accounted for KRW 245.7 billion.

Among non-bank units, iM Capital earned KRW 39.5 billion alongside 13.9% growth in operating assets, iM Securities posted KRW 44.9 billion on higher fee income (separate basis), and iM Life recorded KRW 18.2 billion, up 31.9% year on year. iM Bank began as Daegu Bank in 1967 and became the country's seventh nationwide commercial bank through Financial Services Commission approval in May 2024, the first conversion of a regional bank into a commercial bank.

The line reported as revenue in the audited statements is insurance revenue from the life subsidiary, so group profitability is better read through interest income, fee income and provisioning levels. The franchise remains regionally concentrated.

As of end-1Q26, 85.2% of its 203 branches sat in Daegu (114) and Gyeongbuk (59), while the greater Seoul area had only 14. That said, out-of-region footholds including Jeonju and Gwangju rose to eight, and metropolitan corporate loans reached KRW 8 trillion, more than 25% of total corporate credit.

The PRM corporate-banking specialist unit, staffed with hires from commercial banks and brokerages and slated to expand to 200 people by 2027, is the main execution tool for nationwide growth, with the four large financial holdings and regional peers JB and BNK as competitors.

Earnings trend

Quarterly revenue · Operating profit

₩69.1B₩198.6B25Q2₩70.1B₩155.7B25Q3₩56.3B₩19.9B25Q4₩74.6B₩193.9B26Q1₩71.7B₩182.7B26Q2

RevenueOperating profit

Annual revenue · Operating profit

₩246.9B₩622B2022₩270.8B₩534.3B2023₩255.1B₩263.4B2024₩265.2B₩583.2B2025

RevenueOperating profit

Quarterly results · Last 5 quarters
Quarter	Revenue	Operating profit	Op. margin
2025Q2	₩69.1B	₩198.6B	287.3%
2025Q3	₩70.1B	₩155.7B	222.2%
2025Q4	₩56.3B	₩19.9B	35.3%
2026Q1	₩74.6B	₩193.9B	259.9%
2026Q2	₩71.7B	₩182.7B	254.8%

Annual results
Year	Revenue	Operating profit	Net income (parent)	Op. margin	ROE	Debt-to-equity
2022	₩246.9B	₩622B	₩410.5B	—	7.4%	1304.3%
2023	₩270.8B	₩534.3B	₩387.8B	—	6.5%	1385.8%
2024	₩255.1B	₩263.4B	₩214.9B	—	3.6%	1417.1%
2025	₩265.2B	₩583.2B	₩443.9B	—	7.1%	1435.9%

Consolidated basis (financial statements including subsidiaries) · Final figures from DART filings · Net income attributable to owners of the parent · Data as of 2026-09-04

Earnings analysis

The annual pattern is a clear trough followed by recovery.

Owner-attributable net profit fell from KRW 410.5 billion in 2022 and KRW 387.8 billion in 2023 to KRW 214.9 billion in 2024, then rebounded to KRW 443.9 billion in 2025, while operating profit rose from KRW 263.4 billion to KRW 583.2 billion over the same span.

The group had contracted from 2022 through 2024 on the Legoland credit event and real estate project financing provisions, so the 2025 figures largely reflect easing credit costs.

By quarter, operating profit and owner net profit were KRW 198.6 billion and KRW 154.9 billion in 2Q25 and KRW 155.7 billion and KRW 122.5 billion in 3Q25, before collapsing to KRW 19.9 billion and KRW 12.2 billion in 4Q25.

Yuanta Securities, in a February 2026 note, attributed the weak fourth quarter to bond valuation losses from rising rates and roughly KRW 20 billion of ordinary-wage-related costs.

In 2026, quarterly swings narrowed, with operating profit and owner net profit of KRW 193.9 billion and KRW 154.5 billion in 1Q and KRW 182.7 billion and KRW 141.1 billion in 2Q.

Management attributed the first-half profit decline to non-recurring costs such as this year's education tax rate change and pre-emptive provisioning, while noting group operating income grew 4.4% year on year and interest income improved 4.1%.

On the balance sheet, owner equity rose from KRW 5,991.1 billion in 2024 to KRW 6,220.1 billion in 2025 against liabilities of KRW 92,423.9 billion; given the banking structure, the reported liability ratio of 1,435.9% is not comparable with manufacturers.

Operating cash flow of negative KRW 1,478.0 billion in 2025 likewise reflects loan asset growth rather than operational deterioration.

Industry analysis

The biggest environmental shift for Korean banks is the turn in the rate cycle. The Bank of Korea lifted its policy rate by 25bp to 2.75% in July 2026, the first hike since January 2023, reflecting rising inflation pressure.

Woori Finance Research Institute, in a June 2026 brief, projected two more hikes in the second half of this year and two in the first half of next year, taking the terminal rate to 3.50%.

Because the prior consensus had centered on margin pressure from rate cuts, funding costs, bond valuation results and borrower repayment capacity are all being repriced at once.

Credit rating agencies expect profit growth to slow as household loan volume controls coexist with a productive-finance policy push, with asset quality management limiting aggressive credit expansion. Shareholder returns have become the sector's key differentiator.

JB Financial raised its 2026 total payout target to 50% and BNK Financial recorded 40.4% last year, while iM Financial's 38.8% was the lowest of the three regional holdings.

On asset quality, the group's substandard-and-below loan ratio of 1.38% at end-March 2026 ranked among the higher levels within the holding company peer set. iM Financial's standing in the sector therefore hinges on the pace of earnings recovery, execution of its payout policy and improvement in asset quality metrics.

Outlook

Management's stated direction pairs earnings stability with expanded shareholder returns.

CFO Chun Byung-kyu said that if 2025 was the year of earnings normalization, 2026 will be the year of proving that normalization is not a one-off, adding that the company will manage capital ratios through year-end to reach the first phase of its value-up plan early and make use of tax-exempt dividend opportunities.

At its 2026 annual meeting the company transferred KRW 290 billion of capital reserves into retained earnings to fund capital-reduction dividends, and within its KRW 150 billion buyback-and-cancellation plan through 2027, it completed KRW 60 billion in 2025 and executed KRW 40 billion of purchases in the first half of 2026.

The additional KRW 30 billion approved by the board in July brings cumulative buybacks and cancellations to KRW 130 billion.

Bank-level targets are also specific. iM Bank CEO Kang Jung-hoon set a KRW 400 billion net profit goal for this year, six new second-half branches covering Gwangju and Jeonju in the third quarter and Yeosu, Jeju, Jincheon and Chuncheon in the fourth, completion of a nationwide branch network including Jeju, and an 80% growth rate for metropolitan assets.

The Jeonju and Gwangju branches opened in August. The bank also created an AX division in 2026 to upgrade business models around artificial intelligence and digital channels.

Still, converting externally sourced loan assets into stable deposits and fee income has been flagged as the key task, making the balance between expansion pace, profitability and capital ratios the main thing to watch in the second half.

Valuation

PER

7.3×

PBR

0.5×

ROE

6.9%

EPS

₩2,466

BPS

₩39,665

Dividend per share

₩700

The shares have traded at a multiple well below reported book value, a level the market generally sees as low relative not only to the four large financial holdings but also to regional peers.

On earnings, the direction shifted from the weak 2024 to recovery in 2025, and in the first half of 2026 net profit edged back as growth in operating income met non-recurring costs and provisioning.

On payouts, the 2025 year-end dividend carried a 25.3% payout ratio, satisfying the high-dividend company criteria under the Restriction of Special Taxation Act, and with KRW 60 billion of buybacks and cancellations the total shareholder return ratio reached 38.8%.

As for sell-side views, Yuanta Securities analyst Woo Do-hyung said in a July 2026 report that the firm maintained a Buy rating and a KRW 26,000 target price, and Kiwoom Securities was reported to have set KRW 25,500 on July 28 of the same month - these are those firms' views, not KOSAI's.

The valuation debate therefore turns on whether recovered earnings hold quarter to quarter and whether the higher payout ratio and capital-reduction dividend are actually executed.

PER, EPS, PBR and BPS are all calculated in-house (the same method as Naver and Toss) · Dividend yield = cash dividend per share from DART filings (supplemented by KRX) ÷ current price · As of 2026-09-04

Bull factors

Earnings recovery after credit costs eased

Owner-attributable net profit rebounded from KRW 214.9 billion in 2024 to KRW 443.9 billion in 2025, with operating profit rising from KRW 263.4 billion to KRW 583.2 billion.

Because the 2022-2024 contraction stemmed from the Legoland credit event and real estate project financing provisions, the nature of the recovery is relatively identifiable. In 2026 the quarterly swing narrowed sharply from 4Q25, with KRW 154.5 billion in 1Q and KRW 141.1 billion in 2Q. Whether reliance on one-off items keeps falling remains the item to verify.

Diversified payout tools and improved capital ratio

The CET1 ratio climbed to a record 12.27% in the first half, improving the precondition for payout capacity.

The July board approved an additional KRW 30 billion of buybacks and cancellations, lifting the cumulative figure to KRW 130 billion, with management targeting early completion of the KRW 150 billion plan set for 2027.

Securing KRW 290 billion of funding for capital-reduction dividends is cited as a rare case among small and mid-sized financial holdings. Execution across all three legs - dividends, buybacks and tax-exempt payouts - is the decisive factor.

Rising contribution from non-bank affiliates

In the first half, iM Capital earned KRW 39.5 billion with 13.9% growth in operating assets, iM Securities posted KRW 44.9 billion on higher fee income (separate basis), and iM Life recorded KRW 18.2 billion, up 31.9%. Management said the capital market recovery lifted iM Securities' non-interest income contribution.

This explains how group operating income grew in a half when bank net profit declined. Brokerage and capital results are sensitive to market conditions, however, so durability still needs verification.

Bear factors

Asset growth not yet converting into profit

Corporate loans rose 5.9% in the first half and won loans passed KRW 60 trillion for the first time, yet iM Bank net profit fell 4.2% to KRW 245.7 billion. First-quarter SG&A expenses rose 11.1% from KRW 163.5 billion to KRW 181.6 billion, pushing the cost-to-income ratio from 42.7% to 45.5%.

Because expansion costs come first and revenue contribution follows, earnings leverage may stay limited until cost efficiency improves.

Lower payout ratio and weaker asset quality versus peers

Last year's 38.8% total shareholder return ratio was the lowest among the three regional financial holdings. Analysts have also noted that the value-up target payout ratio itself is somewhat lower than at other financial firms.

The group's substandard-and-below loan ratio stood at 1.38% at end-March 2026, and even after writing off or selling KRW 170 billion of non-performing loans in the first quarter, the ratio stayed among the highest in the industry. Raising payouts and improving asset quality are demanded simultaneously.

Rate cycle turn and non-recurring costs

The collapse to KRW 19.9 billion of operating profit and KRW 12.2 billion of owner net profit in 4Q25 showed how much quarterly results can swing on external factors. Yuanta Securities pointed to bond valuation losses from rising rates and about KRW 20 billion of ordinary-wage-related costs.

In the first half of 2026, non-recurring costs such as the education tax rate change and pre-emptive provisioning again weighed on net profit. With the policy rate back in a tightening phase, securities valuation swings and funding costs remain items to monitor.

Risk factors

Credit risk

The company said first-half bank metrics stabilized lower, with a delinquency ratio of 0.87%, a substandard-and-below ratio of 0.94% and a credit cost ratio of 0.41%.

However, NICE Investors Service saw continued downward pressure on asset quality centered on vulnerable borrowers, noting it takes time for rate effects to materialize. Growth centered on corporate lending also raises cyclical sensitivity. The pace of provisioning remains the biggest swing factor for earnings.

Capital and regulation

In 1Q26 the group CET1 ratio fell to 11.99% as risk-weighted assets grew, which constrained payout capacity at the time. It recovered to 12.27% in the first half, but the task of pursuing loan growth and capital management at once is unchanged.

Across the sector, penalties tied to Hong Kong H-index equity-linked securities losses and alleged loan-to-value collusion are cited as variables. Shifts in regulatory intensity directly affect the pace at which dividend and buyback plans can be executed.

Strategy execution and internal control

Even after the commercial bank conversion, weak internal controls and delayed metropolitan expansion have been flagged as unresolved tasks. Observers note that branch build-out and brand marketing costs have risen while rate competition with incumbent commercial banks has increased the burden of margin management.

With Daegu and Gyeongbuk branches reduced during out-of-region expansion, the ability to convert newly acquired loan assets into stable deposits and fee income is critical. If actual results fall short of plans, the cost burden shows up first.

What to watch next

Late October 2026
Third-quarter results. Yuanta Securities said in a July 2026 report that the KRW 30 billion buyback runs through October 28 and that an additional buyback and a new shareholder return policy could be announced with third-quarter results. The key items are how operating income momentum and provisioning compare with the first half.
Fourth quarter 2026
Whether the planned fourth-quarter branch openings in Yeosu, Jeju, Jincheon and Chuncheon are delivered and whether the stated goal of completing a nationwide network including Jeju is met. It is also worth checking whether the added branches translate into out-of-region deposits and fee income.
Bank of Korea rate meetings in October and November 2026
Whether and by how much rates rise after the July hike. Woori Finance Research Institute had projected two more hikes in the second half, so the outcome shapes funding costs, net interest margin and bond valuation results.
Around February 2027
Full-year 2026 results and the year-end shareholder return announcement. This is when to check whether the company delivers on managing capital ratios into year-end and reaching the first phase of its value-up plan early, and whether the capital-reduction dividend that Yuanta Securities expected to begin next year is actually introduced.
Annual general meeting in March 2027
Agenda items on the capital-reduction dividend and the target figures in a new value-up plan. Yuanta Securities projected that while the existing policy capped the total payout ratio at 40% up to a 12.3% CET1 ratio, the new policy would remove that ceiling. Whether targets are raised and how the mix between dividends and buybacks is set are the points to watch.

Overall view

iM Financial Group's results over the past four years traced a path of credit-cost-driven weakness in 2022-2024 followed by recovery in 2025. Owner-attributable net profit of KRW 443.9 billion and operating profit of KRW 583.2 billion in 2025 compare with KRW 214.9 billion and KRW 263.4 billion in 2024.

In 2026, quarterly swings narrowed to KRW 154.5 billion in the first quarter and KRW 141.1 billion in the second, yet first-half net profit fell year on year as group operating income rose 4.4% while non-recurring costs such as the education tax rate change and higher provisions weighed.

On capital, the CET1 ratio improved to 12.27% and cumulative buybacks and cancellations reached KRW 130 billion, indicating step-by-step execution of the payout policy.

By contrast, the total shareholder return ratio is the lowest among the three regional financial holdings and the group's substandard-and-below loan ratio ranks on the higher side, so improvement tasks coexist.

The return to a rate-hiking phase cuts both ways for margins, bond valuations and borrower repayment capacity. What ultimately needs verification is the quarter-to-quarter durability of recovered earnings, the payback speed on nationwide expansion costs, and actual execution of the payout policy. This report is for information purposes and contains no buy or sell recommendation.

Sources

Korea Exchange (KRX) — Prices · Market Cap · Volume
FSS electronic disclosure system (DART) — Financial statements · Dividend filings

Show 18 more articles and sources

Report written 2026-09-05 · Data as of 2026-09-04

This content is AI analysis of market data and web search results, provided for information only. It is not a solicitation or recommendation to invest. Investment decisions and their consequences are the investor's own responsibility. Data may be delayed or contain errors.