Corporate Value-Up Program and Financial Stocks: Investment Perspectives in the Era of 50% Shareholder Return
Major financial holding companies are participating in the value-up program, aiming to achieve a 50% shareholder return rate. We analyze the outlook for ROE improvement and capital efficiency strategies as key indicators for H2 investments.
Introduction
In the second half of 2026, the effectiveness of the corporate value-up program in the domestic stock market is materializing, primarily led by financial stocks. Major financial holding companies are meeting market expectations by announcing specific targets focused on improving capital efficiency and expanding shareholder returns through their boards of directors. This article analyzes the trend of increasing shareholder returns driven by financial stocks and the outlook for improving ROE (Return on Equity), a key indicator for enhancing future corporate value.
Status of Reaching a 50% Shareholder Return Rate in Financial Stocks
Financial sector's shareholder return policies, which were previously limited to dividend expansion, have evolved into an advanced model that combines share buybacks and cancellations, marking the stabilization of the Common Equity Tier 1 (CET1) ratio above 13%. Currently, major financial holding companies such as KB Financial Group and Shinhan Financial Group have either achieved a total shareholder return rate of 50% or set it as a short-term goal to fulfill.
- Diversification of Capital Management: By managing risk-weighted assets (RWA) to secure capital buffer, companies are actively utilizing it for share cancellations to reduce the number of outstanding shares, thereby increasing the actual value per share.
- Stable Cash Flow Foundation: Despite entering an interest rate cut cycle, solid interest and non-interest income growth in the first half of the year proved the stability of net income, which serves as the source of dividends.
The Next Challenge for Shareholder Returns: Achieving ROE Above 10%
Investors' attention is now shifting to "what comes after a 50% shareholder return rate." To maintain a sustainably high return rate, structural improvement in ROE, which indicates absolute net income growth and capital allocation efficiency, is essential.
Business Portfolio Diversification Focused on Non-Interest Income
To move away from an earnings structure heavily dependent on interest margins, financial holding companies are focusing on strengthening their capabilities in wealth management (WM), global business, and investment banking (IB). This is evaluated as a core driver to push ROE above 10% in the medium to long term.
Cost Efficiency and Risk Management Capabilities
Amid expanding macroeconomic volatility and concerns over prolonged high exchange rates, financial institutions are defending their earnings capacity through proactive provisioning and reducing SG&A expenses via digital transformation. Structural cost reduction contributes directly to an increase in ROE.
H2 Financial Stock Investment Strategies and Implications
The expansion of shareholder returns in response to the government's value-up policy has led to a valuation re-rating of financial stocks. In the upcoming global interest rate cut and stock market volatility expected in the second half of the year, financial stocks are highly likely to serve as both defensive and value stocks simultaneously.
When considering investments, rather than evaluating solely on current dividend yields, a disciplined approach is required to regularly monitor the actual implementation of the specific value-up plans and key indicators (CET1 ratio, ROE targets) disclosed by each financial holding company. A short-term dividend expansion without performance-based capital efficiency improvements is unlikely to lead to long-term corporate value appreciation.