April 20, 2024

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[THE INVESTOR] Shinhan Financial Group’s earnings will be boosted by acquiring Orange Life Insurance, said Eugene Investment & Securities on Sept. 6.

The merger could create synergies as the insurance firm, unlike peers linked with banks, has a strong planner network. Additional capital raise is unlikely since its risk based capital ratio was 440 percent as of end-March, significantly higher than the industry average of 245 percent. The financial group has expanded through M&As, absorbing Chohung Bank and LG Card, and this acquisition could help bolster profits, said analyst Kim In. 

The acquisition price has been set at 2.3 trillion won, higher than the estimated 2 trillion won, and the announcement has brought down its stock price temporarily. When Shinhan takes over the remaining 40.8 percent stake, though, the final acquisition price will be just at 0.9 times price-to-book ratio, added the analyst. 

By Hwang You-mee (glamazon@heraldcorp.com)