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| Woori Financial Group Chairman Son Tae-seung delivers a speech during the group's management strategy meeting at its headquarters in Seoul on Jan. 17. Yonhap |
By Lee Min-hyung
Woori Financial Group's planned privatization has hit another snag after its recent decision to reduce dividend payouts.
Last year, the Financial Services Commission (FSC) was supposed to start selling part of the government's 17.25-percent stake in the financial holding firm aiming to achieve Woori's 100-percent privatization by the end of 2022.
But the state-run Korea Deposit Insurance Corporation, which holds ownership of Woori with the stake, did not sell any of it last year, as Woori's stock price failed to bounce back to levels that met the government's expectations due to the coronavirus outbreak. The corporation's earlier plan was to start selling Woori shares sometime in the first half of 2020, but it ended up retracting the plan amid Woori's dismal stock performance.
It appears unlikely that the corporation will be able to take the step on time this year amid widening uncertainties over the future course of Woori's stock price following its decision to cut its dividend payout ratio down by 7 percentage points to 20 percent. This enables Woori shareholders to receive 2020 dividends worth 260 billion won ($230 million), down by about a half from the previous year's 505.5 billion won.
The move was widely expected amid the FSC's repeated pressure on financial firms here to fix the ratio at around 20 percent to enhance their financial soundness amid coronavirus-induced market uncertainty.
But the decision does no good to boost the firm's stock value, as it goes against the interests of shareholders. Woori's stock price closed at 9,610 won ($8.51), down 90 won or 0.93 percent, as of Friday. This falls far below the government's target selling price of 13,800 won per share.
"Woori will keep reviewing ways to carry out a series of other shareholder return policies this year," an official from the lender said.
Despite the pledge, it looks unclear whether the lender will be able to achieve a major rebound this year amid prevailing uncertainties in the local financial market. Woori shares have failed to exceed even the 10,000-won mark this year, which casts a negative outlook over its earlier stock recovery, so the government can carry out the timely sell-off of the shares.
Few brokerage houses expect Woori shares to exceed the government's expectation this year, even though they generally share the outlook that the group's stock price will be on track for recovery on hopes of Woori's continued efforts to enhance its non-banking portfolio.
Kyobo Securities set Woori's target share price at 12,700 won, as the company is expected to generate synergies among its affiliates to enhance the group's profitability in the non-banking sector.
But SK Securities cut the group's target price to 10,200 won amid weak expectations for dividend payouts.
