A composite image shows the headquarters of the country's largest financial groups — KB, Shinhan, Hana and Woori. Korea Times file

Shares of Korea's four largest banking groups — KB, Shinhan, Hana and Woori — surged an average of 47 percent on the benchmark KOSPI so far this year, after being considered as being grouped as some of the most undervalued stocks.

The surge in the stock prices comes in the wake of the government's Corporate Value-up Program, which aims to boost the value of undervalued Korean stocks. This initiative, introduced in the spring, has fueled optimism that the program is starting to yield positive results.

According to bourse operator Korea Exchange (KRX), KB Financial Group gained 64 percent to 87,900 won ($64.50) from Jan. 2 to July 31, marking the steepest increase among the four financial holding companies.

During the cited period, Shinhan Financial Group advanced 52 percent to 59,800 won and Hana Financial Group climbed 51.2 percent to 64,700 won.

The smallest of the four, Woori Financial Group gained 22.6 percent to 15,740 won.

The four companies also drew attention for setting record prices during intra-day trading this year. On July 29, KB rose as high as 92,400 won while Shinhan rose to 64,200 won and Woori hit 16,960 won.

Hana reported the highest price during intra-day trading, July 3, when the price once shot up to 67,800 won.

Analysts said the surge for the four firms may continue in the second half of the year, driven by record earnings for any first half in the January-June period.

The four banks reported a combined net income of 9.35 trillion won, marking the highest figure ever recorded for the first half of a year since such data began being compiled.

KB took the top position with 2.78 trillion won, followed by Shinhan with 2.74 trillion won, Hana with 2.68 trillion won and Woori with 1.75 trillion won during that period.

Analysts note that the measures the firms are taking to enhance shareholder returns align with the central goals of the Corporate Value-up Program. As a result, these efforts are contributing to the increase in the firms' stock prices.

For example, Shinhan recently announced in a regulatory filing that it plans to buy back and retire 50 million shares by 2027 aiming to achieve a 50 percent return for shareholders.

The plan will cost about 3 trillion won.

Woori was the first of the four banks to announce a 50 percent shareholder return, aligning its strategy with the Corporate Value-up Program.

Hana is currently developing its own plan to support the Corporate Value-up Program.

Through the program, financial regulators are encouraging listed firms to improve corporate governance, enhance self-regulatory practices, and implement other relevant measures to address the so-called Korea discount — a persistent undervaluation of Korean stocks compared to their global counterparts.