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DGB Financial head leads exec stock buybacks, investor relations to bolster corporate value

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DGB Financial Group Chairman and iM Bank CEO Hwang Byung-woo speaks during an event celebrating the transition of DGB Daegu Bank into iM Bank at its headquarters in Daegu, Wednesday. Yonhap

DGB Financial Group Chairman and iM Bank CEO Hwang Byung-woo speaks during an event celebrating the transition of DGB Daegu Bank into iM Bank at its headquarters in Daegu, Wednesday. Yonhap

By Lee Kyung-min

DGB Financial Group, the holding firm of iM Bank which was formerly DGB Daegu Bank, is strengthening efforts to bolster its corporate value, as illustrated by stock buybacks by its executives and the group head engaging in overseas investor relations activities.

Whether the slew of activities will translate into an uptick in stock valuation remains to be seen.

According to industry sources, DGB Financial Group Chairman and iM Bank CEO Hwang Byung-woo will leave for a four-day U.S. trip, June 10.

He will visit New York, Boston, Chicago and San Francisco to pitch future strategies to overseas investors.

The effort followed group executives buying back a combined 160,000 shares of DGB Financial stocks.

Hwang purchased 10,000 shares on May 30 and 31, followed by seven executives.

"We will continue to put responsible management at practice, a group-wide effort to enhance shareholder value amid our goal of nationwide expansion," the group said.

DGB Financial's price-to-book ratio (PBR) stands at 0.22, far lower than the market average of 0.39. The figure of 0.39 is the average of KB Kookmin, Shinhan, Hana, Woori, BNK, DGB and JB.

PBR measures the per-share market value of a stock relative to its book value. A PBR below 1 means a stock is undervalued.

DGB Financial is expected to provide 700 billion won ($509 million) to iM Bank over the next five years, as part of equity financing to achieve an annual growth of at least 7 percent every year through 2028.

The figure was reduced from the initial financing plan of 1 trillion won after adjusting to the pace of growth reflective of its current capacity.

The group's outstanding loan is expected to stand at 75.8 trillion won five years from now, up from 54.7 trillion won as of last year.

iM Bank will receive up to 200 billion won every year through 2028.

The group announced last month its plan to issue 100 billion won worth of hybrid bonds, soon to be followed by the issuance of corporate bonds worth 200 billion won.

Market experts say the group's capital financing will not threaten its financial soundness.

Nice Investor Service said DGB's double-leverage ratio will be limited to 126.7 percent, lower than the regulator's recommendation of a maximum of 130 percent.

The ratio is a firm's total equity divided by its parent firm's equity investment in the subsidiary.

"The equity financing of DGB Financial will have limited impact on its financial stability," the credit agency said.

Lee Kyung-min lkm@koreatimes.co.kr


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