Goldman Sachs: Korean financial stocks offer defensive value amid market volatility, with rising preference for insurance

Overview

This report summarizes investor feedback on Korean financials and fintech gathered by Goldman Sachs during its marketing in Singapore. The core conclusion is that in an environment of rising market volatility, investors are paying more attention to defensive characteristics, and Korean financial stocks are well positioned because of dividend yields, earnings stability, and progress in Value Up policies. Within the sector, recent preference has shifted more from banks toward insurance, but Goldman Sachs still believes both banks and insurance offer value; in fintech, the market is focused on the stablecoin theme, but interest remains limited in the absence of substantive progress.

Core views

First, although Korean bank stocks have recently been sidelined due to a lack of near-term catalysts and social responsibility pressure, investors still recognize that major commercial banks can reach 1x P/B at 10%-11% ROE as TSR rises to around 50% and Shinhan and Woori update their Value Up targets. Second, Korean insurance stocks are becoming more attractive, with underwriting quality improving at some non-life insurers, and possible regulatory measures in 2H26E such as GA commission caps and stricter claims reviews may improve visibility on operational improvement. Third, Kakaopay and KakaoBank share prices react more strongly to stablecoin-related developments, but perceptions of their fundamentals differ: Kakaopay is seeing accelerating revenue growth and quarter-on-quarter OPM improvement, while KakaoBank faces slower deposit growth and regulatory constraints on loan growth.

Analysis framework

The report mainly uses a combination of investor feedback, fundamental trends, valuation rerating, and policy catalysts. For banks, it focuses on TSR, P/B, ROE, and Value Up targets; for insurance, it focuses on underwriting quality, loss ratio trends, regulatory policy, and shareholder return pressure; for fintech, it focuses on stablecoin catalysts, revenue growth, OPM, deposit growth, and regulatory constraints on lending growth.

Methodology notes

• Market feedbackSingapore investor marketing feedback

  Identify sector preferences, catalyst gaps, and shifts in market focus through investor discussions

  The report uses investor feedback during the Singapore marketing as the main thread, pointing out that in a volatile environment capital is more focused on defensive assets, with recent preference leaning more toward insurance, while banks still have rerating potential.

• Fundamentals and valuationValue Up and total shareholder return framework

  Use dividends, buybacks and cancellations, TSR, ROE, and P/B to assess the defensive characteristics and rerating potential of Korean financial stocks

  Korean banks are discussed as assets whose TSR has risen to around 50%, and major commercial banks reaching 1x P/B at 10%-11% ROE is viewed as feasible; for insurance, the focus is on earnings stability and faster reinforcement from Value Up.

• Factor and comparable analysisGS Factor Profile

  Use attributes such as Growth, Financial Returns, Multiple, and Integrated to compare stocks across the market and peers

  The disclosure section explains that GS Factor Profile forms percentile comparisons based on metrics such as forward sales, EBITDA, EPS, ROE, and valuation multiples; for financial stocks, it mainly uses EPS, sales growth, ROE, P/E, P/B, and P/D.

• Database toolQuantum

  Goldman Sachs proprietary database used to query historical financial statements, forecasts, and ratios

  The disclosure section explains that Quantum can be used for in-depth single-company analysis as well as cross-industry and cross-market company comparisons.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Korean bank stocks

  Defensive value and late-stage valuation rerating opportunity

  Strengths

  TSR has risen to around 50%, dividends and buybacks/cancellations enhance shareholder returns, and 1x P/B at 10%-11% ROE is seen as achievable.

  Weaknesses

  They have relatively lagged in the recent rebound, lack near-term catalysts, and face greater social responsibility pressure.

  Comparison

  Relative to insurance, banks have seen declining attention recently, but Goldman Sachs still believes they have further upside.

  Risks

  Value Up expectations may already be priced in fairly fully; if earnings or shareholder return delivery falls short, valuation rerating may slow.

• Korean insurance stocks

  Defensive and improving assets with rising investor preference

  Strengths

  Underwriting quality trends have reversed at some non-life insurers, and regulatory measures may improve commission and claims discipline, potentially enhancing earnings stability.

  Weaknesses

  Improvement still needs validation from actual operating data, and the impact of past loss ratio deterioration and intensifying competition has not been fully eliminated.

  Comparison

  Recent sector preference has tilted more toward insurance, which has a more pronounced operational improvement narrative than banks.

  Risks

  Regulatory measures in 2H26E may progress less than expected, or underwriting quality improvement may not be sustained.

• Kakaopay

  Fintech asset influenced by the stablecoin theme

  Strengths

  The report notes that its revenue growth has started to accelerate and OPM has improved quarter on quarter.

  Weaknesses

  Market interest still depends on the next round of stablecoin updates and visible commercialization progress.

  Comparison

  Compared with KakaoBank, investor perception of Kakaopay's fundamentals is more positive.

  Risks

  Insufficient stablecoin progress or unsustained profit improvement could weaken the stock's thematic elasticity.

• KakaoBank

  Digital banking asset influenced by the stablecoin theme but facing more visible fundamental pressure

  Strengths

  Its stock price reacts strongly to stablecoin-related developments and remains sensitive to thematic catalysts.

  Weaknesses

  Deposit growth is slowing, and loan growth is constrained by regulation.

  Comparison

  Compared with Kakaopay, feedback on KakaoBank's fundamentals is more cautious.

  Risks

  Retail fund migration, weak deposit growth, and regulatory constraints on loan growth may suppress the growth trajectory.

Key data

• Report publication date2026-05-26 5:38PM KSTCover information shows the publication time.
• Korean banks TSR levelAbout 50% (2025A)The report states that Korean banks have raised TSR to around 50%.
• Bank valuation anchor1x P/B corresponds to 10%-11% ROEInvestors appear to recognize that major commercial banks can reach 1x P/B at this ROE level.
• Insurance regulatory catalyst2H26EPotential measures include GA commission caps and stricter claims reviews.
• Valuation table basisBased on the closing price on 2026-05-22; target prices are on a 12-month basisThe valuation table note on page two states this price and target price basis.
• Stablecoin theme reactionKakaopay and KakaoBank share-price reactions are strongerBut the report believes the market is still waiting for stablecoin-related developments that can materially improve the growth trajectory.

Impact & implications

For portfolio allocation, the report implies that Korean financial stocks can serve as a source of defensive assets amid market volatility, with banks offering late-stage valuation rerating and support from shareholder returns, while insurance offers operational improvement and policy-catalyst optionality. Fintech is more dependent on thematic catalysts in the short term; if stablecoin progress lacks a verifiable commercialization path, market interest may remain constrained.

Risks

• If market volatility rises further, it may suppress risk appetite and affect financial stock valuations.
• Korean bank stocks lack near-term catalysts, and social responsibility pressure may weaken shareholder return expectations.
• If banks' Value Up targets are delivered below expectations, the late-stage valuation rerating opportunity may be smaller than expected.
• There is execution risk around insurance underwriting quality improvement and 2H26E regulatory measures.
• Fintech is highly dependent on the stablecoin theme; if there is no substantive progress in products, policy, or revenue, market interest may remain limited.
• Slower deposit growth and regulatory constraints on lending at KakaoBank may drag on growth.

What to watch

• Execution of the updated Value Up targets by Shinhan and Woori.
• Korean banks' TSR, dividends, buybacks and cancellations, and the path toward 1x P/B rerating.
• Underwriting quality, loss ratio trends, and competitive intensity among Korean non-life insurers.
• Whether regulatory measures such as GA commission caps and stricter claims reviews in 2H26E are implemented.
• Kakaopay's revenue growth, OPM improvement, and stablecoin-related commercialization progress.
• KakaoBank's deposit growth, loan growth constraints, and changes in retail fund flows.