Korean banks become a value-defensive choice in volatile markets

Overview

This report summarizes Goldman Sachs' marketing feedback on the Korean financials and fintech sector in Hong Kong and Singapore. The core conclusion is that amid the correction in the technology sector and heightened market volatility, investors are refocusing on Korean financial stocks, especially Korean banks with value characteristics, defensive attributes, and room for improved shareholder returns.

Core views

Korean banks are in a relatively favorable position: the rising-rate cycle may bring greater NIM expansion, asset quality remains resilient, and earnings and ROE are likely to exceed market consensus expectations. Insurance stocks have the potential to become the next phase of the Value Up theme, but current plans are still viewed as relatively preliminary and require more substantive detail. The fintech sector, by contrast, is depressed by tighter retail lending regulation, and investors are more willing to wait for new growth drivers such as stablecoins to materialize.

Analysis framework

The report uses investor marketing feedback as its main thread, and combines it with valuation tables, ratings, target prices, P/B, P/E, ROE, ROA, dividend yield, and TSR yield for covered companies to compare Korean banks, insurance, and fintech horizontally.

Methodology notes

• Factor frameworkGS Factor Profile

  Growth, financial returns, valuation multiples, and composite factors

  Goldman Sachs' factor framework forms percentile rankings by comparing a stock's growth, financial returns, and valuation multiples with the market and industry peers; for financial stocks, it mainly uses indicators such as EPS, sales growth, ROE, P/E, P/B, and P/D.

• M&A frameworkM&A Rank

  Potential acquisition probability tiers

  Goldman Sachs uses an M&A Rank from 1 to 3 to assess the likelihood that a company could become an acquisition target, where 1 represents a higher probability, 2 a medium probability, and 3 a lower probability; highly ranked companies may have M&A factors incorporated into their target prices.

• Data platformQuantum

  Goldman Sachs proprietary financial database

  Quantum provides financial statement history, forecasts, and ratios, and can be used for deep single-company analysis as well as cross-industry and cross-market comparisons.

• Valuation basis12-month target price and total return potential

  Target price, dividends, and TSR yield

  The valuation table is based on closing prices as of July 20, 2026, and all target prices are on a 12-month basis; TSR yield applies to companies implementing buybacks or share cancellations.

Asset mapping & comparison

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

• Korean banks

  The report's most important positive asset class

  Strengths

  The macro environment supports a rising-rate cycle, while NIM expansion, resilient asset quality, and shareholder return commitments together support rising ROE.

  Weaknesses

  The market still has doubts about the sustainability of profit improvement at securities firms, and rising volatility may weigh on retail trading sentiment.

  Comparison

  Compared with fintech, banks better fit the non-tech defensive rotation and safe-haven demand; compared with insurance, banks have a more mature Value Up narrative.

  Risks

  If the assumptions of rising rates or asset quality do not hold, the path toward higher ROE and rerating to 1x P/B may be impeded.

• Korean insurance

  Candidate for the next phase of Value Up

  Strengths

  The underwriting cycle may improve due to reforms such as caps on GA commissions and stricter claims reviews, and the industry is shifting from a scale-oriented model to a quality-oriented one.

  Weaknesses

  Investors believe current Value Up plans are still relatively preliminary and are waiting for more substantive detail.

  Comparison

  Insurance may lag banks in thematic elasticity, but governance reform and peer pressure could drive subsequent catch-up gains.

  Risks

  If companies fail to present clear measures on capital returns, treasury share cancellation, or governance improvement, the thematic trade may be delayed.

• Korean fintech

  A watchlist asset class with weak sentiment

  Strengths

  KakaoBank still has potential upside risk from net interest margin expansion, and Kakaopay's brokerage subsidiary brings accelerated revenue growth.

  Weaknesses

  The government is tightening retail lending, and internet banks are lowering overdraft limits or suspending new account openings, suppressing interest in the sector.

  Comparison

  Compared with banks and insurance, fintech lacks the currently widely recognized defensive and Value Up logic favored by investors.

  Risks

  Further regulatory tightening, constrained loan growth, or slower-than-expected stablecoin progress could all weigh on the growth trajectory.

Key data

• KB Financial GroupBuy; target price 214,000; closing price 168,800; upside 26.8%Among the covered Korean banks, it has a relatively large market cap, and the report emphasizes Value Up renewal and TSR expansion for major banks.
• Shinhan Financial GroupBuy; target price 123,000; closing price 101,800; upside 20.8%Benefiting from defensive rotation into the Korean banking sector and expectations of rising ROE.
• Hana Financial GroupBuy; target price 159,000; closing price 133,400; upside 19.2%One of Korea's major banks, positioned within the themes of macro tailwinds and shareholder returns.
• Woori Financial GroupNeutral; target price 37,000; closing price 30,550; upside 21.1%The valuation table shows positive upside, but the rating is Neutral.
• Samsung F&MBuy; target price 800,000; closing price 602,000; upside 32.9%Listed as Buy within the insurance sector, benefiting from expectations of an improved underwriting cycle.
• Kakaopay Corp.Neutral; target price 58,000; closing price 39,700; upside 46.1%Although the valuation table shows high upside, the report notes that investors are still waiting for substantive stablecoin-related progress.

Impact & implications

The implication of this report for asset allocation is that Korean banks may take on the role of non-tech defense and value rerating during periods of market volatility; insurance stocks need more detail on corporate governance and capital returns before they can replicate banks' Value Up trade; fintech, meanwhile, remains suppressed by regulation in the short term and needs validation from new business catalysts.

Risks

• If volatility in the technology sector eases, the trend of capital rotating from tech to non-tech defensive assets may weaken.
• If Korea's rate cycle, NIM expansion, or asset quality fall short of expectations, the thesis of rising bank ROE may be weakened.
• Broker profits may be affected by market volatility and cooling retail trading sentiment.
• If insurers' Value Up plans lack substantive detail, investor recognition may be insufficient.
• Further government tightening of retail lending may continue to suppress fintech company growth.

What to watch

• Whether major Korean banks raise their TSR caps and set a shareholder return floor of no less than 50%.
• Whether Korean banks can continue to deliver ROE above consensus expectations.
• Whether insurers, under pressure for governance reform, introduce clearer Value Up details, especially measures expected from DB Insurance in mid-August 2026.
• Whether reforms such as GA commission caps and stricter claims reviews improve the insurance underwriting cycle.
• Whether Kakaopay's stablecoin-related progress translates into a visible revenue growth path.