Korean banks' profit predicted to hit KRW1.7trn in 2Q13F

It's 19% below Bloomberg consensus.

According to Nomura, Korea banks are estimated to report aggregate net profit of KRW1.7tn in 2Q13F, 19% below the Bloomberg consensus of KRW2.1tn mainly due to provisioning for STX group. But we think that the event is already priced in.

After outperforming in 1Q13, Korean banks have fallen back down to trough levels because of: 1) poor 1Q results; 2) concerns on STX group; 3) further NIM contraction; and 4) high levels of foreign ownership at a time of money outflow from emerging markets triggered by USD strength, which has been accelerated by the Fed QE tapering.

Here's more from Nomura:

Previously, we argued that Korea banks’ peak multiple should be far below than that of previous cycles given that the banks are not paying out dividends and leverage has been falling and will likely fall further. 

However, even if we assume that the multiple would peak out at 0.8x P/B, we see significant upside from the current level. Moreover, if Woori privatization is carried out as planned by the Public Fund Oversight Committee, then we think that the current upcycle could be stretched as, in our view, the banks involved in the deal would see their leverage rise as they deploy excess capital to buy assets owned by Woori.