7 Cheap Bank Stocks To Invest In Before They Take Off

2. Shinhan Financial Group Co., Ltd. (NYSE:SHG)

Earnings Growth: 1.87%

Forward P/E Ratio: 5.61

Analyst Upside Potential: 48.04% 

Shinhan Financial Group Co Ltd. (NYSE:SHG) is a major financial services company based in South Korea. It is recognized as one of the largest financial conglomerates in the country. The group provides a range of services including banking, credit cards, investment, and insurance services.

The group recently faced challenges, particularly due to significant losses incurred by its securities division. It reported a loss of KRW 135.7 billion in the third quarter of 2024 due to issues related to trading operations at Shinhan Securities, specifically involving futures contracts that were not aligned with their hedging strategies. Management noted that they are actively working to diagnose the root causes of the losses and improve oversight.

Looking ahead, Shinhan Financial Group Co Ltd. (NYSE:SHG) is focused on improving qualitative growth through  Return on Equity and Return on Assets. The company aims for an ROE of 13% by 2025, which involves optimizing how it allocates its assets and resources. This strategy includes prioritizing high-growth areas such as corporate lending and digital banking, while also working on improving operational efficiency and reducing costs to achieve these targets. It is one of the cheap bank stocks to invest in before they take off.

Polaris Global Equity Strategy stated the following regarding Shinhan Financial Group Co., Ltd. (NYSE:SHG) in its Q3 2024 investor letter:

“On the backdrop of interest rate cuts, financials shined on expectations for loan demand and cheaper cost of capital; in fact, all sector holdings were in absolute positive territory. Shinhan Financial Group Co., Ltd. (NYSE:SHG) was the top contributor, with a second-quarter earnings beat on better non-interest income with credit costs under control. An enhanced shareholder return policy was a pleasant upside surprise, as Shinhan committed to returning 50% of earnings to investors through dividends and share buybacks by 2027.”