Daegu Bank (005270 KS) : 다이와 : Sharp decrease in provisioning bodes well for the future : 6-mth rating: 1 / Share price (21 Apr): W7,700 / Target price: W9,050 - Despite the recognition of W23.6bn in early retirement program related cost during 1Q05, the bank posted 7% YoY and 31% QoQ bottom line growth in 1Q05. The bank could have posted 72% YoY and 111% QoQ earnings growth if the bank did not conduct an ERP program of reducing 131 employees in 1Q05. - The major earnings contributor was a sharp decline in provisioning burden. The speed and degree of provisioning decrease turned out to be higher than our expectation. The management expects the provisioning level to remain low for the remainder of the year, which is a very positive signal for the earnings outlook in2005 for the remainder of the year. - New CEO of the bank made it crystal clear that he would put shareholders' value maximizing as his top priority. He also said that investors should expect a reasonably high and sustainable dividend payment from the bank. We expect that the bank could pay W320 of cash dividend in FY05, which means that estimated dividend yield is as high as 4.2% as of now. - After reflecting the 1Q05 business performance of the bank, we revised up our earnings forecast of the bank and raised our 6-month target price from W8,800 to W9,050. We maintain 1 (Buy) rating on the counter. ** 본 한경브리핑 서비스는 거래목적으로 사용될 수 없습니다. 또한, 정보의 오류 및 내용에 대해 당사는 어떠한 책임도 없으며, 단순 참고자료로 활용하시기 바랍니다.

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