Shinhan Financial Group Posts Record High Net Profit of 3.4 Trillion KRW Last Year, Joining '3 Trillion Club' for Second Consecutive Year

Diversifying Global and Non-Bank Profit Bases with Six Consecutive Years of Net Income Growth... Visible Results of the '2020 Smart Project'

[Asia Economy Reporter Kwon Haeyoung] Shinhan Financial Group achieved a net profit of 3.4035 trillion KRW last year, joining the '3 trillion club' for the second consecutive year. This record-high performance was driven by diversification of global and non-bank profit bases, continuing six consecutive years of net profit growth.

Shinhan Financial Group announced on the 5th that the group's net profit for 2019 increased by 7.8% from the previous year to 3.4035 trillion KRW, with a fourth-quarter net profit of 507.5 billion KRW.

In the fourth quarter, net profit decreased by 1.1% year-on-year due to approximately 200 billion KRW in costs related to voluntary retirement and public fund management. However, Shinhan Financial explained that considering these as one-off year-end factors, the group maintained solid recurring profits for four consecutive quarters.

A Shinhan Financial Group official stated, "The key feature of this performance is the establishment of a stable recurring income base through the execution of the '2020 Smart Project' strategy. Despite a decline in net interest margin (NIM) in the banking sector, solid asset growth secured a sustainable growth foundation. The non-bank sector also played a pivotal role in improving group performance through a diversification strategy focused on non-interest income business portfolios. Growth in the global sector further upgraded the group's ability to generate recurring profits."

Shinhan Financial's annual interest income last year was 7.983 trillion KRW, up 7.4% from the previous year. Overseas interest income increased by 27.8% during the same period, raising its share of total interest income from 8.4% in 2018 to 10.3% in 2019.

Non-interest income rose 33.3% year-on-year to 3.152 trillion KRW. This increase was attributed to higher insurance profits following the consolidation of Orange Life and increased gains from securities-related transactions. Global revenue also grew significantly. Shinhan Financial's overseas net profit was 397.9 billion KRW, up 23.3% from the previous year, accounting for 11.7% of the group's total profit.

A Shinhan Financial Group official explained, "The expansion of global revenue secured a stable income base to overcome the ultra-low interest rate era. Glocalization of new global markets through channel and group company expansion has also accelerated."

By group company, core affiliate Shinhan Bank posted an annual net profit of 2.3292 trillion KRW, up 2.2% from the previous year. Due to one-time recognition of public fund-related costs and voluntary retirement expenses, fourth-quarter net profit fell 49.2% quarter-on-quarter to 352.9 billion KRW. Loans grew 7.4% compared to the end of the previous year (household loans up 9%, corporate loans up 5.7%), while net interest margin declined by 7 basis points quarter-on-quarter to 1.46%.

Shinhan Card recorded a net profit of 508.8 billion KRW, down 2% year-on-year, and Shinhan Investment Corp. posted 220.8 billion KRW, down 12.1%. Shinhan Life Insurance and Orange Life recorded 123.9 billion KRW and 271.5 billion KRW, down 5.5% and 12.8%, respectively. Shinhan Capital increased by 21.9% to 126 billion KRW, Shinhan BNP Paribas Asset Management recorded 15 billion KRW, and Shinhan Savings Bank posted 23.1 billion KRW.

Meanwhile, Shinhan Financial resolved to increase the group's common stock dividend for the 2019 fiscal year by 250 KRW from the previous year to 1,850 KRW. The common stock dividend payout ratio is expected to be about 25%, with a dividend yield of approximately 4.1%.

This content was produced with the assistance of AI translation services.