Shinhan Financial's H1 Net Profit 1.8 Trillion Won... "Strong Performance Amid COVID Impact Due to Digital Revenue Growth"

5.7% Decrease Compared to First Half of Last Year
"Impact of Additional Provisions for Bad Loans"
Digital Revenue 830.6 Billion KRW, Up 26.6%
Shinhan Bank Net Profit Down 11.0%
"Will Continue Efforts to Reduce Uncertainty"

[Asia Economy Reporter Kim Hyo-jin] Shinhan Financial Group announced on the 24th that it recorded a net profit of 1.8055 trillion KRW in the first half of this year. Although this is a 5.7% decrease compared to the first half of last year (1.9144 trillion KRW), it is evaluated to have performed well thanks to increased revenue from digital channels amid worsening domestic and international conditions.

It is analyzed that the additional provision for credit losses, based on conservative allowance evaluations to prepare for potential defaults due to the impact of COVID-19 in the second quarter, had a significant effect.

Shinhan Financial's provision for loan losses in the first half was 821.5 billion KRW, a 56.3% increase compared to 525.7 billion KRW in the first half of last year.

In preparation for the Lime Asset Management dispute, 124.8 billion KRW was provisioned in the second quarter alone. Related non-operating expenses amounted to 76.9 billion KRW. Approximately 200 billion KRW in one-time expenses occurred in the second quarter.

The net interest margin (NIM) was 1.84%, down 22 basis points from 2.05% in the same period last year. The non-performing loan (NPL) ratio was 0.56%, a 3 basis point decrease from 0.59% in the same period last year.

The consolidated total assets increased by 9.1% to 578.4 trillion KRW from 530.1 trillion KRW in the same period last year. Return on assets (ROA) decreased by 0.17 percentage points to 0.65% from 0.82% in the same period last year, and return on equity (ROE) decreased by 1.32 percentage points to 9.55% from 10.88% in the same period last year.

Shinhan Financial explained, "Despite the challenging domestic and international environment characterized by economic slowdown and the entry into an ultra-low interest rate era, the group’s ordinary profit continued to increase through steady growth in interest income (YoY +3.1%) and strong performance in the non-interest income segment (YoY +1.8%) driven by stable asset portfolio growth."

In particular, digital channel operating revenue in the first half grew by 26.6% to 830.6 billion KRW compared to the first half of last year. Shinhan Financial stated, "The efforts to enhance group profitability through digital platforms have begun to show visible results."

By affiliate, Shinhan Bank’s net profit in the first half was 1.1407 trillion KRW, down 11.0% compared to 1.2818 trillion KRW in the first half of last year.

Won-denominated loans in the first half increased by 5.5% compared to the same period last year. On an annual basis, household loans increased by 3.0% and corporate loans by 8.2%. This was due to a significant increase in loan assets to small and medium-sized enterprises and small business owners affected by COVID-19.

"Shinhan Bank manages loan assets stably through profitability-based operations and cost reduction efforts"

Shinhan Financial said, "Despite high loan growth rates in the bank in the second quarter, NIM was stably managed with only a 2 basis point decrease from the previous quarter due to profitability-based loan asset management and efforts to reduce funding costs," adding, "We plan to continue active asset and liability management in the second half to minimize the impact of declining market interest rates."

Shinhan Card recorded a net profit of 302.5 billion KRW, an 11.5% increase compared to 271.3 billion KRW in the first half of last year. On the other hand, Shinhan Investment Corp.’s net profit was 57.1 billion KRW, a 60.0% decrease compared to 142.8 billion KRW in the same period last year.

Shinhan Life Insurance recorded a net profit of 91.6 billion KRW, a 17.5% increase compared to 78.0 billion KRW in the first half of last year, and Orange Life Insurance recorded a net profit of 137.5 billion KRW, a 57.9% increase compared to 87.0 billion KRW in the same period last year.

Shinhan Financial stated, "We will continue efforts to accept the anticipated difficult realities and reduce future uncertainties," and added, "To this end, we plan to strengthen our fundamentals based on the 'One Shinhan' strategy and continue to expand future growth engines such as digital and global sectors as well as discover new businesses."

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