"Is It Retention or Recapture? ... Shinhan and KB as the 'Leading Group'"

Record High Performance Expected Last Year... Narrow Gap Between Two Groups
"Performance in Non-Banking Sectors Will Determine the Outcome"

[Asia Economy Reporter Kwangho Lee] As major domestic financial holding companies are expected to have posted record-high earnings last year despite the COVID-19 pandemic, attention is focused on whether there will be any changes in the rankings of Shinhan Financial Group and KB Financial Group, which compete for first and second place in the industry. While some predict KB Financial will reclaim the top spot, there are also many who believe Shinhan Financial will maintain its leading position for the third consecutive year, given that its net income was about 70 billion KRW larger than KB Financial's through the third quarter of last year.

According to the financial sector on the 1st, the 'leading financial group' title is expected to be decided based on the earnings reports of KB Financial and Shinhan Financial, which will be announced on the 4th and 5th, respectively.

Earlier, financial information firm FnGuide's estimates projected Shinhan Financial's annual net profit to increase by 3% year-on-year to 35.067 trillion KRW, while KB Financial's net profit was expected to rise 5.5% to 34.925 trillion KRW. The narrow gap between the two groups makes it difficult to draw a definitive conclusion until the very end.

The financial sector views the performance of non-bank divisions as a key factor that will determine the outcome. Last year, banks saw their net interest margin (NIM) shrink due to interest rate cuts in response to the COVID-19 crisis and experienced deteriorated profitability and soundness due to increased loan loss provisions from large-scale principal and interest deferrals. However, securities firms benefited from a stock investment boom, increasing commission income, and insurance companies saw improved loss ratios amid the pandemic.

In fact, as of the third quarter last year, net income was 635.6 billion KRW for KB Kookmin Bank and 624.4 billion KRW for Shinhan Bank, down 9.4% and 10.1% year-on-year, respectively.

On the other hand, KB Securities posted 209.7 billion KRW, up 275.8%, and Shinhan Investment Corp. recorded 127.5 billion KRW, up 115.0%.

Meanwhile, Hana Financial Group and Woori Financial Group, which will announce their earnings on the same day as Shinhan Financial on the 5th, are expected to report net profits of 2.5246 trillion KRW and 1.4034 trillion KRW, respectively, for last year. Hana Financial's figure represents a 5.6% increase year-on-year, but Woori Financial is expected to post negative earnings. This appears to be due to the poor performance of its main subsidiary, Woori Bank, which directly impacted the overall group results.

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