[Click eStock] "Shinhan Financial Group Expected to Continue Record-Breaking Performance This Year"

[Asia Economy Reporter Park Jihwan] Hyundai Motor Securities on the 13th predicted that Shinhan Financial Group will continue its record-breaking performance this year as well. They maintained a 'Buy' investment rating and a target price of 49,000 KRW.

Net profit for the fourth quarter is expected to be 628.3 billion KRW, generally in line with the market expectation of 632.4 billion KRW. Despite some unusual expenses during the quarter, interest income is expected to remain strong. The net interest margin (NIM) in the fourth quarter is forecasted to rise by 5bps compared to the previous quarter, significantly exceeding the initial estimate of 2-3bps. This is thanks to a favorable interest rate environment, including the full-scale base rate hikes.

Loans in the fourth quarter are expected to increase by 3.0% quarter-on-quarter and 9.2% year-on-year, outperforming peers in the industry. With both margin and scale growth combined, net interest income is estimated to rise by 3.1% compared to the previous quarter.

Key unusual factors during the quarter include the recognition of potential losses on financial investment products (estimated around 150 billion KRW) and voluntary retirement costs for banking and insurance sectors (estimated around 200 billion KRW). These costs are largely proactive in nature and are expected to have a positive impact on future earnings trends.

Researcher Kim Jinsang of Hyundai Motor Securities emphasized, "This year's NIM is expected to improve by 6bps year-on-year as the effect of base rate hikes continues," adding, "The solid asset effect will also contribute, leading to a 9.8% increase in net interest income this year." He also noted that last year's financial investment product-related losses of about 300 billion KRW will disappear this year, contributing to earnings growth. Overall, earnings are expected to increase by 10.3% year-on-year this year.

Researcher Kim highlighted, "Investment points include relatively high earnings visibility this year, improved profitability of Shinhan Life due to the adoption of IFRS next year, regularization of quarterly dividends, expectations for an active shareholder return policy, and progress in digitalization driven by the highest level of MAU growth within the industry."

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