Shinhan Financial Group Reports Record High Net Profit of 4.0193 Trillion KRW Last Year

Increase in Interest Income Due to Interest Rate Hikes - Impact of Growth in the Non-Bank Sector

Cho Yong-byeong, Chairman of Shinhan Financial Group

[Asia Economy Reporter Yoo Je-hoon] Shinhan Financial Group posted a record high net profit of over 4 trillion won last year. This was the result of asset growth, increased interest income due to interest rate hikes, and growth in non-bank sectors.

Shinhan Financial Group announced on the 9th that its consolidated net profit for last year reached 4.0193 trillion won. This represents a 17.7% increase compared to the same period last year, marking the eighth consecutive year of net profit growth for Shinhan Financial Group.

Looking at last year's performance in detail, annual interest income was 9.0535 trillion won, up 11.0% from the previous year, and non-interest income was 3.6381 trillion won, up 7.7% year-on-year. The overall growth was driven by increased interest income from the bank due to asset growth and base rate hikes, as well as improved performance in non-bank sectors such as card, securities, and capital.

Annual selling and administrative expenses increased by 10.2% year-on-year to 5.7431 trillion won due to increased voluntary retirement costs, but excluding one-time factors such as voluntary retirement costs, expenses were well managed.

Annual loan loss provisions amounted to 996.4 billion won, down 28.3% year-on-year due to a base effect from the disappearance of additional COVID-19 related provisions in 2020. Additionally, Shinhan Financial Group recognized 467.6 billion won in losses from investment products for the year.

By affiliate, Shinhan Bank posted an annual net profit of 2.4944 trillion won. Interest income increased by 11.5% year-on-year due to selective loan growth leading to an increase in high-profitability assets and improved net interest margin (NIM) from enhanced operating yields, while non-interest income decreased year-on-year due to reduced gains and losses related to securities. Selling and administrative expenses increased due to factors such as voluntary retirement costs, but loan loss provisions decreased by 49.8% compared to the previous year.

Meanwhile, Shinhan Card, Shinhan Investment Corp., and Shinhan Capital posted net profits of 675 billion won, 320.8 billion won, and 274.9 billion won, respectively, representing increases of 11.3%, 107.3%, and 71.2% year-on-year. However, Shinhan Life recorded a net profit of 391.6 billion won, down 14.3% year-on-year due to decreased business expense gains and losses such as risk rate loss from increased accident insurance payments and new contract cost loss.

A Shinhan Financial Group official stated, "We have made efforts to minimize uncertainties by preparing additional provisions in anticipation of uncertain economic conditions such as the spread of Omicron, the end of COVID-19 financial support programs, implementing voluntary retirement to improve cost structure, and restoring trust with customers and investors by eliminating uncertainties in investment products. These efforts will greatly contribute to improving the cost structure in the long term." He added, "We continue to strengthen digital competitiveness through platform innovation such as improving SOL and Shinhan pLay, and advancing the MyData business. We are also striving to enhance customer value through bold challenges not only in finance but also in non-financial sectors with services like ‘HowFit’ and ‘Ttaenggyeoyo.’"

Meanwhile, Shinhan Financial Group decided to set the dividend per common share at 1,960 won (including quarterly dividends) to enhance shareholder value, which will be finalized at the shareholders' meeting in March. The dividend payout ratio based on net profit is 25.2% for common shares and 26.0% including preferred shares.

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