Shinhan Financial Group Reports 1Q Net Profit of 1.388 Trillion KRW...Significant Increase in Provisions

Shinhan Financial Group announced on the 27th that its net profit for the first quarter was 1.388 trillion KRW. This represents a 0.9% (12.4 billion KRW) decrease compared to the same period last year (1.4004 trillion KRW, IFRS17 not applied).

Firstly, interest income was 2.5401 trillion KRW. Interest-bearing assets increased by 3.5% and the bank's net interest margin (NIM) rose by 8 basis points (1bp=0.01%), but the increase in funding costs in the non-bank sector offset the interest income, resulting in a 2.0% increase compared to the same period last year.

Non-interest income was 1.0329 trillion KRW, up 17.0% from the same period last year. Although fee income decreased due to a decline in credit card and investment finance fees compared to the previous year, a high growth rate was recorded due to the base effect of a decrease in securities trading gains caused by rising market interest rates in the first quarter of last year and an increase in securities valuation gains in the first quarter of this year.

Provision for loan losses in the first quarter reached 461 billion KRW, an 89.4% increase compared to the same period last year. This was due to an increase in regular reserves caused by rising delinquency rates amid continuous interest rate hikes.

The group's global division net profit increased by 23.9% to 158.3 billion KRW. The share of the global division in the group's total profit rose by 2.2 percentage points from 9.2% in the same period last year to 11.4%.

Looking at net profit by subsidiaries, Shinhan Bank recorded 931.5 billion KRW, Shinhan Card 166.7 billion KRW, Shinhan Investment Corp. 119.4 billion KRW, Shinhan Life 133.8 billion KRW, and Shinhan Capital 92.2 billion KRW.

Meanwhile, Shinhan Financial held a board meeting on the same day and decided on a first-quarter dividend of 525 KRW. Additionally, to respond to the increase in the number of outstanding shares due to the conversion of convertible preferred shares worth 750 billion KRW scheduled for the 1st of next month, they also decided to repurchase and cancel treasury shares worth 150 billion KRW.

Shinhan Financial stated, “Interest income decreased due to a decline in bank margins compared to the previous quarter caused by expanded win-win financial support. Although additional provisions were set aside to respond to uncertain economic conditions, we once again confirmed the group's fundamental strength in profit generation based on improvements in non-interest income such as securities and fee income and stable selling and administrative expenses despite inflation.” They added, “We are expanding win-win financial support for individuals, small and medium enterprises, and SOHO customers who are facing difficulties due to recent high interest rates and economic slowdown, strengthening group-level support to ensure a soft landing for financially marginalized groups, and making efforts to mitigate systemic risks.”

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