[Click eStock] "Shinhan Financial Group Expected to Miss 2Q Net Profit Estimates"

Daishin Securities on the 20th expected that Shinhan Financial Group's credit loss expenses will significantly increase in the second quarter due to ongoing corporate evaluations. Accordingly, it maintained a 'Buy' investment rating and a target price of 43,000 KRW.

Researcher Hyejin Park of Daishin Securities stated, "The second-quarter net profit is expected to slightly underperform the consensus of 1.27 trillion KRW." The credit loss expenses for Q2 were estimated at 514 billion KRW, an increase of 11.6% from the previous quarter and 43.6% year-over-year. The credit cost ratio (CCR) was expected to be 50 basis points.

Researcher Park explained, "The reason the second-quarter earnings are expected to fall short of consensus is due to credit loss expenses," adding, "During the corporate credit evaluations conducted every quarter, rising interest burdens from increased rates inevitably lead to higher delinquency rates, and provisions related to project financing (PF) and contracts for difference (CFD) are also reflected."

The bank's net interest margin (NIM) for Q2 is expected to rise by 4 basis points from the previous quarter to 1.63%. Won-denominated loans are projected to grow by 1% compared to the previous quarter. Researcher Park analyzed that this is influenced by the surge in funding costs caused by many deposits with short maturities of 3 to 6 months made in the latter half of last year.

Researcher Park diagnosed, "This year, with the normalization of maturities to 6 to 12 months, issues like those in Q1 are unlikely to recur," and added, "Non-interest income is expected to inevitably decrease after exceeding 1 trillion KRW in Q1, which was quite strong."

Although securities and asset management performance may weaken due to interest rate hikes in Q2 and provisions for CFDs and PFs, Shinhan Card's performance is expected to improve. This is because credit card usage has shown a favorable trend since April.

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