Shinhan Financial Group Reports 2.6 Trillion KRW Net Profit in H1, Down 2.1% YoY

Provision Transfer Amount 1.0095 Trillion Won

Shinhan Financial Group's net profit for the first half of this year slightly decreased compared to the previous year. Both interest and non-interest income increased, improving operating profit, but this was due to an expansion of provisions considering domestic and international uncertainties.

Shinhan Financial announced on the 27th that the group's net profit for the first half of the year was 2.6262 trillion KRW, down 2.1% from the same period last year. The net profit for the second quarter was 1.2383 trillion KRW, a 10.8% decrease from the previous quarter.

According to Shinhan Financial, cumulative interest income for the first half of this year was 5.268 trillion KRW, and non-interest income was 2.0315 trillion KRW, increasing by 3.3% and 21.5%, respectively. Narrowing down to the second quarter, interest income was 2.6942 trillion KRW, and non-interest income was 1.033 trillion KRW, increasing by 4.7% and 3.4% compared to the previous quarter.

The increase in interest income was due to an improvement in the net interest margin (NIM), with the group's overall NIM improving from 1.94% in the first quarter to 2.00% in the second quarter. Non-interest income significantly increased due to the base effect of losses in the securities sector caused by a sharp rise in interest rates in the first half of the previous year and the improvement in securities sector profits and losses due to a decline in market interest rates in the first half of this year, despite a decrease in fee income.

Loan loss expenses reached 1.0095 trillion KRW, a 67.8% increase compared to the same period last year. In the second quarter, it was 548.5 billion KRW, a 19.0% increase from the previous quarter. Overall for the first half, the increase in provisions was influenced by the rise in delinquency rates for banks and cards due to cumulative interest rate hikes, and in the second quarter, by an increase in provisions during Shinhan Bank's corporate credit evaluation season and additional provisions due to the application of the Master Scale PD for corporate representative target default rates.

Looking at the performance by subsidiaries, Shinhan Bank recorded 1.6805 trillion KRW, down 0.1% from the same period last year, attributed to increased loan loss expenses. Shinhan Card saw a 23.2% decrease to 316.9 billion KRW due to increased funding costs from rising interest rates and higher loan loss expenses.

Other subsidiaries reported as follows: Shinhan Investment Corp. increased by 27.9% to 241.9 billion KRW, Shinhan Life Insurance rose 32.0% to 311.7 billion KRW, and Shinhan Capital decreased by 6.9% to 190.1 billion KRW. Shinhan Financial stated, “Although operating profit increased in the second quarter due to balanced growth in interest and non-interest income, net profit decreased compared to the previous quarter due to conservative provision accumulation considering domestic and international uncertainties and increased selling and administrative expenses caused by inflation.”

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