Shinhan Financial Group Reports 4.3 Trillion KRW Net Profit in 2023, Down 6.4% YoY

Annual Weekly Dividend of 2,100 KRW
Resolution to Cancel 150 Billion KRW of Treasury Shares

Shinhan Financial Group announced on the 8th that its annual consolidated net profit for 2023 was 4.368 trillion KRW, a 6.4% decrease compared to the previous year. Although operating profit increased, the company explained that one-time expenses related to banking sector livelihood financial support, provision for allowances, and the base effect from the previous year's gain on the sale of Shinhan Investment Corp.'s building (322 billion KRW) were reflected.

Shinhan Bank, Jung-gu, Seoul. Photo by Jinhyung Kang aymsdream@

First, annual interest income was 10.8179 trillion KRW, up 2.1% from the previous year. This was due to the group’s annual net interest margin (NIM) rising by 1bp (1bp=0.01%) and a 2.6% increase in interest-bearing assets. Non-interest income was 3.4295 trillion KRW, a 51.0% increase from the previous year. This reflected improvements in fee income and the elimination of losses in the securities sector caused by the sharp interest rate hikes last year.

The annual provision for loan losses increased by 70.8% to 2.2512 trillion KRW. This was due to rising provisions for normal losses caused by increased delinquency rates in banking and card sectors amid cumulative interest rate hikes, as well as increased economic response provisions compared to the previous year. Additionally, the annual loan loss cost ratio was 0.57%, and excluding economic response provisions, it was 0.38%.

Net profits by subsidiaries showed mixed results. Shinhan Bank’s net profit increased by 0.7% to 3.0677 trillion KRW, and Shinhan Capital remained flat with a 0.2% increase to 304 billion KRW. On the other hand, Shinhan Card’s net profit decreased by 3.2% to 620.6 billion KRW, and Shinhan Investment Corp. saw a 75.5% drop to 100.9 billion KRW amid sustained high interest rates. Shinhan Life also posted a 61.4% decrease in net profit to 44.8 billion KRW.

Meanwhile, Shinhan Financial held a closing board meeting and resolved to pay a year-end dividend of 525 KRW per share (2,100 KRW annually) for the 2023 fiscal year. This will be finalized at the shareholders’ meeting in March. Including already paid quarterly dividends and amounts for treasury stock acquisition and cancellation, the total annual shareholder return ratio improved by 6.0 percentage points to 36.0% compared to the previous year.

Additionally, Shinhan Financial’s board decided to acquire and cancel 150 billion KRW worth of treasury stock in the first quarter of this year as part of shareholder returns. Shinhan Financial plans to continue efforts to enhance shareholder value consistently and sustainably while maintaining an appropriate capital ratio this year as well.

A Shinhan Financial official stated, “We defended interest income despite narrowing interest margins through growth in corporate loans focused on real demand, and maintained solid profit-generating capability with increased non-interest income through securities portfolio management. We are continuously working to mitigate systemic risks caused by sustained high interest rates by proactively setting aside provisions to prepare for future uncertainties and to guide a soft landing in the real estate project financing (PF) market, as well as providing win-win financial support to ease interest burdens on self-employed and small business owners.”

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