Shinhan Financial Group Reports 3Q Net Profit of 1.2386 Trillion KRW, Down 0.1% YoY

Non-Operating Profit Falls 25%... Impact of Investment Securities Derivatives Loss Incident
Shinhan Financial Board Approves Dividend of 540 Won per Share
Resolution to Buy Back and Cancel 400 Billion Won Worth of Treasury Shares

Shinhan Financial Group posted a net profit of over 1.2 trillion KRW in the third quarter.

Shinhan Financial announced on the 25th that its third-quarter net profit was 1.2386 trillion KRW, a 0.1% decrease compared to the same period last year. On a cumulative basis, net profit increased by 4.4% to 3.9856 trillion KRW.

By segment, third-quarter interest income rose 1.2% from the previous quarter to 2.855 trillion KRW. Although the group's and bank's net interest margin (NIM) each fell by 5 and 4 basis points (1bp=0.01%) respectively compared to the previous quarter, interest-bearing assets increased by 3.1%, resulting in an overall 1.2% increase. Cumulative interest income rose 5.7% year-on-year, despite the cumulative group NIM falling 2bp to 1.95%, supported by a 7.6% increase in interest-bearing assets.

Non-interest income in the third quarter was 827.8 billion KRW, down 25.6% from the previous quarter. This reflects a securities derivative trading loss of 135.7 billion KRW incurred by Shinhan Investment Corp. during the third quarter. However, despite these derivative trading losses, cumulative non-interest income only decreased by 0.1% year-on-year, supported by increased fee income from investment banking and foreign exchange commissions.

The group's global profit in the third quarter was 167.1 billion KRW, down 15.0% from the previous quarter. This was due to an increase in credit costs despite higher operating profits. However, cumulative global profit surged 38.2% year-on-year to 578.4 billion KRW, surpassing the previous year's annual net profit of 549.5 billion KRW. Notably, Shinhan Vietnam Bank led the group's profit growth with a 12.4% increase to 207.6 billion KRW, and SBJ Bank posted a 16.0% increase to 106.9 billion KRW in net profit.

As of the end of September, the group's provisional BIS capital adequacy ratio stood at 15.98%, and the common equity tier 1 (CET1) ratio was 13.13%, maintaining stable capital ratios through appropriate risk-weighted asset (RWA) management.

By affiliate, Shinhan Bank posted a net profit of 1.0493 trillion KRW, down 6.7% from the previous quarter. This was influenced by a decrease in non-operating income due to the expiration of provisions related to the Hong Kong H-Index ELS in the second quarter. As of the end of September, the delinquency rate rose slightly by 0.01 percentage points year-on-year to 0.28%, and the ratio of non-performing loans (NPL) increased by 0.03 percentage points to 0.27%, maintaining a stable level. Other affiliates reported net profits/losses as follows: Shinhan Card 173.4 billion KRW, Shinhan Investment Corp. -16.8 billion KRW, Shinhan Life 154.2 billion KRW, and Shinhan Capital 44.2 billion KRW.

A Shinhan Financial Group official stated, “Despite the contraction in non-interest income due to securities derivative trading losses, we maintained solid profit resilience through proactive provisioning, stable credit cost management, and improved cost efficiency. Moving forward, we will continue to strengthen the group’s fundamentals by securing preemptive loss absorption capacity and enhancing profitability through a diversified group portfolio.”

Regarding the recent securities derivative losses, the official added, “We deeply acknowledge the responsibility for this incident occurring while we are making various efforts to strengthen the group-wide internal control system. We will take this opportunity to reaffirm that customer trust and robust internal controls are the essence of our business, and we will review and improve the internal control system from the ground up.”

Meanwhile, on the same day, Shinhan Financial’s board of directors resolved to pay a third-quarter dividend of 540 KRW per share and to repurchase and retire treasury shares worth a total of 400 billion KRW. Of this, 250 billion KRW will be repurchased by the end of the year, and the remaining 150 billion KRW will be acquired early next year. Through this, the group plans to implement a treasury share policy without any gaps throughout the year starting in 2025.

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