Shinhan Financial Group Posts Record 4.5 Trillion KRW Net Profit Last Year, Bank Division Hits 3.7 Trillion KRW

Second-Highest Performance Ever... Interest Income Reaches 11.4 Trillion KRW Last Year
Shinhan Bank Reclaims 'Leading Bank' Status... Card and Capital Performance Decline

Shinhan Financial Group posted a net profit of 4.5 trillion KRW last year, marking the second-best performance in its history after two years. Shinhan Bank, which drove the group's performance, achieved record-high profits and reclaimed its position as the 'leading bank.' Shinhan Financial Group plans to increase its shareholder returns to the 40% range by proposing at least 1.75 trillion KRW in returns this year.

Second Highest Performance Ever... Interest Income of 11.4 Trillion KRW Last Year

On the 6th, Shinhan Financial Group announced through its management performance disclosure that its net profit last year was 4.5175 trillion KRW, a 3.4% increase compared to the previous year (4.368 trillion KRW). This is the second-best performance following the record high of 4.6423 trillion KRW in 2022. Considering the one-time gain (after tax 322 billion KRW) from the sale of Shinhan Investment Corp.'s building at that time, it is effectively the highest ever.

Net profit in the fourth quarter of last year was 473.4 billion KRW, down 63.5% from the previous quarter (1.2971 trillion KRW). Compared to a year ago, it decreased by 13.9%. Shinhan Financial Group explained, "Net profit increased year-on-year due to stable growth in operating profit and a decrease in credit costs. However, in the fourth quarter, non-interest income such as securities-related profits declined due to increased financial market volatility, and one-time costs such as voluntary retirement expenses and conservative reserve provisions increased, leading to a decrease."

By segment, interest income increased last year, but non-interest income decreased. Interest income was 11.4023 trillion KRW last year, up 5.4% from the previous year. Interest income in the fourth quarter was 2.9096 trillion KRW, a 1.9% increase from the previous quarter. However, the group's and the bank's annual net interest margin (NIM) fell by 0.04 percentage points over the year to 1.93% and 1.58%, respectively.

Non-interest income, including fees, was 3.2575 trillion KRW last year, down 5% from the previous year. Fee income increased by 2.6%, but securities and foreign exchange derivatives underperformed due to interest rate and exchange rate fluctuations. Non-interest income in the fourth quarter sharply dropped by 74% from the previous quarter due to reduced gains and losses related to foreign exchange and derivatives amid increased capital market volatility.

The group's global profit was 758.9 billion KRW, up 38.1% year-on-year. Shinhan Vietnam Bank and Japan's SBJ Bank recorded their highest-ever net profits at 264 billion KRW and 148.6 billion KRW, respectively. Selling and administrative expenses rose 3.7% year-on-year to 6.1162 trillion KRW. Provisions for credit losses decreased by 11.4% to 1.9936 trillion KRW during the same period, but in the fourth quarter, additional provisions related to real estate increased by 49.6% compared to the previous quarter. Non-operating losses totaled 426.2 billion KRW, including 274 billion KRW in provisions related to Hong Kong H-Index equity-linked securities (ELS) in the first quarter.

Shinhan Bank Reclaims Leading Bank Status... Card and Capital Performance Declines

By affiliate, Shinhan Bank effectively led the group's performance improvement. Shinhan Bank's net profit last year was 3.6954 trillion KRW, a record high with a 20.5% increase from the previous year. It outperformed Hana Bank (3.3564 trillion KRW) and KB Kookmin Bank (3.2518 trillion KRW), reclaiming its position as the leading bank. Shinhan Financial Group stated, "Interest income increased due to loan asset growth, and fee income expanded, leading to an increase in non-interest income. The effect of additional reserve provisions made the previous year also disappeared, reducing credit costs and improving performance."

On the other hand, Shinhan Card's net profit last year was 572.1 billion KRW, down 7.8% from a year earlier. Despite increased operating revenues from credit sales, installment plans, and auto leases, net profit declined due to increased voluntary retirement costs implemented in the fourth quarter. Shinhan Capital recorded a net profit of 116.9 billion KRW last year, down 61.5% year-on-year. In the fourth quarter alone, it posted a net loss of 35.7 billion KRW due to losses in securities amid a deteriorating real estate market and increased credit costs.

Shinhan Investment Corp. posted a net profit of 245.8 billion KRW, up 143.6% year-on-year, driven by increased overseas stock brokerage and financial product fee income. Shinhan Life recorded a net profit of 528.4 billion KRW, up 11.9% year-on-year, due to increased interest and dividend income.

The Shinhan Financial Group board resolved to pay a fourth-quarter dividend of 540 KRW per share and to acquire and retire treasury shares worth 500 billion KRW. Including the 150 billion KRW treasury share acquisition in January, the total amount decided so far is 650 billion KRW. Including dividends of 1.1 trillion KRW planned for this year, the total shareholder return is expected to exceed 1.75 trillion KRW.

Shinhan Financial Group said, "As of the end of last year, the Common Equity Tier 1 (CET1) ratio stood at 13.03%, maintaining a stable capital ratio. We plan to continue efforts to enhance shareholder value steadily by expanding quarterly dividends and treasury share acquisition and retirement."

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