[Click eStock] "Shinhan Financial Group, Q3 Earnings Improve Thanks to Increase in Non-Interest Income"

SK Securities Presents 'Buy' Investment Opinion and Target Price of 36,000 Won... Closing Price on 27th at 30,200 Won

[Asia Economy Reporter Kum Boryeong] Shinhan Financial Group's third-quarter earnings improved, driven by an increase in non-interest income, according to an analysis.

On the 28th, SK Securities reported that Shinhan Financial Group's third-quarter net income attributable to controlling shareholders was 1.145 trillion KRW, a 16.6% increase compared to the same period last year. This figure significantly exceeded the market consensus of 899 billion KRW.

The main factor behind the earnings improvement was the increase in non-interest income. Non-interest income for the third quarter was confirmed at 528 billion KRW, a 27.6% increase compared to the previous year. As the stock market environment improved, fee income also saw a substantial increase. The third-quarter net profit of its subsidiary, Shinhan Financial Investment, was recorded at 127.5 billion KRW, higher than usual.

Although the improvement in interest income was not significant, credit costs decreased. Koo Kyung-hoe, a researcher at SK Securities, explained, "The group's net interest margin (NIM) for the third quarter was 1.78%, down 3bps from the previous quarter. Nevertheless, interest income increased by 0.3% quarter-on-quarter due to a 4.3% increase in group loan volume. The interest income performance is not particularly outstanding compared to competitors," adding, "On the other hand, credit costs were 256 billion KRW, a 47.6% decrease from the previous quarter, playing a major role in the earnings improvement."

SK Securities gave Shinhan Financial Group a 'Buy' rating with a target price of 36,000 KRW. The closing price on the 27th was 30,200 KRW. Researcher Koo said, "Considering that credit costs were more stable than initially expected and non-interest income improved, we have raised the net income attributable to controlling shareholders estimate for next year by 13% to 3.37 trillion KRW and increased the dividend forecast from 1,600 KRW to 1,825 KRW."