Resolution of Common Stock Dividend of 540 Won
Shinhan Financial Group announced on the 26th that its net profit for the first half of this year reached KRW 2.747 trillion, a 4.6% increase compared to the same period last year. The net profit for the second quarter was KRW 1.4255 trillion, up 15.1%.
Looking at the performance by segment, interest income for the first half was KRW 5.6377 trillion, a 7.0% increase year-on-year. Interest income expanded by 7.0% as interest-bearing assets grew by 4.3% compared to the end of last year, and the cumulative group net interest margin (NIM) remained steady at 1.97%, the same level as the previous year.
Non-interest income rose slightly by 4.0% to KRW 2.1146 trillion. Although securities-related profits decreased compared to the previous year, fee income from credit cards, leases, securities custody, investment banking (IB), and insurance profits increased, resulting in an overall slight rise.
Global net profit surged by 32.4% to KRW 410.8 billion. In particular, the performance growth of the "dual engines," Shinhan Vietnam Bank and Japan’s SBJ Bank, was steep. Shinhan Vietnam Bank posted KRW 141.3 billion, up 12.1% year-on-year, and SBJ Bank recorded KRW 71.5 billion, a 16.7% increase, driving the overall growth in global profits.
Despite the overall inflationary impact, selling and administrative expenses increased by only 1.6% compared to the same period last year. The cumulative cost-to-income ratio (CIR) for the first half stood at a stable 36.7%.
Provision for loan losses decreased by 2.2% to KRW 987.6 billion. The cumulative loan loss cost ratio was around 0.48%. However, in the second quarter, provisions increased by 61.4% quarter-on-quarter due to business viability assessments on real estate project financing (PF) sites and provisions for guaranteed completion-type land trusts.
As of the end of June, the Common Equity Tier 1 (CET1) ratio stood at 13.05%, maintaining a stable capital ratio through appropriate risk-weighted asset (RWA) management. Accordingly, Shinhan Financial held a board meeting on the same day and resolved a common stock dividend of KRW 540 per share.
A Shinhan Financial official stated, "Achieving the highest quarterly profit based on recurring earnings despite proactive recognition of potential losses related to real estate is quite meaningful," adding, "Operating profit improved through increased interest income based on asset growth centered on corporate loans and increased non-interest income such as credit card and investment finance fees."
Meanwhile, looking at the management performance by group companies, Shinhan Bank posted a net profit of KRW 2.0535 trillion, up 22.2% year-on-year. This was influenced by the expiration of provisions related to the Hong Kong H-Share Index (Hang Seng China Enterprises Index, HSCEI) based equity-linked securities (ELS) incident, with some of these provisions reversed during the second quarter.
Shinhan Bank’s KRW loans increased by 6.4% compared to the end of last year. Household loans rose about 2.1% due to an increase in mortgage loans, and corporate loans grew by 9.9%. The delinquency rate rose by 0.01 percentage points to 0.27%, and the ratio of non-performing loans classified as substandard or below increased by 0.01 percentage points to 0.25%.
Additionally, Shinhan Card recorded a net profit of KRW 379.3 billion, up 19.7%; Shinhan Investment Corp. posted KRW 207.2 billion, down 14.4%; Shinhan Life Insurance recorded KRW 312.9 billion, up 0.4%; and Shinhan Capital posted KRW 108.4 billion, down 43.0%.
Regarding the outlook for the second half, Shinhan Financial stated, "Asset growth, which was concentrated in the first half, is expected to moderate somewhat in the second half, and there will be downward pressure on NIM due to market interest rate cuts," adding, "We plan to maintain solid financial fundamentals on an annual basis through appropriate growth focused on high-quality assets, growth in non-bank and non-interest sectors, and company-wide cost management efforts."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
