Shinhan Financial Enters 'KRW 5 Trillion Club' Ahead of Schedule... KRW 5.03 Trillion in Cumulative Net Income Through Q3

Up 12.7% year over year
Broad-based growth in net interest and non-interest income
ROE reaches 11.9%, exceeding next year's 10% target ahead of schedule
Decides to buy back KRW 450 billion in shares... "Shareholder returns to total about KRW 3 trillion this year"

Shinhan Financial Group entered the “KRW 5 trillion club” in just the first three quarters of this year. Its net interest income increased as its loan assets grew and its net interest margin (NIM) improved, while fee income and other non-interest income also grew across the board, contributing to its results, analysts said. Backed by this solid growth, its return on equity (ROE), a key management indicator, reached 11.9% as of the end of September. The group is increasingly likely to achieve this year, ahead of schedule, its target of 10% set for next year.

Shinhan Financial Group said in a regulatory filing on Tuesday that it posted consolidated net income of KRW 5.0274 trillion through the first three quarters, including KRW 1.5846 trillion in the third quarter (July-September). The cumulative figure was up KRW 566.5 billion, or 12.7%, from KRW 4.4609 trillion in the same period a year earlier. It was the first time Shinhan Financial Group had surpassed KRW 5 trillion. The group has already set a new record for annual earnings in the first three quarters.

Shinhan Financial Group said, “Net interest income maintained a solid trend on the back of cumulative asset growth and an improved NIM, while fee income increased across the board. In addition, earnings growth continued as credit costs, including bad debt expenses and loan-loss provisions, were managed steadily.”

On a quarterly basis, however, net income fell 12.9% from KRW 1.8201 trillion in the previous quarter. Net interest income remained steady, but non-interest income declined.

The group’s net interest income totaled KRW 9.3493 trillion in the first three quarters, up 7.9% from the same period a year earlier. Net interest income increased as cumulative loan assets grew and the group’s NIM rose to 1.93% in the third quarter of this year from 1.90% in the third quarter of last year. Non-interest income reached KRW 3.4283 trillion in the first three quarters, up 8.2% year over year. The group said fee income rose across all business segments, but the increase in non-interest income was partly limited by lower gains and losses related to securities.

Non-operating income totaled KRW 310.8 billion in the first three quarters, reflecting gains from the sale of buildings by the bank and card businesses. Loan-loss provisions came to KRW 486.3 billion in the third quarter, up 11.2% from the previous quarter as the group continued to focus on asset quality management. Cumulatively, they fell 4.5% year over year to KRW 1.4361 trillion, reflecting the impact of proactive asset quality management and portfolio risk management.

Global earnings declined 9.9% from the previous quarter to KRW 225.8 billion in the third quarter. Cumulatively, they rose 7.4% year over year to KRW 698.3 billion. The third-quarter decline in global earnings was attributable to a heavier funding cost burden amid rising interest rates, higher credit costs, and a fall in the exchange rate. Global earnings accounted for 13.9% of the group’s total earnings on a cumulative basis through the third quarter, down 2.7 percentage points from 16.6% at the end of last year.

Shinhan Bank, the group’s key subsidiary, posted cumulative net income of KRW 3.6837 trillion in the first three quarters, up 9.8% year over year. In the third quarter alone, it earned KRW 1.2252 trillion, down 4.3% from the previous quarter but the highest third-quarter figure on record. Despite a decline in non-interest income in the third quarter, cumulative loan asset growth and an improved NIM helped sustain solid growth on a cumulative basis. The cumulative NIM through the third quarter was 1.59%, up 0.04 percentage points from 1.55% at the end of the third quarter last year. As of the end of September this year, won-denominated loans were up 3.3% from the end of last year. Corporate loans rose 4.7% over the same period, led by large companies, while household loans increased 1.5%.

Shinhan Card’s cumulative net income in the first three quarters was KRW 485.8 billion, up 27.7% year over year. The company said the increase reflected third-quarter net income of KRW 232.4 billion, up 68.4% from the previous quarter, as credit card sales grew and a one-off gain from the sale of its headquarters building was recognized. Shinhan Securities posted third-quarter net income of KRW 65.3 billion, down 77.4% from the previous quarter. Operating profit fell as securities brokerage commissions declined amid a slowdown in securities trading volumes following a correction in the domestic stock market, while product operating income fell due to rising interest rates. Cumulatively, however, net income totaled KRW 642.9 billion, up 78.9% from a year earlier.

Shinhan Life posted net income of KRW 128.8 billion in the third quarter, down 31.3% from the previous quarter, and cumulative net income of KRW 419.4 billion. Shinhan Capital’s third-quarter net income was KRW 23.1 billion, down 29.7% from the previous quarter, while its cumulative net income reached KRW 117.8 billion, up 28.1% from a year earlier. Shinhan Asset Management also saw its third-quarter net income fall 63.1% from the previous quarter to KRW 13 billion as gains and losses related to securities declined. Cumulative net income, however, rose 82.6% year over year to KRW 66.6 billion.

The non-bank business segments combined posted earnings of KRW 475.3 billion in the third quarter, down 33.7% from the previous quarter. Cumulatively, however, earnings rose 27.3% from the same period a year earlier to KRW 1.803 trillion. Shinhan Financial Group said, “Compared with the same period last year, performance in the securities business improved significantly, while earnings growth in the card and asset management businesses also contributed to stronger growth. However, quarterly earnings declined compared with the second quarter as earnings in the securities and insurance businesses fell.”

As of the end of September, Shinhan Financial Group’s common equity Tier 1 (CET1) ratio stood at 13.62%, and its BIS capital ratio was 15.99%. ROE was 11.9%, up 0.9 percentage points year over year, putting the group on track to achieve this year the 10% target it had set for next year.

Shinhan Financial Group’s board of directors decided on Tuesday to buy back KRW 450 billion worth of its own shares. The group plans to buy back KRW 200 billion worth of shares by the end of this year and KRW 250 billion worth in January 2027, with each amount reflected in shareholder returns for the respective year. The board also resolved to pay a quarterly cash dividend of KRW 740 per share. The group’s total shareholder returns for this year are expected to reach about KRW 3 trillion.

Jang Jeonghun, Shinhan Financial Group’s chief financial officer (CFO), said, “With progress toward our 10% ROE target becoming increasingly tangible, we will pursue sustainable growth through profitability-focused portfolio management and efficient capital allocation. We will also strengthen the foundation for improving the group’s profitability over the medium to long term by acquiring a non-life insurer and normalizing our insurance business.”

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