Shinhan Financial Group (055550) Q1 2025 earnings summary

Executive summary

• Q1 2025 net income rose 12.6% year-over-year to KRW 1,488.3 billion, driven by strong interest income and normalized non-operating items.

• ROE improved to 11.4% and ROTCE to 12.9% annualized, with CET1 ratio at 13.27%, up 21 basis points year-to-date.

• Shareholder return ratio reached 40.2% in 2024, with ongoing buybacks, quarterly dividends, and a 2025 target of 42% or higher.

• The group is implementing a value-up plan focused on improving ROE, efficient asset management, and accelerated shareholder returns.

• Non-banking profitability and ROE declined year-over-year, but capital buffers remained strong.

Financial highlights

• Net income: KRW 1,488.3 billion (+12.6% YoY); EPS: KRW 12,180.

• Interest income up 1.4% YoY; non-interest income down 6.3% YoY due to lower commission and insurance-related income.

• Cost-to-income ratio at 37.3%, up 1.3–1.4 percentage points year-over-year.

• Group NIM improved by 3–5 basis points quarter-over-quarter to 1.55%.

• NPL ratio increased to 0.81% (from 0.71%); NPL coverage ratio at 128.8%.

Outlook and guidance

• NIM is expected to decline through the year due to falling market rates, though the decrease may be less steep than initially forecast.

• Credit costs are projected to remain elevated, with recovery taking longer than anticipated.

• CET1 ratio target of 13.1% or above is considered comfortably achievable, even with potential increases in business loans.

• Shareholder return program may accelerate, with a target ratio of up to 50% by 2025 and total shares reduced to 450 million.

• Focus on structural reforms in non-banking, capital efficiency, and swift shareholder returns.