Shinhan Financial Group (055550) Q3 2024 earnings summary

Executive summary

• Consolidated net income for 3Q24 was KRW 1,238.6 billion to KRW 1,425.5 billion, down 13.1% QoQ but up 3.9–4.4% YoY, mainly due to large derivative trading losses and valuation impairments on overseas alternative investments.

• Interest income rose 1.2% QoQ and 5.7% YoY, supported by loan book growth and efficient ALM, while non-interest income fell 25.6% QoQ.

• Credit costs remained stable, with a group CCR of 0.44% and CET1 ratio at 13.13%, supporting consistent shareholder returns.

• The group is strengthening internal controls after a KRW 135.7 billion loss in Shinhan Securities' derivatives trading.

Financial highlights

• Interest income increased 1.2% QoQ, driven by 3.5% QoQ and 10.2% YoY growth in bank KRW loans.

• Non-interest income dropped 25.6% QoQ due to securities derivative losses and overseas investment impairments.

• SG&A expenses rose 1.2% QoQ; cumulative CIR improved by 1.2 percentage points YoY to 37.9%.

• Provision for credit losses decreased 33.9% QoQ to KRW 403.1 billion, with group asset quality remaining stable.

• Operating income before expenses rose 4.2% YoY to KRW 11,435 billion YTD.

Outlook and guidance

• NIM is expected to continue declining in Q4 and into next year due to further benchmark rate cuts.

• Loan and RWA growth targeted at about 5% for next year, with a focus on qualitative, ROE-driven growth.

• Credit cost ratio is expected to be around 45 basis points at year-end, with no large-scale provisioning anticipated.

• Focus for 4Q24 will be on profitability and asset quality, with minimized growth due to RWA limits.

• Shareholder return policy to continue, with 250 billion KRW buyback in 4Q24 and 150 billion KRW in early 2025; future dividends and buybacks to be reviewed in February 2025.