Shinhan Financial Group has reported a record net profit of 5.027 trillion won for the first three quarters of this year, surpassing last year's annual profit for the first time. This achievement is attributed to balanced growth in interest and fee income, along with stable management of credit costs. However, the net profit for the third quarter decreased compared to the previous quarter due to weak non-interest income.
On October 27, Shinhan Financial announced that its cumulative net profit for the third quarter reached 5.027 trillion won, a 12.7% increase from the same period last year. This figure exceeds last year's total annual profit of 4.9716 trillion won by 558 billion won. In contrast, the net profit for the third quarter was 1.5846 trillion won, down 12.9% from the previous quarter.
Cumulative interest income rose to 9.3493 trillion won, reflecting a 7.9% increase compared to the same period last year, driven by growth in loan assets and improved net interest margin (NIM). Cumulative non-interest income also increased by 8.2% to 3.4283 trillion won, with fee income rising 35.4% year-on-year, particularly due to an increase in securities trust fees.
However, non-interest income for the third quarter plummeted by 45.5% to 790.2 billion won compared to the previous quarter. This decline was influenced by reduced securities trust fees due to decreased trading volumes and worsened gains and losses related to securities amid rising interest rates. During the same period, interest income increased by 1.8% to 3.1908 trillion won but could not offset the drop in non-interest income.
By major subsidiaries, Shinhan Bank reported a cumulative net profit of 3.6837 trillion won for the third quarter, up 9.8% year-on-year. Shinhan Investment Corp. saw a significant increase of 78.9% to 642.9 billion won, while Shinhan Card's profit rose by 27.7% to 485.8 billion won. Conversely, Shinhan Life's profit fell by 18.5% to 419.4 billion won due to declines in insurance and financial profits.
Profitability indicators also improved. As of the end of September, the return on equity (ROE) was an annualized 11.94%, up 0.88 percentage points from the same period last year. The common equity tier 1 (CET1) ratio increased by 0.12 percentage points to 13.62% compared to the previous quarter. The cumulative cost-to-income ratio (CIR) for the third quarter was 37.6%, and the credit cost ratio was 0.42%.
Shinhan Financial also plans to enhance shareholder returns. The board of directors approved a cash dividend of 740 won per share for the third quarter and decided to buy back shares worth 450 billion won. Of this, 200 billion won will be repurchased in the fourth quarter of this year, while the remaining 250 billion won will be bought back in January next year. The total shareholder return for this year is expected to reach approximately 3 trillion won, combining cash dividends of 1.4 trillion won and share buybacks and cancellations of 1.6 trillion won.
Additionally, the company aims to strengthen its non-banking business competitiveness through the acquisition of Lotte Non-Life Insurance for 693.3 billion won, which is estimated to impact the CET1 ratio by approximately 0.19 percentage points.
Jang Jeong-hoon, Chief Financial Officer of Shinhan Financial, stated, "We will continue sustainable growth based on profitability-focused portfolio management and efficient capital allocation. We will also strengthen the foundation for long-term group profitability through the acquisition of the non-life insurance company and the normalization of the insurance business."
* This article has been translated by AI.
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