By Jhoo Dong-chan
Shinhan Financial Group saw record high earnings last year, but is facing the need to reorganize its group structure. It failed to reach 3 trillion won ($2.78 billion) in profit last year, hinting that the group may fall behind in the fierce competition against other financial groups.
Although it has posted solid earnings for years, Shinhan lost the industry's top position to KB Financial Group. And now, all eyes are on Chairman Cho Yong-Byoung regarding whether he will be able to secure a future growth engine.
According to Shinhan, it recorded 2.91 trillion won in net profit last year. The figure was a 5.2 percent increase from the previous year and the highest in six years since it recorded 3.1 trillion won in 2011. The group said it has managed to see rising revenue and income for four consecutive years thanks to a solid performance in interest and stable growth in its asset portfolio.
Despite its solid performance, concerns have emerged as the group's Q4 earnings plunged 65.4 percent to 211.5 billion won from 2016.
Its largest subsidiary Shinhan Bank netted a 1.71 trillion won profit last year, down 11.8 percent from the previous year. Specifically, the bank's Q4 profit almost halved to 15.1 billion won.
Shinhan Bank attributed its disappointing Q4 figures to one-off costs late last year _ it spent 285.2 billion won for an early retirement program.
Industry observers say the bank successfully reduced fixed costs through the voluntary program, but is now facing another hurdle in diversifying its cash cows from its almost sole bread winner _ interest.
Throughout last year, Shinhan Bank posted 10.8 percent growth in this sector whereas it suffered a 23.5 percent decline in non-interest operations due to depreciation of its share holdings.
It also spent another 123.7 billion won in bad debt provisions for Daewoo Shipbuilding & Marine Engineering and Kumho Tire. The recovery cost related to the nation's struggling cable broadcaster D'Live also mounted to 147 billion won.
"It was nice to clear out negative factors before the end of last year. Other major banks, however, did it two or three quarters before Shinhan. The measure was a bit belated," DB Financial Investment analyst Lee Byung-gun said.
Among the group's subsidiaries, Shinhan Card saw rapid growth last year posting 913.8 billion won in net profit, up 27.6 percent from 2016. Shinhan Investment and Shinhan Capital logged 211.9 billion won and 87.6 billion won in earnings last year, up 83.6 percent and 158.8 percent, respectively.
Shinhan Life, however, suffered a 19.9 percent decline in net profit to 120.6 billion won over the same period.
Shinhan Financial Group saw record high earnings last year, but is facing the need to reorganize its group structure. It failed to reach 3 trillion won ($2.78 billion) in profit last year, hinting that the group may fall behind in the fierce competition against other financial groups.
Although it has posted solid earnings for years, Shinhan lost the industry's top position to KB Financial Group. And now, all eyes are on Chairman Cho Yong-Byoung regarding whether he will be able to secure a future growth engine.
According to Shinhan, it recorded 2.91 trillion won in net profit last year. The figure was a 5.2 percent increase from the previous year and the highest in six years since it recorded 3.1 trillion won in 2011. The group said it has managed to see rising revenue and income for four consecutive years thanks to a solid performance in interest and stable growth in its asset portfolio.
Despite its solid performance, concerns have emerged as the group's Q4 earnings plunged 65.4 percent to 211.5 billion won from 2016.
Its largest subsidiary Shinhan Bank netted a 1.71 trillion won profit last year, down 11.8 percent from the previous year. Specifically, the bank's Q4 profit almost halved to 15.1 billion won.
Shinhan Bank attributed its disappointing Q4 figures to one-off costs late last year _ it spent 285.2 billion won for an early retirement program.
Industry observers say the bank successfully reduced fixed costs through the voluntary program, but is now facing another hurdle in diversifying its cash cows from its almost sole bread winner _ interest.
Throughout last year, Shinhan Bank posted 10.8 percent growth in this sector whereas it suffered a 23.5 percent decline in non-interest operations due to depreciation of its share holdings.
It also spent another 123.7 billion won in bad debt provisions for Daewoo Shipbuilding & Marine Engineering and Kumho Tire. The recovery cost related to the nation's struggling cable broadcaster D'Live also mounted to 147 billion won.
"It was nice to clear out negative factors before the end of last year. Other major banks, however, did it two or three quarters before Shinhan. The measure was a bit belated," DB Financial Investment analyst Lee Byung-gun said.
Among the group's subsidiaries, Shinhan Card saw rapid growth last year posting 913.8 billion won in net profit, up 27.6 percent from 2016. Shinhan Investment and Shinhan Capital logged 211.9 billion won and 87.6 billion won in earnings last year, up 83.6 percent and 158.8 percent, respectively.
Shinhan Life, however, suffered a 19.9 percent decline in net profit to 120.6 billion won over the same period.




































