By Choi Kyong-ae
Shinhan Financial Group posted an 11 percent jump in net profit for the first three quarters of this year helped by cost reductions, decreased loan-loss provisions and increased gains in non-banking operations.
"Companywide cost-cutting efforts, stable profit growth in non-banking business, and a decreased amount of provisions helped the group come up with solid results in the first nine months," an official said Monday.
In the January-September period, Shinhan Financial reported a net profit of 1.963 trillion won (about $1.7 billion), up from 1.768 trillion won a year earlier, according to a regulatory filing.
"We have increased loans to financially-stable individuals and small- and medium-sized companies to minimize the portion of possible non-performing loans. Contributions from non-banking affiliates such as card, financial investment, insurance and capital services are on the rise offsetting declining net interest margins," the official said.
The country's benchmark interest rate stands at an all-time low of 1.5 percent after the Bank of Korea (BOK) cut the base rate four times since August last year to help support growth.
But the economy has not shown any major signs of recovery, with the central bank cutting its outlook for growth this year to 2.7 percent this month from its July forecast of 2.8 percent.
As the central bank may cut the key rate further to stimulate spending in the fourth quarter, commercial banks remain concerned about further declines in their net interest margins.
"If the BOK does not cut the base rate further this year, we will be able to maintain our net interest margins at stable levels," the official said asking not to be named.
Shinhan Financial's net interest margin has plunged to 1 percent compared to 2.4 percent as of early 2014, which often results in a squeezed net income, according to the group.
Looking forward, the country's biggest financial group by assets expects its net profit for the whole of this year to exceed last year's 2.081 trillion won if the non-banking business continues to perform well and provisions remain at low levels.
From January to September, operating profit rose 3.1 percent year-over-year to 2.417 trillion won from 2.344 trillion won. Sales were up 17 percent to 23.865 trillion won from 20.448 trillion won during the same period.
Shinhan Financial Group posted an 11 percent jump in net profit for the first three quarters of this year helped by cost reductions, decreased loan-loss provisions and increased gains in non-banking operations.
"Companywide cost-cutting efforts, stable profit growth in non-banking business, and a decreased amount of provisions helped the group come up with solid results in the first nine months," an official said Monday.
In the January-September period, Shinhan Financial reported a net profit of 1.963 trillion won (about $1.7 billion), up from 1.768 trillion won a year earlier, according to a regulatory filing.
"We have increased loans to financially-stable individuals and small- and medium-sized companies to minimize the portion of possible non-performing loans. Contributions from non-banking affiliates such as card, financial investment, insurance and capital services are on the rise offsetting declining net interest margins," the official said.
The country's benchmark interest rate stands at an all-time low of 1.5 percent after the Bank of Korea (BOK) cut the base rate four times since August last year to help support growth.
But the economy has not shown any major signs of recovery, with the central bank cutting its outlook for growth this year to 2.7 percent this month from its July forecast of 2.8 percent.
As the central bank may cut the key rate further to stimulate spending in the fourth quarter, commercial banks remain concerned about further declines in their net interest margins.
"If the BOK does not cut the base rate further this year, we will be able to maintain our net interest margins at stable levels," the official said asking not to be named.
Shinhan Financial's net interest margin has plunged to 1 percent compared to 2.4 percent as of early 2014, which often results in a squeezed net income, according to the group.
Looking forward, the country's biggest financial group by assets expects its net profit for the whole of this year to exceed last year's 2.081 trillion won if the non-banking business continues to perform well and provisions remain at low levels.
From January to September, operating profit rose 3.1 percent year-over-year to 2.417 trillion won from 2.344 trillion won. Sales were up 17 percent to 23.865 trillion won from 20.448 trillion won during the same period.
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