Anna Jiwon Park has been covering the politics at The Korea Times since the summer of 2024, when she joined the press pool for the Office of the President in Korea. Prior to that, she spent about five years reporting extensively on financial markets, regulatory authorities and the financial industry. She joined The Korea Times in 2019 after spending eight years as a broadcast journalist at Arirang TV, Korea’s leading global broadcaster, covering politics, defense and culture.
Shinhan Financial takes back leading status in Q1 earnings
The headquarters of four major financial groups in Korea — from left, KB Financial Group, Shinhan Financial Group, Hana Financial Group and Woori Financial Group / Courtesy of each financial group
By Anna J. Park
Financial group stocks surge over better-than-expected quarterly performances despite ELS fiasco
Shinhan Financial Group has reclaimed its position as the leading financial conglomerate in the country for its first-quarter earnings, due mainly to the expansion of corporate loans and improved interest margins.
The financial group announced Friday that its net profit for the first quarter recorded 1.32 trillion won ($960 million), which is a 4.8 percent decrease from the same quarter last year.
Its net profit fell year-on-year due to one-time costs, including reserves for contingent liabilities. Shinhan Financial set aside 274 billion won for provisions related to compensation for Hong Kong index-linked ELS products.
Despite the year-on-year fall in its net profit, Shinhan's quarterly operating profit has increased, and it has successfully beaten its rival KB Financial Group, which took the top rank in the previous quarter in terms of quarterly net profit.
Shinhan Financial's net interest margin (NIM) improved to 2 percent, 0.02 percentage points higher compared to the first quarter of last year. This improvement is attributed partly to expansion in core deposit inflows. The group's non-interest income recorded 1.02 trillion won, a 0.3 percent increase from the same period last year.
"Despite challenging market conditions, Shinhan Financial Group achieved a strong performance based on its robust fundamentals and diversified business portfolio. The group expanded interest income, focusing on corporate loans, while posting an improved operating profits thank to increased non-interest income from key affiliates," an official from Shinhan Financial Group pointed out.
KB Financial Group's net profit for the first quarter of this year totaled 1.04 trillion won, a 30.5 percent fall compared to the same quarter last year. The amount is also a four-year low for the group in quarterly net profits.
The group explained that its losses have expanded significantly due to the recognition of approximately 862 billion won in provisions for customer compensation related to the Hong Kong index-tied ELS products.
Still, KB Financial has successfully defended itself from the losses from the ELS fiasco, thanks to its NIM reaching 2.11 percent, up by 0.07 percentage points from the same quarter last year. Interest income accounted for 71.4 percent of the total operating profit of the group.
Hana Financial Group posted a net profit of 1.03 trillion won for the first quarter, a 6.2 percent decline from the same period last year, the group announced Friday afternoon.
The drop is also attributed to the impact of setting aside reserves amounting to about 180 billion won over the ELS compensation issue.
Woori Financial Group's net profit for the first quarter of this year stood at 824 billion won, a 9.8 percent fall compared to the same period last year, the group announced Friday afternoon. The financial group's provisions related to Hong Kong-linked ELS compensations amounted to 7.5 billion won, which is relatively minor compared to its competitors.
Meanwhile, the stock prices of the four financial groups all surged on Friday's trading session over the better-than-expected quarterly performances.
KB Financial Group's stock rose highest during the session, finishing at 76,000 won on Friday's closing, a 9.67 percent jump from the previous session. Shinhan Financial's stock ended at 46,750 won, a 7.47 percent increase from the previous session.
Hana Financial Group stock closed at 60,000 won, a 6.01 percent rise from Thursday's closing price, while Woori Financial finished at 14,350 won, a 2.35 percent jump from the previous session.