Shinhan retains leading status in Q2

By Park Jae-hyuk

Shinhan Financial Group has defended its “leading financial group” title as expected, beating out its competitor KB Financial Group by a narrow margin in second-quarter earnings.

According to their regulatory filings, Friday, Shinhan, the nation's largest financial holding company by assets, posted a 996.1 billion won ($841 million) net profit in the second quarter of 2019, up 6.19 percent from a year earlier.

KB's quarterly net income was 991.1 billion won, a 4.7 percent increase from a year ago.

In terms of half-yearly earnings, Shinhan has defeated KB as well.

It posted a record-high 1.91 trillion won net profit in the first half of the year, while its rival earned 1.83 trillion won.

Before the announcement of their second-quarter results, estimations of the quarterly earnings of Shinhan and KB stood at 976.3 billion won and 943.2 billion won, respectively.

Some observers therefore expected Shinhan might lose to KB, when KB unveiled its quarterly earnings report on July 18, a week earlier than Shinhan's announcement.

With the better-than-expected performance, however, Shinhan has been able to maintain its position as the nation's top financial group for three consecutive quarters. Before Shinhan recouped the top spot in the fourth quarter of 2018, KB had maintained the lead for six consecutive quarters.

Analysts cited Shinhan's high non-interest income as the key reason for the result.

“The driving force of Shinhan's profit growth was the increase in its non-interest income,” Hanwha Investment & Securities analyst Sung Yong-hoon said.

“An increase in commission income from the group's non-banking sector and the acquisition of Orange Life Insurance contributed to the profit growth.”

Shinhan also said its non-banking sector's non-interest income climbed, thanks to its discovery of new markets and its successful M&A deals.

Contrary to Shinhan, the growth of KB's non-interest income was sluggish.

While Shinhan's non-interest income showed a 26.7 percent year-on-year rise during the first half, KB's dropped by 1.7 percent during the same period.

Amid the sluggish non-interest income growth, KB failed to recoup the “leading bank” title, although its quarterly earnings reached a record high in the second quarter.

Meanwhile, in the third-place match, Hana Financial Group regained its status as the third-largest player, surpassing Woori Financial Group which took third place in first-quarter earnings.

Hana posted a 658.4 billion won net profit in the second quarter, bringing the figure for the first half to 1.2 trillion won.

Woori posted a 610.3 billion won net profit in the second quarter, bringing the figure for the first half to 1.18 trillion won.

NH NongHyup Financial Group came after Woori, posting a 564.4 billion won second-quarter net profit, up 30.4 percent from the previous quarter. The second-quarter earnings brought the figure for the first half to a record high of 997.1 billion won, up 20.1 percent from a year earlier.

The Industrial Bank of Korea marked a 428.9 billion won net profit in the period. During the first half, the state-run lender posted a net profit of 985.9 billion won, up 5.2 percent from a year before.