Shinhan Financial Group Co., the nation's second-largest financial services company by assets, said Thursday it posted higher earnings in the first half compared to a year earlier because of increased interest income and gains from a stake sale by its banking unit.
Net profit amounted to 1.6 trillion won ($1.8 billion) in the January-June period, up 56.3 percent from 1.1 trillion won a year earlier, the company said in a regulatory filing. Its
second-quarter earnings gained 18.3 percent year-on-year to 686.6 billion won.
First-half revenue grew 21.7 percent from a year earlier to 12.7 trillion won, and operating profit jumped 93 percent to 2.6 trillion won.
Shares of Shinhan Financial Group closed down 1.82 percent to 59,400 won on the main bourse.
Shinhan Financial Group attributed its record net profit to a 62.1 percent annual gain in earnings by its flagship Shinhan Bank and a 102.8 percent jump in earnings by non-banking units.
In March, the group bought a 78.6 percent stake in LG Card for 6.7 trillion won from creditors that bailed out the nation's top card company in 2003. Shinhan Bank gained 337 billion won by selling its 7.15 percent stake in LG Card.
As of the end of June, its total assets stood at 259.1 trillion won, up 19.7 percent from the end of last year. Net interest margin (NIM), the difference between interest income and costs, reached 4 percent.
Return on assets (ROA), a key barometer of profitability, rose by 0.7 percentage point year-on-year to 1.7 percent, while return on equity (ROE) climbed by 5.3 percentage points to 22.9 percent.
Its bad loan ratio increased by 0.2 percentage point from six months earlier to 1.1 percent.
Meanwhile, Shinhan Bank's first-half earnings soared 62.1 percent year-on-year to 1.5 trillion won thanks to increased interest income and a one-off profit from its stake sale in LG
Card. Its assets rose 12.3 percent on-year to 198.7 billion won.
The lender's NIM inched down by 0.01 percentage point quarter-on-quarter to 2.27 percent in the second quarter. Its ROA gained 0.75 percentage point to 1.86 percent, with its ROE adding 11.40 percentage points to 29.96 percent. Its bad loan ratio came to 0.75 percent.
During the first half, LG Card's net profit came to 280.7 billion won. Shinhan Card Co. posted a 7.4 percent drop in earnings year-on-year to 111.2 billion won.
Net profit by the group's brokerage unit, Goodmorning Shinhan Securities Co., rose 24.8 percent on an annual basis to 76.4 billion won.