Shinhan Financial enjoys solid profits

By Kim Tae-jong

Shinhan Financial Group Tuesday announced it posted a net profit of 558.4 billion won in the first quarter, up 62.7 percent from 343.3 billion won from the previous quarter.

The figure was also up 16.1 percent from 480.9 billion won a year earlier.

“Despite the prolonged economic slump and tightened regulations, the group has improved profitability through preemptive risk management, stable loan interest margins and cost reduction efforts,” an official from the group said.

He also stressed that the group will enjoy solid profits in the rest of the year due to its flagship banking sector’s improved profitability.

Shinhan Bank has successfully offset losses from other non-banking sectors such as the credit card business in the January-March period.

The banking unit’s profit reached 425 billion won on the back of sound credit risk management, up 48.4 percent from the previous quarter and also up 24.6 percent from a year earlier.

Overall, the group’s non-banking sectors saw a 16.3 percent drop in net profits from a year earlier. Despite new regulations and deduction in commission fees, however, they saw a 43.3 percent increase in net profits from the previous quarters.

The group attributed the handsome result to the ongoing efforts to seek stable income sources in the era of low interest rates and low economic development.

Since the financial crisis in 2008, Shinhan Bank has refrained from pursuing excessive external growth but focused on searching for good credit risks. The move laid the groundwork for the bank to rebound faster than its competitors.

But at the same time, it has cut down on the costs of its bad accounts, which also served a positive factor behind the group’s handsome profits.

The bad account costs reached 57.2 billion won, down 75.0 percent from the previous quarters and down 76.8 percent from a year earlier.

With the group’s improving profitability, its capital adequacy ratio recommended by the Bank for International Settlement (BIS) stands at 13.2 percent. The ratio for the bank also reached 16.2 percent.

Meanwhile, Shinhan Credit Card posted a net profit of 141.2 billion won, up 14.5 percent from 123.3 billion won in the previous quarter, although it is a 12.1 percent year-on-year drop.

This is a relatively good outcome given the deduction of commission fees collected from membership stores and interest rates on credit card loans.

Shinhan Investment also posted 26.7 billion won in net profit, up 878.1 percent from the previous quarter, and Shinhan Life Insurance’s net profit reached 21.8 billion won, up 551.7 percent from the previous quarter.

Shinhan Capital posted a net profit of 11.7 billion won, down 12.4 percent from a year earlier. As of March, its operating asset stood at 3.7 trillion won, up 1.6 percent from the end of last year.

Shinhan BNP Paribas Asset Management posted 4.7 billion won in net profit, while Shinan Savings Bank posted a net loss of 100 million won, as it has taken steps for business normalization after taking over Yehanbyeol Savings Bank last year.