Shinhan earns big on diversification

By Choi Kyong-ae

Shinhan Financial Group chairman Han Dong-woo

Shinhan Financial Group said Wednesday that it expects to post a net profit for an eighth consecutive year in 2015 because its diversified portfolio and decreased loan-loss provisions have room to offset the impact of record-low interest rates.

“Given our strong performance in the three quarters ended in September, Shinhan appears to be on track to post a net profit for the full year this year as well,” a bank spokesman said.

Shinhan Financial was the most profitable financial group in Korea in the seven years through 2014. It beat three other financial groups -- KB Financial Group, NongHyup Financial Group and KEB Hana Financial Group -- during those years, the bank said.

In the January-September period, Shinhan Financial reported a net profit of 2.023 trillion won ($1.8 billion), up 8.8 percent from 1.859 trillion won a year earlier. Operating profit rose 3.1 percent year-over-year to 2.417 trillion won during the same period. Sales jumped 17 percent to 23.865 trillion won, according to its regulatory filing.

For 2014, the group’s net profit was 2.2 trillion won, with operating profit at 2.66 trillion and sales of 27.55 trillion won.

The driving force behind robust earnings are loans to financially healthy small- and medium-sized companies, declines in loan-loss provisions and stronger efforts to keep the ratio of non-performing loans low, Shinhan Financial said.

At the end of September, Shinhan Financial held 855.8 billion won in provision.

Moreover, Shinhan began to diversify its portfolio, mostly focused on banking and interest income in 2011, to establish a more stable flow of income. As a result, it earned 41 percent of its net profit in non-banking operations such as credit card, securities and life insurance at the end of September, up from 37 percent a year earlier, the spokesman said.

Shinhan has been included on the Dow Jones Sustainability Index World, one of the most respected sustainability rankings in the world, for three years through 2015.