A view of the Shinhan Financial Group’s office building near South Gate in Seoul.

(Photos:Shinhan Financial Group)

Shinhan Financial Group has rejoined the 2 trillion won net profit club with its net profit exceeding over 2 trillion won last year again.

 The financial group said Feb. 4 that its net profit came to 2.811 trillion won, over the 2 trillion won level in net profit again after a year, rising 9.6 percent year -on -year, recovering from 2013 when its net profit fell below 2 trillion won.

The group said the excellent performance is owed to increases in foreign exchange assets on both corporate and household accounts up 8.8 percent on average and the loan loss provision that began to grow in 2013 also decreased in 2014.

Officials of the group also said Shinhan Bank also performed well with its net profit rising 6 percent to 1.455 trillion won, despite the poor banking environment caused by low interest rates, among others.

The factors that helped the bank to perform so well included rapid rising in loans provided to both excellent SMEs and households, minimizing the reductions in earnings losses from the cuts in net interest margin and other loss factors that the bank was able to minimize.

In the meantime, Shinhan Card’s net profit fell 3.5 percent from the preceding year to 635.2 billion won last year due mainly to cuts in interest rates charged on card loans and increases in loss provisions that the bank had to put up against the loan losses. Shinhan Life Insurance Co.  netted profit of 80.7 billion won, up 6.9 percent year-to-year with the insurance premium collection amounting to 4.20 trillion won, with the insurance premium collection in the fourth quarter down heavily due to the increases in the guarantee-type life insurance product sales, which caused the loss provisions to rise to bring down the insurance premium collection by 53.3 percent from the previous year. Other affiliates such as Shinhan Financial Investment, Shinhan BNP Parisbas Asset Management and Shinhan Capital posted net profits of118.2 billion won, 18.3 billion won and 51.9 billion won respectively, while Shinhan Savings Bank netted 11.1 billion won in  profit, the group said.

During the past year, the group has made a wide range of efforts to increase work efficiency and cut costs. Notwithstanding, cost-to-income ratio kept rising and, as such, a fundamental improvement of the high-cost structure requires much more to be done. 

For a business to survive, at the minimum, value that is felt by customers must be greater than a price they pay and, at the same time, a company must be able to produce products and services at a cost that is lower than the price.