Cho Yong-byung, chairman of the Shinhan Financial Group. (Photo: Shinhan Financial Group)

Shinhan Financial Group recorded the highest-ever net profit since its establishment, with 3,403.5 billion won in net profit in 2019. This was an increase of 7.8 percent compared to the previous year.

The group posted over 3 trillion in net profit for the second consecutive year, following 2018’s 3.1567 trillion won.

KB Financial Group announced in early February it posted 3,311.8 billion won in net profit last year, Shinhan Financial Group took first place among financial groups in Korea for two consecutive years.

The diversification of markets and business sectors, including global operations and non-bank profits significantly contributed to Shinhan Financial Group's highest-ever earnings.

Its net profit in 2019 grew 23.3 percent (397.9 billion won) from the year earlier. In the global investment banking (GIB) sector, its operating profit rose 41.8 percent year on year to 200.3 billion won.

“We were able to increase our profit by 75.1 billion won by strengthening the global non-banking sector last year,” a Shinhan Financial Group official said. “We will focus on differentiation strategies through selection and concentration based on growth in the ASEAN region.”

Shinhan Financial Group sharpened its business competitiveness by expanding collaboration among affiliates through the “One Shinhan” Campaign and successfully upgraded its business portfolio by successfully absorbing Orange Life and Asia Trust as affiliates.

“Overall earnings improvements at the group’s affiliates led the growth of the non-banking sector, finally resulting in an increase in the group's net profit,” another official said.

The net profit of Shinhan Bank, the flagship subsidiary of the group, recorded an increase of 5.1 percent, up 2.2 percent year-on-year, based on won-denominated loans. 4Q net profit fell 49.2 percent QoQ to 352.9 billion won due to temporary recognition of expenses related to the market and the expected retirement cost.

In 2019, won-denominated loans grew 7.4 percent year-on-year, with household loans up 9 percent and business loans up 5.7 percent (small and medium-sized businesses 7.3 percent).

Shinhan Bank's asset growth continued until 4Q on steady lending demand in the market, continuing stable growth.

Shinhan Card's net profit fell 2 percent on year to 508.8 billion won, and its fourth-quarter net profit fell 30.1 percent from the previous quarter to 97.7 billion won due to expenses for voluntary retirements.

Shinhan Card made efforts to generate profits after overcoming a decline in credit card operating profits.

As a consequence, its operating profit from the lease business grew 48.1 percent and its installment financing income also grew 22.5 percent year-on-year.

Shinhan Investment's net profit fell 12.1 percent year on year to 220.8 billion won. GIB-based IB commissions continued to stably generate operating profits, but they were not enough to offset a decline in securities commissions and to overcome the recognition of loss in proprietary trading.

Shinhan Life Insurance’s net profit fell 5.5 percent year on year to 123.9 billion won. Import premiums contracted 6.3 percent year on year to 4,299.9 billion won, but its risk-based capital (RBC) ratio at end-December stood at 226.6 percent (provisional) higher than the regulatory rate of 150 percent.

Orange Life's net profit fell 12.8 percent year on year to 271.5 billion won (before considering equity stakes). Its paid premiums arrived at 4,079.1 billion won, down 12.6 percent year on year as saving and variable insurance shrank. As of end-December, its RBC ratio stood at 420.6 percent (provisional).

On the other hand, Shinhan Capital's net profit rose 21.9 percent year on year to 126 billion won while Shinhan BNP Paribas Asset Management and Shinhan Savings Bank posted net profits of 15 billion won and 23.1 billion won, respectively.