Chairman Cho Yong-byoung of Shinhan Financial Group. (Photo: Shinhan Financial Group)

Shinhan Financial Group set a new quarterly net profit record in the first quarter of 2021.

The financial group announced in an earnings report on April 23 that the group racked up 1.19 trillion won in net profit in the first quarter.

This is an increase of 27.8 percent compared to 932.4 billion won in the same period of last year. It enjoyed an improvement in business performances through core profit growth in the banking and non-banking sectors without one-time factors.

“The main feature of this performance is that the group’s net profit rose based on the basic power of its banking and non-banking sectors,” a Shinhan Financial Group official said. “

Our banking sector received a better business scorecard by using an early asset growth strategy and improving its net interest margin in two years. Our non-banking-oriented growth strategy began to pay off.”

Specifically, Shinhan Financial Group enjoyed even growth of profits in the banking and non-banking sectors. At the same, its profits improved quantitatively and qualitatively.

The financial group’s interest income grew 5.7 percent year-on-year thanks to stable loan growth and a rebound in net interest margins.

Fee profits also continued to grow sharply, chalking up a year-on-year increase of 40.4 percent on the back of mainly the non-banking sector.

In particular, the non-banking sector’s profit contribution rose to 48 percent due to efforts to improve performance and reduce costs by major non-banking affiliates, such as Shinhan Card, Shinhan Investment, Shinhan Life Insurance and Shinhan Capital.

The group reported a balanced growth structure between the banking and non-banking sectors.

A rebound in net interest fueled the growth of Shinhan Financial Group’s core profits. The group’s interest profit rose 5.7 percent year-on-year as profitable assets grew through double-digit loan growth over the past two years and its net interest margins rebounded.

The net interest margins of Shinhan Financial Group and Shinhan Bank rebounded by 5bp from the previous quarter, respectively, through loan management based on profitability and a spike in deposits.

Shinhan Bank’s loan growth rate stood at 2.5 percent in the first quarter, continuing its steady growth following 2020. SME loans grew 3.4 percent as the bank proactively managed financial support limits in order to help companies overcome the COVID-19 crisis.

Non-banking affiliates made an improvement to their business performances and the foundation for generating non-interest income expanded, which diversified the composition of the group’s profits.

The non-banking sector logged 613.3 billion won in quarterly net profit as efforts to strengthen non-interest profitability competitiveness paid off despite continuing difficult internal and external business environments.

Apart from Shinhan Card, which drove growth in the non-banking sector, non-banking affiliates such as Shinhan Investment and Shinhan Capital made high-ranking profits in the industry, achieving net profit growth.

Shinhan Investment made a big improvement to its business performances. The company saw its commission income soar 92.4 percent and its financial product sales surge 194.9 percent year on year in the first quarter on the back of a boom in the stock market and the securities industry.

A spike in participation in deals through a GIB platform drove up IB fees 17 percent. The company enjoyed a balanced improvement in business performances across all sectors.

Shinhan Capital’s non-interest profits increased 30.4 percent year on year through the expansion of investment assets.

Its interest income also steadily grew by expanding the composition of portfolio assets to various corporate finance sectors.

The Shinhan Financial Group kept cost management stable as various factors that remained uncertain in 2020 were minimized.

Preemptive risk management has continued since last year and reduced the group’s provisions in the first quarter by 95 billion won compared to the same period of last year.

As Shinhan Card’s delinquency roll rate improved from 0.32 percent to 0.26 percent, the group’s remained stable at 22bp.

As economic slowdown and financial instability risk factors are still lingering, the group continues to pay attention to coping with a crisis at the group level.

At the same time, efforts are being made to minimize insolvency due to the scheduled end of a financial support program.