Shinhan Financial Group announced its business results in the second quarter of 2023 on July 27.
Its net income in the quarter was 1,238.3 billion won, down 10.8 percent from the previous quarter, and its net profit during the first half of this year came in at 2,626.2 billion won, down 2.1 percent from the same period of 2022.
“Although Shinhan Financial Group’s operating profit even growth in interest income and non-interest income, its net profit decreased quarter-on-quarter due to conservative provisioning in light of internal and external uncertainties and a rise in SG&A expenses caused by inflation,” a Shinhan Financial Group official said.
“Despite the decline in its net profit, Shinhan Financial Group maintained solid fundamentals and ability to generate profits such as an improvement in its operating profit,” the official said.
“We are well prepared for volatility that may arise in the future with additional provisions to proactively respond to recent soundness issues related to real estate PF and growing concerns about insolvencies in vulnerable segments,” the official added.
“A stable capital ratio provides Shinhan Financial Group with loss-absorbing capacity for system risks.”
Shinhan Financial Group’s interest income grew 4.7 percent quarter on quarter to 269.42 billion won in the second quarter.
In the first half of the year, its cumulative interest income inflated 3.3 percent year on year to 5,268 billion won, driven by an increment in its NIM.
Non-interest income in the second quarter was 1,033.3 billion won, up 3.4 percent from the first quarter, driven by a recovery in its fee income including credit card and securities custody fees, despite lower gains in securities.
Shinhan Financial Group’s cumulative non-interest income in the first half of the year totaled 2,325 billion won.
Despite a drop in its fee income, it grew 21.5 percent year over year due to the base effect of losses in the securities segment due to a steep rise in interest rates in the first half of 2022 and an improvement in the securities segment due to a decline in market interest rates in the first half of this year.
Bad debt expenses in the second quarter increased 19 percent year on year to 548.5 billion won due to increased provisions due to Shinhan Bank’s corporate credit rating season and additional provisions due to the application of the group’s Master Scale PD.
The company’s cumulative bad debt expense in the first half of the year ascended 67.8 percent year on year to 1,009.5 billion won.
This was mainly due to more provisions for delinquencies at Shinhan Bank and Shinhan Card due to the accumulation of increases in interest rates. Its NPL ratio in the first half of the year stood at 0.53 percent but at 0.35 percent if additional provisions are excluded.
Shinhan Card’s net profit in the second quarter stood at 150.2 billion won, down 9.9 percent quarter on quarter.
Its cumulative net profit in the first half of the year reached 316.9 billion won, down 23.2 percent year on year.
Shinhan Life’s net profit in the second quarter of 2023 stood at 177.9 billion, up 32.9 percent quarter-on-quarter.
Its cumulative net profit in the first half of the year came in at 311.7 billion won, up 32.0 percent year on year.