Capital markets, global and securities are the best players
[그린포스트코리아 박은경 기자] Shinhan Financial Group gave a leading bank to KB Financial Group as provisions increased due to the aftermath of the novel coronavirus infection (Corona 19) and the private equity crisis.
On the 5th, Shinhan Financial Group announced through an earnings announcement that it achieved annual net income of 3,4146 billion won last year. This decreased by 59.4% in the previous quarter (compared to KRW 1,144.7 billion), but increased by 0.3% (KRW 11.1 billion) from the previous year.
Despite the increase in net profit in the aftermath of the novel coronavirus infection (Corona 19), the leading bank was stolen as it was slightly less than 3,4552 billion won of its rival KB Financial Group. This is because provisions of 187.3 billion won for the re-proliferation of Corona 19 in the fourth quarter and 2675 billion won for compensation for the Lime crisis occurred.
Last year, despite the unstable business conditions, it showed sustainable stamina based on diversified profits from the non-banking sector. Net income increased for the seventh consecutive year, and interest income increased 1.9% despite the low interest rate. Non-interest income and non-banking division also posted 7.9%.
Operating profit expenses also decreased by 45.2% due to stable cost management. This is due to the expansion of digital channels and savings of 38.7%. The net inflow of funds through Shinhan Bank’s Sol Banking amounted to 3.4 trillion won, and Shinhan PayFAN subscribers also reached 12.8 million.
Last year, Shinhan Bank’s loan assets grew significantly. Banks’ loan performance in won, including Corona 19 financial support, increased 10.6% year-on-year. Corporate loans increased by 12.3% compared to the end of the previous year, of which SME loans increased by 14.1% and large corporation loans by 3.4%. Household loans also increased 9% compared to the end of the previous year, while good credit loans increased 28.4%.
In addition, the decrease in NIM has also decreased, contributing to the group’s interest income growth. The group’s non-interest business was a beneficiary as stock trading fees increased in the second half of the year, resulting in a 125% increase in brokerage fees compared to the previous year. Investment financing and leasing fees, which are considered as new growth engines of the group companies, also grew 6.9% and 72.6% year-on-year, respectively, leading to various earnings improvement.
In particular, the capital market and the global sector showed strong growth. GIB (Global Investment Finance) and GMS (Own Asset Management) also increased 33% and 125% year-on-year, and global operating profit also increased 9%, serving as a driving force behind the growth. Even in the case of Corona 19, overseas assets and proportion increased by 2%.
On the other hand, the asset management (WM) division’s earnings fell 29% and the retirement pension operating profit fell 3.1% due to the subsequent private equity crisis.
Last year, the provision for Corona 19 was 3944 billion won, an increase of 439.8 billion won (46.3%) from the previous year. The credit cost ratio was 0.41%, up 9bp from the same period last year. However, the credit cost ratio excluding the Corona 19 provision was 0.29%, down 1bp from the previous year.
The health indicator was also improved. The delinquency rates of Shinhan Bank and Shinhan Card fell from the end of the previous year to 0.24% and 1.04%, respectively, and the capital ratio of the group’s common stock in Basel III was expected to rise 0.6%p to 11.7% from the end of the previous year. Net asset return (ROA) and return on equity (ROE) were also good at 8.4% and 0.60%, respectively.
An official of Shinhan Financial Group said, “The main feature of this performance is that stable current revenue creation continued based on consistent mid- to long-term strategy execution.” The growth has secured the foundation for sustainable growth, and the non-banking sector also played a pivotal role in improving the group’s performance by promoting a diversified business portfolio strategy focused on non-interest.”
He emphasized, “In 2021, we will create a year to realize more and more visible results based on this.”
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