KB Financial Group recaptured the throne of’Leading Finance’ after three years. Shinhan Financial Group, which ranked No. 1 in 2018 and 2019, took the lead in KB Financial Group as losses arising from the suspension of redemption of Lime Fund last year adversely affected 4Q results.
Shinhan Financial Group (Chairman Cho Yong-byung) announced on the 5th that as a result of the 2020 results, net profit increased by 0.3% from the same period of the previous year to KRW 3,4146 billion. This is 40.4 billion won less than KB Financial Group, which previously announced its net profit of 3,4552 billion won in 2020.
KB Financial Group took the first place in 2017 and then gave the lead to Shinhan Financial Group in 2018 and 2019, but regained the No. 1 position again in 2020 and is accelerating to solidify its position as a leading bank this year.
The earnings of both financial holding companies diverged in the fourth quarter.
As of the third quarter of last year, Shinhan Financial Group was ahead of Shinhan Financial Group by KRW 72.3 billion, with net income of KRW 2.95 trillion and KB Financial Group of KRW 2.877.9 billion. In the fourth quarter, KB Finance surpassed Shinhan Finance’s earnings and rose to the top in annual earnings.
If you look closely at this, net profit for both companies in the fourth quarter significantly decreased compared to the previous quarter due to the impact of additional provisions for Corona 19. In the fourth quarter, KB Financial Group recorded a net profit of 5767 billion won (〃51.7%) and Shinhan Financial Group recorded 4644 billion won (-59.4%). As for the Corona 19 provisions, KB Financial Group accumulated 377 billion won annually and Shinhan Financial Group 394 billion won.
Lime fund-related losses were the difference between 4Q results.
Shinhan Financial Group suffered losses related to the Lime Fund and valuation losses of overseas investment assets due to Corona 19, resulting in a relatively large decline in 4Q earnings. Lime Fund losses, reflecting external due diligence evaluation, amounted to KRW 69.2 billion by banks and KRW 128.8 billion by Shinhan Financial Group, which reflected a loss of KRW 2675 billion in the fourth quarter alone.
Shinhan Investment said, “In order to minimize the loss of investment products in the future, we preemptively reflected a loss of 472.5 billion won last year, and the accumulated loss including 2019 was around 520 billion won.” Losses are limited.”
In addition, there was a loss of 66.9 billion won in the evaluation of overseas investment assets due to the corona 19 effect. If the situation improves in the future, it can be reversed, but it had a negative impact on 4Q earnings right now.
Despite the adverse effects of Corona 19, both companies achieved the highest performance ever due to an increase in bank loans and securities commission income. KB Financial Group’s loans in KRW 295 trillion were up 9.9% from the previous year. Shinhan Financial Group rose 10.6% to 248 trillion won.
Earnings growth was also driven by the rapid increase in commission income following the explosive increase in stock trading value.
KB Financial Group posted a 25.6% increase in net commission income to KRW 2.958.9 billion. The brokerage industry’s import fees, centered on consignment fees, rose 77.9% from 446 billion won in 2019 to 7933 billion won last year.
Shinhan Financial Group’s total commission income from credit cards and funds increased by 11.3% from the previous year to KRW 2.383 trillion. Among them, the securities commission increased by 125.0% from 19 billion won in 2019 to 432 billion won last year.
Meanwhile, Shinhan Financial Group is planning to determine the dividend payout ratio at the board of directors meeting early next month. KB Financial Group decided on a 20% dividend payout ratio in 2020, reflecting the 20% dividend payout ratio recommendation from the financial authorities.
Noh Yong-hoon, vice president of Shinhan Financial Group’s Chief Financial Officer (CFO), said, “If the board of directors determines that the capital dynamics are sufficient, they can make a resolution with a dividend payout ratio of 20% or more. It seems quite difficult to challenge.”
table. KB Financial Group and Shinhan Financial Group’s Net Profit Trend (Source: Comprehensive Company)
Reporter Bae Okjin [email protected]