Shinhan Financial Group (055550) Q1 2025 earnings summary

Executive summary

• Q1 2025 net income rose 12.6% year-over-year to KRW 1,488.3 billion, driven by strong interest income, normalized non-operating items, and robust banking performance.

• ROE improved to 11.4% and ROTCE to 12.9% annualized, with CET1 ratio at 13.27%, up 21 basis points year-to-date.

• Shareholder return ratio reached 40.2% in 2024, with a 2025 target of 42% or higher, supported by ongoing share buybacks, cancellations, and quarterly dividends.

• Non-banking profitability and ROE declined year-over-year, but capital buffers remained strong.

• Operating income reached KRW 1,944.2 billion, with a stable cost-to-income ratio at 37.3%.

Financial highlights

• Net income: KRW 1,488.3 billion (+12.6% YoY); EPS: KRW 12,180.

• Net interest income grew 1.4% year-over-year to KRW 2,854.9 billion; non-interest income declined 6.3%.

• Cost-to-income ratio rose to 37.3%, up 1.4 percentage points year-over-year.

• Group credit cost ratio increased by 3 basis points to 0.41% year-over-year.

• Total assets at March 2025 were KRW 746.2 trillion, with loans at amortized cost of KRW 448.5 trillion.

Outlook and guidance

• 2025 targets include ROE improvement, CET1 ratio above 13.1%, and shareholder return ratio of at least 42%.

• NIM is expected to decline through the year due to falling market rates, though the decrease may be less steep than initially forecast.

• Credit costs are projected to remain elevated, with recovery taking longer than anticipated.

• Shareholder return program may accelerate, with flexibility to adjust based on earnings and market conditions.

• Focus on structural reforms in non-banking, capital efficiency, and robust growth in banking.