Shinhan Financial Group (055550) Q2 2024 earnings summary

Executive summary

• Consolidated net income for 2Q24 reached KRW 1,425.5bn, up 15.1% year-over-year and 7.9% sequentially, driven by robust top-line growth and reduced one-off factors from 1Q24.

• Operating income before expenses increased 3.0% QoQ and 6.2% YoY, with interest income up 0.2% QoQ and non-interest income up 10.9% QoQ.

• Cost-to-income ratio improved to 36.7% (down 1.6% YoY), despite a 7.2% QoQ rise in G&A expenses due to marketing.

• Credit cost ratio remained stable at 0.48% with additional provisions for real estate PF and related assets.

• CET1 ratio stood at 13.05%, supporting ongoing shareholder returns including a quarterly dividend of KRW 540 and a KRW 300bn share buyback.

Financial highlights

• 2Q24 consolidated net income: KRW 1,425.5bn (+15.1% YoY, +7.9% QoQ); 1H24: KRW 2,747.0bn (+4.6% YoY).

• Operating income before expenses: KRW 3,933.9bn in 2Q24 (+5.5% YoY, +3.0% QoQ).

• Interest income: KRW 2,821.8bn in 2Q24 (+4.7% YoY, +0.2% QoQ); non-interest income: KRW 1,112.1bn (+7.6% YoY, +10.9% QoQ).

• G&A expenses: KRW 1,471.6bn in 2Q24 (+2.0% YoY, +7.2% QoQ).

• Provision for credit losses: KRW 609.8bn in 2Q24 (+11.2% YoY, +61.4% QoQ).

Outlook and guidance

• Management targets ROE of 10% and ROTCE of 11.5% by FY2027, with a CET1 ratio above 13%.

• Shareholder return ratio to reach 50% by 2027, with incremental DPS growth and additional share buybacks planned.

• Focus on capital efficiency, cost control, and business portfolio optimization to enhance ROE and PBR.