Shinhan Financial Group (055550) Q3 2024 earnings summary

Executive summary

• Net income for Q3 2024 was KRW 1,425.5bn, down 13.1% QoQ but up 4.4% YoY, with YTD net income at KRW 4,044.1bn, up 5.9% YoY, mainly due to robust interest income and stable cost management.

• Interest income rose 1.2% QoQ and 5.7% YoY, supported by loan growth and efficient ALM, while non-interest income fell 25.6% QoQ due to derivative trading losses and conservative investment valuations.

• The group maintained a strong CET1 ratio of 13.13% at end-Q3 2024, supporting consistent shareholder returns.

• The board approved a quarterly dividend of 540 KRW per share and a share buyback/cancellation program totaling 400 billion KRW, with further buybacks planned.

• Credit costs remained stable, with a group CCR of 0.44%.

Financial highlights

• Interest income reached KRW 2,821.8bn in Q3 2024 (+1.2% QoQ, +5.7% YoY), driven by loan growth.

• Non-interest income dropped 25.6% QoQ due to securities derivative losses and overseas investment impairments.

• Cost-to-income ratio improved by 1.2 percentage points YoY to 37.9%.

• Credit cost ratio was stable at 44bp, down 4bp from the previous half.

• Total assets at end-Q3 2024 were 745.4 trillion KRW, up from 691.8 trillion KRW at end-2023.

Outlook and guidance

• NIM is expected to continue declining in Q4 and into next year due to further benchmark rate cuts.

• Loan and RWA growth targeted at about 5% for next year, with a focus on qualitative, ROE-driven growth.

• CET1 ratio to be managed at 13% or above, with a shareholder return ratio of up to 50% by 2027.

• Management expects continued growth in interest income, with ongoing monitoring of real estate PF and asset quality.

• Shareholder return policy to continue, with 250bn KRW buyback in Q4 2024 and 150bn KRW in early 2025.