Shinhan Financial Group Co., Ltd. - FY2024 Business Report Summary
Business Context and Reporting Period
This Form 6-K summarizes the FY2024 Business Report of Shinhan Financial Group (SFG), a Korean financial holding company, filed on March 18, 2025. The report covers the period from January 1, 2024, to December 31, 2024. SFG operates through principal subsidiaries including Shinhan Bank, Shinhan Card, Shinhan Securities, Shinhan Life Insurance, and Shinhan Asset Management. The financial information is prepared in accordance with Korean International Financial Reporting Standards (K-IFRS).
Key Financial Metrics
| Metric (KRW Billion) | FY 2024 | FY 2023 |
|---|---|---|
| Net Interest Income | 11,402 | 10,818 |
| Net Fees and Commission Income | 2,715 | 2,647 |
| Net Insurance Income | 884 | 598 |
| Provision for Credit Loss | (2,104) | (2,251) |
| Net Operating Income | 6,459 | 6,101 |
| Consolidated Net Profit | 4,558 | 4,478 |
| Net Profit Attributable to Equity Holders | 4,450 | 4,368 |
| Total Assets | 722,879 | 679,877 |
| Total Liabilities | 665,224 | 624,280 |
| Total Stockholder's Equity | 57,656 | 55,597 |
Capital and Liquidity: The Consolidated BIS Ratio stood at 15.79% as of December 31, 2024. The Liquidity Coverage Ratio (LCR) for Shinhan Bank was 103.3%. The Debt-to-Equity ratio (Separate Basis) was 42.98%.
Dividends: Total cash dividends for FY2024 were KRW 1,088 billion, resulting in a payout ratio of 24.45%. The total annual dividend per share was KRW 2,160.
Material Changes vs. Prior Period
- Profitability: Consolidated net profit increased by 1.8% to KRW 4.558 trillion, driven by higher net interest income (+5.4%) and net insurance income (+47.8%), partially offset by a decrease in net gains on securities trading (-18.0%).
- Asset Quality: The Non-Performing Loan (NPL) ratio increased to 0.66% from 0.53% in FY2023. The Substandard & Below ratio rose to 0.79% from 0.65%. However, the coverage ratio for substandard loans remained robust at 132.48%.
- Balance Sheet Growth: Total assets grew by 6.3% to KRW 722.9 trillion, with loans increasing by 5.8% to KRW 434.1 trillion.
- Shareholder Returns: The total shareholder return ratio increased to 40.2% (up 4.2 percentage points), including KRW 700 billion in share buybacks and cancellations.
Guidance, Outlook, and Risks
Strategic Targets (2027): SFG has established a Corporate Value-up Plan targeting an ROE of 10%, ROTCE of 11.5%, and a CET1 ratio of at least 13%. The company aims to expand the shareholder return ratio to 50% and reduce outstanding shares by 50 million.
Dividend Policy: Following regulatory amendments, the Board has pre-determined quarterly dividend record dates for 2025 to enhance predictability. A Q4 2024 dividend of KRW 540 per share was declared on February 6, 2025.
Risks and Contingencies:
- Asset Quality: Rising NPL ratios indicate increasing credit risk, though coverage remains adequate.
- Regulatory Changes: The company is adapting to new insurance risk measurement systems (K-ICS) and evolving capital adequacy regulations.
- Market Exposure: Significant exposure to major conglomerates (Samsung, SK, Hyundai) totaling KRW 42.6 trillion across the top ten debtor groups.
Investor Verification Checklist
- Verify the impact of the rising NPL ratio (0.66%) on future provisioning requirements and net interest margins.
- Confirm the execution of the KRW 500 billion treasury stock acquisition program announced in February 2025.
- Monitor the progress toward the 2027 target of a 50% shareholder return ratio and the reduction of 50 million outstanding shares.
- Review the final confirmed Risk-Based Capital Ratios for Shinhan Life Insurance and Shinhan EZ General Insurance under the new K-ICS regime, as FY2024 figures are preliminary.
- Assess the concentration risk associated with the top ten debtor groups, which represent a significant portion of total exposures.