Shinhan Financial Group Co., Ltd. - 1H 2024 Business Summary
Business Context and Reporting Period
This Form 6-K summarizes the First Half (1H) 2024 Business Report of Shinhan Financial Group (SFG), filed on August 14, 2024. The reporting period covers January 1, 2024, through June 30, 2024. Financial information is prepared in accordance with Korean International Financial Reporting Standards (K-IFRS). SFG operates as a diversified financial holding company with principal subsidiaries including Shinhan Bank, Shinhan Card, Shinhan Securities, Shinhan Life Insurance, and Shinhan Capital.
Key Financial Metrics
| Metric | 1H 2024 | FY 2023 | FY 2022 |
|---|---|---|---|
| Consolidated Net Profit (KRW billion) | 2,799 | 4,478 | 4,756 |
| Net Profit Attributable to Equity Holders (KRW billion) | 2,747 | 4,368 | 4,666 |
| Net Operating Income (KRW billion) | 3,921 | 6,101 | 5,906 |
| Net Interest Income (KRW billion) | 5,638 | 10,818 | 10,597 |
| Provision for Credit Loss (KRW billion) | (988) | (2,251) | (1,318) |
| EPS (Consolidated) (KRW) | 5,219 | 8,048 | 8,498 |
| Cash Dividend Payout Ratio (%) | 19.96 | 24.87 | 23.42 |
| BIS Ratio (Consolidated) (%) | 15.76 | 15.98 | 16.11 |
| Non-Performing Loan (NPL) Ratio (%) | 0.63 | 0.53 | 0.44 |
| Debt to Equity Ratio (Separate) (%) | 41.43 | 42.88 | 40.41 |
Material Changes vs. Prior Period
- Profitability Decline: Consolidated net profit for 1H 2024 was KRW 2.80 trillion, a significant decrease compared to the full-year 2023 figure of KRW 4.48 trillion. On a half-year basis, this reflects a slowdown in net operating income (KRW 3.92 trillion vs. KRW 6.10 trillion in FY2023).
- Asset Quality Deterioration: The NPL ratio increased to 0.63% from 0.53% at the end of 2023. The Substandard & Below ratio rose to 0.78% from 0.65%. However, the Substandard & Below Coverage Ratio remains robust at 133.68%.
- Capital Adequacy: The Consolidated BIS Ratio decreased slightly to 15.76% from 15.98% in 2023, remaining well above regulatory requirements. Shinhan Bank's individual BIS ratio stood at 18.0%.
- Liquidity: Shinhan Bank's Liquidity Coverage Ratio (LCR) was 102.6%, exceeding the regulatory minimum. Foreign Currency LCR for Shinhan Bank was 150.4%.
- Dividend Policy: The Board resolved to pay a quarterly cash dividend of KRW 540 per share (Total: KRW 273.4 billion) for the period ended June 30, 2024.
Outlook, Guidance, and Management Commentary
- Corporate Value-up Plan: On July 26, 2024, the Board approved a "2024 Shinhan Financial Group Value-up Plan" with targets to be achieved by 2027:
- Achieve Return on Equity (ROE) of 10% and Return on Tangible Common Equity (ROTCE) of 11.5% based on a CET1 Ratio of 13% or above.
- Increase Shareholder Return Ratio to 50%.
- Improve Tangible Book Value Per Share (TBPS) by reducing total shares outstanding to below 500 million by 2024 and 450 million by 2027.
- Operational Updates: Shinhan AI was dissolved from the list of direct subsidiaries in July 2024 due to business liquidation, reducing the total number of subsidiaries from 16 to 15.
- Risk Management: Management noted that despite a 6.4% year-on-year decrease in FY2023 net profit, the group maintained strong profit-generation capabilities through non-interest income and digital initiatives (e.g., "Super SOL" app, AI contact center).
Investor Verification Checklist
- Asset Quality Trends: Verify the trajectory of the rising NPL ratio (0.63%) and Substandard & Below ratio (0.78%) to assess credit risk exposure.
- Capital Targets: Monitor progress toward the 2027 targets of 10% ROE and 11.5% ROTCE, and the share reduction plan to 450 million shares.
- Dividend Sustainability: Confirm the impact of the quarterly dividend payout (KRW 540/share) on future liquidity and capital adequacy ratios.
- Regulatory Compliance: Review the preliminary nature of the June 30, 2024, BIS and LCR figures, as final confirmed ratios may be amended in subsequent disclosures.
- Subsidiary Restructuring: Assess the financial impact of the liquidation of Shinhan AI and the consolidation of the group structure.