Business Context and Reporting Period
Company: Shinhan Financial Group Co., Ltd. (SFG)
Filing Type: Form 6-K (Report of Foreign Private Issuer)
Reporting Period: Third Quarter 2022 (January 1, 2022 – September 30, 2022)
Filing Date: November 14, 2022
Accounting Standards: Korean International Financial Reporting Standards (K-IFRS)
SFG is a diversified financial holding company headquartered in Seoul, Korea, with principal subsidiaries including Shinhan Bank, Shinhan Card, Shinhan Securities, and Shinhan Life Insurance. The group operates globally with subsidiaries in the Americas, Europe, and Asia.
Key Financial Metrics
| Metric (KRW Billion) | 3Q 2022 (YTD) | FY 2021 | FY 2020 |
|---|---|---|---|
| Net Interest Income | 9,217 | 10,769 | 9,883 |
| Net Fees and Commission Income | 2,022 | 2,675 | 2,383 |
| Net Operating Income | 5,338 | 5,952 | 4,930 |
| Consolidated Net Profit | 4,378 | 4,113 | 3,498 |
| Net Profit Attributable to Equity Holders | 4,315 | 4,019 | 3,415 |
| Earnings Per Share (Won) | 7,896 | 7,308 | 6,654 |
| Total Assets | 673,580.8 | 627,364.3 | 581,187.6 |
| Total Liabilities | 623,675.4 | 579,260.3 | 537,364.3 |
| Shareholder's Equity | 49,905.4 | 48,104.0 | 43,823.3 |
Liquidity and Capital Adequacy
- Consolidated BIS Ratio: 15.89% (Sept 30, 2022) vs. 16.20% (Dec 31, 2021).
- Shinhan Bank LCR: 94.1% (Sept 30, 2022), above the temporary regulatory minimum of 90%.
- Debt to Equity Ratio (Separate Basis): 39.81%.
- Credit Ratings: Debentures rated AAA by Korea Rating, KIS Rating, and NICE Investors Service.
Material Changes vs. Prior Period
- Profitability: Consolidated net profit increased by approximately 6.4% year-over-year compared to the full year 2021, driven by higher net interest income and lower provisions for credit losses.
- Asset Growth: Total assets grew by 7.4% to KRW 673.6 trillion, with loans increasing to KRW 402.5 trillion (59.8% of total assets).
- Asset Quality: The Non-Performing Loan (NPL) ratio remained stable at 0.35%. The Substandard & Below ratio improved slightly to 0.43% from 0.44% in the prior year.
- Dividends: Cash dividend payout ratio for 3Q 2022 was 14.78%, lower than the 26.04% recorded for FY2021.
Guidance, Outlook, and Material Events
Post-Reporting Period Events (Material Information):
- Dividend Declaration: On October 6, 2022, the Board resolved to pay a quarterly dividend of W400 per share (Total: W212.2 billion) for common and convertible preferred stock.
- Share Buyback: The Board resolved to acquire and cancel W150 billion worth of treasury stocks to enhance shareholder value, with completion targeted for November 2022.
- Subsidiary Capital Increase: SFG participated in a W80 billion capital increase of Shinhan EZ General Insurance, Ltd., resulting in the Group's stake decreasing from 100% to 85.1%.
- Rebranding: Shinhan Investment Corporation changed its legal name to Shinhan Securities on October 1, 2022.
Risks and Contingencies:
- Liquidity Regulations: Regulatory minimums for Liquidity Coverage Ratios (LCR) were temporarily eased by the Financial Services Commission through September 2022, with a gradual normalization planned starting in 2024.
- Concentration Risk: The top ten debtor groups (including Hyundai, Samsung, SK, and LG) represent significant exposure, totaling KRW 35.2 trillion.
Investor Verification Checklist
- Dividend Execution: Verify the actual payment date and record date for the declared W400/share dividend.
- Share Buyback Completion: Confirm the completion of the W150 billion treasury stock cancellation in November 2022.
- Capital Adequacy Trends: Monitor the Consolidated BIS Ratio trend, which dipped slightly to 15.89% from 16.20% in the prior year-end.
- Subsidiary Ownership: Note the dilution of ownership in Shinhan EZ General Insurance to 85.1% and its impact on consolidated financials.
- Asset Quality: Review the stability of the NPL ratio (0.35%) amidst global economic conditions.