Shinhan Financial ((SHG)) has held its Q3 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Shinhan Financial Group painted a mixed picture of the company’s financial health. While there was stability in capital management and positive news for shareholders, challenges such as a decline in net income, increased risk-weighted assets (RWA), and concerns over credit costs and asset quality were significant. Despite some positive developments, notably in interest income growth and asset quality management, the lowlights indicate substantial areas of concern for the company.
Stable CET1 Ratio
Shinhan Financial Group successfully maintained a stable Common Equity Tier 1 (CET1) ratio of 13.56% by the end of September 2025. This stability was achieved despite challenges such as the depreciation of the won and loan asset growth, showcasing the company’s effective capital management strategies.
Dividend and Share Buyback
The board of Shinhan Financial resolved on a cash dividend of KRW 570 per share for Q3, with expected shareholder returns of KRW 2.35 trillion for 2025. This includes KRW 1.1 trillion in cash dividends and KRW 1.25 trillion in share buybacks, reflecting the company’s commitment to returning value to its shareholders.
Interest Income Growth
The group reported a 2.9% quarter-on-quarter rise in interest income, driven by profitability-based asset growth and active margin control. The bank’s loan in won increased by 2.7% quarter-on-quarter, contributing to this positive outcome.
Improved Asset Quality Management
Shinhan Financial’s asset quality management showed improvement, with the bank’s Non-Performing Loan (NPL) coverage ratio improving by 12.17 percentage points quarter-on-quarter. This was supported by NPL sales and strengthened asset quality management.
Net Income Decline
The group’s net income for Q3 declined by 8.1% quarter-on-quarter. This decrease was partly due to a reduction in securities-related profits, reflecting market rate movements, which posed a challenge for the company’s financial performance.
Increased RWA
Shinhan Financial’s RWA increased by KRW 8 trillion quarter-on-quarter, driven by growth in foreign currency-denominated RWA due to won depreciation and loan-driven asset growth. This increase highlights the challenges faced by the company in managing its risk-weighted assets.
Credit Cost and Asset Quality Concerns
The credit cost ratio stood at 46 basis points, up 2 basis points year-on-year, with ongoing concerns about asset quality due to macroeconomic uncertainties. This remains a critical area of focus for the company moving forward.
Noninterest Income Decrease
The group’s noninterest income decreased quarter-on-quarter, with declines in gains on securities, FX, and derivatives. However, brokerage and investment banking-related fees saw a surge, partially offsetting the decrease.
Forward-Looking Guidance
Looking ahead, Shinhan Financial Group provided several key forecasts. The CET1 ratio is expected to remain stable, and the company plans to continue its shareholder return initiatives with a total expected return of KRW 2.35 trillion for 2025. Despite a controlled credit cost ratio and stable cost/income ratio, the company anticipates challenges in noninterest income due to market conditions. However, improvements in ROE and ROTCE, as well as a slight increase in the net interest margin, offer some optimism for future performance.
In conclusion, the earnings call for Shinhan Financial Group highlighted a mixed sentiment, with stability in capital management and positive shareholder returns being overshadowed by challenges in net income, RWA, and credit costs. While there are areas of concern, the company remains focused on managing these challenges and delivering value to its shareholders.