Shinhan Financial Group Co (SHG) AI Stock Analysis

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Shinhan Financial Group Co

(NYSE:SHG)

Rating:69Neutral

Price Target:―

Shinhan Financial Group's stock is moderately attractive, supported by stable financial performance and strong technical indicators. However, liquidity challenges and moderate leverage pose potential risks. The stock's low valuation and healthy dividend yield enhance its appeal, particularly for value investors. Investors should be mindful of cash flow issues and the possibility of overbought conditions in the short term.

Shinhan Financial Group Co (SHG) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$22.40B

Dividend Yield3.04%

Average Volume (3M)170.33K

Price to Earnings (P/E)6.8

Beta (1Y)0.81

Revenue Growth12.26%

EPS Growth4.95%

CountryUS

Employees189

SectorFinancial

Sector Strength81

IndustryBanks - Regional

Share Statistics

EPS (TTM)2.13

Shares Outstanding495,842,070

10 Day Avg. Volume165,740

30 Day Avg. Volume170,330

Financial Highlights & Ratios

PEG Ratio-1.87

Price to Book (P/B)0.62

Price to Sales (P/S)0.00

P/FCF Ratio-1.93

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$54.01

Price Target Upside21.97% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering1

Shinhan Financial Group Co Business Overview & Revenue Model

Company DescriptionShinhan Financial Group Co., Ltd. provides financial products and services in South Korea and internationally. The company operates through six segments: Banking, Credit Card, Securities, Life Insurance, Credit, and Others. It offers retail banking services, including demand, savings, and fixed deposit-taking; checking accounts; mortgage and home equity, and retail lending; electronic banking and automatic teller machines (ATM); and bill paying, payroll and check-cashing, currency exchange, and wire fund transfer services. The company also provides corporate banking services, such as investment banking, real estate financing, overseas real estate and development project financing, infrastructure and structured financing, equity/venture investments, mergers and acquisitions consulting; securitization and derivatives services comprising securities and derivative products, and foreign exchange trading; and working capital loans and facilities loans. In addition, it is involved in treasury and investment activities in international capital markets consisting of foreign currency-denominated securities trading, foreign exchange trading and services, trade-related financial services, international factoring services, and foreign banking operations. Further, the company offers trust account management, securities brokerage, and asset management services, as well as leasing and equipment financing, savings banking, loan collection and credit reporting, collective investment administration, private equity investment, and financial system development services. As of December 31, 2021, it operated a network of 784 service centers; 5,234 ATMs; 7 cash dispensers; and 85 digital kiosks. Shinhan Financial Group Co., Ltd. was founded in 1982 and is headquartered in Seoul, South Korea.

How the Company Makes MoneyShinhan Financial Group Co generates revenue through a diversified portfolio of financial services. Its primary revenue streams include interest income from its extensive banking operations, which encompass both retail and corporate clients, and fees and commissions from asset management and investment banking services. Additionally, the group earns from insurance premiums through its insurance arm and transaction fees from its credit card services. Key partnerships and strategic alliances with other financial institutions and technology firms also play a crucial role in enhancing Shinhan's service offerings and expanding its market reach, contributing significantly to its overall earnings.

Shinhan Financial Group Co Earnings Call Summary

Earnings Call Date:Apr 25, 2025

(Q3-2024)

% Change Since: 28.01%|

Next Earnings Date:Jul 25, 2025

Earnings Call Sentiment Neutral

The earnings call presented a mixed outlook. While there were positive signs of interest income growth, cost management, and stable asset quality, significant challenges were highlighted by large derivative trading losses and a notable decline in noninterest income. Shareholder returns and capital adequacy provided some positive counterbalance, yet the overall sentiment leans towards concern over income volatility.

Q3-2024 Updates

Positive Updates

Interest Income Growth

Interest income increased by 1.2% Q-o-Q, driven by growth in the bank's loan book and efficient asset-liability management.

Cost Management

SG&A expenses were well-managed, increasing only 1.2% Q-o-Q, contributing to an improvement in the group's cumulative CIR by 1.2 percentage points Y-o-Y.

Shareholder Returns

The Board approved a third-quarter dividend of KRW 540 per share and announced a share buyback and cancellation totaling KRW 400 billion.

Asset Quality

Bank delinquency rates remained stable, and card delinquency saw additional improvement due to proactive write-downs and sales of non-performing loans.

Capital Adequacy

The CET1 ratio improved by 7 basis points Q-o-Q, estimated at 13.13% as of September 2024.

Negative Updates

Derivatives Trading Loss

Shinhan Securities incurred large losses of KRW 135.7 billion due to a trade in KOSPI 200 Futures, impacting the group's noninterest income.

Noninterest Income Decline

Noninterest income decreased by 25.6% Q-o-Q due to losses on securities derivative transactions and valuation impairments on overseas alternative investments.

Net Income Decrease

Net income posted KRW 1.2386 trillion, down 13.1% Q-o-Q, affected by losses in the noninterest income segment.

NIM Decline

Shinhan Bank's NIM recorded 1.56%, down 4 basis points versus the prior quarter, due to lower market rates.

Company Guidance

During Shinhan Financial Group's Q3 2024 earnings call, several key metrics were discussed, reflecting the company's financial performance and strategic actions. The company reported a net income of KRW 1.2386 trillion, representing a decrease of 13.1% quarter-on-quarter (Q-o-Q), primarily due to large losses in the noninterest income segment, particularly a KRW 135.7 billion loss from derivatives trading by Shinhan Securities. Despite this, interest income increased by 1.2% Q-o-Q, driven by a 3.5% growth in bank won loans, contributing to an annual growth rate of 10.2% in this segment. The group's CET1 ratio was noted at 13.13% at the end of September 2024. Additionally, the Board approved a third-quarter dividend of KRW 540 per share and announced a share buyback and cancellation plan totaling KRW 400 billion to enhance shareholder returns. The company's cumulative credit cost ratio improved by 4 basis points, posting 44 basis points, and the cumulative cost-to-income ratio (CIR) improved by 1.2 percentage points year-on-year to 37.9%. These metrics underscore the group's focus on maintaining financial stability while addressing challenges in its securities segment.

Shinhan Financial Group Co Financial Statement Overview

Summary

Shinhan Financial Group shows stable revenue growth and strong EBIT margins. The balance sheet reflects moderate leverage, typical of the banking sector, with a slight increase in financial risk. Cash flow issues, such as negative Free Cash Flow growth, highlight liquidity challenges that need addressing.

Income Statement

Positive

Shinhan Financial Group demonstrated steady revenue growth with a Revenue Growth Rate of 3.03% from 2023 to 2024. The Gross Profit Margin remained consistent, as Total Revenue equaled Gross Profit. Net Profit Margin improved slightly to 3.05% in 2024. However, the EBIT margin showed minor fluctuation, maintaining a strong position at 59.74% in 2024. The absence of EBITDA data limits the depth of analysis.

Balance Sheet

Positive

The company's Debt-to-Equity Ratio stands at 2.34 in 2024, indicating a moderate level of leverage typical for the banking industry. Return on Equity (ROE) improved to 7.94% in 2024, reflecting effective use of equity. The Equity Ratio declined slightly to 7.58%, suggesting a small increase in financial leverage, which could pose some risks if not managed carefully.

Cash Flow

Neutral

Shinhan Financial Group experienced a significant decline in Free Cash Flow, leading to a negative Free Cash Flow Growth Rate. The Operating Cash Flow to Net Income Ratio was negative in 2024, indicating challenges in converting earnings into cash. The Free Cash Flow to Net Income Ratio was also negative, suggesting cash flow difficulties which need to be addressed to improve financial stability.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
14.61T	14.18T	22.61T	21.86T	20.64T
	Gross Profit
14.61T	14.22T	22.61T	21.86T	20.64T
	EBIT
8.73T	8.48T	13.90T	5.49T	4.67T
	EBITDA
0.00	0.00	0.00	0.00	0.00
	Net Income Common Stockholders
4.45T	4.37T	4.67T	4.02T	3.41T
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
35.23T	30.40T	29.90T	94.37T	92.87T
	Total Assets
10.00T>	10.00T>	10.00T>	10.00T>	10.00T>
	Total Debt
10.00T>	10.00T>	10.00T>	10.00T>	10.00T>
	Net Debt
97.05T	90.36T	88.58T	83.60T	71.44T
	Total Liabilities
10.00T>	10.00T>	10.00T>	10.00T>	10.00T>
	Stockholders Equity
56.05T	53.72T	48.44T	47.29T	44.07T
Cash Flow		Free Cash Flow
-34.51T	-186.39B	6.65T	10.19T	-5.05T
	Operating Cash Flow
-34.25T	529.85B	7.59T	11.08T	-4.41T
	Investing Cash Flow
148.53B	-4.27T	-11.03T	-12.03T	-3.03T
	Financing Cash Flow
38.69T	9.76T	3.39T	4.96T	7.88T

Shinhan Financial Group Co Technical Analysis

Technical Analysis Sentiment

Positive

Last Price44.28

Price Trends

50DMA

36.21

Positive

100DMA

34.89

Positive

200DMA

37.16

Positive

Market Momentum

MACD

2.01

Negative

RSI

80.38

Negative

STOCH

84.29

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SHG, the sentiment is Positive. The current price of 44.28 is above the 20-day moving average (MA) of 39.93, above the 50-day MA of 36.21, and above the 200-day MA of 37.16, indicating a bullish trend. The MACD of 2.01 indicates Negative momentum. The RSI at 80.38 is Negative, neither overbought nor oversold. The STOCH value of 84.29 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SHG.

Shinhan Financial Group Co Risk Analysis

Shinhan Financial Group Co disclosed 46 risk factors in its most recent earnings report. Shinhan Financial Group Co reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 3 New Risks

The implementation of IFRS 17 beginning on January 1, 2023 renders certain of our historical financial information as of December 31, 2021 and for the year ended December 31, 2021, included in this annual report, not directly comparable with our financial information as of December 31, 2022 and 2023 and for the years ended December 31, 2022 and 2023 included in this annual report. Q4, 2023

Evolving regulatory framework for artificial intelligence and machine learning technology, may have an adverse impact on our business, financial condition and results of operations. Q4, 2023

Our business may be materially and adversely affected by legal claims and regulatory actions against us. Q4, 2023

Shinhan Financial Group Co Peers Comparison

Overall Rating

UnderperformOutperform

Sector (64)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
WF	78 Outperform	$11.00B	5.50	9.43%	4.80%	10.87%	14.59%
KB	77 Outperform	$27.99B	7.42	10.66%	2.59%	10.29%	-5.75%
BAP	74 Outperform	$17.30B	11.20	16.35%	4.98%	5.84%	12.67%
BBD	70 Outperform	$28.38B	9.17	10.61%	1.03%	-9.78%	27.43%
BSBR	70 Outperform	$19.38B	16.11	10.89%	3.98%	-3.94%	31.52%
SHG	69 Neutral	$22.40B	6.78	8.79%	3.04%	12.26%	4.95%
Sector *	64 Neutral	$12.86B	9.79	7.78%	16985.65%	12.28%	-7.82%

* Financial Sector Average

Performance Comparison

SHG

Shinhan Financial Group Co

44.28

10.74

32.02%

BBD

Banco Bradesco SA

2.87

0.62

27.56%

BSBR

Banco Santander Brasil

5.16

0.32

6.61%

BAP

Credicorp

213.40

66.48

45.25%

Kb Financial Group

81.26

24.87

44.10%

Woori Finance Holdings Co

45.23

14.46

46.99%

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.