SFG's Strong Growth

Leading financial group posts 25 percent net income increase

Shinhan Financial Group, the nation's leading financial services group, said its net profit rose 25 percent in the first three quarters this year from a year earlier.
Income in the June-Sept. period reached 510.1 billion won, down 14.4 percent compared with 595.7 billion won in the preceding quarter, the group said, adding that the figures exceeded market expectations substantially still.
Strong earnings reports from its financial affiliates, including Goodmorning Shinhan Securities Co., Shinhan Capital and Shinhan Bank helped to boost the group's record gains in the first three quarters. Shinhan Bank, which took over Chohung Bank posted 461.7 billion won in net profit in Q3, Goodmorning Shinhan Securities 81 billion won, Shinhan Life 97.2 billion won, Shinhan Card 187.1 billion won, and Shinhan Capital 43.1 billion won, with incomes of the group's non-banking affiliates coming to 140.2 billion won, a 206 percent increase. The group's non-banking affiliates contributed 22.7 percent of the group's total net income, an 11.5 percent jump from 11.2 percent at the end of 2005.
Group officials said stable net interest margin and the growth of loans led to a rise in interest earnings, increases in non-interest earnings through expanded banking network, which caused sales of funds to rise and continuous reductions in loss provisions have contributed to large combined earnings.
The group's total assets amounted to 217 trillion won at the end of September, up 12 percent from the end of last year. ROA recorded 1.26 percent and ROE 20.88 percent.
Shinhan Bank recorded interest earnings up 16.5 percent from the same period last year and non-interest earnings up 17.7 percent with a 58.5 percent reduction in loan loss provisions owing to the growing soundness of its assets and normalization of borrowers operations through restructuring. Non-financial business income rose 199.6 percent in the Q2 due to the sale of the stake in Hynix Semiconductor amounting to 83.9 billion won. Shinhan Bank'loan assets increased 3.3 trillion won up 4 percent from the same period last year. The group acquired Chohung Bank in 2003 for 3.3 trillion won.
Shinhan Bank, which had a new start after acquiring Chohung Bank, on April 1st, is expected to bring a fresh change in the nation's banking environment, especially with Kookmin Bank in the process of acquiring Korea Exchange Bank. The new Shinhan Bank has its total assets increased to 163 trillion won, second only to Kookmin Bank with 197 trillion won in total assets. The country will have four major commercial banks if Kookmin Bank succeeds in taking over the KEB as planned: Kookmin, Shinhan, Woori, and Hana banks.
The bank will continue to be a key affiliate of the Shinhan Financial Group as it has since its establishment as an integrated financial group in 2001. The financial group has been working for the growth of synergy between its banking and non-banking affiliates by marketing the products of non-banking through the bank's expansive network, including credit card, securities, insurance, and trust.
The group has been named as priority bidder for acquiring the LG Card Co. to become a top credit card operator in the country when the takeover is completed. The group will build up its image as the top financial group in the country as well as securing new income sources through the economy of scale in the credit card sector with the addition of LG Card and achieve synergistic effect with the diversified customer base. The group wrote in 6.7 trillion won to win the bidding, reports said.
The new Shinhan Bank's vision is to become the bank of pride for all those concerned including customers, officers and staff of the bank, and all the people in the country. It aims to be an enterprise that gives pride and dignity to industry and the country. It also means that the bank will position itself in the minds of the people so that they would think about Shinhan when they talk about banks. It also would like to be a top representative bank for the country. nw

President Shin Sang-hoon of Shinhan Bank.