Shinhan Financial Group Co., Ltd. (SHG) Q3 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary presents mixed signals: stable NIM and credit costs are positive, but noninterest income and insurance profits declined. The Q&A reveals cautious optimism with plans for loan growth and shareholder returns, but uncertainties persist in asset quality and dividend policy. The lack of decisive guidance and management's vague responses contribute to a neutral sentiment, suggesting limited stock movement.
Key Financial Performance
CET1 ratio 13.56%, stable level due to RWA management and robust profit generation despite won depreciation and loan asset growth.
Net income (Q3 2025) KRW 1.4235 trillion, despite a decrease in securities-related profits. Credit costs were well controlled.
Credit cost ratio 46 bp, up 2 basis points year-on-year, but improved quarter-on-quarter.
RWA (Risk-Weighted Assets) Increased by KRW 8 trillion quarter-on-quarter, driven by foreign currency-denominated RWA growth due to won depreciation and loan-driven asset growth.
Net income (Q3 quarter-on-quarter) 8.1% decline, due to a decrease in securities-related profits reflecting market rate movements.
ROE and ROTCE Increased by 0.7 percentage points year-on-year to 11.1% and 12.5%, respectively.
Group interest income Rose by 2.9% quarter-on-quarter, driven by profitability-based asset growth and active margin control.
Bank's loan in won Increased by 2.7% quarter-on-quarter, with retail sector growing by 3.1% and corporate segment by 2.3%.
Bank's NIM (Net Interest Margin) Rose to 1.56%, up 1 bp quarter-on-quarter, due to improved funding cost offsetting a fall in interest-bearing asset yield.
Noninterest income Decreased quarter-on-quarter due to market conditions, with declines in securities, FX, and derivatives gains, but brokerage fees and IB-related fees surged.
Insurance-related profits Decreased by 2.4% quarter-on-quarter, but profitability remained stable due to scaled-up CSM management.
Group's SG&A expense Increased by 2.2% quarter-on-quarter due to voluntary retirement costs at Shinhan Card, but CIR remained stable at 37.3%.
Credit cost Decreased by 30.1% quarter-on-quarter, reflecting expiration of corporate credit rating impacts and reduced provisions from real estate PF workout plan.
Group's NPL coverage ratio Declined by 2.9 percentage points quarter-on-quarter due to increased substandard and below loans in the nonbank sector, but the bank's NPL coverage ratio improved by 12.17 percentage points.
Delinquency ratio Gradually improving at both the bank and card levels.
Shinhan Bank earnings Declined slightly quarter-on-quarter due to noninterest income factors, including marketable securities.
Shinhan Card earnings Increased quarter-on-quarter despite decreased merchant fee income and voluntary retirement costs, supported by reduced credit cost.
Shinhan Securities earnings Decreased quarter-on-quarter due to lower product management income, but structural earnings capacity improved year-on-year.
Shinhan Capital performance Subdued due to pressure on funding and credit cost.
Overseas services Delivered differentiated results in Q3, particularly in Japan and Vietnam, despite domestic and global uncertainties.
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Operating Highlights
Digital initiatives: The group has summarized its performance in digital initiatives, indicating progress in execution and outcomes.
Overseas services: Differentiated results were delivered in Japan and Vietnam despite ongoing domestic and global uncertainties.
CET1 ratio: Maintained at 13.56%, reflecting stable financial soundness and robust profit generation despite challenges like won depreciation and loan asset growth.
Net income: Group's Q3 net income was KRW 1.4235 trillion, an 8.1% decline Q-o-Q, but credit costs were well controlled.
Interest income: Increased by 2.9% Q-o-Q due to profitability-based asset growth and active margin control.
Credit cost: Decreased by 30.1% Q-o-Q, reflecting improved asset quality and reduced provisions for real estate PF workout plans.
SG&A expenses: Increased by 2.2% Q-o-Q due to voluntary retirement costs at Shinhan Card, but CIR remained stable at 37.3%.
Shareholder return policy: Board resolved on a cash dividend of KRW 570 per share for Q3, with a total shareholder return of KRW 2.35 trillion expected in 2025, including share buybacks.
Corporate value enhancement: ROE and ROTCE rose by 0.7 percentage points Y-o-Y to 11.1% and 12.5%, respectively, as part of the corporate value enhancement plan.
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Risk or Challenges
Macroeconomic and Domestic Economic Uncertainties: Uncertainties in the macro environment and domestic economy could impact asset quality and financial performance.
RWA Growth and Capital Adequacy: Risk-weighted assets (RWA) increased by KRW 8 trillion Q-o-Q due to won depreciation and loan-driven asset growth, posing challenges to maintaining a stable capital adequacy ratio.
Decline in Noninterest Income: Noninterest income decreased Q-o-Q due to market conditions, including declines in securities, FX, and derivatives gains.
Credit Risk Among Corporates: Credit risk has risen among corporates due to delayed economic recovery, requiring more prudent asset quality management.
Challenges in Vulnerable Customer Segments: Vulnerable customer segments face persistent challenges, necessitating timely funding and asset quality management.
NPL Coverage Ratio Decline: Group's NPL coverage ratio declined by 2.9 percentage points Q-o-Q due to an increase in substandard and below loans in the nonbank sector.
Shinhan Capital Performance Pressure: Shinhan Capital faced pressure on funding and credit costs, leading to subdued performance.
Korean Financial Industry Transformation: The Korean financial industry faces challenges in achieving a productive financial transformation to support economic recovery and sustainable growth.
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Guidance & Outlook
Shareholder Return Policy: The shareholder return policy is expected to remain unchanged in the foreseeable future given the stable CET1 ratio and financial soundness.
Capital Adequacy: The group will focus on maintaining a stable capital adequacy ratio by supplying sufficient funds where and when needed, while improving internal efficiency and strategic resource allocation.
Asset Quality Management: Credit risk among corporates has risen due to delayed economic recovery and challenges among vulnerable customer segments. More prudent asset quality management will be needed.
Specialty Credit Subsidiaries: Specialty credit subsidiaries, including card and capital, are steadily improving fundamentals through asset rebalancing and various self-help measures and are expected to gradually recover profitability.
Overseas Business Performance: Overseas services delivered differentiated results in Q3, particularly in Japan and Vietnam, despite ongoing domestic and global uncertainties.
Corporate Finance and Economic Recovery: Shinhan Financial Group will continue its consistent approach of allocating resources to corporate finance while providing timely and efficient funding to support Korea's economic recovery and sustainable growth.
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Shareholder Return Plan
Cash Dividend: KRW 570 per share for the third quarter
Total Cash Dividend for 2025: KRW 1.1 trillion
Share Buyback: KRW 1.25 trillion for 2025
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Key Q&A
Q:Have there been any discussions about changes in the group's dividend policy related to the dividend tax?
A:Discussions have taken place at the Board of Directors (BOD) workshop regarding shareholder return policy, but no decisions have been made yet. The group intends to slightly increase the dividend payout to align with taxation policy and broaden individual shareholders. They are also considering share buybacks and cancellations without undermining other policies.
Q:What is the outlook for the group's loans and deposits in the fourth quarter and beyond?
A:Corporate loans grew conservatively in the first half but increased by over KRW 1 trillion in the third quarter. The group plans for about KRW 7-8 trillion in corporate loan utilization for the year, with a 5% growth target. Household loans are unlikely to grow significantly due to regulations, but corporate loans are expected to grow by 5-6% next year. Deposit management focuses on funding stability and interest rate management, with preparations for the fourth quarter's funding maturity period.
Q:Will the bank delinquency rate remain stable in the fourth quarter and next year?
A:The bank delinquency rate is stabilizing, and asset quality is flattening across subsidiaries. However, uncertainties in the economic outlook and external factors make it too early to predict further improvements. The group will closely monitor asset quality through the first quarter of next year.
Q:What is the outlook for the card delinquency rate and credit cost?
A:The card delinquency rate improved from 0.45% to 0.41% in September due to public relief funds. The government’s continued support for small merchants is expected to stabilize the rate further. Credit costs are expected to remain within the mid-40 bp range, despite seasonal provisioning requirements in the fourth quarter.
Q:What is the group's perspective on interest spread and resource allocation for next year?
A:The interest spread has been defended despite falling policy rates. Over the long term, interest income is expected to decline, but non-interest income from brokerage and IB is performing well. Resource allocation will focus more on the capital market rather than the bank, while maintaining commitments to shareholder return policies.
Q:What is the group's strategy for RWA management and CET1 ratio growth?
A:RWA growth in the third quarter was slightly higher but remains lower than expected on a yearly basis. Household lending is unlikely to grow further, while corporate loans will be the growth driver. The CET1 ratio is currently in the mid-13% range, considered adequate for capital efficiency. It may dip slightly in the fourth quarter due to seasonality but will be managed above the 13.1% base level.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the exact changes to the dividend policy, citing the need to finalize next year’s business plan. Additionally, they used vague language regarding the long-term interest rate outlook and resource allocation specifics, emphasizing flexibility without concrete commitments.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Bang Shinhan
CFO Sang
CFO Shinhan
CFO Sunghwan
CFO presentation
CSO SeogHeon
Cheol Woo
Dong kwon
Group CFO
Group CSO
Group schedule
IR release
Joo CFO
Koh Dong
Life CFO
Park charge
QA session
Sang Yung
Securities CFO
SeogHeon Koh
Shinhan Bank
Shinhan Life
Sunghwan Joo
Today Group
Woo Park
Yung Group
afternoon Cheol
charge IR
executive CFO
kwon Bang
presentation QA
release Shinhan
schedule Today
session executive
SHG Transcript
Shinhan Financial Group Co., Ltd. (SHG) Q3 2025 Earnings Call Transcript
Unknown10-28
The earnings call summary presents mixed signals: stable NIM and credit costs are positive, but noninterest income and insurance profits declined. The Q&A reveals cautious optimism with plans for loan growth and shareholder returns, but uncertainties persist in asset quality and dividend policy. The lack of decisive guidance and management's vague responses contribute to a neutral sentiment, suggesting limited stock movement.
Shinhan Financial Group Co., Ltd. (SHG) Q2 2025 Earnings Call Transcript
Unknown7-25
The earnings call summary indicates mixed results: strong brokerage commissions and trust fee income but sluggish credit card fee income and increased credit costs. The Q&A reflects cautious optimism with some uncertainties, particularly in regulatory impacts and stablecoin plans. Shareholder returns and capital management remain stable, and there's a proactive approach to loan growth. However, management's vague responses on certain issues suggest underlying uncertainties. Given these factors, a neutral sentiment is appropriate, as positive and negative elements are fairly balanced.
Shinhan Financial Group Co., Ltd. (SHG) Q3 2024 Earnings Call Transcript
Unknown10-25
The earnings call presents a mixed picture. While there are positive aspects like an increase in interest income and shareholder return plans, there are also significant concerns such as declining non-interest income, increased competition, and unclear management responses in the Q&A. The optimistic guidance on credit costs and share buyback plans are offset by declining NIM and asset quality vigilance. These mixed signals suggest a neutral market reaction, with neither strong positive nor negative sentiment expected.
Shinhan Financial Group Co., Ltd. (SHG) Q1 2024 Earnings Call Transcript
Unknown4-26
The earnings call summary shows mixed financial performance with positive growth in interest and noninterest income, but challenges in securities income and NIM stability. The Q&A highlights management's cautious approach, with uncertainties in real estate exposure and shareholder return timelines. Despite positive global business growth, the lack of clear guidance on margins and shareholder returns tempers optimism. Overall, the mixed results and management's cautious stance suggest a neutral stock price reaction over the next two weeks.
SHG Report
Frequently Asked Questions
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They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
