SHG — Shinhan Financial Group Co., Ltd.

Summary of Shinhan Financial Group Q3 2025 Earnings Call

1. Key Financial Results and Metrics

• Net Income: KRW 1.4235 trillion, down 8.1% Q-o-Q.
• CET1 Ratio: 13.56%, stable but down 6 bps Q-o-Q.
• Credit Cost Ratio: 46 bps, up 2 bps YoY but improved Q-o-Q.
• Return on Equity (ROE): 11.1%, up 0.7 percentage points YoY.
• Net Interest Margin (NIM): 1.56%, up 1 bp Q-o-Q.
• Shareholder Returns: KRW 2.35 trillion expected for 2025, including KRW 1.1 trillion in cash dividends and KRW 1.25 trillion in share buybacks.

2. Strategic Updates and Business Highlights

• The group maintained a stable CET1 ratio through effective risk-weighted asset (RWA) management and robust profit generation despite challenges.
• Interest income rose by 2.9% Q-o-Q, driven by asset growth and margin control, particularly in the retail sector.
• Non-interest income decreased due to market conditions, but brokerage and investment banking fees surged.
• The group is focusing on maintaining a stable capital adequacy ratio while improving internal efficiency and resource allocation.
• Digital initiatives and sustainable management activities were highlighted as ongoing priorities.

3. Forward Guidance and Outlook

• The group anticipates continued growth in corporate loans, projecting a 5-6% increase for 2026, while household loan growth is expected to remain constrained due to regulatory pressures.
• The credit cost is expected to remain within the mid-40 bps range, despite potential seasonality impacts in Q4.
• The group plans to allocate more resources to capital markets in 2026, reflecting a shift in strategy towards enhancing non-interest income.

4. Bad News, Challenges, or Points of Concern

• Declining securities-related profits impacted overall net income.
• The NPL coverage ratio declined by 2.9 percentage points due to an increase in substandard loans in the non-bank sector, although the bank's NPL coverage improved.
• Economic uncertainties and challenges in the domestic market may affect asset quality and credit risks, particularly among vulnerable customer segments.
• The group acknowledged potential difficulties in maintaining deposit growth amidst declining trends.

5. Notable Q&A Insights

• Discussions about potential changes in the dividend policy were noted, particularly in light of government taxation discussions, with a slight increase in dividends being considered.
• The bank's CFO indicated that while loan growth was conservative in the first half, there was significant growth in corporate loans in Q3, with expectations to align with government policies.
• Concerns were raised about the stability of delinquency rates, with management expressing cautious optimism about maintaining current trends.
• The group emphasized the importance of asset quality management and indicated that while improvements are seen, vigilance is necessary due to external uncertainties.

Overall, Shinhan Financial Group demonstrated solid financial performance in Q3 2025, with strategic initiatives aimed at enhancing shareholder value while navigating challenges in the macroeconomic environment.