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 slightly down 6 bp Q-o-Q.
• Credit Cost Ratio: 46 bp, up 2 bp YoY but improved Q-o-Q.
• Return on Equity (ROE): Increased to 11.1%, up 0.7 percentage points YoY.
• Interest Income: Rose by 2.9% Q-o-Q, driven by asset growth and margin control.
• Noninterest Income: Decreased Q-o-Q due to market conditions, particularly in securities and FX.

2. Strategic Updates and Business Highlights

• Dividends: Cash dividend of KRW 570 per share declared; total shareholder return for 2025 expected to be around KRW 2.35 trillion (KRW 1.1 trillion in cash dividends and KRW 1.25 trillion in share buybacks).
• Loan Growth: Bank's loans in won increased by 2.7% Q-o-Q, with retail loans growing by 3.1% and corporate loans by 2.3%.
• Asset Quality Management: Continued focus on maintaining asset quality, with improved delinquency ratios in both bank and card sectors.
• Digital Initiatives: Ongoing progress in digital transformation and sustainable management activities.

3. Forward Guidance and Outlook

• Loan and Deposit Growth: Expected to be modest due to government controls on household loans; corporate loan growth projected at 5-6% for 2026.
• Credit Costs: Anticipated to remain within the mid-40 bp range, despite potential seasonal increases in Q4.
• CET1 Ratio Management: Expected to dip slightly in Q4 due to seasonal earnings but aimed to be managed above 13.1% on a yearly basis.

4. Bad News, Challenges, or Points of Concern

• Securities-Related Profits: Declined due to market rate movements, impacting overall profitability.
• Economic Uncertainties: Concerns regarding macroeconomic conditions and their potential impact on asset quality, particularly among vulnerable customer segments.
• Credit Risk: Rising credit risk in corporate sectors due to delayed economic recovery.
• Deposit Declines: Noted decline in deposits, raising concerns about future funding stability.

5. Notable Q&A Insights

• Dividend Policy: Discussions ongoing regarding potential increases in dividend payouts in alignment with new taxation policies, but no firm decisions made yet.
• Loan and Deposit Outlook: CFO indicated conservative growth expectations for household loans, with corporate loans expected to drive growth.
• Asset Quality: While delinquency rates are stabilizing, management remains cautious due to external uncertainties affecting the economic outlook.
• Interest Margin: CFO noted that while the interest spread has improved, long-term expectations suggest a potential decline in interest income due to anticipated rate cuts.

Overall, Shinhan Financial Group reported solid financial performance in Q3 2025, with stable capital ratios and controlled credit costs, but faces challenges from market conditions and regulatory environments affecting loan growth and profitability.