Shinhan Financial Group Co., Ltd. · KRX:055550

Shinhan Financial — Q4 2023 Earnings Presentation

44 slides from Shinhan Financial's earnings presentation, Feb 8, 2024

  1. Slide 1: Business Results

    SHG We believe finance should be Friendly, + More secure, NYSE Creative @ Shinhan Financial Group

  2. Slide 2: Disclaimer

    Disclaimer The financial information contained herein has neither been reviewed nor audited by independent auditors. Therefore, no assurance is given that the financial information is accurate or complete, and such financial information may differ from the financial information to be contained in ou

  3. Slide 3: Contents

    Contents I. FY23 Result Highlights II. 2024 Outlook Ⅲ. Supplements The financial information contained herein has neither been reviewed nor audited by independent auditors. Therefore, no assurance is given that the financial information contained herein is accurate or complete, and such financial in

  4. Slide 4: I. FY23 Result Highlights

    Il. F¥23 Result Highlights

  5. Slide 5: Group Net Income

    Group Net Income Movements (Consolidated basis, QoQ) (KRW bn) Movements (Consolidated basis, YoY) (KRW bn)  Plus factors  Plus factors  Minus factors  Minus factors +23 Δ597 Δ251 +1,159 +221 Non- 1,192 Interest Operating G&A* Income* Δ430 Non- Income* Δ933 +103 4,666 Interest Interest Income* In

  6. Slide 6: Shareholder Return & Plan for 2024

    Shareholder Return & Plan for 2024 Total Shareholder Return (incl. preferred shares) (%, KRW bn)  DPS(KRW)  Amount of cancelled shares / Total shares(KRW) (KRW)  Cash dividend  Share cancellations (buyback)  TSR 36.0% 2022 2023 2024 30.0% 27.9% 865 150Wbn 26.0% 26.0% 486 149Wbn 23.9% 300 300 13

  7. Slide 7: [Note 1] Mid-term Capital Management Policy

    [Note 1] Mid-term Capital Management Policy Mid-term Financial Direction for 2025 (BOD resolution, AUG 2022) Shareholder Return Policy (Board Meeting, FEB 2022) 1. Progressive Dividend per Share 2. Cash Dividends & Share Buyback/Cancellations Enhance Corporate Value 3. Evenly Distributed Quarterly C

  8. Slide 8: FY23 Financial Overview

    FY23 Financial Overview (KRW bn) FY23 FY22 4Q23 4Q22 3Q23  Group interest income grew by 2.1% YoY reflecting 2.6% Y/Y Y/Y % Q/Q Q/Q % QoQ QoQ % growth in interest-bearing assets and 1bp improvement in Operating Income before 14,247.4 12,867.6 1,379.8 10.7% 3,270.2 2,817.7 452.5 16.1% 3,676.6 -406.4

  9. Slide 9: [Note 2] Non-recurring Factors in 4Q23

    [Note 2] Non-recurring Factors in 4Q23 1 [Non-interest Income] "Co-prosperity Finance" △293.9Wbn 4 [Credit Cost] Preemptive provisioning: △350.6Wbn in 4Q23, △765.4Wbn in FY23 (Shinhan Bank △292.1Wbn, Jeju Bank △1.8Wbn) • Preemptive provisioning reflecting adjustments in FLC, etc. (See p.16 for detai

  10. Slide 10: [Note 3] Earnings Trend

    [Note 3] Earnings Trend Operating Income (KRW bn) EPS (KRW)  Operating Income Growth (%) 17.2% 17.7 % 16.1 % 13.7% 9.6% 8.2% 7.8% 5.2% 8,500 8,048 0.3% Δ6.4% 7,000 7,308 6,579 6,654 5,742 6,116 4,666 4,368 4,019 4,789 3,415 4,195 3,157 3,403 2,775 2,919 2,081 2,367 FY14 FY15 FY16 FY17 FY18 FY19 FY2

  11. Slide 11: Interest Income

    Interest Income Details of Interest Income  On YoY basis, Group interest income increased by 2.1% as (KRW bn) FY23 FY22 4Q23 4Q22 3Q23 yearly NIM improved by 1bp and interest-bearing assets Y/Y Y/Y % Q/Q Q/Q % QoQ QoQ % grew 2.6%. On QoQ basis, despite 2bp decrease in quarterly Interest Revenue (a)

  12. Slide 12: [Note 4] Loan Growth, Deposits, and Margin Trend

    [Note 4] Loan Growth, Deposits, and Margin Trend Group Interest Income (KRW bn) KRW Loan Growth (%) SHB NIM Trend (%)  Bank  Non-bank  Retail YTD  Corporate YTD Annualized NIM Quarterly NIM BOK base rate  Total Loans YTD 2021 2022 2023 10.6% 3.50 3.50 3.50 3.50 +2.1% 9.0% 7.4% 10,818 3.25 10,59

  13. Slide 13: Non-interest Income

    Non-interest Income Details of Non-interest Income  Group non-interest income increased by 51.0% YoY driven by securities-related income growth, which largely resulted (KRW bn) FY23 FY22 4Q23 4Q22 3Q23 from low base effect. On QoQ basis, Group non-interest Y/Y Y/Y % Q/Q Q/Q % QoQ QoQ % income decre

  14. Slide 14: [Note 5] Non-interest Income Trend and Details

    [Note 5] Non-interest Income Trend and Details Non-interest Income Trend (KRW bn) Non-interest Income Breakdown (KRW bn) Fees & Commission (%)  Non-interest Income  Fees & Commission  Securities related & FX Trading/Derivatives  Non-interest Income weight (Operating Income/Non-interest Income) 

  15. Slide 15: G&A Expenses

    G&A Expenses Details of G&A Expense  Group G&A costs increased 6.8% QoQ due to the timing of (KRW bn) FY23 FY22 4Q23 4Q22 3Q23 performance-related incentives and seasonal marketing Y/Y Y/Y % Q/Q Q/Q % QoQ QoQ % expenses G&A Expense 5,895.3 5,644.2 251.2 4.5% 1,599.0 1,771.8 -172.8 -9.8% 1,497.5 101

  16. Slide 16: Provision for Credit Losses

    Provision for Credit Losses Provision for Credit Losses / Delinquency  Group’s provision for credit losses went up 70.8% YoY, (KRW bn) FY23 FY22 4Q23 4Q22 3Q23 predominantly due to continued efforts to set aside additional Y/Y Y/Y % Q/Q Q/Q % QoQ QoQ % provisions reflecting conservative economic ou

  17. Slide 17: [Note 6] Asset Quality

    [Note 6] Asset Quality Group Asset Quality (%) SHB Delinquency Rate  Precautionary & Below  Substandard & Below  Precautionary & Below Coverage Ratio  NPL Coverage Ratio 0.26% 0.27% 0.27% 0.28% 209% Loans 0.24% 0.21% 0.26% 195% in KRW 0.19% 184% 168% 151% 0.33% 0.33% 0.32% 0.34% 72% 73% 72% SME

  18. Slide 18: [Note 7] Real Estate PF Updates

    [Note 7] Real Estate PF Updates Group Real Estate-related Exposure (KRW tn, %) Tightened Risk Management of Real Estate Financings  Real Estate PF Group Real Estate-related Exposure  Bridge Loan (KRW bn) 2023.9 2023.12 QoQ Note 20% Total 9,129 9,006 Δ123 Real Estate PF 7,275 7,220 Δ55 Shinhan Bank

  19. Slide 19: SFG Income by Subsidiaries

    SFG Income by Subsidiaries Net Income by Subsidiaries1  Despite sizable one-off costs, including conservative (KRW bn) FY23 FY22 4Q23 4Q22 3Q23 provisioning and "Co-prosperity Finance", SHB’s net income Y/Y Y/Y % Q/Q Q/Q % QoQ QoQ % increased 0.7% YoY thanks to interest income growth and Bank (a) 3

  20. Slide 20: [Note 8] SFG Income by Subsidiaries

    [Note 8] SFG Income by Subsidiaries NI Contribution (%) Snapshot of NI Contribution (%) NI Contribution Trend (KRW bn) by Non-Bank Subsidiaries by Non-Bank Subsidiaries  Bank  Consumer Finance  Insurance  Capital Markets & Others  Non-Bank Weight (%) Group Non-Bank 42.4% 41.7% 39.0% 36.2% 35.0%

  21. Slide 21: [Note 9] SFG Overseas Business

    [Note 9] SFG Overseas Business NI Contribution by Overseas Business (KRW bn) Asset Contribution by Overseas Business (KRW bn)  NI Contribution (%)  Asset Contribution (%)  Overseas Net Income  Overseas Assets 12.9% 8.3% 8.3% 12.1% 7.5% 11.7% 7.0% 7.2% 9.8% 9.8% Δ 0.1% 3.6% 564.6 563.8 57,181 55,

  22. Slide 22: Capital Management and Profitability

    Capital Management and Profitability Group BIS Ratio Group BIS Ratio  CET1 ratio is expected to be 13.13%, up  BIS ratio  Tier 1 ratio  CET 1 ratio 0.21%p QoQ, driven by net income growth, (KRW bn) 2023.12(e) 2022.12 2023.9 YTD YTD % QoQ QoQ % higher market rates and appreciation of 16.2% 16.1%

  23. Slide 23: Digital, Digital to Value

    Digital, Digital to Value Promoting Digital Value Creation and Business Innovation Platform Gross MAU: 25 million (MAU for SOL Bank: 10 million) / DAU for major financial platforms: 5 million Launched ‘Super SOL’ (Dec. ‘23) Growth Platform SFG Gross MAU 1 DAU for Major Financial Platforms 2 • Innova

  24. Slide 24: ESG Initiatives

    ESG Initiatives CO2 Emissions (Scope1,2 / Scope3) Inclusive Finance (As of 4Q 2023, annual cumulative basis) Scope 1 + 2 Emissions Financed Emissions (Scope3) Inclusive Finance CSR Innovative Finance  Annual emissions (thousand tCO2eq)  Financed emissions (million tCO2eq)  Jan-Nov emissions  Car

  25. Slide 25: II. 2024 Outlook

    II. 2024 Outlook

  26. Slide 26: 2024 Outlook - ① Macroeconomic Outlook

    2024 Outlook - ① Macroeconomic Outlook Index(e) GDP growth Price Interest Rate Real Estate Lingering CPI in the Mid-to-High KTB (3Y) Anxiety Mid-to-High 1% Mid-3% & Asset 2% Range Differentiation  Export recovery driven by the  Reduced inflationary pressure amid  Market interest rates to graduall

  27. Slide 27: 2024 Outlook - ② Guidance

    2024 Outlook - ② Guidance 1 Loan growth in line with nominal GDP growth rate 2 Expect at least one base rate cut in 2H 2024 (NIM sensitivity against base rate: 25bp, 2~3bps) 3 Continuing improvement of non-interest income amid falling interest rate environment 4 Maintain stable Group CIR through eff

  28. Slide 28: III. Supplements

    lll. Supplements

  29. Slide 29: FY23 Financial Overview

    FY23 Financial Overview (KRW bn) FY23 FY22 4Q23 4Q22 3Q23 Y/Y Y/Y % Q/Q Q/Q % QoQ QoQ % Operating Income before Expenses 14,247.4 12,867.6 1,379.8 10.7% 3,270.2 2,817.7 452.5 16.1% 3,676.6 -406.4 -11.1% Interest Income 10,817.9 10,596.9 221.1 2.1% 2,786.6 2,765.2 21.4 0.8% 2,763.3 23.3 0.8% Non-inte

  30. Slide 30: Financial Highlights by Subsidiaries

    Financial Highlights by Subsidiaries (KRW bn) Ownership Total Assets1 Shareholder's Equity Profit for the Period2 ROA ROE Bank 633,681.8 34,067.1 3,072.8 Shinhan Bank 100.0% 626,439.4 33,531.2 3,067.7 0.61% 9.39% Jeju Bank 75.3% 7,242.4 535.9 5.1 0.07% 0.96% Non-bank 382,437.4 25,524.9 1,654.3 Consu

  31. Slide 31: Shinhan Bank Income (1)

    Shinhan Bank Income (1) (KRW bn) FY23 FY22 4Q23 4Q22 3Q23 Y/Y Y/Y % Q/Q Q/Q % QoQ QoQ % Operating Income (a=b+c) 8,834.4 8,477.5 356.9 4.2% 2,046.8 2,094.1 -47.3 -2.3% 2,248.7 -201.9 -9.0% Interest Income (b) 8,402.7 8,205.2 197.5 2.4% 2,146.3 2,175.3 -29.0 -1.3% 2,137.4 8.9 0.4% Non-interest Income

  32. Slide 32: Shinhan Bank Income (2)

    Shinhan Bank Income (2) (KRW bn) FY23 FY22 4Q23 4Q22 3Q23 Y/Y Y/Y % Q/Q Q/Q % QoQ QoQ % Non-interest Income (a+b+c) 431.7 272.3 159.4 58.5% -99.6 -81.2 -18.3 n.a. 111.3 -210.8 n.a. Fee & Commission (a) 911.0 955.3 -44.4 -4.6% 220.9 229.1 -8.2 -3.6% 214.0 6.9 3.2% Fund Fees 53.1 62.5 -9.4 -15.0% 13.2

  33. Slide 33: Shinhan Card Income

    Shinhan Card Income (KRW bn) FY23 FY22 4Q23 4Q22 3Q23 Y/Y Y/Y % Q/Q Q/Q % QoQ QoQ % Operating Revenue (a) 5,396.2 4,846.0 550.1 11.4% 1,276.1 758.9 517.2 68.1% 1,446.1 -170.1 -11.8% Card business 3,165.1 2,932.7 232.5 7.9% 821.4 716.1 105.3 14.7% 807.1 14.3 1.8% Installment Finance 226.9 195.3 31.6

  34. Slide 34: Shinhan Life Insurance Income

    Shinhan Life Insurance Income (KRW bn, %) FY23 FY22 4Q23 4Q22 3Q23 Y/Y Y/Y % Q/Q Q/Q % QoQ QoQ % APE1 910.9 733.4 177.5 24.2% 165.0 209.3 -44.3 -21.2% 308.2 -143.2 -46.5 Protection 884.1 629.1 255.1 40.5% 159.1 155.0 4.1 2.7% 298.7 -139.5 -46.7 Savings, Annuities 26.8 104.4 -77.6 -74.4% 5.9 54.3 -48

  35. Slide 35: Shinhan Securities Income

    Shinhan Securities Income (KRW bn) FY23 FY22 4Q23 4Q22 3Q23 Y/Y Y/Y % Q/Q Q/Q % QoQ QoQ % Operating Revenue 1,305.1 998.2 306.9 30.7% 167.3 51.3 115.9 225.8% 388.5 -221.3 -56.9% Fee & Commission 735.7 698.9 36.7 5.3% 170.3 131.7 38.6 29.3% 202.3 -32.0 -15.8% Brokerage fees 353.5 305.0 48.5 15.9% 75.

  36. Slide 36: Shinhan Capital Income

    Shinhan Capital Income (KRW bn) FY23 FY22 4Q23 4Q22 3Q23 Y/Y Y/Y % Q/Q Q/Q % QoQ QoQ % Operating Income before Expenses 655.3 506.9 148.4 29.3% 148.5 90.2 58.3 64.6% 153.3 -4.7 -3.1% (a=b+c-d-e) Interest Income (b) 590.9 486.6 104.2 21.4% 152.3 132.8 19.4 14.6% 150.5 1.7 1.2% Non-interest Income (c)

  37. Slide 37: SFG Subsidiaries Asset

    SFG Subsidiaries Asset (KRW bn) 2023.12 2022.12 2023.9 2023.12 Weight % YTD YTD % QoQ QoQ % Bank 633,681.8 588,633.8 45,048.0 7.7% 633,101.3 580.5 0.1% 62.1% Shinhan Bank 626,439.4 581,202.6 45,236.8 7.8% 625,908.4 531.0 0.1% 61.4% Jeju Bank 7,242.4 7,431.3 -188.8 -2.5% 7,193.0 49.5 0.7% 0.7% Non-Ba

  38. Slide 38: Shinhan Bank Loans & Deposits

    Shinhan Bank Loans & Deposits (KRW bn) 2023.12 2022.12 2023.9 2023.12 Weight % YTD YTD % QoQ QoQ % Loans in KRW 290,336.3 281,380.6 8,955.7 3.2% 286,279.2 4,057.2 1.4% 100.0% Retail 129,652.9 130,626.9 -974.0 -0.7% 127,292.7 2,360.3 1.9% 44.7% Mortgage 61,244.2 60,156.4 1,087.8 1.8% 59,018.2 2,226.0

  39. Slide 39: Shinhan Bank Loans (Retail, Large Corporates)

    Shinhan Bank Loans (Retail, Large Corporates) Delinquency (KRW bn, %) 2023.12 Weight % 2022.12 2023.9 YTD YTD % QoQ QoQ % 2022.12 2023.3 2023.6 2023.9 2023.12 Mortgage Loans 61,244 47.2% 60,156 1,088 1.8% 59,018 2,226 3.8% 0.11% 0.14% 0.15% 0.17% 0.19% Personal Loans 68,409 52.8% 70,470 -2,062 -2.9%

  40. Slide 40: Shinhan Bank SME Loans

    Shinhan Bank SME Loans Delinquency (KRW bn, %) 2023.12 Weight % 2022.12 2023.9 YTD YTD % QoQ QoQ % 2022.12 2023.3 2023.6 2023.9 2023.12 SME Total 129,954 100.0% 126,324 3,630 2.9% 129,694 260 0.2% 0.26% 0.33% 0.32% 0.34% 0.32% SOHO 65,733 50.6% 64,483 1,250 1.9% 65,696 38 0.1% 0.22% 0.33% 0.32% 0.34

  41. Slide 41: Shinhan Card Assets and Funding

    Shinhan Card Assets and Funding (KRW bn, %) 2023.12 2022.12 2023.9 2023.12 Weight % YTD YTD % QoQ QoQ % Earning Assets 39,388.0 39,436.1 -48.1 -0.1% 39,256.5 131.5 0.3% 100.0% Credit Purchase 18,055.8 18,424.0 -368.2 -2.0% 18,006.2 49.6 0.3% 45.8% Cash Advances 1,585.4 1,794.1 -208.7 -11.6% 1,600.6

  42. Slide 42: Asset Quality

    Asset Quality Total Substandard & Loan Loss NPL (KRW bn) NPL Ratio Loans Normal Precautionary Substandard Doubtful Estimated Loss Below Allowance Coverage Ratio Group1 2023.12 392,611 386,024 4,405 963 468 751 2,183 0.56% 4,014 184% 2022.12 392,401 387,771 3,032 678 345 576 1,599 0.41% 3,344 209% Y/

  43. Slide 43: Provisioning and Write-Offs

    Provisioning and Write-Offs Provision for Credit Losses and Credit Cost Ratio (KRW bn) FY23 1Q23 2Q23 3Q23 4Q23 FY22 1Q22 2Q22 3Q22 4Q22 Shinhan Bank1 696.5 154.8 242.4 96.6 202.8 550.6 80.7 196.8 70.8 202.2 Retail 278.8 50.3 57.9 79.9 90.8 332.9 38.2 132.3 86.3 76.1 Corporate 417.7 104.6 184.5 16.7

  44. Slide 44: Additional Notes

    Additional Notes Notes on cash dividend yield calculation (p.6) NOTE 1 Cash dividend yield is the ratio of cash dividends per share to the arithmetic average price of the final market price formed on the Korea Stock Exchange for the past one week prior to the two trading days before the dividend rec

Shinhan Financial Group — Q4 2023 Earnings Presentation on 6ix