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

Shinhan Financial — 1H 2020 Earnings Presentation

31 slides from Shinhan Financial's earnings presentation, Jul 24, 2020

  1. Slide 1: Business Results 1H 2020

    SHG One Shinhan Business Results () 1H 2020 SRE SH @ 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 contained herein is accurate or complete, and such financial information may differ from the financial information to b

  3. Slide 3: Contents

    Contents I. 1H20 Result Highlights II. Supplements

  4. Slide 4: 1H20 Result Highlights

    Il. 1H20 Result Highlights

  5. Slide 5: COVID-19 Response

    COVID-19 Response 1 Continued COVID19-related Support while Bolstering Risk Management  Financial Relief for Corporates (SMEs) and Retail Clients ⊙ KRW 16.7 trillion* support for SMEs ⇒ Including new credit extensions (KRW 7 tn.), loan rescheduling (KRW 9.4 tn.), interest deferrals (KRW 4.8 bn) *13

  6. Slide 6: COVID-19 Response: Digital Capabilities

    COVID-19 Response 2 Leveraging Digital Capabilities to Capture Changing Client Behaviors  Operating Income through Shinhan’s Digital Platform: KRW 830.6 bn1 (+26.6% YoY) (Unit:KRW bn) 2019 YoY Comparison 1H 2019 1H 2020 amount change % Total 1,380 656 831 174 26.6% Shinhan Bank 284 132 159 27 20.4%

  7. Slide 7: Actions on Investment Products

    Actions on Investment Products  Preemptive action on investment products under dispute (Lime, Heritage, etc.) ⊙ Decided to provide liquidity to clients impacted by suspended redemption of certain investment products by paying a portion of the principal in advance ⊙ Impact on 2Q20 Earnings: KRW 201.

  8. Slide 8: 1H20 Financial Overview

    1H20 Financial Overview (KRW bn) 1H20 1H19 YoY % 2Q20 1Q20 QoQ % Operating Income before Expenses 5,803.3 5,650.0 2.7% 3,065.2 2,738.1 11.9% Interest Income 4,022.8 3,900.2 3.1% 2,018.9 2,003.9 0.7% Non-interest Income 1,780.5 1,749.8 1.8% 1,046.3 734.2 42.5% G&A Expenses 2,469.2 2,404.7 2.7% 1,271.

  9. Slide 9: Group Net Income

    Group Net Income Group Net Income Movements (Unit: KRW bn) -22  Plus factors +31  Minus factors Non- Non- -64 +123 interest operating -5.7% Income* income* SG&A* 3,403 1,914 Interest 3,157 -296 Income* 2,919 Reimbursement related to 2,775 +120 1,806 1,914 Lime Fund: -76.9 2,367 1,806 Provision Tax

  10. Slide 10: Net Interest Income

    Net Interest Income Group Net Interest Income and NIM (KRW bn) KEY HIGHLIGHTS  Shinhan Bank  Others  Group NIM 2.05% Net Interest Income & NIM 2.10% 1.84% 2.05% 2.02% 2.06% 2.00%  SFG’s 1H20 interest income grew +3.1% YoY +3.1% - SHB’s 1H20 interest income rose by +1.9% YoY. 7,615 8,001 6,903 3,

  11. Slide 11: Non-interest income

    Non-interest income Non-interest Income (KRW bn) KEY HIGHLIGHTS  Fees & Commission  Securities, F/X trading & Derivatives  Insurance  Others Non-interest Income +1.8% 3,131  Group non-interest income increased by +1.8% YoY 1,750 1,780 due to a increase in securities, FX trading, and 2,580 2,422

  12. Slide 12: Expenses and Provisioning

    Expenses and Provisioning G&A Expense (KRW bn) KEY HIGHLIGHTS  Salary & Employee benefits  D&A  Other expenses  Cost Income ratio Cost Management 52.7% 51.3% 52.4% 47.5% 46.1% 42.6% 42.5%  Group’s G&A expenses went up by +2.7% YoY, and recorded cost-income ratio of 42.5% through cost 5,135 +2.7

  13. Slide 13: Capital and Profitability

    Capital and Profitability Capital Adequacy  SFG  SHB KEY HIGHLIGHTS BIS ratio 16.0% 15.9% 15.5% Capital Adequacy 14.9% 14.1%  Under BASEL III, Group’s Common Equity Tier 1 ratio 13.9% is estimated at 11.4%, up +0.3%p YTD. Tier1ratio 13.4% 13.3% - RWA increased by 4.4% YTD to mark 268.3Wtn - CET 1

  14. Slide 14: Contribution by Subsidiaries and by Matrix

    Contribution by Subsidiaries and by Matrix Global Investment Banking (Operating Income, KRW bn) Net Income Weight by Subsidiaries (%) +10.8%  Shinhan Card  Capital, Savings Bank  Life, Orange Life  Investment Corp.  Others 682.5 391.2 Non-Banks Non-Banks 479.1 302.8 353.1 34% 8 1 38% 32 6 12 20

  15. Slide 15: International Business

    International Business Net Income contribution from International Business (KRW bn) Asset Contribution from International Business (KRW bn)  Net income contribution (%)  Asset contribution (%)  Global net income (Group)  International assets (Group) 9.3% 8.6% 7.4% 11.7% 6.9% 7.0% 10.2% -14.7% 6.

  16. Slide 16: Responsible Financing (ESG)

    Responsible Financing (ESG) Green Finance (Unit: KRW bn) Inclusive Finance (Unit: KRW bn) Loan Investment Loan Investment 3,255 54,756 3,835 629 1,788 674 14,113 501 976 17,025 2,751 2,626 802 909 3,691 1,286 40,644 1,650 13,363 23,618 741 741 449 485 36 10,255 10,255 896 941 36 45 45 2017 2018 2019

  17. Slide 17: Supplements

    ll. Supplements

  18. Slide 18: SFG Income by Subsidiaries

    SFG Income by Subsidiaries Net Profit (before reflecting ownership) (KRW bn) Ownership 1H20 1H19 YoY % 2Q20 1Q20 QoQ % Bank 1,152.7 1,296.9 -11.1% 520.5 632.2 -17.7% Shinhan Bank 1,140.7 1,281.8 -11.0% 514.2 626.5 -17.9% 100.0% Jeju Bank 12.0 15.0 -20.2% 6.4 5.6 12.4% 75.3% Non-bank 728.0 749.7 -2.9

  19. Slide 19: Shinhan Bank Income (1)

    Shinhan Bank Income (1) (KRW bn) 1H20 1H19 YoY % 2Q20 1Q20 QoQ % Operating Income (a=b+c) 3,415.8 3,377.2 1.1% 1,740.9 1,674.9 3.9% Interest Income (b) 2,950.5 2,895.5 1.9% 1,472.3 1,478.2 -0.4% Non-interest Income (c) 465.3 481.7 -3.4% 268.6 196.7 36.6% G&A Expenses (d) 1,511.5 1,455.4 3.9% 767.9 7

  20. Slide 20: Shinhan Bank Income (2)

    Shinhan Bank Income (2) (KRW bn) 1H20 1H19 YoY % 2Q20 1Q20 QoQ % Non-interest Income (a+b+c) 465.3 481.7 -3.4% 268.6 196.7 36.6% Fee & Commission (a) 495.2 574.4 -13.8% 235.4 259.8 -9.4% Fund Fees 43.3 55.0 -21.4% 20.9 22.3 -6.1% Bancassurance Fees 24.8 28.2 -12.3% 11.3 13.4 -15.7% F/X Fees 65.5 71.

  21. Slide 21: Shinhan Card Income

    Shinhan Card Income (KRW bn) 1H20 1H19 YoY % 2Q20 1Q20 QoQ % Operating Revenue (a) 2,046.0 1,964.0 4.2% 954.5 1,091.6 -12.6% Card business 1,456.8 1,470.2 -0.9% 748.8 708.0 5.8% Installment Finance 71.2 63.4 12.3% 36.0 35.2 2.2% Lease 127.8 86.5 47.8% 65.6 62.2 5.5% Others 390.2 343.9 13.5% 104.0 28

  22. Slide 22: Life Insurance Income (Shinhan Life)

    Life Insurance Income (Shinhan Life) (KRW bn) 1H20 1H19 YoY % 2Q20 1Q20 QoQ % Premium Income 2,064.5 2,182.8 -5.4% 1,022.5 1,042.0 -1.9% Net Profit 91.6 78.0 17.5% 51.9 39.7 30.9% APE 217.4 192.0 13.2% 90.1 127.3 -29.2% Protection 213.4 184.4 15.8% 88.7 124.7 -28.8% Savings, Annuities 4.0 7.6 -47.9%

  23. Slide 23: Life Insurance Income (Orange Life)

    Life Insurance Income (Orange Life) (KRW bn) 1H20 1H19 YoY % 2Q20 1Q20 QoQ % Premium Income 1,850.4 2,142.6 -13.6% 943.7 906.7 4.1% Net Profit 137.5 147.2 -6.6% 77.9 59.5 31.0% APE 234.2 348.5 -32.8% 115.8 118.4 -2.2% Protection 145.4 193.2 -24.7% 66.8 78.6 -14.9% Savings, Annuities 88.8 155.3 -42.8

  24. Slide 24: Shinhan Investment Corp. Income

    Shinhan Investment Corp. Income (KRW bn) 1H20 1H19 YoY % 2Q20 1Q20 QoQ % Operating Revenue 493.8 473.1 4.4% 267.2 226.6 17.9% Fee & Commission 321.8 258.0 24.7% 169.5 152.4 11.2% Brokerage fees 198.4 103.0 92.6% 114.4 84.0 36.1% Financial Product fees 43.7 83.2 -47.4% 21.0 22.7 -7.4% Investment Bank

  25. Slide 25: SFG Subsidiaries Asset

    SFG Subsidiaries Asset 2020.06 (KRW bn) 2020.06 2019.12 YTD % 2020.03 QoQ % Weight % Bank 503,084.6 483,644.9 4.0% 507,556.6 -0.9% 62.9% Shinhan Bank 496,508.3 477,289.6 4.0% 501,207.3 -0.9% 62.1% Jeju Bank 6,576.2 6,355.3 3.5% 6,349.4 3.6% 0.8% Non-Bank 296,246.6 278,401.9 6.4% 291,730.9 1.8% 37.1%

  26. Slide 26: Shinhan Bank Loans & Deposit

    Shinhan Bank Loans & Deposit 2020.06 (KRW bn) 2020.06 2019.12 YTD % 2020.03 QoQ % Weight % Loans in KRW 237,212.3 225,001.9 5.4% 231,468 2.6% 100.0% Retail 119,434.2 115,874.8 3.1% 117,925 1.3% 50.3% Mortgage 52,699.1 54,604.9 -3.5% 53,202 -0.9% 22.2% Others1 66,735.1 61,269.9 8.9% 64,723 3.3% 28.1%

  27. Slide 27: Shinhan Bank Loans (Retail, Large Corporates)

    Shinhan Bank Loans (Retail, Large Corporates) Delinquency (KRW bn) 2020.06 Weight % 2019.12 YTD % 2020.03 QoQ % 2019.06 2019.09 2019.12 2020.03 2020.06 Mortgage Loans 52,860 44.3% 54,605 -3.2% 53,202 -0.6% 0.13% 0.15% 0.13% 0.14% 0.14% Personal Loans 66,501 55.7% 61,270 8.5% 64,723 2.7% 0.54% 0.58%

  28. Slide 28: Shinhan Bank SME Loans

    Shinhan Bank SME Loans Delinquency (KRW bn) 2020.06 Weight % 2019.12 YTD % 2020.03 QoQ % 2019.06 2019.09 2019.12 2020.03 2020.06 SME Total 97,758 100.0% 91,185 7.2% 93,280 4.8% 0.38% 0.42% 0.33% 0.41% 0.39% SOHO 50,429 51.6% 46,785 7.8% 47,907 5.3% 0.23% 0.26% 0.20% 0.22% 0.22% Audited SME 16,895 17

  29. Slide 29: Shinhan Card Assets and Funding

    Shinhan Card Assets and Funding 2020.06 (KRW bn) 2020.06 2019.12 YTD % 2020.03 QoQ % Weight % Earning Assets 29,283.6 30,180.3 -3.0% 29,488.3 -0.7% 100.0% Credit Purchase 13,835.3 15,184.4 -8.9% 13,847.8 -0.1% 47.2% Cash Advances 1,620.2 1,864.1 -13.1% 1,771.6 -8.5% 5.5% Card Loan 6,712.1 6,760.9 -0

  30. Slide 30: Asset Quality

    Asset Quality NPL Total Substandard Loan Loss (KRW bn) NPL Ratio Coverage Loans Estimated & Below Allowance Normal Precautionary Substandard Doubtful Ratio Loss Group1 2020.06 329,243 325,420 1,963 709 542 609 1,860 0.56% 2,761 148% 2019.12 312,243 308,565 2,040 621 404 613 1,638 0.52% 2,488 152% YT

  31. Slide 31: Provisioning and Write-Offs

    Provisioning and Write-Offs Provision for Credit Losses and Credit Cost Ratio (KRW bn) 1H20 1Q20 2Q20 FY19 1Q19 2Q19 3Q19 4Q19 Shinhan Bank1 336.2 96.8 239.3 284.3 75.9 135.0 64.4 9.0 Retail 96.6 47.6 49.0 217.2 52.8 57.9 53.3 53.3 Corporate 239.5 49.2 190.3 67.0 23.1 77.1 11.2 -44.3 Shinhan Card 26

Shinhan Financial Group — 1H 2020 Earnings Presentation on 6ix