Shinhan Financial Group Co., Ltd. · KRX:055550
Shinhan Financial — FY2021 Earnings Presentation
37 slides from Shinhan Financial's earnings presentation, Feb 9, 2022
Slide 1: Business Results
We believe finance should be SHG + Friendly, ee ore Secure, NYSE M Creative @ Shinhan Financial Group
Slide 2: Contents
Contents I. FY21 Result Highlights II. 2022 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
Slide 3: I. FY21 Result Highlights
l. FY21 Result Highlights
Slide 4: Group Net Income
Group Net Income Group Net Income (KRW bn) Movements (KRW bn) 17.7% Plus factors Minus factors -193 +260 4,019 Non- -531 +394 -225 +898 Non- Operating 3,403 3,415 Interest Income* Tax and 4,019 3,157 Income* others 2,919 SG&A* Provision for credit 2,775 losses* 3,415 Interest Income* FY16 FY17 F
Slide 5: Preventive measures
Uncertainties Alleviated Restoring customer trust Recovering investor confidence with through private reconciliation + by removing uncertainty 2019 2020 2021 2022~ Products under dispute (Lime AM etc.) All investment products External factors • Dispute settlement process is carried out • Private rec
Slide 6: Net Interest Income
Net Interest Income Group Net Interest Income and NIM (KRW bn) Interest Rate & NIM Movement 1 (%) Bank Non-bank Group NIM Bank NIM 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 2.02% 2.06% 2.10% 2.00% BOK Base rate 0.50 0.50 0.50 0.50 0.75 1.00 1.80% 1.81% 1.62% 1.56% 1.54% 3-y T Bond yield (average) 0.84 0
Slide 7: Non-interest income
Non-interest income Non-interest Income (KRW bn) Details of Non-interest Income Fees & Commission Securities, F/X trading & Derivatives (KRW bn) FY21 FY20 YoY % 4Q21 3Q21 QoQ % Insurance Others Non-Interest Income 3,638.1 3,377.8 7.7% 815.7 808.0 0.9% +7.7% Fees & Commission 2,675.0 2,382.9
Slide 8: Expenses and Provisioning
Expenses and Provisioning G&A Expense (KRW bn) Details of G&A Expense Salary & Employee benefits D&A Other expenses Cost Income ratio (KRW bn) FY21 FY20 YoY% 4Q21 3Q21 QoQ% 51.3% 52.4% 47.5% 46.1% G&A Expense 5,743.1 5,212.5 10.2% 1,810.9 1,296.2 39.7% 45.2% 45.3% Salary & Employee +10.2% 3,
Slide 9: Capital and Profitability
Capital and Profitability Capital Adequacy Group BIS Ratio SFG SHB 18.5% (KRW bn) 2021.12(e) 2020.12 YTD % 2021.9 QoQ % BIS ratio 18.2% 15.9% 16.1% Risk weighted assets 271,861 252,321 7.7% 267,081 1.8% 15.7% Capital 43,722 39,709 10.1% 44,031 -0.7% 13.9% 15.9% 15.6% CET1 35,338 32,462 8.9% 35,8
Slide 10: Contribution by Subsidiaries and by Matrix
Contribution by Subsidiaries and by Matrix Global Investment Banking +12.6% Net Income Weight by Subsidiaries (%) (Operating Income, KRW bn) 1,031 916 Group 683 Non-Bank Card, Savings Bank 479 Insurance 303 Banks Non-Banks Others Investment Corp, FY17 FY18 FY19 FY20 FY21 58% 42% 1% Capital, As
Slide 11: Digital, Digital to Value (1)
Digital, Digital to Value (1) MAU Growth driven by DT Innovation Accelerating Digital Transformation Reducing Cost with Digital Technology MAU Trend of SFG’s Main Platforms1 Digital Coverage2 Digital Cost Efficiency3 (ten thousand users) SHB(SOL) SHC(SHpLay) Shinhan Card 59.5 (KRW bn) ■ Front ■
Slide 12: Digital, Digital to Value (2)
Digital, Digital to Value (2) Investing in the Digital Sector 3rd-party Alliances Securing Digital Talents DT Investment Trend Fintech and Inter-industry Partnerships Digital Manpower in Main Subsidiaries No. of Invested Companies (KRW bn) Fintech ICT Lifestyle Distribution SHB SHC (pe
Slide 13: Sustainability Initiative (ESG)
Sustainability Initiative (ESG) Zero Carbon Drive Innovative Finance Managing Financed Emissions4 Green Finance (KRW tn) Innovative Finance (KRW tn) SBTi 2℃, 1.5℃ SDA Scenario5 Provide KRW 30tn in Green Finance (2020-2030) 46million tCO2eq ■ Others ■ Green Investments ■ Innovative loans 27.2 Green F
Slide 14: Strategic Initiatives and its Overview
Strategic Initiatives and its Overview Fundamental Resilience Eco-system Sustainability Human-talent 2020s Mid-term Financial FIRST Value Optimal Growth ROE 10%+ Growth from Non- Target #1 Customer’s bank, Non-interest, Customers Shareholders Focus on Shareholder investment return return Corporate M
Slide 15: II. 2022 Outlook
lI. 2022 Outlook 15
Slide 16: 2022 Business Outlook
2022 Business Outlook Opportunities and Challenges foreseen in 2022 • Improved NIM and NII as interest rates rise Tailwinds • Robust loan growth with an SME-focus • Boosted sales in the consumer finance sector (credit cards, etc.) thanks to recovery in private consumption • Deteriorated asset qualit
Slide 17: Interest Income Outlook
Interest Income Outlook (KRW tn, %) Robust interest income growth is expected due to the previous year’s base effect. Additional NII growth could come from base-rate hike(s) and loan growth in 2022. NIM 2021 NIM 2022 (%) (%) Period end 25bp movement in base rate = ±3bp movement in NIM Period avg. (M
Slide 18: Boosted Loss Absorption Capacity
Boosted Loss Absorption Capacity Securing sufficient buffer against the possibility of deterioration in asset quality due to increased market volatility (KRW bn) 2020 2021 Provisioning 19.2 COVID-19 63.4 22.3 394.4 83.0 Other Increased Provisioning for 104.6 Provisioning for SHC credit provisioning
Slide 19: III. Supplements
llI. Supplements
Slide 20: FY21 Financial Overview
FY21 Financial Overview (KRW bn) FY21 FY20 4Q21 3Q21 YoY YoY % QoQ QoQ % Operating Income before Expenses 12,691.6 11,532.9 1,158.7 10.0% 3,214.4 3,106.3 108.1 3.5% Interest Income 9,053.5 8,155.1 898.4 11.0% 2,398.7 2,298.3 100.4 4.4% Non-interest Income 3,638.1 3,377.8 260.3 7.7% 815.7 808.0 7.7 0
Slide 21: SFG Income by Subsidiaries
SFG Income by Subsidiaries Net Profit (before reflecting ownership) (KRW bn) Ownership FY21 FY20 YoY % 4Q21 3Q21 QoQ % Bank 2,512.8 2,095.3 19.9% 361.1 766.8 -52.9% Shinhan Bank 2,494.4 2,077.8 20.0% 364.2 759.3 -52.0% 100.0% Jeju Bank 18.4 17.5 5.3% -3.1 7.5 n.a. 75.3% Non-bank 1,852.4 1,501.1 23.4
Slide 22: Financial Highlights by Subsidiaries
Financial Highlights by Subsidiaries Shareholder's Profit for the (KRW bn) Ownership Total Assets1 ROA ROE Equity Period2 Bank 559,566.1 29,751.6 2,512.8 Shinhan Bank 100.0% 552,554.8 29,235.6 2,494.4 0.55% 8.75% Jeju Bank 75.3% 7,011.3 515.9 18.4 0.27% 3.54% Non-bank 326,467.5 19,685.8 1,852.4 Cons
Slide 23: Shinhan Bank Income (1)
Shinhan Bank Income (1) (KRW bn) FY21 FY20 YoY % 4Q21 3Q21 QoQ % Operating Income (a=b+c) 7,289.4 6,796.8 7.2% 1,903.9 1,839.4 3.5% Interest Income (b) 6,611.8 5,927.6 11.5% 1,775.4 1,670.2 6.3% Non-interest Income (c) 677.6 869.3 -22.0% 128.5 169.3 -24.1% G&A Expenses (d) 3,361.0 3,202.9 4.9% 1,042
Slide 24: Shinhan Bank Income (2)
Shinhan Bank Income (2) (KRW bn) FY21 FY20 YoY % 4Q21 3Q21 QoQ % Non-interest Income (a+b+c) 677.6 869.3 -22.0% 128.5 169.3 -24.1% Fee & Commission (a) 977.7 987.0 -0.9% 239.3 243.0 -1.5% Fund Fees 92.7 88.5 4.7% 20.8 23.9 -13.1% Bancassurance Fees 30.5 45.1 -32.5% 6.7 7.8 -13.7% F/X Fees 154.9 142.
Slide 25: Shinhan Card Income
Shinhan Card Income (KRW bn) FY21 FY20 YoY % 4Q21 3Q21 QoQ % Operating Revenue (a) 4,375.4 4,100.2 6.7% 1,066.4 1,174.4 -9.2% Card business 2,862.3 2,848.6 0.5% 724.4 720.1 0.6% Installment Finance 158.7 147.5 7.6% 41.4 40.3 2.8% Lease 399.3 292.7 36.4% 111.2 102.6 8.4% Others 955.1 811.4 17.7% 189.
Slide 26: Shinhan Life Insurance Income
Shinhan Life Insurance Income (KRW bn, %) FY21 FY20 YoY % 4Q21 3Q21 QoQ % APE1 756.7 921.6 -17.9% 170.3 227.4 -25.1% Protection 577.8 704.4 -18.0% 143.0 170.9 -16.3% Savings, Annuities 178.9 217.2 -17.6% 27.3 56.4 -51.7% Net Profit 2 391.6 457.1 -14.3% -10.2 92.8 n.a Premium Income 8,282.4 9,637.3 -
Slide 27: Shinhan Investment Corp. Income
Shinhan Investment Corp. Income (KRW bn) FY21 FY20 YoY % 4Q21 3Q21 QoQ % Operating Revenue 1,574.9 1,220.0 29.1% 389.8 339.3 14.9% Fee & Commission 848.5 740.6 14.6% 202.6 212.2 -4.5% Brokerage fees 510.4 459.5 11.1% 107.3 115.7 -7.3% Financial Product fees 83.8 87.0 -3.7% 19.7 21.1 -6.6% Investment
Slide 28: SFG Subsidiaries Asset
SFG Subsidiaries Asset (KRW bn) 2021.12 2020.12 YTD % 2021.09 QoQ % 2021.12 Weight % Bank 559,566.1 523,700.1 6.8% 548,791.8 2.0% 63.2% Shinhan Bank 552,554.8 517,111.1 6.9% 541,905.2 2.0% 62.4% Jeju Bank 7,011.3 6,589.0 6.4% 6,886.6 1.8% 0.8% Non-Bank 326,467.5 309,629.3 5.4% 325,301.5 0.4% 36.8% C
Slide 29: Shinhan Bank Loans & Deposits
Shinhan Bank Loans & Deposits 2021.12 (KRW bn) 2021.12 2020.12 YTD % 2021.09 QoQ % Weight % Loans in KRW 271,148.4 248,808.2 9.0% 263,719.7 3.0% 100.0% Retail 135,599.4 126,266.4 7.4% 130,081.3 4.4% 50.0% Mortgage 58,893.4 53,355.3 10.4% 55,436.2 6.5% 21.7% Others1 76,706.0 72,911.1 5.2% 74,645.0 2.
Slide 30: Shinhan Bank Loans (Retail, Large Corporates)
Shinhan Bank Loans (Retail, Large Corporates) Delinquency (KRW bn, %) 2021.12 Weight % 2020.12 YTD % 2021.09 QoQ % 2020.12 2021.03 2021.06 2021.09 2021.12 Mortgage Loans 58,893 43.4% 53,355 10.4% 55,436 6.2% 0.10% 0.09% 0.09% 0.09% 0.08% Personal Loans 76,706 56.6% 72,911 5.2% 74,645 2.8% 0.41% 0.41
Slide 31: Shinhan Bank SME Loans
Shinhan Bank SME Loans Delinquency (KRW bn, %) 2021.12 Weight % 2020.12 YTD % 2021.09 QoQ% 2020.12 2021.03 2021.06 2021.09 2021.12 SME Total 117,319 100.0% 103,995 12.8% 115,080 1.9% 0.30% 0.34% 0.33% 0.31% 0.26% SOHO 61,298 52.2% 54,387 12.7% 60,146 1.9% 0.15% 0.17% 0.16% 0.16% 0.14% Audited SME 18
Slide 32: Shinhan Card Assets and Funding
Shinhan Card Assets and Funding 2021.12 (KRW bn, %) 2021.12 2020.12 YTD % 2021.09 QoQ % Weight % Earning Assets 35,371.7 31,963.9 10.7% 33,967.7 4.1% 100.0% Credit Purchase 16,439.0 14,602.3 12.6% 15,438.6 6.5% 46.5% Cash Advances 1,672.7 1,571.0 6.5% 1,634.4 2.3% 4.7% Card Loan 7,653.4 7,371.7 3.8%
Slide 33: 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 2021.12 374,573 370,643 2,463 564 292 612 1,468 0.39% 2,867 195% 2020.12 340,971 337,046 2,239 686 367 633 1,686 0.49% 2,830 168% YT
Slide 34: Provisioning and Write-Offs
Provisioning and Write-Offs Provision for Credit Losses and Credit Cost Ratio (KRW bn) FY21 1Q21 2Q21 3Q21 4Q21 FY20 1Q20 2Q20 3Q20 4Q20 Shinhan Bank1 236.1 58.6 9.4 43.4 124.7 592.4 96.8 239.3 118.1 138.1 Retail 165.4 39.9 37.2 44.8 43.5 210.4 47.6 49.0 58.2 55.5 Corporate 70.7 18.7 -27.8 -1.4 81.1
Slide 35: Disclaimer and Additional Notes (1)
Disclaimer and Additional Notes (1) Please note the following: • Financial information has been prepared in accordance with the Korean IFRS (K-IFRS). • The financial figures have been derived following K-IFRS No.1109, ‘Financial instruments’ and K-IFRS No.1115, ‘Revenue from Contracts with Customers
Slide 36: Disclaimer and Additional Notes (2)
Disclaimer and Additional Notes (2) Digital Transformation (pg. 11) NOTE 1 The MAU figures are average MAU of the given period. We used Appminder (Shinhan Bank SoL, Shinhan Card Shinhan pLay) and Wiseapp (Shinhan Investment Alpha + i mobile) to measure our MAU. NOTE 2 Digital Coverage (Shinhan Bank)
Slide 37: Disclaimer and Additional Notes (3)
Disclaimer and Additional Notes (3) Sustainability Initiative (ESG) (pg. 13) NOTE 4 The methodology from the PCAF Global GHG Accounting & Reporting Standard for the Financial Industry was applied to measure the financed emissions of Shinhan Financial Group’s asset portfolio. The formula for the gene
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