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

Shinhan Financial — Q1 2023 Earnings Presentation

38 slides from Shinhan Financial's earnings presentation, Apr 27, 2023

  1. Slide 1: Business Results

    oe We believe finance should be ia Friendly, NYSE + More secure, NYSE Creative Business Results @ 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. 1Q23 Result Highlights II. 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 information may di

  4. Slide 4: 1Q23 Result Highlights

    l. 1Q23 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 +75 -110 SG&A* +5 -358 Non- Provision Operating 418 for credit +150 Non- losses* Tax and Operating Non- Income* others 1,388 Income

  6. Slide 6: [Note 1] Financial Impact of IFRS 17

    [Note 1] Financial Impact of IFRS 17 Equity IFRS 4 IFRS 17  In IFRS 17, equity is increased by 3.1Wtn to 8.3Wtn Jan. 1, 2022 Dec. 31, 2022 Jan. 1, 2022 Dec. 31, 2022  Despite market rate hikes in 2022, there were only limited equity fluctuations Equity 5.2Wtn 3.5Wtn 8.3Wtn 8.1Wtn BS Asset Asset 70

  7. Slide 7: 1Q23 Financial Overview

    1Q23 Financial Overview SFG Net Income (KRW bn)  Despite 0.9% growth in interest-bearing (KRW bn) 1Q23 1Q22 1Q23 4Q22 assets, interest income went down by  Operating Income1  Net Income YoY YoY % QoQ QoQ %  Operating Income1 Growth (%)  Net Income Growth (%) 10.0% QoQ reflecting 4bp NIM contrac

  8. Slide 8: Interest Income

    Interest Income Group Interest Income and NIM (KRW bn) Details of Interest Income  Despite 0.9% growth in interest-bearing  Bank  Non-bank  Bank NIM (%) (KRW bn) 1Q23 1Q22 YoY YoY% 1Q23 4Q22 QoQ QoQ% assets, Group interest income went down 1.62% 1.63% 10.0% QoQ reflecting 4bp NIM contraction 1.5

  9. Slide 9: [Note 2] Shinhan Bank NIM / Loans / Deposits

    [Note 2] Shinhan Bank NIM / Loans / Deposits SHB NIM Trend (%) Core Deposit Trend (%, KRW tn) Annualized NIM Quarterly NIM Monthly NIM BOK base rate  Deposits in KRW  Core Deposits  Deposit growth rate (YTD, MoM)  Core Deposit growth rate (%) 2021 2022 2023 3.50 26.5% 3.25 15.0% 12.4% 2.50 1.75

  10. Slide 10: Non-interest Income

    Non-interest Income Details of Non-interest Income Non-interest Income (KRW bn, %)  Non-interest income increased significantly  Non-interest income (KRW bn) 1Q23 1Q22 YoY YoY% 1Q23 4Q22 QoQ QoQ% QoQ due to low base effect (large one-off  Non-interest income weight (Operating income/Non-interest

  11. Slide 11: Expenses and Provisioning

    Expenses and Provisioning G&A Expense (KRW bn, %) Details of G&A Expense  G&A costs decreased by 23.6% QoQ due  G&A Expenses  CIR  CIR (excluding ERP) (KRW bn) 1Q23 1Q22 YoY YoY% 1Q23 4Q22 QoQ QoQ% to high base effect (ERP and other 47.5% seasonal costs in the previous quarter). G&A Expense 1,35

  12. Slide 12: [Note 3] Bracing for Future Uncertainties

    [Note 3] Bracing for Future Uncertainties Frontloading Provisions for Resilience (KRW bn, %) Tightened Risk Monitoring and Management on Real Estate Financings  Nominal CCR  Recurring CCR Group Real Estate-related Exposure (Balance as of end of March, 2023) ■ Recurring Provisioning ■ NPL Coverage

  13. Slide 13: [Note 4] Asset Quality

    [Note 4] Asset Quality Group Asset Quality (%) SHB Delinquency Ratio  Precautionary & Below  Substandard & Below  Precautionary & Below Coverage Ratio  NPL Coverage Ratio 0.26% 0.28% Loans 0.25% 0.24% 209% 0.22% in KRW 0.19% 195% 194% 170% 168% 151% 73% 0.33% 0.33% 72% SME 0.29% 0.30% 72% (Incl.

  14. Slide 14: SFG Income by Subsidiaries

    SFG Income by Subsidiaries NI Weight by Subsidiaries (%) Net Profit (before reflecting ownership)  Despite larger provisions set aside, SHB’s (KRW bn) net income increased YoY thanks to Group Non-Bank 1Q23 1Q22 1Q23 4Q22 balanced growth in interest and non-interest YoY YoY % QoQ QoQ % income Others

  15. Slide 15: SFG Overseas Business

    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 8.2% 8.3% 7.8% 12.1% 7.5% 11.7% 6.9% 7.0% 7.2% 11.4% 10.3% 9.8% 9.8% +8.3% 9.2% 564.6 55,174 55,

  16. Slide 16: Capital Management and Profitability

    Capital Management and Profitability BPS & EPS (KRW) Group BIS Ratio  CET1 ratio is expected to be 12.54%,  BPS  EPS (KRW bn) 2023.3 2022.3 YTD YTD % 2022.12 QoQ QoQ % down 0.25%p YTD. When excluding the 92,071 impact from the full adoption of the 88,426 Risk weighted assets 309,107 279,008 30,09

  17. Slide 17: [Note 5] CET 1 and RWA Movement

    [Note 5] CET 1 and RWA Movement CET 1 Movement (%)  Decrease  Increase  Total Non-recurring Shareholder Return 0.26 12.79 0.54 0.48 0.22 0.09 0.10 0.09 0.19 Reduced 12.54 RWA 0.05 0.27Wtn deduction due to 4.9Wtn increased CET 1 0.14Wtn Securities 0.4Wtn Market Risk 0.34% Net Income 1.39Wtn FX gai

  18. Slide 18: [Note 6] Shareholder Returns for FY2022 and FY2023

    [Note 6] Shareholder Returns for FY2022 and FY2023 Total Shareholder Return (incl. preferred shares) (%, KRW bn)  DPS(KRW)  Amount of cancelled shares / Total shares(KRW) (KRW)  Cash dividend  Share cancellations(buyback)  TSR 30.0% 29.6% 27.9% FY2022 FY2023 26.0% 26.0% 865 23.9% 300 269 287 23

  19. Slide 19: Digital, Digital to Value (1/2)

    Digital, Digital to Value (1/2) Digital Strategy Framework Key Digital Index (as of end of 1Q23) More Friendly More Secure More Creative CX Trust Expansion & Partnership More Friendly More Secure More Creative Continued growth in both ATMs with UAD functions Fostering Fintech Easier & Convenient Sec

  20. Slide 20: Digital, Digital to Value (2/2)

    Digital, Digital to Value (2/2) Creating DT Performance while Strengthening Digital Social Responsibility SFG Gross MAU  Financial MAU of SFG’s Major Monitoring and Detecting ATMs with AI-based UAD*  Non-financial Financial Platforms Suspicious Transactions - To be applied to all branches Platform

  21. Slide 21: ESG Initiatives

    ESG Initiatives CO2 Emissions (Scope1,2 / Scope3) Inclusion Finance Scope 1 + 2 Emissions Financed Emissions (Scope3) (KRW bn)  (1Q23) 1,208Wbn in Inclusive loans,  Annual emissions  1Q emissions (thousand tCO2eq)  Financed emissions (million tCO2eq)  Carbon emissions (t/Wbn) Inclusive Loans an

  22. Slide 22: Supplements

    lI. Supplements

  23. Slide 23: 1Q23 Financial Overview

    1Q23 Financial Overview (KRW bn) 1Q23 1Q22 1Q23 4Q22 YoY YoY % QoQ QoQ % Operating Income before Expenses 3,573.1 3,373.8 199.3 5.9% 3,573.1 2,820.1 753.0 26.7% Interest Income 2,540.1 2,491.1 49.0 2.0% 2,540.1 2,822.2 -282.1 -10.0% Non-interest Income 1,032.9 882.7 150.3 17.0% 1,032.9 -2.1 1,035.1

  24. Slide 24: Financial Highlights by Subsidiaries

    Financial Highlights by Subsidiaries (KRW bn) Ownership Total Assets1 Shareholder's Equity Profit for the Period2 ROA ROE Bank 591,960.0 32,373.5 934.9 Shinhan Bank 100.0% 584,744.6 31,845.9 931.5 0.77% 11.98% Jeju Bank 75.3% 7,215.4 527.7 3.3 0.19% 2.56% Non-bank 374,012.4 24,679.9 549.7 Consumer S

  25. Slide 25: Shinhan Bank Income (1)

    Shinhan Bank Income (1) (KRW bn) 1Q23 1Q22 YoY YoY % 1Q23 4Q22 QoQ QoQ % Operating Income (a=b+c) 2,264.1 2,051.4 212.7 10.4% 2,264.1 2,094.1 170.0 8.1% Interest Income (b) 2,002.6 1,852.3 150.2 8.1% 2,002.6 2,175.3 -172.8 -7.9% Non-interest Income (c) 261.6 199.1 62.5 31.4% 261.6 -81.2 342.8 n.a. G

  26. Slide 26: Shinhan Bank Income (2)

    Shinhan Bank Income (2) (KRW bn) 1Q23 1Q22 YoY YoY % 1Q23 4Q22 QoQ QoQ % Non-interest Income (a+b+c) 261.6 199.1 62.5 31.4% 261.6 -81.2 342.8 n.a. Fee & Commission (a) 236.5 265.7 -29.2 -11.0% 236.5 229.1 7.4 3.2% Fund Fees 13.0 17.5 -4.5 -25.9% 13.0 13.3 -0.3 -2.4% Bancassurance Fees 8.7 6.5 2.2 34

  27. Slide 27: Shinhan Card Income

    Shinhan Card Income (KRW bn) 1Q23 1Q22 YoY YoY % 1Q23 4Q22 QoQ QoQ % Operating Revenue (a) 1,365.0 1,151.5 213.5 18.5% 1,365.0 758.9 606.1 79.9% Card business 741.3 729.9 11.4 1.6% 741.3 716.1 25.2 3.5% Installment Finance 52.3 41.6 10.7 25.8% 52.3 57.9 -5.6 -9.6% Lease 166.4 115.3 51.0 44.3% 166.4

  28. Slide 28: Shinhan Life Insurance Income

    Shinhan Life Insurance Income (KRW bn, %) 1Q23 1Q22 YoY YoY % 1Q23 4Q22 QoQ QoQ % APE1 225.3 168.3 +57.0 +33.8% 225.3 209.3 +16.0 +7.6% Protection 217.9 150.9 +66.9 +44.4% 217.9 155.0 +62.9 +40.6% Savings, Annuities 7.4 17.4 -10.0 -57.3% 7.4 54.3 -46.9 -86.3% Total Assets 58,081.9 62,387.8 -4,305.9

  29. Slide 29: Shinhan Securities Income

    Shinhan Securities Income (KRW bn) 1Q23 1Q22 YoY YoY % 1Q23 4Q22 QoQ QoQ % Operating Revenue 340.0 349.1 -9.0 -2.6% 340.0 51.3 288.7 562.4% Fee & Commission 162.5 228.2 -65.7 -28.8% 162.5 131.7 30.8 23.3% Brokerage fees 81.4 91.9 -10.5 -11.4% 81.4 64.6 16.8 26.0% Financial Product fees 25.3 20.6 4.6

  30. Slide 30: Shinhan Capital Income

    Shinhan Capital Income (KRW bn) 1Q23 1Q22 YoY YoY % 1Q23 4Q22 QoQ QoQ % Operating Income before Expenses (a=b+c-d-e) 194.1 144.4 49.6 34.4% 194.1 90.2 103.9 115.1% Interest Income (b) 139.2 105.2 34.0 32.3% 139.2 132.8 6.3 4.8% Non-interest Income (c) 190.3 138.3 52.0 37.6% 190.3 27.8 162.5 584.2% S

  31. Slide 31: SFG Subsidiaries Asset

    SFG Subsidiaries Asset (KRW bn) 2023.3 2022.3 YTD YTD % 2022.12 QoQ QoQ % 2023.3 Weight % Bank 591,960.0 571,528.7 20,431.3 3.6% 588,633.8 3,326.2 0.6% 61.3% Shinhan Bank 584,744.6 564,393.2 20,351.5 3.6% 581,202.6 3,542.1 0.6% 60.5% Jeju Bank 7,215.4 7,135.6 79.8 1.1% 7,431.3 -215.9 -2.9% 0.7% Non-

  32. Slide 32: Shinhan Bank Loans & Deposits

    Shinhan Bank Loans & Deposits (KRW bn) 2023.3 2022.3 YTD YTD % 2022.12 QoQ QoQ % 2023.3 Weight % Loans in KRW 281,519.2 272,588.6 8,930.6 3.3% 281,380.6 138.6 0.0% 100.0% Retail 129,311.1 134,480.8 -5,169.7 -3.8% 130,626.9 -1,315.8 -1.0% 45.9% Mortgage 60,068.4 60,482.1 -413.6 -0.7% 60,156.4 -87.9 -

  33. Slide 33: Shinhan Bank Loans (Retail, Large Corporates)

    Shinhan Bank Loans (Retail, Large Corporates) Delinquency (KRW bn, %) 2023.3 Weight % 2022.3 YTD YTD % 2022.12 QoQ QoQ % 2022.3 2022.6 2022.9 2022.12 2023.3 Mortgage Loans 60,068 46.5% 60,482 -414 -0.7% 60,156 -88 -0.1% 0.08% 0.09% 0.09% 0.11% 0.14% Personal Loans 69,243 53.5% 73,999 -4,756 -6.4% 70

  34. Slide 34: Shinhan Bank SME Loans

    Shinhan Bank SME Loans Delinquency (KRW bn, %) 2023.3 Weight % 2022.3 YTD YTD % 2022.12 QoQ QoQ % 2022.3 2022.6 2022.9 2022.12 2023.3 SME Total 126,763 100.0% 119,557 7,206 6.0% 126,324 439 0.3% 0.28% 0.23% 0.25% 0.26% 0.33% SOHO 64,646 51.0% 62,303 2,343 3.8% 64,483 163 0.3% 0.15% 0.14% 0.16% 0.22%

  35. Slide 35: Shinhan Card Assets and Funding

    Shinhan Card Assets and Funding 2023.3 (KRW bn, %) 2023.3 2022.3 YTD YTD % 2022.12 QoQ QoQ % Weight % Earning Assets 38,487.0 36,181.0 2,306.1 6.4% 39,436.1 -949.1 -2.4% 100.0% Credit Purchase 17,705.1 16,626.6 1,078.5 6.5% 18,424.0 -718.8 -3.9% 46.0% Cash Advances 1,597.4 1,576.8 20.6 1.3% 1,794.1

  36. Slide 36: Asset Quality

    Asset Quality Total Substandard & Loan Loss NPL (KRW bn) NPL Ratio Loans Below Allowance Coverage Ratio Normal Precautionary Substandard Doubtful Estimated Loss Group1 2023.3 391,374 385,845 3,685 721 452 670 1,844 0.47% 3,568 194% 2022.3 379,923 375,879 2,634 507 307 597 1,410 0.37% 2,942 209% YoY

  37. Slide 37: 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 154.8 154.8 550.6 80.7 196.8 70.8 202.2 Retail 50.3 50.3 332.9 38.2 132.3 86.3 76.1 Corporate 104.6 104.6 217.7 42.5 64.5 -15.5 126.1 Shinhan Card1 1

  38. Slide 38: Additional Notes

    Additional Notes Digital Transformation (pg.19 ~ pg.20) NOTE 1 SFG Gross MAU is the sum of the MAU of Shinhan’s financial platforms and the MAU of Shinhan’s non-financial platforms. The MAU figures are based on managed data. * The MAU figures for financial platform represent the sum of MAUs of the f

Shinhan Financial Group — Q1 2023 Earnings Presentation on 6ix