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

Shinhan Financial — Q3 2020 Earnings Presentation

31 slides from Shinhan Financial's earnings presentation, Oct 28, 2020

  1. Slide 1: Business Results 3Q 2020

    SHG One Shinhan aes dz Business Results 3Q 2020 2 «€ a { 2 =e © a 2 * é d 3 ’ % \ a % ey ( Se =4] | | F.Z.E.5.H @ 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. 3Q20 Result Highlights II. Supplements

  4. Slide 4: I. 3Q20 Result Highlights

    Il. 3Q20 Result Highlights

  5. Slide 5: Capital Management

    Capital Management Capital Management Strategy with a Focus on Profitability(ROE and ROA)  Pursuing optimal growth through effective RWA management ⊙ Improving profitability via Investment Banking operations(GIB1, GMS2) ⇒ Operating income of GIB and GMS businesses went up by 127.3Wbn(+24%) and 264.

  6. Slide 6: CET1 Movement

    CET1 Movement Capital Ratio Targets Set to Consider Both Sustainable Growth and Dividend Resources  Reached CET1 target of 12.0%, 89bp improvement YTD (Not reflecting preemptive adoption of BASEL III credit risk factors)  Capital allocated for business development (RWA) marks 76bps, while AOCI and

  7. Slide 7: 3Q20 Financial Overview

    3Q20 Financial Overview (KRW bn) 3Q20(YTD) 3Q19(YTD) YoY % 3Q20 2Q20 QoQ % Operating Income before Expenses 8,756.7 8,514.9 2.8% 2,952.8 3,065.8 -3.7% Interest Income 6,044.7 5,928.2 2.0% 2,022.0 2,018.9 0.2% Non-interest Income 2,711.9 2,586.7 4.8% 930.9 1,046.9 -11.1% G&A Expenses 3,725.4 3,630.4

  8. Slide 8: Group Net Income

    Group Net Income Group Net Income Movements (Unit: KRW bn)  Plus factors +73 -95  Minus factors 1.9% +125 Non- operating SG&A* Non- income* -303 3,403 +117 interest 3,157 +138 2,950 Interest Income* 2,919 2,896 2,775 2,896 2,950 Income* Provision Tax and for credit others 2,367 losses* FY15 FY16 F

  9. Slide 9: Net Interest Income

    Net Interest Income Group Net Interest Income and NIM (KRW bn) KEY HIGHLIGHTS  Bank  Non-bank  Group NIM 2.03% Net Interest Income & NIM 2.10% 1.82% 2.05% 2.06% 2.02% 2.00%  SFG’s YTD interest income continued growth (+2.0% YoY) +2.0% - Bank and Non-bank interest income rose by 0.8%, 5.3% YoY, 7

  10. Slide 10: 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 +4.8% 3,131  Group non-interest income 3Q20(YTD) increased by 2,587 2,712 4.8% YoY due to a increase in fees & commissions, 2,580 2,42

  11. Slide 11: Expenses and Provisioning

    Expenses and Provisioning G&A Expense (KRW bn) KEY HIGHLIGHTS  Salary & Employee benefits  D&A  Other expenses  Cost Income ratio 52.7% 51.3% 52.4% Cost Management 47.5% 42.6% 42.5% 46.1%  Group’s G&A expenses for 3Q20(YTD) went up by 2.6% YoY, and recorded cost-income ratio of 42.5% +2.6% 5,13

  12. Slide 12: Capital and Profitability

    Capital and Profitability Capital Adequacy  SFG  SHB KEY HIGHLIGHTS BIS ratio 18.8% 1 16.0% 15.9% Capital Adequacy 1 15.9%  Under BASEL III, Group’s Common Equity Tier 1 ratio 14.9% is estimated at 12.0%, up 0.9%p YTD. 13.9% Tier1 ratio - When reflecting preemptive adoption of BASEL III 1 16.0% c

  13. Slide 13: Contribution by Subsidiaries and by Matrix

    Contribution by Subsidiaries and by Matrix Global Investment Banking (Operating Income, KRW bn) Net Income Weight by Subsidiaries (%) +24.4%  Shinhan Card  Capital, Savings Bank  Life, Orange Life  Investment Corp.  Others 682.5 649.4 Non-Banks Non-Banks 479.1 522.0 302.8 34% 8 1 41% 6 1 6 13 3

  14. Slide 14: 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) 10.1%  International assets (Group) 7.4% 8.4% 6.9% 7.0% 11.7% 10.3% -16.2% 6

  15. Slide 15: Digital Transformation (DT)

    Digital Transformation (DT) Digital Revenue Creation Digital Cost Efficiency Operating Income before Expenses Costs Saved via DT (Unit: KRW bn) via Digital Channels (Unit: KRW bn) +39.4% +32.7%  DT Contribution(%) 11.6% Front Middle Back 9.5% 192 904 7.2% 26 4.3% 145 4.0% 649 73 9 63 343 61 59 12 2

  16. Slide 16: Responsible Financing (ESG)

    Responsible Financing (ESG) Green Finance (Unit: KRW bn) Inclusive Finance (Unit: KRW bn) Loan Investment Loan Investment 3,535 2,367 62,264 4,792 909 21,621 1,101 1,081 976 17,025 2,751 2,626 802 909 3,691 40,644 1,650 1,286 13,363 23,618 741 741 449 485 896 36 10,255 10,255 45 941 36 45 2017 2018

  17. Slide 17: II. Supplements

    ll. Supplements

  18. Slide 18: SFG Income by Subsidiaries

    SFG Income by Subsidiaries Net Profit (before reflecting ownership) (KRW bn) Ownership 3Q20(YTD) 3Q19(YTD) YoY % 3Q20 2Q20 QoQ % Bank 1,780.8 1,997.2 -10.8% 628.2 520.5 20.7% Shinhan Bank 1,765.0 1,976.3 -10.7% 624.4 514.2 21.4% 100.0% Jeju Bank 15.8 21.0 -24.6% 3.8 6.4 -40.1% 75.3% Non-bank 1,267.3

  19. Slide 19: Shinhan Bank Income (1)

    Shinhan Bank Income (1) (KRW bn) 3Q20(YTD) 3Q19(YTD) YoY % 3Q20 2Q20 QoQ % Operating Income (a=b+c) 5,110.9 5,132.5 -0.4% 1,695.1 1,740.9 -2.6% Interest Income (b) 4,428.9 4,393.4 0.8% 1,478.4 1,472.3 0.4% Non-interest Income (c) 682.0 739.1 -7.7% 216.7 268.6 -19.3% G&A Expenses (d) 2,259.2 2,213.7

  20. Slide 20: Shinhan Bank Income (2)

    Shinhan Bank Income (2) (KRW bn) 3Q20(YTD) 3Q19(YTD) YoY % 3Q20 2Q20 QoQ % Non-interest Income (a+b+c) 682.0 739.1 -7.7% 216.7 268.6 -19.3% Fee & Commission (a) 732.0 847.2 -13.6% 236.8 235.4 0.6% Fund Fees 66.2 83.7 -20.9% 23.0 20.9 9.7% Bancassurance Fees 35.1 43.0 -18.3% 10.3 11.3 -8.8% F/X Fees

  21. Slide 21: Shinhan Card Income

    Shinhan Card Income (KRW bn) 3Q20(YTD) 3Q19(YTD) YoY % 3Q20 2Q20 QoQ % Operating Revenue (a) 2,963.5 2,989.4 -0.9% 917.5 954.5 -3.9% Card business 2,164.4 2,207.4 -1.9% 707.6 748.8 -5.5% Installment Finance 108.3 99.2 9.2% 37.1 36.0 3.1% Lease 197.8 135.3 46.2% 70.0 65.6 6.6% Others 493.0 547.5 -9.9

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

    Life Insurance Income (Shinhan Life) (KRW bn) 3Q20(YTD) 3Q19(YTD) YoY % 3Q20 2Q20 QoQ % Premium Income 3,085.9 3,247.4 -5.0% 1,021.4 1,022.5 -0.1% Net Profit 171.3 109.8 56.0% 79.7 51.9 53.4% APE 310.0 292.2 6.1% 92.6 90.1 2.8% Protection 304.8 282.5 7.9% 91.4 88.7 3.0% Savings, Annuities 5.2 9.7 -4

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

    Life Insurance Income (Orange Life) (KRW bn) 3Q20(YTD) 3Q19(YTD) YoY % 3Q20 2Q20 QoQ % Premium Income 2,941.6 3,127.4 -5.9% 1,091.2 943.7 15.6% Net Profit 213.3 211.6 0.8% 75.8 77.9 -2.7% APE 407.1 474.1 -14.1% 172.8 115.8 49.3% Protection 228.1 274.6 -16.9% 82.7 66.8 23.7% Savings, Annuities 179.0

  24. Slide 24: Shinhan Investment Corp. Income

    Shinhan Investment Corp. Income (KRW bn) 3Q20(YTD) 3Q19(YTD) YoY % 3Q20 2Q20 QoQ % Operating Revenue 855.9 697.3 22.7% 362.2 267.2 35.5% Fee & Commission 536.9 373.3 43.8% 215.1 169.5 26.9% Brokerage fees 341.3 151.1 125.8% 142.9 114.4 24.9% Financial Product fees 66.6 101.3 -34.3% 22.9 21.0 8.7% In

  25. Slide 25: SFG Subsidiaries Asset

    SFG Subsidiaries Asset 2020.09 (KRW bn) 2020.09 2019.12 YTD % 2020.06 QoQ % Weight % Bank 512,097.6 483,644.9 5.9% 503,084.6 1.8% 62.4% Shinhan Bank 505,487.8 477,289.6 5.9% 496,508.3 1.8% 61.6% Jeju Bank 6,609.8 6,355.3 4.0% 6,576.2 0.5% 0.8% Non-Bank 308,093.3 278,401.9 10.7% 296,246.6 4.0% 37.6%

  26. Slide 26: Shinhan Bank Loans & Deposit

    Shinhan Bank Loans & Deposit 2020.09 2019.12 YTD % 2020.06 QoQ % 2020.09 (KRW bn) Weight % Loans in KRW 242,284 225,002 7.7% 237,212 2.3% 100.0% Retail 120,984 115,875 4.4% 119,434 1.3% 49.9% Mortgage 52,353 54,605 -4.1% 52,699 -0.6% 21.6% Others1 68,631 61,270 12.0% 66,735 3.1% 28.3% Corporate 121,

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

    Shinhan Bank Loans (Retail, Large Corporates) Delinquency (KRW bn) 2020.09 Weight % 2019.12 YTD % 2020.06 QoQ % 2019.09 2019.12 2020.03 2020.06 2020.09 Mortgage Loans 52,353 43.3% 54,605 -4.1% 52,699 -0.7% 0.15% 0.13% 0.14% 0.14% 0.12% Personal Loans 68,631 56.7% 61,270 12.0% 66,735 2.8% 0.58% 0.43%

  28. Slide 28: Shinhan Bank SME Loans

    Shinhan Bank SME Loans Delinquency (KRW bn) 2020.09 Weight % 2019.12 YTD % 2020.06 QoQ % 2019.09 2019.12 2020.03 2020.06 2020.09 SME Total 101,580 100.0% 91,185 11.4% 97,758 3.9% 0.42% 0.33% 0.41% 0.39% 0.32% SOHO 52,680 51.9% 46,785 12.6% 50,429 4.5% 0.26% 0.20% 0.22% 0.22% 0.18% Audited SME 17,287

  29. Slide 29: Shinhan Card Assets and Funding

    Shinhan Card Assets and Funding 2020.09 (KRW bn) 2020.09 2019.12 YTD % 2020.06 QoQ % Weight % Earning Assets 30,631.6 30,180.3 1.5% 29,283.6 4.6% 100.0% Credit Purchase 14,739.9 15,184.4 -2.9% 13,835.3 6.5% 48.1% Cash Advances 1,578.0 1,864.1 -15.3% 1,620.2 -2.6% 5.2% Card Loan 7,020.1 6,760.9 3.8%

  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 2020.09 334,412 330,142 2,458 728 502 582 1,812 0.54% 2,740 151% 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) 3Q20(YTD) 1Q20 2Q20 3Q20 FY19 1Q19 2Q19 3Q19 4Q19 Shinhan Bank1 454.3 96.8 239.3 118.1 284.3 75.9 135.0 64.4 9.0 Retail 154.8 47.6 49.0 58.2 217.2 52.8 57.9 53.3 53.3 Corporate 299.4 49.2 190.3 59.9 67.0 23.1 77.1

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