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

Shinhan Financial — FY2020 Earnings Presentation

31 slides from Shinhan Financial's earnings presentation, Feb 5, 2021

  1. Slide 1: Business Results FY 2020

    SHG One Shinhan Business Results FY 2020 @ 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. FY20 Result Highlights II. Supplements

  4. Slide 4: I. FY20 Result Highlights

    l. FY20 Result Highlights = \

  5. Slide 5: Core Net Income Intact

    Core Net Income Intact Growth in recurring net income while taking preemptive actions to minimize uncertainty  Preemptive Actions Taken ⊙ Reflected losses of 267.5Wbn related to investment products and overseas assets in 4Q20 in accordance with 3rd-party due diligence - SHB 69.2Wbn(Lime CI Fund, et

  6. Slide 6: FY20 Financial Overview

    FY20 Financial Overview (KRW bn) FY20 FY19 YoY % 4Q20 3Q20 QoQ % Operating Income before Expenses 11,532.9 11,131.7 3.6% 2,776.2 2,952.8 -6.0% Interest Income 8,155.1 8,001.0 1.9% 2,110.3 2,022.0 4.4% Non-interest Income 3,377.8 3,130.7 7.9% 665.8 930.9 -28.5% G&A Expenses 5,212.5 5,134.7 1.5% 1,487

  7. Slide 7: Group Net Income

    Group Net Income Group Net Income Movements (Unit: KRW bn) Non-  Plus factors 0.3% Interest Income*  Minus factors -41 Non- -78 3,403 3,415 Interest +247 Operating SG&A* Income* Income* 3,157 2,919 Tax and 2,775 +154 -440 others 2,367 3,415 3,403 +168 Provision for credit losses* FY15 FY16 FY17 FY

  8. Slide 8: Net Interest Income

    Net Interest Income Group Net Interest Income and NIM (KRW bn) KEY HIGHLIGHTS  Bank  Non-bank  Group NIM Net Interest Income & NIM 2.05% 2.02% 2.06% 2.10% 2.00% 1.80%  Despite low interest rate environment, SFG saw continued growth in interest income (+1.9% YoY) +1.9% - Interest income from both

  9. Slide 9: Non-interest income

    Non-interest income Non-interest Income (KRW bn) KEY HIGHLIGHTS  Fees & Commission  Securities, F/X trading & Derivatives  Insurance  Others +7.9% Non-interest Income 3,131 3,378  Group non-interest income increased by 7.9% YoY due 1,124 to a increase in fees & commissions, securities, FX 2,580

  10. Slide 10: 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% 46.1% 45.2%  Group’s G&A expenses for FY20 went up by +1.5% 1.5% YoY, and recorded cost-income ratio of 45.2% 5,213 (-0.9%p Y

  11. Slide 11: Capital and Profitability

    Capital and Profitability Capital Adequacy  SFG  SHB KEY HIGHLIGHTS BIS ratio 18.5% Capital Adequacy 16.0% 15.9% 15.8%  Under BASEL III, Group’s Common Equity Tier 1 ratio is 14.9% estimated at 11.7%, up 0.6%p YTD. 13.9% Tier1 ratio - When reflecting early adoption of the revised BASEL III 15.9%

  12. Slide 12: Contribution by Subsidiaries and by Matrix

    Contribution by Subsidiaries and by Matrix Net Income Weight by Subsidiaries (%) +32.8% Global Investment Banking (Operating Income)  Shinhan Card  Capital, Savings Bank  Life, Orange Life (KRW bn) 906.3  Investment Corp.  Others 682.5 479.1 Non-Banks Non-Banks 302.8 FY17 FY18 FY19 FY20 34% 8 1

  13. Slide 13: Overseas Business

    Overseas Business Net Income contribution from Overseas Business (KRW bn) Asset Contribution from Overseas Business (KRW bn)  Net income contribution (%)  Asset contribution (%)  Global net income (Group)  Overseas assets (Group) 11.7% 10.3% 10.0% 7.2% 7.5% 6.9% 7.0% 6.0% -14.0% 6.3% 6.3% 43,495

  14. Slide 14: Digital Transformation (DT)

    Digital Transformation (DT) Digital Revenue Creation Digital Cost Efficiency Operating Income before Expenses Costs Saved via DT1 via Digital Channels (Unit: KRW bn) +38.3% +38.7%  DT Contribution(%) Front Middle Back 12.7 274 11.1 9.5 9.2 1,224 38 80 197 4.3 73 353 13 885 61 59 11 13 94 328 52 282

  15. Slide 15: Sustainability Initiative (ESG)

    Sustainability Initiative (ESG) Zero Carbon Drive - SFG’s new climate initiative ● Reduce 38.6% reduction in carbon emissions of the Group's asset portfolio by year 2030 (net-zero emissions by 2050) ● Provide 30Wtn in green financings by 2030 (with more focus in new and renewable energy) Carbon Emis

  16. Slide 16: Responsible Financing (ESG)

    Responsible Financing (ESG) Green Finance (Unit: KRW bn) Inclusive Finance (Unit: KRW bn) Loan Investment Loan Investment 3,988 67,728 5,038 2,540 1,362 1,347 27,084 1,254 976 17,025 2,751 909 2,626 3,691 802 40,644 1,650 1,286 13,363 23,618 741 741 36 449 485 896 941 36 10,255 10,255 45 45 2017 201

  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 FY20 FY19 YoY % 4Q20 3Q20 QoQ % Bank 2,095.3 2,357.1 -11.1% 314.5 628.2 -49.9% Shinhan Bank 2,077.8 2,329.2 -10.8% 312.7 624.4 -49.9% 100.0% Jeju Bank 17.5 27.9 -37.3% 1.7 3.8 -54.8% 75.3% Non-bank 1,501.1 1,337.6

  19. Slide 19: Shinhan Bank Income (1)

    Shinhan Bank Income (1) (KRW bn) FY20 FY19 YoY % 4Q20 3Q20 QoQ % Operating Income (a=b+c) 6,796.8 6,757.0 0.6% 1,685.9 1,695.1 -0.5% Interest Income (b) 5,927.6 5,871.7 1.0% 1,498.6 1,478.4 1.4% Non-interest Income (c) 869.3 885.3 -1.8% 187.3 216.7 -13.6% G&A Expenses (d) 3,202.9 3,142.4 1.9% 943.8

  20. Slide 20: Shinhan Bank Income (2)

    Shinhan Bank Income (2) (KRW bn) FY20 FY19 YoY % 4Q20 3Q20 QoQ % Non-interest Income (a+b+c) 869.3 885.3 -1.8% 187.3 216.7 -13.6% Fee & Commission (a) 987.0 1,117.3 -11.7% 254.9 236.8 7.7% Fund Fees 88.5 109.3 -19.0% 22.3 23.0 -3.0% Bancassurance Fees 45.1 56.8 -20.5% 10.0 10.3 -2.7% F/X Fees 142.3

  21. Slide 21: Shinhan Card Income

    Shinhan Card Income (KRW bn) FY20 FY19 YoY % 4Q20 3Q20 QoQ % Operating Revenue (a) 4,102.3 3,894.6 5.3% 1,138.8 917.5 24.1% Card business 3,039.2 2,953.5 2.9% 874.8 707.6 23.6% Installment Finance 147.5 134.8 9.4% 39.2 37.1 5.7% Lease 270.9 187.4 44.5% 73.0 70.0 4.3% Others 644.8 619.0 4.2% 151.8 10

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

    Life Insurance Income (Shinhan Life) (KRW bn) FY20 FY19 YoY % 4Q20 3Q20 QoQ % Premium Income 4,085.2 4,299.3 -5.0% 999.3 1,021.4 -2.2% Net Profit 177.8 123.9 43.6% 6.6 79.7 -91.8% APE 401.9 401.5 0.1% 91.9 92.6 -0.8% Protection 395.3 389.7 1.5% 90.6 91.4 -0.9% Savings, Annuities 6.6 11.9 -44.6% 1.3

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

    Life Insurance Income (Orange Life) (KRW bn) FY20 FY19 YoY % 4Q20 3Q20 QoQ % Premium Income 3,854.7 4,079.1 -5.5% 913.1 1,091.2 -16.3% Net Profit 279.3 271.5 2.9% 66.0 75.8 -13.0% APE 519.6 584.5 -11.1% 112.6 172.8 -34.9% Protection 309.0 354.1 -12.7% 80.9 82.7 -2.1% Savings, Annuities 210.6 230.4 -

  24. Slide 24: Shinhan Investment Corp. Income

    Shinhan Investment Corp. Income (KRW bn) FY20 FY19 YoY % 4Q20 3Q20 QoQ % Operating Revenue 1,220.0 882.9 38.2% 364.1 362.2 0.5% Fee & Commission 740.6 508.8 45.6% 203.7 215.1 -5.3% Brokerage fees 459.5 200.3 129.3% 118.2 142.9 -17.3% Financial Product fees 87.0 126.7 -31.4% 20.4 22.9 -10.6% Investme

  25. Slide 25: SFG Subsidiaries Asset

    SFG Subsidiaries Asset 2020.12 (KRW bn) 2020.12 2019.12 YTD % 2020.09 QoQ % Weight % Bank 523,700.1 483,644.9 8.3% 512,097.6 2.3% 62.8% Shinhan Bank 517,111.1 477,289.6 8.3% 505,487.8 2.3% 62.1% Jeju Bank 6,589.0 6,355.3 3.7% 6,609.8 -0.3% 0.7% Non-Bank 309,638.6 278,401.9 11.2% 308,093.3 0.4% 37.2%

  26. Slide 26: Shinhan Bank Loans & Deposit

    Shinhan Bank Loans & Deposit 2020.12 (KRW bn) 2020.12 2019.12 YTD % 2020.09 QoQ % Weight % Loans in KRW 248,808 225,002 10.6% 242,284 2.9% 100.0% Retail 126,262 115,875 9.0% 120,984 4.6% 50.7% Mortgage 53,355 54,605 -2.3% 52,353 1.8% 21.4% Others1 72,907 61,270 19.0% 68,631 7.0% 29.3% Corporate 122,

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

    Shinhan Bank Loans (Retail, Large Corporates) Delinquency (KRW bn) 2020.12 Weight % 2019.12 YTD % 2020.09 QoQ % 2019.12 2020.03 2020.06 2020.09 2020.12 Mortgage Loans 53,355 42.3% 54,605 -2.3% 52,353 1.9% 0.13% 0.14% 0.14% 0.12% 0.10% Personal Loans 72,907 57.7% 61,270 19.0% 68,631 6.2% 0.43% 0.52%

  28. Slide 28: Shinhan Bank SME Loans

    Shinhan Bank SME Loans Delinquency (KRW bn) 2020.12 Weight % 2019.12 YTD % 2020.09 QoQ % 2019.12 2020.03 2020.06 2020.09 2020.12 SME Total 103,995 100.0% 91,185 14.0% 101,580 2.4% 0.33% 0.41% 0.39% 0.32% 0.30% SOHO 54,387 52.3% 46,785 16.3% 52,680 3.2% 0.20% 0.22% 0.22% 0.18% 0.15% Audited SME 17,09

  29. Slide 29: Shinhan Card Assets and Funding

    Shinhan Card Assets and Funding FY20 (KRW bn) 2020.12 2019.12 YTD % 2020.09 QoQ % Weight % Earning Assets 31,963.9 30,180.3 5.9% 30,631.6 4.3% 100.0% Credit Purchase 14,602.3 15,184.4 -3.8% 14,739.9 -0.9% 45.7% Cash Advances 1,571.0 1,864.1 -15.7% 1,578.0 -0.4% 4.9% Card Loan 7,371.7 6,760.9 9.0% 7,

  30. Slide 30: Asset Quality

    Asset Quality NPL Total Substandard Loan Loss (KRW bn) NPL Ratio Coverage Loans1 Estimated & Below Allowance Normal Precautionary Substandard Doubtful Ratio Loss Group1 2020.12 341,897 337,753 2,238 906 367 633 1,906 0.56% 2,833 149% 2019.12 312,243 308,565 2,040 621 404 613 1,638 0.52% 2,488 152% Y

  31. Slide 31: Provisioning and Write-Offs

    Provisioning and Write-Offs Provision for Credit Losses and Credit Cost Ratio (KRW bn) FY20 1Q20 2Q20 3Q20 4Q20 FY19 1Q19 2Q19 3Q19 4Q19 Shinhan Bank1 592.4 96.8 239.3 118.1 138.1 284.3 75.9 135.0 64.4 9.0 Retail 210.4 47.6 49.0 58.2 55.5 217.2 52.8 57.9 53.3 53.3 Corporate 382.0 49.2 190.3 59.9 82.

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