Company Overview - Shinhan Financial Group Co (SHG) currently has a Zacks Rank of 2 (Buy) and an A grade for Value [3][6] - The stock has a P/E ratio of 4.89, significantly lower than the industry average P/E of 9.16 [3][6] - Over the past 52 weeks, SHG's Forward P/E has fluctuated between 4.11 and 6.79, with a median of 5.27 [3] Valuation Metrics - SHG has a PEG ratio of 0.44, compared to the industry average PEG of 0.73 [4][6] - The PEG ratio for SHG has ranged from 0.37 to 0.74 over the past year, with a median of 0.56 [4] - The P/S ratio for SHG is 0.69, while the industry average P/S is 1.38 [5][6] Investment Potential - The metrics indicate that Shinhan Financial Group Co is likely undervalued at the moment [6] - The strength of SHG's earnings outlook further supports its position as a great value stock [6]

Core Points - Shinhan Financial Group filed its Annual Report on Form 20-F for the year ended December 31, 2024 with the U.S. Securities and Exchange Commission on April 23, 2025 [1] - The annual report is accessible on Shinhan Financial Group's official website and the SEC website [1] - Shareholders can request a hard copy of the annual report free of charge via email [2]

Financial Performance - Profit for the year reached W 4,558,170 million in 2024, a slight increase from W 4,478,000 million in 2023, marking a growth of 1.8%[35] - Total comprehensive income for the year decreased to W 3,812,505 million in 2024 from W 5,322,389 million in 2023, a decline of 28.3%[35] - Basic and diluted earnings per share increased to W 8,441 in 2024, up from W 8,048 in 2023, reflecting a growth of 4.9%[35] - Net interest income rose to W 11,402,302 million in 2024, compared to W 10,817,922 million in 2023, reflecting an increase of 5.4%[34] - Interest income grew to W 29,209,338 million in 2024, compared to W 27,579,211 million in 2023, an increase of 5.9%[34] - Net insurance income decreased to W 983,166 million in 2024 from W 1,113,615 million in 2023, a decline of 11.7%[34] Assets and Liabilities - Total assets of Shinhan Financial Group increased to KRW 739,764,256 million in 2024, up from KRW 691,795,333 million in 2023, representing a growth of approximately 6.9%[30] - Total liabilities increased to W 680,943,223 million in 2024, up from W 635,473,468 million in 2023, representing a growth of 7.1%[31] - Loans at amortized cost rose to KRW 449,295,238 million in 2024, compared to KRW 411,739,562 million in 2023, indicating an increase of about 9.1%[30] - Cash and due from banks at amortized cost increased to KRW 40,525,712 million in 2024 from KRW 34,629,251 million in 2023, marking a rise of approximately 17.3%[30] - The Group's total liabilities also increased, reflecting the overall growth in assets and financial activities[30] Equity and Retained Earnings - Total equity attributable to equity holders of Shinhan Financial Group rose to W 56,053,756 million in 2024, compared to W 53,720,537 million in 2023, an increase of 4.3%[31] - Retained earnings increased to W 39,020,580 million in 2024, up from W 36,387,314 million in 2023, indicating a growth of 4.5%[31] - The balance at December 31, 2023, showed total equity attributable to equity holders of 56,321,865 million won, indicating a strong financial position[40] Cash Flow and Investments - Net cash inflow from operating activities significantly increased to W 4,626,299 million from W 529,846 million in 2023[48] - Proceeds from disposal of securities at fair value through other comprehensive income rose to W 44,576,886 million, compared to W 36,748,023 million in 2023, indicating a growth of approximately 21.2%[48] - Cash and cash equivalents at the end of the year increased to W 35,247,543 million from W 30,416,884 million, marking an increase of approximately 16.3%[49] Financial Reporting and Compliance - Management is responsible for ensuring the preparation of consolidated financial statements in accordance with K-IFRS, emphasizing the importance of internal controls[19] - The audit report expressed an unmodified opinion on the effectiveness of the Group's internal control over financial reporting as of December 31, 2024[7] - The consolidated financial statements were authorized for issue by the Board of Directors on February 6, 2025, and will be submitted for approval at the stockholders' meeting on March 26, 2025[58] - The Group's financial statements are prepared in accordance with K-IFRS, with significant judgments and estimates affecting reported amounts of assets, liabilities, income, and expenses[60] Credit Losses and Provisions - The allowance for credit losses for loans was recognized at KRW 4,565,931 million as of December 31, 2024, reflecting the application of the Expected Credit Loss impairment model[10] - The provision for allowance for credit loss was 2,013,274 million won, down from 2,244,503 million won in 2023, showing a decrease of approximately 10.3%[46] Insurance and Financial Instruments - The Group estimates future cash flows for insurance contracts using a probability-weighted average based on all relevant information available[167] - The Group measures insurance liabilities as the sum of fulfillment cash flows and contractual service margin at initial recognition[165] - Insurance revenue is recognized based on expected amounts received for providing insurance services, including changes in liabilities for remaining coverage[199] Derivatives and Financial Assets - The fair value of level 3 derivatives was reported at KRW 718,788 million, while the fair value of derivative-linked securities issued amounted to KRW 7,146,909 million as of December 31, 2024[15] - The Group utilizes various derivative contracts, including forward exchange contracts and interest rate swaps, to manage interest rate and foreign exchange risks[101] Capital Management - The total capital stock of Shinhan Financial Group amounted to W 1,461,721 million as of December 31, 2024[51] - The retirement of treasury stock resulted in a reduction of 486,028 million won in equity, indicating a proactive approach to capital management[40]

Group 1 - The core focus of the research service is on identifying Asia-listed stocks that exhibit a significant disparity between their market price and intrinsic value, particularly emphasizing deep value balance sheet bargains and wide moat stocks [1] - The stock rating for Shinhan Financial (NYSE: SHG) has been upgraded to a Buy, indicating positive expectations for the company's financial performance [1] - The author of the investing group Asia Value & Moat Stocks provides investment ideas specifically for value investors interested in the Hong Kong market, highlighting a strategy that includes deep value and high-quality businesses [1]

Core Viewpoint - Investors are evaluating Shinhan Financial (SHG) and Bank of Nova Scotia (BNS) for potential undervalued stock opportunities, with SHG currently appearing as the more favorable option based on various financial metrics [1]. Valuation Metrics - SHG has a forward P/E ratio of 5.40, significantly lower than BNS's forward P/E of 11.10, indicating that SHG may be undervalued [5]. - The PEG ratio for SHG is 0.55, while BNS has a PEG ratio of 1.24, suggesting that SHG is expected to grow earnings at a more favorable rate relative to its price [5]. - SHG's P/B ratio stands at 0.42, compared to BNS's P/B of 1.23, further indicating that SHG's market value is lower relative to its book value [6]. Zacks Rank and Value Grades - SHG currently holds a Zacks Rank of 2 (Buy), reflecting a positive earnings outlook, while BNS has a Zacks Rank of 4 (Sell) [3]. - Based on the analysis of various metrics, SHG has a Value grade of B, whereas BNS has a Value grade of C, reinforcing the view that SHG is the better investment choice for value investors at this time [7].

Financial Performance - Total assets increased to W 727,679,883 million as of June 30, 2024, up from W 691,795,333 million at December 31, 2023, representing a growth of approximately 5.2%[11] - Loans at amortized cost rose to W 434,524,032 million, an increase of 5.5% from W 411,739,562 million at the end of 2023[11] - Deposits grew to W 402,755,997 million, reflecting an increase of 5.5% compared to W 381,512,664 million at December 31, 2023[11] - Total liabilities increased to W 670,077,603 million, compared to W 635,473,468 million at the end of 2023, marking a rise of approximately 5.4%[11] - Total equity attributable to equity holders of Shinhan Financial Group Co., Ltd. was W 54,837,263 million, up from W 53,720,537 million, reflecting an increase of 2.1%[11] - Profit for the period for the six months ended June 30, 2024, was W 2,798,815 million, compared to W 2,683,123 million in 2023, indicating an increase of 4.3%[12] - Total comprehensive income for the six-month period was W 1,900,968 million, down from W 3,402,364 million in the same period of 2023, a decrease of 44.1%[13] - Basic and diluted earnings per share for the six-month period were W 5,219, compared to W 4,847 in 2023, representing an increase of 7.7%[13] Income and Expenses - Total interest income for the six-month period ended June 30, 2024, was W 14,435,457 million, an increase from W 13,307,663 million in the same period of 2023, representing a growth of 8.5%[12] - Net interest income for the six-month period increased to W 5,637,713 million, up from W 5,268,025 million in 2023, reflecting a growth of 7%[12] - Net insurance income for the six-month period was W 560,715 million, an increase from W 497,576 million in 2023, reflecting a growth of 12.7%[12] - Fees and commission income for the six-month period rose to W 2,186,078 million, up from W 1,995,691 million in 2023, a growth of 9.5%[12] - Operating income for the six-month period was W 3,920,779 million, compared to W 3,492,233 million in 2023, reflecting an increase of 12.3%[12] Assets and Liabilities - The company reported a significant increase in derivative assets, which rose to W 6,317,567 million from W 4,711,421 million, marking a growth of 34%[11] - Financial assets at fair value through profit or loss reached W 74,487,460 million, up from W 71,216,564 million, indicating a growth of 3.2%[11] - The total capital stock of Shinhan Financial Group is W 1,461,721 million, with shares listed on the Korea Exchange since September 10, 2001[20] - The total financial liabilities amount to W 593,482,380 million, with the largest component being deposits at W 391,266,817 million[114] - The total amount of borrowings is W 60,320,524 million, with W 19,310,777 million due in less than 1 month[114] Credit Risk Management - The Group manages various financial risks including credit risk, market risk, interest rate risk, and liquidity risk, with a focus on maintaining appropriate risk levels[37] - The Group's credit risk management encompasses all areas of credit, including on-balance-sheet and off-balance-sheet transactions, with a significant emphasis on potential economic loss[48] - Credit risk evaluation includes a comprehensive assessment of both retail and corporate customers, utilizing internal and external data to inform credit ratings[50] - The total allowance for credit losses as of June 30, 2024, is W 4,454,693 million, reflecting the Group's proactive risk management strategy[79] - The Group recognizes lifetime expected credit losses for exposures subject to debt restructuring, indicating a significant increase in credit risk[63] Market Risk Management - The market risk management framework includes setting VaR limits and daily monitoring by the risk management department, independent of the operating department[89] - The Group adheres to Basel 3 standards for market risk management, reflecting regulatory requirements in its risk calculation methods[92] - Shinhan Financial Group manages market risk through a daily Value at Risk (VaR) measurement with a 99.9% confidence level, ensuring consistent risk management across the group[94] - Stress tests are conducted to manage potential losses from rapid economic changes, supplementing statistical risk measurement methods[91] Liquidity Management - The Group's liquidity risk management includes monitoring indices such as the 'limit management index' and 'early warning index' to preemptively address potential liquidity issues[108] - Following the bankruptcy of Silicon Valley Bank, the Group has strengthened its liquidity crisis response capabilities by analyzing bank run scenarios[107] - Shinhan Card maintains a liquidity level that can withstand a 3-month credit crunch, demonstrating proactive liquidity risk management[109] Derivative Instruments - The total notional amounts of outstanding derivatives reached W 427,561,808 million, an increase from W 367,022,470 million as of December 31, 2023, representing a growth of approximately 16.5%[183] - The total gain or loss on valuation of derivatives for the six-month period ended June 30, 2024, was a net loss of W 90,915 million, contrasting with a net gain of W 66,441 million in the same period of 2023[185] - The total fair value of commodity related derivatives as of June 30, 2024, was W 179,986 million in liabilities, down from W 549,683 million on December 31, 2023[184] Investment and Securities - The total amount of securities at fair value through profit or loss is W 73,001,216 million as of June 30, 2024[162] - The total value of securities at fair value through other comprehensive income (FVOCI) as of June 30, 2024, is 88,821,773 million won, a decrease from 90,311,979 million won as of December 31, 2023[189] - The ending balance of debt securities at FVOCI is 87,074,207 million won, reflecting a decrease of 1,562,793 million won during the six-month period ended June 30, 2024[191]

Core Viewpoint - Value investing remains a preferred strategy for identifying strong stocks, focusing on traditional valuation metrics to find undervalued stocks with profit potential [2][3] Company Summary - Shinhan Financial Group Co (SHG) has a Zacks Rank of 2 (Buy) and a Value grade of A, indicating strong value characteristics [4] - The stock has a P/E ratio of 5.73, significantly lower than the industry average of 9.06, with a 52-week Forward P/E range of 3.67 to 6.79 and a median of 5.32 [4] - SHG's PEG ratio is 0.63, compared to the industry average of 0.70, with a historical range of 0.53 to 1.40 and a median of 0.68 [5] - The P/S ratio for SHG is 0.75, while the industry average is 1.2, indicating a favorable valuation based on sales [6] - SHG's P/CF ratio stands at 4.72, well below the industry average of 13.93, with a historical range of 3.34 to 5.19 and a median of 4.05 [7] - These metrics suggest that SHG is likely undervalued, supported by a strong earnings outlook, making it an attractive value stock [8]

Core Viewpoint - Shinhan Financial (SHG) has been upgraded to a Zacks Rank 2 (Buy) due to an upward trend in earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system is effective for individual investors as it focuses on changes in earnings estimates, which are often more reliable than subjective ratings from Wall Street analysts [2][4]. - The upgrade reflects a positive outlook on Shinhan Financial's earnings, likely leading to increased buying pressure and a rise in stock price [3][5]. Earnings Estimate Revisions - Empirical research indicates a strong correlation between earnings estimate revisions and near-term stock movements, making it beneficial for investors to track these revisions [6]. - Shinhan Financial is projected to earn $6.32 per share for the fiscal year ending December 2024, representing a year-over-year increase of 2.6%. Over the past three months, the Zacks Consensus Estimate for the company has risen by 1.6% [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks, which have averaged a +25% annual return since 1988 [7]. - The upgrade of Shinhan Financial to a Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating a strong potential for market-beating returns in the near term [10].

Core Insights - The article compares Shinhan Financial (SHG) and Erste Group Bank AG (EBKDY) to determine which stock offers better value for investors [1] Valuation Metrics - SHG has a forward P/E ratio of 6.40, while EBKDY has a forward P/E of 6.49 [5] - SHG's PEG ratio is 0.70, indicating a better expected earnings growth rate compared to EBKDY's PEG ratio of 0.99 [5] - SHG's P/B ratio is 0.51, compared to EBKDY's P/B of 0.72, suggesting SHG is undervalued relative to its book value [6] Earnings Outlook - SHG is currently experiencing an improving earnings outlook, which enhances its attractiveness in the Zacks Rank model [7] - The Zacks Rank for SHG is 2 (Buy), while EBKDY is rated 4 (Sell), indicating a more favorable earnings estimate revision trend for SHG [3]

Company Overview - Shinhan Financial is headquartered in Seoul and has experienced a price change of 32.36% this year [3] - The company currently pays a dividend of $0.3 per share, resulting in a dividend yield of 2.99%, which is lower than the Banks - Foreign industry's yield of 3.86% and the S&P 500's yield of 1.56% [3] Dividend Performance - The annualized dividend of Shinhan Financial is $1.22, reflecting a 31.6% increase from the previous year [4] - Over the past five years, the company has increased its dividend three times year-over-year, with an average annual increase of 4.37% [4] - The current payout ratio is 19%, indicating that the company paid out 19% of its trailing 12-month earnings per share as dividends [4] Earnings Expectations - Shinhan Financial is expected to see earnings growth this fiscal year, with the Zacks Consensus Estimate for 2024 at $6.22 per share, representing a 0.97% increase from the previous year [5] Investment Considerations - The company is viewed as a compelling investment opportunity due to its strong dividend performance and current Zacks Rank of 3 (Hold) [7]