Shinhan Financial Group(SHG) - 2024 Q3 - Quarterly Report

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]