Shinhan Financial Group(SHG) - 2021 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company achieved a record high half-year net income of KRW2.4438 trillion, surpassing the recurring income fundamentals of KRW1 trillion per quarter [15][16] - Bank net income rose 20% year-over-year (Y-O-Y), while non-banking recorded a record high half-year net income, improving 68% Y-O-Y [7][8] - Return on Equity (ROE) reached 11.5%, marking a significant improvement in capital profitability [13] Business Line Data and Key Metrics Changes - Non-banking income increased significantly, with capital market subsidiaries contributing KRW507.4 billion, representing 43% of the group non-banking income [8][20] - The digital channels operating income before expenses recorded KRW824 billion in the first half, up 52% Y-O-Y [26] - The credit cost ratio was managed stably at 20 basis points, with the bank's credit cost ratio at a record low of 8 basis points [22] Market Data and Key Metrics Changes - The company reported a 4.2% year-to-date (YTD) increase in loans in won, with SME loans increasing by 7.6% YTD [16][17] - The delinquency rates for Shinhan Bank and card fell Y-O-Y, indicating no signs of asset quality deterioration due to the pandemic [22] Company Strategy and Development Direction - The company aims to balance earnings improvements through efficient capital allocation and synergy expansion between subsidiaries [9] - There is a focus on digital transformation, with plans to launch non-face-to-face collateralized loans in August [58] - The company is committed to ESG activities and is actively expanding strategic digital investments [27][28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining asset quality despite potential risks from the resurgence of COVID-19 [36] - The company anticipates a favorable flow in the second half of the year, with plans to enhance net interest margin (NIM) through improved loan yield [19][66] - The management is closely monitoring the market situation and will execute shareholder return policies accordingly [14][64] Other Important Information - The company is reviewing dividend plans and considering quarterly payouts based on previous year's EPS [14] - The integration of life insurance companies is expected to yield positive results, with a net income goal of KRW400 billion [38][40] Q&A Session Summary Question: Outlook on SOHO loans and COVID-19 impact - Management acknowledged potential risks but noted improvements in asset quality and delinquency rates for SOHO loans [35][36] Question: Integration of life insurance and IFRS 17 impact - The company expects net income to rise with IFRS 17 adoption, enhancing transparency and market differentiation [38][41] Question: Performance of Shinhan Card and income trends - Management confirmed that cost control measures led to improved results and a steady income increase is expected [49][50] Question: Digital loan offerings in response to competition - The company plans to launch non-face-to-face collateralized loans and aims for a fully digital retail loan process [58][66] Question: Shareholder return policy and CET1 ratio - The company is reviewing its total shareholder return ratio and aims to maintain a CET1 ratio of 12% in the mid to long term [76][77] Question: Competition from KakaoBank and fintechs - Management is developing alternative credit rating models to compete effectively in the mid-interest rate market [83]