Shinhan logs $3.29 billion profit, down 6.4% amid weak market

Shinhan said a pre-emptive accumulation of provisions, financial programs for self-employed workers and the reduced valuation of alternative assets contributed to the drop.

Shinhan Financial Group Chairman Jin Ok-dong gives a speech in central Seoul on Nov. 8. Shinhan Financial Group registered 4.37 trillion won in net profit last year, down 6.4 percent on-year. [YONHAP]

Shinhan Financial Group registered 4.37 trillion won ($3.29 billion) in net profit last year, down 6.4 percent on-year, the company reported in a regulatory filing on Thursday.

Shinhan attributed the drop in profit to one-off expenses, including provisions, and the reduced valuation of alternative assets amid a weak market.

The annual figure fell short of the 4.5 trillion won FnGuide consensus.

The company’s fourth-quarter net profit was 549.7 billion won, up 53.2 percent on-year but down 53.9 percent from the previous quarter. Shinhan said a pre-emptive accumulation of provisions, financial programs for self-employed workers and the reduced valuation of alternative assets contributed to the drop.

Shinhan secured 765.4 billion won in provisions last year and spent 293.9 billion won in the fourth quarter on financial programs for the self-employed.

“Shinhan defended interest profit despite the reduced interest margin through a growth in corporate loans,” the company said.

“We are continuously striving to alleviate systematic risks amid high interest rates through means including preemptive securing of provisions to achieve soft landing of the real estate project financing market and the support for the self-employed to reduce their interest burden.”

Shinhan’s annual interest profit was 10.82 trillion won, up 2.1 percent on-year. Its non-interest profit was up 51 percent over the same period, at 3.43 trillion won.

The flagship Shinhan Bank logged 3.68 trillion won in net profit last year on increased interest profit, up 0.7 percent on-year. Shinhan Card’s net profit was 620.6 billion won, down 3.2 percent over the same period due to a rise in borrowing costs among other expenses.

Shinhan Securities’ net profit plunged 75.5 percent on-year to 100.9 billion won due to reduced commissions from investment banking, the company said. Shinhan Life Insurance’s net profit rose 5.1 percent to 472.4 billion won, while that of Shinhan Capital inched up 0.2 percent to 304 billion won over the same period.

The combined net profit of the four largest financial holding firms — KB, Shinhan, Hana and Woori — was 14.97 trillion won last year, down 3.6 percent on-year.

Financial firms face a number of economic hurdles this year as interest rates stay high and troubled Hong Kong-tied equity-linked securities (ELS) mature.

Regulators have pressured financial companies to produce compensation plans for investors in the Hang Seng China Enterprises Index-linked ELS as the index plunged to less than half of its peak in 2021.

BY JIN MIN-JI [jin.minji@joongang.co.kr]