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Shinhan Financial Q4'17 profit drops YOY on higher provisions, expenses

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Shinhan Financial Q4'17 profit drops YOY on higher provisions, expenses

Shinhan Financial Group Co. Ltd.'s net income for the quarter ended Dec. 31, 2017, fell year over year amid an increase in expenses and provisions for credit losses.

The group said net income attributable to controlling interests for the 2017 fourth quarter plunged to 211.51 billion won from 612.08 billion won in the year-ago quarter.

Interest income for the quarter increased to 2.072 trillion won from 1.893 trillion won in the prior-year quarter. Noninterest income fell to 236.09 billion won from 306.70 billion won. As a result, total operating income rose to 2.308 trillion won from 2.199 trillion won in the year-ago period.

General and administrative expenses surged to 1.587 trillion won from 1.279 trillion won. At the same time, provisions for credit losses increased to 385.42 billion won from 294 billion won.

The group's net interest margin was 2.74% when including merchant fees in credit card and 2.06% when excluding such fees, compared with 2.76% and 2.02%, respectively, in the prior-year period.

Shinhan Financial's full-year 2017 consolidated net income attributable to controlling interest jumped to 2.918 trillion won, or 6116.04 won per share, from 2.775 trillion won, or 5,741.84 won per share in 2016.

The net interest margin for the full year was 2.77% when including merchant fees in credit card and 2.06% when excluding such fees, up year over year from 2.76% and 1.98%, respectively.

The group's NPL ratio was 0.62% as of Dec. 31, 2017, down from 0.64% as of Sept. 30, 2017, and 0.74% as of Dec. 31, 2016.

BIS capital adequacy ratio at the end of December 2017 fell to 14.74% from 15.00% in the prior-year period. Tier 1 and common equity Tier 1 ratios for the period were 13.28% and 12.84%, respectively, up from 13.19% and 12.75%, respectively, at the end of 2016.

The group's banking unit, Shinhan Bank Co. Ltd., posted a year-over-year decline in net income attributable to controlling interest for the fourth quarter to 15.09 billion won from 428.57 billion won in the same period of 2016.

The bank's interest income rose to 1.344 trillion won from 1.204 trillion won, while noninterest income plunged to 42.47 billion won from 167.36 billion won.

The bank's provision for credit losses climbed to 219.62 billion won from 135.39 billion won in the prior-year quarter.

Shinhan Bank reported full-year consolidated net income attributable to controlling interest of 1.711 trillion won, or 1,060 won per share, down from 1.940 trillion won, or 1,195 won per share.

As of Dec. 31, 2017, the bank's BIS capital adequacy ratio was 15.42%, down from 15.70% in the prior-year period. Tier 1 and common equity Tier 1 ratios for the period were 13.09% and 12.69%, respectively, down from 13.15% and 12.85%, respectively, as of Dec. 31, 2016.

As of Feb. 6, US$1 was equivalent to 1,084.13 South Korean won.