Shinhan Financial Group Co Ltd

Hello, I'm Park Cheol-woo, and I'm in charge of IR. I would like to thank everyone who attended the 1st quarter business performance presentation of Shinhan Financial Group in 2023. Before the performance presentation, I would like to give a brief introduction to the progress. The company is conducting a performance presentation on a digital platform using the Shinhan Financial Group IR YouTube channel and the Zoom app. The YouTube live channel is only carried out by the government, Thank you very much. Today, we will begin the 1st quarter performance presentation. Today's performance presentation will be attended by Group CFO Lee Tae-kyung, Group CDO Kim Myung-hee, Group CSSO Go Seok-hun, Group CRO Bang Dong-geun, Shinhan Bank CFO Kim Ki-yong, Shinhan Card CFO Kim Nam-joon, and Lee Dong-sang, CFO of Shinhan Investment Securities, and Park Kyung-won, CFO of Shinhan Life. Today's performance announcement will be held after the presentation of the overall business performance of the first quarter of 2023. Then, there will be a presentation of Lee Taek-yong's performance of the first quarter of 2023.

Hello, I'm Lee Tae-kyung, CFO of Shinhan Financial Capital. First of all, I would like to thank everyone who participated in the 1st quarter of 2023 for their participation in the performance announcement. The current performance announcement data was written under IFRS 17, which has been applied since 2023, and for comparison purposes, the business performance of 2022 was also rewritten. I will first explain the highlights on page 5 of the performance announcement data. This is page 5. In the first quarter of 2023, the group's short-term net profit was 1.388 trillion won, and despite the decrease in interest interest due to the decline in the bank margin, the non-interest interest, such as mortgages and securities, was greatly improved and the profit was strengthened. The group's first quarter business profit margin is 37.9%, and despite inflation factors, it is managed at a stable level through continuous cost efficiency and effort. The group's bankruptcy rate is at the level of 48BP, but it is maintained at the level of 29BP, except for 1,850 billion won, which was artificially recognized by the government in addition to COVID-19 and real estate PF. Lastly, I would like to talk about the Group's capital policy. In the first quarter of the year, the fund was decided by the Board of Directors for 525 won, and in the second quarter of the year, the fund was decided by the Board of Directors for 1,500 won. In the future, we will promote effective capital policies, keeping in mind the uncertainties of the future and the expectation of the management of the capital system. On the next 6th page, we will talk about the financial impact of the new life based on the implementation of IFRS 17, and on the 7th page, we will talk about the main business performance of the group in the first quarter, so please refer to it. From the 8th page, we will explain the detailed achievements of the group. In the first quarter of 2023, the interest rate of the group decreased by 10.0% compared to the previous quarter with a profit of 2.540 billion won. This is due to the decrease in the margin of the bank and the decrease in the number of people. As of the same year, the net profit of the bond increased by 3.5% and the NIM increased by 8BP. However, the net profit of the non-bank group company increased by 2.0%. The NIM, which was in the first quarter, recorded a 1.59% drop in net profit due to a short-term change in the net profit of the bond due to a drop in the market interest rate. The bank's loan growth maintained the previous year's level. The company's loan decreased by 1.0% compared to the previous year due to a decrease in demand due to an increase in the interest rate and the influence of the DSR policy, but the company's loan continued to increase by 1.0% compared to the previous year due to a decrease in demand due to a decrease in the interest rate. Please refer to page 32 for details. Next, please refer to the margin and operation delivery status of Sina Bank on the 9th page. Next is the 10th page, Group B interest rate. The Group B interest rate has increased significantly in proportion to the professional period due to the increase in interest rate and capital market related fees due to the increase in interest rate and capital market related fees due to the decrease in market interest rate along with the disappearance of non-modified factors such as replacement investment damage. In comparison to the previous year, despite the decrease in interest rates, the decline in sales due to the rise in interest rates and the increase in interest rates in the financial year and the fiscal year increased by 17.0%. Next, I would like to talk about interest rates. The interest rate for the previous fiscal year increased by 18.1%. This is mainly due to credit card interest rates, stock interest rates, and investment and financial interest rates. In spite of the decline in market sales, credit card fees have increased by 111%, while stock exchange fees have increased by 32.9% compared to the previous quarter. The net profit of the previous year decreased by 14.0%. Despite the increase in credit card fees in the new year, the net profit of the previous year decreased by 18.6% due to the regulation of the exchange rate. In the case of investment and credit card fees, the net profit of the previous year decreased by 18.6%. In the case of investment and credit card fees, the net profit of the previous year decreased by 18.6%. In the case of investment and credit card fees, the net profit of the previous year decreased by 18.6%. In the case of investment and credit card fees, the net profit of the previous year decreased by 18.6%. In the case of investment and credit card fees, the net profit of the previous year decreased by 18.6%. In the case of investment and credit card fees, the net profit of the previous year decreased by 18.6%. In the case of investment and credit card fees, the net profit of the previous year decreased by 18.6%. In the case of investment and credit card fees, the net profit of the previous In the first quarter of this year, the rate of retirement was 23.6% lower than in the previous quarter. In the previous quarter, the rate of retirement was 23.6% lower than in the previous quarter. In the previous quarter, the rate of retirement was 23.6% lower than in the previous quarter. In the previous quarter, the rate of retirement was 23.6% lower than in the previous quarter. As a result, Group CIR recorded a stable 37.9% increase in 1.0% points compared to the previous year. Group's first quarter, the 1,200,000 KRW in cash, increased the amount of cash in cash due to the deterioration of health. In order to respond to the uncertain situation, we established an additional cash of 1,850,000 KRW and maintained the level of the previous quarter. The net profit is 48BP, which increased by 22BP compared to the previous year, and the net profit is 29BP, which increased by 11BP compared to the previous year. If we look at the annual interest rate, which can be seen as a pre-priced index, the bank maintains a level of 0.28% with a 6BP increase compared to the previous quarter. However, in the case of CARD, it increased by 33BP compared to the previous quarter due to an increase in the interest rate, an increase in the request for a new starting fund, and a reduction in the credit limit for pre-priced electricity management. Please refer to the 13th page for detailed information on the group's health management status. The next 14th page is the group's profit and loss status. Despite the increase in cash, the net profit and loss of the previous year has increased with the growth of interest rates and interest rates. In the case of non-banking companies, card companies have decreased their net profit in the previous year due to the rapid increase in the cost of handling and the increase in the interest rate, including the increase in the interest rate of judges, debtors, and lenders. Securities companies have decreased their net profit in the previous year due to the decrease in the exchange rate and the increase in the net profit of financial products and self-sales. In terms of insurance, interest rates increased by 6% and interest rates increased by the same year. In terms of capital, despite the increase in business interest rates, interest rates decreased due to the rise in income and the establishment of conservative bonds related to real estate PF. In addition, in the case of capital markets such as asset management, asset collection, and REITs, interest rates decreased by the same year due to the continuous decline in capital markets. The next page is the global business status of the group. The global business record is 158.3 billion won in net profit, and we are expanding the net profit ratio within the group based on stable growth. The next 16-page is the capital and major profit indicators. The average capital ratio for the third quarter is 12.54%, which decreased by 25BP compared to the previous year. In the next 17 pages, I will explain in more detail. Considering that 54BP decreased due to the final introduction of Basel III, the average capital ratio has improved to 29BP. Also, considering the change in the average capital ratio of 7550 won, which was scheduled for May 1st this year, the average capital ratio will be improved to 12.8%. In the future, we will continue to improve the capital ratio according to the direction of the directorate's regulation as expected, such as the maintenance of the financial stability system of the regulatory authorities. Please refer to the report on the current status of the shareholders on page 18. Next, please explain the digital strategy on page 19 to Mr. Kim Myung-hee, CTO.

Hello, I am the vice president of CDO Kim Myung-hee. In 2023, we will continue the innovation of the financial industry based on the digital influence of the group and strengthen its social role. I will tell you from various points of view, not only about the positive and negative effects, but also about the positive and negative effects. First of all, Group's digital channel is growing in a balanced way with the growth of the size and the convenient platform that customers often seek. Every month, 23,510,000 people visit the digital platform in Sinan, and 4.73 million customers use the main financial platform every day, increasing by 16% compared to the previous year. The second field is more secure. To protect customers from financial accidents, we expanded the AITM to nationwide stores in January this year. In addition, by improving the approachability of senior customers to digital finance, the use rate of senior customers' financial platform has increased by 7.1% compared to the previous year. Newer finance.

You can find information from the message.

In MOA Creative, we will talk about business expansion through the formation and cooperation of Fintech. Through Sinan Futures Lab, 42 startups have been newly selected, and a total of 375 companies have become partners with Sinan. We also established a stronger global support system by cooperating with small and medium-sized venture companies and start-ups. This start-up-based system is connected to co-operative business and allows for more innovative business expansion. On the next page, I will talk about the creation of DT achievements and the strengthening of social roles through digital. The gross MAU of the group's non-financial platform is showing an average growth rate of 27% as of the first quarter of the last three years. In addition to the growth of the platform, we are promoting quality growth through customer engagement recruitment activities such as strengthening the UX function of the platform and providing data-based individualized services. On the right side of the screen is the content of social role enhancement through digital. The group uses AI technology to detect suspicious transactions throughout the channel. In particular, AI vision technology is used to detect abnormal behavior of the ATM transaction in real time and to prevent financial accidents by sending warning messages to customers. In addition, we continue to support digital utilization for senior customers. We are improving the digital financial usage rate of senior customers by providing a dedicated screen to increase productivity, expand digital financial education, and specialize senior customers in ATMs. With the balanced growth of the digital platform, Shinhan Financial Group will work even harder to strengthen its social role and provide financial convenience for its customers.

Thank you. Thank you for your explanation, Ms. Kim. From page 21, please refer to the detailed explanation data of the group and major private companies and the major management indicators of the company. That's all for the explanation, and we'll move on to the answer. Thank you.

Thank you for your presentation. We will now take questions from the audience. If you have any questions, please raise your hand while you are on Zoom. If you have any questions in English, please raise your hand as well. For those who have questions in English, we will provide a short-term translation. If you have any questions in English, please wait for a while until the short-term translation is completed. We need some time until the questions are answered. Please wait a moment. The first question is from Lee Yong-jae of HMC Investment.

Hello, I'm Lee Hong-Jae from Hyundai Car Securities. I have two questions. The first is a question related to digital. You mentioned a lot of things like senior customers and digital utilization. How are you expanding the usage rate of senior customers? Please explain the strategy, goals, and expectations. The second one is related to the new life. I'd like you to explain the 22-year CISM movement. How much was the CISM input in 2022? I'd like to ask you to explain it by dividing it into individual adjustment, unwinding, triangle, and end. In addition, I'd like to ask you to explain the size of the example car that occurred in 2022 and the main cause of the example car. That's all.

Yes, thank you for the question. Please wait a moment while we prepare the answer to the question.

Thank you for the question. The first digital is answered by our group CDO officer. The second question is about Shinhan Life. Shinhan Life CF will answer. First, digital, please.

You asked a question related to senior customers. In the digital strategy of the overall group we provide, in order to provide an easier and more comfortable finance, the part of comfort is more secure and the part that provides more social value is included. Social means that there should be no people who are excluded from the digital gap. In particular, we think that senior customers are the most difficult to deal with because of the digital divide. The part that provides specialized services to these senior customers is expanding financial education, We also provide big-letter services and specialized apps for senior customers. We also provide big-letter services for senior customers at ATMs. As I said before, the number of senior customers increased by 7.1% compared to last year. This 7.1% means that there are active senior customers in our group. This number is also increasing, and compared to active senior customers, the ratio of senior customers who are looking for our platform every month is 7.1%. In terms of numbers, the increase in MAU has increased from 1.1 million to 1.62 million. I believe this will contribute not only to the social value of financial companies and the digital gap, but also to financial performance. Thank you.

Yes, this is Shinhan Life's Park Kyung-won. Thank you for your question. You've mentioned two things. First, the CSM movement Next, I'd like to talk about the situation related to the preliminary trial. As I explained on the 6th page, the CSM base was about 6.5 trillion won at the time of the transfer. Based on the original insurance, the end number of 22 years was about 6.9 trillion won. The CSM size through the new contract was about 7.5 billion won last year. There was an increase in the interest rate of 22 billion won, and as you know, there were 6.7 billion won of CSM that were included in the profit, and the remaining children had an increase of 1.4 billion won, which is the adjustment effect of CSM according to family changes. So, it is a situation where the increase in CSM is continuously expected at the level of about 40 billion to 30 billion won. As for the example car, the example car that we produced last year was about 2.7 billion won. About half of it came from the insurance fund example car, and the rest came from the business example car. So, there are almost no example cars in the first quarter, and there are about 1.6 billion won less than 5 billion won. Also, for reference, the first quarter of 2023, the new contract CSM has recently improved a little and is at the level of 2.2 billion won. Yes, that's it.

Thank you for your answer. Next is Park Hye-jin, a member of the National Security Agency. Mr. Park, please ask a question.

Hello, I'm Hyejin Park from Daesin. Thank you for the question. I have a question about the cash flow. Recently, the cash flow has been a little higher I have two questions. First, I'd appreciate it if you could tell us about the 23-year cash flow. Second, I'd appreciate it if you could divide this into banks and non-banks. And you said that the real estate PF was a bit of a problem, so they established a deposit this time. If you have any additional plans, please share them with us. Thank you for your question, Ms.

Park. Please wait a moment while we prepare an answer to the question.

The question is mainly related to cash flow. I will explain Group C first, and then I will explain the rest in addition.

Yes, hello, I'm Park Nong-won from CRO. Thank you for the good question. As our CFO said earlier, the cash flow is 29BP, which is 48BP. The cash flow rate we set for this year is about 35BP. I think that in 2023, the annual growth trend will continue, so considering this, I think it will end at a slightly higher level than the 35BP we originally planned. So, I'm expecting around 40BP now. And then, in terms of real estate PF, Actually, it is clear that we are the hottest issue right now. We are in a situation where it is more difficult for us to come to the PF, especially to the bridge. In this regard, we are taking up about 2% of the total margin. It's about 8.8 trillion won. The fixed interest rate is 1.75 billion won, and the annual interest rate is 1.9 billion won. I can't predict how long it will last until the end of the year, but I think it will continue to increase in the current situation. We have built up additional funds for non-banking financial institutions. However, we are thinking of building up additional funds for PFOs in the first quarter of the fiscal year and in the second or third quarter. We will talk about that next time.

Yes, you talked about banks and non-banking. In the first quarter of this year, the total net worth of the bank is 1,785 billion won, and the rest is the total net worth of the bank, not the credit bank. I won't make a big change in this ratio in the future, but as you know, I will continue to work with the same bank I think it will be a change in the system as we work together. Also, considering the fact that we are setting up a fund in advance, I think it will be a little difficult to explain how this can be done in detail. In addition, we said that we have accumulated 18.5 billion won in cash in advance, and 13.29 billion won was accumulated in the bank, and 5.21 billion won was accumulated in the non-bank capital. I think we will be able to see the changes in the portfolio and move forward. I think we will be able to move forward to the level of 35BP, which you mentioned in the 1st quarter. That's all I have to say. Thank you for your answer.

Let's move on to the next question. The next question is from Shin Jong-min of CLSA. Shin, please go ahead.

Thank you for the opportunity to ask a question. I would like to ask one thing related to the capital policy. In this quarter, you announced that you would buy 1.5 billion of your own assets, and you can understand that this will continue by quarter. Thank you for your question. Please wait a moment while we prepare an answer to the question.

Thank you for your question. I have two big questions. I'll tell you together. First of all, the 1.5 billion won we're doing this time is a part of the 1.5 billion won that will be transferred to the general stock market on May 1st. And as you asked at the beginning, you asked if this can be continued by quarter, but we've always said that we're going to do it I think I've mentioned two things. I've always said that it can change depending on the economic uncertainty, the stress test results of the directorate, or the changes in the regulations. Recently, I think the government's regulation direction is a little bit new. As you well know, there is a saying that we will introduce a stress relief fund or a stress relief fund. Also, recently, the Basel Bank Directorate and the Global Stress Test of the Banking Safety Commission have been talking about joining Korea, and recently, the Director of the Banking Safety Commission said that it is necessary to secure the integrity of advanced countries, so if we look at this part, our regulation level seems to be going up a little bit. So, we are also trying to respond to this proactively in accordance with it. Then, in the end, we will see how much we can contribute to the regulation I think we can say that we are flexible in this regard. So, as I said before, we will continue to review each branch. Thank you for your answer.

There is no one who is asking a question right now. So, we will wait for the question. If you have any questions, please raise your hand while you are connected to Zoom. Next question is from Jung Joon-seop of NH Investment. Jung, please go ahead.

Hello, I am Jung Joon-seop from NAICS. Thank you for the opportunity to ask a question. Recently, the conditions have not been easy, but we have also seen a decline in NIM in the first quarter, and it seems that loan growth has not come out. In the future, I would like to ask you to share if you have any changes in NIM's loan growth this year.

Thank you for your question, Mr. Jung. Please wait a moment while we prepare for the answer.

This question is mainly related to the bank, so the bank CF will answer it.

Yes, I'm Kim Ki-woong, CFO of Shinhan Bank. Thank you for your question. As you can see, the interest rate of the variable interest asset was affected by the decline in the interest rate. As you can see, the interest rate of the variable interest asset was affected by the decline in the interest rate of the variable interest asset. However, as the money-move phenomenon calmed down in March, NIM turned into a rise in March, focusing on February. You can understand this from the level I mentioned at the beginning of February. After the second quarter, We believe that the impact of the high-price regular interest will be lessened after May. Also, I think that the positive impact of NIM will be affected by the change in the mobility core interest rate. However, as the rising financial support measures that we announced last month are implemented, some of the NIM's effects will be reduced. Considering all these factors, we expect to see a small increase in the second quarter compared to the first quarter. In terms of the year-on-year, we expect to see an increase in NIM in the previous year. Ah, ah, ah, ah, ah, ah, ah, However, in January and February, the stock market growth was not good, so the stock market growth was negative. In January and February, there was a lot of competition, so there were difficulties. However, since the stock market has been rising since March, In general, when we look at it from the perspective of our plan, I think that we will be able to grow our assets to the level that we have planned for a year. That's all.

Thank you for your answer. Next question. No one is asking a question right now. Let's wait for the question. If you have a question, Please raise your hand if you are in contact. Yes, I don't think you have any additional questions right now, but perhaps today, uh, the results of various financial institutions are all gathered, uh, uh, time-related, uh, because there are next results, we will no longer receive additional questions. Uh, then, Thank you for your participation in the 1st quarter performance announcement of Shinhan Financial Group in 2023. Today's announcement is on our Shinhan Financial Group IR YouTube channel, so you can check it again. Thank you for your interest.