Shinhan Financial Group Co Ltd

Hello, I'm Park Cheol-ho, the head of IRPART. Thank you for attending the 3rd quarter financial performance announcement in 2025. Today's performance announcement includes Group CFO Cheon Sang-hyun, Group CFO Go Seok-heon, Group CRO Bang Dong-hoon, Shinhan Bank CFO Lee Jung-bin, Shinhan Card CFO Park Hae-chang, Hello everyone.

I would like to thank everyone who participated in the 3rd quarter of 2025. I will start with the highlights of the 2nd page of the data. As of the end of September of 2025, the proportion of group CTOs has been reduced to 13.56% and is managed at a stable level. Despite the increase in exchange rates and the growth of loan assets for future preparation, The total amount of 1.1 trillion won and 1.25 trillion won, which is the total amount of 1.2 trillion won per self-employed person, will be estimated at 2.35 trillion won, and if we consider the current stable CETON ratio and solid financial fundamentals, we will be able to continue to carry out unwavering and progressive policies in the future. In the third quarter of 2025, the short-term net profit of the group was 1.4235 trillion won, with a good management of the cash flow for the reduction of interest-related interests. The business interest rate also maintains a stable level, and the loss cost is 46BP, which is an increase of 2BP compared to the previous quarter. However, compared to the previous quarter, it seems to have improved a little. However, it is decided that we need to wait a little longer when considering the current conditions, such as the uncertainty of the macro environment and the domestic market situation. The next page is the capital. As I mentioned earlier, the group CET1 ratio was managed at the level of falling 6BP compared to the previous quarter based on stable short-term profits despite the fact that there were many factors of increase in RWA. The RWA increased the risk of foreign currency signage, increased assets, and increased 8 trillion won compared to the previous quarter. In the future, we will do our best to provide sufficient funds that are necessary for each and every situation, and to maintain a stable capital ratio through internal efficiency and strategic resource distribution. Please refer to the data on the 4th page of the asset fund. The 5th page is the group's short-term profit. The group's short-term profit in the 3rd quarter was a decrease in the profits related to childcare rights, which reflected the movement of market currencies, It was calculated at a rate of 8.1% reduction compared to the previous year. The key management indicators of the company's value management plan, ROE and ROTC, recorded 11.1% and 12.5% increase of 0.7% points per year compared to the previous year. I will explain the details of each item from the next page. This is the second part of the sixth page. Group interest profits increased by 2.9% compared to the previous quarter through the growth of assets centered on profitability and efficient ALM management. Bank loan interest increased by 2.7% compared to the previous quarter. As the market demand expanded, the business sector increased by 3.1% based on policy funds, and the corporate sector increased by 2.3% by promoting an active growth strategy from July to provide productive funds. Please refer to page 26 for more details. NIM has recorded a 1.56% increase of 1BP compared to the previous quarter, although the interest rate, including the bond loan, has dropped 12BP compared to the previous quarter due to market interest rates. The next page is interest-free interest. Group B's interest rate has decreased as the market environment has been reflected and the interest rate on child care and foreign exchange has been reduced compared to the previous quarter, but the interest rate has reached a stable level. In order to respond to seasonal factors such as Chuseok, the interest rate has increased and has decreased compared to the previous quarter, Securities collection fees, IV-related fees, and fund sales fees have increased significantly compared to the previous quarter due to the recent activation of the capital market. Insurance-related profits have decreased by 2.4% compared to the previous quarter, but they are providing stable-level profits through large-scale CSM management. The next page is the fee for viewing and shipping. As a result of the hope-return cost of the card company, the group's revenue was increased by 2.2% compared to the previous quarter, but the sales profit margin was recorded at 37.3% according to the cumulative standard, and it is still maintaining a stable level. The cash flow cost decreased by 30.1% compared to the previous quarter due to the loss of the company's credit evaluation influence recognized in the previous quarter and the group's financial stability management efforts. In addition, the increase in the amount of additional funds generated by implementing the government's real estate PF settlement plan has also been greatly reduced compared to the previous quarter and is being managed within the predicted range. With the increase in the risk of credit by companies due to the recovery of the economy, the difficulties of the lower class customers are also continuing, so it is thought that conservative asset sustainability management will be necessary with sufficient funding supply in the future. Next is the asset sustainability index of the group on the 9th page. The group NPL coverage ratio has increased by 2.8% compared to the previous quarter due to the increase in the fixed interest rate of non-banking. However, the NPL coverage ratio has been improved by 12.17% compared to the previous quarter due to the strategic market angle and the strengthening of volatility management. The interest rate of banks and cards is also improving gradually. Please refer to the next page for details of the loss absorption capacity of the group and the sale price. The next 11 pages are the profits of Group 4 and overseas businesses. The profits of Shinhan Bank have decreased significantly compared to the previous quarter due to the influence of non-debtors, such as child protection. Please refer to the 21st page for details. In spite of the reduction in the profit from the supply chain and the cost of retirement, Sinan Card's profit has increased compared to the previous quarter due to the reduction in the cost of management through the improvement of productivity. Sinan Investment's profit has decreased compared to the previous quarter due to the reduction in the cost of management, but it is continuing to recover its strength compared to the previous year through the improvement of competitiveness in the business area. Shinhan Capital continues to face pressure in terms of supply and demand, and is still struggling. Groups such as CARD and CAPITAL are continuing to improve their fundamentals through asset rebalancing and various self-improvement efforts, and are looking forward to recovering their profitability gradually. In spite of the uncertainty of domestic and foreign businesses, Group's foreign business profits have been differentiated in the last three quarters, focusing on major countries such as Japan and Vietnam. The following 12 to 13 pages explain the performance of digital sustainable business activities. From page 15 to page 18, it is the second performance of the company's value-added planning. Overall, we can say that we are showing good results in all aspects, such as performance and speed compared to last year and this year's plan. Please refer to the data for more details. From page 18, we have listed the financial status of each group and detailed profits, operation and delivery status, so please refer to them. Lastly, the current Korean financial industry We are preparing for an important task called a major change in the production finance for Korea's economic reform and sustainable growth. In the future, the financial group will continue to maintain the capital distribution expansion structure of corporate finance, which has been consistently promoted so far, and will carry out the role of financial support, such as financial communication, risk burden, and growth support, based on the efficient management influence and the supply of funds to the right places. 이상으로 전체적인 발표를 마치겠습니다. 경청해 주셔서 감사합니다. 네, 감사합니다. 그러면 지금부터 여러분의 질문을 받도록 하겠습니다.

질문이 있으신 분은 줌의 손들기 기능 눌러주시기 바랍니다. 질문 받겠습니다. 네, 첫 번째 질문은 This is Jung Joon-seop from NH Investment. Please ask your question.

Hello, my name is Jung Joon-seop, and I'm a member of the NAE. Thank you for your question. I would like to ask two questions. The first one is related to capital policy. Recently, the government has been promoting the introduction of tax-dividend tax-dividend tax. In addition, competitors are about to implement tax-dividend tax-dividend tax. In terms of individual tax-dividend tax benefits, if there is any change in the capital policy, please let me know. Second, it is related to female delivery. The government continues to strengthen the management of the branch, and it is known that this year the limit has been exceeded. And on the other hand, due to the recent increase in asset investment demand, the bank's budget demand is expected to decrease. It seems that both female delivery and delivery will not grow easily in the future. Please wait a moment while I prepare the answers to the questions.

There are two questions. I will answer the capital policy first, and then the CFO of the bank will tell you about the quarter and the long-term prospects of the bank. There are two questions related to capital policy. One is related to dividend income separate tax and the other is related to non-tax dividend. There was a discussion within the board of directors. Recently, through the board of directors workshop, there was a discussion about the future policy. Of course, since the business plan for next year has not been established yet, it is difficult to say that a agreed decision has been made, but of course, from our point of view, if the separation tax is implemented, . . I think it's okay to say that this part is actively promoted because there is no big advantage in terms of the overall value of the company and the number of indicators that our customers have. Next is the non-cash payment. I also mentioned non-cash payments a few times before. Actually, internally, we already have enough benefits for payment. However, in terms of the entire industry, In many ways, there is a movement towards tax evasion. If we do the same, I think we should continue to look at the positive side of things. Regarding the overall policy on tax evasion, I think we will be able to sort it out by discussing it with the board at the end of this year and next year. Overall, I would like to say that we are looking at both sides from a positive point of view.

In the first half of the year, we grew conservatively considering our previous year's growth. As you said, we grew by about 7 trillion won until September. The bank's own limit, the bank's own funds, is a little over the government's guidelines, and in the fourth quarter, it is expected to keep it to some extent. In terms of corporate loans, as we said earlier, we had a conservative growth in the first half of the year. In the third quarter, we actively increased corporate loans, and in the third quarter, we increased about 4 trillion won from corporate loans. Overall, we were planning to increase 9 trillion won in corporate loans this year. I think it will be a little less than 7 to 8 trillion won. Overall, we have a growth plan of about 5% of the original loan. In fact, in the 25th year of this year, it will grow by about 4% and there will be no big difference compared to the plan. I think it will be difficult to grow in the next year due to various regulations and environment. However, I think there will be constant demand for government policy funds. I think the corporate debt will grow a little more politically, such as productive finance, but overall, I expect it to be around 5% or 6% next year. I'd like to talk about the reserve fund. There was a talk about the reserve fund this year, and we see the reserve fund as important in terms of payment, but also in terms of cost management. So, in fact, in this year, we see that the NIM has been somewhat prevented from falling while managing the payment cost. However, there is also a part that takes the stability of payment, so we are implementing the reserve fund strategy appropriately. In the fourth quarter, the bank has a lot of full-time jobs, but we are planning to manage them in advance. As you said earlier, there is a possibility that there will be difficulties with the reserve fund. Individuals are losing their regular interest on the stock market. I think we have run the interest rate in a tight way. So next year, we plan to run the interest rate properly and continue to take the stability base. That's all.

Among the things you said at the end, I think you also talked about how the flow of funds is changing towards the capital market. As the CFO of the bank said, I don't think there are any major changes or changes in the bank's funds yet. However, I think that the flow of the entire market, including the capital market, is quite solid. So, if we look at how we are going to distribute resources internally, next year, we will be able to distribute more resources

Please raise your hand if you have any questions. We have a question from Won Jae-yong of HSBC.

Thank you for making good progress even in difficult environments. Looking at the 9th page, it seems that the balance rate of the bank continues to stabilize. I would like to ask if you think that the fourth quarter will be held and that it will be held next year. Then, the card collection rate has dropped a lot in the third quarter. Is this because of the influence of the public life consumption coupon, or is it a temporary drop? I would like to ask if there is a stabilizing appearance in the card part of the crisis. Next, I would like to ask about the shipping cost. I know that the guideline was now in the middle of 40pp. I think you took good care of the 3rd quarter. However, I think that the 4th and 4th quarters can go up a little more because we are accumulating cash in the season. Then, is it right to expect a little higher cash flow than we expected? Or in the 4th and 4th quarters, Thank you. Thank you for your question. Please wait a moment while we prepare the answer to the question.

Thank you for the good question.

First, you asked about the overall efficiency. Second, you asked about the shipping cost. Secondly, I would like to answer the second question about the line cost. Next, I would like to talk about the overall condition of the liquidity. Next, I would like to talk about the liquidity of the bank and the card CF. In conclusion, I think that the 40BP mid-to-late-year plan that we talked about in the first half of last year is also effective at the end of the year. Of course, the quarter-finals will have various seasonal factors, such as interruptions, If I try to simulate various things, I think it will be enough to cover the 40bp mid-to-late level in the current range. Of course, even in the short term, there will be no chance that various variables will not occur, but if it is expected at the current level, I will say that the 40bp mid-to-late level that I have is still advantageous. Hello, I'm Park Nong-kwang from CRO.

I would like to talk about the overall availability. As you said, you talked about the stability of the bank's balance rate trend. Overall, our group is showing a slightly flattening appearance in terms of profitability, not only for banks but also for non-bank groups. However, as you can see, the game view is not clear. Thank you. If we continue to maintain the current standard, we expect to see a positive outcome. As you know, we are trying to maintain the continuity of the economy of banks in Korea.

Yes, I'm a CFO of a bank. In addition to what Mr. Ciaro said, it's not a big difference, but in the case of Shinhwa Bank, there is a part that has not been good among the four major banks in Korea until a few years ago in terms of profitability. So, for that part, it is important for us to have growth and profitability, We are aware that the most important task of the bank is to manage the liquidity. We have made a lot of efforts. We manage the portfolio of credit scoring system and so on. So, the interest rate is relatively stable among the four major banks, but as you said before, it is still too early to say whether the liquidity or interest rate has stabilized. The situation of flatting is continuing, but I think we can't let our guard down. So, as you said, I think we should pay attention to the health of the next year and take care of it. In addition, in the case of banks, the cash flow is managed by the entire group, but I think it would be better to take a conservative policy regarding the cash flow in the fourth quarter.

Yes, I'm Park Hae-chang of CardCF. CardCF is looking at the pre-pandemic period for the pre-pandemic. This is the ratio of the pre-pandemic to the normal pre-pandemic. This is the concept of the new pre-pandemic entry. It took a peak of 0.45% in February and went down to 0.4% in September. The reason why it got better in September is that, as you said earlier, the consumption coupon capacity is a little big. Because of the consumption coupon capacity, the sales of self-employed people are rising, I don't know. I don't know. Thank you very much.

Thank you very much. Yes, the person who is asking the question right now is Doa Kim from Hana Investment. Please ask the question.

Yes, hello. Thank you for the question. Rather than a clear answer to this question, I'd like to ask you what you're thinking right now. Looking at the balance sheet this time, it's been a long time since the spread of interest was meaningful. I'm looking at the bank's. It's a situation. I think the interest rate dropped from May last year to May this year. Compared to that, I think all the banks did a great job this year. If this is the case, I think it's better to raise the interest rate by the end of next year. I don't know how long it will go, but I think the performance of the securities industry is very good. So, considering the distribution of capital for next year, is it better to continue to increase the number of shareholders? Thank you. Thank you for the good question. Please wait a moment while we answer.

Thank you for your question, Mr. Kim. I think the question you asked is exactly the same as the question we've been thinking about internally. First of all, we think about the spread of interest. Overall, the standard interest rate has dropped twice this year, and I think it will drop about once a year. Overall, it's true that the interest rate is falling a little bit, but if you look at the market interest rate, The situation in the U.S. and in Korea But considering the various conditions, I don't think the interest rate is going down as much as I thought. So I think there were some things like that. As a result, I think the year's margin didn't fall that much easier than I thought it would last year. It's only in the short term, but in the long term, the U.S. and Korea are all at least 50pp, 70pp. I think interest rates will fall in the long term. In fact, the interest rate growth rate is still low compared to the external growth rate in the end of September. The interest rate growth rate is still low compared to the external growth rate in the end of September. On the other hand, what I think is a little positive is that recently, the capital market and interest rates are quite good. So, the interest rate of stocks like brokerages and IVs is good, but that direction is necessary for us to achieve corporate value management plans in the future, so we are going to continue to explore that part. As I mentioned earlier, the problem with the allocation of resources is that the direction of next year is to increase the allocation of resources to the capital market rather than the bank. On the other hand, the allocation of capital and growth, as I have already mentioned to you as a stockholder like a company, We will continue to follow the principle. However, as you can see, the ROE is improving, but it is still lower than the COE we have, so it will continue to be resilient, There is no change in the overall trend to follow the flow of stock planning like a company. In fact, because the growth rate of assets itself is so low, it cannot be taken so high. Anyway, I will say that the allocation of resources will take the current big frame, but the allocation of resources will be distributed to the capital market a little more to match the overall flow.

I hope that answers your question. Let's move on to the next question.

Hello, thank you for the opportunity to ask a question. I'd like to ask you a question about the CET-1 ratio this time. It seems that the impact of loan asset growth is a little big. In fact, if you look at the content you mentioned earlier, it is said that the RWA is relatively low in the government guidelines for the loan rate. Thank you. Thank you for the good question. Please wait a moment while we prepare your answers.

You asked about the future direction of the capital ratio including RWA. RWA has grown a little in the third quarter. Compared to the first half of the year, the growth is a little higher, but if you look at the overall RWA growth rate, it is still at a relatively low level compared to the previous year. In the third quarter, RWA has grown a bit, but in terms of the year-on-year, compared to the growth rate of RWA, which won this year, I think it will go a little lower. In the future, I think that the normal growth rate of RWA will continue to flow for a long time. And if you look at it internally, in the case of shop loans, the market demand has gone up so much over the 2nd and 3rd quarter of this year, but if you look at various regulations and things like this, I think the reality is that it is difficult to increase the company's loan. Then, corporate loans will be the center of growth. As you can see, we are relatively we have been doing a lot of fund-sharing for corporate loans. So overall, the management of corporate loans will be much larger, but I would like to say that it will be managed in the overall framework so far. The CETON ratio is a little higher this year than last year. I think I can tell you that we have raised the level by considering various variability in the future. As you know, I don't think it's a good thing to raise the CTO ratio, so from a financial efficiency point of view, I think it's enough to be in the middle of 13%. However, in the fourth quarter, the profit will decrease a little in terms of the season, so it will probably fall a little more than now. Even if it falls, I mentioned 13.1% as the base, will be managed at a much higher level than that. Anyway, the CETON ratio is the most important thing in our future asset growth policy, so we will keep the base and manage it stably so that it can be considered as a buffer in the future.

Thank you for your answer. Let's move on to the next question. If you have any questions, please raise your hand. I don't think there are any more questions. We have one more question. Thank you.