Shinhan Financial Group Co Ltd

Group CFO Jang Jung-hoon, Group CFO Go Seok-hwan, Group AX Digital Choi Hyuk-jae, Group CRO Rahoon, Shinhan Bank CFO Kang Young-won Group, Shinhan Card CFO Lee Jung-bin Group, Shinhan Investment Fund CFO Lee Hye-seong Group, and Shinhan Life CFO Joo Sung-hwan Group. I would like to ask for your interest and participation. Today's performance announcement order is the first quarter of 2026. Hello, I am Jang Jung-hoon, CFO of Shinang Financial Fund.

First of all, I would like to thank everyone who participated in the 1st quarter of the year. In the 2nd and 3rd pages of the data, I will explain the new corporate value stock plan of Shinhan Financial Capital, which was announced on Friday. Through the corporate value stock plan announced in July of 2024, we have talked about three goals, 10, 50, and 50, and we have accelerated various policies to achieve them. As a result, the goal of 50% of the stock exchange rate was achieved in the early stage, and the PBR was also significantly improved. I think that the direction of the plan and the performance of the company have had a significant and meaningful effect. In addition, the tax system related to the dividend has been reformed, and the government's efforts to activate the capital market have continued, so it was decided that a general re-evaluation of the existing plan was needed. As a result, the company upgraded its existing value-of-pricing plan centered on E4L and named it as Shinhan Value-of-Triple-Plus, and established a new value-of-pricing stock plan that reflects the current market environment and the strategy direction of the company. The value-opening plan of the financial support companies that have been announced so far has been limited to increasing the value-added rate of the shareholder in order to overcome the low shareholder return rate and to offer absolute goals at a certain point or to return all shares when the ratio is exceeded. However, I think we need a change in the value-added rate system, including a sustainable growth story, as well as a shareholder return policy that can be predicted. In the past, it was not a policy to simply recover capital or to target a certain number of shareholders, but to aim for sustainable value-of-sum plans based on a solid capital ratio, a sustainable value-of-sum policy, and the growth of the company organically. Accordingly, the Party has newly set three key points of interest. First, the ROE 10% plus. We focused on speedy improvement with the goal of raising the capital cost rate. Considering the current business portfolio of Shinhan Financial Group, we expect it to improve very quickly. For the next 26 years, we will focus on the capital market, and for the next 27 years, we will focus on female businesses, and we will gradually strengthen our non-banking competitiveness, and we will manage ROE by 10% to 12% by 2028. In particular, based on the PBR-ROC logic tree that has been specifically incorporated into the value of value data, we will improve the profitability of capital ratio management and group companies with a divided action plan. Second, the total exchange rate is 50% plus. At the same time, the party proposed an intuitive formula considering the ROE and growth rate of the company at the same time, based on the principle of capital distribution based on demand-earning rate. Through this, I think that investors can easily predict the direction and level of the stock market policy along with the growth of the company. However, as of now, in the section where ROE has to do COE, we have decided to gradually expand the supply and demand ratio for the previous year. The composition of the shareholder unit has also been reorganized, taking into account the needs of the investors and the reform of the tax system related to the dividend. While maintaining a progressive expansion of the DPS and dividend size along with the dividend policy currently in operation, we plan to maximize the revenue of the investors by using the non-credit dividend resources obtained through the recognition of the General Assembly in March of this year from the final dividend in 2026 for three years. For reference, we plan to increase DPS by more than 10% every year for the next three years. We will continue to communicate with the market about the success rate of the goal of increasing self-serve by 50 million weeks, which has been distributed according to a reasonable principle based on demand-benefit ratio. Third, the CTO ratio is 13%+. Considering the macro variability, we will secure sufficient capital buffer to maintain a stable capital ratio in any environment. In addition, we will make additional payments for extra capital generated through capital efficiency improvement such as RWA and SLIMA. In addition, we will check the difference from the trend every year based on the moving average and update the three-year guidance in the future to actively communicate with the market. From now on, I will explain the business performance of the first quarter of 2026. This is the highlight of the business performance on the fourth page. The Group CETON ratio at the end of the first quarter of 2026 is 13.19%, and it maintains a stable level despite the uncertainty of the domestic and foreign markets. Based on the solid capital ratio, the board of directors of Group CETON decided on 740 won as the weekly cash deposit in the first quarter of 2026. For reference, the standard of payment for the gold and silver cash is scheduled to be paid until April 28th, April 30th, and will be paid on May 29th. Out of the 7,000 billion won of self-sufficiency that was planned to be obtained by July of 2026, 4043 billion won of self-sufficiency has been obtained, and it will be collected as soon as the acquisition of children's stocks is completed. The short-term net profit of the first quarter of 2026 was 1.6226 billion won, which increased by 9.0% compared to the previous year, based on the growth of the top-line of the non-profit center. Group ROE and ROTCE recorded 11.9% and 13.4% improvements, each 0.5% per year compared to the previous year, through the robust financial fundamentals and capital adequacy management. For the next page, please refer to the investment assessment data to gather several indicators that can express the value of the stock market. Page 6, capital. The Group CETON ratio decreased by 68BP in total with an increase in RWA and a decrease in the stock market, but it was managed at a level of 16BP at the end of last year based on stable profits. Compared to the end of last year, Group RWA increased by 7.3 trillion won in asset growth and increased by 3.1 trillion won in exchange rate, but it was well managed within the planned range. We will do our best to provide enough funds needed for the future and to maintain a stable capital ratio through internal efficiency and strategic resource distribution. Please refer to the data on the 7-page asset list. This is the hand of the Group on page 8. In the first quarter of the group, the business profit of the car insurance company grew by 11.0% compared to the previous year, with a large growth of non-profit profits based on strong interest profits. I will explain the details of each item in detail from the next page. This is the interest profit on the 9th page. The group's interest interest has improved, and the interest interest on bonds has increased, and it has grown by 5.9% compared to the previous year. The NIM of the bank has improved its loan asset profit rate due to an increase in market interest, and the payment cost has also been well managed, and the EBP has improved compared to the previous quarter. The bank's original loan has been reduced due to the influence of the regulation, but it has increased by 1.4% compared to the previous year by strengthening the role of producing funds for the company. Please refer to the 26th page for more details. The next page is about interest rates. The group's interest rate has increased by 26.5% compared to the previous year, while the interest rate of the group has improved evenly in other areas along with the weakening of the interest rate. The interest rate has increased by 21.5% compared to the previous year, while the interest rate of the group has increased by 21.5% compared to the previous year, overall growth, and the government's capital market revitalization policies, including funds and unit fees, have also increased by 54.7% compared to the previous year, and have been continuously improving. The interest in the stock market has decreased due to the recent rapid rise in market prices, but the increase in the interest in the stock market has also increased. The benefit related to insurance has also increased by 8.7% compared to the previous year, and we expect it to be profitable at a stable level through large-scale CSM management in the future. This is the next 11th page. In the meantime, the cost-saving efforts of group companies have continued to increase by 10.4% compared to the previous year due to the impact of the education tax, while the net profit-saving ratio has decreased by 36.7% compared to the previous year due to the increase in net profit. In the first quarter, the loss rate increased by 17.5% compared to the previous year due to the increase in the number of shares sold by the bank and the decline in the number of shares sold by the company. In the meantime, the loss rate of real estate PF, which has been recognized as conservative, has decreased, and the one-time cost seems to be stable. With the recent uncertainty of the high-price rate and the recent uncertainty of the stock market, while the market risk continues, the big hand rate recorded 46BP, which rose by 5BP compared to the previous year, but it is a plan to take better care of the big hand rate, which was planned for 40BP in the middle of the year, as a goal. Next is the 12-page group's asset volatility index. The NPL coverage ratio of the group decreased by 12.4% compared to the end of last year, despite the group's active trading policy and conservative recognition of the loss. However, this has already been reflected in the previous year's loss cost, as a result of the increase in the group's fixed-interest assets due to the PF raise of the New Tak's responsibility for the mid-term and mid-term business. The annual interest rate of banks and cards, which improved gradually, has increased slightly in the first quarter, but in the case of banks, it records the lowest annual interest rate in the industry, and I think that the card has been able to be managed sufficiently by decreasing the overall assets and increasing the small-scale regulation of loans. However, due to the delay in recovery, the company's credit risk has increased, and the difficulties of the vulnerable customers have also continued, so it is thought that conservative asset sustainability management will be necessary in the future. Please refer to the details of the group's loss absorption capacity and the market price in the next page. The next 14th page is the group's profit. Shinhan Investment's stock market has expanded due to the rise of the capital market, and the interest rate has increased significantly, and the profit of self-sales has also improved, increasing by 167.4% compared to the previous year. Shinhan Bank's net profit grew by 2.6% compared to the previous year, despite the decrease in interest rates due to the increase in market interest and the increase in interest rates due to the increase in interest rates due to the increase in interest rates due to the increase in interest rates due to the increase in interest rates due to the increase in interest rates due to the increase in interest rates due to the increase in interest rates due to the increase in interest rates due to the increase in interest rates due to the increase in interest rates due to the increase in interest rates due to the increase in interest rates due to the increase in interest rates due to the increase in interest rates due to the increase in interest rates due to the increase in interest rates due to the increase in interest rates due to the increase in interest rates due to the increase in interest rates due to the increase in interest rates due to the increase in interest rates due to the increase in interest rates due to the increase in interest rates due to the increase in interest rates due to the increase in interest rates due to the increase in interest rates due to the increase in In the case of Sinan Capital, it was greatly improved compared to the previous year due to the increase in interest rates, such as dividend funds, due to the increase in interest rates due to the increase in market interest rates. Sinan Life was further improved compared to the previous year due to the decrease in interest rates due to the increase in market interest rates and the increase in market interest rates. From the recent performance announcement, investors have marked the short-term interest rates of each group, RWA, and ROC for each quarter, so please refer to it. On the 15th page, we have listed the details of the overseas business, Sonic, which has shown distinguished results in the past. Please refer to it. From the next 16th to 17th pages, we have listed the financial status of each group and the details of Sonic's operation and delivery status from the 19th page of the digital sustainable business activity. We will end the presentation here. Thank you for listening.

Thank you. Then we will proceed with the Q&A session with you from now on. If you have any questions, please raise your hand while you are connected to Zoom. Then we will take the first question. Yes, the first question has come in.

Thank you for the opportunity to ask questions. I have two questions. First of all, I would like to thank you for your detailed and detailed presentation. The first question is, not long ago, the Bank of Korea announced that some of the financial regulations will be eased in order to expand the production of financial funds. If we apply this eased content, how much do you think our capital ratio will improve according to the CETA? I'm curious. I wonder if the capital ratio has been improved to be able to be used in the weekly exchange rate. Because the purpose of the regulation in the financial party is to use the production capacity. In a way, I think it is arranged with the 13.4% extra share of the COT1 announced earlier. Please explain how to see this. The second question is about the billiard policy that you mentioned a little while ago. In the 16th page of the data, you mentioned the internal limit of revenue, and you said that you would decide growth and return by comparing this with the P.E.R. return and cost of equity. I wonder how many percent you are looking at the internal limit of revenue.

Yes, thank you for the question.

Please wait a moment while we prepare the answer to the question. The first question is about the impact of the deregulation of capital regulations. Group CRO will answer it. I will answer the rest after that.

Hello, this is Group CRO. Thank you, Mr. President. Since we are in the process of applying for approval, the number may change depending on the approval results, but we expect it to increase by more than 10BP based on the CT1 ratio. Another thing is the exclusion of the loss of operating risk. In relation to the right to exclude the loss of operating risk that has been recognized for more than three years from the operating risk R&W, we will continue to apply for approval um uh

I think there is room for improvement of more than 20pp. As the chairman said, as we stated in the value-opening plan, As we keep looking at the variability of each quarter, we see that there is a change of up to 36bp per quarter, which is more than we thought. So, we said 13% plus, but like the overseas peer or DBS model, 13.0 to 13.4 sections are in our current plan that we will continue to manage the sections without any particular changes. However, as you said, we will decide on how to use that part in the year-end. We will decide on how to use that part in the year-end or next year. Earlier, you talked about the internal profit margin. When we announced the results in February of the first quarter, we said that the internal profit margin of 9.1% is the average ROE, and we will increase the short-term profit margin by 10% or more. As you know, the internal profit margin can be seen as the profit margin of capital If we set the target ROE of COE and ROE as 10% in PBR 0.8, we believe that the current profit margin is a little higher than 12.5%. However, as I said before, the level of ROE of the previous company is lower than that of COE, so we carefully set the target ROE and we will continue to improve this part of the project. That's how the plan is implemented.

Mr. Park. Mr. Park. I'll give you an additional answer. I usually don't talk about finance. I'm the strategic director of Shinhan Financial Group. I'm in charge of the overall production finance of the group. In relation to the number 1 mentioned by Mr. Jung, As CF said, it can be used as a main source, but the purpose of the capital regulation is not to be used as a main source. It is to be used as a source of production finance, so fundamentally, in accordance with the purpose, I think it's right to use it for the growth of production finance. But we can't cut it with a knife like this, so as CFO said, we'll look at it as a whole. I think you can understand it like this.

Yes, I hope that was a sufficient answer. We'll take the next question. Next question is from Won Jae-woong of HSBC. Please ask your question.

Thank you so much for the detailed analysis. I'd like to ask you two questions. First of all, please explain the definition of growth rate in the formula. Depending on the capital growth rate or the growth rate of RWE, the number of shares changes significantly. If ROE is 9.5%, the growth rate of RWE is 4-5%. And the capital growth rate is about 3% on average, so the range seems to be quite large. I think it would be much easier for us to predict if you could tell us exactly which of the two you are holding. And I guess this time will be decided once, but I think it will continue to be used as the amount after announcing the performance of the quarter-final. So, what kind of season should we look at this year? Thank you for your question, Mr. Won.

Please wait for a moment.

Yes, Mr. Chairman. Regarding the first question, as you said, we had some concerns. If we go a little deeper, the reason why this concept came out was that in the end, The second is that if we calculate the increase rate of capital, this is the logic that comes out. In the end, the meaning of maintaining CT1 means that the increase rate of capital should be greater than the increase rate of RW. Then, the growth rate of capital may become the main factor. However, it will be a more stable ratio rather than changing temporarily depending on whether RWA will be 3% or 7%. However, as the chairman is concerned, we are not using 2% or 3% of the average increase in capital. Instead, we will remove various buffers that are controlled by capital, and the increase in pure capital will result in an increase of about 4% to 5% as we think. Then, naturally, we will try to manage the increase in RWA. However, as I said, the reason why we added the word plus alpha is that if there is additional capacity for this part, we will be able to add that part more. In fact, the most beginner... To put it simply, the target ROE is the growth rate, and the growth rate is the increase in capital or the increase in RWE. So I used the expression again, but that part will probably be 4% to 5%, and then maybe in three years, we will be able to continue to take 50% to 60% of the share. As you said, we will talk about the consensus of the plan during the 4th quarter performance announcement, and we will talk about the growth rate, price, margin, and CCR at that time. However, as we put it in the plan, if we apply this this year, The first is that the average ROE is 9.11%, which is lower than the current COE, so we need to increase the share price rate a little more than last year. The second is that the RWA growth rate and the increase in capital, as we calculated, is about 5.1%, as it is in the example. However, we had a plan internally to lower about 8BP of CET-1. The return rate will be about 4%, so this year, we are calculating 50.2% plus alpha to 53% max. Yes, I hope that answers your question.

Let's move to the next question. Thank you for your time. I have one more question.

Please wait for a moment while preparing your answer.

Ah, yes, I will answer this question from the Securities CFO. Hello, I am Lee Jae-sung, the CFO of Shinhan Investment Securities. Thank you for the good question. Last year, we received a license for the launch. We started the launch in February, and now we have launched about 24 billion won. In the coming year, we will increase the size of the launch and operation in order to take the launch as a stable vehicle. Yes, I hope that answers your question.

Next question, please raise your hand if you have a question. Yes, I'd like to ask a question from Kim Do-ha of Hana Junkon. Kim Do-ha, please mute your voice.

I'm sorry. The first question is about the numbers. I think the NPL coverage ratio has dropped a lot from 110% to 110% based on the stock price. However, it doesn't seem to be an improvement cycle yet. I think there is a need for settlement for the burden of MPL that has come up. At the moment, we are also worrying about the lagging of oil and gas companies, so it would be good if you could explain to us how you are looking at the level of this volatility in the year. I'd like to ask you two simple questions. You said that you will pay the tax for three years, but since 9.9 trillion won has been transferred to the government, you will not use it all this year, but you will use it later. Thank you for your question.

Please wait a moment while we prepare for the next question.

Yes, the first question is about the dryness. I will be the one to answer it. And I will be the one to answer it. And I will be the one to answer it. And I will be the one to answer it. And I will be the one to answer it. And I will be the one to answer it. And I will be the one to answer it. And I will be the one to answer it. And I will be the one to answer it.

And I will be the one to answer it. And I will be the one to answer it. And I will be the one to answer it. The fixed ratio of the group is 0.81%, and the NPL size increased by about 4,685 billion won compared to the previous year due to the support of the border. As a result, the NPL coverage ratio of the group dropped by about 12.4% compared to the previous year at 113.6%. In fact, if you increase the time period, When it comes to the overall cost of the group, we have to consider the year-round cost of the group before the 2022 financial year. It was well maintained at less than 1 trillion won, but as the financial crisis escalated, it began to exceed 2 trillion won from 2023. However, due to recent support from the Ministry of Health and Welfare, some of the number of patients has increased compared to the previous year, but overall, I think that the number of patients in the group and the number of patients in the private company, the proportion of patients who have been hospitalized, and the quality of treatment indicators have been improving in the long term. So what we are aiming for is to manage the NPL coverage ratio to 150% as the bottom line based on the bank. Through that, we are continuing to improve the reliability and selectively sell the product. Considering the current level of settlement and portfolio, we believe that the NCGR coverage ratio can be managed to 110% as the group level. That is all.

As I said, we will provide guidance for the three-year plan. So, we are talking about the three-year plan. As you said, we will consider the remaining funds as an additional plan. I will tell you the duration and if there is anything to add, I will tell you.

Yes, I'm Ju Seong-hwan of Life CF. As you can imagine, our market share has risen more than 40pp compared to the end of December, so our duration gap was slightly higher at the end of December. However, at the end of March, we expect it to be about 1. So the duration gap is getting better and better.

I'd like to add one more thing. I think you're curious about the topic of capital control. The OCI's evaluation board has a certain amount of information, but we have a lot of information in the past, such as the connection control through M&A, so I think it would be good for you to judge that the details are all detailed.

Yes, I hope you have a sufficient answer. There's another question. I'd like to ask a question from Cho Ju-yun of the J.P. Morgan Group.

Hello, thank you for the question. I'm a little confused about the tax return that you just mentioned, so I'd like to ask you again. We transferred 9 trillion won to the price return support, and you said you're going to pay the tax return in 3 years. Are you going to pay the cash return as a tax return or are you going to pay the separate tax return according to the tax reform? I am wondering if it is clear that when we apply tax evasion, tax evasion based on generation change, the income tax is increased by more than 10% every year, but when you apply tax evasion, the income tax is increased by more than 10% every year. Next, the second question is, as you said earlier, this year, the capital market is active, so you have been growing the stock market for 26 years, and you said that your goal is to improve the liquidity of the stock market in 2017. I'm curious if you have a stock market card. I think it will be possible to improve the stock market. However, the merchant fee of the stock market is still decreasing, and it is difficult to think of how to improve the profit in a situation where the stock market is reduced. If you have a strategy, I think it would be good to give it together. Thank you.

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

To make it a little clearer, as you said, this year, as you know, since we held the general election in March, we can't do the default tax. will be taxed when the next general election is over. So, as I said, this year, as shown in the graph, the first, second, and third quarter will be taxed separately. It will be taxed next year when the general election is over. As I said, the next three years will be taxed separately. In fact, there was a concern. There was a period of 3 years of separation tax, and there was also a concern about what to do when this period is over. First of all, the investors had high expectations for tax evasion, so we decided to tax evasion within our capacity. As you said, as we tax evasion, we do not have to increase the amount of tax evasion by more than 10%. But that 10% or more is the scale of the dividend. But what we're talking about is that we're going to raise more than 10% of the DPS that investors feel. As I said before, we expect Sonic to grow more than 10% this year, and we expect DPS to grow that much naturally. In addition, we will continue to increase our self-sufficiency rate, so even if we increase the DPS by more than 10%, we can raise the DPS by more than 10% with the condition that we can raise the DPS at the end. As you know, the second question is about the securities industry. 10 years ago, the securities industry was the last in the world. As you know, the ROE of the securities industry is getting better and better. We have about 5.8 trillion won of capital, and we expect ROE to increase it. We are working on making it sustainable. You were wondering about the female-owned business earlier. When we talked about the card's performance earlier, it fell about 20 billion won this year from the previous year's momentum, but there is already talk about the fall of hope in the first quarter. As we said before, if we have some unbalanced profits, We are concerned about many things, and we are careful about the relationship between the stakeholders, but we will continue to improve the structure of revenue and cost over the year. If we continue to do so, the results of this year will not increase rapidly, Yes, I hope that answers your question.

The next question is from Jung Tae-joon of Mirace.

Hello, I'm a member of the team. There are two questions. The first question is, we are in the middle of a pretty good season, and we are in the early stages of recovery from last year, but I would like to ask you if you can give us guidance on the future when you are in this situation. Thank you for your question. Please wait a moment to answer two questions.

The first question will be answered by the CFO of the bank. The second question will be answered by the CFO of the bank.

Hello, I'm the CFO of the bank, Kang Yong-woong. First of all, I would like to briefly talk about NIM. Currently, NIM is 1.6 in the first quarter, and it has risen about 5BP compared to the first quarter. It has increased by about 5BP compared to the previous year, and it has improved by about 2BP compared to the previous year. There is a reason why the market price has risen, and I think there was also a reason why the environment of the market has been created. And I think it is also due to the fact that we have continued to promote a growth strategy centered on profitability since the second half of last year. But we have to look forward to what the market price will be like in the future. If the domestic market is a little difficult to think about, there are also factors that will cause the interest rate to fall, but if you think about the price and exchange rate, it will be difficult for the interest rate to move up and down. So, first of all, we expect that the interest rate will continue to remain at the current level. We are expecting that NIM will improve as much as possible if we expand the production and finance of NIM through the expansion of the base country and expand the flexible core budget as much as possible.

I think it would be good if you could see that we are trying to maintain or improve the level of NIM as much as possible. To answer the second question, I said I would take care of 13.0 to 13.4% of the section, but if it exceeds 13.4%, will it all be given 100% mechanically? That's not it. As I said, if it exceeds that section and it is a bit more than that, of course, we will return it to the shareholders. However, as I said earlier, we are also cautious about the internal profit margin, but we think that we have entered a higher situation than the current market COE. and decide how to use it at the end of the year or at the beginning of next year. I'm not saying that 13.5% of overseas PEERs are over 13.5%, but I've also studied the logic of distributing the excess amount over three or five years. As I said before, the most important thing is ROE. If ROE increases, of course, the return rate will increase naturally, and I believe that the scale of the return will also increase. However, through the optimization of growth efficiency, we will promise that we will try to maximize the supply and demand.

Yes, thank you for your question. We have another question from Park Shin-young from Goldman Sachs. Park, please go ahead.

Hello, I'm Park Se-young from Goldman Sachs. I'd like to ask you a little more about the ROE you mentioned earlier. As you said, I think it's a picture that the ROE will increase as it strengthens and the share price will increase. So if we look at the data, it says that the ROE level will be 10 to 12% for the next three years. When you divide it into banks and non-banking, you said that banks are aiming to maintain the status quo and non-banking is aiming to improve by 3-4% in terms of ROC at the current level. In fact, I think it's a pretty big improvement, so what do you think is the main driver to achieve this? Thank you. Thank you for your question. Please wait a moment.

As you can see in the plan, we used to be the strongest group of non-bankers. I think it's been a while since we've been through a lot of hardship. The basis for the improvement of non-bank ROC is, of course, the influence of the market. It's probably a different peer group, a group that has various securities with well-developed brokerages. I'm sure the ROC and ROE of the non-banking companies will improve. I'm sure you're expecting that. Then how much is the level? The reason why I told you about the speed is because other peer group securities companies may have increased their profits a little bit, but if it goes like that, Since we started from the bottom, we expect that ROC will not be at the level of 10%, but will be able to reach the absolute level. That's what we expect. As a result, the bank and the stock market will be at odds and the insurance will be stable. As I said before, it is not as easy as you expect to put the top line's profitability. Rather, we are looking at two different directions. I used the term stepwise earlier. This year, we are going to focus on securing customers. In the end, the customers will be connected to the company's profits. We are preparing for that internally. In a more direct sense, it is about the efficiency of the cost. As I said before, we need to improve the structure and build up the basic physical strength so that we can expect that the cost of delivery will be reduced and the cost of charging will be improved. The cost-saving effect that we can do, or the various shapes that we can use to improve the basic physical strength when the top-line on-off profit occurs. And if we can add EPS, we can also add bold M&A. I hope that answers your question. We are running out of time.

Next question is from Shane Matthews from WhiteHawk Capital.

Thank you for the opportunity and congratulations on the results. Just one question. Wanted to confirm the group level NPL coverage, is it targeted at 110% now? And if that's the case, when we look at pre-2019 levels, the coverage levels were maybe 20-30 percentage points at least higher. So why consider operating at a lower coverage level now versus before? What is the change in thinking at this point in time?

Yes, congratulations on your excellent performance. I'm wondering if it's right to lower the goal of NPL coverage by 110% in the group. It's a low level compared to 2009 or before, but I wonder how you manage your goal level lower in the first place due to some changes.

Please wait a moment for the answer to the question.

Group CRO, please answer. If necessary, I will supplement it. Yes, this is Group CRO.

When I was talking about the line-up cost, I talked about the line-up cost trend over a long period of time. The real estate market has not been good since the financial crisis in 2022. As a result, the line-up cost is also the main concern. The price of real estate in the real estate market is not active. And until the real estate market is back to normal, we need to organize the real estate market. In terms of the period, it seems that the overall NPL coverage ratio is maintained at a low level. I expect that the overall NPL coverage ratio will also go up if we can strategically take measures according to the future financial situation or the stability of the market. That's all.

I would like to add something. The reason why we are down 110% is because, as CRF mentioned earlier, the bank will maintain more than 150%, and the reduction in this will be considered as a real asset collection issue among our business portfolios. Through lawsuits and such, we were able to make that part available as our assets, and we already recognized the loss. The problem is that this asset has been set up as NPL until it is sold. Now that there is an absolute number, we have dropped it to 110%. I think we need to look at the real estate market. Even if we sell it at a discounted price, the NPL will be refunded in about a year or two. So, I think it would be good if you could understand that our goal is to reach 110% in the short term.

Yes, I hope you have a sufficient answer. I think the time has passed somewhat. Since there are no additional questions, I will end the 1st quarter business performance presentation of Shinhan Financial Group in the 26th year. The presentation content can be found on our homepage and Shinhan Financial Group IR YouTube channel. Also, the value of the product we announced today Thank you.