Shinhan Group Symbol(source: shfg.co.kr)
SK Securities maintained a "Buy" rating and a target price of 73,000 KRW for Shinhan Financial Group (055550) on April 28, highlighting its strong shareholder return commitment and attractive valuation compared to peers. The previous session's closing price was 49,750 KRW.
Analyst Seol Yong-jin from SK Securities noted that Shinhan Financial’s first-quarter controlling interest net income rose 12.6% year-on-year to 1.4883 trillion KRW, in line with market consensus.
Despite falling interest rates, the group's net interest margin (NIM) improved by 4 basis points (bp) quarter-on-quarter, driven by cost savings on funding. Won-denominated loans also grew 0.4% quarter-on-quarter, centered around credit loans and small and medium-sized business loans.
The credit cost ratio stood at 0.41%. Although the burden from project financing (PF) restructuring and additional provisions related to real estate trusts (approximately 32.1 billion KRW) decreased compared to last year, the overall level of regular provisions rose due to ongoing asset quality deterioration.
Shinhan Financial’s Common Equity Tier 1 (CET1) ratio increased by 21bp quarter-on-quarter to 13.27%, supported by strong earnings and risk-weighted asset (RWA) growth management. Alongside the earnings release, Shinhan raised its CET1 ratio target to 13.1%, factoring in buffers for uncertainties, and announced a 42% total shareholder return target for 2024, demonstrating a strong commitment to capital management and shareholder returns.
Seol stated, "Despite aggressive capital policies, the stock trades at a discount of more than 20% compared to peers based on the projected 2025 price-to-book ratio (PBR), making the current valuation highly attractive and easily accessible."
He also noted that the earnings rebound, aided by a base effect from structured products (ELS) compensation, and the maintenance of last year’s profit levels were positives. However, the increased burden related to asset quality, including higher credit costs, was seen as a downside.
Seol added, "Given the currently unfavorable environment for selling non-performing loans (NPLs), asset quality indicators are likely to remain weak for some time, and credit cost burdens will persist to some extent. Particularly, in the largest non-bank affiliate, the card subsidiary, delinquency rates have been rising sharply since the second half of last year. Meaningful improvements in asset quality will be essential before we can expect a step-up in Shinhan Financial’s earnings strength."
*[KOSPI]Shinhan Financial Group(055550) is a financial holding company that provides various financial services including banking, credit cards, financial investment, life insurance, asset management, specialized lending, and savings banks. The market capitalization is 25.07 trillion won(as of April 25, 2025, closing price).
Shinhan Group Symbol(source: shfg.co.kr)
SK Securities maintained a "Buy" rating and a target price of 73,000 KRW for Shinhan Financial Group (055550) on April 28, highlighting its strong shareholder return commitment and attractive valuation compared to peers. The previous session's closing price was 49,750 KRW.
Analyst Seol Yong-jin from SK Securities noted that Shinhan Financial’s first-quarter controlling interest net income rose 12.6% year-on-year to 1.4883 trillion KRW, in line with market consensus.
Despite falling interest rates, the group's net interest margin (NIM) improved by 4 basis points (bp) quarter-on-quarter, driven by cost savings on funding. Won-denominated loans also grew 0.4% quarter-on-quarter, centered around credit loans and small and medium-sized business loans.
The credit cost ratio stood at 0.41%. Although the burden from project financing (PF) restructuring and additional provisions related to real estate trusts (approximately 32.1 billion KRW) decreased compared to last year, the overall level of regular provisions rose due to ongoing asset quality deterioration.
Shinhan Financial’s Common Equity Tier 1 (CET1) ratio increased by 21bp quarter-on-quarter to 13.27%, supported by strong earnings and risk-weighted asset (RWA) growth management. Alongside the earnings release, Shinhan raised its CET1 ratio target to 13.1%, factoring in buffers for uncertainties, and announced a 42% total shareholder return target for 2024, demonstrating a strong commitment to capital management and shareholder returns.
Seol stated, "Despite aggressive capital policies, the stock trades at a discount of more than 20% compared to peers based on the projected 2025 price-to-book ratio (PBR), making the current valuation highly attractive and easily accessible."
He also noted that the earnings rebound, aided by a base effect from structured products (ELS) compensation, and the maintenance of last year’s profit levels were positives. However, the increased burden related to asset quality, including higher credit costs, was seen as a downside.
Seol added, "Given the currently unfavorable environment for selling non-performing loans (NPLs), asset quality indicators are likely to remain weak for some time, and credit cost burdens will persist to some extent. Particularly, in the largest non-bank affiliate, the card subsidiary, delinquency rates have been rising sharply since the second half of last year. Meaningful improvements in asset quality will be essential before we can expect a step-up in Shinhan Financial’s earnings strength."
*[KOSPI]Shinhan Financial Group(055550) is a financial holding company that provides various financial services including banking, credit cards, financial investment, life insurance, asset management, specialized lending, and savings banks. The market capitalization is 25.07 trillion won(as of April 25, 2025, closing price).