Shinhan Financial Group Co., Ltd. Q3 FY2022 earnings call

• Business Results: Group's cumulative net income in Q3 was KRW4,315.4 billion, with Q3 net income KRW1594.6 billion. Ordinary net income excluding office sale gains was KRW1272.8 billion. Cost income ratio was 40.1%. Credit card ratio maintained stable; conservative provisioning policy continued. Dividend per share KRW400 decided, with treasury stock buyback and cancellation of KRW150 billion.
• Risk Management: CRO discussed preemptive risk management measures, including monitoring vulnerable segments, liquidity management (maintaining stable liquidity ratio exceeding regulatory standards), and capital adequacy (CET1 ratio expected 12.7% at end of September).
• Digital Strategy: Digital platform MAU surpassed 21 million, with Shinhan's My Data service chosen by 6 million people. 6 million Sign users for secure mobile transactions; fraud prevention of KRW38 billion by Q3. New digital business profit over KRW30 billion, Data business income over KRW10 billion, Life platform new business over KRW20 billion.

In Q3 2022, the Group's interest income posted KRW2,716 billion, up 2.7% QoQ, with interest-bearing assets growing 2.3% QoQ. The Bank's NIM was 1.68%, up 5 bps QoQ but growth slowed due to funding cost rise. Non-interest income was down 28.8% QoQ due to declining fee income and gains on AFS securities. SG&A increased slightly but was managed stably excluding certain expenses. Credit cost was managed at a stable level, with delinquency rates stable for Bank (0.20%, up 1 bps QoQ) and Card (0.86%, up 1 bp QoQ). Subsidiaries had mixed results: Bank's net income increased due to interest income growth and lower provisioning; Shinhan Card had net income decrease despite credit purchases growth; Shinhan Securities and Shinhan Capital had decreases; Shinhan Life's profit was solid but investment profit decreased; capital market subsidiaries had net income decline.

• Group's cumulative net income in Q3 was KRW4,315.4 billion. Q3 net income was KRW1594.6 billion. Ordinary net income excluding office sale gains was KRW1272.8 billion.
• Dividend per share KRW400 decided, with plans to maintain solid increase in shareholder return ratio while maintaining appropriate capital ratio.
• Continue conservative provisioning policy to address potential credit risk.

• Real Estate PF: Proportion of total portfolio about 2%, NPL KRW20 billion. Need to strengthen credit line management and bidding strategy for future.
• Interest Rate Hikes: Impact on funding costs, potential asset quality deterioration, and need for monitoring vulnerable segments.
• Digital Divide: Efforts needed to ensure safe financial life and overcome digital divide.

Q: About funding cost for Card business and Bank's low-cost deposits?

A: Card CFO expects funding cost to increase to 3.2 next year, with efforts to balance assets and manage profitability. Bank CFO expects low-cost deposit reduction trend to continue in Q4 but rebound from Q1 next year due to seasonal factors and project reflections.