Shinhan Financial Group Co., Ltd. Q1 FY2024 earnings call

Financial Performance - Net income was KRW1.3215 trillion. Interest income grew 9.4% Y-o-Y. Noninterest income grew 0.3%. G&A increased 1.2%, but cost-to-income ratio was 35.9%, improved by 2 ppt Y-o-Y. - Asset Growth: Interest-bearing assets up 3.6% Y-o-Y. Bank's loan asset in won grew 2.7%, retail loan up 1.2%, corporate loan up 3.9%. - Margin Management: Bank's NIM 1.64%, up 2 bp Q-o-Q. Focus on core deposits and ALM management to improve funding cost. - Noninterest Income: Fee income even across business areas, insurance income up due to CSM write-offs, credit card fee up, brokerage fee up from stock trading. - Credit and Provisioning: Credit cost ratio 38 bp, recurring CCR 30 bp. Preemptive provisioning in Shinhan Capital and Asset Trust for real estate. - Capital and Dividends: Provisional CET1 ratio 13.09%, BOD decided dividend per share KRW540 and KRW300 billion share buyback/cancellation.

In Q1 2024, SFG's interest income was KRW2.8159 trillion, up 9.4% Q-o-Q. Interest-bearing assets increased 3.6% Y-o-Y. Retail loan grew 1.2% and corporate loan grew 3.9%. Bank's NIM was 1.64%, up 2 bp Q-o-Q. Noninterest income grew 16.6% Y-o-Y, with fee income even across business areas, insurance income up 21.4%, credit card fee up 28.4%, and brokerage fee up 25.8%. Securities-related income fell 19.4% Y-o-Y. Credit cost ratio in Q1 was 38 bp, down 10 bp Y-o-Y, with recurring CCR at 30 bp, up 1 bp Y-o-Y. Provisional CET1 ratio as of end-March was 13.09%.

Loan Growth - Focus on customer base growth in first half, then shift to profitability and asset quality in second half. ### NIM Outlook - Q1 NIM up 2 bp, Q2 slightly lower than Q1, Q3 and Q4 expected to be slightly lower but managed overall. ### Share Buyback - KRW300 billion share buyback/cancellation for next 6 months, with potential for more in Q4 based on performance and capital ratios.

• Macro Environment: Geopolitical risk, inflation, delayed rate cuts impacting financial soundness. - Asset Quality: Weakening asset quality expected to continue, requiring vigilant management. - Real Estate Exposure: Group-wide real estate PS exposure KRW8.9 trillion, provisioning ratio 3.61%.

Q: About ELS compensation and refinancing platform impact on margin.

A: ELS loss recognized KRW274 billion, refinancing origination not material impact on margin.

Q: Loan growth rate strategy and NIM outlook.

A: Focus on customer base in first half, NIM Q2 slightly lower, Q3/Q4 managed.

Q: One-offs and real estate exposure.

A: ELT-related costs nonoperating, real estate PF exposure KRW310 billion, provision KRW87.1 billion.

Q: Global business profitability and share buyback timing.

A: Global business growth from interest income and provision reversal, share buyback biannual with potential Q4 activity.

Q: Capital allocation and CET1 relation.

A: CET1 target 13%, above threshold may lead to share buyback.