Shinhan Financial Group Co., Ltd. Q3 FY2024 earnings call

• Shinhan Securities had large derivatives trading losses, recognizing KRW135.7 billion in Q3, with impact on CET1 ratio minus 6 basis points; actively cooperating with regulators and reviewing internal controls. - Interest income supported by growth in Bank won, household, and corporate loans. - Non-interest income affected by securities and derivatives losses. - SG&A managed fairly. - CET1 ratio at 13.13%, dividend declared, share buyback plan announced. - Focus on flexible response to capital regulations and shareholder return policy. - Digital and sustainable management initiatives discussed. - Value Up program implementation review across six core indicators ongoing.

In Q3 2024, interest income was supported by an increase in interest-bearing assets, with Bank won loans totaling KRW2 trillion 855 billion, up 1.2% Q-o-Q. Bank won loans grew 3.5% Q-o-Q (annual growth 10.2%). Household loans increased 6.3% Q-o-Q, corporate loans 1.4% in Q3. Non-interest income was KRW827.8 billion, down 25.6% Q-o-Q due to securities and derivatives losses. SG&A expenses increased 1.2% Q-o-Q. CIR improved 1.2 percentage points YoY to 37.9%. Credit cost ratio was 44 BPS in Q3, down 4 basis points from the first half. CET1 ratio was estimated at 13.13% at end of September 2024. Board approved KRW541 per share for Q3 dividend and KRW400 billion share buyback/cancellation including 2025.

• Intend to minimize loan growth in Q4 relative to RWA budget. - CET1 ratio to be managed at 13% or above in Q4. - Share buyback and cancellation to be expanded, shareholder returns distributed throughout the year. - NIM expected to continue declining due to interest rate impacts and benchmark rate changes. - RWA management to be strengthened with specific targets and data alignment.

• Derivatives trading loss at Shinhan Securities impacting internal controls and customer trust. - Uncertainty in real estate PF market restructuring with potential ongoing risks and provisioning needs. - NIM decline due to interest rate changes and funding rate management. - FX rate sensitivity affecting CET1 ratio.

Q: About shareholder return rate and NIM outlook.

A: Bahng Dong Gwon and Sang Yung Chun discuss shareholder return plans, CET1 management, and NIM decline due to market and rate impacts.

Q: About next year loan growth, RWA, and provisioning.

A: Do-Ha Kim and others get answers on loan growth targets, RWA management, and provisioning outlook.

Q: About PF exposure and provisioning.

A: Bahng Dong Gwon talks about PF loan exposure, restructuring plans, and limited additional provisioning risk.

Q: About RWA segmented data.

A: Sang Yung Chun and Bahng Dong Gwon discuss RWA components and future management.

Q: About asset growth drivers and ROE.

A: Answers on asset growth allocation, ROC focus, and ROE enhancement plans.

Q: About CET1 FX rate sensitivity.

A: Response on CET1 FX rate sensitivity.