Shinhan Financial Group Q3 net dips 38.3 pct

SEOUL, Oct. 31 (Yonhap) -- Shinhan Financial Group Co., South Korea's No. 2 financial services company, said Friday its third-quarter earnings fell 38.3 percent on-year due mainly to its investment losses in Lehman Brothers-related debt instruments and higher loan loss reserves.

Net income amounted to 323.3 billion won (US$254.6 million) in the July-September
period, compared with 524.2 billion won a year earlier, the group said in a
regulatory filing.
Sales jumped 142.7 percent year-on-year to 15.9 trillion won while operating
profit declined 40 percent to 515.2 billion won, the group said.
"The group put aside about 200 billion won further in loan loss reserves in the
third quarter to cover one-off investment losses related to Lehman Brothers
Holdings Inc. and those following the failure of Taesan LCD Co.," an official at
the group said.
The group's securities unit booked 90.4 billion won as pre-tax losses after
investing in credit linked notes related to Lehman Bros. Shinhan Bank, the
flagship unit of the group, also assumed some losses after Taesan LCD, a local
maker of units for computer screens, collapsed due to losses from currency
options contracts.
The outcome came as South Korean lenders, which are suffering from a dollar
shortage, have been increasingly reluctant to extend loans to smaller firms
particularly amid the slowing economy and a global credit squeeze.
The group's total assets reached 315.2 trillion won as of the end of September,
up 17.6 percent from the previous year. Its net interest margin (NIM), a key
barometer of profitability, reached 3.5 percent as of the end of September,
compared with 3.49 percent in the second quarter.
Shinhan Bank logged a net profit of 214.3 billion won in the third quarter, down
32.3 percent from a year earlier. The bank unit's NIM rose to 2.1 percent in the
July-September period from 2.03 percent three months earlier.
sooyeon@yna.co.kr
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