Shinhan Financial Group Q4 net rises 25.7 pct

SEOUL, Feb. 2 (Yonhap) -- Shinhan Financial Group Co., South Korea's No. 2
financial services company, said Monday that its fourth-quarter earnings gained
25.7 percent on-year on higher interest income and one-off profits.

Net income amounted to 283.7 billion won (US$204.2 million) in the
October-December period, compared with 225.7 billion won a year earlier, the
group said in a regulatory filing. But net profit declined 12.2 percent from
three months earlier due to higher loan-loss reserves.
Sales jumped 217.7 percent year-on-year to 23.1 trillion won and operating profit
advanced 105.9 percent to 512.1 billion won, the group said.
But for all of 2008, the group's net income declined 15.8 percent on-year to 2.02
trillion won as its banking unit logged a one-off profit in 2007 by selling its
stake in LG Card Co. to its parent.
Despite stronger earnings, shares of Shinhan Financial Group tumbled 7.19 percent
to 26,450 won on the main bourse.
"The higher fourth-quarter bottom line comes as Shinhan Bank, the group's
flagship unit, posted higher interest income and the group logged one-time gains
like the central bank's interest payment," an official at the group said.
"But compared with the previous quarter, the group's earnings declined as it had
to earmark 183.9 billion won in loan-loss reserves to brace for corporate
restructuring."
The Bank of Korea (BOK) in December paid local banks a one-off interest payment
worth about 500 billion won on their required reserves for the first time since
December 1986. Shinhan received 71.2 billion won in such interest income.
The state-run debt clearer Korea Asset Management Corp. also gave dividend
payouts to local banks late last year after logging profits by selling bad debt
of local financial institutions. Shinhan's dividend income reached 101.5 billion
won, it added.
The outcome came as South Korean lenders have been increasingly wary of providing
lending to households and smaller firms because the slowing economy and the
credit crunch are increasing the amount of bad loans.
Meanwhile, as part of a corporate restructuring drive, local banks decided in
mid-January to end support to two ailing companies and reschedule debts at 11
builders and three shipbuilders.
The group's total assets reached 321.3 trillion won as of the end of December, up
16.1 percent from the previous year. Its net interest margin (NIM), a key
barometer of profitability, reached 3.52 percent as of end-December, compared
with 3.55 percent in the third quarter.
Shinhan Bank logged a net profit of 356.7 billion won in the fourth quarter, up
80.7 percent from a year earlier. The banking unit's NIM reached 2.14 percent in
last quarter, up from 2.1 percent three months earlier.
Shinhan Bank's capital adequacy ratio, stood at 13.4 percent as of the end of
last year, up from 11.9 percent at the end of September.
Since late last year, South Korean lenders have been under pressure to raise
their falling capital adequacy ratio, a key barometer of financial soundness that
measures the percentage of a bank's capital to its risk-weighted credit.
sooyeon@yna.co.kr
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