Strengthening Competitiveness Through M&As
Shinhan Financial Group posted 918.40 billion won (US$784.96 million) in net profit in the first quarter of this year, delivering an “earnings surprise.” The performance improvement is attributed to the “2020 Smart Project,” the group's vision to become Asia's leading financial group by 2020. It was proclaimed by chairman Cho Yong-byoung in 2017.
Shinhan Financial Group has introduced a business unit system after the inauguration of Cho and expanded and reformed the global and investment banking (GIB) business division in June 2017. Its GIB business division posted 172.10 billion won (US$147.22 million) in operating profit in the first quarter of 2019, recording the highest-ever performance since its inception. It ranked first in terms of market share in the syndicated loan market.
The group's global business division is alsoputting up a good show. The group has a total of 188 networks in 20 countries around the world. In particular, the group has entered the banking, card, securities and life insurance markets in seven Southeast Asian countries, including Vietnam, Indonesia, Myanmar, Singapore, India, Cambodia and the Philippines, with 3,675 employees working on 125 networks. Its global business division recorded a net profit of 342.30 billion won (US$292.81 million) last year, up 67.1 percent from a year earlier. It also saw its profit increase by 4 percent on-year to 79.10 billion won (US$67.66 million) in the first quarter of this year.
In addition, Shinhan Financial Group has secured new growth engines through an aggressive M&A strategy. The group acquired a 59.15 percent stake in Orange Life Insurance, the former Korean unit of ING Life Insurance, for 2.30 trillion won (US$1.97 billion) in September last year. It completed the acquisition process in February after receiving approval from the Financial Services Commission (FSC). Orange Life, which became the group's 14th subsidiary, has the industry's best asset soundness and capital adequacy ratio with a total asset of 32.70 trillion won (US$27.97 billion), net profit of 311.30 billion won (US$266.30 million), ROA of 0.97 percent and risk-based capital ratio of 425 percent.
Shinhan Financial Group acquired Asia Trust on April 17 in order to strengthen its competitiveness in the non-banking sector and it has become a total real estate service provider after receiving final approval from the FSC. The group is planning to connect Shinhan REITs Management Co. with the GIB business division to provide a one package service that encompasses the total real estate life cycle ranging from development to lease and commercialization.