Shinhan Financial Group rejoined the 2 trillion won (US$1.84 billion) net profits club again. It was possible largely because the group wiped out bad debt and reduced its allowance for bad debts through preemptive risk management amid low interest and low growth situations. Also, its non-banking subsidiaries, including Shinhan Investment Corp. and Shinhan Life Insurance, showed good performance, as their share of the profits increased to 39 percent.
Shinhan Financial Group announced on Feb. 4 that its annual net profit was up 9.6 percent to 2.0811 trillion won (US$1.92 billion) last year from 1.9 trillion won level (US$1.75 billion) in 2013. Accordingly, the group had made the 2 trillion won (US$1.84 billion) net profit group in succession since 2007, except for 2013.
Regarding this result, Shinhan Financial Group concluded the reason that it managed the bad account costs of the bank well. It means that it decreased risk factors to reduce net profits, since the chances of its clients going bankrupt were relatively low, after doing business with the selected blue-chip individual customers and companies.
Indeed, the bad account cost of Shinhan Bank decreased by 38.2 percent from 2013. The default rate was also decreased by 0.08 percentage points to 0.31 percent from the end of 2013, which means that its soundness improved.
The assets in the won grew evenly in all sectors, including companies and households, and played a role as well. The net profit of Shinhan Bank in 2014 increased by 6 percent to 1.4552 trillion won (US$1.34 billion) from 2013. This is mainly because business loans grew by 8.3 percent, while household loans grew by 9.4 percent, showing stable growth.