2022E NP at KRW5.1tn
The author is an analyst of KB Securities. He can be reached at cygun101@kbfg.com. -- Ed.
Maintain BUY, target price of KRW50,000
We maintain BUY and TP of KRW50,000 on Shinhan FG given the following:
(1) Consolidated NP rose 11.3% YoY despite a KRW299bn increase in provisions in 1H22 (KRW224.5bn as of 2Q22) to prepare for an economic downturn, putting Group CCR at 31.3bps. Taking the economic uncertainty into consideration, we believe earnings stability will still be maintained to a large extent.
(2) Bank NIM rose 12bps QoQ to 1.63% in 2Q22 and is expected to rise further by roughly 7bps considering additional rate hikes expected in 2H22.
We believe Shinhan FG's gains from its building sale (expected to be reflected in 3Q22) will not go to dividends but rather to finance share buyback/retirement and other purposes. We maintain our quarterly/annual DPS estimates at KRW400/KRW1,250.
2022E NP (attributable to controlling interests) at KRW5.1tn
We raise 2022E NP (to control. int.) by 1.6% to KRW5.1tn. For 2Q22, earnings were in line with our estimate, as non-bank subsidiary profits were better than expected.
2Q22 consolidated NP (attributable to controlling interests) at KRW1.32tn, in-line with KB estimate
2Q22 consolidated NP (to control. int.) came in at KRW1.32tn, in line with our estimate. However, top-line profit is estimated to have exceeded expectations, as provisions were more conservatively allocated than expected. KRW-based bank loans grew 1.5% QoQ (household -1.1% QoQ; corporate +4.0% QoQ) and NIM rose 12bps QoQ to 1.63%. Although brokerage/IB fees for securities fell, credit card fees rose 30.5% QoQ, narrowing Group non-interest income. CCR was 37bps, up 11.3bps QoQ on additional provisions of KRW224.5bn (banking KRW197.8bn; credit card KRW15.6bn; Jeju Bank KRW4.1bn; financial investments KRW2.2bn; life insurance KRW3.5bn; capital KRW1.3bn).