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Shinhan Financial Q3 net falls 5.2 pct

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(Globalpost/GlobalPost)

SEOUL, Oct. 29 (Yonhap) -- Shinhan Financial Group Co., South Korea's No. 4 banking group, said Tuesday its third-quarter earnings edged down 5.2 percent on-year on a fall in non-interest income.

Net income amounted to 523.2 billion won (US$493.2 million) in the July-September period, compared with 552.1 billion won the previous year, the group said in a regulatory filing. From three months earlier, net profit inched down 5.8 percent.

Despite the smaller earnings, the group saw its net interest margin (NIM), a gauge of profitability, rebound in the third quarter from three months earlier.

Shinhan Financial's NIM reached 2.31 percent in the third quarter, up from 2.27 percent in the previous quarter.

Korean banks had been suffering from weak earnings as a long streak of low rates undercut their NIMs, and as the economic slowdown and corporate overhaul raised loan-loss reserves. But analysts said starting in the third quarter, their earnings may show signs of improvement as loan-loss reserves could stabilize.

Shinhan said that its loan-loss reserves declined 48 percent on-year to 217.4 billion won in the third quarter.

The group's total assets reached 379.8 trillion won as of end-September, up 1.4 percent from the previous year.

Shinhan Bank, the flagship unit of the group, logged a net profit of 390.8 billion won last quarter, down 0.4 percent from the previous year.

The bank's NIM came in at 1.73 percent as of end-September, slightly down from 1.74 percent three months earlier, it added.

In what may be an encouraging sign for stable growth, the group's combined income from its non-banking business including its card unit accounted for 39.4 percent of the group's total earnings last quarter, up from 37.2 percent the previous year.

As most Korean banks heavily rely on interest income, they are quite sensitive to swings in market rates.

Shares of Shinhan Financial closed at 47,050 won on the main bourse, up 0.32 percent from Monday's close. The earnings result came out after the market closed.

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