Oct 27, 2026 earnings call — Lotte Insurance acquisition and shareholder returns
Shinhan will acquire 77% of Lotte Insurance for KRW 693.3 billion, funded by reallocating group capital without outside funding.
Revenue $3.0B (est $3.1B) · EPS $2.53 (est $2.43)
Key quotes
"Today, the BOD approved a total of KRW 450 billion in share buyback and 400 -- excuse me, KRW 740 per share of Q3 cash dividends."
"As announced, we have decided to acquire 77% of Lotte Insurance at KRW 693.3 billion."
"Shinhan Bank, we are mainly linked to the 6-month debentures and 1-year debentures. That accounts for about 60% of our funding."
Analyst Q&A 10
What drives NIM and Q4 outlook
Q (Jaewoong Won): Which interest rate index drives your Korean won loan pricing? Do you expect NIM to rebound in Q4 and if so from lending or funding? Also, will card NIM fall further in Q4?
A: Management said Q3 bank NIM was 5.18% and they expect current NIM levels to be maintained until year-end. They said funding is mainly linked to 6-month and 1-year debentures (about 60% of funding) and 3-month CD is around 20% or less, so funding costs respond later. They also noted card funding rose about 10 bp and card NIM movements have limited effect on group NIM.
"Our Q3 is 5.18%, which is an increase by 2 bp." — Jeong Hoon Jang (CFO)
Deposit mix, margin and OCI impact
Q (Do Ha Kim · Hanwha Investment): Why didn't margin rise more despite higher debenture rates? Why have deposits grown so much; is this excess funding? And explain the OCI drop and break it down by subsidiaries.
A: They said household deposits fell by about KRW 9 trillion (Time deposits about KRW 7.5 trillion and the liquid assets, KRW 1.5 trillion) while corporate deposits rose about KRW 25 trillion, so overall funding is about the same or a little higher than year-end. Lending rates rose about 10 bps but funding cost rose about 13 to 14 bps, which reduced margin; debenture-linked lending repricing is sequential (6-month or 1-year). On OCI/capital, they said exchange-rate effects raised RWA by KRW 12 trillion, overseas translation losses were KRW 817 billion, insurance losses about KRW 800 billion and bank about KRW 170 billion, producing the OCI decline.
"Time deposits about KRW 7.5 trillion and the liquid assets, KRW 1.5 trillion." — Jeong Hoon Jang (CFO)
What funding competition means in Q4
Q: When you say funding competition in Q4, what exactly do you mean? What will cause it?
A: They said many deposits and some bonds come due in Q4 across banks, so multiple banks will need to raise funds and that drives funding competition. They expect this competition to ease somewhat after the end of the year.
"There was a lot of deposits coming due in Q4." — Jeong Hoon Jang (CFO)
Fee income growth and ROE target impact
Q (Jihyun Cho · JPMorgan): What is your outlook for trading/fee income in Q4 and next year? Will the ROE 12% target change because of the Lotte Insurance acquisition?
A: Management did not give details immediately and said they would split the answers by specialist. They said the Securities CFO will answer the brokerage/fee question and another executive will explain noninterest income and ROE direction.
"So with regards to brokerage, our Securities CFO will take that question." — Unknown Executive
Brokerage fees and ROE path
Q (Jaesung Lee · JPMorgan): How will brokerage fee income evolve with lower trading values, and how will subsidiaries drive the midterm ROE 12% target? Will M&A change the ROE target?
A: The Securities CFO said trading peaked in Q2 and fell in Q3 and will likely be lower into early next year, though signs of stabilization have appeared since mid-October. He said sales of ELS and bonds and new services (SOL LINK SuperSOL) helped: "starting from July, SOL LINK SuperSOL through this account, we have been able to attract about 600,000 customers." He reiterated the mid- to long-term ROE target is 10% to 12% and said they plan no capital increase while considering about KRW 300 billion of CET1 for resource allocation.
Commercial paper business update
Q (Yong Jin Seol · iM): Update on Shinhan Securities' commercial paper business: issuance, margins, and competition? Also asked about P&C termination rates (handled by Life CFO).
A: Shinhan Securities said 9 companies got approval for CP business and they were among 3 recipients; they planned about KRW 700 billion stable volume and have been conservative on risk. They said target margin was 100 bp and currently the CP business has around 100 bp and total issuance is about KRW 530 billion; they expect a stronger pipeline and ~KRW 2 trillion volume next year.
"Currently, our CP business as of last week, have around 100 bp of asset management, and we have a total issuance of about KRW 530 billion." — Jaesung Lee (CFO)
P&C product lapses and impact
Q (Joo Sung-hwan · iM): How are termination (lapse) rates for the P&C-style products you sold in '23–'24? Any cost from lapses?
A: The Life CFO said the product was sold up to 15% until it was discontinued and they did not overconcentrate in it. He said the lapse ratio will be adjusted at year-end above the guideline of 30% and this can be absorbed within the CSM that increased during the year.
Why buy Lotte Non-life at 0.9x P/B
Q (Tejkiran Magesh · WhiteOak Capital): Why pay 0.9x price-to-book for Lotte Non-life given future capital injections? Do you expect a better underwriting cycle that justifies timing and price?
A: They said the 0.9x multiple is based on first-half net assets and KRW 170 billion of invested assets reflected in book value. They explained capital injection plans: they announced only about KRW 300 billion of capital will be injected but their simple calculation shows about KRW 900 billion, and they may use other complementary capital types; they also expect some PPA gain of about KRW 30 billion to KRW 40 billion and see long-term product and synergy opportunities rather than immediate big profitability jumps.
"And that's the reason why we have announced that only about KRW 300 billion of capital will be injected." — Unknown Executive
Credit cost outlook (question only)
Q (Jun-Sup Jung · NH): With rising rates and a possible cycle slowdown, do you expect additional provisioning and higher credit costs ahead?
A: Management did not answer with numbers in this turn and said the group CRO would be the right person to answer the asset quality and credit cost question.
"About asset quality, I think our group CRO will be the right person to answer that question." — Unknown Executive
Credit quality and provisioning outlook
Q (Na Hoon · NH): Do you expect more provisioning given fast rate increases and cycle risk?
A: The Group CRO said delinquencies and NPL indicators are improving across affiliates today, but if rates keep rising and economic recovery delays there is a possibility of delinquencies. He said they have been selective in asset growth and focus on high-quality segments, and even assuming additional provisioning they expect to keep credit card ratios and credit cost ratios in the low 40 bp range.