Shinhan Financial Group Q3 2024 Earnings Call Transcript

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Provided by Quartr
October 25, 2024

There are 2 speakers on the call.

Operator

Good afternoon, I am and Kim Ji Ho from the IR group IR team at Shina Financial Group. Thank you for taking the time out of your busy schedule to attend Shina Financial Group's Q3 2024 Earnings Presentation. I will be moderating today's earnings presentation today. We have with us today the Group CFO, Cheon Sang Young Group CFO, Koo Seok Kyung Group CFO, Bang Dong Goh and Shinan Bank's CFO, Kim Ki Yong Shinan Card's CFO, Choi Jae hoon Shinan Securities' CFO, Lee Hee dong and from Shinhan Life, CFO, Park Kyung won. We will first start with a presentation on our overall Q3 results followed by a Q and A session.

Operator

Now I'd like to turn it over to CFO, Chun Sung Young, for a presentation on our business performance. Good afternoon, everyone. Thank you for joining us for our Q3 2024 earnings presentation. Before going through the overall business performance, I would like to discuss the recent losses on derivatives training at Xianan Securities. As we shared in our disclosures and in a letter last week from the Chairman of the Financial Group's Board of Directors and the CEO, Department of Xianan Securities that provides liquidity to exchange traded funds and performs hedging operations incurred large losses due to a trade in KOSPI 200 Futures unrelated to the LP hedge.

Operator

We recognized a loss of KRW 135,700,000,000 in the 3rd quarter financial statements as a result of this incident and do not expect any further losses. In addition to the capital reduction due to the losses, the impact on the group CET1 ratio from this event, including the impact of the increase in operational risk, RWA, is minus 6 basis points. We sincerely regret that this incident occurred while we are working to strengthen our internal control system across the group. Given the seriousness of the situation, the Board of Directors and the management have committed to informing our shareholders as soon as possible of this incident and sharing updates. Currently, Xunnan Securities is actively cooperating with the regulators' investigation and has launched its own contingency response force to diagnose the root cause.

Operator

Together with the Xianan Financial Group, they are reviewing the deficiencies in the internal control system and taking steps to improve it. We will examine our internal control system from the ground up and fix it, bearing in mind once again that customer trust and strong internal controls are the essence of our business. We're also committed to ensuring that this incident does not impact the enterprise value enhancement plans that we have been communicating. So from now on, we'll move on to our Q3 results. Please refer to Page 5 financial highlights.

Operator

In Q3 of 2024, despite the removal of one off factors such as credit costs related to real estate large losses were incurred in the noninterest income segment with net income posting KRW 1,238,600,000,000,000, down 13.1 percent QoQ. Interest income driven by growth in the bank's loan book, which continues from the first half of the year, increased through efficient ALM, up 1.2% QoQ. Noninterest income decreased by 25.6 percent QoQ due to the aforementioned losses in securities derivative transactions as well as the conservatively recognized valuation impairments on overseas alternative investments. SG and A expenses were managed fairly, increasing only 1.2 percent QoQ despite the impact of depreciation. The group's cumulative CIR for the Q1 improved by 1.2 percentage point y on y to post 37.9%, driven by higher operating profit before expenses along with well managed SG and A expenses.

Operator

The group's cumulative credit cost ratio for the Q3 decreased by 4 basis points compared to first half of the year, posting 44 bps primarily due to the baseline effect of additional provisions recognized in the prior quarter related to real estate and asset trust. Next is capital ratio and the shareholder return policies. The CET1 ratio at the end of September 2024 is estimated to come to 13.13%. In addition, the Board of Directors today approved a 3rd quarter dividend of KRW 5.41 per share and resolved to undertake share buyback and cancellation totaling KRW400 1,000,000,000, which includes the amount for 2025 as well. Let me explain further about the treasury stock.

Operator

To accelerate our shareholder return policy, which we announced in July with our enterprise value enhancement plan, following share buyback of KRW 250,000,000,000 in the Q4 of 2024 through buying back another KRW 150,000,000,000 of treasury shares in early 2025, we intend to fulfill our policy of year round share buyback. We have been engaged in share buyback and cancellation on a regular basis throughout the year, and the amount to be undertaken for the Q1 of 2025 will be announced in our annual earnings release next February along with a quarterly dividend per share subject to Board approval. And going forward, we will strive to flexibly respond to capital related regulatory changes based on our strong financial stability while efficiently managing our capital ratios so that we can fulfill the shareholder return policy we promised through our corporate value plan. On Page 6, we present the group's key profit metrics. Please refer to them at your leisure.

Speaker 1

But yes, on to Page 7 for further detailed performance for the group. In the 3rd quarter, despite overall deterioration in profitability from the decline in market interest rates, the group's interest income was supported by an increase in interest bearing assets centered around the Bank 1 loans recording a total of KRW2855 1,000,000,000,000, up 1.2% Q on Q. Next, Bank 1 loans increased by 3.5% during the quarter or annual growth of 10.2% as the key driver of interest income growth. Household loans increased by 6.3% Q on Q driven by real estate purchasing demand and increased our policy loans for the vulnerable borrowers. Corporate loans increased by 1.4% in the 3rd quarter, centered around blue chip corporate borrowers as we moderated from the rapid pace of growth we saw throughout the first half.

Speaker 1

We intend to minimize loan growth in the 4th quarter relative to our group RWA budget as we focus on enhancing profitability and asset soundness. In the Q2, Shinhan Bank's NIM, despite negative impact from lower market rates, recorded 1.56%, down 4 basis points versus the prior quarter, thanks to our NIBBL ALM strategy. Our we defended the decline in yield on interest bearing assets to 5 basis points despite the decline in loan asset yields through strategic management of our securities investments. In terms of our liability funding cost, it was improved by 1 basis point Q on Q as we issued long dated bank debentures as preemptive net funding as we expect more intense competition in the funding market in the Q4. We will maintain flexible interest rate policy as well as effective ALM to manage our margins proactively.

Speaker 1

The Group's non interest income recorded KRW 827,800,000,000, down 25.6 percent Q on Q due to poor earnings from securities and derivatives. Securities and derivatives earnings were down 47.1% Q on Q from KRW 135.7 billion in derivative trading loss by Shannon Securities as well as 71,200,000,000 in valuation loss from overseas alternative investments, which we recognized preemptively this quarter. Fee income declined by 3.5% Q on Q due to poor fee income from Shannon Card despite the increase in IP earnings from the bank and securities business. SG and A is stable, increasing by 1.2% Q on Q or 0.9% y o y. Our group CIR improved by 1.2 percentage points year on year as operating profit before expense increased 4.2%.

Speaker 1

Cumulative credit costs as of the 3rd quarter was 44 basis points, improving by 4 basis points versus the first half as the impact of additional provisioning against real estate PFN Asset Trust exposure dissipated and also from asset growth. Cumulative credit cost when normalized to remove the effect of additional provisioning was 32 basis points similar to end of June levels. In the future, we'll continue to consistently implement the government led measures to normalize real estate loans. We will also maintain well calibrated management of asset quality and enforce tight management of recurring credit cost. Onto asset soundness, they are stable as we have been performing write offs and sales of NPL.

Speaker 1

Bank delinquencies remained stable after improving by 5 basis points in the Q2. Car delinquency saw additional improvement this quarter as well, while the 2 month delinquency migration rate, which is a leading indicator for delinquencies, has remained flat. This stable trend in asset sale is due in large part to proactive write downs and sales as part of our artificial management. And despite the one rate policy cut that we have seen recently, interest rates still remain high amid a slow recovery in the real economy. So it's hard to say that asset quality is seeing trend growth or improvement.

Speaker 1

Consequently, we will stay vigilant and maintain conservative stance in terms of asset quality. Please refer to the slides for a breakdown of net profit by affiliates. And moving on, as of the Q3 2024, on a tentative basis, the CET1 ratio was measured at 13.13%, which is an improvement of 7 basis points Q on Q. Although risk weighted assets increased by 4,100,000,000,000 from the bank's asset growth, the effect of reduced FX rates and stable earnings performance resulted in a Q on Q increase of 1.8% in common stock equity. In the Q4, similarly, we intend to minimize asset growth while delivering stable financial performance to manage our CET1 at 13% or above.

Speaker 1

And I've already commented on our shareholder return policy and we will move on. Pages 11 to 12 offer details on our digital and sustainable management initiatives. So please refer to the slides. On Page 14, as we promised when we announced our value up program in July, here are the results from our implementation review across 6 core indicators up to the Q3. It is still quite early on, but moving ahead led by our Board of Directors, we will continue to closely monitor implementation of our value up plan and proactively communicate our findings with the market to keep you updated.

Speaker 1

According to our current timeline, we are planning to provide a review of our execution results when we announce our full year performance next year, while also updating you on our implementation plan in greater, more concrete terms. We look forward to your interest as we proceed. This concludes our overall earnings presentation. Thank you very much.

Operator

We will now proceed to our Q and A session. For those of you who have questions, please use the raise your hand function on the resume. And for your information, questions in English will be interpreted consecutively. So after the question is posed in English, a Korean interpretation will be provided. Won Jae Ho from HSBC will ask the first question.

Operator

Can you hear me well? Yes, we can hear you well. In a very difficult environment. Thank you very much for the good performance that you have delivered. I have two questions.

Operator

First question has to do with the shareholder return rate. So up until 2027, 50% TSR has been announced, but the share buyback, if we base our calculations on those numbers, last year's was 36.0. It's going to go up 2% from that. So by 2027, if you're going to reach that target of 50%. So this year, it was really 2 point.

Operator

And going forward, every year, you have to raise it by 4 percent every year. So, Shinhan Financial Group, we do believe you will keep your promise and we do believe you have the capability to keep your promise. But from the 2% point increase, if we are to raise that to 4% going forward every year, what kind of trigger do you need a CET1 growth or earnings growth based on what do you think we can raise the TSR rate increase from 2% to 4% going forward from next year? And my second question has to do with NIM, the NIM outlook. So interest rate has been cut and so the NIM is also declining in the Q4 and also for next year.

Operator

What is your outlook for NIM? Thank you, Mr. Won, for your questions. While we are preparing the answers, please hold. Thank you very much for the question.

Operator

With regards to the TSR rate and then the second question was on NANDIM. So I'll take the first question and the second question will be answered by the CFO. In the case of the shareholder return paid based on the share cancellation up until 2027, we announced that 50% target. In the course of carrying out that promise, as you have mentioned, the image that we have in mind, gradual increase, that is our basic assumption going forward. So as you can see from today's plan of share cancellation, this year we have done 700,000,000,000 in 2027, the TSR and we have said that 450,000,000 of share cancellation will be done.

Operator

So I think based on those announcements, we can anticipate the amounts of this year, 400,000,000,000 was announced and JPY 150,000,000,000 for next year, January February was included as well. So that means that we will expand the shareholder returns going forward. And also if the share buyback and cancellation amount grows, this can have an impact on the market and we want to distribute that impact throughout the year. And what your question was, in order to carry out our promise, what kind of trigger is necessary? So we have just started and what we can say at this point is that confidently, including shareholder share buyback and cancellation, the shareholder return related very specific targets were announced and the action plans for that has been announced as well.

Operator

So we do think we can keep that performance. And also CET1 ratio is not going to go up continuously. We're going to manage it at 13%. So and the share cancellation and shareholder return, if the current earnings growth is underpinning these plans, I think that promise can be kept going forward. Thank you very much for your good question.

Operator

I'm the CFO. So NIM in the 3rd quarter, the market declines and also the benchmark rate impact was reflected as it was 1.56, so down 4 bps. In the Q4, the interest rate cut impact will continue and the NIM decline trend will continue. With regards to our funding. We will continue to manage the funding rate in order to manage the NIM.

Operator

And this year, the NIM, as we have continued to announce compared to last year, it will go down slightly. That is how we're going to manage it. And you asked about the outlook for next year. And next year, additional cuts of benchmark rate is expected and LCR related response is necessary. So the NIM decline trend, we expect to continue.

Operator

And profitability based growth of assets and also funding rate will continue to be managed in order to defend the NIM. Thank you very much.

Speaker 1

So I hope and believe that that was a sufficient answer to your questions. It does not seem that there are any there is anybody lining up to ask a question. So we will wait until the next question please. So we have a question from Doah Kim from Hanwha Investment Securities. Please go ahead.

Speaker 1

Yes, I have a very simple question. In terms of next year targets, what is your target in terms of loan growth? And what about RWA growth? What is your assumption? And RORWA, if you have an assumption on that, I would appreciate some color on that.

Speaker 1

Yes, please bear with us and wait just a moment as we prepare to answer. So for next year, our targets in terms of asset growth, well, when we announced our value up program, one of the key messages then was that up to now, we have been focused on quantitative growth, but we want to more go more toward qualitative growth and change the paradigm to be more focused on capital efficiency as measured by ROE. So in line with the value of program, our ROC target, well, we want to manage it at a group wide level, internalize that as a key metric. So in terms of asset growth, we're planning of course, we're in the process of writing out our business plan, but based on RWA, our target loan growth is about 5%. And then, so loan asset growth.

Speaker 1

So RWA growth of 5%, loan asset growth will be in line with that. Regarding RORWA, we are using ROC as it is more intuitive. So our target ROC would be about 13%. So I think you can calculate the ROR delay, the equivalent figure. Perhaps I can share with you further details on the RORWA at a later opportunity required.

Operator

I hope that provided a sufficient answer to your question. And we will receive the next question. Next question is from NH Securities, Chong Joon Seop. Good afternoon. I'm Jong Jun seok from NH Securities.

Operator

I have two questions as well. So the first question is on the larger than expected share buyback program that is very positively viewed. But going forward, this size of share buyback and cancellation every quarter, can we expect that it will be continued? So I think you are speeding up given the level of stock price increase. But going forward, if the current stock price level is maintained And then before 2027, the share reduction level that you target, I think that can be achieved before 2027.

Operator

So then going forward, PBR onetime, would that be the basis or would the priority be on reducing the number of shares? Can you provide guidance on this? And my second question is on going forward, the outlook for the provisioning. You very much for those questions. While we are preparing the answers, please hold.

Operator

You have asked 2 questions with regards to share cancellation. So as we have mentioned, the targeted level is by 2027, 450,000,000 yen is the target. The number of share reduction that a specific target has been given, by 2027, the number of shares, the cancellation of shares, we would like to accelerate that first. That is our top priority. And we have announced this in our corporate value up program PBR below 1x, 0.8.

Operator

We think that cancellation is lower at that rate. So we're going to place priority on cancellation of shares. And also in terms of the speed for every year, as I've said, gradual increase is our basic assumption going forward. But every year, the P and L and the CET1 ratio, depending on these factors, it may vary. And second, the outlook for provisioning, CCR outlook, I think, should be provided to you.

Operator

As of the end of September, 44 bps and ordinary CCR is 32 bps. And in June, we have answered this question. In our view, by the year end, the credit cost ratio is about around 45 bps. The benchmark rate is declining. However, still, we have higher interest rate regime prevailing.

Operator

So in the short term, we don't think that the asset quality will improve significantly. But early this year, after the year end and early next year, we think the situation will improve. And from a conservative point of view, we have set aside sufficient provisioning. So even if ordinary provision increase by the year end, we think that the credit cost ratio will be around 45 bps at the year end. Thank you.

Speaker 1

Yes. So I believe that should have been a sufficient answer to your question. And there is no one on queue yet, so we will wait for the next question. So we have no one queuing to ask a question just yet. So let us wait another moment.

Speaker 1

Yes. From JPMorgan Securities, Jiyeon Cho. Please go ahead. Yes. Hello.

Speaker 1

Thank you for the chance to ask a question. I would like to ask more about your exposure. I understand that it has been reduced and you commented that provisioning is lower. So I would like to ask that as we move more toward the end of the year, the market restructuring led by the government authorities, altogether seems to be accelerating. So at the end of the year or next year, in terms of asset trust, any burden from that side or additional provisioning burden, how much should we expect overall?

Speaker 1

Is the situation improving in your view? Some banks are seeing some reversal of provisioning even. And as interest rates are being cut, we're seeing restructuring take place. So it does appear that maybe the conditions are improving more than had been expected. So if you could take us through the current status of your exposure, what's the situation in terms of provisioning or perhaps reversals at the affiliate level, what kind of impact there is?

Speaker 1

And cycle wise, but early next year, do you think that it will overall be resolved? What are your expectations? Yes. Thank you for the question. Please wait just one moment as we prepare to answer your question.

Speaker 1

Yes. Thank you for the good question. I am Bangboo Kang, the CRO. So as you have said, interest rates, we're seeing a downward cycle. And so the market has some expectations blooming of recovering the market.

Speaker 1

However, that being said, as you mentioned, led by the government, there are efforts to normalize loans. And I think that likely it will proceed quite speedily until the start of next year. There may be some pricing adjustments across project sites. So for the non banking sector, there might be still ongoing source of concern for additional NPL or loss. For our group, in terms of the situation for us, if I could comment, we have 9,400,000,000,000 in overall loan exposure, which is about 2.2% of our total loan book.

Speaker 1

As you know, the regulatory authorities every quarter is doing an economics viability assessment. So for all of our assets, we have already completed our viability review and we have distinguished all of the assets into 4 categories. For anything cautious, we are proceeding by setting up restructuring and other plans. So RMB 210,000,000,000 are actually were in plan or under plan in the second quarter. Also in the Q3, we have done a full scope review and we will submit to the government our plans for further restructuring.

Speaker 1

So overall, RMB 440,000,000,000 is the restructuring amount. We have set aside significant provisioning already against that exposure amount. So we think any risk of distress is very limited. That being said, the overall situation up to early next year is quite fluid. There are many moving parts and it may be very variable.

Speaker 1

So we do believe that there still are risks that are outstanding. And so we will respond as we see the developments unfold. So right now, the CRO mentioned that,

Operator

well, in terms of

Speaker 1

the overall real estate market, our exposure and how we are managing our exposure, he mentioned. Let me just elaborate a little bit more on our provisioning. As we have said, as of the end of June, in terms of our capital or asset trust or real estate financing affiliates, we have done a full scope review already and we set aside provisioning at the end of June. Of course afterwards in the Q3, there are some deteriorations on a recurring basis and so we have been adding on provisioning. And as the analyst said, we have been doing refinancing or write downs and sales of certain NPL, which has resulted in reversal of some of those provisions as well.

Speaker 1

We think that at the end of this year and past the start of next year, we think that we may see gradual improvement. But as provisioning is concerned, there will be no large scale provision as we did in the first half. But on a recurring normalized basis, there may be smaller provisioning that is required, but relative to fundamentals, it will not be a meaningful scale. In terms of asset trust, the issue right now is about the completion guarantee exposure. Up to the first half of twenty twenty, that was the peak of the those contracts.

Speaker 1

So for those projects, they tended to be smaller in scale. So usually the time period was 2 to 3 years. So for the completion guarantee project sites, I think the peak period will be perhaps the second half of twenty twenty four, where we will have to mobilize lending or there lending to the banking accounts. But as we go, I think that banking account lending balance should diminish. But there can of course, there can be additional losses leading to increased lending to the banking account.

Speaker 1

But we do not expect any large provisioning that we saw in the first half of this year. We don't think that that is likely as well. But for loss absorption purposes, we will continue with incremental provisioning as we go.

Operator

I hope that provided sufficient answer to the question. We have another question from Yimisan from Citi Securities. Yimisan from Citi Securities. RWA, a lot of external factors impact this. Going forward, the RWA predictability, in order to enlarge the scope of analysis of RWA, the data related to RWA, can you disclose more segmentation data about this?

Operator

What kind of segmentation data about RWA going forward? Thank you very much for further questions. While we are preparing to answer, please hold. So I'm not in a position to provide many specific details, but in implementing our share corporate value program, we have given the focus on qualitative growth. And so managing RWA is all the more important.

Operator

So going forward, with regards to RWA, very specific targets will be provided and penalties for exceeding that target will be considered. And so we're going to have more detailed management of RWA going forward. And what you just said, the data about RWA, you want us to share more data about that? So specifically, I'm not really sure what level of data you are asking. If you can provide more feedback, if we are in a position to provide those data, we will be willing to do so.

Operator

And our CRO will add to that. I'm Bang Dong Gong, the CRO. So in the Q3, let me give you some data. So the 337,000,000,000,000 of RWA, it has been increased by 4,100,000,000,000 yen and credit RWA. The bank's asset growth and card asset growth.

Operator

And then the FX effect was large. And so there wasn't any increase from the credit side, JPY 1,700,000,000,000,000 that was increased from the operation side. That was the ETF related losses from National Securities. In the case of the market, one off ELS new issuance was occurred, so there was an increase of 1,500,000,000,000 from that. As the CFO said, going forward, we're going to strengthen the RWA budget system and data alignment and data integrity is very important and also simulation function.

Operator

This analysis function will be strengthened and going forward, starting from next year, based on all of these, RWA based portfolio management will be undertaken. I hope that provides a sufficient answer to your question. Detailed data about RWA, according to the disclosures that are made based on the Financial Group Disclosure Act. We have sufficient details contained in those documents and you can ask further questions to our IR team.

Speaker 1

And next from Baek Doo san from Hanwha Investment Securities, please. Yes, this is Baek. I would like to ask more about asset growth. In the Q3, compared to other companies, you saw more rapid growth in household or mortgage loans. If you look at comments from the authorities, this year for banks with a big increase in household loans and establishing business plan, so there was some comment on constraining that rate of growth and to take measures like that.

Speaker 1

So if mortgage growth decreases last or next year compared to this year, what will be the drivers of asset growth within banking like this the first half of this year? Will you focus on corporate loans or high ROC affiliates? Will they drive up more asset growth? So in terms of asset growth, what are the key drivers and how will that growth be allocated across the different affiliates, not just banking? So please wait as we prepare to answer that question.

Speaker 1

So you asked about growth. So for the bank loan side, the bank CFO will answer. And in terms of assets or resource allocation for next year, I think I will add on after he is finished. Yes, for our bank asset growth. Originally, in the first half of the year, we had seen asset growth, front loading of asset growth.

Speaker 1

In the second half, we wanted to focus more on qualitative growth. But in the first half, there was a lot of excess demand for household mortgage loans, like you said. And in the Q4, it is overall on a full year basis, we will maintain total household loan growth within our target level. So for next year, household loan growth. Well, this year, the size was not that big.

Speaker 1

And so next year, we think overall, as we tighten management, the pace of household loan growth will either be similar to this year or otherwise moderate. So as the CFO continues to say, we want to focus on RWA based ROE driven growth at the bank. So in terms of allocation of growth, so this is not definitive at the moment. The financial business plan is currently being compiled. And so between the group companies and the holding company, we have been engaged in close discussions.

Speaker 1

The theme of those discussions recently has been for each of the different business domains, we want to assess the ROC and then examine potential future potential and areas of improvement. So that is where we are in terms of our discussions. Overall, in terms of RWA growth for next year, I would say 5% or so. So it would be difficult to have any large size growth that like we saw this year. But for household or corporate loans, risk rates are very low.

Speaker 1

So household loans, even if it's growing lower, there will be sizable potential to grow the corporate lending side. We'll focus on ROC or RWA based profitability to guide our asset allocation or resource allocation and that will be reflected into our business plan for next year. Yes, I imagine that has been a full answer to your question. So we will move on.

Operator

We don't have any further questions in the queue. We will wait for further questions. Yes, we have a question. We have Paxton Young from Goldman Sachs Securities. Good afternoon.

Operator

I'm Paxton Young from Goldman Sachs. I do have one question. In last quarter, the target ROE was 10% that you have shared with us. In order to achieve that, the non banking subsidiaries and the non interest income, I think earnings has to be increased. In relation to this, what kind of direction or what kind of detailed plans can you share with us?

Operator

Thank you. Thank you for the question. While we are preparing the answer, please hold. Thank you very much for those questions. In our corporate value program, we have 2 pillars.

Operator

1st, based on ROE, improving in profitability and also accelerated shareholder returns. In the beginning, with regard to shareholder returns, how we're going to implement our commitments, there was a question about that internally, share cancellation and increasing shareholder returns, we are internally confident about this matter. However, ROE is something that we're giving a lot of thought to, how to enhance profitability based on this. And let me share with you several points. First of all, the beginning, the starting point should be not quantity based growth, but qualitative growth.

Operator

We need to have this awareness shared throughout the group and also qualitative growth. We need to set targets for this and also evaluation and the resource allocation, it should all be aligned. And so in relation to that, when we set the plan for this year and next year, the overall group's ROE and the ROC of the subsidiaries must be aligned and internalized. That is being embedded in our plans, and we're going to strengthen those aspects going forward from next year. And as we have said, for each area, rather than the bank, especially this year in the capital market side, we were sluggish, the performance was, and there were provisioning large provisioning set aside.

Operator

So if you look at the group subsidiaries in order to enhance the competitiveness in the capital market, I think that is our top priority. Like the incident in the China Securities has shown, we need to focus on strengthening our internal controls, but I think the priority is really on enhancing the competitiveness in the capital market side. And also, we have RWA burden, but our competitiveness, we think, lies in the global business side. And also, IB, a related WM, asset management, we intend to strengthen our competitiveness in these areas as well. So resource allocation and planning is being discussed.

Operator

As we have mentioned during our presentation, once it is all set up and next year's plan is formulated, when we provide updates on our corporate value up program, more details about this matter or OE will be shared. I hope this provides a sufficient answer to your question.

Speaker 1

Yes, nobody is in line just yet. So we will wait for the next question. From Citi Securities Analyst, Lee Mi Sun. Please go ahead. May I ask just one additional question?

Speaker 1

CT1, can you share the FX rate sensitivity with us for your CT1? Yes. Please wait as we prepare to answer. So for CET1, FX sensitivity, it's 0.8 bp for 10.1 and about 8,000,000,000 sensitivity to net income from a 10.1 increase in the FX rate. Yes, I think it has been 40 minutes up to now.

Speaker 1

I believe that, that has been enough to have discussions on many topics. So with that, we will now conclude the Q3 2024 earnings call for Shinhan Financial Group. Going forward, we will continue to engage in close communications with the market to keep you updated. Please come to our homepage or the Shinhan Financial Group YouTube IR channel. So we look forward to your interest.

Speaker 1

And thank you again for attending today's earnings call.

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Earnings Conference Call
Shinhan Financial Group Q3 2024
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