Shinhan Financial Group Co., Ltd.

Reported Q2 2026 net income was KRW 1,820.1 billion, up 12.2% quarter over quarter. Operating profit before expense increased 8.8% qoq, interest income rose 3.6% qoq, and noninterest income increased 22.0% qoq. The group’s CET1 ratio was 13.43% at quarter-end, up 13 bps from the revised prior figure; ROE and ROTCE improved by about 1 percentage point year over year to 12.4% and 13.9%. The bank’s NIM was 1.61%, up 5 bps year over year and 1 bp sequentially. SG&A increased 8.1% qoq and credit cost ratio was 42 bps, down 8 bps year over year. For capital return, the board approved KRW 700 billion of buybacks over about 3 months and a second-quarter cash dividend of KRW 740 per share. Management said if the current quarterly dividend continues through year-end, annual DPS would be KRW 2,951, up 14.3% year over year, and the planned buyback through October would imply total buybacks 12.0% higher year over year. Guidance-wise, management said it expects stronger NIM in the second half, including an estimated 3 to 4 bps uplift from an additional rate hike, and said additional shareholder return will be decided in October based on expected performance and capital adequacy.

The lead management message was that Shinhan is shifting from size growth to profitability in the second half, while still supporting productive finance and maintaining capital discipline. Management emphasized a stable capital base, flexible shareholder returns, and continued focus on ROE improvement, with an internal goal of reaching a 10% ROE target and a 10% to 12% management range under Value-Up 2.0. Tone was cautiously upbeat: management pointed to stronger fee income, overseas earnings, and improving NIM trends, while acknowledging that macro uncertainty and FX volatility remain.

The CFO highlighted a revised and then improved CET1 ratio, saying first-quarter CET1 was revised up 11 bps to 13.30% and second-quarter CET1 rose another 13 bps to 13.43%, helped by net income and a KRW 3.2 trillion RWA reduction from capital-regulation rationalization measures. He cited Q2 net income of KRW 1,820.1 billion, ROE of 12.4%, ROTCE of 13.9%, SG&A up 8.1% qoq, and credit cost ratio of 42 bps. On capital return, he said the company completed both the first-half buyback and cancellation of KRW 700 billion, approved another KRW 700 billion buyback, and plans to announce additional buybacks in Q4; he also said dividend flexibility remains possible if earnings outperform. He noted operating risk-related items had not yet been reflected, and that the company is still working through conservative provisioning and capital allocation choices.

Analysts pressed on whether fee income can stay strong in 2H, how high ROE can go, whether year-end dividends might be flexed upward, and whether the Q2 beat included one-off items. Management said brokerage and product-fee momentum should continue in 2H, though likely below the first-half pace, and said the ROE path is toward a 10% minimum and 10% to 12% management range, with visible progress expected within 2026. On one-offs, management pointed to an KRW 83.7 billion writeback of ELS penalties and about KRW 30 billion of reversal from business feasibility analysis, while saying credit cost volatility was not a one-off. Questions also focused on M&A and non-life insurance acquisition rumors; management said nothing is finalized, that any deal must clear capital, return, and strategic hurdles, and that no short-term shareholder return impact should be assumed. On buybacks, management said the cycle was shortened to 3 months because volatility in rates, FX, and earnings made six-month forecasting harder, but that this does not mean buybacks will always be quarterly.