Shinhan's Q4 net earnings dip 17.1%

Shinhan Financial's weaker fourth quarter came as it suffered losses in its NIM, mainly from derivatives investment.

Its October-December earnings sank 17.1 percent from a year earlier.

Net income amounted to 419.9 billion won or US$377.5 million in the fourth quarter, compared with a profit of 506.7 billion won the previous year.

The firm added in a regulatory filing that net profit also fell 13.4 percent from three months earlier.

Non-interest income tumbled 54.6 percent on-quarter to 178.2 billion won in the last three months of 2012, and a 23.7 percent fall to 1.61 trillion won from a year ago.

Monetary easing by the central bank also trimmed its interest income, which sank 1.6 percent to 6.96 trillion won on-year in the fourth quarter, contributing to the profit squeeze.

"Personal credit loans increased in the second half, but the policy rate cuts contributed to the overall decline in interest income," said Min Jeong-ki, the Hana Financial vice president said at a conference call.

The firm had to put aside higher loan-loss reserves to brace against potential loan defaults caused by corporate failures on the persistent economic downturn. Its loan-loss reserves rose 4.2 percent on-year to 262.7 billion won in the fourth quarter to reach 1.26 trillion won as of end-2012.

Shinhan Financial's net interest margin came in at 2.40 percent in the fourth quarter, down from 2.58 percent the previous year.

Shinhan Bank, the flagship unit of the group, logged a net profit of 323.6 billion won in the fourth quarter, up 42 percent from the previous year.

The bank's NIM reached 1.85 percent as of the end of 2012, down from 2.10 percent a year ago.

For 2012, the banking firm posted a net profit of 2.36 trillion won, also down 23.8 percent from 3.1 trillion won a year ago.

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