(Updates with analyst comment in fourth paragraph.)
Oct. 26 (Bloomberg) -- Shinhan Financial Group Inc., South Korea’s largest financial services group by market value, said profit dropped 4.1 percent last quarter after selling stakes in two companies last year.
Net income fell to 704.2 billion won ($622 million) in the three months ended Sept. 30 from a revised 734.1 billion won a year earlier when it sold the assets. Revenue declined 7 percent to 969.4 billion won, the Seoul-based company said in an e- mailed statement today.
Shinhan’s provisions for bad loans declined 39 percent last quarter, even as the country’s financial regulator urged local lenders to use profits to counter potential risks from a global economic slowdown. The sale of Hynix Semiconductor Inc. and Daewoo International Corp. gave the company a pretax gain of about 142 billion won last year, according to Lee Chang Wook, an analyst at Taurus Investment & Securities Co.
“Excluding one-time factors a year earlier, Shinhan will report firm earnings,” Lee said before the earnings announcement. “Earnings growth will likely be stagnant next year under the current global economic conditions and loan margin improvement will also be limited.”
Shinhan’s provisions for bad debts fell to 208.6 billion won last quarter from a year earlier, according to the statement. Net interest margin widened 18 basis points to 3.59 percent.
The lender, like other South Korean financial groups, switched to Korean International Financial Reporting Standards this year from generally accepted accounting principles of the country.
--Editors: James Gunsalus, Russell Ward
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