Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors rely on traditional forms of ...

Core Viewpoint - Shinhan Financial (SHG) has been upgraded to a Zacks Rank 2 (Buy) due to an upward trend in earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system is effective for individual investors as it focuses on changes in earnings estimates, which are often more reliable than subjective ratings from Wall Street analysts [2][4]. - The upgrade reflects a positive outlook on Shinhan Financial's earnings, likely leading to increased buying pressure and a rise in stock price [3][5]. Earnings Estimate Revisions - Empirical research indicates a strong correlation between earnings estimate revisions and near-term stock movements, making it beneficial for investors to track these revisions [6]. - Shinhan Financial is projected to earn $6.32 per share for the fiscal year ending December 2024, representing a year-over-year increase of 2.6%. Over the past three months, the Zacks Consensus Estimate for the company has risen by 1.6% [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks, which have averaged a +25% annual return since 1988 [7]. - The upgrade of Shinhan Financial to a Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating a strong potential for market-beating returns in the near term [10].

Core Insights - The article compares Shinhan Financial (SHG) and Erste Group Bank AG (EBKDY) to determine which stock offers better value for investors [1] Valuation Metrics - SHG has a forward P/E ratio of 6.40, while EBKDY has a forward P/E of 6.49 [5] - SHG's PEG ratio is 0.70, indicating a better expected earnings growth rate compared to EBKDY's PEG ratio of 0.99 [5] - SHG's P/B ratio is 0.51, compared to EBKDY's P/B of 0.72, suggesting SHG is undervalued relative to its book value [6] Earnings Outlook - SHG is currently experiencing an improving earnings outlook, which enhances its attractiveness in the Zacks Rank model [7] - The Zacks Rank for SHG is 2 (Buy), while EBKDY is rated 4 (Sell), indicating a more favorable earnings estimate revision trend for SHG [3]

Financial Data and Key Metrics Changes - In Q3 2024, the company reported a net income of KRW1 trillion and 238.6 billion, a decrease of 10.1% quarter-on-quarter (QoQ) [5] - Interest income increased by 1.2% QoQ, driven by growth in the bank's loan book [5] - Non-interest income decreased by 25.6% QoQ due to significant losses in securities derivative transactions and conservative valuation impairments in overseas alternative investments [5][10] - The CET1 ratio at the end of September 2024 is estimated at 13.13%, a decrease of 6 basis points due to operational risk RWA impacts [3][12] Business Line Data and Key Metrics Changes - Bank won loans increased by 3.5% during the quarter, with household loans rising by 6.3% QoQ driven by real estate purchasing demand [8] - Corporate loans increased by 1.4% in Q3, focusing on Blue Chip corporate borrowers [8] - Non-interest income from securities and derivatives fell by 47.1% QoQ, primarily due to a KRW135.7 billion loss in derivative trading [10] Market Data and Key Metrics Changes - The cumulative credit cost ratio for Q3 decreased by 4 basis points compared to the first half of the year, posting 44 basis points [6][11] - The Group's CIR improved by 1.2 percentage points year-on-year to 37.9%, driven by higher operating profit before expenses [5][11] Company Strategy and Development Direction - The company is committed to enhancing shareholder returns through a share buyback and cancellation program totaling KRW400 billion, including KRW250 billion in Q4 2024 [6][7] - The focus is shifting towards qualitative growth and capital efficiency, with a target ROC of about 13% [21][22] - The company plans to minimize loan growth in Q4 relative to its RWA budget, emphasizing profitability and asset soundness [8][12] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by recent losses in derivatives trading and emphasized the importance of strengthening internal controls [3][4] - The outlook for NIM is expected to decline due to anticipated cuts in benchmark interest rates, with a proactive approach to managing funding rates [18] - The company expects gradual improvement in asset quality and provisioning, with no large-scale provisioning anticipated for the remainder of the year [32] Other Important Information - The company is actively cooperating with regulators regarding the investigation into the derivative trading losses and is reviewing its internal control systems [4] - The Group's total PF loan exposure is KRW9.4 trillion, representing about 2.2% of the total loan book, with significant provisioning already set aside [30][31] Q&A Session Summary Question: Shareholder return rate and triggers for increasing TSR - Management confirmed a commitment to gradually increase the TSR rate and emphasized the importance of CET1 growth and earnings growth as triggers for this increase [16][17] Question: NIM outlook - Management indicated that NIM is expected to decline further due to market conditions and interest rate cuts, with ongoing management of funding rates to mitigate impacts [18] Question: Loan growth targets for next year - The company targets a loan growth of about 5% for next year, focusing on qualitative growth and capital efficiency [21][22] Question: Continuation of share buyback program - Management expressed a commitment to maintaining the share buyback program, prioritizing share cancellation to achieve the targeted reduction by 2027 [25] Question: Provisioning outlook - The company anticipates a credit cost ratio of around 45 basis points by year-end, with no large-scale provisioning expected [26] Question: PF exposure and provisioning - Management provided insights into the current status of PF exposure, indicating a cautious approach to provisioning and restructuring plans [30][31] Question: RWA data disclosure - Management acknowledged the need for more segmented data on RWA and committed to enhancing RWA management going forward [34][36]

NYSE We believe finance should be Friendly, Nore Secure, Creative Business Results 3Q 2024 Shinhan Financial Group Disclaimer 2 The financial information contained herein has not been reviewed by independent auditors. Therefore, no assurance is given that the financial information is accurate or complete, and such financial information may differ from the financial information to be contained in our financial statements audited by independent auditors. The information contained herein is subject to change w ...

NYSE We believe finance should be Friendly, nore Secure, Creative Busines Results 2Q 2024 Shinhan Financial Group Disclaimer 2 The financial information contained herein has not been reviewed by independent auditors. Therefore, no assurance is given that the financial information is accurate or complete, and such financial information may differ from the financial information to be contained in our financial statements audited by independent auditors. The information contained herein is subject to change wi ...

Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus. While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividen ...

Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments. While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and invest ...

All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments. While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a ...

Financial Data and Key Metrics - Interest income grew 0.2% QoQ to KRW 2,821.8 billion despite declining market interest rates [57] - Corporate loans grew 6.0% during the quarter, driven by demand from large companies [38] - Non-interest income increased 10.9% QoQ to KRW 1,112.1 billion, driven by favorable market conditions [55][71] - SG&A expenses increased 7.2% QoQ due to higher advertising and service expenses [58] - CET1 ratio was 13.05% as of June 2024, down 6 bps QoQ due to RWA growth [48][56] - Credit cost ratio for Q2 was 48 bps, down 5 bps YoY, with recurring credit cost ratio at 31 bps [61][45] Business Line Performance - Bank NIM declined 4 bps QoQ to 1.60%, with interest-bearing assets growing 2.9% QoQ [41][42] - Fee income increased 1.8% QoQ, led by gains in credit cards and IB business [43] - Household loans grew 0.1%, driven by home mortgages, but growth slowed in Q2 [64] - Card delinquency ratio improved 12 bps QoQ, recovering to levels seen at the end of 2023 [59] Market and Regional Performance - Real estate PF exposure increased due to specific sites (Doan and Seoripul), adding KRW 1 trillion [90] - Provisioning rate for real estate PF was 12% for securities and 7% for Shinhan Capital, with group-level provisioning at 4.2% [90] - Delinquency ratios for SOHO loans and card business stabilized, with proactive credit management [59] Strategic Direction and Industry Competition - The company aims to achieve an ROE of 10% and ROTCE of 11.5% by 2027, with a CET1 ratio above 13% [50] - Shareholder return rate will be increased to 50% by 2027, with plans to reduce the number of shares to below 450 million [14][7] - The company will focus on improving ROA, leverage, and RWA management to enhance profitability [8][52] - Digital and ESG initiatives are being prioritized, with detailed updates provided in the presentation [49] Management Commentary on Operating Environment and Future Outlook - The company expects to maintain a CET1 ratio above 13% while increasing shareholder returns [27] - NIM is expected to decline slightly in H2 2024 due to lower policy rates and LCR regulations, but funding costs will be managed [92] - The company has set aside KRW 182.7 billion in additional provisions for real estate PF in Q2, with total exposure at KRW 269.6 billion [22][29] - Annual credit cost guidance is expected to be around 45 bps, with recurring provisions dominating in H2 [80][87] Other Important Information - The company resolved to distribute a per-share dividend of KRW 541 for Q2 2024 [56] - A KRW 300 billion share buyback is underway, with shares to be canceled upon completion [40] - The company plans to retire shares to below 500 million by 2024 and 450 million by 2027 [14][7] Q&A Session Summary Question: Shareholder Return and ROE Targets - The company aims to increase shareholder return to 50% by 2027, with a phased approach to TSR growth [19][20] - CET1 ratio will be maintained above 13%, allowing for higher shareholder returns without further growth [27] Question: Real Estate PF Provisions - Additional provisions of KRW 182.7 billion were set aside in Q2 for real estate PF, with total exposure at KRW 269.6 billion [22][29] - Provisioning rates for real estate PF are 12% for securities and 7% for Shinhan Capital [90] Question: NIM and Asset Growth Guidance - NIM is expected to decline slightly in H2 2024 due to lower policy rates, but funding costs will be managed [92] - Loan growth in H2 will focus on prime assets, with home mortgages and corporate loans driving growth [76] Question: Share Buyback and Dividend Policy - The company plans to retire shares to below 450 million by 2027, with flexibility in DPS and total dividend amounts [14][85] - If PBR falls below 1, the company will prioritize share cancellation over dividends [75] Question: Credit Cost Guidance - Nominal credit cost ratio for Q2 was 48 bps, with recurring credit cost ratio at 31 bps [61][45] - Annual credit cost guidance is expected to be around 45 bps, with recurring provisions dominating in H2 [80][87]