Shinhan Financial Group Co., Ltd. (NYSE:SHG) Q3 2024 Earnings Conference Call October 25, 2024 1:00 AM ET

Company Participants

Cheol-Woo Park - Head of Investor Relations
Sang-Yung Chun - Chief Financial Officer
Dong Gwon Bahng - Chief Risk Officer and Vice President
Koh SeogHeon - CSO

Conference Call Participants

Do-Ha Kim - Hanwha Investment Securities
Jung Jun-Sup - NH Securities
Citi Securities - Amy Zhang

Operator

Good afternoon. I am and [Indiscernible] Cheol-Woo from the IR Group at IR team at Shinhan Financial Group. Thank you for taking the time out of your busy schedule to attend Shinhan Financial Group’s Q3 2024 Earnings Presentation. I will be moderating today’s earnings presentation.

Today we have with us today, the Group CFO, Sang-Yung Chun, Group CSO, Koh SeogHeon, and Group CRO Bahng Dong Gwon. [Foreign language] We will first start with the presentation on our overall Q3 results followed by a Q&A session.

Now, I'd like to turn it over to CFO, Sang-Yung Chun for a presentation on our business performance.

Sang-Yung Chun

[Interpreted]

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 trading at Shinhan Securities.

As we shared in our disclosures and in the letter last week from the Chairman of the Financial Group's Board of Directors and the CEO, Department of Shinhan Securities that provides a liquidity to exchange traded funds and performs hedging operations incurred large losses due to a trade-in cost between 200 Futures unrelated to the LP hedge.

We recognized a loss of KRW135.7 billion in the third 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 CET 1 ratio from this event, including the impact of the increase in the 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 Group’s Board of Directors and the management have committed to informing our shareholders as soon as possible of this incident and sharing updates.

Currently Shinhan Securities is actively cooperating with the regulators’ investigation and has launched its own contingency respond for us to diagnose the root cause. Together with the Shinhan 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 that bearing in mind once again, that customer trust and strong internal controls are the essence of our business.