Shinhan Financial Group Co Ltd (SHG) 2011 Q4 法說會逐字稿

My name is Ryu Seung Heon, and I am the head of IR. I would like to thank you all for taking the time out to attend today's earnings release.

We'll now begin the earnings call for 2011. With us today is Mr. Han Dong Woo, Chairman and CEO of the Group; Deputy President Choi Buhm Soo; CFO Min Jung Kee; Head of Finance Management team [Chung Dong Gee].

This earnings call will begin with the opening remarks by the Chairman Han Dong Woo, to be followed by the presentation by CFO, Min Jung Kee. At the end we will have a Q&A session. Now let me invite Chairman and CEO Han Dong Woo.

Good afternoon. I am Han Dong Woo, Chairman and CEO of Shinhan Financial Group. First of all, I would like to thank all investors, analysts and journalists from home and abroad for participating in the 2011 earnings call.

The year 2011 was a year of heightened concerns in the market due to the global financial crisis and the slowdown of the Korean economy. However, Shinhan has focused on strengthening the basics, and has been able to differentiate itself from the peers with its performance.

Last year, Shinhan Financial Group has realized a stable growth of 7.3% by focusing on long term goals and continued tight management on soundness which has allowed the Group to reduce the provisioning cost by KRW413.1b and realize annual net income of KRW3.1 trillion.

Once again, I would like to thank all our investors for making this possible and also for your continued encouragement and support.

Respected shareholders and investors, the new strategy for Shinhan Group in 2011 is dubbed a new evolution. As we have communicated to you in the Q3 call, it is imperative that we deal with the new normal, a low growth, a strongly regulated environment and a request for stronger corporate social responsibility in a more active manner.

This year, despite such environment we plan to realize sustainable growth and generate more synergy through the newly-launched wealth management and CIB businesses.

In addition, we will continue to reinforce organic growth and competitiveness of non-bank subsidiaries, such as securities, insurance and asset management to complete the structure of the financial group.

Moreover, we will continue to expand capital through stable profit generation for the early adoption of Basel III, and increased entry into overseas markets. In the end we aim to be newly evaluated by the market as a value stock not a growth stock.

Respected investors, in 2012 where a number of potential crisis and opportunities loom ahead of us, all 23,000 of Shinhan Financial Group's employees and the management will not spare any efforts in creating more change and implementing relevant strategies, so that Shinhan Financial Group can become the leading financial group in Korea that guarantees the best profitability and soundness as a financial group, with the best corporate brand.

This year we will strive to deliver our passion to all our investors. I hope you will continue to support us throughout our journey in the new year. Thank you very much.

Next our CFO, Min Jung Kee will give you a presentation on the earnings results for 2011.

Good afternoon. I am Min Jung Kee, the CFO of Shinhan Financial Group. I would like to give you a brief presentation on Shinhan Financial Group's Q4 and full year 2011 earnings results.

Please refer to page six on SFG income. SFG's net income reached KRW506.7b for Q4 making the full year figure stand at KRW3.1 trillion. Group's interest income rose by 9.4% Q-o-Q on the back of stabilized NIM and adequate loan growth.

Non-interest income fell slightly from the previous year despite the gains from sale of securities, while SG&A increased by 7.5% on a Y-o-Y basis posting the rate of growth.

Credit cost came down by 30.9% from the previous year due to the Y-o-Y fall in loans subject to credit alerts rescheduling programs, and the reduction of new NPLs supported by the loan growth led by quality assets. And this trend of credit cost stabilization is expected to continue on.

To summarize our 2011 earnings interest income grew thanks to the adequate loan growth throughout the year and NIM stabilization, while our net income increased by 15.5% from 2010 on the back of consistent improvement in asset quality and resulting decrease in credit cost.

In Q4, despite the gain from the sale of our stake in BC Card, our net income dropped by 28% from Q3 due to the reflection of one-off expenses such as labor costs. However, I can still assure you that we are maintaining stable net income levels quarter by quarter on a normalized basis.

Next, page seven, is regarding our group companies income. For full year 2011 banking and non-banking net income after equity method reached KRW2.1339 trillion and KRW1.281 trillion respectively indicating net income breakdown between banking and non-banking business of the Group, standing at 62% versus 38%.

Due to additional provisioning in banking and one-off expenses such as ERP cost in Q4 non-banking income contribution increased relative to banking standing at a stable level of 38%.

Let me now move onto page eight on Q4 and full year 2011 results by subsidiary. In the case of banking, income moved up by 26.9% Y-on-Y on the back of stable margin and asset quality, but it fell by 49.7% Q-o-Q due to seasonal expenses posted in Q4. While income in non-banking decreased by 10% Q-on-Q, it increased by 5.5% Q-o-Q thanks to the increased income from Shinhan Card.

Income of Shinhan Card decreased by 11.6% Y-o-Y due to a disappearance of income tax refund effects, but increased by 18.5% Q-o-Q thanks to the gain from the sale of BC Card shares in Q4.

Shinhan Investment saw its income fall by 32.5% from 2010 due to the loss resulting from increased market volatility. Shinhan Life Insurance posted 11.1% income growth in 2011 with its net income reaching KRW236.9b as it saw its premium income consistently increase.

Next, is Shinhan Bank's earnings on page nine. During 2011 Shinhan Bank saw its Korean won loans grow by 9% and its interest income by 8.3% as its cumulative NIM stabilized at 2.22%.

On the other hand the Bank posted non-interest income at a level similar from 2010 as its one-off gains related to Hynix and Hyundai E&C and in 2010 and 2011 respectively offset each other.

The Bank's SG&A increased by 11.7% on a Y-o-Y basis due to the increase in labor cost, including additional retirement benefit expenses caused by actuarial assumption change in ERP expenses. Provision for credit losses fell by 42.3% Y-o-Y due to the reduction of loans subject to restructuring and credit cost stabilization at a normal level.

The Bank posted KRW2.1184 trillion in net income, up by 26.8% Y-o-Y on the back of interest income growth and asset quality improvements.

The Bank's cumulative NIM, including Shinhan Card, moved up by 8 bps from 2010 end to [3.59%]. This is attributable both to the 4 bps rise in Shinhan Bank's NIM resulting from the base rate hike and funding cost reduction and to the 6 bps increase in the cumulative NIM resulting from the increase in Shinhan Card's revenue earning assets.

While Q4 saw NIM decrease due to cancelled income recognition of accrued interest from loans overdue for 90 days or longer, this is a temporary drop caused by retroactive application of the cancellation to the full year. We expect to be able to maintain NIM at a stable level in 2012 as well, through a continued funding cost stabilization and [safe] loan growth.

Now on page 10, regarding the Bank's non-interest income and SG&A, out of the Bank's non-interest income items, securities related income came down by 2.9% Y-o-Y despite the one-off gains from the sale of Hyundai E&C shares in 2011 because the size of the gains from Hynix equity sale and etc. in 2010 was larger.

Fees and commissions, including funds, bank assurance and trust fees edged up by 0.5% and income from FX trading and derivatives increased by 12.2%. Overall, non-interest income remained similar to the 2010 level.

Next is regarding the Bank's SG&A. Shinhan Bank's SG&A increased by 11.7% Y-o-Y due to the 26.8% increase in the staff-related expenses that included KRW69.5b ERP compensation for 238 applicants in Q4 and additional retirement benefit expenses caused by the change in actuarial assumption.

If you exclude these seasonal factors, however, SG&A growth rate is deemed adequate. Both the Group and the Bank maintained adequate cost efficiency levels with their C/I ratios standing at 45% and 46% each.

Next page, while Shinhan Card's 2011 net income came down by 11.6% Y-o-Y to KRW875.9b it can still be viewed as maintaining stable income on a normalized basis if you consider the KRW195.5b income tax refund posted in 2010.

On a Q-o-Q basis the net income increased by 18.5% thanks to the posting of the gains from BC Card share sale. Shinhan Card's operating revenue for full year 2011 increased by 6.1% due to the credit purchase growth while its interest expenses decreased by 1.7% due to the fall in funding cost.

All in all, the card issuer maintained solid profitability on both the revenue and expense fronts. SG&A and also decreased by 1.2% Y-o-Y thanks to the efforts to save labor and marketing expenses. And these efforts aimed at improving cost efficiency are continuing.

Shinhan Card's credit cost reached KRW164.5b, up by 130.8% from 2010 when -- where the write-back too place. However, this can be interpreted as normalization of the credit cost following the Y-o-Y increased in revenue earnings assets and delinquency ratio.

As of 2011 end written-off assets stood at KRW6.4 trillion and in Q4 Shinhan Card recovered the KRW73.1b from the written-off assets, posting a 5% recovery rate for the full year.

Page 13 shows the Shinhan Financial Group's asset status. Shinhan Financial Group's total assets of -- as of 2011 end stood at KRW332.3 trillion, continuing the trend with a 4.2% increase.

This is attributable to the 4.7% annual asset increase as well as the increase in product assets. Financial investment and life insurance increased by 15.9% and 16.7% respectively.

Next page shows the loan in Korean won that increased by 9.0% to KRW139.1 trillion. Increase in loans which began in Q2 continued through Q4 by 2% and household loans grew by 7.2%, and corporate loans grew by 10.6%.

In the household side, general loans increased by 7.3% and mortgage increased by 7.1%, resulting in an adequate growth rate of 7.2% per annum, and in the case of corporate loans, SOHO and public and loans to -- increased by 13.1% showing a solid growth around the quality assets.

The won deposit was KRW140.1 trillion (sic - see presentation) showing a 15.3% (sic - see presentation) increase and the low cost increase increased by 11.4% (sic - see presentation). Loan to deposit ratio maintained a stable 98.9% as of the end of 2011 thanks to increased deposit base and a stable growth. We plan to manage the loan to deposit ratio at below 100% through a deposit-centered stable funding structure.

On page 15 is the Shinhan Card asset growth. As you can see on the upper left-hand side the total transaction volume increased by 8.6% to KRW135.5 trillion and the earning assets increased by 1.6%, largely around credit purchases. In 2012 we plan to carry on the trend of adequate level of asset growth through credit-purchase-oriented differentiated marketing activities, targeted at key merchants and card holders.

Now I will move onto the asset quality of Shinhan Financial Group. As of the end of 2011, NPL ratio decreased by 21 percentage points coming in at 1.25%. Precautionary and below decreased by 4.4 percentage points posting 2.46% decrease at 2011 year end.

This is owing to the continued efforts in NPL management, increased loans to quality lenders and KRW1.951 trillion of write-off and sell-offs that took place in 2011. NPL coverage ratio increased by 24 percentage points to 166% and Shinhan is continuously preparing for any possible losses in the future.

Let's turn to the next page. NPL ratio at Shinhan Bank stood at 1.09% at 2011 end, which is a 22 percentage point drop year on year. And the NPL coverage ratio increased by 30 percentage points to 166%, maintaining the trend in asset soundness.

As you can see in this slide SME and SOHO delinquency ratio have both decreased compared to last year. In the case of household loans it did increase slightly, but it has maintained a stable level at 39 basis points.

Since 2009 Shinhan Bank has been focusing on managing the Bank's soundness, and apart from a few loans given out to companies under work out and corporate renewal process, there isn't much room for NPL to grow.

Next page, NPL ratio for Shinhan Card increased 10 percentage points to 1.72%. NPL coverage ratio stands at 234% which is same as last year. Reserve for credit losses is maintained at the current level to prepare for any possible economic downturn in the future.

Delinquency ratio as of 2011 end increased 21 basis points to 2.01%, a slight increase in delinquency is shown due to the increase in earning assets. However, in provision for possible loss, stable asset management and stronger risk management centered on credit purchase have continued since 2008. And we will make sure that Shinhan Card's asset soundness is managed well going forward.

Moving onto page 20 let me explain to you provision for credit losses and write-offs. As you can see on the graph on the upper left hand side of the slide, provision for losses is showing a stabilizing trend, decreasing from 0.73% as of yearend last year to 0.47%.

In 2011 Shinhan Bank has written off KRW807b and sold KRW678b of its NPL and it is continuously working on the corporate-loan-centered restructuring. And on the back of increase in earning assets KRW466.2b of provision for credit losses has been written off at Shinhan Card. As recovery from written off assets declined, KRW164.5b of provision for loss has been created.

Moving onto page 22, despite the increased profit in Q4 the Group BIS ratio as of the end of 2011 is expected to decrease by 2.0 percentage points to 11.4% due to the decrease in Tier 2 assets, which is a result of increased risk-weighted assets and repayment of redeemable preferred stock.

Tier 1 ratio is also expected to drop slightly to 8.9%. The BIS ratio of Shinhan Bank at the end of 2011 stands at 15.3%, and the Tier 1 ratio is expected to come in at 12.5%. And Shinhan Card's capital adequacy ratio stands at 24.8%, maintaining a healthy status.

We plan to grow the Group by reducing risky assets and increasing stable assets. Profitability is expected to maintain at a stable level, and the capital ratio is expected to improve on a continual basis.

As I have mentioned, on January 25 we have repaid the KRW3.75 trillion of the redeemable preferred stock and convertible redeemable preferred stock, so it is projected that the Group will be able to further improve the Tier 1 ratio.

We have included additional information on the subsidiaries key management indices and the loan status in the appendix. That starts from page 23, so please refer to them as needed.

This concludes the 2011 Shinhan Bank's earnings report. Thank you very much.

Now, we will take your questions. (Operator Instructions). The first question comes from Mr. Lee Byung-Gun from Dongbu Securities.

Yes, good afternoon my name is Lee Byung-Gun from Dongbu Securities. Can you hear me well?

Yes.

Well, thank you for delivering good results all the time. I have two questions one. The first one is simple, you mentioned that there was a temporary drop in NIM related to the accrued interest income and asset [drop] and there must be other factors as well. And recently I believe that there could be some impact from the high level of liquidity that you are maintaining in foreign currency. So how much of that is explained by this factor? Furthermore, what is your expectation for the NIM movement going forward?

The second question is related to credit cards. In the case of Shinhan Financial Group non-banking business represent more than 30% of the income and that is mainly attributable to Shinhan Card's earnings performance. But more recently I don't believe that the performance is as good as it used to be in the past. And provisioning level has increased from KRW400b level to KRW800b.

At the same time, during the presentation you -- the CFO mentioned that the credit purchase is the main strategy for the credit card operations. And in the case of other financial groups who have conducted earnings call they said that their credit purchase level is actually lower vis-a-vis the companies. And that was the competitive edge for them.

So I wonder what your position is on that front. I know that you have been doing well so far, so overall what is your expectation for the credit purchase and credit card operations overall?

Thank you for your question. Let me address the first question first regarding NIM. As you mentioned, during Q4 in the case of the bank there was a margin drop by 14 bps on a Q-o-Q basis. The NIM for the Bank in Q4 came down to 1.1%. If you look at the details, there has been the reduction of the funding margin and that accounts for 3 bps, and for management the loans it accounts for 11 bps. And, as you mentioned, the accrued income from the delinquent loans overdue for 90 days or longer, in terms of value, that's about KRW28b and in terms of the margin that accounts for 8 bps for the quarter, and when it's annualized it's about 2 bps impact.

Other than those, as you mentioned, the interest on the delinquent loans has been reduced and there has been the calculation of the delinquencies, and that has also been posted and that started in December. Therefore, such factors did not represent much of the drop that we experienced in Q4.

In the case of this year, it is true that those factors are putting -- imposing certain margin pressures on us and for that year, in the case of the bank, our expectation for the full year was about 2.15% but incorporating the recent circumstances we believe that there is a possibility that the actual could fall below that planned level.

Regarding the credit cost of the credit card operations, let me try to provide you with an answer. In the case of the credit card, the recovery from the written-off assets were actually higher than our expectations, which was the reason that credit card was relatively lower. But in the case of last year, the bad debt expense came up to about 83 bps -- that's by 83 bps. And I believe that this indicates the normalization of the credit cost portion on cards, and the delinquency roll rate increased in Q4. And just to talk about Shinhan Card, the impact was just about 3% plus. The biggest variable for this year will be the movement of the delinquency roll rate, especially from the credit card operations.

And regarding the bank NIM, when we analyzed our results last year, I believe that the NIM has gone back to the 2010 level. There was the CD rate hike impact that we felt in 2011 but now on this NIM level, it's back to the normalized level before 2011. Thank you.

The next question will be given by Mr. [Chung Win] of Franklin Templeton. Mr. Chung, please go ahead.

Good afternoon. I am Chung Win at Franklin Templeton. I actually have a question regarding strategy. You have said that the Group's environment will not be very favorable in 2012 as the bank credit card securities. There will be heightened regulation and asset side regulations will be there. And also Basel III will go into effect in 2013 so it is not going to be an easy year. However, from the Financial Group's perspective regarding growth strategy I'm sure you do need to pursue growth so I want to know what kind of growth strategy you have and where you will be focusing in terms of growth. And in terms of cost-effectiveness and capital effectiveness, what kind of strategies do you have for those areas?

As you have just pointed out, it is not the best year to pursue growth so we do not have a very high growth target. However, we plan to improve the credit portfolio so that we can maintain a very sound credit portfolio. The priority for us is always going back to basics; that has been the first and foremost goal for us. And we want to employ a converged management based on wealth management and CIB, so we are going to take into account the matrix elements so that we can encompass all of the areas of the finance so that we can create a one-point service to our clients and customers. We are going to increase fee income and thereby we're going to attract more quality customers. We have already entered that sphere and, in terms of growth, with these strategies we believe we will be able to increase market share.

And, as you have already pointed out, cost is becoming a very serious issue because economy is not growing as fast as it used to and when corporate asset fast -- grew very fast, many costs were offset by its fast growth. However, because asset growth is very stagnant, it is very important for us to control cost more wisely. So, in that regard, we call it a fortress balance sheet, so we create a fortress around our balance sheet to protect it. And, going back to basics, we look at all of the cost elements and take a deeper look at each cost element. We take a look at some trend such as cost/income ratios and try to prevent any creep-ups.

We are ready to take the next question coming from Mr. Kim Jinsang from Citi Securities. Please go ahead.

Good afternoon. Thank you for the strong results. In fact, other analysts have already touched upon this, the point of my interest, so while this might be overlapping a little, credit card has played a key role in improving Shinhan's ROA and income but, given the current regulations and competitive landscape, which includes the merger between the KEB and Hana and etc., and also considering the fact that the decline in recovery from the written-off asset, Shinhan Card's income contribution could fall substantially.

At the same time, the equity capital regulations are becoming tighter. Therefore, investors are looking for sustainable ROA improvement but it seems to me that the situation is now favorable for you to do that. Maybe other companies faced a similar situation but how much of improvement are you targeting for ROA, going forward, and what is your plan to overcome these challenges?

Currently, the government is asking financial companies to submit five-year capital adequacy improvement plan. Maybe this will make it quite difficult for you to pay dividends, going forward, or you may think of a way to take out leverage through M&A. After certain time passes, maybe you can normalize the dividend levels, so what is the time that you think it would take for you to normalize dividend payment level?

The credit card industry in Korea is going through a turning point. Credit card operations differ, country by country. Until now, in the case of Korea, there have been many benefits provided to the credit card holders and that has driven the marketing strategy of credit card companies in Korea. But, these days, the credit card issuers are subject to greater pressures to cut fee levels and other regulatory pressures, as well. Therefore, it's not feasible for credit card companies to just focus on expanding their scale for competition. Therefore, it is necessary for these companies to drastically overhaul their strategies.

We believe that this changed environment is not necessarily a bad situation for us. Our credit holder -- card holder base is very large and we have accumulated abundant database regarding these credit card holders. And utilizing this DB, we have minimized our risk coming from credit card operations. Therefore, we will not focus on competing with others to increase our market share; instead, we will try to cope with such changed environment in a proactive manner. And, in that respect, I believe that we are at a very advantageous position.

And regarding the ROA expectation for the future, it is very difficult to predict because we are at a turning point. However, I can assure you that our ROA improvement performance, going forward, will be definitely better than those of others.

You also asked a question regarding dividends. The regulatory bodies, whether they will continue to show interest in the dividend policy of the financial holding companies, is highly dependent on how the global financial market will unfold in the future and that has to do with how the situation will improve in Europe, and this also has to do with the Basel III introduction in Korea. The global discussions regarding those aspects will change and the pendulum will start to swing in the other direction at a certain point in the future but I cannot tell you exactly when that will happen.

As of now, Shinhan is trying to satisfy the Basel III capital adequacy requirements faster and more swiftly than any other global bank, so that is all I can tell you at this current point. Thank you.

Regarding ROE and Basel III, I would like to give you some explanation, myself. The ROE last year, based on common stock was 12.6%. Before Basel III implementation, the global financial markets' (inaudible) ROE was about 15%. However, after the implementation of Basel III, it became almost impossible for financial companies to reach a 15% level. 12% should now be regarded as quite strong. For 2011, there were certain one-off factors and our figure went above 12% but, going forward, of course it would be great for us to be able to continue to push this above that level. However, given the Basel III implementation schedule, we will focus our efforts on strengthening our capital adequacy base.

To add a comment regarding Basel III, its focus is on capital regulations and when we conduct simulations under any scenarios we will not have any difficulties in satisfying common stock capital requirements. But there are other ratio requirements under Basel III and, as of now, we are utilizing hybrid capital instrument and subordinated bonds to fulfill certain capital requirements, but under Basel III that might become difficult for us to do. And it will take some time for the Korean market to be accustomed to the Basel III environment.

Assuming that we would have no difficulty in needing common stock capital requirements regarding how we will try to satisfy other ratios that are not based on common stock, that will remain a challenge for us and we'll have to find a way. Under the aggravated business environment, Shinhan Financial Group has always proven to the investors that we delivered better results than others.

And regarding the ROA or ROA expectations, I believe that we have to manage quite conservatively until Basel III is implemented.

We will take the next question which will be posed by Mr. [Shim Kyu Sun] from Hanwha Securities.

Good afternoon. I'm Shim Kyu Sun from Hanwha Securities. Regarding Q4 results, I would like to talk a little bit here more about the one-off events and regarding the provisioning. Were there any one-off provisions?

And regarding G&A also, I think there was an explanation but I did not quite catch it so could you explain, once again, why the G&A has increased?

And regarding 2012, the growth rate and margin and profit size, how do you project these three?

The one-off events that took place in Q4 are as follows. In the non-interest area, this is the case of Shinhan Card, we have sold BC shares of KRW88.8b; this is before tax. And there were the bond market stabilization fund which we recovered and we have been able to generate KRW55b of profit from that, so these were the two one-off events that was reflected on Q4 results.

And regarding G&A, there has been the provision regarding the annual salary increase. There has been a Group-wide increase of KRW140b and so this has been reflected on Q4. And, in Shinhan Bank, there have been 238 voluntary retirees so, before tax, KRW69.5b has been paid out as ERP; these were some of the large items in the G&A account.

And regarding provision, in Q4 the regulatory body -- we do apply IFRS; however, we had to accumulate more provision and there has been an expansion of -- a requirement for expansion of provisioning for losses so this was due to the stronger regulation on the part of the financial regulatory board.

And also one more thing regarding G&A, in Q4, in Shinhan Bank, we do not adjust salary increase on an annualized basis; it is all reflected on a single quarter in Q4 and it was about KRW91b -- KRW99.7b, to be exact.

And as to your second question, the general provisioning level, let me first talk about this year. This year, the provision for loss will be about KRW925.7b. The provision was reduced because, for the past three years, we have been able to stabilize our assets so the increased soundness of our assets is one of the reasons behind the decrease of provision for loss. We have grown by 3.2% last year; in 2009 we have achieved 1.5% growth, and 5% in 2010, and in 2011 we have been able to achieve 5%, so our growth level has been reduced, which is also reducing risk levels, as well.

And because the growth level is rather stable, we do not need to worry about provisioning the mortgage and also, in the corporate side, the SOHO and the large companies. These business areas have grown so, going forward, regarding provision for losses the legacy issues such as shipbuilding or construction or [PFDs] will no longer be taken into account. Still regarding this year, regarding the cost ratio for provisioning for loss, it will be about 50 basis points to 55 basis points; that is our projection. And the legacy credit might require some additional provision but, given that, it will still maintain at the last year's level.

If there's no investor with a question.

I am Han Dong Woo, Chairman and CEO of the Group. Let me try to share with you what I have felt listening to your questions. I understand that there are some concerns regarding the credit card operations. I believe that the credit card operation of the Group will be quite critical for the overall Group's performance this year.

While it is not possible for me to give you specific numbers; however, I believe that the net income level for this year for credit cards should be able to reach the last year's level. For instance, the customer segmented specific management plan and the advance management of the marginal credit card holders have been incorporated into the plan that we have started to enforce from last year.

Regarding the merchant fee rate reduction, there have been pressures coming from the regulators and the pressures are stronger than we originally expected. However, we will try to have the industry association conduct a cost analysis for communicating with our regulators, and we will definitely take this as an opportunity for us to review the type of services that we have been providing to our customers. Therefore, I don't believe that there is not much reason for you to be concerned too much about our Group's credit card business.

I know that there are certain factors that justify your concerns; however, we've already mentioned the WB and CIB business of the Group and, with this new business lines with a new organization, we will try to seek the qualitative improvement of our income portfolio so that we can increase the profitability of the Group, and that will also include the Life Insurance and Shinhan Investment that will be making greater efforts to improve their own profitability. If we can do that, I believe that the earnings results for this year will be as high as those for 2011.

We've faced numerous challenges in the past but we always manage to overcome such challenges. Some of you mentioned the regulatory risk for this year but we are very confident that we can deliver to your expectations. Thank you.

As there are no other questions, we will conclude the earnings report for 2011 and the information will be uploaded on the website. Should you have any additional questions, please contact our IR team and we will provide you with the answers. Once again, thank you very much for participating in the earnings call.

Speaker statements on this transcript were interpreted on the conference call by an Interpreter present on the live call. The Interpreter was provided by the Company sponsoring this event.