Shinhan Financial Group Co Ltd (SHG) 2012 Q3 法說會逐字稿

Good afternoon. I am Ryu Seung Heon, Head of IR. I would like to thank all of the participants of the financial year Q3 results report. We have here with us CSO Choi Boem Su. We have also here with us CSO Choi Boem Su, CFO Min Jung Kee and Head of Financial Team [Chang Dung Kee]. We're going to deliver the results to you. Our CFO will be making the presentation. And then we will be receiving questions. I would like to now introduce our CFO, Min Jung Kee who will be presenting the Q3 results.

Good afternoon. I am Jung Kee Min, the CFO of Shinhan Financial Group. Despite your busy schedules thank you investors, analysts and journalists for taking part in the Q3 Shinhan Financial Group earnings release. And let me now walk you through the Q3 business performance of Shinhan Financial Group. Let's turn to page six, Group income. Shinhan Financial Group's Q3 net income recorded KRW485b, going down 23.2% QOQ. 2012 cumulative net income recorded KRW1,942.6b, a 25.1% drop year on year.

In Q3 income went down QOQ because of the credit cost incurred for Woongjin Group and other construction companies and also due to the increase of SG&A for factors, including the accounting recognition of provisioning on retirement pension benefits in Q3. There was [Dong] Construction, Woongjin Holdings and Woongjin Polysilicon so total loan-loss provisions were KRW80.9b. And there was 20 -- KRW92.1b for the provisioning of retirement pension benefits which were recognized in Q4 of last year -- which were recognized in Q3 of this year. So KRW127.5b for the employee labor-welfare fund, which was also recognized in Q3, all led to the drop in net income by 23.2% Q0Q.

To summarize the income interest of the Group, despite the drop in the interest rate leading to 2bp drop in NIM in Q3 grew because of the 3.4% growth in Bank's loans in won. Accordingly the interest income went up 2.6% QOQ. Non-interest income rise due to non-recurring securities disposal gains including the Visa assured disposition gains which took place in the previous quarter. This had an effect leading to an 11.9% drop in non-interest income.

For SG&A there was not real cost increase but, as mentioned previously, there were one-off accounting recognition factors which made the numbers grow by 12.2% and 9.6% Q0Q and Y0Y respectively. As you're well aware, under the IFRS standards actuarial assumption of retirement pension obligation uses long-term corporate bond rate as the discount rate. Last year in Q4 we had to set aside KRW140b of provisioning on the pension benefits, which was a one-off cost factor. With the continued drop in the long-term interest rates this year there was a decision to recognize the pension benefit cost earlier in Q3, this quarter leading to a KRW92.1b of additional costs. Excluding the Q3 cost one-off factors the cost growth of 2012 SG&A is quite appropriate.

Let me now cover credit cost. With the KRW80.9b for Woongjin in Q3 related to the additional provisioning for restructuring, credit cost has gone up 28% QOQ and 48.6% YOY. The credit cost ratio of the Group with the additional restructuring of the Bank in Q2 and Q3 and with the normalization of the Card provisioning has slightly increased to the level of 67bp. But excluding the Woongjin-related provisioning the Group's credit-cost ratio stands at 62bp.

To summarize, because of the one-off factors in credit cost and SG&A the Q3 net income went down. But excluding the one-off factors our recurring-profit level is well maintained. So with the re-ignited loan growth and the minimization of NIM reduction you can see that despite the 23.2% drop of net income QOQ we are enjoying a normal level of profits.

Let's go to page seven, Group subsidiary income. Taking into consideration the equity ownership of the bank and the non-banking side, the net income of the Group year-to-date until Q3 recorded KRW1,383.9b and KRW862.7b respectively. And thus the profit contribution of the banking and non-banking side was 62% and 38%, which are similar to the figures last year.

Let's go to page eight, the Group's subsidiaries income for Q3, 2012. In Q3 Bank income was affected by the increase in credit cost related to restructuring and the retirement pension benefit related provisioning, which was recognized in Q4 of last year, was recognized in Q3 of this year. So the Bank income went down 16.7%.

Card and life insurances' income fell 35.2% and 23.7% respectively due to non-recurrence of securities disposition gains in this quarter, including the Visa assured disposition and financial debenture transaction gains. On the other hand, in the case of Shinhan Financial Investment there was a slight recovery in the market-transaction volume of securities, leading to a fee-income increase. And there was also the self-trading income gains following the product asset management, which led to a 200% growth QOQ. For Shinhan Capital there was a 40.7% increase because there were some additional credit costs which occurred not in this quarter but in the last quarter.

Let's now cover Shinhan Bank income from page nine. Let's look at the interest income, which was the core income in Q3. With the rise in loan growth, which was at standstill until Q2, the loan growth led to a 3.4% growth in loans in won. And despite the base rate cut and market interest rate drop the NIM was able to be maintained at a 2% level, a slight drop. So the interest income went up by 1.3%.

Non-interest income in Q3 with the boom in bancassurance sales and financial debenture disposition gains went up 25.8% QOQ. As previously mentioned, the reflection of the actuarial assumption of retirement benefit provisioning in Q3 led to a 16.2% growth in SG&A QOQ. There was a -- there were additional provisioning of KRW73.4b with the [Dong] Construction and Woongjin Construction Company related court receivership. And with the additional loan-loss reserves for some construction company restructuring the credit cost went up 32.4% QOQ.

The Bank's net income in Q3, despite the interest and non-interest income growth due to the SG&A and credit-related one-off costs, went down 16.6% QOQ. But still we're maintaining a sound profit base with growth of core profits. As you can see on the graph on the left-hand bottom side, the Bank NIM including card posted 2.5% in Q3, which was only a 2bp drop QOQ. Despite the interest-rate cut, there were NIM-improvement factors including the recovery of some delayed interest in Q3.

Taking into consideration the one-off factors in Q3 and the additional interest rate cuts that may take place in Q4, we expect the NIM to drop more in Q4. However, with the continuous, efficient running costs and with appropriate asset growth we will endeavor so that the interest income can be maintained stably.

Let's go to page 10, Shinhan Bank's non-interest income and SG&A. Non-interest income of Shinhan Bank in Q3, with the expectations that from next year the immediate pensions tax deduction effect may disappear, saw the bancassurance product sales grow, leading to a 45.6% growth in bancassurance sales income QOQ. There was a KRW40.9b security disposition gain from the disposition gains of financial debentures. And the securities-related income went up 100.4% QOQ.

Regarding Shinhan Bank's SG&A in Q3, the amount of insurance retirement compensation in Q3 led to a more than 100bp drop in the long-term interest rate that was applied at a discount of a yearly basis led to a KRW90.6b of additional costs and climbed up 16.2% QOQ. Excluding the aforementioned one-off factors, it stopped at a 2.2% increase QOQ, showing appropriate cost growth.

The CI ratio of the Group and the Bank with the increase in SG&A one-off factors and the drop in net income posted 45.7%, 47%, 47.1% respectively.

Let's jump to page 11, Shinhan Card income. Shinhan Card's Q3 net income posted KRW158.6b, a 35.2% drop QOQ. However, this was caused by the impact from the non-recurring disposition gains of Visa card and the Card operation -- operating income is continuing to show sound growth. With the 6.4% credit purchase growth in Q3 the credit card operating income grew 1.05%. But the paid interest went down 2.5%. With the continuous efforts to push down the funding cost ratio and with efforts to minimize costs SG&A dropped 0.7% QOQ.

Card's Q3 credit costs posted KRW88.9b, a slight increase from the KRW78.8b in Q2. But the credit costs went up because of the increase in the write-off volume in Q3 and the drop in the written-off debenture collection gains. Accordingly, the asset-quality indicators including real delinquency rate and the interest rate before delinquency are being posted at a stable level. In the case of written-off debentures the balance was KRW6.5 trillion at the end of the third quarter. And there was a KRW68.3b of gains from collection of written-off debentures, which was a KRW3.3b drop QOQ. But still the numbers of collections remain strong.

Page 13, Group's assets. Shinhan Financial Group's total assets as of end September 2012 went up by 5.6% compared to late last year and grew by 3.4% compared to this June end, showing appropriate asset growth. This was caused by Shinhan Bank's Q3 loan growth in earnest, and because of Card's sales assets grew and Shinhan Financial Investment's financial products and managed assets continued their growth.

Page 14, Shinhan Bank's loans in won. You can see than at the end of Q3 the loans in won recorded KRW143.4 trillion, going up 3.1% compared to last year end. The loan growth began in earnest in Q3, going up 3.4% in household loans. With the increase in credit loans by -- credit loans to public officials it went up 10.5% compared to late last quarter. And in SME loans, SOHO loans went up 3.4% additionally in the quarter, which led to a loan in won increase QOQ. Shinhan Bank plans to continue to pursue loan growth focusing on sound assets including household loans and SOHO loans.

Deposits in Korean won as of the end of Q3 stood at KRW146.6 trillion. Thanks to the continued increase in time deposits and accumulative deposits, and the sustained increase in low-cost deposits a 2.5% growth was achieved. Thanks to an increase in savings base and stabilization in loan growth LTD ratio dropped to 97.4% as of the end of Q3. We expect the LTD ratio to maintain at a stable level down the road.

Moving on to page 15. As you can see on the top left hand side, the total transaction volume for Shinhan Card recorded KRW33.8 trillion, which is a 0.8% increase. And the earning assets increased 2.9% mainly due to the increase in credit purchase. The transaction volume and the earning assets have shown a stable growth owing to the increased number of days for credit card use and the seasonality in the credit card market compared to Q2. We plan to continue our efforts in specialized marketing activities for credit sales targeted at good margins and card customers to pursue an adequate level of asset growth.

Next I would like to move on to asset quality of Shinhan Financial Group. As of the end of Q3, 2012 loans that belong to the substandard and below category stood at 1.45%, showing a 0.03 percentage point increase QOQ. This is due to the sustained management of NPL and write-off and sell-off of NPL worth KRW397.8b. In addition, the NPL growth rate has slowed down compared to the asset growth rate. NPL coverage ratio stood at 153%, showing a 1% increase QOQ. And we plan to secure enough provisioning for potential NPLs in the future.

Moving on to page 18, Shinhan Bank's NPL ratio stands at 1.27%, showing a 0.04 percentage points decrease QOQ. And the NPL coverage ratio came in at 154%, a 3 percentage point increase, reflecting a slight improvement in asset quality.

As you can see on the delinquency ratio chart on the bottom-left corner of the slide, delinquency in SME and household loans have stabilized compared to Q2. This includes the delinquency rate in Group loans and excluding the Group loan portion the delinquency ratio is maintained at a stable 0.4% level. In consideration of the current economic situation we are concentrating our efforts in managing asset quality on the Bank side and excluding a few companies that are undergoing court receivership or restructuring we do not foresee an increase in new NPLs due to delinquency.

Moving on to page 19, NPL ratio for Shinhan Card grew at a similar pace with the earning assets in Q3. Therefore, the NPL ratio has remained steady compared to the previous quarter at 2.19%. NPL coverage ratio dropped 1 percentage point to 203%. However, it can be said that a sufficient level of provisioning is in place for a possible deterioration of asset soundness. Delinquency ratio as at Q3 stands at 2.45%, showing a slight increase of 4bp as a result of the continued application of a stable asset-management strategy. And pre-emptive management of high-risk loans. We will work hard to maintain the asset quality of Shinhan Card at a sound level.

Please turn to page 20 for our provision for credit losses and write-offs. As you can see from the graph on the top left-hand corner, Shinhan Financial Group's annual provision for credit losses has increased from 0.46% in 2011 to 0.67%, showing an upward trend YOY. Additional provisioning for companies that underwent corporate restructuring in Q2 and Q3 and increase in credit-card provisioning at an ordinary level have resulted in an increase in annual provisioning. However, as there are a few companies that may become candidates of corporate restructuring and taking into account the stable growth in loans during the past three years, it is unlikely that the provisioning ratio will take a hike in the future.

As you can find in the table on the upper right-hand corner, the Q3 provisioning for Shinhan Bank reflects the KRW76.4b of provisioning for Woongjin-related companies including [Dong] Construction and Engineering, and other provisioning for corporate restructuring and corporate loans. On the Shinhan Card side KRW134.9b of debt was written off in addition to the increased earning assets. Recovery from written-off assets have shown a slight KRW3.3b decrease from the KRW71.6b to KRW63b -- KRW68.3b, generating KRW88.9b of provisioning cost. The written-off debt and NPL sales for Shinhan Bank in Q3 stood at KRW230.1b and KRW167.7b respectively, which is a similar level compared to other quarters.

Please turn to page 22 for capital adequacy figures. As of the end of Q3 the BIS capital adequacy ratio for the Group is expected to decrease by 0.1 percentage points to 12.2% due to the increase in RWA and the increase in buffer capital as the subordinated loans have reached maturity. The Tier 1 ratio is expected to remain at 9.6%, same as last quarter. The BIS ratio for Shinhan Bank in Q3 stood at 15.4%. And the Tier 1 ratio is expected to come in at 12.5%, showing a sound level of capital adequacy. And Shinhan Card's adjusted capital-adequacy ratio stood at 27.5%, sustaining a sound level as well.

We expect the risky assets in the Group to increase at a moderate level and the profit-generating capacity will continue to increase, contributing to further improvement of the Group's BIS ratio.

And from page 23 on we have prepared additional information, such as information on subsidiaries and details on financial indices for the benefit of our investors. So please refer to them as needed.

This concludes Shinhan Financial Group's 2012 Q3 earnings report. Thank you.

Now we will have a Q&A session. (Operator Instructions). We will receive the first question Lee Byung-Gun from Dongbu Securities. Yes, Mr. Lee?

Yes, great to be here. Can you hear me? My name is Byung-Gun Lee. I think you showed good performance despite the difficult environment. I have two questions. First is about the credit card fee income. From next year I know that the fees are going to go down from next year. But what we are concerned about is that for the very large sized merchant stores they -- it could have some impact. But there could be smaller-sized merchant stores that have to engage in bargaining with you for the fees. But I know that there is great pressure to press down the fees for those smaller merchants, as well. Can you give us your take on the impact of next year's fee drop on your performance?

And I know that you are overcoming this with your funding costs improvement. So can you give us some of your assumptions about next years' impact coming from this fee drop?

I know that you have had ample assets growth. And thank you very much for that. And there were some credit purchases -- credit loans that were made to the public officials. And I thought that the fixed-interest rate products were given and for the mortgages at a fixed rate. Can you tell us about your future estimations about those products as well? Thank you.

I will give you the answer to the first question. Regarding the credit card -- regarding the merchant store commissions or fees from next year we're going to have the fee adjustments applied so we're going to see the fees go down. According to our internal estimates, we expect there to be a 12% impact on operating income coming from the drop in the credit-card commissions or fees and after the tax we expect to see about KRW100b to KRW200b of impact after tax.

As was mentioned by Mr. Lee, we have very large-sized merchant shops and other merchant shops that we need to negotiate with to come up with a final figure for the fees. So it could differ. However, I believe that if the gap is bigger, the drop is bigger, then we expect it that that impact could be higher than our estimations.

In the case of Shinhan Card, because we have economy of scale, which is to say that we could save costs because of this in some aspects. And we are engaging in many efforts to cut our costs and in Q3 we have seen some sizeable drop, which is about KRW60b actually. And to give you some background information, there was the promotion-related fees, the promotion-related costs or expenses. And secondly, there are many additional services that we provide to our customers, and we are trying to cut our costs in this field as well.

Accordingly, regarding the SG&A and fees, we're going to cut many corners and on a yearly basis we believe that we could save KRW50b to even KRW80b. I believe I mentioned this previously, that for Shinhan Card the merchant fee drop impact will be quite sizeable, but from next year we're going to also have cost containment. And according to the realization of our cost-containment programs I believe that the impact could be smaller or bigger than we expected.

To answer your second question, in Q3 we had seen some aggressive asset growth compared to before. And regarding the household loans, the loans made to public officials, we had seen KRW1.8 trillion growth because of this. In Q3 the total loans at the Bank grew by KRW4.8 trillion and 38% of that growth stemmed from the loans going to the public officials. And in the corporate loan side on a SOHO basis we had seen more than an 8% growth annually. So for both household and the corporate side it's 4.3% to 4.5% growth. That's 3.4% to 3.5% growth respectively, so it is quite balanced.

Regarding the loans made to Korean government officials or those working in the Korean government, it is true that it has led to our asset growth. If we keep up with this speed then I believe that we could enjoy this continuous growth. From Q4 regarding our asset growth feed it could be going down a bit. Regarding the growth in the credit loans, it's true, and if there is a need for us to grow our collateral loans.

And you talked about the eligible loan for the qualified, but we did not focus much on this. So when we see the numbers until Q3 it's about KRW57.2b, so I believe it's only 1% -- 0.1% out of the whole pie of growth. It is true that our products may have been a bit late in the market and we started to promote our eligible loans from end of July. And I think that the interest rate also had some impact. It is because the customers can choose and because this is a fixed-rate loan there are people thinking that the interest rates could go down in the future. So that is why the demand was not as high as we expected.

I believe that going forward we will take into consideration the demand of our customers and focus on the customer-oriented asset growth. We're not going to hurt our margin or our asset quality because we want loaded asset growth. Thank you.

Lee Byung-Gun from Dongbu Securities, are you still there?

Thank you once again for showing us a good performance despite the very difficult environment. I have two more questions actually. And I think that there was a drop in the asset management profit rate, but I think it can be estimated and we need to look at the different factors that go in. Up to next April I think there will be more pressure for reduction so as the interest rate continues to decrease there will be a impact from that. And so I would like to ask you what the loan rate will look like next year.

And if the interest rate maintains their current level the asset margin or asset profit margin can go down. So I would like to know under the new system what will the loan rate look like from -- the debt rate look like from April.

And recently there has been an increase of insurance rate and there is the driver insurance and the third-party insurance. I would like to know how the insurance trend and the premium trend is changing.

I think Mr. Lee from Dongbu was asking this question to our different conference call so we will have to skip answering this question.

Second question is from Mr. Kim Jinsang from Citigroup.

Thank you very much for the good results. I'm sure it is not easy to predict, but at the Card side, as you have already mentioned in your presentation, the merchant fee reduction will bring about some pressure on the profit. However, we will be able to offset some of that through cost reduction. And the written-off debt I think can be another area that we need to pay attention to.

In the case of Shinhan Card, it already has the economy of scale, so it is very -- showing a very low expense rate of 13% compared to the peers. So I think there is room for improvement at around KRW80b. So in terms of written-off debt, this ratio seems to be going down. What is your estimate of the ordinary level of written-off debt next year? And the Shinhan Card profit, what is your take on the normal level? Do you think the profit this year is showing a normal level, which is at about KRW160b? It is lower than KRW600b so do you consider this a normal level?

And the SOHO portion was quite high. If you look at the delinquency ratio, the SOHO delinquency ratio looks quite stable. However, because the economy is still quite suffering the SOHO side increase is still witnessed. I would like to know what is the basis for this kind of decision.

And as to corporate loans, are you go to put priority on corporate loans next year?

Yes, I will try to answer that question. The first question on written-off debt collection, the Shinhan Cards, the credit losses is quite low because the written-off debt-collection cost is quite low. This year, the size for written-off debt collection is about KRW270b to KRW290b. But, as I have already presented, in Q3 we have collected KRW68.6b and in Q2 we have been able to collect KRW71.6b of written-off debt. So compared to the previous quarter, there was a drop of about KRW3b, but if we continue this trend on an annual basis we will be able to collect about KRW280b.

So, based on our business plan we are meeting our target regarding the written-off debt collection. And if you look at it from the annual perspective the written-off debt size is reducing at about 8% to 10% per annum. So we do not have a complete business plan for next year, but we believe we will be able to collect about KRW250b next year if we take into consideration the decline in rates that we see currently.

And you will probably be wondering about where the bottom is. According to our internal analysis, each year we believe we will be able to collect about KRW200b at the least. So that is the minimum that we are looking at. And the written-off debt cost that we'll continue to incur, we will be able to save about KRW250b next year. So that is our forecast.

And as to the second question, the normal or the ordinary profit for Shinhan Card, if you look at Q3, based on ROA, Shinhan Card's profit was deteriorated, so our rate stood at about 3.2%. However, what we need to consider is the potential NPLs, which is constantly decreasing. And in the case of cash advance, as of the end of last year, compared to the end of last year, we have seen a decrease of 12%. So the assets with high profitability had gone down, so that has eaten into our profitability. But in the case of Shinhan Card, next year, based on ROA, we will be able to achieve a 3.3% to 3.5% profitability. So that is our estimate for Shinhan Card next year.

And let me answer the question on SOHO. Shinhan Bank has started sales in earnest in the SOHO area from 2006. However, we were not doing very well in the beginning, but recently the delinquency ratio has been managed very well. However, the SOHOs and the SMEs are suffering very much because of the economic situation so many analysts are worried about the SOHO situation I understand. If we look at the increased rate of SOHO portion at Shinhan Bank it is increasing at a manageable pace and we have a very tight portfolio-management plan.

So the case of hospitality and restaurant areas, there has been an increased demand in these industries. However, at the headquarter level we have a portfolio and so we have a set percentage for certain industries, so we are managing it very tightly. And 79% of the credit is covered by collateral in the case of SOHO. And in Korea, if SOHOs have good credit so that they can get loans from banks it means that they belong to the upper tier. So we can feel -- we can tell you that these are rather safe SOHOs. And we have about KRW24 trillion gone down as SOHO loans. If the credit cost goes up by 10bp it will have an impact of KRW24b, but it is in the manageable range.

And as to the Shinhan Bank SOHO, it is quite natural for you to be concerned. However, we have a very tight control measure. We have very strict principles under which we manage our portfolio so you do not need to be concerned.

Thank you very much.

Next question is from Barclays Securities, Mr. Sun Mok Ha.

Hello. I'd like to give you some overall questions. I know your business plans haven't been formed completely for next year, but for year 2013, according to the macroeconomic scenarios going forward, I'm curious about your take on next year's economic situation.

Also, I know that compared to this year, for NIM or credit cost you may be taking on a different direction. So can you describe that to us?

And lastly, when you look at this year's performance we see the income go down, SG&A go up and the provisioning go up. So I think that it's not very sound. And I know that your audit -- your income is going down, operating income, and I know that there have been some one-off factors. But still, can you tell us about the control you're going to have over the balance between the costs and the income?

I'm Choi Boem Su, the CSO of Shinhan Financial Group. It's great to talk to you, Mr. Ha. It's been a long time. Next year's scenario, well, we do not have a positive outlook. After the financial crisis, the Korean economy has held strong relatively, but because of the contraction in the global economy, Korea had export diversification and other efforts, but I think that they have reached the limit. At the same time there were some middle-class people that have been doing their best to stay afloat, but now they have to really tighten their belts and do cost containment.

Next year, if Xi Jinping takes office and if China sees breathtaking growth or if there is a breathtaking problem-solving for the European financial crisis I believe that even with a new president in office the Korean economy will have no way to be affected by the circumstances, so we will have low growth and low profit.

Shinhan is well prepared for this, however, and we have a saying, don't waste crisis, which means that there are some things that you can only do in a crisis. For some companies or for some organizations, in order for it to enjoy long-term growth there are some things that they must take care of and there are some things that must be taken care of despite the difficulty of accomplishing its end. I think that maybe in a crisis we could resolve these difficult tasks for long-term growth. We had similar discussions at our internal meeting today and from next year I believe that in the cost side we need to have better operational excellence. This means that we need to do our best to truly tighten our belts for cost containment.

Regarding we have, at Shinhan we have had a CIB and WIM, and the WIM and CIB regime or system I believe can gain more trust by our customers. And we will have to have cost containment in other areas, but also focus on WIM and CIB. After next year when many companies are under duress Shinhan will be praised for having had a good management despite the difficult environment. So with the extended management committee today we had similar discussions and we already are embarking on ways to come up with strategies to battle with these difficulties.

Regarding credit costs and NIM from 2007 to now if we average out the six years of credit cost it's about 65bps for this year. It's a bit higher than 65bp in our credit cost, but according to our business plans that we drew up we had a 50bp target that we had. So our numbers are below our expectations for next year. So when we look at the overall economic situation we believe that we will need some time for the situation to settle and reach the 50bp level of the past. So I believe that we will probably maintain a 65bp level.

And when you look into the different categories, credit cost is determined by large conglomerates in Korea. And it's very strange but we have seen on a five-year cycle many large corporations go down or be affected, which affected negatively the credit cost. With the Woongjin Construction court receivership incident this year we have been monitoring our other large conglomerate customers and according to our monitoring results for some large corporations that are under concern we are having efficient exposure management. So even in a crisis Shinhan was able to absorb the negative impact from the credit cost effect.

So I think for the credit cost for next year if we have 65bp as the assumption, compared to 2009 or 2010 it will be much better. And for NIM, for the yield curve, regarding the base rate cut, in 3Q NIM went down to 2%. And I think that we will soon see NIM reach 1.9%. When we look at the different environmental factors of the financial market in Korea there has been cutthroat competition between the financial institutions in Korea, which will be stabilized. So after continuous effort we will be able to continue the dropping of the NIM.

Thank you very much.

We will take a few minutes to wait for the next question. It looks like there are no further questions so with this I would like to conclude the Q3 earnings results report. Once again I would like to thank all of the participants for joining despite their busy schedules.

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.