Shinhan Financial Group Co Ltd (SHG) 2023 Q2 法說會逐字稿

Good afternoon. I'm Cheol Woo Park, Head of IR. It's my sincere appreciation to you for participating in Shinhan Financial Group earnings presentation for Q2 2023. Before moving on to today's presentation, allow me to make some announcement for housekeeping.

The earnings presentation of Shinhan Financial Group is taking place through the group's digital platform, the YouTube channel and Zoom app. The YouTube Live Channel is only available in Korean and Q&A is not available. Therefore, if you have -- if you wish to have an English view or participate in the Q&A, please join through Zoom. Please refer to our website, shinhangroup.com for detailed information for access.

From now on, we will start the earnings presentation of Shinhan Financial Group for Q2 2023. For today's earnings release, the group CFO, Lee Taekyung; CRO, Dong Kwon Bang; Group CEO, Myoung Hee Kim will be the main presenters. In addition, we are also joined by Shinhan Bank CFO, Kim Ki Heung; Shinhan Card CFO, Nam-Jun Kim; Shinhan Investment and Securities CFO, Hee Dong Lee; and Shinhan Life CFO, Kyoung Won Park.

In today's earnings release, there will first be a presentation on the overall business results for Q2 2023, followed by a Q&A session.

Now I will hand it over to the Group CFO, Taekyung Lee for the presentation on business results for Q2 2023.

Hello. As introduced, I'm Taekyung Lee, CFO of the Shinhan Financial Group. First, I would like to send my sincere appreciation to you for taking part in today's earnings conference call for Q2 2023 despite your busy schedules. Now I will walk you through the key highlights from Page 5 of the IR presentation. Please refer to Page 5.

In Q2 of 2023, despite an increase in operating income, net income declined due to conservative provisioning, realizing a net income of KRW 1.2383 trillion. Noninterest income recorded KRW 1.33 trillion, up again after increase in Q1. This was due to balanced growth of fee income deposit despite the decline in securities-related income. The group's cost income ratio in the first half of the year stood at 38.3%, maintaining a stable level despite the upward inflationary pressure and increase in digital and ICT related expenses through a solid trend of operating profit.

The group's credit cost ratio recorded 53 bps, increased by 22 bps Y-o-Y due to the increase in countercyclical provisions in light of the bank's credit review season and conservative accumulation of additional provisions with master scale PD adjustments.

Lastly, at today's BOD meeting, we passed a resolution to set the quarterly dividend payout for Q2 at KRW 525 and executed an additional round of share buyback and cancellation amounting to KRW 100 billion in Q3. Moving forward, we will continue to implement a sustainable capital policy by securing sufficient capital capacity.

Next on Page 6, you can find the main highlights of the group Q2 financial. And on Page 7, the group's net income and other profitability indicators are available. Now turning to Page 8, I will provide an explanation on the detailed earnings of the group. Page 8 shows the group interest income. In Q2 of 2023, the group's interest income stood at KRW 2.69 trillion, up 4.7% Q-o-Q. This is attributable to an increase in interest-bearing assets and increase in bank margins and a decrease in funding costs of nonbank subsidiaries. During Q2, there was an increase in the interest rate for loans and securities following the rise in market interest rates and the high interest term deposits funded in Q4 of last year reached maturity.

As a result, the bank's NIM recorded 1.64%, up 5 bps Q-o-Q. Growth of bank loans, which slowed down to 0.1% in the first quarter, recovered in Q2, increasing by 0.6%. Due to weaker demand following higher interest rates and tighter DSR regulations and the asset securitization on mortgage loans, retail lending decreased by 1.8% YTD. However, backed by continued demand from large corporations and well-established SMEs, corporate lending grew by 2.8% YTD.

Please refer to Page 34 of the presentation for more detailed information.

Next, on Page 9, detailed information on Shinhan Bank's loan growth, deposit and margin trends are available for your reference.

Next, on Page 10, the group's noninterest income. Despite the drop in securities-related income, fee income and insurance-related income, which are the core sources of noninterest income recovered, resulting in a 3.4% increase of the group's noninterest income Q-o-Q. On a Y-o-Y basis, due to the base effect of the low trading gains due to the sharp rise in interest rates in the previous year and higher securities-related income reflecting market rate decrease in the first half of this year, noninterest income improved by 21.5%.

Due to an increase -- decrease in accident insurance payments with a drop in insurance claim filings, insurance-related income increased by 10.1% Q-o-Q.

Now I will move on to fee income. With balanced growth in all sectors covering credit card fees, brokerage fees and IB commissions, fee income increased by 7.6% Q-o-Q. With increased volume and credit card purchases, credit card fee income increased by 26.9% Q-o-Q and brokerage fees also increased by 17.9% Q-o-Q, reflecting increased trading volume.

IB commissions recorded an increase due to commissions from acquisition financing, recording an increase of 29.3% Q-o-Q. Nonetheless, fee income overall decreased by 8.1% Y-o-Y due to a decline in credit card fees.

On Page 11, additional information on the group's noninterest income trend and details are available for your reference.

Next on Page 12, I'll walk you through the group G&A expenses and credit costs. Despite the one-offs of Shinhan Life ERP costs fully absorbed in the previous quarter due to tax deductions and higher advertising and service expenses, G&A costs increased by 6.4% Q-o-Q.

On a Y-o-Y basis, due to bigger depreciation following increased investments in digital and ICT and an increase in general cost levels due to inflation, G&A cost increased 9.0%. However, if the ERP cost of Shinhan Life from Q1 is excluded, the rate of increase stands at 7.6%. The group's CIR recorded 38.3%, a slight increase of 3.8% on a Y-o-Y basis, but excluding the impact from ERP of Shinhan Life in Q1, it decreased by 0.1%.

Despite the fall in credit card provisions following the stabilization of the 2 months delinquency roll rate for credit cards due to the increase in countercyclical provisions in light of the bank's credit review season and the conservative accumulation of additional provisions set aside through master scale Pd adjustments, the group's provision for credit losses increased by 19% Q-o-Q.

Looking at the delinquency rate, which is a leading indicator of credit costs in the case of banks, following the rate hikes and economic slowdown, it is trending upward. However, when compared against the pre-COVID levels, the absolute level is still low. Through active write-offs, Shinhan Bank's delinquency rate remained flat Q-on-Q at 0.27%. The delinquency rate for Shinhan Card recorded 1.43%, up fixed, that's Q-o-Q. However, the 2-month delinquency roll rate, which is a leading indicator of the delinquency rate has been stabilizing downwards since February.

To be prepared for internal and external uncertainties, the group is making efforts to secure sufficient loss absorption capacity through front-loading provisioning and is continuously striving to mitigate systemic risk by expanding support for vulnerable borrowers. There's exports to include and expand more win-win finance.

On Page 13, additional information on the group's G&A expenses and provisioning are available for your reference. From Page 14, I will hand it over to the Group CRO, Dong-Kwon Bang to explain the group's outlook on asset quality and provisioning.

Good afternoon. I am Dong-Kwon Bang, CRO of SFG. I will go over the asset quality and loss absorption capacity of the group. High interest rates and real estate issues have led to concerns on asset quality. So today, I would like to provide an overview on the group's asset quality, real estate financing management and loss absorption of capacity.

First, in terms of asset quality, for vulnerable segments that are being managed as potential risk factors, since latter half of last year, the credit card company has led efforts to preemptively strengthen credit management. In result, the portion of exposure to vulnerable segments has remained stable.

Fortunately, the group's nonbank delinquency ratio has been showing somewhat stabilizing trends since Q1. In order to manage asset quality, each affiliate is newly establishing or strengthening the related teams, and the group is operating a joint asset quality management system. We will continue to rigorously manage asset quality with our preemptive management system to prepare for any additional market deterioration.

Next is real estate. Including bridge loans, total PF exposure amounted KRW 8.9 trillion as of June, which is approximately 2% of the group's total loans. By region and by underlying assets, Seoul and greater metropolitan area takes up 73%, residential 61% and senior loans, 73%. It is largely comprised of high-quality assets.

Given the concerns on real estate financing from both home and abroad, the group internally conducted a stress test, assuming the level of unsold presale apartments during the '08 financial crisis, which concluded that additional credit cost of KRW 200 billion may be necessary. We will stably manage risk assets with close monitoring and increasing the frequency of reviewing counter measures, while also actively discussing normalization of projects with other lenders.

Last is the strengthening of loss absorption. Since latter half of last year, high interest rates and a sluggish real estate market led to deterioration of market environment. Against this backdrop, the group has consistently implemented preemptive and conservative provisioning policies. Consequently, the group's provisioning rate against total loans and total assets is 0.96% and 0.55%, respectively, showing steady upward trend. SFG has one of the highest loss absorption capacity in the Korean financial sector. We will continue the conservative provisioning and make effort to ensure sufficient loss absorption capacity.

Thank you, Mr. Bang. Next, we will move on to Page 17 to look at the P&L of each affiliate. The bank's interest income increased, thanks to margin improvement, but conservative provisioning, higher G&A and base effect from marketable securities profit led to a decline in net income Q-o-Q. Non-bank subsidiaries, credit cards showed even growth of operating income across credit sales and loans. However, net income decreased Q-o-Q as gains generated by sale of securities in the previous quarter was removed.

For securities, despite higher provisioning against CFD receivables, increase in brokerage fees supported by high transaction volume and growth of underwriting and arrangement base from the IB business led to slightly higher income Q-o-Q.

For life, ERP was fully expressed in the previous quarter. Also, insurance and financial income grew evenly to boost higher net income Q-o-Q. For capital, despite reduction of securities-related income, the effect of real estate provisioning of the previous quarter was removed, leading to higher net income than the previous quarter.

On Page 18, we have the P&L of (inaudible) and Page 19 shows the group's global business. Now let's move on to Page 20, capital management and profitability. As of June, CET1 ratio is expected to improve by 27 bps Q-o-Q to 12.95%. This was mainly driven by robust growth of net income, the conversion of CPS to common shares in May and an appropriate level of RWA growth.

In February, we mentioned that the group's mid long-term target was a CET1 ratio 12%. However, since the authorities have announced that they will levy the countercyclical buffer and introduce the stress capital buffer. We don't know the exact amount yet, but we feel that an additional 1 percentage point of CET1 ratio is appropriate.

Given the sustained economic uncertainty at both home and abroad, we plan to raise the CET1 ratio by 1% to 13% earlier than originally planned. Meanwhile the capital policies that we announced earlier this year are being consistently implemented.

On the next page, we have provided information on our shareholder return efforts and policies for your reference. The digital strategy on Page 22 will be presented by the CDO, Ms. Kim Myoung Hee.

Good afternoon. I am Myoung Hee Kin, CDO of SFG. SFG is working to leverage digital capabilities to strengthen Shinhan's fundamental financial competitiveness and boost social value, in line with the growth vision, which is we believe finance should be more friendly, more secure and more creative. I will go over the achievements of our digital efforts in 3 segments: platform innovation, social responsibility and financial contribution.

First are the achievements in more friendly driven by platform innovation. The group's platform is pursuing both volume and quality growth so that more customers can use our digital services more frequently. So growth MAU across finance and nonfinance platforms reached [24.5 million], which is a 24% growth Y-o-Y. Also, user-friendly UI/UX improvements and a stronger financial product and service portfolio drove the monthly visitors on our finance platform to surpass 20 million.

The nonfinance platform is increasing contact point in the daily lives of customers and recorded an MAU of over 4 million, which is a 59% growth Y-o-Y.

In terms of quality growth, database activities to enhance customer engagement generated a DAU of over 5 million on our finance platform, leading to the growth of quality users.

Next is the growth social responsibility under More Secure. Early this year, we installed UAD-equipped ATMs nationwide to prevent more than 9,200 financial accidents. The AI detection function that analyzes unusual activities and patterns is being continuously upgraded to provide stronger security for our customers' financial transactions. We have also been developing services and content for senior customers. The senior MAU on our finance platform increased by 15% [YTD] as a result. AI will be more widely implied to protect customers, enhance accessibility to digital finance and boost literacy so that we can fulfill our social responsibility.

Last is the financial contribution under More Creative. The group has been leveraging digital technology to strengthen business innovation and has been implementing company-wide process innovation to boost cost efficiency. As of first half of this year, we have been using AICC and RPA to save KRW 200 billion in costs, which is a 10% improvement Y-o-Y. We are also expanding the business scope of the Life platform, while the new digital businesses based on database growth is continuously generating operating profit.

In the first half of this year, operating profit recorded more than KRW 200 billion. The growth on the data business, 28% Y-o-Y is particularly notable. SFG will make utmost effort to strengthen digital capabilities to boost fundamental financial competitiveness and create value for customers to fulfill our social responsibility. Thank you.

Thank you, Ms. Kim. From Page 23, the group's ESG initiatives, detailed information of subsidiaries and major business performance indicators are provided for your reference. This will conclude the presentation for the 2023 Q2 earnings. We will now move on to Q&A. Thank you.

(Operator Instructions) The first question we have [White Oak Capital, Shane Mathews].

I want to ask 3 questions from my end. The first question is on the OCI trajectory. So if you look on a 10-year basis from FY '12 to FY '22, you can see that OCI has actually been negative for the bank over the past 10 years. So wanted to understand the OCI trajectory, which you are seeing both the largely losses which are coming to OCI from the securities. So the duration of this book, how you're actually thinking about this component of the OCI part. That's the first question.

Second is on your CET1 and buyback plans where you've raised the CET1, let's say, target to 13%. So do you think this is going to affect some buyback plans you proposed? The third question is on the credit card delinquency falling down. So I just wanted to get a better sense of how you're seeing the overall environment and however, business is operating in the current macro scenario.

(foreign language) Thank you for your question. Please allow us some time to prepare answers to your question.

There were 3 questions in total. So the first was the OCI securities projections and the CET1 and buyback and the card delinquency rate. The card delinquency rate, we will first have the answer provided to you by CFO, Nam-Jun Kim.

So if we take a look at the delinquency rate for credit cards, the delinquency 2-month roll rate reached its peak in February, and it has been trending downward since. In Korea compared to pre-COVID levels, we think that we will be able to return to that level at near the year-end. So the delinquency rate that increased dramatically in Q1 that led us to additional provisioning will stabilize in the second half. If we look at the delinquency roll rate, we think that it's also at a manageable level at 0.33%. So in terms of delinquency rate, we will be very active in taking a management stance.

And then regarding the profit outlook on our securities book. So as you know, this can be quite volatile depending on interest rates. And I think interest rate is the biggest contributor to the volatility. Recently, interest rate has been going up and it has booked as valuation loss. And the trend is changing from first half and second half.

In the second half, we believe that -- overall, I think the amount that I can give you is that interest rate outlook, it can change as the market conditions change. But Fed raise that once and [BOK], we're not sure whether they're going to raise it or not, probably not. So I think high interest rates will be maintained for the time being. And from next year onwards, the interest rate, I think, will start to come down. Based on these assumptions, the overall securities book and valuations and OCI, the valuation loss should reduce and valuation gain should increase. And there will be a repricing of the securities and the return has been on uptrend and this can have impact on NIM, a positive impact on NIM.

Regarding the CET1 ratio and the buyback plans and cancellation plans, so like you visioned, we raised outlook from 12% to 13%. So as of June, it's most already 12.95%, so it's just 5 bps more than we need. It's not very difficult. And as for the buyback plans, we will be reviewing them on a quarterly basis. So we have been canceling shares on a quarterly basis as well.

TSR, I think, will be around 30% to 40% but we have to consider the authorities, regulations, market conditions and the needs of the group. So considering all these factors, I think we will be able to maintain the policies that we announced earlier this year for the shareholders.

The next question will be from [White Oak Capital, Tejkiran].

I have 2. One, if you could comment on your strategy of expansion outside Korea, how much capital we should expect you to allocate outside Korea over the next 3 years, that would be very helpful. And what businesses, which countries should we expect this capital allocation to go to? And the second question is toward the system level. We know recently there has been high household led to GDP levels in Korea. To what level should this ratio fall for us to expect loan growth again comfortable?

(foreign language) Thank you for the question. Please allow some time for the question to be answered.

I think there were 2 questions. There was first question on the global business and the shareholder return on asset growth. I would like to provide an overall answer and then for the detailed asset growth on the bank side, the Bank CFO will answer.

For the global business, there's advanced markets, and we have the emerging markets. For the advanced markets, as our companies are making inroads into those markets, we're trying to support them in our policies as well. For large corporations and in cooperation with many companies in Korea, we're continuing to pursue those initiatives for emerging markets. In order to increase our income, we are looking at opportunities to seek and we're trying to expand our footprint there as well.

As you well know, in Vietnam, we are seeing good growth. I think it's the same for Korea and other countries as well. Recently, there has been rate hikes and also an economic slowdown. So all countries are looking at delinquency rate increasing. And of course, in emerging markets, we're observing the same situation. But we have the risk management experience in the past that we can refer to. So we will be looking at that for preemptive risk management. Under that, we are looking at how we cannot just expand our footprint physically, but also looking at how we could grow further in the areas that we have already established our businesses. Even if we are going to make additional expansions, we are going to look at how we cannot rather do organic growth.

But if there are high-growth potential areas, we may be looking at options to make equity investments but until now, we haven't had any specific targets. And in terms of our asset growth for total shareholder return in the early start of the year for shareholder return for asset growth, we said that we are trying to support that. And under that asset growth policy, we're trying to grow our assets accordingly.

For retail loans and the bank asset book, the bank CFO will take the answer.

So I'm the CFO of the bank. My name is Kim Ki Heung and I will go over the household loan growth. If you look at the first half asset growth, first of all, the market experienced negative growth, our numbers were minus 2.4%. In the corporate loans, there was net growth of around KRW 3.5 trillion in the corporate loan sector. And earlier this year, we said that we're going to consider our certain economic situation. We're going to focus on high-quality loans, and we're going to be conservative. And in that respect, we believe that in the corporate loan sector, we have been in line with that.

For the households in the second half, there can be some mortgages and (inaudible) related demand. And I think therefore, we will be able to offset the negative growth of the first half. We'll be able to record negative -- positive growth. And if we do that and if we maintain the corporate loan trends, we will be able to achieve our annual targets.

And just to add to that, for the retail loan sector, there is the government concern on high household debt levels. But if you look at the exposure of Shinhan Group in the retail segment, it's actually very high quality. And of course, we are supporting the vulnerable borrowers. But overall, we have very high-quality portfolio, and we'll be appropriately managing and we will be growing the household sector in that respect.

We'll move on to the next question. Next question is from HSBC from Mr. Won Jaewoong.

Thank you for the good results. Congratulations for the good results. Despite challenging market environment, the NIM increased in Q2 for Shinhan Group. I would like to know your outlook for the second half NIM. And second, the credit cost ratio, it went up by 0.5% but in this scenario you said you did a scenario, a stress test based on '08's financial crisis. You said additional credit cost will be around KRW 200 billion. That's not as much as I initially expected. And so does that mean that credit cost overall for the year can show downward stabilizing trend?

And lastly, the cancellation, I think the share cancellation is smaller than what we originally expected. Is this because you have raised the CET1 ratio target? Is that correct? And if this is the case, I understood that you have plans to focus on cancellation and buyback rather than dividend payout, what is your shareholder return policy? And what are your plans for buyback and cancellation for the remainder of the year? Or can -- to focus more on the dividend payout?

Please wait one moment, while we prepare the answer.

There were 3 questions. The NIM will be answered by bank CFO and the remaining 2, I will answer them. First NIM and it will be from the CFO of the bank.

Thank you for the questions. My name is Kim Heung, and I am the CFO of the bank. As you mentioned, Q2 NIM improved by around 5 bps Q-o-Q. And I mentioned in Q1 earnings call, but NIM in Q1 has been affected by Q4 because funding cost rise quite significantly. And the funding cost is showing downward stabilization as we enter Q2. So that has helped our NIM.

In the second half, the household and the corporate loan segment, I think there will be quite intense competition in terms of pricing in the market. And from the deposit side, the time deposits are maturing, so they will be repriced. And so given these factors, I think there is room for improvement. So second half NIM should be slightly higher than Q2 or it should remain stable. Full year NIM should be similar to last year.

And second question, given global financial crisis -- given the current economic recession, you mentioned that there can be KRW 200 billion additional credit cost according to our stress test. And so even if we set that aside, it won't be set aside all at once, it will be distributed across different quarters. And I would like to highlight that the asset -- given the asset quality, we have sufficient provisioning. We are just preparing ourselves for uncertainty in the economy. And if we are going to maintain our conservative provisioning policy.

So in the second half, our credit cost was around 53 bps. It was quite high. In the second half, it's going to come down but maybe I think it will be around 4 bps. And so like you've mentioned, we are increasing the target of CET1 for 12% to 13%, and this has impacted the size of our cancellation. As we move up the CET1 ratio, if we maintain 13%, we will be able to continue. Even if we maintain at 13%, we will be able to continue the initial capital return policy that we announced earlier this year.

The next question will be by Yong Jin Seol from SK.

There's one question from my side. So for the overseas commercial real estate, there have been continuous issues rates, I would like to get a color on your exposure.

Thank you for your question. Please give us some time to prepare for our answers.

So yes, for our commercial real estate exposure, our group CRO will take the question.

So yes, I'm Dong-Kwon Bang, the Group CRO. Thank you for the question. If we look at our overseas real estate investment, it's around KRW 4 trillion. I'd like to just add a little bit of explanation to that. There is about $1 trillion of substandard and mostly in hotels around KRW 100 billion and America KRW 2.5 trillion and KRW 800 billion in Europe and others are in Asia.

We did a full-scale investigation into the current status and the additional loss that's expected, we are going to carry out proactive monitoring. And because of COVID until now, due diligence on site was quite difficult. But now things have changed. So on-site due diligence activities are possible. So we are looking at the plans of how we could do so on site at the group level. If we take a look at the exposure, it's around KRW 4 trillion as explained. Thank you.

So we are waiting for the questions to come in. So while we wait for the questions, please bear with us for one moment. Our next question is from [Kim Doha] from Hana Securities.

I was on mute. I'm sorry for that. In the second half, I was already assuming 150 billion cancellation of stock. It has gone down to 100 billion. Then I think given the changes of the number of shares subject for dividends can actually increase from last year. So regarding the stress capital buffer, there can be some announces by government in the second half of this year. The target you mentioned was 12%. And I think all the minimum regulatory requirement adds up to 10.5%. If the stress capital offer is around 2% to 3%, then do you still have room to buyback and cancel shares? So what are your expectations for the stress capital? And what are your plans regarding this? And can you still maintain 100 billion to 150 billion cancellation every quarter, even with the changes in the minimum regulatory requirements, I would like to add for some more details here.

Yes, thank you for the question, and please give us one moment.

So we keep getting questions regarding the buyback and cancellation and it was actually a very detailed question. So thank you for that. So early this year, we said that we are going to review this on a quarterly basis. I don't think we committed to 150 billion every quarter, but I think, largely, you expected 150 billion every quarter. So the TSR that we are aiming is around 30% to 40%. And so we gave you some references.

Given economic uncertainty and regulatory changes, stress tests and so on, so economic uncertainty is continuing and importantly, the financial authorities are introducing new regulation. The stress capital buffer, we are not sure the exact amount. I think the TSR is coming to an end, end of October, and it should be introduced next year. If we refer to U.S. and Europe, if you look at their situation, the stress capital buffer -- so if loss is 1.5%, the minimum is 2.5%.

And if we look at the government -- Korean government, it was around 1.5%. If we assume U.S., then we need to assume 2.5%. If you look at European banks, those risk capital requirements, they have a requirement and they have a guidance. If you add both of them together, on average, there are different countries, but on average, it's around 2.4%. So this means that the requirement is basically going up by 2.4% for the banks.

So currently, requirement for us is 8%. If the countercyclical buffer is 1%, that's 9% and then it's not confirmed, and we don't know there is a number yet. But if we refer to U.S. and Europe, there should be 2.5% additional as the stressed capital. So then it goes up to 11.5%. So we add 1.5% buffer. And that's how we came up with this 13% number. So we have to still see the stress capital buffer, how that's going to play out, but that was our logic behind 13%.

And we have -- I think you are going through various scenarios, but like we mentioned earlier, it will be able to largely be in line with what we mentioned early this year. I'm not sure if this will completely answer your question, but please understand that at this point, it's very difficult to give you more detailed answers.

Thank you for your answer. We'll wait for the next question. I think we have another question from [White Oak Capital Shane Mathews]. Please ask your question.

So 2 questions from my end. The first is a follow-up on the first one. So can you just tell the duration of your investment portfolio? The second question is with respect to your nonbanking subsidiaries. So till around 2017, the card operation has contributed around 30% net-net income, but it has fallen off a bit in the past 5 years. So wanted to understand the competitive strategy you're seeing in the Shinhan card operating segment. And also, with respect to the other nonbanking subsidiaries, what areas are you targeting more to make more sustainable revenue stream?

(foreign language) Thank you. Please allow some time for us to prepare to answer your question.

Okay. I think you asked for the duration of our investment portfolio. And the second question was on the credit card, the contribution to the group's income. I think the first question, I'll take the answer. And the second question, I'll refer back to our Card CFO.

For the duration of our marketable securities in terms of short term, if we look at our fixed income portfolio, the outstanding balance is KRW 33 trillion and [0.47] and SCOM is KRW 75 trillion and 5.9 years in duration. In AC, maturity to hold is 32 trillion and 3.95 years. And now for the second question?

I think it would be a question on the overall growth potential for our credit card. I think I will give an overall explanation. I think the payment and the settlement and the overall landscape in this segment is quite difficult. It's very challenging in terms of competition. If we look at the credit card companies activities, it's not only credit card payments, but also different business areas as well.

Nonbanking areas and also data businesses. We're looking for new revenue sources to diversify our portfolio. And if we look at our revenue generation, it's not only coming from credit card purchases, but additional revenue sources are continuously being identified. So credit card income, about KRW 600 billion as we see in our current level, we expect that, that will continue on in the future as well. Thank you.

And to add on top of that, for the other credit card companies and the other nonbank subsidiaries -- I had a brief off of my mic, I apologize for that. So we have the bank and the nonbanking sector. So for -- I think that you know that we are making continuous efforts to grow our nonbanking business as well. So if we take a look at our income, so with the interest rate hikes, there has been a hike in interest rates. And as a result, you might think that the contribution coming from the nonbank subsidiaries is lower. But securities, insurance, and also asset management capital, all of those subsidiaries are growing quite steadily.

The Korean economy, in fact, continues to grow, not only the banks but the nonbanking subsidiaries, we expect that the capital markets will grow in these segments as well. So we think that this will continue to be our growth drivers. And from our group's perspective, we will make continuous efforts to grow them. Thank you.

We don't have any immediate questions coming in. We will wait just one moment. If there are no more questions, we will conclude the 2023 Q2 earnings call of Shinhan Financial Group. I would like to thank you all for attending the earnings call. The content of today's earnings call will be uploaded on the YouTube channel of Shinhan Financial Group's IR team. There are various other videos introducing the company and giving you more information on the company. So please take your time when -- please take your time. Thank you.