Shinhan Financial Group Co Ltd (SHG) 2023 Q3 法說會逐字稿

Good afternoon, everyone. This is Park Cheol Woo, in charge of IR. And thanks, everyone, for joining us at this SFG 2023 Q3 earnings presentation.

大家下午好。我是 IR 負責人 Park Cheol Woo。感謝大家參加我們的 SFG 2023 年第三季財報發表會。

Today, I'm joined by Group CFO, Lee Taekyung, the main presenter; Group CDO, Kim Myoung Hee; Group's CSSO, [Ko Seok hon]; Group CRO, Bang Dong Kwon; Shinhan Bank CFO, Kim Ki Heung; Shinhan Card CFO, Kim Nam-Jun; Shinhan Investment Securities CFO, Lee Heedong; and Shinhan Life CFO, Park Kyoung Won. We will first present the group's business results in Q3 2023, followed by the Q&A. And now I invite the CFO, Lee Taekyung to present the group's business results in Q3 2023.

今天，集團財務長李泰京（Lee Taekyung）擔任主講人；集團首席數位長 Kim Myoung Hee；集團CSSO，[Ko Seok hon]；集團 CRO，Bang Dong Kwon；新韓銀行財務長 Kim Ki Heung； Shinhan Card 財務長 Kim Nam-Jun；新韓投資證券財務長Lee Heedong；和新韓生命首席財務官 Park Kyoung Won。我們將先介紹集團 2023 年第三季的業務業績，然後再進行問答。現在我邀請財務長李泰京介紹集團 2023 年第三季的業績。

Good afternoon. This is CFO, Lee Taekyung of Shinhan Financial Group. Let me thank everyone for participating at our Q3 2023 earnings conference call despite your busy schedule. I will first go through our business highlights from Page 5 of the slide. Page 5.

午安.我是新韓金融集團的財務長李泰京。讓我感謝大家在繁忙的日程中參加我們的 2023 年第三季財報電話會議。我將首先介紹投影片第 5 頁的業務亮點。第 5 頁。

We have maintained steady operating income through Q3 2023. Net income was KRW 1.1921 trillion, down KRW 46.2 billion Q-o-Q. There was recognition of one-off costs such as investment-related provisioning in Shinhan Securities. Noninterest income fell from Q2, owing to decrease in securities-related income resulting from market volatility but the fee income is growing evenly across the different items. The group's cost income ratio was 39.2%, slightly up Y-o-Y but excluding ERP cost, it fell slightly.

到 2023 年第三季度，我們維持穩定的營業收入。淨利潤為 11921 億韓元，季減 462 億韓元。新韓證券確認了投資相關撥備等一次性成本。由於市場波動導致證券相關收入減少，非利息收入較第二季下降，但不同項目的費用收入平均成長。集團成本收入率為39.2%，年比小幅上升，但剔除ERP成本後，略有下降。

Provision for credit loss fell Q-o-Q by KRW 81 billion. Credit cost ratio was 50 bp, increasing Y-o-Y, but falling Q-o-Q. Last, the group's Board resolved on the 25th on KRW 525 in dividend per share in Q3 and KRW 100 billion in share buyback and cancellation in Q4. It brings the group's total resolution on share buyback and cancellation to KRW 500 billion in 2023. Looking ahead, we will continue with sustainable capital and shareholder return policy as we try to secure capital adequacy and in response to changes in capital regulated -- capital regulations.

信貸損失準備金季減 810 億韓元。信貸成本率為 50 個基點，較去年同期上升，但較上季下降。最後，集團董事會於25日決定第三季每股股利525韓元，第四季回購取消股票1,000億韓元。這使得集團在 2023 年回購和註銷股票的總決議達到 5,000 億韓元。展望未來，我們將繼續實施可持續的資本和股東回報政策，努力確保資本充足率並應對資本監管的變化——資本法規。

Page 6 is on the group's major business highlights and Page 7 shows the group's net income and income indicators provided for your information.

第6頁是集團的主要業務亮點，第7頁顯示了該集團的淨利潤和收入指標，供您參考。

Moving on to Page 8 on the group's income breakdown. Page 8 on the group's interest income. Interest income in Q3 2023 was KRW 2.7633 trillion, up 2.6% Q-o-Q. It is attributable to growth in interest-bearing assets and business days despite the fall in the group's margin by 1 bp.

請前往第 8 頁，了解該群體的收入細目。第8頁關於集團的利息收入。 2023年第三季利息收入為27,633億韓元，較上季成長2.6%。儘管集團利潤率下降了1個基點，但生息資產和營業日數仍有所成長。

In Q3, the bank's NIM was 1.63%, down 1 bp Q-o-Q due to loan growth, primarily in high-quality assets and preemptive funding.

第三季度，該行的淨利差為 1.63%，較上季下降 1 個基點，原因是貸款成長，主要是優質資產和優先融資。

The bank's loan assets grew 1.1% in Q3 following the 0.7% in the first half. Retail loans fell 2.5% from the end of last year, owing to slowing demand for credit loan from tightening rates and DSR regulations as well as securitization of mortgages. Corporate loans grew 5.5% from the end of last year on the back of continued demand from large companies and quality SMEs. Please refer to Page 33 for more details.

該銀行的貸款資產繼上半年成長 0.7%之後，第三季成長 1.1%。由於利率收緊、DSR 監管以及抵押貸款證券化導致信用貸款需求放緩，零售貸款較去年底下降 2.5%。在大企業和優質中小企業持續需求的推動下，企業貸款較去年底增加5.5%。詳情請參閱第 33 頁。

Page 9 is on Shinhan Bank's loan asset growth, funding and margin provided for your reference.

第9頁介紹了新韓銀行的貸款資產成長、融資和保證金情況，供您參考。

Next, Page 10, on noninterest income. The group's noninterest income fell 11.6% Q-o-Q despite growth in fee income and insurance income due to lower securities related income. Insurance income grew 4.2% Q-on-Q, resulting from the increase in CSM amortization from improvement in insurance sales.

接下來，第 10 頁，關於非利息收入。儘管由於證券相關收入下降，費用收入和保險收入有所增長，但該集團的非利息收入環比下降了 11.6%。保險收入較上季成長 4.2%，主要是由於保險銷售改善導致 CSM 攤提增加。

Next is on fee income breakdown. Credit card fee was up 52.8% Q-o-Q, driven by growth in credit card purchases and other fees. Brokerage fee was 8.3% on the back of increased stock trading but IB fee fell 36.6% Q-o-Q despite the growth in underwriting fee, resulting from more risk [PCM] sales due to reduced real estate PF and financing arrangement fee.

接下來是費用收入細目。由於信用卡購買和其他費用的成長，信用卡費用較上季成長 52.8%。由於股票交易增加，經紀費用為 8.3%，但儘管承銷費用有所增長，但 IB 費用環比下降了 36.6%，這是由於房地產 PF 和融資安排費用減少導致風險 [PCM] 銷售增加。

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

第11頁包括有關該集團非利息收入趨勢的更多信息，詳細資訊可供您參考。

Page 12 is for group's provision for credit losses. G&A costs increased 4.3% (inaudible) reclassification of service accounting (inaudible) Q-o-Q. Group's CIR on an accumulated basis edged up slightly to 39.2% Q-o-Q. But when excluding ERP costs, group's CIR was 38.2%, down 0.3% points.

第12頁為集團信用損失準備金。 G&A 成本較上季成長 4.3%（聽不清楚）服務會計重新分類（聽不清楚）。集團累計 CIR 環比小幅上升至 39.2%。但剔除ERP成本後，集團的CIR為38.2%，下降0.3個百分點。

Group's Q3 provision for credit losses due to declining additional countercyclical provisioning fell 14.7% Q-o-Q. Group's recurring provision decreased KRW 8.1 billion Q-on-Q.

由於額外反週期撥備下降，集團第三季​​信用損失撥備季減 14.7%。集團經常性撥備季減 81 億韓元。

Shinhan Bank, with the end of corporate credit rating season, its recurring provision fell by [KRW 71.1 billion]. Shinhan Card with long and the September holidays shortening payment cycle, it's recurring provision increased by KRW 79.7 billion. As for the leading indicator of credit cost ratio, that is delinquency rate, the bank's delinquency rate affected by higher interest rates and unfavorable economic conditions, continues an upward trend yet compared to pre-COVID levels in Q3 2019, the absolute delinquency rates still remains low. Through write-offs, delinquency rate remains flat Q-on-Q at 0.27%.

新韓銀行，隨著企業信用評等季的結束，其經常性撥備減少了[711億韓元]。新韓卡由於9月假期較長以及縮短了付款週期，其經常性撥備增加了797億韓元。至於信貸成本比率的先行指標，即拖欠率，受利率上升和經濟情勢不利的影響，銀行的拖欠率繼續呈上升趨勢，但與2019年第三季疫情前的水平相比，絕對拖欠率仍然保持不變低的。透過沖銷，拖欠率環比保持在 0.27% 的水平。

As with Shinhan Card, due to write-offs, the delinquency rate dropped 8 bp to 1.35% Q-o-Q. But the leading indicator of delinquency, 2 months delinquency migration rate went up [2 bp] Q-o-Q.

與新韓卡一樣，由於註銷，拖欠率環比下降 8 個基點至 1.35%。但拖欠的領先指標，2 個月拖欠遷移率環比上升了 [2 bp]。

On Page 13 to 15. Information on group's G&A expenses, credit cost ratio, asset quality and real estate PF has been included with further details for your reference.

第13至15頁。有關集團的G&A費用、信貸成本比率、資產品質和房地產PF的資訊已包含在內，並提供更多詳細資訊供您參考。

From Page 16, SFG income by subsidiary will be explained. As for [SHB], higher interest rates and FX rate lowered noninterest income, while ERP raised G&A expenses. Nevertheless, interest income rose and provisions declined, resulting in an overall increase in net income Q-o-Q. As for nonbank subsidiaries, Shinhan Card, despite increase in provisioning were boosted by operating income growth, kept its net income flat Q-o-Q.

從第16頁起，將對子公司的SFG收入進行說明。至於[SHB]，較高的利率和匯率降低了非利息收入，而ERP則增加了一般管理費用。儘管如此，利息收入上升，撥備下降，導致淨利潤環比整體上升。至於非銀行子公司，新韓卡儘管營業收入成長推動撥備增加，但淨利環比持平。

For Shinhan Securities, rising interest rates and falling stock prices resulted in sluggish stock trading and trading income and reflecting recognition of provisioning for investment products related costs. Its net income dropped significantly Q-o-Q.

對於新韓證券來說，利率上升和股價下跌導致股票交易和交易收入低迷，反映出對投資產品相關成本撥備的認可。其淨利潤環比大幅下降。

As for Shinhan Life, improved insurance sales led to increase in CSM amortization, which led to increase in insurance service income, but due to higher interest rates, insurance finance income decreased thereby reducing net income Q-o-Q.

新韓人壽方面，保險銷售改善帶動CSM攤銷增加，從而帶動保險服務收入增加，但由於利率上升，保險財務收入下降，從而導致淨利潤環比減少。

As for Shinhan Capital, interest expenses increased but with decrease in provisioning, its net income grew Q-o-Q.

新韓資本方面，利息支出增加，但隨著撥備減少，淨利較上季成長。

Page 17 shows SFG income by subsidiaries and Page 18 shows SFG overseas business for your information.

第17頁顯示了SFG的子公司收入，第18頁顯示了SFG的海外業務，供您參考。

Page 19, capital management and key profitability indicators. At the end of September, CET1 ratio is expected to decrease 9 bp to 12.90% provisionally. This is due to higher FX rates and loan growth resulting in the growth of RWA. As for our digital strategy outlined on Page 21, CDO Kim Myoung Hee will take the floor.

第19頁，資本管理和關鍵獲利指標。 9月底，CET1比率預計將下降9個基點至12.90%。這是由於匯率上升和貸款成長導致 RWA 成長。至於第 21 頁概述的我們的數位策略，CDO Kim Myoung Hee 將發言。

Good afternoon. I am CDO, Kim Myoung Hee. Regarding Q3 2023, I will address you on how the group aims to strengthen its fundamentals for its digital transformation. To begin, group's digital strategy framework with 6 key customer-centric priorities and their key performance has been described on the left.

午安.我是 CDO 金明熙。關於 2023 年第三季度，我將向您介紹該集團如何加強數位轉型的基礎。首先，左側描述了集團的數位策略框架，其中包括 6 個以客戶為中心的關鍵優先事項及其關鍵績效。

As for SFG's financial and nonfinancial platform, its gross MAU is 24.42 million, up 16% year-on-year. Financial platform, DAU is 5.13 million, indicating the platform evolving into a high-traffic sites. As for new digital business expansion, data sales business generated KRW 15.5 billion of revenue, which is a 28% growth year-on-year. Such results and customer value creation are enabled by 4 key core competencies, which I will explain.

SFG金融及非金融平台總每月活躍用戶數為2,442萬，較去年同期成長16%。金融平台的DAU為513萬，顯示該平台正在演變成一個高流量網站。在新的數位業務拓展方面，數據銷售業務創造了155億韓元的收入，年增28%。這樣的成果和客戶價值創造是由 4 項關鍵核心能力實現的，我將對此進行解釋。

First, strengthening data competencies. The group is working to understand its customers' financial life thoroughly and extensively by scaling up data collaboration with various industries, which is leading to growth in data business. In addition, data contest for university students and other data-driven CSR initiatives are also taking place continuously.

一是強化數據能力。該集團致力於透過擴大與各行業的數據合作，全面、廣泛地了解客戶的金融生活，從而帶動數據業務的成長。此外，大學生數據大賽等數據驅動的企業社會責任活動也持續進行。

Next is technology. Group is strategically tapping into cloud to drive infrastructure improvement, open development environment and open source software usage. This will enhance access to new digital technologies and improve service [development] as well as operational efficiency.

接下來是技術。集團正在策略性地利用雲端來推動基礎設施的改善、開放的開發環境和開源軟體的使用。這將增加對新數位技術的獲取，並提高服務[開發]和營運效率。

Next, process innovation. Enabled by digital technology, we're optimizing operational processes and enhancing employee productivity across the entire group. We're expanding no code into business units while renewing our group [work] to innovate the way we work.

其次，流程創新。在數位技術的支援下，我們正在優化整個集團的營運流程並提高員工的生產力。我們正在將無程式碼擴展到業務部門，同時更新我們的團隊[工作]以創新我們的工作方式。

Last part is the people domain, talent development. Group in order to qualitatively expand and qualitatively grow digital talent has established a common group-wide competency system, based on which a customized HRD program for employees is operated. SFG will continue to strengthen its fundamentals to enhance customer value. Thank you.

最後一部分是人才領域，人才發展。集團為了數位化人才的質的拓展和質的成長，建立了全集團通用的能力體系，並在此基礎上為員工運營定制化的HRD計劃。 SFG將持續夯實基礎，提升顧客價值。謝謝。

Thank you, CDO Kim for your presentation. Starting with Page 22 onwards, information on the group's ESG initiatives, detailed data by group and key subsidiaries as well as key management indicators have been explained for your reference. This concludes the presentation. We will now start the Q&A. Thank you.

謝謝 CDO Kim 的演講。從第22頁開始，詳細介紹了集團的ESG舉措、集團及主要子公司的詳細數據以及關鍵管理指標，供您參考。演示到此結束。我們現在開始問答。謝謝。

(Operator Instructions) And for your information, if you ask the question in English, then it will be interpreted consecutively. So please, I ask for your patience while the consecutive interpretation is underway. And now let us wait for questions. (Operator Instructions) First question is by Mr. Seol Yong Jin from SK Securities.

（操作員說明）供您參考，如果您用英語提出問題，則將進行連續翻譯。因此，在交替傳譯過程中，請您耐心等待。現在讓我們等待提問。 （操作員說明） 第一個問題是來自 SK 證券的 Seol Yong Jin 先生。

This is about provision. Now regarding the credit loan, I understand that there were some talks about adjusting LGD value and then also in the fourth quarter, also for the collateralized loan and I understand that there are talks about adjusting the LGD value. So if you could explain a bit further.

這是關於供給的。現在關於信用貸款，我了解到有一些關於調整LGD值的討論，然後在第四季度，還有抵押貸款，我了解到有關於調整LGD值的討論。所以如果你能進一步解釋一下。

So this was about provisioning. Yes, in third quarter, about the credit LGD, what we provision for credit LGD, then there is KRW 26 billion for the bank and then also smaller amounts for other subsidiaries. So that was the impact. And then also for the nonrecurring, then not only the -- not for the credit LGD, but then for retail, and also for the [SOHO] model, then that was about KRW 21.8 billion. So then that was also included. So in total, it was KRW 55.1 billion.

這是關於配置的。是的，在第三季度，關於信貸 LGD，我們為信貸 LGD 準備了什麼，然後銀行有 260 億韓元，其他子公司的金額也較小。這就是影響。然後，對於非經常性業務，不僅是信貸 LGD，而且是零售業，還有 [SOHO] 模式，則約為 218 億韓元。那麼這也包括在內。總共為 551 億韓元。

And therefore, the fourth quarter, the collateral loan, LGD, we would have to do some more calculation, but the expectation now is that it will be around KRW 100 billion.

因此，第四季度，抵押貸款，LGD，我們還得再做一些計算，但現在的預期是1000億韓元左右。

I will take the next question from [Hanguk] Investment Securities, [Baek Doosan]. Please go ahead, sir.

我將回答[韓國]投資證券[白斗山]提出的下一個問題。請繼續，先生。

I'm from Korea Investment & Securities, Baek Doosan. A question regarding capital ratio and also to related the capital growth -- asset growth, especially if you look at the bank loans, there is a lot of demand for lending, but our capital ratio due to higher interest rates is in a very high position. However, we still need to increase TSR in terms of the capital ratio and also considering the TSR in Q4 or maybe next year, what are your growth targets? Or in order to achieve the growth targets, what are the current plans that you have in place?

我來自韓國投資證券公司白斗山。關於資本比率以及與資本成長相關的問題——資產成長，特別是如果你看看銀行貸款，有很多貸款需求，但由於利率較高，我們的資本比率處於非常高的位置。但是，我們仍然需要在資本比率方面提高股東總回報率，並考慮第四季度或明年的股東總回報率，您的成長目標是多少？或者為了實現成長目標，您目前有哪些計畫？

Yes, for the capital ratio and also for the asset growth in TSR, shareholder returns, so the question was dealing with all 3 different elements here. So at the end of -- at the beginning of the year, CET1 target was 12%, and we raised that to 13%. And we're going to achieve that by the end of the year, to 13%, and the effort is underway. So currently, it's 12.9%. And in order to achieve 13%, of course, we have to grow our assets. So we have to look at actual demand. At the same time, because there are economic uncertainties, we have to focus on high-quality on corporate loans that has been increasing. And in order to maintain [30%], RWA has continued to increase and (inaudible) as well, the 30% target is going to be maintained. And if you go with that as planned, next year's net income -- we will have to allocate, for example, organically to RWA, and we will also have to think about how we go about doing the TSR.

是的，對於資本比率以及股東回報率的資產成長、股東回報，所以問題是處理這裡的所有 3 個不同元素。因此，在今年年底、年初，CET1 目標是 12%，我們將其提高到 13%。我們將在今年年底前實現這一目標，達到 13%，我們正在努力。目前，該比例為 12.9%。當然，為了達到13%，我們必須增加我們的資產。所以我們還要看實際需求。同時，由於經濟存在不確定性，我們必須關注不斷增加的高品質企業貸款。為了維持 [30%]，RWA 持續增加，（聽不清楚）30% 的目標也將維持下去。如果按照計劃，明年的淨利潤——我們將不得不有機地分配給 RWA，我們還必須考慮如何進行 TSR。

Beginning of the year, we said the TSR is within the 30% to 40%. We have to take into account, of course, economic uncertainty and volatile environment. And that continues still, the [spend] maintained and the [spends] will continue on into next year, and that is how we're going to allocate. But even for the RWA, because we don't want to erode into the capital, we want to look at profitability, not only the short term, but over the long term, we'll focus a lot on profitability, so we can sustain our growth, and we'll try to allocate more into those industries and areas in business that could bring us more profitability so that we continue to keep our commitment.

今年年初，我們說股東總回報率在 30% 至 40% 之間。當然，我們必須考慮到經濟的不確定性和不穩定的環境。這種情況仍在繼續，[支出]維持不變，[支出]將持續到明年，這就是我們將如何分配。但即使對於 RWA，因為我們不想侵蝕資本，所以我們希望專注於盈利能力，不僅是短期的，而且從長遠來看，我們將非常關注盈利能力，這樣我們就可以維持我們的增長，我們將嘗試向那些可以為我們帶來更多盈利能力的行業和業務領域分配更多資金，以便我們繼續信守我們的承諾。

And now yes, we'll take the next question from Daishin Securities, it is Park Hye-jin. Please go ahead with your question.

現在是的，我們將接受大信證券的下一個問題，是樸惠珍。請繼續你的問題。

I am park Hye-Jin from Daishin Securities. I have 2 questions. The first is about the funding costs, it seems as if the funding cost pressure continues. So in Q4 and then also in 2024, what is the company's outlook for NIM?

我是大信證券的樸惠珍。我有 2 個問題。首先是關於融資成本，看來融資成本壓力仍在持續。那麼，在第四季以及 2024 年，公司對 NIM 的前景如何？

The second question is -- I'm asking this because I'm ignorant about this, and that's about the securities and also the provision and then also the one-off costs, if you could also expand a bit further. Then in Q4, so there is also going to be valuation on the market assets. And now because of the overseas situation, then what is the company's projection for like losses? Or what is the overall projection?

第二個問題是──我問這個問題是因為我對此一無所知，這涉及證券、條款以及一次性成本，如果你還可以進一步擴展的話。然後在第四季度，市場資產也會進行估值。現在由於海外情勢的原因，那麼公司對類似損失的預測是怎麼樣的呢？或者說整體的預測是怎麼樣的？

So there were 3 questions. First will be answered by the bank's CFO, followed by the Securities CFO. And then the third question will be answered by the CRO. First from Shinhan Bank.

所以有3個問題。首先由銀行財務長回答，然後由證券財務長回答。然後第三個問題將由CRO來回答。首先是新韓銀行。

This is Kim Ki Heung from Shinhan Bank. So now then for Q4 and 2024 NIM outlook. Now in Q3, looking at the NIM band, then you can see that it fell by 1 bp Q-o-Q. So looking at just Q3 then. Now in Q4, then we see that the funding would be [concentrated] by the commercial banks in Q4. So that is why we went into preemptive funding in Q3. So then looking at the funding cost rate, then that was also affected by that. And then also in terms of the loan, then now because of the competition in the interest, now we are thinking that we would be able to [maintain this] this, but then now we ended up with 1 bp lower in Q3.

我是新韓銀行的 Kim Ki Heung。接下來是第四季和 2024 年淨利差展望。現在在第三季度，查看 NIM 頻段，您可以看到它環比下降了 1 個基點。所以現在只看第三季。現在在第四季度，我們看到第四季的資金將由商業銀行[集中]。這就是我們在第三季進行優先融資的原因。那麼再看看融資成本率，那麼這也受到了影響。然後在貸款方面，由於利息的競爭，現在我們認為我們能夠[維持]這一點，但現在我們最終在第三季度下降了 1 個基點。

Now looking ahead to Q4, then now some of the high interest deposit that we had acquired in the past, now they are nearing the maturity. So then we believe that afterwards, then the funding rate is going to improve. So then there is going to be improvement in the NIM. With the projection of -- I'm very cautious at 1 bp to 2 bp, then looking ahead to next year.

現在展望第四季度，我們過去獲得的一些高利率存款現在已經接近到期。所以我們相信之後，融資率將會提高。那麼NIM 將會得到改善。根據預測——我對 1 bp 至 2 bp 非常謹慎，然後展望明年。

Now in Q4, the NIM this year was the highest in Q4. Then looking at the interest rate next year, then we believe that the benchmark rate is going to remain frozen for some time. And so looking at the overall situation, then the NIM next year is likely to be largely flat from this year. Again, that is our cautious outlook for next year.

現在進入第四季度，今年的淨利差是第四季度最高的。然後再看看明年的利率，那麼我們認為基準利率將會在一段時間內保持凍結。所以從整體情況來看，明年的淨利差很可能會與今年基本持平。同樣，這是我們對明年的謹慎展望。

This is the Shinhan Securities CFO, Lee Heedong. Now your question about the one-off cost, well, were reflected in this quarter, one-off cost. Now that is from the August decision about the Gen 2 Fund. And now what we had decided on the private cancellation was [line]. And then so -- so that was about [KRW 1,400 billion]. And then for this time, the provision this time was for Gen 2 and that's a pretax KRW 119 billion. So now regarding this provisioning -- now in the past, the Financial Supervisory Commission Disputes Settlement Committee, now they have come out with the ratio of settlement, and we have also applied that this time. And of course, in the process of settlement, then whether it is going to -- so it will be determined throughout the negotiation, but then there is the projected numbers and then also the percentage that is expected for Gen 2. So we combine them as the one-off costs in the past quarter.

我是新韓證券財務長李熙東。現在，您關於一次性成本的問題已經反映在本季的一次性成本中。這是 8 月關於第二代基金的決定。現在我們決定私下取消的是[line]。然後就是這樣——所以大約是[14,000億韓元]。然後這次，這次的撥款是針對Gen 2的，稅前金額為1190億韓元。那麼現在這個規定呢,過去金監會糾紛處理委員會,現在他們出了一個和解比例,我們這次也應用了這個。當然，在解決過程中，是否會——所以這將在整個談判過程中確定，但是還有預計的數字，以及第二代的預期百分比。所以我們將它們結合起來作為上一季的一次性成本。

So now to the future, then in the course of settlement, then we are going to compare between these 2 assets and book them accordingly. And then also for your further information, now in early part of the year in January -- in February, I have also explained about the investor-related products and then also about the Gen 2 and also the other small value funds. And then remaining is about [KRW 1,500]. So you could take it as a part of what we had already explained in the early part of the year.

所以現在到未來，然後在結算過程中，我們將對這兩種資產進行比較並相應地進行預訂。然後，為了讓您了解更多信息，今年年初的 1 月至 2 月，我還解釋了與投資者相關的產品，然後也解釋了 Gen 2 和其他小價值基金。然後剩下的大約是[1,500韓元]。因此，您可以將其視為我們在今年早些時候已經解釋過的內容的一部分。

And now this is the group CRO, Bang Dong-kwon. And about the -- so I would take it that this question is about the overseas real estate. Now first of all, about the status, now for the group, then our overseas real estate is about KRW 4 trillion in holding and to be more specific, about 60% is in North America and also by purposes then office or residential, that's about 65%.

現在這位是組合 CRO，Bang Dong-kwon。關於——所以我認為這個問題是關於海外房地產的。首先，關於現狀，現在對於集團來說，我們的海外房地產持有量約為4萬億韓元，更具體地說，大約60%在北美，而且按用途劃分，然後是辦公室或住宅，大約是65 %。

(inaudible) substandard is about KRW 160 billion, so about 4%. So slightly higher than the other invested assets in Korea. So having said that, now we have done on all counts in the second half of the year. And since the insurance company has the highest holding, they have conducted inspection of the potentially distressed assets. And then now next week, so we believe that we need to take a look into the bottom 10% assets. So then next month, then we would be, again, conducting on-site inspections across 2 geographies next month. So then in preparation against potential losses, we will continue to closely monitor the overall situation.

（聽不清楚）不合格金額約為 1,600 億韓元，即 4% 左右。因此略高於韓國的其他投資資產。話雖如此，現在我們已經在下半年完成了所有工作。而且由於保險公司持股比例最高，他們對潛在的不良資產進行了檢查。然後是下週，所以我們認為我們需要研究底部 10% 的資產。那麼下個月，我們將再次在兩個地區進行現場檢查。因此，為了防止可能的損失，我們將繼續密切關注整體情況。

And for your information, yes, of course, we would be working together with outside organizations to conduct additional valuation. And it is too early for us to tell you about the total size, but then we are going to update them in terms of the valuation, and that would be reflected into our fourth quarter.

供您參考，是的，我們當然會與外部組織合作進行額外的評估。現在告訴您總規模還為時過早，但我們將在估值方面更新它們，這將反映在我們的第四季。

From HSBC, Won Jaewoong will ask a question.

來自匯豐銀行的 Won Jaewoong 將提出一個問題。

I have 2 questions. First is that (inaudible). In terms of the corporate lending increase, I think, CET1, you were able to defend quite effectively. So the movements -- can you explain about the movements between the previous quarter and this quarter in relation to the CET1? Second -- and I think the (inaudible) method was used for insurance, does that lead to any changes in terms of the P&L?

我有 2 個問題。首先是（聽不清楚）。就企業貸款增加而言，我認為，CET1，您能夠非常有效地進行防禦。那麼，您能解釋一下上一季和本季之間與 CET1 相關的變動嗎？其次，我認為（聽不清楚）方法用於保險，這是否會導致損益表發生任何變化？

Yes. First question was related to CET1 movement. And the second is related to the insurance calculation method. As for the CET1, on a Q-o-Q basis, you can refer to the slide outlined on Page 19, RWA increased [KRW 7.7 trillion], credit of [KRW 7.3 billion] and market KRW 0.4 trillion down. And in terms of the operation, RWA increased by KRW 0.8 trillion and as for the declines over here for the market RWAs, I'll just read this for you. ELS volatility increased and the bond positioning going up but [bond-related] duration went down, which led to the current results. And not only for the RWA, but for the CET1 has been a drop in [CET2]. As you can see from the graph, this is because 39 bp due to the net income and 12 bp came down due to the [TSP]. Now, RWA 32 bp down and TSP 12 bp and OCI changes 4 bp change -- reduction was made.

是的。第一個問題與CET1運動有關。第二個是與保險計算法有關。至於CET1，按季度計算，您可以參考第19頁概述的幻燈片，RWA增加[7.7兆韓元]，信貸[73億韓元]，市場下降0.4兆韓元。就操作而言，RWA 增加了 0.8 兆韓元，至於市場 RWA 的下降，我為您解讀。 ELS 波動性增加，債券部位上升，但[債券相關]久期下降，導致了目前的結果。不僅對於 RWA，對於 CET1 來說，[CET2] 也有所下降。從圖中可以看出，這是因為淨利潤下降了 39 個基點，[TSP] 下降了 12 個基點。現在，RWA 下降了 32 bp，TSP 下降了 12 bp，OCI 變化了 4 bp——減少了。

Our CFO from insurance side will answer.

我們保險方面的CFO來回答。

I'm Shinhan Life, [Park Kyoung Won]. IFRS 17 guideline, this is related to the actual loss, medical cost, which has been reflected in Q3 performance. As for the overall guidelines, that really does not have a lot of implications on our insurance. The reason we decided to reflect the [use fee] because the total KRW 100 billion, an improvement was achieved. And also in terms of the P&L, maybe KRW 3 billion in terms of the losses, which is quite minimal. We really haven't had a lot of changes in terms of the P&L as a result of the progressive (inaudible).

我是新韓生命[樸景元]。 IFRS 17準則，這與實際損失、醫療費用有關，這已反映在第三季的業績中。至於整體指導方針，這對我們的保險確實沒有太大影響。我們之所以決定反映[使用費]，是因為總計1000億韓元，取得了改善。而且就損益表而言，損失可能為 30 億韓元，這是相當小的。由於漸進式（聽不清楚），我們的損益表確實沒有太多變化。

We don't have any more questions. So we will wait until more questions come through. (Operator Instructions) Those of you who are doing the questions in English, there will be consecutive interpretation provided afterwards. So while the interpreter takes the floor, please wait until the interpretation is finished. We'll wait for more questions.

我們沒有更多問題了。因此，我們將等待更多問題的出現​​。 （操作員說明） 用英文做題的，之後會有交替傳譯。因此，當口譯員發言時，請等待口譯結束。我們將等待更多問題。

Now it is Mr. Jeong Tae Joon from Yuanta Securities.

現在是元大證券的鄭泰俊先生。

I am Jeong Tae Joon from Yuanta Securities. My question is on dividend. Now recently -- now actually this year, early this year, you have also revised the articles and now then -- what is your guidance about the shareholder return policy?

我是元大證券的鄭泰俊。我的問題是關於股息。最近，實際上是今年，今年年初，您還修改了這些條款，那麼您對股東回報政策的指導是什麼？

So that is about the closing of the shareholder register and we were preparing to communicate about this even if there were no questions about this. So as you have mentioned earlier, so we have changed the AOI in the early part of the year. And so now the dividend is not going to be at the year-end, but that should be resolved at the Board. And not just for the group, but then for the subsidiaries and also by the other listed companies as well. So then it is going to be determined at the general shareholders' meeting.

這就是關於關閉股東名冊的問題，即使沒有任何問題，我們也準備就此進行溝通。正如您之前提到的，我們在今年年初更改了 AOI。因此，現在不會在年底發放股息，但這應該由董事會解決。不僅對於集團而言，對於子公司以及其他上市公司也是如此。那麼這將由股東大會決定。

And then so we revised the AOI in accordance to that. So then afterwards, we will be paying off the dividend, not always at the end of the year, but then determined by the BoD. And so the direction now is that perhaps after the general shareholders meeting, not right after the GSM, but then perhaps 1 or 2 days afterwards, so that is our direction as we have discussed so far, but it has not been finalized yet. So that is direction of discussion. And once we make the decisions, then we will make sure that they are duly communicated and disclosed at the end of the year.

然後我們據此修改了 AOI。那麼之後，我們將支付股息，並不總是在年底，而是由董事會決定。所以現在的方向是，也許在股東大會之後，不是在 GSM 之後，而是可能在 1 或 2 天之後，所以這是我們到目前為止討論的方向，但還沒有最終確定。這就是討論的方向。一旦我們做出決定，我們將確保在年底適當傳達和揭露這些決定。

Cho Jihyun from JPMorgan. This was included in the slide, you didn't mention this. This is really related to real estate PF. The slide clearly shows no information. But on the news, it seems that a lot of media coverage is actually focused on any companies that are in distress. So what's the current situation right now, especially the creditors group, they're quite strong. And also there is an influence coming from the government policies as well. So what's the current level right now? And especially between this year and next year, do you see any difficulties going forward? And how do you plan on responding to them? So if you could talk about your future risk management, I would appreciate that.

摩根大通的趙智賢。這已包含在幻燈片中，您沒有提及這一點。這確實和房地產PF有關。幻燈片顯然沒有顯示任何資訊。但在新聞上，似乎很多媒體報道其實都集中在任何陷入困境的公司。那麼現在的情況是什麼呢，特別是債權人群體，他們是相當強大的。此外還有來自政府政策的影響。那麼現在的水平是多少呢？特別是今年和明年之間，您認為未來會遇到什麼困難嗎？您打算如何回應他們？因此，如果您能談談您未來的風險管理，我將不勝感激。

And we know that you had a lot of provisioning for credit losses this year. What is the target for provisioning this year, year-end? And since we had a provisioning in place and also considering the risk factors next year, is that going to continue to go up? Or is it going to come down? So in terms of the credit loss provisioning, if you could provide us with a yearly guidance.

我們知道你們今年為信貸損失準備了大量準備金。今年底的撥備目標是多少？既然我們已經做好了準備，並考慮了明年的風險因素，那麼這個數字還會繼續上升嗎？還是會下降？因此，就信用損失撥備而言，您是否能為我們提供年度指引。

The last question is that among the top banking groups, you did quarterly dividend payout continuously. So can we expect that as well next year? Is that going to continue for the part of the dividend.

最後一個問題是，在頂級銀行集團中，你們連續進行季度分紅。那我們明年也能期待這一點嗎？股息部分會繼續這樣嗎？

So a few questions here. First is the real estate [PF]. Our CFO will answer. And for the last remaining 2 questions, I will try to address them. CRO, please take the floor.

這裡有幾個問題。首先是房地產[PF]。我們的財務長將回答。對於最後剩下的兩個問題，我將嘗試解決它們。 CRO，請發言。

I'm [Lee Tae Kyung], the CRO. So as I mentioned in the slide, the [PF] included bridge loan is [KRW 9.1 trillion]. In terms of the delinquency, that's about 1.4%, substandard and below is about 2%. However, if you look at the characteristics of the assets, most of them -- [73%] are concentrated in the metropolitan area, for residential, that's about 60% concentrated. So across the board, this is -- well, internally, we are confident about our asset quality like what the market sees us. But of course, the market will take precedence over our internal situation. So we're remaining very cautious.

我是 CRO [李泰京]。正如我在幻燈片中提到的，[PF] 包含的過橋貸款為 [9.1 兆韓元]。就拖欠率而言，約為1.4%，不合格及以下約為2%。然而，如果你看一下資產的特徵，其中大多數——[73%]都集中在大都會區，對於住宅來說，大約集中在60%。因此，總的來說，在內部，我們對我們的資產品質充滿信心，就像市場對我們的看法一樣。但當然，市場將優先於我們的內部情況。所以我們仍然非常謹慎。

As for the major creditor group, lenders group, I think, operation is quite effective. There are about 40 different sites and about KRW 36 billion -- KRW 360 billion have been incurred. And all the assets that are flying to the lenders group and some of them are in delinquent state and some of them may go delinquent going forward but we'll have to be cautious as to how to distinguish between the 2.

至於主要的債權人群體、貸款人群體，我認為，操作是相當有效的。大約有 40 個不同的站點，耗資約 360 億韓元，已產生 3,600 億韓元。所有流向貸款人集團的資產，其中一些處於拖欠狀態，其中一些可能會繼續拖欠，但我們必須謹慎對待如何區分這兩者。

So of course, a lot of interest is focused on real estate. So we're doing this on a weekly basis. We try to monitor the developments on a weekly basis for the PF, we also do a monthly review for the assets. And we also try to readjust our (inaudible) as well and in the second half of the year, we'll do full enumeration survey, and we have also come up with response strategies by each company. But for the time being, for the real estate business, this is where everyone is interested in, and we're not exactly sure, we can say whether it's going to get better or it's going to become worse, but we'll just have to remain vigilant.

當然，很多興趣都集中在房地產。所以我們每週都會這樣做。我們嘗試每週監控 PF 的進展，我們也每月對資產進行審查。我們也嘗試重新調整我們的（聽不清楚），下半年我們會做全面的枚舉調查，我們也提出了每個公司的應對策略。但就目前而言，對於房地產行業來說，這是大家都感興趣的地方，我們也不太確定，我們可以說它會變得更好還是會變得更糟，但我們只會保持警惕。

Second question is related to provision for credit losses. [50 bp] until 3Q and during the Q4, it's about 40 bp [remunerated]. As for the 4Q prediction, [89 to 89]-- 48 bp to 49 bp is being planned. As for additional provisioning, (inaudible) real estate, yes, will have to review that on case by case basis, and we'll have to add more provision for that.

第二個問題涉及信用損失準備金。 [50 bp] 直到第三季和第四季度，大約是 40 bp [有償]。至於第四季的預測，[89 至 89]-- 48 bp 至 49 bp 正在計畫中。至於額外的準備金，（聽不清楚）房地產，是的，必須根據具體情況進行審查，我們將不得不為此添加更多準備金。

Our support on a year basis, are probably in the later [40 bp], but it may go up as high as with 50 bp . As for next year, we have a recurring provisioning and additional provisioning. As for additional provisioning, due to [EAD] changes, there could be additional provisioning required. And of course, individual overlay and [BCF] may be required, but starting last year, the year before and next year, we really don't have much room for additional provisioning. So that is really not going to be that sizable. In terms of the recurring provisioning, it's (inaudible) now, as was mentioned by our CRO, the (inaudible) and the loan loss provision or credit loss ratio is going to decrease next year.

我們的年度支撐可能會在後期 [40 bp]，但可能會高達 50 bp。至於明年，我們有經常性撥備和額外撥備。至於額外的配置，由於 [EAD] 更改，可能需要額外的配置。當然，可能需要單獨的覆蓋和[BCF]，但從去年、前年和明年開始，我們確實沒有太多額外配置的空間。所以這實際上不會那麼大。就經常性撥備而言，正如我們的 CRO 所提到的，現在（聽不清楚），（聽不清楚）貸款損失撥備或信用損失率將在明年下降。

For the dividend, quarterly dividend this year as well as next year. That is a regular practice. That's part of our policy to do our quarterly dividend. The quarterly dividend policy is going to be maintained.

至於股息，今年和明年季度股息。這是一種常規做法。這是我們季度股利政策的一部分。維持季度分紅政策。

And now let us wait for further questions. (Operator Instructions) From JPMorgan, Cho Jihyun, I believe that she has a follow-up question. So please go ahead.

現在讓我們等待進一步的問題。 （操作員指示）來自摩根大通的 Cho Jihyun，我相信她有一個後續問題。所以請繼續。

So what I had asked about was also whether for next year, the share buyback and cancellation, will that also occur on a quarterly basis? And I believe that I perhaps have phrased my question wrong, asking only about the dividend, but then also about the share buyback and cancellation.

所以我問的還有明年的股票回購和註銷是否也會按季進行？我相信我的問題措辭可能是錯的，只問了股息，但也問了股票回購和取消。

Yes, then let me directly answer the question. So yes, dividend on a quarterly basis and then also the share buyback and cancellation, we have also tried that this time. Now the overall shareholder return policy remains unchanged from the previous guidance and then now, for next year, whether it will also take place on a quarterly basis or not, that is also up to the BoD decision as well. So the overall direction, it remains unchanged. But then now regarding the share buyback and cancellation, I would have to come back to you after we make the decisions at the BoD.

是的，那我就直接回答問題吧。所以是的，按季度分紅，然後還有股票回購和取消，我們這次也嘗試過。現在整體股東回報政策與先前的指導保持不變，然後現在，明年是否也按季度進行，這也取決於董事會的決定。所以整體方向，沒有改變。但現在關於股票回購和註銷的事情，我得等董事會做出決定後再來告訴你。

[White Oak] Capital, [Tejkiran Kannaluri Magesh].

[白橡]首都，[Tejkiran Kannaluri Magesh]。

I wanted to understand how the retail business credit scores are being used in our risk management practices. So what -- how the internal scorecards have used? What kind of [bureau] data do we use? And whether alternate credit scores that with new technology like machine learning and AI, are they replacing bureau data that you're using? How is this risk management at the time of underwriting evolving from a credit risk perspective.

我想了解零售企業信用評分如何用於我們的風險管理實務。那麼又怎樣──內部記分卡是如何使用的呢？我們使用什麼樣的[局]數據？機器學習和人工智慧等新技術的替代信用評分是否會取代您正在使用的局數據？從信用風險的角度來看，核保時的風險管理是如何演變的？

Yes, the CRO will take your question.

是的，CRO 會回答您的問題。

Yes, this is the CRO, Bang Dong-kwon. So I see that it's quite a technical question. So now, yes, for the retail loan, then we have the rating agency system. So we don't use the outside system. So then in our case, for the [BIS] ratio, when we calculate the BIS ratio, then we use the internal rating method. So then now we are using this with approval from the FSC. So yes, this is the internal model. And then there's also what we call the alternative model. So in a top deregulated model, then there's also what we use for our business purpose and that is the alternative model. Now for this alternative model, then what you have mentioned, for example, machine learning and other new technology. So yes, we are obviously seeing -- using them. Now for the data, then we try to use as much data as possible from both inside and outside to input them into the model to run the model. So now let me sum up.

是的，這是 CRO，Bang Dong-kwon。所以我認為這是一個相當技術性的問題。所以現在，是的，對於零售貸款，我們有評級機構系統。所以我們不使用外部系統。那麼在我們的例子中，對於[BIS]比率，當我們計算BIS比率時，我們使用內部評級方法。所以現在我們在 FSC 的批准下使用它。是的，這就是內部模型。然後還有我們所說的替代模型。因此，在頂級放鬆管制模型中，還有我們用於商業目的的替代模型。現在對於這個替代模型，那麼你提到的，例如機器學習和其他新技術。所以，是的，我們顯然正在使用它們。現在對於數據，然後我們嘗試使用盡可能多的來自內部和外部的數據將它們輸入到模型中來運行模型。那麼現在讓我總結一下。

We have the regulated model, then the alternative model. Regulated model has been approved by the FSC, it is in usage, therefore, the alternative model, this is for our internal usage, and we are also applying machine learning technologies as well.

我們有受監管的模型，然後是替代模型。監管模型已經獲得FSC批准，正在使用，因此，替代模型，這是供我們內部使用的，我們也在應用機器學習技術。

We don't have any questions in the queue, so we'll try to wait a little longer. Yes, I am aware of the time. And yes, this concludes 2023 Q3 earnings presentation. So we would like to thank the participants once again for our earnings presentation. Our presentation materials will be posted on homepage as well as SFG IR YouTube channel. We ask for continued interest and we will see you again at the next quarter. Thank you very much.

我們隊列中沒有任何問題，因此我們會嘗試等待更長的時間。是的，我知道時間。是的，2023 年第三季財報到此結束。因此，我們要再次感謝參與者的收益報告。我們的簡報資料將發佈在主頁以及 SFG IR YouTube 頻道上。我們請求您繼續關注，我們將在下個季度再次見到您。非常感謝。

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

[本筆錄中的英語陳述是由現場通話中的口譯員說出的。]