Shinhan Financial Group Co., Ltd. (NYSE:SHG) Q3 2024 Earnings Call Transcript

Shinhan Financial Group Co., Ltd. (NYSE:SHG) Q3 2024 Earnings Call Transcript October 25, 2024

Operator: Good afternoon. I am and [Indiscernible] Cheol-Woo from the IR Group at IR team at Shinhan Financial Group. Thank you for taking the time out of your busy schedule to attend Shinhan Financial Group’s Q3 2024 Earnings Presentation. I will be moderating today’s earnings presentation. Today we have with us today, the Group CFO, Sang-Yung Chun, Group CSO, Koh SeogHeon, and Group CRO Bahng Dong Gwon. [Foreign language] We will first start with the presentation on our overall Q3 results followed by a Q&A session. Now, I’d like to turn it over to CFO, Sang-Yung Chun for a presentation on our business performance.

Sang-Yung Chun: [Interpreted] Good afternoon, everyone. Thank you for joining us for our Q3 2024 earnings presentation. Before going through the overall business performance, I would like to discuss the recent losses on derivatives trading at Shinhan Securities. As we shared in our disclosures and in the letter last week from the Chairman of the Financial Group’s Board of Directors and the CEO, Department of Shinhan Securities that provides a liquidity to exchange traded funds and performs hedging operations incurred large losses due to a trade-in cost between 200 Futures unrelated to the LP hedge. We recognized a loss of KRW135.7 billion in the third quarter financial statements as a result of this incident and do not expect any further losses.

In addition to the capital reduction due to the losses, the impact on the Group CET 1 ratio from this event, including the impact of the increase in the operational risk RWA is minus 6 basis points, We sincerely regret that this incident occurred while we are working to strengthen our internal control system across the Group. Given the seriousness of the situation, the Group’s Board of Directors and the management have committed to informing our shareholders as soon as possible of this incident and sharing updates. Currently Shinhan Securities is actively cooperating with the regulators’ investigation and has launched its own contingency respond for us to diagnose the root cause. Together with the Shinhan Financial Group, they are reviewing the deficiencies in the internal control system and taking steps to improve it.

We will examine our internal control system from the ground up and fix that bearing in mind once again, that customer trust and strong internal controls are the essence of our business. We’re also committed to ensuring that this incident does not impact the enterprise value enhancement plans that we have been communicating. So from now on, we’ll move on to our Q3 results. Please refer to page 5 financial highlights. During Q3 of 2024, despite the removal of one-off factors such as credit cost related to real estate PF. Large losses were incurred in the non-interest income segment with a net income posting KRW1 trillion and 238.6 billion, down, 10.1 QoQ. Interest income driven by growth in the banks and loan book which matures from the first half of the year increased to efficient ALM up 1.2% QoQ.

Non-interest income decreased by 25.6% QoQ due to the aforementioned losses on securities derivative transactions, as well as the conservatively recognized valuation impairments in overseas alternative investments. SG&A expenses were managed fairly, increasing only 1.2% QoQ despite the impact of depreciation. The Group’s accumulative CIR for the third quarter improved by 1.2 percentage point YoY to post 37.9% driven by higher operating profit before expenses, along with well-managed SG&A expenses. The Group’s cumulative credit cost ratio for the third quarter decreased by 4 basis points compared to first half of the year posting 44 BPS primarily due to the baseline effective additional provisions recognized in the prior quarter related to real estate PFs and asset trust.

Next is capital ratio and the shareholder return policies. The CET1 ratio at the end of September 2024 is estimated to come to 13.13%. In addition, the Board of Directors today approved a third quarter dividend of KRW541 per share and resolved to undertake share buyback and cancellation totaling KRW400 billion, which includes the amount for 2025, as well. Let me explain further about the treasury stock. To accelerate our shareholder return policy, which we announced in July with our Enterprise Value enhancement plan, I’ll call in for a buyback of KRW250 billion in the fourth quarter 2024 through buying back another KRW150 billion of treasury shares in the early 2025. We intend to fulfill our policy of year-round share buyback. We have been engaged in share buyback and cancellation on a regular basis throughout the year and the amount to be undertaken for the first quarter of 2025 will be announced in our annual earnings release next February along with the quarterly dividend per share subject to Board approval.

And going forward, we will try to flexibly respond to capital-related regulatory changes based on our strong financial stability, while efficiently managing our capital ratios so that we can fulfill the shareholder return policy we promised through our corporate value plan. On Page 6, I represent the Group’s key profit metrics. Please refer to them at your leisure. But I guess on to Page 7 for further detailed performance for the Group. I the third quarter, despite overall deterioration in profitability from the decline in market interest rates, the Group’s interest income was supported by an increase in interest-bearing assets centered around the Bank won loans recording a total of KRW2 trillion 855 billion up 1.2% Q-on-Q. Next Bank won loans increased by 3.5% during the quarter or annual growth of 10.2% as the key driver of interest income growth.

Household loans increased by 6.3% Q-on-Q, driven by real estate purchasing demand and increased our policy loans for the vulnerable borrowers. Corporate loans increased by 1.4% in the third quarter, centered around Blue Chip corporate borrowers as we moderated from the rapid pace of growth we saw throughout the first half. We intend to minimize loan growth in the fourth quarter relative to our Group RWA budget, as we focus on enhancing profitability and asset soundness. In the second quarter, Shinhan Banks named despite negative impact from lower market rates, recorded 1.56%, down 4 basis points versus the prior quarter. Thanks to our nimble ALM strategy. Our – we defended the decline in yield on interest-bearing assets to 5 basis points, despite the decline in loan asset yields through a strategic management of our securities investments.

In terms of our liability funding cost, it was improved by 1 basis point Q-on-Q, as we issued long-dated bank debentures as preemptive debt funding as we set more intense competition in the funding market in the fourth quarter. We will maintain flexible interest rate policy, as well as effective ALM to manage our margins proactively. The Group’s non-interest income recorded KRW827.8 billion, down 25.6% Q-on-Q due to poor earnings from securities and derivatives. Securities and derivatives earnings were down 47.1% Q-on-Q from KRW135.7 billion in derivative trading loss by Shinhan Securities, as well as KRW71.2 billion in valuation loss from overseas alternative investments, which we recognized preemptively this quarter. Fee income declined by 3.5% Q-on-Q due to poor fee income from Shinhan card, despite the increase in IP earnings from the Bank and Securities business.

SG&A is stable, increasing by 1.2% Q-on-Q or 0.9% YoY. Our Group CIR improved by 1.2 percentage points year-on-year as operating profit before expense increased 4.2%. Cumulative credit cards as of the third quarter was 44 basis points improving by 4 basis points versus the first half, as the impact of additional provisioning against real estate PFN asset trust exposure dissipated and also from asset growth. Cumulative credit costs when normalized remove the effect of additional provisioning was 32 basis points similar to end of June levels. In the future, we will continue to consistently implement the government-led measures to normalize real estate PF loans. We will also maintain well-calibrated management of asset quality and enforce tight management of recurring credit cost.

On to asset soundness, they are stable as we’ve been performing write-offs and sales of NPL. Bank delinquencies remain stable after improving by 5 basis points in the second quarter. Card delinquency saw additional improvement this quarter, as well, while the two month delinquency migration rate, which is a leading indicator for delinquencies has remained flat. This stable trend in asset soundness is due in large part to attractive write-downs and sales as part of our artificial management. And despite the won rate policy cut that we have seen recently, interest rates still remain high and made a slow recovery in the real economy. So it’s hard to say that asset quality is seeing trend growth or improvement consequently, we will stay vigilant and maintain conservative stance in terms of asset quality.

Please refer to the slides for a breakdown of net profit by affiliates. And moving on, as of the third quarter 2024, on a tentative basis, the CET1 ratio was measured at 13.13%, which is an improvement of 7 basis points Q-on-Q. Although risk-weighted assets increased by KRW4.1 trillion from the Bank’s asset growth, the effect of reduced FX rates and stable earnings performance resulted in a Q-on-Q increase of 1.8% in common stock equity. In the fourth quarter, similarly, we intend to minimize asset growth, while delivering stable financial performance to manage our CET1 at 13% or above. And I’ve already commented on our shareholder return policy and we will move on Pages 11 to 12 of our details on our digital and sustainable management initiatives.

So please refer to those slides. On Page 14, as we promised when we announced our Value Up program in July, here are the results from our implementation review across six core indicators up to the third quarter. It is still quite early on, but moving ahead led by our Board of Directors we will continue to closely monitor implementation of our Value Up plan and proactively communicate our findings with the market to keep you updated. According to our current timeline, we are planning to provide a review of our execution results. When we announce our full year performance next year while also updating you on our implementation plan in greater more concrete terms, we look forward to your interest as we proceed. This concludes our overall earnings presentation.

Thank you very much.

Q&A Session

Operator: So we will now proceed to a Q&A session. [Operator Instructions] Jaewoong Won [Ph] from HSBC will ask the first question.

Unidentified Analyst: [Interpreted] Can you hear me well?

Unidentified Company Representative: [Interpreted] Yes, we can hear you well.

Unidentified Analyst: [Interpreted] You are in a very difficult environment. Thank you very much for the good performance that you have delivered. I have two questions. The first question has to do with the shareholder return rate. And so, in – up until 2027, 50% TSR has been announced, but the share buyback – if we base that calculations on those numbers, last years was at 36 point. It’s going to go up 2% from that. So by 2027, if you are going to reach that target of 50% and so this year it was only 2 point. And going forward, I mean, you have to raise it by 4% every year. So at Shinhan Financial Group we do believe you will keep your promise and we do believe you have the capability to keep your promise. But from the 2% point increase, if we are to raise that to 4% going forward every year, what kind of trigger do you need a CET1 growth or earnings growth based on what do you think we can raise the TSR rate to increase from 2% to 4% going forward from next year?

And my second question, has to do with NIM, the NIM outlook. So interest rate had – it’s been cut. And so, the NIM is also declining in the fourth quarter and also for next year. What is your outlook for NIM?

Dong Gwon Bahng : [Interpreted] Thank you Mr. Won [Ph] for your questions. While we are preparing the answers, please hold. Thank you very much for the question. With regards to the TSR rate and then the second question was on the NIM. So, I’ll take the first question and the second question will be answered by the CFO. In the case of the shareholder return head based on the share cancellation up until 2027, we announced that the 50% target and in the course of carrying out that promise, as you have mentioned, the image that we have in mind a gradual increase. That is our basic assumption going forward. So, as you can see from today’s plan of our share cancellation, this year we have done KRW700 billion and the 2027 the TSR and we have said that KRW450 million of share cancellation will be done.

So I think based on those announcements we can anticipate the amounts of this year KRW400 billion was announced and KRW150 billion for next year January and February was included, as well. So that means that we will expand the shareholder returns going forward. And also if the share buyback and cancellation amount of growth, this can have an impact on the market and we want to distribute that impact throughout the year. And what your question was, as in order to carry out our progress what kind of trigger is necessary. So we have just started and what we can say at this point is that, confidently including shareholder – share buyback and cancellation. The shareholder return related very specific targets were announced and the action plans for that has been announced as well.

So we do think we can keep that promise and also CET1 ratio. It’s not going to go up continuously. We’re going to manage it at 13%. So and the share cancellation and new shareholder return, if the current earnings growth is underpinning these plans, I think that promise can be kept going forward.

Sang Yung Chun : [Interpreted] Thank you very much for your good question. I’m the CFO. So NIM in the third quarter the market declines and also the benchmark rate impact was reflected as it was 1.56 a down 4 base in the fourth quarter. Again, interest rate card impact will continue and the NIM decline trend will continue. With regards to funding, we will continue to manage the funding rate in order to manage the NIM. And then, this year, the NIM as we have continuously analyzed compared to last year, it will go down slightly that is how we’re going to manage it. And you ask about the outlook for next year and next year additional cuts of benchmark rate is expected and LCR-related response is necessary. So the NIM decline trend we expect to continue and new profitability based that growth of assets and also where funding rate continues to be managed in order to defend the NIM. Thank you very much.

Operator: [Interpreted] So, I hope and believe that that was a sufficient answer to your questions. It doesn’t seem that there are any – there is anybody – to ask a question. So we will wait until the next question please. So we have a question from Do-Ha Kim from Hanwha Investment Securities. Please go ahead.

Do-Ha Kim: [Interpreted] Yes, I have a very simple question. In terms of next year targets, what is your target in terms of loan growth? And what about RWA growth? What is your assumption? IN RWA, if you have a assumption on that, I would appreciate some color on that.

Unidentified Company Representative: [Interpreted] Yes, please. Bear with us and wait just a moment as we prepare to answer. So for next year, our targets, in terms of asset growth, well when we announced our value of program one of the key messages then was that up to now we’ve been focused on quantitative growth, but we want to more – go more toward qualitative growth and change the paradigm to be more focused on capital efficiency as measured by ROE. So, in line with the Value Up program, our ROC target, well, we want to manage it at a group-wide level internalize that as a key metric. So in terms of asset growth, we’re planning, of course, we’re in the process of writing out our business plan. But based on RWA, our target loan growth is about 5%.

And then, so loan asset growth, so, RWA growth of 5%, loan asset growth will be in line with that. Regarding RWA, we are using ROC as it is more intuitive. So our target ROC would be about 13%. So I think you can calculate the RWA the equivalent, figure. Perhaps I can share with you further details on the RO – RWA at a later opportunity required.

Operator: [Interpreted] I hope that provided a sufficient answer to your question and we will see the next question. Next question is from NH Securities, Jung Jun-Sup.

Jung Jun-Sup: Good afternoon. I’m [Indiscernible] from NH Securities. I have two questions, as well? So, the first question is on the larger than expected share buyback program that is very, very positively viewed. But going forward, this size of the share buyback and cancellation every quarter – can we expect that it will be continued? And so, I think you are speeding up, given the level of a stock price increase. But going forward, if the current stock price level is maintained and then before 2027, the share reduction level that you target I think that can be achieved before 2027. So, then, going forward PBR one time, was that be the basis or would the priority be or reducing the number of shares? Can you provide guidance on this? And my second question is on going forward, the outlook for the provisioning.

Unidentified Company Representative: [Interpreted] Thank you very much for those questions. While we are preparing the answers, please hold. You have asked two questions. With regards to share cancellation, so, as you have mentioned, the targeted level is by 2027 KRW450 million is the target. The number of share reduction that, a specific target has been given, by 2027, the number of shares, the cancellation of shares, we would like to accelerate that first. That is our top priority. And we have announced this in our prepared Value Up program, PVR below one times, 0.8, we think that cancellation is lower at that rate. So we’re going to place priority on cancellation of shares and also in terms of the speed for every year as I said, gradual increase is our basic assumption going forward.

But every year the P&L and the CET1 ratio are depending on these factors, it may vary. And second, the outlook for provisioning CCR Outlook I think should be provided to you. And as of the end of September, a 44 BPS and ordinary CCR is 32 BPS. And in June, we have answered this question, in our view, by the year end, the credit cost ratio is about around 45 BPS at the year end. Thank you.

Operator: [Interpreted] Yeah, so I believe it should have been a sufficient answer to your question. And there is no one on queue yet. So we will wait for the next question. So we have no one queuing to ask a question just yet. So let us wait another moment. I guess, from JPMorgan Securities Tien Cho [Ph]. Please go ahead. [Indiscernible] please, go ahead and ask your question please.

Unidentified Analyst : [Interpreted] Yes, hello. Thank you for the chance to ask a question. I would like to ask more about your PF exposure. I understand that it has been reduced and you commented that provisioning is lower. So I would like to ask that as we move more toward the end of the year, the PF market restructuring led by the government authorities altogether seems to be accelerating. So and the end of the year or next year in terms of asset trust or any burden from that side or additional provisioning burden, how much should we expect overall? And is the situation improving in your view? Some banks are seeing some reversal of provisioning even and as interest rates are being cut, we’re seeing restructuring take place.

So, it does appear that maybe the conditions are improving more than had been expected. So, if you could take us through the current status of your PF exposure where is the situation in terms of provisioning or perhaps reversals at the affiliate level? What kind of impact there is? And cycle wise but early next year, do you think that it will overall be resolved? What are your expectations?

A –Bahng Dong Gown: Yeah, thank you for the question. Please wait just one moment as we prepare to answer your question. Yes, thank you for the good question. I’m Bahng Dong Gwon, the CRO. So as you have said, interest rates we’re seeing a downward cycle. And so the market has some expectations blooming of recovering the PF market. However, that being said, as you mentioned led by the government, their efforts to normalize PF loans. And I think that likely it will proceed quite speedily until the start of next year. There may be some pricing adjustments across product sites. So, for the non-banking sector, there might be still ongoing source of concern for additional NPO or loss. For our Group, in terms of the situation for us, if I could comment we have KRW9.4 trillion in overall PF loan exposure, which is about 2.2% of our total loan book.

As you know the regulatory authorities every quarter is doing an economics viability assessment. So for all of our assets, we have already completed our viability review and we have distinguished all of the assets into four categories. For anything cautious we are proceeding by setting up restructuring and other plans. So KRW210 billion are actually were in plan or under plan in the second quarter. Also, in the third quarter, we have done a full scope review and we will submit to the government our plans for further restructuring. So, overall, KRW440 billion is the restructuring amount. We have set aside significant provisioning already against that exposure amount. So we think any risk of the stress is very limited. That being said, the overall situation up to early next year is quite fluid.

There are many moving parts and it may be very variable. So we do believe that there is still are risks that are outstanding is where will respond as we see the developments unfold. So right now, the CRO mentioned that, well, in terms of the overall real estate market, our exposure in how we are managing our exposure he mentioned. Let me just elaborate a little bit more on our provisioning. As we have said, as of the end of June, in terms of a capital or asset trust or real estate financing affiliates, we have done a full scope review already and we set aside provisioning at the end of June. Of course, afterwards in the third quarter, there’s some deteriorations on a recurring basis. And so we have been adding on provisioning. And as the analyst said, we have been doing refinancing or write-downs and sales of certain NPO, which has resulted in reversal of some of those provisions, as well.

We think that at the end of this year and past the start of next year, we think that we may see a gradual Improvement. But as provisioning is concerned, there will be no large-scale provisioning as we did in the first half. But on a recurring normalized basis, there may be smaller provisioning that is required. But relative to fundamentals it will not be a meaningful scale. In terms of asset trust, the issue right now is about the completion guarantee exposure. Up to the first half of 2020, that was a peak of those contracts. So for those projects, they tended to be smaller in scale. So, usually the time period was 2 to 3 years. So for the completion guarantee project sites I think the peak period will be perhaps the second half of 2024 where we will have to mobilize lending or they’re lending through the banking accounts.

But as we go I think that banking account lending balance should diminish. But then there can – of course, there can be additional losses leading to increased lending to the banking account. But we do not expect any large provisioning that we saw in the first half of this year. We don’t think that that is likely as well. But for loss absorption purposes, we will continue with incremental the provisioning as we go.

Operator: I hope that provided a sufficient answer to the question. We have another question from Amy Zhang from Citi Securities,

Amy Zhang: [Interpreted] RWA a lot of external factors impact there, so going forward the RWA predictability or in order to enlarge the scope of analysis of RWA, the data related to RWA, can you disclose more segmented – segmentized data about this? What kind of segmentized data about RWA going forward?

Sang Yung Chun: [Interpreted] Thank you very much for that question. And while we are preparing to answer please hold. So, I’m not in a position to provide many specific details, but in implementing other corporate value program and we have given the focus on qualitative growth and so managing RWA is all the more important. So, going forward, we feel first to RWA, very specific targets will be provided and penalties for exceeding that our target will be considered. And so, we’re going to have more detailed management of RWA going forward. And would you just said the data about RWA you want us to share more data about that? So, specifically I’m not really sure on what level data you are asking. If you can provide more feedback, if we are in a position to provide those data, we will be willing to do so. And our CRO will add to that.

A –Bahng Dong Gown: I am Bahng Dong Gown, the CRO. So in the third quarter, let me give you some data. So, KRW337 trillion of RWA, it has been increased by KRW4.1 trillion and their credit RWA the Bank’s asset growth and the card asset growth and then the FX effect was large. And so there wasn’t any increase from the credit side. KRW1.7 trillion it was increased from the operation side. That was the ETF belated losses from National Securities. And in the case of the market one of the ELS new – who has occurred. So there was an increase of KRW1.5 trillion from that. As the CFO said, going forward, we’re going to strengthen the RWA budget system and data alignment and data integrity is very important. And also simulation function. There’s an analysis function will be strengthened and going forward, starting from next year, based on all of these, RWA basis based that portfolio management will be undertaken.

Operator: [Interpreted] I hope that provide a sufficient answer to your question. The detailed data of that RWA of according to the disclosures that are made based on the financial disclosure act. We have sufficient details contained in those documents and you can ask further the questions to our IR team. And next from [Indiscernible] Hanwha Investment Securities, please.

Unidentified Analyst: Yes, this is [Indiscernible]. I would like to ask more about asset growth. In the third quarter, well, compared to other companies, you saw more rapid growth in household or mortgage loans. If you look at comments from the authorities, this year for banks with a big increase in household loans and establishing business plans, so there were some comments on constraining that rate of growth to take measures like that. So if mortgage growth decreases last or next year, compared to this year, what will be the drivers of asset growth within banking like this, the first half of this year? Will you focus on corporate loans? Or high ROC affiliates, will they drive up more asset growth? So, in terms of asset growth what are the key drivers? And how will that growth be allocated across the different affiliates, not just banking?

Bahng Dong Gown: [Interpreted] So please wait as we prepare to answer that question. So, you asked about growth? So for the bank loans side, the Bank’s CFO will answer. And in terms of assets or resource allocation for next year, I think I will add on after he is finished.

Sang Yung Chun : [Interpreted] Yes. For our Bank asset growth, originally in the first half of the year, we had seen asset growth – the front-loading of the asset growth, in the second half we wanted to focus more on all the data growth. But in the first half, there was a lot of excess demand for household mortgage loans, like you said, and in the fourth quarter is – overall, on a full year basis, we will maintain total household loan growth within our target level. So, for next year, household loan growth, well, this year, the size was not that big. And so next year, we think overall, as we tightened management, the pace of household loan growth will either be similar to this year or otherwise moderate. So as, the CFO continues to say, we want to focus on RWA-based ROE-driven growth at the Bank.

So, in terms of allocation of growth, so, this is not definitive at the moment. The financial business plan is currently being compiled. And so, between the Group companies and the holding company, we have been engaged in close discussions, the theme of those discussions recently has been for each of the different business domains, we want to assess ROC and then examine potential – future potential and areas of improvement. So that is where we are in terms of our discussions. Overall, in terms of RWA growth for next year, I’d say 5% or so. So, it would be difficult to have any large-sized growth like we saw this year. But for household or corporate loans, risk rates are very low. So, household loans even if it’s growing lower, there will be sizable potential to grow with the corporate lending side.

But we will focus on ROC or RWA-based profitability to guide our asset allocation or resource allocation. And that will be reflected into our business plan for next year.

Sang Yung Chun : [Interpreted] Yes, I imagine that it has been a full answer to your question. So we will move on. We don’t have any further questions in the queue. We will wait for further questions. Yes, we have a question we have [Indiscernible] from Goldman Sachs Securities.

Unidentified Analyst: [Interpreted] Good afternoon. I’m [Indiscernible] from Goldman Sachs. I do have one question. So in last quarter, the target Roe was 10% that you have shared with us. In order to achieve that, that the non-banking subsidiaries and then non-interest income, I think, earning has to be increased. In relation to this what kind of direction or what kind of detail plans can you share with us? Thank you.

Unidentified Company Representative: [Interpreted] Thank you for the question. While we are preparing the answer please hold. Well, thank you very much for those questions. In our Corporate Value Up program, we have two pillars. First, based on ROE improving and profitability and also accelerated shareholder returns. In the beginning with regards to our shareholder returns, how we are going to implement our commitment. There was a question about that internally share, cancellation and increasing shareholder returns. We are internally confident about this matter. However, ROE is something that we’re giving a lot of thought to how to enhance profitability based on this. And let me share with you several points. First of all, the beginning, the starting point, we should be non-quantitative, but qualitative growth.

We need to have this awareness shared throughout the Group. And also qualitative growth, we need to set targets for this and also evaluation and the resource allocation, it should all be aligned. And so, in relation to that, when we set the plan for this year and next year, the overall Group’s ROE and the ROC of the subsidiaries must be aligned and internalized. That is being embedded in our plans. And we’re going to strengthen those aspects going forward from next year. And as we have said, for each area, rather than the Bank, especially this year in the capital market, saw that we were sluggish, the performance was. And there were provisioning – large provisioning set aside. So, if we look at the Group’s subsidiaries in order to enhance the competitiveness in the capital market, I think that is our top priority like the incident in the, Shinhan Securities.

And so that we need to focus on strengthening our internal controls but, I think the priority is really on enhancing the competitiveness in the capital market side. And also we I have RWA burden, but our competitiveness we think lies in the global business side. And also IB-related WM asset management we intend to strengthen our competitiveness in these areas as well. So our resource allocation and the planning is being discussed. As we have mentioned during our presentation, once it is all set up and next year is a plan is formulated when we provide updates on our Corporate Value Up program more details about this matter our ROE will be shared.

Operator: I hope this provided a sufficient answer to your question. Yes nobody is in line just yet. So we will wait for the next question. From Citi Securities, analyst Amy Zhang. Please go ahead.

Amy Zhang : [Interpreted] May I just one additional question. CET1, can you share the FX rate sensitivity with us for your CET1?

Unidentified Company Representative: [Interpreted] Yes. Please wait, as we prepare to answer. So, for CET1, FX sensitivity, it’s 0.8 BP for KRW10. And about KRW8 billion sensitivity to next income from a KRW10 increase in the FX rates.

Cheol-Woo Park: [Interpreted] Yes, I think it has been 40 minutes up to now. And I believe that that has been enough to have discussions on many topics. So with that, we will now conclude the third quarter 2024 earnings call for Shinhan Financial Group Going forward, we will continue to engage in close communications with the market to keep you updated. Please come to our homepage or the Shinhan Financial Group, YouTube IR channel. So we look forward to your interest. And thank you again for attending today’s earnings call.