Shinhan FG to maintain ‘resilient’ credit profile despite subsidiary woes

Whilst two subsidiaries saw trouble, other key subsidiaries maintain stable outlooks.

Shinhan Financial Group is expected to maintain a ‘resilient’ credit profile over the next 12-18 months despite the credit and earnings weaknesses in its subsidiaries.

Shinhan is the expected high level of support it will receive from the South Korean government should it run into trouble, according to Moody’s, which maintained a stable outlook for the group.

Non-bank assets make up 25% of Shinhan’s total assets, which has helped it achieve stable profitability that is higher than Shinhan Bank alone.

However, its non-bank subsidiaries saw their credit profiles weaken during the recent credit downcycle. Shinhan Capital saw its asset quality deteriorate, and Shinhan Securities saw earnings volatility, according to Moody’s Ratings.

Its other key subsidiaries— Shinhan Bank, Jeju Bank, and Shinhan Card— all maintained stable outlooks. 

Shinhan’s highly diversified portfolio of subsidiaries benefits the group, whilst its key subsidiaries' capital buffers provide Shinhan with the flexibility in servicing its debt, Moody’s said.

Shinhan’s systemic importance as a domestic systematically important financial group in South Korea also meant that it is expected to enjoy a “very high level” of support from the Korean government.