S.Korea Shinhan Bank sees 2009 net profit falling

SEOUL, Jan 5 - Shinhan Bank, a core arm of South Korea's top financial services group <055550.KS>, said on Monday it was targeting a 1.2 trillion won ($922 million) net profit in 2009, with asset growth seen sharply slowing to 2 percent.

The targets would be its lowest in several years, reflecting an increase in loan delinquencies from corporate clients as Asia's fourth-largest economy heads for its first recession in a decade.

The government-orchestrated restructuring of ailing shipbuilders and construction companies in the current quarter also look set to raise bad loans for banks.

Shinhan Bank, which closely competes with sector leader Kookmin Bank, earned a 2.05 trillion won net profit in 2007 and 1.43 trillion won in 2006.

Shin Sang-hoon, CEO of Shinhan Bank, told the Korea Economic Daily in an interview that it would stick to building fundamental strength in the current financial climate, instead of setting a profit-driven strategy.

The bank confirmed his comments and the numbers carried in the daily's early Tuesday edition.

"Our net profit target of 1.2 trillion won will be achieved by reshuffling portfolios and maximising operational efficiency," Shin was quoted as saying by the newspaper.

Shinhan Bank, which accounts for almost half of Shinhan Financial Group's <SHG.N> earnings, is estimated to post a 1.4 trillion won net profit last year by analysts.

The parent group is forecast to post a 1.6 trillion won net profit in 2009, sharply down from an estimated 2.1 trillion won last year, according to Reuters' survey of 20 analysts.

Shinhan Bank is aiming for a 7 percent increase in lending this year, most of which will go to small- and medium-sized companies in tandem with the government's policy to support the sluggish economy.

Overall, the bank would see asset expansion slowing to a meagre 2 percent, compared with double-digit growth in previous years, it said.