신한은행,우리은행,신한은행재무분석,우리은행재무분석,재무분석사례,재무비율분석사례경영경제레포트

Financial Management
The Analysis of Shinhan Bank&Woori Bank

업계선정- Shinhan bank & Woori bank
A commercial bank is a type of financial institution and intermediary.
It is a bank that provides transactional, savings, and money market accounts
and that accepts time deposits.

Banks take deposits from savers, paying interest on some of these accounts.
They pass these funds on to borrowers, receiving interest on the loans.
Their profits are derived from the spread between the rate they pay for funds
and the rate they receive from borrowers.
We choose two big commercial banks and the average of banks in Korea to analyze financial ratios and recognize financial health.
Financial Management
vs
Shinhan bank
The Shinhan Bank has substantial importance and influence in the Korean financial system supported by the solid third largest market position in terms of assets.

The Bank is planning to pursue an appropriate level of growth through conservative risk
manageme…(생략) nt against the rise in credit risk caused by the continued corporate restructuring and recession in the real estate market and construction industry.
Financial Management
Woori bank
The Woori Bank has consistently held the second largest amount of assets among domestic
banks thanks to the substantial expansion of assets since 2006.

In 2xxx, net interest margin began to rise although provisioning burden increased due to
Corporate restructuring and strengthened asset quality standards for property-related PF loans.
Financial Management
Financial Management
자본적정성-BIS Ratio (자기자본비율)
BISratio(BIS) is equity capitalratio and BIS presented. It is an indicator to check the soundness of banks.If BIS ratio looks larger,it means that bank management is positive. BIS recommend the ratio of Bank would be good when it is over 8%.

Financial Management
자본적정성-Basic Capital Ratio
Equity capital is the sum of ‘basic capital(Tier1)’ & ‘supplement capital(Tier2)’.
The basicindicators. Usuallymore than 10%equityratio, primarycapitalratiois
less than 8%is assessedashealthy banks.

Shin Han Bank have had the capital by using capital increase and publishing subordinated bonds and hybrid bonds.

According to this, at the time of 2xxx, BIS & Basic capital ratio has remained high levels.

Even though the lessening trends of asset quality would be burden, their continuous abilities and buffering capacity is still good.

Even though continuous dividends payments, there is increase of capital.

There is also the efforts of capital increase, new capital insurance of capital securities, subordinated bonds.

Thus, BIS ratio(14.7%), Basic capital ratio has remained high levels at the end of 2xxx.
Financial Management
Analysis of Shinhan & Woori Bank
Due to the increase of low level bonds, profitability and asset quality is lossing after
global economy crisis.

Exit strategy(the concern of global economy condition, the rising of rate, etc.) and the presence of credit risks(SME sector, real estate PF loans,etc.) would be bad effects for profitability and asset equity.

Therefore, Ongoing monitoring will be needed.
Financial Management
Recommendation
Financial Management
여신건전성-1
What Does Nonperforming Loan – NPL MeanLoans that are in default or close to being in default.
Many loans become non-performing after being in default forthree months, but this can depend on the contract terms.
The NPL ratio of Shinhan bank is lower than Woori bank.
The financial health of Shinhan bank is greater than Woori bank.

The NPL ratio of Shinhan bank has increased a few from 4Q in 2008 to 4Q in 2xxx, because of
PF loan 290 billion won, Daehanship(precautionary → substandard) 140 billion won, small&medium
-sized shipping businesses 80 billion won.

However, the NPL ratio of bank average also has increased like the NPL ratio of Shinhan bank.

The NPL ratio of Shinhan(1.31) was lower than the NPL ratio of bank average(1.89) at 4Q in 2xxx.
It was good, compared to the NPL ratio of bank average.

Financial Management
여신건전성-1(계속)
The NPL ratio of Woori bank has greatly increased from 4Q in 2008 to 4Q in 2xxx,
because of PF loan (nomal→ non-performing) 1.1 trillion won.

The NPL ratio of Woori(3.34) was greater than the NPL ratio of bank average(1.89) at 4Q in 2xxx.
It was bad, compared to the NPL ratio of bank average.
여신건전성-2
What Does NPL Coverage Ratio MeanFinancial ratio measuring a bank`s ability to absorb potential losses from nonperforming loans.
Financial Management
여신건전성-2(계속)
The NPL coverage ratio of Shinhan bank is greater than Woori bank.

The NPL coverage ratio of Shinhan bank has decreased 60% from 4Q in 2008 to 4Q in 2xxx.
However, the NPL ratio of bank average also has decreased 90%.

The NPL coverage ratio of Shinhan(133.1) was greater than the NPL coverage ratio of bank average(106.36) at 4Q in 2xxx.

It was good, compared to the NPL coverage ratio of bank average.
The NPL coverage ratio of Woori bank has greatly decreased 140% from 4Q in 2007 to 4Q in 2xxx.

The NPL coverage ratio of Woori(70.07) was lower than the NPL coverage ratio of bank average(106.36)
at 4Q in 2xxx.

It was bad, compared to the NPL coverage ratio of bank average.
For Shinhan bank and Woori bank

Focus on managing substandard and below loans.
Sell substandard and below loans to other investment agency.
Dispose substandard and below PF loans by PF bad bank.

Especially, Woori bank needs to save finance more for The NPL coverage ratio.
recommendation
Financial Management
수익성-ROA(Return on Asset)
By calculating ROA , we can examine the level of Net Income relative to the Total Assets.

Return On Assets is an indicator of how profitable a company is before level average & is compared
With companies in the same industry. Return on assets is a common figure used for comparing
performance of financial institutions (such as banks), because the majority of their assets will have
a carrying value that is close to their actual market value.

Financial Management
수익성-ROA(계속)

In 2006, Woori bank had higher ROA rather than the bank average, but Shinhan bank had lower ROA
compared to the bank average.
By 2007, Shinhan scored higher ROA and Woori bank scored lower ROA compared to the bank average

In 2008, because of the sub-prime mortgage loan, most of the banks` ROA decreased.
Especially, Woori bank`s ROA was very low.

In 2009, both banks showed close ROA to the bank average.

In 2xxx, Shinhan scored very high ROA, showing big gap.

Financial Management
NIM is a measure of the difference between the interest income generated by banks or other financial
institutions and the amount of interest paid out to their lenders(for example, deposits), relative to the
amount of their (interest-earning) assets.

NIM= (Interest income-Interest expense)/Total Equity

Financial Supervisory Service once used loan-deposit margin to rate profitability, but since 2000 FSS is
using NIM to rate profitability.

Right now, Woori and Shinhan scores lower NIM than the bank average.
It means that both bank`s profitability of interest is lower than the bank average.
Financial Management
수익성-NIM (Net Interest Margin명목순이자마진)
In case of ROA, Shinhan shows stable number. So Woori needs to increase ROA.
In order to increase ROA, the bank needs to increase efficiency of invested equity.
In other words, Woori needs to increase sales and return on sales by controlling the cost.
We can see specific structure of ROA if you look at the bottom picture.

In case of NIM, both banks show lower number when compared to the bank average.
So both bank needs to increase the profitability of interest part.

Financial Management
Recommendation
1. What is the Liquidity ratios
▶The ratio of a company`s liquid assets to its current liabilities, used as a measure of its solvency

2. Usually Liquidity ratios is interpreted that ratios is stable over100. Both Shinhan bank’s ratio&Woori bank’s
ratio are maintained over 100. Thus, Those bank’s Liquidity ratios are stable.

3. Because of the Government’s prompt action for example, a fall in the rate interest and expansion of
fiscal payment- nation’s major bank’s Liquidity ratios(won) is maintained in stable condition.
Except for, 2008.12 All of the world’s economy are heightend by Sub prime mortage.

Financial Management
유동성(Liquidity Ratio)
원화유동성 비율
1. At this point time(2008 Sub prime mortage crisis), Woori bank gives up call option.
So, negative cognition are expanded, foreigner’s the share for stick scale is increased.
Consequentially, rate of exchange has gone up a lot(about 1,400won).
Korea’s commercial bank’s general shortage of foreign currency liquidity problem is growing.

2. Like liquidity ration(won), the Government’s prompt action and all of the world’s cooperation
are reduce the economy damage.

3. Especially international money market’s risk aversion tendency appeasement and continuous
expansion of the nation’s favorable trade balance are influence a polished supply and demand($).

Financial Management
유동성(Liquidity Ratio)-2
외화유동성 비율
Recommendation
Liquidity ratios of Won&Dollar are stable. But, World economy’s flows are changed anytime.
So, we are prepare continuous monitoring of the Foreign loan condition or liquidity present condition
and set up a unit to take charge of it. Also, domestic bank have a riciprocal arrangement that extreme competition of domestic&foreign business must be sublated.
4. Because of the strong yen, korea’s export is increased.
So, Both Won and dollar are remain stable.

5. Although Sub prime mortage is influence the domestic economy, in early stage the situation
is right but, at the end of 2008 ShinhanWoori bank’s liquidity ratios($) are below the 100.

6. In 2009, The world economy is picking up, also korea’s