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| Shinhan Financial Group Chairman Cho Yong-byoung / Courtesy of Shinhan Financial Group |
Cho expected to engage in aggressive set of management activities
By Lee Min-hyung
Shinhan Financial Group Chairman Cho Yong-byoung has overcome a major legal hurdle and has extended his term at Shinhan, as the Supreme Court acquitted him on corruption charges in relation to the lender's employee hiring practices.
The court issued the ruling on Thursday, thereby clearing the way for the Shinhan chief to serve for a third term.
Cho and six other human resources employees at Shinhan Bank were charged with allegedly unfairly influencing the lender's recruitment process in 2018. The prosecution accused them of recruiting the sons and daughters of government officials and lawmakers in a corrupt manner in 2015 and 2016 when Cho was leader of the lender. He has since appealed to a Seoul court to prove his innocence.
"The Shinhan chief is widely expected to serve another term with no difficulties after overcoming the legal obstacles," a financial industry source said. Following the court's decision, Financial Supervisory Service (FSS) Governor Lee Bok-hyun said he respects the judgment from the top court.
Cho has so far kept a low profile in management activities due to the legal cloud that was hanging over him, but the latest ruling is expected to help Cho lead the company more aggressively against its rival, KB Financial Group.
Under the leadership of Cho, Shinhan Financial Group has set a new earnings record each year. Shinhan chalked up 2.91 trillion won in net profit in 2017 when Cho took office as the new leader of the group.
The figure has since been on the gradual rise due to its solid growth in the banking business. Last year, the company generated more than 4 trillion won in net profit for the first time.
Shinhan maintained its status as Korea's most profitable banking group in 2018 and 2019 but has since lost its place to KB for the past two years. KB still stayed slightly ahead of Shinhan in first-quarter net profit.
Given that Shinhan remained passive in its business expansion due to legal issues with Cho, he will now engage in a more aggressive set of management activities in the latter half of this year, with the focus on winning back the title of the top financial group here.
Shinhan's rapid expansion in the non-banking sector is noteworthy. In 2021, non-banking affiliates of Shinhan accounted for more than 42 percent of the group's annual net profit, the highest level among commercial banking groups here.
For this year, Shinhan is also widely forecast to set a new earning record again due to rising interest rates and the group's robust non-banking portfolio. In particular, Shinhan will be able to attain an additional profit of around 460 billion won from the selling of Shinhan Investment's office building on Yeouido in Seoul.
The company is also extending its winning streak in its overseas business. According to data from the FSS, Shinhan Bank's 10 overseas branches in countries such as the United States, China and Indonesia generated a combined net profit of 256.8 billion won last year, up 9.7 percent from the previous year.
Shinhan is also considered to have taken some of the most aggressive steps for its digital transformation after the COVID-19 pandemic hit. Under the leadership of Cho, Shinhan has urged its staff to embrace the digital paradigm shift by introducing a series of digital performance indexes for management.
However, he is also tasked with boosting its weak stock performance. Shares of Shinhan Financial Group are on a downward trajectory this month. Shinhan shares closed with a drop of 2.11 percent on Thursday. The stock price of Shinhan hovered around 43,000 won, earlier in June, but has since lost momentum.
