[Alpha Biz= Reporter Kim Sangjin] Korea Credit Rating Agency (KIS) announced on October 15 that Shinhan Investment Corp. has incurred a loss of 130 billion won related to its exchange-traded fund (ETF) operations. KIS stated that while this loss is within a manageable range, further verification is required regarding its financial impact.

In its report, KIS highlighted that the anticipated loss of 130 billion won constitutes 61.7% of the expected net income of 210.6 billion won for the first half of 2024, indicating that the loss will inevitably have a negative effect on Shinhan Investment's profitability in the third quarter of 2024.

KIS assessed the loss as relatively minor, noting it accounts for only 2.4% of the company's capital, approximately 5.4 trillion won as of June 2024. Considering the firm's business portfolio and its capacity for generating recurring profits, KIS deemed the loss manageable.

However, the agency stressed the importance of monitoring several factors moving forward, including the final scale of the losses, potential sanctions from regulatory authorities, impacts on the company's reputation, and necessary improvements in risk management and internal controls.

In related news, Shinhan Investment Corp. disclosed on October 10 that it had engaged in futures trading that deviated from its role as a liquidity provider for ETFs, resulting in substantial losses. The company admitted to misrepresenting these trades as swap transactions. The confirmed loss amounts to 130 billion won, although the final loss could vary based on ongoing investigations. Internal audits at Shinhan Investment and on-site inspections by the Financial Supervisory Service are currently underway.

 

 

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