Earnings Transcript for 055550.KS - Q4 Fiscal Year 2021

Unidentified Company Representative: [Foreign Language] Recording in progress Group CSSO; Corso Kun [ph]; Group CMO, Heo Young-Taeg; Group CRO, Bang Dong-Kwon; Shinhan Bank CFO, Chong Chang Hak [ph]; Shinhan Card CFO, Moon Tung Gwan [ph] and Shinhan Investments CFO, Kim Song Hwan [ph] here with us. We will first hear about the 2021 early business results presentation highlights from Group CFO, Etaeg Young [ph] and then Group CDO, Kim Myoung-hee will also deliver results and then we will have a Q&A session. I will invite Group CFO, Etaeg Young who will deliver 2021 full year business results presentation.

Unidentified Company Representative: Greetings. I am CFO, Etaeg Young in-charge of Group finance from this year. First of all, I would like express my gratitude to everyone who is participating in our 2021 business results presentation despite your busy schedules. Along with the global spread of Omicron, among pressures for global interest hike, there’s still very high uncertainty including concerns over inflation and global supply chain vulnerabilities. In this situation, we have been strengthening our basic fundamentals and securing our future new growth engines and striving to continually increase our shareholder profitability rate. Now let’s go to page four of our business results presentation, Group business results highlights and I will cover the 2021 business highlights. In 2021, Shinhan posted KRW4,019.3 billion of net income, a record high level since we were first established and the earning level has been on the rise for eight consecutive years. Excluding non-recurring items which occurred in 2021 including KRW173.4 billion of increasing ERP costs and KRW467.6 billion of investment product related losses, recurrent level net income posted a KRW4.5 trillion level. Interest income along with SME-centered loan asset growth and Bank’s quarterly margin improving by four bps grew KRW898.4 billion. In non-interest income as well non-banking securities and fee income improved and drove our earnings growth. CIR posted 45.3%, which may seem to have slightly risen Y-o-Y, but excluding ERP effects, CIR posted 43.1%, a 1.3-percentage-point improvement Y-o-Y. Lastly, despite the additional provisioning preparing for uncertain economic outlook and termination of COVID-19 forbearance programs, our credit cost ratio, CCR, posted 27 bps, a 14 bp improvement Y-o-Y and is in a downward stabilization trend. From the next page, I would like to elaborate on the current status of investment product losses, which was pointed out to be a factor of uncertainty for our Group. Until 2020, according to our Conflict Settlement process, we recognized expenses which was limited to the investment products which could be recognized as expenses. However, from 2021 later half, in order for customer confidence recovery and removal of uncertainties regarding losses, we actively implemented private reconciliation. Accordingly constructive obligation occurred and it became possible to reasonably recognize costs, and the maximum amount of losses was assumed according to the accounting standard in 2021, KRW467.6 billion of investment product losses was recognized as non-operating expenses and minimized uncertainty going forward. However, there are parts where losses could not be recognized according to accounting standard as of late last year and we expect that there could be after tax KRW90 billion to a maximum of KRW200 billion of losses that can occur during the next two years to three years. However, we improved all processes from product sourcing to sales so that such incidents do not occur again. Next, I would like to explain in more detail regarding net interest income. Group interest income posted KRW9.053.065 trillion, a KRW898.4 billion increasing 11.0% growth. This was driven by the Bank’s margin quarterly profit improvement and growth in Bank loans, 9% growth, focusing on SME loans and I would like to explain about the Group non-interest income on page seven. Group non-interest income posted KRW9.638.1 billion, a 7.7% increase Y-o-Y. However, excluding insurance-related non-interest income centering on non-banking, it increased 19.7% Y-o-Y. Fee income increased KRW292.1 billion, a 12.3% increase and when you look at the detail in the table below, you can see that there was an increase of trust fee income on the back of Asia Trust Income and Bank ERP Pension Trust balance growth, as well as an increase on sizable increase in FX fee income, investment banking and lease financing fee. Securities and FX derivative income posted KRW289.5 billion, a 25% growth and this was on the back of good performance in securities transaction gains and financial investments self trading. I would like to explain in more detail regarding expenses from page eight. 2021 G&A posted KRW5.754.3 trillion, a 10.2% increase Y-o-Y. Excluding the sizable ERP expense of KRW268.1 billion in the previous year, G&A growth rate posted 7%. The high growth rate compared to average years was due to Group digital platform and new business-related advertisement and promotion expense increase. The strategic expenses which was saved through digital transformation, is being utilized in new businesses, including activation of digital platforms. As aforementioned, the CIR excluding ERP expenses posted 43.1%, a 1.3-percentage-point improvement Y-o-Y. On the other hand, Group provisioning on the back of the feeding of the 2020 COVID-related additional provisioning due to the underlying effect decreased KRW394.2 billion, a 28.3% drop Y-o-Y. Despite the KRW187.9 billion of additional provisioning preparing for uncertain economic situation, including the spread of Omnicron and the termination of COVID-19 financial forbearance program, the credit cost ratio posted 27 bps showing stabilization. Delinquency rate, which can be seen as a leading indicator of credit costs, as you can see on the table on the right, is showing downward stabilization for both Shinhan Card. Next is page nine, capital and major income indicators. CET1 ratio is 13.0%, a 13 bp improvement YTD. CET1 ratio based on the standard before the adoption of revised Basel III credit risk is forecast to be 11.8%. On the other hand, with the profit expansion, businesses with high ROE including capital and asset management, Group ROE improved by 0.8 percentage points Y-o-Y. Please refer to the graph in the lower right side of the slide for our CET movement in 2021. We plan to continuously improve capital adequacy and profitability, including establishing core earnings basis and solid net income growth. The Group’s common share and dividend for the fiscal year 2021 was resolved at the BOD to be KRW1,401 per share and included the quarterly dividend in the previous year, it is KRW1,961 and the common share dividend payout ratio was at 25.2% and the total dividend payout ratio, including preferred share is 26%. We will strive forward to continuously improve shareholder value, including making the full payout for quarterly dividends and income routine. Next is page 10, results for different businesses. For the Group’s 2021 net profit, the non-Bank contribution is approximately 42%. Within the non-banking sector, the profit contribution of the capital market sector, including Shinhan Capital and Investment expanded to 40%, confirming the diversified business portfolio, despite the uncertain business environment. For the digital strategy on the next pages 11 and 12, I’d like to invite the new CDO in charge of the Group’s digital strategy, Vice President, Kim Myoung-hee.

Kim Myoung-hee: Hello. I am Kim Myoung-hee as was introduced. I will talk about the Group’s digital strategy. In 2021, the Group has continued its efforts to improve customer experience and provide services close to life on the digital platform, which is our customer contacts channel. As a result, MAU of Bank SOL and Card pLay grew 25% and 28%, respectively Y-o-Y, recording the highest growth rate in the industry. In particular, Bank conducted the various gamification based marketing with KBO, Metaverse, baseball field and Nexen cart writer for the MZ generation, and is currently promoting the establishment of a young smart campus through an agreement with the University. In October last year, Shinhan Card newly launched pLay, which converges various live services with the existing pay-oriented services and recently introduced services that apply new technologies such as MyNFT. In addition, Shinhan Bank and Card are promoting their business in earnest this year as they acquire the MyData business license last year and Shinhan Investment and Life are preparing to acquire the license. Each subsidiary plans to provide differentiated services by integrating data into their main businesses, such as banking, payment, investment and healthcare. In addition, we plan to enhance customer value through bold attempts in non-financial, as well as financial areas such as health fit and AI motion recognition-based home trading platform, Engdangayo [ph], the first delivery app launched by a financial company. For a detailed digital coverage and cost savings from digital channels, please refer to the document. Next page. The Group is also actively pursuing investment and alliances with digital new technology companies. Last year, we created a KRW300 billion Digital Strategic Investment Fund, a first to our domestic financial company and invested KRW173 billion in 11 companies, expanding our efforts to improve customer contact points, capture future markets early and secure new technologies. In addition, we are expanding the ecosystem of win-win growth with startups through a Shinhan Future’s Lab, the first accelerator launched in the financial sector. In the Baby Unicorn 200 Fostering Project hosted by the Ministry of SMEs and Startups, 10 companies, the largest number in the financial sector were selected and their expertise was recognized, playing a pivotal role in accelerating the Group CET. In addition, we are strengthening cooperation for future businesses through strategic partnerships with other industries such as fintech and ICT. Recently, we signed a digital alliance with KT in the form of a share swap of KRW440 billion. The two companies plan to jointly advance to a digital company that goes beyond finance and telecommunication in fields such as AI, Metaverse and NFT. The Group declared a new vision of how finance should be more friendly, more secure, more creative, which is consistent with the Groups [Foreign Language] [Technical Difficulty] Interest income shifts an economic fluctuations. As confirmed in the Q4 results, margin improvement due to interest rate rise and loan asset growth-led interest income growth has expanded. With the base effect of margin improvement and asset growth made during 2021, there will be a significant increase in interest rate income and net interest income in 2022 as well. In addition to this, interest income is expected to increase further this year, as margins continue to improve due to an upward rate revision and if the effect of asset growth is taken into account. According to our internal estimate, a 25 bps rise in the base rate will affect the Bank margin by about 3 bps to 4 bps for a year. Considering the number of rate hikes expected by the market, margin improvement is expected to be larger than the previous year. Asset growth expectation is currently in the mid-5% range by Bank standards. Page 17, I will explain the loss absorbing capacity according to economic uncertainty. Due to economic uncertainty and the scheduled end of the COVID-19 forbearance program, concerns about further asset deterioration in 2022 are growing. In this regard, first, we maintain the PD for collective assessment, the same conservative level as 2021. The effect of increase in PD this year due to sluggish economy will likely be limited. Considering the end of the COVID-19 support program, there was additional provisioning of KRW187.9 billion for vulnerable borrowers according to individual assessment, maintaining enough buffer. The following pages include detailed performance descriptions of the Group and subsidiaries and key business indicators. This concludes my presentation and now we will proceed with Q&A. Thank you very much.

Operator: Thank you very much. [Operator Instructions] The first question is from Hyundai Automobile Securities, Mr. Kim Jin-Sang is on the line. Please ask your question, sir. Mr. Kim, you are on the line.

Kim Jin-Sang: Can you hear me?

Unidentified Company Representative: Yes. We can hear you well.

Kim Jin-Sang: I have two questions. First of all, thank you very much for your good earnings. And I would like to ask your question about your capital policy, and for Shinhan, you initiated a quarterly dividend and you are leading very active shareholder return in the banking sector and I know that…

Unidentified Company Representative: Sir, we hearing some howling on the line.

Kim Jin-Sang: Is it okay now?

Unidentified Company Representative: Yes. It’s much better. Thank you.

Kim Jin-Sang: And for your treasury shares, I know you have some funds to use them going forward. So, is there any plan for cancelation of those treasury shares? So, do you have any plans to have any changes in the ownership? Second question is about your journey growth, because even -- excluding the ERP cost of 7%, which is quite high and we know that you have had a lot of cost going into digital platform, but compared to your peers, it may seem that your digital platform cost are maybe a bit larger, is that a reason? Is there a special reason why it is quite high? And for this year, what is your expected growth for digital platform investment, I know that there was a high base last year. So do you believe that it will go down this year?

Unidentified Company Representative: Thank you very much for your questions, Mr. Kim, and we will soon answer your questions. Please hold. Our Group CFO, Etaeg Young, will answer your questions.

Unidentified Company Representative: You asked a question about our capital policy and for the quarterly dividend, we had been executing it since the last year and, for this year. We also want to make this routine with a fixed amount that was aforementioned. And we mentioned the share buyback. And regarding whether we are going to do it or not, we are not going to make a comment now, but when we do, we will communicate this to the market. Of course, there -- we will keep in mind the cancellation as well. And, for our G&A, we will hear from our Group CMO, Heo Young-Taeg, and then, from our CDO, Kim Myoung-hee.

Heo Young-Taeg: I am Group CMO, Heo Young-Taeg. Regarding the G&A expenses, compared to the previous year, what was extraordinary is ERP. In the past, for ERP, it was most -- mostly took place at Banks, in the past. However, for the previous year, there were many subsidiaries, because there was an ERP for the credit card, which takes place every two years and at Life, there was a sizable ERP. And, from capital as well, we had the ERP, which was not something that happens often. So that happened often last year. So it might seem that we had a high growth in G&A costs. However, excluding all that, we believe that we can have a disciplined management of the G&A expenses. We do not believe there are other expected burden on the G&A cost going forward.

Unidentified Company Representative: I am, Etaeg Young, our Group CFO, for this year. Regarding investment in digital or new growth areas, we will make continuous investments. And for CIR, we are going to have a downward pressure. So, the CIR ratio for this year is about 43.7% that we are forecasting. So, we are going to keep on our -- keep with our cost management.

Operator: Thank you very much. The next question is from Mr. Lee Byung Gun from DB Securities. Please go ahead.

Lee Byung Gun: Hello. I am Lee Byung Gun from DB. Thank you for wonderful results. I have two questions. This may be too narrow of a question, but earlier, you were talking about the investment products and you took care of the accounting and I do appreciate that. But there were some items that could not be taken care of accounting wise and it could be KRW90 billion to KRW200 billion. So, what kinds are these and how will you take care of these? And second question is about credit card. Consumption is expected to recover. So we are seeing good signs. But what we are concerned about is the funding rate is going up and with the DSR regulation in place, the loan assets will be affected in June and July, because of the loan asset regulation what is the amount of asset size that will be affected? So, DSR, the loan contraction, how will you deal with these issues? Thank you.

Unidentified Company Representative: Thank you very much for the questions. Please hold as we prepare for the answer. Yes. The first question will be answered by the CFO, Kim Song Hwan of Shinhan Investment.

Unidentified Company Representative: Hello. I am Kim Song Hwan, the CFO of Shinhan Investment. As for the provisions that can be possible accounting wise we have done what we are required to do, but we have to wait for the decision by the Conflict Settlement Commission and we may see a change in the price of the underlying assets and so the compensation might change. So, within the next three years, as was mentioned by the Group CFO, it is expected to be in the range of KRW90 billion to KRW200 billion. Thank you.

Unidentified Company Representative: Hello. I am Moon Tung Gwan, the CFO of Shinhan Card. I’d like to answer the questions you post about Card. Looking at the financial institutions, it seems like there are concerns about the Card business. The funding rate growing and that regulations and merchant fees, these are the three challenges and there could be downside risks, but Shinhan Card is coming up with the necessary strategies. As for your question, as for the rise in the funding rate and the DSR regulations and the merchant fee and its impact on the income, it could be in the range of KRW200 billion. But for several years, we have anticipated these changes. As was mentioned by the Group CFO, we are getting the preparations and we declared a vision in 2019 for sustainable growth and solid fundamentals. These were the vision and the strategies. Looking at the details, we have diversified into new businesses. For example, the merchant fees, we have been able to deal with these. So non-settlements non-payment was supported and 40% -- 40.9% of the business is for non-settlements businesses, card loan and cash advance services. The loan assets, we are confirming that and we are also increasing the auto loans. So as of 2021, we expect those general assets to be KRW1.8 trillion and auto loans to be about more than KRW8 trillion. So we do have earnings power in the loan assets. We have data sales business and platform-based businesses, which garner actual profits. Last year, with the income from the data sales, we were able to sign a contract of KRW10 billion and so we are making the visions into a reality. And second, the Group strategy was to save costs by building a digital platform. We were able to save KRW100 billion with the digital transformation and we plan to customer additional KRW120 billion ARCC. These will be quite positive in our changes. And as for ERP, we have been very aggressive and looking at the Global business, we have our subsidiaries and we were able to preemptively deal with the losses in the four subsidiaries overseas and so we believe that these earlier efforts will be visible this year. I know this year is challenging, but all of the card companies in Korea, Shinhan Card is differentiated in that, we were able to make earlier preparations for the previous four years and so we are able to deal with the three challenges mentioned. Thank you.

Operator: It seems that there are no questions as of now. [Operator Instructions] Next question is from JPMorgan, Josie Hung. Director Jo, you are on the line.

Josie Hung: Thank you for the opportunity. In Q4, your provision, you said that, you have preemptively reflected some for COVID-19-related programs, but compared to your peers looking at the increase of provisioning it seems a bit low. So, as I understand it, the government has been wanting to have more provisioning and for the different companies looking at macro assumptions or provision standards, I think, they are different. So can you tell us the reason why? And can you tell us about your conservative assumptions and how you are provisioning? In March, people are saying that COVID-19-related forbearance programs are going to be terminated. So can you tell us about your exposure, how you are going to manage them and what kind of provisioning you have in store to prepare for the termination of those forbearance programs?

Unidentified Company Representative: Thank you very much. Director Jo, for your program. We will soon answer your questions, so please hold. CFO, Etaeg Young will answer your question.

Unidentified Company Representative: Thank you very much for your question. And compared to, I think, other Banks, you have made a comparison and I think maybe you are talking about the NPL coverage ratio, because compared to other Banks, the market probably thinks that we have a lower NPL coverage ratio. And NPL ratio is about provisioning against the delinquent or potentially delinquent loans and according to the types of collateral that provisioning rates are different. So you need to look at the different types of provisioning, because they are different in the types of loans involved. And secondly, regarding the termination of COVID-19 forbearance programs related to the termination of the financial support programs, among the balance for the installment repayment deferrals, there is about KRW200 billion for high risk loans and for the amount that is at most risk, it’s about KRW50 billion, and for the interest deferral amount, it’s about KRW40 billion, and we believe that our credit exposure amount is about KRW56 billion. So it’s about KRW100 billion in total and we had provisioned additional KRW83 billion, and including our previous provisioning, we have more than KRW140 billion of provisioning. So even if there is a termination of the repayment deferral forbearance program, even if there is some deterioration for the borrowers, we believe that we can sufficiently cover them. Going into more macros, in 2020, we had conservative provisioning, and in 2021, we mentioned that we have maintained them. So we have actually maintained the observation period to include the area when -- era when we had the defaults. So we had made it possible for us to look at any further delinquent possibilities of borrowers. So apart from the KRW83 billion that are aforementioned for individual borrowers, we had made preparations to preemptively to prepare for their delinquencies if they occur. So we believe that we are sufficiently covered with our provisioning. However, when the interest rate goes up, generally in the economy, there could be a recession effect, because there could be a more burden for wages, so that when the PD gets higher or -- so rather than getting higher or when we have an effect on borrower, because of that overall effect in -- on the portfolio, looking at the amount of the provisioning increase, that is something that can occur in the economic cycle. So it will -- it might occur on a recurring level. So we believe that the amount of provisioning might go up compared to similar periods.

Bang Dong-Kwon: I am the Group CRO, Bang Dong-Kwon. Regarding assumption related question that you have asked for SLC. I think further looking criteria is what you have asked, regarding Stage 3 or Stage 3, their individual assessments, but there is a collective assessment I think that you have asked about. So I will base my answer on that and the portfolio default rate, PD rate, you can see that it is at the minimum, the lowest level. So, if we assume the risk component on a moving level, as we had in the past, it is at a very low level. So in order for us to be more conservative, we had changed the observation period to include the financial crisis eras. So we have expanded those period to actually remove the write-back or cost factors and we have enough time for observation for RC and we have made the provisions based on that. Thank you very much.

Operator: Thank you very much. The next question is from Yafei Tian from Citi Securities. Please go ahead.

Yafei Tian: Hi. Thank you for giving me the opportunity to ask. A few relatively quick ones. The first one is on the non-operating losses for this quarter. Maybe I missed at the very beginning, what is that related to, please? And then, secondly is that thank you for the detailed discussion on the loan losses trajectory and asset quality, but assuming that there is no increase in delinquency and the things that remain status quo. Does that mean that this year the loan losses could be lower than what we have seen the last two years in the absence of top-ups? And thirdly is on the Life business of Shinhan Life and Orange Life. Could you please give us an update on the integration between these two businesses and also your outlook on these businesses into IFRS 17 implementation, please? Thank you.

Unidentified Company Representative: Thank you for the questions. Please hold. We will be right back with the answers. The CMO, Heo Young-Taeg, will first answer the question.

Heo Young-Taeg: Hello. I am Heo Young-Taeg, the Group CMO. I’d like to answer the question about the larger effect of Shinhan Life and Orange Life, and the introduction of IFRS 17. Last year, Shinhan Life and Orange Life merged and there was a lot of costs one-time that incurred. There was ERP for the redundant workforce KRW56.6 billion, system integration KRW40 billion. And the reason why I am mentioning the numbers is because, in the long-term, we have to look at the costs and how the merger is to produce return in the later years and we had reflected the cost last year. This year, the integration cost this year will be much slower. System integration, the amortization, we will have less burden and when the two entities merge, we have efficient workforce and the effect will kick in this year. And from a Group level, we can share the customers and we will have more business opportunities. Orange Life and the Shinhan Life had each different business models. One had younger FMFCs [ph] and Shinhan Life had a PM organization, and there will be synergy produced, and this will become visible starting this year. But according to insurance accounting methods, maybe the size may not be visible accounting wise. But as for IFRS 17 introduction, the integrated Shinhan Life will have the industry’s best capital base and this will serve as an opportunity to shift to profit making. So, starting in 2023, maybe Shinhan Life will be able to record a significant growth in profit. So this will be a huge plus for the Group as a whole. So, thank you.

Bang Dong-Kwon: I would like to take on the next question about the asset quality and loan loss. I am the CRO, Bang Dong-Kwon. As for the asset quality, we have businesses that focus on sound assets and so the sound as -- the asset quality is improving against the NPL ratios and the delinquency ratios, we see improvements continuously. And as for the loan losses, as was mentioned by the CFO, there was 27 bps of credit cost ratio despite the COVID provisioning. We have done stress test under different scenarios. It used to be 30 bps in 2019 and we expect the credit costs to be in the range. So that’s our plan. It’s a bit higher than the 27 bps of last year and that’s what we are targeting. Thank you.

Unidentified Company Representative: Yes. As for the non-operating losses, we were a distributor of the investment product and we recognized that as a non-operating loss and that was KRW192 billion. And additionally, IFRS 17 and its adoption and how it will affect the Insurance business. I know you are probably familiar with the accounting. But as for the integrated entity, we have a large portion of protection type -- guaranteed type insurance companies. So compared to the competitors, we believe that we would fare better and the capital could under undergo some changes, but we do have enough capital buffer. So relatively speaking, our business will be safer off. I know -- I do want to talk about numbers to be more specific, but I will be general, but everything will be positive for Shinhan Life and Orange. Thank you.

Operator: We are waiting for more questions. We have no questions that we can see as of now. So, if you have any questions, please log into Zoom and press the raise hand button.

Mike Makdad: Hello. This is Mike Makdad from Morningstar. Can you hear me? I just have one question, which is about your overseas subsidiaries. Until the pandemic, I think, you are strong overseas units like Japan and Vietnam were at a differentiation point for Shinhan compared to other Korean Banks contributing 10% to 15% of profit. Of course, during the pandemic, Japan seems to be very strong continuing and I am familiar with it, but Vietnam has been affected. I wanted to ask what’s the outlook for these overseas subsidiaries once the pandemic end. Maybe 2022 is too early, but once the pandemic ends, how is Vietnam? And then also any plans for other countries in ASEAN to make them bigger? That’s my question. Thank you.

Unidentified Company Representative: Thank you very much for your question. Please hold. We will soon answer your question. You will hear from our CMO, Heo Young-Taeg.

Heo Young-Taeg: Thank you for your question. I am CMO, Heo Young-Taeg. As you are well aware, there was the lockdown in Vietnam and we had great challenges because of COVID-19. Despite this, globally, you can see net income, it was about KRW390 million -- $390 million. So it was very high. So, in Myanmar, Yangon, you can see we had some losses that we had preemptively recognized. And in Vietnam, there was the Card business and others, and we had preemptively recognized the provisions. So it’s about $25 million or so altogether. So, excluding all this, compared to the previous year, even in the difficult situation of the previous year, there was about 25% increase that we would have seen. And for this year, there are emerging countries and new countries, MMC countries and for the emerging markets, we believe that they will see no lockdown or they have announced lockdown opening or ending of lockdown, so we believe that there will be a great recovery and what was repressed -- suppressed we believe will be great momentum for growth. In particular, for Vietnam and Indonesia, we believe that in the global supply chain, they play very pivotal and important roles. So we believe that we will see similar effects. And for the advanced markets in the GIB area, we have been making inroads, so we have been doing some IT business and we have seen some considerable results. So, going forward, globally, including what we haven’t been able to do for the past two years, we hope that this year will be a year where we can see some feasible results and apart from that, we are also looking at inorganic opportunities. Of course, it will depend on the government regulations and others. So, we will need to wait and see. But regarding Shinhan’s Global business, compared to our peers, other financial holdings groups, we believe that Shinhan will see a very good year compared to other financial holdings groups in Korea.

Mike Makdad: Thank you very much for your answer.

Operator: The next question is from Mr. Sin-Young Park from Goldman Sachs. Please go ahead.

Sin-Young Park: Hello. Thank you for giving me a chance. I have one question. This year and last year also and even the year before, wealth management and product was -- where conservative stance was taken and booking was made conservatively and is there a time when there will be a reversal and what will be the scope? So what will be the timeframe and the conditions for the reversal? Thank you very much.

Unidentified Company Representative: Please hold. We will be right back with the answer. Yes. The CFO, Etaeg Young will answer.

Unidentified Company Representative: I think related questions keep coming up, specific numbers this quarter, next year, we want to be clear with the numbers, but we are not at a place to do that. There were some funds that were recovered and some funds we did expect some losses and we wanted to provision against the losses. But according to the reports published, there seem to be no issues, but we did expect losses nonetheless. But we cannot provide you with the exact schedule and the conditions. Of course, the ballpark figure would be about KRW100 billion and it could be as long as five years as the dispute per longs and it could be as high as KRW200 billion. And so, we just gave you a range. It’s not based on exact calculations. As of 2021 year end, we did some assessments. There were private reconciliations and [Foreign Language] [Ended Abruptly English Translation]