Good afternoon, everyone. I am Park Cheol Woo, Head of the IR. I'd like to thank everyone for taking part in today's event and will now begin the 2020 Q1 Earnings Presentation. We'd like to ask for your understanding that for this particular earnings presentation, as part of our efforts to observe social distancing, we will only be providing audio contents with minimum outside attendees. Joining us today are CFO, Yu Sunghun; and CSO, Park Sunghun; and the Managing Director of Finance, Kim Tae-yeon. After a presentation by CFO, Yu Sunghun, on the business results of 2020 Q1, we will be holding a Q&A session. I now invite CFO, Yu Sunghun, for the earnings presentation for Q1 of 2020.

Good afternoon. I am Yu Sunghun, the group CFO. First of all, I would like to thank the shareholders, investors, analysts and journalists from home and abroad for taking part in the earnings presentation for the first quarter of 2020. Before going into the Q1 performance of Shinhan Financial Group, let me go over the issues and responses related to COVID-19. This is Page 5 of the presentation deck. The coronavirus is posing a severe threat to both people's livelihoods and economy. Shinhan is doing its utmost to faithfully undertake its social roles and responsibilities in the broad effort to overcome the economic crisis caused by the COVID-19. The first and foremost is step with the government's livelihood financial stability package program, an inclusive financial policy is being pursued proactively to ensure that funds are provided in a speedy and timely manner to the society at large and our customers. As of the 20th of April, the bank has extended KRW4.9 trillion, a total of 32,510 loans as financial support to SMEs. A new loan to SMEs have been increased from KRW1 trillion to KRW3 trillion. Not only the bank, but the card, savings bank and the insurance arm of the group are taking part in various financial support programs, including assistance to individuals. Secondly, Shinhan is actively involved in the government-led policies to stabilize the financial market through liquidity provision. We have contributed KRW1.770 trillion to the fixed income market stabilization fund and another KRW1 trillion will be provided for the securities market stabilization fund targeting the stock market. And so contributions are being made at present within the limit. And thirdly, we are at the forefront of providing a necessary community-level assistance to most vulnerable groups and to health professionals. Going forward, we will continue to spearhead the…

Thank you very much. That was the CFO's presentation, and now we will take questions.

[Operator Instructions]. We will take the first question from Hyundai Motor Securities, Mr. Kim Jin-Sang.

I have two questions. First of all, the group CET1 ratio has been enhanced despite the growth in assets. Yes, it provides reassurance to all of us. The 12% -- however, you are still below 12%. You don't have that much of a leeway. And the government, for its part, the dividend payout ratio -- they do have a very cautious approach about this. So by the year-end, the group's CET1 ratio -- what is your outlook for the year-end -- the CET1 ratio? And do you think it's possible to continue to improve the dividend payout ratio going forward? And my second question. I think the credit cost has been well managed, as you have said, preemptively -- because of the growing uncertainties, preemptively setting aside provision. I do believe that by the year-end, this will be possible. So for this year, what is the level of credit costs that you expect? And do you intend to more proactively set aside provisioning? Well what can serve as a trigger for this to happen? Do you have any internal scenarios that you have simulated? So can you share that kind of information with us?

Thank you very much. I'm Yu Sunghun, I'm the group's CFO. With regards to the capital ratio question that you have asked, given the financial plans for 2020, BIS ratio is targeted at 14% and CET1 ratio is later half of 11%. So that is our financial plan going forward. But when we set up the financial plan initially, what we didn't take into consideration was that the FSS has now decided to introduce in advance the Basel III components. And so if the regulations are eased somewhat, then compared to what is in the financial plan, the CET1 ratio and BIS ratio will go up more than 100 bp. Of course, this is a temporary increase only. And do you think this -- us engaging proactively to create leverage affect that? I don't think will be possible. And secondly, with regards to the dividend policy. Through our disclosures, we have provided an explanation. The long- to mid-term capital policy is being formulated at the moment. And dividend payout ratio will go over 30%, and this is more timing and the size and treasury buyback and cancellation size. And the target BIS ratio and the target CET1 ratio are included. But we only have plans, but we have to, I think, postpone communication with the market at the moment because in this crisis period, we need to secure more capital. And so we need to wait and see how long this crisis will be protracted. So after the general directions are more clear, I think we will be able to provide you with more details.

I'm Kim Tae-yeon [ph] from the finance team. I have some additional information. With regards to the CET1 ratio -- so the dividend shareholder return policy, every year, 20 bp improvement is being planned. Because of coronavirus, if we satisfy more capital, then the CET1 improvement rate was going to be quicker. In a normal situation, we believe that 20 bp improvements annually can be possible. Before coronavirus, the capital policy that we had in place was very much focused on shareholder return. So I would like to emphasize that. With regards to the preemptive provisioning, that was a question that you asked. JPMorgan in China, they recommended preemptive provisioning. But there's a difference in accounting methods. There's a general reserve in other countries when the economy turns bad. No particular borrowers, but general provisioning can be satisfied preemptively. But for particular borrowers, provisioning can be used. But in the IFRS that is being applied to Korea, the borrowers and the provisioning are matched. So the preemptive provisioning, the necessity for that is there, of course. If a certain borrower of financial status will turn that, I think more detailed analysis or anticipation or evaluation is required. About 3 to 6 months of very intricate and elaborate evaluation is necessary. And with regards to -- the 40 bp is the target for us.

From DB.

I am from DB, Lee Byung Gun. Congratulations on the good results under difficulties. I also have 2 questions or they could be tied into 1 question. In the beginning, you talked about the COVID-19 response measures. You talked about the status in great detail. And as for the maturity program and deferment of the interest payments that will be protected until September, what do you think will be the loan size? And with regards to COVID-19, the government is running the super low interest rate loan. So how much of that do you have left? And if you are going to have additional KRW10 trillion, how much of that will be your exposure? And KRW1 trillion of loans will be under the moratorium of the interest payment. I think that's related to the KRW3 trillion program. So could you explain about that? And the second question is you had large corporate loans in March. And up until the 21st of April, there was significantly large corporate loans. And as a major bank, you will play your role accordingly. And of course, you will be very cautious with your asset quality. The loan growth may come out differently from our expectations. So what -- how high do you think the asset growth will be? And right now, the interest rates are low. And how far do you think the margin will fall? And at which level do you plan to defend it?

Yes. I will answer your question. As for the COVID-19 measures, SMEs and self-employed people are given relief programs so that they can defer their payment of principal and interest. KRW42 trillion is at stake, and out of that, we believe people will be applying for KRW15 trillion from that. Well, this is just one of our scenarios, and we believe KRW15 trillion will be how much people will applied for. And at the year-end, how will this affect our book? We are doing and running a lot of analyses. We cannot share with you the details at this point, and it's too early to share with you the results of the stress test. But this is within our control. We believe that we can stomach this kind of loss. And if the principal and interest payment -- how can we soft land this whole situation? Through new financial products. That's what we are studying at the moment. And as for the new loans extended and rolling over the existing loans, the new loans amount to KRW2 trillion and to KRW100 billion. As for the rolled-over debt, it's also about KRW5.005 trillion.

Yes. I will answer the second part of the question. I am the CFO. When we are making up the financial plan, the loan growth was conservative at 3% to 4% asset growth. But as you said, we are now in a completely different situation with the government measures. And to inject liquidity into the market, we already had significant growth in the loans. So it's at 5% now. It's above our target. And yes, we are concerned about NIM as well. From the bank side, in Q1, the NIM fell by 5 bp. And on an annualized basis, we believe the NIM could fall by 10 bp. And the NIM is falling and in connection with the loan growth we will have to figure it out again. So we are going to focus more on the noninterest income to offset that.

Ms. Kim-Do Ha [ph] will ask the next question from KT [ph].

I have a question on noninterest income. FBPR [ph], profit-related noninterest income, so FBPR and FX derivatives. You have large changes. I think they mostly come from the securities area. So can you give us more figures and details about this matter by each segment?

I'm Kim Tae-yeon [ph]. In Q1, with regards to FTPL, if you look at marketable securities, compared to last year, profit has been reduced. It appears that it has been reduced significantly. And so as of March '19, the marketable securities, it had appeared solid. And then suddenly, steep losses appeared. In the case of our company, DMSC and JIB, I think we had defended Q1 well. In the case of Shinhan Life, we don't have much stock holdings. And overseas investments, I have realized quick growth and profits. And our income has been diversified. If you look at each item, FX and fixed income valuation losses have been minimized. KRW7.2 billion in losses have incurred. And so -- and KRW5.4 billion in gains have been realized overall. And derivatives-related CBA, because there has been no changes in the credit rating, so there's been no significant changes. And CBA-related losses have not occurred. And with regard to lines, the valuation losses. Last year, KRW56.5 billion was recognized in fourth quarter and in this quarter. With regard to line or KRW19.6 billion losses have been additionally recognized. So much of the losses have been already recognized. But going forward, there is potential of additional financial losses coming from line-related investment. So that is all.

It seems that there are no questions on queue. [Operator Instructions]. We'll take the last question from Lee Byung Gun.

It seems like no one was interested in asking a question, so I'd like some elaboration on the earlier question that I have asked. Other companies have -- are targeting 5% for asset growth. So I don't think that's a low figure. But the government has its plans already, and loan is growing in April. So I think we're going to exceed 5%. And if you think of the securitized amount, I think the loan growth will be higher than 5%. So what is your take on this? And NIM fall by 10 bp. That's what you expect. But compared to last year, it seems like we have gone over that. So for each quarter, in Q2 and Q3, what is your forecast for NIM?

Thank you. I am Park Cheol Woo, in charge of IR. Thank you for your additional questions. As for asset growth, well as of now, the government is providing livelihood loan programs, and they have started in earnest in April, and we're still in the initial stage. So we don't know how this will unfold. We will have to wait and see to be able to say with some certainty about the loan growth trend. And so we will be updating you with further communication. And as for the margin, this is pretty much the similar. We have seen drastic changes as we went through March, and we don't still have the COVID-19 outbreak under control. So it's very early to come up with any specific figures. So I'd like to ask for your understanding.

There are no further questions. We will conclude the 2020 Q1 Shinhan Financial Group's Financial presentation. We hope that the outbreak is conquered soon. I wish you health and all the best. Thank you.