US investment giant Capital Group has returned as a major shareholder in Shinhan Financial Group, lifting its stake above 5 percent as the Korean banking group steps up shareholder returns.

According to a regulatory filing Wednesday, Capital Research and Management Company, a Capital Group affiliate, held 23.57 million shares in Shinhan Financial, equivalent to a 5.02 percent stake. The holding makes the manager the third-largest shareholder in Shinhan Financial, behind the National Pension Service and BlackRock.

Capital Group is an active asset manager overseeing about $3.6 trillion in assets. It is known for its long-term, active investment approach centered on fundamental research and collaboration among diverse portfolio managers.

The group held a 0.18 percent stake in Shinhan Financial at the start of the year but has since increased its holding, crossing the 5 percent threshold that requires disclosure.

The move comes as Capital Group has been trimming its holdings in other Korean banking groups. It reduced its stake in Hana Financial Group to 5.55 percent from 6.6 percent last year. Over the same period, it also sold shares in KB Financial Group, bringing its stake down to 6.82 percent from 8.27 percent.

The shift is notable as KB Financial ranked No. 1 among Korea's major financial groups in first-half earnings, followed by Shinhan Financial, Hana Financial and Woori Financial Group. That makes Capital Group's reweighting toward Shinhan more than a simple portfolio adjustment, coming at a time when Korean lenders are being measured not just by profit but also by how aggressively they return capital to shareholders.

Against this backdrop, Capital Group's decision to increase its stake in Shinhan Financial is being viewed as a positive assessment of the banking group's efforts to boost shareholder returns.

Under the Value-up 2.0 strategy announced earlier this year, Shinhan Financial has set targets of achieving a return on equity of at least 10 percent, a total shareholder return ratio of at least 50 percent and a Common Equity Tier 1 ratio, a key indicator of banks' capital adequacy, of at least 13 percent.

Shinhan Financial said during a July conference call that it would buy back and retire an additional 700 billion won ($515 million) of its own shares through direct purchases by October.

By the end of the third quarter, Shinhan Financial's cumulative share buybacks and cancellations for 2026 are expected to reach 1.4 trillion won, surpassing the 1.25 trillion won recorded in 2025.

"We believe Capital Group positively viewed Shinhan Financial's efforts to sustainably enhance shareholder value through Value-up 2.0, as well as the improvement in the group's return on equity driven by stronger performance, particularly at nonbank affiliates," a Shinhan Financial official said.

For Shinhan Financial, the move also marks the return of a major global institutional investor that had previously exited the company. Capital Group held more than a 5 percent stake in Shinhan Financial until 2005, but gradually reduced its holding before fully exiting the investment in 2012.